- Litigation and Dispute ResolutionLitigation and Dispute Resolution
Civil cases generally involve enforcement of rights, collection of sum of money, claims for damages, actions affecting title to or interest in real property, implementation of contracts, and disputes concerning family relations.
1. A civil case is generally commenced by filing a complaint in court in the place of residence of the complainant or of the defendant, or, if the matter involves interest in a real property, in the place where the property is located.
2. The trial court summons the defendant and directs the filing his/her/its answer to the complaint.
3. As part of the pre-trial proceedings, the case is referred to mediation where the parties discuss the issues and strive to settle the dispute amicably. If mediation is successful, the parties enter into a compromise agreement. If mediation fails, the case is referred back to court.
4. When the case is referred back to court, the parties undergo another mediation phase referred to as judicial dispute resolution or “JDR”, which is facilitated by the judge. The parties again try to settle the dispute amicably. If JDR is successful, the parties enter into a compromise agreement. If JDR fails, the case proceeds to trial.
5. During trial, the parties present their evidence in support of their respective positions.
6. Based on the evidence presented, the court resolves the matter and issues a decision. The party who is able to establish his/her/its case with a “preponderance of evidence” will be awarded his/her/its claims. Preponderance of evidence refers to “evidence which is more convincing to the court as worthy of belief that that which is offered in opposition thereto” [30 Am Jur 2d §1164, 339].
7. The decision may be appealed by any of the parties. If no appeal is made, the decision becomes final and executory.
Intra-corporate disputes generally involve controversies arising out of the activities or relations in a partnership or corporation.
Like civil cases, an intra-corporate dispute is typically commenced with the filing of a case in court, and similarly undergoes mediation and JDR to explore the possibility of amicably settling the dispute.
If the parties are unable to settle amicably, the case likewise undergoes trial until the matter is resolved by the trial court on the basis of the evidence presented. The decision of the trial court may also be appealed by any of the parties.
Criminal cases involve the prosecution of offenses committed in violation of the Revised Penal Code and other penal provisions under special laws.
1. A criminal action is generally commenced by filing a complaint with the police or with the public prosecutor’s office where the crime or offense was committed. If the complaint is filed with the police, the police gathers the needed evidence and thereafter files the complaint with the public prosecutor’s office.
2. The public prosecutor conducts a preliminary investigation, during which the parties present their respective evidence to the public prosecutor, for the purpose of determining the existence of probable cause to indict the respondent.
3. Based on the evidence presented, the public prosecutor determines whether there is sufficient evidence to prosecute the case in court. If the public prosecutor finds that there is sufficient evidence to prosecute the case, the public prosecutor files the corresponding charge sheet against the accused in court. If the public prosecutor finds that the evidence is insufficient, the public prosecutor dismisses the action.
4. When the charges are filed in court, the court makes an independent evaluation of the records of the case to determine if there is sufficient basis to issue a warrant of arrest.
5. Depending on the nature of the case, the accused may be detained or he/she may post bail while the case is pending to ensure his/her presence during the hearing whenever required by the court.
6. The case then goes to trial during which the prosecution and the defense present their respective evidence.
7. Based on the evidence presented, the court determines whether the accused is guilty of the offense and, if so, imposes the appropriate penalty. If the accused is found guilty, the decision may be subject to an appeal. However, if the accused is acquitted, the decision is final and unappealable. In order to warrant a conviction, the prosecution is required, in the discharge of the burden imposed upon it of establishing by proof all the essential elements of the crime with which the accused in charged in the indictment, to establish beyond a reasonable doubt that the accused is guilty of the crime charged, and in the absence of such a degree of proof of the guilt of the accused, he is entitled to an acquittal [30 Am Jur 2d §1170, 349].
Labor cases involve claims under the Labor Code and other special laws affecting the rights of workers.
1. A labor case is generally initiated by filing a complaint with the National Labor Relations Commission (“NLRC”).
2. A labor arbiter conducts conciliation proceedings during which the parties try to settle the case amicably. If conciliation is successful, the case is terminated; if conciliation fails, the labor arbiter proceeds to hear the case.
3. During the hearing, parties submit their position papers and evidence in support of their respective claims. Unless the labor arbiter finds it necessary to conduct clarificatory hearings, the submissions made by the parties shall suffice to enable the labor arbiter to decide the case.
4. Based on the evidence presented, labor arbiter resolves the matter and issues a decision. Its decision may be appealed by any of the parties within the prescribed period. If no appeal is made, the decision becomes final and executory.
Complaints against overseas recruitment agencies are generally filed with and heard by the Philippine Overseas Employment Administration (“POEA”).
Cases against local manning agencies and their foreign principals initiated by seafarers are filed with and heard by the NLRC or, if subject to arbitration, by the National Conciliation and Mediation Board (“NCMB”).
