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Volume IV Issue No. 3 M A R C H 2 0 1 2

BIR ISSUANCES

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REVENUE REGULATIONS NO. 4-

2012 issued on March 28, 2012

amends Revenue Section 2.6 of Rev-

enue Regulations No. 13-2011 by de-

leting Section 2.6.1 thereof, which

provides that penalties and/or interest

imposed on the taxpayer may be

abated or cancelled on the ground of

one day late filing and remittance due

to failure to beat the bank cut-off time.

REVENUE MEMORANDUM ORDER

NO. 5-2012 issued on March 30,

2012 prescribes the revised guide-

lines, policies procedures in the con-

duct of performance benchmarking

method, amending for this purpose

Revenue Memorandum Order (RMO)

No. 4-2006.Benchmarking Program/

Activities in the Regional/District offic-

es shall cover as many types of tax-

payers by industry as may be applica-

ble. Large Taxpayers, however, may

later be fully covered by the Bench-

marking Program/Activities. Bench-

marking shall be done separately for

corporate and individual taxpayers.

Benchmarking Committee shall be

created, chaired by the Deputy Com-

missioner for Operations. The Assis-

tant Commissioners (ACIRs) of As-

sessment Service, Policy and Plan-

ning Service, Large Taxpayers Ser-

vice (LTS) and the Proponent Region-

al Director for Benchmarking Program

shall be called as Project Directors,

and shall serve as committee mem-

bers with responsibilities specified in

the Order. Said committee shall be

responsible for reporting and recom-

mending the appropriate actions that

may be taken and/or sanctions that

may be imposed against taxpayers or

any other person found to be supply-

ing/submitting false or fabricated data

purportedly to meet the benchmark

requirements.

The Assistant Commissioner (ACIR),

LTS or the Head Revenue Executive

Assistants, in the absence of the for-

mer, the LTS Audit Division Chiefs,

the Regional Directors and all Reve-

nue District Officers (RDOs) shall

cause the implementation of the

Benchmarking Program and activities

under their respective jurisdictions.

For the Large Taxpayers, however,

the Benchmarking Program shall ini-

tially be limited to the gathering and

profiling of data and setting the

benchmark for taxpayers under their

jurisdiction. The RDOs, in close coor-

dination with their respective Regional

Directors, shall have the responsibility

of ensuring the timely conduct of tax

profiling and benchmarking. The

benchmarking cycle shall be strictly

followed and shall be completed with-

in the required timeframe.

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In cases where Letters of Authority

have been issued to taxpayers, the

LT Audit Division Chiefs and RDOs

concerned shall take into considera-

tion the established benchmark in the

industry where the subject taxpayer

belongs before considering the case

closed and terminated. Any down-

trend deviation from the benchmark

shall be fully explained and such data

shall form part of the inputs in the re-

vision of final benchmark rates. All

issues and concerns raised by tax-

payers in the implementation of this

program that call for immediate action

shall be the responsibility of the im-

plementing office. Reports of action

taken thereon must be furnished the

Benchmarking Committee.

Taxpayers whose tax compliance is

below the duly established and ap-

proved benchmark

shall be classified as follows:

Classifications Risk to

Revenue/Gap to Benchmark

High Risk Taxpayers Over 30%

below benchmark

Middle Risk Taxpayers 16%

to 30% below benchmark

Low Risk Taxpayers 15% or

less below benchmark

Taxpayers classified as high risk shall

be the top priority target for enforce-

ment actions, such as surveillance,

CRM/POS Post Evaluation, Oplan

Kandado, inventory stocktaking and

audit.

The Benchmarking Committee shall

be responsible for reporting and rec-

ommending the appropriate actions

that may be taken and/or sanctions

that may be imposed against taxpay-

ers or any other person found to be

supplying/submitting false or fabricat-

ed data purportedly to meet the

benchmark requirements.

The industry benchmark may be re-

vised every two (2) years from ap-

proval hereof or when a law is passed

changing the rate of Value-Added Tax

and Income Tax, whichever comes

first, or as may be directed by the

Commissioner. The guidelines and

procedures in the conduct of bench-

marking as well as the data and/or

reports required to be submitted by

the LTS (Audit Divisions and LTDOs),

Regional and District offices are spec-

ified in the Order.

