Rights of employees and obligations of employers in business closure, asset sale, or stock sale

(Note: For counseling on labor problems, please contact the Public Assistance and Complaints Unit (PACU) of the Department of Labor and Employment, Muralla St. cor. Gen. Luna St., Intramuros, 1002 Manila, between Pamantasan ng Lungsod ng Maynila and the Bulletin. You may call DOLE Hotline: 1349 from your fixed-line phones. You can also inquire through an online form.)

Business closure	The law permits an employer to dismiss its employees if the business is being closed down.	Obligations of employer: (1) serve written notices on the employees and the Department of Labor at least one month before the intended date of closure; (2) pay the dismissed employees separation pay, except if the closure is due to serious business losses or financial reverses. Exemption from giving separation pay: . a. the closure was due to serious business losses or financial reverses; . b. the employer must show convincing evidence that it actually suffered serious financial reverses.
Asset sale	The business owner sells all or substantially all of the assets to another party.	The business owner who sells in good faith is authorized to dismiss the affected employees. But the owner must give separation pay to the employees. The buyer in good faith, on the other hand, is: (1) not obliged to absorb the employees affected by the sale. (2) not liable for paying their claims.
Stock sale	The individual or corporate shareholders sell a controlling block of stock to new or existing shareholders.	The employees cannot be dismissed simply because new majority stockholders and new management have taken over the business.

Sari-sari Group of Companies, Inc. v. Piglas Kamao, G.R. No. 164624, 11 August 2008, 561 SCRA 569

Facts: The employees agreed with the corporation’s act of considering them as terminated. They accepted their separation pay.

Ruling: Despite having accepted the separation pay, the employees can contest the legality of their dismissal.

SME Bank vs. De Guzman, G.R. No. 184517, October 8, 2013

Background facts:

The original principal shareholders and corporate directors of Small and Medium Enterprise Bank, Incorporated (SME Bank) were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr. (De Guzman). Some of SME Bank’s employees were Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.(Ricardo), Eufemia Rosete (Eufemia), Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato Mangoba (Liberato).

SME Bank experienced financial difficulties in June 2001. To remedy the situation, Agustin and De Guzman sold 86.365% of the shares of stock of SME Bank to spouses Abelardo and Olga Samson. The Samson couple then became the principal shareholders of SME Bank, while Aurelio Villaflor, Jr. was appointed bank president.

Before the sale, Simeon Espiritu (Espiritu), then the general manager of SME Bank, met with all the employees of the head office and of the Talavera and Muñoz branches of SME Bank. He persuaded them to tender their resignations, with the promise that they would be rehired when they reapplied.

Relying on this representation, Elicerio, Ricardo, Fidel, Simeon, Jr., and Liberato tendered their resignations dated August 27, 2001. As for Eufemia, she first tendered a resignation letter and then a retirement letter dated September 2001. But as it turned out, the employees, except for Simeon, Jr., were not rehired.

The employees demanded the payment of their respective separation pays but their requests were denied. They then filed a Complaint with the National Labor Relations Commission (NLRC) – Regional Arbitration Branch No. III against SME Bank, the Samson couple, and Villaflor for unfair labor practice; illegal dismissal; illegal deductions; underpayment; and nonpayment of allowances, separation pay and 13th month pay. The employees later on amended their Complaint to include Agustin and De Guzman as respondents.

In defense, the Samson Group (the Samson couple, and Villaflor) contended that Elicerio, Ricardo, Fidel, and Liberato voluntarily resigned from their posts while Eufemia retired from her position. As their resignations and retirements were voluntary, they were not dismissed from their employment. In support of this argument, the Samson Group presented copies of their resignation and retirement letters, which were couched in terms of gratitude.

Labor Arbiter dismisses case against the Samson Group but rules against Agustin and De Guzman

(1) The buyer of an enterprise is not bound to absorb its employees, unless there is an express stipulation to the contrary.

(2) The employees were illegally dismissed, because they had involuntarily executed their resignation letters after relying on representations that they would be given their separation benefits and rehired by the new management. The arbiter ordered Agustin and De Guzman to pay the complainants’ separation pay.

NLRC ruling: mere change in management not a valid ground to terminate the employees

Dissatisfied with the judgment, Elicerio and the other employees appealed to the NLRC. Agustin and De Guzman also appealed. The employees questioned the labor arbiter’s failure to award backwages. Agustin and De Guzman, on the other hand, contended that they should not be held liable for the payment of the employees’ claims.

The NLRC found that there was only a mere transfer of shares – and therefore, a mere change of management – from Agustin and De Guzman to the Samson Group. As the change of management was not a valid ground to terminate respondent bank employees,

(1) Elicerio and the other employees were illegally dismissed;

(2) Agustin, De Guzman, and the Samson Group should be held jointly and severally liable for the employees’ separation pay and backwages.

Supreme Court ruling: corporate officers who act in bad faith or with malice liable for illegal dismissal

(1) Elicerio and the other employees are entitled to separation pay, full backwages, moral damages, exemplary damages and attorney’s fees. They tendered resignation letters only because they were led to believe that, upon reapplication, they would be reemployed by the new management. They had no real intention of leaving their posts.

While resignation letters containing words of gratitude may indicate that the employees were not coerced into resignation, this fact alone is not conclusive proof that they intelligently, freely and voluntarily resigned. To rule that resignation letters couched in terms of gratitude are, by themselves, conclusive proof that the employees intended to relinquish their posts would open the floodgates to possible abuse.

In order to withstand the test of validity, resignations must be made voluntarily and with the intention of relinquishing the office, coupled with an act of relinquishment. Therefore, in order to determine whether the employees truly intended to resign from their respective posts, the Court cannot merely rely on the tenor of the resignation letters, but must consider the totality of circumstances.

(2) Contrary to SME Bank’s argument, there was no transfer of the business establishment but merely a change in the new majority shareholders and new management of the corporation. This change is not a just or authorized cause for termination of employment under the Labor Code.

SME Bank continued to be the employer of respondent employees notwithstanding the equity change in the corporation. A corporation has a personality separate and distinct from that of its individual shareholders or members. Thus, a change in the composition of its shareholders or members would not affect its corporate liabilities.

As the employer of the illegally dismissed employees before and after the equity transfer, SME Bank is liable for the satisfaction of their claims.

(3) Liability of corporate directors and officers in illegal dismissal cases

Rule Corporate officers are not personally liable for their official acts. A corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and members.

Exception Corporate directors and officers are solidarily liable with the corporation if they acted with malice or in bad faith in terminating the employees.

Agustin and De Guzman are corporate directors who acted in bad faith. They may be held solidarily liable with SME Bank for the satisfaction of the employees’ lawful claims.

The dismissal of Elicerio and the other employees was done in bad faith. Motivated by their desire to sell their shares of stock to the Samson couple, Agustin and De Guzman agreed to and later implemented the precondition in the Letter Agreements as to the termination or retirement of SME Bank’s employees. But instead of going through the proper procedure, the bank manager induced the employees to resign or retire from their respective employments, while promising that they would be rehired by the new management. Fully relying on that promise, they tendered courtesy resignations or retirements and eventually found themselves jobless. Clearly, this sequence of events constituted a gross circumvention of labor laws and a violation of the employees’ constitutionally guaranteed right to security of tenure.

Differences between regular employees and project employees, between project employment and fixed term employment

Plain Language summary: Case title: “GMA Network, Inc., Petitioner, vs.Carlos P. Pabriga, Geoffrey F. Arias, Kirby N. Campo, Arnold L. Lagahit, And Armando A. Catubig, Respondents” G.R. No. 176419, November 27, 2013 Ruling: Pabriga and his co-workers were GMA7’s regular employees, not project employees, and they were illegally dismissed. Definitions: “Regular employees perform activities that are usually necessary or desirable in the employer’s usual business or trade.” “Project employees perform activities that may be usually necessary or desirable in the usual business or trade of the employer.” (For example, a construction company engages in various projects like a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as “project employees,” and their services may be lawfully terminated at completion of the project.) “Project employees perform activities that may not be usually necessary or desirable in the usual business or trade of the employer.” (For example, a steel company engages in  fish production or cultivation of vegetables.) A project employee or a member of a work pool may acquire the status of a regular employee. Related case: “Universal Robina Sugar Milling Corporation, et. al., vs. Acibo, et. al” G.R. No. 186439, 15 January 2014 (differences between regular, project/seasonal, and casual employees)

(Note: For counseling on labor problems, please contact the Public Assistance and Complaints Unit (PACU) of the Department of Labor and Employment, Muralla St. cor. Gen. Luna St., Intramuros, 1002 Manila, between Pamantasan ng Lungsod ng Maynila and the Manila Bulletin office. You may call DOLE Hotline: 1349 from your fixed-line phones. You can also inquire through an online form.)

Background facts

Carlos Pabriga, Geoffrey Arias, Kirby Campo, Arnold Lagahit, and Armando Catubig worked as television technicians for GMA7 in the late 1990s. Their work included manning of technical operations center and acting as transmitter/VTR men, maintenance staff, and cameramen. They were repeatedly rehired in several fixed term contracts from 1996 to 1999.

Pabriga and his co-workers originally filed in July 1999 a complaint for non-payment of benefits with the National Labor Relations Commission (NLRC). Later on, they amended their complaint by raising the issues of unfair labor practice, illegal dismissal, damages, and attorney’s fees.

Pabriga and his co-workers claimed that they were GMA7's regular employees. On the other hand, GMA7 claimed that they were merely hired as “pinch-hitters” on fixed term contracts.

Labor Arbiter rules against Pabriga and his co-workers

The Labor Arbiter dismissed the complaint for illegal dismissal and unfair labor practice, but held GMA 7 liable for 13th month pay.

NLRC reverses Labor Arbiter’s decision; Court of Appeals affirms NLRC ruling

The NLRC ruled that Pabriga and his co-workers were regular employees with respect to the particular activity to which they were assigned, until it ceased to exist. As such, they were entitled to payment of separation pay computed at one month salary for every year of service.

The NLRC also ruled that Pabriga and his co-workers were entitled to 13th month pay, night shift differential, and service incentive leave pay.

GMA7 elevated the case to the Court of Appeals through a petition for certiorari. On September 8, 2006, the CA denied the petition for lack of merit.

Supreme Court ruling: Pabriga and his co-workers were regular employees, not project employees, and they were illegally dismissed

The Supreme Court affirmed the findings of the NLRC and the CA that Pabriga and his co-workers were GMA7’s regular employees and that they were illegally dismissed.The Court ruled:

(1) Pabriga and his co-workers were not project employees because the manning of the operations center to air commercials, acting as transmitter/VTR men, maintaining the equipment, and acting as cameramen were not undertakings separate or distinct from the business of a broadcasting company.

(2) Even if Pabriga and his co-workers are to be considered as project employees, they attained regular employment status because GMA7 continuously rehired them.

(3) GMA7 did not report the completion of its projects and the dismissal of Pabriga and his co-workers in its finished projects to the nearest Public Employment Office as required by Policy Instruction No. 20 of the Department of Labor and Employment. Based on jurisprudence, the failure of an employer to report to the nearest Public Employment Office the termination of its workers’ services every time a project or a phase is completed indicates that the workers are not project employees.

(4) GMA7’s practice of hiring and rehiring of workers on fixed terms, without end, is unjustifiable.

Difference between regular employee and project employee

A regular employee performs activities that are usually necessary or desirable in the employer’s usual business or trade.

A project employee performs activities that may or may not be usually necessary or desirable in the usual business or trade of the employer. The services of the project employees are legally and automatically terminated when the project ends or is completed.

The principal test for determining whether employees are “project employees” is two-fold:

(1) Is the employee assigned to carry out a specific project or undertaking?

(2) Is the completion or termination of the project specified or determined at the time the employee was engaged for that project?

Definition of “project”

The term “project” must be properly defined in order to safeguard the rights of workers against the arbitrary use of the word “project” by employers to prevent them from attaining the status of regular employees.

(1) The “project” would ordinarily have some relationship to the usual business of the employer.

For example, a construction company ordinarily carries out two or more [distinct] identifiable construction projects: a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects (the scope and duration of which has been determined and made known to the employees at the time of employment), are properly treated as “project employees,” and their services may be lawfully terminated at completion of the project.

(2) Exceptionally, the “project” job or undertaking is not within the regular business of the employer. The job or undertaking is identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. For example, a steel-making company, for one reason or another, undertakes the breeding and production of fish or the cultivation of vegetables.

Examples of regular employee and a project employee

Philippine Long Distance Telephone Company v. Ylagan, 537 Phil. 840 (2006) Although essentially a telephone company, PLDT maintains its own accounting department to which Ylagan was assigned. PLDT was not able to prove that accounting duties were distinct, separate and identifiable from its usual undertakings. Ylagan is therefore a regular employee, not a project employee.

San Miguel Corporation v. National Labor Relations Commission, 357 Phil. 954 (1998) The private respondent was hired to repair furnaces, which are needed by San Miguel Corporation to manufacture glass, an integral component of its packaging and manufacturing business. San Miguel Corporation is not engaged in the business of repairing furnaces. Although the activity was necessary to enable it to continue manufacturing glass, the necessity for the repairs arose only when a furnace reached the end of its life or operating cycle. Private respondent is therefore a project employee.

A project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

(1) The project employee is continuously rehired even after a project has ended; and

(2) The alleged project employee performs tasks are vital, necessary, and indispensable to the usual business or trade of the employer.

Difference between project employment and fixed period/fixed term employment

GMA7 interchangeably characterized Pabriga and his co-workers’s service as project employment and fixed term employment. But these types of employment are not the same.

Project employment The employee’s services are coterminous with the project. The employment may, in fact, last for more than a year, depending on the needs or circumstances of the project.

Fixed period/fixed term employment Duration of employment is agreed upon by the parties.

The decisive determinant in fixed-term employment is not the activity that the employee is called upon to perform but the day certain agreed upon by the parties for the employment relationship to commence and terminate.

The use of fixed-term employment is subject to abuse by employers who want to deprive workers of their security of tenure. In this situation, the fixed term or period should be struck down as contrary to public policy or morals.

Indications or criteria under which “term employment” does not circumvent the law on security of tenure:

(1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or

(2) The employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.

To prove the fixed term contracts, GMA7 presented cash disbursement vouchers signed by Pabriga and his co-workers, stating that they were merely hired as “pinch-hitters.” The Court observed that Pabriga and his co-workers were in no position to refuse to sign these vouchers, as refusal would entail not getting paid for their services. Plainly, Pabriga and his co-workers as “pinch-hitters” cannot be considered to be on equal footing as GMA7 in the negotiation of their employment contract.

Illegal drugs: if chain of custody is broken, accused must be acquitted

Plain Language summary: Case title: “People of the Philippines vs. Nicolas Gutierrez” G.R. No. 179213, September 3, 2009 Ruling: The prosecution failed to prove under the “chain of custody” rule that the shabu allegedly seized from the accused by the police officers was the same shabu presented in court. The accused must therefore be acquitted. Definitions: (1) “Corpus delicti”: substance of the crime that proves a crime has actually been committed. In cases involving illegal drugs, the illegal drug itself is the corpus delicti. Its existence is vital for the court to find the accused beyond reasonable doubt. (2) “Chain of custody” rule: there must be testimony about every link in the chain, from the moment the object seized was picked up to the time it is offered in evidence. Every person who touched the object must describe how and from whom it was received, where it was, and what happened to it while in the witness's possession, the condition in which it was received, and the condition in which it was delivered to the next link in the chain. References, links, relevant laws: “Mallillin v. People” G.R. No. 172953, April 30, 2008 (Supreme Court requirements in proving chain of custody) Section 1 (b) of the Dangerous Drugs Board Regulation No. 1, Series of 2002 which implements R.A. No. 9165 (definition of "chain of custody")

Background facts:

[1] A police team arrested Nicolas Gutierrez during a buy-bust operation on June 16, 2003 in Pasig City. The team allegedly seized from Gutierrez five centigrams of methylamphetamine hydrochloride (“shabu”) and drug paraphernalia.

Gutierrez was charged under R.A. 9165 with illegal sale of shabu and illegal possession of paraphernalia.

[2] Gutierrez pleaded “not guilty” during his arraignment. He claimed that he was merely having dinner with his family when four unidentified armed men barged into his house and arrested him.

[3] During the pre-trial, Gutierrez’s lawyer stipulated that:

a. the specimen (alleged shabu) exists,
b. the arresting officers requested for its examination,
c. a forensic chemist examined the specimen, and
d. it tested positive for methyl amphetamine hydrochloride.

[4] During the hearing, the fiscal presented some of the police officers who arrested Gutierrez. The officers identified the buy-bust money paid to Gutierrez and the shabu bought from him. PO1 Espares testified on the marking and eventual turnover of the seized sachet of alleged shabu to the investigator.

[5] The Pasig City Regional Trial Court found Gutierrez guilty of the illegal sale of shabu. But the RTC acquitted him of the charge of illegal possession of paraphernalia.

Gutierrez questioned the RTC’s ruling before the Court of Appeals. The CA affirmed the RTC’s decision. Gutierrez then brought his case up to the Supreme Court.

Issue:

The prosecution failed to show what happened to the shabu from the time the arresting officers gave it to the investigator up to its turnover for laboratory examination. The case records also do not show what happened to the shabu between its turnover by the chemist to the investigator and its presentation in court. Since the prosecution failed to prove that the shabu allegedly seized from Gutierrez was the same shabu presented in court, should Gutierrez be acquitted?

Supreme Court ruling:

Gutierrez should be acquitted because the prosecution failed to show an unbroken chain of custody of the alleged shabu.

Under Section 5, Article II of R.A. No. 9165, the elements necessary in a prosecution for the illegal sale of shabu are:

• the identity of the buyer and the seller;
• the object and the consideration; and
• the delivery of the thing sold and the payment for it.

The prosecution must prove that the sale of shabu took place. The corpus delicti— the body or substance of the crime which establishes the fact that acrime has actually been committed—must also be presented in court. In cases involving narcotics, the illegal drug itself constitutes the corpus delicti of the offense. The existence of the illegal drug is vital for the court to find the accused guilty beyond reasonable doubt. The “chain of custody” rule ensures that unnecessary doubts on the identity of the evidence are removed.

In “Malillin v. People,” the Supreme Court explained how it expects the chain of custody or “movement” of the seized evidence to be maintained. There must be testimony about every link in the chain, from the moment the object seized was picked up to the time it is offered in evidence. Every person who touched the object must describe

• how and from whom it was received, where it was, and what happened to it
  while in the witness’s possession,
• the condition in which it was received, and
• the condition in which it was delivered to the next link in the chain.
  

These witnesses must describe the precautions taken to ensure that there had been

1. no change in the condition of the object and
2. no opportunity for someone not in the chain to possess the object.

PO1 Espares, one of the arresting officers, testified on the marking and eventual turnover of the allegedly seized sachet of shabu to the investigator. But no explanation was given on its custody in the interim – from the time it was turned over to the investigator to its turnover for laboratory examination. The case records also do not show what happened to the allegedly seized shabu between the turnover by the chemist to the investigator and its presentation in court.

Highlights of the Supreme Court’s decision / clarifications:

[1] The Supreme Court also ruled that Gutierrez should be acquitted because the arresting officers failed to comply with the rule on the custody and disposition of confiscated drugs (Section 21, Paragraph 1 of Article II of R.A. No. 9165). The officers did not physically inventory and take pictures of the shabu allegedly confiscated from Gutierrez. The officers also did not explain why they did not follow the rule.

[2] “Because of the built-in danger of abuse that a buy-bust operation carries, it is governed by specific procedures on the seizure and custody of drugs.”

“By the very nature of anti-narcotics operations, the need for entrapment procedures, the use of shady characters as informants, the ease with which sticks of marijuana or grams of heroin can be planted in the pockets or hands of unsuspecting provincial hicks, and the secrecy that inevitably shrouds all drug deals, the possibility of abuse is great.”

“Courts must be extra vigilant in trying drug cases lest an innocent person is made to suffer the unusually severe penalties for drug offenses.”

[3] What about the stipulations made by Gutierrez’s lawyer during the pre-trial?

These stipulations have no bearing on the question of chain of custody. The Court said:

These stipulations, which merely affirm the existence of the specimen, and the request for laboratory examination and the results thereof, were entered into during pre-trial only in order to dispense with the testimony of the forensic chemist and abbreviate the proceedings. That such is the intention of the parties is clear from the additional stipulations that the forensic chemist had no personal knowledge as to the source of the alleged specimen; and that the defense was reserving its right to object to the pieces of evidence marked by the prosecution. Clearly, the stipulations do not cover the manner the specimen was handled before it came to the possession of the forensic chemist and after it left her possession.

To interpret the stipulations as an admission that appellant was the source of the specimen would be to bind him to an unceremonious withdrawal of his plea of not guilty – a reading not supported by the records which creates a dangerous precedent.

When someone hits a minor, should the charge be child abuse under RA 7610 or physical injury under the Revised Penal Code?

Plain Language summary: Case title: Bongalon v. People of the Philippines (G.R. No. 169533, March 20, 2013) Ruling: Not every instance of laying of hands on a child constitutes the crime of child abuse under Republic Act No. 7610. If the accused intended to debase, degrade or demean the intrinsic worth and dignity of the child as a human being, then the accused can be charged for child abuse. But if that wasn’t the intention, then the accused should be charged under the Revised Penal Code. Relevant laws and discussions: Republic Act No. 7610 Duration of penalties

Background facts

[1] On June 26, 2000, the Prosecutor’s Office of Legazpi City charged George Bongalon in the Regional Trial Court with child abuse under Section 10 (a) of Republic Act No. 7610. Bongalon allegedly

(a) struck Jayson de la Cruz, a minor, with his palm hitting Jayson at his back and

(b) slapped Jayson hitting his left cheek.

Jayson’s physical injury required five to seven days of medical attention.

Bongalon also allegedly uttered these derogatory remarks against Jayson’s family: “Mga hayop kamo, para dayo kamo digdi, Iharap mo dito ama mo” (You all animals, you are all strangers here. Bring your father here).

[2] According to Bongalon’s version of the incident, Jayson and his older brother Roldan threw stones at his two minor daughters Mary Ann Rose and Cherrlyn. Jayson also burned Cherrlyn’s hair. Bongalon denied physically abusing or maltreating Jayson.

[3] The RTC found Bongalon guilty as charged and sentenced him to imprisonment of 6 years and 1 day to 8 years of prision mayor in its minimum period.

[4] Bongalon then appealed to the Court of Appeals. He contended that the RTC overlooked or disregarded material facts and circumstances in the records that would have led to a favorable judgment for him. He attacked the lack of credibility of the witnesses presented against him, citing the failure of the complaining brothers to react to the incident, which was unnatural and contrary to human experience.

The CA affirmed the conviction but modified the penalty to an indeterminate penalty of 4 years, 2 months and 1 day of prision correccional, as minimum term, to 6 years, 8 months and 1 day of prision mayor as the maximum.

[5] Bongalon brought his case up to the Supreme Court through a petition for certiorari under Rule 65 of the Rules of Court. He claimed that he was not guilty and that, even assuming that he was guilty, his liability should be mitigated because he had merely acted to protect his two minor daughters.

Supreme Court ruling

[1] As the RTC correctly found, Bongalon struck Jayson at the back with his hand and slapped Jayson on the face. But Bongalon’s acts did not constitute child abuse under RA 7610. He did not intend to debase the “intrinsic worth and dignity” of Jayson as a human being. He also did not intend to humiliate or embarrass Jayson.

Instead of child abuse, Bongalon should be convicted of slight physical injuries under Article 266 (1) of the Revised Penal Code.

[2] Child abuse, the crime charged, is defined by Section 3 (b) of Republic Act No. 7610, as follows:

Section 3. Definition of terms. –
x x x x

(b) “Child Abuse” refers to the maltreatment, whether habitual or not, of the child which includes any of the following:

(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional maltreatment;

(2) Any act by deeds or words which debases, degrades or demeans the intrinsic worth and dignity of a child as a human being;

(3) Unreasonable deprivation of his basic needs for survival, such as food and shelter; or

(4) Failure to immediately give medical treatment to an injured child resulting in serious impairment of his growth and development or in his permanent incapacity or death.

[3] The records did not establish beyond reasonable doubt that Bongalon intended to debase the “intrinsic worth and dignity” of Jayson as a human being or that he had intended to humiliate or embarrass Jayson. Bongalon acted on the spur of the moment and in anger, being then overwhelmed by his fatherly concern for the personal safety of his minor daughters who had just suffered harm at the hands of Jayson and his older brother Roldan.

[4] The penalty for slight physical injuries is arresto menor, which ranges from one day to 30 days of imprisonment. Since Bongalon lost his reason and self-control in defending his daughters, he was entitled to the mitigating circumstance of passion. The proper penalty is 10 days imprisonment.

Other highlights of the Supreme Court ruling

[1] Under the well-recognized doctrine of “pro reo,” every doubt is resolved in favor of the accused. Courts should consider all possible circumstances in favor of the accused.

[2] Bongalon used the wrong remedy in questioning the CA’s affirmance of his conviction. His proper remedy was an appeal taken in due course. He should have filed a petition for review on certiorari. Instead, he wrongly brought a petition for certiorari.

Even if Bongalon’s petition is treated as having been brought under Rule 45 of the Rules of Court, it would still be defective due to its being filed beyond the period provided by law. Section 2 of Rule 45 requires the filing of the petition within 15 days from the notice of judgment to be appealed. Bongalo received a copy of the CA’s decision on July 15, 2005, but filed the petition only on September 12, 2005.

Despite Bongalon’s procedural mistakes, the Supreme Court did not dismiss his petition outright but treated it as an appeal filed on time. The Court said that it did not want to be seen as “an unfeeling tribunal of last resort willing to sacrifice justice in order to give premium to the rigidity of its rules of procedure.” The Court explained:

“The procedural transgressions of the petitioner notwithstanding, we opt to forego quickly dismissing the petition, and instead set ourselves upon the task of resolving the issues posed by the petition on their merits. We cannot fairly and justly ignore his plea about the sentence imposed on him not being commensurate to the wrong he committed. His plea is worthy of another long and hard look. If, on the other hand, we were to outrightly dismiss his plea because of the procedural lapses he has committed, the Court may be seen as an unfeeling tribunal of last resort willing to sacrifice justice in order to give premium to the rigidity of its rules of procedure. But the Rules of Court has not been intended to be rigidly enforced at all times. Rather, it has been instituted first and foremost to ensure justice to every litigant. Indeed, its announced objective has been to secure a ‘just, speedy and inexpensive disposition of every action and proceeding.’ This objective will be beyond realization here unless the Rules of Court be given liberal construction and application as the noble ends of justice demand. Thereby, we give primacy to substance over form, which, to a temple of justice and equity like the Court, now becomes the ideal ingredient in the dispensation of justice in the case now awaiting our consideration.

“The petitioner’s right to liberty is in jeopardy. He may be entirely deprived of such birthright without due process of law unless we shunt aside the rigidity of the rules of procedure and review his case.”

After getting married, a woman should consistently use either her maiden surname or her married surname

Plain Language summary Case title: “Maria Virginia V. Remo vs. The Honorable Secretary of Foreign Affairs,” G.R. No. 169202, March 5, 2010 Ruling: A married woman is not prohibited from continuously using her maiden name once she is married. When a woman marries, she does not change her name but only her civil status. RA 8239 does not prohibit a married woman from using her maiden name in her passport. The DFA allows a married woman who applies for a passport for the first time to use her maiden name. She is not required to adopt her husband's surname. But once a married woman uses her married name in her passport, she cannot be allowed to change her family name at will. This prohibition prevents confusion and inconsistency in the records of passport holders. Relevant laws: 1. Republic Act No. 8239 or the Philippine Passport Act of 1996 2. Article 370 of the New Civil Code of the Philippines (law on surnames for married women)

(Related discussion: “Miss, Ms, or Mrs? Philippine law on surnames for married women”)

Background facts:

1. Maria Virginia V. Remo is a Filipino citizen married to Francisco R. Rallonza. The following entries appear in her passport: “Rallonza” as her surname, “Maria Virginia” as her given name, and “Remo” as her middle name.

Virginia’s passport was due to expire on October 27, 2000. She applied for her passport’s renewal with the Department of Foreign Affairs (DFA) office in Chicago, Illinois, USA. She also requested that her maiden name and surname be used in the replacement passport.

2. The DFA office in Chicago and later on DFA Sec. Domingo Siason denied Virginia’s request.

DFA Sec. Siason, through an undersecretary, stated:

This Office is cognizant of the provision in the law that it is not obligatory for a married woman to use her husband’s name. Use of maiden name is allowed in passport application only if the married name has not been used in previous application. The Implementing Rules and Regulations for Philippine Passport Act of 1996 clearly defines the conditions when a woman applicant may revert to her maiden name, that is, only in cases of annulment of marriage, divorce and death of the husband. Ms. Remo’s case does not meet any of these conditions.

3. Virginia appealed to the Office of the President but her appeal was denied. The OP stated:

Section 5(d) of Republic Act No. 8239 (RA 8239) or the Philippine Passport Act of 1996 “offers no leeway for any other interpretation than that only in case of divorce, annulment, or declaration [of nullity] of marriage may a married woman revert to her maiden name for passport purposes.”

4. Virginia then filed a petition for review of the OP’s decision with Court of Appeals. The CA denied the petition, stating:

• Virginia’s marriage to Francisco Rallonza has not been annulled or declared void. A divorce decree has also not been granted to them.
• Virgina cannot therefore simply revert to her maiden name in the replacement passport after she had adopted her husband’s surname in her old passport.

Virginia subsequently filed a petition for review of the CA’s ruling with the Supreme Court. She claimed that no law prohibits her from using her maiden name and that Section 5(d) of RA 8239 conflicts with Article 370 of the New Civil Code of the Philippines (NCC).

Issue

Should Virginia be allowed to use her maiden surname in the replacement passport?

Supreme Court ruling

1. “A married woman has an option, but not a duty, to use the surname of the husband in any of the ways provided by Article 370 NCC. She is therefore allowed to use not only any of the three names provided in Article 370, but also her maiden name upon marriage.”

“A married woman is not prohibited from continuously using her maiden name once she is married. When a woman marries, she does not change her name but only her civil status.”

2. The law governing passport issuance is RA 8239. Section 5(d) “limits the instances when a married woman may be allowed to revert to the use of her maiden name in her passport.” These instances are death of husband, divorce decree, annulment or nullity of marriage.

Article 370 of the Civil Code and Section 5(d) of RA 8239 do not conflict with one another. RA 8239, including its implementing rules and regulations, does not prohibit a married woman from using her maiden name in her passport. In fact, in recognition of this right, the DFA allows a married woman who applies for a passport for the first time to use her maiden name. Such an applicant is not required to adopt her husband's surname.

3. Virginia “would not have encountered any problems in the replacement passport had she opted to continuously and consistently use her maiden name from the moment she was married and from the time she first applied for a Philippine passport.”

4. If Virginia’s request to use her maiden surname in the replacement passport is granted, “nothing prevents her in the future from requesting to revert to the use of her husband’s surname.”

“Unjustified changes in one’s name and identity in a passport cannot be allowed. Undue confusion and inconsistency in the records of passport holders will arise.”

For passport issuance purposes, a married woman whose marriage is subsisting, may not change her family name at will.

Can an employee file a case of constructive dismissal and yet continue reporting for work?

Plain Language summary: Case title: ‘The Orchard Golf and Country Club vs. Amelia R Francisco,” G.R. No. 178125, March 2013 Issue: How can an employee file a labor case for constructive dismissal and at the same time continue reporting for work? Ruling: Constructive dismissal does not occur when the employee stops reporting for work, but when the employer commits acts that make continued employment intolerable. In difficult times, an employee may have no choice but to continue working despite the employer’s abuses and even while a labor case is pending between them. This should not be taken against the employee. Definition: “Constructive dismissal” is quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits; if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment; when the employee involuntary resigns due to the harsh, hostile, and unfavorable conditions set by the employer. The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his employment/position under the circumstances. (Gan vs. Galderma Philippines, G.R. No. 177167, January 17, 2013)

Background facts

[1] The Orchard Golf and Country Club (Orchard), operates two golf courses in Dasmariñas, Cavite for its members and their guests. Orchard also has a swimming pool, bowling alley, cinema, fitness center, courts for tennis, badminton and basketball, restaurants, and function rooms.

Amelia R. Francisco (Francisco) was employed as Club Accountant to head Orchard’s General Accounting Division and the four divisions under it. Each of these four divisions has its own Supervisor and Assistant Supervisor. As General Accounting Division head, Francisco reported directly to Orchard’s Financial Comptroller, Jose Ernilo P. Famy (Famy).

Tomas B. Clemente III (Clemente) is Orchard’s General Manager while Ma. Irma Corazon A. Nuevo (Nuevo) is the General and Administrative Manager.

[2] Famy’s actions against Francisco:

(a) suspended Francisco without pay for a period of 15 days for her alleged failure to prepare a letter to SGV, Orchard’s internal auditor, despite repeated verbal and written reminders;

(b) temporarily transferred Francisco to the Cost Accounting Section, without diminution in salary and benefits, while Francisco’s charges against him for fraudulent and negligent acts were being investigated;

(c) asked for investigation into Francisco’s insubordination, for her alleged unauthorized change of day-off from July 30 to August 4, 2000, and for being absent on that date despite disapproval of her leave/offset application;

(d) asked Francisco in a memorandum dated August 5, 2000 to explain the charges of insubordination, negligence, inefficiency and violation of work standards relative to the unauthorized change of day-off and disapproved offset/ leave.

[3] Francisco’s reactions:

(a) She accused Famy of waging a personal vendetta against her because she sought Orchard’s inquiry into Famy’s fraudulent and negligent acts. She also said that her transfer to the Cost Accounting Section was humiliating and demeaning, and that it constituted constructive dismissal.

Francisco also threatened to take legal action or seek assistance from Orchard members to insure that Famy’s impropriety was investigated.

(c) On August 11, 2000, Francisco filed a Complaint for illegal dismissal against Orchard, impleading Famy, Clemente and Nuevo as additional respondents. The case was docketed as NLRC Case No. RAB-IV-812780-00-C. She asked, among others, for damages and attorney’s fees.

[4] Events after Francisco filed her illegal dismissal case with the NLRC:

(a) On August 16, 2000, Francisco received another memorandum requiring her to explain why she should not be charged with betrayal of company trust. The memorandum alleged that a club member was seen distributing copies of Francisco’s letter to Orchard’s Chairman of the Board of Directors.

(b) On August 18, 2000, Francisco submitted her written explanation to the charges.

(c) On August 19, 2000, Clemente handed Francisco a Notice of Disciplinary Action dated August 16, 2000 relative to her July 30, 2000 unauthorized change of day-off and her August 4, 2000 unauthorized leave/absence. Francisco was suspended for another fifteen days, or from August 21 to September 6, 2000.

[5] Events after Francisco’s suspension:

(a) Francisco amended her illegal dismissal Complaint to one for illegal suspension. Meanwhile, she continued to report for work.

(b) On September 7, 2000, or a day after serving her suspension, Francisco received a September 6, 2000 memorandum from Nuevo and approved by Clemente. She was placed on forced leave with pay for 30 days, or from September 7, 2000 up to October 11, 2000, allegedly because the case filed against her has strained her relationship with her superiors.

(c) Francisco wrote a letter to Nuevo seeking clarification as to what case was filed against her. Nuevo immediately sent a reply memorandum stating that the case referred to her alleged “betrayal of company trust.”

(d) After the expiration of her forced leave, or on October 12, 2000, Francisco reported back to work.

This time Francisco was handed an October 11, 2000 memorandum from Clemente informing her that she has been permanently transferred, without diminution of benefits, to Orchard’s Cost Accounting Section effective October 12, 2000. The transfer was due to strained relations between her and Famy and the pending evaluation of her betrayal of company trust charge. Francisco’s position at the Cost Accounting Section was to remain under Famy’s direct supervision.

(e) In an October 13, 2000 memorandum to Clemente, Francisco protested her permanent transfer, claiming that it was made in bad faith. She also bewailed Clemente’s inaction on her July 5, 2000 letter charging Famy with irregularities relative to BIR tax payments.

Because of her transfer, Francisco once more amended her Complaint to include illegal/constructive dismissal. In her prayer, she sought to be reinstated to her former position as Club Accountant.

[6] Labor Arbiter rules against Francisco

Labor Arbiter Enrico Angelo C. Portillo issued a Decision dated August 23, 2001 dismissing Francisco’s Complaint for lack of merit. The Arbiter noted the “belligerence and animosity” between Francisco and Famy. He dismissed Francisco’s charges as nothing more than attempts to get back at Famy for his reproach at her failure to draft the SGV letter.

The Arbiter further upheld Francisco’s two suspensions as valid exercises of Orchard’s management prerogative. He also found Francisco’s claim of constructive dismissal to be baseless. On the contrary, he found Francisco’s transfer as necessary and in furtherance of Orchard’s interests. He also noted that the transfer was lateral, or to a position of the same rank and pay scale based on Orchard’s Organizational Chart.

[7] NLRC overrules the Labor Arbiter

While Francisco’s suspensions were valid, her subsequent permanent transfer on the ground of strained relations to the Cost Accounting Section on October 12, 2000 had no just cause. It resulted in Francisco’s demotion, since the position of Cost Controller was merely of a supervisory character while the position of Club Accountant was of managerial rank. Francisco held the rank of “Manager 3” as Club Accountant, while the Cost Controller is only a Supervisor position and is precisely under the direct supervision and control of the Club Accountant. This unwarranted demotion is equivalent to constructive dismissal.

The NLRC added that “strained relationship” is not a valid ground for termination of employment under the Labor Code. It ordered Francisco’s reinstatement to her former position as Club Accountant and awarded her attorney’s fees in the amount of P50,000.00. But the NLRC absolved Famy, Nuevo and Clemente of wrongdoing.

Francisco moved for partial reconsideration of the NLRC’s Resolution with respect to its ruling declaring her suspensions as valid and the denial of her claim for damages. The NLRC denied her motion.

[8] The Court of Appeals affirms NLRC ruling

Orchard went up to the CA through a Petition for Certiorari while Francisco no longer took issue with the denial of her motion.

In its January 25, 2007 Decision, the CA sustained the NLRC ruling. It held that while Orchard had the right to transfer Francisco from one office to another within the club, there should be no demotion in rank, salary, benefits, and other privileges. The CA added that the right may not be used arbitrarily to rid the employer of an undesirable worker. Proper notification and an opportunity to be heard or contest the transfer must be given to the employee whose transfer is sought.

Francisco was notified only of Orchard’s decision to permanently transfer her, without giving her the opportunity to contest the transfer. The CA characterized Francisco’s permanent transfer as a demotion in the guise of a lateral transfer.

Orchard filed a Petition for Review with the Supreme Court questioning the CA’s decision.

Supreme Court ruling: Francisco was constructively dismissed

Francisco’s transfer to the position of Cost Controller was without valid basis and that it amounted to a demotion in rank. Hence, there was constructive dismissal.

The cause of Francisco’s temporary transfer on July 20, 2000 was her pending complaint against Famy.

When Francisco was placed on forced leave and transferred to the Cost Accounting Section, not once was Francisco given the opportunity to contest these company actions taken against her.

Just when one penalty has been served by Francisco, another would instantaneously take its place. And all these happened even while the supposed case against her, the alleged charge of “betrayal of company trust”, was still pending and remained unresolved.

Not even the claim that her relations with her superiors have been strained could justify Francisco’s transfer to Cost Accounting Section. Indeed, it appears that her charge was never resolved. And if Famy, Nuevo and Clemente truly believed that their relations with Francisco have been strained, then it puzzles the Court why, despite her transfer, she continues to remain under Famy’s direct supervision.

For this reason, Francisco’s July 20, 2000 temporary transfer and her October 12, 2000 permanent transfer to Cost Accounting Section must be invalidated. For one, there was no valid reason to temporarily transfer Francisco to Cost Accounting Section on July 20, 2000. She had already served her penalty for her failure to draft the SGV letter, through the 15-day suspension period which she just completed on July 20, 2000. Secondly, the transfer was not even rooted in any new infraction she is accused of committing. There was thus an absolute lack of basis for her July 20, 2000 temporary transfer.

As for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause. Also, the transfer is a penalty imposed on a charge that has not yet been resolved. Definitely, to punish one for an offense that has not been proved is truly unfair; this is deprivation without due process. Finally, the Court sees no necessity for Francisco’s transfer; on the contrary, such transfer is outweighed by the need to secure her office and documents from Famy’s possible intervention on account of the complaint she filed against him.

The fact that Francisco continued to report for work does not necessarily suggest that constructive dismissal has not occurred, nor does it operate as a waiver. Constructive dismissal occurs not when the employee ceases to report for work, but when the unwarranted acts of the employer are committed to the end that the employee’s continued employment shall become so intolerable. In these difficult times, an employee may be left with no choice but to continue with his employment despite abuses committed against him by the employer, and even during the pendency of a labor dispute between them. This should not be taken against the employee. Instead, we must share the burden of his plight, ever aware of the precept that necessitous men are not free men.

Can a rank-and-file employee like a hotel service attendant be terminated on the ground of loss of trust and confidence?

Plain Language summary: Case title: “Philippine Plaza Holdings, Inc. vs. Ma. Flora M. Episcope,” G.R. No. 192826, Feb. 27, 2013 Issues: (1) Can a rank-and-file employee like a service attendant be terminated on the ground of loss of trust and confidence? (2) What are the two classes of positions of trust? (3) What are the requirements for the ground of loss of trust and confidence? (4) Is proof beyond reasonable doubt necessary in dismissing an employee on the ground of loss of trust and confidence? Relevant laws and cases: Article 293 (formerly Article 279) of the Labor Code Bristol Myers Squibb (Phils), Inc. v. Baban, citing Atlas Fertilizer Corporation v. National Labor Relations Commission Lopez v. Alturas Group of Companies

Background facts

[1] Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of the Westin Philippine Plaza Hotel (Hotel).

Ma. Flora M. Episcope (Episcope) was employed by PPHI from July 24, 1984 until she was terminated on November 4, 2004. Grounds for her termination were dishonesty, willful disobedience, and serious misconduct amounting to loss of trust and confidence.

[2] To check the performance of the employees and the services of the Hotel’s outlets, PPHI regularly employed independent auditors or professional shoppers.

For this purpose, Sycip, Gorres and Velayo auditors dined at the Hotel’s Café Plaza on August 28, 2004. After dining, the auditors were billed the total amount of P2,306.65, representing the cost of the food and drinks they had ordered under Check No. 565938.

[3] Based on the audit report submitted to PPHI, Episcope was one of those who attended to the auditors. She was the one who handed the check and received the payment of P2,400.00. She then returned Check No. 565938, which was stamp marked “paid,” together with the change.

[4] Upon comparing the check receipt with the sales report of Café Plaza, it was discovered that the Hotel’s copy of the receipt had a discount of P906.45. This was due to the use of a Starwood Privilege Discount Card registered in the name of Peter A. Pamintuan. The receipt issued by Episcope to the auditors reflected the undiscounted amount of P2,306.65 since none of the auditors had this discount card.

[5] On September 30, 2004, the Hotel issued a Show-Cause Memo to Episcope asking her to explain why no disciplinary action should be taken against her for the questionable and invalid discount application on the check.

In her handwritten letter, Episcope admitted that she was on duty on the date and time in question. But she could no longer recall if the concerned guests presented a Starwood Privilege Discount Card.

[6] On October 4, 2004, PPHI placed Episcope on preventive suspension without pay.

[7] During the administrative hearing on October 6, 2004, Episcope confirmed that she was the one who presented the check and received the payment from the guests. But she denied stamping the check as “paid” or that she gave any discount without a discount card. She explained that she could not have committed these acts since all receipts and discount applications were handled by the cashier. But when asked why the discounted receipt was not given to the guests, she merely replied that she could no longer remember.

In a separate inquiry, the cashier of Café Plaza maintained that a discount card must have been presented since there was a Discount Slip and a stamped receipt indicating the discounted payment.

[8] Finding Episcope to have failed to sufficiently explain the questionable discount application, PPHI terminated her employment for committing acts of dishonesty, willful disobedience, serious misconduct, and loss of trust and confidence.

[9] Episcope filed a complaint for illegal dismissal with prayer for payment of damages and attorney's fees against PPHI before the NLRC.

Rulings of the Labor Arbiter and the NLRC

On October 20, 2005, the Labor Arbiter (LA) dismissed Episcope’s complaint for illegal dismissal.

The LA found that there was substantial evidence to support the charge of improper discount application and observed that the act resulted to a loss on the Hotel’s part. Accordingly, the LA held that Episcope’s actions rendered her unworthy of the trust and confidence demanded by her position.

On appeal, the NLRC affirmed the LA’s decision in its May 30, 2007 Resolution. It also denied Episcope’s motion for reconsideration in its November 14, 2007 Resolution.

Ruling of the Court of Appeals

The CA reversed the NLRC’s Decision. It found the report submitted by the auditors insufficient to prove that Episcope was guilty of the charges against her.

The CA described the report as a mere transaction account in tabular form, without evidentiary worth. It was unsigned and bore no indication of Episcope’s alleged culpability. The CA likewise did not give credence to the minutes of the administrative hearing because it was based on the same unaudited report.

The CA (1) declared Episcope’s dismissal illegal; (2) ordered her reinstatement to her former position without loss of seniority rights and benefits under the Labor Code; and (3) remanded the case to the NLRC for further proceedings on her money claims and other benefits.

PPHI moved for reconsideration but he CA in its July 5, 2010 Resolution denied the motion. PPHI then filed with the Supreme Court a petition for certiorari under Rule 45.

The Supreme Court ruling

[1] The Court reversed the findings and conclusion of the CA. The records show that Episcope committed acts of dishonesty that resulted to monetary loss on the part of PPHI. More significantly, her acts led to PPHI’s loss of trust and confidence in her.

Despite the questioned value of the unaudited and unsigned auditor’s report, all circumstances support the finding that Episcope was negligent in her duty to carefully account for the money she received from the café’s guests. Even though the receipts were prepared by the cashier, Episcope, as a service attendant, actually handled the money given to her by the guests. She should have at least known why there was a shortage in remittance. Yet when asked, she could not offer any plausible explanation but merely shifted the blame to the cashier.

[2] Article 293 (formerly Article 279) of the Labor Code25 provides that the employer must not terminate the services of an employee except only for a just or authorized cause.

Among the just causes for termination is the employer’s loss of trust and confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an employer may terminate the services of an employee for fraud or willful breach of the trust reposed in him.  

But in order for loss of trust and confidence to be properly invoked, certain requirements must be complied with, namely:

1. the employee must be holding a position of trust and confidence, and
   
   
2. there must be an act that would justify the loss of trust and confidence.

[3] The two classes of positions of trust are:

(1) managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision, and other officers or members of the managerial staff;

(2) fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s money or property, and are thus classified as occupying positions of trust and confidence.

Episcope belonged to this latter class and therefore, occupied a position of trust and confidence.

[4] Proof beyond reasonable doubt is not required in dismissing an employee for loss of trust and confidence. It is sufficient that there is some basis to believe that the employee is responsible for the misconduct. The nature of the employee’s act rendered the employee absolutely unworthy of trust and confidence demanded by the position.

Loss of trust and confidence must be based on substantial evidence and not on the employer’s whims, caprices or suspicions. Otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that an employee’s dismissal was arbitrary.

BP 22 demand letter (notice of dishonor) must be actually received by issuer of check

Plain Language summary: Case title: “Erlinda C. San Mateo, Petitioner v. People of the Philippines, Respondent,” G.R. NO. 200090, March 6, 2013 Ruling: Notice of dishonor must be actually received by issuer of the check. When an acquittal is based on lack of proof beyond reasonable doubt, civil damages can be awarded.

Background facts

The Metropolitan Trial Court (MeTC) of Taguig City, Branch 74 found San Mateo guilty of 10 counts of violation of B.P. 22. She was sentenced to suffer the straight penalty of imprisonment of six months for each count. As to San Mateo’s civil liability, the MeTC ordered her to pay Php 134,275.00, the total value of the 11 checks she issued to ITSP International, Incorporated.

Both the Regional Trial Court and the Court of Appeals affirmed the MeTC’s decision.

Supreme Court ruling

The Supreme Court acquitted San Mateo on the ground that her guilt has not been established beyond reasonable doubt.

But her civil liability for the dishonored checks stands. She must pay Php 134,275.00 plus 12% interest per annum from the time the sum became due and demandable until fully paid.

Reasons for the Court’s ruling

[1] To be liable for violation of B.P. 22, the following essential elements must be present:

(1) the making, drawing, and issuance of any check to apply for account or for value;

(2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of the check in full upon its presentment; and

(3) the subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

The Court found that the second element was not sufficiently established. Section 2 of B.P. 22 creates the presumption that the issuer of the check was aware of the insufficiency of funds when the check was issued and the bank dishonored it. But this presumption, however, arises only after it is proved that:

(1) the issuer had received a written notice of dishonor and

(2) within five days from receipt of the notice, the issuer failed to pay the amount of the check or to make arrangements for its payment.

[2] San Mateo may have requested in her letters that Sehwani (ITSP Vice-President for Operations) defer depositing all the checks, otherwise, her account will close. But San Mateo’s act was not an admission that, when she issued those checks, she knew that she would have no sufficient funds in the drawee bank.

Sehwani tried to serve the notice of dishonor to San Mateo two times. First, Sehwani’s counsel sent a demand letter to San Mateo’s residence at Greenhills, San Juan. When the security guard refused to accept the letter, the liaison officer told the guard to hand it to San Mateo. But the prosecution failed to show that the letter ever reached San Mateo.

Second, Sehwani’s counsel sent a demand letter to San Mateo by registered mail. It was returned with the notation “N/S Party Out 12/12/05” and that San Mateo did not claim it despite three notices to her.

[3] The notice of dishonor must be actually received by the issuer of the check. The Court has consistently ruled that receipts for registered letters, including return receipts, do not themselves prove receipt. They must be properly authenticated to serve as proof of receipt of the letters, claimed to be a notice of dishonor.

The presentation of the registry card with an unauthenticated signature, does not meet the required proof beyond reasonable doubt that the accused received the notice. It is not enough for the prosecution to prove that a notice of dishonor was sent to the accused. The prosecution must also prove actual receipt of the notice, because the fact of service provided for in the law is reckoned from receipt of the notice of dishonor by the accused.

Since there is insufficient proof that San Mateo actually received the notice of dishonor, the presumption that she knew of the insufficiency of her funds cannot arise. For this reason, the Court cannot convict her with moral certainty of violation of B.P. 22.

[4] But San Mateo’s acquittal does not extinguish her civil liability for the dishonored checks. When an acquittal is based on lack of proof beyond reasonable doubt, civil damages can be awarded. For this reason, the trial court’s directive for San Mateo to pay the civil liability in the amount of Php 134,275.00 representing the total value of the 11 checks plus 12% interest per annum from the time the said sum became due and demandable until fully paid, stands.

If there’s no valid marriage license, then the marriage contract, authority of solemnizing officer, testimony of witnesses and sponsors, wedding pictures, etc. do not mean anything

Plain Language summary: Case title: “Syed Azhar Abbas v. Gloria Goo Abbas,” G.R. No. 183896. January 30, 2013 Issue: The Regional Trial Court (RTC) ruled that no valid marriage license was issued and thus the marriage is void. The RTC based its ruling on the certification by the Municipal Civil Registrar of Carmona, Cavite that no marriage license was issued to Syed and Gloria. On the other hand, the Court of Appeals held that, for several reasons, Syed and Gloria were validly married. The certification of the Municipal Civil Registrar failed to categorically state that a diligent search for the marriage license was conducted under Sec. 28, Rule 132 of the Rules of Court. Supreme Court ruling: Syed and Gloria’s marriage is void because they did not have a valid marriage license. Relevant cases and legal provisions: Republic vs. Court of Appeals, G.R. No. 103047, September 2, 1994, 236 SCRA 257 Cariño vs. Cariño, 403 Phil. 861, 869 (2001) Section 28, Rule 132 of the Rules of Court Family Code of the Philippines: Article 3; Article 4; Article 35 (3)

Background facts

Syed Azhar Abbas (Syed) filed a petition for the declaration of nullity of his marriage to Gloria GooAbbas (Gloria) with the Regional Trial Court of Pasay City (RTC).

The RTC ruled that Syed and Gloria’s marriage was void from the beginning because they did not have a valid marriage license. The Municipal Civil Registrar of Carmona, Cavite certified that Syed and Gloria’s alleged Marriage License No. 9969967 was actually issued to a certain Arlindo Getalado and Myra Mabilangan.

On the other hand, the Court of Appeals ruled that Syed and Gloria’s marriage was valid because:

1. The Municipal Civil Registrar’s certification cannot be used as evidence because it failed to categorically state that a “diligent search” for the marriage license was conducted, as required by Section 28, Rule 132 of the Rules of Court.

2. Both Syed and Gloria were legally capacitated to marry; the Embassy of Pakistan issued a certificate of legal capacity in Syed’s favor.

3. Syed admitted to signing the marriage contract.

4. Several pictures were presented showing Syed and Gloria before the solemnizing officer, the witnesses, and other members of Gloria’s family, taken during the marriage ceremony and in the restaurant where the lunch was held after the marriage ceremony.

5. Syed and Gloria comported themselves as husband and wife.

6. Syed only filed his petition after Gloria had filed a case against him for bigamy.

Supreme Court ruling

1. Syed and Gloria’s marriage is void because they did not have a valid marriage license.

2. All the evidence cited by the CA to show that a wedding ceremony was conducted and a marriage contract was signed cannot cure the absence of a valid marriage license. Article 4 of the Family Code is clear when it says, “The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2).”

3. From the absence of the words “despite diligent search” in the certification, the CA reasoned that no diligent search was conducted and thus, the certification could not be used as evidence. But a categorical declaration is not absolutely necessary for Sec. 28, Rule 132 to apply, as held in Republic vs. Court of Appeals and in Cariño vs. Cariño.

The Municipal Civil Registrar did conduct a “diligent search” because it located and submitted Marriage License No. 996967 to the RTC.

4. The solemnizing officer testified that the marriage contract and a copy of the marriage license were submitted to the Local Civil Registrar of Manila. Gloria could have simply secured a copy of the license from that office and submitted it to the RTC. But Gloria inexplicably failed to do so, further weakening her claim that there was a valid marriage license issued for her and Syed.

A notarized document can be questioned as to validity of its execution or contents

Case title: “Spouses Lehner and Ludy Martires v. Menelia Chua,” G.R. NO. 174240, March 20, 2013 Issues: Validity of a notarized document Equitable mortgage

Background facts

[1] Menelia Chua and her mother owned 24 memorial lots located at the Holy Cross Memorial Park in Barangay Bagbag, Novaliches, Quezon City. Menelia borrowed Php 150,000.00 from spouses Lehner and Ludy Martires. Menelia promised to pay a monthly interest of 8% and an additional 10% monthly interest in case of default. The loan was secured by a real estate mortgage over the memorial lots.

[2] Menelia failed to fully settle her obligation. Subsequently, without foreclosing the mortgage, the Martires couple transferred ownership of the lots in their name through a Deed of Transfer.

[3] Menelia filed with the Regional Trial Court (RTC) of Quezon City a complaint against the Martires couple, Manila Memorial Park Inc. (owner of the Holy Cross Memorial Park), and the Register of Deeds of Quezon City. She asked the RTC to:

• annul the contract of mortgage between her and the Martires couple on the ground that the interest rates imposed were unjust and exorbitant;
  
  
• determine her liability under the law; and
  
  
• reconvey the disputed property to her.

Menelia later on alleged that the Deed of Transfer and Affidavit of Warranty were forged and asked that they be annulled.

[4] The RTC dismissed Menelia’s complaint for lack of merit and granted the counterclaims of the Martires couple.

[5] The Court of Appeals (CA) reversed the RTC decision. The CA ruled, among other things, that the Deed of Transfer was not duly notarized because there was no convincing proof that Menelia appeared before the notary public.

Supreme Court ruling: notarization does not guarantee the validity of a document’s contents

[1] The CA has pointed out the dubious circumstances and irregularities in the alleged notarization of the Deed of Transfer. Among others:

• the Administrative Officer of the Notarial Section of the Makati City RTC certified that their office could not find a copy of the Deed of Transfer in their files;
  
  
• the Deed did not state the date of execution and lacked the marital consent of Menelia's husband;
  
  
• the notary public whose certification was presented by the Martires couple did not testify and therefore could not be cross-examined as to the truthfulness of his certification;
  
  
• the certification of the Clerk of Court of the Notarial Section of the Makati City RTC was not based on documents existing in their files, but was simply based on the certification issued by the notary public.

[2] A notarized document enjoys the presumption of regularity. But notarization does not guarantee the validity of the document’s contents. The presumption is not absolute and may be rebutted by clear and convincing evidence to the contrary.

Citizens’ guide to the budget: a weapon against pork barrel scams and corruption, and for government transparency and accountability

Overview: Civil society groups and private individuals must  (1) scrutinize the national budget's pork barrel allocations, lump sums, unprogrammed funds, and (2) pressure Congress or Malacanang to produce a “citizens’ guide to the budget.” Civil society groups should partner with the International Budget Partnership. Civil society groups and private individuals can learn budget advocacy and monitoring through IBP’s Open Budgets Game! Reasons why governments should publish a citizens' guide to the budget Countries that currently publish a citizens’ guide to the budget Producing a citizens’ guide to the budget can either be (a) mandated by law, or (b) a proactive move by Congress or Malacanang Examples of citizens’ guide to the budget

After the successful and festive meeting of thousands of ordinary Filipinos in Luneta last week against the pork barrel scam, many are asking, “What’s next? How can Filipinos continue the fight against the pork barrel scam and corruption in government?”

My suggestions are for civil society groups and private individuals to (1) scrutinize the national budget's pork barrel allocations, and (2) pressure Congress or Malacanang to produce a “citizens’ guide to the budget.”

President Aquino has changed the system in the allocations for congressional and senatorial projects. These allocations will now become line items in the national budget. Presumably, this new set-up will prevent another scam. But the national budget is thousands of pages long and only a few Filipinos have the technical expertise to understand it.

[1] Civil society groups should partner with the International Budget Partnership. The IBP explains its advocacy:

If you want to fight poverty, you need to care about government budgets. As the specific plans for how public funds will be raised and spent, budgets are the government’s most powerful tool to meet the needs and priorities of a country and its people. The aim of the International Budget Partnership (IBP) is to ensure that government budgets are more responsive to the needs of poor and low-income people in society and, accordingly, to make budget systems more transparent and accountable to the public.

The IBP believes that the public has a right to comprehensive, timely, and useful information on how the government manages public funds. Our experience shows that when ordinary people have information, skills, and opportunities to participate, broader public engagement in government budget processes can promote substantive improvements in governance and poverty.

In order to achieve its goals, the IBP works in five major areas:

• Building budget analysis and advocacy skills through training and technical assistance
• Measuring and advancing transparency, accountability, and public participation in the budget process
• Contributing to strong and sustainable organizations by providing financial assistance for civil society budget work
• Enhancing knowledge exchange among civil society budget groups and other public finance stakeholders by acting as a hub of information on civil society budget work
• Building vibrant international and regional budget networks

The IBP and its civil society partners contribute to reforms in how governments around the world manage public funds so that:

• budget processes (how budgets are proposed, debated, implemented, and evaluated) are more transparent and open to public input;
• budget policies (who will pay what taxes, or how much money will go to specific programs) effectively address the needs of the poor and marginalized; and
• budget rules, regulations, and institutions are stronger and better able to resist corruption and mismanagement and ensure more effective and efficient use of public resources.

Relevant links: Code-NGO: PDAF Watch Philippine Center for Investigative Journalism: PDAF Flow Chart

Some Philippine civil society groups that are already partnering with the IBP are the Philippine Center for Investigate Journalism, Balay Mindanaw Foundation, Procurement. Watch Inc., Philippine Center for Civic Education and Democracy, Institute for Popular Democracy, Caucus of Development NGO Networks (CODE-NGO), and Concerned Citizens of Abra for Good Government.

[2] Civil society groups and private individuals can learn budget advocacy and monitoring through the IBP’s Open Budgets Game!
 
[3] Why should governments publish a citizens' guide to the budget? (From “Producing a Citizens' Guide to the Budget: Why, What and How?” by Murray Petrie and Jon Shields, OECD Journal on Budgeting, Volume 2010/2)

Access to information is a precondition for citizens to: understand how a government is using its entrusted powers to tax, borrow, and spend public resources; become involved in informed public debate during the budget process; and hold a government properly to account. By reporting and explaining budget decisions and the state of the public finances with simplicity and clarity, the government can help to demystify the budget beyond the often necessarily technically complex detail in the budget documentation. Otherwise, the job is left to civil society or the media, who are not always adequately equipped. It is also a good discipline for policy makers to explain themselves in simple, everyday language.

Publication of a citizens’ guide allows a government to explain in plain language the objectives of its budget and to supplement and complement other supporting material such as the budget speech, press releases, web pages, media appearances, etc. A guide provides a single place where the public can learn about the main features of the budget and gain access to more detailed reference sources. It also helps citizens to assess the impact on their own circumstances and on specific groups in society (including the effects on the burden of taxation, service provision and employment prospects).

Publication of a citizens’ guide to the budget is called for in the International Monetary Fund (IMF) Code of Good Practices on Fiscal Transparency (2007) under the principle that “fiscal information should be presented in a way that facilitates policy analysis and promotes accountability” (IMF, 2007a). The code stipulates specifically that: “A clear and simple summary guide to the budget should be widely distributed at the time of the annual budget.” A short paragraph in the explanatory IMF Manual on Fiscal Transparency (2007) lists some of the substantive and qualitative elements of a citizens’ guide (IMF, 2007).

[4] What countries currently publish a citizens’ guide to the budget? (Producing a Citizens’ Guide to the Budget: Why, What and How?,” by Murray Petrie and Jon Shields,OECD Journal on Budgeting, Volume 2010/2)

It appears that relatively few governments currently publish a citizens’ guide to the annual budget. Less than 20 concrete examples have so far been identified. A major source of information about current practice is the Open Budget Survey. The seven countries identified in the 2006 survey (based on 2005 data) were El Salvador, France, Korea, New Zealand, South Africa, Sweden and the United Kingdom. Two of these - New Zealand and the United Kingdom - publish summary information on the budget but do not call it a citizens’ guide.

The 2008 survey identified an additional ten countries that published a citizens’ guide or apparent equivalent: Angola, Colombia, Croatia, Georgia, Ghana, India, Norway, Russia, Uganda and Ukraine. The 2008 survey found that, of these 17 guides, ten were very informative, three were somewhat informative, and four were not very informative.

[5] Civil society groups and private individuals must pressure Congress or Malacanang to publish a citizens’ guide to the budget. The guide must expressly point out, describe, and explain, among other things, what are the (a) pork barrel allocations for senators and representatives, (b) lump sums, and (c) unprogrammed funds.

Producing a citizens’ guide to the budget should ideally be mandated by law. Or, if Congress and Malacanang are sensitive to the public anger over the pork barrel scam,  they should proactively produce the citizens’ guide to the budget, in cooperation with credible institutions like the UP National College of Public Administration and Governance.

If producing the citizens’ guide to the budget is mandated by law, safeguards must be placed to prevent the guide from simply being a “praise release.” For example, comments, critiques, or evaluation of the budget by civil society groups and institutions like the UP NCPAG must be included in the guide (at the very least, as annexes).

[6] Learn more about what a “citizens’ guide to the budget” is all about through these resources:

A Citizen’s Guide to the Federal Budget (IBP)
A Citizens’ Guide to Monitoring Government Expenditures (IBP)
Producing a Citizens’ Guide to the Budget (Organisation for Economic Co-operation and Development)
A Citizen’s Guide to the Federal Budget (John F. Kennedy Library)
Citizen’s Guide - New York State Division of the Budget
NYS DOB: Citizen’s Guide The Budget Process
Citizen’s Guide to the City’s Budget Process (City of San Diego)
2013 Citizen’s Guide To The Washington State Budget

[7] Philippine Center for Investigative Journalism articles

Part 1: PDAF racket rocks 'daang matuwid'
Sidebar 1: Pork a la PNoy

Part 2: Bailiwicks, not poor towns, grab slabs of House PDAF
Sidebar 2: Good pork, bad pork

Part 3: Senators' PDAF floods NCR, vote-rich provinces
Sidebar 3: Pork, 'daang matuwid' don't mix: One bidder, one PDAF project?

Part 4: Binay bags P200-M PDAF: Pork train to Malacañang?
Sidebar 4: LGUs ride piggyback on pork

Part 5: Bogus, favored NGOs fail to account for P770-M pork