THE PEOPLE OF THE PHILIPPINES vs. FELIPE MAPOY G.R. No.

L-48336
FACTS: Defendants were charged with violation of the Bulk Sales Law in that they mortgaged all of their stock of goods, etc., without any notice to Daido Boeki Kaisha, Ltd., one of the offended parties, to which they were indebted. They pleaded guilty and its sentenced by the Court of First Instance of Manila to pay a fine, and the costs, and to indemnify Daido Boeki Kaisha, Ltd., jointly and severally, with subsidiary imprisonment in case of insolvency. ISSUE: WON in violation of bulk sales law,payment of indemnity will lie. RULING: That it was error for the trial court to consider said indebtedness as a liability arising from the crime charged, and to order defendants to indemnify Daido Boeki Kaisha, Ltd., with subsidiary imprisonment in case of insolvency. Inasmuch as under section 4 of the Bulk Sales Law, the mortgaged in question was fraudulent and void, and there being no proof that the mortgaged goods have disappeared, the same are still subject to attachment for the satisfaction of creditors' lawful claims against the defendants. Daido Boeki Kaisha, Ltd., may still bring a separate civil action against defendants herein for the collection of any indebtedness that may be due from defendants, and if the latter will not pay the judgment in such civil case, the goods involved in the instant case may be seized and sold. Therefore, the obligations of defendants to pay Daido Boeki Kaisha , Ltd., which was already existing when the mortgage was signed, was not the result of the violation of the Bulk Sales Law, nor was it affected by said violation.

September 21, 1942

CIR vs. HAWAIIAN-PHILIPPINE COMPANY (HPC) G.R. No. L-16315

FACTS: A petition filed by the Commissioner of Internal Revenue for the review of the decision of the Court of Tax Appeals ordering him to refund to respondent HawaiianPhilippine Company for taxes assessed against it and which the latter had deposited with the City Treasurer of Silay, Occidental Negros. HPC is operating a sugar central in the City of Silay, Occidental Negros. It produces centrifugal sugar from sugarcane supplied by planters. The processed sugar is divided between the planters and the petitioner in the proportion stipulated in the milling contracts, and thereafter is deposited in the warehouses of the latter. For the sugar deposited by the planters, the petitioner issues the corresponding warehouse receipts of "quedans". It does not collect storage charges on the sugar deposited in its warehouse during the first 90 days period counted from the time it is extracted from the sugarcane. Upon the lapse of the first ninety days and up to the beginning of the next milling season, it collects a fee of P0.30 per picul a month. Upon investigation conducted by the Bureau, it was found that during the years 1949 to 1957, the petitioner realized from collected storage fees a total gross receipts of P212,853.00, on the basis of which the respondent determined the petitioner's liability for fixed and percentage taxes, 25% surcharge, and administrative penalty in

May 30, 1964

the aggregate amount of P8,411.99. The petitioner deposited the amount of P8,411.99 with the Office of the City Treasurer of Silay. After due hearing CTA ordered the refund to HPC. HPC contention: -that it is not engaged the business of storing its planters' sugar for profit; that the maintenance of its warehouses is merely incidental to its business of manufacturing sugar and in compliance with its obligation to its planters. -that the imposition of the tax under consideration would amount to double taxation. ISSUE: WON petitioner is a warehouseman liable for the payment of the fixed and percentage taxes prescribed in Sections 182 and 191 of the National Internal Revenue Code. WON it amounts to double taxation which will exempt HPC from paying the assessed tax of BIR. RULING: SEC. 182. FIXED TAXES (a) ON BUSINESS (1) PERSONS SUBJECT TO PERCENTAGE TAX. Unless otherwise provided every person engaging in a business on which the percentage tax is imposed shall pay a fixed annual tax of twenty pesos. ... . SEC. 191. PERCENTAGE TAX ON ROAD, BUILDING, IRRIGATION, ARTESIAN WELL, WATERWORKS, AND OTHER CONSTRUCTION WORK CONTRACTORS, PROPRIETORS OR OPERATORS OF DOCKYARD, AND OTHERS. ...w arehousemen; plumbers, smiths; house or sign painters; lithographers, publishers, except those engaged in the publication or printing and publication of any newspaper, magazine, review or bulletin which appear at regular intervals with fixed prices for subscription and sale, and which is not devoted principally to the publication of advertisements; printers and bookbinders, business agents and other independent contractors, shall pay a tax equivalent to THREE PERCENTUM of their gross receipts. A warehouseman has been defined as one who receives and stores goods of another for compensation. For one to be considered engaged in the warehousing business, therefore, it is sufficient that he receives goods owned by another for storage, and collects fees in connection with the same. In fact, Section 2 of the General Bonded Warehouse Act, as amended, defines a warehouseman as "a person engaged in the business of receiving commodity for storage." That HPC stores its planters' sugar free of charge for the first ninety days does not exempt it from liability based on sec 191 NIRC. The fact that respondent's warehousing business is incidental with the operation of its sugar central not sufficient to exempt it from payment of the tax prescribed under Section 178 NIRC, the tax on business is payable for every separate or distinct establishment or place where business subject to the tax is conducted, and one line of business or occupation does not become exempt by being conducted with some other business or occupation for which such tax has been paid. DOUBLE TAXATION ISSUE: As is clear from the facts, respondent's warehousing business, although carried on in relation to the operation of its sugar central, is a distinct and separate business taxable under a different provision of the Tax Code. There can be no double taxation where the State merely imposes a tax on every separate and distinct business in which a party is engaged.There is no prohibition against double or multiple taxation in this jurisdiction.

Mandarin Villa, Inc. vs. CA and Clodualdo de Jesus

G.R. No. 119850June 20, 1996

FACTS: In the evening of 19 Oct 1989, private respondent de Jesus hosted a dinner for his friends at the peririoners restaurant, the Mandarin Villa Seafoods Village in Mandaluyong City. After dinner, the waiter handed to de Jesus the bill amounting to P2,658.50. De Jesus offered his BANKARD credit card to the waiter for payment. Minutes later, the waiter returned and audibly informed that said credit card had expired. De Jesus demonstrated that the card had yet to expire on Sept 1990, as embossed on its face. De Jesus approached the cashier who again dishonored such card. De Jesus offered his BPI express credit card instead and this was accepted, honored and verified. The trial court and CA held petitioner to be negligent. ISSUES: WON petitioner was negligent; If negligent, WON such negligence was the proximate cause of private respondents damage. RULING: Petition dismissed. The test for determining the existence of negligence in a case may be stated as follows: did the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary prudent person would have used in the same situation? If not, then he is guilty of negligence. In the case at bar, the Point of Sale Guidelines which outlined the steps that petitioner must follow under the circumstances reveals that whenever the words CARD EXPIRED flashes on screen, petitioner should check cards expiry date as embossed in the card itself. If unexpired, petitioner should honor the card. Clearly, it has not yet expired in 19 Oct 1989 when the same was dishonored by petitioner. Hence, petitioner did not use the reasonable care and caution which an ordinary prudent person would have used in the same situation and as such, petitioner is guilty of negligence. The humiliation and embarrassment of private respondent was brought about by the fact of dishonor by petitioner of private respondents valid BANKARD. Hence, petitioners negligence is the proximate cause of private respondents damage. Petitioner contends that it cannot be faulted for its cashier's refusal to accept private respondent's BANKARD credit card, the same not being a legal tender. It argues that private respondent's offer to pay by means of credit card partook of the nature of a proposal to novate an existing obligation for which petitioner, as creditor, must first give its consent otherwise there will be no binding contract between them. Petitioner cannot seek refuge behind this averment. While private respondent, may not be a party to the said agreement, the above-quoted stipulation conferred a favor upon the private respondent, a holder of credit card validly issued by BANKARD. This stipulation is a stipulation pour autri and under Article 1311 of the Civil Code private respondent may demand its fulfillment provided he communicated his acceptance to the petitioner before its revocation. In this case, private respondent's offer to pay by means of his BANKARD credit card constitutes not only an acceptance of the said stipulation but also an explicit communication of his acceptance to the obligor. In addition, the record shows that petitioner posted a logo inside Mandarin Villa Seafood Village stating that "Bankard is accepted here. This representation is conclusive upon the petitioner which it cannot deny or disprove as against the private respondent, the party relying thereon. Petitioner, therefore, cannot disclaim its obligation to accept private respondent's BANKARD credit card without violating the equitable principle of estoppel.

Acme Shoe, Rubber and Plastic Corporation v. CA G.R. No. 103576Aug. 22, 1996
FACTS:

Chua Pac, president and general manager of Acme Shoe, Rubber and Plastic Corporation, executed a chattel mortgage in favor of Producers Bank of the Philippines, as a security for a corporate loan in the amount of P3M. The chattel mortgage contained a clause that provided for the mortgage to stand as security for all other obligations contracted before, during and after the constitution of the mortgage. The P3M was paid. Subsequently, the corporation obtained additional financial accommodations totaling P2.7M. This was also paid on the due date. Again, the bank extended another loan to the corporation in the amount of P1M, covered by four promissory notes. However, the corporation was unable to pay this at maturity. Thereupon, the bank applied for an extra-judicial foreclosure of mortgage. For its part, the corporation filed an action for injunction with prayer for damages. The lower court ultimately dismissed the case and ordered the extra-judicial foreclosure of mortgage. Hence, this appeal. ISSUES: WON extra-judicial foreclosure of the chattel mortgage is proper. If not proper, WON the corporation is entitled to damages as a result of the extra-judicial foreclosure. WON it would be valid and effective to have a clause in a chattel mortgage that purports to likewise extend its coverage to obligations yet to be contracted or incurred? RULING: Contracts of security are either personal or real. In contracts of personal security, such as a guaranty or suretyship, the faithful performance of the obligation by the principal debtor is secured by the personal commitment of another (the guarantor or surety). In contracts of real security, such as a pledge, a mortgage or an antichresis, that fulfillment is secured by an encumbrance of property in pledge, the placing of movable property in the possession of the creditor; in chattel mortgage by the execution of the corresponding and substantially in teh form prescribed by law; in real estate mortgage, by the execution of a public instrument encumbering the real property covered thereby; and in antichresis, by a written instrument granting to the creditor the right to receive the fruits of an immovable property with the obligation to apply such fruits to the payment of interest, if owing, and thereafter to the principal of his credit upon the essential condition that if the obligation becomes due and the debtor defaults, then the property encumbered can be alienated for the payment of the obligation, but that should the obligation be duly paid, then the contract is automatically extinguished proceeding from the accessory character of the agreement. As the law so puts it, once the obligation is complied with, then the contract of security becomes, ipso facto, null and void. While a pledge, real estate mortgage, or antichresis may exceptionally secure after-incurred obligations so long as these future debts are accurately described, a chattel mortgage, however, can only cover obligations existing at the time the mortgage is constituted. Although a promise expressed in a chattel mortgage to include debts that are yet to be contracted can be a binding commitment that can be compelled upon, the security itself, however, does not come into existence or arise until after a chattel mortgage agreement covering the newly contracted debt is executed either by concluding a fresh chattel mortgage or by amending the old contract conformably with the form prescribed by the Chattel Mortgage Law. Refusal on the part of the borrower to execute the agreement so as to cover the afterincurred obligation can constitute an act of default on the part of the borrower of the financing agreement whereon the promise is written but, of course, the remedy of foreclosure can only cover the debts extant at the time of constitution and during the life of the chattel mortgage sought to be foreclosed.

BICOL SAVINGS & LOAN ASSOCIATION vs. JAIME GUINHAWA G.R. No. L-62415 August 20, 1990
FACTS:

Victorio Depositario together with private respondent Jaime Guinhawa, acting as solidary co-maker, took a loan from petitioner Bicol Savings and Loan Association (BISLA for brevity) payable every 19th day of each month beginning July 1980 until maturity on June 19, 1982. To secure the payment of the foregoing loan obligation, the principal borrower Victorio Depositario put up as security a chattel mortgage which was a Yamaha Motorcycle. Said motorcycle was eventually foreclosed by reason of the failure of Depositario and private respondent Guinhawa to pay the loan. As a result of the foreclosure, there was a deficiency. Thus, on August 6, 1981, petitioner BISLA (plaintiff therein) filed in the City Court a complaint for the recovery of a sum of money constituting the deficiency after foreclosure of the chattel mortgage put up by the principal borrower Depositario against the latter and his solidary co-maker Guinhawa (herein private respondent) as defendants. City Court rendered a decision in favor of the petitioner,however it was reversed by the RTC upon appeal,hence this petition. ISSUE: WON Private respondent was not a party to the chattel mortgage executed by Depositario but merely a co-maker on the promissory note executed by the latter and therefore cannot be held liable for the deficiency. RULING: In an extrajudicial foreclosure of a chattel mortgage a deficiency exists, an independent civil action may be instituted for the recovery of said deficiency. If the mortgagee has foreclosed the mortgage judicially, he may ask for the execution of the judgment against any other property of the mortgagor for the payment of the balance. To deny to the mortgagee the right to maintain an action to recover the deficiency after foreclosure of the chattel mortgage would be to overlook the fact that the chattel mortgage is only given as a security and not as payment for the debt in case of failure of payment. In the case at bar, the obligation contracted by the principal debtor (Depositario) with a solidary co-maker (private respondent herein), was one of loan secured by a chattel mortgage, executed by the principal debtor, and not a sale where the price is payable on installments and where a chattel mortgage on the thing sold was constituted by the buyer and, further, the obligation to pay the installments having been guaranteed by another. Under Article 1216 of the Civil Code, the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. And therefore, where the private respondent binds himself solidarily with the principal debtor to pay the latter's debt, he may be proceeded against by the principal debtor. Private respondent as solidary co- maker is also a surety (Art. 2047) and that under the law, the bringing of an action against the principal debtor to enforce the payment of the obligation is not inconsistent with, and does not preclude, the bringing of another action to compel the surety to fulfill his obligation under the agreement.

FEATI BANK & TRUST COMPANY vs. C.A, and BERNARDO E. VILLALUZ G.R. No. 94209 April 30, 1991
FACTS: In this case, Bernardo Villaluz agreed to sell to Axel Christiansen 2,000 cubic meters of lauan logs at $27.00 per cubic meter FOB. On the arrangements made and upon the instructions of consignee, Hanmi Trade Development, Ltd., the Security Pacific National Bank of Los Angeles, California issued an irrevocable letter of credit

available at sight in favor of Villaluz for the sum of $54,000.00, the total purchase price of the lauan logs. The letter of credit was mailed to the Feati Bank and Trust Company (now Citytrust) with the instruction to the latter that it forward the enclosed letter of credit to the beneficiary. The letter of credit also provided that the draft to be drawn is on Security Pacific National Bank and that it be accompanied by certain documents. The logs were thereafter loaded on a vessel but Christiansen refused to issue the certification required in paragraph 4 of the letter of credit, despite repeated requests by the private respondent. The logs however were still shipped and received by consignee, to whom Christiansen sold the logs. Because of the absence of the certification by Christiansen, the Feati Bank and Trust company refused to advance the payment on the letter of credit until such credit lapsed. Since the demands by Villaluz for Christiansen to execute the certification proved futile, he filed an action for mandamus and specific performance against Christiansen and Feati Bank and Trust Company before the Court of First Instance of Rizal. Christiansen however left the Philippines and Villaluz filed an amended complaint making Feati Bank and Trust Company solidarily liable with Christiansen. Trial court held that Christiansen and Feati Bank were liable, the latter for refusing to negotiate the letter of credit in the absence of Christiansens certification considering that the letter of credit is irrevocable. Trial court said that Security Pacific National Bank, the issuing bank, undertook by the terms of the letter of credit that the same shall be honored upon presentment. On the other hand, the notifying bank, Feati Bank, by accepting the instructions from the issuing bank, itself assumed the very same undertaking as the issuing bank under the terms of the letter of credit. The Court of Appeals affirmed the decision of the trial court thus this petition for review. ISSUE: WON a correspondent bank is to be held liable under the letter of credit despite non-compliance by the beneficiary with the terms thereof. RULING: The Supreme Court held that Feati Bank is not liable. It is settled rule in commercial transactions involving letters of credit that the documents tendered must strictly conform to the terms of the letter of credit. The tender of documents by the beneficiary (seller) must include all documents required by the letter. A correspondent bank which departs from what has been stipulated under the letter of credit, as when it accepts a faulty tender, acts on its own risks and it may not thereafter be able to recover from the buyer or the issuing bank, as the case may be, the money thus paid to the beneficiary. Thus the rule of strict compliance. We have heretofore held that these letters of credit are to be strictly complied with, which documents and shipping documents must be followed as stated in the letter. There is no discretion in the bank or trust company to waive any requirements. The terms of the letter constitutes an agreement between the purchaser and the bank. In the absence of any specific provision governing the legal complexities arising from transactions involving letters of credit in the Philippines, the Supreme Court applied the Uniform Customs and Practice for Documentary Credit (UCP) in lieu of Article 2 of the Code of Commerce that in the absence of any particular provision in the Code of Commerce, commercial transactions shall be governed by the usages and customs generally observed.

Under the UCP, an irrevocable credit is a definite undertaking on the part of the issuing bank and constitutes the engagement of that bank to the beneficiary and bona fide holders of drafts drawn and/or documents presented thereunder, that the provisions for payment, acceptance or negotiation contained in the credit will be duly fulfilled, provided that all the terms and conditions of the credit are complied with. An irrevocable credit may be advised to a beneficiary through another bank (the advising bank) without engagement on the part of that bank, but when an issuing bank authorizes or requests another bank to confirm its irrevocable credit and the latter does so, such confirmation constitutes a definite undertaking of the confirming bank. Under the foregoing provisions, the bank may only negotiate, accept or pay, if the documents tendered to it are on their face in accordance with the terms and conditions of the documentary credit. And since a correspondent bank, like Feati Bank, principally deals only with documents, the absence of any document required in the documentary credit justifies the refusal by the correspondent bank to negotiate, accept or pay the beneficiary, as it is not its obligation to look beyond the documents. It merely has to rely on the completeness of the documents tendered by the beneficiary. SC also ruled out the contentions that Feati Bank is a trustee and guarantor. What actually transpires in an irrevocable credit is that the correspondent bank does not receive in advance the sum of money from the buyer or the issuing bank. On the contrary, when the correspondent bank accepts the tender and pays the amount stated in the letter, the money that it doles out comes not from any particular fund that has been advanced by the issuing bank, rather it gets the money from its own funds and then later seeks reimbursement from the issuing bank. Granting that a trust has been created, still, the petitioner may not be considered a trustee. As the petitioner is only a notifying bank, its acceptance of the instructions of the issuing bank will not create estoppel on its part resulting in the acceptance of the trust. Precisely, as a notifying bank, its only obligation is to notify the private respondent of the existence of the letter of credit. The relationship between the issuing bank and the notifying bank, on the contrary, is more similar to that of an agency and not that of a guarantee. It may be observed that the notifying bank is merely to follow the instructions of the issuing bank which is to notify or to transmit the letter of credit to the beneficiary. (See Kronman v. Public National Bank of New York, supra). Its commitment is only to notify the beneficiary. It does not undertake any assurance that the issuing bank will perform what has been mandated to or expected of it. As an agent of the issuing bank, it has only to follow the instructions of the issuing bank and to it alone is it obligated and not to buyer with whom it has no contractual relationship. In fact the notifying bank, even if the seller tenders all the documents required under the letter of credit, may refuse to negotiate or accept the drafts drawn thereunder and it will still not be held liable for its only engagement is to notify and/or transmit to the seller the letter of credit. Finally, even if we assume that the petitioner is a confirming bank, the petitioner cannot be forced to pay the amount under the letter. As we have previously explained, there was a failure on the part of the private respondent to comply with the terms of the letter of credit.