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Garcia 191 November 1990 FACTS:


Board SCRA



(BOI) 288

Former Bataan Petrochemical Corporation (BPC), now Luzon Petrochemical Corporation, formed by a group of Taiwanese investors, was granted by the BOI its have its plant site for the products naphta cracker and naphta to based in Bataan. In February 1989, one year after the BPC began its production in Bataan, the corporation applied to the BOI to have its plant site transferred from Bataan to Batangas. Despite vigorous opposition from petitioner Cong. Enrique Garcia and others, the BOI granted private respondent BPCs application, stating that the investors have the final choice as to where to have their plant site because they are the ones who risk capital for the project. ISSUE: Whether or not the BOI committed a grave abuse of discretion in yielding to the application of the investors without considering the national interest COURT RULING:

The Supreme Court found the BOI to have committed grave abuse of discretion in this case, and ordered the original application of the BPC to have its plant site in Bataan and the product naphta as feedstock maintained. The ponente, Justice Gutierrez, Jr., first stated the Courts judicial power to settle actual c ontroversies as provided for by Section 1 of Article VIII in our 1987 Constitution before he wrote the reasons as to how the Court arrived to its conclusion. He mentioned that nothing is shown to justify the BOIs action in letting the investors decide on an issue which, if handled by our own government, could have been very beneficial to the State, as he remembered the word of a great Filipino leader, to wit: .. he would not mind having a government run like hell by Filipinos than one subservient to foreign dictation. Justice Grio Aquino, in her dissenting opinion, argued that the petition was not well-taken because the 1987 Investment Code does not prohibit the registration of a certain project, as well as any decision of the BOI regarding the amended application. She stated that the fact that petitioner disagrees with BOI does not make the BOI wrong in its decision, and that petitioner should have appealed to the President of the country and not to the Court, as provided for by Section 36 of the 1987 Investment Code. Justice Melencio-Herrera, in another dissenting opinion, stated that the Constitution does not vest in the Court the power to enter the realm of policy considerations, such as in this case. ______________________________-_ _----Enrique Garcia vs Executive Secretary on November 16, 2011

Political Law Congress Authorizing the President to Tax

On 27 November 1990, Cory issued Executive Order 438 which imposed, in addition to any other duties, taxes and charges imposed by law on all articles imported into the Philippines, an additional duty of 5% ad valorem. This additional duty was imposed across the board on all imported articles, including crude oil and other oil products imported into the Philippines. In 1991, EO 443 increased the additional duty to 9%. In the same year, EO 475 was passed reinstating the previous 5% duty except that crude oil and other oil products continued to be taxed at 9%. Garcia, a representative from Bataan, avers that EO 475 and 478 are unconstitutional for they violate Sec 24 of Art 6 of the Constitution which provides: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. He contends that since the Constitution vests the authority to enact revenue bills in Congress, the President may not assume such power of issuing Executive Orders Nos. 475 and 478 which are in the nature of revenue-generating measures. ISSUE: Whether or not EO 475 and 478 are constitutional. HELD: Under Section 24, Article VI of the Constitution, the enactment of appropriation, revenue and tariff bills, like all other bills is, of course, within the province of the Legislative rather than the Executive Department. It does not

follow, however, that therefore Executive Orders Nos. 475 and 478, assuming they may be characterized as revenue measures, are prohibited to the President, that they must be enacted instead by the Congress of the Philippines. Section 28(2) of Article VI of the Constitution provi des as follows: (2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. There is thus explicit constitutional permission to Congress to authorize the President subject to such limitations and restrictions as [Congress] may impose to fix wi thin specific limits tariff rates . . . and other duties or imposts . . . . --- Phillips Seafood Corporation v. Board of Investments Facts: Phillips Seafood is registered with respondent Bureau of Investments (BOI) as an existing and expansion producer of soft shell crabs and other seafood products, on a non-pioneer status under Certificate of Registration No. EP 93-219. When Phillips relocated its plant to Roxas City, it filed with BOI an application for registration, which the latter granted. In effect , Petitioners Certificate of Registration No. EP 93-219 was extended up to 12 August 2000, pursuant to Article 39 (a) (1) (ii) of Executive Order No. 226. Petitioner changed its corporate name from PS-Masbate to its current name of Phillips Seafood (Philippines) Corporation, which was approved by respondent BOI on 16 February 2001. In a letter dated 25 September 2003, respondent BOI informed petitioner that the ITH previously granted would be applicable only to the period from 13 August 1999 to 21 October 1999 or before petitioners transfer to a not less-developed area. Petitioner wrote respondent BOI requesting for a reconsideration of its decision. On 03 May 2004, petitioner received BOIs letter denying its motion for reconsideration. Petitioner elevated the matter to the Office of the President, which dismissed petitioners appeal on the ground of lack of jurisdiction in a Decision dated 22 September 2004. The Office of the President likewise denied petitioners motion for reconsideration in an O rder dated 14 March 2005. Petitioner received a copy of the order on 01 April 2005. On 05 April 2005, petitioner filed a petition for review before the Court of Appeals, questioning the dismissal of its appeal before the Office of the President. After respondent BOI filed its comment on the petition, petitioner filed an omnibus motion asking for leave to file an amended petition to counter the issues raised in the comment for the first time and to suspend the period for filing a reply. On 24 May 2006, the Court of Appeals rendered the first assailed resolution denying petitioners omnibus motion and dismissing its petition for review. The appellate court denied petitioners omnibus motion on the ground that the same was filed with intent to delay the case. Simultaneously, the appellate court dismissed the petition for review for having been filed out of time as petitioner opted to appeal to the Office of the President instead of filing a Rule 43 petition to the Court of Appeals within the reglementary period.

Issue: Did the Court of Appeals err in denying the petition for review for having filed out of time? NO Ruling: Indeed, under E.O. 226, when the action or decision pertains to either of these two instances: first, in the decisions of the BOI over controversies concerning the implementation of the relevant provisions of E.O No. 226 that may arise between registered enterprises or investors and government agencies under Article 7; and second, in an action of the BOI over applications for the Office of the President is available. E.O. No. 226 contains no provision specifically governing the remedy of a party whose application for an ITH has been denied by the BOI in the same manner that Articles 7 and 36 thereof allow recourse to the Office of the President in certain instances. Nevertheless, Article 82 of E.O. No. 22 is the catch-all provision allowing the appeal to the courts from all other decisions of respondent BOI involving the other provisions of E.O. No. 226. The intendment of the law is undoubtedly to afford immediate judicial relief from the decision of respondent BOI, save in cases mentioned under Articles 7 and 36. In relation to Article 82, E.O. No. 226, Section 1 of Rule 43 of the 1997 Rules of Civil Procedure expressly includes respondent BOI as one of the quasi-judicial agencies whose judgments or final orders are appealable to the Court of Appeals via a verified petition for review. Appeals from judgments and final orders of quasi-judicial agencies are now required to be brought to the Court of Appeals on a verified petition for review, under the requirements and conditions in Rule 43 which was precisely formulated and adopted to provide for a uniform rule of appellate procedure for quasi-judicial agencies. Thus, petitioner should have immediately elevated to the Court of Appeals the denial by respondent BOI of its application for an ITH. From the letter dated 09 October 2003 of respondent BOI, which informed petitioner that its ITH would be extended only from 13 August 1999 to 21 October 1999, petitioner appealed to the Office of the President, a recourse that is not sanctioned by either the Rules of Civil Procedure or by the Omnibus Investments Code of 1987. Petitioner cannot invoke Article 36 of E.O. No. 226 to justify its appeal to the Office of the President. Article 36, along with Article 7, which allows recourse to the Office of the President, applies to specific instances, namely, controversies between a registered enterprise and a government agency and decisions concerning the registration of an enterprise, respectively. Expresio unius est exclusio alterius. This enumeration is exclusive so that other controversies outside of its purview, including petitioners entitlement to an ITH, can invoke only the appellate judicial relief provi ded under Article 82. In the instant case, the denial of petitioners application for an ITH is not within the cases where the law expressly provides for

appellate recourse to the Office of the President. That being the case, petitioner should have elevated its appeal to the Court of Appeals under Rule 43. --------------- Atlas Consolidated vs. CIR ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR 524 SCRA 73, 103 GR Nos. 141104 & 148763, June 8, 2007 "The taxpayer must justify his claim for tax exemption or refund by the clearest grant of organic or statute law and should n ot be permitted to stand on vague implications." "Export processing zones (EPZA) are effectively considered as foreign territory for tax purposes." FACTS: Petitioner corporation, a VAT-registered taxpayer engaged in mining, production, and sale of various mineral products, filed claims with the BIR for refund/credit of input VAT on its purchases of capital goods and on its zero-rated sales in the taxable quarters of the years 1990 and 1992. BIR did not immediately act on the matter prompting the petitioner to file a pet ition for review before the CTA. The latter denied the claims on the grounds that for zero-rating to apply, 70% of the company's sales must consists of exports, that the same were not filed within the 2-year prescriptive period (the claim for 1992 quarterly returns were judicially filed only on April 20, 1994), and that petitioner failed to submit substantial evidence to support its claim for refund/credit. The petitioner, on the other hand, contends that CTA failed to consider the following: sales to PASAR and PHILPOS within the EPZA as zero-rated export sales; the 2-year prescriptive period should be counted from the date of filing of the last adjustment return which was April 15, 1993, and not on every end of the applicable quarters; and that the certification of the independent CPA attesting to the correctness of the contents of the summary of suppliers invoices or receipts examined, evaluated and audited by said CPA should substantiate its claims. ISSUE: Did the petitioner corporation sufficiently establish the factual bases for its applications for refund/credit of input VAT? HELD: No. Although the Court agreed with the petitioner corporation that the two-year prescriptive period for the filing of claims for refund/credit of input VAT must be counted from the date of filing of the quarterly VAT return, and that sales to PASAR and PHILPOS inside the EPZA are taxed as exports because these export processing zones are to be managed as a separate customs territory from the rest of the Philippines, and thus, for tax purposes, are effectively considered as foreign territory, it still denies the claims of petitioner corporation for refund of its input VAT on its purchases of capital goods and effectively zero-rated sales during the period claimed for not being established and substantiated by appropriate and sufficient evidence. Tax refunds are in the nature of tax exemptions. It is regarded as in derogation of the sovereign authority, and should be construed in strictissimi juris against the person or entity claiming the exemption. The taxpayer who claims for exemption must justify his claim by the clearest grant of organic or statute law and should not be permitted to stand on vague implication National Economic Protectionism Association vs Ongpin on September 24, 2011

Judicial Review Requisites

After the lifting of martial law in 1981, Marcos issued PD 1789 and some other PDs. The said PD was issued in order to suspend for one year the requirement that in order for companies to validly operate in the country it must be compose of at least 60% Filipino. NEPA assailed the said PD averring that as taxpayers and Filipinos they will be greatly adversed by such PD. The Sol-Gen commented that NEPA et al have no personality and standing to sue in the absence of an actual controversy concerning the enforcement of the PD in question. ISSUE: Whether or not the requisites for judicial review are met. HELD: NEPA et al question the constitutionality of Secs 1 and 3 of PD 1892 in relation to PD 1789, the 1981 Investment Priorities Plan and EO 676, as being violative of the due process and equal protection clauses of the 1973 Constitution as well as Secs 8 & 9 of Article 14 thereof, and seek to prohibit Ongpin from implementing said laws. Yet, not even one of the petitioners has been adversely affected by the application of those provisions. No actual conflict has been alleged wherein the petitioner could validly and possibly say that the increase in foreign equity participation in non-pioneer areas of investment from the period of Dec 2, 1983 to Dec 4, 1984 had any direct bearing on them, such as considerable rise in unemployment, real increase in foreign investment, unfair competition with Philippine nationals, exploitation of the countrys natural resources by foreign investors under the decrees. Petitioners advance an abstract, hypothetical issue which is in effect a petition for an advisory opinion from the SC. The power of courts to declare a law unconstitutional arises only when the interests of litigants require the use of that judicial authority for their protection against actual interference, a hypothetical threat being insufficient. Bona fide suit. Judicial power is limited to the decision of actual cases and controversies. The authority to pass on the validity of statutes is incidental to the decision of such cases where conflicting claims under the Constitution and

under a legislative act assailed as contrary to the Constitution are raised. It is legitimate only in the last resort, and as necessity in the determination of real, earnest, and vital controversy between litigants. Assignment of Tax Credit Certificate (TCC); Exception to Estoppel CIR vs. Petron Corporation, GR No. 185568, march 21, 2012 Facts: Petron, a Board of Investment (BOI)-registered enterprise, was an assignee of several Tax Credit Certificates (TCCs) from various BOI-registered enterprises for the taxable years 1995-1998. Petron subsequently utilized said TCCs to pay its excise taxes for said taxable years. The TCCs had a Liability Clause which provided: Both the TRANSFEROR and the TRANSFEREE shall be jointly and severally liable for any fraudulent act or violation of the pertinent laws, rules and regulations relating to the transfer of this TAX CREDIT CERTIFICATE. Sometime in 1999, a post-audit of said TCCs was conducted by the DOF. The TCCs and the TDMs were cancelled by reason of fraud. The DOF found that said TCCs were fraudulently obtained by the transferors and subsequently the same was fraudulently transferred to Petron. Thus, On January 30, 2002, The CIR issued an assessment against Petron for deficiency excise taxes for the taxable years 1995 to 1998 based on the ground that the TCCs utilized by petitioner in its payment of excise taxes have been cancelled by the DOF for having been fraudulently issued and transferred. Subsequently, petron filed a protest letter regarding said assessment. In 2002, the CIR served a Warrant of Distraint and/or Levy on petitioner to enforce payment of the tax deficiencies. Construing the Warrant of Distraint and/or Levy as the final adverse decision of the BIR on its protest of the assessment, Petron filed a petition before the CTA contending that the assignment/transfer of the TCCs to petitioner by the TCC holders was submitted to, examined and approved by the concerned government agencies which processed the assignment in accordance with law and revenue regulations and that the assessment and collection of alleged excise tax deficiencies sought to be collected by the BIR against petitioner through the January 30, 2002 letter are already barred by prescription. The CTA Second Division ruled for the CIR. Petron appealed the decision to the CTA En banc which, in turn, reversed the CTA 2nd Division decision, based on the following on the ground that Petron was considered an innocent transferee of the subject TCCs and may not be prejudiced by a re-assessment of excise tax liabilities that respondent has already settled, when due, with the use of the TCCs. Issue: Held: Is Petron still liable to pay its excise taxes? PETRONS NON-PARTICIPATION IN FRAUDULENT ACTS

RR 5-2000 prescribes the regulations governing the manner of issuance of TCCs and the conditions for their use, revalidation and transfer. Under the said regulation, a TCC may be used by the grantee or its assignee in the payment of its direct internal revenue tax liability. It may be transferred in favor of an assignee subject to the following conditions: 1) the TCC transfer must be with prior approval of the Commissioner or the duly authorized representative; 2) the transfer of a TCC should be limited to one transfer only; and 3) the transferee shall strictly use the TCC for the payment of the assignees direct internal revenue tax liability and shall not be convertible to cash . A TCC is valid only for 10 years subject to the following rules: (1) it must be utilized within five (5) years from the date of issue; and (2) it must be revalidated thereafter or be otherwise considered invalid. The processing of a TCC is entrusted to a specialized agency called the One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center to expedite the processing and approval of tax credits and duty drawbacks. A TCC may be assigned through a Deed of Assignment, which the assignee submits to the Center for its approval. Upon approval of the deed, the Center will issue a DOF Tax Debit Memo (DOF-TDM), which will be utilized by the assignee to pay the latters tax liabilities for a specified period. Upon surrender of the TCC and the DOF -TDM, the corresponding Authority to Accept Payment of Excise Taxes (ATAPET) will be issued by the BIR Collection Program Division and will be submitted to the issuing office of the BIR for acceptance by the Assistant Commissioner of Collection Service. This act of the BIR signifies its acceptance of the TCC as payment of the assignees excise taxes. Thus, it is apparent that a TCC undergoes a stringent process of verification by various specialized government agencies before it is accepted as payment of an assignees tax liability The CIR had no allegation that there was a deviation from the process for the approval of the TCCs, which Petron used as payment to settle its excise tax liabilities for the years 1995 to 1998. Further, any merit in the position of CIR on this issue is negated by the Joint Stipulation it entered into with Petron in the proceedings before the said Division. As correctly noted by the CTA En Banc, herein parties jointly stipulated before the Second Division in CTA Case No. 6423 as follows: 13. That petitioner (Petron) did not participate in the procurement and issuance of the TCCs, which TCCs were transferred to Petron and later utilized by Petron in payment of its excise taxes. This stipulation of fact by the CIR amounts to an admission and, having been made by the parties in a stipulation of facts at pretrial, is treated as a judicial admission Petron had the right to rely on the joint stipulation that absolved it from any participation in the alleged fraud pertaining to the issuance and procurement of the subject TCCs.

PETRON AS INNOCENT TRANSFEREE FOR VALUE A transferee in good faith and for value of a TCC who has relied on the Center's representation of the genuineness and validity of the TCC transferred to it may not be legally required to pay again the tax covered by the TCC which has been belatedly declared null and void, that is, after the TCCs have been fully utilized through settlement of internal revenue tax liabilities. Conversely, when the transferee is party to the fraud as when it did not obtain the TCC for value or was a party to or has knowledge of its fraudulent issuance, said transferee is liable for the taxes and for the fraud committed as provided for by law. VALIDITY OF A POST-AUDIT OF TCCs TCCs are valid and effective from their issuance and are not subject to a post-audit as a suspensive condition for their validity. The implication on the instant case of the said ruling is that Petron has the right to rely on the validity and effectivity of the TCCs that were assigned to it. Art. 1181 tells us that the condition is suspensive when the acquisition of rights or demandability of the obligation must await the occurrence of the condition. However, Art. 1181 does not apply to the present case since the parties did NOT agree to a suspensive condition. Rather, specific laws, rules, and regulations govern the subject TCCs, not the general provisions of the Civil Code. It would be absurd to make the effectivity of the payment of a TCC dependent on a post-audit since there is no contemplation of the situation wherein there is no post-audit. Does the payment made become effective if no postaudit is conducted? Or does the so-called suspensive condition still apply as no law, rule, or regulation specifies a period when a post-audit should or could be conducted with a prescriptive period? Clearly, a tax payment through a TCC cannot be both effective when made and dependent on a future event for its effectivity. Our system of laws and procedures abhors ambiguity. Moreover, if the TCCs are considered to be subject to post-audit as a suspensive condition, the very purpose of the TCC would be defeated as there would be no guarantee that the TCC would be honored by the government as payment for taxes. THE LIABILITY CLAUSE ON THE TCCs The Liability Clause of the TCCs reads: Both the TRANSFEROR and the TRANSFEREE shall be jointly and severally liable for any fraudulent act or violation of the pertinent laws, rules and regulations relating to the transfer of this TAX CREDIT CERTIFICATE. The above clause to our mind clearly provides only for the solidary liability relative to the transfer of the TCCs from the original grantee to a transferee. There is nothing in the above clause that provides for the liability of the transferee in the event that the validity of the TCC issued to the original grantee by the Center is impugned or where the TCC is declared to have been fraudulently procured by the said original grantee. Thus, the solidary liability, if any, applies only to the sale of the TCC to the transferee by the original grantee. GOVERNMENT IS NOT ESTOPPED FROM THE MISTAKES OF ITS AGENTS; EXCEPTION We recognize the well-entrenched principle that estoppel does not apply to the government, especially on matters of taxation. Taxes are the nations lifeblood through which government agencies continue to operate and with which the State discharges its functions for the welfare of its constituents. As an exception, however, this general rule cannot be applied if it would work injustice against an innocent party. Petron, in this case, was not proven to have had any participation in or knowledge of the CIRs allegation of the fraudulent transfer and utilization of the subject TCCs. Respondents status as a transferee in good faith and for value of these TCCs has been established and even stipulated upon by petitioner. [58] Respondent was thereby provided ample protection from the adverse findings subsequently made by the Center. Given the circumstances, the CIRs invocation of the non-applicability of estoppel in this case is misplaced. First Lepanto Ceramics vs. CA [G.R. No. 110571, March 10, 1994] Post under case digests, Political Law at Thursday, February 23, 2012 Posted by Schizophrenic Mind Facts: The Omnibus Investments Code of 1981 as amended provided that appeals from decisions of the Board of Investments (BOI) shall be the exclusive jurisdiction of the CA. Just a few monthsafter the 1987 Constitution took effect (July 17, 1987), the Omnibus Investments Code of 1987 (EO 226) was promulgated which provided in Art 82 thereof that such appeals be directly filed with the SC. The SC later promulgated, under its rule-making power, Circular No. 1-91 which confirmed that jurisdiction of the CA over appeals from the decisions of the BOI. SCs Second Division, relying on said Circular, accordingly sustained the appellate jurisdiction of the CA in this present case. Petitioner now move to reconsider and question the Second Divisions ruling which provided:

.although the right to appeal granted by Art 82 of EO 226 is a substantive right which cannot be modified by a rule of procedure, nonetheless, questions concerning where and in what manner the appeal can be brought are only matters of procedure which this Court hast he power to regulate.

They contend that Circular No. 191 (a rule of procedure) cannot be deemed to have superseded Art 82 of EO 226 (a legislation).

Issue: Was the Court correct in sustaining the appellate jurisdiction of the CA in decisions from the Board of Investments?

Held: Yes. EO 226 was promulgated after the 1987 Constitutiontook effect February 2, 1987. Thus, Art 82 of EO 226, which provides for increasing the appellate jurisdiction of the SC, is invalid and therefore never became effective for the concurrence of the Court was no sought in its enactment. Thus, the Omnibus Investments Code of 1981 as amended still stands. The exclusive jurisdiction on appeals from decisions of the BOI belongs to the CA. FIRST LEPANTO v. CA 231 SCRA 30 FACTS: BOI granted petitioners application to amend its BOI certificate of registration by changing the scope of its registered product from glazed floor tiles to ceramic tiles. Oppositor Mariwasa filed a petitioner for review with the CA. CA granted the preliminary injunction. Petitioner says that the CA has no jurisdiction as it is vested exclusively with the SC within 30 days from receipt of the decision pursuant to the Omnibus Investments Code and therefore, Mariwasa has lost its right to appeal. Mariwasa counters that whatever inconsistencies that the Omnibus Investment Code and the Judiciary Reorganization Act have been resolved by SC Circular 1-91. ISSUES: W/n Mariwasa correctly filed its appeal with the CA. RULING:

YES. B.P. 129s objective is providing a uniform procedure of appeal from decisions of all quasi-judicial agencies for the benefit of the bench and the bar. The obvious lack of deliberation in the drafting of our laws could perhaps explain the deviation of some of our laws from the goal of uniform procedure which B.P. 129 sought to promote. Although a circular is not strictly a statute or law, it has, however, the force and effect of law according to settled jurisprudence The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the former grants a substantive right which is prohibited under the Constitution. These simply deal with procedural aspects which this Court has the power to regulate by virtue of its constitutional rule-making powers. Circular 1-91 simply transferred the venue of appeals from decisions of this agency to respondent Court of Appeals and provided a different period of appeal, i.e., fifteen (15) days from notice. It did not make an incursion into the substantive right to appeal. Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the manner and method of enforcing the right to appeal from decisions of the BOI are concerned.

FIRST LEPANTO v. CA 237 SCRA 519 FACTS: This is a MR of the previous case. Petitioner's contention is that Circular No. 1-91 cannot be deemed to have superseded art. 82 of the Omnibus Investments Code of 1987 (E.O. No. 226) because the Code, which President Aquino promulgated in the exercise of legislative authority, is in the nature of a substantive act of Congress defining the jurisdiction of courts pursuant to Art. VIII, 2 of the Constitution. ISSUES:

The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third sentence of Section 1 of Circular 1-91 does not mean that said circular does not apply to appeals from final orders or decision of the BOI. The second sentence of Section 1 thereof expressly states that "(T)hey shall also apply to appeals from final orders or decisions of any quasi-judicial agency from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court." E.O. 266 is one such statute. Besides, the enumeration is preceded by the words "(A)mong these agencies are . . . ," strongly implying that there are other quasi-judicial agencies which are covered by the Circular but which have not been expressly listed therein.

