CIR vs. ALGUE INC.

FACTS:

Algue Inc. is a domestic corporation engaged in engineering, construction and other allied
activities. On Jan. 14, 1965, the corporation received a letter from the CIR regarding its delinquency
income taxes from 1958-1959, amounting to P83,183.85. A letter of protest or reconsideration was filed
by Algue Inc. on January 18. On March 12, a warrant of distraint and levy was presented to Algue Inc.
thru its counsel, Atty. Guevara, who refused to receive it on the ground of the pending protest. Since the
protest was not found on the records, a file copy from the corporation was produced and given to BIR
Agent Reyes, who deferred service of the warrant. On April 7, Atty. Guevara was informed that the BIR
was not taking any action on the protest and it was only then that he accepted the warrant of distraint
and levy earlier sought to be served. On April 23, Algue filed a petition for review of the decision of the
CIR with the Court of Tax Appeals.

On the other hand, the CIR contends that a.) The claimed deduction of P75,000.00 was properly
disallowed because it was not an ordinary reasonable or necessary business expense b.)Payments are
fictitious because most of the payees are members of the same family in control of Algue and that there
is not enough substantiation of such payments

Court of Tax Appleals ruled in favor of Algue Inc. stating that 75K had been legitimately paid by
Algue Inc. for actual services rendered in the form of promotional fees. These were collected by the
Payees for their work in the creation of the Vegetable Oil Investment Corporation of the Philippines and
its subsequent purchase of the properties of the Philippine Sugar Estate Development Company.

ISSUE

Whether or not the the BIR correctly disallowed the deduction

RULING:

The burden is on the taxpayer to prove the validity of the claimed deduction. Here, the onus has been
discharged satisfactorily. Here, the onus has been discharged satisfactorily. The promotional fees were
necessary and reasonable in the light of the efforts exerted by the payees in the inducement of investors
to venture in an experimental enterprise. Thus, the payees should be sufficiently recompensed.
JAVELLANA v. EXECUTIVE SECRETARY

FACTS

On January 20, 1973, just two days before the Supreme Court decided the sequel of plebiscite cases,
Jose Javellana filed this suit against the respondents to restrain them from implementing any of the
provisions of the proposed Constitution not found in the present 1935 Constitution. This is a petition
filed by him as a Filipino citizen and a qualified and registered voter and as a class suit, for himself and in
behalf of all citizens and voters similarly situated. Javellana also alleged that the President had
announced the immediate implementation of the new constitution, thru his Cabinet, respondents
including.

Respondents are acting without or in excess of jurisdiction in implementing the said proposed
constitution upon ground the that the President as Commander-in-Chief of the AFP is without authority
to create the Citizens Assemblies; without power to approve proposed constitution; without power to
proclaim the ratification by the Filipino people of the proposed constitution; and the election held to
ratify the proposed constitution was not a free election, hence null and void.

Following that, petitioners prayed for the nullification of Proclamation No. 1102 and any order, decree,
and proclamation which have the same import and objective.

ISSUE

1. Is the validity of Proclamation No. 1102 justiciable?

2. Was the constitution proposed by the 1971 Constitutional Convention ratified validly in
compliance to applicable laws?
3. Was the proposed Constitution acquiesced by the people?
4. Are the petitioners entitled relief?
5. Is the proposed Constitution in force?

RULINGS

First. To determine whether or not the new constitution is in force depends upon whether or not the
said new constitution has been ratified in accordance with the requirements of the 1935 Constitution. It
is well settled that the matter of ratification of an amendment to the constitution should be settled
applying the provisions of the constitution in force at the time of the alleged ratification of the old
constitution.
The issue whether the new constitution proposed has been ratified in accordance with the provisions of
Article XV of the 1935 Constitution is justiciable as jurisprudence here and in the US (from whom we
patterned our 1935 Constitution) shall show.

Second. The Constitution does not allow Congress or anybody else to vest in those lacking the
qualifications and having the disqualifications mentioned in the Constitution the right of suffrage.

The votes of persons less than 21 years of age render the proceedings in the Citizen’s assemblies void.
Proceedings held in such Citizen’s Assemblies were fundamentally irregular, in that persons lacking the
qualifications prescribed in Article V Section 1 of the 1935 Constitution were allowed to vote in said
Assemblies. And, since there is no means by which the invalid votes of those less than 21 years of age
can be separated or segregated from those of the qualified voters, the proceedings in the Citizen’s
Assemblies must be considered null and void.

Viva voce voting for the ratification of the constitution is void. Article XV of the 1935 Constitution
envisages with the term "votes cast" choices made on ballots – not orally or by raising hands – by the
persons taking part in plebiscites. This is but natural and logical, for, since the early years of the
American regime, we had adopted the Australian Ballot System, with its major characteristics, namely,
uniform official ballots prepared and furnished by the Government and secrecy in the voting, with the
advantage of keeping records that permit judicial inquiry, when necessary, into the accuracy of the
election returns.

The plebiscite on the constitution not having been conducted under the supervision of COMELEC is void.
The point is that, such of the Barrio Assemblies as were held took place without the intervention of the
COMELEC and without complying with the provisions of the Election Code of 1971 or even of those of
Presidential Decree No. 73. The procedure therein mostly followed is such that there is no reasonable
means of checking the accuracy of the returns filed by the officers who conducted said plebiscites. This
is another patent violation of Article X of the 1935 Constitution which form part of the fundamental
scheme set forth in the 1935 Constitution, as amended, to insure the "free, orderly, and honest"
expression of the people's will. For this, the alleged plebiscite in the Citizen’s Assemblies is null and void,
insofar as the same are claimed to have ratified the revised Constitution.

Third. Proclamation No. 1102 is not an evidence of ratification. Article X of the 1935 Constitution places
COMELEC the "exclusive" charge to the "the enforcement and administration of all laws relative to the
conduct of elections," independently of the Executive. But there is not even a certification by the
COMELEC in support of the alleged results of the citizen’s assemblies relied upon in Proclamation No.
1102. Also, on January 17, 1973 neither the alleged president of the Federation of Provincial or City
Barangays nor the Department of Local Governments had certified to the President the alleged result of
the citizens' assemblies all over the Philippines. The citizen’s assemblies did not adopt the proposed
constitution. It is to my mind a matter of judicial knowledge that there have been no such citizen’s
assemblies in many parts of Manila and suburbs, not to say, also, in other parts of the Philippines.
Fourth. The Court is not prepared to concede that the acts the officers and offices of the Executive
Department, in line with Proclamation No. 1102, connote recognition of or acquiescence to the
proposed Constitution.

A department of the Government cannot “recognize” its own acts. Recognition normally connotes the
acknowledgment by a party of the acts of another. Individual acts of recognition by members of
Congress do not constitute congressional recognition, unless the members have performed said acts in
session duly assembled. This is a well-established principle of Administrative Law and of the Law of
Public Officers. The compliance by the people with the orders of martial law government does not
constitute acquiescence to the proposed Constitution. Neither does the Court prepared to declare that
the people's inaction as regards Proclamation No. 1102, and their compliance with a number of
Presidential orders, decrees and/or instructions, some or many of which have admittedly had salutary
effects, issued subsequently thereto, amounts to a ratification, adoption or approval of said
Proclamation No. 1102. The intimidation is there, and inaction or obedience of the people, under these
conditions, is not necessarily an act of conformity or acquiescence.

As regards the applicability to these cases of the "enrolled bill" rule, it is well to remember that the same
refers to a document certified to the President for his action under the Constitution by the Senate
President and the Speaker of the House of Reps, and attested to by the respective Secretaries of both
Houses, concerning legislative measures approved by said Houses. Whereas, Proclamation No. 1102 is
an act of the President declaring the results of a plebiscite on the proposed Constitution, an act which
Article X of the 1935 Constitution denies the executive department of the Government.

In all other respects and with regard to the other respondent in said case, petitions therein should be
given due course, there being more than prima facie showing that the proposed Constitution has not
been ratified in accordance with Article XV of the 1935 Constitution, either strictly, substantially, or has
been acquiesced in by the people or majority thereof; that said proposed Constitution is not in force and
effect; and that the 1935 Constitution is still the Fundamental Law of the Land, without prejudice to the
submission of said proposed Constitution to the people at a plebiscite for its ratification or rejection in
accordance with Articles V, X and XV of the 1935 Constitution and the provisions of the Revised Election
Code in force at the time of such plebiscite.

Fifth. Four (4) members of the Court, namely, Justices Barredo, Makasiar, Antonio and Esguerra hold
that it is in force by virtue of the people's acceptance thereof; 4 members of the Court, namely, Justices
Makalintal, Castro, Fernando and Teehankee cast no vote thereon on the premise stated in their votes
on the third question that they could not state with judicial certainty whether the people have accepted
or not accepted the Constitution; and 2 members of the Court, namely, Justice Zaldivar and myself voted
that the Constitution proposed by the 1971 Constitutional Convention is not in force; with the result,
there are not enough votes to declare that the new Constitution is not in force.
CALTEX v. PALOMAR

FACTS

In 1960, the petitioner, Caltex (Philippines) Inc., launched a promotional scheme called "Caltex Hooded
Pump Contest" which calls for participants to estimate the actual number of liters a hooded gas pump of
each Caltex Station will dispense within a specific period. Such contest is open to all motor vehicle
owners and/or licensed drivers. There is no required fee or consideration, and there is no need for the
contestants to purchase the products of Caltex. The forms are available upon request at each Caltex
Station and there is a sealed can where accomplished entry stubs may be deposited. Foreseeing the
extensive use of mails for publicizing and transmission of communication purposes, Caltex sent
representatives to the postal authorities for advance clearing for the use of mails for the contest. But
then, the Postmaster General, Enrico Palomar, denied the request of Caltex in view of Sections 1954 (a),
1982 and 1983 of the Revised Administrative Code. The aforesaid sections prohibits the use of mail
conveying any information concerning non-mailable schemes, such as lottery, gift enterprise, or similar
scheme. Consequently, Caltex invoked a judicial intervention by filing a petition of declaratory relief
against the Postmaster General, ordering the Postmaster General to allow the petitioner to use the
mails to bring the contest to the attention of the public and that the aforesaid contest is not violative of
the Postal Law.

ISSUE

Whether or not construction should be employed in this case and

Whether or not the contest violates the provisions of the Postal Law

RULINGS

Yes. Construction of a law is in order if what is in issue is an inquiry into the intended meaning of
the words used in a certain law. As defined in Black's Law Dictionary: Construction is the art or process
of discovering and expounding the meaning and intention of the author's of the law with respect to a
given case, where that intention is rendered doubtful, amongst others, by reason of the fact that the
given case is not explicitly provided for in the law. In the present case, the prohibitive provisions of the
Postal Law inescapably require an inquiry into the intended meaning of the words therein. This is as
much as question of construction or interpretation as any other. The Court is tasked to look beyond the
fair exterior, to the substance, in order to unmask the real element and pernicious tendencies that the
law is seeking to prevent.

Lottery extends to all schemes for the distribution of prize by chance. The three essential elements
of a lottery are: (1) consideration, (2) prize, and (3) chance. Gift enterprise is commonly applied to a
sporting artifice under which goods are sold for their market value but by way of inducement, each
purchaser is given a chance to win a prize. Gratuitous distribution of property by lot or chance does not
constitute lottery. In the present case, the element of consideration is not observed. No payment or
purchase of merchandise was required for the privilege to participate.
Sps. Gauvain Benzonan v. Court of Appeals

G.R. No. 97973

FACTS

In this case, petitioners Gauvain and Bernadita Benzonan want a review on the decision made by herein
respondent Court of Appeals – sustaining the right of private respondent Pe to repurchase a parcel of
land sold to petitioners. It started when respondent Pe was granted parcel of lands acquired through
free patent, however, Pe then mortgaged the lot to DPB; developed it into commercial complex. Failed
to pay the mortgaged, DBP foreclosed the lot; Pe leased it to DBP; the former failed to redeem such
property within one year period; DBP sold it to petitioners Benzonan. Then Pe filed a complaint to
repurchase. The RTC and CA affirmed and granted the claim to repurchase. Petitioners filed a complaint
against CA, alledging, among other issues, that the latter erred in its decision re. the five-year period in
foreclosure sale by not relying on the doctrine in Monge v. Angeles and instead relied on the ruling in
Belisario v. Intermediate Appellate Court which was applied retroactively. Hence, the issue.

ISSUE

Whether or not respondent Court of Appeals erred in its decision regarding the foreclosure sale by not
applying the doctrinal law ruled in Monge v. Angeles and instead applied retroactively the ruling in the
case Belisario v. IAC?

RULING

Yes.

At the time of the foreclosure sale issue, the prevailing jurisprudence was still the Monge case, hence, it
is the doctrine that should be applied in the case at bar. However, the respondent court applied the
rulings in Belisario case in 1988 thereby rendering a decision in favor of the private respondent. But the
Supreme Court sustained the claims of the petitioners. The Court said that though they are bound by
decisions pursuant to Article 8 of the Civil Code, the Court also stressed that: “while our decisions form
part of the law of the land, they are also subject to Article 4 of the Civil Code which states that “laws
shall have no retroactive effect unless the contrary is provided””. Moreover, the Court emphasized that
“when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be
applied prospectively xxx.” Therefore, respondents cannot rely on the Belisario ruling because it should
be applied prospectively and not the contrary. CA erred in its decision regarding this case. Wherefore,
such decision was reversed and set aside.
Barrera v. Barrera

G.R. No. L-31589

FACTS

This case involved the contempt of Judge Alfredo Catolico of the Court of First Instance of Cavite for
having been issued a disciplinary action for the refusal to apply the law as interpreted by the highest
tribunal, the Supreme Court. It started when this case was pending trial in CFI Cavite, the counsel for
petitioner requested Judge Catolico to continue with the hearing, invoking Section 3, Rule 22 of the
Rules of Court. However, the case remains pending when at the time of the supposed continuance, the
new Presiding Judge did not arrive due to bad weather. Such case was referred to the Justice
Department; the Undersecretary of the latter referred it to respondent judge who, in his comments, said
that such case cannot be continued because it has already lapsed, pursuant to the three-month limit in
the Rules of Court. Moreover, notwithstanding his awareness to a doctrine the Court rule in Barrueco v.
Abeto, the respondent judge predicated his own opinion and rather, questioned the decisions of the
Hon. Court in its ruling in Barrueco case. Hence, a disciplinary action against respondent. Hence, the
issue.

ISSUE

Whether or not the refusal by respondent Judge to apply the law as interpreted by the Highest Tribunal
lead him to his contempt?

RULINGS

Yes.

The Court ruled that what the highest judicial organ says should be definitive and authoritative, hence,
binding to those occupying the lower ranks of judicial hierarchy. More so, reiterating an opinion by
Justice J.B.L Reyes, “…the Supreme Court, by tradition and in our system of judicial administration, has
the last word on what the law is…there is only one Supreme Court from whose decisions all other courts
should take their bearings.” The Court emphasized that a Judge of a lower court may state his opinion if
he finds a doctrine of the SC against his principles, however, he cannot dispose of the case, for he always
has to render judgement whether or not it is against his conscience.
Villena vs Spouses Chavez

G.R. No. 148126

FACTS

This is a petitioned case that was already decided by the Court of Appeals (CA), this case was
said to be stare decisis which mean”…that a judgment reached in one case should be applied to
successive ones in which the facts are substantially identical, even though the parties may be different.
Like cases ought to be decided alike.”

According to the facts of the CA the respondents owned four parcels of land subdivided into
several blocks. By mere permission of the respondents the petitioners have occupied and erected their
homes, the respondent allowed it but they should, in consideration pay in certain amount as equity The
petitioners failed to pay the equity from the respondent so the respondent in return wrote them a letter
that they need to vacate the premises in a span of 30 days, but in regards to that the petitioners refused
to vacate and remove their houses. The petitioners said that the respondent does not have power to
institute such orders from the conflicted properties because the equities that they must pay is in
accordance of National Home Mortgage Finance Corp.(NHMFC) They also claim that they paid already
the said equity however they were not given any receipts and copy of their contract The petitioners also
claim that they are qualified beneficiaries under the RA no. 7279 known as the Urban Development and
Housing Act and adding that they were builder of good faith CA ruled that the petitioners entered with
an agreement of equity with the respondent , so in return they must pay amortization or they will face
eviction.

ISSUE

Whether or not, the decision of the CA needed to be redefine by the SC

RULINGS

It is ruled that in the findings they the petitioners were in binding contract with the respondent
in regarding with paying their equity and by not paying it they has lost their right to occupy. The CA
ruling in this case is informative and straight to the point.

The petition to review was granted, the decision of the CA was overturned and the decision of
the RTC and MTC was reinstated
Olaguer v. Military Commission

G.R. No. L-54558

FACTS

Petitioners, as civilians, have been charged the crime of subversion. Consequently, the Chief-of-Staff of
the AFP created a military tribunal, named Military Commission No. 34, to try criminal case against
petitioners. Petitioners were then convicted and have been imposed a penalty of death penalty.
Thereafter, petitioners filed a petition to enjoin the military tribunal from taking further action on their
case for the tribunal should be considered null and void. Respondents invoked that the creation of
Military Commission is constitutional as ruled upon in a previous case – Aquino v. Military Commission
No. 2.- as decided upon by the Supreme Court. However, petitioners contend that such ruling must be
overturned because the ruling is now inapplicable since Martial Law has already been lifted.

ISSUE

Whether or not the ruling in Aquino v. Military Commission be abandoned and/or modified in so far as
the case at bar is concerned?

RULINGS

Yes.

First, the Court considered that since the martial law has been lifted during the case is still pending,
military tribunals, which were created for the purpose of martial law, shall be held void already since the
law itself is lifted. Second, the Court relied on the dissenting views of some justices in AQUINO V.
MILCOMM, stating that “Civilians like the petitioner placed on trial for civil offenses under general law
are entitled of trial by judicial process, not by executive or military process…….. Judicial power exists
only in courts”.

Moreover, the Court emphasized that “Reverence for precedent, simply as precedent, cannot prevail
when constitutionalism and the public interest demand otherwise. Thus, a doctrine which should be
abandoned or modified should be abandoned or modified accordingly. After all, more important than
anything else is that this Court should be right.

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