Cu Unjieng Sons, Inc. v. Board of Tax Appeals, 100 Phil.

The facts:
-Respondent Union Bank of the Philippines (UBP) is the owner of a parcel of agricultural land
with an area of 218,769 square meters situated in Barangay Sta. Maria, San Miguel, Bulacan and
registered in its name under Transfer Certificate of Title (TCT) No. TC-1062 of the Registry of Deeds of
Bulacan.
-Sometime in January 1994, UBP caused the posting on the bulletin boards of its branch offices
of a three-page list of acquired realty assets available for sale to interested parties. Included in said list
was the aforementioned parcel of land, offered to be sold for P2,200,000.00.
- Petitioner, through a letter3 dated April 11, 1994 and addressed to Joselito P. Valera, manager
of UBP’s Acquired Assets Department, offered to buy the subject property for a lesser amount of
P2,078,305.50, payable as follows: 50% as down payment with the balance to be paid in equal monthly
installments over a period of two (2) years. Petitioner explained that his offer for an amount lesser than
UBP’s asking price was on account of five (5) tenants occupying the subject land who were allegedly
demanding P500,000.00 to voluntarily vacate the same.
-As proof of his interest to buy the property, petitioner tendered PCIB Check No. 565827 for
P103,915.27, purportedly representing 10% of the 50% down payment as earnest money or deposit.
UBP acknowledged receipt thereof by way of Union Bank Receipt No. 495081 dated April 11, 1994.
-On August 30, 1994, petitioner wrote a follow-up letter to UBP inquiring on the status of his
offer to buy the subject premises.
-Via a reply-letter dated August 31, 1994, the manager of UBP’s Acquired Assets Department
advised petitioner that his offer to purchase is yet to be acted upon because the bank was still awaiting
the opinion of its legal division regarding the sale of "CARPable" agricultural assets acquired by the bank.
-As it turned out, UBP rejected petitioner’s offer as shown by the fact that in another letter
dated December 19, 1994, the bank informed petitioner that his offer could not be favorably acted upon
on account of the legal division’s opinion that sales of lands covered by the Comprehensive Agrarian
Reform Law without prior Department of Agrarian Reform (DAR) approval are considered null and void.
Accordingly, UBP advised petitioner to pick up the refund of his P103,915.27 "earnest money" at the
bank’s disbursing unit.
-Unable to accept UBP’s rejection of his offer, petitioner, through counsel, made a formal
demand7 for the bank to comply with its obligation to transfer and deliver the title of the subject
property to him by executing the proper deed of conveyance, under the terms and conditions set forth
in his April 11, 1994 offer.
-Responding thereto, UBP, thru its counsel, Atty. Luzano, in a letter8 dated July 19, 1995,
reiterated the bank’s rejection of petitioner’s offer as "the land being carpable could only be disposed of
by the bank either thru Voluntary Offer to Sell (VOS) or compulsory acquisition, the procedure of which
is outlined in Sec. 16" of Republic Act (RA) No. 6657.
-It was against the foregoing backdrop of events that, on February 6, 1997, in the Regional Trial
Court (RTC) at Malolos, Bulacan, petitioner filed his complaint9 in this case for Specific Performance and
Damages against UBP, impleading as co-defendant in the suit the Register of Deeds of Bulacan.
Docketed as Civil Case No. 80-M-97 and raffled to Branch 9 of the court, the complaint principally sought
UBP’s compliance with an alleged perfected contract of sale between it and petitioner relative to the
parcel of land in question. More specifically, the complaint prays for a judgment ordering UBP to:
a) accept payments from the plaintiff [petitioner] for the sale of the Property in
accordance with the terms and conditions of the letter dated 11 April 1994;
b) execute a Deed of Absolute Sale over the Property covered by TCT No. TC 1062 of the
Registry of Deeds of the Province of Bulacan upon the plaintiff’s full payment of the amount of
 Two Million Seventy Eight Thousand Three Hundred Five & 50/100 (P2,078,305.50), failing in
which, the deputy sheriff should be ordered to execute such deed and the Registry of Deeds to
cancel the title of the Bank and issue a new one in favor of the plaintiff;
c) pay plaintiff the sum of Five Hundred Thousand Pesos (P500,000.00) as moral
damages; d) pay plaintiff the sum of Five Hundred Thousand Pesos (P500,000.00) as
exemplary damages;
e) pay plaintiff the sum of Four Hundred Thousand Pesos (P400,000.00) as attorney’s
fees; and
f) pay the costs of the suit.
Other reliefs, just and equitable under the premises, are likewise respectfully prayed for.

After due proceedings, the trial court, in a decision dated September 1, 1998,10 upon a finding
that no perfected contract of sale transpired between the parties, dismissed petitioner’s complaint for
lack of sufficient cause of action, thus:

WHEREFORE, on the basis of the evidence adduced and the laws/jurisprudence applicable
thereon, judgment is hereby rendered DISMISSING the complaint in the above-entitled case for want of
sufficient cause of action as well as the defendant’s counterclaim for damages and attorney’s fees for
lack of proof to warrant the same.

However, defendant Union Bank of the Philippines is ordered to reimburse plaintiff Charles Cu-
Unjieng the amount of P103,915.27 representing the face value of PCIBank Check No. 565827 tendered
by the latter to the former as purported "earnest money", with interest thereon at the prevailing rates
of interest periodically bestowed by UBP to its savings depositors from April 11, 1994, through the
succeeding years, and until the full amount thereof shall have been delivered to the plaintiff.

No pronouncement as to costs.

ISSUE:
whether losses due to the war were to be deductible from gross income of 1945 when they
were sustained, or in 1950 when Philippine War Damage Commission advised that no payment would
be made for said losses?

STATUTE:
“In the case of a corporation, all losses actually sustained and not charged off within the taxable
year and not compensated for by insurance or otherwise.”
Contention: the assurances of responsible public officials before the end of 1945 that property owners
would be compensated for their losses as a result of the war sufficed to place the losses within the
phrase “compensated xxx otherwise” than by insurance

HELD:
Rejected! “Otherwise” in the clause “compensated for by insurance or otherwise”  refers to
compensation due under a title analogous or similar to insurance.  Inasmuch as the latter is a contract
establishing a legal obligation, it follows that in order to be deemed “compensated for xxx ‘otherwise,’
the losses sustained by a taxpayer must be covered by a judicially enforceable right, springing from any
of the juridical sources of obligations, namely, law, contract, quasi-contract, torts, or crimes,” and not
mere pronouncement of public officials
 WHEREFORE, on the basis of the evidence adduced and the laws/jurisprudence applicable
thereon, judgment is hereby rendered DISMISSING the complaint in the above-entitled case for want of
sufficient cause of action as well as the defendant’s counterclaim for damages and attorney’s fees for
lack of proof to warrant the same.
However, defendant Union Bank of the Philippines is ordered to reimburse plaintiff Charles Cu-
Unjieng the amount of P103,915.27 representing the face value of PCIBank Check No. 565827 tendered
by the latter to the former as purported "earnest money", with interest thereon at the prevailing rates
of interest periodically bestowed by UBP to its savings depositors from April 11, 1994, through the
succeeding years, and until the full amount thereof shall have been delivered to the plaintiff.
No pronouncement as to costs.