1. CENTENO VS VILLALON-PORNILLOS
When he was handed a copy of the complaint, he signed the receipt as “Oscar Perez”.
FACTS: The officers of a group of elderly men of a civic organization known as the
Samahang Katandaan ng Nayon ng Tikay launched a fund drive for the purpose of
renovating the chapel of Barrio Tikay, Malolos, Bulacan. Martin Centeno, the chairman
of the group, approached Judge Adoracion G. Angeles, a resident of Tikay, and
solicited from her a contribution of P1,500.00. It is admitted that the solicitation was
made without a permit from the Department of Social Welfare and Development. As a
consequence, an information was filed against Centeno, for violation of PD No. 1564
or the Solicitation Permit Law. Centeno filed a motion to quash the information on the
ground that the facts alleged therein do not constitute an offense, claiming that PD No.
1564 only covers solicitations made for charitable or public welfare purposes, but not
those made for a religious purpose such as the construction of a chapel.
ISSUE: WON solicitation for religious purposes constitutes a violation of PD 1564
HELD: NO. Presidential Decree No. 1564 merely stated "charitable or public welfare
purposes," which only goes to show that the framers of the law in question never
intended to include solicitations for religious purposes within its coverage. Solicitation
for religious purposes may be subject to proper regulation by the State in the exercise
of police power. However, in the case at bar, considering that solicitations intended for
a religious purpose are not within the coverage of PD 1564, as earlier demonstrated,
petitioner cannot be held criminally liable therefor and therefore acquitted.
For, it is a well-entrenched rule that penal laws are to be construed strictly against the
State and liberally in favor of the accused. They are not to be extended or enlarged by
implications, intendments, analogies or equitable considerations. They are not to be
strained by construction to spell out a new offense, enlarge the field of crime or multiply
felonies. Hence, in the interpretation of a penal statute, the tendency is to subject it to
careful scrutiny and to construe it with such strictness as to safeguard the rights of the
accused. If the statute is ambiguous and admits of two reasonable but contradictory
constructions, that which operates in favor of a party accused under its provisions is to
be preferred. The principle is that acts in and of themselves innocent and lawful cannot
be held to be criminal unless there is a clear and unequivocal expression of the
legislative intent to make them such. Whatever is not plainly within the provisions of a
penal statute should be regarded as without its intendment. 13
The purpose of strict construction is not to enable a guilty person to escape punishment
through a technicality but to provide a precise definition of forbidden acts. 14 The word
"charitable" is a matter of description rather than of precise definition, and each case
involving a determination of that which is charitable must be decided on its own
particular facts and circumstances. 15 The law does not operate in vacuo nor should its
applicability be determined by circumstances in the abstract.
2. URSUA VS COURT OF APPEALS
FACTS: In 1989, Cesario Ursua was charged with bribery and dishonesty. His lawyer
then asked him to get a copy of the complaint against him from the Office of the
Ombudsman. His lawyer asked him that because the law firm’s messenger, a certain
Oscar Perez, was unable to go to the Ombudsman.
Before going to the Ombudsman, Ursua talked to Perez. He revealed to him that he
feels uncomfortable asking for a copy of the complaint because he is the respondent in
the said case. Perez then told him than he can go there as “Oscar Perez” so that he
does not have to reveal his true identity.
At the Office of the Ombudsman, Ursua signed the logbook there as “Oscar Perez”.
However, a staff of the Ombudsman was able to learn that he was in fact Cesario
Ursua. The staff then recommended that a criminal case be filed against Ursua.
Eventually, Ursua was sentenced to three years in prison for violating C.A. No. 142, as
amended, otherwise known as “An Act To Regulate The Use Of Aliases”.
ISSUE: Whether or not the use of alias in isolated transaction falls within the prohibition
of Commonwealth Act No. 142
HELD: NO. The use of a fictitious name or a different name belonging to another person
in a single instance without any sign or indication that the user intends to be known by
this name in addition to his real name from that day forth does not fall within the
prohibition contained in C.A. No. 142 as amended.
Time and again [courts] have decreed that statutes are to be construed in the light of
the purposes to be achieved and the evils sought to be remedied. Thus in construing
a statute the reason for its enactment should be kept in mind and the statute should be
construed with reference to the intended scope and purpose. The court may consider
the spirit and reason of the statute, where a literal meaning would lead to absurdity,
contradiction, injustice, or would defeat the clear purpose of the lawmakers.