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REVENUE MEMORANDUM CIRCU-

LAR NO. 10-2012 issued on March

19, 2012 prescribes the transition

procedures for all Electronic Filing

and Payment System (eFPS) filers in

using the enhanced Income Tax Re-

turns (November 2011 ENCS version

of BIR Form Nos. 1700, 1701 and

1702 prescribed under Revenue Reg-

ulations No. 19-2011).The eFPS ver-

sion of the enhanced BIR Forms are

still in the testing stage. In view of

this, the following work-around proce-

dures shall be adopted by eFPS filers

until the enhanced BIR forms are al-

ready available in the eFPS.

a. eFPS filers are required to use and

manually file the revised Income Tax

forms, with the corresponding pay-

ment to any Authorized Agent Bank

located within the territorial jurisdiction

of the Revenue District Office/Large

Taxpayers Office (RDO/LTO) where

the taxpayer is registered. In case of

no payment returns, the taxpayer

shall file the abovementioned tax

forms to the RDO/LTO where they are

registered.

b. Once the enhanced forms are

available in the eFPS, eFPS filers are

required to encode the contents of the

return previously filed manually, to

wit:

b.1 Enhanced Forms are available on

or before the deadline eFPS filers

shall encode the contents of the re-

turn on or before April 16, 2012

b.2 Enhanced Forms are available

after the deadline of April 16, 2012

eFPS filers shall encodethe contents

of the return within 10 days from date

of announcement of the eFPS availa-

bility via the BIR website.

c. e-Payment shall no longer be re-

quired if the tax due on the e-filed re-

turn is equal to the amount previously

paid. However, if the tax due on the e-

filed return is greater than the amount

previously paid, taxpayer shall e-pay

the unpaid amount, subject to applica-

ble penalties in case e-filing is made

after the due date for payment of In-

come Tax due.

REVENUE MEMORANDUM CIRCU-

LAR NO. 11-2012 issued on March

22, 2012 clarifies the tax conse-

quences of Power Sector Assets

and Liabilities Management Corpo-

ration (PSALM) transactions.

The Electric Power Industry Reform

Act of 2001 (EPIRA), particularly Sec-

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tion 50 thereof, provides that the pro-

ceeds from the sale of the National

Power Corporation (NPC) generation

assets and other real properties

and all its liabilities outstanding up-

on the expiration of its term of ex-

istence shall revert to and be as-

sumed by the National Government.

Based from the foregoing, PSALM will

not derive gain from the said sale of

the NPC generation assets and other

real properties. Accordingly, no In-

come Tax and consequently with-

holding tax is due from PSALM on its

sale of the NPC generation assets

and other real properties.

The enactment of Republic Act (RA)

No. 9337 on July 1, 2005 placed the

electric power industry in the Value-

Added Tax (VAT) System. Particu-

larly, the amendment included the

sale of electricity by generation com-

panies, transmission and distributions

companies, to sales subject to VAT.

Moreover, Revenue Regulations (RR)

No. 16-2005 was accordingly amend-

ed by RR No. 4-2007 and subjected

the sale of real properties not primari-

ly held for sale or for lease, but used

in business, to VAT.

Considering that the sale of electricity

is now subject to VAT, the real prop-

erties sold by PSALM are regarded as

real properties used in the trade or

business. While it is clear under the

Tax Code of 1997 that such sale is

not subject to Income Tax, there is no

provision under the same Code that

exempts it from VAT nor subject it to

VAT at zero rate. Section 106 of the

Tax Code of 1997 imposes VAT on

all kinds of goods and properties

sold in the Philippines, with the term

goods and properties given an all-

encompassing meaning by Con-

gress. Thus, any goods and prop-

erties sold should be deemed in-

cluded unless some provisions of law

especially exclude it. The sale of the

generation assets, real properties and

other disposable assets by PSALM

are no different from the goods and

properties provided under Section

106 of the Tax Code of 1997. It is to

be noted, however, that the VAT im-

posed on the sale of the transferred

assets may be utilized by the buyer

as creditable input VAT.

Pursuant to Section 196 of the Tax

Code of 1997, the sale of real proper-

ties by PSALM will be subject to Doc-

umentary Stamp Tax (DST) at the

rate of P15.00 for every P 1,000

based on the consideration contract-

ed to be paid for such realty or its fair

market value determined in accord-

ance with Section 6(E) thereof, which-

ever is higher. When one of the con-

tracting parties is the Government,

the tax to be imposed shall be based

on the actual consideration subject to

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the proviso that, where one party to

the transaction is exempt, the other

party shall pay the tax.

Accordingly, the sale of the NPC gen-

eration assets and other real proper-

ties by PSALM pursuant to the privati-

zation will be subject to DST based

on the fair market value or the actual

consideration that PSALM will re-

ceive, whichever is higher. After the

transfer of the NPC generation assets

and other real properties to PSALM

but prior to the privatization, PSALM

enters into contracts of lease with pri-

vate entities where the subject of the

lease are the NPC generation assets

and other real properties transferred

to PSALM. The income received by

PSALM from the lease is subject to

corporate Income Tax provided under

Section 27(A) of the Tax Code of

1997 .

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JURISPRUDENCE

G.R. No. 193279 March 14, 2012 ELEANOR DE LEON

LLENADO, Petitioner, vs.

PEOPLE OF THE PHILIPPINES and EDITHA VILLAFLORES, Respondents.

FACTS:

Petitioner issued checks to secure the loans obtained from private respondent. Upon presentment, the checks were dishon-ored, leading to the filing with the MeTC of criminal cases docketed as Criminal Case Nos. 54905, 54906, 54907, and 54908 for four (4) counts of violation of B.P. 22.

Subsequently, petitioner settled the

loans subject of Criminal Case Nos. 54906, 54907 and 54908 using the funds of the Children of Mary Immaculate College, of which she was president. Private respond-ent executed an Affidavit of Desistance for the three cases;1 thus, only Criminal Case No. 54905 covering a check worth, P1,500,000, proceeded to trial.

The MeTC found that all the following

elements of a violation of B.P. 22 were pre-sent in the last check subject of the criminal proceedings: (1) the making, drawing, and issuance of any check to apply for account or for value; (2) the knowledge of the maker, drawer, or issuer that at the time of issue he or she does not have sufficient funds in or credit with the drawee bank for the payment of the check in full upon its presentment; and (3) the drawee banks subsequent dis-honor of the check for insufficiency of funds or credit, or dishonor of the check for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

In ruling against petitioner, the MeTC

took note that petitioner admitted knowledge of the checks dishonor, and that the de-mand letter with Notice of Dishonor mailed to petitioners residence on 10 May 1999

was received by one Alfredo Abierra on 14 May 1999. Thus, petitioner was sentenced to pay P1,500,000, the amount of the dis-honored check, and a fine of P200,000 with subsidiary imprisonment in case of insolven-cy.

The MeTC also held the Children of

Mary Immaculate College liable for the value

of the check for being the drawer thereof.

The RTC affirmed the Decision of the MeTC.

The CA ruled that the elements of a

violation of B.P. 22 were estab-lished.3 However, it held that the trial court erred in holding Children of Mary Immacu-late College civilly liable and petitioner was SENTENCED to pay a fine of P200,000.00 with subsidiary imprisonment in case of in-solvency. Petitioner is ORDERED to indem-nify private complainant in the amount of P1,500,000.00, the amount of the dishon-ored check, with 12% interest per annum from the date of judicial demand until the fi-nality of this Decision plus attorneys fees of P20,000.00 and litigation expenses of P16,860.00.

ISSUES:

Whether or not herein petitioner rightfully alleged that the herein respondent failed to prove that there was actual receipt of the notice of dishonor, a question of fact.

Whether or not the imposition of interest

was proper.

HELD:

1. No. It is an established rule that the remedy of appeal through a Petition for Review on Certiorari under Rule 45 of the Rules of Court contemplates only questions of law and not questions of fact. The issue in the case at bar is clear-

Volume IV Issue No. 3 M A R C H 2012

6

JURISPRUDENCE

ly a question of fact that rightfully be-longed to the proper determination of the MeTC, the RTC and the CA. All these lower courts found the elements of a vio-lation of B.P. 22 present. Petitioner failed to provide any cogent reason for us to overturn these findings, or to consider this case as an exception to this general rule.

2. Conforming to prevailing jurispru-dence, we find the need to modify the ruling of the CA with regard to the impo-sition of interest on the judgment. It has been established that in the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, that is, from judicial or extrajudi-cial demand under and subject to the provisions of Article 1169 of the Civil Code.9 In Ongson v. People, we held that interest began to run from the time of the extrajudicial demand, as duly proved by the creditor. Thus, petitioner should also be held liable for the amount of the dishonored check, which is P1,500,000, plus 12% legal interest covering the period from the date of the receipt of the demand letter on 14 May 1999 to the finality of this Decision. The total amount due in the dispositive por-tion of the CAs Decision, inclusive of in-terest, shall further earn 12% interest per annum from the finality of this Decision until fully paid.

