THIRD DIVISION

June 22, 2016

G.R. No. 181369

TALA REALTY SERVICES CORP., INC., PEDRO B. AGUIRRE, REMEDIOS A. DUPASQUIER,

DOLLY LIM, RUBENCITO M. DEL MUNDO AND ELIZABETH H. PALMA, Petitioners,
vs.
BANCO FILIPINO SAVINGS & MORTGAGE BANK, Respondent.

DECISION

JARDELEZA, J.:

1
In G.R. No. 188302 (2012) and the consolidated cases of G.R. Nos. 130088, 131469, 155171,
2
155201and166608 (2009), we applied the rule of stare decisis to deny Banco Filipino's claims for
reconveyance of various real properties based on a trust agreement that we previously declared void
3
in G.R. No. 137533 (2002). This case raises the question of whether Banco Filipino Savings &
Mortgage Bank's (Banco Filipino) complaint for reconveyance in the proceedings below is likewise
precluded by stare decisis and conclusiveness of judgment.

4
On September 5, 1995, Banco Filipino filed a complaint with the Regional Trial Court (RTC) of
Manila against Tala Realty Services Corporation, Inc. (Tala Realty) and the individual petitioners.
This was one of the 17 reconveyance cases instituted by Banco Filipino against Tala Realty covering
5
properties located in different parts of the Philippines.

The complaint alleged that the properties were covered by a trust agreement between Banco
Filipino, as trustor-beneficiary, and Tala Realty, as trustee. The trust agreement was essentially a
sale and lease-back arrangement wherein Banco Filipino sold various properties to Tala Realty,
including the one located in Sta. Cruz, Manila, while the latter concurrently leased to Banco Filipino
the same property for a period of 20 years, renewable for another 20 at the option of Banco
6
Filipino. Banco Filipino admitted that the purpose of the trust agreement was to "allow more
flexibility in the opening of branches and to enable the bank to acquire new branch [sites]," since at
that time, Banco Filipino was concerned about keeping within the 50% capital asset threshold for
7
banks under the General Banking Act. However, sometime in August 1992, Tala Realty claimed
8
the property for itself and threatened to eject Banco Filipino.
 9
Petitioners moved to dismiss the complaint based on the following grounds: forum shopping, lack
10
of cause of action, and pari delicto. The RTC initially denied the motion to dismiss but later
11
reversed itself. It ordered the dismissal of the complaint against herein petitioners except Tala
Realty and ordered the suspension of the proceedings in view of our decision in G.R. No. 137533.
12 13
Banco Filipino moved for reconsideration which the RTC denied. Consequently, Banco
14
Filipino elevated the case to the Court of Appeals (CA) via Rule 65. The CA granted the petition,
finding that the R TC should have hypothetically admitted the truth of the factual allegations in the
15
complaint-including the validity of the trust agreement-when it ruled on the motion to dismiss. The
CA also said that the proceedings should not have been suspended because the matter resolved in
G.R. No. 137533, which originated from an ejectment suit, is distinct and separate from the subject
16
matter of the case for reconveyance. The CA subsequently denied petitioners' motion for
17
reconsideration.

Hence, this appeal under Rule 45 where petitioners principally claim that Banco Filipino's action for
reconveyance is already barred by stare decisis and conclusiveness of judgment considering the en
banc decision in G.R. No. 137533, as reiterated in the April 7, 2009 consolidated decision in G.R.
18
Nos. 130088, 131469, 155171, 155201, and 166608 and the June 27, 2012 decision in G.R No.
19
188302. They also argue that Banco Filipino availed of the wrong remedy when they filed a
20
petition for certiorari with the CA instead of an ordinary appeal. In response, Banco Filipino
insists that it availed of the correct mode of review and counters that G.R. No. 137533 cannot apply
because it involved an ejectment suit, which is distinct from its action for reconveyance. It cites the
21 22 23 24 25
final rulings in G.R. Nos. 144700, 130184, 139166, 167255 and 144705 -which
commonly held that the elements of forum shopping, litis pendentia and res judicata were not
present in Banco Filipino's various reconveyance cases-as the controlling precedents.

II

In resolving this case, the sole determinative issue is whether Banco Filipino can recover the Sta.
26
Cruz property based on the same trust agreement which we declared void in G.R. No. 137533.
The issue, however, is not novel and has already been conclusively resolved in both G.R. No.
27
188302 and the consolidated cases of G.R. Nos. 130088, 131469, 155171, 155201, and
28
166608. The facts of the present case, save for the specific parcel of land being disputed, are
identical to those obtaining in these two decisions. Therefore, the doctrines of stare decisis and
conclusiveness of judgment warrant the granting of the petition.

29 30
In G.R. No. 188302 and G.R. Nos. 130088, 131469, 155171, 155201, and 166608, we applied
and extensively quoted the ruling in G.R. No. 13753331 that the trust agreement between Banco
Filipino and Tala Realty is void and cannot be enforced, thus:

The Bank alleges that the sale and twenty-year lease of the disputed property were part
of a larger implied trust "warehousing agreement." Concomitant with this Court's factual
finding that the 20-year contract governs the relations between the parties, we find the
Bank's allegation of circumstances surrounding its execution worthy of credence; the
Bank and Tala entered into contracts of sale and lease back of the disputed property
and created an implied trust "warehousing agreement" for the reconveyance of the
property. In the eyes of the law, however, this implied trust is inexistent and void
for being contrary to law.

xxx

An implied trust could not have been formed between the Bank and Tala as this
Court has held that "where the purchase is made in violation of an existing
statute and in evasion of its express provision, no trust can result in favor of the
party who is guilty of the fraud." x x x

x x x [T]he Bank cannot use the defense of nor seek enforcement of its alleged implied
trust with Tala since its purpose was contrary to law. As admitted by the Bank, it
1âwphi1

"warehoused" its branch site holdings to Tala to enable it to pursue its expansion
program and purchase new branch sites including its main branch in Makati, and at the
same time avoid the real prope1iy holdings limit under Sections 25(a) and 34 of the
General Banking Act which it had already reached. x x x

Clearly, the Bank was well aware of the limitations on its real estate holdings under the
General Banking Act and that its "warehousing agreement" with Tala was a scheme to
circumvent the limitation. Thus, the Bank opted not to put the agreement in writing and
call a spade a spade, but instead phrased its right to reconveyance of the subject
property at any time as a "first preference to buy" at the "same transfer price." This
arrangement which the Bank claims to be an implied trust is contrary to law.
Thus, while we find the sale and lease of the subject property genuine and
binding upon the parties, we cannot enforce the implied trust even assuming the
parties intended to create it. In the words of the Court in the Ramos case, "the courts
will not assist the payor in achieving his improper purpose by enforcing a resultant trust
for him in accordance with the 'clean hands' doctrine." The Bank cannot thus demand
reconveyance of the property based on its alleged implied trust relationship with
Tala.

xxx
 The Bank and Tala are in pari delicto, thus, no affirmative relief should be given
to one against the other. The Bank should not be allowed to dispute the sale of its
lands to Tala nor should Tala be allowed to further collect rent from the Bank. The clean
hands doctrine will not allow the creation or the use of a juridical relation such as a trust
to subvert, directly or indirectly, the law. Neither the Bank nor Tala came to court with
clean hands; neither will obtain relief from the court as one who seeks equity and
32
justice must come to court with clean hands. (Citations omitted; emphases
supplied.)

