text:
How will certain Delaware statutory trusts be classified for federal tax purposes and may a taxpayer acquire an interest in certain Delaware statutory trusts without recognition of gain or loss under section 1031 of the Internal Revenue Code.
26 CFR 301.7701-1: Classification of organizations for federal tax purposes.
(1) In the situation described below, how is a Delaware statutory trust, described in Del. Code Ann. title 12, Sections 3801 - 3824, classified for federal tax purposes?
(2) In the situation described below, may a taxpayer exchange real property for an interest in a Delaware statutory trust without recognition of gain or loss under Section 1031 of the Internal Revenue Code?
On January 1, 2005, A, an individual, borrows money from BK, a bank, and signs a 10-year note bearing adequate stated interest, within the meaning of Section 483. On January 1, 2005, A uses the proceeds of the loan to purchase Blackacre, rental real property. The note is secured by Blackacre and is nonrecourse to A.
Immediately following A's purchase of Blackacre, A enters into a net lease with Z for a term of 10 years. Under the terms of the lease, Z is to pay all taxes, assessments, fees, or other charges imposed on Blackacre by federal, state, or local authorities. In addition, Z is to pay all insurance, maintenance, ordinary repairs, and utilities relating to Blackacre. Z may sublease Blackacre. Z's rent is a fixed amount that may be adjusted by a formula described in the lease agreement that is based upon a fixed rate or an objective index, such as an escalator clause based upon the Consumer Price Index, but adjustments to the rate or index are not within the control of any of the parties to the lease. Z's rent is not contingent on Z's ability to lease the property or on Z's gross sales or net profits derived from the property.
Also on January 1, 2005, A forms DST, a Delaware statutory trust described in the Delaware Statutory Trust Act, Del. Code Ann. title 12, Sections 3801 - 3824, to hold property for investment. A contributes Blackacre to DST. Upon contribution, DST assumes A's rights and obligations under the note with BK and the lease with Z. In accordance with the terms of the note, neither DST nor any of its beneficial owners are personally liable to BK on the note, which continues to be secured by Blackacre.
Under the trust agreement, the trustee is authorized to establish a reasonable reserve for expenses associated with holding Blackacre that may be payable out of trust funds. The trustee is required to distribute all available cash less reserves quarterly to each beneficial owner in proportion to their respective interests in DST. The trustee is required to invest cash received from Blackacre between each quarterly distribution and all cash held in reserve in short-term obligations of (or guaranteed by) the United States, or any agency or instrumentality thereof, and in certificates of deposit of any bank or trust company having a minimum stated surplus and capital. The trustee is permitted to invest only in obligations maturing prior to the next distribution date and is required to hold such obligations until maturity. In addition to the right to a quarterly distribution of cash, each beneficial owner has the right to an in-kind distribution of its proportionate share of trust property.
The trust agreement provides that the trustee's activities are limited to the collection and distribution of income. The trustee may not exchange Blackacre for other property, purchase assets other than the short-term investments described above, or accept additional contributions of assets (including money) to DST. The trustee may not renegotiate the terms of the debt used to acquire Blackacre and may not renegotiate the lease with Z or enter into leases with tenants other than Z, except in the case of Z's bankruptcy or insolvency. In addition, the trustee may make only minor non-structural modifications to Blackacre, unless otherwise required by law. The trust agreement further provides that the trustee may engage in ministerial activities to the extent required to maintain and operate DST under local law.
On January 3, 2005, B and C exchange Whiteacre and Greenacre, respectively, for all of A's interests in DST through a qualified intermediary, within the meaning of Section 1.1031(k)-1(g). A does not engage in a Section 1031 exchange. Whiteacre and Greenacre were held for investment and are of like kind to Blackacre, within the meaning of Section 1031.
BK is not related to A, B, C, DST's trustee or Z within the meaning of Section 267(b) or Section 707(b). Z is not related to B, C, or DST's trustee within the meaning of Section 267(b) or Section 707(b).
Section 671 provides that, where the grantor or another person is treated as the owner of any portion of a trust (commonly referred to as a "grantor trust"), there shall be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that the items would be taken into account under chapter 1 in computing taxable income or credits against the tax of an individual.
Under Section 1.671-2(e)(3), the term "grantor" includes any person who acquires an interest in a trust from a grantor of the trust if the interest acquired is an interest in certain investment trusts described in Section 301.7701-4(c).
Under Section 677(a), the grantor is treated as the owner of any portion of a trust whose income without the approval or consent of any adverse party is, or, in the discretion of the grantor or a nonadverse party, or both, may be distributed, or held or accumulated for future distribution, to the grantor or the grantor's spouse.
A person that is treated as the owner of an undivided fractional interest of a trust under subpart E of part I, subchapter J of the Code (Section 671 and following), is considered to own the trust assets attributable to that undivided fractional interest of the trust for federal income tax purposes. See Rev. Rul. 88-103, 1988-2 C.B. 304; Rev. Rul. 85-45, 1985-1 C.B. 183; and Rev. Rul. 85-13, 1985-1 C.B. 184. See also Section 1.1001-2(c), Example 5.
Section 761(a) provides that the term "partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and that is not a corporation or a trust or estate. Under regulations the Secretary may, at the election of all the members of the unincorporated organization, exclude such organization from the application of all or part of subchapter K, if the income of the members of the organization may be adequately determined without the computation of partnership taxable income and the organization is availed of (1) for investment purposes only and not for the active conduct of a business, (2) for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, or (3) by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities.
Section 1.761-2(a)(2) provides the requirements that must be satisfied for participants in the joint purchase, retention, sale, or exchange of investment property to elect to be excluded from the application of the provisions of subchapter K. One of these requirements is that the participants own the property as coowners.
Section 1031(a)(2) provides that Section 1031(a) does not apply to any exchange of stocks, bonds or notes, other securities or evidences of indebtedness or interest, interests in a partnership, or certificates of trust or beneficial interests. It further provides that an interest in a partnership that has in effect a valid election under Section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of the partnership and not as an interest in a partnership.
Under Section 301.7701-1(a)(1) of the Procedure and Administration Regulations, whether an organization is an entity separate from its owners for federal tax purposes is a matter of federal tax law and does not depend on whether the organization is recognized as an entity under local law.
Generally, when participants in a venture form a state law entity and avail themselves of the benefits of that entity for a valid business purpose, such as investment or profit, and not for tax avoidance, the entity will be recognized for federal tax purposes. See Moline Properties, Inc. v. Comm'r, 319 U.S. 436 (1943); Zmuda v. Comm'r, 731 F.2d 1417 (9th Cir. 1984); Boca Investerings P'ship v. United States, 314 F.3d 625 (D.C. Cir. 2003); Saba P'ship v. Comm'r, 273 F.3d 1135 (D.C. Cir. 2001); ASA Investerings P'ship v. Comm'r, 201 F.3d 505 (D.C. Cir. 2000); Markosian v. Comm'r, 73 T.C. 1235 (1980).
Section 301.7701-2(a) defines the term "business entity" as any entity recognized for federal tax purposes (including an entity with a single owner that may be disregarded as an entity separate from its owner under Section 301.7701- 3) that is not properly classified as a trust under Section 301.7701-4 or otherwise subject to special treatment under the Code. A business entity with two or more owners is classified for federal tax purposes as either a corporation or a partnership. A business entity with only one owner is classified as a corporation or is disregarded.
Section 301.7701-3(a) provides that an eligible entity can elect its classification for federal tax purposes. Under Section 301.7701-3(b)(1), unless the entity elects otherwise, a domestic eligible entity is a partnership if it has two or more owners or is disregarded as an entity separate from its owner if it has a single owner.
Section 301.7701-4(a) provides that the term "trust" refers to an arrangement created either by will or by an inter vivos declaration whereby trustees take title to property for the purpose of protecting and conserving it for the beneficiaries. Usually the beneficiaries of a trust do no more than accept the benefits thereof and are not voluntary planners or creators of the trust arrangement. However, the beneficiaries of a trust may be the persons who create it, and it will be recognized as a trust if it was created for the purpose of protecting and conserving the trust property for beneficiaries who stand in the same relation to the trust as they would if the trust had been created by others for them.
Section 301.7701-4(c)(1) provides that an "investment" trust will not be classified as a trust if there is a power under the trust agreement to vary the investment of the certificate holders. See Comm'r v. North American Bond Trust, 122 F.2d 545 (2d Cir. 1941), cert. denied, 314 U.S. 701 (1942). An investment trust with a single class of ownership interests, representing undivided beneficial interests in the assets of the trust, will be classified as a trust if there is no power to vary the investment of the certificate holders.
A power to vary the investment of the certificate holders exists where there is a managerial power, under the trust instrument, that enables a trust to take advantage of variations in the market to improve the investment of the investors. See Comm'r v. North American Bond Trust, 122 F.2d at 546.
Rev. Rul. 75-192, 1975-1 C.B. 384, discusses the situation where a provision in the trust agreement requires the trustee to invest cash on hand between the quarterly distribution dates. The trustee is required to invest the money in short-term obligations of (or guaranteed by) the United States, or any agency or instrumentality thereof, and in certificates of deposit of any bank or trust company having a minimum stated surplus and capital. The trustee is permitted to invest only in obligations maturing prior to the next distribution date and is required to hold such obligations until maturity. Rev. Rul. 75- 192 concludes that, because the restrictions on the types of permitted investments limit the trustee to a fixed return similar to that earned on a bank account and eliminate any opportunity to profit from market fluctuations, the power to invest in the specified kinds of short-term investments is not a power to vary the trust's investment.
Rev. Rul. 92-105, 1992-2 C.B. 204, addresses the transfer of a taxpayer's interest in an Illinois land trust under Section 1031. Under the facts of the ruling, a single taxpayer created an Illinois land trust and named a domestic corporation as trustee. Under the deed of trust, the taxpayer transferred legal and equitable title to real property to the trust, subject to the provisions of an accompanying land trust agreement. The land trust agreement provided that the taxpayer retained exclusive control of the management, operation, renting, and selling of the real property, together with an exclusive right to the earnings and proceeds from the real property. Under the agreement, the taxpayer was required to file all tax returns, pay all taxes, and satisfy any other liabilities with respect to the real property. Rev. Rul 92-105 concludes that, because the trustee's only responsibility was to hold and transfer title at the direction of the taxpayer, a trust, as defined in Section 301.7701-4(a), was not established. Moreover, there were no other arrangements between the taxpayer and the trustee (or between the taxpayer and any other person) that would cause the overall arrangement to be classified as a partnership (or any other type of entity). Instead, the trustee was a mere agent for the holding and transfer of title to real property, and the taxpayer retained direct ownership of the real property for federal income tax purposes.
Whether DST or its trustee is an agent of DST's beneficial owners depends upon the arrangement between the parties. The beneficiaries of DST do not enter into an agency agreement with DST or its trustee. Further, neither DST nor its trustee acts as an agent for A, B, or C in dealings with third parties. Thus, neither DST nor its trustee is the agent of DST's beneficial owners. Cf. Comm'r v. Bollinger, 485 U.S. 340 (1988).
This situation is distinguishable from Rev. Rul. 92-105. First, in Rev. Rul. 92-105, the beneficiary retained the direct obligation to pay liabilities and taxes relating to the property. DST, in contrast, assumed A's obligations on the lease with Z and on the loan with BK, and Delaware law provides the beneficial owners of DST with the same limitation on personal liability extended to shareholders of Delaware corporations. Second, unlike A, the beneficiary in Rev. Rul. 92-105 retained the right to manage and control the trust property.
Because DST is an entity separate from its owner, DST is either a trust or a business entity for federal tax purposes. To determine whether DST is a trust or a business entity for federal tax purposes, it is necessary, under Section 301.7701-4(c)(1), to determine whether there is a power under the trust agreement to vary the investment of the certificate holders.
Prior to, but on the same date as, the transfer of Blackacre to DST, A entered into a 10-year nonrecourse loan secured by Blackacre. A also entered into the 10-year net lease agreement with Z. A's rights and obligations under the loan and lease were assumed by DST. Because the duration of DST is 10 years (unless Blackacre is disposed of prior to that time), the financing and leasing arrangements related to Blackacre that were made prior to the inception of DST are fixed for the entire life of DST. Further, the trustee may only invest in short-term obligations that mature prior to the next distribution date and is required to hold these obligations until maturity. Because the trust agreement requires that any cash from Blackacre, and any cash earned on short-term obligations held by DST between distribution dates, be distributed quarterly, and because the disposition of Blackacre results in the termination of DST, no reinvestment of such monies is possible.
The trust agreement provides that the trustee's activities are limited to the collection and distribution of income. The trustee may not exchange Blackacre for other property, purchase assets other than the short-term investments described above, or accept additional contributions of assets (including money) to DST. The trustee may not renegotiate the terms of the debt used to acquire Blackacre and may not renegotiate the lease with Z or enter into leases with tenants other than Z, except in the case of Z's bankruptcy or insolvency. In addition, the trustee may make only minor non-structural modifications to Blackacre, unless otherwise required by law.
This situation is distinguishable from Rev. Rul. 78-371, because DST's trustee has none of the powers described in Rev. Rul. 78-371, which evidence an intent to carry on a profit making business. Because all of the interests in DST are of a single class representing undivided beneficial interests in the assets of DST and DST's trustee has no power to vary the investment of the certificate holders to benefit from variations in the market, DST is an investment trust that will be classified as a trust under Section 301.7701-4(c)(1).
B and C are treated as grantors of the trust under Section 1.671-2(e)(3) when they acquire their interests in the trust from A. Because they have the right to distributions of all trust income attributable to their undivided fractional interests in the trust, B and C are each treated, by reason of Section 677, as the owner of an aliquot portion of the trust and all income, deductions, and credits attributable to that portion are includible by B and C under Section 671 in computing their taxable income. Because the owner of an undivided fractional interest of a trust is considered to own the trust assets attributable to that interest for federal income tax purposes, B and C are each considered to own an undivided fractional interest in Blackacre for federal income tax purposes. See Rev. Rul. 85-13.
Accordingly, the exchange of real property by B and C for an interest in DST through a qualified intermediary is the exchange of real property for an interest in Blackacre, and not the exchange of real property for a certificate of trust or beneficial interest under Section 1031(a)(2)(E). Because Whiteacre and Greenacre are of like kind to Blackacre, and provided the other requirements of Section 1031 are satisfied, the exchange of real property for an interest in DST by B and C will qualify for nonrecognition of gain or loss under Section 1031. Moreover, because DST is a grantor trust, the outcome to the parties will remain the same, even if A transfers interests in Blackacre directly to B and C, and B and C immediately form DST by contributing their interests in Blackacre.
Under the facts of this case, if DST's trustee has additional powers under the trust agreement such as the power to do one or more of the following: (i) dispose of Blackacre and acquire new property; (ii) renegotiate the lease with Z or enter into leases with tenants other than Z; (iii) renegotiate or refinance the obligation used to purchase Blackacre; (iv) invest cash received to profit from market fluctuations; or (v) make more than minor non-structural modifications to Blackacre not required by law, DST will be a business entity which, if it has two or more owners, will be classified as a partnership for federal tax purposes, unless it is treated as a corporation under Section 7704 or elects to be classified as a corporation under Section 301.7701-3. In addition, because the assets of DST will not be owned by the beneficiaries as coowners under state law, DST will not be able to elect to be excluded from the application of subchapter K. See Section 1.761-2(a)(2)(i).
(1) The Delaware statutory trust described above is an investment trust, under Section 301.7701-4(c), that will be classified as a trust for federal tax purposes.
(2) A taxpayer may exchange real property for an interest in the Delaware statutory trust described above without recognition of gain or loss under Section 1031, if the other requirements of Section 1031 are satisfied.

matches: v. v. v. v. v. v. v. v. v.


text:
J. Hernan doubled, RBI; C. Capps scored.
J. Roper singled, RBI; J. Hernan scored.
V. Lontz singled, RBI; J. Roper scored.
T. Maldo singled; V. Lontz advanced to second.
K. Krebs singled; C. Mich advanced to second.
C. Capps advanced to third; J. Peter scored on a wild pitch.
J. Hedric singled, RBI; C. Capps scored.
J. Hedric advanced to second on a wild pitch.
M. Mijano hit by pitch.
V. Lontz singled, RBI; M. Mijano advanced to third; J. Hedric scored.
B. Prybyl doubled, RBI; A. Peppard scored, unearned.
J. Hedric doubled, 2 RBI; J. Hernan scored; C. Capps scored.
M. Mijano singled, RBI; J. Hedric scored.
J. Roper singled; M. Mijano advanced to second.
I. Verre singled, advanced to second on an error by cf, advanced to third.
G. Golde grounded out to 1b, RBI; I. Verre scored, unearned.
A. Raym to p for A. Clouthi.
J. Hernan singled; C. Capps advanced to third.
J. Guzman to lf for J. Hernan.
J. Guzman advanced to third; C. Capps scored on a wild pitch.
J. Hedric tripled, RBI; J. Guzman scored.
J. Terre to dh for J. Roper.
J. Terre hit by pitch.
V. Lontz doubled, RBI; J. Terre advanced to third; J. Hedric scored.
N. Capsali walked, RBI; T. Maldo advanced to second; V. Lontz advanced to third; J. Terre scored.
J. Peter tripled, 3 RBI; N. Capsali scored; T. Maldo scored; V. Lontz scored.
J. Guzman hit by pitch; C. Capps advanced to second.
M. Hans to p for B. Hert.
J. Guzman advanced to second; C. Capps advanced to third; J. Peter scored on a passed ball, unearned.
A. Evans reached first on an error by ss, RBI; J. Guzman scored, unearned; C. Capps scored, unearned.
M. Mijano singled; A. Evans advanced to second.
D. Evans to p for D. Aria.
C. Christi to p for D. Evans.
D. Brown to rf for J. Peter.
D. Brown advanced to second on a passed ball.
Z. Ells to lf for D. Brown.
M. Vice to p for C. Christi.
G. Herna to p for N. Botello.
E. Vokes to ss for A. Peppard.
M. Freeman to p for M. Vice.

matches: V. V. V. V. V. V.


The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA or Act), 7 U.S.C. § 136 et seq., was primarily a pesticide licensing and labeling law until 1972, when it was transformed by Congress into a comprehensive regulatory statute. Among other things, the 1972 amendments significantly strengthened the preexisting registration and labeling standards, specified that FIFRA regulates pesticide use, as well as sales and labeling, and granted increased enforcement authority to the Environmental Protection Agency (EPA). Regarding state and local authorities, FIFRA, as amended, includes provisions requiring pesticide manufacturers to produce records for inspection "upon request of any officer or employee . . . of any State or political subdivision," § 136f(b); directing the EPA to cooperate with "any appropriate agency of any state or any political subdivision thereof . . . in securing uniformity of regulations," § 136t(b); and specifying that "[a] State" may regulate pesticide sale or use so long as such regulation does not permit a sale or use prohibited by the Act, § 136v(a). Pursuant to its statutory police power, petitioner town adopted an ordinance that, inter alia, requires a permit for certain applications of pesticides to private lands. After the town issued a decision unfavorable to respondent Mortier on his application for a [111 S.Ct. 2478] permit to spray a portion of his land, he brought a declaratory judgment action in county court, claiming, among other things, that the ordinance was preempted by FIFRA. The court granted summary judgment for Mortier, and the Wisconsin Supreme Court affirmed, finding preemption on the ground that the Act's text and legislative history demonstrate a clearly manifest congressional intent to prohibit any regulation of pesticides by local governmental units.
Held: FIFRA does not preempt local governmental regulation of pesticide use. Pp. 604-616.
assumed to preclude enforcement of state laws on the same subject. Even where Congress has not chosen to occupy a particular field, preemption may occur to the extent that state and federal law actually conflict, as when compliance with both is a physical impossibility, or when the state law stands as an obstacle to the accomplishment of Congress' purposes and objectives. Pp. 604-605.
(b) FIFRA nowhere expressly supersedes local regulation. Neither the Act's language nor the legislative history relied on by the court below, whether read together or separately, suffices to establish preemption. The fact that § 136v(a) expressly refers only to "[a] State" as having the authority to regulate pesticide use, and the Act's failure to include political subdivisions in its § 136(aa) definition of "State," are wholly inadequate to demonstrate the requisite clear and manifest congressional intent. Mere silence is insufficient in this context. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230. And the exclusion of local governments cannot be inferred from the express authorization to "State[s]," because that term is not self-limiting; political subdivisions are merely subordinate components of the very entity the statute empowers. Cf., e.g., Sailors v. Board of Education of Kent County, 387 U.S. 105, 108. Indeed, the more plausible reading of the express authorization leaves the allocation of regulatory authority to the absolute discretion of the States themselves, including the options of specific redelegation or leaving local regulation of pesticides in the hands of local authorities under existing state laws. Nor is there any merit to Mortier's contention that the express references in §§ 136t(b) and 136f(b) to "political subdivision[s]" show that Congress made a clear distinction between nonregulatory authority, which may be exercised by such subdivisions, and the regulatory authority reserved to the "State[s]" in § 136v(a). Furthermore, the legislative history is, at best, ambiguous, reflecting a disagreement between the responsible congressional committees as to whether the provision that would become § 136v preempted local regulation. Pp. 606-610.
comprehensive statute that occupied the entire pesticide regulation field, and that certain provisions, including § 136v(a), reopened certain portions of the field to the States, but not to political subdivisions, is unpersuasive. Section 136v itself undercuts any inference of field preemption, since § 136v(b) prohibits States from enacting or imposing labeling or packaging requirements that conflict with those required under FIFRA. This language would be pure surplusage if Congress had already occupied the [111 S.Ct. 2479] entire field. Nor does FIFRA otherwise imply preemption. While the 1972 amendments turned the Act into a comprehensive regulatory statute, substantial portions of the field are still left vacant, including the area at issue in this case. FIFRA nowhere seeks to establish an affirmative permit scheme for the actual use of pesticides or to occupy the field of local use permitting. Thus, the specific grant of authority in § 136v(a) must be read not as an exclusion of municipalities, but as an act ensuring that the States could continue to regulate use and sales even where, such as with regard to the banning of mislabeled products, a narrow preemptive overlap might occur. Pp. 611-614.
(d) There is no actual conflict either between FIFRA or the ordinance at issue or between the Act and local regulation generally. Compliance with both the ordinance and FIFRA is not a physical impossibility. Moreover, Mortier's assertions that the ordinance stands as an obstacle to the Act's goals of promoting pesticide regulation that is coordinated solely at the federal and state levels, that rests upon some degree of technical expertise, and that does not unduly burden interstate commerce are based on little more than snippets of legislative history and policy speculations, and are unpersuasive. As is evidenced by § 136t(b), FIFRA implies a regulatory partnership between federal, state, and local governments. There is no indication that any coordination which the statute seeks to promote extends beyond the matters with which it expressly deals, or does so strongly enough to compel the conclusion that an independently enacted ordinance that falls outside the statute's reach frustrates its purpose. Nor is there any indication in FIFRA that Congress felt that local ordinances necessarily rest on insufficient expertise and burden commerce. Pp. 614-616.
WHITE, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and MARSHALL, BLACKMUN, STEVENS, O'CONNOR, KENNEDY, and SOUTER, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment, post, p. 616.
regulated the use, as well as the sale and labeling, of pesticides; regulated pesticides produced and sold in both intrastate and interstate commerce; [and] provided [111 S.Ct. 2480] for review, cancellation, and suspension of registration.
Ruckleshaus, supra, at 991-992. An additional change was the grant of increased enforcement authority to the Environmental Protection Agency (EPA), which had been charged with federal oversight of pesticides since 1970. See Reorganization Plan No. 3 of 1970, 35 Fed.Reg. 15623 (1970), 5 U.S.C.App. p. 1343. In this fashion, the 1972 amendments "transformed FIFRA from a labeling law into a comprehensive regulatory statute." 467 U.S. at 991.


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WAREHOUSEMEN AND HELPERS OF AMERICA et al., Appellees.
George M. Eubanks, Atlanta, Ga., Paul, Eubanks & Scroggins, Atlanta, Ga., of counsel, for appellants.
John W. Chambers, Smith, Cohen, Ringel, Kohler, Martin & Lowe, Atlanta, Ga., for appellee, Termanal Transport Co., Inc.
Herbert S. Thatcher, Thatcher & Barr, Washington, D.C., for appellee, International Brotherhood of Teamsters.
Thomas L. Carter, Jr., Gilbert & Carter, Atlanta, Ga., for appellee, Local Union No. 728.
Before TUTTLE, BELL and SIMPSON, Circuit Judges.
The six plaintiffs-appellants brought suit under Section 301 of the National Labor Relations Act,1 against the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Union), Local 728 thereof, and the Employer, Terminal Transport Company, Inc., appellees herein. The district court after full hearing denied relief. We affirm.
The appellants' claims for relief are based upon the 1961-1964 collective bargaining agreement between Terminal and Local 728. The substance of appellants' claims is that they were employed as 'casual' employees, and were denied the status of 'regular' employees, and the attendant benefits, such as seniority rights, pensions, vacation and holiday pay, health and welfare coverage, and the like.
All of the appellants were employed by Terminal between February 1961 and February 1963. On July 15, 1963, each of the appellants filed a grievance asserting that he should be classified as a regular employee under the 1961-1964 collective bargaining agreement. On July 20, 1963, Terminal wrote each of the appellants notifying them that Terminal considered the filing of grievances seeking status as regular employees as a relinquishment of their casual employment status. Terminal heard nothing from any of the appellants. None of the appellants requested that they be allowed to continue work as casuals. It is the contention of Terminal, Local 728 and the Teamsters that the appellants should have continued work as casuals during the grievance procedure, and that by not doing so, they voluntarily relinquished their employment. The appellants contend they were fired.
Three principal questions are presented on this appeal: (1) whether there was a valid casual agreement between Local 728 and Terminal governing the terms and conditions of appellants' employment as casuals as opposed to status as regular employees; (2) if such an agreement does exist, were appellants employed as casual employees, and (3) whether Local 728 and the Teamsters, either or both, failed, in bad faith, to represent the appellants fairly and adequately in the processing of their grievances against Terminal for the alleged discharge and denial of regular employee status.
For purposes of background, evidence was introduced at the trial showing that the term 'casual' is applied throughout the trucking industry to employees who are used to fill in for regular employees who are absent, or as warranted by a carrier's particular operating circumstances. 'Casual' employees do not obtain seniority rights or receive certain fringe benefits such as paid vacations, holidays or health and welfare benefits.
It was explained at the trial that carriers are benefitted by the use of casuals in that employees are available to satisfy requirements caused by absenteeism of regular employees. By resorting to the list of casuals, the carrier can avoid overloading the seniority list with regular employees, who would be subjected to periodic layoffs. Use of casual employees also serves as a training ground for new, young men in the industry. The practice of hiring casual employees also benefits the regular drivers by affording them longer breaks between runs.
The casual employees themselves benefit in several ways. The record reveals that regular drivers are not hired in the industry over the age of thirty-seven, but this same restriction does not apply to casuals. Four of the appellants were over this age limit of thirty-seven; thus, as to these four, they would not have been employable in the trucking industry but for the very casual status attacked in the present action.
Employment as a casual is often available to employees who are laid off or on strike from their regular employment. In fact, four of the six appellants were either on strike or laid off elsewhere before being hired by Terminal.
Subsequent to the adoption of this interpretation, Terminal and Local 728, under the 'special occasions' clause, orally agreed that Terminal's regular employees would take a longer break between runs than the ten hours allowed by the collective bargaining contract. Terminal's employees were allowed to mark off between runs for periods of time up to forty-eight hours. Local 728 agreed as quid pro quo to allow Terminal to employ an indefinite number of employees as casuals.
It is undisputed that the appellants in the present action were employed by Terminal for the requisite thirty-day period, but were not placed on the seniority list and accorded the other benefits of regular status drivers. The appellants argue that this constitutes a violation of Article II, Section 2, above, but the appellees rely on the preceding interpretation of the Interpretations Committee to support their contention and the holding of the district court that the appellants were not entitled to seniority benefits.
The substance of the appellants' position is that the previously quoted interpretation, as applied to Article II, Section 2 of the 1961-1964 collective bargaining contract, was, in reality, not an interpretation at all, but rather, it constitutes an impermissible amendment to the collective bargaining contract. The appellants rely on a provision of the 1961-1964 contract providing that 'no new riders or supplements to this agreement shall be negotiated by any of the parties hereto'. The appellants then argue that the casual agreement between Terminal and Local 728 was not reduced to writing until December 1961, after the 1961-1964 collective bargaining contract was in effect, thus creating an unauthorized 'new rider or supplement' to the contract.
We reject this argument for several reasons. First, the evidence was overwhelming that the casual agreement between Terminal and Local 728 was in effect long before the 1961-1964 contract was negotiated, and, therefore, could not be considered a 'new' rider or supplement. Second, even though the casual agreement was reduced to writing only after the 1961-1964 contract was in effect, it did no more than reiterate the oral understanding and prior interpretations concerning the casual agreement, and could in no sense of the word be considered 'new'.
Our interpretation of this provision is in accord with that of appellees-- that this provision in the 1961-1964 contract expressly ratified and incorporated into the 1961-1964 contract Terminal's previous casual agreement with Local 728.
The casual agreement at issue in this case easily falls within the classification of 'conditions of employment' referred to in the preceding provisions, and was given continuing effect by Article VI, Section 1.
The case law is clear that an oral agreement between the parties to a collective bargaining contract may modify, supplement or amend the collective bargaining contract. Roadway Express, Inc. v. General Teamsters Local Union 249, 3 Cir., 1964, 330 F.2d 859; N.L.R.B. v. Local Union 825, Operating Engineers, 3 Cir., 1963, 315 F.2d 695; Rabouin v. N.L.R.B., 2 Cir., 1952, 195 F.2d 906.
In support of their position, appellants cite numerous cases which we find inapposite in that they disapprove of side agreements which undermine not only the standards of wages, hours and working conditions but also the status of the national and local unions as bargaining agents. Such an objective is simply not contemplated by the casual agreement in the present case. To the contrary, the district court properly found ample testimony and evidence that agreements concerning the casual drivers were a long existing custom and worked to the benefit of all parties concerned.4 Local supplements are an inherent part of the concept of national or area collective bargaining, for neither the employers nor local union would engage in the practice of group bargaining if it were so rigid as to preclude adjustments for local needs of employers and employees.
Appellants maintain that the casual agreement between Local 728 and Terminal constituted a waiver of seniority, contrary to holding in J.I.Case Co. v. N.L.R.B., 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762 (1944). Case is distinguishable. In Case, the Court condemned individual contracts between employer and individual employees that circumvented the union and the collective bargaining agreement. In the instant case, the casual agreement between Terminal and the Local was entered into at the insistence of the Local and the agreement was worked out between Terminal and the Local in accordance with the authority conferred by the collective bargaining agreement.
The second major question for resolution is whether the appellants were in fact employed as casuals rather than regular truck drivers. This question is answered in the affirmative.
Appellants testified to their unawareness that they were hired as casuals, but the court below relied on substantial evidence and testimony that made it highly unlikely that the employees were unaware of their casual status. Each of the employees, except Watson, signed papers at the initiation of employment acknowledging that they were to be used as casual employees only. Although Watson's signed form was not produced, there was testimony that he did sign the form, and his trip reports show that he uniformly checked himself off as a casual rather than a regular driver.
Other testimony showed that a list of regular drivers was posted and the appellants would have been well aware that they were not on it. The district court also noted that appellants did not demand seniority status after thirty days employments, as provided in Article II, Section 2, of the contract, although they had worked from six to twenty months with Terminal at the time the first grievance was filed. It appears probable that the first thought the appellants had concerning acquiring status as regulars came when they realized that they were not going to get their jobs back with former employers from whom they had separated because of strikes and lay-offs.
The circumstances surrounding the termination of the appellants' employment with Terminal can be briefly summarized. When the appellants filed their grievances seeking regular status, Terminal notified them that its interpretation of this action was that the appellants intended to relinquish their casual status. Upon receiving Terminal's interpretation of their action, the appellants did nothing, but departed. No request was made to continue work as casuals. The record supports the inference that appellants voluntarily relinquished their employment, and were not wrongfully discharged. In fact, the attorney representing all the appellants advised at least one of the appellants to refuse to continue work, rather than remain on the job as a casual pending the operation of the grievance procedure, as is the usual practice. We hold that there was no wrongful discharge, or, for that matter, any discharge at all.
The final issue is easily disposed of. The appellants contend that Local 728, with the concurrence and knowledge of the Teamsters, did, in bad faith, fail to adequately represent them in the prosecution of their grievances through the grievance procedure.
We find nothing in the present record to support the contention that the Local or the Teamsters exercised bad faith. 'A breach of the statutory duty of fair representation occurs only when a union's conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith.' Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 916, 17 L.Ed.2d 842 (1967). If the representation of the appellants was anything less than enthusiastic, it may well have been due to the Local's well-founded belief that the grievance was unjustifiable. The union is permitted to exercise its discretion in prosecuting grievances. Vaca v. Sipes, supra. Indeed, it is questionable that the union could expect to prosecute successfully a grievance attacking the casual agreement entered into with Terminal, which agreement the Local had procured and negotiated.

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PEOPLE OF THE PHILIPPINES, Plaintiff-Appellant, v. DR. CLARO ROBLES, Defendant-Appellee.
Acting Solicitor General Guillermo E. Torres and Solicitor Pacifico P. de Castro for Appellant.
Elias C. Desembrana for Appellee.
In the circumstances, we find no alternative than to hold that the dismissal of Criminal Case No. 11065 is not provisional in character but one which is tantamount to acquittal that would bar further prosecution of the accused for the same offense.
There is a close parallelism between the instant case and that of People v. Tecneng, Et Al., G.R. No. L-12082, which was decided by this Court only on April 30, 1959. In that case, the accused was charged with homicide before the Court of First Instance of Ilocos Sur. They pleaded not guilty, and the case was set for hearing. When the hearing came, the Fiscal asked for postponement alleging that he was not able to contact his witnesses, which was granted. When the case was again called for hearing, the Fiscal moved for another postponement alleging that his witnesses could not be found, and the hearing was againg postponed. But when the third hearing came and the Fiscal asked for another postponement, the accused vigorously objected to the postponement invoking his Constitutional right to a speedy trial. Considering that the case had been postponed twice and the whereabouts of the witnesses for the prosecution could not be ascertained, while on the other hand the accused were intitled to a speedy trial, the Court dismissed the case. However, one year and three months thereafter, the Provincial Fiscal filed another information for murder against the same defendants, with the onlu difference that the mayor of the place was included as co-accused. When the case came up for hearing, the defendants moved to quash the information on the ground of double jeopardy. The Court entertained the motion and on appeal this Court rendered a confirmatory decision.
ARNOLD VEGAFRIA, Petitioner, v. JUDGE CATALINO CASTAÑEDA, JR., Presiding Judge, Br. 17, RTC, Manila, RONILO A. AZARRAGA, Asst. City Prosecutor of Manila, and CARLOS V. DE GUZMAN, Respondents.
Recto Law Offices for Petitioner.
Cayanga, Zuñiga & Angel Law Offices for C. V. de Guzman.
The legal consequence of the provisional dismissal of a criminal case, based on an Affidavit of Desistance executed by the complaining witness, is the crux of this petition for certiorari and prohibition.
PEOPLE OF THE PHILIPPINES, et al., vs. PANFILO M. LACSON.
SEC. 8. Provisional dismissal.- A case shall not be provisionally dismissed except with the express consent of the accused and with notice to the offended party.
The provisional dismissal of offenses punishable by imprisonment not exceeding six (6) years or a fine of any amount, or both, shall become permanent one (1) year after issuance of the order without the case having been revived. With respect to offenses punishable by imprisonment of more than six (6) years, their provisional dismissal shall become permanent two (2) years after issuance of the order without the case having been revived.
Like any other favorable procedural rule, this new rule can be given retroactive effect. However, this Court cannot rule on this jugular issue due to the lack of sufficient factual bases. Thus, there is need of proof of the following facts, viz: (1) whether the provisional dismissal of the cases had the express consent of the accused; (2) whether it was ordered by the court after notice to the offended party, (3) whether the 2-year period to revive has already lapsed, and (4) whether there is any justification for the filing of the cases beyond the 2-year period.
There is no uncertainty with respect to the fact that the provisional dismissal of the cases against respondent Lacson bears his express consent. It was respondent Lacson himself who moved to dismiss the subject cases for lack of probable cause before then Judge Agnir, hence, it is beyond argument that their dismissal bears his express consent.
From the records of the case before us, it cannot be determined whether there were affidavits of desistance executed by the relatives of the three (3) other victims, namely: Meleubren Soronda, Pacifico Montero, Jr., and Alex Neri. The same records do not show whether they were notified of the hearing or had knowledge thereof. To be sure, it is not fair to expect the element of notice to be litigated before then Judge Agnir for Section 8, Rule 117 was yet inexistent at that time.
The fact of notice to the offended parties was not raised either in the petition for prohibition with application for temporary restraining order or writ of preliminary injunction filed by respondent Lacson in the RTC of Manila, presided by Judge Pasamba, to enjoin the prosecutors from reinvestigating the said cases against him. The only question raised in said petition is whether the reinvestigation will violate the right of respondent Lacson against double jeopardy. Thus, the issue of whether or not the reinvestigation is barred by Section 8, Rule 117 was not tackled by the litigants.
Nor was the fact of notice to the offended parties the subject of proof after the eleven (11) informations for murder against respondent Lacson and company were revived in the RTC of Quezon City presided by Judge Yadao. There was hardly any proceeding conducted in the case for respondent Lacson immediately filed a petition for certiorari in the appellate court challenging, among others, the authority of Judge Yadao to entertain the revived informations for multiple murder against him.
This is not to be wondered at. The applicability of Section 8, Rule 117 was never considered in the trial court. It was in the Court of Appeals where respondent Lacson raised for the first time the argument that Section 8, Rule 117 bars the revival of the multiple murder cases against him. But even then, the appellate court did not require the parties to elucidate the crucial issue of whether notices were given to the offended parties before Judge Agnir ordered the dismissal of the cases against respondent Lacson and company. To be sure, there is a statement in the Decision of the appellate court to the effect that records show that the prosecution and the private offended parties were notified of the hearing x x x. It is doubtful whether this finding is supported by the records of the case. It appears to be contrary to Judge Agnirs finding that only seven (7) of the complainants submitted affidavits of desistance.
Indeed, the records of this case are inconclusive on the factual issue of whether the multiple murder cases against respondent Lacson are being revived within or beyond the 2-year bar. The reckoning date of the 2-year bar has to be first determined – – – whether it is from the date of the Order of then Judge Agnir dismissing the cases or from the dates the Order were received by the various offended parties or from the date of the effectivity of the new rule.
If the cases were revived only after the 2-year bar, the State must be given the opportunity to justify its failure to comply with said timeline. The new rule fixes a timeline to penalize the State for its inexcusable delay in prosecuting cases already filed in courts. It can therefore present compelling reasons to justify the revival of cases beyond the 2-year bar.
In light of the lack of or the conflicting evidence on the various requirements to determine the applicability of Section 8, Rule 117, this Court is not in a position to rule whether or not the re-filing of the cases for multiple murder against respondent Lacson should be enjoined. Fundamental fairness requires that both the prosecution and the respondent Lacson should be afforded the opportunity to be heard and to adduce evidence on the presence or absence of the predicate facts upon which the application of the new rule depends. They involve disputed facts and arguable questions of law. The reception of evidence on these various issues cannot be done in this Court but before the trial court.
PEOPLE OF THE PHILIPPINES, THE SECRETARY OF JUSTICE, DIRECTOR GENERAL OF THE PHILIPPINE NATIONAL POLICE, CHIEF STATE PROSECUTOR JOVENCITO ZUO, STATE PROSECUTORS PETER L. ONG and RUBEN A. ZACARIAS; 2ND ASSISTANT CITY PROSECUTOR CONRADO M. JAMOLIN and CITY PROSECUTOR OF QUEZON CITY CLARO ARELLANO, petitioners, vs. PANFILO M. LACSON, respondent.
The Court shall resolve the issues seriatim.
I. SECTION 8, RULE 117 OF THE REVISED RULES OF CRIMINAL PROCEDURE IS NOT APPLICABLE TO CRIMINAL CASES NOS. Q-99-81679 TO Q-99-81689.
The petitioners aver that Section 8, Rule 117 of the Revised Rules of Criminal Procedure is not applicable to Criminal Cases Nos. Q-99-81679 to Q-99-81689 because the essential requirements for its application were not present when Judge Agnir, Jr., issued his resolution of March 29, 1999. Disagreeing with the ruling of the Court, the petitioners maintain that the respondent did not give his express consent to the dismissal by Judge Agnir, Jr., of Criminal Cases Nos. Q-99-81679 to Q-99-81689. The respondent allegedly admitted in his pleadings filed with the Court of Appeals and during the hearing thereat that he did not file any motion to dismiss said cases, or even agree to a provisional dismissal thereof. Moreover, the heirs of the victims were allegedly not given prior notices of the dismissal of the said cases by Judge Agnir, Jr. According to the petitioners, the respondents express consent to the provisional dismissal of the cases and the notice to all the heirs of the victims of the respondents motion and the hearing thereon are conditions sine qua non to the application of the time-bar in the second paragraph of the new rule.
The Court has reviewed the records and has found the contention of the petitioners meritorious.
Sec. 8. Provisional dismissal. A case shall not be provisionally dismissed except with the express consent of the accused and with notice to the offended party.
4. the public prosecutor is served with a copy of the order of provisional dismissal of the case.
The foregoing requirements are conditions sine qua non to the application of the time-bar in the second paragraph of the new rule. The raison d etre for the requirement of the express consent of the accused to a provisional dismissal of a criminal case is to bar him from subsequently asserting that the revival of the criminal case will place him in double jeopardy for the same offense or for an offense necessarily included therein.
Although the second paragraph of the new rule states that the order of dismissal shall become permanent one year after the issuance thereof without the case having been revived, the provision should be construed to mean that the order of dismissal shall become permanent one year after service of the order of dismissal on the public prosecutor who has control of the prosecution without the criminal case having been revived. The public prosecutor cannot be expected to comply with the timeline unless he is served with a copy of the order of dismissal.
Express consent to a provisional dismissal is given either viva voce or in writing. It is a positive, direct, unequivocal consent requiring no inference or implication to supply its meaning.Where the accused writes on the motion of a prosecutor for a provisional dismissal of the case No objection or With my conformity, the writing amounts to express consent of the accused to a provisional dismissal of the case. The mere inaction or silence of the accused to a motion for a provisional dismissal of the case or his failure to object to a provisional dismissal does not amount to express consent.
A motion of the accused for a provisional dismissal of a case is an express consent to such provisional dismissal. If a criminal case is provisionally dismissed with the express consent of the accused, the case may be revived only within the periods provided in the new rule. On the other hand, if a criminal case is provisionally dismissed without the express consent of the accused or over his objection, the new rule would not apply. The case may be revived or refiled even beyond the prescribed periods subject to the right of the accused to oppose the same on the ground of double jeopardy or that such revival or refiling is barred by the statute of limitations.
The case may be revived by the State within the time-bar either by the refiling of the Information or by the filing of a new Information for the same offense or an offense necessarily included therein. There would be no need of a new preliminary investigation. However, in a case wherein after the provisional dismissal of a criminal case, the original witnesses of the prosecution or some of them may have recanted their testimonies or may have died or may no longer be available and new witnesses for the State have emerged, a new preliminary investigation must be conducted before an Information is refiled or a new Information is filed. A new preliminary investigation is also required if aside from the original accused, other persons are charged under a new criminal complaint for the same offense or necessarily included therein; or if under a new criminal complaint, the original charge has been upgraded; or if under a new criminal complaint, the criminal liability of the accused is upgraded from that as an accessory to that as a principal. The accused must be accorded the right to submit counter-affidavits and evidence. After all, the fiscal is not called by the Rules of Court to wait in ambush; the role of a fiscal is not mainly to prosecute but essentially to do justice to every man and to assist the court in dispensing that justice.
2) warrants for the arrest of the accused-movants be withheld, or, if issued, recalled in the meantime until the resolution of this incident.
Other equitable reliefs are also prayed for.
… An examination of the Motion for Judicial Determination of Probable Cause and for Examination of Prosecution Witnesses filed by the petitioner and his other co-accused in the said criminal cases would show that the petitioner did not pray for the dismissal of the case. On the contrary, the reliefs prayed for therein by the petitioner are: (1) a judicial determination of probable cause pursuant to Section 2, Article III of the Constitution; and (2) that warrants for the arrest of the accused be withheld, or if issued, recalled in the meantime until the resolution of the motion. It cannot be said, therefore, that the dismissal of the case was made with the consent of the petitioner. A copy of the aforesaid motion is hereto attached and made integral part hereof as Annex A.
And it is your stand that the dismissal made by the Court was provisional in nature?
It was in (sic) that the accused did not ask for it. What they wanted at the onset was simply a judicial determination of probable cause for warrants of arrest issued. Then Judge Agnir, upon the presentation by the parties of their witnesses, particularly those who had withdrawn their affidavits, made one further conclusion that not only was this case lacking in probable cause for purposes of the issuance of an arrest warrant but also it did not justify proceeding to trial.
And it is expressly provided under Section 8 that a case shall not be provisionally dismissed except when it is with the express conformity of the accused.
And with notice to the offended party.
Was there an express conformity on the part of the accused?
There was none, Your Honor. We were not asked to sign any order, or any statement, which would normally be required by the Court on pre-trial or on other matters, including other provisional dismissal. My very limited practice in criminal courts, Your Honor, had taught me that a judge must be very careful on this matter of provisional dismissal. In fact they ask the accused to come forward, and the judge himself or herself explains the implications of a provisional dismissal. Pumapayag ka ba dito. Puwede bang pumirma ka?
You were present during the proceedings?
You represented the petitioner in this case?
That is correct, Your Honor. And there was nothing of that sort which the good Judge Agnir, who is most knowledgeable in criminal law, had done in respect of provisional dismissal or the matter of Mr. Lacson agreeing to the provisional dismissal of the case.
Now, you filed a motion, the other accused then filed a motion for a judicial determination of probable cause?
Did you make any alternative prayer in your motion that if there is no probable cause what should the Court do?
That the arrest warrants only be withheld. That was the only prayer that we asked. In fact, I have a copy of that particular motion, and if I may read my prayer before the Court, it said: Wherefore, it is respectfully prayed that (1) a judicial determination of probable cause pursuant to Section 2, Article III of the Constitution be conducted, and for this purpose, an order be issued directing the prosecution to present the private complainants and their witnesses at the scheduled hearing for that purpose; and (2) the warrants for the arrest of the accused be withheld, or, if issued, recalled in the meantime until resolution of this incident.
There is no general prayer for any further relief?
There is but it simply says other equitable reliefs are prayed for.
Dont you surmise Judge Agnir, now a member of this Court, precisely addressed your prayer for just and equitable relief to dismiss the case because what would be the net effect of a situation where there is no warrant of arrest being issued without dismissing the case?
Yes, Your Honor. I will not second say (sic) yes the Good Justice, but what is plain is we did not agree to the provisional dismissal, neither were we asked to sign any assent to the provisional dismissal.
If you did not agree to the provisional dismissal did you not file any motion for reconsideration of the order of Judge Agnir that the case should be dismissed?
I did not, Your Honor, because I knew fully well at that time that my client had already been arraigned, and the arraignment was valid as far as I was concerned. So, the dismissal, Your Honor, by Judge Agnir operated to benefit me, and therefore I did not take any further step in addition to rocking the boat or clarifying the matter further because it probably could prejudice the interest of my client.
Soon thereafter, the SC in early 1999 rendered a decision declaring the Sandiganbayan without jurisdiction over the cases. The records were remanded to the QC RTC: Upon raffle, the case was assigned to Branch 81. Petitioner and the others promptly filed a motion for judicial determination of probable cause (Annex B). He asked that warrants for his arrest not be issued. He did not move for the dismissal of the Informations, contrary to respondent OSGs claim.
The respondents admissions made in the course of the proceedings in the Court of Appeals are binding and conclusive on him. The respondent is barred from repudiating his admissions absent evidence of palpable mistake in making such admissions.
To apply the new rule in Criminal Cases Nos. Q-99-81679 to Q-99-81689 would be to add to or make exceptions from the new rule which are not expressly or impliedly included therein.This the Court cannot and should not do.
The Court also agrees with the petitioners contention that no notice of any motion for the provisional dismissal of Criminal Cases Nos. Q-99-81679 to Q-99-81689 or of the hearing thereon was served on the heirs of the victims at least three days before said hearing as mandated by Rule 15, Section 4 of the Rules of Court. It must be borne in mind that in crimes involving private interests, the new rule requires that the offended party or parties or the heirs of the victims must be given adequate a priori notice of any motion for the provisional dismissal of the criminal case. Such notice may be served on the offended party or the heirs of the victim through the private prosecutor, if there is one, or through the public prosecutor who in turn must relay the notice to the offended party or the heirs of the victim to enable them to confer with him before the hearing or appear in court during the hearing. The proof of such service must be shown during the hearing on the motion, otherwise, the requirement of the new rule will become illusory. Such notice will enable the offended party or the heirs of the victim the opportunity to seasonably and effectively comment on or object to the motion on valid grounds, including: (a) the collusion between the prosecution and the accused for the provisional dismissal of a criminal case thereby depriving the State of its right to due process; (b) attempts to make witnesses unavailable; or (c) the provisional dismissal of the case with the consequent release of the accused from detention would enable him to threaten and kill the offended party or the other prosecution witnesses or flee from Philippine jurisdiction, provide opportunity for the destruction or loss of the prosecutions physical and other evidence and prejudice the rights of the offended party to recover on the civil liability of the accused by his concealment or furtive disposition of his property or the consequent lifting of the writ of preliminary attachment against his property.
In the case at bar, even if the respondents motion for a determination of probable cause and examination of witnesses may be considered for the nonce as his motion for a provisional dismissal of Criminal Cases Nos. Q-99-81679 to Q-99-81689, however, the heirs of the victims were not notified thereof prior to the hearing on said motion on March 22, 1999. It must be stressed that the respondent filed his motion only on March 17, 1999 and set it for hearing on March 22, 1999 or barely five days from the filing thereof. Although the public prosecutor was served with a copy of the motion, the records do not show that notices thereof were separately given to the heirs of the victims or that subpoenae were issued to and received by them, including those who executed their affidavits of desistance who were residents of Dipolog City or Pian, Zamboanga del Norte or Palompon, Leyte. There is as well no proof in the records that the public prosecutor notified the heirs of the victims of said motion or of the hearing thereof on March 22, 1999. Although Atty. Valdez entered his appearance as private prosecutor, he did so only for some but not all the close kins of the victims, namely, Nenita Alap-ap, Imelda Montero, Margarita Redillas, Rufino Siplon, Carmelita Elcamel, Myrna Abalora, and Leonora Amora who (except for Rufino Siplon) executed their respective affidavits of desistance. There was no appearance for the heirs of Alex Neri, Pacifico Montero, Jr., and Meleubren Sorronda. There is no proof on record that all the heirs of the victims were served with copies of the resolution of Judge Agnir, Jr. dismissing the said cases. In fine, there never was any attempt on the part of the trial court, the public prosecutor and/or the private prosecutor to notify all the heirs of the victims of the respondents motion and the hearing thereon and of the resolution of Judge Agnir, Jr. dismissing said cases. The said heirs were thus deprived of their right to be heard on the respondents motion and to protect their interests either in the trial court or in the appellate court.
Since the conditions sine qua non for the application of the new rule were not present when Judge Agnir, Jr. issued his resolution, the State is not barred by the time limit set forth in the second paragraph of Section 8 of Rule 117 of the Revised Rules of Criminal Procedure. The State can thus revive or refile Criminal Cases Nos. Q-99-81679 to Q-99-81689 or file new Informations for multiple murder against the respondent.
On the other hand, the time-bar under Section 8 of Rule 117 is akin to a special procedural limitation qualifying the right of the State to prosecute making the time-bar an essence of the given right or as an inherent part thereof, so that the lapse of the time-bar operates to extinguish the right of the State to prosecute the accused.
In the new rule in question, as now construed by the Court, it has fixed a time-bar of one year or two years for the revival of criminal cases provisionally dismissed with the express consent of the accused and with a priori notice to the offended party. The time-bar may appear, on first impression, unreasonable compared to the periods under Article 90 of the Revised Penal Code. However, in fixing the time-bar, the Court balanced the societal interests and those of the accused for the orderly and speedy disposition of criminal cases with minimum prejudice to the State and the accused. It took into account the substantial rights of both the State and of the accused to due process. The Court believed that the time limit is a reasonable period for the State to revive provisionally dismissed cases with the consent of the accused and notice to the offended parties. The time-bar fixed by the Court must be respected unless it is shown that the period is manifestly short or insufficient that the rule becomes a denial of justice. The petitioners failed to show a manifest shortness or insufficiency of the time-bar.
The new rule was conceptualized by the Committee on the Revision of the Rules and approved by the Court en banc primarily to enhance the administration of the criminal justice system and the rights to due process of the State and the accused by eliminating the deleterious practice of trial courts of provisionally dismissing criminal cases on motion of either the prosecution or the accused or jointly, either with no time-bar for the revival thereof or with a specific or definite period for such revival by the public prosecutor. There were times when such criminal cases were no longer revived or refiled due to causes beyond the control of the public prosecutor or because of the indolence, apathy or the lackadaisical attitude of public prosecutors to the prejudice of the State and the accused despite the mandate to public prosecutors and trial judges to expedite criminal proceedings.
It is almost a universal experience that the accused welcomes delay as it usually operates in his favor, especially if he greatly fears the consequences of his trial and conviction. He is hesitant to disturb the hushed inaction by which dominant cases have been known to expire.
The inordinate delay in the revival or refiling of criminal cases may impair or reduce the capacity of the State to prove its case with the disappearance or nonavailability of its witnesses. Physical evidence may have been lost. Memories of witnesses may have grown dim or have faded. Passage of time makes proof of any fact more difficult. The accused may become a fugitive from justice or commit another crime. The longer the lapse of time from the dismissal of the case to the revival thereof, the more difficult it is to prove the crime.
On the other side of the fulcrum, a mere provisional dismissal of a criminal case does not terminate a criminal case. The possibility that the case may be revived at any time may disrupt or reduce, if not derail, the chances of the accused for employment, curtail his association, subject him to public obloquy and create anxiety in him and his family. He is unable to lead a normal life because of community suspicion and his own anxiety. He continues to suffer those penalties and disabilities incompatible with the presumption of innocence. He may also lose his witnesses or their memories may fade with the passage of time. In the long run, it may diminish his capacity to defend himself and thus eschew the fairness of the entire criminal justice system.
The time-bar under the new rule was fixed by the Court to excise the malaise that plagued the administration of the criminal justice system for the benefit of the State and the accused; not for the accused only.
The two-year period fixed in the new rule is for the benefit of both the State and the accused. It should not be emasculated and reduced by an inordinate retroactive application of the time-bar therein provided merely to benefit the accused. For to do so would cause an injustice of hardship to the State and adversely affect the administration of justice in general and of criminal laws in particular.
Indeed, for justice to prevail, the scales must balance; justice is not to be dispensed for the accused alone. The interests of society and the offended parties which have been wronged must be equally considered. Verily, a verdict of conviction is not necessarily a denial of justice; and an acquittal is not necessarily a triumph of justice, for, to the society offended and the party wronged, it could also mean injustice. Justice then must be rendered even-handedly to both the accused, on one hand, and the State and offended party, on the other.
PEOPLE OF THE PHILIPPINES, THE SECRETARY OF JUSTICE, DIRECTOR GENERAL OF THE PHILIPPINE NATIONAL POLICE, CHIEF STATE PROSECUTOR JOVENCITO ZUÑO, STATE PROSECUTORS PETER L. ONG and RUBEN A. ZACARIAS; 2ND ASSISTANT CITY PROSECUTOR. CONRADO M. JAMOLIN and CITY PROSECUTOR OF QUEZON CITY CLARO ARELLANO, Petitioners, v. PANFILO M. LACSON, Respondent.
The contentions of the respondent have no merit.
13. Inasmuch as the case subject of the “preliminary investigation” was dismissed for the reasons mentioned, there currently exists no complaint upon which a valid investigation can be had in light of the clear provisions of Rule 110 which requires the existence of a “sworn written statement charging a person with an offense” as basis for the commencement of a preliminary investigation under Rule 112.
You are saying that Sen. Lacson can no longer be prosecuted forever for that crime, for the killing of the 11 in 1995?
That is my submission, Your Honor.
Let us see your reason for it?
First, are you saying that double jeopardy applies or not?
Allow me to qualify the effects of double jeopardy occur with permanent dismissal that is my submission.
No, no, I am not talking of the effects, I am talking of the doctrine, you are not invoking the doctrine of double jeopardy?
They are two different claims.
That is what I am trying to rule out so that we do not have to discuss it.
You are not invoking double jeopardy?
No, I am not talking of the effects, I am asking about the application, you are not asking the Court to apply the doctrine of double jeopardy to prevent a prosecution of Mr. Lacson?
Because the element of double jeopardy cannot apply 8, 117.
So, the answer is yes?
No, Your Honor, we were saying that precisely a permanent dismissal vests the rights of double jeopardy upon the accused who invokes it.
What you are saying is the effects, I am not asking about the effects, I will ask that later.
Later, I am asking about doctrines. Since you are not invoking the doctrine of double jeopardy you are resting your case win or lose, sink or sail on the application of 8, 117?
On the constitutional right of the accused under Section 16 of Article 3 which is speedy disposition of cases which implemented 8, 117, that is our arguments in this bar.
Are you not resting on 8,117?
That and the constitutional provision, Your Honor.
So, you are resting on 8,117?
The Constitution which gave life to 8,117.
Can a Court, let us see your theory then — your theory rest on two provisions: first, the Rules of Court 8,117 and Second, the Constitution on speedy disposition?
Do we get it from you that it is your stand that this is applicable to the case at bar?
It is my submission, that it is, Your Honor. In addition, of course, to my proposition that Mr. Lacson is covered by the rule on double jeopardy as well, because he had already been arraigned before the Sandiganbayan prior to the case being remanded to the RTC.
You are referring to those cases which were dismissed by the RTC of Quezon City.
It was in that the accused did not ask for it. What they wanted at the onset was simply a judicial determination of probable cause for warrants of arrest issued. Then Judge Agnir, [Jr.] upon the presentation by the parties of their witnesses, particularly those who had withdrawn their affidavits, made one further conclusion that not only was this case lacking in probable cause for purposes of the issuance of an arrest warrant but also it did not justify proceeding to trial.
And it is expressly provided under Section 8 that a case shall not be provisionally dismissed except [if] it is with the express conformity of the accused.
That is correct, Your Honor. And there was nothing of that sort which the good Judge Agnir, [Jr.] who is most knowledgeable in criminal law, had done in respect of provisional dismissal or the matter of Mr. Lacson agreeing to the provisional dismissal of the case.
Don’t you surmise Judge Agnir, [Jr.] now a member of this Court, precisely addressed your prayer for just and equitable relief to dismiss the case because what would be the net effect of a situation where there is no warrant of arrest being issued without dismissing the case?
If you did not agree to the provisional dismissal, did you not file any motion for reconsideration of the order of Judge Agnir, [Jr.] that the case should be dismissed?
Sec. 4. Judicial admissions. — An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.
Sec. 14. Revival of cases provisionally dismissed.- The one or two- year period allowed for reviving a criminal case that has been provisionally dismissed shall be reckoned from the issuance of the order of dismissal. The dismissal shall become automatically permanent if the case is not revived within the required period. Such permanent dismissal shall amount to an adjudication of the case on the merits.
The issue is ultimately reduced to whether Section 8, Rule 117 is applicable to the case, as the CA found. If it applies, then the CA ruling effectively lays the matter to rest. If it does not, then the revised RTC decision reopening the case should prevail.
We find the petition meritorious and hold that the case should be remanded to the trial court for arraignment and trial.
SEC.8. Provisional dismissal. A case shall not be provisionally dismissed except with the express consent of the accused and with notice to the offended party.
4) the public prosecutor is served with a copy of the order of provisional dismissal of the case.
In People v. Lacson, we ruled that there are sine quanon requirements in the application of the time-bar rule stated in the second paragraph of Section 8 of Rule 117. We also ruled that the time-bar under the foregoing provision is a special procedural limitation qualifying the right of the State to prosecute, making the time-bar an essence of the given right or as an inherent part thereof, so that the lapse of the time-bar operates to extinguish the right of the State to prosecute the accused.
An examination of the whole Rule tells us that a dismissal based on a motion to quash and a provisional dismissal are far different from one another as concepts, in their features, and legal consequences. While the provision on provisional dismissal is found within Rule 117 (entitled Motion to Quash), it does not follow that a motion to quash results in a provisional dismissal to which Section 8, Rule 117 applies.
double jeopardy, by the previous extinction of criminal liability, by the rule on speedy trial, and the dismissals after plea without the express consent of the accused. Section 8, by its own terms, cannot cover these dismissals because they are not provisional.
A second feature is that Section 8 does not state the grounds that lead to a provisional dismissal. This is in marked contrast with a motion to quash whose grounds are specified under Section 3. The delimitation of the grounds available in a motion to quash suggests that a motion to quash is a class in itself, with specific and closely-defined characteristics under the Rules of Court. A necessary consequence is that where the grounds cited are those listed under Section 3, then the appropriate remedy is to file a motion to quash, not any other remedy. Conversely, where a ground does not appear under Section 3, then a motion to quash is not a proper remedy. A motion for provisional dismissal may then apply if the conditions required by Section 8 obtain.
A third feature, closely related to the second, focuses on the consequences of a meritorious motion to quash. This feature also answers the question of whether the quashal of an information can be treated as a provisional dismissal. Sections 4, 5, 6, and 7 of Rule 117 unmistakably provide for the consequences of a meritorious motion to quash. Section 4 speaks of an amendment of the complaint or information, if the motion to quash relates to a defect curable by amendment. Section 5 dwells on the effect of sustaining the motion to quash – the complaint or information may be re-filed, except for the instances mentioned under Section 6. The latter section, on the other hand, specifies the limit of the re-filing that Section 5 allows it cannot be done where the dismissal is based on extinction of criminal liability or double jeopardy. Section 7 defines double jeopardy and complements the ground provided under Section 3(i) and the exception stated in Section 6.
Rather than going into specifics, Section 8 simply states when a provisional dismissal can be made, i.e., when the accused expressly consents and the offended party is given notice. The consent of the accused to a dismissal relates directly to what Section 3(i) and Section 7 provide, i.e., the conditions for dismissals that lead to double jeopardy. This immediately suggests that a dismissal under Section 8 i.e., one with the express consent of the accused is not intended to lead to double jeopardy as provided under Section 7, but nevertheless creates a bar to further prosecution under the special terms of Section 8.
