Professional Documents
Culture Documents
Taxation 1
Case Digests
political corporations for purposes of local self-government courts with it the power to confer on such local government agencies the power to tax. The constitution grants local government the autonomous authority to create their own sources of revenue and to levy taxes. b) No, the difference between the two ordinances clearly lies in the tax rate of the soft drinks produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked; in Ordinance No. 27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the prior Ordinance No. 23, and operates as a repeal of the latter, even without words to that effect. Plaintiff-appellant in its brief admitted that defendants-appellees are only seeking to enforce Ordinance No. 27, series of 1962. Undoubtedly, the taxing authority conferred on local governments under Section 2, Republic Act No. 2264, is broad enough as to extend to almost "everything, accepting those which are mentioned therein." The limitation applies, particularly to the prohibition against municipalities and municipal districts to impose "any percentage tax or other taxes in any form based thereon nor impose taxes on articles subject to specific tax except gasoline, under the provisions of the National Internal Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of the taxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. But, the imposition of "a tax of one centavo (P0.01) on each gallon of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on 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 treated as a specific tax. Specific taxes are those imposed on specified articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. Soft drink is not one of those specified. c) The tax of one (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all softdrinks, produced or manufactured, or an equivalent of 1- centavos per case, cannot be considered unjust and unfair. An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the rates of imposable taxes. This is in line with the constitutional policy of according the widest possible autonomy to local governments in matters of local taxation, an aspect that is given expression in the Local Tax Code (PD No. 231, July 1, 1973). Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as unreasonable. Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if the purpose of the law to further strengthen local autonomy were to be realized. CIR vs. Algue Inc. (G.R. No. L-28896 Feb 17, 1988)
Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.
Pepsi commenced a complaint with preliminary injunction before the CFI of Leyte for that court to declare Section 2 of R.A. 2264 (Local Autonomy Act) unconstitutional as an undue delegation of taxing authority as well as declare Municipal Ordinance Nos. 23 & 27 series of 1962 of Municipality of Tanauan, Leyte null and void. Municipal Ordinance 23 levies and collects from softdrinks producers and manufacturers a tai of 1/16th of a centavo for every bottle of softdrink corked. On the other hand, Municipal Ordinance 27 levies and collects on softdrinks produced or manufactured within the territorial jurisdiction of the municipality a tax of 1 centavo on each gallon of volume capacity. Both are denominated as municipal production tax. Issues: a) WoN section 2 of R.A. 2264 is an undue delegation of power b) WoN Ordinances 23 & 27 constitute double taxation and impose percentage or specific tax c) WoN Ordinances 23 and 27 are unjust and unfair Held: a) No, it is true that power of taxation is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separation of powers but the exception lies in the case of municipal corporations to which the said theory does not apply. Legislative concerns may be delegated to local governments in respect of matters of local concerns. By necessary implication, the legislative power to create
Philippine Sugar Estate Development Company appoints Algue as its agent authorizing it to sell its land, factories and oil manufacturing process. Family members Guevara et al
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The petitioners pray for injunctive relief, to stop the Energy Regulatory Board from implementing its Order, dated September 21, 1990, mandating a provisional increase in the prices of petroleum and petroleum products. The petitioner, Senator Ernesto Maceda, also submits that the same was issued without proper notice and hearing in violation of Section 3, paragraph (e), of Executive Order No. 172; that the Board, in decreeing an increase, had created a new source for the Oil Price Stabilization Fund (OPSF), or otherwise that it had levied a tax, a power vested in the legislature, and/or that it had "re-collected", by an act of taxation, ad valorem taxes on oil which Republic Act No. 6965 had abolished. Issue: WON the Board authorizing the proceeds generated by the increase to be deposited to the OPSF is an act of taxation Held. No. The Board Order authorizing the proceeds generated by the increase to be deposited to the OPSF is not an act of taxation. It is authorized by Presidential Decree No. 1956, as amended by Executive Order No. 137. Anent claims that oil companies cannot charge new prices for oil
purchased at old rates, suffice it to say that the increase in question was not prompted alone by the increase in world oil prices arising from tension in the Persian Gulf. What the Court gathers from the pleadings as well as events of which it takes judicial notice, is that: (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments is expected to reach $1 Billion; (4) our trade deficit is at $2.855 Billion as of the first nine months of the year. Evidently, authorities have been unable to collect enough taxes necessary to replenish the OPSF as provided by Presidential Decree No. 1956, and hence, there was no available alternative but to hike existing prices. The OPSF, as the Court held in the aforecited CACP cases, must not be understood to be a funding designed to guarantee oil firms' profits although as a subsidy, or a trust account, the Court has no doubt that oil firms make money from it. As we held there, however, the OPSF was established precisely to protect the consuming public from the erratic movement of oil prices and to preclude oil companies from taking advantage of fluctuations occurring every so often. As a buffer mechanism, it stabilizes domestic prices by bringing about a uniform rate rather than leaving pricing to the caprices of the market.
