Criminal Stupidity (or What is reckless imprudence?)

By Obiter07

The recent tragic death of an elementary school student has given rise to charges of reckless imprudence resulting in homicide and damage to property. The fatal road accidents reported on an almost daily basis provide more morbid examples.

Imprudence penalized under the Revised Penal Code

But what exactly does reckless imprudence mean? Article 365 of the Revised Penal Code defines reckless imprudence as that which “consists in voluntary, but without malice, doing or falling to do an act from which material damage results by reason of inexcusable lack of precaution on the part of the person performing or failing to perform such act, taking into consideration his employment or occupation, degree of intelligence, physical condition and other circumstances regarding persons, time and place.”

Article 365 also defines simple imprudence as that which “consists in the lack of precaution displayed in those cases in which the damage impending to be caused is not immediate nor the danger clearly manifest.”

The entire Article does not make for easy reading as it refers to any act, which if it been intentional, would fall or qualify as a certain criminal charge. It is like saying if you commit any crime by mistake or negligence, then it could be an act of reckless imprudence. The penalties imposable depend on the degree of negligence involved.

“ARTICLE 365. Imprudence and negligence. — Any person who, by reckless imprudence, shall commit any act which, had it been intentional, would constitute a grave felony, shall suffer the penalty of arresto mayor in its maximum period to prision correccional in its medium period; if it would have constituted a less grave felony, the penalty of arresto mayor in its minimum and medium periods shall be imposed; if it would have constituted a light felony, the penalty of arresto menor in its maximum period shall be imposed.

Any person who, by simple imprudence or negligence, shall commit an act which would otherwise constitute a grave felony[1], shall suffer the penalty of arresto mayor in its medium and maximum periods; if it would have constituted a less serious felony, the penalty of arresto mayor in its minimum period shall be imposed.

When the execution of the act covered by this article shall have only resulted in damage to the property of another, the offender shall be punished by a fine ranging from an amount equal to the value of said damages to three times such value, but which shall in no case be less than 25 pesos.

A fine not exceeding 200 pesos and censure shall be imposed upon any person who, by simple imprudence or negligence, shall cause some wrong which, if done maliciously, would have constituted a light felony.

In the imposition of these penalties, the court shall exercise their sound discretion, without regard to the rules prescribed in article 64.

The provisions contained in this article shall not be applicable:

1. When the penalty provided for the offense is equal to or lower than those provided in the first two paragraphs of this article, in which case the court shall impose the penalty next lower in degree than that which should be imposed in the period which they may deem proper to apply.

2. When, by imprudence or negligence and with violation of the Automobile Law (Act No. 3992)[2], the death of a person shall be caused, in which case the defendant shall be punished by prision correccional in its medium and maximum periods.

xxx

The penalty next higher in degree to those provided for in this article shall be imposed upon the offender who fails to lend on the spot to the injured parties such help as may be in his hands to give. (As amended by Republic Acts Nos. 384 and, 1790, approved June 21, 1957.)”

Imprudence in decided cases

Still awake? We will try and simplify matters. If someone is killed or injured or property damaged, unintentionally, then there could be a charge for reckless or simple imprudence. One example cited by an authority is an instance where a policeman fires a warning shot into the air. Somehow he hits and kills someone. The charge is not homicide but reckless imprudence resulting in homicide. One has to make a distinction: that imprudence is not the crime, but just the means of committing it.[3]

There is also a distinction between imprudence and negligence per se. Imprudence is “failure in precaution” while “failure in advertence” or lack of due diligence is negligence.[4] But even the decided cases use the terms negligence and imprudence interchangeably. And Article 3 of the Revised Penal Code provides that “wrongful act” can result from “imprudence, negligence, lack of foresight or lack of skill.”

To further illustrate, a man was found guilty of reckless imprudence resulting in homicide when he threw a stone at a distance of ten meters and hit the victim at the back of the head. The victim subsequently died from the head injury. The victim had attacked the accused’s companion who was much smaller than the victim. Even if his intent was just to drive away the victim, he was still found guilty. The court found that the “act was committed with inexcusable lack of precaution. He failed to consider that a stone the size of a man's fist could inflict substantial injury on someone. He also miscalculated his own strength, perhaps unaware, or even completely disbelieving, that he could throw a stone with such force as to seriously injure, or worse, kill someone, at a quite lengthy distance of ten meters.” He was also found civilly liable for damages.” CALIMUTAN vs. PEOPLE, [G.R. No. 152133. February 9, 2006.]

In practice, this charge is usually made in relation to car accidents resulting in death, physical injury or damage to property. Do you ever feel the need for speed? Or do you sometimes vent your anger through aggressive driving? Do you take chances while driving? Think you can drive while drunk or drowsy? Always be mindful of the possible dreadful consequences.

In one case, a driver was sentenced to four months in prison for hitting a passenger of another vehicle that had stopped at a road shoulder. This resulted in the amputation of the passenger’s leg. A separate civil case was filed resulting in the award of damages as well. ESTACION vs. BERNARDO, et al. [G.R. No. 144723. February 27, 2006.]

The price of any lack of precaution exposes you to legal charges, having to pay damages or post bail or possibly imprisonment or all of the above. A separate civil case can be filed apart from criminal charges. So it is possible that you have to face litigation on two fronts. The worst would be having to face your own conscience, in case you took the life of another or disabled someone permanently.

Please note, however, that if there is only damage to property, the most you can get is a fine and damage, but no prison time. But when life and limb are affected, you do face imprisonment as well. Loss of liberty is something that cannot be easily measured as you can be taken away from your present life and family.

Drive (and act) carefully and safely. The lives you save may include your own.

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[1] (NB: ARTICLE 9. Grave felonies, less grave felonies and light felonies. — Grave felonies are those to which the law attaches the capital punishment or penalties which in any of their periods are afflictive, in accordance with article 25 of this Code.xxx

ARTICLE 25. Penalties which may be imposed. — The penalties which may be imposed according to this Code, and their different classes, are those included in the following:

Scale

Principal Penalties

Capital punishment:

Death.

Afflictive penalties:

Reclusion perpetua,

Reclusion temporal,

Perpetual or temporary absolute disqualification,

Perpetual or temporary special disqualification,

Prision mayor.

xxx

[2] An example is allowing a someone without a license to drive a vehicle.

[3] Reyes, The Revised Penal Code, Book II (1981), pp. 978-979.

[4] Ibid, p. 980.

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Obstruction of Justice

by Obiter07

What are you guilty of if you trip a Justice of the Court? Obstruction of Justice. Corny, yes. But it is no laughing matter where you see it in the headlines to justify the “arrest” of househelp, drivers and even relatives of the deceased in a suspected killing or suicide without warrants or apparently, formal charges.

The charge is based on a 1981 Presidential Decree “PENALIZING OBSTRUCTION OF APPREHENSION AND PROSECUTION OF CRIMINAL OFFENDERS” (P.D. No. 1829). The Decree imposes the penalty of imprisonment or a fine of up to P6,000 (Section 1) or both upon “upon any person who knowingly or willfully obstructs, impedes, frustrates or delays the apprehension of suspects and the investigation and prosecution of criminal cases by committing any of the following acts:

(a) preventing witnesses from testifying in any criminal proceeding or from reporting the commission of any offense or the identity of any offender/s by means of bribery, misrepresentation, deceit, intimidation, force or threats;

(b) altering, destroying, suppressing or concealing any paper, record, document, or object, with intent to impair its verity, authenticity, legibility, availability, or admissibility as evidence in any investigation of or official proceedings in, criminal cases, or to be used in the investigation of, or official proceedings in, criminal cases;

(c) harboring or concealing, or facilitating the escape of, any person he knows, or has reasonable ground to believe or suspect, has committed any offense under existing penal laws in order to prevent his arrest, prosecution and conviction;

(d) publicly using a fictitious name for the purpose of concealing a crime, evading prosecution or the execution of a judgment, or concealing his true name and other personal circumstances for the same purpose or purposes;

(e) delaying the prosecution of criminal cases by obstructing the service of process or court orders or disturbing proceedings in the fiscal's offices, in Tanodbayan, or in the courts;

(f) making, presenting or using any record, document, paper or object with knowledge of its falsity and with intent to affect the course or outcome of the investigation of, or official proceedings in, criminal cases;

(g) soliciting, accepting, or agreeing to accept any benefit in consideration of abstaining from, discontinuing, or impeding the prosecution of a criminal offender;

(h) threatening directly or indirectly another with the infliction of any wrong upon his person, honor or property or that of any immediate member or members of his family in order to prevent such person from appearing in the investigation of, or official proceedings in, criminal cases, or imposing a condition, whether lawful or unlawful, in order to prevent a person from appearing in the investigation of or in official proceedings in, criminal cases;

(i) giving of false or fabricated information to mislead or prevent the law enforcement agencies from apprehending the offender or from protecting the life or property of the victim; or fabricating information from the data gathered in confidence by investigating authorities for purposes of background information and not for publication and publishing or disseminating the same to mislead the investigator or the court.

If any of the acts mentioned herein is penalized by any other law with a higher penalty, the higher penalty shall be imposed.”

Based on newspaper accounts, those arrested are being charged for obstruction for “cleaning” the scene of the crime, the vehicle used to bring the victim to the hospital and the alleged weapon, a pistol. Letters (a) and (b) above seem to be the most applicable to the case.

We will not comment on whether the charges will prosper as that will be something that will ultimately be up to the prosecutor and later the courts to decide. But the manner by which people were picked up can be open to question.

If the “suspects” were arrested, this does not appear to be one of the instances where warrantless arrests are allowed. Under Rule 113 of the Rules on Criminal Procedure, a warrantless arrest is justified only in the following instances:

“Sec. 5. Arrest without warrant; when lawful. – A peace officer or a private person may, without a warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is attempting to commit an offense;

(b) When an offense has just been committed and he has probable cause to believe based on personal knowledge of facts or circumstances that the person to be arrested has committed it; and

(c) When the person to be arrested is a prisoner who has escaped from a penal establishment or place where he is serving final judgment or is temporarily confined while his case is pending, or has escaped while being transferred from one confinement to another. xxx”

Only the first and second instances could be argued to apply in this case. However, if the acts have been completed there can no longer be any arrest. There was no crime committed in the presence of the police. For the second instance, this typically envisions a “hot pursuit” after an offense has “just been committed” and there is personal knowledge on the part of the arresting officer that the person arrested has committed the same.[1]

How long a time passed between the alleged commission of the offense and the arrests seen on T.V.? Why could not the police wait to file formal charges and wait for a warrant of arrest? Could not the witnesses have been invited or questioned and not treated as accused?

We appear to have enforcers of the law who are prone to shortcuts, either out of ignorance of the law or by ignoring its requirements when it suits them. Being deprived of liberty and brought to detention is a serious matter and contravenes rights guaranteed by the Constitution. “No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws (Article III, Section 1). These rights seem empty and unenforceable now.

During this spectacle, who obstructs justice, the police who are sworn to uphold it, or the suspects who are entitled to the presumption of innocence?[2]

The Supreme Court has already issued this warning once:

“We cannot close this ponencia without a word of caution: those who are supposed to enforce the law are not justified in disregarding the rights of the individual in the name of order. Order is too high a price for the loss of liberty. As Justice Holmes once said, "I think it is less evil that some criminals should escape than that the government should play an ignoble part." It is simply not allowed in free society to violate a law to enforce another, especially if the law violated is the Constitution itself. PEOPLE vs. LAGUIO, JR., et al.[G.R. No. 128587. March 16, 2007.]

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[1] This interdiction against warrantless searches and seizures, however, is not absolute and such warrantless searches and seizures have long been deemed permissible by jurisprudence in instances of (1) search of moving vehicles, (2) seizure in plain view, (3) customs searches, (4) waiver or consented searches, (5) stop and frisk situations (Terry search), and search incidental to a lawful arrest. The last includes a valid warrantless arrest, for, while as a rule, an arrest is considered legitimate [if] effected with a valid warrant of arrest, the Rules of Court recognize permissible warrantless arrest, to wit: (1) arrest in flagrante delicto, (2) arrest effected in hot pursuit, and (3) arrest of escaped prisoners. 48 (Emphasis supplied.) PEOPLE vs. CABUGATAN, [G.R. No. 172019. February 12, 2007.]

[2] SECTION 14. (1) No person shall be held to answer for a criminal offense without due process of law. (2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy, impartial, and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witnesses and the production of evidence in his behalf. However, after arraignment, trial may proceed notwithstanding the absence of the accused provided that he has been duly notified and his failure to appear is unjustifiable.(ARTICLE III, Constitution)

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The Incredible Bulk Sales Law

By Siesta-friendly

Okay, maybe only as far as creditors are concerned. Even then … maybe not. Anyway, the Bulk Sales Law (as amended)[1] is there to protect creditors from sneaky debtors who want to unload their assets to keep them away from paying for their debts.

What’s covered

Not all assets are covered though. Only the “sale, transfer, mortgage or assignment” by the debtor of:

a) a stock of goods, wares, merchandise, provisions, or materials otherwise than in the ordinary course of trade and the regular prosecution of the business, or

b) all, or substantially all, of the business or trade, or

c) all, or substantially all, of the fixtures and equipment used in and about the business the law

are subject of the law. (Section 2) Thus, the law contemplates only those doing business, be they individuals or firms.

Who are covered

As to creditors, only those whose claims (whether due or not) existed before the sale, transfer, mortgage or assignment of the assets are protected by the law.

Exemptions

The law specifically exempts from its application the following instances:

a) any sale, transfer, mortgage or assignment by “executors, administrators, receivers, assignees in insolvency, or public officers, acting under judicial process” (Section 8), and

b) when the creditors execute sworn written waivers of the application to them (and their claims) of the provisions of the Bulk Sales Law. (Section 2)

Requirements

When the debtor is planning the sale, transfer, mortgage or assignment of the assets listed above, he/it (if a firm) must, at least 10 days before the sale, transfer or execution of the mortgage:

1) make a full detailed inventory of goods, wares, merchandise, provisions or materials involved showing the (1) quantity and, so far as is possible with the exercise of reasonable diligence, (2) the cost price of each article, and

2) notify every creditor of the price, terms and conditions of said sale, transfer, mortgage, or assignment. (Section 5)

Afterwards, the debtor (and would-be seller, transferor, mortgagor or assignor) must deliver to the buyer, transferee, mortgagee or assignee either:

a) a sworn written statement listing the (1) names and (2) addresses of all creditors together with the (3) amount of indebtedness due or owing, or to become due or owing to each creditor, followed by an (4) affirmation that “there are no creditors holding claims due or which shall become due, for or on account of goods, wares, merchandise, provisions or materials purchased upon credit or on account of money borrowed, to carry on the business of which said goods, wares, merchandise, provisions or materials are a part, other than as set forth in said statement” (Section 3), or

b) a sworn written waiver of the provisions of Bulk Sales Law executed by all creditors. (Section 2)

Prohibitions

These are the 2 specific instances prohibited under the law:

a) any sale, transfer, mortgage or assignment of the assets, for cash or on credit, without having first delivered to the buyer, transferee, mortgagee or assignee, the sworn written statement required, and “without applying the purchase or mortgage money of the said property to the pro rata payment of the bona fide claim or claims of the creditors”. (Section 4)

b) any transfer of title by the owner of any stock of goods, wares, merchandise, provisions or materials, in bulk, without consideration or for a nominal consideration only. (Section 7)

Just remember the golden rule: don’t forget the creditors because you owe them.

Consequences

A violation of the law renders the sale, transfer, mortgage or assignment void. Thus, the purchaser has no rights to the assets as against the creditors. He is a mere trustee, or receiver for the benefit of all the creditors.

An innocent purchaser for value is not liable to the creditor. The creditor can only go after those who knew that the law was violated. But remember another golden rule: ‘ignorance of the law excuses no one’ so the debtor-seller and immediate purchaser are expected to know the law’s requirements. If the law was violated, they can’t claim they weren’t aware of them.

If not all creditors were defrauded, then the sale, transfer, mortgage or assignment is void only as to those defrauded.

Penalty

Since a violation of this law is a criminal act, the penalty may be imprisonment of not less than 6 months nor more than 5 years; however, the court has discretion to instead impose a fine of not more than P5,000.00, or impose both such imprisonment and fine. If a firm, the actual perpetrators are liable. It is just unfortunate that the penalties need (much higher) adjustment.

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[1] Act No. 3952, “An Act To Regulate The Sale, Transfer, Mortgage Or Assignment Of Goods, Wares, Merchandise, Provisions Or Materials, In Bulk, And Prescribing Penalties For The Violation Of The Provisions Thereof”. December 1, 1972.

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Franchisetein (Creating and taming your Franchise Agreement)

By Siesta-friendly

Regret not knowing the hidden costs of your franchise? Missing any kind of support from your franchisor? Feeling bad for over-franchising your brand? Lamenting the low quality produced by your franchisee? Did not take your franchise agreement seriously, eh? At this point, we can only advice you to settle amicably. Litigation is usually a no-win situation.

But for those who want to avoid the horror stories, then for heaven’s sake, strive a little harder and create your own brand! Of course, if you don’t have the time but have the funds (or, if you’re a franchisor) then continue reading.

For those of you who want to franchise your business (and earn more) or those who want to get a franchise (and earn quicker), you will need a franchise agreement to protect your interests. And it is in your best interests to know (and negotiate) it from beginning to end.

No Franchise Law

Although we don’t have a franchise law to guide us, that hasn’t stopped franchises from sprouting on every other busy street corner.

FYI, the U.S. has the Franchise Rule (or the “Disclosure Requirements And Prohibitions Concerning Franchising And Business Opportunity Ventures“) to help guide the parties.

We may not have anything similar (attention lawmakers!) but the Intellectual Property Code[1](IP Code) prohibits and mandates certain provisions in Technology Transfer Agreements (TTA) and, of course, there’s always the Civil Code provisions primarily on Obligations and Contracts.

The relevant Civil Code provisions are applicable to obligations and contracts in general while the relevant IP Code provisions are specific to TTAs. Hence, we will focus on the latter (as the former may be hopelessly ambiguous for now).

Technology Transfer Agreements

The IP Code defines TTAs as “contracts or agreements involving the transfer of systematic knowledge for the manufacture of a product, the application of a process, or rendering of a service including management contracts; and the transfer, assignment or licensing of all forms of intellectual property rights, including licensing of computer software except computer software developed for mass market.” (Section 4.2) If your franchise agreement involves any of the above, then it’s a TTA covered by the IP Code.

“Prohibited Clauses”

Although Section 87 of the IP Code is titled “Prohibited Clauses”, the section specifically states that in general, the following provisions are deemed prima facie (at first appearance) to have an adverse effect on competition and trade (thus, frowned upon but not exactly prohibited if evidence can be shown to prove otherwise or exemption can be had from the Documentation, Information and Technology Transfer Bureau (DITTB of the Intellectual Property Office) explained Documentation, Information and Technology Transfer Bureau (DITTB of the Intellectual Property Office) later:

1. Those which impose upon the licensee (i.e., the franchisee) the obligation to acquire from a specific source capital goods, intermediate products, raw materials, and other technologies, or of permanently employing personnel indicated by the licensor (the franchisor);

2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the products manufactured on the basis of the license;

3. Those that contain restrictions regarding the volume and structure of production;

4. Those that prohibit the use of competitive technologies in a non-exclusive technology transfer agreement;

5. Those that establish a full or partial purchase option in favor of the licensor;

6. Those that obligate the licensee to transfer for free to the licensor the inventions or improvements that may be obtained through the use of the licensed technology;

7. Those that require payment of royalties to the owners of patents for patents which are not used;

8. Those that prohibit the licensee to export the licensed product unless justified for the protection of the legitimate interest of the licensor such as exports to countries where exclusive licenses to manufacture and/or distribute the licensed product(s) have already been granted;

9. Those which restrict the use of the technology supplied after the expiration of the technology transfer arrangement, except in cases of early termination of the technology transfer arrangement due to reason(s) attributable to the licensee;

10. Those which require payments for patents and other industrial property rights after their expiration/termination arrangement;

11. Those which require that the technology recipient shall not contest the validity of any of the patents of the technology supplier;

12. Those which restrict the research and development activities of the licensee designed to absorb and adapt the transferred technology to local conditions or to initiate research and development programs in connection with new products, processes or equipment;

13. Those which prevent the licensee from adapting the imported technology to local conditions, or introducing innovation to it, as long as it does not impair the quality standards prescribed by the licensor;

14. Those which exempt the licensor for liability for non-fulfilment of his responsibilities under the technology transfer arrangement and/or liability arising from third party suits brought about by the use of the licensed product or the licensed technology; and

15. Other clauses with equivalent effects.

Exceptions

In exceptional or meritorious cases where substantial benefits will accrue to the economy, such as high technology content, increase in foreign exchange earnings, employment generation, regional dispersal of industries and/or substitution with or use of local raw materials, or in the case of Board of Investments, registered companies with pioneer status, exemption from any of the requirements above (those prohibited) and below (those mandatory) may be allowed by the DITTB after evaluation thereof on a case by case basis. (Sec. 91)

Mandatory Provisions

Section 88 of the IP Code has only a handful of required agreement provisions:

1. That the laws of the Philippines shall govern the interpretation of the same and in the event of litigation, the venue shall be the proper court in the place where the licensee has its principal office;
2. Continued access to improvements in techniques and processes related to the technology shall be made available during the period of the technology transfer arrangement;
3. In the event the technology transfer arrangement shall provide for arbitration, the Procedure of Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) or the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the Philippines or any neutral country; and
4. The Philippine taxes on all payments relating to the technology transfer arrangement shall be borne by the licensor.

Registration of your TTA

Under Sec. 92 of the IP Code, a TTA is unenforceable if it violates Sec. 87 (Prohibited Clauses) and Sec. 88 (Mandatory Provisions) unless it is approved and registered with the DITTB for exceptional or meritorious reasons as explained above. TTAs that conform with both Sections need not be registered with the DITTB.

Common / Suggested Provisions

Now that you know, more or less, some key legal requirements, let’s list down some topics which you should either include or look out for in a franchise agreement. These are culled from practice and may or may not be applicable to your situation. Nevertheless, we’re pretty sure they are helpful.

These are:

1. franchise fee - this normally pays for your use of the franchisor’s brand and business processes (including management, operations, marketing, accounting, etc.)

2. other fees – all fees should be indicated and sufficiently explained to avoid hidden costs.

3. tax implications – to know who pays which tax.

4. franchise period – this should also cover renew conditions.

5. franchise territory – franchisor should be prohibited from granting a franchise so close to another franchisee’s territory to avoid unreasonable competition. Franchisee should seek territorial exclusivity as much as possible.

6. staff training – usually covered by the franchise fee paid.

7. continuing support – should include support for all that the franchise fee pays for.

8. sourcing requirements – franchisee should be allowed to cut costs by sourcing equipment/materials/ingredients/supplies elsewhere as long as quality standards are met.

9. warranties – sets out what either party must be able to guaranty (like freedom to enter into the agreement).

10. obligations and restrictions – these largely depend on the business but this is where franchisors should really protect their business and brand.

11. liabilities - enumerates what either party will be liable for and the consequences (say for violating the agreement)

12. reciprocal instances of default – certain actions of either party which are inimical to the other should be stopped or cured.

13. termination options – apart from the end of the franchise period, certain continuing instance/s of default should give a party the option to terminate the contract. Parties should seek an exit strategy (pre-termination or sale of franchise) due to unforeseen or unfavourable circumstances.

14. use and protection of intellectual property – another element covered by the franchise fee, thus, both parties should provide sufficient safeguard for the protection of franchisor’s tradename/trademark/other IP to prevent infringement (which could devalue the IP and eventually the business).

15. settlement of disputes – parties should be allowed to settle disputes amicably as much as possible. Reciprocal legal fees should be allowed both parties to deter unnecessary litigation.

The above should be more than sufficient guidelines in creating your franchise agreement. Anymore and you’ll have to pay our legal fees =)

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[1] Republic Act No. 8293, “An Act Prescribing The Intellectual Property Code And Establishing The Intellectual Property Office, Providing For Its Powers And Functions, And For Other Purposes”, June 6, 1997.

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