Taxation 1 Case Digest by Topic

Tax 1 Lex Talionis Fraternitas Inc.
Taxation 1 agencies the power to tax. The constitution grants local liquors, products of tobacco other than cigars and cigarettes,
Case Digests
government the autonomous authority to create their own matches firecrackers, manufactured oils and other fuels,
sources of revenue and to levy taxes. coal, bunker fuel oil, diesel fuel oil, cinematographic films,
Pepsi-Cola vs Mun. of Tanauan (G.R. No. L-31156 Feb 27, playing cards, saccharine, opium and other habit-forming
1976) b) No, the difference between the two ordinances clearly lies drugs. Soft drink is not one of those specified.
in the tax rate of the soft drinks produced: in Ordinance No.
The legislative power to create political corporations for purposes of local 23, it was 1/16 of a centavo for every bottle corked; in c) The tax of one (P0.01) on each gallon (128 fluid ounces,
self-government courts with it the power to confer on such local Ordinance No. 27, it is one centavo (P0.01) on each gallon U.S.) of volume capacity on all softdrinks, produced or
government agencies the power to tax. (128 fluid ounces, U.S.) of volume capacity. The intention of manufactured, or an equivalent of 1-½ centavos per
the Municipal Council of Tanauan in enacting Ordinance No. case, cannot be considered unjust and unfair. An increase
Pepsi commenced a complaint with preliminary injunction 27 is thus clear: it was intended as a plain substitute for the in the tax alone would not support the claim that the tax is
before the CFI of Leyte for that court to declare Section 2 of prior Ordinance No. 23, and operates as a repeal of the oppressive, unjust and confiscatory. Municipal corporations
R.A. 2264 (Local Autonomy Act) unconstitutional as an undue latter, even without words to that effect. Plaintiff-appellant are allowed much discretion in determining the rates of
delegation of taxing authority as well as declare Municipal in its brief admitted that defendants-appellees are only imposable taxes. This is in line with the constitutional policy
Ordinance Nos. 23 & 27 series of 1962 of Municipality of seeking to enforce Ordinance No. 27, series of 1962. of according the widest possible autonomy to local
Tanauan, Leyte null and void. Municipal Ordinance 23 levies Undoubtedly, the taxing authority conferred on local governments in matters of local taxation, an aspect that is
and collects from softdrinks producers and manufacturers a governments under Section 2, Republic Act No. 2264, is broad given expression in the Local Tax Code (PD No. 231, July 1,
tai of 1/16th of a centavo for every bottle of softdrink corked. enough as to extend to almost "everything, accepting those 1973). Unless the amount is so excessive as to be prohibitive,
On the other hand, Municipal Ordinance 27 levies and which are mentioned therein." The limitation applies, courts will go slow in writing off an ordinance as
collects on softdrinks produced or manufactured within the particularly to the prohibition against municipalities and unreasonable. Reluctance should not deter compliance with
territorial jurisdiction of the municipality a tax of 1 centavo municipal districts to impose "any percentage tax or other an ordinance such as Ordinance No. 27 if the purpose of the
on each gallon of volume capacity. Both are denominated as taxes in any form based thereon nor impose taxes on articles law to further strengthen local autonomy were to be
“municipal production tax”. subject to specific tax except gasoline, under the provisions realized.
of the National Internal Revenue Code." For purposes of this
Issues: a) WoN section 2 of R.A. 2264 is an undue delegation particular limitation, a municipal ordinance which prescribes CIR vs. Algue Inc. (G.R. No. L-28896 Feb 17, 1988)
of power b) WoN Ordinances 23 & 27 constitute double a set ratio between the amount of the tax and the volume of
taxation and impose percentage or specific tax c) WoN sale of the taxpayer imposes a sales tax and is null and void Taxes are the lifeblood of the government and so should be collected
Ordinances 23 and 27 are unjust and unfair for being outside the power of the municipality to without unnecessary hindrance. On the other hand, such collection should
be made in accordance with law as any arbitrariness will negate the very
enact. But, the imposition of "a tax of one centavo (P0.01)
reason for government itself. It is therefore necessary to reconcile the
Held: a) No, it is true that power of taxation is purely on each gallon of volume capacity" on all soft drinks apparently conflicting interests of the authorities and the taxpayers so that
legislative and which the central legislative body cannot produced or manufactured under Ordinance No. 27 does not the real purpose of taxation, which is the promotion of the common good,
delegate either to the executive or judicial department of partake of the nature of a percentage tax on sales, or other may be achieved.
the government without infringing upon the theory of taxes in any form based thereon. The tax is levied on the
produce (whether sold or not) and not on the sales. The Philippine Sugar Estate Development Company appoints Algue
separation of powers but the exception lies in the case of as its agent authorizing it to sell its land, factories and oil
municipal corporations to which the said theory does not volume capacity of the taxpayer's production of soft drinks is
considered solely for purposes of determining the tax rate on manufacturing process. Family members Guevara et al
apply. Legislative concerns may be delegated to local worked for the formation of Vegetable Oil Investment Corp
governments in respect of matters of local concerns. By the products, but there is not set ratio between the volume
of sales and the amount of the tax. Nor can the tax levied be inducing persons to invest in it. After its incorporation largely
necessary implication, the legislative power to create through the promotion of Guevara et al, VOIC purchased
political corporations for purposes of local self-government treated as a specific tax. Specific taxes are those imposed on
specified articles, such as distilled spirits, wines, fermented PSEDC properties. For the sale, Algue received as agent a
courts with it the power to confer on such local government
fallschirmjäger Page 1
commission of 126k and it was from this commission that the prescribed procedure. If it is not, then the taxpayer has a of payments is expected to reach $1 Billion; (4) our trade
75k promotional fees were paid to Guevara et al. right to complain and the courts will then come to his succor. deficit is at $2.855 Billion as of the first nine months of the
Issue: WON Sunga the collector of Internal Revenue correctly For all the awesome power of the tax collector, he may still year. Evidently, authorities have been unable to collect
disallowed the 75k deduction claimed by private respondent be stopped in his tracks if the taxpayer can demonstrate, as enough taxes necessary to replenish the OPSF as provided by
Algue as legitimate business expensed in its income tax it has here, that the law has not been observed. Presidential Decree No. 1956, and hence, there was no
returns available alternative but to hike existing prices. The OPSF, as
Maceda vs ERB (G.R. No. 95203-05 Dec 18, 1990) the Court held in the aforecited CACP cases, must not be
Held: No, claimed deduction was an ordinary reasonable or understood to be a funding designed to guarantee oil firms'
necessary business expense. Amount has been legitimately The Energy Regulatory Board order authorizing the proceeds generated by profits although as a subsidy, or a trust account, the Court
paid by Algue for actual services rendered. The payment was the increase in the prices of petroleum products to be deposited to the Oil has no doubt that oil firms make money from it. As we held
in the form of promotional fee and collected by the payees Price Stabilization Fund is not an act of taxation. there, however, the OPSF was established precisely to
for their in the creation of VOIC and its subsequent purchase protect the consuming public from the erratic movement of
of the properties of the PSEDC. It is immaterial that it was The petitioners pray for injunctive relief, to stop the Energy oil prices and to preclude oil companies from taking
paid to the family members owning Algue who rendered Regulatory Board from implementing its Order, dated advantage of fluctuations occurring every so often. As a
services as the promotional fee was not excessive. Although September 21, 1990, mandating a provisional increase in the buffer mechanism, it stabilizes domestic prices by bringing
the Solicitor General is correct when he said that the burden prices of petroleum and petroleum products. The petitioner, about a uniform rate rather than leaving pricing to the
is on the taxpayer to prove the validity of claimed deduction. Senator Ernesto Maceda, also submits that the same was caprices of the market.
In the present case, however, SC find that the onus has been issued without proper notice and hearing in violation of
discharged satisfactorily. Algue has proved that the payment Section 3, paragraph (e), of Executive Order No. 172; that Paras (dissenting): Anent the unconstitutional use of the taxing power, the
the Board, in decreeing an increase, had created a new decision of the majority says that "the Board Order authorizing the proceeds
of fees was necessary and reasonable in the light of the
generated by the increases" is "authorized by Presidential Decree No. 1456,
efforts exerted by the payees in inducing investors and source for the Oil Price Stabilization Fund (OPSF), or
as amended by Executive Order No. 137". Assuming that such is authorized
prominent businessmen to venture in an experimental otherwise that it had levied a tax, a power vested in the by law, still a law, no matter how imperative, cannot prevail over the
enterprise and involved themselves in a new business legislature, and/or that it had "re-collected", by an act of Constitution which grants only to Congress the power to tax. And indeed,
requiring millions of pesos. This was no mean feat and should taxation, ad valorem taxes on oil which Republic Act No. there can be no denying the fact that when revenue is earned by the
government from the consuming public (except when only licenses are
be, as it was, sufficiently recompensed. It is said that taxes 6965 had abolished.
concerned) there is an exercise of the taxing power.
are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power Issue: WON the Board authorizing the proceeds generated by
the increase to be deposited to the OPSF is an act of taxation Victorias Milling vs PPA (G.R. No. 73705 Aug 27, 1987)
to activate and operate it. Hence, despite the natural
reluctance to surrender part of one's hard earned income to Held. No. The Board Order authorizing the proceeds Berthing charges against a vessel are collectible regardless of the fact that
the taxing authorities, every person who is able to must generated by the increase to be deposited to the OPSF is not mooring or berthing is made from a private pier or wharf. This is because
contribute his share in the running of the government. The an act of taxation. It is authorized by Presidential Decree No. the government maintains bodies of water in navigable condition and it is
government for its part, is expected to respond in the form 1956, as amended by Executive Order No. 137. Anent claims
to support its operations in this regard that dues and charges are imposed
of tangible and intangible benefits intended to improve the for the use of piers and wharves regardless of their ownership.
that oil companies cannot charge new prices for oil
lives of the people and enhance their moral and material purchased at old rates, suffice it to say that the increase in
values. This symbiotic relationship is the rationale of On April 28, 1981, the Iloilo Port Manager of respondent
question was not prompted alone by the increase in world oil Philippine Ports Authority (PPA for short) wrote petitioner
taxation and should dispel the erroneous notion that it is an prices arising from tension in the Persian Gulf. What the
arbitrary method of exaction by those in the seat of power. Victorias Milling Co., requiring it to have its tugboats and
Court gathers from the pleadings as well as events of which it barges undergo harbor formalities and pay entrance/
But even as we concede the inevitability and indispensability takes judicial notice, is that: (1) as of June 30, 1990, the
of taxation, it is a requirement in all democratic regimes clearance fees as well as berthing fees effective May 1, 1981.
OPSF has incurred a deficit of P6.1 Billion; (2) the exchange PPA, likewise, requiring petitioner to secure a permit for
that it be exercised reasonably and in accordance with the rate has fallen to P28.00 to $1.00; (3) the country's balance
cargo handling operations at its Da-an Banua wharf and remit which a person desiring to operate arrastre service must applying the well-settled doctrine of strict interpretation in
10% of its gross income for said operations as the agree as a condition to the grant of the permit to operate. the imposition of taxes. It is obviously both illogical and
government's share. To these demands, petitioner sent two impractical to determine who are exempted without first
(2) letters, both dated June 2, 1981, wherein it maintained CIR vs Ateneo de Manila (G.R. No. 115349 Apr 18, 1997) determining who are covered by the aforesaid provision. The
that it is exempt from paying PPA any fee or charge because: Commissioner should have determined first if private
(1) the wharf and an its facilities were built and installed in While it is conceded that statutes providing for election contests are to be respondent was covered by Section 205, applying the rule of
its land; (2) repair and maintenance thereof were and solely liberally construed to the end that the will of the people in the choice of strict interpretation of laws imposing taxes and other
paid by it; (3) even the dredging and maintenance of the public officers may not be defeated by mere technical questions, the rule burdens on the populace, before asking Ateneo to prove its
likewise stands, that in an election protest, the protestant must stand or
Malijao River Channel from Guimaras Strait up to said private exemption therefrom. The Court takes this occasion to
fall upon the issues he had raised in his original or amended pleading filed
wharf are being done by petitioner's equipment and prior to the lapse of the statutory period for filing of the protest. reiterate the hornbook doctrine in the interpretation of tax
personnel; and (4) at no time has the government ever spent laws that "(a) statute will not be construed as imposing a tax
a single centavo for such activities. Petitioner further added unless it does so clearly, expressly, and unambiguously . . .