Paras (dissenting): Anent the unconstitutional use of the taxing power, the decision of the majority says that "the Board Order authorizing the proceeds generated by the increases" is "authorized by Presidential Decree No. 1456, as amended by Executive Order No. 137". Assuming that such is authorized by law, still a law, no matter how imperative, cannot prevail over the Constitution which grants only to Congress the power to tax. And indeed, there can be no denying the fact that when revenue is earned by the government from the consuming public (except when only licenses are concerned) there is an exercise of the taxing power.
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On April 28, 1981, the Iloilo Port Manager of respondent Philippine Ports Authority (PPA for short) wrote petitioner Victorias Milling Co., requiring it to have its tugboats and barges undergo harbor formalities and pay entrance/ clearance fees as well as berthing fees effective May 1, 1981. PPA, likewise, requiring petitioner to secure a permit for cargo handling operations at its Da-an Banua wharf and remit 10% of its gross income for said operations as the government's share. To these demands, petitioner sent two (2) letters, both dated June 2, 1981, wherein it maintained that it is exempt from paying PPA any fee or charge because: (1) the wharf and an its facilities were built and installed in its land; (2) repair and maintenance thereof were and solely paid by it; (3) even the dredging and maintenance of the Malijao River Channel from Guimaras Strait up to said private wharf are being done by petitioner's equipment and personnel; and (4) at no time has the government ever spent a single centavo for such activities. Petitioner further added that the wharf was being used mainly to handle sugar purchased from district planters pursuant to existing milling agreements. Issue: WON Victorias is exempted from the claimed fees and charges due to the fact that the port is privately owned Held: No, as correctly stated by the Solicitor General, the fees and charges PPA collects are not for the use of the wharf that petitioner owns but for the privilege of navigating in public waters, of entering and leaving public harbors and berthing on public streams or waters. In Compaia General de Tabacos de Filipinas vs. Actg. Commissioner of Customs (23 SCRA 600), this Court laid down the rule that berthing charges against a vessel are collectible regardless of the fact that mooring or berthing is made from a private pier or wharf. This is because the government maintains bodies of water in navigable condition and it is to support its
operations in this regard that dues and charges are imposed for the use of piers and wharves regardless of their ownership. As to the requirement to remit 10% of the handling charges, Section 6B-(ix) of the Presidential Decree No. 857 authorized the PPA "To levy dues, rates, or charges for the use of the premises, works, appliances, facilities, or for services provided by or belonging to the Authority, or any organization concerned with port operations." This 10% government share of earnings of arrastre and stevedoring operators is in the nature of contractual compensation to which a person desiring to operate arrastre service must agree as a condition to the grant of the permit to operate. CIR vs Ateneo de Manila (G.R. No. 115349 Apr 18, 1997)
While it is conceded that statutes providing for election contests are to be liberally construed to the end that the will of the people in the choice of public officers may not be defeated by mere technical questions, the rule likewise stands, that in an election protest, the protestant must stand or fall upon the issues he had raised in his original or amended pleading filed prior to the lapse of the statutory period for filing of the protest.
