SEEKING HELP FROM INSURANCE COMMISSION ON MONEY CLAIMS - By RANDY B. ESCOLANGO

See - https://www.manilatimes.net/2019/09/30/opinion/columnists/seeking-help-from-insurance-commission-on-money-claims/623775/


"x x x.

SEEKING HELP FROM INSURANCE COMMISSION ON MONEY CLAIMS

By RANDY B. ESCOLANGO
SEPTEMBER 30, 2019

RANDY B. ESCOLANGO

DISAGREEMENTS over money claims can happen in many insurance (life and non-life) and Mutual Benefit Associations’ (MBA) dealings.

Suppose an insured person suffers a loss and claims that it was due to a risk or peril he was insured against, but the insurer denies such claim and avoids payment of liability.

If the insured disagrees and still believes that he has the right to be paid by the insurance company, should he immediately hire a lawyer and file a legal case against the insurer in court?


What if his claim is just a meager P5,000, should he push through with the lawsuit?

Is it worth going through the entire formal legal process for such a relatively small amount of money?

Should he just let it go and move on with his life despite his loss resulting from the damage done to his property or an untimely death of a loved one?

These issues on money claims and the tiresome and lengthy processes that one must undergo to settle disagreements over such claims often discourage potential buyers from obtaining insurance and trusting the entire insurance system.

In recognition of this matter, the Insurance Code of the Philippines provides a recourse for the insured to settle claims and/or complaints against the insurer by allowing the Insurance Commission (IC) to adjudicate or decide over claims and/or complaints involving any loss, damage, or liability for which the latter may be answerable.

The scope of the IC’s authority to adjudicate is for a single claim for loss, damage, or liability not exceeding P5 million, excluding interest, cost and attorney’s fees.
When the insured claim is denied but he disagrees with it, his initial step could be to seek help from and file an informal complaint with the Public Assistance and Mediation Division (PAMD) of the IC, either by contacting this government division through phone, mail, and/or email, or directly by visiting its office.

The PAMD may shed light and provide clarity on the denial of claim and conduct a mediation conference to amicably settle the issue at hand.

Note that no fees are required in filing an informal complaint with the PAMD.

Engaging the services of a lawyer is not yet required during the mediation conference.

If the insurer still denies the claim and no amicable settlement is reached, the insured may formally file a written complaint against the insurer with the Claims Adjudication Division (CAD) of the IC.
The commencement of his action against the insurer shall begin with a filing of a verified complaint with the CAD, stating that his allegations are true and correct of his own knowledge.

The complaint should state the names and addresses of the parties, the substance of the claim, the date when the loss occurred, the amount of claim, the grounds of action, the relief sought, an allegation that there is final denial of claim by the insurance company, and that there is no pending mediation conference with the PAMD of the IC.

The verified complaint may also be filed with any regional offices of the IC in Davao and Cebu, aside from its main office in Manila.
As opposed to an informal complaint, filing a formal complaint with the CAD of IC entails some costs, such as docketing fee, summons and legal research fund fees.

Filing fees may range from P1,000 for claims worth less than P100,000, or up to 30,000 if the claim reached P4 to P5 million.
Indigent or poor complainants may be exempted from paying docket and other legal fees once found to be indeed lacking money or property enough to sustain his family’s needs.

The normal proceedings for regular money claims after the filing of a formal complaint usually include those stated in IC’s Memorandum Circular 2014-1.

These are the following:

1. a response or an answer from the insurance company over a period allowed by law, or a motion to dismiss the case on the grounds found in Rule 6, Section 1, such as the following: lack of jurisdiction of the IC over the case; the same case involving the same party and same cause of action has been filed in another court; and the complaint does not involve any claim against insurance or MBAs;

2. A final mediation conference to exhaust possibility of amicable settlement;

3. a provision of judicial affidavits, and examination of witnesses;

4. pre-trial brief submissions and appearance in pre-trial conference;

5. attendance in the hearing proper led by the Insurance Commissioner or any hearing officers (i.e. lawyer/s under the Claims Adjudication Division of the IC);

6. decision or order;

7. motion for reconsideration; and

8. appeal on the order or decision, among others.

Note that like a case in court, the parties may be represented by lawyers.

Also, if no appeal or motion for reconsideration is filed within 15 days from receipt of the judgment, final order or decision rendered by the IC, the same becomes final and may be executed and enforced accordingly.

Lastly, it should also be mentioned that for convenience and practicability, the regular claims proceeding should follow the Rules of Court as specified in the 1997 Rules of Civil Procedure in suppletory character or to supply deficiencies in regulation.

The next column will discuss the rules of procedure for a single claim not exceeding P200,000, exclusive of interest, attorney’s fees and cost.
The rules of procedure are embodied in IC Circular 2016-01 otherwise known as the Rules of Procedure for Small Claims cases in the Insurance Commission.
The author is the deputy commissioner for legal services of the Insurance Commission. He may be contacted at rb.escolango@yahoo.com.
x x x."

Enforcement of foreign judgment - "It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of money rendered by a foreign court "is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title", but when suit for its enforcement is brought in a Philippine court, said judgment "may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact""

G.R. No. L-22470 May 28, 1970
SOORAJMULL NAGARMULL, plaintiff-appellee,
vs.
BINALBAGAN-ISABELA SUGAR COMPANY, INC., defendant-appellant.


"x x x.

The main issue to be resolved is whether or not the decision of the Tribunal of Arbitration of the Bengal Chamber of Commerce, as affirmed by the High Court of Judicature of Calcutta, is enforceable in the Philippines.

For the purpose of this decision We shall assume that appellee — contrary to appellant's contention — has the right to sue in Philippine courts and that, as far as the instant case is concerned, it is not guilty of laches. This notwithstanding, We are constrained to reverse the appealed decision upon the ground that it is based upon a clear mistake of law and its enforcement will give rise to a patent injustice.

It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of money rendered by a foreign court "is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title", but when suit for its enforcement is brought in a Philippine court, said judgment "may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact" (Emphasis supplied.)

Upon the facts of record, We are constrained to hold that the decision sought to be enforced was rendered upon a "clear mistake of law" and because of that it makes appellant — an innocent party — suffer the consequences of the default or breach of contract committed by appellee.

There is no question at all that appellee was guilty of a breach of contract when it failed to deliver one-hundred fifty-four Hessian bales which, according to the contract entered into with appellant, should have been delivered to the latter in the months of July, August and September, all of the year 1949. It is equally clear beyond doubt that had these one-hundred fifty-four bales been delivered in accordance with the contract aforesaid, the increase in the export tax due upon them would not have been imposed because said increased export tax became effective only on October 1, 1949.

To avoid its liability for the aforesaid increase in the export tax, appellee claims that appellant should be held liable therefor on the strength of its letter of September 29, 1949 asking appellee to ship the shortage. This argument is unavailing because it is not only illogical but contrary to known principles of fairness and justice. When appellant demanded that appellee deliver the shortage of 154 bales it did nothing more than to demand that to which it was entitled as a matter of right. The breach of contract committed by appellee gave appellant, under the law and even under general principles of fairness, the right to rescind the contract or to ask for its specific performance, in either case with right to demand damages. Part of the damages appellant was clearly entitled to recover from appellee growing out of the latter's breach of the contract consists precisely of the amount of the increase decreed in the export tax due on the shortage — which, because of appellee's fault, had to be delivered after the effectivity of the increased export tax.

