law

Cervantes vs City Service (G.R. No. 191616 April 18, 2016)

Cervantes vs City Service Corporation
G.R. No. 191616 April 18, 2016
 
Facts: The instant petition stemmed from a Complaint for illegal dismissal dated December 19, 2007 filed before the National Labor Relations Commission (NLRC) by petitioner Francis C. Cervantes against respondents City Service Corporation and/or Valentin Prieto, Jr. for illegal dismissal, underpayment of salaries/wages, overtime pay, holiday pay, holiday premium, rest day premium, service incentive leave, separation pay, ECOLA, moral and exemplary damages, and attorney’s fees. On June 30, 2008, the Labor Arbiter, in NLRC-NCR-12-14080-07, dismissed the complaint for lack of merit. It found that it was Cervantes who refused to work after he was transferred to another client of City Service. The Labor Arbiter stressed that employees of local manpower agencies, which are assigned to clients, do not become employees of the client. Cervantes appealed the Labor Arbiter’s decision, but was denied in a Resolution dated February 5, 2008. Undaunted, Cervantes moved for reconsideration, but was denied anew in a Resolution dated July 22, 2009. Procedurally, petitioner insists that he filed the petition for certiorari on time, which should be reckoned from the moment his counsel was informed about the Resolution denying his motion for reconsideration, and not from the date his mother received a copy of the NLRC Resolution. 
Issue: Whether or not the petition for certiorari was filed on time.
Held: Yes. In practice, service means the delivery or communication of a pleading, notice or some other paper in a case, to the opposite party so as to charge him with receipt of it and subject him to its legal effect. The purpose of the rules on service is to make sure that the party being served with the pleading, order or judgment is duly informed of the same so that he can take steps to protect his interests; i.e., enable a party to file an appeal or apply for other appropriate reliefs before the decision becomes final.
The rule is – where a party appears by attorney in an action or proceeding in a court of record, all notices required to be given therein must be given to the attorney of record; and service of the court’s order upon any person other than the counsel of record is not legally effective and binding upon the party, nor may it start the corresponding reglementary period for the subsequent procedural steps that may be taken by the attorney. Notice should be made upon the counsel of record at his exact given address, to which notice of all kinds emanating from the court should be sent in the absence of a proper and adequate notice to the court of a change of address. When a party is represented by counsel of record, service of orders and notices must be made upon said attorney; and notice to the client and to any other lawyer, not the counsel of record, is not notice in law.
In the instant case, it is not disputed that during the NLRC proceedings, petitioner was represented by counsel, Atty. Romeo S. Occena, as in fact the NLRC albeit belated, furnished a copy of its July 29, 2009 Resolution to Atty. Occena on November 19, 2009. Petitioner’s several motions during the proceedings before the NLRC were likewise all signed by Atty. Occena as counsel. Consequently, following the policy that the period to appeal shall be counted from receipt of resolution by the counsel of record, considering that petitioner is represented by a counsel, the latter is considered to have received notice of the NLRC Resolution dated July 22, 2009 on November 19, 2009, the date when his representative and counsel, Atty. Occena was served notice thereof and not on July 30, 2009, or the date when petitioner’s mother received the same decision. 
Accordingly, the 60-day period for filing the petition for certiorari with the CA should be counted from the receipt by the petitioner’s counsel of a copy of the NLRC Decision dated July 22, 2009 on November 19, 2009. It should be stressed that the NLRC sent the notice of Resolution to petitioner’s counsel only on November 19, 2009. While there was a notice of Resolution dated July 22, 2009, said notice was not served upon petitioner’s counsel. Thus, strictly speaking, the running of the 60-day period to appeal should be counted from November 19, 2009 when the notice of Resolution dated July 22, 2009 was served on petitioner’s counsel. Considering that petitioner filed his petition for certiorari on October 7, 2009, the same was well within the prescribed period to appeal. The petition for certiorari was filed on time. 
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Jamaca vs People (G.R. No. 183681, July 27, 2015)

