lca lines | volume iv, issue no. 2

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Serving your purpose, realizing your

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Volume IV Issue No. 2 F E B R U A R Y 2 0 1 2

BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances 1

Jurisprudence 6

JL’s Corner 15

REVENUE REGULATIONS NO. 1-2012 is-sued on February 20, 2012 requires the mandatory submission of Quarterly Summary List of Sales and Purchases (SLSP) by all Value-Added Tax (VAT) registered taxpayers, thereby amending Section 4.114-3 of Reve-nue Regulations (RR) No. 16 -2005, as amended, otherwise known as the Consoli-dated Value-Added Tax Regulations of 2005.

Section 4.114-3 (a) and (e)(7) is hereby modified to read as follows:

―SECTION 4.114-3. Submission of Quar-terly Summary List of Sales and Purchas-es. —

a. Persons Required to Sub-mit Summary Lists of Sales/Purchases. —

(1) Persons Required to Submit Summary Lists of Sales. — All persons liable for VAT such as manufacturers, wholesal-ers, service-providers, among others are re-quired to submit Sum-mary List of Sales. (2) Persons Required to Submit Summary Lists of Purchases. — All per-sons liable for VAT such as manufacturers, ser-vice-providers, among others are required to file Summary List of Pur-chases. x x x

e. Rules in the Presentation of the Required Information in the Summary Schedules. —

x x x

(7) The Quarterly Summary List of Sales and Purchases shall be submitted through Compact Disk-Recordable (CDR) medium fol-lowing the format pro-vided in Subsection (g) hereof. ―

All reference to ―magnetic form 3.5-inch floppy diskettes‖ in RR No. 16-2005 shall henceforth refer to ―Compact Disk-Recordable (CDR)‖.

This Revenue Regulations shall take ef-

fect on January 1, 2012.

REVENUE REGULATIONS NO. 2-2012

issued on February 20, 2012 prescribes

the tax administration treatment of petrole-

um and petroleum products imported into

the Philippines including those coming in

through freeport zones and economic

zones and registration of all storage tanks,

facilities, depots and terminals.

The Value-Added Tax (VAT) and Excise

Taxes which are due on all petroleum and

petroleum products that are imported and/

or brought directly from abroad to the Phil-

ippines, including Freeport and Economic

zones, shall be paid by the importer there-

of to the Bureau of Customs (BOC).

The subsequent exportation or sale/delivery

of these petroleum or petroleum products to

registered enterprises enjoying tax privileges

within the Freeport and Economic zones, as

well as the sale of said goods to persons

engaged in international shipping or interna-

tional air transport operations, shall be sub-

ject to 0% VAT. With respect to the VAT paid

on petroleum or petroleum products by the

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Serving your purpose, realizing your dreams….

Volume IV Issue No. 2 F E B R U A R Y 2 0 1 2

BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances 1

Jurisprudence 6

JL’s Corner 15 importer on account of aforesaid 0% VAT

transactions/entities and the Excise Taxes

paid on account of sales to international carri-

ers of Philippine or Foreign Registry for use or

consumption outside the Philippines or ex-

empt entities or agencies covered by tax trea-

ties, conventions and international agree-

ments for their use or consumption (covered

by Certification in such entity’s favor), as well

as entities which are by law exempt from indi-

rect taxes, the importer may file a claim for

credit or refund with the BOC. The BOC shall

process the claim for refund, subject to the

favorable endorsement of the BIR, in accord-

ance with existing rules and procedures: Pro-

vided, that no claim for refund shall be granted

unless it is properly shown to the satisfaction

of the BIR that said petroleum or petroleum

products have been sold to a duly registered

locator and have been utilized in the regis-

tered activity/operation of the locator, or that

such have been sold and have been used for

international shipping or air transport opera-

tions, or that the entities to which the said

goods were sold are statutorily zero-rated for

VAT, and/or exempt from Excise Taxes.

In the event that the said Freeport/Economic

zone-registered enterprise shall subsequently

sell/introduce the petroleum or petroleum prod-

ucts, or part of the volume thereof, into the

customs territory (except sales of fuel for use

in international operations) or another Free-

port/Economic zone-registered enterprise not

enjoying tax privileges, no refund for Excise

Taxes shall be granted to the importer for the

product sold. In any event, the possessor of

petroleum or petroleum products must be able

to present sufficient evidence that the Excise

Taxes due thereon have been paid, otherwise

the Excise Taxes due on said goods shall be

collected from said possessor/user.

In case of sale/introduction of petroleum and

petroleum products, or part of the volume

thereof, by a Freeport/Economic zone-

registered enterprise, or part/volume thereof,

into the customs territory or to a Freeport/

Economic zone-registered enterprise not en-

joying tax privileges, or any sale to an entity

not enjoying 0% VAT rate, the seller shall be

liable for 12% VAT. In this instance, no refund

for VAT shall be allowed the importer or an

assessment for VAT shall be issued to the said

importer, if the refund has already been grant-

ed, and another assessment for VAT shall be

made against the seller.

For each and every importation of petroleum

and petroleum products, the importer thereof

shall secure the prescribed ATRIG from the

BIR’s Excise Tax Regulatory Division (ETRD),

and pay the VAT and Excise Taxes, as com-

puted, before the release thereof from the

BOC’s custody. In case of subsequent sale/

introduction to customs territory by a Freeport/

Economic zone-registered enterprise of petro-

leum and petroleum products, the importer

shall secure the necessary Withdrawal Certifi-

cate.

For Excise Tax purposes, all importers of pe-

troleum and petroleum products shall secure a

Permit to Operate with the BIR’s ETRD. Such

permit shall prescribe the appropriate terms

and conditions which shall include, among oth-

ers, the issuance of a Withdrawal Certificate

and the submission of liquidation reports, for

the Permitee’s strict compliance.

All tank facilities, depots or terminals through-

out the Philippines, including those located

within the Freeport Zones as well as within the

Economic Zones shall be registered by the

owners, lessors or operators thereof with the

appropriate BIR Office having jurisdiction over

the said facilities as follows:

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Volume IV Issue No. 2 F E B R U A R Y 2012

BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances 1

Jurisprudence 6

JL’s Corner 15

In cases where said facilities will be used

for the storage of petroleum or petroleum

products or other goods subject to Ex-

cise Taxes, a Permit to Operate from the

BIR shall be issued. Said permit shall

prescribe the appropriate terms and con-

ditions which shall include, among oth-

ers, the maintenance of Official Register

Books or their equivalent, joint supervi-

sion over the facilities with the BIR,

through the assignment of Revenue Of-

ficers, and stocktaking/physical inventory

taking of petroleum and petroleum prod-

ucts stored therein. The monitoring re-

quirements prescribed in this Section

and in the permit granted shall likewise

be strictly observed.

A facility which will not be used for stor-

age of petroleum or petroleum products

or other articles subject to Excise Taxes,

if satisfactorily established to the BIR, will

be issued a Permit to Operate Exempt

Facility. This notwithstanding, both Per-

mit to Operate and Permit to Operate

Exempt Facility should categorically state

the goods stored therein, and should any

changes be planned, an application for

new permit should be made.

All owners, lessors or operators of tank

facilities, depots or terminals shall submit

the required documents specified in the

Regulations to the appropriate BIR offic-

es within fifteen (15) days from the date

of effectivity of these Regulations.

REVENUE REGULATIONS NO. 3-2012

issued on February 20, 2012 prescribes

the effectivity of threshold amounts for

sale of residential lot, sale of house and

lot, lease of residential unit and sale or

lease of goods or properties or perfor-

mance of services covered by Section

109 (P), (Q) and (V) of the Tax Code of

1997, as amended.

The new threshold amounts specified in

Revenue Regulations (RR) No. 16-2011

shall be made effective for instrument of

sale (whether the instrument is nominat-

ed as a deed of absolute sale, deed of

conditional sale or otherwise) is executed

and notarized on or after January 1,

2012.

Thus, pertinent portions of Section 4.106

-3 of RR No. 16-2005, as amended by

RR No. 16-2011 should properly be

worded as follows:

Revenue Re-

gions Where

the Storage

Facilities are

Located

Appropriate BIR Office

Where to Register

Revenue Re-

gion Nos. 4, 5,

6, 7, 8, 9 and

10

Excise Tax Regulatory Di-

vision, National Office

Revenue Re-

gion Nos. 1, 2

and 3

Excise Tax Area I-Baguio

City

Revenue Re-

gion Nos. 11

and 12

Excise Tax Area III-

Bacolod

Revenue Re-

gion Nos. 13,

14

Excise Tax Area IV-Cebu

Revenue Re-

gion Nos. 15

and 19

Excise Tax Area V-Davao

Revenue Re-

gion Nos. 16,

17 and 18

Excise Tax Area VI-

Cagayan de Oro

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BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances 1

Jurisprudence 6

JL’s Corner 15 "Section 4.106-3 Sale of Real Properties.

— Sale of real properties held primarily

for sale to customers or held for lease in

the ordinary course of trade or business

of the seller shall be subject to VAT.

Sale of residential lot with gross selling

price exceeding P 1,919,500.00, residen-

tial house and lot or other residential

dwellings with gross selling price exceed-

ing P 3,199,200.00, where the instrument

of sale (whether the instrument is nomi-

nated as a deed of absolute sale, deed of

conditional sale or otherwise) is executed

and notarized on or after January 1,

2012 and shall be subject to twelve

percent (12%) output VAT.