Private respondent is a non-stock, non-profit educational
that the wharf was being used mainly to handle sugar (A) tax cannot be imposed without clear and express words
institution with auxiliary units and branches all over the
purchased from district planters pursuant to existing milling for that purpose. Accordingly, the general rule of requiring
Philippines. One such auxiliary unit is the Institute of
agreements. adherence to the letter in construing statutes applies with
Philippine Culture (IPC), which has no legal personality
peculiar strictness to tax laws and the provisions of a taxing
separate and distinct from that of private respondent. The
Issue: WON Victorias is exempted from the claimed fees and act are not to be extended by implication." Parenthetically,
IPC is a Philippine unit engaged in social science studies of
charges due to the fact that the port is privately owned in answering the question of who is subject to tax statutes, it
Philippine society and culture. Occasionally, it accepts
is basic that "in case of doubt, such statutes are to be
sponsorships for its research activities from international
Held: No, as correctly stated by the Solicitor General, the construed most strongly against the government and in favor
organizations, private foundations and government agencies.
fees and charges PPA collects are not for the use of the of the subjects or citizens because burdens are not to be
On July 8, 1983, private respondent received from petitioner
wharf that petitioner owns but for the privilege of navigating imposed nor presumed to be imposed beyond what statutes
Commissioner of Internal Revenue a demand letter dated
in public waters, of entering and leaving public harbors and expressly and clearly import. To fall under its coverage,
June 3, 1983, assessing private respondent the sum of
berthing on public streams or waters. In Compañia General Section 205 of the National Internal Revenue Code requires
P174,043.97 for alleged deficiency contractor's tax, and an
de Tabacos de Filipinas vs. Actg. Commissioner of Customs that the independent contractor be engaged in the business
assessment dated June 27, 1983 in the sum of P1,141,837 for
(23 SCRA 600), this Court laid down the rule that berthing of selling its services. Hence, to impose the three percent
alleged deficiency income tax, both for the fiscal year ended
charges against a vessel are collectible regardless of the fact contractor's tax on Ateneo's Institute of Philippine Culture, it
March 31, 1978. Denying said tax liabilities, private
that mooring or berthing is made from a private pier or should be sufficiently proven that the private respondent is
respondent sent petitioner a letter-protest and subsequently
wharf. This is because the government maintains bodies of indeed selling its services for a fee in pursuit of an
filed with the latter a memorandum contesting the validity of
water in navigable condition and it is to support its independent business. And it is only after private respondent
the assessments.
operations in this regard that dues and charges are imposed has been found clearly to be subject to the provisions of Sec.
for the use of piers and wharves regardless of their 205 that the question of exemption therefrom would arise.
ownership. As to the requirement to remit 10% of the Issue: WON Ateneo de Manila University, through its auxiliary Only after such coverage is shown does the rule of
handling charges, Section 6B-(ix) of the Presidential Decree unit or branch, the Institute of Philippine Culture, performing construction — that tax exemptions are to be strictly
No. 857 authorized the PPA "To levy dues, rates, or charges the work of an independent contractor and thus subject to construed against the taxpayer — come into play, contrary to
for the use of the premises, works, appliances, facilities, or the 3% contractor's tax levied by then Section 205 of the petitioner's position. There is no evidence to prove that
for services provided by or belonging to the Authority, or any National Internal Revenue Code? Ateneo's Institute of Philippine Culture ever sold its services
organization concerned with port operations." This 10% for a fee to anyone or was ever engaged in a business apart
government share of earnings of arrastre and stevedoring Held: No, Petitioner Commissioner of Internal Revenue erred from and independently of the academic purposes of the
operators is in the nature of contractual compensation to in applying the principles of tax exemption without first university.
Figuerres vs Mandaluyong (G.R. No. 119172 Mar 25, 1999) fees, or charges "shall not be enacted without any prior 2nd, 3rd and 4th quarter of 1991 as well as the 1st and 2nd
public hearing conducted for the purpose." However, it is quarter of 1992 in the total amount of P123,821.982.52. In a
The presumption of validity in favor of a tax ordinance, its constitutionality noteworthy that apart from her bare assertions, petitioner letter dated August 20, 1992, Philex protested the demand
or legality should be upheld in the absence of evidence showing that the Figuerres has not presented any evidence to show that no for payment of the tax liabilities stating that it has pending
procedure prescribed by law was not observed in their enactment.
public hearings were conducted prior to the enactment of claims for VAT input credit/refund for the taxes it paid for
the ordinances in question. On the other hand, the the years 1989 to 1991 in the amount of P119,977,037.02 plus
Petitioner Belen C. Figuerres is the owner of a parcel of land, Municipality of Mandaluyong claims that public hearings were interest. Therefore these claims for tax credit/refund should
covered by Transfer Certificate of Title No. 413305, and indeed conducted before the subject ordinances were be applied against the tax liabilities. In reply, the BIR, in a
located at Amarillo Street, Barangay Mauway, City of adopted, although it likewise failed to submit any evidence letter dated September 7, 1992, found no merit in Philex's
Mandaluyong. In 1993, she received a notice of assessment, to establish this allegation. However, in accordance with the position. Since these pending claims have not yet been
dated October 20, 1993, from the municipal assessor of the presumption of validity in favor of an ordinance, their established or determined with certainty, it follows that no
then Municipality of Mandaluyong. The assessment, effective constitutionality or legality should be upheld in the absence legal compensation can take place. Hence, the BIR reiterated
in the year 1994, was based on Ordinance Nos. 119 and 125, of evidence showing that the procedure prescribed by law its demand that Philex settle the amount plus interest within
series of 1993, and Ordinance No. 135, series of 1994, of the was not observed in their enactment. The lack of a public 30 days from the receipt of the letter. Philex was able to
Sangguniang Bayan of Mandaluyong. Ordinance No. 119, hearing is a negative allegation essential to petitioner's cause obtain its VAT input credit/refund not only for the taxable
series of 1993, which was promulgated on April 22, 1993, of action in the present case. Hence, as petitioner is the year 1989 to 1991 but also for 1992 and 1994. In view of the
contains a schedule of fair market values of the different party asserting it, she has the burden of proof. Since grant of its VAT input credit/refund, Philex now contends
classes of real property in the municipality. Ordinance No. petitioner failed to rebut the presumption of validity in favor that the same should, ipso jure, off-set its excise tax
125, series of 1993, which was promulgated on November 11, of the subject ordinances and to discharge the burden of liabilities since both had already become "due and
1993, on the other hand, fixes the assessment levels proving that no public hearings were conducted prior to the demandable, as well as fully liquidated;" hence, legal
applicable to such classes of real property. Finally, enactment thereof, we are constrained to uphold their compensation can properly take place.
Ordinance No. 135, series of 1994, which was promulgated on constitutionality or legality.
February 24, 1994, amended Ordinance No. 119, §6 by ISSUE: WoN Philex’s contention is tenable
providing that only one third (1/3) of the increase in the
market values applicable to residential lands pursuant to the Philex Mining vs CIR (G.R. No. 125704 Aug 28, 1998)
Held: No, Philex’s contention is not tenable. In several
said ordinance shall be implemented in the years 1994, 1995, instances prior to the instant case, SC have already made the
That taxes cannot be subject to compensation for the simple reason that
and 1996. Petitioner brought a prohibition suit in the Court pronouncement that taxes cannot be subject to
the government and the taxpayer are not creditors and debtors of each
of Appeals against the Assessor, the Treasurer, and the other. There is a material distinction between a tax and debt. Debts are compensation for the simple reason that the government and
Sangguniang Bayan to stop them from enforcing the due to the Government in its corporate capacity, while taxes are due to the the taxpayer are not creditors and debtors of each other.
ordinances in question on the ground that the ordinances Government in its sovereign capacity.
There is a material distinction between a tax and debt. Debts
were invalid for having been adopted allegedly without are due to the Government in its corporate capacity, while
public hearings and prior publication or posting and without Petitioner Philex Mining Corp. assails the decision of the taxes are due to the Government in its sovereign capacity.
complying with the implementing rules yet to be issued by Court of Appeals promulgated on April 8, 1996 in CA-G.R. SP We find no cogent reason to deviate from the
the Department of Finance. No. 36975 affirming the Court of Tax Appeals decision in CTA aforementioned distinction. Prescinding from this premise, in
Case No. 4872 dated March 16, 1995 ordering it to pay the Francia v. Intermediate Appellate Court, we categorically
Issue: WON the contention of Figuerres is tenable amount of P110,677,668.52 as excise tax liability for the held that taxes cannot be subject to set-off or compensation,
period from the 2nd quarter of 1991 to the 2nd quarter of thus: “We have consistently ruled that there can be no off-
Held: No, although the petitioner is right in contending that 1992 plus 20% annual interest from August 6, 1994 until fully setting of taxes against the claims that the taxpayer may
public hearings are required to be conducted prior to the paid pursuant to Sections 248 and 249 of the Tax Code of have against the government. A person cannot refuse to pay
enactment of an ordinance imposing real property taxes, 1977. The facts show that on August 5, 1992, the BIR sent a a tax on the ground that the government owes him an
R.A. No. 7160, §186 provides that an ordinance levying taxes, letter to Philex asking it to settle its tax liabilities for the
amount equal to or greater than the tax being collected. Issue: WoN the sales tax paid by CENVOCO when it purchased CIR vs Fireman’s Fund (G.R. No. L-30644 Mar 9, 1987)
The collection of a tax cannot await the results of a lawsuit containers and packaging materials for its milled products
against the government.” The ruling in Francia has been can be credited against the deficiency miller’s tax due There is no justification for the government which has already realized the
revenue which is the object of the imposition of subject stamp tax, to
applied to the subsequent case of Caltex Philippines, Inc. v. thereon
require the payment of the same tax for the same documents. Enshrined in
Commission on Audit, which reiterated that: “a taxpayer our basic legal principles is the time honored doctrine that no person shall
may not offset taxes due from the claims that he may have Held: Yes, it can be credited against the deficiency miller’s unjustly enrich himself at the expense of another. It goes without saying
against the government. Taxes cannot be the subject of tax due thereon. The law relied upon by the BIR that the government is not exempted from the application of this doctrine.
compensation because the government and taxpayer are not Commissioner as the basis for not allowing Cenvoco's tax
mutually creditors and debtors of each other and a claim for credit is just a proviso of Section 168 of the old Tax Code. From January, 1952 to December, 1958, herein private
taxes is not such a debt, demand, contract or judgment as is The restriction in the said proviso, however, is limited only respondent Fireman's Fund Insurance Company entered into
allowed to be set-off.” to sales, miller's or excise taxes paid "on raw materials used various insurance contracts involving casualty, fire and
in the milling process". Under the rules of statutory marine risks, for which the corresponding insurance policies
CIR vs Central Vegetable (G.R. No. 107135 Feb 23, 1999) construction, exceptions, as a general rule, should be strictly were issued. From January, 1952 to 1956, documentary
but reasonably construed. They extend only so far as their stamps were bought and affixed to the monthly statements
language fairly warrants, and all doubts should be resolved in of policies issues; and from 1957 to 1958 documentary
Tax burdens are not to be imposed or presumed to be imposed beyond what
the statute expressly and clearly imports, tax statutes being construed favor of the general provisions rather than the exception. stamps were bought and affixed to the corresponding pages
strictissimi juris against the government.