Same issue as in the first FIRST LEPANTO case. RULING: YES (as in previous case). Art. 78 of the Omnibus Investment Code on Judicial Relief was thereafter 3 amended by B.P. Blg. 129, by granting in 9 thereof exclusive appellate jurisdiction to the CA over the decisions and final orders of quasi-judicial agencies. When the Omnibus Investments Code was promulgated on July 17, 1987, the right to appeal from the decisions and final orders of the BOI to the Supreme Court was again granted. By then, 4 however, the present Constitution had taken effect. The Constitution now provides in Art. VI, 30 that "No law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this Constitution without its advice and concurrence." This provision is intended to give the Supreme Court a measure of control over cases placed under its appellate jurisdiction. For the indiscriminate enactment of legislation enlarging its appellate jurisdiction can unnecessarily burden the Court and thereby undermine its essential function of expounding the law in its most profound national aspects. Now, art. 82 of the 1987 Omnibus Investments Code, by providing for direct appeals to the Supreme Court from the decisions and final orders of the BOI, increases the appellate jurisdiction of this Court. Since it was enacted without the advice and concurrence of this Court, this provision never became effective, with the result that it can never be deemed to have amended BPBlg. 129, 9. CIR vs toshiba information equipment digest Rationale for zero-rating of exports. The Philippine VAT system adheres tothe Cross Border Doctrine, according to which, no VAT shall be imposed toform part of the cost of goods destined for consumption outside of theterritorial border of the taxing authority. [Commissioner of Internal Revenue v.Toshiba Information Equipment (Phils.), Inc., G. R.. No. 150154, August 9,2005 106(A)(2)(a) Export Sales Q: What is the cross-border doctrine? * According to CIR v. Toshiba Information Equipment (Phils.), Inc. , the Philippines adheres to the cross-border doctrine which means that no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence: actual export of goods and services from the Philippines to a foreign country must be free of VAT; On the other hand, those destined for use or consumption within the Philippines shall be imposed with ten percent (10%) [now 12%] VAT. Additionally, sales made by an enterprise within a non-ECOZONE territory, i.e., Customs Territory, to an enterprise within an ECOZONE territory shall be free of VAT. JOHN HAY P EOP LES ALTER NATIVE COALITION, MATEO CARIO F OUNDA T I O N I N C . , C E N T E R F O R ALTERNATIVE SYSTEMS FOUNDATION INC., REGINA VICTORIA A. BENAFIN REPRESENTED AND JOINEDBY HER MOTHER MRS. ELISA BENAFIN, IZABEL M. LUYK REPRESENTED AND JOINED BY HER MOTHERMRS. REBECCA MOLINA LUYK, KATHERINE PE REPRESENTED AND JOINED BY HER MOTHER ROSEMARIEG. PE, SOLEDAD S. CAMILO, ALICIA C. PACALSO ALIAS "KEVAB," BETTY I. STRASSER, RUBY C. GIRON,URSULA C. PEREZ ALIAS "BA-YAY," EDILBERTO T. CLARAVALL, CARMEN CAROMINA, LILIA G. YARANON,D I A N E M O N D O C , p e t i t i o n e r s , v s . V I C T O R L I M , P R E S I D E N T , B A S E S C O N V E R S I O N D E V E L O P M E N T AUTHORITY; JOHN HAY PORO POINT DEVELOPMENT CORPORATION, CITY OF BAGUIO, TUNTEX (B.V.I.)CO. LTD., ASIAWORLD INTERNATIONALE GROUP, INC., DEPARTMENT OF ENVIRONMENT AND NATURALRESOURCES, respondents.Facts: The controversy stemmed from the issuance of Proclamation No. 420 by then President Ramos declaring a portionof Camp John Hay as a Special Economic Zone (SEZ) and creating a regime of tax exemption within the John HaySpecial Economic Zone. In the present petition, petitioners assailed the constitutionality of the proclamation. The Court also held that it is the legislature, unless limited by a provision of the Constitution, that has the full powerto exempt any person or corporation or class of property from taxation, its power to exempt being as broad as itspower to tax. The challenged grant of tax exemption would circumvent the Constitution's imposition that a lawgranting any tax exemption must have the concurrence of a majority of all the members of Congress. Moreover, theclaimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from thelanguage of the law on which it is based. Thus, the Court declared that the grant by Proclamation No. 420 of taxexemption and other privileges to the John Hay SEZ was void for being violative of the Constitution. However, theentire assailed proclamation cannot be declared unconstitutional, the other parts thereof not being repugnant tothe law or the Constitution. The delineation and declaration of a portion of the area covered by Camp John Hay as aSEZ was well within the powers of the President to do so by means of a proclamation. Where part of a statute isvoid as contrary to the Constitution, while another part is valid, the valid portion, if separable from the invalid, as inthe case at bar, may stand and be enforced. Issue: WON the petitioners have legal standing to bring the petition Ruling: YES Rationale: R.A. No. 7227 expressly requires the concurrence of the affected local government units to the creation of SEZs outof all the base areas in the country. The grant by the law on local government units of the right of concurrence onthe bases'

conversion is equivalent to vesting a legal standing on them, for it is in effect a recognition of the realinterests that communities nearby or surrounding a particular base area have in its utilization. Thus, the interest of petitioners, being inhabitants of Baguio, in assailing the legality of Proclamation No. 420, ispersonal and substantial such that they have sustained or will sustain direct injury as a result of the government actbeing challenged. Theirs is a material interest, an interest in issue affected by the proclamation and not merely aninterest in the question involved or an incidental interest, for what is at stake in the enforcement of ProclamationNo. 420 is the very economic and social existence of the people of Baguio City. ... Moreover, petitioners Edilberto T.Claravall and Lilia G. Yaranon were duly elected councilors of Baguio at the time, engaged in the local governanceof Baguio City and whose duties included deciding for and on behalf of their constituents the question of whether toconcur with the declaration of a portion of the area covered by Camp John Hay as a SEZ. Certainly then, petitionersClaravall and Yaranon, as city officials who voted against the sanggunian Resolution No. 255 (Series of 1994)supporting the issuance of the now challenged Proclamation No. 420, have legal standing to bring the presentpetition. COMMUNICATION MATERIALS AND DESIGN, INC et al vs.CA et al. G.R. No. 102223 August 22, 1996 FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI) and ASPAC MULTITRADE INC., (ASPAC) are both domestic corporations.. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC) are corporations duly organized and existing under the laws of the State of Alabama, USA. There is no dispute that ITEC is a foreign corporation not licensed to do business in the Philippines. ITEC entered into a contract with ASPAC referred to as Representative Agreement. Pursuant to the contract, ITEC engaged ASPAC as its exclusive representative in the Philippines for the sale of ITECs products, in consideration of which, ASPAC was paid a stipulated commission. Through a License Agreement entered into by the same parties later on, ASPAC was able to incorporate and use the name ITEC in its own name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known as ASPAC-ITEC (Philippines). One year into the second term of the parties Representative Agreement, ITEC decided to terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their agreements. ITEC charges the petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL), the President of which is likewise petitioner Aguirre, of using knowledge and information of ITECs products specifications to devel op their own line of equipment and product support, which are similar, if not identical to ITECs own, and offering them to ITECs former customer. The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping which justifies the application against it of the principle of forum non conveniens. The MTD was denied. Petitioners elevated the case to the respondent CA on a Petition for Certiorari and Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied, hence this Petition for Review on Certiorari under Rule 45. ISSUE: 1. Did the Philippine court acquire jurisdiction over the person of the petitioner corp, despite allegations of lack of capacity to sue because of non-registration? 2. Can the Philippine court give due course to the suit or dismiss it, on the principle of forum non convenience? HELD: petition dismissed. 1. YES; We are persuaded to conclude that ITEC had been engaged in or doing business in the Philippines for some time now. This is the inevitable result after a scrutiny of the different contracts and agreements entered into by ITEC with its various business contacts in the country. Its arrangements, with these entities indicate convincingly that ITEC is actively engaging in business in the country. A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. One who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity. In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this commonly used scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the same ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties. 2. YES; Petitioners insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion

whether to give cognizance or not to the present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner is not at liberty to question plaintiffs standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier. Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non convenience. Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: 1) That the Philippine Court is one to which the parties may conveniently resort to; 2) That the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, 3) That the Philippine Court has or is likely to have power to enforce its decision. The aforesaid requirements having been met, and in view of the courts disposition to give due course to the questioned action, the matter of the present forum not being the most convenient as a ground for the suits dismissal, deserves scant consideration.








G.R. No. 75198 October 18, 1988 Facts: RJL Martinez Fishing Corporation is engaged in deep-sea fishing. In the course of its business, it needed electrical generators for the operation of its business. Schmid and Oberly sells electrical generators with the brand of Nagata, a Japanese product. D. Nagata Co. Ltd. of Japan was Schmids supplier. Schmid advertised the 12 Nagata generators for sale and RJL purchased 12 brand new generators. Through an irrevocable line of credit, Nagata shipped to the Schmid the generators and RJL paid the amount of the purchase price. (First sale = 3 generators; Second sale = 12 generators). Later, the generators were found to be factory defective. RJL informed the Schmid that it shall return the 12 generators. 3 were returned. Schmid replaced the 3 generators subject of the first sale with generators of a different brand. As to the second sale, 3 were shipped to Japan and the remaining 9 were not replaced. RJL sued the defendant on the warranty, asking for rescission of the contract and that Schmid be ordered to accept the generators and be ordered to pay back the purchase money as well as be liable for damages. Schmid opposes such liability averring that it was merely the indentor in the sale between Nagata Co., the exporter and RJL Martinez, the importer. As mere indentor, it avers that is not liable for the sellers implied warranty against hidden defects, Schmid not having personally assumed any such warranty. Issue: 1) WON the second transaction between the parties was a sale or an indent transaction? INDENT TRANSACTION 2) Even is Schmid is merely an indentor, may it still be liable for the warranty? YES, under its contractual obligations it may be liable. But in this case, Schmid did not warrant the products. Held: An indentor is a middlemen in the same class as commercial brokers and commission merchants. A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some

purpose the agent of both parties. There are 3 parties to an indent transaction, (1) buyer, (2) indentor, and (3) supplier who is usually a non-resident manufacturer residing in the country where the goods are to be bought. The chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction. RJL MARTINEZ admitted that the generators were purchased through indent order. RJL admitted in its demand letter previously sent to SCHMID that 12 of 15 generators were purchased through your company, by indent order and three (3) by direct purchase. The evidence also show that RJL MARTINEZ paid directly NAGATA CO, for the generators, and that the latter company itself invoiced the sale and shipped the generators directly to the former. The only participation of Schmid was to act as an intermediary or middleman between Nagata and RJL, by procuring an order from RJL and forwarding the same to Nagata for which the company received a commission from Nagata.





The essence of the contract of sale is transfer of title or agreement to transfer it for a price paid or promised. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is, a sale. 3 the evidences conclusion pointing that to fact CO., that was the Schmid real is seller merely of the an 12 indentor: generators. a. the Quotation and the General Conditions of Sale on the dorsal side thereof do not necessarily lead to NAGATA b. When RJL complained to SCHMID, it immediately asked RJL to send the defective generators to its shop to determine what was wrong. SCHMID informed NAGATA about the complaint of RJL. After the generators were found to have factory defects, SCHMID facilitated the shipment of three (3) generators to Japan and, after their repair, back to the Philippines. c. the letter from NAGATA CO. to SCHMID regarding the repair of the generators indicated that the latter was within the purview of a seller. 2) Even as SCHMID was merely an indentor, there was nothing to prevent it from voluntarily warranting that twelve (12) generators subject of the second transaction are free from any hidden defects. In other words, SCHMID may be held answerable for some other contractual obligation, if indeed it had so bound itself. As stated above, an indentor is to some extent an agent of both the vendor and the vendee. As such agent, therefore, he may expressly obligate himself to undertake the obligations of his principal. Notably, nowhere in the Quotation is it stated therein that SCHMID did bind itself to answer for the defects of the things sold. Balagtas testified initially that the warranty was in the receipts covering the sale. Nowhere is it stated in the invoice that SCHMID warranted the generators against defects. He again changed his mind and asserted that the warranty was given verbally. Hence, RJL has failed to prove that SCHMID had given a warranty on the 12 generators subject of the second transaction. MR Holdings Ltd. vs. Sheriff Bajar Case Digest MR Holdings Ltd. vs. Sheriff Bajar [GR 138104, April 11, 2002]

Facts: Under a "Principal Loan Agreement" and "Complementary Loan Agreement," both dated 4 November 1992, Asian Development Bank (ADB), a multilateral development finance institution, agreed to extend to Marcopper Mining Corporation (Marcopper) a loan in the aggregate amount of US$40,000,000.00 to finance the latter's mining project at Sta. Cruz, Marinduque. The principal loan of US$15,000,000.00 was sourced from ADB's ordinary capital resources, while the complementary loan of US$25,000,000.00 was funded by the Bank of Nova Scotia, a participating finance institution. On even date, ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation which owns 40% of Marcopper, executed a "Support and Standby Credit Agreement" whereby the latter. agreed to provide Marcopper with cash flow support for the payment of its obligations to ADB. To secure the loan, Marcopper executed in favor of

ADB a "Deed of Real Estate and Chattel Mortgage" dated 11 November 1992, covering substantially all of its (Marcopper's) properties and assets in Marinduque.

It was registered with the Register of Deeds on 12 November 1992. When Marcopper defaulted in the payment of its loan obligation, Placer Dome, in fulfillment of its undertaking under the "Support and Standby Credit Agreement," and presumably to preserve its international credit standing, agreed to have its subsidiary corporation, MR Holding, Ltd., assumed Marcopper's obligation to ADB in the amount of US$18,453,450.02. Consequently, in an "Assignment Agreement" dated 20 March 1997 ADB assigned to MR Holdings all its rights, interests and obligations under the principal and complementary loan agreements, ("Deed of Real Estate and Chattel Mortgage," and "Support and Standby Credit Agreement"). On 8 December 1997, Marcopper likewise executed a "Deed of Assignment" in favor of MR Holdings. Under its provisions, Marcopper assigns, transfers, cedes and conveys to MR Holdings, its assigns and/or successors-in-interest all of its (Marcopper's) properties, mining equipment and facilities. Meanwhile, it appeared that on 7 May 1997, Solidbank Corporation (Solidbank) obtained a Partial Judgment against Marcopper from the RTC, Branch 26, Manila, in Civil Case 96-80083, ordering Marcopper to pay Solidbank he amount if PHP 52,970,756.89, plus interest and charges until fully paid; to pay an amount equivalent to 10% of above-stated amount as attorney's fees; and to pay the costs of suit. Upon Solidbank's motion, the RTC of Manila issued a writ of execution pending appeal directing Carlos P. Bajar, sheriff, to require Marcopper "to pay the sums of money to satisfy the Partial Judgment." Thereafter, Bajar issued two notices of levy on Marcopper's personal and real properties, and over all its stocks of scrap iron and unserviceable mining equipment. Together with sheriff Ferdinand M. Jandusay of the RTC, Branch 94, Boac, Marinduque, Bajar issued two notices setting the public auction sale of the levied properties on 27 August 1998 at the Marcopper mine site. Having learned of the scheduled auction sale, MR Holdings served an "Affidavit of Third-Party Claim" upon the sheriffs on 26 August 1998, asserting its ownership over all Marcopper's mining properties, equipment and facilities by virtue of the "Deed of Assignment." Upon the denial of its "Affidavit of Third-Party Claim" by the RTC of Manila, MR Holdings commenced with the RTC of Boac, Marinduque, presided by Judge Leonardo P. Ansaldo, a complaint for reivindication of properties, etc., with prayer for preliminary injunction and temporary restraining order against Solidbank, Marcopper, and sheriffs Bajar and Jandusay (Civil Case 98-13).

In an Order dated 6 October 1998, Judge Ansaldo denied MR Holdings' application for a writ of preliminary injunction on the ground that (a) MR Holdings has no legal capacity to sue, it being a foreign corporation doing business in the Philippines without license; (b) an injunction will amount "to staying the execution of a final judgment by a court of coequal and concurrent jurisdiction;" and (c) the validity of the "Assignment Agreement" and the "Deed of Assignment" has been "put into serious question by the timing of their execution and registration." Unsatisfied, MR Holdings elevated the matter to the Court of Appeals on a Petition for Certiorari, Prohibition and Mandamus (CA-GR SP 49226). On 8 January 1999, the Court of Appeals rendered a Decision affirming the trial court's decision. MR Holdings filed the Petition for Review on Certiorari.

Issue: Whether MR Holdings' participation under the "Assignment Agreement" and the "Deed of Assignment" constitutes doing business.

Held: Batas Pambansa 68, otherwise known as "The Corporation Code of the Philippines," is silent as to what constitutes doing" or "transacting" business in the Philippines. Fortunately, jurisprudence has supplied the deficiency and has held that the term "implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object for which the corporation was organized." The traditional case law definition has metamorphosed into a statutory definition, having been adopted with some qualifications in various pieces of legislation in Philippine jurisdiction, such as Republic Act 7042 (Foreign Investment Act of 1991), and Republic Act 5455. There are other statutes defining the term "doing business," and as may be observed, one common denominator among them all is the concept of "continuity." The expression "doing business" should not be given such a strict and literal construction as to make it apply to any corporate dealing whatever. At this early stage and with MR Holdings' acts or transactions limited to the assignment contracts, it cannot be said that it had performed acts intended to continue the business for which it was organized. Herein, at this early stage and with MR Holdings' acts or transactions limited to the assignment contracts, it cannot be said that it had performed acts intended to continue the business for which it was organized. It may not be amiss to point out that the purpose or business for which MR Holdings was organized is not discernible in the records. No effort was exerted by the Court of Appeals to establish the nexus between MR Holdings' business and the acts supposed to constitute "doing business." Thus, whether the assignment contracts were incidental to MR Holdings' business or were continuation thereof is beyond determination. The Court of Appeals' holding that MR Holdings was determined to be "doing business" in the Philippines is based mainly on conjectures and speculation. In concluding that the "unmistakable intention" of MR Holdings is to continue Marcopper's business, the Court of Appeals hangs on the wobbly premise that "there is no other way for petitioner to recover its huge financial investments which it poured into Marcopper's rehabilitation without it (petitioner) continuing Marcopper's business in the country." Absent overt acts of MR Holdings from which we may directly infer its intention to continue Marcopper's business, the Supreme Court cannot give its concurrence. Significantly, a view subscribed upon by many authorities is that the mere ownership by a foreign corporation of a property in a certain state, unaccompanied by its active use in furtherance of the business for which it was formed, is insufficient in itself to constitute doing business. Further, long before MR Holdings assumed Marcopper's debt to ADB

and became their assignee under the two assignment contracts, there already existed a "Support and Standby Credit Agreement" between ADB and Placer Dome whereby the latter bound itself to provide cash flow support for Marcopper's payment of its obligations to ADB. Plainly, MR Holdings' payment of US$18,453,450.12 to ADB was more of a fulfillment of an obligation under the "Support and Standby Credit Agreement" rather than an investment. That MR Holdings had to step into the shoes of ADB as Marcopper's creditor was just a necessary legal consequence of the transactions that transpired. Also, the "Support and Standby Credit Agreement" was executed 4 years prior to Marcopper's insolvency, hence, the alleged "intention of MR Holdings to continue Marcopper's business" could have no basis for at that time, Marcopper's fate cannot yet be determined. In the final analysis, MR Holdings was engaged only in isolated acts or transactions. Single or isolated acts, contracts, or transactions of foreign corporations are not regarded as a doing or carrying on of business. Typical examples of these are the making of a single contract, sale, sale with the taking of a note and mortgage in the state to secure payment therefor, purchase, or note, or the mere commission of a tort. In these instances, there is no purpose to do any other business within the country. Vinoya v. NLRC [G.R. No. 126596, February 2, 2000] Tuesday, January 27, 2009 Labels: Case Digests, Labor Law


by Coffeeholic


FACTS: Petitioner Vinoya was hired by RFC as sales representative. He avers that he was transferred by RFC to PMCI, an agency which provides RFC with additional contractual workers. In PMCI, he was reassigned to RFC as sales representative and then later informed by the personnel manager of RFC that his services were terminated. RFC maintains that no employer-employee relationship existed between petitioner and itself. Petitioner filed complaint for illegal dismissal. RFC alleges that PMCI is an independent contractor as the latter is a highly capitalized venture.

ISSUE: Whether or not petitioner was an employee of RFC and thereby, illegally dismissed.

HELD: Yes. PMCI was a labor-only contractor. Although the Neridoctrine stated that it was enough that a contractor had substantial capital to show it was an independent contractor, the case of Fuji Xerox clarified the doctrine stating that an independent business must undertake the performance of the contract according to its own manner and method free from the control of the principal. In this case, PMCI did not even have substantial capitalization as only a small amount of its authorized capital stock was actually paid-in. Also, PMCI did notcarry on an independent business or undertake the performance of its contract according to its own manner and method. Furthermore, PMCI was not engaged to perform a specific and special job or service, which is one of the strong indicators that is an independent contractor. Lastly, in labor-only contracting, the employees supplied by the contractor perform activities, which are directly related to the main business of its principal. It is clear that in this case, the work ofpetitioner as sales representative was directly related to the business of RFC. Since due to petitioners length of service, he attained the status of regular employee thus cannot be terminated without just or valid cause. RFC failed to prove that his dismissal was for cause and that he was afforded procedural due process. Petitioner is thus entitled to reinstatement plus full backwages from his dismissal up to actual reinstatement. Case Digest on Vinoya v. NLRC, G.R. No. 126596, February 2, 2000- Labor Law Q: B is a lady Security Guard of Company O. She was last assigned at Vicente Madrigal Condominium II located in Ayala Avenue,Makati. In a memorandum, the Building Administrator of VM Condomunium II complained of the laxity of the guards in enforcing security measures and requested to reorganize the men and women assigned to the building to induce more discipline and proper decorum. B was then transferred another building in Taytay, Rizal. B filed a complaint alleging that her transfer amounted to an unjust dismissal. Was the transfer of B illegal? A: No. Service-oriented enterprises adhere to the business adage that, the customer is always right. In the employment of personnel, the employer has management prerogatives subject only to limitations imposed by law. The transfer of an employee would only amount to constructive dismissal when such is unreasonable, inconvenient,

or prejudicial to the employee, and when it involves a demotion in rank or diminution of salaries, benefits and other privileges. In this case, the transfer was done in good faith and in the best interest of the business enterprise. Evidence does not show that Company O discriminated against B in effecting her transfer as such was done to comply with a reasonable request. The mere inconvenience of a new job assignment does not by itself make the transfer illegal. Q: Give an example of export sales under the Omnibus Investment Code of 1987 and other special laws. In Panasonic Communications Imaging Corporation of the Philippines v. CIR , Panasonic produced and exported paper copiers and their sub-assemblies, parts, and components. It was registered with the Board of Investments as a preferred pioneer enterprise under the Omnibus Investment Code of 1987; it was a registered VAT enterprise; and its export sales were zerorated. [Panasonic Communications Imaging Corporation of the Philippines v. CIR, GR No. 178090, 8 Feb. 2010.] Cargill Inc. vs Intra Strata Assurance Corporation

Facts: Cargill (foreign) is a corporation organized and existing under the laws of the State of Delaware. Cargill executed a contract with Northern Mindanao Corporation (NMC) (domestic), whereby NMC agreed to sell to petitioner 20,000 to 24,000 metric tons of molasses to be delivered from Jan 1 to 30 1990 for $44 per metric ton The contract provided that CARGILL was to open a Letter of Credit with the BPI. NMC was permitted to draw up 500,000 representing the minimum price of the contract The contract was amended 3 times (in relation to the amount and the price). But the third amendment required NMC to put up a performance bond which was intended to guarantee NMCs performance to deliver the molasses during the prescribed shipment periods In compliance, INTRA STRATA issued a perfor mance bond to guarantee NMCs delivery. NMC was only able to deliver 219551 metric tons out of the agreed 10,500. Thus CARGILL sent demand letters to INTRA claiming payment under the performance and surety bonds. When INTRA failed to pay, CARGILL filed a complaint. CARGILL NMC and INTRA entered into a compromise agreement approved by the court, such provided that NMC would pay CARGILL 3 million upon signing and would deliver to CARGILL 6,991 metric tons of molasses. But NMC still failed to comply RTC in favor of CARGILL CA CARGILL does not have the capacity to file suit since it was a foreign corporation doing business in the PH without the requisite license. The purchase of molasses were in pursuance of its basic business and not just mere isolated and incidental transactions

Issue: Whether or not petitioner is doing or transacting business in the Philippines in contemplation of the law and established jurisprudence/ Whether or not CARGILL, an unlicensed foreign corporation, has legal capacity to sue before Philippine courts.