While the act of petitioner may be covered by other provisions of law, such does not
constitute an offense within the concept of C.A. No. 142 as amended under which he
is prosecuted. Moreover, as C.A. No. 142 is a penal statute, it should be construed
strictly against the State and in favor of the accused. The reason for this principle is the
tenderness of the law for the rights of individuals and the object is to establish a certain
rule by conformity to which mankind would be safe, and the discretion of the court
limited
3. IENT AND SCHULZE VS. TULLET PREBON
FACTS: Tradition Group, where petitoners herein are employed, and Tullett are
competitors in the inter-dealer broking business. On Tradition’s motive of expansion
and diversification in Asia, petitioners lent and Schulze were tasked with the
establishment Tradition Financial Services Philippines, Inc. However, Tullett, filed a
Complaint-Affidavit in Makati City against the officers/employees of the Tradition Group
for violation of Secs 31 and 34 of the Corporation Code which made them criminally
liable under Section 144. Impleaded as respondents in the Complaint-Affidavit were
petitioners lent and Schulze, Jaime Villalon, who was formerly President and Managing
Director of Tullett, Mercedes Chuidian who was formerly a member of Tullett's Board
of Directors. Villalon and Chuidian were charged with using their former positions in
Tullett to sabotage said company by orchestrating the mass resignation of its entire
brokering staff in order for them to join Tradition Philippines which was evident on their
conduct of several meetings with the employees. According to Tullett, petitioners lent
and Schulze have conspired with Villalon and Chuidian in the latter's acts of disloyalty
against the company. Petitioners argued that there could be no violation of Sections 31
and 34 of the Corporation as these sections refer to corporate acts or corporate
opportunity, that Section 144 of the same Code cannot be applied to Sections 31 and
34 which already contains the penalties or remedies for their violation; and conspiracy
under the Revised Penal Code cannot be applied to the Sections 31 and 34 of the
Corporation Code. The city prosecutor dismissed the criminal complaint however, on
respondent’s appeal to the DOJ, the dismissal was reversed finding the arguments of
the respondent proper. CA affirmed the decision of the DOJ secretary.
ISSUE: WON Section 144 of the Corporation Code appliesto Secs 31 and 34 of the
same code, thus, making it a penal offense so that conspiracy can be appreciated and
the petitioners can be impleaded.
HELD: In a Resolution dated February 17, 2009, State Prosecutor Cresencio F. Delos
Trinos, Jr. (Prosecutor Delos Trinos), Acting City Prosecutor of Makati City, dismissed
the criminal complaints.
On the issue of conspiracy, Prosecutor Delos Trinos found that since Villalon and
Chuidian did not commit any acts in violation of Sections 31 and 34 of the Corporation
Code, the charge of conspiracy against Schulze and Ient had no basis.
Dated April 23, 2009, then Secretary of Justice Raul M. Gonzalez reversed and set
aside Prosecutor Delos Trinos's resolution and directed the latter to file the information
for violation of Sections 31 and 34 in relation to Section 144 of the Corporation Code
against Villalon, Chuidian, Harvey, Schulze, and Ient before the proper court.
Undeniably, respondents Villalon, Chuidian and Harvey occupied positions of high
responsibility and great trust as they were members of the board of directors and
corporate officers of complainant.
The provision of Section 144 of the Corporation Code is also applicable in the case at
bar as the penal provision provided therein is made applicable to all violations of the
Corporation Code, not otherwise specifically penalized.
After a meticulous consideration of the arguments presented by both sides, the Court
comes to the conclusion that there is textual ambiguity in Section 144; moreover, such
ambiguity remains even after an examination of its legislative history and the use of
other aids to statutory construction, necessitating the application of the rule of lenity in
the case at bar.
The Corporation Code was intended as a regulatory measure, not primarily as a penal
statute. Sections 31 to 34 in particular were intended to impose exacting standards of
fidelity on corporate officers and directors but without unduly impeding them in the
discharge of their work with concerns of litigation.
4. PEOPLE VS. TEMPORADA
FACTS:Accused Rosemarie Robles, Bernadette Miranda, Nenita Catacotan, Jojo
Resco and Beth Temporada are all employees of ATTC, a Travel and Tour Company,
recruited and promised overseas employment for a fee to Rogelio Legaspis Jr, as a
technician in Singapore, and other overseas workers. The accused were holding office
in Makati but eventually transferred to Manila. After paying placements fees, none of
the overseas recruits was able to leave or recover what they have paid, thus they filed
separate criminal complaints against accused in Manila.
The accused were then sentenced to life imprisonment for illegal recruitment and
estafa. Then the case was referred to the CA for intermediate review, CA affirmed with
modification on the penalty. The penalty was lowered for the lower court due to
insufficiency of evidence.
ISSUE: W/N the accused were guilty of 5 counts of estafa and illegal recruitment, and
be charged of the penalty of life imprisonment
HELD: The Court affirms the modification of the CA, except for the penalty on the 5
counts of estafa. Although Temporada is saying that she is not a principal to the illegal
recruitment and estafa because she is a mere employee of ATTC and that she was just
echoing the requirement of her employer, the Court believes that Temporada actively
and consciously participated in illegal recruitment. The Court agrees with the lower
court that the accused were guilty of illegal recruitment by a syndicate with the penalty
of life imprisonment. The accused were convicted separately also for 5 counts of estafa.
DISSENTING OPINION, CORONA, J.:
The application of the Indeterminate Sentence Law is one of the more complicated and
confusing topics in criminal law. It befuddles not a few students of law, legal scholars
and members of the bench and of the bar. Fortunately, this case presents a great
opportunity for the Court to resolve with finality a controversial aspect of the application
and interpretation of the Indeterminate Sentence Law. It is an occasion for the Court to
perform its duty to formulate guiding and controlling principles, precepts, doctrines or
rules. In the process, the matter can be clarified, the public may be educated and the
Court can exercise its symbolic function of instructing bench and bar on the extent of
protection given by statutory and constitutional guarantees.
The fundamental principle in applying and interpreting criminal laws, including the
Indeterminate Sentence Law, is to resolve all doubts in favor of the accused. In dubio
pro reo. When in doubt, rule for the accused. This is in consonance with the
constitutional guarantee that the accused ought to be presumed innocent until and
unless his guilt is established beyond reasonable doubt.
Intimately intertwined with the in dubio pro reo principle is the rule of lenity. It is the
doctrine that a court, in construing an ambiguous criminal statute that sets out multiple
or inconsistent punishments, should resolve the ambiguity in favor of the more lenient
punishment.
Lenity becomes all the more appropriate when this case is viewed through the lens of
the basic purpose of the Indeterminate Sentence Law to uplift and redeem valuable
human material, and prevent unnecessary and excessive deprivation of personal liberty
and economic usefulness. Since the goal of the Indeterminate Sentence Law is to look
kindly on the accused, the Court should adopt an application or interpretation that is
more favorable to the accused.
It is on the basis of this basic principle of criminal law that I respectfully submit this
opinion.
5. PEOPLE OF THE PHILIPPINES vs. WALPAN LADJAALAM y MIHAJIL alias
“WARPA,”
FACTS: The trial court found the appellant guilty of maintaining a drug den, an offense
for which was sentenced to reclusion perpetua. Appellant’s guilt was established by the
testimony of Prosecution Witness, who himself had used the extension house of
appellant as a drug den on several occasions, including the time of the raid. The
former’s testimony was corroborated by all the raiding police officers who testified
before the court. That appellant did not deny ownership of the house and its extension
lent credence to the prosecution’s story.
The trial court also convicted appellant of direct assault with multiple counts of
attempted homicide. It found that “[t]he acts of the accused [of] firing an M14 rifle [at]
the policemen [,] who were about to enter his house to serve a search warrant x x x”
constituted such complex crime. Aside from finding appellant guilty of direct assault
with multiple attempted homicide, the trial court convicted him also of the separate
offense of illegal possession of firearms under PD 1866, as amended by RA 8294, and
sentenced him to 6 years of prision correccional to 8 years of prision mayor.
ISSUE: Whether or not appellant can be convicted separately of illegal possession of
firearms after using said firearm in the commission of another crime.
HELD: NO. The appealed Decision was affirmed with modifications. Appellant is found
guilty only of two offenses: (1) direct assault and multiple attempted homicide with the
use of a weapon and (2) maintaining a drug den.
The law is clear: the accused can be convicted of simple illegal possession of firearms,
provided that “no other crime was committed by the person arrested.” If the intention of
the law in the second paragraph were to refer only to homicide and murder, it should
have expressly said so, as it did in the third paragraph. Verily, where the law does not
distinguish, neither should [the courts].
The Court is aware that this ruling effectively exonerates appellant of illegal possession
of an M-14 rifle, an offense which normally carries a penalty heavier than that for direct
assault. While the penalty for the first is prision mayor, for the second it is only prision
correccional. Indeed, the accused may evade conviction for illegal possession of
firearms by using such weapons in committing an even lighter offense, like alarm and
scandal or slight physical injuries, both of which are punishable by arresto menor. This
consequence, however, necessarily arises from the language of RA 8294, whose
wisdom is not subject to the Court’s review. Any perception that the result reached here
appears unwise should be addressed to Congress. Indeed, the Court has no discretion
to give statutes a new meaning detached from the manifest intendment and language
of the legislature. [The Court’s] task is constitutionally confined only to applying the law
and jurisprudence to the proven facts, and [this Court] have done so in this case.
6. MANILA ELECTRIC COMPANY v ANATALIO HALILI
FACTS: This is an appeal taken by the respondent Anatalio Halili from the decision of
the Associate Commissioner, Anastasio R. Teodoro with the concurrence of
commissioners M. V. del Rosario, and Vicente de Vera, wherein the charges alleged in
the complaint are established by the evidence, and order the respondent to pay a fine
of P25 in addition to the investigation expenses, which we fix at P25.
In support of his appeal, the appellant assigns the following alleged errors as committed
by the Public Service Commission, to wit:
1. The Public Service Commission erred in ordering the herein appellant to pay a fine
of twenty-five pesos besides another twenty-five for investigation expenses, in the
decision rendered on February 15, 1932 in case No. 30171 of the Public Service
Commission, despite the fact that there is no evidence of record to justify such a fine
and investigation expense.
2. The Public Service Commission also erred in rendering the decision aforementioned
notwithstanding the fact that case No. 30171 had been heard only one commissioner,
merely, the Hon. Anastasio R. Teodoro.
3. The Public Service Commission erred and abused its discretion in denying the
motion for reconsideration of the herein appellant in case No. 30171.
ISSUE: Whether or not the respondent and appellant may be punished for an act not
prohibited in the order of the commission by virtue of which his certificate of public
necessity and convenience was issued.
HELD: No. The respondent-appellant was charged with, and fined for, operating along
that portion of its route within the City of Manila from Divisoria Market to La Loma
without a special permit to do so. The decision, or order, by virtue of which the
respondent-appellant, Anatalio Halili, was granted his certificate does not contain an
express prohibition from carrying passengers from one place to another within the City
of Manila along its route; nor does it specify from what point to what point, along its line,
outside the Divisoria Market—San Jose line, he might carry passengers, in such a
manner that it might be clearly inferred from what points or to what points he might not
carry them. The prohibition from carrying passengers from one point to another in the
City of Manila is therefore a mere inference, remote and indirect.
The legal provision, which in this case is Section 30 of Act No. 3108, as amended by
section 8 of Act No. 3316, is penal in character, inasmuch as it punishes with a fine and
any one who violates any order issued by the Public Service Commission. It is an
elementary rule in penal law that no one should be punished for the commission or
omission of an act not prohibited by law and for which no penalty has been established.
Under the rules of statutory construction, penal laws are to be strictly interpreted, such
laws will not be enlarged by implication or intendment beyond the fair meaning of the
language used, and will not be held to include other offenses and persons than those
which are clearly described and provided for, although the court may think the
Legislature should have made them come comprehensive. Anatalio Halili, the
respondent-appellant, cannot be held criminally liable for the act for which he has been
punished, the commission of which is not prohibited by law.
7. REPUBLIC OF THE PHILIPPINES vs. IAC and SPOUSES ANTONIO and CLARA
PASTOR
FACTS: Republic of the Philippines, through the Bureau of Internal Revenue,
commenced an action in the Court of First Instance (now Regional Trial Court), to
collect from the spouses Antonio Pastor and Clara Reyes-Pastor deficiency income
taxes for the years 1955 to 1959 with surcharge and monthly interest, and costs. The
Pastors filed a motion to dismiss the complaint, but the motion was denied. They filed
an answer admitting there was an assessment against them for income tax deficiency
but denying liability therefor. They contended that they had availed of the tax amnesty
under P.D.’s Nos. 23, 213 and 370 and had paid the corresponding amnesty taxes
amounting of their reported untaxed income under P.D. 23, and a final payment on
October 26, 1973 under P.D. 370 evidenced by the Government’s Official Receipt. The
trial court held that the respondents had settled their income tax deficiency for the years
1955 to 1959, not under P.D. 23 or P.D. 370, but under P.D. 213.
The Government appealed to the Intermediate Appellant Court, alleging that the private
respondents were not qualified to avail of the tax amnesty under P.D. 213 for the
benefits of that decree are available only to persons who had no pending assessment
for unpaid taxes, as provided in Revenue Regulations Nos. 8-72 and 7-73. Since the
Pastors did in fact have a pending assessment against them, they were precluded from
availing of the amnesty granted in P.D.’s Nos. 23 and 213. The Government further
argued that “tax exemptions should be interpreted strictissimi juris against the
taxpayer. The Intermediate Appellate Court (now Court of Appeals) rendered a decision
dismissing the Government’s appeal and holding that the payment of deficiency income
taxes by the Pastors under PD. No. 213, and the acceptance thereof by the
Government, operated to divest the latter of its right to further recover deficiency
income taxes from the private respondents pursuant to the existing deficiency tax
assessment against them.
ISSUE: Whether or not the tax amnesty payments made by the private respondents
bar an action for recovery of deficient income taxes under P.D.’s Nos. 23, 213 and 370.

HELD: YES. Petition for review is denied. [T]he Government is estopped from
collecting the difference between the deficiency tax assessment and the amount
already paid by them as amnesty tax. The finding of the appellate court that the
deficiency income taxes were paid by the Pastors, and accepted by the Government,
under P.D. 213, granting amnesty to persons who are required by law to file income
tax returns but who failed to do so, is entitled to the highest respect and may not be
disturbed except under exceptional circumstances
The rule is that in case of doubt, tax statutes are to be construed strictly against the
Government and liberally in favor of the taxpayer strictisimi juris for taxes, being
burdens, are not to be presumed beyond what the applicable statute (in this case P.D.
213) expressly and clearly declares.
8. COMMISSIONER OF CUSTOMS, vs. MANILA ELECTRIC COMPANY AND CTA
FACTS: Manila Electric Company (MEC) claims that it is exempt from the special
import tax not only by virtue of Sec 6 of RA 1394, which exempts from said tax
equipment and spare parts for use in industries, but also under par 9, Part Two, of its
franchise, which expressly exempts it from all taxes of whatever nature, and by
whatever authority, with respect to its insulators in consideration for the payment of the
percentage tax (two and one-half per centum) on its gross earnings. It believes that it
is exempted from paying import tax for its shipment of insulating oil but, acting
Commissioner of Customs Romualdez thought otherwise. MEC then appealed upon
the Court of Tax Appeals which reversed the decision. Hence, this instant petition
where petitioner insists that a tax exemption is to be construed strictly, and the
decision of the respondent Court which assumed that insulating oil can be considered
as insulators must be reversed and set aside.
ISSUE: WON the insulating oil in question comes within the meaning of the term
'insulator' thus exempting MEC from the import tax.
HELD: Yes. The Court reiterates the CTA’s decision: “there is no question that
insulating oils of the type imported by petitioner are 'used for cooling as well as for
insulating,' and when used in oil circuit breakers, they are 'required to maintain
insulation between the contacts inside the tank and the tank itself”. Further, it is true
that in the construction of tax statutes tax exemptions (and deductions are of this
nature) are not favored in the law, and are construed strictissimi juris (ie. the strictest
letter of the law) against the taxpayer. However, it is equally a recognized principle that
where the provision of the law is clear and unambiguous, so that there is no occasion
for the court's seeking the legislative intent, the law must be taken as it is, devoid of
judicial addition or subtraction (Justice JBL Reyes). In this case, we find the provision
of Section 186-A -whenever a tax free product is utilized, ... — all-encompassing to
comprehend tax-free raw materials, even if imported. Where the law provided no
qualification for the granting of the privilege, the court is not at liberty to supply any.
Petition for review is dismissed
9. MISAMIS ORIENTAL ASSOC. OF COCO TRADERS, INC. v. DOF SECRETARY
and BIR et.al.
FACTS: Petitioner, a domestic corporation engaged in the buying and selling of copra
in Misamis Oriental, contests the validity of Revenue Memorandum Circular 47-9.
Under the Natl. Internal Revenue Code §103(a), the sale of agricultural non-food
products in their original state is exempt from VAT only if the sale is made by the
primary producer or owner of the land from which the same are produced. The sale
made by any other person or entity, like a trader or dealer, is not exempt from the tax.
