REALaw

Sunday, March 6, 2011

2011 BAR COVERAGE FOR TAXATION

Source: http://sc.judiciary.gov.ph/

I. General Principles of Taxation

A. Definition and Concept of Taxation
B. Nature of Taxation
C. Characteristics of Taxation
D. Power of Taxation Compared With Other Powers1. Police Power
2. Power of Eminent Domain
E. Purpose of Taxation
1. Revenue-raising
2. Non-revenue/special or regulatory
F. Principles of Sound Tax System
1. Fiscal Adequacy
2. Administrative Feasibility
3. Theoretical Justice
G. Theory and Basis of Taxation
1. Lifeblood Theory
2. Necessity Theory
3. Benefits-Protection Theory (Symbiotic Relationship)
4. Jurisdiction over subject and objects
H. Doctrines in Taxation
1. Prospectivity of tax laws
2. Imprescriptibility
3. Double taxation
a. Strict sense
b. Broad sense
c. Constitutionality of double taxation
d. Modes of eliminating double taxation
4. Escape from taxation
a. Shifting of tax burden
1) Ways of shifting the tax burden
2) Taxes that can be shifted
3) Meaning of impact and incidence of taxation
b. Tax avoidance
c. Tax evasion
5. Exemption from taxation
a. Meaning of exemption from taxation
b. Nature of tax exemption
c. Kinds of tax exemption
1) Express
2) Implied
3) Contractual
d. Rationale/grounds for exemption
e. Revocation of tax exemption
6. Compensation and Set-off
7. Compromise
8. Tax amnesty
a. Definition
b. Distinguished from tax exemption
9. Construction and Interpretation of:
a. Tax laws
1) General Rule
2) Exception
b. Tax exemption and exclusion
1) General Rule
2) Exception
c. Tax rules and regulations
1) General rule only
d. Penal provisions of tax laws
e. Non-retroactive application to taxpayers
1) Exceptions
I.Scope and Limitation of Taxation
1. Inherent Limitations
a. Public Purpose
b. Inherently Legislative
1) General Rule
2) Exceptions
a) Delegation to local governments
b) Delegation to the President
c) Delegation to administrative agencies
c. Territorial
1) Situs of Taxation
a) Meaning
b) Situs of Income Tax
1) From sources within the Philippines
2) From sources without the Philippines
3) Income partly within and partly without the Philippines
c) Situs of Property Taxes
(1) Taxes on Real Property
(2) Taxes on Personal Property
d) Situs of Excise Tax
(1) Estate Tax
(2) Donor’s Tax
e) Situs of Business Tax
(1) Sale of Real Property
(2) Sale of Personal Property
(3) VAT
d. International Comity
e. Exemption of Government Entities, Agencies, and Instrumentalities
2. Constitutional Limitations
a. Provisions Directly Affecting Taxation
1) Prohibition against imprisonment for non-payment of poll tax
2) Uniformity and equality of taxation
3) Grant by Congress of authority to the President to impose tariff rates
4) Prohibition against taxation of religious, charitable entities, and educational entities
5) Prohibition against taxation of non-stock, non-profit institutions
6) Majority vote of Congress for grant of tax exemption
7) Prohibition on use of tax levied for special purpose
8) President’s veto power on appropriation, revenue, tariff bills
9) Non-impairment of jurisdiction of the Supreme Court
10) Grant of power to the local government units to create its own sources of revenue
11) Flexible tariff clause
12) Exemption from real property taxes
13) No appropriation or use of public money for religious purposes
b. Provisions Indirectly Affecting Taxation
1) Due process
2) Equal protection
3) Religious freedom
4) Non-impairment of obligations of contracts
J. Stages of Taxation
1. Levy
2. Assessment and Collection
3. Payment
4. Refund
K. Definition, Nature, and Characteristics of Taxes
L. Requisites of a valid tax
M.Tax as distinguished from other forms of exactions
1. Tariff
2. Toll
3. License fee
4. Special assessment
5. Debt
N. Kinds of Taxes
1. As to object
a. Personal, capitation, or poll tax
b. Property tax
c. Privilege tax
2. As to burden or incidence
a. Direct
b. Indirect
3. As to tax rates
a. Specific
b. Ad valorem
c. Mixed
4. As to purposes
a. General or fiscal
b. Special, regulatory, or sumptuary
5. As to scope or authority to impose
a. National – internal revenue taxes
b. Local – real property tax, municipal tax
6. As to graduation
a. Progressive
b. Regressive
c. Proportionate
II. National Internal Revenue Code of 1997 as amended (NIRC)
A. Income Taxation
1. Income Tax Systems
a. Global Tax System
b. Schedular Tax System
c. Semi-schedular or semi-global tax system
2. Features of the Philippine Income Tax Law
a. Direct tax
b. Progressive
c. Comprehensive
d. Semi-schedular or semi-global tax system
3. Criteria in Imposing Philippine Income Tax
a. Citizenship Principle
b. Residence Principle
c. Source Principle
4. Types of Philippine Income Tax
5. Taxable Period
a. Calendar Period
b. Fiscal Period
c. Short Period
6. Kinds of Taxpayers
a. Individual Taxpayers
1) Citizens
a) Resident citizens
b) Non-resident citizens
2) Aliens
a) Resident aliens
b) Non-resident aliens
(1) Engaged in trade or business
(2) Not engaged in trade or business
3) Special Class of Individual Employees
a) Minimum wage earner
b. Corporations
1) Domestic corporations
2) Foreign corporations
(1) Resident foreign corporations
(2)Non-resident foreign corporations
c. Partnerships
d. General Professional Partnerships
e. Estates and Trusts
f. Co-ownerships
7. Income Taxation
a. Definition
b. Nature
c. General principles
8. Income
a. Definition
b. Nature
c. When income is taxable
1) Existence of income
2) Realization of income
a) Tests of Realization
b) Actual vis-à-vis Constructive receipt
3) Recognition of income
4) Methods of accounting
a) Cash method vis-à-vis Accrual method
b) Installment payment vis-à-vis Deferred payment vis-àvis Percentage completion (in long term contracts)
d. Tests in determining whether income is earned for tax purposes
1) Realization test
2) Claim of right doctrine or Doctrine of ownership, command, or control
3) Economic benefit test, Doctrine of proprietary interest
4) Severance test