Jamaca vs People of the Philippines
G.R. No. 183681, July 27, 2015
Facts: Private complainant Atty. Emilie Bangot filed a complaint for Grave Threats against petitioner with the Office of the Deputy Ombudsman for the Military, docketed as OMB-MIL-CRIM-97-0754. He likewise filed a similar complaint before the Office of the City Prosecutor of Cagayan de Oro City. In a Resolution dated January 26, 1998, the Office of the Deputy Ombudsman for the Military dismissed the complaint on the ground that the accusation against petitioner was unfounded, based solely on the statement of one Rustom Roxas that there were no threatening words uttered by petitioner. A petition for certiorari was filed with this Court to assail said ruling of the Office of the Deputy Ombudsman for the Military, but the same was dismissed in a Resolution dated July 29, 1998. On the other hand, private complainant’s complaint before the Office of the City Prosecutor prospered and led to the filing of an Information against petitioner. He was charged with grave threats defined and penalized under paragraph 1 of Article 282 of the Revised Penal Code.
Issue: Whether or not non-compliance on non-forum shopping may be raised for the first time on appeal.
Held: No. It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body, need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel. x x x x 
In Young v. John Keng Seng, it was also held that the question of forum shopping cannot be raised in the CA and in the Supreme Court, since such an issue must be raised at the earliest opportunity in a motion to dismiss or a similar pleading. The high court even warned that [i]nvoking it in the later stages of the proceedings or on appeal may result in the dismissal of the action x x x.

Morillo vs People (G.R. No. 198270, December 09, 2015)

Morillo vs People of the Philippines
G.R. No. 198270, December 09, 2015
 
Facts: Sometime in July 2003, respondent Richard Natividad, Milo Malong and Bing Nanquil, introducing themselves as contractors doing business in Pampanga City under the name and style of RB Custodio Construction, purchased construction materials for their project inside the Subic Freeport Zone from petitioner Armilyn Morillo, owner of Amasea General Merchandize and Construction Supplies. The parties agreed that twenty percent (20%) of the purchases shall be paid within seven (7) days after the first delivery and the remaining eighty percent (80%) to be paid within thirty-five (35) days after the last delivery, all of which shall be via postdated checks. Pursuant to the agreement, petitioner delivered construction materials amounting to a total of P500,054.00 at the construction site where respondent and his partners were undertaking their project. After the last delivery, respondent paid P20,000.00 in cash and issued two (2) post-dated checks, drawn from Metrobank, Pampanga branch, in the amounts of P393,000.00 and P87,054.00. Upon maturity, petitioner attempted to deposit the checks in her savings account at Equitable PCI Bank, San Lorenzo, Makati City. They were, however, dishonored by the drawee bank. Immediately thereafter, petitioner communicated the dishonor to respondent and his partners and demanded for payment. Again, respondent issued two (2) post-dated Metrobank checks and assured petitioner that they will be honored upon maturity. Upon deposit in her savings account at Equitable PCI Bank, Makati Branch, the checks were once again dishonored for the reason that the account from which they were drawn was already a closed account. Consequently, petitioner made several demands from respondent and his partners, but to no avail, prompting her to file a complaint with the City Prosecution Office, Makati City. Thus, on August 12, 2004, two (2) Informations were filed against respondent and Milo Malong.
Issue: Whether or not MeTC of Makati City has jurisdiction over the case.
Held: Yes. It is well settled that violation of BP 22 cases is categorized as transitory or continuing crimes, which means that the acts material and essential thereto occur in one municipality or territory, while some occur in another. Accordingly, the court wherein any of the crime’s essential and material acts have been committed maintains jurisdiction to try the case; it being understood that the first court taking cognizance of the same excludes the other. Stated differently, a person charged with a continuing or transitory crime may be validly tried in any municipality or territory where the offense was in part committed. Applying these principles, a criminal case for violation of BP 22 may be filed in any of the places where any of its elements occurred – in particular, the place where the check is drawn, issued, delivered, or dishonored. 
Guided by the foregoing pronouncements, there is no denying, therefore, that the court of the place where the check was deposited or presented for encashment; can be vested with jurisdiction to try cases involving violations of BP 22. Thus, the fact that the check subject of the instant case was drawn, issued, and delivered in Pampanga does not strip off the Makati MeTC of its jurisdiction over the instant case for it is undisputed that the subject check was deposited and presented for encashment at the Makati Branch of Equitable PC IBank. The MeTC of Makati, therefore, correctly took cognizance of the instant case and rendered its decision in the proper exercise of its jurisdiction. 
First of all, the Court stresses that the appellate court’s dismissal of the case is not an acquittal of respondent. Basic is the rule that a dismissal of a case is different from an acquittal of the accused therein. Except in a dismissal based on a Demurrer to Evidence filed by the accused, or for violation of the right of the accused to a speedy trial, the dismissal of a criminal case against the accused will not result in his acquittal. In the oft-cited People v. Salico, the Court explained: This argument or reasoning is predicated on a confusion of the legal concepts of dismissal and acquittal. Acquittal is always based on the merits, that is, the defendant is acquitted because the evidence does not show that defendant’s guilt is beyond a reasonable doubt; but dismissal does not decide the case on the merits or that the defendant is not guilty. Dismissal terminates the proceeding, either because the court is not a court of competent jurisdiction, or the evidence does not show that the offense was committed within the territorial jurisdiction of the court, or the complaint or information is not valid or sufficient in form and substance, etc. The only case in which the word dismissal is commonly but not correctly used, instead of the proper term acquittal, is when, after the prosecution has presented all its: evidence, the defendant moves for the dismissal and the court dismisses the ease on the ground that the evidence fails to show beyond a reasonable doubt that the defendant is guilty; for in such case the dismissal is in reality an acquittal because the case is decided on the merits. If the prosecution fails to prove that the offense was committed within the territorial jurisdiction of the court and the case is dismissed, the dismissal is not an acquittal, inasmuch as if it were so the defendant could not be again prosecuted before the court of competent jurisdiction; and it is elemental that in such case, the defendant may again be prosecuted for the same offense before a court of competent jurisdiction. 
Thus, when the appellate court herein dismissed the instant case on the ground that the MeTC lacked jurisdiction over the offense charged, it did not decide the same on the merits, let alone resolve the issue of respondent’s guilt or innocence based on the evidence proffered by the prosecution. The appellate court merely dismissed the case on the erroneous reasoning that none of the elements of BP 22 was committed within the lower court’s jurisdiction, and not because of any finding that the evidence failed to show respondent’s guilt beyond reasonable doubt. Clearly, therefore, such dismissal did not operate as an acquittal, which, as previously discussed, may be repudiated only by a petition for certiorari under Rule 65 of the Rules of Court, showing a grave abuse of discretion. Thus, petitioner’s resort to Rule 45 of the Rules of Court cannot be struck down as improper. In a petition for review on certiorari under Rule 45, the parties raise only questions of law because the Court, in its exercise of its power of review, is not a trier of facts. There is a question of law when the doubt or difference arises as to what the law is on certain state of facts and which does not call for an existence of the probative value of the evidence presented by the parties-litigants.
In the instant case; the lone issue invoked by petitioner is precisely “whether the Court of Appeals erred when it ruled that the Metropolitan Trial Court of Makati City did not have jurisdiction over the case despite clear showing that the offense was committed within the jurisdiction of said court.” Evidently, therefore, the instant petition was filed within the bounds of our procedural rules for the issue herein rests solely on what the law provides on the given set of circumstances insofar as the commission of the crime of BP 22 is concerned. In criminal cases, the jurisdiction of the court is determined by the averments of the complaint or Information, in relation to the law prevailing at the time of the filing of the complaint or Information, and the penalty provided by law for the crime charged at the time of its commission. Thus, when a case involves a proper interpretation of the rules and jurisprudence with respect to the jurisdiction of courts to entertain complaints filed therewith, it deals with a question of law that can be properly brought to this Court under Rule 45.

