NERA vs. REMANDO (Formalities of Wills - Test of Presence)

One of the best lecturers I’ve encountered in my new law school so far is my teacher in Succession, Atty. Fretti Ganchoon. Believe me once you’re seated in her class you wouldn’t want to miss a single word you’d wish you’re wired or somethin', like you have that tiny high definitioned microphone planted in you that records everything she says. Not for the purpose of wire tapping of course but to record everything vital and worth taking down in that lecture. Or maybe you could at least had it tape recorded with her knowledge to be at least fair to the teacher right? Co’z the moment she starts discussing, man! legal insights after another would keep flowing like she've just handpicked for you the salient points from the Jurado book where I bet your pen could hardly keep up. And do take note, her lectures are mostly precise and logically arranged. Her scenarios of the cases are concise, direct and clearly pictured out, and if possible in relation with or in contrast to other cases. And the principles of the discussed applicable laws and potential remedies are always clearly delivered.

This is a case about formalities of wills. Since this case was partially discussed in a previous post, allow me to discuss it further and a little bit more fully. This is the "2 Room Blocked By Curtain" case. Basically what happened here is that the will was executed in a large room which was connected to a smaller room by a doorway covered by a curtain. The parties needed to the execution of this will as prerequisite were all present. We have the testator, and the three witnesses or more. Of course we all know the notarial part may be satisfied afterwards.

The thing was, one of the witnesses to the signing of the instrument was in the small room when all the other witnesses were attaching their signatures to the instrument in the large room together with the testator. So it’s a question of presence, or position of witnesses when the instrument was signed.  The lower court did not consider that as of vital importance. It based its decision in an earlier ruling in the Jabonetta Case (Jabonetta vs. Gustillo) where the court held it was NOT sufficient to invalidate execution of the will. The CA affirmed the lower court ruling

So the ISSUE is.. is PRESENCE sufficient to INVALIDATE will?

The Supreme Court decided otherwise saying YES! It is sufficient to invalidate a will. You see presence is not one of those that could go under SUBSTANTIAL COMPLIANCE, this is a FATAL DEFECT that could not be cured by mere examination, since the law on succession expressly provides in

ART. 805 - “…attested and subscribed by three or more credible witnesses IN THE PRESENCE OF THE TESTATOR AND OF ONE ANOTHER”

In this case, the attaching of signature was not done in the presence of the witness in the other room (I wonder whut the hell the punk’s doin’ there?).

Well the court wanted to be liberal about it in the sense that I think it said somethin' like 'if there’s no curtain blocking the two rooms..' they might have considered it. Or maybe at least the.. you know those sleazy tassel curtains? those exotic ones we see on some Arab harems in movies where you hear sleazy music and see sultry women belly dancing? cobra rising and stuff (Lol). Well atleast it's see-through right? I mean you know like at least the other guy in the small room if he’s sneaking in on the lechon or somethin' in that small room could at least peek or somethin' and see “Oops! their signing it… that's hudas... woops that's barabas...  I gotta finish this off right away it’s gonna be my turn.. my gawd so yummy”.. "hestaaas!!! where the hell are you?!! " LOL

But.. oh well. A thick dark curtain is a thick dark curtain.. so. The court held that the line of vision of witness to testator was BLOCKED by curtain. I mean you know, the rule books say their suppose to see each other sign.. so.. there’s nothin’ we can do with that.

Of course the Jabonetta Case was invoked here and here’s what the Supreme Court said:

In the Jabonetta Case the ruling was settled revolving in the principle that “The true test of presence is not whether or not they saw each other sign.  But whether they might have seen each other sign if they chose to do so considering their physical, mental condition, and position in relation to each other at the moment of signing” (my lechon anecdote remember)

I think the invoked ruling even strengthened the superior court ruling.

So I guess it's clear, the court didn't find the Jabonetta Case applicable here. And though the court tried hard for the law not to be strictly construed and tried to be liberal about it, but what can it do, it’s the fuckin’ curtains man!  This is no longer a question of substantial compliance, this is clearly a fatal defect, e wala syang makita eh.. barado.. so ofcourse the court would  have no choice but to strictly construe.

JAVELLANA vs. LEDESMA

This Succession Case tackles the chronological issues in signing a will or codicil for that matter. Whether which should come first. Must the document be accomplished in one sitting? Or once acknowledgements had all been accomplished, the unfinished document can be set aside for another day or two where concluding parts of it such as the notarial requisite be accomplished in a subsequent act. 

Well the Old Civil Code of 1899 expressly requires that all be accomplished in one sitting, otherwise the instrument may be deemed invalid.

So I wonder how they pass on their inheritance in the olden days? Boy it must be all dramatic and all that stuff. Just imagine everyone is there, present. I mean if there be grudge and bad blood that runs in the family, consider the ordeal these documentary witnesses and notarial representative (should there'd be any) undergo when the family starts washing their dirty linens even in closed doors. 

Let's try to take a look at one case.

Court admitted to probate a will and codicil executed by the deceased Apolinaria Ledesma. The contestant was the sister and nearest surviving kin of the deceased. In her appeal she alleged that the will and codicil were not executed in accordance with law, well because:

1. The testament was executed at the house of the testator. [under the Old Civil Code of 1899] 2. But the codicil was executed and attested at the San Pablo hospital [after the enactment of the New Civil Code (NCC)], and therefore had to be acknowledged before a notary public. 

So basically were talking about the acknowledgement of a codicil here. What is acknowledgement by the way? Is it any different from attestation? How about a Jurat?

Now, the contestant, who happens to be one of the instrumental witnesses asserted that after the codicil was signed and attested at the San Pablo hospital, the Notary Public signed and sealed it on the same occasion. (Duh?) Notary public however, said that he did not do so, and that the act of signing and sealing was done afterwards. (Whut the...Is this the only difference between the old and the new code?.. this is what I hate about transitions) 

Well, one clear allegation was that the certificate of acknowledgement (were talking about the notarial act) to the codicil was signed elsewhere, most probably in the office of the notary. 

Nevertheless, what is the ISSUE here: 

The issue is whether or not the signing and sealing of the codicil by notary public in the absence of the testator and witnesses affects the validity of the will. 

RULING:

NO.  Court held that unlike in the Old Civil Code of 1899, the NCC does not require that the signing of the testator, the witnesses and the notary be accomplished in one single act. All that is required is that every will must be acknowledged before a notary public by the testator and witnesses. 

The subsequent signing and sealing is not part of the acknowledgement itself nor of the testamentary act. Their separate execution out of the presence of the testator and the witnesses cannot be a violation of the rule that testaments should be completed without interruption.

Alright let me get that straight: Let's do some differentiation here to somehow clear things up (I hope) and somehow make this post a reference:

NOTARIZATION vs. ATTESTATION 

It’s a common assumption that “notarization” and “attestation” refer to the same type of act. But you see, while a public notary can only perform notarial acts, attestations are required for certain documents.  

The act of notarization the signatures on a document can only by a legal public notary. it usually involves paying a fee, taking an oath, and being sworn in by the attesting authority.  

Attestations, on the other hand, can be performed by anyone, regardless as to whether or not the individual is a public notary. It's common for public documents to require witness attestations, which basically means that a 3rd party must bear witness to the document’s signing. You see this 3rd party attests that the document was signed by the said person.  So basically it is used in the context of validating the contents of a document.

Another key difference between notarial acts and attestations involves the way in which they are executed. When a notarial act is being performed, the public notary is usually required to place his or her official stamp or seal and recording log numbers on the document. 

Someone who’s attesting the signatures on a document and/or its contents, on the other hand, are not required to place a stamp or seal on the document.

ATTESTATION vs. ACKNOWLEDGEMENT  

An attestation however is different from an acknowledgement. Attestation is done by a witness. An acknowledgement is done by the party concerned. 

You will also come across the word “Subscribe” in legal documents. Strictly speaking, the word “Subscribe” does not impute personal knowledge of the matter in consideration and is more in the nature of appending the names of signatures in a mechanical manner.

The term attested, when used in relation to a deed or document, means that the deed or document concerned is attested by two or more witnesses. So it is imperative that each of the witnesses should have seen the Testator (who is the executor of the document) sign the document. And each of them (3 or more Witnesses as in the case of a notarial will) should have signed as a witness in the presence of the Testator and all other Witnesses. 

By the way, In the US their succession laws carries no specific or particular form prescribed for attestations. It is not necessary that the witnesses should sign in the presence of each other. It is only required that each of the witness has direct knowledge that the document had been signed by the Executor (which they refer to as  Executant for that matter).  Here in the Philippines on the other hand, our succession laws requires stricter application. Witnesses are expected to sign the notarial will as attestation in the presence of the Testator and other Witnesses.

Such in the case of Nera vs. Rimando two rooms were blocked by a curtain. One of the witnesses was in a the other room while the other witness was attaching his signature to the instrument in front of the testator. The lower court did not consider the position of the witnesses at the time of signing of vital importance. This lower court decision was based on an earlier ruling called the Jabonetta Case (Jabonetta vs. Gustillo) where it was held that it was not sufficient to invalidate execution of will. The CA affirmed this decision but when it reached the highest court the decision was overturned. The court said the line of vision of witness to the testator and other witnesses was blocked, 

I think in hindsight, the highest court was telling the lower court, 'You've used the right citational   jurisprudence but you've misapplied the doctrine'  Don't verbatim quote me on that. This is just my interpretation. You see the doctrine of the Jabonetta Case states that "True test of presence is not whether or not they saw each other sign but WHETHER THEY MIGHT HAVE SEEN EACH OTHER SIGN IF THEY CHOSE TO DO SO, considering their physical, mental condition and position in relation to each other at the moment of signing." 

So as if the SC was saying 'If the curtain wasn't there and nothing is blocking the winess' vision even if he is positioned in the other room it might have been considered. But the curtain was there what can we do, the Jabonetta Case had provided the standard' Again don't quote me on that. I just can't stop my creative juices coming out. So the bottom-line is they should see each other sign.

More on ACKNOWLEDGEMENT: 

You know at times, a person may sign his or her name in a deed or document for identifying an Executor. The purpose of this is only to confirm the identity and such. The identifier does not become an Attestor for the execution of deed or document concerned.

The term “Sign” generally mean affixing the signature or otherwise affixing the name or a mark to represent the name of a person. The “signing” should be such that it would bind the person concerned as relating to the aspect of signing. Even the insertion of a name, done in the manner required, may amount to signing, authentication or attestation as the case may be.

JURAT vs. ACKNOWLEDGEMENT  

Now, Acknowledgement and Jurat  are the two most common notarial acts. Actually there is confusion among law students about the difference between these two.   

A jurat is used when the signer is swearing to the content of the document.  The notary must administer an oath or affirmation to the signer in order to complete the jurat. A jurat also requires that the signer signs in the presence of the notary. it's quite easy to identify a Jurat in a legal document. Just find the portion that states “Subscribed and sworn to before me…” – subscribed meaning “signed” and sworn meaning that an oral oath or affirmation was given.  “Before me” means that both were done in the presence of the notary public.

In Acknowledgements however, acknowledgement portion is used to verify the identity of the signer and to confirm that they signed the document.  They are not swearing to the truthfulness or validity of the document, they are simply acknowledging that they signed the document.  

An acknowledgment certificate indicates that the signer:

1. personally appeared before the Notary,

2. was identified by the Notary, and

3. acknowledged to the Notary that the document was freely signed.

Acknowledgments do not need to be signed in the notary’s presence although it would be highly preferred whenever possible. For this matter I think the confusion lies from the fact that the signer must appear before the Notary at the time of notarization to acknowledge that he or she freely signed for the purposes stated in the document.

But take note of this, documents requiring a Jurat must be signed in the Notary’s presence, as dictated by the typical jurat wording, “Subscribed (signed) and sworn to before me…” okay? So in theory, it is imperative that it is the executor who was presenting the document to the notary. But in practice, sometimes if not, then must be duly identified. 

In executing a Jurat, a notary guarantees that the signer:

1. personally appeared before the notary,

2. was given an oath or affirmation by the notary, and finally

3. signed in the Notary Public’s presence.

To summarize, the key difference between a JURAT vs ACKNOWLEDGMENT is that the former (Jurat) is used primarily when dealing with sworn statements and the latter (Acknowledgment)  typically applies to documents that must be signed in front of an unbiased independent witness.

SAMAR MINING vs. NORDEUTSCHER

This Transpo Law case arose from an importation made by SAMAR MINING. The cargo was 1 crate of Optima Welded Wedge Wire. The freight-in ship was named M/S Schwabenstein, a German cargo ship owned by NORDEUTSCHER.  Which was represented in the Philippines by its agent CF SHARP.  The shipment was covered by a bill of lading duly issued to consignee SAMAR MINING.  

I hope I made it clear, the consignee in this case is the shipper himself SAMAR MINING.  The cargo was aboard a German vessel. The carrier here or the ship-owner of course  is a German company,  which is NORDEUTSCHER. And wait,  there’s a 3^rd party here. The shipper Samar Mining had availed of the services of a bonded warehouse called AMCYL beforehand. 

So upon arrival of the vessel at the port of Manila, importation was unloaded and delivered in good order and condition to the bonded warehouse AMCYL as was agreed upon.  The goods however was never delivered to and received by consignee Samar at the port of destination which is Davao.

Wait let me get that straight. You see the following are the pertinent ports as provided in the Bill of Lading:

1. Port of Loading – GERMANY
2. Port of Discharge from Ship – MANILA
3. Port of Destination (Discharge of Goods) - DAVAO  

So as plainly indicated on the face of the Bill, vessel  M/S Schwabenstein is to transport the goods only up to Manila.  Thereafter, the goods are to be TRANSHIPPED by the carrier to the port of destination. So what on earth is NORDEUTSCHER thinking?

So there you go, letters of complaint therefore were sent to  NORDEUTSCHER, which failed to elicit the desired response.   SAMAR therefore filed a formal complaint for claims of damage against NORDEUTSCHER, its local agent CF SHARP, and warehouse AMCYL as 3^rd party defendant .  

The lower court CFI of Manila favored SAMAR, but however stated that  NORDEUTSCHER may recoup whatever they may pay Samar by enforcing the judgment against 3^rd Party Defendant AMCYL.  

So what is the ISSUE here:

The issue is whether appellants NORDS, SHARP, and AMCYL were liable for the loss of goods under the bill of lading.

HELD:

The answer is NO.  SC said the Bill of Lading operates both as a:  1. RECEIPT for the goods on board and 2. A CONTRACT to transport and deliver the same as stipulated therein.

Geez what happened?  Say what?

Let’s take a look at the Bill of Lading then.

You see,  in Section 1 of Paragraph 3 of the Bill of Lading the parties stipulated that:

“The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged, transshipped or forwarded. “

Question, was this a valid stipulation? The court said it’s VALID.  We are talking about what is not on carriers actual custody you see.  Therefore the carrier may be exempt from liability for loss or damage, for how can you oblige someone with something that is not in their actual custody?

