A.

STATUTES STRICTLY CONSTRUED

PENAL LAWS
1. Carungcong v people and Sato
Facts:
- Mediatrix G. Carungcong filed a complaint-affidavit for estafa
against her brother-in-law, William Sato, a Japanese national.
-

Prior to the death of mediatrixs mother, Manolita Carungcong Y

Gonzales, specifically on or about November 24, 1992, manolitas
son-in-law and mediatrix brother-in-law, William Sato, through
fraudulent misrepresentations, was able to secure the signature and
thumbmark of my mother on a Special Power of Attorney.

William satos daughter attests to the fact that manolita

signed the document in the belief that they were in
connection with her taxes, not knowing, since she was blind,
that the same was in fact a Special Power of Attorney to sell
her Tagaytay properties.

A judicious and thorough examination of Article 332 of the

Revised Penal Code convinces the trial court of the
correctness of the contention of the defense. While it is
true that the death of Zenaida Carungcong-Sato has
extinguished the marriage of accused with her, it does
not erase the fact that accused and Zenaidas mother,
herein complainant, are still son[-in-law] and motherin-law and they remained son[-in-law] and mother-inlaw even beyond the death of Zenaida.
o

Article 332(1) of the Revised Penal Code, is very

explicit and states no proviso. No criminal, but only
civil liability, shall result from the commission of the
crime of theft, swindling or malicious mischief
fcommitted or caused mutually by xxx 1) spouses,
ascendants and descendants, or relatives by affinity in
the same line.

Dissatisfied with the trial courts rulings, the intestate estate of

Manolita, represented by Mediatrix, filed a petition for certiorari in
the Court of Appeals which, however, in a decision dated August 9,
2007, dismissed it.

Issue:
Whether or not the respondent may be exempt from criminal
liability invoking art 332 of the RPC
-

Held: No
The coverage of Article 332 is strictly limited to the felonies
mentioned therein. The plain, categorical and unmistakable
language of the provision shows that it applies exclusively to the
simple crimes of theft, swindling and malicious mischief. It does
not apply where any of the crimes mentioned under Article
332 is complexed with another crime, such as theft through
falsification or estafa through falsification.

A reading of the facts alleged in the Information reveals that Sato is

being charged not with simple estafa but with the complex crime of
estafa through falsification of public documents. In particular, the
Information states that Sato, by means of deceit, intentionally
defrauded Manolita committed as follows:
(a) Sato presented a document to Manolita (who was already
blind at that time) and induced her to sign and thumbmark
the same;
(b) he made Manolita believe that the said document was in
connection with her taxes when it was in fact a special power
of attorney (SPA) authorizing his minor daughter Wendy to
sell, assign, transfer or otherwise dispose of Manolitas
properties in Tagaytay City;
(c) relying on Satos inducement and representation, Manolita
signed and thumbmarked the SPA in favor of Wendy Mitsuko
Sato, daughter of Sato;
(d) using the document, he sold the properties to third
parties but he neither delivered the proceeds to Manolita nor
accounted for the same and
(d) despite repeated demands, he failed and refused to
deliver the proceeds, to the damage and prejudice of the
estate of Manolita.

The absolutory cause under Article 332 is meant to address specific

crimes against property, namely, the simple crimes of theft,
swindling and malicious mischief. Thus, all other crimes, whether
simple or complex, are not affected by the absolutory cause
provided by the said provision. In other words, to apply Article

332 to the complex crime of estafa through falsification of public

document would be to mistakenly treat the crime of estafa as a
separate simple crime, not as the component crime that it is in that
situation.
-

While there may be two component crimes (estafa and

falsification of documents), both felonies are animated by and result
from one and the same criminal intent for which there is only one
criminal liability. That is the concept of a complex crime. In other
words, while there are two crimes, they are treated only as one,
subject to a single criminal liability.

Under Article 48 of the Revised Penal Code, the formal plurality of

crimes (concursus delictuorum or concurso de delitos) gives rise to
a single criminal liability and requires the imposition of a single
penalty
o Although [a] complex crime quantitatively consists of two or
more crimes, it is only one crime in law on which a single
penalty is imposed and the two or more crimes constituting
the same are more conveniently termed as component
crimes.
o In [a] complex crime, although two or more crimes are
actually committed, they constitute only one crime in the
eyes of the law as well as in the conscience of the offender.
The offender has only onecriminal intent. Even in the case
where an offense is a necessary means for committing the
other, the evil intent of the offender is only one. [

The falsification of a public, official or commercial document may be

a means of committing estafa because, before the falsified
document is actually utilized to defraud another, the crime
of falsification has already been consummated, damage or
intent to cause damage not being an element of the crime of
falsification of a public, official or commercial document. In other
words, the crime of falsification was committed prior to the
consummation of the crime of estafa. Actually utilizing the falsified
public, official or commercial document to defraud another is
estafa. The damage to another is caused by the commission of
estafa, not by the falsification of the document. [

Applying the above principles to this case, the allegations in the

Information show that the falsification of public document was

consummated when Sato presented a ready-made SPA to

Manolita who signed the same as a statement of her
intention in connection with her taxes. While the falsification
was consummated upon the execution of the SPA, the
consummation of the estafa occurred only when Sato later utilized
the SPA. Damage or prejudice to Manolita was caused not by the
falsification of the SPA (as no damage was yet caused to the
property rights of Manolita at the time she was made to sign the
document) but by the subsequent use of the said document. That is
why the falsification of the public document was used to facilitate
and ensure (that is, as a necessary means for) the commission of
the estafa.
2. ELVIRA YU OH V COURT OF APPEALS
June 6, 2003; PONENTE: Austria-Martinez, J.
FACTS:
Elvira Yu Oh (petitioner) bought jewelry from Solid Gold International
Traders (private respondent) but failed to pay purchase price. The
company filed civil complaints against her for specific performance with
the Pasig Regional Trial Court. Joaquin Novales III, general manager of
Solid Gold, and the petitioner entered into a compromise agreement
where petitioner was to issue ninety-nine post-dated checks amounting to
P50,000 each to be deposited every 15th and 30th of the month from
October 1990 to November 16, 1994. Balance of over P1 million was to be
paid in cash, lump sum, on November16, 1994 as well.
Petioner issued 10 checks amounting to P50,000 each, drawn against her
account in EquitableBanking Corporation. When Novales deposited the
checks with Far East Bank and Trust Company, however, checks were
dishonored as the account was already closed.
On October 5, 1992, Novales filed 10 separate Informations. These were
consolidated and raffled to Branch 99 of the Pasig RTC. And on December
22, 1993 RTC rendered a decision finding the accused guilty of ten counts
of violation of B.P. Blg. 22, also known as the Bouncing Checks Law. She
was sentenced to one year of imprisonment for each count and
indemnification of P500.
Petitioner appealed to the Court of Appeals but the CA found it to be of no
merit and affirmed the RTCs decision. Thus, the petition on certiorari of
the decision of the court of appeals, affirming the conviction of Elvira Yu
Oh by the RTC dated May 30 1996 which denied her motion for
reconsideration.
ISSUES:

1.) Did the court err in not granting retroactive effect to R.A. 7691 in
view of Art. 22 of the RPC?
2.) Did the appellate court err in construing B.P. Blg. 22?
3.) Is the notice of dishonor to the drawer important in warranting a
conviction?
RULING:
Assailed Decision and Resolution of the CA are REVERSED and SET ASIDE.
Petitioner is acquitted of the ten counts for insufficiency of evidence but is
ordered to pay P500,000 to the private respondent, with 12% interest per
annum from the date of finality of judgment.
REASONING:
1. NO. The court did not err in not granting retroactive effect to R.A.
7691.
A penal law, is an act of the legislature that prohibits certain acts and
establishes penalties for its violations. It also defines crime, treats of its
nature and provides for its punishment. R.A. No. 7691 does not prohibit
certain acts or provides penalties for its violation; neither does it treat of
the nature of crimes and its punishment. Consequently, R.A. No. 7691 is
not a penal law, and therefore, Art. 22 of the RPC does not apply in the
present case.
R.A. No. 7691 which took effect on June 15, 1994, amended B.P. Blg. 129,
and vested on the Metropolitan, Municipal and Municipal Circuit Trial
Courts jurisdiction to try cases punishable by imprisonment of not more
than six (6) years. Since R.A. No. 7691 vests jurisdiction on courts, it is
apparent that said law is substantive.
Jurisdiction being a matter of substantive law, the established rule is that
the statute in force at the time of the commencement of the action
determines the jurisdiction of the court. R.A. No. 7691 was not yet in force
at the time of the commencement of the cases in the trial court. It took
effect only during the pendency of the appeal before the Court of Appeals.
There is therefore no merit in the claim of petitioner that R.A. No. 7691
should be retroactively applied to this case and the same be remanded to
the MTC. The Court has held that a "law vesting additional jurisdiction in
the court cannot be given retroactive effect.
2. NO. The appellate court did not err in construing B.P. Blg. 22.
Petitioner: That because penal statutes must be strictly construed and
resolved in favor of the accused, the insufficiency of funds referred to in
B.P. Blg. 22 must not be made to cover those accounts that are closed
or declared to have no funds. Post-dated checks, not being drawn
payable on demand but rather on a fixed date, should also be considered
as ordinary and not special bills of exchange.

Lozano v Martinez: Thrust of the Bouncing Checks law is to

prohibit the making of worthless checks and putting them in
circulation as their effects directly affect public interest. Such
intent is reiterated in Cueme v People and in Recuerdo v
People.
Claim on closed accounts not being included in the
coverage of the B.P. has no merit in view of the legislative
intent of the law which is to protect the interest of the
community at large.
People v Nitafan: The law does not distinguish but merely
provides that any person who makes/draws and issues any
check knowing that he does not have enough funds shall be
punished.
3. YES. The notice of dishonor to the drawer is important.
Petitioner: That no notice of dishonor had been given to her as drawer of
the dishonored checks, pursuant to the requirement expressly provided in
B.P. Blg. 22.
Elements for conviction of violation of B.P. Blg. 22:
a) Accused makes, draws or issues any check to apply to
account or for value.
b) Accused knows at the time of issuance that he/she does
not have sufficient funds in, or credit with, the drawee
bank for payment of the check in full upon its
presentment.
c) The check is subsequently dishonored.

For liability to attach, it is not enough for prosecution to

simply prove that the checks were subsequently dishonored.
Prosecution must also prove awareness/knowledge of the
accused at the time of issuance.
Basis of Yu Ohs awareness of the lack/insufficiency was a line
in her Counter-Affidavit where she declares that she told the
general manager that the actual status of the checks that
the same might not be able to cover the amount of the said
checks so stated therein [sic].
Presumption (provided in Sec. 2, B.P. Blg. 22) of knowledge
cannot arise if such notice of non-payment by the bank is not
sent to the maker/drawer.
Jurisprudence has shown that notice of dishonor is vital
insomuch as Sec. 2, B.P. Blg. 22 provides the drawee or
maker five days in which to come up with the needed money.

Procedural due process demands that a notice is served in

order to afford the accused the opportunity to aver
prosecution.
Also, it was shown through the general managers testimony
that no personal demands were made on the petitioner prior
to the complaints being filed.
Novales also apparently knew of the possible insufficiency of
funds. The Court has ruled before that when the complainant
was informed by the drawer of such, there is no violation of
B.P. Blg. 22.

3. Villasenor v. Oco- Perguerra

Facts:
On August 18, 2001, disaster struck. In the wee hours of the morning, the
Quezon City Manor Hotel went ablaze resulting in the death of seventyfour (74) people and injuries to scores of others. Investigation into the
tragedy revealed that the hotel was a veritable fire trap.
Petitioners, together with other officials of the City Engineering Office of
Quezon City, arepresently facing criminal charges before the 5th Division
of the Sandiganbayan for the crime of multiple homicide through reckless
imprudence and for violation of Section 3 (e) of R.A. No. 3019. They were
also charged administratively with gross negligence, gross misconduct
and conduct prejudicial to the interest of the service in connection with
the Manor Hotel inferno.
In two separate Orders dated August 29, 2001 and September 7, 2001 in
the administrative case, petitioners Villaseor and Mesa were preventively
suspended for a period of six (6) months, effective upon receipt of the
suspension order. On September 20, 2006, during the pendency of the
criminal case, respondent special prosecutor Louella Mae Oco-Pesquerra
led a motion for suspension pendente lite of petitioners.
Petitioners opposed the motion, contending that they had already been
suspended for six (6) months relative to the administrative case, based on
the same facts and circumstances. They posited that any preventive
suspension that may be warranted in the criminal case was already
absorbed by the preventive suspension in the administrative case because
both the criminal and administrative cases were anchored on the same set
of facts.

