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Love takes up where Knowledge leaves OffSt. Thomas Aquinas July 20 HIV infection and the limit of its allowable discoveryFiled 7/3/06
IN THE SUPREME COURT OF CALIFORNIA JOHN B., Petitioner, S128248 v. Ct.App. 2/8 B169563 THE SUPERIOR COURT OF LOS ANGELES COUNTY, Los Angeles County Respondent; Super. Ct. No. BC271134 BRIDGET B.,
Real Party in Interest.
______________________________________________ x Facts:
Bridget’s complaint for damages alleges the following: Plaintiff Bridget B. and defendant John B. met in September 1998 and began dating shortly thereafter. The couple became engaged in late 1999 and were married in July 2000. During this period, John represented to Bridget that he was healthy, disease-free, and monogamous. Indeed, it was John who insisted that the couple stop using condoms during intercourse. Based on John’s representations, Bridget complied with his demand to engage in unprotected sex. In September 2000, however, Bridget began to suffer from exhaustion and high fevers. On October 1, 2000, Bridget learned that she had tested positive for HIV. She was advised to undergo a second test and to have her husband tested as well. The second test confirmed that Bridget was HIV positive. John, too, was determined to be HIV positive. John’s doctor told Bridget that she had “brought the HIV into the marriage.” The doctor prescribed medications for John that made his viral load virtually undetectable. Bridget, on the other hand, was not offered treatment; she was informed that she had “had the illness for a long time.” Bridget became depressed that she had infected her husband with this deadly disease.
In September 2001, John began telling others that Bridget had infected him with HIV. The next month, after defendant refused to continue his treatment, he became much sicker and developed sores on his face and scalp. Although he was diagnosed with AIDS, he refused all treatments and medications except those that treated the visible signs of the disease. In November 2001, Bridget began to doubt that she had been the cause of defendant’s infection. John responded by asking whether she was “accusing” him of bringing HIV into their lives and advised “it would not be healthy for their marriage to blame him.” The following month, however, John admitted to Bridget that he had had sexual relations with men before their marriage. The complaint further alleges that John also engaged in sexual relations with men during their marriage and used the Internet to solicit these relationships. Issue: The extent to which Bridget may inquire into John’s medical records and sexual conduct in order to confirm or refute her allegations that John knowingly or negligently infected her with HIV. Discussion: Information is discoverable if it is unprivileged and is either relevant to the subject matter of the action or reasonably calculated to reveal admissible evidence. (Schnabel v. Superior Court (1993) 5 Cal.4th 704, 711; Vinson v. Superior Court (1987) 43 Cal.3d 833, 838.) “Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action.” (Code Civ. Proc., § 2017.010.) The threshold that ‘the discovery statutes vest a wide discretion in the trial court in granting or denying discovery’ and ‘such exercise [of discretion] may only be disturbed when it can be said that there has been an abuse of discretion.’ (Pacific Tel. & Tel. Co. v. Superior Court (1970) 2 Cal.3d 161, 171.) The allegations in the special interrogatories and requests for admission at issue meet the statutory standard/limits of discoverability. Sister jurisdictions have long imposed liability on individuals who have harmed others by transmitting communicable diseases. (See, e.g., Berner v. Caldwell (Ala. 1989) 543 So.2d 686, 688 [“For over a century, liability has been imposed on individuals who have transmitted communicable diseases that have harmed others”]; Crowell v. Crowell (N.C. 1920) 105 S.E. 206, 208 [“it is a wellsettled proposition of law that a person is liable if he negligently exposes another to a contagious or infectious disease”]; see generally 39 Am.Jur.2d (1999) Health, § 99, p. 549 [“The general principle is established that a person who negligently exposes another to an infectious or contagious disease, which such other thereby contracts, is liable in damages”]. “[T]o be stricken with disease through another’s negligence is in legal contemplation as it often is in the seriousness of consequences, no different from being struck with an automobile through another’s negligence.” (Billo v. Allegheny Steel Co. (Pa. 1937) 195 A. 110, 114.) To prevail in an action for negligence, the plaintiff must demonstrate that the defendant owed a duty to the plaintiff, that the defendant breached that duty, and that the breach proximately caused the plaintiff’s injuries. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1145.) The existence of a legal duty is a question of law for the court. (Delgado v. Trax Bar & Grill (2005) 36 Cal.4th 224, 237.) ‘Duty’ is not an immutable fact of nature “but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.” In California, the general rule is that all persons have a duty “to use ordinary care to prevent others being injured as the result of their conduct. . . .” (Rowland v. Christian (1968) 69 Cal.2d 108,112 [70 Cal.Rptr. 97, 443 P.2d 561] (citations omitted); Civ. Code, § 1714.)” (Ballard v. Uribe (1986) 41 Cal.3d 564, 572-573, fn. 6.) Foreseeability of harm is a “ ‘crucial factor’ ” in determining the existence and scope of that duty. (Delgado, supra, 36 Cal.4th at p. 237.) A. Whether Discovery Must Be Limited Because the Torts in the Complaint Require Proof That the Infected Individual Had Actual Knowledge of the Infection
The court has repeatedly recognized a cause of action for negligence not only against those who have actual knowledge of unreasonable danger, but also against those who have constructive knowledge of it. (See, e.g., Ortega v. Kmart Corp. (2001) 26 Cal.4th 1200, 1210; Toland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253, 260, fn. 1; Kentucky Fried Chicken of Cal., Inc. v. Superior Court (1997) 14 Cal.4th 814, 823; Garcia v. Superior Court (1990) 50 Cal.3d 728, 735; Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 407.)
At this early stage, when no facts have yet been developed, the issue is not which of these mental states is required for the tort of negligent transmission of HIV, but what is permissible discovery for a party seeking to prove such a tort. In determining whether the requested discovery satisfies statutory requirements, therefore, should recognize a duty no broader than is necessary to resolve the current discovery dispute. In this case, the tort of negligent transmission of HIV does not depend solely on actual knowledge of HIV infection and would extend at least to those situations where the actor, under the totality of the circumstances, has reason to know of the infection. Under the reason-to-know standard, “the actor has information from which a person of reasonable intelligence or of the superior intelligence of the actor would infer that the fact in question exists, or that such person would govern his conduct upon the assumption that such fact exists.” (Rest.2d Torts, § 12, subd. (1). Imposing liability for the transmission of HIV where the actor knows or has reason to know he or she is HIV positive is consistent with the general principle of California law that “ ‘[a]ll persons are required to use ordinary care to prevent others being injured as the result of their conduct.’ ” (Rowland v. Christian, supra, 69 Cal.2d at p. 112.) “Although it is true that some exceptions have been made to the general principle that a person is liable for injuries caused by his failure to exercise reasonable care in the circumstances, it is clear that in the absence of a statutory provision declaring an exception to the fundamental principle enunciated by section 1714 of the Civil Code, no such exception should be made unless clearly supported by public policy.” (Ibid.; see also Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1077 (Randi W.) “Before judicially establishing an exception based on public policy, consider a variety of factors; ‘the major ones are the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved.’ ” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 477.) When the actor has reason to know of the HIV infection— i.e., when there is sufficient information to cause a reasonably intelligent actor to infer he or she is infected with the virus or that infection is so highly probable that his or her conduct would be predicated on that assumption—the potential for harm through sexual transmission of the virus is reasonably foreseeable. Moreover, society has an overriding policy of preventing the spread of sexually transmitted diseases (see Health & Saf. Code, § 120290), especially HIV (see, e.g., Health & Saf. Code, § 120291), which would be enhanced by imposing a duty of care on those who have reason to know they are infected with HIV. The burden of a duty of care on defendants who know or have reason to know of their HIV infection is minimal, and the consequences for the community would be salutary. (Cf. Health & Saf. Code, § 121015, subd. (a) [permitting physicians and surgeons to disclose to “a person reasonably believed to be the spouse, or to a person reasonably believed to be a sexual partner or a person with whom the patient has shared the use of hypodermic needles, . . . that the patient has tested positive on a test to detect HIV infection, except that no physician and surgeon shall disclose any identifying information about the individual believed to be infected”].) Indeed, limiting liability only to those who have actual knowledge they are infected would discourage those who fear they may be infected from getting tested, which would be contrary to the public policy of encouraging testing for and preventing the spread of HIV and thwart the effectiveness of new treatments that depend on early diagnosis of the virus. The discovery Bridget has requested comports with the reason-to-know standard. Evidence that John engaged in unprotected sex outside the relationship during the relevant period and hid these encounters from Bridget, even if insufficient to establish the requisite knowledge for a negligence claim, might reasonably lead to the discovery of evidence as to John’s awareness of the HIV status of those partners—without even disclosing their identities, may be relevant to whether John knew or had reason to know he was infected with HIV. (Doe v. Johnson, supra, 817 F.Supp. 1395-1396.) Similarly, evidence that John had symptoms consistent with HIV infection may be insufficiently distinctive to indicate HIV infection by itself but may be relevant to whether John knew or had reason to know he was infected when considered in combination with his alleged history of engaging in unprotected sex outside the relationship. The court cannot agree that persons who have reason to know they are infected with HIV, a gravely serious disease with no known cure, should be subject to a lesser duty of care than persons who have reason to know they are infected with other sexually transmitted diseases. John's contention that carriers of HIV may be asymptomatic, possible symptoms of HIV (other than those distinctively and idiosyncratically associated with virus, such as Kaposi’s sarcoma), are irrelevant. But merely because “[m]any people who are infected with HIV do not have any symptoms at all for many years” does not mean that plaintiffs are barred from discovering whether a particular defendant did have unique or diffuse symptoms and whether those symptoms, singly or in combination with other factors, gave the defendant reason to know he or she was infected with HIV. Many sexually transmitted diseases— such as chlamydia,3 gonorrhea,4 syphilis,5 herpes,6 and human papillomavirus (HPV)7— likewise commonly present asymptomatically at the initial stages or have nonspecific symptoms that can be confused with other, more common diseases. Yet, no decision that has invoked the possible difficulties of establishing the requisite knowledge of these diseases in some instances as a justification for categorically foreclosing recovery in all cases. To the contrary, courts here and elsewhere have regularly found negligence when the evidence does show the defendant knew or had reason to know of infection with these sexually transmitted diseases. John fails to explain why Bridget should be precluded from discovering whether he harbored such knowledge in this case. A low risk of transmission is insufficient to relieve the infected individual of a duty where the harm itself is great and the duty of care to prevent that harm is not onerous. (See Bigbee v. Pacific Tel. & Tel. Co. (1983) 34 Cal.3d 49, 57; Prosser & Keeton on Torts, supra, § 31, p. 171 [“as the gravity of the possible harm increases, the apparent likelihood of its occurrence need be correspondingly less to generate a duty of precaution”]. Moreover, the gravity of the harm from HIV infection is a justification for imposing a greater duty of care on those who are infected (see Prosser & Keeton on Torts, supra, § 31, p. 171; Rest.2d Torts, § 293, com. c, p. 59)— not, a basis for insulating those infected from responsibility for their conduct in transmitting the virus to others. As CA found, John waived or is estopped from invoking this statutory protection by claiming in his answer that Bridget infected him with HIV and by relying on a negative HIV test in support of his motion for summary judgment. (See Taub, Doctors, AIDS, and Confidentiality in the 1990’s (1994) 27 J. Marshall L.Rev. 331, 335. B. Whether Discovery Must Be Limited Because of John’s Right to Privacy Under the State Constitution Article I, section 1 of the California Constitution recognizes a number of inalienable rights, including the right to privacy. As previously observed, the right of privacy extends to sexual relations (Vinson v. Superior Court, supra, 43 Cal.3d at p. 841) and medical records (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 41). Accordingly, a litigant may invoke the constitutional right to privacy as justification for refusing to answer questions that unreasonably intrude on that right. (Britt v. Superior Court (1978) 20 Cal.3d 844, 855[associational privacy]; Fults v. Superior Court (1979) 88 Cal.App.3d 899, 903 [sexual privacy]. The right to privacy, however, is not absolute. In appropriate circumstances, this right must be balanced against other important interests. (Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th at p. 37.) This is not a case in which a plaintiff seeks discovery to obtain information from a defendant whose HIV status is unknown. Both parties have admitted they are HIV positive, informally and in court filings. John thus has a diminished privacy interest in his HIV status. (Cf. In re Marriage of Bonneau (Ill.App.Ct. 1998) 691 N.E.2d 123, 134 [declining to permit discovery of medical records where neither party’s HIV status was alleged].) Moreover, not only does the complaint allege sufficient facts to permit the inference that John infected Bridget with HIV, but John has alleged that Bridget infected him. By thus putting his own medical condition at issue, John has “substantially lowered” his expectation of privacy even further. (Heller v. Norcal Mutual Ins. Co. (1994) 8 Cal.4th 30, 43.) After balancing the competing interests in this case, the Court is persuaded that Bridget is entitled to discovery concerning John’s sexual history and HIV status. The Court emphasize that Bridget is not entitled to discovery without limit. As the CA pointed out, even where the plaintiff can establish a compelling state interest in discovery, “ ‘ “ ‘[p]recision of [compelled disclosure]’ ” ’ is required so that the right of privacy is not ‘ “ ‘curtailed except to the extent necessitated by the legitimate governmental objective.’ ” ’ ” Thus, where a plaintiff seeks discovery from a defendant concerning sexual matters protected by the constitutional right of privacy, the “intrusion upon sexual privacy may only be done on the basis of “practical necessity” (Fults v. Superior Court, supra, at pp. 904-905), and ‘the compelled disclosure [must] be narrowly drawn to assure maximum protection of the constitutional interests at stake.’ (Britt v. Sup Crt, supra, [20 Cal.3d] at p. 859.)” (Boler v. Superior Court (1987) 201 Cal.App.3d 467, 473-474.) It is therefore essential to measure the closeness of the fit between the requested discovery and the allegations of the complaint. The theory of Bridget’s is that John became infected with HIV prior to or during their relationship by engaging in unprotected sex with other men, that he knew or had reason to know he was infected before he engaged in unprotected sex with her, that he did not share his knowledge with Bridget or otherwise take steps to prevent transmission of the virus, and that he infected her with HIV during unprotected sex. To prove these allegations, it is necessary for Bridget to inquire into John’s medical records and his sexual activity, as the superior court and the Court of Appeal found. Not all of the discovery authorized by the superior court and the CA satisfies this heightened standard, however. To the extent that special interrogatory Nos. 3 and 13 and request for admission No. 10 seek information concerning John’s sexual conduct after the couple stopped having sex—which, according to the complaint, was sometime during the honeymoon in July 2000— they are overbroad. John’s sexual conduct after the cessation of marital sexual relations could not have resulted in the transmission of HIV to Bridget through sexual relations as alleged in the complaint, nor would it shed light on whether John knew or had reason to know that he was HIV positive at the time he and Bridget engaged in unprotected sex. Bridget thus has failed to identify the practical necessity for discovery of John’s sexual conduct subsequent to their honeymoon. The Court of Appeal also erred in upholding discovery into John’s sexual behavior dating back years before he even met Bridget. Under the record as it currently stands, Bridget has failed to identify the practical necessity for discovery of John’s sexual conduct any earlier than the six months that preceded his negative HIV test. John’s declaration in support of his motion for summary judgment states that he was tested for HIV in connection with a life insurance application on August 17, 2000, and includes a copy of the lab report. The results were negative. Based on information from the Centers for Disease Control that the window period between exposure to HIV and the production of sufficient antibodies to detect the presence of the virus in the blood can last up to six months, John reasons that he “was necessarily HIV negative six months prior to August 17, i.e., mid-February 2000, and at every prior time in his life.” He therefore contends that any discovery related to his sexual history must be limited to the six-month window period. Bridget responds that John’s negative HIV test in August 2000 is “a mere allegation which defendant has advanced as a part of his ‘she-infected-me’ defense and which plaintiff intends to prove to be patently false. Obviously, discovery cannot serve to debunk a lie if discovery is thwarted by having to assume the truth of the lie. The defect in Bridget’s response is that John’s negative HIV test is not a mere allegation. John has supported his allegation with an applicant profile from Intellisys reflecting the results of his HIV test. If the test is accurate, and if the latency period for development of HIV antibodies is no longer than six months, John could not have been infected any earlier than February 2000. Under those circumstances, as Bridget’s counsel conceded at oral argument, John’s sexual behavior during that earlier period would not be relevant to the issue of when he became infected. In other words, Bridget has not demonstrated, under the heightened standard applicable to constitutional rights of privacy, a practical necessity for discovery of John’s sexual conduct before he could have been infected with HIV. On the other hand, as Bridget’s counsel explained at oral argument, it is possible that Bridget