Case-1-art-20 (1).docx

ART 22-23 UNJUST ENRICHMENT G.R. No. 172525 October 20, 2010 SHINRYO (PHILIPPINES) COMPANY, INC., Petitioner, vs. RRN INCORPORATED,* Respondent.

Their dispute was submitted to arbitration. During the preliminary conference, the parties agreed in their Terms of Reference to resolve the issues.

FACTS: Shinryo (Philippines) Company, Inc. and RRN Incorporated are domestic corporations organized under Philippine laws.

CIAC: In favor of the claimant and respondent is ordered to pay claimant its unpaid account in the sum of ₱3,728,960.54

RNN filed a claim for arbitration against petitioner before CIAC for recovery of unpaid account which consists of unpaid portions of the subcontract, variations and unused materials in the total sum of ₱5,275,184.17 and legal interest in the amount of ₱442,014.73. Shinryo filed a counterclaim for overpayment in the amount of ₱2,512,997.96.

Petitioner accepts the ruling of the CIAC only in so far as the amount of ₱440,000.00 awarded as back charges for the use of scaffoldings.

It was shown that petitioner and respondent executed an Agreement and Conditions of Sub-contract (June 11, 1996 and June 14, 1996). RNN signified its willingness to accept and perform for petitioner in any of its projects, a part or the whole of the works more particularly described in Conditions of Sub-Contract and other Sub-contract documents. On June 2002, the parties executed a "Supply of Manpower, Tools/Equipment, Consumables for the Electrical Works-Power and Equipment Supply, Bus Duct Installation" for the Phillip Morris Greenfield Project, a total amount of ₱25,000,000.00. The parties also agreed that RNN will perform variation orders in the Project. In connection with the Project, Shinryo supplied manpower chargeable against respondent. RNN was not able to finish the entire works with petitioner due to financial difficulties. Shinryo paid respondent a total amount of ₱26,547,624.76. On 2005, RNN sent a letter to petitioner demanding for the payment of its unpaid balance amounting to ₱5,275,184.17. Petitioner claimed material back charges, ₱4,063,633.43. On September 2003, RNN only acknowledged ₱2,371,895.33 as material back charges. On October 2003, RNN sent another letter to petitioner for them to meet and settle their dispute. On January 2004, RNN sent another letter to petitioner regarding the cost of equipment rental and the use of scaffolding. Shinryo sent a letter to respondent denying any unpaid account and the failure in their negotiations for amicable settlement.

CA: Affirming the decision of the CIAC that petitioner failed to adduce sufficient proof that the parties had an agreement regarding charges for respondent's use of the manlift. As to the other charges for materials, the CA held that the evidence on record amply supports the CIAC findings. ISSUE: Whether or not the Claimant's claim constitutes to unjust enrichment. HELD: NO. Petitioner's reliance on the principle of unjust enrichment is likewise misplaced. The ruling of the Court in University of the Philippines v. Philab Industries, Inc.8 is highly instructive, thus: Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully. To substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party knowingly received something of value to which he was not entitled and that the state of affairs are such that it would be unjust for the person to keep the benefit. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution. Article 22 of the New Civil Code reads: Every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

In order that accion in rem verso may prosper, the essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy on contract, quasicontract, crime, and quasi-delict. If there is an obtainable action under any other institution of positive law, that action must be resorted to, and the principle of accion in rem verso will not lie. Petitioner failed to prove that respondent's free use of the manlift was without legal ground based on the provisions of their contract. Thus, the third requisite, i.e., that the enrichment of respondent is without just or legal ground, is missing. In addition, petitioner's claim is based on contract, hence, the fourth requisite − that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict − is also absent. Clearly, the principle of unjust enrichment is not applicable in this case CAR COOL vs. USHIO [G.R. No. 138088: January 26, 2006] FACTS:  1972- spouses Hector and Gloria Lopez leased the questioned parcel of land to Car Cool  1990- written lease of agreement (good for two years) executed between the two parties; Lopez allowed Car Cool to occupy the property upon payment of monthly rentals. The verbal month-tomonth lease agreement continued until August 31, 1995  June 1, 1995- Lopez, through a letter, informed Car Cool of his intention to sell the land and offered the latter the option to buy the property before offering it to someone else. No response.  Lopez terminated the agreement on June 28 and gave Car Cool until August 31 to vacate the property, and reiterated the same in his subsequent letters. Still no response from Car Cool.  USHIO Realty, upon purchase of the property, demanded Car Cool to vacate the same, who gave no response. When petitioner refused to vacate the property despite USHIO’s final demand on December 3, respondent then filed a complaint for ejectment.  CAR COOL’S SIDE

Lopez agreed to renew the least for another two years until December 1996, with monthly rentals and security deposit - USHIO , despite being aware of the lease agreement, still demanded Car Cool to vacate the land and allegedly broke into its premises, demolished improvements, threatened and inflicted injuries upon two employees - Car Cool filed a complaint-affidavit against USHIO for robbery with force upon things and malicious mischief; complaint for specific performance and damages with RTC, seeking to compel Lopez to execute a written lease contract MTC ruled in favor of USHIO - ordered Car Cool to surrender the premises, pay respondent P18k/month beginning October 1995 for the use of premises, plus P20k attorney’s fees RTC affirmed. CA affirmed with modification (rental should start Dec. 19, 1995 instead) -

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ISSUE: W/N the CA erred in awarding damages by way of rentals and attorney’s fees, and such constitute to unjust enrichment at the expense of Car Cool HELD: NO.  There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.  Requisites of unjust enrichment: 1) a person is benefited without valid basis or justification, and 2) such benefit is derived at another’s expense or damage  CA held: alleged payment was made by petitioner to Lopez, not to USHIO. Checks received by respondent were never encashed. These do not amount to payment. In other words, USHIO never benefited financially from the transaction.  There is no unjust enrichment when the person who will benefit has a valid claim. USHIO, being the new owner of the land, has the legal right to receive payment as reasonable compensation for petitioner’s occupation. ELEGIR vs. PHILIPPINE AIRLINES, INC. G.R. No. 181995 July 16, 2012

Facts: Petitioner Bibiano C. Elegir was hired by Philippine Airlines, Inc. (PAL) as a commercial pilot, specifically designated as HS748 Limited First Officer, on March 16, 1971. In 1995, PAL embarked on a refleeting program and acquired new and highly sophisticated aircrafts. Subsequently, PAL posts a bid for the opening of slots for the crew of the new aircrafts. Elegir was one of those awarded with the opportunity. Elegir, along with 7 other pilot, were sent for training in Seattle, Washington, United States of America on May 8, 1995 for the necessary training of his skills and knowledge to handle the new aircraft. He completed his training on September 19, 1995. On November 5, 1996 after rendering 25 years, 8 months, and 20 days of continuous service, the petitioner applied for an optional retirement authorized under the Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots Association of the Philippines (ALPAP). PAL asked him to reconsider his retirement in that the company has yet to recover the cost of his training. In the event that he finally decides to leave, PAL will deduct the unrecovered cost of his training from his Retirement Pay. He decided to leave thereafter. Elegir’s counsel sent PAL a letter of correspondence stating that the cost of training should not be deducted from his retirement pay. Issue: Whether or not PAL had the right to reimburse themselves from Elegir’s retirement pay the amount unrecovered from his training. Ruling: PAL had the right to be reimbursed. According to Article 22-23 of the New Civil Code, they had the right to demand payment since Elegir will unjustly enrich himself at the expense of PAL. Unjustly enriching is unduly profiting one’s self on something which does not meritoriously belong to him, this is well enshrined in the Latin maxim, “Nemo cum alterius detrimentolocupletaripotest”. Elgir has the right to retire since he has reached a certain number of flight hours which is considered a long stay in PAL, but his bid for the vacancy and his subsequent training sponsored by PAL was put to waste when he decides to have an early retirement from PAL after his training. It would be unfair for PAL if Elegir has gained new skills for the service of PAL but then leave even after PAL has still not even recovered the cost of training.

WILLEM BEUMER, Petitioner, vs. AVELINA AMORES, Respondent FACTS:

Petitioner, a Dutch National, and respondent, a Filipina, married in March 29, 1980. After several years, the RTC declared the nullity of their marriage. Consequently, petitioner filed a Petition for Dissolution of Conjugal Partnership dated praying for the distribution of properties claimed to have been acquired during the subsistence of their marriage. During trial, petitioner testified that while Lots 1, 2142, 5845 and 4, parcels of land, were registered in the name of respondent, these properties were acquired with the money he received from the Dutch government as his disability benefit since respondent did not have sufficient income. He also claimed that the joint affidavit they submitted was contrary to Article 89 of the Family Code, hence, invalid. The RTC ruled that, regardless of the source of funds for the acquisition of Lots 1, 2142, 5845 and 4, petitioner could not have acquired any right whatsoever over these properties as petitioner still attempted to acquire them notwithstanding his knowledge of the constitutional prohibition against foreign ownership of private lands. This was made evident by the sworn statements petitioner executed purporting to show that the subject parcels of land were purchased from the exclusive funds of his wife, the herein respondent. Petitioner’s plea for reimbursement for the amount he had paid to purchase the foregoing properties on the basis of equity was likewise denied for not having come to court with clean hands. CA affirmed the decision of RTC. Petitioner appealed. ISSUE: Whether petitioner can seek reimbursement on the basis of unjust enrichment RULING: NO. As held in Frenzel v. Catito, a case also involving a foreigner seeking monetary reimbursement for money spent on purchase of Philippine land, the provision on unjust enrichment does not apply if the action is proscribed by the Constitution, to wit: Futile is petitioner's reliance on Article 22 of the New Civil Code which reads: Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO PROTEST" (No person should unjustly enrich himself at

the expense of another). An action for recovery of what has been paid without just cause has been designated as an accion in rem verso. This provision does not apply if, as in this case, the action is proscribed by the Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the subject properties, or from recovering the money he paid for the said properties, but, as Lord Mansfield stated in the early case of Holman v. Johnson: "The objection that a contract is immoral or illegal as between the plaintiff and the defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff."

HULST vs. PR Builders, Inc. Jacobus Bernhard Hulst (petitioner) and his spouse Ida, both Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. (respondent) to purchase a residential unit in the respondent’s townhouse project in Batangas. After the respondent’s failure to complete the project by June 1995 as verbally promised, spouses Hulst filed a complaint for rescission of contract with interest, damages and attorney’s fees before the Housing and Land Use Regulatory Board (HLURB). The HLURB Arbiter ruled in favor of the petitioner, thereby ordering the return of the price paid for the residential unit which amounts to P3, 187,500, as well as actual, moral, and exemplary damages, and attorney’s fees. A Writ of Execution was thereafter issued to execute the HLURB Arbiter’s judgment. The Ex-officio Sheriff proceeded to implement the Writ of Execution. However upon the complaint of the respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the sheriff was set aside, requiring the Sheriff to levy first on respondent’s personal properties. Nonetheless, this writ was not satisfied. Upon petitioner’s motion, an Alias Writ of Execution was later issued, with which the Sheriff levied on respondent’s parcels of land in Laurel, Batangas. The sheriff levied on the properties at around P6,000,000.

Two days before the scheduled auction, respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB. that the Sheriff levied properties with an aggregate appraised value over and above the judgment award. Notwithstanding the pendency of said motion, the Sheriff proceeded to auction all of the respondent’s levied lands for all of which Holly Properties Realty Corporation was the winning bidder for all parcels of land for a total amount of P5,450,653.33. On that same day, while the Sheriff was at the HLURB office to remit the legal fees relative to the auction sale and to submit the Certificates of Sale, he received an Order to suspend the proceeding on the matter. Four months after the auction, the HLURB issued an order setting aside the sheriff’s levy on respondent’s property. The HLURB reasoned that while they are not making a ruling that the fair market value of the levied properties is P6,500.oo per sqm, they also do not agree with the position of the Complainants and the sheriff that the aggregate value of the levied properties is only around P6,000,000. The HLURB ordered the sheriff to levy on the respondent’s properties again. Petitioner filed a Petition for Certiorari and Prohibition with the CA. The CA dismissed the Petition ISSUE: Did the HLRUB Decision result in the unjust enrichment of petitioner at the expense of respondent? HELD: Yes. Ineluctably, the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent. Petitioner received more than what he is entitled to recover under the circumstances. Article 22 of the Civil Code which embodies the maxim, nemo ex alterius incommode debet lecupletari (no man ought to be made rich out of another's injury), states: Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as basic principles to be observed for the rightful relationship between human beings and for the stability of the social order; designed to indicate certain norms that spring from the fountain of good conscience; guides for human conduct that should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of justice. There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.

the documents relative to the collection of the 0% retention fee and in encashing the check to be issued by the DPWH for that purpose. During the processing of the documents for the retention fee, Tarnate learned that Gonzalo had rescinded the deed of assignment by means of affidavit of cancellation of deed of assignment dated April 19, 1999 and that the disbursement voucher for the 10% retention fee had been issued in the name of Gonzalo, and the retention fee released to him. Taranate demanded the payment of the retention fee from Gonzalo, moral and exemplary damages for breach of contract, and attorney’s fees.

A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of entering into a contract to sell that violates the constitutional proscription. The sheriff delivered to petitioner the amount of P5,313,040.00 representing the net proceeds (bidded amount is P5,450,653.33) of the auction sale after deducting the legal fees in the amount of P137,613.33. Petitioner is only entitled to P3,187,500.00, the amount of the purchase price of the real property paid by petitioner to respondent under the Contract to Sell. Thus, the Court in the exercise of its equity jurisdiction may validly order petitioner to return the excess amount of P2,125,540.00

Issue: W/N the subcontract and deed of assignment are void contracts W/N unjust enrichment is present in the case.

Gonzalo v. Tarnate Facts: DPWH had awarded on July 22, 1997, a contract for the improvement of the Sadsadan-Maba-ay Section of the Mountain Province – Benguet Road to Gonzalo Construction. Domingo Gonzalo subcontracted to respondent John Tarnate Jr. for the supply of materials and labor for the project under the latter’s business known as JNT Aggregates. Their agreement required, that Tarnate would pay to Gonzalo eight percent and four percent of the contract price, respectively, upon Ternate’s first and second billing in the Project. Furthermore, Gonzalo executed on April 6, 1999, a deed of assignment whereby, he was assigning Tarnate an amount of 233,526.13 or equivalent to 10% of the total collection from DPWH for the project. This 10% retention fee was for the rent for Tarnate’s equipment that had been utilized for the said project. In the deed of assignment, Gonzalo authorized Tarnate to use the official receipt of Gonzalo Construction in the processing of

Ruling: Yes. The court held that the subcontract and deed of assignment are void for being contrary to law. Every contractor is prohibited from subcontracting with or assigning to another person any contract that he has with DPWH unless DPWH Secretary has approved the subcontracting. In the case, their subcontract is illegal because it wasn’t approved by the DPWH secretary. The deed of assignment on the other hand, obviously sprung from the subcontract. The illegality of the Subcontract affects the deed of assignment because the rule is that an illegal agreement cannot give birth to a valid contract. Hence, the subcontract and deed of assignment are void. Yes, there was unjsut enrichment on the part of Gonzalo. There is no question that Tarnate provided the equipment, labor and materials for the project in compliance with his obligations under the subcontract and the deed of assignment; and that it was Gonzalo who received the payment for his contract with the DPWH as well as the 10% retention fee that should have been paid to Tarnate pursuant to the deed of assignment. Considering that Gonzalo refused to pay Tarnate, Gonzalo would be unjustly enriched at the expense of Tarnate if the latter was to be barred from recovering because of the rigid application of the doctrine of in pari delicto. The pari delicto doctrine eliminated Tarnate’s claim for the damages. Hence the deletion of awards for moral damages

and attorney’s fees. However, even though both parties are in pare delicto, the court allowed Tarnate to recover his retention fee, as an exceptions, due to unjust enrichment.

loan only amounts to P300.00 and not P5,000.00. By virtue of the power of the state the bank was ordered to return the land it extra judicially settled.

ART 24 – PARENS PATRIAE Valenzuela vs. Court of Appeals G. R. No. L-56168

ART. 26, RIGHT TO PRIVACY RODRIGO CONCEPCION, petitioner, vs. COURT OF APPEALS and SPS. NESTOR NICOLAS and ALLEM NICOLAS, respondents G.R. NO. 120706, JANUARY 31, 2000

Facts:

Carlos Telosa is a farmer and a fisherman. He had very limited education. Telosa initiated a loan with the Rural Bank of Lucena with a contract mortgage. The mortgage covered a parcel of land measuring 50,000 square meters. Several months later the Rural Bank experienced financial distress. The Central Bank appraised Rural Bank of Lucena’s shareholders. It was found out in its investigation that key officers of the bank had certain anomalies or had resorted to unsound banking practices which were prejudicial to the government, the public and its creditors. Rural Bank of Lucena has then undergone liquidations. It had received orders to turn its non-monetary assets into cash to satisfy claims. Among one of the accounts it decides to liquidate was the Telosa account in the amount of P5,000.00. Rural Bank of Lucena sent for a demand letter asking for the payment of the account. Carlos Teloso thought that he owes the bank only P300.00 and not 5k, so Telosa filed a protest in the demand received. Meanwhile, Carlos Telosa died in Jan 13,1968. The rural bank claiming that the payment was not fully paid petitioned the foreclosure the Telosa’s land to satisfy the claim. The lot was then sold to the highest bidder and was consequently registered in the Registry of Deeds on September 11, 1972. Telosa now pray for the annulment of the land back to them because they have already paid the loan of P300.00. ISSUE: W/N the state can intervene via parenspatriae for the return of the Telosa’s land. Ruling: The State can protect its citizens; it is a supreme power that state can exercise at any time the rights of its citizen is being prejudiced. The bank took advantage of the Telosa’s by making a document that was not the contract that they have agreed upon. Needless to state in this regard the particular transaction was one of the fraudulent and anomalous transactions involving the officer of the Rural Bank of Lucena. The State can intervene because there has been a preponderance of proof that the

FACTS: Sometime in 1985 the spouses Nestor Nicolas and Allem Nicolas resided at San Joaquin, Pasig City in an apartment leased to them by the owner, Florence "Bing" Concepcion, who also resided in the same compound where the apartment was located. Sometime in the second week of July 1985 Rodrigo Concepcion, brother of the deceased husband of Florence, angrily accosted Nestor at Florence’s apartment and accused him of conducting an adulterous relationship with Florence. To clarify matters, Nestor went with Rodrigo, upon the Rodrigo’s dare, to see some relatives of the Concepcion family who allegedly knew about the relationship. However, those whom they were able to see denied knowledge of the alleged affair. The same accusation was hurled by Rodrigo against Nestor when the two confronted Florence at the terrace of her residence. Florence denied the imputations and Rodrigo backtracked saying that he just heard the rumor from a relative. However, Rodrigo called Florence over the telephone reiterating his accusation and threatening her that should something happen to his sick mother, in case the Rodrigo learned about the affair, he would kill Florence. As a result of this incident, Nestor Nicolas felt extreme embarrassment and shame to the extent that he could no longer face his neighbors. Florence Concepcion also ceased to do business with him by not contributing capital anymore so much so that the business venture of the Nicolas spouses declined as they could no longer cope with their commitments to their clients and customers. To make matters worse, Allem Nicolas started to doubt Nestors fidelity resulting in frequent bickerings and quarrels during which Allem even expressed her desire to leave her husband. Consequently, Nestor was forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedly

ignored the demand, for which reason the Nicolas spouses filed a civil suit against him for damages. In his defense, Rodrigo denied that he maligned Nestor by accusing him publicly of being Florence's lover. He reasoned out that he only desired to protect the name and reputation of the Concepcion family which was why he sought an appointment with Nestor through Florence's son Roncali to ventilate his feelings about the matter. Initially, he discussed with Nestor certain aspects of the joint venture in a friendly and amiable manner, and then only casually asked the latter about his rumored affair with his sister-in-law. RTC ordered Nestor to pay respondent spouses Nestor Nicolas and Allem Nicolas the sums of P50,000.00 for moral damages, P25,000.00 for exemplary damages and P10,000.00 for attorneys fees, plus the costs of suit. CA affirmed the decision of RTC. ISSUES: Whether there is basis in law for the award of damages to private respondents, the Nicolas spouses Whether there is basis to review the facts which are of weight and influence but which were overlooked and misapplied by the respondent appellate court HELD: YES. The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed defective. Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a persons dignity, personality, privacy and peace of mind. It is petitioners position that the act imputed to him does not constitute any of those enumerated in Arts 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a persons

dignity, such as profane, insulting, humiliating, scandalous or abusive language. Under Art. 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although incapable of pecuniary computation, may be recovered if they are the proximate result of the defendants wrongful act or omission. NESTOR N. PADALHIN and ANNIE PADALHIN vs. NELSON D. LAVINA

FACTS: Laviña and Nestor were both Filipino diplomats assigned in Kenya as Ambassador and Consul General. In the course of their stay in Kenya, the residence of Laviña was raided twice and prior to that Pasturan delivered a message to the household helpers of Lavina’s residence to allow the entry of an officer who would come to take photographs of ivory souvenirs kept therein.

The first raid was conducted on April 18, 1996 while Lavina and his wife were attending a diplomatic dinner. Criminal Investigation Division’s Intelligence office of Kenya and Digirie Police Station participated in the raid. The second raid was conducted on April 23, 1996 while Lavina and his wife was not around again and additional photographs were taken. Subsequently, both Nestor and Laviña were recalled from their posts in Kenya.

On November 17, 1997, Laviña filed before the RTC a complaint for damages against Nestor and his wife, petitioner Annie Padalhin (Annie) Palao, Cabando, Manalo, Ebdalin and Dizon. On July 6, 1998, Laviña amended his complaint to include Pasturan as a defendant. Laviña alleged (a) affront against his privacy and the sanctity and inviolability of his diplomatic residence during the two raids conducted by the Kenyan officials, supposedly instigated by Padalhin and participated by all the defendants as conspirators; (b) bad faith, malice and deceit exhibited by the defendants, including Padalhin, in conspiring on the conduct of the

raids, engaging in a smear campaign against him, and seizing without authority his personal effects. Laviña sought payment of actual, moral, exemplary and nominal damages, attorney’s fees and costs of suits. RTC dismissed the charges against Palao, Cabando, Manalo, Ebdalin and Dizon. RTC ruled in favor of Lavina. Finding of RTC: Defendant Nestor N. Padalhin admitted in his sworn statement (affidavit) that he caused the taking of pictures of the raw elephant tusks in the official residence of the ambassador. the taking of the pictures of the elephant tusks inside the residence of Laviña while the latter and his wife were out and attending a diplomatic function, was upon order of Nestor Padalhin. The invasion of diplomatic residence of Lavina in Kenya by Nestor was done in bad faith. By insufficiency of evidence, Annie and Pasturan are not liable. Nestor was not proved to be present in the 2nd raid. Both lavina and Nestor filed an appeal. CA: The affidavit of Nestor constitute as an admission against his interest. Presumption is that no man would declare anything against himself unless such declaration was true. CA denied both the appeals and affirmed the ruling of RTC. ISSUES: Whether or not the raid violated the right to privary of the spouses Lavina RULING: As already exhaustively discussed by both the RTC and the CA, Nestor himself admitted that he caused the taking of the pictures of Lavina's residence without the latter's knowledge and consent. Nestor reiterates that he did so sans bad faith or malice. However, Nestor's surreptitious acts negate his allegation of good faith. If it

were true that Lavina kept ivories in his diplomatic residence, then, his behavior deserves condemnation. However, that is not the issue in the case at bar. Nestor violated the New Civil Code prescriptions concerning the privacy of one's residence and he cannot hide behind the cloak of his supposed benevolent intentions to justify the invasion.

ARTICLE 27. NONFEASANCE, MISFEASANCE AND MALFEASANCE G.R. No. 125704 August 28, 1998 PHILEX MINING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, COURT OF APPEALS, and THE COURT OF TAX APPEALS, respondents. FACTS: On August 5, 1992, the BIR sent a letter to Philex asking it to settle its tax liabilities for the 2nd, 3rd and 4th quarter of 1991 as well as the 1st and 2nd quarter of 1992 in the total amount of P123,821.982.52. In a letter dated August 20, 1992, Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P119,977,037.02 plus interest. Therefore these claims for tax credit/refund should be applied against the tax liabilities. September, 1992, In reply, the BIR in a letter, found no merit in Philex's position. Since these pending claims have not yet been established or determined with certainty, it follows that no legal compensation can take place. Hence, the BIR reiterated its demand that Philex settle the amount plus interest within 30 days from the receipt of the letter. Philex raised the issue to the Court of Tax Appeals on November 6, 1992. In the course of the proceedings, the BIR issued a Tax Credit Cert in the amount of P13,144,313.88 which, applied to the total

tax liabilities of Philex of P123,821,982.52; effectively lowered the latter's tax obligation to P110,677,688.52. CTA: Philex to pay the remaining balance of P110,677,688.52 plus interest: Thus, for legal compensation to take place, both obligations must be liquidated and demandable. "Liquidated" debts are those where the exact amount has already been. In the instant case, the claims of the Petitioner for VAT refund is still pending litigation, and still has to be determined by this Court. A fortiori, the liquidated debt of the Petitioner to the government cannot, therefore, be set-off against the unliquidated claim which Petitioner conceived to exist in its favor. Moreover, the Court of Tax Appeals ruled that "taxes cannot be subject to set-off on compensation since claim for taxes is not a debt or contract." CA: Affirmed CTA. A few days after the denial of its motion for reconsideration, Philex was able to obtain its VAT input credit/refund not only for the taxable year 1989 to 1991 but also for 1992 and 1994, computed as follows: 1994 /P25,317,534.01 1994 /P21,791,020.61 1989 /P37,322,799.19 1990-1991 /P84,662,787.46 1992 /P36,501,147.95 Philex now contends that the same should, ipso jure, off-set its excise tax liabilities since both had already become "due and demandable, as well as fully liquidated;" hence, legal compensation can properly take place. ISSUE: W/N the Philex’ credit may be used to off-set its’ tax liabilities. W/N BIR is guilty of delay in the refund of input taxes.

HELD: NO. Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity. This is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. Moreover, Philex's theory that would automatically apply its VAT input credit/refund against its tax liabilities can easily give rise to confusion and abuse, depriving the government of authority over the manner by which taxpayers credit and offset their tax liabilities. YES. Philex asserts that the BIR violated Section 106 (e) of the National Internal Revenue Code of 1977, which requires the refund of input taxes within 60 days, when it took five years for the latter to grant its tax claim for VAT input credit/refund. In this regard, we agree with Philex. While there is no dispute that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund, however, once the claimant has submitted all the required documents it is the function of the BIR to assess these documents with purposeful dispatch. In the instant case, the VAT input taxes were paid between 1989 to 1991 but the refund of these erroneously paid taxes was only granted in 1996. The BIR should have been more diligent and judicious with their duty, it could have granted the refund earlier. We need not remind the BIR that simple justice requires the speedy refund of wrongly-held taxes. The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, in order to maintain the general

public's trust and confidence in the Government The State is not bound by the neglect of its agents and officers. We understand Philex's predicament, it must be stressed that the same is not a valid reason for the non-payment of its tax liabilities. First, if the BIR takes time in acting upon the taxpayer's claim for refund, the latter can seek judicial remedy before the Court of Tax Appeals in the manner prescribed by law. Second, if the inaction can be characterized as willful neglect of duty, then recourse under the Civil Code and the Tax Code can also be availed of. Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary action that may be taken. More importantly, Section 269 (c) of the National Internal Revenue Act of 1997 states: (c) Wilfully neglecting to give receipts, as by law required for any sum collected in the performance of duty or wilfully neglecting to perform, any other duties enjoyed by law. The Provisions abhor official inaction, willful neglect and unreasonable delay in the performance of official duties. In no uncertain terms must we stress that every public employee or servant must strive to render service to the people with utmost diligence and efficiency. Insolence and delay have no place in government service. The BIR, being the government collecting arm, must and should do no less. It simply cannot be apathetic and laggard in rendering service to the taxpayer if it wishes to remain true to its mission of hastening the country's development. In sum, while we can never condone the BIR's apparent callousness in performing its duties, still, the same cannot justify Philex's non-payment of its tax liabilities.

UNFAIR COMPETITION WILLAWARE v. JESICHRIS Facts: Jesichris Manufacturing Company the respondent filed this present complaint for damages for unfair competition with prayer for permanent injunction to enjoin Willaware Products Corporation the petitioner from manufacturing and distributing plastic-made automotive parts similar to Jesichris Manufacturing Company. The respondent, alleged that it is a duly registered partnership engaged in the manufacture and distribution of plastic and metal products, with principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since its registration in 1992, Jesichris Manufacturing Company has been manufacturing in its Caloocan plant and distributing throughout the Philippines plastic-made automotive parts. Willaware Products Corporation, on the other hand, which is engaged in the manufacture and distribution of kitchenware items made of plastic and metal, has its office near that of the Jesichris Manufacturing Company. Respondent further alleged that in view of the physical proximity of petitioner’s office to respondent’s office, and in view of the fact that some of the respondent’s employees had transferred to petitioner, petitioner had developed familiarity with respondent’s products, especially its plastic-made automotive parts. That sometime in November 2000, Jesichris discovered that Willaware had been manufacturing and distributing the same automotive parts with exactly similar design, same material and colors but was selling these products at a lower price as respondent’s plastic-made automotive parts and to the same customers. Respondent alleged that it had originated the use of plastic in place of rubber in the manufacture of automotive under chassis parts such as spring eye bushing, stabilizer bushing, shock absorber bushing, center bearing cushions, among others. Petitioner’s manufacture of the same automotive parts with plastic material was taken from respondent’s idea of using plastic for automotive parts. Also, petitioner deliberately copied respondent’s products all of which acts constitute unfair competition, is and are contrary to law, morals, good customs and public policy and have caused respondent damages in terms of lost and unrealized profits in the amount of 2,000,000 as of the date of respondent’s complaint. Issue: 1. Whether or not there is unfair competition under human relations when the parties are not competitors and there is actually no damage on the part of Jesichris.

Held: Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage." In this case, it is clear that what is being sought to be prevented is not competition per se but the use of unjust, oppressive or high handed methods which may deprive others of a fair chance to engage in business or to earn a living. What the law prohibits is unfair competition and not competition where the means use dare fair and legitimate. In order to qualify the competition as "unfair," it must have two characteristics: (1) it must involve an injury to a competitor or trade rival, and (2) it must involve acts which are characterized as "contrary to good conscience," or "shocking to judicial sensibilities," or otherwise unlawful; in the language of our law, these include force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method. The public injury or interest is a minor factor; the essence of the matter appears to be a private wrong perpetrated by unconscionable means. In sum, petitioner is guilty of unfair competition under Article 28 of the Civil Code. However, since the award of Two Million Pesos (P2,000,000.00) in actual damages had been deleted and in its place Two Hundred Thousand Pesos (P200,000.00) in nominal damages is awarded, the attorney's fees should concomitantly be modified and lowered to Fifty Thousand Pesos (P50,000.00).