AEGIS PEOPLESUPPORT, INC. [FORMERLY PEOPLESUPPORT (PHILIPPINES), INC.

],
PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
G.R. No. 216601, October 07, 2019
SECOND DIVISION, J. REYES, JR.

Review on Certiorari; Application

The tax treatment of foreign exchange (forex) gains shall depend on the activities from
which these arise.

Petitioner Aegis People Support, Inc. is an IT Export service firm who was issued a
Certificate of ITHEntitlement and was registered with the PEZA and the BIR.

On April 2008, petitioner filed their ITR with the BIR for the taxable year of 2007 and days
after, filed its amended Annual ITR for the same taxable year. On the same date, petitioner
filed its Audited Financial Statements with the Revenue District Office of the BIR. In 2010,
petitioner filed with the BIR an administrative claim for refund or issuance of tax credit
certificate and an Application for Tax Credits/Refunds for its excess payment of income tax
for taxable year 2007 in the amount of P66,177,830.95. Respondent, who was then the duly
appointed Commissioner of the Bureau of Internal Revenue, however, did not act on the
administrative claim for refund.

The CTA denied petitioner's claim for refund or issuance of tax credit certificate for
insufficiency of evidence for petitioner's failure to present evidence in support of its
allegation that the activities from which the amount of foreign exchange gain arose, were
attributable to activities with income tax incentive. After the CTA’s ruling, the petitioner
appealed to the CTA En Banc which affirmed the CTA’s Decision. This prompted the
petitioner to file a Petition for Review on Certiorari.

Are the petitioner’s foreign exchange gains covered by Income Tax Holiday and
subject to tax refund?

YES. The SC noted that tax treatment of foreign exchange gains shall depend on the
activities from which these arise. Thus, if the forex gain is attributed to an activity with
income tax incentive (Income Tax Holiday or 5% Gross Income Tax), said forex gain shall
be covered by the same income tax incentive. On the other hand, if the forex gain is
attributed to an activity without income tax incentive, said forex gain shall likewise be
without income tax incentive, i.e., therefore, subject to normal corporate income tax.

In the instant case, petitioner may validly enter into a hedging contract to manage its
foreign currencies on-hand earned as gross revenues. In the Article of Incorporation of the
petitioner’s business reads:

To invest and deal with the money and properties of the Corporation in such manner as may
from time to time be considered wise or expedient for the advancement of its interest

This item authorizes the petitioner to enter into a hedging contract with a broker in order to
protect its gross revenues in the form of foreign currency from being severely devalued in
terms of local currency. Consequently, the SC considers hedging to be very much related to
its registered activities and, hence, still subject to a preferential tax treatment under R.A.
No. 7916 and EO No. 226.
 REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT (PCGG), PETITIONER, V. SANDIGANBAYAN
2ND DIVISION, TRADERS ROYAL BANK, ROYAL TRADERS HOLDING CO., INC. AND
BANK OF COMMERCE, AS SUCCESSORS-IN-INTEREST OF TRADERS ROYAL BANK,
RESPONDENTS.
G.R. No. 212436, October 02, 2019
SECOND DIVISION, J. REYES, JR.

Petition for Certiorari under Rule 65; Right to cross-examine witnesses

When cross-examination is not and cannot be done or completed due to causes attributable
to the party offering the witness, the uncompleted testimony is rendered incompetent.

The Republic, represented by the PCGG, filed a complaint against Traders Royal Bank (TRB)
wherein it was alleged that they issued several illegal banking instruments showing receipt
of funds from President Marcos. The PCGG presented its witnesses against the TRB and
among them were Reynaldo Guiao, Eleuterio Camarote, and Julieta Bertuben. In 2000, TRB
amended its Article of Incorporation and changed its name to Royal Traders Holding Co.,
Inc. and was purchased by the Bank of Commerce in 2001. PCGG alleged that the
amendment in TRB's Articles of Incorporation was a precursor to the sale of RTHCI to the
Bank of Commerce for the purpose of mingling TRB's assets with the latter to escape its
obligations with the government.

During the proceedings, PCGG prayed that it be allowed to enter against Bank of Commerce
the previously presented testimonial and documentary evidence, but the Sandiganbayan
denied the same on the ground that it would violate the Bank of Commerce's right to due
process. The Sandiganbayan’s order was not followed by PCGG and the latter manifested
that it would adopt as evidence against Bank of Commerce the testimonies of Guiao,
Camarote, and Bertuben that were presented in evidence against TRB. The Bank of
Commerce prayed that the witnesses be cross-examined by them, but the cross
examination did not push through due to the unavailability of the witnesses. Thus, the bank
filed a motion to strike out the testimonies of the witnesses. The Sandiganbayan granted
the Bank of Commerce's motion and ordered that the testimonies of witnesses be stricken
off the record with respect to the Bank of Commerce.

Did the Sandiganbayan commit grave abuse of discretion when it ordered the
testimonies of the witnesses be stricken off the record as to the Bank of
Commerce?

NO. The contention of the PCGG that the Bank of Commerce bought RTHCI for purposes of
mingling its assets to subvert the government's effort to recover ill-gotten wealth remains
to be an allegation as the respondents were able to prove that there was no mingling of
assets between the Bank of Commerce and TRB. To hold that TRB's actions, including the
conduct of cross-examination, bind the Bank of Commerce on account of privity is to quickly
judge a determinative issue. The Bank of Commerce did not waive their right to cross-
examine the witnesses when in fact, they manifested its intention to subject the witnesses
to a cross-examination. Consequently, the absence of the opportunity to cross-examine
these witnesses renders their testimony incomplete and therefore inadmissible for being
incompetent as to the Bank of Commerce. Until such cross-examination has been finished,
the testimony of the witness cannot be considered as complete and may not be allowed to
form part of the evidence to be considered by the court in deciding the case.
 GENOVEVA G. GABRILLO, REP. HEREIN BY ATTORNEY-IN-FACT, MEDARDO G.
CADIENTE, JR., PETITIONER, V. HEIRS OF OLIMPIO PASTOR REP. BY
CRESENCIANA MANGUIRAN VDA. DE PASTOR, RESPONDENT.
G.R. No. 234255, October 02, 2019
SECOND DIVISION, J. REYES, JR.

Review on Certiorari under Rule 45; Application

Nothing is more settled in procedural law than the rule that jurisdiction over the subject
matter is conferred by law and determined by the allegations in the complaint, including the
character of the reliefs prayed for.

Petitioner Gabrillo claims to be the lawful owner of a parcel of land measuring 9,000 sq. m.
that was originally owned by Sps. Pastor, herein respondents. Sps. Pastor executed a
Transfer of Rights and Sale of Improvements over the subject property, then consisted of
10,000 square meters, before the Bureau of Lands Investigation in favor of Ernesto A.
Cadiente, Sr. Sps. Pastor and Cadiente had a disagreement and a compromise agreement
and/or amicable settlement was forged which stated that Cadiente's land was reduced to
9,000 square meters to devote the 1,000 square meters to a barangay site. In 1991,
Cadiente executed a Transfer of Rights or Relinquishment and Sale of Improvements
conveying the entire 10,000 square-meter property to petitioner Gabrillo, but despite the
transfer, herein respondents filed an application for free patent and an OCT was issued in
their favor.

Gabrillo maintained that when the respondents registered the subject property in their
names, an implied trust was created warranting reconveyance as well as the
cancellation/annulment of the OCT, which was essentially her course of action.
Respondents, however, alleged that the property subject of their free patent application is
different from the property claimed by Gabrillo. They further posited that the OCT had
become indefeasible one (1) year from the date of its issuance and can no longer be
attacked on the ground of fraud.

The RTC dismissed the case on the grounds that it had no jurisdiction to take cognizance of
the case because the complaint failed to state the assessed value of the land in dispute and
the CA affirmed this.

Did the RTC have jurisdiction over petitioner's action by the mere allegation of the
market value or estimated value of the subject property in the complaint?

NO. The SC took note of the fact that the petitioner’s aim is to secure her claimed
ownership by recovering the subject property from respondents and have the certificate of
title under their name cancelled and an action for reconveyance and annulment of title is an
action involving title to real property, jurisdiction over which rests on the assessed value of
the real property in question as alleged in the initiatory pleading.

Petitioner's complaint did not allege the disputed property's assessed value, but instead
stated its market value pegged at P50,000.00. It is well-settled that the courts cannot take
judicial notice of the assessed value or even the market value of the land. The assessed
value of the realty in question must be clearly stated in the complaint to prompt the court
whether it can or cannot take cognizance of the case. The RTC cannot be said to have erred
in dismissing the complaint on the ground of lack of jurisdiction. Not even a single
document reflecting the assessed value of the subject property was annexed to petitioner's
complaint and failed to attach even tax declarations.

YOUNG AN CHO AND MA. CECILIA S. CHO, PETITIONERS, V. YOUNG JOO LEE,
RESPONDENT.
G.R. No. 224121, October 02, 2019
SECOND DIVISION, J. REYES, JR.

Review on Certiorari; actual case or controversy

Respondent Young Joo Lee and her husband, Ok Cheon Lim are the owners of S.K.I.
Industry, Inc. (SKI) and K.J. Springs and Plastics Technology, Inc. (KJS) while petitioner An
Cho was SKI's general manager while his wife, Cecilia was the accounting and finance
manager of both SKI and KJS.

Petitioners were tasked by the respondents to look after their dollar savings account. When
petitioners resigned from the respondents’ business, it was found out that petitioners made
two unauthorized money transfers from the dollar savings account, consisting of
$100,000.00, withdrawn on June 18, 2009 and $500,000.00, withdrawn on October 18,
2010 through forging respondent’s signature.

The petitioners were initially charged with qualified theft, but the charges were modified to
two counts of estafa through falsification of commercial documents.

The RTC approved the modification of the charges which prompted the respondents to
appeal the order to the CA. The CA ruled that the RTC gravely abused its discretion when it
approved the substitution of the offense. The RTC, in 2015, eventually dismissed the
criminal cases against petitioners for failure to prosecute.

Did this instant petition present a justiciable controversy after the criminal cases
against petitioners have already been dismissed?

NO. An actual case or controversy exists when there is a conflict of legal rights or an
assertion of opposite legal claims between the parties that is susceptible or ripe for judicial
resolution. It only becomes moot and academic when none of the following are present in
the case:

(1) Grave constitutional violations;

(2) Exceptional character of the case;
(3) Paramount public interest;
(4) The case presents an opportunity to guide the bench, the bar, and the
public; or
(5) The case is capable of repetition yet evading review.

The dismissal of the criminal cases against petitioners operates as a supervening event that
mooted the present petition. Even if the Court decides on the proper offense to be charged
against petitioners, there is no longer any Information to be substituted. Any resolution on
the propriety of downgrading the offense charged from qualified theft to estafa would no
longer serve any purpose. It must also be emphasized that no petition was filed to assail the
dismissal of the criminal cases for violation of the accused's right to speedy trial.

NOEL FERNANDEZ Y VILLEGAS AND ANDREW PLATA Y SUMATRA, PETITIONERS, V.

PEOPLE OF THE PHILIPPINES, RESPONDENT.
G.R. No. 224708, October 02, 2019
SECOND DIVISION, J. REYES, JR.

Rules of Court; Plea-bargaining framework; Application

A plea of guilty to a lesser offense only works as a consequence of a plea negotiation

between the offended party, the prosecutor, with the approval of the court.

The RTC rendered a judgment finding both petitioners Fernandez and Plata guilty for the
following cases, all of which were charges for violation of Section 11, Article II of RA No.
9165 of the Comprehensive Dangerous Drugs Act of 2002 and were both sentenced to
suffer an indeterminate penalty of twelve (12) years and one (1) day as minimum term to
fourteen (14) years as maximum term. Petitioners appealed the RTC’s Decision to the CA
and the latter affirmed the former’s Decision. In 2016, petitioners filed a Petition for Review
on Certiorari under Rule 45 of the Rules of Civil Procedure questioning CA’s affirmation.

The SC issued a Resolution denying the petition for the PAO's failure to: (1) sufficiently
show any reversible error in the challenged decision and resolution as to warrant the
exercise of the Court's discretionary appellate jurisdiction; (2) state the material date of
filing of the motion for reconsideration in violation of Sections 4(b) and 5, Rule 45 of the
Rules of Civil Procedure; and (3) submit a soft copy of the petition.

Subsequently, the PAO filed a Manifestation with attached Motion for Reconsideration
submitting the soft copy of the petition and its annexes. Petitioners imputed error on the
part of the court in not giving credence to their testimony that no illegal drugs were
confiscated from their possession when the police arrested them. However, the SC still
upheld its Resolution. Petitioners then filed this instant Manifestation asking for leniency and
to allow the application of the plea-bargaining framework for the purpose of reducing their
sentence, saying that the framework was not present during the trial of their case.

Is the plea-bargaining framework applicable to the petitioners?

NO. In the plea-bargaining framework, an accused charged with violation of Sec. 11 par. 3
of R.A. No. 9165 for illegal possession of dangerous drugs where the quantity is less than 5
grams may be allowed to enter a plea of guilty to a lesser offense under Section 12 of R. A.
No. 9165. Here, the accused shall only suffer the penalty of imprisonment for six months
and one day to four years. Petitioners’ Manifestation, as the SC noted, will show that they
seek the reduction of the penalty imposed upon them by the RTC pursuant to the plea-
bargaining framework sans a plea of guilty to a lesser offense. However, a plea of guilty to a
lesser offense only works as a consequence of a plea negotiation between the offended
party, the prosecutor, with the approval of the court. This is not present on this petition as
petitioners only anchored their request for the reduction of the sentence imposed on them
on the mere issuance of the plea-bargaining framework which, they claim, offers a more
favorable penalty than that prescribed under R.A. No. 9165 and absent a categorical
admission of guilt for a lighter offense than that actually charged, the accused should be
sentenced to suffer the penalty prescribed for the offense to which he actually pleaded. The
SC affirmed the RTC’s Decision.

PCI LEASING & FINANCE, INC., PETITIONER, V. SPOUSES JAMES D. GUTIERREZ

AND CATHERINE R. GUTIERREZ, RESPONDENTS.
G.R. No. 182842, September 04, 2019
SPOUSES DANTE R. GUTIERREZ AND LOURDES D. GUTIERREZ, DOING BUSINESS
UNDER THE NAME AND STYLE OF CAPITOL ALLIED TRADING & TRANSPORT,
PETITIONERS, V. PCI LEASING & FINANCE, INC., RESPONDENT.
G.R. No. 199393, September 4, 2019
SECOND DIVISION, J. REYES, JR.

Review on Certiorari under Rule 45; Application

Given the ministerial nature of the trial court's duty to issue a writ of possession after the
purchaser has consolidated his ownership, any question regarding the regularity and validity
of the mortgage or its foreclosure cannot be raised as justification for opposing the issuance
of the writ.

In December 1999, spouses Gutierrez, herein respondents, obtained loans from PCI
Leasing, herein petitioner, in the total amount of P48,246,000.00 and as security, the
spouses mortgaged to PCI their properties including 2 condo units and a parcel of land.
When the spouses defaulted in their payment obligation, PCI Leasing extrajudicially
foreclosed the mortgages. PCI Leasing allowed the spouses Gutierrez to sell their properties
located in San Fernando which were also mortgaged to PCI Leasing. For P14,500,000.00,
said properties were sold to spouses Paredes. On March 2004, spouses Gutierrez requested
PCI to release the real estate mortgages on some of their properties, but PCI did not reply
to this request. Consequently, PC filed a complaint against the sps. Gutierrez and months
after, filed a Joint Motion for Judgment based on a compromise agreement, the subject of
which is the outstanding balance of the spouses. In December 2004, PCI filed another
petition for issuance of writ of possession for the properties of sps. Gutierrez that was sold
to spouses Paredes. The spouses Paredes filed a motion to suspend proceedings, contending
that the obligations for which their properties had been mortgaged were already fully paid,
and as a consequence, PCI was not entitled to the issuance of a writ of possession.
Subsequently, in 2005, the Paredes filed an action for the nullification of foreclosure,
certificate of sale, and title and for the reconveyance of their properties.

The RTC granted the issuance of the writ of possession in favor of PCI. Sps. Gutierrez
appealed this Decision to the CA, but the latter ruled that PCI, as purchaser in the auction
sale and the new owner of the property on the strength of a new title issued and registered
under its name, was entitled to the contested writ of possession.

Is PCI Leasing is entitled to a writ of possession despite the spouses Gutierrez's

claim of redemption?
NO. Issues concerning the sufficiency of the evidence presented to support the claim of
redemption should be separately instituted for the purpose. In petitions for the issuance of a
writ of possession, the judge need not look into the validity of the mortgages or the manner
of their foreclosure. When the mortgagor claims redemption, the judge is not mandated to
determine whether the payment satisfies the obligation secured by the foreclosed property.
Hence, in accordance with the ministerial duty of the trial courts to issue writs of possession
and given that the issue of redemption is heavily disputed, the general rule should apply,
and the writs of possession should issue as a matter of course.