Case Digest: G.R. No. 173227. January 20, 2009

Sebastian Siga-an, petitioner, vs. Alicia Villanueva, respondent.

Facts: Respondent filed a complaint for sum of money against petitioner. Respondent claimed that petitioner approached her inside the PNO and offered to loan her the amount of P540,000.00 of which the loan agreement was not reduced in writing and there was no stipulation as to the payment of interest for the loan. Respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan.  She then issued another check in the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan of which the excess amount of P160,000.00 would be applied as interest for the loan.  Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest and threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. Thus, she paid additional amounts in cash and checks as interests for the loan.  She asked petitioner for receipt for the payments but was told that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated to P1,200,000.00.

The RTC rendered a Decision holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former.  It ratiocinated that respondent’s obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should not be included in the computation of respondent’s total monetary debt because there was no agreement between them regarding payment of interest.  It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti. Also, petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent.  Further, petitioner should pay exemplary damages by way of example or correction for the public good, plus attorney’s fees and costs of suit. 

Issue: (1) Whether or not interest was due to petitioner; and (2)  whether the principle of solutio indebiti applies to the case at bar. 

Ruling: (1) No. Compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan and no interest was due on the loan because there was no written agreement as regards payment of interest. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing.  As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing.  The concurrence of the two conditions is required for the payment of monetary interest.  Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.   

(2) Petitioner cannot be compelled to return the alleged excess amount paid by respondent as interest. Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied.  Article 2154 of the Civil Code explains the principle of solutio indebiti.  Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.  In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same.  The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.  The principle of 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.  We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest.  

Article 2232 of the Civil Code states that in a quasi-contract, such as solutio indebiti, exemplary damages may be imposed if the defendant acted in an oppressive manner.  Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest.  This forced respondent to pay interest despite lack of agreement thereto.  Thus, the award of exemplary damages is appropriate so as to deter petitioner and other lenders from committing similar and other serious wrongdoings.

Case Digest: G.R. No. L-25024. March 30, 1970. 32 SCRA 188

Teodoro C. Santiago, JR. minor, represented by his mother, Angelita C. Santiago, petitioner-appellant, vs. Juanita Bautista, Rosalinda Alpas, Rebecca Matugas, Milkita Inamac, Romeo Agustin, Aida Camino, Luna Sarmago, Aurora Lorena, Soledad Francisco and Mr. Flor Marcelo, respondents-appellees.

Facts: Appellant Teodoro Santiago, Jr. was a pupil in Grade Six at the public school named Sero Elementary School in Cotabato City. As the school year 1964-1965 was then about to end, the "Committee on the Rating of Students for Honor" was constituted by the teachers concerned at said school for the purpose of selecting the "honor students" of its graduating class. With the school Principal, Mrs. Aurora Lorena, as chairman, and Juanita Bautista, Rosalinda Alpas, Rebecca Matugas, Milkita Inamac, Romeo Agustin, Aida Camino and Luna Sarmago, as members, the above-named committee deliberated and finally adjudged Socorro Medina, Patricia Liñgat and Teodoro C. Santiago, Jr. as first, second and third honors, respectively. The school's graduation exercises were thereafter set for May 21, 1965; but three days before that date, the "third placer" Teodoro Santiago, Jr., represented by his mother, and with his father as counsel, sought the invalidation of the "ranking of honor students."

Issue: Whether or not there is an actual cause of action for petition for certiorari.

Ruling: No. The court held to sustain the order of dismissal appealed from for failure on the part of appellant to comply with the requirements of Section 1 of Rule 65. To be sure, the lower court's holding that appellant's failure to accompany his petition with a copy of the judgment or order subject thereof together with copies of all pleadings and documents relevant and pertinent thereto "is fatal to his cause" is supported not only by the provision of that Rule but by precedents as well.

Case Digest: G.R. No. 78780. July 23, 1987. 152 SCRA 284

David G. Nitafan, Wenceslao M. Polo, and Maximo A. Savellano, Jr., petitioners, vs. Commissioner Of Internal Revenue and The Financial Officer, Supreme Court Of The Philippines, respondents.

Facts: Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional Trial Court, National Capital Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin respondents, the Commissioner of Internal Revenue and the Financial Officer of the Supreme Court, from making any deduction of withholding taxes from their salaries.

Issue: Whether or not members of the Judiciary are exempt from income taxes.

Ruling: Yes. The Court held that the salaries of Justices and Judges are properly subject to a general income tax law applicable to all income earners and that the payment of such income tax by Justices and Judges does not fall within the constitutional protection against decrease of their salaries during their continuance in office and the ruling that "the imposition of income tax upon the salary of judges is a diminution thereof, and so violates the Constitution" in Perfecto vs. Meer, as affirmed in Endencia vs. David must be declared discarded. The framers of the fundamental law, as the alter ego of the people, have expressed in clear and unmistakable terms the meaning and import of Section 10, Article VIII, of the 1987 Constitution that they have adopted.

Case Digest: G.R. No. 138570. October 10, 2000. 342 SCRA 449

BAYAN (Bagong Alyansang Makabayan), a Junk VFA Movement, Bishop Tomas Millamena (Iglesia Filipina Independiente), Bishop Elmer Bolocan (United Church of Christ of the Phil.), Dr. Reynaldo Legasca, Md, Kilusang Mambubukid Ng Pilipinas, Kilusang Mayo Uno, Gabriela, Prolabor, and The Public Interest Law Center, petitioners, vs. Executive Secretary Ronaldo Zamora, Foreign Affairs Secretary Domingo Siazon, Defense Secretary Orlando Mercado, Brig. Gen. Alexander Aguirre, Senate President Marcelo Fernan, Senator Franklin Drilon, Senator Blas Ople, Senator Rodolfo Biazon, And Senator Francisco Tatad, respondents.

Facts: On March 14, 1947, the Philippines and the United States of America forged a Military Bases Agreement which formalized, among others, the use of installations in the Philippine territory by United States military personnel. In view of the impending expiration of the RP-US Military Bases Agreement in 1991, the Philippines and the United States negotiated for a possible extension of the military bases agreement. On September 16, 1991, the Philippine Senate rejected the proposed RP-US Treaty of Friendship, Cooperation and Security which, in effect, would have extended the presence of US military bases in the Philippines. On July 18, 1997, the United States panel, headed by US Defense Deputy Assistant Secretary for Asia Pacific Kurt Campbell, met with the Philippine panel, headed by Foreign Affairs Undersecretary Rodolfo Severino Jr., to exchange notes on “the complementing strategic interests of the United States and the Philippines in the Asia-Pacific region.” Both sides discussed, among other things, the possible elements of the Visiting Forces Agreement (VFA for brevity). Thereafter, then President Fidel V. Ramos approved the VFA, which was respectively signed by public respondent Secretary Siazon and Unites States Ambassador Thomas Hubbard. On October 5, 1998, President Joseph E. Estrada, through respondent Secretary of Foreign Affairs, ratified the VFA. On October 6, 1998, the President, acting through respondent Executive Secretary Ronaldo Zamora, officially transmitted to the Senate of the Philippines, the Instrument of Ratification, the letter of the President and the VFA, for concurrence pursuant to Section 21, Article VII of the 1987 Constitution

Issues (justiciable controversy): (1) Whether or not petitioners have legal standing as concerned citizens, taxpayers, or legislators to question the constitutionality of the VFA; (2) whether the VFA is governed by the provisions of Section 21, Article VII or of Section 25, Article XVIII of the Constitution; (3) and whether or not the Supreme Court has jurisdiction.

Ruling: (1) No. Petitioners failed to show that they have sustained, or are in danger of sustaining any direct injury as a result of the enforcement of the VFA. As taxpayers, petitioners have not established that the VFA involves the exercise by Congress of its taxing or spending powers. On this point, it bears stressing that a taxpayer’s suit refers to a case where the act complained of directly involves the illegal disbursement of public funds derived from taxation.

(2) Yes.The fact that the President referred the VFA to the Senate under Section 21, Article VII, and that the Senate extended its concurrence under the same provision, is immaterial. For in either case, whether under Section 21, Article VII or Section 25, Article XVIII, the fundamental law is crystalline that the concurrence of the Senate is mandatory to comply with the strict constitutional requirements.

(3) No. In fine, absent any clear showing of grave abuse of discretion on the part of respondents, the Court as the final arbiter of legal controversies and staunch sentinel of the rights of the people is then without power to conduct an incursion and meddle with such affairs purely executive and legislative in character and nature. For the Constitution no less, maps out the distinct boundaries and limits the metes and bounds within which each of the three political branches of government may exercise the powers exclusively and essentially conferred to it by law.

Case Digest: G.R. No. L-6355-56. August 31, 1953. 93 Phil 696

Pastor M. Endencia and Fernando Jugo, plaintiffs-appellees, vs. Saturnino David, as Collector of Internal Revenue, defendant-appellant.

Facts: This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino David as Collector of Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of P1,744.45, representing the income tax collected on his salary as Associate Justice of the Court of Appeals in 1951, and to Justice Fernando Jugo the amount of P2,345.46, representing the income tax collected on his salary from January 1,1950 to October 19, 1950, as Presiding Justice of the Court of Appeals, and from October 20, 1950 to December 31,1950, as Associate Justice of the Supreme Court, without special pronouncement as to costs.

Issue: Whether or not Republic Act No. 590, particularly section 13, can justify and legalize the collection of income tax on the salary of judicial officers. 

Ruling: No. The Supreme Court reiterated the doctrine laid down in the case of Perfecto vs. Meer, to the effect that the collection of income tax on the salary of a judicial officer is a diminution thereof and so violates the Constitution. It is further held that the interpretation and application of the Constitution and of statutes is within the exclusive province and jurisdiction of the Judicial department, and that in enacting a law, the Legislature may not legally provide therein that it be interpreted in such a way that it may not violate a Constitutional prohibition, thereby tying the hands of the courts in their task of later interpreting said statute, especially when the interpretation sought and provided in said statute runs counter to a previous interpretation already given in a case by the highest court of the land.

Case Digest: G.R. No. L-2348. February 27, 1950. 85 Phil 522

Gregorio Perfecto, plaintiff-appellee, vs. Bibiano Meer, Collector of Internal Revenue, defendant-appellant.

Facts: In April, 1947 the Collector of Internal Revenue required plaintiff-appellee to pay income tax upon his salary as member of this Court during the year 1946. After paying the amount, he instituted this action in the Manila Court of First Instance contending that the assessment was illegal, his salary not being taxable for the reason that imposition of taxes thereon would reduce it in violation of the Constitution.

Issue: Whether or not the imposition of an income tax upon this salary in 1946 amount to a diminution thereof.

Ruling: The Supreme Court held that unless and until the Legislature approves an amendment to the Income Tax Law expressly taxing "that salaries of judges thereafter appointed", salaries of judges are not included in the word "income" taxed by the Income Tax Law. Two paramount circumstances may additionally be indicated, to wit: First, when the Income Tax Law was first applied to the Philippines 1913, taxable "income" did not include salaries of judicial officers when these are protected from diminution. That was the prevailing official belief in the United States, which must be deemed to have been transplanted here; and second, when the Philippine Constitutional Convention approved (in 1935) the prohibition against diminution off the judges’ compensation, the Federal principle was known that income tax on judicial salaries really impairs them.