Wake Up, Philippines!

Relaxing the rules

Posted in Labor, Labor Law, Laws, Supreme Court Decisions by Erineus on February 18, 2009

Rules of procedure should not be applied in a very rigid and technical sense if the ends of justice will be defeated. This is once more illustrated in this case of Ed.

Ed was employed in a cement company (UCC) in 1996 starting as a planner in the motor pool section. In the course of his employment he was assigned and promoted to different positions. But when he was already in a supervisory level position, he got involved in an alleged theft of company property and after investigation establishing his culpability, was dismissed for loss of trust and confidence.

Thus Ed filed an action against UCC and its plant manager for illegal dismissal before the NLRC. In its decision the Labor Arbiter (LA) found UCC guilty of illegal dismissal as it failed to establish the commission of the theft much less Ed’s culpability. So the LA ordered Ed’s reinstatement with back wages plus moral and exemplary damages all totaling P1,185,835.25. Initially this was affirmed by the NLRC modifying only the award of moral and exemplary damages into P100,000 and P50,000. But on UCC’s motion for reconsideration the NLRC reversed and set aside its previous ruling and dismissed Ed’s complaint.

Posthaste, Ed filed a petition for certiorari in the Court of Appeals (CA). But the latter dismissed his petition outright for deficient payment of docket fee, failure of his counsel to indicate his Roll of Attorney’s number and the date and place of issue of his IBP OR, failure to append a legible copy of annex “E” and improper verification as it is not based on personal knowledge since it was only done by his wife as attorney-in-fact.

Ed filed a motion for reconsideration explaining the procedural lapses pointing out that: the petition itself contained a reservation on his willingness and readiness to pay the deficiency that may be further assessed as the fee he paid was based only on a prior inquiry via long distance. To settle the deficiency, he sent a postal money order for P1,000; the roll of attorney’s number as well as the IBP OR also appeared in the petition but in other parts; the illegible copy of annex “E” is only one of the annexes that should not merit outright dismissal and to cure it, he submitted a clearer copy; while the verification was executed by Ed’s wife whom he constituted as his attorney-in-fact only because he was then already working abroad.

Notwithstanding the exhaustive explanation, the CA still denied his motion for reconsideration. Was the CA correct?

No. Subsequent and substantial compliance by the appellant may warrant the relaxation of the rules of procedure. The rules of procedure are mere tools designed to expedite the decision or resolution of cases and other matters pending in court. Strict and rigid application of technicalities that tend to frustrate rather than promote substantial justice must be avoided. Case should be determined on the merits after full opportunity to all parties to ventilate their causes and defenses rather than on some technicality or procedural imperfections.

In this case Ed readily corrected the procedural lapses in his petition cited by the CA as reason for the dismissal thereof. In all, he subsequently and substantially complied with the procedural requirements initially found lacking or defective by the appellate court.

Undeniably, the CA was correct in dismissing outright his petition for certiorari. However, upon motion for reconsideration and with a full and complete explanation, the CA should have reconsidered its prior dismissal and reinstated the petition. It is not remiss for the CA to adjudge Ed’s case based on the merits especially with the conflicting decisions rendered by the NLRC (Hipol vs. NLRC etc. G.R. 181818, December 18, 2008).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

E-mail at: jcson@pldtdsl.net

A LAW EACH DAY (Keeps Trouble Away)
By Jose C. Sison
Updated February 18, 2009 12:00 AM

View previous articles of this column.

High court rules vs NPC, private firm in tax case

Posted in NPC, Supreme Court Decisions, Tax by Erineus on February 11, 2009


The Supreme Court (SC) has ruled that the National Power Corp. (NPC) is not exempt from the P288 million taxes imposed on the machineries and equipment used in the construction of the 215 megawatt power plant in Bauang, La Union under a Build-Operate-Transfer (BOT) agreement with a private firm in 1993.

In a decision written by Justice Arturo D. Brion, the SC affirmed the ruling of the Court of Tax Appeals (CTA) that denied the petitions of both the NPC and its contractor, Bauang Private Power Corp. (BPPC), to nullify the tax assessment imposed by the provincial government of La Union.

Senior Justice Leonardo A. Quisumbing and Justices Renato C. Corona, Conchita Carpio Morales, and Dante O. Tinga concurred in the decision.

NPC had claimed it is the actual owner and user of the machineries and equipment used in the construction of the power plant under the BOT scheme and thus it is exempt from taxes under Republic Act No. 7160, the Local Government Code (LGC).

The LCG exempts from payment of real property tax “all machineries that are actually, directly, and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power.”

According to the NPC, its BOT agreement with BPPC is a financing agreement that makes it the beneficial owner and the actual, direct and exclusive user of the power plant, while the contractor is the lender/creditor that retains the plant’s legal ownership until it is fully paid.

In upholding the CTA ruling, the SC said that a review of the BOT agreement between the NPC and the BPPC showed that the latter has complete ownership — both legal and beneficial — of the power plant project which would be turned over to the former once the obligations are fully paid.

SC decision clarifies use of manager’s checks

Posted in Laws, Supreme Court Decisions by Erineus on February 11, 2009

The Supreme Court (SC) has ordered the Security Bank and Trust Co. to pay P4 million, excluding interest of six percent a year from 1981, to the Rizal Commercial Banking Corp. representing the balance of the P8 million manager’s check issued by SBTC and encashed by RCBC.

In a decision written by Senior Justice Leonardo A. Quisumbing, the SC said that “the questioned check issued by SBTC is not just an ordinary check but a manager’s check – one that is drawn by a bank’s manager upon the bank itself.”

“As the bank’s own check, a manager’s check becomes the primary obligation of the bank and is accepted in advance by the act of its issuance,” it said.

Justices Renato C. Corona, Conchita Carpio Morales, Dante O. Tinga, and Teresita J. Leonardo de Castro concurred in the decision.

With the ruling, the SC affirmed the decision of the Court of Appeals (CA) that upheld with modification the order issued by the Makati City regional trial court (RTC) in favor of RCBC.

The case arose from the issuance by the SBTC on Jan. 9, 1981 a manager’s check for P8 million payable to “Cash” as proceeds of the loan granted to Guidon Construction and Development Corp. (GCDC).

On the same day, the P8 million check was deposited by Continental Manufacturing Corp. (CMC) in its current account with RCBC. In turn, RCBC honored the check and allowed CMC to withdraw the amount covered by the check.

On Jan. 10, 1981, GCDC issued a “stop payment order” to SBTC claiming that the P8 million check was released to a third party by mistake. Consequently, SBTC dishonored and returned the manager’s check to RCBC.

On Feb. 13, 1981, RCBC filed a complaint for damages against SBTC. In the meantime, the P8 million check was equally divided between, and credited to, RCBC and SBTC in line with the rules of the Philippine Clearing House.

In a decision by the trial court on May 9, 2000, SBTC was ordered to pay RCBC P4 million in actual damages and P100,000 in lawyer’s fees. On appeal to the CA, the appellate court affirmed the trial court’s ruling with modification to the effect that SBTC should pay interests of six per cent annually from 1981 until fully paid. Both RCBC and SBTC elevated the case to the SC.

“In our considered view, SBTC cannot escape liability by invoking Monetary Board Resolution No. 2202 that prohibits drawings against uncollected deposits. (R. G. Panaligan)