In both cases, we applied the time-honored principle of stare decisis et non quieta movere, which
literally means "to adhere to precedents, and not to unsettle things which are established," to settle
the issue of whether Banco Filipino can recover the properties subject of the void trust agreement.
The rule of stare decisis is a bar to any attempt to re-litigate the same issue where the same
questions relating to the same event have been put forward by parties similarly situated as in a
33
previous case litigated and decided by a competent court. Thus, the Court's ruling in G.R. No.
34
137533 regarding the nullity of the trust agreement-the very same agreement which Banco
Filipino seeks to enforce in the proceedings a quo-applies with full force to the present case.
Consequently, Banco Filipino's action for reconveyance of the Sta. Cruz property based on the void
trust agreement cannot prosper and must be dismissed for lack of cause of action.

35 36
It is the Court's duty to follow the precedents laid down in G.R. No. 137533, G.R. No. 188302
37
and G.R. Nos. 130088, 131469, 155171, 155201 and 166608. The doctrine of stare decisis is one
of policy grounded on the necessity for securing certainty and stability of judicial decisions. As well
stated by Justice Cardozo in his book, The Nature of the Judicial Process:

x x x It will not do to decide the same question one way between one set of litigants and
the opposite way between another. "If a group of cases involves the same point,
1âwphi1

the parties expect the same decision. It would be a gross injustice to decide
alternate cases on opposite principles. If a case was decided against me yesterday
when I was defendant, I shall look for the same judgment today if I am plaintiff. To
decide differently would raise a feeling of resentment and wrong in my breast; it would
be an infringement, material and moral, of my rights." x x x Adherence to precedent
must then be the rule rather than the exception if litigants are to have faith in the
38
evenhanded administration of justice in the courts. (Emphasis supplied.)

In addition to the principle of stare decisis, the doctrine of conclusiveness of judgment, otherwise
39
known as "preclusion of issues" or "collateral estoppel," bars the re-litigation of Banco Filipino's
claim based on the void trust agreement. This concept is embodied in the third paragraph of Rule
39, Section 47 of the Rules of Civil Procedure:
 Section 47. Effect of judgments or final orders.-The effect of a judgment or final order
rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or
final order, may be as follows:

xxx

(c) In any other litigation between the same parties or their successors in interest, that
only is deemed to have been adjudged in a former judgment or final order which
appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto. (Emphasis supplied.)

Conclusiveness of judgment is a species of res judicata and it applies where there is identity of
40
parties in the first and second cases, but there is no identity of causes of action. Any right, fact, or
matter in issue directly adjudicated or necessarily involved in the determination of an action before a
competent court in which judgment is rendered on the merits is conclusively settled by the judgment
therein, and cannot again be litigated between the parties and their privies whether or not the claim,
41
demand, purpose, or subject matter of the two actions is the same. Thus, if a particular point or
question is in issue in the second action, and the judgment will depend on the determination of that
particular point or question, a former judgment between the same parties or their privies will be final
and conclusive in the second if that same point or question was in issue and adjudicated in the first
42
suit. Identity of cause of action is not required but mere1y identity of issue.

In this case, the rule on conclusiveness of judgment is squarely applicable because Banco Filipino's
action for reconveyance is solely based on a trust agreement which, it cannot be overemphasized,
has long been declared void in a previous action that involved both Tala Realty and Banco Filipino,
i.e., G.R. No. 137533. In other words, the question on the validity of the trust agreement has been
finally and conclusively settled. Hence, this question cannot be raised again even in a different
proceeding involving the same parties. Although the action instituted in this case is one for
reconveyance, which is technically different from the ejectment suit originally instituted by Tala
Realty in G.R. No. 137533, "the concept of conclusiveness of judgment still applies because under
this principle, the identity of causes of action is not required but merely identity of issues. Simply put,
conclusiveness of judgment bars the relitigation of particular facts or issues in another litigation
43
between the same parties on a different claim or cause of action. "

44 45 46 47
Banco Filipino cannot rely on G.R. Nos. 144700, 130184, 139166, 167255 and
48
144705. In these cases, we ruled that Banco Filipino did not violate the rule against forum
shopping when it filed separate cases for reconveyance in different trial courts. These rulings were
based on the Court's finding that the elements of litis pendentia and res judicata were not present.
However, the concept of res judicata referred to in these cases is the one commonly understood as
49
"bar by prior judgment," which is enunciated in Rule 39, Section 47(b). Bar by prior judgment is
the traditional formulation of res judicata, which requires the identity of parties, subject matter, and
 50
causes of action. It is this concept which is used in determining whether litis pendentia or forum
shopping exists. In contrast, and as previously discussed, res judicata as conclusiveness of
judgment requires only identity of parties and of issues. These two kinds of res judicata are legally
distinct.

Accordingly, under the doctrine of res judicata as bar by prior judgment, Banco Filipino could not be
prevented from filing separate actions for reconveyance because each action involved a different
subject matter, i.e., a different parcel of land. Nonetheless, res judicata as conclusiveness of
judgment would still apply to these different cases, as it does here, insofar as they involve material
facts or questions which were in issue and which have been adjudicated in a former action.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 89155 are REVERSED and SET ASIDE. Civil Case No. 95-75214
before Branch 47 of the Regional Trial Court of Manila is DISMISSED.

SO ORDERED.

FRANCIS H. JARDELEZA
Associate Justice
 THIRD DIVISION

January 10, 2018

G.R. No. 204039

UNITED COCONUT PLANTERS BANK, Petitioner

vs.
SPOUSES WALTER UY AND LILY UY, Respondents

DECISION

MARTIRES, J.:

1
This petition for review on certiorari seeks to reverse and set aside the 23 May 2012 Decision and
2
the 18 October 2012 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 118534 which
3
affirmed with modification the 24 March 2010 Decision of the Office of the President (OP).

THE FACTS

Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc. were the joint developers of the Kiener
Hills Mactan Condominium Project (Kiener Hills). In 1997, spouses Walter and Lily Uy (respondents)
entered into a Contract to Sell with PPGI for a unit in Kiener Hills. The total contract price amounted
to ₱1, 151,718. 7 5 payable according to the following terms: (a) ₱l00,000.00 as down payment; and
(b) the balance paid in 40 monthly installments at ₱26,297.97 from 16 January 1997 to 16 April
4
2000.

On 23 April 1998, PPGI and petitioner United Coconut Planters Bank (UCPB) executed the
5
following: Memorandum of Agreement (MOA), and Sale of Receivables and Assignment of Rights
6
and Interests. By virtue of the said agreements, PPGI transferred the right to collect the receivables
of the buyers, which included respondents, of units in Kiener Hills. The parties entered into the said
7
agreement as PPGI's partial settlement of its ₱l,814,500,000.00 loan with UCPB.

