Carpio v Rural Bank of Sto. Tomas (Batangas), Inc.

Facts:

Rodolfo Carpio and Remedios Orendain filed with the RTC Batangas a complaint against Rural Bank and Jaime Ozaeta, clerk of court and sheriff of the same court. Petitioner alleges that they are absolute owners of a parcel of land in Sto. Tomas, Batangas. They obtained a loan of P515,000 from the Bank and executed a real estate mortgage over the same property. Without prior demand or notice to petitioners, Bank filed for extra-judicial foreclosure of the mortgage. Ozaeta then conducted a public auction where the Bank was the only bidder.

Petitioners allege that the sale was conducted without proper publication because the sheriff’s notice of sale was not published in a newspaper of general circulation, and that they were not given the opportunity to redeem the property. Bank filed an Answer with Counterclaim alleging that oral and written demands were made to petitioners, that there was proper publication, and that petitioners were given 2 years to redeem the property but they failed.

Petitioners then filed a motion to dismiss the counterclaim on the ground that the Bank’s counterclaim was not accompanied by a certification against forum shopping. Bank filed an opposition, contending that its counterclaim is compulsory, thereby needing no more certificate of forum shopping since it is not an initiatory pleading or complaint. RTC dismissed the motion to dismiss. CA affirmed.

Issue:

Whether or not counterclaim needs to be accompanied by a certificate of forum shopping.

Held:

No. Section 5,Rule 7 of the 1997 Rules of Civil Procedure distinctly provides that the required certification is intended to cover an initiatory pleading – meaning an incipient application of a party asserting a claim for relief. Rationale of this provision is to curb the malpractice of forum shopping.

In the case, the Bank’s Answer with Counterclaim is a responsive pleading, filed to counter petitioner’s complaint that initiates the civil action. The provision does not contemplate a defendant’s claim for relief that is derived from the main action or complaint.

*Petition denied

** Forum Shopping – an act of a party against whom an adverse judgment has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum.

Hydro Resources Contractors Corporation v CTA

Facts:

National Irrigation Administration (NIA) entered into an agreement with Hydro Resources for the construction of the Magat River Multipurpose Project in Isabela. Under their contract, Hydro was allowed to procure new construction equipment, the payment for which will be advanced by NIA. Hydro shall repay NIA the costs incurred and the manner of repayment shall be through deductions from each monthly payment due to Hydro. Hydro shall repay NIA the full value of the construction before the eventual transfer of ownership.

Upon transfer, Hydro was assessed an additional 3% ad valorem duty which it paid under protest. The Collector of Customs then ordered for the refund of the ad valorem duty in the form of tax credit. This was then reversed by the Deputy Minister of Finance.

Issue:

Whether or not the imposition of the 3% ad valorem tax on importations is valid.

Held:

No. EO 860 which was the basis for the imposition of the ad valorem duty took effect December 1982. The importations were effected in 1978 and 1979 by NIA. It is a cardinal rule that laws shall have no retroactive effect unless contrary is provided. EO 860 does not provide for its retroactivity. The Deputy Minister of Finance even clarified that letters of credit opened prior to the effectivity of EO 860 are not subject to its provisions.

In the case, the procurement of the equipment was not on a tax exempt basis as the import liabilities have been secured to paid under a financial scheme. It is a matter of implementing a pre-existing agreement, hence, the imported articles can only be subject to the rates of import duties prevailing at the time of entry or withdrawal from the customs’ custody.

Commissioner of Internal Revenue v Ayala Securities Corporation

Facts:

Ayala Securities Corp. (Ayala) failed to file returns of their accumulated surplus so Ayala was charged with 25% surtax by the Commissioner of internal Revenue. The CTA (Court of Tax Appeals) reversed the Commissioner’s decision and held that the assessment made against Ayala was beyond the 5-yr prescriptive period as provided in section 331 of the National Internal Revenue Code. Commissioner now files a motion for reconsideration of this decision. Ayala invokes the defense of prescription against the right of the Commissioner to assess the surtax.

Issue:

Whether or not the right to assess and collect the 25% surtax has prescribed after five years.