Issue: Petitioners have resorted to the present recourse, hoisting the lone
issue of "WHETHER OR NOT THE PUBLIC RESPONDENT ACTED IN EXCESS
OF JURISDICTION AND/OR WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ORDERING THE SUSPENSION
PENDENTE LITE OF HEREIN PETITIONERS DESPITE THE FACT THAT THEY
HAD ALREADY BEEN PREVIOUSLY SUSPENDED ADMINISTRATIVELY BASED
ON THE SAME FACTS AND CIRCUMSTANCES.
Statcon Issue: It is petitioners' contention that as a penal statute, the
provision on preventive suspension should be strictly construed
against the State and liberally in their favor.
Provision: Section 13 of R.A. No. 3019
Suspension and loss of benefits . Any incumbent public offcer against
whom any criminal prosecution under a valid information under this Act or
under Title 7, Book II of the Revised Penal Code or for any offense
involving fraud upon the government or public funds or property, whether
as a simple or as a complex offense and in whatever stage of the
execution and mode of participation, is pending in court, shall be
suspended from office.
Held: We cannot agree. Section 13 of R.A. No. 3019 on preventive
suspension is not a penal provision. It is procedural in nature. Hence, the
strict construction rule finds no application.
The Court expounded on this point in Buenaseda v Flavier: Penal statutes
are strictly construed while procedural statutes are liberally construed
(Crawford, Statutory Construction, Interpretation of Laws, pp. 460-461;
Lacson v. Romero , 92 Phil. 456 [1953]). The test in determining if a
statute is penal is whether a penalty is imposed for the punishment of a
wrong to the public or for the redress of an injury to an individual (59
Corpuz Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A
Code prescribing the procedure in criminal cases is not a penal
statute and is to be interpreted liberally (People v. Adler, 140 N.Y.
331; 35 N.E. 644).
SATUTES IN DEROGATION OF RIGHTS
1. Heirs of Suguitan vs. City of Mandaluyong
Petitioner: Heirs of Alberto Suguitan
Respondent: City of Mandaluyong

Facts:
The respondent issued a resolution authorizing Mayor Banjamin
Abalos to institute expropriation proceeding over the property of
Alberto Suguitan for the expansion of Mandaluyong Medical Center.
Alberto Suguitan refused the offer Mayor Abalos in buying his
property. City of Mandaluyong filed a complaint for expropriation
with the RTC of Pasig.
The trial court denied the motion to dismiss filled by Alberto
Suguitan and allowed the expropriation of the subject property.
The petitioner asserted that the respondent may only exercise its
delegated power of eminent domain by means of an ordinance as
required by Section 19 of Republic Act No. 7160 and not by means
of a mere resolution.
Petition for review for reversal of the Order by the RTC of Pasig.
Issue:
Whether a resolution is a sufficient antecedent for the filling of
expropriation proceedings with the RTC.
Ruling:
No. Petition is granted and the decision of RTC of Pasig is reversed
and set aside. An examination of the applicable law will show that an
ordinance is necessary to authorize the filing of a complaint with the
proper court since, beginning at this point, the power of eminent domain
is already being exercised.
Private property shall not be taken for public use without just
compensation. The due process and equal protection clauses act as
additional safeguards against the arbitrary exercise of this governmental
power. Since exercise of the power of eminent domain affects an
individuals right to private property, a constitutionally-protected right
necessary for the preservation and enhancement of personal dignity and
intimately connected with the rights to life and liberty the need for its
circumspect operation cannot be overemphasized.
The exercise of the rights of eminent domain, whether directly by
the State, or by its authorized agents, is necessarily in derogation
of private rights, and the rule in that case is that the authority
must be strictly construed. No species of property is held by
individuals with greater tenacity, and none is guarded by the
constitution and the laws more sedulously, than the right to the
freehold of inhabitants. When the legislature interferes with that
right, and, for greater public purposes, appropriates the land of
an individual without his consent, the plain meaning of the law
should not be enlarged by doubt[ful] interpretation.

The statutory power of taking property from the owner without

his consent is one of the most delicate exercise of governmental
authority. It is to be watched with jealous scrutiny. Important as
the power may be to the government, the inviolable sanctity
which all free constitutions attach to the right of property of the
citizens, constrains the strict observance of substantial provisions
of the law which are prescribed as mode of the exercise of the
power, and to protect it from abuse....
The power of eminent domain is essentially legislative in nature. It is
firmly settled, however, that such power may validly delegated to local
government units, other public entities and public utilities, although the
scope of this delegated legislative power is necessarily narrower than that
of the delegating authority and may only be exercised in strict compliance
with the terms of the delegating law. The basis of the exercise of the
power of eminent domain by local government units is Section 19
of RA 7160:
A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of
eminent domain for public use, or purpose or welfare for the
benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the amount
to be paid for the expropriated property shall be determined by
the proper court, based on the fair market value at the time of
the taking of the property.
- The City of Mandaluyong seeks to exercise the power of eminent
domain over petitioners property by means of resolution, in
contravention of the first requisite. The law is clear and free from
ambiguity. Section 19 of the Code requires an ordinance, not
resolution, for exercise of the power of eminent domain.
- 1st requisite: An ordinance is enacted by the local legislative council
authorizing the local chief executive, in behalf of the local
government unit, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular property.

An ordinance promulgated by the local legislative body authorizing

its local chief executive to exercise the power of eminent domain is
necessary prior to the filing by the latter of the complaint with the
proper court, and not only after the court has determined the
amount of just compensation to which the defendant is entitled.
In inconsistency between the Code (Section 19 of RA 7160) and
the IRR (Article 36, Rule VI): The law itself surely prevails over said
rule which merely seeks to implement it. It is automatic that the clear
letter of the law is controlling and cannot be amended by mere
administrative rule issued for its implementing. Besides, what the
discrepancy seems to indicate is a mere oversight in the wording of the
implementing rules, since Article 32, Rule VI thereof, also requires that, in
exercising the power of eminent domain, the chief executive of the LGU
must act pursuant to an ordinance.
While we remain conscious of the constitutional policy of promoting local
autonomy, we cannot grant judicial sanction to local government units
exercise of its delegated power of eminent domain in contravention of the
very law giving it such power.
2. PHILACOR CREDIT CORPORATION vs. COMMISSIONER OF
INTERNAL REVENUE
FACTS:
Philacor is a domestic corporation organized under Philippine
laws and is engaged in the business of retail financing.
Through retail financing, a prospective buyer of a home
appliance with neither cash nor any credit card may
purchase appliances on installment basis from an appliance
dealer. After Philacor conducts a credit investigation and
approves the buyer's application, the buyer executes a
unilateral promissory note in favor of the appliance dealer.
The same promissory note is subsequently assigned by the
appliance dealer to Philacor
Philacor received Pre-Assessment Notices covering the alleged
deficiency income, percentage and DSTs, including increments
Philacor protested the PANs, with a request for reconsideration
and reinvestigation.
It alleged that the assessed deficiency income tax was
erroneously computed when it failed to take into account the
reversing entries of the revenue accounts and income
adjustments, such as repossessions, write-offs and legal
accounts. Similarly, the Bureau of Internal Revenue (BIR) failed

to take into account the reversing entries of repossessions,

legal accounts, and write-offs when it computed the
percentage tax; thus, the total income reported, that the BIR
arrived at, was not equal to the actual receipts of payment
from the customers.
As for the deficiency DST, Philacor claims that the accredited
appliance dealers were required by law to affix the
documentary stamps on all promissory notes purchased until
the enactment of Republic Act No. 7660, otherwise known as
An Act Rationalizing Further the Structure and Administration of
the Documentary Stamp Tax, 9 which took effect on January
15, 1994
The CTA rendered its decision and concluded that Philacor failed to
declare part of its income making it liable for deficiency income and
percentage tax. The CTA also ruled that Philacor is liable for
the DST on the issuance of the promissory notes and their
subsequent transfer or assignment.
The CTA partially granted Philacor's motion in the resolution of
April 6, 2004, 15 wherein it cancelled the assessment for
deficiency income tax and deficiency percentage tax. These
assessments were withdrawn because the CTA found that
Philacor had correctly declared its income; the discrepancy of
P2,180,564.00 had been properly accounted for as proper
adjustments to Philacor's net revenues. Nevertheless, the CTA
Division sustained the assessment for deficiency DST in the
amount of P673,633.88.
Philacor filed a petition for review before the CTA en bacn and the
CTA en banc affirmed the resolution of the CTA division. It
reiterated that Philacor is liable for the DST due on two
transactions the issuance of promissory notes and their
subsequent assignment in favor of Philacor. With respect to
the issuance of the promissory notes, Philacor is liable as the
transferee which "accepted" the promissory notes from the
appliance dealer in accordance with Section 180 of Presidential
Decree No. 1158, as amended (1986 Tax Code)
o citing Section 42 19 of Regulations No. 26, 20 the CTA
en banc held that a person "using" a promissory note is
one of the persons who can be held liable to pay the
DST. Since the subject promissory notes do not bear
documentary stamps, Philacor can be held liable for DST

As for the assignment of the promissory notes, the CTA

en banc held that each and every transaction involving
promissory notes is subject to the DST under Section
173 of the 1986 Tax Code
Ggmyg
o

ISSUE:

Whether or not Philacor is liable for the documentary stamp tax on

the issuance of the promissory notes?

RULING: NO. Philacor, as an assignee or transferee of the promissory

notes, is not liable for the assignment or transfer of promissory
notes as this transaction is not taxed under the law.
Neither party questions that the issuances of promissory notes are
transactions which are taxable under the DST
Section 180. Stamp tax on promissory notes, bills of exchange,
drafts, certificates of deposit, debt instruments used for deposit
substitutes and others not payable on sight or demand. On
all bills of exchange (between points within the Philippines),
drafts, or certificates of deposits, debt instruments used for
deposit substitutes or orders for the payment of any sum of
money otherwise than at sight or on demand, on all promissory
notes, whether negotiable or non-negotiable except bank notes
issued for circulation, and on each renewal of any such note,
there shall be collected a documentary stamp tax of twenty
centavos on each two hundred pesos, or fractional part thereof,
of the face value of any such bill of exchange, draft certificate of
deposit, debt instrument, or note.
Under the undisputed facts and the above law, the issue that
emerges is: who is liable for the tax?
o Section 173 of the 1997 National Internal Revenue Code
(1997 NIRC) names those who are primarily liable for
the DST and those who would be secondarily liable:
Section 173.Stamp taxes upon documents, instruments,
and papers. Upon documents, instruments, and
papers, and upon acceptances, assignments, sales, and
transfers of the obligation, right, or property incident
thereto, there shall be levied, collected and paid for, and in
respect of the transaction so had or accomplished, the
corresponding documentary stamp taxes prescribed in the

following sections of this Title, by the person making,

signing, issuing, accepting, or transferring the same, and
at the same time such act is done or transaction had:
Provided, that wherever one party to the taxable
document enjoys exemption from the tax herein
imposed, the other party thereto who is not exempt shall
be the one directly liable for the tax
Philacor did not make, sign, issue, accept or transfer the
promissory notes. The acts of making, signing, issuing and
transferring are unambiguous. The buyers of the appliances
made, signed and issued the documents subject to tax, while
the appliance dealer transferred these documents to Philacor
which likewise indisputably received or "accepted" them.
Acceptance," however, is an act that is not even applicable to
promissory notes, but only to bills of exchange. Under Section
132 of the Negotiable Instruments Law (which provides for
how acceptance should be made), the act of acceptance refers
solely to bills of exchange. Its object is to bind the drawee of
a bill and make him an actual and bound party to the
instrument
Further, in a ruling adopted by the BIR as early as 1955,
acceptance has already been given a narrow definition with
respect to incoming foreign bills of exchange, not the common
usage of the word "accepting" as in receiving:
The word "accepting" appearing in Section 210 of the National
Internal Revenue Code has reference to incoming foreign bills of
exchange which are accepted in the Philippines by the
drawees thereof.
o This ruling, to our mind, further clarifies that a party to
a taxable transaction who "accepts" any documents or
instruments in the plain and ordinary meaning of the act
(such as the shipper in the cited case) does not
become primarily liable for the tax. In the same way,
Philacor cannot be made primarily liable for the DST on
the issuance of the subject promissory notes, just
because it had "accepted" the promissory notes in the
plain and ordinary meaning.

