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employment and the arrangement of those terms are involved, bringing the matter within the
purview of labor dispute.
attestation requirements contained in Article 235, paragraph 2 of the Labor Code, it follows that
the Constitution and by-laws, set of officers and books of accounts submitted by the local chapter
must likewise comply with these requirements. The same rationale for requiring the submission
of duly subscribed documents upon union registration exists in the case of union affiliation.
Herein, the only document extant on record to establish the legitimacy of the NACUSIP-TUCP
Lopez Sugar Central Supervisory Chapter is a chapter certificate and nothing else.
Issue: Whether Gomez is the duly elected President of the labor organization ALPAP, as
declared by the CIR.
(BGs issue: Whether membership in the labor organization ALPAP is necessarily limited to
employees of the particular employer PAL)
Topic: Definitions; Labor Organization - Legitimate Labor Organization
Held: The Supreme Court cannot subscribed to the restrictive interpretation made by the CIR of
the term labor organization which is defined as any union or association of employees which
exists in whole or in part for the purpose of collective bargaining or of dealing with employers
concerning terms and conditions of employment. The absence of the condition which the court
below would attach to the statutory conscept of a labor organization, as being limited to the
employees of a particular employer, is quite evident from law. The emphasis of the Industrial
Peace Act is clearly on the purpose for which a union or association of employees is established
rather than that membership therein should be limited only to the employees of a particular
employer. Trite to say, under section 2 (h) of RA 875, representative is defined as including a
legitimate labor organization or any officer or agent of such organization, whether or not
employed by the employer or employee whom he represents. Moreover, the election of Gomez
as ALPAP President is not valid. He was elected at a meeting of only 45 members called just one
day after Gastons election who received a majority of 180 votes out of 270 members. A labor
union, however, may authorize a segment thereof to bargain collectively with the employer and
in the exercise of such authority to have custody of the unions funds, office and name. Having
given Gomez the authority to enter and conclude bargaining contrafcts with PAL, it would be
unreasonable to disallow Gomez a certain use of the office, funds and name of ALPAP when
such use is necessary or would be required to enable ALPAP to exercise, in a proper manner, its
delegated authority to bargain collectively with PAL.
presidential certification is violative of Section 10 of the Industrial Peace Act, as the University
is not an industrial establishment, and there was no industrial dispute which could be certified to
the CIR; and (3) that since it is not an industrial establishment, hence, it is not an employer in
contemplation of the Industrial Peace Act.
Issue: Whether FEATI University, an educational institution, is not an employer and the
members of the Faculty Club, are not employers within the purview of the Industrial Peace
Act.
Topic: Definitions; Employer and Employee
Held: [N] The Court of Industrial Relations has jurisdiction over unfair labor practice charges
against educational institutions that are organized, operated and maintained for profit. Industrial
Peace Act is applicable to any organization or entity whatever may its purpose when it was
created that is operated for profit or gain. Congress, in the Industrial Peace Act, did not intend
to give a complete definition of employer, but rather that the definition in Section 2 (c) of the
law to be complementary to what is commonly understood as employer.
Educational institutions, that are operated for profit, are included within the term employer as
contemplated in the Industrial Peace Act, since they are not among the seceptions metioned in
Section 2 (c) of the law. An employer is one who employs the services of others; one for whom
employees work and who pays their wages or salaries. A University that engaged the services of
the professors, provided them work, and paid them compensation or salary for their services,
even if it considers itself as a mere lessee of services under a contract between it and the
members of said professors. For the purposes of the Industrial Peace Act the University is an
industrial establishment because it is operated for profit and it employs persons who work to earn
a living. The term industry, for the purposes of the application of our labor laws should be
given a broad meaning so as to cover all enterprises which are operated for profit and which
engage the services of persons who work to earn a living. Professors and instructors, who are
under contract to teach particular courses and are paid for their services, are employees under the
Industrial Peace Act. Striking professors and/or instructors of the University are employees
because striking employees retain their status as employees. Professors and instructors are not
independent contractors. The Court takes judicial notice that a university controls the work of the
members of its faculty; that a university prescribes the courses or subjects that professors teach,
and when and where to teach; that the professors work is characterized by regularity and
continuity for a fixed duration; that professors are compensated for their services by wages and
salaries, rather than by profits; that the professors and/or instructors cannot substitute others to
do their work without the consent of the university; and that the professors can be laid off if their
work is found not satisfactory. All these indicate that the university has control over their work;
and professors are, therefore, employees and not independent contractors.
employee for his offense. The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged.
condition of the laborers in the sugar plantation. Having in view its primary objective, to
promote the interests of the labor, it can never be possible that the State would be bereft of
constitutional authority to enact legislations of its kind. the imperious mandate of the social
justice ideal consecrated in our fundamental laws, asserts its majesty, calling upon the courts to
accord utmost consideration to the spirit animating the act assailed, not just for the sake of
enforcing the explicit social justice provisions of the article on Declaration of Principles and
State Policies, but more fundamentally, to serve the sacred cause of human dignity, which is
actually what lies at the core of those constitutional precepts as it is also the decisive element
always in the determination of any controversy between capital and labor. RA 809, which
provides for bigger shares to the planters in the big milling districts than those in the small
milling districts, does not violate the equal protection clause considering that the more a central
produces, the bigger could be its margin of profit which can be correspondingly cut for the
purpose of enlarging the share of the planters.
Held: A party need not exhaust administrative remedies before going to Court, when questioning
the validity or constitutionality of a rule or regulation issued by an administrative agency. The
principle only applies when the act of the agency was performed pursuant to its quasi-judicial
function, and not when the assailed and pertained to its rule-making or quasi-legislative power.
Issue: Whether the court or NTC has jurisdiction over the issues pertaining to the memoranda.
Held: The issues raised in the complaint do not entail highly technical matters, and thus are
within the competence of a judge in the lower court. What is required of the judge who will
resolve the issue is a basic familiarity with the workings of the cellular telephone service,
including pre-paid SIM and call cards (which is within the knowledge of a good percentage of
the Philippine population) and expertise in fundamental principles of civil law and the
Constitution.
the case to the Court of Appeals pursuant to Paragraph 1, Section 9 of BP 129. The Court of
Appeals granted BellTels position. Hence, the petitions for review by the opposing
telecommunication companies and Commissioner Kintanar.
Issue: Whether the vote of the Chairman of the Commission is sufficient to legally render an
NTC order, resolution or decision.
Held: Having been organized under Executive Order 146 as a three-man commission, the NTC
is a collegial body and was a collegial body even during the time it was acting as a one-man
regime. NTC is a collegial body requiring a majority vote out of three members of the
commission in order to validly decide a case or any incident therein. The vote alone of the
chairman of the Commission, absent the required concurring vote coming from the rest of the
membership of the commission to at least arrive at a majority decision, is not sufficient to legally
render an NTC order, resolution or decision. NTC Circulars 1-1-93, 3-1-93 and the Order of
Kintanar, declaring the NTC as a single entity or non-collegial entity, are contrary to law and
thus are null and void.
Held: The ERB has the power to fix rates to be charged by public utilities involved in the
distribution of electricity, under Executive Order 172. What is just, reasonable rate is a question
of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent
judgment. In determining the just and reasonable rates to be charged by a public utility, the
regulating agency must consider the rate of return, the rate base, and the return itself or the
computed revenue to be earned by the public utility based on the rate of return and rate base.
Aside from the financial condition of the public utility, particular reasons involved for the
request of the rate increase, the quality of the services rendered by the public utility, the existence
of competition, the element of risk or hazard involved in the investment, the capacity of
consumers, etc. should be considered for the purpose of rate regulation. Herein, the factual
findings of the administrative body should be accorded great respect, even finality, if supported
by substantial evidence. To the extent that the agency has not been arbitrary or capricious in the
exercise of its powers, the courts should not interfere.
Issue: Whether income tax may be shifted to the public utilitys customer.
Held: Income tax should be borne by the taxpayer alone as they are payments made in exchange
for benefits received by the taxpayer from the State. No benefit is derived by the customers of a
public utility for such entity and no direct contribution is made by the payment of income tax to
the operation of a public utility for purposes of generating revenue or profit. Thus, the burden of
paying income tax should be Meralcos alone and should not be shifted to the customers by
including the same in the computation of its operating expenses.
Issue: Whether the net average investment method or the trending method should be used in
determining the tax base.
Held: The administrative agency is not bound to apply any one particular formula or method
simply because the same method has been previously used and applied. What constitutes a
reasonable return for the public utility is necessarily determined and controlled by its peculiar
environmental milieu. The reasonableness of the net average investment method is borne by the
records of the case. By using the said method, the ERB and COA considered for determination of
the rate base the value of the properties and equipment used by Meralco in proportion to the
period that the same were actually used during the period in question. If the trending method is
to be applied, the public utility may easily manipulate the valuation of its property entitled to a
return (tax base) by simply including a highly capitalized asset in the computation of the rate
base even if the same was used for a limited period if time during the test year.
ultimate, considerations. To these public and national interests, public utility companies must
yield.
The NTC order does not deprive PLDT due process as it allows the parties themselves to discuss
and agree upon the specific terms and conditions of the interconnection agreement instead of the
NTC itself laying down the standards of interconnection which it can very well impose.
On the other hand, there has been no evidence that Pearl & Deans use of Poster Ads was
distinctive or well known. Poster Ads was too generic a name to identify it to a specific
company or entity. Poster Ads was generic and incapable of being used as a trademark
because it was used in the field of poster advertising, the very business engaged by earl & Dean.
Furthermore, Pearl & Deans exclusive right to the use of Poster Ads is limited to what is
written in its certificate of registration. Shoemart, et. al. cannot be held liable for the
infringement of the trademark.
Facts: Fruit of the Loom is the registrant of the trademark Fruit of the Loom, while General
Garments corp. is the registrant of the trademark Fruit for Eve. Both trademarks cover
clothing. In 1976,k Fruit of the Loom filed with the trial court a complaint for infringement and
unfair competition against General Garments. The trial court ruled in favor of Fruit of the
Loom. General Garments appealed. The appellate court reversed the trial courts decision.
Hence, the petition for review on certiorari.
Issue: Whether there was an infringement of the trademark of Fruit of the Loom.
Held: No. The trademarks Fruit of the Loom and Fruit for Eve do not resemble each other
as to confuse or deceive an ordinary purchaser. No confusion would arise in the pronunciation of
the two marks. Further, the similarities of the competing trademarks are completely lost in the
substantial difference in the design and general appearance of their respective hang tags. For one
to be confusingly similar to another, the discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing in the labels.
Issue: Whether the proceedings before the patent office is a prejudicial question that need to be
resolved before the criminal action for unfair competition may be pursued.
Held: No. The proceedings pending before the Patent Office do not partake of the nature of a
prejudicial question which must first be definitely resolved. The case which suspends the
criminal action must be a civil case, not a mere administrative case, which is determinative of the
innocence or guilt of the accused. The issue whether a trademark used is different from
anothers trademark is a matter of defense and will be better resolved in the criminal proceedings
before a court of justice instead of raising it as a preliminary matter in an administrative
proceeding.
Inasmuch as the goodwill and reputation of La Chemise Lacoste products date back even before
1964, Hemandas cannot be allowed to continue the trademark Lacoste for the reason that he
was the first registrant in the Supplemental Register of a trademark used in international
commerce. Registration in the Supplemental Register cannot be given a posture as if the
registration is in the Principal Register. It must be noted that one may be declared an unfair
competitor even if his competing trademark is registered. La Chemise Lacoste is world
renowned mark, and by virtue of the 20 November 1980 Memorandum of the Minister of Trade
to the director of patents in compliance with the Paris Convention for the protection of industrial
property, effectively cancels the registration of contrary claimants to the enumerated marks,
which include Lacoste.
Held: No. Pagasa has not shown any semblance of justification for usurping the trademark
YKK. In fact, Pagasa knew prior to 1968 that Yoshida was the registered owner and user of the
YKK trademark, which is an acronym of its corporate name. The registration of Pagasa was
admittedly a mistake. Pag-asas application should have been denied outright. Further, Pagasas knowledge of the trademarks prior use precludes the application of the equitable principle
of laches, estoppel and acquiescence. He who comes into equity must come with clean hands.
Sat 4 Sep 2004
eventually, ruled against Kabushi Kaisha Isetan. It appealed to the intermediate Appellate
Court, which denied the petition for being filed out of time.
Issue: Whether Kabushi Kaisha Isetan has the right to seek for the cancellation of the word
Isetan from the corporate name of Isetann Department Store.
Held: No. A Fundamental principle in Trademark Law is that the actual use in commerce in the
Philippines is a pre-requisite to the acquisition of ownership over a trademark or a tradename.
Kabushi Kaisha Isetan has never conducted any business in the Philippines. It has never
promoted its trademark or tradename in the Philippines. It has absolutely no business goodwill
in the Philippines. It is unknown to Filipinos except the very few who may have noticed it while
traveling abroad. It has never paid a single centavo of tax to the Philippine Government. Under
the law, it has no right to the remedy it seeks. Isetann Department Store is entitled to use its
trademark in the Philippines.
IPL-d: Sterling Products Vs. Farbenfabriken Bayer (GR L19906, 30 April 1969)
Posted by Berne Guerrero under (a) oas , digests
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Sterling Products Vs. Farbenfabriken Bayer
GR L-19906, 30 April 1969; En Banc, Sanchez (J).
Facts: The Bayer Cross in circle trademark was registered in Germany in 1904 to
Farbenfabriken vorm. Friedr. Bayer (FFB), successor to the original Friedr. Bauyer et. Comp.,
and predecessor to Farbenfabriken Bayer aktiengessel craft (FB2). The Bayer, and Bayer
Cross in circle trademarks were acquired by sterling Drug Inc. when it acquired FFBs
subsidiary Bayer Co. of New York as a result of the sequestration of its assets by the US Alien
Property Custodian during World War I. Bayer products have been known in Philippines by the
close of the 19th century. Sterling Drugs, Inc., however, owns the trademarks Bayer in relation
to medicine. FBA attempted to register its chemical products with the Bayer Cross in circle
trademarks. Sterling Products International and FBA seek to exclude each other from use of the
trademarks in the Philippines. The trial court sustained SPIs right to use the Bayer trademark
for medicines and directed FBA to add distinctive word(s) in their mark to indicate their products
come from Germany. Both appealed.
Issue: Whether SPIs ownership of the trademarks extends to products not related to medicine.
Held: No. SPIs certificates of registration as to the Bayer trademarks registered in the
Philippines cover medicines only. Nothing in the certificates include chemicals or insecticides.
SPI thus may not claim first use of the trademarks prior to the registrations thereof on any
product other than medicines. For if otherwise held, a situation may arise whereby an applicant
may be tempte3d to register a trademark on any and all goods which his mind may conceive
even if he had never intended to use the trademark for the said goods. Omnibus registration is
not contemplated by the Trademark Law. The net result of the decision is that SPI may hold on
its Bayer trademark for medicines and FBA may continue using the same trademarks for
insecticide and other chemicals, not medicine.
The formula fashioned by the lower court avoids the mischief of confusion of origin, and does
not visit FBA with reprobation and condemnation. A statement that its product came from
Germany anyhow is but a statement of fact.
Facts: 17 parcels of land (Guiguinto, Bulacan) were inherited by Mariano L. Bernardo from his
father. Socorro Roldan, his stepmother, was appointed by the court as his guardian. Roldan was
able to secure permission later on to sell his wards property for the alleged purpose of investing
the proceeds thereof in a residential house in Manila, to which Mariano allegedly desired. Roldan
sold the parcels of land to his brother-in-law Dr. Fidel C. Ramos, to which a judicial
confirmation of the sale was obtained. The next day, Ramos executed a deed of conveyance
covering the same parcels for the sum of P15,000. Two months later, Roldan sold 4 parcels to
Emilio Cruz for P3,000, reserving to herself the right to purchase. The Philippine Trust Company
replaced Roldan as guardian a year later, and thereafter, filed a complaint in the lower court to
annul the contracts regarding the parcel of land pursuant to the prohibitions provided in Article
1459. The trial court upheld the validity of the contracts but allowing the minor to repurchase the
land for P15,000 within one year.
Issue: Whether the contracts of sale involving the 17 parcels of land are valid.
Held: The three contracts of sale are void; the first two for violation of article 1459 of the Civil
Code; and the third because Roldan could pass no title to Emilio Cruz. The annulment carries
with is (Article 1303 Civil Code) the obligation of Roldan to return the 17 parcels together with
their fruits and the duty of the minor, through his guardian to repay P14,700 with legal interest.
Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any
inducement to neglect his wards interest and in line with the courts suspicion whenever the
guardian acquires the wards property, the Court has no hesitation to declare that, in the eyes of
the law, the guardian (Roldan) took by purchase her wards parcels (thru Dr. Ramos), and that
Article 1459 of the Civil Code applies. The reconveyance of the property to Roldan after being
sold to her brother-in-law within a week of each other, or a day after the judicial confirmation of
sale was obtained, raises suspicions. Even if arguendo she acted without malice, the temptation
which naturally besets a guardian so circumstanced, necessitates the annulment of the
transaction, even if no actual collusion is proved (so hard to prove) between such guardian and
the intermediate purchaser. This would uphold a sound principle of equity and justice.
lawyer by profession. Rubias declared the land for taxation purposes under various tax
declarations and land taxes. The CA likewise dismissed Militantes application. Meanwhile,
other claimants declared the same land for taxation purposes (tax declaration and land tax), one
of whom is Isaias Batiller. In 1960, Rubias filed a forcible entry case against Batiller before the
municipal court, which the latter ruled in favor of Batiller. Rubias appealed to the CFI, which
affirmed the judgment in favor of Batiller. In 1964, Rubias filed a suit to recover ownership and
possession of land to claim portions of lot, bought from Militante, which were occupied by
Batiller. The lower court (CFI) dismissed the case. Rubias appealed to the Court of appeals
which certified the appeal to the Supreme Court for involving purely legal questions.
Issue: Whether the sale of the lot by Francisco Militante to his son-in-law Domingo Rubias is
valid for the latter to claim ownership over said lot
Held: The purchase by a lawyer of the property in litigation from his client is categorically
prohibited by Article 1491, paragraph (5) of the Civil Code, and that consequently, Rubias
purchase of the property in litigation from his father-in-law was void and could produce no legal
effect (Article 1409 [7] of the Civil Code). It is void and not voidable (as the 1929 case of
Director of Lands v. Abagat which declared such purchase void superceded the 1911 case of
Wolfson v. Estate of Martinez which declared such purchase mere voidable). The nullity of
prohibited contracts is definite and permanent and cannot be cured by ratification. The public
interest and public policy remain paramount and do not permit of compromise or ratification.
However, when the causes of nullity which have ceased to exist, a second contract may be
executed and would then be valid from its execution; however, it does not retroact to the date of
the first contract.
Still, Rubias complaint, to be declared absolute owner of the land and to be restored to
possession thereof with damages, was bereft of any factual or legal basis. The CAs final
judgment affirming the dismissal of Militantes application of registration made it conclusive that
Militante lack rightful claim or title to the land. There was no right or title to the land that could
be transferred or sold by Militantes purported sale in favor of Rubias in 1956.
Sun 4 Apr 2004
abroad. She became a victim of an unscrupulous illegal recruiter. While she was in Manila, her
husband sold the remaining half of the property to the Guiangs, even if the latter held the letter of
Gildas protestations over said sale. To cure the defect in the husbands title over the land,
Luzviminda Guiang executed another agreement over the lot with the widow of Manuel Callejo
(Manuela Jimenez). A week after, Gilda returned to Koronodal and gathered her children, living
in different households, and stayed at their house. The Guiangs filed a complaint against Gilda
with the barangay authorities for trespassing. An amicable settlement was signed before the
barangay captain, requiring Gilda and her family to vacate the premises free of charge. Gilda,
alleging coercion and misrepresentation, sought to annul said document, to no avail. Gilda, then,
filed an amended complaint against her husband and the Guiangs, seeking that the court declare
the deed of sale involving the conjugal property null and void. The lower court (RTC) ruled in
favor of Gilda Corpuz but ordered her to pay the amounts paid as unpaid balance for the lot and
the realty taxes incurred by the Guiangs. The appellate court affirmed said ruling.
Issue: Whether the sale made by Judie Corpuz to Antonio and Luzviminda Guiang is valid.
Held: The contract of sale of the conjugal property is void because the written consent of one
spouse is absent or totally inexistent; pursuant to the amendatory effect made by the Family Code
(Article 124), which was made effective 3 August 1988 and which covers the encumbrance or
the alienation of the conjugal property in the present case. Encumbrance or alienation of conjugal
property by one spouse without the consent of the other spouse is no longer voidable (as it was
under Article 166 in relation to Article 173 of the Civil Code).
Under the Family Code, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer is withdrawn by
either or both offerors. The amicable settlement agreed by the parties merely states that Gilda
and family are to vacate the property, and does not state an acceptance of the continuing offer.
quieting of title and damages against Mercedes, after the former was unable to take possession of
the house and lot. The trial court (CFI) ruled in favor of Daguines, ruling that she is the owner of
of the land as well as of the house erected on said land. Upon reconsideration, the judgment
was modified wherein Daguines is the owner of the land and 10 coconut trees thereon, and the
sale of the conjugal house including 3 coconuts and other crops planted during the conjugal
relation of the spouses is null and void.
Issue: Whether the sale made by Fernando Canullas to Corazon Daguines was valid.
Held: The contract of sale was null and void for being contrary to morals and public policy,
pursuant to Article 1409 of the Civil Code. The sale was made by a husband in favor of a
concubine after he had abandoned his family and left the conjugal home where his wife and
children lived and from whence they derived their support. That sale was subversive of the
stability of the family, a basic social institution which public policy cherishes and protects.
the face of the contract should be regarded as dealers or traders talk which cannot bind either
party. Not every concealment is fraud, short of fraud, and such as that in this case, is considered
as business acumen.
Romero v. CA
250 SCRA 15
Facts: Virgilio Romero and his foreign partners decided to put up a central warehouse in Metro
Manila. Alfonso Flores, in behalf of Enriqueta Chua vda. De Ongsiong, proposed the latters lot
to Romero as the site for the said warehouse. A contract denominated as Deed of Conditional
Sale was executed between Romero and Ongsiong where the amount of P50,000 was received
from Romero for the purpose of taking up am ejectment case against the squatters found therein.
Ongsiong sought to return the amount she received from Romero as she claimed she is unable to
rid the land of squatters, notwithstanding the favorable judgment already promulgated by the
court in the ejectment case. Romeros counsel refused the tender and expressed willingness to
underwrite the expense of executing the judgment chargeable to the purchase price of the land.
Ongsiong filed a case with the trial court for the rescission of the deed of conditional sale, and
for the consignation of the amount of P50,000. The trial court rendered a decision in favor of
Romero, which was reversed by the Court of Appeals.
Issue: Whether the Deed of Conditional Sale is a perfected contract of sale
Held: The deed of sale, even if denominated as a deed of conditional sale, may be treated as
absolute in nature, especially if title to the property sold is not reserved in the vendor or if the
vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or
non-fulfillment of the prescribed condition. In determining the real character of contract, the
substance and not the title given by the party is more significant. Upon perfection, i.e. where the
seller obligates himself, for a price certain, to deliver and to transfer ownership of a specific
thing or right to the buyer over which the latter agrees, the parties are bound not only to the
fulfillment of what was expressly stipulated but also the consequences which may be in keeping
with good faith, usage and law. Being a perfected contract of sale, no rescission can be had. The
proper action is an action for damages. Arguendo that rescission is available as a remedy, as
provide by Article 1191 in reciprocal obligations, it may only be availed of by the injured party.
name. Upon the registration of the property to name of the heirs, the Coronels sold the same
property to Catalina B. Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz
by depositing the downpayment amount in a bank account in favor of Alcaraz. Alcaraz filed a
complaint for specific performance, which the trial and the appellate court ruled in her favor.
Issue: Whether the receipt of downpayment serves a contract to sell or a conditional contract
of sale.
Held: The agreement is a contract of sale as there was no express reservation of ownership or
title to the subject parcel of land. Petitioners did not merely promise to sell the property to
private respondent upon the fulfillment of the suspensive condition but on the contrary, having
already agreed to sell the subject property, they undertook to have the certificate of title changed
to their names and immediately thereafter, to execute the written deed of absolute sale. The
suspensive condition was fulfilled on 6 February 1985 and thus, the conditional contract of sale
between the parties became obligatory, the only act required for the consummation thereof being
the delivery of the property by means of the execution of the deed of absolute sale in a public
instrument, which petitioners unequivocally committed themselves to do as evidenced by the
Receipt of Down Payment.
was a resident of Makati while Uy was a resident of Caloocan City; the place of business of the
alleged partnership is in Malabon; the drawee bank was located in Malabon; and the checks were
all deposited for collection in Makati.
personal checks in the name of Go Lak and MS Development Trading Corporation. Both checks
bounced due to insufficiency of funds. Tan filed a suit for damages against RCBC.
Issue: Whether a cashiers check is as good as cash, so as to have funded the two checks
subsequently drawn.
Held: An ordinary check is not a mere undertaking to pay an amount of money. There is an
element of certainty or assurance that it will be paid upon presentation; that is why it is perceived
as a convenient substitute for currency in commercial and financial transactions. Herein, what is
involved is more than an ordinary check, but a cashiers check. A cashiers check is a primary
obligation of the issuing bank and accepted in advance by its mere issuance. By its very nature, a
cashiers check is a banks order to pay what is drawn upon itself, committing in effect its total
resources, integrity and honor beyond the check. Herein, PCIB by issuing the check created an
unconditional credit in favor any collecting bank. Reliance on the laymans perception that a
cashiers check is as good as cash is not entirely misplaced, as it is rooted in practice, tradition
and principle.
Stelco came into possession of it in some way. Stelco cannot thus be deemed a holder of the
check for value as it does not meet two essential requisites prescribed by the statute, i.e. that it
did not become the holder of it before it was overdue, and without notice that it had been
previously dishonored, and that it did not take the check in good faith and for value.
bank in form of export advances and letters of credit or trust receipts accommodations. Three
years after, the bank filed an action to recover the sums of money covered by the promissory
notes. Worldwide Garment Manufacturing changed its name to Pinch Manufacturing Corp.
Canlas alleged he was not liable personally for the corporate acts that he performed, and that the
notes were still blank when he signed them.
Issue: Whether the corporate treasurer is liable for the amounts in the promissory notes.
Held: Canlas is a co-maker of the promissory notes, under the law, and cannot escape liability
arising therefrom. Inasmuch as the instrument contained the words I promise to pay and is
signed by two or more persons, said persons are deemed to be jointly and severally liable
thereon. As the promissory notes are stereotype ones issued by the bank in printed form with
blank spaces filled up as per agreed terms of the loan, following customary procedures, leaving
the debtors to do nothing but read the terms and conditions therein and to sign as makers or comakers. Section 14 of the Negotiable Instruments Law, therefore, does not apply. Canlas is
solidarily liable with the corporation for the amount of the 9 promissory notes.
it to the bank for payment. Her failure to do so makes her liable for the loss and the Bank may
recover from her the money she received for the check. Had she performed her duty, the forgery
would have been detected and fraud defeated. Even if she turned over the amount to Dominguez
immediately after receiving the cash proceeds of the check, she is liable as an accommodation
party under Section 29 of the Negotiable Instruments Law.
loan was signed by Toribio. The Prudencios also signed the portion of the note indicating that
they are requesting the PNB to issue the check covering the loan to the Company. Jose Toribio
executed the Deed of Assignment assigning all payments made by the Bureau to the company
on account of the Puerto Princesa building project in favor of PNB. The Bureau, however,
conditioned that the payment should be for labor and materials. The Prudencios wrote PNB that
since PNB authorized payments to the Company where there were changes in the conditions of
the contract without their knowledge, they seek to cancel the mortgage contract. Failing to cancel
the mortgage, they filed suit to cancel the same.
Issue: Whether the Prudencios were solidary co-debtors or sureties as a result of being
accommodation makers.
Held: In lending his name to the accommodated party, the accommodation party is in effect a
surety. However, unlike in a contract of suretyship, the liability of the accommodation party
remains not only primary but also unconditional to a holder for value such that even if the
accommodated party receives an extension of the period of payment without the consent of the
accommodation party, the latter is still liable for the whole obligation and such extension does
not release him because as far as the holder for value is concerned, he is a solidary co-debtor.
Consequently, the Prudencios cannot claim to have been released from their obligation simply
because the time of payment of such obligation was temporarily deferred by PNB without their
knowledge and consent. To be freed of obligation, it is thus necessary to determine if PNB, the
payee of the promissory note, is a holder in due course. Herein, PNB was an immediate party or
in privy to the note, besides that it dealt directly with the Prudencios knowing fully well that they
are accommodation makers. The general rule that a payee may be considered a holder in due
course does not apply to PNB.
of the principal sum, plus interest and damages. The trial court rendered judgment in favor of
Ponce. The Court of Appeals affirmed the decision of the trial court. On the second motion for
reconsideration, however, the appellate court reversed the judgment and opined that the intent of
the parties was that the note was payable in US dollars which is illegal, with neither party
entitled to recover under the in pari delicto rule.
Issue: Whether an agreement to pay in dollars defeat a creditors claim for payment.
Held: If there is an agreement to pay an obligation in a currency other than Philippine legal
tender, the same is illegal / null and void as contrary to public policy, pursuant to RA 529, and
the most that can be demanded is to pay the said obligation in Philippine currency. It cannot
defeat a creditors claim for payment, for such will allow a person to enrich himself inequitably
at anothers expense. What RA 529 prohibits is the payment of an obligation in dollars. A
creditor cannot oblige the debtor to pay in dollars, even if the loan was given in said currency. In
such case, the indemnity is expressed in Philippine currency on the basis of the current rate of
exchange at the time of payment.
Held [2]: In determining the relative rights of a drawee who, under a mistake of fact, has paid,
and a holder who has received such payment, upon a check to which the name of the drawer is
forged, it is only fair to consider the question of diligence or negligence contributed to the
success of the fraud or to mislead the drawee. To entitle the holder of a forged check to retain the
money obtained thereon, there must be a showing that the duty to ascertain the genuineness of
the signature rested entirely upon the drawee, and that the constructive negligence of such
drawee in failing to detect the forgery was not affected by any disregard of duty on the part of the
holder, or by failure of any precaution which, from his implied assertion in presenting the check
as a sufficient voucher, the drawee had the right to believe he had taken. Under the circumstance
of the case, if the PNB is allowed to recover, there will be no change of position as to the injury
or prejudice of the Motor Service Co.
Facts: Enrique Montinola sought to purchase from the Manila Post Office 10 money orders
(P200 each), offering to pay for them with a private check. Montinola was able to leave the
building with his check and the 10 money orders without the knowledge of the teller. Upon
discovery, message was sent to all postmasters and banks involving the unpaid money orders.
One of the money orders was received by the Philippine Education Co. as part of its sales
receipt. It was deposited by the company with the Bank of America, which cleared it with the
Bureau of Post. The Postmaster, through the Chief of the Money Order Division of the Manila
Post Office informed the bank of the irregular issuance of the money order. The bank debited the
account of the company. The company moved for reconsideration.
Issue: Whether postal money orders are negotiable instruments.
Held: Philippine postal statutes are patterned from those of the United States, and the weight of
authority in said country is that Postal money orders are not negotiable instruments inasmuch as
the establishment of a postal money order is an exercise of governmental power for the publics
benefit. Furthermore, some of the restrictions imposed upon money order by postal laws and
regulations are inconsistent with the character of negotiable instruments. For instance, postal
money orders may be withheld under a variety of circumstances, and which are restricted to not
more than one indorsement.
Held: The mere fact that forgery was committed by a drawer-payors confidential employee or
agent, who by virtue of his position had unusual facilities to perpetrate the fraud and imposing
the forged paper upon the bank, does not entitle the bank to shift the loss to the drawer-payor, in
the absence of some circumstance raising estoppel against the drawer. The rule applies to checks
fraudulently negotiated or diverted by the confidential employees who hold them in their
possession.
In GRs 121413 and 121479, PCIBank failed to verify the authority of Mr. Rivera to negotiate the
checks. Furthermore, PCIBanks clearing stamp which guarantees prior or lack of indorsements
render PCIBank liable as it allowed Citibank without any other option but to pay the checks.
PCIBank, being a depository / collecting bank of the BIR, had the responsibility to make sure
that the crossed checks were deposited in Payees account only as found in the instrument.
In GR 128604, on the other hand, the switching operation involving the checks, while in transit
for clearing, were the clandestine or hidden actuations performed by the members of the
syndicate in their own personal, covert and private capacity; without the knowledge nor official
or conscious participation of PCIBank in the process of embezzlement. Central Bank Circular
580 (1977), however, provide d that any theft affecting items in transit for clearing are for the
account of the sending bank (herein PCIBank). Still, Citibank was likewise negligent in the
performance of its duties as it failed to establish its payment of Fords checks were made in due
course and legally in order. The fact that drawee bank did not discover the irregularity
seasonably constitutes negligence in carrying out the banks duty to its depositors.
Nego-d: Philippine Bank of Commerce vs. Aruego (GR L25836-37, 31 January 1981)
Posted by Berne Guerrero under (a) oas , digests
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Philippine Bank of Commerce vs. Aruego
GR L-25836-37, 31 January 1981
First Division, Fernandez (J)
Facts: Jose Aruego publishes a periodical called World Current Events. To facilitate payment
of the printing, Aruego obtained a credit accommodation from the Philippine Bank of
Commerce. For every printing of the periodical, the printer (Encal Press and Photo-Engraving)
collected the cost of printing by drawing a draft against the bank, said draft being sent later to
Aruego for acceptance. As an added security for the payment of the amounts advanced to the
printer, the bank also required Aruego to execute a trust receipt in favor of the bank wherein
Aruego undertook to hold in trust for the bank the periodicals and to sell the same with the
promise to turn over to the bank the proceeds of the sale to answer for the payment of all
obligations arising from the draft. The bank instituted an action against Aruego to recover the
cost of printing of the latters periodical for the period of 28 August 1950 to 14 March 1951.
Issue [1]: Whether the drafts were bills of exchange or mere pieces of evidence of indebtedness.
Held [1]: Under the Negotiable Instruments Law, a bill of exchange is an unconditional order in
writing addressed by one person to another, signed by the person giving it, requiring the person
to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain
in money to order or to bearer. As long as a commercial paper conforms with the definition of a
bill of exchange, that paper is considered a bill of exchange. The nature of acceptance is
important only in the determination of the kind of liabilities of the parties involved, but not in the
determination of whether a commercial paper is a bill of exchange or not.
Issue [2]: Whether Aruego is an agent of Philippine Education Foundation Company when he
signed the supposed bills of exchange.
Held [2]: Nowhere in the drafts accepted by Aruego that he disclosed that he was signing as
representative of the Philippine Education Foundation Company. For failure to disclose his
principal, Aruego is personally liable for the drafts he accepted, pursuant to Section 20 of the
Negotiable Instruments Law.
Issue [3]: Whether Aruego is primarily liable.
Held [3]: An accommodation party is one who has signed the instrument as maker, drawer,
acceptor, indorser, without receiving value therefor and for the purpose of lending his name to
some other person. Herein, Aruego signed as a drawee / acceptor. Under the Negotiable
Instruments Law, a drawee is primarily liable. If Aruego intended to be secondarily liable only,
he should not have signed as an acceptor / drawee. In doing so, he became primarily and
personally liable for the drafts.
by the drawee bank, Traders Royal Bank, for insufficiency of funds. Notwithstanding receipt of
the notice of dishonor, Tuanda made no effort to settle her obligation. Criminal cases were filed,
wherein she was acquitted of estafa but was found guilty of violation of BP 22. The appellate
court affirmed the decision of the trial court and imposed further suspension against Tuanda in
the practice of law, on the ground that the offense involves moral turpitude.
Issue: Whether violation of BP 22 involves moral turpitude to allow the suspension of a member
of the bar from the practice of law.
Held: Conviction of a crime involving moral turpitude relates to and affects the good moral
character of a person convicted of such offense. Herein, BP 22 violation is a serious criminal
offense which deleteriously affects public interest and public order. The effects of the issuance of
a worthless check transcends the private interest of parties directly involved in the transaction
and touches the interest of the community at large. Putting valueless commercial papers in
circulation, multiplied a thousand fold, can very well pollute the channels of trade and
commerce, injure the banking system and eventually hurt the welfare of society and the public
interest. The Court affirmed the suspension of Tuanda from the practice of law.
inimical to public welfare. BP 22 applies even where the dishonored checks were issued merely
in the form of a deposit or a guaranty and not as actual payment, as the law does not make any
distinction. On the other hand, the checks were not payment for a pre-existing obligation nut as
consideration for each shipment of rice. The checks were issued as an inducement for the
surrender by the party deceived of her property. Reyes made good 3 of the checks, giving
assurance to Garcia that the remaining checks were fully funded. Her failure to make good the
checks raised the prima facie inference of deceit.
Facts: Mercedes D. Navarro was convicted of violating Batas Pambansa Bilang 22 (BP 22) in
the Regional Trial Court of Pangasinan. She failed to file her brief on appeal. She claimed to
have made payment to the original complainants saleslady when she filed a motion for new trial
on the ground of newly discovered evidence. Such motion was denied.
Issue: Whether Navarro is indeed guilty of violating the bouncing check law.
Held: Payment of the value of the check either by the drawer or by the drawee bank within 5
banking days from notice of dishonor given to the drawer is a complete defense. The prima facie
presumption that the drawer had knowledge of the insufficiency of funds or credit at the time of
the issuance and on its presented for payment would be rebutted by such payment. This defense
lies regardless of the strength of the evidence offered by the prosecution to prove the elements
of the offense (i.e. violation of BP 22). Herein, Navarro failed to overcome the presumption by
substantiating her allegation of payment. There is no proof that the payment, if it was really
made at all, was done within 5 days from the notice of dishonor.
prevention of their fraudulent encashment through constant reminders to all its current account
bookkeepers informing them of the activities of forgery syndicates. MWSS gross negligence
was the proximate cause of the loss (P3 million), and should bear the loss.
Magno, he issued a postdated check to LS Finance, which delivered it to Teng. When the check
matured, Magno requested that the check not to be deposited as he no longer banks with Pacific
Bank. To replace the check, Magno issued 6 postdated checks, 2 of which were deposited and
cleared, the other 4 were held momentarily by Teng, on the request of Magno for they are not
covered with sufficient funds. As Magno cannot pay the monthly rentals fro the equipment, the
same were pulled out. Only then did Magno learned that Teng was the one who advanced the
deposit. Magno promised to pay her but payment never came. When the checks were deposited,
they were dishonored. Magno was found guilty of violation of BP22 when the cases were
adjudicated.
Issue: Whether there was a violation of BP 22.
Held: The crux of the matter rest upon the reason for the drawing of the postdated checks by
Magno, i.e. whether they were drawn or issued to apply on account or for value, as required
under Section 1 of BP 22. When viewed against the definitions of warranty and deposit, for
which the postdated checks were issued or drawn, the alleged crime could not have been
committed by Magno. Furthermore, the element of knowing at the time of issue that he does not
have sufficient funds in or credit with the drawee bank.: is inversely applied in the case. From
the beginning, Magno never hid the fact that he had no funds. Magno, thus, was acquitted of the
crime charged.
Held: The language of BP22 is broad enough to cover all kinds of checks, whether present dated
or post dated, whether issued in payment of pre-existing obligations or given in mutual or
simultaneous exchange for something of value. BP 22 is aimed to put a stop or to curb the
practice of issuing worthless checks, which is proscribed by the State because of the injury it
causes to public interests. The gravamen of the offense punished by BP 22 is the act of making or
issuing a worthless check or a check which is dishonored upon its presentation for payment. it is
not the non-payment of an obligation which the law punishes. The law publishes the act not as
an offense against property but an offense against public order. The enactment of BP 22 is a valid
exercise of police power and is not repugnant to the constitutional inhibition against
imprisonment for debt. The statute is not unconstitutional.
It must be noted that the check was issued for a valuable consideration (P180,000). Had the
money been intended to be returned when the investment was successful, the check need not be
issued. A receipt and their written agreement would have sufficed.
Facts: Spouses Manuel and Rosita Lim are the president and treasurer, respectively, of RIGI
Built Industries Inc. RIGI had been transacting business with Linton Commercial Company for
years, the latter supplying the former with steel plates, steel bars, flat bars and purlin sticks
which the company uses in the fabrication, installation and building of steel structures. The Lims
ordered steel plates from Linton Commercial, delivering checks to the latters collector as
payment. The checks were dishonored for insufficiency of funds with the additional notation
payment stopped (The Lims claimed that the supplies delivered by Linton Commercial were
not in accordance with the specifications of purchase orders). Despite demands, the Lims refused
to make good the checks or to pay value of the deliveries.
Issue: Whether the receipt of the checks by the collector of Linton is the issuance and delivery to
the payee within the contemplation of the law (as prelude to jurisdiction issue).
Held: Issue means the first delivery of the instrument complete in form to a person who takes
it as a holder. Holder refers to the payee or indorsee of a note or who is in possession of it or
the bearer thereof. The issuance as well as the delivery of the check must be to a person who
takes it as a holder. Delivery of the checks signifies transfer of possession (actual or constructive)
from one person to another with intent to transfer title thereto; the delivery being the final act
essential to its consummation as an obligation. The collector was not the person who could take
the checks as a holder. Neither could the collector be deemed an agent of Linton Commercial
with respect to the checks because he was a mere employee.
Held: The clear intention of the framers of BP 22 is to make the mere act of issuing a check that
is worthless malum prohibitum. The law does not require that there be damage or prejudice to the
individual complainant by reason of the issuance of the check. The fine provided for in BP 22
was intended as an additional penalty for the act of issuing a worthless check. BP 22 provides
that a fine of not less than but not more than double the amount of the dishonored check may be
imposed by the court.
Held: Ministry Circular 4, issued 1 December 1981 by the Department of Justice, provides that
where a check is issued as part of an arrangement to guarantee or secure the payment of the
obligation, pre-existing or not, the drawer is not criminally liable for either estafa or violation of
BP 22. Incidents however indicate that the checks were issued as payment and for value, and not
for accommodation (i.e. pertaining to an arrangement made a favor to another, not upon a
consideration received). as the checks failed to bear any statement for accommodation and for
guarantee to show Ibascos intent. ( It must be noted, however, that BP22 does not distinguish
and applies even in cases where dishonored checks were issued as a guarantee or for deposit
only. The erroneous interpretation of Ministry Circular 4 was rectified by the repealing Ministry
Circular 12, issued on 8 August 1984).
Nego-d: Firestone Tire and Rubber vs. Ines Chaves & Co.
(GR L-17106, 19 October 1966)
Posted by Berne Guerrero under (a) oas , digests
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Firestone Tire and Rubber vs. Ines Chaves & Co.
GR L-17106, 19 October 1966
En Banc, Regala (J)
Facts: The check was intended as part of the payment of Ines Chaves debt. When presented to
the Security Bank and Trust Co. by Firestone, the check was returned for insufficiency of funds.
Despite repeated demands, Ines Chaves failed to settle its account; hence, the suit.
Issue: Whether good faith is required in the issuance of a check.
Held: Everyone must in the performance of his duties, observe honesty and good faith. Where a
person issues a postdated check without funds to cover it and informs the payee of this fact, he
cannot be held guilty of estafa because there is no deceit. Herein, there is nothing in the record to
show that Firestone knew that there were no funds when it accepted the check, much less that
Firestone agreed to take the check with knowledge of the lack of funds. As Ines Chavez is guilty
of fraud (bad faith) in the performance of its obligation, it is liable for damages. Its conduct
wanting in good faith, the award of attorneys fees was warranted.
Mabanto until delivered to him, and as such are still public funds which could not be subject of
garnishment..
Issue: Whether the checks subject of garnishment belong to Mabanto or whether they still
belong to the government.
Held: Under Section 16 of the Negotiable Instruments Law, every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the purpose of giving
effect thereto. As ordinarily understood, delivery means the transfer of the possession of the
instrument by the maker or drawer with the intent to transfer title to the payee and recognize him
as the holder thereof. Herein, the salary check of a government officer or employee does not
belong to him before it is physically delivered to him. Inasmuch as said checks had not yet been
delivered to Mabanto, they did not belong to him and still had the character of public funds. As a
necessary consequence of being public fund, the checks may not be garnished to satisfy the
judgment.
the dishonored check is actually the payment of two separate bills, and was issued 15 days after
notice. Such replacement cannot negate the presumption that the drawers knew of the
insufficiency of funds.
Issue [2]: Whether the absence of damages incurred by the payee absolves the drawers from
liability.
Held [2]: The claim that the case was simply a result of a misunderstanding between GARDS
and the drawers and that the security agency did not suffer any damage from the dishonor of the
check is flimsy. Even if the payee suffered no damage as a result of the issuance of the
bouncing check, the damage to the integrity of the banking system cannot be denied. Damage to
the payee is not an element of the crime punished in BP 22.
Note: In this case, the Court recognized the contribution of Filipino entrepreneurs to the national
economy; and that to serve the ends of criminal justice, instead of the 1 year imprisonment, a
fine of double the amount of the check involved was imposed as penalty. This was made to
redeem valuable human material and prevent unnecessary deprivation of personal liberty and
economic usefulness with due regard to the protection of the social order.
Issue: Whether there is a tender of payment by means of a cashiers check representing war
notes.
Held: Japanese military notes were legal tender during the Japanese occupation; and Ocampo
impliedly accepted the consignation of the cashiers check when he asked the court that he be
paid the amount of the second loan (P15,000). It is a rule that a cashiers check may constitute a
sufficient tender where no objection is made on this ground.
Insurance and Surety Co., which wrote PNB its interest to redeem the Makati property (one of
the property mortgaged) for P1,621,970. PNB rejected the offer. Citadel filed suit against PNB,
where the complaint was accompanied by an RCBC managers check and which was deposited
under a savings bank account with RCBC by order of the trial court.
Issue: Whether there was a valid and effective tender of payment.
Held: The unequivocal tender of redemption was made, through a managers check of RCBC (a
well-known, big and reputable banking institution) for the amount it believed it should pay as
redemption price. PNB rejected it on the sole and only ground that it considered the amount
insufficient. Redemption was made on time, i.e. 1 year from the date appearing as the date of the
registration of the certificate of sale. Tender by managers check was not inefficacious as the
Court has already sanctioned redemption by check (See Javellana vs. Mirasol).
in turn, he executed a notarized Deed of Assignment of Time Deposit in favor of the bank.
Thereafter, Caltex presented for verification the CTDs (which were declared lost by de la Cruz)
with the bank. Caltex formally informed the bank of its possession of the CTDs and its decision
to preterminate the same. The bank rejected Caltex claim and demand, after Caltex failed to
furnish copy of the requested documents evidencing the guarantee agreement, etc. In 1983, de la
Cruz loan matured and the bank set-off and applied the time deposits as payment for the loan.
Caltex filed the complaint, but which was dismissed.
Issue [1]: Whether the Certificates of Time Deposit (CTDs) are negotiable instruments.
Held [1]: The CTDs in question meet the requirements of the law for negotiability. Contrary to
the lower courts findings, the CTDs are negotiable instruments (Section 1). Negotiability or
non-negotiability of an instrument is determined from the writing, i.e. from the face of the
instrument itself. The documents provided that the amounts deposited shall be repayable to the
depositor. The amounts are to be repayable to the bearer of the documents, i.e. whosoever may
be the bearer at the time of presentment.
Issue [2]: Whether the CTDs negotiation require delivery only.
Held [2]: Although the CTDs are bearer instruments, a valid negotiation thereof for the true
purpose and agreement between it (Caltex) and de la Cruz requires both delivery and
indorsement; as the CTDs were delivered to it as security for dela Cruz purchases of its fuel
products, and not for payment. Herein, there was no negotiation in the sense of a transfer of title,
or legal title, to the CTDs in which situation mere delivery of the bearer CTDs would have
sufficed. The delivery thereof as security for the fuel purchases at most constitutes Caltex as a
holder for value by reason of his lien. Accordingly, a negotiation for such purpose cannot be
effected by mere delivery of the instrument since the terms thereof and the subsequent
disposition of such security, in the event of non-payment of the principal obligation, must be
contractually provided for.
Facts: Bataan Cigar and Cigarette Factory Inc. (BCCFI) engaged one of its suppliers, Kim Tim
Pua George (George King), to deliver bales of tobacco leaf. In consideration thereof, BCCFI
issued postdated cross checks to King. King sold the checks, at a discount, to the State
Investment House Inc. (SIHI). As King failed to deliver the bales of tobacco leaf despite demand,
BCCFI issued stop payment orders on the checks. Efforts by SIHI to collect from BCCFI failed.
SIHI filed suit.
Issue: Whether SIHI can recover the value of the checks, premised on the issue whether SIHI is
a holder in due course.
Held: The facts of the case are on all fours to the case of SIHI vs. Intermediate Appellate Court.
The crossing of the checks should put the holder on inquiry and upon him devolves the duty to
ascertain the indorsers title to the check or the nature of his possession. Failing in this respect,
the holder is declared guilty of gross negligence amounting to legal absence of good faith,
contrary to Section 52 (c) of the Negotiable Instruments Law, and as such the consensus of
authority is to the effect that the holder of the check is not a holder in due course. BCCFI cannot
be obliged to pay the checks as there is a failure of consideration (King being unable to supply
the bales of tobacco leaf, for which the checks were intended for). Still, SIHI a holder not in
due course can collect from the immediate indorser, George King. Such is the disadvantage of
a holder not in due course, i.e. the instrument is subject to defenses as if it were non-negotiable.
Issue: Who shall bear the loss resulting from the forged checks.
Held: PNB is not negligent as it is not required to return the check to the collecting bank within
24 hours as the banks involved are covered by Central Bank Circular 580 and not the rules of the
Philippine Clearing House. Associated Bank, and not PNB, is the one duty-bound to warrant the
instrument as genuine, valid and subsisting at the time of indorsement pursuant to Section 66 of
the Negotiable Instruments Law. The stamp guaranteeing prior indorsement is not an empty
rubric; the collecting bank is held accountable for checks deposited by its customers. However,
due to the fact that the Province of Tarlac is equally negligent in permitting Pangilinan to collect
the checks when he was no longer connected with the hospital, it shares the burden of loss from
the checks bearing a forged indorsement. Therefore, the Province can only recover 50% of the
amount from the drawee bank (PNB), and the collecting bank (Associated Bank) is liable to PNB
for 50% of the same amount.
Held: A treasury warrant is not a negotiable instrument; it being an order for payment out of a
particular fund, and is not unconditional and does not fulfill one of the essential requirements
of a negotiable instrument. Therefore, a holder of a treasury warrant cannot argue that he is a
holder in good faith and for value of a negotiable instrument and thus entitled to the rights and
privileges of a holder in due course, free from defenses.
Issue: Whether Section 40 (b) of RA 7160 apply retroactively to those removed from office
before it took effect on 1 January 1992.
Held: Section 40 (b) of the Local Government Code provides that those removed from office as
a result of an administrative case are disqualified from running for any elective local position.
while the Legislature has the power to pass retroactive laws which do not impair the obligation
of contracts, or affect injuriously vested rights, it is equally true that statutes are not to be
construed as intended to have a retroactive effect so as to affect pending proceedings, unless such
intent is expressly declared or clearly and necessarily implied from the language of the
enactment.There is no provision in the statute which would clearly indicate that the same
operates retroactively. That the provision of the Code in question does not qualify the date of a
candidates removal from office and that it is couched in the past tense should not deter the Court
from applying the law prospectively. The basic tenet in legal hermeneutics that laws operate only
prospectively and not retroactively provides the qualification sought by petitioner. A statute,
despite the generality in its language, must not be so construed as to overreach acts, events or
matters which transpired before its passage. Lex prospicit, non respicit. The law looks forward,
not backward. Section 40 (b) of the Local Government Code is thus not applicable to the present
case.
conduct contrary to justice, honesty, modesty, or good morals. The elements of the crime of
fencing (as gleaned from the definition of fencing in Section 2 of PD 1612, Anti-fencing Law)
are: (1) A crime of robbery or theft has been committed; (2) The accused who is not a principal
or accomplice in the crime of robbery or theft, buys, receives, possesses, keeps, acquires,
conceals, sells or disposes, or buys and sells, or in any manner deals in any article, item, object
or anything of value, which have been deprived from the proceeds of the said crime; (3) The
accused knows or should have known that the said article, item, object or anything of value has
been derived from the proceeds of the crime of robbery or theft; and (4) There is, on the part of
the accused, intent to gain for himself or for another. Moral turpitude is deducible from the third
element. Actual knowledge by the fence of the fact that property received is stolen displays the
same degree of malicious deprivation of ones rightful property as that which animated the
robbery or theft which, by their very nature, are crimes of moral turpitude. Thus, the COMELEC
did not err in disqualifying the petitioner on the ground that the offense of fencing of which he
had been previously convicted by final judgment was one involving moral turpitude.
Based on that application of his, he was issued by the U.S. Government the requisite green card
or authority to reside there permanently (See Question 21 of Miguels application). To be
qualified to run for elective office in the Philippines, the law requires that the candidate who is
a green card holder must have waived his status as a permanent resident or immigrant of a
foreign country. Therefore, his act of filing a certificate of candidacy for elective office in the
Philippines, did not of itself constitute a waiver of his status as a permanent resident or
immigrant of the United States. The waiver of his green card should be manifested by some act
or acts independent of and done prior to filing his candidacy for elective office in this country.
Without such prior waiver, he was disqualified to run for any elective office. Absent clear
evidence that he made an irrevocable waiver of that status or that he surrendered his green card
to the appropriate U.S. authorities before he ran for mayor of Bolinao in the local elections on 18
January 1988, he was disqualified to run for said public office, hence, his election thereto was
null and void.
Sun 7 Mar 2004
presence of the second element manifests moral turpitude. There was no distinction whether the
offender is a lawyer or a non-lawyer in the case of People vs. Tuanda, where a similar violation
of BP 22 was likewise determined to be a crime against moral turpitude. There was neither any
declaration in that case that such offense constitutes moral turpitude when committed by a
member of the Bar but is not so when committed by a non-member. The Court found no grave
abuse of discretion committed by in issuing the assailed Resolutions.
the Philippines, to preside over them as mayor of their city. Only citizens of the Philippines have
that privilege over their countrymen. The people of that locality could not have, even
unanimously, changed the requirements of the Local Government Code and the Constitution.
necessary nor do they claim to have been coerced to abandon their cherished status as
Filipinos. Still, if he really wanted to disavow his American citizenship and reacquire Philippine
citizenship, Frivaldo should have done so in accordance with the laws of our country. Under CA
No. 63 as amended by CA No. 473 and PD No. 725, Philippine citizenship may be reacquired by
direct act of Congress, by naturalization, or by repatriation. He failed to take such categorical
acts. Rhe anomaly of a person sitting as provincial governor in this country while owing
exclusive allegiance to another country cannot be permitted. The fact that he was elected by the
people of Sorsogon does not excuse this patent violation of the salutary rule limiting public
office and employment only to the citizens of this country. The will of the people as expressed
through the ballot cannot cure the vice of ineligibilityQualifications for public office are
continuing requirements and must be possessed not only at the time of appointment or election or
assumption of office but during the officers entire tenure. Once any of the required
qualifications is lost, his title may be seasonably challenged. Frivaldo is disqualified from
serving as governor of Sorsogon.
in the preparation thereof and being statistically improbable, and ordering a new registration of
voters for the local elections of 15 February 1988. Said Resolution was affirmed by the Court in
Anni vs. COMELEC, G.R. No. 81398, 26 January 1988. A new Registry List was subsequently
prepared yielding only 12,555 names. Ututalums pending petitions in the Comelec were
dismissed. He assailed the Comelecs resolutions before the Supreme Court.
Issue: Whether the annulment of the list of votes constitute a ground for a pre-proclamation
contest.
Held: Padded voters list, massive fraud and terrorism is clearly not among the issues that may
be raised in a pre-proclamation controversy. They are proper grounds for an election protest. The
subsequent annulment of the voting list in a separate proceeding initiated motu proprio by the
Commission and in which the protagonists here were not parties, cannot retroactively and
without due process result in nullifying accepted election returns in a previous election simply
because such returns came from municipalities where the precinct books of voters were ordered
annulled due to irregularities in their preparation. The preparation of a voters list is not a
proceeding before the Board of Canvassers. A pre-proclamation controversy is limited to
challenges directed against the Board of Canvassers, not the Board of Election Inspectors, and
such challenges should relate to specified election returns against which petitioner should have
made specific verbal objections. Furthermore, where the winning candidates have been
proclaimed, the pre-proclamation controversies cease. A pre-proclamation controversy is no
longer viable at this point in time and should be dismissed. The proper remedy thereafter is an
election protest before the proper forum.
deadline. Subsequent to a public hearing and on 29 January 2001, Commissioners Tancangco and
Lantion submitted Memorandum 2001-027 on the Report on the Request for a Two-day
Additional Registration of New Voters Only. On 8 February 2001, the COMELEC issued
Resolution 3584, which denied the request to conduct a two-day additional registration of new
voters on February 17-18, 2001. Aggrieved by the denial, petitioners AKBAYAN-Youth, SCAP,
UCSC, MASP, KOMPIL II (YOUTH) et al. filed before this Court the instant Petition for
Certiorari and Mandamus, which seeks to set aside and nullify respondent COMELECs
Resolution and/or to declare Section 8 of RA 8189 unconstitutional insofar as said provision
effectively causes the disenfranchisement of petitioners and others similarly situated. Likewise,
petitioners pray for the issuance of a writ of mandamus directing COMELEC to conduct a
special registration of new voters and to admit for registration petitioners and other similarly
situated young Filipinos to qualify them to vote in the 14 May 2001 General Elections.
Issue: Whether Comelec may be directed, through mandamus, to hold a registration of new
voters for the 14 May 2001 General Elections on 17-18 February 2001.
Held: In a representative democracy, the right of suffrage, although accorded a prime niche in
the hierarchy of rights embodied in the fundamental law, ought to be exercised within the proper
bounds and framework of the Constitution and must properly yield to pertinent laws skillfully
enacted by the Legislature, which statutes for all intents and purposes, are crafted to effectively
insulate such so cherished right from ravishment and preserve the democratic institutions our
people have, for so long, guarded against the spoils of opportunism, debauchery and abuse. The
right of suffrage is not at all absolute. The exercise of the right of suffrage, as in the enjoyment of
all other rights, is subject to existing substantive and procedural requirements embodied in our
Constitution, statute books and other repositories of law. As to the procedural limitation, the right
of a citizen to vote is necessarily conditioned upon certain procedural requirements he must
undergo: among others, the process of registration. Since Section 8 of RA 8189 explicitly
provides that no registration shall be conducted during the period starting 120 days before a
regular election, the assailed COMELEC Resolution should be upheld. Truly, it is an accepted
doctrine in administrative law that the determination of administrative agency as to the operation,
implementation and application of a law would be accorded great weight considering that these
specialized government bodies are, by their nature and functions, in the best position to know
what they can possibly do or not do, under prevailing circumstances.
Facts: Maximo Abao is a native of the municipality of Meycauayan, Bulacan. At the proper
age, he transferred to Manila to complete his education. While temporarily residing in Manila,
Abao registered as a voter there. Shortly after qualifying as a member of the bar and after the
death of his father, Abao returned to Meycauayan to live. From 10 May 1927, until the present,
Abao has considered himself a resident of Meycauayan. When the 1928 elections were
approaching, he made an application for cancellation of registration in Manila which was dated
April 3, 1928, but this application was rejected by the city officials for the reason that it was not
deposited in the mails on or before 4 April 1928. Nevertheless Abao presented himself as a
candidate for municipal president of Meycauayan in the 1928 elections and was elected by
popular vote to that office. Marcos Yra, the vice-president elect of Meycauayan, Bulacan, who
challenges the right of Maximo Abao, the municipal president elect of Meycauayan, through a
quo warranto proceeding to the position to which elected on the ground that Abao is ineligible.
The CFI Bulacan (through Judge Anastasio R. Teodoro) ruled in favor of Abao, declaring the
complaint as without merit.
Issue: Whether Abao is not eligible to hold a municipal office for the reason that he was not a
qualified voter in his municipality (being a registered voter in Manila) not a qualified elector
therein.
Held: The term qualified when applied to a voter does not necessarily mean that a person
must be a registered voter. To become a qualified candidate a person does not need to register as
an elector. It is sufficient that he possesses all the qualifications prescribed in section 431 and
none of the disqualifications prescribed in section 432. The fact that a candidate failed to register
as an elector in the municipality does not deprive him of the right to become a candidate and to
be voted for (Jose P. Laurel, Law of Elections of the Philippine Islands, pages 32, 33. See also
Meffert vs. Brown ([1909], 132 Ky., 201)
upon Vda. de Borromeo a letter demanding that she pay the overdue rentals corresponding to the
period from March to September 1982, and thereafter to vacate the premises.
As Vda. de Borromeo failed to do so, Atty. Reyes instituted on 16 September 1982 an ejectment
case against the former in the Municipal Trial Court of Cebu City (Civil Case R-23915, assigned
to the sala of Judge Julian B. Pogoy). On 12 November 1982, Vda. de Borromeo moved to
dismiss the case, advancing, among others, the want of jurisdiction of the trial court on the
ground of Atty. Reyes failure to refer the dispute to the Barangay Court, as required by PD 1508
(Katarungang Pambarangay Law). The judge denied the motion to dismiss. Unable to secure a
reconsideration of said order, Vda. de Borromeo brought the case to the Supreme Court through
a petition for certiorari.
Issue: Whether Barangay Conciliation is required in the present case before the lower court can
exercise jurisdiction over the case.
Held: With certain exceptions, PD 1508 makes the conciliation process at the Barangay level a
condition precedent for filing of actions in those instances where said law applies. Under Section
4(a) of PD 1508, referral of a dispute to the Barangay Lupon is required only where the parties
thereto are individuals. The law applies only to cases involving natural persons, and not where
any of the parties is a juridical person such as a corporation, partnership, corporation sole, testate
or intestate, estate, etc. Herein, Atty. Ricardo Reyes is a mere nominal party who is suing in
behalf of the Intestate Estate of Vito Borromeo, as the the real party in interest in the case is the
intestate estate under administration. Since the said estate is a juridical person, the administrator
may file the complaint directly in court, without the same being coursed to the Barangay Lupon
for arbitration.
Comments (required in assignment): PD 1508 has been superceded by pertinent provisions of
the Local Government Code of 1991 (RA 7160). Section 410 of said Code provides that Upon
payment of the appropriate filing fee, any individual who has a cause of action against another
individual involving any matter within the authority of the lupon may complain, orally or in
writing, to the lupon chairman of the barangay. The doctrine enunciated in the case (as to
individuals) appears to apply even with the enactment of RA 7160.
To note, similar to defenses raised in the case using PD 1508, Section 412 of RA 7160 provides
that No complaint, petition, action, or proceeding involving any matter within the authority of
the lupon shall be filed or instituted directly in court or any other government office for
adjudication, unless there has been a confrontation between the parties before the lupon chairman
or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon
secretary or pangkat secretary as attested to by the lupon or pangkat chairman or unless the
settlement has been repudiated by the parties thereto. The parties may go directly to court in the
following instances: (1) Where the accused is under detention; (2) Where a person has otherwise
been deprived of personal liberty calling for habeas corpus proceedings; (3) Where actions are
coupled with provisional remedies such as preliminary injunction, attachment, delivery of
personal property and support pendente lite; and (4) Where the action may otherwise be barred
by the statute of limitations.
recovery of the usurious interest paid. In that case, if the entity sued shall not file its answer
under oath denying the allegation of usury, the defendant shall be deemed to have admitted the
usury. The provision does not apply to a case where it is the defendant, not the plaintiff, who is
alleging usury.
Issue [2]: Whether the repeal of Rules of Court or any procedural law is with retroactive effect.
Held [2]: The Court opined that the Rules of Court in regards to allegations of usury, procedural
in nature, should be considered repealed with retroactive effect. It has been previously held
(People vs. Sumilang, and De Lopez, et al. vs. Vda. de Fajardo, et al.) that statutes regulating the
procedure of the courts will be construed as applicable to actions pending and undetermined at
the time of their passage. Procedural laws are retrospective in that sense and to that extent.
Comments (required in assignment): The last sentence of Section 11, Rule 9, of the 1997
Rules of Civil Procedure provides that Allegation of usury in a complaint to recover usurious
interest are deemed admitted if not denied under oath, and is similar in context to Section 9 of
Usury Law, which was raised in this 1984 case (although improperly applied). The reiteration of
matters pertaining to usury in the 1997 rules is perplexing as the 1984 decision itself admits that
usury has been legally non-existent; as interest can now be charged as lender and borrower may
agree upon, and that the Rules of Court in regards to allegations of usury, procedural in nature,
should be considered repealed with retroactive effect. These incongruent realities, however, are
secondary only to the fact that a mere Central Bank circular or memorandum effectively
suspended the application of the Usury Law to a degree tantamount to its repeal.
ordered to pay the former P50,000.00 as moral damages; and P15,000.00 as attorneys fees and
necessary litigation expenses. In addition, petitioners were ordered to pay actual damages of
P183,600.00 representing the value of the coconuts and/or proceeds of the fruits from the parcels
(or portions) they have been occupying since 1975 up to 1992, specifically parcels 2, 3 (portion),
4, 5 and 6 plus P10,200.00 per annum effective 1993 until they finally vacate and turn over the
possession thereof to private respondents and to the pay the costs.
Having received the decision on 22 September 1992, petitioners eventually filed a notice of
appeal on 5 October 1992. Said notice was acted upon and given due course by Presiding Judge
Ireneo B. Escandor on 8 October 1992 on 30 June 1992. However, Judge Escandor inhibited
himself and withdrew his 8 October 1992 order giving due course to the appeal for an
unspecified reason. Instead, Judge Simon S. Encinas acted upon and gave due course to the
appeal on 26 January 1993. The Court of Appeals, however, dismissed the appeal in a 16 June
1995 Resolution for failure of petitioners to file appellants brief. Petitioners counsel received
the resolution on 3 July 1995. On 1 August 1995, petitioners filed their Appellants Brief. A
Motion for Reconsideration dated 18 July 1995 was allegedly filed together with the Appellants
Brief but received by the Court of Appeals only on 29 December 1995. On 8 December 1995, the
Court of Appeals ordered entry of judgment and expunction of Appellants Brief. On 18
December 1996, the Court of Appeals denied petitioners motion for leave to file and admit
incorporated omnibus motion for reconsideration and reiterated its order to release entry of
judgment. Petitioners filed a Petition for Review before the Supreme Court.
Issue [1]: Whether the appeal was seasonably filed.
Held [1]: Records show that the notice of appeal was filed within the reglementary period. As
such, it was seasonably filed. A distinction should be made between failure to file a notice of
appeal within the reglementary period and failure to file brief within the period granted by the
appellate court. The former would result in the failure of the appellate court to obtain jurisdiction
of the appealed decision resulting in its becoming final and executory upon failure to move for
reconsideration. The latter would simply result in the abandonment of the appeal which could
lead to its dismissal upon failure to move for its reconsideration. Consequently, the appealed
decision would become final and executory but prior thereto, the appellate court shall have
obtained jurisdiction of the appealed decision. Herein, petitioners simply failed to file the
Appellants Brief within the extended period accorded to them after the appellate court had
obtained jurisdiction of the case.
Issue [2]: Whether the negligence of the counsel to file the Appellants Brief binds the clients.
Held [2]: Ordinarily, a negligent act or omission on the part of counsel would, as a rule, have
bound his clients. Under the prevailing circumstances and in the interest of justice and equity, the
Court cannot strictly apply the same rule in the case before it. Herein, petitioners stand to lose
their alleged rightful share in the inheritance consisting of fifty-nine hectares of land just because
their former counsel failed to file the Appellants Brief within the reglementary period. To
deprive petitioners of their share in the inheritance due to the negligence of their counsel coupled
with their submissions of the trial courts failure to appreciate and consider some of their
evidence, documentary at that, are sufficient demonstrations of the merits of their case.
Issue [3]: Whether the Supreme Court can relax its own rules.
Held [3]: Technicality should not be relied upon to subject and defeat substantive rights of the
other party. The rules of procedure should be viewed as mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in technicalities that
tend to frustrate rather than promote substantial justice, must always be eschewed. The principal
considerations in giving due course to an appeal by suspending the enforcement of statutory and
mandatory rules are substantial justice and equity considerations. The following elements should
likewise be considered for the appeal to be reinstated and given due course: (1) the existence of
special or compelling circumstances, (2) the merits of the case, (3) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the rules, (4) a
lack of any showing that the review sought is merely frivolous and dilatory, (5) the other party
will not be unjustly prejudiced thereby.
Issue [4]: Whether the Supreme Court should review the factual findings of the lower court
considering the length of time the case has been pending.
Held [4]: Due to the circumstances, it is imperative for the Court of Appeals to review the
findings of fact made by the trial court. For while the Court may review factual findings of the
lower court, it will not preempt the Court of Appeals in reviewing the same and reappreciating
the evidence presented by petitioners to resolve factual questions. Prior resolution of the issues is
necessary in order to determine the question of original ownership over the subject parcels of
land which in turn would resolve the question of succession. Said questions pertain to factual
matters that could best be resolved by the Court of Appeals which is mandated to examine and
review the findings of fact made by the lower court.
Comments (required in assignment): Rule 1, Section 6 of the 1997 Rules of Court provides
that These Rules shall be liberally construed in order to promote their objective of securing a
just, speedy and inexpensive disposition of every action and proceeding. Although the section
provides only for the construction of the rules (thus the application of the rules) and not for the
suspension of the Rules itself, as in this case, the purpose remains the same, i.e. to secure a just,
speedy and inexpensive disposition of every action and proceeding. It would be absurd for the
rules to provide for its own suspension, the same way that it would be absurd for statutes to
provide for their own repeal. Time and again, the Supreme Court has relaxed, or suspended, its
Rules in the light of compelling public interest or concern (especially in Political Law cases) and
to prevent a manifestly prejudicial situation or outcome against a person, as in this case.
Although the remand of the case to the Court of Appeals may have prevented injustice to the
parties, as it should be; dispelling from the minds from the public the image of the partiality of
the Courts may take more than a decision to rectify. Herein, the Court recognized that the
reason they (the petitioners) kept on changing their lawyers was because their lawyers were
intimidated by private respondents who were judges, or that the lawyers themselves refused to
accept their case, are bereft of concrete proof, still they may not entirely be without merit. The
interplay between the pursuit of justice, the exercise of power, and the achievement of a purpose,
provides for the dynamics of a peculiar Philippine legal culture; the evils of which cannot be
expunged in a single stroke. The delicate task of a lawyer not to antagonize judges is equivalent
to the delicate task of a law student not to antagonize a law professor. One inquiry leads to the
question whether is it right? while the other leads to the question whether can you blame
them?
Held: Paragraph 7 of the Indemnity Agreement was imposed on the Pan spouses by the surety
company for its benefit and convenience and therefore the latter could waive the provision by
filing its complaint, not in Quezon City, but in Manila. A third-party complaint is but ancillary to
the main action and is a procedural device to avoid multiplicity of suits. Because of its nature the
prescriptions on jurisdiction and venue applicable to ordinary suits may not apply. Thus a thirdparty complaint has to yield to the jurisdiction and venue of the main action; since jurisdiction
over the main case embraces all incidental matters arising therefrom and connected therewith. A
contrary rule would result in split jurisdiction which is not favored, and in multiplicity of suits,
a situation obnoxious to the orderly administration of justice.
Comments (required in assignment): The prevailing law on family relations during the
promulgation of this case (1981) was the New Civil Code (not the Family Code, which was
enacted 1987), and the presumed property regime during that time, in the absence of any proof to
the contrary, was a conjugal partnership of gains (not yet the Absolute Community in the Family
Code). The spouse herein is not sued jointly with the husband but is made the respondent in a
third-party complaint by the surety company; recognizing that the single proprietorship belongs
to the husband and not necessarily to the conjugal partnership. Under the present rules (Rule 3,
Section 4), the husband and wide shall sue or be sued jointly, except as provided by law,
reflecting the paradigm shift.
Although the present rules (Rule 4, Section 4 [b]) provide that the Rule on Venue does not apply
where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof, the same principle as enunciated in the case as to third-party
complaints would remain to apply as a third-party complaint is ancillary to the main action. The
implication that the third party complaint cannot be initiated in another venue pursuant to
stipulation to a contract between the defendant and a third person may be inferred from the
requirement of a certification against forum shopping in Rule 7, Section 5 of the 1997 Rules on
Civil Procedure, as such requirement does not only apply to complaints but other initiatory
pleadings.
Sat 13 Dec 2003
1939 and 1940. The provincial revenue agent for Misamis Occidental ascertained the number of
receipts by referring to the conductors daily report for the said period 1936 to 1938. From there,
the tax assessed amounted to P7,776.24, which was collected from the companys deposit in
Philippine National Bank. The company demanded the refund of the said amount, but which was
denied.
Issue: Whether the freight receipts were actually issued for more than P5 each, to warrant the
assessed tax of P7,776.24.
Held: Receipts must have been issued for valuable cargo to insure against the loss of which,
unlike cargo handcarried by townfolks and farmers where the latter avoid to secure receipts
thereto. Such finding by the revenue agent was not controverted. In actions fro the recovery of
taxes assessed and collected, the taxpayer has the burden of proving that the assessment is illegal
as all presumptions are in favor of the correctness of tax assessments. The good faith of tax
assessors and the validity of their actions are presumed. As such rule, on the burden of proof, has
not been complied with, the action for recovery must be denied.
Held: Under Section 332 (c) of the Tax Code, the collection of the tax by summary method or by
judicial action shall be effected within 5 years after the assessment of the tax. To assess means to
impose a tax; to charge with a tax; to declare a tax to be payable; to apportion a tax to be paid or
contributed; to fix a rate, to fix or settle a sum to be paid by way of tax; to set, fix or charge a
certain sum to each taxpayer; to settle, determine or fix the amount of tax to be paid. Herein, the
assessment was made on 17 June 1948 (when a letter of demand for the amount of the rubber
check was sent to the company) and not on 15 Jne 1946 (the date of payment). Even assuming
that the latter date is the date of assessment, the action is still not barred by the statute of
limitations as teh statute was suspended when the company acknowledged the debt in writing in
April 1951, and requested the deferment of the judicial action to be taken by the Government
towards the collection of the obligation, so that the company could make representations with the
COllector to settle the matter amicably. Prescription has not set in.
P16,593.87 (September 1951 to November 1956), the Commissioner is trying to collect the same
deficiency tax where the right to assess the same, according to him, has been lost by prescription.
The demand on the taxpayer to pay the sum of P16,593.87 is in effecct an assessment of
deficiency franchise tax. The right to assess, thus, and to collect is governed by Section 331 of
the Tax Code rather than by Article 1145 of the Civil Code, as a special law prevails over a
general law. Guagua Electric is absolved from the payment of P16,593.87.
Facts: Cecilia Teodoro Dayrit, Toribia Teodoro Castaneda, Prudencio Teodor, Francisco Teodoro
and Josefina Teodoro Tiongson are legitimate children and heirs of the deceased spouses Marta
and Toribio Teodoro who died intestate on 1 July 1965 and 30 August 1965. The heirs separately
filed estate and inheritance tax returns for the estates of the spouses with the BIR. In 1972, the
BIR issued deficiency estate and inheritance tax assessments for P1,662,072,34 and
P1,747,790.94 respectively for the Estate of Dona Marta and P1,542,293.01 amd P518,458.72,
respectively for the Estate of Don Toribio. The heirs asked for reconsideration as the assessment
was allegedly contrary to law and not supported by sufficient evidence. In a tax return dated 31
March 1973, Dayrit declared an additional amount of P3,655,595.78 as part of the estates of the
Teodoro spouses. The BIR issued tax payment acceptance orders, as the heirs and estate have
paid a total of P285,046.88. In 1974, the Commissioner filed a motion for allowance of claim
against the estates, and for an order of payment of taxes before the trial court, praying that Dayrit
be ordered to pay the BIR the sum of P6,470,391.91 plus surcharges and interest. Dayrit filed
oppositions contending that the taxes have been settled according to the provisions of PD 23, as
amended by PD 67.
Issue: Whether the assessment is final, executory, and demandable.
Held: The act of the Commissioner, in filing an action for allowance of the claim for estate and
inheritance taxes, may be construed as a denial of the taxpayers request for reconsideration.
From the date of receipt of the copy of the Commissioners letter for collection of taxes, the
taxpayers must contest and dispute the same, and upon denial thereof, they have a period of 30
days to appeal the case to the Court of Tax Appeals. Tax assessment made by tax examiners are
presumed correct and made in good faith. A taxpayer has to prove otherwise. Failure of the
taxpayers to appeal to the Court of Tax Appeals in due time made the assessments fina, executory
and demandable.
was denied by the Collector of Internal Revenue, through the Acting Chief of the Assessment
Department on 7 June 1955.
Issue: Whether the letter signed by the Acting Chief of the Assessment Department is the
decision contemplated by law.
Held: The issue is of no moment considering that Memorandum Order V-603 (15 March 1956)
of the Bureau of Internal Revenue, which authorizes said official (Acting Chief of Assessment
Department) to sign letters of demand involving assessment in behald of the Collector of Internal
Revenue. Moreover, the subsequent letters signed by the Collector affirming and upholding the
correctness of the assessment made by his Assessment Department constitutes evident proof that
the official who signed the letter of 7 June 1955 was duly authorized to do so.
Facts: In 1947, Tan Guan and Sia Lin, Chinamen, organized and registered the Philippine
Surplus Company, a general partnership. A general partnership is exempt from income tax
although it is required to file an income tax return. Profits, whether distributed or not, are
considered income of the partners. Acting upon a confidential report, however, that the company
posted fictitious expesnes in its books to avoid taxes, the BIR investigated in 1954 the books of
the partnership and discovered that the expenses were not covered by receipts, that the names of
payees were erased, and that the payees did not report the sums in question in their income tax.
The BIR disallowed expense deductions for the year 1948 amounting to P206,380 for being
fictitious. Said sum was treated as income of the individual partners, and thus, the BIR assessed
P50,956.57 as deficiency income tax against Tan Guan. Tan Guan appealed.
Issue: Whether the deduction claimed by the company as business income should be allowed,
and thus absolve Tan Guan of the assessed tax liability.
Held: The Commissioners finding on the facts constituting fraud, proven, and found established
by the Court of Tax Appeals, was not rebutted by the taxpayer. Tan Guan did not present any
evidence to disprove the findings that the expenses are fictitious; considering that the
investigation on Tan Guans liability was made prior to the expiration of the 5-year period to
preserve and keep receipts as set fgorth in Section 337 of the Tax Code. As the determination of
the Commissioner is presumed correct, it behooves the taxpayers to rebut such presumption. For
failure to overcome the burden, Tan Guan or the company cannot claim the expenses as
deduction from gross income.
Digest: Esso Standard Eastern vs. Commissioner (GR 285089, 7 July 1989)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Esso Standard Eastern vs. Commissioner
GR 28508-9, 7 July 1989
First Division, Cruz (J): 4 concur
Facts: ESSO deducted from its gross income for 1959, as part of its ordinary and necessary
business expenses, the amount it had spent for drilling and exploration of its petroleum
conscessions. The Commissioner disallowed the claim on the ground that the expenses should be
capitalized and might be written off as a loss only when a dry hole should result. Hence, ESSO
filed an amended return where it asked for the refund of P323,270 by reason of its abandonment,
as dry holes, of several of its oil wells. It also claimed as ordinary and necessary expenses in the
same return amount representing margin fees it had paid to the Central Bank on its profit
remittances to its New York Office.
Issue: Whether the margin fees may be considered ordinary and necessary expenses when paid.
Held: For an item to be deductible as a business expense, the expense must ebe ordinary and
necessary; it must be paid or incurred within the taxable year; and it must be paid or incurred in
carrying on a trade or business. In addition, the taxpayrer must substantially prove by evidence
or records teh deductions claimed under law, otherwise, the same will be disallowed. There has
been no attempt to define ordinary and necessary with precision. However, as guiding
principle in the proper adjudication of conflicting claims, an expenses is considered necessary
where the expenditure is appropriate and helpdul in the development of the taxpayers business.
It is ordinary when it connotes a payment which is normal in relation to the business of the
taxpayer and the surrounding circumstances. Assuming that the expenditure is ordinary and
necessary in the operation of the taxpayers business; the expenditure, to be an allowable
deduction as a business expense, must be determined from the nature of the expenditure itself,
and on the extent and permanency of the work accomplished by the expenditure. Herein, ESSO
has not shown that the remittance to the head office of part of its profits was made in furtherance
of its own trade or business. The petitioner merely presumed that all corporate expenses are
necessary and appropriate in the absence of a showing that they are illegal or ultra vires; which is
erroneous. Claims for deductions are a matter of legislative grace and do not turn on mere
equitable considerations.
Held: An application for terminal leave is an application for a commutation of leave credits
and not a commutation of salary as the officer or employee has already severed his
conncection with his employer and is no longer working. The cash value of his accumulated
leave credits should not be treated as compensation for services rendered at that time. Inasmuch
as terminal leave payments are given not only at teh same time but also for the same policy
considerations governing retirement benefits, the payments therefore should include COLA and
RATA. Section 286 of the Revised Administrative Code is not applicable. It cannot be construed
as limiting the basis of the computation of terminal leave pay to monthly salary only.
Facts: Amounts were claimed by Atty. Bernardo F. Zialcity on the occasion of his retirement. On
23 August 1990, a resolution was issued by the Court En Banc stating that the terminal leave pay
of Atty. Zialcita received by virtue of his compulsory retirement can never be considered a part
of his salary subject to the payment of income tax but falls under the phrase other benefits
received by retiring employees and workers, within the meaning of Section 1 of PD 220 and is
thus exempt from the payment of income tax. That the money value of his accrued leave credits
is not part of his salary is buttessed by Section 3 of PD 985, which it makes it clear that the
actual service is the period of time for which pay has been received, excluding the period
covered by terminal leave. The Commissioner filed a motion for reconsideration.
Issue: Whether terminal leave pay is exempt from tax; as well as other amounts claimed herein.
Held: Applying Section 12 (c) of Commonwealth Act 186, as incorporated into RA 660, and
Section 28 (c) of the former law, the amount received by Atty. Zialcita as a result of the
converson of unused leave credits, commonly known as terminal leave, is applied for by an
officer or employee who retires, resigns, or is separated from the service through no fault of his
own. Since the terminal leave is applied for after the severance of the employment, terminal pay
is no longer compensation for services rendered. It cannot be viewed as salary. Further, the
terminal leave pay may also be considered as a retirement gratuity, which is also another
exclusion from gross income as provided for in Section 28 (b), 7 (f) of the Tax Code.
The 23 August Resolution (AM 90-6-015-SC), however, specifically applies only to employees
of the Judiciary who retire, resign or are separated through no fault of their own. The resolution
cannot be made to apply to otehr government employees, absent an actual case or controversy, as
that would be in principle an advisory opinion.
was an original Fortune Tobacco Corp. register and thus a local brand. RA 7654 was enacted on
10 June 1993, levying a P5 minimum tax on locally manufactured cigarettes taxed at 55% or
exportation of which is not authorized by contract, and P2 minimum tax per pack on other
locally manufactured cigarette. The BIR sent the Company a month later a copy Revenue
Memorandum Circular 37-93 declaring Hope, More and Champion as foreign brands, and
thus subjecting them to 55% as valorem tax, a review of RMC 37-93 was denied.
Issue: Whether the brands may be placed within the scope of the amendatory law (RA 7654)
and subject then to an increased, through RMC 37-93.
Held: Prior to the issuance of RMC 37-93, the brands were in the category of locally
manufactured cigarettes not bearing foreign brands, subject to 45% ad valorem tax. Without
RMC 37-93, the enactment of RA7654 would not have new tax rate consequences on the
companys products. In issuing RMC 37-93, the BIR legislated under its quasi-legislative
authority and not simply interpreted the law. When an administrative rule goes beyond merely
providing for the means that can facilitate or render least cumbersome the implementation of the
law but substantially adds to or increases the burden of those governed. It behooves the agency
to accord at least to those directly affected a chance to be heard, and thereby be duly informed,
before that new issuance is given the force and effect of law.
FIRB issued Resolution 17-87 (24 June 1987) restoring NAPOCORs exemption, which was
approved by the President on 5 October 1987.
Since 1976, oil firms never paid excise or specific and ad valorem taxes for petroleum products
sold and delivered to NAPOCOR. Oil companies started to pay specific and ad valorem taxes on
their sales of oil products to NAPOCOR only in 1984. NAPOCOR claimed for a refund
(P468.58 million). Only portion thereof, corresponding to Caltex, was approved and released by
way of a tax credit memo. The claim for refund of taxes paid by PetroPhil, Shell and Caltex
amounting to P410.58 million was denied. NAPOCOR moved for reconsideration, starting that
all deliveries of petroleum products to NAPOCOR are tax exempt, regardless of the period of
delivery.
Issue: Whether NAPOCOR cease to enjoy exemption from indirect tax when PD 938 stated the
exemption in general terms.
Held: NAPOCOR is a non-profit public corporation created for the general good and welfare,
and wholly owned by the government of the Republic of the Philippines. From the very
beginning of the corporations existence, NAPOCOR enjoyed preferential tax treatment to
enable the corporation to pay the indebtness and obligation and effective implementation of the
policy enunciated in Section 1 of RA 6395. From the preamble of PD 938, it is evident that the
provisions of PD 938 were not intended to be strictly construed against NAPOCOR. On the
contrary, the law mandates that it should be interpreted liberally so as to enhance the tax exempt
status of NAPOCOR. It is recognized principle that the rule on strict interpretation does not
apply in the case of exemptions in favor of government political subdivision or instrumentality.
In the case of property owned by the state or a city or other public corporations, the express
exception should not be construed with the same degree of strictness that applies to exemptions
contrary to the policy of the state, since as to such property exception is the rule and taxation
the exception.
Hong Kong to Manila on 30 March 1898 by a Royal Decree of the Spanish Government. When
the concession expired in 1952, RA 808 was approved, giving the company a legislative
franchise to land, construct, maintain and operate a submarine telegraph cable connecting
Manila to Hong Kong, and a tax exception from the payment of all taxes except a franchise tax
of 5% of the gross earnings and the tax on its real property. The Commissioner, however,
assessed deficiency income tax (inclusive of surcharges, interests and penalties thereon for years
1965-1970) against the company on the belief that the franchise is inoperative for failure to
conform with the constitutional requirement that franchise holders should be organized under
Philippine Laws and that 80% of its capital owned by Filipinos
Issue: Whether the franchise is inoperative, rendering the company liable for deficiency income
tax.
Held: A law is presumed constitutional as it is supposed to have been carefully studied and
determined to constitutional before it was finally enacted by Congress and approved by the Chief
Executive. No constitutional question would be resolved unless the requisites of a judicial
inquiry are present; i.e. the existence of an appropriate case, an interest personal and substantial
by the party raising the constitutional question, the plea that the function be exercised at the
earliest opportunity, and the necessity that the constitutional question be passed in order to
decide the case. Herein, the last criterion is missing; and accordingly, the Court gives high
respect for the acts of the other departments of the government and, as much as possible, avoids
deciding the constitutional question.
The company duly complied with the conditions set forth in the legislative franchise. It has also
complied with the tax requirement by paying to the Republic a tax of 5% of the gross earnings
from Philippines operations regularly since its creation. As a legislative franchise partakes of the
nature of a contract; the franchise is the law between the parties and they are bound by the terms
thereof. The government agency cannot declare the franchise as ineffective and unenforceable
merely by stating that the company failed to comply with the requirements of the general statutes
(e.g. Public Service Act and the Corporation law) which are not mentioned in RA 808. Still, a
remand of the case to the Court of Tax Appeals is necessary to determine the income tax liability
of the company corresponding to its income beyond the scope of RA 808.
Facts: Meralco is the holder of a franchise to construct, maintain, and operate an electric light,
heat , and power system in the City of Manila and its suburbs. In 1962 and 1963, Meralco
imported and received from abroad copper wires, transformers, and insulators for use in the
operation of its business. The Collector of Customs, as deputy of the Commissioner of Internal
Revenue, levied and collected a compensating tax. Meralco claimed for refund for the said
yeares, but such claims were either not acted upon or denied by the Commissioner.
Issue: Whether Meralco is exempt from payment of a compensating tax on poles, wires,
transformers and insulators imported by it for use in the operation of its electric light, heat, and
power system.
Held: Meralco is not exempt from paying the compensationg tax provided for in Section 190 of
the Tax Code, the prupose of which is to place casual importers, who are not merchants on
equal forring with established merchants who pay sales tax on articles imported by them.
Meralcos claim for exemption from payment of the compensating tax is not clear or expressed,
contrary to the rule that exemptions from taxation are highly disfavored in law, and he who
claims exemption must be able to justify his claim by the clearest grant of organic or statute
law. Tax exemptiion are strictly construed against the taxpayer, they being highly disfavored
and may almost be said to be odious to the law. When exemption is claimed, it must be shown
indubitably to exist, for every presumption is against it, and a well-founded doubt is fatal to the
claim.
Sat 13 Dec 2003
corporations exercising the privilege of storing copra within the municipalitys territorial
jurisdiction. Such fees imposed do not amount to double taxation. For double taxation to exist,
the same property must be taxed twice, when it should be taxed but once. A tax on the companys
producs is different from the tax on the privilege of storing copra in a bodega situated within the
territorial boundary of the municipality.
Facts: On 30 September 1946, the Municipal Board of Iloilo City enacted Ordinance 86
imposing license tax fees upon tenement house (P25); tenemen house partly engaged or wholly
engaged in and dedicated to business in Baza, Iznart, and Aldeguer Streets (P24 per apartment);
and tenement house, padtly or wholly engaged in business in other streets (P12 per apartment).
The validity of such ordinance was challenged by Eusebio and Remedios Villanueva, owners of
four tenement houses containing 34 apartments. The Supreme Court held the ordinance to be
ultra vires. On 15 January 1960, however, the municipal board, believing that it acquired
authority to enact an ordinance of the same nature pursuant to the Local Autonomy Act, enacted
Ordinance 11 (series of 1960), Eusebio and Remedios Villaniueva assailed the ordinance anew.
Issue: Whether Ordinance 11 violate the rule of uniformity of taxation.
Held: The Court has ruled that tenement houses constitute a distinct class of property; and that
taxes are uniform and equal when imposed upon all property of the same class or character
within the taxing authority. The fact that the owners of the other classes of buildings in Iloilo are
not imposed upon by the ordinance, or that tenement taxes are imposed in other cities do not
violate the rule of equality and uniformity. The rule does not require that taxes for the same
purpose should be imposed in different territorial subdivisions at the same time. So long as the
burden of tax falls equally and impartially on all owners or operators of tenement houses
similarly classified or situated, equality and uniformity is accomplished. The presumption that
tax statutes are intended to operate uniformly and equally was not overthrown herein.
Held: Uniformity in taxation means that all taxable articles or kinds of property, of the same
class, shall be taxed at the same rate. It does not mean that lands, chattels, securities, incomes,
occupations, franchises, privileges, necessities, and luxuries shall all be assessed at the same rate.
Different articles may be taxed at different amounts provided the rate is uniform on the same
class everywhere, with all people, at all times. Herein, the Act imposes a tax of P2 per square
meter or a fraction thereof upon every electric sign, billboard, etc., wherever found in the
Philippine Islands. The rule of taxation upon such signs is uniform throughout the islands. The
rule does not require taxes to be graded according to the value of the subject(s) upon which they
are imposed, especially those levied as privilege or occupation taxes.
Digest: Pepsi-Cola Bottling Co. vs. City of Butuan (GR L22814, 28 August 1968)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Pepsi-Cola Bottling Co. vs. City of Butuan
GR L-22814, 28 August 1968
En Banc, Concepcion (J): 5 concur
Facts: Ordinance 110 was enacted by the City of Butuan imposing a tax of P0.10 per case of 24
bottles of softdrinks or carbonated drinks. The tax was imposed upon dealers engeged in selling
softdrinks or carbonated drinks. When Ordinance 110, the tax was imposed upon an agent or
consignee of any person, association, partnership, company or corporation engaged in selling
softdrinks or carbonated drinks, with agent or consignee being particularly defined on the
inserted provision Section 3-A. In effect, merchants engaged in the sale of softdrinks, etc. are not
subject to the tax unless they are agents or consignees of another dealer who must be one
engaged in business outside the City. Pepsi-Cola Bottling Co. filed suit to recover sums paid by
it to the city pursuant to the Ordinance, which it claims to be null and void.
Issue: Whether the Ordinance is discriminatory.
Held: The Ordinance, as amended, is discriminatory since only sales by agents or consignees
of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf
of other merchants, regardless of the volume of their sales , and even if the same exceeded those
made by said agents or consignees of producers or merchants established outside the city, would
be exempt from the tax. The classification made in the exercise of the authority to tax, to be valid
must be reasonable, which would be satisfied if the classification is based upon substantial
distinctions which makes real differences; these are germane to the purpose of legislation or
ordinance; the classification applies not only to present conditions but also to future conditions
substantially identical to those of the present; and the classification applies equally to all those
who belong to the same class. These conditions are not fully met by the ordinance in question.
Facts: Air India is a foreign corporation and an off-line international carrier not engaged in the
business of air transporation in the Philippines. Air India sells airplane tickets in the Philippines
trhough its general sales agent, Philippine Airlines. Said tickets are serviced by Air India outside
the Philippines. The Commissioner of Internal Revenue assessed against Air India the amount of
P142,471.68 representing 2.55 income tax on its gross Philippine billngs pursuant to Section 24
(b) (2) of the Tax Code, as amended, inclusive of th e50% surcharge and interest for willful
neglect to file a return as provided under Section 72 of the same Code. Air India appealed to the
Court of Tax Appeals.
Issue: Whether the revenue derived by an international air carrier from sles of tickets in the
Philippines for air transportation, while having no landing rights in the country, constitutes
income of said carrier from Philippine sources, and thus taxable under Section 24 (b) (2) of the
Tax Code.
Held: Based on the doctrine enunciated in British Overseas Airways Corp., the revenue derived
by Air India from the sales of airplane tickets, through its agent in the Philippines, must be
considered taxable income. As correctly assessed by the Commissioner, such income is subject to
a 2.5% tax pursuant to PD 1355, amending section 24 (b) (2) of the Tax Code.
Issue: Whether the revenue derived by BOAC from ticket sales in the Philippines for air
transportation, while having no landing rights in the Philippines, constitute income of BOAC
from Philippine sources, and accordingly, taxable.
Held: The source of an income is the property, activity or service that produced the income. For
the source of income to be considered as coming from the Philippines, it is sufficient that the
income is derived from activity within the Philippines. Herein, the sale of tickets in the
Philippines is the activity that produced the income. The tickets exchanged hands here and
payments for fares were also made here in Philippine currency. The situs of the source of
payments is the Philippines. The flow of wealth proceeded from, and occured within, Philippine
territory, enjoying the protection accorded by the Philippine Government. In consideration of
such protection, the flow of wealth should share the burden of supporting the government. PD
68, in relation to PD 1355, ensures that international airlines are taxed on their income from
Philippine sources. The 2 1/2 %tax on gross billings is an income tax. If it had been intended as
an excise or percentage tax, it would have been placed under Title V of the Tax Code covering
taxes on business.
Digest: # Philippine Match Co. Ltd. vs. Cebu City (GR L30745, 18 January 1978)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Philippine Match Co. Ltd. vs. Cebu City
GR L-30745, 18 January 1978
Second Division, Aquino (J): 3 concur, 1 on leave
Facts: Cebu City imposed a quarterly tax (sales tax of 1%) on gross sales or receipts of
merchants, dealers, importers and manufacturers or any commodity doing business in Cebu City,
through Ordinance 279. Section 9 of the Ordinance provided that, for the purpose of the tax, all
deliveries of goods or commodities stored in Cebu City, or if not stored are solld in that city sahll
be considered as sales in the city and shall be taxable. Philippine Match Co. Ltd., with principal
office in Manila, questioned the legality of the tax collected by the City of Cebu on sales of
matches stored by the company in Cebu City but delivered to customers outside the city.
Issue: Whether the City of Cebu can tax sales of matches which were perfected and paid for in
Cebu City but where the matches were delivered to customers outside the city.
Held: The city can validly tax the sales of matches to customers outside of the city as long as the
orders were booked and paid for in the companys branch office in the city. Those matches can
be regarded as sold in the city, as contemplated in the ordinance, because the matches were
delvered to the carrier in Cebu City. Generally, delivery to the carrier is delivery to the buyer
(Article 1523, Civil Code). A different interpretation would defeat the tax ordinance in question
or encourage tax evasion through the simple expedient of arranging for the delivery of the
matches at the outskirts of the city though the purchases were effected and paid for in the
companys branch office in the city. The municipal board of the city is empowered to provide for
the levy and collection of taxes for general and special purposes in accordance with law.
is hardly possible, considering the multiple, distinct relationships which may be entered into with
respect thereto.
Herein, the actual situs of the shares of stock is in the Philippines, the corporation being
domiciled therein. The certificates of stock remained in the Philippines up to the time when the
deceased died in California, and they were in possession of one Syrena McKee, secretary of the
corporation, to whom they have been delivered and indorsed in blank. McKee had the legal title
to the certificates of stock held in trust for the true owner thereof. The owner residing in
California has extended here her activities with respect to her intangibles so as to avail hereself
of the protection and benefit of Philippine laws. Accordingly, the jurisdiction of the Philippine
Government to tax must be upheld.
to serve the Government as it was intended to serve it, or hinder the efficient exercise of its
power.
An Army Post Exchange, although an agency within the US Army, cannot secure exemption
from taxation for merchants who make sales to the Post Exchange.
Digest: Republic vs. Bacolod-Murcia Milling Co. (GR L19824-26, 9 July 1999)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Republic vs. Bacolod-Murcia Milling Co.
GR L-19824-26, 9 July 1999
En Banc, Regala (J): 7 concur, 1 took no part
Facts: RA 632 created the Philippine Sugar Institute, a semi-public corporation. In 1951, the
Institute acquired the Insular Sugar Refinery for P3.07 million payable in installments from the
proceeds of the sugar tax to be collected under RA 632. The operation of the refinery for 1954 to
1957 was disastrous as the Institute suffered tremendous losses. Contending that the purchase of
the refinery with money from the Institutes fund was not authorized under RA 632, and that the
continued operation of the refinery is inimical to their interest, Bacolod-Murcia Milling Co., Maao Sugar Central, Talisay-Silay Milling Co. and the Central Azucarera del Danao refused to
continue with their contribution to said fund. The trial court found them liable under RA 632.
Issue: Whether the taxpayers may refuse to pay the special assessment, allegedly distinct from
an ordinary tax which no one can refuse to pay.
Held: The nature of a special assessment similar to the case has been discussed and explained
in Lutz vs. Araneta. The special assessment or levy for the Philippine Sugar Institute (Philsugin)
Fund is not so much an exercise of the power of taxation, nor the imposition of a special
assessment, but the exercise of police power for the general welfare of the entire country. It is,
therefore, an exercise of a sovereign power which no private citizen may lawfully resist. Section
2a of the Charter authorizing Philsugin to conduct research work for the sugar industry in all its
phases, either agricultural or industrial, for the purpose of introducing into the sugar industry
such practices or processes that will reduce the cost of production and achieve greater efficiency
in the industry, justifies the acquisition of the refinery in question. The financial loss resulting
from the operation thereof is no means an index that the industry did not profit therefrom, as
other gains of a different nature (such as experience) may have been realized.
Revenue and the Financial Officer of the Supreme Court from making any deduction of
withholding taxes from their salaries.
Issue: Whether the salaries of judges are subject to tax.
Held: The salaries of members of the Judiciary are subject to the general income tax applied to
all taxpayers. Although such intent was somehoe and inadvertently not clearly set forth in the
final text of the 1987 Constitution, the deliberations of the 1986 Constitutional Commission
negate the contention that the intent of the framers is to revert to the original concept of nondiminution of salaries of judicial officers. Hence, the doctrine in Perfecto v. Meere and
Endencia vs. David do not apply anymore. Justices and judges are not only the citizens whose
income have been reduced in accepting service in government and yet subjecte to income tax.
Such is true also of Cabinet members and all other employees.
used to other non-religious purposes. Thus, the Apostolic Prefect is required to pay the special
assessment.
Facts: The laws of Mississippi provided that any person engaged in the business of distributor
of gasoline, or retail dealer in gasoline, shall pay an excise tax for the privilege of engaging in
such business, except that sold in interstate commerce or puchased outside the state and brought
in by the consumer for his own use. Since 1925, Panhandle Oil Co. has been engaged in such
business. Subsequently, the State sued to recover taxes claimed on account of sales made by the
company to the United States for the use of its Coast Guard fleet in service in the Gulf of Mexico
and its Veterans Hospital at Gulfport. The company defended on the ground that Mississippi
statutes relevant to the case, if construed to impose taxes on such sales, are repugnant to the
federal constitution.
Issue: Whether Panhandle Oil Co. is liable for the excise tax imposed by the State of
Mississippi.
Held: The United States is empowered by the Constitution to maintain and operate the fleet and
the hospital. Authorization and laws enacted pursuant to the Constitution are supreme, and in
case of conflict, control state enactments. The States may not burden or interfere with the
exertion of national power, or make it a source of revenue or take the funds raised or tax the
means for for the performance of federal functions. While the State of Mississippi may impose
charges upon the company for the privilege of carrying trade that is subject to the power of the
State, it may not lay any tax upon transactions by which the United States secures the things
desired for its governmental purposes. The necessary operation of the statutes when so construed
is directly to retard, impede, and burden the exertion by the United States of its constitutional
powers to operate the fleet and the hospital. The exactions demanded infringe upon the right to
have the Constitutional independence of the United States, in respect to such purchases, remain
untrammeled.
Panhandle Oil Co. is, thus, not liable for the taxes claimed.
[ Note: It is not in the main body or decision, but in the dissenting opinion of Justice Holmes
that the following doctrine was enunciated:
(The Court), so often has defeated the attempt to tax in certain ways, can defeat an attempt to
discriminate or otherwise go too far without wholly abolishing the power to tax. The power to
tax is not the power to destroy while this Court sits. The power to fix rates is the power to
destroy if unlimited, but this Court while it endeavors to prevent confiscation does not prevent
the fixing of rates. A tax is not an unconstitutional regulation in every case where an absolute
prohibition of sales would be one. ]
Secretary of Finance did in Departent Order 18, series of 1958), the admission of pay patients
does not detract from the charitable character of a hospital, if its funds are devoted exclusively to
the maintenance of the institution. Thus, the shipments are tax exempt.
protection and due process clauses of the Constitution as well as the rule requiring uniformity in
taxation.
Issue: Whether BP 135 violates the due process and equal protection clauses, and the rule on
uniformity in taxation.
Held: There is a need for proof of such persuasive character as would lead to a conclusion that
there was a violation of the due process and equal protection clauses. Absent such showing, the
presumption of validity must prevail. Equality and uniformity in taxation means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate. The taxing power
has the authority to make reasonable and natural classifications for purposes of taxation. Where
the differentitation conforms to the practical dictates of justice and equity, similar to the
standards of equal protection, it is not discriminatory within the meaning of the clause and is
therefore uniform. Taxpayers may be classified into different categories, such as recipients of
compensation income as against professionals. Recipients of compensation income are not
entitled to make deductions for income tax purposes as there is no practically no overhead
expense, while professionals and businessmen have no uniform costs or expenses necessaryh to
produce their income. There is ample justification to adopt the gross system of income taxation
to compensation income, while continuing the system of net income taxation as regards
professional and business income.
Digest: Association of Custom Brokers vs. Manila (GR L4376, 22 May 1953)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Association of Custom Brokers vs. Manila
GR L-4376, 22 May 1953
En Banc, Bautista-Angelo (J): 3 concur, 4 concur in result
Facts: The Association of Customs Brokers, which is composed of all brokers and public service
operators of motor vehicles in the City of Manila, challenges the validity of Ordinance 3379 on
the grounds (1) that while it levies a so-called property tax, it is in reality a license tax which is
beyond the power of the Manila Municipal Board; (2) that said ordinance offends against the rule
on uniformity of taxes; and (3) that it constitutes double taxation.
Issue: Whether the ordinance infringes on the rule on uniformity of taxes as ordained by the
Constitution.
Held: While the tax in the Ordinance refers to property tax and it is fixed ad valorem, it is
merely levied on all motor vehicles operating within Manila with the main purpose of raising
funds to be expended exclusively for the repair, maintenance and improvement of the streets and
bridges in said city. The ordinance imposes a license fee although under the cloak of an ad
valorem tax to circumvent the prohibition in the Motor Vehicle Law. Further, it does not
distinguish between a motor vehicle for hire and one which is purely for private use. Neither
does it distinguish between a motor vehicle registered in Manila and one registered in another
place but occasionally comes to Manila and uses its streets and public highways. The distinction
is necessary if he ordinance intends to burden with tax only those registered in Manila as may be
inferred from the word operating used therein. There is an inequality in the ordinance which
renders it offensive to the Constitution.
Insofar as the enumerated exceptions are concerned, the company does not fall under any of
them.
Digest: Commissioner vs. Cebu Portland Cement (GR L29059, 15 December 1987)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Commissioner vs. Cebu Portland Cement
GR L-29059, 15 December 1987
First Division, Cruz (J): 4 concur
Facts: By virtue of a decision of the Court of Tax Appeals, modified by the Supreme Court, the
Commissioner was ordered to refund overpayments of ad valorem taxes on cement produced and
sold by the company after October 1957. The company moved for a writ of execution, which
was opposed by the Commissioner on the ground that the company had an outstanding sales tax
liability to which the judgment debt had already been credited. The Court of Tax Appeals held
that the alleged sales tax liability was still being questioned and therefore cannot be set-off
against the refund.
Issue: Whether the assessment of sales tax liability may be enforced, i.e. to set off against the
refund.
Held: The argument, that the assessment cannot as yet be enforced because it is still being
contested, loss sight of the urgency of the need to collect taxes as the life blood of the
government. If the payment of taxes could be postponed by simply questioning their validity,
the machinery of the state would grind to a halt and all government functions would be
paralyzed. To require the Commissioner to actually refund to the company the amount of the
judgment debt. Which he will later have the right to distrait for payment of its sales tax liability,
is an idle ritual.
Digest: Commissioner vs. Firemans Fund Insurance (GR L30644, 9 March 1987)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Commissioner vs. Firemans Fund Insurance
GR L-30644, 9 March 1987
Second Division, Paras (J): 5 concur, 1 on leave
Facts: Firemans Funds Insurance is a resident foreign insurance corporation organized under the
laws of the United States, authorized and duly licensed to do business in the Philippines. From
1952-1958, the company entered into various insurance contracts involving causality, fire and
marine risks, for which the corresponding insurance policies were issued. From 1952-1956,
documentary stamps were bought and affixed to the corresponding pages of the policy register,
instead of on the insurance policies issued. The Commissioner assessed and demanded from the
company the payment of documentary stamps for the years 1952-1958, plus compromise
penalties.
Issue: Whether the affixture of documentary stamp on pages other than those authorized by law
is tantamount to failure to pay the same.
Held: Although the documentary stamps were affixed to papers other than those authorized by
law, it is not tantamount to failure to pay the same as the company purchased and paid the
documentary stamps corresponding to the various insurance policies. Sections 210, 232, 221,
237 and 239 of the Tax Code have the overriding purpose to collect taxes, and the steps
involving documentary taxes (purchase, affixture, and cancellation) are but a means to that end.
Although the insurance policies with the corresponding documentary stamps affixed are the best
evidence to prove payment of said documentary stamp tax, it does not preclude the admissibility
of other proofs which are uncontradicted and considerable weight. Still, whenever the
interpretation of statute levying taxes or duties are in doubt, such statutes are to be construed
most strongly against the government and in favor of the subjects or citizens, because burdens
are not to be imposed, nor presumed to be imposed beyond what statutes expressly and clearly
import. There is no justification for the government which has already realized the revenue,
which is the object of the imposition of the subject stamp tax, to require payment of the same tax
for the same documents.
nails, candies, chairs, etc. The tax exemption expired on 30 May 1951. In 1953, the company
applied with the secretary of Finance for the reinstatement of the exemption privilege under the
provisions of RA 901, the reinstatement to commence on the date RA 901 took effect. The
company was given a Certificate of Tax Exemption on 7 July 1954, exemption it similarly as in
RA 35 until 31 December 1958, with diminishing exemption until 20 June 1955. The
Commissioner assessed sales tax on gross sales of articles manufactured by it, including steel
chairs. The company appealed to the Court of Tax Appeals.
Issue: Whether the company is exempted from the tax imposed on the manufacture and sale of
articles, such as steel chairs.
Held: The company was granted tax exemption in the manufacture and sale of machines for
making cigarette paper, pails, etc. but not for the manufacture and sale of articles produced by
those machines. The manufacture of steel chairs, jeep parts, and other articles not constituting
machines for making certain products would not fall under the classification of new and
necessary industries envisioned in RA 35 and 901 as to entitle the company to tax exemption.
Exemptions are highly disfavored in law and he who claims tax exemption must be able to
justify his claim or right thereto by the clearest grant of organic or statute law. Tax exemption
must be clearly expressed and cannot be established by implication.
Digest: Surigao Consolidated Mining vs. Collector (GR L14878, 26 December 1963)
Posted by Berne Guerrero under (a) oas , digests
No Comments
Surigao Consolidated Mining vs. Collector
GR L-14878, 26 December 1963
En Banc, Ragala (J): 10 concur
Facts: Before the outbreak of the War, the Surigao Consolidated Mining Co. was operating its
mining concessions in Mainit, Surigao. Due to the interruption of communications at the
outbreak of the war, the company lost contact with its mines and never received the production
reports for the 4th quarter of 1941. To avoid incurring any tax liability or penalty, it deposited of
check payable to and indorsed in favor of the City Treasurer, in payment of ad valorem taxes for
the said period. After the war, the company filed its ad valorem tax for the said period pursuant
to Commonwealth Act 772. Its return was revised, until eventually the company claimed a refund
of P17,158.01. The collector of Internal Revenue denied the request for refund.
Issue: Whether Surigao Consolidated may recover its tax payment in light of the condonation
made under a subsequent law, RA 81.
Held: RA 81, Section 1(d) provided that all unpaid royalties, ad valorem or specific taxes on all
minerals mined from mining claims or concessions existing an din force on 1 January 1942, and
which minerals were lost by reason of war, of circumstance arising therefrom are condoned
The provision refers to the condonation of unpaid taxes only. The condonation of a tax liability is
equivalent and is in the nature of tax exemption. Being so, it should be sustained only when
expressed in explicit terms, and it cannot be extended beyond the plain meaning of those terms.
He who claims an exemption from his share of the common burden of taxation must justify his
claim by showing t hat the Legislature intended to exempt him. The company failed to show any
portion of the law that explicitly provided for a refund of those taxpayers who had paid their
taxes on the items.
provision of the law to that effect. Exemption from taxation is never presumed. For tax
exemption to be recognized, the grant must be clear and express. It cannot be made to rest on
vague implications.
taxes paid to the US Federal Government, interests, and exchange and bank charges. They filed
their claims for refund.
Issue: Whether income tax paid to foreign governments can be deducted from the gross income
or as a tax credit.
Held: The laws intent is that the right to deduct income taxes paid to foreign government from
the taxpayers gross income is given only as an alternative or substitute to his right to claim a tax
credit for sich foreign income taxes; so that unless the alien resident has a right to claim such tax
credit if he so chooses, he is precluded from deducting the foreign income taxes from his gross
income. The prupose of the law is to prevent the taxpayer from claiming twice the benefits of his
payment of foreign taxes, by deduction from gross income and by tax credit. To allow an alien
resident to deduct from his gross income whatever taxes he pays to his own government amounts
to confer on the latter power to reduce the tax income of the Philippine Government. Such result
is incompatible with the status of the Philippines as an independent and sovereign state. Any
relief from the alleged double taxation should come from the United States, since its right to
burden the taxpayer is solely predicated on the taxpayers citizenship, without contributing to the
production of the wealth that is being taxed.
Digest: Commissioner vs. Lingayen Gulf Electric (GR L23771, 4 August 1988)
Posted by Berne Guerrero under (a) oas , digests
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Commissioner vs. Lingayen Gulf Electric
GR L-23771, 4 August 1988
En Banc, Sarmiento (J): 13 concur
Facts: Lingayen Gulf Electric Power operates an electric power plant serving the municipalities
of Lingayen and Binmaley, Pangaisnan, pursuant to municipal franchise granted it by the
respective municipal councils. The franchises provided that the grantee shall pay quarterly to the
Provincial Treasury of Pangasinan 1% of the gross earnings obtained through the privilege for
the first 20 years (from 1946), and 2% during the remaining 15 years of the life of the franchise.
In 1948, the Philippine President approved the franchise (RA 3843). In 1955, the BIR assessed
and demanded against the company deficiency franchise taxes and surcharges fro the years 1946
to 1954 applying the franchise tax rate of 5% on gross receipts from 1948 to 1954. The company
asked for a reinvestigation, which was denied.
Issue [1]: Whether the Court can inquire into the wisdom of the Act.
Held [1]: The Court does not have the authority to inquire into the wisdom of the Act. Charters
or special laws granted and enacted by the Legislatur are in the nature of private contracts. They
do not contitute a part of the machinery of the general government. They are usually adopted
after careful consideration of the private rights in relation with the resultant benefits of the State.
In passing a special charter, the attention of the Legislature is directed to the facts and
circumstances which the act or charter is intended to meet. The Legislature considers and makes
provision for all the circumstance of the particular case. The Court ought not to disturb the ruling
of the Court of Tax Appeals on the constitutionality of the law in question.
Issue [2]: Whether a rate below 5% on gross income violate the uniformity of tax clause in the
Constitution.
Held [2]: A tax is uniform when it operates with the same force and effect in every place where
the subject of it is found. Uniformity means that all property belonging to the same class shall be
taxed alike. The legislature has the inherent power not only to select the subjects of taxation but
to grant exemptions. Tax exemptions have never been deemed violateve of the equal protection
clause. Herein, the 5% franchise tax rate provided in Section 259 of the Tax Code was never
intended to have a universal application. Section 259 expressly allows the payment of taxes at
rates lower than 5% when the charter granting the franchise precludes the imposition of a higher
tax. RA 3843 did not only fix and specify a franchise tax of 2% on its gross receipts, but made it
in lieu of any and all taxes, all laws to the contrary notwithstanding.
The company, hence, is not liable for deficiency taxes.
Digest: Visayas Cebu Terminal vs. Commissioner (GR L19530 and L-19444, 27 February 1965)
Posted by Berne Guerrero under (a) oas , digests
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Visayas Cebu Terminal vs. Commissioner
GR L-19530 and L-19444, 27 February 1965
En Banc, Paredes (J): 8 concur, 2 took no part
Facts: Visayan CebuTerminal Co. was appointed the sole manager of the Irrastre Service at the
Port of Cebu, after a public bidding in 1957, covering import cargoes, including transit import
cargoes. In 1958, the Bureau of Internal Revenue (Manila) demanded the payment of percentage
taxes and penalties due to the Government. Subsequently, however, BIR examiners stated that
the company was not subjected of the 3% percentage tax, it has been paying 28% of the gross
receipts to the Bureau of Customs.
Issue: Whether Visayas Cebu Terminal Co. In c. is exempted from the percentage tax.
Held: The company is an arrastre contractor and is covered by Section 191 of the Tax Code.
Section 191 of the Tax Code does not establish any distinction between an arrastre operator who
handles only imported cargo in its arrastre operations , pursuant to RA 140, and those handling
interisland cargo, so as to exempt the company from the percentage tax. It is a well settled rule
that he who claim s exemption should prove by convincing proofs that he is exempted. The
company failed to present such proofs. Further, the recommendation of the examiners are subject
to the review of their superiors, who may countermand or affirm them. The government is never
estopped to collect legitimate taxes because of the error committed by its agents.
However, as the company pays 28% of the total monthly gross receipts derived from the arrastre
service to the Bureau of Customs, to hold the company liable for the payment of percentage tax
is unjust and not contemplated by Section 191 of the Tax Code.
Facts: In 1957, the MB Estate Inc. of Bacolod City donated P10,000 in cash to the parish priest
of Victorias, Negros Occidental; the amount spent for the construction of a new Catholic Church
in the locality,m as intended. In1958, MB Estate filed the donors gift tax return. In 1960, the
Commissioner issued an assessment for donees gift tax against the parish. The priest lodged a
protest to the assessment and requested the withdrawal thereof.
Issue: Whether the Catholic Parish is tax exempt.
Held: The phrase exempt from taxation should not be interpreted to mean exemption from all
kinds of taxes. The exemption is only from the payment of taxes assessed on such properties as
property taxes as contradistinguished from excise taxes. A donees gift tax is not a property tax
but an excise tax imposed on the transfer of property by way of gift inter vivos. It does not rest
upon general ownership, but an excise upon the use made of the properties, upon the exercise of
the privilege of receiving the properties. The imposition of such excise tax on property used for
religious purpose do not constitute an impairment of the Constitution.
The tax exemption of the parish, thus, does not extend to excise taxes.
is incidental to education; the lease of the first floor cannot by any stretch of imagination be
considered incidental to the purposes of education. The test of exemption from taxation is the use
of the property for purposes mentioned in the Constititution.
Held: The legislature may, in its discretion, select what occupation shall be taxed, and in the
exercise of that discretion it may tax all, or it may select for taxation certain classes and leave the
other untaxed. Manila, as the seat of the National Government and with a population and volume
of trade many times that of any other Philippine city or municipality, offers a more lucrative field
for the practice of the professions, so that it is but fair that the professionals in Manila be made to
pay a higher occupation tax than their brethen in the provinces. The ordinance imposes the tax
upon every person exercising or pursuing any of the occupation named in the ordinance, and
does not make any distinction between professional having offices in Manila and outsiders who
practice their profession therein. What constitutes exercise or pursuit of a profession in the city is
a matter of judicial determination.
The Ordinance does not violate the equal protection clause.
company. The company denied liability for the payment of tax on the ground that both Napocor
and VOA are exempt from taxes.
Issue: Whether Philippine Acetylene Co. is exempt from the tax.
Held: Sales tax are paid by the manufacturer or producer who must make a true and complete
return of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of
output actually removed from the factory or mill, warehouse and to pay the tax due thereon. The
tax imposed by Section 186 of the Tax Code is a tax on the manufacturer or producer and not a
tax on the purchaser except probably in a very remote and inconsequential sense. Accordingly, its
levy on the sales made to tax-exempt entities like the Napocor is permissible. On the other hand,
there is nothing in the language of the Military Bases Agreement to warrant the general
exemption granted by General Circular V-41 (1947). Thus, the expansive construction of the tax
exemption is void; and the sales to the VOA are subject to the payment of percentage taxes under
Section 186 of the Tax Code. Therefore, tax exemption is strictly construed and exemption will
nbot be held to be conferred unless the terms under which it is granted clearly and distinctly
show that such was the intention.
curtailment of the rights of the owners of said animals and articles to freely sell and of
prospective purchasers to buy and dispose of them without the city limits in the ordinary course
of commerce and trade. The ordinance is ultra vires and, thus, is null and void.
Digest: Francia vs. Intermediate Appellate Court (GR L67649, 28 June 1988)
Digest: National Development Co. vs. Commissioner (GR L53961, 30 June 1987)
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National Development Co. vs. Commissioner
GR L-53961, 30 June 1987
En Banc, Cruz (J): 14 concur
Facts: The National Development Co. (NDC) entered into contracts in Tokyo with several
Japanese shipbuilding companies for the construction of 12 ocean-going vessels. Initial payments
were made in cash and through irrevocable letters of credit. When the vessels were completed
and delivered to the NDC in Tokyo, the latter remitted to the shipbilders the amount of US$
4,066,580.70 as interest on the balance of the purchase price. No tax was withheld. The
Commissioner then held NDC liable on such tax in the total amount of P5,115,234.74. The
Bureau of Internal Revenue served upon the NDC a warrant of distraint and levy after
negotiations failed.
Issue: Whether the NDC is liable for deficiency tax.
Held: The Japanese shipbuilders were liable on the interest remitted to them under Section 37 of
the Tax Code. The NDC is not the one taxed. The imposition of the deficiency taxes on the NDS
is a penalty for its failure to withhold the same from the Japanese shipbuilders. Such liability is
imposed by Section 53(c) of the Tax Code. NDC was remiss in the discharge of its obligation of
its obligation as the withholding agent of the government and so should be liable for its
omission.
governments hands; in light of the overpayment for 1959 and 1960, it cannot be said that the
taxpayer was guilty of delay enabling it to utilize the money.
The company is entitled to refund.
of the VOICP, P75,000 in promotional fees. In 1965, Algue received an assessment from the
Commissioner of Internal Revenue in the amount of P83,183.85 as delinquency income tax for
years 1958 amd 1959. Algue filed a protest or request for reconsideration which was not acted
upon by the Bureau of Internal Revenue (BIR). The counsel for Algue had to accept the warrant
of distrant and levy. Algue, however, filed a petition for review with the Coourt of Tax Appeals.
Issue: Whether the assessment was reasonable.
Held: Taxes are the lifeblood of the government and so should be collected without unnecessary
hindrance. Every person who is able to pay must contribute his share in the running of the
government. The Government, for his part, is expected to respond in the form of tangible and
intangible benefits intended to improve the lives of the people and enhance their moral and
material values. This symbiotic relationship is the rationale of taxation and should dispel the
erroneous notion that is an arbitrary method of exaction by those in the seat of power.
Tax collection, however, should be made in accordance with law as any arbitrariness will negate
the very reason for government itself. For all the awesome power of the tax collector, he may
still be stopped in his tracks if the taxpayer can demonstrate that the law has not been observed.
Herein, the claimed deduction (pursuant to Section 30 [a] [1] of the Tax Code and Section 70 [1]
of Revenue Regulation 2: as to compensation for personal services) had been legitimately by
Algue Inc. It has further proven that the payment of fees was reasonable and necessary in light of
the efforts exerted by the payees in inducing investors (in VOICP) to involve themselves in an
experimental enterprise or a business requiring millions of pesos.
The assessment was not reasonable.
Thereafter, five other guards filed their complaint for the same causes of action. Petitioner
contended that complainants have no cause of action against it due to absence of employeremployee relationship between them. They also denied liability alleging that due to the
inadequacy of the amounts paid to it under the Contract of Services, it could not possibly comply
with the payments required by labor laws.
Assigned for compulsory arbitration, the Labor Arbiter rendered a decision dismissing the
complaint for want of employer-employee relationship. When the case was appealed to the
NLRC, the decision was modified by holding that petitioner is liable to pay complainants, jointly
and severally, with the Security Agency on the ground that the petitioner is an indirect employer
pursuant to Articles 106 and 107. Hence, the appeal. The petitioner contended that NLRC erred
in giving due course to the appeal despite the fact that it was not under oath and the required
appeal fee was not paid; in holding it jointly and severally liable with the Security Agency; and
in refusing to give due course to its Motion for Reconsideration.
Issue(s):
Whether the formal defects of the appeal of the security agency invalidate the appeal.
Whether the security guards from the agency are entitled to benefits claimed from the
company
Held: The formal defects in the appeal of the Security Agency were not fatal defects. The lack of
verification could have been easily corrected by requiring an oath. The appeal fee had been paid
although it was delayed. Failure to pay the docketing fees does not automatically result in the
dismissal of the appeal. Dismissal is discretionary with the Appellate Court and discretion must
be exercised wisely and prudently, never capriciously, with a view to substantial justice. Failure
to pay the appeal docketing fee confers a directory and not a mandatory power to dismiss an
appeal and such power must be exercised with sound discretion and with a great deal of
circumspection, considering all attendant circumstances. Moreover, as provided for by Article
221 of the Labor Code in any proceeding before the Commission or any of the Labor Arbiters,
the rules of evidence prevailing in Courts of law or equity shall not be controlling and it is the
spirit and intention of this Code that the Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure, all in the interest of due
process.
Further, Articles 106 of the Labor Code provides that in the event that the contractor or
subcontractor fails to pay the wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent that he is liable
to employees directly employed by him, and Article 107 provides that the provisions of the
immediately preceding Article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent contractor for the
performance of any work, task, job or project. In the case at bar, petitioner became an indirect
reason that there being no severance of amputation of the left hand, the disability suffered by him
was not covered by his policy.
Plaintiff sued the defendants in the Municipality Court of this City, which dismissed his
complaints. Thereafter, the plaintiff appealed to the Court of First Instance Manila, presided by
Judge Gregorio S. Narvasa, which absolved the defendants from the complaints. Hence, the
appeal.
Issue: Whether Diosdado Ty is entitled to indemnity under the insurance policy for the disability
of his left hand.
Held: The agreement contained in the insurance policies is the law between the parties. As the
terms of the policies are clear, express and specific that only amputation of the left hand should
be considered as a loss thereof, an interpretation that would include the mere fracture or other
temporary disability not covered by the policies would certainly be unwarranted. In the case at
bar, due to the clarity of the stipulation, distinction between temporary disability and total
disability need not be made in relation to ones occupation means that the condition of the
insurance is such that common prudence requires him to desist from transacting his business or
renders him incapable of working. While the Court sympathizes with the plaintiff or his
employer, for whose benefit the policies were issued, it can not go beyond the clear and express
conditions of the insurance policies, all of which define partial disability as loss of either hand by
a amputation through the bones of the wrist. There was no such amputation in the case at bar.
The Supreme Court affirmed the appealed decision, with costs against the plaintiff-appellant.
Digest: Home Insurance v. Eastern Shipping Lines (GR L34382, 20 July 1983)
Posted by Berne Guerrero under (a) oas , digests
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Home Insurance v. Eastern Shipping Lines
GR L-34382, 20 July 1983 (123 SCRA 425)
First division, Gutierrez (p): 4 concurring, 2 on leave.
Facts: On 13 January 1967, S. Kajita & Co., on behalf of Atlas Consolidated Mining &
Development Corporation, shipped on board the SS Eastern Jupiter from Osaka, Japan, 2,361
coils of Black Hot Rolled Copper Wire Rods. The vessel is owned and operated by Eastern
Shipping Lines. The shipment was insured with Home Insurance against all risks in the amount
of P1,580,105.06. 53 of the 2361 coils discharged from the vessel were in bad order. The
Consignee ultimately received the 2,361 coils with 73 coils loose and partly cut, and 28 coils and
partly cut, which had to be considered as scrap. The weight also had a net loss/shortage of 593.15
kgs, or 1,209.56 lbs. For the loss/damage suffered by the cargo, Home Insurance paid the
consignee under its insurance policy the amount of P3,260.44, by virtue of which Home
Insurance became subrogated to the rights and actions of the Phelps Dodge. Home Insurance
made demands for payment against Eastern Shipping and the transportation company for
reimbursement of the aforesaid amount but each refused to pay the same. (A case Home
insurance v. NV Nedlloyd Lijnen consolidated with this case is of the same nature).
Filing its cases in court, Home Insurance avers that it is a foreign insurance company authorized
to do business in the Philippines through its agent, Victor Bello (who holds office at Makati) in
both cases. In L-34382, Eastern Shipping Lines denies the allegation of plaintiffs capacity to sue
for lack of knowledge or information sufficient to form a belief as to the truth thereof, while
Angel Jose Transportation admits the allegation. In L-34383, NV Nedlloyd Lijnen, Columbian
Philippines, and Guacods denied plaintiffs capacity to sue. The court dismissed the complaints
in the two cases on the same ground, that the plaintiff failed to prove its capacity to sue, even if
the petitioner had already secured the necessary license to conduct its insurance business in the
Philippines during the filing of the case. Hence, the petition.
Issue: Whether a foreign corporation doing business in the Philippines initially without a license
can claim indemnity through Philippine Courts.
Held: The objective of the law was to subject the foreign corporation to the jurisdiction of our
courts. The Corporation Law must be given a reasonable, not an unduly harsh, interpretation
which does not hamper the development of trade relations and which fosters friendly commercial
intercourse among countries. A harsh interpretation would disastrously embarrass trade, unlike if
the law is given a reasonable interpretation, it would markedly help in the development of trade.
The law simply means that no foreign corporation shall be permitted to transact business in the
Philippine Islands, as this phrase is known in corporation law, unless it shall have the license
required by law, and, until it complies with the law, shall not be permitted to maintain any suit in
the local courts. A contrary holding would bring the law to the verge of unconstitutionality, a
result which should be and can be easily avoided. In the present case, the lack of capacity at the
time of the execution of the contracts was cured by the subsequent registration. Such is also
strengthened by the procedural aspects of these cases.The petitioner sufficiently alleged its
capacity to sue when it averred in its complaints that it is a foreign insurance company, that it is
authorized to do business in the Philippines, that its agent is Mr. Victor H. Bello, and that its
office address is the Oledan Building at Ayala Avenue, Makati; as required by Section 4, Rule 8
of the Rules of Court. General denials inadequate to attack the foreign corporations lack of
capacity to sue in the light of its positive averment that it is authorized to do so. Nevertheless,
even if the plaintiffs lack of capacity to sue was not properly raised as an issue by the answers,
the petitioner introduced documentary evidence that it had the authority to engage in the
insurance business at the time it filed the complaints.
The Supreme Court consolidated and granted the petitions, reversed and set aside the CFI
decisions. In L-34382 (Civil Case 71923), Eastern Shipping Lines and Angel Jose Transportation
Inc. are ordered to pay the Home Insurance Company the sum of P1,630.22 each with interest at
the legal rate from 5 January 1968 until fully paid. Each shall also pay one-half of the costs. The
Court dismissed the counterclaim of Angel Jose Transportation Inc. In L-34383, N. V. Nedlloyd
Lijnen or its agent Columbian Phil. Inc. was ordered to pay the petitioner the sum of P2,426.98
with interest at the legal rate from 1 February 1968 until fully paid, the sum of P500.00
attorneys fees, and costs. The Court dismissed the complaint against Guacods, Inc.
point below 300 degrees Fahrenheit. Gasoline, which has a flash point below 300 degrees
Fahrenheit was stored therein.
Issue: Whether gasoline may be construed as oil to warrant the forfeiture of claims under the
insurance policy.
Held: The Hemp Warranty provisions relied upon by the insurer speaks of oils (animal and/or
vegetable and/or mineral and/or their liquid products having a flash point below 300
Fahrenheit, and is decidedly ambiguous and uncertain; for in ordinary parlance, Oils mean
lubricants and not gasoline or kerosene. By reason of the exclusive control of the insurance
company over the terms and phraseology of the contract, the ambiguity must be held strictly
against the insurer and liberally in favor of the insured, specially to avoid a forfeiture. There is no
reason why the prohibition of keeping gasoline in the premises could not be expressed clearly
and unmistakably, in the language and terms that the general public can readily understand,
without resort to obscure esoteric expression. If the company intended to rely upon a condition of
that character, it ought to have been plainly expressed in the policy. Still, it is well settled that the
keeping of inflammable oils on the premises, though prohibited by the policy, does not void it if
such keeping is incidental to the business and according to the weight of authority, even though
there are printed prohibitions against keeping certain articles on the insured premises the policy
will not be avoided by a violation of these prohibitions, if the prohibited articles are necessary or
in customary use in carrying on the trade or business conducted on the premises. In the present
case, no gasoline was stored in the burned bodegas, and that Bodega No. 2 which was not
burned and where the gasoline was found, stood isolated from the other insured bodegas.
The Supreme Court found no reversible error in the judgment appealed from, thus affirming it;
with costs against the appellant.
of the head, causing Eduardo to fall, with his head hitting the rope of the ring. The insured died
with the cause of death reported as hemorrhage intracranial, left. The insurer refused to pay the
proceeds of the policy on the ground that the death of the insured in a boxing contest, was not
accidental and, therefore, not covered by the insurance.
Simon de la Cruz, the father of the insured and beneficiary under the policy, filed a claim with
the insurance company for payment of indemnity under the insurance policy. Denied, De la Cruz
instituted the action in the CFI Pangasinan (Civ. Case No. U-265)) for specific performance.
Defendant insurer set up the defense that the death of the insured, caused by his participation in a
boxing contest, was not accidental and, therefore, not covered by insurance. After due hearing,
the court rendered the decision in favor of the plaintiff; ordering the insurance company to
indemnify plaintiff for the death of the latters son, to pay the burial expenses, and attorneys
fees. Hence, the appeal.
Issue: Whether the death of the insured is covered by the policy.
Held: The terms accident and accidental have not acquired any technical meaning, and are
construed by the courts in their ordinary and common acceptation. The terms mean that which
happen by chance or fortuitously, without intention and design, and which is unexpected,
unusual, and unforeseen. An accident is an event that takes place without ones foresight or
expectation: an event that proceeds from an unknown cause, or is an unusual effect of a known
cause and, therefore, not expected. There is no accident when a deliberate act is performed unless
some additional, unexpected, independent, and unforeseen happening occurs which produces or
brings about the result of injury or death. Where the death or injury is not the natural or probable
result of the insureds voluntary act, which produces the injury, the resulting death is within the
protection of policies insuring against the death or injury from accident. In the present case,
while the participation of the insured in the boxing contest is voluntary, if without the
unintentional slipping of the deceased, perhaps he could not have received that blow in the head
and would not have died. Further, death or disablement resulting from engagement in boxing
contests was not declared outside of the protection of the insurance contract (What was included
was death or disablement consequent upon the Insured engaging in football, hunting, pigsticking,
steeplechasing, polo-playing, racing of any kind, mountaineering, or motorcycling). Failure of
the defendant insurance company to include death resulting from a boxing match or other sports
among the prohibitive risks leads inevitably to the conclusion that it did not intend to limit or
exempt itself from liability for such death.
The Supreme Court affirmed the appealed decision, with costs against appellant.
Guerrero v. CA
GR L-44570, 30 May 1986 (142 SCRA 136)
Second Division, Gutierrez (p): 4 concurring, 1 taking no part.
Facts: On 8 August 1963, RA 3844 abolished and outlawed share tenancy and put in its stead the
agricultural leasehold system. In 1969, Apolinario Benitez was taken by Manuel and Maria
Guerrero to take care of their 60 heads of cows which were grazing within their 21-hectare
coconut plantation situated at the Subprovince of Aurora, Quezon. Benitez was allowed for that
purpose to put up a hut within the plantation where he and his family stayed. In addition to
attending to the cows, he was made to clean the already fruitbearing coconut trees, burn dried
leaves and grass and to do such other similar chores. Harvest time which usually comes every 3
months. For his work related to the coconuts, he shared 1/3 of the proceeds from the copra he
processed and sold in the market. For attending to the cows he was paid P500 a year.
On 10 September 1971, RA 6389 amending RA 3844 declared share tenancy relationships as
contrary to public policy. Sometime in the early part of 1973, Benitez was refrained from
gathering nuts from the 10-hectare portion of the 16-hectare part of the plantation from where he
used to gather nuts. He felt aggrieved by the acts of defendants and he brought the matter to the
attention of the Office of Special Unit in the Office of the President in Malacaang, Manila. This
led to an execution of an agreement whereby defendants agreed to let plaintiff work on the 16hectare portion of the plantation as tenant thereon and that their relationship will be guided by
the provisions of RA 1199 (Agricultural Tenancy Act of the Philippines).
In July 1973, he was again refrained from gathering nuts from the 10-hectare portion of the
plantation with threats of bodily harm if he persists to gather fruits therefrom. The Guerreros
assigned Rogelio and Paulino Latigay to do the gathering of the nuts and the processing thereof
into copra. Defendants Guerreros also caused to be demolished a part of the cottage where
Benitez and his family lived, thus, making the Benitez feel that they meant business. Hence, the
case for reinstatement with damages.
Issue: Whether Benitez is a tenant within the meaning of the tenancy law to warrant
reinstatement to the plantation
Held: Longstanding possession is an essential distinction between a mere agricultural laborer
and a real tenant within the meaning of the tenancy law, a tenant being one who has the
temporary use and occupation of land or tenements belonging to another for the purpose of
production. A hired laborer who built his own house at his expense at the risk of losing the same
upon his dismissal or termination any time, is more consistent with that of an agricultural tenant
who enjoys security of tenure under the law. Cultivation is another important factor in
determining the existence of tenancy relationships. Cultivation is not limited merely to the
tilling, plowing or harrowing of the land but also includes the promotion of growth and the care
of the plants, or husbanding the ground to forward the products of the earth by general industry.
Agreement to share the produce or harvest on a tercio basis that is, a 1/3 to 2/3 sharing in favor
of the landowners bolsters the tenancy claim. The agricultural laborer works for the employer,
and for his labor he receives a salary or wage, regardless of whether the employer makes a profit.
On the other hand, the share tenant participates in the agricultural produce. His share is
necessarily dependent on the amount of harvest. Once a tenancy relationship is established, the
tenant has the right to continue working until such relationship is extinguished according to law.
In the present case, besides these indications, the agreement made on 2 May 1973 is clear and
categorical term that the Benitez is a tenant. Arguing that the intent was different, being that of a
hired farmhand, the law existing at that time the agreement was made militate against the claim.
Benitez did not commit any of the causes that would warrant his ejectment, and thus, was
unlawfully deprived of his right to security of tenure and the Court of Agrarian Reforms did not
err in ordering the reinstatement of respondent as tenant and granting him damages therefor.
The Supreme Court dismissed the petition for lack of merit, and affirmed the CA decision. No
costs.
Lee Cho filed a petitioner for naturalization before the Court of First Iinstance of Cebu. On 30
August 1956, the court rendered decision finding petitioner qualified to be a Filipino citizen. On
2 October 1957, however, the government filed a motion for new trial on the ground of newly
discovered evidence which if presented may affect the qualification of petitioner, and finding the
same well founded, the court entertained the motion. After hearing, the court again rendered
decision reaffirming its holding that petitioner is qualified to become a Filipino citizen. The
government interposed an appeal.
Issue: Whether petitioner was able to comply with the requirements for naturalization.
Held: The provisions of the Naturalization Law should be strictly construed in order that its
laudable and nationalistic purpose may be fully fulfilled. In the present case, the petitioner has
not filed any declaration of intention to become a Filipino citizen because, as he claims, he has
resided continuously in the Philippines for a period of more than 30 years and has given primary
and secondary education to all his children in private schools recognized by the government.
Angelita Lee has only reached grade five and no explanation was given why no secondary
education was afforded her. Lourdes Lee has studied only as far as 3rd year high school and then
allegedly stopped allegedly because of poor health. Lourdes admitted in open court, however,
that she continued her studies in a Chinese school, which employs strictly Chinese curriculum,
despite her illness. This circumstance betrays the sincerity of petitioner to become a Filipino
citizen for if his motive were proper he should not have tolerated such deviation from the
educational requirement of the law. The petitioner, thus, has failed to qualify to become a
Filipino citizen.
The Supreme Court ruled that appealed decision is reversed, with costs against petitioner.
organization. He does not believe in, nor practice, polygamy. Since his birth, he has never gone
abroad. He mingles with the Filipinos. He prefers a democratic form of government and stated
that if his petition is granted he would serve the government either in the military or civil
department. He is a merchant dealing in the buy and sell of tobacco. He also is part owner of a
store in Bangued. In his tobacco business, he has a working capital of P10,000.00 which he
claims to have been accumulated thru savings. He contributes to civic and charitable
organizations like the Jaycees, Rotary, Red Cross and to town fiestas. He likes the customs of the
Filipinos because he has resided in the Philippines for a long time. During the year 1956, he
claims to have earned P1,000.00 in his tobacco business. With respect to the store of which he
claims to be a part owner, he stated that his father gave him a sum of less than P3,000.00
representing one-fourth of the sales. Aside from being a co-owner of said store, he receives a
monthly salary of P120,00 as a salesman therein. He took a course in radio mechanics and
completed the same in 1955. He has no vice of any kind. He claims that he has never been
delinquent in the payment of taxes. But he admitted that he did not file his income tax return
when he allegedly received an amount of not less than P3,000 from his father which he claims to
have invested in his tobacco business.
Petitioner filed his petition for naturalization in the trial court. After hearing, the court ordered
that a certificate of naturalization be issued to petitioner after the lapse of two years from the date
the decision becomes final and all the requisites provided for in RA 503. The government
appealed the decision of the trial court, raising the facts that did not state what principles of the
Constitution he knew, although when asked what laws of the Philippines he believes in, he
answered democracy.; that he stated that his father had already filed his income tax return, when
asked why he did not file his income tax returns; and that he presented his alien certificate of
registration, but not the alien certificates of registration of his wife and child.
Issue: Whether petitioner failed to comply with the requirements prescribed by law in order to
qualify him to become a Filipino citizen.
Held: The scope of the word law in ordinary legal parlance does not necessarily include the
constitution, which is the fundamental law of the land, nor does it cover all the principles
underlying our constitution. Further, Philippine law requires that an alien to conducted himself in
a proper and irreproachable manner during the entire period of his residence in the Philippines in
his relation with the constituted government as well as with the community in which he is living.
In the present case, in so stating that he believes merely in our laws, he did not necessarily refer
to those principles embodied in our constitution which are referred to in the law; the belief in
democracy or in a democratic form of government is not sufficient to comply with the
requirement of the law that one must believe in the principles underlying our constitution.
Further, petitioner failed to show that he has complied with his obligation to register his wife and
child with the Bureau of Immigration as required by the Alien Registration Actl; and further
failed to file his income tax return despite his fixed salary of P1,440.00 a year and his profit of
P1,000.00 in his tobacco business, and received an amount less than P3,000 from his father as
one-fourth of the proceeds of the sale of the store, the total of which is more than what is
required by law for one to file an income tax return.
The Supreme Court reversed the appealed decision, hold that the trial court erred in granting the
petition for naturalization, without pronouncement as to costs.
dependents in the event that the former should die or sustain an injury. Pursuant to such doctrine
and applying now the provisions of the Workmens Compensation Act in this case, the
presumption of compensability subsists in favor of the claimant.
The Supreme Court set aside the decision of the ECC and ordered the GSIS to pay the petitioner
the amount of P6,000.00 as death compensation benefit and P600.00 as attorneys fees, to
reimburse the petitioners expenses incurred for medical services, hospitalization and medicines
of the deceased Nazario Manahan, Jr., duly supported by proper receipts, and to pay
administrative fees.
most extensive sense the term judge includes all officers appointed to decide litigated
questions while acting in that capacity, including justice of the peace, and even jurors, it is said,
who are judges of facts. The intention of the Legislature did not exclude the justice of the peace
from its operation. In Section 54, there is no necessity to include the justice of peace in the
enumeration, as previously made in Section 449 of the Revised Administrative Code, as the
legislature has availed itself of the more generic and broader term judge, including therein all
kinds of judges, like judges of the courts of First Instance, judges of the courts of Agrarian
Relations, judges of the courts of Industrial Relations, and justices of the peace.
The Supreme Court set aside the dismissal order entered by the trial court and remanded the case
for trial on the merits.
Mon 24 Mar 2003
materials, wallets, bandanas, shirts, hats, matches, and cigarettes, and concluding with the words
and the like.). Taped jingles therefore were not prohibited.
The Supreme Court decision was made to expound on the reasons behind the minute resolution
of 3 November 1970. The Supreme Court permanently restrained and prohibited the Comelec
from enforcing or implementing or demanding compliance with its order banning the use of
political taped jingle, pursuant to the SC resolution of 3 November 1970; without pronouncement
as to costs.
bases his petition to reopen the cadastral proceedings fails to supply any basis for respondents
contention. It will be noted that while RA 2061 fixed the time to reopen cadastral cases which
shall not extend beyond 31 December 1968, no similar provision is found in RA 6236 expressly
extending the time limit for the reopening of cadastral proceedings on parcels of land declared
public land. As correctly pointed out by petitioners, the extension as provided for by the RA 6236
makes no reference to reopening of cadastral cases as the earlier law, RA2061, expressly did.
Truly, the extension provided for by RA 6236 applies only to the filing of applications for free
patent and for judicial confirmation of imperfect or incomplete titles and not to reopening of
cadastral proceedings like the instant case, a proceeding entirely different from filing an
application for a free patent or for judicial confirmation of imperfect or incomplete titles.
The Supreme Court set aside the 22 July 1972 decision of the respondent Judge and reiterating
the 28 September 1940 decision of the Cadastral Court; without pronouncement as to costs.
the authority to carry and possess firearms. He was issued a firearm in the performance of his
official duties and for his personal protection. Application of license was unnecessary, according
to Col. Maristela, as the firearm is government property. No permit was issued, according to
Capt. Adolfo Bringas as he was already appointed as a CIS agent. Even if the case of People vs.
Mapa revoked the doctrine in the Macarandang case, this was made only on 30 August 1967,
years after the accused was charged. Under the Macarandang rule therefore obtaining at the time
of appellants appointment as secret agent, he incurred no criminal liability for possession of the
pistol in question.
The Supreme Court reversed the appealed decision, conformably with the recommendation of
the Solicitor General, and acquitted Jesus Santayana, canceling the bond for his provisional
release; with costs de oficio.
purely literal of the language used must be remedied by an adherence to its avowed objective. It
is a principle of statutory construction that what is within the spirit of the law is as much a part of
it as what is written. Otherwise the basic purpose discernible in such codal provision would not
be attained.
The Supreme Court (1) reversed the 23 November 1965 decision of the lower court; (2) declared
the questioned donation void and recognized the rights of plaintiff and defendant as pro indiviso
heirs to the property; and (3) remanded the case to the lower court for its appropriate disposition
in accordance with the current decision; without pronouncement as to costs.
of the testatrix. Petitioner appealed from this ruling. The Court of Appeals certified the case to
the Supreme Court because it involves purely a question of law.
Issue: Whether the absence of the testators thumbmark in the first page is fatal to render the will
void
Held: Statutes prescribing the formalities to be observed in the execution of wills are very
strictly construed. A will must be executed in accordance with the statutory requirements;
otherwise it is entirely void. In the present case, the contention that the petition for probate is
unopposed, and that the three testimonial witnesses testified and manifested to the court that the
document expresses the true and voluntary will of the deceased, cannot be sustained as it runs
counter to the express provision of the law. Since the will suffers the fatal defect, as it does not
bear the thumbmark of the testatrix on its first page even if it bears the signature of the three
instrumental witnesses, the same fails to comply with the law and therefore cannot be admitted to
probate.
The Supreme Court affirmed the appealed order, without pronouncement as to costs.
Vivencio G. Lirio as the only unopposed candidate and as the duly elected vice mayor of
Dolores.
On 21 February 1980, Comelec denied the petition of Villanueva, stating that Mendozas
withdrawal was not under oath as required by Section 27 of the 1978 Election Code, and that his
withdrawal was not made after the last day for filing of certificate of candidacy, as contemplated
by Section 28, but on the same day.
Issue: Whether the informal withdrawal of Mendoza invalidates the election of Villanueva as
vice mayor.
Held: Section 28 of the 1978 Election Code provides for such substitute candidates in case of
death, withdrawal or disqualification up to mid-day of the very day of the elections. Mendozas
withdrawal was filed on the last hour of the last day for regular filing of candidacies, which he
had filed earlier that same day. For all intents and purposes, such withdrawal should therefore be
considered as having been made substantially and in truth after the last day, even going by the
literal reading of the provision by the Comelec. Further, the will of the electorate should be
respected, it should not be defeated through the invocation of formal or technical defects. The
will of the people cannot be frustrated by a technicality that the certificate of candidacy had not
been properly sworn to. This legal provision is mandatory and non-compliance therewith before
the election would be fatal to the status of the candidate before the electorate, but after the people
have expressed their will, the result of the election cannot be defeated by the fact that the
candidate has not sworn to his certificate or candidacy. The legal requirement that a withdrawal
be under oath will be held to be merely directory and Mendozas failure to observe the
requirement should be considered a harmless irregularity. The bona fides of petitioner Villanueva
as a substitute candidate cannot be successfully assailed. The votes cast in his favor must be
counted.
The Supreme Court resolved to reconsider and sets aside the questioned Resolutions of Comelec
and annuls the proclamation of Lirio as elected vice-mayor of Dolores, Quezon and instead
declares petitioner as the duly elected vice-mayor of said municipality and entitled forthwith to
assume said office, take the oath of office and discharge its functions. The resolution is made
immediately executory.
established that the greatest necessity exists therefor. In this case there is no necessity of taking
since there are other ways by which Rizal Avenue may be expanded to ease the traffic situation.
The Supreme Court held that there is no proof of the necessity of opening the street through the
cemetery from the record. But that adjoining and adjacent lands have been offered to the city free
of charge, which answers every purpose of the City. The Supreme Court, thus, affirmed the
judgment of the lower court, with costs against the appellant.
all even on the assumption that petitioners can be said to deserve some equities. With their
motion for reconsideration denied, petitioners filed the petition for review.
Issue: Whether the formal impleading of the Court of First Instance is indispensable and the
procedural infirmity of misdirecting the appeal to Court of First Instance are fatal to the
appellees cause
Held: The construction of statutes is always cautioned against narrowly interpreting a statute as
to defeat the purpose of the legislator and it is of the essence of judicial duty to construe statutes
so as to avoid such a deplorable result (of injustice or absurdity and therefore a literal
interpretation is to be rejected if it would be unjust or lead to absurd results. Thus, in the
construction of its own Rules of Court, the Court is all the more so bound to liberally construe
them to avoid injustice, discrimination and unfairness and to supply the void by holding that
Courts of First Instance are equally bound as the higher courts not to dismiss misdirected appeals
timely made but to certify them to the proper appellate court.
The formal impleading of the CFI which issued the challenged order of dismissal was not
indispensable and could be overlooked in the interest of speedy adjudication. The Court of
Appeals act of dismissing the petition and denying the relief sought of endorsing the appeal to
the proper court simply because of the non-impleader of the CFI as a nominal party was
tantamount to sacrificing substance to form and to subordinating substantial justice to a mere
matter of procedural technicality. The procedural infirmity of petitioners misdirecting their
appeal to the CFI rather than to the Court of Appeals, which they had timely sought to correct in
the CFI itself by asking that court to certify the appeal to the Court of Appeals as the proper
court, should not be over-magnified as to totally deprive them of their substantial right of appeal
and leave them without any remedy.
The Supreme Court set aside the CA decision dismissing the petition and in lieu thereof,
judgment was rendered granting the petition for prohibition against City court, enjoining it from
executing its judgment of conviction against petitioners-accused and further commanding said
city court to elevate petitioners appeal from its judgment to the CA for the latters disposition on
the merits; without costs.
Facts: On 25 August 1937, a parcel of land was patented in the name of Pacifico Casamayor
(OCT 1839). On 14 December 1945, he sold said land in favor of Nemesia D. Balatazar (TCT
No. 57-N, 18 January 1946). OCT 1839 was lost during the war and upon petition of Nemesia
Baltazar, the Court of First Instance of Negros Occidental ordered the reconstitution thereof.
Pursuant thereto, OCT 14-R (1839) was issued on 18 January 1946 in the name of Pacifico
Casamayor. On that same day, TCT 57-N was issued in the name of Nemesia Baltazar but after
the cancellation of OCT 14-R (1839). On 15 August 1951, Nemesia Baltazar, sold said property
to Lopez Sugar Central Mill Co., and the latter did not present the documents for registration
until 17 December 1964 to the Office of the Registry of Deeds. Said office refused registration
upon its discovery that the same property was covered by another certificate of title, TCT 38985,
in the name of Federico Serfino. On 19 November 1964, the spouses Serfinos mortgaged the
land to the Philippine National Bank (PNB) to secure a loan in the amount of P5,000.00; which
was inscribed in TCT No. 38985.
The Lopez Sugar Central instituted an action to recover said land; and the lower court rendered a
decision ordering the cancellation of TCT No. 38985; issuance of a new TCT in the name of
plaintiff; and the payment of the plaintiff PNB the loan of spouses Serfinos secured by said land.
Both parties appealed from this decision of the trial court. Ruling on the assignment of errors,
the appellate court affirmed the judgment of the trial court with modification in its decision
setting aside the decision of the trial court declaring plaintiff liable to PNB for payment,
however, ordering the plaintiff to reimburse the Serfino spouses of the sum P1,839.49,
representing the unpaid taxes and penalties paid by the latter when they repurchased the property.
Hence, the appeal by the spouses Serfino and PNB to the Supreme Court.
Issue: Whether the auction sale of the disputed property was null and void.
Held: The assailed decision of the appellate court declares that the prescribed procedure in
auction sales of property for tax delinquency being in derogation of property rights should be
followed punctiliously. Strict adherence to the statutes governing tax sales is imperative not only
for the protection of the tax payers, but also to allay any possible suspicion of collusion between
the buyer and the public officials called upon to enforce such laws. Notice of sale to the
delinquent land owners and to the public in general is an essential and indispensable requirement
of law, the non-fulfillment of which vitiates the sale. In the present case, Lopez Sugar Central
was not entirely negligent in its payment of land taxes. The record shows that taxes were paid for
the years 1950 to 1953 and a receipt therefor was obtained in its name. The sale therefore by the
Province of Negros Occidental of the land in dispute to the spouses Serfinos was void since the
Province of Negros Occidental was not the real owner of the property thus sold. In turn, the
spouses Serfinos title which has been derived from that of the Province of Negros Occidental is
likewise void. However, the fact that the public auction sale of the disputed property was not
valid cannot in any way be attributed to the mortgagees fault. The inability of the Register of
Deeds to notify the actual owner or Lopez Sugar Central of the scheduled public auction sale was
partly due to the failure of Lopez Sugar Central to declare the land in its name for a number of
years and to pay the complete taxes thereon. PNB is therefore entitled to the payment of the
mortgage loan as ruled by the trial court and exempted from the payment of costs.
The Supreme Court affirmed the assailed decision, with modification that PNB mortgage credit
must be paid by Lopez Sugar Central.
Held: Tax statutes are construed strictly against the government and liberally in favor of the
taxpayer. But since taxes are paid for civilized society, or are the lifeblood of the nation, the law
frowns against exemptions from taxation and statutes granting tax exemptions are thus construed
strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of
exemption from tax payments must be clearly shown and based on language in the law too plain
to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception.
However, if the grantee of the exemption is a political subdivision or instrumentality, the rigid
rule of construction does not apply because the practical effect of the exemption is merely to
reduce the amount of money that has to be handled by the government in the course of its
operations. Further, since taxation is the rule and exemption therefrom the exception, the
exemption may be withdrawn at the pleasure of the taxing authority. The only exception to this
rule is where the exemption was granted to private parties based on material consideration of a
mutual nature, which then becomes contractual and is thus covered by the non-impairment clause
of the Constitution.
Mactan Cebu International Airport Authority (MCIAA) is a taxable person under its Charter
(RA 6958), and was only exempted from the payment of real property taxes. The grant of the
privilege only in respect of this tax is conclusive proof of the legislative intent to make it a
taxable person subject to all taxes, except real property tax. Since Republic Act 7160 or the Local
Government Code (LGC) expressly provides that All general and special laws, acts, city
charters, decrees [sic], executive orders, proclamations and administrative regulations, or part of
parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed
or modified accordingly. With that repealing clause in the LGC, the tax exemption provided for
in RA 6958 had been expressly repealed by the provisions of the LGC. Therefore, MCIAA has to
pay the assessed realty tax of its properties effective after January 1, 1992 until the present.
The Supreme Court denied the petition, and affirmed the challenged decision and order of the
RTC Cebu; without pronouncement as to costs.
Mon 24 Mar 2003
July 1983, private respondent received from Commissioner of Internal Revenue (CIR) a demand
letter dated 3 June 1983, assessing private respondent the sum of P174,043.97 for alleged
deficiency contractors tax, and an assessment dated 27 June 1983 in the sum of P1,141,837 for
alleged deficiency income tax, both for the fiscal year ended 31 March 1978. Denying said tax
liabilities, private respondent sent petitioner a letter-protest and subsequently filed with the latter
a memorandum contesting the validity of the assessments. On 17 March 988, petitioner rendered
a letter-decision canceling the assessment for deficiency income tax but modifying the
assessment for deficiency contractors tax by increasing the amount due to P193,475.55.
Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified
assessment.
At the same time, it filed in the respondent court a petition for review of the said letter-decision
of the petitioner. While the petition was pending before the respondent court, petitioner issued a
final decision dated 3 August 1988 reducing the assessment for deficiency contractors tax from
P193,475.55 to P46,516.41, exclusive of surcharge and interest. On 12 July 1993, the respondent
court set aside respondents decision, and canceling the deficiency contractors tax assessment in
the amount of P46,516.41 exclusive of surcharge and interest for the fiscal year ended 31 March
1978. No pronouncement as to cost. On 27 April 1994, Court of Appeals, in CA-GR SP 31790,
affirmed the decision of the Court of Tax Appeals. Not in accord with said decision, petitioner
came to Supreme Court via a petition for review.
Issues:
Whether the private respondent has the burden of proof in the tax case.
Held: The Commissioner erred in applying the principles of tax exemption without first applying
the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously both
illogical and impractical to determine who are exempted without first determining who are
covered by the aforesaid provision. The Commissioner should have determined first if private
respondent was covered by Section 205, applying the rule of strict interpretation of laws
imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption
therefrom, following the rule of construction where the tax exemptions are to be strictly
construed against the taxpayer.
The doctrine in the interpretation of tax laws is that a statute will not be construed as imposing a
tax unless it does so clearly, expressly, and unambiguously. Tax cannot be imposed without clear
and express words for that purpose. Accordingly, the general rule of requiring adherence to the
letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a
taxing act are not to be extended by implication. In case of doubt, such statutes are to be
construed most strongly against the government and in favor of the subjects or citizens because
burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and
clearly import. In the present case, Ateneos Institute of Philippine Culture never sold its services
for a fee to anyone or was ever engaged in a business apart from and independently of the
academic purposes of the university. Funds received by the Ateneo de Manila University are
technically not a fee. They may however fall as gifts or donations which are tax-exempt as
shown by private respondents compliance with the requirement of Section 123 of the National
Internal Revenue Code providing for the exemption of such gifts to an educational institution.
The Supreme Court denied the petition and affirmed the assailed Decision of the Court of
Appeals. The Court ruled that the private respondent is not a contractor selling its services for a
fee but an academic institution conducting these researches pursuant to its commitments to
education and, ultimately, to public service. For the institute to have tenaciously continued
operating for so long despite its accumulation of significant losses, we can only agree with both
the Court of Tax Appeals and the Court of Appeals that education and not profit is motive for
undertaking the research projects.
Issue: Whether upon the importation of the fertilizers are covered by the exemption (provided by
Section 1 and 2 of Republic Act No. 601, as amended by Republic Acts 1175, 1197 and 1375).
Held: The law is, therefore, clear that imported fertilizers are exempt from the payment of the
17% tax only if the same were imported by planters or farmers directly or through their
cooperatives. The exemption covers exclusively fertilizers imported by planters or farmers
directly or through their cooperatives. The word directly has been interpreted to mean without
anything intervening. Consequently, an importation of fertilizers made by a farmer or planter
through an agent, other than his cooperative, is not imported directly as required by the
exemption.
When the issue is whether or not the exemption from a tax imposed by law is applicable, the rule
is that the exempting provision is to be construed liberally in favor of the taxing authority and
strictly against exemption from tax liability, the result being that statutory provisions for the
refund of taxes are strictly construed in favor of the State and against the taxpayer. Exempting
from the 17% tax all fertilizers imported by planters or farmers through any agent other than
their cooperatives, this would be rendering useless the only exception expressly established in
the case of fertilizers imported by planters or farmers through their cooperatives.
Due to the institution of the criminal case, Primicias initiated an action for the annulment of said
ordinance with prayer for the issuance of preliminary injunction for the purpose of restraining
defendants Municipality of Urdaneta, Mayor Perez, Police Chief Suyat, Judge Soriano and
Patrolman Andrada from enforcing the ordinance. The writ was issued and Judge Soriano was
enjoined from further proceeding in the criminal case. On 29 June 1966, the Court of First
Instance Lingayen held in its decision that the ordinance was null and void and had been
repealed by RA 4136. The writ of preliminary injunction against Judge Soriano definite and
permanent. It also restrained Perez, Suyat, and Andrada from enforcing said ordinace throughout
Urdaneta, ordering them to return the plaintiffs drivers license, and to pay the cost of the suit.
The public officials appealed to the Supreme Court.
Issue: Whether the ordinance is valid.
Held: The general rule is that a later law prevails over an earlier law. The ordinances validity
should be determined vis-a-vis RA 4136, the mother statute (not Act 3992), which was in force
at the time the criminal case was brought against Primicias. Further, when the Municipal Council
of Urdaneta used the phrase vehicular traffic (Section 1, Ordinance) it did not distinguish
between passenger cars and motor vehicles and motor trucks and buses. Considering that this is a
regulatory ordinance, its clearness, definiteness and certainty are all the more important so that
an average man should be able with due care, after reading it, to understand and ascertain
whether he will incur a penalty for particular acts or courses of conduct. Thus, as the Municipal
Council of Urdaneta did not make any classification of its thoroughfares, contrary to the explicit
requirement laid down by Section 38, RA 4136. The Ordinance refers to only one of the four
classifications mentioned in paragraph (b), Section 35. The classifications which must be based
on Section 35 are necessary in view of Section 36 which states that no provincial, city or
municipal authority shall enact or enforce any ordinance or resolution specifying maximum
allowable speeds other than those provided in this Act. The ordinance, therefore in view of the
foregoing, is void.
The Supreme Court affirmed the appealed decision.
published, they shall have no binding force and effect. Decision was concurred only by 3 judges.
Petitioners move for reconsideration / clarification of the decision on various questions. Solicitor
General avers that the motion is a request for advisory opinion. February Revolution took place,
which subsequently required the new Solicitor General to file a rejoinder on the issue (under
Rule 3, Section 18 of the Rules of Court).
Issue: Whether publication is still required in light of the clause unless otherwise provided.
Held: The clause unless it is otherwise provided, in Article 2 of the Civil Code, refers to the
date of effectivity and not to the requirement of publication itself, which cannot in any event be
omitted. This clause does not mean that the legislature may make the law effective immediately
upon approval, or on any other date, without its previous publication. The legislature may in its
discretion provide that the usual fifteen-day period shall be shortened or extended. Publication
requirements applies to (1) all statutes, including those of local application and private laws; (2)
presidential decrees and executive orders promulgated by the President in the exercise of
legislative powers whenever the same are validly delegated by the legislature or directly
conferred by the Constitution; (3) Administrative rules and regulations for the purpose of
enforcing or implementing existing law pursuant also to a valid delegation; (4) Charter of a city
notwithstanding that it applies to only a portion of the national territory and directly affects only
the inhabitants of that place; (5) Monetary Board circulars to fill in the details of the Central
Bank Act which that body is supposed to enforce. Further, publication must be in full or it is no
publication at all since its purpose is to inform the public of the contents of the laws.
The Supreme Court declared that all laws as above defined shall immediately upon their
approval, or as soon thereafter as possible, be published in full in the Official Gazette, to become
effective only after 15 days from their publication, or on another date specified by the legislature,
in accordance with Article 2 of the Civil Code.
of P1,966.59 were levied and imposed upon petitioner. Failing to secure a reconsideration of the
reassessment and levy of additional customs duties, Lopez & Sons appealed to the Court of Tax
Appeals. Acting upon a motion to dismiss the appeal, filed by the Solicitor General on the
ground of lack of jurisdiction, the Tax Court, by its resolution of 23 May 1955, dismissed the
appeal on the ground hat it had no jurisdiction to review decisions of the Collector of Customs of
Manila, citing section 7 of RA 1125, creating said tax court. From said resolution of dismissal,
Lopez & Sons appealed to the Supreme Court, seeking reversal of said resolution of dismissal.
Issue: Whether the decision of the Collector of Customs is directly appealable to the Court of
Tax Appeal.
Held: Section 7 of Republic Act 1125 specifically provides that the Court of Tax Appeals (CTA)
has appellate jurisdiction to review decisions of the Commissioner of Customs. On the other
hand, section 11 of the same Act in lifting the enumerating the persons and entities who may
appeal mentions among others, those affected by a decision or ruling of the Collector of
Customs, and fails to mention the Commissioner of Customs. While there is really a discrepancy
between the two sections, it is more reasonable and logical to hold that in section 11 of the Act,
the Legislature meant and intended to say, the Commissioner of Customs, instead of Collector of
Customs. If persons affected by a decision of the Collector of Customs may appeal directly to
the Court of Tax Appeals, then the supervision and control of the Commissioner of Customs over
his Collector of Customs, under the Customs Law found in sections 1137 to 1419 of the Revised
Administrative Code, and his right to review their decisions upon appeal to him by the persons
affected by said decision would, not only be gravely affected but even destroyed. The Courts are
not exactly indulging in judicial legislation but merely endeavoring to rectify and correct a
clearly clerical error in the wording of a statute, in order to give due course and carry out the
evident intention of the legislature.
The Supreme Court affirmed the appealed order, holding that under the Customs Law and RA
1125, the CTA has no jurisdiction to review by appeal decision of the Collector of Customs; with
costs.
Councils (ABC) of Ozamiz City by the Board of Directors of the said Association. As the
President of the Association, petitioner was appointed by the President of the Philippines as a
member of the Citys Sangguniang Panlungsod. On 27 March 1984, petitioner filed his
Certificate of Candidacy for the 14 May 1984 Batasan Pambansa elections for Misamis
Occidental under the banner of the Mindanao Alliance. He was not successful in the said
election. Invoking Section 13(2), Article 5 of BP 697, petitioner informed Vice-Mayor Benjamin
A. Fuentes, Presiding Officer of the Sangguniang Panlungsod, that he was resuming his duties as
member of that body. The matter was elevated to the Minister of Local Government Jose A.
Roo, who ruled that since petitioner is an appointive official, he is deemed to have resigned
from his appointive position upon the filing of his Certificate of Candidacy.
Issue: Whether the accused is considered resigned from the latters filing of a certificate of
candidacy for the Batasan.
Held: Although it may be that Section 13(2), Batas Pambansa 697, admits of more than one
construction, taking into sconsideration the nature of the positions of the officials enumerated
therein, namely, governors, mayors, members of the various sanggunians or barangay officials,
the legislative intent to distinguish between elective positions in section 13(2), as contrasted to
appointive positions in section 13(l) under the all-encompassing clause reading any person
holding public appointive office or position, is clear. It is a rule of statutory construction that
when the language of a particular section of a statute admits of more than one construction, that
construction which gives effect to the evident purpose and object sought to be attained by the
enactment of the statute as a whole, must be followed. A statutes clauses and phrases should not
be taken as detached and isolated expressions, but the whole and every part thereof must be
considered in fixing the meaning of any of its parts. The legislative intent to cover public
appointive officials in subsection (1), and officials mentioned in subsection (2) which should be
construed to refer to local elective officials, can be gleaned from the proceedings of the Batasan
Pambansa. Since petitioner is unquestionably an appointive member of the Sangguniang
Panlungsod of Ozamiz City, as he was appointed by the President as a member of the Citys
Sangguniang Panlungsod by virtue of his having been elected President of the Association of
Barangay Councils, he is deemed to have ipso facto ceased to be such member when he filed his
certificate of candidacy for the 14 May 1984 Batasan elections.
The Supreme Court dismissed the petition and denied the writs prayed for, holding that there was
no grave abuse of discretion on the part of the officials; without costs.
Tanada v. Tuvera
GR L-63915, 24 April 1985 (136 SCRA 27)
En Banc, Escolin (p): 1 concur, 2 concur with reservation, 1 took no part, 1 on leave
Facts: Invoking the peoples right to be informed on matters of public concern (Section 6,
Article IV of the 1973 Philippine Constitution) as well as the principle that laws to be valid and
enforceable must be published in the Official Gazette or otherwise effectively promulgated,
petitioners seek a writ of mandamus to compel respondent public officials to publish, and or
cause the publication in the Official Gazette of various presidential decrees, letters of
instructions, general orders, proclamations, executive orders, letter of implementation and
administrative orders. They maintain that since the subject of the petition concerns a public right
and its object is to compel the performance of a public duty, they are proper parties for the
petition. The respondents alleged, however through the Solicitor-General, that petitioners have
no legal personality or standing to bring the instant petition. They further contend that
publication in the Official Gazette is not a sine qua non requirement for the effectiveness of laws
where the laws provide for their own effectivity dates. Thus publication is not indispensable.
Issue: Whether publication is an indispensable requirement for the effectivity of laws
Held: Publication in the Official Gazette is necessary in those cases where the legislation itself
does not provide for its effectivity date for then the date of publication is material for
determining its date of effectivity, which is the fifteenth day following its publication but not
when the law itself provides for the date when it goes into effect. This is correct insofar as it
equates the effectivity of laws with the fact of publication. Article 2 however, considered in the
light of other statutes applicable to the issue does not preclude the requirement of publication in
the Official Gazette, even if the law itself provides for the date of its effectivity. The clear object
of the such provision is to give the general public adequate notice of the various laws which are
to regulate their actions and conduct as citizens. Without such notice and publication, there
would be no basis for the application of the maxim ignorantia legis non excusat. It would be
the height of injustice to punish or otherwise burden a citizen for the transgression of a law of
which he had no notice whatsoever, not even a constructive one. Further, publication is necessary
to apprise the public of the contents of regulations and make the said penalties binding on the
persons affected thereby. In the present case, Presidential issuances of general application, which
have not been published, shall have no force and effect. The implementation/enforcement of
presidential decrees prior to their publication in the Official Gazette is an operative fact, which
may have consequences which cannot be justly ignored. The past cannot always be erased by a
new judicial declaration that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified.
The Supreme Court ordered the respondents to publish in the Official Gazette all unpublished
presidential issuances which are of general application, and that unless so published, they shall
have no binding force and effect.
Whether the provisions of the Constitution, particularly Article XII Section 10, are selfexecuting.
Held: A provision which lays down a general principle, such as those found in Article II of the
1987 Constitution, is usually not self-executing. But a provision which is complete in itself and
becomes operative without the aid of supplementary or enabling legislation, or that which
supplies sufficient rule by means of which the right it grants may be enjoyed or protected, is selfexecuting. Thus a constitutional provision is self-executing if the nature and extent of the right
conferred and the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no language indicating
that the subject is referred to the legislature for action. In self-executing constitutional
provisions, the legislature may still enact legislation to facilitate the exercise of powers directly
granted by the constitution, further the operation of such a provision, prescribe a practice to be
used for its enforcement, provide a convenient remedy for the protection of the rights secured or
the determination thereof, or place reasonable safeguards around the exercise of the right. The
mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a
self-executing constitutional provision does not render such a provision ineffective in the
absence of such legislation. The omission from a constitution of any express provision for a
remedy for enforcing a right or liability is not necessarily an indication that it was not intended to
be self-executing. The rule is that a self-executing provision of the constitution does not
necessarily exhaust legislative power on the subject, but any legislation must be in harmony with
the constitution, further the exercise of constitutional right and make it more available.
Subsequent legislation however does not necessarily mean that the subject constitutional
provision is not, by itself, fully enforceable. As against constitutions of the past, modern
constitutions have been generally drafted upon a different principle and have often become in
effect extensive codes of laws intended to operate directly upon the people in a manner similar to
that of statutory enactments, and the function of constitutional conventions has evolved into one
more like that of a legislative body. Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now is that all provisions of the
constitution are self-executing. If the constitutional provisions are treated as requiring legislation
instead of self-executing, the legislature would have the power to ignore and practically nullify
the mandate of the fundamental law. In fine, Section 10, second paragraph, Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in itself and which needs no
further guidelines or implementing laws or rules for its enforcement. From its very words the
provision does not require any legislation to put it in operation.
In its plain and ordinary meaning, the term patrimony pertains to heritage. When the Constitution
speaks of national patrimony, it refers not only to the natural resources of the Philippines, as the
Constitution could have very well used the term natural resources, but also to the cultural
heritage of the Filipinos. It also refers to Filipinos intelligence in arts, sciences and letters. In the
present case, Manila Hotel has become a landmark, a living testimonial of Philippine heritage.
While it was restrictively an American hotel when it first opened in 1912, a concourse for the
elite, it has since then become the venue of various significant events which have shaped
Philippine history. In the granting of economic rights, privileges, and concessions, especially on
matters involving national patrimony, when a choice has to be made between a qualified
foreigner and a qualified Filipino, the latter shall be chosen over the former.
The Supreme Court directed the GSIS, the Manila Hotel Corporation, the Committee on
Privatization and the Office of the Government Corporate Counsel to cease and desist from
selling 51% of the Share of the MHC to Renong Berhad, and to accept the matching bid of
Manila Prince Hotel at P44 per shere and thereafter execute the necessary agreements and
document to effect the sale, to issue the necessary clearances and to do such other acts and deeds
as may be necessary for the purpose.
The Supreme Court denied the petition for a writ of prohibition, without pronouncement as to
costs.
framers of the 1987 Constitution, in adopting it, was to make the salaries of members of the
Judiciary taxable.
The Supreme Court dismissed the petition for prohibition.
interpret them. This is more true with regard to the interpretation of the basic law, the
Constitution, which is not within the sphere of the Legislative department. Allowing the
legislature to interpret the law would bring confusion and instability in judicial processes and
court decisions.
Further, under the Philippine system of constitutional government, the Legislative department is
assigned the power to make and enact laws. The Executive department is charged with the
execution or carrying out of the provisions of said laws. But the interpretation and application of
said laws belong exclusively to the Judicial department. And this authority to interpret and apply
the laws extends to the Constitution. Before the courts can determine whether a law is
constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but
also of the pertinent portion of the Constitution in order to decide whether there is a conflict
between the two, because if there is, then the law will have to give way and has to be declared
invalid and unconstitutional. Therefore, the doctrine laid down in the case of Perfecto vs. Meer to
the effect that the collection of income tax on the salary of a judicial officer is a diminution
thereof and so violates the Constitution, is reiterated.
The Supreme Court affirmed the decision, affirming the ruling in Perferto v. Meer and holding
the interpretation and application of laws belong to the Judiciary.
Issue: Whether the imposition of an income tax upon the salary of a member of the Judiciary
amount to a diminution thereof., and thus violate the Constitution.
Held: The imposition of an income tax upon the salary of a member of the judiciary amounts to
a diminution thereof. If said imposition would not be considered as a diminution, it would
appear that, in the matter of compensation and power and need of security, the judiciary is on a
par with the Executive. Such assumption certainly ignores the prevailing state of affairs. Further,
the Constitution provides that judges shall hold their offices during good behavior, and shall at
stated times receive for their services a compensation which shall not be diminished during their
continuance in office. Thus, next to permanency in office, nothing can contribute more to the
independence of the judges than a fixed provision for their support. In the general course of
human nature, a power over a mans subsistence amounts to a power over his will. The
independence of the judges as of far greater importance than any revenue that could come from
taxing their salaries.
Exemption of the judicial salary from reduction by taxation is not really a gratuity or privilege.
It is essentially and primarily compensation based upon valuable consideration. The covenant on
the part of the government is a guaranty whose fulfillment is as much as part of the consideration
agreed as is the money salary. The undertaking has its own particular value to the citizens in
securing the independence of the judiciary in crises; and in the establishment of the
compensation upon a permanent foundation whereby judicial preferment may be prudently
accepted by those who are qualified by talent, knowledge, integrity and capacity, but are not
possessed of such a private fortune as to make an assured salary an object of personal concern.
On the other hand, the members of the judiciary relinquish their position at the bar, with all its
professional emoluments, sever their connection with their clients, and dedicate themselves
exclusively to the discharge of the onerous duties of their high office. So, it is irrefutable that the
guaranty against a reduction of salary by the imposition of a tax is not an exemption from
taxation in the sense of freedom from a burden or service to which others are liable. The
exemption for a public purpose or a valid consideration is merely a nominal exemption, since the
valid and full consideration or the public purpose promoted is received in the place of the tax.
The Supreme Court affirmed the judgment.
whatever prior executive or judicial construction may have been given to the phrase in question
should give way to the clear mandate of the new law.
The Supreme Court affirmed the appealed resolution, with costs against appellant.
explicit, it provides for both the coverage of and exclusion from the benefit. In Policy Instruction
9, the Secretary of Labor went as far as to categorically state that the benefit is principally
intended for daily paid employees, when the law clearly states that every worker shall be paid
their regular holiday pay.
While it is true that the contemporaneous construction placed upon a statute by executive officers
whose duty is to enforce it should be given great weight by the courts, still if such construction is
so erroneous, the same must be declared as null and void. It is the role of the Judiciary to refine
and, when necessary, correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations where some
agency of the State has engaged in action that stems ultimately from some legitimate area of
governmental power. Section 2, Rule IV, Book III of the Rules to implement the Labor Code and
Policy Instruction was declared null and void in IBAAEU v. Inciong, and thus applies in the case
at bar. Since the private respondent premises its action on the invalidated rule and policy
instruction, it is clear that the employees belonging to the petitioner association are entitled to the
payment of 10 legal holidays under Articles 82 and 94 of the Labor Code, aside from their
monthly salary. They are not among those excluded by law from the benefits of such holiday pay
The Supreme Court reversed and set aside the Labor Ministers 7 September 1976 order, and
reinstated with modification (deleting the interest payments) the 24 March 1976 decision of the
NLRC affirming the 30 October 1975 resolution of the Labor Arbiter.
On 16 December 1975, Presidential Decree 850 was promulgated amending, among others, the
provisions of the Labor Code on the right to holiday pay. Accordingly, on 16 February 1976, by
authority of Article 5 of the same Code, the Department of Labor (now Ministry of Labor)
promulgated the rules and regulations for the implementation of holidays with pay. The
controversial section thereof reads as Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be presumed to be paid
for all days in the month whether worked or not. On 23 April 1976, Policy Instruction 9 was
issued by the then Secretary of Labor (now Minister) interpreting the above-quoted rule. The
bank, by reason of the ruling laid down by the rule implementing Article 94 of the Labor Code
and by Policy Instruction 9, stopped the payment of holiday pay to an its employees.
On 30 August 1976, the Union filed a motion for a writ of execution to enforce the arbiters
decision of 25 August 1975, which the bank opposed. On 18 October 1976, the Labor Arbiter,
instead of issuing a writ of execution, issued an order enjoining the bank to continue paying its
employees their regular holiday pay. On 17 November 1976, the bank appealed from the order
of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated its resolution en
banc dismissing the banks appeal, and ordering the issuance of the proper writ of execution. On
21 February 1979, the bank filed with the Office of the Minister of Labor a motion for
reconsideration/appeal with urgent prayer to stay execution. On 13 August 1979,s the NLRC
issued an order directing the Chief of Research and Information of the Commission to compute
the holiday pay of the IBAA employees from April 1976 to the present in accordance with the
Labor Arbiter dated 25 August 1975. On 10 November 1979, the Office of the Minister of Labor,
through Deputy Minister Amado G. Inciong, issued an order setting aside the resolution en banc
of the NLRC dated 20 June 1978, and dismissing the case for lack of merit. Hence, the petition
for certiorari charging Inciong with abuse of discretion amounting to lack or excess of
jurisdiction.
Issue: Whether the Ministry of Labor is correct in determining that monthly paid employees are
excluded from the benefits of holiday pay.
Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 82
of the same Code, it is clear that monthly paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary
of Labor excludes monthly paid employees from the said benefits by inserting, under Rule IV,
Book Ill of the implementing rules, Section 2, which provides that: employees who are
uniformly paid by the month, irrespective of the number of working days therein, with a salary of
not less than the statutory or established minimum wage shall be presumed to be paid for all days
in the month whether worked or not. Even if contemporaneous construction placed upon a
statute by executive officers whose duty is to enforce it is given great weight by the courts, still if
such construction is so erroneous, the same must be declared as null and void. So long, as the
regulations relate solely to carrying into effect the provisions of the law, they are valid. Where an
administrative order betrays inconsistency or repugnancy to the provisions of the Act, the
mandate of the Act must prevail and must be followed. A rule is binding on the Courts so long as
the procedure fixed for its promulgation is followed and its scope is within the statutory authority
granted by the legislature, even if the courts are not in agreement with the policy stated therein or
its innate wisdom. Further, administrative interpretation of the law is at best merely advisory, for
it is the courts that finally determine what the law means.
The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and
reinstated the 25 August 1975 decision of the Labor Arbiter Ricarte T. Soriano.
Digest: Philippine Apparel Workers Union v. NLRC (GR L50320, 31 July 1981)
Posted by Berne Guerrero under (a) oas , digests
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Philippine Apparel Workers Union v. NLRC
GR L-50320, 31 July 1981 (105 SCRA 444)
First Division, Makasiar (p): 3 concurring
Facts: In anticipation of the expiration of their 1973-1976 collective bargaining agreement, the
Union submitted a set of bargaining proposals to the company. Negotiations were held thereafter,
but due to the impasse, the Union filed a complaint with the Department of Labor praying that
the parties be assisted in concluding a collective agreement. Notwithstanding the complaint, the
parties continued with negotiations. Finally, on 3 September 1977, the parties signed the
agreement providing for a three-stage wage increase for all rank and file employees, retroactive
to 1April 1977. Meanwhile, on 21 April 1977, Presidential Decree 1123 was enacted to take
effect on 1 May 1977 providing for an increase by P60.00 in the living allowance ordained by
Presidential Decree 525. This increase was implemented effective 1 May 1977 by the company.
The controversy arose when the petitioner union sought the implementation of the negotiated
wage increase of P0.80 as provided for in the collective bargaining agreement. The company
alleges that it has opted to consider the P0.80 daily wage increase (roughly P22 per month) as
partial compliance with the requirements of PD 1123, so that it is obliged to pay only the balance
of P38 per month, contending that that since there was already a meeting of the minds between
the parties as early as 2 April 1977 about the wage increases which were made retroactive to 1
April 1977, it fell well within the exemption provided for in the Rules Implementing PD 1123.
The Union, on the other hand, maintains that the living allowance under PD 1123 (originally PD
525) is distinct from the negotiated daily wage increase of P0.80.
On 13 February 1978, the Union filed a complaint for unfair labor practice and violation of the
CBA against the company. On 30 May 1978, an Order was issued by the Labor Arbiter
dismissing the complaint and referred the case to the parties to resolve their disputes in
accordance with the machinery established in the Collective Bargaining Agreement. From this
order, both parties appealed to the Commission. On 1 September 1978, the Commission (Second
Division) promulgated its decision, setting aside the order appealed from and entering a new one
dismissing the case for obvious lack of merit, relying on a letter of the Undersecretary of Labor
that agreement between the parties was made 2 April 1977 granting P27 per month retroactive to
1 April 1977 which was squarely under the exceptions provided for in paragraph k of the rules
implementing PD 1123. The union filed for reconsideration, but the Commission en banc
dismissed the same on 8 February 1979. Hence, the petition.
Issue: Whether the Commission was correct in determining the agreement falls under the
exceptions.
Held: The collective bargaining agreement was entered into on 3 September1977, when PD 1123
was already in force and effect, although the increase on the first year was retroactive to 1 April
1977. There is nothing in the records that the negotiated wage increases were granted or paid
before May 1977, to allow the company to fall within the exceptions provided for in paragraph k
of the rules implementing PD 1123. There was neither a perfected contract nor an actual payment
of said increase. There was no grant of said increases yet, despite the contrary opinion expressed
in the letter of the Undersecretary of Labor. It must be noted that the letter was based on a wrong
premise or representation on the part of the company. The company had declared that the parties
have agreed on 2 April 1977 in recognition of the imperative need for employees to cope up with
inflation brought about by, among others, another increase in oil price, but omitting the fact that
negotiations were still being held on other unresolved economic and non-economic bargaining
items (which were only agreed upon on 3 September 1977).
The Department of Labor had the right to construe the word grant as used in its rules
implementing PD 1123, and its explanation regarding the exemptions to PD 1123 should be
given weight; but, when it is based on misrepresentations as to the existence of an agreement
between the parties, the same cannot be applied. There is no distinction between interpretation
and explaining the extent and scope of the law; because where one explains the intent and scope
of a statute, he is interpreting it. Thus, the construction or explanation of Labor Undersecretary is
not only wrong as it was purely based on a misapprehension of facts, but also unlawful because it
goes beyond the scope of the law.
The writ of certiorari was granted. The Supreme Court set aside the decision of the commission,
and ordered the company to pay, in addition to the increased allowance provided for in PD 1123,
the negotiated wage increase of P0.80 daily effective 1 April 1977 as well as all other wage
increases embodied in the Collective Bargaining Agreement, to all covered employees; with
costs against the company.
which is to assure parties justice according to law, must not be ignored. No counsel should fall
prey to the vice of literalness.
The Supreme Court dismissed the petition with costs against petitioners.
obligatory, no matter what their forms maybe, whenever the essential requisites for their validity
are present. In the present case, there is no ambiguity in the terms and stipulations of the
extrajudicial partition (Extrajudicial Partition with Confirmation of Sale). Since Macarios share
(later Anselmos) is only 405 of the 749 square meters comprising Lot 26, Venancio was entitled
to the remaining 344 square meters of Lot 26, 149 square meters of which was sold to
Longalong. Supplemented by the holding that the prescriptive period on reconveyance is ten
years and not four years, as held in Caro v. CA, Longalong is entitled to reconveyance as his
complaint was filed five years after the constitution of Anselmos fraudulent Original Certificate
of title.
The Supreme Court denied the petition for want of merit, with costs against petitioners.
Mon 24 Mar 2003
In 1973, Gasilao filed an action against the Board to recover the pension, which he claims he is
entitled to, from July 1955, when he first filed his application for pension, up to 1968 when his
pension was finally approved. The Board contends, however, based on Section 15 of Republic
Act 65, that since the section impliedly requires that the application filed should first be
approved by the Board of Administrators before the claimant could receive his pension,
therefore, an award of pension benefits should commence from the date of approval of the
application.
Issue: Whether Gasilao is entitled to the pension from 1955 instead of from 1968.
Held: As it is generally known, the purpose of Congress in granting veteran pensions is to
compensate a class of men who suffered in the service for the hardships they endured and the
dangers they encountered, and more particularly, those who have become incapacitated for work
owing to sickness, disease or injuries sustained while in line of duty. A veteran pension law is,
therefore, a governmental expression of gratitude to and recognition of those who rendered
service for the country, especially during times of war or revolution, by extending to them
regular monetary aid. For this reason, it is the general rule that a liberal construction is given to
pension statutes in favor of those entitled to pension. Courts tend to favor the pensioner, but such
constructional preference is to be considered with other guides to interpretation, and a
construction of pension laws must depend on its own particular language. In the present case,
Republic Act 65 is a veteran pension law which must be accorded a liberal construction and
interpretation in order to favor those entitled to rights, privileges, and benefits granted
thereunder, among which are the right to resume old positions in government, educational
benefits, the privilege to take promotion examinations, a life pension for the incapacited, pension
for widow and children, and hospitalization and medical benefits. Upholding the Board that the
pension awards are made effective only upon approval of the application, this would be
dependent upon the discretion of the Board which had been abused in this case through inaction
extending for 12 years. Such stand, therefore does not appear to be, or simply is not, in
consonance with the spirit and intent of the law. Gasilaos claim was sustained.
The Supreme Court modified the judgment of the court a quo, ordering the Board of
Administrators of the Philippine Veterans Administration (now the Philippine Veterans Affairs
Office) to make Gasilaos pension effective 18 December 1955 at the rate of P50.00 per month
plus P10.00 per month for each of his then unmarried minor children below 18, and the former
amount increased to P100.00 from 22 June 1957 to 7 August 1968; and declaring the differentials
in pension to which said Gasilao, his wife and his unmarried minor children below 18 are
entitled for the period from 22 June 1969 to 14 January 1972 by virtue of Republic Act 5753
subject to the availability of Government funds appropriated for the purpose.
Banking Corporation only for purposes of the garnishment issued by it, so that the bank would
hold the same intact and not allow any withdrawal until further order.
The Supreme Court affirmed the orders of the lower court dated 4 and 27 March 1972, with
costs against the petitioners.
Issue: Whether the Supreme Court, in determining the action to be selective, is guilty of judicial
legislation.
Held: The Court, through its majority, defended itself by holding that the Court does not
legislate but merely applies and gives effect to the constitutional guarantees of social justice then
secured by Section 5 of Article II and Section 6 of Article XIV of the 1935 Constitution, and later
by Sections 6, 7, and 9 of Article II of the Declaration of Principles and State Policies of the
1973 Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201,
2216, 2231 and 2232 of the New Civil Code of 1950. Further, it reiterated its ruling in People vs.
Licera: that judicial decisions of the Supreme Court assume the same authority as the statute
itself, pursuant to Article 8 of the Civil Code of the Philippines which decrees that judicial
decisions applying or interpreting the laws or the Constitution form part of this jurisdictions
legal system. It argues that the application or interpretation placed by the Court upon a law is
part of the law as of the date of the enactment of the said law since the Courts application or
interpretation merely establishes the contemporaneous legislative intent that the construed law
purports to carry into effect. Yet, the Court argues that the Court can legislate, pursuant to Article
9 of the New Civil Code, which provides that No judge or court shall decline to render
judgment by reason of the silence, obscurity or insufficiency of the laws. Thus, even the
legislator himself recognizes that in certain instances, the court do and must legislate to fill in
the gaps in the law; because the mind of the legislator, like all human beings, is finite and
therefore cannot envisage all possible cases to which the law may apply.
cited for contempt for misrepresenting that the barangay recall election was without Comelec
approval.
In a resolution dated 5 January 1996, the Comelec, for the third time, re-scheduled the recall
election on 13 January 1996; hence, the instant petition for certiorari with urgent prayer for
injunction. The petitioner contends that no recall can take place within one year preceding a
regular local election, the Sangguniang Kabataan elections slated on the first Monday of May
1996. He cited Associated Labor Union v. Letrondo-Montejo to support the argument, the Court
in which case considered the SK election as a regular local election.
Issue: Whether the Sangguniang Kabataan election is to be construed as a regular local election
in a recall proceeding
Held: It is a rule in statutory construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be considered together with the
other parts, and kept subservient to the general intent of the whole enactment. Further, the spirit,
rather than the letter of a law determines its construction; hence, a statute must be read according
to its spirit and intent. The too literal interpretation of the law leads to absurdity which the Court
cannot countenance. A too-literal reading of the law constrict rather than fulfill its purpose and
defeat the intention of its authors. That intention is usually found not in the letter that killeth but
in the spirit that vivifieth. In the present case, Paragraph (b) of Section 74 construed together
with paragraph (a) merely designates the period when such elective local official may be subject
of a recall election. The Sangguniang Kabataan elections cannot be considered a regular election,
as this would render inutile the recall provision of the Local Government Code. It would be more
in keeping with the intent of the recall provision of the Code to construe regular local election as
one referring to an election where the office held by the local elective official sought to be
recalled will be contested and be filled by the electorate.
The Supreme Court, however, has to dismiss the petition for having become moot and academic,
as the next regular elections involving the barangay office concerned were seven months away.
Thus, the Temporary Restraining Order issued on 12 January 1996, enjoining the recall election,
was made permanent.
Digest: # Daoang v. Municipal Judge of San Nicolas (GR L34568, 28 March 1988)
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San Jose, Baggao, Cagayan because the driver could not produce the required documents for the
forest products found concealed in the truck. On 23 May 1989, Aritao CENROs Jovito Layugan
issued an order of confiscation of the truck. Its owner, De Guzman, failed to submit the required
explanation within the reglementary period set by Layugan. On 22 June 1989, DENR Regional
Executive Director Rogelio Baggayan sustained the Alitao CENROs action of confiscation and
ordered the forfeiture of the truck invoking Section 68-A of Presidential Decree 705, as amended
by Executive Order 277. De Guzman filed for reconsideration but was denied.
The case was appealed to the Secretary of DENR. Pending resolution, however, a suit for
replevin (Civil Case 4031), was filed by De Guzman and company against Layugan and
Baggayan with the RTC Cagayan (Branch 2), contending that the only the court is authorized to
confiscate and forfeit conveyances used in the transporting illegal forest products, pursuant to the
second paragraph of Section 68. De Guzman further contended that the seizure is illegal, as she
did not use the truck in the commission of the crime (of qualified theft under Article 309 and 310
of the Revised Penal Code, punishable under Section 68), as allegedly admitted by the Regional
Executive Director, releasing her from criminal liability. The trial court thereafter issued a writ
ordering the return of the truck to De Guzman. The petitioners filed a petition for certiorari with
the Court of Appeals. The appellate court sustained the trial courts order ruling that the question
involved is purely a legal one. Hence, the petition.
Issues:
Whether the truck was used in the commission of an offense under Section 68 of
Presidential Decree 705, as amended by Executive Order 277
Held: The construction that conveyances are subject of confiscation by the courts exclusively
(pursuant to Section 28, paragraph 2) unduly restricts the clear intention of the law and inevitably
reduces the other provision of Section 68-A, aside to the fact that conveyances are not mentioned
nor included in the former provision. In the construction of statutes, it must be read in such a way
as to give effect to the purpose projected in the statute. Statutes should be construed in the light
of the object to be achieved and the evil or mischief to be suppressed, and they should be given
such construction as will advance the object, suppress the mischief, and secure the benefits
intended. In the case at bar, the phrase to dispose of the same is broad enough to cover the act
of forfeiting conveyances in favor of the government. The only limitation is that it should be
made in accordance with pertinent laws, regulations or policies on the matter.
Further, when the statute is clear and explicit, there is hardly room for any extended court
ratiocination or rationalization of the law. The language of the amendatory executive order, when
it eliminated the phrase shall be guilty of qualified theft as defined and punished under Articles
309 and 310 of the Revised Penal Code and inserted the words shall be punished with the
penalties imposed under Article 309 and 310 of the Revised Penal Code, meant that the act of
cutting, gathering, collecting, removing, or possessing forest products without authority
constitutes a distinct offense independent now from the crime of theft under Articles 309 and 310
of the Revised Penal Code, but the penalty to be imposed is that provided for under Article 309
and 310 of the Revised Penal Code.
The Supreme Court granted the petition, reversed and set aside the 16 October decision and 14
July 1992 resolution of the CA, made permanent the restraining order promulgated on 27
September 1993, and directed the DENR secretary to resolve the controversy with utmost
dispatch.
Digest: National Federation of Labor (NFL) v. Eisma (GR L61236, 31 January 1984)
Posted by Berne Guerrero under (a) oas , digests
No Comments
National Federation of Labor (NFL) v. Eisma
GR L-61236, 31 January 1984 (127 SCRA 419)
En Banc, Fernando (p): 9 concur, 1 concur with comments, 1 took no part, 1 on leave
Facts: On 5 March 1982, the National Federation of Labor filed with the Ministry of Labor and
Employment (Labor Relations Division, Zamboanga City), a petition for direct certification as
the sole exclusive collective bargaining representative of the monthly paid employees at the
Lumbayao manufacturing plant of the Zamboanga Wood Products, Inc. (Zambowood). On 17
April 1982, such employees charged the firm before the same office for underpayment of
monthly living allowances. On 3 May 1982, the union issued a notice of strike against the firm,
alleging illegal termination of Dionisio Estioca, president of the said local union; unfair labor
practice; nonpayment of living allowances; and employment of oppressive alien management
personnel without proper permit. The strike began on 23 May 1982.
On 9 July 1982, Zambowood filed a complaint with the trial court against the officers and
members of the union, for damages for obstruction of private property with prayer for
preliminary injunction and/or restraining order. The union filed a motion for the dismissal and
for the dissolution of the restraining order, and opposition to the issuance of the writ of
preliminary injunction, contending that the incidents of picketing are within the exclusive
jurisdiction of the Labor Arbiter pursuant to Batas Pambansa 227 (Labor Code, Article 217) and
not to the Court of First Instance. The motion was denied. Hence, the petition for certiorari.
Issue: Whether construction of the law is required to determine jurisdiction.
Held: The first and fundamental duty of courts is to apply the law. Construction and
interpretation come only after it has been demonstrated that application is impossible or
inadequate without them.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
authority which organizes the court; and it is given only by law. Jurisdiction is never presumed; it
must be conferred by law in words that do not admit of doubt. Since the jurisdiction of courts
and judicial tribunals is derived exclusively from the statutes of the forum, the issue should be
resolved on the basis of the law or statute in force. Therefore, since (1) the original wording of
Article 217 vested the labor arbiters with jurisdiction; since (2) Presidential Decree 1691
reverted the jurisdiction with respect to money claims of workers or claims for damages arising
from employer-employee relations to the labor arbiters after Presidential Decree 1367 transferred
such jurisdiction to the ordinary courts, and since (3) Batas Pambansa 130 made no change with
respect to the original and exclusive jurisdiction of Labor Arbiters with respect to money claims
of workers or claims for damages arising from employer-employee relations; Article 217 is to be
applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is therein
provided for explicitly. It means, it can only mean, that a court of first instance judge then, a
regional trial court judge now, certainly acts beyond the scope of the authority conferred on him
by law when he entertained the suit for damages, arising from picketing that accompanied a
strike.
The Supreme Court, thus, granted the writ of certiorari, and nullified and set aside the 20 July
1982 order issued by the court a quo. It granted the writ of prohibition, and enjoined the Judge of
said court, or whoever acts in his behalf in the RTC to which this case is assigned, from taking
any further action on the civil case (Civil Case 716 [2751]), except for the purpose of dismissing
it. It also made permanent the restraining order issued on 5 August 1982.
Mon 24 Mar 2003
justify its position that the contest does not violate the anti-lottery provisions of the Postal Law.
Unimpressed, the then Acting Postmaster General Enrico Palomar opined that the scheme falls
within the purview of the provisions aforesaid and declined to grant the requested clearance.
Caltex thereupon invoked judicial intervention by filing a petition for declaratory relief against
the Postmaster General, praying that judgment be rendered declaring its Caltex Hooded Pump
Contest not to be violative of the Postal Law, and ordering respondent to allow petitioner the use
of the mails to bring the contest to the attention of the public. The trial court ruled that the
contest does not violate the Postal Code and that the Postmaster General has no right to bar the
public distribution of the contest rules by the mails. The Postmaster General appealed to the
Supreme Court.
Issue(s):
Whether the contest is a lottery or a gift enterprise that violates the provisions of the
Postal Law.
Held:
Construction is the art or process of discovering and expounding the meaning and intention of
the authors of the law with respect to its application to a given case, where that intention is
rendered doubtful, amongst others, by reason of the fact that the given case is not explicitly
provided for in the law. In the present case, the prohibitive provisions of the Postal Law
inescapably require an inquiry into the intended meaning of the words used therein. This is as
much a question of construction or interpretation as any other. The Court is tasked to look
beyond the fair exterior, to the substance, in order to unmask the real element and pernicious
tendencies that the law is seeking to prevent.
Lottery extends to all schemes for the distribution of prizes by chance, such as policy playing,
gift exhibitions, prize concerts, raffles at fairs, etc., and various forms of gambling. The three
essential elements of a lottery are: (1) consideration, (2) prize, and (3) chance. Gift enterprise,
on the other hand, is commonly applied to a sporting artifice under which goods are sold for their
market value but by way of inducement each purchaser is given a chance to win a prize. Further,
consonant to the well-known principle of legal hermeneutics noscitur a sociis, the term under
construction should be accorded no other meaning than that which is consistent with the nature
of the word associated therewith. Hence, if lottery is prohibited only if it involves a
consideration, so also must the term gift enterprise be so construed. Significantly, there is not
in the law the slightest indicium of any intent to eliminate that element of consideration from the
gift enterprise therein included. Gratuitous distribution of property by lot or chance does not
constitute lottery, if it is not resorted to as a device to evade the law and no consideration is
derived, directly or indirectly, from the party receiving the chance, gambling spirit not being
cultivated or stimulated thereby. Thus, gift enterprises and similar schemes therein contemplated
are condemnable only if, like lotteries, they involve the element of consideration. In the present
case, there is no requirement in the rules that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate; for the
scheme to be deemed a lottery. Neither is there is a sale of anything to which the chance offered
is attached as an inducement to the purchaser for the scheme to be deemed a gift enterprise. The
scheme is merely a gratuitous distribution of property by chance.
The Supreme Court affirmed the appealed judgment, without costs.