COMMUNICATION MATERIALS VS.
CA
FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN,
INC., (CMDI) and ASPAC MULTI-TRADE INC., (ASPAC) are both
domestic corporations.. Private Respondents ITEC, INC. and/or ITEC,
INTERNATIONAL, INC. (ITEC) are corporations duly organized and
existing under the laws of the State of Alabama, USA. There is no
dispute that ITEC is a foreign corporation not licensed to do business
in the Philippines.
ITEC entered into a contract with ASPAC referred to as
Representative Agreement. Pursuant to the contract, ITEC engaged
ASPAC as its exclusive representative in the Philippines for the sale
of ITECs products, in consideration of which, ASPAC was paid a
stipulated commission. Through a License Agreement entered into
by the same parties later on, ASPAC was able to incorporate and use
the name ITEC in its own name. Thus , ASPAC Multi-Trade, Inc.
became legally and publicly known as ASPAC-ITEC (Philippines).
One year into the second term of the parties Representative
Agreement, ITEC decided to terminate the same, because petitioner
ASPAC allegedly violated its contractual commitment as stipulated in
their agreements. ITEC charges the petitioners and another Philippine
Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL), the
President of which is likewise petitioner Aguirre, of using knowledge
and information of ITECs products specifications to develop their own
line of equipment and product support, which are similar, if not
identical to ITECs own, and offering them to ITECs former customer.
The complaint was filed with the RTC-Makati by ITEC, INC.
Defendants filed a MTD the complaint on the following grounds: (1)
That plaintiff has no legal capacity to sue as it is a foreign corporation
doing business in the Philippines without the required BOI authority
and SEC license, and (2) that plaintiff is simply engaged in forum
shopping which justifies the application against it of the principle of
forum non conveniens. The MTD was denied.Petitioners elevated the
case to the respondent CA on a Petition for Certiorari and Prohibition
under Rule 65 of the Revised ROC. It was dismissed as well. MR
denied, hence this Petition for Review on Certiorari under Rule 45.
ISSUE:
1. Did the Philippine court acquire jurisdiction over the person of the
petitioner corp, despite allegations of lack of capacity to sue because
of non-registration?
2. Can the Philippine court give due course to the suit or dismiss it, on
the principle of forum non convenience?
HELD: petition dismissed.
YES; We are persuaded to conclude that ITEC had been engaged in
or doing business in the Philippines for some time now. This is the
inevitable result after a scrutiny of the different contracts and
agreements entered into by ITEC with its various business contacts in
the country. Its arrangements, with these entities indicate
convincingly that ITEC is actively engaging in business in the country.
A foreign corporation doing business in the Philippines may sue in
Philippine Courts although not authorized to do business here against
a Philippine citizen or entity who had contracted with and benefited
by said corporation. To put it in another way, a party is estopped to
challenge the personality of a corporation after having acknowledged
the same by entering into a contract with it. And the doctrine of
estoppel to deny corporate existence applies to a foreign as well as to
domestic corporations. One who has dealt with a corporation of
foreign origin as a corporate entity is estopped to deny its corporate
existence and capacity.
In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin
over this commonly used scheme of defaulting local companies which
are being sued by unlicensed foreign companies not engaged in
business in the Philippines to invoke the lack of capacity to sue of such
foreign companies. Obviously, the same ploy is resorted to by ASPAC
to prevent the injunctive action filed by ITEC to enjoin petitioner from
using knowledge possibly acquired in violation of fiduciary
arrangements between the parties.
2. YES; Petitioners insistence on the dismissal of this action due to
the application, or non application, of the private international law rule
Page | 1
of forum non conveniens defies well-settled rules of fair play.
According to petitioner, the Philippine Court has no venue to apply its
discretion whether to give cognizance or not to the present action,
because it has not acquired jurisdiction over the person of the plaintiff
in the case, the latter allegedly having no personality to sue before
Philippine Courts. This argument is misplaced because the court has
already acquired jurisdiction over the plaintiff in the suit, by virtue of
his filing the original complaint. And as we have already observed,
petitioner is not at liberty to question plaintiffs standing to sue, having
already acceded to the same by virtue of its entry into the
Representative Agreement referred to earlier.
Thus, having acquired jurisdiction, it is now for the Philippine Court,
based on the facts of the case, whether to give due course to the suit
or dismiss it, on the principle of forum non convenience. Hence, the
Philippine Court may refuse to assume jurisdiction in spite of its having
acquired jurisdiction. Conversely, the court may assume jurisdiction
over the case if it chooses to do so; provided, that the following
requisites are met:
1) That the Philippine Court is one to which the parties may
conveniently resort to;
2) That the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and,
3) That the Philippine Court has or is likely to have power to
enforce its decision.
The aforesaid requirements having been met, and in view of
the courts disposition to give due course to the questioned
action, the matter of the present forum not being the most
convenient as a ground for the suits dismissal, deserves
scant consideration.
United Airlines vs. Commissioner of Internal Revenue\
Facts:International airline, petitioner United Airlines, filed a claim
for income tax refund. Petitioner sought to be refunded the
erroneously collected income tax from in the amount of
P5,028,813.23 on passenger revenue from tickets sold in the
Philippines, the uplifts of which did not originate in the Philippines.
The airlines ceased operation originating form the Philippines
since February 21, 1998.
Court of tAx appeals ruled the petitioner is not entitled to a refund
because under the NIRC, income tax on GPB also includes gross
revenue from carriage of cargoes from the Philippines. And upon
assessment by the CTA, it was found out that petitioner deducted
items from its cargo revenues which should have entitled the
government to an amount of P 31.43 million, which is obviously
higher than the amount the petitioner prayed to be refunded.
Petitioner argued that the petitioners supposed underpayment
cannot offset his claim to a refund as established by well-settled
jurisprudence.
Issue:Whether or not petitioner is entitled to a refund?
HELD:Petitioner was correct in averring that his claim to a refund
cannot be subject to offsetting or, as it claimed the offsetting to
be, a legal compensation under Sec. 28(A)(3)(a)Petitioners
(similar) tax refund claim assumes that the tax return that it filed
was correct. Given, however, the finding of the CTA that
petitioner, although not liable under Sec. 28(A)(3)(a) of the 1997
NIRC, is liable under Sec. 28(A)(1), the correctness of the return
filed by petitioner is now put in doubt. As such, we(the court)
cannot grant the prayer for a refund.The court held that the
petitioner is not entitled to a refund, Having underpaid the GPB
tax due on its cargo revenues for 1999, the amount of the former
being even much higher (P31.43 million) than the tax refund
sought (P5.2 million).
Relevant note:The Court have consistently ruled that there can be
no off-setting [or compensation] of taxes against the claims that
the taxpayer may have against the government. A person cannot
refuse to pay a tax on the ground that the government owes him
an amount equal to or greater than the tax being collected. The
collection of a tax cannot await the results of a lawsuit against the
government.(francia vs Intermediate appellate court)The grant of
a refund is founded on the assumption that the tax return is valid,
that is, the facts stated therein are true and correct. The
Page | 2
 deficiency assessment, although not yet final, created a doubt as
to and constitutes a challenge against the truth and accuracy of
the facts stated in said return which, by itself and without
unquestionable evidence, cannot be the basis for the grant of the
refund. (CIR vs CTA
BOMAN VS CA
Facts:
Respondent Fajilan offered in writing to resign as President of
petitioner BEDECO and to sell to the company all his shares, rights,
and interests therein plus the transfer to him of the companys Isuzu
truck which he had been using. The Board of Directors approved his
resignation and promised to pay him on a staggered basis. BEDECO
was able to pay twice but defaulted in paying the balance. Respondent
Fajilan then filed a complaint for collection which the trial court
dismissed ruling that the controversy arose out of intra-corporate
relations hence SEC has jurisdiction. On appeal, CA ruled for
respondent Fajilan.
Issue:
Whether or not SEC has jurisdiction in the exercise of respondents
appraisal right.
Ruling: YES.
Fajilans suit against the corporation to enforce the latters promissory
note or compel the corporation to pay for his shareholdings is
cognizable by the SEC alone which shall determine whether such
payment will not constitute a distribution of corporate assets to a
stockholder in preference over creditors of the corporation. The SEC
has exclusive supervision, control and regulatory jurisdiction to
investigate whether the corporation has unrestricted retained earnings
to cover the payment for the shares, and whether the purchase is for
a legitimate corporate purpose as provided in Sections 41 and 122 of
the Corporation Code.
The requirement of unrestricted retained earnings to cover the shares
is based on the trust fund doctrine which means that the capital stock,
property and other assets of a corporation are regarded as equity in
trust for the payment of corporate creditors. The reason is that
creditors of a corporation are preferred over the stockholders in the
distribution of corporate assets. There can be no distribution of assets
among the stockholders without first paying corporate creditors.
Hence, any disposition of corporate funds to the prejudice of creditors
is null and void.
TOLENTINO VS SEC OF FINANCE
FACTS:
The present case involves motions seeking reconsideration of the
Courts decision dismissing the petitions for the declaration of
unconstitutionality of R.A. No. 7716, otherwise known as the
Expanded Value-Added Tax Law. The motions, of which there are 10
in all, have been filed by the several petitioners.
The Philippine Press Institute, Inc. (PPI) contends that by removing
the exemption of the press from the VAT while maintaining those
granted to others, the law discriminates against the press. At any rate,
it is averred, "even nondiscriminatory taxation of constitutionally
guaranteed freedom is unconstitutional, citing in support the case of
Murdock v. Pennsylvania.
Chamber of Real Estate and Builders Associations, Invc., (CREBA), on
the other hand, asserts that R.A. No. 7716 (1) impairs the obligations
of contracts, (2) classifies transactions as covered or exempt without
reasonable basis and (3) violates the rule that taxes should be uniform
and equitable and that Congress shall "evolve a progressive system of
taxation.
Further, the Cooperative Union of the Philippines (CUP), argues that
legislature was to adopt a definite policy of granting tax exemption to
cooperatives that the present Constitution embodies provisions on
cooperatives. To subject cooperatives to the VAT would therefore be
to infringe a constitutional policy.
ISSUE:
Page | 3
Whether or not, based on the aforementioned grounds of the
petitioners, the Expanded Value-Added Tax Law should be declared
unconstitutional.
RULING:
No. With respect to the first contention, it would suffice to say that
since the law granted the press a privilege, the law could take back
the privilege anytime without offense to the Constitution. The reason
is simple: by granting exemptions, the State does not forever waive
the exercise of its sovereign prerogative. Indeed, in withdrawing the
exemption, the law merely subjects the press to the same tax burden
to which other businesses have long ago been subject. The PPI asserts
that it does not really matter that the law does not discriminate against
the press because "even nondiscriminatory taxation on constitutionally
guaranteed freedom is unconstitutional." The Court was speaking in
that case (Murdock v. Pennsylvania) of a license tax, which, unlike an
ordinary tax, is mainly for regulation. Its imposition on the press is
unconstitutional because it lays a prior restraint on the exercise of its
right. The VAT is, however, different. It is not a license tax. It is not a
tax on the exercise of a privilege, much less a constitutional right. It
is imposed on the sale, barter, lease or exchange of goods or
properties or the sale or exchange of services and the lease of
properties purely for revenue purposes. To subject the press to its
payment is not to burden the exercise of its right any more than to
make the press pay income tax or subject it to general regulation is
not to violate its freedom under the Constitution.
Anent the first contention of CREBA, it has been held in an early case
that even though such taxation may affect particular contracts, as it
may increase the debt of one person and lessen the security of
another, or may impose additional burdens upon one class and release
the burdens of another, still the tax must be paid unless prohibited by
the Constitution, nor can it be said that it impairs the obligation of any
existing contract in its true legal sense. It is next pointed out that while
Section 4 of R.A. No. 7716 exempts such transactions as the sale of
agricultural products, food items, petroleum, and medical and
veterinary services, it grants no exemption on the sale of real property
which is equally essential. The sale of food items, petroleum, medical
and veterinary services, etc., which are essential goods and services
was already exempt under Section 103, pars. (b) (d) (1) of the NIRC
before the enactment of R.A. No. 7716. Petitioner is in error in
claiming that R.A. No. 7716 granted exemption to these transactions,
while subjecting those of petitioner to the payment of the VAT. Finally,
it is contended that R.A. No. 7716 also violates Art. VI, Section 28(1)
which provides that "The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of
taxation. Nevertheless, equality and uniformity of taxation means
that all taxable articles or kinds of property of the same class be taxed
at the same rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of taxation. To
satisfy this requirement it is enough that the statute or ordinance
applies equally to all persons, forms and corporations placed in similar
situation. Furthermore, the Constitution does not really prohibit the
imposition of indirect taxes which, like the VAT, are regressive. What
it simply provides is that Congress shall "evolve a progressive system
of taxation." The constitutional provision has been interpreted to
mean simply that "direct taxes are . . . to be preferred [and] as much
as possible, indirect taxes should be minimized." The mandate to
Congress is not to prescribe, but to evolve, a progressive tax system.
As regards the contention of CUP, it is worth noting that its theory
amounts to saying that under the Constitution cooperatives are
exempt from taxation. Such theory is contrary to the Constitution
under which only the following are exempt from taxation: charitable
institutions, churches and parsonages, by reason of Art. VI, 28 (3),
and non-stock, non-profit educational institutions by reason of Art.
XIV, 4 (3).
With all the foregoing ratiocinations, it is clear that the subject law
bears no constitutional infirmities and is thus upheld.
NORS MGT COMPANY VS NATIONAL SEAMEN
Facts:
Napoleon B. Abordo, the deceased husband of private respondent
Restituta C. Abordo, was the Second Engineer of M.T. "Cherry Earl"
when he died from an apoplectic stroke in the course of his
Page | 4
employment with petitioner NORSE MANAGEMENT COMPANY (PTE).
The M.T. "Cherry Earl" is a vessel of Singaporean Registry. In her
complaint for compensation benefits filed before the National Seamen
Board, private respondent alleged that the amount of compensation
due her from petitioners should be based on the law where the vessel
is registered. Petitioners contend that the law of Singapore should not
be applied in this case because the National Seamen Board cannot
take judicial notice of the Workmen's Insurance Law of Singapore
instead must be based on Boards Memeorandum Circular No. 25.
Ministry of Labor and Employment ordered the petitioner to pay jointly
and severally the private respondent. Petitioner appealed to the
Ministry of Labor but same decision. Hence, this petition.
Issue Whether or not the law of Singapore ought to be applied in this
case.
Held: The SC denied the petition. It has always been the policy of this
Board, as enunciated in a long line of cases, that in cases of valid
claims for benefits on account of injury or death while in the course
of employment, the law of the country in which the vessel is registered
shall be considered. In Section 5(B) of the Employment Agreement
between petitioner and respondents husband states that In the event
of illness or injury to Employee arising out of and in the course of his
employment and not due to his own willful misconduct, EMPLOYER
will provide employee with free medical attention. If such illness or
injury incapacitates the EMPLOYEE to the extent the EMPLOYEE's
services must be terminated as determined by a qualified physician
designated by the EMPLOYER and provided such illness or injury was
not due in part or whole to his willful act, neglect or misconduct
compensation shall be paid to employee in accordance with and
subject to the limitations of the Workmen's Compensation Act of the
Republic of the Philippines or the Workmen's Insurance Law of registry
of the vessel whichever is greater. Finally, Article IV of the Labor Code
provides that "all doubts in the implementation and interpretation of
the provisions of this code, including its implementing rules and
resolved in favor of labor.
SANTOS VS NORTHWEST KOREAN
FACTS: The petitioner is a minor and a resident of the Philippines.
Private respondent Northwest Orient Airlines (NOA) is a foreign
corporation with principal office in Minnesota, U.S.A. and licensed to
do business and maintain a branch office in the Philippines.
On October 21, 1986, the petitioner purchased from NOA a round-trip
ticket in San Francisco. U.S.A., for his flight from San Francisco to
Manila via Tokyo and back. The scheduled departure date from Tokyo
was December 20, 1986. No date was specified for his return to San
Francisco.
On December 19, 1986, the petitioner checked in at the NOA counter
in the San Francisco airport for his scheduled departure to Manila.
Despite a previous confirmation and re-confirmation, he was informed
that he had no reservation for his flight from Tokyo to Manila. He
therefore had to be wait-listed.
On March 12, 1987, the petitioner sued NOA for damages in the RTC
of Makati. On April 13, 1987, NOA moved to dismiss the complaint on
the ground of lack of jurisdiction, citing Article 28(1) of the Warsaw
Convention, reading as follows:
Art. 28. (1) An action for damage must be brought at the option of
the plaintiff, in the territory of one of the High Contracting Parties,
either before the court of the domicile of the carrier or of his principal
place of business, or where he has a place of business through which
the contract has been made, or before the court at the place of
destination.
The private respondent contended that the Philippines was not its
domicile nor was this its principal place of business. Neither was the
petitioners ticket issued in this country nor was his destination Manila
but San Francisco in the United States.
Lower court granted the dismissal, CA affirmed.
Page | 5
ISSUE: WON the Philippines has jurisdiction over the case. (Issue WON Northwest has domicile in the Philippines
raised by the party is WON the provision of the Warsaw convention Notably, the domicile of the carrier is only one of the places where the
was constitutional) complaint is allowed to be filed under Article 28(1). By specifying the
three other places, to wit, the principal place of business of the carrier,
HELD: No jurisdiction (the provision is constitutional) its place of business where the contract was made, and the place of
destination, the article clearly meant that these three other places
The Convention is a treaty commitment voluntarily assumed by the were not comprehended in the term domicile.
Philippine government and, as such, has the force and effect of law in AMERICAN AIRLINES VS CA
this country. The petitioners allegations are not convincing enough to Facts:
overcome this presumption. Apparently, the Convention considered Private respondent purchased from Singapore Airlines in Manila
the four places designated in Article 28 the most convenient forums conjunction ticketsfrom Manila-Singapore-Athens-Larnaca-Rome-
for the litigation of any claim that may arise between the airline and Turin-Zurich-Geneva-Copenhagen-New York. In Geneva, he decided
its passenger, as distinguished from all other places. to forego his trip to Copenhagen and go straight to New York. In the
absence of a direct flight under his conjunction tickets from Geneva
NOTES: to New York, he exchanged the unused portion of the
conjunction ticket for a one way ticket from Geneva to New York
WON Warsaw convention applies. from American Airlines, which issued its own ticket to respondent in
Convention applies to all international transportation of persons Geneva and claimed the value of the unused portion of the
performed by aircraft for hire. Whether the transportation is conjunction ticket from the International Air Transport Association
international is determined by the contract of the parties, which in (IATA) clearing house in Geneva. In September, 1989, respondent
the case of passengers is the ticket. When the contract of carriage filed an action for damages before the Regional Trial Court of Cebu
provides for the transportation of the passenger between certain for the alleged embarrassment and mental anguish he suffered at the
designated terminals within the territories of two High Contracting Geneva Airport when American Airlines security officers prevented
Parties, the provisions of the Convention automatically apply and him from boarding the plane.
exclusively govern the rights and liabilities of the airline and its Issue:
passenger. Whether or not the issuance of American Airlines of a new ticket in
exchange of the conjunction ticket the respondent purchased in
WON MNL or SFO was the destination. Manila bar him from seeking recourse in Philippine courts.
The place of destination, within the meaning of the Warsaw Ruling:
Convention, is determined by the terms of the contract of carriage or, The petitioner contends that under Article 28 of the Warsaw
specifically in this case, the ticket between the passenger and the Convention, action for damages may only be brought upon the
carrier. Examination of the petitioners ticket shows that his ultimate following courst:
destination is San Francisco. Although the date of the return flight was a.) Domicile of the carrier
left open, the contract of carriage between the parties indicates that b.) Carriers principal place of business
NOA was bound to transport the petitioner to San Francisco from c.) Place where carrier has a place of business
Manila. Manila should therefore be considered merely an agreed d.) Place of destination
stopping place and not the destination.

Page | 6
Since neither of these elements is present in the case, the petitioner
contends that plaintiff cannot file the case in the Philippines. He
further posits that the second contract cannot be deemed as an
extension of the first as the petitioner airline is not a participating
airline in any of the destinations under the first contract.
Respondent on the other hand contends that the second contract she
entered into at Geneva is part and parcel of the first contract, thus the
third option under Article 28 of the Warsaw Convention would apply
to him. He further pointed out that petitioner cannot deny the contract
of agency with Singapore Airlines after it honored the
conjunction tickets issued by the latter.
The court ruled that petitioners argument is void of merit with
reference to Article 1(3) of the Warsaw Convention. According to the
said article, transportation to be performed by several carriers shall be
deemed as one and undivided. The number of tickets issued does not
detract from the oneness of the contract of carriage. Hence, the third
option of the plaintiff under Article 28 of the Warsaw Convention is
clothed with jurisdiction.
PAL VS SAVILLO
Facts:
Savillo was a judge of the RTC of Iloilo
He was invited to participate in the 1993 ASEAN Seniors
Annual Golf Tournament in Jakarta Indonesia.
So, in order to take part in such event, he purchased a ticket
from PAL with the following itinerary: Manila-Singapore-
Jakarta-Singapore-Manila.
PAL would take them from Manila to Signapore, while
Singapore Airlines would take them from Singapore to
Jakarta.
When they arrived in Singapore, Singapore Airlines rejected
the tickets of Savillo because they were not endorsed by PAL.
It was explained that if Singapore Airlines honoured the
tickets without PALS endorsement, PAL would not pay
Singapore Airlines for their passage.
Savillo demanded compensation from both PAL and Singapore
Airlines, but his efforts were futile. He then sued PAL after 3
years, demanding moral damages.
PAL , in its MTD, claimed that the cause of action has already
prescribed invoking the Warsaw Convention (providing for a
2 year prescriptive period). Both RTC and CA ruled against
PAL.
Issues:
What is the applicable law, the Civil Code or the Warsaw Convention?
Has the action prescribed?
Held:
The Civil Code is applicable. Therefore the action has not yet
prescribed for the prescription period is 4 years.
If cause of action claims moral damages, not covered by
Warsaw Convention. Article 19 of the Warsaw Convention provides
for liability on the part of a carrier for damages occasioned by delay
in the transportation by air of passengers, baggage or goods. Article
24 excludes other remedies by further providing that (1) in the cases
covered by articles 18 and 19, any action for damages, however
founded, can only be brought subject to the conditions and limits set
out in this convention. Therefore, a claim covered by the Warsaw
Convention can no longer be recovered under local law, if the statue
of limitations of two years has elapsed.
Nevertheless, this Court notes that jurisprudence in the Philippines
and the United States also recognizes that the Warsaw Convention
does not exclusively regulate the relationship between passenger
and carrier on an international flight.
In U.S. v. Uy, this Court distinguished between the (1) damage to the
passengers baggage and (2) humiliation he suffered at the hands of
the airlines employees. The First cause of action was covered by the
Warsaw Convention which prescribes in two years, while the second
was covered by the provisions of the Civil Code on torts, which
prescribes in four years.
In Mahaney v. Air France (US case), the court therein ruled that if the
plaintiff were to claim damages based solely on the delay she
experienced- for instance, the costs of renting a van, which she had
to arrange on her own as a consequence of the delay the complaint
Page | 7
would be barred by the twoyear statute of limitations. However,
where the plaintiff alleged that the airlines subjected her to unjust
discrimination or undue or unreasonable preference or disadvantage,
an act punishable under the US law, then the plaintiff may claim purely
nominal compensatory damages for humiliation and hurt feelings,
which are not provided for by the Warsaw Convention.
In the Petition at bar, Savillos Complaint alleged that both PAL and
Singapore Airlines were guilty of gross negligence, which resulted in
his being subjected to humiliation, embarrassment, mental anguish,
serious anxiety, fear and distress therefore this case is not covered
by the Warsaw Convention.
When the negligence happened before the performance of
the contract of carriage, not covered by the Warsaw
Convention. Also, this case is comparable to Lathigra v. British
Airways. In that case, it was held that the airlines negligent act of
reconfirming the passengers reservation days before departure and
failing to inform the latter that the flight had already been
discontinued is not among the acts covered by the Warsaw
Convention, since the alleged negligence did not occur during the
performance of the contract of carriage but, rather, days before the
scheduled flight.
In the case at hand, Singapore Airlines barred Savillo from boarding
the Singapore Airlines flight because PAL allegedly failed to endorse
the tickets of private respondent and his companions, despite PALs
assurances to Savillo that Singapore Airlines had already confirmed
their passage. While this fact still needs to heard and established by
adequate proof before the RTC, an action based on these allegations
will not fall under the Warsaw Convention, since the purported
negligence on the party of PAL did not occur during the performance
of the contract of carriage but days before the scheduled flight. Thus,
the present action cannot be dismissed based on the Statue of
Limitations provided under Article 29 of the Warsaw Convention.
Gallanosa vs. Arcangel 83 SCRA 676/
FACTS:
Florentino Hitosis was a childless widower and was survived by his
brother Lito. In his will, Florentino bequeathed his share in
the conjugal estate to his second wife, Tecla, and, should Tecla
predecease him, as was the case, his share would be assigned to
spouses Gallanosa. Pedro Gallanosa was Teclas son by her first
marriage who grew up under the care of Florentino. His other
properties were bequeathed to his protg Adolfo Fortajada.
Upon his death, a petition for the probate of his will was wile.
Opposition was registered by Florentinos brother, nephews and
nieces.
After a hearing, where the oppositors did not present any evidence,
the Judge admitted the will to probate.
The testators legal heirs did not appeal from the decree of probate
and from the order of partition and distribution.
Later, the legal heirs filed a case for recovery of 61 parcels of land
against Pedro alleging that they had been in continuous possession of
those lands and praying that they be declared owners thereof.
Pedro moved for a dismissal which was later granted by the Judge on
the ground of res judicata.
The legal heirs did not appeal from the order of dismissal.
15 years after the dismissal of the first civil case and 28 years after
the probate of the will, the legal heirs filed a case for annulment of
the will alleging fraud and deceit.
The court dismissed said action. However, the court set aside the
dismissal after the heirs filed a motion for reconsideration. Hence, this
appeal.
ISSUE:
Whether the legal heirs have a cause of action for the annulment of
the will of Florentino and for the recovery of the 61 parcels of land
adjudicated under that will to the petitioners.
HELD:
NO. The SC held that the lower court committed a grave abuse of
discretion in setting aside its order of dismissal and ignoring the
Page | 8
testamentary case and the first civil case which is the same as the
instant case. It is evident that second civil case is barred by res
judicata and by prescription.
The decree of probate is conclusive as to the due execution or formal
validity of the will. That means that the testator was of sound and
disposing mind at the time he executed the will and was not acting
under duress, menace, fraud, or undue influence; that the will was
signed by him in the presence of the required number of witnesses,
and that the will is genuine.
Accordingly, these facts cannot again be questioned in a subsequent
proceeding, not even in a criminal action for the forgery of the will.
After the finality of the allowance of a will, the issue as to the
voluntariness of its execution cannot be raised anymore.
The SC also held that the decree of adjudication, having rendered in
a proceeding in rem, is binding upon the whole world. Moreover, the
dismissal of the first civil case, which is a judgment in personam, was
an adjudication on the merits. Thus. It constitutes a bar by former
judgment under the Rules of Court.
The SC also held that the lower court erred in saying that the action
for the recovery of the lands had not prescribed. The SC ruled that
the Art. 1410 of NCC (the action or defense for the declaration of the
inexistence of a contract does not prescribe) cannot apply to last wills
and testaments.
The Rules of Court does not sanction an action for annulment of a
will.
A final decree of probate is conclusive as to the due execution of the
will.
A decree of adjudication in a testate proceeding is binding on the
whole world.After the period for seeking relief from a final order or
judgment under Rule 38 of the Rules of court has expired, a final
judgment or order can be set aside only on the grounds of: (a) lack
of jurisdiction or lack of due process of law or (b) that the judgment
was obtained by means of extrinsic or collateral fraud. In the latter
case, the period for annulling the judgment is four (4) years from
the discovery of fraud.
The Civil Law rule that an action for declaration of inexistence of a
contract does not prescribe cannot be applied to last wills and
testaments.
Vda. de Perez vs. Bolete 232 SCRA 722
o PRIVATE INTERNATIONAL LAW: Extrinsic Validity of Wills of Non-
Resident Aliens
o PRIVATE INTERNATIONAL LAW: Reprobate of Foreign Wills:
Requirement of Notices
FACTS:
Dr. Jose Cunanan and his wife, Dr. Evelyn Perez-Cunanan, who
became American citizens and residents of New York, each executed
a will also in New York, containing provisions on presumption of
survivorship (in the event that it is not known which one of the
spouses died first, the husband shall be presumed to have
predeceased his wife). Later, the entire family perished in a fire that
gutted their home. Thus, Rafael, who was named trustee in Joses will,
filed for separate probate proceedings of the wills.
Later, Evelyns mother, Salud Perez, filed a petition for reprobate in
Bulacan. Rafael opposed, arguing that Salud was not an heir according
to New York law. He contended that since the wills were executed in
New York, New York law should govern. He further argued that, by
New York law, he and his brothers and sisters were Joses heirs and
as such entitled to notice of the reprobate proceedings, which Salud
failed to give.
For her part, Salud said she was the sole heir of her daughter, Evelyn,
and that the two wills were in accordance with New York law. But
before she could present evidence to prove the law of New York, the
reprobate court already issued an order, disallowing the wills.
ISSUE: Whether or not the reprobate of the wills should be
allowed
HELD:
Page | 9

Extrinsic Validity of Wills of Non-Resident Aliens
The respective wills of the Cunanan spouses, who were American
citizens, will only be effective in this country upon compliance with the
following provision of the Civil Code of the Philippines:
Art. 816. The will of an alien who is abroad produces effect in the
Philippines if made with the formalities prescribed by the law of the
place in which he resides, or according to the formalities observed in
his country, or in conformity with those which this Code prescribes.
Thus, proof that both wills conform with the formalities prescribed by
New York laws or by Philippine laws is imperative.
Evidence for Reprobate of Wills Probated outside the Philippines
an heir of Dr. Jose F. Cunanan, she noticeably failed to notify his heirs
of the filing of the proceedings. Thus, even in the instant petition, she
only impleaded respondent Judge, forgetting that a judge whose order
is being assailed is merely a nominal or formal party (Calderon v.
Solicitor General, 215 SCRA 876 [1992]).
The rule that the court having jurisdiction over the reprobate of a will
shall "cause notice thereof to be given as in case of an original will
presented for allowance" (Revised Rules of Court, Rule 27, Section 2)
means that with regard to notices, the will probated abroad should be
treated as if it were an "original will" or a will that is presented for
probate for the first time. Accordingly, compliance with Sections 3 and
4 of Rule 76, which require publication and notice by mail or personally
to the "known heirs, legatees, and devisees of the testator resident in
the Philippines" and to the executor, if he is not the petitioner, are
required.

The evidence necessary for the reprobate or allowance of wills which The brothers and sisters of Dr. Jose F. Cunanan, contrary to
have been probated outside of the Philippines are as follows: (1) the petitioner's claim, are entitled to notices of the time and place for
due execution of the will in accordance with the foreign laws; (2) the proving the wills. Under Section 4 of Rule 76 of the Revised Rules of
testator has his domicile in the foreign country and not in the Court, the "court shall also cause copies of the notice of the time and
Philippines; (3) the will has been admitted to probate in such country; place fixed for proving the will to be addressed to the designated or
(4) the fact that the foreign tribunal is a probate court, and (5) the other known heirs, legatees, and devisees of the testator, . . . "
laws of a foreign country on procedure and allowance of wills (III
Moran Commentaries on the Rules of Court, 1970 ed., pp. 419-429; WHEREFORE, the questioned Order is SET ASIDE. Respondent Judge
Suntay v. Suntay, 95 Phil. 500 [1954]; Fluemer v. Hix, 54 Phil. 610 shall allow petitioner reasonable time within which to submit evidence
[1930]). Except for the first and last requirements, the petitioner needed for the joint probate of the wills of the Cunanan spouses and
submitted all the needed evidence. see to it that the brothers and sisters of Dr. Jose F. Cunanan are given
all notices and copies of all pleadings pertinent to the probate
The necessity of presenting evidence on the foreign laws upon which proceedings.
the probate in the foreign country is based is impelled by the fact that
our courts cannot take judicial notice of them. Testate Estate Bellis vs. Bellis 20 SCRA 358
TESTATE ESTATE OF AMOS G. BELLIS, deceased, PEOPLES BANK &
On Lack of Notice to Joses Heirs TRUST COMPANY,
executor, MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS,
This petition cannot be completely resolved without touching on a very oppositors-appellants, VS.
glaring fact - petitioner has always considered herself the sole heir of EDWARD A. BELLIS, ET. AL., heir-appellees
Dr. Evelyn Perez Cunanan and because she does not consider herself G.R. No. L-23678 June 6, 1967

Page | 10
FACTS: ISSUE:
Amos Bellis, born in Texas, was a citizen of the State of Texas and of Whether Texan Law of Philippine Law must apply.
the United States. He had 5 legitimate children with his wife, Mary
Mallen, whom he had divorced, 3 legitimate children with his 2nd wife, RULING:
Violet Kennedy and finally, 3 illegitimate children. It is not disputed that the decedent was both a national of Texas and
a domicile thereof at the time of his death. So that even assuming
Prior to his death, Amos Bellis executed a will in the Philippines in Texan has a conflict of law rule providing that the same would not
which his distributable estate should be divided in trust in the following result in a reference back (renvoi) to Philippine Law, but would still
order and manner: refer to Texas Law.

a. $240,000 to his 1st wife Mary Mallen; Nonetheless, if Texas has conflict rule adopting the situs theory (lex
b. P120,000 to his 3 illegitimate children at P40,000 each; rei sitae) calling for the application of the law of the place where the
c. The remainder shall go to his surviving children by his 1st and 2nd properties are situated, renvoi would arise, since the properties here
wives, in equal shares. involved are found in the Philippines. In the absence, however of
proofs as to the conflict of law rule of Texas, it should not be presumed
Subsequently, Amos Bellis died a resident of San Antonio, Texas, USA. different from our appellants, position is therefore not rested on the
His will was admitted to probate in the Philippines. The Peoples Bank doctrine of renvoi.
and Trust Company, an executor of the will, paid the entire bequest
therein. The parties admit that the decedent, Amos Bellis, was a citizen of the
State of Texas, USA and that under the Laws of Texas, there are no
Preparatory to closing its administration, the executor submitted and forced heirs or legitimates. Accordingly, since the intrinsic validity of
filed its Executors Final Account, Report of Administration and Project the provision of the will and the amount of successional rights has to
of Partition where it reported, inter alia, the satisfaction of the legacy be determined under Texas Law, the Philippine Law on legitimates can
of Mary Mallen by the shares of stock amounting to $240,000 not be applied to the testate of Amos Bellis.
delivered to her, and the legacies of the 3 illegitimate children in the
amount of P40,000 each or a total of P120,000. In the project Miciano vs. Brimo 50 Phil. 867
partition, the executor divided the residuary estate into 7 equal cts:
portions
for the benefit of the testators 7 legitimate children by his 1st and The judicial administrator of the estate of the deceased, Joseph Brimo,
2nd marriages. filed a scheme of partition. However, one of the brothers of the
deceased opposed the said partition.
Among the 3 illegitimate children, Mari Cristina and Miriam Palma
Bellis filed their respective opposition to the project partition on the According to the scheme and its provision, that the deceased requests
ground that they were deprived of their legitimates as illegitimate that all his relatives respect his wishes, otherwise those who opposed
children. the same shall be cancelled in said disposition in favor of the
oppositor.
The lower court denied their respective motions for reconsideration.

Page | 11
The apellant in the case, who opposed the same, based his opposition
on the fact that the deceased was a Turkish citizen, that his disposition
should be in accordance with the laws of his nationality.
Issue:
WON the disposition shall be made in accordance with Philippine Laws
WON there shall be cancellation of disposition/s in favor of the
appellant-oppositor
Held:
No, although the disposition provides an express provision that it shall
be governed by Philippine Laws and those who opposed the condition
of the provisions given shall be cancelled from the disposition, the fact
is that the condition itself is void for being contrary to law. Article 792
of the Civil Code provides:Impossible conditions and those contrary
to law or good morals shall be considered as not imposed and shall
not prejudice the heir or legatee in any manner whatsoever, even
should the testator otherwise provide.
It is contrary to law because it expressly ignores the decedents
national law, according to Article 10 of the Civil Code, such national
law shall govern his testamentary dispositions.
Therefore, the institution of the legatees are unconditional and are
valid, as well as those favorable to herein appellant-oppositor.
Roman Catholic Apostolate Admin. Of Davao vs. Land Reg. Comm.
102 Phil. 596
acts:
On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of
the City of Davao, executed a deed of sale of a parcel of land located
in the same city covered by Transfer Certificate No. 2263, in favor of
the Roman Catholic Apostolic Administrator of Davao Inc.,(RCADI) is
corporation sole organized and existing in accordance with Philippine
Laws, with Msgr. Clovis Thibault, a Canadian citizen, as actual
incumbent. Registry of Deeds Davao (RD) required RCADI to submit
affidavit declaring that 60% of its members were Filipino Citizens. As
the RD entertained some doubts as to the registerability of the deed
of sale, the matter was referred to the Land Registration
Commissioner (LRC) en consulta for resolution. LRC hold that
pursuant to provisions of sections 1 and 5 of Article XII of the
Philippine Constitution, RCADI is not qualified to acquire land in the
Philippines in the absence of proof that at leat 60% of the capital,
properties or assets of the RCADI is actually owned or controlled by
Filipino citizens. LRC also denied the registration of the Deed of Sale
in the absence of proof of compliance with such requisite. RCADIs
Motion for Reconsideration was denied. Aggrieved, the latter filed a
petition for mandamus.
Issue:
Whether or not the Universal Roman Catholic Apostolic Church in the
Philippines, or better still, the corporation sole named the Roman
Catholic Apostolic Administrator of Davao, Inc., is qualified to acquire
private agricultural lands in the Philippines pursuant to the provisions
of Article XIII of the Constitution.
Ruling:
RCADI is qualified.
While it is true and We have to concede that in the profession of their
faith, the Roman Pontiff is the supreme head; that in the religious
matters, in the exercise of their belief, the Catholic congregation of
the faithful throughout the world seeks the guidance and direction of
their Spiritual Father in the Vatican, yet it cannot be said that there is
a merger of personalities resultant therein. Neither can it be said that
the political and civil rights of the faithful, inherent or acquired under
the laws of their country, are affected by that relationship with the
Pope. The fact that the Roman Catholic Church in almost every
country springs from that society that saw its beginning in Europe and
the fact that the clergy of this faith derive their authorities and receive
orders from the Holy See do not give or bestow the citizenship of the
Pope upon these branches. Citizenship is a political right which cannot
be acquired by a sort of radiation. We have to realize that although
there is a fraternity among all the catholic countries and the dioceses
therein all over the globe, the universality that the word catholic
Page | 12
implies, merely characterize their faith, a uniformity in the practice
and the interpretation of their dogma and in the exercise of their
belief, but certainly they are separate and independent from one
another in jurisdiction, governed by different laws under which they
are incorporated, and entirely independent on the others in the
management and ownership of their temporalities. To allow theory
that the Roman Catholic Churches all over the world follow the
citizenship of their Supreme Head, the Pontifical Father, would lead to
the absurdity of finding the citizens of a country who embrace the
Catholic faith and become members of that religious society, likewise
citizens of the Vatican or of Italy. And this is more so if We consider
that the Pope himself may be an Italian or national of any other
country of the world. The same thing be said with regard to the
nationality or citizenship of the corporation sole created under the
laws of the Philippines, which is not altered by the change of
citizenship of the incumbent bishops or head of said corporation sole.
We must therefore, declare that although a branch of the Universal
Roman Catholic Apostolic Church, every Roman Catholic Church in
different countries, if it exercises its mission and is lawfully
incorporated in accordance with the laws of the country where it is
located, is considered an entity or person with all the rights and
privileges granted to such artificial being under the laws of that
country, separate and distinct from the personality of the Roman
Pontiff or the Holy See, without prejudice to its religious relations with
the latter which are governed by the Canon Law or their rules and
regulations.
It has been shown before that: (1) the corporation sole, unlike the
ordinary corporations which are formed by no less than 5
incorporators, is composed of only one persons, usually the head or
bishop of the diocese, a unit which is not subject to expansion for the
purpose of determining any percentage whatsoever; (2) the
corporation sole is only the administrator and not the owner of the
temporalities located in the territory comprised by said corporation
sole; (3) such temporalities are administered for and on behalf of the
faithful residing in the diocese or territory of the corporation sole; and
(4) the latter, as such, has no nationality and the citizenship of the
incumbent Ordinary has nothing to do with the operation,
management or administration of the corporation sole, nor effects the
citizenship of the faithful connected with their respective dioceses or
corporation sole
In view of these peculiarities of the corporation sole, it would seem
obvious that when the specific provision of the Constitution invoked
by respondent Commissioner (section 1, Art. XIII), was under
consideration, the framers of the same did not have in mind or
overlooked this particular form of corporation. If this were so, as the
facts and circumstances already indicated tend to prove it to be so,
then the inescapable conclusion would be that this requirement of at
least 60 per cent of Filipino capital was never intended to apply to
corporations sole, and the existence or not a vested right becomes
unquestionably immaterial.
. Rep. vs. CA 235 SCRA 562
FACTS: On August 1988, private respondent Dolor filed an application
before the RTC of Daet, Camarines Norte, for the confirmation and
registration of her title to a residential lot located at Daet, Camarines
Norte.
On November 25 1988, when the case was called for initial
hearing, the Fiscal entered his appearance on behalf of petitioner
Republic of the Philippines. Respondent Dolor moved that an order of
general default be issued against the whole world except petitioner
which had filed an opposition.
At the hearing on 20 December 1988, respondent Dolors counsel
marked as Exhibits A to D, respectively, the Notice of Initial
Hearing, the Certificate of Publication of the Notice of Initial
Hearing in the Official Gazette (October 17, 1988 issue), the
Affidavit of Publication of the Editor of the Weekly Informer, and the
Certification or Return of Posting by the Deputy Sheriff.
Satisfied that respondent Dolor had a registerable title over subject
property the trial court confirmed her title thereto and ordered its
registration as her exclusive property.
ISSUE: Petitioner assailed the trial courts decision before the CA on
a purely jurisdictional ground. Petitioner argued that it was incumbent
upon respondent Dolor to show proof that on or before the date of
Page | 13
initial hearing on 25 November 1988, there had been compliance with
the requirements specified by Sec. 23 of P.D. 1529, otherwise known
as The Property Registration Decree, , to wit:
Sec. 23. Notice of initial hearing, publication, etc. The court shall,
within five days from filing of the application, issue an order setting
the date and hour of the initial hearing which shall not be earlier than
forty-five days nor later than ninety days from the date of the order
1. By publication. Upon receipt of the order of the court setting
the time for initial hearing, the Commissioner of Land Registration
shall cause a notice of initial hearing to be published once
in the Official Gazette and once in a newspaper of general
circulation in the Philippines; Provided, however, that the
publication in the Official Gazette shall be sufficient to
confer jurisdiction upon the court.
The records show that while the trial court stated that the jurisdictional
requirements were complied with on 25 November 1988, they were
yet to be presented on 20 December 1988 before its Branch Clerk, the
designated Commissioner.
In its decision dated 16 July 1991, the appellate court affirmed the
decision of the trial court, , rationalizing thus
We find that the requirements of Sec. 23 of PD No. 1529 have been
complied with in the instant case. The record shows that the Notice of
Initial Hearing set on November 25, 1988, issued by the Administrator,
National Land Titles and Deeds Registration Administration had been
published in the September 10, 1988 issue of the Weekly Informer
and in Volume 84, No. 42 of the Official Gazette issue of October
17, 1988
The appellant (Republic) claims that while the presiding judge of the
trial court stated that the jurisdictional requirements have been
complied with on November 25, 1988, the jurisdictional requirements
have yet to be presented on December 20, 1988 before the Branch
Clerk of Court. Hence, appellant argues, the Order of November 25,
1988 had no basis in fact and in law; there was no notice to interested
persons adjoining owners, and the whole world; and jurisdiction to
hear and decide the case has not yet been conferred with the court
on November 25, 1988. Petitioner concludes that the late publication
did not vest jurisdiction in the trial court.
HELD: WHEREFORE, the petition is GRANTED. The questioned
decision of respondent CA which affirmed the decision of the RTC is
VACATED and SET ASIDE, and the application of private respondent
for the confirmation and registration of her title over the property
described therein is DENIED.
By reason of the defective notice of initial hearing, all the proceedings
conducted by the trial court which culminated in its decision granting
the prayer of respondent Dolor are declared VOID and it was error
for respondent CA to have sustained the same.
The jurisdiction is not conferred by the marking of the relevant
documents as exhibits, but by the fact that all the requirements of
Sec. 23, PD 1529 had been complied with as shown by those
documents proving compliance therewith. The trial court is not
precluded from taking cognizance of its own record. But,the rule is
not without exception. As borne out by the records, at the scheduled
date of initial hearing on 25 November 1988 and even during the
actual hearing on 20 December 1988, the publication requirement
in the Official Gazette was yet to be complied with. Although
the Notice of Initial Hearing was included for publication in the 17
October 1988 issue of the Official Gazette, specifically Vol. 84, No. 42,
thereof, the same was however released for publication only
on 31 January 1989
In petitioners brief filed before respondent CA, we note that the issue
of late publication of the Notice of Initial Hearing in the Official Gazette
was raised squarely. But for no apparent reason, the issue was ignored
in the questioned decision. Indeed, respondent court could have easily
resolved the issue in favor of petitioner supported as it was not only
by competent evidence but also by ample jurisprudence
The primary legal principle against which the legality of all the
proceedings conducted by the trial court should be tested is
jurisdiction. In order to ascertain whether a court has jurisdiction, the
provision of the law in point should be inquired into. Section 23 of P.D.
1529 explicitly provides that before the court can act on the
Page | 14
application for land registration, the public shall be given notice
of the initial hearing thereof by means of publication, mailing,
and posting. In Director of Lands v. Court of Appeals, citing Caltex
v. CIR, 8, this Court ruled that in all cases where the authority of the
courts to proceed is conferred by a statute and when the manner of
obtaining jurisdiction is mandatory it must be strictly complied with, or
the proceedings will be utterly void. So that where there is a
defect of publication of petition, such defect deprives the court of
jurisdiction. And when the court lacks jurisdiction to take cognizance
of a case, the same lacks authority over the whole case and all its
aspects.
Regarding applications for land registration, the purpose of publication
of the notice of initial hearing is the same: to require all persons
concerned who may have any rights or interests in the property
applied for to appear in court at a certain date and time to show cause
why the application should not be granted.
Section 23 of P.D. 1529 does not provide a period within which the
notice should be published in the Official Gazette but for reasons
already obvious, the publication should precede the date of
initial hearing. While there is no dispute that the notice was included
in Vol. 84, No. 42, 17 October 1988 issue of the Official Gazette,
this particular issue was released for publication only on 31
January 1989 when the initial hearing was already a fait
accompli. The point of reference in establishing lack of jurisdiction of
the trial court was 31 January 1989 because it was only on that date
when the notice was made known to the people in general. Verily,
the late publication of the notice defeated the purpose for its existence
thereby reducing it to a mere pro formanotice.
NOTES: In Register of Deeds of Malabon v. RTC, Malabon, an issue
similar to the one presented in the present petition was posed, that
is, whether the actual publication of the notice of the petition in the
Official Gazette forty-seven (47) days after the hearing, instead of at
least thirty (30) days prior to the date of hearing, was sufficient to
vest jurisdiction in the court to hear and determine the petition. We
answered in the negative since the purpose of the publication of the
notice of the petition for reconstitution in the Official Gazette is
to apprise the whole world that such a petition has been filed and that
whoever is minded to oppose it for good cause may do so within thirty
(30) days before the date set by the court for hearing the petition. It
is the publication of such notice that brings in the whole world as a
party in the case.
Advertis
Rellosa vs. Gauu Chee-Hun 94 Phil. 827
DOCTRINE:
The In Pari Delicto doctrine provides that the proposition is universal
that no action arises, in equity or at law, from an illegal contract; no
suit can be maintained for its specific performance, or to recover the
property agreed to be sold or delivered, or the money agreed to be
paid, or damages for its violation.
FACTS:
On February 2, 1944, Dionisio Rellosa sold to Gaw Chee Hun a parcel
of land, together with the house erected thereon, situated in the City
of Manila, Philippines, for the sum of P25,000. The vendor remained
in possession of the property under a contract of lease entered into
on the same date between the same parties.
Alleging that the sale was executed subject to the condition that the
vendee, being a Chinese citizen, would obtain the approval of the
Japanese Military Administration in accordance with (seirei) No. 6
issued on April 2, 1943, by the Japanese authorities, and said approval
has not been obtained, and that, even if said requirement were met,
the sale would at all events be void under article XIII, section 5, of
our Constitution.
The vendor instituted the present action in the Court of First Instance
of Manila seeking the annulment of the sale
ISSUES:
1. Whether the sale was void because it is against the constitution
Page | 15
2. Whether the petitioner have the sale declared null and void and
recover the property considering the effect of the law governing
rescission of contracts
HELD:
1) Yes, the court held that under the Constitution, aliens may not
acquire private or public agricultural lands, including residential lands.
This matter has been once more submitted to the court for
deliberation, but the ruling was reaffirmed. This ruling fully disposes
of the question touching on the validity of the sale of the property
herein involved.
2) No, even if the plaintiffs can still invoke the Constitution to set
aside the sale in question, they are now prevented from doing
so if their purpose is to recover the lands that they have
voluntarily parted with, because of their guilty knowledge that
what they were doing was in violation of the Constitution.
They cannot escape this conclusion because they are
presumed to know the law.
Phil. Banking Corp. vs. Lui-She 21 SCRA 52
DOCTRINE:
Even if the contract appears to be valid, if the provisions
is against a constitutional prohibition, the same should be
considered null and void.
FACTS:
Justina Santos executed on a contract of lease in favor of Wong,
covering the portion then already leased to him and another
portion fronting Florentino Torres street. The lease was for 50
years, although the lessee was given the right to withdraw at any
time from the agreement.
On December 21 she executed another contract giving Wong the
option to buy the leased premises for P120,000, payable within
ten years at a monthly installment of P1,000. The option, written
in Tagalog, imposed on him the obligation to pay for the food of
the dogs and the salaries of the maids in her household, the
charge not to exceed P1,800 a month. The option was conditioned
on his obtaining Philippine citizenship, a petition for which was
then pending in the Court of First Instance of Rizal.
It appears, however, that this application for naturalization was
withdrawn when it was discovered that he was not a resident of
Rizal. On October 28, 1958 she filed a petition to adopt him and
his children on the erroneous belief that adoption would confer on
them Philippine citizenship. The error was discovered and the
proceedings were abandoned.
In two wills executed on August 24 and 29, 1959, she bade her
legatees to respect the contracts she had entered into with Wong,
but in a codicil of a later date (November 4, 1959) she appears to
have a change of heart. Claiming that the various contracts were
made by her because of machinations and inducements practiced
by him, she now directed her executor to secure the annulment
of the contracts.
ISSUE:
Whether the contracts involving Wong were valid
HELD:
No, the contracts show nothing that is necessarily illegal,
but considered collectively, they reveal an insidious pattern to
subvert by indirection what the Constitution directly prohibits. To
be sure, a lease to an alien for a reasonable period is valid. So is
an option giving an alien the right to buy real property on
condition that he is granted Philippine citizenship.
But if an alien is given not only a lease of, but also an
option to buy, a piece of land, by virtue of which the Filipino owner
cannot sell or otherwise dispose of his property, this to last for 50
years, then it becomes clear that the arrangement is a virtual
transfer of ownership whereby the owner divests himself in stages
not only of the right to enjoy the land but also of the right to
dispose of it rights the sum total of which make up ownership.
If this can be done, then the Constitutional ban against alien
landholding in the Philippines, is indeed in grave peril.
. Llorente vs. Sandiganbayan 202 SCRA 309
Page | 16
In the case of Llorente vs. Sandiganbayan (G.R. No. 122166.
March 11, 1998), the Honorable Supreme Court ruled that bad
faith does not simply connote bad judgment or negligence; it
imputes a dishonest purpose or some moral obliquity and
conscious doing of a wrong; a breach of sworn duty through some
motive or intent or ill will; it partakes of the nature of fraud.
(Spiegel v. Beacon Participations, 8 NE 2nd Series, 895, 1007). It
contemplates a state of mind affirmatively operating with furtive
design or some motive of self interest or ill will for ulterior
purposes (Air France v. Carrascoso, 18 SCRA 155, 166-167).
Evident bad faith connotes a manifest deliberate intent on the part
of the accused to do wrong or cause damage. Furthermore, this
must be substantiated by evidence as the unbroken jurisprudence
is that bad faith under the law cannot be presumed, it must be
established by clear and convincing evidence.
Evident bad faith was illustrated in the case of Mejorada vs.
Sandiganbayan (G.R. Nos. L-51065-72 June 30, 1987). The
accused therein took advantage of his position as a right-of-way-
agent by making the claimants sign the aforementioned
agreements to demolish and sworn statements which contained
falsified declarations of the value of the improvements and lots.
Honorable Supreme Court ruled that there was evident bad faith
on the part of the accused when he inflated the values of the true
claims and then divested the claimants of a large share of the
amounts due them.vi
Similarly, the Honorable Supreme Court ruled in the case of
Deniega vs. Sandiganbayan (G.R. No. 109991 May 22, 1995) that
there is evident bad faith when the accused therein already paid
the contractor a total of P 650,000.00 out of the contract price of
P 652, 562.60 when only 36.24% of the construction of the
market has been completed. In so doing, petitioners disregarded
the provision in the contract that payment should be based on the
percentage of work accomplishment. Moreover, the contract
provided that in case of delay in the completion of the project, the
contractor shall be liable for liquidated damages at the rate of
1/10 of 1% of the contract price per day of delay.
Lastly, there was also a finding of evident bad faith in the case of
Asilo vs. People (G.R. Nos. 159017-18, March 9, 2011) when the
accused therein demolished market stalls despite the fact that
these were not considered public nuisance and where there is no
legal order for its demolition.
On the other hand, the Honorable Supreme Court ruled that there
can be no evident bad faith when the accused who is a an officer-
in-charge of a government hospital removed the name of the
private complainant from the plantilla and withheld her salary
when the latter was found moonlighting (Jacinto vs.
Sandiganbayan, G.R. No. 84571 October 2, 1989). In that case,
the Honorable Supreme Court ruled that the actions taken by
petitioner afore-stated were not entirely without rhyme or reason.
They were measures taken by a superior against an erring
employee who studiously ignored if not defied his authority. In
another case, it also ruled that mistake on a doubtful or difficult
question of law may be the basis of good faith as long as it is not
shown that they were motivated by malice or gross negligence
amounting to bad faith (Daraug vs. Perez, CA-G.R. SP No. 87152,
September 18, 2006).
From the above-cited cases, it can be said that a person can be
considered in good faith where there is an honest intention to
abstain from taking any unconscientious advantage of another
(PNB vs. Heirs of Militar, G.R. No. 164801, June 30, 2006). In
the case of People vs. Ojeda (G.R. Nos. 104238-58, June 3, 2004),
it was ruled that good faith may be demonstrated, for instance,
by a debtors offer to arrange a payment scheme with his creditor.
Any allegation of intent of malice or deceit can be rebutted by an
extraordinary effort to pay complainant notwithstanding her own
financial situation (People vs. Dimalanta, G.R. No. 157039,
October 1, 2004).
Alvinson Ent. Corp. vs. CA 217 SCRA 16
ALBENSON vs. COURT OF APPEALSFACTS:
Page | 17
Albenson Ent. delivered mild steel plates to Guaranteed Industries
Inc. A Pacific BankingCorporation Check was paid and drawn
against the account of EL Woodworks. Check waslater dishonored
for the reason Account Closed. Company traced source of check
and laterdiscovered that the signature belonged to one Eugenio
Baltao. Albenson made anextrajudical demand upon Baltao but
latter denied that he issued the check or that thesignature was
his. Company filed a complaint against Baltao for violation of BP
22. It waslater discovered that private respondent had son:
Eugene Baltao III, who manages thebusiness establishment, EL
Woodworks. No effort from the father to inform Albenson of
suchinformation. Rather the father filed complaint for damages
against Albenson.
ISSUE:
Whether there is indeed cause for the damages against Albenson
Enterprise.
RULING:
Based on Art 19, 20, 21 of the civil code, petitioners didnt have
the intent to cause damageto the respondent or enrich themselves
but just to collect what was due to them.
There wasno abuse of right on the part of Albenson on accusing
Baltao of BP 22.Albenson Corp. honestly believed that it was
private respondent who issued check based onff inquiries:
SEC records showed that president to Guaranteed was Eugene
Baltao
Bank said signature belonged to EB
EB did not do his part in clarifying that there were in fact 3 Ebs,
Jr., Sr. and theIII.
There was no malicious prosecution on the part of Albenson:
there must be proof that:
the prosecution was prompted by a sinister design to vex and
humiliate aperson and
that damages was initiated deliberately by defendant knowing
that his chargeswere false and groundlessElements of abuse of
right under Article 19:
1.
there is a legal right or duty2.exercised in bad faith3.for the sole
intent of prejudicing or injuring anotherElements under Article 21:
contra bonus mores:1.there is an act which is legal2.but which is
contrary to morals, good custom, public order or public policy3.it
is done with intent to injureA person who has not been paid an
obligation owed to him will naturally seek ways tocompel the
debtor to pay him. It was normal for petitioners to find means to
make the issuerof the check pay the amount thereof. In the
absence of a wrongful act or omission or of fraud or bad faith,
moral damages cannot be awarded and that the adverse result of
anaction does not
per se
make the action wrongful and subject the actor to the payment of
damages, for the law could not have meant to impose a penalty
on the right to litigate
BPI Express Card, Corp. vs. CA 296 SCRA 260
BPI EXPRESS CARD CORPORATION,
petitioner, vs.
COURT OF APPEALS and RICARDO J.
MARASIGAN,respondents.G.R. No. 120639. September 25,
1998FACTS:
Marasigan, a lawyer, is a BPI credit card holder. His contractual
relationswith BPI went on smoothly until October 1989, when his
statement of accountamounting to P8,987.84 was not paid in due
time. BPI demanded immediatepayment, and required him to
issue a check in favor of BPI, otherwise his card willbe suspended.
Marasigan issued a post-dated check (PDC) in favor of BPI.BPI,
having been informed of the PDC only a week after receipt,
already sent a letterto Marasigan, informing him of the temporary
suspension of the privileges of hiscard. He was also told to refrain
from using his card to avoid anyinconvenience/embarrassment
and that unless he settles his outstanding accountwithin 5 days
from receipt of the letter, his membership will be
permanentlycancelled.On the other hand, confident that he had
settled his account with the issuance of the postdated check,
Page | 18
Marasigan invited some guests at Caf Adriatico (there isalso no
showing that he received the letter from BPI before he went to
CafAdriatico). When he presented his credit card to paythe bill,
the it wasdishonored and one of his guests paid the bill by using
her own credit card.Marasigan asked BPI to withhold the deposit
of his postdated check and to returnthe said check to him because
according to him,
BPI violated theiragreement that once Marasigan issues the check
to the to cover hisunpaid account, BPI will not suspend the
effectivity of the card
.Marasigan filed a complaint for damages against BPI before the
trial court, and thetrial court ruled in favor of him. The decision
was affirmed by the CA.
ISSUE/S:
1.W/N BPI had the right to suspend the credit card of the
Marasigan2.W/N the trial court and CA erred in holding BPI liable
for damages
HELD:
1.YES2.YES
RATIO:
Under the terms and conditions of the credit card, signed by
Marasigan, any cardwith outstanding balances after 30 days from
original billing shall automatically besuspended. Marasigan
admitted that he did not pay within 30 days for his originalbilling.
BPI could automatically suspend his credit card.
Even though there was an arrangement between the parties (that
uponissuance of a check, the card wouldnt be suspended) the
court found thatMarasigan was not able to comply with his
obligation.
The purpose of the arrangement between the parties was for the
immediatepayment of Marasigans outstanding account, in order
that his credit card would notbe suspended. As agreed upon by
the parties, on the following day, privaterespondent did issue a
check.
However, the check was postdated 15December 1989. Settled is
the doctrine that a check is only a substitutefor money and not
money, the delivery of such an instrument does not, byitself
operate as payment. This is especially true in the case of
apostdated check.Thus, the issuance by the private respondent of
the postdated check wasnot effective payment. It did not comply
with his obligation under thearrangement
with BPI. BPI corporation was therefore justified in suspending
hiscredit card.While Marasigan suffered damages as a result of
the cancellation of his credit card,there is a material distinction
between damages and injury. Injury is the illegalinvasion of a legal
right; damage is the loss, hurt, or harm which results from
theinjury; and damages are the recompense or compensation
awarded for the damagesuffered. Thus, there can be damage
without injury in those instances in which theloss or harm was not
the result of a violation of a legal duty. In order that a plaintiff
may maintain an action for the injuries of which he complains, he
must establishthat such injuries resulted from a breach of duty
which the defendant owed to theplaintiff. In the case at bar, it
was Marasigan's failure to settle his obligation whichcaused the
suspension of his credit card and subsequent dishonor at
CafAdriatico
Eastern Shipping Lines, Inc. vs. POEA 170 SCRA 54
FACTS:
A Chief Officer of a ship was killed in an accident in Japan. The widow
filed a complaint for charges against the Eastern Shipping Lines with
POEA, based on a Memorandum Circular No. 2, issued by the POEA
which stipulated death benefits and burial for the family of overseas
workers. ESL questioned the validity of the memorandum circular as
violative of the principle of non-delegation of legislative power. It
contends that no authority had been given the POEA to promulgate
the said regulation; and even with such authorization, the regulation
represents an exercise of legislative discretion which, under the
principle, is not subject to delegation. Nevertheless, POEA assumed
jurisdiction and decided the case.
ISSUE:
Whether or not the Issuance of Memorandum Circular No. 2 is a
violation of non-delegation of powers.
Page | 19
RULING: authority and prevent the delegation from running riot.
No. SC held that there was a valid delegation of powers.
The authority to issue the said regulation is clearly provided in Section Both tests are intended to prevent a total transference of legislative
4(a) of Executive Order No. 797. ... "The governing Board of the authority to the delegate, who is not allowed to step into the shoes of
Administration (POEA), as hereunder provided shall promulgate the the legislature and exercise a power essentially legislative.
necessary rules and regulations to govern the exercise of the
adjudicatory functions of the Administration (POEA)." Everett Steel Ship, Corp. vs CA 297 SCRA 496
PARTIES:
It is true that legislative discretion as to the substantive contents of Everett Steamship Corporation, petitionerCourt of Appeals and
the law cannot be delegated. What can be delegated is the discretion Hernandez Trading Co. Inc., respondents
to determine how the law may be enforced, not what the law shall be. BRIEF STATEMENT OF THE CASE:
The ascertainment of the latter subject is a prerogative of the Validity of the Bill of lading in a contract of carriage
legislature. This prerogative cannot be abdicated or surrendered by BRIEF STATEMENT OF THE FACTS:
the legislature to the delegate. Private respondent imported 3 crates of bus spare parts marked as
MARCO C/No. 12,MARCO C/No. 13 and MARCO C/No. 14, from its
The reasons given above for the delegation of legislative powers in supplier, Maruman Trading Company,Ltd. (Maruman Trading), a
general are particularly applicable to administrative bodies. With the foreign corporation based in Inazawa, Aichi, Japan. The crateswere
proliferation of specialized activities and their attendant peculiar shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE,"
problems, the national legislature has found it more and more a vesselowned by petitioner's principal, Everett Orient Lines. Upon
necessary to entrust to administrative agencies the authority to issue arrival at the port of Manila,it was discovered that the crate marked
rules to carry out the general provisions of the statute. This is called MARCO C/No. 14 was missing. Privaterespondent claim upon
the "power of subordinate legislation." petitioner for the value of the lost cargo amounting to OneMillion Five
Hundred Fifty Two Thousand Five Hundred (Y1, 552,500.00) Yen,
With this power, administrative bodies may implement the broad theamount shown in an Invoice No. MTM-941, dated November 14,
policies laid down in a statute by "filling in' the details which the 1991. However,petitioner offered to pay only One Hundred Thousand
Congress may not have the opportunity or competence to provide. (Y100,000.00) Yen, the maximumamount stipulated under Clause 18
This is effected by their promulgation of what are known as of the covering bill of lading which limits the liabilityof petitioner.
supplementary regulations, such as the implementing rules issued by Private respondent rejected the offer and thereafter instituted a suit
the Department of Labor on the new Labor Code. These regulations forcollection. The trial court rendered a decision in favour of the
have the force and effect of law. private respondents andthis was affirmed by the Court of Appeals.
Thus, this instant petition.
There are two accepted tests to determine whether or not there is a
valid delegation of legislative power: ISSUES:
1. Completeness test - the law must be complete in all its terms 1.Is the petitioner liable for the actual value and not the maximum
and conditions when it leaves the legislature such that when it reaches valuerecoverable under the bill of lading?
the delegate the only thing he will have to do is enforce it. 2.
2. Sufficient standard test - there must be adequate guidelines or Is private respondent, as consignee, who is not a signatory to the bill
stations in the law to map out the boundaries of the delegate's of ladingbound by the stipulations thereof?

Page | 20
ARGUMENTS:

1.The Petitioner is only liable for the maximum value recoverable

under the bill of lading.Clause 18 of the covering bill of lading:18. All
claims for which the carrier may be liable shall be adjusted andsettled
on the basis of the shipper's net invoice cost plus freight andinsurance
premiums, if paid, and in no event shall the carrier be liable forany
loss of possible profits or any consequential loss. The carrier shall not
be liable for any loss of or any damage to or in anyconnection with,
goods in an amount exceeding One Hundred thousand Yen in
Japanese Currency (Y100,000.00) or its equivalent in any
othercurrency per package or customary freight unit (whichever is
least)
unlessthe value of the goods higher than this amount is declared in
writing by the shipper before receipt of the goods by the carrier and
inserted in theBill of Lading and extra freight is paid as required

. (Emphasis supplied)Pertinent provisions that is applicable as to this

case:Art. 1749. A stipulation that the common carrier's liability is
limited to the value of thegoods appearing in the bill of lading, unless
the shipper or owner declares a greatervalue, is binding.Art. 1750. A
contract fixing the sum that may be recovered by the owner or shipper
forthe loss, destruction, or deterioration of the goods is valid, if it is
reasonable and justunder the circumstances, and has been freely and
fairly agreed upon.Pursuant to the afore-quoted provisions of law, it
is required that the stipulation limitingthe common carrier's liability for
loss must be "reasonable and just under thecircumstances, and has
been freely and fairly agreed upon." The above stipulations are
reasonable and just. In the bill of lading, the carrier made itclear that
its liability would only be up to One Hundred Thousand (Y100,000.00)
Yen

Page | 21