Revenue Regulations No. 9-2000 26 interprets the law more

widely so that all parties to a transaction are primarily liable

for the DST, and not only the person making, signing, issuing,
accepting or transferring the same becomes liable as the law
provides. It provides:
SEC. 2. Nature of the Documentary Stamp Tax and Persons
Liable for the Tax
(a) In General. The documentary stamp taxes under
Title VII of the Code is a tax on certain transactions. It
is imposed against "the person making, signing, issuing,
accepting, or transferring" the document or facility
evidencing the aforesaid transactions. Thus, in general, it
may be imposed on the transaction itself or upon the
document underlying such act. Any of the parties
thereto shall be liable for the full amount of the tax
due: Provided, however, that as between themselves,
the said parties may agree on who shall be liable or how
they may share on the cost of the tax.
(b) Exception. Whenever one of the parties to the
taxable transaction is exempt from the tax imposed
under Title VII of the Code, the other party thereto who is
not exempt shall be the one directly liable for the tax.
o

But even under these terms, the liability of Philacor is

not a foregone conclusion as from the face of the
promissory note itself, Philacor is not a party to the
issuance of the promissory notes, but merely to their
assignment. On the face of the documents, the parties
to the issuance of the promissory notes would be the
buyer of the appliance, as the maker, and the appliance
dealer, as the payee.
Nor can the CIR justify his position that Philacor is
liable for the tax by citing Section 42 of Regulations No.
26, which was issued by the Department of Finance on
March 26, 1924:
Section 42. Responsibility for payment of tax on
promissory notes . The person who signs or issues a
promissory note and any person transferring or using a
promissory note can be held responsible for the payment
of the documentary stamp tax.
The rule uses the word "can" which is permissive,
rather than the word "shall," which would make the

liability of the persons named definite and unconditional.

In this sense, a person using a promissory note can be
made liable for the DST if he or she is: (1) among
those persons enumerated under the law. Such
interpretation would avoid any conflict between Section
173 of the 1997 NIRC and Section 42 of Regulations
No. 26 and would make it unnecessary for us to strike
down the latter as having gone beyond the law it seeks
to interpret.
However, we cannot interpret Section 42 of Regulations
No. 26 to mean that anyone who "uses" the document,
regardless of whether such person is a party to the
transaction, should be liable, as this reading would go
beyond Section 173 of the 1986 Tax Code the law
that the rule seeks to implement. Implementing rules
and regulations cannot amend a law for they are
intended to carry out, not supplant or modify, the law.
31 To allow Regulations No. 26 to extend the liability for
DST to persons who are not even mentioned in the
relevant provisions of any of our Tax Codes, particularly
the 1986 Tax Code (the relevant law at the time of the
subject transactions) would be a clear breach of the
rule that a statute must always be superior to its
implementing regulations.

As Philacor correctly points out, there are provisions in the

1997 NIRC that specifically impose the DST on the transfer
and/or assignment of documents evidencing particular
transactions. We can safely conclude that where the law did
not specify that such transfer and/or assignment is to be
taxed, there would be no basis to recognize an imposition

3. CIR v KUDOS
Fatcs:
- On April 15, 1999, respondent Kudos Metal Corporation filed its Annual
Income Tax Return (ITR) for the taxable year 1998.
- Pursuant to a Letter of Authority dated September 7, 1999, the Bureau
of Internal Revenue (BIR) served upon respondent three Notices of
Presentation of Records.
- Respondent failed to comply with these notices, hence, the BIR issued
a Subpeona Duces Tecum dated September 21, 2006, receipt of which

Issue:

was acknowledged by respondents President, Mr. Chan Ching Bio, in a

letter dated October 20, 2000.
Respondent filed three waiver of the defense of prescription.
On August 25, 2003, the BIR issued a Preliminary Assessment Notice for
the taxable year 1998 against the respondent. This was followed by a
Formal Letter of Demand with Assessment Notices for taxable year 1998,
dated September 26, 2003 which was received by respondent
on November 12, 2003.
Respondent challenged the assessments by filing its Protest on Various
Tax Assessments on December 3, 2003 and its Legal Arguments and
Documents in Support of Protests against Various Assessments on
February 2, 2004.
Believing that the governments right to assess taxes had prescribed,
respondent filed on August 27, 2004 a Petition for Review with the CTA
On October 4, 2005, the CTA Second Division issued a
Resolution canceling the assessment notices issued against respondent
for having been issued beyond the prescriptive period.
It found the first Waiver of the Statute of Limitations incomplete
and defective for failure to comply with the provisions of Revenue
Memorandum Order (RMO) No. 20-90.
o The waiver failed to indicate the date of acceptance. Such date of
acceptance is necessary to determine whether the acceptance
was made within the prescriptive period
o the fact of receipt by the taxpayer of his file copy was not
indicated on the original copy. The requirement to furnish
the taxpayer with a copy of the waiver is not only to give
notice of the existence of the document but also of the
acceptance by the BIR and the perfection of the
agreement.
The subject waiver is therefore incomplete and
defective. As such, the three-year prescriptive
period was not tolled or extended and
continued to run.
Section 203 of the National Internal Revenue Code of 1997 (NIRC)
mandates the government to assess internal revenue taxes within three
years from the last day prescribed by law for the filing of the tax return or
the actual date of filing of such return, whichever comes later. Hence, an
assessment notice issued after the three-year prescriptive period is no
longer valid and effective.

Whether or not the doctrine of estoppel can be applied in this case

Held: No
We find no merit in petitioners claim that respondent is now estopped from
claiming prescription since by executing the waivers, it was the one
which asked for additional time to submit the required documents.
The doctrine of estoppel cannot be applied in this case as an exception to the
statute of limitations on the assessment of taxes considering that there is a
detailed procedure for the proper execution of the waiver, which the
BIR must strictly follow.
The BIR cannot hide behind the doctrine of estoppel to cover its failure to
comply with RMO 20-90 and RDAO 05-01, which the BIR itself issued. As stated
earlier, the BIR failed to verify whether a notarized written authority was given
by the respondent to its accountant, and to indicate the date of acceptance and
the receipt by the respondent of the waivers. Having caused the defects in
the waivers, the BIR must bear the consequence. It cannot shift the
blame to the taxpayer. To stress, a waiver of the statute of limitations,
being a derogation of the taxpayers right to security against
prolonged and unscrupulous investigations, must be carefully and
strictly construed.
As to the alleged delay of the respondent to furnish the BIR of the required
documents, this cannot be taken against respondent. Neither can the BIR use
this as an excuse for issuing the assessments beyond the three-year period
because with or without the required documents, the CIR has the power to
make assessments based on the best evidence obtainable.
4.) MAPULO MINING ASSOCIATION and E.V. CHAVEZ & ASSOCIATES,
represented by ANTONIO M. CHAVEZ, petitioners, vs. HON. FERNANDO
LOPEZ, in his official capacity as the SECRETARY OF AGRICULTURE AND
NATURAL RESOURCES; HON. FERNANDO S. BUSUEGO, JR., in his official
capacity as the DIRECTOR OF MINES; and PROJECTS & VENTURES, INC.,
respondents.
This is a petition under Section 61 of the Mining Act (C.A. NO. 137), as
amended by R.A. No. 4388, for review of the 24 March 1969 decision of
then Secretary of the Department of Agriculture and Natural Resources
(DANR), Hon. Fernando Lopez, in DANR Case No. 3359 entitled Mapulo
Mining Association and E.V. Chavez & Associates versus Projects &
Ventures, Inc., 1 affirming the 5 July 1968 Order of the Director of the
Bureau of Mines, Hon. Fernando S. Busuego, Jr., which dismissed

petitioners' adverse claim against private respondent's Application For

Lease of Mining Claims over certain mineral lands located at Taysan,
Batangas, principally on the ground that said claim was filed one (1) day
after the expiration of the period within which to do so pursuant to Section
72 of the Mining Act.
FACTS:
In 1940, Eliseo Chavez and his wife, Lucia B. Mercado, located a
limestone mining claim (then known as the San Jose Placer Claim)
over a piece of registered private land situated at Barrio Mapulo,
Taysan, Batangas with an area of 12.4469 hectares. The said land is
covered by Original Certificate of Title (OCT) No. RO-174(0-510). On
6-12 and 18-27 March 1943, the lease survey of the placer claim
was undertaken by then Assistant Mineral Land Surveyor of the
Bureau of Mines, Mr. Julian Lagman; on 5 July 1943, then Director of
Mines, Hon. Quirico A. Abadilla, approved the survey plan (Pla-163)
prepared by the former. Under a temporary permit to extract
minerals issued to them by the Director of Mines on 3 February
1943, spouses extracted and mined limestone from the land.
Subsequently, the Mineral Lands and Administrative Division of the
Bureau of Mines declared as abandoned this claim of Mr. Chavez
due to his failure to comply with requirements. Thereafter, the
Mapulo Mining Association, petitioner herein, relocated the area
through Antonio Chavez on 16-22 December 1963 and registered it
as the Mapulo Placer Mining Area with the Office of the Mining
Recorder (Register of Deeds) of Batangas on 22 January 1964.
On 4 February 1964, the Mapulo Mining Association filed an
application for a mining lease, which was docketed as PLA-V-1136.
On 26-30 November 1963 and 1-4 December 1963, petitioner E.V.
Chavez & Associates located mining claims known as "Chavez I"
and "Chavez II" inside private agricultural lands belonging to
several individuals. On 5 December 1963, the corresponding
declarations of location were registered in the Office of the Mining
Recorder of Batangas. An application for mining lease over the
claims was filed on 25 August 1967.
Upon the other hand, on 6-10 June 1966, private respondent
Projects & Ventures, Inc. (PROVEN) located mining claims known as
"BAT 40, 41, 60, 22, 23, 38, 37, 44, 57, 61, 62, 63, 64, 39, 42. 58,
59, 43, and 24" over an area embraced by petitioners' mining
claims.
On 2 August 1967, petitioners filed with the Bureau of Mines an
application for an order of lease survey of the "Mapulo Placer

Claim," "Chavez I" and "Chavez II" mining claims. This application
was denied on the ground that said claims are in conflict with the
claims of the private respondent.
On 29 August 1967, petitioners filed an Adverse Claim and/or
Opposition to the Issuance of Mining Lease dated 28 August 1967.
Private respondent, on 20 October 1967, filed a Motion to Dismiss
petitioners' adverse claim on the ground that the same was filed
one (1) day late.
On 20 November 1967, petitioners opposed the motion to dismiss
contending that: (1) Section 72 of the Mining Act, as amended,
requiring the publication of the notice of mining lease application in
the provincial newspaper, has not yet been complied with and so,
therefore, there is no publication deadline to speak of; (2) the issues
of the Official Gazette dated 7, 14 and 21 August 1967, where
private respondent's notice of application was inserted, were
actually released to the public only on 5, 19 and 29 September
1967, respectively; (3) private respondent's mining claims were
located in violation of Sections 28(d) and 60 of the Mining Act as the
same had already been previously located by other parties; and (4)
private respondent's declarations of location are fraudulent as they
are mere table locations, no actual location having been performed.
On 5 July 1968, the Director of Mines dismissed petitioners' adverse
claim on the ground that: (1) the publication of private respondent's
notice of filing of applications for lease in a provincial newspaper is
not necessary; (2) with respect to the publication in the Official
Gazette, what is controlling is not the date of the actual release but
rather the date appearing thereon; and (3) petitioners are guilty of
laches in filing their adverse claim only on 29 August 1967.
On 25 July 1968, petitioners moved for a reconsideration of the
Order but the same was later denied.
ISSUES:
1.) Whether or not there was valid and sufficient publication of the
notice of private respondent's application for a mining lease over its
claims; and
2.) Assuming that there was, whether or not petitioners' Adverse Claim
and/or Opposition to such application was seasonably filed.
RULING: The petition is GRANTED. The Decision of the then Secretary of
Agriculture and Natural Resources of 24 March 1969 in DANR Case No.
3359 affirming the Order of the then Director of the Bureau of Mines of 5
July 1968 in Mines Administrative Case No. V-417 is SET ASIDE and the
Adverse Claim and/or Opposition filed by petitioners is REINSTATED.

REASONING:
1.) The Court agrees with the petitioner stating that there was no
publication of the notice in a newspaper published in the
municipality or province in which the mining claim was located.
Section 72 of the Mining Act provides, inter alia, that:
Upon receipt of the application, and provided that the requirements of this
Act have been substantially complied with, the Director of the Bureau of
Mines shall publish a notice that such application has been made, once a
week for a period of three consecutive weeks, in the Official Gazette and
in two newspapers, one published in Manila either in English or Spanish,
and the other published in the municipality or province in which the
mining claim is located, if there is such newspaper, otherwise, in the
newspaper published in the nearest municipality or province. . . .
There was no publication, however, of the notice in a newspaper published
in the municipality or province in which the mining claim was located, i.e.,
in Batangas. It is not denied that at that time, there were two (2) weekly
newspapers in Batangas, namely the People's Courier and The Batangas
Reporter. All that respondent Director of Mines could say in his challenged
Order of 5 July 1968 is that "We are not aware of the publication in
Batangas of such newspapers." This non-awareness does not mean that
the newspapers do not in fact exists; besides, the petitioners presented
him with certifications issued by the Circulation Manager of the People's
Courier (Exh. "5") and the Editor of The Batangas Reporter (Exh. "4")
attesting to the existence of said periodicals.
And even granting for the sake of argument that these two (2) local
newspapers do not exist, the fact remains that there was still no
publication of the notice in a newspaper published in the nearest
municipality or province.
Petitioners maintain that publication in a newspaper published in the
municipality or province where the claims are located, if there be such a
newspaper, or in a newspaper published in the nearest municipality or
province, is mandatory. The Court agrees with petitioners that the
publication requirements prescribed in Section 72 of the Mining Act are
mandatory and that substantial compliance therewith is not enough. Such
mandatory character is obvious from the Section itself.
It is evident that the newspaper first mentioned refers to a periodical
published in Manila and circulated in the Philippines while the second
refers to a local newspaper. Publication in one does not mean that the
applicant can dispense with publication in the other. Otherwise, it would
have been absurd, nay ridiculous, for the law to require publication in both
newspapers in addition to publication in the Official Gazette. The
legislature certainly abhors absurdity. Corollarily, courts should not give a

statute a meaning that would lead to absurdity. 39 Besides, Section 72

imposes upon the Director of Mines the duty, "[u]pon receipt of the
application, and provided that the requirements of this Act have been
complied with," to publish the notice in the Official Gazette and in the said
two (2) newspapers. The language of the mandate is undeniably clear and
unequivocal. It should be taken to mean exactly what it says:
. . . It is the rule in statutory construction that if the words and phrases of
a statute are not obscure or ambiguous, its meaning and the intention of
the legislature must be determined from the language employed, and,
where there is no ambiguity in the words, there is no room for
construction (Black on Interpretation of Laws, sec. 51). The courts may
not speculate as to the probable intent of the legislature apart from the
words (Hondoras vs. Soto, 8 Am. St., Rep. 744). The reason for the rule is
that the legislature must be presumed to know the meaning of words, to
have used words advisedly and to have expressed its intent by the use of
such words as are found in the statute (50 Am. Jur. p. 212).
Considering then that there was no publication in a newspaper published
in the municipality or province where the subject claims are located
Batangas despite the existence of two (2) weekly newspapers therein, it
is clear that there was non-compliance with Section 72 of the Mining Act
and that public respondents acted with grave abuse of discretion in
holding that the publication in the Philippines Herald, El Debate and the
Official Gazette was sufficient.
STATUTES GRANTING PRIVILIGES
1. CIR v. PLDT
Facts:
PLDT is a grantee of a franchise under Republic Act (R.A.) No. 7082 to
install, operate and maintain a telecommunications system throughout the
Philippines. For equipment, machineries and spare parts it imported for its
business. PLDT paid the following (a) compensating tax,advance sales tax
and other internal revenue taxes. For similar importations, PLDT paid
value-added tax (VAT).
On March 15, 1994, PLDT addressed a letter to the BIR seeking a
confirmatory ruling on its tax exemption privilege under Section 12 of
R.A. 7082, which reads:
Provision:
Sec. 12.The grantee . . . shall be liable to pay the same taxes on their real
estate, buildings, and personal property, exclusive of this franchise, as

other persons or corporations are now or hereafter may be required by law

to pay. In addition thereto, the grantee, . . . shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the telephone or
other telecommunications businesses transacted under this franchise by
the grantee, its successors or assigns, and the said percentage shall
be in lieu of all taxes on this franchise or earnings thereof:
The BIR responded :
The "in lieu of all taxes" provision under Section 12 of RA 7082
clearly exempts PLDT from all taxes including the 10% value-added tax
(VAT) prescribed by Section 101 (a) of the same Code on its importations
of equipment, machineries and spare parts necessary in the conduct of its
business covered by the franchise, except the aforementioned
enumerated taxes for which PLDT is expressly made liable.
In view thereof, this Office . . . hereby holds that PLDT, is exempt
from
VAT on its importation of equipment, machineries and spare parts . .
.needed in its franchise operations.
Armed with the foregoing BIR ruling, PLDT filed on December 2, 1994 a
claim for tax credit/refund of the VAT, compensating taxes, advance sales
taxes and other taxes it had been paying "in connection with its
importation of various equipment, machineries and spare parts needed
for its operations".
CTA granted PLDTs petition.
Petitioners claim: The BIR Commissioner excepts. He submits that the
exempting "in lieu of all taxes" clause covers direct taxes only, adding that
for indirect taxes to be included in the exemption, the intention to include
must be specific and unmistakable. He thus faults the Court of Appeals for
erroneously declaring PLDT exempt from payment of VAT and other
indirect taxes on its importations. To the Commissioner, PLDT's claimed
entitlement to tax refund/credit is without basis inasmuch as the 3%
franchise tax being imposed on PLDT is not a substitute for or in lieu of
indirect taxes.
Issue: WON "in lieu of all taxes " clause found in Section 12 of PLDT's
franchise (R.A. 7082) covers all taxes, whether direct or indirect.

Held: NO. TAX EXEMPTIONS; STATUTES GRANTING TAX EXEMPTIONS MUST

BE CONSTRUED STRICTLY AGAINST THE TAXPAYER AND LIBERALLY IN
FAVOR OF THE TAXING AUTHORITY. Time and again, the Court has
stated that taxation is the rule, exemption is the exception. Accordingly,
statutes granting tax exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favour of the taxing authority. To him,
therefore, who claims a refund or exemption from tax payments rests the
burden of justifying the exemption by words too plain to be mistaken and
too categorical to be misinterpreted. . . . It cannot be overemphasized that
tax exemption represents a loss of revenue to the government and must,
therefore, not rest on vague inference. When claimed, it must be strictly
construed against the taxpayer who must prove that he falls under the
exception. And, if an exemption is found to exist, it must not be enlarged
by construction, since the reasonable presumption is that the state has
granted in express terms all it intended to grant at all, and that, unless the
privilege is limited to the very terms of the statute the favor would be
extended beyond dispute in ordinary cases.
[T]he clause "in lieu of all taxes" in Section 12 of RA 7082 is immediately
followed by the limiting or qualifying clause "on this franchise or earnings
thereof", suggesting that the exemption is limited to taxes imposed
directly on PLDT since taxes pertaining to PLDT's franchise or earnings are
its direct liability. Accordingly, indirect taxes, not being taxes on PLDT's
franchise or earnings, are outside the purview of the "in lieu" provision. If
we were to adhere to the appellate court's interpretation of the law that
the "in lieu of all taxes " clause encompasses the totality of all taxes
collectible under the Revenue Code, then, the immediately following
limiting clause "on this franchise and its earnings" would be nothing more
than a pure jargon bereft of effect and meaning whatsoever. Needless to
stress, this kind of interpretation cannot be accorded a governing sway
following the familiar legal maxim redendo singula singulis meaning, take
the words distributively and apply the reference. Under this principle, each
word or phrase must be given its proper connection in order to give it
proper force and effect, rendering none of them useless or superfluous.
2. DEL MAR vs. PAGCOR
3. REPUBLIC OF THE PHILIPPINES vs. KERRY LAO ONG
FACTS:

Respondent Ong filed a petition for naturalization. He is a Chinese

citizen registered as a resident alien and possesses an alien

certificate of registration and a native-born certificate of residence

from the Bureau of Immigration. He has been continuously and
permanently residing in the Philippines from birth up to present.
He married Griselda Yap who is also a Chinese citizen. They have
four children who were all born and raised in the Philippines.
Ong alleged in his petition that he has been a businessman
business manager" since 1989, earning an average annual
income of P150,000.00. However, when he testified, he said
that he has been a businessman since he graduated from
college in 1978. He did not specify or describe the nature of
his business
He presented a health certificate to prove that he is of sound
physical and mental health and has no criminal record or pending
criminal charges.
The trial court held :
From the evidence presented by [respondent], this Court
believes and so holds that [respondent] possesses all the
qualifications and none of the disqualifications provided
for by law to become a citizen of the Philippines.
The Republic, through the SolGen, appealed to the CA :
o faulted the trial court for granting Ong's petition despite
his failure to prove that he possesses a known lucrative
trade, profession or lawful occupation as required under
Section 2, fourth paragraph of the Revised Naturalization
Law
o respondent Ong did not prove his allegation that he is a
businessman/business manager earning an average
income of P150,000.00
o Considering that he has four minor children (all
attending exclusive private schools), he has declared no
other property and/or bank deposits, and he has not
declared owning a family home, his alleged income
cannot be considered lucrative.
o respondent Ong is not qualified as he does not possess
a definite and existing business or trade
The appellate court dismissed the Republics appeal:
o It may appear that the respondent has no lucrative
employment. However, it is of judicial notice that the
value of the peso has taken a considerable plunge in
value since that time up to the present. If we consider
the income earned at that time, the ages of the

children of the respondent, the employment of his wife,

we can say that there is an appreciable
Petitioners arguments:
o The only pieces of evidence presented by Ong to prove
that he qualifies under Section 2, fourth paragraph of
the Revised Naturalization Law, are his tax returns for
the years 1994 to 1997, which show that Ong earns
from P60,000.00 to P128,000.00 annually. This declared
income is far from the legal requirement of lucrative
income. It is not sufficient to provide for the needs of a
family of six, with four children of school age
o none of these tax returns describes the source of Ong's
income, much less can they describe the lawful nature
Respondents arguments: Ong submits that his tax returns support
the conclusion that he is engaged in lucrative trade

ISSUE:
Whether respondent Ong has proved that he has some lucrative
trade, profession or lawful occupation in accordance with Sec. 2,
paragraph 4, of the Revised Naturalization Law
RULING: NO. Respondent Ong failed to prove that he possesses the
qualification of a known lucrative trade provided in Section 2, fourth
paragraph, of the Revised Naturalization Law

The courts must always be mindful that naturalization

proceedings are imbued with the highest public interest.
Naturalization laws should be rigidly enforced and strictly
construed in favor of the government and against the
applicant. The burden of proof rests upon the applicant to
show full and complete compliance with the requirements of
law.
the controversy revolves around respondent Ong's compliance
with the qualification found in Section 2, fourth paragraph of
the Revised Naturalization Law

Section 2. Qualifications Subject to section four of this Act, any

person
having the following qualifications may become a citizen of the
Philippines by
naturalization:

Fourth. He must own real estate in the Philippines worth not less
than five
thousand pesos, Philippine currency, or must have some known
lucrative
trade, profession, or lawful occupation;

The qualification of "some known lucrative trade, profession, or

lawful occupation" means "not only that the person having the
employment gets enough for his ordinary necessities in life. It
must be shown that the employment gives one an income
such that there is an appreciable margin of his income over
his expenses as to be able to provide for an adequate support
in the event of unemployment, sickness, or disability to work
and thus avoid one's becoming the object of charity or a
public charge."
His income should permit "him and the members of his
family to live with reasonable comfort, in accordance with the
prevailing standard of living, and consistently with the
demands of human dignity, at this stage of our civilization.
It has been held that in determining the existence of a
lucrative income, the courts should consider only the
applicant's income; his or her spouse's income should not be
included in the assessment. The spouse's additional income is
immaterial "for under the law the petitioner should be the one
to possess 'some known lucrative trade, profession or lawful
occupation' to qualify him to become a Filipino citizen."
The applicant's qualifications must be determined as of the
time of the filing of his petition
The Court finds the appellate courts decision erroneous:
o First, it should not have included the spouse's income in
its assessment of Ong's lucrative income.
o Second, it failed to consider the following circumstances
which have a bearing on Ong's expenses vis--vis his
income: (a) that Ong does not own real property; (b)
that his proven average gross annual income around the
time of his application, which was only P106,000.00, had
to provide for the education of his four minor children;
and (c) that Ong's children were all studying in exclusive
private schools in Cebu City.

Third, the CA did not explain how it arrived at the

conclusion that Ong's income had an appreciable margin
over his known expenses.

EXCEPTIONS AND PROVISIOS

1. CIR v CENVOCO
Facts:
- Private respondent Central Vegetable Oil Manufacturing Co.,Inc.
(CENVOCO) is a manufacturer of edible oil and coconut, copra meal cake
and such other coconut related oil subject to the miller tax of 3%.
- In1986, CENVOCO purchased a specified number of containers and
packaging materials for its edible oil from its suppliers, and paid the sales
tax due thereon.
- After an investigation by the Revenue Examiner, CENVOCO was assessed
for deficiency miller's tax in the total amount of P1,575,514.70.
- CENVOCO wrote petition era letter requesting for reconsideration,
contending that the final provision of Section168 of the Tax Code does not
apply to sales tax paid on containers and packaging materials, hence, the
amount paid therefor should have been credited against the miller's tax
assessed against it.
- Petitioner, through a letter, reiterated the validity of its assessment.
- Dissatisfied, CENVOCO filed a petition for review with the Court of Tax
Appeals, which came out with a decision in favor of CENVOCO. Petitioner
appealed to the Court of Appeals.
- The assailed decision was affirmed in toto.
Issue:
Whether or not petitioner can invoke section 168 of the Tax Code to
exempt it from the deficiency millers tax
Held: No
- The law relied upon by the BIR Commissioner as the basis
for not allowing CENVOCO's tax credit is just a proviso of
Section 168 of the old Tax Code.
- The restriction in said proviso, however, is limited only to sales,
miller's or excise taxes paid "On raw materials used in the
milling process."
- The Court ruled that under the rules of statutory construction,
exceptions as a general rule, should be strictly but reasonably
construed. They extend only so far as their language fairly

warrants, and all doubts should be resolved in favor of the general

provisions rather than the exception.
The exception provided for in section 168 of the old Tax Code
should be strictly construed.
The Court also ruled that it is a basic rule of interpretation that
words and phrases used in the statute in the absence of a clear
legislative intent to the contrary, should be given their plain,
ordinary and common usage or meaning.
Cans and tetrapaks are not used in the manufacture of CENVOCO's
finished products which are coconut, edible oil or copra meal cake.
Such finished products are packed in cans and tetrapaks. There is
no error in allowing the sales taxes paid on the containers and
packaging materials of the milled products should be credited
against the miller's tax due thereon.

2. GEOLINGUISTICS, INC. vs. GATEWAY ELECTRONICS

CORPORATION

On January 13, 2010, Congress amended Republic Act No. 910 and passed
Republic Act No. 9946. Republic Act No. 9946 provided for more benefits,
including survivorship pension benefits, among others. The law also
provides a retroactivity provision which
states:
SEC. 3-B. The benefits under this Act shall be granted to all those who
have retired prior to the effectivity of this Act: Provided, That the benefits
shall be applicable only to the members of the Judiciary: Provided, further,
That the benefits to be granted shall be prospective.
Issue: (1) whether Republic Act No. 9946 applies to Judge Gruba; (2)
whether the heirs of Judge Gruba are entitled to the 10-year lump sum
gratuity benefits under Republic Act No. 9946; and (3) whether Mrs. Gruba
is entitled to survivorship pension benefits under the same law.
Held: First two issues in favor of the heirs of Judge Gruba. However, we
deny theapplication for survivorship pension benefits of Mrs. Gruba.

B. STATUTES LIBERALLY CONSTRUED

1. RE: APPLICATION FOR SURVIVORSHIP PENSION BENEFITS
UNDER
REPUBLIC ACT NO. 9946 OF MRS. PACITA A. GRUBA, SURVIVING
SPOUSE OF THE LATE MANUEL K. GRUBA, FORMER CTA ASSOCIATE
JUDGE.
Facts:
This case involves a judge, Manuel K. Gruba, of the Court of Tax Appeals 1
who died while in service. He died at the age of 55 years, two (2) months,
and six (6) days. He died prior to the enactment of Republic Act No. 9946,
which substantially amended the benefits provided in Republic Act No.
910.
The surviving spouse of Judge Gruba, Mrs. Pacita A. Gruba (Mrs. Gruba),
applied for retirement/gratuity benefits under Republic Act No. 910.
In a Resolution dated September 24, 1996, this Court approved the
application filed by Mrs. Gruba. The five-year lump sum retirement benefit
under Republic Act No. 910 was remitted to the Government Service
Insurance System effective
June 26, 1996.

Retirement laws, in particular, are liberally construed in favor of the retiree

because their objective is to provide for the retiree's sustenance and,
hopefully, even comfort, when he no longer has the capability to earn a
livelihood. The liberal approach aims to achieve the humanitarian
purposes of the law in order that efficiency, security, and well-being of
government employees may be enhanced. Indeed, retirement laws are
liberally construed and administered in favor of the persons intended to
be benefited, and all doubts are resolved in favour of the retiree to
achieve their humanitarian purpose.
When Mrs. Gruba applied for benefits under Republic Act No. 9946, she
was not claiming additional gratuity benefits. She was invoking the second
paragraph of
Section 3 of Republic Act No. 910 as amended by Republic Act No.
9946, thus: aSIUpon the death of a Justice or Judge of any court in
the Judiciary, if such Justice or Judge has retired, or was eligible to
retire optionally at the time of death, the surviving legitimate
spouse shall be entitled to receive all the retirement benefits that
the deceased Justice or Judge would have received had the Justice
or Judge not died. The surviving spouse shall continue to receive
such retirement benefits until the surviving spouse's death or
remarriage.

According to Section 3 of Republic Act No. 9946, survivorship pension

benefits are given to surviving spouses of retired judges or justices or
surviving spouses of judges or justices who are eligible to retire optionally.
This means that for the spouse to qualify for survivorship pension, the
deceased judge or justice must (1) be at least 60 years old, (2) have
rendered at least fifteen years in the Judiciary or in any other branch of
government, and in the case of eligibility for optional retirement, (3) have
served the last three years continuously in the Judiciary.
Mrs. Gruba could have been entitled to survivorship pension benefits if her
late husband were eligible to optionally retire at the time of his death.
However, we are faced with a situation where the justice complied only
with two of three requirements for optional retirement. He was only 55
years old, and the law required the age of 60 for eligibility for optional
retirement.
2. OBRA vs. SSS
Petitioner: Maria Buena Obra
Respondent: Social Security System (Jollar Industrial Sales and Servicex,
Inc.)
Facts:
Petitioner filed her claim for death benefits, when his husband
Juanito Buena Obra died from heart attack while driving a dump
truck inside his work compound, under the SSS law and started
receiving pension in Nov. 1988 then she found out in 1998 there are
other benefits under the Law on Employees Compensation (P.D.
626). She completed the necessary documents for filling her claim
for funeral benefits under the P.D. 626 but the SSS denied her
claim.
The petitioner failed to substantiate that the cause of her husbands
death was work related. Filed an appeal to the Court of Appeals.
The appellate court ruled that the petitioners cause of action had
prescribed.
Issue:
Whether the claim of petitioner had already prescribed.
Whether the cause of her husbands death was work related.
Ruling:
No. In the issue of prescriptive period it is governed by P.D. No. 626, or the
Law on Employees Compensation. Art. 201 of P.D. No. 626 and Sec. 6,
Rule VII of the 1987 Amended Rule of Employees Compensation. "No

claim for compensation shall be given due course unless said

claim is filed with the System within three years from the time the
cause of action accrued."
This is the general rule. The exceptions are found in Board Resolution 9308-0068 and ECC Rules of Procedure for the Filing and Disposition of
Employees' Compensation Claims. Board Resolution 93-08-0068 issued on
5 August 1993, states: "A claim for employee's compensation must
be filed with System (SSS/GSIS) within three (3) years from the
time the cause of action accrued, provided however, that any
claim filed within the System for any contingency that may be
held compensable under the Employee's Compensation Program
(ECP) shall be considered as the EC claim itself. The three-year
prescriptive period shall be reckoned from the onset of disability,
or date of death. In case of presumptive death, the three (3)
years limitation shall be counted from the date the missing
person was officially declared to be presumptively dead."
Section 4(b), Rule 3 of the ECC Rules of Procedure for the Filing and
Disposition of Employees' Compensation Claims, reads:
"RULE 3. FILING OF CLAIM
Section 4. When to file.
(a) Benefit claims shall be filed with the GSIS or the SSS within three (3)
years from the date of the occurrence of the contingency (sickness, injury,
disability or death).
(b) Claims filed beyond the 3-year prescriptive period may still be
given due course, provided that:
1. A claim was filed for Medicare, retirement with disability, burial,
death claims, or life (disability) insurance, with the GSIS within
three (3)years from the occurrence of the contingency.
2. In the case of the private sector employees, a claim for
Medicare, sickness, burial, disability or death was filed
within three (3) years from the occurrence of the
contingency.
3. In any of the foregoing cases, the employees' compensation
claim shall be filed with the GSIS or the SSS within a reasonable
time as provided by law.
The petitioner claim for death benefits under the SSS law should be
considered as the Employees' Compensation claim itself. This is but logical
and reasonable because the claim for death benefits which petitioner filed
with the SSS is of the same nature as her claim before the ECC. The SSS is
the same agency with which Employees' Compensation claims are filed.
As correctly contended by the petitioner, when she filed her claim for
death benefits with the SSS under the SSS law, she had already notified

the SSS of her employees' compensation claim, because the SSS is the
very same agency where claims for payment of sickness/disability/death
benefits under P.D. No. 626 are filed. The petitioner was able to file her
claim for death benefits under the SSS law within the three-year
prescriptive period also she has been receiving her pension under the SSS
law since Nov. 1988. The evidence shows that the System failed to
process her compensation claim. Under the circumstances, the petitioner
cannot be made to suffer for the lapse committed by the System. It is the
avowed policy of the State to construe social legislations liberally in favour
of the beneficiaries. 13 This court has time and again upheld the policy of
liberality of the law in favor of labor. Presidential Decree No. 626 itself, in
its Art. 166 reads:
"ART. 166. Policy . The State shall promote and develop a taxexempt employees' compensation program whereby employees
and their dependents, in the event of work-connected disability
or death, may promptly secure adequate income benefit, and
medical or related benefits."
Furthermore, Art. 4 of P.D. No. 442, as amended, otherwise known as the
Labor Code of the Philippines, which P.D. No. 626 forms a part of, reads as
follows:
"ART. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be
resolved in favor of labor."
Yes. The cause of her husbands death was work related the petitioner's
husband's heart disease falls under the second condition of ECC
Resolution No. 432 dated July 20, 1977 which states that the strain of work
that brought about the acute attack must be of sufficient severity and
must be followed within 24 hours by the clinical signs of a cardiac insult to
constitute causal relationship. Petitioner's husband was driving a dump
truck within the company premises where they were stacking gravel and
sand when he suffered the heart attack. He had to be taken down from the
truck and brought to the workers' quarters where he expired at 10:30
a.m., just a few minutes after the heart attack, which is much less than
the 24 hours required by ECC Resolution No. 432. This is a clear indication
that severe strain of work brought about the acute attack that caused his
death.
(b) The strain of work that brings about an acute attack must be
of sufficient severity and must be followed within 24 hours by the
clinical signs of a cardiac insult to constitute causal relationship.
Heavy exertion or emotional stress can trigger a heart attack. The
petitioners husband is under a lot of stress in the workplace. He had to be

taken down from the truck and brought to the workers' quarters where he
expired at 10:30 a.m., just a few minutes after the heart attack, which is
much less than the 24 hours required by ECC Resolution No. 432. This is
a clear indication that severe strain of work brought about the
acute attack that caused his death.
The petition is granted. Decision of the Court of Appeals and the
Resolution are set aside. The SSS is directed to pay the petitioner the
death/funeral benefits under existing law.
P.D. No. 626, as amended, is a social legislation whose primordial
purpose is to provide meaningful protection to the working class
against the hazards of disability, illness and other contingencies
resulting in the loss of income. Thus, as the official agents
charged by law to implement social justice guaranteed by the
Constitution, the ECC and the SSS should adopt a liberal attitude
in favor of the employee in deciding claims for compensability
especially where there is some basis in the facts for inferring a
work connection with the illness or injury, as the case may be. It
is only this kind of interpretation that can give meaning and
substance to the compassionate spirit of the law as embodied in
Article 4 of the New Labor Code which states that all doubts in
the implementation and interpretation of the provisions of the
Labor Code including its implementing rules and regulations
should be resolved in favor of labor.
3. RE: APPLICATION FOR SURVIVORSHIP PENSION BENEFITS
UNDER
REPUBLIC ACT NO. 9946 OF MRS. PACITA A. GRUBA, SURVIVING
SPOUSE OF THE LATE MANUEL K. GRUBA, FORMER CTA ASSOCIATE
JUDGE.
Facts:
This case involves a judge, Manuel K. Gruba, of the Court of Tax Appeals 1
who died while in service. He died at the age of 55 years, two (2) months,
and six (6) days. He died prior to the enactment of Republic Act No. 9946,
which substantially amended the benefits provided in Republic Act No.
910.
The surviving spouse of Judge Gruba, Mrs. Pacita A. Gruba (Mrs. Gruba),
applied for retirement/gratuity benefits under Republic Act No. 910.
In a Resolution dated September 24, 1996, this Court approved the
application filed by Mrs. Gruba. The five-year lump sum retirement benefit

under Republic Act No. 910 was remitted to the Government Service
Insurance System effective
June 26, 1996.
On January 13, 2010, Congress amended Republic Act No. 910 and passed
Republic Act No. 9946. Republic Act No. 9946 provided for more benefits,
including survivorship pension benefits, among others. The law also
provides a retroactivity provision which
states:
SEC. 3-B. The benefits under this Act shall be granted to all those who
have retired prior to the effectivity of this Act: Provided, That the benefits
shall be applicable only to the members of the Judiciary: Provided, further,
That the benefits to be granted shall be prospective.
Issue: (1) whether Republic Act No. 9946 applies to Judge Gruba; (2)
whether the heirs of Judge Gruba are entitled to the 10-year lump sum
gratuity benefits under Republic Act No. 9946; and (3) whether Mrs. Gruba
is entitled to survivorship pension benefits under the same law.
Held: First two issues in favor of the heirs of Judge Gruba. However, we
deny theapplication for survivorship pension benefits of Mrs. Gruba.
Retirement laws, in particular, are liberally construed in favor of the retiree
because their objective is to provide for the retiree's sustenance and,
hopefully, even comfort, when he no longer has the capability to earn a
livelihood. The liberal approach aims to achieve the humanitarian
purposes of the law in order that efficiency, security, and well-being of
government employees may be enhanced. Indeed, retirement laws are
liberally construed and administered in favor of the persons intended to
be benefited, and all doubts are resolved in favour of the retiree to
achieve their humanitarian purpose.
When Mrs. Gruba applied for benefits under Republic Act No. 9946, she
was not claiming additional gratuity benefits. She was invoking the second
paragraph of
Section 3 of Republic Act No. 910 as amended by Republic Act No.
9946, thus: aSIUpon the death of a Justice or Judge of any court in
the Judiciary, if such Justice or Judge has retired, or was eligible to
retire optionally at the time of death, the surviving legitimate
spouse shall be entitled to receive all the retirement benefits that

the deceased Justice or Judge would have received had the Justice
or Judge not died. The surviving spouse shall continue to receive
such retirement benefits until the surviving spouse's death or
remarriage.
According to Section 3 of Republic Act No. 9946, survivorship pension
benefits are given to surviving spouses of retired judges or justices or
surviving spouses of judges or justices who are eligible to retire optionally.
This means that for the spouse to qualify for survivorship pension, the
deceased judge or justice must (1) be at least 60 years old, (2) have
rendered at least fifteen years in the Judiciary or in any other branch of
government, and in the case of eligibility for optional retirement, (3) have
served the last three years continuously in the Judiciary.
Mrs. Gruba could have been entitled to survivorship pension benefits if her
late husband were eligible to optionally retire at the time of his death.
However, we are faced with a situation where the justice complied only
with two of three requirements for optional retirement. He was only 55
years old, and the law required the age of 60 for eligibility for optional
retirement.
4. THE COCA-COLA EXPORT CORPORATION vs. CLARITA P. GACAYAN
5. REGIONAL AGRARIAN REFORM ADJUCTION BOARD vs. COURT OF
APPEALS
PRESCRIPTION
1. COMMISSIONER OF INTERNAL REVENUE v. BASF COATING +
INKS PHILS., INC.,
BASF COATING + INKS PHILS., INC was a corporation which was duly
organized under and by virtue of the laws of the Republic of the
Philippines on August 1, 1990 with a term of existence of fifty (50) years.,
Majority of the members of the Board of Directors and the stockholders
representing more than two-thirds (2/3) of the entire subscribed and
outstanding capital stock of herein respondent corporation, resolved to
dissolve the corporation by shortening its corporate term to March 31,
2001. Subsequently, respondent moved out of its address in Las Pias City
and transferred to Carmelray Industrial Park, Canlubang, Calamba,
Laguna.
On June 26, 2001, respondent submitted two (2) letters to the Bureau of
Internal Revenue (BIR) Revenue District Officer of Revenue District Office

(RDO) No. 53, Region 8, in Alabang, Muntinlupa City. The first letter, dated
April 26, 2001, was a notice of respondent's dissolution, in compliance
with the requirements of Section 52(c) of the National Internal Revenue
Code.4 On the other hand, the second letter, dated June 22, 2001, was a
manifestation indicating the submission of various documents supporting
respondent's dissolution, among which was BIR Form No. 1905, which
refers to an update of information contained in its tax registration. 5
Thereafter, in a Formal Assessment Notice (FA N) dated January 17, 2003,
petitioner assessed respondent the aggregate amount of P18,671,343.14
representing deficiencies in income tax, value added tax, withholding tax
on compensation, expanded withholding tax and documentary stamp tax,
including increments, for the taxable year 1999. The FAN was sent by
registered mail on January 24, 2003 to respondent's former address in Las
Pias City.
On March 5, 2004, the Chief of the Collection Section of BIR Revenue
Region No. 7, RDO No. 39, South Quezon City, issued a First Notice Before
Issuance of Warrant of Distraint and Levy, which was sent to the residence
of one of respondent's directors.7
On March 19, 2004, respondent filed a protest letter citing lack of due
process and prescription as grounds. On April 16, 2004, respondent filed a
supplemental letter of protest. Subsequently, on June 14, 2004,
respondent submitted a letter wherein it attached documents to prove the
defenses raised in its protest letters.
The CTA En Banc held that petitioner's right to assess respondent for
deficiency taxes for the taxable year 1999 has already prescribed and that
the FAN issued to respondent never attained finality because respondent
did not receive it.
Petitioners claim: Insofar as respondent's alleged deficiency taxes for
the taxable year 1999 are concerned, the running of the three-year
prescriptive period to assess, under Sections 203 and 222 of the National
Internal Revenue Act of 1997 (Tax Reform Act of 1997) was suspended
when respondent failed to notify petitioner, in writing, of its change of
address, pursuant to the provisions of Section 223 of the same Act and
Section 11 of BIR Revenue Regulation No. 12-85.
Provision/s: Sec 203 of the National Internal Revenue Act
Sec. 203. Period of Limitation Upon Assessment and Collection.
Except as provided in Section 222,internal revenue taxes shall be
assessed within three (3) years after the last day prescribed by
law for the filing of the return, and no proceeding in court without

assessment for the collection of such taxes shall be begun after

the expiration of such period: Provided, That in a case where a return
is filed beyond the period prescribed by law, the three (3)-year period shall
be counted from the day the return was filed. For purposes of this Section,
a return filed before the last day prescribed by law for the filing thereof
shall be considered as filed on such last day.
Sec. 223. Suspension of Running of Statute of Limitations. The
running of the Statute of Limitations provided in Sections 203 and
222 on the making of assessment and the beginning of distraint or levy a
proceeding in court for collection, in respect of any deficiency, shall be
suspended for the period during which the Commissioner is
prohibited from making the assessment or beginning distraint or
levy or a proceeding in court and for sixty (60) days thereafter;
when the taxpayer requests for a reinvestigation which is granted by the
Commissioner; when the taxpayer cannot be located in the address
given by him in the return filed upon which a tax is being
assessed or collected: Provided, that, if the taxpayer informs the
Commissioner of any change in address, the running of the
Statute of Limitations will not be suspended; when the warrant of
distraint or levy is duly served upon the taxpayer, his authorized
representative, or a member of his household with sufficient discretion,
and no property could be located; and when the taxpayer is out of the
Philippines.
In addition, Section 11 of BIR Revenue Regulation No. 12-85 states:
Sec. 11. Change of Address. In case of change of address, the taxpayer
must give a written notice thereof to the Revenue District Officer or the
district having jurisdiction over his former legal residence and/or place of
business, copy furnished the Revenue District Officer having jurisdiction
over his new legal residence or place of business, the Revenue Computer
Center and the Receivable Accounts Division, BIR, National Office, Quezon
City, and in case of failure to do so, any communication referred to in
these regulations previously sent to his former legal residence or business
address as appear in is tax return for the period involved shall be
considered valid and binding for purposes of the period within which to
reply.
Held: Pettion DISMISSED. It is true that, under Section 223 of the Tax
Reform Act of 1997, the running of the Statute of Limitations provided
under the provisions of Sections 203 and 222 of the same Act shall be

suspended when the taxpayer cannot be located in the address given by

him in the return filed upon which a tax is being assessed or collected. In
addition, Section 11 of Revenue Regulation No. 12-85 states that, in case
of change of address, the taxpayer is required to give a written notice
thereof to the Revenue District Officer or the district having jurisdiction
over his former legal residence and/or place of business. However, this
Court agrees with both the CTA Special First Division and the CTA En Banc
in their ruling that the abovementioned provisions on the suspension of
the three-year period to assess apply only if the BIR Commissioner is not
aware of the whereabouts of the taxpayer.
Prescription in the assessment and in the collection of taxes is
provided by the Legislature for the benefit of both the
Government and the taxpayer; for the Government for the
purpose of expediting the collection of taxes, so that the agency
charged with the assessment and collection may not tarry too
long or indefinitely to the prejudice of the interests of the
Government, which needs taxes to run it; and for the taxpayer so
that within a reasonable time after filing his return, he may know
the amount of the assessment he is required to pay, whether or
not such assessment is well founded and reasonable so that he
may either pay the amount of the assessment or contest its
validity in court . . . . It would surely be prejudicial to the interest of the
taxpayer for the Government collecting agency to unduly delay the
assessment and the collection because by the time the collecting agency
finally gets around to making the assessment or making the collection,
the taxpayer may then have lost his papers and books to support his
claim and contest that of the
Government, and what is more, the tax is in the meantime accumulating
interest which the taxpayer eventually has to pay.
Likewise, in Republic of the Philippines v. Ablaza, this Court elucidated
that the prescriptive period for the filing of actions for collection of taxes is
justified by the need to protect law-abiding citizens from possible
harassment. Also, in Bank of the Philippine Islands v. Commissioner of
Internal Revenue, it was held that the statute of limitations on the
assessment and collection of taxes is principally intended to afford
protection to the taxpayer against unreasonable investigations as the
indefinite extension of the period for assessment deprives the taxpayer of
the assurance that he will no longer be subjected to further investigation
for taxes after the expiration of a reasonable period of time. Thus, in
Commissioner of Internal Revenue v. B.F. Goodrich Phils., Inc., this Court

ruled that the legal provisions on prescription should be liberally

construed to protect taxpayers and that, as a corollary, the
exceptions to the rule on prescription should be strictly
construed.
2. SYHUNLIONG vs. RIVERA
Petitioner: Ramon A. Syhunliong
Respondent: Teresita D. Rivera
Facts:
The petitioner is the President of BANFF Realty and Development
Corporation and likewise owns construction, restaurant, and
hospital businesses.
The Respondent is the Accounting Manager of BANFF, who worked
for 3 years then filed a resignation but continued working of the
same year to complete the turnover of papers to Jennifer Lumapas,
who succeeded her.
The respondent filed a complaint against the petitioner before the
National Labor Relations Commissions for unpaid salaries, 13 th to
16th month and incentives, gratuities and tax refund a total of Php
698,150.48
The petitioner filled a complaint for libel against the respondent
because of the text messages the respondent sent to one of
BANFFs official cellular phone held by Lumapas.
Petitioner seeks for the reversal of the CAs decision and resolution.
Issue:
Whether Riveras text message falls within the ambit of a qualified
privileged communication.
Whether the prescription of the crime had set in.
Ruling:
Yes. The petition was denied. Riveras text message falls within the
ambit of a qualified privileged communication since she was speaking in
response to duty (to protect her own interest) and not out of intent to
injure the reputation of Syhunliong. Also there was no unnecessary
publicity of the message beyond that of conveying it to the party
concerned. Lamapas was the one who told Rivera about the delay so
Rivera expressed her grievances to Lumapas and she was the best person
at that time that could help expedite the release of Riveras claims.
Supreme Court ruled that it should be noted that the libellous material
must be viewed as a whole. In order to ascertain the meaning of the
published article the whole of the article must be considered, each phrase
must be construed in the light of the entire publication.

The prescription had set in. There is no merit in the instant

petition of Syhunliong against Rivera since it was filled more than one
year after the allegedly libellous message was sent to Lumapas. Its
institution was made beyond the prescriptive period provided for in Article
90 of the RPC. The Court finds no persuasive reason why Rivera should be
deprived of the benefits accruing from the prescription of the crime
ascribed to her. The plea of prescription should be set up before the
accused pleads to the charge, as otherwise the defense would be deemed
waived, but the rule is not absolute especially when it conflicts with a
substantive provisions of the law, such as that refers to prescription of
crimes. The Supreme Court has only power to promulgate rules
concerning pleadings, practice, and procedure, and the admission to the
practice of law, and cannot cover substantive rights, the rule we
considering cannot be interpreted or given such scope or extent that
would come into conflict or defeat an express provision of our substantive
law. PRESCRIPTION OF THE CRIME IS ALREADY A COMPELLING
REASON FOR THE REASON OF THE COURT TO ORDER THE
DISMISSAL OF THE LIBEL INFORMATION, BUT THE COURT STILL
STRESSES THAT THE TEXT MESSAGE WHICH RIVERA SENT TO
LUMAPAS FALLS WITHIN THE PURVIEW OF A QUALIFIED
PRIVELEGED COMMUNICATION.
Even if the court were to sustain Syhunliongs stance that Rivera
availed of the wrong remedy when she restored to filling a petition for
certiorari before the CA to assail the RTC orders denying the motion to
quash, the result would only prove circuitous. Even if the trial proceeds
and an adverse decision is rendered against Rivera, she can appeal the
same, but the CA and the Supreme Court would still be compelled to order
the dismissal of the information on account of prescription of the crime.

"SEC. 2. Paragraph one of section thirteen of Act Numbered

One hundred and
ninety, entitled 'An Act providing a Code of Procedure in Civil
Actions and Special Proceedings in the Philippine Islands,' is
hereby amended to read as follows: "'
1. Those who have been duly licensed under the laws and
orders of the Islands under the sovereignty of Spain or of
the United States and are in good and regular standing as
members of the bar of the Philippine Islands at the time of
the adoption of this code: Provided, That any person who,
prior to the passage of this Act, or at any time thereafter,
shall have held, under the authority of the United States,
the position of justice of the Supreme Court, judge of the
Court of First Instance, or judge or associate judge of the
Court of Land Registration, of the Philippine Islands, or the
position of Attorney-General, Solicitor-General, Assistant
Attorney-General, assistant attorney in the office of the
Attorney-General, prosecuting attorney for the city of
Manila, assistant prosecuting attorney for the city of Manila,
city attorney of Manila, assistant city attorney of Manila,
provincial fiscal, attorney for the Moro Province, or assistant
attorney for the Moro Province, may be licensed to practice
law in the courts of the Philippine Islands without an
examination, upon motion before the Supreme Court and
establishing such fact to the satisfaction of said court.'"

MANDATORY AND DIRECTORY STATUTES

1. ART 5 OF THE NEW CIVIL CODE
2. In re application of MARIO GUARIA for admission to the bar.
FACTS:
Relying upon the provisions of section 2 of Act No. 1597, the
applicant in this case seeks admission to the bar, without
taking the prescribed examination, on the ground that he holds
the office of provincial fiscal for the Province of Batanes
Section 2 of Act No. 1597, enacted February 28, 1907, is as
follows:

ISSUE:

It is contended that this mandatory construction is imperatively

required in order to give effect to the apparent intention of
the legislator, and to the candidate's claim de jure to have
the power exercised.
It must be confessed that were the inquiry limited strictly to
the provisions of local law touching this matter, the
contentions of the applicant would have great weight. For it is
well settled that in statutory interpretation the word "may"
should be read "shall" where such construction is necessary to
give effect to the apparent intention of the legislator

Whether or not, taken as a whole and viewed in the light of

surrounding circumstances, it can be said that a purpose existed on the
part of the legislator to enact a law mandatory in its character
RULING:
Whether the word "may" in a statute is to be construed as
mandatory and imposing a duty, or merely as permissive and
conferring discretion, is to be determined in each case from
the apparent intention of the statute as gathered from the
context, as well as from the language of the particular
provision.
Applying these canons of construction to the statute under
consideration, and limiting ourselves strictly to the provisions
of local law touching the admission of candidates to the bar,
we might, as we have said, be inclined to give the statute
the mandatory effect which applicant claims should be placed
upon it. But we are of opinion that such a construction is
precluded by the provisions of the Act of Congress enacted
July 1, 1902, which confirm and secure to this court the
jurisdiction therefore conferred upon it.
Prior to the passage of this Act the power and jurisdiction of
this court in relation to the admission of candidates to the bar
of the Philippine Islands had been fixed by the provisions of
the Organic Act (No. 136) and the Code of Civil Procedure (Act
No. 190); and as we understand these provisions this court
was vested thereby with authority, and charged with a duty to
pass upon the "moral character" and the "qualifications and
ability" of all candidates for admission to the bar.
Manifestly, the jurisdiction thus conferred upon this court by
the Commission and confirmed to it by the Act of Congress
would be limited and restricted, and in a case such as that
under consideration wholly destroyed, by giving the word
"may," as used in the above citation from Act No. 1597, a
mandatory rather than a permissive effect. But any Act of the
Commission which has the effect of setting at naught in whole
or in part the Act of Congress of July 1, 1902, or of any Act
of Congress prescribing, defining or limiting the power
conferred upon the Commission is to that extent invalid and
void, as transcending its rightful limits and authority.

In construing a statute enacted by the Philippine Commission

we deem it our duty not to give it a construction which would
be repugnant to an Act of Congress, if the language of the
statute is fairly susceptible of another construction not in
conflict with the higher law. In doing so, we think we should
not hesitate to disregard contentions touching the apparent
intention of the legislator which would lead to the conclusion
that the Commission intended to enact a law in violation of
the Act of Congress.
In construing a doubtful or ambiguous statute, the courts will
presume that it was the intention of the legislature to enact a
valid, sensible, and just law, and one which should change the
prior law no further than may be necessary to effectuate the
specific purpose of the act in question. The construction
should be in harmony with this assumption whenever possible."
"Hence it follows that the courts will not so construe the law
as to make it conflict with the constitution, but will rather put
such an interpretation upon it as will avoid conflict with the
constitution and give it full force and effect, if this can be
done without extravagance. If there is doubt or uncertainty as
to the meaning of the legislature, if the words or provisions of
the statute are obscure, or if the enactment is fairly
susceptible of two or more constructions, that interpretation
will be adopted which will avoid the effect of
unconstitutionality, even though it may be necessary, for this
purpose, to disregard the more usual or apparent import of
the language employed."
Without undue straining of the language used in the statute
under consideration, the word "may" may be construed as
either mandatory or permissive in its effect. But to construe it
as mandatory would bring it in direct conflict with the Act of
Congress, and we conclude therefore, despite the contentions
of the applicant as to the apparent intention of the legislator,
that it should be given its permissive and not its mandatory
effect, and that the true intention of the legislator was to
leave it within the discretion of the court to admit to the bar
without examination the officials mentioned in the Act in any
case wherein the court is otherwise satisfied that they possess
the necessary qualifications.
In the case under consideration, however, it affirmatively
appears that the applicant was not and never had been a

practicing attorney in this or any other jurisdiction prior to the

date of his appointment as provincial fiscal, and it further
affirmatively appears that he was deficient in the required
qualifications at the time when he last applied for admission
to the bar.
3. ACOSTA vs. DAZA
4. PHILIPPINE REGISTERED ELECTRICAL PRACTITIONER, INC. vs.
JULIO FRANCIA, JR.
5. GAUDENCIO GUERRERO v. REGIONAL TRIAL COURT OFILOCOS
NORTE, BR. XVI, JUDGE LUIS B. BELLO, JR., PRESIDING,AND PEDRO
G. HERNANDO,
Facts: Filed by petitioner, GAUDENCIO GUERRERO, as an accion
publiciana
against private respondent, this case assumed another
dimension when it was dismissed by respondent Judge on the ground that
the parties being brothers-in-law the complaint should have alleged that
earnest efforts were first exerted towards a compromise.
Admittedly, the complaint does not allege that the parties exerted earnest
efforts towards a compromise and that the same failed. However, private
respondent Pedro G. Hernando apparently overlooked this alleged defect
since he did not file any motion to dismiss nor attack the complaint on this
ground in his answer. It was only on 7 December 1992, at the pre-trial
conference, that the relationship of petitioner Gaudencio Guerrero and
respondent Hernando was noted by respondent Judge Luis B. Bello, Jr.,
they being married to half-sisters hence are brothers-in-law, and on the
basis thereof respondent Judge gave petitioner five (5) days "to file his
motion and amended complaint" to allege that the parties were very close
relatives, their respective wives being sisters, and that the complaint to be
maintained should allege that earnest efforts towards a compromise were
exerted but failed. Apparently, respondent Judge considered this
deficiency a jurisdictional defect.
Petitioners claim: Guerrero appeals by way of this petition for review
the dismissal by the court a quo. (a) whether brothers by affinity are
considered members of the same family contemplated in Art. 217, par. (4),
and Art. 222 of the New Civil Code, as well as under Sec. 1, par. (j), Rule
16, of the Rules of Court requiring earnest efforts towards a compromise
before a suit between them may be instituted and maintained; and,

Held: Petition granted.The Constitution protects the sanctity of the

family and endeavors to strengthen it as a basic autonomous social
institution. 2 This is also embodied in Art. 149, 3 and given flesh in Art.
151, of the Family Code, which provides:
Art. 151. No suit between members of the same family shall prosper
unless it should appear from the verified complaint or petition that earnest
efforts toward a compromise have been made, but that the same have
failed. If it is shown that no such efforts were in fact made, the case must
be dismissed. This rule shall not apply to cases which may not be the
subject of compromise under the Civil Code.
Considering that Art. 151 herein-quoted starts with the negative
word "No," the requirement is mandatory that the complaint or
petition, which must be verified, should allege that earnest efforts towards
a compromise have been made but that the same failed, so that "[i]f it is
shown that no such efforts were in fact made, the case must be
dismissed."
Further, Art. 151 is contemplated by Sec. 1, par. (j), Rule 16, of the Rules
of Court which provides as a ground for a motion to dismiss "(t)hat the suit
is between members of the same family and no earnest efforts towards a
compromise have been made."
The Code Commission, which drafted the precursor provision in the Civil
Code, explains the reason for the requirement that earnest efforts at
compromise be first exerted before a complaint is given due course
This rule is introduced because it is difficult to imagine a sadder and more
tragic spectacle than a litigation between members of the same family. It
is necessary that every effort should be made toward a compromise
before a litigation is allowed to breed hate and passion in the family. It is
known that a lawsuit between close relatives generates deeper bitterness
than between strangers . . . A litigation in a family is to be lamented far
more than a lawsuit between strangers.
..
But the instant case presents no occasion for the application of the abovequoted provisions. As early as two decades ago, we already ruled in Gayon
v. Gayon that the enumeration of "brothers and sisters" as members of
the same family does not comprehend "sisters-in-law." In that case, then
Chief Justice Concepcion emphasized that "sisters-in-law" (hence, also
"brothers-in-law") are not listed under Art. 217 of the New Civil Code as
members of the same family. Since Art. 150 of the Family Code repeats

essentially the same enumeration of "members of the family," we find no

reason to alter existing jurisprudence on the matter. Consequently, the
court a quo erred in ruling that petitioner Guerrero, being a
brother-in-law of private respondent Hernando, was required to
exert earnest efforts towards a compromise before filing the
present suit.
6. LOKIN vs. COMELEC
7. BOARDWALK BUSINESS VENTURES, INC., petitioner, vs. ELVIRA
A. VILLAREAL (deceased) substituted by Reynaldo P. Villareal, Jr.spouse, Shekinah Marie Villareal-Azugue- daughter, Reynaldo A.
Villareal III-son, Shahani A. Villareal- daughter, and Billy Ray A.
Villareal-son, respondents.
FACTS:
Petitioner Boardwalk Business Ventures, Inc. (Boardwalk) is a
duly organized and existing domestic corporation engaged in
the selling of ready-to-wear (RTW) merchandise.
Respondent Elvira A. Villareal (Villareal) is one of Boardwalk's
distributors of RTW merchandise.
Boardwalk filed an Amended Complaint 5 for replevin against
Villareal covering a 1995 Toyota Tamaraw FX, for the latter's
alleged failure to pay a car loan obtained from the former.
Ruling of the Metropolitan Trial Court:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the
defendant adjudging that the former has the right to the
possession of the subject motor vehicle and for the
latter to pay the costs of the suit.
Villareal moved for reconsideration but failed

Ruling of the Regional Trial Court:

WHEREFORE, the appeal is granted. The assailed
judgment of the lower court is reversed and set aside.
Defendant Villareal has the right of possession to and the
value of subject vehicle described in the complaint.
Hence, plaintiff is directed to deliver the subject vehicle
to defendant or its value in case delivery cannot be
made. The complaint and counterclaim are both
dismissed

Boardwalk filed a Motion for Reconsideration, but the same

was denied by the RTC in a December 14, 2006 Order, which
Boardwalk received on January 19, 2007. On February 5, 2007,
Boardwalk through counsel filed with the Manila RTC a Motion for
Extension of Time to File Petition for Review, praying that it be
granted 30 days, or until March 7, 2007, to file its Petition for
Review. It paid the docket and other legal fees therefor at the Office
of the Clerk of Court of the Manila RTC. On even date, Boardwalk
also filed a Notice of Appeal with the RTC which the said court
denied for being a wrong mode of appeal. On March 7, 2007,
Boardwalk filed through mail its Petition for Review with the CA.

Ruling of the Court of Appeals:

The CA held that Boardwalk erred in filing its Motion for
Extension and paying the docket fees therefor with the RTC. It
should have done so with the CA as required by Section 1 25
of Rule 42 of the Rules of Court. It held that as a result of
Boardwalk's erroneous filing and payment of docket fees, it
was as if no Motion for Extension was filed, and the
subsequent March 7, 2007 filing of its Petition with the
appellate court was thus late and beyond the reglementary 15day period provided for under Rule 42.

The CA added that Boardwalk's prayer for a 30-day extension

in its Motion for Extension was irregular, because the
maximum period that may be granted is only 15 days
pursuant to Section 1 of Rule 42. A further extension of 15
days should only be granted for the most compelling reason
which is not obtaining in the present case
Petitioners Arguments:
Boardwalk invokes the principle that litigations should be
decided on the merits and not on technicalities; that litigants
should be afforded the amplest opportunity for the proper and
just disposition of their causes, free from the constraints of
technicalities.
It claims that it should not be faulted for the error committed
by its counsel's clerk in wrongly filing the Motion for Extension
and paying the docket fees with the RTC Clerk of Court. It
prays that the Court review the merits of its case.

within fifteen (15) days from notice of the decision

sought to be reviewed or of the denial of petitioner's
motion for new trial or reconsideration . . . . Upon
proper motion . . ., the Court of Appeals may grant an
additional period of fifteen (15) days only within which
to file the petition for review. No further extension shall
be granted except for the most compelling reason and in no
case to exceed fifteen (15) days.

As for the defective Verification and Certification of non-forum

shopping, Boardwalk contends that these are formal, not
jurisdictional, requisites which could as well be treated with
leniency. Its subsequent submission of the proper secretary's
certificate should thus have cured the defect.
It adds that the same treatment should be accorded its
subsequent payment of the docket fees with the CA Cashier
and submission of the required annexes and pleadings in
support of its Petition.
It prays the Court to consider these as substantial compliance
with the Rules.

Sec. 2. Form and contents.

The petition shall be . . . accompanied by . . .
copies . . . of the pleadings and other material portions
of the record as would support the allegations of the
petition. The petitioner shall also submit together with the
petition a certification under oath that he has not
theretofore commenced any other action involving the
same issues in the Supreme Court, the Court of Appeals
or different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he
must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has
been filed or is pending before the Supreme Court, the
Court of Appeals, or different divisions thereof, or any
other tribunal or agency, he undertakes to promptly
inform the aforesaid courts and other tribunal or agency
thereof within 5 days therefrom

ISSUE:
Whether or not the rules to effect substantial justice in accordance
with Rule 1, Section 6 of the 1997 Rules of Civil Procedure be liberally
construed; specifically, the assailed resolutions ordering the outright
dismissal of the petition for review due to procedural lapses, in total
disregard of the substantial issues clearly raised thereat, are contrary to
existing rules, law, jurisprudence, and the principle of equity and
substantial justice
RULING: NO

Petitioner's case is not unique, and there is no compelling

reason to accord it the privilege it now seeks.
The right to appeal is neither a natural right nor [is it a
component] of due process. It is a mere statutory privilege,
and may be exercised only in the manner and in accordance
with the provisions of law.
In this case, petitioner must comply with the following
requirements laid down in Rule 42 of the Rules of Court:
Section 1. How appeal taken; time for filing.
A party desiring to appeal from a decision of the
Regional Trial Court rendered in the exercise of its appellate
jurisdiction may file a verified petition for review with
the Court of Appeals, paying at the same time to the
clerk of said court the corresponding docket and other
lawful fees, . . . . The petition shall be filed and served

The Rules also require that the Petition must be verified or

accompanied by an affidavit by which the affiant attests under
oath that he "has read the pleading and that the allegations
therein are true and correct of his personal knowledge or
based on authentic records."

Section 3 of Rule 42 provides that non-compliance "with any

of the foregoing requirements regarding the payment of the
docket and other lawful fees, . . . and the contents of and
the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof."

Records show that petitioner failed to comply with the foregoing

rules

Concededly, this Court in several cases exercised leniency and

relaxed the Rules. However, in this case, petitioner committed
multiple violations of the Rules which should sufficiently
militate against its plea for leniency. As will be shown below,
petitioner failed to perfect its appeal by not filing the Petition
within the reglementary period and paying the docket and
other lawful fees before the proper court. These requirements
are mandatory and jurisdictional.

Section 1, Rule 42 of the Rules of Court specifically states

that payment of the docket fees and other lawful fees should
be made to the clerk of the CA. A plain reading of the Rules
leaves no room for interpretation; it is categorical and explicit.
It was thus grave error on the part of the petitioner to have
misinterpreted the same and consequently mistakenly remitted
its payment to the RTC clerk. Petitioner's subsequent payment
to the clerk of the CA of the docket fees and other lawful fees
did not cure the defect

Petitioner sought an extension of 30 days within which to file

its Petition for Review with the CA. This is not allowed.
Section 1 of Rule 42 allows an extension of only 15 days. "No
further extension shall be granted except for the most
compelling reason . . . ." Petitioner never cited any
compelling reason.

Section 8 of Rule 42 provides that the appeal is deemed

perfected as to the petitioner "upon the timely filing of a
petition for review and the payment of the corresponding
docket and other lawful fees." Undisputably, petitioner's appeal
was not perfected because of its failure to timely file the
Petition and to pay the docket and other lawful fees before
the proper court which is the CA

To stress, the right to appeal is statutory and one who seeks

to avail of it must comply with the statute or rules. The
requirements for perfecting an appeal within the reglementary
period specified in the law must be strictly followed as they

are considered indispensable interdictions against needless

delays.

the perfection of an appeal in the manner and within the

period set by law is not only mandatory but jurisdictional as
well, hence failure to perfect the same renders the judgment
final and executory.

It must be emphasized that since petitioner's right of appeal

is a mere statutory privilege, it was bound to a strict
observance of the periods of appeal, which requirements are
not merely mandatory, but jurisdictional.

8. QUIZON V COMELEC
Facts:
-Petitioner Quizon and Respondent Puno were congressional candidates
during the May 14, 2007 national and local elections.
-Quizon filed a Petition for Disqualification and Cancellation of Certificate
of Candidacy against Puno.
-Quizon alleged that Puno is not qualified to run as candidate in Antipolo
City for failure to meet the residency requirement prior to the day of
election;
-Punos claim in his Certificate of Candidacy (COC) that he is a resident of
1906 Don Celso Tuazon, Valley Golf Brgy. De la Paz, Antipolo City for four
years and six months before May 14, 2007 constitutes a material
misrepresentation since he was in fact a resident of Quezon City
-On April 24, 2007, Quizon filed a Supplement to the petition claiming that
Puno cannot validly be a candidate for a congressional seat in the First
District of Antipolo City since he indicated in his COC that he was running
in the First District of the Province of Rizal which is a different legislative
district.
-Quizon filed a motion for reconsideration with the COMELEC En Banc
which remains unresolved up to this date.
-On June 5, 2007, Quizon filed this Petition for Mandamus alleging that the
COMELEC had not rendered a judgment on the above-mentioned petitions
and that the unreasonable delay in rendering judgment deprived him of
his right to be declared as the winner and assume the position of member
of the House of Representatives
-Puno argues that the petition for mandamus was mooted by the July 31,
2007Resolution of the COMELEC Second Division. He also alleged that the

petition must be dismissed for the act sought to be performed is a

discretionary and not a ministerial duty.
-COMELEC Second Division DISMISSED the instant Petition for
Disqualification and Cancellation of the Certificate of Candidacy of
respondent Roberto V. Puno.
-The COMELEC then continued to state that the respondent is a resident of
the 1st District of Antipolo City, and is thus qualified to runs as Member of
the House of Representatives of the same district.
-The Office of the Solicitor General agrees that the petition for mandamus
was mooted by the July 31, 2007 Resolution of the COMELEC Second
Division. Any question regarding Puno qualifications now pertains to the
House of Representatives Electoral Tribunal (HRET)
Issue:
Whether or not the Petition for Disqualification and Cancellation of the
Certificate of Candidacy of Roberto V. Puno valid?
Ruling : No
-The instant Petition is hereby DISMISSED for lack of merit.
-Respondent is a resident of the 1st District of Antipolo City, and is thus
qualified to run as a Member of the House of Representatives of the same
district.

Section 78 of the Omnibus Election Code 11 provides that

petitions to deny due course or cancel a certificate of candidacy
should be resolved, after due notice and hearing, not later than
fifteen days before the election. In construing this provision
together with Section 6 of R.A. No. 6646 or The Electoral Reforms
Law of 1987, 12 this Court declared in Salcedo II v.COMELEC 13 that
the fifteen-day period in Section 78 is merely directory.
Thus:
If the petition is filed within the statutory period and the
candidate is subsequently declared by final judgment to be
disqualified before the election, he shall not be voted for, and the
votes cast for him shall not be counted. If for any reason a
candidate is not declared by final judgment before an election to be
disqualified and he is voted for and receives the winning number of
votes in such election, the Court or the Comelec shall continue with
the trial and hearing of the action, inquiry, or protest and, upon
motion of the complainant or any intervenor, may during the
pendency thereof order the suspension of the proclamation of such
candidate whenever the evidence of his guilt is strong. The fifteenday period in section 78 for deciding the petition is merely directory.