Cases involving deadlocks in negotiations for collective bargaining agreement (“CBA”) are generally filed with and resolved by the NCMB.
Intellectual Property Rights Cases
Intellectual property rights cases involve infringements of registered patents, trademarks and copyrights, and other violations of the Intellectual Property Code.
1. An intellectual property case that is civil in nature is generally commenced by filing a complaint in court or at the Intellectual Property Office (“IPO”). If the claim for damages is less than Two Hundred Thousand Pesos (PHP200,000.00), the complaint is filed in court; if the claim for damages is Two Hundred Thousand Pesos (PHP200,000.00) or more, the complaint is filed with the IPO.
2. If the complaint is filed in court, the rules applicable to civil actions generally apply. If the complaint is filed with the IPO, the IPO summons the respondent and directs him/her/it to file his/her/its answer to the complaint.
3. The hearing officer of the IPO then conducts trial during which the parties present their evidence in support of their respective positions.
4. Based on the evidence presented, the hearing officer resolves the matter and issues a decision. The hearing officer may impose administrative penalties, such as seizure of the products, imposition of fine or assessment of damages.
5. The decision may be appealed by any of the parties. If no appeal is made, the decision becomes final and executory.
Violations of the penal provisions of the Intellectual Property Code are considered criminal offenses which are prosecuted in accordance with the rules on criminal procedure.
Cases before Quasi-Judicial Agencies
Many regulatory bodies of the government perform quasi-judicial functions. When performing quasi-judicial functions, a government agency determines if a person or entity subject of the agency’s regulations has violated any law or rule which may call for the imposition of penalties. Government agencies with exercise quasi-judicial functions include the Securities and Exchange Commission, Energy Regulatory Board, Housing Land Use and Regulatory Board, and National Telecommunications Commission.
1. A case before a quasi-judicial agency is generally commenced by filing a complaint.
2. The agency summons the respondent and requires the respondent to submit an answer.
3. The agency may conduct clarificatory hearings or trial during which the parties present evidence in support of their respective positions.
4. The agency resolves the case and issues a decision. The decision may include the imposition of penalties such as revocation of a permit or license, or assessment of a fine.
5. The decision may be appealed by any of the parties. If no appeal is made, the decision generally becomes final and executory.
Violations of the penal provisions of pertinent laws involving a quasi-judicial agency are considered criminal offenses which are prosecuted in accordance with the rules on criminal procedure.
Alternative Dispute Resolution
Alternative Dispute Resolution or “ADR” is a procedure by which a dispute or controversy is resolved using procedures other than court litigation or hearings before a government agency. ADR is voluntary and is resorted to by agreement of the parties. Dispute resolution via ADR is encouraged since it is generally less time-consuming and entails lower costs.
There are various forms of ADR, such as arbitration, mediation, early neutral evaluation and mini-trial.
1. Arbitration is a form of ADR wherein the parties appoint one or more arbitrators who hear the respective positions of the parties and thereafter resolve the dispute by rendering an arbitral award. The arbitral award may be submitted to court which may approve, modify, correct or vacate the arbitral award. The action of the court on the arbitral award may be appealed by any of the parties.
2. Mediation is a form of ADR wherein a mediator facilitates communication and negotiation between the parties, and assists them in reaching an amicable settlement of the dispute.
3. Mediation-Arbitration or Med-Arb is a two-step dispute resolution process wherein the parties first submit the dispute to mediation. If mediation fails, the parties then submit the dispute to arbitration.
4. Early Neutral Evaluation is an ADR process wherein the parties present summaries of their cases to an experienced, neutral person with expertise in the subject matter of the dispute. Such expert studies the positions of the parties and issues a non-binding assessment.
5. Mini-Trial is a structured dispute resolution method in which the merits of a case are argued before a panel comprised of senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement. [Republic Act No. 9285, otherwise known as the Alternative Dispute Resolution Act of 2004]
Disputes in the construction industry are commonly resolved via arbitration conducted by the Construction Industry Arbitration Commission (“CIAC”).
- Investment and Corporate PracticeInvestment and Corporate Practice
Incorporators of a Corporation
There should be at least five (5) natural individuals, a majority of whom should be residents of the Philippines, to act as incorporators of a Philippine corporation. However, a corporation may subscribe to the authorized capital stock of a corporation in the pre-incorporation stage. The incorporators are required to disclose their full names, residential address, citizenship, birth date, Tax Identification Number and official ID details.
Foreign Nationals or Foreign Corporations as Stockholders
A foreign national or foreign corporation can subscribe to and own shares of stock of a domestic corporation. There are nationality restrictions, which limit foreign ownership in certain industries. However, in certain instances and subject to certain requirements, foreign nationals and/or foreign corporations are allowed to be the controlling stockholder/s or can own up to 100% of the issued capital stock of a domestic corporation.
Under Philippine laws, a corporation has a separate and distinct juridical personality from its stockholders and/or officers. However, in instances where the corporate vehicle was utilized for fraudulent purposes, the law also allows the corporate identity to be pierced or lifted, in which case, responsibility or liability may be imposed upon the individuals forming or having control of the corporation.
Issuance of Shares
The issuance of shares of stock from the unissued authorized capital stock of a corporation is governed by the Securities Regulation Code of the Philippines. While, as a rule, registration is required before shares are issued, certain transactions may be classified as exempt from registration requirements, or the shares to be issued may be classified as exempt securities. Said issuance is subject to the approval or confirmation by the Securities and Exchange Commission.
The issuance of shares of stock or the subsequent transfer thereof is subject to the payment of a Documentary Stamp Tax in addition to the Capital Gains Tax, if any, in the latter event.
Issuance of Stock Certificates
A stockholder is entitled to the issuance of a Stock Certificate only upon payment of the full amount of his subscription, together with interest and expenses (in case of delinquent shares), if any is due. Partial payments on one subscription shall be deemed applied proportionately among the number of shares, in which case, no stock certificate can as yet be issued before its full payment. [SEC Opinion No. 06-113]
Corporate Reportorial Requirements
Philippine law generally requires the submission of the following:
a. General Information Sheet (“GIS”) – within thirty (30) days from the actual date of the Annual Stockholders or Members’ Meeting and/or any change in the composition of the Board of Directors or Trustees of a corporation or any other information in the GIS. If the corporation is unable to hold stockholders’ or members’ meeting for the calendar year, then the GIS must be filed not later than January 30 of the next calendar year. For corporations with annual gross sales or revenues of at least Php10,000,000.00, copies in electronic format (i.e. on disc drives or compact discs) must also be submitted.
b. Audited Financial Statements – stamped received by the Bureau of Internal Revenue and within 120 days (105 days for corporations whose securities are registered under the Revised Securities Act or Securities Regulation Code) after the end of the corporation's fiscal year as specified in the corporate By-Laws. For stock corporations with paid-up capital of less than Php50,000.00, or non-stock corporations with gross annual receipts of less than Php100,000.00 or total assets of less than Php500,000.00, the Financial Statements shall, at the minimum, be certified under oath by the treasurer of the corporation. For corporations with annual gross sales or revenues of at least Php10,000,000.00, copies in electronic format (i.e. on disc drives or compact discs) must also be submitted.
c. Affidavit of Non-Operation (in addition to the GIS and the Financial Statements) – within 120 days after the end of the fiscal year as specified in the corporate By-Laws, if the corporation is not in operation.
d. Stock and Transfer Book (for stock corporations) or Membership Book (for non-stock corporations) – within 30 days from the date of issuance of the certificate of incorporation.
A foreign corporation is defined as one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in the Philippines. [Sec. 123, Corporation Code of the Philippines] The application for such a license shall include specifically required data, including the designation of a resident agent, who shall be authorized to accept summons and processes in all legal proceedings affecting the corporation, which is meant to ensure that proper jurisdiction will be obtained over the foreign corporation in the event of suits and similar proceedings. [Sec. 126-128, Ibid.]
Subject to the approval by the Securities and Exchange Commission and/or the Board of Investments upon submission of certain documentary requirements, a foreign corporation may establish any of the following in the Philippines:
a. a Representative Office, for liaison and research work, quality control, and/or solicitation of clients, but which will not earn any income in the Philippines, with proof of inward remittance of at least US$30,000.00;
b. a Branch Office, which is allowed to do business and earn income in the Philippines. Generally, a branch office of a foreign corporation that qualifies as a “domestic market enterprise” must have a paid-up capital of at least US$200,000.00. However, where the activities of the domestic market enterprise involve advanced technology or where at least 50 direct employees are employed, the paid-up capital requirement is reduced to US100,000.00. A branch office that qualifies as an export enterprise (exporting 60% or more of its output) is not subject to any minimum capitalization requirement;
c. a Regional or Area Headquarter, to act as supervisory, communications and coordinating center for affiliates, subsidiaries, or branches in the Asia Pacific Region, but without any authority to do business or to earn income in the Philippines, which requires, among other things, proof of inward remittance of at least US$50,000.00 initially and, thereafter, US$50,000.00 annually;
d. a Regional Operating Headquarter, which is allowed to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries or branches in the Asia Pacific Region and in other foreign markets, which requires, among other things, proof of inward remittance of at least US$200,000.00; and
e. a Regional Warehouse, to (i) serve as a supply depot for the storage, deposit, and safekeeping of its spare parts, semi-finished products, and raw materials, (ii) fill up transactions and sales made by its head office or parent company, and (iii) serve as storage or warehouse of goods purchased locally for export abroad. A Regional Warehouse, which cannot do business or to earn income in the Philippines, may be set up by a foreign company which has established or will simultaneously establish a Regional or Area Headquarter or a Regional Operating Headquarter.
A corporation, partnership, or association which possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due may file with the proper court a petition for suspension of payments and for rehabilitation. Subject to compliance with certain requirements, including the submission of the rehabilitation plan, the court may issue an order to temporarily stop enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor. Thereafter, upon proof of viability of the rehabilitation plan, the court may grant the petition, which shall have, among others, the following effects:
a. The plan and its provisions shall be binding upon the debtor-corporation and all persons who may be affected by it, including the creditors, whether or not such persons have participated in the proceedings or opposed the plan or whether or not their claims have been scheduled;
b. The debtor-corporation shall comply with the provisions of the plan and shall take all actions necessary to carry out the plan; and
c. Payments shall be made to the creditors in accordance with the provisions of the plan.
- Taxation, Estate Planning and ProbateTaxation, Estate Planning and ProbateTaxes in the Philippines are imposed both on a national and on a local level. National taxes are imposed and collectible by the Philippine Bureau of Internal Revenue, while local taxes are levied by local government units, i.e., provinces, cities, municipalities, and barangays.
Philippine tax laws call for the imposition of the following essential taxes: (i) income tax; (ii) estate and donor’s tax; (iii) value-added tax; (iv) excise tax; and (v) documentary stamp tax.
Income taxes are imposable on individuals and corporations. Individuals are classified as citizens or residents, while corporations include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations, or insurance companies, but does not include general professional partnerships (which are exempt from taxation) and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the Government.
Resident Citizens and Resident Aliens. Resident citizens and resident aliens are taxable on net income from all sources at graduated rates ranging from 5% to 32%.
Non-Resident Aliens Engaged in Trade or Business. Non-resident aliens engaged in trade or business in the Philippines are taxable on net income from all sources within the Philippines at graduated rates ranging from 5% to 32%. A non-resident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year shall be deemed a “non-resident alien doing business in the Philippines”.
Non-Resident Aliens Not Engaged in Trade or Business. Non-resident aliens not engaged in trade or business in the Philippines are taxable on gross income from all sources within the Philippines at the rate of 25%, withheld at source.
Reduced Rate for Certain Employed Aliens. Subject to certain conditions, aliens employed by Regional or Area Headquarters and Regional Operating Headquarters of multinational companies, by offshore banking units, and by foreign service contractors or foreign service subcontractors engaged in petroleum operations in the Philippines, shall be subject to 15% tax on their gross compensation income.
Domestic Corporations. Domestic corporations, including subsidiaries of foreign companies, are generally subject to income tax of 30% upon the net taxable income derived during each taxable year from all sources within and without the Philippines.
Resident Foreign Corporations. Resident foreign corporations, including Philippines branches of foreign companies, are generally subject to income tax of 30% upon the net taxable income derived during each taxable year from all sources within the Philippines. A foreign corporation is considered a resident when it is engaged in trade or business in the Philippines, having been duly issued a license therefor by the Securities and Exchange Commission.
Non-Resident Foreign Corporations. Non-resident foreign corporations are generally subject to income tax of 30% upon the gross income derived during each taxable year from all sources within the Philippines.
Minimum Corporate Income Tax. A Minimum Corporate Income Tax (“MCIT”) of 2% is imposed on the gross income of domestic and resident foreign corporations, which amount shall be due in lieu of the regular corporate income tax if the latter is less than the MCIT, or if the corporation has zero or negative taxable income. The MCIT is imposable beginning on the fourth taxable year immediately following the year in which such corporation commenced its business operations.
Reduced Rates for Certain Corporations. Subject to certain conditions: (i) proprietary educational institutions and hospitals which are non-profit shall pay a tax of 10% on their taxable income; (ii) international carriers doing business in the Philippines shall pay a tax of 2.5% on its “Gross Philippine Billings”; (iii) income derived by offshore banking units authorized by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) to transact business with offshore banking units, including any interest income derived from foreign currency loans granted to residents, shall be subject to a final income tax at the rate of 10% of such income; (iv) regional or area headquarters of multinational companies shall not be subject to income tax, while regional operating headquarters shall pay a tax of 10% of their taxable income; (v) cinematographic film owners, lessors, or distributors shall pay a tax of 25% of its gross income from all sources within the Philippines; (vi) non-resident owners or lessors of vessels shall be subject to a tax of 4.5% of gross rentals, lease or charter fees from leases or charters to Filipino citizens or corporations; and (vii) rentals, charters and other fees derived by non-resident lessors of aircraft, machineries and other equipment shall be subject to a tax of 7.5% of gross rentals or fees.
Estate and Donor’s Tax
Estate Tax. An estate tax at graduated rates ranging from 0% to 20% is levied, assessed, collected and paid upon the transfer of the net estate of every decedent, whether resident or non-resident of the Philippines. Subject to a reasonable extension not to exceed thirty (30) days, the estate tax return shall be filed within six (6) months from the death of the decedent.
