POLITICAL LAW1. Atong Paglaum, Inc. vs Commission on Elections694 SCRA 477 Political Law Constitutional Law Legislative Department Party-List SystemThis case partially abandoned the rulings inAng Bagong Bayani vs COMELECandBANAT vs COMELEC.Atong Paglaum, Inc. and 51 other parties were disqualified by the Commission on Elections in the May 2013 party-list elections for various reasons but primarily for not being qualified as representatives for marginalized or underrepresented sectors.Atong Paglaum et al then filed a petition for certiorari against COMELEC alleging grave abuse of discretion on the part of COMELEC in disqualifying them.ISSUE:Whether or not the COMELEC committed grave abuse of discretion in disqualifying the said party-lists.HELD:No. The COMELEC merely followed the guidelines set in thecases ofAng Bagong BayaniandBANAT. However, the Supreme Court remanded the cases back to the COMELEC as the Supreme Court now provides for new guidelines which abandoned some principles established in the two aforestated cases. The new guidelines are as follows:I.Parameters. In qualifying party-lists, the COMELEC must use the following parameters:1. Three different groups may participate in the party-list system: (1)nationalparties or organizations, (2)regional parties or organizations, and (3)sectoral parties or organizations.2.Nationalparties or organizations and regional parties or organizations do not need to organize along sectoral lines and do not need to represent any marginalized and underrepresented sector.3. Political parties can participate in party-list elections provided they register under the party-list system and do not field candidates in legislative district elections. A political party, whether major or not, that fields candidates in legislative district elections can participate in party-list elections only through its sectoral wing that can separately register under the party-list system. The sectoral wing is by itself an independent sectoral party, and is linked to a political party through a coalition.4. Sectoral parties or organizations may either be marginalized and underrepresented or lacking in well-defined political constituencies. It is enough that their principal advocacy pertains to the special interest and concerns of their sector. The sectors that are marginalized and underrepresented include labor, peasant, fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, and overseas workers. The sectors that lack well-defined political constituencies include professionals, the elderly, women, and the youth.5. A majority of the members of sectoral parties or organizations that represent the marginalized and underrepresented must belong to the marginalized and underrepresented sector they represent. Similarly, a majority of the members of sectoral parties or organizations that lack well-defined political constituencies must belong to the sector they represent. The nominees of sectoral parties or organizations that represent the marginalized and underrepresented, or that represent those who lack well-defined political constituencies, either must belong to their respective sectors, or must have a track record of advocacy for their respective sectors. The nominees ofnationaland regional parties or organizations must be bona-fide members of such parties or organizations.6.National, regional, and sectoral parties or organizations shall not be disqualified if some of their nominees are disqualified, provided that they have at least one nominee who remains qualified.II.In theBANATcase, major political parties are disallowed, as has always been the practice, from participating in the party-list elections. But, since theres really no constitutional prohibition nor a statutory prohibition, major political parties can now participate in the party-list systemprovided that they do so through their bona fide sectoral wing(see parameter 3 above).Allowingmajor political partiesto participate, albeit indirectly, in the party-list elections will encouragethem to work assiduously in extending their constituencies to the marginalized and underrepresented and to those who lack well-defined political constituencies.Ultimately, the Supreme Court gave weight to the deliberations of the Constitutional Commission when they were drafting the party-list system provision of the Constitution. The Commissioners deliberated that it was their intention to include all parties into the party-list elections in order to develop a political system which is pluralistic and multiparty. (In theBANATcase, Justice Puno emphasized that the will of the people should defeat the intent of the framers; and that the intent of the people, in ratifying the 1987 Constitution, is that the party-list system should be reserved for the marginalized sectors.)III. The Supreme Court also emphasized that the party-list system is NOT RESERVED for the marginalized and underrepresented or for parties who lack well-defined political constituencies. It is also fornationalor regional parties. It is also for small ideology-based and cause-oriented parties who lack well-defined political constituencies. The common denominator however is that all of them cannot, they do not have the machinery unlike major political parties, to field or sponsor candidates in the legislative districts but they can acquire the needed votes in anationalelection system like the party-list system of elections.If the party-list system is only reserved for marginalizedrepresentation, then the system itself unduly excludes other cause-oriented groups from running for a seat in the lower house.As explained by the Supreme Court, party-list representationshould not be understood to include onlylabor, peasant, fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, overseas workers, and other sectors that by their nature areeconomicallyat the margins of society. It should be noted that Section 5 ofRepublicAct 7941 includes, among others, in its provision for sectoral representation groups of professionals, which are not per se economically marginalized but are still qualified as marginalized, underrepresented, and do not havewell-defined political constituencies as they areideologically marginalized.

2. Maria Carolina Araullo vs Benigno Aquino IIIPolitical Law Constitutional Law Separation of Powers Fund Realignment Constitutionality of the Disbursement Acceleration ProgramPower of the Purse Executive ImpoundmentWhen President Benigno Aquino III took office, his administration noticed the sluggish growth of the economy. The World Bank advised that the economy needed a stimulus plan. Budget Secretary Florencio Butch Abad then came up with a program called the Disbursement Acceleration Program (DAP).The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the Executive to realign funds from slow moving projects to priority projects instead of waiting for next years appropriation. So what happens under the DAP was that if a certain government project is being undertaken slowly by a certain executive agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared as savings by the Executive and said funds will then be reallotted to other priority projects. The DAP program did work to stimulate the economy as economic growth was in fact reported and portion of such growth was attributed to the DAP (as noted by the Supreme Court).Other sources of the DAP include the unprogrammed funds from the General Appropriations Act (GAA). Unprogrammed funds are standby appropriations made by Congress in the GAA.Meanwhile, in September 2013, Senator Jinggoy Estrada made an expos claiming that he, and other Senators, received Php50M from the President as an incentive for voting in favor of the impeachment of then Chief Justice Renato Corona. Secretary Abad claimed that the money was taken from the DAP but was disbursed upon the request of the Senators.This apparently opened a can of worms as it turns out that the DAP does not only realign funds within the Executive. It turns out that some non-Executive projects were also funded; to name a few: Php1.5B for the CPLA (Cordillera Peoples Liberation Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the Quezon Province, P50-P100M for certain Senators each, P10B for Relocation Projects, etc.This prompted Maria Carolina Araullo, Chairperson of theBagong Alyansang Makabayan, and several other concerned citizens to file various petitions with the Supreme Court questioning the validity of the DAP. Among their contentions was:DAP is unconstitutional because it violates the constitutional rule which provides that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law.Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of Executive Order 292 (power of the President to suspend expenditures and authority to use savings, respectively).Issues:I. Whether or not the DAP violates the principle no money shall be paid out of the Treasury except in pursuance of an appropriation made by law (Sec. 29(1), Art. VI, Constitution).II. Whether or not the DAP realignments can be considered as impoundments by the executive.III. Whether or not the DAP realignments/transfers are constitutional.IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.V. Whether or not the Doctrine of Operative Fact is applicable.HELD:I.No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program by the Executive and is not a fund nor is it an appropriation. It is a program for prioritizing government spending. As such, it did not violate the Constitutional provision cited in Section 29(1), Art. VI of the Constitution. In DAP no additional funds were withdrawn from the Treasury otherwise, an appropriation made by law would have been required. Funds, which were already appropriated for by the GAA, were merely being realigned via the DAP.II.No, there is no executive impoundment in the DAP. Impoundment of funds refers to the Presidents power to refuse to spend appropriations or to retain or deduct appropriations for whatever reason. Impoundment is actually prohibited by the GAA unless there will be an unmanageable national government budget deficit (which did not happen). Nevertheless, theres no impoundment in the case at bar because whats involved in the DAP was the transfer of funds.III.No, the transfers made through the DAP were unconstitutional. It is true that the President (and even the heads of the other branches of the government) are allowed by the Constitution to make realignment of funds, however, such transfer or realignment should only be made within their respective offices. Thus, no cross-border transfers/augmentations may be allowed. But under the DAP, this was violated because funds appropriated by the GAA for the Executive were being transferred to the Legislative and other non-Executive agencies.Further, transfers within their respective offices also contemplate realignment of funds to an existing project in the GAA. Under the DAP, even though some projects were within the Executive, these projects are non-existent insofar as the GAA is concerned because no funds were appropriated to them in the GAA. Although some of these projects may be legitimate, they are still non-existent under the GAA because they were not provided for by the GAA. As such, transfer to such projects is unconstitutional and is without legal basis.On the issue of what are savingsThese DAP transfers are not savings contrary to what was being declared by the Executive. Under the definition of savings in the GAA, savings only occur, among other instances, when there is an excess in the funding of a certain project once it is completed, finallydiscontinued, or finally abandoned. The GAA does not refer to savings as funds withdrawn from a slow moving project. Thus, since the statutory definition of savings was not complied with under the DAP, there is no basis at all for the transfers. Further, savings should only be declared at the end of the fiscal year. But under the DAP, funds are already being withdrawn from certain projects in the middle of the year and then being declared as savings by the Executive particularly by the DBM.IV.No. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the law, such funds may only be used if there is a certification from the National Treasurer to the effect that the revenue collections have exceeded the revenue targets. In this case, no such certification was secured before unprogrammed funds were used.V.Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being declared as unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped stimulate the economy. It has funded numerous projects. If the Executive is ordered to reverse all actions under the DAP, then it may cause more harm than good. The DAP effects can no longer be undone. The beneficiaries of the DAP cannot be asked to return what they received especially so that they relied on the validity of the DAP. However, the Doctrine of Operative Fact may not be applicable to the authors, implementers, and proponents of the DAP if it is so found in the appropriate tribunals (civil, criminal, or administrative) that they have not acted in good faith.

3. Greco Belgica vs Executive Secretary Paquito Ochoa710 SCRA 1 Political Law Constitutional Law Local Government Invalid DelegationLegislative Department Invalid Delegation of Legislative PowerThis case is consolidated withG.R. No. 208493 andG.R. No. 209251.The so-called pork barrel system has been around in the Philippines since about 1922. Pork Barrel is commonly known as the lump-sum, discretionary funds of the members of the Congress. It underwent several legal designations from Congressional Pork Barrel to the latest Priority Development Assistance Fund orPDAF. Theallocationfor the pork barrel is integrated in the annualGeneral Appropriations Act(GAA).Since 2011, theallocationof the PDAF has been done in the following manner:a.P70 million: for each member of the lower house; broken down to P40 million for hard projects (infrastructure projects like roads, buildings, schools, etc.), and P30 million for soft projects (scholarship grants, medical assistance, livelihood programs, IT development, etc.);b.P200 million: for each senator; broken down to P100 million for hard projects, P100 million for soft projects;c.P200 million: for the Vice-President;broken down to P100 million for hard projects, P100 million for soft projects.The PDAF articles in the GAA do provide forrealignment of fundswhereby certain cabinet members may request for the realignment of funds into their department provided that the request for realignment is approved or concurred by the legislator concerned.Presidential Pork BarrelThe president does have his own source of fund albeit not included in the GAA. The so-called presidential pork barrel comes from two sources: (a) theMalampaya Funds, from the Malampaya Gas Project this has been around since 1976, and (b) the Presidential Social Fund which is derived from theearningsof PAGCOR this has been around since about 1983.Pork Barrel Scam ControversyEver since, the pork barrel system has been besieged by allegations of corruption. In July 2013, six whistle blowers, headed by Benhur Luy, exposed that for the last decade, the corruption in the pork barrel system had been facilitated by Janet Lim Napoles. Napoles had been helping lawmakers in funneling their pork barrel funds into about 20 bogus NGOs (non-government organizations) whichwould make it appear that government funds are being used in legit existing projects but are in fact going to ghost projects. An audit was then conducted by the Commission on Audit and the results thereof concurred with the exposes of Luy et al.Motivated by the foregoing, Greco Belgica and several others, filed various petitions before the Supreme Court questioning the constitutionality of the pork barrel system.ISSUES:I. Whether or not the congressional pork barrel system is constitutional.II. Whether or not presidential pork barrel system is constitutional.HELD:I.No, the congressional pork barrel system is unconstitutional. It is unconstitutional because it violates the following principles:a. Separation of PowersAs a rule, the budgeting power lies in Congress. It regulates the release of funds (power of the purse). The executive, on the other hand, implements the laws this includes the GAA to which the PDAF is a part of. Only the executive may implement the law but under the pork barrel system, whats happening was that, after theGAA, itself a law, was enacted, the legislators themselves dictate as to which projects their PDAF funds should be allocated to a clear act of implementing the law they enacted a violation of the principle of separation of powers. (Note in the older case ofPHILCONSA vs Enriquez, it was ruled that pork barrel, then called as CDF or the Countrywide Development Fund, was constitutional insofar as the legislators only recommend where their pork barrel funds go).This is also highlighted by the fact that in realigning the PDAF, the executive will still have to get the concurrence of the legislator concerned.b. Non-delegability of Legislative PowerAs a rule, the Constitution vests legislative power in Congress alone. (The Constitution does grant the people legislative power but only insofar as the processes of referendum and initiative are concerned). That being, legislative power cannot be delegated by Congress for it cannot delegate further that which was delegated to it by the Constitution.Exceptions to the rule are:(i) delegated legislative power to local government units but this shall involve purely local matters;(ii) authority of the Presidentto, by law, exercise powers necessary and proper to carry out a declared national policy in times of war or other national emergency,or fix within specified limits, and subject to such limitations and restrictions as Congress may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.In this case, the PDAF articles which allow the individual legislator to identify the projects to which his PDAF money should go to is a violation of the rule on non-delegability of legislative power. The power to appropriate funds is solely lodged in Congress (in the two houses comprising it) collectively and not lodged in the individual members. Further, nowhere in the exceptions does it state that the Congress can delegate the power to the individual member of Congress.c. Principle of Checks and BalancesOne feature in the principle of checks and balances is the power of the president to veto items in the GAA which he may deem to be inappropriate. But this power is already being undermined because of the fact that once the GAA is approved, the legislator can now identify the project to which he will appropriate his PDAF. Under such system, how can the president veto the appropriation made by the legislator if the appropriation is made after the approval of the GAA again,Congress cannot choose a mode of budgeting which effectively renders the constitutionally-given power of the President useless.d. Local AutonomyAs a rule, the local governments have the power to manage their local affairs. Through their Local Development Councils (LDCs), the LGUs can develop their own programs and policies concerning their localities. But with the PDAF, particularly on the part of the members of the house of representatives, whats happening is that a congressman can either bypass or duplicate a project by the LDC and later onclaimit as his own. This is an instance where the national government (note, a congressman is a national officer) meddles with the affairs of the local government and this is contrary to the State policy embodied in the Constitution on local autonomy. Its good if thats all that is happening under the pork barrel system but worse, the PDAF becomes more of a personal fund on the part of legislators.II.Yes, the presidential pork barrel is valid.The main issueraised by Belgica et al against the presidential pork barrel is that it is unconstitutional because it violates Section 29 (1), Article VI of the Constitution which provides:No money shall be paid out of the Treasury except in pursuance of anappropriationmade by law.Belgica et al emphasizedthat the presidential pork comes from theearningsof the Malampaya and PAGCOR and not from any appropriation from a particular legislation.The Supreme Court disagrees as it ruled that PD 910, which created the Malampaya Fund, as well as PD 1869 (as amended by PD 1993), which amendedPAGCORs charter, provided for the appropriation, to wit:(i) PD 910: Section 8 thereof provides that all fees, among others, collected from certain energy-related ventures shall form part of a special fund (the Malampaya Fund) which shall be used to further finance energy resource development and for other purposes which the President may direct;(ii) PD 1869, as amended: Section 12 thereof provides that a part of PAGCORs earnings shall be allocated to a General Fund (the Presidential Social Fund) which shall be used in government infrastructure projects.These are sufficient laws which met the requirement of Section 29, Article VI of the Constitution. The appropriation contemplated therein does not have to be a particular appropriation as it can be a general appropriation as in the case of PD 910 and PD 1869.

Related news:SC strikes down certain provisions of DAP as unconstitutional(Updated 4:29 p.m.)The Supreme Court has voted unanimously to strike down as unconstitutional specific acts under the controversial Disbursement Acceleration Program (DAP) of the Aquino government.

In a press briefing in Manila on Tuesday, SC spokesman Theodore Te said the high court sitting en banc declared the following "acts and practices" under the DAP, National Budget Circular No. 541, and related issuancesas unconstitutional:

- the withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying with the statutory definition of savings contained in the General Appropriations Act;

- the cross-border transfers of the savings of the executive to augment the appropriations of other offices outside the executive; and

- the funding of projects, activities and programs that were not covered by any appropriation in the GAA.

Te said these acts violated Section 25 (5) Article VI of the 1987 Constitution and the doctrines of separation of powers.

The National Budget Circular No. 541, which sanctions the DAP, allows the DBM to withdraw unobligated allotments of agencies with low levels of obligations as of June 30, 2012, both for continuing and current allotments.

The court also ruled as void the portion of the DAP that allows the use of unprogrammed funds even without a certification from the National Treasurer saying that revenue collections exceeded the revenue targets due to non-compliance with the conditions provided in the relevant GAA.Te said the high court en banc voted 13-0-1, with Associate Justice Teresita Leonardo-De Castro recusing.A court insider said the petitioners were "partially granted" because "other prayers of the petitioners, like the disclosure of documents, were not granted because they were moot."Nine petitions have been filed with the high court contesting the legality of the DAP, a discretionary fund that hit the headlines after Sen. Jinggoy Estrada revealed that several senators received P50 million to P100 million after the conviction of Chief Justice Renato Corona by the Senate impeachment court.

Te said the dispositive portion of the ruling did not mention anything about liabilities of the government officials involved in the DAP.

Asked to comment on the SC ruling, presidential spokesperson Edwin Lacierda said in a text message sent to GMA News Online thatthey will wait first for the full decision to come out."We are not in a position to make a comment until we see the full decision," he said.

Savings or presidential pork barrel?The Aquino government said the fund came from "unobligated allotments of all agencies with low level of obligations as of June 30, 2012 both for continuing and current allotment" that President Benigno Aquino III ordered withdrawn on June 27, 2012.The withdrawn funds were deemed as savings by Aquino and Budget Sec. Florencio "Butch" Abad, and realigned to augment existing programs and projects of other agencies and fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented within the current year.But the petitioners have argued the DAP funds could not be artificially deemed as savings as defined by the Department of Budget and Management and the General Appropriations Act of 2012 since there couldn't be savings in the middle of a fiscal year, especially if the projects or programs for which these funds were allocated by law, haven't been completed, discontinued or abandoned.They said the funds accumulated through the DAP were part of the presidential pork barrel, where only the sitting President, or in this case, Aquino, can determine where the funds will go. They said this could be used for patronage politics.During oral arguments last January, the government had insisted that the SC debate on the issue was already moot since the Aquino administration has already stopped the implementation of the DAP.Abad, during the Jan. 28 debates, said the countrys economic managers have already recommended to Aquino to stop the implementation of the DAP.Malacaang had reiterated the President's statement that DAP was essential in boosting economic growth.Te said copies of the resolution would be available "within the next few days."

"The decision itself will be promulgated as soon as editing is done and separate opinions are submitted," he said.

The SC spokesman said separate opinions will be submitted by Senior Associate Justice Antonio Carpio, and Associate Justices Arturo Brion, Mariano del Castillo, Estela Perlas-Bernabe and Marvic Leonen.LABOR LAW

CIVIL LAW1. Spouses Teodoro and Nanette Perea vs Spouses Nicolas and Teresita ZarateCivil Law Common Carrier Private School Transport are Common CarriersTorts and Damages Heirs of a high school student may be awarded damages for loss incomeIn June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their (Zarates) son, Aaron Zarate, to and from school. The Pereas were owners of a van being used for private school transport.At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were on board including Aaron, decided to take a short cut in order to avoid traffic. The usual short cut was a railroad crossing of the Philippine National Railway (PNR).Alfaro saw that thebarandilla(the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He then tried to overtake a bus. However, there was in fact an oncoming train but Alfaro no longer saw the train as his view was already blocked by the bus he was trying to overtake. The bus was able to cross unscathed but the vans rear end was hit. During the collision, Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed. He was only 15 years old.It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because the vans stereo was playing loudly.The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict. Their cause of action against the Pereas was based on breach of contract of common carriage.In their defense, the Pereas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they made sure that he had a drivers license and that he was not involved in any accident prior to his being hired. In short, they observed the diligence of a good father in selecting their employee.PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for railroad crossing (really, thats their defense!).The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and the CA, they awarded damages in favor of the Zarates for the loss of earning capacity of their dead son.The Pereas appealed. They argued that the award was improper as Aaron was merely a high school student, hence, the award of such damages was merely speculative. They cited the case of People vs Teehankee where the Supreme Court did not award damages for the loss of earning capacity despite the fact that the victim there was enrolled in a pilot school.ISSUES:Whether or not the defense of due diligence of a good father by the Pereas is untenable. Whether or not the award of damages for loss of income is proper.HELD:Yes, in both issues.Defense of Due Diligence of a Good FatherThis defense is not tenable in this case. The Pereas are common carriers. They are not merely private carriers. (Prior to this case, the status of private transport for school services or school buses is not well settled as to whether or not they are private or common carriers but they were generally regarded as private carriers). Private transport for schools are common carriers. The Pereas, as the operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a limited clientle, the Pereas operated as a common carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular school living within or near where they operated the service and for a fee.Being a common carrier, what is required of the Pereas is not mere diligence of a good father. What is specifically required from them by law is extraordinary diligence a fact which they failed to prove in court. Verily, their obligation as common carriers did not cease upon their exercise of diligently choosing Alfaro as their employee.(It is recommended that you read thefull text, the Supreme Court made an elaborate and extensive definition of common and private carriers as well as their distinctions.)Award of Damages for Aarons loss of earning capacity despite he being a high school student at the time of his deathThe award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied person. Further, the basis of thecomputationof his earning capacity was not on what he would have become. It was based on the current minimum wage. The minimum wage was validly used because with his circumstances at the time of his death, it is most certain that had he lived, he would at least be a minimum wage earner by the time he starts working. This is not being speculative at all.The Teehankee case was different because in that case, the reason why no damages were awarded for loss of earning capacity was that the defendants there were already assuming that the victim would indeed become a pilot hence, that made the assumption speculative. But in the case of Aaron, there was no speculation as to what he might be but whatever hell become, it is certain that he will at the least be earning minimum wage.

2. DARIO NACAR VS. GALLERY FRAMES 703 SCRA 439 Civil Law Torts and Damages Actual and Compensatory Damages Legal Rate of Interest is now 6%Labor Law Labor Relations Illegal Dismissal Computationof Monetary BenefitsFacts: Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he was dismissed without cause by Gallery Frames on January 24, 1997. On October 15, 1998, the Labor Arbiter (LA) found Gallery Frames guilty of illegal dismissal hence the Arbiter awarded Nacar P158,919.92 in damages consisting of backwages and separation pay.Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision of the Labor Arbiter and the decision became final on May 27, 2002.After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he alleged that his backwages should be computed from the time of his illegal dismissal (January 24, 1997) until the finality of the SC decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the reckoning point of thecomputationshould only be from the time Nacar was illegally dismissed (January 24, 1997) until the decision of the LA (October 15, 1998). The LA reasoned that the said date should be the reckoning point because Nacar did not appeal hence as to him, that decision became final and executory.ISSUE:Whether or not the Labor Arbiter is correct.HELD:No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where the dismissed employee wins, or loses but wins on appeal). The first part is the ruling that the employee was illegally dismissed. This is immediately final even if the employer appeals but will be reversed if employer wins on appeal. The second part is the ruling on the award of backwages and/or separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the decision of the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the day when the appellate courts decision shall become final. Hence, as a consequence, the liability of the employer, if he loses on appeal, will increase this is just but a risk that the employer cannot avoid when it continued to seek recourses against the Labor Arbiters decision. This is also in accordance with Article 279 of the Labor Code.Anent the issue of award of interest in the form of actual or compensatory damages, the Supreme Court ruled that the old case ofEastern Shipping Lines vs CAis already modified by the promulgation of the Bangko Sentral ng Pilipinas Monetary Board Resolution No. 796 which lowered the legal rate of interest from 12% to 6%. Specifically, the rules on interest are now as follows:1. Monetary Obligations ex. Loans:a. If stipulated in writing:a.1. shall run from date of judicial demand (filing of the case)a.2. rate of interest shall be that amount stipulatedb. If not stipulated in writingb.1. shall run from date of default (either failure to pay upon extra-judicial demand or upon judicial demand whichever is appropriate and subject to the provisions of Article 1169 of the Civil Code)b.2. rate of interest shall be 6% per annum2. Non-Monetary Obligations (such as the case at bar)a. If already liquidated, rate of interest shall be 6% per annum, demandable from date of judicial or extra-judicial demand (Art. 1169, Civil Code)b. If unliquidated, no interestExcept: When later on established with certainty. Interest shall still be 6% per annum demandable from the date of judgment because such on such date, it is already deemed that the amount of damages is already ascertained.3. Compounded Interest- This is applicable to both monetary and non-monetary obligations- 6% per annum computed against award of damages (interest) granted by the court. To be computed from the date when the courts decision becomes final and executory until the award is fully satisfied by the losing party.4. The 6% per annum rate of legal interest shall be applied prospectively:- Final and executory judgments awarding damages prior to July 1, 2013 shall apply the 12% rate;- Final and executory judgments awarding damages on or after July 1, 2013 shall apply the 12% rate for unpaid obligations until June 30, 2013; unpaid obligations with respect to said judgments on or after July 1, 2013 shall still incur the 6% rate.Michael Pealosa vs Candido Villanueva

TAXATION LAW

MERCANTILE LAW1. Wilson Gamboa vs Secretary Margarito TevesMercantile Law Corporation Code Capital What Capital meansIn 1928, the Philippine Long Distance Telephone Company (PLDT) was granted a franchise to engage in the business of telecommunications. Telecommunications is a nationalized area of activity where a corporation engaged therein must have 60% of its capital be owned by Filipinos as provided for by Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution, to wit:Section 11. No franchise, certificate, or any other form ofauthorizationfor the operation of a public utility shall be granted except to citizens of the Philippines or to corporations orassociationsorganized under the laws of the Philippines,at least sixty per centum of whosecapitalis owned by such citizens; xxxIn 1999, First Pacific, a foreign corporation, acquired 37% of PLDT common shares. Wilson Gamboa opposed said acquisition because at that time, 44.47% of PLDT common shares already belong to various other foreign corporations. Hence, if First Pacifics share is added, foreign shares will amount to 81.47% or more than the 40% threshold prescribed by the Constitution.Margarito Teves, as Secretary of Finance, and the other respondents argued that this is okay because in totality, most of the capital stocks of PLDT is Filipino owned. It was explained that all PLDT subscribers, pursuant to a law passed by Marcos, are considered shareholders (they hold serial preferred shares). Broken down, preferred shares consist of 77.85% while common shares consist of 22.15%.Gamboa argued that the term capital should only pertain to the common shares because that is the share which is entitled to vote and thus have effective control over the corporation.ISSUE:What does the term capital pertain to? Does the term capital in Section 11, Article XII of the Constitution refer to common shares or to the total outstanding capital stock (combined total of common and non-voting preferred shares)?HELD:Gamboa is correct. Capital only pertains to common shares. It will be absurd for capital to pertain as inclusive of non-voting shares. This is because a corporation consisting of 1,000,000 capital stocks, 100 of which are common shares which are foreign owned and the rest (999,900 shares) are preferred shares which are non-voting shares and are Filipino owned, would seem compliant to the constitutional requirement here 99.999% is Filipino owned. But if scrutinized, the controlling stock the voting stock or that miniscule .001% is foreign owned. That is absurd.In this case, it is true that at least 77.85% of the capital is owned by Filipinos (the PLDT subscribers). But these subscribers, who hold non-voting preferred shares, have no control over the corporation. Hence, capital should only pertain to common shares.Thus, to be compliant with the constitution, 60% of the common shares of PLDT should be Filipino owned. That is not so in this case as it appears that 81.47% of the common shares are already foreign owned (split between First Pacific (37%) and a Japanese corporation).When may preferred shares be considered part of the capital share?If the preferred shares are allowed to vote like common shares.

RELATED NEWS:Son continues fathers fight vs. giant firm, July 30, 2013 (MANILA TIMES)This son is carrying on a just fight waged by his father.A pool of lawyers led by Wilson Gamboa Jr., son of the late Bacolod lawmaker Wilson Gamboa Sr. earlier favored twice by the Supreme Court as petitioner, has joined the legal battle over the questionable status of Philippine Long Distance Telephone Co. (PLDT)s ownership of voting of shares including alleged violation of constitutional provisions.Gamboa Jr. and lawyers Daniel Cartagena, John Warren Gabinete, Antonio Pesina Jr., Modesto Martin Mamon and Gerardo Erebaren, filed a motion for intervention on Tuesday before the Supreme Court supporting a petition against the Securities and Exchange Commission (SEC) and the PLDT.The group seeks to join the petition filed by lawyer Jose Roy 3rd former dean and president of Pamantasan ng Lungsod ng Maynila, that aims to nullify Memorandum Circular 8 (MC8) Series of 2013 of the SEC.Roys petition claims that the said memorandum circular seems to have been tailor-made to accommodate the alleged scheme of PLDT to conform with the Constitution which includes amending its Articles of Incorporation to be able to issue preferred voting shares, which are sold to a non-complying entity called BTF Holdings Inc., to skirt the cap on foreign ownership in public utilities.BTF Holdings Inc. was formed from the Beneficial Trust Fund or the fund allotted for the pensions of retiring PLDT employees.PLDT employees had earlier filed a complaint over the BTF issue because of their lack of participation in nominating trustees. They added that all the trustees are PLDT nominees.Gamboa Jr. substituted as petitioner after his father passed away in 2011 to continue the quest. The elder Gamboa was the petitioner in the case of Gamboa vs. Teves, in which the Supreme Court decided that PLDT breached the 40-percent foreign ownership limit for utilities on June 2011 and rejected the motion for reconsideration filed by PLDT on October 2012.In their motion for intervention, Gamboas group fully agrees with Roy that Section 2 of MC8 is not in accord with the previous ruling of the Supreme Court because it fails to differentiate the varying classes of shares and does not require the application of the foreign equity limits to each class of shares issued by a corporation.To continue the legacy of his father, Gamboa Jr. and his group challenged what they refer to as SECs patently erroneous interpretation of the Constitution as well as the erroneous implementation of the Supreme Court decision in the Gamboa case.We cannot just stay on the sidelines doing nothing while such violations are allowed to go on, said Gamboa Jr.The group joined Roy in asking the High Tribunal to declare that the PLDT BeneficialTrust Fund is not a Philippine entity and that more than 60 percent of its outstanding capital stock should also be declared as a foreign capital.The group added that SEC should also be correspondingly ordered to issue new guidelines regarding the determination of compliance with Section 11, Article XII of the Constitution in accordance with the Gamboa cases, with a warning that any deviation from the said decision will be tantamount to contempt of court.2.