To the extent, therefore, that the decisions of the Tribunal of Arbitration of the Bengal Chamber of Commerce and of the High Court of Judicature of Calcutta fail to apply to the facts of this case fundamental principles of contract, the same may be impeached, as they have been sufficiently impeached by appellant, on the ground of "clear mistake of law". We agree in this regard with the majority opinion in Ingenohl vs. Walter E. Olsen & Co. (47 Phil. 189), although its view was reversed by the Supreme Court of the United States (273 U.S. 541, 71 L. ed. 762) which at that time had jurisdiction to review by certiorari decisions of this Court. We can not sanction a clear mistake of law that would work an obvious injustice upon appellant.

x x x."

Docket fees for petition to enforce foreign judgment - "...this foreign judgment may, for purposes of classification under the governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving property." Thus, only the blanket filing fee of minimal amount is required."

G.R. No. 139325 April 12, 2005

PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United States District Court of Hawaii, Petitioner,
vs.
HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos, Jr., Respondents.

"x x x.

The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exhorbitant assessment of docket fees is alien to generally accepted practices and principles in international law. Indeed, there are grave concerns in conditioning the amount of the filing fee on the pecuniary award or the value of the property subject of the foreign decision. Such pecuniary award will almost certainly be in foreign denomination, computed in accordance with the applicable laws and standards of the forum.72 The vagaries of inflation, as well as the relative low-income capacity of the Filipino, to date may very well translate into an award virtually unenforceable in this country, despite its integral validity, if the docket fees for the enforcement thereof were predicated on the amount of the award sought to be enforced. The theory adopted by respondent judge and the Marcos Estate may even lead to absurdities, such as if applied to an award involving real property situated in places such as the United States or Scandinavia where real property values are inexorably high. We cannot very well require that the filing fee be computed based on the value of the foreign property as determined by the standards of the country where it is located.

As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes that the subject matter of an action for enforcement of a foreign judgment is the foreign judgment itself, and not the right-duty correlatives that resulted in the foreign judgment. In this particular circumstance, given that the complaint is lodged against an estate and is based on the US District Court's Final Judgment, this foreign judgment may, for purposes of classification under the governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving property." Thus, only the blanket filing fee of minimal amount is required.

Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that "[F]ree access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty." Since the provision is among the guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable right. However, now is not the occasion to elaborate on the parameters of this constitutional right. Given our preceding discussion, it is not necessary to utilize this provision in order to grant the relief sought by the petitioners. It is axiomatic that the constitutionality of an act will not be resolved by the courts if the controversy can be settled on other grounds73 or unless the resolution thereof is indispensable for the determination of the case.74

One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. This ruling, decisive as it is on the question of filing fees and no other, does not render verdict on the enforceability of the Final Judgment before the courts under the jurisdiction of the Philippines, or for that matter any other issue which may legitimately be presented before the trial court. Such issues are to be litigated before the trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39. On the other hand, the speedy resolution of this claim by the trial court is encouraged, and contumacious delay of the decision on the merits will not be brooked by this Court.

x x x."

Recognition and enforcement of foreign judgments in Philippine jurisdiction. - "As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law."

G.R. No. 167052, March 11, 2015
BANK OF THE PHILIPPINE ISLANDS SECURITIES CORPORATION, Petitioner, v. EDGARDO V. GUEVARA, Respondent.


"x x x.

In Mijares v. Rañada,33 the Court extensively discussed the underlying principles for the recognition and enforcement of foreign judgments in Philippine jurisdiction:

There is no obligatory rule derived from treaties or conventions that requires the Philippines to recognize foreign judgments, or allow a procedure for the enforcement thereof. However, generally accepted principles of international law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if they do not derive from treaty obligations. The classical formulation in international law sees those customary rules accepted as binding result from the combination two elements: the established, widespread, and consistent practice on the part of States; and a psychological element known as the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the latter element is a belief that the practice in question is rendered obligatory by the existence of a rule of law requiring it.

While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not been authoritatively established, the Court can assert with certainty that such an undertaking is among those generally accepted principles of international law. As earlier demonstrated, there is a widespread practice among states accepting in principle the need for such recognition and enforcement, albeit subject to limitations of varying degrees. The fact that there is no binding universal treaty governing the practice is not indicative of a widespread rejection of the principle, but only a disagreement as to the imposable specific rules governing the procedure for recognition and enforcement.

Aside from the widespread practice, it is indubitable that the procedure for recognition and enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted in various foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed in its current form since the early 1900s. Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid enforcement, as derived from internationally accepted doctrines. Again, there may be distinctions as to the rules adopted by each particular state, but they all prescind from the premise that there is a rule of law obliging states to allow for, however generally, the recognition and enforcement of a foreign judgment. The bare principle, to our mind, has attained the status of opinio juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and requisites outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but by virtue of the incorporation clause of the Constitution. Rules of procedure are promulgated by the Supreme Court, and could very well be abrogated or revised by the high court itself. Yet the Supreme Court is obliged, as are all State components, to obey the laws of the land, including generally accepted principles of international law which form part thereof, such as those ensuring the qualified recognition and enforcement of foreign judgments. (Citations omitted.)

It is an established international legal principle that final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious subject to certain conditions that vary in different countries.34 In the Philippines, a judgment or final order of a foreign tribunal cannot be enforced simply by execution. Such judgment or order merely creates a right of action, and its non-satisfaction is the cause of action by which a suit can be brought upon for its enforcement.35 An action for the enforcement of a foreign judgment or final order in this jurisdiction is governed by Rule 39, Section 48 of the Rules of Court, which provides:

SEC. 48. Effect of foreign judgments or final orders. – The effect of a judgment or final order of a tribunal of a foreign country, having jurisdiction to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

The Court expounded in Mijares on the application of the aforequoted provision:

There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and their successors in interest by a subsequent title. However, in both cases, the foreign judgment is susceptible to impeachment in our local courts on the grounds of want of jurisdiction or notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, the party aggrieved by the foreign judgment is entitled to defend against the enforcement of such decision in the local forum. It is essential that there should be an opportunity to challenge the foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy.

It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign judgment, even if such judgment has conclusive effect as in the case of in rem actions, if only for the purpose of allowing the losing party an opportunity to challenge the foreign judgment, and in order for the court to properly determine its efficacy. Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its validity.

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in the Philippines. But there is no question that the filing of a civil complaint is an appropriate measure for such purpose. A civil action is one by which a party sues another for the enforcement or protection of a right, and clearly an action to enforce a foreign judgment is in essence a vindication of a right prescinding either from a “conclusive judgment upon title” or the “presumptive evidence of a right.” Absent perhaps a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must be brought before the regular courts.

There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of a foreign judgment, and that arising from the facts or allegations that occasioned the foreign judgment. They may pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to be vindicated. For example, in a complaint for damages against a tortfeasor, the cause of action emanates from the violation of the right of the complainant through the act or omission of the respondent. On the other hand, in a complaint for the enforcement of a foreign judgment awarding damages from the same tortfeasor, for the violation of the same right through the same manner of action, the cause of action derives not from the tortious act but from the foreign judgment itself.

More importantly, the matters for proof are different. Using the above example, the complainant will have to establish before the court the tortious act or omission committed by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove extenuating circumstances. Extensive litigation is thus conducted on the facts, and from there the right to and amount of damages are assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. The limitations on review [are] in consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and issues. Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be increased by never-ending litigation of the same disputes, and – in a larger sense – to promote what Lord Coke in the Ferrer’s Case of 1599 stated to be the goal of all law: “rest and quietness.” If every judgment of a foreign court were reviewable on the merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial the previously concluded litigation.36 (Emphases supplied, citations omitted.)

Also relevant herein are the following pronouncements of the Court in Minoru Fujiki v. Marinay37:

A petition to recognize a foreign judgment declaring a marriage void does not require relitigation under a Philippine court of the case as if it were a new petition for declaration of nullity of marriage. Philippine courts cannot presume to know the foreign laws under which the foreign judgment was rendered. They cannot substitute their judgment on the status, condition and legal capacity of the foreign citizen who is under the jurisdiction of another state. Thus, Philippine courts can only recognize the foreign judgment as a fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order against a person creates a “presumptive evidence of a right as between the parties and their successors in interest by a subsequent title.” Moreover, Section 48 of the Rules of Court states that “the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.” Thus, Philippine courts exercise limited review on foreign judgments. Courts are not allowed to delve into the merits of a foreign judgment. Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on grounds external to its merits, i.e., “want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.” The rule on limited review embodies the policy of efficiency and the protection of party expectations, as well as respecting the jurisdiction of other states. (Emphases supplied, citations omitted.)

As the foregoing jurisprudence had established, recognition and enforcement of a foreign judgment or final order requires only proof of fact of the said judgment or final order. In an action in personam, as in the case at bar, the foreign judgment or final order enjoys the disputable presumption of validity. It is the party attacking the foreign judgment or final order that is tasked with the burden of overcoming its presumptive validity.38 A foreign judgment or final order may only be repelled on grounds external to its merits, particularly, want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

The fact of a foreign final order in this case is not disputed. It was duly established by evidence submitted to the RTC that the U.S. District Court issued an Order on March 13, 1990 in Civil Action No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00 as sanction for filing a frivolous suit against respondent, in violation of Rule 11 of the U.S. Federal Rules of Civil Procedure. The said Order became final when its reinstatement in the Order dated December 31, 1991 of the U.S. District Court was no longer appealed by petitioner, AIFL, and/or ATHONA.

x x x."

Dispute resolution in Philippines - Ocampo, Manalo, Valdez & Lim Law Firm

See - https://www.lexology.com/library/detail.aspx?g=992f5031-18ef-47d7-8741-8be25fc388c6&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2019-10-02&utm_term=


"x x x.

Dispute resolution in Philippines
Ocampo, Manalo, Valdez & Lim Law Firm

September 16, 2019

x x x.

LitigationCourt system

What is the structure of the civil court system?

The Philippine judicial system comprises first-level courts (municipal, metropolitan and regional trial courts), the Court of Appeals and the Supreme Court. A single judge presides over first-level courts, while the Court of Appeals comprises 69 justices, which sit in divisions of three members. The Supreme Court comprises 15 justices, which sit en banc or in divisions of three, five or seven members.

The jurisdiction of first-level courts depends on the nature of the proceedings and the amounts involved. A metropolitan trial court has exclusive original jurisdiction over civil actions involving amounts at lower limits. Civil actions involving amounts beyond the threshold of metropolitan trial courts, as well as actions incapable of pecuniary estimation, are handled at the first instance by regional trial courts.

Metropolitan trial court decisions can be appealed to a regional trial court. In turn, regional trial court decisions can be appealed to the Court of Appeals and the Supreme Court.Judges and juries

What is the role of the judge and the jury in civil proceedings?

The judge presiding over civil proceedings:
determines the facts;
ensures that the parties comply with the rules of procedure;
interprets the applicable laws; and
in penning the decision, applies the law.

In the performance of their functions, judges must be impartial. Nonetheless, during a trial, judges may adopt an inquisitorial role only for clarificatory purposes.

The Philippines has not adopted the jury system.Limitation issues

What are the time limits for bringing civil claims?

The time limits for bringing civil claims are as follows:
eight years from the time possession was lost for actions to recover movable property;
30 years for actions affecting title to or possession of real property;
10 years for actions involving mortgages, written contracts, obligations created by law and judgments;
six years for actions involving oral contracts and quasi-contracts;
four years for actions involving injury to the rights of the claimant and quasi-delicts;
one year for actions involving forcible entry, detainers and defamation; and
five years for all other actions.

Actions to demand a right of way or to bring an action to abate a public or private nuisance are not time limited.

Time limits for bringing civil claims may not be suspended merely on agreement of the parties involved. However, such periods may be interrupted if:
a relevant action is filed before the court;
the creditors produce a written extrajudicial demand; or
the debtor issues a written acknowledgment of the debt.Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

Depositions may be commenced before a civil action has been instituted. However, a proper petition for this purpose must be filed with the court. The petition should indicate that the petitioner expects to be a party to an action but is presently unable to commence said action. The petition must also describe the expected action in which the deposition would be used and the facts to be established in and purpose of the deposition. If allowed, the deposition may be used in any action involving the same subject matter.

All other remedies may be availed of only after a civil action has been instituted.Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

A claimant institutes a civil action by filing a complaint and paying the proper fees therefor. The responding party will be notified by the court of the complaint through a summons and issued a copy of the complaint.

Due to greater court accessibility and the relative ease of initiating civil actions, court dockets have become congested. As a response, the Philippine judiciary has actively promoted amicable settlements to resolve civil actions. Thus, after they are instituted and before the trial, civil actions are diverted to mediation over which accredited mediators from the Philippine Mediation Centre preside. Where mediation fails, another chance to arrive at an amicable settlement is available during judicial dispute resolution, presided over by a judge. If mediation fails again and trial ensues until complete resolution of the civil action, a third attempt at mediation is available at the appellate level.Timetable

What is the typical procedure and timetable for a civil claim?

After the institution of a civil action, the responding party is served with a summons requiring an answer within 15 days and is issued a copy of the complaint. The claimant may file a reply within 10 days of receiving an answer. After all pleadings have been submitted, the court will set a hearing for a pre-trial conference, during which the parties identify:
the admitted facts;
the legal issues to be resolved;
their respective evidence and witnesses; and
the trial dates.

The trial then ensues, during which the parties present their evidence and witnesses. After trial terminates, the court may require the submission of memoranda. Thereafter, the civil action will be submitted for resolution.

The 1987 Constitution requires courts to resolve cases in three months in the first instance, 12 months on appeal (ie, before the Court of Appeals) and 24 months on final appeal (ie, before the Supreme Court). These periods commence after the case is submitted for resolution.Case management

Can the parties control the procedure and the timetable?

In general, parties cannot control the procedure, as each step in the process is a prerequisite for the next. However, the timetable may be controlled by implication. Parties may request specific deadlines and choose when hearings will be set, subject to the court’s approval. Further, while courts frown on postponements, parties may ask for leave of court to extend reglementary periods for submissions and defer trial dates or hearings for compelling reasons.Evidence – documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

While there is no express requirement on the matter, diligence dictates that parties preserve their evidence prior to the termination of the trial. After the presentation of their testimonial, documentary and object evidence in open court, parties submit their evidence to the court through a formal offer of evidence. It then becomes the court’s duty to preserve the parties’ evidence until the final disposition of the case.

Parties need not volunteer documents; however, they may seek leave of court to compel another party to produce documents (ie, non-privileged) which are material to the case.Evidence – privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

Communications between the following persons are generally privileged:
husband and wife;
attorney and client;
doctor and patient; and
priest and penitent.

In-house lawyers are covered by the attorney-client privilege. However, the privilege may be waived by the person in whose favour the privilege was constituted.Evidence – pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

Parties may exchange written evidence from witnesses prior to the trial proper. In civil actions, parties are required to submit the judicial affidavits of their witnesses to the court at least five days before pre-trial and serve the same on the other parties within the same period. Documentary evidence to be identified and authenticated by the witnesses is attached to these judicial affidavits.Evidence – trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

Evidence is presented through the presentation of witnesses, who are tasked with identifying and authenticating the parties’ documentary and object evidence. Witnesses may be subject to direct examination, cross-examination, re-direct examination and re-cross examination. Moreover, after both parties have concluded the presentation of their evidence, witnesses may be recalled with the court’s permission.

