Professional Documents
Culture Documents
Taxation 1 Case Digests
Taxation 1 Case Digests
Taxation 1
Case Digests
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inducing persons to invest in it. After its incorporation largely
through the promotion of Guevara et al, VOIC purchased
PSEDC properties. For the sale, Algue received as agent a
commission of 126k and it was from this commission that the
75k promotional fees were paid to Guevara et al.
Issue: WON Sunga the collector of Internal Revenue correctly
disallowed the 75k deduction claimed by private respondent
Algue as legitimate business expensed in its income tax
returns
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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
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205 that the question of exemption therefrom would arise.
Only after such coverage is shown does the rule of
construction that tax exemptions are to be strictly
construed against the taxpayer come into play, contrary to
petitioner's position. There is no evidence to prove that
Ateneo's Institute of Philippine Culture ever sold its services
for a fee to anyone or was ever engaged in a business apart
from and independently of the academic purposes of the
university.
Figuerres vs Mandaluyong (G.R. No. 119172 Mar 25, 1999)
The presumption of validity in favor of a tax ordinance, its constitutionality
or legality should be upheld in the absence of evidence showing that the
procedure prescribed by law was not observed in their enactment.
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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.
That taxes cannot be subject to compensation for the simple reason that
the government and the taxpayer are not creditors and debtors of each
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Held: No, Philexs contention is not tenable. In several
instances prior to the instant case, SC have already made the
pronouncement 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.
We find no cogent reason to deviate from the
aforementioned distinction. Prescinding from this premise, in
Francia v. Intermediate Appellate Court, we categorically
held that taxes cannot be subject to set-off or compensation,
thus: We have consistently ruled that there can be no offsetting of taxes against the claims that the taxpayer may
have against the government. A person cannot refuse to pay
a tax on the ground that the government owes him an
amount equal to or greater than the tax being collected.
The collection of a tax cannot await the results of a lawsuit
against the government. The ruling in Francia has been
applied to the subsequent case of Caltex Philippines, Inc. v.
Commission on Audit, which reiterated that: a taxpayer may
not offset taxes due from the claims that he may have
against the government. Taxes cannot be the subject of
compensation because the government and taxpayer are not
mutually creditors and debtors of each other and a claim for
taxes is not such a debt, demand, contract or judgment as is
allowed to be set-off.
CIR vs Central Vegetable (G.R. No. 107135 Feb 23, 1999)
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.
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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
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July 6, 1959. Herein petitioner was also informed of such loss
by respondent company, through the latter's auditors, Sycip,
Gorres and Velayo, in a letter dated July 14, 1959. After
conducting an investigation of said loss, petitioner's examiner
ascertained that respondent company failed to affix the
required documentary stamps to the insurance policies issued
by it and failed to preserve its accounting records within the
time prescribed by Section 337 of the Revenue Code by using
loose leaf forms as registers of documentary stamps without
written authority from the Commissioner of Internal Revenue
as required by Section 4 of Revenue Regulations No. V-1. As a
consequence of these findings, petitioner, in a letter dated
December 7, 1962, assessed and demanded from petitioner
the payment of documentary stamp taxes for the years 1952
to 1958 in the total amount of P 79,806.87 and plus
compromise penalties, a total of P 81,406.87.
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refinanced the matured obligation and granted 3 foreign
currency denominated loans. Apart from interest, there are
additional charges and penalties in case of default. After 10
years, DBP initiated for forclosure of mortgaged prop and the
balance shoot up to P63M. Resp claim that reason for nonpayment is because financial rehabilitation from a contract
with the military didnt push thru.
Issue: WON the resp can claim without fault in default of the
non-happening of the contract with the military.
Held: NO. DBP is no party to resp and AFPs contract. Resp
can claim from AFP but without prejudice to its contract with
DBP. DBP has given Resp all the possible options for payment.
Source: Contract
II. NATURE AND EFFECTS OF OBLIGATION
A. Obligation to give
Extinguised based on delicts. Art. 89(1) of RPC, death of
convict occurs before final judgment, extinguished. But only
criminal liability is extinguished and also the civil liability
directly arising from and based solely on offense. Claim for
Civil liability survives if the same may also be predicated on
a source of oblig other than delict.
