Bishop Roderick S. Pabillo et al., v. Commission on Elections En Banc, G.R. No. 216098, 21 April 2015

Constitutional Law; Requisites for Judicial Review; Public Interest Exception – Indeed, the conduct of the upcoming 2016 Elections is dependent on the functional state of the existing PCOS machines purchased by the COMELEC. PCOS means “a technology wherein an optical ballot scanner, into which optical scan paper ballots marked by hand by the voter are inserted to be counted, is located in every precinct.” As the AES’s groundwork mechanism, it is imperative that the PCOS machines, come election day, are of optimal utility. Following the CAC’s recommendation to re-use the existing technology for the said elections, the COMELEC proceeded to procure services for the repair and refurbishment  of the PCOS machines. The COMELEC, however, through its Resolution No. 9922, decided to pursue a direct contracting arrangement with Smartmatic-TIM, which has now resulted in the execution of the Extended Warranty Contract (Program 1). Petitioners assail the validity of the foregoing courses of action mainly for violating the GPRA. Thus, if only to ensure that the upcoming elections is not mired with illegality at this basic, initial front, this Court, pursuant to its unyielding duty as final arbiter of the laws, deems it proper to thresh out the above-stated substantive issues, reasonably unfettered by the rigors of procedure.

Administrative Law; Government Procurement; Alternative Procurement Methods; Requisites – [T]he Manual of Procedures for the Procurement of Goods and Services of the Government Procurement Policy Board (GPPB Manual) explains that the GPRA allows the use of alternative methods of procurement in some exceptional instances, provided: (a) there is prior approval of the Head of the Procuring Entity on the use of alternative methods of procurement, as recommended by the BAC; and (b) the conditions required by law for the use of alternative methods are present. As additional requisites, (c) the Procuring Entity must ensure that the method chosen promotes economy and efficiency, and (d) that the most advantageous price for the government is obtained.

Words and Phrases; Proprietary Nature – Goods are considered to be of “proprietary nature” when they are owned by a person who has a protectable interest in them or an interest protected by intellectual property laws.

Administrative Law; Government Procurement; Services for Repair and Refurbishment Are Covered By Public Bidding Requirement – However, it is at once apparent that the “goods” subject of these cases neither pertain to the PCOS machines nor the software program aforementioned, but rather to the services for the machines’ repair and refurbishment, which in itself constitutes a distinct contract object that is susceptible to government procurement through competitive public bidding. As defined in Section 5 (h), Article I of the GPRA, “services such as the repair and maintenance of equipment” are included within the ambit of the term “goods” as applied within the context of the procurement law.

Intellectual Property Law; Scope of License to Use – At any rate, even if it is assumed that Smartmatic-TIM is the proprietary source of the services or that the intended repair and refurbishment would necessarily entail a modification of the PCOS hardware and software of which its existing intellectual property rights cover, the COMELEC is still not bound to engage Smartmatic-TIM on an exclusive basis. Based on the 2009 AES Contract, Smartmatic-TIM would grant the COMELEC a perpetual, but non-exclusive license to use, modify, and customize the PCOS systems and software, including the right to alter and modify the source code itself, for all future elections, when the latter exercises its option to purchase (which it eventually did), with certain limitations as hereunder stated:


Indeed, the license granted is but a natural incident of the COMELEC’s exercise of the OTP, by which it had acquired ownership over the PCOS machines; hence, the COMELEC should already be able to freely exploit them for the purpose that they were purchased. The only limitations, as may be above-gleaned, are on their commercialization as such would be clearly foreign to the contract’s objective. It would be both absurd and unfair if the COMELEC’s ability to effectively operate the machines would remain solely dependent on Smartmatic-TIM notwithstanding its acquired ownership over the same. While the intellectual property rights of Smartmatic-TIM were acknowledged by the COMELEC, by no means was it precluded – as it should not be precluded – from the complete utilization of the machines as long as it advances election-related purposes: XXX

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Land Bank of the Philippines v. Lajom, G.R. No. 184982, 20 August 2014

Constitutional Law; Agrarian Reform; Just Compensation; Time of Taking – Just compensation must be valued at the time of the taking, or the “time when the landowner was deprived of the use and benefit of his property” which, in this case, is reckoned from the date of the issuance of the emancipation patents. Hence, the valuation of the subject portion must be based on evidence showing the values prevalent on such time of taking for like agricultural lands

Constitutional Law; Agrarian Reform; Just Compensation; Award of Interest; Prospectivity of Nacar Ruling – With respect to the commonly raised issue on interest, the RTC may impose the same on the just compensation award as may be justified by the circumstances of the case and in accordance with prevailing jurisprudence. The Court has previously allowed the grant of legal interest in expropriation cases where there was delay in the payment of just compensation, deeming the same to bean effective forbearance on the part of the State. To clarify, this incremental interest is not granted on the computed just compensation; rather, it is a penaltyimposed for damages incurred by the landowner due tothe delay in its payment. Thus, legal interest shall be pegged at the rate of 12% p.a. from the time of taking until June 30, 2013. Thereafter, or beginning July 1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of 6% p.a., conformably with the modification on the rules respecting interest rates introduced by Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, Series of 2013.

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People of the Philippines v. Noel Enojas, et al., G.R. No. 204894, 10 March 2014

Remedial Law; Evidence; Electronic Evidence; Admissibility; Text Messages – As to the admissibility of the text messages, the RTC admitted them in conformity with the Court’s earlier Resolution applying the Rules on Electronic Evidence to criminal actions. Text messages are to be proved
by the testimony of a person who was a party to the same or has personal knowledge of them.16 Here, PO3 Cambi, posing as the accused Enojas, exchanged text messages with the other accused in order to identify and entrap them. As the recipient of those messages sent from and to the mobile phone in his possession, PO3 Cambi had personal knowledge of such messages and was competent to testify on them.

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BERGONIO v. SOUTH EAST ASIAN AIRLINES, G.R. No. 195227, April 21, 2014

Labor law; Payment of accrued wages despite reversal of decision. An employer, who, despite the Labor Arbiter’s order of reinstatement, did not reinstate the employee during the pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the employee, i.e., the unpaid salary accruing up to the time the higher tribunal reverses the decision. The rule, therefore, is that an employee may still recover the accrued wages up to and despite the reversal by the higher tribunal. This entitlement of the employee to the accrued wages proceeds from the immediate and self-executory nature of the reinstatement aspect of the LA’s decision.

Exception. By way of exception to the above rule, an employee may be barred from collecting the accrued wages if shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. To determine whether an employee is thus barred, two tests must be satisfied: (1) actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. Note that under the second test, the delay must be without the employer’s fault. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the LA’s decision.

Full text here.

ARABIT, et al., v. JARDINE PACIFIC FINANCE, INC., G.R. No. 181719, April 21, 2014

Labor law; Retrenchment differentiated from redundancy. Retrenchment and redundancy are two different concepts; they are not synonymous; thus, they should not be used interchangeably.

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

Retrenchment, on the other hand, is used interchangeably with the term “lay-off.” It is the termination of employment initiated by the employer through no fault of the employee’s and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.

These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in the business. Primarily, employers resort to redundancy when the functions of an employee have already become superfluous or in excess of what the business requires. Thus, even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that employee’s position has already become in excess of what the employer’s enterprise requires.

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SEC Memorandum Circular No. 16 Series of 2014 (August 13, 2014): Principal Office Address of Corporations and Partnerships

A corporation whose principal office address in the Articles of Incorporation is specific, complete or fully compliant with relevant Circulars need not file an amended AOI if moving to another location within the same city or municipality. However, it must declare its new address in the General Information Sheet within 15 days from transfer to the new location.

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Under Revenue Memorandum Circular No. 8-2014, withholding agents must require all individuals and entities to present valid, current and subsisting tax exemption certificates or rulings before payment of related income. Failure on the part of the taxpayer to present such exemption certificate or ruling shall subject the income to appropriate withholding taxes due on the transaction. On the other hand, failure of the withholding agent to withhold taxes in the absence of said certificate or ruling shall subject the withholding agent to penalties equal to the total amount of tax not withheld as provided under Section 251 of the Tax Code.

RMC 60-2014 clarifies that the provisions of RMC 8-2014 do not apply to General Professional Partnerships (GPPs) inasmuch as income payments to GPPs are not subject to income tax and withholding tax.

Full text here.


Remedial law; When is a case deemed moot and academic. A case is said to be moot and/or academic when it “ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value.” Thus, the courts “generally decline jurisdiction over the case or dismiss it on the ground of mootness.”

Exceptions to assuming jurisdiction despite the case becoming moot. The “mootness” principle, however, does accept certain exceptions and the mere raising of an issue of “mootness” will not deter the courts from trying a case when there is a valid reason to do so. In David v. Macapagal-Arroyo, the Court provided four instances where courts can decide an otherwise moot case, thus: (1) There is a grave violation of the Constitution; (2) The exceptional character of the situation and paramount public interest is involved; (3) When constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; and (4) The case is capable of repetition yet evading review.

Commercial law; Tests to determine the nationality of a corporation. There are two acknowledged tests in determining the nationality of a corporation: the control test and the grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopts the 1967 SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the controlling interests in enterprises engaged in the exploitation of natural resources owned by Filipino citizens. The first part of paragraph 7, DOJ Opinion No. 020, stating “shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality,” pertains to the control test or the liberal rule. On the other hand, the second part of the DOJ Opinion which provides, “if the percentage of the Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as Philippine nationality,” pertains to the stricter, more stringent grandfather rule.

Application of the Grandfather Rule. Based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or the 59% less Filipino). Stated differently, where the 60-40 Filipino- foreign equity ownership is not in doubt, the Grandfather Rule will not apply.

Existence of doubt. The assertion of petitioners that “doubt” only exists when the stockholdings are less than 60% fails to convince this Court. DOJ Opinion No. 20, which petitioners quoted in their petition, only made an example of an instance where “doubt” as to the ownership of the corporation exists. It would be ludicrous to limit the application of the said word only to the instances where the stockholdings of non-Filipino stockholders are more than 40% of the total stockholdings in a corporation. The corporations interested in circumventing our laws would clearly strive to have “60% Filipino Ownership” at face value. It would be senseless for these applying corporations to state in their respective articles of incorporation that they have less than 60% Filipino stockholders since the applications will be denied instantly. Thus, various corporate schemes and layerings are utilized to circumvent the application of the Constitution.

Full text here.