Held:

No. There is no such time limit on the right of the Commissioner to assess the 25% surtax since there is no express statutory provision limiting such right or providing for its prescription. Hence, the collection of surtax is imprescriptible. The underlying purpose of the surtax is to avoid a situation where the corporation unduly retains its surplus earnings instead of declaring and paying dividends to its shareholders. SC reverses the ruling of the CTA.

Maceda v Macaraig

Facts:

The petition seeks to nullify certain decisions, orders, ruling, and resolutions of the respondents (Macaraig et. al) for exempting the National Power Corporation (NPC) from indirect tax and duties. Commonwealth Act 120 created NPC as a public corporation. RA 6395 revised the charter of NPC and provided in detail the exemption of NPC from all taxes, duties and other charges by the government. There were many resolutions and decisions that followed after RA 6395 which talked about the exemption and non-exemption from taxes of NPC.

Issue:

Whether or not NPC is really exempt from indirect taxes

Held:

Yes. NPC is a non-profit public corporation created for the general good and welfare of the people. From the very beginning of its corporate existence, NPC enjoyed preferential tax treatment to enable it to pay its debts and obligations. From the changes made in the NPC charter, the intention to strengthen its preferential tax treatment is obvious. The tax exemption is intended not only to insure that the NPC shall continue to generate electricity for the country but more importantly, to assure cheaper rates to be paid by consumers.

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Some Notes on Direct and Indirect Taxes:
Direct Taxes – those which a taxpayer is directly liable on the transaction or business it engages in. Examples are: custom duties, ad valorem taxes paid by oil companies for importation of crude oil

Indirect Taxes – paid by persons who can shift the burden upon someone else.

Examples are: ad valorem taxes that oil companies pay to BIR upon removal of petroleum products from its refinery can be shifted to its buyer, like the NPC

Dissenting Opinion of Justice Sarmiento: The fact that NPC has been tasked with the enormous undertaking to improve the quality of life, is no reason, to include indirect taxes, within the coverage of its preferential tax treatment. The deletion of “indirect taxes” as stated in one of the assailed orders (PD 938), is significant, because if said law truly intends to exempt NPC from indirect taxes, it would have said so specifically.

Junio v Grupo

Facts:

Rosario Junio entrusted to Atty. Salvador Grupo, P25,000 to be used in the redemption of a property in Bohol. For no reason at all, Atty. Grupo did not redeem the property so the property was forfeited. Because of this, Junio wanted the money back but Grupo refused to refund. Instead, Grupo requested that he use the money to help defray his children’s educational expenses. It was a personal request to which Grupo executed a PN. He maintains that the family of the Junio and Grupo were very close since Junio’s sisters served as Grupo’s household helpers for many years. Grupo also stated that the basis of his rendering legal services was purely gratuitous or “an act of a friend for a friend” with “consideration involved.” He concluded that there was no atty-client relationship existing between them.

The case was referred to the IBP and found Grupo liable for violation of Rule 16.04 of the Code of Profesisonal Responsibility which forbids lawyers from borrowing money from their clients. The IBP Board of Governors recommended that he be suspended indefinitely from the practice of law. Grupo filed a motion for reconsideration.

Issue:

Whether or not there was an atty-client relationship.

Held:

Yes. If a person, in respect to his business affairs, consults with an attorney in his professional capacity and the attorney voluntarily permits in such consultation, then the professional employment must be regarded as established.

Having gained dominance over Junio by virtue of such long relation of master and servant, Grupo took advantage of his influence by not returning the money. Grupo has committed an act which falls short of the standard conduct of an attorney. If an ordinary borrower of money is required by law to repay his loan, it is more so in the case of a lawyer whose conduct serves as an example.

*SC orders Grupo suspended from the practice of law for a month and to pay Junio within 30 days with interest at the legal rate.
* Note: 5 yrs. has already passed since the loan.

Cena v CSC

Facts:

Gaudencio Cena worked for 7 years as a Legal Officer of the Law Dep’t of Caloocan City. He was then transferred to the Office of the Congressman where he worked as a Supervising Staff Officer for 3 months.  He was then appointed as Registrar of the RD (Register of Deeds) in Malabon. In total, he has rendered gov’t service for 11 years, 9 months and 6 days. Before reaching his 65^th bday, he requested the LRA Administrator that he be allowed to extend his service to complete the 15-year service requirement to enable him to retire with full benefits of old age pension.

The LRA Administrator sought a ruling from the CSC. The CSC denied the extension but Cena filed a motion for reconsideration. This time around, CSC granted a 1-yr extension to him. Cena still filed a case against CSC for grave abuse of discretion when it granted an extension of only 1 yr. He contends that the law(Sec 11, PD 1146 also known as Revised Gov’t Insurance Act) does not limit or specify the maximum number of years the retiree may avail of to complete the 15-year service. Thus, the CSC has no authority to limit through a memorandum the number of years.

In defense, CSC said that since it is the central personnel agency of the gov’t, it is vested with power to grant or allow extension of service beyond retirement age.

Issue:

Whether or not Cena is allowed to continue in the service to complete the 15-year service requirement?

Held:

Yes. An administrative circular, such as a memorandum of the CSC cannot limit PD 1146, on extension of service of employees who reach 65. While it is true that CSC is given the authority to take appropriate action on all appointments and other personnel matters in the Civil Service, it cannot extend to matters not covered. The CSC’s authority is limited only to carrying into effect what PD 1146 says. It cannot go beyond the terms and provisions of the basic law.

The CSC Memorandum, being in the nature of an administrative regulation, must be governed by the principle that a regulation must be in harmony with the provisions of the law and should be for the sole purpose of carrying into effect its general provisions. CSC has no power to supply or add perceived omissions in PD 1146.

Tolentino v Sec. of Finance

Facts:

-          House of Rep. filed House Bill 11197 (An Act Restructuring the VAT System to Widen its Tax Base and Enhance its Admin., Amending for these Purposes…)

-          Upon receipt of Senate, Senate filed another bill completely different from that of the House Bill

-          Senate finished debates on the bill and had the 2^nd and 3^rd reading of the Bill on the same day

-          Bill was deliberated upon in the Conference Committee and become enrolled bill which eventually became the EVAT law.

Procedural Issue:

(1)    WoN RA 7716 originated exclusively from the House of Rep. in accordance with sec 24, art 6 of Consti

(2)    WoN the Senate bill violated the “three readings on separate days” requirement of the Consti

(3)    WoN RA 7716 violated sec 26(1), art 6 - one subject, one title rule.

NOTE: This case was filed by PAL because before the EVAT Law, they were exempt from taxes. After the passage of EVAT, they were already included. PAL contended that neither the House or Senate bill provided for the removal of the exemption from taxes of PAL  and that it was inly made after the meeting of the Conference Committee w/c was not expressed in the title of RA 7166

Held:

(1)    YES! Court said that it is not the law which should originate from the House of Rep, but the revenue bill which was required to originate from the House of Rep. The inititiative must ocme from the Lower House because they are elected in the district level – meaning they are expected to be more sensitive to the needs of the locality.

Also, a bill originating from the Lower House may undergo extensive changes while in the Senate. Senate can introduce a separate and distinct bill other than the one the Lower House proposed.  The Constitution does not prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the House bill, so long as action by Senate is withheld pending the receipt of the House bill.

(2)    NO. The Pres. certified that the Senate bill was urgent. Presidential certification dispensed the requirement not only of printing but also reading the bill in 3 separate days.  In fact, the Senate accepted the Pres. certification

(3)    No.  Court said that the title states that the purpose of the statute is to expand the VAT system and one way of doing this is to widen its base by withdrawing some of the exemptions granted before. It is also in the power of Congress to amend, alter, repeal grant of franchises for operation of public utility when the common good so requires.

One subject rule is intended to prevent surprise upon Congress members and inform people of pending legislation. In the case of PAL, they did not know of their situation not because of any defect in title but because they might have not noticed its publication until some event calls attention to its existence.

Aquino v COMELEC

Facts:

Agapito Aquino filed a Cert. of Candidacy to run for Rep in the 2^nd district of Makati. However, Mateo Bedon ( Chairman of LAKAS-NUCD-UMDP) filed a petition to disqualify Aquino on the grounds that he lacked the residence qualification under Sec 6, Art 7 of the 1987 Consti. Hearings were conducted by the COMELEC and dismissed Bedon’s petition to disqualify.

During the counting of votes, Aquino garnered more votes against Agusto Syjuco. Bedon then filed an Urgent Motion to Suspend Proclamation of Aquino to which COMELEC agreed by issuing an Order. COMELEC then again issued another Order declaring Aquino to be disqualified due to the lack of constitutional qualification of residence.

Hence, the petition for certiorari.

Issue:

W/N COMELEC erred in deciding that petitioner lacked the constitutional req’ts for residence.

Held:

No! Aquino failed to prove that he was a resident of the 2^nd Legislative District of Makati for a period of one year at the time of election. His domicile of origin was in Concepcion, Tarlac. COMELEC said that the intention not to establish a permanent home in Makati is evident in his leasing a condo unit instead of buying one. While a lease contract may give an indication that he intends to reside in Makati, it does not engender the kind of permanency required to prove abandonment of one’s domicile. Aquino himself testified that his intention was really for a year because he has other “residences” in Manila or Quezon City.

Residence is synonymous with domicile -> place where a party actually or constructively has his permanent home where he, no matter where he may be found eventually intends to return and remain (ruling in Co V Electoral Tribunal of House of Rep)

Elpidio Uy v CA

Facts of the Case:

Bases Conversion Development Authority (BCDA), Pool Formation Trust Agreement (PFTA), PNB  and Public Estates Authority (PEA) entered into an agreement to implement the Heritage Memorial Park.  BCDA was the Project Owner and tasked to sell Heritage Park Investment Certificates to buyers. As trustee, PNB is given the legal and beneficial title to hold the certificates. The certificate holders organized themselves into a non-stock, non-profit corporation, Heritage Park Management Corp. (HPMC).

            Now, PEA and Uy’s business (Edison Dev’t and Construction) executed a Landscaping and Construction Agreement whereby the business will do all the landscaping and the construction of a terrasoleum. Since there was delay in the construction, the Heritage Park Executive Committee terminated the construction contracts so HPMC assumed all the duties and responsibilities of PEA.

Uy filed a complaint against PEA before the Construction Industry Arbitrary Commission (CIAC) where it sought to recover payments for the construction already done in the project.  The CIAC awarded monetary claims to Uy and a Notice of Garnishment was served on HPMC.

HPMC then filed a petition for Injunction/Prohibition before the CA on the ground that the CIAC had no jurisdiction since HPMC was not impleaded as a party in the case before CIAC. HPMC contended it is an indispensable party since it holds the certificates, any claim against PEA is a claim against all parties who contributed funds to the project.  Uy’s contention is that HPMC is not a party-in-interest since it was only a mere trustee of the funds and would not be directly benefited or injured by the outcome of the case.

Issue:

            Whether or not HPMC is a real party-in-interest or an indispensable party.

Held:

            Indispensable party.  An indispensable party is one whose interest will be affected by court’s action in litigation and without whom there can be no final determination of the case. A party’s interest in the subject matter and in the relief sought are so intertwined that his legal presence as a party to the proceeding is an absolute necessity.

            According to the provisions of PFTA, PEA would turn over to HPMC all the contracts relating to Heritage Park. At the time of the filing of the CIAC case, PEA already assigned its interests to HPMC and therefore, no longer a party-in-interest. HPMC now stands to be benefited/injured in the suit. Since HPMC was not impleaded, there cannot be an effective, complete and equitable resolution of the dispute.

Notes on indispensable parties:

*Does CIAC have jurisdiction? YES. Both parties agree to submit the dispute for arbitration. However, CIAC should’ve dismissed the case on the grounds that HPMC was not impleaded. Indispensable parties must be joined as either plaintiffs or defendants. When they are not joined, it is the duty of the court to stop trial and order its inclusion.

*The responsibility of impleading all the indispensable parties lies on the plaintiff. Defendant has no tight to compel.