Case Brief: American Tobacco Company, et. al. vs Director of Patents

G.R. No. L-26803 .  October 14, 1975

AMERICAN TOBACCO COMPANY, CARNATION COMPANY, CURTISS CANDY COMPANY, CUDAHY PACKING CO., CLUETT, PEABODY & CO., INC., CANNON MILLS COMPANY, FORMICA CORPORATION, GENERAL MOTORS CORPORATION, INTERNATIONAL LATEX CORPORATION, KAYSER-ROTH CORPORATION, M and R DIETETIC LABORATORIES, INC., OLIN MATHIESON, PARFUM CIRO, INC., PROCTER and GAMBLE COMPANY, PROCTER and GAMBLE PHILIPPINE MANUFACTURING CORPORATION, PARFUMS PORVIL DENTRIFICES DU DOCTEUR PIERRE REUNIS SOCIETE ANONYME, R.J. REYNOLDS TOBACCO COMPANY, SWIFT AND COMPANY, STERLING PRODUCTS INTERNATIONAL, THE CLOROX COMPANY, WARNER LAMBERT PHARMACEUTICALS COMPANY and ZENITH RADIO CORPORATION, petitioners,

vs.

THE DIRECTOR OF PATENTS, ATTYS. AMANDO L. MARQUEZ, TEOFILO P. VELASCO, RUSTICO A. CASIA and HECTOR D. BUENALUZ, respondents.

FACTS:

Petitioners are parties to various “inter partes” cases before the Philippine Patent Office.

Under the Trademark Law (R.A. No. 166), the Director of Patents have original jurisdiction over “inter partes” proceedings. This Rule, however, was subsequently amended by the Director of Patents, with the Approval of the Secretary of Agriculture and Commerce, authorizing any ranking official designated by the Director of said office to hear “inter partes” proceedings.

In accordance with the amended Rule, the Director of Patents delegated the hearing of petitioners’ cases to hearing officers Attys. Amando Marquez, Teofilo Velasco, Rustico Casia and Hector Buenaluz, the other respondents herein.

Petitioners filed their objections to the Authority of the hearing officers to hear their cases, alleging that the amendment of Rule is illegal and void because under the law, the Director must personally hear and decide “inter partes” cases. Said objections were overruled by the Director of Patents. Hence, this petition.

ISSUE:

Whether the designation of hearing offices other than the Director of Patents is a violation of due process.

HELD:

No. The Supreme Court ruled that the power to decide resides solely in the administrative agency vested by law, this does not preclude a delegation of the power to hold a hearing on the basis of which the decision of the administrative agency will be made.

The rule that requires an administrative officer to exercise his own judgment and discretion does not preclude him from utilizing, as a matter of practical administrative procedure, the aid of subordinates to investigate and report to him the facts, on the basis of which the officer makes his decisions.   It is sufficient that the judgment and discretion finally exercised are those of the officer authorized by law. Neither does due process of law nor the requirements of fair hearing require that the actual taking of testimony be before the same officer who will make the decision in the case. As long as a party is not deprived of his right to present his own case and submit evidence in support thereof, and the decision is supported by the evidence in the record, there is no question that the requirements of due process and fair trial are fully met.   In short, there is no abnegation of responsibility on the part of the officer concerned as the actual decision remains with and is made by said officer. It is, however, required that to “give the substance of a hearing, which is for the purpose of making determinations upon evidence the officer who makes the determinations must consider and appraise the evidence which justifies them.”

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Case Brief: People vs. Go

PEOPLE OF THE PHILIPPINES
vs.
JOSE C. GO, AIDA C. DELA ROSA, and FELECITAS D. NECOMEDES
G.R. No. 191015  August 6, 2014

Facts:

In October 14, 1998, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) issued a Resolution ordering the closure of the Orient Commercial Banking Corporation (OCBC) and placing such bank under the receivership of the Philippine Deposit Insurance Corporation (PDIC).  PDIC took all the assets and liabilities of OCBC.  PDIC began collecting OCBC’s due loans by sending demand letters from the borrowers.  Among these borrowers are Timmy’s, Inc. and Asia Textile Mills, Inc. which appeared to have loan in the amount of 10 million each. Both Corporation denied the allegation. Because of this, the PDIC conducted an investigation and found out that the loans purportedly for Timmy’s, Inc. and Asia Textile Mills, Inc. were released in the form of manager’s check deposited in the account of the private respondents.