filed with the latter a memorandum contesting the validity of the assessments. Issue: WON Ateneo de Manila University, through its auxiliary unit or branch, the Institute of Philippine Culture, performing the work of an independent contractor and thus subject to the 3% contractor's tax levied by then Section 205 of the National Internal Revenue Code? Held: No, Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously both illogical and impractical to determine who are exempted without first determining who are covered by the aforesaid provision. The Commissioner should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom. The Court takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that "(a) statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously . . . (A) tax cannot be imposed without clear and express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by implication." Parenthetically, in answering the question of who is subject to tax statutes, it is basic 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 nor presumed to be imposed beyond what statutes expressly and clearly import. To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be engaged in the business of selling its services. Hence, to impose the three percent contractor's tax on Ateneo's Institute of Philippine Culture, it should be sufficiently proven that the private respondent is
Private respondent is a non-stock, non-profit educational institution with auxiliary units and branches all over the Philippines. One such auxiliary unit is the Institute of Philippine Culture (IPC), which has no legal personality separate and distinct from that of private respondent. The IPC is a Philippine unit engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies. On July 8, 1983, private respondent received from petitioner Commissioner of Internal Revenue a demand letter dated June 3, 1983, assessing private respondent the sum of P174,043.97 for alleged deficiency contractor's tax, and an assessment dated June 27, 1983 in the sum of P1,141,837 for alleged deficiency income tax, both for the fiscal year ended March 31, 1978. Denying said tax liabilities, private respondent sent petitioner a letter-protest and subsequently
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and 1996. Petitioner brought a prohibition suit in the Court of Appeals against the Assessor, the Treasurer, and the Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that the ordinances were invalid for having been adopted allegedly without public hearings and prior publication or posting and without complying with the implementing rules yet to be issued by the Department of Finance. Issue: WON the contention of Figuerres is tenable Held: No, although the petitioner is right in contending that public hearings are required to be conducted prior to the enactment of an ordinance imposing real property taxes, R.A. No. 7160, 186 provides that an ordinance levying taxes, fees, or charges "shall not be enacted without any prior public hearing conducted for the purpose." However, it is noteworthy that apart from her bare assertions, petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the enactment of the ordinances in question. On the other hand, the Municipality of Mandaluyong claims that public hearings were indeed conducted before the subject ordinances were adopted, although it likewise failed to submit any evidence to establish this allegation. However, in accordance with the presumption of validity in favor of an ordinance, their constitutionality or legality should be upheld in the absence of evidence showing that the procedure prescribed by law was not observed in their enactment. The lack of a public hearing is a negative allegation essential to petitioner's cause of action in the present case. Hence, as petitioner is the party asserting it, she has the burden of proof. Since petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the burden of proving that no public hearings were conducted prior to the enactment thereof, we are constrained to uphold their constitutionality or legality. Philex Mining vs CIR (G.R. No. 125704 Aug 28, 1998)
That taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. There is a material distinction between a tax and debt. Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity.
Petitioner Belen C. Figuerres is the owner of a parcel of land, covered by Transfer Certificate of Title No. 413305, and located at Amarillo Street, Barangay Mauway, City of Mandaluyong. In 1993, she received a notice of assessment, dated October 20, 1993, from the municipal assessor of the then Municipality of Mandaluyong. The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and 125, series of 1993, and Ordinance No. 135, series of 1994, of the Sangguniang Bayan of Mandaluyong. Ordinance No. 119, series of 1993, which was promulgated on April 22, 1993, contains a schedule of fair market values of the different classes of real property in the municipality. Ordinance No. 125, series of 1993, which was promulgated on November 11, 1993, on the other hand, fixes the assessment levels applicable to such classes of real property. Finally, Ordinance No. 135, series of 1994, which was promulgated on February 24, 1994, amended Ordinance No. 119, 6 by providing that only one third (1/3) of the increase in the market values applicable to residential lands pursuant to the said ordinance shall be implemented in the years 1994, 1995,
Petitioner Philex Mining Corp. assails the decision of the Court of Appeals promulgated on April 8, 1996 in CA-G.R. SP No. 36975 affirming the Court of Tax Appeals decision in CTA Case No. 4872 dated March 16, 1995 ordering it to pay the amount of P110,677,668.52 as excise tax liability for the period from the 2nd quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from August 6, 1994 until fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. The facts show that on August 5, 1992, the BIR sent a letter to Philex asking it to settle its tax liabilities for the 2nd, 3rd and 4th quarter of 1991 as well as the 1st and 2nd quarter of 1992 in the total amount of P123,821.982.52. In a letter dated August 20, 1992, Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P119,977,037.02 plus interest. Therefore these claims for tax credit/refund should be applied against the tax liabilities. In reply, the BIR, in a letter dated September 7, 1992, found no merit in Philex's position. Since these pending claims have not yet been established or determined with certainty, it follows that no legal compensation can take place. Hence, the BIR reiterated its demand that Philex settle the amount plus interest within 30 days from the receipt of the letter. Philex was able to obtain its VAT input credit/refund not only for the taxable year 1989 to 1991 but also for 1992 and 1994. In view of the grant of its VAT input credit/refund, Philex now contends that the same should, ipso jure, off-set its excise tax liabilities since both had already become "due and demandable, as well as fully liquidated;" hence, legal compensation can properly take place. ISSUE: WoN Philexs contention is tenable
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and packaging materials for its edible oil from its suppliers and paid the sales tax due thereon. After an investigation conducted by respondent's Revenue Examiner, Assessment Notice No. FAS-B-86-88-001661-001664 dated April 22, 1988 was issued against petitioner for deficiency miller's tax in the total amount of P1,575,514.70. On June 29, 1988, CENVOCO filed with CIR a letter dated June 27, 1988 requesting for reconsideration of the above deficiency miller's tax assessments, contending that the final provision of Section 168 of the Tax Code does not a apply to sales tax paid on containers and packaging materials, hence, the amount paid therefor should have been credited against the miller's tax assessed against it. CIR contends that Sec. 188 of the Tax Code provides that sales, miller's or excise taxes paid on raw materials or supplies used in the milling process shall not be allowed against the miller's tax due. Issue: WoN the sales tax paid by CENVOCO when it purchased containers and packaging materials for its milled products can be credited against the deficiency millers tax due thereon Held: Yes, it can be credited against the deficiency millers tax due thereon. The law relied upon by the BIR Commissioner as the basis for not allowing Cenvoco's tax credit is just a proviso of Section 168 of the old Tax Code. The restriction in the said proviso, however, is limited only to sales, miller's or excise taxes paid "on raw materials used in the milling process". Under the rules of statutory construction, exceptions, as a general rule, should be strictly but reasonably construed. They extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provisions rather than the exception. Where a general rule is established by statute with exceptions, the court will not curtail the former nor add to the latter by implication. The exception provided for in Section 168 of the old Tax Code should thus be strictly construed. Conformably, the sales, miller's and excise taxes paid on all other materials (except on raw materials used in
the milling process), such as the sales taxes paid on containers and packaging materials of the milled products under consideration, may be credited against the miller's tax due therefor. It is a basic rule of interpretation that words and phrases used in the statute, in the absence of a clear legislative intent to the contrary should be given their plain, ordinary and common usage or meaning. From the disquisition and rationalization aforequoted, containers and packaging materials are certainly not raw materials. Cans and tetrakpaks are not used in the manufacture of Cenvoco's finished products which are coconut, edible oil or coprameal cake. Such finished products are packed in cans and tetrapaks. It bears stressing that tax burdens are not to be imposed or presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi juris against the government.
