CIVIL LAW; FAMILY LAW; Marriage; Marriages for Purposes of Immigration; Whether or not valid

Republic of the Philippines v. Liberty D. Albios

G.R. No. 198780, 16 October 2013

The case of Republic v. Albios involves a marriage alleged to be entered into by Albios for the purpose of obtaining US citizenship, which failed to materialize. Hence, finding no use for her marriage and arguing that both she and her husband did not really intend to enter into a married life, Albios filed a Petition for Declaration of Nullity before the Regional Trial Court (RTC) for the purpose of declaring her marriage void.

The RTC found the marriage as one made in jest, or for convenience only, and voided the marriage of Albios and her husband. This was later upheld by the Court of Appeals (CA) which reasoned that since there was no intention to enter into a married life, there was no consent to begin with, making the marriage void.

The Office of the Solicitor General (OSG) appealed the decision of the CA to the Supreme Court (SC) via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

Marriage Fraud for Purposes of Immigration

The SC reversed the CA and declared the marriage valid. Before explaining its reason, the SC first delved into the issue of fraud marriages for purposes of immigration in the US, thus -

"The institution of marriage carries with it concomitant benefits. This has led to the development of marriage fraud for the sole purpose of availing of particular benefits. In the United States, marriages where a couple marries only to achieve a particular purpose or acquire specific benefits, have been referred to as "limited purpose" marriages.  A common limited purpose marriage is one entered into solely for the legitimization of a child.  Another, which is the subject of the present case, is for immigration purposes. Immigration law is usually concerned with the intention of the couple at the time of their marriage, and it attempts to filter out those who use marriage solely to achieve immigration status.

In 1975, the seminal case of Bark v. Immigration and Naturalization Service,  established the principal test for determining the presence of marriage fraud in immigration cases. It ruled that a "marriage is a sham if the bride and groom did not intend to establish a life together at the time they were married." This standard was modified with the passage of the Immigration Marriage Fraud Amendment of 1986 (IMFA), which now requires the couple to instead demonstrate that the marriage was not "entered into for the purpose of evading the immigration laws of the United States." The focus, thus, shifted from determining the intention to establish a life together, to determining the intention of evading immigration laws. It must be noted, however, that this standard is used purely for immigration purposes and, therefore, does not purport to rule on the legal validity or existence of a marriage.

The question that then arises is whether a marriage declared as a sham or fraudulent for the limited purpose of immigration is also legally void and inexistent. The early cases on limited purpose marriages in the United States made no definitive ruling. In 1946, the notable case of United States v. Rubenstein  was promulgated, wherein in order to allow an alien to stay in the country, the parties had agreed to marry but not to live together and to obtain a divorce within six months. The Court, through Judge Learned Hand, ruled that a marriage to convert temporary into permanent permission to stay in the country was not a marriage, there being no consent, to wit:

. . . But, that aside, Spitz and Sandler were never married at all. Mutual consent is necessary to every contract; and no matter what forms or ceremonies the parties may go through indicating the contrary, they do not contract if they do not in fact assent, which may always be proved. . . . Marriage is no exception to this rule: a marriage in jest is not a marriage at all. . . . It is quite true that a marriage without subsequent consummation will be valid; but if the spouses agree to a marriage only for the sake of representing it as such to the outside world and with the understanding that they will put an end to it as soon as it has served its purpose to deceive, they have never really agreed to be married at all. They must assent to enter into the relation as it is ordinarily understood, and it is not ordinarily understood as merely a pretence, or cover, to deceive others. 

(Italics supplied)

On the other end of the spectrum is the 1969 case of Mpiliris v. Hellenic Lines, which declared as valid a marriage entered into solely for the husband to gain entry to the United States, stating that a valid marriage could not be avoided "merely because the marriage was entered into for a limited purpose." The 1980 immigration case of Matter of McKee, further recognized that a fraudulent or sham marriage was intrinsically different from a nonsubsisting one.

Nullifying these limited purpose marriages for lack of consent has, therefore, been recognized as problematic. The problem being that in order to obtain an immigration benefit, a legal marriage is first necessary.  At present, United States courts have generally denied annulments involving "limited purpose" marriages where a couple married only to achieve a particular purpose, and have upheld such marriages as valid."

Why Albios' marriage, though entered to obtain US citizenship, is valid

After discussing how US courts have treated fraud marriages for immigration purposes or limited purpose marriages, the SC then proceeded to explain why Albios' marriage cannot be declared void. It held that Albios' marriage is not one made in jest, which is void ab initio, but one where all the elements are present, though the purposes for which it was entered into may be different. As opposed to marriages made in jest, Albios marriage was one where both parties intended to give legal effect to the marriage though Albios' intended US citizenship was not achieved. Both parties' consent were also conscious and intelligent, thus belying the CA's ruling that there was no consent to begin with. 

“The CA's assailed decision was, therefore, grounded on the parties' supposed lack of consent. Under Article 2 of the Family Code, consent is an essential requisite of marriage. Article 4 of the same Code provides that the absence of any essential requisite shall render a marriage void ab initio.

Under said Article 2, for consent to be valid, it must be (1) freely given and (2) made in the presence of a solemnizing officer. A "freely given" consent requires that the contracting parties willingly and deliberately enter into the marriage. Consent must be real in the sense that it is not vitiated nor rendered defective by any of the vices of consent under Articles 45 and 46 of the Family Code, such as fraud, force, intimidation, and undue influence. Consent must also be conscious or intelligent, in that the parties must be capable of intelligently understanding the nature of, and both the beneficial or unfavorable consequences of their act. Their understanding should not be affected by insanity, intoxication, drugs, or hypnotism.