PDIC filed two counts of Estafa thru falsification of Commercial Documents against the private respondents. After finding probable cause, the Office of the City Prosecutor of the City of Manila filed Information against the private respondents. Upon being subjected to arraignment by the RTC in Manila, the private respondents pleaded not guilty to the criminal cases filed against them. A pre-trial was conducted. Thereafter, trial of the cases ensued and the prosecution presented its evidence. After the presentation of all of the prosecution’s evidence, the private respondents filed a Motion for Leave to File Demurrer to Evidence and a Motion for Voluntary Inhibition.

The presiding judge granted the private respondents’ Motion for Voluntary Inhibition and ordered the case to be re-raffled to another branch. The case was subsequently re-raffled to the branch of the respondent RTC judge. Respondent Judge granted the Motion for Leave to File Demurrer of Evidence praying for the dismissal of the criminal cases instituted against them due to the failure of the prosecution to establish their guilt beyond reasonable doubt. An order was promulgated by the respondent judge finding the private respondents’ Demurrer to Evidence to be meritorious, dismissing the Criminal Case. Private prosecutor filed a Motion for Reconsideration but was denied by the RTC Judge. The prosecution through the Office of the Solicitor General filed a certiorari before the Court of Appeals but was also denied.

Issue:

Whether or not the CA erred in affirming the decision of RTC Judge erred in granting the Motion for Leave to File Demurrer of Evidence.

Held:

No.  CA grossly erred in affirming the trial court’s Order granting the respondent’s demurrer, which Order was patently null and void for having been issued with grave abuse of discretion and manifest irregularity, thus causing substantial injury to the banking industry and public interest.

The Court found that the prosecution has presented competent evidence to sustain the indictment for the crime of estafa through falsification of commercial documents, and that respondents appear to be the perpetrators thereof. What the trial and appellate courts disregarded, however, is that the OCBC funds ended up in the personal bank accounts of respondent Go, and were used to fund his personal checks, even as he was not entitled thereto. These, if not rebutted, are indicative of estafa.

Hence, the Petition is GRANTED. Resolution of the Court of Appeals are REVERSED and SET ASIDE. The July 2, 2007 and October 19, 2007 Orders of the Regional Trial Court of Manila, Branch 49 in Criminal Case Nos. 00-187318 and 00-187319 are declared null and void, and the said cases are ordered REINSTATED for the continuation of proceedings.

Case Brief: People vs. Tan

G.R. No. 167526 July 26, 2010
PEOPLE OF THE PHILIPPINES, Petitioner,
vs.
DANTE TAN, Respondent

Facts:
Two separate information were filed against respondent Tan for violation of the Revised Securities Act, when he failed to file with SEC the amount of all BWRC (Best World Resources Corporation) shares of which he is the beneficial owner within 10 days after he became such beneficial owner.

During the trial, petitioner made its formal offer of evidence. RTC admitted the pieces of evidence, but denied admission of all other exhibits. Tan filed Motion for Leave to File Demurrer to Evidence. Petitioner filed its Opposition to which Tan filed a Reply. In the end, RTC issued an order granting Tan’s Demurrer to Evidence.

Petitioner filed a petition before the CA assailing the order of RTC which granted Tan’s motion. CA denied, ruling that the dismissal of a criminal action by the grant of a Demurrer to Evidence is one on the merits and operates as an acquittal, for which reason, the prosecution cannot appeal therefrom as it would place the accused in double jeopardy.

Hence, the appeal.

Issue:
Whether or not the court erred in granting Tan’s Demurrer to Evidence.

Held:
No.

The demurrer to evidence in criminal cases, such as the one at bar, is “filed after the prosecution had rested its case,” and when the same is granted, it calls “for an appreciation of the evidence adduced by the prosecution and its sufficiency to warrant conviction beyond reasonable doubt, resulting in a dismissal of the case on the merits, tantamount to an acquittal of the accused.” Such dismissal of a criminal case by the grant of demurrer to evidence may not be appealed, for to do so would be to place the accused in double jeopardy. The verdict being one of acquittal, the case ends there.

The only instance when double jeopardy will not attach is when the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction, which is not present in this case. RTC did not violate petitioner’s right to due process as the petitioner was given more than ample opportunity to present its case which led to grant of Tan’s demurrer. RTC never prevented petitioner from presenting its case. In fact, one of the main reasons for the RTCs decision to grant the demurrer was the absence of evidence to prove the classes of shares that the Best World Resources Corporation stocks were divided into, whether there are preferred shares as well as common shares, or even which type of shares respondent had acquired,

Petitioner argues that the RTC displayed resolute bias when it chose to grant respondents demurrer to evidence notwithstanding that it had filed a Motion to Hold in Abeyance the Resolution of Tan’s Demurrer to Evidence and The Prosecution’s Opposition Thereto. Petitioner contends that instead of acting on the motion, the RTC peremptorily granted Tan’s demurrer to evidence which prevented petitioner from its intention to file a petition to question the orders.

While it would have been ideal for the RTC to hold in abeyance the resolution of the demurrer to evidence, nowhere in the rules, however, is it mandated to do so. Furthermore, even if this Court were to consider the same as an error on the part of the RTC, the same would merely constitute an error of procedure or of judgment and not an error of jurisdiction as persistently argued by petitioner.

As such RTC did not abuse its discretion in the manner it conducted the proceedings of the trial, as well as its grant of respondent’s demurrer to evidence.

Case Brief: Kilusang Mayo Uno Labor Center vs Garcia & LTFRB

G.R. No. 115381 December 23, 1994

KILUSANG MAYO UNO LABOR CENTER, petitioner,

vs.

HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES, respondents.

FACTS: 

In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB Chair Remedios Fernando to allow provincial bus to change passenger rates w/in a fare range of 15% above or below the LTFRB official rate for a 1yr. period. This is in line with the liberalization of regulation in the transport sector which the government intends to implement and to make progress towards greater reliance on free market forces.

Fernando respectfully called attention of DOTC Sec. that the Public Service Act requires publication and notice to concerned parties and public hearing. In Dec. 1990, Provincial Bus Operators Assoc. of the Phils. (PBOAP) filed an application for across the board fare rate increase, which was granted by LTFRB. In 1992, then DOTC Sec. Garcia issued a memo to LTFRB suggesting a swift action on adoption of procedures to implement the Department Order & to lay down deregulation policies. Pursuant to LTFRB Guideline, PBOAP, w/o benefit of public hearing announced a 20% fare rate increase.

Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a petition before LTFRB w/c was denied. Hence the instant petition for certiorari w/ urgent prayer for a TRO, w/c was readily granted by the Supreme Court.

ISSUE: 

Whether the authority granted by LTFB to provincial buses to set a fare range above existing authorized fare range is unconstitutional and invalid.

HELD:

The grant of power by LTFRB of its delegated authority is unconstitutional. The doctrine of Potestas delegate non delegari (what has been delegated cannot be delegated) is applicable because a delegated power constitutes not only a right but a duty to be performed by the delegate thru instrumentality of his own judgment. To delegate this power is a negation of the duty in violation of the trust reposed in the delegate mandated to discharge such duty. Also, to give provincial buses the power to charge their fare rates will result to a chaotic state of affairs ad this would leave the riding public at the mercy of transport operators who can increase their rates arbitrarily whenever it pleases or when they deem it necessary.

Case Brief: Edu vs. Ericta

G.R. No. L-32096  October 24, 1970
ROMEO F. EDU, in his capacity as Land Transportation Commissioner, petitioner,
vs.
HON. VICENTE G. ERICTA in his capacity as Judge of the Court of First Instance of Rizal, Br. XVIII, Quezon City, and TEDDY C. GALO respondents.

 

FACTS: 

Petitioner Romeo F. Edu, the Land Transportation Commissioner, petitioned the SC to rule squarely on the constitutionality of the Reflector Law in this proceeding for certiorari and prohibition against respondent Judge, the Honorable Vicente G. Ericta of the Court of First Instance of Rizal, Quezon City Branch, to annul and set aside his order for the issuance of a writ of preliminary injunction directed against Administrative Order No. 2 of petitioner for the enforcement of the aforesaid statute, in a pending suit in his court for certiorari and prohibition, filed by the other respondent Teddy C. Galo assailing; the validity of such enactment as well as such administrative order.

Such administrative order, which took effect on April 17, 1970, has a provision on reflectors in effect reproducing what was set forth in the Act. Thus: “No motor vehicles of whatever style, kind, make, class or denomination shall be registered if not equipped with reflectors. Such reflectors shall either be factory built-in-reflector commercial glass reflectors, reflection tape or luminous paint. The luminosity shall have an intensity to be maintained visible and clean at all times such that if struck by a beam of light shall be visible 100 meters away at night.” 35 Then came a section on dimensions, placement and color.

As to dimensions the following is provided for: “Glass reflectors — Not less than 3 inches in diameter or not less than 3 inches square; Reflectorized Tape — At least 3 inches wide and 12 inches long. The painted or taped area may be bigger at the discretion of the vehicle owner.” Provision is then made as to how such reflectors are to be “placed, installed, pasted or painted.”

There is the further requirement that in addition to such reflectors there shall be installed, pasted or painted four reflectors on each side of the motor vehicle parallel to those installed, pasted or painted in front and those in the rear end of the body thereof. The color required of each reflectors, whether built-in, commercial glass, reflectorized tape or reflectorized paint placed in the front part of any motor vehicle shall be amber or yellow and those placed on the sides and in the rear shall all be red.

Penalties resulting from a violation thereof could be imposed. Thus: “Non-compliance with the requirements contained in this Order shall be sufficient cause to refuse registration of the motor vehicle affected and if already registered, its registration maybe suspended in pursuance of the provisions of Section 16 of RA 4136; Provided, however, that in the case of the violation of Section 1 (a) and (b) and paragraph (8) Section 3 hereof, a fine of not less than ten nor more than fifty pesos shall be imposed.

The  respondent Judge denied the motion for reconsideration of the order of injunction.

ISSUE:  
1.) WON Reflector Law is unconstitutional.
2.) WON A.O No. 2 is invalid and contrary to the principle of non-delegation of legislative power.

HELD:  
NO. both are valid and constitutional.
It is thus obvious that the challenged statute is a legislation enacted under the police power to promote public safety. What is delegated is authority which is non-legislative in character, the completeness of the statute when it leaves the hands of Congress being assumed.

1. Police Power.  It is in the above sense the greatest and most powerful attribute of government. “the most essential, insistent, and at least illimitable of powers,” (Justice Holmes) aptly pointed out “to all the great public needs.”
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits. In the language of Justice Cardozo: “Needs that were narrow or parochial in the past may be interwoven in the present with the well-being of the nation.

2. Delegation of Legislative Power. It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not delegate its legislative power to the two other branches of the government, subject to the exception that local governments may over local affairs participate in its exercise. What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the test is the completeness of the statute in all its term and provisions when it leaves the hands of the legislature. To determine whether or not there is an undue delegation of legislative power the inquiry must be directed to the scope and definiteness of the measure enacted. The legislature does not abdicate its functions when it describes what job must be done, who is to do it, and what is the scope of his authority. For a complex economy, that may indeed be the only way in which the legislative process can go forward. A distinction has rightfully been made between delegation of power to make the laws which necessarily involves a discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or discretion as to its execution to exercised under and in pursuance of the law, to which no valid objection call be made. The Constitution is thus not to be regarded as denying the legislature the necessary resources of flexibility and practicability.
To avoid the taint of unlawful delegation, there must be a standard, which implies at the very least that the legislature itself determines matters of principle and lay down fundamental policy. Otherwise, the charge of complete abdication may be hard to repel. A standard thus defines legislative policy, marks its limits, its maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under which the legislative command is to be effected. It is the criterion by which legislative purpose may be carried out. Thereafter, the executive or administrative office designated may in pursuance of the above guidelines promulgate supplemental rules and regulations.
The standard may be either express or implied. If the former, the non-delegation objection is easily met. The standard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public safety.

Notes: May a foreign corporation, which is not licensed to do business in the Philippines, sue or be sued before the Philippine courts?

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Q: May a foreign corporation, which is not licensed to do business in the Philippines, sue or be sued before the Philippine courts?

Let’s discuss.

First and foremost, Sec. 123 of the Corporation Code defines what a foreign corporation is (although it is not quite accurate). Simply put, a foreign corporation is one formed, organized, and existing under any laws other than those of the Philippines. Jurisprudence has provided for several tests to determine as to whether or not the entity can be considered as “foreign corporation”.

If, however, they want to conduct business in the Philippines, they have to secure a license from the Securities and Exchange Commission (SEC). The subsequent provisions of the Corporation Code indicate how it is done. It bears noting that several statutory requirements must be complied with before they can conduct business in our country, such as the required number of shares belonging to foreigner/Filipinos, appointment of resident agents, and the likes. The salient laws include RA 7042 (Foreign Investments Act), RA 8762 (Retail Trade Liberalization Act), EO 184 (Tenth Foreign Negative Investment List), and BP 68 (Corporation Code). Even the 1987 Constitution and Omnibus Investments Code may come in handy.

After complying with the requirements, SEC will then issue a license to such corporation and it can start transacting business in the Philippines from there. It is worthy to mention that the license does not really serve to bar a foreign corporation from performing isolated or single acts. Its purpose is really to make it amenable to suits in the Philippine courts. Otherwise stated, the grant of license allows the foreign corporation to sue and be sued before the Philippine tribunals.

Now, what would happen if the foreign corporation transacts business in the Philippines without a license?

First, its officers may be penalized under Sec. 144 of the Corporation Code, which provides for imprisonment (30 days to 5 years) and payment of fine.