CENVOCO is a manufacturer of edible and coconut/coprameal cake and such other coconut related oil subject to the miller's tax of 3%. Petitioner also manufactures lard, detergent and laundry soap subject to the sales tax of 10%. In 1986, petitioner purchased a specified number of containers
From January, 1952 to December, 1958, herein private respondent Fireman's Fund Insurance Company entered into various insurance contracts involving casualty, fire and marine risks, for which the corresponding insurance policies were issued. From January, 1952 to 1956, documentary stamps were bought and affixed to the monthly statements of policies issues; and from 1957 to 1958 documentary stamps were bought and affixed to the corresponding pages of the policy register, instead of on the insurance policies issued. On July 3, 1959, respondent company discovered that its monthly statements of business and policy register were lost. The loss was reported to the Building Administration of Ayala Building and the National Bureau of Investigation on
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Norkis vs. CAAko ang bumili ng motor iba ang gumamit. Nepales bought a motorcycle from Norkis and issued a chattel mortgage in favor of DBP. Invoice was issued and motorcycle was registered by Norkis evidenced by receipts of registration. Motor was delivered to a certain Julian Nepales and an accident happened while being driven by a certain Payba. Norkis claims it cannot be held liable since ownership
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Ocena vs. Jabsonsubdivision na kontrata, maling akala. Resp filed a complaint for modification of the terms and conditions of its subdivision contract with petitioners. Allegations are that price in oil and derivatives have increased, not within the control of the plaintiff. It will cause unjust enrichment to the pet. In the contract, the pet are guaranteed as landowners and that they will receive 40% of all cash receipts from the sale of the subdivision lots. Resp hinged their argument on 1267 when the service has become so difficult beyond contemplation, release from obligation. Issue: WON there is a sufficient cause of action for modification of the subdivision contract. Held: No. Cited article does not grant the courts this authority to remake, modify or revise the contract. Their contract has a force of law and should there be substitution or modification, it should be amongst the parties themselves. A showing of mere inconvenience, unexpected impediments or increased expenses is not enough. Equity cannot relieve from bad bargains simply bec they are such. Effect: The contract has the force of law.
**Woodhouse vs. HaliliMission Softdrinks P and D entered into an agreement that they will form a partnership for the bottling and distribution of Mission softdrinks, P as manager and D as capitalist. When the bottling plant was in operation P wants to execute the partnership papers but D refuses. D claims that he was made to believe that P has the exclusive ownership of the bottling franchise. Issue: WON the misrepresentation of P can vitiate the contract. Held: No. Although P was guilty of misrepresentation, it was not the causal consideration or the principal inducement that led defendant to enter into the partnership. D may not be compelled to carry out the agreement which is to execute the partnership papers. The defendant has obligation to do and not to give. The D reduced the percentage of P from 30% to 15% bec of his misrepresentation. Obligation to do: Execute partnership contract. Ong vs. BognalbalShe wants her Kenzo Tiles, now na. Bognalbal was an architect hired by Ong who was a businesswoman to construct her boutique. Bog agrees to furnish labor within 45 days and owner to pay every 2 weeks based on the accomplishment of work value. 4th billing came and Ong refused to pay but reason was not clear on the record. She wanted to change Vinyl tiles to Kenzo flooring. Ong claimed Bog abandoned job. Issue: WON Bog be liable for abandoning job. Held: No. He is not liable but is not justified for doing so. 1191, it was a reciprocal obligation and there is power to rescind it in case one doesnt comply with what is incumbent upon him. But this article should be judicially invoked.
B. Obligation to do Hahn vs. CAI want these diamond rings. Santos received 2 diamond rings with a total amount of 47K. She issued separate receipts therefore in which she acknowledged that they have been delivered by Letty Hahn for sale on commission and that they would be returned upon
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Not to do: Expand structures of house. D. Effect of Breach 1. Delay in Performance Villaruel vs. Manila MotorsKasalanan ng lawyer, naningil ng renta nung may gera. Manila Motors and Villaruel entered into a contract whereby the former agreed to convey by lease to the latter some premises. The term of lease is 5 years. The premises were invaded by the Japanese and then the American occupied the same building. The occupants paid the same rate as the defendants after which they have vacated the premises. Def renewed contract for addtl 5 yrs. Pet, as per his lawyers advise, demanded for rental from the Def for the period when the Jap and the Americans occupied the premises. The premises was set on fire and the reason was unknown. Issue: WON Pet has power to demand rentals and recover the same due to default. Held: No. Art. 1554 of CC of Spain states the duties of a lessor. A. deliver to the lessee the subject matter b. make thereon, during the lease, all repairs necessary and maintain serviceable condition c. maintain lessee in peaceful enjoyment of lease. 1560, lessor shall not be liable for any act of mere disturbance of 3rd person but lessee would have direct action against trespassers. No lessee would agree to pay rent for premises he could not enjoy. Delay in performance: It was the creditor who was in default or delay when it refused to get the payment given by the resp. Lopez vs. Tan TiocoIbenta mo ang asukal pag sinabi kong ibenta mo.
Lopez and Tan Tioco entered into a verbal contract that shell deliver certain sugar to Tan Tioco which he obligated himself to store until he receives instructions from her to sell them. She delivered the piculs of sugar and instructed to sell in on Sept 1904 but def did not do so. Pet filed action. Def denies allegations. Issue: WON the defendant was in default. Held: Yes. He was in default from the time the Pet demanded to deliver or do something, or the fulfillment of the obligation. Neither the contract nor the law demands to make judicial demand than extrajudicial. The price of the sugar should be from the time she instructed the def to sell them. Delay in Performance: Delay in selling the sugar upon instructions. Dela Rosa vs. BPIAtat sa announcement ng winners ng design contest. BPI held this contest of designs and plans for the construction of a building. Prizes would be awarded not later than Nov. 30, 1921. Plaintiff took part in the said contest and after the date stipulated, the bank didnt award prize nor made any announcement. Plaintiff filed. Issue: WON BPI was in default when it did not release the announcement on the date stipulated. Held: The bank cannot be held in default through the mere lapse of time. Plaintiff never demanded from bank and just filed the case in Court. A binding obligation may originate from advertisements addressed to the general public. Demand will not be necessary only in certain conditions, but demand is indispensable as a general rule. Plaintiff has no cause of action bec he alleges that the contest didnt push
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Bachrach Motor vs. Lee TayKinuha ng Kano ang truck niya, ayaw na niyang magbayad.
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Delay: Non-payment of availement of accommodation. 2. Non-fulfillment Chavez vs. Gonzales Non-fulfillment: The typewriter was not fixed. Telefast vs. Castrodahil sa telegrama, mag-isa lang nang ilibing ang mama. Consolacion Bravo-Castro died in Pangasinan and on the same day the daughter sent a telegram to the US to inform the other siblings and dad about death of Mom. The Mom was interred by daughter alone. When she came back to the states, she found out that the telegram never reached her siblings. Telefast claimed force majeure bec of technical and atmospheric factors but no evidence to support. Issue: WON force majeure applies. Held: No. No evidence to support. And even so, def should have informed the plaintiff that it cannot transmit the telegram. 1170 and 2176, guilty of fraud, negligence or delay. 2217 for moral damages. Non-fulfillment: Sending of telegram. Tanguiling vs. CAwindmill na nasira sa wind. A case involving proper interpretation of contract. JMI Engr and GM proposed to resp Vicente to construct windmilling system for him. They agreed on the construction for P60K. P30K DP and P15K installment. Vincente didnt pay the remaining P15K bec he paid it to SPGMI who constructed the deep well to which the windmill would be attached. And even assuming that he owes pet P15K, it should have been offset by the collapse after a strong wind.
Issue: a. WON agreement to construct windmill included in the installation of a deep well. b. WON the pet is under the obligation to reconstruct the windmill. Held: a. No. It was not included in the agreement. Intention of the parties must be accorded primordial consideration and in case of doubt, contemporaneous and subsequent acts shall be principally considered. b. Yes. Pet claimed there is a strong wind but this is actually necessary for the windmill to turn. It was just newly constructed, it should have not collapsed. Non-fulfillment: Payment of last installment. Perez vs. CAniloko yung businessman at pinaalaga ang fishpond. Juan Perez usufructuary of a parcel of land called Papaya Fishpond with other usufructuaries. The usufructuaries entered into a contract leasing the fishpond to Luis Keh for a period of 5 years. The contract states that the lessee cannot sublease the fishpond nor assign his rights to anyone. But Crisostomo was persuaded by the pet Keh to take over the Papaya fishpond bec Cris is a businessman. Executed a written agreement. Cris even paid the rentals until 1985, 10 years of taking care of the fishpond. In 1979 however, pet with armed men went to fishpond and showed that Keh surrendered the fishpond to the usufructuaries. Issue: WON the resp is a sublessee of Keh which is barred by the lease contract. Held: Yes. He was a sublessee. But Perez and his counsel knew and acquiesced to that arrangement by their act of receiving from the resp rentals evidenced by the receipts which puts the pet in estoppelwhich arises when one by his acts and representations and admission or by his own silence
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Held: Every obligation whose performance does not depend upon a future or uncertain event or upon a past unknown to the parties, it is demandable at once. 2. Conditional Obligations a. with suspensive/resolutory conditions
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Trillana vs. Quezon Collegesif I harvested fish. The stipulation in this case was that the obligor would pay the full value of a subscription for shares in the Quezon College after she had harvested fish. Held: This condition is obviously depended upon the sole will of the obligor, and the conditional obligation is void, because it would have served to create an obligation to pay, the whole obligation is void. **When conditional obligation is void, then it would convert the obligation to a pure obligation which would be demandable at once. Osmena vs. RamaIf the house of strong materials is sold, I will pay my debt.
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C. ALTERNATIVE AND FACULTATIVE OBLIGATIONS Agoncillo vs. JavierAnastacio property to pay the debt. Alano mortgaging his
Held: Anastacio was only a rep of his children, and his partial payment does not affect prescription not for the benefit of the other debtors. The mortgage was never recorded therefore invalid. Action to recover has prescribed, the action to compel a conveyance of the house and lot is likewise barred as the agreement to make such conveyance was not an independent principal undertaking, but merely a subsidiary alternative pact relating to the method by which the debt might be paid. Ong Guan Can vs. Centurythe insurance company doesnt want to rebuild with the same materials. Held: On the contract the insurance company obligated itself to either pay the amount to which the house was insured or rebuild it. The debtor must notify the creditor of his election, stating which prestation he is disposed to fulfill. The effect of notice is to give the creditor, that is, the plaintiff in the instant case, opportunity to express his consent, or to impugn the election made by the debtor, and only after said notice shall the election take legal effect when consented by the creditor, or impugned by the latter, when declared improper by the competent court. D. JOINT AND SOLIDARY Jaucian vs. Queroisurety was solidarily liable, then surety died. Held: The right of a guarantor or surety to insist on the exhaustion of the property of the principal debtor, before his
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E. DIVISIBLE AND INDIVISIBLE OBLIGATION Art. 1223-1225 F. OBLIGATION WITH A PENAL CAUSE Manila Racing vs. Manila Jockeyforfeiture of what was partially paid. Held: The clause of the contract referring to the forfeiture of the P100,00 already paid, should the purchases C fail to pay the subsequent installments, is valid, It is in the nature of a penal clause which be legally established by the parties. In its double purpose of insuring compliance with the contract and of otherwise measuring beforehand the damages which may result from non-compliance, it is not contrary to law, morals or public order bec it was voluntarily and knowingly agreed upon by the parties. Viewing concretely the true effects thereof in the present case, the amount forfeited constitutes only 8% of the stipulated price, which is not excessive if considered as the profit which would have been obtained had the contract been complied with. There is, moreover, evidence that the defendants, because of this contract with C, had to reject other propositions to buy the same property. At any rate, the penal clause does away with the duty to prove the existence and measure of the damages caused by the breach. Caridad Est. vs. Santeroloan to be paid in 60 days and failure to do so, those already paid shall be forfeited. Antichresis: a contract whereby the creditor acquires the right to receive the fuirts of an immovable of his debtor with the obligation to apply them to the payment of interest if owing and thereafter to the principal of his credit. Penal ClauseL generally intended to substitute the indemnity for damages and the payment of interests in case of noncompliance of the obligation.
