Chapter VIII

1.) Centeno vs Villalon- Pornillos (1994)

G.R. No. 113092 | 1994-09-01

Subject: Solicitation for charitable purposes is not prohibited; Penal laws are to be construed strictly against the State and liberally in favor of the accused; Exercise of religion may be regulated in order that the State may protect its citizens from injury; The general regulation of solicitation for public interest does not involve any religious test

Facts:

The Samahang Katandaan ng Nayon ng Tikay launched a fund drive for the purpose of renovating the chapel of Barrio Tikay. Martin Centeno together with Vicente Yco approached Judge Adoracion G. Angeles, a resident of Tikay, and solicited from her a contribution of P1,500.00. The solicitation was made without a permit from the DSWD.

Based on the complaint of Judge Angeles, an information was filed complaint against Centento, Evaristo and Yco for violation of PD No. 1564 (Solicitation Permit Law).

Centeno filed a motion to quash the information on the ground that Solicitation Permit Law 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. It argued that to subject to State regulation solicitations made for a religious purpose would constitute an abridgment of the right to freedom of religion guaranteed under the Constitution.

The MTC rendered judgment finding the accused Yco and Centeno guilty beyond reasonable doubt but it recommended that the accused be pardoned since they acted in good faith. The RTC affirmed the judgment but modified the penalty imposed.

Held:

Solicitation for charitable purposes is not prohibited

1. Solicitation Permit Law merely stated "charitable or public welfare purposes," only goes to show that the framers of the law never intended to include solicitations for religious purposes within its coverage.

It is an elementary rule of statutory construction that the express mention of one person, thing, act, or consequence excludes all others ("expressio unius est exclusio alterius").

2. It will be observed that the 1987 Constitution, as well as several other statutes, treat the words "charitable" and "religious" separately and independently of each other. Furthermore, the words "charitable" and "religious" make use of the disjunctive "or." Accordingly, "charitable" and "religious," which are integral parts of an enumeration using the disjunctive "or" should be given different, distinct, and disparate meanings.

Penal laws are to be construed strictly against the State and liberally in favor of the accused

3. The term "charitable" should be strictly construed so as to exclude solicitations for "religious" purposes in adherence to the fundamental doctrine 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. If the statute is ambiguous and admits of two reasonable but contradictory constructions that which operates in favor of a party accused is to be preferred.

Exercise of religion may be regulated in order that the State may protect its citizens from injury

4. The constitutional inhibition of legislation on the subject of religion embraces two concepts, that is, freedom to believe and freedom to act. The first is absolute but the second cannot be. Conduct remains subject to regulation for the protection of society. The freedom to act must have appropriate definitions to preserve the enforcement of that protection. In every case, the power to regulate must be so exercised, in attaining a permissible end, as not to unduly infringe on the protected freedom.

5. Hence, even the exercise of religion may be regulated, at some slight inconvenience, in order that the State may protect its citizens from injury. Without doubt, a State under the exercise of police power may protect its citizens from fraudulent solicitation by requiring a stranger in the community, before permitting him publicly to solicit funds for any purpose, to establish his identity and his authority to act for the cause which he purports to represent. The State is likewise free to regulate the time and manner of solicitation generally, in the interest of public interest, safety, peace, comfort, or convenience.

The general regulation of solicitation for public interest does not involve any religious test

6. A law advancing a legitimate governmental interest is not necessarily invalid as one interfering with the "free exercise" of religion merely because it also incidentally has a detrimental effect on the adherents of one or more religion. Thus, the general regulation, in the public interest, of solicitation, which does not involve any religious test and does not unreasonably obstruct or delay the collection of funds, is not open to any constitutional objection, even though the collection be for a religious purpose. Such regulation would not constitute a prohibited previous restraint on the free exercise of religion or interpose an inadmissible obstacle to its exercise.

7. In the case at bar, considering that solicitations intended for a religious purpose are not within the coverage of Solicitation Permit Law, Centeno cannot be held criminally liable therefor.

2.) Ursua v. CA -- <3

3.) People v. LAdjaalam

PEOPLE OF THE PHILIPPINES, appellee, vs. WALPAN LADJAALAM y MIHAJIL alias "WARPAN," appellant.

G.R. Nos. 136149-51 | 2000-09-19

Tagged under keywords

D E C I S I O N

PANGANIBAN, J.:

Republic Act No. 8294 penalizes simple illegal possession of firearms, provided that the person arrested committed "no other crime." Furthermore, if the person is held liable for murder or homicide, illegal possession of firearms is an aggravating circumstance, but not a separate offense. Hence, where an accused was convicted of direct assault with multiple attempted homicide for firing an unlicensed M-14 rifle at several policemen who were about to serve a search warrant, he cannot be held guilty of the separate offense of illegal possession of firearms. Neither can such unlawful act be considered to have aggravated the direct assault.

The Case

Walpan Ladjaalam y Mihajil, also known as "Warpan," appeals before us the September 17, 1998 Decision [1] of the Regional Trial Court (RTC) of Zamboanga City (Branch 16), which found him guilty of three out of the four charges lodged against him.

Filed against appellant were four Informations, [2] all signed by Assistant Regional State Prosecutor Ricardo G. Cabaron and dated September 25, 1997. The first Information [3] was for

maintaining a den for the use of regulated drugs. It reads as follows:

That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, Walpan Ladjaalam being then the owner of a residential house located at Rio Hondo, [4] this City, conspiring and confederating together, mutually aiding and assisting x x x his co-accused wife Nur-in Ladjaalam and Ahmad Sailabbi y Hajaraini, did then and there wilfully, unlawfully and feloniously, maintain said house as a den, where regulated drug [was] used in any form. [5]

The second Information [6] charged appellant with illegal possession of firearms and ammunition. We quote it below:

That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating together, mutually aiding and assisting with one another, without any justifiable reason or purpose other than to use it in the commission of crime, did then and there, wilfully, unlawfully, and feloniously have in their possession and under their custody and control, the following weapons, to wit: one (1) M14 rifle with SN 1555225 with magazines and seven (7) rounds of live ammunition; two (2) magazines with twenty (20) and twenty[-one] (21) rounds of live [ammunition]; one (1) homemade caliber .38 revolver with five (5) live ammunition; one (1) M-79 (single) rifle with pouch and with five (5) empty shell[s]; one (1) home made caliber .38 with SN-311092 with five live ammunition and one empty shell of [a] cal. 38 x x x Smith and Wesson; two (2) .38 Caliber paltik revolver with Serial Number 311092 and one defaced M79 grenade launcher paltik, without first having obtained the necessary license and or permit therefor from authorities concerned, in flagrant violation of the aforementioned law. [7]

The third Information, [8] for multiple attempted murder with direct assault, was worded thus:

That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused being then armed with M-14 Armalite Rifles, M-16 Armalite Rifles and other assorted firearms and explosives, conspiring and

confederating together, mutually aiding and assisting x x x one another and with intent to kill, did then and there wilfully, unlawfully and feloniously try and attempt to kill SPO1 WILLIAM B. JONES, JR., PO3 ENRIQUE C. RIVERA[,] SPO1 AMADO A. MIRASOL, JR., and SPO1 RICARDO J. LACASTESANTOS, in the following manner, to wit: by then and there firing their M-14 x x x Armalite Rifles, M-16 Armalite Rifles and other assorted firearms and explosives, aimed and directed at the fatal parts of the bodies of the above-named police officers, well known to the accused as members of the Philippine National Police, Zamboanga City Police Office, and as such, agents of a person in authority, who at the time of the attack were engaged in the performance of their duties, that is, on the occasion when said officers were about to serve the Search Warrant legally issued by the Regional Trial Court, this City, to the person of the accused thus commencing the commission of crime of multiple murder directly by overt acts, and if the accused did not accomplish their unlawful purpose, that is, to kill the above-named Police Officers, it was not by reason of their own voluntary desistance but rather because of the fact that all the above-named police officers were able to seek cover during the firing and were not hit by the bullets and explosives fired by the accused and also by the fact said police officers were able to wrestle with two (2) of the accused namely: Walpan Ladjaalam y Mihajil a.k.a. 'Warpan' and Ahmad Sailabbi y Hajairani, who were subdued and subsequently placed under arrest; whereas accused PO2 Nurhakim T. Hadjula was able to make good his escape and has remained at-large. [9]

In the fourth Information, appellant was charged with illegal possession of drugs. [10]

On December 21, 1997, the cases against Nur-in Ladjaalam and Ahmad Sailabbi y Hajaraini were dismissed upon motion of the Office of the City Prosecutor, which had conducted a reinvestigation of the cases as ordered by the lower court. The accused were consequently released from jail.

The arraignment of appellant on all four (4) charges took place on January 6, 1998, during which he entered a plea of not guilty. [11] After pretrial, the assailed Decision was rendered, the dispositive part of which reads:

WHEREFORE, the Court finds accused WALPAN LADJAALAM y MIHAJIL a.k.a. 'WARPAN' -

1. in Criminal Case No. 14636, GUILTY BEYOND REASONABLE DOUBT of Violation of Section 15-A, Article III, of Republic Act No. 6425, otherwise known as the Dangerous Drugs Act of 1972, as amended, and SENTENCES said accused to the penalty of RECLUSION PERPETUA and to pay a fine of FIVE HUNDRED THOUSAND (P500,000.00) and to pay the costs;

2. In Criminal Case No. 14637, NOT GUILTY of Violation of Section 16, Article III, in relation to Section 21, Article IV, of Republic Act No. 6425, otherwise known as the Dangerous Drugs Act of 1972, as amended, and ACQUITS him of said crime with costs de oficio;

3. in Criminal Case No. 14638, GUILTY BEYOND REASONABLE DOUBT of the crime of Illegal Possession of Firearm and Ammunition penalized under Presidential Decree No. 1866, as amended by Republic Act. No. 8294, and SENTENCES said accused to suffer an indeterminate penalty of SIX (6) YEARS of prision correccional as minimum to EIGHT (8) YEARS of prision mayor as maximum and to pay a fine [of] THIRTY THOUSAND (P30,000.00) and pay the costs;

4. in Criminal Case No. 14639, GUILTY BEYOND REASONABLE DOUBT of the crime of Direct Assault with Multiple Attempted Homicide and SENTENCES said accused to an indeterminate penalty of TWO (2) YEARS and FOUR (4) MONTHS of prision correccional as minimum to SIX (6) YEARS of prision correccional as maximum and to pay a fine of ONE THOUSAND (P1,000.00) and to pay the costs. (emphasis in the original)

Hence, this appeal. [12]

The Facts

Prosecution's Version

In its Brief, [13] the Office of the Solicitor General presents the facts in this wise:

At 1:45 p.m. of September 24, 1997, PO3 Allan Marcos Obut filed an application for the issuance of a search warrant against appellant, his wife and some John Does (Exh. C). After the search warrant was issued about 2:30 p.m. of the same day, a briefing was conducted inside the office of the Anti-Vice/Narcotics Unit of the Zamboanga City Police Office in connection with the service of the search warrant. The briefing was conducted by SPO2 Felipe Gaganting, Chief of the Anti-Vice/Narcotics Unit. During the briefing, PO3 Renato Dela Peña was assigned as presentor of the warrant. SPO1 Ricardo Lacastesantos and PO3 Enrique Rivera were designated to conduct the search. Other policemen were assigned as perimeter guards (TSN, March 3, 1998, pp. 33-36).

After the briefing, more than thirty (30) policemen headed by Police Superintendent Edwin Soledad proceeded to the house of appellant and his wife at Rio Hondo on board several police vehicles (TSN, March 4, 1998, p. 32; April 22, 1998, p. 54). Before they could reach appellant's house, three (3) persons sitting at a nearby store ran towards the house shouting, '[P]olice, raid, raid' (Ibid., March 3, 1998, pp. 41, 43-44; April 23, 1998, p. 4). When the policemen were about ten (10) meters from the main gate of the house, they were met by a rapid burst of gunfire coming from the second floor of the house. There was also gunfire at the back of the house (Ibid., March 5, 1998, pp. 14-16).

SPO1 Mirasol, SPO2 Lacastesantos, PO3 Rivera, and PO3 Dela Peña who were with the first group of policemen saw appellant fire an M14 rifle towards them. They all knew appellant. When they were fired upon, the group, together with SPO2 Gaganting, PO3 Obut and Superintendent Soledad, sought cover at the concrete fence to observe the movements at the second floor of the house while other policemen surrounded the house (Ibid., March 4, 1998, pp. 50-51).

In front of the house was an extension building connected to the concrete fence (Ibid., pp. 45-46, 57-59, 73-76). Gaganting, Mirasol, Lacastesantos, Gregorio, and Obut entered the door of the extension building. Gaganting opened the main (steel) gate of the house. The other members of the team then entered. Lacastesantos and Mirasol entered the house through the main door and went inside the sala of the ground floor while other policemen surrounded the house. Two (2) old women were in the sala together with a young girl and three (3) children. One of the old women took the children to the second floor while the young girl remained seated at the corner (Ibid., pp. 19-21).

Lacastesantos and Mirasol proceeded to the second floor where they earlier saw appellant firing an M14 rifle at them through the window. While they were going upstairs, appellant noticed their presence. He went inside the bedroom and, after breaking and removing the jalousies, jumped from the window to the roof of a neighboring house. Seeing this, Mirasol rushed downstairs and asked help from the other members of the raiding team to arrest appellant. Lacastesantos went to the second floor and shouted to the policemen outside not to fire in the direction of the second floor because there were children. Mirasol and SPO1 Cesar Rabuya arrested appellant at the back of his house after a brief chase (Ibid., pp. 21-23).

At the second floor, Lacastesantos saw an M14 rifle (Exh. B-3) with magazine on top of the sofa at the sala on the second floor (Ibid., P. 27). The rifle bore Serial No. 1555225. He removed the magazine from the rifle and the bullet inside the chamber of the rifle. He counted seventeen (17) live ammunition inside the magazine. He saw two (2) more M14 rifle magazines on the sofa, one with twenty (20) live ammunition (Exh. G-3) and another with twenty-one (21) live ammunition (Exh. G-4). He likewise saw three (3) M16 rifle magazines (Exh. G-2) in a corner at the second floor (TSN, March 5, 1998, pp. 23-32, 53-57).

After Lacastesantos and Mirasol entered appellant's house, Rivera, Dela Peña, Gregorio and Obut followed and entered the house. After identifying themselves as members of the PNP Anti-Vice/Narcotics Unit, Obut presented to the old women a copy of the search warrant. Dela Peña and Rivera then searched appellant's room on the ground floor in the presence of Punong Barangay Elhano (TSN, March 3, 1998, pp. 41-43). On top of a table was a pencil case (Exh. J) with fifty (50) folded aluminum foils inside (Exhs. J-1 to J-50), each containing methamphetamine hydrochloride or 'shabu'.

Other items were found during the search, namely, assorted coins in different denominations (Exh. W; TSN, April 28, 1998, pp. 23-25), one (1) homemade .38 caliber revolver (Exh. B-2) with five (5) live [ammunition], one (1) M79 single rifle with [a] pouch containing five (5) empty shells of an M79 rifle (Exh. B-4), and one (1) empty shell of an M14 rifle (TSN, April 23, 1998, pp. 30-32).

Rino Bartolome Locson was an informer of the Anti-Vice/Narcotics Unit of the Zamboanga Police. [O]n the morning of September 24, 1997, he was instructed by SPO2 Gaganting to go to appellant's house to buy 'shabu.' Locson knew appellant as a seller of 'shabu' (TSN, April 22, 1998, p. 5) and had been to appellant's house about fifteen (15) times before. He went to Rio Hondo and arrived at appellant's house at 3:20 p.m. He bought P300.00 worth of 'shabu' from appellant. The latter got three (3) decks of shabu from his waist bag. Appellant instructed Locson to go behind the curtain where there was a table. There were six (6) persons already smoking. There was a lighted kerosene lamp made of a medicine bottle placed on the table. They asked Locson to smoke 'shabu' and Locson obliged. He placed the three (3) decks of 'shabu' he bought on the table (Ibid., pp. 8-15).

While they were smoking 'shabu,' Locson heard gunfire coming from appellant's house. They all stood and entered appellant's compound but were instructed to pass [through] the other side. They met appellant at the back of his house. Appellant told them to escape 'because the police are already here.' They scampered and 'ran away because there were already shots.' Locson jumped over the fence and ran towards the seashore. Upon reaching a place near the Fisheries School, he took a tricycle and went home (Ibid., pp. 17-19).

The following day, September 25, 1997, he went to the police station and executed an affidavit (Exh. M) narrating what transpired at appellant's house [o]n the afternoon of September 24, 1997.

After the search and before returning to the police station, P03 Dela Peña prepared a 'Receipt for Property Seized' (Exh. P & 3) listing the properties seized during the search. The receipt was signed by Dela Peña as the seizure officer, and by Punong Barangay Hadji Hussin Elhano and radio reporter Jun Cayona as witnesses. A copy of the receipt was given to appellant but he refused to acknowledge the properties seized (TSN, April 23, 1998, pp. 11-12).

An examination conducted by Police Inspector Mercedes D. Diestro, Forensic Chemist of the PNP Crime Laboratory Service Office 9, on the paraffin casts taken from both hands of appellant yielded positive for gunpowder nitrates (Exh. A-3), giving rise to the possibility that appellant had fired a gun before the examination (TSN, March 3, 1998, p. 11). Gunpowder residue examinations conducted on September 26, 1997 showed that the following firearms 'were

fired' (Exh. B-5): a .38 caliber revolver (homemade) with Serial No. 311092 (Exh. B-1), another .38 caliber revolver (homemade) without a serial number (Exh. B-2), a Cal. 7.62 mm M14 U.S. rifle with Serial No. 1555225 (Exh. B-3), and an M79 rifle without a serial number (Exh. B-4). They were fired within five (5) days prior to the examination (TSN, March 3, 1998, pp. 16-21).

With respect to the crystalline substances, an examination conducted by Police Inspector Susan M. Cayabyab, likewise a Forensic Chemist of the PNP Crime Laboratory Service Office 9, on the fifty (50) pieces of folded aluminum foils each containing white crystalline granules with a total weight of 1.7426 grams (Exh. J-1 to J-50) yielded positive results for the presence of methamphetamine hydrochloride (shabu) (Exh. L). However, the examination of one (1) crystalline stone weighing 83.2674 grams (Exh. K) yielded negative results for the presence of methamphetamine hydrochloride (Exh. L).

The records of the Regional Operation and Plans Division of the PNP Firearm and Explosive Section show that appellant 'had not applied/filed any application for license to possess firearm and ammunition or x x x been given authority to carry [a] firearm outside of his residence' (Exh. X) [14]

Defense's Version

Appellant Ladjaalam agrees with the narration of facts given by the lower court. [15] Hence, we quote the pertinent parts of the assailed Decision:

Accused Walpan Ladjaalam y Mihajil a.k.a. 'Warpan', 30 years old, married, gave his occupation as 'smuggling' (tsn, p. 2, May 4, 1998). He used to go to Labuan in Malaysia and bring cigarettes to the Philippines without paying taxes (tsn, pp. 40-41, id). He said that his true name [was] Abdul Nasser Abdurakman and that Warpan or Walpan Ladjaalam [was] only his 'alias'. However, he admitted that more people kn[e]w him as Walpan Ladjaalam rather than Abdul Nasser Abdurakman (tsn. pp. 39-40; 46-47, id). He testified that [o]n the afternoon of September 24, 1997, when he was arrested by the police, he was sleeping in the house of Dandao, a relative of his wife. He was alone. He slept in Dandao's house and not in his house

because they ha[d] 'a sort of a conference' as Dandao's daughter was leaving for Saudi Arabia. He noticed the presence of policemen in his neighborhood at Aplaya, Rio Hondo when he heard shots. He woke up and went out of the house and that was the time that he was arrested. He said he was arrested 'xxx [at] the other side of my house; at the other side of the fence where I was sleeping. xxx. At the back of my house' (tsn, p. 7, id.). He does not know who arrested him 'considering that he one who arrested me does not have nameplate.' He was arrested by four (4) persons. Not one of those who arrested him testified in Court. He was handcuffed and placed inside a jeep parked at Rio Hondo Elementary School. According to him, he did not fire a gun at the policemen from [t]he second floor of his house. He said the 'policemen' [were] 'the one[s] who fire[d] at us' (tsn, p. 5, id.). If he fired a gun at the policemen for sure they [would] die '[b]ecause the door is very near x x x the vicinity of my house'. He does not own the M14 rifle (Exh. 'B-3') which according to policemen, he used in firing at them. The gun does not belong to him. He does not have a gun like that (tsn, p. 15, id.). A policeman also owns an M14 rifle but he does not know the policeman (tsn, pp. 16-17, id). He said that the M79 rifle (Exh. 'B-4'), the three (3) empty M16 rifle magazines (Exh. 'G'; 'G-1' to 'G-2'), the two (2) M14 magazines with live ammunition (Exh. 'G-3'; 'G-4'); the two (2) caliber .38 revolvers (Exhs. 'B-1'; 'B-2'), the fifty (50) aluminum foils each containing shabu (Exhs. 'J-1' to 'J-50') placed inside a pencil case (Exh. 'J', the assorted coins placed inside a blue bag (Exh. 'W') and the white crystalline stone (Exh. 'K') all do not belong to him. He said that the policemen just produced those things as their evidence. The firearms do not belong to him. They were brought by the policemen (tsn, p. 43, May 4, 1998). Regarding the blue bag containing assorted coins, he said: 'that is not ours, I think this (is) theirs, xxx they just brought that as their evidence' (tsn, pp. 15-24, id.)

Walpan Ladjaalam declared there were occupants who were renting his extension house. He affirmed that he owns that house. Four (4) persons were staying in the extension house. He could only recognize the husband whose name is Momoy. They are from Jolo. They left the place already because they were afraid when the police raided the place. (tsn, pp. 8-10, May 4, 1998). He does not know prosecution witness Rino Locson y Bartolome. Although Locson recognized him, in his case he does not know Locson and he does not recognize him (tsn, p.11, id). He did not sell anything to Locson and did not entertain him. He is not selling shabu but he knows 'for a fact that there are plenty of person who are engaged in selling shabu in that place', in that area known as Aplaya, Rio Hondo. One of them is Hadji Agbi (tsn, pp.11-14, id).

After his arrest Walpan Ladjaalam was brought to the police station where he stayed for one day and one night before he was transferred to the City jail. While at the police station, he was not able to take a bath. He smokes two packs of cigarette a day. While he was at the police

station, he smoked [a] cigarette given to him by his younger sister. He lighted the cigarettes with [a] match. From the police station, he was brought to the PNP Regional Office at R.T. Lim Boulevard where he was subject to paraffin examination (tsn, pp. 24-26, May 4, 1998).

During the raid conducted on his house, his cousin Boy Ladjaalam, Ating Sapadi, and Jecar (Sikkal) Usman, the younger brother of his wife were killed. Walpan Ladjaalam said that he saw that 'it was the policeman who shot them[,] only I do not know his name. They were killed at the back of his house. He said that no charges were filed against the one responsible for their death (tsn, pp. 30-33- May 4, 1998).

Anilhawa Ahamad, more or less 80 years old, a widow was in the house of Walpan Ladjaalam whom he calls 'Hadji Id' at the time the police raided the house. She is the mother of Ahma Sailabbi. She was together with Babo Dandan, two small children and a helper when 'soldiers' entered the house. '(W)hen they arrived, they kept on firing (their guns) even inside the house' (tsn, p.5, May 5, 1998). They were armed with short and long firearms. They searched the house and scattered things and got what they wanted. They entered the room of Walpan Ladjaalam. They tried to open a bag containing jewelry. When Anilhawa tried to bring the bag outside the room, they grabbed the bag from her and poked a gun at her. At that time Walpan Ladjaalam was not in the house. Ahamad Sailabbi was also not in the house. A Search Warrant was shown to Anilhawa after the search was conducted and just before the policemen left the place. Anilhawa Ahamad said that 'it was already late in the afternoon[;] before they left that was the time the Search Warrant (was) given to us by xxx Barangay Captain Hussin Elhano' (tsn, pp.6-8, May 5, 1998). Barangay Chairman Elhano arrived 'already late in the afternoon, almost sundown' (tsn, p. 9, id). Anilhaw declared that aside from a bag containing jewelry and a bag full of money, she had not seen anything else that was taken from Walpan Ladjaalam's house (tsn, pp. 9-12, id).

Akmad (Ahmad) Sailabbi, 37 years old, married testified that about 4:00 o'clock [o]n the afternoon of September 24, 1997, ha was standing in front of his house when policemen arrived and immediately arrested him. He was about to go to the City Proper to buy articles he was intending to bring to Sabah. He had 'around P50,000.00' placed inside a waist bag tied around his waist. The policemen told him to lie down in prone position and a policeman searched his back. They pulled his waist bag and took his DiaStar wrist watch. He was shot three times and was hit on the forehead leaving a scar. His injury was not treated. He was taken to the police station where he was detained for one day and one night. He was detained at the

City Jail for three months and five days after which he was released (tsn, pp. 25-29, May 5, 1998).

Melba Usma, 20 years old, a widow, testified that [o]n the afternoon of September 24, 1997, she was in the house of her parents lying together with her husband Sikkal Usma. There is only one house between her parents' house and the house of Walpan Ladjaalam. Her husband Sikkal Usman is the brother of Nur-in Ladjaalam, Walpan's wife. When Melba heard shots, she went downstairs. A policeman was looking for her husband. The policeman called her husband. When her husband went down, he was instructed by the policeman to lie down in prone position. Then the policeman shot her husband. The policeman had two other companions who also shot her husband while he was lying down in prone position (tsn, pp.2-7, May 5, 1998).

Murkisa Usman, 30 years old, married, declared that [o]n the afternoon of September 24, 1997, she was sitting at the door of her house watching her children playing when a motorcyle, driven by a person, stopped near her house. The driver was Gaganting whom she called a soldier. He went down from his motorcycle, pulled a gun and poked it at Murkisa. Murkisa stood up and raised her hands. She got her children and when she was about to enter the room of her house, Gaganting again poked a gun at her and 'there was a shot.' As a result of firing, three persons died, namely, Sikkal Usman, Boy Ladjaalam and Atip Sapali Sali (tsn, pp. 8-10, May 5, 1998).

Barangay Captain Hadji Hussin Elhano, 51 years old, testified that about 4:00 o 'clock [o]n the afternoon of September 24, 1997, he was fetched by two policemen at Catabangan where he was attending a seminar. Because of traffic along the way, they arrived at the Rio Hondo already late in the afternoon. He saw policemen were already inside the house. Upon entering the gate, he saw Walpan at the gate already handcuffed. Walpan called him but the police advised him not to approach Walpan. The search was already over and things were already taken inside the house. When he went inside the house, he saw 'the things that they (policemen) searched, the firearms and the shabu' (tsn, p. 17. May 8, 1998). He did not see the Search Warrant. What was shown to him were the things recovered during the search which were being listed. They were being counted and placed on a table. 'Upon seeing the things that were recovered during the search, I just signed the receipt (Exh. [P]; [P-1]) of the things x x x taken during the search (tsn, pp. 17-18. May 8, 1998). He saw three dead bodies at the side of the fence when he went to the other side of the house. The three persons were killed outside the fence of Walpan Ladjaalam (tsn, p. 18, id). [16]

The Trial Court's Ruling

The trial court observed that the house of appellant was raided on September 24, 1997 by virtue of Search Warrant No. 20 issued on the same day. However, the lower court nullified the said Warrant because it had been issued for more than one specific offense, [17] in violation of Section 3, Rule 126 of the Rules of Court. [18] The court a quo ruled:

It should be stated at the outset that Search Warrant No. 20 is totally 'null and void' because it was issued for more than one specific offense x x x contrary to Section 3, Rule 1[2]6 of the Rules of Court which provides that 'A search warrant shall not issue but upon probable cause in connection with one specific offense xxx'. In Tambasan vs. People, 246 SCRA 184 (1995), the Supreme Court ruled that a search warrant for more than one offense - a 'scatter shot warrant' - violates Section 3, Rule 126 of the [R]evised Rules of Court and is 'totally null and void.'" [19] (emphasis in the original)

Nevertheless, the trial court deemed appellant's arrest as valid. It emphasized that he had shot at the officers who were trying to serve the void search warrant. This fact was established by the testimonies of several police officers, [20] who were participants in the raid, and confirmed by the laboratory report on the paraffin tests conducted on the firearms and appellant. [21] Additionally, the judge noted that Appellant Ladjaalam, based on his statements in his Counter Affidavit, impliedly contradicted his assertions in open court that there had been no exchange of gunfire during the raid. [22] The trial court concluded that the testimonies of these officers must prevail over appellant's narration that he was not in his house when the raid was conducted.

Prescinding from this point, the court a quo validated the arrest of appellant, reasoning thus:

Under the circumstances, the policemen 'had authority to pursue and arrest Walpan Ladjaalam and confiscate the firearm he used in shooting at the policemen and to enter his house to effect said arrest and confiscation of the firearm.' Under Rule 113, Section 5 (a), of the Rules of Court, 'A peace officer or a private person may, without a warrant, arrest a person xxx (w)hen in his

presence, the person to be arrested has committed, is actually committing, or is attempting to commit an offense.' An offense is committed in the presence or within the view of an officer, within the meaning of the rule authorizing an arrest without a warrant, when the officer sees the offense, although at a distance, or hears the disturbances created thereby and proceeds at once to the scene thereof. At the time the policemen entered the house of accused Walpan Ladjaalam after he had fired shots at the policemen who intended to serve the Search Warrant to him, the accused was engaged in the commission of a crime, and was pursued and arrested after he committed the crime of shooting at the policemen who were about to serve the Search Warrant. [23]

As a consequence of the legal arrest, the seizure of the following was also deemed valid: the M14 rifle (with a magazine containing seventeen live ammunition) [24] used by appellant against the police elements, two M14 magazines, and three other M16 rifle magazines. [25] The trial court observed that these items were in plain view of the pursuing police officers. Moreover, it added that these same items were "evidence [of] the commission of a crime and/or contraband and therefore, subject to seizure" [26] since appellant "had not applied for a license to possess firearm and had not been given authority to carry firearm outside his residence." [27]

For being incredible and unsupported by evidence, appellant's claim that the items that were seized by the police officers had been planted was disbelieved by the trial court. It ruled that if the police officers wanted to plant evidence to incriminate him, they could have done so during the previous raids or those conducted after his arrest. To its mind, it was unbelievable that they would choose to plant evidence, when they were accompanied by the barangay chairman and a radio reporter who might testify against them. It then dismissed these allegations, saying that frame-up, like alibi, was an inherently weak defense. [28]

The trial court also convicted the accused of the crime of maintaining a drug den. It reasoned as follows:

The testimony of Rino Bartolome Locson, corroborated by SPO1 Ricardo Lacastesantos and SPO1 Amado Mirasol, Jr. clearly established that Walpan Ladjaalam operated and maintained a drug den in his extension house where shabu or methamphetamine hydrochloride, a regulated

drug, was sold, and where persons or customers bought and used shabu or methamphetamine hydrochloride by burning the said regulated drug and sniffing its smoke with the use of an aluminum foil tooter. A drug den is a lair or hideaway where prohibited or regulated drugs are used in any form or are found. Its existence [may be] proved not only by direct evidence but may also be established by proof of facts and circumstances, including evidence of the general reputation of the house, or its general reputation among police officers. The uncorroborated testimony of accused Walpan Ladjaalam a.k.a. Warpan' that he did not maintain an extension house or a room where drug users who allegedly buy shabu from him inhales or smokes shabu cannot prevail over the testimonies of Locson, SPO1 Lacastesantos, and SPO1 Mirasol. He admitted that he is the owner of the extension house but he alleged that there were four (4) occupants who rented that extension house. He knew the name of only one of the four occupants who are allegedly from Jolo, a certain Momoy, the husband. Aside from being uncorroborated, Walpan's testimony was not elaborated by evidence as to when or for how long was the extension house rented, the amount of rental paid, or by any other document showing that the extension house was in fact rented. The defense of denial put up by accused Walpan Ladjaalam a.k.a. 'Warpan' is a weak defense. Denial is the weakest defense and cannot prevail over the positive and categorical testimonies of the prosecution witnesses. Denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving evidence which deserve no weight in law and cannot be given evidentiary weight over the testimony of credible witnesses who testify on affirmative matters. As between the positive declaration of the prosecution witnesses and the negative statements of the accused, the former deserve more credence. [29]

In conclusion, the trial court explained appellant's liability in this manner:

x x x. The act of the accused in firing an M14 rifle to the policemen who were about to enter his house to serve a search warrant constitutes the crime of direct assault with multiple attempted homicide[,] not multiple attempted murder with direct assault[,] considering that no policeman was hit and injured by the accused and no circumstance was proved to qualify the attempted killing to attempted murder.

The accused Walpan Ladjaalam a.k.a. 'Warpan' cannot be held liable [for] the crime of Violation of Section 16, Article III, in relation to Section 21, Article IV, of Republic Act 6425 otherwise known as the Dangerous Drugs Act of 1992, as amended, because the fifty (50) pieces of folded aluminum foils having a total weight of 1.7426 grams all containing methamphetamine

hydrochloride or shabu allegedly found in his house are inadmissible as evidence against him considering that they were seized after [a] search conducted by virtue of Search Warrant No. 20 which is totally null and void as it was issued for more than one offense, and were not found in 'plain view' of the police officers who seized them. Neither could the accused be held liable for illegal possession of firearms and ammunition except for the (1) M14 rifle with Serial Number 1555225 and with magazine containing fifteen (15) live ammunition and two more M14 rifle magazines with twenty (20) and twenty-one (21) live ammunition respectively considering that the policemen who recovered or seized the other firearms and ammunition did not testify in court. The blue bag containing assorted coins cannot be returned to the accused Walpan Ladjaalam a.k.a. 'Warpan' because according to the accused the blue bag and assorted coins do not belong to him[;] instead the said assorted coins should be turned over to the National Treasury. [30]

The Issues

In his Brief, appellant submits the following Assignment of Errors:

I

The trial court erred when it concluded that appellant Walpan Ladjaalam y Mihajil [had] fired first at the police officers who went to his house to serve a search warrant upon him which led to an exchange of fire between Ladjaalam and the police officer.

II

The trial court erred when it denied the appellant the right and opportunity for an ocular inspection of the scene of the firefight and where the house of the appellant [was] located.

III

"The trial court erred when it ruled that the presumption of regularity in the performance of their duties [excluded] the claim of the appellant that the firearms and methamphetamine hydrochloride (i.e. shabu) were planted by the police." [31]

In the interest of simplicity, we shall take up these issues seriatim: (a) denial of the request for ocular inspection, (b) credibility of the prosecution witnesses, and (c) the defense of frame-up. In addition, we shall also discuss the proper crimes and penalties to be imposed on appellant.

The Court's Ruling

The appeal has no merit.

First Issue: Denial of Request for Ocular Inspection

Appellant insists that the trial court erred in denying his request for an ocular inspection of the Ladjaalam residence. He argues that an ocular inspection would have afforded the lower court "a better perspective and an idea with respect to the scene of the crime." [32] We do not agree.

We fail to see the need for an ocular inspection in this case, especially in the light of the clear testimonies of the prosecution witnesses. [33] We note in particular that the defense had even requested SPO1 Amado Mirasol Jr. to sketch the subject premises to give the lower court a fairly good idea of appellant's house. [34] Viewing the site of the raid would have only delayed the proceedings. [35] Moreover, the question whether to view the setting of a relevant event has long been recognized to be within the discretion of the trial judge. [36] Here, there is no reason to disturb the exercise of that discretion. [37]

Second Issue: Credibility of Prosecution Witnesses

Appellant, in essence, questions the credibility of the prosecution witnesses. [38] Suffice it to state that the trial court's assessment of their credibility is generally accorded respect, even finality. [39] After carefully examining the records and finding no material inconsistencies to support appellant's claim, we cannot exempt this case from the general rule. [40] Quite the contrary, the testimonies of these witnesses positively showed that appellant had fired upon

the approaching police elements, and that he had subsequently attempted to escape. SPO1 Amado Mirasol Jr. [41] testified thus:

PROSECUTOR NUVAL:

Q: And, this trail is towards the front of the house of the accused?

A: Yes.

Q: And it's there where you were met by a volley of fire?

A: Yes, Your Honor.

COURT:

Q: How far were you from the concrete fen[c]e when you were met by a volley of fire? ... You said you were fired upon?

A: More or less, five (5) meters.

x x x x x x x x x

PROSECUTOR NUVAL:

Q: Now, you said you were able to enter the house after the gate was opened by your colleague Felipe Gaganting ... I will reform that question.

Q: Who opened the gate Mr. Witness?

A: SPO2 Felipe Gaganting, Efren Gregorio and Allan Marcos Obut.

Q: And, at that time you were hiding at the concrete fence?

A: Yes.

Q: Now, when this gate was opened, you said you went inside the house, right?

A: Yes.

Q: What did you see inside the house?

A: I, together with SPO1 Ricardo Lacastesantos, entered the main door of the house of Walfran [sic] Ladjaalam at the ground floor. We went inside the sala on the ground floor of his house[;] I saw two old woman.

x x x x x x x x x

PROSECUTOR NUVAL:

Q: Now, what did you do with these two old women?

A: I did not mind those two old women because those two women were sitting on the ground floor. I was concentrating on the second floor because Ladjaalam was firing towards our group so, I, together with Ricardo Lacastesantos, went upstairs to the second floor of the house.

Q: Were you able to go to the second floor of the house?

A: Yes.

Q: What happened when you were already on the second floor?

A: While we were proceeding to the second floor, Walfan [sic] Ladjaalam, noticed our presence and immediately went inside the bedroom [o]n the second floor and he went immediately and jumped from the window of his house x x x leading to the roof of the neighbor's house.

x x x x x x x x x

COURT:

Reform. That is leading

Q: What happened when you entered and he jumped to the roofing of the neighbor's house?

A: Immediately, I myself, we immediately went downstairs and asked the assistance of the members of the raiding team to arrest Walfan Ladjaalam.

x x x x x x x x x

PROSECUTOR NUVAL:

Q: Were you able to go down?

A: Yes.

Q: What happened when you were there?

A: We immediately went out and I asked the assistance of the members of the raiding team and the investigator of the unit especially SPO1 Cesar Rabuya. I was able to manage to arrest Walfan Ladjaalam. [42]

What happened thereafter was narrated by Senior Police Officer Ricardo Lacastesantos, [43] as follows:

Q: What did you notice [o]n the second floor?

A: I went where the firing came from, so, I saw [an] M14 rifle and I shouted from the outside, 'do not fire at the second floor because there [are] a lot of children here.'

Q: Now, that rifle you said [was an] M14, where did you find this?

A: At the sala set.

Q: This sala set where is this located?

A: Located [on] the second floor of the house.

Q: Is there a sala [o]n the second floor?

A: Yes.

Q: Can you still identify that M14 rifle which you said you recovered from the sale set?

A: Yes.

Q: Why can you identify that?

A: The Serial No. of M14 is 1555225 and I marked it with my initial.

Q: Now, I have here M14 rifle[;] will you please tell us where is the Serial No. of this?

A: 1555225 and I put my initial, RJL.

FISCAL NUVAL:

This is already marked as our Exhibit 'B-3' with magazine, one magazine and seven round [ammunition].

Q: After recovering this, what did you do with this firearm?

A: When I recovered it I removed the bullets inside the chamber[.] I removed the magazine and I turned it over to the investigator.

Q: Where did you turn it over?

A: At the crime scene.

Q: Now, that magazine, can you still identify this?

A: Yes.

Q: Why?

A: I put x x x markings.

x x x x x x x x x

COURT:

So, a[si]de from the magazine attached to the M14 rifle you found six more magazines?

A: Yes, so, all in all six magazines, three empty M16 rifle magazines and three M14.

Q: The M16 magazines [were] empty?

A: Empty.

Q: How about the M14?

A: Found with [ammunition].

x x x x x x x x x

Q: So, where are the three M16 magazines?

A: In the corner.

Q: What did you do with [these] three magazines of M16?

A: I turned [them] over to the investigator.

Q: Can you identify them?

A: Yes, because of my initials[.]

Q: Where are your initials?

A: On the magazines.

Q: RJL?

A: RJL. [44]

These were confirmed by the results of the paraffin tests conducted on appellant and on the weapons seized during the raid. Both of his hands as well as the weapons, particularly the M-14

which he had used, were positive for gunpowder nitrate. Police Inspector Mercedes Delfin-Diestro explained in open court:

Q: Okay. Now, what was the result of your examination, Madam Witness?

A: The result of the examination [was] that both hands of the subject person, ha[d] presence of gun powder nitrates.

Q: What do you mean Madam Witness, what does that indicate?

A: It indicates there is presence of powder nitrates.

Q: Can we conclude that he fired a gun?

A: I cannot conclude that he fired a gun because there are so many circumstances [why] a person [would be] positive on his hands for gun powder nitrates.

Q: But, most likely, he fired a gun?