On 17 April 2006, the Housing and Land Use Regulatory Board Regional Office (HLURB Regional
Office) received respondents' complaint for sum of money and damages against PPGI and UCPB.
They claimed that in spite of their full payment of the purchase price, PPGI failed to complete the
8
construction of their units in Kiener Hills.

The HLURB Regional Office Decision

 9
In its 29 November 2006 decision, the HLURB Regional Office found that respondents were
entitled to a refund in view of PPGI' s failure to complete the construction of their units. Nonetheless,
it found that UCPB cannot be solidarily liable with PPGI because only the accounts receivables were
conveyed to UCPB and not the entire condominium project. The HLURB Regional Office suspended
the proceedings as to PPGI on account of its being in corporate rehabilitation. The dispositive
portion reads:

WHEREFORE, premises considered, decision is hereby rendered suspending the

proceedings of the present case. The complainants are therefore directed to file their
claim before the Rehabilitation Receiver.

10
No judgment as to cost.

Unsatisfied, respondents appealed before the HLURB-Board of Commissioners (HLURB Board).

The HLURB Board Decision

11
In its 17 September 2007 decision, the HLURB Board reversed and set aside the HL URB
Regional Office decision. It agreed that the proceedings against PPGI should be suspended on
account of its corporate rehabilitation. Nevertheless, the HLURB Board found UCPB solidarily liable
with PPGI because it stepped into the latter's shoes insofar as Kiener Hills is concerned pursuant to
the MOA between them. It noted that UCPB was PPGI's successor-in-interest, such that the delay in
the completion of the condominium project could be attributable to it and subject it to liability. The
HLURB Board ruled that as PPGI's assignee, UCPB was bound to refund the payments made,
without prejudice to its right of action against PPGI. Thus, it pronounced:

WHEREFORE, premises considered, the appeal is GRANTED and the decision of the
Regional Office is SET ASIDE and a new one is entered as follows:

1. Respondent UCPB is hereby ordered to refund to the complainant the amount of

₱l,151,718.75 with interest at the legal rate of 6% per annum reckoned from the date of
extrajudicial demand on May 24, 2005 until fully paid without prejudice to whatever
claims UCPB may have against PPGI; and

2. Respondent UCPB and PPGI, jointly and severally, are declared liable to the
complainant for payment of exemplary damages in the amount of ₱30,000.00; and
12
attorney's fees in the amount of ₱30,000.00:

Aggrieved, UCPB appealed before the OP.

The OP Decision

In its 24 March 2010 decision, the OP affirmed the decision of the HLURB Board. It
explained that the agreement between PPGI and UCPB clearly transferred all rights,
titles, interests, and participations over Kiener Hills to the latter. It concluded that as
successor-in-interest, UCPB now had the obligations relating to Kiener Hills, including
the reimbursement of payments to respondents. The OP added that benefit of
suspension of actions only attached to PPGI and not to UCPB. Thus:

WHEREFORE, based on the foregoing, the decision appealed from is

13
hereby AFFIRMED.

Undeterred, UCPB appealed before the CA.

The CA Ruling

In its assailed 23 May 2012 decision, the CA affirmed with modification the OP decision.
While the appellate court agreed that respondents are entitled to a full refund of the
payments they may have made, it ruled that UCPB is not solidarily liable with PPGI, and
as such cannot be held liable for the full satisfaction of respondents' payments. It limited
UCPB's liability to the amount respondents have paid upon the former's assumption as
the party entitled to receive payments or on 23 April 1998 when the MOA and AIR
Agreement were made between UCPB and PPGI.

In addition, the appellate court noted the pronouncements of the CA in United Coconut
14
Planters Bank v. O'Halloran (O'Halloran). It explained that it involved similar facts
and issues where the CA ruled that the assignment of the receivables did not make
UCPB the developer of Kiener Hills it being merely the assignee of the receivables
under the contract to sell and, as such, UCPB cannot be deemed as the debtor with
respect to the construction, development, and delivery of the subject condominium
units. Thus, the CA ruled:

WHEREFORE, in view of all the foregoing, the instant Petition for Review
is PARTIALLY GRANTED. The promulgated Decision dated 24 March
2010 and Resolution dated 16 February 2011 are hereby AFFIRMED with
MODIFICATION, as follows:

1) UCPB is ordered to pay Spouses Uy the amount of ₱552,152.34, with

legal interest at 6% per annum from the filing of the complaint until fully
paid without prejudice to whatever claims U CPB may have against
Primetown; and

2) Without prejudice to a separate action Spouses Uy may file against

Primetown, Primetown is liable to pay Spouses Uy the amount of
₱599,566.41 with legal interest at 6% per annum from the filing of the
15
complaint until fully paid.

UCPB moved for reconsideration but it was denied by the CA in its assailed 18 October
2012 resolution.

Hence, this appeal raising the following:

 ISSUES

[WHETHER] THE HONORABLE COURT OF APPEALS GRIEVOUSLY

ERRED WHEN IT MISCONSTRUED THE APPLICABILITY TO THE
INSTANT CASE OF THE FINAL AND EXECUTORY DECISION IN
UNITED COCONUT PLANTERS BANK V. JOHN P. O'HALLORAN AND
JOSEFINA O'HALLORAN (CA-G.R. SP NO. 101699, 23 JULY 1999)
UNDER THE PRINCIPLE OF STARE DECISIS; AND

II

[WHETHER] THE HONORABLE COURT OF APPEALS GRIEVOUSLY

ERRED IN RULING THAT UCPB IS LIABLE TO THE RESPONDENTS
FOR THE AMOUNT THE RESPONDENTS DID NOT PAY THE BANK
16
AND WHICH UCPB DID NOT RECEIVE.

OUR RULING

The petition is meritorious.

Issues that may be raised on appeal

Respondents assailed that the CA erred in applying O'Halloran because the

circumstances were different, notably the issue that estoppel did not arise in the said
case. In addition, they argued that 0 'Halloran and the other cases cited by UCPB are
not binding pursuant to the doctrine of stare decisis because they were decided by the
CA and not by this Court. As such, respondents posited that only decisions of the Court,
excluding all other courts such as the CA, form part of the legal system.

On the other hand, UCPB countered that the only issue to be resolved in the present
petition is the actual amount of its liability. It explained that the assailed CA decision had
become final and executory after respondents failed to appeal the same. UCPB pointed
out that the issues respondents raised were already ventilated before the appellate
court. It believed that respondents should have filed their own appeal to assail the
issues they found questionable.

It must be remembered that when a case is appealed, the appellate court has the
17
power to review the case in its entirety. In Heirs of Alcaraz v. Republic of the Phils.,
18
the Court explained that an appellate court is empowered to make its own judgment
as it deems to be a just determination of the case, to wit:

In any event, when petitioners interposed an appeal to the Court of

Appeals, the appealed case was thereby thrown wide open for review by
that court, which is thus necessarily empowered to come out with a
 judgment as it thinks would be a just determination of the controversy.
Given this power, the appellate court has the authority to either affirm,
reverse or modify the appealed decision of the trial court. To withhold from
the appellate court its power to render an entirely new decision would
violate its power of review and would, in effect, render it incapable of
19
correcting patent errors committed by the lower courts.

