SPOUSES PONCE V. ALDANESE [G.R. No. 216587, August 4, 2021]

 

SPOUSES PONCE V. ALDANESE

G.R. No. 216587, August 4, 2021

SECOND DIVISION, HERNANDO J.

 

Property; Possession; Ownership

Principle: The case emphasizes the importance of presenting substantial evidence to establish ownership and possession rights over disputed land. It also serves as a reminder that mere encroachment or possession of land is not enough to claim ownership, and the true owner should be determined based on valid evidence and legal rights.

 

Jesus Aldanese inherited the land known as Lot No. 6890 located in Sibonga, Cebu from his father and diligently paid its real property taxes. In 1996, he discovered that the Spouses Ponce encroached upon his land. Jesus demanded that they vacate the land, but the Spouses Ponce refused, claiming that Lot No. 6890 was part of the land they bought from Jesus' brother, Teodoro Aldanese, Jr.

Jesus denied the sale and filed a complaint for recovery of possession and damages. The RTC ruled in his favor of Jesus, declaring him as the absolute owner and possessor of Lot No. 6890. The Spouses Ponce appealed, arguing that the complaint should have been dismissed on grounds of prescription and that Jesus failed to sufficiently prove his ownership over the subject land.

 

Whether Jesus Aldanese has sufficiently proven his ownership and entitlement to possession of Lot No. 6890, despite the Spouses Ponce's claim of purchasing the land from his brother.

 

YES. The Court upheld Jesus' claim of ownership and possession, rejecting the Spouses Ponce's contention that they acquired the land through a valid purchase from Teodoro Aldanese, Jr.

The Supreme Court, upon reviewing the case, focused on determining the true ownership and possession of Lot No. 6890. Jesus presented tax declarations and certificates indicating his possession and ownership of the land. The Spouses Ponce failed to present evidence of their own ownership, and their claim that Lot No. 6890 was included in the sale is contradicted by Teodoro Aldanese Jr.'s testimony.

The Court determined that the evidence sufficiently supported Jesus' ownership and established his right to possess Lot No. 6890. Jesus Aldanese, was recognized as lawful owner and entitling him to possession of the land. The petition by the Spouses Ponce was denied.

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HEIRS OF BAGAYGAY V. HEIRS OF PACIENTE [G.R. No. 212126, August 4, 2021]

 

HEIRS OF BAGAYGAY V. HEIRS OF PACIENTE

G.R. No. 212126, August 4, 2021

SECOND DIVISION, HERNANDO J.

Evidence; Original Document; Secondary Evidence; Land Titles and Deeds; Public Land Act; Laches

PRINCIPLE: Documentary evidence prevails over testimonial evidence. The doctrine of Secondary Evidence of a Lost Document allows parties to present substitute evidence when the original document is unavailable.

 

The case involves a dispute over the ownership of a parcel of land initially granted to Anastacio Paciente, Sr. under a homestead patent. Subsequently, Anastacio allegedly sold the land to his brother-in-law, Eliseo Bagaygay, who then subdivided it and obtained new titles.

Upon the deaths of Anastacio and Eliseo, their respective heirs entered into a legal battle over the land's ownership and possession. The heirs of Anastacio sought to nullify the Deed of Sale and the titles issued to Eliseo, claiming it was executed within the five-year prohibition period under the Public Land Act. On the other hand, the petitioners, heirs of Eliseo, claimed that the sale was valid, that the sale indeed happened in 1958, beyond the five-year prohibition period. They also presented the Marriage Contract of respondent Meregildo to prove that his wedding, for which the money from the sale was supposedly used, took place on June 8, 1958.

The trial court ruled in favor of Eliseo's heirs, but the Court of Appeals reversed it. The CA gave more weight to documentary evidence showing the Deed of Sale was executed within the prohibition period, declaring it void ab initio.

 

Whether the Deed of Sale executed by Anastacio in favor of Eliseo is valid.

 

NO. The Public Land Act's provisions played a significant role in determining the validity of the Deed of Sale. The Act prohibits certain land transactions within a specified period, and compliance with its provisions was crucial in validating the sale.

The Supreme Court ruled in favor of the heirs of Anastacio Paciente, Sr., confirming them as the rightful owners entitled to possess the land. The Court relied on the assessment of evidence, including the Deed of Sale and the land titles. As the original Deed of Sale was not available, the Court considered the Primary Entry Book from the Register of Deeds as secondary evidence, which served as prima facie evidence of the Deed of Sale's execution date. The entries in the official record were deemed credible evidence, leading to the finding that the Deed of Sale was executed within the prohibition period. Consequently, the Deed of Sale was deemed void ab initio. As a result, the heirs of Anastacio were declared as the rightful owners entitled to possession of the land.

The concept of laches was raised as a defense by the heirs of Eliseo Bagaygay but was not upheld by the Court, since laches does not apply to void ab initio contracts.

 

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DACQUEL V. SPOUSES SOTELO [G.R. No. 203946, August 4, 2021]

 

DACQUEL V. SPOUSES SOTELO

G.R. No. 203946, August 4, 2021

SECOND DIVISION, HERNANDO J.

 

Sales; Equitable Mortgage

Principle: An equitable mortgage exists when a property is used as security for a debt, without the intention of actually transferring ownership. Decisive for the proper determination of the true nature of the transaction between the parties is their intent, shown not merely by the contract's terminology but by the totality of the surrounding circumstances, such as acts, conduct, declarations, and negotiations leading to the agreement.

This involves a parcel of land in Malabon City, originally owned by the Spouses Sotelo. In 1994, the Sotelos borrowed P140,000.00 from Arturo Dacquel to finance the construction of a 7-door apartment on the land. To secure the loan, the Sotelos allegedly signed a Deed of Sale, transferring the land to Dacquel. However, the Sotelos claimed that they signed the document without fully comprehending its contents and that they were deceived by Dacquel's actions. They argued that the Deed of Sale was fraudulent and that Dacquel held the land in trust for them. They filed a complaint seeking to annul the title and regain ownership of the land, asserting that the Deed of Sale was merely intended as security for the loan and not an actual sale.

 

Dacquel, in defense claimed that the Deed of Sale was a valid agreement and that the Sotelos voluntarily offered to sell the land to him.

 

Whether the Deed of Sale executed between Dacquel and the Spouses Sotelo was a valid sale.

 

NO. The court ruled in favor of the Spouses Sotelo, declaring the Deed of Sale to be an equitable mortgage rather than a valid sale. It found that the Sotelos signed the document without understanding its contents and were deceived by Dacquel. The court acknowledged that Dacquel held the title to the land as security for the loan, and the true nature of the transaction was an equitable mortgage.

 

The court emphasized that the essential characteristic of an equitable mortgage is that it is intended as security for a debt and does not involve a valid transfer of ownership. In this case, the evidence presented supported the Sotelos' claim that the Deed of Sale was a mortgage and not an actual sale.

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CARDINEZ V. SPOUSES CARDINEZ [G.R. No. 213001, August 4, 2021]

 

CARDINEZ V. SPOUSES CARDINEZ

G.R. No. 213001, August 4, 2021

SECOND DIVISION, HERNANDO J.

 

Property; Donation; Consent

Principle: This case underscores the importance of voluntary and informed consent in donations. The court's decision to revoke the donation in this case serves as a reminder of the significance of genuine consent in the transfer of property rights through donations.

 

After the death of Simeona Cardinez, her sons Prudencio, Florentino, and Valentin inherited and divided the land among themselves. In 1994, Valentin asked Prudencio to donate a ten-square meter portion of his land that was being encroached by Valentin's balcony. Prudencio, trusting his brother, agreed and signed a document without understanding its contents. Prudencio later discovered that the document he signed was a Deed of Donation, allegedly transferring his inherited portion to Valentin's children. The Deed of Donation was not read or understood by Prudencio and his wife Cresencia when they signed it.

 

When Prudencio discovered this, he sought to revoke the donation, alleging lack of consent. The trial court ruled in his favor of Prudencio, revoking the donation due to fraudulent means. Court of Appeals affirmed the decision.

 

Whether the donation made by Spouses Cardinez should be revoked due to lack of consent.

 

 

YES. The Supreme Court affirmed the ruling of the trial court and upheld the revocation of the donation. Deed of Donation is void ab initio in the absence of respondents' consent.  

 

The court held that Prudencio’s testimony provided sufficient evidence to prove that the donation was fraudulently executed. The SC held that respondents did not give their consent to the donation of their land to petitioners. Hence, no valid donation had transpired between the parties.

 

It is clear that respondents did not donate their land. They never understood the full import of the document they signed because it was neither shown to them nor read by either Valenin or the notary public. Considering that they did not give their consent at all to the Deed of Donation, it is therefore null and void.

 

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Mandanas et. al v. Ochoa [G.R. No. 199802, April 10, 2019]

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Mandanas et. al v. Ochoa, G.R. No. 199802, April 10, 2019

 

FACTS: The fiscal autonomy guaranteed to local governments under Section 6, Article X of the 1987 Constitution means the power to create their own sources of revenue in addition to their equitable share in the "national taxes" released by the National Government, as well as the power to allocate their resources in accordance with their own priorities.

 

Pursuant to this Constitutional dictum, Congress enacted Republic Act No. 7160, otherwise known as the Local Government Code (LGC). Sec. 284 of the LGC provides that LGUs shall have an allotment equivalent to 40% of the the national internal revenue taxes. The share of the LGUs, known as the Internal Revenue Allotment (IRA), has been regularly released to the LGUs. Two petitions were filed to challenge the base figure for the computation of the IRA.

 

In G.R. No. 199802, Cong. Hermilando Mandanas, et al., alleged that the NIRTs certified by the BIR excluded the NIRTs collected by the Bureau of Customs, specifically excise taxes, value added taxes (VATs), and documentary stamp taxes (DSTs). Such exclusion resulted in LGUs being deprived of ₱60,750,000,000.00 for FY 2012. Further, the petitioners argued that since this mistake in computation was happening since 1992, then the National Government has effectively deprived LGUs of ₱438,103,906,675.73 in their IRA.

 

Meanwhile, in G.R. No. 208488, Cong. Enrique Garcia, Jr. sought the issuance of the writ of mandamus to compel respondents to compute the just share of the LGUs on the basis of all national taxes. He argued that the insertion by Congress of the words "internal revenue" in the phrase "national taxes" found in Section 284 of the LGC caused the diminution of the base for determining the just share of the LGUs, and should be declared unconstitutional.

 

ISSUE: Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6, Article X of the 1987 Constitution. -- YES.

 

HELD:

Section 6 of the Constitution mentions "national taxes" as the source of the just share of the LGUs while Section 284 of the LGC ordains that the share of the LGUs be taken from "national internal revenue taxes" instead. Congress thereby infringed the constitutional provision.

 

Although the power of Congress to make laws is plenary in nature, congressional lawmaking remains subject to the limitations stated in the 1987 Constitution.

 

The phrase "national internal revenue taxes" in Section 284 is undoubtedly more restrictive than the term "national taxes" written in Section 6 of the Constitution. As such, Congress has actually departed from the letter of the 1987 Constitution stating that national taxes should be the base from which the just share of the LGU comes. Such departure is impermissible. Verba legis non est recedendum (from the words of a statute there should be no departure).

 

Equally impermissible is that Congress has also thereby curtailed the guarantee of fiscal autonomy in favor of the LGUs under the 1987 Constitution. What the phrase "national internal revenue taxes" as used in Section 284 of the LGC included are all the taxes enumerated in Section 21 of the National Internal Revenue Code (NIRC), as amended by R.A. No. 8424, namely: income tax, estate and donor's taxes, VAT, other percentage taxes, excise taxes, documentary stamp taxes, and such other taxes as may be imposed and collected by the BIR.

 

In view of the foregoing enumeration of what are the national internal revenue taxes, Section 284 of the LGC has effectively deprived the LGUs from deriving their just share from other national taxes, like the customs duties.

 

Congress cannot disobey the express mandate of Section 6, Article X of the 1987 Constitution for the just share of the LGUs to be derived from the national taxes.

 

Moving forward, the BIR and the BOC are directed certify all national tax collections. This ruling, also known as the "Mandanas Ruling," is to be applied prospectively.

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CIR v. Covanta Energy Philippine Holdings, Inc. [G.R. No. 203160, January 24, 2018]

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CIR v. Covanta Energy Philippine Holdings, Inc.

G.R. No. 203160, January 24, 2018

 

Principle: While tax amnesty is in the nature of a tax exemption, which is strictly construed against the taxpayer.

 

Facts: The CIR issued Formal Letters of Demand and Assessment Notices against Covanta Energy Philippine Holdings, Inc. (CEPHI) for deficiency value-added tax (VAT) and expanded withholding tax (EWT).

 

CEPHI filed separate petitions before the CTA, seeking the cancellation and withdrawal of the deficiency assessments. Moreover, the CEPHI filed a supplemental petition, informing the CTA that it availed of the Tax Amnesty under RA 9480.

 

The CIR was of the position that CEPHI is not entitled to the immunities and privileges under R.A. No. 9480 because its documentary submissions failed to comply with the requirements under the tax amnesty law.

 

Issue: Whether or not Covanta Energy Philippine Holdings, Inc. (CEPHI) can avail the Tax Amnesty as provided under RA 9480.

 

Ruling: Yes, CEPHI is entitled to the immunities and privileges of the tax amnesty program upon full compliance with the requirements of R.A. No. 9480. R.A. No. 9480 governs the tax amnesty program for national internal revenue taxes for the taxable year 2005 and prior years. Subject to certain exceptions, a taxpayer may avail of this program by complying with the documentary submissions to the (BIR) and thereafter, paying the applicable amnesty tax.

Upon the taxpayer’s full compliance with these requirements, the taxpayer is immediately entitled to the enjoyment of the immunities and privileges of the tax amnesty program. But when: (a) the taxpayer fails to file a SALN and the Tax Amnesty Return; or (b) the net worth of the taxpayer in the SALN as of December 31, 2005 is proven to be understated to the extent of 30% or more, the taxpayer shall cease to enjoy these immunities and privileges.

 

The taxpayer’s SALN is presumed true and correct. The tax amnesty law thus places the burden of overturning this presumption to the parties who claim that there was an under declaration of the taxpayer’s net worth.

 

In this case, it is undisputed that CEPHI submitted all the documentary requirements for the tax amnesty program. The CIR argued, however, that CEPHI cannot enjoy the privileges attendant to the tax amnesty program because its SALN failed to comply with the requirements of R.A. No. 9480. The CIR specifically points to CEPHI’s supposed omission of the information relating to the Reference and Basis for Valuation columns in CEPHI’s original and amended SALNs.

 

However, aside from the bare allegations of the CIR, there is no evidence on record to prove that the amount of CEPHI’s net worth was understated. Neither was the CIR able to establish that there were findings or admissions in a congressional, administrative, or court proceeding that CEPHI indeed understated its net worth by 30%.

 

Considering that CEPHI completed the requirements and paid the corresponding amnesty tax, it is considered to have totally complied with the tax amnesty program. As a matter of course, CEPHI is entitled to the immediate enjoyment of the immunities and privileges of the tax amnesty program. Nonetheless, the Court emphasizes that the immunities and privileges granted to taxpayers under R.A. No. 9480 is not absolute. It is subject to a resolutory condition insofar as the taxpayers’ enjoyment of the immunities and privileges of the law is concerned. These immunities cease upon proof that they underdeclared their net worth by 30%.

 

Unfortunately for the CIR, however, there is no such proof in CEPHI’s case. The Court, thus, finds it necessary to deny the present petition. While tax amnesty is in the nature of a tax exemption, which is strictly construed against the taxpayer, the Court cannot disregard the plain text of R.A. No. 9480.

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CIR v. De La Salle University [G.R. Nos. 196596, 198841, 198941, November 9, 2016]

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CIR v. De La Salle University

 G.R. Nos. 196596, 198841, 198941, November 9, 2016

 

Principle: Incomes and revenues of non-stock, non-profit educational institutions are tax exempt if it is actually, directly, and exclusively used for educational purposes.

Test of exemption: the utilization of assets and income Tax exemption is source-blind; and applies as long as ADE rule is satisfied.

 

Facts: BIR issued a Formal Letter of Demand to assess DLSU on its deficiency on its payment of taxes which covers the following to wit: (1) income tax on rental earnings from restaurants/canteens and bookstores operating within the campus; (2) value-added tax (VAT) on business income; and (3) documentary stamp tax (DST) on loans and lease contracts.

 

The assessment was protested by DLSU. DLSU’s contention is anchored under its exemption from taxes as provided for under Constitution “All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties”

 

CIR argument:

(1) DLSU’s use of its revenues and assets for non-educational or commercial purposes removed these said items from the exemption coverage under the Constitution;

(2) DLSU’s rental income is taxable regardless of how much income is derived, use or disposed of. DLSU's operations of canteens and bookstores within its campus even though exclusively serving the university community do not negate income tax liability;

(3) Commissioner also argues that a tax-exempt organization such as DLSU is only exempt from property tax and not from income tax which is earned from leasing the property. Hence, DLSU’s income from the rentals earned is not tax exempt even if the proceeds are used for educational purposes.

 

Issue: Whether or DLSU's income and revenues proved to have been used actually, directly and exclusively for educational purposes are exempt from duties and taxes.

 

Ruling: Yes. DLSU’s income and revenues are proven to have been used actually, directly and exclusively for educational purposes and are tax exempt. TWO requisites: (1) The school must be non-stock and non-profit; and (2) The income is actually, directly and exclusively used for educational purposes. There are no other conditions and limitations.

 

Test of exemption: the utilization of assets and income Tax exemption is source-blind; and applies as long as ADE rule is satisfied. The tax exemption no longer hinges on the source from which the revenues were earned, but on the actual, direct and exclusive use of the revenues for educational purposes.  

 

The commercial use of the property is also not incidental to and reasonably necessary for the accomplishment of the main purpose of a university, which is to educate its students. Such income was spent by DLSU for building of a sports complex. The crucial point of inquiry then is on the use of the assets or on the use of the revenues. So long as the assets or revenues are used actually, directly and exclusively for educational purposes, they are exempt from duties and taxes.

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