could offer evidence to cast doubt on the results of the August 2000 HIV test, such as by challenging the accuracy or reliability of an insurance application test or by offering expert testimony that the test was inconsistent with John’s development of full-blown AIDS the following year. If Bridget were to offer some basis to question the August 2000 test, or to adduce evidence that the time period from exposure to the virus to the development of antibodies in the blood can be longer than six months, then she may be entitled to discovery covering a broader time period. That option remains open to Bridget on remand. Because Bridget has not yet done so, however, the Court balance John’s constitutional right to privacy against Bridget’s need for discovery based on the record as it currently stands. It must therefore limit her discovery requests concerning John’s sexual behavior to the period between February 17, 2000, the earliest date at which John could have been infected, through July 2000, when the couple last had sexual relations. Finally, the Court emphasize that it has not been asked, therefore express no views as to what measures trial court should employ to maintain confidentiality of the materials produced in discovery. The propriety of in camera review, orders to seal documents, protective orders, and other measures is an issue that remains for the trial court on remand. (See Schnabel v. Superior Court, supra, 5 Cal.4th at p. 714.) C. Whether Discovery Must Be Limited Because of the Physician- Patient Privilege John also asserts that the medical information sought by the subpoenas is protected by the physician- patient privilege but concedes, as he must, that “[t]here is no privilege under this article as to a communication relevant to an issue concerning the condition of the patient in a proceeding to recover damages on account of the conduct of the patient if good cause for disclosure of the communication is shown.” (Evid. Code, § 999.) John contends that discovery must nonetheless be denied because a good cause showing should require at a minimum “an expert declaration regarding the [plaintiff’s] infection status; the probable exposure period; and a description of the plaintiff’s sexual history that establishes the defendant as a probable transmitter.” John cites no authority for his contention that a plaintiff must essentially eliminate other possible agents of infection before discovery may proceed. (Cf.M. M.D. v. B.L.G., supra, 467 N.W.2d at pp. 647-648 [evidence was sufficient to support liability despite inability of medical expert to determine whether plaintiff’s herpes outbreak was due to a recent infection or a dormant virus].) The statutory standard is good cause, and Bridget has amply established good cause for disclosure of John’s medical records concerning HIV and AIDS: she has recently been diagnosed as HIV positive; John, too, has been diagnosed as HIV positive, but his viral infection has already progressed to full-blown AIDS; during the two years preceding Bridget’s diagnosis, she was dating John, engaged to him, and married to him; and the couple engaged in unprotected sex during that period. Bridget thus has offered far more than “conjecture” or a “speculative presumption” to justify the requested discovery. (Mendez v. Sup Crt (1988) 206 Cal.App.3d 557, 570-571.) Moreover, John has not offered any evidence to suggest that an expert could pinpoint the time period for Bridget’s exposure to the virus. The Court find that the superior court did not abuse its discretion in overruling John’s objection under the physician-patient privilege. DISPOSITION The judgment of the CA is reversed insofar as it affirmed the order compelling responses to plaintiff’s special interrogatories and requests for admission to the extent they seek information about John’s sexual history outside the time period between February 17, 2000, and the end of July 2000, and the matter is remanded for further proceedings consistent with the views herein. BAXTER, J. WE CONCUR: GEORGE, C.J. CHIN, J. CORRIGAN, J. March 28 THE BIRTH ORDER OF CHILDRENYour Clothes:
1st baby: You begin wearing maternity clothes as soon as your OB/GYN confirms your pregnancy. 2nd baby: You wear your regular clothes for as long as possible. 3rd baby: Your maternity clothes ARE your regular clothes. ______________________________________________________ Preparing for the Birth:
1st baby: You practice your breathing religiously. 2nd baby: You don't bother because you remember that last time, breathing didn't do a thing. 3rd baby: You ask for an epidural in your eighth month. ______________________________________________________
The Layette:
1st baby: You pre-wash newborn's clothes, color-coordinate them, and fold them neatly in the baby's little bureau. 2nd baby: You check to make sure that the clothes are clean and discard only the ones with the darkest stains. 3rd baby: Boys can wear pink, can't they? ______________________________________________________
Worries:
1st baby: At the first sign of distress--a whimper, a frown--you pick up the baby. 2nd baby: You pick the baby up when her wails threaten to wake your firstborn. 3rd baby: You teach your three-year-old how to rewind the mechanical swing. ______________________________________________________
Pacifier:
1st baby: If the pacifier falls on the floor, you put it away until you can go home and wash and boil it. 2nd baby: When the pacifier falls on the floor, you squirt it off with some juice from the baby's bottle. 3rd baby: You wipe it off on your shirt and pop it back in. _____________________________________________________
Diapering:
1st baby: You change your baby's diapers every hour, whether they need it or not. 2nd baby: You change their diaper every two to three hours, if needed. 3rd baby: You try to change their diaper before others start to complain about the smell or you see it sagging to their knees. ______________________________________________________ Activities:
1st baby: You take your infant to Baby Gymnastics, Baby Swing, and Baby Story Hour. 2nd baby: You take your infant to Baby Gymnastics. 3rd baby: You take your infant to the supermarket and the dry cleaner. ______________________________________________________
Going Out:
1st baby: The first time you leave your baby with a sitter, you call home five times. 2nd baby: Just before you walk out the door, you remember to leave a number where you can be reached. 3rd baby: You leave instructions for the sitter to call only if she sees blood. ______________________________________________________ At Home:
1st baby: You spend a good bit of every day just gazing at the baby. 2nd baby: You spend a bit of everyday watching to be sure your older child isn't squeezing, poking, or hitting the baby. 3rd baby: You spend a little bit of every day hiding from the children. ______________________________________________________
Swallowing Coins (a favorite):
1st child: When first child swallows a coin, you rush the child to the hospital and demand x-rays. 2nd child: When second child swallows a coin, you carefully watch for the coin to pass. 3rd child: When third child swallows a coin you deduct it from his allowance! March 19 Amended InformationSPO4 MARINO SOBERANO, SPO3 MAURO TORRES and SPO3 JOSE ESCALANTE, Petitioners, v. THE PEOPLE OF THE PHILIPPINES, Respondent. G.R. No. 154629 Facts: In November 2000, the prominent public relations practitioner, Salvador “Bubby” Dacer, together with his driver, Emmanuel Corbito, was abducted along Zobel Roxas St. in the City of Manila. Their charred remains, consisting of burnt bones, metal dental plates and a ring, were later found in Barangay Buna Lejos, Indang, Cavite. They were positively identified by their dentists and by forensic pathologists from the University of the Philippines. Both victims were killed by strangulation.
A preliminary investigation was conducted by the Department of Justice (DOJ) through a panel of prosecutors made up of State Prosecutor II Ruben B. Carretas, State Prosecutor Geronimo L. Sy and Prosecution Attorney Juan Pedro C. Navera.
On 11 May 2001, an Information was filed by the panel of prosecutors with the Regional Trial Court (RTC), City of Manila. The following were charged with double murder:
Jimmy L. Lopez Alex B. Diloy William L. Lopez (all detained)
SPO4 Marino Soberano SPO3 Mauro Torres SPO3 Jose Escalante Crisostomo M. Purificacion Digo De Pedro Renato Malabanan Jovencio Malabanan Margarito Cueno Rommel Rollan (all under the custody of PNP-CIDG Camp Crame, Quezon City)
P/Supt. Glen Dumlao P/C. Insp. Vicente Arnado P/Insp. Roberto Langcauon SPO4 Benjamin Taladua SPO1 Rolando Lacasandile P/Insp. Danilo Villanueva SPO1 Mario Sarmiento SPO1 William Reed PO2 Thomas J. Sarmiento SPO1 Ruperto A. Nemeno John Does and James Does (all at large)
The Information reads:
That on or about November 24, 2000 in Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, some of whom are public officers, being then members of the Philippine National Police (PNP) Force assigned at Presidential Anti-Organized Crime Task Force, Camp Crame, Quezon City, (SPO4 Soberano, SPO3 Torres, SPO3 Escalante, P/Supt. Dumlao, P/C. Insp. Arnado, P/Insp. Langcauon, SPO4 Taladua, SPO3 Villanueva, SPO1 Sarmiento, SPO1 Reed, PO3 Lacasandile, PO1 Sarmiento and SPO1 Nemeno), with evident premeditation, treachery, abuse of superior strength, nighttime and remoteness of the place and with deliberate intent to kill, conspiring, confabulating and confederating with one another, the accused police officers using their offices in committing the offense, did then and there, willfully, unlawfully and feloniously kill SALVADOR (Bubby) DACER and EMMANUEL CORBITO by strangulation, which was the immediate cause of their death, and thereafter dispose of their body (sic) by incineration, to the damage and prejudice of the latter’s respective heirs.
The case was raffled to RTC, Branch 41, Manila, presided by Judge Rodolfo A. Ponferrada.
On 23 May 2001, the prosecution filed a Motion to Admit Amended Information which was granted and the Amended Information was admitted by the trial court.
The Amended Information reads:
That on or about November 24, 2000 in Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, some of whom are public officers, being then members of the Philippine National Police (PNP) Force assigned at Presidential Anti-Organized Crime Task Force, Camp Crame, Quezon City, (SPO4 Soberano, SPO3 Torres, SPO3 Escalante, P/Supt. Dumlao, P/ C. Insp. Arnado, P/Insp. Langcauon, SPO4 Taladua, SPO3 Villanueva, SPO1 Sarmiento, SPO1 Reed, PO3 Lacasandile, PO1 Sarmiento and SPO1 Nemeno), abduct SALVADOR (Bubby) DACER and EMMANUEL CORBITO at the corner of Osmeña Highway (formerly South Super Highway) and Zobel Roxas Street in Manila, and later brought them to Indang, Cavite, and with evident premeditation, treachery, abuse of superior strength, nighttime and remoteness of the place and with deliberate intent to kill, conspiring, confabulating and confederating with one another, the accused police officers using their offices in committing the offense, did then and there, willfully, unlawfully and feloniously kill said SALVADOR (Bubby) DACER and EMMANUEL CORBITO by strangulation, which was the immediate cause of their death, and thereafter dispose of their body by incineration, to the damage and prejudice of the latter’s respective heirs.
On 24 May 2001, Soberano, Escalante, Torres, Purificacion, Renato Malabanan, Jovencio Malabanan and Rollan moved to quash the Information.
Accused P/Supt. Glen Dumlao was subsequently arrested. He later executed a sworn statement implicating other police officers to the Dacer-Corbito double murder, specifically P/Supt. Michael Ray B. Aquino, P/Supt. Cesar Mancao, PO3 Larry Ambre and a certain Rigor, all former members of the defunct Presidential Anti-Organized Crime Task Force (PAOCTF).
On 18 June 2001, one of the accused, P/Insp. Danilo Villanueva, filed a Motion for Reinvestigation asserting that he was mistakenly identified as a participant in the double murder. He stressed that it was not him but a certain “SPO3 Allan Cadenilla Villanueva” who was previously identified by several witnesses as one of the culprits. This was granted by the trial court.
In view of the sworn statement executed by Dumlao, the prosecution filed a Motion for Reinvestigation which was granted by the trial court in its Order dated 04 July 2001. The prosecution was ordered to terminate the reinvestigation and submit its findings within twenty (20) days. The arraignment was set on 30 July 2001.
On 28 June 2001, the trial court denied the joint Motion to Quash the Information earlier filed by Soberano, Escalante, Torres, Purificacion, Renato Malabanan, Jovencio Malabanan and Rollan.
The National Bureau of Investigation filed a new complaint with the DOJ against a new suspect in the same case, by the name of P/Sr. Supt. Teofilo Viña, who was also a member of the PAOCTF.
After the reinvestigation, the prosecution filed a Motion to Discharge dated 13 August 2001, praying that P/Insp. Danilo Villanueva be discharged from the Information, and that he be immediately released from detention. In its Order dated 16 August 2001, the trial court granted the motion.
A Manifestation and Motion to Admit Amended Information dated 17 September 2001 was filed by the prosecution. The Amended Information avers to - (1) discharged accused Jimmy L. Lopez, Alex B. Diloy, William L. Lopez and Glen Dumlao as they are now witnesses for the State; (2) substituted SPO3 Allan Villanueva for P/Insp. Danilo Villanueva; and (3) charged as additional accused P/Supt. Michael Ray Aquino, P/Supt. Cezar Mancao II and P/Sr. Supt. Teofilo Viña.
Accused Soberano, Torres, Escalante, Purificacion, Renato and Jovencio Malabanan opposed the Manifestation and Motion to Admit Amended Information in an Opposition dated 28 September 2001. They prayed that the Motion to Admit Amended Information and the discharge of accused Dumlao, Diloy and the brothers Lopez be denied.
In its Order dated 01 October 2001, the trial court denied the Motion to Admit Amended Information. The prosecution filed a Motion for Reconsideration which was denied in an Order dated 24 October 2001.
The prosecution moved in open court to inhibit Judge Ponferrada from hearing the case. Acting on this motion, Judge Ponferrada, on 22 November 2001, ordered that the case be re-raffled. The case was re-raffled to Branch 18, RTC, Manila, presided by Judge Perfecto A.S. Laguio.
On 04 January 2002, the prosecution filed a special civil action for certiorari with prayer for issuance of a temporary restraining order before the Supreme Court praying that the Orders of then Judge Ponferrada dated 01 and 24 October 2001 be annulled and set aside and that Judge Perfecto A.S. Laguio of Branch 18 be restrained, in the meantime, from proceeding with the case in accordance with said orders. In a Resolution dated 21 January 2002, this Court referred the case to the Court of Appeals for appropriate action.
The Court of Appeals rendered the assailed Decision, the dispositive portion of which reads:
WHEREFORE, all the foregoing premises considered, the present petition is hereby GIVEN DUE COURSE and the writ prayed for, accordingly GRANTED. The assailed Orders dated October 01, 2001 and October 24, 2001 which were issued by JUDGE RODOLFO A. PONFERRADA in Criminal Case No. 01-191969, entitled “People of the Philippines v. Jimmy Lopez, et al.” are hereby ANNULLED and SET ASIDE. Respondent JUDGE PERFECTO A.S. LAGUIO, JR. or any person or persons acting in his stead, is/are hereby ORDERED to ADMIT the Amended Information dated September 17, 2001 substituting SPO3 ALLAN CADENILLA VILLANUEVA for P/Insp. DANILO VILLANUEVA as accused, and charging P/Senior Supt. MICHAEL RAY AQUINO, P/Senior Supt. CEZAR MANCAO II and P/Senior Supt. TEOFILO VIÑA as additional accused, and discharging or excluding only the accused JIMMY L. LOPEZ, WILLIAM L. LOPEZ and ALEX B. DILOY and to CONTINUE with the proceedings therefrom with utmost deliberate dispatch. Needless to state, the original information filed on May 11, 2001 stands insofar as P/Senior Supt. GLEN(N) G. DUMLAO is concerned.
Accused Soberano, Escalante and Torres moved for the reconsideration of the Court of Appeals Decision. In a Resolution dated 12 August 2002, the motion was denied for lack of merit. Hence, the instant petition for review with Prayer for Temporary Restraining Order.
Issue: Whether or not the trial court judge erred in denying the motion to admit amended information excluding some of the accused named in the original information for utilization as witnesses for the State.
Ruling: The key lies in the correct interpretation of two pertinent provisions of the Revised Rules of Criminal Procedure, i.e., Section 14 of Rule 110 on amendment of information and Section 17 of Rule 119 on the discharge of an accused as state witness.
Section 14, Rule 110 states:
Section 14. Amendment or substitution. A complaint or information may be amended, in form or in substance, without leave of court, at any time before the accused enters his plea. After the plea and during the trial, a formal amendment may only be made with leave of court and when it can be done without causing prejudice to the rights of the accused.
However, any amendment before plea, which downgrades the nature of the offense charged in or excludes any accused from the complaint or information, can be made only upon motion by the prosecutor, with notice to the offended party and with leave of court. The court shall state its reasons in resolving the motion and copies of its order shall be furnished all parties, especially the offended party.
On the other hand, Section 17, Rule 119 provides:
Section 17. Discharge of accused to be state witness. When two or more persons are jointly charged with the commission of any offense, upon motion of the prosecution before resting its case, the court may direct one or more of the accused to be discharged with their consent so that they may be witnesses for the state when, after requiring the prosecution to present evidence and the sworn statement of each proposed state witness at a hearing in support of the discharge, the court is satisfied that:
(a) There is absolute necessity for the testimony of the accused whose discharge is requested;
(b) There is no other direct evidence available for the proper prosecution of the offense committed, except the testimony of said accused;
(c) The testimony of said accused can be substantially corroborated in its material points;
(d) Said accused does not appear to be the most guilty; and
(e) Said accused has not at any time been convicted of any offense involving moral turpitude.
Evidence adduced in support of the discharge shall automatically form part of the trial. If the court denies the motion for discharge of the accused as state witness, his sworn statement shall be inadmissible in evidence.
The trial court, in denying the prosecution’s motion to admit amended information discharging some accused, ratiocinated that to admit said amended information would be violative of Section 17, Rule 119, thus:
After study, it appearing that the Amended Information not only includes new accused, namely, SPO3 Allen Villanueva, P/Supt. Michael Ray Aquino, P/Supt. Cezar Mancao and P/Supt. Teofilo Viña but excludes or discharges certain accused, namely, Jimmy L. Lopez, Alex B. Diloy, William L. Diloy and Glenn Dumlao from the original Information to be used as state witnesses, the Court is not inclined to grant the motion as it believes and so holds that in the discharge of the accused to be state witnesses the provisions of Section 17, Rule 119 of the Revised Rules of Criminal Procedure should be observed and/or complied with. Stated otherwise, to grant the motion and admit the Amended Information outright would violate said section which is quoted as follows ...
The Court of Appeals held the contrary view. It reasoned that Section 14, Rule 110 is applicable in the instant case and not Section 17, Rule 119 of the Revised Rules of Criminal Procedure, thus:
To begin with, it is undeniable, and it is necessary to point out, that Criminal Case No. 01-191969 has already been filed with the Regional Trial Court of Manila on May 11, 2001. The Motion to Admit was filed later or on September 18, 2001.