G.R. No. 171251 March 5, 2012 LASCONA LAND CO., INC., Petitioner,

vs. COMMISSIONER OF INTERNAL REVE-

NUE, Respondent.

FACTS: On March 27, 1998, the Commission-er of Internal Revenue (CIR) issued Assess-ment Notice No. 0000047-93-4075against Lascona Land Co., Inc. (Lascona) informing the latter of its alleged deficiency income tax

for the year 1993 in the amount of P753,266.56. Consequently, on April 20, 1998, Lascona filed a letter protest, but was denied by Norberto R. Odulio, Officer-in-Charge (OIC), Regional Director, Bureau of Internal Reve-nue, Revenue Region No. 8, Makati City, in his Letter6dated March 3, 1999

Anent the 1993 tax case of subject

taxpayer, please be informed that while we agree with the arguments advanced in your letter protest, we regret, however, that we cannot give due course to your request to cancel or set aside the assessment notice issued to your client for the reason that the case was not elevated to the Court of Tax Appeals as mandated by the provisions of the last paragraph of Section 228 of the Tax Code. By virtue thereof, the said assess-ment notice has become final, executory and demandable.

In view of the foregoing, please ad-vise your client to pay its 1993 deficiency income tax liability in the amount of P753,266.56. ISSUE:

WHETHER OR NOT THE FAILURE OF THE PETITIONER TO ELEVATE THE MAT-TER TO THE COURT OF TAX APPEAL 30

DAYS AFTER THE INACTION OF THE COMMISSIONER ON INTERNAL REVE-

NUE CAUSED THE ASSESSMENT TO BE-COME FINAL.

HELD: the taxpayer has two options, either: (1) file a petition for review with the CTA within 30 days after the expiration of the 180-day period; or (2) await the final decision of the Commissioner on the disputed assessment and appeal such final decision to the CTA within 30 days after the receipt of a copy of such decision, these options are mutually exclusive and resort to one bars the ap-plication of the other the CIR should be reminded that taxpayers


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JURISPRUDENCE

cannot be left in quandary by its inaction on the protested assessment. It is imperative that the taxpayers are informed of its action in order that the taxpayer should then at least be able to take recourse to the tax court at the opportune time. As correctly pointed out by the tax court: x x x to adopt the interpretation of the re-spondent will not only sanction inefficiency, but will likewise condone the Bureau's inac-tion. This is especially true in the instant case when despite the fact that respondent found petitioner's arguments to be in order, the assessment will become final, executory and demandable for petitioner's failure to appeal before us within the thirty (30) day period. G.R. No. 187073 March 14, 2012

PEOPLE OF THE PHILIPPINES, Appellee, vs.

EDUARDO CASTRO y PERALTA and RENERIO DELOS REYES y BO-

NUS, Appellants. FACTS: On 9 September 2002, [around] sev-en oclock in the evening, [the] victim Ricar-do Pacheco Benedicto ("Benedicto"), a mer-chant and owner of a store selling bakery supplies and pastries in Bagong Silang, Caloocan City, was tending his store along with his helpers, one of whom was Emily Austria ("Austria"), when four (4) armed men entered the store and announced a hold-up. Two (2) of the armed men proceeded to the table of Benedicto asking the latter to bring out his gun. One (1) of the armed men stayed outside the store while the other one (1) guarded Austria. Since Benedicto resist-ed the assault, a commotion ensued prompt-ing the armed man guarding Austria and the lookout stationed outside the store to join and help their other companions. Taking ad-vantage of said commotion, Austria ran out-side the store and crossed the street. Imme-

diately after crossing the street, Austria heard three (3) gunshots and saw the four (4) assailants walking out of the store, one of them carrying Benedictos belt bag. Austria then returned to the store and saw Benedicto lying in a pool of blood. She immediately sought the help of their neigh-bors and the Barangay Captain, who re-sponded to the scene, and summoned the police authorities. When the police officers arrived at the store, they checked the body of Benedicto. Sadly though, Benedicto was already dead. RTC found the defendants guilty, decision was affirmed by the COURT OF APPEALS ISSUE:

WHETHER OR NOT THE TRIAL COURT ERRED IN NOT ADMITTING THE DE-

FENSE OF ALIBI. HELD: We concur with the trial and appellate courts in rejecting appellants defenses of denial and alibi. Time and again this Court has ruled that alibi is the weakest of all de-fenses, for it is easy to fabricate and difficult to prove; it cannot prevail over the positive identification of the accused by the witness-es.9 Moreover, for the defense of alibi to prosper, the requirements of time and place must be strictly met. It is not enough to prove that the accused was somewhere else when the crime was committed, but he must also demonstrate by clear and convincing evidence that it was physically impossible for him to have been at the scene of the crime at the time the same was commit-ted.10 Such physical impossibility was not shown to have existed in this case where appellants testimonies confirmed they were in the same locality (Bagong Silang) when the robbery-killing took place. G.R. No. 185255 March 14, 2012

NORKIS DISTRIBUTORS, INC. AND ALEX


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JURISPRUDENCE

D. BUAT, Petitioners, vs.

DELFIN S. DESCALLAR, Respondent

FACTS: On April 26, 1993, respondent Delfin S. Descallar was assigned at the Iligan City Branch of petitioner Norkis Distributors, Inc., a distributor of Yamaha motorcycles. He be-came a regular employee on February 1, 1994 and was promoted as Branch Manager on June 30, 1997. He acted as branch ad-ministrator and had supervision and control of all the employees. Respondent was also responsible for sales and collection. On August 12, 2002, petitioners issued a "Notice to Show Cause" to respondent. The notice reads: It has been reported that during the audit of your branch last July 2002, serious adverse findings were noted against you as follows:

a) Refusal to accept redemption pay-ment made by customer Gamboa on their deposited motorcycle unit which was traced later sold to one Marvin Joseph Gealon allegedly your neph-ew; b) Unauthorized use of deposited mo-torcycle unit owned by Ludy Gamboa; c) Requiring customer Amy Pastor to pay excessive amount over her ac-count balance; d) Disbursement of sales commis-

sions to unauthorized persons; e) Doing personal business of selling safety helmets using the facility of the

branch.

Further, it is so disappointing to note that despite management support and coop-eration, your branch performance continu-ously failed to reach to an acceptable level as illustrated below:

On August 21, 2002, petitioners terminated respondents services for loss of trust and confidence and gross inefficiency

ISSUE:

WHETHER OR NOT THE FAILURE OF THE RESPONDENT TO MEET THE SALES QUOTA CONSTITUTES A GROUND FOR TERMINATION UNDER LOSS OF CONFI-

DENCE AND GROSS INEFFICIENCY.

HELD: Loss of trust and confidence as a ground for termination of an employee under Article 282 of the Labor Coderequires that the breach of trust be willful, meaning it must be done intentionally, knowingly, and pur-posely, without justifiable excuse. The basic premise for dismissal on the ground of loss of confidence is that the employees con-cerned holds a position of trust and confi-dence. It is the breach of this trust that re-sults in the employers loss of confidence in the employee.

To our mind, the failure to reach the monthly sales quota can-not be considered an intentional and unjustified act of respondent amount-ing to a willful breach of trust on his part that would call for his termina-tion based on loss of confidence. This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of the Labor Code. In-

deed, the low sales performance could be attributed to several factors which are be-yond respondents control. To be a valid


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YEAR SALES QUOTA

ACTUAL AVERAGE

SALES

ACCEPTA-BLE COL-

LEX

ACTUAL AVERAGE COLLEX

2001 (Jan-Dec)

13 units 5 only 70% 43% only

2002 (Jan-Jun)

13 units 5 only 70% 39% only

JURISPRUDENCE

SECOND DIVISION G.R. No. 186030 March 21, 2012 NORMA DELOS REYES VDA. DEL PRA-DO, EULOGIA R. DEL PRADO, NORMITA

R. DEL PRADO and RODELIA R. DEL PRADO, Petitioners,

vs. PEOPLE OF THE PHILIP-

PINES, Respondent. FACTS:

The late Rafael died on July 12, 1978. On October 29, 1979, Corazon, as a daugh-ter of the late Rafael, and Norma, as the late Rafaels surviving spouse and representative of their five minor children, executed a "Deed of Extra-Judicial Partition of the Estate of Ra-fael Del Prado" to cover the distribution of several properties owned by the late Rafael.

Corazon, however, later discovered

that her right over the subject parcel of land was never registered by Norma, contrary to the latters undertaking. The petitioners in-stead executed on July 19, 1991 a Deed of Succession wherein they, together with Ra-fael, Jr. and Antonio, partitioned and adjudi-cated unto themselves the property covered by OCT No. P-22848, to the exclusion of Co-razon. The deed was notarized by Loreto L. Fernando.