Where a general rule is established by statute with of the policy register, instead of on the insurance policies
exceptions, the court will not curtail the former nor add to issued. On July 3, 1959, respondent company discovered that
CENVOCO is a manufacturer of edible and coconut/coprameal the latter by implication. The exception provided for in its monthly statements of business and policy register were
cake and such other coconut related oil subject to the Section 168 of the old Tax Code should thus be strictly lost. The loss was reported to the Building Administration of
miller's tax of 3%. Petitioner also manufactures lard, construed. Conformably, the sales, miller's and excise taxes Ayala Building and the National Bureau of Investigation on
detergent and laundry soap subject to the sales tax of 10%. In paid on all other materials (except on raw materials used in July 6, 1959. Herein petitioner was also informed of such loss
1986, petitioner purchased a specified number of containers the milling process), such as the sales taxes paid on by respondent company, through the latter's auditors, Sycip,
and packaging materials for its edible oil from its suppliers containers and packaging materials of the milled products Gorres and Velayo, in a letter dated July 14, 1959. After
and paid the sales tax due thereon. After an investigation under consideration, may be credited against the miller's tax conducting an investigation of said loss, petitioner's examiner
conducted by respondent's Revenue Examiner, Assessment due therefor. It is a basic rule of interpretation that words ascertained that respondent company failed to affix the
Notice No. FAS-B-86-88-001661-001664 dated April 22, 1988 and phrases used in the statute, in the absence of a clear required documentary stamps to the insurance policies issued
was issued against petitioner for deficiency miller's tax in the legislative intent to the contrary should be given their plain, by it and failed to preserve its accounting records within the
total amount of P1,575,514.70. On June 29, 1988, CENVOCO ordinary and common usage or meaning. From the time prescribed by Section 337 of the Revenue Code by using
filed with CIR a letter dated June 27, 1988 requesting for disquisition and rationalization aforequoted, containers and loose leaf forms as registers of documentary stamps without
reconsideration of the above deficiency miller's tax packaging materials are certainly not raw materials. Cans written authority from the Commissioner of Internal Revenue
assessments, contending that the final provision of Section and tetrakpaks are not used in the manufacture of Cenvoco's as required by Section 4 of Revenue Regulations No. V-1. As a
168 of the Tax Code does not a apply to sales tax paid on finished products which are coconut, edible oil or coprameal consequence of these findings, petitioner, in a letter dated
containers and packaging materials, hence, the amount paid cake. Such finished products are packed in cans and December 7, 1962, assessed and demanded from petitioner
therefor should have been credited against the miller's tax tetrapaks. It bears stressing that tax burdens are not to be the payment of documentary stamp taxes for the years 1952
assessed against it. CIR contends that Sec. 188 of the Tax imposed or presumed to be imposed beyond what the statute to 1958 in the total amount of P 79,806.87 and plus
Code provides that sales, miller's or excise taxes paid on raw expressly and clearly imports, tax statutes being construed compromise penalties, a total of P 81,406.87.
materials or supplies used in the milling process shall not be strictissimi juris against the government.
allowed against the miller's tax due.
Issue: WON respondent company may be required to pay

again the documentary stamps it has actually purchased,
affixed and cancelled
Held: No, as correctly pointed out by respondent Court of

Tax Appeals, under the National Internal Revenue Code,
documentary tax is deemed paid by: (a) the purchase of
documentary stamps; (b) affixture of documentary stamps to
the document or instrument taxed or to such other paper as
may be indicated by law or regulations; and (c) cancellation
of the stamps as required by law. It will be observed
however, that the over-riding purpose of these provisions of
law is the collection of taxes. The three steps above-
mentioned are but the means to that end. Thus, the
purchase of the stamps is the form of payment made; the
affixture thereof on the document or instrument taxed is to
insure that the corresponding tax has been paid for such
document while the cancellation of the stamps is to obviate
the possibility that said stamps will be reused for similar
documents for similar purposes. In the case at bar, there
appears to be no dispute on the fact that the documentary
stamps corresponding to the various policies were purchased
and paid for by the respondent Company. Neither is there
any argument that the same were cancelled as required by
law. It is a general rule in the interpretation of statutes
levying taxes or duties, that 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 or 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 subject
stamp tax, to require the payment of the same tax for the
same documents. Enshrined in our basic legal principles is
the time honored doctrine that no person shall unjustly
enrich himself at the expense of another. It goes without
saying that the government is not exempted from the
application of this doctrine.
1. Determinate Thing Held: No. The object to be delivered was generic and set no
bounds or limits to the palay to be paid. Any palay of the
Extinguised based on delicts. Art. 89(1) of RPC, death of Equatorial vs. Mayfair—Right of First Refusal same quality can replace. Impossibility must consist in the
convict occurs before final judgment, extinguished. But only nature of the thing to be done and not the inability of the
criminal liability is extinguished and also the civil liability Carmelo owned a parcel of land with 2-storey building and party to do it.
directly arising from and based solely on offense. Claim for leased said portions to Mayfair. On their contract, stipulation
Civil liability survives if the same may also be predicated on that Mayfair has 30-day exclusive option to purchase the
a source of oblig other than delict. same should the lessor decide to sell the leased premises.
Source: Crimes or Delicts. Acts or omission. But Carmelo wanted to sell the whole property. He sold Norkis vs. CA—Ako ang bumili ng motor iba ang gumamit.
entire prop to Equatorial. Mayfair filed for annulment of sale
DBP vs CA –Restructuring of Debt bec of lack of consideration. Mayfair claimed that he told Nepales bought a motorcycle from Norkis and issued a chattel
Carmelo that it is willing to purchase the same and that it mortgage in favor of DBP. Invoice was issued and motorcycle
DBP granted PHUMACO and PHILICO an industrial loan for has the right of first refusal. was registered by Norkis evidenced by receipts of
P2.5M, 2M in bonds and 500k in cash. Promissory note registration. Motor was delivered to a certain Julian Nepales
executed and a mortgage over their present and future Issue: WON the sale can be nullified because of Mayfair’s and an accident happened while being driven by a certain
properties. DBP granted another loan of 1.7M reflected in the action Payba. Norkis claims it cannot be held liable since ownership
amended mortgage contract. After 7 yrs the outstanding was already transferred to Nepales evidenced by the receipts
balance was restructured bec Resp failed to pay. Resp still Held: The contract is deemed rescinded. Rescission a relief and the invoice.
failed to pay under the restructured payment. DBP allowed for protection of one of the contracting parties and
refinanced the matured obligation and granted 3 foreign even 3rd persons from injury or to protect some incompatible Issue: WON ownership was transferred to Nepales.
currency denominated loans. Apart from interest, there are and preferred right by the contract. Mayfair has the
additional charges and penalties in case of default. After 10 opportunity to negotiate. Held: No. No actually delivery nor constructive one. The
years, DBP initiated for forclosure of mortgaged prop and the receipts of reg fees and the invoice is nothing but a detailed
balance shoot up to P63M. Resp claim that reason for non- Determinate Thing: There is a problem because statement of the nature and quantity sold and not a bill of
payment is because financial rehabilitation from a contract determination cannot be made bec prop is indivisible. You sale. Intent considered. Intent was not to transfer ownership
with the military didn’t push thru. cannot pinpoint which is the 25% of the property. but to facilitate execution of chattel mortgage.
Determination of the exact portion of the building.
Issue: WON the resp can claim without fault in default of the Determinate Thing: The motorcycle was a generic thing. (?)
non-happening of the contract with the military. De Leon vs. Soriano—bigyan ng palay si nanay.
Heirs of Juan San Andres vs. Rodriguez—Binili ko na ang
Held: NO. DBP is no party to resp and AFP’s contract. Resp Natural children of Soriano agreed that they are to deliver nakapaligid na lupa.
can claim from AFP but without prejudice to its contract with certain number of cavanes of palay each year to Soriano and
DBP. DBP has given Resp all the possible options for payment. shall only cease upon death of mother. But deliveries were of JSA sold 345 sqm lot to Rodriguez. There was a deed of sale.
3,400 cavanes and children claimed that due to Huk troubles JSA died and Rodriguez appointed administrator. The heirs
Source: Contract in Central Luzon. engaged services of a geodetic engg and found out that resp
has encroached the lot by 509 sqm. They sent letter to
II. NATURE AND EFFECTS OF OBLIGATION Issue: WON inability to deliver was permissible due to force vacate. Resp claimed they bought the said portion of the lot
majeure the ff day when they first bought the 345 sqm lot. Proof of
A. Obligation to give sale was attached and that payable in 5 years. Resp
deposited the balance in court.
discontinuing the plan without their consent, is not in the so. Force majeure is also claimed since a storm destroyed the
Issue: WON there was a contract of sale. position to insist upon the terms of the very contract they bodega.
have breached.
Held: Yes. There was a contract of sale which transferred the Issue: WON VPC is held liable.
ownership to resp. Pet claimed that the object cannot be
determined with sufficient certainty. Court held that it is Held: Yes. Subject matter is Phil Copra, does not refer to any
capable of being determined w/o need for new contract and CO vs. CA—pinagawa kong kotse, na-carnap. particular or specific copra. Since generic, obligation can’t
the receipts showed that payment was to the lot adjoining be deemed extinguished by the destruction/disappearance.
the prev paid lot on three sides thereof. The land is Pet entrusted his car to Resp to make same job repair Obligation subsists as long as commodity is available. Pet can
determinate or determinable. Ownership transferred by services and supply of parts which was to be returned after 3 also sell the copra which they expect to acquire in the future
constructive delivery which is the execution of public days as per the contract. Pet paid in full. After 3 days the for purposes of speculation.
document. vehicle can’t still be released due to failed battery so pet
bought battery. When Pet was about to get it, resp said the Effect: Subsistence of obligation since generic object.
Determinate Thing: The lot. car was carnapped while being road-tested. Resp claims
force majeure. Ocena vs. Jabson—subdivision na kontrata, maling akala.
2. Generic Thing
Issue: WON Resp will be liable for the carnapping. Resp filed a complaint for modification of the terms and
Norkis vs. CA conditions of its subdivision contract with petitioners.
Held: Yes. It was due to negligence premised on delay which Allegations are that price in oil and derivatives have
Generic thing: motorcycle is the basis of the complaint. Carnapping cannot be increased, not within the control of the plaintiff. It will
considered as fortuitous. It must be proved and established cause unjust enrichment to the pet. In the contract, the pet
PLDT vs. Jeturian—Pension bago gera. that it is an act of God. No other evidence but the police are guaranteed as landowners and that they will receive 40%
report. Even when Pet agreed to resked repair, can’t be of all cash receipts from the sale of the subdivision lots. Resp
PLDT adopted in 1923 a Plan for Emloyees Pension. In 1945 taken as waiver bec he really has no other choice but to hinged their argument on 1267 when the service has become
the BOD adopted a resolution discontinuing the pension plan. leave it since he can’t have it run. so difficult beyond contemplation, release from obligation.
Hence this action of Resp.
3. Effect of Loss Issue: WON there is a sufficient cause of action for
Issue: WON the pre-war employees are entitled to the modification of the subdivision contract.
pension. Bunge vs. Camenforte—Copra ko sa’yo binenta ko.
Held: No. Cited article does not grant the courts this
Held: Yes. But with the exception of those who died or left Plaintiffs filed to recover certain damages from the def bec authority to remake, modify or revise the contract. Their
before the outbreak of the war. The pension plan was not a of the latter’s failure to deliver Phil copra they agreed to contract has a force of law and should there be substitution
gratuity but an inducement for employees to continue deliver. A contract was entered into where the VPC sold 500 or modification, it should be amongst the parties themselves.
indefinitely in service. The plan ripened into a binding tons of Phil Copra to BC. The vendor would ship the copra to A showing of mere inconvenience, unexpected impediments
contract upon its implied acceptance of the employees. USA but even with demands, failed to do so. The vendee or increased expenses is not enough. Equity cannot relieve
Acceptance is inferred from their entering the employ of the however believed in good faith that it shall be delivered so it from bad bargains simply bec they are such.
company and staying after the plan was made known. PLDT sold the expected copra to EDOW. Bec vendor failed, vendee
argues that it can only be held liable under the conditions suffered damages. VPC denies contract and said that Effect: The contract has the force of law.
expressly set in the pension plan. But the Court held that the Vicente, the manager who contracted had no authority to do
Company that violated the contract with its employees, by
but Court held that fixing a period would only be a mere and Ong refused to pay but reason was not clear on the
formality and would serve no purpose than to delay. Liable record. She wanted to change Vinyl tiles to Kenzo flooring.
under 1170. Ong claimed Bog abandoned job.
B. Obligation to do Issue: WON Bog be liable for abandoning job.
To do: Specific performance – repair typewriter.
Hahn vs. CA—I want these diamond rings. Held: No. He is not liable but is not justified for doing so.
Oceana vs Jabson—subdivision kontrata, maling akala. 1191, it was a reciprocal obligation and there is power to
Santos received 2 diamond rings with a total amount of 47K. rescind it in case one doesn’t comply with what is incumbent
She issued separate receipts therefore in which she To do: To give 40% of the cash receipts from sale of upon him. But this article should be judicially invoked.
acknowledged that they have been delivered by Letty Hahn subdivision lots. Novation is not presumed. There must be an express
for sale on commission and that they would be returned upon stipulation. Novation a. change of obj or principal conditions,
demand if unsold. The rings were not sold nor returned after **Woodhouse vs. Halili—Mission Softdrinks b. substituting person of debtor c. subrogating 3rd person in
demand. Thus this action. the rights of creditor. Liability is on the first infractor, 1192.
P and D entered into an agreement that they will form a There has been no contract novation that required Bog to
Issue: WON the contract was of sale or agency. partnership for the bottling and distribution of Mission finish the Kenzo flooring before the 4 th billing shall be paid.
softdrinks, P as manager and D as capitalist. When the 1186. Condition shall be deemed fulfilled when the obligor
Held: Of agency. There is no evidence that would tell that is bottling plant was in operation P wants to execute the voluntarily prevents the fulfillment.
was of sale. Their contract’s stipulation does not show it was partnership papers but D refuses. D claims that he was made
of sale. Although resp was willing to give a different object, to believe that P has the exclusive ownership of the bottling To do: Pay 4th billing. (Reciprocal-di mo ginawa di ko rin
the debtor cannot compel the creditor to receive a diff franchise. gagawin-pero sabi nga ng court hindi pa rin yun justification,
object. but only the first infractor shall be liable).
Issue: WON the misrepresentation of P can vitiate the
To do: Deliver the rings, the specific rings. contract.
C. Obligation not to do
Chavez vs. Gonzales—Dahil sa typewriter. Held: No. Although P was guilty of misrepresentation, it was
not the causal consideration or the principal inducement that Fajardo vs. Freedom to Build—Wag dagdagan kung hindi
P delivered to D a typewriter for D to repair. D was not able led defendant to enter into the partnership. D may not be bawasan!
to repair the typewriter and asked for P6 for spare parts. P compelled to carry out the agreement which is to execute
went to D and demanded the typewriter which D gave in a the partnership papers. The defendant has obligation to do FTB, owner-developer and seller of low-cost housing, sold to
wrapped package. When P opened it at home, he saw that and not to give. The D reduced the percentage of P from 30% petitioner-spouses a house and lot. Restrictive covenant was
the typewriter had missing parts and found it in shambles. P to 15% bec of his misrepresentation. contained in the contract, easement. No upward and front
demanded missing parts, interior cover and P6. P brought it expansion which is contained in their Transfer Certificate.
to a diff repair shop and spent P89.95. P filed for payment of Obligation to do: Execute partnership contract. Pet’s children are to wed so extended their house thus
P90 and damages. contravening the terms of contract. Pet filed, demolish the
Ong vs. Bognalbal—She wants her Kenzo Tiles, now na. unauth structures.
Issue: WON D is liable for damages.
Bognalbal was an architect hired by Ong who was a Issue: WON resp has the auth to ask for demolition since
Held: Yes. 1167 states that when a person is obliged to do businesswoman to construct her boutique. Bog agrees to ownership already transferred to the prop owners or
something and fails to do the same, it shall be executed at furnish labor within 45 days and owner to pay every 2 weeks homeowners association.
his cost. What is poorly done be undone. D claims no period based on the accomplishment of work value. 4 th billing came
Held: Yes. Restrictive covenant should still be followed. Held: The bank cannot be held in default through the mere
Although courts generally view restrictive covenant with Delay in performance: It was the creditor who was in default lapse of time. Plaintiff never demanded from bank and just
disfavor but sustain them if reasonable, not contrary to or delay when it refused to get the payment given by the filed the case in Court. A binding obligation may originate
public policy, law etc. Intent of developer was to provide resp. from advertisements addressed to the general public.
safety, aesthetic and decent living conditions and prevent Demand will not be necessary only in certain conditions, but
overcrowding. Art. 1168, when ob consists in not doing, Lopez vs. Tan Tioco—Ibenta mo ang asukal pag sinabi kong demand is indispensable as a general rule. Plaintiff has no
obligor does what was forbidden, shall be undone at his ibenta mo. cause of action bec he alleges that the contest didn’t push
expense. thru but in consideration of the evidence, the materials are
Lopez and Tan Tioco entered into a verbal contract that on their way to New York and were sent to a technical
Not to do: Expand structures of house. she’ll deliver certain sugar to Tan Tioco which he obligated committee.
himself to store until he receives instructions from her to sell
D. Effect of Breach them. She delivered the piculs of sugar and instructed to sell Delay: Bank was not in default. No demand.
in on Sept 1904 but def did not do so. Pet filed action. Def
1. Delay in Performance denies allegations. Lizares vs. Hernaez—Camarin was burned and lessee won’t
pay.
Villaruel vs. Manila Motors—Kasalanan ng lawyer, naningil Issue: WON the defendant was in default.
ng renta nung may gera. Lizares and Hernaez entered into a contract, the former
Held: Yes. He was in default from the time the Pet became the lessee of the two haciendas. Pet used one of the
Manila Motors and Villaruel entered into a contract whereby demanded to deliver or do something, or the fulfillment of improvements there which was a roofed camarin used in
the former agreed to convey by lease to the latter some the obligation. Neither the contract nor the law demands to manufacture of sugar. A fire occurred and destroyed the
premises. The term of lease is 5 years. The premises were make judicial demand than extrajudicial. The price of the camarin. Pet demanded from Def that he reconstruct
invaded by the Japanese and then the American occupied the sugar should be from the time she instructed the def to sell camarin. Def refused. Pet did not pay the rentals bec of non-
same building. The occupants paid the same rate as the them. construction of the camarin. Def claims Pet should be liable
defendants after which they have vacated the premises. Def for the fire since he is the lessee when the fire occurred.
renewed contract for addtl 5 yrs. Pet, as per his lawyer’s Delay in Performance: Delay in selling the sugar upon
advise, demanded for rental from the Def for the period instructions. Issue: WON plaintiff has responsibility to the damages caused
when the Jap and the Americans occupied the premises. The by fire.
premises was set on fire and the reason was unknown. Dela Rosa vs. BPI—Atat sa announcement ng winners ng
design contest. Held. No. And so is the def. Force Majeure. But the plaintiff
Issue: WON Pet has power to demand rentals and recover the is in default with regard to the non-payment of rentals due
same due to default. BPI held this contest of designs and plans for the construction to non-construction of camarin. Although there is
of a building. Prizes would be awarded not later than Nov. presumption against lessee when loss in the leased prop
Held: No. Art. 1554 of CC of Spain states the duties of a 30, 1921. Plaintiff took part in the said contest and after the occurs, proof is necessary to prove he is not responsible.
lessor. A. deliver to the lessee the subject matter b. make date stipulated, the bank didn’t award prize nor made any 1183. When a thing is lost while in the possession of the
thereon, during the lease, all repairs necessary and maintain announcement. Plaintiff filed. debtor, it is presumed that it loss occurred by his fault and
serviceable condition c. maintain lessee in peaceful not by fortuitous even in the absence of the contrary.
enjoyment of lease. 1560, lessor shall not be liable for any Issue: WON BPI was in default when it did not release the
act of mere disturbance of 3rd person but lessee would have announcement on the date stipulated. Delay: Not in the Def for non-construction but in Plaintiff in
direct action against trespassers. No lessee would agree to non-payment of rentals.
pay rent for premises he could not enjoy.
Held: No. Ownership was already transferred to the buyer. Issue: WON the Resp is in default.
Although there has been an agreement that the ownership
shall remain with the seller until the price has been fully Held: No. The obligation to withdrew the 500MT of H2SO4
Bachrach Motor vs. Lee Tay—Kinuha ng Kano ang truck paid, it was only for the security of payment but in the very before Aug. 1989 and the resp was already ready to deliver
niya, ayaw na niyang magbayad. contract in was expressly agreed that the loss or damage the same but it was Plaintiff’s fault for not chartering
after delivery to the buyer shall be borne by the buyer. another vessel which has the capacity to withdraw the
Def executed and delivered to the plaintiff a promissory note Exemptions from liability due to fortuitous event: 1. volume. It has the duty of emptying the acid. Pet claim that
payable in installments which represents the balance of one determinate thing (in the present case, pecuniary in nature) it was due to a storm that’s why it can’t empty the storage
white chasses purchased by def from pet. The truck was 2. No stipulation holding him liable even in case of fortuitous but evidence proved that it was of the incapability of the
delivered to the def. After the outbreak of war, the truck vessels. There was an obligation on the pet to empty the
was one of the trucks that were commandeered by the Delay: Non-payment of balance. storage.
USAFEE. Neither the plaintiff not def filed an official claim They were the ones in delay.
from the US govt.
Equatorial vs. Mayfair—right of first refusal Delay: Pet for not emptying the storage.
Issue: WON the commandeering of the truck exempts the def
from payment of the obligation represented by the prom Delay: ***By not giving to Mayfair the 30-day period of which Selegna vs. UCPB—credit facility which ballooned.
note. it is entitled to exercise right of first refusal upon
communication of Carmelo that he would sell the property. Selegna, rep by spouses Edgardo and Zenaida Angeles were
Held: No. There is no principle of law by which the obligation granted a credit facility for P70M by UCPB. As a security, pet
was extinguished. The interest was not reduced due to Co vs. CA--carnap executed real estate mortgages over several parcels of land.
suspension since the pet was generous enough to compute Pet also executed prom note every time they avail of credit
only from 1948, the truck was commandeered in 1941. Def Delay: Delay in delivering the car to Co after demand which facility. In their credit agreement, it was stipulated that
could have filed a claim from the US govt and he would have is the premise of negligence of resp. failure to pay any availment of the accommodation or
been paid but he failed to do so. interest or any sum due shall constitute an event of default
Aerospace vs. CA—Sulfuric Acid na ayaw pang kunin. which shall allow resp bank to declare as immediate and
Delay: Non-payment of the prom note. payable all outstanding availments together with accrued
Pet purchased from resp Philphos 500 MT of Sulfuric Acid. In interest. Pet increased credit facility and they agreed to
Lawyers Coop Pub vs. Tabora—bumili ng law books, their contract it was pet’s responsibility to get the acid from 21.75% interest per annum. Demand letters were sent upon
nasunog. resp. Philphos demanded that pet get the acid and pet failure to pay. Pet paid 10M as partial payment of accrued
chartered a vessel MT Sultan but the vessel was not able to interest. UCPB applied for extra-judicial foreclosure of
Tabora bought books from Pet and made partial payment. It get the whole volume bec it tilted. Resp sent a demand petitioners mortgaged properties. The obligation has
was delivered to his law office. On the same date, a fire letter that the acid should be emptied or else petitioner will ballooned to 132M and pet alleged that 10M as payment had
broke out in the office and destroyed the building including be liable for the storage and other incremental expenses if the effect of updating and thereby averting the maturity of
the books. Def doesn’t want to pay balance since the books pet fails to do so. Pet chartered MT Sultan again but it tilted the obligation.
were loss due to force majeure and the ownership has not so never gotten the whole volume. Chartered another vessel
been transferred to him yet. Don Victor and asked Resp to deliver additional orders. Resp Issue: WON the Pet were in default.
did not do so unless the remaining acid be emptied and that
Issue: WON force majeure can be claimed by defendant from pet pay the maintenance and storage. Pet filed and Held: Yes. The contract is the law and the resp is justified in
his non-fulfillment of obligation. contended Resp is in default. invoking the acceleration clause declaring the entire oblig
due and payable. The resp had the right to foreclose the
mortgages extra-judicially. Failure to furnish a detailed even assuming that he owes pet P15K, it should have been acts and representations and admission or by his own silence
statement of account doesn’t ipso facto result in offset by the collapse after a strong wind. when he is obliged to speak out, intentionally or thru
unliquidated obligation. Pet was in default. culpable negligence induces another to believe certain facts
Issue: a. WON agreement to construct windmill included in to exist and such other rightfully relies and acts on such
Delay: Non-payment of availement of accommodation. the installation of a deep well. beliefs so that he will be prejudiced if the former is
b. WON the pet is under the obligation to reconstruct the permitted to deny the existence of such facts. 1168: Oblig is
2. Non-fulfillment windmill. in not doing and obligor has done what is forbidden, shall be
done at his expense.
Chavez vs. Gonzales Held: a. No. It was not included in the agreement. Intention
of the parties must be accorded primordial consideration and Non-fulfillment: of the obligation not to do which is to
Non-fulfillment: The typewriter was not fixed. in case of doubt, contemporaneous and subsequent acts shall sublease the fishpond.
be principally considered.
Telefast vs. Castro—dahil sa telegrama, mag-isa lang nang b. Yes. Pet claimed there is a strong wind but this is actually 3. Fraud
ilibing ang mama. necessary for the windmill to turn. It was just newly
constructed, it should have not collapsed. Board of Liquidators vs. Heirs of Maximo Kalaw—Copra
Consolacion Bravo-Castro died in Pangasinan and on the same Trading, hindi na kelangan ng pirma ng Board of Directors.
day the daughter sent a telegram to the US to inform the Non-fulfillment: Payment of last installment.
other siblings and dad about death of Mom. The Mom was Nacoco is for the protection, preservation and development
interred by daughter alone. When she came back to the Perez vs. CA—niloko yung businessman at pinaalaga ang of the coconut industry. Kalaw is the manager and board
states, she found out that the telegram never reached her fishpond. chairman. Nacoco embarked on copra trading activities, thus
siblings. Telefast claimed force majeure bec of technical entering into contracts. For 3 years, profited 3M but after 4
and atmospheric factors but no evidence to support. Juan Perez usufructuary of a parcel of land called Papaya typhoons, left the coconut lands devastated throughout the
Fishpond with other usufructuaries. The usufructuaries country. It was not able to fulfill the contracts it has engaged
Issue: WON force majeure applies. entered into a contract leasing the fishpond to Luis Keh for a in. Nacoco paid damages to one of the parties. Nacoco now
period of 5 years. The contract states that the lessee cannot sues Kalaw for having approved the contracts.
Held: No. No evidence to support. And even so, def should sublease the fishpond nor assign his rights to anyone. But
have informed the plaintiff that it cannot transmit the Crisostomo was persuaded by the pet Keh to take over the Issue: WON Kalaw is guilty of negligence for entering into
telegram. 1170 and 2176, guilty of fraud, negligence or Papaya fishpond bec Cris is a businessman. Executed a contracts without prior approval of the Board of Directors.
delay. 2217 for moral damages. written agreement. Cris even paid the rentals until 1985, 10
years of taking care of the fishpond. In 1979 however, pet Held: No. Consideration of practice. Corporate officer
Non-fulfillment: Sending of telegram. with armed men went to fishpond and showed that Keh entrusted with the gen management and control of business
surrendered the fishpond to the usufructuaries. has implied authority to make any contract or do other act
Tanguiling vs. CA—windmill na nasira sa wind. wichi is necessary or appropriate to the conduct of the
Issue: WON the resp is a sublessee of Keh which is barred by ordinary business of the corporation. But there is a citation
A case involving proper interpretation of contract. JMI Engr the lease contract. on the Nacoco’s by-laws requiring prior directorate approval
and GM proposed to resp Vicente to construct windmilling of Nacoco contracts. Court considered practice of trade of
system for him. They agreed on the construction for P60K. Held: Yes. He was a sublessee. But Perez and his counsel short-sellling or forward sales. Prev contracts without prior
P30K DP and P15K installment. Vincente didn’t pay the knew and acquiesced to that arrangement by their act of auth from Board. And evidence showed that Kalaw actually
remaining P15K bec he paid it to SPGMI who constructed the receiving from the resp rentals evidenced by the receipts handled the corp well for it to profit. Force majeure reason.
deep well to which the windmill would be attached. And which puts the pet in estoppel—which arises when one by his
Fraud: There is no fraud because Kalaw didn’t need the Action against owners and operators of the commom carrier
Board’s approval due to practice of trade. No negligence too known as the Phil Rabbit Bus Lines filed by one passenger and Held: Yes. Failure of the letter of credit to be opened in the
on his part. the heirs of another who were injured as a result of the fall contemplated period. Immediate cause of damages. No
into a river in which they were riding. The mother of the pet necessary data but pet would not win bid had she not furnish
ICB vs. Gueco—Joint Motion to Dismiss for the car. drowned and the son Necessito was injured. them with it. Waiver bec Pet suggested to sub it Thai rice.
Waiver are not presumed. Express stipulation.
Gueco spouses obtained a loan from UPC to purchase car and Issue: WON the carrier is liable for damages.
executed prom note which were payable in mnthly Contravention: That Burmese Rice should be delivered and
installments and chattel mortgage over car to serve as Held: Yes. Although resp claims that force majeure since should not deliver another thing.
security over the notes. Spouses defaulted in payment. The knuckles were the reason for the accident and they have
payment was lowered but still no payment. Car was detained inspected the knuckles, does exercised diligence. Carrier Chavez vs. Gonzales
inside the bank’s compound. Gueco went to bank and claims liability of manufacturer. Court said that the
negotiated and issued a manager’s check. But car was not inspection done was merely visual and not meeting the Contravention: That they agree that after 3 days, typewriter
released bec Gueco doesn’t want to sign Joint Motion to requirement of expected due diligence. would be usable.
Dismiss claiming not in the contract that they have to sign.
Negligence: In not exercising the proper diligence required. E. Effect of fortuitous event
Issue: WON the bank in not informing the spouses to sign
motion to dismiss liable for damages for not releasing car. 5. Contravention of the tenor of the obligation Necessito vs. Paras
Held: No. Joint Motion to Dismiss for the spouses’ benefit and Arrieta vs. Naric—Burmese Rice, di naman pala kayang Effect: Not fortuitous since knuckles should have been
not for the bank. It would only state that the case would be mag-open ng Letter of Credit. inspected more than the visual inspection done.
dropped and that the spouses had fully settled his obligation
thus the dismissal of the case. There is no fraud—no Pet participated in the public bidding by Naric for the supply Ampang vs. Guinco—the bus that skidded.
intentional and deliberate evasion of the normal fulfillment of 20K MT of Burmese rice. Her bidding being the highest,
of obligations. she was awarded the contract. In 1952, entered into Held: The accident was caused by an accident which was
contract, Naric and Pet, sale of rice. Pet obligated herself to unforeseen and beyond the control of the company on its
Fraud: In not stating that they have to sign Joint Motion to deliver to the latter the tons os Burmese rice and in turn driver.
Dismiss but this is not considered Fraud. No intent and for corp has to pay for the imported rice by means of an
the benefit of the Plaintiff. irrevocable, confirmed and assignable letter of credit in US Victoria Planters vs. Victorias Milling—30 years contract
currency. It was only In July that def took first step to open suspended due to Japanese Invasion.
letter of credit. Pet already made a tender to her supplier a
5% and this will be confiscated if L/C will not be received Held: 1174 relieves obligor from fulfilling a contractual
before Aug. 4. PNB informed Naric that L?C approved but has obligation (fortuitous event). The stipulation in the contract
a condition that the 50% marginal cash deposit be paid. Naric that in the event of force majeure, the contract shall be
was not in any financial position to meet the condition and deemed suspended during the said period does not mean that
4. Negligence wrote the pet about it. L/C was opened in Sept thus 5% the happening of those events stops the running of the period
deposit was forfeited. When appellee failed to restore agreed upon. It only relieves the parties from fulfilling their
Necessito vs. Paras—Knuckles killed the passengers. cancelled Burmese rice she offered a sub but Naric rejected. obligation that time. To require the pet to deliver the
sugarcane during the 6 yrs of suspension was impossible of
Issue: WON Naric should be liable for damages. being performed. 6 yrs can’t be deducted from 30 yrs.
Fortuitous Event: Will not apply bec there is negligence. thereon. It was held that the insurance of the vessel would
La Mallorca vs. De Jesus—tire blow-out. be liable for the damages that the shipowner or agent be
Austria vs. CA—Naglakad mag-isa sa gabi, nanakawan ng liable for the death of the passengers.
Held: Cause of the blow-out was known. It was a mechanical diamond pendant.
defect of the conveyance or a fault in its equipment which Fortuitous Event: Will not apply bec captain had knowledge
was easily discoverable if the bus had been subjected to a Abad acknowledged receiving from Austria one pendant with of the event thus making it not unforeseen.
more thorough or rigid check-up before it took the road that diamonds valued at P4,500 to be sold on commission basis or
day. The bus was driving fast as was evidenced in the trial. to be returned on demand. While walking home, Abad was F. Usurious transactions
robbed and her things were taken including pendant. Estafa.
Nakpil vs. CA—Engr/Archi pati Contractors liable sa RTC ruled negligence. CA held that robbery was established, Angel Jose Warehousing Co vs. Chelda—Loans with
pagguho ng bldg. fortuitous event. usurious interest, principal still enforced but interest not.
(P20K+)
Phil Bar Assoc decided to construct its building in INtramuros Issue: WON Abad is liable for the loss of the pendant.
Manila. Construction was undertaken by UCCI on Angel Jose filed against Chelda, its capitalist partner for the
administration basis and the plans and specifications of the Held: No. It was undisputed that Abad was a victim of recovery of the unpaid loans with legal interest and atty’s
building were prepared by another party Nakpil. It was robbery. Even when she walked alone at night knowing that fees (P20K+). Def paid bal of P5.6K. Plaintiff charged and
completed in June 1966. In 1968, a strong earthquake hit she had with her the pendant and a large amount of money, deducted from the loan usurious interest at the rate of 2%
Manila and building sustained major damages. As temporary the crimes then were not as prevalent as the present time. and 2.5% PER MONTH and consequently, as claimed by def
remedy UCCI shoved up the building at its own expense. PBA should not be permitted to recover under the law. RTC-
commenced action against UCCI for the partial collapse of Fortuitous event: Robbery was unforeseen and evidence P1048.15 usurious interest which the payment was deducted
the building. Allegations were that there was a failure of the established that it happened. from the interest and def claims that it should have been
contractors to follow plans and specifications and violations deducted from the principal obligation.
by the defendants of the terms of the contract. Def then Vasquez vs. CA—sinabi na sa captain na may bagyo,
filed against 3rd party-architects who prepared plans and tumuloy pa rin. Lumubog. Issue: a. WON in loans with usurious interest, the plaintiff
specifications alleging collapse was due to the defect of it. may still recover the principal of the loan.
Pioneer Cebu left the port of Manila. The vessel encountered b. WON the illegal terms as to the payment of interest
Issue: WON UCCI and Nakpil be held liable. a typhoon and struck a reef and subsequently sank. Plaintiffs renders nullity as to the payment of the principal debt.
seek the recovery of damages due to the loss of children and
Held: Yes. The case was referred to the Commissioner and other people due to voyage. There was a storm as def claims Held: a. Yes. Creditor may still recover principal of the loan.
found out that there were defects in plans and specifications but it was established that the captain knew about it but still Loans with usurious interest are not totally void but only as
and that contractors failed to observe requisite of proceeded. to the interest. Renunciation of the principal would
workmanship and even the owners failed to observe requisite extinguish accessory but waiver of the accessory would not
degree of supervision in the construction. Fortuitous even Issue: WON fortuitous event shall be considered and exempt extinguish the principal.
will not be applied bec there is negligence. 1723 will apply. def from liability. b. Yes. Divisible contract, that which is illegal can be
Engineer/ arch who drew up plans and spec liable for separated from legal ones and the latter may be enforced.
damages. Contractor liable if edifice falls within the same Held: No. They already knew the risk they were taking. They Interest which would be allowed is the interest bec of delay
period on acct of defects in the construction or the use of already receive report of the typhoon but proceeded anyway. and default due to the general provisions of the law.
materials of inferior quality. Engr/archi will be held solidary Def claim Art. 587 Code of Commerce, loss of vessel exempt
liable if supervises construction. liability. But it is cited there that the liability of the owner is Usurious obligation: Principal only, usurious interest not
limited to the value of the vessel or to the insurance enforced.
entitled only to so much as is needed to satisfy his credit;

Briones vs. Cammayo—P1500 lang utang pero interest P300 if there is any balance, it shall pertain to his debtor. Held: No. Obligations extinguished by death are: a. support
per year-usurious. b. parental auth c. usufruct d. contracts for a piece of work
Goldstar Minig vs. Lim Jimena—mining claims pinondohan, d. partnership e. agency. Articles that regulate guaranty or
Briones filed against Cammayo to recover P1500. They hindi na siya binayaran sa usapan. suretyship contain no provision that the guaranty is
executed a real mortgage as security for the loan of P1200 extinguished upon the death of guarantor. Art. 774 and 776
given by Cammayo upon usurious agreement and reserved to Jimena lent to Lincallo money to purchase mining claims and (succession and inheritance) state that heir succeed no only
himself P300 payment of interest for a year. Plaintiff paid they agreed that ½ f the proceeds shall be given to Jimena. to the rights but also to the obligations.
total sum of P330 but Cammayo refused to acknowledge it as Mining rights over part of the claim were assigned to Gold
payment for principal but for interest of loan for a year. Star before WWII and copr paid Lincallo P5000 royalties. AS: Obligation was subrogated to the heirs of the dead
Lincallo entered contracts without the knowledge of person.
Issue: WON creditor entitled to collect the principal Jimeana. Marquez contracted with Gold Mining and 45%
obligation and interest. should go to Lincallo. Another company contracted and III. KINDS OF OBLIGATION
stipulated 43% would go to Lincallo. Jimena demanded part
Held: Yes. But only as to the principal. Ruling of Angel vs. but he was not paid. A. PURE AND CONDITIONAL OBLIGATIONS
Chelda.
Issue: WON Jimena has a cause of action against Gold Mine 1. Pure Obligations
Usurious obligation: Principal only, usurious interest not when it contracted only with Lincallo.
enforced. Pay vs. Palanca—naningil ng utang after 15 yrs,
Held: Yes. Art. 1177 provides that creditors after having nagprescribe.
G. Presumption of interest and installments pursued the property in possession of the debtor to satisfy
their claims, may exercise all the rights and bring all the Held: Every obligation whose performance does not depend
***Hill vs. Veloso actions of the latter (debtor) for the same purpose, save upon a future or uncertain event or upon a past unknown to
which are inherent in his person. 1883: the principal may the parties, it is demandable at once.
sue the person with whom the agent dealt with in his own
***Vda De Ongsiako vs. Cabatuando name, when the transaction involves things belonging to the 2. Conditional Obligations
principal.
H. Action Subrogation a. with suspensive/resolutory conditions
AS: File against debtor of his debtor.
Accion Subrogatoria: action which the creditor may Lichauco vs. Figueras-Hermanos—Lorchas, emergency and
exercise in the place of his negligent debtor in order to Estate of Hernandez vs. Luzon Surety—namatay yung regular use.
preserve or recover for the patrimony of the debtor the guarantor, namana rin yung utang niya.
product of such action, and then obtain therefrom the Held: The amendment to the contract bet the plaintiff and
satisfaction of his own credit. Double function: conserving Luzon Surety filed against estate of Hemady based on 20 def was expressly conditioned on the defs being the
the patrimony of the debtor by bringing into it property different indemnity agreements and couterbounds by the successful bidders at the letting and they were not the
abandoned or neglected by him AND of making execution deceased in consideration of guaranteeing various principals winners. Second contract has no force but the first one. No
on such property effective thereafter. “Debtor’s debtor is in favor of different creditors. Hemady died and estate claim showing that they have given new life to the agreement.
my own debtor”. Debtor who is sued may set up against not liable bec of death.
the plaintiff the same defense he could set up against his Wise & Co vs. Kelly—hindi naman sinabi na ibenta yung
own creditor. If the action succeeds, the plaintiff is Issue: WON death extinguishes obligation of the estate. goods sa ganitong halaga.
one because dependent also of the will of the third person or

Held: No proof that Kelly has not turned over all the money Don Lopez donated land to CPU on the condition that it the US govt whether to allow the delivery or not.
received from the sale of the merchandize so that Lim, the would be used for the establishment of a medical school and
surety, has no liability. The condition is that Lim will pay if that CPU cannot sell or convey the land to any party. CPU
Kelly has not turned over all the sales of the merchandise but failed to do so and even exchanged land with another with
not that he shall pay if all the sales has not amounted to the the NHA. Heirs filed for annulment of donation. Trillana vs. Quezon Colleges—if I harvested fish.
original amount of obligation. There is no stipulation that the
goods were to be sold at a certain price, or not less than Issue: WON donation annulled. The stipulation in this case was that the obligor would pay
what it should be. the full value of a subscription for shares in the Quezon
Held: No. Although there is a need to fix a period bec the College after she had harvested fish.
Santiago vs. Millar—nanalo sa sweepstakes pero nawala ang contract did not stipulate period when to commence
ticket. condition. However, in consideration of the facts, 50 years Held: This condition is obviously depended upon the sole will
have lapsed for the condition to be complied with and CPU of the obligor, and the conditional obligation is void, because
Held: The ticket sold has a notation that prize will be paid was not able to perform. SC ruled to reconvey to heirs the it would have served to create an obligation to pay, the
upon the surrender of the ticket. The surrender or land. whole obligation is void.
presentation of the ticket is a condition precedent of
payment. Aguilar vs. Cititrust—yung hindi ko maintindihang kaso or **When conditional obligation is void, then it would convert
baka hindi lang siya talaga relevant under this title. the obligation to a pure obligation which would be
Parks vs. Prov of Tarlac—nagdonate ng land for school and demandable at once.
public park in 6 mos pero hindi ginawa.
b. Potestative Mixed Conditions Osmena vs. Rama—If the house of strong materials is sold, I
Cirer and Hill were owners of parcels of land and donated it will pay my debt.
to the municipality of Tarlac on the condition that erection Shotwell vs. Manila Motor—Banks were chartered to accept
of a public school and a public park shall be commenced liability. Held: If the statement found in the acknowledgement should
within the period of 6 months. Tarlac failed. Cicer and Hill be regarded as a condition, it was a condition dependent
sold land to Parks. Parks pray for annulment of donation. Held: The banks will not be liable since they didn’t accept upon the exclusive will of the debtor, and is, therefore, void.
that they will should liability. The lease was extinguished by The acknowledgement, therefore, was an absolute
Issue: WON Parks is the owner of the land bec of non- the fire that occurred and the chartered banks being a acknowledgement of the obligation and was sufficient to
performance of the condition of the mun of tarlac. sublessee of the Manila Motor which contracted lease also prevent the statute of limitations from barring the action
from Shotwell, will not be liable for the construction of the upon the original contract.
Held: No. The action for revocation of a donation is 10 yrs. destroyed buildings. No potestative condition.
They have filed case after 14 yrs. Although condition was Lease for the enjoyment of the premises. No fault on part of Hermosa vs. Longara—as soon as I receive funds derived
not complied with, revocation should have been made before anyone. from the sale of my property in Spain.
the sale of the land. Req: 1. consent of the donee of the
revocation 2. judicially decreed. Onerous donations, 10 yrs Smith Bell vs. Sotello Matti—i-deliver yung equipment pero Held: The condition implies that the obligor has already
prescription. depende sa gobyerno. decided to sell his house or at least that he had made his
creditors to pay his indebtedness demandable is that the sale
CPU vs. CA—nagdonate ng land for medical school pero Held: The conditions did not depend upon the will of the be consummated and the price thereof remitted to the
hindi ginawa. No period but 50 yrs na nakalipas di pa rin debtor alone. There is no delay since there existed rigid islands. Not a purely potestative one, depending upon the
ginawa. restrictions during the that time of world war. It is a mixed will of the obligor, but partly upon chance, i.e. presence of
the buyer of the property for the price and under conditions if the obligor intentionally impedes its fulfillment, has no the prospective buyer by entering into a contract of absolute
desired by the obligor. application to the cases of the resolutory provision giving to sale.
the obligor a right to cancel contract upon contingency
c. Impossible and Illicit conditions within the control of the obligor. 4. Retroactivity of Obligation
Luneta Motor Co. vs. Abad—if I recovered judgment in the Herrera vs. Leviste—GSIS and Leviste Case. Teehankee’s Padilla vs. Paterno-his mom is the universal heir and not
action but he died during the trial. Dissent. his wife-paraphernal.
Held: The obligation is subject to the condition that when Tehankees Dissent: Leviste was guilty of bad faith and Held: The ownership of the land is retained by the wife until
the plaintiff recovered judgment, they shall deliver the violated the terms of the contract thus there is constructive she is paid the value of the lot, as a result of the liquidation
property so released to the officer of the court for the fulfillment. Herrera was required by GSIS to submit papers to of the conjugal partnership. There mere construction of the
payment of said judgment of in default, pay its full value. support his assumption but could not be approved until building from common funds does not automatically convey
Since Abad died, it has become a legal impossibility since no Herrera could submit a final deed of sale and Leviste did not the ownership of the wife’s land to the conjugal partnership.
judgment shall be rendered. execute this deed. He prevented the assumption of Herrera The properties’ conversion from paraphernal to conjugal
of the mortgage. Not only that, Leviste is in arrears for 14 assets would be deemed to retroact to the time the conjugal
Galang vs. CA—you pay 25% within 3 months or upon the months in its amortization and Herrera did not know that. buildings were first constructed thereon or at the very latest,
removal of the encargado. 1186 and 1169 (reciprocal obligations). the time before the death of Narcisso Padilla that ended the
partnership. The acquisition by the partnership of theses
Held: The removal of the encargado was not a condition Tayag vs. CA—estopped bec receipt of payments and properties was subject to the suspensive condition that their
precedent to the fulfillment of the contract. What we have is knowledge of irregularities. values would be reimbursed to the widow at the liquidation
a contract to sell wherein the ownership is retained or title of the conjugal partnership; once paid, the effects of the
until the fulfillment of a positive condition, normally the Held: The acceptance of the petitioners of the various fulfillment of the condition should be deemed to retroact to
payment of the purchase price in the manner agreed upon. It payments even beyond the periods agreed upon, was the date the obligation was constituted.
was just an alternative period for the payment of the second perceibved by the lower court as tantamount to faithful
installment. performance of the obligation. 1186 applies to both obligees
and obligors in reciprocal obligations even when the proviso Coronel vs. CA—Downpayment
d. positive and negative conditions only speaks of the obligor. Pet accepted the performance
knowing its incompleteness and irregularity and without Retroactive: From the moment the obligation was
3. Constructive Fulfillment expressing any protest or objection, the obligation is deemed constituted, upon payment of full balance, retroact to that
to be complied with. date.
Taylor vs. Uy Tieng—dapat may trabaho siya pero binawi ni
Uy Tieng dahil di maganda sitwasyon. “FOR ANY REASON” Coronel vs. CA—Receipt of Downpayment 5.Preservation of Creditor’s Rights
Held: “Should the machinery to be installed in the said Held: Intent of the parties has to be considered. It was a Art. 1188: The creditor may, before the fulfillment of the
factory fail, for ANY REASON, 6 months from the date hereof, contract of sale and not a contract to sell. Contract of sale— condition, bring the appropriate actions for the
this contract may be cancelled”. The def can rescind the ownership already transferred upon fulfillment of the preservation of his right.
contract bec their reason falls under “any reason”. suspensive condition. Absolute sale. Contract to sell-although The debtor may recover what during the same
suspensive condition was complied with, ownership will not time he has paid by mistake in case of a suspensive
But there is no constructive fulfillment on this case. automatically transfer. There is still a need to convey title to condition.
Constructive fulfillment: condition shall be deemed fulfilled
6. Rescission in Reciprocal Obligations 1191’s consideration: There is nothing in the law that Held: Power to rescind under 1191 is not absolute. The act of
prohibits that parties from entering into agreement that a part in treating a contract as canceled or resolved on
Ocejo vs. Interbank—maswerteng assignee. violation of the terms of contract would cause cancellation account of infractions by the other contracting party must be
Yung asukal na nasa ibang warehouse na kinuha ng banko. thereof even without court intervention. BUT PROCEEDS AT made known to the other and is always provisional subject to
ITS RISK. Extra-judicial resolution will remain contestable the scrutiny and review by the proper court.
Held: The thing sold not subject to condition that the buyer and subject to judicial invalidation, unless attack thereon Delta –no manifestation that it had opted to rescind contract,
was the pay the price before the delivery. On demandability: should become barred by acquiescence, estoppel or it has possession of the two irons and the downpayment and
No term having been stipulated on payment, it should be prescription. has waived the performance of conditions of the contract
demandable at the time and place of the delivery of the when they opted to go on with the contract only with a much
thing sold. Demandable at once and failure to do so would Roque vs. Lapuz—10 yrs to pay, I can pay anytime within higher price.
entitle obligor either performance or rescission. But the 10 years.
rescission should be applied to the court for a decree for the Ong vs. Bognalbal
rescission of the contract. No rescission was made before Held: Qualification for rescission: so substantial and
the insolvency of plaintiff, the assignee standing on the shoes fundamental to defeat the object of the parties. Absence of Rescission: Upon the infraction of Ong, Bognalbal could have
of the buyer has a better right. a formal deed of conveyance is a very strong indication that filed rescission of the contract or the performance of it.
the parties did not intend immediate transfer of ownership
Albert vs. University Publishing—publishing the Revised and title, but only a transfer after full payment of the price. Carrascoso vs. CA—notice of lis pendence but continued
Penal Code. Intent of the parties was to have the obligation be paid in with the sale of the land.
monthly installment.
Held: It was the defendant corporation who had breached 1972-El Dorado sold to Carrascoso the parcel of land
the contract. The plaintiff has written letters reminding the Herrera vs. Leviste July 1975- Buy and Sell bet Carrasco and PLDT
corp that the contract will be deemed rescinded if the corp April 1977- Carrasco to PLDT
would not fulfill its obligation. Tehankee’s dissent: Upon Leviste’s refusal to execute the May 30, 1977 PLDT to PLDTAC
deed of sale, Herrera has the option of specific performance May 15, 1977-notice of lis pendens
Accg to Tolentiono: Rescission must be judicially invoked. or the rescission of the contract.
Unless there is a stipulation of period when the contract Held: Notice of Lis pendens, but still PLDT conveyed land to
would be deemed rescinded. If one party is willing to Zulueta vs. Mariano—Avellana a movie director made PLDTAC. Where a contract is rescinded it is the duty of the
perform and the other is not extra-judicial rescission would movies for Zulueta for his political campaign, automatic Court to require both parties to surrender that which they
suffice if there is stipulation. However, if there has been a rescission clause. may have respectively received and to place each other as
performance already by one of the parties, rescission should far as practicable in his original situation. The exercise of the
already be judicially invoked regardless whether there is a Held: There is an automatic rescission clause in the contract power to rescind extinguished the obligatory relation as if it
stipulation or none, especially if the other party rejects and the fact that pet has cancelled contract, resp has no had never been created, the extinction having a retroactive
rescission. right to remain in the premises. Extra-judicial rescission shall effect.
only take legal effect where the other party does not oppose
UP vs. Delos Angeles—award of logging rights; rescission it.
without need of judicial suit. B. OBLIGATIONS WITH A PERIOD
Delta Motor Corp vs. Genuino—delivery of black iron pipes
Held: In the agreement, there is a stipulation that UP has for iceplant and storage. PNB vs. Lopez Vito—loan of spouses when there is a
“the right and power to consider the Logging Agreement date condition and a period stipulated.
Dec 2 1960 rescinded without the necessity of a judicial suit.
Held: The non-fulfillment of the conditions of the contract Sarmiento vs. Villasenor—loan with a pledge of a medal performance d. amount due placed at the disposal of the
renders the period ineffective, and makes the obligation with a diamond in the center with 10 diamonds court 3. after consignation had been made, the person
demandable at the will of the creditor. Failure to pay would surrounding it, pair of diamond earrings, comb with 22 interested was notified thereof. Reasons why creditor can’t
make the entire obligation due and demandable, so diamds, and two diamond rings! Daming diamonds!!! be forced to accept payment a. may want to keep his money
regardless of the period of other installments, def has to pay invested safely instead of having it in his hands. B. to protect
the entire obligation. Held: In a contract of loan with interest wherein a term was himself of sudden decline on the purchasing power of the
fixed for the payment thereof, it is presumed that said terms currency loaned. Unless creditor consents, debtor cannot
Smith Bell vs. Matti was established for the benefit of the creditor as well as that accelerate payment.
of the debtor, unless from its tenor or other circumstances it
Held: There also was a stipulated period however there is appears to have been stipulated for the benefit of one only. Millare vs. Hernando—yung bahay niya gusting gawing resto
also a condition which states that delivery would depend In such a case the debtor has no right to pay the debt before e ayaw niya nga.
upon the US govt. Upon the lapse of the period and the the lapse of said period, without the consent of the creditor,
condition bars the performance, def will not be liable. and demand the devolution of the goods that were pledged Held: On the contract, it is stipulated that the lease may be
to secure the payment. Only after the expiration of said renewed after a period of 5 years under the terms and
Gaite vs. Fonacier—expiration of the surety, debtor loses period may the debtor make payment, and, therefore, the conditions as will be mutually agreed upon by the parties at
the benefit of the period. Mining claim case. action for the recovery of the goods pledged arises only after the time of the renewal. 1197 and 1670 of the CC (fixing of
the lapse of said for the purpose of the computation for he period, and after 15 days of occupying the leased property
Held: 1198 states when debtor loses the benefit of the period of prescription of said actions. and without any notice from lessor, contract shall be
period. The surety contract expired and Fonacier didn’t renewed). It is understood that there is an implied new
renew or replaced the surety. Sale of the ore was not a Daguhoy Enterprises vs. Ponce—nagsecure ng mortgage as lease, not for the period of the original contract, but for the
suspensive condition but a suspensive period, fixing the guaraty sa loan sa isang corp tapos after ibigay yung loan, time established by 1682 and 1687. The other terms of the
future date of the payment. withdrew mortgaged properties then mortgage them again contract shall be revived. After the expiration of the
sa ibang corp for another loan. Madaya. contract, the implied new lease could not possibly have the
Qui vs. CA—factory was razed to the ground and failure of period of 5 years, but rather would have been a month-to-
lease to rebuild the building of the lessee. (the building to Held: Although the contract stipulates that loan payable in 6 month lease since the rentals were payable on a monthly
be constructed shall belong to the resp lessor after 20 years, but because of the failure to give and register the basis.
yrs). security agreed upon in the form of two deeds of mortgage,
the obligation becomes pure and without condition thus due Pacific Banking Corp vs. CA—negosyo sa cultivation of fish
Held: 1197. If obligation does not fix a period but from its and immediately demandable. 1198, lost the benefit of the and saltmaking bumagsak.
nature and circumstance it can be inferred that a period was period.
intended , the courts may fix the duration thereof. Will also Held: An agreement to extend the time of payment in order
fix period when it depends upon will of the debtor. In Victorias Planter, supra to be valid must be for a definite time. The cause of action
determining period, courts will have to consider the was for the fixing of the period.
circumstances and see if period was contemplate. The De Leon vs. Syjuco—gusto ng magbayad ng debtor pero
contract doesn’t stipulate a period, thus the court held that ayaw pang tanggapin ng creditor.
resp has to institute a judicial action to fix the period. (this Song Fo vs. Oria—launch was sold but was shipwrecked,
case is an ejectment case so fixing a period was not alleged Held: Consignation was not valid. Req: a. debt due b. Song Fo did not insure and Oria did not secure.
in the case). consignation has been made bec creditor to whom payment is
made refused to accept, or was absent or incapacitated c. Held: The launch was with Oria already and knowing that the
prev notice of consignation to the person interested in the launch has not been insured yet, sent it from Manila to Samar
and on the trip it was shipwrecked. The contract stipulates when consented by the creditor, or impugned by the latter, Tortuous act-joint and severally liable
quarterly installments. Since the vessel is lost, Oria doesn’t when declared improper by the competent court.
want to pay. That unpaid installments of the purchase price Ronquillo vs. CA—foodstuff, individually and jointly,
of the launch, which under the express terms of the contract auction of furnitures on same day of hearing for
had not become due and payable at the time of the loss of D. JOINT AND SOLIDARY reconsideration.
the vessel, became due and payable under the provisions of
article 1129 of the Civil Code, upon the failure of the Jaucian vs. Queroi—surety was solidarily liable, then Held: Clearly then, by the express term of the compromise
purchaser, within a reasonable time after the loss of the surety died. agreement and the decision based upon it, the defendants
launch, to offer either satisfactory security or to give bond to obligated themselves to pay their obligation, “individually
secure the payment of the unpaid installment of the Held: The right of a guarantor or surety to insist on the and jointly”. The term “individually” has the same meaning
purchase price. exhaustion of the property of the principal debtor, before his as “collectively”, “separately”, “distinctively”, respectively,
own shall be taken in execution does not exist where the and severally. An agreement to be individually liable
guarantor or surety is jointly and severally bound with the undoubtedly creates a several obligation and a several
C. ALTERNATIVE AND FACULTATIVE OBLIGATIONS principal debtor. obligation is one by which one individual binds himself to
perform the whole obligation.
Agoncillo vs. Javier—Anastacio Alano mortgaging his Ramos vs. Gibbon—Mining Claims, Possessory Rights of a
property to pay the debt. Qualified Locator. Oritz vs. Cayanon—Bartolome Ortiz, ayaw umalis sa
premises dahil sa mga improvements na ginawa niya at
Held: Anastacio was only a rep of his children, and his partial Held: The concurrence of two or more creditors or of two or hindi siya nakasama sa bidding. Nangolekta pa ng toll.
payment does not affect prescription not for the benefit of more debtors with respect to the same obligation does not
the other debtors. The mortgage was never recorded imply that each of the former is entitled to demand the Held: Presumption when two persons are liable under a
therefore invalid. Action to recover has prescribed, the performance of the obligation in its entirety or that each of contract or judgment and no mention of the specific liability
action to compel a conveyance of the house and lot is the latter is bound to perform it. This shall be the case only of each for the entire obligation. With respect to the amount
likewise barred as the agreement to make such conveyance when the expressly so provided by the terms of the of reimbursement to be paid by Comintan, it appears that
was not an independent principal undertaking, but merely a obligation, and the parties are bound in solido. The the dispositive portion of the decision was lacking in
subsidiary alternative pact relating to the method by which presumption, in the absence of the stipulation as to how specificity, as it merely provided Zamora and Comintan
the debt might be paid. certain debtors are bound, is that they are bound jointly. jointly liable therefore. When two persons are liable under a
contract or under a judgment, no words appear in the
Ong Guan Can vs. Century—the insurance company doesn’t Versoza vs. Lim—Collision of Perla and Ban Yek. contract or judgment to make each liable for the entire
want to rebuild with the same materials. obligation, the presumption is that their obligation is
Held: Where a collision occurs between tow sea-going mancommunada, and each debtor is liable only for a
Held: On the contract the insurance company obligated itself vessels, caused exclusively by the carelessness of the proportionate part of the obligation. The judgment debt of
to either pay the amount to which the house was insured or navigating officers in charge of one of the vessels, both the 13K should be pro-rated in equal shares to Comintan and
rebuild it. The debtor must notify the creditor of his owner and the operating company directly in charge of the Zamora.
election, stating which prestation he is disposed to fulfill. offending vessel are liable for the damage done. The rule
The effect of notice is to give the creditor, that is, the that joint obligations are apportionable unless otherwise Imperial Insurance vs. David—spouses bound themselves to
plaintiff in the instant case, opportunity to express his specially provided has no application to obligations arising be solidary and jointly liable, husband died.
consent, or to impugn the election made by the debtor, and from tort. Persons who cooperate in the tortuous infliction of
only after said notice shall the election take legal effect damage are jointly and severally liable. Held: If husband and wife bound themselves jointly and
Contractual Obligations-joint severally, in case of his death her liability is still solidary and
may be sued for the whole debt. The Rules of Court provide **But Ma’am said, this is not the same meaning of real severally liable to the injured passenger or the latter’s heirs.
the procedure should the creditor desire to go against the subrogation of rights. Nor should it make any difference that the liability of pet
deceased debtor, but there is nothing in the said provision (bus owner) springs from contract while that of respondents
making compliance with such procedure a condition Chinese Chamber of Commerce vs. Pua Te Ching—Surety (owner and driver of other vehicle) arises from quasi-delict.
precedent before an ordinary action against the surviving was jointly ans severally liable, principal died. Bus owner-contract, owner and owner of other vehicle-quasi-
solidary debtors, should the creditor choose to demand delict : both jointly and severally liable.
payment from the latter, could be entertained to the extent Held: The surety may use against the creditors all the
that failure to observe the same would deprive the court defenses which the principal debtor is entitled and that are
jurisdiction to take cognizance of the action against the inherent in the debt, but not those purely personal to the E. DIVISIBLE AND INDIVISIBLE OBLIGATION
surviving debtors. CIVIL Code allows the creditor to proceed debtor, to wit, those which may contribute to weaken or Art. 1223-1225
against any of the solidary debtors or some or all of them destroy the juridical bond existing between the creditor and
simultaneously. Hence, there is nothing improper in the the principal debtor, not any means of defense which may F. OBLIGATION WITH A PENAL CAUSE
creditor’s filing of an action against the surviving solidary invalidate the original contract from which the tight or the
debtors alone, instead of instituting a proceeding for the action of the creditor against the security arises in this class Manila Racing vs. Manila Jockey—forfeiture of what was
settlement of the estate of the deceased debtor wherein his of actins is not included the means of defense as to how the partially paid.
claim could be filed. trial may be continued and the writ of execution issued in
case of the death of the principal debtor which can not Held: The clause of the contract referring to the forfeiture of
Inchausti vs. Yulo—magkakapatid na hindi pa nagkasundo affect the original contract nor destroy the bond existing bet the P100,00 already paid, should the purchases C fail to pay
sa remission na binigay. the creditor and the principal debtor, it being, therefore, an the subsequent installments, is valid, It is in the nature of a
exception or means of defense no inherent in the debt, but penal clause which be legally established by the parties. In
Held: The remission of any part of the debt, made by the at the most, a purely personal one of the debtor or the its double purpose of insuring compliance with the contract
creditor in favor of one or more his solidary debtors, inures successors-in-interest of the debtor. and of otherwise measuring beforehand the damages which
to the benefit of the rest of them, and these latter may may result from non-compliance, it is not contrary to law,
utilize in their favor the defense of remission. The solidary morals or public order bec it was voluntarily and knowingly
debtor unconditionally obligated or whose period for Int’l Finance vs. Imperial Textile—guarantee vs. surety agreed upon by the parties. Viewing concretely the true
payment has expired, may not, with respect to the part of effects thereof in the present case, the amount forfeited
the debt he is liable, plead the defense of prematurity of the Held: Although it states “Guarantee”, the stipulations of the constitutes only 8% of the stipulated price, which is not
action, which is personal to his co-debtors. contract make it clear that “jointly and severally” phrase is excessive if considered as the profit which would have been
the one used in the contract. obtained had the contract been complied with. There is,
BPI vs. McCoy—McCoy paid all the debts and was Surety: person binds himself solidary with the principal moreover, evidence that the defendants, because of this
subrogated with the rights to contribution from his co- debtor, primary liability contract with C, had to reject other propositions to buy the
debtors. Guaranty: contract whereby a person binds himself to the same property. At any rate, the penal clause does away with
creditor to fulfill the obligation of the principal in case the the duty to prove the existence and measure of the damages
Held: Where one of the several persons who are sued upon a latter should fail to do so, secondary liability. caused by the breach.
joint and several liability elects to pay the whole, such
person is subrogated to the rights of the common creditor Construction Dev. Vs. Estrella—Bus was rammed and their Caridad Est. vs. Santero—loan to be paid in 60 days and
and may properly substituted in the same action as plaintiff knees are pinned to the seats in front of them. failure to do so, those already paid shall be forfeited.
for the purpose of enforcing contribution from his former
associates under art. 1145. Held: The bus company, its driver, the operator of the other Antichresis: a contract whereby the creditor acquires the
vehicle and the driver of the vehicle were jointly and right to receive the fuirts of an immovable of his debtor with
the obligation to apply them to the payment of interest if Held: Under the law, a penalty takes the place of interests
owing and thereafter to the principal of his credit. Held: The provisions in the contract between the parties only if there is no stipulation to the contrary, and even then,
relative to the compounding of interest partake the nature of damages may still be collected if the obligor refuses to pay
Penal ClauseL generally intended to substitute the indemnity a penal clause and under 1229, may be reduced by court if the penalty.
for damages and the payment of interests in case of non- iniquitous or unconscionable.
compliance of the obligation.
Pamintuan vs. CA—plastic sheetings
Held: The provisions in which the parties have indicated in
the contract is a penal clause which carries the express Held: The theory that penal and liquidated damages are the
waiver of the vendee to any all sums he had paid when the same cannot be sustained where the obligor is guilty of fraud
vendor, upon his inability to comply with his duty, seeks to in the fulfillment of his obligation. The penalty clause is
recover passions of the property, a conclusive recognition of strictly penal or cumulative in character and does not
the right of the vendor to the said sums, and avoid partake the nature of liquidated damages when the parties
unnecessary litigation designed to enforce fulfillment of the agree.
terms and conditions agreed upon. Said provisions are not
unjust or inequitable and does not, as appellant contends, Concurring Antonio: A creditor in case of fraud by the obligor
make the vendor unduly rich at his cost and expense. is entitled only to the stipulated penalty plus the difference
bet the proven damages and such stipulated penalty.
Bachrach Motors vs. Espiritu—obligation partly performed, Robes-Francisco Realty vs. CFJ –
25% penalty, reduced. WHITE TRUCKS.
Held: A contract of sale which stipulate payment of interest
Held: Interest and penalty are not the same. When the at 4% per annum in case vendor fails to issue a certificate of
obligation has been partly performed, the CC authorizes the title to vendee is not a penal clause because even without it
court to reduce the penalty thereon. vendee would be entitled to interest at the legal rate of 6%
per annum. It is therefore inconceivable that the aforecited
Cabbarroguis vs. Vicente—jeep accident. provision in the deed of sale is a penal clause which will
preclude an award of damages to the vendee Millan.
Held: The refusal of the defendant to pay when the demand
was made by plaintiff entitles the latter to interest on the Makati Devt Corp vs. Empire Insurance Co.—you should
penalty. 2210 provides that in the discretion of the court, build a house on the lot or else.
interest may be allowed upon damages warded for breach of
contract. This interest is recoverable from the time of delay, Held: Mitigation of the penalty is allowed where there is
that is to say, from the date of demand, either judicial or partial payment of the obligation, the reduction of the
extrajudicial. And if there is no showing as to when demand penalty is justified. This is true where the indemnity
for payment was made, plaintiff must be considered to have provided for is essentially a mere penalty , having for its
made such demand only from the filing of the complaint. object to compel compliance with the contract.
Hodges vs. Javellana--iceplant machinery, softdrint, ice Umali vs. Miclat—creation of an advertisement LAGRIMAS
drop and fixture.

Taxation 1 Case Digest by Topic

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Tax 1 Lex Talionis Fraternitas Inc.

Issue: WON respondent company may be required to pay

Held: No, as correctly pointed out by respondent Court of

entitled only to so much as is needed to satisfy his credit;

one because dependent also of the will of the third person or

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