Held: YES According to Article 123 of the Corporation Code, a foreign corporation must first obtain a license and a certificate from the appropriate government agency before it can transact business in the Philippines. Where a foreign corporation does business in the Philippines without the proper license, it cannot maintain any action or proceeding before Philippine courts, according to Article 133 of the Corporation Code Doing Business o .. and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization. Since INTRA is relying on Section 133 of the Corporation Code to bar petitioner from maintaining an action in Philippine courts, INTRA bears the burden of proving that CARGILL was doing business in the PH. In this case, we find that INTRA failed to prove that CARGILLs activities in the Philippines constitute doing business as would prevent it from bringing an action. There is no showing that the transactions between petitioner and NMC signify the intent of petitioner to establish a continuous business or extend its operations in the Philippines. In this case, the contract between petitioner and NMC involved the purchase of molasses by petitioner from NMC. It was NMC, the domestic corporation, which derived income from the transaction and not petitioner. To constitute doing business, the activity undertaken in the Philippines should involve profit -making. Other factors which support the finding that petitioner is not doing business in the Philippines are: (1) petitioner does not have an office in the Philippines; (2) petitioner imports products from the Philippines through its nonexclusive local broker, whose authority to act on behalf of petitioner is limited to soliciting purchases of products from suppliers engaged in the sugar trade in the Philippines; and (3) the local broker is an independent contractor and not an agent of petitioner. To be doing or transacting business in the Philippines for purposes of Section 133 of the Corporation Code, the foreign corporation must actually transact business in the Philippines, that is, perform specific business transactions within the Philippine territory on a continuing basis in its own name and for its own account CARGILL is a foreign company merely importing molasses from a Philipine exporter. A foreign company that merely imports goods from a Philippine exporter, without opening an office or appointing an agent in the Philippines, is not doing business in the Philippines. Constitutional Law 1 Exception to Non- Delegation Doctrine- Delegation to the President

HON. EXECUTIVE SECRETARY vs. SOUTHWING HEAVY INDUSTRIES, INC. G.R. No. 164171 February 20, 2006 HON. EXECUTIVE SECRETARY, HON. SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), COMMISSIONER OF CUSTOMS, ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE, AND CHIEF OF LTO, SUBIC BAY FREE PORT ZONE, Petitioners, vs. SOUTHWING HEAVY INDUSTRIES, INC., represented by its President JOSE T. DIZON, UNITED AUCTIONEERS, INC., represented by its President DOMINIC SYTIN, and MICROVAN, INC., represented by its President MARIANO C. SONON, Respondents. G.R. No. 164172 February 20, 2006 HON. EXECUTIVE SECRETARY, SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATION (DOTC), COMMISSIONER OF CUSTOMS, ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE AND CHIEF OF LTO, SUBIC BAY FREE PORT ZONE, Petitioners, vs. SUBIC INTEGRATED MACRO VENTURES CORP., represented by its President YOLANDA AMBAR,Respondent. G.R. No. 168741 February 20, 2006 HON. EXECUTIVE SECRETARY, HON. SECRETARY OF FINANCE, THE CHIEF OF THE LAND TRANSPORTATION OFFICE, THE COMMISSIONER OF CUSTOMS, and THE COLLECTOR OF CUSTOMS, SUBIC SPECIAL ECONOMIC ZONE, Petitioners, vs. MOTOR VEHICLE IMPORTERS ASSOCIATION OF SUBIC BAY FREEPORT, INC., represented by its President ALFREDO S. GALANG, Respondent. CASE This instant consolidated petitions seek to annul the decisions of the Regional Trial Court which declared Article 2, Section 3.1 of Executive Order 156 unconstitutional. Said EO 156 prohibits the importation of used vehicles in the country inclusive of the Subic Bay Freeport Zone. FACTS On December 12, 2002, President Gloria Macapagal Arroyo issued Executive Order 156 entitled "Providing for a comprehensive industrial policy and directions for the motor vehicle development program and its implementing guidelines." The said provision prohibits the importation of all types of used motor vehicles in the country including the Subic Bay Freeport, or the Freeport Zone, subject to a few exceptions. Consequently, three separate actions for declaratory relief were filed by Southwing Heavy Industries Inc, Subic Integrated Macro Ventures Corp , and Motor Vehicle Importers Association of Subic Bay Freeport Inc. praying that judgment be rendered declaring Article 2, Section3.1 of the EO 156 unconstitutional and illegal. The RTC rendered a summary judgment declaring that Article 2, Section 3.1 of EO 156 constitutes an unlawful usurpation of legislative power vested by the Constitution with Congress and that the proviso is contrary to the mandate of Republic Act 7227(RA 7227) or the Bases Conversion and Development Act of 1992 which allows the free flow of goods and capital within the Freeport. The petitioner appealed in the CA but was denied on the ground of lack of any statutory basis for the President to issue the same. It held that the prohibition on the importation of use motor vehicles is an exercise of police power vested on the legislature and absent any enabling law, the exercise thereof by the President through an executive issuance is void.

ISSUE Whether or not Article2, Section 3.1 of EO 156 is a valid exercise of the Presidents quasi-legislative power. YES. SC RULING Police power is inherent in a government to enact laws, within constitutional limits, to promote the order, safety, health, morals, and general welfare of society. It is lodged primarily with the legislature. By virtue of a valid delegation of legislative power, it may also be exercised by the President and administrative boards, as well as the lawmaking bodies on all municipal levels, including the barangay. Such delegation confers upon the President quasi-legislative power which may be defined as the authority delegated by the law-making body to the administrative body to adopt rules and regulations intended to carry out the provisions of the law and implement legislative policy provided that it must comply with the following requisites: (1) Its promulgation must be authorized by the legislature; (2) It must be promulgated in accordance with the prescribed procedure; (3) It must be within the scope of the authority given by the legislature; and (4) It must be reasonable. The first requisite was actually satisfied since EO 156 has both constitutional and statutory bases. Anent the second requisite, that the order must be issued or promulgated in accordance with the prescribed procedure, the presumption is that the said executive issuance duly complied with the procedures and limitations imposed by law since the respondents never questioned the procedure that paved way for the issuance of EO 156 but instead, what they challenged was the absence of substantive due process in the issuance of the EO. In the third requisite, the Court held that the importation ban runs afoul with the third requisite as administrative issuances must not be ultra vires or beyond the limits of the authority conferred. In the instant case, the subject matter of the laws authorizing the President to regulate or forbid importation of used motor vehicles, is the domestic industry. EO 156, however, exceeded the scope of its application by extending the prohibition on the importation of used cars to the Freeport, which RA 7227, considers to some extent, a foreign territory. The domestic industry which the EO seeks to protect is actually the "customs territory" which is defined under the Rules and Regulations Implementing RA 7227 which states: "the portion of the Philippines outside the Subic Bay Freeport where the Tariff and Customs Code of the Philippines and other national tariff and customs laws are in force and effect." Regarding the fourth requisite, the Court finds that the issuance of EO is unreasonable. Since the nature of EO 156 is to protect the domestic industry from the deterioration of the local motor manufacturing firms, the Court however, finds no logic in all the encompassing application of the assailed provision to the Freeport Zone which is outside the

customs territory of the Philippines. As long as the used motor vehicles do not enter the customs territory, the injury or harm sought to be prevented or remedied will not arise. The Court finds that Article 2, Section 3.1 of EO 156 is VOID insofar as it is made applicable within the secured fenced-in former Subic Naval Base area but is declared VALID insofar as it applies to the customs territory or the Philippine territory outside the presently secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-A (an EO executed by Pres. Fidel V. Ramos in 1993 providing the Tax and Duty Free Privilege within the Subic Freeport Zone). Hence, used motor vehicles that come into the Philippine territory via the secured fenced-in former Subic Naval Base area may be stored, used or traded therein, or exported out of the Philippine territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in former Subic Naval Base area. Petitions are PARTIALLY GRANTED provided that said provision is declared VALID insofar as it applies to the Philippine territory outside the presently fenced-in former Subic Naval Base area and VOID with respect to its application to the secured fenced-in former Subic Naval Base area.

Namuhe vs. Ombudsman G.R. No. 124965, October 29, 1998 Sunday, January 25, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: Petitioners



at the

Mountain ProvinceEngineering District

and Ifugao Engineering District of the DPWH. In connection with the purported public bidding held for the Bailey bridgecomponents for use in Mainit, Mountain Province, they were charged with dishonesty, falsification of official documents, grave misconduct, gross neglect of duty, violation of office rules and regulations and conduct prejudicial to the best interest of the service. As a result, the Office of the Ombudsman dismissed petitioners from the government service.

Issue: Whether or not the SC has jurisdiction over appeals of administrative disciplinary decisions of the Office of the Ombudsman

Held: In Fabian v. Desierto (G.R. No. 129742, September 16, 1998), the Court held that appeals from decisions of the Office of the Ombudsman in administrative disciplinary cases should be taken to the CA under Rule 43 of the 1997 Rules of Civil Procedure. In so holding, the Court en banc declared as unconstitutional Sec. 27 of RA 6770 or the Ombudsman Act of 1989, which provided that decisions of the Office of the Ombudsman may be appealed to the SC by way of a petition for review on certiorari under Rule 45 of the Rules of Court. Such provision was held violative of Sec. 30, Art. VI of the Constitution, as it expanded the jurisdiction of the SC without its advice and consent.


[G.R. No. 124932. October 29, 1998]


[G.R. No. 124913. October 29, 1998]

ROMULO H. MABUNGA, petitioner, vs. THE OMBUDSMAN and OMB TASK FORCE ON PUBLIC WORKS AND HIGHWAYS, respondents. DECISION PANGANIBAN, J.: In Fabian v. Desierto et al.,[1] this Court declared that Section 27 of Republic Act 6770, otherwise known as the Ombudsman Act of 1989, was unconstitutional. Accordingly, this Court has no jurisdiction over petitions for review of decisions of the Office of the Ombudsman imposing administrative disciplinary sanctions.

The Case

Filed before us, under Rule 45 of the Rules of Court, are three Petitions for Review on Certiorari seeking the reversal of the March 28, 1994 Resolution[2] of the Office of the Ombudsman (OMB), which dismissed petitioners from government service for acts of dishonesty, falsification of public documents, misconduct and conduct prejudicial to the best interest of the service.[3] Likewise challenged is the OMBs Order dated December 11, 1995, which denied petitioners Motions for Reconsideration.

The Facts

Petitioners Jimmie F. Tel-Equen, Rolando D. Ramirez and Rudy P. Antonio were employed at the Mountain Province Engineering District (MPED) of the Department of Public Works and Highways in Bontoc, Mountain Province. Tel-Equen was the district engineer, Ramirez the assistant district engineer, and Antonio the chief of the construction section. On the other hand, Petitioners Romulo H. Mabunga and Romeo C. Namuhe were the district engineer and construction section chief, respectively, of the Ifugao Engineering District (IED) in Lagawe, Ifugao. The petitioners were among the respondents in the Administrative Complaint, docketed as OMB-0-91-0430, filed by the OMB Task Force on Public Works and Highways. In connection with the purported public bidding held for the Bailey bridge components for use in Mainit, Mountain Province, they were charged with dishonesty, falsification of official documents, grave misconduct, gross neglect of duty, violation of office rules and regulations and conduct prejudicial to the best interest of the service. As earlier stated, the OMB dismissed petitioners from the government service in the first assailed Resolution promulgated on March 28, 1994, and denied reconsideration in the second challenged Order dated December 11, 1995. Hence, these three petitions[4] were directly filed before this Court under Rule 45 of the Rules of Court. [5] In its Resolution dated February 24, 1997, the Court ordered the consolidation of these cases. [6]

Ruling of the Ombudsman

In ordering the dismissal of herein petitioners from the government service, the OMB ruled: x x x xxx xxx

After a circumspect evaluation of the record, it is crystal clear that there was conspiracy among the respondents, Jimmie F. TelEquen, Francisco Miranda, Rudy P. Antonio, Alfredo C. Apolinar, Rodolfo B. Camarillo and Felix Gasmena, Jr. to defraud the government considering the following circumstances, to wit: Firstly, there was no immediate need for the bridge components and yet, they made it appear that the same were needed; Secondly, they made it appear that on May 10, 1990, they conducted a public bidding for said materials when in truth and in fact, there was no actual bidding as shown in the investigation report of the NBI; and lastly, the individual acts of the respondents contributed to the defraudation of the government when it was made to pay for its own property. While there was nothing illegal in the acts of Mabunga and Namuhe in the lending of the bailey bridge components, it is obvious from their acts that they had knowledge of the transaction and cooperated with Jimmie F. Tel-Equen and other employees of the MPED in defrauding the government as shown by the following circumstances: Firstly, there is nothing in the records to show the necessity of lending the bridge components; secondly, it was the supplier, Dangayo, who handcarried the letter-request of Tel-Equen to Mabunga and Namuhe. Had they been more circumspect in their actuations, they would have questioned the authority of Dangayo to transact business with them for and in behalf of the MPED; and lastly, in their statement before the NBI, they denied that it was Dangayo who brought the letter of Tel-Equen. They also denied having anything to do with the lending of the bridge components and pointed to Manuel Aguana, (who was given immunity by the Hon. Ombudsman) as the culprit who acted on his own without their prior consent and approval. The reason is they [were] privy to the transaction of Tel-Equen, otherwise they would have been more candid to the fact that it was Dangayo who went to their office to facilitate the release of the bridge components. xxx xxx xxx

As shown by the evidence on record, the government was defrauded in the amount of P553,900.00 on account of the fictitious transaction engineered by the officials of the Mt. Province Engineering District (MPED) and the Ifugao Engineering District (IED) thru falsification of various official and public documents.


Petitioner Tel-Equen contends that the evidence against him is weak and inadmissible, Petitioners Ramirez and Antonio assert that there was a misappreciation of pertinent facts, while Petitioners Mabunga and Namuhe insist that the findings against them have no factual and legal basis. In sum, petitioners question the factual findings and conclusion reached by the OMB in the administrative cases against them. Apart from the foregoing issues raised by petitioners, the overriding question before us is the jurisdiction of the Supreme Court over appeals of administrative disciplinary decisions of the OMB. It is well-settled that the issue of jurisdiction over the subject may, at any time, be raised by the parties or motu proprio considered by the Court.[7]

The Courts Ruling In light of the recent ruling in Fabian v. Desierto et al., [8] this Court has no jurisdiction over the present petitions. In the interest of justice, these petitions should be referred and transferred to the Court of Appeals.

Lack of Jurisdiction

In Fabian, the Court held that appeals from decisions of the Office of the Ombudsman in administrative disciplinary cases should be taken to the Court of Appeals under Rule 43 of the 1997 Rules of Civil Procedure. In so holding, the Court en banc, through Mr. Justice Florenz D. Regalado, declared unconstitutional Section 27 of Republic Act 6770 or the Ombudsman Act of 1989, which provided that decisions of the Office of the Ombudsman may be appealed to the Supreme Court by way of a petition for review on certiorari under Rule 45 of the Rules of Court. Such provision was held violative of Section 30, Article VI of the Constitution, [9]as it expanded the jurisdiction of the Supreme Court without its advice and consent. The Court also took note of the regulatory philosophy adopted in appeals from quasi-judicial agencies in the 1997 Revised Rules of Civil Procedure. Thus, it held that [u]nder the present Rule 45, appeals may be brought through a petition for review on certiorari, but only from judgments and final orders of the courts enumerated in Section 1 thereof. Appeals from judgments and final orders of quasi-judicial agencies are now required to be brought to the Court of Appeals on a verified petition for review, under the requirements and conditions in Rule 43 which was precisely formulated and adopted to provide for a uniform rule of appellate procedure for quasi-judicial agencies.[10] The Office of the Ombudsman is a quasi-judicial agency falling under Rule 43. As the Court succinctly stated: It is suggested, however, that the provisions of Rule 43 should apply only to ordinary quasi -judicial agencies, but not to the Office of the Ombudsman which is a high constitutional body. We see no reason for this distinction for, if hierarchical rank should be a criterion, that proposition thereby disregards the fact that Rule 43 even includes the Office of the President and the Civil Service Commission, although the latter is even an independent constitutional commission, unlike the Office of the Ombudsman, which is a constitutionally-mandated but statutorily-created body.[11] The transfer of the consolidated petitions at bar to the Court of Appeals would not impair any substantive right of the petitioners, as the matter relates to procedure only. Worth repeating is the Courts elucidation on the matter in Fabian: xxx a transfer by the Supreme Court, in the exercise of its rule making-power, of pending cases involving review of decisions of the Office of the Ombudsman in administrative disciplinary actions to the Court of Appeals which shall now be vested with exclusive appellate jurisdiction thereover, relates to procedure only. This is so because it is not the right to appeal of an aggrieved party which is affected by law. That right has been preserved. Only the procedure by which the appeal to be made or decided has been changed. The rationale for this is that no litigant has a vested right in a particular remedy, which may be changed by substitution without impairing vested rights, hence he can have none in rules of procedure which relate to the remedy. xxx xxx xxx

Thus, it has been generally held that rules or statutes involving a transfer of cases from one court to another, are procedu ral and remedial merely and that, as such, they are applicable to actions pending at the time the statute went into effect, or, in the case at bar, when its invalidity was declared.[12] Instead of dismissing the petitions for lack of jurisdiction, we find that referring and transferring these petitions to the Court of Appeals is more in consonance with justice and due process. WHEREFORE, these consolidated cases are hereby REFERRED and TRANSFERRED for final disposition to the Court of Appeals, which shall pro hac vice consider them petitions for review under Rule 43, without prejudice to its requiring the parties to submit such amended or supplemental pleadings and additional documents or records as it may deem necessary and proper in the premises. SO ORDERED TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILS. VS. COMELEC [289 SCRA 337; G.R. NO. 132922; 21 APR 1998] Monday, February 02, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. (TELEBAP) is an organization of lawyers of radio and television broadcasting companies. It was declared to be without

legal standing to sue in this case as, among other reasons, it was not able to show that it was to suffer from actual or threatened injury as a result of the subject law. Petitioner GMA Network, on the other hand, had the requisite standing to bring the constitutional challenge. Petitioner operates radio and television broadcast stations in the Philippines affected by the enforcement of Section 92, B.P. No. 881.













Comelec Time- The Commission shall procure radio and television time to be known as the Comelec Time which shall be allocated equally and impartially among the candidates within the area of coverage of all radio and television stations. For this purpose, the franchise of all radio broadcasting and television stations are hereby amended so as to provide radio or television time, free of charge, during the period of campaign.

Petitioner contends that while Section 90 of the same law requires COMELEC to procure print space in newspapers and magazines with payment, Section 92 provides that air time shall be procured by COMELEC free of charge. Thus it contends that Section 92 singles out radio and television stations to provide free air time.

Petitioner claims that it suffered losses running to several million pesos in providing COMELEC Time in connection with the 1992 presidential election and 1995 senatorial election and that it stands to suffer even more should it be required to do so again this year. Petitioners claim that the primary source of revenue of the radio and television stations is the sale of air time to advertisers and to require these stations to provide free air time is to authorize unjust taking ofprivate property. According to petitioners, in 1992 it lost P22,498,560.00 in providing free air time for one hour each day and, in this years elections, it stands to lost P58,980,850.00 in view of COMELECs requirement that it provide at least 30 minutes of prime time daily for such.


(1) Whether of not Section 92 of B.P. No. 881 denies radio andtelevision broadcast companies the equal protection of the laws.

(2) Whether or not Section 92 of B.P. No. 881 constitutes taking of property without due process of law and without just compensation.

Held: Petitioners argument is without merit. All broadcasting, whether radio or by television stations, is licensed by the government. Airwave frequencies have to be allocated as there are more individuals who want to broadcast that there are frequencies to assign. Radio and television broadcasting companies, which are given franchises, do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege to use them. Thus, such exercise of the privilege may reasonably be burdened with the performance by the grantee

of some form of public service. In granting the privilege to operate broadcast stations and supervising radio and television stations, the state spends considerable public funds in licensing and supervising them.

The argument that the subject law singles out radio and television stations to provide free air time as against newspapers and magazines which require payment of just compensation for the print space they may provide is likewise without merit. Regulation of the broadcast industry requires spending of public funds which it does not do in the case of print media. To require the broadcast industry to provide free air time for COMELEC is a fair exchange for what the industry gets.

As radio and television broadcast stations do not own the airwaves, noprivate property is taken by the requirement that they provide air time to the COMELEC. Digested by: Jr Abul Subject: Insurance Law Title: Avon Insurance vs CA Topic: Reinsurance (sections 95-98) FACTS: It all started with Yupangco Cotton Mills engaged to secure with Worldwide Security and Insurance Co. Inc., several of its properties totaling P200 Million These contracts were covered by reinsurance treaties between Worldwide Surety and Insurance, and several foreign reinsurance companies including the petitioners through CJ Boatrwright acting as agent of Worldwide Surety and Insurance A Fire then razed the properties insured on December 1969 and May 2, 1981 A Deed of Assignment made by Worldwide Surety and Insurance acknowledged a remaining balance of P19,444,447.75 still due and assigned to Yupangco all reinsurance proceeds still collectible from all the foreign reinsurance companies. Yupangco then filed a collection suit on the above petitioners The service of summons were made through the office of the Insurance Commissioner but since the international reinsurers question the jurisdiction the trial court the case has not proceeded to trial on the merits The reinsurer is questioning also the service of summons through extraterritorial service under Sect 17 Rule 14 of the Rules of Court nor through the Insurance Commissioner under Sec 14 Yupangco also contends that since the reinsurers question the jurisdiction of the court they are deemed to have submitted to the jurisdiction of the court. ISSUE: WON the international reinsurers are doing business in the Philippines. WON the Philippine court has jurisdiction over these international reinsurers who are not doing business in the Philippines RULING: NO, international reinsurers are not doing business in the Philippines and the Philippine court has not acquired jurisdiction over them. The reinsurance treaties between the petitioners and Worldwide Surety and Insurance were made through an international insurance broker and NOT through any entity or means remotely connected with the Philippines Reinsurance company is not doing business in a certain state even if the property or lives which are insured by the original insurer company are located in that state. Reinsurance Contract is generally separate and distinct arrangement from the original contract of insurance. Doing business in the Philippines must be judged in the light of its peculiar circumstances upon its peculiar facts and upon the language of the statute applicable. o True test: whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized If there exist a domestic agent of the foreign corporation it can be served with summons through that agent without proving that such corporation is doing business in the phils or not. o NO allegation or demonstration of the existence of petitioners d omestic agent but avers simply that they are doing business not only abroad but in the Phils o Petitioners had not performed any act which would give the general public the impression that it had been engaging or intends to engage in its ordinary and usual business undertaking in the country. The purpose of the law in requiring that foreign corporations doing business in the country be licensed to do so, is to subject the foreign corporations doing business in the Philippines to the jurisdiction of the courts, 19 otherwise, a foreign corporation illegally doing business here because of its refusal or neglect to obtain the required license and authority to do business

may successfully though unfairly plead such neglect or illegal act so as to avoid service and thereby impugn the jurisdiction of the local courts. Voluntary appearance before the lower court to question the jurisdiction is not equivalent to submission to jurisdiction

The SC disposed the case in favor of the international insurers (petitioners) decla ring that the lower court has not acquired and cannot acquire jurisdiction over them and was ordered to desist from maintaining further proceeding against them. JG Summit Holdings Inc. vs. CA G.R. No. 124293, November 20, 2000

FACTS: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the construction, operation and management of the Subic National Shipyard, Inc., later became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%-40% and that the parties have the right of first refusal in case of a sale. Through a series of transfers, NIDCs rights, title and interest in PHILSECO eventually went to the National Government. In the interest of national economy, it was decided that PHILSECO should be privatized by selling 87.67% of its total outstanding capital stock to private entities. After negotiations, it was agreed that Kawasakis right of first refusal under the JVA be exchanged for the right to top by five percent the highest bid for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a stockholder, would exercise this right in its stead. During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right to top by 5% percent the highest bid, it was able to top JG Summits bid. JG Summit protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of PHILSECOs capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the stock. ISSUE:

Whether or not PHILSECO is a public utility Whether or not Kawasaki/PHI can purchase beyond 40% of PHILSECOs stocks

HELD: In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA No. 146. On the other hand, Kawasaki/PHI argued that PD No. 666 explicitly stated that a shipyard was not a public utility. But the SC stated that sec. 1 of PD No. 666 was expressly repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666. Therefore, the law that states that a shipyard is a public utility still stands. A shipyard such as PHILSECO being a public utility as provided by law is therefore required to comply with the 60%40% capitalization under the Constitution. Likewise, the JVA between NIDC and Kawasaki manifests an intention of the parties to abide by this constitutional mandate. Thus, under the JVA, should the NIDC opt to sell its shares of stock to a third party, Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock would not exceed 40% of the entire shares of stock. The NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100% Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the Constitution clearly limits only foreign capitalization. Kawasaki was bound by its contractual obligation under the JVA that limits its right of first refusal to 40% of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the capitalization of the joint venture on account of both constitutional and contractual proscriptions.


Sir Jonas Matias L. Javier Facts: Petitioners filed a complaint for violation of PD 49 or the Decree on the Protection of intellectual Property,with the NBI against Sunshine Home Video Inc. owned and operated by Danilo A. Pelindario. On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search warrant against Sunshine Home Video Inc. On the basis of affidavits and depositions, a search warrant was issued. The search warrant was served on December 14, 1987 wherein pirated video tapes and other equipments were seized. Pelindario filed a Motion to Lift the Order of the Search Warrant but was denied. A Motion for Reconsideration was filed and the Court granted it relying on the ruling in 20th Century Fox Film Corp. vs. C.A., decided on August 19, 1988, which provides that the master tapes of the copyrighted films from which the pirated films were copied must be presented in the issuance of a search warrant in order for the court to determine probable cause. Issues: 1. Whether or not the petitioners have the capacity to sue. 2. Whether or not the ruling in the 20th Century Fox case can be given retroactive effect to determine probable cause. Ruling: 1. Petitioners have the capacity to sue respondent. Any foreign corporation not doing business in the Philippines may maintain an action in our courts upon any cause of action, provided that the subject matter and the defendant are within the jurisdiction of the court. It is not the absence of the prescribed license but doing business in the Philippines without such license which debars the foreign corporation from access to our courts. Lack of Capacity to sue should not be confused with Lack of personality to sue. While the former refers to a plaintiffs general disability to sue, the latter refers to the fact that the plaintiff is not the real party- in-interest. Correspondingly, the first can be a ground for a motion to dismiss based on the ground of lack of legal capacity to sue, whereas the second can be used as a ground for a motion to dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action. The ground available for barring recourse to our courts by an unlicensed foreign corporation doing or transacting business in the Philippines should properly be lack of capacity to sue, not lack of personality to sue. 2. The 20th Century Fox case cannot be given retroactive effect. The case mentioned is inexistent in December of 1987 when the search warrant was issued. It is unjust and unfair to require compliance with a legal requirement which are inexistent at the time they were supposed to have been complied with. Rule 126 of the Rules of Court provides: Sec. 3. Requisites for issuing search warrant. A search warrant shall not issue but upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the things to be seized. Sec. 4. Examination of complainant; record. The judge must, before issuing the warrant, personally examine in the form of searching questions and answers, in writing and under oath the complainant and any witnesses he may produce on facts personally known to them and attach to the record their sworn statements together with any affidavits submitted. Sec. 5. Issuance and form of search warrant. If the judge is thereupon satisfied of the existence of facts upon which the application is based, or that there is probable cause to believe that they exist, he must issue the warrant, which must be substantially in the form prescribed by these Rules. The lower court followed the procedure for the issuance of the search warrant. Having satisfactorily complied with the then prevailing standards under the law for the determination of probable cause, the search warrant issued is valid. CIR vs. SEAGATE TECHNOLOGY

Facts: Seagate Technology (Seagate) is registered with the Philippine export Zone Authority (PEZA) and has been issued a PEZA certificate It is also a VAT registered entity An administrative claim for refund of VAT input taxes in the amount of PHP 28,369.88 was filed on October 4, 1999 No final action as been received by Seagate from the CIR on its claim for VAT refund Seagate thus elevated the case to the CTA by way of petition for review in order to toll the running of the two year prescriptive period

ISSUE: W/N Segeate is entitled to the refund or issuance of Tax Credit Certificate YES


Seagate is a PEZA registered enterprise

As a PEZA registered enterprise within a special economic zone, Seagate is entitled in the fiscal incentives and benefits, provided for in either PD66 or EO 226. It shall moreover enjoy all privileges, benefits, advantages, or exemptions under both RA 7227 and RA 7844 Seagate enjoys preferential tax treatment. It is not subject to internal revenue laws and regulations and is even entitled to tax credits. The VAT on capital goods is an internal revenue from which Seagate as an entity is exempt. Although the transactions involving such tax is are not exempt, Seagate as a VAT registered person however is entitled to their credits VAT is a uniform tax ranging at present from 0-10% levied on every importation of goods, whether or not in the course of trade or business, or imposed on each sale, barter, exchange or lease of goods or properties, or on each rendition of services in the course of trade or business as they pass along the production and distribution chain, the tax being limited only to the value added to such goods, properties or services by the seller, transferor or lessor It is an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of the goods, properties, or services The law that originally impose the VAT in the country, as well as subsequently amendments of that law, has been drawn from the tax credit method. Under the present method that relied on invoices, and entity can credit against or subtract from the VAT charged on its sales or outputs the Vat paid on its purchases, inputs and imports. If at the end of a taxable quarter the output taxes charged by a seller are equal to the input taxes passed on by the suppliers, no payment is required. It is when the output taxes exceed the input taxes tha the excess has to be paid. If, however, the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or quarters. Should the input taxes result from zero rated or effectively zero rated transactions or from the acquisition of capital goods, any excess over the output taxes shall instead be refunded to the taxpayer or credited against other internal revenue taxes

Zero Rated and Effectively Zero Rated Transactions

Although both are taxable and similar in effect, zero rated transactions differ from effectively zero rated transactions as to their source Zero rated transactions generally refer to the export sale of goods and supply of services. The tax rate is set at zero. When applied to the tax base, such rate obviously results in no tax chargeable against the purchaser. The seller of such transactions charges no output tax, but can claim a refund of or a tax credit certificate for the VAT previously charged by suppliers. Effectively zero rated transactions, however, refer to the sale of goods or supply of services to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such transaction to a zero rate. Again, as applied to the tax base, such rate does not yield any tax chargeable against the purchaser. The seller who chares zero output tax on such transactions can also claim a refund of or a tax credit certificate fir the VAT previously charged by suppliers.

Zero Rating and Exemption

In terms of the VAT computation, zer rating and exemption are the same, but the extend of relief that results from either one of them is not Applying the destination principle to the exportation of goods, automatic zero rating is primarily intended to be enjoys by the seller who is directly and legally liable for the VAT, making such seller internationally competitive by allowing the refund or credit of input taxes that are attributable to export sales. Effective zero rating on the contrary is intended to benefit the purchaser who not being directly and legally liable for the payment of the VAT, will ultimately bear the burden of the tax shifted by the suppliers. In both instances of zero rating, there is a TOTAL relief for the purchaser from the burden of the tax. But in an exemption there is only partial relief because the purchaser is not allowed any tax refund of or credit for input taxes paid.

Exempt Transaction and Exempt Party

the object of exemption from the VAT may either be the transaction itself or any of the parties to the transaction An exempt transaction on the one hand., involved goods or services which, by their nature are specifically listed in and expressly exempted from the VAT under the Tax Code, without regard to the tax status VAT exempt or not of the party to the transaction. Such transaction is not subject to the VAT, but the seller is not allowed any tax refund of or credit for any input taxes paid. An exempt party, on the other hand is a person or entity granted VAT exemption under the TAX Code, a special law or an international agreement to which the Philippines is a signatory, and by virtue of which, its taxable transactions

become exempt from the VAT. Such party is also not subject to the VAT but may be allowed a tax refund of or credit for input taxes paid, depending on its registration as a VAT r non-VAT taxpayer. Special laws may certainly exempt transactions from the VAT. However, the Tax Code provides that those falling under PD 66 are not. PD 66 is the precursor of RA 7916 the special law under which Seagate was registered. The purchase transactions it entered into are therefore not VAT exempt. These are subject to the Vat. Seagate is required to register. Its sales transactions however will either be zero rated or taxed at the standard rate of 10 percent. Depending again on the application of the destination principle If Seagate enters into such sales transactions with a purchaser --- usually in a foreign country for use or consumption outside the Philippines, these shall be subject to a 0 percent. If entered into which a purchase for use or consumption in the Philippine, then these shall be subject to 10 percent, unless the purchaser is exempt from the indirect burden of the VAT, in which case it shall also be zero rated. Since the purchases of Seagate are not exempt from the VAT, the rate to be applied is zero. Its exemption under both PD 66 and RA 7916 effectively subjects such transactions to a zero rate because the ecozone within which it is registered is managed and operated by the PEZA as a separate customs territory. This means that such zone has created the legal fiction of a foreign territory. Under the cross border principle of the VAT system being enforced by the BIR, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. If exports of goods and services from the Philippines to a foreign country are free of the VAT, then the same rule holds for such exports from the national territory except specifically declared areas --to an ecozone. Sales made by a VAT registered person in the customs territory to a PEZA registered entity are considered exports to a foreign country, conversely, sales by a PEZA registered entity to a VAT registered person in the customs territory are deemed imports from a foreign country. This legal fiction is necessary to give meaningful effect to the policies of the special law creating the zone. If Seagate is located in an export processing zone within that ecozone, sales to the export processing zone , even without being actually exported, shall in fact be viewed as constructively exported under EO 226. Considered as export sales, such purchase transactions by Seagate would indeed be subject to a zero rate

The Exemptions Broad and Express Applying the special laws we have earlier discussed, Seagate as an entity is exempt from internal revenue laws and regulations. This exemption covers both direct and indirect taxes, stemming from the very nature of the VAT as a tax on consumption, for which the direct liability is imposed on one person but the indirectly made to bear, as added cost to such sales, the equivalent VAT n its purchases. First, RA 7916 states that no taxes, local, and national, shall be imposed on the business establishments operating within the ecozone Since this law does not exclude the VAT from the prohibition, it is deemed included Second, when RA 8748 was enacted to amend RA 7916, the same prohibition applied, except for real property taxes that presently are imposed on land owned by developers Third, foreign and domestic merchandise, raw materials, equipment and the like shall not be subject to internal revenue laws and regulations under PD 66 the original charter provisions on the latter law modify such exemption Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise except those prohibited by law shall not be subject to internal revenue laws and regulations if brought to the ecozones restricted area for manufacturing by registered export enterprises of which Seagate is one. These rules also apply to all enterprises registered with the PEZA prior to the effectivity of such ruled

Tax Refund as Tax Exemption To be sure, statutes that grant tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority Tax refunds are in the nature of such exemptions. Accordingly, the claimants of those refunds bear the burden of proving the factual basis of them claims and of showing by words to plain to be mistaken, that the legislature intended to exempt them. In the present case, all the cited legal provisions with respect to the grant of the tax exemptions are too vivid to pass unnoticed. Seagate which as an entity is exempt, is different from its transactions which are not exempt. The end result, however, is that it is not subject to the VAT. The non taxability of transactions that are otherwise taxable is merely a necessary incident to the tax exemption conferred by law upon it as an entity, not upon the transactions themselves. Nonetheless, its exemption as an entity and the non exemption of its transactions lead to the same result.

VAT registration, not application for effective zone rating indispensable to Vat refund

Registration is an indispensable requirement under our Vat law By the VATs very nature as a tax on consumption, the capital goods and services Seagate has purchased are sub ject to VAT, although at zero rate. Registration does not determine taxability under the VAT law. The BIR regulations additionally requiring an approved prior application for effective zero rating cannot prevail over the clear VAT nature of Seagates transactions. The scope of such regulations is not within the statutory authority granted by the legislature. Other than the general registration of a taxpayer, the VAT status of which is aptly determined, no provision under our VAT law requires an additional application to be made for such taxpayers transactions to be considered effectively zero rated. An effectively zero rated transaction does not and cannot become exempt simply because an application

therefore was not made or if made, was denied. To allow the additional requirement is to give unfettered discretion to those officials or agents who without fluid consideration, are bent on denying a valid application

Tax Refund or credit in order

Having determined that Seagates purchase transactions are subject to a zero VAT rate, the tax refund or credit is in order. As correctly held by the lower courts, Seagate had chosen the fiscal incentives in EO 226 over those in RA 7916 and PD 66. It opted for the income tax holiday regime instead of the 5 percent preferential tax regime, These two regimes are incompatible and cannot be availed of simultaneously by the same entity. While EO 226 merely exempts it from income taxes, the PEZA law exempts it from all taxes. Therefore Seagate can be considered exempt not from the VAT but only from the payment of income tax for certain number of years depending on its registration. JG Summit Holdings INC. vs. Court of Appeals G.R. No. 124293 January 31, 2005 (Reported by Joahna Paula Domingo) Facts: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard Inc., (SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, the NDC and KAWASAKI will contribute P330M for the capitalization of PHILSECO in the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture. NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant to an Administrative Order. When the former President Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of nonperforming assets of the National Government, a trust agreement was entered into between the National Government and the APT wherein the latter was named the trustee of the N ational Governments share in PHILSECO. In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National Governments share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI , they agreed that the latters right of first refusal under the JVA be exchanged for the right to top by 5%, the highest bid for the said shares. They further agreed that KAWASAKI woul.d be entitled to name a company in which it was a stockholder, which could exercise the right to top. KAWASAKI then informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top. At the public bidding, petitioner J.G. Summit Holdings Inc. submitted a bid of Two Billion and Thirty Million Pesos (Php2,030,000,000.00) with an acknowledgement of KAWASAKI/PHILYARDS right to top. As petitioner was declared the highest bidder, the COP approved the sale subject to the right of Kawasaki Heavy Industries, Inc. / PHILYARDS Holdings Inc. to top JGs bid by 5% as specified in the bidding rules. On the other hand, the respondent by virtue of right to top by 5%, the highest bid for the said shares timely exercised the same. Petitioners, in their motion for reconsideration, raised, inter alia, the issue on the maintenance of the 60%-40% relationship between the NIDC and KAWASAKI arising from the Constitution because PHILSECO is a landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional limitation. ISSUE: Whether or not the respondent is prohibited to possess the disputed property considering the prohibition stipulated in the 1987 Constitution against foreign owned companies. RULING: The court upheld the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC. The right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns the land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40% ration. This transfer by itself, does not amount to a violation of the AntiDummy Laws, absent proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECOs equity. In fact, in can even be said that if the foreign shareholdings of a landholding corporation exeeds 40%, it is not the foreign stockholders ownership of the shares which is adversely affected but the capacity of the corporation to won landthat is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate judicial entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their

right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. Indophil Textile Mill Workers Union vs. CalicaFacts: Petitioner Indophil Textile Mill Workers Union- PTGWO is the LLO and EBA of all Rank&File of Indophil. Respondent Calica is Voluntary Arbitrator of NCMB of DOLE Indophil Textile Mills Inc is a corporation engaged in the manufacture, sale and export of yarns of various counts andkinds and of materials of kindred character. Plant in Marilao, Bulacan.1. Petitioner Union and Indophil Textile Company executed a CBA 04/01/87 to 03/31/902. 11/3/87 Indophil Acrylic Manufacturing Corporation was formed.a. Workers of Acrylic unionized and a duly certified CBA was executed.3. Union in 1990 claimed that plant facilities built and setup by Acrylic should be considered as an EXTENSION or EXPANSIONof the facilities of the company pursuant to the CBA and part of the Indophil bargaining unit.4. Company submitted it is a juridical entity separate and distinct from Acrylic.a. Impasse led petitioner and PR to enter into submission to VA Calica for interpretation of CBA5. VA interpreted that the CBA does not extend to the employees of Acrylic as an extension/ expansion of Company.6. Petition for certiorari to review the award issued by VA Calica.ISSUE: w/n the operations in Acrylic are an extension of expansion of company and that the RnF employees of Acrylic should berecognized as part of, and/ or within the scope of the bargaining unit. Petitioner stresses that the Articles of Incorporation establish that the two are engaged in the SAME KIND OF BUSINESS,which is the manufacture and sale of yarns and other materials of kindred character or nature.-argues also that two corporations have practically the same incorporators, directors and officers.-both have plants located in Marilao Bulacan-many of machineries were transferred and used now in the Acrylic plant-employees of Indophil textile are the same persons manning and servicing the units of Acrylic Calica argues that Acrylic has a separate legitimate business purpose. Indophil Textile is engaged in business of MANUFACTURING yarns and textiles. Acrylic is engaged in manufacture, buy, sell at wholesale, barter, import etc of yarnsof various counts and kinds.So Acrylic cannot manufacture textiles while Indophil cannot buy or import yarns.-also that two corporations cannot be treated as a single bargaining unit even if their businesses are related.-existence of a business relationship between Acrylic and Indophil textile is not a proof of being a single corporateentity. HELD:- Decisions of voluntary arbitrators are to be given the highest respect and a certain measure of finality is not a hardand fast rule.Doctrine of piercing the veil of corporate entity:The legal fiction that a corporation is an entity with a juridical personality separate and distinct from itsmembers or stockholders may be disregarded. Corp will be considered as a mere association of persons. Liability willattach directly to the officers and stockholders.Applies when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud ordefend crime or where a corpo is the mere alter ego or business conduit of a person.Fact that business of Indophil Textile and Acrylic are related, that some of the employees of the private respondentare the same persons manning and providing for auxiliary services to the units of Acrylic and that the physical plants,offices and facilities are situated in the same compound are not sufficient to justify the piercing of the corporate veilof Acrylic.Doctrine cannot be applied in this case La Chemise Lacoste vs. Fernandez

GR 63796-97, 21 May 1984; First Division, Gutierrez Jr. (J)Facts: La chemise Lacoste is a French corporation a nd the actual owner of the trademarks Lacoste,Chemise Lacoste, Crocodile Device and a composite mark consisting of the word Lacoste and a representation of a crocodile/alligator, used on clothings and other goods sold in many parts of the world andwhich has been marketed in the Philippines (notably by Rustans) since 1964. In 1975 and 1977, HemandasQ. Co. was issued certificate of registration for the trademark Chemise Lacoste and Q Crocodile Deviceboth in the supplemental and Principal Registry. In 1980, La Chemise Lacoste SA filed for the registration ofthe Crocodile device and Lacoste. Games and Garments (Gobindram Hemandas, assignee of HemandasQ.Co.) opposed the registration of Lacoste.In 1983, La Chemise Lacoste filed with the NBI a letter -complaint alleging acts of unfair competition committed by Hemandas and requesting the agencys assistance. A search warrant was issued by the trialcourt. Various goods and articles were seized upon the execution of the warrants. Hemandas filed motion toquash the warrants, which the court granted. The search warrants were recalled, and the goods ordered to bereturned. La Chemise Lacoste filed a petition for certiorari. Intellectual Property Law, 2004 ( 5 )

Digests (Berne Guerrero) Issue: Whether the proceedings before the patent office is a prejudicial question that need to be resolvedbefore the criminal action for unfair competition may be pursued.Held: No. The proceedings pending before the Patent Office do not partake of the nature of a prejudicialquestion which must first be definitely resolved. The case which suspends the criminal action must be a civilcase, not a mere administrative case, which is determinative of the innocence or guilt of the accused. Theissue whether a trademark used is differe nt from anothers trademark is a matter of defense and will be betterresolved in the criminal proceedings before a court of justice instead of raising it as a preliminary matter in anadministrative proceeding.Inasmuch as the goodwill and reputation of La Chemise Lacoste products date back even before 1964, H e m a n d a s c a n n o t b e a l l o w e d t o c o n t i n u e t h e t r a d e m a r k La c o s t e f o r t h e r e a s o n t h a t h e w a s t h e f i r s t registrant in the Supplemental Register of a trademark used in international commerce. Registration in theSupplemental Register cannot be given a posture as if the registration is in the Principal Register. It must benoted that one may be declared an unfair competitor even if his competing trademark is registered. LaChemise Lacoste is world renowned mark, and by virtue of the 20 November 1980 Memorandum of theMinister of Trade to the director of patents in compliance with the Paris Convention for the protection of industrial property, effectively cancels the registration of contrary claimants to the enumerated m arks, whichinclude Lacoste.


La Chemise Lacoste, S.A. vs. Fernandez [129 SCRA 373 (1984)] As early as 1927, this Court was, and it still is, of the view that a foreign corporation not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 115), this Court held that a foreign corporation which has never done any business in the Philippines and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Philippines through the use therein of its products bearing its corporate and tradename, has a legal right to maintain an action in the Philippines to restrain the residents and inhabitants thereof from organizing a corporation therein bearing the same name as the foreign corporation, when it appears that they have personal knowledge of the existence of such a foreign corporation, and it is apparent that the purpose of the proposed domestic corporation is to deal and trade in the same goods as those of the foreign corporation. We further held: xxx xxx xxx ". . . That company is not here seeking to enforce any legal or control rights arising from, or growing out of, any business which it has transacted in the Philippine Islands. The sole purpose of the action: "'Is to protect its reputation, its corporate name, its goodwill, whenever that reputation, corporate name or goodwill have, through the natural development of its trade, established themselves. And it contends that its rights to the use of its corporate and trade name: "'Is a property right, a right in rem, which it may assert and protect against all the world, in any of the courts of the world even in jurisdictions where it does not transact business just the same as it may protect its tangible property, real or personal, against trespass, or conversion. Citing Sec. 10, Nims on Unfair Competition and TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks, Trade Names and Unfair Competition and cases cited.' That point is sustained by the authorities, and is well stated in Hanover Star Mining Co. v. Allen and Wheeler Co. (208 Fed., 513), in which the syllabus says: "'Since it is the trade and not the mark that is to be protected, a trade-mark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and identified by the use of the mark.'" Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent setting. Our jurisprudence is replete with cases illustrating instances when foreign corporations not doing business in the Philippines may nonetheless sue in our courts.