[Digest] Cebu Salvage Corporation vs Philippine Home Assurance (2007)

CEBU SALVAGE CORPORATION,   vs. PHILIPPINE HOME ASSURANCE CORPORATION (2007)

CORONA, J.:

·         NOV 12, 1984 - Cebu Salvage Corporation (as carrier) and Maria Cristina Chemicals Industries, Inc. [MCCII] (as charterer) entered into a voyage charter wherein CSC was to load 800 to 1,100 metric tons of silica quartz on board the M/T Espiritu Santo at Ayungon, Negros Occidental for transport to and discharge at Tagoloan, Misamis Oriental to consignee Ferrochrome Phils., Inc

·         DEC 23, 1984, CSC received and loaded 1,100 metric tons of silica quartz on board the M/T Espiritu Santo which left for Misamis the next day à M/T Espiritu Santo sank off the beach of Opol, Misamis Oriental, resulting in the total loss of the cargo.

·         MCCII filed a claim for the loss of the shipment with its insurer Philippine Home Assurance Corporation à paid the claim of P211,500 and was subrogated to the rights of MCCII

·         PHAC filed a case against CSC for reimbursement of the amount it paid MCCII à WON IN THE RTC! CSC ordered to reimburse

·         CA affirmed à CSC appealed

ISSUE: May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not own?

·         CSC and MCCII entered into a "voyage charter," also known as a contract of affreightment wherein the ship was leased for a single voyage for the conveyance of goods, in consideration of the payment of freight. Under a voyage charter, the shipowner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of freight. An owner who retains possession of the ship remains liable as carrier and must answer for loss or non-delivery of the goods received for transportation.

·         CSC argues that the voyage of charter is NOT a contract of carriage. It insists that the agreement was merely a contract of hire wherein MCCII hired the vessel from its owner, ALS Timber Enterprises (ALS). Not being the owner of the M/T Espiritu Santo, petitioner did not have control and supervision over the vessel, its master and crew thus, it could not be held liable for the loss of the shipment

·         SC DISAGREES! à Based on the agreement signed by the parties and the testimony of CSC’s operations manager, it is clear that it was a contract of carriage.

·         There is no dispute that CSC was a common carrier. At the time of the loss of the cargo, it was engaged in the business of carrying and transporting goods by water, for compensation, and offered its services to the public.

·         From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport according to the circumstances of each case. In the event of loss of the goods, common carriers are responsible, unless they can prove that this was brought about by the causes specified in Article 1734. In all other cases, common carriers are presumed to be at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.

·         IN THIS CASE à CSC was the one which contracted with MCCII for the transport of the cargo. It had control over what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common carrier. The fact that it did not own the vessel it decided to use to consummate the contract of carriage did not negate its character and duties as a common carrier.

·         Court did said it is not reasonable to expect MCCII to ask about ownership of vesselà  As a practical matter, it is very difficult and often impossible for the general public to enforce its rights of action under a contract of carriage if it should be required to know who the actual owner of the vessel is. In fact, in this case, the voyage charter itself denominated petitioner as the "owner/operator" of the vessel

·         CSC says if there was a contract of carriage à it was between MCCII and ALS as evidenced by the bill of lading ALS issuedà SC DISAGREES AGAIN

o    A bill of lading may serve as the contract of carriage between the parties BUT it cannot prevail over the express provision of the voyage charter à[I]n cases where a Bill of Lading has been issued by a carrier covering goods shipped aboard a vessel under a charter party, and the charterer is also the holder of the bill of lading, "the bill of lading operates as the receipt for the goods, and as document of title passing the property of the goods, but not as varying the contract between the charterer and the shipowner."

·         Coastwise asserts that MCCII should be held liable for its own loss since the voyage charter stipulated that cargo insurance was for the charterer’s account. à This deserves scant consideration. à This simply meant that the charterer would take care of having the goods insured. It could not exculpate the carrier from liability for the breach of its contract of carriage. The law, in fact, prohibits it and condemns it as unjust and contrary to public policy.

[Digest] US CASE - US vs. SCRAP

US v. Students Challenging Regulatory Agency Procedures (SCRAP[1]) et al

Ponente: Mr. Justice Stewart

Facts:

ú   December 13, 1971 substantially all railroads in the US requested authorization from the Interstate Commerce Commission to file 5 days’ notice of a 2.5% surcharge on nearly all freight rates.

ú   Railroads sought January 1, 1972 as the effective date for new rates

ú   According to Railroad companies: Surcharge is an emergency measure designed to produce $246M annually to meet the revenues that are going down and the costs that are going up.  They claim over $1B loss annually and more than $305M in increased wages alone.