Thus, when UCPB appealed the present controversy before the Court, it was not
merely limited to determine whether the CA accurately set UCPB's liability against
respondents. It is also empowered to determine whether the appellate court's
determination of liability was correct in the first place. This is especially true considering
that the issue of the nature of UCPB's liability is closely intertwined and inseparable
from the determination of the amount of its actual liability.

Stare Decisis applies only to cases decided by the Supreme Court

As above-mentioned, respondents bewail the reliance of the CA on 0 'Halloran arguing

that it was not a binding precedent since it was not issued by this Court. In De Mesa v.
20
Pepsi-Cola Products Phils. Inc., the Court explained that the doctrine of stare
decisis deems decisions of this Court binding on the lower courts, to wit:

The principle of stare decisis et non quieta movere is entrenched in Article

8 of the Civil Code, to wit:

xxxx

It enjoins adherence to judicial precedents. It requires our courts to follow

a rule already established in a final decision of the Supreme Court. That
decision becomes a judicial precedent to be followed in subsequent cases
by all courts in the land. The doctrine of stare decisis is based on the
principle that once a question of law has been examined and decided, it
21
should be deemed settled and closed to further argument. (emphasis
and underscoring supplied)

In other words, the doctrine of stare decisis becomes operative only when judicial
precedents are set by pronouncements of this Court to the exclusion of lower courts. It
is true regardless whether the decisions of the lower courts are logically or legally
sound as only decisions issued by this Court become part of the legal system. At the
most, decisions of lower courts only have a persuasive effect. Thus, respondents are
correct in contesting the application of the doctrine of stare decisis when the CA relied
on decisions it had issued.

UCPB only jointly liable to PPGI in reimbursing unitowners of Kiener Hills

With that said, the Court still finds that the CA did not err in ruling that UCPB was only
jointly, and not solidarily liable to PPGI against respondents. In Spouses Choi v. UCPB
22
(Spouses Choi), the Court had definitely ruled on UCPB 's liability to the purchasers
of Kiener Hills, viz:

The primordial issue to be resolved is whether, under the Agreement between

Primetown and UCPB, UCPB assumed the liabilities and obligations of Primetown
under its contract to sell with Spouses Choi.

An assignment of credit has been defined as an agreement by virtue of which the owner
of a credit, known as the assignor, by a legal cause - such as sale, dation in payment or
exchange or donation - and without need of the debtor's consent, transfers that credit
and its accessory rights to another, known as the assignee, who acquires the power to
enforce it to the same extent as the assignor could have enforced it against the debtor.
In every case, the obligations between assignor and assignee will depend upon the
judicial relation which is the basis of the assignment. An assignment will be construed in
accordance with the rules of construction governing contracts generally, the primary
object being always to ascertain and carry out the intention of the parties. This intention
is to be derived from a consideration of the whole instrument, all parts of which should
be given effect, and is to be sought in the words and language employed.

In the present case, the Agreement between Primetown and UCPB provided that
Primetown, in consideration of ₱748,000,000.00, "assigned, transferred, conveyed and
set over unto [UCPB] all Accounts Receivables accruing from [Primetown's Kiener] ...
together with the assignment of all its rights, titles, interests and participation over the
units covered by or arising from the Contracts to Sell from which the Accounts
Receivables have arisen."

The Agreement further stipulated that "x x x this sale/assignment is limited to the
Receivables accruing to [Primetown] from the [b]uyers of the condominium units in x x x
[Kiener] and the corresponding Assignment of Rights and Interests arising from the
pertinent Contract to Sell and does not include except for the amount not exceeding
30,000,000.00, Philippine currency, either singly or cumulatively any and all liabilities
which [Primetown] may have assumed under the individual Contract to Sell." (emphasis
omitted)

The Agreement conveys the straightforward intention of Primetown to "sell, assign,

transfer, convey and set over" to UCPB the receivables, rights, titles, interests and
participation over the units covered by the contracts to sell. It explicitly excluded any
and all liabilities and obligations, which Primetown assumed under the contracts
to sell. The intention to exclude Primetown's liabilities and obligations is further
shown by Primetown's subsequent letters to the buyers, which stated that "this
payment arrangement shall in no way cause any amendment of the other terms
and conditions, nor the cancellation of the Contract to Sell you have executed
with [Primetown]." x x x (emphasis and underlining supplied)

xxxx
The intention to merely assign the receivables and rights of Primetown to UCPB is even
bolstered by the CA decisions in the cases of UCPB v. O'Halloran and UCPB v. Ho.

In UCPB v. O'Halloran, docketed as CA-G.R. SP No. 101699, respondent O'Halloran's

accounts with Primetown were also assigned by Primetown to UCPB, under the same
Agreement as in this case. Since Primetown failed to deliver the condominium units
upon full payment of the purchase price, O'Halloran likewise sued both Primetown and
UCPB for cancellation of the contracts to sell, and the case eventually reached the CA.
The CA held UCPB liable to refund the amount it actually received from O'Halloran. The
CA held that there is no legal, statutory or contractual basis to hold UCPB solidarily
liable with Primetown for the full reimbursement of the payments made by O'Halloran.
The CA found that based on the Agreement, UCPB is merely the assignee of the
receivables under the contracts to sell to the extent that the assignment is a manner
adopted by which Primetown can pay its loan to the bank. The CA held that the
assignment of receivables did not make UCPB the owner or developer of the unfinished
project to make it solidarily liable with Primetown. The CA decision dated 23 July 2009
in CA-G.R. SP No. 101699 became final and executory upon Entry of Judgment on 17
August 2009 for O'Halloran and 18 August 2009 for UCPB.

In UCPB v. Ho, docketed as CA-G.R. SP No. 113446, respondent Ho was similarly

situated with O'Halloran and Spouses Choi. Upon reaching the CA, the CA considered
the Agreement between UCPB and Primetown as an assignment of credit, because: 1)
the parties entered into the Agreement without the consent of the debtor; 2) UCPB's
obligation "to deliver to the buyer the title over the condominium unit upon their full
payment" signifies that the title to the condominium unit remained with Primetown; 3)
UCPB's prerogative "to rescind the contract to sell and transfer the title of condominium
unit to its name upon failure of the buyer to pay the full purchase price" indicates that
UCPB was merely given the right to transfer title in its name to apply the property as
partial payment of Primetown's obligation; and 4) the Agreement clearly states that the
assignment is limited to the receivables and does not include "any and all liabilities
which [Primetown] may have assumed under the individual contract to sell." Thus, the
CA ruled that UCPB was a mere assignee of the right of Primetown to collect on its
contract to sell with Ho. The CA, then, applied the ruling in UCPB v. O'Halloran in
finding UCPB jointly liable with Primetown only for the payments UCPB had actually
received from Ho.

