Ponce v. Alsons Cement Corp. (393 SCRA 602) G. R. NO. 139802 - December 10, 2002

Ponce v. Alsons Cement Corp. (393 SCRA 602 [2002])

F: Petitioner Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against respondents Alsons Cement Corporation and its corporate secretary Francisco M. Giron, Jr. 

He alleged that the late Fausto G. Gaid was an incorporator of Victory Cement Corporation (VCC) now Alsons Cement Corp, having subscribed to and fully paid 239,500 shares of said corporation. That they executed a “Deed of Undertaking” and “Indorsement” whereby the Fausto acknowledges that the Ponce is the owner of said shares and he was therefore assigning/endorsing the same to the Ponce. 

However, from the time of incorporation of VCC up to the present, no certificates of stock corresponding to the 239,500 subscribed and fully paid shares of Gaid were issued in the name of Fausto G. Gaid and/or the plaintiff. Despite repeated demands, the defendants refused and continue to refuse without any justifiable reason to issue to plaintiff the certificates of stocks corresponding to the 239,500 shares of Gaid, in violation of plaintiff’s right to secure the corresponding certificate of stock in his name.

I: WON Ponce has no cause of action for a writ of mandamus

H: Ponce has no cause of action for a writ of mandamus to compel the corp secretary to issue certificates of stock in his favor. 

Pursuant to Sec 63 of RCC, a transfer of shares of stock not recorded in the stock and transfer book of the corporation is non-existent as far as the corporation is concerned. It is only when the transfer has been recorded in the stock and transfer book that a corporation may rightfully regard the transferee as one of its stockholders. From this time, the consequent obligation on the part of the corporation to recognize such rights as it is mandated by law to recognize arises. Hence, without such recording, the transferee may not be regarded by the corporation as one among its stockholders and the corporation may legally refuse the issuance of stock certificates in the name of the transferee. 

The corporate secretary is under no clear legal duty to issue stock certificates because of the petitioner’s failure to record earlier the transfer of shares, one of the elements of the cause of action for mandamus is clearly missing.

CIR v. Club Filipino (G.R. No. L-12719, May 31, 1962)

CIR v. Club Filipino (G.R. No. L-12719, May 31, 1962)

F:  Club Filipino is a civic corporation organized under the laws of the Philippines with an authorized capital stock of P200,000.00. The Club owns and operates a club house, a bowling alley, a golf course and a bar-restaurant where it sells wines and liquors, soft drinks, meals and short orders to its members and their guests. The bar-restaurant was a necessary incident to the operation of the club and its golf-course. Neither in the articles or by-laws is there a provision relative to dividends and their distribution, although it is covenanted that upon its dissolution, the Club's remaining assets, after paying debts, shall be donated to a charitable Philippine Institution in Cebu. 

In 1952, a BIR agent discovered that the Club has never paid percentage tax on the gross receipts of its bar and restaurant and thus demanded that it pay sum of 12,068.84, as fixed and percentage taxes.

Section 182, of the Tax Code states, "Unless otherwise provided, every person engaging in a business on which the percentage tax is imposed shall pay in full a fixed annual tax of ten pesos for each calendar year or fraction thereof in which such person shall engage in said business.

"Percentage tax . . . Keepers of restaurants, refreshment parlors and other eating places shall pay a tax three per centum, and keepers of bar and cafes where wines or liquors are served five per centum of their gross receipts . . .”.

Issue: 

WON the Club should pay for percentage taxes for the operation of its bar and restaurant exclusive for its members. 

H: 

No, the Club is not liable for the payment of said taxes. It was held that he liability for fixed and percentage taxes, as provided by these sections, does not ipso facto attach by mere reason of the operation of a bar and restaurant. For the liability to attach, the operator thereof must be engaged in the business as a barkeeper and restaurateur. This means that the purpose must be profit and livelihood is the motive. This is not the case for Club Filipino.

The Club was organized to develop and cultivate sports of all class and denomination, for the healthful recreation and entertainment of its stockholders and members; that upon its dissolution, its remaining assets, after paying debts, shall be donated to a charitable Philippine Institution in Cebu. The Club’s bar only caters to its members and their guests and that although it derives profit, it is not the main purpose of the operation of the bar and restaurant. The Club is a stock corporation that does not provide for the distribution of its dividends or surplus profits. 

A tax is a burden, and, as such, it should not be deemed imposed upon fraternal, civic, non-profit, nonstock organizations, unless the intent to the contrary is manifest and patent" (Collector v. BPOE Elks Club, et al., supra), which is not the case in the present appeal.

Paragele vs GMA Network [ G.R. No. 235315, July 13, 2020 ]

 Paragele vs GMA Network  [ G.R. No. 235315, July 13, 2020 ]

Facts: 

The thirty one petitioners in this case are cameramen and assistant cameramen of GMA network. This is a case of "illegal dismissal, non-payment of salary/wages, and regularization”. The petitioners claim that having passed the four fold test for an existence of an employer-employee relationship, they were regular employees of the respondent and have been dismissed illegally. They averred that (1) GMA hired them as camera operators; (2) GMA compensated them for their service; (3) GMA exercised its power of dismissal, albeit unjustly, over them; and (4) GMA had control over the means and methods of their work. 

They further explained that with respect to the element of control, their work schedules were provided by GMA, as well as the equipment they use and that GMA assigned supervisors to monitor their work and ensure their compliance with company standards.

Petitioners assert that as camera operators assigned to several television programs of GMA, they performed functions that were necessary and desirable to GMA's business as both a television and broadcasting company. They further contend that their repeated and continuous employment with GMA after each television program they covered shows the necessity and desirability of their functions. Hence, they have already attained the status of regular employees.

Respondent GMA Network on the other hand denies the existence of an employer-employee relationship as the petitioners were merely "pinch-hitters or relievers" only hired when there’s a need for additional workers. GMA also refuted that the petitioners were given compensation as an employee but rather, it was a renumeration for the services rendered. In addition, GMA claims that it only monitored the performance of their work to ensure that the "end result" is compliant with company standards. Further, GMA explained that petitioners could not have attained regular status as they have not rendered at least one year of service as required by law. 

Issue: 

1. Whether or not there exist an employer-employee relationship between the parties. 
2. Whether or not the petitioners were regular employees of the respondent. 

Ruling: 

1. Yes, there is an employer-employee relationship between the petitioners and respondent. First, on the power of hiring, GMA concedes that it engaged the services of the petitioners. Second, on the payment of wages, it is not the nomenclature that determines the compensation received by an employee but the fact that GMA directly compensated the petitioners for their services. Third, on the power to dismiss, it is implied and is concomitant with the power to select and engage. Lastly, on the element of control, GMA exercised control over the means and methods of the petitioners’ work and not just the end result. They were subject to GMA’s control and supervision as their shoots and recordings were never left to their own discretion and craft. They were also required to follow the work schedule that GMA provides as well as the equipment they will use.

1. Yes, the petitioners were regular employees of GMA. There are 4 categories of employees,  namely: (1) regular; (2) project; (3) seasonal; and (4) casual employees. Article 295 of the Labor Code states that an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. However, this may also be the case for a project employee. The test for determining whether an employee is a regular employee or a project employee is to distinguish whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. That such job is within the regular or usual business of the employer and not identifiably distinct or separate from the other undertakings of GMA. The repeated engagement of petitioners over the years reinforces the indispensability of their services to GMA's business. The clear constant necessity for their services made the court certain that they were GMA’s regular employees. 

IPAMS vs De Vera GR No. 205703 (March 7, 2016)

 IPAMS vs De Vera  GR No. 205703 (07 March 2016)

Facts: Petitioner IPAMS is a placement agency in the Philippines and SNC Lavalin Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a Canadian company. On the other hand, respondent Alberto Arriola (Arriola) is a licensed general surgeon in the Philippines.

Respondent Arriola was offered by SNC-Lavalin a position in Madagascar as a Safety Officer for a period of 19 months starting from June 9, 2008 to December 31, 2009. Subsequently, Arriola was hired by SNC-Lavalin, through IPAMS, and his overseas employment contract was processed with POEA. He started working on June 9, 2008 but just 3 months after, he received a notice of pre-termination of employment and was repatriated. 

He then filed a complaint against the petitioners for illegal dismissal and non payment of overtime pay, vacation leave and sick leave pay before the Labor Arbiter. The petitioner insist that Arriola was not illegally dismissed as his dismissal was allowed by the Canadian Laws. They argued that all his employment documents were processed in Canada and that SNC-Lavalin’s office is located in Canada. Therefore, Canadian Laws should govern their contract. That the said foreign law did not require any ground for early termination of employment, and the only requirement was the written notice of termination. Even assuming that Philippine laws should apply, Arriola would still be validly dismissed because domestic law recognized retrenchment and redundancy as legal grounds for termination.

Issue: Whether or not Arriola was illegaly dismissed. 

Held: Yes, Arriola was illegally dismissed. As a general rule, Philippine laws apply even to overseas employment contracts. This rule is rooted in the constitutional provision of Section 3, Article XIII that the State shall afford full protection to labor, whether local or overseas. Hence, even if the OFW has his employment abroad, it does not strip him of his rights to security of tenure, humane conditions of work and a living wage under our Constitution.

As an exception to this, the parties may agree that a foreign law shall govern the employment contract subject to the following requisites:

1. That it is expressly stipulated in the overseas employment contract that a specific foreign law shall govern;
2. That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on evidence;
3. That the foreign law stipulated in the overseas employment contract must not be contrary to law, morals, good customs, public order, or public policy of the Philippines; and
4. That the overseas employment contract must be processed through the POEA.

In this case, petitioners were able to observe only the second and fourth requisites. They were able to present the ESA (foreign law) duly authenticated by the Canadian Authorities and certified by the Philippine Embassy. Arriola’s contract was also processed though the POEA. However, they failed to adhere to the other two. 

The foreign law was not expressly specified in the employment contract. In its pleadings, the petitioners did not directly cite any specific provision or stipulation in the said labor contract which indicated the applicability of the Canadian labor laws or the ESA. They failed to show on the face of the contract that a foreign law was agreed upon by the parties. Considering that no foreign law was specified in the contract and the same was executed in the Philippines, the doctrine of lex loci celebrationis applies and the Philippine laws shall govern the overseas employment of Arriola.

The foreign law invoked is contrary to the Constitution and the Labor Code. First, the ESA does not require any ground for the early termination of employment. Second, the ESA allows the employer to dispense with the prior notice of termination to an employee. Not only do these provisions collide with the right to security of tenure, but they also deprive the employee of his constitutional right to due process by denying him of any notice of termination and the opportunity to be heard. Thus, the Court concurs with the CA that the ESA is not applicable in this case as it is against our fundamental and statutory laws. In fine, as the petitioners failed to meet all the four (4) requisites on the applicability of a foreign law, then the Philippine labor laws must govern the overseas employment contract of Arriola.

Applying Philippine laws, the court ruled that Arriola was illegally dismissed. Article 279 of our Labor Code has construed security of tenure to mean that the employer shall not terminate the services of an employee except for a just cause or when authorized by law that must be proven by the employer with substantial evidence before a dismissal may be considered valid.

Here, the petitioners simply argued that they were suffering from financial losses and Arriola had to be dismissed. The petitioners did not even present a single credible evidence to support their claim of financial loss. They simply offered an unreliable news article which deserves scant consideration as it is undoubtedly hearsay.

Tan Tiong Bio v. Commissioner (100 Phil. 86; 1956)

 

Tan Tiong Bio v. Commissioner (100 Phil. 86; 1956)

Doctrine: 

The legal death of the corporation does not prevent the government from assessing taxes and collecting them from his administrator, who holds the property which the decedent had formerly possessed" 

The government does not lose its right to assess taxes which had been due from the corporation, and to collect them from persons, who by reason of transactions with the corporation, hold property against which the tax can be enforced.

Facts: 

On October 19, 1946, the Central Syndicate (corp.) sent a letter to the Collector of internal Revenue advising the latter that it purchased from Dee Hon Lue the entire stock of surplus properties which the said Dee Hon Lue had bought from the Foreign Liquidation Commission and that it assumes Lue’s obli to pay 3 ½% sales tax on the said surplus goods. 

On January 31, 1948, the syndicate again wrote the Collector requesting the refund of an alleged excess payment of sales tax due to the adjustment and reduction of the purchase price. After investigation, CIR found that 

1. Lue purchased the surplus goods on behalf of the Central Syndicate which was in the process of organization at the time of bidding. 

2. that it was the representatives of the Central Syndicate that received the surplus goods from their base at Leyte on February 21, 1947; 

3. that the syndicate must have realized a gross profit of 18.8% from the sales thereof; and 

4. that if the sales tax were to be assessed on its gross sales it would still be liable for the amount of P33,797.88 as deficiency sales tax. 

CIR then held that the Central Syndicate was the importer and original seller of the surplus goods in question and, therefore, the one liable to pay the sales tax.

Issue:

Since the Central Syndicate now dissolved because of the expiration of its corporate existence, whether the sales tax in question can be enforced against its successors-in-interest who are the present petitioners.

Held: Yes, the government does not lose its right to assess taxes which had been due from the corporation, and to collect them from persons, who by reason of transactions with the corporation, hold property against which the tax can be enforced.

It should be stated at the outset that it was petitioners themselves who caused their substitution as parties in the present case, being the successors-in-interest of the defunct syndicate, when they appealed this case to the Supreme Court. They cannot be now heard to complain if they are made responsible for the tax liability of the defunct syndicate whose representation they assumed and whose assets were distributed among them.

In the second place, there is good authority to the effect that the creditor of a dissolved corporation may follow its assets once they passed into the hands of the stockholders. The dissolution of a corporation does not extinguish the debts due or owing to it. A creditor of a dissolve corporation may follow its assets, as in the nature of a trust fund, into the hands of its stockholders. An indebtedness of a corporation to the federal government for income and excess profit taxes is not extinguished by the dissolution of the corporation. 

"the hands of the government cannot, of course, collect taxes from a defunct corporation, it loses thereby NONE of its rights to assess taxes which had been due from the corporation, and to collect them from persons, who by reason of transactions with the corporation, hold property against which the tax can be enforced and that the legal death of the corporation no more prevents such action than would the physical death of an individual prevent the government from assessing taxes against him and collecting them from his administrator, who holds the property which the decedent had formerly possessed"

Since the Central Syndicate realized from the sale of the surplus goods a net profit of P229,073.83, and that the sale of said goods was the only transaction undertaken by said syndicate, the conclusion is that said net profit remained intact and was distributed among the stockholders when the corporation liquidated and distributed its assets on August 15, 1948, immediately after the sale of the said surplus goods. Petitioners are therefore the beneficiaries of the defunct corporation and as such should be held liable to pay the taxes in question. However, there being no express provision requiring the stockholders of the corporation to be solidarily liable for its debts which liability must be express and cannot be presumed, petitioners should be held to be liable for the tax in question only in proportion to their shares in the distribution of the assets of the defunct corporation.

Bustos v. Millians Shoe, Inc. (G.R. 185024, 4 April 2017)

 

Bustos v. Millians Shoe, Inc. (G.R. 185024, 4 April 2017)

Doctrine: Stockholders liab in close corp not automatically liab. Only liab to the extent that the stockholders are actively engaged in the management or operation of the business and affairs of a close corporation and if corpo has not secured adequate liability insurance. 

Facts: 

Sps Fernando and Amelia Cruz owned a parcel of land that was levied for nonpayment of real estate taxes. The City Treasurer of Marikina auctioned off the property, with Petitioner as the winning bidder. He then applied for the cancellation of TCT. The Regional Trial Court granted the cancellation of the previous title and issued a new one under the name of petitioner.

Subsequently, notices of lis pendens were annotated to Bustos’s Title indicating that SEC Corp. Case No. 036-04, which was filed before the RTC involved the rehabilitation proceedings for MSI, covered the subject property and included it in the Stay Order issued by the RTC. Petitioner moved for the exclusion of the subject property from the Stay Order. He claimed that the lot belonged to Spouses Cruz who were mere stockholders and officers of MSL. He further argued that since he had won the bidding of the property, the auctioned property could no longer be part of the Stay Order. The RTC denied the entreaty of petitioner on the ground that the period of redemption has not yet lapsed.