A: Yes.

x x x x x x x x x

PROSECUTOR NUVAL:

Q: What about, Madam Witness this Exhibit 'B-3', which is the M14 rifle. What did you do with this?

A: SPO3 Abu did the swabbing both in the chamber and the barrel wherein I observed there [were] black and traces of brown residue on the bolt, chamber and in the barrel.

Q: And, that indicates Madam Witness...?

A: It indicates that the gun was fired.

Q: Recently?

A: Because of the traces of brown residue, it could be possible that the gun was fired before the incident x x x.

COURT:

Q: There is also black residue?

A: Yes.

Q: What does it indicate?

A: It indicates that the firearm was recently fired.

Q: And, where is this swab used at the time of the swabbing of this Exhibit?

A: This one.

PROSECUTOR NUVAL:

May we ask that this be marked as Exhibit 'B-3-A'.

COURT:

Q: The firing there indicates that the gun was recently fired, during the incident?

A: Yes.

Q: And also before the incident it was fired because of the brown residue?

A: Yes, Your Honor." [45] (emphasis supplied)

Duly proven from the foregoing were the two elements [46] of the crime of illegal possession of firearms. Undoubtedly, the established fact that appellant had fired an M-14 rifle upon the approaching police officers clearly showed the existence of the firearm or weapon and his possession thereof. Sufficing to satisfy the second element was the prosecution's Certification [47] stating that he had not filed any application for license to possess a firearm, and that he had not been given authority to carry any outside his residence. [48] Further, it should be pointed out that his possession and use of an M-14 rifle were obviously unauthorized because this weapon could not be licensed in favor of, or carried by, a private individual. [49]

Third Issue: Defense of Frame-up

From the convoluted arguments strewn before us by appellant, we gather that the main defense he raises is frame-up. He claims that the items seized from his house were "planted," and that the entire Zamboanga police force was out to get him at all cost.

This Court has invariably held that the defense of frame-up is inherently weak, since it is easy to fabricate, but terribly difficult to disprove. [50] Absent any showing of an improper motive on the part of the police officers, [51] coupled with the presumption of regularity in the performance of their duty, such defense cannot be given much credence. [52] Indeed, after examining the records of this case, we conclude that appellant has failed to substantiate his claim. On the contrary, his statements in his Counter Affidavit are inconsistent with his testimony during the trial. [53] He testified thus:

Q Now, Mr. Witness, do you remember having executed an Affidavit/ a Counter-Affidavit?

A I could not remember.

Q I have here a Counter-Affidavit and it was signed before this representation on the 8th day of December 1997[;] tell us whose signature is this appearing above the typewritten name

FISCAL NUVAL:

Q . . . . Walpan Ladjaalam, whose signature is this?

(Showing)

A Yes, Sir. This is mine.

Q Now, in paragraph[s] 1,2,3,4,5,6,7 and 8; you stated in this Counter-Affidavit which I quote: 'that I was resting and sleeping when I heard the gunshots and I noticed that the shots were directed towards our house.. and I inspected and x x x we were attacked by armed persons.. and I was apprehended by the persons who attacked x x x our house'; [the] house you are referring to [in] this paragraph, whose house [are you] referring to, is this [what] you are referring to [as] your house or the house of your neighbors [from] which you said you heard gunshots?

A Our house.

Q Now, in paragraph 6 of your Counter-Affidavit you stated and I quote: 'that [o]n that afternoon of September 24, 1997, I was at home in my house Aplaya, Riohondo, Bo. Campo Muslim, my companions in my house [were] the two old women and my children, is this correct?

A They were not there.

Q Now, in that statement Mr. Witness, you said that you were at home in [your] house at Aplaya, Riohondo, Bo. Campo Muslim[;] which is which now, you were in your house or you were in your neighbors['] house at that time when you heard gunshots?

A I was in the house near my house.

Q So, your statement particularly paragraph 6 of your Counter-Affidavit that you were at home in [your] house at Aplaya Riohondo Bo. Campo Muslim, is x x x not correct?

A Yes, Sir. This is not correct. [54]

Crime and Punishment

The trial court convicted appellant of three crimes: (1) maintenance of a drug den, (2) direct assault with attempted homicide, and (3) illegal possession of firearms. We will discuss each of these.

Maintenance of a Drug Den

We agree with the trial court that appellant was guilty of maintenance of a drug den, an offense for which he was correctly sentenced to reclusion perpetua. His guilt was clearly established by the testimony of Prosecution Witness Rino Bartolome Locson, 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.

Direct Assault with Multiple Attempted Homicide

The trial court was also correct in convicting appellant of direct assault [55] with multiple counts of attempted homicide. It found that [t]he act 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. [56]

We note that direct assault with the use of a weapon carries the penalty of prision correccional in its medium and maximum periods, while attempted homicide carries the penalty of prision correccional. [57] Hence, for the present complex crime, the penalty for direct assault, which constitutes the most serious crime, should be imposed and applied in its maximum period. [58]

Illegal Possession of Firearms

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.

The Office of the Solicitor General (OSG) disagrees, on the ground that the trial court should not have applied the new law. It contends that under the facts of the case, the applicable law should have been PD 1866, as worded prior to its amendment by RA 8294.

The trial court's ruling and the OSG's submission exemplify the legal community's difficulty in grappling with the changes brought about by RA 8294. Hence, before us now are opposing views on how to interpret Section 1 of the new law, which provides as follows:

SECTION 1. Section 1 of Presidential Decree No. 1866, as amended, is hereby further amended to read as follows:

Section 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession of Firearms or Ammunition Instruments Used or Intended to be Used in the Manufacture of Firearms or Ammunition. -- The penalty of prision correccional in its maximum period and a fine of not less than Fifteen thousand pesos (P15,000) shall be imposed upon any person who shall unlawfully manufacture, deal in, acquire, dispose, or possess any low powered firearm, such as rimfire handgun, .380 or .32 and other firearm of similar firepower, part of firearm, ammunition, or machinery, tool or instrument used or intended to be used in the manufacture of any firearm or ammunition: Provided, That no other crime was committed.

The penalty of prision mayor in its minimum period and a fine of Thirty thousand pesos (P30,000) shall be imposed if the firearm is classified as high powered firearm which includes those with bores bigger in diameter than .30 caliber and 9 millimeter such as caliber .40, .41, .44, .45 and also lesser calibered firearms but considered powerful such as caliber .357 and caliber .22 centerfire magnum and other firearms with firing capability of full automatic and by burst of two or three: Provided, however, That no other crime was committed by the person arrested.

If homicide or murder is committed with the use of an unlicensed firearm, such use of an unlicensed firearm shall be considered as an aggravating circumstance.

If the violation of this Section is in furtherance of or incident to, or in connection with the crime of rebellion or insurrection, sedition, or attempted coup d'etat, such violation shall be absorbed as an element of the crime of rebellion or insurrection, sedition, or attempted coup d'etat.

The same penalty shall be imposed upon the owner, president, manager, director or other responsible officer of any public or private firm, company, corporation or entity, who shall willfully or knowingly allow any of the firearms owned by such firm, company, corporation or entity to be used by any person or persons found guilty of violating the provisions of the preceding paragraphs or willfully or knowingly allow any of them to use unlicensed firearms or firearms without any legal authority to be carried outside of their residence in the course of their employment.

The penalty of arresto mayor shall be imposed upon any person who shall carry any licensed firearm outside his residence without legal authority therefor.

Citing People v. Jayson, [59] the OSG argues that the foregoing provision does not cover the specific facts of this case. Since another crime -- direct assault with multiple unlawful homicide -- was committed, appellant cannot be convicted of simple illegal possession of firearms under the second paragraph of the aforecited provision. Furthermore, since there was no killing in this case, illegal possession cannot be deemed as an aggravating circumstance under the third paragraph of the provision. Based on these premises, the OSG concludes that the applicable law

is not RA 8294, but PD 1866 which, as worded prior the new law, penalizes simple illegal possession of firearms even if another crime is committed at the same time. [60]

Applying a different interpretation, the trial court posits that appellant should be convicted of illegal possession of firearms, in addition to direct assault with multiple attempted homicide. It did not explain its ruling, however. Considering that it could not have been ignorant of the proviso [61] in the second paragraph, it seemed to have construed no other crime as referring only to homicide and murder, in both of which illegal possession of firearms is an aggravating circumstance. In other words, if a crime other than murder or homicide is committed, a person may still be convicted of illegal possession of firearms. In this case, the other crime committed was direct assault with multiple attempted homicide; hence, the trial court found appellant guilty of illegal possession of firearms.

We cannot accept either of these interpretations because they ignore the plain language of the statute. A simple reading thereof shows that if an unlicensed firearm is used in the commission of any crime, there can be no separate offense of simple illegal possession of firearms. Hence, if the other crime is murder or homicide, illegal possession of firearms becomes merely an aggravating circumstance, not a separate offense. Since direct assault with multiple attempted homicide was committed in this case, appellant can no longer be held liable for illegal possession of firearms.

Moreover, penal laws are construed liberally in favor of the accused. [62] In this case, the plain meaning of RA 8294's simple language is most favorable to herein appellant. Verily, no other interpretation is justified, for the language of the new law demonstrates the legislative intent to favor the accused. [63] Accordingly, appellant cannot be convicted of two separate offenses of illegal possession of firearms and direct assault with attempted homicide. Moreover, since the crime committed was direct assault and not homicide or murder, illegal possession of firearms cannot be deemed an aggravating circumstance.

We reject the OSG's contention that PD 1866, as worded prior to its amendment by RA 8294, should be applied in this case. When the crime was committed on September 24, 1997, the original language of PD 1866 had already been expressly superseded by RA 8294 which took effect on July 6, 1997. [64] In other words, no longer in existence was the earlier provision of PD 1866, which justified a conviction for illegal possession of firearms separate from any other crime. It was replaced by RA 8294 which, among other amendments to PD 1866, contained the specific proviso that no other crime was committed.

Furthermore, the OSG's reliance on People v. Jayson [65] is misplaced. True, this Court sustained the conviction of appellant for illegal possession of firearms, although he had also committed homicide. We explained, however, that the criminal case for homicide [was] not before us for consideration.

Just as unacceptable is the interpretation of the trial court. We find no justification for limiting the proviso in the second paragraph to murder and homicide. 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 we.

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, [66] like alarm and scandal [67] or slight physical injuries, [68] both of which are punishable by arresto menor. [69] 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. Our task is constitutionally confined only to applying the law and jurisprudence [70] to the proven facts, and we have done so in this case.

WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that appellant is found guilty only of two offenses: (1) direct assault and multiple attempted homicide with the use of a weapon, for which he is sentenced to 2 years and 4 months to 6 years of prision correccional; and (2) maintaining a drug den, for which he was correctly sentenced by the trial court to reclusion perpetua. Costs against appellant.

Let a copy of this Decision be furnished the Congress of the Philippines for a possible review, at its sound discretion, of RA 8294.

SO ORDERED.

4.) Republic v. IAC, Antonio, Pastor

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-69344 April 26, 1991

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.

INTERMEDIATE APPELLATE COURT and SPOUSES ANTONIO and CLARA PASTOR, respondents.

Roberto L. Bautista for private respondents.

GRIÑO-AQUINO, J.:

The legal issue presented in this petition for review is whether or not the tax amnesty payments made by the private respondents on October 23, 1973 bar an action for recovery of deficiency income taxes under P.D.'s Nos. 23, 213 and 370.

On April 15, 1980, the Republic of the Philippines, through the Bureau of Internal Revenue, commenced an action in the Court of First Instance (now Regional Trial Court) of Manila, Branch XVI, to collect from the spouses Antonio Pastor and Clara Reyes-Pastor deficiency income taxes

for the years 1955 to 1959 in the amount of P17,117.08 with a 5% surcharge and 1% monthly interest, and costs.

The Pastors filed a motion to dismiss the complaint, but the motion was denied.1âwphi1 On August 2, 1975, they filed an answer admitting there was an assessment against them of P17,117.08 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 to P10,400 or 10% of their reported untaxed income under P.D. 23, P2,951.20 or 20% of the reported untaxed income under P.D. 213, and a final payment on October 26, 1973 under P.D. 370 evidenced by the Government's Official Receipt No. 1052388. Consequently, the Government is in estoppel to demand and compel further payment of income taxes by them.

The parties agreed that there were no issues of fact to be litigated, hence, the case was submitted for decision upon the pleadings and memoranda on the lone legal question of: whether or not the payment of deficiency income tax under the tax amnesty, P.D. 23, and its acceptance by the Government operated to divest the Government of the right to further recover from the taxpayer, even if there was an existing assessment against the latter at the time he paid the amnesty tax.

It is not disputed that as a result of an investigation made by the Bureau of Internal Revenue in 1963, it was found that the private respondents owed the Government P1,283,621.63 as income taxes for the years 1955 to 1959, inclusive of the 50% surcharge and 1% monthly interest. The defendants protested against the assessment. A reinvestigation was conducted resulting in the drastic reduction of the assessment to only P17,117.08.

It appears that on April 27, 1978, the private respondents offered to pay the Bureau of Internal Revenue the sum of P5,000 by way of compromise settlement of their income tax deficiency for the questioned years, but Assistant Commissioner Bernardo Carpio, in a letter addressed to the Pastor spouses, rejected the offer stating that there was no legal or factual justification for accepting it. The Government filed the action against the spouses in 1980, ten (10) years after the assessment of the income tax deficiency was made.

On a motion for judgment on the pleadings filed by the Government, which the spouses did not oppose, the trial court rendered a decision on February 28, 1980, holding that the defendants spouses 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, as shown in the Amnesty Income Tax Returns' Summary Statement and the tax Payment Acceptance Order for P2,951.20 with its corresponding official receipt, which returns also contain the very assessment for the questioned years. By accepting the payment of the amnesty income taxes, the Government, therefore, waived its right to further recover deficiency incomes taxes "from the defendants under the existing assessment against them because:

1. the defendants' amnesty income tax returns' Summary Statement included therein the deficiency assessment for the years 1955 to 1959;

2. tax amnesty payment was made by the defendants under Presidential Decree No. 213, hence, it had the effect of remission of the income tax deficiency for the years 1955 to 1959;

3. P.D. No. 23 as well as P.D. No. 213 do not make any exceptions nor impose any conditions for their application, hence, Revenue Regulation No. 7-73 which excludes certain taxpayers from the coverage of P.D. No. 213 is null and void, and

4. the acceptance of tax amnesty payment by the plaintiff-appellant bars the recovery of deficiency taxes. (pp. 3-4, IAC Decision, pp. 031-032, Rollo.)

The Government appealed to the Intermediate Appellant Court (AC G.R. CV No. 68371 entitled, "Republic of the Philippines vs. Antonio Pastor, et al."), 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 respondent spouses, on the other hand, alleged that P.D. 213 contains no exemptions from its coverage and that, under Letter of Instruction LOI 129 dated September 18, 1973, the immunities granted by P.D. 213 include:

II-Immunities Granted.

Upon payment of the amounts specified in the Decree, the following shall be observed:

1. . . . .

2. The taxpayer shall not be subject to any investigation, whether civil, criminal or administrative, insofar as his declarations in the income tax returns are concerned nor shall the same be used as evidence against, or to the prejudice of the declarant in any proceeding before any court of law or body, whether judicial, quasi-judicial or administrative, in which he is a defendant or respondent, and he shall be exempt from any liability arising from or incident to his failure to file his income tax return and to pay the tax due thereon, as well as to any liability for any other tax that may be due as a result of business transactions from which such income, now voluntarily declared may have been derived. (Emphasis supplied; p. 040, Rollo.)

There is nothing in the LOI which can be construed as authority for the Bureau of Internal Revenue to introduce exceptions and/or conditions to the coverage of the law.

On November 23, 1984, 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. The appellate court held that if Revenue Regulation No. 7-73 did provide an exception to the coverage of P.D. 213, such provision was null and void for being contrary to, or restrictive of, the clear mandate of P.D. No. 213 which the regulation should implement. Said revenue

regulation may not prevail over the provisions of the decree, for it would then be an act of administrative legislation, not mere implementation, by the Bureau of Internal Revenue.

On February 4, 1986, the Republic of the Philippines, through the Solicitor General, filed this petition for review of the decision dated November 23, 1984 of the Intermediate Appellate Court affirming the dismissal, by the Court of First Instance of Manila, of the Government's complaint against the respondent spouses.

The petition is devoid of merit.

Even assuming that the deficiency tax assessment of P17,117.08 against the Pastor spouses were correct, since the latter have already paid almost the equivalent amount to the Government by way of amnesty taxes under P.D. No. 213, and were granted not merely an exemption, but an amnesty, for their past tax failings, the Government is estopped from collecting the difference between the deficiency tax assessment and the amount already paid by them as amnesty tax.

A tax amnesty, being a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law, partakes of an absolute forgiveness or waiver by the Government of its right to collect what otherwise would be due it, and in this sense, prejudicial thereto, particularly to give tax evaders, who wish to relent and are willing to reform a chance to do so and thereby become a part of the new society with a clean slate (Commission of Internal Revenue vs. Botelho Corp. and Shipping Co., Inc., 20 SCRA 487).

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 which have already become familiar (Rule 45, Sec. 4, Rules of Court; e.g., where: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension

of facts; (5) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both the appellant and the appellee; (6) the findings of fact of the Court of Appeals are contrary to those of the trial court; (7) said findings of fact are conclusions without citation of specific evidence in which they are based; (8) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (9) when the finding of fact of the Court of Appeals is premised on the absense of evidence and is contradicted by the evidence on record (Thelma Fernan vs. CA, et al., 181 SCRA 546, citing Tolentino vs. de Jesus, 56 SCRA 67; People vs. Traya, 147 SCRA 381), none of which is present in this case.

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, for taxes, being burdens, are not to be presumed beyond what the applicable statute (in this case P.D. 213) expressly and clearly declares (Commission of Internal Revenue vs. La Tondena, Inc. and CTA, 5 SCRA 665, citing Manila Railroad Company vs. Collector of Customs, 52 Phil, 950).

WHEREFORE, the petition for review is denied. No costs.

SO ORDERED.

5.)Acting Commisioner of customs v. Manila electronic Company and CTA

ACTING COMMISSIONER OF CUSTOMS, petitioner,

vs.

MANILA ELECTRIC COMPANY and COURT OF TAX APPEALS, respondents.

Solicitor General Arturo A. Alafriz Assistant Solicitor General Felicisimo R. Rosete and Solicitor Alejandro B. Afurong for petitioner.

Ross, Selph Salcedo, Del Rosario Bito & Misa for private respondent.

FERNANDO, J.:

The reversal by respondent Court of Tax Appeals of a determination by the then Acting Commissioner of Customs, the late Norberto Romualdez, Jr., that private respondent Manila Electric Company was not exempt from the payment of the special import tax under Republic Act No. 1394 1 for shipment to it of insulating oil, respondent Court entertaining the contrary view 2 led to this petition for review. The contention pressed in support of the petition is that as a tax exemption is to be construed strictly, the decision of the respondent Court, which assumed that insulating oil can be considered as insulators must be reversed and set aside. The appealed decision of respondent Court in the light of applicable authorities supplies the best refutation of such contention. It must be sustained.

The appealed decision 3 set forth that petitioner Manila Electric Co., nor private respondent, in appealing from a determination by the then Acting Commissioner of Customs, now petitioner, "claims that it is exempt from the special import tax not only by virtue of Section 6 of Republic Act No. 1394, which exempts from said tax equipment and spare parts for use in industries, but also under Paragraph 9, Part Two, of its franchise, which expressly exempts is insulators from all taxes of whatever kind and nature. 4 It then made reference to the franchise of private respondent Manila Electric Co.: "Par. 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay. In consideration of Part Two of the franchise herein granted, to wit, the right to build and maintain in the City of Manila and its suburbs a plant for the conveying and furnishing of electric current for light, heat, and power, and to charge for the same, the grantee shall pay to the City of Manila two and one-half per centum of the gross earnings received from the business under this franchise in the city and its suburbs: ... and shall be in lieu of all taxes and assessments of whatsoever nature, and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted." 5 It noted that the above "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 on its gross earnings." 6

The question then, according to such decision of respondent Court is: "Does the insulating oil in question come within the meaning of the term 'insulator '?" 7 Then it went on: "insulating oils are mineral oils of high di-electrics strength and high flash point employed in circuit breakers, switches, transformers and other electric apparatus. An oil with a flash point of 285 º F and fire point of 310 º F is considered safe. A clean, well- refined oil will have a minimum dielectric of 22,00 volts, but the presence of a slow as 0.01% water will reduce the di-electric strength drastically. The insulating oils, therefore, cannot be stored for long periods because of the danger of absorbing moisture. Impurities such as acids or alkalies also detract from the strength of the oil. Since insulating oils are used for cooling as well as for insulating, the viscosity should be low enough for free circulation, and they should not gum. (Materials Handbook by George J. Brady, 8th Edition 1956, pp. 421-423.) ... ." 8

The last portion of the appealed decision explained why the determination of the Acting Commissioner of Customs must be reversed: "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.' ... The decision appealed from not being in accordance with law, the same is hereby reversed. Respondent is ordered to refund to petitioner the sum of P995.00 within thirty days from the date this decision becomes final, without pronouncement as to costs." 9 It was therein made clear that private respondent was not liable for the payment of the special import tax under Republic Act No. 1394.

As noted at the outset, the decision speaks for itself. It cannot be stigmatized as suffering from any flaw that would call for its reversal.

1. It is to be admitted, as contended by petitioner, that this Court is committed to the principle that an exemption from taxation must be justified by words too clear to be misread. As set forth in Commissioner of Internal Revenue v. Guerrero: 10 "From 1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting Commissioner of Customs, 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." 11 Such a ruling was reaffirmed in subsequent decisions.

12 It does not mean, however, that petitioner should prevail, for as was unequivocally set forth in the leading ease of Republic Flour Mills v. Commissioner of Internal Revenue, 13 this Court speaking through Justice J.B.L. Reyes. "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 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. In this ease, 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. 14 That is what was done by respondent Court of Tax Appeals. It showed fealty to this equally well. settled doctrine. It construed the statutory provision as it is written. It is precluded, in the language of ;the Republic Flour Mills opinion, considering that the law is clear and ambiguous, to look further for any legislative intent, as "the law must be taken as it is, devoid of judicial addition or subtraction." 15 If there is an extended discussion of this point, it is due solely to the emphasis placed on the matter by petitioner.

2. Moreover, the decision of respondent Court under review finds support in Balbas v. Domingo. 16 Thus: "No other conclusion is possible in view of the well-settled principle that this Court is bound by the finding of facts of the Court of Tax Appeals, only questions of law being open to it for determination. As stated in another decision, 'only errors of law, and not rulings on the weight of evidence, are reviewable by this Court.' The facts then as above ascertained cannot be disturbed. In our latest decision, there is a categorical assertion that where the question is one of fact, it is no longer reviewable. 17 Such a doctrine is not of limited application. It is a recognition of the wide discretion enjoyed by the Court of Tax Appeals in construing tax statutes. So it was categorically held in Alhambra Cigar and Cigarette Manufacturing Co. v. Commissioner of Internal Revenue: 18 "Nor as a matter of principle is it advisable for this Court to set aside the conclusion reached by an agency such as the Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertice on the subject, unless, as did not happen here, there has been an abuse or improvident exercise of its authority. 19 That same approach was reflected in Reyes v. Commissioner of Internal Revenue, 20 Chu Hoi Horn v. Court of Tax Appeals, 21 Vi Ve Chemical Products v. Commissioner of Customs, 22 and Nasiad v. Court of Tax Appeals. 23 The Vi Ve decision has some relevance. There the stand of the state that the Court of Tax Appeals could rightfully determine that '"priopionic glycine" is the same as glutamic acid" 24 was considered as well within the authority of respondent Court. It would be an affront to the sense of fairness and of justice if in

another case, respondent Court, in the exercise of its discretionary authority, after determining that insulating oil comes within the term insulator, is not be upheld.

WHEREFORE, the petition for review is dismissed. No costs.

6.) Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., petitioner, vs. DEPARTMENT OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL, respondents.

G.R. No. 108524 | 1994-11-10

D E C I S I O N

MENDOZA, J.:

This is a petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 47-91 and enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the sale of copra by members of petitioner organization. 1

Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation whose members, individually or collectively, are engaged in the buying and selling of copra in Misamis Oriental. The petitioner alleges that prior to the issuance of Revenue Memorandum Circular 47-91 on June 11, 1991, which implemented VAT Ruling 190-90, copra was classified as agricultural food product under $ 103(b) of the National Internal Revenue Code and, therefore, exempt from VAT at all stages of production or distribution.

Respondents represent departments of the executive branch of government charged with the generation of funds and the assessment, levy and collection of taxes and other imposts.

The pertinent provision of the NIRC states:

Sec. 103. Exempt Transactions. -- The following shall be exempt from the value-added tax:

(a) Sale of nonfood agricultural, marine and forest products in their original state by the primary producer or the owner of the land where the same are produced;

(b) Sale or importation in their original state of agricultural and marine food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic material therefor;

Under § 103(a), as above quoted, 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 §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.

The question is whether copra is an agricultural food or non-food product for purposes of this provision of the NIRC. On June 11, 1991, respondent Commissioner of Internal Revenue 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, as amended." 2

The reclassification had the effect of denying to the petitioner the exemption it previously enjoyed when copra was classified as an agricultural food product under § 103(b) of the NIRC.

Petitioner challenges RMC No. 47-91 on various grounds, which will be presently discussed although not in the order raised in the petition for prohibition.

First. Petitioner contends that the Bureau of Food and Drug of the Department of Health and not the BIR is the competent government agency to determine the proper classification of food products. Petitioner cites the opinion of Dr. Quintin Kintanar of the Bureau of Food and Drug to the effect that copra should be considered "food" because it is produced from coconut which is food and 80% of coconut products are edible.

On the other hand, the respondents argue that the opinion of the BIR, as the government agency charged with the implementation and interpretation of the tax laws, is entitled to great respect.

We agree with respondents. In interpreting § 103(a) and (b) of the NIRC, the Commissioner of Internal Revenue 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. Indeed, even Dr. Kintanar said that his classification of copra as food was based on "the broader definition of food which includes agricultural commodities and other components used in the manufacture/processing of food." The full text of his letter reads:

10 April 1991

Mr. VICTOR A. DEOFERIO, JR.

Chairman VAT Review Committee

Bureau of Internal Revenue

Diliman, Quezon City

Dear Mr. Deoferio:

This is to clarify a previous communication made by this Office about copra in a letter dated 05 December 1990 stating that copra is not classified as food. The statement was made in the context of BFAD's regulatory responsibilities which focus mainly on foods that are processed and packaged, and thereby copra is not covered.

However, in the broader definition of food which include agricultural commodities and other components used in the manufacture/processing of food, it is our opinion that copra should be classified as an agricultural food product since copra is produced from coconut meat which is food and based on available information, more than 80% of products derived from copra are edible products.

Very truly yours,

QUINTIN L. KINTANAR, M.D., Ph.D.

Director

Assistant Secretary of Health

for Standards and Regulations

Moreover, as the government agency charged with the enforcement of the law, the opinion of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of his power under $ 245 of the NIRC to "make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes."

Second. Petitioner complains that it was denied due process because it was not heard before the ruling was made. There is a distinction in administrative law between legislative rules and interpretative rules. 3 There would be force in petitioner's argument if the circular in question were in the nature of a legislative rule. But it is not. It is a mere interpretative rule.

