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NEW ERA UNIVERSITY COLLEGE OF LAW

Introduction to Law
Professor: Atty. Estrellita C. Panulaya
Student: Evangeline P. Omadto

CASE DIGEST (Finals)


RENATO CAYETANO vs. CHRISTIAN MONSOD
September 3, 1991
201 SCRA 210
Facts:
Respondent Christian Monsod was nominated by President Corazon C. Aquino
to the position of chairman of the COMELEC. Petitioner opposed the nomination
because allegedly Monsod does not posses required qualification of having been
engaged in the practice of law for at least ten years. The 1987 constitution provides in
Section 1, Article IX-C: There shall be a Commission on Elections composed of a
Chairman and six Commissioners who shall be natural-born citizens of the Philippines
and, at the time of their appointment, at least thirty-five years of age, holders of a
college degree, and must not have been candidates for any elective position in the
immediately preceding elections. However, a majority thereof, including the Chairman,
shall be members of the Philippine Bar who have been engaged in the practice of law
for
at
least
ten
years.
Issue:
Whether the respondent does not posses the required qualification of having
engaged
in
the
practice
of
law
for
at
least
ten
years.
Ruling:
The 1987 Constitution provides in Section 1 (1), Article IX-C, that there shall be a
Commission on Elections composed of a Chairman and six Commissioners who shall
be natural-born citizens of the Philippines and, at the time of their appointment, at least
thirty-five years of age, holders of a college degree, and must not have been candidates
for any elective position in the immediately preceding elections. However, a majority
thereof, including the Chairman, shall be members of the Philippine Bar who have been
engaged in the practice of law for at least ten years.
In the case of Philippine Lawyers Association vs. Agrava, stated: The practice of
law is not limited to the conduct of cases or litigation in court; it embraces the
preparation of pleadings and other papers incident to actions and special proceeding,
the management of such actions and proceedings on behalf of clients before judges
and courts, and in addition, conveying. In general, all advice to clients, and all action
taken for them in matters connected with the law incorporation services, assessment
and condemnation services, contemplating an appearance before judicial body, the
foreclosure of mortgage, enforcement of a creditors claim in bankruptcy and insolvency
proceedings, and conducting proceedings in attachment, and in matters of estate and
guardianship have been held to constitute law practice. Practice of law means any
activity, in or out court, which requires the application of law, legal procedure,
knowledge,
training
and
experience.
Evangeline P. Omadto
Case Digest in Introduction to Law

The contention that Atty. Monsod does not posses the required qualification of
having engaged in the practice of law for at least ten years is incorrect since Atty.
Monsods past work experience as a lawyer-economist, a lawyer-manager, a lawyerentrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of both
rich and the poor verily more than satisfy the constitutional requirement for the
position of COMELEC chairman, The respondent has been engaged in the practice of
law for at least ten years does In the view of the foregoing, the petition is DISMISSED.

Evangeline P. Omadto
Case Digest in Introduction to Law

CLARITA J. SAMALA vs. ATTY. LUCIANO D. VALENCIA


A.C. NO. 5439
January 22, 2007
512 SCRA 01
Facts:
This is a complaint filed by Clarita J. Samala against Atty. Luciano D. Valencia for
Disbarment on the following grounds: (a) serving on two separate occasions as counsel
for contending parties; (b) knowingly misleading the court by submitting false
documentary evidence; (c) initiating numerous cases in exchange for nonpayment of
rental fees; and (d) having a reputation of being immoral by siring illegitimate children.
Issue:
Whether or not respondent violated his Code of Professional Responsibility.
Ruling:
Yes. Commissioner Wilfredo E.J.E. Reyes found respondent guilty of violating
Canons 15 and 21 of the Code of Professional Responsibility and recommended the
penalty of suspension for six months.
The IBP Board of Governors adopted and approved the report and recommendation of
Commissioner Reyes but increased the penalty of suspension from six months to one
year.
The Court held:
a. On serving as counsel for contending parties Canon 21
The fact that respondent filed a case entitled "Valdez and Alba v. Bustamante
and her husband," is a clear indication that respondent is protecting the interests of both
Valdez and Alba in the said case. Respondent cannot just claim that the lawyer-client
relationship between him and Alba has long been severed without observing Section 26,
Rule 138 of the Rules of Court wherein the written consent of his client is required.
Respondent's representation of Valdez and Alba against Bustamante and her husband,
in one case, and Valdez against Alba, in another case, is a clear case of conflict of
interests which merits a corresponding sanction from this Court.
b. On knowingly misleading the court by submitting false documentary evidence
Canon 10
Respondent cannot feign ignorance of the fact that the title he submitted was
already cancelled in lieu of a new title issued in the name of Alba in 1995 yet, as proof
of the latter's ownership. What is decisive in this case is respondent's intent in trying to
mislead the court by presenting TCT No. 273020 despite the fact that said title was
already cancelled and a new one, TCT No. 275500, was already issued in the name of
Alba.
c. On initiating numerous cases in exchange for nonpayment of rental fees Dismissed
for lack of sufficient basis
The act of respondent of filing the aforecited cases to protect the interest of his
client, on one hand, and his own interest, on the other, cannot be made the basis of an
administrative charge unless it can be clearly shown that the same was being done to
abuse judicial processes to commit injustice.

Evangeline P. Omadto
Case Digest in Introduction to Law

d. On having a reputation for being immoral by siring illegitimate children Canon 1,


Rule 1.01
The Court found respondent liable for being immoral by siring illegitimate
children. During the hearing, respondent admitted that he sired three children by
Teresita Lagmay who are all over 20 years of age, while his first wife was still alive. In
this case, the admissions made by respondent are more than enough to hold him liable
on the charge of immorality.
In sum, the Court found respondent Atty. Luciano D. Valencia guilty of
misconduct and violation of Canons 21, 10 and 1 of the Code of Professional
Responsibility and suspended him from the practice of law for three years.

Evangeline P. Omadto
Case Digest in Introduction to Law

MARIVELES SHIPYARD CORP. VS. COURT OF APPEAL et al.


G.R. No. 144134
November 11, 2003
415 SCRA 573
Facts:
Petitioner engaged the services of Longest Force Investigation and Security
Agency, Inc. to render security services at its premises. Longest Force then deployed its
security guards, herein private respondents, at the petitioners shipyard. However,
petitioner found the services rendered by private respondents unsatisfactory and
inadequate causing it to terminate its contract with Longest Force and in turn, the latter
terminated the employment of said respondents. Consequently, private respondents
filed a case for illegal dismissal, underpayment of wages pursuant to the PNPSOSIAPADPAO rates, non-payment of overtime pay, premium pay for holiday and rest day,
service incentive leave pay, 13th month pay and attorneys fees, against both Longest
Force and petitioner, before NLRC, who in turn sought the guards reinstatement with
full backwages and without loss of seniority rights.
Petitioner appealed to the NLRC, contending that it should not be held jointly and
severally liable with Longest Force for underpayment of wages and overtime pays
because it had been religiously and promptly paying the bills for the security services
sent by Longest Force and that these are in accordance with the statutory minimum
wage. Also, petitioner contends that it should not be held liable for overtime pay as
private respondents failed to present proof that overtime work was actually
performed. However, the labor tribunal affirmed in toto the decision of the Labor Arbiter.
Petitioner moved for reconsideration, but this was denied by the NLRC. The petitioner
then filed a special civil action for certiorari assailing the NLRC judgment for having
been rendered with grave abuse of discretion with the Court of Appeals, which was also
outright dismissed by the respondent court due to a defective certificate of non-forum
shopping and non-submission of the required documents to accompany said petition.
The petitioner then moved for reconsideration of the order of dismissal but was also
denied by the appellate court, hence, this petition.
Issue:
Whether or not petitioner is jointly and severally liable with Longest Force
Ruling:
Yes, Petitioners liability is joint and several with that of Longest Force, pursuant
to Articles 106, 107 and 109 of the Labor Code. When the petitioner contracted with
Longest Force, petitioner became an indirect employer of private respondents pursuant
to Article 107. Following Article 106, when the agency as contractor failed to pay the
guards, the corporation as principal becomes jointly and severally liable for the guards
wages. This is mandated by the Labor Code to ensure compliance with its provisions,
including payment of statutory minimum wage. The security agency is held liable by
virtue of its status as direct employer, while the corporation is deemed the indirect
employer of the guards for the purpose of paying their wages in the event of failure of
the agency to pay them. This statutory scheme gives the workers the ample protection
consonant with labor and social justice provisions of the Constitution. Petitioner cannot
evade its liability by claiming that it had religiously paid the compensation of guards as
stipulated under the contract with the security agency. Labor standards are enacted by
the legislature to alleviate the plight of workers whose wages barely meet the spiraling
costs of their basic needs. Labor laws are considered written in every contract.
Stipulations in violation thereof are considered null. Similarly, legislated wage increases
are deemed amendments to the contract. Thus, employers cannot hide behind their
contracts in order to evade their (or their contractors or subcontractors) liability for
noncompliance with the statutory minimum wage.
Evangeline P. Omadto
Case Digest in Introduction to Law

JENNY M. AGABON AND VIRGILIO C. AGABON V. NLRC


442 SCRA 573 GR 158693, Nov. 17 2004
Facts:
This petition for review seeks to reverse the decision of the Court of Appeals
dated January 23, 2003, modifying the decision of National Labor Relations
Commission (NLRC).
Private respondent Riviera Home Improvements, Inc. is engaged in the business
of selling and installing ornamental and construction materials. It employed petitioners
Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January
2, 1992 until February 23, 1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims and
on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals
illegal and ordered private respondent to pay the monetary claims.
On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also denied
for lack of evidence.
Upon denial of their motion for reconsideration, petitioners filed a petition for
certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal
of the petitioners was not illegal because they had abandoned their employment but
ordered the payment of money claims. Hence, this petition for review.
Issue:
Whether or not the Agabons were illegally dismissed
Ruling:
No. Substantive due process (Employees must be dismissed for just or
authorized cause): SC upheld the finding of abandonment, because the act of the
Agabons in seeking employment elsewhere clearly showed a deliberate intent to sever
the employer-employee relationship.
Procedural due process (for just cause, there must be a written notice informing
him of grounds for termination, a hearing or opportunity to be heard, and a final notice of
termination stating the grounds therefor): There was no due process because employer
did not send the requisite notices to the last known address of the employees. Employer
only gave a flimsy excuse that the notice would be useless because the employees no
longer lived there. This is not a valid excuse; they should have still sent a notice as
mandated by law. For not sending the requisite notices, the employer should be held
liable for non-compliance with the procedural requirements of due process.
The petition is DENIED. The decision of the Court of Appeals, finds that
petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private
respondent to pay each of the petitioners holiday pay for four regular holidays from
1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same
period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month
pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that
private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each
of the petitioners the amount of P30,000.00 as nominal damages for non-compliance
with statutory due process.
Evangeline P. Omadto
Case Digest in Introduction to Law

GRACE M. GRANDE, petitioner, vs. PATRICIO T. ANTONIO, respondent.


G.R. No. 206248. February 18, 2014
Facts
Patrino Antonio filed a petition for judicial approval of recognition of the filiation of
the two children with the prayer for the correction or change of the surname of the
minors from Grande to Antonio when a public document acknowledged before a notary
public under Sec. 19, Rule 132 of the Rules of Court is enough to establish the paternity
of his children. He also prayed for a judicial conferment of parental authority, parental
custody, and an official declaration of his childrens surname as Antonio.
Issue:
Whether a father may compel his illegitimate children to use his surname upon
his recognition of their filiation.
Ruling:
No. Central to the core issue is the application of Art. 176 of the Family Code,
originally phrased as follows:
Illegitimate children shall use the surname and shall be under the parental
authority of their mother, and shall be entitled to support in conformity with this Code.
The legitime of each illegitimate child shall consist of one-half of the legitime of a
legitimate child. Except for this modification, all other provisions in the Civil Code
governing successional rights shall remain in force.
This provision was later amended on March 19, 2004 by RA 9255 which now reads:
Art. 176. Illegitimate children shall use the surname and shall be under the
parental authority of their mother, and shall be entitled to support in conformity with
this Code. However, illegitimate children may use the surname of their father if
their filiation has been expressly recognized by their father through the record of
birth appearing in the civil register, or when an admission in a public document or
private handwritten instrument is made by the father. Provided, the father has the
right to institute an action before the regular courts to prove non-filiation during his
lifetime. The legitime of each illegitimate child shall consist of one-half of the
legitime of a legitimate child.
From the foregoing provisions, it is clear that the general rule is that an illegitimate
child shall use the surname of his or her mother. The exception provided by RA 9255 is,
in case his or her filiation is expressly recognized by the father through the record of
birth appearing in the civil register or when an admission in a public document or private
handwritten instrument is made by the father. In such a situation, the illegitimate child
may use the surname of the father.
Parental authority over minor children is lodged by Art. 176 on the mother; hence,
respondent's prayer has no legal mooring. Since parental authority is given to the
mother, then custody over the minor children also goes to the mother, unless she is
shown to be unfit.
As to the matter of the change of surname of the illegitimate children. Art. 176 gives
illegitimate children the right to decide if they want to use the surname of their father or
not. It is not the father (herein respondent) or the mother (herein petitioner) who is
granted by law the right to dictate the surname of their illegitimate children.

Evangeline P. Omadto
Case Digest in Introduction to Law

Nothing is more settled than that when the law is clear and free from ambiguity, it
must be taken to mean what it says and it must be given its literal meaning free from
any interpretation. Respondent's position that the court can order the minors to use his
surname, therefore, has no legal basis.
On its face, Art. 176, as amended, is free from ambiguity. And where there is no
ambiguity, one must abide by its words. The use of the word "may" in the provision
readily shows that an acknowledged illegitimate child is under no compulsion to use the
surname of his illegitimate father. The word "may" is permissive and operates to confer
discretion upon the illegitimate children.
WHEREFORE, the appeal is partly GRANTED. Accordingly, the appealed Decision of
the Regional Trial Court Branch 8, Aparri Cagayan in SP Proc. Case No. 11-4492 is
MODIFIED in part and shall hereinafter read as follows:
a.
[Antonio] is ORDERED to deliver the minor children Jerard Patrick and Andre
Lewis to the custody of their mother herein appellant, Grace Grande who by virtue
hereof is hereby awarded the full or sole custody of these minor children;
b.
[Antonio] shall have visitation rights 28 at least twice a week, and may only take
the children out upon the written consent of [Grande];
c.
The parties are DIRECTED to give and share in support of the minor children
Jerard Patrick and Andre Lewis in the amount of P30,000.00 per month at the rate of
70% for [Antonio] and 30% for [Grande]; and
d.
The case is REMANDED to the Regional Trial Court, Branch 8 of Aparri,
Cagayan for the sole purpose of determining the surname to be chosen by the children
Jerard Patrick and Andre Lewis.
Rule 7 and Rule 8 of the Office of the Civil Registrar General Administrative Order No.
1, Series of 2004 are DISAPPROVED and hereby declared NULL and VOID.

Evangeline P. Omadto
Case Digest in Introduction to Law

REPUBLIC OF THE PHILIPPINES, Petitioner, v. LIBERTY D. ALBIOS, Respondent.


G.R. No. 198780 : OCTOBER 16, 2013
707 SCRA 584
Facts:
On October 22, 2004, Fringer, an American citizen, and Albios were married, as
evidenced by a Certificate of Marriage. On December 6, 2006, Albios filed with the RTC
a petition for declaration of nullity of her marriage with Fringer, alleging that immediately
after their marriage, they separated and never lived as husband and wife because they
never really had any intention of entering into a married state or complying with any of
their essential marital obligations.
Fringer did not file his answer. On September 13, 2007, Albios filed a motion to set case
for pre-trial and to admit her pre-trial brief. After the pre-trial, only Albios, her counsel
and the prosecutor appeared. Fringer did not attend the hearing despite being duly
notified of the schedule.
The RTC declared the marriage void ab initio. The RTC opined that the parties married
each other for convenience only. Albios stated that she contracted Fringer to enter into a
marriage to enable her to acquire American citizenship and that in consideration thereof,
she agreed to pay him the sum of $2,000.00. However, she did not pay Fringer
$2,000.00 because the latter never processed her petition for citizenship
The OSG filed an appeal before the CA. The CA affirmed the RTC ruling which found
that the essential requisite of consent was lacking.
Issue:
Whether or not the marriage contracted for the sole purpose of acquiring
American citizenship void ab initio on the ground of lack of consent?
Ruling:
The marriage between the parties is valid
Under Article 2 of the Family Code, for consent to be valid, it must be (1) freely given
and (2) made in the presence of a solemnizing officer. A freely given consent requires
that the contracting parties willingly and deliberately enter into the marriage. Consent
must be real in the sense that it is not vitiated nor rendered defective by any of the vices
of consent under Articles 45 and 46 of the Family Code, such as fraud, force,
intimidation, and undue influence. Consent must also be conscious or intelligent, in that
the parties must be capable of intelligently understanding the nature of, and both the
beneficial or unfavorable consequences of their act.
Based on the above, consent was not lacking between Albios and Fringer. In fact, there
was real consent because it was not vitiated nor rendered defective by any vice of
consent. Their consent was also conscious and intelligent as they understood the
nature and the beneficial and inconvenient consequences of their marriage, as nothing
impaired their ability to do so. That their consent was freely given is best evidenced by
their conscious purpose of acquiring American citizenship through marriage. Such
plainly demonstrates that they willingly and deliberately contracted the marriage. There
was a clear intention to enter into a real and valid marriage so as to fully comply with the
requirements of an application for citizenship. There was a full and complete
Evangeline P. Omadto
Case Digest in Introduction to Law

understanding of the legal tie that would be created between them, since it was that
precise legal tie which was necessary to accomplish their goal.

Evangeline P. Omadto
Case Digest in Introduction to Law

MANDARIN VILLA, INC. vs.COURT OF APPEALS, and CLODUALDO DE JESUS


G.R. No. 119850 June 20, 1996
Facts:
In October 19, 1989, private respondent, Clodualdo de Jesus, a practicing lawyer
and businessman, hosted a dinner for his friends at the petitioner's restaurant, the
Mandarin Villa Seafoods Village. After dinner the waiter handed to him the bill in the
amount of P2,658.50. Private respondent offered to pay the bill through his credit card
issued by Philippine Commercial Credit Card Inc. (BANKARD). This card was accepted
by the waiter who immediately proceeded to the restaurant's cashier for card
verification. But the waiter returned and audibly informed private respondent that his
credit card had expired. Private respondent remonstrated that said credit card had yet to
expire on September 1990, as embossed on its face. The waiter was unmoved, thus,
private respondent and two of his guests approached the restaurant's cashier who again
passed the credit card over the verification computer and same appeared. Private
respondent and his guests returned to their table and at this juncture, Professor Lirag,
another guest, uttered the following remarks: "Clody [referring to Clodualdo de Jesus],
may problema ba? Baka kailangang maghugas na kami ng pinggan?" Thereupon,
private respondent left the restaurant and got his BPI Express Credit Card from his car
and offered it to pay their bill which was accepted.
The incident triggered the filing of a suit for damages by private respondent
directing the petitioner and BANKARD to pay jointly and severally the private
respondent: (a) moral damages in the amount of P250,000.00; (b) exemplary damages
in the amount of P100,000.00, and (c) attorney's fees and litigation expenses in the
amount of P50,000.00. Both the petitioner and BANKARD appealed to the respondent
Court of Appeals
Issues:
Whether or not BANKARD is liable to pay jointly and severally with the petitioner
on the damages incurred by the private respondent.
Whether or not petitioner is negligent.
Ruling:
While private respondent, may not be a party to the said agreement, the abovequoted stipulation conferred a favor upon the private respondent, a holder of credit card
validly issued by BANKARD. This stipulation is a stipulation pour autri and under Article
1311 of the Civil Code private respondent may demand its fulfillment provided he
communicated his acceptance to the petitioner before its revocation. In this case,
private respondent's offer to pay by means of his BANKARD credit card constitutes not
only an acceptance of the said stipulation but also an explicit communication of his
acceptance to the obligor. In addition, the record shows that petitioner posted a logo
inside Mandarin Villa Seafood Village stating that "Bankard is accepted here. This
representation is conclusive upon the petitioner which it cannot deny or disprove as
against the private respondent, the party relying thereon. Petitioner, therefore, cannot
Evangeline P. Omadto
Case Digest in Introduction to Law

disclaim its obligation to accept private respondent's BANKARD credit card without
violating the equitable principle of estoppel.
Petitioner did not use the reasonable care and caution which an ordinary prudent
person would have used in the same situation and as such petitioner is guilty of
negligence. In this connection, we quote with approval the following observations of the
respondent Court.

Ernesto M. Maceda vs. Macaraig, Jr.


196 SCRA 771, 223 SCRA 217
G.R. No. 88291 June 8, 1993
Facts:
Commonwealth Act 120 created NAPOCOR as a public corporation to undertake
the development of hydraulic power and the production of power from other sources. On
June 4, 1949, Republic Act No. 357 was enacted authorizing the President of the
Philippines (Pres. Quirino) to guarantee, absolutely and unconditionally, as primary
obligor, the payment of any and all NPC loans.
He was also authorized to contract on behalf of the NPC with the International
Bank for Reconstruction and Development (IBRD) for NPC loans for the
accomplishment of NPC's corporate objectives and for the reconstruction and
development of the economy of the country. It was expressly stated that any such loan
or loans shall be exempt from taxes, duties, fees, imposts, charges, contributions and
restrictions of the Republic of the Philippines, its provinces, cities and municipalities.
On June 2, 1954, R.A. No. 987 was enacted specifically to withdraw NPC's tax
exemption for real estate taxes and on September 10, 1971, R.A. No. 6395 was
enacted revising the charter of the NPC, C.A. No. 120, as amended. A new section was
added to the charter, now known as Section 13, R.A .No. 6395, which declares the nonprofit character and tax exemptions of NPC.
To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section one of this
Act, the Corporation is hereby declared exempt from the payment of all taxes, duties,
fees, imposts, charges costs and service fees in any court or administrative
proceedings.
It is also exempt from all income taxes, franchise taxes and realty taxes to be
paid to the National Government including import duties, compensating taxes and
advanced sales tax, and wharfage fees on import of foreign goods and all taxes, duties,
fees, imposts on all petroleum products used by the Corporation in the generation,
transmission, utilization, and sale of electric power.
On January 22, 1974, P.D. No. 380 was issued giving extra powers to the NPC to
enable it to fulfill its role under aforesaid P.D. No. 40. PD 380 specified that NAPOCORs
exemption includes all taxes, etc. imposed directly or indirectly.
PD 938 integrated the exemptions in favor of GOCCs including their subsidiaries;
however, empowering the President or the Minister of Finance, upon recommendation
Evangeline P. Omadto
Case Digest in Introduction to Law

of the Fiscal Incentives Review Board (FIRB) to restore, partially or completely, the
exemptions withdrawn or revised. The FIRB issued Resolution 10-85 restoring the duty
and tax exemptions privileges of NAPOCOR for period 11 June 1984- 30 June 1985.
Resolution 1-86 restored such exemption indefinitely effective July 1, 1985.
EO 93 withdrew the exemption. FIRB issued Resolution 17-87 restoring NAPOCORs
exemption .Since 1976, oil firms never paid excise or specific and ad valorem taxes for
petroleum products sold and delivered to NAPOCOR. Oil companies started to pay
specific and ad valorem taxes on their sales of oil products to NAPOCOR only in 1984.

Issue:
Whether or not the NAPOCOR is no longer subject to tax exemption from indirect
tax when PD 938 stated the exemption in general term.

Ruling:
No. Petitioner contends that P.D. No. 938 repealed the indirect tax exemption of
NPC as the phrase "all forms of taxes etc.," in its section 10, amending Section 13, R.A.
No. 6395, as amended by P.D. No. 380, does not expressly include "indirect taxes
(Indirect Tax - tax is imposed upon goods BEFORE reaching the consumer who
ultimately pays for it, not as a tax, but as a part of the purchase price. E.g. the internal
revenue indirect taxes (specific tax, percentage taxes, (VAT) and the tariff and customs
indirect taxes (import duties, special import tax and other dues).

Supreme Court ruled that NPC laws show that it has been the lawmaker's
intention that the NPC was to be completely tax exempt from all forms of taxes direct
and indirect. And when the NPC was authorized to contract with the IBRD for foreign
financing, any loans obtained were to be completely tax exempt.
After the NPC was authorized to borrow from other sources of funds aside
issuance of bonds it was again specifically exempted from all types of taxes "to
facilitate payment of its indebtedness." Even when the ceilings for domestic and foreign
borrowings were periodically increased, the tax exemption privileges of the NPC were
maintained.
NPC's tax exemption from real estate taxes was, however, specifically withdrawn
by Rep. Act No. 987 but the exemption was, however, restored by R.A. No. 6395. In fact
P.D. No. 380 added phrase "directly or indirectly" to said Section 13(d).
Furthermore SC held that both presidential decrees were made by the same
person, it would have been very easy for him to retain the same or similar language
used in P.D. No. 380 P.D. No. 938 if his intention were to preserve the indirect tax
exemption of NPC. One common theme in all these laws is that the NPC must be
enable to pay its indebtedness 56 which, as of P.D. No. 938, was P12 Billion in total
domestic indebtedness, at any one time, and U$4 Billion in total foreign loans at any
one time. The NPC must be and has to be exempt from all forms of taxes if this goal is
to be achieved.
Evangeline P. Omadto
Case Digest in Introduction to Law

CIR vs. Judge Santos


GR No. 119252
August 18, 1997
Facts:
The BIR examined the books and accounting records of Jewelry by Marco & Co.
for excise tax purposes. Alleging that the provisions of the Tariff and Customs Code are
oppressive and confiscatory, presenting on its behalf data on the differences of tax rates
in Asia, sought said Code to declare unconstitutional. Judge Santos, an RTC judge,
ruled in favor of Jewelry by Marco & Co, and declared that said law is inoperative and
without force and effect as far as Jewelry by Marco & Co is concerned, or
unconstitutional.
Issue:
Whether or not the RTC judge correctly declared some provisions of the Tariff
and Customs Code as unconstitutional.
Ruling:
No. The trial court is not the proper forum for the ventilation of the issues raised
by the private respondents. The arguments they presented focus on the wisdom of the
provisions of law which they seek to nullify. Regional Trial Courts can only look into the
validity of a provision, that is, whether or not it has been passed according to the
procedures laid down by law, and thus cannot inquire as to the reasons for its existence.
Granting arguendo that the private respondents may have provided convincing
arguments why the jewelry industry in the Philippines should not be taxed as it is, it is to
the legislature that they must resort to for relief, since with the legislature primarily lies
the discretion to determine the nature (kind), object (purpose), extent (rate), coverage
(subjects) andsitus (place) of taxation. This Court cannot freely delve into those matters
which, by constitutional fiat, rightly rest on legislative judgment.
The judiciary does not pass upon questions of wisdom, justice or expediency of
legislation. And fittingly so, for in the exercise of judicial power, we are allowed only to
settle actual controversies involving rights which are legally demandable and
enforceable, and may not annul an act of the political departments simply because we
feel it is unwise or impractical. This is not to say that Regional Trial Courts have no
power whatsoever to declare a law unconstitutional. In J.M. Tuason and Co. v. Court of
Appeals, we said that [p]lainly the Constitution contemplates that the inferior courts
should have jurisdiction in cases involving constitutionality of any treaty or law, for it
speaks of appellate review offinal judgments of inferior courts in cases where such
constitutionality happens to be in issue. This authority of lower courts to decide
questions of constitutionality in the first instance reaffirmed in Ynos v. Intermediate
Court of Appeals. But this authority does not extend to deciding questions which pertain
to legislative policy.

Evangeline P. Omadto
Case Digest in Introduction to Law

Y-I LEISURE PHILIPPINES, INC., YATS INTERNATIONAL LTD. AND Y-I CLUBS AND
RESORTS, INC., Petitioners, v. JAMES YU, Respondent.
G.R. No. 207161, September 08, 2015
Facts:
James Yu was a businessman, interested in purchasing golf and country club shares
from Mt. Arayat Development Co., Inc. (MADCI) which was a real estate development
corporation. MADCI offered for sale shares of a golf and country club located in the
vicinity of Mt. Arayat in Arayat, Pampanga, for the price of P550.00 per share. Relying
on the representation of MADCI's brokers and sales agents, Yu bought 500 golf and 150
country club shares for a total price of P650,000.00 which he paid by installment. Upon
full payment of the shares to MADCI, Yu visited the supposed site of the golf and
country club and discovered that it was non-existent.
Yu filed with the RTC a complaint for collection of sum of money and damages
with prayer for preliminary attachment against MADCI and its president Rogelio Sangil
(Sangil) to recover his payment. In his transactions with MADCI, Yu alleged that he
dealt with Sangil, who used MADCI's corporate personality to defraud him.
RTC ruled that because MADCI did not deny its contractual obligation with Yu, it
must be liable for the return of his payments. The trial court also ruled that Sangil should
be solidarily liable with MADCI because he used the latter as a mere alter ego or
business conduit. In two separate appeals, the parties elevated the case to the CA.
The CA partly granted the appeals and modified the RTC decision by holding YIL
and its companies, YILPI and YICRI, jointly and severally, liable for the satisfaction of
Yu's claim. The CA held that the sale of lands between MADCI and YIL must be upheld
because Yu failed to prove that it was simulated or that fraud was employed.
The CA explained that YIL, YILPI and YICRI could not escape liability by simply
invoking the provision in the MOA that Sangil undertook the responsibility of paying all
the creditors' claims for refund. The provision was, in effect, a novation under Article
1293 of the Civil Code, specifically the substitution of debtors. Considering that Yu, as
creditor of MADCI, had no knowledge of the "change of debtors," the MOA could not
validly take effect against him. Accordingly, MADCI remained to be a debtor of Yu.
Anent Sangil's liability, the CA ruled that he could not use the separate corporate
personality of MADCI as a tool to evade his existing personal obligations under the
MOA.
YIL and its companies, YILPI and YICRI, moved for reconsideration, but their
motion was denied by the CA
Evangeline P. Omadto
Case Digest in Introduction to Law

Issue:
Whether or not the court of appeals erred in ruling that petitioners YATS group
should be held jointly and severally liable to respondent Yu despite the absence
of fraud in the sale of assets and bad faith on the part of petitioners YATS group.
Ruling:
The petition lacks merit. Upon Yus demand of return of his payment, MADCI could not
return it anymore because all its assets had been transferred. Through the acts of YIL,
MADCI sold all its lands to YILPI and, subsequently to YICRI. Thus, Yu now claims that
the petitioners inherited the obligations of MADCI. On the other hand, the petitioners
counter that they did not assume such liabilities because the transfer of assets was not
committed in fraud of the MADCI's creditors.
Generally, where one corporation sells or otherwise transfers all of its assets to another
corporation, the latter is not liable for the debts and liabilities of the transferor, except:
1. Where the purchaser expressly or impliedly agrees to assume such debts;
2. Where the transaction amounts to a consolidation or merger of the
corporations;
3. Where the purchasing corporation is merely a continuation of the selling
corporation; and
4. Where the transaction is entered into fraudulently in order to escape
liability for such debts.
The Nell Doctrine states the general rule that the transfer of all the assets of a
corporation to another shall not render the latter liable to the liabilities of the transferor. If
any of the above-cited exceptions arepresent, then the transferee corporation shall
assume the liabilities of the transferor.
Jurisprudence has held that in a business-enterprise transfer, the transferee is liable for
the debts and liabilities of his transferor arising from the business enterprise conveyed.
Many of the application of the business-enterprise transfer have been related by the
Court to the application of the piercing doctrine.
While the Corporation Code allows the transfer of all or substantially all the properties
and assets of a corporation, the transfer should not prejudice the creditors of the
assignor. The only way the transfer can proceed without prejudice to the creditors is to
hold the assignee liable for the obligations of the assignor. The acquisition by the
assignee of all or substantially all of the assets of the assignor necessarily
includes the assumption of the assignor's liabilities, unless the creditors who did
not consent to the transfer choose to rescind the transfer on the ground of fraud. To
allow an assignor to transfer all its business, properties and assets without the consent
of its creditors and without requiring the assignee to assume the assignor's obligations
will defraud the creditors. The assignment will place the assignor's assets beyond the
reach of its creditors.
Bearing in mind that fraud is not required to apply the business-enterprise transfer, the
next issue to be resolved is whether the petitioners indeed became a continuation of
MADCI's business. Synthesizing Section 40 and the previous rulings of this Court, it is
apparent that the business-enterprise transfer rule applies when two requisites concur:
Evangeline P. Omadto
Case Digest in Introduction to Law

(a) the transferor corporation sells all or substantially all of its assets to another entity;
and (b) the transferee corporation continues the business of the transferor corporation.
Both requisites are present in this case.
MADCI was a development company which acquired properties in Magalang,
Pampanga to be developed into a golf course however, was then sold to YILPI, and
then transferred to YICRI. Its sale to the petitioners rendered it incapable of continuing
its intended golf and country club business.
In the present case, the MOA stated that Sangil undertook to redeem MADCI
proprietary shares sold to third persons or settle in full all their claims for refund of
payments. While this free and harmless clause cannot affect respondent as a creditor,
the petitioners may resort to this provision to recover damages in a third-party
complaint. Whether the petitioners would act against Sangil under this provision is their
own option.

Evangeline P. Omadto
Case Digest in Introduction to Law

Group 3
GEORGE T. VILLENA, CARLOS N. VILLENA, AURORA M. BONDOC and RONNIE C.
FERNANDEZ, and their Respective Spouses, petitioners, vs. Spouses ANTONIO C.
CHAVEZ and NOEMI MARCOS-CHAVEZ and CARLITA C. CHAVEZ, respondents
G.R. No. 148126. November 10, 2003

This is a petitioned case that was already decided by the Court of Appeals (CA), this
case was said to be stare decisis which means that a judgment reached in one case should be
applied to successive ones in which the facts are substantially identical, even though the parties
may be different. Like cases ought to be decided alike.
Facts:
According to the facts of the CA the respondents owned four parcels of land subdivided
into several blocks. By mere permission of the respondents the petitioners have occupied and
erected their homes, the respondent allowed it but they should, in consideration pay in certain
amount as equity. The petitioners failed to pay the equity from the respondent so the respondent
in return wrote them demand letters that they need to vacate the premises in a span of 30 days,
but petitioners' refused to vacate and remove their houses.
The petitioners said that the respondent does not have power to institute such orders
from the conflicted properties because the equities that they must pay are in accordance of
National Home Mortgage Finance Corporation (NHMFC). They also claim that they are paying
the said equity however they were not given any receipts and copy of their contract
The petitioners also claim that they are qualified beneficiaries under the RA no. 7279
known as the Urban Development and Housing Act and adding that they were builders of good
faith. Hence, they cannot be summarily evicted unless relocated and that they should be
indemnified for the improvements they constructed. They prayed for declaration that they were
lawful tenants and qualified beneficiaries of RA 7279 and that lots of the respondents be sold to
them.
MTC dismissed the case on the ground that the filing of ejectment case based on the
alleged violation of agreement which has not yet been rescinded is premature and that it is
beyond the competence of the said court. Respondents appealed to RTC but rendered a
decision affirming in toto the MTC judgment.
CA ruled that the petitioners entered with an agreement of equity with the respondent, so
in return they must pay amortization or they will face eviction.

Issue:
Whether or not, the decision of the CA needed to be redefined by the Supreme Court.

Evangeline P. Omadto
Case Digest in Introduction to Law

Ruling:
It is ruled that in the findings, the petitioners were in binding contract with the
respondent as regard paying their equity and by not paying it will lead to rescission of the
contract or specific performance but not illegal detainer.
The CA ruling in this case is informative and straight to the point. The petition to review
was granted, the decision of the CA was overturned and the decision of the RTC and MTC was
reinstated.

Questions:
1. What is the contention of the respondents? How about the petitioners?
Based on the admissions of respondents themselves, they entered into an
agreement with petitioners and that respondents alleged that petitioners had
violated the stipulations of their agreement by not paying their equity. Afterwhich,
a formal demand letter was sent to the petitioners to vacate the lots and remove
their house.
2. Did the petitioners have the right over the said lots?
No. Due to their non-payment of equity agreed upon.
3. Is there an existing agreement between the petitioners and the respondents? Express or
implied?
Yes, implied from the words of the respondents.
4. Did the MTC has jurisdiction of the case?
No. It is beyond the competence of MTC. An allegation of a violation of a contract
or agreement in a detainer suit may be proved by the presentation of competent
evidence, upon which an MTC judge might make a finding to that effect. But
certainly, that court cannot declare and hold that the contract is rescinded, as
such power is vested in the RTC apart from the fact that there was no written
contract to that effect. Under these circumstances, proof of violation of the
provisions of the contract is a condition precedent to resolution or rescission. The
contract can be declared rescinded only when its nature has been clarified and
the eventual violation thereof, if any, has been established. Upon such rescission,
in turn, hinges a pronouncement that the possession of the realty has become
unlawful. Thus, the basic issue is not possession but interpretation, enforcement
and/or rescission of the contract -- a matter that is beyond the jurisdiction of the
Municipal Trial Court to hear and determine
5. Did the occupancy of the petitioners a mere tolerance on the part of the respondents?
No. The CA ruled that petitioners possession or occupancy of the subject
premises was by mere tolerance of respondents. Hence, once petitioners failed
to pay the agreed amount as equity, their right to continue occupying the lots was
lost. Contradictory were the statements of the appellate court that, on the one
hand, there was no contract between the parties; and yet, on the other, that
petitioners failed to pay the agreed equity. The fact that the CA found that there
was failure to pay the equity was an indication of an agreement. To be sure,
petitioners possession of the subject premises was not by mere tolerance of
respondents.
6. What is the real issue? What is unlawful detainer or a detainer suit? What is rescission
or specific performance suit?
Whether or not unlawful detainer is the proper action to resolve this case.
Unlawful detainer or detainer action or suit is a special court proceeding evicting
someone from the place where they live which usually happens if a tenant stays
after the contract is terminated, cancelled or hos not paid corresponding rent.
Rescission is the revocation, cancellation or repeal of an agreement (in this case)
Evangeline P. Omadto
Case Digest in Introduction to Law

Specific performance suit is a court order which requires a party to perform a


specific act or obligation which he failed to comply as usually stated in an
agreement or contract.

Evangeline P. Omadto
Case Digest in Introduction to Law