However, for instruments of sale exe-

cuted and notarized on or after Nov. 1,

2005 but prior to January 1, 2012, the

threshold amounts should appropriate-

ly be P 1,500,000 and P 2,500,000 re-

spectively, and excess thereof shall be

subject to ten percent (10%) output

VAT, and starting Feb. 1, 2006, to

twelve percent (12%) output VAT.

x x x x x x x x "

Moreover, Sections 4.109.-1 (B)(1), (p)(4) of

RR No. 16-2005, as amended by RR No. 16-

2011 should properly be worded as follows:

―(p) The following sales of real properties

are exempt from VAT, namely:

(4) Sale of residential lot valued at One

Million Nine Hundred Nineteen Thou-

sand Five Hundred Pesos (P

1,919,500.00) and below, or house & lot

and other residential dwellings valued at

Three Million One Hundred Ninety-Nine

Thousand Two Hundred Pesos (P

3,199,200.00) and below where the in-

strument of sale/transfer/ disposition was

executed and notarized on or after Jan-

uary 1, 2012;

However, for instruments executed

and notarized on or after Nov. 1, 2005

but prior to January 1, 2012, the

threshold amounts should appropri-

ately be P 1,500,000 and P 2,500,000

respectively.

Provided, That every three (3) years

thereafter, the amounts stated herein

shall be adjusted to its present value

using the Consumer Price Index, as pub-

lished by the National Statistics Office

(NSO); Provided, further, that such ad-

justment shall be published through rev-

enue regulations to be issued not later

than March 31 of each year;

x x x x x x x x x "

This Revenue Regulations shall take effect

starting January 1, 2012.

REVENUE MEMORANDUM CIRCULAR

NO. 7-2012 issued on February 24, 2012

circularizes relevant portion of BIR Ruling

No. 023-10 dated August 4, 2010 concern-

ing the Capital Gains Tax (CGT) and Docu-

mentary Stamp Tax (DST) liability of a non-

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BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances 1

Jurisprudence 6

JL’s Corner 15 stock, non-profit organization on its real

property disposition. BIR employees en-

gaged in the processing and review of

One-Time Transactions are enjoined to

assess the appropriate CGT and DST, if

warranted, on real property disposition by

a non-stock, non-profit organization.

REVENUE MEMORANDUM CIRCULAR

NO. 8-2012 issued on February 29, 2012

circularizes relevant excerpts from the En

Banc Supreme Court Decision in the case

of Philippine Amusement and Gaming

Corporation (PAGCOR) vs. the Bureau of

Internal Revenue, G.R. No. 172087 dated

March 15, 2011, concerning the liability of

PAGCOR to corporate Income Tax and

the revocation of the pertinent provi-

sions of Revenue Regulations (RR) No.

16-2005 relative to the imposition of

10% Value-Added Tax (VAT) on

PAGCOR.

PAGCOR failed to prove that it is still ex-

empt from the payment of corporate In-

come Tax, considering that Section 1 of

Republic Act (RA) No. 9337 amended

Section 27(c) of the National Internal Rev-

enue Code of 1997 by omitting PAGCOR

from the exemption. The legislative intent

is to require PAGCOR to pay Income Tax.

Since PAGCOR is exempt from VAT under

RA No. 9337, the BIR exceeded its authori-

ty in subjecting PAGCOR to 10% VAT un-

der RR No. 16-2005; hence the said regu-

latory provision is nullified.

Subsequently, the Court En Banc Resolu-

tion dated May 31, 2011 denied with finality

the separate motions for partial reconsider-

ation filed by the BIR and PAGCOR since

―no substantial arguments were presented

to warrant the reversal of the questioned

Decision‖.

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JURISPRUDENCE

BANK OF LUBAO, INC., Petitioner, vs.

ROMMEL J. MANABAT and the NATION-AL LABOR RELATIONS COMMIS-

SION, Respondents. G.R. No. 188722 February 1, 2012

FACTS:

Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural bank, as a Market Collector. Subsequently, the re-spondent was assigned as an encoder at the Bank of Lubao’s Sta. Cruz Extension Office, which he manned together with two other em-ployees, teller Lingad and May O. Manasan. As an encoder, the respondent’s primary duty is to encode the clients’ deposits on the bank’s com-puter after the same are received by Lingad.

In November 2004, an audit on the Bank

conducted by the petitioner revealed that there was a misappropriation of funds in the amount of P3,000,000.00, more or less. The respondent then was asked to explain in writing the discrep-ancies that were discovered during the audit.

On December 11, 2004, an administra-tive hearing was conducted by the bank’s inves-tigating committee where the respondent was further made to explain his side. Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error corrections in the bank’s computer.

On August 9, 2005, the petitioner filed

several criminal complaints for qualified theft against Lingad and the respondent. Thereafter, citing serious misconduct tantamount to willful breach of trust as ground, it terminated the re-spondent’s employment effective September 1, 2005.

On September 26, 2005, the respondent

filed a Complaint for illegal dismissal and to bol-ster his claim that there was no valid ground for his dismissal, averred that the charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad. The respondent sought an award for separation pay, full backwages, 13th month pay for 2004 and moral and exemplary damag-es.

For its part, the petitioner insists that the dismissal of the respondent is justified, asserting the February 14, 2006 Audit Report which con-firmed the participation of the respondent in the alleged misappropriations. Likewise, the petition-er asserted that the dismissal of the qualified theft charge against the respondent is immateri-al to the validity of the ground for the latter’s dis-missal.