Source: Crimes or Delicts. Acts or omission.
DBP vs CA Restructuring of Debt
DBP granted PHUMACO and PHILICO an industrial loan for
P2.5M, 2M in bonds and 500k in cash. Promissory note
executed and a mortgage over their present and future
properties. DBP granted another loan of 1.7M reflected in the
amended mortgage contract. After 7 yrs the outstanding
balance was restructured bec Resp failed to pay. Resp still
failed to pay under the restructured payment. DBP
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1. Determinate Thing
Equatorial vs. MayfairRight of First Refusal
Carmelo owned a parcel of land with 2-storey building and
leased said portions to Mayfair. On their contract, stipulation
that Mayfair has 30-day exclusive option to purchase the
same should the lessor decide to sell the leased premises.
But Carmelo wanted to sell the whole property. He sold
entire prop to Equatorial. Mayfair filed for annulment of sale
bec of lack of consideration. Mayfair claimed that he told
Carmelo that it is willing to purchase the same and that it
has the right of first refusal.
Issue: WON the sale can be nullified because of Mayfairs
action
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was already transferred to Nepales evidenced by the receipts
and the invoice.
2. Generic Thing
Norkis vs. CA
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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.
B. Obligation to do
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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.
Novation is not presumed. There must be an express
stipulation. Novation a. change of obj or principal conditions,
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b. substituting person of debtor c. subrogating 3rd person in
the rights of creditor. Liability is on the first infractor, 1192.
There has been no contract novation that required Bog to
finish the Kenzo flooring before the 4 th billing shall be paid.
1186. Condition shall be deemed fulfilled when the obligor
voluntarily prevents the fulfillment.
To do: Pay 4th billing. (Reciprocal-di mo ginawa di ko rin
gagawin-pero sabi nga ng court hindi pa rin yun justification,
but only the first infractor shall be liable).
C. Obligation not to do
Fajardo vs. Freedom to BuildWag dagdagan kung hindi
bawasan!
FTB, owner-developer and seller of low-cost housing, sold to
petitioner-spouses a house and lot. Restrictive covenant was
contained in the contract, easement. No upward and front
expansion which is contained in their Transfer Certificate.
Pets children are to wed so extended their house thus
contravening the terms of contract. Pet filed, demolish the
unauth structures.
Issue: WON resp has the auth to ask for demolition since
ownership already transferred to the prop owners or
homeowners association.
Held: Yes. Restrictive covenant should still be followed.
Although courts generally view restrictive covenant with
disfavor but sustain them if reasonable, not contrary to
public policy, law etc. Intent of developer was to provide
safety, aesthetic and decent living conditions and prevent
overcrowding. Art. 1168, when ob consists in not doing,
obligor does what was forbidden, shall be undone at his
expense.
Not to do: Expand structures of house.
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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.
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.
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on their way to New York and were sent to a technical
committee.
Delay: Bank was not in default. No demand.
Lizares vs. HernaezCamarin was burned and lessee wont
pay.
Lizares and Hernaez entered into a contract, the former
became the lessee of the two haciendas. Pet used one of the
improvements there which was a roofed camarin used in
manufacture of sugar. A fire occurred and destroyed the
camarin. Pet demanded from Def that he reconstruct
camarin. Def refused. Pet did not pay the rentals bec of nonconstruction of the camarin. Def claims Pet should be liable
for the fire since he is the lessee when the fire occurred.
Issue: WON plaintiff has responsibility to the damages caused
by fire.
Held. No. And so is the def. Force Majeure. But the plaintiff
is in default with regard to the non-payment of rentals due
to non-construction of camarin. Although there is
presumption against lessee when loss in the leased prop
occurs, proof is necessary to prove he is not responsible.
1183. When a thing is lost while in the possession of the
debtor, it is presumed that it loss occurred by his fault and
not by fortuitous even in the absence of the contrary.
Delay: Not in the Def for non-construction but in Plaintiff in
non-payment of rentals.
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the same but it was Plaintiffs fault for not chartering
another vessel which has the capacity to withdraw the
volume. It has the duty of emptying the acid. Pet claim that
it was due to a storm thats why it cant empty the storage
but evidence proved that it was of the incapability of the
vessels. There was an obligation on the pet to empty the
storage.
They were the ones in delay.
Delay: Pet for not emptying the storage.
Selegna vs. UCPBcredit facility which ballooned.
Selegna, rep by spouses Edgardo and Zenaida Angeles were
granted a credit facility for P70M by UCPB. As a security, pet
executed real estate mortgages over several parcels of land.
Pet also executed prom note every time they avail of credit
facility. In their credit agreement, it was stipulated that
failure to pay any availment of the accommodation or
interest or any sum due shall constitute an event of default
which shall allow resp bank to declare as immediate and
payable all outstanding availments together with accrued
interest. Pet increased credit facility and they agreed to
21.75% interest per annum. Demand letters were sent upon
failure to pay. Pet paid 10M as partial payment of accrued
interest. UCPB applied for extra-judicial foreclosure of
petitioners mortgaged properties. The obligation has
ballooned to 132M and pet alleged that 10M as payment had
the effect of updating and thereby averting the maturity of
the obligation.
Issue: WON the Pet were in default.
Held: Yes. The contract is the law and the resp is justified in
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
statement of account doesnt ipso facto result in
unliquidated obligation. Pet was in default.
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when he is obliged to speak out, intentionally or thru
culpable negligence induces another to believe certain facts
to exist and such other rightfully relies and acts on such
beliefs so that he will be prejudiced if the former is
permitted to deny the existence of such facts. 1168: Oblig is
in not doing and obligor has done what is forbidden, shall be
done at his expense.
Non-fulfillment: of the obligation not to do which is to
sublease the fishpond.
3. Fraud
Board of Liquidators vs. Heirs of Maximo KalawCopra
Trading, hindi na kelangan ng pirma ng Board of Directors.
Nacoco is for the protection, preservation and development
of the coconut industry. Kalaw is the manager and board
chairman. Nacoco embarked on copra trading activities, thus
entering into contracts. For 3 years, profited 3M but after 4
typhoons, left the coconut lands devastated throughout the
country. It was not able to fulfill the contracts it has engaged
in. Nacoco paid damages to one of the parties. Nacoco now
sues Kalaw for having approved the contracts.
Issue: WON Kalaw is guilty of negligence for entering into
contracts without prior approval of the Board of Directors.
Held: No. Consideration of practice. Corporate officer
entrusted with the gen management and control of business
has implied authority to make any contract or do other act
wichi is necessary or appropriate to the conduct of the
ordinary business of the corporation. But there is a citation
on the Nacocos by-laws requiring prior directorate approval
of Nacoco contracts. Court considered practice of trade of
short-sellling or forward sales. Prev contracts without prior
auth from Board. And evidence showed that Kalaw actually
handled the corp well for it to profit. Force majeure reason.
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4. Negligence
Necessito vs. ParasKnuckles killed the passengers.
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Issue: WON Naric should be liable for damages.
Held: Yes. Failure of the letter of credit to be opened in the
contemplated period. Immediate cause of damages. No
necessary data but pet would not win bid had she not furnish
them with it. Waiver bec Pet suggested to sub it Thai rice.
Waiver are not presumed. Express stipulation.
Contravention: That Burmese Rice should be delivered and
should not deliver another thing.
Chavez vs. Gonzales
Contravention: That they agree that after 3 days, typewriter
would be usable.
E. Effect of fortuitous event
Necessito vs. Paras
Effect: Not fortuitous since knuckles should have been
inspected more than the visual inspection done.
Ampang vs. Guincothe bus that skidded.
Held: The accident was caused by an accident which was
unforeseen and beyond the control of the company on its
driver.
Victoria Planters vs. Victorias Milling30 years contract
suspended due to Japanese Invasion.
Held: 1174 relieves obligor from fulfilling a contractual
obligation (fortuitous event). The stipulation in the contract
that in the event of force majeure, the contract shall be
deemed suspended during the said period does not mean that
the happening of those events stops the running of the period
agreed upon. It only relieves the parties from fulfilling their
obligation that time. To require the pet to deliver the
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Held: No. They already knew the risk they were taking. They
already receive report of the typhoon but proceeded anyway.
Def claim Art. 587 Code of Commerce, loss of vessel exempt
liability. But it is cited there that the liability of the owner is
limited to the value of the vessel or to the insurance
thereon. It was held that the insurance of the vessel would
be liable for the damages that the shipowner or agent be
liable for the death of the passengers.
Fortuitous Event: Will not apply bec captain had knowledge
of the event thus making it not unforeseen.
F. Usurious transactions
Angel Jose Warehousing Co vs. CheldaLoans with
usurious interest, principal still enforced but interest not.
(P20K+)
Angel Jose filed against Chelda, its capitalist partner for the
recovery of the unpaid loans with legal interest and attys
fees (P20K+). Def paid bal of P5.6K. Plaintiff charged and
deducted from the loan usurious interest at the rate of 2%
and 2.5% PER MONTH and consequently, as claimed by def
should not be permitted to recover under the law. RTCP1048.15 usurious interest which the payment was deducted
from the interest and def claims that it should have been
deducted from the principal obligation.
Issue: a. WON in loans with usurious interest, the plaintiff
may still recover the principal of the loan.
b. WON the illegal terms as to the payment of interest
renders nullity as to the payment of the principal debt.
Held: a. Yes. Creditor may still recover principal of the loan.
Loans with usurious interest are not totally void but only as
to the interest. Renunciation of the principal would
extinguish accessory but waiver of the accessory would not
extinguish the principal.
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Estate of Hernandez vs. Luzon Suretynamatay yung
guarantor, namana rin yung utang niya.
Issue: WON Parks is the owner of the land bec of nonperformance of the condition of the mun of tarlac.
ng
utang
after
15
yrs,
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Held: No proof that Kelly has not turned over all the money
received from the sale of the merchandize so that Lim, the
surety, has no liability. The condition is that Lim will pay if
Kelly has not turned over all the sales of the merchandise but
not that he shall pay if all the sales has not amounted to the
original amount of obligation. There is no stipulation that the
goods were to be sold at a certain price, or not less than
what it should be.
Santiago vs. Millarnanalo sa sweepstakes pero nawala ang
ticket.
Held: The ticket sold has a notation that prize will be paid
upon the surrender of the ticket. The surrender or
presentation of the ticket is a condition precedent of
payment.
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Held: The banks will not be liable since they didnt accept
that they will should liability. The lease was extinguished by
the fire that occurred and the chartered banks being a
sublessee of the Manila Motor which contracted lease also
from Shotwell, will not be liable for the construction of the
destroyed buildings. No potestative condition.
Lease for the enjoyment of the premises. No fault on part of
anyone.
Smith Bell vs. Sotello Mattii-deliver yung equipment pero
depende sa gobyerno.
Held: The conditions did not depend upon the will of the
debtor alone. There is no delay since there existed rigid
restrictions during the that time of world war. It is a mixed
one because dependent also of the will of the third person or
the US govt whether to allow the delivery or not.
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Held: The acceptance of the petitioners of the various
payments even beyond the periods agreed upon, was
perceibved by the lower court as tantamount to faithful
performance of the obligation. 1186 applies to both obligees
and obligors in reciprocal obligations even when the proviso
only speaks of the obligor. Pet accepted the performance
knowing its incompleteness and irregularity and without
expressing any protest or objection, the obligation is deemed
to be complied with.
4. Retroactivity of Obligation
Padilla vs. Paterno-his mom is the universal heir and not
his wife-paraphernal.
Held: The ownership of the land is retained by the wife until
she is paid the value of the lot, as a result of the liquidation
of the conjugal partnership. There mere construction of the
building from common funds does not automatically convey
the ownership of the wifes land to the conjugal partnership.
The properties conversion from paraphernal to conjugal
assets would be deemed to retroact to the time the conjugal
buildings were first constructed thereon or at the very latest,
the time before the death of Narcisso Padilla that ended the
partnership. The acquisition by the partnership of theses
properties was subject to the suspensive condition that their
values would be reimbursed to the widow at the liquidation
of the conjugal partnership; once paid, the effects of the
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Herrera vs. Leviste
Tehankees dissent: Upon Levistes refusal to execute the
deed of sale, Herrera has the option of specific performance
or the rescission of the contract.
Zulueta vs. MarianoAvellana a movie director made
movies for Zulueta for his political campaign, automatic
rescission clause.
Held: There is an automatic rescission clause in the contract
and the fact that pet has cancelled contract, resp has no
right to remain in the premises. Extra-judicial rescission shall
only take legal effect where the other party does not oppose
it.
Delta Motor Corp vs. Genuinodelivery of black iron pipes
for iceplant and storage.
Held: Power to rescind under 1191 is not absolute. The act of
a part in treating a contract as canceled or resolved on
account of infractions by the other contracting party must be
made known to the other and is always provisional subject to
the scrutiny and review by the proper court.
Delta no manifestation that it had opted to rescind contract,
it has possession of the two irons and the downpayment and
has waived the performance of conditions of the contract
when they opted to go on with the contract only with a much
higher price.
Ong vs. Bognalbal
Rescission: Upon the infraction of Ong, Bognalbal could have
filed rescission of the contract or the performance of it.
Carrascoso vs. CAnotice of lis pendence but continued
with the sale of the land.
1972-El Dorado sold to Carrascoso the parcel of land
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Daguhoy Enterprises vs. Poncenagsecure ng mortgage as
guaraty sa loan sa isang corp tapos after ibigay yung loan,
withdrew mortgaged properties then mortgage them again
sa ibang corp for another loan. Madaya.
Held: Although the contract stipulates that loan payable in 6
years, but because of the failure to give and register the
security agreed upon in the form of two deeds of mortgage,
the obligation becomes pure and without condition thus due
and immediately demandable. 1198, lost the benefit of the
period.
Victorias Planter, supra
De Leon vs. Syjucogusto ng magbayad ng debtor pero
ayaw pang tanggapin ng creditor.
Held: Consignation was not valid. Req: a. debt due b.
consignation has been made bec creditor to whom payment is
made refused to accept, or was absent or incapacitated c.
prev notice of consignation to the person interested in the
performance d. amount due placed at the disposal of the
court 3. after consignation had been made, the person
interested was notified thereof. Reasons why creditor cant
be forced to accept payment a. may want to keep his money
invested safely instead of having it in his hands. B. to protect
himself of sudden decline on the purchasing power of the
currency loaned. Unless creditor consents, debtor cannot
accelerate payment.
Millare vs. Hernandoyung bahay niya gusting gawing resto
e ayaw niya nga.
Held: On the contract, it is stipulated that the lease may be
renewed after a period of 5 years under the terms and
conditions as will be mutually agreed upon by the parties at
the time of the renewal. 1197 and 1670 of the CC (fixing of
period, and after 15 days of occupying the leased property
and without any notice from lessor, contract shall be
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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
own shall be taken in execution does not exist where the
guarantor or surety is jointly and severally bound with the
principal debtor.
Ramos vs. GibbonMining Claims, Possessory Rights of a
Qualified Locator.
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action of the creditor against the security arises in this class
of actins is not included the means of defense as to how the
trial may be continued and the writ of execution issued in
case of the death of the principal debtor which can not
affect the original contract nor destroy the bond existing bet
the creditor and the principal debtor, it being, therefore, an
exception or means of defense no inherent in the debt, but
at the most, a purely personal one of the debtor or the
successors-in-interest of the debtor.
Intl Finance vs. Imperial Textileguarantee vs. surety
Held: Although it states Guarantee, the stipulations of the
contract make it clear that jointly and severally phrase is
the one used in the contract.
Surety: person binds himself solidary with the principal
debtor, primary liability
Guaranty: contract whereby a person binds himself to the
creditor to fulfill the obligation of the principal in case the
latter should fail to do so, secondary liability.
Construction Dev. Vs. EstrellaBus was rammed and their
knees are pinned to the seats in front of them.
Held: The bus company, its driver, the operator of the other
vehicle and the driver of the vehicle were jointly and
severally liable to the injured passenger or the latters heirs.
Nor should it make any difference that the liability of pet
(bus owner) springs from contract while that of respondents
(owner and driver of other vehicle) arises from quasi-delict.
Bus owner-contract, owner and owner of other vehicle-quasidelict : both jointly and severally liable.
E. DIVISIBLE AND INDIVISIBLE OBLIGATION
Art. 1223-1225
F. OBLIGATION WITH A PENAL CAUSE
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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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