While it is true that once the information is filed in court, the court acquires complete jurisdiction over it, the Court is not unmindful of the well-settled ruling that the determination of who should be criminally charged in court is essentially an executive function, not a judicial one.
Sec. 14, Rule 110 (Prosecution of Offenses) of the Revised Rules of Criminal Procedure, as amended, reads:
“Section 14. Amendment or substitution. A complaint or information may be amended, in form or in substance, without leave of court, at any time before the accused enters his plea. After the plea and during the trial, a formal amendment may only be made with leave of court and when it can be done without causing prejudice to the rights of the accused.
“However, any amendment before plea, which downgrades the nature of the offense charged in or excludes any accused from the complaint or information, can be made only upon motion by the prosecutor, with notice to the offended party and with leave of court. The court shall state its reasons in resolving the motion and copies of its order shall be furnished all parties, especially the offended party.
“If it appears at any time before judgment that a mistake has been made in charging the proper offense, the court shall dismiss the original complaint or information upon the filing of a new one charging the proper offense in accordance with Section 19, Rule 119, provided the accused shall not be placed in double jeopardy. The court may require the witnesses to give bail for their appearance at the trial.”
Applying the import of the afore-quoted Section 14, Rule 110, it appears that the Amended Information sought to be admitted by the petitioner finds sufficient support therein, considering, firstly, that there has been no arraignment yet. Secondly, when respondent JUDGE RODOLFO A. PONFERRADA granted the motion for reinvestigation in the Order dated July 04, 2001, there was in effect a prior leave of court given to the State Prosecutors of the Department of Justice to conduct the same, substantially complying with such requirement under the second paragraph of Section 14, Rule 110. After all, a leave of court is defined a “permission obtained from a court to take some action which, without such permission, would not be allowable: as, to sue a receiver, to file an amended pleading, to plead several pleas.”
In the case of People v. Montesa, Jr., the Supreme Court’s pertinent ruling, finds application in the case at bench, i.e., where a judge grants a motion for reinvestigation [as in this case], he is deemed to have deferred to the authority of the prosecution arm of the Government to consider the so-called new relevant and material evidence and to determine whether the information it has filed should stand, and that the final disposition on the reinvestigation should be the sole and only valid basis for the judge’s final action with respect to the reinvestigation.
Thus, in accord with the aforesaid Montesa, Jr. ruling, respondent JUDGE RODOLFO A. PONFERRADA’s “sole and only basis” for the inclusion (or exclusion, for that matter) of the additional accused should be the final disposition on the reinvestigation conducted by the State Prosecutors of the Department of Justices.
Consistent with the foregoing disquisition, Section 17, Rule 119 (Trial), . . . is not applicable under the circumstances obtaining in the case at bench, although in the case of Guingona, Jr. v. Court of Appeals, the Supreme Court’s clarifies that only when an information, charging two (2) or more persons with a certain offense, has already been filed in court will Section 9, Rule 119 (Trial) of the Rules of Court [now 100% restated under Section 17, Rule 119 (Trial) of the Revised Rules of Criminal Procedure] “come into play.”
Section 17, Rule 119 (Trial), contemplates a situation wherein the Information is already filed, the accused is already arraigned, undergoing trial and the prosecution has not rested its case.
Here, although the original Information has already been filed, the four (4) accused sought to be discharged or excluded from the Amended Information have not been arraigned and no trial has been commenced. Thus, the discharge or exclusion being sought by the petitioner may come under the purview of Republic Act No. 6981, a special law which the Department of Justice is called upon to enforce and implement. Considering that the State Prosecutor’s disposition on the investigation in Criminal Case No. 01-191969 should be the sole and only valid basis of respondent JUDGE RODOLFO A. PONFERRADA in considering whether the Amended Information sought to be admitted should stand or not, it follows that the discharge/exclusion of the four (4) accused under Republic Act No. 6981 must be directed by the Department of Justice, not by the court a quo. Needless to say, Section 9, Rule 119 [of the Rules of Court] does not support the proposition that the power to choose who shall be state witness is an inherent judicial prerogative. It is not constitutionally impermissible for Congress to enact Republic Act No. 6981 vesting in the Department of Justice the power to determine who can qualify as a witness in the program and who shall be granted immunity from prosecution.
The petitioners submit that the Court of Appeals erred in applying Section 14 of Rule 110 of the Revised Rules of Criminal Procedure on amendment of complaints. Instead, what should have been applied was Section 17 of Rule 119 on the discharge of an accused as witness for the state. The petitioners further aver that even if it is only a simple discharge under Section 14 of Rule 110, it is still necessary to seek prior leave of court. The prosecution simply filed an Amended Information excluding Jimmy and William Lopez, Alex Diloy and Glen Dumlao, without prior leave of court, and moved for its admission.
The petitioners also argue that while the determination of who should be criminally charged is essentially an executive function, the discharge of an accused when an Information had already been filed lies with the court. Further, the petitioners assert that the Motion For Reinvestigation which was approved by the trial court is not tantamount to a Motion For Leave to File an Amended Information as required under Section 14 of Rule 110 of the Revised Rules of Criminal Procedure.
In answer to all these, the prosecution contends that the admission of the Amended Information was not violative of Section 17, Rule 119 of the Revised Rules of Criminal Procedure, contrary to the opinion of the trial court.
The prosecution insists that Judge Ponferrada should have just required it to present evidence in support of the discharge for had this procedure been followed, the fact of admission of the accused sought to be discharged into the Witness Protection Program (WPP) would have come to light. It likewise professes that Section 14, Rule 110 should be applied, and not Section 17, Rule 119 for the following reasons: first, while the case was already filed in court, the accused therein have not yet been arraigned; second, the trial court ordered the reinvestigation of the case; and third, new evidence dictate the necessity to amend the Information to include new accused and to exclude other accused who will be utilized as state witnesses.
There can be no quarrel as to the fact that what is involved here is primary an amendment of an information to exclude some accused and that the same is made before plea. Thus, at the very least, Section 14, Rule 110 is applicable which means that the amendment should be made only upon motion by the prosecutor, with notice to the offended party and with leave of court. What seems to complicate the situation is that the exclusion of the accused is specifically sought for the purpose of discharging them as witnesses for the State. The consequential question is, should the requirements for discharge of an accused as state witness as set forth in Section 17, Rule 119 be made as additional requirements (i.e., Section 14, Rule 110 and Section 17, Rule 119) or should only one provision apply as ruled by the trial court and the Court of Appeals (i.e., Section 14, Rule 110 or Section 17, Rule 119)?
An amendment of the information made before plea which excludes some or one of the accused must be made only upon motion by the prosecutor, with notice to the offended party and with leave of court in compliance with Section 14, Rule 110. Section 14, Rule 110 does not qualify the grounds for the exclusion of the accused. Thus, said provision applies in equal force when the exclusion is sought on the usual ground of lack of probable cause, or when it is for utilization of the accused as state witness, as in this case, or on some other ground.
At this level, the procedural requirements of Section 17, Rule 119 on the need for the prosecution to present evidence and the sworn statement of each state witness at a hearing in support of the discharge do not yet come into play. This is because, as correctly pointed out by the Court of Appeals, the determination of who should be criminally charged in court is essentially an executive function, not a judicial one. The prosecution of crimes appertains to the executive department of government whose principal power and responsibility is to see that our laws are faithfully executed. A necessary component of this power to execute our laws is the right to prosecute their violators. The right to prosecute vests the prosecutor with a wide range of discretion – the discretion of whether, what and whom to charge, the exercise of which depends on a smorgasbord of factors which are best appreciated by prosecutors. By virtue of the trial court having granted the prosecution’s motion for reinvestigation, the former is deemed to have deferred to the authority of the prosecutorial arm of the Government. Having brought the case back to the drawing board, the prosecution is thus equipped with discretion - wide and far reaching – regarding the disposition thereof.
The foregoing discussion is qualified in the seminal case of Crespo v. Mogul, wherein the Supreme Court declared:
... Should the fiscal find it proper to conduct a reinvestigation of the case, at such stage, the permission of the Court must be secured. After such reinvestigation the finding and recommendations of the fiscal should be submitted to the Court for appropriate action. While it is true that the fiscal has the quasi judicial discretion to determine whether or not a criminal case should be filed in court or not, once the case had already been brought to Court whatever disposition the fiscal may feel should be proper in the case thereafter should be addressed for the consideration of the Court. The only qualification is that the action of the Court must not impair the substantial rights of the accused or the right of the People to due process of law.
Thus, as in almost all things, the prosecution’s discretion is not boundless or infinite. The prosecution must satisfy for itself that an accused excluded from the information for purposes of utilizing him as state witness is qualified therefor.
The situation is different in cases when an accused is retained in the information but his discharge as state witness is sought thereafter by the prosecution before it rests its case, in which event, the procedural (in addition to the substantive) requirements of Section 17, Rule 119 apply. Otherwise stated, when no amendment to the information is involved as a by-product of reinvestigation and trial proceeds thereafter, the discharge of the accused falls squarely and solely within the ambit of Section 17, Rule 119. It is fitting then to re-state the rule in Guingona, Jr. v. Court of Appeals that –
... [T]he decision on whether to prosecute and whom to indict is executive in character. Only when an information, charging two or more persons with a certain offense, has already been filed in court will Rule 119, Section 9 of the Rules of Court, come into play ...
Prescinding from the foregoing, it is in a situation where the accused to be discharged is included in the information that the prosecution must present evidence and the sworn statement of each proposed state witness at a hearing in support of the discharge in order to convince the judge, upon whom discretion rests, as to the propriety of discharging the accused as state witness.
Having thus ruled, it now behooves upon this Court to determine whether the Court of Appeals was correct in admitting the amended information insofar as the discharge of JIMMY L. LOPEZ, WILLIAM LOPEZ and ALEX B. DILOY is concerned.
It is undisputed that the motion to admit amended information seeking the exclusion of the above-named accused (together with P/Sr. Supt. GLEN G. DUMLAO) was with notice to the offended party and was set for hearing. The Court of Appeals held that the trial court’s grant of the prosecution’s motion for reinvestigation operates as leave of court to amend the information, if the situation so warrants.
Under the circumstances obtaining herein, we agree with the Court of Appeals considering that we do not perceive here any impairment of the substantial rights of all the accused or the right of the people to due process.
The trial court is with discretion to grant or deny the amendment of the information. In general, its discretion is hemmed in by the proscription against impairment of the substantial rights of the accused or the right of the People to due process of law. In this case, in denying the motion to admit amended information, the trial court simply said that the same was violative of Section 17, Rule 119 without stating the reasons therefor. And for this lapse, the trial court has indeed erred.
In the Decision of the Court of Appeals, it held that the discharge or exclusion of P/Sr. Supt. Glen Dumlao from the Amended Information finds no legal basis under Republic Act No. 6981 for he is a law enforcement officer. The original information, according to the Court of Appeals, should stand insofar as Dumlao is concerned.
Section 3, Rep. Act No. 6981 provides:
SEC. 3. Admission into the Program. – Any person who has witnessed or has knowledge or information on the commission of a crime and has testified or is testifying or about to testify before any judicial or quasi-judicial body, or before any investigating authority, may be admitted into the Program provided, that:
a) the offense in which his testimony will be used is a grave felony as defined under the Revised Penal Code, or its equivalent under special laws;
b) his testimony can be substantially corroborated in its material points;
c) he or any member of his family within the second civil degree of consanguinity or affinity is subjected to threats to his life or bodily injury or there is a likelihood that he will be killed, forced, intimidated, harassed or corrupted to prevent him from testifying, or to testify falsely, or evasively, because or on account of his testimony; and
d) he is not a law enforcement officer, even if he would be testifying against other law enforcement officers. In such a case, only the immediate members of his family may avail themselves of the protection provided for under this Act.
If the Department, after examination of said applicant and other relevant facts, is convinced that the requirements of this Act and its implementing rules and regulations have been complied with, it shall admit said applicant to the Program, require said witness to execute a sworn statement detailing his knowledge or information on the commission of the crime, and thereafter issue the proper certification. For purposes of this Act, any such person admitted to the Program shall be known as the Witness.
It must be stressed that Section 3 of Rep. Act No. 6981 enumerates the requirements before a person may be admitted to the WPP. It does not state that if an accused cannot be admitted to the WPP, he cannot be discharged as a witness for the state. Admission to the WPP and being discharged as an accused are two different things. Dumlao’s being a law enforcement officer and, thus, disqualified to be under the WPP, do not in any way prohibit him to be discharged from the information.
WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of Appeals dated 04 April 2002 and 12 August 2002, respectively, are hereby AFFIRMED with the MODIFICATION to include P/Sr. Supt. GLEN G. DUMLAO as one of the accused excluded from the Amended Information dated 17 September 2001. No costs.
SO ORDERED. March 10 The Da Vinci CodeA copyright case involving the best-selling thriller "The Da Vinci Code", author Dan Brown.
The case concerns the genesis of Brown's publishing phenomenon. Plaintiffs' writers, Michael Baigent and Richard Leigh of the 1982 nonfiction book "The Holy Blood and the Holy Grail," are suing Brown's publisher, Random House. They claim that parts of their work formed the basis of Brown's 2003 novel, which has sold more than 40 million copies and has been made into a film starring Tom Hanks and Ian McKellan. They say that Brown "appropriated the architecture" of their book, which explores theories that Jesus married Mary Magdalene, that the couple had a child and that the bloodline survives. Plaintiffs' said that Dan Brown appropriated their ideas and themes.
Lawyers for Random House have said ideas about the life and legacy of Jesus Christ, which two writers claim were stolen, are so general that they are not protected by copyright. Many key themes of their book are not in "The Da Vinci Code."
Baigent and Leigh's lawyers say they were not attempting to claim a monopoly on ideas or historical debate, but to prove Brown had "relied heavily" on the earlier work, published in Britain in 1982 and the following year in the United States.
If the writers succeed in securing an injunction to bar the use of their material, they could hold up the scheduled May 19 release of "The Da Vinci Code" movie, directed by Ron Howard. Sony Pictures said it planned to release the film on time.
The irony of the whole lawsuit is that Dan Brown has made those authors rich because publicity around 'The Da Vinci Code' turned their book into a best seller after being on the back shelf of libraries and bookstores for years. February 15 Ill-gotten wealthPart I
EN BANC
REPUBLIC OF THE PHILIPPINES, Represented by the Presidential Commission on Good Government, Petitioner, v. ESTATE OF HANS MENZI (Through its Executor, MANUEL G. MONTECILLO), EMILIO T. YAP, EDUARDO M. COJUANGCO, JR., ESTATE OF FERDINAND MARCOS, SR., and IMELDA R. MARCOS, Respondents. G.R. NO. 152578
EDUARDO M. COJUANGCO, JR., Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent. G.R. No. 154487
ESTATE OF HANS M. MENZI (Through its Executor, Manuel G. Montecillo), and HANS M. MENZI HOLDING AND MANAGEMENT, INC. (HMHMI), Petitioners, versus REPUBLIC OF THE PHILIPPINES, (represented by the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), Respondents. G. R. No. 154518
D E C I S I O N
President Corazon C. Aquino issued Executive Order (EO) No. 1, creating the Presidential Commission on Good Government (PCGG) tasked with, among others, the recovery of all ill-gotten wealth accumulated by former President Ferdinand Marcos, his immediate family, relatives, subordinates and close associates. This was followed by EO Nos. 2 and 14, respectively freezing all assets and properties in the Philippines in which the former President, his wife, their close relatives, subordinates, business associates, dummies, agents or nominees have any interest or participation, and defining the jurisdiction over cases involving the ill-gotten wealth. Pursuant to the executive orders, several writs of sequestration were issued by the PCGG in pursuit of the reputedly vast Marcos fortune.
Following a lead that Marcos had substantial holdings in Bulletin Publishing Corporation (Bulletin), the PCGG issued a Writ of Sequestration dated April 22, 1986, sequestering the shares of Marcos, Emilio T. Yap (Yap), Eduardo M. Cojuangco, Jr. (Cojuangco), and their nominees and agents in Bulletin.
This was followed by another Writ of Sequestration issued on February 12, 1987, this time sequestering the shares of stock, assets, properties, records and documents of Hans Menzi Holdings and Management, Inc. (HMHMI).
The Republic then instituted before the Sandiganbayan on July 29, 1987, a complaint for reconveyance, reversion, accounting, restitution and damages entitled “Republic of the Philippines v. Emilio T. Yap, Manuel G. Montecillo, Eduardo M. Cojuangco, Jr., Cesar C. Zalamea, Ferdinand E. Marcos and Imelda R. Marcos” and docketed as Civil Case No. 0022. The complaint substantially averred that Yap knowingly and willingly acted as the dummy, nominee or agent of the Marcos spouses in appropriating shares of stock in domestic corporations such as the Bulletin, and for the purpose of preventing disclosure and recovery of illegally obtained assets. It also averred that Cesar Zalamea (Zalamea) acted, together with Cojuangco, as dummies, nominees and/or agents of the Marcos spouses in acquiring substantial shares in Bulletin in order to prevent disclosure and recovery of illegally obtained assets, and that Zalamea established, together with third persons, HMHMI which acquired Bulletin.
On March 10, 1988, the complaint was amended joining Cojuangco as Zalamea’s co-actor instead of mere collaborator. The complaint was amended for the second time on October 17, 1990. The amendment consisted of dropping Zalamea as defendant in view of the Deed of Assignment dated October 15, 1987 which he executed, assigning, transferring and ceding to the Government the 121,178 Bulletin shares registered in his name. These shares, as will be explained forthwith, formed part of the 214,424.5 shares (214 block) which became the subject of a case that reached this Court.
The Second Amended Complaint also included the Estate of Hans M. Menzi (Estate of Menzi), through its executor, Atty. Manuel G. Montecillo (Atty. Montecillo), as one of the defendants.
The Issues presented for resolution as stated in the Sandiganbayan’s Pre-Trial Order dated November 11, 1991 were:
1) Whether or not the sale of 154,470 shares of stock of Bulletin Publishing Co., Inc., subject of this case by the late Hans M. Menzi to the U.S. Automotive Co. Inc. is valid and legal; and
2) Whether or not the shares of stock of Bulletin Publishing Co. Inc. registered and/or issued in the name of defendants Emilio T. Yap, Eduardo Cojuangco, Jr., Cesar Zalamea and the late Hans M. Menzi (and/or his estate and/or his holding company, HM Holding & Investment Corp.) are ill-gotten wealth of the defendants Marcos spouses.
Make of record the oral manifestation of Atty. Estelito Mendoza, counsel for defendant Eduardo Cojuangco, that:
(a) whether or not the said 154,470 shares of stock of Bulletin Publishing Co. Inc. legally belonged to the late Hans Menzi before he sold the same to U.S. Automotive Co. Inc. ; and
(b) whether or not plaintiff Republic is entitled to the same, should also be threshed out during the trial on the merits.
After protracted proceedings which spawned a number of cases that went up to this Court, the Sandiganbayan rendered a Decision dated March 14, 2002, the dispositive portion of which states:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the following Bulletin shares are the ill-gotten wealth of the defendant Marcos spouses:
A. The 46,626 Bulletin shares in the name of defendant Eduardo M. Cojuangco, Jr., subject of the Resolution of the Supreme Court dated April 15, 1988 in G.R. No. 79126.
Pursuant to alternative “A” mentioned therein, plaintiff Republic of the Philippines through the PCGG is hereby declared the legal owner of these shares, and is further directed to execute, in accordance with the Agreement which is entered into with Bulletin Publishing Corporation on June 9, 1988, the necessary documents in order to effect transfer of ownership over these shares to the Bulletin Publishing Corporation.
B. The 198,052.5 Bulletin shares in the names of:
No. of Shares
Jose Y. Campos 90,866.5
Eduardo M. Cojuangco, Jr. 90,877
Cesar C. Zalamea 16,309
Total 198,052.5
which they transferred to HM Holdings and Management, Inc. on August 17, 1983, and which the latter sold to Bulletin Publishing Corporation on February 21, 1986. The proceeds from this sale are frozen pursuant to PCGG’s Writ of Sequestration dated February 12, 1987, and this writ is the subject of the Decision of the Supreme Court dated January 31, 2002 in G.R. No. 135789.
Accordingly, the proceeds from the sale of these 198,052.5 Bulletin shares, under Philtrust Bank Time Deposit Certificate No. 136301 dated March 3, 1986 in the amount of P19,390,156.68 plus interest earned, in the amount of P104,967,112.62 as of February 28, 2002, per Philtrust Bank’s Motion for Leave to Intervene and to consign the Proceeds of Time Deposits of HMHMI, filed on February 28, 2002 with the Supreme Court in G.R. No. 135789, are hereby declared forfeited in favor of the plaintiff Republic of the Philippines.
2. Ordering the defendant Estate of Hans M. Menzi through its Executor, Manuel G. Montecillo, to surrender for cancellation the original eight Bulletin certificates of stock in its possession, which were presented in court as Exhibits …., which are part of the 212,424.5 Bulletin shares subject of the Resolution of the Supreme Court dated April 15, 1988 in G.R. No. 79126.
3. Declaring that the following Bulletin shares are not the ill-gotten wealth of the defendant Marcos spouses:
a. The 154,472 Bulletin shares sold by the late Hans M. Menzi to U.S. Automotive Co., Inc., the sale thereof being valid and legal;
b. The 2,617 Bulletin shares in the name of defendant Emilio T. Yap which he owns in his own right; and
c. The 1 Bulletin share in the name of the Estate of Hans M. Menzi which it owns in its own right.
4. Dismissing, for lack of sufficient evidence, plaintiff’s claim for damages, and defendants’ respective counterclaims.
SO ORDERED.
In the present consolidated petitions, the foregoing Sandiganbayan Decision is assailed on different grounds.
The Republic, in G.R. No. 152758, assails the afore-quoted Decision insofar as it declared as not ill-gotten wealth of the Marcos spouses the 154,472 shares (154 block) sold by Menzi to U.S. Automotive Co., Inc. (US Automotive) and dismissed the Republic’s claim for damages.
In G.R. No. 154487, Cojuangco questions paragraphs 1 and 2 of the Sandiganbayan Decision.
In G.R. No. 154518, on the other hand, the Estate of Menzi imputes grave error and misinterpretation of facts and evidence against the Sandiganbayan in declaring that the 46,626 Bulletin shares in the name of Cojuangco, and the 198,052.5 shares (198 block) in the names of Jose Campos (Campos), Cojuangco and Zalamea are ill-gotten wealth of the Marcoses.
The three blocks of Bulletin shares of stock subject of these consolidated petitions are:
1. 154,472 shares (154 block) sold by the late Menzi and/or Atty. Montecillo to US Automotive on May 15, 1985 for P24,969,200.09;
2. 198,052.50 (198 block) issued and registered in the names of Campos, Cojuangco, and Zalamea which were transferred to HMHMI and subsequently sold by HMHMI (through Atty. Montecillo) to Bulletin on February 21, 1986 for P23,675,195.85; and
3. 214,424.5 shares (214 block) issued and registered in the names of Campos, Cojuangco, and Zalamea which were the subject of the unanimous Resolution of this Court, through Mr. Chief Justice Claudio Teehankee, in Bulletin v. PCGG (Teehankee Resolution) dated April 15, 1988 and the Sandiganbayan Resolutions dated January 2, 1995 and April 25, 1996 in Civil Case No. 0022.
For clarity of presentation, the 154 block, which is the subject of the Republic’s petition in G.R. No. 152578, is treated separately from the 198 and 214 blocks, which are the subjects of the petitions in G.R. No. 154487 and G.R. No. 154518.
Re: 154 Block
In 1957, Menzi purchased the entire interest in Bulletin from its founder and owner, Mr. Carson Taylor. In 1961, Yap, owner of US Automotive, purchased Bulletin shares from Menzi and became one of the corporation’s major stockholders.
On April 2, 1968, a stock option was executed by and between Menzi and Menzi and Co. on the one hand, and Yap and US Automotive on the other, whereby the parties gave the each other preferential right to buy the other’s Bulletin shares.
On April 22, 1968, the stockholders of Bulletin approved certain amendments to Bulletin’s Articles of Incorporation, consisting of some restrictions on the transfer of Bulletin shares to non-stockholders. The amendments were approved by the Board of Directors of Bulletin and by the Securities and Exchange Commission (SEC).
Several years later, on June 5, 1984, Atty. Amorsolo V. Mendoza (Atty. Mendoza), Vice President of US Automotive, executed a promissory note with his personal guarantee in favor of Menzi, promising to pay the latter the sum of P21,304,921.16 with interest at 18% per annum as consideration for Menzi’s sale of his 154 block on or before December 31, 1984.
One day after Menzi’s death on June 27, 1984, a petition for the probate of his last will and testament was filed in the Regional Trial Court (RTC) of Manila, Branch 29, by the named executor, Atty. Montecillo, and docketed as Special Proceeding No. 84-25244.
On January 10, 1985, Atty. Montecillo filed a motion praying for the confirmation of the sale to US Automotive of Menzi’s 154 block. The probate court confirmed the sale in its Order dated February 1, 1985.
Accordingly, on May 15, 1985, Atty. Montecillo received from US Automotive two (2) checks in the amounts of P21,304,778.24 and P3,664,421.85 in full payment of the agreed purchase price and interest for the sale of the 154 block. On the same day, Atty. Montecillo signed a company voucher acknowledging receipt of the payment for the shares, indicating on the dorsal portion thereof the certificate numbers of the 12 stock certificates covering the 154 block, the number of shares covered by each certificate and the date of issuance thereof.
Atty. Montecillo also wrote on the lower portion of the promissory note executed by Atty. Mendoza the words “Paid May 15, 1985 (signed) M.G. Montecillo, Executor of the Estate of Hans M. Menzi.”
Upon these facts, the Sandiganbayan ruled that the sale of the 154 block to US Automotive is valid and legal. According to the Sandiganbayan, the sale was made pursuant to the stock option executed in 1968 between the parties to the sale. Negotiations took place and were concluded before Menzi’s death, and full payment was made only after the probate court had judicially confirmed the sale.
The Sandiganbayan dismissed the Republic’s claim, based on the affidavit of Mariano B. Quimson, Jr. (Quimson) dated October 9, 1986, that the sale should be nullified because US Automotive only acted as a dummy of Marcos who was the real buyer of the shares. According to the court, the Republic failed to overcome its burden of proof since Quimson’s affidavit was not corroborated by other evidence and was, in fact, refuted by Atty. Montecillo.
In its Memorandum dated July 7, 2003 in G.R. No. 152578, the Republic argues that the Sandiganbayan failed to take into account the fact that despite Menzi’s claim that he acquired Bulletin in 1957, he did not include any Bulletin shares in his Last Will and Testament executed in 1977. Atty. Montecillo, the executor of Menzi’s estate, likewise did not include any Bulletin share in the initial inventory of Menzi’s properties filed on May 15, 1985. Neither were any Bulletin shares declared by Atty. Montecillo even after the probate court issued an Order dated November 17, 1992 for the submission of an updated inventory of Menzi’s assets.
The Republic claims that despite these circumstances, coupled with Quimson’s affidavit detailing how Marcos used his dummies to conceal his control over Bulletin, as well as the letters and correspondence between Marcos and Menzi indicating that Menzi consistently updated Marcos on the affairs of Bulletin, the Sandiganbayan ruled that the 154 block was not ill-gotten wealth of the Marcoses. The Sandiganbayan’s erroneous inference allegedly warrants a review of its findings.
Moreover, the Republic disputes the Sandiganbayan’s ruling that it heavily leaned on the affidavit of Quimson without presenting any other corroborating evidence. It argues that in the proceedings before the PCGG, Quimson was subjected to cross-examination by the lawyers of Bulletin which is controlled by Yap. Further, the evidence it presented before the PCGG purportedly showing that the transfer of Bulletin shares from Menzi to US Automotive was undertaken due to pressure exerted by Marcos on Menzi should have been taken into account.
The Republic insists that the sale between Menzi and U.S. Automotive was a sham because the parties failed to comply with the basic requirement of a deed of sale in the transfer of the subject shares. Further, a number of questions were allegedly not resolved, such as: (a) Who was the seller of the subject shares—the late Menzi as the alleged owner or Atty. Montecillo as then special administrator and later executor of Menzi’s estate; (b) If Menzi sold the shares, was there a need to confirm the sale? If Atty. Montecillo was the one who sold them, what was his authority to sell the said shares?
The Republic also contends that Menzi and Yap were both dummies of the late President Marcos, used by the latter in order to conceal his interest in Bulletin. Hence, the 154 block should also have been declared ill-gotten wealth and forfeited in favor the Government.
The foregoing allegedly warrants the award of damages in favor of the Republic which the Sandiganbayan erroneously failed to do.
The Republic, therefore, prays that the Sandiganbayan Decision, insofar as it declares the sale of the 154 block to be valid and legal, be reconsidered and judgment accordingly rendered declaring the 154 block as ill-gotten wealth, forfeiting the same or the proceeds thereof in favor of the Republic, and awarding actual, temperate and nominal damages in the Court’s discretion, moral damages in the amount of 50 Billion Pesos, exemplary damages of 1 Billion Pesos, attorney’s fees, litigation expenses and treble judicial costs.
The Estate of Menzi and HMHMI filed a Memorandum dated March 10, 2005, averring that the Republic failed to adduce evidence of any kind that the 154 block was ill-gotten wealth of the Marcoses. They claim that the requirements for a valid transfer of stocks, namely:
(1) there must be delivery of the stock certificate;
(2) the certificate must be indorsed by the owner or his attorney-in-fact or other persons legally authorized to make the transfer; and
(3) the transfer must be recorded in the books of the corporation in order to be valid against third parties, have all been met.
The parties to the sale allegedly confirm the indorsement and delivery of the Bulletin shares of stock representing the 154 block. The requirement that the transfer be recorded in the books of the corporation was also met because US Automotive exercised its rights as shareholder.
It is also allegedly immaterial whether it was Menzi or Atty. Montecillo who indorsed the stock certificates. If it was Menzi, then his indorsement was an act of ownership; if it was Montecillo, then the indorsement was pursuant to the duly executed General Power of Attorney filed with the SEC and, subsequently, on the basis of his authority as Special Administrator and Executor of Menzi’s estate.
In his Memorandum dated May 10, 2005, Yap also maintains that the sale of the 154 block was valid and legal. The non-inclusion of the said block of shares in the inventory of Menzi’s estate was purportedly due to the fact that the same had, by then, been sold to US Automotive. Yap also claims that Atty. Montecillo was duly authorized to effect the sale by virtue of the General Power of Authority and the Last Will and Testament executed by Menzi.
The absence of a deed of sale evidencing the sale is allegedly not irregular because the law itself does not require any deed for the validity of the transfer of shares of stock, it being sufficient that such transfer be effected by delivery of the stock certificates duly indorsed. At any rate, a duly notarized Receipt covering the sale was executed.
Moreover, the BIR certified that the Estate of Menzi paid the final tax on capital gains derived from the sale of the 154 block and authorized the Corporate Secretary to register the transfer of the said shares in the name of US Automotive. Further, a stock certificate covering the 154 block was issued to US Automotive by Quimson himself as Corporate Secretary.
Sec. 63 of the Corporation Code provides the requisites for a valid transfer of shares:
Certificate of stock and transfer of shares.—The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred.
No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. [Emphasis supplied]
The Corporation Code acknowledges that the delivery of a duly indorsed stock certificate is sufficient to transfer ownership of shares of stock in stock corporations. Such mode of transfer is valid between the parties. In order to bind third persons, however, the transfer must be recorded in the books of the corporation.
Clearly then, the absence of a deed of assignment is not a fatal flaw which renders the transfer invalid as the Republic posits. There appears to be no dispute in this case that the stock certificates covering the 154 block were duly indorsed and delivered to the buyer, US Automotive. The parties to the sale, in fact, do not question the validity and legality of the transfer.
The objection raised by the Republic actually concerns the authority of Atty. Montecillo, the executor of Menzi’s estate, to indorse the said certificates. However, Atty. Montecillo’s authority to negotiate the transfer and execute the necessary documents for the sale of the 154 block is found in the General Power of Attorney executed by Menzi on May 23, 1984, which specifically authorizes Atty. Montecillo “[T]o sell, assign, transfer, convey and set over upon such consideration and under such terms and conditions as he may deem proper, any and all stocks or shares of stock, now standing or which may thereafter stand in my name on the books of any and all company or corporation, and for that purpose to make, sign and execute all necessary instruments, contracts, documents or acts of assignment or transfer.”
Atty. Montecillo’s authority to accept payment of the purchase price for the 154 block sold to US Automotive after Menzi’s death springs from the latter’s Last Will and Testament and the Order of the probate court confirming the sale and authorizing Atty. Montecillo to accept payment therefor. Hence, before and after Menzi’s death, Atty. Montecillo was vested with ample authority to effect the sale of the 154 block to US Automotive.
That the 154 block was not included in the inventory is plausibly explained by the fact that at the time the inventory of the assets of Menzi’s estate was taken, the sale of the 154 block had already been consummated. Besides, the non-inclusion of the proceeds of the sale in the inventory does not affect the validity and legality of the sale itself.
At any rate, the Sandiganbayan’s factual findings that the 154 block was sold to US Automotive while Menzi was still alive, and that Atty. Montecillo merely accepted payment by virtue of the authority conferred upon him by Menzi himself are conclusive upon this Court, supported, as they are, by the evidence on record.
The Supreme Court is not a trier of facts. It is not our function to examine and weigh all over again the evidence presented by the parties in the proceedings before the Sandiganbayan.
It is also significant that even Quimson’s affidavit does not state, in a categorical manner, that Yap was a Marcos dummy used by the latter to conceal his Bulletin shareholdings. In contrast, Quimson unqualifiedly declared that Campos, Cojuangco and Zalamea were the former dictator’s nominees to Bulletin.
The Supreme Court, agree with the Sandiganbayan that the sale of the 154 block to US Automotive was valid and legal.
Re: 198 and 214 blocks
HMHMI was incorporated on May 20, 1982 by Menzi, Campos, Cojuangco, Rolando C. Gapud (Gapud) and Zalamea, with an authorized capital stock of P1,000,000.00 divided into 100,000 shares with par value of P10.00 each.