Based on the above, consent was not lacking between Albios and Fringer. In fact, there was real consent because it was not vitiated nor rendered defective by any vice of consent. Their consent was also conscious and intelligent as they understood the nature and the beneficial and inconvenient consequences of their marriage, as nothing impaired their ability to do so. That their consent was freely given is best evidenced by their conscious purpose of acquiring American citizenship through marriage. Such plainly demonstrates that they willingly and deliberately contracted the marriage. There was a clear intention to enter into a real and valid marriage so as to fully comply with the requirements of an application for citizenship. There was a full and complete understanding of the legal tie that would be created between them, since it was that precise legal tie which was necessary to accomplish their goal.

In ruling that Albios' marriage was void for lack of consent, the CA characterized such as akin to a marriage by way of jest. A marriage in jest is a pretended marriage, legal in form but entered into as a joke, with no real intention of entering into the actual marriage status, and with a clear understanding that the parties would not be bound. The ceremony is not followed by any conduct indicating a purpose to enter into such a relation. It is a pretended marriage not intended to be real and with no intention to create any legal ties whatsoever, hence, the absence of any genuine consent. Marriages in jest are void ab initio, not for vitiated, defective, or unintelligent consent, but for a complete absence of consent. There is no genuine consent because the parties have absolutely no intention of being bound in any way or for any purpose.

The respondent's marriage is not at all analogous to a marriage in jest. Albios and Fringer had an undeniable intention to be bound in order to create the very bond necessary to allow the respondent to acquire American citizenship. Only a genuine consent to be married would allow them to further their objective, considering that only a valid marriage can properly support an application for citizenship. There was, thus, an apparent intention to enter into the actual marriage status and to create a legal tie, albeit for a limited purpose. Genuine consent was, therefore, clearly present.

The avowed purpose of marriage under Article 1 of the Family Code is for the couple to establish a conjugal and family life. The possibility that the parties in a marriage might have no real intention to establish a life together is, however, insufficient to nullify a marriage freely entered into in accordance with law. The same Article 1 provides that the nature, consequences, and incidents of marriage are governed by law and not subject to stipulation. A marriage may, thus, only be declared void or voidable under the grounds provided by law. There is no law that declares a marriage void if it is entered into for purposes other than what the Constitution or law declares, such as the acquisition of foreign citizenship. Therefore, so long as all the essential and formal requisites prescribed by law are present, and it is not void or voidable under the grounds provided by law, it shall be declared valid.

Motives for entering into a marriage are varied and complex. The State does not and cannot dictate on the kind of life that a couple chooses to lead. Any attempt to regulate their lifestyle would go into the realm of their right to privacy and would raise serious constitutional questions. The right to marital privacy allows married couples to structure their marriages in almost any way they see fit, to live together or live apart, to have children or no children, to love one another or not, and so on.  Thus, marriages entered into for other purposes, limited or otherwise, such as convenience, companionship, money, status, and title, provided that they comply with all the legal requisites,  are equally valid. Love, though the ideal consideration in a marriage contract, is not the only valid cause for marriage. Other considerations, not precluded by law, may validly support a marriage.

Although the Court views with disdain the respondent's attempt to utilize marriage for dishonest purposes, It cannot declare the marriage void. Hence, though the respondent's marriage may be considered a sham or fraudulent for the purposes of immigration, it is not void ab initio and continues to be valid and subsisting.

Neither can their marriage be considered voidable on the ground of fraud under Article 45 (3) of the Family Code. Only the circumstances listed under Article 46 of the same Code may constitute fraud, namely, (1) non-disclosure of a previous conviction involving moral turpitude; (2) concealment by the wife of a pregnancy by another man; (3) concealment of a sexually transmitted disease; and (4) concealment of drug addiction, alcoholism, or homosexuality. No other misrepresentation or deceit shall constitute fraud as a ground for an action to annul a marriage. Entering into a marriage for the sole purpose of evading immigration laws does not qualify under any of the listed circumstances. Furthermore, under Article 47 (3), the ground of fraud may only be brought by the injured or innocent party. In the present case, there is no injured party because Albios and Fringer both conspired to enter into the sham marriage.

Albios has indeed made a mockery of the sacred institution of marriage. Allowing her marriage with Fringer to be declared void would only further trivialize this inviolable institution. The Court cannot declare such a marriage void in the event the parties fail to qualify for immigration benefits, after they have availed of its benefits, or simply have no further use for it. These unscrupulous individuals cannot be allowed to use the courts as instruments in their fraudulent schemes. Albios already misused a judicial institution to enter into a marriage of convenience; she should not be allowed to again abuse it to get herself out of an inconvenient situation.

No less than our Constitution declares that marriage, as an inviolable social institution, is the foundation of the family and shall be protected by the State.  It must, therefore, be safeguarded from the whims and caprices of the contracting parties. This Court cannot leave the impression that marriage may easily be entered into when it suits the needs of the parties, and just as easily nullified when no longer needed.”

As can be seen from above, the SC found both parties' consent to be valid because in order to effect the intended change in citizenship, the marriage between Albios and her husband should first be completely legal. Thus, even if it is conceded that Albios' husband's consent was obtained by paying him $2,000.00, this is not enough to declare his consent absent. This is likewise not enough to deem the consent vitiated, which is not, and most especially considering the fact that Albios is not an innocent party who can claim vitiation of consent due to fraud.

CIVIL LAW; CORPORATE REHABILITATION; Jurisdiction of Rehabilitation Court does not include claims by debtor against its own debtors or third parties

Steel Corporation of the Philippines v. Mafpre Insular Insurance Corporation

G.R. No. 201199, 16 October 2013

This case involves a claim by Steel Corporation of the Philippines (SCP), which was under corporation rehabilitation, for payment of its insurance claims against the respondents Mafpre Insular Insurance Corporation ("Respondents").

SCP won before the Rehabilitation Court (RTC), which was later overturned by the Court of Appeals after the Respondents filed a Petition for Review under Rule 43 of the Rules of Court..

On Petition for Review on Certiorari under Rule 45 before the Supreme Court, the latter upheld the decision of the Court of Appeals.

According to the Supreme Court, while Rehabilitation Proceedings are proceedings in rem and, under the rules, affects all those "affected thereby," this does not include the claims by the debtor against its own debtors or against third parties.

In this case, therefore, and as quoted by the SC, "SCP's insurance claims cannot be considered as 'claims' within the jurisdiction of the trial court functioning as a rehabilitation court. Rehabilitation courts only have limited jurisdiction over the claims by creditors against the distressed company, not on the claims of said distressed company against its debtors. The interim rules define claim as referring to all claims or demands, of whatever nature or character against a debtor or its property, whether for money or otherwise."

The SC thus held that the RTC, as a rehabilitation court, was acting without jurisdiction when it granted SCP's "Motion to Pay" insurance claims against the Respondents, which, not claiming or demanding any property from SCP, cannot be considered bound by or subsumed under the rehabilitation proceedings.

Since SCP's claims are contested and require a full-blown trial, SCP must file a separate action therefor and pay the necessary filing fees.

CIVIL LAW; TORTIOUS INTERFERENCE; Not present when the intrusion is impelled by purely economic motives

Analita P. Inocencio v. Hospicio De San Jose

G.R. No. 201787, 25 September 2013

"We also find that HDSJ did not commit tortious interference. Article 1314 of the Civil Code states:

Art. 1314.Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. 

As correctly pointed out by the Inocencios, tortious interference has the following elements: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of the contract; and (3) interference of the third person without legal justification or excuse.

The facts of the instant case show that there were valid sublease contracts which were known to HDSJ. However, we find that the third element is lacking in this case.

In So Ping Bun v. Court of Appeals, we held that there was no tortious interference if the intrusion was impelled by purely economic motives. In So Ping Bun, we explained that:

'Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. One view is that, as a general rule, justification for interfering with the business relations of another exists where the actor's motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer's interest outweighs that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. Moreover, justification for protecting one's financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives.'

The evidence shows that HDSJ entered into agreements with Ramon's former sublessees for purely economic reasons (payment of rentals). HDSJ had a right to collect the rentals from the sublessees upon termination of the lease contract. It does not appear that HDSJ was motivated by spite or ill will towards the Inocencios." (Emphasis and underscoring supplied)

CIVIL LAW; LEASE; Essentially not personal in character; No novation in sublease; Lessee can sublease as long as it is not expressly prohibited; When Lessor should pay 1/2 value of improvements introduced

Analita P. Inocencio vs. Hospicio De San Jose

G.R. No. 201787, 25 September 2013

In this case, the Supreme Court held the clause "contract is non-transferable unless prior consent of the lessor is obtained in writing" to refer to transfers inter vivos and not transmissions mortis causa.

Since lease contracts are not personal in character, the SC explained that the rights of a lessee may be transferred to an heir via intestate succession and unless prohibited, the heir can exercise the same rights as the lessee-predecessor-in-interest.

A lessee is also not prohibited from sub-leasing the leased property or premises provided no express prohibition exists in the contract of lease. When there is a sub-lease, there is likewise no novation of the contract of lease, since the original juridical relation between the lessor-lessee remains (as opposed to an Assignment of the Lease when the lessee is replaced by the assignee).

Another notable point made in this case is the fact the simultaneous lease of the building likewise includes with it, the lease of the land on which the property is located. Thus, rental payment for the building includes rental for the lot.

With respect to improvements introduced by the lessor in good faith on the property, the SC held that the lessor is entitled to be paid 1/2 value of the improvements introduced at the time the lease is terminated, provided that the following requirements are present: (1) the improvements were introduced in good faith; (2) the improvements are useful; and (3) suitable to the use for which the lease is intended, without altering the form and substances.

Should the lessee refuse to reimburse the lessor, the latter may then cause the demolition of the improvements introduced.

ADMIN. MATTER; PAO Clients not exempted from the payment of Sheriff’s Expenses since these are not properly considered as “Fees”; to allow free access to courts, however, PAO officials and employees are now authorized to serve subpoenas, summons, and other court processes in cases involving their clients

Re: Letter dated April 18, 2011 of Chief Public Attorney Persida Rueda-Acosta Requesting Exemption from the Payment of Sheriff’s Expenses

A.M. No. 11-10-03-O, 30 July 2013.

Sheriff’s Expenses are different from Sheriff’s Fees.

“Sheriff's expenses, however, cannot be classified as a "fee" within the purview of the exemption granted to PAO's clients under Section 6 of R.A. No. 9406. Sheriff's expenses are provided for under Section 10, Rule 141 of the Rules of Court, viz.

xxx

Sheriff's expenses are not exacted for any service rendered by the court; they are the amount deposited to the Clerk of Court upon filing of the complaint to defray the actual travel expenses of the sheriff, process server or other court-authorized persons in the service of summons, subpoena and other court processes that would be issued relative to the trial of the case. It is not the same as sheriff's fees under Section 10, Rule 141 of the Rules of Court, which refers to those imposed by the court for services rendered to a party incident to the proceedings before it.” (Emphasis and underscoring supplied)

PAO Lawyers now authorized to serve summons, subpoenas, and other processes on behalf of their clients or only in cases involving their clients.

“The Court, however, is not unmindful of the predicament of PAO's clients. In exempting PAO's clients from paying docket and other legal fees, R.A. No. 9406 intended to ensure that the indigents and the less privileged, who do not have the means to pay the said fees, would not be denied access to courts by reason of poverty. Indeed, requiring PAO's clients to pay sheriff's expenses, despite their exemption from the payment of docket and other legal fees, would effectively fetter their free access to the courts thereby negating the laudable intent of Congress in enacting R.A. No. 9406.

Free access to the courts and adequate legal assistance are among the fundamental rights which the Constitution extends to the less privileged. Thus, Section 11, Article III of the 1987 Constitution mandates that "[f]ree access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty." The Constitution affords litigants — moneyed or poor — equal access to the courts; moreover, it specifically provides that poverty shall not bar any person from having access to the courts. Accordingly, laws and rules must be formulated, interpreted, and implemented pursuant to the intent and spirit of this constitutional provision.

Access to justice by all, especially by the poor, is not simply an ideal in our society. Its existence is essential in a democracy and in the rule of law. Without doubt, one of the most precious rights which must be shielded and secured is the unhampered access to the justice system by the poor, the underprivileged and the marginalized.

Having the foregoing principles in mind, the Court, heeding the constitutional mandate of ensuring free access to the courts and adequate legal assistance to the marginalized and less privileged, hereby authorizes the officials and employees of PAO to serve summons, subpoena and other court processes pursuant to Section 3, Rule 14 of the Rules of Court. The authority given herein by the Court to the officials and employees of PAO shall be limited only to cases involving their client.

Authorizing the officials and employees of PAO to serve the summons, subpoenas and other court processes in behalf of their clients would relieve the latter from the burden of paying for the sheriff's expenses despite their non-exemption from the payment thereof under Section 6 of R.A. No. 9406. The amount to be defrayed in the service of summons, subpoena and other court processes in behalf of its clients would consequently have to be taken from the operating expenses of PAO. In turn, the amount advanced by PAO as actual travel expenses may be taken from the amount recovered from the adversaries of PAO's clients as costs of suit, attorney's fees or contingent fees prior to the deposit thereof in the National Treasury.” (Emphasis and underscoring supplied)

LABOR LAW; Illegal Dismissal; While Employer has the Burden of Proving that Dismissal was for a Valid or Authorized Cause, Employee must First Establish the Fact of Dismissal from Service by Substantial Evidence

Canedo v. Kampilan Security and Detective Agency, Inc.,

G.R. No. 179326, 31 July 2013.

Employee must first prove the fact of dismissal, before Employer may be asked to prove validity thereof.

“In illegal dismissal cases, "[w]hile the employer bears the burden . . . to prove that the termination was for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service." The burden of proving the allegations rests upon the party alleging and the proof must be clear, positive and convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of dismissal.” (Emphasis and underscoring supplied)

Certification not enough proof that dismissal was effected; Floating Status not unusual for security guards employed in security agencies; Floating Status can only ripen to constructive dismissal when it goes beyond the 6-month maximum period allowed by law.

“Petitioner relies on the word "terminated" as used in the June 25, 2003 Certification issued him by respondent Arquiza and argues that the same is a clear indication that he was dismissed from service. We are, however, not persuaded. Petitioner cannot simply rely on this piece of document since the fact of dismissal must be evidenced by positive and overt acts of an employer indicating an intention to dismiss. Here, aside from this single document, petitioner proffered no other evidence showing that he was dismissed from employment. While it is true that he was not allowed to report for work after the period of his suspension expired, the same was due to NPC's request for his replacement as NPC was no longer interested in his services. And as correctly argued by respondents, petitioner from that point onward is not considered dismissed but merely on a floating status. "Such a 'floating status' is lawful and not unusual for security guards employed in security agencies as their assignments primarily depend on the contracts entered into by the agency with third parties."

Countering such status, petitioner contends that even at present, he is still not given any new duties. A floating status can ripen into constructive dismissal only when it goes beyond the six-month maximum period allowed by law. In this case, petitioner filed the Complaint for illegal dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal lacks basis. Moreover and as aptly observed by the NLRC, it was in fact petitioner who intended to terminate his relationship with respondents through his planned retirement. This is further bolstered by his prayer in his Complaint where he sought for separation pay and not for reinstatement.

At any rate, upon a close reading of the June 25, 2003 Certification, this Court is of the opinion that petitioner was not dismissed from service. The import of the said Certification is that petitioner was assigned in NPC from November 20, 1996 up to May 7, 2003 and that on May 7, 2003, respondents terminated his assignment to NPC upon the latter's request. This is the correct interpretation based on the true intention of the parties as shown by their contemporaneous and subsequent acts and the other evidence on record as discussed above. Section 12 of Rule 130 of the Rules of Court states that in the construction and interpretation of a document, the intention of the parties must be pursued. Section 13 of the same Rule further instructs that the circumstances under which a document was made may be shown in order to ascertain the correct interpretation of a document.” (Emphasis and underscoring supplied)

CIVIL LAW; RTC Jurisdiction vis-à-vis Special Commercial Courts; SPA for Sale of Real Property Must Expressly State Authority of Agent to Sell the Land; Rule that Buyer May Rely on Title Inapplicable when Agency is Contested; Person Dealing with Agent Must Ascertain the Extent of the Agent’s Authority

Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, 31 July 2013.

The RTC and not the SEC has jurisdiction over the case because it involves the application of the Civil Code, which are properly cognizable by courts of general jurisdiction.

  

“The CA correctly ruled that the RTC has jurisdiction over the present case. Joy Training seeks to nullify the sale of the real properties on the ground that there was no contract of agency between Joy Training and the spouses Johnson. This was beyond the ambit of the SEC's original and exclusive jurisdiction prior to the enactment of Republic Act No. 8799 which only took effect on August 3, 2000. The determination of the existence of a contract of agency and the validity of a contract of sale requires the application of the relevant provisions of the Civil Code. It is a well-settled rule that "[d]isputes concerning the application of the Civil Code are properly cognizable by courts of general jurisdiction." Indeed, no special skill requiring the SEC's technical expertise is necessary for the disposition of this issue and of this case.” (Emphasis and underscoring supplied)

SPA for the sale of real property must expressly mention a sale or express the agent’s power in clear and unmistakable terms.

  

“Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter." It may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

As a general rule, a contract of agency may be oral. However, it must be written when the law requires a specific form. Specifically, Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil Code, states that special powers of attorney are necessary to convey real rights over immovable properties.

The special power of attorney mandated by law must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals that a special power of attorney must express the powers of the agent in clear and unmistakable language for the principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document. The purpose of the law in requiring a special power of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the putative agent.” (Emphasis and underscoring supplied)

Failure to Produce Original of Documents and to show that Exceptions for the Introduction of Secondary Evidence Applies makes Evidence Inadmissible.

  

“The lower courts should not have relied on the resolution and the certification in resolving the case. The spouses Yoshizaki did not produce the original documents during trial. They also failed to show that the production of pieces of secondary evidence falls under the exceptions enumerated in Section 3, Rule 130 of the Rules of Court. Thus, the general rule — that no evidence shall be admissible other than the original document itself when the subject of inquiry is the contents of a document — applies.” (Emphasis and underscoring supplied)

Rule that person dealing with registered land need only to rely on the face of the title applies only to ownership of land and not when the fact of agency is contested; Person who deals with agent must examine and verify extent of agent’s authority.

  

“Necessarily, the absence of a contract of agency renders the contract of sale unenforceable; Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a registered land have the legal right to rely on the face of the title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested.

At this point, we reiterate the established principle that persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agent's authority.  A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover on his own peril the authority of the agent. Thus, Sally bought the real properties at her own risk; she bears the risk of injury occasioned by her transaction with the spouses Johnson.” (Emphasis and underscoring supplied)

CRIMINAL LAW; Estafa by means of False Pretenses under Article 315, paragraph 2(a) of the Revised Penal Code

Lopez v. People, G.R. No. 199294, 31 July 2013

Use of False Pretense of Capability not covered by Article 315 paragraph 2(a)

“The Information filed against petitioner and Ragonjan alleges that they conspired to use two false pretenses on Sy to defraud him on 10 October 1996, namely, that ‘[1] Subic Island [Club] would be developed by Primelink and that [2] the latter was duly authorized to sell membership certificates.’ We find merit in petitioner's contention that the prosecution failed to prove the element of use of false pretense regarding the first allegation. Nevertheless, we find the evidence sufficient to prove the use of false pretense on the second allegation.

Allegation on the Club's Development not "False"

It is impossible to determine from the records the category of false pretense the prosecution wished the first allegation to belong. Undoubtedly, it concerns Primelink's capability to develop the Club. Use of false pretense of capability is, however, not penalized under Section 2 (a) of Article 315. The category approximating the allegation in question is false pretense of power (to develop the Club). We proceed with our analysis using such category as frame of reference.” (Emphasis and underscoring supplied)

Further proof of conspiracy not necessary because witness already testified as to the central role played by the accused in the sale of unregistered shares

"First. Petitioner was no bystander in Primelink's sale of unregistered shares. Santiago, Primelink's comptroller and drafter of the Agreement, testified as witness for petitioner that after Primelink's Board of Directors approved the sale of the unregistered Club shares, petitioner "encouraged and instructed" the sale of "many shares," no doubt to raise as much capital for the Club as possible. This was the context of Sy's purchase of a Club share from Primelink.

Petitioner attempts to distance himself from the transaction between Ragonjan and Sy by claiming that Ragonjan violated standing company policy to be "candid" to buyers by disclosing Primelink's lack of license. We find this unpersuasive. In the first place, petitioner failed to present independent proof of such company policy, putting in serious doubt the veracity of his claim. Secondly, it is improbable for Ragonjan to take it upon herself to fabricate the serious claim that Primelink was a licensed securities dealer in violation of company policy, in the process risking her employment. It is more consistent with logic and common sense to hold that Ragonjan followed company policy in giving assurances to Sy that Primelink was licensed to sell Club shares. After all, Primelink stood to attract more investments if it presented itself to the public as a licensed securities dealer. Indeed, Sy was emphatic in his claim that he bought a Club share for P0.8 million because he was "convinced that there was a license to sell."

Petitioner's direct hand in the unlicensed selling of Club shares, coupled with Ragonjan's position in Primelink's organizational and sales structure, suffices to prove petitioner's liability under the allegation of use of false pretense of qualification. With Santiago's testimony on petitioner's central role in the sale of unregistered Primelink shares, further proof of conspiracy between petitioner and Ragonjan is superfluous.” (Emphasis and underscoring supplied)

License to Sell or Capacity to Sell is implied in sales and is different from warranties

“Second. There is no merit in the argument that Ragonjan's assurance to Sy of Primelink's status as a licensed securities dealer amounts to a warranty, and thus required, under the warranty clause of the reservation agreement, to be reduced in writing. The warranty clause, which provides —

Any representation or warranty made by the agent who handled this sale not embodied herein shall not bind the company, unless reduced in writing and confirmed by the President or the Chairman of the Board. 

refers to warranties on the terms of the share sold, not to the capacity of Primelink to sell Club shares. Indeed, the fact that "the seller has the right to sell the thing at the time when ownership is to pass," is implied in sales, dispensing with the need to expressly state such in the contract. Further, the clause operates to shield Primelink from claims of violation of unwritten warranties, not its officers from criminal liability for making fraudulent representation on Primelink's authority to sell Club shares.” (Emphasis and underscoring supplied)

Misappropriation or Conversion of money or property not required in Estafa by Means of False Pretenses

“Lastly, unlike estafa under paragraph 1 (b) of Article 315 of the Code, estafa under paragraph 2 (a) of that provision does not require as an element of the crime proof that the accused misappropriated or converted the swindled money or property. All that is required is proof of pecuniary damage sustained by the complainant arising from his reliance on the fraudulent representation. The prosecution in this case discharged its evidentiary burden by presenting the receipts of the installment payments made by Sy on the purchase price for the Club share.” (Emphasis and underscoring supplied)

LEGAL ETHICS; Disbarment Proceedings: Burden of Proof Always Rests on the Complainant

"The burden of proof in disbarment and suspension proceedings always rests on the shoulders of the complainant. The Court exercises its disciplinary power only if the complainant establishes the complaint by clearly preponderant evidence that warrants the imposition of the harsh penalty. As a rule, an attorney enjoys the legal presumption that he is innocent of the charges made against him until the contrary is proved. An attorney is further presumed as an officer of the Court to have performed his duties in accordance with his oath.

In this case, complainants failed to discharge their burden of proving respondents' administrative liability. Granting that the certification of the QCCPO of the actual date of receipt of the subject NLRC decision has prima facie credence, this Court finds it is not sufficient to hold respondents administratively liable as contended by complainants.

While there is incongruity between said certification and the records of respondents' law firm as to when the subject NLRC decision was actually received by the latter, there is no clear and convincing evidence presented by complainants that respondents maliciously made it appear that they received the decision on a date ten days later than what is reflected on the records of the QCCPO. Complainants would like to convince this Court that the only logical explanation as to the discrepancy is that Calucag, a secretary under the employ of respondents, was ordered by respondents to stamp a much later date instead of the actual date of receipt for the purpose of extending by ten-day period within which to file a Motion for Reconsideration under the NLRC Rules of Procedure. Clearly, such claim is merely anchored on speculation and conjecture and not backed by any clear preponderant evidence necessary to justify the imposition of administrative penalty on a member of the Bar." (Joven and Rasing v. Attys. Cruz and Magsalin, A.C. No. 7686, 31 July 2013)

CIVIL LAW; Express Trust: Intention to create an express trust must be firmly established; merely designating a bank account as an "ITF" (In Trust For) account is not sufficient to establish an express trust

In Goyanko, Jr. v. UCPB, G.R. No. 179096, 6 February 2013, the Petitioners filed a complaint against UCPB for recovery of sum of money.

Specifically, Petitioners claim that UCPB should not have allowed Philippine Asia Lending Investors, Inc. (“Phil Asia” or "PALII") to have withdrawn the money deposited with the said bank since it was made under the name of “Phil Asia: ITF (In Trust For) the Heirs of Joseph Goyanko, Sr.

According to the Petitioners, when Phil Asia opened the said account with UCPB, using the words “ITF”, the bank was charged with the knowledge that it was being opened in trust for the heirs. Thus, when UCPB allowed Phil Asia to withdraw almost the entire amount deposited, the bank acted negligently or in bad faith, thus making it liable to return the amount withdrawn.

In disposing of the case, the Supreme Court examined the factual milieu and ruled that no express trust was created. Contrary to the petitioners’ (heirs) argument, the mere use of the words “ITF” is not sufficient to establish an express trust in favor of the heirs:

“A trust, either express or implied, is the fiduciary relationship ". . . between one person having an equitable ownership of property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter." Express or direct trusts are created by the direct and positive acts of the trustor or of the parties. No written words are required to create an express trust. This is clear from Article 1444 of the Civil Code, but, the creation of an express trust must be firmly shown; it cannot be assumed from loose and vague declarations or circumstances capable of other interpretations.

In Rizal Surety & Insurance Co. v. CA, we laid down the requirements before an express trust will be recognized:

Basically, these elements include a competent trustor and trustee, an ascertainable trust res, and sufficiently certain beneficiaries. . . . each of the above elements is required to be established, and, if any one of them is missing, it is fatal to the trusts (sic). Furthermore, there must be a present and complete disposition of the trust property, notwithstanding that the enjoyment in the beneficiary will take place in the future. It is essential, too, that the purpose be an active one to prevent trust from being executed into a legal estate or interest, and one that is not in contravention of some prohibition of statute or rule of public policy. There must also be some power of administration other than a mere duty to perform a contract although the contract is for a third-party beneficiary. A declaration of terms is essential, and these must be stated with reasonable certainty in order that the trustee may administer, and that the court, if called upon so to do, may enforce, the trust. [emphasis ours]

Under these standards, we hold that no express trust was created. First, while an ascertainable trust res and sufficiently certain beneficiaries may exist, a competent trustor and trustee do not. Second, UCPB, as trustee of the ACCOUNT, was never under any equitable duty to deal with or given any power of administration over it. On the contrary, it was PALII that undertook the duty to hold the title to the ACCOUNT for the benefit of the HEIRS. Third, PALII, as the trustor, did not have the right to the beneficial enjoyment of the ACCOUNT. Finally, the terms by which UCPB is to administer the ACCOUNT was not shown with reasonable certainty. While we agree with the petitioner that a trust's beneficiaries need not be particularly identified for a trust to exist, the intention to create an express trust must first be firmly established, along with the other elements laid above; absent these, no express trust exists.

Contrary to the petitioner's contention, PALII's letters and UCPB's records established UCPB's participation as a mere depositary of the proceeds of the investment. In the March 28, 1996 letter, PALII manifested its intention to pursue an active role in and up to the turnover of those proceeds to their rightful owners, while in the November 15, 1996 letter, PALII begged the petitioner to trust it with the safekeeping of the investment proceeds and documents. Had it been PALII's intention to create a trust in favor of the HEIRS, it would have relinquished any right or claim over the proceeds in UCPB's favor as the trustee. As matters stand, PALII never did. (Emphasis and underscoring supplied)”

In absence of the above elements indicating the creation of an express trust, the Supreme Court held that UCPB did not become a trustee by the mere opening of a deposit account. Hence, as no trust was created, the relationship between UCPB and Phil Asia remained to be that of a creditor and debtor, and UCPB rightfully paid Phil Asia upon the latter’s demand in accordance with its deposit contract.

LEGAL ETHICS; Lawyers must not present and offer in evidence any document they know to be false; this includes false allegations or statements in letters sent to opposing parties

Trinidad, et al. v. Atty. Villarin, A.C. No. 9310, 27 February 2013 is an administrative case against a lawyer for allegedly harassing complainants through demand letters sent to them.

In disposing of the case, the Supreme Court found Atty. Villarin to have acted without malice when he sent the letters to vacate to Complainants since a lawyer “is expected to champion the cause of his client with wholehearted fidelity, care, and devotion.” This simply means that his client is entitled to the benefit of any and every remedy and defense that is recognized by our laws, to wit:

“Proceeding to the contested demand letters, we adopt the recommendation of the IBP board of governors that the issuance thereof was not malicious.  According to its Report, respondent counsel merely acted on his legal theory that the HLURB Decision was not binding on his client, since it had not received the summons. Espousing the belief that the proceedings in the HLURB were void, Villarin pursued the issuance of demand letters as a prelude to the ejectment case he would later on file to protect the property rights of his client.

As the lawyer of Purence Realty, respondent is expected to champion the cause of his client with wholehearted fidelity, care, and devotion. This simply means that his client is entitled to the benefit of any and every remedy and defense — including the institution of an ejectment case — that is recognized by our property laws. In Legarda v. Court of Appeals, we held that in the full discharge of their duties to the client, lawyers shall not be afraid of the possibility that they may displease the general public.”

However, the Supreme Court reminded the Bar that the duty to pursue a client’s case with zeal comes with a limitation and that is, that any means adopted by a lawyer in pursuit of a client’s claim should be within the bounds of law. “[Lawyers] should only make such defense only when they believe it to be honestly debatable under the law.”

                “Nevertheless, the Code of Professional Responsibility provides the limitation that lawyers shall perform their duty to the client within the bounds of law. They should only make such defense only when they believe it to be honestly debatable under the law. In this case, respondent's act of issuing demand letters, moved by the understanding of a void HLURB Decision, is legally sanctioned. If his theory holds water, the notice to vacate becomes necessary in order to file an action for ejectment. Hence, he did not resort to any fraud or chicanery prohibited by the Code, just to maintain his client's disputed ownership over the subdivision lots.

Even so, respondent cannot be considered free of error. The factual findings of the IBP board of governors reveal that in his demand letter, he brazenly typified one of the complainants, Florentina Lander, as an illegal occupant. However, this description is the exact opposite of the truth, since the final and executory HLURB Decision had already recognized her as a subdivision lot buyer who had a right to complete her payments in order to occupy her property. Respondent is very much aware of this ruling when he filed an Omnibus Motion to set aside the HLURB Decision and the appurtenant Writ of Execution.

Given that respondent knew that the aforementioned falsity totally disregarded the HLURB Decision, he thus advances the interest of his client through means that are not in keeping with fairness and honesty. What he does is clearly proscribed by Rule 19.01 of the Code of Professional Responsibility, which requires that a lawyer shall employ only fair and honest means to attain lawful objectives. Lawyers must not present and offer in evidence any document that they know is false.”

As can be seen from the above disquisition, while the Supreme Court agreed with the findings of the IBP that no malice attended the sending of the letters to Complainants by Atty. Villarin, the latter’s act of naming or referring to one of the complainants as an “illegal occupant”, when he very well knew of the finality of the HLURB’s decision in their (one of the Complainants) favor is not in accord with the ethics of the legal profession, particularly Rule 19.01 of the Code of Professional Responsibility, which requires a lawyer to “employ only fair and honest means to attain lawful objectives” and not to “present and offer in evidence any document that they know is false.”

Accordingly, the Supreme Court reprimanded Atty. Villarin with a warning that a repetition of the same or similar act shall be dealt with more severely.

CIVIL PROCEDURE; Order granting Motion for Execution Pending Appeal Must State the Good Reason/s Therefor

In Carpio v. Court of Appeals, et al., G.R. No. 183102, 27 February 2013, the Supreme Court held that when a Motion for Execution Pending Appeal is granted by the trial court, the said court must state or indicate the good reasons therefor in its order, otherwise the issuance of a writ pending appeal will be void and of no effect.

“In any case, we proceed to rule that because the writ of execution was void, all actions and proceedings conducted pursuant to it were also void and of no legal effect. To recall, this Court affirmed the Decision of the CA in CA-G.R. SP No. 84632, annulling the RTC's Omnibus Order granting the Motion for Immediate Execution pending appeal. We affirmed the CA Decision because of the RTC's failure to state any reason, much less good reason, for the issuance thereof as required under Section 2, Rule 39. In the exercise by the trial court of its discretionary power to issue a writ of execution pending appeal, we emphasize the need for strict compliance with the requirement for the statement of a good reason, because execution pending appeal is the exception rather than the rule.

Since the writ of execution was manifestly void for having been issued without compliance with the rules, it is without any legal effect. In other words, it is as if no writ was issued at all. Consequently, all actions taken pursuant to the void writ of execution must be deemed to have not been taken and to have had no effect. Otherwise, the Court would be sanctioning a violation of the right to due process of the judgment debtors — respondent-spouses herein.” (Emphasis and underscoring supplied)

CIVIL LAW; Damages: Actual, Temperate, Exemplary, and Moral Damages

Gonzales, et al. v. Camarines Sur II Electric Cooperative, Inc. (CASURECO), et al., G.R. No. 181096, 6 March 2013, is a case on the propriety of the grant of damages, as well as the amounts thereof, to Petitioners.

Actual and Temperate Damages

In upholding the appellate court’s ruling that actual damages cannot be granted, the Supreme Court explained that since no documentary proof was presented by the Petitioners to support their claim of actual damages, it may not be awarded. Indeed, while the Petitioners were able to enumerate their expenditures in their Complaint, they admittedly failed to back it up with the proper documentary proof (i.e., receipts or invoices):

“Despite the enumeration of expenditures, the claim of petitioners for actual damages cannot be granted. In People v. Buenavidez, this Court stressed that only expenses supported by receipts, and not merely a list thereof, shall be allowed as bases for the award of actual damages. As admitted by petitioners themselves, none of these expenses, which were incurred over a span of seven years, was backed up by documentary proof such as a receipt or an invoice. Considering, therefore, that adequate compensation is awarded only if the pecuniary loss suffered is proven by competent proof and by the best evidence obtainable showing the actual amount of loss, the CA correctly denied petitioners' claims for actual damages.

The Supreme Court, however, granted the alternative prayer of temperate damages in favor of the Petitioners since both the court a quo and the trial court recognized that there was some pecuniary loss suffered:

“Here, the RTC acknowledged that petitioners suffered some form of pecuniary loss when it accepted as fact that they went back and forth to the office of CASURECO at Del Rosario, Naga City, to settle the account of the Samsons. Although the CA did not review this factual finding, we find that the RTC's pronouncement on this matter was nonetheless substantiated by the evidence on record given the attached letters with postages, documents, and testimonies that signified an ongoing transaction between the parties to settle the electric charges. Indeed, they were at least able to prove that they incurred undue costs in pursuing their rights against CASURECO.

Hence, the award of temperate damages to petitioners is in order. Given that these are more than nominal but less than compensatory damages, we deem it reasonable under the circumstances to award them P3,000.”

Note that, in the above case, the Supreme Court explained that while the issue on the grant of temperate damages was raised for the first time on appeal, it may nevertheless grant the same considering that the newly-raised question or issue is related closely or dependent on an assigned error, citing the case of Viron Transportation Co., Inc. v. Delos Santos, 399 Phil. 243 (2000).

Also, even if the pecuniary loss suffered by the claimant is capable of documentary proof, the Supreme Court explained that an award of temperate damages is not precluded, as it is “drawn from equity to provide relief to those definitely injured.” Hence, “it may be allowed so long as the court is convinced that the aggrieved party suffered some pecuniary loss.”

“Article 2224 of the Civil Code provides that temperate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.

Notwithstanding the wording of the Civil Code cited above, we have already settled in jurisprudence that even if the pecuniary loss suffered by the claimant is capable of proof, an award of temperate damages is not precluded. The grant of temperate damages is drawn from equity to provide relief to those definitely injured. Therefore, it may be allowed so long as the court is convinced that the aggrieved party suffered some pecuniary loss.”

Exemplary Damages and Attorney’s Fees

On the issue of exemplary damages, the Supreme Court sided with the Petitioners and ruled that its deletion was improper, given the findings of the court a quo that there was evident bad faith on the part of CASURECO, which clearly betrayed the compromise agreement it entered into with the Petitioners by refusing to remove old accountabilities of the apartment unit, and unjustifiably and repetitively reflecting them for 7 years in several electric bills of the Petitioners with threat of electric service disconnection.

  

Inasmuch as there was a finding of evident bad faith on the part of CASURECO, the Supreme Court likewise reinstated the award of attorney’s fees, since the Civil Code provides that attorney’s fees shall be given to the claimant if “exemplary damages are awarded; or if the defendant acted in gross and evident bad faith in refusing to satisfy the former’s plainly valid, just and demandable claim.”

               

Moral Damages

On the reduction of the amount awarded as moral damages by the CA, the Supreme Court reiterated its previous ruling that the fairness thereof may be subject of appellate determination and reduced if found to be far too excessive compared to the actual loss sustained by the claimants.

In this case, however, the Supreme Court held that the award of 50,000.00 as damages is proper in view of the severe sufferings inflicted on the Petitioners by CASURECO. The Supreme Court noted the fact that CASURECO failed to even explain why they failed to update their records despite the compromise agreement and the constant reminders of the Petitioners over the span of 7 years.

CIVIL PROCEDURE; Courts should exercise caution in exercising their authority or power to dismiss a case motu proprio on the ground of the plaintiff’s failure to prosecute

In Republic v. Heirs of Enrique Oribello, Jr., et al., G.R. No. 199501, 6 March 2013, the Supreme Court reminded trial courts to exercise their power to dismiss a case motu proprio with caution. According to the Supreme Court, “[r]esort to such action must be determined according to the procedural history of each case, the situation at the time of the dismissal, and the diligence (or the lack thereof) of the plaintiff to proceed therein. If a lesser sanction would achieve the same result, then dismissal should not be resorted to, thus:

“While it is within the trial court's discretion to dismiss motu proprio the complaint on the ground of plaintiff's failure to prosecute, it must be exercised with caution. Resort to such action must be determined according to the procedural history of each case, the situation at the time of the dismissal, and the diligence (or the lack thereof) of the plaintiff to proceed therein.  As the Court held in Gomez v. Alcantara, if a lesser sanction would achieve the same result, then dismissal should not be resorted to. 

‘Unless a party's conduct is so indifferent, irresponsible, contumacious or slothful as to provide substantial grounds for dismissal, i.e., equivalent to default or non-appearance in the case, the courts should consider lesser sanctions which would still amount to achieving the desired end. In the absence of a pattern or scheme to delay the disposition of the case or of a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense with rather than wield their authority to dismiss. (Emphasis supplied)’”

In Republic, the trial court therein deemed the Republic of the Philippines to have abandoned its complaint for reversion due to non-appearance at a hearing. The respondent argued that this declaration of abandonment is tantamount to a dismissal of the case for failure to prosecute. Since the Republic failed to appeal the said order, the order should be considered final, hence properly leading to the dismissal of the case.

The Supreme Court did not side with the respondent on this point. Instead, the Supreme Court examined the records and noted that the Republic was merely deemed to have terminated its presentation of evidence. According to the High Court, the records of the case clearly belie the argument that there was manifest lack of intent to prosecute. While there was delay, this was not sufficient to cause the dismissal of the case motu proprio:

“Based on the records, petitioner has presented testimonial evidence on various hearing dates and marked numerous documents during the trial of Civil Case No. 225-0-92. Such acts do not manifest lack of interest to prosecute. Admittedly there was delay in this case. However, such delay is not the delay warranting dismissal of the complaint. To be a sufficient ground for dismissal, delay must not only be lengthy but also unnecessary resulting in the trifling of court processes. There is no proof that petitioner intended to delay the proceedings in this case, much less abuse judicial processes.

While petitioner failed to appear on the hearing of 12 September 1997, such failure does not constitute a ground for the dismissal of the reversion complaint for failure to prosecute. Petitioner's non-appearance on that date should simply be construed as a waiver of the right to present additional evidence.” (Emphasis and underscoring supplied)