Donor’s Tax. A donor’s tax, either at graduated rates ranging from 0% to 15% or at a fixed rate of 30%, is generally levied, assessed, collected and paid upon the transfer by any person, resident or non-resident, of property by gift.
A 12% value-added tax (“VAT”) on the sale of goods and services based on gross selling price or gross value in money of the goods or properties covered, or gross receipts in case of leases, is generally imposed on all sales, barters, exchanges, leases of goods or properties, and services in the Philippines, as well as on importations of goods.
Subject to certain limitations, input taxes on purchase and importation of goods, and purchase of services, are allowed to be credited against the VAT output tax liability.
In certain instances, sales by VAT-registered persons may be subject to 0% rate, where input tax credits may still be claimed. An application may then be filed with the Bureau of Internal Revenue for the issuance of tax credit certificates or refund of creditable input tax due or paid attributable to such sales or services. This generally applies to export sales or activities related thereto.
The law also enumerates certain VAT-exempt activities or transactions. Unlike in the case of zero-rated transactions, input tax credits cannot be claimed for VAT-exempt transactions.
A person becomes subject to VAT when his annual gross sales or receipts exceed One Million Five Hundred Thousand Philippine Pesos (P1,500,000.00) or when he elects to be subjected to VAT even if sales fall below the said threshold level. Where his gross sales or receipts fall below the said amount, and the taxpayer is not a VAT-registered person, he shall pay a percentage tax of 3% of his gross quarterly sales or receipts.
Documentary Stamp Tax
Documentary stamp taxes are due and to be affixed on certain documents, instruments or evidence of business transactions. Any instrument, document or paper which is required by law to be stamped and which has been signed, issued, accepted or transferred without being duly stamped, shall not be recorded and shall not be admissible in evidence in any court until the requisite stamp or stamps are affixed and cancelled.
Other Impositions by the National Government
In addition to the value-added tax and applicable taxes, importations are generally subject to custom duties, which is collectible by the Philippine Bureau of Customs. Under special circumstances, Philippine laws also provide for the imposition of anti-dumping duty, countervailing duty, marking duty, and discriminating duty.
Local taxes imposable by the local government units include annual business or license fees, annual real property taxes, and transfer taxes due on each transfer of real property.
Tax-Free Transfers of Property
Subject to certain conditions, a transaction involving the transfer of real property may qualify as a “tax-free exchange”. In such a case, the transfer would be subject to tax on a “deferred” basis on the gain, and the tax normally due and imposable by the national government on such transfers (either 6% capital gains tax, or 7.5% creditable withholding tax plus 30% income tax on the actual gain at yearend) would be deferred until such time that the property is subsequently transferred for value.
There are variations for this type of transaction, which may call for the imposition of VAT on the transfer, depending on how the asset involved is classified.
- Labor and Employment RelationsLabor and Employment Relations
The Philippine Constitution provides that “the State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.” [Article XIII, Section 3]
In line with this, the Labor Code of the Philippines provides the minimum terms and conditions of employment, and outlines the basic benefits which all employees are entitled to as a matter of right, and which employers are bound to extend to all employees.
The applicable minimum wage varies in the different regions of the Philippines. The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. Currently, the prevailing Wage Order for employees in Metro Manila mandates a minimum daily wage of Four Hundred Ninety One Philippine Pesos (Php491.00) plus Ten Philippine Pesos (Php50.00) cost of living allowance (COLA).
Basic Terms and Conditions of Employment
The normal hours of work of any employee shall not exceed eight (8) hours a day, with not less than sixty (60) minutes time-off for regular meals. Any work performed in excess of eight (8) hours shall be subject to overtime pay, which varies depending on whether the overtime work is rendered on a regular work day, a regular holiday, a special holiday, or an employee’s rest day. In addition, every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning.
It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days. For work done on rest days or holidays, the employer is required to pay additional compensation, the rate of which varies depending on when the work was done.
Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five (5) days with pay.
Maternity and Paternity Benefits
Every employer shall grant to any pregnant woman employee who has paid at least three (3) monthly maternity contributions in the twelve-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for sixty (60) days subject to certain conditions. [Republic Act No. 7322]
As for legally married male employees, they are entitled to a paternity leave benefit of seven (7) days with full pay for each birth, miscarriage or abortion of the male employee’s lawful spouse, but only for the first four (4) births, miscarriages or abortions. [Republic Act No. 8187]
Non-Diminution of Benefits
Philippine labor laws shall not be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed by employees at the time of passage of the law. Thus, any benefit already granted in favor of an employee, whether by express acts on the part of the employer or by reason of established company practice or policy, cannot be withdrawn or discontinued by the employer.
Classification of Employment
Regular Employment: The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.
Project Employment: This is one where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee.
Seasonal Employment: This covers an employment where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
Casual Employment: An employment shall be deemed to be casual if it is not covered by the preceding paragraphs, provided, that any employee who has rendered at least one (1) year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
Probationary employment: Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.
Termination of Employment
Termination of employment relations requires compliance with two (2) aspects of the law, namely: substantive due process, and procedural due process.
Substantive due process: An employer may terminate an employment for any of the following causes: (i) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (ii) gross and habitual neglect by the employee of his duties; (iii) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (iv) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (v) other causes analogous to the foregoing. An employee who is unjustly removed, or dismissed from work not for any of these causes, is generally entitled to reinstatement without loss of seniority rights and other privileges, plus full backwages, computed from the time his compensation was withheld up to the time of his actual reinstatement.
Procedural due process: The employee whose services are sought to be terminated must be given the opportunity to answer the charges against him before being terminated. Thus, even if there may have been just or authorized cause for his termination, failure on the part of the employer to comply with the procedural due process would result in the dismissal being declared illegal, which would render the employer liable for nominal damages, the amount of which will be subject to the discretion of the court.
Other grounds for termination of employment: (i) installation of labor-saving devices, redundancy, or retrenchment to prevent losses; (ii) closure or cessation of operation of the establishment or undertaking; and (iii) where the employee has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees.
- Intellectual PropertyIntellectual Property
The objects of intellectual property are the creations of the human mind, the human intellect. This is why this kind of property is called "intellectual" property. In a somewhat simplified way, one can state that intellectual property relates to pieces of information which can be incorporated in tangible objects at the same time in an unlimited number of copies at different locations anywhere in the world. The property is not in those copies but in the information reflected in those copies. Similar to property in movable things and immovable property, intellectual property, too, is characterized by certain limitations, for example, limited duration in the case of copyright, trademarks, and patents. [cf. Background Reading Material on Intellectual Property, World Intellectual Property Organization, 1998 Ed.]
In the Philippines, the law governing intellectual property is Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines ("IP Code"), which took effect on 01 January 1998.
Copyright is defined as the right of literary property as recognized and sanctioned by positive law. An intangible, incorporeal right granted by statute to the author or originator of certain literary or artistic productions, whereby he is invested, for a specified period, with the sole and exclusive privilege of multiplying copies of the same and publishing and selling them. [Black's Law Dictionary, p. 336, 6th Ed.]
Copyright protection extends to most artistic works, such as paintings, drawings, books, articles, periodicals, or newspapers, which are embodied in physical or tangible objects. It can also extend to artistic works which are not represented in a tangible medium of expression, such as poems, music, choreographic works, or computer programs. What the law on copyright protects, however, are not the ideas but the form or manner in which ideas are expressed.
The author of a copyrighted work is entitled to protection during his lifetime and for fifty (50) years after his death.
A trademark is a distinctive design, symbol, mark, or device which serves to distinguish products of a particular manufacturer or enterprise from products of other manufacturers or enterprises, and shall include a stamped or marked container of goods. In the same manner, a service mark distinguishes the services of one enterprise from that of the others [cf. Sec. 121.1, IP Code]. The object of the law in protecting trademarks or service marks is to permit an enterprise, upon registration of a mark, to have an exclusive right to use, share, license, or assign the mark.
The owner of a trademark is entitled to protection for a period of ten (10) years from date of issue, which may be renewed for periods of ten (10) years each.
A patent is a grant or right to exclude others from making, using or selling one's invention and includes the right to license others to make, use or sell it. It is also defined as a grant from the government conveying and securing for an inventor the exclusive right to make, use, and sell an invention for a period of time. [Black's Law Dictionary, p. 1125, 6th Ed.] Any technical solution of a problem in any field of human activity, which is new, involves an inventive step, and is industrially applicable shall be patentable. [Sec. 21, IP Code]
Protection may also be obtained under the IP Code for "utility models", or inventions in the mechanical field, and "industrial designs", which covers new ornamental appearances of an article of manufacture or handicraft.
The term of an invention shall be twenty (20) years from the filing date of the invention patent application. For utility models, the term is seven (7) years from the filing date of the utility model patent application, without any possibility of renewal, while the term for industrial designs is five (5) years from the filing date of the industrial design patent application, which may be renewed for not more than two (2) consecutive periods of five (5) years each.
- Real Estate TransactionsReal Estate Transactions
Ownership and Lease of Private Lands
Ownership of private lands in the Philippines is generally reserved for Filipino citizens and corporations which are 60% owned by Filipinos. By way of an exception, foreigners can own private lands in case of hereditary succession, where the foreigner, as a compulsory heir, inherits from a Filipino citizen.
Foreigners or foreign corporations, although prohibited from owning private lands as indicated above, can nevertheless hold private lands by way of lease for a period of up to fifty (50) years, renewable once for a period of twenty-five (25) years. However, a non-Filipino may acquire and own condominium units, provided that the total shareholdings of non-Filipinos in the Condominium Corporation (established to own the common areas and the land on which the condominium building stands) does not exceed 40%.
Purchase of Private Lands by Balikbayans
Any natural-born Filipino citizen who has lost his Philippine citizenship may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters in the case of urban land, or three (3) hectares in the case of rural land, to be used by him for business or other purposes. In the case of married couples, one of them may avail of the said privilege.
Under the Dual Citizenship Act, natural-born Filipinos who lost their citizenship by naturalization as citizen of a foreign country before or after the enactment of said law would reacquire their Filipino citizenship upon taking an oath of allegiance to the Philippines.
The Anti-Dummy Law prohibits foreign nationals (with the exception of technical personnel specifically authorized by the Secretary of Justice) from intervening in the management, operation, administration or control of persons, corporations, or associations reserved by nationalization laws to Filipino citizens or to corporations or associations at least a certain percentage of the capital of which should be owned by Filipino citizens.
Title to Property
The Philippines adopts the Torrens System of registration for real properties, which is patterned after the Massachusetts Land Registration Act of 1898. Subject only to direct attacks on the validity of its issuance, titles registered under the Torrens System are considered as absolute proof of ownership. “A certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein.” [Endaya vs. Villaos, G.R. No. 202426, 27 January 2016]
In the absence of a title registered under the Torrens System, tax declarations may constitute proof of ownership. “Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one's bona fide claim of acquisition of ownership.” [Heirs of Jose Estremadura vs. Extremadura, G.R. No. 211065 15 June 2016]
Notice of Lis Pendens
“The notice of lis pendens is an announcement to the whole world that a particular real property is in litigation. The inscription serves as a warning that one who acquires an interest over a litigated property does so at his own risk, or that he gambles on the result of the litigation over the said property.” [Col. Dela Merced vs. GSIS, G.R. No. 167140, 23 November 2011]
“The annotation of an adverse claim is a measure designed to protect the interest of a person over a part of real property, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest over it or has a better right than the registered owner thereof.” [Navotas Industrial Corporation vs. Cruz, 469 SCRA 530, 549 (2005)]
“The general rule is that a person dealing with registered land is not required to go behind the register to determine the condition of the property. However, such person is charged with notice of the burden on the property which is noted on the face of the register or certificate of title. A person who deals with registered land is bound by the liens and encumbrances including adverse claim annotated therein.” [Ibid. at p. 553-554]
Visiting the Philippines
A Section 9a Visa is issued to a foreign national who will travel to the Philippines for a holiday, medical reasons or business trips. This visa may be secured from the Philippine Embassy from the port of origin and will entitle a foreign national a 59-day stay in the Philippines, or a foreign national (except restricted nationalities) may travel to the Philippines and will be issued a 21-day stay upon entry into the Philippines which may, upon application, be extended for another 38-days.
Working in the Philippines
There are several types of visas issued to foreign nationals (including their dependents) who will stay in the Philippines for regular employment, namely: Pre-arranged Employment Visas or Treaty Trader Visas (available only to US, Japan and German nationals) under the Philippine Immigration Act, or Multiple Entry Special Visas under the Philippine Foreign Investment Act. Foreign nationals who will come to the Philippines for employment for a short period of time should secure a Provisional Permit to Work or a Special Work Permit.
In conjunction with the above-mentioned visas issued by the Bureau of Immigration, applicable Philippine law also requires that an Alien Employment Permit (AEP) be secured from the Department of Labor and Employment
Other visas issued to stay in the Philippines
The Philippine Immigration Act also allows the issuance of resident visas to Balikbayans or naturalized foreign nationals who were formerly Philippine citizens, or to foreign nationals including their dependents (children below 18 years of age). Other visas issued to qualified foreign nationals and their dependents (spouse and children below 18 years of age) pursuant to special laws are Special Investor's Resident Visa (SIRV) or Special Retiree's Resident Visa (SRRV).
Immigration into the Philippines
Qualified foreign nationals may also enter and/or stay in the Philippines as immigrants. The Philippine government observes an annual quota per nationality in the admission of foreign nationals as immigrants.
Registration of Foreign Nationals
Foreign nationals who have stayed in the Philippines for at least one hundred eighty (180) consecutive days are required to register with the country's Bureau of Immigration and to obtain an Alien Certificate of Registration (ACR). Once registered, a foreign national will be issued an ACR which is now in digital card form and is referred to as the ACR i-Card. The i-Card contains information about the card holder and also includes data concerning a foreign national's Emigration Clearance Certificate (ECC) and Special Return Permit (SRC) or Re-entry Permit for purposes of exit and re-entry into the Philippines.
Naturalization as Philippine Citizens
Qualified foreign nationals may be naturalized as Philippine citizens. Depending on their qualifications, naturalization may be obtained judicially or administratively.
Recognition of Philippine Citizenship
Philippine citizens who became naturalized citizens of another country or foreign nationals whose mother or father are Philippine citizens at the time of their birth may be recognized as Philippine citizens.
- Family RelationsFamily Relations
Psychological Incapacity as a Ground for Declaration of Nullity of Marriage
Article 36 of the Family Code provides that “marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, shall be void even if such incapacity becomes manifest only after its solemnization.”
Whether or not psychological incapacity exists in a given case calling for the declaration of the nullity of the marriage depends crucially on the facts of the case. Each case must be closely scrutinized and judged according to its own facts as there can be no case that is on "all fours" with another. [Carating-Siayngco vs. Siayngco, 441 SCRA 422, 432 (2004)]
In Republic vs. Court of Appeals, 268 SCRA 198, 209-212 (1997), the Supreme Court laid down the following guidelines in cases involving psychological incapacity as a ground to have a marriage declared a nullity:
a. The burden of proof to show the nullity of marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire Article on the Family, recognizing it “as the foundation of the nation.” It decrees marriage as legally “inviolable”, thereby protecting it from dissolution at the whim of the parties. Both the family and marriage are to be "protected" by the state. The Family Code echoes this constitutional edict on marriage and the family and emphasizes their permanence, inviolability and solidarity.
b. The root cause of the psychological incapacity must be: a) medically or clinically identified, b) alleged in the complaint, c) sufficiently proven by experts and d) clearly explained in the decision. Article 36 of the Family Code requires that the incapacity must be psychological – not physical. The evidence must convince the court that the parties, or one of them, was mentally or physically ill to such an extent that the person could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof. Although no example of such incapacity need be given here so as not to limit the application of the provision under the principle of ejusdem generis, nevertheless such root cause must be identified as a psychological illness and its incapacitating nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists.
c. The incapacity must be proven to be existing at the “time of the celebration” of the marriage. The evidence must show that the illness was existing when the parties exchanged their “I do's”. The manifestation of the illness need not be perceivable at such time, but the illness itself must have attached at such moment, or prior thereto.
d. Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute or even relative only in regard to the other spouse, not necessarily absolute against everyone of the same sex. Furthermore, such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage like the exercise of a profession or employment in a job. Hence, a pediatrician may be effective in diagnosing illnesses of children and prescribing medicine to cure them but may not be psychologically capacitated to procreate, bear and raise his/her own children as an essential obligation of marriage.
e. Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Thus, “mild characteriological peculiarities, mood changes, occasional emotional outbursts” cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage.
f. The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision.
g. Interpretations given by the national Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, should be given great respect by out court.
The term “psychological incapacity” refers to a serious psychological illness afflicting a party even before the celebration of the marriage. It is a malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the matrimonial bond one is about to assume. As all people may have certain quirks and idiosyncrasies, or isolated characteristics associated with certain personality disorders, there is hardly any doubt that the intendment of the law has been to confine the meaning of “psychological incapacity” to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. It is for this reason that the Court relies heavily on psychological experts for its understanding of the human personality. However, the root cause must be identified as a psychological illness and its incapacitating nature must be fully explained. [cf. Ma. Armida Perez-Ferraris vs. Brix Ferraris, G.R. No. 162368, 17 July 2006]
Thus, mixed personality disorder, such as the “leaving-the-house” attitude whenever the spouses quarreled, the violent tendencies during epileptic attacks, the sexual infidelity, the abandonment and lack of support, and preference to spend more time with friends or people other than his/her family, dependence on parents for aid and assistance, dishonesty to the spouse regarding finances, may not be rooted on some debilitating psychological condition but a mere refusal or unwillingness to assume the essential obligations of marriage. Such psychological defects may be more of a “difficulty,” if not outright “refusal” or “neglect” in the performance of some marital obligations, and a mere showing of irreconcilable differences and conflicting personalities in no wise constitutes psychological incapacity. It is not enough to prove that the parties failed to meet their responsibilities and duties as married persons; it is essential that they must be shown to be incapable of doing so, due to some psychological, not physical, illness. [Ibid.]
Also, habitual alcoholism, sexual infidelity or perversion, and abandonment do not by themselves constitute grounds for declaring a marriage void based on psychological incapacity. [Ibid.]
Accordingly, in determining the import of “psychological incapacity” under Article 36, it must be read in conjunction with other provisions of the law on void ab initio and voidable marriages, as well as on the grounds for legal separation. Care must be observed so that these various circumstances are not applied so indiscriminately as if the law were indifferent on the matter. Also, Article 36 should not be confused with a divorce law that cuts the marital bond at the time the causes therefor manifest themselves. Neither it is to be equated with legal separation, in which the grounds need not be rooted in psychological incapacity but on physical violence, moral pressure, moral corruption, civil interdiction, drug addiction, habitual alcoholism, sexual infidelity, abandonment and the like. [Ibid.]