The Labor Arbiter (LA) rendered a deci-

sion sustaining the respondent’s claim of illegal dismissal thus ordering the petitioner to reinstate the respondent to his former position and award-ing the latter backwages

The petitioner appealed the foregoing

disposition to the NLRC. The NLRC rendered a

Decision affirming the Decision of the LA.

Subsequently, the petitioner filed a Peti-tion for Certiorari with the CA.

The CA agreed with the LA and the

NLRC that the petitioner failed to establish by substantial evidence that there was indeed a valid ground for the respondent’s dismissal. Nevertheless, the CA held that the petitioner should pay the respondent separation pay since the latter did not pray for reinstatement before the LA and that the same would be in the best interest of the parties considering the animosity and antagonism that exist between them. ISSUES:

1. Whether or not the CA erred in ordering the

petitioner to pay the respondent separation pay in lieu of reinstatement.

2. Whether the respondent is entitled to payment of backwages.

HELD: 1. No, the CA did not err in ordering the pe-

titioner to pay the respondent separation pay in lieu of reinstatement.

Under the law and prevailing jurispru-

dence, an illegally dismissed employee is enti-tled to reinstatement as a matter of right. How-

ever, if reinstatement would only exacerbate the tension and strained relations between the par-ties, or where the relationship between the em-


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JURISPRUDENCE

ployer and the employee has been unduly strained by reason of their irreconcilable differ-ences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstate-ment. The law on reinstatement is provided for under Article 279 of the Labor Code of the Phil-ippines: Article 279.Security of Tenure. - In cases of reg-ular employment, the employer shall not termi-nate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstate-ment without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the effi-ciency and productivity of the employee con-cerned Here, we agree with the CA that the rela-tions between the parties had been already strained thereby justifying the grant of separa-tion pay in lieu of reinstatement in favor of the respondent. First, the petitioner’s filing of various criminal complaints against the respondent for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pen-dency of the instant case for more than six years, had caused strained relations between the parties.

Second, considering that the respond-ent’s former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the petitioner to be ordered to maintain

the former in its employ since it may only inspire vindictiveness on the part of the respondent. 2. Yes, the respondent is entitled to payment of back wages.

The petitioner failed to assert any cir-cumstance which would impel the Court to disre-gard the findings of fact of the lower tribunals on the propriety of the award of backwages in favor of the respondent. However, the backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full backwages, inclusive of allow-ances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if rein-statement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Thus, when there is an order of reinstate-ment, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the employee is actually reinstated to his former position. The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay in lieu of the respondent’s rein-statement would not entitle the latter to back-wages. It bears stressing that decisions of the CA, unlike that of the LA, are not immediately executory. Accordingly, the petitioner should on-ly pay the respondent backwages from Septem-ber 1, 2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date when the petitioner required the former to report to work.

D.M. FERRER & ASSOCIATES CORPO-

RATION, Petitioner versus

UNIVERSITY OF SANTO TO-MAS, Respondent.

G.R. No. 189496 February 1, 2012

FACTS: Petitioner and UST Hospital Inc., (USTHI) executed a project construction man-agement contract for the renovation of the 4th and 5th floors of the Clinical Division Building,


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JURISPRUDENCE

Nurse Call Room and Medical Records, Medical Arts Tower, Diagnostic Treatment Building and Pay Division Building. On various dates, petition-er demanded payment of the construction costs, but USTHI did not pay. USTHI was dissolved and under its charter, its assets go to UST.

On May 23, 2008, petitioner filed a Com-plaint for sum of money, breach of contract and damages against UST and USTHI when the lat-ter failed to pay petitioner despite repeated de-mands. The RTC of Quezon City dismissed the case against UST on the ground that UST has no privity with petitioner.

ISSUE:

WHETHER OR NOT THE COMPLAINT

STATED NO CAUSE OF ACTION

HELD:

The complaint stated a cause of action.

The existence of a cause of action is determined

by the allegations in the complaint. In resolving a

motion to dismiss based on the failure to state a

cause of action, only the facts alleged in the

complaint must be considered. The test is

whether the court can render a valid judgment

on the complaint based on the facts alleged and

the prayer asked for. Indeed, the elementary test

for failure to state a cause of action is whether

the complaint alleges facts which if true would

justify the relief demanded. Only ultimate facts

and not legal conclusions or evidentiary facts,

which should not be alleged in the complaint in

the first place, are considered for purposes of

applying the test (Abacan v. Northwestern Uni-

versity, Inc).

While it is admitted that respondent UST

was not a party to the contract, petitioner posits

that the former is nevertheless liable for the con-

struction costs. Petitioner’s complaint alleged

that:

(1) UST and USTHI are one and the

same corporation;

(2) UST stands to benefit from the assets

of USTHI by virtue of the latter’s Articles of In-

corporation;

(3) Respondent controls the business of

USTHI; and

(4) UST’s officials have performed acts

that may be construed as an acknowledgement

of respondent’s liability to petitioner.

Clearly, the foregoing issues would have

been best resolved during trial. Thus, the RTC

therefore committed grave abuse of discretion

when it dismissed the case against respondent

for lack of cause of action. The trial court relied

on the contract executed between petitioner and

USTHI, when the court should have instead con-

sidered merely the allegations stated in the com-

plaint.

