Republic v. Salvador, G.R. No. 205428, 7 June 2017

Spouses Senando and Josefina Salvador were the owners of a parcel of land in Valenzuela City. The land was expropriated by DPWH for a road widening project. 

Accordingly, the RTC rendered a decision ruling that consequential damages be awarded on top of the zonal value of the land and the cost of the structure on the land. 

Said consequential damages is equivalent to the value of the capital gains tax and other taxes necessary for the transfer of the subject property in the Republic's name.

DPWH questioned the award of the consequential damages, since the payment of the capital gains tax and other transfer taxes is just a consequence of the expropriation proceedings.

Issue: W/N the capital gains tax on the transfer of the expropriated property can be considered as consequential damages that may be awarded to spouses Senando and Josefina.

Ruling: No.

It is settled that the transfer of property through expropriation proceedings is a sale or· exchange within the meaning of Sections 24(D) and 56(A) (3) of the National Internal Revenue Code, and profit from the transaction constitutes capital gain. Since capital gains tax is a tax on passive income, it is the seller, or respondents in this case, who are liable to shoulder the tax.

The capital gains tax even in expropriation proceedings remains a liability of the seller, as it is a tax on the seller's gain from the sale of real property.

 

 

Case Digest: Asian Construction and Development Corporation v. Mendoza

ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner, v. LOURDES K. MENDOZA, Respondent.

G.R. No. 176949, 27 June 2012.

DEL CASTILLO, J.:

Lourdes K. Mendoza (Mendoza), sole proprietor of Highett Steel Fabricators (Highett), a Complaint for a sum of money against Asian Construction and Development Corporation (ACDC), a duly registered domestic corporation.

Mendoza alleged that ACDC purchased from Highett various fabricated steel materials and supplies amounting to P1,206,177.00, exclusive of interests; that despite demand, ACDC failed and/or refused to pay.

Petitioner moved for a bill of particulars on the ground that no copies of the purchase orders and invoices were attached to the complaint to enable petitioner to prepare a responsive pleading to the complaint, which motion was denied by the court. Accordingly, ACDC filed its Answer with Counterclaim denying liability for the claims and interposing the defense of lack of cause of action.

Mendoza presented the testimonies her salesman Artemio Tejero who confirmed the delivery of the supplies and materials to ACDC.

The presentation of evidence for petitioner, however, was deemed waived and terminated due to the repeated non-appearance of ACDC and counsel.

The Court ruled in favor of Mendoza, finding ACDC liable for purchase price of the materials it ordered.

On appeal before the Supreme Court, ACDC argues that a charge or sales invoice is not an actionable document; thus, its failure to deny under oath its genuineness and due execution does not constitute an admission thereof. ACDC likewise insists that respondent was not able to prove her claim as the invoices offered as evidence were not properly authenticated by her witnesses.

ISSUE: W/N ACDC is liable for the materials ordered.

RULING: Yes.

A document is actionable when an action or defense is grounded upon such written instrument or document. In the instant case, the Charge Invoices are not actionable documents per se as these only provide details on the alleged transactions. These documents need not be attached to or stated in the complaint as these are evidentiary in nature. In fact, Mendoza’s cause of action is not based on these documents but on the contract of sale between the parties.

Although the Charge Invoices are not actionable documents, these, along with the Purchase Orders, are sufficient to prove that ACDC indeed ordered supplies and materials from Highett and that these were duly delivered.

Moreover, contrary to the claim of ACDC, the Charge Invoices were properly identified and authenticated by witness Tejero who was present when the supplies and materials were delivered to ACDC and when the invoices were stamped received by its employee.

Case Digest: Adriano v. Lasala

JAIME P. ADRIANO and LEGASPI TOWERS 300, INC., Petitioners, vs. ALBERTO LASALA and LOURDES LASALA, Respondents.

G.R. No. 197842               October 9, 2013

Mendoza, J.: 

On September 25, 1992, Legaspi Towers 300 (LT300) entered a security service contract with Alberto and Lourdes Lasala (the Lasalas), the owners of Thunder Security and Investigation Agency, for a period of one year.

On October 18, 1992, the Lasalas received a letter signed by Building Administrator Jaime P. Adriano (Adriano), reminding them of their non-compliance with the security services agreement, among which were the failure to assign security guards with the required height and educational attainment, and the failure to provide the agreed service vehicle. In compliance, respondents relieved and replaced the unqualified personnel with Adriano’s recommendees. A Ford Fiera was also produced although parked in a nearby area as no space in the building was available. The Lasalas received another letter 3 days later, reiterating the same instances of non-compliance. This prompted them to talk to Adriano.

In the meeting, Adriano mentioned that the differences could only be settled by cooperating with each other. He then requested from respondents the payment of P18,000.00, of which P5,000 would be given to the LT300 President; P3,000.00 to Captain Perez; and the rest to Adriano himself. These payments were requested in return for acting as the bridge in resolving the issues. The Lasalas paid, but the Mr. Adriano demanded another equivalent amount in another meeting in November.

Thereafter, a series of correspondence between the parties took place, with LT300 constantly reiterating the alleged violations of the service contract. In the last letter, LT300 added another grievance – non- payment of the minimum wage. To finally settle the issues, respondents sought audience before the LT300 Board but to no avail. Instead, the Board terminated the contract.

The Lasalas filed a complaint for damages alleging that LT300 and Adriano illegally terminated their services.

In its defense, LT300 said that the Lasalas breached the contract by employing personnel who failed to meet the minimum qualifications of at least 2nd year of college and 5’6" in height (note, however, that the unqualified employees were absorbed by the Lasalas due to the recommendation of LT300). LT300 also argued that the Lasalas failed to provide a service vehicle and pay minimum wage to the security guards.

The RTC ruled in favor of the Lasalas, and the CA affirmed the decision (with modification on damages).

ISSUE: W/N LT300 and Adriano are liable to the Lasalas for illegal pretermination of the contract.

RULING: YES.

LT300 has no basis in attributing breach of contract on the part of the Lasalas. As to the absorbed employees, it is ridiculous and unfair to allow the LT300 to cite lack of qualifications when they were active participants in the selection and hiring process. As to the non-provision of service vehicle and non-payment of minimum wage, the same are groundless and flimsy.

In fact, LT300 was the one that committed the breach by its abrupt and groundless termination of the agreement. Although pre-termination was allowed under the contract, LT300 could not just invoke and exercise the same without a valid and legal ground.

The LT300 is reminded that "every person must, in the exercise of his right and in the performance of his duty, act with justice, give everyone his due, and observe honesty and good faith." The Lasalas clearly complied with their part of the obligation under the security services agreement but it appeared that whatever they did, the LT300 was bent on ending it.

As such, the award of moral damages was proper since the termination was effected without valid reason, in addition to the inappropriate dealings of Adriano to acquire financial gain at the expense of the Lasalas manifested LT300’s malicious and unjust intent to do away with the Lasalas’ services.

As regards exemplary damages, the same is proper as bad faith attended the termination of the service contract agreement.

