constitution

Gamboa vs Teves (G.R. No. 176579 June 28, 2011)

Gamboa vs Teves
G.R. No. 176579 June 28, 2011

Facts: On 28 November 1928, the Philippine Legislature enacted Act No. 3436 which granted PLDT a franchise and the right to engage in telecommunications business. In 1969, General Telephone and Electronics Corporation (GTE), an American company and a major PLDT stockholder, sold 26 percent of the outstanding common shares of PLDT to PTIC. In 1977, Prime Holdings, Inc. (PHI) was incorporated by several persons, including Roland Gapud and Jose Campos, Jr. Subsequently, PHI became the owner of 111,415 shares of stock of PTIC by virtue of three Deeds of Assignment executed by PTIC stockholders Ramon Cojuangco and Luis Tirso Rivilla. In 1986, the 111,415 shares of stock of PTIC held by PHI were sequestered by the Presidential Commission on Good Government (PCGG). The 111,415 PTIC shares, which represent about 46.125 percent of the outstanding capital stock of PTIC, were later declared by this Court to be owned by the Republic of the Philippines. Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of 46.125 percent of PTIC shares is actually an indirect sale of 12 million shares or about 6.3 percent of the outstanding common shares of PLDT. With the sale, First Pacifics common shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing the common shareholdings of foreigners in PLDT to about 81.47 percent. This violates Section 11, Article XII of the 1987 Philippine Constitution which limits foreign ownership of the capital of a public utility to not more than 40 percent.

Issue: Whether or not the term capital in Section 11, Article XII of the Constitution refers to the common shares of PLDT, a public utility.

Held: Yes. Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution mandates the Filipinization of public utilities, to wit:

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. (Emphasis supplied)

Any citizen or juridical entity desiring to operate a public utility must therefore meet the minimum nationality requirement prescribed in Section 11, Article XII of the Constitution. Hence, for a corporation to be granted authority to operate a public utility, at least 60 percent of its capital must be owned by Filipino citizens.

Thus, the 40% foreign ownership limitation should be interpreted to apply to both the beneficial ownership and the controlling interest.

Clearly, therefore, the forty percent (40%) foreign equity limitation in public utilities prescribed by the Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares. Furthermore, ownership of record of shares will not suffice but it must be shown that the legal and beneficial ownership rests in the hands of Filipino citizens. Consequently, in the case of petitioner PLDT, since it is already admitted that the voting interests of foreigners which would gain entry to petitioner PLDT by the acquisition of SMART shares through the Questioned Transactions is equivalent to 82.99%, and the nominee arrangements between the foreign principals and the Filipino owners is likewise admitted, there is, therefore, a violation of Section 11, Article XII of the Constitution.

Indisputably, one of the rights of a stockholder is the right to participate in the control or management of the corporation. This is exercised through his vote in the election of directors because it is the board of directors that controls or manages the corporation. In the absence of provisions in the articles of incorporation denying voting rights to preferred shares, preferred shares have the same voting rights as common shares. However, preferred shareholders are often excluded from any control, that is, deprived of the right to vote in the election of directors and on other matters, on the theory that the preferred shareholders are merely investors in the corporation for income in the same manner as bondholders. In fact, under the Corporation Code only preferred or redeemable shares can be deprived of the right to vote. Common shares cannot be deprived of the right to vote in any corporate meeting, and any provision in the articles of incorporation restricting the right of common shareholders to vote is invalid.

Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term capital in Section 11, Article XII of the Constitution refers only to common shares. However, if the preferred shares also have the right to vote in the election of directors, then the term capital shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term capital in Section 11, Article XII of the Constitution refers only to shares of stock that can vote in the election of directors.

This interpretation is consistent with the intent of the framers of the Constitution to place in the hands of Filipino citizens the control and management of public utilities.

As shown in PLDTs 2010 GIS, as submitted to the SEC, the par value of PLDT common shares is P5.00 per share, whereas the par value of preferred shares is P10.00 per share. In other words, preferred shares have twice the par value of common shares but cannot elect directors and have only 1/70 of the dividends of common shares. Moreover, 99.44% of the preferred shares are owned by Filipinos while foreigners own only a minuscule 0.56% of the preferred shares. Worse, preferred shares constitute 77.85% of the authorized capital stock of PLDT while common shares constitute only 22.15%.62 This undeniably shows that beneficial interest in PLDT is not with the non-voting preferred shares but with the common shares, blatantly violating the constitutional requirement of 60 percent Filipino control and Filipino beneficial ownership in a public utility.

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Philippine Journalist vs Journal Employees Union (G.R. No. 192601 June 3, 2013)

Philippine Journalist, Inc vs Journal Employees Union
G.R. No. 192601 June 3, 2013

Facts: The second complainant Michael L. Alfante alleged that he started to work with respondents as computer technician at Management Information System under manager Neri Torrecampo on 16 May 2000; that on 15 July 2001, he was regularized receiving a monthly salary of P9,070.00 plus other monetary benefits; that sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was opposed by complainant and three other co-employees; that Pagkalinawan took offense of their objection; that on 22 October 2002, complainant Alfante received a memorandum from Pagkalinawan regarding his excessive tardiness; that on 10 June 2003, complainant Alfante received a memorandum from Executive Vice-President Arnold Banares, requiring him to explain his side on the evaluation of his performance submitted by manager Pagkalinawan; that one week after complainant submitted his explanation, he was handed his notice of dismissal on the ground of “poor performance”; and that complainant was dismissed effective 28 July 2003. Complainant Alfante submitted that he was dismissed without just cause. With respect to the alleged non-adjustment of longevity pay and burial aid, respondent PJI pointed out that it complies with the provisions of the CBA and that both complainants have not claimed for the burial aid.

Issue: Whether or not petitioner’s denial of respondents’ claims for funeral and bereavement aid granted under Section 4, Article XIII of their CBA constituted a diminution of benefits in violation of Article 100 of the Labor Code.

Held: Yes. A collective bargaining agreement (or CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law between the parties, must be complied with by them. The literal meaning of the stipulations of the CBA, as with every other contract, control if they are clear and leave no doubt upon the intention of the contracting parties.

It is further worthy to note that petitioner granted claims for funeral and bereavement aid as early as 1999, then issued a memorandum in 2000 to correct its erroneous interpretation of legal dependent under Section 4, Article XIII of the CBA. This notwithstanding, the 2001-2004 CBA35 still contained the same provision granting funeral or bereavement aid in case of the death of a legal dependent of a regular employee without differentiating the legal dependents according to the employee’s civil status as married or single. The continuity in the grant of the funeral and bereavement aid to regular employees for the death of their legal dependents has undoubtedly ripened into a company policy. With that, the denial of Alfante’s qualified claim for such benefit pursuant to Section 4, Article XIII of the CBA violated the law prohibiting the diminution of benefits.

Funa vs Agra (G.R. No. 191644 February 19, 2013)

Funa vs Agra
G.R. No. 191644 February 19, 2013

Facts: The petitioner alleges that on March 1, 2010, President Gloria M. Macapagal Arroyo appointed Agra as the Acting Secretary of Justice following the resignation of Secretary Agnes VST Devanadera in order to vie for a congressional seat in Quezon Province; that on March 5, 2010, President Arroyo designated Agra as the Acting Solicitor General in a concurrent capacity; that on April 7, 2010, the petitioner, in his capacity as a taxpayer, a concerned citizen and a lawyer, commenced this suit to challenge the constitutionality of Agra’s concurrent appointments or designations, claiming it to be prohibited under Section 13, Article VII of the 1987 Constitution; that during the pendency of the suit, President Benigno S. Aquino III appointed Atty. Jose Anselmo I. Cadiz as the Solicitor General; and that Cadiz assumed as the Solicitor General and commenced his duties as such on August 5, 2010. Agra renders a different version of the antecedents. He represents that on January 12, 2010, he was then the Government Corporate Counsel when President Arroyo designated him as the Acting Solicitor General in place of Solicitor General Devanadera who had been appointed as the Secretary of Justice; that on March 5, 2010, President Arroyo designated him also as the Acting Secretary of Justice vice Secretary Devanadera who had meanwhile tendered her resignation in order to run for Congress representing a district in Quezon Province in the May 2010 elections; that he then relinquished his position as the Government Corporate Counsel; and that pending the appointment of his successor, Agra continued to perform his duties as the Acting Solicitor General. Notwithstanding the conflict in the versions of the parties, the fact that Agra has admitted to holding the two offices concurrently in acting capacities is settled, which is sufficient for purposes of resolving the constitutional question that petitioner raises herein.

Issue: Whether or not Agra’s holding of concurrent position is unconstitutional.

Held: Yes. At the center of the controversy is the correct application of Section 13, Article VII of the 1987 Constitution, viz:

Section 13. The President, Vice-President, the Members of the Cabinet, and their deputies or assistants shall not, unless otherwise provided in this Constitution, hold any other office or employment during their tenure. They shall not, during said tenure, directly or indirectly practice any other profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in the conduct of their office.

A relevant and complementing provision is Section 7, paragraph (2), Article IX-B of the 1987 Constitution, to wit:

Section 7. x x x Unless otherwise allowed by law or the primary functions of his position, no appointive official shall hold any other office or employment in the Government or any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries.

Being designated as the Acting Secretary of Justice concurrently with his position of Acting Solicitor General, therefore, Agra was undoubtedly covered by Section 13, Article VII, supra, whose text and spirit were too clear to be differently read. Hence, Agra could not validly hold any other office or employment during his tenure as the Acting Solicitor General, because the Constitution has not otherwise so provided.

It was of no moment that Agra’s designation was in an acting or temporary capacity. The text of Section 13, supra, plainly indicates that the intent of the Framers of the Constitution was to impose a stricter prohibition on the President and the Members of his Cabinet in so far as holding other offices or employments in the Government or in government-owned or government controlled-corporations was concerned. In this regard, to hold an office means to possess or to occupy the office, or to be in possession and administration of the office, which implies nothing less than the actual discharge of the functions and duties of the office. Indeed, in the language of Section 13 itself, supra, the Constitution makes no reference to the nature of the appointment or designation. The prohibition against dual or multiple offices being held by one official must be construed as to apply to all appointments or designations, whether permanent or temporary, for it is without question that the avowed objective of Section 13, supra, is to prevent the concentration of powers in the Executive Department officials, specifically the President, the Vice-President, the Members of the Cabinet and their deputies and assistants. To construe differently is to “open the veritable floodgates of circumvention of an important constitutional disqualification of officials in the Executive Department and of limitations on the Presidents power of appointment in the guise of temporary designations of Cabinet Members, undersecretaries and assistant secretaries as officers-in-charge of government agencies, instrumentalities, or government-owned or controlled corporations.

It is not amiss to observe, lastly, that assuming that Agra, as the Acting Solicitor General, was not covered by the stricter prohibition under Section 13, supra, due to such position being merely vested with a cabinet rank under Section 3, Republic Act No. 9417, he nonetheless remained covered by the general prohibition under Section 7, supra. Hence, his concurrent designations were still subject to the conditions under the latter constitutional provision. In this regard, the Court aptly pointed out in Public Interest Center, Inc. v. Elma:

The general rule contained in Article IX-B of the 1987 Constitution permits an appointive official to hold more than one office only if “allowed by law or by the primary functions of his position.” In the case of Quimson v. Ozaeta, this Court ruled that, “[t]here is no legal objection to a government official occupying two government offices and performing the functions of both as long as there is no incompatibility.” The crucial test in determining whether incompatibility exists between two offices was laid out in People v. Green – whether one office is subordinate to the other, in the sense that one office has the right to interfere with the other.

