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G.R. No. 123672 - FERNANDO CARRASCOSO, JR., PETITIONER, VS. THE HONORABLE COURT OF APPEALS, LAURO LEVISTE, AS DIRECTOR AND MINORITY STOCKHOLDER AND ON BEHALF OF OTHER STOCKHOLDERS OF EL DORADO PLANTATION, INC. AND EL DORADO PLANTATION, INC., REPRESENTED BY ONE OF ITS MINORITY STOCKHOLDERS, LAURO P. LEVISTE, RESPONDENTS. Brief Summary : This case involves a dispute over a land sale between El Dorado Plantation, Inc. and Fernando O. Carrascoso, Jr. El Dorado sought rescission of the sale due to Carrascoso's failure to pay the balance of the purchase price. The Philippine Long Distance Telephone Company (PLDT) later purchased a portion of the property, leading to further legal complications. FACTS ● Sale Agreement : On March 23, 1972, El Dorado sold approximately 1, hectares of land in Sablayan, Occidental Mindoro, to Carrascoso for P1,800,000.00. The payment terms included an immediate payment of P500,000.00 and a balance of P1,300,000.00 payable over three years with 10% annual interest. ● Mortgage: Carrascoso mortgaged the property to Home Savings Bank (HSB) to secure a P1,000,000.00 loan, part of which was used to pay the initial amount due to El Dorado. ● Default : Carrascoso failed to pay the remaining balance by the due dates. ● Rescission Action : On March 15, 1977, El Dorado filed a complaint for rescission of the sale and caused a notice of lis pendens to be annotated on the property's title. ● Subsequent Sale: Despite the pending litigation, on April 6, 1977, Carrascoso sold a 1,000-hectare portion of the property to PLDT.
ISSUES
● Whether the rescission of the sale between El Dorado and Carrascoso was proper due to non-payment. ● Whether PLDT's purchase of the property was affected by the notice of lis pendens. RULING: The Supreme Court upheld the rescission of the sale between El Dorado and Carrascoso due to the latter's failure to fulfill his payment obligations. The Court also ruled that PLDT's acquisition of the property was subject to the notice of lis pendens, as the purchase occurred during the pendency of the litigation, rendering PLDT a purchaser pendente lite. REASONING: ● Rescission : The Court emphasized that in reciprocal obligations, such as a contract of sale, non-fulfillment by one party justifies the rescission of the contract. Carrascoso's failure to pay the balance constituted a substantial breach, warranting rescission. ● Notice of Lis Pendens : The annotation served as constructive notice to third parties, including PLDT. The Court held that PLDT, having purchased the property with knowledge of the pending litigation, could not claim good faith and was bound by the outcome of the case. DOCTRINE: : In contracts of sale, the failure of the buyer to comply with payment terms constitutes a substantial breach, justifying rescission. Additionally, a notice of lis pendens serves to protect the rights of parties in pending litigation and binds subsequent purchasers to the results of the case. CONCLUSION : The Supreme Court affirmed the rescission of the sale between El Dorado and Carrascoso due to non-payment. PLDT's purchase of the property was deemed subject to the existing litigation, and as a purchaser pendente lite, PLDT was bound by the Court's decision.
G.R. No. 137290 - SAN MIGUEL PROPERTIES PHILIPPINES, INC., PETITIONER, VS. SPOUSES ALFREDO AND GRACE HUANG, RESPONDENTS. Brief Summary : This case centers on a dispute between San Miguel Properties Philippines, Inc. (SMPPI) and spouses Alfredo and Grace Huang over the sale of two parcels of land. The contention arose from disagreements on the terms of payment and the nature of a P1,000,000.00 "earnest-deposit," leading to questions about whether a perfected contract of sale existed between the parties. FACTS ● Initial Offer : On February 21, 1994, SMPPI offered to sell two parcels of land in Pasig City to Atty. Helena M. Dauz, representing the Huangs, for P52,140,000.00 in cash. ● Counter-Offer : On March 24, 1994, Atty. Dauz proposed paying P500,000.00 as earnest money, with the balance payable in eight equal monthly installments. SMPPI rejected this proposal. ● Revised Proposal: On March 29, 1994, Atty. Dauz offered a P1,000,000. "earnest-deposit," requesting an exclusive 30-day option to purchase, during which the parties would negotiate the sale's terms. SMPPI's Vice-President, Isidro A. Sobrecarey, accepted this offer. ● Failed Negotiations: Despite extensions, the parties did not finalize the payment terms. On July 7, 1994, SMPPI returned the P1,000,000.00 deposit, citing the failure to reach an agreement. The Huangs demanded the execution of a deed of sale and attempted to return the deposit, but SMPPI refused, stating the option had expired. ● Legal Action : The Huangs filed a complaint for specific performance. The Regional Trial Court dismissed the complaint, but the Court of Appeals reversed this decision, prompting SMPPI to elevate the case to the Supreme Court. ISSUES ● Whether a perfected contract of sale existed between SMPPI and the Huangs. ● Whether the P1,000,000.00 "earnest- deposit" constituted earnest money under Article 1482 of the Civil Code. ● Whether the exclusive option to purchase was enforceable without a separate consideration. RULING : The Supreme Court reversed the Court of Appeals' decision, ruling that no perfected contract of sale existed between the parties. The P1,000,000. "earnest-deposit" did not constitute earnest money, and the option to purchase was unenforceable due to the lack of separate consideration. REASONING: ● Absence of Perfected Contract : A contract of sale requires agreement on the object and the price, including the manner of payment. The parties failed to agree on the payment terms, indicating that negotiations did not progress beyond the preliminary stage. ● Nature of the Deposit: The P1,000,000. was labeled as an "earnest-deposit" intended to secure an exclusive option period, not as partial payment. Since the contract was not perfected, this amount could not be considered earnest money under Article 1482. ● Unenforceable Option : An option contract must be supported by a separate consideration distinct from the purchase price. In this case, no such consideration was provided, rendering the option unenforceable. DOCTRINE : For a contract of sale to be perfected, there must be a meeting of minds on the object and the price, including the terms of payment. An "earnest-deposit" does not equate to earnest money unless a perfected contract exists. Additionally, an option contract requires separate consideration to be binding; without it, the option is unenforceable. CONCLUSION : The Supreme Court concluded that no perfected contract of sale existed between SMPPI and the Huangs due to the lack of agreement on essential terms, particularly the manner of payment. The P1,000,000.00 "earnest-deposit" was not considered earnest money, and the option to purchase was unenforceable without separate consideration. Therefore, the complaint for specific performance was dismissed. G.R. No. 115349 - COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. THE COURT OF APPEALS, THE COURT OF TAX APPEALS, AND ATENEO DE MANILA UNIVERSITY, RESPONDENTS.
Brief Summary: This case involves a dispute over the validity of a mortgage executed by Oakland Development Resources Corporation (Oakland) in favor of William Ong Genato, which included a property subject to a Contract to Sell with the spouses Godofredo and Dominica Flancia. The Flancias sought to nullify the mortgage and subsequent foreclosure, asserting their prior rights under the Contract to Sell. FACTS ● Contract to Sell: The Flancias entered into a Contract to Sell with Oakland for a parcel of land in Prater Village Subdivision, Quezon City. The contract stipulated that ownership would transfer only upon full payment of the purchase price. ● Possession Granted: Upon payment of a down payment and several monthly installments, the Flancias were granted an occupancy permit, allowing them to possess the property. ● Mortgage Executed: Prior to the full payment by the Flancias, Oakland mortgaged the property, along with others, to Genato as security for a loan. This mortgage was duly registered. ● Foreclosure Proceedings: Due to Oakland's failure to pay the loan, Genato initiated foreclosure proceedings, leading to the auctioning of the mortgaged properties, including the one occupied by the Flancias. ● Legal Action: The Flancias filed a complaint to nullify the mortgage and foreclosure sale, claiming their rights under the Contract to Sell were superior. ISSUES: ● Validity of the Mortgage: Whether the mortgage executed by Oakland in favor of Genato was valid concerning the property subject to the Contract to Sell with the Flancias. ● Priority of Rights: Whether the Flancias' rights under the unregistered Contract to Sell could override Genato's rights as a mortgagee in good faith. RULING: The Supreme Court ruled in favor of Genato, upholding the validity of the mortgage and the foreclosure sale. The Court found that Oakland retained ownership of the property under the Contract to Sell, as ownership would only transfer upon full payment. Since the Flancias had not completed payment, Oakland had the right to mortgage the property. Genato, as a mortgagee in good faith, had a superior right over the unregistered interests of the Flancias. REASONING: ● Ownership and Contract to Sell: In a Contract to Sell, ownership remains with the seller until the buyer fulfills all payment obligations. The Flancias' contract explicitly stated that ownership would transfer only upon full payment, which had not occurred. ● Right to Mortgage : As the owner, Oakland had the legal right to mortgage the property. The mortgage was executed and registered before the Flancias completed their payments, and their Contract to Sell was not registered, rendering it ineffective against third parties. ● Good Faith Mortgage: Genato relied on the clean title presented by Oakland. There was no indication of the Flancias' unregistered interest; thus, Genato was considered a mortgagee in good faith, protected by law. DOCTRINE : In a Contract to Sell, the seller retains ownership until full payment of the purchase price. An unregistered Contract to Sell does not affect the rights of a mortgagee in good faith who relies on the clean title of the property. CONCLUSION : The Supreme Court affirmed the validity of the mortgage and subsequent foreclosure sale in favor of Genato. The Flancias' unregistered Contract to Sell and incomplete payment did not confer ownership rights that could override the interests of a mortgagee in good faith.
G.R. No. 108346. July 11, 2001. Spouses
MARIANO Z. VELARDE and AVELINA D.
VELARDE, petitioners,
vs. COURT OF APPEALS, DAVID A.
RAYMUNDO and GEORGE RAYMUNDO,
respondents
Brief Summary: This case involves a dispute over a real estate transaction between the Velarde spouses and the Raymundo family.The Velardes failed to fulfill their payment obligations under the contract.The Raymundos rescinded the contract, leading the Velardes to file a complaint to enforce the sale. The Supreme Court upheld the rescission, emphasizing the need to honor contractual obligations in reciprocal agreements. FACTS ● The Sale Agreement: David Raymundo owned a property in Dasmariñas Village, Makati, mortgaged to the Bank of the Philippine Islands (BPI) for ₱1.8 million. On August 8, 1986, he sold it to Avelina Velarde for ₱800,000, with the condition that Velarde would assume the mortgage. The Deed of Sale stated that non- compliance would lead to forfeiture of the down payment and contract rescission. ● Breach of Agreement: The Velardes applied to assume the mortgage, but BPI denied their application. They then stopped making further payments. The Raymundos informed them of the breach and later rescinded the contract after failed negotiations. ● Court Proceedings: The Velardes filed a complaint to enforce the sale. The Court of Appeals ruled in favor of the Raymundos. The Velardes appealed to the Supreme Court. ISSUES: ● Did the Velardes breach the contract by failing to fulfill their payment obligations? ● Was the rescission of the contract by the Raymundos justified? RULINGS : Yes, the Velardes breached the contract by not paying the balance of the purchase price. Yes, the Raymundos were justified in rescinding the contract due to the Velardes' substantial breach. REASONING: In reciprocal obligations, each party must fulfill their respective commitments. The execution of the Deed of Sale transferred ownership to the Velardes, but they failed to pay the full purchase price. The Velardes added conditions not in the original agreement, leading to a material breach. Since Article 1191 of the Civil Code allows rescission in case of substantial breach, the Raymundos had the right to rescind. DOCTRINE: Article 1191 of the Civil Code: In reciprocal obligations, a party can rescind a contract if the other party fails to comply with its terms. A substantial breach entitles the aggrieved party to rescission and restitution. CONCLUSION: The Supreme Court affirmed the Court of Appeals’ decision. The rescission was valid because the Velardes failed to meet their financial obligations. This case highlights the importance of honoring contractual obligations, especially in reciprocal agreements.
Chevron Holdings, Inc. vs.
Commissioner of Internal Revenue,
G.R. No. 215159, July 5, 2022
Brief Summary: Chevron Holdings, Inc. (Chevron), a Regional Operating Headquarters (ROHQ) in the Philippines, filed for a refund of
qualify for Value-Added Tax (VAT) zero-rating under Section 108(B)(4) of the National Internal Revenue Code (NIRC), as amended. FACTS ● Parties Involved: Manila Peninsula Hotel, Inc. (Petitioner) is a domestic corporation providing hotel accommodations and services. The Commissioner of Internal Revenue (Respondent) oversees tax assessments and refunds. ● Services Rendered: Manila Peninsula provided room accommodations and food and beverage services to Delta Air Lines, Inc., a foreign corporation engaged in international air transport operations, specifically for its pilots and cabin crew during flight layovers in the Philippines. ● Tax Payments and Refund Claim: For the taxable year 2010, Manila Peninsula paid VAT amounting to PHP 74,764,313.49. Subsequently, it filed a claim for a refund of PHP 3,807,771.77, alleging that the VAT paid on services rendered to Delta Air was erroneously collected, as these should have been zero-rated under the NIRC. ISSUES : ● Validity of BIR Issuances: Whether Revenue Memorandum Circular (RMC) No. 46-2008 and RMC No. 31-2011, which imposed additional requirements for VAT zero-rating, are valid. ● Qualification for VAT Zero-Rating: Whether the services provided by Manila Peninsula to Delta Air's crew during layovers qualify for VAT zero-rating under Section 108(B)(4) of the NIRC. RULING : The Supreme Court ruled in favor of Manila Peninsula, declaring that the additional conditions imposed by RMC No. 46-2008 and RMC No. 31- were invalid. The Court held that the services rendered by Manila Peninsula to Delta Air's crew during layovers are subject to VAT zero-rating under Section 108(B)(4) of the NIRC. REASONING: ● Invalidity of Additional Requirements: The Court emphasized that administrative issuances, such as RMCs, cannot expand or modify statutory provisions. The additional conditions introduced by the BIR in RMC No. 46-2008 and RMC No. 31-2011 were not found in Section 108(B)(4) of the NIRC, rendering them invalid. ● Interpretation of Section 108(B)(4): The provision specifies that services rendered to persons engaged in international shipping or air transport operations are zero-rated. The Court found that the services provided by Manila Peninsula to Delta Air's crew were indispensable to Delta Air's international operations, as aviation regulations require rest periods for flight crews. Therefore, these services are directly attributable to Delta Air's international air transport operations and qualify for VAT zero-rating. DOCTRINE : Administrative issuances must align strictly with the statutory language and cannot impose additional, unwarranted conditions beyond what the law prescribes. Services rendered to entities engaged in international air transport operations, which are indispensable to such operations, qualify for VAT zero-rating under Section 108(B)(4) of the NIRC. CONCLUSION: The Supreme Court reversed the decision of the Court of Tax Appeals En Banc, declared the additional conditions in RMC No. 46- 2008 and RMC No. 31-2011 null and void, and remanded the case to the Court of Tax Appeals Third Division for the proper determination of the refundable amount due to Manila Peninsula.
Tullett Prebon (Philippines Inc.) vs
Commissioner of Internal Revenue G.R.
No. 257219 [Formerly UDK No. 16941].
July 15, 2024 Brief Summary : In the case of Tullett Prebon (Philippines), Inc. vs. Commissioner of Internal Revenue, G.R. No. 257219, decided on July 15, 2024, the Supreme Court addressed the entitlement of a taxpayer to a refund of unutilized creditable withholding taxes (CWT) and the
necessary substantiation required for such claims. FACTS ● Parties Involved: Tullett Prebon (Philippines), Inc. (Petitioner) is a domestic corporation engaged in financial services. The Commissioner of Internal Revenue (Respondent) is responsible for tax administration in the Philippines. ● Refund Claim : For the taxable year 2016, Tullett Prebon filed a claim for a refund of unutilized CWT amounting to PHP 10,148,237.77, asserting that these taxes were erroneously withheld and remained unutilized. ● Proceedings: The Court of Tax Appeals (CTA) partially granted the refund, allowing PHP 7,486,552.83 and disallowing PHP 2,661,684.94 due to insufficient substantiation. Both parties elevated the case to the Supreme Court for review. ISSUES: ● Entitlement to Full Refund : Whether Tullett Prebon is entitled to the full refund of PHP 10,148,237.77 in unutilized CWT. ● Substantiation Requirements : Whether the disallowed amount of PHP 2,661,684.94 was rightfully denied due to inadequate documentation. RULING: The Supreme Court affirmed the CTA's decision, granting a partial refund of PHP 7,486,552.83 and upholding the disallowance of PHP 2,661,684.94 due to insufficient evidence. REASONING : ● Proof of Income Declaration: The Court emphasized that for a CWT refund claim to prosper, the taxpayer must demonstrate that the income subjected to withholding was declared as part of gross income in the relevant tax return. Tullett Prebon successfully substantiated PHP 7,486,552.83 of the claimed amount but failed to provide adequate documentation for the remaining PHP 2,661,684.94. ● Documentation Standards : The Court highlighted the necessity of maintaining comprehensive records, including Certificates of Creditable Tax Withheld at Source (BIR Form No. 2307), official receipts, and a detailed general ledger. The absence of these documents for the disallowed amount justified the partial denial of the refund claim. DOCTRINE : Taxpayers seeking a refund of unutilized creditable withholding taxes must provide sufficient evidence that the income subjected to withholding was reported in their gross income. Adequate documentation is essential to substantiate such claims. CONCLUSION : The Supreme Court's decision underscores the importance of meticulous record-keeping and strict compliance with substantiation requirements in tax refund claims. Taxpayers are reminded to maintain and present comprehensive documentation to support their entitlement to tax refunds.
FIRST DIVISION
[ G.R. No. 207575, July 15, 2015 ]
HEDCOR, INC., PETITIONER, VS.
COMMISSIONER OF INTERNAL
REVENUE, RESPONDENT
Brief Summary: In the case of Hedcor, Inc. vs. Court of Tax Appeals and Commissioner of Internal Revenue, G.R. No. 252407, decided on July 31, 2023, the Supreme Court addressed the issue of whether Hedcor, Inc. (Hedcor) is entitled to a refund of unutilized input Value- Added Tax (VAT) attributable to its zero-rated
providing marketing and support services to its foreign affiliates. The Commissioner of Internal Revenue (Respondent) oversees tax assessments and refunds in the Philippines. ● Refund Claim : For the taxable year 2017, Amadeus filed a claim for a refund of unutilized input VAT amounting to PHP 15,000,000.00. This amount represented input taxes incurred from domestic purchases of goods and services, which Amadeus alleged were attributable to its zero-rated sales to foreign clients. ● Proceedings: The Bureau of Internal Revenue (BIR) did not act upon Amadeus's administrative claim within the prescribed period, prompting Amadeus to elevate the matter to the Court of Tax Appeals (CTA). The CTA denied the claim, leading Amadeus to file a petition for review with the Supreme Court. ISSUES: ● Entitlement to VAT Refund : Whether Amadeus is entitled to a refund of unutilized input VAT attributable to its zero-rated sales to foreign clients. ● Compliance with Documentary Requirements : Whether Amadeus sufficiently complied with the substantiation requirements prescribed by law to support its refund claim. RULING: The Supreme Court denied Amadeus's petition, affirming the CTA's decision that Amadeus was not entitled to the claimed VAT refund due to insufficient compliance with the substantiation requirements. REASONING : ● Substantiation Requirements : The Court emphasized that taxpayers claiming VAT refunds must strictly comply with the substantiation requirements outlined in the National Internal Revenue Code (NIRC) and relevant regulations. Specifically, official receipts or invoices must be duly registered with the BIR and must reflect the correct information to support the input VAT claimed. ● Amadeus's Documentation: Upon review, the Court found that some of Amadeus's supporting documents did not meet the prescribed standards. Notably, certain invoices lacked the necessary details, and some receipts were not duly registered with the BIR. This lack of proper documentation rendered the claimed input VAT unsubstantiated. DOCTRINE : Taxpayers seeking a refund of unutilized input VAT must strictly adhere to the substantiation requirements set forth in tax laws and regulations. Failure to provide duly registered and accurately detailed invoices or receipts will result in the denial of the refund claim. CONCLUSION: The Supreme Court's decision underscores the importance of meticulous compliance with documentary requirements in VAT refund claims. Taxpayers are reminded to ensure that all supporting documents are properly registered and contain the necessary information to substantiate their claims effectively.