On temperate damages, the Lasalas suffered pecuniary loss because of the untimely termination of their services for no cause at all. As there is no proof capable of ascertaining the actual loss, the same is proper in lieu of actual damages.

As to attorney's fees, suffice it to say that because the Lasalas were constrained to litigate to protect their interests, the award was proper.

Case Digest: ALPS Transportation v. Rodriguez

ALPS TRANSPORTATION and/or ALFREDO E. PEREZ, Petitioners, vs. ELPIDIO M. RODRIGUEZ, Respondent.

G.R. No. 186732               June 13, 2013

SERENO, CJ.:

Respondent Elpidio Rodriguez (Rodriguez) was previously employed as a bus conductor. He entered into an employment contract with Contact Tours Manpower and was assigned to work with the bus company ALPS Transportation, owned by Alfredo Perez as a sole proprietor.

During the course of his employment, Rodriguez was found to have committed irregularities on 26 April 2003, 12 October 2003, and 26 January 2005. The latest irregularity report dated 26 January 2005 stated that he had collected bus fares without issuing corresponding tickets to passengers. The report was annotated with the word "Terminate."

Rodriguez alleged that he was dismissed from his employment on 27 January 2005, or the day after the issuance of the last irregularity report. However, he did not receive any written notice of termination. He went back to the bus company a number of times, but it refused to readmit him.

Rodriguez then filed before the labor arbiter a complaint for illegal dismissal.

In response to the complaint, ALPS and Perez stated that they did not have any prerogative to dismiss Rodriguez, as he was not their employee, but that of Contact Tours.

ISSUES:

1. Whether Rodriguez was illegally dismissed;

2. Assuming Rodriguez was illegally dismissed, whether ALPS Transportation and/or Alfredo E. Perez is liable for the dismissal.

RULING:

1.     Yes

2.     Yes.

For a dismissal to be valid, the rule is that the employer must comply with both substantive and procedural due process requirements. Substantive due process requires that the dismissal must be pursuant to either a just or an authorized cause under the Labor Code. Procedural due process, on the other hand, mandates that the employer must observe the twin requirements of notice and hearing before a dismissal can be effected.

Evidence must, therefore, be substantial and not based on mere surmises or conjectures for to allow an employer to terminate the employment of a worker based on mere allegations places the latter in an uncertain situation and at the sole mercy of the employer. An accusation that is not substantiated will not ripen into a holding that there is just cause for dismissal. A mere accusation of wrongdoing or a mere pronouncement of lack of confidence is not sufficient cause for a valid dismissal of an employee. Thus, the failure of the petitioners to convincingly show that the respondent misappropriated the bus fares renders the dismissal to be without a valid cause. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

Turning to the issue of procedural due process, both parties agree that Rodriguez was not given a written notice specifying the grounds for his termination and giving him a reasonable opportunity to explain his side.

As to the contention of ALPS that Rodriguez is an employee of Contact Tours, the presumption is that a contractor is a labor-only contractor unless he overcomes the burden of proving that it has substantial capital, investment, tools, and the like. While ALPS Transportation is not the contractor itself, since it is invoking Contact Tours status as a legitimate job contractor in order to avoid liability, it bears the burden of proving that Contact Tours is an independent contractor.

However, aside from making bare assertions and offering the Kasunduan between Rodriguez and Contact Tours in evidence, ALPS Transportation has failed to present any proof to substantiate the former's status as a legitimate job contractor. Hence, the legal presumption that Contact Tours is a labor-only contractor has not been overcome.

As a labor-only contractor, therefore, Contact Tours is deemed to be an agent of ALPS Transportation. Thus, the latter is responsible to Contact Tours' employees in the same manner and to the same extent as if they were directly employed by the bus company.

Finally, since ALPS Transportation is a sole proprietorship owned by Perez, it is he who must be held liable for the payment of backwages to Rodriguez. A sole proprietorship does not possess a juridical personality separate and distinct from that of the owner of the enterprise. Thus, the owner has unlimited personal liability for all the debts and obligations of the business, and it is against him that a decision for illegal dismissal is to be enforced.

Case Digest: Mangila v. Guina

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.

G.R. No. 125027. August 12, 2002

CARPIO, J.:

Petitioner Anita Mangila, a resident of Pampanga, is a single proprietor exporting sea foods and doing business under the name and style of Seafoods Products. Private respondent Loreta Guina is single proprietor providing freight forwarding service doing business as Air Swift International, with office address in Pasay.

Mangila contracted the freight forwarding services of Guina for shipment of sea food products to Guam where Mangila maintains an outlet. Mangila agreed to pay Guina cash on delivery. 

On the first shipment, Mangila requested for seven days within which to pay Guina. However, for the next three shipments, Mangila failed to pay Guina the shipping charges.

Despite several demands, Mangila never paid Guina. Thus, Guina filed before the Regional Trial Court of Pasay City a case for collection of sum of money.

Mangila filed a Motion to Dismiss on the ground of improper venue. Guina’s invoice for the freight forwarding service stipulates that if court litigation becomes necessary to enforce collection, the agreed venue for such action is Makati.

Guina filed an Opposition asserting that although Makati appears as the stipulated venue, the same was merely an inadvertence by the printing press. Moreover, Guina claimed that Mangila knew that Guina was holding office in Pasay City and not in Makati.

The trial court, finding credence in private respondents assertion, denied the Motion to Dismiss and allowed the case to proceed.

The trial court thereafter ruled in favor of Guina, ordering Mangila to pay her outstanding balance.

ISSUE: W/N there was improper venue.

RULING: Yes.

The case should be dismissed for improper venue, but not for the reason stated by Mangila.

Mangila raised the issue of improper venue due to the stipulation in the invoice that any litigation’s agreed venue is Makati. However,  the stipulation does not limit the venue exclusively to Makati.

Nevertheless, Pasay is not the proper venue for this case.

Under the Rules of Court, venue in personal actions is where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as discussed, this exception is not applicable in this case. Hence, following the general rule, the case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff.

In the instant case, the residence of Guina was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only during trial that she mentioned her residence to be in Paranaque City.  

In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga while private respondent resides in Paranaque City. However, this case was brought in Pasay City, where the business of Guina is found. This would have been permissible had Guina’s business been a corporation. However, as Guina admitted in her Complaint in the trial court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable it to file a suit in court. In fact, there is no law authorizing sole proprietorships to file a suit in court.

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government. The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.^[42]

Thus, not being vested with legal personality to file this case, Air Swift International is not the plaintiff in this case but rather Loreta Guina in her personal capacity.

Case Digest: S.C. Megaworld v. Parada

S.C. MEGAWORLD CONSTRUCTION and DEVELOPMENT CORPORATION, Petitioner,  vs. ENGR. LUIS U. PARADA, represented by ENGR. LEONARDO A. PARADA of GENLITE INDUSTRIES, Respondent.

G.R. No. 183804               September 11, 2013

REYES, J.:

S.C. Megaworld Construction and Development Corporation (Megaworld) bought electrical lighting materials from Gentile Industries, a sole proprietorship owned by Engineer Luis U. Parada. Megaworld was unable to pay for the above purchase on due date, but blamed it on its failure to collect under its sub-contract with the Enviro KleenTechnologies, Inc. (Enviro Kleen). It was however able to persuade Enviro Kleen to agree to settle its above purchase, but after paying the respondent P250,000.00 once, Enviro Kleen stopped making further payments, leaving an outstanding balance of P816,627.00. It also ignored the various demands of the Parada, who then filed a suit in the RTC, to collect from the petitioner the said balance, plus damages, costs and expenses.

Megaworld denied liability by saying that it was released from its indebtedness to the Parada due to the novation of their contract, which. There was allegedly novation when the Parada accepted the partial payment of Enviro Kleen in its behalf, and thereby acquiesced to the substitution of Enviro Kleen as the new debtor in Megaworld’s place. 

The Regional Trial Court ruled in favor of Parada.

On appeal, Megaworld argued that the trial court should have dismissed the complaint for failure of the respondent to implead Genlite Industries as "a proper party in interest."

The sales invoices and receipts show that the respondent is the sole proprietor of Genlite Industries, and therefore the real party.

On the issue of novation, the Court of Appeals ruled that by retaining his option to seek satisfaction from the petitioner, any acquiescence which the respondent had made was limited to merely accepting Enviro Kleen as an additional debtor from whom he could demand payment, but without releasing the petitioner as the principal debtor from its debt to him.

ISSUE: W/N Genlite Industries should have been impleaded as a party-plaintiff.

RULING: No.

Only natural or juridical persons or entities authorized by law may be parties in a civil case.

A sole proprietorship has no juridical personality separate and distinct from that of its owner, and need not be impleaded as a party-plaintiff in a civil case.

Genlite Industries is merely the DTI-registered trade name or style of Parada by which he conducted his business. As such, it does not exist as a separate entity apart from its owner, and therefore it has no separate juridical personality to sue or be sued. As the sole proprietor of Genlite Industries, there is no question that the Parada is the real party in interest who stood to be directly benefited or injured by the judgment in the complaint below. There is then no necessity for Genlite Industries to be impleaded as a party-plaintiff, since the complaint was already filed in the name of its proprietor, Engr. Luis U. Parada. To heed the Megaworld’s sophistic reasoning is to permit a dubious technicality to frustrate the ends of substantial justice.

ISSUE: W/N there is novation of the contract.

RULING: None.

Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. It is "the substitution of a new contract, debt, or obligation for an existing one between the same or different parties."

The settled rule is that novation is never presumed, but must be clearly and unequivocally shown.  In order for a new agreement to supersede the old one, the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one.

The trial court found that the respondent never agreed to release the petitioner from its obligation, and this conclusion was upheld by the CA.

Case Digest: Labayog v. M.Y. San Biscuits

BERNARDINO LABAYOG, CRESENCIO GRANZORE, JEANETTE GONZALES, NOEME DADIZ, GEMMA PANGANIBAN, DALISAY BUENVIAJE, VICTORIANA RUEDAS, MA. VICTORIA CABALONG, AMALIA SALVARRI, ROWENA FERNANDEZ, DELIA LOZARES, LUNINGNING ANGELES, ROSEMARIE SALES, VIVIAN VERZOSA, MARILYN JOSE, ROSANNA ROLDAN, HERMINIO CARANTO, ANITA SALVADOR, JORGE SALAMAT, ROBERTO ODIAMAR, EFREN LACAMPUINGAN, NOEL TAGALOG, MARCOS DE LA CRUZ, ELIAS BELO, DARIUS EROLES, HELEN BARAYUGA,1 CRISTOPHER HILARIO, JOEL ESGUERRA, BERNABE DUCUT, JOSEPH TANAUY, EDWIN CEA, NOEL VILLASCA, ERNESTO ALFONSO, FERNANDO CEBU and REYNALDO SESBRENO, petitioners,

vs.

M.Y. SAN BISCUITS, INC. and MEW WAH LIM, respondents

G.R. No. 148102, 11 July 2006.

Corona, J.:

On various dates in 1992, petitioners entered into contracts of employment with respondent company as mixers, packers and machine operators for a fixed term. On the expiration of their contracts, their services were terminated. Forthwith, they each executed a quitclaim.

Petitioners filed complaints for illegal dismissal, among others. The labor arbiter ruled their dismissal to be illegal on the ground that they had become regular employees who performed duties necessary and desirable in respondent company's business and ordered for their reinstatement.

The NLRC reversed the ruling, which the CA eventually affirmed.

ISSUE: W/N the fixed term contract of petitioners were valid.

RULING: YES.

Where the duties of the employee consist of activities which are necessary or desirable in the usual business of the employer, the parties are not prohibited from agreeing on the duration of employment. Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided it is not intended to circumvent the security of tenure.

Two criteria validate a contract of employment with a fixed period: (1) the fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress or improper pressure being brought to bear on the employee and without any circumstances vitiating consent or, (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. Against these criteria, petitioners' contracts of employment with a fixed period were valid.

In this case, there was no allegation of vitiated consent. Respondents did not exercise moral dominance over petitioners. The contracts were mutually advantageous to the parties.

While their employment as mixers, packers and machine operators was necessary and desirable in the usual business of respondents, they were employed temporarily only, during periods when there was heightened demand for production. Consequently, there could have been no illegal dismissal when their services were terminated on expiration of their contracts. There was even no need for notice of termination because they knew exactly when their contracts would end. Contracts of employment for a fixed period terminate on their own at the end of such period.

Case Digest: Macua vda. de Avenido v. Hoybia Avenido

PEREGRINA MACUA VDA. DE AVENIDO, Petitioner, vs. TECLA HOYBIA AVENIDO, Respondent.

G.R. No. 173540, 22 January 22 2014.

PEREZ, J.:

This case involves a contest between two women both claiming to have been validly married to the same man, now deceased.

Tecla Hoybia Avenido (Tecla) instituted on 11 November 1998, a Complaint for Declaration of Nullity of Marriage against Peregrina Macua Vda. de Avenido (Peregrina) on the ground that Tecla is the lawful wife of the deceased Eustaquio Avenido (Eustaquio).

Tecla alleged that her marriage to Eustaquio was solemnized on 30 September 1942 in Talibon, Bohol in rites officiated by the Parish Priest of the said town. While the a marriage certificate was recorded with the local civil registrar, the records of the LCR were destroyed during World War II. Tecla and Eustaquio begot four children, but Eustaquio left his family in 1954.

In 1979, Tecla learned that Eustaquio got married to another woman by the name of Peregrina, which marriage she claims must be declared null and void for being bigamous. In support of her claim, Tecla presented eyewitnesses to the ceremony, the birth certificate of their children and certificates to the fact that the marriage certificate/records were destroyed.

Peregrina, on the other hand averred that she is the legal surviving spouse of Eustaquio who died on 22 September 1989, their marriage having been celebrated on 30 March 1979 and showed the marriage contract between her and Eustaquio.

RTC ruled in favor of Peregrina. It relied on Tecla’s failure to present her certificate of marriage to Eustaquio. Without such certificate, RTC considered as useless the certification of the Office of the Civil Registrar of Talibon over the lack of records.

The CA, on appeal, ruled in favor of Tecla. It held there was a presumption of lawful marriage between Tecla and Eustaquio as they deported themselves as husband and wife and begot four children. Such presumption, supported by documentary evidence consisting of the same Certifications disregarded by the RTC, and testimonial evidence created sufficient proof of the fact of marriage. The CA found that its appreciation of the evidence presented by Tecla is well in accord with Section 5, Rule 130 of the Rules of Court.

ISSUE: Between Tecla and Peregrina, who was the legal wife of Eustaquio?

RULING: TECLA

While a marriage certificate is considered the primary evidence of a marital union, it is not regarded as the sole and exclusive evidence of marriage. The fact of marriage may be proven by relevant evidence other than the marriage certificate. Hence, even a person’s birth certificate may be recognized as competent evidence of the marriage between his parents.

It is an error on the part of the RTC to rule that without the marriage certificate, no other proof can be accepted.

The execution of a document may be proven by the parties themselves, by the swearing officer, by witnesses who saw and recognized the signatures of the parties; or even by those to whom the parties have previously narrated the execution thereof.

In this case, due execution was established by the eyewitness testimonies and of Tecla herself as a party to the event. The subsequent loss was shown by the testimony of the officiating priest. Since the due execution and the loss of the marriage contract were clearly shown by the evidence presented, secondary evidence–testimonial and documentary–may be admitted to prove the fact of marriage.

The starting point then, is the presumption of marriage.

Every intendment of the law leans toward legalizing matrimony. Persons dwelling together in apparent matrimony are presumed, in the absence of any counter-presumption or evidence special to the case, to be in fact married. The reason is that such is the common order of society, and if the parties were not what they thus hold themselves out as being, they would be living in the constant violation of decency and of law.

Case Digest: Pelizloy v. Benguet

PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY, Petitioner, vs. THE PROVINCE OF BENGUET, Respondent.

G.R. No. 183137, 10 April 2013.

LEONEN, J.:

Petitioner Pelizloy Realty Corporation owns Palm Grove Resort in Tuba, Benguet, which has facilities like swimming pools, a spa and function halls.

In 2005, the Provincial Board of Benguet approved its Revenue Code of 2005. Section 59, the tax ordinance levied a 10% amusement tax on gross receipts from admissions to "resorts, swimming pools, bath houses, hot springs and tourist spots."

Pelizloy's posits that amusement tax is an ultra vires act. Thus, it filed an appeal/petition before the Secretary of Justice. Upon the Secretary’s failure to decide on the appeal within sixty days, Pelizloy filed a Petition for Declaratory Relief and Injunction before the RTC.

Pelizloy argued that the imposition was in violation of the limitation on the taxing powers of local government units under Section 133 (i) of the Local Government Code, which provides that the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided.

The Province of Benguet assailed the that the phrase ‘other places of amusement’ in Section 140 (a) of the LGC encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots since Article 131 (b) of the LGC defines "amusement" as "pleasurable diversion and entertainment synonymous to relaxation, avocation, pastime, or fun."

RTC rendered a Decision assailed Decision dismissing the Petition for Declaratory Relief and Injunction for lack of merit. Procedurally, the RTC ruled that Declaratory Relief was a proper remedy. However, it gave credence to the Province of Benguet's assertion that resorts, swimming pools, bath houses, hot springs, and tourist spots are encompassed by the phrase ‘other places of amusement’ in Section 140 of the LGC.

ISSUE:  W/N provinces are authorized to impose amusement taxes on admission fees to resorts, swimming pools, bath houses, hot springs, and tourist spots for being "amusement places" under the LGC.

RULING: NO.

Amusement taxes are percentage taxes. However, provinces are not barred from levying amusement taxes even if amusement taxes are a form of percentage taxes. The levying of percentage taxes is prohibited "except as otherwise provided" by the LGC. Section 140 provides such exception.

Section 140 expressly allows for the imposition by provinces of amusement taxes on "the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement."

However, resorts, swimming pools, bath houses, hot springs, and tourist spots are not among those places expressly mentioned by Section 140 of the LGC as being subject to amusement taxes. Thus, the determination of whether amusement taxes may be levied on admissions to these places hinges on whether the phrase ‘other places of amusement’ encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots.

Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of particular and specific words of the same class or where the latter follow the former, the general word or phrase is to be construed to include, or to be restricted to persons, things or cases akin to, resembling, or of the same kind or class as those specifically mentioned."

Section 131 (c) of the LGC already provides a clear definition: "Amusement Places" include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performances.

As defined in The New Oxford American Dictionary, ‘show’ means "a spectacle or display of something, typically an impressive one"; while ‘performance’ means "an act of staging or presenting a play, a concert, or other form of entertainment." As such, the ordinary definitions of the words ‘show’ and ‘performance’ denote not only visual engagement (i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting) such that actions are manifested to, and (correspondingly) perceived by an audience.

Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be considered venues primarily "where one seeks admission to entertain oneself by seeing or viewing the show or performances". While it is true that they may be venues where people are visually engaged, they are not primarily venues for their proprietors or operators to actively display, stage or present shows and/or performances.

Case Digest: Gambino v. NBP Officials

MAXIMINO GAMIDO Y BUENAVENTURA, petitioner, vs. NEW BILIBID PRISONS (NBP) OFFICIALS, respondents.

G.R. No. 114829, 1 March 1995.

DAVIDE, JR., J.:

The Supreme court required Atty. Icasiano M. dela Rea to show cause why no disciplinary action should be taken against him for making it appear in the jurat of the petition in this case that petitioner Gambino subscribed the verification when in truth and in fact the petitioner did not.

In his explanation, Atty. dela Rea admitted having executed the jurat without the presence of petitioner, who was imprisoned in the New Bilibid Prisons at the time of notarization.

He said he did it in the honest belief that since it is jurat and not an acknowledgement, it would be alright to notarize without the petitioner’s presence since he knew the latter.

ISSUE: W/N executing a jurat without the presence of the person swearing is proper.

RULING: No.

A jurat is that part of an affidavit in which the officer certifies that the instrument was subscribed and sworn to before him.

Accordingly, in a jurat, the affiant must sign the document in the presence of and take his oath before a notary public or any other person authorized to administer oaths.

An acknowledgment, on the other hand, shall be made before a notary public in which the notary public shall certify that the person acknowledging the instrument or document is known to him and that he is the same person who executed it, and acknowledged that the same is his free act and deed.

It is obvious that the party acknowledging must likewise appear before the notary public or any other person authorized to take acknowledgments of instruments or documents.

The claim or belief of Atty. dela Rea that the presence of petitioner was not necessary for the jurat because it is not an acknowledgment is patently baseless.

His prior acquaintance and friendship with petitioner provides no excuse for non-compliance with his duty. If Atty. dela Rea were faithful to his duty as a notary public and if he wanted to accommodate a friend who was inside a prison, he could have gone to the latter's cell.

Thus, Atty. dela Rea committed grave misconduct when he agreed to prepare the jurat in the petition in this case in the absence of petitioner, making it appear that the latter personally signed the certification of the petition and took his oath before him when in truth and in fact the said petitioner did not.

Case Digest: Begino v. ABS-CBN

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.

G.R. No. 199166, 20 April 2015.

PEREZ, J.:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of Petitioners as cameramen, editors or reporters for TV Broadcasting. Petitioners signed regularly renewed Talent Contracts (3 months - 1 year) and Project Assignment Forms which detailed the duration, budget and daily technical requirements of a particular project. Petitioners were tasked with coverage of news items for subsequent daily airings in Respondents’ TV Patrol Bicol Program.

The Talent Contract has an exclusivity clause and provides that nothing therein shall be deemed or construed to establish an employer-employee relationship between the parties.

Petitioners filed against Respondents a complaint for regularization before the NLRC's Arbitration branch.

In support of their complaint, Petitioners claimed that they worked under the direct control of Respondent Villafuerte - they were mandated to wear company IDs, they were provided the necessary equipment, they were informed about the news to be covered the following day, and they were bound by the company’s policy on attendance and punctuality.

Respondents countered that, pursuant to their Talent Contracts and Project Assignment Forms, Petitioners were hired as talents to act as reporters, editors and/or cameramen. Respondents further claimed they never imposed control as to how Petitioners discharged their duties. At most, they were briefed regarding the general requirements of the project to be executed.

While the case was pending, Petitioners contracts were terminated, prompting the latter to file a second complaint for illegal dismissal.

The Arbitration Branch ruled that Petitioners were regular employees, and ordered Respondents to reinstate the Petitioners.

The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship, the so-called "control test" is generally regarded as the most crucial and determinative indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed reserves the right to control not only the end result but also the manner and means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and condition embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and supervision of Respondents which provided them with the equipment essential for the discharge of their functions. The exclusivity clause and prohibitions in their Talent Contract were likewise indicative of Respondents' control over them, however obliquely worded.

Also,the presumption is that when the work done is an integral part of the regular business of the employer and when the worker does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.

Case Digest: Ronulo v. People

RENE RONULO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

G.R. No. 182438, 2 July 2014.

BRION, J.:

Joey Umadac and Claire Bingayen were scheduled to marry on 29 March 2003 at the Sta. Rosa Catholic Parish Church in Ilocos Norte. But on the day of the wedding, the church's officiating priest refused to solemnize the marriage because of lack of a marriage license.

With the couple and the guests already dressed for the wedding, they headed to an Aglipayan Church. The Aglipayan priest, herein petitioner Ronulo, conducted a ceremony on the same day where the couple took each other as husband and wife in front of the guests. This was despite Petitioner's knowledge of the couple's lack of marriage license.

Petitioner was eventually charged of violating Article 352 of the RPC for performing an illegal marriage ceremony.

The MTC did not believe Petitioner's defense that what he did was an act of blessing and was not tantamount to solemnization of marriage and was found guilty.

The decision was affirmed by both the RTC and the CA.

ISSUE: W/N Petitioner committed an illegal marriage.

RULING: Yes.

Article 352 of the RPC penalizes an authorized solemnizing officer who shall perform or authorize any illegal marriage ceremony. The elements of this crime are: 

1. authority of the solemnizing officer; and 
2. his performance of an illegal marriage ceremony.

The first element is present since Petitioner himself admitted that he has authority to solemnize a marriage.

The second element is present since the alleged "blessing" by Petitioner is tantamount to the performance of an illegal marriage ceremony.

There is no prescribed form or rite for the solemnization of a marriage. However, Article 6 of the Family Code provides that it shall be necessary: 

1. for the contracting parties to appear personally before the solemnizing officer; and 
2. declare in the presence of not less than two witnesses of legal age that they take each other as husband and wife.

The first requirement is present since petitioner admitted to it. The second requirement is likewise present since the prosecution, through the testimony of its witnesses, proved that the contracting parties personally declared that they take each other as husband and wife.

The penalty for violating Article 352 of the RPC is in accordance with the provision of the Marriage Law, specifically Article 44, which states that:

Section 44. General Penal Clause – Any violation of any provision of this Act not specifically penalized, or of the regulations to be promulgated by the proper authorities, shall be punished by a fine of not more than two hundred pesos or by imprisonment for not more than one month, or both, in the discretion of the court.

As such, Petitioner was held guilty of violating Article 352 and was fined P200 as penalty.

Case Digest: San Mateo v. People

ERLINDA C. SAN MATEO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

G.R. No. 200090, 6 March 2013.

ABAD, J.:

Petitioner Erlinda San Mateo ordered assorted yarns from ITSP through its the Vice President for Operations, Ravin A. Sehwani. In partial payment, thereof, she issued 11 postdated checks.

But whenever a check matured, San Mateo would call Sehwani requesting him not to deposit the checks.

Sehwani finally deposited one check, but was it dishonored due to insufficient funds. He informed San Mateo of the dishonor, who asked him to defer depositing the other checks since she was encountering financial difficulties.

Sehwani deposited another check but was dishonored due to a stop payment order. Sehwani deposited the remaining checks which were all dishonored because the account had been closed. Sehwani attempted to contact San Mateo but she never responded.

Sehwani’s counsel then sent a demand letter to San Mateo’s residence but the security guard of the townhouse complex refused to accept the letter. Thereafter, he sent a copy of the demand letter to San Mateo by registered mail which was returned to his counsel’s office with the notation "N/S Party Out 12/12/05" and that San Mateo did not claim it despite three notices to her.

San Mateo was charged with 11 counts of violation of B.P. 22, and was found guilty of 10 counts by the MTC. On appeal, the ruling was affirmed by the RTC and the CA.

ISSUE: W/N San Mateo was guilty of violating B.P. 22.

RULING: No.

To be liable for violation of B.P. 22, the following essential elements must be present: 

1. The making, drawing, and issuance of any check to apply for account or for value; 
2. The knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of the check in full upon its presentment; and 
3. The subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

In this case, the third element is present and had been adequately established. The first element had also been established since San Mateo herself admitted that she drew and issued the same as payment for the yarns she ordered from ITSP. Besides, the issue of lack of valuable consideration for the issuance of checks which were later on dishonored for insufficient funds is immaterial to the success of a prosecution for violation of B.P. 22.

However, the second element was not sufficiently established. Section 2 of B.P. 22 creates the presumption that the issuer of the check was aware of the insufficiency of funds when he issued a check and the bank dishonored it. This presumption, however, arises only after it is proved that the issuer had received a written notice of dishonor.

Here, when Sehwani's counsel's attempted to serve the notice by leaving a copy with the security guard, there was no showing that the letter ever reached San Mateo.

On the second occasion, Sehwani's counsel sent a demand letter to San Mateo by registered mail. However, the prosecution must not only prove that a notice of dishonor was sent to the accused, it must also prove actual receipt of said notice, because the fact of service provided for in the law is reckoned from receipt of such notice of dishonor by the accused.

Since there is insufficient proof that San Mateo actually received the notice of dishonor, the presumption that she knew of the insufficiency of her funds cannot arise. For this reason, the Court cannot convict her of violation of B.P. 22.

Nevertheless, San Mateo’s acquittal does not entail the extinguishment of her civil liability for the dishonored checks. An acquittal based on lack of proof beyond reasonable doubt does not preclude the award of civil damages.

Case Digest: Soliman v. Sandiganbayan

MANUEL SOLIMAN, Petitioner, v. HON. SANDIGANBAYAN, 3RD DIVISION; and THE PEOPLE OF THE PHILIPPINES, Respondents.

G.R. No. 71305, November 24, 1986.

CRUZ, J:

Petitioner Manuel Soliman was convicted of qualified theft by Sandiganbayan for having allegedly conspired with his co-workers in the Malacañang garage to steal 1,000 liters of gasoline. All his co-accused were acquitted with the exception of Bernardo Cube, the driver of the truck where the stolen fuel was carried, who had escaped and could not be tried.

A requisition was made by the Malacañang garage for 9,000 liters of gasoline which was filled in Pandacan. 1,000 liters was retained in the delivery truck which the accused were allegedly intending to sell. It was foiled as a surveillance team prevented the sale. The driver was arrested and implicated his other co-accused.

In finding the petitioner guilty, the Sandiganbayan relied heavily on the supposed confession of Cube, who was at large and never tried. However, the confession had not been formally and specifically offered in evidence by the prosecution.

The Court also relied on the alleged confession of Soliman, although he alleged the confession was elicited by interrogators who manhandled him.

The Court also made the conjecture that since Soliman had gone to the Pandacan depot and later rode with Cube in the delivery truck that brought the gasoline to Malacañang, he really conspired with Cube.

Although Soliman explained that he was ordered by a superior to follow up on the requisition, Sandiganbayan held that the said person should have been presented as a defense witness.

ISSUE: W/N Soliman could be held guilty of qualified theft.

RULING: No.

1. The confession of Cube was not offered in evidence, in contravention of the Section 35 Rule 132 of the Rules of Court (on offer of evidence).

2. Cube's confession should have been barred altogether as pure hearsay since the petitioner did not have the chance to confront and cross-examine his accuser.

3. Soliman's alleged confession is inadmissible for being violative of his Bill of Rights while under custodial investigation.

4. The conclusion of conspiracy is far-fetched. In effect, the petitioner is held guilty because of his presence in the Pandacan depot and later in the delivery truck, as if such presence were a crime.

5. The non-presentation of Soliman's supervisor does not point to his guilt, since there is still constitutional presumption of innocence. If at all, it was the prosecution that had to introduce evidence to disprove the Soliman's testimony and not the other way around.

"We repeat our counsel against ill-considered convictions based only, as in this case, on unfounded surmises or, in other cases, prejudgments and prejudices. Although these errors may at times be corrected and undone on appeal, the stigma of a criminal conviction, even if ultimately reversed, is never quite washed away and remains to soil the innocent man’s name to his dying day."

Case Digest: Dolefil v. NLRC

DOLE PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Second Division) ALFREDO TARROZA, ROGELIO DE LA PEÑA and LORETO TEJERO, respondents.

G.R. No. L-55413, 25 July 1983.

AQUINO, J.:

Alfredo Tarroza, Rogelio de la Peña and Loreto Tejero ("Respondents") were light-wheel tractor operators in the pineapple field of Dole Philippines, Inc ("Dolefil"). 

On April 29, 1977, landguards of Dolefil spotted two drums containing crude oil in the farmlot of Inocencio Asibal which adjoins Dolefil's pineapple field. 

Asibal and companion Rogelio Odarve were investigated by the police and stated in their sworn statements that they bought the crude oil from Respondents and two other Dolefil employees.

Respondents and their two co-employees were charged with qualified theft in the municipal court. 

While those cases were pending, Dolefil filed with the Department of Labor an application for clearance to terminate the employment of Respondents for "stealing or dishonesty," which was granted.

Eight months later, the municipal court of acquitted Respondents of qualified theft while the two other Dolefil employees were convicted of qualified theft.

After that decision, Respondents filed a complaint for illegal dismissal and for reinstatement with backwages against Dolefil.

The Labor Arbiter dismissed the complaint and declared as valid, lawful and for a just cause the termination from employment of Respondents. The NLRC set aside the decision of the Labor Arbiter. 

ISSUE: W/N Dolefil is justified in dismissing Respondents.

RULING: Yes.

An employer may terminate an employment for "serious misconduct" or for "fraud or willful breach by the employee of the trust reposed in him by his employer or representative".

Loss of confidence as a ground for dismissal does not entail proof beyond reasonable doubt of the employee's misconduct. It is enough that there be some basis for such loss of confidence or that the employer has reasonable grounds to believe that the employee is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position. 

The eventual conviction of an employee who is prosecuted for his misconduct is not indispensable to warrant his dismissal by his employer.

On the other hand, the acquittal of an employee in the criminal case filed against him by his employer does not also guarantee his reinstatement if the employer has lost confidence in him. 

A company has the right to dismiss its erring employees if only as a measure of self-protection against acts inimical to its interest.

Case Digest: McDonald's Corporation v. L.C. Big Mak Burger, Inc.

MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC., petitioners, vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and GRACE HUERTO, respondents.

G.R. No. 143993, August 18, 2004.

CARPIO, J.:

Petitioner McDonald's Corporation ("McDonald's") is a US corporation that operates a global chain of fast-food restaurants, with Petitioner McGeorge Food Industries ("McGeorge"), as the Philippine franchisee.

McDonald's owns the "Big Mac" mark for its "double-decker hamburger sandwich." with the US Trademark Registry on 16 October 1979.

Based on this Home Registration, McDonald's applied for the registration of the same mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology ("PBPTT") (now IPO). On 18 July 1985, the PBPTT allowed registration of the "Big Mac."

Respondent L.C. Big Mak Burger, Inc. is a domestic corporation which operates fast-food outlets and snack vans in Metro Manila and nearby provinces. Respondent corporation's menu includes hamburger sandwiches and other food items.

On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for its hamburger sandwiches, which was opposed by McDonald's. McDonald's also informed LC Big Mak chairman of its exclusive right to the "Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark.

Having received no reply, petitioners sued L.C. Big Mak Burger, Inc. and its directors before Makati RTC Branch 137 ("RTC"), for trademark infringement and unfair competition.

RTC rendered a Decision finding respondent corporation liable for trademark infringement and unfair competition. CA reversed RTC's decision on appeal.

1ST ISSUE:W/N respondent corporation is liable for trademark infringement and unfair competition.

Ruling: Yes
Section 22 of Republic Act No. 166, as amended, defines trademark infringement as follows:

Infringement, what constitutes. - Any person who [1] shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.

To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion." Of these, it is the element of likelihood of confusion that is the gravamen of trademark infringement.

1st element:

A mark is valid if it is distinctive and not merely generic and descriptive.

The "Big Mac" mark, which should be treated in its entirety and not dissected word for word, is neither generic nor descriptive. Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer. Descriptive marks, on the other hand, convey the characteristics, functions, qualities or ingredients of a product to one who has never seen it or does not know it exists, such as "Arthriticare" for arthritis medication. On the contrary, "Big Mac" falls under the class of fanciful or arbitrary marks as it bears no logical relation to the actual characteristics of the product it represents. As such, it is highly distinctive and thus valid.

2nd element:

Petitioners have duly established McDonald's exclusive ownership of the "Big Mac" mark. Prior valid registrants of the said mark had already assigned his rights to McDonald's.

3rd element:

Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks, namely, confusion of goods (confusion in which the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other) and confusion of business (though the goods of the parties are different, the defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the public would then be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant which, in fact, does not exist).

There is confusion of goods in this case since respondents used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is used.

There is also confusion of business due to Respondents' use of the "Big Mak" mark in the sale of hamburgers, the same business that petitioners are engaged in, also results in confusion of business. The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market. The registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business.

Furthermore, In determining likelihood of confusion, the SC has relied on the dominancy test (similarity of the prevalent features of the competing trademarks that might cause confusion) over the holistic test (consideration of the entirety of the marks as applied to the products, including the labels and packaging).

Applying the dominancy test, Respondents' use of the "Big Mak" mark results in likelihood of confusion. Aurally the two marks are the same, with the first word of both marks phonetically the same, and the second word of both marks also phonetically the same. Visually, the two marks have both two words and six letters, with the first word of both marks having the same letters and the second word having the same first two letters.

Lastly, since Section 22 only requires the less stringent standard of "likelihood of confusion," Petitioners' failure to present proof of actual confusion does not negate their claim of trademark infringement.

2ND ISSUE: W/N Respondents committed Unfair Competition

Ruling: Yes.
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:

Any person who will employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.

The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods, and (2) intent to deceive the public and defraud a competitor.

In the case at bar, Respondents have applied on their plastic wrappers and bags almost the same words that petitioners use on their styrofoam box. Further, Respondents' goods are hamburgers which are also the goods of petitioners. Moreover, there is actually no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc." This clearly shows respondents' intent to deceive the public.

Case Digest: Roxas v. CA

MELANIA A. ROXAS, petitioner, vs. THE HON. COURT OF APPEALS and ANTONIO M. CAYETANO, respondents.

G.R. No. 92245, 26 June 1991.

PARAS, J.:

Petitioner Melania Roxas ("Melania") is married to Antonio Roxas ("Antonio"), although they are already estranged and living separately.

Melania discovered that Antonio leased to Respondent Antonio Cayetano ("Mr. Cayetano") their conjugal lot in Novaliches without her knowledge and consent. 

Thus, Melanie filed a case before the RTC praying for the annulment of the contract of lease between Antonio and Mr. Cayetano.

Mr. Cayetano moved to dismiss the complaint on the sole ground that the complaint states no cause of action.

The RTC Judge resolved said Motion by dismissing Melania's complaint.

ISSUE: W/N a husband, may legally enter into a long-term contract of lease involving conjugal real property without the consent of the wife.

Ruling: No. (Case remanded to the RTC by the SC)

Even if the husband is administrator of the conjugal partnership, administration does not include acts of ownership. For while the husband can administer the conjugal assets unhampered, he cannot alienate or encumber the conjugal realty.

As stated in Black's Law Dictionary, the word "alienation" means "the transfer of the property and possession of lands, tenements, or other things from one person to another ... The act by which the title to real estate is voluntarily assigned by one person to another and accepted by the latter, in the form prescribed by law." While encumbrance "has been defined to be every right to, or interest in, the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance; any (act) that impairs the use or transfer of property or real estate..."

The pivotal issue in this case is whether or not a lease is an encumbrance and/or alienation.

Under Art. 1643 of the New Civil Code "In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite...." Thus, lease is a grant of use and possession: it is not only a grant of possession.

In the contract of lease, the lessor transfers his right of use in favor of the lessee. The lessor's right of use is impaired, therein. He may even be ejected by the lessee if the lessor uses the leased realty.

Therefore, lease is a burden on the land, it is an encumbrance on the land. The concept of encumbrance includes lease, thus "an encumbrance is sometimes construed broadly to include not only liens such as mortgages and taxes, but also attachment, LEASES, inchoate dower rights, water rights, easements, and other RESTRICTIONS on USE."

Moreover, lease is not only an encumbrance but also a qualified alienation, with the lessee becoming, for all legal intents and purposes, and subject to its terms, the owner of the thing affected by the lease.

Thus, in case the wife's consent is not secured by the husband as required by law, the wife has the remedy of filing an action for the annulment of the contract.

Case Digest: Islamic Directorate of the Philippines v. CA

ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F. PEREA and SECURITIES & EXCHANGE COMMISSION, petitioners, vs.COURT OF APPEALS and IGLESIA NI CRISTO, respondents.
G.R. No. 117897, 14 May 1997.


HERMOSISIMA, JR., J.:

1971, the ISLAMIC DIRECTORATE OF THE PHILIPPINES ("IDP") was incorporated  with the primary purpose of establishing a mosque, school, and other religious infrastructures in Quezon City.

IDP purchased a 49,652-square meter lot in Tandang Sora, QC, which was covered by TCT Nos. RT-26520 (176616) and RT-26521 (170567).

When President Marcos declared martial law in 1972, most of the members of the 1971 Board of Trustees ("Tamano Group")flew to the Middle East to escape political persecution.

Thereafter, two contending groups claiming to be the IDP Board of Trustees sprung: the Carpizo group and Abbas group.

In a suit between the two groups, SEC rendered a decision in 1986 declaring both groups to be null and void. SEC recommeded that the a new by-laws be approved and a new election be conducted upon the approval of the by-laws. However, the SEC recommendation was not heeded.

In 1989, the Carpizo group passed a Board Resolution authorizing the sale of the land to Iglesia Ni Cristo ("INC"), and a Deed of Sale was eventually executed.

In 1991, the Tamano Group filed a petition before the SEC questioning the sale.

Meanwhile, INC filed a suit for specific performance before RTC Branch 81 against the Carpizo group. INC also moved to compel  a certain Leticia Ligon (who is apparently the mortgagee of the lot) to surrender the title.

The Tamano group sought to intervene, but the intervention was denied despite being informed of the pending SEC case. In 1992, the Court subsequently ruled that the INC as the rightful owner of the land, and ordered Ligon to surrender the titles for annotation. Ligon appealed to CA and SC, but her appeals were denied.

In 1993, the SEC ruled that the sale was null and void . On appeal CA reversed the SEC ruling.

MAIN ISSUE: W/N the sale between the Carpizo group and INC is null and void.

RULING: YES.

Since the SEC has declared the Carpizo group as a void Board of Trustees, the sale it entered into with INC is likewise void. Without a valid consent of a contracting party, there can be no valid contract.

In this case, the IDP, never gave its consent, through a legitimate Board of Trustees, to the disputed Deed of Absolute Sale executed in favor of INC. Therefore, this is a case not only of vitiated consent, but one where consent on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever.

Further, the Carpizo group failed to comply with Section 40 of the Corporation Code, which provides that: " ... a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets... when authorized by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; or in case of non-stock corporation, by the vote of at least two-thirds (2/3) of the members, in a stockholders' or members' meeting duly called for the purpose...."

The subject lot constitutes the only property of IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met in the case at bar.

ANCILLARY ISSUE: W/N The Ligon ruling constitutes res judicata.

RULING: NO.

Section 49(b), Rule 39 enunciates the first concept of res judicata known as "bar by prior judgment," whereas, Section 49(c), Rule 39 is referred to as "conclusiveness of judgment."

There is "bar by former judgment" when, between the first case where the judgment was rendered, and the second case where such judgment is invoked, there is identity of parties, subject matter and cause of action. When the three identities are present, the judgment on the merits rendered in the first constitutes an absolute bar to the subsequent action. But where between the first case wherein judgment is rendered and the second case wherein such judgment is invoked, there is only identity of parties but there is no identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. This is what is termed "conclusiveness of judgment."

Neither applies to the case at bar. There is no "bar by former judgment" since while there may be identity of subject matter (IDP property) in both cases, there is no identity of parties.  The principal parties in the first case were Ligon and the Iglesia Ni Cristo. The IDP can not be considered essentially a formal party thereto for the simple reason that it was not duly represented by a legitimate Board of Trustees.

Res Judicata in the form of "conclusiveness of judgment" cannot likewise apply for the reason that the primary issue in the first case is the possession of the titles, and not the sale of the land, as in this case.

Case Digest: Pagsibigan v. CA

PILAR PAGSIBIGAN, petitioner, vs. COURT OF APPEALS and PLANTERS DEVELOPMENT BANK, respondents.

G.R. No. 90169, April 7, 1993.

CAMPOS, JR., J:

On November 3, 1976, Petitioner Pilar Pagsigiban obtained a loan from Respondent Planters Development Bank ("Bank") for P4,500.00, secured by a mortgage over a parcel of land.

The Promissory Note for the said loan stipulated for the first payment to be made on May 3, 1977 and payments every six months thereafter at P1,018.14 with 19% interest for unpaid amortizations. It also contained an acceleration clause.

Initial payment was made in July 6, 1977, followed by several payments in the total amount of P11,900.00. However, only four of these payments were applied to the loan, while the rest were "temporarily lodged to accounts payable since the account was already past due".

In 1984, the property was foreclosed extrajudicially upon Petition by the bank for failure to pay an outstanding balance of P29,554.81. This resulted in the property being sold to the bank for P8,163.00, and later claimed a deficiency of P21,391.81.

Petitioner filed an action for annulment of sale by Petitioner, which the lower court granted. However, it was overturned by CA.

1st Issue: W/N the auction sale is valid.

Ruling: No.
The respondent bank had the right to foreclose the mortgage upon the first default of petitioner on May 3, 1977, but it did not. When it received payment of petitioner on July 6, 1977, the respondent bank had clearly waived its right under the acceleration clause since instead of claiming penalty charges on the entire amount of P4,500.00, it only computed the penalty based on the defaulted amortization payment which is P1,018.14.

Further, for more than four years, the bank made petitioner believe that it was applying her payment on the loan and interest. It is now bound by estoppel to apply the payments to petitioner's debt and from foreclosing the property.

Accordingly, the legality of the foreclosure cannot be sustained because of substantial performance on the part of petitioner (Article 1234. If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee.) and acceptance of payment by the bank (Article 1235: when the creditor accepts performance, knowing its incompleteness and irregularity without protest or objection, the obligation is deemed complied with.).

2nd Issue: W/N Petitioner is entitled to recover damages.

Ruling: Yes.
Moral damages are warranted for the mental anguish, sleepless nights and serious anxiety that the bank's acts have caused petitioner. The bank succeeded in taking advantage of the ignorance of petitioner by lodging the bulk of petitioner's payment to account payable based on the flimsy reason that she had been in default, and then considering the entire debt pursuant to an acceleration clause as earning interest and penalty charges at an exorbitant rate of 19% each from the date of first default up to the date of foreclosure, thus bringing the obligation to an astronomical amount of P29,554.81 instead of just P11,000.00.

Exemplary damages are also proper, to serve as a deterrent for the bank from repeating similar acts and to set an example and correction for the public good.

Case Digest: Spouses Ruiz v. Sheriff of Manila

SPOUSES JESUS RUIZ and AMPARO SAMBENITO RUIZ, petitioners-appellants, vs. SHERIFF OF MANILA and THE BANK OF THE PHILIPPINE ISLANDS, respondents-appellees.

G.R. No. L-24016. July 31, 1970.
MAKALINTAL, J.:

Spouses Ruiz ("Appellants") executed in favor of Appellee Bank of the Philippine Islands ("BPI") a real estate mortgage covering a parcel of land in Sta. Ana, Manila, as security for a loan of P15,000.00.

At the heart of the controversy is the following stipulation in the contract:

WHEREAS, the [Appellants]... have applied for and ... obtained from [BPI] ... a loan in the sum of P 15,000.00 ... to be amortized at the rate of not less than P300.00... to be effected at the end of each month. Failure to pay two successive monthly amortizations will cause this loan to be automatically due and payable in its entirety. Notwithstanding the foregoing, this loan shall not run for more than 5 years.

Upon failure of Appellants to pay 12 successive monthly amortizations despite several demands, BPI asked the Sheriff of Manila to foreclose the mortgage extrajudicially. The Sheriff caused the notice of auction to be published in the "Daily Record."

The Sheriff proceeded to sell the mortgaged property, with the BPI as the highest bidder. Since the mortgagee's bid of P15,173.74 represented the total mortgage debt, the Sheriff did not collect cash but merely applied the same to the amount of the bid.

Appellants then filed with the lower court praying for the annulment of the foreclosure sale, but the same was denied.

1st Issue: W/N the foreclosure sale was premature and therefore illegal

Ruling: No.

The acceleration clause is valid. All that the stipulation in issue meant is that while monthly amortizations could be as little as P300.00 the loan should anyway be paid within 5 years; and that failure to pay two successive amortizations would render the entire loan due and payable. Consequently, default leaving been committed for twelve months, the foreclosure of the mortgage was not premature.

2nd Issue: W/N the foreclosure sale was null and void for failure to comply with the requirements prescribed by Act 3135.

Ruling: No.

Re "Daily Record" as a newspaper of general circulation: The party alleging non-compliance with the requisite publication has the burden of proving the same. The appellants did not present evidence to show that the "Daily Record" was not a newspaper of general circulation.

Re Non-payment of cash by BPI as highest bidder: It was not necessary for BPI to pay cash to the sheriff, since the amount of its bid represented the total mortgage debt. It would serve no purpose for the sheriff to go through the ceremony of receiving the money and paying it back to the creditor.