Here’s an illustration I prepared to make it more clear to you:

Here’s the original deal. The 2 parties SAMAR and NORDEUTSCHER had a meeting of minds, the agreement was to transport and deliver the cargo from Germany to Davao. That is the intent. Manila is just a point of reference between Germany and Davao. And that a TRANSHIPMENT was bound to happen. Either NORDEUTSCHER reloads it from the warehouse into another ship they own which happen to be in the Manila port or hire another ship of local ownership to deliver the goods to the consignee in Davao.  So the bill of lading is very clear, we could infer from it that the shipper-consignee had no wish to obligate itself to handle any booking of further shipment other than the one starting from Germany. It is leaving it all to the carrier’s discretion. All it wanted to do was start the shipment in Germany and wait for the end of shipment in Davao.

If you look at my diagram you can see bold lines and broken lines right? The bold lines is where the carrier  NORDEUTSCHER has actual custody of the goods. And therefore must exercise extra-ordinary diligence as required by law. The broken lines are the moments it has no actual custody and control. And this does not require any kind of diligence, pursuant to what had been stipulated in the bill of lading. Right? So why oblige someone of something he has no control of?

And what the SC had decided upon is the part in the middle where the broken lines landed on the warehouse awaiting transshipment.  This is where this decision was based. SC said there was ACTUAL CONSTRUCTIVE DELIVERY during that time. The goods were discharged from the ship to the warehouse. Therefore the liability now shifts from the carrier to the warehouse. Meaning it is no longer in their custody and control. Therefore the requisite to exercise extra-ordinary diligence ceases, and they are no longer liable for loss or destruction of the goods. Why? Well basically by virtue of the above stipulation. (Section 1 of Paragraph 3 of the Bill of Lading).

Gets? 

TEOFISTO GUINGONA vs CITY FISCAL OF MANILA

A certain Clemente David made several investments with NSLA (National  Savings and Loan Association). But after almost 3 years of investing the bank was placed under receivership by the Central Bank.

So.. here we find out that NSLA is suppose to be a bank ok?  Don’t laugh. This is not a mainstream bank were talking about here such as BDO, BPI, MetroBank, RCBC and all those commercial banks we all see around.  These types are what you call S&L banks or Thrift Banks ok? The difference between the two is that thrift banks are governed by R.A. 7906 which is the Thrift Bank Act, whereas commercial banks are governed by R.A. 8791 the General Banking Law, though the latter law has suppletory application to thrift banks. Gets? So if the name doesn’t ring any bell, it’s suppose to be highly understandable.  

S&L,  meaning savings and loan association. These are financial institutions that specializes in accepting savings deposits and making mortgage and other loans.  They are often mutually held by a certain collective class , like teachers, soldiers, etc. often called mutual savings banks meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization. I should know, I've worked in one type of bank my self during my Letran days.

To site some examples I think we have the Manila Teachers Savings and Loan Association, which has its office in UN Ave.  JUSLAI is another, the Judiciary Savings and Loan Association Inc., I think the Armed Forces have one of their own.  So generally these institutions are not stand alones, they are mostly subsidiaries of their mother institution to where their collective clients belong. 

So here we see in this case NSLA was placed under receivership by Central Bank, and whenever you hear that a certain bank (thrift banks included) is being placed under receivership by Banko Sentral,  take note that's a red flag, that only means one thing, that the bank is in a brink of insolvency.. in other words its getting bankrupt.  So better take your money immediately out of it. You see by law, thrift banks can have no more than 20 percent of their lending in commercial loans so their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns.

So here’s the scenario,  starting early of 1979 David and her sister were making several investments with said thrift bank NSLA right?  Three years later (1981) the bank gets bankrupt.  So by operation of law Central Bank has to come in right? in order to save bank assets  and see what can be done for its recovery. And of course to protect investors. Which they actually did. But sadly due to technical reasons, not in this case. But can you blame the petitioners here? I dont think so.

With regard to the owners of the bank I dunno correct me if I’m wrong but I’m just inferring from the digested case. I think the said bank was partly owned by the then Senator Teofisto Guingona Jr. , I’m talking about the old Guingona. No not the Sr. but the  Jr. because the current senate speaker, which is the good Senator Teofisto Guingona III is ofcourse the third.

This case was decided 1984. The senator assumed senate office in 1987. And that was mostly the start of his long political career. So.. this tells you aside from heading the Philippine Chamber of Commerce and being the top honcho of DBP before assuming his seats of power, the fellow was a simple businessman.

But as an investor of course suddenly knowing that the funds in the bank where you placed your money is at stake, you ofcourse kinda worry for your financial security you know?  So what David did was he requested  from Guingona and Martin a joint promissory note stating that they are absorbing the obligations of the bank in case of insolvency, and since the former senator as we all know is a man of his word, in good faith, he and his co-owner divided the indebtedness and issued the requested joint promissory note.   

Let’s take a look at what David is arguing for and how much he is trying to secure.  It says in the actual case Clement David, together with his sister, Denise Kuhne, invested with NSLA the sum of:

P1,145,546.20 on time deposits

P13,531.94 on savings account deposits  

 US$ 75,000.00 on foreign deposits

(plus interests)

Ladies and gentlemen were talking about year 1979-1981. So.. you could just figure out how much this amounts are valued during the time prevailing.  

But I’m not sure what triggered private respondent David to file a complaint with the Office of the City Fiscal of Manila charging Guingona and Martin with estafa and violation of Central Bank Circular No. 364 and related Central Bank regulations on foreign exchange transactions.  The actual case as I read it recounts that the promissory note was based on the statement of account as of June 30, 1981 prepared by the private respondent.  Thing was, the amount of indebtedness assumed appears to be bigger than the original claim because of the added interest and the inclusion of other deposits of private respondent's sister in the amount of P116,613.20 where Guingona by himself executed another promissory note antedated to June 17, 1981 whereby he personally acknowledged an indebtedness. So here it's clear, the former senator was aware of his obligation and had no plans to back down.

So, what do you think will happen next?  If I am the former senator and I am faced with a criminal law suit instead of a civil one, I would file a petition myself. Which they did. Hence this case.  

This is a petition for prohibition and injunction with a prayer for the immediate issuance of restraining order and/or writ of preliminary injunction seeking  to prohibit the public respondent which is the City Fiscal of Manila  from proceeding with the preliminary investigation, in which they were charged by private respondent Clement David.  

So as I said erlier, the charge was ESTAFA and a violation of Central Bank Circular No 364.  Now here lies the controversy .. Estafa is a criminal offense.   

So the ISSUE now is: Whether City Fiscal of Manila acted without jurisdiction when they investigated the charges of estafa and violation of CB Circular No. 364 and related regulations regarding foreign exchange transactions.

RULING:

Court HELD that the City Fiscal of Manila have NO JURISDICTION over the charge of ESTAFA.

When private respondent David invested his money  with the bank, the contract that was perfected was a CONTRACT OF SIMPLE LOAN or mutuum and not a Contract of Deposit.

So take note okay?  Time deposits are different from savings account deposits.  It’s an all too different bologna.  It’s more complicated than you’ll ever thought.  The rulebooks and the SC couldn’t have said it more clearly.  It’s an all too different contract meaning the repercussions and ramification are not the same.    

Check this out: Article 1980 of the New Civil Code provides that:  

“Fixed, savings, and current deposits of-money in banks and similar institutions shall be governed by the provisions concerning simple loan” 

Hence, the relationship between David and the NSLA is that of creditor and debtor.  David is the creditor the bank is the debtor.  So  if you do time deposits, consequently, the ownership of the amount deposited will be transmitted to the bank upon the perfection of the contract. That means the bank can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals.

Now, take note of this, while the Bank has the obligation to return the amount deposited, it has, however, no obligation to return or deliver the same money that was deposited.  Meaning the bank may return it in full or in half depending on its solvency.

And, take note further…  the failure of the Bank to return the amount deposited will not constitute estafa through misappropriation punishable under Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to CIVIL LIABILITY, as in the case at bar public respondent City Fiscal of Manila therefore have no- jurisdiction.. since its suppose to be a civil case, tsk tsk tsk.

Coz you see… in order that a person can be convicted under the above-quoted provision, it must be proven that he has the obligation to deliver or return the sum of money, goods or  personal property that he received.   And as we have just pointed out, such in the prevailing contract, petitioners Guingona and Martin had no such obligation to return the same money they received from David. Okay?

This is because as clearly as stated earlier the sums of money that petitioners received were loans. The nature of simple loan is defined in Articles 1933 and 1953 of the Civil Code. So.. check it out for yourself.

If I were you, I’d hold on to that money and push aside that time deposit contract. Shake that manager’s hand and bid him farewell. Until you find a stronger, stable, and reliable bank for that matter.

 "Art. 1933. - By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time-and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid in which case the contract is simply called a loan or mutuum.

"Commodatum is essentially gratuitous." Simple loan may be gratuitous or with a stipulation to pay interest."In commodatum the bailor retains the ownership of the thing loaned while in simple loan, ownership passes to the borrower.

"Art. 1953. - A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality."

So in simple loan(mutuum), as contrasted to commodatum the borrower acquires ownership of the money, goods or personal property borrowed right? And of course being the owner, the borrower can dispose of the thing borrowed (Article 248, Civil Code) and his act will not be considered misappropriation thereof. right?'

Uuuuh!! Gooey. 

MARTINI vs. MACONDRAY

Pardon my 'UN-BAR-LIKE' penmanship. This is my desperate 10 minute case digest at the backseat of my car. If push comes to shove where all else been taken into account and matters must be confronted, means I'll have to rely on this piece of crap in the recitation coming within an hour. Look at that, it's not even done due to time constraint. It need not be. The ruling is in my head.

Alright here we go, plaintif G. MARTINI Ltd.  is a Trading Company, alright?  MACONDRAY & Co., respondent in this case  is an Australian Steamship Company.. meaning we have a common carrier here which is a shipping company.   Martini had to transport 219 packages of chemical products from Manila to Japan. So, port of loading –Manila, port of destination – Kobe, Japan.  

It was a Friday morning when Martini applied to Macondray for a space on the steamship called Eastern. (Please be noted, steamships are obsolete, they are propelled by coal energy, like the RMS Titanic remember?  They heap coal at the inner bottom of the ship to produce steam to run the ship’s engine. The shipping industry have evolved since the early 19th century so practically it’s of no use today.  This is ahmm.. this case is dated 1916 so there you are, that explains everything,  this case actually happened 4 years after the sinking of the Titanic).

So the ship captain received the Shipping Order (don’t pay too much attention to it, its not the Bill of Lading,  its ahm.. its just a slip issued by the company which mainly constitutes extending authority to the one in-charge of the ship to receive the cargo aboard, it’s more like a job order or something) Once the Shipping Order is issued, shipment starts to be loaded, and then the ship issues something what you call a Mate’s Receipt to the shipper, which in this case is Martini. The thing was, the receipt did not reach Martini’s hand till Monday night.  BTW - The receipt had a stamp on its face that said “ON DECK AT SHIPPER’S RISK”. Which confirmed the ship captain had decided to merely carry it on deck rather than under the hatches as was requested. 

But beforehand the day of his application on Friday, Martini expressed desire to the Macondray company if he could obtain the Bill of Lading on Saturday morning in order that he might negotiate them at the bank. So a request was made by Martini to Macondray for the delivery of the Bill of Lading on that day. But to effectuate this, Martini was required to enter into a written obligation, something you call a Letter of Guarantee.   So in other words we established 3 things here. 1. That it isn’t Martini who was paying for the shipment but the bank. 2. That the cargo is being loaded on the ship while Martini was simultaneously taking care of shipment and bank documents. 3.  Saturday during the 1900s unlike today was a bank day. (Geez I didn’t know that, so Saturday is still work huh? bummer)  

So in conformity with the purpose of this document the Bills of Lading were  issued, and the negotiable copies were on the same day negotiated at the bank by plaintiff Martini for 90% of the invoice value of the goods. So this means it didn't actually reached Saturday when Martini got what he asked for, he got it even earlier, So clearly these are two parties that comply right away to each other's documentary need. But of course there's a defect somewhere, had there not then we're not looking at a legal case here.  

Now here comes the controversy.  The Bills of Lading were issued right? Right just in time when the shipper needed it.  But the thing was, the Bills of Lading contained on their face the conspicuously stenciled words “ON DECK AT SHIPPER’S RISK.” 

So Martini upon seeing the words  all at once called the attention of S. Codina, the Martini employee whose primary duty was to attend to all shipments of merchandise and cargo related documents. 

And so through Codina, Martini sent Macondray a letter  stating the following :            

“It is the prevailing practice that, whenever a cargo is being carried on deck, ship owners  or agents give advice of it to shippers previous to shipment taking place, and obtain their consent to it. If we had been advised of it, shipment would not have been effected by us. We regret very much this occurrence, but you will understand that in view of your having acted in this case on your own responsibility, we shall have to hold you amenable for any consequences that may be caused from your action.” (hadnt it occured to you.. Old English sounds and even looks more compelling especially when it's used in law)

So Macondray called Codina by phone saying they:

“..could not accept the cargo  for transportation otherwise (meaning under the hatches) than on deck and that if Martini were dissatisfied, the cargo could be discharged from the ship.”

You must understand, the content of cargo were CHEMICALS. I dunno but maybe having found out from the Shipping Order and from ocular inspection that such cargo constitute hazardous material. So carrying it under hatches renders a greater risk on the ship itself than on deck on open air, should it cause fire or anything else for that matter.

So it's clear, Macondray opted to observe ORDINARY DILIGENCE (Diligence of a Good Father of a Family) with regard to the Martini cargo, other than the usual EXTRA-ORDINARY DILIGENCE basically required of all common carriers. 

Well there is substantial conformity with respect to the time of the conversation by telephone and the nature of the message which Macondray & Co. intended to convey. But in conclusion, it seems clear enough that, although Martini would have greatly preferred for the cargo to be carried under the hatches, they nevertheless consented for it to go on deck.

So the goods were embarked at Manila on the steamship Eastern and were carried to Kobe on the deck of that ship. Upon arrival at the port of destination they found out that the chemicals which comprised the shipment had suffered damage from the effects of both fresh and salt water.

Therefore an action was instituted by Martini to recover the amount of the damage (I think I should add here ‘thereby occasioned’ so It’d look something like I’m in the 1912 or somethin’…. I’M THE KING OF THE WOORRLD!!) 

The Court of First Instance of Manila’s judgment was rendered in favor of Martini for the sum of P34,997.56, with interest from 24 March 1917, and costs of the proceeding.

ISSUE:

Do you think Macondray should be held liable?

HELD:

NO. (I'm pasting from BerneGuerrero's Haystack now)

1. Damage was caused by water
The damage was caused by water, either falling in the form of rain or splashing aboard by the action of wind and waves.