In civil actions, witnesses’ judicial affidavits take the place of their oral direct testimony. Nonetheless, the cross-examination, re-direct examination and re-cross examination of the witnesses are given orally.

If a party wishes to present an unwilling witness summoned by the court through a subpoena, this witness must give oral evidence. The rule on judicial affidavits does not apply to unwilling witnesses.Interim remedies

What interim remedies are available?

Parties may apply for preliminary attachment, preliminary injunction, receivership, replevin or support as interim remedies. These remedies are available to local proceedings only.

The more common interim remedies are:
preliminary attachment, which is available where the applicable fraudulent circumstances are present in a case and the applicant wishes to attach on the opponent’s property as security for the potential judgment award; and
preliminary injunction, which is available where:
the relief sought in the civil action is the performance or restraining the commission of a certain act;
the performance or non-performance of an act will result in injustice or irreparable damage to the applicant; or
there is a threat of violation of the rights of the applicant with respect to the subject matter of the action.Remedies

What substantive remedies are available?

Parties may seek relief in the form of specific performance or rescission of contracts and damages. The damages that may be recovered are as follows:
actual damages or the loss capable of pecuniary estimation;
moral damages, which compensates the claimant for (among other things) physical suffering, mental anguish and besmirched reputation;
nominal damages, which is similar to punitive damages;
temperate or moderate damages to compensate for a pecuniary loss where the amount cannot be determined with certainty;
liquidated damages or an indemnity or penalty agreed to be paid based on a contract; and
exemplary damages, which are imposed by way of example for the public good.Enforcement

What means of enforcement are available?

As regards judgments for money, the officer of the court may simply demand payment from the judgment obligor. If the judgment obligor cannot pay in full, the officer may levy on the properties of the judgment obligor, which includes debts due the judgment obligor and bank deposits. However, certain properties indispensable to the judgment obligor’s livelihood and those qualifying as basic necessities are exempt from execution.

The execution of judgments for specific performance are straightforward. Failure to comply may result in the court directing the performance of the act at the cost of the judgment obligor, or contempt in some cases.Public access

Are court hearings held in public? Are court documents available to the public?

In general, court hearings for civil cases are conducted in public, except those concerning children and family cases and adoption proceedings, which are confidential in nature. Similarly, case files are generally available to the public, except records concerning children and family cases and adoption proceedings.Costs

Does the court have power to order costs?

Yes. The courts may rule that either party pay the costs of an action, or that the same be divided. Costs are calculated in accordance with the Supreme Court’s guidelines.Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

Yes, contingent fee arrangements are accepted in the Philippines as these are beneficial to parties which have meritorious claims but are unable to secure legal counsel due to insufficient funds. Under contingent fee arrangements, legal fees are usually a fixed percentage of what may be recovered in an action. Hence, a lawyer would be able to collect legal fees only if the litigation succeeds.

A party may commence an action using third-party funding. However, in the strict sense, the court will not recognise the funding arrangement. Hence, the third party may not be able to collect from the judgment award. Instead, the third party may demand payment from the party pursuant to their agreement.Insurance

Is insurance available to cover all or part of a party’s legal costs?

Yes, legal costs may be covered by liability insurance, including indemnity insurance, director and officer liability insurance and comprehensive general liability insurance.Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

Yes, the Philippines allows class action suits to be filed in regular courts. The general rule for a class suit to be filed is that:
the subject matter is of common or general interest to many persons; and
the persons are so numerous making it impractical to bring them all before the court.

Class action suits aim to obtain relief for or against numerous persons as a group or as an integral entity, and not as separate, distinct individuals whose rights or liabilities are separate from and independent of those affecting the others.Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

In general, appeals to higher courts are available against adverse decisions rendered by lower courts. The appeal, when available, usually requires the listing of an assignment of errors by the court in rendering the decision on any question of law or fact that has been raised in the lower court and which is within the issues framed by the parties.

Court of Appeals decisions may be appealed to the Supreme Court, which is deemed the final arbiter for all cases.Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

The Philippines recognises foreign judgments and allows procedures for the enforcement thereof. This practice is based on generally accepted principles of international law, by virtue of the incorporation clause of the Constitution that consider these principles as forming part of the laws of the land even if they are not derived from treaty obligations.

Although Philippine courts have not laid down the exact boundaries by which foreign judgments can be recognised and enforced, there is no question that this remedy is considered among the universally accepted tenets of international law. States generally accept in principle the need for such recognition and enforcement – albeit subject to limitations of varying degrees – and the Philippines is no exception.

Nonetheless, anyone seeking to enforce a foreign judgment or final order may be prevented by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact.Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

Yes. The Revised Rules of Evidence requires documentary evidence arising from official acts of a sovereign authority, or its official bodies, tribunals or public officers to be accompanied by:

its official publication; ora copy attested by the officer having legal custody of the document and a certificate that said officer has custody.

The certificate may be made by any officer (ie, secretary of the embassy or legation, consul general, consul, vice consul or consular agent) in the foreign service of the Philippines stationed in the pertinent foreign country. The certificate must also be authenticated by the seal of their office. Public documents not covered above must be authenticated at the Philippine embassy in the foreign country. Notably, the Philippines recently acceded to the Apostille Convention, which allows for a simplified process in authenticating foreign-made or foreign-kept documents.

As regards oral evidence, depositions and written interrogatories are acceptable modes of preserving testimony of witnesses located outside the Philippines.

ArbitrationUNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

Yes. The Alternative Dispute Resolution Act 2004 categorically adopts in its entirety the UNCITRAL Model Law, both for international and domestic commercial arbitration.Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

An agreement to arbitrate a controversy arising between parties, as well as a submission to arbitrate an existing controversy, must be in writing and subscribed by the party sought to be charged or by their lawful agent.Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

In the absence of an agreed method to select an arbitrator, the parties must seek guidance from a first-level court, which will designate an arbitrator or arbitrators.

The court may appoint one or three arbitrators, according to the importance of the controversy involved.

The appointment of an arbitrator may be challenged if an arbitrator discovers any circumstances likely to create a presumption of bias or which they believe might disqualify them as an impartial arbitrator; the parties are made aware of such circumstances. Such challenges can be made even after arbitration has begun.Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

A person who wishes to be an arbitrator should be of legal age, with no imposed restrictions as to their capacity to exercise their civil rights and must be able to read and write. No person appointed to serve as an arbitrator may be related by blood or marriage within the sixth degree to either party to the controversy. No person may serve as an arbitrator in any proceeding if they:
have or have had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding; or
have any partiality or prejudice that may gravely affect the right of a party to a fair award.Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Yes, there are specific provisions on how to initiate arbitration, appoint arbitrators and conduct arbitration hearings under Republic Act 876 (the Arbitration Law) and Republic Act 9285 (the Alternative Dispute Resolution Act 2004) and its implementing rules and regulations.

Arbitration is allowed when:
Two or more persons agree to submit to arbitration any controversy existing between them at the time of the submission, which controversy may be the subject of an action.
The parties to a contract agreed in said contract to settle by arbitration a controversy thereafter arising between them.

In order to initiate arbitration, the provisions of the submission or contract must be complied with. For instance, where a prior demand is required under the arbitration contract, the claimant must serve on the responding party a demand for arbitration containing the nature of the controversy, the amount involved and the relief sought.

On the other hand, where a party to a submission to arbitration refuses to arbitrate, the other party must also serve a demand for arbitration as stated above.

However, the submission or contract may be revoked on such grounds that exist under Philippine law for revocation of any contract.

Further, the following matters cannot be the subject of arbitration by virtue of certain public policies that may be affected or violated:
labour disputes covered by the Labour Code;
a person’s civil status;
marriage validity;
grounds for legal separation;
courts’ jurisdiction;
future legitime (ie, a succession issue);
criminal liability; and
future support (ie, a family law issue).Court intervention

On what grounds can the court intervene during an arbitration?