Duncano vs Sandiganbayan (G.R. No. 191894 July 15, 2015)

Duncano vs Sandiganbayan
G.R. No. 191894 July 15, 2015
 
Facts: Petitioner Danilo A. Duncano is, at the time material to the case, the Regional Director of the Bureau of Internal Revenue (BIR) with Salary Grade 26 as classified under Republic Act (R.A.) No. 6758. On March 24, 2009, the Office of the Special Prosecutor (OSP), Office of the Ombudsman, filed a criminal case against him for violation of Section 8, in relation to Section 11 of R.A. No. 6713, allegedly committed as follows:
That on or about April 15, 2003, or sometime prior or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, accused DANILO DUNCANO y ACIDO, a high ranking public officer, being the Regional Director of Revenue Region No. 7, of the Bureau of Internal Revenue, Quezon City, and as such is under an obligation to accomplish and submit declarations under oath of his assets, liabilities and net worth and financial and business interests, did then and there, willfully, unlawfully and criminally fail to disclose in his Sworn Statement of Assets and Liabilities and Networth (SALN) for the year 2002, his financial and business interests/connection in Documail Provides Corporation and Don Plus Trading of which he and his family are the registered owners thereof, and the 1993 Nissan Patrol motor vehicle registered in the name of his son VINCENT LOUIS P. DUNCANO which are part of his assets, to the damage and prejudice of public interest.
CONTRARY TO LAW.
Issue: Whether or not the Sandiganbayan has jurisdiction over the petitioner.
Held: No. The creation of the Sandiganbayan was mandated by Section 5, Article XIII of the 1973 Constitution. By virtue of the powers vested in him by the Constitution and pursuant to Proclamation No. 1081, dated September 21, 1972, former President Ferdinand E. Marcos issued P.D. No. 1486. The decree was later amended by P.D. No. 1606, Section 20 of Batas Pambansa Blg. 129, P.D. No. 1860, and P.D. No. 1861. 
With the advent of the 1987 Constitution, the special court was retained as provided for in Section 4, Article XI thereof. Aside from Executive Order Nos. 14 and 14-a, and R.A. 7080, which expanded the jurisdiction of the Sandiganbayan, P.D. No. 1606 was further modified by R.A. No. 7975, R.A. No. 8249, and just this year, R.A. No. 10660.
For the purpose of this case, the relevant provision is Section 4 of R.A. No. 8249, which states: SEC. 4. Section 4 of the same decree is hereby further amended to read as follows: 
“SEC. 4. Jurisdiction.– The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving: 
“A. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where one or more of the accused are officials occupying the following positions in the government, whether in a permanent, acting or interim capacity, at the time of the commission of the offense: 
“(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise classified as Grade 27 and higher, of the Compensation and Position Classification Act of 1989 (Republic Act No. 6758), specifically including: 
“(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and provincial treasurers, assessors, engineers, and other provincial department heads; 
“(b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors, engineers, and other city department heads; 
“(c) Officials of the diplomatic service occupying the position of consul and higher; 
“(d) Philippine army and air force colonels, naval captains, and all officers of higher rank; 
“(e) Officers of the Philippine National Police while occupying the position of provincial director and those holding the rank of senior superintendent or higher; 
“(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the Ombudsman and special prosecutor; 
“(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or foundations. 
“(2) Members of Congress and officials thereof classified as Grade 27 and up under the Compensation and Position Classification Act of 1989; 
“(3) Members of the judiciary without prejudice to the provisions of the Constitution; 
“(4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of the Constitution; and 
“(5) All other national and local officials classified as Grade 27 and higher under the Compensation and Position Classification Act of 1989. 
“B. Other offenses or felonies whether simple or complexed with other crimes committed by the public officials and employees mentioned in subsection a of this section in relation to their office. 
“C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. 
Yet, those that are classified as Salary Grade 26 and below may still fall within the jurisdiction of the Sandiganbayan, provided that they hold the positions enumerated by the law. In this category, it is the position held, not the salary grade, which determines the jurisdiction of the Sandiganbayan. The specific inclusion constitutes an exception to the general qualification relating to “officials of the executive branch occupying the positions of regional director and higher, otherwise classified as Grade 27 and higher, of the Compensation and Position Classification Act of 1989.”38 As ruled in Inding: 
Following this disquisition, the paragraph of Section 4 which provides that if the accused is occupying a position lower than SG 27, the proper trial court has jurisdiction, can only be properly interpreted as applying to those cases where the principal accused is occupying a position lower than SG 27 and not among those specifically included in the enumeration in Section 4 a. (1) (a) to (g). Stated otherwise, except for those officials specifically included in Section 4 a. (1) (a) to (g), regardless of their salary grades, over whom the Sandiganbayan has jurisdiction, all other public officials below SG 27 shall be under the jurisdiction of the proper trial courts “where none of the principal accused are occupying positions corresponding to SG 27 or higher.” By this construction, the entire Section 4 is given effect. The cardinal rule, after all, in statutory construction is that the particular words, clauses and phrases should not be studied as detached and isolated expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. And courts should adopt a construction that will give effect to every part of a statute, if at all possible. Ut magis valeat quam pereat or that construction is to be sought which gives effect to the whole of the statute – its every word.
The Sandiganbayan has no jurisdiction over violations of Section 3(a) and (e), Republic Act No. 3019, as amended, unless committed by public officials and employees occupying positions of regional director and higher with Salary Grade “27” or higher, under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758) in relation to their office. 
In ruling in favor of its jurisdiction, even though petitioner admittedly occupied the position of Director II with Salary Grade “26” under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758), the Sandiganbayan incurred in serious error of jurisdiction, and acted with grave abuse of discretion amounting to lack of jurisdiction in suspending petitioner from office, entitling petitioner to the reliefs prayed for.

BPI Family vs Yujuico (G.R. No. 175796 July 22, 2015)

BPI Family Savings Bank Inc vs Sps Yujuico
G.R. No. 175796 July 22, 2015
 
Facts: On August 22, 1996, the City of Manila filed a complaint against the respondents for the expropriation of five parcels of land located in Tondo, Manila and registered in the name of respondent Teresita Yujuico. Two of the parcels of land, covered by Transfer Certificate of Title (TCT) No. 261331 and TCT No. 261332, were previously mortgaged to Citytrust Banking Corporation, the petitioner’s predecessor-in-interest, under a First Real Estate Mortgage Contract. On June 30, 2000, the Regional Trial Court in Manila (Manila RTC) rendered its judgment declaring the five parcels of land expropriated for public use. The judgment became final and executory on January 28, 2001 and was entered in the book of entries of judgment on March 23, 2001. The petitioner subsequently filed a Motion to Intervene in Execution with Partial Opposition to Defendant’s Request to Release, but the RTC denied the motion for having been “filed out of time.” Hence, the petitioner decided to extrajudicially foreclose the mortgage constituted on the two parcels of land subject of the respondents’ loan. After holding the public auction, the sheriff awarded the two lots to the petitioner as the highest bidder at ₱10, 000, 000.00. Claiming a deficiency amounting to P18, 522155.42, the petitioner sued the respondents to recover such deficiency in the Makati RTC (Civil Case No. 03-450). The respondents moved to dismiss the complaint on several grounds, namely: that the suit was barred by res judicata; that the complaint stated no cause of action; and that the plaintiffs claim had been waived, abandoned, or extinguished. In the reply, respondents objected and alleged that the venue is improper.
Issues: Whether or not improper venue as a ground for objection maybe raised at anytime.
Whether or not a claim for deficiency in an extrajudicial foreclosure is a real action.
Held: No. We underscore that in civil proceedings, venue is procedural, not jurisdictional, and may be waived by the defendant if not seasonably raised either in a motion to dismiss or in the answer. Section 1, Rule 9 of the Rules of Court thus expressly stipulates that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. As it relates to the place of trial, indeed, venue is meant to provide convenience to the parties, rather than to restrict their access to the courts. In other words, unless the defendant seasonably objects, any action may be tried by a court despite its being the improper venue. 
No. It is basic that the venue of an action depends on whether it is a real or a personal action. The determinants of whether an action is of a real or a personal nature have been fixed by the Rules of Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real action is one that affects title to or possession of real property, or an interest therein. Thus, an action for partition or condemnation of, or foreclosure of mortgage on, real property is a real action. The real action is to be commenced and tried in the proper court having jurisdiction over the area wherein the real property involved, or a portion thereof, is situated, which explains why the action is also referred to as a local action. In contrast, the Rules of Court declares all other actions as personal actions. Such actions may include those brought for the recovery of personal property, or for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. The venue of a personal action is the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff, for which reason the action is considered a transitory one. 
Based on the distinctions between real and personal actions, an action to recover the deficiency after the extrajudicial foreclosure of the real property mortgage is a personal action, for it does not affect title to or possession of real property, or any interest therein.

Mentholantum Co., Inc vs Mangaliman (G.R. No. L-47701 June 27, 1941)

Mentholantum Co., Inc vs Mangaliman
G.R. No. L-47701 June 27, 1941

Facts: On October 1, 1935, the Mentholatum Co., Inc., and the Philippine-American Drug Co., Inc. instituted an action in the Court of First Instance of Manila, civil case No. 48855, against Anacleto Mangaliman, Florencio Mangaliman and the Director of the Bureau of Commerce for infringement of trade mark and unfair competition. Plaintiffs prayed for the issuance of an order restraining Anacleto and Florencio Mangaliman from selling their product “Mentholiman,” and directing them to render an accounting of their sales and profits and to pay damages. The complaint stated, among other particulars, that the Mentholatum Co., Inc., is a Kansas corporation which manufactures Mentholatum,” a medicament and salve adapted for the treatment of colds, nasal irritations, chapped skin, insect bites, rectal irritation and other external ailments of the body; that the Philippine-American Drug co., Inc., is its exclusive distributing agent in the Philippines authorized by it to look after and protect its interests; that on June 26, 1919 and on January 21, 1921, the Mentholatum Co., Inc., registered with the Bureau of Commerce and Industry the word, “Mentholatum,” as trade mark for its products; that the Mangaliman brothers prepared a medicament and salve named “Mentholiman” which they sold to the public packed in a container of the same size, color and shape as “Mentholatum”; and that, as a consequence of these acts of the defendants, plaintiffs suffered damages from the dimunition of their sales and the loss of goodwill and reputation of their product in the market.

Issue: Whether or not the petitioner has the right to maintain the action for infringement of trademark and unfair competition.

Held: No. Section 69 of Act No. 1459 reads:

SEC. 69. No foreign corporation or corporation formed, organized, or existing under any laws other than those of the Philippine Islands shall be permitted to transact business in the Philippine Islands or maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding. Any officer, or agent of the corporation or any person transacting business for any foreign corporation not having the license prescribed shall be punished by imprisonment for not less than six months nor more than two years or by a fine of not less than two hundred pesos nor more than one thousand pesos, or by both such imprisonment and fine, in the discretion of the court.

In the present case, no dispute exists as to facts: (1) that the plaintiff, the Mentholatum Co., Inc., is a foreign corporation; (2) that it is not licensed to do business in the Philippines. The controversy, in reality, hinges on the question of whether the said corporation is or is not transacting business in the Philippines.

No general rule or governing principle can be laid down as to what constitutes “doing” or “engaging in” or “transacting” business. Indeed, each case must be judged in the light of its peculiar environmental circumstances. The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another. (Traction Cos. v. Collectors of Int. Revenue [C. C. A. Ohio], 223 F. 984, 987.) The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization. (Griffin v. Implement Dealers’ Mut. Fire Ins. Co., 241 N. W. 75, 77; Pauline Oil & Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. v. American Standard Metal Products Corp., 158 N. E. 698, 703, 327 III. 367.)

MORAN, J., dissenting:

Section 69 of the Corporation Law provides that, without license no foreign corporation may maintain by itself or assignee any suit in the Philippine courts for the recovery of any debt, claim or demand whatever. But this provision, as we have held in Western Equipment & Supply Company vs. Reyes (51 Phil., 115), does not apply to suits for infringement of trade marks and unfair competition, the theory being that “the right to the use of the corporate and trade name of a foreign corporation is a property right, a right in rem, which it may assert and protect in any of the courts of the world even in countries where it does not personally transact any business,” and that “trade mark does not acknowledge any territorial boundaries but extends to every mark where the traders’ goods have become known and identified by the use of the mark.”

Lozada vs Magtanggol (G.R. No. 196134, October 12, 2016)

Lozada vs Magtanggol
G.R. No. 196134, October 12, 2016

Facts: On October 13, 1997, the Magtanggol Mendoza was employed as a technician by VSL Service Center, a single proprietorship owned and managed by Valentin Lozada. Sometime in August 2003, the VSL Service Center was incorporated and changed its business name to LB&C Services Corporation. Subsequently, Magtanggol was asked by respondent Lozada to sign a new employment contract. The petitioner did not accede because the respondent company did not consider the number of years of service that he had rendered to VSL Service Center. From then on, the his work schedule was reduced to one to three days a week. In December 2003, He was given his regular working schedule by the company. However, on January 12, 2004, Magtanggol was advised by the respondent company’s Executive Officer, Angeline Aguilar, not to report for work and just wait for a call from the respondent company regarding his work schedule. Due to the continued failure of respondent company to give work schedule to Magtanggol, the latter filed a complaint against the respondent company on January 21, 2004 for illegal dismissal with a prayer for the payment of his 13th month pay, service incentive leave pay, holiday pay and separation pay and with a claim for moral and exemplary damages, and attorney’s fees. The case was docketed as NLRC NCR Case No. 00-01-00968-2004. On February 23, 2005, the Labor Arbiter declared the dismissal of the petitioner from employment as illegal. LB&C Services Corporation appealed, but the NLRC dismissed the appeal for non-perfection thereof due to failure to deposit the required cash or surety bond. Thus, the Labor Arbiter’s decision attained finality on August 4, 2006, and the entry of judgment was issued by the NLRC on August 16, 2006. The respondent moved for the issuance of the writ of execution, which the Labor Arbiter granted on November 21, 2006.

Issue: Whether or not the petitioner may be held liable for the monetary awards granted to the respondent despite the absence of a pronouncement of his being solidarily liable with LB&C Services Corporation.

Held: No. A corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a result of the acts of the directors and officers as the corporate agents are not their personal liability but the direct responsibility of the corporation they represent. As a general rule, corporate officers are not held solidarily liable with the corporation for separation pay because the corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.

To hold a director or officer personally liable for corporate obligations, two requisites must concur, to wit: (1) the complaint must allege that the director or officer assented to the patently unlawful acts of the corporation, or that the director or officer was guilty of gross negligence or bad faith; and (2) there must be proof that the director or officer acted in bad faith.

Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.

The records of this case do not warrant the application of the exception. The rule, which requires malice or bad faith on the part of the directors or officers of the corporation, must still prevail. The petitioner might have acted in behalf of LB&C Services Corporation but the corporation’s failure to operate could not be hastily equated to bad faith on his part. Verily, the closure of a business can be caused by a host of reasons, including mismanagement, bankruptcy, lack of demand, negligence, or lack of business foresight. Unless the closure is clearly demonstrated to be deliberate, malicious and in bad faith, the general rule that a corporation has, by law, a personality separate and distinct from that of its owners should hold sway. In view of the dearth of evidence indicating that the petitioner had acted deliberately, maliciously or in bad faith in handling the affairs of LB&C Services Corporation, and such acts had eventually resulted in the closure of its business, he could not be validly held to be jointly and solidarily liable with LB&C Services Corporation.

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.

Lokin Jr. vs COMELEC (GR No. 179431-32)

Lokin Jr. vs Commission on Elections
GR No. 179431-32

Facts: The Citizen’s Battle Against Corruption (CIBAC) was one of the organized groups duly registered under the partylist system of representation that manifested their intention to participate in the May 14, 2007 synchronized national and local elections. Together with its manifestation of intent to participate, CIBAC, through its President Emmanuel Joel J. Villanueva, submitted a list of 5 nominees from which its representatives would be chosen should CIBAC obtain the required number of qualifying votes. The nominees in order that their names appeared in the certificate of nomination dated March 29, 2007, were: 1.) Emmanuel Joel J. Villanueva; 2.) herein petitioner Luis K. Lokin Jr.; 3.) Cinchora C. Cruz-Gonzales; 4.) Sherwin Tugma; and 5.) Emil L. Galang. The nominees certificate of acceptance were attached to the certificate of nomination filed by CIBAC. The list of nominees was later published in two newspaper of general circulation. Prior to elections, however, CIBAC still through Villanueva filed a certificate of nomination, substitution and amendment of the list of nominees dated May 7, 2007, hereby it withdrew the nominations of Lokin, Tugma and Galang and substituted Armi Jane R. Borje as one of the nominees.

Issue: Whether or not the substitution is valid.

Held: No. The legislative power of the government is vested exclusively in accordance with the doctrine of separation of power. As a general rule, the legislative cannot surrender pr abdicate its legislative power for doing so will be unconstitutional. Although the power to make laws cannot be delegated by the legislative to any other authority, a power that is not legislative in character may be delegated.

Under certain circumstances, the legislature can delegate to executive officers and administrative boards the authority to adopt and promulgate IRRs. To render such delegation lawful, the legislature must declare the policy of the law and fix the legal principles that are to control in given cases. The legislature should set a definite or primary standard to guide those empowered to execute the law. For as long as the policy is laid down and a proper standard is established by statute, there can be no unconstitutional delegation of legislative power when the legislature leaves to selected instrumentalities the duty of making subordinate rules within the prescribed limits, although there is conferred upon the executive officer or administrative board a large measure of discretion. There is a distinction between the delegation of power to make a law and the conferment of an authority or a discretion to be exercised under and in pursuance of the law, for the power to make laws necessarily involves a discretion as to what it shall be.

To be valid, therefore, the administrative IRRs must comply with the following requisites to be valid:

  1. Its promulgation must be authorized by the legislature;
  2. It must be within the scope of the authority given by the legislature;
  3. It must be promulgated in accordance with thr prescribed procedure;
  4. It must be reasonable.

The COMELEC, despite the role as implementing arm of the government in the enforcement and administration of all laws and regulations relative to the conduct of an election, has neither the authority nor the license to expand, extend, or add anything to the law it seeks to implement. The IRRs the COMELEC issues for that purpose should always accord with the law to be implemented, and should not be override, supplant or modify the law. It is basic that the IRRs should remain consistent with the law they intend to carry out.

Republic vs Drugmaker’s Lab (GR No. 190837 March 5, 2014)

Republic of the Philippines vs Drugmaker’s Laboratories Inc.
GR No. 190837 March 5, 2014

Facts: The FDA was created pursuant to RA 3720, otherwise known as the “Food, Drug and Cosmetics Act” primarily in order to establish safety or efficacy standards and quality measure of foods, drugs and devices and cosmetics products. On March 15, 1989, the Department of Health, thru then Secretary Alfredo RA Bengzon issued AO 67 s. 1989, entitled Revised Rules and Regulations on Registration of Pharmaceutical products. Among others, it required drug manufacturers to register certain drug and medicine products with FDA before they may release the same to the market for sale. In this relation, a satisfactory bioavailability/bioequivalence (BA/BE) test is needed for a manufacturer to secure a CPR for these products. However, the implementation of the BA/BE testing requirement was put on hold because there was no local facility capable of conducting the same. The issuance of circulars no. 1 s. of 1997 resumed the FDA’s implementation of the BA/BE testing requirement with the establishment of BA/BE testing facilities in the country. Thereafter, the FDA issued circular no. 8 s. of 1997 which provided additional implementation details concerning the BA/BE testing requirement on drug products.

Issue: Whether or not the circular issued by FDA are valid.

Held: Yes. Administrative agencies may exercise quasi-legislative or rule-making power only if there exist a law which delegates these powers to them. Accordingly, the rules so promulgated must be within the confines of the granting statutes and must not involve discretion as to what the law shall be, but merely the authority to fix the details in the execution or enforcement of the policy set out in the law itself, so as to conform with the doctrine of separation of powers and as an adjunct, the doctrine of non-delegability of legislative powers.

An administrative regulation may be classified as a legislative rule, an interpretative rule or a contingent rule. Legislative rules are in the nature of subordinate legislation a d designed to implement a primary legislation by providing the details thereof. They usually implement existing law, imposing general, extra-statutory obligations pursuant to authority properly delegated by the congress amd effect a change in existing law or policy which affect individual rights and obligations. Meanwhile, interpretative rules are intended to interpret, clarify or explain existing statutory regulations under which the administrative body operates. Their purpose or objective is merely to construe the statue being administered and purpory to do no more than interpret the statute. Simply, they try to say what the statute means and refer to no single person or party in particular but concern all those belonging to the same class which may be covered by the said rules. Finally, contingent rules are those issued by an administrative authority based on the existence of certain facts or things upon which the enforcement of the law depends.

In general, an administrative regulation needs to comply with the requirements laid down by EO 292 s. of 1988 otherwise known as the administrative code of 1987 on prior notice, hearing and publication in order to be valid and binding except when the same is merely an interpretative rule. This is because when an administrative rule is merely intepretative in nature its applicability needs nothing further than its bare issuance, for it gives no real consequence more than what the law itself has already prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the means that ca  facilitate or render least cumbersome the implementation of the law but substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed before that new issuance is given the force and effect of law.

A careful scrutiny of the foregoing issuances would reveal that A0 67 is actually the rule that originally introduced the BA/BE testing requirement as a component of applications for the issuamce of CPR covering certain pharmaceutical products as such, it is considered an administrative regulation – a legislative rule to be exact – issued by the Secretary of Health in consonance with the express authority granted to him by RA 3720 to implement the statutory mandate that all drugs and devices should first be registered with the FDA prior to their manufacture and sale. Considering that neither party contested the validity of its issuance, the court deems that AO 67 complied with the requirements of prior hearing, notice and publication pursuant to the presumption of regularity accorded tl the govt in the exercise of its official duties.

On the other hand, circulars no. 1 and 8 s. of 1997 cannot be considered as administrative regulations because they do not: a.) implement a primary legislation by providing the details thereof; b.) Interpret, clarify or explain existing statutory regulation under which FDA operates and/or; c.) Ascertain the existence of certain facts or things upon which the enforcement of RA 3720 depends. In fact, the only purpose of these is for FDA to administer and supervise the implementation of the provisions of AO 67 s. of 1989 including those covering the BA/BE testing requirement consistent with and pursuant to RA 3720. Therefore, the FDA has sufficient authority to issue the said circulars and since theu would not affect the substantive rights of the parties that they seek to govern – as they are not, strictly speaking, administrative regulations in the first place – no prior hearing, consultation and publication are needed for their validity.