BANK OF THE PHILIPPINE ISLANDS, AS SUCCESSOR-IN-INTEREST OF FAR

EAST BANK & TRUST COMPA-NY, Petitioner,

versus CYNTHIA L. REYES, Respondent.

G.R. No. 182769 February 1, 2012 FACTS: Respondent Reyes borrowed, renewed and received from Far East Bank the principal of

P20, 950,000.00. As security for the obligation,

Reyes executed Real Estate Mortgage Agree-ments involving 22 parcels of land. When the debt became due and demandable, the defend-ant failed to settle her obligation and the plaintiff was constrained to foreclose the properties. At the public auction, the mortgaged properties were awarded to BPI. After applying the pro-ceeds of the public auction to the outstanding obligation, there remains to be a deficiency and Reyes is still indebted, as of January 20, 2003, to the plaintiff in the amount of P24, 545,094.67, broken down as follows:


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JURISPRUDENCE

Petitioner contends that it has the right to collect from the respondent the remainder of her obligation after deducting the amount obtained from the extrajudicial foreclosure sale. On the other hand, respondent avers that since petition-er’s predecessor’s own valuation of the subject property shows that its value is more than the amount of respondent’s outstanding obligation, then respondent cannot be held liable for the balance especially because it was petitioner who bought the property at the foreclosure sale. The RTC rendered its decision in favor of the petitioner. The CA reversed the ruling of the RTC.

ISSUE: WHETHER OR NOT THE PETITIONER IS EN-

TITLED TO RECOVER THE DEFICIENCY FROM THE RESPONDENT.

HELD:

The petition is meritorious. In the case of BPI Family Savings Bank,

Inc. v. Avenido, the Court held that a creditor is not precluded from recovering any unpaid bal-ance on the principal obligation if the extrajudi-cial foreclosure sale of the property subject of the real estate mortgage results in a deficiency. It is settled that if "the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is enti-tled to claim the deficiency from the debtor. While Act No. 3135, as amended, does not dis-cuss the mortgagee’s right to recover the defi-ciency, neither does it contain any provision ex-pressly or impliedly prohibiting recovery.

Furthermore, the Court has also ruled in

Suico Rattan & Buri Interiors, Inc. v. Court of Ap-peals that, in deference to the rule that a mort-gage is simply a security and cannot be consid-ered payment of an outstanding obligation, the creditor is not barred from recovering the defi-ciency even if it bought the mortgaged property at the extrajudicial foreclosure sale at a lower price than its market value notwithstanding the fact that said value is more than or equal to the total amount of the debtor’s obligation. Thus, it is wrong for petitioners to conclude that when re-spondent bank supposedly bought the fore-closed properties at a very low price, the latter effectively prevented the former from satisfying their whole obligation. Petitioners still had the option of either redeeming the properties and, thereafter, selling the same for a price which corresponds to what they claim as the proper-ties’ actual market value or by simply selling their right to redeem for a price which is equiva-lent to the difference between the supposed market value of the said properties and the price obtained during the foreclosure sale.

Moreover, petitioners are not justified in

concluding that they should be considered as having paid their obligations in full since re-spondent bank was the one who acquired the mortgaged properties and that the price it paid was very inadequate. The fact that it is respond-ent bank, as the mortgagee, which eventually acquired the mortgaged properties and that the bid price was low is not a valid reason for peti-tioners to refuse to pay the remaining balance of their obligation. Settled is the rule that a mort-gage is simply a security and not a satisfaction

of indebtedness.

CARMINA G. BROKMANN, Petitioner, vs.

PEOPLE OF THE PHILIP-PINES, Respondent.

G.R. No. 199150 February 6, 2012

FACTS: The petitioner was charged of the crime

of estafa. The criminal charge stemmed from the failure of the petitioner to return or remit the pro-ceeds of jewelries amounting to P1,861,000.00. The prosecution anchored its case on the testi-mony of Anna de Dios (private complainant),

Principal P19,700,000.00

Unsatis-fied Inter-est

2,244,694.67

Interest 2,383,700.00

Penalty 216,700.00

TOTAL P24,545,094.67


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JURISPRUDENCE

and the Memorandum of Agreement (MOA) exe-cuted between the private complainant and the petitioner. The gist of the MOA provides: (1) the petitioner’s acknowledgment and receipt, on var-ious dates, of jewelries from the private com-plainant amounting to P1,861,000.00; (2) the petitioner failed to remit the proceeds of the sale of the subject jewelries; and (3) the private com-plainant filed the estafa case against the peti-tioner for the non-remittance of the proceeds of the sale of the jewelries.

The petitioner asserted in defense her

lack of bad faith and intention to deceive the pri-vate complainant. She narrated that she and the private complainant had been engaged in the buy and sell of jewelries for 15 years. She admit-ted receiving the subject jewelries on a consign-ment basis but she averred that not all the jewel-ries were sold. The petitioner emphasized that she made partial payments of her obligation and had no intention of absconding. With respect to the MOA, she insisted that there was no period in the agreed terms as to when the remittance of the proceeds for the sale of the jewelries or the return of the unsold jewelries should be made.