Judicial intervention is permitted if:
it is unclear whether the arbitration agreement and its provisions are valid and enforceable;
it is unclear whether a dispute is covered by the arbitration agreement;
an action demanding arbitration should be filed;
interim remedies are necessary to conserve the subject matter of arbitration pending appointment of the arbitrators;
a petition to quash or vacate the award is warranted;
the confirmation and enforcement of the award is due;
the appointment or challenge of an arbitration is necessary due to an event of default of the appointing authority; or
appeals from a judgment of the court are filed.Interim relief

Do arbitrators have powers to grant interim relief?

Yes. A request for an interim measure of protection to prevent irreparable loss, preserve evidence or compel the performance of an act may be made with the arbitral tribunal after its constitution and during the arbitral proceedings. The arbitral tribunal is deemed constituted when the final nominated arbitrator (ie, the sole arbitrator or the third arbitrator) has accepted the nomination and the party making the request received written communication of such acceptance.

Where an arbitral tribunal is powerless to act or unable to act effectively, the request may be made with the regular courts. If the arbitral tribunal is not yet constituted, the request for an interim measure will have to be filed in court.Award

When and in what form must the award be delivered?

The parties may agree on the period within which the award must be rendered. Such agreement must be in writing. In the absence of an agreement, arbitrators must render an award within 30 days after the closing of the hearings or, if the oral hearings have been waived, within 30 days after the arbitrators have officially closed the proceedings in lieu of oral hearings. The parties may likewise agree to extend this period.

The award must be written and signed and acknowledged by the sole arbitrator or by a majority of the arbitrators, if more than one. Each party will be provided with a copy of the award.Appeal

On what grounds can an award be appealed to the court?

The agreement by the parties to refer a dispute to arbitration means that the arbitral award is final and binding. A party to an arbitration is therefore precluded from filing an appeal or a petition for certiorari questioning the merits of an arbitral award.

Unless a public policy is violated or the substance and format of the arbitration proceedings are infirm, as provided for under the UNCITRAL Model Law, the arbitral award may not be vacated by filing an appeal or set aside by filing an action with the appellate courts.Enforcement

What procedures exist for enforcement of foreign and domestic awards?

Domestic arbitral awards are executed in the same manner as final and executory decisions of first-level courts.

The recognition and enforcement of international arbitral awards are governed by the rules set out in the New York Convention, to which the Philippines is a signatory.Costs

Can a successful party recover its costs?

Under Philippine arbitral rules, costs are generally borne equally by the parties unless otherwise agreed on or directed by the arbitrator or arbitral tribunal.

There are specific instances in court filings where the parties which are unsuccessful in opposing the enforcement of arbitral awards or in questioning the jurisdiction of the arbitral tribunal are made to shoulder the costs of the suit, including the payment of lawyers’ fees incurred by the prevailing party.

Alternative dispute resolutionTypes of ADR

What types of ADR process are commonly used? Is a particular ADR process popular?

Aside from arbitration, the Philippines recognises other forms of ADR. Acceptable forms of ADR include:
mediation;
conciliation;
early neutral evaluation;
mini trial; or
any combination thereof.

The most commonly used ADR methods (and mandated by the courts) are mediation and judicial dispute resolution conferences. These are normally conducted before the trial proper begins.Requirements for ADR

Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

In both civil and criminal cases, mediation and judicial dispute resolution conferences are ADR methods that parties to a case must undergo during the proceedings or before the trial begins. In criminal cases, only the civil aspect of the claim can be the subject of ADR proceedings.

MiscellaneousInteresting features

Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

If mediation fails and the case proceeds to trial, discussions or statements made during ADR hearings are generally inadmissible as evidence against the party making the statement.

Further, even at the appellate level, mediation is available in civil claims (except for those that cannot be compromised as a matter of public policy) and for minor crimes. Tax court and quasi-judicial agency judgments can also be the subject of appellate court mediation proceedings.

Update and trendsRecent developments

Are there any proposals for dispute resolution reform? When will any reforms take effect? (Please also mention any ground-breaking recent cases, etc.)

One of the more contentious issues in arbitration involves questions of law on jurisdiction, particularly cases heard and tried before the Construction Industry Arbitration Commission (CIAC). The construction industry in the Philippines is at the forefront of arbitration law practice due to the fact that the CIAC was one of the earliest arbitral bodies created by law (ie, in 1985) and has the richest experience among all other arbitral bodies.

The law creating the CIAC provides that the CIAC has original and exclusive jurisdiction in commercial disputes between parties to a construction agreement where there exists an arbitration clause, regardless of whether the parties themselves specified a different arbitration procedure or tribunal and venue (outside the Philippines) to hear and decide the dispute.

The Supreme Court has generally upheld the CIAC’s right to assume jurisdiction regardless of the intent of the parties in the contract to confer jurisdiction to a different arbitral tribunal. However, this is particularly controversial, as one of the main elements of arbitration is giving importance to the wishes of the parties, including their choice of jurisdiction. Depriving the parties of this option (at least in construction agreements) nullifies one of the key elements of arbitration.

There has been a move to soften this position among some members of the CIAC, but so far the Supreme Court has made no ruling to the contrary. Notably, in a recent Supreme Court decision, the CIAC’s jurisdiction was expanded to include government contracts involving construction projects even where the contract contains no arbitration clause.

Aside from the CIAC, one of the more popular arbitration centres is the privately run Philippine Dispute Resolution Centre (PDRCI). In recent years the number of cases referred to the PDRCI has steadily grown.

[Ocampo, Manalo, Valdez & Lim Law Firm - Joan Roshen M. Dueñas and Manolito Alvarez Manalo].

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Number and qualifications of incorporators under the Revised Corporation Code

See - https://www.lexology.com

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Philippines: The Securities and Exchange Commission issues guidelines on the number and qualifications of incorporators under the Revised Corporation Code

By Blog Global Compliance News

Baker McKenzie

September 13, 2019

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Recent Developments

To implement Section 10 of Republic Act No. 11232 or the Revised Corporation Code of the Philippines (Revised Corporation Code),[1] the Securities and Exchange Commission (SEC) has issued Memorandum Circular No. 16 series of 2019 entitled: Guidelines on the Number and Qualifications of Incorporators under the Revised Corporation (Circular). The Circular provides for the composition and requirements for incorporators of domestic corporations.

Implications for applicant-corporations

The Circular amends the previous requirements and policies of the SEC with respect to incorporators. Persons seeking to apply for incorporation of a domestic corporation (stock or non-stock) with the SEC must comply with the requirements in the Circular. The SEC has the power to require submission of the required documents before it approves an application for incorporation.

What the Circular says

The Circular provides for the following:

1. Two or more persons but not more than 15 may organize themselves and form a domestic corporation, except a one-person corporation, under the Revised Corporation Code.
2. Each incorporator must own or be a subscriber to at least one share of the capital stock of the proposed stock corporation, or must be a member of the proposed non-stock corporation.

The incorporators may be composed of any combination of (i) natural individual persons, (ii) SEC-registered partnership, (iii) SEC-registered domestic corporations, or (iv) foreign corporations.

3. Certain documents are required for each type of incorporator, as follows:

Type of incorporator	Specific requirement
SEC-registered partnership	Partners’ Affidavit, duly executed by all partners certifying that they have authorized the partnership to invest in the corporation to be formed and that they have designated one of the partners to be the signatory to the incorporation documents. Partnerships under “dissolved” or “expired” status with the SEC shall be authorized to become an incorporator.
SEC-registered domestic corporations	Directors’ Certificate of Secretary’s Certificate certifying that the incorporator has obtained the approval of majority of its board of directors / trustees, ratified by at least 2/3 of the outstanding capital stock or members, to invest in the proposed corporation and specifically naming its signatory to the incorporation documents. Domestic corporations under “delinquent,” “suspended,” “revoked,” or “expired” status with the SEC shall not be authorized to become an incorporator.
Foreign corporations	Board resolution or Directors’ Certificate or Secretary’s Certificate or its equivalent, duly authenticated or apostilled by the Philippine Embassy or consulate, certifying that the foreign corporation is authorized to invest in the proposed corporation and specifically naming the signatory to the incorporation documents.

4. An individual signing the Articles of Incorporation (AOI) and By-Laws must indicate the capacity upon which the signatory is signing the same (i.e., as incorporator, or as representative of XYZ Corp., etc.). An individual designated to sign the AOI and By-Laws on behalf of an incorporator which is not a natural person must also indicate the corporate or partnership name of the entity represented and for whom he/she is executing the same.

5. An individual who signed the AOI on behalf of an incorporator who is not a natural person may not be named as director or trustee in the same AOI unless such individual also owns at least one share or is also a member of the proposed corporation.

6. Processing of applications for incorporation in accordance with the Revised Corporation Code shall be done manually and the SEC has been receiving such applications starting 2 August 2019.

The Circular took effect on 2 August 2019, immediately following its publication in a newspaper of general circulation on 1 August 2019.

Actions to Consider

The Circular amends the previous requirements for incorporators of a domestic corporation, by minimizing the required number of incorporators, and allowing juridical persons as incorporators. Applicants for incorporation should maximize the flexibility provided in the Circular in structuring the arrangements for the incorporation of a domestic corporation in the Philippines.

Quisumbing Torres’ Corporate and Commercial Practice Group can assist clients in filing applications for incorporation with the SEC and ensure compliance with the guidelines and requirements provided in the Circular.

[1] Section 10 of the Revised Corporation Code provides that:

SECTION 10. Number and Qualifications of Incorporators. — Any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. Incorporators who are natural persons must be of legal age.

Each incorporator of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock.

A corporation with a single stockholder is considered a One Person Corporation as described in Title XIII, Chapter III of this Code.

[Baker McKenzie - Maria Christina Macasaet-Acaban and Lara Camille A. Lee]
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Costs, settlement and funding of appeals in Philippines - SyCip Salazar Hernandez & Gatmaitan

See - https://www.lexology.com/library/detail.aspx?g=85c5c061-1c88-4086-90e8-93b02fec4f76&utm_source=lexology+daily+newsfeed&utm_medium=html+email&utm_campaign=lexology+subscriber+daily+feed&utm_content=lexology+daily+newsfeed+2019-10-02&utm_term=


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Costs, settlement and funding of appeals in Philippines
SyCip Salazar Hernandez & Gatmaitan
August 19, 2019

What are the rules regarding attorneys’ fees and costs on appeal?

There are two commonly accepted concepts of attorneys’ fees: ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his or her client for the legal services he or she has rendered to the latter; while in its extraordinary concept, attorneys’ fees are deemed indemnity for damages ordered by the court to be paid by the losing party in litigation. The instances where these may be awarded are those enumerated in article 2208 of the Civil Code (Alva v High Capacity Security Force, Inc, G R No. 203328, 8 November 2017). An appellate court may affirm, modify or set aside a trial court’s award of extraordinary attorneys’ fees in the process of appellate review.

Meanwhile, costs shall be awarded in favour of the prevailing party as a matter of course, but the court has the power, for special reasons, to adjudge that either party shall pay the costs of an action or that the same be divided, as may be equitable. Likewise, where an action or appeal is found to be frivolous, double or treble cost may be imposed on the plaintiff or appellant, which shall be paid by his or her attorney, if so ordered by the court. Again, this imposition may be affirmed, modified or set aside on appeal.

Settlement of first instance judgment after appeal lodged

Can parties enter into a settlement agreement to vacate the trial court judgment after an appeal has been taken?

Yes. Parties are allowed to enter into compromise or settlement agreements that cover cases pending trial, on appeal or even those that have already been finally decided. There is no time limitation as to when a compromise or settlement agreement may be entered into (Magbanua v Uy, G R No. 161003. 6 May 2005).

Limits on settlement after commencement of appeal

Are there any limits on settlement once an appeal has been taken?

The filing of an appeal does not limit the parties’ ability to enter into compromise or settlement agreements as long as such agreements are not contrary to law, morals, good customs or public policy. Article 2935 of the Civil Code of the Philippines, however, provides that no compromise upon the following questions shall be valid:

the civil status of persons;
validity of a marriage or a legal separation;
any ground for legal separation;
future support;
jurisdiction of courts; or
future legitime.

Third-party funding

May third parties fund appeals?

There are no specific rules in this jurisdiction that govern third-party litigation funders, and a litigant would ordinarily be free to source his or her litigation funds. However, an agreement whereby an attorney agrees to pay the expenses of proceedings to enforce the client’s rights is champertous (Roxas v Republic Real Estate Corp, G R No. 208205, 1 June 2016). A champertous contract is considered against public policy as it violates the fiduciary relations between the lawyer and his or her client, whose weakness or disadvantage may be exploited by the former (Nocom v Camerino, G R No. 182984, 10 February 2009).

Disclosure of litigation funding

If litigation funding is permitted in an appeal, must funding sources be disclosed to the court or other parties to the litigation?

There are no express rules covering third-party litigation funders in this jurisdiction (see question 25).

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Foreign Divorce

See - https://batasnatin.com/law-library/civil-law/persons-and-family/122-foreign-divorce.html
[https://batasnatin.com]

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Foreign Divorce
In Edgar San Luis v. Felicidad San Luis, G.R. No. 133743; Rodolfo San Luis v. Felicidad Sagalongos (Felicidad San Luis), G.R. No. 134029, February 6, 2007, the late Governor Felicisimo San Luis got married three (3) times. In his first marriage, he had six (6) children. Then, his first wife died and got married again. They had a child. After the divorce obtained his second wife in the USA, he got married in the USA. He died in the Philippines. The third wife, Felicidad filed a petition to settle his estate, alleging that she was married to Felicisimo before he died and after his second wife obtained a decree of divorce in the USA. Two children of Felicisimo opposed on the ground that Felicisimo and Felicidad were not legally married as the divorce decree obtained by the second wife was not valid and binding in the Philippines, hence, it’s a bigamous marriage. The divorce decree was obtained in 1973 in Hawaii. It was contended that since their marriage was solemnized in 1974 or before the effectivity of the Family Code in 1988, the law cannot be given retroactive effect. Rule on the contention.

Held: In resolving the issue, the SC said that the issue of whether a Filipino who is divorced by his alien spouse abroad may validly remarry in the Philippines considering that Felicidad’s marriage to Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3, 1988. In resolving this issue, the SC said that it need not retroactively apply the provisions of the Family Code, particularly Article 26, par. (2) considering that there is sufficient jurisprudential basis allowing the retroactivity of the Family Code.

The case of Van Dorn v. Romillo, Jr., 139 SCRA 139 (1985), involved a marriage between a foreigner and his Filipino wife, which marriage was subsequently dissolved through a divorce obtained abroad by the latter. Claiming that the divorce was not valid under Philippine law, the alien spouse alleged that his interest in the properties from their conjugal partnership should be protected. The Court, however, recognized the validity of the divorce and held that the alien spouse had no interest in the properties acquired by the Filipino wife after the divorce. Thus, it was held:

“In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:

“The purpose and effect of a decree of divorce from the bond of matrimony by a competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie, when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty, that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage.”

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner’s husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country’s Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property.”

As to the effect of divorce on the Filipino wife, the Court held that she can no longer be considered married to the alien spouse. Further, she should not be required to perform her marital duties and obligations. It held:

“To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and still subject to a wife’s obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. “

This principle was thereafter applied in Pilapil v. Ibay-Somera, 174 SCRA 653 (1989), where the Court recognized the validity of a divorce obtained abroad. In the said case, it was held that the alien spouse is not a proper party in filing the adultery suit against his Filipino wife. The Court stated that “the severance of the marital bond had the effect of dissociating the former spouses from each other; hence the actuations of one would not affect or cast obloquy on the other.”

Likewise, in Quita v. Court of Appeals, 300 SCRA 406 (1998), the Court stated that where a Filipino is divorced by his naturalized foreign spouse, the ruling in Van Dorn applies. Although decided on December 22, 1998, the divorce in the said case was obtained in 1954 when the Civil Code provisions were still in effect.

The significance of the Van Dorn case to the development of limited recognition of divorce in the Philippines cannot be denied. The ruling has long been interpreted as severing marital ties between parties in a mixed marriage and capacitating the Filipino spouse to remarry as a necessary consequence of upholding the validity of a divorce obtained abroad by the alien spouse. In his treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that “if the foreigner obtains a valid foreign divorce, the Filipino spouse shall have capacity to remarry under Philippines law.” In Garcia v. Recio, G.R. No. 138322, October 2, 2001, 366 SCRA 437, the Court likewise cited the aforementioned case in relation to Article 26.

In the recent case of Republic v. Orbecido III, the historical background and legislative intent behind paragraph 2, Article 26 of the Family Code were discussed, to wit:

On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise known as the “Family Code”, which took effect on August 3, 1988. Article 26 thereof states:

“All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35, 36, 37 and 38.”

On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was likewise signed into law, amending Articles 26, 36 and 39 of the Family Code. A second paragraph was added to Article 26. As so amended, it now provides:

“ARTICLE 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Where a divorce between a Filipino citizen and a foreigner is validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law.” (Emphasis supplied)

Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article 26, is to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse.

Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo, Jr.. The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court held therein that a divorce decree validly obtained by the alien spouse is valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry under Philippine law.

As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly obtained abroad by the alien spouse. With the enactment of the Family Code and paragraph 2, Article 26 thereof, our lawmakers codified the law already established through judicial precedent.

Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one of the parties and productive of no possible good to the community, relief in some way should be obtainable. (Goitia v. Campos Rueda, 35 Phil. 252 (1916)). Marriage, being a mutual and shared commitment between two parties, cannot possibly be productive of any good to the society where one is considered released from the marital bond while the other remains bound to it. Such is the state of affairs where the alien spouse obtains a valid divorce abroad against the Filipino spouse.

Petitioner cited Articles 15 and 17 of the Civil Code in stating that the divorce is void under Philippine law insofar as Filipinos are concerned. However, in light of the Court’s rulings in the cases discussed above, the Filipino spouse should not be discriminated against in his own country if the ends of justice are to be served. (Van Dorn v. Romillo). In Alonzo v. Intermediate Appellate Court, 150 SCRA 259 (1987), the Court stated:

“But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their language. What we do instead is find a balance between the word and the will, that justice may be done even as the law is obeyed.

As judges, we are not autonomous. We do not and must not unfeelingly apply the law as it is worded, yielding like robots to the literal command without regard to its cause and consequence. “Courts are apt to err by sticking too closely to the words of a law”, so we are warned, by Justice Holmes again, “where these words import a policy that goes beyond them.”

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More than twenty centuries ago, Justinian defined justice “as the constant and perpetual wish to render every one his due”. That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with justice.”

Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad with the legal personality to file the present petition as Felicisimo’s surviving spouse. However, the records show that there is insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well as the marriage of respondent and Felicisimo under the laws of the U.S.A. In Garcia v. Recio, the Court laid down the specific guidelines for pleading and proving foreign law and divorce judgments. It held that presentation solely of the divorce decree is insufficient and that proof of its authenticity and due execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or document may be proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer having legal custody of the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office.

With regard to Felicidad’s marriage to Felicisimo allegedly solemnized in California, U.S.A., she submitted photocopies of the Marriage Certificate and the annotated text of the Family Law Act of California which purportedly show that their marriage was done in accordance with the said law. As stated in Garcia, however, the Court cannot take judicial notice of foreign law as they must be alleged and proved.

Therefore, the case was remanded to the trial court for further reception of evidence on the divorce decree obtained by Merry Lee and the marriage of respondent and Felicisimo.

Even assuming that Felicisimo was not capacitated to marry Felicidad in 1974, nevertheless, the latter has the legal personality to file the subject petition for letters of administration, as she may be considered the co-owner of Felicisimo as regards the properties that were acquired through their joint efforts during their cohabitation.

Section 6, Rule 78 of the Rules of Court states that letters of administration may be granted to the surviving spouse of the decedent. However, Section 2, Rule 79 thereof also provides in part:

Section 2. Contents of petition for letters of administration. – A petition for letters of administration must be filed by an interested person and must show, as far as known to the petitioner: x x x.

An “interested person” has been defined as one who would be benefited by the estate, such as an heir, or one who has a claim against the estate, such as a creditor. The interest must be material and direct, and not merely indirect or contingent. (Saguinsin v. Lindayag, 116 Phil. 1193 (1962)).

In the instant case, Felicidad would qualify as an interested person who has a direct interest in the estate of Felicisimo by virtue of their cohabitation, the existence of which was not denied by petitioners. If she proves the validity of the divorce and Felicisimo’s capacity to remarry, but fails to prove that her marriage with him was validly performed under the laws of the U.S.A., then she may be considered as a co-owner under Article 144 of the Civil Code. This provision governs the property relations between parties who live together as husband and wife without the benefit of marriage, or their marriage is void from the beginning. It provides that the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership. In a co-ownership, it is not necessary that the property be acquired through their joint labor, efforts and industry. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. Hence, the portions belonging to the co-owners shall be presumed equal, unless the contrary is proven. (Valdes v. RTC, Br. 102, Q.C., 328 Phil. 1289 (1996)).

Meanwhile, if Felicidad fails to prove the validity of both the divorce and the marriage, the applicable provision would be Article 148 of the Family Code which has filled the hiatus in Article 144 of the Civil Code by expressly regulating the property relations of couples living together as husband and wife but are incapacitated to marry. In Saguid v. Court of Appeals, G.R. No. 150611, June 10, 2003, 403 SCRA 678, which occurred before the Family Code took effect, Article 148 governs. The Court described the property regime under this provision as follows:
“The regime of limited co-ownership of property governing the union of parties who are not legally capacitated to marry each other, but who nonetheless live together as husband and wife, applies to properties acquired during said cohabitation in proportion to their respective contributions. Co-ownership will only be up to the extent of the proven actual contribution of money, property or industry. Absent any proof of the extent thereof, their contributions and corresponding shares shall be presumed to be equal.

x x x x

In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership of properties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively, we ruled that proof of actual contribution in the acquisition of the property is essential. x x x

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence and reliance must be had on the strength of the party’s own evidence and not upon the weakness of the opponent’s defense. x x x

Thus, the legal capacity to file the subject petition for letters of administration may arise from her status as the surviving wife of Felicisimo or as his co-owner under Article 144 of the Civil Code or Article 148 of the Family Code.

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Recently enacted Tax Amnesty Act - RA 11313

See - https://www.manilatimes.net/2019/10/03/opinion/columnists/the-tax-amnesty-solution/625397/


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The tax amnesty solution
By JOEL L. TAN-TORRESOCTOBER 03, 2019

THE TAX AMNESTY SOLUTION

JOEL L. TAN-TORRE
First of two parts

TO avail or not? That is the question confronting taxpayers, both individual and corporate, on whether to rely on the recently enacted Tax Amnesty Act to find closure to their tax problems and woes.