2. Paragraph 19 of the several bills of lading issued for transportation of the cargo
Paragraph 19 of the several bills of lading issued for transportation of the cargo reads “(19) Goodssigned for on this bill of lading as carried on deck are entirely at shipper’s risk, whether carried on deck or under hatches, and the steamer is not liable for any loss or damage from any cause whatever.“

3. Shipper ordinarily produce mate’s receipt to agents of ship’s company
Ordinarily the shipper is supposed to produce the mate’s receipt to the agents of the ship’s company, who thereupon issue the bill of lading to the shipper. When, however, the shipper desires to procure the bill of lading before he obtains the mate’s receipt, it is customary for him to enter into a written obligation, binding himself, among other things, to abide by the terms of the mate’s receipt. Herein,

4. Contents of the “Letter of Guarantee”
The “Letter of Guarantee” dated 16 September 1916, is of the tenor “In consideration of your signing us clean B/L for the undermentioned cargo per above steamer to be shipped on or under deck at ship’s option, for Kobe without production of the mate’s receipt, we hereby guarantee to hold you free from any responsibility by your doing so, and for any expense should the whole or part of the cargo be shut out, or otherwise, and to hand you said mate’s receipt as soon as it reaches us and to abide by all clauses and notations on the same.”

5. Martini did nothing to discharge cargo
In order to get the cargo off certain formalities were necessary which could not be accomplished, as for instance, the return of the mate’s receipt (which had not yet come to Martini’s hands), the securing of a permit from the customs authorities, and the securing of an order of discharge from the steamship company. In view of the fact that Martini did nothing whatever looking towards the discharge of the cargo, not even so much as to notify Macondray that the cargo must come off, the proof relative to the practicability of discharge is inconclusive. If Martini had promptly informed Macondray of their resolve to have the cargo discharged, and the latter had nevertheless permitted the ship to sail without discharging it, there would have been some ground for Martini’s contention that its consent had not been given for the goods to be carried on deck. Needless to say the Court attached no weight to the statement of Codina that he was unable to get Macondray by telephone in order to communicate directions for the discharge of the cargo. 

(The rest you can get it from there, here's the link, just hunt it down)
https://berneguerrero.files.wordpress.com/2012/08/2004hs198_transpo.pdf

SALVACION vs CENTRAL BANK

I entered my tita's house and I got greeted by three angry wagging tailed pups. I had to crouch and stretch out my arms and do what Chris Pratt did... "Stand down.. stand down.."

Aw that's probably the best movie I've seen so far this 2015. Seen it just recently, oh no not in the theaters of course, love life is currently arid these days, well by choice.. (tsk.. would somebody get back from Canada! damn it)  On the couch, lights out, ear plugs, wifi. Dang the movie's that good I kept adjusting my glasses I couldn't put the damn tablet down.       

Anyway. Let's get back to the cases. 

This is ah... well this is not a rape case perse, because we'll be tackling not the criminal but the civil aspect of this case in order to contribute in our having a good grasp of typical banking laws and how it works. Although it started that way (criminally). But what were after here for is the controversial Supreme Court ruling in as far as executing the lower court decision of the attachment or garnishment of the accused' dollar account to pay-off  the moral and exemplary damages awarded by the court since accused resorted to flight.

But first I will let you have a sneak peak to the gruesomeness of this case just so you would know where the Supreme Court was coming from when they decided on this very peculiar case. I know, as a law student I should write this case objectively. Law is after all what 70% exact science? hehe on the basis I guess on our perceived methodological rigor. (and pity has no place in science right?) But I in so far as injustice is concern couldn't muster to digest even more the already digested facts of this case and present you an even more skewed understanding of this case when it pertains to justice. So I will have to present it as it is. But luckily due to my desired appearance of compactness I want my every posts to comply with as standard in this blog, I will have somebody to do it for me. And that means using another blog post by another blogger as supplemental to this post.

Don't ask me, I don't know the guy really, I just accidentally got hold of his writing while browsing the case but click on this, he sort of wrote a blow by blow account of how the exact crime had transpired. Click this: The Eternal Student - The Salvacion Case. or better yet, read the actual case to make it a little bit more sanitized if you want it that way. Here's the link to the actual case- Salvacion vs CBP 

There you go did you read it?  I hear bloods raising now, I'm a vampire I could actually hear it (joke). Makes you wanna question what humanity is really fuckin' made of right? What kind of people are these right??  And makes you wanna clobber that fuckin' bastard right? I know how you feel. The thought of Bartelli's flight alone makes me wanna scream and shout on our public servants who allegedly let this thing happen maybe purely for monetary consideration whatsoever. The accused' mysterious flight alone is already a miscarriage of justice.   

So the American tourist, was arrested for committing four counts of rape and serious illegal detention against the 12 year old Karen Salvacion. Yes its clear this is a pedophile case. And here's what happened after he got arrested. The police recovered from him several dollar checks and a dollar account in the China Bank. He was, however, able to escape from prison as I have implied earlier. So In a civil case filed against him, the trial court awarded Salvacion moral, exemplary and attorney’s fees amounting to almost P1,000,000.00.

Now I really don't know the inter-lying circumstances behind these case. I mean whether the trial court ruling should make me jump up and write "finally justice was rolling!" as I read the case. But who knows, the thought of a clandestine arrangement with the American Embassy may not be too far right? We know and have heard stories of how the American government extensively took care of their beloved citizens even when they're abroad right? The perks of belonging to a world power country. Who knows if some prim and proper US Embassy personnel have met with our locals and said "Listen we don't want this case to get blown out of proportion okay, so we need you to come down with us and settle this in an unwritten bargaining agreement. We know your laws, and one of them expressly and absolutely denies attachment or garnishment of  a foreigner's dollar deposits. We will not hold you accountable for the repercussions of what might be the outcome of this case as long as you let our guy off the hook. That's all we asked for" hmhm. Of course that's just my creative juices working. I will not steal the glory of our courts in their some sort of admirable decisions in this case, but I dunno, it's just that all I see is a naive 12 year old girl who see the world with silver-lined clouds and a good-faith view that all Americans are good. Well reality bites.

And I dunno, maybe its a fact that I hardly see a convicted American behind our local bars. (bars ha.. the one with the vertical designs..remember?)  Hard as I try to justify that premise, sad to say it isn't necessarily so. But I'm not anti-Americans okay? (Oh please please US Embassy don't deny me if ever I'd apply for visa in the near future.. please please :) ) and I know man's morals has degenerated since what after the 1950s?  but I will not hesitate to touch on this racial issue just so that any foreigner that lands their foot on the part of this earth gets the bad signal that they themselves should and would clean up their own ranks. Besides, they themselves are a disgrace to their own race as they consider us to ours. What do you think the bastard will do when he reaches home?  Pop open some bottles of beer with his crooked buddies and revel on his virile exploits? This is one of the reasons why sometimes I believe the barrel of a gun is quicker to do more justice than justice it self.

Now going back to the case, Salvacion's family tried to execute the judgment on the dollar deposit of Bartelli with the China Bank but the latter refused invoking Section 113 of Central Bank Circular No. 960 which exempts foreign currency deposits from attachment nor garnishment. It also invoked Rep. Act No. 1405 (An Act Prohibiting Disclosure of or Inquiry into, Deposits with any Banking Institution) as its answer to the notice of garnishment.

Asked to comment on the petition of Salvacion, the Central Bank reiterated its stand and said that Section 113 of CB Circular No. 960 was copied verbatim from a portion of RA No. 6426 as amended by P.D. No. 1246, which amended among other things, Section 8 of the law, which reads: Sec. 8. Secrecy of Foreign Currency Deposits. – All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolute confidential nature and, except upon the written permission of the depositors, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or private; Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. It explained that the purpose of the law is to encourage dollar accounts within the country’s banking system, which would help in the development of the economy, and even said that the law may be harsh as some perceive it, but it is still the law.

Well for its part, lets give China Bank a little bit of credit here. Expressing sorrow or sympathy with the ordeal of the minor. It was only too willing to release the dollar deposit of the foreigner but refrained from doing so because the law prevented it and it has no choice but to follow the law.

The Solicitor General expressed a different view stressing "the far-reaching implications on the right of a national to obtain redress for a wrong committed by an alien who takes refuge under a law and regulation promulgated for a purpose which does not contemplate the application thereof in this case. It opined that the law seeks to protect a lender or investor but not a mere transient or tourist who is not expected to maintain the deposit in the bank for long."

FINALLY THE ISSUE: 

Should Section 113 of Central Bank Circular No. 960 and Section 8 of Republic Act No. 6426, as amended by PD 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient?

Well basically there are 2 laws (among others) which is the subject of controversy here.

R.A. 1405 - which is the Bank Secrecy Law
R.A. 6426 - which is the Foreign Currency Deposit Act

The former covers all bank deposits and no distinction is made between domestic and foreign deposits, the latter which is a special law is designed especially for foreign currency deposits in the Philippines. But of course since we are talking about a foreign transient's dollar deposits the latter had been given more applicability.

HELD: 

The answer is NO.  (There you go... now I can write that justice had been at least rolling since the lower court's dispensation)  

Supreme Court said the "provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246, insofar as it amends Section 8 of Republic Act No. 6426, are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances." 

The reason why it was peculiar was because the suspect, an American tourist escaped from jail and after “hearing the testimony of Karen, the Court BELIEVED that it was undoubtedly a shocking and traumatic experience”, which required compensation.

Let me quote what the SCRA said:

Supreme Court ruled that the questioned law makes futile the favorable judgment and award of damages that Salvacion and her parents fully deserve. It then proceeded to show that the economic basis for the enactment of RA No. 6426 is not anymore present; and even if it still exists, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the law may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us.

The SC adopted the comment of the Solicitor General who argued that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors and, subsequently, to give the latter protection. However, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in the country and, therefore, will maintain his deposit in the bank only for a short time. Considering that Bartelli is just a tourist or a transient, he is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment, garnishment or other court processes.Further, the SC said: “In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that “in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.”

"Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in the civil case and to RELEASE to petitioners the dollar deposit of Bartelli in such amount as would satisfy the judgment."

___________________________________

Postscript:

I remember back in the Corona Impeachment days. They were deciding on whether to invoke the ruling in this case with regard to the applicability of the Foreign Currency Deposit Act with the then Chief Justice's supposed dollar accounts.   The senate majority leader A.P. Cayetano explained to Garcia that the impeachment court was invoking the SC ruling in the Salvacion case, which states that the secrecy of dollar deposits cannot be allowed to “impede the interest of justice.” Still, Garcia maintained that the depositor’s written consent is required. 

It would have been interesting to see how the Supreme Court would have handled it had it been the proper jurisdictional impeachment court. I mean you know, will it apply its ruling in this case with regard to the petition of Philippine Savings Bank to stop the Senate Impeachment Court from looking at the dollar accounts of CJ Corona? Like... will the Supreme Court find an exception to the Foreign Currency Deposit Act in the case of their Chief Justice? Woah.. intriguing.

Our rule books says, you know R.A. 6426's  emphasis is that the purpose of this law is to protect foreign investors and depositors and encourage the flow of foreign currency in the economy right? 

Now whether it will be used to shield a public official from any examination or investigation for charges of graft and corruption or ill-gotten wealth. That still remains to be seen. To be seen what?... well you know.. as they say... a culture of impunity is gradually reeking the highest court of the land. Well granted if the 'gods of olympus' have decided otherwise granted they were the jurisdictional impeachment court during that time, boy that would surely send a wrong signal to public officials and criminal elements. I mean you know... like "Well woop my ass, I'd rather put my money in a foreign deposit accounts since its beyond reach of 'any court, legislative body, government agency or any administrative body whatsoever' " right? bingo!! 'I've created a monster'.

I think the Supreme Court granted given jurisdiction to decide on the impeachment case, if it had to decide is bound to decide on the Corona Case the way it decided in this Salvacion Case notwithstanding the fact that the Chief Justice hasn’t been found guilty nor liable for any damages then yet right? 

Well, even PNoy in his meddling with the Corona Case conveniently forgot to mention that R.A. 6426 was held to be “inapplicable” to that case because of its “peculiar circumstances.”

And oh, what’s disturbing is when PNoy said that “The Palace was considering appealing the TRO on the basis that the Supreme Court may not interfere in impeachment proceedings.” Tsk tsk I remember the President’s men being reminded that he cannot interpret the law the way he wants to since the Supreme Court is the sole and final interpreter of the law right? Otherwise, he is just confirming to the public the allegations that he is the main instigator in the ousting of the former Chief Justice. Uh-oh.

Well, all's well ends well.

PLDT stockholder GAMBOA vs. Finance Secretary TEVES

I hope I don’t strike you as an Erudite, like a person who is learned. I AM NOT. Not even a Divergent. I'm a Dauntless. And I don't like long thinking. So I try to quickly grasp everything about anything in one sitting, and sadly mostly in an overview.  Even when I write I think it manifests it self a bit recklessly even though how much I wanted to hide it. And I'm not a writer perse. I’m just a blogger who writes at least good that’s all, and say what he feels to at least within a threshold of what is generally ethical. Anyone can do that.

And I’m not the nerdy type either, although I'm a geek most of the time co'z I'm a little bit techie and internet savvy, but I got my share of bad grades as well. I procrastinate relying on my push-comes-to-shove 'mutant' learning abilities, I only study during exams, and I’m an excellent crammer. Like it all ferociously crumple up inside my head in so short a time and sort of automatically downloads it self when I need it, only inevitably some in disarray.  I’m not the studious type even. Although I could read a book in one sitting, if the facts interests me. And it’s only just this year after so many years of having 20/20 vision that the doctors slid a pair of glasses on me and they never even were thick glasses but just take-off-in-a-normal-day reading glasses.  I'm far-sited.  So, don't feel intimidated okay? Who knows, we might be after all kindred spirits.

Truth is I should’ve taken the bar what 5 or 6 years ago? So in a bird's eye-view technically that would make me certified failure.  I should’ve been done with this sooner had I come to my senses earlier when I was a bit not older that this is really what I wanted.  And right now I feel like I’m slowly inching, dragging towards the finish line like a boring itchy worm. I hope I get there somehow, or at least. And who knows come to think of it, chances are you might be someone that's actually better than me, in so many ways than one when we actually get there. Oh do we digress? :) Sorry. Alright here it goes.

This is a CORPO case. Corpo meaning corporation. It is also somehow tackled in Transportation Law when it comes to discussing the foreign ownership issue of a public utility.  The law particularly invoked in this case is Sec. 11 of Art. 12 of the 1987 Constitution, which provides the limitation of foreign ownership of capital stocks to not more than 40%.

The exact provision states:

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens;..  

So meaning.. adhering to this well settled principle, the remaining 40% may be foreign owned. This is ah... the bone of contention here is the word "CAPITAL" in this constitutional provision.

The action in this corporate drama started when above petitioner Wilson Gamboa, a Filipino  PLDT stockholder  filed a petition to nullify the sale of shares of stocks of PTIC, (that's  Philippine Telecommunications Investment Corporation) by the government, who effected the sale through IPC, (the Inter-Agency Privatization Council.) The transfer of the ownership of  the shares was done through a conditional sale via a public bidding. And the sale was awarded to MPAH, (Metro Pacific Assets Holdings, Inc.), an affiliate of First Pacific Company Limited (First Pacific), which is a Hong Kong-based investment management and holding company. In other words, were talking about a foreign company purchaser here.

Let me give you a rundown on the history of this case so you can understand it fully:

In (1928) : The Philippine legislature enacted Legislative Act No. 3436 which granted PLDT franchise and the right to engage in telecommunication business  alright? (grabe buhay na pala PLDT noon? pano sila nagcocommunicate?  dalawang lata na may tale?... oh well I guess its understandable, the brilliant dude Alex Graham Bell invented the telephone in around 1876? The invention must have probably evolved when it reached Philippine soil, although I just wonder if our predecessors were able to utilize the earliest model, the one that you stuck this thing in your ear and the other one in your mouth and say 'greetings!' Lol)

Alright, in (1969): GTE (not the VW GTE hybrid car ah) General Telephone Electronics, (the one that merged with Bell Atlantic. GTE is the parent company that spearheaded subsidiaries like Verizon and the Canadian company Telus? Yeah like the BPO outsourcing company.. you know that building you see across the Araneta Coliseum?) GTE is an American firm and during that time was one of the major PLDT stockholders. So what happened was it sold the 26% of its Outstanding Common Shares to PTIC. Outstanding Common Shares, meaning were talking about the whole shares of stocks of PLDT okay?. (Parang... kase the whole PLDT shares wasn't owned individually but severally like most of the stocks right? Like a conglomerate.) And the 26% OComS which was owned by the Americans was sold to a Filipino company which is PTIC,  (Philippine Telecommunications Investment Corporation,  which I think was majorly owned by the Cojuancos.)

Now in (1977): PHI (Prime Holdings Inc. ) was incorporated which I think was surreptitiously created since it subsequently became owner  of  111 thousand shares of PTIC by virtue of a Deed of Assignment executed by PTIC then stockholder Ramon Cojuanco. (I think this was during the time of Marcos when a lot of clandestine transfer of ownership were being effected, but of course the anti-Marcoses saw all that). 

So in (1986): after the EDSA Revolution. The PCGG was created and it sequestered this 111 Thousand shares which was later declared by court as government owned. The 111 Thousand shares by the way comprises 46% of the Outstanding Capital Stock of PTIC. OCapS meaning like were talking about Total Capital Shares of Stocks meaning may be owned within the individual shares of companies that comprised the PLDT stockholder companies. Gets? Now here comes the foreign company that started the issue entering the picture..

In (1999): First Pacific a Hong Kong based investment management and holding company acquired the remaining 54% Outstanding Capital Stocks of PTIC...  so were talking about OCapS here alright? as opposed to OComS. This acquisition simply means a foreign company had just bought himself in and became a player as one of the stockholders of PLDT through PTIC stocks. Crystal?

Now (2006): We now all know that 46% of OCapS of PTIC is now government owned right?  PCGG sequestered the assets remember?   Now, the government wanted to dispose these shares in order to privatize it, so through the IPC (Inter-Agency Privatization Council) it announced a public bidding where thereafter only 2 bidders submitted a bid.  Parallax Ventures and PAN ASIA.  Parallax won with a  bid of P25 Billion.

Now watch out here comes that foreign company First Pacific once again. As a PLDT stockholder and one of the stock players, it entered the picture once again eyeing that remaining 46%  PTIC shares... in other words foreign owned First Pacific wanted to own PTIC by 100% alright? So what it did was it announced that it will exercise its Right of First Refusal as a PTIC stockholder (it has a right because it owned the 54% PTIC shares of stocks remember?) and it offered to buy the remaining 46% by matching the bid price of Parallax.

But in (2007): First Pacific failed to do so and therefore not complying with the deadline. So it was opted out by the government seller.  But since the company was insistent First Pacific thru its subsidiary company MPAH entered into a conditional sale with the government and purchased the 46% for P25 Billion which resulted to an increase of First Pacific's stock ownership, rendering PTIC as wholly foreign owned. (Kaya pag magtatayo ka ng kompanya, magtayo ka ng subsidiary di ba? or affiliates through acquired assets.. to do the dirty work :))

Now this is primarily the reason for this petition. PLDT stock holder Wilson Gamboa saw all that and he now questions the sale between the government and MPAH (First Pacific) alleging that the sale resulted to an Indirect Sale which violated the 40% foreign capital ownership limitation of Sec. 11 of Art. 12 of the 1987 Constitutional provision.

Finance Secretary Margarito Teves who was the prime respondent in this case together with the then PCGG Commissioner Abcede defended the sale and alleged that First Pacific's intended acquisition of government's 111 Thousand PTIC shares resulting in 100% ownership of PTIC WILL NOT VIOLATE the 40% constitutional limit on foreign ownership   of public utility since PTIC holds only 13% of the total OUTSTANDING COMMON SHARES of PLDT. (OComS remember?)

ISSUE:

Whether the term CAPITAL in Sec. 11 Art. 12 of  Consti refer to the total common shares only, or to the total outstanding capital stocks of PLDT.

RULING:

The petition is PARTLY MERITORIOUS.

The Court said that it is not a trier of facts. That factual questions raised by petitioner are generally beyond the court jurisdiction. So adhering to this well settled principle. the court said it will confine its resolution solely on the threshold of purely legal matter on the interpretation of the term 'CAPITAL'. So it was a question of law after all. (After all the hoopla and bombardization of facts Lol.)

The Court partly granted the petition and held that the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock entitled to vote in the election of directors of a public utility, i.e., to the total common shares in PLDT.

Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to common shares. 

However, if the preferred shares also have the right to vote in the election of directors, then the term “capital” shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock that can vote in the election of directors.

CIR vs. PILIPINAS SHELL

SHELL seeks tax refunds... I mean tax credits.. does  BIR still gives tax rebates nowadays?  I bet due to scarcity of funds they merely resort to giving tax credits.

Well reason is because they sold petroleum products to an international carrier and they claimed that inasmuch as the law provides exemption from paying excise tax, then therefore they are entitled to a tax rebate.

Well we all know Shell right? their one of the top local oil companies in the country. Their into the manufacture, distribution and sale including export of petroleum products.

What Shell tried to do here is not Tax Evasion as all other big companies are understandably tempted to do so. What it tried doing here in this case is what you call 'Tax Avoidance'.

Well of course you're a top big oil company, it's  a given that you retain some of the best mercantile lawyers in the country.  So what do you do come the day of filing your business taxes? you call on your pool of lawyers to try think of a way to augment company expenses right?  And well of course since these men are all well versed in tax laws, then there's no harm in trying in circumventing some tax provisions right? And if caught in the act of doing? then you just have put up an innocent look, scratch your head and say "oh I didn't know that..tsk". E malay mo nga makalusot.  

So here they are Shell maintaining that since petroleum products sold to qualified international carriers are exempt from excise tax, as expressly stated in the tax code, then  no taxes should imposed on the article, to which goods the tax attaches, whether in the hand of the said international carriers or the petroleum manufacturer or producer. (Hmhm- pushing the envelope huh?)

But then the Commissioner of Internal Revenue on the other hand thought otherwise. Contending that Shell must shoulder the excise taxes it previously paid on petroleum products which it later sold to international carriers.

Meaning it cannot  pass on the tax burden to the said international carriers which have been granted exemption under Sec. 135 of the NIRC.

Okay what does Sec. 135 of the 1997 NIRC has to say?

SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and (c) Entities which are by law exempt from direct and indirect taxes.

So what happened? Had Shell really understood it differently?  

ISSUE:

1. WON Shell can pass on to international carriers and exempt agencies the excise taxes it paid as manufacturer or producer.

2. WON Shell has a right to file a claim for refund or tax credit for the excise taxes it paid or the petroleum products it sold to international carriers.

HELD:

1. SHELL CANNOT PASS ON THE EXCISE TAXES

Court says: An excise tax is a tax on the manufacturer not on the purchaser.  Hence Shell as engaged in the business of processing petroleum products is the one liable for the excise taxes.

There being no express grant under NIRC of exemption of payment of excise tax  to local manufacturers of petroleum products sold international carriers and absent any provision in the Code authorizing the refund of excise tax paid, the Court holds that Sec. 135 should be construed as prohibiting the shifting of the burden of the excise tax to the international carriers who buys petroleum products from the local manufacturers. 

2. SHELL HAS NO RIGHT TO CLAIM FOR TAX REFUND

Founded on the principles of international comity  and reciprocity. PD 1359 granted exemption from payment of excise tax but only to foreign international carriers who are allowed to purchase petroleum products free of  specific tax provided the country of said carrier also grants tax exemption to Philippine carriers.

So what is PD 1359?  This was a Marcos Decree that amended a previous tax code, the Sec. 134 of the 1977 NIRC.  The exact provision states:

"HOWEVER, PETROLEUM PRODUCTS SOLD TO AN INTERNATIONAL CARRIER FOR ITS USE OR CONSUMPTION OUTSIDE OF THE PHILIPPINES SHALL NOT BE SUBJECT TO SPECIFIC TAX, PROVIDED, THAT THE COUNTRY OF SAID CARRIER EXEMPTS FROM TAX PETROLEUM PRODUCTS SOLD TO PHILIPPINE CARRIERS."

I think the old law  Sec. 134 of the 1977 NIRC did not extend tax exemption to international carriers before. So Marcos did spearheaded the tax exemption, that is now contemplated in the current law governing sale of petroleum products outside the country.

Geez... I bet Shell must have been dissing that Marcos amendment up to now.  

In continuation, the Supreme Court further stated that both the earlier amendment in the 1977 Tax Code and the present Sec. 135 of the 1997 NIRC did not exempt the oil companies from the payment of excise tax on petroleum products manufactured and sold by them  to international carriers.

Therefore claims for tax refund or credit filed by Shell is denied for lack of basis.

So Shell top retainer lawyers loses this case. I bet they knew it all along. E malay mo nga naman talaga baka makalusot.  The case is dated 2012... makakalusot ka pa ba kay Commissioner Kim Henares?  Try mo lang ;p

ALVAREZ vs IAC (YANES)

I remember back in freshmen law, may maid kame si Manang Carmen, grabe sobrang magugugulaten & mali-mali. Eh pag nag mememorize ako palakadlakad ako sa buong bahay. Kaso napapadaan ako sa kusina naaamoy ko niluluto nya ang sarap. Pero iniimagine ko nasa korte ako, ako yung abogadong nagcocrossexamine ng adverse party's witness or yung accused. Tipong court room drama ba. Tinuturo ko para umamin. Kaso si Manang Carmen nandon, eh kelangan ko ng props kaya sya kunyare yung witness. "..accused did then & there.." lalagpasan ko kunyare tas biglang tatalikod ako "WILLFULLY!!" (Ay Kabayo!!) "UNLAWFULLY!!!" (Esusmariosep!!!) "& FELONEOUSLY!!!" (Ay pelonyusly kang bata ka.. AAAAAAAYYY!!!!! YAWA PISTING BATA KA) Ahahaha.. hahabulin ako nun... hangang garden up to the gate lakas talaga ng tawa ko. Pagmangungurot yon sobrang lake LOL. San na kaya si Manang Carmen ngayon, I hope everything's well with her.

Alright we digressed. Here's another Succession case. Brace your selves, this is a roller coaster ride.

Two parcels of land were registered in the names of Ancieto Yanes, father of herein respondents alright? Were talking about an Original Certificate of Title alright (OCT)? Now for some reason a certain Fortunato Santiago was issued a Transfer Certificate of Tittle (TCT), meaning there was a transfer of ownership, in what mode? most probably a sale.  Santiago then sold the lots to Monico Fuentebella. Then the lots were sold thereafter to Rosendo Alvarez.  So three TCTs in one sitting  everyone seemed to be itching to quickly dispose it, the first transfer of ownership must be a falsificated sale.  So person A is the original owner, person B got a hold of the title to his property, sold it to person C, who in turn sold it to person D. Oh but wait there's more. There's a person E. And he's coming, wait for it. 

So the Yaneses filed a complaint against the three. Santiago, Fuentebella and Alvarez and wait.. there's one more, the 4th person imputed in his filed case, only its not a person perse, its a juridical person. The Register of Deeds of Negros Occidental, which must have been the source of all the falsification. Yanes petitioned the return and owndership of the lots and prayed for an accounting of the produce of the land from 1944 up to the filing of the complaint with damages. 

Enter person E. Take note. Now during the pendency of the case, Alvarez offered the lots to Dr. Rodolfo Siason. Now Dr. Siason unsuspecting and unaware of the previous dubitable contracts and the pending case bought the lots. 

Comes out the decision, The CFI (Court of First Instance) (This is an old case that's how they call their RTC then.) ordered Alvarez to reconvey and deliver the possession of the lots to Yanes.  Here comes the controversy. The court order proved to be inexecutable with respect to the one lot since it had been subdivided into two, and they were in the name of the doctor who purchased them in good faith from Alvarez, and that the lot could not be delivered back to the plaintiff since Dr. Siason was not a party in the writ of execution. 

So the Yaneses filed a petition for the issuance of a new certificate of title and for the declaration of nullity of the TCTs issued to Alvarez.  But the lower court found Siason as a buyer in good faith. Tsk tsk.. it could have stopped in Alvarez you know, the reconveyance would not have seemed to be a problem you know, but the court saw a 3rd party liability in here in the person of Siason, and the court just had to protect that, gets?  

Meanwhile in the middle of all these Rosendo Alvarez died. He probably couldn't take it anymore. Hahaha.. don't quote me on that. And so the court ordered the heirs of Alvarez to pay the Yaneses the actual value of the lots, plus damages. The IAC, meaning Intermediate Appellate Court  (Their CA during their time) affirmed the CFI decision except with regard to the damages.  Heirs of Alvarez contends the liability arising from the sale of the lots made by their father to Dr. Siason should be the sole liability of the late Rosendo Alvarez or of his estate after his death. 

ISSUE:

WON the Heirs of Alvarez' contention that the liability arising from the sale of the lots made to Dr. Siason should be the sole liability of the late Rosendo Alvarez or of his estate after his death.

RULING:

  

NO. - Under our law, the general rule is that a party's contractual rights and obligations are transmissible to the successors.  The pertinent provisions of the Civil Code state:

Art. 774.

Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law.

Art. 776.

The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death.

Art. 1311

Contracts take effect only between the parties, their assigns and heirs except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property received from the decedent.

In the Estate of Hemady vs. Luzon Surety Case, the court ruled that:

The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89).  The reason is that whatever payment made from the state is ultimately a payment by the heirs, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive.

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's transaction, which gave rise to the present claim for damages. 

That petitioners did not inherit the property involved is of no moment because by legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary estate, and hereditary assets are always liable in their totality for the payment of the debts of the estate. 

It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance.

Heirs of Alvarez loses this case.