MINDANAO BUS COMPANY vs THE COLLECTOR OF INTERNAL REVENUE

G.R. No. L-14078             February 24, 1961

FACTS:

Petitioner is a common carrier engaged in transporting passengers and freight by means of auto-
buses in Northern Mindanao.

On 1953, an agent of the Respondent examined the books of accounts of the petitioner and found
that the freight tickets used by it do not contain the required documentary stamp tax. Upon
recommendation of the said agent, Respondent assessed against the petitioner the sum of
P15,704.16, exclusive of compromise penalty, as documentary stamp taxes.

The Court of Tax Appeals, ordered the petitioner to pay P15,704.16, as documentary stamp taxes
for the period from January 1, 1948 up to September 16, 1953. It modifies an assessment by the
Collector of Internal Revenue eliminating the compromise penalty imposed by the Collector.

Upon petitioner's motion for reconsideration, the court resolved to reopen the case, for the sole
purpose of allowing the petitioner to present as evidence the 500 booklets and 17 sackful,
respectively, of passenger and freight tickets of the petitioner. The Court of Tax Appeals denied the
motion for reconsideration. Hence, this appeal.

ISSUES:

1. WON the tax court erred in presuming the correctness of the assessment, and in not finding same
not based upon the best evidence obtainable, but is arbitrary, speculative, hypothetical, grossly
exaggerated and without factual bases. (NO)

2. WON the freight tickets issued by it are not bills of lading subject to documentary stamp tax (NO)

RULING:

1.

The procedure of counting one by one the freight tickets contained in used booklets dumped inside
the petitioner's bodega by said agent, which is the average method, in ascertaining the total number
of freight tickets used during the period under review, cannot be improved because an actual count
of the freight tickets is practically impossible because the booklets were so numerous and most of
them were either torn or destroyed.. The average method is the only way by which the agent could
determine the number of booklets used during the period in question.

The agent also correctly assumed that the value of the goods covered by each freight ticket is not
less than P5.00. It is a common practice of passengers in the rural areas not to secure receipts for
cargoes of small value and to demand receipts only for valuable cargo. If the freight tickets were
issued, the baggage carried must have been valuable enough.

On the other hand, it was the duty of petitioner to present evidence to show inaccuracy in the above
method of assessment but it failed to do so.

2.

The claim of petitioner that the freight tickets issued by it are not bills of lading subject to
documentary stamp tax must also be dismissed.
In the case of Interprovincial Autobus Co., Inc. vs. Collector, supra: .

But the claim that freight tickets of bus companies are not 'bills of lading or receipts' within
the meaning of the Documentary Stamp Tax Law is without merit. Bills of Lading, in modern
jurisprudence, are not those issued by masters of vessels alone; they now comprehend all
forms of transportation, whether by sea or land, and includes the receipts for cargo
transported.

As comprehending all methods of transportation, a bill of lading may be defined as a written

acknowledgment of the receipt of goods and an agreement to transport and to deliver them
at a specified place to a person named or on his order. Such instruments are sometimes
called 'shipping receipts,' 'forwarders' receipts,' and 'receipts for transportation." The
designation, however, is not material, and neither is the form of the instrument. If it contains
an acknowledgment by the carrier of the receipt of goods for transportation, it is, in legal
effect, a bill of lading."

Section 227 of the National Internal Revenue Code imposes the tax on receipts for goods or
effects shipped from one port or place to another port or place in the Philippines. The use of
the word place after port and of the, word 'receipt' shows that the receipts for goods shipped
on land are included.

Petition Denied.
PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. AND TAGUM PLASTICS, INC. VS.
SWEET LINES, INC.
G.R. No. 87434 August 5, 1992

FACTS:

Vessel SS "VISHVA YASH" belonging to or operated by the foreign common carrier, took on board
cargoes for shipment to Manila and later for transhipment to Davao consigned to the order of FEBTC
of Manila, with arrival notice to Tagum Plastics, Inc. (TPI), Davao. Cargoes were covered by Bills of
Lading issued by the foreign common carrier. The cargoes were likewise insured by the TPI with
Philippine American General Insurance Co., Inc. (Philamgen). Said vessel arrived at Manila and
discharged its cargoes for transhipment to Davao. For this purpose, the foreign carrier awaited and
made use of the services of the vessel called M/V "Sweet Love" owned and operated by Sweet
Lines Inc. (SLI) interisland carrier. The shipments were discharged from the interisland carrier into
the custody of the consignee. Some bags were shorthanded, missing, torn, spilled, emptied or
contaminated with foreign matters. In resisting the claim, SLI raised prescription as its defense.

ISSUE: Whether or not the notice requirement is a condition precedent for their cause of action to
arise. (YES)

RULING:

Paragraph 5 of the bills of lading which unequivocally prescribes a time frame of 30 days for filing a
claim with the carrier in case of loss of or damage to the cargo and 60 days from accrual of the right
of action for instituting an action in court, both must concur. It has long been held that Article 366 of
the Code of Commerce applies not only to overland and river transportation but also to maritime
transportation. The filing of a claim with the carrier within the time limitation therefor under Article
366 actually constitutes a condition precedent to the accrual of a right of action against a carrier for
damages caused to the merchandise. The shipper or the consignee must allege and prove the
fulfillment of the condition and if he omits such allegations and proof, no right of action against the
carrier can accrue in his favor. As the requirements are reasonable conditions precedent, they are
not limitations of action. Being conditions precedent, their performance must precede a suit for
enforcement and the vesting of the right to file suit does not take place until the happening of these
conditions. Before an action can be commenced all the essential elements of the cause of action
must be complete. All valid conditions precedent to the institution of the particular action, whether
prescribed by statute, fixed by agreement of the parties or implied by law must be performed or
complied with before commencing the action, unless waived.

There is neither any showing of compliance by TPI with the requirement for the filing of a notice of
claim within the prescribed period. It may then be said that while they may possibly have a cause of
action, for failure to comply with the above condition precedent they lost whatever right of action they
may have in their favor or that remedial right or right to relief had prescribed. Provisions of the law on
the matter would disclose that there is no constitutional or statutory prohibition infirming par. 5 of
subject Bill of Lading. The stipulated period of 60 days is reasonable enough for them to ascertain
the facts and thereafter to sue, if need be, and the 60-day period agreed upon by the parties which
shortened the statutory period within which to bring action for breach of contract is valid and binding.
The shortened period for filing suit is not unreasonable and has in fact been generally recognized to
be a valid business practice in the shipping industry.

Knowledge on the part of the carrier of the loss of or damage to the goods deducible from the
issuance of said report is not equivalent to nor does it approximate the legal purpose served by the
filing of the requisite claim, that is, to promptly apprise the carrier about a consignee's intention to file
a claim and thus cause the prompt investigation of the veracity and merit thereof for its protection. It
would be an unfair imposition to require the carrier, upon discovery in the process of preparing the
report on losses or damages of any and all such loss or damage, to presume the existence of a
claim against it when at that time the carrier is expectedly concerned merely with accounting for
each and every shipment and assessing its condition.

Unless and until a notice of claim is therewith timely filed, the carrier cannot be expected to presume
that for every loss or damage tallied, a corresponding claim has been filed or is already in existence
as would alert it to the urgency for an immediate investigation of the soundness of the claim. The
report on losses and damages is not the claim referred to and required by the bills of lading for it
does not fix responsibility for the loss or damage, but merely states the condition of the goods
shipped. The claim contemplated, in whatever form, must be something more than a notice that the
goods have been lost or damaged; it must contain a claim for compensation or indicate an intent to
claim.

Where the contract of shipment contains a reasonable requirement of giving notice of loss of or
injury to the goods, the giving of such notice is a condition precedent to the action for loss or injury
or the right to enforce the carrier's liability. Such requirement is not an empty formalism. The
fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but
reasonably to inform it that the shipment has been damaged and that it is charged with liability
therefor, and to give it an opportunity to examine the nature and extent of the injury. This protects
the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh
and easily investigated so as to safeguard itself from false and fraudulent claims. Notice is a
condition precedent and the carrier is not liable if notice is not given in accordance with the
stipulation, as the failure to comply with such a stipulation in a contract of carriage with respect to
notice of loss or claim for damage bars recovery for the loss or damage suffered.
POWER COMMERCIAL AND INDUSTRIAL CORP. VS. CA
GR No. 119745 June 20, 1997 274 SCRA 597 

FACTS:

Petitioner Power Commercial & Industrial Development Corporation (PowerCom), an industrial

asbestos manufacturer, needed a bigger office space and warehouse for its products. On 1979,
petitioner entered into a contract of sale with the respondent spouses Reynaldo and Angelita R.
Quiambao—involving a 612-sq. m. parcel of land in San Antonio Village, Makati City. The parties
agreed that petitioner would pay private respondents spouses Quiambao P108,000.00 as down
payment, and the balance of P295,000.00 upon the execution of the deed of transfer of the title.
Further, petitioner assumed, as part of the purchase price, the existing mortgage on the land. In full
satisfaction thereof, he paid P79,145.77 to respondent PNB.

June 1, 1979, respondent spouses mortgaged again said land to PNB to guarantee a loan of in
which Petitioner PowerCom agreed to assume payment of the loan. The parties executed a Deed of
Absolute Sale With Assumption of Mortgage. On the same date, Mrs. C.D. Constantino, then
General Manager of PowerCom, submitted to PNB said deed with a formal application for
assumption of mortgage.

PNB informed respondent spouses that, for petitioner’s failure to submit the papers necessary for
approval pursuant to the former’s letter dated January 15, 1980, the application for assumption of
mortgage was considered withdrawn; that the outstanding balance of P145,000.00 was deemed fully
due and demandable; and that said loan was to be paid in full within fifteen (15) days from notice.
Petitioner PowerCom paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December 23,
1980, payments which were to be applied to the outstanding loan.

On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for rescission
and damages. Petitioner demanded the return of the payments it made on the ground that its
assumption of mortgage was never approved. May 31, 1983: while this case was pending, the
mortgage was foreclosed. The property was subsequently bought by PNB during the public auction.

Trial Court ruled that the failure of respondent spouses to deliver actual possession to petitioner
entitled the latter to rescind the sale, and in view of such failure and of the denial of the latter’s
assumption of mortgage, PNB was obliged to return the payments made by the latter.

Court of Appeals reversed the trial court decision. It held that the deed of sale between respondent
spouses and petitioner did not obligate the former to eject the lessees from the land in question as a
condition of the sale, nor was the occupation thereof by said lessees a violation of the warranty
against eviction. Hence, there was no substantial breach to justify the rescission of said contract or
the return of the payments made Petitioner contends: there was a substantial breach of the contract
between the parties warranting rescission CA gravely erred in failing to consider in its decision that a
breach of implied warranty under Article 1547 in relation to Article 1545 of the Civil Code applies in
the case-at-bar.
ISSUES:

1. Whether or not petitioner failed to establish any breach of the warranty against eviction. (YES)

2. WON a return of the payments by Petitioner made to PNB is warranted under Article 2154 of the
Code, solutio indebiti (NO)

HELD:

1.
A breach of this warranty requires the concurrence of the following circumstances:
(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance
of the vendee.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547
cannot be declared. Petitioner argues in its memorandum that it has not yet ejected the occupants of
said lot, and not that it has been evicted therefrom.

As correctly pointed out by Respondent Court, the presence of lessees does not constitute an
encumbrance of the land, nor does it deprive petitioner of its control thereof. We note, however, that
petitioner’s deprivation of ownership and control finally occurred when it failed and/or discontinued
paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public
auction. But this deprivation is due to petitioner’s fault, and not to any act attributable to the vendor-
spouses. Because petitioner failed to impugn its integrity, the contract is presumed, under the law, to
be valid and subsisting.

2.

Solutio indebiti applies where: (1) a payment is made when there exists no binding relation between
the payor, who has no duty to pay, and the person who received the payment, and (2) the payment
is made through mistake, and not through liberality or some other cause.

In this case, petitioner was under obligation to pay the amortizations on the mortgage under the
contract of sale and the deed of real estate mortgage.

Therefore, it cannot be said that it did not have a duty to pay to PNB the amortization on the
mortgage.

Also, petitioner insists that its payment of the amortization was a mistake because PNB disapproved
its assumption of mortgage after it failed to submit the necessary papers for the approval of such
assumption.
But even if petitioner was a third party in regard to the mortgage of the land purchased, the payment
of the loan by petitioner was a condition clearly imposed by the contract of sale. This fact alone
disproves petitioner's insistence that there was a "mistake" in payment.

The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle
that no one shall enrich himself unjustly at the expense of another. But as shown earlier, the
payment of the mortgage was an obligation petitioner assumed under the contract of sale. There is
no unjust enrichment where the transaction, as in this case, is quid pro quo, value for value.

Petition denied.