A Deed of Transfer and Conveyance was executed by Menzi, Campos, Cojuangco and Zalamea on August 17, 1983, transferring the shares of stock registered in their names in various corporations to HMHMI in exchange for 6,000,000 shares of the latter’s capital stock, subject to the approval by the SEC of HMHMI’s Certificate of Increase of Capital Stock. The shares of stock transferred included the 198 block of Bulletin shares, 90,866.5 of which were registered in the name of Campos; 90,877 in the name of Cojuangco; and 16,309 in the name of Zalamea.
On February 14, 1984, HMHMI amended its Articles of Incorporation by increasing its authorized capital stock to P100,000,000.00 divided into 10,000,000 shares with par value of P10.00 per share.
On January 15, 1986, the law firm of Siguion Reyna, Montecillo & Ongsiako wrote a letter to Bulletin’s corporate secretary, Atty. Mendoza, requesting that three (3) certificates of stock representing 90,866.5, 90,877, and 16,309 Bulletin shares be issued in favor of HMHMI in exchange for 21 certificates of stock in HMHMI.
Atty. Mendoza acknowledged receipt of the 21 certificates of stock but replied that the transfer by Campos, Cojuangco and Zalamea of their Bulletin shares to HMHMI cannot be recorded in the books of Bulletin because it was made in violation of Bulletin’s Articles of Incorporation which provides restrictions and limitations on the transferability of the shares of the company by its stockholders. Bulletin, however, offered to buy the shares at the price fixed in the Articles of Incorporation. The offer appears to have been accepted by HMHMI through its President, Atty. Montecillo.
Thus, on January 30, 1986, HMHMI’s Board of Directors passed a resolution approving the sale to Bulletin of the 198 block and authorizing its President or Corporate Secretary to sign and execute the corresponding deed of sale. Accordingly, a Deed of Sale was executed on February 21, 1986 by Atty. Montecillo whereby HMHMI sold the 198 block to Bulletin for the amount of P23,675,195.85.
On April 22, 1986, the shares of Marcos, Yap, Cojuangco and their nominees or agents in the Bulletin were sequestered by virtue of a Sequestration Order issued by the PCGG.
The SEC issued a certification to the effect that as of February 21, 1986, the total subscribed shares of Bulletin was 756,861. Of these, 198,052.5 were treasury shares, leaving the total outstanding shares at 567,808.5. The stockholders of Bulletin and the shares of stock held by each of them were listed as follows:
Name
No. of Shares Emilio T. Yap 2,617 Menzi Trust Fund 28,977 Estate of Hans M. Menzi 1 U.S. Automotive Co. Inc. 318,084 xxx xxx Cesar Zalamea 121,178 Jose Campos
46,620.5 Eduardo Cojuangco 46,626 xxx xxx Total 567,808.5 On February 12, 1987, another Writ of Sequestration was issued by the PCGG, sequestering all the shares of stock, as well as the assets, properties, records and documents of HMHMI. Because of this Sequestration Order, the proceeds from the sale of the 198 block which were deposited with Philtrust Bank were frozen.
On March 16, 1987, the sequestration of the 2,617 Bulletin shares of Yap was lifted upon the latter’s motion.
On April 14, 1987, the PCGG wrote a letter/order to the Corporate Secretary of Bulletin, asking for the schedule of the annual stockholders’ meeting of the corporation because the sequestered shares consisting of the 214 block will be voted by the Commission. This letter became the subject of a petition filed by Bulletin with this Court questioning the validity of the PCGG’s letter/order and seeking to compel PCGG to accept Bulletin’s offer of a cash deposit in the amount of P34,592,903.34 representing the value of the 214 block of sequestered Bulletin shares. The Court issued a temporary restraining order.
On July 31, 1987, the PCGG received from Bulletin the amount of P8,173,506.06 as full payment of 46,620.5 Bulletin shares registered in the name of Campos. The receipt stated that “Mr. Jose Y. Campos has waived the ownership of said shares in favor of the Republic of the Philippines through the Presidential Commission on Good Government.”
A Deed of Assignment was likewise executed by Zalamea on October 15, 1987, assigning and waiving in favor of the Republic his rights to 121,178 Bulletin shares registered in his name. On the same day, Bulletin issued in favor of PCGG a check in the amount of P21,244,926.96 as full payment of Zalamea’s shares.
This Court, on April 15, 1988, issued the "Teehankee Resolution", the dispositive portion of which pertinently states:
- Directing the Commission to accept the cash deposit of P8,174,470.32 offered by petitioner for the 46,626 sequestered shares in the name of Mr. Eduardo M. Cojuangco, Jr. expressly subject to the alternative conditions (A and B) hereinabove set forth, and likewise directing the Commission to accept the cash deposit, if it has not actually sold the Cesar C. Zalamea Bulletin shares to petitioner (supra, p. 13, par [2]) of P21,244,926.96 for the sequestered shares of Bulletin in the name of Mr. Cesar Zalamea under the same alternatives already mentioned; and
- Remanding the case regarding the issue of ownership of the said sequestered Bulletin shares for determination and adjudication to the Sandiganbayan. Ill-gotten wealthPart II
contn..
An agreement was thereafter executed between PCGG and Bulletin on June 9, 1988 regarding the 46,626 Bulletin shares of Cojuangco whereby PCGG accepted Bulletin’s deposit in the amount of P8,174,470.32, subject to the alternatives set forth in the Teehankee Resolution, as follows:
Alternative “A”
To standby as full payment plus whatever interest earnings thereon upon final judgment of the Court declaring the Republic of the Philippines as owners of the 46,626 shares, accompanied by the corresponding original stock certificates, issued in the name of the government, duly endorsed in favor of the Bulletin Publishing Corporation, free from liens and encumbrances; or
Alternative “B”
To immediately return to Bulletin Publishing Corporation the cash deposit in the amount of P8,174,470.32 plus whatever interest earnings thereon upon final judgment by the Court declaring that Mr. Eduardo Cojuangco, Jr. is the true owner of the 46,626 shares.
With this factual backdrop, the Sandiganbayan ruled that Campos, Cojuangco and Zalamea were nominees and dummies of Marcos. Hence, the 198 block which these nominees transferred to HMHMI and which, in turn, were sold to Bulletin are ill-gotten wealth.
The Sandiganbayan anchored its finding on the Deposition of Campos taken on November 25, 1994 before the Philippine Consulate General in Vancouver, British Columbia, Canada, that he held shares in Bulletin and HMHMI “per instruction of President Marcos;” that the beneficial owner of these shares “must be President Marcos;” and that he received three (3) dividend checks from Bulletin “for the benefit of President Marcos.”
Based on the Deed of Assignment executed by Zalamea on October 15, 1987, wherein he manifested that he “does not claim true and beneficial ownership” of the 121,178 Bulletin shares registered in his name and that he voluntarily waived and assigned these shares in favor of PCGG, the Sandiganbayan concluded that Zalamea could not have been a nominee of Menzi, as the latter’s estate claims, but of Marcos.
The Sandiganbayan likewise rejected Cojuangco’s contention that the Bulletin and HMHMI shares registered in his name “were not acquired and held by him as dummy, nominee and/or agent of defendants Ferdinand E. Marcos and Imelda Romualdez Marcos, but upon the request, and as nominee, of the late Hans Menzi who owned and delivered to him said shares.” According to the Sandiganbayan, Cojuangco failed to present evidence necessary to establish his affirmative defense.
As regards the 214 block, the Sandiganbayan ruled that there is no longer any dispute concerning the ownership of the 46,620.5 shares held by Campos and the 121,178 shares held by Zalamea in view of the Teehankee Resolution and the fact that these shares have been waived and assigned to PCGG.
The Sandiganbayan went on to declare that the only remaining issue pertaining to Cojuangco’s claim to his alleged portion of the 214 block should be resolved in favor of the Republic because of Cojuangco’s consistent disavowal of any “proprietary interest in the shares which are the subject matter of the instant case” and his claim that he held the shares as nominee of Menzi.
The Sandiganbayan further ruled that Yap’s shares, which were acquired by him in 1961 before Marcos became President, are not ill-gotten wealth of the Marcoses. Moreover, the one (1) Bulletin share for which dividend checks were issued to and received by the Estate of Menzi was deemed to belong to the latter.
In G.R. No. 154487, petitioner Cojuangco assails paragraphs 1 and 2 of the Sandiganbayan Decision. Allegedly, the Government does not claim that in acquiring the Bulletin shares registered in Cojuangco’s name, the late President Marcos used government funds or resources. Cojuangco raises several issues, namely:
(a) Were the Bulletin shares, at any time, of government ownership?
(b) Were the Bulletin shares acquired by Marcos and, if so, did he use government funds to acquire them?
(c) Did petitioner Cojuangco act as the “dummy” or “nominee” of Marcos to acquire, or to conceal the acquisition of the shares by the latter?
In the Memorandum for Eduardo M. Cojuangco, Jr. dated May 6, 2005, Cojuangco argues that the Republic neither alleged nor presented evidence to prove that that the Bulletin shares registered in his name were owned by the Republic but were taken by the Marcoses “by taking advantage of their public office and/or using their powers, authority, influence, connections or relationship” or that they were acquired by the Marcoses from Menzi with the use of government or public funds. Hence, the conclusion should be sustained that the shares were owned by Menzi and never by the Republic, and no public funds were used in their acquisition.
Cojuangco attacks the Sandiganbayan’s reliance on Quimson’s affidavit saying that it is hearsay because Quimson was not presented in court to affirm the contents of his affidavit and was not subjected to cross-examination as he had already passed away when Civil Case No. 0022 was tried. Quimson’s affidavit is allegedly double hearsay insofar as it alleges that Marcos owned the Bulletin shares and that Cojuangco was merely Marcos’ nominee because Quimson had no contact with Marcos and his knowledge of the latter’s purported ownership of the Bulletin shares was merely relayed to him by Menzi.
Even the supposed corroborating evidence, consisting of the affidavits of Pedro Teodoro, Evelyn S. Singson, Gapud, and Angelita Reyes, have allegedly been declared as having no probative value inasmuch as the affiants did not take the witness stand and could not be cross-examined.
The Republic likewise allegedly failed to prove its contention that Bulletin issued checks in favor of Campos, Cojuangco and Zalamea which were deposited into numbered accounts in Security Bank & Trust Company owned by the Marcoses. Moreover, the dividend checks supposedly indorsed by Cojuangco in blank do not conclusively demonstrate that they were indorsed in favor of the Marcoses.
On the other hand, there is allegedly sufficient evidence on record to prove that Cojuangco was a nominee of Menzi. These documents consist of the testimony of Atty. Montecillo to the effect that, as far as he knew, Cojuangco “really acted as nominee for the General,” and the originals of the stock certificates covering the Bulletin shares registered in Cojuangco’s name.
Cojuangco further avers that the allegation that the Bulletin shares were registered in his name upon the request, and as nominee, of Menzi is a specific denial and not an affirmative defense as the Sandiganbayan declared. As a specific denial, the allegation need not be proven unless the Republic presents adequate evidence proving the allegations in its complaint which, Cojuangco insists, the Republic failed to do.
He likewise argues that the Republic is not entitled to damages of any kind because it failed to establish that it has any proprietary interest in the Bulletin shares registered in his name; that the said shares are owned by the Marcoses; and that it suffered any pecuniary loss by reason of such ownership.
Based on these allegations, Cojuangco prays that he be declared the owner of the 46,626 Bulletin shares registered in his name, together with all cash and stock dividends which have accrued in favor of said shares from October 15, 1987, and ordering the PCGG to return the cash deposit of P8,174,470.32 plus interest to Bulletin.
In its Memorandum dated March 17, 2005, the Republic maintains that Cojuangco has consistently denied any proprietary interest in the Bulletin shares. Hence, he cannot claim ownership of the Bulletin shares registered in his name. His allegation that that he was a nominee of Menzi was pleaded by way of defense. Thus, he has the burden of proving this material allegation, set up as new matter, that the shares were not his but Menzi’s.
Since the Bulletin shares were not included in the inventory of Menzi’s assets, it allegedly follows that Cojuangco could not have been a nominee of Menzi who did not own the subject Bulletin shares.
As regards the contention that the Republic failed to show that the shares belong to the Government or were acquired using public funds, the Republic maintains that Marcos acquired the Bulletin shares using his political clout. His very act of participating in a business enterprise using nominees to conceal his ownership of Bulletin shares is already a violation of the Constitution.
Furthermore, Campos and Zalamea, who, like Cojuangco, held shares in the 198 and 214 blocks, have already surrendered and assigned their respective shares to the Government and acknowledged the right of the Government over the Bulletin registered in their names. Such is allegedly a clear indication that they acted as dummies of Marcos. The admission of Campos and Zalamea that their shares in the 214 block belonged to Marcos may allegedly be used to prove that the 198 block was likewise held by them as dummies of the former dictator.
The Sandiganbayan also allegedly did not rely on the Teehankee Resolution to support its conclusion that the 198 and 214 blocks are ill-gotten wealth but made its own finding after a full-blown trial at which all the parties, except Cojuangco, presented their respective evidence.
Moreover, the evidence presented by the Republic allegedly preponderates in favor of its theory that the Bulletin shares in the names of Campos, Cojuangco and Zalamea were actually held in trust for the benefit of the Marcoses. Notably, the PCGG Resolution dated May 22, 1987, presented by the Republic as its Exhibit “I” declares that Quimson and Teodoro, close associates of Menzi, stated under oath that when Marcos allowed the Bulletin to reopen during Martial Law, Menzi was allowed only 20% participation, and that Marcos put his shares in the names of Campos, Cojuangco and Zalamea.
Besides, Menzi did not execute any deed of trust in his favor as trustor and Campos, Cojuangco and Zalamea as trustees. Neither did the Estate of Menzi claim that Campos, Cojuangco and Zalamea were nominees of Menzi as no cross-claim was filed by the Estate of Menzi even as it claimed ownership of the 198 and 214 blocks.
In their Memorandum dated March 10, 2005 in G.R. Nos. 154487 and 154518, the Estate of Menzi and HMHMI argue that the Sandiganbayan erred in not resolving the issue of the ownership of the 198 and 214 blocks. The Sandiganbayan instead allegedly relied on its misinterpretation of the Teehankee Resolution to the effect that there is no longer any controversy as regards the ownership of the portion of the 214 block held by Zalamea. According to said respondents, the Teehankee Resolution clearly directed the Sandiganbayan to resolve the issue of ownership of both the Zalamea and Cojuangco portions of the 214 block.
Respondents Estate of Menzi and HMHMI also contend that the Quimson affidavit should have been treated as having no probative value with respect to the 154 block and the 198 and 214 blocks alike. The affidavit was allegedly not at all corroborated by the other documents presented by the Republic and cited in the assailed Decision.
They insist that Campos, Cojuangco and Zalamea were nominees of Menzi, not dummies of Marcos, because, as allegedly established during trial, the stock certificates covering the contested blocks of shares were indorsed in blank and remained in Menzi’s possession. Even Campos allegedly testified that he was never in possession of the stock certificates.
Assuming that Campos was indeed a Marcos dummy, his admission should apply solely to the Bulletin shares registered in his name. Likewise, Zalamea allegedly never declared himself to be a Marcos nominee, only that he does not claim true and beneficial ownership of the Bulletin shares recorded in his name. The dividend checks for Zalamea’s shareholdings, in fact, allegedly indicate the Estate of Menzi as the payee, proving that Zalamea was Menzi’s nominee.
Respondents Estate of Menzi and HMHMI further claim that the 198 and 214 blocks were not mentioned in Menzi’s Last Will and Testament because Menzi knew of the impending promulgation of a decree which would limit to only 20% the ownership of media enterprises by one person or family. Allegedly, in order to get around this restriction, Menzi devised the nominee structure whereby he used three (3) nominees to enable him to retain his 80% stake in Bulletin. Besides, there was allegedly a legal question as to whether sequestered shares need to be declared for estate tax purposes in the meantime that a case involving these shares was pending.
Said respondents finally posit that assuming that the 198 and 214 blocks are ill-gotten, the shares themselves, and not merely the proceeds, should be forfeited in favor of the Government.
Yap, on the other hand, claims in his Memorandum dated May 10, 2005 filed in G.R. Nos. 154487 and 154518 that Cojuangco may not raise in his petition a new specific relief consisting of the prayer that he be declared the owner of the 46,626 Bulletin shares registered in his name which Cojuangco never asked for during the proceedings before the Sandiganbayan. Cojuangco is allegedly bound by his judicial admission that he has no proprietary interest over the said Bulletin shares.
Purportedly, because of this judicial admission, Alternative B mentioned in the Teehankee Resolution was eliminated. The only option which remained was, as held by the Sandiganbayan, to declare that the Government is the legal owner of the shares and direct the PCGG to execute the necessary documents to effect the transfer thereof in accordance with Alternative A.
As regards the prayer that the shares themselves be forfeited in favor of the Government, Yap contends that this cannot be done because the Government is barred by the Constitution from acquiring ownership of private mass media.
The Estate of Menzi and HMHMI should also not be allowed to claim the portion of the 214 block held by Campos and Zalamea whose ownership has allegedly been settled by this Court in the Teehankee Resolution.
Yap also claims that the Estate of Menzi and HMHMI have unlawfully concealed the stock certificates representing a portion of the shares held by Campos and Zalamea. Their lawyers, specifically Atty. Montecillo, have also allegedly staked an unfounded claim on the Bulletin shares in violation of their duty, as lawyers of Bulletin for several years, to protect the latter’s interests.