Held: The provisions in which the parties have indicated in the contract is a penal clause which carries the express waiver of the vendee to any all sums he had paid when the vendor, upon his inability to comply with his duty, seeks to recover passions of the property, a conclusive recognition of the right of the vendor to the said sums, and avoid unnecessary litigation designed to enforce fulfillment of the terms and conditions agreed upon. Said provisions are not unjust or inequitable and does not, as appellant contends, make the vendor unduly rich at his cost and expense. Bachrach Motors vs. Espirituobligation partly performed, 25% penalty, reduced. WHITE TRUCKS. Held: Interest and penalty are not the same. When the obligation has been partly performed, the CC authorizes the court to reduce the penalty thereon. Cabbarroguis vs. Vicentejeep accident. Held: The refusal of the defendant to pay when the demand was made by plaintiff entitles the latter to interest on the penalty. 2210 provides that in the discretion of the court, interest may be allowed upon damages warded for breach of contract. This interest is recoverable from the time of delay, that is to say, from the date of demand, either judicial or extrajudicial. And if there is no showing as to when demand for payment was made, plaintiff must be considered to have made such demand only from the filing of the complaint. Hodges vs. Javellana--iceplant machinery, softdrint, ice drop and fixture. Held: The provisions in the contract between the parties relative to the compounding of interest partake the nature of a penal clause and under 1229, may be reduced by court if iniquitous or unconscionable.
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Pamintuan vs. CAplastic sheetings Held: The theory that penal and liquidated damages are the same cannot be sustained where the obligor is guilty of fraud in the fulfillment of his obligation. The penalty clause is strictly penal or cumulative in character and does not partake the nature of liquidated damages when the parties agree. Concurring Antonio: A creditor in case of fraud by the obligor is entitled only to the stipulated penalty plus the difference bet the proven damages and such stipulated penalty. Robes-Francisco Realty vs. CFJ Held: A contract of sale which stipulate payment of interest at 4% per annum in case vendor fails to issue a certificate of title to vendee is not a penal clause because even without it vendee would be entitled to interest at the legal rate of 6% per annum. It is therefore inconceivable that the aforecited provision in the deed of sale is a penal clause which will preclude an award of damages to the vendee Millan. Makati Devt Corp vs. Empire Insurance Co.you should build a house on the lot or else. Held: Mitigation of the penalty is allowed where there is partial payment of the obligation, the reduction of the penalty is justified. This is true where the indemnity provided for is essentially a mere penalty , having for its object to compel compliance with the contract. Umali vs. Miclatcreation of an advertisement LAGRIMAS Held: Under the law, a penalty takes the place of interests only if there is no stipulation to the contrary, and even then, damages may still be collected if the obligor refuses to pay the penalty.
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