On the other hand, under it §103(b) the sale of agricultural food products in their original
state is exempt from VAT at all stages of production or distribution regardless of who
the seller is. HOWEVER, in 1991, respondent CIR issued the circular in question,
classifying copra as an agricultural non-food product and declaring it "exempt from VAT
only if the sale is made by the primary producer pursuant to Section 103(a) of the Tax
Code”. Petitioner insists that 1.) copra was considered as ‘food’ by the DOH therefore
exempting it from VAT, and 2.) that the circular is discriminatory and violative of the
equal protection clause of the Constitution because, while coconut farmers and copra
producers are exempt, traders and dealers are not even though both sell copra in its
original state.
ISSUES: WON copra is an agricultural food or non-food product for purposes of this
provision of the NIRC, and WON the circular was valid.
HELD: Copra is non-food product and, the RMC is valid. CIR was correct in not
considering copra as an "agricultural food product" within the meaning of § 103(b) of
the NIRC. As the Sol Gen contends, "copra per se is not food, that is, it is not intended
for human consumption. Simply stated, nobody eats copra for food." <DUH??> That
previous Commissioners considered it so, is not reason for holding that the present
interpretation is wrong. The CIR is not bound by the ruling of his predecessors. To the
contrary, the overruling of decisions is inherent in the interpretation of laws. Further,
there is a material or substantial difference between coconut farmers and copra
producers on the one hand, and copra traders and dealers, on the other. The
former produce and sell copra, the latter merely sell copra. The Constitution does not
forbid the differential treatment of persons so long as there is a reasonable basis for
classifying them differently. In interpreting §103(a) and (b) of the NIRC, the CIR gave it
a strict construction consistent with the rule that tax exemptions must be strictly
construed against the taxpayer and liberally in favor of the state.
10. RESINS, INC. v. AUDITOR GENERAL and CENTRAL BANK OF THE
PHILIPPINES
FACTS: Like Casco Phil. Company, Resins Inc. is seeking a refund from Central Bank
on the claim that it is exempt from the margin fee under RA 2609 for the importation of
urea and formaldehyde, as separate units, used for the production of synthetic glue of
which it was a manufacturer. Further, petitioner contends that the action taken by the
Auditor General in an indorsement to Central Bank regarding the non-exemption from
tax of urea and formaldehyde, did not come within the purview of the statutory
language.
ISSUES: WON the importation of urea and formaldehyde as separate units is
exempted from tax under RA 2609 and, WON the Auditor General’s action was
unconstitutional.
HELD: No. As held by the Court in the Casco case, the law is clear in stating that only
‘urea formaldehyde’ combined is exempted from tax. As a refund, this would
undoubtedly partake a nature of an exemption, it cannot be allowed unless granted in
the most explicit and categorical language. It has been the constant and uniform
holding that exemption from taxation is not favored and is never presumed, so that if
granted it must be strictly construed against the taxpayer. Affirmatively put, the law
frowns on exemption from taxation, hence, an exempting provision should be
construed strictissimi juris. Certainly, whatever may be said of the statutory language
found in RA 2609, it would be going too far to assert that there was such a clear and
manifest intention of legislative will as to compel such a refund. Further, the Auditor
General acted constitutionally because his function is to implement the constitutional
mandate that no money can be paid out of the treasury except in the pursuance of
appropriation made by law. Hence, he must carefully see to it that there is in fact such
statutory enactment and, no refund, which likewise represents a diminution of public
funds in the treasury, should be allowed unless the law clearly so provides.
11. COMMISSIONER OF INTERNAL REVENUE versus PHILIPPINE LONG
DISTANCE COMPANY
Facts: PLDT is a grantee of a franchise under Republic Act (R.A.) No. 7082 to install,
operate and maintain a telecommunications system throughout the Philippines. For
equipment, machineries and spare parts it imported for its business on different dates
from October 1, 1992 – May 31, 1994, PLDT paid the BIR P164,510,953.00, broken
down as follows: (a) P126,713,037.00 (compensating tax); P12,460,219.00 (advance
sales tax) and other P25,337,697.00 (internal revenue taxes). For similar importations
made between March 1994 – May 31, 1994, PLDT paid P116,041,333.00 value-added
tax (VAT). On March 15, 1994, Respondent addressed a letter to the BIR seeking a
confirmatory ruling on its tax exemption privilege under Section 12 of R.A. 7082: stated
that the said percentage shall be in lieu of all taxes on this franchise or earnings thereof.