CA ruled that the subject land which secured several mortgage liens for the account of MSI remains to be an asset of the Cruz Spouses, who are the stockholders and/or officers of MSI, a close corporation. Incidentally, as an exception to the general rule, in a close corporation, the stockholders and/or officers usually manage the business of the corporation and are subject to all liabilities of directors. Thus, the Cruz Spouses being stockholders of MSI are personally liable for the latter's debt and obligations.

Issue: Whether the CA correctly considered the properties of Spouses Cruz answerable for the obligations of MSI.

Held: 

No, CA’s decision characterized respondent spouses as stockholders of a close corporation who, as such, are liable for its debts. There is no basis for finding that MSI is a close corporation.

(1) The courts a quo did not at all refer to the Articles of Incorporation of MSI. For this reason alone, the CA rulings should be set aside. 

(2) CA seriously erred in portraying the import of Section 97 of the Corp Code making the stockholders automatically liable for Corp’s debts. 

(3) Stay orders only cover claims against the corporation, guarantors and sureties. Properties merely owned by stockholders cannot be included in the inventory of assets of a corporation under rehabilitation.

CA seriously erred in portraying the import of Section 97 of the Corporation Code. Citing that provision, the CA concluded that "in a close corporation, the stockholders and/or officers usually manage the business of the corporation and are subject to all liabilities of directors, i.e. personally liable for corporate debts and obligations."

However, Section 97 of the Corporation Code only specifies that "the stockholders of the corporation shall be subject to all liabilities of directors." Nowhere in that provision do we find any inference that stockholders of a close corporation are AUTOMATICALLY liable for corporate debts and obligations.

Parenthetically, only Sec. 100, par 5, of the Corp Code explicitly provides for personal liability of stockholders of close corporation: To the extent that the stockholders are actively engaged in the management or operation of the business and affairs of a close corporation, the stockholders shall be held to strict fiduciary duties to each other and among themselves. Said stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance.

In the case at bar, neither RTC nor the CA discussed the factual circumstance required above. Thus, general doctrine of separate juridical personality should be applied. Being an officer or a stockholder of a corporation does not make one's property the property also of the corporation. 

In addition: Stay orders should only cover those claims directed against corporations or their properties, against their guarantors, or their sureties who are not solidarily liable with them, to the exclusion of accommodation mortgagors. To repeat, properties merely owned by stockholders cannot be included in the inventory of assets of a corporation under rehabilitation. Given that the true owner of the subject property is not the corporation, petitioner cannot be considered a creditor of MSI but a holder of a claim against respondent spouses.

Knights of Rizal v. DMCI Homes, G.R. No. 213948, April 25, 2017

Facts: This case is about the construction of the Torre de Manila in Taft Avenue. The petitioner in this case averred that Torre de Manila will rise behind Rizal Park, clearly dwarfing the statue of our hero and ruin the line of sight of the Rizal Shrine from the frontal Roxas Boulevard vantage point. The court however decided that there actually is no law prohibiting such construction and that Torre de Manila is neither contrary to law, endanger the public health of safety nor its construction contrary to morals, good customs, public order, or public policy. It was also not considered by the court as nuisance as defined in the Civil Code. 

Issue: WON constru of DMCI Homes is a nuisance.

Held: No. It was explained in the case that there are two kinds of nuisance. The first one would be nuisance per se, is when an act is a direct menace to public health or safety, and, for that reason, may be abated summarily under the undefined law of necessity. While the second one is nuisance per accidens. A nuisance per accidens is determined based on its surrounding conditions and circumstances. These conditions and circumstances must be well established, not merely alleged. It is a question of fact where it cannot be abated without due hearing thereon in a proper tribunal authorized to decide whether such a thing in law constitutes a nuisance. 

In this case, the SC is not a trier of facts but the RTC. Hence, petition was dismissed.

Province of Camarines Sur vs CA (G.R. No. 103125)

Province of Camarines Sur vs CA (G.R. No. 103125)

Facts: On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and non-traditional agricultural crops and a housing project for provincial government employees. Pursuant to the said Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis R. Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N. San Joaquin. The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for their property. The Trial court denied their motion to dismiss and authorized the Province of Camarines Sur to take possession the property of the San Joaquins. 

San Joaquins filed a petition to the Court of Appeals to set aside the order of the Trial Court. The Court of Appeals asked the Solicitor General to give his comment to the petition. The Solicitor General stated that under Section 9 of the Local Government Code, there was no need for the approval by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of eminent domain. However, the Solicitor General expressed the view that the Province of Camarines Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the lands of petitioners for use as a housing project. The Court of Appeals then ruled to suspend the expropriation proceedings until the required approval is secured from DAR. 

Issue: WO.N LGUs need to secure approval from DAR before they can convert lands from agricultural use to non-agricultural use?

Held: No, the Supreme Court did not agree with the ruling of the Court of Appeals where an approval from DAR is a requirement in converting expropriated lands from agricultural used to non-agricultural use or public use. The Court explained that to sustain the Court of Appeals would mean that the local government units can no longer expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc, without first applying for conversion of the use of the lands with the Department of Agrarian Reform, because all of these projects would naturally involve a change in the land use. In effect, it would then be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose or public use.

Section 9 of B.P. Blg. 337 or the Local Government Code which is the source of authority of the petitioner in passing Resolution No. 129 series of 1988 does not require prior approval of the Department of Land Reform for the conversion of lands from agricultural to non-agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation of agricultural lands by local government units to the control of the Department of Agrarian Reform. Their power to expropriate comes from delegation by the congress and that the court views the power of expropriation as superior to the power to distribute lands under the land reform program. The closest provision of law that could be used to justify the requirement of the approval from DAR would be sec. 65 of the Comprehensive Agrarian Reform Law which states:

 "SEC. 65. Conversion of Lands. - After the lapse of five (5) years from its award, when the land ceases to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, the DAR, upon application of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorize the reclassification or conversion of the land and its disposition: Provided, That the beneficiary shall have fully paid his obligation."

However, sec. 65 only applies to lands previously placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its award.” which is not the case of herein subject property.

Furthermore, the issuance of Resolution No. 129 is a valid exercise of the power of eminent domain by the Provincial Governor of the Province of Camarines Sur as it was properly delegated by the Legislative Department through section 9 of the Local Government Code which provides:

"A local government unit may, through its head and acting pursuant to a resolution of its sanggunian exercise the right of eminent domain and institute condemnation proceedings for public use or purpose.”

The intervention of the Department of Agrarian Reform in expropriation matters in Section 65 of the Comprehensive Agrarian Reform Law is not applicable. 

Magallona v. Ermita, G.R. No. 187167, July 16, 2011

 

• Doctrine: RA 9522 did not decrease the demarcation of Ph territory and is merely a statutory tool to establish the country’s maritime zone and continental shelves to comply with UNCLOS.

  
  

• Facts: In March 2009, Republic Act 9522 (Baseline Law), an act defining the archipelagic baselines of the Philippines was enacted to comply with the terms of the third United Nations Convention on the Law of the Sea (UNCLOS III), ratified by the Philippines in February 1984. Professor Merlin Magallona et al questioned the validity of RA 9522 as they contend, among others, that the law decreased the national territory of the Philippines hence the law is unconstitutional.

  RA 9522 used the baseline method marking specific basepoints along the coasts from where the baselines are drawn. Instead of the Treaty of Paris where a rectangular area delineated Ph embracing hundreds of nautical miles around Ph. Acc to petitioner, baseline law dismembers a large portion of nat’l territory including the Kalayaan Group of Islands and the Scarborough Shoal.

  
  

  The Supreme Court emphasized that RA 9522, or UNCLOS, itself is not a means to acquire, or lose, territory. The treaty and the baseline law have nothing to do with the acquisition, enlargement, or diminution of the Philippine territory. What controls when it comes to acquisition or loss of territory is the international law principle on occupation, accretion, cession and prescription and NOT the execution of multilateral treaties on the regulations of sea-use rights or enacting statutes to comply with the treaty’s terms to delimit maritime zones and continental shelves. 

  
  

  The law did not decrease the demarcation of our territory. In fact it increased it. 

• "Lastly, the UNCLOS III and RA 9522 are not incompatible with the Constitution’s delineation of internal waters. Petitioners contend that RA 9522 transformed the internal waters of the Philippines to archipelagic waters hence subjecting these waters to the right of innocent and sea lanes passages, exposing the Philippine internal waters to nuclear and maritime pollution hazards. The Court emphasized that the Philippines exercises sovereignty over the body of water lying landward of the baselines, including the air space over it and the submarine areas underneath, regardless whether internal or archipelagic waters. However, sovereignty will not bar the Philippines to comply with its obligation in maintaining freedom of navigation and the generally accepted principles of international law. It can be either passed by legislator as a municipal law or in the absence thereof, it is deemed incorporated in the Philippines law since the right of innocent passage is a customary international law, thus automatically incorporated thereto." (https://attymorena.weebly.com/)

  
  

  
  

Tongko v. The Manufacturers Life Insurance Company G.R. No. 167622 (June 29, 2010)

 Tongko v. The Manufacturers Life Insurance Company, De Dios

G.R. No. 167622 | June 29, 2010 | Brion, J. 

The Principles

• Four-Fold Test
• Labor Code concept of control
• concept of control in insurance industry

Tongko and Manulife’s relationship existed under a Career Agent’s Agreement which provided that Tongko is an independent contractor and that he can be terminated by mere notice. He was promoted to higher positions over the course of his career in Manulife and was made to follow the company Rules and Regulations or Codes. Later, Renato (who seems to be part of the Management) wrote him a letter calling out his poor performance and giving him some guidelines he could follow to improve it. However, shortly after that, Renato followed it up with another letter saying that he is terminating the services of Tongko. 

The latter filed an illegal dismissal complaint arguing that he was an employee of Manulife and that the company is liable for his backwages and separation pay. The Court found Tongko’s argument inconsistent with the Agreement signed by both parties which was never substantially altered over the course of his career and Tongko’s consistent declaration in his ITR that he is a self-employed individual. Following the provisions of Insurance Code, Civil Code and Labor Code, Manulife did not exercise control on Tongko’s actions as an independent agent that would be construed as having an employer-employee relationship. At the very least, the instructions given to him from time to time were part of the principal-agent relationship they had. 

Q: What is the Four-Fold Test?

In Pacific Consultants International Asia, Inc. v. Schonfeld, the Court set out the elements of an employer-employee relationship, thus: 

Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. 

Q: What is the Labor Code’s concept of “control” that must necessarily exist in a principal-agent relationship?

In this case, Manulife did not exercise the type of control that the Labor Code contemplates. The Codes and Guidelines implemented by Manulife seemed like control amounting to an employer-employee relationship but since it does not intrude into the insurance agents' means and manner of conducting their sales and only control them as to the desired results, it does not amount to the “control” the Labor Code contemplates.

A commitment to abide by the rules and regulations of an insurance company does not ipso facto make the insurance agent an employee. Neither do guidelines somehow restrictive of the insurance agent’s conduct necessarily indicate "control" as this term is defined in jurisprudence.

Guidelines indicative of labor law "control," as the first Insular Life case tells us, should not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means or methods to be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of these means.

Q: Can control be exercised without establishing an employer-employee relationship?

Yes, although Manulife exercised a type of control over Tongko, it did not amount to the control contemplated by the Labor Code. Tongko remained an agent all along in absence of a subsequent contract; although his subsequent duties made him a lead agent with leadership role, he was nevertheless only an agent whose basic contract yields no evidence of means-and-manner control. 

Since the factual antecedents were set in an insurance industry, Insurance Code primarily governs. There are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the company's insurance products.

Under the Insurance Code, "No person, partnership, or association of persons shall transact any insurance business in the Philippines except as agent of a person or corporation authorized to do the business of insurance in the Philippines." The agent must, as a matter of qualification, be licensed and must also act within the parameters of the authority granted under the license and under the contract with the principal.

In addition, under the general law on agency as applied to insurance, an agency must be express in light of the need for a license and for the designation by the insurance company. In this case, the Career Agent’s Agreement fully serves as a grant of authority to Tongko as Manulife’s insurance agent.