The RTC found the petitioner liable for

estafa, and sentenced the petitioner to imprison-ment of six (6) years and six (6) months of pri-sion mayor, as minimum, to twenty (20) years of reclusion temporal, as maximum.4 The RTC also ordered the petitioner to restitute the private complainant P1,047,720.00 as actual damages.

The petitioner appealed the judgment of

the RTC to the CA which affirmed the petition-er’s conviction. ISSUE:

Whether or not the CA committed re-versible error in affirming the judgment of the RTC finding the petitioner guilty of estafa beyond reasonable doubt.

HELD: Except for the penalty imposed, the Court found no reversible error in the CA’s deci-sion. The CA held: As to the first element, without a doubt[,] appellant acquired material possession of the jewelry. She admitted that she received the subject pieces of jewelry from De

Dios. x x x

Additionally, by the terms and conditions of the memorandum of agreement, Brokmann agreed to hold in trust the said pieces of jewelry for the purpose of selling them to the customers and with the obligation to remit the proceeds of those sold and return the items unsold. What was created was an agency for the sale of jewel-ry, in which Brokmann as an agent has the duty to return upon demand of its owner, herein ap-pellee.

On the second element, misappropriation

was clearly evident. Appellee sent a demand letter to appellant, reminding the latter of her subsisting obligation, however, it was simply ig-nored. x xx. The demand for the return of the thing delivered in trust and the failure of the ac-cused-agent to account for it are circumstantial evidence of misappropriation.

x xx.

x xxx The third element, it is apparent that ap-

pellee was prejudiced when appellant did not return the pieces of jewelry upon her demand. x xx. Damage as an element of estafa may consist in – 1) the offended party being deprived of his money or property as a result of the defrauda-tion; 2) disturbance in property right; or 3) tem-porary prejudice. x xx.

Lastly, the fourth element, it has duly

been established that appellee demanded for

the payment and return of the pieces of jewelry,

however, the same was unheeded.

The offense of estafa, in general, is com-mitted either by (a) abuse of confidence or (b) means of deceit.8 The acts constituting estafa committed with abuse of confidence are enu-merated in item (1) of Article 315 of the Revised Penal Code, as amended; item (2) of Article 315 enumerates estafa committed by means of de-ceit. Deceit is not an essential requisite of estafa by abuse of confidence; the breach of confi-dence takes the place of fraud or deceit, which is a usual element in the other estafas.9 In this case, the charge against the petitioner and her subsequent conviction was for estafa committed by abuse of confidence. Thus, it was not neces-sary for the prosecution to prove deceit as this was not an element of the estafa that the peti-


10

http://www.lawphil.net/judjuris/juri2012/feb2012/gr_199150_2012.html#fnt4



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tioner was charged with. SC MODIFIED the penalty imposed and sentence her to suffer the penalty of imprison-ment of four (4) years and two (2) months of pri-sion correccional, as minimum term, to twenty (20) years of reclusion temporal, as maximum term.

NANCY T. LORZANO, Petitioner,

vs. JUAN TABAYAG, JR., Respondent. G.R. No. 189647 February 6, 2012

FACTS:

The petitioner and the respondent are two of the children of the late Juan Tabayag. Tabayag owned a parcel of land situated in Sto. Domingo, Iriga City (subject property). Right af-ter the burial of their father, the petitioner re-quested from her siblings that she be allowed to take possession of and receive the income gen-erated by the subject property until after her eld-est son could graduate from college. The peti-tioner’s siblings acceded to the said request.

After the petitioner’s eldest son finished

college, her siblings asked her to return to them the possession of the subject property but peti-tioner refused claiming that she purchased the subject property from their father as evidenced by a Deed of Absolute Sale of Real Property.

The respondent claimed that their father

did not execute the said deed of sale. He point-ed out that the signature of their father appear-ing in the said deed of sale was a forgery and that the deed of sale was acknowledged before a person who was not a duly commissioned No-tary Public.

For her part, the petitioner maintained she is the owner of the subject parcel of land having purchased the same from Tabayag as evidenced by the May 25, 1992 deed of sale. Further, the petitioner asserted that the respond-ent failed to establish that the signature of Tabayag appearing on the said deed of sale was a forgery considering that it was not submitted for examination by a handwriting expert.

Respondent filed a complaint for annul-

ment of document and reconveyance. The petitioner asserts that the amended

complaint for annulment of document, reconvey-ance and damages is a collateral attack on her title over the subject property. She avers that, when the said amended compliant was filed, more than a year had already lapsed since OCT No. 1786 over the subject property was issued under her name. Thus, the petitioner maintains that her title over the subject property is already indefeasible and, hence, could not be attacked collaterally.

The RTC ruled in favor of the respond-

ents. The CA affirmed the decision. ISSUE: 1. Whether the lower courts erred in declaring

the deed of sale a nullity. 2. Whether an action for reconveyance is prop-

er.