ú   December 21, 1971- Commission acknowledged the need but thought that January 1, 1972 date ‘would preclude the public from effective participation.’ à authorized a refile of same surcharge with not less than 30 days’ surcharge and effective date of February 5, 1972

ú   January 5, 1972 – Railroads refiled but several parties protested.

Interested parties

Railroads

ú   Shippers, competing carriers and environmental groups (including SCRAP) protested surcharge, praying for 7-month statutory suspension period found under the Interstate Commerce Act. They claim: o    Economic, aesthetic and recreational harm to their members o    Discourage the use of recyclable materials à promote use of new raw materials that compete with scrap materials à bad for environment à forced to pay more for finished products o    Impaired use of forests and streams due to unnecessary destruction of timber and accumulation of more waste specifically in the Washington, DC area.

o         ‘since this was a general rate increase, recylcable materials would not be made any les competitive…that in the past general rate increases had not discouraged the movement of scrap materials.

ú   February 1, 1972 report by the commission held that ‘the involved general increase will have no significant adverse effect on the movement of traffic by railway or on the quality of the human environment within the meaning of the National Environmental Policy act of 1969

o    Surcharge is not suspended

o    April 24, 1972- ordered  the proposed selective increases filed by the carriers to be suspended for a full 7-month period ending November 30, 1972 and permitted the collection of the surcharge until that date

o    SCRAP FILED SUIT AS RESULT

Issues:

ú   Does SCRAP (and interveners) have standing?

ú   Can the court validly decide this issue without usurping the exclusive jurisdiction vested in the ICC by the Congress?

a.     Were ICC’s orders unlawful for failure to include a detailed environmental impact statement as required by National Environmental Policy Act of 1969 Sec 102 (2) (C)?

Held:

ú   YES. Even thought economic harm was not sufficiently proved and the injuries claimed were not exactly specific to the petitioners due to the cross country coverage of the railroad system the court held that aesthetic and environmental well being are also important ingredients to the quality of life in a society. ‘The fact that the environmental interests are shared by the many rather than the few does not make them less deserving of judicial protection. They cited Association of Data Processing Service v. Camp and Barlow v. Collins in holding that standing can be granted when the ‘challenged action had caused injury in fact and where the alleged injury was to an interest arguably within the zone of interests to be protected or regulated by the statutes that the agencies were claimed to have violated.

ú   NO. The district court enjoined the ICC from ‘permitting’ the railroad surcharge due to an alleged implicit conferment of authority on federal courts due to the violation of the NEPA 1969’s procedural requirements. Citing Arrow the court held that courts are without jurisdiction over such an issue due to the exclusive power vested in the commission by the congress. To decide the issue is a direct interference with the commission’s discretionary decision whether or not to suspend the rates. Furthermore nowhere in the legislative history or the statutory language did the Congress imply such a grant of power that was already expressly taken away by SEC 15 (7) of the interstate commerce act. ‘To permit such judicial interference…would invite the very disruption’ of the system congress set up for orderly and lawful review of tariffs.

DECISION: REVERSED and REMANDED.

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[1] An unincorporated association formed by 5 law students to enhance the quality of the environment

[CA CASE] Hulleza v Escalante 2012

HULLEZA v ESCALANTE

2012 | SORONGON, E.D., J.

§       Leonilo B. Hulleza was appointed City Engineer of Cadiz City, Negros Occidental on July 1, 2001. As city engineer, he is the head of the engineering department and in charge of all engineering and public works of the City of Cadiz. 

§       April 19, 2006, Hon. Mayor of Cadiz City, Salvador G. Escalante, Jr., issued 2 memos authorizing Melecio D. Bacomo, Jr., City Planning and Development Coordinator, to sign documents relating to projects funded under the 20% Development Fund and later on expanding Mr. Bacomo's authority to sign documents this includes preparation of program, implementation and payment of all infrastructure projects of the City regardless of the source of funds. However, the memos did not relieve Hulleza of his duty of preparing program of work and detailed estimate of infrastructure projects subject however to the authority of the mayor.

§       Hulleza questioned the payment for projects released to contractors without his required signature on the Certificate of Completion pursuant to the memoranda and thereafter he filed a letter-complaint against Mrs. Delilah Fernandez (City Accountant) before the Ombudsman of Cebu City.

§       July 2, 2007, Escalante issued Memorandum Order No. 112-SGE-20075, placing Hulleza under “floating status” citing loss of trust and confidence in Hulleza and ordered him to cease and desist from performing his functions as city engineer.  Escalante issued another memo on the same day designating Engineer Lauro Napud as Officer-in-Charge of the City Engineer's Office and also entitled Napud to receive the RATA and other benefits allotted to the City Engineer.

o      As a result of the foregoing, Hulleza filed a complaint in the Office of the President against Escalante for Abuse of Authority, Dishonesty and Dereliction of Duty premised on the following grounds:

§       That respondent unlawfully stripped him of his function as City Engineer  and for placing him under floating status

§       That there was no basis to place him under floating status since there was no case filed against him with the Ombudsman (cited a CSC opinion as basis)

o      Petitioner therefore asked for his reinstatement and payment of his RATA from the time he was placed on floating status and for the issuance of an order declaring null and void the memos 1) placing him under floating status and 2) appointing Napud

§       Escalante’s ANSWER - he is merely exercising his duty as Chief Executive provided under Section 455 (b) of the LGC, which necessarily includes the exercise of general supervision and control over all programs, projects, services, and activities of the city government as well as to ensure that city funds are applied to the payment of expenses and settlement of obligations of the City.

o      Re the side issues:

§       The legal basis for complaint is a Malversation cased filed by Escalante against Hulleza in 2007 à Therefore “floating status” is valid - no actual performance of duties à Not entitled to RATA under DBM National Compensation Circular 67 and RA 9401 Sec 44

§       Respondent also pointed out that the opinion of the CSC on the legality of the floating status is not tantamount to the adjudication of legal issues in the exercise of its quasi-judicial power but merely an opinion based on the information provided solely by the petitioner. Had the petitioner informed the CSC regarding the Malversation case which the respondent had filed Against him it would have viewed the same differently.

§       On November 5, 2009, the Office of the President rendered the assailed Decision, dismissing Hulleza's complaint citing failure to substantiate accusations. 

ISSUE: WON the act of Mayor Escalante in placing Hulleza on floating status constitutes abuse of authority, dishonesty and dereliction of duty, which are grounds for disciplinary action under Section 60 of RA 7160.

HELD: Partly meritorious. Yes there was abuse of authority; No proof of dishonesty and dereliction of duty.

Ratio:

§       Citing Salalima vs. Guingona, Jr. - abuse of authority -"Abuse" means "to make excessive or improper use of a thing, or to employ it in a manner contrary to the natural or legal rules for its use. To make an extravagant or excessive use, as to abuse one's authority" It includes "misuse"

§       Applying the foregoing legal definition the CA found Escalante to have exceeded his authority in issuing the Floating Status Memorandum as it is not in accordance with the legal precepts of law.

1. Violated his security of tenure because it was not based on a just or valid cause. Section 2(3), Article IX-B of the 1987 Constitution mandatorily dictates that, "No officer or employee of the civil service shall be removed or suspended except for cause provided by law." Article IX, Section 36 of P.D. No. 807 (Civil Service Decree of the Philippines) likewise provides that, No officer or employee in the Civil Service shall be suspended or dismissed except for cause as provided by law and after due process.

§       Loss of trust and confidence and the existence of a pending case are not among the valid grounds provided by law for removing or dismissing an employee from service.

2. No Due Process. There was no showing that he was informed of the grounds upon which his floating assignment was based nor was he given an opportunity to be heard before he was stripped of his official duties and functions.
3. Constructive dismissal. When petitioner was divested of his powers and functions as City Engineer it created a situation whereby he was reduced to a mere subordinate without any authority to supervise. This in effect resulted in a diminution of rank and deprivation of the emoluments attached to his former position such as his RATA.
4. A careful reading of the assailed Order reveals that the floating status of petitioner does not contain a definite date or period of duration à this means that the duration of the floating status is dependent solely on the discretion of Escalante.

 §       Under Section 455 of the LGC, Escalante as Mayor is vested with the authority to exercise general supervision and control over all programs, projects, services and activities of the City, it must be noted however that such authority should be exercised within the bounds of the law. Although a charge of Malversation was filed against petitioner before the Ombudsman, this alone cannot be used as sufficient basis for the respondent to place petitioner under a floating assignment and removed from him the duties and responsibilities of a city engineer. Instead of issuing the Floating Status Memorandum, the most prudent and appropriate action the respondent could have done was to place petitioner on preventive suspension pending the trial of the malversation case he filed pursuant to Section 8511 of the LGC. Verily, this act of respondent is a clear unjustifiable and arbitrary use of authority vested upon him by law.

§       HOWEVER  ANY PENALTY TO BE IMPOSED ON ESCALANTE IN THIS CASE IS MOOT AND ACADEMIC -à Salvador Escalante is no longer the Mayor City of Cadiz by reason of the expiration of his term of office, the current Mayor of Cadiz City is Dr. Patrick G. Escalante.

FULL TEXT

Gonzales v. Macaraig, Jr. 1990

Gonzales v. Macaraig, Jr.  1990

GR 87636  -EN BANC

Facts:

·  December 16, 1988 Congress passed House Bill No. 19186 (GAB of Fiscal Year 1989) which eliminated or decreased certain items included in the proposed budget submitted by the president

·  December 29, 1988 à President signed bill into law (RA 6688) but vetoed 7 special provisions and Sec 55, a general provision.

·  February 2, 1989 Senate passed Res. No. 381 à Senate as an institution decided to contest the constitutionality of the veto of the president of SEC 55 only.

·  April 11, 1989 this petition was filed

·  January 19, 1990 filed motion for leave to file and to admit supplemental petition à same issues but included SEC 16 of House Bill 26934 (Gab for FY 1990 or RA 6831)

·  SEC. 55 disallows the president and heads of several department to augment any item in the GAB thereby violation CONSTI ART VI SEC 25 (5) (page 459)

·  SEC 16 of the GAB of 1990 provides for the same and the reason for veto remains the same with the additional legal basis of violation of PD 1177 SEC 44 and 45 as amended by RA 6670 that authorizes the president and the heads of depts. To use saving to augment any item of appropriations in the exec branch of government (page 460)

ISSUE:

·  Whether or not the veto by the President of SEC 55 of GAB for FY 1989 and SEC 16 of GAB for FY 1990 is unconstitutional.

HELD:

·  The veto is CONSTITUTIONAL. Although the petitioners contend that the veto exceeded the mandate of the line-veto power of the president because SEC 55 and SEC 16 are provisions the court held that inappropriate provisions can be treated as items (Henry v. Edwards) and therefore can be vetoed validly by the president. Furthermore inappropriate provisions must be struck down because they contravene the constitution because it limits the power of the executive to augment appropriations (ART VI SEC 25 PAR 5.)

·  The ‘provisions’ are inappropriate because

o    They do not relate to particular or distinctive appropriations

o    Disapproved or reduces items are nowhere to be found on the face of the bill

o    It is more of an expression of policy than an appropriation

·  Court also said that to make the GAB veto-proof would be logrolling on the part of the legislative à the subject matter of the provisions should be dealt with in separate and complete legislation but because they are aware that it would be NOT passed in that manner they attempt hide it in the GAB

·  If the legislature really believes that the exercise of veto is really invalid then congress SHOULD resort to their constitutionally vested power to override the veto. (ART VI SEC 21 PAR 1)

DECISION: Veto UPHELD. Petition DISMISSED.

Del Saz Orozco V Araneta 1951

DEL SAZ OROZCO vs. ARANETA (1951)

JUGO, J.:

FACTS

·         Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on March 5, 1921 à will provided that certain properties should be given in life usufruct to his son Jacinto del Saz Orozco with the obligation on his part to preserve said properties in favor of the other heirs who were declared the naked owners thereof. Among these properties were 5,714 shares of stock of the Benguet Consolidated Mining Company.

·         SEPT 11, 1934, the Benguet Consolidated Mining Company declared and distributed stock dividends out of its surplus profits, Jacinto receiving his proportionate portion of 11,428 shares.

·         NOV 17, 1939, said Mining Company again declared stock dividends out of its surplus profits, of which the Jacinto received 17,142 shares, making a total of 28,570 shares.

ISSUE: WON the stock dividend is part of the capital which should be preserved in favor of the owners or an income of fruits of the capital which should be given to and enjoyed by the life usufructuary, Jacinto, as his own exclusive property?

COURT LOOKS AT “in re: Testate Estate of Emil Maurice Bachrach” AS BASIS à Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of the corpus of the estate, which pertains to the remainderman. 

·         Justice Ozaeta ruled that a dividend, whether in the form of cash or stock, is income and, consequently, should go to the usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be declared only out of profits of the corporation, for it were declared out of the capital it would be a serious violation of the law.

IN THIS CASE

·         Araneta and his clients attempt to differentiate the present case from that case, contending that, while the doctrine in that case effected a just and equitable distribution, the application of it in the present case would cause an injustice à quoting Justice Holmes, "abstract propositions do not decide concrete cases."

o    Difference pointed out à by the declaration of stock dividends the voting power of the original shares of stock is considerably diminished, and, if the stock dividends are not given to the remaindermen, the voting power of the latter would be greatly impaired

o    Bearing in mind that the number of shares of stock of the Benguet Consolidated Mining company is so large, the diminution of the voting power of the original shares of stock in this case cannot possibly affect or influence the control of the policies of the corporation which is vested in the owners of the great block of shares. à not significant enough a reason to change doctrine

·         We have examined the two cases carefully and we have not perceived any difference which would justify a reversal or modification of the doctrine in the Bachrach case.

·         With regard to the sum of P3,428.40 which is alleged to have been received by Jacinto from the Benguet Consolidated Mining Company, as a result of the reduction of its capital à not proven à on the contrary, it was denied by him as soon as he arrived in the Philippines from Spain. There is no ground, therefore, for ordering the plaintiff to deliver such sum to the defendants.

DECISION: Reversed, and it is declared that the stock dividends amounting to 28,570 shares belongs to Jacinto del Saz Orozco exclusively and in absolute ownership. 

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Del Saz Orozco v Araneta 1939

JACINTO DEL SAZ OROZCO and MARIA PAZ ALCANTARA vs.SALVADOR ARANETA (1939)

VILLA-REAL, J.:

Jacinto Orozco filed in the office of the clerk of court of CFI Manila a complaint praying that

·         Salvador Araneta be declared without any right to have, hold or dispose of the shares of stock owned by Jacinto Orozco

·         Jacinto and Alacantara without the intervention of Araneta be declared entitled to withdraw certificate of stock from the BPI

The complaint also contained the following facts:

·         Jacinto Orozco is the registered owner of the 11,428 shares of stock (certificate of stock No. 8357) of Benguet Consolidated Mining Company and that Maria Paz Alcantara is his attorney-in-fact and his administratrix of the properties and interests in the Philippines

·         Alcantara being attorney-in-fact and administratrix was in possession of the certificate of stock and was consequently in possession of the shares of stock

·         Araneta, without any right to said shares of stock, induced Alcantara to deliver to him the certificate and that when Araneta was asked to return the shares he refused saying that “the shares of stock represented by said certificate belonged in naked ownership to some client of his”

·         Araneta, making use of similar means, induced Alcantara to ask for the delivery of said certificate of stock from BPI à made a written communication to BPI with the signature of Alcantara and making Alcantara understand that said certificate was in the hands of the aforesaid bank

·         that when the bank was required by Alcantara to deliver to her the certificate in question, BPI merely issued a receipt in which it was stated that the certificate was in the possession of the bank at the disposal of the Alcantara and of Araneta in view of the latter's opposition

·         Alcantara expressed that she did not willingly deliver the certificate of stock to BPI or to anyone else because she was not authorized to do so by Jacinto

Araneta interposed a demurrer alleging that there was a defect of parties defendant à overruled

·         DEC 20, 1935 Araneta’s answerà denying generally and specifically each and every fact alleged in the complaint and interposing a special defense àhe is merely the lawyer of Francisco del Saz Orozco, Dolores del Saz Orozco Lopez, and their minor children Felisa, Eugenio, Antonio, Jose Maria, and Carlos, all surnamed Del Saz Orozco Lopez, who are the real parties in interest and who pretend to own the shares of stock

·         Claims that such clients mentioned are necessary parties to the case and that without them the controversy cannot be resolved à Plaintiffs opposed this petition.

·         CFI à ordered plaintiffs to amend their complaint to include the del Saz Orzoco Lopezes as defendants

·         Plaintiffs are now appealing this order to the SC

ISSUE: WON Francisco, Dolores, Felisa, Eugenio, Antonio, Jose, Maria and Carlos are all necessary parties to this case? NO.

COURT NOTES THAT

·         Alcantara hypothetically admitted the allegation contained in the complaint that Maria Paz Alcantara is the attorney-in-fact and administratrix of the properties and interests of Jacinto, who is the registered owner of the shares of stock free from any annotation of an encumbrance

·         And that in Araneta’s answer à he did state the nature of the interest which his clients have in the said shares of stock, opposed to that of the Jacinto and Alcantara’s, to show the necessity of making them parties defendant in the litigation.

COURT DECIDES

·         It is clear from the complaint that Jacinto is the registered owner of the stocks and that Alcantara is his legal representative

·         On the other hand it is unclear as to what exactly the interests of Araneta’s clients are in relation to the stocks à the necessity to compel plaintiffs to include in their complaint said clients as parties defendant cannot be determined.

DECISION: REVERSED.

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CLICK HERE FOR DEL SAZ OROZCO v ARANETA 1951 DIGEST