On 4 December 2013, this Court issued a Resolution denying Ho's petition for review
for failure to show any reversible error on the part of the CA. On 2 April 2014, this Court
likewise denied the motion for reconsideration with finality. Thus, the 9 May 2013
Decision of the Special Fifteenth Division of the CA in CA-G.R. SP No. 113446 became
final and executory. (emphasis omitted)

Considering that UCPB is a mere assignee of the rights and receivables under the
Agreement, UCPB did not assume the obligations and liabilities of Primetown under its
contract to sell with Spouses Choi.

xxxx
 Contrary to Spouses Choi's argument that UCPB was estopped, we find that estoppel
would not lie since UCPB's letters to the buyers only assured them of the completion of
their units by the developer. UCPB did not represent to be the new owner of Kiener or
23
that UCPB itself would complete Kiener. (emphases and underlining supplied)

24
In Liam v. UCPB (Liam), the Court maintained its position that the transaction between PPGI and
UCPB was merely an assignment of credit. Hence, what was transferred to UCPB was only the right
to collect PPGI's receivables from the purchases of Kiener Hills and not the obligation to complete
the said condominium project. Thus:

The terms of the MOA and Deed of Sale/Assignment between PPGI and UCPB
unequivocally show that the parties intended an assignment of PPG l's credit in favor of
UCPB.

xxxx

The provisions of the foregoing agreements between PPGI and UCPB are clear, explicit
and unambiguous as to leave no doubt about their objective of executing an
assignment of credit instead of subrogation. The MOA and the Deed of
Sale/Assignment clearly state that UCPB became an assignee of PPGI's outstanding
receivables of its condominium buyers. The Court perceives no proviso or any
extraneous factor that incites a contrary interpretation. Even the simultaneous and
subsequent acts of the parties accentuate their intention to treat their agreements as
assignment of credit.

xxxx

The last paragraph of the letter also confirms that UCPB's acquisition of PPGI's
receivables did not involve any changes in the Contract to Sell between PPGI and
Liam; neither did it vary the rights and the obligations of the parties therein. Thus, no
novation by subrogation could have taken place.

The CA was therefore correct in ruling that the agreement between PPGI and UCPB
was an assignment of credit. UCPB acquired PPGI's right to demand, collect and
receive Liam's outstanding balance; UCPB was not subrogated into PPGI's place as
25
developer under the Contract to Sen. (emphases and underlining supplied)

It is noteworthy that the circumstances and issues in Choi and Liam fall squarely with the case at
bar. First, PPGI and UCPB were prominent parties in the cited cases. Second, it involved the same
documents and agreement between PPGI and UCPB whereby the right to collect the receivables
were assigned to the latter. Third, the controversy arose from the complaints of disgruntled unit
owners to recover the amount they had paid from PPGI or UCPB after Kiener Hills was not
completed.
In addition, the issue on estoppel was addressed in Spouses Choi. There, the Court ruled that the
demand letters UCPB sent to the buyers, including herein respondents, only assured the completion
of the condominium project. Nevertheless, there was no representation on the part of the UCPB that
it would continue the construction of Kiener Hills or that it was the new owner thereof. Guided by the
previous pronouncements of this Court, it is settled that UCPB is only jointly liable with PPGI to the
disgruntled purchasers of Kiener Hills, including respondents. Thus, UCPB is only bound to refund
the amount it had unquestionably received from respondents.

Only questions of law may he raised in a petition for review under Rule 45; exceptions

In the present petition, UCPB does not contest the CA's conclusion that it is jointly liable with PPGI
to the unit owners of Kiener Hills. It, however, assails that the CA erred in computing its actual
1âwphi1

liability because it was only bound to refund the amount it had actually received. Meanwhile,
respondents contest that the resolution of the correct amount of UCPB's liability is a question of fact,
which is beyond the ambit of a petition for review under Rule 45.

It is axiomatic that, as a rule, only questions of law may be raised under a petition for review under
Rule 45 because the Court is not a trier of facts and the factual findings of lower courts are final,
26
binding or conclusive on the parties and to the Court. As with every rule, however, it admits
certain exceptions. Among the recognized exceptions are when the conclusion of the lower court is
one grounded entirely on speculation, surmises or conjectures or when the judgment is based on a
27
misapprehension of facts.

The Court finds that the exceptions are present to warrant a review of the factual matters.

Jurisprudence has settled UCPB's liability to unit owners to refund the amount it indubitably received
from the purchasers of Kiener Hills. In this case, the CA determined UCPB's actual liability of
₱552,152.34 by subtracting the amounts already paid to PPGI from the total purchase price of
28
₱l,151,718.75.

Such computation of the appellate court, however, merely assumes that the said balance was
actually paid by respondents and received by UCPB. A closer scrutiny of the records, nonetheless,
shows that the said amount is not supported by the evidence at hand. The only document that
identifies the amount respondents had paid to UCPB is the demand letter it sent to the former. It is
29
noteworthy that the said demand letter was materially reproduced in respondents' complaint
before the HLURB Regional Office. In the said letter, the amount UCPB received from respondents
is only ₱157,757.82.

While respondents alleged that they had paid in full the purchase price of the condominium units,
only ₱157,757.82 was sufficiently substantiated to have been actually received by UCPB. Thus,
UCPB should only be held liable for ₱157,757.82 because it was the only amount which was
unequivocally shown it had received. This is especially true considering that one who pleads
30
payment has the burden of proving the fact of payment.
Thus, it was incumbent upon respondents to prove the actual amount UCPB had unquestionably
received.

WHEREFORE, the 23 May 2012 Decision of the Court of Appeals m CA-G.R. SP No. 118534 is
AFFIRMED with MODIFICATION. Petitioner United Coconut Planters Bank shall pay the amount of
₱157,757.82 to Spouses Walter and Lily Uy, with legal interest at six percent (6%) per annum,
without prejudice to any action which the parties may have against Prime Town Property Group, Inc.

SO ORDERED.

SAMUEL R. MARTIRES
Associate Justice
 Republic of the Philippines
SUPREME COURT

FIRST DIVISION

G.R. Nos. 153063-70. August 19, 2005

AMELIA D. DE MESA, ARACELI ADATO, RODRIGO ALVARAN, AIDA CASTRO, BALTAZAR

ESTRELLES, ANTONIO A. FERRER, DANILO GARCIA, JULIO M. GONZALES, MARRIETA A.
JOSE, PEPITA JUNTADO, EDUARDO U. LAGO, NESTOR RODA, JAIME SANCHEZ and
JUANITA SANCHEZ, Petitioners,
vs.
PEPSI COLA PRODUCTS PHILS., INC. and PEPSICO INC., Respondent.

RESOLUTION

QUISUMBING, J.:

1
For review on certiorari is the Order, dated April 18, 2002, of the Regional Trial Court of Makati
City, Branch 142 in Civil Cases Nos. 94-2414 to 94-2421. In the said Order, the RTC granted herein
respondents’ motion to dismiss the complaints filed by petitioners herein based on the principle of
stare decisis.

The instant case arose from the same set of facts as (1) Mendoza v. Pepsi-Cola Products
2
Philippines, Inc., et al., G.R. No. 153183 promulgated on July 24, 2002 affirming the Court of
3
Appeals Decision, dated April 16, 2002, in CA-G.R. CV No. 53860; and (2) Rodrigo v. Pepsi Cola
Products (Phils.), Inc. and Pepsico, Inc., G.R. No. 149411, dated October 1, 2001, which also
4
affirmed the Court of Appeals Decision of May 21, 2001 in CA-G.R. CV No. 62837.