Maturan vs Guttierez-Torres (A.M. OCA IPI No. 04-1606-MTJ September 19, 2012)

Maturan vs Guttierez-Torres
A.M. OCA IPI No. 04-1606-MTJ September 19, 2012

Facts: On August 12, 2004, complainant Atty. Arturo Juanita T. Maturan (Maturan), the counsel for the private complainant in Criminal Case No. 67659 entitled People v. Anicia C. Ventanilla, filed a sworn complaint against Judge Lizabeth Gutierrez-Torres, the former Presiding Judge of Branch 60 of the Metropolitan Trial Court in Mandaluyong City, charging her with unjustifiably delaying the rendition of the decision in his client’s criminal case. Atty. Maturan averred that the criminal case had remained pending and unresolved despite its having been submitted for decision since June 2002. Atty. Maturan stated that Judge Gutierrez-Torres’ failure to render the judgment within the 90-day period from submission of the case for decision violated Canon 3, Rule 3.05 of the Code of Judicial Conduct and the Constitution, and constituted gross inefficiency. On August 27, 2004, the Office of the Court Administrator (OCA) directed Judge Gutierrez-Torres through its first indorsement of the complaint to submit her comment, and also to show cause why no disciplinary action should be taken against her for her violation of her professional responsibility as a lawyer pursuant to the Resolution dated September 17, 2002 issued in A.M. No. 02-902-SC to which an extension was asked of by the respondent Judge. Despite the extension given, she still failed to file her comment and further asked for more extension.

Issue: Whether or not the respondent’s judge dismissal from service is valid.

Held: Yes. Article VIII, Section 15(1) of the 1987 Constitution requires that all cases or matters filed after the effectivity of the Constitution must be decided or resolved within twenty-four months from date of submission for the Supreme Court, and, unless reduced by the Supreme Court, twelve months for all lower collegiate courts, and three months for all other lower courts. Thereby, the Constitution mandates all justices and judges to be efficient and speedy in the disposition of the cases or matters pending in their courts.

Reiterating the mandate, the New Code of Judicial Conduct for the Philippine Judiciary requires judges to “devote their professional activity to judicial duties, which include xxx the performance of judicial functions and responsibilities in court and the making of decisions xxx,” and to “perform all judicial duties, including the delivery of reserved decisions, efficiently, fairly and with reasonable promptness.” Likewise, Rule 3.05, Canon 3 of the Code of Judicial Conduct imposes on all judges the duty to dispose of their courts’ business promptly and to decide cases within the required periods.

To fix the time when a case pending before a court is to be considered as submitted for decision, the Court has issued Administrative Circular No. 28 dated July 3, 1989, whose third paragraph provides:

A case is considered submitted for decision upon the admission of the evidence of the parties at the termination of the trial. The ninety (90) day period for deciding the case shall commence to run from submission of the case for decision without memoranda; in case the court requires or allows its filing, the case shall be considered submitted for decision upon the filing of the last memorandum or upon the expiration of the period to do so, whichever is earlier. Lack of transcript of stenographic notes shall not be a valid reason to interrupt or suspend the period for deciding the case unless the case was previously heard by another judge not the deciding judge in which case the latter shall have the full period of ninety (90) days for the completion of the transcripts within which to decide the same.

The time when a case or other matter is deemed submitted for decision or resolution by a judge is, therefore, settled and well defined. There is no longer any excuse for not complying with the canons mandating efficiency and promptness in the resolution of cases and other matters pending in the courts. Hence, all judges should be mindful of the duty to decide promptly, knowing that the public’s faith and confidence in the Judiciary are no less at stake if they should ignore such duty. They must always be aware that upon each time a delay occurs in the disposition of cases, their stature as judicial officers and the respect for their position diminish. The reputation of the entire Judiciary, of which they are among the pillars, is also thereby undeservedly tarnished.

The indifference of Judge Gutierrez-Torres towards the Court’s directive for her to file her comment despite the repeated extensions of the period to do so liberally extended by the Court at her request. Such indifference reflected not only that she had no credible explanation for her omission, but also that she did not care to comply with the directives of the Court. The latter represents an attitude that no judge should harbor towards the Highest Tribunal of the country, and for that reason is worse than the former. She should not be emulated by any other judge, for that attitude reflected her lack of personal character and ethical merit. To be sure, the Court does not brook her insubordination, and would do more to her had she not been removed from the Judiciary. Accordingly, the Court must still hold her to account for her actuations as a member of the Law Profession, which is what remains to be done after first giving her the opportunity to show cause why she should not.