The reason for this distinction is that a legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this connection, the Administrative Code of 1987 provides:

Public Participation. If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed. 4

In addition such rule must be published. 5 On the other hand, interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing.

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued pursuant to proper procedure. But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to administrative judgments and not to judicial judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule. As a matter of power a court, when confronted with an interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule. 6

In the case at bar, we find no reason for holding that respondent Commissioner erred in not considering copra as an "agricultural food product" within the meaning of § 103(b) of the NIRC. As the Solicitor General contends, "copra per se is not food, that is, it is not intended for human consumption. Simply stated, nobody eats copra for food." That previous Commissioners considered it so, is not reason for holding that the present interpretation is wrong. The Commissioner of Internal Revenue is not bound by the ruling of his predecessors. 7 To the contrary, the overruling of decisions is inherent in the interpretation of laws.

Third. Petitioner likewise claims that RMC No. 47-91 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, although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax credit out of the VAT payment of traders and dealers.

The argument has no merit. 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. 8

It is not true that oil millers are exempt from VAT. Pursuant to § 102 of the NIRC, they are subject to 10% VAT on the sale of services. Under § 104 of the Tax Code, they are allowed to credit the input tax on the sale of copra by traders and dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is VAT exempt. In the same manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by other traders and dealers, but there is no tax credit if the sale is made by the producer.

Fourth. It is finally argued that RMC No. 47-91 is counterproductive because traders and dealers would be forced to buy copra from coconut farmers who are exempt from the VAT and that to the extent that prices are reduced the government would lose revenues as the 10% tax base is correspondingly diminished.

This is not so. The sale of agricultural non-food products is exempt from VAT only when made by the primary producer or owner of the land from which the same is produced, but in the case of agricultural food products their sale in their original state is exempt at all stages of production or distribution. At any rate, the argument that the classification of copra as agricultural non-food product is counterproductive is a question of wisdom or policy which should be addressed to respondent officials and to Congress.

WHEREFORE, the petition is DISMISSED.

7.) Resins, Incorporated v Auditor General of the Philippines

RESINS INCORPORATED, petitioner, vs. AUDITOR GENERAL OF THE PHILIPPINES and THE CENTRAL BANK OF THE PHILIPPINES, respondents.

G.R. No. L-17888 | 1968-10-29

D E C I S I O N

FERNANDO, J.:

Petitioner here, as did petitioner in Casco Philippine Chemical Co., Inc. v. Gimenez, 1 would seek a refund 2 from respondent Central Bank on the claim that it was exempt from the margin fee under Republic Act No. 2609 for the importation of urea and formaldehyde, as separate units, used for the production of synthetic glue, of which it was a manufacturer. Since the specific language of the Act speaks of "urea formaldehyde", 3 and petitioner admittedly did import urea and formaldehyde separately, its plea could be granted only if we could construe the above provision of law to read "urea and formaldehyde". In the above Casco decision, we could not see our way clear to doing so. We still cannot see it that way. Hence, this petition must.

Our inability to indulge petitioner in the aforecited Casco petition was made clear by the present Chief Justice. Thus: "Hence, `urea formaldehyde' is clearly a finished product, which is patently distinct and different from `urea' and `formaldehyde', as separate articles used in the manufacture of the synthetic resins known as `urea formaldehyde'. Petitioner contends, however, that the bill approved in Congress contained the copulative conjunction `and' between the terms `urea' and `formaldehyde,' and that the members of Congress intended to exempt `urea' and `formaldehyde' separately as essential elements in the manufacture of the synthetic resin glue called `urea formaldehyde', not the latter as a finished product, citing in support of this view the statements made on the floor of the Senate, during the consideration of the bill before said House, by members thereof. But, said individual statements do not necessarily reflect the view of the Senate. Much less do they indicate the intent of the House of Representatives . . . Furthermore, it is well settled that the enrolled bill - which uses the term `urea formaldehyde' instead of `urea and formaldehyde' - is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President.. If there has been any mistake in the printing of the bill before it was certified by the officers of Congress and approved by the Executive - on which we cannot speculate, without jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic system - the remedy is amendment or curative legislation, not by judicial decree."

To which we can only add the deference to the scope and implication of the function entrusted by the Constitution to the judiciary leaves us no other alternative. For nothing is better settled than that the first and fundamental duty of courts is to apply the law as they find it, not as they would like it to be. Fidelity to such a task precludes construction or interpretation, unless application is impossible or inadequate without it. 4 Such is not the case in the situation presented here. So we have held in Casco Philippine Chemical Co., Inc. v. Gimenez. We do so again.

Then, again, there is merit in the contention of the Solicitor General, as counsel for respondent Central Bank, and the Auditor General, that as a refund undoubtedly partakes of a nature of an exemption, it cannot be allowed unless granted in the most explicit and categorical language. As was held by us in Commissioner of Internal Revenue v. Guerrero: 5 "From 1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting Commissioner of Customs, 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 Republic Act 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.

One last matter. Petitioner would assail as devoid of support in law the action taken by respondent Auditor-General in an endorsement to the respondent Central Bank 6 causing it to overrule its previous resolution and to adopt the view in such indorsement to the effect that the importation of urea and formaldehyde, as separate units, did not come within the purview of the statutory language that granted such exemption. It does not admit of doubt that the respondent Auditor-General's interpretation amounts to a literal adherence to the statute as enacted. As such, it cannot be said to be contrary to law. As a matter of fact, it is any other view, as is evident from the above, that is susceptible to well-founded criticism, as lacking legal basis. Under the circumstances, the respondent Auditor-General was merely complying with his duty in thus calling the attention of respondent Central Bank.

The limit of his constitutional function was clearly set forth in Guevara v. Gimenez, 7 the opinion being rendered by the present Chief Justice. Thus: "Under our Constitution, the authority of the Auditor General, in connection with expenditures of the Government is limited to the auditing of expenditures of funds or property pertaining to, or held in trust by, the Government or the provinces or municipalities thereof (Article XI, section 2, of the Constitution). Such function is limited to a determination of whether there is a law appropriating funds for a given purpose; whether a contract, made by the proper officer, has been entered into in conformity with said appropriation law; whether the goods or services covered by said contract have been delivered or rendered in pursuance of the provisions thereof, as attested to by the proper officer; and whether payment therefor has been authorized by the officials of the corresponding department or bureau. If these requirements have been fulfilled, it is the ministerial duty of the Auditor General to approve and pass in audit the voucher and treasury warrant for said payment. He has no discretion or authority to disapprove said payment upon the ground that the aforementioned contract was unwise or that the amount stipulated thereon is unreasonable. If he entertains such belief, he may do no more than discharge the duty imposed upon him by the Constitution (Article XI, section 2), `to bring to the attention of the proper administrative officer expenditures of funds or property which, in his opinion, are irregular, unnecessary, excessive or extravagant'. This duty implies a negation of the power to refuse and disapprove payment of such expenditures, for its disapproval, if he had authority therefor, would bring to the attention of the aforementioned administrative officer the reasons for the adverse action thus taken by the General Auditing office, and, hence, render the imposition of said duty unnecessary."

In the same way that the Auditor General, by virtue of the above function, which is intended to implement the constitutional mandate that no money can be paid out of the treasury except in the pursuance of appropriation made by law, 8 must carefully see to it that there is in fact such statutory enactment, no refund, which likewise represents a diminution of public funds in the treasury, should be allowed unless the law clearly so provides. The Auditor General would be sadly remiss in the discharge of his responsibility under the Constitution if, having the statute before him, he allows such a refund when, under the terms thereof, it cannot be done. His actuation here cannot be stigmatized as violative of any legal precept; as a matter of fact, it is precisely in accordance with the constitutional mandate.

WHEREFORE, this petition is denied, with costs against petitioner.

8.) CIR v. PLDT

D E C I S I O N

GARCIA, J.:

In this petition for review on certiorari, the Commissioner of Internal Revenue (Commissioner) seeks the review and reversal of the September 17, 1999 Decision[1] of the Court of Appeals (CA) in CA-G.R. No. SP 47895, affirming, in effect, the February 18, 1998 decision[2] of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5178, a claim for tax refund/credit instituted by respondent Philippine Long Distance Company (PLDT) against petitioner for taxes it paid to the Bureau of Internal Revenue (BIR) in connection with its importation in 1992 to 1994 of equipment, machineries and spare parts.

The 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 to May 31, 1994, PLDT paid the BIR the amount of P164,510,953.00, broken down as follows: (a) compensating tax of P126,713,037.00; advance sales tax of P12,460,219.00 and other internal revenue taxes of P25,337,697.00. For similar importations made between March 1994 to May 31, 1994, PLDT paid P116,041,333.00 value-added tax (VAT).

On March 15, 1994, PLDT addressed a letter to the BIR seeking a confirmatory ruling on its tax exemption privilege under Section 12 of R.A. 7082, which reads:

Sec. 12. The grantee ... shall be liable to pay the same taxes on their real estate, buildings, and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto, the grantee, ... shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee, its successors or assigns, and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof: Provided, That the grantee ... shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Sec. 2 of Executive Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto. (Emphasis supplied).

Responding, the BIR issued on April 19, 1994 Ruling No. UN-140-94,[3] pertinently reading, as follows:

PLDT shall be subject only to the following taxes, to wit:

xxx xxx xxx

7. The 3% franchise tax on gross receipts which shall be in lieu of all taxes on its franchise or earnings thereof.

xxx xxx xxx

The "in lieu of all taxes" provision under Section 12 of RA 7082 clearly exempts PLDT from all taxes including the 10% value-added tax (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.

xxx xxx xxx

In view thereof, this Office ... hereby holds that PLDT, is exempt from VAT on its importation of equipment, machineries and spare parts ... needed in its franchise operations.

Armed with the foregoing BIR ruling, PLDT filed on December 2, 1994 a claim[4] 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". With its claim not having been acted upon by the BIR, and obviously to forestall the running of the prescriptive period therefor, PLDT filed with the CTA a petition for review,[5] therein seeking a refund of, or the issuance of a tax credit certificate in, the amount of P280,552,286.00, representing compensating taxes, advance sales taxes, VAT and other internal revenue taxes alleged to have been erroneously paid on its importations from October 1992 to May 1994. The petition was docketed in said court as CTA Case No. 5178.

On February 18, 1998, the CTA rendered a decision[6] granting PLDT's petition, pertinently saying:

This Court has noted that petitioner has included in its claim receipts covering the period prior to December 16, 1992, thus, prescribed and barred from recovery. In conclusion, We find that the petitioner is entitled to the reduced amount of P223,265,276.00 after excluding from the final computation those taxes that were paid prior to December 16, 1992 as they fall outside the two-year prescriptive period for claiming for a refund as provided by law. The computation of the refundable amount is summarized as follows:

COMPENSATING TAX

Total amount claimed P126,713.037.00

Less:

a) Amount already prescribed: xxx

Total P 38,015,132.00

b) Waived by petitioner

(Exh. B-216) P 1,440,874.00 P39,456,006.00

Amount refundable P87,257,031.00

ADVANCE SALES TAX

Total amount claimed P12,460.219.00

Less amount already prescribed: P5,043,828.00

Amount refundable P7,416,391.00

OTHER BIR TAXES

Total amount claimed P25,337,697.00

Less amount already prescribed: 11,187,740.00

Amount refundable P14,149,957.00

VALUE ADDED TAX

Total amount claimed P116.041,333.00

Less amount waived by petitioner

(unaccounted receipts) 1,599,436.00

Amount refundable P114,441,897.00

TOTAL AMOUNT REFUNDABLE P223,265,276.00,

============

(Breakdown omitted)

and accordingly disposed, as follows:

WHEREFORE, in view of all the foregoing, this Court finds the instant petition meritorious and in accordance with law. Accordingly, respondent is hereby ordered to REFUND or to ISSUE in favor

of petitioner a Tax Credit Certificate in the reduced amount of P223,265,276.00 representing erroneously paid value-added taxes, compensating taxes, advance sales taxes and other BIR taxes on its importation of equipments (sic), machineries and spare parts for the period covering the taxable years 1992 to 1994.

Noticeably, the CTA decision, penned by then Associate Justice Ramon O. de Veyra, with then CTA Presiding Judge Ernesto D. Acosta, concurring, is punctuated by a dissenting opinion[7] of Associate Judge Amancio Q. Saga who maintained that the phrase "in lieu of all taxes" found in Section 12 of R.A. No. 7082, supra, refers to exemption from "direct taxes only" and does not cover "indirect taxes", such as VAT, compensating tax and advance sales tax.

In time, the BIR Commissioner moved for a reconsideration but the CTA, in its Resolution[8] of May 7, 1998, denied the motion, with Judge Amancio Q. Saga reiterating his dissent.[9]

Unable to accept the CTA decision, the BIR Commissioner elevated the matter to the Court of Appeals (CA) by way of petition for review, thereat docketed as CA-G.R. No. 47895.

As stated at the outset hereof, the appellate court, in the herein challenged Decision[10] dated September 17, 1999, dismissed the BIR's petition, thereby effectively affirming the CTA's judgment.

Relying on its ruling in an earlier case between the same parties and involving the same issue - CA-G.R. SP No. 40811, decided 16 February 1998 - the appellate court partly wrote in its assailed decision:

This Court has already spoken on the issue of what taxes are referred to in the phrase "in lieu of all taxes" found in Section 12 of R.A. 7082. There are no reasons to deviate from the ruling and the same must be followed pursuant to the doctrine of stare decisis. xxx. "Stare decisis et non quieta movere. Stand by the decision and disturb not what is settled."

Hence, this recourse by the BIR Commissioner on the lone assigned error that:

THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT IS EXEMPT FROM THE PAYMENT OF VALUE-ADDED TAXES, COMPENSATING TAXES, ADVANCE SALES TAXES AND OTHER BIR TAXES ON ITS IMPORTATIONS, BY VIRTUE OF THE PROVISION IN ITS FRANCHISE THAT THE 3% FRANCHISE TAX ON ITS GROSS RECEIPTS SHALL BE IN LIEU OF ALL TAXES ON ITS FRANCHISE OR EARNINGS THEREOF.

There is no doubt that, insofar as the Court of Appeals is concerned, the issue petitioner presently raises had been resolved by that court in CA-G.R. SP No. 40811, entitled Commissioner of Internal Revenue vs. Philippine Long Distance Company. There, the Sixteenth Division of the appellate court declared that under the express provision of Section 12 of R.A. 7082, supra, "the payment [by PLDT] of the 3% franchise tax of [its] gross receipts shall be in lieu of all taxes" exempts PLDT from payment of compensating tax, advance sales tax, VAT and other internal revenue taxes on its importation of various equipment, machinery and spare parts for the use of its telecommunications system.

Dissatisfied with the CA decision in that case, the BIR Commissioner initially filed with this Court a motion for time to file a petition for review, docketed in this Court as G.R. No. 134386. However, on the last day for the filing of the intended petition, the then BIR Commissioner had a change of heart and instead manifested[11] that he will no longer pursue G.R. No. 134386, there being no compelling grounds to disagree with the Court of Appeals' decision in CA-G.R. 40811. Consequently, on September 28, 1998, the Court issued a Resolution[12] in G.R. No. 134386 notifying the parties that "no petition" was filed in said case and that the CA judgment sought to be reviewed therein "has now become final and executory". Pursuant to said Resolution, an Entry of Judgment[13] was issued by the Court of Appeals in CA-G.R. SP No. 40811. Hence, the CA's dismissal of CA-G.R. No. 47895 on the additional ground of stare decisis.

Under the doctrine of stare decisis et non quieta movere, a point of law already established will, generally, be followed by the same determining court and by all courts of lower rank in subsequent cases where the same legal issue is raised.[14] For reasons needing no belaboring, however, the Court is not at all concluded by the ruling of the Court of Appeals in its earlier CA-G.R. SP No. 47895.

The Court has time and again stated that the rule on stare decisis promotes stability in the law and should, therefore, be accorded respect. However, blind adherence to precedents, simply as precedent, no longer rules. More important than anything else is that the court is right,[15] thus its duty to abandon any doctrine found to be in violation of the law in force.[16]

As it were, the former BIR Commissioner's decision not to pursue his petition in G.R. No. 134386 denied the BIR, at least as early as in that case, the opportunity to obtain from the Court an authoritative interpretation of Section 12 of R.A. 7082. All is, however, not lost. For, the government is not estopped by acts or errors of its agents, particularly on matters involving taxes. Corollarily, the erroneous application of tax laws by public officers does not preclude the subsequent correct application thereof.[17] Withal, the errors of certain administrative officers, if that be the case, should never be allowed to jeopardize the government's financial position.[18]

Hence, the need to address the main issue tendered herein.

According to the Court of Appeals, the "in lieu of all taxes" clause found in Section 12 of PLDT's franchise (R.A. 7082) covers all taxes, whether direct or indirect; and that said section states, in no uncertain terms, that PLDT's payment of the 3% franchise tax on all its gross receipts from businesses transacted by it under its franchise is in lieu of all taxes on the franchise or earnings thereof. In fine, the appellate court, agreeing with PLDT, posits the view that the word "all" encompasses any and all taxes collectible under the National Internal Revenue Code (NIRC), save those specifically mentioned in PLDT's franchise, such as income and real property taxes.

The BIR Commissioner excepts. He submits that the exempting "in lieu of all taxes" clause covers direct taxes only, adding that for indirect taxes to be included in the exemption, the intention to include must be specific and unmistakable. He thus faults the Court of Appeals for erroneously declaring PLDT exempt from payment of VAT and other indirect taxes on its importations. To the Commissioner, PLDT's claimed entitlement to tax refund/credit is without basis inasmuch as the 3% franchise tax being imposed on PLDT is not a substitute for or in lieu of indirect taxes.

The sole issue at hand is whether or not 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.

Based on the possibility of shifting the incidence of taxation, or as to who shall bear the burden of taxation, taxes may be classified into either direct tax or indirect tax.

In context, direct taxes are those that are exacted from the very person who, it is intended or desired, should pay them;[19] they are impositions for which a taxpayer is directly liable on the transaction or business he is engaged in.[20]

On the other hand, indirect taxes are those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else.[21] Stated elsewise, indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the price of goods sold or services rendered.

To put the situation in graphic terms, by tacking the VAT due to the selling price, the seller remains the person primarily and legally liable for the payment of the tax. What is shifted only to the intermediate buyer and ultimately to the final purchaser is the burden of the tax.[22] Stated differently, a seller who is directly and legally liable for payment of an indirect tax, such as the VAT on goods or services, is not necessarily the person who ultimately bears the burden of the same tax. It is the final purchaser or end-user of such goods or services who, although not directly and legally liable for the payment thereof, ultimately bears the burden of the tax.[23]

There can be no serious argument that PLDT, vis-á -vis its payment of internal revenue taxes on its importations in question, is effectively claiming exemption from taxes not falling under the category of direct taxes. The claim covers VAT, advance sales tax and compensating tax.

The NIRC classifies VAT as "an indirect tax ... the amount of [which] may be shifted or passed on to the buyer, transferee or lessee of the goods".[24] As aptly pointed out by Judge Amancio Q. Saga in his dissent in C.T.A. Case No. 5178, the 10% VAT on importation of goods partakes of an excise tax levied on the privilege of importing articles. It is not a tax on the franchise of a business enterprise or on its earnings. It is imposed on all taxpayers who import goods (unless such importation falls under the category of an exempt transaction under Sec. 109 of the Revenue Code) whether or not the goods will eventually be sold, bartered, exchanged or utilized for personal consumption. The VAT on importation replaces the advance sales tax payable by regular importers who import articles for sale or as raw materials in the manufacture of finished articles for sale.[25]

Advance sales tax has the attributes of an indirect tax because the tax-paying importer of goods for sale or of raw materials to be processed into merchandise can shift the tax or, to borrow from Philippine Acetylene Co, Inc. vs. Commissioner of Internal Revenue,[26] lay the "economic burden of the tax", on the purchaser, by subsequently adding the tax to the selling price of the imported article or finished product.

Compensating tax also partakes of the nature of an excise tax payable by all persons who import articles, whether in the course of business or not.[27] The rationale for compensating tax is to place, for tax purposes, persons purchasing from merchants in the Philippines on a more or less equal basis with those who buy directly from foreign countries.[28]

It bears to stress that the liability for the payment of the indirect taxes lies only with the seller of the goods or services, not in the buyer thereof. Thus, one cannot invoke one's exemption privilege to avoid the passing on or the shifting of the VAT to him by the manufacturers/suppliers of the goods he purchased.[29] Hence, it is important to determine if the tax exemption granted to a taxpayer specifically includes the indirect tax which is shifted to him as part of the purchase price, otherwise it is presumed that the tax exemption embraces only those taxes for which the buyer is directly liable.[30]

Time and again, 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.[31] To him, therefore, who claims a refund or exemption from tax payments rests the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted.[32]

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, not being taxes on PLDT's franchise or earnings, 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, then, 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. [33]

Significantly, in Manila Electric Company [Meralco] vs. Vera,[34] the Court declared the relatively broader exempting clause "shall be in lieu of all taxes and assessments of whatsoever nature ... upon the privileges earnings, income franchise ... of the grantee" written in par. # 9 of Meralco's franchise as not so all encompassing as to embrace indirect tax, like compensating tax. There, the Court said:

It is a well-settled rule or principle in taxation that a compensating tax ... is an excise tax ... one that is imposed on the performance of an act, the engaging in an occupation, or the enjoyment of a privilege. A tax levied upon property because of its ownership is a direct tax, whereas one levied upon property because of its use is an excise duty. ....

The compensating tax being imposed upon ... MERALCO, is an impost on its use of imported articles and is not in the nature of a direct tax on the articles themselves, the latter tax falling within the exemption. Thus, in International Business Machine Corporation vs. Collector of

Internal Revenue, ... which involved the collection of a compensating tax from the plaintiff-petitioner on business machines imported by it, this Court stated in unequivocal terms that "it is not the act of importation that is taxed under section 190 but the uses of imported goods not subjected to a sales tax" because the "compensating tax was expressly designated as a substitute to make up or compensate for the revenue lost to the government through the avoidance of sales taxes by means of direct purchases abroad.

xxx xxx xxx

xxx If it had been the legislative intent to exempt MERALCO from paying a tax on the use of imported equipments, the legislative body could have easily done so by expanding the provision of paragraph 9 and adding to the exemption such words as "compensating tax" or "purchases from abroad for use in its business," and the like.

It may be so that in Maceda vs. Macaraig, Jr.[35] the Court held that an exemption from "all taxes" granted to the National Power Corporation (NPC) under its charter[36] includes both direct and indirect taxes. But far from providing PLDT comfort, Maceda in fact supports the case of herein petitioner, the correct lesson of Maceda being that an exemption from "all taxes" excludes indirect taxes, unless the exempting statute, like NPC's charter, is so couched as to include indirect tax from the exemption. Wrote the Court:

xxx However, the amendment under Republic Act No. 6395 enumerated the details covered by the exemption. Subsequently, P.D. 380, made even more specific the details of the exemption of NPC to cover, among others, both direct and indirect taxes on all petroleum products used in its operation. Presidential Decree No. 938 [NPC's amended charter) amended the tax exemption by simplifying the same law in general terms. It succinctly exempts NPC from "all forms of taxes, duties fees ...."

The use of the phrase "all forms" of taxes demonstrate the intention of the law to give NPC all the tax exemptions it has been enjoying before. ....

xxx xxx xxx

It is evident from the provisions of P.D. No. 938 that its purpose is to maintain the tax exemption of NPC from all forms of taxes including indirect taxes as provided under R.A. No. 6395 and P.D. 380 if it is to attain its goals. (Italics in the original; words in bracket added)

Of similar import is what we said in Borja vs. Collector of Internal Revenue.[37] There, the Court upheld the decision of the CTA denying a claim for refund of the compensating taxes paid on the importation of materials and equipment by a grantee of a heat and power legislative franchise containing an "in lieu" provision, rationalizing as follows:

xxx Moreover, the petitioner's alleged exemption from the payment of compensating tax in the present case is not clear or expressed; unlike the exemption from the payment of income tax which was clear and expressed in the Carcar case. Unless it appears clearly and manifestly that an exemption is intended, the provision is to be construed strictly against the party claiming exemption. xxx.

Jurisprudence thus teaches that imparting the "in lieu of all taxes" clause a literal meaning, as did the Court of Appeals and the CTA before it, is fallacious. It is basic that in construing a statute, it is the duty of courts to seek the real intent of the legislature, even if, by so doing, they may limit the literal meaning of the broad language.[38]

It cannot be over-emphasized that tax exemption represents a loss of revenue to the government and must, therefore, not rest on vague inference. When claimed, it must be strictly construed against the taxpayer who must prove that he falls under the exception. And, if an exemption is found to exist, it must not be enlarged by construction, since the reasonable presumption is that the state has granted in express terms all it intended to grant at all, and that, unless the privilege is limited to the very terms of the statute the favor would be extended beyond dispute in ordinary cases.[39]

All told, we fail to see how Section 12 of RA 7082 operates as granting PLDT blanket exemption from payment of indirect taxes, which, in the ultimate analysis, are not taxes on its franchise or earnings. PLDT has not shown its eligibility for the desired exemption. None should be granted.

As a final consideration, the Court takes particular stock, as the CTA earlier did, of PLDT's allegation that the Bureau of Customs assessed the company for advance sales tax and compensating tax for importations entered between October 1, 1992 and May 31, 1994 when the value-added tax system already replaced, if not totally eliminated, advance sales and compensating taxes.[40] Indeed, pursuant to Executive Order No. 273[41] which took effect on January 1, 1988, a multi-stage value-added tax was put into place to replace the tax on original and subsequent sales tax.[42] It stands to reason then, as urged by PLDT, that compensating tax and advance sales tax were no longer collectible internal revenue taxes under the NILRC when the Bureau of Customs made the assessments in question and collected the corresponding tax. Stated a bit differently, PLDT was no longer under legal obligation to pay compensating tax and advance sales tax on its importation from 1992 to 1994.

Parenthetically, petitioner has not made an issue about PLDT's allegations concerning the abolition of the provisions of the Tax Code imposing the payment of compensating and advance sales tax on importations and the non-existence of these taxes during the period under review. On the contrary, petitioner admits that the VAT on importation of goods has "replace[d] the compensating tax and advance sales tax under the old Tax Code".[43]

Given the above perspective, the amount PLDT paid in the concept of advance sales tax and compensating tax on the 1992 to 1994 importations were, in context, erroneous tax payments and would theoretically be refundable. It should be emphasized, however, that, such importations were, when made, already subject to VAT.

Factoring in the fact that a portion of the claim was barred by prescription, the CTA had determined that PLDT is entitled to a total refundable amount of P94,673,422.00 (P87,257,031.00 of compensating tax + P7,416,391.00 = P94,673,422.00). Accordingly, it behooves the BIR to grant a refund of the advance sales tax and compensating tax in the total amount of P94,673,422.00, subject to the condition that PLDT present proof of payment of the corresponding VAT on said transactions.

WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals in CA-G.R. No. 47895 dated September 17, 1999 is MODIFIED. The Commissioner of Internal Revenue is

ORDERED to issue a Tax Credit Certificate or to refund to PLDT only the of P94,673,422.00 advance sales tax and compensating tax erroneously collected by the Bureau of Customs from October 1, 1992 to May 31, 1994, less the VAT which may have been due on the importations in question, but have otherwise remained uncollected.

SO ORDERED.

9.) Chia v. republic

ONG CHIA, petitioner, vs. REPUBLIC OF THE PHILIPPINES and THE COURT OF APPEALS, respondents.

G.R. No. 127240 | 2000-03-27

Tagged under keywords

A discussion citing this case or law is available.

Political Law; Constitutional Law; Citizenship; Who are Filipino Citizens

D E C I S I O N

MENDOZA, J.:

This is a petition for review of the decision1 [Per Justice Bernardo Ll. Salas, and concurred in by Justices Gloria C. Paras and Ma. Alicia Austria Martinez.] of the Court of Appeals reversing the decision of the Regional Trial Court, Branch 24, Koronadal, South Cotabato2 [Presided by Judge Rodolfo C. Soledad.] admitting petitioner Ong Chia to Philippines citizenship.

The facts are as follows:

Petitioner was born on January 1, 1923 in Amoy, China. In 1932, as a nine-year old boy, he arrived at the port of Manila on board the vessel "Angking." Since then, he has stayed in the Philippines where he found employment and eventually started his own business, married a Filipina, with whom he had four children. On July 4, 1989, at the age of 66, he filed a verified petition to be admitted as a Filipino citizen under C.A. No. 473, otherwise known as the Revised Naturalization Law, as amended. Petitioner, after stating his qualifications as required in §2, and lack of the disqualifications enumerated in §3 of the law, stated -

17. That he has heretofore made (a) petition for citizenship under the provisions of Letter of Instruction No.270 with the Special Committee on Naturalization, Office of the Solicitor General, Manila, docketed as SCN Case No.031776, but the same was not acted upon owing to the fact that the said Special Committee on Naturalization was not reconstituted after the February, 1986 revolution such that processing of petitions for naturalization by administrative process was suspended;

During the hearings, petitioner testified as to his qualifications and presented three witnesses to corroborate his testimony. So impressed was Prosecutor Isaac Alvero V. Moran with the testimony of petitioner that, upon being asked by the court whether the State intended to present any witness against him, he remarked:

Actually, Your Honor, with the testimony of the petitioner himself which is rather surprising, in the sense that he seems to be well-versed with the major portion of the history of the Philippines, so, on our part, we are convinced, Your Honor Please, that petitioner really deserves to be admitted as a citizen of the Philippines. And for this reason, we do not wish to present any evidence to counteract or refute the testimony of the witnesses for the petitioner, as well as the petitioner himself.3 [TSN, p. 152, June 27, 1991.]

Accordingly, on August 25, 1999, the trial court granted the petition and admitted petitioner to Philippine citizenship. The State, however, through the Office of the Solicitor General, appealed contending that petitioner: (1) failed to state all the names by which he is or had been known; (2) failed to state all his former places of residence in violation of C.A. No. 473, §7; (3) failed to conduct himself in a proper and irreproachable manner during his entire stay in the

Philippines, in violation of §2; (4) has no known lucrative trade or occupation and his previous incomes have been insufficient or misdeclared, also in contravention of §2; and (5) failed to support his petition with the appropriate documentary evidence.4 [Appellant's Brief, pp. 21-22; CA Rollo, pp. 35-36.]

Annexed to the State's appellant's brief was a copy of a 1977 petition for naturalization filed by petitioner with the Special Committee on Naturalization in SCN Case No. 031767,5 [Annex B; Id., pp. 129-138.] in which petitioner stated that in addition to his name of "Ong Chia," he had likewise been known since childhood as "Loreto Chia Ong." As petitioner, however, failed to state this other name in his 1989 petition for naturalization, it was contended that his petition must fail.6 [Citing Watt v. Republic, 46 SCRA 683 (1972); Id., p. 37.] The state also annexed income tax returns7 [Annexes F, F-1, F-2, F-3 and F-4; Id., pp. 144-157.] allegedly filed by petitioner from 1973 to 1977 to show that his net income could hardly support himself and his family. To prove that petitioner failed to conduct himself in a proper and irreproachable manner during his stay in the Philippines, the State contended that, although petitioner claimed that he and Ramona Villaruel had been married twice, once before a judge in 1953, and then again in church in 1977, petitioner actually lived with his wife without the benefit of marriage from 1953 until they were married in 1977. It was alleged that petitioner failed to present his 1953 marriage contract, if there be any. The State also annexed a copy of petitioner's 1977 marriage contract8 [Annex D; Id., p. 139.] and a Joint-Affidavit9 [Annex E; Id., p. 140.] executed by petitioner and his wife. These documents show that when petitioner married Ramona Villaruel on February 23, 1977, no marriage license had been required in accordance with Art.76 of the Civil Code because petitioner and Ramona Villaruel had been living together as husband and wife since 1953 without the benefit of marriage. This, according to the State, belies his claim that when he started living with his wife in 1953, they had already been married.

The State also argued that, as shown by petitioner's Immigrant Certificate of Residence,10 [Annex A; Records, p. 16.] petitioner resided at "J.M. Basa Street, Iloilo," but he did not include said address in his petition.

On November 15, 1996, the Court of Appeals rendered its decision which, as already noted, reversed the trial court and denied petitioner's application for naturalization. It ruled that due to the importance of naturalization cases, the State is not precluded from raising questions not

presented in the lower court and brought up for the first time on appeal.11 [CA Decision, P. 8; Rollo, p. 50. Citations omitted.] The appellate court held:

As correctly observed by the Office of the Solicitor General, petitioner Ong Chia failed to state in this present petition for naturalization his other name, "LORETO CHIA ONG," which name appeared in his previous application under Letter of Instruction No.270. Names and pseudonyms must be stated in the petition for naturalization and failure to include the same militates against a decision in his favor...This is a mandatory requirement to allow those persons who know (petitioner) by those other names to come forward and inform the authorities of any legal objection which might adversely affect his application for citizenship.

Furthermore, Ong Chia failed to disclose in his petition for naturalization that he formerly resided in "J.M. Basa St., Iloilo" and "Alimodian, Iloilo." Section 7 of the Revised Naturalization Law requires the applicant to state in his petition "his present and former places of residence." This requirement is mandatory and failure of the petitioner to comply with it is fatal to the petition. As explained by the Court, the reason for the provision is to give the public, as well as the investigating agencies of the government, upon the publication of the petition, an opportunity to be informed thereof and voice their objections against the petitioner. By failing to comply with this provision, the petitioner is depriving the public and said agencies of such opportunity, thus defeating the purpose of the law-

Ong Chia had not also conducted himself in a proper and irreproachable manner when he lived-in with his wife for several years, and sired four children out of wedlock. It has been the consistent ruling that the "applicant's 8-year cohabitation with his wife without the benefit of clergy and begetting by her three children out of wedlock is a conduct far from being proper and irreproachable as required by the Revised Naturalization Law", and therefore disqualifies him from becoming a citizen of the Philippines by naturalization-

Lastly, petitioner Ong Chia's alleged annual income in 1961 of P5,000.00, exclusive of bonuses, commissions and allowances, is not lucrative income. His failure to file an income tax return "because he is not liable for income tax yet" confirms that his income is low. . ."It is not only that the person having the employment gets enough for his ordinary necessities in life. It must be shown that the employment gives one an income such that there is an appreciable margin of

his income over expenses as to be able to provide for an adequate support in the event of unemployment, sickness, or disability to work and thus avoid one's becoming the object of charity or public charge." ...Now that they are in their old age, petitioner Ong Chia and his wife are living on the allowance given to them by their children. The monthly pension given by the elder children of the applicant cannot be added to his income to make it lucrative because like bonuses, commissions and allowances, said pensions are contingent, speculative and precarious-

Hence, this petition based on the following assignment of errors:

I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN RULING THAT IN NATURALIZATION CASES, THE APPELLATE COURT CAN DENY AN APPLCATION FOR PHILIPPINE CITIZENSHIP ON THE BASIS OF DOCUMENTS NOT PRESENTED BEFORE THE TRIAL COURT AND NOT FORMING PART OF THE RECORDS OF THE CASE.

II. THE FINDING OF THE COURT OF APPEALS THAT THE PETITIONER HAS BEEN KNOWN BY SOME OTHER NAME NOT STATED IN HIS PETITION IS NOT SUPPORTED BY THE EVIDENCE ON RECORD.

III. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE PETITIONER STATED IN HIS PETITION AND ITS ANNEXES HIS PRESENT AND FORMER PLACES OF RESIDENCE.

IV. THE FINDING OF THE COURT OF APPEALS THAT THE PETITIONER FAILED TO CONDUCT HIMSELF IN A PROPER AND IRREPROACHABLE MANNER IS NOT SUPPORTED BY THE EVIDENCE ON RECORD.

Petitioner's principal contention is that the appellate court erred in considering the documents which had merely been annexed by the State to its appellant's brief and, on the basis of which, justified the reversal of the trial court's decision. Not having been presented and formally offered as evidence, they are mere "scrap(s) of paper devoid of any evidentiary value,"12 [Petition, p. 21; Id., p. 29.] so it was argued, because under Rule 132, §34 of the Revised Rules on Evidence, the court shall consider no evidence which has not been formally offered.

The contention has no merit. Petitioner failed to note Rule 14313 [Now found under Rule 1, §4 of the 1997 Rules of Civil Procedure.] of the Rules of Court which provides that -

These rules shall not apply to land registration, cadastral and election cases, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient.

Prescinding from the above, the rule on formal offer of evidence (Rule 132, §34) now being invoked by petitioner is clearly not applicable to the present case involving a petition for naturalization. The only instance when said rules may be applied by analogy or suppletorily in such cases is when it is "practicable and convenient." That is not the case here, since reliance upon the documents presented by the State for the first time on appeal, in fact, appears to be the more practical and convenient course of action considering that decision in naturalization proceedings are not covered by the rule on res judicata.14 [Republic v. Guy, 115 SCRA 244 (1982).] Consequently, a final favorable judgment does not preclude the State from later on moving for a revocation of the grant of naturalization on the basis of the same documents.

Petitioner claims that as a result of the failure of the State to present and formally offer its documentary evidence before the trial court, he was denied the right to object against their authenticity, effectively depriving him of his fundamental right to procedural due process.15 [Petition, p. 17; Rollo, p. 25.] We are not persuaded. Indeed, the reason for the rule prohibiting the admission of evidence which has not been formally offered is to afford the opposite party the chance to object to their admissibility.16 [See Peninsula Construction, Inc. v. Eisma, 194 SCRA 667 (1991).] Petitioner cannot claim that he was deprived of the right to object to the authenticity of the documents submitted to the appellate court by the State. He could have included his objections, as he, in fact, did, in the brief he filed with the Court of Appeals, thus:

The authenticity of the alleged petition for naturalization (SCN Case No. 031767) which was supposedly filed by Ong Chia under LOI 270 has not been established. In fact, the case number of the alleged petition for naturalization- is 031767 while the case number of the petition actually filed by the appellee is 031776. Thus, said document is totally unreliable and should not

be considered by the Honorable Court in resolving the instant appeal.17 [Appellee's Brief, p. 13; CA Rollo, p. 184.]

Indeed, the objection is flimsy as the alleged discrepancy is trivial, and, at most, can be accounted for as a typographical error on the part of petitioner himself. That "SCN Case No. 031767," a copy of which was annexed to the petition, is the correct case number is confirmed by the Evaluation Sheet18 [Annex C; CA Rollo, p. 133. Said evaluation sheet recommended that the petition be dismissed as petitioner failed to meet the requirements under LOI 491 because his income is insufficient for his support and that of his family and also because he failed to show that he believes in the principles underlying the Constitution.] of the Special Committee on Naturalization which was also docketed as "SCN Case No. 031767." Other than this, petitioner offered no evidence to disprove the authenticity of the documents presented by the State.

Furthermore, the Court notes that these documents - namely, the petition in SCN Case No. 031767, petitioner's marriage contract, the joint affidavit executed by him and his wife, and petitioner's income tax returns - are all public documents. As such, they have been executed under oath. They are thus reliable. Since petitioner failed to make satisfactory showing of any flaw or irregularity that may cast doubt on the authenticity of these documents, it is our conclusion that the appellate court did not err in relying upon them.

One last point. The above discussion would have been enough to dispose of this case, but to settle all the issues raised, we shall briefly discuss the effect of petitioner's failure to include the address "J.M. Basa St., Iloilo" in his petition, in accordance with §7, C.A. No. 473. This address appears on petitioner's Immigrant Certificate of Residence, a document which forms part of the records as Annex A of his 1989 petition for naturalization. Petitioner admits that he failed to mention said address in his petition, but argues that since the Immigrant Certificate of Residence containing it had been fully published,19 [In the Official Gazette and in the Sarangani Journal.] with the petition and the other annexes, such publication constitutes substantial compliance with §7.20 [Petition, p. 22; Rollo, p. 30.] This is allegedly because the publication effectively satisfied the objective sought to be achieved by such requirement, i.e., to give investigating agencies of the government the opportunity to check on the background of the applicant and prevent suppression of information regarding any possible misbehavior on his part in any community where he may have lived at one time or another.21 [Watt v. Republic, supra.] It is settled, however, that naturalization laws should be rigidly enforced and strictly

construed in favor of the government and against the applicant.22 [Chan Chen v. Republic, 109 Phil. 940 (1960), citing Co Quing v. Republic, 104 Phil. 889 (1958) and Co. v. Republic, 108 Phil. 265 (1960).] As noted by the State, C.A. No. 473, §7 clearly provides that the applicant for naturalization shall set forth in the petition his present and former places of residence.23 [Comment, p. 23; Rollo, p. 110.] This provision and the rule of strict application of the law in naturalization cases defeat petitioner's argument of "substantial compliance" with the requirement under the Revised Naturalization Law. On this ground alone, the instant petition ought to be denied.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED and the instant petition is hereby DENIED.

SO ORDERED.