The facts are culled from the aforesaid Decisions of the Court of Appeals as affirmed by this Court.

Petitioners are holders of soft drink bottle caps bearing the number "349," allegedly a winning
combination in a contest sponsored by respondents Pepsi Cola Products Phils., Inc. (PCPPI) and
PEPSICO, Inc. (PI).

Respondent PCPPI is a domestic corporation engaged in the production, bottling, and distribution of
carbonated drinks, while respondent PI is a foreign corporation licensed to do business in the
Philippines and is the major stockholder of PCPPI.

D.G. Consultores, a Mexican consulting firm that handled similar promotions in other countries, was
tasked to randomly pre-select the winning numbers and send to respondents a list of the 60 winning
numbers with their corresponding security codes. The process of selecting the winning numbers was
implemented with the approval of the Department of Trade and Industry (DTI).
During the initial promotion period, from February 17 to May 8, 1992, respondents seeded 1000
numbers, 60 of which were winning numbers, 510 non-winning numbers, while the remaining 430
were unused. To ensure that the winning numbers would not be tampered, the DTI required
respondents to submit the list of winning numbers including their security codes which was then
5
deposited in a safety deposit box in a bank.

Owing to the promotional campaign’s success, respondents extended the "Number Fever" by five
more weeks, from May 10 to June 12, 1992. Pepsi again tapped D.G. Consultores to predetermine
the 25 additional winning numbers from the list of unused numbers.

On May 25, 1992, respondents announced "349" as the winning number for the May 26 draw. Later
the same night, Quintin Gomez, Jr., then PCPPI’s Marketing Services Manager called DTI Director
Madarang informing her that due to some security code problems a mistake had been made in the
6
announcement of number "349" as the winning number.

Numerous holders of the supposedly winning "349" crowns were not honored and paid by
respondents, which led these rejected crown holders to file separate complaints for specific
performance and damages.

Civil Case No. 93-68351 was originally filed before the Regional Trial Court of Manila, Branch 16, but
the plaintiffs in the said case withdrew their complaint, leaving Gerson Mendoza as the sole plaintiff
7
in Gerson M. Mendoza v. Pepsi-Cola Products Phils., Inc. and Pepsico, Inc. The other plaintiffs
re-filed their complaints before the Regional Trial Court of Manila, Branch 50, entitled Romulo
8
Rodrigo, et al. v. Pepsi Cola Products Philippines, Inc., et al., docketed as Civil Case No. 94-71403.

For their part, petitioners herein filed their separate complaints, docketed as Civil Cases Nos.
94-2414 to 94-2421, before the Regional Trial Court of Makati, Branch 142.

In the Mendoza case, the RTC dismissed the complaint filed against herein respondents for specific
9
performance and damages in connection with the Number Fever fiasco. Mendoza appealed to the
10
Court of Appeals, in CA-G.R. CV No. 53860, which was dismissed for lack of merit. Unfazed,
Mendoza filed with this Court a petition for review, which was denied for failure to sufficiently show
11
that the Court of Appeals committed any reversible error.

In the Rodrigo case, the RTC likewise dismissed the complaint against herein respondents for
12
specific performance and damages arising from the said promotion. On appeal, docketed as
13
CA-G.R. CV No. 62837, the Court of Appeals affirmed the RTC decision. A petition for review was
subsequently filed with this Court, which was denied for failure to show that a reversible error was
 14
committed by the appellate court. The motion for reconsideration was also denied with finality and
15
entry of judgment was made.

However, prior to the resolution of the Mendoza and Rodrigo cases, herein petitioners filed with the
16
RTC, on December 11, 2000, a motion for leave to (1) adopt the previous testimonial and
documentary evidence in the Mendoza and Rodrigo cases; or (2) archive the case until final
resolution of the said two cases, which were then pending with the Court of Appeals. The RTC
17
granted the said motion on January 8, 2001 and the case was accordingly archived.

Meantime, the Rodrigo case became final and executory on February 5, 2002 in view of our denial of
therein petitioners’ petition for review on certiorari and motion for reconsideration.

18
Hence, on February 20, 2002, herein respondents filed with the RTC a motion to dismiss the
complaints filed by petitioners herein invoking the principle of stare decisis. The RTC, in its assailed
19
Order, granted the motion to dismiss ratiocinating as follows:

The Court finds the instant motion meritorious under the principle of stare decisis. The said doctrine
embodies the legal maxim that a principle or rule of law which has been established by the decision
of a court of controlling jurisdiction will be followed in other cases involving similar situation. It is
founded on the necessity for securing certainty and stability in the law and does not require identity
or privy of parties. This is explicitly ordained in Article 8 of the Civil Code which provides that
decisions applying or interpreting the laws or the Constitution shall form part of the legal system.
Such decisions "assume the same authority as the statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce
obedience thereto" (Kilosbayan, Inc. et al. vs. Manuel Morato, G.R. No. 118910, July 17, 1995).

In the instant cases as well as in Civil Case No. 93-68351 (the Mendoza case), not only are the legal
rights and relations of the parties substantially the same as those passed upon in Civil Case No.
94-71403 (the Rodrigo case), but the facts, the applicable laws, the causes of action, the issues, and
the testimonial and documentary evidence are identical such that a ruling in one case, i.e. the
Rodrigo case in Civil Case No. 94-71403, under the rule of stare decisis, is a bar to any attempt to
20
relitigate the same issue.

Petitioners now come to us in this petition for review claiming that (1) the principle of res judicata
does not apply; and (2) the dismissal of the complaint was premature as petitioners’ motion to
archive the case and the grant thereof was based on the condition that there be a final resolution in
21
the Mendoza and Rodrigo cases.

Simply put, the sole issue is whether the present case is barred by this Court’s ruling in the Mendoza
and Rodrigo cases.
Petitioners contend that res judicata does not apply as there is no identity of parties to begin with.
Moreover, they argue that stare decisis is not a hard and fast rule. They insist another review should
be taken on the cause of action in this case because the Court of Appeals, in the Mendoza and
Rodrigo cases, erred in ruling that the security code determines the real winning crowns. They claim
that the trial court’s dismissal of their complaint was premature. Lastly, petitioners posit that there
was a breached contract between the parties; therefore, respondents should be made to perform
their contractual obligation.

For their part, respondents counter that the RTC correctly dismissed petitioners’ complaint on the
ground of res judicata. Respondents contend that, like the Mendoza and Rodrigo cases, the civil
cases filed by petitioners arose from the conduct of respondents’ "Number Fever" promotion.
Petitioners’ causes of action, testimonial and documentary evidence, are the same as those in the
Mendoza and Rodrigo cases. Lastly, respondents point out that the findings of fact in the said two
cases are also the same, i.e.: (i) Respondents did not breach any contract since the "349" crowns
with security code "L-2560-FQ" are not winning crowns; and (ii) Respondents were not negligent in
the conduct of their promotion and they exerted efforts to ensure the integrity and smooth conduct of
the same.

The instant petition must be denied.

22
The principle of stare decisis et non quieta movere is entrenched in Article 8 of the Civil Code, to
wit:

ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines.

It enjoins adherence to judicial precedents. It requires our courts to follow a rule already established
in a final decision of the Supreme Court. That decision becomes a judicial precedent to be followed
in subsequent cases by all courts in the land. The doctrine of stare decisis is based on the principle
that once a question of law has been examined and decided, it should be deemed settled and closed
23
to further argument.

In the instant case, the legal rights and relations of the parties, the facts, the applicable laws, the
causes of action, the issues, and the evidence are exactly the same as those in the decided cases of
Mendoza and Rodrigo, supra. Hence, nothing is left to be argued. The issue has been settled and
this Court’s final decision in the said cases must be respected. This Court’s hands are now tied by
the finality of the said judgments. We have no recourse but to deny the instant petition.

WHEREFORE, the instant petition is hereby DENIED. The assailed Order of the Regional Trial Court
of Makati City, Branch 142, in Civil Cases Nos. 94-2414 to 94-2421, is AFFIRMED. Costs against
petitioners.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 197192 June 4, 2014

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
THE INSULAR LIFE ASSURANCE CO. LTD., Respondent.

DECISION

REYES, J.:

"Time and again, the Court has held that it is a very desirable and necessary judicial practice that
when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to
that principle and apply it to all future cases in which the facts are substantially the same. Stare
decisis et non quieta movere. Stand by the decisions and disturb not what is settled. Stare decisis
simply means that for the sake of certainty, a conclusion reached in one case should be applied to
those that follow if the facts are substantially the same, even though the parties may be different. It
proceeds from the first principle of justice that, absent any powerful countervailing considerations,
like cases ought to be decided alike. Thus, where the same questions relating to the same event
have been put forward by the parties similarly situated as in a previous case litigated and decided by
1
a competent court, the rule of stare decisisis a bar to any attempt to relitigate the same issue."

The Case

2
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by the
Commissioner of Internal Revenue (petitioner) against The Insular Life Assurance Co., Ltd.
3 4
(respondent),challenging the Decision dated March 14, 2011 and Resolution dated June 13, 2011
of the Court of Tax Appeals (CTA) en banc in CTA EB Case No. 585 (CTA Case No. 7292).

Antecedent Facts

Petitioner Commissioner of Internal Revenue is the official duly authorized under Section 4 of the
National Internal Revenue Code (NIRC) of 1997, as amended, to assess and collect internal
revenue taxes, as well as the power to decide disputed assessments, subject to the exclusive
appellate jurisdiction of this Court.

Respondent The Insular Life Assurance, Co., Ltd. is a corporation duly organized and existing under
and by virtue of the laws of the Republic of the Philippines, with principal office located at IL
Corporate Center, Insular Life Drive, FilinvestCorporate City, Alabang, Muntinlupa City. It is
registered as a non-stock mutual life insurer with the Securities and Exchange Commission.
On October 7, 2004, respondent received an Assessment Notice with Formal Letter of Demand both
dated July 29, 2004, assessing respondent for deficiency DST on its premiums on direct
business/sums assured for calendar year 2002, computed as follows:

Documentary Stamp Tax

Deficiency Documentary Stamp ₱70,732,389.83

Tax-Basic

Add: Increments (Interest and 23,201,969.38

Compromise Penalty)

Total Amount Due ₱93,934,359.21

Thereafter, respondent filed its Protest Letter on November 4, 2004, which was subsequently denied
by petitioner in a Final Decision, on Disputed Assessment dated April 15, 2005 for lack of factual and
legal bases. Apparently, respondent received the aforesaid Final Decision on Disputed Assessment
only on June 23, 2005.

On July 15, 2005, respondent filed a Petition for Review before [the CTA].

On April 21, 2009, the former Second Division of the [CTA] rendered a Decision in favor of
respondent, thus, granting the Petition for Review and held, among others, that respondent
sufficiently established that it is a cooperative company and therefore, it is exempt from the DST on
the insurance policies it grants to its members.

Consequently, on May 13, 2009, petitioner filed a Motion for Reconsideration.

On January 11, 2010, petitioner received a Resolution dated January 4, 2010 of the former Second
Division of [the CTA] denying [its] Motion for Reconsideration for lack of merit. It held, among others,
that the Supreme Court in Republic of the Philippines vs. Sunlife Assurance Company of Canada
already laid down the rule that registration with the Cooperative Development Authority is not
essential before respondent may avail of the exemptions granted under Section 199 of the 1997
NIRC, as amended.

5
Undaunted, petitioner filed a Petition for Review before the [CTA] en banc on January 26, 2010.
(Citations omitted)
On March 14, 2011, the CTA en banc denied the petition and rendered the assailed decision, with
the dispositive portion as follows:

WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit. The assailed
Decision dated April 21, 2009 and Resolution dated January 4, 2010 are AFFIRMED.

6
SO ORDERED.

It is the petitioner’s contention that since the respondent is not registered with the Cooperative
Development Authority (CDA), it should not be considered as a cooperative company that is entitled
to the exemption provided under Section 199(a) of the National Internal Revenue Code (NIRC) of
7
1997. Thus, the instant petition.

Issue

WHETHER OR NOT THE CTA EN BANC ERRED IN RULING THAT RESPONDENT IS A

8
COOPERATIVE AND [IS] THUS[,] EXEMPT FROM DOCUMENTARY STAMP TAX.

Ruling

9
The Court has pronounced in Republic of the Philippines v. Sunlife Assurance Company of Canada
that "[u]nder the Tax Code although respondent is a cooperative, registration with the CDA is not
necessary in order for it to be exempt from the payment of both percentage taxes on insurance
premiums, under Section 121; and documentary stamp taxes on policies of insurance or annuities it
10
grants, under Section 199."

Section 199 of the NIRC of 1997 provides:

Sec. 199. Documents and Papers Not Subject to Stamp Tax. – The provisions of Section 173 to the
contrary notwithstanding, the following instruments, documents and papers shall be exempt from the
documentary stamp tax:

(a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order,
association or cooperative company, operated on the lodge system or local cooperation plan and
organized and conducted solely by the members thereof for the exclusive benefit of each member
and not for profit.

x x x x (Emphasis ours)

As regards the applicability of Sunlife to the case at bar, the CTA, through records, has established
the following similarities between the two which call for the application of the doctrine of stare
decisis:
1. Sunlife Assurance Company of Canada and the respondent are both engaged in mutual life
insurance business in the Philippines;

2. The structures of both corporations were converted from stock life insurance corporation to
non-stock mutual life insurance for the benefit of its policyholders pursuant to Section 266, Title 17 of
the Insurance Code of 1978 and they were made prior to the effectivity of Republic Act (R.A.) No.
6938, otherwise known as the "Cooperative Code of the Philippines";

3. Both corporations claim to bea purely cooperative corporation duly licensed to engage in mutual
life insurance business;

4. Both corporations claim exemption from payment of the documentary stamp taxes (DST) under
Section 199(1) of the Tax Code (now Section 199[a] of the NIRC of 1997, as amended); and

5. Petitioner CIR requires registration with the CDA before it grants tax exemptions under the Tax
11
Code.

The CTA observed that the factual circumstances obtaining in Sunlife and the present case are
substantially the same. Hence, the CTA based its assailed decision on the doctrine enunciated by
the Court in the said case. On the other hand, the petitioner submitted that the doctrine in Sunlife
should be reconsidered and not be applied because the same failed to consider Section 3(e) of R.A
12 13
No. 6939, which provides that CDA has the power to register all cooperatives, to wit:

Section 3. Powers, Functions and Responsibilities. – The Authority shall have the following powers,
functions and responsibilities:

xxxx

(e) Register all cooperatives and their federations and unions, including their division, merger,
consolidation, dissolution or liquidation. It shall also register the transfer of all or substantially all of
their assets and liabilities and such other matters as may be required by the Authority;

xxxx

The petitioner proposed that considering the foregoing provision, registration with the CDA is
necessary for an association to be deemed as a cooperative and to enjoy the tax privileges
14
appurtenant thereto.

A perusal of Section 3(e) of R.A. No. 6939 evidently shows that it is merely a statement of one of the
powers exercised by CDA. Neither Section 3(e) of R.A. No. 6939 nor any other provision in the
aforementioned statute imposes registration with the CDA as a condition precedent to claiming DST
exemption. Even then, R.A. No. 6939 is inapplicable to the case at bar, as will be discussed shortly.

The NIRC of 1997 defined a cooperative company or association as "conducted by the members
thereof with the money collected from among themselves and solely for their own protection and not
 15
for profit." Consequently, as long as these requisites are satisfied, a company or association is
deemed a cooperative insofar as taxation is concerned. In this case, the respondent has sufficiently
established that it conforms with the elements of a cooperative as defined in the NIRC of 1997 in
that it is managed by members, operated with money collected from the members and has for its
16
main purpose the mutual protection of members for profit.

The Court presented three justifications in Sunlife why registration with the CDA is not necessary for
cooperatives to claim exemption from DST.

First, the NIRC of 1997 does not require registration with the CDA. No tax provision requires a
mutual life insurance company to register with that agency in order to enjoy exemption from both
percentage and DST. Although a provision of Section 8 of the Revenue Memorandum Circular
(RMC) No. 48-91 requires the submission of the Certificate of Registration with the CDA before the
issuance of a tax exemption certificate, that provision cannot prevail over the clear absence of an
17
equivalent requirement under the Tax Code.

The respondent correctly pointed out that in other provisions of the NIRC, registration with the CDA
18
is expressly required in order to avail of certain tax exemptions or preferential tax treatment −a
requirement which is noticeably absent in Section 199 of the NIRC. Quoted below are examples of
cooperatives which are expressly mandated by law to be registered with the CDA before their
transactions could be considered as exempted from value added tax:

Sec. 109. Exempt Transactions. – The following shall be exempt from the value-added tax:

xxxx

(r) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority to
their members as well as sale of their produce, whether in its original state or processed form, to
non-members; their importation of direct farm inputs, machineries and equipment, including spare
parts thereof, to be used directly and exclusively in the production and/or processing of their
produce;

(s) Sales by electric cooperatives duly registered with the Cooperative Development Authority or
National Electrification Administration, relative to the generation and distribution of electricity as well
as their importation of machineries and equipment, including spare parts, which shall be directly
used in the generation and distribution of electricity;

(t) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with
the Cooperative Development Authority whose lending operation is limited to their members;

(u) Sales by non-agricultural, non-electric and noncredit cooperatives duly registered with the
Cooperative Development Authority: Provided, That the share capital contribution of each member
does not exceed Fifteen thousand pesos (₱15,000) and regardless of the aggregate capital and net
surplus ratably distributed among the members;
 x x x x (Emphasis ours)

This absence of the registration requirement under Section 199 clearly manifests the intention of the
Legislative branch of the government to do away with registration before the CDA for a cooperative
to benefit from the DST exemption under this particular section.

19
Second, the provisions of the Cooperative Code of the Philippines do not apply. The history of the
Cooperative Code was amply discussed in Sunlife where it was noted that cooperatives under the
20
old law, Presidential Decree (P.D.) No. 175 "referred only to an organization composed primarily
of small producers and consumers who voluntarily joined to form a business enterprise that they
themselves owned, controlled, and patronized. The Bureau of Cooperatives Development — under
the Department of Local Government and Community Development (later Ministry of Agriculture) —
had the authority to register, regulate and supervise only the following cooperatives: (1) barrio
associations involved in the issuance of certificates of land transfer; (2) local or primary cooperatives
composed of natural persons and/or barrio associations; (3) federations composed of cooperatives
that may or may not perform business activities; and (4) unions of cooperatives that did not perform
any business activities. Respondent does not fall under any of the abovementioned types of
21
cooperatives required to be registered under [P.D. No.] 175."

Thus, when the subsequent law, R.A. No. 6939, concerning cooperatives was enacted, the
respondent was not covered by said law and was not required to be registered, viz:

When the Cooperative Code was enacted years later, all cooperatives that were registered under PD
175 and previous laws were also deemed registered with the CDA. Since respondent was not
required to be registered under the old law on cooperatives, it followed that it was not required to be
registered even under the new law.

x x x Only cooperatives to be formed or organized under the Cooperative Code needed registration
22
with the CDA. x x x. (Emphasis ours)

"The distinguishing feature of a cooperative enterprise is the mutuality of cooperation among its
member-policyholders united for that purpose. So long as respondent meets this essential feature, it
does not even have to use and carry the name of a cooperative to operate its mutual life insurance
business. Gratia argumenti that registration is mandatory, it cannot deprive respondent of its tax
exemption privilege merely because it failed to register. The nature of its operations is clear; its
23
purpose well-defined. Exemption when granted cannot prevail over administrative convenience."

Third, the Insurance Code does not require registration with the CDA. "The provisions of this Code
1âwphi1

primarily govern insurance contracts; only if a particular matter in question is not specifically
24
provided for shall the provisions of the Civil Code on contracts and special laws govern."

There being no cogent reason for the Court to deviate from its ruling in Sunlife, the Court holds that
the respondent, being a cooperative company not mandated by law to be registered with the CDA,
cannot be required under RMC No. 48-91, a mere circular, to be registered prior to availing of DST
exemption.

"While administrative agencies, such as the Bureau of Internal Revenue, may issue regulations to
implement statutes, they are without authority to limit the scope of the statute to less than what it
provides, or extend or expand the statute beyond its terms, or in any way modify explicit provisions
of the law. Indeed, a quasi-judicial body or an administrative agency for that matter cannot amend an
act of Congress. Hence, in case of a discrepancy between the basic law and an interpretative or
25
administrative ruling, the basic law prevails. "

WHEREFORE, premises considered, the petition is DENIED. Accordingly, the Decision dated March
14, 2011 and Resolution dated June 13, 2011 of the Court of Tax Appeals en bane in CTA EB Case
No. 585 (CTA Case No. 7292) are hereby AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice