MICROSOFT PHILIPPINE INC., Petitioner, vs. CIR, Respondent. G.R. No. 180173 April 6, 2011 REVENUE REGULATION NO.

7-95 Obligation and Contract HELD: The subsequent enactment of Republic Act No. 9337 on 1 November 2005 elevating provisions of RR 7-95 into law merely codified into law administrative regulations that already had the force and effect of law. Such codification does not mean that prior to the codification the administrative regulations were not enforceable. We have ruled in several cases that the printing of the word "zero-rated" is required to be placed on VAT invoices or receipts covering zero-rated sales in order to be entitled to claim for tax credit or refund. In Panasonic v. Commissioner of Internal Revenue, we held that the appearance of the word "zero-rated" on the face of invoices covering zerorated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT is actually paid. Absent such word, the government may be refunding taxes it did not collect. Microsoft's invoice, lacking the word "zero-rated," is not a "VAT invoice," and thus cannot give rise to any input tax. APPLICABLE LAW: Revenue Regulation No. 7-95 ENUMERATES THE INFORMATION WHICH MUST APPEAR ON THE FACE OF THE OFFICIAL RECEIPTS OR INVOICES FOR EVERY SALE OF GOODS BY VATREGISTERED PERSONS. At the time Microsoft filed its claim for credit of VAT input tax, RR 7-95 was already in effect. The provision states: All VAT-registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales or commercial invoices which must show: a) the name, TIN and address of seller; b) date of transaction; c) quantity, unit cost and description of merchandise or nature of service; d) the name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client; e) the word "zero-rated" imprinted on the invoice covering zero-rated sales; and f) the invoice value or consideration.

AOWA ELECTRONIC PHILIPPINES INC., Petitioner, vs. DEPARTMENT OF TRADE AND INDUSTRY, National Capital Region, Respondent. G.R. No. 189655 April 13, 2011 ARTICLE 50 AND 52 OF THE CONSUMER ACT OF THE PHILIPPINES Obligation and Contract HELD: In sustaining the CA Decision, the Supreme Court held that it is indubitable that the DTI is tasked to protect the consumers against deceptive, unfair and unconscionable sales, acts or practices as defined in Article 50 and 52 of the Consumer Act. It cannot be gainsaid that the DTI acted on the basis of about 273 consumer complaints against Aowa, averring a common and viral scheme in carrying out its business to the prejudice of consumers. Complaints- filed by consumers not only within NCR but also in the provinces- continued to be filed even after the formal charge and the issuance of PMO. In giving due respect to factual findings of DTI, the Supreme Court held: By reason of the special knowledge and expertise of DTI over matters falling under its jurisdiction, it is in better position to pass judgment on the issues, and its findings of fact in that regard, especially when confirmed by the CA, are generally accorded with respect, if not finality, by this Court. Furthermore, Aowa failed to refute DTIs finding that it did not secure any permit for its alleged promotional sale. APPLICABLE LAWS: ART. 50. Prohibition Against Deceptive Sales Acts or Practices. A deceptive act or practice by a seller or supplier in connection with a consumer transaction violates this Act whether it occurs before, during or after the transaction. An act or practice shall be deemed deceptive whenever the producer, manufacturer, supplier or seller, through concealment, false representation [or] fraudulent manipulation, induces a consumer to enter into a sale or lease transaction of any consumer product or service. Without limiting the scope of the above paragraph, the act or practice of a seller or supplier is deceptive when it represents that: a) a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have; b) a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not; c) a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state; d) a consumer product or service is available to the consumer for a reason that is different from the fact; e) a consumer product or service has been supplied in accordance with the previous representation when in fact it is not; f) a consumer product or service can be supplied in a quantity greater than the supplier intends; g) a service, or repair of a consumer product is needed when in fact it is not; h) a specific price advantage of a consumer product exists when in fact it does not;

i)

j)

the sales act or practice involves or does not involve a warranty, a disclaimer of warranties, particular warranty terms or other rights, remedies or obligations if the indication is false; and the seller or supplier has a sponsorship, approval, or affiliation he does not have.

ART. 52. Unfair or Unconscionable Sales Act or Practice. An unfair or unconscionable sales act or practice by a seller or supplier in connection with a consumer transaction violates this Chapter whether it occurs before, during or after the consumer transaction. An act or practice shall be deemed unfair or unconscionable whenever the producer, manufacturer, distributor, supplier or seller, by taking advantage of the consumer's physical or mental infirmity, ignorance, illiteracy, lack of time or the general conditions of the environment or surroundings, induces the consumer to enter into a sales or lease transaction grossly inimical to the interests of the consumer or grossly one-sided in favor of the producer, manufacturer, distributor, supplier or seller. In determining whether an act or practice is unfair and unconscionable, the following circumstances shall be considered: a) that the producer, manufacturer, distributor, supplier or seller took advantage of the inability of the consumer to reasonably protect his interest because of his inability to understand the language of an agreement, or similar factors; b) that when the consumer transaction was entered into, the price grossly exceeded the price at which similar products or services were readily obtainable in similar transaction by like consumers; c) that when the consumer transaction was entered into, the consumer was unable to receive a substantial benefit from the subject of the transaction; d) that when the consumer transaction was entered into, the seller or supplier was aware that there was no reasonable probability or payment of the obligation in full by the consumer; and e) that the transaction that the seller or supplier induced the consumer to enter into was excessively one-sided in favor of the seller or supplier.

NERWIN INDUSTRIES CORPORATION, Petitioner, vs. PNOC-ENERGY DEVELOPMENT CORPORATION, and ESTER R. GUERZON, Chairman, Bids and Awards Committee, Respondents. G.R. No. 167057 April 11, 2012 SECTION 3 AND SECTION 4 OF REPUBLIC ACT NO. 8975 Obligation and Contract HELD: In its decision of October 22, 2004, the CA explained why it annulled and set aside the assailed orders of the RTC issued on July 20, 2003 and December 29, 2003, and why it altogether dismissed Civil Case No. 03106921, as follows: a) It is beyond dispute that the crux of the instant case is the propriety of respond Judge issuance of a preliminary injunction, or the earlier TRO, for that matter. b) Respondent Judge gravely abused his discretion in entertaining an application for/preliminary injunction, and worse, in issuing a preliminary injunction through the assailed order enjoining petitioners sought bidding for its O-ILAW Project. The same is a palpable violation of RA 8975 which was approved on November 7, 2000, thus, already existing at the time respondent Judge issued the assailed Orders dated July 20 and December 29, 2003. The said proscription is not entirely new. RA 8975 merely supersedes PD 1818 which underscored the prohibition to courts from issuing restraining orders or preliminary injunctions in cases involving infrastructure or National Resources Development projects of, and public utilities operated by, the government. This law was, in fact, earlier upheld to have such a mandatory nature by the Supreme Court in an administrative case against a Judge. WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petitioner to pay the costs of suit. APPLICABLE LAW: Section 3 and Section 4 of Republic Act No. 8975 provide: Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions. No court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the governments direction, to restrain, prohibit or compel the following acts: a) Acquisition, clearance and development of the right-of-way and/or site or location of any national government project; b) Bidding or awarding of contract/project of the national government as defined under Section 2 hereof; c) Commencement, prosecution, execution, implementation, operation of any such contract or project; d) Termination or rescission of any such contract/project; and e) The undertaking or authorization of any other lawful activity necessary for such contract/project.

This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not limited to cases filed by bidders or those claiming to have rights through such bidders involving such contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond shall accrue in favor of the government if the court should finally decide that the applicant was not entitled to the relief sought. If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same, without prejudice to any liability that the guilty party may incur under existing laws. Section 4. Nullity of Writs and Orders. - Any temporary restraining order, preliminary injunction or preliminary mandatory injunction issued in violation of Section 3 hereof is void and of no force and effect.

PHILIPPINE DEPOSIT INSURANCE CORPORATION, Petitioner, vs. CITIBANK, N.A. and BANK OF AMERICA, S.T. & N.A., Respondents. G.R. No. 170290 April 11, 2012 REPUBLIC ACT NO. 8791, SECTION 75 OF THE PHILIPPINES Obligation and Contract HELD: The Philippine branch of a foreign bank has no separate legal personality with its foreign head office. The Court began by examining the manner by which a foreign corporation can establish its presence in the Philippines. It may choose to incorporate its own subsidiary as a domestic corporation, in which case such subsidiary would have its own separate and independent legal personality to conduct business in the country. In the alternative, it may create a branch in the Philippines, which would not be a legally independent unit, and simply obtain a license to do business in the Philippines. In the case of Citibank and BA, it is apparent that they both did not incorporate a separate domestic corporation to represent its business interests in the Philippines. Their Philippine branches are, as the name implies, merely branches, without a separate legal personality from their parent company, Citibank and BA in their respective branches in the Philippines should not be treated as deposits made by third parties subject to deposit insurance under the PDIC Charter. Based on the foregoing, it is clear that the head office of a bank and its branches are considered as one under the eyes of the law. While branches are treated as separate business units for commercial and financial reporting purposes, in the end, the head office remains responsible and answerable for the liabilities of its branches which are under its supervision and control. As such, it is unreasonable for PDIC to require the respondents, Citibank and BA, to insure the money placements made by their home office and other branches. Deposit insurance is superfluous and entirely unnecessary when, as in this case, the institution holding the funds and the one which made the placements are one and the same legal entity.

APPLICABLE LAW: Republic Act No. 8791, Section 75 SECTION 75. Head Office Guarantee. In order to provide effective protection of the interests of the depositors and other creditors of Philippine branches of a foreign bank, the head office of such branches shall fully guarantee the prompt payment of all liabilities of its Philippine branch. Residents and citizens of the Philippines who are creditors of a branch in the Philippines of a foreign bank shall have preferential rights to the assets of such branch in accordance with existing laws.

LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC., Petitioner, vs. UNIVERSITY OF THE PHILIPPINES, Respondent. G.R. No. 185918 April 18, 2012 PRESIDENTIAL DECREE NO. 1445, SECTION 26 Obligation and Contract

HELD: For its part, UP contends that it did not invoke the doctrine of state immunity from suit in the proceedings a quo and in fact, it did not object to being sued before the labor department. It maintains, however, that suability does not necessarily mean liability. UP argues that the CA correctly applied the NEA ruling when it held that all money claims must be filed with the COA. As to alleged injustice that may result for invocation of state immunity from suit, UP reiterates that it consented to be sued and even participated in the proceedings below. Lockheed cannot now claim that invocation of state immunity, which UP did not invoke in the first place, can result in injustice. On the fait accompli argument, UP argues that Lockheed cannot wash its hands from liability for the consummated garnishment and execution of UPs trust fund in the amount of P12,062,398.71. UP cites that damage was done to UP and the beneficiaries of the fund when said funds, which were earmarked for specific educational purposes, were misapplied, for instance, to answer for the execution fee of P120,123.98 unilaterally stipulated by the sheriff. Lockheed, being the party which procured the illegal garnishment, should be held primarily liable. The mere fact that the CA set aside the writ of garnishment confirms the liability of Lockheed to reimburse and indemnify in accordance with law. WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. Petitioner Lockheed Detective and Watchman Agency, Inc. is ordered to REIMBURSE respondent University of the Philippines the amount ofP12,062,398.71 plus interest of 6% per annum, to be computed from September 12, 2005 up to the finality of this Decision, and 12% interest on the entire amount from date of finality of this Decision until fully paid. APPLICABLE LAWS: Presidential Decree No. 1445, Section 26 Section 26. General jurisdiction. The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including nongovernmental entities subsidized by the government, those funded by donations through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government.

THE ROMAN CATHOLIC CHURCH, represented by the Archbishop of Caceres, Petitioner, vs. REGINO PANTE, Respondent. G.R. No. 174118 April 11, 2012 ARTICLE 1331 AND ARTICLE 1390 OF THE PHILIPPINE CIVIL CODE Obligation and Contract

HELD: No, the Supreme Court ruled that there were no misrepresentation made that would vitiate the consent and render the contract as voidable. As consent as one of the essential requisites of a valid contract and such consent should be free, voluntary, willful and a reasonable understanding of the various obligations that the parties have assumed for themselves. However if consent is given through mistake, violence, intimidation, undue influence and fraud, it would render a contract voidable. On Article 1331 of the Civil Code, mistake could only render a contract voidable if the following requisites concur: 1. the mistake must be either with regard to the identity or with regard to the qualification of one of the contracting parties; and 2. the identity or qualification must have been the principal consideration for the celebration of the contract. In this case, there is no mistake as to the qualifications as to the policy of the Church on selling only for those who are occupants and residents, for neither Pante nor spouses Rubi would qualify as residents of the said 32-square meter lot, as none of them had occupied or resided on the lot. The lot is a passageway for the respondent Pante, thus it is considered as his RIGHT OFWAY. Also, records show that the Parish Priest was aware that Parte was not an actual occupant and still he allowed the sale to Pante. So, the Church cannot by any means contend that the Church was misled by the act of Pante, that there was vitiation of consent on the said sale. In Article 1390 of the Civil Code declares that voidable contracts are binding, unless annulled by a proper court action. From the time the sale to Pante was made and up until it sold the subject property to the spouses Rubi, the Church made no move to reject the contract with Pante; it did not even return the down payment he paid. The Churchs bad faith in selling the lot to Rubi without annulling its contract with Pante negates its claim for damages. There was no vitiation of consent; therefore, the contract between the Church and Pante stands valid and existing. The delay of Pante in paying the full price could not nullify the contract, since it was a contract of sale (as correctly observed by the CA). In the terms of the contract, it did not stipulate that the Church will retain ownership until full payment of the price. The right to repurchase given to the Church if ever Pante fails to pay within the grace period provided would have been unnecessary had ownership not already passed to Pante.

APPPLICABLE LAWS: Art. 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract. A simple mistake of account shall give rise to its correction. (1266a) Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties: Those where one of the parties is incapable of giving consent to a contract; Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification. (n)

PREMIER SHIPPING LINES INC., Petitioner, vs. EAGLE STAR REINSURANCE COMPANY, LTD., Respondent G.R. No. 186213 April 11, 2011 REPUBLIC ACT NO. 7042, SECTION 3: FOREIGN INVESTMENTS ACT OF 1991 Obligation and Contract

HELD: Respondent's questioned business deal was an isolated transaction. The reinsurance by the member companies of the ILU led by respondent through broker Nicholson does not fall within the phrase "doing business in the Philippines," as defined under Republic Act No. 7042, otherwise known as the "Foreign Investments Act of 1991."[6] Respondent does not maintain an office, agency, or branch in the Philippines. It transacts reinsurance business through London brokers, such as Nicholson, in the London market. Sometimes, brokers do bring in reinsurance business from the Philippines, but they are not agents of the London underwriters. Respondent deals only through London brokers who pay the reinsurance premium, file claims, and receive payments on behalf of "reassureds." This business is not contracted directly with Philippine clients. Respondent did not have a direct business transaction with Philphos. Anchor brokered the insurance of UCPB. Its insurance was arranged by Anchor with Nicholson, as the foreign insurance broker. Hence, since respondent is not engaged in the business of insurance in the Philippines but is merely collecting a claim assigned to it, if is not barred from filing the herein suit, although it has not secured a license to transact insurance business in the Philippines. APPLICABLE LAW: Republic Act No. 7042, Section 3: Section 3 (d): The phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines: and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor: nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.

PHILIPPINE NATIONAL RAILWAYS, Petitioner, vs. KANLAON CONSTRUCTION ENTERPRISES CO., INC. Respondent. G.R. No. 182967 April 6, 2011 P. D. 1445, SECTION 85 AND 86: GOVT AUDITING CODE OF THE PHILS. Obligation and Contract HELD: The Court notes that one of the reasons the COA issued the Notices of Suspension was because the contracts did not contain a Certificate of Availability of Funds as required under Sections 85 and 86 of Presidential Decree No. 1445. Kanlaon does not dispute the absence of a Certificate of Availability of Funds. The Administrative Code of 1987, a more recent law, also contains the same provisions. Sections 46, 47, and 48, Chapter 8, Subtitle B, Title I, Book V of the Administrative Code of 1987 provide: SECTION 46. Appropriation Before Entering into Contract: 1) No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure; and 2) Notwithstanding this provision, contracts for the procurement of supplies and materials to be carried in stock may be entered into under regulations of the Commission provided that when issued, the supplies and materials shall be charged to the proper appropriations account. SECTION 47. Certificate Showing Appropriation to Meet Contract. Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three (3) months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current calendar year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished. SECTION 48. Void Contract and Liability of Officer. Any contract entered into contrary to the requirements of the two (2) immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties. Thus, the Administrative Code of 1987 expressly prohibits the entering into contracts involving the expenditure of public funds unless two prior requirements are satisfied.

First, there must be an appropriation law authorizing the expenditure required in the contract. Second, there must be attached to the contract a certification by the proper accounting official and auditor that funds have been appropriated by law and such funds are available. Failure to comply with any of these two requirements renders the contract void. In several cases, the Court had the occasion to apply these provisions of the Administrative Code of 1987 and the Government Auditing Code of the Philippines. In these cases, the Court clearly ruled that the two requirements the existence of appropriation and the attachment of the certification are "conditions sine qua non for the execution of government contracts."

APPLICABLE LAWS: P. D. 1445, SECTION 85 AND 86 Section 85. Appropriation before entering into contract. 1. No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure. 2. Notwithstanding this provision, contracts for the procurement of supplies and materials to be carried in stock may be entered into under regulations of the Commission provided that when issued, the supplies and materials shall be charged to the proper appropriation account. Section 86. Certificate showing appropriation to meet contract. Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three months, or banking transactions of government-owned or controlled banks no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished.