Republic of the Philippines v. Apostolita San Mateo

In a petition to register a land, both CENRO certification and approval thereof by the DENR Secretary are required to be presented as proofs that the land is alienable.

G.R. No. 203560, 10 November 2014

A petition to register a land was denied for failure to present both CENRO certification and approval thereof by the DENR Secretary. As held by the Supreme Court, “a CENRO certification that a certain property is alienable, without the corresponding proof that the DENR Secretary had approved such certification, is insufficient to support a petition for registration of land. Both certification and approval are required to be presented as proofs that the land is alienable. Otherwise, the petition must be denied.”

The cited case of Republic v. Vega, which granted a petition for registration despite the absence of a DENR Certification was pro hac vice. “It must be emphasized that the present ruling on substantial compliance applies pro hac vice. It does not in any way detract from our rulings in Republic v. T.A.N. Properties, Inc., and similar cases which impose a strict requirement to prove that the public land is alienable and disposable, especially in this case when the Decisions of the lower court and the Court of Appeals were rendered prior to these rulings. To establish that the land subject of the application is alienable and disposable public land, the general rule remains: all applications for original registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification made by the DENR Secretary.

The Republic case goes on to add: “As an exception, however, the courts – in their sound discretion and based solely on the evidence presented on record – may approve the application, pro hac vice, on the ground of substantial compliance showing that there has been a positive act of government to show the nature and character of the land and an absence of effective opposition from the government. This exception shall only apply to applications for registration currently pending before the trial court prior to this Decision and shall be inapplicable to all future applications.”

MCMP Construction Corp. v. Monark Equipment Corp.

Excessive and unconscionable interests are void for being contrary to morals, if not against the law.

G.R. No. 201001, 10 November 2014

Plaintiff Monark Equipment Corp. initiated a Complaint for a Sum of Money against Defendant MCMP Construction Corp. after the latter failed to pay rental fees for the use of five (5) pieces of heavy equipment as stated in their Rental Equipment Contract. In the agreement, interest and penalties were stated as follows:

“Credit sales are payable within 30 days from the date of invoice. Customer agrees to pay interest at 24% p.a. on all amounts. In addition, customer agrees to pay a collection fee of 1% compounded monthly and 2% per month penalty charge for late payment on amounts overdue. Customer agrees to pay a sum equal to 25% of any amount due as attorney’s fees in case of suit, and expressly submit to the jurisdiction of the courts of Quezon City, Makati, Pasig or Manila, Metro Manila, for any legal action arising from, this transactions.”

The trial court ruled in favor of plaintiff.

HELD: The trial court’s decision was affirmed with modifications as to the granting of the “24% per annum interest on the rental fees as well as a collection fee of 1% per month compounded monthly and a 2% per month penalty charge. In all then, the effective interest rate foisted upon MCMP is 60% per annum.”

Citing Macalinao v. Bank of the Philippine Islands, a 36% interest imposed by a bank was reduced for being excessive and unconscionable. That being the case, the interest is void for being contrary to morals, if not against the law. “Since the stipulation on the interest rate is void, it is as if there was no express contract thereon. Hence, courts may reduce the interest rate as reason and equity demand.”

In Chuam v. Timam, it was held “[w]hile C.B. Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets.”

For penalties, the Macalinao case also struck down the 3% penalty charge per month imposed by a bank in the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card. As stated in Article 1229 of the Civil Code, “[t]he judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

In view thereof, “the interest and penalty charges imposed upon MCMP must also be considered as iniquitous, unconscionable and, therefore, void. As such, the rates may validly be reduced. Thus, the interest rate of 24% per annum is hereby reduced to 12% per annum. Moreover, the interest shall start to accrue thirty (30) days after receipt of the second set of invoices on January 21, 2001, or March 1, 2001 in accordance with the provisions in the invoices themselves.” Likewise, “the penalty and collection charge of 3% per month, or 36% per annum, is also reduced to 6% per annum. And the amount of attorney’s fees is reduced from 25% of the total amount due to 5%.”

The Legal Side of Clinical Laboratories

An incorrect diagnostic resulted in a liability against a medical professional.

Medical checkups are important. I routinely have an annual medical checkup to know the status of my health. During my medical examination this year, I had the opportunity to observe how doctors ran their clinics. I must say that I  was satisfied and even impressed at how clinics were run by the doctors in Medical City  Pasig City.

While doing my observation, I was thinking of a case where an incorrect diagnostic resulted in a liability against a medical professional. It was supposed to be a routine checkup for employment purposes. Unfortunately, it did not end well for the patient who lost her job due to a mistaken analysis of her results.

This was the case. I am lifting this excerpt from my book Legal Aspects of Business.

Continue reading here.

Register drones or face P500K penalty

The Civil Aviation Authority of the Philippines (CAAP) directs owners of drones to register them. Failure to do so will result in a fine from P300,000.00 up to P500,000.00.

CAAP Deputy Director for Operations Gen. Rodante Joya (Ret.) notes that no registration has been made yet. In an interview, he said that CAAP has not yet allowed any drone to operate as there has been not a single registration.

Joya stresses the importance of safety.  If someone is injured by a drone, the owner will be made liable.

“They cannot fly drones over congregations of people, on busy streets, near government buildings and installations, especially within airports due to safety concerns,” warns Joya.

For the upcoming visit of Pope Francis and the ongoing Sinulog, CAAP has imposed a no-drone policy.

ASEAN Open Skies Policy

ASEAN Single Aviation Market (ASEAN-SAM) + Unified Air Transport Market = ASEAN Open Skies

ASEAN Briefing: ASEAN Open Skies Policy To Be Implemented in 2015

Read more:

Got paid with your holiday pay?

May the employer convert the holiday pay to other benefits?

During the long Christmas holidays, some businesses operated on regular holidays resulting in work being rendered by their employees. Although the law expressly requires that holiday pay should be paid, businesses looking to save tend to pay their employees through other benefits instead of the statutory monetary benefit. May businesses do so?

Legal Basis

The law specifically mandates the payment of holiday pay (Article 94, Labor Code).

By way of summary, the Department of Labor and Employment (DOLE) has issued Labor Advisory No. 09-14 reminding employers to comply with the holiday pay rules. Below is the computation:

  1. If the employee did not work, he/she shall be entitled to be paid 100% of his/her salary for that day [(Daily Rate + COLA) x 100%];
  2. For work done during the regular holiday, the employee shall be paid 200% of his/her regular salary for that day for the first eight hours [(Daily Rate + COLA) x 200%];
  3. For work done in excess of eight hours (overtime work), he /she shall be paid an additional 30%    of his/her hourly rate on said day (Hourly Rate of the Basic Daily Wage x 200% x 130% x number of hours worked);
  4. For work done during a regular holiday that also falls on his/her rest day, he/she shall be paid an additional 30% of his/her daily rate of 200% [(Daily Rate + COLA) x 200%] + [30% (Daily Rate x 200%)]; and
  5. For work done in excess of eight hours (overtime work) during a regular holiday that also falls on his/her rest day, he/she shall be paid an additional 30% of his/her hourly rate on said day (Hourly Rate of the Basic Daily Wage x 200% x 130% x 130% x number of hours worked).

In the above computations, COLA refers to Cost of Living Allowance.


Holiday pay is a statutory monetary benefit. It is called a statutory monetary benefit because the law itself (i.e. a statute through the Labor Code) requires that such benefit is owing to the employee.

While it is a statutory monetary benefit, may the employer and the employee agree that the holiday pay be paid through other benefits?

No, the employer and the employee cannot agree that holiday pay be paid through other benefits. As a statutory monetary benefit, the law expressly mandates the observance of the payment of the holiday pay . This is in accordance with the constitutional mandate affording full protection to labor, as well as those provided in labor laws and policies. Further, in line with the Labor Code provision that wages have to be paid in legal tender, the employer has to pay the employee in cash as the employer is prohibited from paying through promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee (Paragraph 1, Article 102, Ibid.).

What if the benefit is more valuable or favorable than the holiday pay?

No, the labor law and policy on the matter is clear that the employer has to pay in legal tender even if expressly requested by the employee (Ibid.). The tenor of the law is categorical.

Covered Employees

While the law requires that holiday pay be paid, it is not due to all employees. There are only certain employees who are covered or entitled to receive that statutory monetary benefit.

All employees in all establishments and undertakings, whether for profit or not, are entitled to holiday pay except the following:

  1. Government employees;
  2. Managerial employees;
  3. Officers or members of a managerial staff;
  4. Field personnel;
  5. Members of the family of the employer who are dependent on him for support;
  6. Domestic helpers;
  7. Persons in the personal service of another; and
  8. Workers who are paid by results as determined by the DOLE Secretary (Paragraph 1, Article 82, Ibid.).

If an employee falls in the above list of exemptions, then he/she is not entitled to the statutory monetary benefit of a holiday pay.


Businesses and employers who fail to comply with the payment of holiday pay will be opening themselves to liabilities, including but not limited to administrative, civil, and even criminal.

For administrative liabilities, the Department of Labor and Employment (DOLE) may sanction employers for their failure to comply with labor laws. These may be in the form of administrative penalties or fines.

As for civil liabilities, the employer may face a labor complaint which could result in a judgment award requiring the business to pay the holiday pay. In addition, if the withholding of the payment was done in bad faith, the employer may also be liable for moral and exemplary damages. Further, the employer may be also be directed to pay the attorney’s fees of the employees.

As for criminal liabilities, Labor Code violations may result in the following penalties: (a) fine not less than P1,000.00 but not more than P10,000.00; (b) imprisonment of not less than 3 months but not more than 3 years; or (c) both fine and imprisonment at the discretion of the court. It is the guilty officer/s who will be liable.

Best Legal Practices

Business should comply with the rule on holiday pay. The holiday pay should be paid in legal tender or in cash.

The computation for holiday pay as stated by the law should be complied unless there is a more favorable one provided for in the employment contract, collective bargaining agreement (CBA), or company policy or practice.

Proper documentation should be observed when making payments of holiday pay. Proof of receipt thereof should be signed by the employee. Afterwards, payment records should be in placed in safekeeping ready for access in the unlikely event of a labor complaint. It is, after all, the employer who has the burden to prove payment.