BIR issued Ruling No. UN-140-94 PLDT shall be subject only to the following taxes:
The 3% franchise tax on gross receipts which shall be in lieu of all taxes on its franchise
or earnings thereof. The “in lieu of all taxes” provision under Section 12 of RA 7082
clearly exempts PLDT from all taxes including the 10% VAT prescribed by Section
101(a) of the same Code on its importations of equipment, machineries and spare parts
necessary in the conduct of its business covered by the franchise, except the
aforementioned enumerated taxes for which PLDT is expressly made liable. On
December 2, 1994, PLDT filed a claim for tax credit/refund of the VAT, compensating
taxes, advance sales taxes and other taxes it had been paying “in connection with its
importation of various equipment, machineries and spare parts needed for its
operations”. BIR not acted upon it. To forestall the running of the prescriptive period
therefor, PLDT filed with the CTA a petition for review which rendered a decision in
favor of PLDT. BIR moved for a reconsideration but denied. Hence this petition.
Issue: WoN PLDT, given the tax component of its franchise, is exempt from paying
VAT, compensating taxes, advance sales taxes and internal revenue taxes on its
importations.
Held: The Court has stated that taxation is the rule, exemption is the exception.
Accordingly, statutes granting tax exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing authority. Therefore, to him who
claims a refund/exemption from tax payments rests the burden of justifying the
exemption by words too plain to be mistaken and too categorical to be misinterpreted.
As may be noted, the clause “in lieu of all taxes” in Section 12 of RA 7082 is
immediately followed by the limiting or qualifying clause “on this franchise or earnings
thereof”, suggesting that the exemption is limited to taxes imposed directly on PLDT
since taxes pertaining to PLDT’s franchise or earnings are its direct liability.
Accordingly, indirect taxes are outside the purview of the “in lieu” provision. If we were
to adhere to the appellate court’s interpretation of the law that the “in lieu of all taxes”
clause encompasses the totality of all taxes collectible under the Revenue Code, the
immediately following limiting clause “on this franchise and its earnings” would be
nothing more than a pure jargon bereft of effect and meaning whatsoever. Needless to
stress, this kind of interpretation cannot be accorded a governing sway following the
familiar legal maxim redendo singula singulis meaning, take the words distributively
and apply the reference. Under this principle, each word or phrase must be given its
proper connection in order to give it proper force and effect, rendering none of them
useless or superfluous
12. MACEDA V MACARAIG
FACTS: Commonwealth Act 120 created NAPOCOR as a public corporation to
undertake the development of hydraulic power and the production of power from other
sources. Sen. Ernesto Maceda sought to nullify certain decisions, orders, rulings, and
resolutions of respondents Exec. Sec., Secretary of Finance, Commissioner of Internal
Revenue, Commissioner of Customs and the Fiscal Incentives Review Board for
exempting the NAPOCOR from indirect tax and duties. RA 358 granted NAPOCOR tax
and duty exemption privileges; RA 6395 revised the charter of NPC, tasking it to carry
out the policy of the national electrification and provided in detail NAPOCOR’s tax
exceptions and PD 380 specified that NAPOCOR’s exemption includes all taxes, etc.
imposed “directly or indirectly”; expressly grant NPC exemptions from all taxes whether
direct or indirect. PD 938 dated May 27, 1976 further amended the provision by
integrating the tax exemption in general terms. In 1984, PD 1931 and EO 93 withdrew
all tax exemptions granted to all GOCCs including the NPC but granted the President
and/or the Secretary of Finance by recommendation of the FIRB the power to restore
certain tax exemptions. Pursuant to this, FIRB issued a resolution restoring the tax and
duty exemption privileges of the NPC. The actions of the respondents were thus
questioned by the petitioner by this petition for certiorari, prohibition and mandamus
with prayer for a writ of preliminary injunction and/or restraining order. To which public
respondents argued, among others, that petitioner does not have the standing to
challenge the questioned orders and resolution because he was not in any way affected
by such grant of tax exemptions.
ISSUE: 1. Has a taxpayer the capacity to question the legality of the resolution issued
by the FIRB restoring the tax exemptions?