Cojuangco filed a Reply Memorandum dated October 17, 2005, substantially reiterating his argument that the Sandiganbayan failed to make a finding that the Bulletin shares are ill-gotten as defined by the pertinent executive orders and that they were owned by the Marcoses. Consequently, he insists that there is no basis for the Sandiganbayan’s conclusion that the Republic is the legal owner of the said shares.
The Republic also filed a Memorandum dated March 17, 2005 in G.R. No. 154518, averring that the petition raises factual issues not proper in a petition for review under Rule 45 of the Rules of Court.
The Republic insists that the Decision of the Sandiganbayan relative to the 198 and 214 blocks was not based on Quimson’s affidavit alone but on the totality of the evidence presented to support the complaint. Quimson’s affidavit was allegedly given prominence because it related in detail how Campos, Cojuangco and Zalamea came to be nominees of Marcos. The allegations in Quimson’s affidavit were allegedly confirmed by Menzi’s Last Will and Testament, the initial inventory of his assets, the letters and correspondence between Marcos and Menzi, Campos’ deposition, and the dividend checks issued to Campos, Cojuangco and Zalamea even after they have supposedly transferred their Bulletin shares to HMHMI.
Moreover, Atty. Montecillo did not institute any action against Campos, Cojuangco and Zalamea to recover the shares. This allegedly indicates that the shares were not owned by Menzi and that Campos, Cojuangco and Zalamea did not act as Menzi’s nominees.
As regards the claim that Menzi owned the shares registered in the names of Campos, Cojuangco and Zalamea because the stock certificates covering them were in Menzi’s possession, the Republic maintains that mere possession of the stock certificates does not operate to vest ownership on Menzi considering that Campos already declared that Marcos owned those shares and Zalamea surrendered his shares to the Government.
Furthermore, the Republic alleges that the Sandiganbayan had already ruled with finality that the Estate of Menzi and HMHMI cannot recover the Campos and Zalamea portions of the 214 block. Specifically, in the Resolution dated January 2, 1995, the Sandiganbayan declared that the Estate of Menzi cannot recover the Campos shares because the latter, who was not a co-defendant in the case, had already voluntarily surrendered the same to the PCGG. Zalamea’s shares could likewise not be recovered because he was also not a party, either as defendant, cross-defendant or third-party defendant. Moreover, in another Resolution dated July 10, 1993, the Sandiganbayan held that the Estate of Menzi has not pleaded any claim of ownership over the Bulletin shares in the names of Campos, Cojuangco and Zalamea, much less has it intervened to express any prejudice to it should any judgment be rendered for or against Campos, Cojuangco and Zalamea.
The Supreme Court affirm the ruling of the Sandiganbayan.
It is to be noted at the outset that there is no more dispute as regards the Bulletin shares registered in the name of Campos. In fact, Campos was not included as a defendant in Civil Case No. 0022. The Bulletin shares registered in his name have been voluntarily surrendered to the PCGG and the proceeds thereof have accordingly been forfeited in favor of the Government.
The Pre-Trial Order of the Sandiganbayan dated November 11, 1991 likewise does not mention as an issue the ownership of the Campos-held Bulletin shares.
The same cannot be said, however, of the Bulletin shares registered in the name of Zalamea. Although he was dropped as a party-defendant in the Second Amended Complaint dated October 17, 1990 purportedly by reason of the Deed of Assignment he executed on October 15, 1987, the Zalamea-held shares are clearly still covered by the Teehankee Resolution remanding the issue on the ownership of the sequestered Cojuangco and Zalamea shares for determination and adjudication by the Sandiganbayan.
As with the 154 block, the issues raised by the petitioners assailing the Sandiganbayan’s disposition of the 198 and 214 blocks are largely factual and, therefore, generally beyond the scope of our review under Rule 45 of the Rules of Court. Nonetheless, as will be shown in the following disquisition, there is no cause for the Court to reverse the Sandiganbayan because the evidence on record amply supports its findings and conclusions.
The 46,626 shares registered in the name of Cojuangco which formed part of the 214 block were declared to be ill-gotten wealth based on the evidence presented by the Republic to show that Cojuangco acted as a nominee of Marcos and on Cojuangco’s unsubstantiated allegation that he acted as a nominee not of Marcos but of Menzi.
Cojuangco counters, however, that the allegation that he acted as Menzi’s nominee is a specific denial which he does not have the burden of proving.
Notably, in the Answer of Defendant Eduardo M. Cojuangco, Jr. dated March 16, 1989, Cojuangco claimed as part of his denial that “whatever shares of stock he may have in Bulletin Publishing Corporation and/or H.M. Holdings and Management, Inc. were not acquired and held by him as dummy, nominee and/or agent of defendants Ferdinand E. Marcos and Imelda Romualdez Marcos, but upon the request, and as nominee, of the late Hans Menzi who owned and delivered to him said shares.”
Likewise, in his Pre-Trial Brief dated January 15, 1992, Cojuangco stated that “[I]n regard shares of stock in the name of defendant Cojuangco in Bulletin Publishing Corporation and/or HM Holdings & Management, Inc., he was never, and is not, a nominee of any other person but the late Brig. Gen. Hans M. Menzi. Defendant Cojuangco therefore reiterates that he has no proprietary interest in the shares which are the subject matter of the instant case. They properly belong to the estate of the late Hans Menzi.”
It is procedurally required for each party in a case to prove his own affirmative allegations by the degree of evidence required by law. In civil cases such as this one, the degree of evidence required of a party in order to support his claim is preponderance of evidence, or that evidence adduced by one party which is more conclusive and credible than that of the other party. It is therefore incumbent upon the plaintiff who is claiming a right to prove his case. Corollarily, the defendant must likewise prove its own allegations to buttress its claim that it is not liable.
The party who alleges a fact has the burden of proving it. The burden of proof may be on the plaintiff or the defendant. It is on the defendant if he alleges an affirmative defense which is not a denial of an essential ingredient in the plaintiff’s cause of action, but is one which, if established, will be a good defense – i.e., an “avoidance” of the claim.
In the instant case, Cojuangco’s allegations are in the nature of affirmative defenses which should be adequately substantiated. He did not deny that Bulletin shares were registered in his name but alleged that he held these shares not as nominee of Marcos, as the Republic claimed, but as nominee of Menzi. He did not, however, present any evidence to support his claim and, in fact, filed a Manifestation dated July 20, 1999 stating that he “sees no need to present any evidence in his behalf.”
In contrast to Cojuangco’s consistent, albeit unsupported, disclaimer, the Sandiganbayan found the Republic’s evidence to be preponderant. These pieces of evidence consist of: the affidavit of Quimson detailing how Campos, Cojuangco and Zalamea became Marcos’ nominees in Bulletin; the affidavit Teodoro relative to the circumstances surrounding the sale of Menzi’s substantial shares in Bulletin to Marcos’ nominees and Menzi’s retention of only 20% of the corporation; the sworn statement of Gapud describing the business interests and associates of Marcos and stating that Bulletin checks were periodically issued to Campos, Cojuangco and Zalamea but were deposited after indorsement to Security Bank numbered accounts owned by the Marcoses dividend checks issued to Campos, Cojuangco and Zalamea even after their shares have been transferred to HMHMI; the Certificate of Incorporation, Articles of Incorporation and Amended Articles of Incorporation of HMHMI showing that Bulletin shares held by Campos, Cojuangco and Zalamea were used to set up HMHMI; Deed of Transfer and Conveyance showing that Campos, Cojuangco, Zalamea and Menzi transferred several shares, including Bulletin shares, to HMHMI in exchange for shares of stock in the latter which shares were not issued; the Inventory of Menzi’s assets as of May 15, 1985 which does not include Bulletin shares; notes written by Marcos regarding Menzi’s resignation as aide-de-camp to devote his time to run Bulletin’s operations and the reduction of his shares in the corporation to 12%; and letters and correspondence between Marcos and Menzi regarding the affairs of Bulletin.
These pieces of uncontradicted evidence suffice to establish that the 198 and 214 blocks are indeed ill-gotten wealth as defined under the Rules and Regulations of the PCGG, viz:
Sec. 1. Definition.—(A) “Ill-gotten wealth is hereby defined as any asset, property, business enterprise or material possession of persons within the purview of Executive Orders Nos. 1 and 2, acquired by them directly, or indirectly thru dummies, nominees, agents, subordinates and/or business associates by any of the following means or similar schemes:
(1) Through misappropriation, conversion, misuse or malversation of public funds or raids on the public treasury;
(2) Through the receipt, directly or indirectly, of any commission, gift, share, percentage, kickbacks or any other form of pecuniary benefit from any person and/or entity in connection with any government contract or project or by reason of the office or position of the official concerned;
(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the government or any of its subdivisions, agencies or instrumentalities or government-owned or controlled corporations;
(4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation in any business enterprise or undertaking;
(5) Through the establishment of agricultural, industrial or commercial monopolies or other combination and/or by the issuance, promulgation and/or implementation of decrees and orders intended to benefit particular persons or special interests; and
(6) By taking undue advantage of official position, authority, relationship or influence for personal gain or benefit.
Cojuangco’s disavowal of any proprietary interest in the Bulletin shares is conclusive upon him. His prayer that he be declared the owner of the said shares, together with all the cash and stock dividends which have accrued thereto since October 15, 1987, and that the PCGG be ordered to return the cash deposit of P8,174,470.32 to Bulletin, therefore, has no legal basis and should perforce be denied.
In this connection, it should be said that Cojuangco apparently desisted from presenting evidence and chose instead to stake his claim with the Estate of Menzi and HMHMI. As found by the Sandiganbayan, however, the Estate of Menzi and HMHMI failed to prove their allegation that Campos, Cojuangco and Zalamea were Menzi’s nominees. Neither did the Estate of Menzi and HMHMI institute an action to recover the shares from Menzi’s nominees.
Significantly, even as they claimed ownership of the Bulletin shares in their Answer to the Republic’s Second Amended Complaint, the Estate of Menzi and HMHMI did not file any cross-claim against the purported Menzi nominees.
Quite revealing, too, is the fact that Campos, in his Answers to Direct Interrogatories taken before the Consul General at the Philippine Consulate General in Vancouver, British Columbia, Canada on November 25, 1994, repeatedly declared that he owned a portion of the 198 block “per instruction of President Marcos” and that he “became the shareholder, per instruction of President Marcos.”
Likewise, in his Deed of Assignment dated October 15, 1987, Zalamea manifested that he “does not claim true and beneficial ownership” of the Bulletin shares registered in his name and that he voluntarily waived and assigned the same in favor of the PCGG.
These declarations should have alerted the Estate of Menzi and HMHMI to file cross-claims against Campos and Zalamea. The fact that they did not enfeebles their claim of ownership.
It is also important to note that the Estate of Menzi did not include the 198 and 214 blocks in the inventory of the estate’s assets dated May 15, 1985. If, as it claims, the Bulletin shares of Campos, Cojuangco and Zalamea were held by them as nominees of Menzi, then these shares should have been included in the inventory. The justification advanced for the said non-inclusion, which is that the stock certificates covering them were not in the possession of Atty. Montecillo, is nothing but a hollow pretext given the fact that even after the certificates came to Atty. Montecillo’s possession in 1987, an updated inventory declaring the said shares as part of Menzi’s estate was not filed pursuant to the Order of the probate court dated November 17, 1992.
Further, the claim that Menzi would need dummies because of the impending promulgation of a decree which would limit to 20% the ownership of media enterprises by one person or family is incredulous since no such decree was ever issued.
Parenthetically, the fact that the stock certificates covering the shares registered under the names of Campos, Cojuangco and Zalamea were found in Menzi’s possession does not necessarily prove that the latter owned the shares. A stock certificate is merely a tangible evidence of ownership of shares of stock. Its presence or absence does not affect the right of the registered owner to dispose of the shares covered by the stock certificate. Hence, as registered owners, Campos and Zalamea validly ceded their shares in favor of the Government. This assignment is now a fait accompli for the benefit of the entire nation.
The contention that the sale of the 214 block to the Bulletin was null and void as the PCGG failed to obtain approval from the Sandiganbayan is likewise unmeritorious. While it is true that the PCGG is not empowered to sell sequestered assets without prior Sandiganbayan approval, this case presents a clear exception because this Court itself, in the Teehankee Resolution, directed the PCGG to accept the cash deposit offered by Bulletin in payment for the Cojuangco and Zalamea sequestered shares subject to the alternatives mentioned therein and the outcome of the remand to the Sandiganbayan on the question of ownership of these sequestered shares.
In light of the foregoing, the Supreme Court is not inclined to disturb the Sandiganbayan’s evaluation of the weight and sufficiency of the evidence presented by the Republic and its finding that the evidence adduced by the Estate of Menzi and HMHMI do not prove their allegation that Campos, Cojuangco and Zalamea are Menzi’s nominees, taking into account the express admission of Campos that he owned the shares upon Marcos’ instruction, the declaration of Zalamea that he does not claim true and beneficial ownership of the shares, and the absolute dearth of evidence regarding Cojuangco’s assertion that he is Menzi’s nominee.
With regard to the Republic’s prayer for damages, the Court finds the same not supported by sufficient evidence.
An award of actual or compensatory damages requires proof of pecuniary loss. In this case, the Republic has not proven with a reasonable degree of certainty, premised on competent proof and the best evidence obtainable, that it has suffered any actual pecuniary loss by reason of the acts of the defendants. Hence, actual or compensatory damages may not be awarded.
On the other hand, while no proof of pecuniary loss is necessary in order that moral, temperate, nominal and exemplary damages may be adjudicated, proof of damage or injury should nonetheless be adduced. As found by the Sandiganbayan, however, the Republic failed to show the factual basis for the award of moral damages and its causal connection to defendants’ acts. Thus, moral damages, which are designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer, may not be awarded. Temperate, nominal, and exemplary damages, attorney’s fees, litigation expenses and judicial costs may likewise not be adjudicated for failure to present sufficient evidence to establish entitlement to these awards.
WHEREFORE, the petitions in G.R. No. 152578, G.R. No. 154487 and G.R. No. 154518 are DENIED. The Decision of the Sandiganbayan dated March 14, 2002 is AFFIRMED.
SO ORDERED.
February 03 GooglebotIt is an automated program that continuously crawl across the internet, to locate and analyze available web pages and to catalog, those web pages into Google searchable web index.
Process:
Google makes and analyze copy of each web pages that it finds and stores the HTML code for those pages in a temporary repository called the 'cache.' Once it index and stored in a cache, it can include that page in the search results it displays to users in response to their queries. The first item appearing in each result is the title of the web page followed by a short 'snippet' from the web page in a smaller font and Goole display another link labeled, 'cached.' When clicked, the cached links directs an Internet user to the archival copy of a web page stored in Google's system cache rather than to the original web site for that page. By clicking on the cache linked for a page, the user can view the snapshot of that page, as it appeared the last time it was visited and analyzed by the Googlebot.
The page a user retrieves from Google after clicking on a cache links contains a conspicuous Disclaimer at the top explaining that it is only a snap shot of the page from Google cache, not the original page and that the page from the cache may not be current. The Disclaimer also includes two separate hyperlinks to the original, current page.
Google enables users to access copy of the web pages through 'Cached' links for several reasons:
1. Archival copies
2. We page comparisons 3. Identification of Search Query Terms Google provides instructions for web site owners to communicate their preferences to:
1. Google at http://www.google.com/remove.html/
2. The principal way to communicate with Google robot is by placing specific instructions in 'meta tags' within the computer code (called HTML) that comprises a given page. When the Googlebot visits a page, it reads through this code. If it encounters the meta tags, it follows the instructions provided either for the Googlebot not to analyze the page or include it in Google's web index and search results:
"<META NAME="robots"CONTENT="NOINDEX,NOFOLLOW">"
or to include in a given page in Google's search results, i.e., no archive meta tags:
"<METANAME="ROBOTS" CONTENT="NOARCHIVED">"
If the web site owner includes the no archived meta tags in a page, then Google does not provide a "cached" links when it lists that page in its search results.
3. The web site owner can also communicate with search engines robot by placing a "robots.txt" file on their web sites. If web site owner doesn't want robot to crawl the owner's web site, it can create the following:
"User-agent: * Disallow:/".
February 02 Copyright InfringementUNITED STATES DISTRICT COURT DISTRICT OF NEVADA
Blake A. Field
-versus- FINDINGS OF FACT AND CONCLUSIONS OF LAW GOOGLE, INC. x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
This is in connection with a case filed against Google, Inc. brought by Blake A. Field for copyright infringement alleging among others that by allowing Internet users to access his copyrighted works, he was deprived of his exclusive rights to reproduce and distribute copies of his works. The Court grants Google's Motion for Summary Judgment by finding that: (1) There is no direct infringement of the copyrighted works at issue; (2) Google has an implied license to reproduce and distribute the copyrighted works; (3) Estoppel on the part of Field; and (4) Implied Use under 17 U.S C. section 107 and further grant a partial summary judgment that Field's claim is precluded under the operation of a 'system cache' safe harbor section 512(b) of the Digital Millennium Copyright Act (DMCA).
Issue: Whether by allowing access to copyrighted works through "Cached" links Google engages in volitional "copying" or "distribution" under Copyright Act sufficient to establish a prima facie case for copyright infringement.
Conclusions of Law: I. Direct Infringement of the Copyrighted Works. To demonstrate copyright infringement, the plaintiff must show "ownership of the copyright and copying by the defendant." Kelly vs. Arriba Soft Corp., 336 F.3d 811, 817 (9th Cir. 2003); see also 17 U.S.C. section 501. A plaintiff must also show volitional conduct on the part of the defendant in order to support a finding of direct copyright infringement.
II. Google's Defenses A. Implied License A license is a defense to a claim of copyright infringement. Assocs., Inc. vs. Cohen, 908 F.2d 555, 558-59 (9th Cir. 1990). A copyright owner may grant a nonexclusive license expressly or impliedly through conduct. See id. (citing 3 Melville B. Nimmer & David Nimmer, Nimmer On Copyrights section 10.03[A] (1989). An implied license can be found where the copyright holder engages in conduct "from which [the] other [party] may properly infer that the owner consents to his use. De Forest Radio Tel. & Tel. Co. vs. United States, 273 U.S. 236, 241 (1927). Consent to use the copyrighted work need not be manifested verbally and may be inferred based on silence where the copyright holder knows of the use and encourages it. Keane Dealer Servs., Inc. vs. Harts, 968 F. Supp. 944, 947 (S.D.N.Y. 1997) ("consent given in the form of mere permission or lack of objection is also equivalent to a nonexclusive license"); Quinn, 23 F. Supp. at 753. The undisputed testimony of Google's Internet expert, Dr. John Levine, Web site publishers typically communicate their permissions to Internet search engines (such as Google) using "meta-tags." A Web site publisher can instruct a search engine not to cache the publisher's Web site by using a "no-archive" meta-tag which is highly publicized and well-known industry standard. Field concedes he was aware of these industry standard mechanisms, and knew that the presence of a "no archive" meta-tag on the pages of his Web site would have informed Google not to display "Cached" links to his pages. Despite this knowledge, plaintiff chose not to include the no-archive meta-tag as permission to allow access to the pages via "Cached" links. Thus, with knowledge of how Google would use the copyrighted works he placed on those pages, and with knowledge that he could prevent such use, Filed instead made a conscious decision to permit it. His conduct is reasonably interpreted as the grant of a license to Google for that use. Keane, 968 F. Supp. at 947 (copyright owner's knowledge of defendant's use coupled with owner's silence constituted an implied license).
B. Estoppel A plaintiff is estopped from ascertaining a copyright claim "if he has aided the defendant in infringing or otherwise induced it to infringe or has committed covert acts such as holding out... by silence or inaction. Quinn, 23 F. Supp. 2d at 753. To prevail on its estoppel defense, Google must prove the following 4 elements: 1. Fields knew of Google's allegedly infringing conduct; 2. Field intended that Google rely upon his conduct or acted so that Google had a right to believe it was so intended; 3. Google was ignorant of the true facts; and 4. Google detrimentally relied on Field's conduct.
First, Field knew of Google's allegedly infringing conduct well before any supposed infringement of his works took place. Field concedes that he knew that Google would automatically allow access to his works through "Cached" links when he posted them on the Internet unless he instructed otherwise. He also knew that if an Internet user clicked on the "Cached" links to his Web pages, the user would immediately download a copy of those pages from Google's system cache. There is no dispute that Field was aware of the conduct that he challenges in this lawsuit.
Second, Field remained silent regarding his unstated desire not to have "Cached" links provided to his Web site, and he intended for Google to rely on this silence. Field could have informed Google not to provide "Cached" links by using a "no archive" meta-tag or by employing certain commands in robots.txt file. Instead, he chose to remain silent knowing that Google would automatically interpret that silence as permission to display "Cached" links. His silence, particularly given his knowledge of the consequences of that silence, satisfies the second estoppel factor.
Third, Google was not aware that Field did not wish to have Google provide "Cached" links to his works; and
Fourth, Google detrimentally relied on Field silence. It is undisputed that if Google had known of Field's preference, it would not have presented "Cached" links to Fields pages.
Google honors copyright holder's requests that it not display "Cached" links to their pages. Google's reliance on Field's silence was to its detriment. Had Field communicated his preferences to Google, the parties would have avoided the present lawsuit entirely. Hadady Corp. vs. Dean Witter Reynolds, Inc. 739 F. Supp. 1932, 1400 (C.D. Cal. 1990).
C. Fair Use "Fair use" of a copyrighted work "is not an infringement of copyright" under the Copyright Act. 17 U.S.C. section 107. The fair use doctrine "creates a limited privilege in those other than the owner of a copyright to use the copyrighted material in a reasonable manner without the owner's consent," Fisher v. Dees, 794 F.2d 432, 435 (9th Cir. 1986), and "permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which the law is designed to foster." Dr. Seuss Enters., L.P. vs. Penguin Books USA, Inc., 109 F.3d 1394, 1399 (9th Cir. 1997).
In analyzing whether a particular use qualifies as a "fair use," the Copyright Act directs a Court to analyze at least four factors: 1. the purpose and character of the use, including whether such use is of a commercial nature or is for non profit educational purposes; 2. the nature of the copyrighted work; 3. the amount and substantially of the portion used in relation to the copyrighted work as a whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C. section 107.
The Court must "balance these factors in light of the objectives of copyright law, rather than view them as definitive or determinative tests. Kelly, 336 F.3d at 818. While no one factor is dispositive, the court traditionally have given the most weight to the first and fourth factors. Compare Campbell vs. Acuff-Rose Music, Inc. 510 U.S. 569, 579 (1994) (focusing primarily on first factor and whether use is transformative); Leibovitz vs. Paramount Pictures Corp., 137 F.3d 109, 114-15 (2d Cir. 1998) (affirming summary judgment of fair use for parody based primarily on the first fair use factor) with Harper & Row, Publishers, Inc. vs. Nation Enters, 471 U.S. 539, 566 (1985) ("[The fourth] factor is undoubtedly the single most important element of fair use.").
Based on a balancing of the relevant fair use factors, the Court finds that to the extent that Google itself copied or distributed Field's copyrighted woks by allowing access to them through "Cached" links, Google engaged in a "fair use" of those copyrighted works.
1. Factor One: Purpose and Character of the Use A. The Google System Cache serves a Different Purpose from that of Plaintiff's Original Works
US Supreme Court fair use analysis largely turns on one question: "whether the new [use] "supercedes the objects" of the original creation.. or instead add something new, with a further purpose of different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is "transformative" .. Although such transformative use is not absolutely necessary for a finding of fair use, .. the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Campbell, 510 U.S. at 579. In the seminal case of Kelly vs. Arriba Soft Corp., 336 F.3d at 819, the Ninth Circuit determined that a search engine's use of copyrighted photographs was a transformative fair use based on the fact the search engine used the photographs in question to "improve access to information on the internet" while the original function of the work in question was artistic. Assuming that Field intended his copyright works to serve an artistic function to enrich and entertain others as he claims, Google's presentation of "Cached" links to the copyrighted works at issue does not serve the same functions. For a variety of reasons, the "Cached" links "add something new" and do not merely supersede the original work. First, Google's cache functionality enables users to access content when the original page is inaccessible. The Internet is replete with references from academics, researchers, journalists, and site owners praising Google's cache for this reason. In these circumstances, Google's archival copy of a work obviously does not substitute for the original. Instead, Google's "Cached" links allow users to locate and access information that is otherwise inaccessible. Second, providing "Cached" links allow Internet users to detect changes that have been made to a particular Web page over time. Such comparisons can reveal significant differences that have political, educational, legal or other ramifications. By definition, this information location cannot be served by the original Web page alone. To conduct such a comparison, a user would need to access both Google's archival copy of a Web page and the current form of the Web page on the Internet. Third, offering "Cached" links allow users to understand why a page was responsive to their original query. It is often difficult for users to locate their query terms within a given page, and may be impossible where the language of a page has been modified. Because it controls its archival copy, Google can automatically highlight the user's query in the copy that the user then retrieves. By affording access to a page within its cache, Google enables users to determine whether and where the relevant language appears, and thus whether the page is truly germane to their inquiry. The objective of enabling users to more quickly find and access the information they are searching for is not served by the original page. Fourth, Google utilizes several design features to make clear that it does not intend a "Cached" link of a page to substitute for a visit to the original page. In its search results, at the top of each listing, Google prominently features a link to the original page. By contrast, when "Cached" links are displayed they are in smaller font and in less conspicuous location. Further, after a user clicks on a "Cached" link, he sees a prominent disclaimer at the top of the page explaining that he is only viewing a snapshot of the page from Google's cache. The disclaimer also includes two separate links away from the archival copy and to the original, current page. Accordingly, any user seeking to access the original page has more than ample opportunity to do so. There is no evidence in the record that Internet users accessed the pages containing Field's works via Google's "Cached" links in lieu of visiting those pages directly. Fifth, Google ensures that any site owner can disable the cache functionality for any of the pages on its site in a matter of seconds. Thus, site owners and not Google, control whether "Cached" links will appear for their pages. The fact that the owners of billions of Web pages choose to permit these links to remain is further evidence that they do not view Google's cache as a substitute for their own pages. Google serves different and socially important purposes in offering access to copyrighted works through "Cached" links and does not merely supersede the objectives of the original creations, the Court concludes alleged copying and distribution of Fields We pages containing copyrighted works was transformative.
B. Google's Status as a Commercial Enterprise Does Not Negate Fair Use
When a use is found to be transformative, the "commercial" nature of the use is of less importance in analyzing the first fair use factor. Campbell, 510 U.S. at 579. ("[Transformative] works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, ... and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against the finding of fair use."). Kelly, 336 F.3 at 818. While Google is for profit corporation, there is no evidence Google profited in any way by the use of Field's works. Rather, Field's works were among billions of works in Google's database. Moreover, when a user accesses a page vis Google's "Cached" links, Google displays no advertising to the user and does not otherwise offer a commercial transaction to the user. The fact that Google is a commercial operation is of only minor relevance in the fair use analysis. The transformative purpose of Google's use is considerably more important, and, as in Kelly, means the first factor of the analysis weighs heavily in favor of a fair use finding.
The second fair use factor looks to the nature of the plaintiff's work. When dealing with transformative uses, this factor has been described as "not.. terribly significant in the overall fair use balancing (Mattel Inc. vs. Walking Mountains Prods., 353 F.3d 792, 803) and "not much help" (Campbell, 510 U.S. at 586). The Ninth Circuit in Kelly ruled that this factor weighed slightly in favor of the plaintiff where the copyrighted photographs at issue were "creative." However, the Court also noted that the photographs had been made available to the world for free on the plaintiff's own Web site. Even assuming Field's copyrighted works are as creative as the works at issue, the plaintiff published his works on the Internet, thereby making them available to the world for free at his Web site. Moreover, Field added a "robots.txt" file to his site to ensure that all search engines would include his Web site in their search listings. He sought to make his works available to the widest possible audience for free.
The third use factor looks at the amount of the work used. The Supreme Court has made clear that even copying of entire works should not weigh against a fair use finding where the new use serves a different function from the original, and the original work can be viewed by anyone free of charge: [W]hen one considers the nature of a televised copyrighted audiovisual work... and that time shifting merely enables a viewer to see such a work which had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced... does not have its ordinary effect of militating against a finding of fair use. (Sony Corp. vs. Universal City Studios, Inc., 464 U.S. 417, 449-50 (1984). Similarly, "the extent of permissible copying varies with the purpose and character of the use" and that "[i]f the secondary user only copies as much as is necessary for his or her intended use, then this factor will not weigh against him or her. The Ninth Circuit concluded that the search engine's use of entire photographs was of no significance: This factor neither weighs for nor against either party because, although Arriba did copy each of Kelly's images as a whole, it was reasonable to do so in light of Arriba's use of the images. It was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the original web site. If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine. (336 F.3d at 821) See also Mattel, 353 F.3d at 803 n.8 (holding that "entire verbatim reproductions are justifiable where the purpose of the work differs from the original"). Google's use of entire web pages in its Cached links serves multiple transformative and socially valuable purposes. These purposes could not be effectively accomplished by using only portions of the Web pages. Without allowing access to the whole of a Web page, the Google Cached link cannot assist Web users (and content owners) by offering access to pages that are otherwise unavailable. Nor could use of less than the whole pages assist in the archival or comparative purposes of Google's "Cached" links. Finally, Google's offering of highlighted search terms in cached copies of Web pages would not allow users to understand why a Web page was deemed germane if less than the whole Web page were provided. Because Google uses no more of the works than is necessary in allowing access to them through "Cached" links, the third fair use factor is neutral, despite the fact that Google allowed access to the entirety of Field's works.
The fourth fair factor considers the effect of defendant's use upon the potential market for the plaintiff's work. "[A] use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create." Here there is no evidence of any market for Field's works. Field's make the work available to the public for free in their entirety, and admits that he had never received any compensation from selling or licensing them. There is likewise no evidence that by displaying "Cached" links from Field's site, Google had any impact on any potential market for those works. More generally, there is no evidence before the Court for any market for licensing search engines the right to allow access to Web pages through "Cached" links, or evidence that one is likely to develop. "Cached" links are simply one way that search engines enable end-users to obtain information that site owners make freely available to the world. There is compelling evidence that site owners would not demand payment for this use of their works. Notwithstanding Google's long-standing display of "Cached" links and the well-known industry standard protocols for instructing search engines not to display them, the owners of literally billions of Web pages choose to permit such links to be displayed. Sophisticated Internet publishers such as those operating Web sites for Disney, Sports Illustrated, America Online, ESPN and Reader's Digest all permit the display of "Cached" links to the pages of their sites though they could easily prevent it. Since there is no evidence that Google's "Cached" links had any impact on the potential market for Field's copyrighted works, the fourth fair use factor weighs strongly in favor of a fair use determination. (Kelly, 336 F.3d at 821-22)
The Ninth Circuit has stated that courts may evaluate whether an alleged copyright infringer has acted in good faith as part of the fair use inquiry. Fisher, 794 F.2 at 436-37 ("Because fair use presupposes "good faith" and "fair dealing," courts may weight the propriety of defendants conduct in the equitable balance of a fair use determination.") The fact that Google has acted in good faith in providing "Cached" links to Web pages lends additional support for the Court's fair use finding. Google does not provide "Cached" links to any page if the owner of that page does not want them to appear. Google honors industry-standard protocols that site owners use to instruct search engines not to provide "Cached" links for the pages of their sites. It also provides an explanation on its Web site of how to deploy these industry-standard instructions, and provides an automated mechanism for promptly removing "Cached" links from Google's search results if the links ever appear. Moreover, Google takes steps to ensure that users seeking an original Web page through Google's search engine can easily access it, and that any user viewing a page from Google's cache knows that it is not the original. Field did not include any information on the pages of his site to instruct Google not to provide "Cacahed" links to those pages. Fields own conduct stands in marked contrast to Google's good faith. Field took a variety of affirmative steps to get his works included in Google's search results, where he knew they would be displayed with "Cached" links to Google's archival copy and he deliberately ignored the protocols that would have instructed Google not to present "Cacahed" links. Comparing Field's conduct with Google's provides further weight to the scales in favor of a finding of fair use. Campbell, 510 U.S. at 585 n.18.
III Digital Millennium Copyright Act
The safe harbor of Section 512(b) is directed to system caches and states that "[a] service provider shall not be liable for monetary relief... for infringement of copyright by reason of the intermediate and temporary storage of material on a system or network controlled or operated by or for the service provider" provided certain requirements are met. Field contends that three elements of the safe harbor are missing.
First, he contends that in operating its cache, Google does not make "intermediate and temporary storage of that material" as required by Section 512(b)(1). Field is incorrect. In Ellison vs. Robertson, 357 F.3d 1072, 1081 (9th Cir. 2004) AOL's storage of online postings for 14 days was "intermediate" and "transient" for purposes of Section 512 (a). Like AOL's repository of Usenet postings in Ellison which operated between the individuals posting information and the users requesting it, Google's cache is a repository of material that operates between the individual posting the information, and the end-user requesting it. Further, the copy of Web pages that Google stores in its cache is present for approximately 14 to 20 days deemed "transient storage" in Ellison - is "temporary" under Section 512(b) of the DMCA. (Gustafso vs. Alloyd Co., 513 U.S. 561, 570 (1995).
Field next claims that Google's cache does not satisfy the requirements of Section 512(b)(1)(B) which requires that the material in question be transmitted from the person who makes it available online, here field, to a person other than himself, at the direction of the other person. Field transmitted the material in question, the pages of his Web site, to Google's Googlebot at Google's request. Google is a person other than Field. Thus, Google's cache meets the requirement of Section 512 (b)(1)(B).
Finally, Fields contends that Google's cache does not fully satisfy the requirements of Section 512(b)(1)(C) which requires that Google's storage of Web pages be carried out through "an automat[ed] technical process" and be "for the purpose of making the material available to users... who... request access to the material from [the original site]." There is no dispute that Google's storage is carried out through an automated technical process and that Google's principal purposes in including Web pages in its cache is to enable subsequent users to access those pages if they are unsuccessful in requesting the materials from the originating site for whatever reason. Google cache thus meets the requirements of Section 512(b)(1)(C). Accordingly, Google's motion for partial summary judgment that it qualifies for the Section 512(b) safe harbor is granted.
O R D E R
For all of the foregoing reasons, the Court hereby:
(1) GRANTS Google's Motion for Summary Judgment of non-infringement and DENIES Field's Motion for Summary Judgment of Infringement; (2) GRANTS Google's Motion for Summary Judgment based on an implied license and DENIES Field's Motion for Summary Judgment that license defense does not apply; (3) GRANTS Google's Motion for Summary Judgment based on estoppel and DENIES Field'd Motion for Summary Judgment that the estoppel defense does not apply; (4) GRANTS Google's Motion for Summary Judgment based on fair use and DENIES Fields Motion for Summary Judgment based on Section 512(b) of the DMCA and DEBIES Field's Motion for Summary Judgment that the DMCA safe harbors do not apply.
SO ORDERED.
January 24 Physician-assisted suicideALBERTO R. GONZALES, ATTORNEY GENERAL, ET AL., PETITIONERS v. OREGON ET AL. Facts:
In 1994, Oregon became the first State to legalize assisted suicide when voters approved a ballot measure enacting the Oregon Death With Dignity Act (ODWDA). Ore. Rev. Stat. §127.800 et seq. (2003). ODWDA, which survived a 1997 ballot measure seeking its repeal, exempts from civil or criminal liability state-licensed physician who, in compliance with the specific safeguards in ODWDA, dispense or prescribe a lethal dose of drugs upon the request of a terminally ill patient. The drugs Oregon physicians prescribe under ODWDA are regulated under a federal statute, the Controlled Substances Act (CSA or Act). 84 Stat. 1242, as amended, 21 U. S. C. §801 et seq. The CSA allows these particular drugs to be available only by a written prescription from a registered physician. In the ordinary course the same drugs are prescribed in smaller doses for pain alleviation.
A November 9, 2001 Interpretive Rule issued by the Attorney General addresses the implementation and enforcement of the CSA with respect to ODWDA. It determines that using controlled substances to assist suicide is not a legitimate medical practice and that dispensing or prescribing them for this purpose is unlawful under the CSA. The Interpretive Rule’s validity under the CSA is the issue before the supreme court. The present dispute involves controlled substances listed in Schedule II, substances generally available only pursuant to a written, non refillable prescription by a physician. 21 U. S. C. §829(a). A 1971 regulation promulgated by the Attorney General requires that every prescription
for a controlled substance “be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” 21 CFR §1306.04(a) (2005). The Court of Appeals for the Ninth Circuit granted the petitions for review and held the Interpretive Rule invalid. Oregon v. Ashcroft, 368 F. 3d 1118 (2004). It reasoned that, by making a medical procedure authorized under Oregon law a federal offense, the Interpretive Rule altered the “usual constitutional balance between the States and the Federal Government” without the requisite clear statement that the CSA authorized such action. Id., at 1124–1125 (quoting Gregory v. Ashcroft, 501 U. S. 452, 460 (1991) (in turn quoting Atascadero
State Hospital v. Scanlon, 473 U. S. 234, 242 (1985). The Court of Appeals held in the alternative that the Interpretive Rule could not be squared with the plain language of the CSA, which targets only conventional drug abuse and excludes the Attorney General from decisions on medical policy. 368 F. 3d, at 1125–1129. Issue:
Whether the Controlled Substances Act allows the United States Attorney General to prohibit doctors from prescribing regulated drugs for use in physician-assisted suicide, notwithstanding a state law permitting the procedure.
Ruling:
The Government’s petition for certiorari, is granted. Familiar principles guides the supreme court, to wit:
An administrative rule may receive substantial deference if it interprets the issuing agency’s own ambiguous regulation. Auer v. Robbins, 519 U. S. 452, 461–463 (1997). An interpretation of an ambiguous statute may also receive substantial deference. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842–845 (1984). Deference in accordance with Chevron, however, is warranted only “when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.” United States v. Mead Corp., 533 U. S. 218, 226–227 (2001). Otherwise, the interpretation is “entitled to respect” only to the extent it has the “power to persuade.” Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944).
The CSA gives the Attorney General limited powers, to be exercised in specific ways. His rulemaking authority under the CSA is described in two provisions:
(1) “The Attorney General is authorized to promulgate rules and regulations and to charge reasonable fees relating to the registration and control of the manufacture, distribution, and dispensing of controlled substances and to listed chemicals,” 21 U. S. C. A. §821 (Supp. 2005); and
(2) “The Attorney General may promulgate and enforce any rules, regulations, and procedures which he may deem necessary and appropriate for the efficient execution of his functions under this subchapter,” 21 U. S. C. §871(b).
As is evident from these sections, Congress did not delegate to the Attorney General authority to carry out or effect all provisions of the CSA. Rather, he can promulgate rules relating only to “registration” and “control,” and “for the efficient execution of his functions” under the statute the Attorney General’s authority to make regulations for the “control” of drugs, this delegation cannot sustain the Interpretive Rule’s attempt to define standards of medical practice. Control is a term of art in the CSA. “As used in this subchapter,” §802–– the chapter that includes §821–– “The term ‘control’ means to add a drug or other substance, or immediate precursor, to a schedule under part B of this subchapter, whether by transfer from another schedule or otherwise.” §802(5). To exercise his scheduling power, the Attorney General must follow a detailed set of procedures, including requesting a scientific and medical evaluation from the Secretary. See 21 U. S. C. A. §§811, 812 (main ed. and Supp. 2005).
The statute is also specific as to the manner in which the Attorney General must exercise this authority:
“Rules of the Attorney General under this subsection [regarding scheduling] shall be made on the record after opportunity for a hearing pursuant to the rulemaking procedures prescribed by [the Administrative Procedure Act, 5 U. S. C. §553].” 21 U. S. C. §811(a).
The Interpretive Rule now under consideration does not concern the scheduling of substances and was not issued after the required procedures for rules regarding scheduling, so it cannot fall under the Attorney General’s “control” authority. Even if “control” in §821 were understood to signify something other than its statutory definition, it would not support the Interpretive Rule. The statutory references to “control” outside the scheduling context make clear that the Attorney General can establish controls “against diversion,” e.g., §823(a)(1), but do not give him authority to define diversion based on his view of legitimate medical practice.
Before 1984, the Attorney General was required to register any physician who was authorized by his State. The Attorney General could only deregister a physician who falsified his application, was convicted of a felony relating to controlled substances, or had his state license or registration revoked. See 84 Stat. 1255. The CSA was amended in 1984 to allow the Attorney General to deny registration to an applicant “if he determines that the issuance of such registration would be inconsistent with the public interest.” Registration may also be revoked or suspended by the Attorney General on the same grounds. §824(a)(4). In determining consistency with the public interest, the Attorney General must, as discussed above, consider five factors, including: the State’s recommendation; compliance with state, federal, and local laws regarding controlled substances; and public health and safety. §823(f). The problem with the design of the Interpretive Rule is that it cannot, and does not, explain why the Attorney General has the authority to decide what constitutes an underlying violation of the CSA in the first place. The explanation the Government seems to advance is that the Attorney General’s authority to decide whether a physician’s actions are inconsistent with the “public interest” provides the basis for the Interpretive Rule. By this logic, however, the Attorney General claims extraordinary authority.
If the Attorney General’s argument were correct, his power to deregister necessarily would include the greater power to criminalize even the actions of registered physicians, whenever they engage in conduct he deems illegitimate. This power to criminalize—unlike his power over registration, which must be exercised only after considering five express statutory factors—would be unrestrained. It would be anomalous for Congress to have so painstakingly described the Attorney General’s limited authority to deregister a single physician or schedule a single drug, but to have given him, just by implication, authority to declare an entire class of activity outside “the course of professional practice,” and therefore a criminal violation of the CSA. See Federal Maritime Comm’n v. Seatrain Lines, Inc., 411 U. S. 726, 744 (1973).
The 1970 Act’s regulation of medical practice with respect to drug rehabilitation gives the Attorney General a limited role; for it is the Secretary who, after consultation with the Attorney General and national medical groups, “determine[s] the appropriate methods of professional practice in the medical treatment of . . . narcotic addiction.” 42 U. S. C. §290bb–2a; see 21 U. S. C. §823(g) (2000 ed. and Supp. II); Moore, 423 U. S., at 144. H. R. Rep. No. 93– 884, p. 6 (1974) (“This section preserves the distinctions found in the [CSA] between the functions of the Attorney General and the Secretary . . . . All decisions of a medical nature are to be made by the Secretary . . . . Law enforcement decisions respecting the security of stocks of narcotics drugs and the maintenance of records on such drugs are to be made by the Attorney General”).
In 1978, in preparation for ratification of the Convention on Psychotropic Substances, Feb. 21, 1971, [1979–1980] 32 U. S. T. 543, T. I. A. S. No. 9725, Congress decided it would implement the United States’ compliance through “the framework of the procedures and criteria for classification of substances providedin the” CSA. 21 U. S. C. §801a(3). It did so to ensure that “nothing in the Convention will interfere with ethical medical practice in this country as determined by [the Secretary] on the basis of a consensus of the views of the American medical and scientific community.” Ibid
The structure of the CSA, then, conveys unwillingness to cede medical judgments to an Executive official who lacks medical expertise. In interpreting statutes that divide authority, the Court has recognized: “Because historical familiarity and policy making expertise account in the first instance for the presumption that Congress delegates interpretive lawmaking power to the agency rather than to the reviewing court, we presume here that Congress intended to invest interpretive power in the administrative actor in the best position to develop these attributes.” Martin v. Occupational Safety and Health Review Comm’n, 499 U. S. 144, 153 (1991). This presumption works against a conclusion that the Attorney General has authority to make quintessentially medical judgments.
The Government contends the Attorney General’s decision here is a legal, not a medical, one. This generality, however, does not suffice. The Attorney General’s Interpretive Rule, and the Office of Legal Counsel memo it incorporates, place extensive reliance on medical judgments and the views of the medical community in concluding that assisted suicide is not a “legitimate medical purpose.” See 66 Fed. Reg. 56608 (noting the “medical” distinctions between assisting suicide and giving sufficient medication to alleviate pain). Congress regulates medical practice insofar as it bars doctors from using their prescription-writing powers as a means to engage in illicit drug dealing and trafficking as conventionally understood. Beyond this, however, the statute manifests no intent to regulate the practice of medicine generally. The silence is understandable given the structure and limitations of federalism, which allow the States “ ‘great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet of all persons.’ ” Medtronic, Inc. v. Lohr, 518 U. S. 470, 475 (1996).
The structure and operation of the CSA presume and rely upon a functioning medical profession regulated under the States’ police powers. The Attorney General can register a physician to dispense controlled substances “if the applicant is authorized to dispense . . . controlled substances under the laws of the State in which he practices.” 21 U. S. C. §823(f). When considering whether to revoke a physician’s registration, the Attorney General looks not just to violations of federal drug laws; but he “shall” also consider “[t]he recommendation of the appropriate state licensing board or professional disciplinary authority” and the registrant’s compliance with state and local drug laws. Ibid. ODWDA limits its exercise to the attending physicians of terminally ill patients, physicians who must be licensed by Oregon’s Board of Medical Examiners. Ore. Rev. Stat. §§127.815, 127.800(10) (2003). The statute gives attending physicians a central role, requiring them to provide prognoses and prescriptions, give information about palliative alternatives and counseling, and ensure patients are competent and acting voluntarily. §127.815. Any eligible patient must also get a second opinion from another registered physician, §127.820, and the statute’s safeguards require physicians to keep and submit to inspection detailed records of their actions, §§127.855, 127.865. Oregon’s regime is an example of the state regulation of medical practice that the CSA presupposes. Rather than simply decriminalizing assisted suicide, the prescription requirement is better understood as a provision that ensures patients use controlled substances under the supervision of a doctor so as to prevent addiction and recreational abuse. As a corollary, the provision also bars doctors from peddling to patients who crave the drugs for those prohibited uses. See Moore, 423 U. S., at 135, 143. To read prescriptions for assisted suicide as constituting“drug abuse” under the CSA is discordant with the phrase’s consistent use throughout the statute, not to mention its ordinary meaning. CSA’s prescription requirement does not authorize the Attorney General to bar dispensing controlled substances for assisted suicide in the face of a state medical regime permitting such conduct.
The Government, in the end, maintains that the prescription requirement delegates to a single Executive officer the power to effect a radical shift of authority from the States to Federal Government to define general standards of medical practice in every locality. The text and structure of the CSA show that Congress did not have this far-reaching intent to alter the federal-state balance and the congressional role in maintaining it. The judgment of the Court of Appeals is affirmed.
January 19 Abortion law notification reconsideredAYOTTE, ATTORNEY GENERAL OF NEW HAMPSHIRE v. PLANNED PARENTHOOD OF NORTHERN NEW ENGLAND ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
Facts: In 2003, New Hampshire enacted the Parental Notification Prior to Abortion Act. N. H. Rev. Stat. Ann. §§132:24–132:28 (Supp. 2004). The Act prohibits physicians from performing an abortion on a pregnant minor (or a woman for whom a guardian or conservator has been appointed) until 48 hours after written notice of the pending abortion is delivered to her parent or guardian. §132:25(I). Notice may be delivered personally or by certified mail. §§132:25(II), (III). Violations of the Act are subject to criminal and civil penalties. §132:27.
The Act allows for three circumstances in which a physician may perform an abortion without notifying the minor’s parent. First, notice is not required if "[t]he attending abortion provider certifies in the pregnant minor’s record that the abortion is necessary to prevent the minor’s death and there is insufficient time to provide the required notice." §132:26(I)(a). Second, a person entitledto receive notice may certify that he or she has already been notified. §132:26(I)(b). Finally, a minor may petition a judge to authorize her physician to perform an abortion without parental notification. The judge must so authorize if he or she finds that the minor is mature and capable of giving informed consent, or that an abortion without notification is in the minor’s best interests. §132:26(II).
These judicial bypass proceedings "shall be confidential and shall be given precedence over other pending matters so that the court may reach a decision promptly and without delay," and access to the courts "shall be afforded [to the] pregnant minor 24 hours a day, 7 days a week." §§132:26(II)(b), (c). The trial and appellate courts must each rule on bypass petitions within seven days. Ibid. The Act does not explicitly permit a physician to perform an abortion in a medical emergency without parental notification.
Respondents are Dr. Wayne Goldner, an obstetrician and gynecologist who has a private practice in Manchester and three clinics that offer reproductive health services. All provide abortions for pregnant minors and each anticipates having to provide emergency abortions for minors in the future. Before the Act took effect, respondents brought suit under 42 U. S. C. §1983, alleging that the Act is unconstitutional because it fails “to allow a physician to provide a prompt abortion to a minor whose health would be endangered” by delays inherent in the Act. Respondents also challenged the adequacy of the Act’s life exception and of the judicial bypass’ confidentiality provision.
Issue: Must New Hampshire's law prohibiting abortions for minors unless the parents have been notified make an exception when the health of a pregnant girl is at risk?
Ruling: No. The New Hampshire’s Parental Notification Prior to Abortion Act, in relevant part, prohibits physicians from performing an abortion on a pregnant minor until 48 hours after written notice of such abortion is delivered to her parent or guardian.
The case established three (3) propositions. First, States unquestionably have the right to require parental involvement when a minor considers terminating her pregnancy, because of their “strong and legitimate interest in the welfare of [their] young citizens, whose immaturity, inexperience, and lack of judgment may sometimes impair their ability to exercise their rights wisely.” Hodgson v. Minnesota, 497 U. S. 417, 444–445 (1990). State parental involvement statutes is upheld.
The question of remedy: Generally speaking, when confronting a constitutional flaw in a statute, try to enjoin only the unconstitutional applications of a statute while leaving other applications in force, see United States v. Raines, 362 U. S. 17, 20–22 (1960), or to sever its problematic portions while leaving the remainder intact, United States v. Booker, 543 U. S. 220, 227–229 (2005).
Three interrelated principles to remedies. First, not to nullify more of a legislature’s work than is necessary, that “[a] ruling of unconstitutionality frustrates the intent of the elected representatives of the people.” Regan v. Time, Inc., 468 U. S. 641, 652 (1984). It is axiomatic that a “statute may be invalid as applied to one state of facts and yet valid as applied to another.” Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282, 289 (1921). Accordingly, the “normal rule” is that “partial, rather than facial, invalidation is the required course,” such that a “statute may . . be declared invalid to the extent that it reaches too far, but otherwise left intact.” Brockett v. Spokane Arcades, Inc., 472 U. S. 491, 504 (1985); see also Tennessee v. Garner, 471 U. S. 1 (1985); United States v. Grace, 461 U. S. 171, 180–183 (1983). Second, the constitutional mandate and institutional competence are limited. Virginia v. American Booksellers Assn., Inc., 484 U. S. 383, 397 (1988). The ability to devise a judicial remedy that does not entail quint essentially legislative work often depends on how clearly Supreme Court have already articulated the background constitutional rules at issue and how easily the court can articulate the remedy. In United States v. Grace, supra, at 180–183. Third, the touchstone for any decision about remedy is legislative intent, for a court cannot “use its remedial powers to circumvent the intent of the legislature.” Califano v. Westcott, 443 U. S. 76, 94 (1979).
Respondents, on the other hand, contend that New Hampshire legislators preferred no statute at all to a statute enjoined in the way have described. Because this is an open question, the Supreme Court remand for the lower courts to determine legislative intent in the first instance.
Either an injunction prohibiting unconstitutional applications or a holding that consistency with legislative intent requires invalidating the statute in toto should obviate any concern about the Act’s life exception. The court need not pass on the lower courts’ alternative holding.
Finally, if the Act does survive in part on remand, the Court of Appeals should address respondents’ separate objection to the judicial bypass’ confidentiality provision. The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion. Certiorari is granted. It is so ordered.
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