USLS Law Journal Volume III

Table Of Contents Note from Editor Legal Essays

3 Maria Reylan Garcia Editor in Chief 5 Re-examining Republic Act 9163, the current National Reservist Law, and why the ROTC Program should be reinstated as a mandatory course for all male college and university students Atty. Rester John Lao Nonato 26 Summary on the The South China Sea Arbitration The Republic of Philippines v.

The People’s Republic of China Ralph Romeo Bascones 30 The Triangle of Struggle in the West Philippine Sea: A story of Philippine Military Viability Atty. Michael Hanz Villaster 34 The Theory of Adaptation The Pursuit for a more globally-responsive Philippine Legal Education Maria Reylan M. Garcia 38 Dissecting the Elements of an Ideal Bar Exam Answer

Self-Help Articles

Case Digests

Ciro dela Cruz 42 The Need for Speed: Mastering Speed Reading in Law School Jannica Pandanduyan 46 48 50 52 54 56 58 59 61 63 64 67 69

San Miguel Properties vs. Secretary of Justice Barrameda vs. Rural Bank of Canaman Landbank of the Philippines vs. Yatco Agricultural Ent. Gloria Macapagal-Arroyo vs. People Advance Paper Corp vs. Arma Traders Corp.

Alabang Development vs. Alabang Hills Village Poe-Llamanzares vs. COMELEC Diocese of Bacolod vs. COMELEC Jusayan vs. Sombilla Heirs of Pocdo vs. Avila Protective Maximum Security Agency vs. Fuentes Lorenzana vs. Judge Austria Dulang vs. Judge Regencia

Student Council List Faculty List New Laws

71 Flores vs. Republic 73 People vs. Nacua 74 Enrile vs. Sandiganbayan 76 ISAAA vs. Greenpeace 79 Fonterra Brands vs. Lagardo 81 Millan vs. NLRC 83 CIR vs. Silicon Philippines 85 CIR vs. Team Sual Corp.

87 Solidum vs. People 89 CIR vs. Marubeni Corp.

92 CIR vs. St. Luke’s Medical Center 95 Deutsche Bank vs. CIR 97 Batangas City vs. Pilipinas Shell 99 Smart Communications vs. City of Davao 100 Quezon City vs. ABS-CBN Broadcasting 102 City of Manila vs. Coca-Cola Bottlers 104 Petron Corporation vs. Tiangco 106 Philippine Healthcare Providers vs. CIR 107 Espiritu vs. Petron Corp.

110 Valle Verde vs. Africa 111 Marc II Marketing vs. Joson 113 Matling Industrial vs. Coros 116 Ponce vs. Alsons Cement 117 Reyes vs. RTC of Makati 119 BPI vs. BPI-Employees Union Davao Chapter 121 Valley Golf and Country Club vs. De Caram 122 Power Homes Unlimited vs. SEC 124 Ejercito vs. Sandiganbayan 126 SEC vs. Prosperity.com 128 BSB Group vs. Go 129 Philippine Deposit Insurance vs. Citibank 130 Philippine Deposit Insurances vs. PCRBI 132 Eternal Gardens vs. Phil-Am Life 134 A.Y. 2016-2017 136 A.Y. 2016-2017 138 REPUBLIC ACT NO. 10911 Anti-Age Discrimination in Employment Act 143 REPUBLIC ACT NO. 10909 No Shortchanging Act of 2016

Note from Editor | page no. 3

Note from Editor Third time’s the charm.

Volume III is proof to the continuing industry of the Editorial Board who braved the demands of time and academics to brew a quality breed of legal write-ups.

This issue features case briefs of current Supreme Court decisions traversing the eight major Bar subjects - Political Law, Labor Law, Civil Law, Criminal Law, Mercantile Law, Taxation Law, Remedial Law, and Legal Ethics. Legal essays discuss the recently arbitrated West Philippine Sea dispute, the concurrent needs of national defense through the revival of the ROTC training in universities, and the global challenges of Philippine legal education. Selfhelp articles continue to focus recommending techniques the law students need in the overall experience of studying and classroom performance.

USLS Law Journal Volume III is indebted to Atty. Alexander Mirano for his mentoring during the planning and content formulation, to our former dean, Atty. Ralph Sarmiento, and to our present dean, Atty. Rosanne Juliana Gonzaga, for their support and guidance.

It is hoped that the reader not only finds the content informative but also inspiring and enjoyable.

MARIA REYLAN M. GARCIA Editor-in-Chief

page no. 4 | Legal Essays

Legal Essays Scholarly write-ups of University of St. La Salle College of Law faculty, alumni, students and friends on various legal issues.

Legal Essays | page no. 5

RE-EXAMINING REPUBLIC ACT NO. 9163, THE CURRENT NATIONAL RESERVIST LAW, AND WHY THE ROTC PROGRAM SHOULD BE REINSTATED AS A MANDATORY COURSE FOR ALL MALE COLLEGE AND UNIVERSITY STUDENTS Atty. Rester John Lao Nonato*

I. An Introduction “Today, we need a nation of Minutemen, citizens who are not only prepared to take arms, but citizens who regard the preservation of freedom as the basic purpose of their daily life and who are willing to consciously work and sacrifice for that freedom.”

-- John F. Kennedy

One of the primary duties of every citizen is to defend and protect one’s country. It is not only a responsibility, but a duty that one should embrace. Having a reserve component in the Armed Forces of one’s country provides a sense of security to its citizens in times of emergency or national disaster. Unfortunately, the number of reservists in the Philippines have depleted since the enactment of Republic Act No. 7077 thus rendering volatile our *The Author is a Partner in the Nonato Nonato Nonato-Luciano & Luciano Law Offices based in Mandaue City, Cebu practicing tax law, intellectual property law, corporate law, labor law, and civil litigation. He is a reservist with the rank of Captain serving under the 501st Technical Administrative Group, 5th Technical Administrative Services (Visayas), Armed Forces of the Philippines Reserve Command. He is also a current part-time professor of law at the Ateneo Graduate School MBA Program teaching Business Law. He was a former Associate Director in Ernst and Young Philippines (SGV & Co.), a Tax Supervisor in KPMG Philippines, and an Associate Lawyer in the Siguion Reyna Montecillo & Ongsiako Law Offices. He graduated Cum Laude with the Degree of Masters of Law with Specialization in International Business and Trade Law from the University of California Hastings College of Law. He also graduated Second Honors in Juris Doctor of Laws with the Ateneo De Manila University School of Law Batch 2006 and Cum Laude in Bachelor of Business Management with the University of the Philippines.

page no. 6 | Legal Essays country’s capability to mount a credible defense or its capability to initiate deployment in times of national emergencies to supplement the organic and active service units of the Armed Forces of the Philippines.

Under Section 4, Article II of the 1987 Philippine Constitution, it is the prime duty of the government to serve and protect the people and the government may call upon the people to defend the State and in the fulfillment thereof, all citizens may be required under conditions provided by law, to render personal, military or civil service. Likewise, under Section 13, Article II of the 1987 Philippine Constitution, the State also recognized the role of the youth in nation building and shall promote and protect their physical, moral, spiritual, intellectual and social being. Under this mandate, the State shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civil affairs.1

The current law applicable, setting the rules on the recruitment and training of reservists for the Armed Forces of the Philippines, is Republic Act No. 9163 also known as “An Act Establishing the National Service Training Program (“NSTP”) for Tertiary Level Students, Amending for the Purpose Republic Act No. 7077 and Presidential Decree No. 1706, and For Other Purposes.” Under the said law, the State recognized (1) that it is the responsibility of all citizens to defend the security of the State and in fulfillment thereof, the Government may require each citizen to render personal military or civil service, (2) that the youth has a virtual role in nation building, and that the State shall promote civic consciousness among the youth and shall develop their physical moral, spiritual intellectual and social well-being, and (3) that the State shall inculcate to the youth patriotism, nationalism and advance their involvement in public and civic affairs. In pursuit of this goals the youth, the most valuable resource of the nation, shall be motivated, trained, organized, and mobilized in military training, literacy civic welfare and other similar endeavors in the service of nation.2 1

Section 2, Republic Act No. 9163.

Id.

2

Legal Essays | page no. 7

Republic Act No. 9163 is significant as it made national service mandatory for not only male, but also female college and university students to enroll into any of the three components of the National Service Training Program (“NSTP”) aimed at enhancing civic consciousness and defense preparedness in the youth by developing the ethics of service and patriotism. Its various components are specially designed to enhance the youth’s active contribution to the general welfare. 3

Republic Act No. 9163 also removed as a mandatory college course or subject the Reserve Officer Training Corps (“ROTC”) program institutionalized under Section 38 and 39 of Republic Act No. 7077 designed to provide military training to tertiary level students in order to motivate, train, organize and mobilize them for national defense preparedness. 4 The ROTC would only be optional as one of the NSTP options available to college and university students. Section 4 of Republic Act No. 9163 states the following: SECTION 4. Establishment of the National Service Program. - There is hereby established a National Service Training Program (NSTP) which shall form part of the curricula of all baccalaureate degree courses and of at least two-years technical vocational courses and is a requisite for graduation, consisting of the following service components: The Reserve Officers Training Corps (ROTC) which is hereby made optional and voluntary upon the effectivity of this Act; The Literacy Training Service; and The Civic Welfare Training Service The ROTC under the NSTP shall instill patriotism, moral virtues, respect for rights of civilians and adherence to the constitution among other, Citizenship Training shall be given emphasis in all three (3) program components.

The Commission on Higher Education (CHED) and Technical Education and Skills Development Authority (TESDA) in consultation with the Department of National 3

Section 3, Republic Act No. 9163.

Id.

4

page no. 8 | Legal Essays Defense (DND) Philippine Association of State Universities and Colleges (PASUC).

Coordinating Council of Private Association of the Philippines (COCOPAP) and other concerned government agencies, may design and implement such other program components as may be necessary in consonance with the provisions of this Act.

Considering however the fast changing external scenario faced by the Philippines in terms of safeguarding the country’s territory including its exclusive economic zone against incursions and violations against its sovereignty, it may be time to re-examine again Republic Act No. 9163 specifically on the possibility of reinstating the mandatory nature of the ROTC for male college and university students.

The latest bill in Congress proposing for the reinstatement of the ROTC Program as a mandatory course for male colleges and universities is House Bill No. 2336 from the Sixteenth Congress filed on August 7, 2013 by House of Representative Sherwin Gatchalian of the First District of Valenzuela City. Said measure however has not been passed into law. This article will examine the merits of said proposal under House Bill No. 2336 specifically on why the ROTC Program should be reinstated as a mandatory course for male college and university students and will recommend the appropriate measure for Congress to undertake.

II. Predecessors of Republic Act No. 9163 and why it was amended “The soldier is the Army. No army is better than its soldiers.

The Soldier is also a citizen. In fact, the highest obligation and privilege of citizenship is that of bearing arms for one’s country”

-General George S. Patton Jr.

Prior to Republic Act No. 9163, the ROTC was imposed as a mandatory course in compliance with Republic Act No. 7077. Under

Legal Essays | page no. 9 said law, the ROTC was made mandatory not only for incoming college and university male students, but also for all male citizens between the ages of eighteen (18) and twenty-five (25) years.

Female students were excluded from taking the ROTC Program or any alternative program espousing national service. Section 14 of Republic Act No. 7077 states the following: Section 14. Compulsory Military Registration and Training. – All male citizens between the ages of eighteen (18) and twenty-five (25) years who are not reservists shall be required to register for military instruction. Registration shall take place in suitable registration places to be prescribed by the city or municipal government between the dates of April First and Seventh commencing one (1) year after the effectivity of this Act. Biennial registrations shall be held during the same period in succeeding years.

The above provision imposes mandatory military registration and training to all male students within the prescribed age, regardless of whether or not he is enrolled in a college or university.

Male students of colleges and universities, on the other hand, are governed by Section 38 of the same law, quoted below: Section 38. Reserve Officers’ Training Corps (ROTC). – Military training for students enrolled in colleges, universities and similar institutions of learning is mandatory pursuant to the provisions of the National Defense Act and the 1987 Constitution.

Prior laws and enactments before Republic Act No. 7077 were consistent in imposing the ROTC Program as a mandatory course for male college and university students. However, female students were again excluded consistently from the ROTC Program and were not required to take any alternative program involving national service. Female students who opted to voluntarily enroll in the ROTC Program were allowed to do so. The ROTC Program

page no. 10 | Legal Essays in the Philippines began in the year 1912 when the then Philippine Constabulary (now no longer existing) commenced military instruction and lessons to male students at the University of the Philippines, Diliman Campus. The University of the Philippines’ Board of Regents then made representations to the United States Department of War through the Governor-General and received the services of a United States Army officer who took on the duties of a professor of Military Science. Interestingly, the ROTC courses are defined as Military Science 11, 12, 21, and 22 with advance courses labeled as Military Science 31, 32, 41 and 42. Through this arrangement, the first official ROTC unit in the Philippines was established in the University of the Philippines on July 3, 1922.5 Other educational institutions such as the National University, Ateneo de Manila University, Liceo de Manila, and Colegio de San Juan de Letran soon followed and organized their own respective ROTC units with the guidance of the United States Department of War. In 1936, the ROTC became even more organized and established with the Office of the Superintendent for ROTC Units under the Philippine Army having been activated to formally supervise all ROTC units in the country.6 During this time, the ROTC however remained an optional course.

Former President Manuel L. Quezon then issued Executive Order No. 207 in 1939 in order to implement the National Defense Act of 1935 otherwise known as Commonwealth Act No. 1, the embodiment of the national defense plan formulated by General Douglas MacArthur for the Philippine Commonwealth.7 This executive order made ROTC now compulsory and obligatory to male students in all colleges and universities in the Philippines with a total enrollment of 100 students and greater. This measure was made in light of the brewing worldwide situation with war in the distant corner and in order to help fill-out the planned reserve force requirement of 400,000 men by 1946 and especially for junior reserve officers.8 The ROTC Program, for obvious reasons, was suspended during World War II from the years 1941-1945. On September 13, 1946 after World War II, Philippine Army Headquarters reactivated 5

Syjuco, José G., Brigadier General, Military Education in the Philippines. New Day Publishers (1977).

Id. 7 National Assembly of the Philippines. Commonwealth Act No. 1.

8 Morton, Louis. “The Fall of the Philippines”, Online Book accessed at http://www.ibiblio.org/ hyperwar/USA/USA-P-PI/USA-P-PI-1.html on April 26, 2016.

6

Legal Essays | page no. 11 the pre-war ROTC units. The Philippine Army also formally became the Armed Forces of the Philippines on December 23, 1950. At which time, the Philippines was divided into four military areas and ROTC units operating within these areas fell under the supervision of their respective Area Commanders. On February 8, 1967, Former President Ferdinand Marcos revoked and rescinded Executive Order No. 207 of 1939, promulgating in its place Executive Order No. 59. This executive order made ROTC again mandatory for male enrollees in all colleges, universities and other institutions with an enrollment of 250 male students and greater.9 Former President Ferdinand Marcos also issued Presidential Decree No. 1706, otherwise known as the “National Service Law”, on August 8, 1980. It made national service obligatory for all Filipino citizens and specified three categories of national service: civic welfare service, law enforcement service and military service.

The main reason for the sudden change of policy with regards the ROTC that led to the amendment of Republic Act No. 7077 and the enactment into law of Republic Act No. 9163 was the death of Cadet Officer Mark Chua sometime between March 15-18, 2001.10 As a member of the University of Santo Tomas (“UST”) ROTC unit’s intelligence monitoring team, Mark Welson Chua had first-hand knowledge of corruption within their ROTC organization, which he divulged to UST’s official student publication The Varsitarian in January 2001.11 The allegation of corruption resulted in the relief of the then-commandant of the University of Santo Tomas ROTC and his support command staff tainting the legacy and image of their ROTC Program.12 Corruption in the ROTC however was not limited to UST’s ROTC Program. The author, when he was undergoing ROTC Training himself, witnessed questionable practices such as the charging of exorbitant fees and physical abuse by some officers among others.

Mark Welson Chua after the publication of his allegations of corruption against UST’s ROTC Program thereafter received death threats after his revelations to 9

Supra note 5.

Pangalangan, Raul. “Mandatory ROTC? Remember Mark Chua”, Philippine Daily Inquirer, August 6, 2010, page A4.

11 Requinta, Elka Krystle R. “Mark Chua’s killer gets death”, The Varsitarian, University of Santo Tomas, Vol. LXXV, No. 10, June 3, 2004, accessed at http://varsitarian.net/news/mark_chuas_killer_gets_ death on April 26, 2016.

12 Id. 10

page no. 12 | Legal Essays The Varsitarian.13 The new ROTC commandant of UST advised him to undergo security training at Fort Bonifacio. On March 15, 2001, Mark Welson Chua was supposed to meet with a confidential agent, but he was never seen alive again.14 Three days later, his corpse was found floating in the Pasig River with his hands and feet tied and his face wrapped in cloth and packing tape.15 The autopsy report showed that sludge was in his lungs, indicating that he was alive when he was thrown into the river and probably drowned to death.16 In order to mislead investigators, his abductors even had pretended to demand ransom from Mark Welson Chua’s family.17

The above incident resulted to nationwide protests against the ROTC Program. University and College administrators likewise supported the students’ call to have the ROTC Program nationwide abolished.18 The University Belt Consortium was the first group of educators to publish a call to address the ROTC issue then shortly thereafter, they were followed by a group of Cebuano educators in the Visayas.19

ROTC lessons and classes in certain prominent Universities were hit by cadet walk-outs in the middle of formations. These were inspired by “Abolish!”, a coalition of organizations including the League of Filipino Students, National Union of Students in the Philippines, the College Editors Guild, Student Christian Movement, Kalipunan ng Kabataang Kristyano sa Pilipinas, and Anakbayan.20 Another group, the Movement for the Advancement of Student Power (MASP) -- composed of Akbayan and the Student Council Association of the Philippines -- went on a different tack, focusing instead on parliamentary approaches to the matter.

The Philippine Congress later took notice of the brewing ROTC issue which was rocked with nationwide protests. No less than seventeen bills and resolutions were filed and generated from several legislators representing several districts nationwide in response to the protests.21 13

Id. Id. 15 Id. 16 Supra note 5.

17 Aravilla, Jose. “4 more suspects tagged in Mark Chua slay case” , The Philippine Star, October 5, 2001 accessed at http://www.philstar.com/metro/135728/4-more-suspects-tagged-mark-chua-slay-case on April 26, 2016.

18 The History of ROTC, Army Reserve Command (ARESCOM) Website, accessed at http://www.army. mil.ph/Army_Sites/INFANTRY%20DIVISIONS/arescom/rotc_pages/his_rotc.htm on April 26, 2016.

19 Id. 20 Id. 21 Id. 14

Legal Essays | page no. 13

Republic Act No. 9163, or the National Service Training Program (“NSTP”), was thereafter enacted to address the ROTC Program. Signed into law on January 23, 2002, it removed the ROTC as a prerequisite for graduation for all male college students, and substituted it with the NSTP. Furthermore, aside from removing ROTC as a mandatory measure, women were no longer exempt from national service under the NSTP as the same is now a requirement for both genders.22 III.

The Usefulness of ROTC in Philippine History

“Give me ten thousand Filipino soldiers and I will conquer the world.”

- General Douglas Macarthur.

The ROTC Program however was able to prove its importance and worth when the Philippines, then an American colony, was faced with the Japanese invasion and occupation in World War II. By the year 1941, there were 33 colleges and universities throughout the country that maintained ROTC units.23 All however, were closed for obvious reasons with the onset of World War II.24 The war saw ROTC cadets and graduates in action for the first time. ROTC cadets, both graduates and trainees of the ROTC Program, from different Metro Manila units took part with regular military forces in the defense of Bataan - the last stand for General Macarthur’s forces in addition to the positions taken in Corregidor Island; in the Visayas, 45% of the 75th Infantry Regiment of the US Armed Forces in the Far East (“USAFFE”) were ROTC cadets of Silliman University, a university based in Dumaguete City, Negros Oriental; and after the surrender of Bataan and Corregidor Island, volunteers from the Philippine Military Academy, the premier military school in the Philippines, and various ROTC units formed what is now famously the Hunter’s ROTC Guerillas, which took part in the fight and fierce resistance 22

Id. Supra note 5.

24 Id. 23

page no. 14 | Legal Essays movement during the Japanese occupation.25 Ordinary citizens also joined the resistance movement supplementing those belonging to ROTC programs including the author’s grandfather, Restituto Pido Nonato, a corporal in the 76th Infantry Regiment, 7th Military District, USAFFE, of Hinigaran, Negros Island.

The presence of the ROTC cadets helped organize a persistent guerrilla resistance force against the invading Japanese forces disrupting efforts for the invader to set an initial concrete foothold in the country. Likewise, when the Japanese became an occupational force, the guerilla resistance also actively took part in disrupting supply lines and other movements.

When General Macarthur landed at Lingayen Gulf on January 6, 1945 to re-take the Philippines from the Japanese invaders, the Japanese were caught in the midst of a general redeployment of their forces throughout Luzon.26 Seizing the advantages of the moment, the guerrillas broke out in full force. Roads were torn up, bridges destroyed, mountain passes blocked, and rail and motor facilities sabotaged at every turn to interfere seriously with Japanese troop and supply movements.27 The Filipino guerrillas, as mentioned, were very successful in their resistance against the Japanese occupation before General Macarthur’s retaking of the Philippines. Of the 48 provinces in the Philippines, only 12 were in firm control of the Japanese.28 Many provinces in Mindanao were already liberated by the Moros way before the Americans came, as well as major islands in the Visayas such as Cebu, Panay and Negros.29 Said guerillas harassed occupying Japanese forces and supplied vital intelligence to the American military, before eventually actively participating in the liberation of the Philippines from 1944-1945. After the war, the American and Philippines governments officially recognized some of the units and individuals who had fought against the Japanese. Recognition led to 25

Id. Reports from General Macarthur, Guerilla Activities in the Philippines, US Army accessed at http:// www.history.army.mil/books/wwii/macarthur%20reports/macarthur%20v1/ch10.htm on April 26, 2016 27 Id. 28 Caraccilo, Dominic J. (2005). Surviving Bataan And Beyond: Colonel Irvin Alexander’s Odyssey As a Japanese Prisoner Of War. Stackpole Books. pp. 287 29 Id. 26

Legal Essays | page no. 15 benefits as veterans. 277 guerrilla units and 260,715 individuals were recognized as guerrilla fighters.30

In 1967, then President Ferdinand Marcos issued Executive Order No. 59 making ROTC mandatory at all educational institutions with an enrollment of at least 250 students. In 1980, Marcos promulgated Presidential Decree 1706, the National Service Law, which made national service such as civic welfare service, law enforcement service, and military, mandatory for all Filipino citizens.

IV.

A Growing Threat Against the Philippines

“A Country is not a mere territory; the particular territory is only its foundation. The Country is the idea which rises upon that foundation; it is the sentiment of love, the sense of fellowship which binds together all the sons of that territory.”

- Giuseppe Mazzini Developing the ROTC Program and making it mandatory once again for male college and university students may be one way of addressing the growing threat against the Philippines, which is Chinese incursions in the West Philippine Sea known as the South China Sea by China and other claimants.

The threat against the Philippines originates from the nine-dash line area claimed by the People’s Republic of China which covers most of the South China sea and overlaps Exclusive Economic Zone claims of Brunei, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam.31 China essentially considers almost the entire South China Sea and the West Philippine Sea to be its own. This area of the world is highly contested because of its great potential as a source of natural resources. A 2013 report by the United States Energy Information Administration raised the total estimated oil reserves to 30

Schmidt, Larry S. (1982). American Involvement in the Filipino Resistance Movement on Mindanao During the Japanese Occupation, 1942–1945 (Master of Military Art and Science thesis). U.S. Army Command and General Staff College. p. 5.

31 “An interactive look at claims on the South China Sea”. The Straits Times, February 29, 2016 accessed at http://graphics.straitstimes.com/STI/STIMEDIA/Interactives/2016/02/turf-wars-on-the-southchina-sea/index.html on April 26, 2016

page no. 16 | Legal Essays 11 billion barrels.32 According to studies made by the Department of Environment and Natural Resources, Philippines, this body of water also holds one third of the entire world’s marine biodiversity, thereby making it a very important area for the ecosystem.33 Considering that a favorable ruling has been issued by the Arbitral Court for our country, the Philippines will have to rely on the international community to enforce the decision of the Arbitral Court. This will be a huge challenge considering that China has refused to participate in the proceedings and have consistently taken the position that it will not follow the arbitral decision should it be against their position. Reliance to the international community, however cannot be a 100 percent assurance, as the Philippines will also have to ensure that it has some credibility in asserting its claims over portions of the sea which it claims as part of its sovereign territory. This can only be done through military assertion should China become belligerent. China however undoubtedly outnumbers the Philippines in terms of military assets and personnel. One way of partially addressing the problem of lack of advantage in terms of military might, is to have a credible reserve force. Although diplomacy should still remain to be the priority for the Philippines, a strong reserve force should likewise be given emphasis in order for the Philippines to have the credibility in order to defend its own territory and sovereignty.

V. Current Source of Reservists “...It is a proud privilege to be a soldier – a good soldier … [with] discipline, self-respect, pride in his unit and his country, a high sense of duty and obligation to comrades and to his superiors, and a self confidence born of demonstrated ability.”

- General George S. Patton Jr.

32

US Report Details Rich Resources in Soth China Sea, Focus Taiwan News Channel, February 9, 2013, accessed at https://web.archive.org/web/20130213111846/http://focustaiwan.tw/ShowNews/ WebNews_Detail.aspx?ID=201302090013&Type=aIPL on April 26, 2016.

33 Schearf, Daniel. “S. China Sea Dispute Blamed Partly on Depleted Fish Stocks.” VOA, May 16, 2012.

Legal Essays | page no. 17

The Armed Forces of the Philippines Major Services namely the Army, Navy, Air Force, and the Technical Services is composed of active soldiers and reservists. Active duty members also known as organic members of the Armed Forces of the Philippines are full-time soldiers. Reservists, on the other hand, typically pursue civilian lifestyles with civilian jobs, with the understanding that they may be called upon at anytime to support the regular military which includes assistance in times of war, humanitarian or disaster relief operations as well as active duty in the regular force to provide additional manpower when deemed necessary, such as in the case of national emergencies.34 Portions of Republic Act No. 7077 remain as law as this was not amended or modified by Republic Act No. 9163. Section 12, Article 5, of Republic Act No. 7077 for instance breaks down and categorizes reservists and their units based on various criteria cited by this law.

First Category Reservists are those who are able-bodied reservists aged eighteen (18) years of age up to thirty five (35) years of age, inclusive. The Second Category Reservists are composed of able bodied reservists aged eighteen (36) years of age up to fifty one (51) years of age, inclusive. Lastly, the Third Category Reservists are those able bodied reservists aged above fifty (51) years of age.

As to classification of reservists and reserve units, Section 13, Article 5, of Republic Act 7077 clearly cites the classification of reservists based on their operational readiness for immediate deployment or mobilization. The first classification are the Ready Reserve or those who are physically-fit and tactically-current reservist personnel that are always on constant alert and training ready to mobilize once a mobilization order has been given. The second classification are the Standby Reserve composed of reservist personnel who do not maintain any training in specialization qualifications but serves as the base for expansion, support and augmentation to the Ready Reserve Force as needed. The last classification are the Retired Reserve who are composed of citizens and former Armed Forces of the Philippines personnel that are qualified for retirement either by length of service or age.

34

Revisiting the Role of the ROTC, accessed at http://www.pampubliko.com/background-briefings/ view/revisiting-the-role-of-the-reserve-officer-training-corps-rotc on April 26, 2016.

page no. 18 | Legal Essays According to the latest available data, there has been a significant reduction in the number of students enrolling in ROTC since the ROTC controversy that arose in the year 2001. From more than 800,000 enrolled cadets during the 1999-2000 school year, ROTC enrolment has dropped to 150,000 as of 2011.35 During the first quarter of 2011, 500 colleges and universities were participating in the ROTC program.36 This is a sharp decline from the 200,000 schools offering ROTC before the National Service Training Program was enforced.37 According to the Commission on Higher Education, the ROTC component of NSTP has produced 1,435,000 graduates over a ten-year period from 2002 to 2012.38 In comparison, the other components of NSTP aside from the ROTC Program has produced 8,614,000 and 538,700 graduates respectively.39 Due to the reduced number of reservists being produced from the ROTC Program, the Armed Forces of the Philippines have relied on previously issued circulars by its General Headquarters (“GHQ”) to recruit reservists from other sources. GHQ Circular Number 30, AFP dated December 7, 1987 for instance provided for the procurement and appointment of reserve officers from Advanced ROTC programs, and technical professionals such as lawyers, doctors, and nurses for the Judge Advocate General Services, Medical Corps, Nurse Corps, Dental Service, and Medical Administrative Corps. Another regulation was GHQ Circular Number 3, AFP dated September 25, 1997, which provides for the commissioning of elected officials and presidential appointees in the reserve force. GHQ Circular Number 6, AFP dated June 3, 1995 also provided for the Armed Forces of the Philippines Affiliated Reserve Units Program which allows for the recruitment of those employed in vital public utility or service like, any establishment, firm or corporation which provides services to the public such as: electricity, gas telephone or telegraph and land, air and water transportation. It also includes postal system, water works and sewerage, shipyards, motorized fishing fleet, hospitals, 35

President Benigno Aquino III. “Speech of President Aquino at the 17th national convention of the National ROTC Alumni Association,” May 25, 2012.

36 Id. 37 Id. 38 Liveta, Ronaldo A. (April 28, 2015). “NSTP-NSRC Updates and Challenges”. 13th National Congress of NSTP Educators and Implementors. Philippine Society of NSTP Educators and Implementors.

39 Id.

Legal Essays | page no. 19 clinic facilities, related organization of the media, architectural and engineering firms. GHQ Circular Number 14, AFP dated Jan 14, 1975 also provides for the commission with the rank of Lieutenant Colonel in the reserve of National Defence College of the Philippines civilian graduates. Lastly, GHQ Circular Number 16 dated July 27, 1990 also provided for the appointment of the deserving NonCommissioned Officers in the grade of Second Lieutenant or Ensign for the Philippine Navy in the reserve force, under Republic Act No. 718.

Despite the above measures to try to supplement the number of reservists, the same however still could not increase the number of reservists to the level prior to when ROTC was a mandatory course for male colleges and universities before the year 2001.

VI. Conclusion and Recommendation “Young men go to war. Sometimes because they have to, sometimes because they want to. Always, they feel they are supposed to. This comes from the sad, layered stories of life, which over the centuries have seen courage confused with picking up arms, and cowardice confused with laying them down.”

-Mitch Albom, The Five People You Meet in Heaven

The ROTC program may have its flaws prior to the year 2001 but most of its flaws arose from improper implementation and lack of supervision on the conduct of training to the cadets. The original spirit on why the ROTC Program was put in place however still rings relevant today. The ROTC Program encourages volunteerism and patriotism. On June 25, 2013, the Association of Generals and Flag Officers Inc. or AGFO has in fact issued a Board Resolution calling for the revival of the ROTC where they took the position “that the present National Service Training Program (NSTP) that became the alternate program for the ROTC, are deemed insufficient to inculcate the values of discipline and patriotism required and do not address the military training ideally required of every citizen.”

40

Fonbuena, Carmela, Retired Generals Want ROTC Back in Colleges, Rappler, July 24, 2013 accessed at http://www.rappler.com/nation/34685-retired-generals-rotc-colleges on April 27, 2016.

page no. 20 | Legal Essays

The ROTC Program also fulfills the mandate of the government under Section 4, Article II of the 1987 Philippine Constitution, where the government may call upon the people to defend the State and in the fulfillment thereof, all citizens may be required under conditions provided by law, to render personal, military or civil service. The people however could not defend the State without proper training, which they can attain from the ROTC Program.

The ROTC Program is also not about militarizing the youth.

In times of national calamities, ROTC graduates may be mobilized by the government to supplement and assist the regular units of civilian and military operators in search and rescue efforts. This is more relevant today considering the negative effects being faced by the Philippines due to climate change and global warming. In fact, ROTC Programs have topics focused on search and rescue aside from community defense. The Program of Instruction for the ROTC component includes lectures, field works, and practical exercises focusing on the organization of the Armed Forces of the Philippines, basic military principles and theories, customs and traditions in the military service, human rights, disaster and relief operations, basic survival, anti/counter terrorism, defensive techniques, team building, weapons familiarization, drills and ceremonies, among others.41 The latest non-armed threats that have recently wreaked havoc in Central and Eastern Visayas particularly the 7.2 magnitude earthquake that shattered Bohol and Cebu provinces and the super typhoon Yolanda that devastated many parts of Eastern Visayas especially Tacloban City are wake up calls for our defense establishment’s capability to respond credibly to such non-traditional military roles.42 With a revitalized curriculum, the ROTC Program is the best vehicle for community-based disaster preparedness because the ROTC cadets have the command structure and training for disaster risk reduction and management and search and rescue operations. It is further proposed that for female college and university students, the NSTP Program that they enroll in should also cover disaster preparedness 41

Michael Lugtu, Mandatory ROTC Program: Key to National Defense Preparedness, Security Matters, accessed at http://securitymatters.com.ph/mandatory-rotc-program-key-to-national-defensepreparedness-part-2-of-3-11514/#sthash.7a2XQr9a.dpuf on April 26, 2016.

42 Id.

Legal Essays | page no. 21 and search and rescue operations,43 or them to also assists in national calamities.

Among the objectives of the recently issued Department of National Defense Circular No. 3 dated April 11, 2013 regarding the Implementing Rules and Regulations of the Revised AFP Modernization Act 10349, are the development of the capability of the AFP to uphold the sovereignty and territorial integrity of the Republic and to secure the national territory from all forms of intrusion and encroachment and the enhancement of the capability of the AFP to protect the Filipino people not only from armed threats but from the ill effects of life-threatening and destructive consequences of natural and man-made disasters and calamities, including typhoons, earthquakes, volcanic eruptions, major accidents in far-flung or inaccessible terrain or at sea, and from all forms of ecological damage. Aligned with these objectives is the Revised AFP Modernization Program Force Restructuring and Organizational Development component which “shall develop the Armed Forces of the Philippines into a compact, efficient, responsive and modern force with the capability to engage in conventional and/ or unconventional warfare, disaster relief and rescue operations, and contribute to economic development and other non-traditional military roles”.

As mentioned above, reviving the ROTC Program as a mandatory course for male college and university students would also provide the Philippines with a minimum credible defense on its territorial disputes with China in the West Philippine Sea. In April 2015, then presidential candidate and now President of the Philippines, Rodrigo Duterte “proposed the revival of mandatory military training for male college students to augment government forces in the face of Chinese aggression in the disputed West Philippine Sea.”44 In his statement, President Duterte argued that “the Philippines cannot rely solely on its mutual defense treaty with the U.S,” and therefore needs to “build up a credible self-defense force.”45 43

UP Vanguard Supports the Return of Mandatory ROTC, UP Vanguard Website accessed at http:// www.upvanguard.org/press-release/u.p.-vanguard-supports-the-return-of-mandatory-rotc.html on April 26, 2016.

44

Duterte: Revive ROTC amid China’s build-up in West PH Sea. (215, April 23). Retrieved January 21, 2016, from http://www.rappler.com/nation/90877-duterte-rotc-china-build-up-west-ph-sea.

45 Id.

page no. 22 | Legal Essays The aforementioned Section 4, Article II of the 1987 Philippine Constitution is also clear that all citizens have the responsibility to render service for the country. This includes both males and females.

The author is therefore in favor of retaining the NSTP’s policy of compelling both male and female college and university students to render mandatory service. However, the author is in favor of having the ROTC Program, considering its military background, as optional only for female college and university students with the NSTP Program being retained as a mandatory course for female students who opt not to enroll in the ROTC Program. This is consistent with Section 2 of Republic Act No. 9710 also known as the Magna Carta for Women, which is partially quoted below: “SECTION 2.

Declaration of Policy. — Recognizing that the economic, political, and sociocultural realities affect women’s current condition, the State affirms the role of women in nation building and ensures the substantive equality of women and men. It shall promote empowerment of women and pursue equal opportunities for women and men and ensure equal access to resources and to development results and outcome. Further, the State realizes that equality of men and women entails the abolition of the unequal structures and practices that perpetuate discrimination and inequality.

To realize this, the State shall endeavor to develop plans, policies, programs, measures, and mechanisms to address discrimination and inequality in the economic, political, social, and cultural life of women and men The following proposed bill is therefore recommended for Congress to consider, which is a modified version of House Bill No. 2336 from the Sixteenth Congress filed on August 7, 2013 by House of Representative Sherwin Gatchalian of the First District of Valenzuela City: House Bill No._________ AN ACT TO AMEND REPUBLIC ACT NO. 9163 TO REINTRODUCE AS A MANDATORY COURSE THE RESERVE OFFICER TRAINING

Legal Essays | page no. 23 CORPS (ROTC) FOR MALE COLLEGE AND UNIVERSITY STUDENTS AND TO MANDATE THE INCLUSION OF SEARCH AND RESCUE OPERATIONS, DISASTER PREPAREDNESS AND DELIVERY OF HEALTH SERVICES IN THE ROTC PROGRAM AND IN ALL OTHER NATIONAL SERVICE TRAINING PROGRAM (NSTP) OFFERED COURSES.

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled Section 1. Statement of Policy – a) It is the policy of the State to serve and protect the people. The government may call upon the people to defend the State and, in fulfillment thereof, all citizens may be required, under conditions provided by law, to render personal, military, or civil service; b) The State recognizes the role of the youth in nation building and shall promote and protect their physical, moral, spiritual, intellectual and social being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civil affairs; and c) The State shall ensure that the youth shall be trained on how defend and protect the State in times of national emergencies or calamities should the need arises in the future.

Section 2. Coverage – The conduct of the ROTC Program shall apply to all male students enrolled in colleges, universities, and technical or vocational schools. Female students may voluntarily enroll themselves in the ROTC Program. However, female students who opt not to enroll in the ROTC Program, shall enroll in other NSTP Courses available which should include basic rescue operations, disaster preparedness, and the delivery of health services.

Male students and voluntary female students shall be required to complete the ROTC for an academic period of two (2) years while the NSTP Course for other female students shall also be completed during the same period.

Section 3. Establishment of the ROTC and Inclusion of Search and Rescue Operations, Disaster Preparedness, and Delivery

page no. 24 | Legal Essays of Health Services in the Program of Instruction in both ROTC and other NSTP Courses – There is hereby established a mandatory ROTC Program for all male college, university, technical or vocational school students. The ROTC shall form part of the curriculum of all college and university degree courses as well as technical or vocational courses, and shall be a pre-requisite for graduation.

The Program of Instruction of both ROTC and NSTP Courses shall include subjects in search and rescue operations, disaster preparedness, and delivery of health services. Existing NSTP Courses shall be revised to include said mandated topics to comply with this Act.

The Department of National Defense (DND) with the Commission on Higher Education (CHED) and the Technical and Skills Development Authority (TESDA) and other concerned government agencies shall formulate the ROTC Program of Instruction including the above mandated subjects and adopt the rules and regulations to effectively carry out the objectives of this Act. The school authorities shall, with the DND, CHED, and TESDA provide close coordination, and administrative supervision to ensure the fitness and well-being of the students to undertake the training.

Section 4. Funding – The funds for the establishment, maintenance, and operation of the ROTC shall be provided for in the general appropriations act of the DND.

Section 5. Persons Disqualified or Exempted from this Act: 1. Students who are physically or psychologically unfit, as certified by the Armed Forces of the Philippines medical officer and/or medical personnel of the academic institution where the concerned student in enrolled. A certification from a private licensed physician may be considered subject to verification by an Armed Forces of the Philippines medical officer and/or medical personnel of the academic institution where the concerned student in enrolled 2. Students who are active members of the AFP and the PNP

Legal Essays | page no. 25 3. Those who may be exempted from training for other valid reasons which may be authorized jointly by the DND and the academic institution where the concerned student is enrolled in.

Persons who are disqualified or exempted from this Act to undergo the ROTC Program shall enroll themselves with other NSTP Courses.

Section 6. Transitory Provision – This Act shall apply in the year following its approval. Any male student enrolled and undertaking any component of the NSTP shall be allowed to continue and complete the program.

Section 7. Repealing Clause – All other laws, executive orders, presidential decrees, rules and regulations inconsistent with any provisions of this Act is hereby repealed, amended or modified accordingly.

Section 8. Effectivity – This Act shall take effect within fifteen (15) days following its publication in at least two (2) newspapers of general circulation.

Approved.

It is therefore respectfully submitted that with proper implementation of the ROTC Program and by making it once again mandatory to male college and university students, it can help instill discipline, patriotism, and volunteerism to the youth of the country and at the same time add on to our reserve forces to not only supplement our active personnel in the Armed Forces of the Philippines in times of impending war, but also to assist in disaster relief and rehabilitation efforts in times of national emergencies other than war.

page no. 26 | Legal Essays

Summary on the The South China Sea Arbitration (The Republic of Philippines v.

The People’s Republic of China) By: Ralph Romeo B. Bascones

Case Number : 2013-19 Claimant : The Republic of the Philippines Respondent : The People’s Republic of China FACTS: • Both the Philippines and China are parties to the 1982 United Nations Convention on the Law of the Sea (the “Convention” or “UNCLOS”).1 The Convention2 was adopted as a “constitution for the oceans,” in order to “settle all issues relating to the law of the sea.”

• The Convention provides for a system of peaceful settlement of disputes. This is set out in Part XV of the Convention, which provides for a variety of dispute settlement procedures,

including compulsory arbitration in accordance with a procedure contained in Annex VII to the Convention. It was

pursuant to Part XV of, and Annex VII to,

the Convention that the Philippines commenced

this arbitration against China on 22 January 2013.3 • The Convention does not address the sovereignty of States over land territory. Accordingly, this Tribunal has not been asked to, and does not purport to, make any ruling as to which State enjoys sovereignty over any land territory4 in the South China Sea, in particular with respect to the disputes concerning sovereignty over the Spratly Islands or Scarborough Shoal. None of the Tribunal’s decisions in this Award are dependent on a finding of sovereignty, nor

1 PCA Case N 2013-19. The South China Sea Arbitration, Award of 12 July, 2016. I-1, at 1.

2 United Nations Convention on the Law of the Sea, 10 December 1982, 1833 UNTS 3.

3

Supra note 1, at 11, Notification and Statement of Claim of the Republic of the Philippines, 22 January 2013, ¶6, Annex 1.

4 Id. I-5, at 1.

Legal Essays | page no. 27

should anything in this Award be understood to imply a view with respect to questions of land sovereignty • By Notification and Statement of Claim dated 22 January 2013, the Philippines initiated arbitration proceedings against China pursuant to Articles 286 and 287 of the Convention and in accordance with Article 1 of Annex VII of the Convention. In response, China presented a Note Verbale to the Department of Foreign Affairs of the Philippines on 19 February 2013, rejecting the arbitration and returning the Notification and Statement of Claim to the Philippines.

ISSUES: 1. Whether or not historic rights of China may form a legal basis for maritime rights and entitlements in the South China Sea. a. Whether or not China’s nine-dash line are with lawful

effect.

2. To settle the status of certain geographic features in the South China Sea. 3. Whether actions taken by China in the South China Sea are lawful such as: a. interfering with the exercise of the Philippines’ rights, including fishing, oil exploration, navigation, and the construction of artificial islands and installations; b. failing to protect and preserve the marine environment by tolerating and actively supporting Chinese fishermen in the harvesting of endangered species and the use of harmful fishing methods that damage the fragile coral reef ecosystem in the South China Sea; and c. inflicting severe harm on the marine environment by constructing artificial islands and engaging in extensive land reclamation at seven reefs in the Spratly Islands.

page no. 28 | Legal Essays HELD: 1.

2.

The historic rights of China, if any, were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention. Although Chinese and non-Chinese navigators have historically made use of the islands in the South China Sea, there was no evidence that China had historically exercised exclusive control over the waters or their resources. Transient use does not constitute inhabitation by a stable community and that all of the historical economic activity had been extractive. a. There was no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘ninedash line’.5 The ‘nine-dash line’ is ambiguous and China has never expressly clarified the nature or scope of its claimed historic rights.6 The Convention considers ‘feature’ on their natural condition, without human intervention. As a matter of law, human modification cannot change the seabed into a low-tide elevation or a low-tide elevation into an island. A low-tide elevation will remain a low-tide elevation under the Convention, regardless of the scale of the island or installation built atop it.

As to the capability of the Spratly Islands to generate extended maritime zones, it cannot do so as a collective unit. None of the features claimed by China was capable of generating an exclusive economic zone, the Tribunal could—without delimiting a boundary—declare that certain sea areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China.

5 Supra note 1, at 117.

6

Id. No. 275, at 116.

Legal Essays | page no. 29 3.

The Tribunal noted that this is not a dispute concerning sovereignty. a. The Tribunal found that China had violated the Philippines’ maritime rights in its exclusive economic zone by (a) interfering with Philippine fishing and petroleum exploration, (b) constructing artificial islands7 and (c) failing to prevent Chinese fishermen from fishing in the zone. It held that fishermen from the Philippines (like those from China) had traditional fishing rights at Scarborough Shoal and that China had interfered with these rights in restricting access. Furthermore, Tribunal held that Chinese law enforcement vessels had unlawfully created a serious risk of collision when they physically obstructed Philippine vessels.8 b. C hinese authorities were aware that Chinese fishermen have harvested endangered sea turtles, coral, and giant clams on a substantial scale in the South China Sea using methods that inflict severe damage on the coral reef environment. China had not fulfilled its obligations to stop such activities to protect and preserve the marine environment.9 c. T he Tribunal found that China’s large-scale land reclamation and construction of artificial islands had caused severe harm to the marine environment such as the coral reef environment and violated its obligation to preserve and protect fragile ecosystems and the habitat of depleted, threatened, or endangered species.10

7 Supra note 1, Dispositif 1203 No. 4, at 474.

8 Id. No. 15, at 476.

9 Id No. 13, at 475.

10

Id at 475.

page no. 30 | Legal Essays

THE TRIANGLE OF STRUGGLE IN THE WEST PHILIPPINE SEA: A STORY OF PHILIPPINE MILITARY VIABILITY Atty. Michael Hanz Villaster

In the recent years, one of the gravest foreign relations concerns for the Philippines is its legal claim over maritime features and resources in the West Philippines Sea. It is subject of a bitter row with China, raising interests of different countries especially the United State THE BACKDROP AND THE BATTLEGROUND For many global observers, the struggle in the West Philippine Sea is a game of shark, minnow, and trawler. For China, aggressiveness is the key to dominance. For the Philippines, diplomacy is the only route towards conflict resolution. For the US, balancing its economic interest and its longstanding political commitment had always been the business of the day.

From an economic standpoint, particularly for China, control over the area covered by its historical Nine-Dash Line (now Ten-Dash Line) means pulling in the freedom of fishing, navigation and overflight of non-Chinese vessels, regardless of any violation of the United Nations Convention on the Law of the Seas (UNCLOS) of 1987. In a strategic and military sense, regional dominance for China poses a subliminal, or even a direct challenge to the American leadership and a loud message to the Philippines to never court China into flexing its military muscles.

1

PCA Case N 2013-19. The South China Sea Arbitration, Award of 12 July, 2016. I-1, at 1.

2 With red flags all over the place, Philippine sovereignty and security United Nations Convention on the Law of the Sea, 10 December 1982, 1833 UNTS 3.

3 Supra note 1, at 11, Notification and Statement of Claim of the Republic of the Philippines, 22 January are in serious jeopardy.

2013, Âś6, Annex 1.

Id. I-5, at 1.

4

Legal Essays | page no. 31 PHILIPPINES AND THE FIRST ISLAND CHAIN Philippines belongs to a geopolitical concept coined as the First Island Chain. This chain of major archipelagos stretches out from the East Asian continental mainland coast, mainly consisting of the Kuril Islands, Japanese Archipelago, Ryukyu Islands, Taiwan, Philippines, Borneo, and to a certain extent the Malayan Peninsula.

In current Chinese military doctrine, it refers to the strategy that should an armed confrontation break out between China and the US and its allies (particularly Japan and the Philippines), the only way to win is to launch a pre-emptive strike aiming to cripple the American bases, its aircrafts and aircraft-carriers, within the First Island Chain.

Since the Philippines is in the middle portion of the chain, and admittedly the weakest link in the group, initial tactical efforts of the Chinese military would be to conquer the Philippines.

PHILIPPINES AND THE AMERICAN PRESENCE The US’ military presence in the Asia-Pacific region was unbridled in the aftermath of the Second World War. In fact, it entered into several military arrangements with the Philippines. These include: 1) the 1947 Military Bases Agreement (1947 MBA); 2) the 1947 Military Assistance Agreement (1947 MAA); and, 3) the 1951 Mutual Defense Treaty (1951 MDT).

The 1947 MBA, as amended, provided for the continued presence of US bases in the Philippines until the year 1991. On the other hand, the 1947 MAA supplemented the 1947 MBA as it guaranteed US’ continued support to the Philippines in the form of military arms provision, vessels and training defense forces. Fortifying these preexisting legal regimes was the 1951 MDT which: 1) allowed mutual assistance in maintaining and developing the countries’ individual and collective capacities to resist and armed attack; and,

page no. 32 | Legal Essays 2) provided for their mutual self-defense in the event of an armed attack against the territory of either party.

After the expiration of the 1947 MBA in 1991, the US emptied their military bases in the Philippines but continued to exercise its reciprocal ties through joint military exercises sanctioned by the Visiting Forces Agreement (VFA) in 1999 and Balikatan Exercises in 2002.

Notwithstanding these legal frameworks, the absence of permanent US military presence in the Philippines has emboldened China as it rose into power at the turn of the new millennium.

EDCA AND THE AMERICAN NEUTRALITY With the construction of artificial islands in the disputed Spratlys area nearing to a close, the power that be in the West Philippine Sea has drastically shifted from the US to China.

This development pushed the governments of the Philippines and the US to come up with deliberate measures to suppress what seems to be a foreshadowing of the Chinese dominance of the First Island Chain in the near future. Hence, in 2014, the Enhanced Defense Cooperation Agreement (EDCA) was signed between the US and the Philippines.

In relation to an armed attack, EDCA is a re-affirmation of US’ assurance to assist Philippines in its defense capability. However, it does not contain any specific provision that US will supplant for Philippines in case of armed incursion. This is buttressed by the recent US State Department declaration in its Limits in the Seas No. 143 publication stating that it maintains its neutrality over the territorial dispute in the West Philippine Sea.

Legal Essays | page no. 33 PHILIPPINES AND ITS LONE SELF Even in the advent of the Philippine Supreme Court decision in Saguisag, et al v. Executive Secretary (G.R. No. 212426 & 212444, January 12, 2016) upholding the constitutionality of EDCA, the situation inevitably calls for introspection on the part of the Philippines to reevaluate its foreign policies and to adjust its domestic priorities by beefing up its external security competence.

Statistics show that in 2015, China has amassed 303 naval combat vessels, amphibians and submarines, whereas Philippines has only 5 large and small naval combat vessels. For Philippine military viability in the West Philippine Sea dispute, government spending must be poured into the Armed Forces of the Philippines to provide credible deterrence. At the end of the day, it is unlikely that US will come to the Philippines’ rescue, and the latter will be left to fend for itself.

page no. 34 | Legal Essays

The Theory of Adaptation: The pursuit for a more globally - responsive Philippine Legal Education (3rd Place, Philippine Association of Law Schools Essay Writing Contest 2015) Maria Reylan M. Garcia

The Law is one of man’s greatest inventions. While the steam engine propelled faster trade and transportation, the law mobilized justice and equity to reach a more diverse populace. While penicillin, cured infections debilitating the physical body, the law healed fraud, deceit, and malice. And because the law is a human innovation, it grows with its inventor. Today, we see electricity powering trains and laborers receiving minimum wage. Today, we witness precise robotic surgery and the emancipation of tenant farmers.

Justice Ozaeta, in a trademark case in 1942, capsulized the fluidity of the law, when he wrote: “Law and jurisprudence must keep abreast with the progress of mankind, and the courts must breathe life into the statutes if they are to serve their purpose.1” But, Philippine Legal Education has not yet peaked in its quest to become globally responsive. The pedagogy and training for Filipino Law Students remain quarantined into passing the bar examinations.

Law students continue to wear horse blinkers, unaware of what is happening peripherally – unprepared of what the rest of the world demands or offers.

Illustrative is the unfazed number of registered law schools in the Philippines who still adopts the LL.B. curriculum. As of 2010, only 10 out of the 116 registered law schools offer Juris Doctor (JD) programs.2 This inertia is inconsistent with the growing number of legal institutions around the world implementing the JD curriculum.

Law schools seek both title and training of a higher degree of

Legal Essays | page no. 35 education as the LLB curriculum is being gradually considered as an undergraduate degree.

Another indicator is the underwhelming number of law subjects dealing with foreign legal systems offered as core subjects. They are either electives, which can usually be taken up only during the third or fourth year, or bite-sized seminar courses. In comparison, the National University of Singapore offers a roster of Asian Legal Studies and Comparative Law such as Indian Business Law, European Union Law, Chinese Commercial Law and ASEAN Law and Policy.3 Thus, in prospect, the adoption of the JD curriculum for all law schools in the Philippines in conjunction with the integration of more specialized international and comparative law courses as core subjects offered therein are the little big steps Philippine Legal Education must boldly take to address the needs of the 21st century.

The data provided for the Philippine Statistical Authority in 2014 is enlightening. Total Philippine External Trade totalled to $127.5 Billion. Japan, China, USA, Singapore and Korea were the top five trading partners of the country. Four of them are within the same continent and one is within the same economic region.4 These numbers aren’t nonsensical digits. These numbers represent the opportunity, nay, the demand for legal assistance in facilitating cross border transactions. If today is not the day when the Filipino law student will be oriented to, at least, the commercial laws of Japan or Singapore, then we might as well be immune to the pitiful sight of Korean lawyers or European barristers mediating transactions for our investing Filipino people.

In addition to the inoculation of foreign law systems into the local curriculum, it will be also beneficial to include clinical courses on negotiation, conciliation, mediation and arbitration. These skills will be staple for cross-broader practice as it will be quite impracticable to master all foreign domestic laws and court procedures. These skills are indeed, universal.

page no. 36 | Legal Essays Opportunities to study abroad must be more accessible. Externships and summer programs with affiliated law schools abroad should be as regular as on-the-job training with the Public Attorney’s Office.

In the US, more than 200 study-abroad programs are flourishing.5 There is even a developing trend of dual-degree programs, where lawyers receive degrees needed to practice in participating countries.

The University of Detroit Mercy has a dual US-Mexican program where upon graduation, the lawyer may practice in the US, Canada and Mexico.6 But what is most important about studying abroad is the exposure and orientation to foreign cultures. Admittedly, their laws and jurisprudence can be just as decently comprehended when read in the Philippines. Knowing first-hand how they shake, kiss and bow will prepare a cross-border practitioner not on the forms and solemnities of contracts, but on the essential subtleties of how their minds would meet, of how they would agree to contract.

Justice Ozaeta’s words meant adaptation. The law must be adaptive as this will complement growth. This adaptation, however, must begin within the portals of our legal educational institutions. For a dynamic legal education precedes a dynamic legal practice.

Footnotes: 1

Ang vs. Teodoro, G.R. No. L-48226, December 14, 1942 2 Commission on Higher Education, 2009 3 National University of Singapore, Law Course Listings (as of November 2015) 2 Commission on Higher Education, 2009 3 National University of Singapore, Law Course Listings (as of November 2015) 4 Philippine Statistic Authority, https://psa.gov.ph/content/foreign-trade-statistics-philippines-2014, last accessed November 11, 2015 5 Weyenberg, Study abroad, work abroad, 22 Nat’l Jurist 32 (January 2013) 6 Moore, A, et.al, The Globalization of Legal Education, Michigan Bar Journal (November 2013)

Self Help Articles | page no. 37

Self-help Articles

Write-ups to assist the USLS Law Student in study management and BAR Exam preparation

page no. 38 | Self Help Articles

Dissecting the Elements of an ideal Bar Exam Answer Ciro P. dela Cruz

Most law professors advise that the preparation for the bar examinations starts from the first day of law school. This is not surprising, as the Philippine Bar Exam is considered one of the hardest bar examinations worldwide. With questions coming from eight major law subjects Political Law, Labor Law, Taxation Law, Commercial Law, Criminal Law, Civil Law, Remedial Law and Legal Ethics, plus the necessary application of legal reasoning, logic and writing, make it all the more difficult.

After graduation, there are approximately five to seven months of preparation for the bar exam as it is usually held in October or November annually. In the bar exam, one of the aspects that examiners look into is how the examinees present their answers in essay questions. In this article, the writer will attempt to provide what makes a great bar exam answer, in other words, the elements of an ideal bar exam answer.

To do this, help was sought from some USLS College of Law alumni, lawyers, and law professors.1 Their valued wisdom revealed that the Issue - Rule of Law – Arguments – Conclusion format is mostly followed in answering bar exam essay questions.

Issue

The first paragraph addresses the issue or what is being asked to be resolved by the problem. It usually starts with a Yes or No (affirmative or negative), followed by a brief explanation of why the answer is affirmative or negative. The content of the first paragraph is of vital importance, because it give the examiner an impression of what the answer contains. This should be concise and definitive.

Because of the voluminous booklets to check, examiners usually browse through the answer in the first paragraph only. A correct 1

The writer thanks Atty. Narciso Javelosa III, Atty. Jose Pio Seva, Atty. Rhodora Lo, Atty. Jan Michael Arbolado, Maricor Katalbas, Atty. Alain Gatuslao, and Atty. Ralph Sarmiento.

Self Help Articles | page no. 39 response in the first paragraph addressing the issue posed may give the examiner an impression that the examinee knows the correct rationale, without him reading the entirety of the answer. A neutral response, although at times allowed depending on the examiner, is usually frowned upon because it is expected from the examinees to take a stand as to the issue posed by the question.

Here are samples for the first paragraph.

1.) Yes, the order must be struck down because it is unconstitutional for it curtails the freedom of expression espoused in the Constitution.

2.) No, the accused must not be held guilty for committing estafa because intent to defraud as one of the elements of the crime was not proven.

Rule of Law

The second paragraph of the answer contains the rule of law which is the legal basis of the answer given in the first paragraph. This can either be a law, rule or jurisprudence. The recitation of the legal basis may be in specific terms by citing the Republic Act, Executive Order, Jurisprudence or case citation. It can also be in broader terms by citing simply that the legal basis is a “law”, “rule”, “principle”, or a “decided case by the Supreme Court”. The use of broader terms is usually suggested because of the vast number of laws, rules and jurisprudence, it is difficult to remember the specific names, article or rule numbers or case titles. Citing these inaccurately will be to the detriment of the examinees. However, it is recommended that if an examinee is certain of the law, rule or case, he must not hesitate to do cite with particularity. It is also advised to have variations on the introductory phrases in presenting the legal basis. Further, if the examinee knows the rationale why such law or rule was enacted or promulgated, he may state so, as it will make an impression that the examinee does not only the law or rule but also the reason why there is such.

page no. 40 | Self Help Articles Here are sample introductions for the second paragraph.

Under the Family Code or The Family Code provides, (state the provision of law) The 1987 Constitution provides (state the provision of the Constitution) Under the 1997 Rules of Court, (state what the rules provide) A long line of jurisprudence or In a vast majority of cases decided by the Supreme Court (state the established doctrines) Arguments

The third paragraph contains the arguments applying the legal basis to the facts given in the question. This is where the legal reasoning and logic of the examinees come into play. It is also where logical assumption and qualification take place, especially when an examinee is uncertain of his answer. In this part, the examinee puts forward or displays his legal understanding to fit to the given facts.

The argument is usually the longest part of the answer because of the discussion of the law as applied to the given facts. Variations in the opening sentence in this paragraph is likewise advised so as not to bore the examiners especially in cases when he is already in the middle of checking voluminous booklets.

Here are samples for the third paragraph.

In the case at bar, (discussion of the application of law to the facts) In the situation presented, (discussion of the application of law to the facts)

Self Help Articles | page no. 41 Conclusion

The fourth paragraph contains the conclusion or what others dub as the re-conclusion of the first paragraph. Words that can be used are: therefore; thus; hence; and in conclusion. This is followed by a restatement of the first paragraph with minor alterations in the wording. This can be dispensed with especially if the first paragraph is clear, concise and definite.

It is also worthy to note, that the answer must be kept simple and straight to the point. The proper presentation of answers is just one of the many things that an examinee prepares for in taking the bar. Nonetheless, it is of equal importance because it may make or break your chances in passing the bar. Remember that a man who comes well prepared should have nothing to fear.

page no. 42 | Self Help Articles

The Need for Speed: Mastering Speed Reading in Law School Jannica Pandanduyan

Reading is becoming more and more significant in the new knowledge economy and remains the most effective human activity for transforming information into knowledge.1 In law school, this reading skill is an essential requisite for success. Surviving law school requires comprehension of the law combined with the ability to explain, apply, and argue around it. In order for the law student to do all of these, he or she needs to be able to read an avalanche of information.

On a daily basis, a law student endures an immense amount of reading - laws, annotations, cases, or journal articles. Professors, on average can assign as much as 20 cases for one meeting.

However, it does not end there, as he can additionally require you to burn midnight candles with at least 100 pages of your annotated law book; and these are just academic readings. At some point, you will find yourself browsing through innumerable emails, newspaper articles, and viral social media posts.

What then would you do when you are tasked to consume this huge amount of readings for a restrictively limited amount of time? What if you could dramatically increase your reading speed and have more time to sleep?

If you want to cope up with an avalanche of readings, speedreading just might be the solution. Speed-reading is one of the several beneficial skills to improve one’s ability to read quickly.

Research shows that the average person reads approximately 250 words per minute 2. A speed-reader can read from 600-1500 words per minute, or more. However, this is not an easy skill to acquire and master. It compels a lot of practice for efficiency and effectiveness.

For law students, the saying “time is gold” is an understatement. Surviving law school in not just about studying hard, but also studying smart and reading fast. Here are some tips that will help you save your time and keep your sanity.

1

Nawal Mohamed Abdul, Rahman Al-Othman, The Relationship between online reading, online reading rates, and performance on proficiency tests. The Reading Matrix Vol. III. No.3, November 2003, last accessed February 13, 2017, https://pdfs.semanticscholar.org/6fda/ b7ae7b062ff4ff455f8e30f1b8a1dbf7a134.pdf 2 Thomas, Mark, What Is the Average Reading Speed and the Best Rate of Reading?, Health Guidance, last accessed February 13, 2017, http://www.healthguidance.org/entry/13263/1/What-Is-the-AverageReading-Speed-and-the-Best-Rate-of-Reading.html

Self Help Articles | page no. 43 1) Pre-reading3

Pre-reading gives you an edge by knowing a few things about the materials before actually reading it. Pre-reading gives you the gist of the material and with this, you can determine whether to skim, skip or thoroughly read. This allows you to read faster and retain more information later on. When pre-reading, read through the titles and headings of every page and if possible, highlight them.

2) Zoom-out4

Reading each word individually, significantly increases reading time. Learn to use your peripheral vision. Enable your eyes to read small pieces of text in a single glance. Practice yourself to see five or more words on a line without moving your eyes.

3) Sub-vocalization5

Sub-vocalization is the little inner voice you have when reading that speaks the words aloud. When you start reading you spoke out loud with that voice. Sub vocalization may be minimized, however, it needs constant practice. If you can learn to just recognize words visually without saying them in your inner voice, you can read faster. Nonetheless, there are people who need to sub-vocalize in order to read and understand the material well. Just know which one works for you.

4) Fluency6

Fluent recognition of words can help you speed up your reading. Readers read slower on words that are unfamiliar to them.

The best way to improve fluency is to read more, more and more.

http://www.slideshare.net/promotemedical/speed-reading-22198440 http://survivelaw.com/index.php/blogs/study/1540-how-to-speed-read 5http://www.irisreading.com/speed-reading-tips-5-ways-to-minimize-subvocalization/ 6https://www.scholastic.com/teachers/blog-posts/andrea-spillett/speed-accuracy-expression-oh-my/ 3 4

page no. 44 | Self Help Articles 5) Use a pointer7

The best way is to start using your finger. Your finger is your workout partner in reading. It pushes you to train harder and move faster. Your finger will move faster compared to your eyes, so your eyes will be forced to keep up. Move your finger across a line of text and focus your eyes on the text above the tip of your finger.

6) Regression8

Regression is the unnecessary re-reading of material.

Sometimes people get into the habit of skipping back to words, phrases or even to sentences they have just read, just to make sure that they read it right. When you regress like this, you lose the flow and structure of the text, and your focus and understanding of the subject can decrease.

Be conscious of regression, and don’t allow yourself to reread material unless you really have to.

7) Avoid distractions9

Spend quality time in reading. This means avoiding distractions and multi-tasking while you are reading. Speed-reading takes a lot of effort and practice, so focus.

8) Practice, practice and practice

Unfortunately you’re not going to become a remarkably fast reader overnight. It’s going to take time and a lot of practice. Thus, the key in speed reading is practice, practice and practice.

But here’s a caveat. Don’t get too caught up with speed reading. In spite of all the convenience and self-fulfillment it initially brings you, remember that comprehension is more important than speed. Missing a footnote or misunderstanding a sentence can lead to many negative consequences that you may later on regret. Read fast, but read well.

7

https://www.mindtools.com/speedrd.html https://www.spreeder.com/to-improve-reading-speed-you-must-resist-regression/ https://www.irisreading.com/4-ways-to-read-faster-with-better-focus/

8 9

Case Digests | page no. 45

Case Digests Summary of recent Supreme Court decisions from 2010-2016.

page no. 46 | Case Digests

SAN MIGUEL PROPERTIES INC. VS SECRETARY OF JUSTICE 2013 | G.R. No. 166836 Commercial Law Facts: Petitioner San Miguel Properties, Inc. Is a domestic corporation engaged in the real estate business. It purchased from B.F. Homes, Inc., represented by Atty. Florencio B. Orendain as the duly authorized rehabilitation receiver appointed by the SEC, 130 residential lots situated in its subdivision, BF Homes Para単aque.

The TCTs were fully delivered to San Miguel Properties, except for 20 certificate of titles covering 20 of the 41 parcels, for which San Miguel Properties paid the full price.

Petitioner San Miguel Properties, Inc. Is a domestic corporation engaged in the real estate business. It purchased from B.F. Homes, Inc., represented by Atty. Florencio B. Orendain as the duly authorized rehabilitation receiver appointed by the SEC, 130 residential lots situated in its subdivision, BF Homes Para単aque.

The TCTs were fully delivered to San Miguel Properties, except for 20 certificate of titles covering 20 of the 41 parcels, for which San Miguel Properties paid the full price.

On its part, BF Homes claimed that it withheld the delivery of the 20 TCTs for parcels of land because Atty. Orendain had ceased to be its rehabilitation receiver at the time of the transactions. He was meanwhile replaced as receiver by FBO Network Management, Inc. pursuant to an order from the SEC. BF Homes refused to deliver the 20 TCTs despite demands. Thus, on August 15, 2000, San Miguel Properties filed a complaintaffidavit in the Office of the City Prosecutor of Las Pi単as City (OCP Las Pi単as) charging respondent directors and officers of BF Homes with non-delivery of titles in violation of Section 25, in relation to Section 39, both of Presidential Decree No. 957 (I.S. No. 00-2256).

At the same time, San Miguel Properties sued BF Homes for specific performance in the HLURB and charged respondent directors and officers of BF Homes with non-delivery of titles.

Case Digests | page no. 47

OCP Las Piñas dismissed San Miguel Properties’ criminal complaint and denied its motion for reconsideration, holding that BF Homes’ directors and officers could not be held liable for the non-delivery of the TCTs under Presidential Decree No. 957 since there was no definite ruling on the legality of Atty. Orendain’s actions; and that the criminal liability would attach only if BF Homes would not comply with a directive of the HLURB, directing it to deliver the titles.

The said ruling was affirmed by the DoJ and CA. Issue: Did the Secretary of Justice commit grave abuse of discretion in upholding the dismissal of San Miguel Properties’ criminal complaint for violation of Presidential Decree No. 957 for lack of probable cause and for reason of a prejudicial question?

Held: Action for specific performance, even if pending in the HLURB, an administrative agency, raises a prejudicial question. BF Homes’ contention that the administrative case for specific performance in the HLURB posed a prejudicial question that must first be determined before the criminal case for violation of Section 25 of Presidential Decree No. 957 could be resolved is correct.

That the action for specific performance was an administrative case pending in the HLURB, instead of in a court of law, was of no consequence at all. The action for specific performance, although civil in nature, could be brought only in the HLURB. This situation conforms to the doctrine of primary jurisdiction. The doctrine of primary jurisdiction is frequently invoked not to defeat the resort to the judicial adjudication of controversies, but to rely on the expertise, specialized skills, and knowledge of such agencies in their resolution.

The Court has observed that one thrust of the proliferation is that the interpretation of contracts and the determination of private rights under contracts are no longer a uniquely judicial function exercisable only by the regular courts.

page no. 48 | Case Digests

LUCIA BARRAMEDA VDA. DE BALLESTEROS, vs RURAL BANK OF CANAMAN INC. 2010 | G.R. No. 176260 Taxation Law Facts: Lucia Barrameda Vda. De Ballesteros (Lucia) filed a complaint for Annulment of Deed of Extrajudicial Partition, Deed of Mortgage and Damages with prayer for Preliminary Injunction against her children, all surnamed Ballesteros, and the Rural Bank of Canaman, Inc., Baao Branch (RBCI) before the RTC-Iriga.

Lucia alleged that her deceased husband, Eugenio, left two 357 sqm. parcels of land located in San Nicolas, Baao, Camarines Sur and without her knowledge and consent, her children executed a deed of extrajudicial partition and waiver of the estate wherein all heirs, including Lucia, agreed to allot the two parcels to Rico Ballesteros.

Lucia was occupying Parcel B and without her knowledge and consent, Rico mortgaged Parcel B in favor of RBCI. The said mortgage was being foreclosed for failure to settle the loan. She prayed that the deed of extrajudicial partition and waiver, and the subsequent mortgage in favor of RBCI be declared null and void.

RBCI claimed that in 1979, Lucia sold one of the two parcels to Rico which represented her share. The extrajudicial partition, waiver and mortgage were all executed with the knowledge and consent of Lucia although she was not able to sign the document and that Parcel B had already been foreclosed way back in 1999, which fact was known to Lucia through the auctioning notary public.

During the pre-trial, RBCI’s counsel filed a motion to withdraw after being informed that Philippine Deposit Insurance Corporation (PDIC) would handle the case as RBCI had already been closed and placed under the receivership of the PDIC. The lawyers of PDIC took over the case of RBCI. RBCI filed a motion to dismiss on the ground that the RTC-Iriga has no jurisdiction over the subject matter of the action. RBCI stated that pursuant to Section 30, Republic Act No. 7653 (RA No. 7653), otherwise known as the New Central Bank

Case Digests | page no. 49 Act, the RTC-Makati, already constituted itself, per its Order, as the liquidation court to assist PDIC in undertaking the liquidation of RBCI. Thus, the subject matter fell within the exclusive jurisdiction of such liquidation court. Lucia opposed the motion.

RTC-Iriga dimissed the case and Lucia appealed the RTC ruling to the CA on the ground that the RTC-Iriga erred because it had jurisdiction over the case under the rule on adherence of jurisdiction.

CA ordered the consolidation of the case and the liquidation case pending before RTC-Makati and denying Luicia’s motion for reconsideration.

Issue: Whether a liquidation court can take cognizance of a case wherein the main cause of action is not a simple money claim against a bank ordered closed, placed under receivership of the PDIC, and undergoing a liquidation proceeding.

Ruling: The Court said: A liquidation proceeding is commenced by the filing of a single petition by the Solicitor General with a court of competent jurisdiction entitled, “Petition for Assistance in the Liquidation of e.g., Pacific Banking Corporation. All claims against the insolvent are required to be filed with the liquidation court. Although the claims are litigated in the same proceeding, the treatment is individual.

Each claim is heard separately. And the Order issued relative to a particular claim applies only to said claim, leaving the other claims unaffected, as each claim is considered separate and distinct from the others.

It is clear, therefore, that the liquidation court has jurisdiction over all claims, including that of Lucia against the insolvent bank. As declared in Miranda v. Philippine Deposit Insurance Corporation, regular courts do not have jurisdiction over actions filed by claimants against an insolvent bank, unless there is a clear showing that the action taken by the BSP, through the Monetary Board, in the closure of financial institutions was in excess of jurisdiction, or with grave abuse of discretion. The same is not obtaining in this present case.

Petition DENIED.

page no. 50 | Case Digests

LAND BANK OF THE PHILIPPINES vs.YATCO AGRICULTURAL ENTERPRISES 2014 | G.R. No.172551 Remedial Law Facts: Yatco Agricultural Enterprises (Yatco) was the registered owner of an agricultural land in Calamba, Laguna measuring 27.5730 hectares. On April 30, 1999, such land was placed under the coverage of the Comprehensive Agrarian Reform Program (CARP). The Land Bank of the Philippines (LBP) valued the land at P1,126,132.89.8 with which Yatco disagreed. He questioned the valuation to the Department of Agrarian Reform (DAR) Provincial Agrarian Reform Adjudicator (PARAD). The PARAD computed the just compensation value at P16,543,800.00 by considering the property’s current market value and applying the formula “MV x 2.”

LBP filed with the RTC of San Pablo City Branch 39 organized as a Special Agrarian Court (RTC-SAC) a petition for the judicial determination of just compensation. The RTC-SAC, adopting the valuation of RTC of Calamba City Branches 35 and 36, fixed the just compensation value at P200.00 per square meter. The valuation of RTC of Calamba City Branches 35 and 36 was derived from civil cases which covered the same properties in the present case.

RTC-SAC ruled in favor of Yatco. Upon denial of its motion for reconsideration, LBP appealed to the Court of Appeals (CA). CA dismissed the appeal and the subsequent motion for reconsideration.

LBP then filed a petition for review on certiorari before the Supreme Court.

Issue: Whether the RTC-SAC’s determination of just compensation for the land was proper.

Case Digests | page no. 51 Ruling: No. The RTC-SAC ignored the mandates of Section 17 of R.A. No. 6657 and DAR AO 5-98.

Section 17 of R.A. No. 6657 stipulates that in determining just compensation, the following must be considered: the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, the assessment made by government assessors, social social and economic benefits contributed by the farmers and the farm workers and by the Government, and the non-payment of taxes or loans secured from any government financing institution.

DAR AO 5-9850 provides for the formulae to be followed in determining the valuation of lands xxx A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be: LV = MV x 2 The RTC-SAC did not indicate the factors, values, and formula it used to arrived at the P200.00 per square meter valuation. The Supreme Court noted that the RTC-SAC did not even consider the property’s market value, and even if it did such was not justified

by II.A.3 of DAR AO 5-98. Notably, it did not also conduct an independent assessment and computation using the considerations required by the law and the rules.

Also, the civil cases in Branches 35 and 36 dealt about easement of right of way and its subsequent expropriation by the NAPOCOR. The Supreme Court then is convinced that the valuation fixed by Branch 36 is inapplicable to the present case. There is even a discrepancy of the valuation between Branch 36 and the current value. Branch 36 fixed a valuation of P20.00 per square meter; while the RTC-SAC, in the present case, valued the property at P200.00 per square meter.

page no. 52 | Case Digests The Supreme Court then held that RTC-SAC should have exercised the authority granted to it by Section 58 of R.A. No. 6657 - to appoint one or more Commissioners to ascertain and report to it the facts necessary for the determination of the just compensation for the property. The Supreme Court reversed and set aside the decision of the CA and remanded the case to the RTC for determination of just compensation.

GLORIA MACAPAGAL-ARROYO vs. PEOPLE OF THE PHILIPPINES AND THE SANDIGANBAYAN 2016 | G.R. No. 220598 Criminal Law Facts: On July 10, 2012, the Ombudsman charged former President Gloria Macapagal-Arroyo (GMA) and PCSO Budget and Accounts Manager Aguas with other COA and PCSO officials (including Uriarte, the PCSO general manager, who remains at large) for conspiracy to commit plunder, as defined by, and penalized under Section 2 (b) of Republic Act (R.A.) No. 7080, as amended by R.A. No. 7659. They were alleged to have conspired with one another to amass ill-gotten wealth in the aggregate amount of PHP365,997,915.00 by raiding the public treasury.

The accused then filed their demurrers to evidence, claiming that no case of plunder was established against them. The demurrers were denied by the Sandiganbayan. They then filed their respective petitions for certiorari.

Issues: Whether or there was conspiracy among GMA, Aguas, and Uriarte.

Whether or not the elements of the crime of plunder were proven Ruling: There was no conspiracy. The prosecution did not claim it was

Case Digests | page no. 53 an express conspiracy, or even whether it was a wheel or chain conspiracy. The prosecution tried to show an implied conspiracy to commit plunder on the basis of their collective actions prior to, during and after the implied agreement. The Supreme Court did not delve on the sufficiency of the information as to the allegation of conspiracy but to the identification of the main plunderer to be prosecuted as per the requirement of R.A. 7080. Such main plunderer was also essential in safeguarding the rights of all of the accused to be properly informed of the charges they were being made answerable for. No such main plundered was identified on the information, but the Sandiganbayan made GMA in its resolution the mastermind despite the absence of the specific allegation in the information and evidence to substantiate the same.

The prosecution failed to prove one of the elements of plunder which was the amassing, or accumulating, or acquiring ill-gotten wealth of at least Php50 Million of GMA and Aguas. There was also no evidence, testimonial or otherwise, presented by the Prosecution showing even the remotest possibility that the CIFs [Confidential/ Intelligence Funds] of the PCSO had been diverted to either GMA or Aguas, or Uriarte. Amassment, accumulation or acquisition of ill-gotten wealth valued at not less than Php50,000,000.00 is the corpus delicti of plunder and failure to establish such should lead to the dismissal of the criminal prosecution.

Also, the predicate act of raiding the public treasury as was not proven. To discern the proper import of the phrase “raids on the public treasury”, the Supreme Court looked into the neighboring words: misappropriation, conversion, misuse or malversation of public funds. The common thread that binds all the four terms together is that the public officer used the property taken. Considering that raids on the public treasury is in the company of the four other terms that require the use of the property taken, the phrase “raids on the public treasury” similarly requires such use of the property taken. It was wrong for the Sandiganbayan to contend that the mere accumulation and gathering constituted the forbidden act of raids on the public treasury. Pursuant to the maxim of noscitur a sociis, raids on the public treasury requires the raider to use the property taken

page no. 54 | Case Digests impliedly for his personal benefit. The prosecution failed to show where the money went and that GMA and Aguas had personally benefited from the same.

The Supreme Court granted the petitions for certiorari, dismissed the criminal cases against GMA and Aguas and ordered their immediate release.

ADVANCE PAPER CORP. VS. ARMA TRADERS CORP. 2013 | G.R. No. 176897 Commercial Law Facts: Petitioner Advance Paper Corporation is engaged in the business of producing and selling of various paper products. Respondent Arma Traders Corporation is engaged in the wholesale and distribution of school and office supplies, and novelty products. Respondent Antonio Tan (Tan) was formerly the President while respondent Uy Seng Kee Willy (Uy) is the Treasurer of Arma Traders. They represented Arma Traders when dealing with Advance Paper for about 14 years. On the other hand, respondents Manuel Ting, Cheng Gui and Benjamin Ng worked for Arma Traders as Vice-President, General Manager and Corporate Secretary, respectively.

From September to December 1994, Arma Traders purchased on credit notebooks and other paper products amounting to P7,533,001.49 from Advance Paper. Arma Traders also obtained three loans from Advance Paper in November 1994 for a total of P7,788,796.76. As payment for the purchases on credit and the loan transactions, Arma Traders issued 82 postdated checks payable to cash or to Advance Paper. Tan and Uy were Arma Traders’ authorized bank signatories who signed and issued these checks which had the aggregate amount of P15,130,636.87.Advance Paper presented the checks to the drawee bank but these were dishonored either for “insufficiency of funds” or “account closed.” Despite repeated demands, however, Arma Traders failed to settle its account with Advance Paper.

Case Digests | page no. 55 On December 29, 1994, the petitioners filed a complaint for collection of sum of money with application for preliminary attachment against Arma Traders, Tan, Uy, Ting, Gui, and Ng.On June 18, 2001, the RTC ruled that the purchases on credit and loans were sufficiently proven by the petitioners. Hence, the RTC ordered Arma Traders to pay Advance Paper and held that the respondents failed to present hard, admissible and credible evidence to prove that the sale invoices were forged or fictitious, and that the loan transactions were personal obligations of Tan and Uy. Arma Traders appealed the RTC decision to the CA.The CA held that the petitioners failed to prove by preponderance of evidence the existence of the purchases on credit and loans based on specific grounds. Thus, the CA set asidethe RTC’s order.

Issue: Whether or not Arma Traders is liable to pay the loans applying the doctrine of apparent authority Ruling: Yes. Arma Traders is liable to pay the loans on the basis of the doctrine of apparent authority. The doctrine of apparent authority provides that a corporation will be estopped from denying the agent’s authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, and it holds him out to the public as possessing the power to do those acts.

The respondents, through Ng testified that the sole management of Arma Traders was left to Tan and Uy and that he and the other officers never dealt with the business and management of Arma Traders for 14 years. Thus, Arma Traders bestowed upon Tan and Uy broad powers by allowing them to transact with third persons without the necessary written authority from its non-performing board of directors. Because of its own laxity in its business dealings, Arma Traders is now estopped from denying Tan and Uy’s authority to obtain loan from Advance Paper.

page no. 56 | Case Digests

ALABANG DEVELOPMENT CORPORATION VS. ALABANG HILLS VILLAGE ASSOCIATION 2014 | G.R. No. 187456 Commercial Law Facts: On September 2006, the petitioner, Alabang Development Corporation (ADC) learned that herein respondents, Alabang Hills Village Association, Inc. (AHVAI) and Rafael Tinio (Tinio), President of AHVAI started the construction of a multi-purpose hall and a swimming pool on one of the parcels of land owned by ADC without the latter’s consent and approval, and that despite demand, AHVAI failed to desist from constructing said improvements.

ADC filed a Complaint for Injunction and Damages against AHVAI. In its Answer With Compulsory Counterclaim, AHVAI denied ADC’s asseverations and claimed that the latter has no legal capacity to sue since its existence as a registered corporate entity was revoked by the Securities and Exchange Commission on May 26, 2003; that ADC has no cause of action because by law it is no longer the absolute owner but is merely holding the property in question in trust for the benefit of AHVAI as beneficial owner thereof; and that the subject lot is part of the open space required by law to be provided in the subdivision. RTC rendered judgment dismissing petitioner’s complaint on the grounds (1) that the latter has no personality to file the same; (2) that the subject property is a reserved area for the beneficial use of the homeowners, as mandated by law; and (3) that the Housing and Land Use Regulatory Board, not the RTC, has exclusive jurisdiction over the dispute between petitioner and respondents.

Petitioner filed a Notice of Appeal while respondent moved that it be allowed to prosecute its compulsory counterclaim. RTC approved petitioner’s notice of appeal but dismissed respondent AHVAI’s counterclaim on the ground that it is dependent on petitioner’s complaint. Respondent then filed an appeal with the CA.The CA

Case Digests | page no. 57 dismissed both appeals and affirmed the decision of the RTC. Issue: Whether or not ADC may still sue as a corporation even after it has been dissolved and the three-year liquidation period provided under Section 122 of the Corporation Code has passed Ruling: The ADC lacks the capacity to sue as a corporation because it no longer possesses its juridical personality by reason of its dissolution and lapse of the three-year grace period provided under Section 122 of the Corporation Code which provides: “Sec. 122. Corporate liquidation. – Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs…”

Based on the above-quoted provision of law, ADC had three years, or until May 26, 2006, to prosecute or defend any suit by or against it. The subject complaint, however, was filed only on October 19, 2006, more than three years after such revocation. The petitioner filed its complaint not only after its corporate existence was terminated but also beyond the three-year period allowed by Section 122 of the Corporation Code. To allow petitioner to initiate the subject complaint and pursue it until final judgment, on the ground that such complaint was filed for the sole purpose of liquidating its assets, would be to circumvent the provisions of Section 122 of the Corporation Code. Thus, it is clear that at the time of the filing of the subject complaint, petitioner lacks the capacity to sue as a corporation.

page no. 58 | Case Digests

POE-LLAMANZAREZ vs COMELEC 2016 | G.R. No. 221697, 221698-700 Political Law Facts: A child was found abandoned in a church in Jaro Iloilo sometime in 1968. The child was then named Mary Grace Militar, and was subsequently adopted by Fernando Poe, Jr. and Susan Roces sometime in 1974. In 2005, Susan Roces found out that their lawyer failed to secure a new certificate of live birth indicating Poe’s new name and the name of the adoptive parents. Roces submitted an affidavit and in 2006, a Certificate of Live Birth in the name of Mary Grace Poe was released by the Civil Registry of Iloilo.

In 1991, Poe married Teodoro Llamanzares and flew to the US right after the wedding. In 2001, she became a naturalized American Citizen and she obtained a US Passport in the same year.Poe came back to the Philippines sometime in April 2004 to support her father’s candidacy. But she returned to the US in July 2004. She returned in December 2004 because of her father’s deteriorating health. When Poe’s father died, she stayed until February 2005.

She and her husband decided to move and reside permanently in the Philippines sometime in the first quarter of 2005. From then on, Poe went back and forth to US to settle matters. And in July 7, 2006, Poe took her Oath of Allegiance to the Republic of the Philippines pursuant to R.A. 9225. On July 10, 2006, she filed a sworn petition to acquire Philippine citizenship together with petitions for derivative citizenship on behalf of her three children. On July 18, 2006, the Bureau of Immigration granted Poe and her children dual citizenship.

On July 12, 2011, Poe executed and Oath/Affirmation of Renunciation of Nationality of the US before the Vice Consul of the US Embassy in Manila. She was then granted by the US Vice Consul on December 9, 2011 a Certificate of Loss of Nationality of the US effective October 21, 2010.On October 15, 2015, Poe filed her COC for the Presidency for the May 2016 elections. Poe declared that she is a natural born and her residence in the Philippines up to the day

Case Digests | page no. 59 before election would be 10 years and 11 months from May 4, 2005.

Petitions were filed against Poe alleging that she committed material misrepresentation in her COC and that she was not a natural born considering that Poe is a foundling. COMELEC ruled against Poe. Issue: Whether as a foundling, Poe is a natural born Citizen.

Ruling: Foundlings are as a class, natural born citizens. The amendment to the Constitution to include foundlings as natural born citizens was not carried out, not because there was any objection to the notion that persons of unknown parentage are not citizens, but only because their number was not enough to merit specific mention.

There was no intent or language that would permit discrimination against foundlings. All three Constitutions guarantee the basic right to equal protection of the laws. Under international law, foundlings are citizens. Generally accepted principles of international law which include international customs form part of the laws of the land. Common among the Universal Declaration of Human Rights, the Convention on the Rights of the Child and the International Convent on Civil and Political Rights obligates the Philippines to grant nationality from birth and to ensure that no child is stateless.

DIOCESE OF BACOLOD VS COMELEC 2016 | G.R. No. 221697, 221698-700 Political Law On February 21, 2013, the Diocese of Bacolod posted 2 tarpaulins within a private compound housing the San Sebastian Cathedral of Bacolod. Each tarpaulin was approximately 6 feet by 10 feet in size.

The same were posted on the form walls of the cathedral within public view. The first tarpaulin contains a message “IBASURA RH LAW” referring to the Reproductive Health Law of 2012 (Republic Act No. 10354). The second one is the subject of the present case.

It contains the heading “Conscience Vote” and lists candidates as

page no. 60 | Case Digests either “Team Buhay” with check mark –referring candidates who are Anti-RH and “Team Patay” with an X, which refers to candidates who are Pro-RH. The candidates were classified according to their vote on the adoption of Republic Act 10354, otherwise known as the RH Law.

During the oral arguments, respondents conceded that the tarpaulin was neither sponsored nor paid for by any candidate and that, the tarpaulin contains names of candidates for the 2013 elections, but not of politicians who helped in the passage of the RH Law but were not candidates for the election.

Issues: Whether or not COMELEC may regulate expressions made by private citizens.

Whether or not the assailed notice and letter for the removal of the tarpaulin violated petitioner’s fundamental right to freedom of expression.

Ruling: COMELEC has no legal basis to regulate expressions made by private citizens. COMELEC does not have the authority to regulate the enjoyment of the preferred right to freedom of expression exercised by a non-candidate in this case. The respondents considered the tarpaulin as a campaign material in their issuances.

The provisions cited by the respondent which regulate the posting of campaign materials only apply to candidate and political parties, and petitioners are neither of the two. The tarpaulin was not paid for by any candidate or political party. There was no allegation that petitioners coordinated with any of the persons named in the tarpaulin regarding its posting. On the other hand, petitioners posted the tarpaulin as part of their advocacy against the RH Law. Yes, the notice and letter for the removal of the tarpaulin violated petitioner’s fundamental right to freedom of expression. The Court held that every citizen’s expression with political consequences

Case Digests | page no. 61 enjoys a high degree of protection. Moreover, the respondent’s argument that the tarpaulin is election propaganda, being petitioner’s way of endorsing candidates who voted against the RH Law and rejecting those who voted for it, holds no water. The Court held that while the tarpaulin may influence the success or failure of the named candidates and political parties, this does not necessarily mean it is election propaganda. The tarpaulin was not paid for or posted “in return for consideration” by any candidate, political party or partylist group. Personal opinions are not included, while sponsored messages are covered.

MANUEL JUSAYAN VS JORGE SOMBILLA 2015| G.R. No. 163928 Civil Law Facts: Wilson Jesena is the owner of four parcel of lands in New Lucena, Iloilo. Wilson designated Jorge as agent to supervise the tilling and farming of his riceland. Wilson then sold the four parcels of land to Timoteo Jusayan before the expiration of his agreement with Jorge. Timoteo and Jorge agreed to the following: (a) Jorge would continue to be in possession of the land; (b) deliver 110 cavans of palay annually to Timoteo without the need of accounting of the cultivation expenses; and (c) pay the irrigation fees.

For 12 years Timoteo and Jorge followed the arrangement. Timoteo transferred the parcels of land in the names his sons, namely; Manuel, Alfredo and Michael. Subsequently, Timoteo sent several letters to Jorge terminating his administration and demanding the return of the possession of the parcels of land.

Due to the failure of Jorge to comply with the demands of Timoteo, the latter filed a complaint for recovery of possession and accounting against Jorge. Timoteo died in 1991 so the petitioners substituted him as the plaintiffs. Jorge claimed that he enjoyed security of tenure as the agricultural lessee of Timoteo; and that he could not be

page no. 62 | Case Digests ejected from the property without valid cause. The RTC upheld the contractual relationship of agency between Timoteo and Jorge.The CA reversed the decision and dismissed the case.

Issue: Whether or not the relationship between the petitioners and respondent is that of agency or agricultural leasehold.

Whether or not Jorge personally cultivated the leased agricultural land.

Ruling: The Supreme Court enumerated the following as the elements of agency: (a) the relationship is established by the parties’ consent, express or implied; (b) the object is the execution of a juridical act in relation to a third person; (c) the agent acts as representative and not for himself; and (d) the agent acts within the scope of his authority.

According to the Supreme Court, the agricultural production was left to Jorge and while he is in possession of the land, he was acting for himself instead of for Timoteo. Furthermore, Jorge presented handwritten receipts showing that the sacks of palay delivered to and received by Corazon Jusayan represented payment of rental.

These receipts substantially proved that the contractual relationship between Jorge and Timoteo was not agency but a lease.

The Supreme Court said, that in both civil law lease of an agricultural land and agricultural lease, the lessor gives to the lessee the use and possession of the land for a price certain. The distinctive attribute that sets a civil law lease apart from an agricultural lease is the personal cultivation by the lessee. An agricultural lessee cultivates by himself and with the aid of those of his immediate farm household. Conversely, even when the lessee is in possession of the leased agricultural land and paying a consideration for it but is not personally cultivating the land, he or she is a civil law lessee.

Jorge’s knowledge of and familiarity with the landholding, its production and the instances when the landholding was struck by

Case Digests | page no. 63 drought definitely established that he personally cultivated the land.

His ability to farm the seven hectares of land was not physically impossible for him to accomplish considering that his daughter, a member of his immediate farm household, was cultivating one of the parcels of the land. The law did not prohibit him as the agricultural lessee who generally worked the land himself or with the aid of member of his immediate household from availing himself occasionally or temporarily of the help of others in specific jobs.

HEIRS OF PACIFICO AVILA 2014 | G.R. No. 199146 Civil Law

POCDO vs.

ARSENIA

Facts: Pacifico Pocdo, who was later substituted by his heirs upon his death, filed a complaint to quiet title over a 1,728-square meter property (disputed property) located in Camp 7, Baguio City, and covered by Tax Declaration 96-06008-106641. Pacifico claimed that the disputed property is part of Lot 43, TS-39, which originally belonged to Pacifico’s father, Pocdo Pool. The disputed property is allegedly different from the one- hectare portion alloted to Polon Pocdo, the predecessor-in-interest of the defendants Arsenia Avila and Emelinda Chua, in a partition made by the heirs of Pocdo Pool.

Pacifico alleged that the defendants unlawfully claimed the disputed property, which belonged to Pacifico.The Regional Trial Court dismissed the case for lack of jurisdiction.

Issue: Whether or not the RTC has jurisdiction over a complaint to quiet title to a land that forms part of the public domain.

Ruling: The disputed property was proven to be part of the public land.

page no. 64 | Case Digests Therefore, the trial court was correct in dismissing the complaint to quiet title for lack of jurisdiction. The trial court had no jurisdiction to determine who among the parties have better right over the disputed property which is admittedly still part of the public domain.

The Supreme Court stated, “An action for quieting of title, the complainant is seeking for an adjudication that a claim of title or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands exist.” Furthermore, the Supreme Court cited Articles 476 and 477 of the Civil Code, stating the two indispensable requisites in an action to quiet title. Theses are the following: (1) that the plaintiff has a legal or equitable title to or interest in the real property subject of the action; and (2) that there is a cloud on his title by reason of any instrument, record, deed, claim, encumbrance or proceeding, which must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity.

In the case at bar, petitioners claiming to be owners of the disputed property, claim that respondents are unlawfully claiming the disputed property by using void documents, namely the “Catulagan” and the Deed of Waiver of Rights. The records reveal that petitioners do not have legal or equitable title over the disputed property, which forms part of Lot 43, a public land within the Baguio Townsite Reservation. It is clear that petitioners’ predecessors-in-interest, the heirs of Pocdo Pool, were not even granted a Certificate of Ancestral Land Claim over Lot 43, which remains public land. Thus, the trial court had no other recourse but to dismiss the case.

PROTECTIVE MAXIMUM SECURITY AGENCY, INC. VS. CELSO E. FUENTES 2015 | G.R. No. 169303 Labor Law Facts: Carlo E. Fuentes (Respondent) was hired as a security guard by

Case Digests | page no. 65 Protective Maximum Security Agency, Inc. (Petitioner). He was designated at Post 33 in Upper New Visayas, Agusan del Sur. On July 20, 2000, Post 33 was ransacked by a group of armed men.

After its initial investigation, the Philippine National Police (PNP) found reason to believe that Fuentes conspired and consorted with the armed men who were identified as members of the New People’s Army. On July 24, 2000, the PNP, through Senior Police Officer IV Benjamin Corda, Jr. filed a Complaint for robbery committed by a band against Fuentes and others. Fuentes was thereafter detained, however, on August 15, 2001, the Office of the Provincial Prosecutor of Surigao del Sur issued a Resolution dismissing the said Complaint as no probable cause warrants the filing of Information against Fuentes.

Fuentes filed a Complaint “for illegal dismissal, non-payment of salaries, overtime pay, premium pay for holiday and rest day, 13th month pay, service incentive leave and damages against Protective and three others. Executive Labor Arbiter Rogelio P. Legaspi rendered his Decision in favor of Protective after finding that Fuentes was not dismissed from service much less illegally by Protective, et.al. On appeal, the National Labor Relations Commissions (NLRC) found that Fuentes was illegally dismissed, thus, the Honorable Commission reversed the Labor Arbiter’s Decision. A Petition for Certiorari before the Court of Appeals was filed by Protective but the same was dismissed, thus, the present Petition.

Issues: Whether or not the Court of Appeals erred in dismissing the Petition for Certiorari assailing the Decision of the NLRC. Whether or not Respondent abandoned his job.

Whether or not Respondent’s right to substantive and procedural due process was violated.

page no. 66 | Case Digests Ruling: No, the National Labor Relations Commission has the authority to reverse the decision of the Labor Arbiter provided that one of the grounds in Article 223 of the Labor Code exists. One of the grounds in Article 223 is if serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. In reversing the Labor Arbiter’s Decision, the NLRC decided that there was a serious error in the factual findings of the former. First, the Labor Arbiter erroneously found that Respondent conspired with the NPA in ransacking Post 33. However, as founded by the NLRC, the allegation was not substantiated at all. Second, the Labor Arbiter erroneously found that Respondent is unable to perform his duties and responsibilities as security guard due to the criminal charges filed against him. The NLRC found that the refusal to admit Respondent to work based on the latter’s alleged conspiracy with the New People’s Army during the July 20, 2000 incident had no basis. Lastly, the Labor Arbiter erroneously found that Respondent “vanished” from work; on the other hand, the NLRC found that Respondent’s absent is justified. The fourth ground laid down under Article 223 being present and proven, the Honorable Supreme Court rules that the NLRC acted well within its discretion in deciding appealed cases from the Labor Arbiter.

No, Citing Standard Electric Manufacturing Corp. versus Standard Electric Employees Union-NAFLU-KMU and Magtoto versus National Labor Relations Commission, the Honorable Supreme Court ruled that the two elements of abandonment were not met.

First, there was no failure of the employee to report to work without a valid and justifiable reason. In this case, Respondent’s failure to return to work was justified because of his detention and its adverse effects. Second, there was no overt act showing that the employee has no intention to return to work. In this case, Respondent reported for work after the criminal complaint against him was dropped, thus, he had no intention to sever ties with his employees.

Yes, Citing Agabon versus NLRC, the two-notice requirement was not followed. Petitioner claims that Respondent’s address is

Case Digests | page no. 67 unknown, however, Petitioner admitted before the Court of Appeals that the latter’s address was given to the investigating court.

Furthermore, aside from the lack of attempt from Petitioner to serve the proper notice on Respondent, the latter was replaced without affording him the right to explain his absence.

ANTONIO M. LORENZANA VS. JUDGE MA. CECILIA I. AUSTRIA, RTC BATANGAS 2014 | A.M. No. RTJ-09-2200 Legal Ethics Facts: Lorenzana (complainant) was the Executive Vice President and Chief Operating Officer of Steel Corporation of the Philippines, a company undergoing rehabilitation proceedings. He filed a verified complaint against Judge Austria (Austria), the presiding judge of the proceedings, alleging that the latter committed Gross Ignorance of the Law, Grave Abuse of Authority, Gross Misconduct, Grave Incompetence, Irregularity in the Performance of Duty, Grave Bias and Partiality, Lack of Circumspection, Conduct Unbecoming of a Judge, Failure to Observe Reglementary Period and Violation of the Code of Responsibility. He alleged that the Austria had biases against SCP and worked for her own personal motives, and that she posted inappropriate photos of herself on the social networking site, Friendster.

Austria denied the claims and asserted that she was only exercising her functions as presiding judge to provide fairness and equity to the parties. She furthermore asserted that her photos were in no way inappropriate as to warrant administrative sanctions.

The investigating justice, Justice Marlene Gonzales-Sison, ruled that the issues were judicial in nature since it involved Austria’s appreciation of evidence, and that the complainant failed to present clear and convincing proof of bias and partiality. However, Justice Gonzales-Sison found that the respondent judge was unnecessarily

page no. 68 | Case Digests arrogant in dealing with SCP’s legal counsel, in violation of Sec. 6, Canon 6 of the New Code of Judicial Conduct. With regard to the conduct of the respondent judge on Friendster, Justice GonzalesSison noted that despite being a current trend, judges must conduct themselves in a manner consistent with the dignity of the judicial office and that the act of maintaining one and posting personal details constitutes an act of impropriety.

The OCA recommended that the respondent judge be found guilty of conduct unbecoming a judge and for violation of Sec. 6, Canon 4 of the New Code of Judicial Conduct, thus be fined P20,000, and that the respondent judge be admonished to refrain from further acts of impropriety.

Issue: Whether or not the respondent judge was guilty of the charges imputed to her Ruling: On the matter of conduct unbecoming of a judge, the Court ruled that a judge should always conduct himself in a manner that would preserve the dignity, independence and respect for himself/ herself, the Court and the Judiciary as a whole. The respondent’s unnecessary bickering with SCP’s legal counsel, her expressions of exasperation over trivial procedural and negligible lapses, her snide remarks, as well as her condescending attitude, are conduct that the Court cannot allow.

On the ground of impropriety, the Court ruled that while judges are not prohibited from becoming members of and from taking part in social networking activities, they do not shed off their status as judges. They carry with them in cyberspace the same ethical responsibilities and duties that every judge is expected to follow in his/her everyday activities. Section 6, Canon 4 of the New Code of Judicial Conduct recognizes that judges, like any other citizen, are entitled to freedom of expression. Joining a social networking site is

Case Digests | page no. 69 an exercise of one’s freedom of expression. The respondent judge’s act of joining Friendster is, therefore, per se not violative of the New Code of Judicial Conduct. Section 6, Canon 4 of the New Code of Judicial Conduct. However, a correlative restriction on judges must be imposed: in the exercise of their freedom of expression, they should always conduct themselves in a manner that preserves the dignity of the judicial office and the impartiality and independence of the Judiciary.

As the visible personification of law and justice, however, judges are held to higher standards of conduct and thus must accordingly comport themselves. This exacting standard applies both to acts involving the judicial office and personal matters. The very nature of their functions requires behavior under exacting standards of morality, decency and propriety; both in the performance of their duties and their daily personal lives, they should be beyond reproach.

GERSHON N. DULANG VS. JUDGE MARY JOCYLEN G. REGENCIA, MTC CEBU 2014 | A.M. No. MTJ-14-1841 Legal Ethics Facts: This is an administrative case for gross inefficiency, gross ignorance of the law, gross incompetence, serious misconduct and serious dereliction of duty against the respondent judge, Judge Mary Jocylen G. Regencia (Judge Regencia) of MCTC-Asturias-Balamban, Cebu City. The complainant, Dulang, alleged that he filed an ejectment case against a certain Emmanuel Flores on February 2, 2000. More than eleven years passed until Judge Regencia resolved the matter by dismissing the ejectment case on February 2011. Thus, Dulang filed a verified complaint against Judge Regencia, claiming that she stalled the administration of justice to his prejudice.

Judge Regencia claimed that she was unable to resolve the matter since there was a pending case in the RTC of Toledo City which was intertwined with Dulang’s ejectment suit. She stated that she

page no. 70 | Case Digests found it prudent to defer the resolution of the ejectment suit and that she only started presiding over the said court on November 2007. On December 20, 2012, Executive Judge Hermes Montero of RTC-Toledo City found that Judge Regencia was administratively liable for gross inefficiency, gross ignorance of the law, gross incompetence, serious misconduct and serious dereliction of duty in handling the ejectment case and recommended that she be dismissed from service due to violation of the Rules on Summary Procedure.

The OCA recommended that Judge Regencia be held administratively liable for undue delay and fined her in the amount of P20,000 with a stern warning, and agreed with Judge Montero’s findings that there is no justifiable excuse for Judge Regencia not to render judgment in the ejectment case within the 30-day reglementary period.

Issue: Whether Judge Regencia may be held administratively liable for undue delay in rendering a decision Ruling: Yes. The Court found respondent Judge guilty of undue delay in rendering a decision. Prompt disposition of cases is attained basically through the efficiency and dedication to duty of judges. If judges do not possess those traits, delay in the disposition of cases is inevitable to the prejudice of the litigants. Accordingly, judges should be imbued with a high sense of duty and responsibility in the discharge of their obligation to administer justice promptly. It is embodied in Rule 3.05, Canon 3 of the Code of Judicial Conduct that “[a] judge shall dispose of the court’s business promptly and decide cases within the required periods” and echoed in Section 5, Canon 6 of the New Code of Judicial Conduct for the Philippine Judiciary which provides that “judges shall perform all judicial duties, including the delivery of reserved decisions, efficiently, fairly, and with reasonable promptness.”

Civil Case No. 212-B was already submitted for resolution on

Case Digests | page no. 71 October 17, 2008. Being an ejectment case, it is governed by the Rules of Summary Procedure which clearly sets a period of thirty (30) days from the submission of the last affidavit or position paper within which a decision thereon must be issued. Despite this, Judge Regencia rendered judgment only about two (2) years and four (4) months later, or on February 18, 2011. Rules prescribing the time within which certain acts must be done are indispensable to prevent needless delays in the orderly and speedy disposition of cases and thus, mandatory. The Court has nevertheless been mindful of the plight of judges and has been understanding of circumstances that may hinder them from promptly disposing of their businesses and, as such, has allowed extensions of time due to justifiable reasons.

However, Judge Regencia failed to proffer any acceptable reason in delaying the disposition of the ejectment case, thus, making her administratively liable for undue delay in rendering a decision.

SIMON FLORES VS. PHILIPPINES 2013 | GR No. 181354 Criminal Law

REPUBLIC

OF

THE

Facts: On August 15, 1989, on the eve of the barangay fiesta in San Roque, Alaminos, Laguna, visitors of Jesus Avenido, were drinking at the terrace of his house. At around 12 o’clock in the morning while the drinking was ongoing, Simon Flores, arrived with an M-16 armalite rifle. Flores and Avenido began talking to each other. Subsequently, several gunshots were heard from where Flores and Avenido was located. After the gunshots ceased, the bloodied body of Avenido was found and Flores is nowhere to be found. Avenido was rushed to the hospital but was pronounced dead on arrival. Witnesses revealed that they saw Flores suddenly shot Avenido while they were talking.

Avenido’s body fell on the ground but Flores continued to fire his gun upon the former.

Flores interposed self-defense as justification in killing Avenido.

page no. 72 | Case Digests In his narration, Flores went to Avenido’s house along with some member of CAFGU’s after they heard gunshots that seem to be coming from the latter’s house. He politely requested Avenido and guests to cease from firing guns, but it was met with hostility.

Avenido drew his pistol, pointed against Flores’ chest and fired.

Flores was able to partially ward off Avenido’s hand that holds his pistol. After sustaining two gunshot wounds, Flores was able to fire the M-16 he was carrying, which hit Avenido in his shoulder.

Issue: Whether Flores is justified in killing Avenido?

Ruling: No. Generally, the burden lies upon the prosecution to prove the guilt of the accused beyond reasonable doubt. If the accused, however, admits killing the victim, but pleads self-defense, the burden of evidence is shifted to him. To escape liability, it now becomes incumbent upon the accused to prove by clear and convincing evidence all the elements of that justifying circumstance.

Under Article 11 of the Revised Penal Code, any person who acts in defense of his person or rights does not incur any criminal liability provided that the following circumstances concur: (1) unlawful aggression; (2) reasonable necessity of the means employed to prevent or repel it; and (3) lack of sufficient provocation on the part of the person defending himself. The most important among all the elements is unlawful aggression. There can be no selfdefense, whether complete or incomplete, unless the victim had committed unlawful aggression against the person who resorted to self-defense. It is present only when the one attacked faces real and immediate threat to one’s life. Aggression, if not continuous, does not constitute aggression warranting self-defense. Granting for the sake of argument that unlawful aggression was initially staged by Avenido, the same ceased to exist when Avenido was first shot on the shoulder and fell to the ground. At that point, the perceived threat to Flores’ life was no longer attendant. The latter had no reason to

Case Digests | page no. 73 pump more bullets on Jesus’ abdomen and buttocks.

PEOPLE OF THE PHILIPPINES VS. REYNALDO NACUA 2013 | G.R. No. 200165 Criminal Law Facts: On September 2, 2005, a “test-buy” was executed by the same police officers and yielded a sachet of suspected shabu. The police officers proceeded to their station where the sachet obtained from the test buy was labelled with “RN” representing the initials of the accused.

The sachet was submitted to the crime Laboratory for analysis.

The contents of the sachet tested positive for methamphetamine hydrochloride. With the laboratory report and the affidavits executed by the police officers who executed the “test buy”, an application for search warrant was filed at Cebu City RTC which was subsequently granted to search the residence of the accused.

On September 21, 2005, the search warrant was implemented which yielded paraphernalia and effects purporting to be related to the sale of shabu. The search was done in the presence of a Barangay Councilman and a Tanod. As a result therof, the Nacua’s were immediately arrested. However, the “test-buy” money where not recovered.

The accused raised the issue of failure to follow the statutory requirements under Sec. 21 (Chain of Custody) of RA 9165.

Issue: Whether the non-compliance to Sec. 21 of RA 9165 fatal in proving the guilt beyond reasonable doubt of the accused.

Ruling: Yes, it is of paramount importance to establish beyond reasonable doubt the identity of the dangerous drug. Given the unique

page no. 74 | Case Digests characteristic of dangerous and illegal drugs which are indistinct, not readily identifiable, and easily susceptible to tampering, alteration, or substitution, either by accident or otherwise, there must be strict compliance with the prescribed measures to be observed during and after the seizure of dangerous drugs and related paraphernalia, during the custody and transfer thereof for examination, and at all times up to their presentation in court.

Marking of the seized drugs must be done immediately after they are seized from the accused and failure to do so suffices to rebut the presumption of regularity in the performance of official duties and raises reasonable doubt as to the authenticity of the corpus delicti.

While the Court allows for relaxation of the rules in some cases, there must be compelling and justifiable grounds for the same and it must be shown that the integrity and evidentiary value of the seized items have been properly preserved. However, such conditions are not present in the instant case. The prosecution did not offer any explanation as to why the police officers failed to strictly comply with the established procedure for the custody of the suspected shabu.

The prosecution failed to show that the integrity and evidentiary value of the sachet of suspected shabu allegedly bought from the Nacua couple during the “test-buy� operation has been properly preserved from the time said item was transmitted to the crime laboratory up to its presentation in court. No evidence was offered to show as to how the said specimen was kept and by whom after its forensic examination throughout its presentation in court.

ENRILE VS .SANDIGANBAYAN 2015 | G.R. No. 213847 Remedial Law Facts: On June 5, 2014, the Office of the Ombudsman charged Enrile and several others with plunder in the Sandiganbayan on the basis of their purported involvement in the diversion and misuse of appropriations

Case Digests | page no. 75 under the Priority Development Assistance Fund (PDAF).

On June 10, 2014 and June 16, 2014, Enrile respectively filed his Omnibus Motion and Supplemental Opposition, praying, among others, that he be allowed to post bail should probable cause be found against him. On July 3, 2014, the Sandiganbayan issued its resolution denying Enrile’s motion, particularly on the matter of bail, on the ground of its prematurity considering that Enrile had not yet surrendered or placed under the custody of the law. On the same day that the warrant for his arrest was issued, Enrile voluntarily surrendered.

On July 7, 2014 Enrile filed his Motion for Detention at the PNP General Hospital, and his Motion to Fix Bail. On July 14, 2014, the Sandiganbayan issued its first assailed resolution denying Enrile’s Motion to Fix Bail. On August 8, 2014, the Sandiganbayan issued it s second assailed resolution to deny Enrile’s motion for reconsideration filed vis-à-vis the July 14, 2014 resolution. Thus a petition for certiorari was filed by Enrile.

Issues: W/N Enrile is entitled to bail as a matter of right and falls within the exception only upon concurrence of two (2) circumstances: (i) where the offense is punishable by reclusion perpetua, and (ii) when evidence of guilt is strong.

Ruling: Yes. Bail protects the right of the accused to due process and to be presumed innocent. In all criminal prosecutions, the accused shall be presumed innocent until the contrary is proved. The presumption of innocence is rooted in the guarantee of due process, and is safeguarded by the constitutional right to be released on bail, and further binds the court to wait until after trial to impose any punishment on the accused.

Bail may be granted as a matter of right or of discretion. The general rule is, therefore, that any person, before being convicted of any criminal offense, shall be bailable, unless he is charged with a capital

page no. 76 | Case Digests offense, or with an offense punishable with reclusion perpetua or life imprisonment, and the evidence of his guilt is strong. Hence, from the moment he is placed under arrest, or is detained or restrained by the officers of the law, he can claim the guarantee of his provisional liberty under the Bill of Rights, and he retains his right to bail unless he is charged with a capital offense, or with an offense punishable with reclusion perpetua or life imprisonment, and the evidence of his guilt is strong. Once it has been established that the evidence of guilt is strong, no right to bail shall be recognized.

Admission to bail in offenses punishedby death, or life imprisonment, or reclusion perpetua is subject to judicial discretion. Bail cannot be allowed when its grant is a matter of discretion on the part of the trial court unless there has been a hearing with notice to the Prosecution.

Enrile’s poor health justifies his admission to bail. This national commitment to uphold the fundamental human rights as well as value the worth and dignity of every person has authorized the grant of bail not only to those charged in criminal proceedings but also to extraditees upon a clear and convincing showing: (1 ) that the detainee will not be a flight risk or a danger to the community; and (2 ) that there exist special, humanitarian and comzpelling circumstances.

ISAAA VS GREENPEACE 2015 | G.R. No. 209271 Remedial Law Facts: Under the regulatory supervision of NCBP, a contained experiment was started in 2007 and officially completed on March 3, 2009.

The NCBP thus issued a Certificate of Completion of Contained Experiment stating that “During the conduct of the experiment, all the biosafety measures have been complied with and no untoward incident has occurred.” BPI issued Biosafety Permits to UPLB on March 16, 2010 and June 28, 2010. Thereafter, field testing of

Case Digests | page no. 77 Bt talong commenced on various dates in the following approved trial sites: Kabacan, North Cotabato; Sta. Maria, Pangasinan; Pili, Camarines Sur; Bago Oshiro, Davao City; and Bay, Laguna.

On April 26, 2012, Greenpeace, MASIPAG and individual respondents (Greenpeace, et al.) filed a petition for writ of kalikasan and writ of continuing mandamus with prayer for the issuance of a Temporary Environmental Protection Order (TEPO). They alleged that the Bt talong field trials violate their constitutional right to health and a balanced ecology . The full acceptance by the project proponents of the findings in the MAHYCO Dossier was strongly assailed on the ground that these do not precisely and adequately assess the numerous hazards posed by Bt talong and its field trial.

Greenpeace, et al. further claimed that the Bt talong field test project did not comply with the required public consultation under Sections 26 & 27 of the Local Government Code. Greenpeace, et al. argued that this case calls for the application of the precautionary principle.

Issues: Whether the respondents have Legal standing; Whether the case is moot; Whether there was violation of the doctrines of primary jurisdiction and exhaustion of administrative remedies; Ruling: 1. Yes. It was ruled in Oposa v. Factoran, Jr., that the state recognized the “public right” of citizens to “a balanced and healthful ecology which, for the first time in our nation’s constitutional history, is solemnly incorporated in the fundamental law.” Since the Oposa ruling, ordinary citizens not only have legal standing to sue for the enforcement of environmental rights, they can do so in representation of their own and future generations.

Courts will decide cases, otherwise moot and academic if: first, there is a grave violation of the Constitution;

page no. 78 | Case Digests second, the exceptional character of the situation and the paramount public interest is involved; third, when the constitutional issue raised requires formulation of controlling principles to guide the bench, the bar and the public; and fourth, the case is capable of repetition yet evading review.

The Court finds that the presence of the second and fourth exceptions justified the CA in not dismissing the case despite the termination of Bt talong field trials.

As a general rule, before a party may seek the intervention of the court, he should first avail of all the means afforded him by administrative processes. The issues which administrative agencies are authorized to decide should not be summarily taken from them and submitted to a court without first giving such administrative agency the opportunity to dispose of the same after due deliberation.

Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is, courts cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.

There are many accepted exceptions, such as: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant;

Case Digests | page no. 79 (d) where the amount involved is relatively small so as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other plain, speedy and adequate remedy; (k) when strong public interest is involved; and, (1) in quo warranto proceedings.

FONTERRA BRANDS PHILS VS LAGARDO AND ESTRALLADO 2015 | G.R. No. 205300 Labor Law Facts: Petitioner (Fonterra) contracted the services of Zytron Marketing and Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products. In order to fulfill the latter’s obligation, they provided Fonterra with trade merchandisers in the person of Largado and Estrallado. Their services began on September 15, 2003 and May 27, 2002, respectively, and ended June 6, 2006.

However, on May 6, 2006, Fonterra sent a letter terminating their contract services with Zytron effective June 5, 2006. Fonterra then entered into manpower supply contract with AC Sicat. In order to continue their employment with Zytron, the respondents submitted

page no. 80 | Case Digests their application to AC Sicat which employed them for a period of five (5) months from June 7, 2006 until November 6, 2006.

When the above mentioned contract with AC Sicat was about to expire, the respondents allegedly submitted an application to extend their employment but were denied. Thus, this action.

Issues Was there an illegal dismissal on the part of the private respondents?

Ruling: No, there was no illegal dismissal with Zytron. As correctly held by the Labor Arbiter and the NLRC, the termination of respondents’ employment with Zytron was brought about by the cessation of their contracts with the latter.

By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment, done with the intention of relinquishing an office, accompanied by the act of abandonment. The respondents’ voluntary refusal to renew their contracts was brought about by their desire to continue their assignment in Fonterra which could not happen in view of the conclusion of Zytron’s contract with Fonterra, thus prompting them to apply to AC Sicat.

Supreme Court decided that the termination of respondents’ employment with the latter was simply brought about by the expiration of their employment contracts. Considering that they are only fixed-term employees, being in the nature of seasonal or for specific projects with predetermined dates of completion.

In the case at bar, it is clear that respondents were employed by A.C. Sicat as project employees. Thus, herein respondents, by accepting the terms of their contract were well aware of and even acceded to the condition that their employment thereat will end on said predetermined date of termination. They are now, therefore, estopped

Case Digests | page no. 81 from arguing otherwise.

MILLAN VS NLRC 2015 | G.R. No. 202961 Labor Law Facts: Petitioners, Solid Mills’ employees were allowed to occupy SMI Village, a property owned by Solid Mills. According to the latter, the act was of liberality and for the convenience of its employees provided that the employees would vacate the premises anytime the Company deems fit.

When Solid Mills informed their employees that they would cease operations due to serious business losses, NAFLU recognized the same in a memorandum of agreement. The same agreement contains accrued sick leave benefits, vacation leave benefits, and 13th month pay to the employees. When Solid Mills was able to comply with the notice requirement before DOLE, they sent the notice to all Solid Mills’ employees informing them of the need to vacate SMI Village.

Those who signed their quitclaim after their vacation and sick leave benefits, 13th month pay, and separation pay were released, were considered by Solid Mills to have agreed to vacate SMI village and the demolition of the same. These employees then refused to sign and instead demanded for their benefits and separation pay.

Petitioners argued that their accrued benefits were brought about by policy and practice and that the payment of 13th month pay is actually mandated by law, thus demandable. Furthermore, their possession of the Solid Mills property is not a requirement for clearance processing.

Solid Mills’, on the other hand, argued that the petitioner’s complaint was premature since they have not vacated the premises.

page no. 82 | Case Digests Issues: Does the National Labor Relations Commission have jurisdiction over the case?

Are clearance procedures legal?

Are the respondents entitled to the benefits claimed?

Ruling: Yes, the National Labor Relations Commission have jurisdiction over the case. NLRC has the jurisdiction to to determine, preliminarily, the parties’ rights over a property, when it is necessary to determine an issue related to rights or claims arising from an employeremployee relationship.

According to Article 217 of the Labor Code, the NLRC, in its original and appellate jurisdiction, may determine issues arising from employee-employer relationship. Thus, the petitioner’s claim that they have the right to the immediate release of their benefits as employees separated from respondent Solid Mills is a question that involves the employer-employee relationship between the parties.

2. Clearance procedures are standard operating procedures among employers. Clearance procedures are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee, are returned to the employer before the employee’s departure. As a general rule, employers are not allowed to withhold wages from employees, subject to several exceptions provided by the law. However, our law supports the employers’ institution of clearance procedures before the release of wages.

“Debt” in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as petitioners would argue.

The Court explained that Withholding of payment by the employer

Case Digests | page no. 83 does not mean that the employer may renege on its obligation to pay employees their wages, termination payments, and due benefits.

The employees’ benefits are also not being reduced. It is only subjected to the condition that the employees return properties properly belonging to the employer.

The petitioners in this case are not entitled to their separation benefits as they were already retired long ago and were able to receive their retirement benefits.

CIR VS. SILICON PHILIPPINES, INC. 2014 | G.R. No. 169778 Tax Law Facts: Respondent Silicon Philippines, Inc. is a corporation duly organized and existing under and by virtue of the laws of the Philippines, engaged primarily in the business of designing, developing, manufacturing, and exporting advance and large-scale integrated circuits components (ICs).

On May 6, 1999, Respondent filed with the One-Stop Shop InterAgency Tax Credit and Duty Drawback Center of the Department of Finance (DOF) an application for Tax Credit/Refund of VAT paid for the second quarter of 1998 in the aggregate amount of P29,559,050.44, representing its alleged unutilized input tax.

Thereafter, since no final action has been taken by petitioner on respondent’s administrative claim for refund, respondent filed a Petition for Review before the Court of Tax Appeals (CTA) on 30 June 2000 docketed as CTA Case No. 6129.

Issue: Whether or not respondent is entitled to its claim for refund or issuance of a tax credit certificate in its favor in the amount of P21,338,910.44 representing its unutilized creditable input taxes for

page no. 84 | Case Digests the period covering 1 April 1998 to 30 June 1998 (second quarter), pursuant to the applicable provisions of the NIRC of 1997, as amended.

Ruling: The Court summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code, as follows: (1)An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.

(2)The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate.

The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two- year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction.

(3)A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR. (4)All taxpayers, however, can rely on BIR Ruling No. DA- 489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional 120+30 day periods.

CTA has no jurisdiction over respondent’s judicial appeal considering that its Petition for Review was filed beyond the mandatory 30-day period pursuant to Section 112(D) of the NIRC of 1997, as amended. Consequently, respondent’s instant claim for refund must be denied.

To recapitulate, the mandatory rule is that a judicial claim must be

Case Digests | page no. 85 filed with the CTA within thirty (30) days from the receipt of the Commissioner’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the Commissioner. Otherwise, said judicial claim shall be considered as filed out of time.

CIR VS. TEAM SUAL CORP. 2014 | G.R. No. 194105 Tax Law Facts: TSC is a corporation that is principally engaged in the business of power generation and the subsequent sale thereof solely to National Power Corporation (NPC); it is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer.

On November 26, 1999, the CIR granted TSC’s application for zero-rating arising from its sale of power generation services to NPC for the taxable year 2000. As a VAT-registered entity, TSC filed its VAT returns for the first, second, third, and fourth quarters of taxable year 2000 on April 24, 2000, July 25, 2000, October 25, 2000, and January 25, 2001, respectively.

On March 11, 2002, TSC filed with the BIR an administrative claim for refund, claiming that it is entitled to the unutilized input VAT in the amount of P179,314,926.56 arising from its zero-rated sales to NPC for the taxable year 2000.

On April 1, 2002, without awaiting the CIR’s resolution of its administrative claim for refund/tax credit, TSC filed a petition for review with the CTA seeking the refund or the issuance of a tax credit certificate in the amount of P179,314,926.56 for its unutilized input VAT for the taxable year 2000. The case was subsequently raffled to the CTA First Division.

In his Answer, the CIR claimed that TSC’s claim for refund/tax credit should be denied, asserting that TSC failed to comply with

page no. 86 | Case Digests the conditions precedent for claiming refund/tax credit of unutilized input VAT. The CIR pointed out that TSC failed to submit complete documents in support of its application for refund/tax credit contrary to Section 112(C)6 of the National Internal Revenue Code (NIRC).

Issue: Whether the CTA en banc erred in holding that TSC’s petition for review with the CTA was not prematurely filed.

Ruling: TSC failed to comply with the 120-day mandatory period under Section 112(C) of the NIRC for the CIR to render his decision with regard to the claim for tax refund or tax credit. Its failure to comply with the condition precedent of the lapse of the 120-day period of the inaction of the CIR with regard to its claim divested the CTA of jurisdiction for the petition for review.

Section 112([C]) of the NIRC clearly provides that the CIR has “120 days, from the date of the submission of the complete documents in support of the application [for tax refund/credit],” within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer’s recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax refund/ credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days.

In this case, the administrative and the judicial claims were simultaneously filed on September 30, 2004. Obviously, respondent did not wait for the decision of the CIR or the lapse of the 120-day period. For this reason, we find the filing of the judicial claim with the CTA premature.

Case Digests | page no. 87

SOLIDUM VS. PEOPLE 2014 | G.R. No. 192123 Civil Law Facts: Gerald Albert Gercayo was born on June 2, 1992 with an imperforate anus. On June 4, 1994, Gerald underwent colostomy, a surgical procedure to bring one end of the large intestine out through the abdominal walls, enabling him to excrete through a colostomy bag attached to the side of his body. On May 17, 1995, Gerald was admitted at the Ospital ng Maynila for a pull-through operation. The surgical team was headed by Dr. Leandro and the anesthesiologist included Drs. Abella, Razon and Solidum (Petitioner). During the operation, Gerald experienced bradycardia and went into a coma.

His coma lasted for two weeks, but he regained consciousness only after a month. He could no longer see, hear, or move.

Alleging that there was a failure in monitoring the anesthesia administered to Gerald, a complaint for reckless imprudence resulting in serious physical injuries were filed by Gerald’s parents against the team of doctors who were responsible for the operation.

Upon the finding of probable cause, the City Prosecutor’s Office filed an information solely against Dr. Solidum. On July 19, 2004, the RTC rendered its judgment finding Dr. Solidum guilty beyond reasonable doubt of reckless imprudence resulting to serious physical injuries. On January 20, 2010, the CA affirmed the conviction of Dr. Solidum ruling that the case appears to be an example of res ipsa loquitur.

Issues: 1. Whether or not res ipsa liquitor can be resorted to in medical negligence cases.

2. Whether or not petitioner is liable for medical negligence.

page no. 88 | Case Digests Ruling: 1No, in order for the doctrine of res ipsa loquitur to apply, three requisites must be satisfied, to wit: (1) the accident was of a kind that does not ordinarily occur unless someone is negligent; (2) the instrumentality or agency that caused the injury was under the exclusive control of the person charged; and (3) the injury suffered must not have been due to any voluntary action or contribution of the person injured.

The Court ruled that it was inappropriate to use the doctrine in this case since the first element is wanting. When Luz delivered Gerald to the care, custody and control of his physicians for the operation, he was of sound body and mind. However, despite Gerald being fit for the operation, he experienced bradycardia, causing loss of his senses and rendering him immobile. Citing Mason v. Ellsworth and Nelson v. Murphy, the Honorable Court elucidated that the doctrine does not find application in cases when the injury rarely occurs as in the case bradycardia or when an operation yielded a bad result.

2. No, the Court ruled that an action upon medical negligence – whether criminal, civil or administrative – calls for the plaintiff to prove by competent evidence each of the following four elements, namely: (a) the duty owed by the physician to the patient, as created by the physician-patient relationship, to act in accordance with the specific norms or standards established by his profession; (b) the breach of the duty by the physician’s failing to act in accordance with the applicable standard of care; (3) the causation, i.e., there must be a reasonably close and causal connection between the negligent act or omission and the resulting injury; and (4) the damages suffered by the patient.

Reckless imprudence consists of voluntarily doing or failing to do, without malice, an act from which material damage results by reason of an inexcusable lack of precaution on the part of the person performing or failing to perform such act.

The Prosecution did not prove the elements of reckless imprudence

Case Digests | page no. 89 beyond reasonable doubt. The determination of a physician’s “inexcusable lack of precaution” is based on the standard of care observed by other members of the profession in good standing under similar circumstances bearing in mind the advanced state of the profession at the time of the treatment or the present state of medical science. In this respect, expert testimony is usually necessary to support the conclusion as to causation. In this case, however, the prosecution failed to present expert witnessed to prove Petitioner’s culpability.

COMMISSIONER OF INTERNAL REVENUE vs.

MARUBENI CORPORATION 2001 | G.R. No. 137377 Taxation Law Facts: Marubeni Corporation is a Japanese corporation. In the course of the examination through a Letter of Authority, it was found that Marubeni has undeclared income from two contracts in the Philippines. Marubeni Corporation filed two petitions for review with the Court of Tax Appeals.

Earlier, Executive Order No. 41 declared a one-time amnesty covering unpaid income taxes for the years 1981 to 1985 was issued.

So, Marubeni filed its tax amnesty return dated October 30, 1986.

The return was received by the BIR on November 3, 1986 and Marubeni paid the amount of P2,891,273.00.

On November 17, 1986, the scope and coverage of E.O. No. 41 was expanded by Executive Order No. 64, which provided that the immunities and privileges under E.O. No. 41 were extended to the foregoing tax liabilities, and the period within which the taxpayer could avail of the amnesty was extended to December 15, 1986.

Those taxpayers who already filed their amnesty return under E.O. No. 41, as amended, could avail themselves of the benefits, immunities and privileges under the new E.O. by filing an amended

page no. 90 | Case Digests return and paying an additional 5% on the increase in net worth to cover business, estate and donors tax liabilities.

Further, the period of amnesty under E.O. No. 64 was extended to January 31, 1987 by E.O No. 95 dated December 17, 1986. On December 15, 1986, respondent filed a supplemental tax amnesty return under the benefit of E.O. No. 64 and paid a further amount of P1,445,637.00 to the BIR equivalent to five percent (5%) of the increase of its net worth between 1981 and 1986.

Issues: Whether or not the Court of Appeals erred in affirming the Decision of the Court of Tax Appeals which ruled that herein respondents deficiency tax liabilities were extinguished upon respondents availment of tax amnesty under Executive Orders Nos. 41 and 64.

Whether or not respondent is liable to pay the income, branch profit remittance, and contractors taxes assessed by petitioner.

Ruling: The Court of Appeals did not err in affirming the Decision of the Court of Tax Appeals.

Section 4 of E.O. No. 41 enumerates which taxpayers cannot avail of the amnesty granted thereunder, xxx b) Those with income tax cases already filed in Court as of the effectivity hereof; xxxx E.O. No. 41 took effect on August 22, 1986. CTA Case No. 4109 questioning the 1985 deficiency income, branch profit remittance and contractors tax assessments was filed by respondent with the Court of Tax Appeals on September 26, 1986. When E.O. No. 41 became effective on August 22, 1986, CTA Case No. 4109

Case Digests | page no. 91 had not yet been filed in court. Thus, Marubeni did not fall under the said exception in Section 4 (b), hence, respondent was not disqualified from availing of the amnesty for income tax under E.O. No. 41.

The respondent is not liable to pay the income, branch profit remittance and contractors taxes assessed by the petitioner.

A contractor’s tax is a tax imposed upon the privilege of engaging in business. It is generally in the nature of an excise tax on the exercise of a privilege of selling services or labor rather than a sale on products; and is directly collectible from the person exercising the privilege. Being an excise tax, it can be levied by the taxing authority only when the acts, privileges or business are done or performed within the jurisdiction of said authority. Like property taxes, it cannot be imposed on an occupation or privilege outside the taxing district.

Clearly, the service of “design and engineering, supply and delivery, construction, erection and installation, supervision, direction and control of testing and commissioning, coordination…”of the two projects involved two taxing jurisdictions. These acts occurred in two countries – Japan and the Philippines. While the construction and installation work were completed within the Philippines, the evidence is clear that some pieces of equipment and supplies were completely designed and engineered in Japan. The two sets of ship unloader and loader, the boats and mobile equipment for the NDC project and the ammonia storage tanks and refrigeration units were made and completed in Japan. They were already finished products when shipped to the Philippines. The other construction supplies listed under the Offshore Portion such as the steel sheets, pipes and structures, electrical and instrumental apparatus, these were not finished products when shipped to the Philippines. They, however, were likewise fabricated and manufactured by the sub-contractors in Japan. All services for the design, fabrication, engineering and manufacture of the materials and equipment under Japanese Yen Portion I were made and completed in Japan. These services were rendered outside the taxing jurisdiction of the Philippines and are therefore not subject to contractor’s tax.

page no. 92 | Case Digests

COMMISSIONER OF INTERNAL REVENUE vs.

ST. LUKE’S MEDICAL CENTER, INC. 2012 | G.R. No. 195909 Taxation Law Facts: Under St. Luke’s Medical Center, Inc.’s articles of incorporation, among its corporate purposes are: (a) To establish, equip, operate and maintain a non-stock, non-profit Christian, benevolent, charitable and scientific hospital which shall give curative, rehabilitative and spiritual care to the sick, diseased and disabled persons; provided that purely medical and surgical services shall be performed by duly licensed physicians and surgeons who may be freely and individually contracted by patients; Xxx On 16 December 2002, BIR assessed St. Luke’s deficiency taxes of P63,935,351.57. On 14 January 2003, St. Luke’s filed an administrative protest with the BIR against the deficiency tax assessments. The BIR did not act on the protest within the 180-day period under Section 228 of the NIRC. Thus, St. Luke’s appealed to the CTA. The BIR argued before the CTA that Section 27(B) of the NIRC, which imposes a 10% preferential tax rate on the income of proprietary non-profit hospitals, should be applicable to St. Luke’s.

BIR claimed that St. Luke’s was actually operating for profit in 1998 because only 13% of its revenues came from charitable purposes.

Moreover, the hospital’s board of trustees, officers and employees directly benefit from its profits and assets.

St. Luke’s maintained that it is a non-stock and non-profit institution for charitable and social welfare purposes under Section 30(E) and (G) of the NIRC. It argued that the making of profit per se does not destroy its income tax exemption.

Case Digests | page no. 93 Issue: Whether the enactment of Section 27(B) takes proprietary nonprofit hospitals out of the income tax exemption under Section 30 of the NIRC and instead, imposes a preferential rate of 10% on their taxable income.

Ruling: 30 (E) and (G).

Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of proprietary non-profit educational institutions. The only qualifications for hospitals are that they must be proprietary and non-profit. “Proprietary” means private, following the definition of a “proprietary educational institution” as “any private school maintained and administered by private individuals or groups” with a government permit. “Non-profit” means no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institution’s purposes and all its activities conducted not for profit.

Section 28(3), Article VI of the Constitution does not define a charitable institution, but requires that the institution “actually, directly and exclusively” use the property for a charitable purpose.

Section 30(E) of the NIRC provides that a charitable institution must be: (1) A non-stock corporation or association; (2) Organized exclusively for charitable purposes; (3) Operated exclusively for charitable purposes; and (4) No part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person.

page no. 94 | Case Digests There is no dispute that St. Luke’s is organized as a non-stock and non-profit charitable institution. However, this does not automatically exempt St. Luke’s from paying taxes. This only refers to the organization of St. Luke’s. Even if St. Luke’s meets the test of charity, a charitable institution is not ipso facto tax exempt.

The last paragraph of Section 30 provides that if a tax exempt charitable institution conducts “any” activity for profit, such activity is not tax exempt even as its not-for-profit activities remain tax exempt. This paragraph qualifies the requirements in Section 30(E) that the “[n]on-stock corporation or association [must be] organized and operated exclusively for x xx charitable x xx purposes x xx.”

It likewise qualifies the requirement in Section 30(G) that the civic organization must be “operated exclusively” for the promotion of social welfare.

Thus, even if the charitable institution must be “organized and operated exclusively” for charitable purposes, it is nevertheless allowed to engage in “activities conducted for profit” without losing its tax exempt status for its not-for-profit activities. The only consequence is that the “income of whatever kind and character” of a charitable institution “from any of its activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax.” Services to paying patients are activities conducted for profit. They cannot be considered any other way. There is a “purpose to make profit over and above the cost” of services.

The P1.73 billion total revenues from paying patients is not even incidental to St. Luke’s charity expenditure of P218,187,498 for non-paying patients.

St. Luke’s fails to meet the requirements under Section 30(E) and (G) of the NIRC to be completely tax exempt from all its income.

However, it remains a proprietary non-profit hospital under Section 27(B) of the NIRC as long as it does not distribute any of its profits to its members and such profits are reinvested pursuant to its corporate purposes. St. Luke’s, as a proprietary non-profit hospital, is entitled to the preferential tax rate of 10% on its net income from its forprofit activities.

Case Digests | page no. 95

DEUTSCHE BANK AG MANILA BRANCH vs.

COMMISSIONER OF INTERNAL REVENUE 2013 | G.R. No. 188550 Taxation Law Facts: In accordance with Section 28(A)(5) of the NIRC of 1997, petitioner withheld and remitted to respondent on 21 October 2003 the amount of PHP 67,688,553.51, which represented the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking unit (RBU) net income remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable years.

Believing that it made an overpayment of the BPRT, petitioner filed with the BIR Large Taxpayers Assessment and Investigation Division on 4 October 2005 an administrative claim for refund or issuance of its tax credit certificate in the total amount of PHP 22,562,851.17.

On the same date, petitioner requested from the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty.

Alleging the inaction of the BIR on its administrative claim, petitioner filed a Petition for Review with the CTA on 18 October 2005.

Petitioner reiterated its claim for the refund or issuance of its tax credit certificate for the amount of PHP 22,562,851.17 representing the alleged excess BPRT paid on branch profits remittance to DB Germany.

Issue: Whether the failure to strictly comply with RMO No. 1-2000 will deprive persons or corporations of the benefit of a tax treaty.

Ruling: RMO No. 1-2000 was implemented to obviate any erroneous interpretation and/or application of the treaty provisions. The objective of the BIR is to forestall assessments against corporations

page no. 96 | Case Digests who erroneously availed themselves of the benefits of the tax treaty but are not legally entitled thereto, as well as to save such investors from the tedious process of claims for a refund due to an inaccurate application of the tax treaty provisions. However, as earlier discussed, noncompliance with the 15-day period for prior application should not operate to automatically divest entitlement to the tax treaty relief especially in claims for refund.

The underlying principle of prior application with the BIR becomes moot in refund cases, such as the present case, where the very basis of the claim is erroneous or there is excessive payment arising from non-availment of a tax treaty relief at the first instance. In this case, petitioner should not be faulted for not complying with RMO No. 1-2000 prior to the transaction. It could not have applied for a tax treaty relief within the period prescribed, or 15 days prior to the payment of its BPRT, precisely because it erroneously paid the BPRT not on the basis of the preferential tax rate under the RPGermany Tax Treaty, but on the regular rate as prescribed by the NIRC. Hence, the prior application requirement becomes illogical.

Therefore, the fact that petitioner invoked the provisions of the RPGermany Tax Treaty when it requested for a confirmation from the ITAD before filing an administrative claim for a refund should be deemed substantial compliance with RMO No. 1-2000.

Corollary thereto, Section 229 of the NIRC provides the taxpayer a remedy for tax recovery when there has been an erroneous payment of tax. The outright denial of petitioner’s claim for a refund, on the sole ground of failure to apply for a tax treaty relief prior to the payment of the BPRT, would defeat the purpose of Section 229.

Case Digests | page no. 97

BATANGAS CITY vs. PILIPINAS PETROLEUM CORPORATION 2015 | G.R. No. 187631 Taxation Law

SHELL

Facts: Respondent Shell was only paying the amount of P98,964.71 for fees and other charges which include the amount of P1,180.34 as Mayor’s Permit. However, on February 20, 2001, petitioner Batangas City, through its City Legal Officer, sent a notice of assessment to respondent demanding the payment of P92,373,720.50 andP312,656,253.04 as business taxes for its manufacture and distribution of petroleum products. In addition, respondent was also required and assessed to pay the amount of P4,299,851.00 as Mayor’s Permit Fee based on the gross sales of its Tabagao Refinery.

The assessment was allegedly pursuant of Section 134 of the LGC of 1991 and Section 23 of its Batangas City Tax Code of 2002.

In response, respondent filed a protest on April 17, 2002 contending among others that it is not liable for the payment of the local business tax either as a manufacturer or distributor of petroleum products.

It further argued that the Mayor’s Permit Fees are exorbitant, confiscatory, arbitrary, unreasonable and not commensurable with the cost of issuing a license.

Petitioners denied respondent’s protest and declared that under Section 14 of the Batangas City Tax Code of 2002, they are empowered to withhold the issuance of the Mayor’s Permit for failure of respondent to pay the business taxes on its manufacture and distribution of petroleum products.

Issue: Whether a LGU is empowered under the LGC to impose business taxes on persons or entities engaged in the business of manufacturing and distribution of petroleum products.

page no. 98 | Case Digests Ruling: The Supreme Court does not agree. At the outset, it must be emphasized that although the power to tax is inherent in the State, the same is not true for LGUs because although the mandate to impose taxes granted to LGUs is categorical and long established in the 1987 Philippine Constitution, the same is not all encompassing as it is subject to limitations as explicitly stated in Section 5, Article X of the 1987 Constitution, viz.: SECTION 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy.

Such taxes, fees, and charges shall accrue exclusively to the local governments.

The power to tax “is an attribute of sovereignty,” and as such, inheres in the State. Such, however, is not true for provinces, cities, municipalities and barangays as they are not the sovereign; rather, there are mere “territorial and political subdivisions of the Republic of the Philippines.”

It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. The charter or statute must plainly show an intent to confer that power or the municipality, cannot assume it. And the power when granted is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality.

Inferences, implication, deductions – all these- have no place in the interpretation of the taxing power of a municipal corporation.

Case Digests | page no. 99

SMART COMMUNICATIONS, INC. VS. CITY OF DAVAO 2008 | GR No. 155491 Taxation Law Facts: Smart filed a civil action for declatory relief as to Sec. 1, Article 10 of the Tax Code of City of Davao which requires payment of franchise tax at the rate of seventy-five percent (75%) of one percent (1%) of the gross annual receipts. Smart contends that it is exempt from payment because: (1)its franchise under RA 7294 issued after the Local Government Code (LGC) which then shows the legislative intent to exempt it from the latter’s provisions; (2) Sec. 137, LGC only applies to exemption already existing at the time of its effectivity; (3) City of Davao’s power to tax is subject to statutory limitations such as that of RA 7294; (4) such is a violation of the constitutional provisions against impairment of contracts. City of Davao argued by invoking the Constitutional grant to local government units to create their own sources of revenue.

Issue: Whether Smart is liable to pay the franchise tax imposed by the City of Davao Ruling: Although, the Local Government Code has a prospective effect which can only affect those franchises granted prior to its effectivity- Smart is still liable to pay the franchise tax ifor the following reasons: 1. The “in lieu of all taxes” clause is not clear as to whether it includes exemption from local or national taxation. Thus, because of its uncertainty, the clause in must be construed strictly against the taxpayer (Smart) which also has the burden of proving the exemption. Correspondingly, it must be construed in favor of the

page no. 100 | Case Digests taxing authority (City of Davao) - that the “in lieu of all taxes” clause applies only to national internal revenue taxes and not to local taxes.

Exemptions can only be given force when the grant is clear and categorical. Smart was not able to prove such exemption (N.B. The “in lieu of all taxes” clause in RA 7294 has become functus officio with the abolition of the franchise tax on telecommunications companies because of the VAT Law.) 2. Section 23 of RA 7925 (Public Telecommunications Policy Act), otherwise known as the most favored treatment clause or the equality clause does not render the the provision in the franchise of Globe exempting it from local taxes to be also applicable to Smart.

The term “exemption” does not mean tax exemption but exemption from certain regulations and requirements imposed by the National Telecommunications Commission.

3. There is no violation of the constitutional provision against impairment of contracts. The franchise of Smart does not expressly provide for exemption from local taxes. Such has never been thought as a limitation on the exercise of the States power of taxation except where a tax exemption has been granted for a valid consideration.

QUEZON CITY AND CITY TREASURER VS. ABSCBN BROADCASTING 2008 | GR NO. 166408 Taxation Law Facts: In May 1995, RA 796 granted ABS-CBN franchise to install and operate radio and television broadcasting stations in the Philippines.

It is of the opinion that it is not liable to pay the local franchise tax imposed by Quezon City because of the “in lieu of all taxes” clause in the franchise. ABSCBN paid in protest the local franchise tax to Quezon City and later on filed a refund which was not responded to. ABSCBN filed a case for nullity of the imposition of local

Case Digests | page no. 101 franchise tax at the RTC of Quezon City. Quezon City invoked the constitutional mandate which ensures the viability and selfsufficiency of local government units.

Issue: Whether or not the clause “in lieu of all taxes” indicated in the franchise serves to exempt it from the payment of the local franchise tax imposed by Quezon City Ruling: The “in lieu of all taxes” clause in its franchise failed to specify the taxes ABSCBN is sought to be exempted from. It is not clear whether the exemption would include both local, whether municipal, city or provincial, and national tax. The right to tax exemption must be clearly established and cannot be made out of inference or implications but must be laid beyond reasonable doubt. ABSCBN failed in overcoming the burden of proof that it is exempted. It also failed to identify the taxing authority from whose jurisdiction the taxing power is withheld, whether municipal, provincial, or national.

Also, the “in lieu of all taxes” clause has become functus officio because as the law now stands, ABS-CBN is no longer subject to a franchise tax. The advent of the EVAT Law telephone and/ or telegraph systems, broadcasting stations and other franchise grantees were omitted from the list of entities subject to franchise tax. VAT is a percentage tax imposed on any person whether or not a franchise grantee, who in the course of trade or business, sells, barters, exchanges, leases, goods or properties, renders services. It is also levied on every importation of goods whether or not in the course of trade or business. The franchise tax, on the other hand, is a percentage tax imposed only on franchise holders. Thus, the “in lieu of all taxes” clause cannot pertain VAT or any other tax. It cannot apply when what is paid is a tax other than a franchise tax.

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THE CITY OF MANILA, ET AL VS. COCA-COLA BOTTLERS PHILIPPINES 2009 | GR No. 181845 Taxation Law Facts: Coca-Cola had been paying the City of Manila business tax only under Section 14 of the Tax Ordinance No. 7794, being expressly exempted from business tax under Section 21 of the same tax ordinance. The pertinent provisions are as follows: Subsequently, the City of Manila approved Tax Ordinance 7988 which increased the tax rates applicable in Section 14 and by deleting the proviso in Section 21. After a year, another tax ordinance has been approved Tax Ordinance 8011, amending Tax Ordinance No. 7988. However, both ordinances were later declared by the Court to be null and void.

But before the Court could declare them void, the City of Manila assessed the respondent on the basis of Section 21 of Tax Ordinance 7794, as amended, for the deficiency amount of P18,583,932.04 for the third and fourth quarters of 2000.

Coca-Cola Bottlers Philippines, Inc. filed a protest before petitioner Toledo on the ground that the said assessment is tantamount to double taxation as they are taxed twice under Section 14 and 21 of Tax Ordinance 7794, as amended.

Issues: Whether the City of Manila can still assess taxes under Section 14 and 21 of Tax Ordinance 7794, as amended.

Whether the application of Section 21 of Tax Ordinance 7794, as amended constitutes double taxation.

Case Digests | page no. 103 Ruling: Respondent cannot be taxed and assessed under the amendatory laws – Tax Ordinance 7988 and Tax Ordinance 8011. Prior to the passage of Tax Ordinance 7988 and Tax Ordinance 8011, petitioners subjected and assessed the respondent only for local business tax under Section 14 of Tax Ordinance 7794 which was due to the unambiguous proviso under Section 21 of the same. This said proviso, however, was deleted from Section 21 of Tax Ordinance 7944 by Tax Ordinances 7988 and 8011. Following this deletion, the petitioner started assessing the respondent for local business tax under Section 21 of Tax Ordinance 7794.

However, with the pronouncement by the Court in the Coca-Cola case that Tax Ordinance 7988 and Tax Ordinance 8011 were null and void and without legal effect, then Section 21 of Tax Ordinance 7794, as it has been previously worded, as an exempting proviso, is back in effect. Accordingly, respondent should not have been subjected to the local business tax under Section 21 of Tax Ordinance 7794.

There is, indeed, double taxation if the respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance 7794.

Double taxation means taxing the same property twice when it should be taxed only once; that is, “taxing the same person twice by the same jurisdiction for the same thing.” It is obnoxious when the taxpayer is taxed twice, when it should be but once.

In this case, should the petitioner continue with their proposition of taxing the respondent under Section 21 of Tax Ordinance 7794, double taxation happens because of: a) Respondent is taxed on the same subject matter: the privilege of doing business in the City of Manila b) Respondent is taxed on the same purpose: to make those who conducts business in the City of Manila contribute to city revenues c) Respondent is taxed by the same taxing authority: the City of Manila

page no. 104 | Case Digests d) Respondent is taxed within the same taxing jurisdiction: within the City of Manila e) Respondent is taxed for the same taxing periods: per calendar year f) Respondent’s taxes are of the same kind or character: a local business tax

PETRON CORPORATION v TIANGCO, ET AL 2008 | GR No. 158881 Taxation Law Facts: Petron maintains a depot or bulk plant in Navotas Fishport Complex, Navotas. On March 1, 2002, Petron Corporation received a letter from the Navotas Mayor Tiangco declaring that the former has been assessed taxes “relative to the figures covering the sale of diesel declared by the Navotas Terminal from 1997 to 2001”.

Petron then filed a letter-protest to the notice of assessment and argued that it was exempt from local business taxes under Art. 232(h) of the Implementing Rules of the Code as well as a ruling of the Bureau of Local Government Finance dated July 31, 1995.

The letter protest was denied. Soon, Petron filed with Malabon RTC a Complaint fo Cancellation of Assesment for Deficiency Taxes with Prayer for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction. During the pendency of the case, respondents refused to issue a business permit to Petron prompting it to file a Supplemental Complaint with Prayer for Preliminary Mandatory Injunction against respondents.

On May 5, 2003, Malabon RTC dismissed Petron’s complaint and ordered the payment of the assessed amount. Eleven days after, Petron received a Closure Order from the Mayor.

Issue: Whether the local government unit is empowered under the Local

Case Digests | page no. 105 Government Code to impose business taxes on persons and entities engaged in the sale of petroleum products.

Ruling: The tax assessment is ultra vires and void. The power of the local government units to impose business or other local taxes is rooted in the fiscal autonomy granted by the 1987 Constitution. Congress, however, may impose limitations, and Section 133 of the Code is one of such limitation. The Court conceded that a tax on a business is distinct from a tax on the article itself, or for that matter, that a business tax is distinct from an excise tax. However, such distinction is immaterial insofar as the latter part of Section 133(h) is concerned, for the phrase “taxes, fees or charges on petroleum products” does not qualify the kind of taxes, fees or charges that could withstand the absolute prohibition imposed by the provision. It would have been a different matter had Congress, in crafting Section 133(h), barred “excise taxes” or “direct taxes,” or any category of taxes only, for then it would be understood that only such specified taxes on petroleum products could not be imposed under the prohibition.

The absence of such a qualification leads to the conclusion that all sorts of taxes on petroleum products, including business taxes, are prohibited by Section 133(h).

The power of a municipality to impose business taxes is embodied in Section 143 of the Local Government Code, which authorizes a municipality to impose business taxes on a whole host of business activities which necessarily includes selling diesel fuels, and any other petroleum product. Section 133(h), on the other hand, provides two kinds of taxes which cannot be imposed by local government units, “excise taxes on articles enumerated” under the NIRC and “taxes, fees, or charges on petroleum products.”

The contention of Petron that to bar the local government units from taxing “excise taxes” is untenable for it were sustained, it would mean that local government units are barred from imposing business taxes on any of the articles subject to excise taxes under the NIRC. The Supreme Court went on by explaining that if the

page no. 106 | Case Digests local government units were authorized to impose business taxes on manufacturers and retailers of petroleum products, the resulting losses to these enterprises would be passed on to the consumers triggering the chain of increases that normally accompany the increase in oil prices.

PHILIPPINE HEALTH CARE PROVIDERS, INC. V. CIR 2009 | GR No 167330 Taxation Law Facts:

On January 27, 2000, CIR sent a formal demand letter to the petitioner and corresponding assessment notices, demanding the payment of deficiency taxes. The deficiency assessment was imposed on petitioner’s health care agreement with members of its health care program, pursuant to Sec. 185 of the 1997 Tax Code.

The petitioner protested but CIR did not act on such protest, prompting petitioner to file a petition for review in the CTA, seeking for the cancellation of the deficiency VAT and DST assessment.

The CTA ultimately held that petitioner’s health care agreement was in the nature of a non-life insurance contract, subject to DST. Issue: Whether petitioner is liable for DST payment; whether petitioner is an HMO or an insurance company; whether the availment of tax amnesties under RA 9480 renders the issue of DST moot and academic Ruling: The Court held that HMO are not engaged in the insurance business.

Sec. 185 of the 1997 NIRC provides that two requisites must concur before DST can apply: the document must be a policy of insurance

Case Digests | page no. 107 or an obligation in the nature of indemnity, and the maker should be transacting the business of branches of insurance. An HMO is an entity which provides, offers or arranges for the coverage of designated health services needed by plan members for a fixed premium. In the application of US jurisprudence (Jordan v. Group Health Associatior), it was held that Group Health Association should not be considered as engaged in insurance activities since it was created primarily for the distribution of health care services rather than the assumption of risk. That an incidental element of risk distribution or assumption may be present should not outweigh all other factors. In California Physicians’ Service v. Garrison, it was service rather than indemnity which stood as its principal purpose.

Overall, petitioner appears to provide insurance-type benefits to its members (with respect to its curative medical services), but these are incidental to the principal activity of providing them medical care. The “insurance-like” aspect of petitioner’s business is miniscule compared to its noninsurance activities. Therefore, since it substantially provides health care services rather than insurance services, it cannot be considered as being in the insurance business.

In construing Art. 185, we should be guided by the principle that tax statutes are strictly construed against the taxing authority.

MANUEL ESPIRITU V. PETRON CORPORATION 2009 |GR NO. 170891 Commercial Law Facts: Respondent Carmen Doloiras owned and operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul in Sorsogon.

Jose Nelson Doloiras served as KPE’s manager. Petitioner Audie Llona managed Bicol Gas, who was in the business of selling and distributing LPGs in Sorsogon. They carried the trademark of Bicol Savers Gas. In the course of business, any given distributor would at times

page no. 108 | Case Digests acquire the possession of LPG tanks belonging to other distributors in the same area (captured cylinders). Jose stated that they would swap the cylinders since the distributors could not refill the captured cylinders with its own brand of LPG. Jose observed that on a daily basis, Bicol Gas trucks carried a lot of Gasul tanks, and that KPE sales volume dropped significantly from June-July 2001. He soon discovered that Bicol Gas refilled the cylinders with their own gas.

KPE filed for violations of Republic Act (R.A.) 623 (illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas. These directors, officers, and stockholders were eventually identified during the preliminary investigation. The provincial prosecutor ruled that there was probable cause only for violation of R.A. 623 (unlawfully filling up registered tanks) and that only the four Bicol Gas employees, Mirabena, Misal, Leorena, and petitioner Llona, could be charged.

The charge against the other petitioners who were the stockholders and directors of the company was dismissed.

Issue: Whether the stockholders should be included in the information charged Ruling: R.A. 623, as amended, punishes any person who, without the written consent of the manufacturer or seller of gases contained in duly registered steel cylinders or tanks, fills the steel cylinder or tank, for the purpose of sale, disposal or trafficking, other than the purpose for which the manufacturer or seller registered the same. Bicol Gas employees filled up with their firms gas the tank

Case Digests | page no. 109 registered to Petron and bearing its mark without the latters written authority. Consequently, they may be prosecuted for that offense.

However, they are not liable for trademark infringement and unfair competition.

As to the liabilities of the stockholders, they are not liable. Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its officers, directors, and stockholders. It has been held, however, that corporate officers or employees, through whose act, default or omission the corporation commits a crime, may themselves be individually held answerable for the crime. Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with Bicol Gas, its manager, petitioner Audie Llona, claimed that he would be consulting with the owners of Bicol Gas about it. Subsequently, Bicol Gas declined the offer to swap cylinders for the reason that the owners wanted to send their captured cylinders to Batangas. The Court of Appeals seized on this as evidence that the employees of Bicol Gas acted under the direct orders of its owners and that the owners of Bicol Gas have full control of the operations of the business.

The owners of a corporate organization are its stockholders and they are to be distinguished from its directors and officers. The petitioners here, with the exception of Audie Llona, are being charged in their capacities as stockholders of Bicol Gas. But the Court of Appeals forgets that in a corporation, the management of its business is generally vested in its board of directors, not its stockholders.

Stockholders are basically investors in a corporation. They do not have a hand in running the day-to-day business operations of the corporation unless they are at the same time directors or officers of the corporation. Before a stockholder may be held criminally liable for acts committed by the corporation, therefore, it must be shown that he had knowledge of the criminal act committed in the name of the corporation and that he took part in the same or gave his consent to its commission, whether by action or inaction.

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VALLE VERDE COUNTRY CLUB VS. AFRICA 2009 | GR No. 151969 Commercial Law Facts: Ernesto Villaluna, Jaime C. Dinglasan (Dinglasan), Eduardo Makalintal (Makalintal), Francisco Ortigas III, Victor Salta, Amado M. Santiago, Jr., Fortunato Dee, Augusto Sunico, and Ray Gamboa were elected as BOD during the Annual Stockholders’ Meeting of petitioner Valle Verde Country Club, Inc. (VVCC) In 1997 to 2001, requisite quorum could not be obtained so they continued in a hold-over capacity. In 1998: Dinglasan resigned, BOD still constituting a quorom elected Eric Roxas (Roxas). Makalintal also resigned in the same year. In 2001, Jose Ramirez (Ramirez) was elected by the remaining BOD Respondent Africa (Africa), a member of VVCC, questioned the election of Roxas and Ramirez as members of the VVCC Board with the Securities and Exchange Commission (SEC) and the Regional Trial Court (RTC) as contrary to: Sec. 23. The board of directors or trustees. - Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for 1 year until their successors are elected and qualified.

Sec. 29. Vacancies in the office of director or trustee. Any vacancy occurring in the board of directors or trustees other than by removal by the stockholders or members or by expiration of term, may be filled by the vote of at least a majority of the remaining directors or trustees, if still

Case Digests | page no. 111 constituting a quorum; otherwise, said vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. A director or trustee so elected to fill a vacancy shall be elected only for the unexpired term of his predecessor in office. xxx.

Makalintal’s term should have expired after 1996 there being no unexpired term. The vacancy should have been filled by the stockholders in a regular or special meeting called for that purpose Issue: Whether the remaining directors of a corporation’s Board, still constituting a quorum, can elect another director to fill in a vacancy caused by the resignation of a hold-over director.

Ruling: In situations where directors/trustees are acting on a hold-over capacity, there are actually vacancies caused by expiration of terms, and the resignation of a hold-over director/trustee cannot change the nature of the vacancy. Hence, a vacancy caused by resignation of a hold-over director/trustee cannot be filled by the vote of the directors/trustees, but rather, by the vote of stockholders/members in a regular or special meeting called for the purpose, as it is provided in Sec. 29 of the Corporation Code.

MARC II MARKETING, INC. VS. ALFREDO M. JOSON 2011 | GR NO. 171993 Commercial Law Facts: Respondent Alfredo Joson was the General Manager, incorporator, director and stockholder of Marc II Marketing (petitioner corporation).

Before petitioner corporation was officially incorporated, respondent has already been engaged by petitioner

page no. 112 | Case Digests Lucila Joson, in her capacity as President of Marc Marketing Inc., to work as the General Manager of petitioner corporation through a management contract.

However, petitioner corporation decided to stop and cease its operation wherein respondent’s services were then terminated.

Feeling aggrieved, respondent filed a Complaint for Reinstatement and Money Claim against petitioners before the Labor Arbiter which ruled in favor of respondent. The National Labor and Relations Commission (NLRC) reversed said decision. The Court of Appeals (CA) however, upheld the ruling of the Labor Arbiter. Hence, this petition.

Issue: Whether or not the Labor Arbiter has jurisdiction over the controversy at bar.

Ruling: While Article 217(a) 229 of the Labor Code, as amended, provides that it is the Labor Arbiter who has the original and exclusive jurisdiction over cases involving termination or dismissal of workers when the person dismissed or terminated is a corporate officer, the case automatically falls within the province of the Regional Trial Court (RTC). The dismissal of a corporate officer is always regarded as a corporate act and/or an intra-corporate controversy.

In conformity with Section 25 of the Corporation Code, whoever are the corporate officers enumerated in the by-laws are the exclusive officers of the corporation and the Board has no power to create other officers without amending first the corporate by-laws. However, the Board may create appointive positions other than the positions of the corporate officers, but the persons occupying such positions are not considered as corporate officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions of the corporate officers, except those functions lawfully delegated to them. Their functioning and duties are to be determined

Case Digests | page no. 113 by the Board of Directors/Trustees.

In the case at bar, the respondent was not a corporate officer of petitioner corporation because his position as General Manager was not specifically mentioned in the roster of corporate officers in its corporate by-laws. Thus respondent, can only be regarded as its employee or subordinate official. Accordingly, respondent’s dismissal as petitioner corporation’s General Manager did not amount to an intra-corporate controversy. Jurisdiction therefore properly belongs with the Labor Arbiter and not with the RTC.

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION vs.RICARDO R. COROS 2010 | G.R. No. 157802 Commercial Law Facts: After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed on August 10, 2000, a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate officers (petitioners) in the NLRC. The petitioners moved to dismiss the complaint contending that the jurisdiction is with the Securities and Exchange Commission (SEC) due to the controversy being intra-corporate.

The respondent was a member of Matling’s Board of Directors aside from being its Vice-President for Finance and Administration prior to his termination.

The respondent opposed the petitioners’ motion to dismiss, insisting that his status as a member of Matling’s Board of Directors was doubtful, considering that he had not been formally elected; he did not own a single share of stock in Matling; he had been removed as the Vice President for Finance and Administration, not as a Director The Labor Arbiter granted the motion to dismiss ruling that the

page no. 114 | Case Digests respondent was a corporate officer. The respondent appealed to the NLRC, which set aside the dismissal, concluding that the respondent’s complaint for illegal dismissal was properly cognizable by the LA, not by the SEC, because he was not a corporate officer by virtue of his position in Matling, albeit high ranking and managerial, not being among the positions listed in Matling’s Constitution and By-Laws.

The petitioners elevated the issue to the CA by petition for certiorari.

The CA dismissed the petition for certiorari.

Issues: Whether or not the respondent was a stockholder/member of the Matling’s Board of Directors as well as its Vice President for Finance and Administration; Whether or not the respondent was a corporate officer of Matling or not. The resolution of the issue determines whether the LA or the RTC had jurisdiction over his complaint for illegal dismissal.

Ruling: Where the complaint for illegal dismissal concerns a corporate officer, the controversy falls under the jurisdiction of the Securities and Exchange Commission (SEC), because the controversy arises out of intra-corporate or partnership relations between and among stockholders, members, or associates, or between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership, or association and the State insofar as the controversy concerns their individual franchise or right to exist as such entity; or because the controversy involves the election or appointment of a director, trustee, officer, or manager of such corporation, partnership, or association. Such controversy, among others, is known as an intra-corporate dispute.Upon the passage of Republic Act No. 8799, otherwise known as The Securities Regulation Code, the SEC’s jurisdiction over all intra-corporate

Case Digests | page no. 115 disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799 In this case, respondent was appointed vice president for nationwide expansion by Malonzo, petitioner’s general manager, not by the board of directors of petitioner. It was also Malonzo who determined the compensation package of respondent. Thus, respondent was an employee, not a “corporate officer.”

This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states that the corporate officers are the President, Secretary, Treasurer and such other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in the context of PD No. 902-A are exclusively those who are given that character either by the Corporation Code or by the corporation’s By-Laws.

The respondent was not appointed as Vice President for Finance and Administration because of his being a stockholder or Director of Matling. He had started working for Matling on September 8, 1966, and had been employed continuously for 33 years until his termination on April 17, 2000, first as a bookkeeper, and his climb in 1987 to his last position as Vice President for Finance and Administration had been gradual but steady.

Even though he might have become a stockholder of Matling in 1992, his promotion to the position of Vice President for Finance and Administration in 1987 was by virtue of the length of quality service he had rendered as an employee of Matling. His subsequent acquisition of the status of Director/stockholder had no relation to his promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from employment as Vice President for Finance and Administration.

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VICENTE C. PONCE vs. ALSONS CEMENT CORPORATION, and FRANCISCO M. GIRON, JR. 2002 | G.R. NO. 139802 Commercial Law Facts: On January 25, 1996, Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against defendants (now respondents) Alsons Cement Corporation and its corporate secretary Francisco M. Giron, Jr. Petitioner prayed that judgment be rendered ordering respondents: (a) to issue in his name certificates of stocks covering the 239,500 shares of stocks and its legal increments and (b) to pay him damages.

Respondents argued, inter alia, that there being no allegation that the alleged “INDORSEMENT” was recorded in the books of the corporation, said indorsement by Gaid to the plaintiff of the shares of stock in question—assuming that the indorsement was in fact a transfer of stocks—was not valid against third persons such as ALSONS under Section 63 of the Corporation Code. There was, therefore, no specific legal duty on the part of the respondents to issue the corresponding certificates of stock, and mandamus will not lie.

Issue: Whether the Court of Appeals erred in holding that herein petitioner has no cause of action for a writ of mandamus.

Ruling: In the absence of any allegation that the transfer of the shares between Fausto Gaid and Vicente C. Ponce was registered in the stock and transfer book of ALSONS, Ponce failed to state a cause of action.

Case Digests | page no. 117

The Supreme Court held that the law does not prescribe a period within which the registration should be effected, the action to enforce the right does not accrue until there has been a demand and a refusal concerning the transfer. In the present case, petitioner’s complaint for mandamus must fail, not because of laches or estoppel, but because he had alleged no cause of action sufficient for the issuance of the writ.

OSCAR C. REYES v HON. REGIONAL TRIAL COURT OF MAKATI 2008 | GR NO 165744 Facts: Oscar and Rodrigo Reyes were two of the four children of spouses Pedro and Anastacia Reyes which founded the Zenith Insurance Corporation. Pedro died in 1964 and his estate was judicially partitioned. When Anastacia died in 1993, her estate was not settled including the 136,598 shares in Zenith. Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively. On May 9, 2000, Zenith and Rodrigo filed a complaint with the SEC. The complaint stated that it is a derivative suit initiated and filed to obtain an accounting of the funds and assets of Zenith Insurance Corporation and to determine the shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriate, which were not collated and taken into account in the settlement of the estate of the deceased spouses.

Oscar questioned the SEC’s jurisdiction to entertain the complaint because it pertains to the settlement of the estate. The case was transferred to the RTC. Subsequently Oscar claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed.

page no. 118 | Case Digests Issue: Was there an intra-corporate controversy to give jurisdiction to the special commercial court over the case?

Ruling: The case failed to meet the two-tier test (Relationship and Nature of Controversy test) To determine whether a case involves an intracorporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates; between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns their individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. (Speed Distribution, Inc. v. Court of Appeals) Relationship test What is material in resolving the issues of this case under the allegations of the complaint is Rodrigos interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigos personally-owned shares nor on his personality as shareholder owning these shares.

Without the settlement of Anastacias estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer.

Case Digests | page no. 119 And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court.

Nature of controversy test The examination of the complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as a complaint for accounting of all corporate funds and assets.

BANK OF THE PHILIPPINE ISLANDS vs BPI EMPLOYEES UNION-DAVAO CHAPTERFEDERATION OF UNIONS IN BPI UNIBANK 2010 | G.R. No. 164301 Commercial Law Facts: There was a merger between BPI and Far East Bank and Trust Company (FEBTC). Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI as the surviving corporation. FEBTC employees, including those in its different branches across the country, were hired by petitioner as its own employees, with their status and tenure recognized and salaries and benefits maintained.

BPI has an existing CBA with BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank which is the exclusive bargaining agent of BPI’s rank and file employees in Davao City.

A Union Shop Clause was embodied in the CBA which contains among others that new employees must join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank. After several meetings, FEBTC’s employees refused to join the Union. Consequently, the president of the Union requested BPI to implement the Union Shop Clause

page no. 120 | Case Digests of the CBA and to terminate their employment pursuant thereto.

However, BPI refused claiming that, the former FEBTC employees were not covered by the Union Shop Clause of the CBA between the Union and the Bank on the ground that the said employees were not new employees who were hired and subsequently regularized, but were absorbed employees by operation of law because the former employees of FEBTC can be considered assets and liabilities of the absorbed corporation.

Issue: Whether the FEBTC employees were absorbed by BPI merely as a legal consequence of a merger?

Ruling: No, BPIs absorption of former FEBTC employees was neither by operation of law nor by legal consequence of contract. There was no government regulation or law that compelled the merger of the two banks or the absorption of the employees of the dissolved corporation by the surviving corporation. Had there been such law or regulation, the absorption of employees of the non-surviving entities of the merger would have been mandatory on the surviving corporation.

In the present case, the merger was voluntarily entered into by both banks presumably for some mutually acceptable consideration. Sec. 80 of the Corporation Code does not also mandate the absorption of the employees of the non-surviving corporation by the surviving corporation in the case of a merger.

The Court believes that it is contrary to public policy to declare the former FEBTC employees as forming part of the assets or liabilities of FEBTC that were transferred and absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should be deemed to refer only to property rights and obligations of FEBTC and do not include the employment contracts of its personnel. A corporation cannot unilaterally transfer its employees to another employer like chattel.

Case Digests | page no. 121

VALLEY GOLF AND COUNTRY CLUB, INC. VS. ROSA O. VDA. DE CARAM 2009 | GR.NO. 158805 Commercial Law Facts: The late Congressman Caram (Respondent’s husband) subscribed to purchased and paid for in full one share (Golf Share) in the capital stock of Petitioner. Despite the five demand letters sent by Petitioner, Caram defaulted in paying his monthly dues. Thus, Petitioner sold Caram’s golf membership share at a public auction.

As it turned out, Caram had died on October 6, 1986. His wife, herein Respondent, initiated instestate proccedings before the RTC of Iloilo City, Branch 35. As a result, Caram’s Golf Share was adjudicated to herein Respondent.

An action for reconveyance of the Golf Share with damages was filed by Respondent before the Securities and Exchange Commission (SEC) against Petitioner. The SEC Hearing Officer ordered Petitioner to convey ownership of the Golf Share, or in the alternative, to issue one fully paid share of stock of the same class as the Golf Share to Respondent, plus damages in the amount of P90,000.00.

Issue: Whether or not a non-stock corporation may seize and dispose of the membership of a fully-paid member on account of its unpaid debts to the corporation when it is authorized to do so under the corporateby-laws but not the Articles of Incorporation?

Ruling: Citing Section 91 of the Corporation Code which deals with termination of membership in a non-stock corporation, the Supreme Court ruled that the right of a non-stock corporation to expel a

page no. 122 | Case Digests member through the forfeiture of the Golf Share may be established in the by-laws alone. Section 91 provides:

SEC. 91. Termination of membership.Membership shall be terminated in the manner and for the causes provided in the articles of incorporation or the by-laws. Termination of membership shall have the effect of extinguishing all rights of a member in the corporation or in its property, unless otherwise provided in the articles of incorporation or the by-laws.

However, the Supreme Court pointed out that Petitioner acted in bad faith when it sent the final notice to Caram under the pretense they believed him to be still alive, when in fact they had very well known that he had already died, thus, he would not be able to settle the obligation himself, resulting to the sale of his golf membership share.

The Court ruled that this reason alone is sufficient to nullify the sale and sustain the rulings of the SEC and the Court of Appeals. The same, as ruled by the Supreme Court, could bring into operation Articles 19, 20 and 21 under the Chapter on Human Relations of the Civil Code. These provisions enunciate a general obligation under law for every person to act fairly and in good faith towards one another. Non-stock corporations and its officers are not exempt from that obligation.

POWER HOMES UNLIMITED CORPORATION VS. SECURITIES AND EXCHANGE COMMISSION 2008 | G.R. No. 164182 Commercial Law Facts: Petitioner is a domestic corporation duly registered with Public Respondent SEC, and is engaged in the transaction of promoting, acquiring, managing, leasing, obtaining options on, development, and improvement of real estate properties for subdivision and allied purposes, and in the purchase, sale and/or exchange of said

Case Digests | page no. 123 subdivision and properties through network marketing.

Public Respondent SEC acted on the letters of Respondent Noel Manero and a certain Romulo Munsayac, Jr. Manero alleged that in a seminar he attended, Petitioner claimed that it sells properties that were inexistent and without any broker’s license. Munsayac on the other hand, inquired whether Petitioner’s business is legitimate or not.

After investigation, Public Respondent SEC found out that Petitioner is engaged in the sale or offer for sale or distribution of investment contracts, which are considered securities under Sec. 3.1 (b) of Republic Act (R.A.) No. 8799 (The Securities Regulation Code), but failed to register them in violation of Sec. 8.1 of the same Act, Public Respondent SEC issued a Cease and Desist Order against Petitioner.

Issues: Whether or not Public Respondent SEC followed due process in the issuance of the assailed Cease and Desist Order; Whether or not Petitioner’s business constitutes an investment contract which should be registered with Public Respondent SEC before its sale or offer for sale or distribution to the public.

Ruling: The Court held that Petitioner was not denied of due process. The records reveal that Public Respondent SEC properly examined petitioners business operations when it (1) called into conference three of petitioners incorporators, (2) requested information from the incorporators regarding the nature of petitioners business operations, (3) asked them to submit documents pertinent thereto, and (4) visited petitioners business premises and gathered information thereat.

All these were done before the CDO was issued by the Public Respondent SEC.

page no. 124 | Case Digests The Court ruled that Petitioner’s business constitutes an investment contract, thus, should be registered with Public Respondent SEC before its sale or offer for sale of distribution to the public.

To determine whether a transaction falls within the scope of an investment contract, the Court made use of the Howey Test which provides that an investment contract requires a transaction, contract, or scheme whereby a person: (1) makes an investment of money, (2) in a common enterprise, (3) with the expectation of profits, (4) to be derived solely from the efforts of others.

Ciiting SEC v. Glenn W. Turner Enterprises, Inc. et al., the Court therefore ruled that the business operation or the scheme of Petitioner constitutes an investment contract that is a security under R.A. No. 8799. Thus, it must be registered with Public Respondent SEC before its sale or offer for sale or distribution to the public.

As petitioner failed to register the same, its offering to the public was rightfully enjoined by Public Respondent SEC. The CDO was proper even without a finding of fraud.

JOSEPH VICTOR SANDIGANBAYAN 2006 | 509 SCRA 140 Commercial Law

G.

EJERCITO

vs.

Facts: Ejercito is the owner of Trust Account No. 858 and Savings Account No. 0116-17345-9. Ejercito charged with Plunder.

Special Prosecution Panel had requested from the Sandiganbayan the issuance of subpoenas for the examination of bank accounts belonging to Ejercito. The Sandiganbayan granted requests.

Subpoenas were accordingly issued.

Petitioner filed a Motion to Quash, claiming that his bank accounts are covered by R.A. No. 1405 and do not fall under any of the exceptions stated therein. He further claimed that the specific

Case Digests | page no. 125 identification of documents in the questioned subpoenas, could only have been made possible by an earlier illegal disclosure by the EIB and the PDIC in its capacity as receiver of the then Urban Bank.

Issues: Whether petitioner’s Trust Account No. 858 is covered by the term “deposit” as used in R.A. 1405.

Whether petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9 are excepted from the protection of R.A. 1405.

Ruling: The policy behind the law is laid down in Section 1. If the money deposited under an account may be used by banks for authorized loans to third persons, then such account, regardless of whether it creates a creditor-debtor relationship between the depositor and the bank, falls under the category of accounts which the law precisely seeks to protect for the purpose of boosting the economic development of the country.

Trust Account No. 858 is one such account. The Trust Agreement between petitioner and Urban Bank provides that the trust account covers “deposit, placement or investment of funds” by Urban Bank for and in behalf of petitioner. The money deposited under Trust Account No. 858, was intended not merely to remain with the bank but to be invested by it elsewhere. To hold that this type of account is not protected by R.A. 1405 would encourage private hoarding of funds that could otherwise be invested by banks in other ventures, contrary to the policy behind the law.

The protection afforded by the law is not absolute, there being recognized exceptions thereto, as Section 2 provides. In the present case, two exceptions apply, to wit: (1) the examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials, and (2) the money deposited

page no. 126 | Case Digests or invested is the subject matter of the litigation.

Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to the other. This policy expresses the notion that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny. Undoubtedly, cases for plunder involve unexplained wealth. Section 2 of R.A. No. 7080 states so.

SEC vs. PROSPERITY.COM, INC. 2012 | GR No. 164197 Commercial Law Facts: PCI sold computer software and hosted websites without providing internet service. To make a profit, PCI devised a scheme in which, for the price of US$234.00 a buyer could acquire from it an internet website of a 15MB capacity. At the same time, by referring to PCI his own down-line buyers, a first-time buyer could earn commissions, interest in real estate in the Philippines and in the United States, and insurance coverage worth P50,000.00.

To benefit from this scheme, a PCI buyer must enlist and sponsor at least two other buyers as his own down-lines. These second tier of buyers could in turn build up their own down-lines. For each pair of down-lines, the buyer-sponsor received a US$92.00 commission.

But referrals in a day by the buyer-sponsor should not exceed 16 since the commissions due from excess referrals inure to PCI, not to the buyer-sponsor.

Issue: Whether or not PCI’s scheme constitutes an investment contract that

Case Digests | page no. 127 requires registration under R.A. 8799.

Ruling: The Securities Regulation Code treats investment contracts as “securities” that have to be registered with the SEC before they can be distributed and sold. An investment contract is a contract, transaction, or scheme where a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.

The United States Supreme Court held in SEC v. W.J. Howey Co. that, for an investment contract to exist, the following elements, referred to as the Howey test must concur: (1) a contract, transaction, or scheme; (2) an investment of money; (3) investment is made in a common enterprise; (4) expectation of profits; and (5) profits arising primarily from the efforts of others. Thus, to sustain the SEC position in this case, PCI’s scheme or contract with its buyers must have all these elements.

PCI’s clients do not make such investments. They buy a product of some value to them. The buyers of the website do not invest money in PCI that it could use for running some business that would generate profits for the investors. The price of US$234.00 is what the buyer pays for the use of the website, a tangible asset that PCI creates, using its computer facilities and technical skills.

The commissions, interest in real estate, and insurance coverage worth P50,000.00 are incentives to down-line sellers to bring in other customers. These can hardly be regarded as profits from investment of money under the Howey test.

The CA is right in ruling that the last requisite in the Howey test is lacking in the marketing scheme that PCI has adopted. Evidently, it is PCI that expects profit from the network marketing of its products.

PCI is correct in saying that the US$234 it gets from its clients is merely a consideration for the sale of the websites that it provides.

page no. 128 | Case Digests

BSB GROUP, INC VS. SALLY GO 2010 | G.R. NO. 168644 Commercial Law Facts: Petitioner is a duly organized domestic corporation presided by its representative, Bangayan. Respondent is Bangayan’s wife, who was employed in the company as a cashier, and was engaged, among others, to receive and account for the payments made by the various customers of the company. Bangayan filed a complaint for estafa and/or qualified theft against respondent, alleging that several checks representing the aggregate amount of P1,534,135,50 issued by the company’s coffer, indorsed by respondent who deposited the same to her personal banking account maintained at Security Bank.

The prosecution was able to present the testimony of Marasigan, the representative of Security Bank. In the course of the testimony, the subject checks were presented to Marasigan for identification and marking as the same checks received by respondent, endorsed, and then deposited in her personal account with Security Bank.

Respondent invoked, in addition to irrelevancy, the privilege of confidentiality under RA 1405.

Issue: Whether the accompanying documents are violative of the absolutely confidential nature of bank deposits and, hence, excluded by operation of RA No. 1405.

Ruling: Right to privacy of such account stems from RA No. 1405 otherwise known as the Bank Secrecy Act of 1955. Section 2 of the law institutionalized this policy by characterizing as absolutely confidential in general all deposits of whatever nature with banks and other financial institutions in the country.

Case Digests | page no. 129 The subject matter of the action is the money amounting to P1,534,135.50 alleged to have been stolen by respondent, and not the money equivalent of the checks which are sought to be admitted in evidence. Thus, it is that, which prosecuti8on is bound to prove with its evidence, and no other.

The admisson of testimonial and documentary evidence relative to respondent’s Security Bank account serves no other purpose than to establish the existence of such account, its nature and the amount it kept in it. It constitutes an attempt by the prosecution at an impermissible inquiry into a bank deposit account the privacy and confidentiality of which is protected by law.

PHILIPPINE DEPOSIT INSURANCE CORPORATION VS. CITIBANK, N.A. AND BANK OF AMERICA, S.T.&N.A. 2012 | G.R. NO. 170290 Commercial Law Facts: PDIC conducted an examination of the books of account of Citibank.

It discovered accounts which were not reported to PDIC as deposit liabilities that were subject to assessment for insurance. As such, petitioner, in a letter, assessed Citibank for deficiency in the sum of P1,595,081.96.

PDIC examined the books of accounts of Bank of America (BA) which revealed that there were accounts which were excluded from its deposit liabilities. PDIC wrote to BA seeking the remittance of P109,264.83 representing deficiency premium assessments for dollar deposits.

Respondents filed a petition for declaratory relief before the RTC alleging that the money placements they received from their head office and other branches were not deposits and did not give rise to insurable deposit liabilities under Sec. 3 and 4 of RA 3591 .

page no. 130 | Case Digests Issue: Whether the funds placed in the Philippine branch by the head office and foreign branches of Citibak and BA are insurable deposits under the PDIC charter, and, as such, are subject to assessment for insurance premiums.

Ruling: PDIC argues that the head offices of Citibank and BA and their individual foreign branches are separate and independent entities.

Court disagrees with PDIC’s contention. A branch has no separate legal personality. Their Philippine branches are without a separate legal personality from their parent company. Thus, being one and the same entity, the funds placed by the respondent in their respective branches in the Philippines should not be treated as deposits made by third parties subject to deposit insurance under the PDIC charter.

Funds which are not considered a deposit under the definition of the PDIC Charter are excluded from assessment. Inter-branch deposits refer to funds of one branch deposit in other branch and both branches are part of the same company and it is the practice of PDIC to exclude such inter-branch deposits from a bank’s total deposit liabilities subject to assessment.

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) VS. PHILIPPINE COUNTRYSIDE RURAL BANK, INC. (PCRBI) 2011 | G.R. No. 176438 Commercial Law Facts: The PDIC filed a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 18, 2006 Decision of the Court of Appeals-Cebu (CA-Cebu) which granted the petition for injunction filed by respondents PCRBI, RBCI, BEAI, and PRBI, all collectively referred to as “Banks”.

Case Digests | page no. 131 On March 9, 2005, the PDIC Board of Directors adopted a resolution approving the conduct of an investigation, in accordance with Section 9 (b-1) of Republic Act (R.A.) No. 3591, as amended, on the basis of the Reports of Examination of the Bangko Sentral ng Pilipinas (BSP) on ten (10) banks, four (4) of which are respondents in this petition for review; created a Special Investigation Team to conduct the said investigation.

Notices of investigation were issued to the Banks; the PDIC Investigation Team were refused entry and access to records and documents on the ground that its investigatory power pursuant to Section 9 (b-1) of R.A. 3591, as amended, cannot be differentiated from the examination powers accorded to PDIC under Section 8, paragraph 8 of the same law, under which, prior approval from the Monetary Board (MB) is required.

The PDIC replied that the “PDIC’s investigation power does not need prior approval of the MB.” Issue: Whether prior approval of the Monetary Board is necessary before the PDIC may conduct an investigation of the banks Ruling: NO. Monetary Board approval is not required for PDIC to conduct an investigation on the Banks. Section 9 (b-1) of the PDIC Charter provides that: “(b-1) The investigators appointed by the Board of Directors shall have the power on behalf of the Corporation to conduct investigations on frauds, irregularities, and anomalies committed in banks, based on reports of examination conducted by the Corporation and BSP or complaints from depositors or from other government agency. Each such investigator shall have the power to administer oaths, and to examine and take and preserve the testimony of any person relating to the subject of investigation.”

page no. 132 | Case Digests An examination of banks requires the prior consent of the Monetary Board, whereas an investigation based on an examination report, does not.

ETERNAL GARDENS MEMORIAL PARK CORPORATION VS. PHILIPPINE AMERICAN LIFE INSURANCE COMPANY 2008 | G.R. No. 166245 Commercial Law Facts: On December 10, 1980, Philippine American Life Insurance Company (Philamlife) entered into an agreement denominated as Creditor Group Life Policy No. P-1920 with Eternal Gardens Memorial Park Corporation (Eternal). Under the policy, the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. The amount of insurance coverage depended upon the existing balance of the purchased burial lots. The policy was to be effective for a period of one year, renewable on a yearly basis.

Eternal submitted a letter containing the list of insurable balances of its lot buyers for October 1982 attaching therewith the lot buyers’ insurance forms; Philamlife stamped the letter as received. One of those included in the list was John Chuang.

On August 2, 1984, Chuang died with a balance of Php 100,000.

Eternal sent a letter to Philamlife which served as an insurance claim for Chuang’s death. Eternal then demanded from Philamlife the payment of the claim since the latter had not furnished any reply to the insurance claim.

According to Philamlife, since no application had been submitted by the insured, prior to his death, for their approval, Mr. Chuang was not covered under the Policy. Moreover, their acceptance of premiums do not connote approval but are only held in trust for the payor.

Case Digests | page no. 133 Issue: Whether Philam’s inaction on the insurance application be considered as approval of the application Ruling: The fact of the matter is that Philamlife’s stamp of receipt on the letter dated December 29, 1982 has the effect of acknowledging receipt of the letter together with the attachments. Philamlife failed to prove that the letter did not contain Chuang’s insurance application; thus, Philamlife is deemed to have received said application. It was Philamlife’s bounden duty to make sure that before a transmittal letter is stamped as received, the contents of the letter are correct and accounted for.

Upon a party’s purchase of a memorial lot on installment from Eternal, an insurance contract covering the lot purchaser is created and the same is effective, valid, and binding until terminated by Philamlife by disapproving the insurance application. Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The termination of the insurance contract by the insurer must be explicit and unambiguous. In order to protect the interest of insurance applicants, insurance companies must be obligated to act with haste upon insurance applications, to either deny or approve the same, or otherwise be bound to honor the application as a valid, binding, and effective insurance contract.

page no. 134 | Student Council List

University of St. La Salle College of Law STUDENT COUNCIL A.Y. 2016-2017 Jaysun C. Buensalida President Edward Jorge Masa Vice President Kristianly Hazel Esclares Secretary Bebelan Madera Auditor Leah Bargaso Treasurer Jeremae Ceriaco Business Manager Marty Go PIO

Student Council List | page no. 135

Batch Representatives: Dennis Salem 4th year Saviya Alvestor 3rd year Lodilyn Chua 2nd year John Raymund Parreno 1st year

University of St. La Salle College of Law BAR OPERATIONS A.Y. 2016-2017 Mariz Andraneda Commissioner Jacquiline Eberechi Mitchelle Jacob Deputy Commissioner

page no. 136 | Faculty List

University of St. La Salle College of Law Faculty A.Y. 2016-2017 Atty. Maria Conchita Antipatia Atty. Maki Angel Ascalon Dr. Lorenzo Cabalfin Judge Rosario Orda Caise Fiscal Fernand Castro Atty. Lenon Jay Corgos Atty. Dennis Cortes Fiscal Ma. Theresa Ditching Atty. Alain Gatuslao Atty. Rosanne Juliana Gonzaga Judge Frances Guanzon Atty. Benjamin Hilado Atty. Ma. Corazon Katalbas Fiscal Elnathan Lim Atty. Alexander Mirano Atty. Pearl Montesino Atty. Ramon Antonio Pandan Atty. Raymundo Pandan

Faculty List | page no. 137

Atty. Wilfred Ramon PeĂąalosa Atty. Jezzel Rasimo Atty. Reuben Mikhail Sabig Atty. Allan Sacramento Atty. Ralph Sarmiento Atty. Jocelle Sigue Atty. Roev Bryl Sobejuanite Atty. Asia Sproten Atty. Milagros Salud Villanueva Atty. Michael Hanz Villaster Atty. Mac Lord Zafra Ms. Maria Lynn Salazar College Secretary Atty. Rosanne Juliana Gonzaga Dean

page no. 138 | New Laws New Laws: REPUBLIC ACT NO. 10911, July 21, 2016 AN ACT PROHIBITING DISCRIMINATION AGAINST ANY INDIVIDUAL IN EMPLOYMENT ON ACCOUNT OF AGE AND PROVIDING PENALTIES THEREFOR Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Short Title. – This Act shall be known as the “Anti-Age Discrimination in Employment Act”.

Sec. 2. Declaration of Policies. – The State shall promote equal opportunities in employment for everyone. To this end, it shall be the policy of the State to:Ch (a) Promote employment of individuals on the basis of their abilities, knowledge, skills and qualifications rather than their age. (b) Prohibit arbitrary age limitations in employment. (c) Promote the right of all employees and workers, regardless of age, to be treated equally in terms of compensation, benefits, promotion, training and other employment opportunities.

Sec. 3. Definition of Terms. – As used in this Act: (a) Employee refers to a person who performs professional, managerial or administrative work and is paid salaries by the

New Laws | page no. 139 employer as compensation for services rendered; (b) Employer refers to any person, natural or juridical, employing the services of an employee or worker and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned and -controlled corporations, and government financial institutions, as well as nonprofit private institutions or organizations; (c) Job applicant refers to a person who applies for employment; (d) Labor contractor refers to any person or an agent of that person who regularly undertakes, with or without compensation, the procurement of employees or workers for an employer, or the procurement for employees’ or workers’ opportunities to work for an employer; (e) Labor organization refers to any union or association of employees or workers which exists in whole or in part for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment; (f) Publisher refers to any person or juridical entity engaged in the printing of information on paper and its distribution, buying or securing of airtime or space on television, radio or the internet, and other similar media; and (g) Worker refers to a person who performs manual labor involving skilled or unskilled work, and is paid wages by the employer as compensation for services rendered.

page no. 140 | New Laws Sec. 4. Coverage. – The provisions of this Act shall apply to all employers, labor contractors or subcontractors, if any, and labor organizations.

Sec. 5. Prohibition of Discrimination in Employment on Account of Age. – (a) It shall be unlawful for an employer to: (1) Print or publish, or cause to be printed or published, in any form of media, including the internet, any notice of advertisement relating to employment suggesting preferences, limitations, specifications, and discrimination based on age; (2) Require the declaration of age or birth date during the application process; (3) Decline any employment application because of the individual’s age; (4) Discriminate against an individual in terms of compensation, terms and conditions or privileges of employment on account of such individual’s age; (5) Deny any employee’s or worker’s promotion or opportunity for training because of age; (6) Forcibly lay off an employee or worker because of old age; or (7) Impose early retirement on the basis of such employee’s or worker’s age.

New Laws | page no. 141 (b) It shall be unlawful for a labor contractor or subcontractor, if any, to refuse to refer for employment or otherwise discriminate against any individual because of such person’s age. (c) It shall be unlawful for a labor organization to: (1) Deny membership to any individual because of such individual’s age; (2) Exclude from its membership any individual because of such individual’s age; or (3) Cause or attempt to cause an employer to discriminate against an individual in violation of this Act. (d) It shall be unlawful for a publisher to print or publish any notice of advertisement relating to employment suggesting preferences, limitations, specifications, and discrimination based on age.

Sec. 6. Exceptions. – It shall not be unlawful for an employer to set age limitations in employment if: (a) Age is a bona fide occupational qualification reasonably necessary in the normal operation of a particular business or where the differentiation is based on reasonable factors other than age;cralawlawlibrary (b) The intent is to observe the terms of a bona fide seniority system that is not intended to evade the purpose of this Act;cralawlawlibrary

page no. 142 | New Laws (c) The intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan consistent with the purpose of this Act: Provided, That such retirement or voluntary retirement plan is in accordance with the Labor Code, as amended, and other related laws; or (d) The action is duly certified by the Secretary of Labor and Employment in accordance with the purpose of this Act. Sec. 7. Penalty. – Any violation of this Act shall be punished with a fine of not less than fifty thousand pesos (P50,000.00) but not more than five hundred thousand pesos (P500,000.00), or imprisonment of not less than three (3) months but not more than two (2) years, or both, at the discretion of the court. If the offense is committed by a corporation, trust, firm, partnership or association or other entity, the penalty shall be imposed upon the guilty officer or officers of such corporation, trust, firm, partnership or association or entity.

Sec. 8. Education and Research Programs. – The Department of Labor and Employment (DOLE) shall: (a) Conduct studies and researches on minimizing impediments to the employment of older persons, and furnish such information to employers, labor groups, and the general public; and (b) Promote programs, in coordination with public and private agencies, that will further enhance the knowledge and skills of every individual regardless of age.

Sec. 9. Implementing Rules and Regulations. – The DOLE shall

New Laws | page no. 143 have the authority to investigate and require the keeping of records necessary for the administration of this Act. Within ninety (90) days from the effectivity of this Act, the Secretary of Labor and Employment shall formulate the necessary rules and regulations to implement the provisions of this Act. Sec. 10. Separability Clause. – Should any provision of this Act be declared unconstitutional, the remainder thereof not otherwise affected shall remain in full force and effect.

Sec. 11. Repealing Clause. – All existing laws, presidential decrees, executive orders, proclamations or administrative regulations that are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

Sec. 12. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.

REPUBLIC ACT NO. 10909, July 21, 2016 AN ACT PROHIBITING BUSINESS ESTABLISHMENTS FROM GIVING INSUFFICIENT OR NO CHANGE TO CONSUMERS AND PROVIDING PENALTIES THEREFOR Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Short Title. – This Act shall be known as the “No Shortchanging Act of 2016”.

page no. 144 | New Laws Sec. 2. Declaration of Policy. – It is the policy of the State to protect the interest and promote the general welfare of the consumer as well as establish standards of conduct for business and industry.

Towards this end, the State shall implement measures to achieve the following objectives; (a) Protection of consumers against deceptive, unfair and unconscionable sales acts and practices; (b) Institutionalization of the industry practice of giving exact change to consumers of goods and services; (c) Provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer; (d) Provision of adequate rights and means of redress for consumers; and (e) Provision of penalties for offenders.

Sec. 3. Definition of Terms. – For the purpose of this Act, the following terms shall mean; (a) Business establishment – any person, natural or juridical, whether single proprietorship, partnership or corporation, including a government-owned and -controlled corporation or a government entity exercising its proprietary functions, engaged in, or doing business in the Philippines, either in selling goods or providing services;

New Laws | page no. 145 (b) Change – the excess in the payment given by a consumer for goods and services purchased or received from a business establishment; (c) Consumer – a natural person who purchases goods or services in cash; (d) Goods – all types of tangible property that could be bought and sold, and the possession of which could be transferred in whole or in part, temporarily or permanently; (e) Gross sales – the total invoice value of sales, before deducting for customer discount, allowances and returns;. (f) Insufficient change – a change that is less than what is due the consumers; (g) Price – tag any device written, printed, affixed or attached to a good, or displayed in a consumer retail or service establishment for the purpose of indicating the retail price per unit or services; (h) Services – all types of commercial activities which enable the supply, access to, consumption or use of goods, intellectual property or other services; and (i) Shortchange – the act of giving insufficient or no change to a consumer who purchased a product or service.

Sec. 4. Regulated Acts. – It shall be the duty of the business establishment to give the exact change to the consumer without waiting for the consumer to ask for the same.

page no. 146 | New Laws (a) In General. – It shall be unlawful for any business establishment to shortchange a consumer, even if such change is only of a small amount. Nothing in this Act shall be construed as a restriction for business establishments to give an amount greater than the sufficient change. (b) Other Prohibitions. – It shall also be unlawful for any business establishment which sells goods or provides services to give the change in any form other than the present currency or to ask the consumers for permission to be exempted from the provisions of this Act for any reason, including the nonavailability of small bills or coins. (c) Price Tags. – It shall likewise be the duty of business establishments to use price tags, when appropriate, indicating the exact retail price per unit or service which already includes the taxes applicable to the goods or services being offered. These establishments shall also put signs in conspicuous places within the establishments or reflect in the official receipts issued, the taxes incorporated in the retail price per unit of goods or services. This is to avoid misleading the consumers as to the exact price they have to pay for the goods or services and, consequently, the exact change due them.

Sec. 5. Procedures in Filing a Complaint. – (a) The consumer shall write and submit a letter of complaint to the Department of Trade and Industry (DTI) not later than ten (10) working days after a violation has been committed. (b) The DTI shall, in not more than ten (10) working days after the complaint has been submitted, conduct an investigation, and shall issue a notice to the establishment involved.

New Laws | page no. 147 (c) After a full investigation shall have been made by the DTI, it shall issue its decision and findings not later than thirty (30) days from the receipt of the complaint. (d) Nothing herein shall be construed to limit or impair the rights and remedies of a consumer under any other law.

Sec. 6. Penalties. – Any violation of this Act as determined by the DTI under Section 5 hereof shall be punished as follows: for the first offense, a violator shall be fined five hundred pesos (P500.00) or three percent (3%) of the gross sales of the business establishment on the day of the violation, whichever is higher: for the second offense, a violator shall be fined five thousand pesos(P5,000.00) or five percent (5%)of the gross sales of the business establishment on the day of the violation, whichever is higher; for the third offense, a violator shall be fined fifteen thousand pesos (P15,000.00) or seven percent (7%) of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate of the business establishment shall be suspended for three (3) months; and for the fourth offense, a violator shall be fined twenty-five thousand pesos (P25,000.00) or ten percent (10%) of the gross sales of the business establishment on the day of the violation, whichever is higher, and the license to operate of the business establishment shall be revoked.

In addition to the amount of the fine mentioned above, the total amount of change the establishment failed or refused to give, as determined from the audit of the DTI, shall be paid by the said establishment to the complainant.

Sec. 7. Implementing Rules and Regulations. – The DTI, in consultation with the appropriate stakeholders and other government

page no. 148 | New Laws Sec. 8. Information Campaign. –The DTI shall undertake to implement an education campaign to inform consumers of the provisions of this Act. It shall regularly publish a list of the establishments found to have violated any provision of this Act. Sec. 9. Separability Clause. – If, for any reason, any part or provision of this Act is declared invalid, such declaration shall not affect the other provisions of this Act. Sec. 10. Repealing Clause. – All laws, decrees, executive orders, issuances, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

Sec. 11. Effectivity. – This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in two (2) newspapers of general circulation.