2. Whether or not NPC has ceased to enjoy indirect tax and duty exemption with the
enactment of PD 938 which amended PD 380
HELD: 1. Yes. In this petition it is alleged that petitioner is "instituting this suit in his
capacity as a taxpayer and a duly-elected Senator of the Philippines." Public
respondent argues that petitioner must show that he has sustained direct injury as a
result of the action and that it is not sufficient for him to have a mere general interest
common to all members of the public. The Court agrees with the petitioner that as a
taxpayer he may file the instant petition when it involves illegal expenditure of public
money. The petition questions the legality of the tax refund to NPC by way of tax credit
certificates and the use of said assigned tax credits by respondent oil companies to pay
for their tax and duty liabilities to the BIR and Bureau of Customs.
2. No, it is still exempt. NPC is a non-profit public corporation created for the general
good and welfare wholly owned by the government of PH. From the beginning of the
corporation’s existence, NAPOCOR enjoyed preferential tax treatment “to enable the
corporation to pay the indebtedness and obligation” and effective implementation of the
policy enunciated in Section 1 of RA 6395. It is evident in the preamble of PD 93 that
the provisions of PD 938 were not intended to be interpreted liberally so as to enhance
the tax exempt status of NAPOCOR. It is recognized that the rule on strict interpretation
does not apply in the case of exemptions in favor of government political
subdivision/instrumentality. In the case of property owned by the state/city/other public
corporations, the express exception should not be construed with the same degree of
strictness that applies to exemptions contrary to the policy of the state, since as to such
property “exception is the rule and taxation the exception.”
The Commission shall exempt any specific telecommunications service from its rate or
tariff regulations if the service has sufficient competition to ensure fair and reasonable
rates of tariffs. Another exemption granted by the law in line with its policy
of deregulationis the exemption from the requirement of securing permits from the NTC
every time a telecommunications company imports equipment. Tax exemptions should
be granted only by clear and unequivocal provision of law on the basis of language too
plain to be mistaken.

13. PLDT vs. CITY OF DAVAO

Facts: PLDT paid a franchise tax equal to 3% of its gross receipts. The
franchise tax was paid “in lieu of all taxes on this franchise or earnings thereof” pursuant
to RA 7082. The exemption from “all taxes on this franchise or earnings thereof” was
subsequently withdrawn by the LGC, which at the same time gave LGUs the power to
tax businesses enjoying a franchise on the basis of income received or earned by them
within their territorial jurisdiction. The LGC took effect on January 1, 1992.
The City of Davao enacted Ordinance No. 519, Series of 1992, which in pertinent part
provides: Notwithstanding any exemption granted by law or other special laws, there is
hereby imposed a tax on businesses enjoying a franchise, a rate of 75% of 1% of the
gross annual receipts for the preceding calendar year based on the income receipts
realized within the territorial jurisdiction of Davao City. Subsequently, Congress granted
in favor of Globe Mackay Cable and Radio Corporation (Globe) and Smart Information
Technologies, Inc. (Smart) franchises which contained “in leiu of all taxes” provisos. In
1995, it enacted RA 7925, or the Public Telecommunication Policy of the Philippines,
Sec. 23 of which provides that any advantage, favor, privilege, exemption, or immunity
granted under existing franchises, or may hereafter be granted, shall ipso facto become
part of previously granted telecommunications franchises and shall be accorded
immediately and unconditionally to the grantees of such franchises. The law took effect
on March 16, 1995. In January 1999, when PLDT applied for a mayor’s permit to
operate its Davao Metro exchange, it was required to pay the local franchise tax which
then had amounted to P3,681,985.72. PLDT challenged the power of the city
government to collect the local franchise tax and demanded a refund of what had been
paid as a local franchise tax for the year 1997 and for the first to the third quarters of
1998.

Issue: WON by virtue of RA 7925, Sec. 23, PLDT is again entitled to the exemption
from payment of the local franchise tax in view of the grant of tax exemption to Globe
and Smart.

Held: Petitioner contends that because their existing franchises contain “in lieu of all
taxes” clauses, the same grant of tax exemption must be deemed to have become ipso
facto part of its previously granted telecommunications franchise. But the rule is that
tax exemptions should be granted only by a clear and unequivocal provision of law
“expressed in a language too plain to be mistaken” and assuming for the nonce that
the charters of Globe and of Smart grant tax exemptions, then this runabout way of
granting tax exemption to PLDT is not a direct, “clear and unequivocal” way of
communicating the legislative intent.
Nor does the term “exemption” in Sec. 23 of RA 7925 mean tax exemption. The term
refers to exemption from regulations and requirements imposed by the National
Telecommunications Commission (NTC). For instance, RA 7925, Sec. 17 provides: