Wednesday, April 12, 2017

Can a foreigner be the chairman of the board of a corporation?

For as long as the corporation is not engaged in any nationalized or partly nationalized activity, a foreigner may serve as president or chairman of the board of a corporation.

However, if the purpose of the corporation as stated in its Article of Incorporation does not exclude ownership of land and the corporation eventually owns a land, then a foreigner cannot be chairman of its board. That is because by owning a land, the corporation has engaged in a partly nationalized activity.

Article XII, Section 7 of the Constituion provides that: "Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporation or associations qualified to acquire or hold lands of the public domain."

It also goes without saying that in a 60:40 corporation where 60% of shares is owned by Filipinos and 40% is owned by foreigners, a foreigner cannot be chairman of the board or president of the corporation.

According to the Securities and Exchange Commission in an Opinion, foreigners can be elected as directors in proportion to their participation or share in the capital of corporations engaged in activities that are reserved to Filipino pursuant to PD 715 which amends CA 108, but are prohibited from being elected in management positions such as the President.

"On the citizenship requirement of corporate officers: Sec. 2-A of Commonwealth Act (CA) No. 108, as amended, bans foreigners from being elected or appointed to management positions as president, vice-president, treasurer, secretary, etc. in business activities where there is a constitutional or statutory provision imposing a specific nationality requirement as a requisite for the exercise or enjoyment of a right, franchise or privilege."

Saturday, February 18, 2017

Sic utere tuo ut alienum non laedas

Sic utere tuo ut alienum non laedas. No one should make evil use of his own property.

The principle states that one has free use of his property so long as such use does not injure another. It is the foundation of every state control and regulation on use of property such as zoning laws and  limitations on mining.

Although the principles is largely used as an exercise of the police power of the state, it can also be said that non-use of property for what the community intended it to be may fall under this principle. A foremost example of this is the imposition of property taxes, where a local government imposes higher taxes for certain prime properties in order to compel the owners thereof to keep their properties from being idle.

Execution pending appeal

Normally, execution may only be allowed when the case has become final and executory. But a party may move for execution pending appeal, even before final judgment, under the following circumstances laid down by Section 2, Rule 39 of the Revised Rules of Court:

a. by motion by the prevailing party with notice to the adverse party;

b. with good reasons for issuing execution; and

c. that the good reasons should be stated in a Special Order

One of the "good reasons" that may be accepted is when the appeal is clearly and obviously frivolous and dilatory in nature, where the appellant has failed to adduce substantial valid and meritorious defenses against the appellee. But the same reason cannot be used by the trial court where the case is already within the purview of the appellate court. The authority to disapprove an appeal rightfully pertains to the appellate court. (Heirs of Gavino Sabenal v. Hon. Benjamin Gorospe, G.R. No. 50168, September 30, 1988, 166 SCRA 145)

Filing of a bond required by the court also constitutes special ground authorizing the court to issue writ of execution pending appeal. The decision to grant a writ of execution pending appeal rests upon the sound discretion of the court based on the sufficiency or insufficiency of the special reasons cited in the motion.

Another good reason considered by courts is when the appellee is already old and of frail health. Because of this fact, appellee  may not be able to live long enough or survive to enjoy the reliefs and rights granted to her under the decision sought to be executed pending appeal (De Leon, et al. vs. Soriano, L-7648, September 17, 1954; PBC vs. CA, 279 SCRA 364; and Ma-ao Sugar Central vs. Canete, 19 SCRA 646).

Thursday, February 9, 2017

Parties in interest in the enforcement of a contract

Is a plaintiff in a case for enforcement of contract which was for the benefit of another a real party in interest in that case?

Plaintiff is not affected by defendant's alleged intrusion on the right of way which was the subject of a condition in their deed of sale. They must show that they stand to be injured or benefitted by the outcome of the case. Can the Deed of Absolute Sale be a source of any right in their favor?

Under the Rules, an action for specific performance, like any other civil action, must be instituted by the real party in interest.

In Goco vs. Court of Appeals (G.R. No. 157449, April 6, 2010): “One having no material interest to protect cannot invoke the jurisdiction of the court as the plaintiff in an action. When the plaintiff is not the real party in interest, the case is dismissible on the ground of lack of cause of action.”

If in case the party who has the sole interest in this case has already abandoned de facto his property (dominant estate) in the said area long before the use of part of the pathway by defendant, plaintiff clearly has no right to assert something which the supposed beneficiary has already abandoned. Defendants is no longer under any obligation to provide a right of way in any size or width because of the change in circumstance which annuls the crux of the original agreement being sought to be enforced.

Moreover, the Deed of Absolute Sale is precisely named so because it attaches no conditions for which the conveyance was made. While plaintiff wanted to make sure that the existing right of way  she has with the beneficiary will be respected by the new owner (buyer), such agreement cannot be considered sine qua non to the validity and enforcement of the sale. For in fact, said agreement was made for the benefit of another person and that person therefore is the real party in interest who can assert such right, granting arguendo that such right of action has not been extinguished, based on the deed of sale.

Wednesday, February 8, 2017

Plunder is malum in se

There may be mala in se crimes under special laws, such as plunder under R.A. No. 7080, as amended. That plunder is a heinous offense implies that is it malum in se, inherently immoral or inherently wrong.

In Dungo vs. People (G.R. No. 209464, July 1, 2015) the Supreme Court said that the better approach to distinguish between mala in se and mala prohibita crimes is the determination of the inherent immorality or vileness of the penalized act.
"If the punishable act or omission is immoral in itself, then it is a crime mala in se; on the contrary, if it is not immoral in itself, but there is a statute prohibiting its commission (for) reasons of public policy, then it is mala prohibita. In the final analysis, whether or not a crime involves moral turpitude is ultimately a question of fact and frequently depends on all the circumstances surrounding the violation of the statute."
 Therefore, the elements of mens rea must be proven in a prosecution for plunder. In the case of Estrada vs. Sandiganbayan (G.R. No. 148560. November 19, 2001), the Supreme Court agreed with Justice Mendoza in his concurring opinion which stated as follows:
"Precisely because the constitutive crimes are mala in se the element of mens rea must be proven in a prosecution for plunder. It is noteworthy that the amended information alleges that the crime of plunder was committed "willfully, unlawfully and criminally." It thus alleges guilty knowledge on the part of petitioner."

Tuesday, February 7, 2017

Mens rea

In criminal law, mens rea means the gravamen of the offense. It is derived from the latin maxim Actus non facit reum, nisi mens sit rea, which means that "evil intent must unite with an unlawful act for a crime to exist." There can be no crime when the criminal mind is wanting.

In Ombudsman vs. Torres (G.R. No. 168309, January 29, 2008), the Supreme Court reiterated the rule laid down in Lecaroz vs. Sandiganbayan which also qualified that neglect betrays criminal intent, to wit:
 "As a general rule, ignorance or mistake as to particular facts, honest and real, will exempt the doer from felonious responsibility. The exception of course is neglect in the discharge of duty or indifference to consequences, which is equivalent to criminal intent, for in this instance, the element of malicious intent is supplied by the element of negligence and imprudence."
The doctrine applies to crimes mala in se, mens rea being defined as a guilty mind, a guilty or wrongful purpose or criminal intent, and essential for criminal libility. A criminal law that contains no mens rea requirement infringes on constitutionally protected rights. The criminal statute must also provide for the overt acts that constitute the crime. For a crime to exist in our legal law, it is not enough that mens rea be shown; there must also be an actus reus which is defined as an action or conduct that is a constituent element of a crime, as opposed to the mental state of the accused.

Sunday, February 5, 2017

Stealing a credit card and using the same

If a person steals a credit card and uses the same to obtain services, he is liable of the following:

1.) Theft of the credit card (Art. 308, Revised Penal Code);
2.) Violation of R.A. 8484 (Access Devices Regulation Act of 1998); and
3.) Estafa (Art. 315, Revised Penal Code).

In Francisco vs. People (G.R. No. 177720, February 18, 2009), the Supreme Court held that the third element of estafa under Article 315(a) merely requires that the offended party must have relied on the false pretense, fraudulent act or fraudulent means. "It does not require that the false pretense, fraudulent act or fraudulent means be intentionally directed to the offended party."
"Thus, in this case wherein a person pretended to possess credit in order to defraud third persons (Solidbank Mastercard and AIG Visa), but the offended party nevertheless relied on such fraudulent means and consequently suffered damage by virtue thereof, such person is liable for estafa under Article 315(a), even though the fraudulent means was not intentionally directed to the offended party. A person committing a felony is criminally liable although the consequences of his felonious act are not intended by him."

Saturday, February 4, 2017

Imposing sales taxes on manufacturing firms

Can local government units (LGUs) impose two taxes, one on manufacturing and one on selling?

This was the question answered in the case of Iloilo Bottlers vs. City of Iloilo (164 SCRA 607), and the answer is yes. The business of manufacturing carries with it the business of selling, except when there are warehouses where separate selling is done.

Says the Supreme Court:

"The right to manufacture implies the right to sell/distribute the manufactured products [See Central Azucarera de Don Pedro v. City of Manila and Sarmiento, 97 Phil. 627 (1955); Caltex (Philippines), Inc. v. City of Manila and Cudiamat, G.R. No. L-22764, July 28, 1969, 28 SCRA 840, 843.] Hence, for tax purposes, a manufacturer does not necessarily become engaged in the separate business of selling simply because it sells the products it manufactures. In certain cases, however, a manufacturer may also be considered as engaged in the separate business of selling its products."
 In this case, Iloilo Bottlers, Inc. distributed its softdrinks by delivery trucks directly to customers in lloilo province. Sales were perfected and consummated by route salesmen. Truck sales were made independently of transactions in the main office. The delivery trucks were not used solely for the purpose of delivering softdrinks but served also as selling units or "rolling stores". Iloilo Bottlers, Inc. thus was engaged in the separate business of selling or distributing soft-drinks, independently of its business of bottling them, and therefore subject to the tax ordinance.

Friday, February 3, 2017

Test of Insurable Interest

The test of insurable interest in the life and health of a person in life insurance is whether or not the person is interested in the preservation of the insured life despite the insurance.

Section 17 of the Insurance Code provides: "The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof."

In Sps. Cha vs. Court of Appeals (G.R. No. 124520 August 18, 1997), the Supreme Court held that automatic assignment of the policy to another entity under the provision of the lease contract is void for being contrary to law and public policy.

This is because the insurable interest over the merchandise remains with the insured not the assigneed entity. Thus, the insurer cannot be compelled to pay the proceeds of the fire insurance policy to a person who has no insurable interest in the property insured.

In Gercio vs. Sun Life Assurance of Canada (G.R. No. 23703, September 28, 1925, it states that it is well settled that a man has an insurable interest in his own life and in that of his wife and children; a woman in the life of her husband; and the creditor in the life of his debtor.
"Indeed it may be said generally that any reasonable expectation of pecuniary benefit or advantage from the continued life of another creates an insurable interest in such life. And there is no doubt that a man may effect an insurance on his own life for the benefit of a relative or fried; or two or more persons, on their joint lives, for the benefit of the survivor or survivors. The old tontines were based substantially on this principle, and their validity has never been called in question."

Thursday, February 2, 2017

Requisites of a class suit

A class suit is an action where one or more may sue for the benefit of all. However, there are requisites that must be complied with for one to be able to file a class suit, and this will have to depend on the attendant facts, not the designation in the pleadings as a class suit.

The requisites are: (CRIS)

1.)  subject matter must be of  Common or general interest to many persons;
2.)  parties are so numerous that it is Impracticable to join all parties;
3.) Sufficiently numerous and representative as to fully protect the interests of all concerned; and
4.) Representatives sue or defend for the benefit of all.

Pay parties may or may not have a common interest in the questions involved in a class suit. What is required is a common or general interest in the subject matter of the suit.

There shall be no class suit when the interests represented are conflicting.

Tuesday, January 31, 2017

Dismissal of employee for just cause but without proper notice

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.

To dismiss an employee because of abandonment, the following requisites must concur to constitute abandonment: (1) failure to report for work or absence without valid reasons; AND (2) a clear intention to sever employee-employer relationship; the latter being the more determinative factor.

The procedure for terminating an employee is found in Book VI, Rule 1, Section 2(d) of the Omnibus Rules Implementing the Labor Code.

In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow the Wenphil doctrine which held that the dismissal was for just cause but still imposing sanctions on the employer.

This is to avoid the absurd situation where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination.

Where the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal or render it illegal or ineffectual. But the employer should indemnify the employee for the violation of the latter's statutory rights, as ruled in Reta vs. NLRC (G.R. No. 112100 May 27, 1994).

The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now, pay later" which the Supreme Court sought to deter in the Serrano ruling.

Monday, January 30, 2017

Notes on the Katarungang Pambarangay Law

Lupon proceedings under the Local Government Code are not judicial proceedings. There is no such thing as a barangay court.

In the lupon, only mediation and conciliation are done. The lupon does not have inherent adjudicatory powers. Any adjudicatory power must be agreed upon by the parties in writing. In other words, a barangay lupon may exercise adjudicatory powers only if the parties agree so in writing.

The purpose of the lupon proceedings is to reduce the number of court litigations. It also aims to prevent the deterioration of the quality of justice.

No lawyers are allowed in the proceedings before the lupon, and personal appearance is required.

What may be settled? All disputes EXCEPT the following:

1.) government is a party
2.) public officer or employee is a party and where the dispute relates the performance of his official function
3. offenses with maximum penalty of imprisonment exceeding one year or a fine exceeding P5,000.00
4.) there is no private offended party
5.) real properties in different cities or municipalities, unless parties agree otherwise
6.) parties actually reside in different barangays of different cities or municipalities, except where such units adjoin each other and the parties agree to submit their differences to an appropriate lupon.

(So where the parties are not actual residents in the same city or municipality or adjoining barangays, they are not required to submit their dispute to the lupon.

7.) such other  classes of disputes which the president may determine in the interest of justice.

In another instance where a case may fall under the lupon, the court in a criminal case may motu proprio refer the case, at any time before the trial, to the lupon for amicable settlement, even if the case does not fall within the authority of the lupon.

The form of settlement must be in writing.

An amicable settlement has the same effect of a final judgment of a court upon the expiration of 10 days from date thereof.

Failure to go through prior recourse to the lupon when required by law bars the filing of the criminal or civil action in court. It is a ground to dismiss the case, that a condition precedent for filing the claim has not been complied with.

Sunday, January 29, 2017

Right of action and cause of action

The elements of a cause of action are:

1.) a Right (in favor of the plaintiff)
2.) an Obligation (of the defendant to respect such right)
3.) Violation of this right (by the defendant)

A cause of action is substantive in character, while a right of action is procedural in character. There can be no right of action without a cause of action first being established.

But the existence of a cause of action does not guarantee a right of action. In Philippine American General Insurance Co. vs. Sweet Lines, Inc. (G.R. No. 87434 August 5, 1992), the Supreme Court held:
"In the case at bar, there is neither any showing of compliance by petitioners with the requirement for the filing of a notice of claim within the prescribed period nor any allegation to that effect. It may then be said that while petitioners may possibly have a cause of action, for failure to comply with the above condition precedent they lost whatever right of action they may have in their favor or, taken in another sense, that remedial right or right to relief had prescribed." [emphasis supplied]

Friday, January 27, 2017

Is a seaman entitled to overtime pay?

A seafarer, or what is commonly known in the Philippines as seaman, is generally not entitled to overtime pay merely on the basis of rendering service during the whole time he is confined in the vessel at sea.

The nature of the job of a seaman is such that he is required to be in the vessel at sea where his services, while following a shifting schedule, may be required at various times during the entire voyage for the safety of passengers, crewmen and cargo.

In PCL Shipping Philippines vs. NLRC (G.R. No. 153031, December 14, 2006), the Supreme Court ruled that the correct criterion in determining if sailors are entitled to overtime pay is not whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours.

To be entitled to overtime pay, the sailor must therefore prove that he rendered service in excess of the regular eight working hours a day.

In Cagampan v. National Labor Relations Commission (195 SCRA 533 [1991]), the court stated:
"Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable."


Wednesday, January 25, 2017

Is an unnotarized contract of sale of land effective between the seller and buyer?

A contract of sale involving real property is perfected the moment all the elements of a contract of sale are present -- even if said contract is reduced only in a private instrument or in layman's terms, an unnotarized document.

The Supreme Court in Tapec vs. Court of Appeals (G.R. No. 111952, October 26, 1994) explained in this, to wit:

"Article 1358 does not invalidate the acts or contracts enumerated therein if they are not embodied in public documents. As one noted civilian (Tolentino, Arturo) has said:

This Article enumerates certain contracts that must appear in public or private documents. This provision does not require such form in order to validate the act or contract but to insure its efficacy. It is limited to an enumeration of the acts and contracts which should be reduced to writing in a public or private instrument. The reduction to writing in a public or private document, required in this article, is not an essential requisite for the existence of the contract, but is simply a coercive power granted to the contracting parties by which they can reciprocally compel the observance of these formal requisites. Contracts enumerated by this article are, therefore, valid as between the contracting parties, even when they have not been reduced to public or private writings. Except in certain cases where public instruments and registration are required for the validity of the contract itself, the legalization of a contract by means of a public writing and its entry in the register are not essential solemnities or requisites for the validity of the contract as between the contracting parties, but are required for the purpose of making it effective as against third person." [emphasis supplied]

The Supreme Court in Estate of Pedro C. Gonzales vs. Heirs of Marcos Perez (G.R. No. 169681, November 5, 2009) further states:

"Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to the validity or enforceability of the transaction, but merely for convenience. xxx  For the time-honored rule is that even a verbal contract of sale of real estate produces legal effects between the parties. Stated differently, although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only to insure its efficacy." [emphasis supplied]


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