This feature must be read with Section 6 which provides for the effects of sustaining a motion to quash the dismissal is not a bar to another prosecution for the same offense unless the basis for the dismissal is the extinction of criminal liability and double jeopardy. These unique terms, read in relation with Sections 3(i) and 7 and compared with the consequences of Section 8, carry unavoidable implications that cannot but lead to distinctions between a quashal and a provisional dismissal under Section 8. They stress in no uncertain terms that, save only for what has been provided under Sections 4 and 5, the governing rule when a motion to quash is meritorious are the terms of Section 6. The failure of the Rules to state under Section 6 that a Section 8 provisional dismissal is a bar to further prosecution shows that the framers did not intend a dismissal based on a motion to quash and a provisional dismissal to be confused with one another; Section 8 operates in a world of its own separate from motion to quash, and merely provides a time-bar that uniquely applies to dismissals other than those grounded on Section 3. Conversely, when a dismissal is pursuant to a motion to quash under Section 3, Section 8 and its time-bar does not apply.
First, a motion to quash is invariably filed by the accused to question the efficacy of the complaint or information filed against him or her (Sections 1 and 2, Rule 117); in contrast, a case may be provisionally dismissed at the instance of either the prosecution or the accused, or both, subject to the conditions enumerated under Section 8, Rule 117.
Second, the form and content of a motion to quash are as stated under Section 2 of Rule 117; these requirements do not apply to a provisional dismissal.
Third, a motion to quash assails the validity of the criminal complaint or the criminal information for defects or defenses apparent on face of the information; a provisional dismissal may be grounded on reasons other than the defects found in the information.
Fourth, a motion to quash is allowed before the arraignment (Section 1, Rule 117); there may be a provisional dismissal of the case even when the trial proper of the case is already underway provided that the required consents are present.
Fifth, a provisional dismissal is, by its own terms, impermanent until the time-bar applies, at which time it becomes a permanent dismissal. In contrast, an information that is quashed stays quashed until revived; the grant of a motion to quash does not per se carry any connotation of impermanence, and becomes so only as provided by law or by the Rules. In re-filing the case, what is important is the question of whether the action can still be brought, i.e., whether the prescription of action or of the offense has set in. In a provisional dismissal, there can be no re-filing after the time-bar, and prescription is not an immediate consideration.
To recapitulate, quashal and provisional dismissal are different concepts whose respective rules refer to different situations that should not be confused with one another.If the problem relates to an intrinsic or extrinsic deficiency of the complaint or information, as shown on its face, the remedy is a motion to quash under the terms of Section 3, Rule 117. All other reasons for seeking the dismissal of the complaint or information, before arraignment and under the circumstances outlined in Section 8, fall under provisional dismissal.
Thus, we conclude that Section 8, Rule 117 does not apply to the reopening of the case that the RTC ordered and which the CA reversed; the reversal of the CAs order is legally proper.
NEW PROSPERITY PLASTIC PRODUCTS, represented by ELIZABETH UY,1 Respondent.
Assuming that the criminal cases were only provisionally dismissed, Co further posits that such dismissal became permanent one year after the issuance of the June 9, 2003 Order, not after notice to the offended party. He also insists that both the filing of the motion to revive and the trial court’s issuance of the order granting the revival must be within the one-year period. Lastly, even assuming that the one-year period to revive the criminal cases started on July 2, 2003 when Uy received the June 9, 2003 Order, Co asserts that the motion was filed one day late since year 2004 was a leap year.
Fourth, the contention that both the filing of the motion to revive the case and the court order reviving it must be made prior to the expiration of the one-year period is unsustainable. Such interpretation is not found in the Rules. Moreover, to permit otherwise would definitely put the offended party at the mercy of the trial court, which may wittingly or unwittingly not comply. Judicial notice must be taken of the fact that most, if not all, of our trial court judges have to deal with clogged dockets in addition to their administrative duties and functions. Hence, they could not be expected to act at all times on all pending decisions, incidents, and related matters within the prescribed period of time. It is likewise possible that some of them, motivated by ill-will or malice, may simply exercise their whims and caprices in not issuing the order of revival on time.
Fifth, the fact that year 2004 was a leap year is inconsequential to determine the timeliness of Uy’s motion to revive the criminal cases. What is material instead is Co’s categorical admission that Uy is represented by a private counsel who only received a copy of the June 9, 2003 Order on July 3, 2003. Therefore, the motion was not belatedly filed on July 2, 2004. Since the period for filing a motion to revive is reckoned from the private counsel’s receipt of the order of provisional dismissal, it necessarily follows that the reckoning period for the permanent dismissal is likewise the private counsel’s date of receipt of the order of provisional dismissal.
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Appeal from Breathitt Circuit Court.
A.H. Patton and G.C. Wilson for appellants.
The chancellor sustained exceptions to the master commissioner's report of sale and ordered a re-sale of the property on the same terms as set out in the original judgment, and the purchaser at the decretal sale appeals. This is a second appeal, the former opinion being reported in 277 Ky. 20, 125 S.W.2d 211.
Upon the case being returned to the circuit court, the chancellor entered judgment in conformity with that opinion, whereby a one-half undivided interest in the farm of A.A. Roberts was directed to be sold and the proceeds divided among his heirs. The judgment directing the sale provided that the parties waived newspaper advertisements and that the sale was to be advertised by notices being posted as required by statute, Section 426.200, KRS. The interest to be sold in the property was duly appraised at $1,000 and Mrs. Margaret Campbell became the purchaser for $700 and executed bond.
J.M. Roberts, appellee on the former appeal, died and his daughter, Mrs. Marie Turner, filed exceptions to the commissioner's report of sale because: (a) She had not heard when the sale was to be, saw no notice of it, and did not know it was to be held on May 26, 1941; (b) she was prevented from attending the sale because on that day she was at the bedside of her sick daughter in Louisville; (c) the one-half undivided interest in the property is worth $1,000 and she will bid $850 therefor if the sale is set aside. The averments of the exceptions were supported by the affidavit of Mrs. Turner. Also, the affidavit of her attorney, Hon. Grannis Bach, was filed to the effect that he did not know the property had been advertised for sale until the commissioner started selling it, and his client was then in Louisville.
The general rule is that inadequacy of price standing alone is not sufficient ground for setting aside a judicial sale where the interested parties are under no disabilities, unless it is so great as to shock the conscience or create a presumption of fraud. Melton v. Tipton, 264 Ky. 196, 94 S.W.2d 350; Louisville Title Co. v. Ramsey, 258 Ky. 183, 79 S.W.2d 693; Henderson v. Henderson, 266 Ky. 319, 98 S.W.2d 904. But where inadequacy of price is accompanied by other circumstances, even though slight and not sufficient in themselves to justify the setting aside of the sale, or where there is an apparent unfairness or impropriety on the part of those connected with the sale, then it will be set aside. 35 C. J. 101-103, secs. 164, 165; Kentucky Joint Land Bank v. Fitzpatrick, 237 Ky. 624, 36 S.W.2d 25; Elswick v. Justice, 287 Ky. 632, 154 S.W.2d 714; Louisville Title Co. v. Ramsey, 258 Ky. 183, 79 S.W.2d 693.
It is admitted that a fair appraisal of this property is $1,000. It sold for $700, and Mrs. Turner was willing only to make it bring $850 on another sale. The property brought 70% of its appraised value and the guaranteed price on the second sale sought is an increase of but slightly over 20%. If there were any inadequacy in the sale price, it was modest. The accompanying circumstances upon which Mrs. Turner relied to set aside the sale appear to be that she and her lawyer overlooked the sale since newspaper advertisement had been waived, and they did not see the notices posted up at the court house door. This was not unavoidable casualty upon their part, but rather is to be classed as their carelessness.
While the chancellor has a sound judicial discretion in confirming or setting aside a judicial sale, it must be exercised with due regard for the rights of all parties involved as measured by legal and equitable standards. Kentucky Joint Land Bank of Lexington v. Fitzpatrick, 237 Ky. 624, 36 S.W.2d 25. The policy of the law is to uphold such sales and it would be trifling with the stability of judicial sales, as well as the rights of purchasers, to permit one who had agreed to waive newspaper advertisment and then forgot the sale, to obtain a re-sale of the property because she was willing to up the price 20%. In the light of all the circumstances we are constrained to hold that the chancellor abused his judicial discretion in sustaining the exceptions to this sale.
A motion was made to dismiss the appeal, it being insisted that appellants had brought up only a partial transcript of the record and notice of the filing of the schedule was not served upon the appellee, Mrs. Turner, as required by Section 737, Civil Code of Practice. This motion was passed to merits. The schedule directed the clerk to copy the judgment, the report of sale, the exceptions filed thereto, the order sustaining same and all orders or pleadings in the case since the judgment was entered, including the schedule. This was the entire record made in the case since the former appeal was taken and the record thereof filed in this court. Therefore, the entire record was brought up which in any way related to the question before us. It has been written it is not necessary to file the schedule mentioned in Section 737 where the entire record is brought up. Grubbs v. Fish, 97 S.W. 258, 29 Ky. Law Rep. 1291; Strother v. McClave, 264 Ky. 121, 94 S.W.2d 310. This being true, it naturally follows it is not necessary to serve notice of the filing of the schedule where no schedule is required. The motion to dismiss the appeal is overruled.
The judgment sustaining the exceptions to the report of sale is reversed with directions that one be entered overruling the exceptions and sustaining the report of sale.