When Corazon discovered this, she

filed a criminal complaint against now peti-tioners Norma, Eulogia, Normita and Rodel-ia. Antonio and Rafael, Jr. had both died be-fore the filing of said complaint.

Among the witnesses presented dur-

ing the trial was Loreto, who confirmed that upon the request of Norma and Antonio, he prepared and notarized the deed of succes-sion. He claimed that the petitioners ap-peared and signed the document before him.

For their defense, the petitioners de-nied having signed the Deed of Succession, or having appeared before notary public Loreto. They also claimed that Corazon was not a daughter, but a niece, of the late Ra-fael. Norma claimed that she only later knew

that a deed of succession was prepared by her son Antonio, although she admitted hav-ing executed a deed of real estate mortgage in favor of mortgagee Prudential Bank over portions of the subject parcel of land already covered by the new titles. ISSUE:

Whether or not the CA erred in affirming the petitioners conviction for falsification, notwithstanding the said petitioners defense that they never intended to exclude private complain-ant Corazon from the estate of the late Rafael.

HELD:

Only questions of law may be raised in petitions for review on certio-rari under Rule 45 of the Rules of Court.

First, the questions being

raised by the petitioners refer to factu-al matters that are not proper subjects of a petition for review under Rule 45. Settled is the rule that in a petition for review under Rule 45, only questions of law may be raised. It is not this Courts function to analyze or weigh all over again evidence already con-sidered in the proceedings below, our jurisdiction being limited to reviewing only errors of law that may have been committed by the lower court. The res-olution of factual issues is the function of the lower courts, whose findings on these matters are received with re-spect. A question of law which we may pass upon must not involve an examination of the probative value of the evidence presented by the liti-gants. This is clear under Section 1, Rule 45 of the Rules of Court, as amended, which provides:

Section 1. Filing of petition with Supreme

Court. A party desiring to appeal by certiorari from a judgment, final order or


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JURISPRUDENCE

resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Ap-peals, the Regional Trial Court or other courts, whenever authorized by law, may file with the Supreme Court a verified pe-tition for review on certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek the same provi-sional remedies by verified motion filed in the same action or proceeding at any time during its pendency.

Contrary to these rules, the petition-ers ask us to review the lower courts factu-al finding on Corazons exclusion in the subject deed of succession, to reconsider its contents and those of the other docu-mentary evidence which they have submit-ted with the court a quo, all of which involve questions of fact rather than questions of law. In their assignment of errors, petition-ers even fully question the factual basis for the courts finding of their guilt.

Even granting that the present peti-tion may be admitted, we find no cogent rea-son to reverse the CA decision appealed from, considering that the elements of the crime of falsification under Art. 171, par. 4 of the Revised Penal Code, in relation to Art. 172 thereof, were duly proved during the proceedings below. Said elements are as follows:

(a) The offender makes in a public document untruthful statements in a narration of facts; (b) The offender has a legal obligation to disclose the truth of the facts narrated by him; and (c) The facts narrated by the

offender are absolutely false. There can be no good faith on

the part of the petitioners since they knew of the untruthful character of

statements contained in their deed of succession.

SECOND DIVISION G.R. No. 185568 March 21, 2012 COMMISSIONER OF INTERNAL REVE-

NUE, Petitioner, vs.

PETRON CORPORATION, Respondent. FACTS:

Respondent Petron is a corporation engaged in the production of petroleum products and is a Board of Investment (BOI) registered enterprise in accordance with the provisions of the Omnibus Investments Code of 1987 (E.O. 226) under Certificate of Registration Nos. 89-1037 and D95-136.

During the period covering the taxa-

ble years 1995 to 1998, petitioner (herein respondent Petron) had been an assignee of several Tax Credit Certificates (TCCs) from various BOI-registered entities for which pe-titioner utilized in the payment of its excise tax liabilities for the taxable years 1995 to 1998. The transfers and assignments of the said TCCs were approved by the Depart-ment of Finances One Stop Shop Inter-Agency Tax Credit and Duty Drawback Cen-ter (DOF Center), composed of representa-tives from the appropriate government agen-cies, namely, the Department of Finance (DOF), the Board of Investments (BOI), the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).

Taking ground on a BOI letter issued

on 15 May 1998 which states that hydraulic oil, penetrating oil, diesel fuels and industrial gases are classified as supplies and consid-ered the suppliers thereof as qualified trans-ferees of tax credit, petitioner acknowledged and accepted the transfers of the TCCs from the various BOI-registered entities.

Petitioners acceptance and use of


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JURISPRUDENCE

the TCCs as payment of its excise tax liabili-ties for the taxable years 1995 to 1998, had been continuously approved by the DOF as well as the BIRs Collection Program Divi-sion through its surrender and subsequent issuance by the Assistant Commissioner of the Collection Service of the BIR of the Tax Debit Memos (TDMs).

On January 30, 2002, respondent

[herein petitioner CIR] issued the assailed Assessment against petitioner for deficiency excise taxes for the taxable years 1995 to 1998, in the total amount of P 739,003,036.32, inclusive of surcharges and interests, based on the ground that the TCCs utilized by petitioner in its payment of excise taxes have been cancelled by the DOF for having been fraudulently issued and transferred.

Respondent, on February 27, 2002,

petitioner filed its protest letter to the Assessment.

On 27 March 2002, respondent,

through Assistant Commissioner Edwin R. Abella served a Warrant of Distraint and/or Levy on petitioner to enforce payment of the tax deficiencies.

On 03 December 2008, the CTA En

Banc promulgated a Decision, which re-versed and set aside the CTA Second Divi-sion on 04 May 2007. The former absolved Petron from any deficiency excise tax liabil-ity for taxable years 1995 to 1998. ISSUES:

Whether or not Petron had participation or knowledge on the fraudulent issu-ance or transfer of the subject Tax Credit Certificates hence liable for the payment of excise taxes from 1995-1998.

Whether or not the petitioner is correct in

asserting that the non-applicanility of the principle of estoppel in the instant

case. HELD:

None. The processing of a TCC is en-trusted to a specialized agency called the "One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Cen-ter" ("Center"), created on 07 Febru-ary 1992 under Administrative Order (A.O.) No. 226. Its purpose is to ex-pedite the processing and approval of tax credits and duty drawbacks. The Center is composed of a representa-tive from the DOF as its chairperson; and the members thereof are repre-sentatives of the Bureau of Invest-ment (BOI), Bureau of Customs (BOC) and Bureau of Internal Reve-nue (BIR), who are tasked to process the TCC and approve its application as payment of an assignees tax lia-bility. A TCC may be assigned through a Deed of Assignment, which the as-signee submits to the Center for its approval. Upon approval of the deed, the Center will issue a DOF Tax Debit Memo (DOF-TDM), which will be uti-lized by the assignee to pay the lat-ters tax liabilities for a specified peri-od. Upon surrender of the TCC and the DOF-TDM, the corresponding Au-thority to Accept Payment of Excise Taxes (ATAPET) will be issued by the BIR Collection Program Division and will be submitted to the issuing office of the BIR for acceptance by the As-sistant Commissioner of Collection Service. This act of the BIR signifies its acceptance of the TCC as pay-ment of the assignees excise taxes. Thus, it is apparent that a TCC under-goes a stringent process of verifica-tion by various specialized govern-ment agencies before it is accepted as payment of an assignees tax lia-bility.


12

JURISPRUDENCE

We agree with the pronounce-ment of the CTA En Banc that Petron has not been shown or proven to have participated in the alleged fraud-ulent acts involved in the transfer and utilization of the subject TCCs. Petron had the right to rely on the joint stipu-lation that absolved it from any partic-ipation in the alleged fraud pertaining to the issuance and procurement of the subject TCCs. The joint stipula-tion made by the parties consequent-ly obviated the opportunity of the CIR to present evidence on this matter, as no proof is required for an admission made by a party in the course of the proceedings. Thus, the CIR cannot now be allowed to change its stand and renege on that admission.

No, the Petitioner is not correct.

While we agree with petitioner that the State in the performance of government function is not estopped by the neglect or omission of its agents, and nowhere is this truer than in the field of taxation, yet this princi-ple cannot be applied to work injus-tice against an innocent party.

Petron, in this case, was not proven to have had any participation in or knowledge of the CIRs allega-tion of the fraudulent transfer and uti-lization of the subject TCCs. Re-spondents status as a transferee in good faith and for value of these TCCs has been established and even stipulated upon by petition-er. Respondent was thereby provided ample protection from the adverse findings subsequently made by the Center. Given the circumstances, the CIRs invocation of the non-applicability of estoppel in this case is misplaced.

WHEREFORE, the CIRs Peti-

tion is DENIED for lack of merit.

EN BANC

G.R. No. 190293 March 20, 2012 PHILIP SIGFRID A. FORTUN and ALBERT

LEE G. ANGELES, Petitioners, vs.

GLORIA MACAPAGAL-ARROYO, as Commander-in-Chief and President of the

Republic of the Philippines, EDUARDO ERMITA, Executive Secretary, ARMED

FORCES OF THE PHILIPPINES (AFP), or any of their units, PHILIPPINE NATIONAL

POLICE (PNP), or any of their units, JOHN DOES and JANE DOES acting un-

der their direction and con-trol, Respondents.

FACTS:

On November 23, 2009 heavily armed men, believed led by the ruling Am-patuan family, gunned down and buried un-der shoveled dirt 57 innocent civilians on a highway in Maguindanao. In response to this carnage, on November 24 President Arroyo issued Presidential Proclamation 1946, de-claring a state of emergency in Maguinda-nao, Sultan Kudarat, and Cotabato City to prevent and suppress similar lawless vio-lence in Central Mindanao.

Believing that she needed greater au-

thority to put order in Maguindanao and se-cure it from large groups of persons that have taken up arms against the constituted authorities in the province, on December 4, 2009 President Arroyo issued Presidential Proclamation 1959 declaring martial law and suspending the privilege of the writ of habe-as corpus in that province except for identi-fied areas of the Moro Islamic Liberation Front.

Two days later or on December 6,

2009 President Arroyo submitted her report to Congress in accordance with Section 18, Article VII of the 1987 Constitution which re-quired her, within 48 hours from the procla-


13

JURISPRUDENCE

mation of martial law or the suspension of the privilege of the writ of habeas corpus, to sub-mit to that body a report in person or in writing of her action.

In her report, President Arroyo said that

she acted based on her finding that lawless men have taken up arms in Maguindanao and risen against the government. The President described the scope of the uprising, the na-ture, quantity, and quality of the rebels wea-ponry, the movement of their heavily armed units in strategic positions, the closure of the Maguindanao Provincial Capitol, Ampatuan Municipal Hall, Datu Unsay Municipal Hall, and 14 other municipal halls, and the use of armored vehicles, tanks, and patrol cars with unauthorized "PNP/Police" markings.

On December 9, 2009 Congress, in

joint session, convened pursuant to Section 18, Article VII of the 1987 Constitution to re-view the validity of the Presidents action. But, two days later or on December 12 before Con-gress could act, the President issued Presi-dential Proclamation 1963, lifting martial law and restoring the privilege of the writ of habe-as corpus in Maguindanao. ISSUE:

Whether or not Presidential Proclama-tion No 1959 is constitutional. HELD:

The issue of the constitutionality of Proclamation 1959 is not unavoida-ble for two reasons:

One. President Arroyo withdrew her proclamation of martial law and suspension of the privilege of the writ of habeas corpus before the joint houses of Congress could fulfill their automatic duty to review and validate or invalidate the same.

Here, President Arroyo withdrew

Proclamation 1959 before the joint houses of Congress, which had in fact convened, could act on the same. Con-

sequently, the petitions in these cases have become moot and the Court has nothing to review. The lifting of martial law and restoration of the privilege of the writ of habeas corpus in Maguinda-nao was a supervening event that oblit-erated any justiciable controversy.

Two. Since President Arroyo

withdrew her proclamation of martial law and suspension of the privilege of the writ of habeas corpus in just eight days, they have not been meaningfully implemented. The military did not take over the operation and control of local government units in Maguindanao. The President did not issue any law or de-cree affecting Maguindanao that should ordinarily be enacted by Congress. No indiscriminate mass arrest had been reported. Those who were arrested dur-ing the period were either released or promptly charged in court. Indeed, no petition for habeas corpus had been filed with the Court respecting arrests made in those eight days. The point is that the President intended by her ac-tion to address an uprising in a relative-ly small and sparsely populated prov-ince. In her judgment, the rebellion was localized and swiftly disintegrated in the face of a determined and amply armed government presence.

The problem in this case is that the President aborted the proclamation of martial law and the suspension of the privilege of the writ of habeas corpus in Maguindanao in just eight days. In a real sense, the proclamation and the suspension never took off. The Con-gress itself adjourned without touching the matter, it having become moot and academic.


14

JURISPRUDENCE


15

JLs Corner

There is a higher court than

courts of justice and that is

the court of conscience. It

supercedes all other courts.

Mahatma Gandhi


16

lca lines | volume iv, issue no.3

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