Friday, November 27, 2015

30-day Notice Rule in Temporary Layoff

Article 283 of the Labor Code of the Philippines considers the layoff of employees valid if the following requisites are met: (1) necessity of the retrenchment to prevent losses, and proof of such losses; (2) written notice to the employees and to the Department of Labor and Employment (DOLE) at least one (1) month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.

Article 283 however seems to refer only to a permanent retrenchment or layoff. The question is: Is the 30-day notice rule also applicable to temporary layoffs?

This question was answered in the affirmative by the Supreme Court in PT&T vs. NLRC [G.R. No. 147002. April 15, 2005]. The Supreme Court ruled, to wit: "It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non distinguit nec nos distinguere debemus (When the law does not distinguish, we must not distinguish)."

Non-compliance with the one month notice requirement prior to retrenchment, however, only renders the termination defective, and not illegal, thus entitling the dismissed employee to payment of indemnity in the form of nominal damages and not reinstatement if it was determined that there was basis for the retrenchment.

Friday, November 6, 2015

Issuance of Bouncing Check as Estafa

When is issuance of a bouncing check also considered Estafa? Can a person be held liable for violation of Batas Pambansa Blg. 22 (BP 22), and separately also be held liable for the crime of estafa under Article 315 (2-D) of the Revised Penal Code for the issuance of the same bouncing checks?

These questions have been answered by the Supreme Court in the case of Nierras vs. Hon. Dacuycuy [G.R. Nos. 59568-76, January 11, 1990].

In this case, a customer of Pilipinas Shell Petroleum Corporation bought oil products from it. Together with the delivery of the products, he issued nine (9) checks in payment of the oil purchased. However, said checks were dishonored upon presentation because the check issuer's account was already closed. Repeated demands for payment were ignored. The customer was charged with two separate offenses, first under BP 22 and the second under Article 315, (2-D) of the Revised Penal Code.

The High Court upheld the separate charges, ruling that deceit and damage are essential elements in Article 315 (2-D) of the Revised Penal Code, but are not required in BP 22. Under BP 22, mere issuance of a check that is dishonored gives rise to the presumption of knowledge on the part of the drawer that he issued the same without sufficient funds and hence punishable. Moreover, a drawer of a dishonored check may be convicted under BP 22 even if he had issued the same for a pre-existing obligation, while Article 315 (2-D) of the Revised Penal Code penalizes the issuance of a check only if it were itself the immediate consideration for the reciprocal receipt of benefits. [Castro vs. Hon. Mendoza, G.R. No. 50173 September 21, 1993] Estafa is essentially a crime against property, while violation of BP 22 is principally a crime against public interest as it does injury to the entire banking system. Also, violations of Article 315 of the Revised Penal Code are mala in se, while those of BP 22 are mala prohibita. [Nierras vs. Hon. Dacuycuy, G.R. Nos. 59568-76, January 11, 1990]

Therefore, to constitute Estafa, the bouncing check must be issued concurrently with, and in exchange for, a material gain. If in the issuance of a check the drawer derives no such contemporary gain in return since the obligation sought to be settled is already pre-existing or incurred and outstanding before the check is issued, then there is no crime of Estafa.

Again, under the law, the false pretense or fraudulent act must be executed prior to or simultaneously with the commission of the fraud. The issuance of the check must be used as a means to obtain a valuable consideration from the payee, as to make deceit the efficient cause of the defraudation. "In other words, the check must be issued concurrently with, and in exchange for, a material gain to make it a punishable offense under Article 315, paragraph 2(D) of the Revised Penal Code." [Nierras vs. Hon. Dacuycuy, G.R. Nos. 59568-76, January 11, 1990; Castro vs. Hon. Mendoza, G.R. No. 50173 September 21, 1993]

Discharge of Real Estate Mortgage



Mortgage is discharged only upon full payment of indebtedness. Up to what extent of the indebtedness? Aside from principal and stipulated interest, does it cover legal interest on the stipulated interest due, attorneys fees, and costs of suit?

This issue was resolved by the Supreme Court in Sps. Adelina Cuyco vs. Sps. Renato Cuyco [G.R. No. 168736, April 19, 2006].

In this case, the deed of mortgage did not contain a stipulation that the legal interest on the stipulated interest due, attorneys fees, and costs of suit must be paid first before the mortgage may be discharged. May the real estate mortgage be discharged upon payment only of the principal and the annual interest stipulated in the deed?

The Supreme Court answered in the negative.

Section 2, Rule 68 of the Rules of Court provides: "SEC. 2. Judgment on foreclosure for payment or sale. If upon the trial in such action the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court, and costs, and shall render judgment for the sum so found due and order that the same be paid to the court or to the judgment obligee within a period of not less than ninety (90) days nor more than one hundred twenty (120) days from the entry of judgment, and that in default of such payment the property shall be sold at public auction to satisfy the judgment."

Based on the foregoing, the mortgaged property may be charged not only for the mortgage debt or obligation but also for the interest, other charges and costs approved by the court. According to the Court, to discharge the real estate mortgage, the debtor (mortgagor) must pay the creditor the total amount due which includes the principal loan, the stipulated interest, the interest on the stipulated interest computed from the filing of the complaint until finality of the decision less partial payments made, the legal interest on the total amount due from finality until fully satisfied, the reasonable attorneys fees, and the costs of suit. If the debtor fails to pay within the period prescribed, the mortgaged property shall be sold at public auction to satisfy the judgment.

Thursday, November 5, 2015

Supreme Court Circulars on BP 22 Cases (Bouncing Checks)

CIRCULAR NO. 57-97

RULES AND GUIDELINES IN THE FILING AND PROSECUTION OF CRIMINAL CASES UNDER BATAS PAMBANSA BLG. 22


Any provision of law or the Rules of Court to the contrary notwithstanding, the following rules and guidelines shall henceforth be observed in the filing and prosecution of all criminal cases under Batas Pambansa Blg. 22 which penalizes the making or drawing and issuance of a check without funds or credit:

[1] The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to necessarily include the corresponding civil action, and no reservation to file such civil action separately shall be allowed or recognized. 

[2] Upon the filing of the aforesaid joint criminal and civil action, the offended party shall pay in full the filing fees based upon the amount of the check involved, which shall be considered as the actual damages claimed, in accordance with the schedule of filing fees in Section 7(a) and Section 8(a), Rule 141 of the Rules of Court, as last amended by Administrative Circular No. 11-94 effective August 1, 1994. Where the offended party further seeks to enforce against the accused civil liability by way of liquidated, moral, nominal, temperate or exemplary damages, he shall pay the corresponding filing fees therefor based on the amounts thereof as alleged either in his complaint or in the information. If not so alleged but any of these damages are subsequently awarded by the Court, the amount of such fees shall constitute a first lien on the judgment. 

[3] Where the civil action has heretofore been filed separately and trial thereof has not yet commenced, it may be consolidated with the criminal action upon application with the Court trying the latter case. If the application is granted, the trial of both actions shall proceed in accordance with the pertinent procedure outlined in Section 2(a) of Rule 111 governing the proceedings in the actions as thus consolidated. 

[4] This Circular shall be published in two [2] newspaper of general circulation and shall take effect on November 1, 1997. 
September 16, 1997. 


Sgd.] ANDRES R. NARVASA
Chief Justice


CIRCULAR NO. 70-97
    
PROCEDURAL GUIDELINES IN THE COLLECTION OF THE FILING FEES SUBJECT OF SUPREME COURT CIRCULAR NO. 57-97 DATED 16 SEPTEMBER 1997 AND OTHER LEGAL FEES INVOLVED; AND THE DOCKETING OF THE CRIMINAL CASE/S ON THE VIOLATION OF BATAS PAMBANSA BLG. 22


In implementation of the provisions of Circular No. 57-97 dated 16 September 1997 prescribing rules and guidelines in the filing and prosecution of criminal cases under Batas Pambansa Blg. 22 ["An Act Penalizing the Making or Drawing, and Issuance of a Check Without Sufficient Funds or Credit and For Other Purposes"], the following procedures shall be followed in [a] the collection of the filing fees subject of said Circular No. 57-97 and other legal fees involved; and [b] the docketing of the criminal case or cases on the violation of Batas Pambansa Blg. 22:

1. The Office of the Clerk of Court shall receive the Information filed by the Office of the Chief State Prosecutor or the Provincial/City, Prosecution Office. Upon receipt, the Information shall be entered in a separate record book and assigned an undocketed number [UDK No.] consistent, of (a) the Investigation Slip No. ["I.S. No."] appearing on the said Information for easy identification; and (b) a number starting with No. 1 [Example: UDK No. 6789-1]; 

2. Thereafter, the Clerk of Court shall, by form letter [Annex "A"], notify and advise the complainant of (a) the filing of the information; and (b) the requirement as to the payment in full of the filing fees under Circular No. 57-97 based upon the computation stated therein. The State Prosecutor, the Provincial/Assistant Provincial Prosecutor or the City/Assistant City Prosecutor who filed the Information and the respondent shall be furnished with copies of the accomplished form letter sent by the Clerk of Court; 

3. The complainant shall have a period of ten [10] days from receipt of the letter within which to pay the filing fees. Should the complainant fail to pay the filing fees within the ten [10] day period stated herein, the case folder shall be archived. After the lapse of two [2] months, the records may be disposed of. 

4. Upon receipt of the filing fees under Circular No. 57-97, the Information shall be entered in the Court’s general docket book and assigned the court case number. Thereafter, the Clerk of Court shall cause the inclusion of the case in the raffle of cases. 

The filing fees and other legal fees shall be processed in accordance with the flowchart attached herewith as Annex "B." 

5. In the event that the amount of the actual damages claimed exceeds the maximum amount of P200,000.00, the filing fees to be collected in excess of the aforementioned amount shall be in accordance with the provisions of Section 7 (a), Rule 141 of the Rules of Court. 

6. This Circular shall take effect on 1 November 1997 and shall remain in force until further orders.
21 October 1997.


[Sgd.] ALFREDO L. BENIPAYO
Court Administrator  

When Debt is Secured by Both Mortgage and Post-Dated Checks

The creditor forecloses on mortgaged property in order to obtain payment for a loan which the debtor is unable or unjustifiably refuses to pay. This is the same reason when the creditor chooses to file a case against the debtor for collection of debt.

However, the creditor must choose either of the two remedies. If he opts to sue for collection of a loan, he waives his right to foreclose on the mortgage securing the loan. "Nemo debet bis vexare pro una et eadem causa." No man shall be twice vexed for one and the same cause.

Likewise, based on Circular 57-97 and Section 1(b), Rule 111 of the Rules of Court, a creditor who chooses to sue the debtor for violation of Batas Pambansa (BP) Blg. 22 is barred from foreclosing on the mortgaged property. While BP 22 is a criminal remedy and foreclosure of mortgage is a civil remedy, the creditor's principal purpose in suing the debtor for BP 22 is to be able to collect his debt. This is the same purpose in trying to foreclose on the mortgaged property.

Thus, we repeat: "If the debtor fails or unjustly refuses to pay his debt when it falls due and the debt is secured by a mortgage and by a check, the creditor has three options against the debtor and the exercise of one will bar the exercise of the others. He may pursue either of the three but not all or a combination of them."

The three options are: (1) The creditor files a collection suit against the debtor, in which case all the properties of the debtor may be subject to attachment and execution including the the mortgaged property itself; (2) The creditor forecloses on the mortgaged property, in which case if the debt is not fully satisfied he may sue the debtor for the deficiency which will open up all the other properties of the debtor in order to pay for the deficiency; or (3) The creditor files a case against the debtor for violation of BP 22 if the checks securing the obligation bounce.

Circular 57-97 and Section 1(b), Rule 111 of the Rules of Court both provide that the criminal action for violation of BP 22 shall be deemed to necessarily include the corresponding civil action. No reservation to file such civil action separately will be allowed or recognized.

Reference: Sps. Simon Yap vs. First e-Bank Corporation [G.R. No. 169889, September 29, 2009]

Creditor's Options Upon the Death of the Mortgagor

A creditor lends money to the debtor and secures such debt with a collateral - a mortgaged real property. However, the debtor died intestate (without a will) after the debt has become due and demandable and which gave the creditor the right to foreclose the mortgaged property. What is the creditor to do?

Under our jurisprudence based on Section 7, Rule 86 of the Rules of Court, the secured creditor has three options that he may alternatively pursue for the satisfaction of the obligation in his favor. He may EITHER choose to : (1) waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2) foreclose the mortgage judicially and prove the deficiency as an ordinary claim; or (3) rely on the mortgage exclusively, or other security and foreclose the same before it is barred by prescription, without the right to file a claim for any deficiency. The third remedy includes the option of extra-judicially foreclosing the mortgage under Act No. 3135 which governs extrajudicial foreclosures.

It must be emphasized that according to the Supreme Court, the said remedies are distinct, independent and mutually exclusive from each other. Therefore, when the creditor makes his choice, he waves his right to exercise the other choices. When the creditor chooses, for example, extra-judicial foreclosure under Act No. 3135, the creditor waives his right to recover any deficiency from the estate.

Again, case law now holds that this rule grants to the mortgagee (creditor) three distinct, independent and mutually exclusive remedies that can be alternatively pursued by the mortgage creditor for the satisfaction of his credit in case the mortgagor dies, among them:

(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;

(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and

(3) to rely on the mortgage exclusively, foreclosing the same at anytime before it is barred by prescription without right to file a claim for any deficiency.

Thus, in the case of Heirs of Sps. Maglasang vs. Manila Banking Corporation [G.R. No. 171206, September 23, 2013], the creditor having chosen to extra-judicially foreclosure the mortgage, he is now barred from recovering any deficiency amount from the sale of the foreclosed property.


Reference: Heirs of Sps. Maglasang vs. Manila Banking Corporation [G.R. No. 171206, September 23, 2013]

Stale Checks and the Non-Extinguishment of Debt



By current banking practice, a check becomes stale after more than six (6) months, or 180 days, and the drawer is discharged from liability thereon to the extent of the loss caused by the delay. Under Section 186 of the Negotiable Instruments Law, "a check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay."

A stale check  is valueless and, therefore, should not be paid. This is because the nature and theory behind the use of a check points to its immediate use and payability. However, failure to present for payment within a reasonable time does not totally wipe out all liability. It will result only to the discharge of the drawer only to the extent of the loss caused by the delay.

In fact, the legal situation amounts to an acknowledgment of liability in the sum stated in the check, subject to deduction only for the proven losses or damages suffered by the drawer because of the delay or non-presentment. Definitely, the original obligation to pay certainly has not been erased.

Reference: THE INTERNATIONAL CORPORATE BANK (now UNION BANK OF THE PHILIPPINES) vs. SPS. FRANCIS S. GUECO and MA. LUZ E. GUECO [G.R. No. 141968, February 12, 2001]

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