HELD: First Issue: Section 1, Rule 45 of the Rules of Court categorically states that the petition filed shall raise only questions of law, which must be distinctly set forth. A question of law arises when there is doubt as to what the law is on a certain

state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. The CA aptly ruled that a handwriting expert is not indispensable to prove that the sig-nature of Tabayag in the questioned deed of sale was indeed a forgery. It is true that the opinion of handwriting experts are not necessari-ly binding upon the court, the expert’s function being to place before the court data upon which the court can form its own opinion. A finding of forgery does not depend entirely on the testimo-nies of handwriting experts, because the judge

must conduct an independent examination of the questioned signature in order to arrive at a

reasonable conclusion as to its authenticity. Second Issue: An action for reconveyance is proper in this case. The petitioner’s assertion that the


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amended complaint for annulment of document, reconveyance and damages is a collateral at-tack on her title over the subject property is un-tenable. She avers that, when the said amended complaint was filed, more than a year had al-ready lapsed since OCT No. 1786 over the sub-ject property was issued under her name. Thus, the petitioner maintains that her title over the subject property is already indefeasible and, hence, could not be attacked collaterally. It must be noted that a title emanating from a free pa-tent which was secured through fraud does not become indefeasible, precisely because the pa-tent from whence the title sprung is itself void and of no effect whatsoever. Fraudulent statements were made in the application for the patent and no notice thereof was given to plaintiffs, nor knowledge of the peti-tion known to the actual possessors and occu-pants of the property. The action is one based on fraud and under the law, it can be instituted within four years from the discovery of the fraud. (Art. 1146, Civil Code, as based on Section 3, paragraph 43 of Act No. 190.) It is to be noted that as the patent here has already been issued, the land has the character of registered property in accordance with the provisions of Section 122 of Act No. 496, as amended by Act No. 2332, and the remedy of the party who has been in-jured by the fraudulent registration is an action for reconveyance. Here, the respondent, in filing the amended complaint for annulment of docu-ments, reconveyance and damages, was not seeking a reconsideration of the granting of the patent or the decree issued in the registration proceedings. What the respondent sought was the reconveyance of the subject property to the heirs of the late Tabayag on account of the fraud committed by the petitioner. Thus, the lower courts did not err in upholding the respondent’s right to ask for the reconveyance of the subject property. To hold otherwise would be to make the Torrens system a shield for the commission of fraud. That the subject property was not regis-tered under the name of the heirs of Tabayag prior to the issuance of OCT No. 1786 in the name of the petitioner would not effectively deny the remedy of reconveyance to the former. An

action for reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or reconvey the land to him.

It cannot be gainsaid that the heirs of Tabayag, by themselves and through their pre-decessors-in-interest, had already acquired a vested right over the subject property. An open, continuous, adverse and public possession of a land of the public domain from time immemorial by a private individual personally and through his predecessors confers an effective title on said possessors whereby the land ceases to be public, to become private property, at least by presumption.36 Hence, the right of the heirs of Tabayag to ask for the reconveyance of the sub-ject property is irrefutable.

BANK OF THE PHILIPPINE ISLANDS, as successor-in-interest of Far East Bank

and Trust Company,Petitioner, vs.

EDUARDO HONG, doing business under the name and style "SUPER LINE PRINT-

ING PRESS" and the COURT OF AP-PEALS, Respondents.

G.R. No. 161771 February 15, 2012

FACTS:

On September 16, 1997, the EYCO Group of Companies ("EYCO") filed a petition for suspension of payments and rehabilitation before the Securities and Exchange Commis-sion (SEC), docketed as SEC Case No. 09-97-5764. A stay order was issued on September 19, 1997 enjoining the disposition in any manner except in the ordinary course of business and

payment outside of legitimate business ex-penses during the pendency of the proceed-ings, and suspending all actions, claims and proceedings against EYCO until further or-ders from the SEC. On September 14, 1999, the SEC rendered its decision disapproving the petition for suspension of payments, ter-minating EYCO’s proposed rehabilitation


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plan and ordering the dissolution and liqui-dation of the petitioning corporation.

Sometime in November 2000 while

the case was still pending with the CA, peti-tioner Bank of the Philippine Islands (BPI), filed with the Office of the Clerk of Court, Regional Trial Court of Valenzuela City, a petition for extra-judicial foreclosure of real properties mortgaged to it by Eyco Proper-ties, Inc. and Blue Star Mahogany, Inc. Pub-lic auction of the mortgaged properties was scheduled on December 19, 2000.

Claiming that the foreclosure pro-

ceedings initiated by petitioner was illegal, respondent Eduardo Hong, an unsecured creditor of Nikon Industrial Corporation, one of the companies of EYCO, filed an action for injunction and damages against the peti-tioner in the same court (RTC of Valenzuela City).

After hearing, the trial court issued a

temporary restraining order (TRO). Petition-er filed a motion to dismiss arguing that by plaintiff’s own allegations in the complaint, jurisdiction over the reliefs prayed for be-longs to the SEC, and that plaintiff is actually resorting to forum shopping since he has filed a claim with the SEC and the desig-nated Liquidator in the ongoing liquida-tion of the EYCO Group of Companies.

On January 17, 2001, the trial court

denied the motion to dismiss. Petitioner’s motion for reconsideration was likewise de-nied. Petitioner challenged the validity of the trial court’s ruling before the CA via a peti-tion for certiorari under Rule 65.

The CA affirmed the trial court’s deni-

al of petitioner’s motion to dismiss. No grave abuse of discretion was committed by the trial court in issuing the assailed orders. Hence this case. ISSUES:

1. Whether or not the RTC has jurisdic-

tion to rule as to the validity or legality of foreclosure proceedings initiated by herein petitioner.

2. Whether or not the SEC has jurisdic-

tion to rule on the liquidation of corpo-rations.

3. Whether or not the RTC properly took

cognizance of the injunction case filed by the respondent.

HELD:

1. Yes. The Decision of the CA was af-firmed by the SC. In its Decision, CA held that questions relating to the va-lidity or legality of the foreclosure pro-ceedings, including an action to en-join the same, must necessarily be cognizable by the RTC, notwithstand-ing that the SEC likewise possesses the power to issue injunction in all cases in which it has jurisdiction as provided in Sec. 6 (a) of Presidential Decree (P.D.) No. 902-A. Further, the CA stated that an action for foreclo-sure of mortgage and all incidents rel-ative thereto including its validity or invalidity is within the jurisdiction of the RTC and is not among those cas-es over which the SEC exercises ex-clusive and original jurisdiction under Sec. 5 of P.D. No. 902-A. Conse-quently, no grave abuse of discretion was committed by the trial court in issuing the assailed orders.

2. None. R.A. No. 8799, which took effect on August 8, 2000, transferred to the ap-propriate regional trial courts the SEC’s jurisdiction over those cases enumerated in Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799 provides:

SEC. 5.2 The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of gen-eral jurisdiction or the appropriate Re-gional Trial Court: Provided, that the Su-


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preme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdic-tion over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. The SEC’s jurisdiction does not extend to the liquidation of a corporation. While the SEC has jurisdiction to order the disso-lution of a corporation, jurisdiction over the liquidation of the corporation now pertains to the appropriate regional trial courts. This is the reason why the SEC, in its 29 November 2000 Omnibus Order, directed that "the pro-ceedings on and implementation of the or-der of liquidation be commenced at the Re-gional Trial Court to which this case shall be transferred." This is the correct procedure because the liquidation of a corporation re-quires the settlement of claims for and against the corporation, which clearly falls under the jurisdiction of the regular courts. The trial court is in the best position to con-vene all the creditors of the corporation, as-certain their claims, and determine their preferences.

3. Yes. There is no showing in the records that SEC Case No. 09-97-5764 had been trans-ferred to the appropriate RTC designated as Special Commercial Court at the time of the commencement of the injunction suit on De-cember 18, 2000. Given the urgency of the situation and the proximity of the scheduled public auction of the mortgaged properties as per the Notice of Sheriff’s Sale, respond-ent was constrained to seek relief from the same court having jurisdiction over the fore-closure proceedings – RTC of Valenzuela City. Respondent thus filed Civil Case No. 349-V-00 in the RTC of Valenzuela City on December 18, 2000 questioning the validity of and enjoining the extrajudicial foreclosure

initiated by petitioner. Pursuant to its original jurisdiction over suits for injunction and damages, the RTC of Valenzuela City, Branch 75 properly took cognizance of the injunction case filed by the respondent. No reversible error was therefore committed by the CA when it ruled that the RTC of Valen-zuela City, Branch 75 had jurisdiction to hear and decide respondent’s complaint for injunction and damages.


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JL’s Corner

Law Like Love -W. H. Auden-

Law, say the gardeners, is the sun, Law is the one

All gardeners obey To-morrow, yesterday, to-day.

Law is the wisdom of the old,

The impotent grandfathers feebly scold; The grandchildren put out a treble tongue,

Law is the senses of the young.

Law, says the judge as he looks down his nose, Speaking clearly and most severely,

Law is as I’ve told you before, Law is as you know I suppose,

Law is but let me explain it once more, Law is The Law.

And always the loud angry crowd,

Very angry and very loud, Law is We,

And always the soft idiot softly Me.

If we, dear, know we know no more Than they about the Law,

If I no more than you Know what we should and should not do

Except that all agree

Gladly or miserably That the Law is

And that all know this If therefore thinking it absurd

To identify Law with some other word, Unlike so many men

I cannot say Law is again,

No more than they can we suppress The universal wish to guess

Or slip out of our own position Into an unconcerned condition. Although I can at least confine

Your vanity and mine To stating timidly A timid similarity,

We shall boast anyway: Like love I say.

Like love we don’t know where or why, Like love we can’t compel or fly,

Like love we often weep, Like love we seldom keep.

V o l u m e I V I s s u e N o . 2 F E B R U A R Y 2012

15

lca lines | volume iv, issue no. 2

Documents

n s i d e t h i s i

petroleum products

summary list of pur

summary lists of purchases

valueadded tax regulations

summary schedules

bir issuances

account of sales