Moreover, it cannot sue before the Philippine courts, but it can be sued for any causes of action arising from any sources of obligation. In plain view, as far as the judicial flow is concerned, a corporation which stands as an aggrieved party gets the short end of the stick because in the grand scheme of things, it cannot claim. As amply stated by the Supreme Court in the case of Universal Shipping vs. IAC, “It is not the lack of required license but doing business without a license which bars a foreign corporation from access to our courts”.

Are there exceptions to the general rule that a foreign corporation, which has no license, can sue before the Philippine courts?

Yes. In some decisions, the Supreme Court allowed a foreign corporation without a license to sue and file a claim before our domestic courts. To enumerate:

– Cases of isolated transactions with other entities, even if it is done pursuant to the usual business of the corporation. The cases of Western Supply vs. Reyes and Facilities Management vs. Dela Rosa are on point. In line with this, the phrase “doing business” is defined in Sec. 3 of the Foreign Investment Act.
– To protect its trademark, tradename, corporate name, reputation, or goodwill; even in cases of unfair competition. The discussion in the case of Fredco Manufacturing vs. Harvard comes into play. Moreover, it bears noting that the Philippines, along with other States, is a signatory to the Paris Convention which allows such foreign corporations to file a claim here for the protection of their intellectual property rights, without the need of applying for a license.  This explains why in such case, Harvard was able to file a complaint for trademark infringement against Fredco in our domestic courts.
– It is merely defending a suit against it, such as cases of defamation and, as stated earlier, unfair competition. You may refer to the case of Time Inc. vs. Reyes.  The Revised Penal Code may also apply.
– In cases of estoppel, where a party transacted with such corporation knowing fully well of the latter’s lack of capability to conduct business, as mentioned in Rimbunan Hijau vs. Oriental Wood.

—–

Disclaimer: The author merely published his notes from the classroom discussions and recitations. He does not guarantee the full accuracy of the data. If you see any wrong information, please tell and the author will be more than happy to correct it. After all, “false knowledge is more dangerous that outright ignorance”. 

Notes: Nell Doctrine (in relation to Corporation’s Power to Sell or Dispose its Assets)

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The 2017 Commercial Law Bar Examination made mention of this:

Under the Nell Doctrine, so called because it was first pronounced by the Supreme Court in the 1965 ruling in Nell v. Pacific Farms, Inc. (15 SCRA 415), the general rule is that where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor.

State the exceptions to the Nell Doctrine. (4%)

The answer, as provided by the Supreme Court in such case, is:

Generally where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor, except: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into fraudulently in order to escape liability for such debts.

Background of the case:

Nell Co. filed a civil case against Insular Farms, Inc. for a sum of money plus interest, attorney’s fees, and costs. A writ of execution was issued by the court, but was returned unsatisfied, stating that Insular Farms had no leviable property. Thereafter, Nell Co. filed another action against Pacific Farms, Inc. for the collection of the same amount, upon the theory that the latter is the alter ego of Insular Farms. Nell Co. supported its claim by alleging that Pacific Farms had purchased all or substantially all of the shares, as well as the real and personal properties, of Insular Farms.

The record shows that, on March 21, 1958, Pacific Farms purchased 1,000 shares of stock of Insular Farms for P285,126.99; that, thereupon, Pacific Farms sold said shares of stock to certain individuals, who forthwith reorganized said corporation; and that the board of directors thereof, as reorganized, then caused its assets, including its leasehold rights over a public land in Bolinao, Pangasinan, to be sold to Pacific Farms for P10,000.00.

The Supreme Court held that such facts do not prove that Pacific Farms is the alter ego of Insular Farms. There was neither proof nor allegation that Pacific Farms had expressly or impliedly agreed to assume the debt of Insular Farms, or that the Pacific Farms was a continuation of Insular Farms, or that the sale of either the shares of stock or the assets of Insular Farms to the Pacific Farms had been entered into fraudulently, in order to escape liability for the debt of the Insular Farms.

In fact, such sales took place months before the rendition of the judgment in the previous case, and a month before the filing of the present case.  Moreover, Pacific Farms purchased the shares as the highest bidder at an auction sale held at the instance of the bank, to which the shares were originally pledged as a security for an obligation of Insular Farms.

Neither was it claimed that these transactions have resulted in the consolidation or merger of the Insular Farms and Pacific Farms.  On the contrary, Nell Co’s theory to the effect that Pacific Farms was an alter ego of the Insular Farms negated such consolidation or merger, for a corporation cannot be its own alter ego.

The case is generally related to the power of a corporation to sell or dispose its assets, as provided in Sec. 40 of the Corporation Code.  In essence, it can be also related with the Doctrine of Piercing of Corporate Veil.