9. Gross Income
a. Definition
b. Concept of income from whatever source derived
c. Gross Income vis-à-vis Net Income vis-à-vis Taxable Income
d. Classification of Income as to Source
     1) Gross income and taxable income from sources within the Philippines
     2) Gross income and taxable income from sources without the Philippines
     3) Income partly within or partly without the Philippines
d. Sources of income subject to tax
     1) Compensation Income
     2) Fringe Benefits
       a) Special treatment of fringe benefits
       b) Definition
       c) Taxable and non-taxable fringe benefits
     3) Professional Income
     4) Income from Business
     5) Income from Dealings in Property
       a) Types of Properties
         (1) Ordinary assets
         (2) Capital assets
       b) Types of Gains from dealings in property
         (1) Ordinary income vis-à-vis Capital gain
         (2) Actual gain vis-à-vis Presumed gain
         (3) Long term capital gain vis-à-vis Short term capital gain
         (4) Net capital gain, Net capital loss
         (5) Computation of the amount of gain or loss
           (a) Cost or basis of the property sold
           (b) Cost or basis of the property exchanged in corporate readjustment
             [1] Merger
             [2] Consolidation
             [3] Transfer to a controlled corporation (tax-free exchanges)
           (c) Recognition of gain or loss in exchange of property
             [1] General rule
               [a] Where no gain or loss shall be recognized
             [2] Exceptions
                [a] Meaning of merger, consolidation, control securities
                [b] Transfer of a controlled corporation
         (6) Income tax treatment of capital loss
           (a) Capital loss limitation rule (applicable to both corporations and individuals)
           (b) Net loss carry-over rule (applicable only to individuals)
         (7) Dealings in real property situated in the Philippines
         (8) Dealings in shares of stock of Philippine corporations
           (a) Shares listed and traded in the stock exchange
           (b) Shares not listed and traded in the stock exchange
         (9) Sale of principal residence
     6) Passive Investment Income
       a) Interest Income
       b) Dividend Income
         (1) Cash dividend
         (2) Stock dividend
         (3) Property dividend
         (4) Liquidating dividend
       c) Royalty Income
       d) Rental Income
         (1) Lease of personal property
         (2) Lease of real property
         (3) Tax treatment of
           (a) Leasehold improvements by lessee
           (b) VAT added to rental/paid by the lessee
           (c) Advance rental/long term lease
7) Annuities, Proceeds from life insurance or other types of insurance
8) Prizes and awards
9) Pensions, retirement benefit, or separation pay
10) Income from any source whatever
a) Forgiveness of indebtedness
b) Recovery of accounts previously written off
c) Receipt of tax refunds or credit
d) Income from any source whatever
e. Source rules in determining income from within and without
1) Interests
2) Dividends
3) Services
4) Rentals
5) Royalties
6) Sale of real property
7) Sale of personal property
8) Shares of stock of domestic corporation
f. Situs of Income Taxation (See page 2 under Inherent
Limitations, Territorial)
g. Exclusions from Gross Income
1) Rationale for the exclusions
2) Taxpayers who may avail of the exclusions
3) Exclusions distinguished from deductions and tax credit
4) Under the Constitution
a) Income derived by the government or its political subdivisions from the exercise of any essential governmental function
5) Under the Tax Code
a) Proceeds of life insurance policies
b) Return of premium paid
c) Amounts received under life insurance, endowment or annuity contracts
d) Value of property acquired by gift, bequest, devise or descent
e) Amount received through accident or health insurance
f) Income exempt under tax treaty
g) Retirement benefits, pensions, gratuities, etc.
h) Winnings, prizes, and awards, including those in sports competition
6) Under a Tax Treaty
7) Under Special Laws
h. Deductions from Gross Income
1) General rules
a) Deductions must be paid or incurred in connection with the taxpayer’s trade, business or profession
b) Deductions must be supported by adequate receipts or invoices (except standard deduction)
2) Return of capital (cost of sales or services)
a) Sale of inventory of goods by manufacturers and dealers of properties
b) Sale of stock in trade by a real estate dealer and dealer in securities
c) Sale of services
3) Itemized deductions
a) Expenses
(1) Requisites for deductibility
(a) Nature: Ordinary and necessary
(b) Paid and incurred during taxable year
(2) Salaries, wages and other forms of compensation for personal services actually rendered, including the grossed-up monetary value of the fringe benefit subjected to fringe benefit tax which tax should have been paid
(3) Traveling/Transportation expenses
(4) Cost of materials
(5) Rentals and/or other payments for use or possession of property
(6) Repairs and maintenance
(7) Expenses under lease agreements
(8) Expenses for professionals
(9) Entertainment expenses
(10) Political campaign expenses
(11) Training expenses
b) Interest
(1) Requisites for deductibility
(2) Non-deductible interest expense
(3) Interest subject to special rules
(a) Interest paid in advance
(b) Interest periodically amortized
(c) Interest expense incurred to acquire property for use in trade/business/profession
c) Taxes
(1) Requisites for deductibility
(2) Non-deductible taxes
(3) Treatments of surcharges/interests/fines for delinquency
(4) Treatment of special assessment
(5) Tax credit vis-à-vis deduction
d) Losses
(1) Requisites for deductibility
(2) Other types of losses
(a) Capital losses
(b) Securities becoming worthless
(c) Losses on wash sales of stocks or securities
(d) Wagering losses
(e) NOLCO
e) Bad debts
(1) Requisites for deductibility
f) Depreciation
(1) Requisites for deductibility
(2) Methods of computing depreciation allowance
(a) Straight-line method
(b) Declining-balance method
(c) Sum-of-the-years-digit method
g) Charitable and other contributions
(1) Requisites for deductibility
(2) Amount that may be deducted
h) Contributions to pension trusts
(1) Requisites for deductibility
4) Optional standard deduction
a) Individuals, except non-resident aliens
b) Corporations, except non-resident foreign corporations
5) Personal and additional exemption (Republic Act 9504 Minimum Wage Earner Law)
a) Basic personal exemptions
b) Additional exemptions for taxpayer with dependents
c) Status-at-the-end-of-the-year rule
6) Items not deductible
a) General rules
b) Personal, living or family expenses
c) Amount paid for new buildings or for permanent improvements (capital expenditures)
d) Amount expended in restoring property (major repairs)
e) Premiums paid on life insurance policy covering life or any other officer or employee financially interested
f) Interest expense, bad debts, and losses from sales of property between related parties
g) Losses from sales or exchange or property
h) Non-deductible interest
i) Non –deductible taxes
j) Non-deductible losses
k) Losses from wash sales of stock or securities
i.Exempt Corporations
10. Taxation of Resident Citizens, Non-resident Citizens, and Resident Aliens
a. General rule: Resident citizens – Taxable on income from all sources within and without the Philippines
b. Taxation on Compensation Income
1) Inclusions
a) Monetary compensation
(1) Regular salary/wage
(2) Separation pay/retirement benefit not otherwise exempt
(3) Bonuses, 13th month pay, and other benefits not exempt
(4) Director’s fees
b) Non-monetary compensation
(1) Fringe benefit not subject tax
2) Exclusions
a) Fringe benefit subject to tax
b) De minimis benefits
c) 13th month pay and other benefits and payments specifically excluded from taxable compensation income
3) Deductions
a) Personal exemptions and additional exemptions
b) Health and hospitalization insurance
c) Taxation of compensation income of a minimum wage earner
(1) Definition of Statutory Minimum Wage
(2) Definition of Minimum Wage Earner
(3) Income also subject to tax exemption: holiday pay, overtime pay, night shift differential, and hazard pay
c. Taxation of Business Income/Income from Practice of Professiond. Taxation of Passive Income
1) Passive income subject to final tax
a) Interest income
b) Royalties
c) Dividends from domestic corporation
d) Prizes and other winnings
2) Passive income not subject to final tax
e. Taxation of capital gains
1) Income from sale of shares of stock of a Philippine corporation
a) Shares traded and listed in the stock exchange
b) Shares not listed and traded in the stock exchange
2) Income from the sale of real property situated in the Philippines
3) Income from the sale, exchange, or other disposition of other capital assets
11. Taxation of Non-resident Aliens Engaged in Trade or Business
a. General rules
b. Cash and/or property dividends
c. Capital gains
12. Exclude Non-resident Aliens Not Engaged in Trade or Business
13. Individual Taxpayers Exempt from Income Tax
a. Senior citizens
b. Exemptions granted under international agreements
14. Taxation of Domestic Corporations
a. Tax payable
1) Regular tax
2) Minimum corporate income tax (MCIT)
a) Imposition of MCIT
b) Carry forward of excess minimum tax
c) Relief from the MCIT under certain conditions
d) Corporations exempt from the MCIT
e) Applicability of the MCIT where a corporation is governed both under the regular tax system and aspecial income tax system
b. Allowable deductions
1) Itemized deductions
2) Optional standard deduction
c. Taxation of Passive Income
1) Passive income subject to tax
a) Interest from deposits and yield or any other monetary benefit from deposit substitutes and from trustfunds and similar arrangements and royalties
b) Capital gains from the sale of shares of stock not traded in the stock exchange
c) Income derived under the expanded foreign currency deposit system
d) Intercorporate dividends
e) Capital gains realized from the sale, exchange, or disposition of lands and/or buildings
2) Passive income not subject to tax
d. Taxation of Capital Gains
1) Income from sale of shares of stock
2) Income from the sale of real property situated in the Philippine
3) Income from the sale, exchange, or other disposition of other capital assets
e. Tax on proprietary educational institutions and hospitals
f. Tax on government-owned or controlled corporations, agencies or instrumentalities
15. Taxation of Resident Foreign Corporations
a. General rule
b. With respect to their income from sources within the Philippines
c. Minimum corporate income tax
d. Tax on certain income
(1) Interest from deposits and yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements and royalties
(2)Income derived under the expanded foreign currency deposit system
(3) Capital gain from sale of shares of stock not traded in the stock exchange
(4) Intercorporate dividends
e. Exclude:
(1) International carrier
(2) Offshore banking units
(3) Branch profits remittances
(4) Regional or area headquarters and Regional operating headquarters of multinational companies
16. Taxation of Non-resident Foreign Corporations
a. General rule
b. Tax on certain income
(1) Interest on foreign loans
(2) Intercorporate dividends
(3) Capital gains from sale of shares of stock not traded in the stock exchange
c. Exclude:
(1)Non-resident cinematographic film owner, lessor or distributor
(2)Non-resident owner or lessor of vessels chartered by Philippine nationals
(3)Non-resident owner or lessor of aircraft machineries and other equipment
17.Improperly Accumulated Earnings of Corporations
18. Exemption from tax on corporations
19. Taxation of Partnerships
20. Taxation of General Professional Partnerships
21. Taxation on Estates and Trusts
a) Application
b) Exception
c) Determination of tax
1) Consolidation of income of two or more trusts
2) Taxable income
3) Revocable trusts
4) Income for benefit of grantor
5) Meaning of “in the discretion of the grantor”
22. Withholding tax
a. Concept
b. Kinds
1) Withholding of final tax o certain incomes
2) Withholding of creditable tax at source
c. Withholding on wages
1) Requirement for withholding
2) Tax paid by recipient
3) Refunds or credits
4) Year-end adjustment
5) Liability for tax
d. Withholding of VAT
e. Filing of return and payment of taxes withheld
1) Return and payment in case of government employees
2) Statements and returns
f. Final withholding tax at source
g. Creditable withholding tax
1) Expanded withholding tax
2) Withholding tax on compensation
h. Fringe benefit tax
B. Estate Tax
1. Basic principles
2. Definition
3. Nature
4. Purpose or object
5. Time and transfer of properties
6. Classification of decedent
7. Gross estate vis-à-vis Net estate
8. Determination of gross estate and net estate
9. Composition of gross estate
10.Items to be included in gross estate
11.Deductions from estate
12.Exclusions from estate
13.Tax credit for estate taxes paid in a foreign country
14.Exemption of certain acquisitions and transmissions
15.Filing of notice of death
16.Estate tax return
C. Donor’s Tax
1. Basic principles
2. Definition
3. Nature
4. Purpose or object
5. Requisites of valid donation
6. Transfers which may be constituted as donation
a. Sale/exchange/transfer of property for insufficient consideration
b. Condonation/remission of debt
7. Transfer for less than adequate and full consideration
8. Classification of donor
9. Determination of gross gift
10.Composition of gross gift
11.Valuation of gifts made in property
12.Tax credit for donor’s taxes paid in a foreign country
13. Exemptions of gifts from donor’s tax
14. Person liable
15. Tax basis
D. Value-Added Tax (VAT)
1. Concept
2. Characteristics
3. Impact of tax
4. Incidence of tax
5. Tax credit method
6. Destination principle
7. Persons liable
8. VAT on sale of goods or properties
a. Requisites of taxability of sale of goods or properties
9. Zero-rated sales of goods or properties, and effectively zerorated sales of goods or properties
10.Transactions deemed sale
a. Transfer, use or consumption not in the course of business of goods/properties originally intended for sale or use in the course of business
b. Distribution or transfer to shareholders, investors or creditors
c. Consignment of goods if actual sale not made within 60 days from date of consignment
d. Retirement from or cessation of business with respect to inventories on hand
11.Change or cessation of status as VAT-registered person
a. Subject to VAT
1) Change of business activity from VAT taxable status to
VAT-exempt status
2) Approval of request for cancellation of a registration due to reversion to exempt status
3) Approval of request for cancellation of registration due to desire to revert to exempt status after lapse of 3 consecutive years
b. Not subject to VAT
1) Change of control of a corporation
2) Change in the trade or corporate name
3) Merger or consolidation of corporations
12.VAT on importation of goods
a. Transfer of goods by tax exempt persons
13.VAT on sale of service and use or lease of properties
a. Requisites for taxability
14.Zero-rated sale of services
15.VAT exempt transactions
a. VAT exempt transactions, in general
b. Exempt transaction, enumerated
16.Input tax and output tax, defined
17.Sources of input tax
a. Purchase or importation of goods
b. Purchase of real properties for which a VAT has actually been paid
c. Purchase of services in which VAT has actually been paid
d. Transactions deemed sale
e. Transitional input tax
f. Presumptive input tax
g. Transitional input tax credits allowed under the transitory and other provisions of the regulations
18.Persons who can avail of input tax credit
19.Determination of output/input tax; VAT payable; Excess input tax credits
a. Determination of output tax
b. Determination of input tax creditable
c. Allocation of input tax on mixed transactions
d. Determination of the output tax and VAT payable and computation of VAT payable or excess tax credits
20.Substantiation of input tax credits
21.Refund or tax credit of excess input tax
a. Who may claim for refund/apply for issuance of tax credit certificate (TCC)
b. Period to file claim/apply for issuance of TCC
c. Manner of giving refund
d. Destination principle or Cross-border doctrine
22.Invoicing requirements
a. Invoicing requirements in general
b. Invoicing and recording deemed sale transactions
c. Consequences of issuing erroneous VAT invoice or VAT official receipt
23.Filing of return and payment
24.Withholding of final VAT on sales to government
E. Compliance Requirements (Internal Revenue Taxes)
1. Administrative requirements
a. Registration requirements
1) Annual registration fee
2) Registration of each type of internal revenue tax
3) Transfer of registration
4) Other updates
5) Cancellation of registration
6) Power of the Commissioner to suspend the business operations of any person who fails to register
b. Persons required to register for VAT
1) Optional registration for VAT of exempt person
2) Cancellation of VAT registration
3) Changes in or cessation of status of a VAT-registered person
c. Supplying taxpayer identification number (TIN)
d. Issuance of receipts or sales or commercial invoices
1) Printing of receipts or sales or commercial invoices
2) Invoicing requirements for VAT
a) Information contained in the VAT invoice or VAT official receipt
b) Consequences of issuing erroneous VAT invoice or official receipts
e. Exhibition of certificate of payment at place of business
f.Continuation of business of deceased person
g. Removal of business to other location
2. Tax returns
a. Income Tax Returns
1) Individual Tax Returns
a) Filing of individual tax returns
(1) Who are required to file
(a) Return of husband and wife
(b) Return of parent to include income of children
(c) Return of persons under disability
(2)Who are not required to file
b) Where to file
c) When to file
2) Corporate Returns
a) Requirement for filing returns
(1) Declaration of quarterly corporate income tax
(a) Place of filing
(b)Time of fling
(2) Final adjustment return
(a) Place of filing
(b)Time of filing
(3) Taxable year of corporations
(4)Extension of time to file return
b) Return of corporation contemplating dissolution or reorganization
c) Return on capital gains realized from sale of shares of stock not traded in the local stock exchange
3) Returns of receivers, trustees in bankruptcy or assignees
4) Returns of general partnerships
5) Fiduciary returns
b. Estate Tax Returns
1) Notice of death to be filed
2) Estate tax returns
a) Requirements
b) Time of filing and extension of time
c) Place of filing
3) Discharge of executor or administrator from personal liability
a) Definition of deficiency
c. Donor’s Tax Returns
1) Requirements
2) Time and place of filing
d. VAT Returns
1) In general
2) Where to file the return
e. Withholding Tax Returns
1) Quarterly returns and payments of taxes withheld
2) Annual information return
3. Tax payments
a. Income Taxes
1) Payment, in general; time of payment
2) Installment payment
3) Payment of capital gains tax
b. Estate Taxes
1) Time of payment
a) Extension of time
2) Liability for payment
a) Discharge of executor or administrator from personal liability
b) Definition of deficiency
3) Payment before delivery by executor or administrator
a) Payment of tax antecedent to the transfer of shares, bonds or rights
4) Duties of certain officers and debtors
5) Restitution of tax upon satisfaction of outstanding obligations
c. Donor’s Taxes
1) Time and place of payment
d. VAT
1) Payment of VAT
2) Where to pay the VAT
F. Tax Remedies under the NIRC
1. Taxpayer’s Remedies
a. Assessment
1) Concept of assessment
a) Requisites for valid assessment
b) Constructive methods of income determination
c) Inventory method for income determination
d) Jeopardy assessment
e) Tax delinquency and tax deficiency
2) Power of the Commissioner to make assessments and prescribe additional requirements for tax administration and enforcement
a) Power of the Commissioner to obtain information, and
to summon/examine, and take testimony of persons
3) When assessment is made
a) Prescriptive period for assessment
(1) False, fraudulent, and non-filing of returns
b) Suspension of running of statute of limitations
4) General provisions on additions to the tax
a) Civil penalties
b) Interest
5) Assessment process
a) Tax audit
b) Notice of informal conference
c) Issuance of preliminary assessment notice (PAN)
d) Notice of informal conference
e) Issuance of preliminary assessment notice (PAN)
f) Exceptions to Issuance of PAN
g) Reply to PAN
h) Issuance of formal letter of demand and assessment notice/final assessment notice
i) Disputed assessment
j) Administrative decision on a disputed assessment
6) Protesting assessment
a) Protest of assessment by taxpayer
(1) Protested assessment
(2) When to file a protest
(3) Forms of protest
b) Submission of documents within 60 days from filing of protest
c) Effect of failure to protest
7) Rendition of decision by Commissioner
a) Denial of protest
(1) CIR’s actions equivalent to denial of protest
(a) Filing of criminal action against taxpayer
(b) Issuing a warrant of distraint and levy
(2)Inaction by Commissioner
8) Remedies of taxpayer to action by Commissioner
a) In case of denial of protest
b) In case of inaction by Commissioner within 180 days from submission of documents
c) Effect of failure to appeal
b. Collection
1) Requisites
2) Prescriptive periods
3) Distraint of personal property including garnishment
a) Summary remedy of distraint of personal property
(1) Procedure for distraint and garnishment
(2) Sale of property distrained and disposition of proceeds
(a) Release of distrained property upon payment prior to sale
(3)Purchase by the government at sale upon distraint
(4) Report of sale to BIR
(5) Constructive distraint to protect the interest of the government
4) Summary remedy of levy on real property
a) Advertisement and sale
b) Redemption of property sold
c) Final deed of purchaser
5) Forfeiture to government for want of bidder
a) Remedy of enforcement of forfeitures
(1)Action to contest forfeiture of chattel
b) Resale of real estate taken for taxes
c) When property to be sold or destroyed
d) Disposition of funds recovered in legal proceedings or obtained from forfeiture
6) Further distraint or levy
7) Tax lien
8) Compromise
a) Authority of the Commissioner to compromise and abate taxes
9) Civil and criminal actions
a) Suit to recover tax based on false or fraudulent returns
c. Refund
1) Grounds and requisites for refund
2) Requirements for refund as laid down by cases
a) Necessity of written claim for refund
b) Claim containing a categorical demand for reimbursement
c) Filing of administrative claim for refund and the suit/proceeding before the CTA within 2 years from dateof payment regardless of any supervening cause
3) Legal basis of tax refunds
4) Statutory basis for tax refund under the Tax Code
a) Scope of claims for refund
b) Necessity of proof for claim or refund
c) Burden of proof for claim of refund
d) Nature of erroneously paid tax/illegally assessed collected
e) Tax refund vis-à-vis tax credit
f) Essential requisites for claim of refund
5) Who may claim/apply for tax refund/tax credit
a) Taxpayer/withholding agents of non-resident foreign corporation
6) Prescriptive period for recovery of tax erroneously or illegally collected
7) Other consideration affecting tax refunds
2. Government Remedies
a. Administrative remedies
1) Tax lien
2) Levy and sale of real property
3) Forfeiture of real property to the government for want of bidder
4) Further distraint and levy
5) Suspension of business operation
6) Non-availability of injunction to restrain collection of tax
b. Judicial remedies
3. Statutory Offenses and Penalties
a. Civil penalties
1) Surcharge
2) Interest
a) In General
b) Deficiency interest
c) Delinquency interest
d) Interest on extended payment
4. Compromise and Abatement of taxes
a. Compromise
b. Abatement
G. Organization and Function of the Bureau of Internal Revenue
1. Rule-making authority of the Secretary of Finance
a. Authority of secretary of finance to promulgate rules and regulations
b. Specific provisions to be contained in rules and regulations
c. Non-retroactivity of rulings
2. Power of the Commissioner to suspend the business operation of a taxpayer