Let us do a fast rewind. Last February 2019, taxpayers received a hearty Valentine’s gift from Congress and President Duterte. Republic Act (RA) 11213: the long-awaited tax amnesty (TA) under Package 1B of the Duterte administration’s Comprehensive Tax Reform Program was finally signed into law.

The Tax Amnesty Act offers taxpayers the opportunity to be forgiven of their past lapses in meeting their tax obligations, and eventually settle these liabilities affordably. As a complement to Tax Reform for Acceleration and Inclusion Law, the Tax Amnesty Act is expected to ramp-up revenue collections of the government to meet its priority infrastructural and socio-economic agenda. An amnesty may be construed as a relaxation of some stringent tax rules, but it is indicative that more aggressive tax enforcement efforts are forthcoming.

In the journey of the passage into law of the Tax Amnesty Act, there were deletions of some provisions contained in the version of the law sent by Congress to Malacañang for approval. In a veto letter dated Feb. 22, 2019, the President said the General Tax Amnesty (GTA) provisions were being vetoed because of a lack of safeguards against tax evasion. The President said: “I believe that, ultimately, the original objective will not be met under the proposed framework. Without the provisions breaking down the walls of bank secrecy, setting the legal information for tax purposes, and safeguarding against those who abuse the amnesty by declaring an untruthful asset or net worth, a general amnesty that is overgenerous and unregulated would create an environment ripe for future tax evasion, the very thing we wish to address.”

In his veto message, the President also indicated, “The general amnesty program is meant to give taxpayers a fresh start as well as to signal the start of a fair tax enforcement campaign by the tax authorities. It is not meant to be abused for the gain of the few and the loss of the rest of the citizenry. These safeguards against tax evasion are estimated to contribute P76.6 billion to the public funds in the next five years which we hope to use to better our infrastructure and services.” It is to be noted that with the presidential veto of the GTA, the tax revenues estimated from the tax amnesty amounts to a lower P27.5 billion.

With the veto of the GTA provisions, what were left in the Tax Amnesty Law were the TA on delinquent accounts and the estate tax.

The veto letter came out with this insightful message: “More than the much welcomed revenue to be generated by this law, the amnesty is about rebuilding trust between the government and the people — an opportunity for citizens to disclose past failings and for the government to forgive them with the expectation of better compliance in the future.”

If and how these noble intentions will be attained remain to be seen.

TA on delinquent accounts

With the presidential veto of the General Tax Amnesty provisions, the TA on delinquent accounts and estate tax remained in RA 11213.

The TA on delinquent accounts provide a relief for those taxpayers who have unresolved tax cases pending collection proceedings in the Bureau of Internal Revenue (BIR) or unsettled in the judicial courts or Department of Justice (DoJ). This also covers situations where taxpayers failed to remit to the BIR taxes that they previously withheld from suppliers or employees. Several issuances have been promulgated by the Department of Finance and the BIR for this TA, including Revenue Regulations 4-2018, Revenue Memorandum Circulars 23-2019 and 57-2019. It is expected that additional guidelines will still be issued.

This TA covers all national internal revenue taxes for taxable year 2017 and prior years. I like to categorize the different situations covered in the TA into two. The first category consists of where the BIR has issued final assessment notices (FAN) or final decision on disputed assessments (FDDA), which have become final and executory since the taxpayer failed to contest these, administratively or judicially, within the prescribed time period. The BIR considers these as being delinquent accounts and included in its inventory of arrears accounts that amount to over P300 billion to date. The second category includes all other cases that may not have FAN or FDDA becoming final and executory but are considered delinquent under the guidelines. These include criminal cases pending with the DoJ or prosecutor’s office or the courts for tax evasion and other criminal offenses; cases with final and executory judgment by the courts; and withholding tax liabilities of withholding agents arising from their failure to remit withheld taxes.

Those availing of the TA on delinquent accounts have until one year from the effectivity of the rules or April 23, 2020 to complete the payment of the amnesty tax and submit all documentary requirements. The guidelines issued by the BIR and the Tax Amnesty Return (“TAR”) or BIR Form 2118-DA contain the details of the documentary and procedural requirements.

The first requirement for the first category of tax delinquencies is to secure a certificate of tax delinquencies (CTD) from the BIR office concerned. The BIR is mandated to submit the CTD to the taxpayer who requests the same within the day of application. The requirements for the second category of TA case are different as prescribed in the guidelines,

The TAR and the acceptance payment form (APF) or BIR Form 0621-DA can be accomplished without too much difficulty. The TA rates for the different cases are the following:

– 40 percent of basic tax for delinquent accounts in the first category;

– 50 percent of basic tax for tax cases subject of final and executory judgment by the courts;

– 60 percent of the basic tax for criminal cases pending with the DoJ/prosecutor’s office or the courts; and

– 100 percent of the basic tax for unremitted withholding taxes.
Once the TAR and APF are accomplished, these are to be submitted to the BIR office concerned. The BIR will review and endorse these back to the taxpayer, with the APF bearing the signature of the authorized BIR officer.

The taxpayer can now proceed with the payment of the amnesty tax to the authorized accredited agent bank or revenue collection office (RCO) by merely presenting the APF. There is no need to present the TAR or any supporting document to the bank or RCO. Instead, all of the documents, including the TAR, bank-validated APF and supporting documents should be filed in triplicate with the BIR office concerned after the payment. Taxpayer will be given the received copy of all of these documents,

Within 15 calendar days from the submission to the BIR, the authority to cancel (ATCA) will be issued by the BIR to the taxpayer. The ATCA will be the basis for the closure of the cases of taxpayers with delinquent accounts. Thereafter, the taxpayer can finally relax knowing that his tax cases are finally settled and henceforth “start clean” with the BIR moving forward.

TA on estate tax

One of the common tax problems that my clients, relatives and friends present to me is how to resolve their long-pending estate tax issues. Most of them have been unable to transfer to the rightful heirs the properties left by their ancestors since the required estate tax payments and clearances have not been completed after so many years since the decedent’s death. Consequently, they have not been able to put to maximum productive use these properties due to constraints of the unsettled estate tax and ownership issues.

With the passage of RA 11313 providing for a tax amnesty on estate tax, is the resolution of this problem forthcoming? This TA provides for the settlement of the tax obligations of estates of decedents who died on or before Dec. 31, 2017, with the payment of TA of 6 percent of the estate value. There are no interest or other penalties on late payment of these estate taxes for those availing of the tax amnesty. This can result in a hefty amount, especially for those estate tax cases which were supposed to have been payable for a long time already. It is to be noted that for estates of decedents who died after Dec. 31, 2017, the estate tax provisions under the Tax Reform for Acceleration and Inclusion law will apply, including the 6 percent estate tax rate similar to the TA estate tax rate

The TA on estate tax provides a relief for the administrators of and heirs to estates who have not been able to pay the estate taxes on properties left by decedents. Several issuances have been promulgated by the Department of Finance and the BIR for this TA, including Revenue Regulations (RR) 6-2018, Revenue Memorandum Order 33-2019, and Revenue Memorandum Circular 68-2019. It is expected that additional guidelines will be issued on this in the near future.

(To be continued tomorrow)
Joel L. Tan-Torre is a Certified Public Accountant who placed No. 1 in the May 1979 CPA board examinations. He was the BIR commissioner from 2009 to 2010 and chairman of the Professional Regulatory Board of Accountancy from 2014 to August 2018. He is a partner of Reyes Tacandong & Co. He completed his International Tax Program at the Harvard Law School in 1988.

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