III. Local Government Code of 1991, as amended
A. Local Government Taxation
1. Fundamental principles
2. Nature and source of taxing power
a. Grant of local taxing power under the Local Government Code
b. Authority to prescribe penalties for tax violations
c. Authority to grant local tax exemptions
d. Withdrawal of exemptions
e. Authority to adjust local tax rates
f. Residual taxing power of local governments
g. Authority to issue local tax ordinances
3. Local taxing authority
a. Power to create revenues exercised thru LGUs
b. Procedure for approval and effectivity of tax ordinances
4. Scope of taxing power
5. Specific taxing power of local government unit (LGUs)
a. Taxing powers of provinces
1) Tax on transfer of real property ownership
2) Tax on business of printing and publication
3) Franchise tax
4) Tax on sand, gravel and other quarry services
5) Professional tax
6) Amusement tax
7) Tax on delivery truck/van
b. Taxing powers of cities
c. Taxing powers of municipalities
1) Tax on various types of businesses
2) Ceiling on business tax impossible on municipalities within Metro Manila
3) Tax on retirement on business
4) Rules on payment of business tax
5) Fees and charges for regulation & licensing
6) Situs of tax collected
d. Taxing powers of barangays
e. Common revenue raising powers
1) Service fees and charges
2) Public utility charges
3) Toll fess or charges
f. Community tax
6. Common limitations on the taxing powers of LGUs
7. Collection of business tax
a. Tax period and manner of payment
b. Accrual of tax
c. Time of payment
d. Penalties on unpaid taxes, fees or charges
e. Authority of treasurer in collection and inspection of books
8. Taxpayer’s remedies
a. Periods of assessment and collection of local taxes, fees or charges
b. Protest of assessment
c. Claim for refund of tax credit for erroneously or illegally collected tax, fee or charge
9. Civil remedies by the LGU for collection of revenues
a. Local government’s lien for delinquent taxes, fees or charges
b. Civil remedies, in general
1) Administrative action
2) Judicial action
c. Procedure for administrative action
1) Distraint of personal property
2) Levy of real property, procedure
3) Further distraint or levy
4) Exemption of personal property from distraint or levy
5) Penalty on local treasurer for failure to issue and execute warrant of distraint or levy
d. Procedure for judicial action
B. Real Property Taxation
1. Fundamental principles
2. Nature of real property tax
3. Imposition of real property tax
a. Power to levy real property tax
b. Exemption from real property tax
4. Appraisal and assessment of real property tax
a. Rule on appraisal of real property at fair market value
b. Declaration of real property
c. Listing of real property in assessment rolls
d. Preparation of schedules of fair market value
1) Authority of assessor to take evidence
2) Amendment of schedule of fair market value
e. Classes of real property
f.Actual use of property as basis of assessment
g. Assessment of real property
1) Assessment levels
2) General revisions of assessments and property classification
3) Date of effectivity of assessment or reassessment
4) Assessment of property subject to back taxes
5) Notification of new or revised assessment
h. Appraisal and assessment of machinery
5. Collection of real property tax
a. Date of accrual of real property tax
b. Collection of tax
1) Collecting authority
2) Duty of assessor to furnish local treasurer with assessment rolls
3) Notice of time for collection of tax
c. Periods within which to collect real property tax
d. Special rules on payment
1) Payment of real property tax in installments
2) Interests on unpaid real property tax
3) Condonation of real property tax
e. Remedies of LGUs for collection of real property tax
1) Issuance of notice of delinquency for real property tax payment
2) Local government’s lien
3) Remedies in general
4) Resale of real estate taken for taxes, fees or charges
5) Further levy until full payment of amount due
6. Refund or credit of real property tax
a. Payment under protest
b. Repayment of excessive collections
7. Taxpayer’s remedies
a. Contesting an assessment of value of real property
1) Appeal to the Local Board of Assessment Appeals (LBAA)
2) Appeal to the Central Board of Assessment Appeals (CBAA)
3) Effect of payment of tax
b. Payment of real property under protest
1) File protest with local treasurer
2) Appeal to the LBSS
3) Appeal to the CBAA
4) Appeal to the CTA
5) Appeal to the SC

IV. Tariff and Customs Code of 1978, as amended (TCC)
A. Tariff and duties, defined
B. General rule: All imported articles are subject to duty. Importation by the government taxable.
C. Purpose for imposition
D. Flexible tariff clause
E. Requirements of importation
1. Beginning and ending of importation
2. Obligations of importer
a. Cargo manifest
b. Import entry
c. Declaration of correct weight or value
d. Liability for payment of duties
e. Liquidation of duties
f. Keeping of records
F. Importation in violation of TCC
1. Smuggling
2. Other fraudulent practices
G. Classification of goods
1. Taxable importation
2. Prohibited importation
3. Conditionally-free importation
H. Classification of duties
1. Ordinary/Regular duties
a. Ad valorem; Methods of valuation
1) Transaction value
2) Transaction value of identical goods
3) Transaction value of similar goods
4) Deductive value
5) Computed value
6) Fallback value
b. Specific
2. Special duties
a. Dumping duties
b. Countervailing duties
c. Marking duties
d. Retaliatory/Discriminatory duties
e. Safeguard
I.Drawbacks
J.Remedies
1. Government
a. Administrative/Extrajudicial
1) Search, seizure, forfeiture, arrest
b. Judicial
1) Rules on appeal including jurisdiction
2. Taxpayer
a. Protest
b. Abandonment
c. Abatement and refund

V. Judicial Remedies; Republic Act 1125 The Act that Created the Court of Tax Appeals (CTA), as amended, and the Revised Rules of the Court of Tax Appeals
A. Jurisdiction of the Court of Tax Appeals
1. Exclusive appellate jurisdiction over civil tax cases
a. Cases within the jurisdiction of the Court en banc
b. Cases within the jurisdiction of the Court in divisions
2. Criminal cases
a. Exclusive original jurisdiction
b. Exclusive appellate jurisdiction in criminal cases
B. Judicial Procedures
1. Judicial action for collection of taxes
a. Internal revenue taxes
b. Local taxes
1) Prescriptive period
2. Civil cases
a. Who may appeal, mode of appeal, effect of appeal
1) Suspension of collection of tax
a) Injunction not available to restrain collection
2) Taking of evidence
3) Motion for reconsideration or New trial
b. Appeal to the CTA, en banc,
a. Petition for review on certiorari to the Supreme Court
3. Criminal cases
a. Institution and prosecution of criminal actions
1) Institution on civil action in criminal action
b. Appeal and period to appeal
1) Solicitor General as counsel for the People and government officials sued in their official capacity
c. Petition for review on certiorari to the Supreme Court
C. Taxpayer’s suit impugning the validity of tax measures or acts of taxing authorities
a. Taxpayer’s suit, defined
b. Distinguished from citizen’s suit
c. Requisites for challenging the constitutionality of a tax measure or act of taxing authority
1) Concept of locus standi as applied in taxation
2) Doctrine of transcendental importance
3) Ripeness for judicial determination

Sunday, February 27, 2011

UN Security Council orders Libya sanctions

Agence France-Presse First Posted 09:41:00 02/27/2011
Filed Under: Foreign affairs & international relations, Treaties & International Organisations, Politics, Government, Civil unrest

UNITED NATIONS-- The UN Security Council on Saturday ordered an arms embargo against Libya, a travel and assets ban on Moamar Gadhafi's regime and ordered a crimes against humanity investigation into the bloodshed.

The council made a new demand for an immediate end to attacks on civilians by Gadhafi loyalists which it said had been incited "from the highest level of the Libyan government." The UN says more than 1,000 people have been killed in the unrest.

The travel ban and assets will target the 68-year-old Libyan leader, seven of his sons and daughter Aisha, other family members and top defence and intelligence officials accused of playing a role in the bloodshed.

Sixteen names are on the sanctions list.

The council ordered an immediate halt in arms sales to Libya and referred the civilian attacks to the International Criminal Court because it said the deaths "may amount to crimes against humanity."

Source: inquirer.net

Thursday, February 17, 2011

LEGAL DICTIONARY

DEFINITION; MEANING

Concurring opinion -- a separate opinion delivered by one or more judges which agrees with the decision of the majority of the court but offering its own reason for reaching that decision. (Manotok vs. Barque, G.R. Nos. 162335 & 162605, February 13, 2009)Good faith -- an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. (Commercial Company vs. CA, G.R. No. 122823, Nov. 25, 1999; 377 Phil. 221)

Preponderance of evidence--that evidence which is of greater weight or is more convincing than that which is in opposition to it. (Bank of the Philippine Islands vs. Reyes, G.R. No. 157177, Feb 11, 2008)

Res gestae -- statements made by the participants or the victims of, or the spectators to, a crime immediately before, during, or after its commission. These statements are a spontaneous reaction or utterance inspired by the excitement of the occasion, without any opportunity for the declarant to fabricate a false statement. (People vs. Fallones, G.R. No. 190341, Mar 16, 2011)

Unwilling or hostile witness -- one so declared by the court upon adequate showing of his adverse interest, unjustified reluctance to testify, or his having misled the party into calling him to the witness stand. (Gomez vs. Gomez-Samson, G.R. No. 156284, Feb 6, 2007)

Monday, February 14, 2011

CASE DIGEST (Transportation Law): Necesito vs. Paras

PRECILLANO NECESITO, ETC. vs. NATIVIDAD PARAS, ET AL.

G.R. No. L-10605, June 30, 1958)

FACTS:

A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Lines. While entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell into a breast-deep creek. The mother drowned and the son sustained injuries. These cases involve actions ex contractu against the owners of PRBL filed by the son and the heirs of the mother. Lower Court dismissed the actions, holding that the accident was a fortuitous event.

ISSUE:

Whether or not the carrier is liable for the manufacturing defect of the steering knuckle, and whether the evidence discloses that in regard thereto the carrier exercised the diligence required by law (Art. 1755, new Civil Code)

HELD:

Yes.

While the carrier is not an insurer of the safety of the passengers, the manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the carrier from liability. The rationale of the carrier’s liability is the fact that the passengers has no privity with the manufacturer of the defective equipment; hence, he has no remedy against him, while the carrier has. We find that the defect could be detected. The periodical, usual inspection of the steering knuckle did not measure up to the “utmost diligence of a very cautious person” as “far as human care and foresight can provide” and therefore the knuckle’s failure cannot be considered a fortuitous event that exempts the carrier from responsibility.

Sunday, February 13, 2011

CASE DIGEST (Transportation Law): Trans Asia vs. Court of Appeals

Trans-Asia Shipping Lines vs. CA

(GR 118126, 4 March 1996)

FACTS:

Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991.

At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia Thailand vessel during which he noticed that some repairs were being undertaken on the engine of the vessel. The vessel departed at around 11:00 in the evening with only one (1) engine running.

After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel headed back to Cebu City.

In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant.

On account of this failure of defendant to transport him to the place of destination on November 12, 1991, respondent Arroyo filed before the trial court “an action for damage arising from bad faith, breach of contract and from tort,” against petitioner. The trial court ruled only for breach of contract. The CA reversed and set aside said decision on appeal.

ISSUE:

Whether or not the petitioner Trans-Asia was negligent?

HELD:

Yes.

Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew.[21] The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code.

Saturday, February 12, 2011

CASE DIGEST (Transportation Law): Baliwag vs. Court of Appeals

Baliwag Transit vs. CA

(GR 116110, 15 May 1996)

FACTS:

On 31 July 1980, Leticia Garcia, and her 5-year old son, Allan Garcia, boarded Baliwag Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver.

At about 7:30 p.m., in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck, owned by A & J Trading, parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, as the shoulder of the road was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. The truck driver, and his helper were then replacing a flat tire.

Bus driver Santiago was driving at an inordinately fast speed and failed to notice the truck and the kerosene lamp at the edge of the road. Santiago’s passengers urged him to slow down but he paid them no heed. Santiago even carried animated conversations with his co-employees while driving. When the danger of collision became imminent, the bus passengers shouted “Babangga tayo!”. Santiago stepped on the brake, but it was too late. His bus rammed into the stalled cargo truck killing him instantly and the truck’s helper, and injury to several others among them herein respondents.

Thus, a suit was filed against Baliwag Transit, Inc., A & J Trading and Julio Recontique for damages in the RTC of Bulacan. After trial, it found Baliwag Transit, Inc. liable for having failed to deliver Garcia and her son to their point of destination safely in violation of Garcia’s and Baliwag Transit’s contractual relation; and likewise found A & J and its truck driver liable for failure to provide its cargo truck with an early warning device in violation of the Motor Vehicle Law. All were ordered to pay solidarily the Garcia spouses.

On appeal, the CA modified the trial court’s Decision by absolving A & J Trading from liability.

ISSUE:

Whether or not Baliwag should be held solely liable for the injuries.

HELD:

Yes.

As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.

Article 1759 of the Civil Code provides that “Common carriers are liable for the death of or injuries to passengers through the negligence or willfull acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers do not cease upon proof that they exercised all the diligence of a good father of a family in the selection or supervision of their employees.”

Section 34 (g) of the Land Transportation and Traffic Code provides “Lights and reflector when parked or disabled. — Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered. ”

x x x However, the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device. This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code. The law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible 100 meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique.

The Supreme Court affirmed the Decision of the Court of Appeals (CA-GR CV-31246) with the modification reducing the actual damages for hospitalization and medical fees to P5,017.74; without costs.

Friday, February 11, 2011

CASE DIGEST (Transportation Law): Pilapil vs. CA

JOSE PILAPIL vs. COURT OF APPEALS and ALATCO TRANSPORTATION COMPANY, INC.

(G.R. No. 52159, December 22, 1989)

FACTS:

Petitioner Pilapil, on board respondent’s bus was hit above his eye by a stone hurled by an unidentified bystander. Respondent’s personnel lost no time in bringing him to a hospital, but eventually petitioner partially lost his left eye’s vision and sustained a permanent scar.

Thus, Petitioner lodged an action for recovery of damages before the Court of First Instance of Camarines Sur which the latter granted. On appeal, the Court of Appeals reversed said decision.

ISSUE:

Whether or not common carriers assume risks to passengers such as the stoning in this case?

HELD:

In consideration of the right granted to it by the public to engage in the business of transporting passengers and goods, a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof.

x x x

While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers.

x x x

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

Clearly under the above provision, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carrier's employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. Further, under the same provision, it is to be noted that when the violation of the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family.

Thursday, February 10, 2011

CASE DIGEST (Transportation Law): Sabena vs. Court of Appeals

Sabena Belgian World Airlines vs. CA

(GR 104685, 14 March 1996)

FACTS:

Private respondent MA. PAULA SAN AGUSTIN was a passenger on board Flight SN 284 of defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in her luggage which contained her valuables all amounting to $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. Upon Arrival in Manila, she learned that her luggage was missing and was advised to accomplish and submit a property Irregularity Report which she submitted and filed on the same day.

Upon follow up, it remained missing; thus, she filed her formal complaint with the office of Ferge Massed, petitioner’s Local Manager, demanding immediate attention.

Two weeks later she was notified that her luggage was found. But unfortunately plaintiff was informed that the luggage was lost for the second time. She demanded payment but the airline refused to settle the claim.

The trial court ruled in favor of Ma. Paula San Agustin. The appellate court affirmed in toto the trial court’s judgment.

Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that:

“Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables.”

ISSUE:

Whether or not the airline is negligent? Whether respondent’s negligence is the sole and proximate of the loss?

HELD:

Yes.

Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due diligence of a good father of a family but that of “extraordinary” care in the vigilance over the goods. The appellate court has aptly observed:

“x x x Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time the goods are unconditionally placed in the possession of and received by the carrier until they are delivered actually or constructively to the consignee or person who has the right to receive them. Art. 1737 states that the common carrier’s duty to observe extraordinary diligence in the vigilance over the goods transported by them ‘remains in full force and effect even when they are temporarily unloaded or stored in transit.’ And Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733.

The above rules remain basically unchanged even when the contract is breached by tort although noncontradictory principles on quasi-delict may then be assimilated as also forming part of the governing law. Petitioner is not thus entirely off track when it has likewise raised in its defense the tort doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in this particular instance, support its case. Proximate cause is that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred.

The above findings, which certainly cannot be said to be without basis, foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention .

The Warsaw Convention however denies to the carrier availment ‘of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct,’ or ‘if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment.’

The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or as an absolute limit of the extent of that liability.

( Loss of baggage twice shows gross negligence)

Wednesday, February 9, 2011

CASE DIGEST (Transportation Law): Vlasons vs. Court of Appeals

VLASONS SHIPPING, INC vs. CA and NATIONAL STEEL CORPORATION

[G.R. No. 112350. December 12, 1997]

NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC.

[G.R. No. 112287. December 12, 1997]

FACTS:

National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSI’s vessel, the MV ‘VLASONS I’ to make one (1) voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a “special contract of charter party.”

The vessel arrived with the cargo in Manila, but when the vessel’s three (3) hatches containing the shipment were opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty.

NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the “act, neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant to make the vessel seaworthy … -- all in violation of defendant’s undertaking under their Contract of Voyage Charter Hire.”

In its answer, defendant denied liability for the alleged damage claiming that the MV ‘VLASONS I’ was seaworthy in all respects for the carriage of plaintiff’s cargo; that said vessel was not a ‘common carrier’ inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party.

The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.

ISSUE:

Whether or not Vlazons is a private carrier.

HELD:

Yes.

At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case.

Article 1732 of the Civil Code defines a common carrier as “persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.” It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a private carrier. “Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages.”

In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, it carried passengers or goods only for those it chose under a “special contract of charter party.” As correctly concluded by the Court of Appeals, the MV Vlasons I “was not a common but a private carrier.” Consequently, the rights and obligations of VSI and NSC, including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, the Court ruled:

“ x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers.”

Tuesday, February 8, 2011

CASE DIGEST (Transportation Law): Loadstar Shipping vs. CA

Loadstar Shipping vs. Court of Appeals

(GR 131621, 28 September 1999)

FACTS :

Loadstar Shipping Co. Inc. received on board its M/V “Cherokee” goods, amounting to P6,067,178, which were insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks including “total loss by total loss of the vessel.” The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4 million. On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor.

MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo. The trial court rendered judgment in favor of MIC. Loadstar elevated the matter to the Court of Appeals, which affirmed the RTC’s decision in toto.

ISSUE:

Whether or not Loadstar is a common carrier.

HELD:

Yes.

x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled.

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine.

These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."14 ["A general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce is a common carrier." (Baer, Senior & Co.’s Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool Steamship Co. v. Phoenix Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev. Ed. 1989).] Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers.

Monday, February 7, 2011

CASE DIGEST (Transportation Law): Ganzon vs. CA

GANZON vs.COURT OF APPEALS and GELACIO E. TUMAMBING

(G.R. No. L-48757, May 30, 1988)

FACTS:

On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman. Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three feet of water. Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain's supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing who sustained injuries.

After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron.

Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his custody and control to make him liable. The trial court dismissed the case but on appeal, respondent Court rendered a decision reversing the decision of the trial court and ordering Ganzon to pay damages.

ISSUE:

Whether or not a contract of carriage has been perfected.

HELD:

Yes.

By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded.

Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accumulated by the appellant through separate purchases here and there from private individuals. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5,000.00. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out.

Sunday, February 6, 2011

CASE DIGEST (Transportation Law): Aboitiz vs. CA

ABOITIZ SHIPPING CORPORATION vs. COURT OF APPEALS, LUCILA C. VIANA, SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER STEVEDORING CORPORATION

(G.R. No. 84458 November 6, 1989)

FACTS:

Anacleto Viana boarded the vessel M/V Antonia, owned by Aboitiz Shipping Corporation, at the port at San Jose, Occidental Mindoro, bound for Manila. After said vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive control of the cargoes loaded on said vessel pursuant to the Memorandum of Agreement between Pioneer and petitioner Aboitiz.

The crane owned by Pioneer was placed alongside the vessel and one (1) hour after the passengers of said vessel had disembarked, it started operation by unloading the cargoes from said vessel. While the crane was being operated, Anacleto Viana who had already disembarked from said vessel obviously remembering that some of his cargoes were still loaded in the vessel, went back to the vessel, and it was while he was pointing to the crew of the said vessel to the place where his cargoes were loaded that the crane hit him, pinning him between the side of the vessel and the crane. He was thereafter brought to the hospital where he later expired three (3) days thereafter.

Private respondents Vianas filed a complaint for damages against petitioner for breach of contract of carriage. Aboitiz denied responsibility contending that at the time of the accident, the vessel was completely under the control of respondent Pioneer Stevedoring Corporation as the exclusive stevedoring contractor of Aboitiz, which handled the unloading of cargoes from the vessel of Aboitiz.

ISSUE:

Whether or not Aboitiz is negligent and is thus liable for the death.

HELD:

Yes.

x x x [T]he victim Anacleto Viana guilty of contributory negligence, but it was the negligence of Aboitiz in prematurely turning over the vessel to the arrastre operator for the unloading of cargoes which was the direct, immediate and proximate cause of the victim's death.

The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner's dock or premises. 11 Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier's conveyance or had a reasonable opportunity to leave the carrier's premises. All persons who remain on the premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. 12 The carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for example, such person remains in the carrier's premises to claim his baggage.

It is apparent from the foregoing that what prompted the Court to rule as it did in said case is the fact of the passenger's reasonable presence within the carrier's premises. That reasonableness of time should be made to depend on the attending circumstances of the case, such as the kind of common carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of the time element per se without taking into account such other factors. It is thus of no moment whether in the cited case of La Mallorca there was no appreciable interregnum for the passenger therein to leave the carrier's premises whereas in the case at bar, an interval of one (1) hour had elapsed before the victim met the accident. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner's vessel. We believe there exists such a justifiable cause.

It is of common knowledge that, by the very nature of petitioner's business as a shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than other common carriers such as a passenger bus. With respect to the bulk of cargoes and the number of passengers it can load, such vessels are capable of accommodating a bigger volume of both as compared to the capacity of a regular commuter bus. Consequently, a ship passenger will need at least an hour as is the usual practice, to disembark from the vessel and claim his baggage whereas a bus passenger can easily get off the bus and retrieve his luggage in a very short period of time. Verily, petitioner cannot categorically claim, through the bare expedient of comparing the period of time entailed in getting the passenger's cargoes, that the ruling in La Mallorca is inapplicable to the case at bar. On the contrary, if we are to apply the doctrine enunciated therein to the instant petition, we cannot in reason doubt that the victim Anacleto Viana was still a passenger at the time of the incident. When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from petitioner's vessel. As earlier stated, a carrier is duty bound not only to bring its passengers safely to their destination but also to afford them a reasonable time to claim their baggage.

Saturday, February 5, 2011

CASE DIGEST (Transportation Law): Baliwag Transit vs. CA

Baliwag Transit vs. CA

(GR 116110, 15 May 1996)

Saturday, January 15, 2011

CASE DIGEST (Transportation Law): PHILTRANCO vs. CA

PHILTRANCO vs. Court of Appeals

(G.R. No. 120553 June 17, 1997)

FACTS:

Ramon Acuesta, while riding in his bicycle, was bumped and ran over by a defendant’s bus which resulted to his death.

As expected, the heirs of Ramon filed a suit for damages with the trial court which eventually ordered, after trial, that the petitioners to jointly and severally pay the private respondents the following amounts:

1) P55, 615.72 as actual damages;
2) P200,000 as death indemnity for the death of the victim Ramon A. Acuesta;
3) P1 million as moral damages;
4) P500,000 by way of exemplary damages;
5) P50,000 as attorney's fees; and
6) the costs of suit.

On appeal, the CA affirmed the trial court’s decision.

ISSUE:

Whether or not the damages awarded are improper and excessive.

HELD: Yes.

The trial court erroneously fixed the "death indemnity" at P200,000. The private respondents defended the award in their Opposition to the Motion for Reconsideration by saying that "[i]n the case of Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, our Supreme Court held that the award of damages for death is computed on the basis of the life expectancy of the deceased." In that case, the "death indemnity" was computed by multiplying the victim's gross annual income by his life expectancy, less his yearly living expenses. Clearly then, the "death indemnity" referred to was the additional indemnity for the loss of earning capacity mentioned in Article 2206(1) of the Civil Code, and not the basic indemnity for death mentioned in the first paragraph thereof. This article provides as follows:

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death;

We concur with petitioners' view that the trial court intended the award of "P200,000.00 as death indemnity" not as compensation for loss of earning capacity. Even if the trial court intended the award as indemnity for loss of earning capacity, the same must be struck out for lack of basis. There is no evidence on the victim's earning capacity and life expectancy.

Only indemnity for death under the opening paragraph of Article 2206 is due, the amount of which has been fixed by current jurisprudence at P50,000.

The award of P1 million for moral damages to the heirs of Ramon Acuesta has no sufficient basis and is excessive and unreasonable. This was based solely on the testimony of one of the heirs, Atty. Julio Acuesta, x x x. Since the other heirs of the deceased did not take the witness stand, the trial court had no basis for its award of moral damages to those who did not testify thereon.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They are awarded only to allow the former to obtain means, diversion, or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant's culpable action and must, perforce, be proportional to the suffering inflicted. 20 In light of the circumstances in this case, an award of P50,000 for moral damages is in order.

The award of P500,000 for exemplary damages is also excessive. In quasi-delicts, exemplary damages may be awarded if the party at fault acted with gross negligence. The Court of Appeals found that there was gross negligence on the part of petitioner Manilhig. Under Article 2229 of the Civil Code, exemplary damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated, or compensatory damages. Considering its purpose, it must be fair and reasonable in every case and should not be awarded to unjustly enrich a prevailing party. In the instant case, an award of P50,000 for the purpose would be adequate, fair, and reasonable.

Finally, the award of P50,000 for attorney's fees must be reduced. The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. Stated otherwise, the grant of attorney's fees as part of damages is the exception rather than the rule, as counsel's fees are not awarded every time a party prevails in a suit. Such attorney's fees can be awarded in the cases enumerated in Article 2208 of the Civil Code, and in all cases it must be reasonable. In the instant case, the counsel for the plaintiffs is himself a co-plaintiff; it is then unlikely that he demanded from his brothers and sisters P100,000 as attorney's fees as alleged in the complaint and testified to by him. He did not present any written contract for his fees. He is, however, entitled to a reasonable amount for attorney's fees, considering that exemplary damages are awarded. Among the instances mentioned in Article 2208 of the Civil Code when attorney's fees may be recovered is "(1) when exemplary damages are awarded." Under the circumstances in this case, an award of P25,000 for attorney's fees is reasonable.

The petitioners did not contest the award for actual damages fixed by the trial court. Hence, such award shall stand.

Friday, January 14, 2011

CASE DIGEST (Transportation Law): PNR vs.CA

PNR vs.Court of Appeals

(G.R. No. L-55347 October 4, 1985)

FACTS:

Winifredo Tupang, husband of respondent Rosario Tupang, boarded 'Train No. 516 of petitioner at Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the train resulting in his death. The train did not stop despite the alarm raised by the other passengers that somebody fell from the train. Instead, the train conductor Perfecto Abrazado, called the station agent at Candelaria, Quezon, and requested for verification of the information. Police authorities of Lucena City were dispatched to the Iyam Bridge where they found the lifeless body of Winifredo Tupang.

Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instance of Rizal, after trial, held the petitioner PNR liable for damages for breach of contract of carriage and ordered "to pay the plaintiff the sum of P12,000,00 for the death of Winifredo Tupang, plus P20,000.00 for loss of his earning capacity and the further sum of P10,000.00 as moral damages, and P2,000.00 as attorney's fees, and costs.

On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise the utmost diligence required by law of a common carrier. It further increased the amount adjudicated by the trial court by ordering PNR to pay the plaintiff an additional sum of P5,000.00 as exemplary damages.

ISSUE:

Whether or not petitioner is liable as a common carrier.

HELD:

The appellate court found, the petitioner does not deny, that the train boarded by the deceased Winifredo Tupang was so over-crowded that he and many other passengers had no choice but to sit on the open platforms between the coaches of the train. It is likewise undisputed that the train did not even slow down when it approached the Iyam Bridge which was under repair at the time, Neither did the train stop, despite the alarm raised by other passengers that a person had fallen off the train at lyam Bridge.

The petitioner has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in the performance of its obligation under the contract of carriage. Thus, as correctly ruled by the respondent court, the petitioner failed to overthrow such presumption of negligence with clear and convincing evidence.

But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears that the deceased was chargeable with contributory negligence. Since he opted to sit on the open platform between the coaches of the train, he should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from the speeding train. Such contributory negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the amount adjudicated as moral damages. By the same token, the award of exemplary damages must be set aside. Exemplary damages may be allowed only in cases where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. There being no evidence of fraud, malice or bad faith on the part of petitioner, the grant of exemplary damages should be discarded.

WHEREFORE, the decision of the respondent appellate court is hereby modified by eliminating therefrom the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages, respectively. No costs.

Thursday, January 13, 2011

How to Repair Electric Fans

If your electric fan (stand fan) suddenly stops working, do not discard it yet. You might just be able to fix it and save money by not buying a new one. First, try to feel or sense whether the motor is still running while it is switched on. If not, it is most likely that the motor needs a rewinding. This costs around P 250-P 280 in an ordinary repair shop. Some shops charge P380 to P 480, so ask around if you have a number of them in your area or community.

Electric fans suddenly halting is usually caused by overheating. They need at least two hours of rest a day for them not to overheat.

However, if you sensed that the motor is still functioning even if the blades are not spinning, it may just need an oiling. The motor oil might just have dried up. You can use Singer oil which is available in any supermarket. Detach the cover screen and the blades and drop some oil at the base of the iron bar sticking out (this is where the blades are attached).

For broken blades or other parts,there are shops who sell replacement parts. Ordinary blades cost around P180 apiece.

SEE ALSO: Electric Fan Repair

Wednesday, January 5, 2011

CASE DIGEST (Transportation Law): Singson vs. CA

SINGSON vs. COURT OF APPEALS and CATHAY PACIFIC AIRWAYS

(G.R. No. 119995. November 18, 1997)

FACTS:

Petitioner CARLOS SINGSON and his cousin Crescentino Tiongson bought from respondent Cathay Pacific Airways two (2) open-dated, identically routed, round trip plane tickets (Manila to LA and vice versa). Each ticket consisted of six (6) flight coupons, each would be detached at the start of each leg of the trip.

Singson failed to obtain a booking in LA for their to Manila; apparently, the coupon corresponding to the 5th leg of the trip was missing and instead the 3rd was still attached. It was not until few days later that the defendant finally was able to arrange for his return to Manila.

Singson commenced an action for damages based on breach of contract of carriage against CATHAY before the Regional Trial Court.

CATHAY alleged that there was no contract of carriage yet existing such that CATHAY’s refusal to immediately book him could not be construed as breach of contract of carriage.

The trial court rendered a decision in favor of petitioner herein holding that CATHAY was guilty of gross negligence amounting to malice and bad faith for which it was adjudged to pay petitioner P20,000.00 for actual damages with interest at the legal rate of twelve percent (12%) per annum from 26 August 1988 when the complaint was filed until fully paid, P500,000.00 for moral damages, P400,000.00 for exemplary damages, P100,000.00 for attorney’s fees, and, to pay the costs.

On appeal by CATHAY, the Court of Appeals reversed the trial court’s finding that there was gross negligence amounting to bad faith or fraud and, accordingly, modified its judgment by deleting the awards for moral and exemplary damages, and the attorney’s fees as well.

ISSUES:

1.) whether a breach of contract was committed by CATHAY when it failed to confirm the booking of petitioner.

2.) whether the carrier was liable not only for actual damages but also for moral and exemplary damages, and attorney’s fees.

HELD:

1.) Yes. x x x the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the carrier and the passenger. It had all the elements of a complete written contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hong Kong back to the Philippines, and the carrier’s acceptance to bring him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of departure to the place of destination and back, which are also stated in his ticket. In fact, the contract of carriage in the instant case was already partially executed as the carrier complied with its obligation to transport the passenger to his destination, i.e., Los Angeles. , x x x the loss of the coupon was attributable to the negligence of CATHAY’s agents and was the proximate cause of the non-confirmation of petitioner's return flight.

2.) Yes. x x x Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages.

x x x these circumstances reflect the carrier’s utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence, recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is shown to have acted fraudulently, with malice or in bad faith, the award of moral and exemplary damages, in addition to actual damages, is proper.

However, the P500,000.00 moral damages and P400,000.00 exemplary damages awarded by the trial court have to be reduced. The well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case. This discretion is limited by the principle that the "amount awarded should not be palpably and scandalously excessive" as to indicate that it was the result of prejudice or corruption on the part of the trial court. Damages are not intended to enrich the complainant at the expense of the defendant. They are awarded only to alleviate the moral suffering that the injured party had undergone by reason of the defendant's culpable action. There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts.

In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00. The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is, in our view, reasonable and realistic.

On the issue of actual damages, we agree with the Court of Appeals that the amount of P20,000.00 granted by the trial court to petitioner should not be disturbed.

As regards attorney's fees, they may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. It was therefore erroneous for the Court of Appeals to delete the award made by the trial court; consequently, petitioner should be awarded attorney's fees and the amount of P25,000.00, instead of P100,000.00 earlier awarded, may be considered rational, fair and reasonable.

Tuesday, January 4, 2011

CASE DIGEST (Transportation Law): PAL. vs. C.A.

Philippine Air Lines vs. Court of Appeals

GR 120262, 17 July 1997)

FACTS:

On 23 October 1988, Leovigildo A. Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City. However, due to typhoon Osang, the connecting flight to Surigao City was cancelled. To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of P 100.00 and, the next day, P200.00, for their expected stay of 2 days in Cebu. Pantejo requested instead that he be billeted in a hotel at the PAL’s expense because he did not have cash with him at that time, but PAL refused. Thus, Pantejo was forced to seek and accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching Surigao. On 25 October 1988 when the flight for Surigao was resumed, Pantejo came to know that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales and a certain Mrs. Gloria Rocha, an Auditor of the Philippine National Bank, were reimbursed by PAL. At this point, Pantejo informed Oscar Jereza, PAL’s Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for discriminating against him. It was only then that Jereza offered to pay Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the latter declined.

Pantejo filed a suit for damages against PAL with the RTC of Surigao City which, after trial, rendered judgment, ordering PAL to pay Pantejo P300.00 for actual damages, P150,000.00 as moral damages, P100,000.00 as exemplary damages, P15,000.00 as attorney’s fees, and 6% interest from the time of the filing of the complaint until said amounts shall have been fully paid, plus costs of suit.

On appeal, the appellate court affirmed the decision of the court a quo, but with the exclusion of the award of attorney’s fees and litigation expenses.

The Supreme Court affirmed the challenged judgment of Court of Appeals, subject to the modification regarding the computation of the 6% legal rate of interest on the monetary awards granted therein to Pantejo.

ISSUE:

Whether petitioner airlines acted in bad faith when it failed and refused to provide hotel accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred by reason of the cancellation of its connecting flight to Surigao City due to force majeur.

HELD:
A contract to transport passengers is quite different in kind and degree from any other contractual relation, and this is because of the relation which an air carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier’s employees naturally could give ground for an action for damages.

The discriminatory act of PAL against Pantejo ineludibly makes the former liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. As held in Alitalia Airways vs. CA, et al., such inattention to and lack of care by the airline for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They are awarded only to allow the former to obtain means, diversion, or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant’s culpable action and must, perforce, be proportional to the suffering inflicted. However, substantial damages do not translate into excessive damages. Herein, except for attorney’s fees and costs of suit, it will be noted that the Courts of Appeals affirmed point by point the factual findings of the lower court upon which the award of damages had been based.

The interest of 6% imposed by the court should be computed from the date of rendition of judgment and not from the filing of the complaint.

The rule has been laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals, et. al. that “when an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.” This is because at the time of the filling of the complaint, the amount of the damages to which Pantejo may be entitled remains unliquidated and not known, until it is definitely ascertained, assessed and determined by the court, and only after the presentation of proof thereon.

Monday, January 3, 2011

CASE DIGEST (Transportation Law): Bacarro vs. Castano

Bacarro vs. Castano

(GR L-34597, 5 November 1982)

FACTS:

Respondent Castano boarded a jeep driven by Petitioner Montefalcon who thereafter drove it at around 40 kilometers per hour. While approaching Sumasap Bridge at the said speed, a cargo truck coming from behind, blowing its horn to signal its intention to overtake the jeep. The jeep, without changing its speed, gave way by swerving to the right, such that both vehicles ran side by side for a distance of around 20 meters. Thereafter as the jeep was left behind, its driver was unable to return it to its former lane and instead it obliquely or diagonally ran down an inclined terrain towards the right until it fell into a ditch pinning down and crushing Castano’s right leg in the process.

Castano filed a case for damages against Rosita Bacarro, William Sevilla, and Felario Montefalcon. Defendants alleged that the jeepney was sideswiped by the overtaking cargo truck. After trial, the CFI of Misamis Oriental ordered Bacarro, et.al. to jointly and severally pay Castano. It was affirmed by the CA upon appeal.

ISSUES:

1. Whether or not there was a contributory negligence on the part of the jeepney driver.
2. Whether or not extraordinary diligence is required of the jeepney driver.
3. Whether or not the sideswiping is a fortuitous event.

HELD:

1.) Yes. X x x. The fact is, petitioner-driver Montefalcon did not slacken his speed but instead continued to run the jeep at about forty (40) kilometers per hour even at the time the overtaking cargo truck was running side by side for about twenty (20) meters and at which time he even shouted to the driver of the truck.

Thus, had Montefalcon slackened the speed of the jeep at the time the truck was overtaking it, instead of running side by side with the cargo truck, there would have been no contact and accident. He should have foreseen that at the speed he was running, the vehicles were getting nearer the bridge and as the road was getting narrower the truck would be to close to the jeep and would eventually sideswiped it. Otherwise stated, he should have slackened his jeep when he swerved it to the right to give way to the truck because the two vehicles could not cross the bridge at the same time.

2.) Yes. x x x [T]he fact is, there was a contract of carriage between the private respondent and the herein petitioners in which case the Court of Appeals correctly applied Articles 1733, 1755 and 1766 of the Civil Code which require the exercise of extraordinary diligence on the part of petitioner Montefalcon.

Indeed, the hazards of modern transportation demand extraordinary diligence. A common carrier is vested with public interest. Under the new Civil Code, instead of being required to exercise mere ordinary diligence a common carrier is exhorted to carry the passengers safely as far as human care and foresight can provide "using the utmost diligence of very cautious persons." (Article 1755). Once a passenger in the course of travel is injured, or does not reach his destination safely, the carrier and driver are presumed to be at fault.

3.) The third assigned error of the petitioners would find fault upon respondent court in not freeing petitioners from any liability, since the accident was due to a fortuitous event. But, We repeat that the alleged fortuitous event in this case - the sideswiping of the jeepney by the cargo truck, was something which could have been avoided considering the narrowness of the Sumasap Bridge which was not wide enough to admit two vehicles. As found by the Court of Appeals, Montefalcon contributed to the occurrence of the mishap.

Sunday, January 2, 2011

CASE DIGEST (Transportation Law): Barrios vs. Go Thong

Barrios vs. Go Thong

GR L-17192, 30 March 1963)

FACTS:
Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel, and steered and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon getting close to the MV Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also released.

Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an appeal.

ISSUE:
Whether under the facts of the case, the service rendered by plaintiff to defendant constituted "salvage" or "towage", and if so, whether plaintiff may recover from defendant compensation for such service.

HELD:
It is not a salvage service.

Salvage defined
“Salvage” has been defined as “the compensation allowed to persons by whose assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or recapture.”

Elements for a valid salvage claim; Erlanger & Galinger case
In the Erlanger & Galinger case, it was held that three elements are necessary to a valid salvage claim, namely, (1) a marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service rendered contributed to such success.

No marine peril to justify valid salvage claim
There was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It appears that although Go Thong’s vessel in question was, on the night of 1 May 1958, in a helpless condition due to engine failure, it did not drift too far from the place where it was. The weather was fair, clear, and good. The waves were small and too slight, so much so, that there were only ripples on the sea, which was quite smooth. During the towing of the vessel on the same night, there was moonlight. Although said vessel was drifting towards the open sea, there was no danger of its foundering or being stranded, as it was far from any island or rocks. In case of danger of stranding, its anchor could be released, to prevent such occurrence. There was no danger that Go Thong’s vessel would sink in view of the smoothness of the sea and the fairness of the weather. That there was absence of danger is shown by the fact that said vessel or its crew did not even find it necessary to lower its launch and two motor boats, in order to evacuate its passengers aboard. Neither did they find occasion to jettison the vessel’s cargo as a safety measure. Neither the passengers nor the cargo were in danger of perishing. All that the vessel’s crew members could not do was to move the vessel on its own power. That did not make the vessel a quasi-derelict.

Contract of towage perfected even without written agreement
Herein, in consenting to Barrios’ offer to tow the vessel, Go Thong (through the captain of its vessel MV Don Alfredo) thereby impliedly entered into a juridical relation of “towage” with the owner of the vessel MV Henry I, captained by Barrios, the William Lines.

Only owner entitled to remuneration in towage
If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to remuneration. The courts have to draw a distinct line between salvage and towage; for the reason that a reward ought sometimes to be given to the crew of the salvage vessel and to other participants in salvage services, and such reward should not be given if the services were held to be merely towage. The master and members of the crew of a tug were not entitled to participate in payment by liberty ship for services rendered by tug which were towage services and not salvage services. The distinction between salvage and towage is of importance to the crew of the salvaging ship, for the following reasons: If the contract for towage is in fact towage, then the crew does not have any interest or rights in the remuneration pursuant to the contract. But if the owners of the respective vessels are of a salvage nature, the crew of the salvaging ship is entitled to salvage, and can look to the salved vessel for its share.

Equity cannot be resorted if there is an express provision of law
Barrios cannot invoke equity in support of his claim for compensation against Go Thong. There being an express provision of law (Art. 2142, Civil Code) applicable to the relationship created in the case, i.e. that of a quasi-contract of towage where the crew is not entitled to compensation separate from that of the vessel, there is no occasion to resort to equitable considerations.

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