1 Change of Status: Alien Spouse failed to comply on the Jurisdictional Requirement Corpuz vs. Sto. Tomas, G.R. No.

186571, August 11,2010 Gerbert R. Corpuz v. Daisylyn Tirol Sto. Tomas and the Solicitor GeneralG.R. No. 186571, 11 August 2010, THIRD DIVISION, (Brion, J.) The unavailability of the second paragraph of Article 26 of the Family Code to aliens does not necessarily strip Gerbert of legal interest to petition theRTC for the recognition of his foreign divorce decree. The foreign divorce decreeitself, after its authenticity and conformity with the alien's national law havebeen duly proven according to our rules of evidence, serves as a presumptiveevidence of right in favor of Gerbert, pursuant to Section 48, Rule 39 of theRules of Court which provides for the effect of foreign judgments. This is a petition for review on certiorari seeking a direct appeal from thedecision of the Regional Trial Court of Laoag City.Petitioner Gerbert R. Corpuz is a naturalized Canadian citizen who marriedrespondent Daisylyn Tirol Sto. Tomas but subsequently left for Canada due towork and other professional commitments. When he returned to the Philippines,he discovered that Sto. Tomas was already romantically involved with anotherman. This brought about the filing of a petition for divorce by Corpuz in Canadawhich was eventually granted by the Court Justice of Windsor, Ontario, Canada.A month later, the divorce decree took effect. Two years later, Corpuz has fallenin love with another Filipina and wished to marry her. He went to Civil RegistryOffice of Pasig City to register the Canadian divorce decree on his marriagecertificate with Sto. Tomas. However, despite the registration, an official of National Statistics Office informed Corpuz that the former marriage still subsistsunder the Philippine law until there has been a judicial recognition of theCanadian divorce decree by a competent judicial court in view of NSO CircularNo. 4, series of 1982. Consequently, he filed a petition for judicial recognition of foreign divorce and/or declaration of dissolution of marriage with the RTC.However, the RTC denied the petition reasoning out that Corpuz cannot institutethe action for judicial recognition of the foreign divorce decree because he is anaturalized Canadian citizen. It was provided further that Sto. Tomas was theproper party who can institute an action under the principle of Article 26 of theFamily Code which capacitates a Filipino citizen to remarry in case the alienspouse obtains a foreign divorce decree. Hence, this petition.ISSUE:Whether or not the second paragraph of Article 26 of the Family Codegrants aliens like Corpuz the right to institute a petition for judicial recognition of a foreign divorce decree.HELD: Petition GRANTED. RTC Decision REVERSED. The Supreme Court qualifies the above conclusion - i.e., that the second paragraph of Article 26 of the Family Code bestows no rights in favor of aliens -with the complementary statement that this conclusion is not sufficient basis to dismiss Gerbert's petition before the RTC. In other words, the unavailability of the second paragraph of Article 26 of the Family Code to aliens does not necessarily strip Gerbert of legal interest to petition the RTC for the recognition of his foreign divorce decree. The foreign divorce decree itself, after its authenticity and conformity with the alien's national law have been duly proven according to our rules of evidence, serves as a presumptive evidence of right infavor of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides for the effect of foreign judgments. A remand, at the same time, will allow other interested parties to oppose the foreign judgment and overcome a petitioner's presumptive evidence of aright by proving want of jurisdiction, want of notice to a party, collusion, fraud,or clear mistake of law or fact. Needless to state, every precaution must be taken to ensure conformity with our laws before a recognition is made, as the foreign

judgment, once recognized, shall have the effect of res judicata between the parties, as provided in Section 48, Rule 39 of the Rules of Court. Note: Facts: A became a Canadian citizen through naturalization. A later married B a Filipino. A worked abroad and when he came back to see B, B was having an affair. A filed a petition for Divorce in Canada which was granted. A fell in love with C. A went to the Civil Registry Office and registered the Canadian divorce decree Despite the registration of the divorce decree, an official of the National Statistics Office (NSO) informed him that the marriage between him and B still subsists. To be enforceable, the foreign divorce decree must first be judicially recognized by a competent Philippine court, pursuant to a NSO Circular. RTC- A was NOT THE PROPER PARTY to institute the action for judicial recognition of the foreign divorce decree as he is a NATURALIZED CANADIAN CITIZEN. It ruled that ONLY THE FILIPINO spouse can avail of the remedy, under Art. 26, 2 of the Family Code.1 Issue: WON Art. 26, 2 extends to aliens the right to petition a court of this jurisdiction for the recognition of a foreign divorce decree. Held: NO. The alien spouse can claim no right under Art. 26, 2 of the Family Code as the substantive right it establishes is in favor of the FILIPINO SPOUSE. Art. 26, 2 was included in the law to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially, Art. 26, 2 provided the Filipino spouse a substantive right to have his or her marriage to the alien spouse considered as dissolved, capacitating him or her to remarry. Without Art. 26, 2, the judicial recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that purpose or as a related issue in another proceeding, would be of no significance to the Filipino spouse since our laws do not recognize divorce as a mode of severing the marital bond. An action based on Art. 26, 2 is not limited to the recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated to contract another marriage. However, no Philippine court can make a similar declaration for the alien spouse, whose status and legal capacity are generally governed by his national law. ######################################################### ####################### CORPUZ V. STO. TOMAS G.R. NO. 186571, 11 AUGUST 2010 FACTS: Gerbert Corpuz (Gerbert) was a former Filipino citizen who acquired Canadian citizenship through naturalization. He later married a Filipina, Daisylyn Sto. Tomas (Daisy). Gerbert left for Canada soon after the wedding because of his work. He returned after 4 months to surprise Daisy, but discovered that she was having an affair with another man. Hurt and disappointed, Gerbert returned to Canada and filed a petition for divorce. The Superior Court of Justice in Ontario, Canada granted his petition for divorce.

2 years after the divorce, Gerbert found another Filipina to love. Gerbert went to the Civil Registry Office and registered the Canadian divorce decree on his and Daisys marriage certificate. Despite the registration of the divorce decree, an official of the National Statistics Office (NSO) informed him that the marriage between him and Daisy still subsists under Philippine law. To be enforceable, the foreign divorce decree must first be judicially recognized by a competent Philippine court, pursuant to a NSO Circular. Gerbert filed a petition for judicial recognition of foreign divorce and/or declaration of marriage as dissolved with the RTC. Daisy did not file any responsive pleading and offered no opposition to the petition. In fact, Daisy alleged her desire to file a similar case but was prevented by financial constrains. She, thus, requested that she be considered as a party-in-interest with a similar prayer to Gerberts. The RTC denied Gerberts petition. The RTC concluded that Gerbert was NOT THE PROPER PARTY to institute the action for judicial recognition of the foreign divorce decree as he is a NATURALIZED CANADIAN CITIZEN. It ruled that ONLY THE FILIPINO spouse can avail of the remedy, under Art. 26, 2 of the Family Code. ISSUE: WON Art. 26, 2 extends to aliens the right to petition a court of this jurisdiction for the recognition of a foreign divorce decree. HELD: NO. The alien spouse can claim no right under Art. 26, 2 of the Family Code as the substantive right it establishes is in favor of the FILIPINO SPOUSE. Art. 26, 2 was included in the law to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially, Art. 26, 2 provided the Filipino spouse a substantive right to have his or her marriage to the alien spouse considered as dissolved, capacitating him or her to remarry. Without Art. 26, 2, the judicial recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that purpose or as a related issue in another proceeding, would be of no significance to the Filipino spouse since our laws do not recognize divorce as a mode of severing the marital bond. An action based on Art. 26, 2 is not limited to the recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated to contract another marriage. However, no Philippine court can make a similar declaration for the alien spouse, whose status and legal capacity are generally governed by his national law. Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35 (1), (4), (5) and (6), 3637 and 38. (17a) Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (As amended by Executive Order 227) Civil Law Reiew l Atty. Mel Sta. Maria l ######################################################### ###########################

2. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 177333 April 24, 2009

PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) represented by ATTY. CARLOS R. BAUTISTA, JR., Petitioner, vs. PHILIPPINE GAMING JURISDICTION INCORPORATED (PEJI), ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY, et al., Respondent. DECISION CARPIO MORALES, J.: Before the Court is a petition for Prohibition. Republic Act No. 7903 (R.A. No. 7903), which was enacted into law on February 23, 1995, created the Zamboanga City Special Economic Zone (ZAMBOECOZONE) and the ZAMBOECOZONE Authority. Among other things, the law gives the ZAMBOECOZONE Authority the following power under Sec. 7 (f), viz: Section 7. xxxx (f) To operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements and recreational and sports facilities; xxxx Apparently in the exercise of its power granted under the above provision, public respondent ZAMBOECOZONE Authority passed Resolution No. 2006-08-03 dated August 19, 2006 approving the application of private respondent Philippine E-Gaming Jurisdiction, Inc. (PEJI) to be a Master Licensor/Regulator of on-line/internet/electronic gaming/games of chance. PEJI forthwith undertook extensive advertising campaigns representing itself as such licensor/regulator to the international business and gaming community, drawing the Philippine Amusement and Gaming Corporation (PAGCOR) to file the present petition for Prohibition which assails the authority of the ZAMBOECOZONE Authority to operate, license, or regulate the operation of games of chance in the ZAMBOECOZONE. PAGCOR contends that R.A. No. 7903, specifically Section 7(f) thereof, does not give power or authority to the ZAMBOECOZONE Authority to operate, license, or regulate the operation of games of chance in the ZAMBOECOZONE. Citing three (3) statutes, which it claims are in pari materia with R.A. No. 7903 as it likewise created economic zones and provided for the powers and functions of their respective governing

and administrative authorities, PAGCOR posits that the grant therein of authority to operate games of chance is clearly expressed, but it is not similarly so in Section 7(f) of R.A. No. 7903. Thus PAGCOR cites these three statutes and their respective pertinent provisions: Republic Act No. 7227, or the "Bases Conversion and Development Authority Act" enacted on March 13, 1992: Section 13. The Subic Bay Metropolitan Authority. xxxx (b) Powers and functions of the Subic Bay Metropolitan Authority. The Subic Bay Metropolitan Authority, otherwise known as the Subic Authority, shall have the following powers and functions: xxxx (7) To operate directly or indirectly or license tourism-related activities subject to priorities and standards set by the Subic Authority including games and amusements, except horse-racing, dog-racing and casino gambling which shall continue to be licensed by the Philippine Amusement and Gaming Corporation (PAGCOR) upon recommendation of the Conversion Authority; to maintain and preserve the forested areas as a national park; xxxx Republic Act No. 7922 or the "Cagayan Economic Zone Act of 1995" enacted on February 24, 1995: Section 6. Powers and Functions of the Cagayan Economic Zone Authority The Cagayan Economic Zone Authority shall have the following powers and functions: xxxx (f) To operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements, recreational and sports facilities such as horse-racing, dog-racing gambling, casinos, golf courses, and others, under priorities and standards set by the CEZA; xxxx And Republic Act No. 7916 or the "Special Economic Zone Act of 1995," enacted on February 24, 1995 authorizing other economic zones established under the defunct Export Processing Zone Authority (EPZA) and its successor Philippine Economic Zone Authority (PEZA) to establish casinos and other games of chance under the license of PAGCOR by way of the ipso facto clause, viz: SECTION 51. Ipso Facto Clause. - All privileges, benefits, advantages or exemptions granted to special economic zones under Republic Act No. 7227 shall ipso facto be accorded to special economic zones already created or to be created under this Act. The free port status shall not be vested upon the new special economic zones. PAGCOR maintains that, compared with the above-quoted provisions of the ecozone-related statutes, Section 7(f) of R.A. No. 7903 does not categorically empower the ZAMBOECOZONE Authority to operate, license, or authorize entities to operate games of chance in the area, as the words "games" and "amusement" employed therein do not include "games of chance." Hence, PAGCOR concludes,

ZAMBOECOZONE Authoritys grant of license to private respondent PEJI encroached on its (PAGCORs) authority under Presidential Decree No. 1869 vis-a-vis the above-stated special laws to centralize and regulate all games of chance. ZAMBOECOZONE Authority, in its Comment,1 contends that PAGCOR has no personality to file the present petition as it failed to cite a superior law which proves its claim of having been granted exclusive right and authority to license and regulate all games of chance within the Philippines; and that, contrary to PAGCORs assertion, the words "games" and "amusements" in Section 7(f) of R.A. No. 7903 include "games of chance" as was the intention of the lawmakers when they enacted the law. In its Reply Ex Abundante Ad Cautelam,2 PAGCOR cites the November 27, 2006 Opinion3 rendered by the Office of the President through Deputy Executive Secretary for Legal Affairs Manuel B. Gaite, the pertinent portions of which read: Coming to the issue at hand, the ZAMBOECOZONE Charter simply allows the operation of tourism-related activities including games and amusements without stating any form of gambling activity in its grant of authority to ZAMBOECOZONE. xxxx In view of the foregoing, we are of the opinion that under its legislative franchise (RA 7903), the ZAMBOECOZONE is not authorized to enter into any gaming activity by itself unless expressly authorized by law or other laws specifically allowing the same. (Emphasis and underscoring supplied) The Court finds that, indeed, R.A. No. 7903 does not authorize the ZAMBOECOZONE Authority to operate and/or license games of chance/gambling. Section 7(f) of R.A. No. 7903 authorizes the ZAMBOECOZONE Authority "[t]o operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements and recreational and sports facilities." It is a well-settled rule in statutory construction that where the words of a statute are clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.4 The plain meaning rule or verba legis, derived from the maxim index animi sermo est (speech is the index of intention), rests on the valid presumption that the words employed by the legislature in a statute correctly express its intention or will, and preclude the court from construing it differently. For the legislature is presumed to know the meaning of the words, to have used them advisedly, and to have expressed the intent by use of such words as are found in the statute. Verba legis non est recedendum. From the words of a statute there should be no departure.5 The words "game" and "amusement" have definite and unambiguous meanings in law which are clearly different from "game of chance" or "gambling." In its ordinary sense, a "game" is a sport, pastime, or contest; while an "amusement" is a pleasurable occupation of the senses, diversion, or enjoyment.6 On the other hand, a "game of chance" is "a game in which chance rather than skill determines the outcome," while "gambling" is defined as "making a bet" or "a play for value against an uncertain event in hope of gaining something of value." 7 A comparison of the phraseology of Section 7(f) of R.A. No. 7903 with similar provisions in the three cited statutes creating ECOZONES shows that while the three statutes, particularly R.A. No. 7922 which authorized the Cagayan Economic Zone Authority to directly or indirectly operate gambling and casinos within its jurisdiction, categorically stated that such power was being vested in their respective administrative bodies, R.A. No. 7903 did not.

The spirit and reason of the statute may be passed upon where a literal meaning would lead to absurdity, contradiction, injustice, or defeat the clear purpose of the lawmakers.8 Not any of these instances is present in the case at bar, however. Using the literal meanings of "games" and "amusement" to exclude "games of chance" and "gambling" does not lead to absurdity, contradiction, or injustice. Neither does it defeat the intent of the legislators. The lawmakers could have easily employed the words "games of chance" and "gambling" or even "casinos" if they had intended to grant the power to operate the same to the ZAMBOECOZONE Authority, as what was done in R.A. No. 7922 enacted a day after R.A. No. 7903. But they did not. The Court takes note of the above-mentioned Opinion of the Office of the President which, after differentiating the grant of powers between the Cagayan Special Economic Zone and the ZAMBOECOZONE Authority, states that while the former is authorized to, among other things, operate gambling casinos and internet gaming, as well as enter into licensing agreements, the latter is not. The relevant portions of said Opinion read: The difference in the language and grant of powers to CEZA and ZAMBOECOZONE is telling. To the former, the grant of powers is not only explicit, but amplified, while to the latter the grant of power is merely what the law (RA 7903) states. Not only are the differences in language telling, it will be noted that both charters of CEZA and ZAMBOECOZONE were signed into law only one (1) day apart from each other, i.e., February 23, 1995 in the case of ZAMBOECOZONE and February 24, 1995 in the case of CEZA. x x x Accordingly, both laws have to be taken in the light of what Congress intended them to be, and the distinction that the lawmakers made when they enacted the two laws. Coming to the issue at hand, the ZAMBOECOZONE Charter simply allows the operation of tourism-related activities including games and amusements without stating any form of gambling activity in its grant of authority to ZAMBOECOZONE. On the other hand, the grant to CEZA included such activities as horseracing, dog-racing and gambling casinos. xxxx In view of the foregoing, we are of the opinion that under its legislative franchise (RA 7903), the ZAMBOECOZONE is not authorized to enter into any gaming activity by itself unless expressly authorized by law or other laws specifically allowing the same. (Emphasis supplied) Both PAGCOR and the Ecozones being under the supervision of the Office of the President, the latters interpretation of R.A. No. 7903 is persuasive and deserves respect under the doctrine of respect for administrative or practical construction. In applying said doctrine, courts often refer to several factors which may be regarded as bases thereof factors leading the courts to give the principle controlling weight in particular instances, or as independent rules in themselves. These factors include the respect due the governmental agencies charged with administration, their competence, expertness, experience, and informed judgment and the fact that they frequently are the drafters of the law they interpret; that the agency is the one on which the legislature must rely to advise it as to the practical working out of the statute, and practical application of the statute presents the agency with unique opportunity and experiences for discovering deficiencies, inaccuracies, or improvements in the statute.8 In fine, Section 7(f) did not grant to the ZAMBOECOZONE Authority the power to operate and/or license games of chance/gambling. WHEREFORE, the petition is GRANTED. Public respondent Zamboanga Economic Zone Authority is DIRECTED to CEASE and DESIST from exercising jurisdiction to operate, license, or otherwise authorize and regulate the operation of any games of chance. And private respondent Philippine Gaming Jurisdiction, Incorporated is DIRECTED to CEASE and DESIST from operating any games of chance pursuant to the license granted to it by public respondent.

SO ORDERED. CONCHITA CARPIO MORALES Associate Justice Acting Chairperson WE CONCUR: DANTE O. TINGA Associate Justice TERESITA J. LEONARDO DE CASTRO* Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONCHITA CARPIO MORALES Associate Justice Acting Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice PRESBITERO J. VELASCO, JR. Associate Justice ARTURO D. BRION Associate Justice

Footnotes
*

Additional member in lieu of Justice Leonardo A. Quisumbing who is on official leave. Rollo, pp. 75-85. Id. at 99-109. Annex "A" of Reply, id. at 111-113.

Vide National Food Authority (NFA) v. Masada Security Agency, Inc., G.R. No. 163448, March 8, 2005, 453 SCRA 70, 79; Philippine National Bank v. Garcia, Jr., G.R. No. 141246, September 9, 2002, 388 SCRA 485, 487, 491.
5

Id.

Blacks Law Dictionary, Sixth Edition, West Publishing Co., St. Paul, Minnesota, U.S.A., 1990, pp. 679 and 84.
7

Id. at 679.

Asturias v. Commissioner of Customs, G.R. No. L-19337, September 30, 1969, 29 SCRA 617, 623.

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4 Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 154598 August 16, 2004

IN THE MATTER OF APPLICATION FOR THE ISSUANCE OF A WRIT OF HABEAS CORPUS RICHARD BRIAN THORNTON for and in behalf of the minor child SEQUEIRA JENNIFER DELLE FRANCISCO THORNTON, petitioner, vs. ADELFA FRANCISCO THORNTON, respondent.

DECISION

CORONA, J.: This is a petition to review, under Rule 45 of the Rules of Court, the July 5, 2002 resolution1 of the Court of Appeals, Sixteenth Division, in CA G.R. SP No. 70501 dismissing the petition for habeas corpus on the grounds of lack of jurisdiction and lack of substance. The dispositive portion2 read: WHEREFORE, the Court DISMISSES the petition for habeas corpus on the grounds that: a) this Court has no jurisdiction over the subject matter of the petition; and b) the petition is not sufficient in substance. Petitioner, an American, and respondent, a Filipino, were married on August 28, 1998 in the Catholic Evangelical Church at United Nations Avenue, Manila. A year later, respondent gave birth to a baby girl whom they named Sequeira Jennifer Delle Francisco Thornton.

However, after three years, respondent grew restless and bored as a plain housewife. She wanted to return to her old job as a "guest relations officer" in a nightclub, with the freedom to go out with her friends. In fact, whenever petitioner was out of the country, respondent was also often out with her friends, leaving her daughter in the care of the househelp. Petitioner admonished respondent about her irresponsibility but she continued her carefree ways. On December 7, 2001, respondent left the family home with her daughter Sequiera without notifying her husband. She told the servants that she was bringing Sequiera to Purok Marikit, Sta. Clara, Lamitan, Basilan Province. Petitioner filed a petition for habeas corpus in the designated Family Court in Makati City but this was dismissed, presumably because of the allegation that the child was in Basilan. Petitioner then went to Basilan to ascertain the whereabouts of respondent and their daughter. However, he did not find them there and the barangay office of Sta. Clara, Lamitan, Basilan, issued a certification3 that respondent was no longer residing there. Petitioner gave up his search when he got hold of respondents cellular phone bills showing calls from different places such as Cavite, Nueva Ecija, Metro Manila and other provinces. Petitioner then filed another petition for habeas corpus, this time in the Court of Appeals which could issue a writ of habeas corpus enforceable in the entire country. However, the petition was denied by the Court of Appeals on the ground that it did not have jurisdiction over the case. It ruled that since RA 8369 (The Family Courts Act of 1997) gave family courts exclusive original jurisdiction over petitions for habeas corpus, it impliedly repealed RA 7902 (An Act Expanding the Jurisdiction of the Court of Appeals) and Batas Pambansa 129 (The Judiciary Reorganization Act of 1980): Under Sec. 9 (1), BP 129 (1981) the Intermediate Appellate Court (now Court of Appeals) has jurisdiction to issue a writ of habeas corpus whether or not in aid of its appellate jurisdiction. This conferment of jurisdiction was re-stated in Sec. 1, RA 7902 (1995), an act expanding the jurisdiction of this Court. This jurisdiction finds its procedural expression in Sec. 1, Rule 102 of the Rules of Court. In 1997, RA 8369 otherwise known as Family Courts Act was enacted. It provides: Sec. 5. Jurisdiction of Family Court. The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases: xxx xxx xxx

b. Petition for guardianship, custody of children, habeas corpus in relation to the latter. The vital question is, did RA 8369 impliedly repeal BP 129 and RA 7902 insofar as the jurisdiction of this Court to issue writ of habeas corpus in custody of minor cases is concerned? The simple answer is, yes, it did, because there is no other meaning of the word "exclusive" than to constitute the Family Court as the sole court which can issue said writ. If a court other than the Family Court also possesses the same competence, then the jurisdiction of the former is not exclusive but concurrent and such an interpretation is contrary to the simple and clear wording of RA 8369. Petitioner argues that unless this Court assumes jurisdiction over a petition for habeas corpus involving custody of minors, a respondent can easily evade the service of a writ of habeas corpus on him or her by just moving out of the region over which the Regional Trial Court issuing the writ has territorial jurisdiction. That may be so but then jurisdiction is conferred by law. In the absence of

a law conferring such jurisdiction in this Court, it cannot exercise it even if it is demanded by expediency or necessity. Whether RA 8369 is a good or unwise law is not within the authority of this Court or any court for that matter to determine. The enactment of a law on jurisdiction is within the exclusive domain of the legislature. When there is a perceived defect in the law, the remedy is not to be sought form the courts but only from the legislature. The only issue before us therefore is whether the Court of Appeals has jurisdiction to issue writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving family courts exclusive original jurisdiction over such petitions. In his comment, the Solicitor General points out that Section 20 of the Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors (A.M. No. 03-04-04-SC, effective May 15, 2003) has rendered the issue moot. Section 20 of the rule provides that a petition for habeas corpus may be filed in the Supreme Court,4Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines.5 The petition is granted. The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors. The Court of Appeals opines that RA 8369 impliedly repealed RA 7902 and BP 129 since, by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended it to be the sole court which can issue writs of habeas corpus. To the court a quo, the word "exclusive" apparently cannot be construed any other way. We disagree with the CAs reasoning because it will result in an iniquitous situation, leaving individuals like petitioner without legal recourse in obtaining custody of their children. Individuals who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the lawmakers when they passed the Family Courts Act of 1997. As observed by the Solicitor General: Under the Family Courts Act of 1997, the avowed policy of the State is to "protect the rights and promote the welfare of children." The creation of the Family Court is geared towards addressing three major issues regarding childrens welfare cases, as expressed by the legislators during the deliberations for the law. The legislative intent behind giving Family Courts exclusive and original jurisdiction over such cases was to avoid further clogging of regular court dockets, ensure greater sensitivity and specialization in view of the nature of the case and the parties, as well as to guarantee that the privacy of the children party to the case remains protected. The primordial consideration is the welfare and best interests of the child. We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction over habeas corpus cases involving the custody of minors. Again, to quote the Solicitor General: To allow the Court of Appeals to exercise jurisdiction over the petition for habeas corpus involving a minor child whose whereabouts are uncertain and transient will not result in one of the situations that the legislature seeks to avoid. First, the welfare of the child is paramount. Second, the ex parte nature of habeas corpus proceedings will not result in disruption of the childs privacy and emotional well-being; whereas to deprive the appellate court of jurisdiction will result in the evil sought to be avoided by the legislature: the childs welfare and well being will be prejudiced.

This is not the first time that this Court construed the word "exclusive" as not foreclosing resort to another jurisdiction. As correctly cited by the Solicitor General, in Floresca vs. Philex Mining Corporation,6 the heirs of miners killed in a work-related accident were allowed to file suit in the regular courts even if, under the Workmens Compensation Act, the Workmens Compensation Commissioner had exclusive jurisdiction over such cases. We agree with the observations of the Solicitor General that: While Floresca involved a cause of action different from the case at bar. it supports petitioners submission that the word "exclusive" in the Family Courts Act of 1997 may not connote automatic foreclosure of the jurisdiction of other courts over habeas corpus cases involving minors. In the same manner that the remedies in the Floresca case were selective, the jurisdiction of the Court of Appeals and Family Court in the case at bar is concurrent. The Family Court can issue writs of habeas corpus enforceable only within its territorial jurisdiction. On the other hand, in cases where the territorial jurisdiction for the enforcement of the writ cannot be determined with certainty, the Court of Appeals can issue the same writ enforceable throughout the Philippines, as provided in Sec. 2, Rule 102 of the Revised Rules of Court, thus: The Writ of Habeas Corpus may be granted by the Supreme Court, or any member thereof, on any day and at any time, or by the Court of Appeals or any member thereof in the instances authorized by law, and if so granted it shall be enforceable anywhere in the Philippines, and may be made returnable before the court or any member thereof, or before a Court of First Instance, or any judge thereof for hearing and decision on the merits. It may also be granted by a Court of First Instance, or a judge thereof, on any day and at any time, and returnable before himself, enforceable only within his judicial district. (Emphasis supplied) In ruling that the Commissioners "exclusive" jurisdiction did not foreclose resort to the regular courts for damages, this Court, in the same Floresca case, said that it was merely applying and giving effect to the constitutional guarantees of social justice in the 1935 and 1973 Constitutions and implemented by the Civil Code. It also applied the well-established rule that what is controlling is the spirit and intent, not the letter, of the law: "Idolatrous reverence" for the law sacrifices the human being. The spirit of the law insures mans survival and ennobles him. In the words of Shakespeare, "the letter of the law killeth; its spirit giveth life." xxx xxx xxx

It is therefore patent that giving effect to the social justice guarantees of the Constitution, as implemented by the provisions of the New Civil Code, is not an exercise of the power of lawmaking, but is rendering obedience to the mandates of the fundamental law and the implementing legislation aforementioned. Language is rarely so free from ambiguity as to be incapable of being used in more than one sense. Sometimes, what the legislature actually had in mind is not accurately reflected in the language of a statute, and its literal interpretation may render it meaningless, lead to absurdity, injustice or contradiction.7 In the case at bar, a literal interpretation of the word "exclusive" will result in grave injustice and negate the policy "to protect the rights and promote the welfare of children"8 under the Constitution and the United Nations Convention on the Rights of the Child. This mandate must prevail over legal technicalities and serve as the guiding principle in construing the provisions of RA 8369. Moreover, settled is the rule in statutory construction that implied repeals are not favored:

The two laws must be absolutely incompatible, and a clear finding thereof must surface, before the inference of implied repeal may be drawn. The rule is expressed in the maxim, interpretare et concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and brought into accord with other laws as to form a uniform system of jurisprudence. The fundament is that the legislature should be presumed to have known the existing laws on the subject and not have enacted conflicting statutes. Hence, all doubts must be resolved against any implied repeal, and all efforts should be exerted in order to harmonize and give effect to all laws on the subject."9 The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 and BP 129 are absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 that family courts have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus where the custody of minors is at issue. In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule provides that: Section 20. Petition for writ of habeas corpus.- A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs. xxx xxx xxx

The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits. (Emphasis Ours) From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction with family courts in habeas corpus cases where the custody of minors is involved. One final note. Requiring the serving officer to search for the child all over the country is not an unreasonable availment of a remedy which the Court of Appeals cited as a ground for dismissing the petition. As explained by the Solicitor General:10 That the serving officer will have to "search for the child all over the country" does not represent an insurmountable or unreasonable obstacle, since such a task is no more different from or difficult than the duty of the peace officer in effecting a warrant of arrest, since the latter is likewise enforceable anywhere within the Philippines. WHEREFORE, the petition is hereby GRANTED. The petition for habeas corpus in CA-G.R.-SP-No. 70501 is hereby REINSTATED and REMANDED to the Court of Appeals, Sixteenth Division. SO ORDERED. Panganiban,, J., Chairman, and Carpio Morales, JJ., concur. Sandoval-Gutierrez, on leave.

Footnotes
1

Penned by Associate Justice Hilarion A. Aquino and concurred in by Associate Justices Edgardo P. Cruz and Regalado E. Maambong.
2

CA Decision, p. 3. Rollo, p. 49. Article VIII. Section 5. "The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over petitions for habeas corpus. xxx
5

xxx

xxx."

Section 20. Petition for writ of habeas corpus. A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Courts belong. xxx xxx xxx

The petition may likewise be filed with the Supreme Court, Court of Appeals or with any of its members and, if so granted, the writ shall be enforecebale anywhere in the Philippines. The writ may be returnable to a Family Court or any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits.
6

136 SCRA 141 [1985]. Agpalo Statutory Constitution, 1986, p. 98.

SEC. 2. State and National Policies.- The State shall protect the rights and promote the welfare of children in keeping with the mandate of the Constitution and the precepts of the United Nations Convention on the Rights of the Child. xxx
9

Republic vs. Marcopper Mining, 335 SCRA 386 [2000]. Ibid. at 120.

10

######################################################### ######################## 5. THIRD DIVISION

[G.R. No. 153866. February 11, 2005]

COMMISSIONER OF INTERNAL (PHILIPPINES),respondent.

REVENUE, petitioner,

vs.

SEAGATE

TECHNOLOGY

DECISION PANGANIBAN, J.: Business companies registered in and operating from the Special Economic Zone in Naga, Cebu -- like herein respondent -- are entitiesexempt from all internal revenue taxes and the implementing rules relevant thereto, including the value-added taxes or VAT. Although export sales are not deemed exempt transactions, they are nonetheless zero-rated. Hence, in the present case, the distinction between exempt entities and exempt transactions has little significance, because the net result is that the taxpayer is not liable for the VAT. Respondent, a VAT-registered enterprise, has complied with all requisites for claiming a tax refund of or credit for the input VAT it paid on capital goods it purchased. Thus, the Court of Tax Appeals and the Court of Appeals did not err in ruling that it is entitled to such refund or credit. The Case Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the May 27, 2002 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 66093. The decretal portion of the Decision reads as follows: WHEREFORE, foregoing premises considered, the petition for review is DENIED for lack of merit.[3] The Facts The CA quoted the facts narrated by the Court of Tax Appeals (CTA), as follows: As jointly stipulated by the parties, the pertinent facts x x x involved in this case are as follows: 1. [Respondent] is a resident foreign corporation duly registered with the Securities and Exchange Commission to do business in the Philippines, with principal office address at the new Cebu Township One, Special Economic Zone, Barangay Cantao-an, Naga, Cebu; 2. [Petitioner] is sued in his official capacity, having been duly appointed and empowered to perform the duties of his office, including, among others, the duty to act and approve claims for refund or tax credit; 3. [Respondent] is registered with the Philippine Export Zone Authority (PEZA) and has been issued PEZA Certificate No. 97-044 pursuant to Presidential Decree No. 66, as amended, to engage in the manufacture of recording components primarily used in computers for export. Such registration was made on 6 June 1997; 4. [Respondent] is VAT [(Value Added Tax)]-registered entity as evidenced by VAT Registration Certification No. 97-083-000600-V issued on 2 April 1997; 5. VAT returns for the period 1 April 1998 to 30 June 1999 have been filed by [respondent]; 6. An administrative claim for refund of VAT input taxes in the amount of P28,369,226.38 with supporting documents (inclusive of theP12,267,981.04 VAT input taxes subject of this Petition for Review), was filed on 4 October 1999 with Revenue District Office No. 83, Talisay Cebu; 7. No final action has been received by [respondent] from [petitioner] on [respondents] claim for VAT refund.

The administrative claim for refund by the [respondent] on October 4, 1999 was not acted upon by the [petitioner] prompting the [respondent] to elevate the case to [the CTA] on July 21, 2000 by way of Petition for Review in order to toll the running of the two-year prescriptive period. For his part, [petitioner] x x x raised the following Special and Affirmative Defenses, to wit: 1. [Respondents] alleged claim for tax refund/credit is subject to administrative routinary investigation/examination by [petitioners] Bureau; 2. Since taxes are presumed to have been collected in accordance with laws and regulations, the [respondent] has the burden of proof that the taxes sought to be refunded were erroneously or illegally collected x x x; 3. In Citibank, N.A. vs. Court of Appeals, 280 SCRA 459 (1997), the Supreme Court ruled that: A claimant has the burden of proof to establish the factual basis of his or her claim for tax credit/refund. 4. Claims for tax refund/tax credit are construed in strictissimi juris against the taxpayer. This is due to the fact that claims for refund/credit [partake of] the nature of an exemption from tax. Thus, it is incumbent upon the [respondent] to prove that it is indeed entitled to the refund/credit sought. Failure on the part of the [respondent] to prove the same is fatal to its claim for tax credit. He who claims exemption must be able to justify his claim by the clearest grant of organic or statutory law. An exemption from the common burden cannot be permitted to exist upon vague implications; 5. Granting, without admitting, that [respondent] is a Philippine Economic Zone Authority (PEZA) registered Ecozone Enterprise, then its business is not subject to VAT pursuant to Section 24 of Republic Act No. ([RA]) 7916 in relation to Section 103 of the Tax Code, as amended. As [respondents] business is not subject to VAT, the capital goods and services it alleged to have purchased are considered not used in VAT taxable business. As such, [respondent] is not entitled to refund of input taxes on such capital goods pursuant to Section 4.106.1 of Revenue Regulations No. ([RR])7-95, and of input taxes on services pursuant to Section 4.103 of said regulations. 6. [Respondent] must show compliance with the provisions of Section 204 (C) and 229 of the 1997 Tax Code on filing of a written claim for refund within two (2) years from the date of payment of tax. On July 19, 2001, the Tax Court rendered a decision granting the claim for refund.[4] Ruling of the Court of Appeals The CA affirmed the Decision of the CTA granting the claim for refund or issuance of a tax credit certificate (TCC) in favor of respondent in the reduced amount of P12,122,922.66. This sum represented the unutilized but substantiated input VAT paid on capital goods purchased for the period covering April 1, 1998 to June 30, 1999. The appellate court reasoned that respondent had availed itself only of the fiscal incentives under Executive Order No. (EO) 226 (otherwise known as the Omnibus Investment Code of 1987), not of those under both Presidential Decree No. (PD) 66, as amended, and Section 24 of RA 7916. Respondent was, therefore, considered exempt only from the payment of income tax when it opted for the income tax holiday in lieu of the 5 percent preferential tax on gross income earned. As a VAT-registered entity, though, it was still subject to the payment of other national internal revenue taxes, like the VAT. Moreover, the CA held that neither Section 109 of the Tax Code nor Sections 4.106-1 and 4.103-1 of RR 7-95 were applicable. Having paid the input VAT on the capital goods it purchased, respondent correctly filed the administrative and judicial claims for its refund within the two-year prescriptive period.

Such payments were -- to the extent of the refundable value -- duly supported by VAT invoices or official receipts, and were not yet offset against any output VAT liability. Hence this Petition.[5] Sole Issue Petitioner submits this sole issue for our consideration: Whether or not respondent is entitled to the refund or issuance of Tax Credit Certificate in the amount of P12,122,922.66 representing alleged unutilized input VAT paid on capital goods purchased for the period April 1, 1998 to June 30, 1999.[6] The Courts Ruling The Petition is unmeritorious.

Sole Issue: Entitlement of a VAT-Registered PEZA Enterprise to a Refund of or Credit for Input VAT No doubt, as a PEZA-registered enterprise within a special economic zone,[7] respondent is entitled to the fiscal incentives and benefits[8]provided for in either PD 66[9] or EO 226.[10] It shall, moreover, enjoy all privileges, benefits, advantages or exemptions under both Republic Act Nos. (RA) 7227[11] and 7844.[12] Preferential Tax Treatment Under Special Laws If it avails itself of PD 66, notwithstanding the provisions of other laws to the contrary, respondent shall not be subject to internal revenue laws and regulations for raw materials, supplies, articles, equipment, machineries, spare parts and wares, except those prohibited by law, brought into the zone to be stored, broken up, repacked, assembled, installed, sorted, cleaned, graded or otherwise processed, manipulated, manufactured, mixed or used directly or indirectly in such activities.[13] Even so, respondent would enjoy a net-operating loss carry over; accelerated depreciation; foreign exchange and financial assistance; and exemption from export taxes, local taxes and licenses.[14] Comparatively, the same exemption from internal revenue laws and regulations applies if EO 226[15] is chosen. Under this law, respondent shall further be entitled to an income tax holiday; additional deduction for labor expense; simplification of customs procedure; unrestricted use of consigned equipment; access to a bonded manufacturing warehouse system; privileges for foreign nationals employed; tax credits on domestic capital equipment, as well as for taxes and duties on raw materials; and exemption from contractors taxes, wharfage dues, taxes and duties on imported capital equipment and spare parts, export taxes, duties, imposts and fees,[16] local taxes and licenses, and real property taxes.[17] A privilege available to respondent under the provision in RA 7227 on tax and duty-free importation of raw materials, capital and equipment[18]-- is, ipso facto, also accorded to the zone[19] under RA 7916. Furthermore, the latter law -- notwithstanding other existing laws, rules and regulations to the contrary -extends[20] to that zone the provision stating that no local or national taxes shall be imposed therein. [21] No exchange control policy shall be applied; and free markets for foreign exchange, gold, securities and future shall be allowed and maintained.[22] Banking and finance shall also be liberalized under minimum Bangko Sentral regulation with the establishment of foreign currency depository units of local commercial banks and offshore banking units of foreign banks.[23]

In the same vein, respondent benefits under RA 7844 from negotiable tax credits[24] for locallyproduced materials used as inputs. Aside from the other incentives possibly already granted to it by the Board of Investments, it also enjoys preferential credit facilities[25] and exemption from PD 1853.[26] From the above-cited laws, it is immediately clear that petitioner enjoys preferential tax treatment. [27] It is not subject to internal revenue laws and regulations and is even entitled to tax credits. The VAT on capital goods is an internal revenue tax from which petitioner as an entity is exempt. Although the transactions involving such tax are not exempt, petitioner as a VAT-registered person,[28] however, is entitled to their credits. Nature of the VAT and the Tax Credit Method Viewed broadly, the VAT is a uniform tax ranging, at present, from 0 percent to 10 percent levied on every importation of goods, whether or not in the course of trade or business, or imposed on each sale, barter, exchange or lease of goods or properties or on each rendition of services in the course of trade or business[29] as they pass along the production and distribution chain, the tax being limited only to the value added[30] to such goods, properties or services by the seller, transferor or lessor.[31] It is an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. [32] As such, it should be understood not in the context of the person or entity that is primarily, directly and legally liable for its payment, but in terms of its nature as a tax on consumption. [33] In either case, though, the same conclusion is arrived at. The law[34] that originally imposed the VAT in the country, as well as the subsequent amendments of that law, has been drawn from the tax credit method.[35] Such method adopted the mechanics and selfenforcement features of the VAT as first implemented and practiced in Europe and subsequently adopted in New Zealand and Canada.[36] Under the present method that relies on invoices, an entity can credit against or subtract from the VAT charged on its sales or outputs the VAT paid on its purchases, inputs and imports.
[37]

If at the end of a taxable quarter the output taxes [38] charged by a seller[39] are equal to the input taxes[40] passed on by the suppliers, no payment is required. It is when the output taxes exceed the input taxes that the excess has to be paid.[41] If, however, the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or quarters. [42] Should the input taxes result from zero-rated or effectively zero-rated transactions or from the acquisition of capital goods,[43] any excess over the output taxes shall instead be refunded[44] to the taxpayer or credited[45] against other internal revenue taxes.[46] Zero-Rated and Effectively Zero-Rated Transactions Although both are taxable and similar in effect, zero-rated transactions differ from effectively zero-rated transactions as to their source. Zero-rated transactions generally refer to the export sale of goods and supply of services.[47] The tax rate is set at zero.[48] When applied to the tax base, such rate obviously results in no tax chargeable against the purchaser. The seller of such transactions charges no output tax,[49] but can claim a refund of or a tax credit certificate for the VAT previously charged by suppliers. Effectively zero-rated transactions, however, refer to the sale of goods[50] or supply of services[51] to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such transactions to a zero rate.[52]Again, as applied to the tax base, such rate does not yield any tax chargeable against the purchaser. The seller who charges zero output tax on such transactions can also claim a refund of or a tax credit certificate for the VAT previously charged by suppliers. Zero Rating and

Exemption In terms of the VAT computation, zero rating and exemption are the same, but the extent of relief that results from either one of them is not. Applying the destination principle[53] to the exportation of goods, automatic zero rating[54] is primarily intended to be enjoyed by the seller who is directly and legally liable for the VAT, making such seller internationally competitive by allowing the refund or credit of input taxes that are attributable to export sales. [55] Effective zero rating, on the contrary, is intended to benefit the purchaser who, not being directly and legally liable for the payment of the VAT, will ultimately bear the burden of the tax shifted by the suppliers. In both instances of zero rating, there is total relief for the purchaser from the burden of the tax.[56] But in an exemption there is only partial relief,[57] because the purchaser is not allowed any tax refund of or credit for input taxes paid.[58] Exempt Transaction and Exempt Party The object of exemption from the VAT may either be the transaction itself or any of the parties to the transaction.[59] An exempt transaction, on the one hand, involves goods or services which, by their nature, are specifically listed in and expressly exempted from the VAT under the Tax Code, without regard to the tax status -- VAT-exempt or not -- of the party to the transaction.[60] Indeed, such transaction is not subject to the VAT, but the seller is not allowed any tax refund of or credit for any input taxes paid. An exempt party, on the other hand, is a person or entity granted VAT exemption under the Tax Code, a special law or an international agreement to which the Philippines is a signatory, and by virtue of which its taxable transactions become exempt from the VAT.[61] Such party is also not subject to the VAT, but may be allowed a tax refund of or credit for input taxes paid, depending on its registration as a VAT or non-VAT taxpayer. As mentioned earlier, the VAT is a tax on consumption, the amount of which may be shifted or passed on by the seller to the purchaser of the goods, properties or services.[62] While the liability is imposed on one person, the burden may be passed on to another. Therefore, if a special law merely exempts a party as a seller from its direct liability for payment of the VAT, but does not relieve the same party as a purchaser from its indirect burden of the VAT shifted to it by its VAT-registered suppliers, the purchase transaction is not exempt. Applying this principle to the case at bar, the purchase transactions entered into by respondent are not VAT-exempt. Special laws may certainly exempt transactions from the VAT. [63] However, the Tax Code provides that those falling under PD 66 are not. PD 66 is the precursor of RA 7916 -- the special law under which respondent was registered. The purchase transactions it entered into are, therefore, not VAT-exempt. These are subject to the VAT; respondent is required to register.
[64]

Its sales transactions, however, will either be zero-rated or taxed at the standard rate of 10 percent, depending again on the application of the destination principle.[65]

If respondent enters into such sales transactions with a purchaser -- usually in a foreign country -- for use or consumption outside the Philippines, these shall be subject to 0 percent.[66] If entered into with a purchaser for use or consumption in the Philippines, then these shall be subject to 10 percent,[67] unless the purchaser is exempt from the indirect burden of the VAT, in which case it shall also be zero-rated. Since the purchases of respondent are not exempt from the VAT, the rate to be applied is zero. Its exemption under both PD 66 and RA 7916 effectively subjects such transactions to a zero rate,[68] because the ecozone within which it is registered is managed and operated by the PEZA as a separate customs territory.[69] This means that in such zone is created the legal fiction of foreign territory. [70] Under the crossborder principle[71] of the VAT system being enforced by the Bureau of Internal Revenue (BIR),[72] no VAT

shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. If exports of goods and services from the Philippines to a foreign country are free of the VAT,[73] then the same rule holds for such exports from the national territory -- except specifically declared areas -- to an ecozone. Sales made by a VAT-registered person in the customs territory to a PEZA-registered entity are considered exports to a foreign country; conversely, sales by a PEZA-registered entity to a VAT-registered person in the customs territory are deemed imports from a foreign country.[74]An ecozone -- indubitably a geographical territory of the Philippines -- is, however, regarded in law as foreign soil. [75] This legal fiction is necessary to give meaningful effect to the policies of the special law creating the zone.[76] If respondent is located in an export processing zone[77] within that ecozone, sales to the export processing zone, even without being actually exported, shall in fact be viewed as constructively exported under EO 226. [78] Considered as export sales,[79] such purchase transactions by respondent would indeed be subject to a zero rate.[80] Tax Exemptions Broad and Express Applying the special laws we have earlier discussed, respondent as an entity is exempt from internal revenue laws and regulations. This exemption covers both direct and indirect taxes, stemming from the very nature of the VAT as a tax on consumption, for which the directliability is imposed on one person but the indirect burden is passed on to another. Respondent, as an exempt entity, can neither be directly charged for the VAT on its sales nor indirectly made to bear, as added cost to such sales, the equivalent VAT on its purchases. Ubi lex non distinguit, nec nos distinguere debemus. Where the law does not distinguish, we ought not to distinguish. Moreover, the exemption is both express and pervasive for the following reasons: First, RA 7916 states that no taxes, local and national, shall be imposed on business establishments operating within the ecozone.[81] Since this law does not exclude the VAT from the prohibition, it is deemed included. Exceptio firmat regulam in casibus non exceptis. An exception confirms the rule in cases not excepted; that is, a thing not being excepted must be regarded as coming within the purview of the general rule. Moreover, even though the VAT is not imposed on the entity but on the transaction, it may still be passed on and, therefore, indirectly imposed on the same entity -- a patent circumvention of the law. That no VAT shall be imposed directly upon business establishments operating within the ecozone under RA 7916 also means that no VAT may be passed on and imposed indirectly. Quando aliquid prohibetur ex directo prohibetur et per obliquum. When anything is prohibited directly, it is also prohibited indirectly. Second, when RA 8748 was enacted to amend RA 7916, the same prohibition applied, except for real property taxes that presently are imposed on land owned by developers. [82] This similar and repeated prohibition is an unambiguous ratification of the laws intent in not imposing local or national taxes on business enterprises within the ecozone. Third, foreign and domestic merchandise, raw materials, equipment and the like shall not be subject to x x x internal revenue laws and regulations under PD 66[83] -- the original charter of PEZA (then EPZA) that was later amended by RA 7916.[84] No provisions in the latter law modify such exemption. Although this exemption puts the government at an initial disadvantage, the reduced tax collection ultimately redounds to the benefit of the national economy by enticing more business investments and creating more employment opportunities.[85] Fourth, even the rules implementing the PEZA law clearly reiterate that merchandise -- except those prohibited by law -- shall not be subject to x x x internal revenue laws and regulations x x x [86] if brought to the ecozones restricted area[87] for manufacturing by registered export enterprises,[88] of which respondent is one. These rules also apply to all enterprises registered with the EPZA prior to the effectivity of such rules.
[89]

Fifth, export processing zone enterprises registered[90] with the Board of Investments (BOI) under EO 226 patently enjoy exemption from national internal revenue taxes on imported capital equipment reasonably needed and exclusively used for the manufacture of their products;[91] on required supplies and spare part for consigned equipment;[92] and on foreign and domestic merchandise, raw materials, equipment and the like -- except those prohibited by law -- brought into the zone for manufacturing. [93] In addition, they are given credits for the value of the national internal revenue taxes imposed on domestic capital equipment also reasonably needed and exclusively used for the manufacture of their products, [94] as well as for the value of such taxes imposed on domestic raw materials and supplies that are used in the manufacture of their export products and that form part thereof.[95] Sixth, the exemption from local and national taxes granted under RA 7227 [96] are ipso facto accorded to ecozones.[97] In case of doubt, conflicts with respect to such tax exemption privilege shall be resolved in favor of the ecozone.[98] And seventh, the tax credits under RA 7844 -- given for imported raw materials primarily used in the production of export goods,[99] and for locally produced raw materials, capital equipment and spare parts used by exporters of non-traditional products[100] -- shall also be continuously enjoyed by similar exporters within the ecozone.[101] Indeed, the latter exporters are likewise entitled to such tax exemptions and credits. Tax Refund as Tax Exemption To be sure, statutes that grant tax exemptions are construed strictissimi juris[102] against the taxpayer[103] and liberally in favor of the taxing authority.[104] Tax refunds are in the nature of such exemptions.[105] Accordingly, the claimants of those refunds bear the burden of proving the factual basis of their claims;[106] and of showing, by words too plain to be mistaken, that the legislature intended to exempt them.[107] In the present case, all the cited legal provisions are teeming with life with respect to the grant of tax exemptions too vivid to pass unnoticed. In addition, respondent easily meets the challenge. Respondent, which as an entity is exempt, is different from its transactions which are not exempt. The end result, however, is that it is not subject to the VAT. The non-taxability of transactions that are otherwise taxable is merely a necessary incident to the tax exemption conferred by law upon it as an entity, not upon the transactions themselves.[108] Nonetheless, its exemption as an entity and the non-exemption of its transactions lead to the same result for the following considerations: First, the contemporaneous construction of our tax laws by BIR authorities who are called upon to execute or administer such laws[109] will have to be adopted. Their prior tax issuances have held inconsistent positions brought about by their probable failure to comprehend and fully appreciate the nature of the VAT as a tax on consumption and the application of the destination principle.[110] Revenue Memorandum Circular No. (RMC) 74-99, however, now clearly and correctly provides that any VATregistered suppliers sale of goods, property or services from the customs territory to any registered enterprise operating in the ecozone -- regardless of the class or type of the latters PEZA registration -- is legally entitled to a zero rate.[111] Second, the policies of the law should prevail. Ratio legis est anima. The reason for the law is its very soul. In PD 66, the urgent creation of the EPZA which preceded the PEZA, as well as the establishment of export processing zones, seeks to encourage and promote foreign commerce as a means of x x x strengthening our export trade and foreign exchange position, of hastening industrialization, of reducing domestic unemployment, and of accelerating the development of the country.[112] RA 7916, as amended by RA 8748, declared that by creating the PEZA and integrating the special economic zones, the government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country x x x through the establishment,

among others, of special economic zones x x x that shall effectively attract legitimate and productive foreign investments.[113] Under EO 226, the State shall encourage x x x foreign investments in industry x x x which shall x x x meet the tests of international competitiveness[,] accelerate development of less developed regions of the country[,] and result in increased volume and value of exports for the economy.[114] Fiscal incentives that are cost-efficient and simple to administer shall be devised and extended to significant projects to compensate for market imperfections, to reward performance contributing to economic development,[115] and to stimulate the establishment and assist initial operations of the enterprise.[116] Wisely accorded to ecozones created under RA 7916[117] was the governments policy -- spelled out earlier in RA 7227 -- of converting into alternative productive uses[118] the former military reservations and their extensions,[119] as well as of providing them incentives[120] to enhance the benefits that would be derived from them[121] in promoting economic and social development.[122] Finally, under RA 7844, the State declares the need to evolve export development into a national effort[123] in order to win international markets. By providing many export and tax incentives,[124] the State is able to drive home the point that exporting is indeed the key to national survival and the means through which the economic goals of increased employment and enhanced incomes can most expeditiously be achieved.[125] The Tax Code itself seeks to promote sustainable economic growth x x x; x x x increase economic activity; and x x x create a robust environment for business to enable firms to compete better in the regional as well as the global market.[126] After all, international competitiveness requires economic and tax incentives to lower the cost of goods produced for export. State actions that affect global competition need to be specific and selective in the pricing of particular goods or services.[127] All these statutory policies are congruent to the constitutional mandates of providing incentives to needed investments,[128] as well as of promoting the preferential use of domestic materials and locally produced goods and adopting measures to help make these competitive.[129]Tax credits for domestic inputs strengthen backward linkages. Rightly so, the rule of law and the existence of credible and efficient public institutions are essential prerequisites for sustainable economic development.[130] VAT Registration, Not Application for Effective Zero Rating, Indispensable to VAT Refund Registration is an indispensable requirement under our VAT law.[131] Petitioner alleges that respondent did register for VAT purposes with the appropriate Revenue District Office. However, it is now too late in the day for petitioner to challenge the VAT-registered status of respondent, given the latters prior representation before the lower courts and the mode of appeal taken by petitioner before this Court. The PEZA law, which carried over the provisions of the EPZA law, is clear in exempting from internal revenue laws and regulations the equipment -- including capital goods -- that registered enterprises will use, directly or indirectly, in manufacturing.[132] EO 226 even reiterates this privilege among the incentives it gives to such enterprises.[133] Petitioner merely asserts that by virtue of the PEZA registration alone of respondent, the latter is not subject to the VAT. Consequently, the capital goods and services respondent has purchased are not considered used in the VAT business, and no VAT refund or credit is due.[134] This is a non sequitur. By the VATs very nature as a tax on consumption, the capital goods and services respondent has purchased are subject to the VAT, although at zero rate. Registration does not determine taxability under the VAT law. Moreover, the facts have already been determined by the lower courts. Having failed to present evidence to support its contentions against theincome tax holiday privilege of respondent,[135] petitioner is deemed to have conceded. It is a cardinal rule that issues and arguments not adequately and seriously brought below cannot be raised for the first time on appeal. [136] This is a matter of procedure[137] and a question of fairness.[138] Failure to assert within a reasonable time warrants a presumption that the party entitled to assert it either has abandoned or declined to assert it.[139]

The BIR regulations additionally requiring an approved prior application for effective zero rating[140] cannot prevail over the clear VAT nature of respondents transactions. The scope of such regulations is not within the statutory authority x x x granted by the legislature.[141] First, a mere administrative issuance, like a BIR regulation, cannot amend the law; the former cannot purport to do any more than interpret the latter.[142] The courts will not countenance one that overrides the statute it seeks to apply and implement.[143] Other than the general registration of a taxpayer the VAT status of which is aptly determined, no provision under our VAT law requires an additional application to be made for such taxpayers transactions to be considered effectively zero-rated. An effectively zero-rated transaction does not and cannot become exempt simply because an application therefor was not made or, if made, was denied. To allow the additional requirement is to give unfettered discretion to those officials or agents who, without fluid consideration, are bent on denying a valid application. Moreover, the State can never be estopped by the omissions, mistakes or errors of its officials or agents.[144] Second, grantia argumenti that such an application is required by law, there is still the presumption of regularity in the performance of official duty.[145] Respondents registration carries with it the presumption that, in the absence of contradictory evidence, an application for effective zero rating was also filed and approval thereof given. Besides, it is also presumed that the law has been obeyed[146] by both the administrative officials and the applicant. Third, even though such an application was not made, all the special laws we have tackled exempt respondent not only from internal revenue laws but also from the regulations issued pursuant thereto. Leniency in the implementation of the VAT in ecozones is an imperative, precisely to spur economic growth in the country and attain global competitiveness as envisioned in those laws. A VAT-registered status, as well as compliance with the invoicing requirements,[147] is sufficient for the effective zero rating of the transactions of a taxpayer. The nature of its business and transactions can easily be perused from, as already clearly indicated in, its VAT registration papers and photocopied documents attached thereto. Hence, its transactions cannot be exempted by its mere failure to apply for their effective zero rating. Otherwise, their VAT exemption would be determined, not by their nature, but by the taxpayers negligence -- a result not at all contemplated. Administrative convenience cannot thwart legislative mandate. Tax Refund or Credit in Order Having determined that respondents purchase transactions are subject to a zero VAT rate, the tax refund or credit is in order. As correctly held by both the CA and the Tax Court, respondent had chosen the fiscal incentives in EO 226 over those in RA 7916 and PD 66. It opted for the income tax holiday regime instead of the 5 percent preferential tax regime. The latter scheme is not a perfunctory aftermath of a simple registration under the PEZA law,[148] for EO 226 also has provisions to contend with. These two regimes are in fact incompatible and cannot be availed of simultaneously by the same entity. While EO 226 merely exempts it from income taxes, the PEZA law exempts it from all taxes.
[149]

Therefore, respondent can be considered exempt, not from the VAT, but only from the payment of income tax for a certain number of years, depending on its registration as a pioneer or a non-pioneer enterprise. Besides, the remittance of the aforesaid 5 percent of gross income earned in lieu of local and national taxes imposable upon business establishments within the ecozone cannot outrightly determine a VAT exemption. Being subject to VAT, payments erroneously collected thereon may then be refunded or credited. Even if it is argued that respondent is subject to the 5 percent preferential tax regime in RA 7916, Section 24 thereof does not preclude the VAT. One can, therefore, counterargue that such provision

merely exempts respondent from taxes imposed on business. To repeat, the VAT is a tax imposed on consumption, not on business. Although respondent as an entity is exempt, the transactions it enters into are not necessarily so. The VAT payments made in excess of the zero rate that is imposable may certainly be refunded or credited. Compliance with All Requisites for VAT Refund or Credit As further enunciated by the Tax Court, respondent complied with all the requisites for claiming a VAT refund or credit.[150] First, respondent is a VAT-registered entity. This fact alone distinguishes the present case from Contex, in which this Court held that the petitioner therein was registered as a non-VAT taxpayer. [151] Hence, for being merely VAT-exempt, the petitioner in that case cannot claim any VAT refund or credit. Second, the input taxes paid on the capital goods of respondent are duly supported by VAT invoices and have not been offset against any output taxes. Although enterprises registered with the BOI after December 31, 1994 would no longer enjoy the tax credit incentives on domestic capital equipment -- as provided for under Article 39(d), Title III, Book I of EO 226[152] -- starting January 1, 1996, respondent would still have the same benefit under a general and express exemption contained in both Article 77(1), Book VI of EO 226; and Section 12, paragraph 2 (c) of RA 7227, extended to the ecozones by RA 7916. There was a very clear intent on the part of our legislators, not only to exempt investors in ecozones from national and local taxes, but also to grant them tax credits. This fact was revealed by the sponsorship speeches in Congress during the second reading of House Bill No. 14295, which later became RA 7916, as shown below: MR. RECTO. x x x Some of the incentives that this bill provides are exemption from national and local taxes; x x x tax credit for locally-sourced inputs x x x. xxx xxx xxx

MR. DEL MAR. x x x To advance its cause in encouraging investments and creating an environment conducive for investors, the bill offers incentives such as the exemption from local and national taxes, x x x tax credits for locally sourced inputs x x x.[153] And third, no question as to either the filing of such claims within the prescriptive period or the validity of the VAT returns has been raised. Even if such a question were raised, the tax exemption under all the special laws cited above is broad enough to cover even the enforcement of internal revenue laws, including prescription.[154] Summary To summarize, special laws expressly grant preferential tax treatment to business establishments registered and operating within an ecozone, which by law is considered as a separate customs territory. As such, respondent is exempt from all internal revenue taxes, including the VAT, and regulations pertaining thereto. It has opted for the income tax holiday regime, instead of the 5 percent preferential tax regime. As a matter of law and procedure, its registration status entitling it to such tax holiday can no longer be questioned. Its sales transactions intended for export may not be exempt, but like its purchase transactions, they are zero-rated. No prior application for the effective zero rating of its transactions is necessary. Being VAT-registered and having satisfactorily complied with all the requisites for claiming a tax refund of or credit for the input VAT paid on capital goods purchased, respondent is entitled to such VAT refund or credit. WHEREFORE, the Petition is DENIED and the Decision AFFIRMED. No pronouncement as to costs.

SO ORDERED. Sandoval-Gutierrez, Corona, Carpio-Morales and Garcia, JJ., concur. ######################################################## ##################################### 6. FIRST DIVISION SPOUSES NEREO and NIEVA DELFINO, Petitioners, G.R. No. 166735 Present: PANGANIBAN, CJ Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

- versus -

ST. JAMES HOSPITAL, INC. and HON. RONALDO B. ZAMORA, EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT, Respondents.

Promulgated:

September 5, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - -x DECISION CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision[1] of the Court of Appeals in CA-G.R. SP No. 60495, dated 20 January 2003, which affirmed the Decision[2] of the Office of the President, dated 26 March 1999, and the Resolution[3] dated 11 August 2000, reinstating the grant to respondent St. James Hospital, Inc. of a Locational Clearance and a Certificate of Locational Viability (CLV) for its expansion as a four-storey, forty-bed capacity hospital. St.JamesHospital was established in 1990 as a two-storey, ten-bed capacity hospital in MariquitaPueblo Subdivision in Santa Rosa, Laguna.In 1994, it applied for a permit with the Housing and Land Use Regulatory Board (HLURB) to expand its hospital into a fourstorey, forty-bed capacity medical institution.Thus, on 23 November 1994, Reynaldo Pambid, HLURB Deputized Zoning Administrator for Santa Rosa, Laguna, issued a 'temporary clearance for the expansion of said hospital.Said issuance was challenged by herein petitioners spouses Nereo and Nieva Delfino, residents of Mariquita Pueblo Subdivision, on the ground that the proposed expansion is in violation of the provisions of

the 1981 Santa Rosa Municipal Zoning Ordinance.Thereafter, Mr. Pambidreferred the matter for evaluation by his superiors. On 19 April 1995, HLURB Regional Office No. IV Director Alfredo M. Tan II issued a letter explaining that the issuance of a 'temporary clearance is not allowed under existing laws for it may be erroneously construed as a permit to start construction. Director Tan, however, opined that under existing HLURB guidelines, CLVs may be issued to certain projects for purposes of securing an Environment Compliance Certification (ECC) from the Department of Environment and Natural Resources (DENR). On the strength of said opinion, Mr. Pambid revoked the temporary clearance issued toSt.JamesHospital and declared the expansion as not viable.The municipal engineer of Santa Rosa, Laguna, also suspended the hospital's building permit, while DENR Regional Executive Director Antonio Principe issued a cease and desist order on 16 August 1995.Nevertheless, upon written representation of the hospital's operator, Dr. Jose P. Santiago, that the St.JamesHospital will retain the same number of beds maintained in the hospital, Mr. Pambid issued a CLV dated 29 October 1995 for the hospital's expansion project.Upon protest from the petitioners, Mr. Pambid thereafter suspended the issued CLV. In the interim, the Sangguniang Panlalawigan of Laguna passed on 11 December 1995 Resolution No. 811, approving the 1991 Comprehensive Land Use Plan (CLUP) or the Comprehensive Zoning Ordinance of the Municipality of Santa Rosa, Laguna.Under the new Zoning Ordinance, hospitals are now excluded from the list of viable institutions within the residential zone of Santa Rosa, Laguna. Oblivious of the approval of the 1991 Zoning Ordinance, Mr. Pambid issued on 1 February 1996 a Certificate of Zoning Compliance or Locational Clearance for the two-storey, tenbed St. James Hospital citing as basis the provisions of the 1981 Santa Rosa Municipal Zoning Ordinance.On 14 March 1996, Mr. Pambid likewise issued a CLV for a four-storey, forty-bed hospital expansion project in favor of St.JamesHospital. These issuances of Mr. Pambid were, however, invalidated by HLURB Director Tan on 25 April 1996, as it violated, according to Director Tan, the provisions of the 1991 Zoning Ordinance.As a result thereof, Mr. Pambid suspended the locational clearance issued to St.JamesHospital and elevated the matter to the HLURB for disposition.According to Mr. Pambid, he received a copy of the new Zoning Ordinance only on 14 February 1996, two weeks after issuing the locationalclearance. On 16 May 1996, petitioners filed before the HLURB Regional Office No. IV a lettercomplaint against Mr. Pambid for issuing the CLV in violation of both the 1981 and 1991 Zoning Ordinances, and against Dr. Santiago for continuing with the expansion project despite the invalidation of the CLV issued by Mr. Pambid. In reply to petitioners' complaint, St.JamesHospital maintained that there is a need to expand the existing hospital to address the acute deficiency of medical facilities in the

municipality, and that the project is permissible under the new Zoning Ordinance.Furthermore, it pointed out that the project has been favorably endorsed not only by the residents of Mariquita Pueblo Subdivision, but also by the residents of other neighboring communities.St.JamesHospital also argued that it has already incurred millions of pesos in losses for every day of delay in the construction. Pursuant to HLURB Rules, the case was elevated to the HLURB Legal Services Group (LSG), and was assigned to Arbiter Erwin T. Daga.During the course of the proceedings, Arbiter Daga issued the following Orders: 1. Order dated December 6, 1996 (temporary restraining order) enjoining St. James [Hospital] from continuing with its expansion project; Order dated December 11, 1996 ordering St. James [Hospital] to cease and desist from proceeding with its expansion project; Order dated December 12, 1996 denying St. James [Hospital's ] motion to lift the temporary restraining order; and Order dated December 14, 1996 ordering St. James [Hospital] to again cease and desist from further work and construction of the hospital's expansion building pending the resolution of the case. [4]chanroblesvirtuallawlibrary

2. 3. 4.

On 4 March 1997, Dr. Santiago filed before the HLURB Board of Commissioners a Motion seeking the inhibition of Arbiter Daga for partiality, which was subsequently denied. On 16 July 1997, after the parties have submitted their respective position papers and draft decisions, Arbiter Daga rendered a Decision in favor of petitioners, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered, to wit: 1. The Locational Clearance dated February 1, 1996 issued by public respondent Reynaldo Pambid to the expansion hospital building of private respondent St. James Hospital, Inc. is hereby revoked and set aside; Ordering private respondent to demolish its two-storey hospital expansion building within ONE MONTH at its cost and upon failure to comply within the period given, pay complainants P10,000.00 per day of delay; Ordering private respondent to relocate its existing ten-bed capacity hospital within ONE YEAR and thereafter to permanently cease and desist from operating a hospital/clinic within a residential zone, particularly inMariquita Pueblo Subdivision, Dita, Sta. Rosa, Laguna and failure to comply within the reglementary

2.

3.

period given, pay complainants the amount ofP10,000.00 per day of delay; 4. 5. Ordering private respondent to pay this Board administrative fine ofP20,000.00, aside from the other fines previously imposed; Ordering private respondent to pay this Board P5,000.00 per day beginning February 4, 1997 until the day that it ceased or finished the construction of its expansion building as determined by the Board's Regional Office No. IV; Ordering private respondent to pay complainants FIVE HUNDRED THOUSAND PESOS as moral damages, TWO MILLION PESOS exemplary damages, TWO HUNDRED THOUSAND PESOS as attorney's fees, and FIFTY THOUSAND PESOS cost of litigation;

6.

The motion of private respondent dated 24 June 1997 is hereby DENIED and its Counterclaim is hereby dismissed for lack of merit. Without prejudice to the filing of criminal action that may be filed with the proper court.[5]chanroblesvirtuallawlibrary

Aggrieved by the aforecited Decision, St.JamesHospital appealed to the HLURB Board of Commissioners asserting that the proposed expansion of the hospital conforms to the 1991 Zoning Ordinance.Resolving said appeal, the HLURB effectively modified Arbiter Daga's Decision, ruling that the existing hospital, with its original two-storey, tenbed capacity, is allowable under the old 1981 Zoning Ordinance and may be allowed to continue as a medical institution within theMariquita Pueblo Subdivision even after the effectivity of the 1991 Zoning Ordinance.However, the HLURB opined that the new construction of commercial buildings within the said residential zone, such as the forty-bed capacity expansion building of St.JamesHospital, is repugnant to Section 2, Article VI of the 1991 Santa Rosa Municipal Zoning Ordinance and, hence, should be disallowed.Thus, on 13 January 1998, the HLURB Special Division rendered a Decision, to wit: WHEREFORE, the decision of the LSG dated July 16, 1997, is hereby SET ASIDE and a new decision entered: 1. Declaring the original two-storey, ten-bed capacity St. JamesHospital, as allowable in the Mariquita Pueblo Subdivision, Sta. Rosa, Laguna; Ordering respondent St. James to set-up an efficient hospital waste disposal system in conformity with the rules and regulations and standards of the Department of Health, the Department of Environment and Natural Resources and all other concerned government agencies; and present a certification of compliance to the Board from said agencies within ninety (90) days from finality hereof; and

2.

3.

Revokingthe Locational Clerance dated February 01, 1996 issued by respondent Pambid for the expansionHospital building of respondent St. James. [6]chanroblesvirtuallawlibrary

The separate Motions for Reconsideration of both parties having been denied by the HLURB, the parties elevated the case to the Office of the President, which rendered a decision on 26 March 1999 in favor of St.JamesHospital.According to the Office of the President: Without doubt, the establishment of a ten-bed capacity hospital, like the existingSt.JamesHospital, is allowed within a residential zone.This is expressly provided under Section 2, paragraph 1(d), Article VI of the 1981 Sta. Rosa Municipal Zoning Ordinance, the law existing at the time of the founding of the said hospital.The term 'hospital was, however, deleted from the list of conforming establishments within a residential zone in the recently approved 1991 CLUP or the Comprehensive Zoning Ordinance of the Municipality of Sta. Rosa, Laguna.The question now is whether or not the proposed expansion of St.JamesHospital, which will transform it into a four-storey, 40-bed capacity hospital, is allowable under the 1991 zoning ordinance.Stated differently, does the term 'institutional, as used in the said ordinance, include hospitals and other medical establishments. In construing words or phrases used in a law, the general rule is that, in the absence of legislative intent to the contrary, they should be given their plain, ordinary, and common usage meaning (Amadora vs. Court of Appeals, 160 SCRA 315).For, words are presumed to have been employed by the lawmaker in their ordinary and common use and acceptation (People vs. Kottinger, 45 Phil. 352). Under Section 2, Article VI of the 1991 Zoning Ordinance, certain activities that are commercial and institutional in character are allowed within the residential zone.St. James maintained the term 'institutional includes hospitals and other medical establishments. We agree.The word 'institutional used as it is in said ordinance without qualification should be understood in its plain and ordinary meaning.In law, the word institution is understood to mean an establishment or place, especially one of public character or one affecting a community (Black's Law Dictionary, Revised 4th edition, 1968, p. 940).It may be private in character, designed for profit to those composing the organization, or public and charitable in its purposes. From the above definition, it is clear that hospitals fall within the pale of the term 'institution', a hospital being a public establishment and that the nature of its business is for profit.The fact that hospitals are not categorized as dwelling unit does not inevitably mean that it is already a non-conforming establishment within a residential zone.As provided under aforecited provision of the 1991 Zoning Ordinance, settlement activities that are 'institutional in character are allowed within the residential zone.Even the HLURB recognized St. James as a medical institution within the residential zone of the Municipality of Sta. Rosa, Laguna.Be that as it may,St.JamesHospital may

be allowed to continue its business within the Mariquita Pueblo Subdivision.To limit the term 'institutional to activities conducted within the dwelling units of the residents would be unrealistic and would contemplate undue restrictions to existing and lawful establishments, like the St.JamesHospital. As a conforming establishment within the residential zone, St.JamesHospital may also be allowed to expand its present structure.It is not disputed that the new zoning ordinance does not expressly prohibit expansion of existing buildings within the residential zone.As correctly observed by St. James, it would be an absurd requirement if such establishment, like hospitals, would have the appearance of residential units or that its use be incidental and subordinate to its residential purposes.The parameters mentioned in the said ordinance should only be applied to residential units. Foregoing considered, the locational clearance certificate oflocational viability may now of St.JamesHospital. and be the complementary issued in favor

WHEREFORE, the grant to St. James Hospital, Inc., of a Locational Clearanceand a Certificate of Locational Viability (CLV) relative to its expansion as a 4-storey, 40-bed capacity hospital dated February 1, 1996, is hereby REINSTATED.In all other respects, the Decision of the Housing and Land Use Regulatory Board dated January 13, 1998is AFFIRMED in toto. [7]chanroblesvirtuallawlibrary

The Motion for Reconsideration of herein petitioners having been denied in a Resolution dated 11 August 2000, petitioners appealed to the Court of Appeals.In the assailed Decision dated 20 January 2003, the appellate court affirmed the Decision of the Office of the President, adopting the latter's conclusion that the establishment/expansion of the St.JamesHospital is not a proscribed land use in the designated residential zone known as Mariquita Pueblo Subdivision. Petitioners' Motion for Reconsideration was subsequently denied in a Resolution dated 14 January 2005.Hence, the instant Petition. From the facts of the case, it is undisputed that the Mariquita Pueblo Subdivision located atBarangay Dita, Santa Rosa, Laguna, is located within an area classified as a residential zone under both the 1981 and 1991 Zoning Ordinances.There is also no question that a two-storey, ten-bed capacity hospital, such as St.JamesHospital, was allowed to be constructed within a residential zone under the 1981 Zoning Ordinance.Likewise, it is apparent that under the 1981 Zoning Ordinance, the proposed expansion of the St. James Hospital into a four-storey, forty-bed capacity hospital would be disallowed as it violates the restriction set by said Zoning Ordinance regarding permissible activities within a residential zone, which specifically limits any medical institution built within a residential zone to a twostorey, ten-bed capacity structure.

Nonetheless, with the passage of the 1991 Zoning Ordinance, the proposed expansion of theSt.JamesHospital must now be decided in light of the provisions of the new Zoning Ordinance.Hence, the pivotal issue now to be resolved in this Petition is whether or not the proposed expansion of St.JamesHospital into a four-storey, forty-bed capacity medical institution may be permitted under the 1991 Zoning Ordinance.However, in order to settle the present controversy, it is essential that we determine the effect of the enactment of the 1991 Zoning Ordinance with respect to the proposed expansion of the St. James Hospital in view of the deletion therein of the phrase hospitals with not more than ten capacity from those enumerated as allowable uses in a residential zone as contained in Section 2, Article VI of the 1981 Zoning Ordinance. Section 2, Article VI of the 1981 Zoning Ordinance states: SECTION 2.REGULATIONS FOR URBAN CORE ZONE. ' This zone shall be devoted to various settlement activities that are residential and commercial, or institutional in character, subject to the following terms and conditions: 1. a) In the Residential Sector, only the following uses shall be allowed: All types of dwelling units (one-family detached, two-family detached, one-family semi-detached, two-family semi-detached and multi-family of not more than 5 doors) Home occupation, or the practice of one's profession or occupation, such as tailoring, dressmaking, banking, and like provided that: b.1.cralawNot more than five (5) outside assistants or helpers shall be employed; b.2.The use of the dwelling unit for the home occupation shall be clearly incidental and subordinate to its use for residential purpose by its occupants; b.3.As much as possible there shall be no change in the outside appearance of the building or premises; b.4. No equipment or process shall be used in such home occupation which creates noise, vibration, glare, fumes, odors, or electrical interference or outside the dwelling unit if conducted in a place other than a single-family residence. In the case of electrical interference, no equipment or process shall be used which creates visual or audible interference in any radio or television receiver or causes fluctuation in line voltage off the premises. a) Elementary schools b) High Schools and vocational schools c) Chapels, churches, and other place of worship d) Clinics, hospitals with not more than ten (10) capacity e) Drugstores f) cralawBackyard gardens and raising of pigs, poultry and other animals and fowls provided:

b)

1.cralawThat they are only for family consumption 2.cralawNo undue noise shall be created 3.cralawNo foul smell shall be emitted 4.cralawOther sanitary requirements enforced municipality g) h) i) j) k) Boarding House Parks and playground Barangay tanod stations Neighborhood assembly hall Recreation centers[8]chanroblesvirtuallawlibrary

in

the

On the other hand, Section 2, Article VI of the 1991 Zoning Ordinance reads: SECTION 2.REGULATIONS FOR RESIDENTIAL ZONE. ' This zone shall be devoted to various settlements, activities that are residential, commercial, and institutional in character and other spaces designed for recreational pursuit and maintenance of ecological balance of the municipality, subject to the following terms and conditions: The following uses shall be allowed: 1. 2. 3. 4. 5. 6. 7. Single detached family dwellings Semi-detached family dwelling Two detached family dwelling Two semi-detached family dwelling Multi-family dwelling with not more than five (5) families residing Residential Subdivision Projects Home occupation for the practice of one's profession or for engaging an in-house business such as dressmaking, tailoring, baking, running a sarisari store and the like, provided that: 7.1. 7.2. 7.3. Only members of the family residing within the premises shall be engaged in such home occupation; Maximum of five (5) outside helpers or assistants shall be employed; The use of the dwelling unit for home occupation shall be clearly incidental and subordinate to its use for residential purpose by its occupants and for the conduct of the home occupation, not more than twenty-five (25%) percent of the floor area of the dwelling unit shall be used;

7.4. 7.5. 7.6.

As much as possible there shall be no change in the outside appearance of the building premises; No home occupation shall be conducted in any accessory building; No traffic shall be generated by such home occupation in greater volume than would normally be expected in a residential neighborhood and any need for parking generated by the conduct of such home occupation shall be met off the street and in a place other than in a required front yard; No equipment or process shall be used in such home occupation which created noise, vibration, glare, fumes, odors, or electrical interference detectable to the normal sense off the lot, if the occupation is conducted in a single family residence or outside the dwelling unit if conducted in a place other than a single-familyresidence. In the case of electrical interference, no equipment or process shall be used which created visual or audible interference in any radio or television receiver or causes fluctuation in line voltage off the premises.

7.7.

8.

Backyard gardens and raising of pigs, poultry and other animals and fowls provided: 8.1. 8.2. 8.3. 8.4. That they are only for family consumption; No undue noise shall be created; No foul smell shall be emitted; and Other sanitary requirements enforced in the municipality are complied with.

9.

Barangay Tanod Stations.

10. Police outposts.[9]chanroblesvirtuallawlibrary

The enactment of the 1991 Zoning Ordinance effectively repealed the 1981 Zoning Ordinance.This intent to repeal is manifested in the very wordings of the 1991 Zoning Ordinance.The complete title of said Ordinance, 'An Ordinance Adopting a Comprehensive Zoning Regulation for the Municipalityof Santa Rosa, Laguna and Providing for the Administration, Enforcement and Amendment Thereof.And for the Repeal of all Ordinances in Conflict Therewith, as well as the Repealing Clause[10] of the same Ordinance which states that 'all other ordinances, rules or regulations that are in conflict with the provisions of this ordinance are hereby repealed,[11] clearly express the intent of the Sangguniang Bayan of Santa Rosa, Laguna, to repeal any enactment that is inconsistent with the new Ordinance.The inclusion of this general repealing provision in the Ordinance predicated the intended repeal under the condition that a substantial conflict must be found in existing and prior acts.

This is what is known as an implied repeal.Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of the legislature to abrogate a prior act on the subject, that intention must be given effect.[12]There are two categories of implied repeal.The first is where the provisions in the two acts on the same subject matter are in an irreconcilable conflict, the latter act to the extent of the conflict constitutes an implied repeal of the earlier one.[13]The second is if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law.[14]The second category of repeal is only possible if the revised statute was intended to cover the whole subject matter and as a complete and perfect system in itself.It is the rule that a subsequent statute is deemed to repeal a prior law if the former revises the whole subject matter of the former statute. [15]chanroblesvirtuallawlibrary In the case at bar, there is no doubt that the 1991 Zoning Ordinance not only covers the same, but embraces the whole subject matter contained in the 1981 Zoning Ordinance, and was enacted to substitute the latter.A perusal of the two pieces of legislation will reveal that both Ordinances were enacted to guide, control, and regulate the future growth and development of the Municipality of Santa Rosa, Laguna, in accordance with the municipality's development plan, as well as to promote the general welfare of the residents of the community by regulating the location and use of all buildings and land within the municipality.However, unlike the 1981 Zoning Ordinance, the 1991 Zoning Ordinance clearly identifies the development plan to which it is patterned after, specifically the development plan adopted by the Sangguniang Bayan through Kapasiyahan Blg. 20-91, dated 20 February 1991.Considering that the 1981 Zoning Ordinance was not in furtherance of the later development plan, consequently, there was the necessity to adopt a new statute to effect the changes contained therein, hence, the adoption of the 1991 Zoning Ordinance. Since it is presumed that the Sangguniang Bayan knew of the existence of the older Ordinance, by enacting the later law embracing the complete subject matter of the 1981 Zoning Ordinance, it must be concluded that the legislative body had intended to repeal the former Ordinance.With respect to the omission of the phrase 'hospitals with not more than ten capacity from the 1991 Zoning Ordinance, we conclude that the SangguniangBayan did intend to remove such building use from those allowed within a residential zone.As ruled by this Court, when both intent and scope clearly evince the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised act are deemed repealed.[16]chanroblesvirtuallawlibrary Likewise, it must be stressed at this juncture that a comprehensive scrutiny of both Ordinances will disclose that the uses formerly allowed within a residential zone under the 1981 Zoning Ordinance such as schools, religious facilities and places of worship, andclinics and hospitals have now been transferred to the institutional

zone under the 1991 Zoning Ordinance.[17]This clearly demonstrates the intention of the Sangguniang Bayan to delimit the allowable uses in the residential zone only to those expressly enumerated under Section 2, Article VI of the 1991 Zoning Ordinance, which no longer includes hospitals. It is lamentable that both the Office of the President and the Court of Appeals gave undue emphasis to the word 'institutional as mentioned in Section 2, Article VI of the 1991 Zoning Ordinance and even went through great lengths to define said term in order to include hospitals under the ambit of said provision.However, they neglected the fact that under Section 4, Article VI of said Ordinance[18], there is now another zone, separate and distinct from a residential zone, which is classified as 'institutional', wherein health facilities, such as hospitals, are expressly enumerated among those structures allowed within said zone. Moreover, both the Office of the President and the appellate court failed to consider that any meaning or interpretation to be given to the term 'institutional as used in Section 2, Article VI must be correspondingly limited by the explicit enumeration of allowable uses contained in the same section.Whatever meaning the legislative body had intended in employing the word 'institutional must be discerned in light of the restrictive enumeration in the said article.Under the legal maxim expressio unius est exclusio alterius, the express mention of one thing in a law, means the exclusion of others not expressly mentioned.[19]Thus, in interpreting the whole of Section 2, Article VI, it must be understood that in expressly enumerating the allowable uses within a residential zone, those not included in the enumeration are deemed excluded.Hence, since hospitals, among other things, are not among those enumerated as allowable uses within the residential zone, the only inference to be deduced from said exclusion is that said hospitals have been deliberately eliminated from those structures permitted to be constructed within a residential area in Santa Rosa, Laguna. Furthermore, according to the rule of casus omissus in statutory construction, a thing omitted must be considered to have been omitted intentionally.Therefore, with the omission of the phrase hospital with not more than ten capacity in the new Zoning Ordinance, and the corresponding transfer of said allowable usage to another zone classification, the only logical conclusion is that the legislative body had intended that said use be removed from those allowed within a residential zone.Thus, the construction of medical institutions, such as St.JamesHospital, within a residential zone is now prohibited under the 1991 Zoning Ordinance. Be that as it may, even if the St.JamesHospital is now considered a non-conforming structure under the 1991 Zoning Ordinance as it is located in a residential zone where such use is no longer allowed, said structure cannot now be considered illegal.This is because the St. James Hospital was constructed during the effectivity of the 1981 Zoning Ordinance, and, as earlier stated, under the said

Ordinance, the construction of a two-storey, ten-bed capacity hospital within a residential zone is explicitly allowed. Having concluded that the St. James Hospital is now considered a non-conforming structure under the 1991 Zoning Ordinance, we now come to the issue of the legality of the proposed expansion of said hospital into a four-storey, forty-bed medical institution.We shall decide this said issue in accordance with the provisions of the 1991 Zoning Ordinance relating to non-conforming buildings, the applicable law at the time of the proposal.As stated in Section 1 of Article X of the 1991 Zoning Ordinance: Section 1. EXISTING NON-CONFORMING USES AND BUILDINGS.The lawful uses of any building, structure or land at the point of adoption or amendment of this Ordinance may be continued, although such does not conform with the provisions of this Ordinance. 1. That no non-conforming use shall [be] enlarge[d] or increased orexten[ded] to occupy a greater area or land that has already been occupied by such use at the time of the adoption of this Ordinance, or moved in whole or in part to any other portion of the lot parcel of land where such [non]-conforming use exist at the time of the adoption of this Ordinance.[20](Emphasis ours.)

It is clear from the abovequoted provision of the 1991 Zoning Ordinance that the expansion of a non-conforming building is prohibited.Hence, we accordingly resolve that the expansion of the St.JamesHospital into a four-storey, forty-bed capacity medical institution within the Mariquita Pueblo Subdivision is prohibited under the provisions of the 1991 Zoning Ordinance. WHEREFORE, premises considered, the instant Petition is hereby GRANTED.The Decision of the Court of Appeals in CA-G.R. SP No. 60495, dated 20 January 2003, is herebyREVERSED and SET ASIDE and a new Decision entered: 1. Sustaining that the original two-storey, ten-bed capacity St. James Hospital is allowable within the Mariquita Pueblo Subdivision, Sta. Rosa, Laguna as long as it shall comply with the provisions on existing non-conforming buildings under the 1991 Zoning Ordinance, as well as the rules and regulations and standards of the Department of Health, Department of Environment and Natural Resources and all other concerned government agencies; and Prohibiting the proposed expansion of the St.JamesHospital into a four-storey, forty-bed capacity hospital, the proposed expansion being illegal under the 1991 Zoning Ordinance.

2.

SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice

WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson

CONSUELO YNARES-SANTIAGOMA. ALICIA AUSTRIA-MARTINEZ Associate JusticeAssociate Justice

ROMEO J. CALLEJO, SR. Associate Justice CERTIFICATION cralawPursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ARTEMIO V. PANGANIBAN Chief Justice

##################################################### 7.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 132051 June 25, 2001

TALA REALTY SERVICES CORP., petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent. SANDOVAL-GUTIERREZ, J.: Stare decisis et non quieta movere. This principle of adherence to precedents has not lost its luster and continues to guide the bench in keeping with the need to maintain stability in the law. The principle finds application to the case now before us. This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Resolution dated December 23, 1997 of the Court of Appeals in C.A.-G.R. SP No. 44257. Under Republic Act No. 337 (General Banking Act), commercial banks are allowed to invest in real property subject to the limitation that: "Sec. 25. Any commercial bank may purchase, hold and convey real estate for the following purposes: "(a) such as shall be necessary for its immediate accommodation in the transaction of its business: Provided, however, that the total investment in such real estate and improvements thereof, including bank equipment, shall not exceed fifty percent (50%) of net worth x x x x x x ." (Emphasis Ours) Investments in real estate made by savings and mortgage banks are likewise subject to the same limitation imposed by the aforequoted provision.1 Bound by such limitation, the management of Banco Filipino Savings and Mortgage Bank (Banco Filipino for brevity) devised means to pursue its endeavor to expand its banking operations. To this end, Tala Realty Services Corporation (Tala for brevity) was organized by Banco Filipino's four (4) major stockholders namely, Antonio Tiu, Tomas B. Aguirre, Nancy Lim Ty and Pedro B. Aguirre. Tala and Banco Filipino agreed on this scheme Tala would acquire the existing branch sites and new branch sites which it would lease out to Banco Filipino. On August 25, 1981, pursuant to their agreement, Banco Filipino sold its eleven (11) branch sites all over the country to Tala. In turn Tala leased those sites to Banco Filipino under contracts of lease executed by both parties on the same day. Years after, dissension between Tala and Banco Filipino arose in connection with their lease contracts resulting in a chain of lawsuits for illegal detainer. Some of these cases are still pending in courts. At present, three of the illegal detainer cases have been passed upon by the Supreme Court. The case at bar, involving Banco Filipino's Iloilo City branch site, is one of those cases for illegal detainer filed by Tala against Banco Filipino based on these grounds: (a) expiration of the period of lease and (b) non-payment of rentals. The facts of the present controversy may be summed up as follows:

In its complaint in Civil Case No. 51(95) filed with the Municipal Trial Court (MTC) of Iloilo City on March 29, 1995, Tala alleged that on the basis of a contract of lease executed on August 25, 1981 which provides in part: "1. That the term of this LEASE shall be for a period of eleven (11) years, renewable for another period of nine (9) years at the option of the LESSEE under terms and conditions mutually agreeable to both parties."2, its contract with Banco Filipino expired on August 31, 1992. However, Banco Filipino has continued to occupy the premises even after the expiration of the lease. On June 2, 1993, Tala imposed upon Banco Filipino the following terms and conditions: that the bank should pay P70,050.00 as monthly rental retroactive as of September 1, 1992, with rental escalation of 10% per year; and advance deposit equivalent to rents for four months, plus a goodwill of P500,000.00. Banco Filipino did not comply and in April 1994, it stopped paying rents. In its letter dated April 14, 1994, Tala notified Banco Filipino that the lease contract would no longer be renewed; that it should pay its back rentals, including goodwill, deposit and adjusted rentals in the amount of P2,059, 540.00 and vacate the premises on or before April 30, 1994.3 In its second letter dated May 2, 1994, Tala demanded upon Banco Filipino to pay the rents and vacate the premises.4 In answer to Tala's complaint, Banco Filipino denied having executed the lease contract providing for a term of eleven (11) years; claiming that its contract with Tala is for twenty (20) years, citing the Contract of Lease executed on August 25, 1981 providing: "That the term of this LEASE shall be for a period of twenty (20) years, renewable for another period of twenty (20) years at the option of the LESSEE under terms and conditions mutually agreeable to both parties."5 On July 1, 1996, the MTC rendered judgment holding that the eleven (11)-year lease contract superseded the twenty (20)-year lease contract. Thus, the court ordered the ejectment of Banco Filipino from the premises on these grounds: expiration of the eleven (11)-year lease contract and nonpayment of the adjusted rental. Banco Filipino was likewise ordered to pay back rentals in the amount of P79,050.00 corresponding to the period from May 1994 up to the time that it shall have surrendered to Tala possession of the premises.6 On appeal, the Regional Trial Court, Branch 26, Iloilo City affirmed the MTC decision.7 Banco Filipino elevated the RTC decision to the Court of Appeals which affirmed the challenged decision.8 Banco Filipino sought for a reconsideration of the Court of Appeals Decision, invoking in its Supplemental Motion for Reconsideration the Decisions of the same court in two of the other illegal detainer cases initiated by Tala against Banco Filipino, docketed as CA-G.R. SP Nos. 39104 and 40524. In these cases, the Court of Appeals upheld the validity of the lease contract providing for a period of twenty (20) years. Finding Banco Filipino's motions for reconsideration meritorious, the Court of Appeals issued the herein assailed Resolution, thus:

"This Court agrees with petitioner that its Decision of August 30, 1996 in CA-G.R. SP No. 39104, having been declared final and executory by no less than the Supreme Court in G.R. No. 127586, now constitutes the law of the case between the parties in the present case. Accordingly, this Court is not at liberty to disregard or abandon the same at will without wreaking havoc on said legal principle. "WHEREFORE, petitioner's motion for reconsideration and supplemental motion for reconsideration are hereby GRANTED. Accordingly, the Court's Decision of August 25, 1997 is hereby SET ASIDE and, in lieu thereof, a new one is rendered REVERSING and SETTING ASIDE the appealed decision and DISMISSING the complaint for ejectment filed against herein petitioner in the Municipal Trial Court of Iloilo City."9 Tala now comes to this Court on the lone ground that: "The Honorable Court of Appeals erred in considering that principle of 'the law of the case' finds application in the instant case."10 Petitioner Tala contends that its complaint for illegal detainer should not have been dismissed by the Court of Appeals on the basis of its decision in CA-G.R. SP No. 39104. Petitioner claims that this decision is not a precedent. The first in the series of illegal detainer cases filed by Tala against the bank which reached the Supreme Court is CA-G.R. SP No. 39104. This involves the site in Malabon. The Court of Appeals held that Banco Filipino cannot be ejected from the subject premises considering that the twenty (20)year lease contract has not expired. Tala elevated this Court of Appeals decision to the Supreme Court in G.R. No. 127586. In a Resolution dated March 12, 1997, the Supreme Court dismissed Tala's petition as the "appeal" was not timely perfected, thus: "Considering the manifestation dated January 31, 1997 filed by petitioner that it is no longer pursuing or holding in abeyance recourse to the Supreme Court for reasons stated therein, the Court Resolved toDECLARE THIS CASE TERMINATED and DIRECT the Clerk of Court to INFORM the parties that the judgment sought to be reviewed has become final and executory, no appeal therefrom having been timely perfected."11 We agree with petitioner Tala that the decision of the Court of Appeals in CA-G.R. SP No. 39104 holding that the twenty (20)-year contract of lease governs the contractual relationship between the parties is not a precedent considering that the Supreme Court in G.R. No. 127586 did not decide the case on the merits. The petition was dismissed on mere technicality. It is significant to note, however, that the Supreme Court in G.R. No. 129887,12through Mr. Justice Sabino R. de Leon, resolved the identical issue raised in the present petition, i.e., whether the period of the lease between the parties is twenty (20) or eleven (11) years, thus: "Second. Petitioner Tala Realty insists that its eleven (11)-year lease contract controls. We agree with the MTC and the RTC, however, that the eleven (11)-year contract is a forgery because (1) Teodoro O. Arcenas, then Executive Vice-President of private respondent Banco Filipino, denied having signed the contract; (2) the records of the notary public who notarized the said contract, Atty. Generoso S. Fulgencio, Jr., do not include the said document; and (3) the said contract was never submitted to the Central Bank as required by the latter's rules and regulations (Rollo, pp. 383-384.). "Clearly, the foregoing circumstances are badges of fraud and simulation that rightly make any court suspicious and wary of imputing any legitimacy and validity to the said lease contract.

"Executive Vice-President Arcenas of private respondent Banco Filipino testified that he was responsible for the daily operations of said bank. He denied having signed the eleven (11)-year contract and reasoned that it was not in the interest of Banco Filipino to do so (Rollo, p. 384). The fact was corroborated by Josefina C. Salvador, typist of Banco Filipino's Legal Department, who allegedly witnessed the said contract and whose initials allegedly appear in all the pages thereof. She disowned the said marginal initials (id., p. 385). "The Executive Judge of the RTC supervises a notary public by requiring submission to the Office of the Clerk of Court of his monthly notarial report with copies of acknowledged documents thereto attached. Under this procedure and requirement of the Notarial Law, failure to submit such notarial report and copies of acknowledged documents has dire consequences including the possible revocation of the notary's notarial commission. "The fact that the notary public who notarized petitioner Tala Realty's alleged eleven (11)-year lease contract did not retain a copy thereof for submission to the Office of the Clerk of Court of the proper RTC militates against the use of said document as a basis to uphold petitioner's claim. The said alleged eleven (11)-year lease contract was not submitted to the Central Bank whose strict documentation rules must be complied with by banks to ensure their continued good standing. On the contrary, what was submitted to the Central Bank was the twenty (20)year lease contract. "Granting arguendo that private respondent Banco Filipino deliberately omitted to submit the eleven (11)-year contract to the Central Bank, we do not consider that fact as violative of the res inter alios acta aliis non nocet (Section 28, Rule 130, Revised Rules of Court provides, viz.: 'Sec. 28. Admission by third party - The rights of a party cannot be prejudiced by an act, declaration or omission of another, except as hereinafter provided.'; Compania General de Tabacos v. Ganson, 13 Phil. 472, 477 [1909]) rule in evidence. Rather, it is an indication of said contract's inexistence. "It is not the eleven (11)-year lease contract but the twenty (20)-year lease contract which is the real and genuine contract between petitioner Tala Realty and private respondent Banco Filipino. Considering that the twenty (20)-year lease contract is still subsisting and will expire in 2001 yet, Banco Filipino is entitled to the possession of the subject premises for as long as it pays the agreed rental and does not violate the other terms and conditions thereof (Art. 1673, New Civil Code)." (Emphasis supplied) The validity of the twenty (20) year lease contract was further reinforced on June 20, 2000 when the First Division of this Court, this time, speaking through Madame Justice Consuelo Ynares-Santiago, rendered a Decision in G.R. No. 137980, likewise upholding the twenty (20)-year lease contract, thus: "In light of the foregoing recent Decision of this Court (G.R. No. 129887), we have no option but to uphold the twenty-year lease contract over the eleven-year contract presented by petitioner. It is the better practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same. 'Stare decisis et non quieta movere.' "That the principle of stare decisis applies in the instant case, even though the subject property is different, may be gleaned from the pronouncement in Negros Navigation Co., Inc. vs. Court of Appeals [G.R. No. 110398, 281 SCRA 534, 542-543 (1997)], to wit 'Petitioner criticizes the lower court's reliance on the Mecenas case, arguing that although this case arose out of the same incident as that involved in Mecenas, the

parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it, or, in short, on the record of this case. 'The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there is only one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other! 'Adherence to the Mecenas case is dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the legal maxim 'stare decisis et non quieta movere' (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue (J.M. Tuason & Corp. v. Mariano, 85 SCRA 644 [1978]). In Woulfe v. Associated Realties Corporation (130 N.J. Eq. 519, 23 A. 2d 399, 401 [1942]), the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis.Similarly, in State ex rel. Tollinger v. Gill (75 Ohio App., 62 N.E. 2d 760 [1944]), it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: 'Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same, even though the parties may be different' (Heisler v. Thomas Colliery Co., 274 Pa. 448, 452, 118A, 394, 395 [1922]. Manogahela Street Ry, Co. v. Philadelphia Co., 350 Pa 603, 39 A. 2d 909, 916 [1944]; In re Burtt's Estate, 353 Pa. 217, 4 A. 2d 670, 677 [1945]). Thus, in J.M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of 'stare decisis et non quieta movere.'(underscoring, Ours) "Here, therefore, even if the property subject of the Decision of G.R. No. 129887 is located in Urdaneta, Pangasinan while that in the instant case is located in Davao, we can very well apply the conclusion in G.R. No. 129887 that it is the twenty-year lease contract which is controlling inasmuch as not only are the parties the same, but more importantly, the issue regarding its validity is one and the same and, hence, should no longer be relitigated." Considering the above rulings, we hold that the term of the lease in the present case is also twenty (20) years. Resolving now the issue of whether or not respondent Banco Filipino should be ejected for nonpayment of rentals, the First Division of this Court in the same G.R. No. 137980 held: "Coming now to the issue of whether or not respondent should be ejected for non-payment of rentals, we do not agree with the ruling in G.R. No 129887 that since the unpaid rentals demanded by petitioner were based on a new rate which it unilaterally imposed and to which respondent did not agree, there lies no ground for ejectment. In such a case, there could still be ground for ejectment based on non-payment of rentals. The recent case of T & C

Development Corporation vs. Court of Appeals13 is instructional on this point. It was there cautioned that 'The trial court found that private respondent had failed to pay the monthly rental of P1,800.00 from November 1992 to February 16, 1993, despite demands to pay and to vacate the premises made by petitioner. Even if private respondent deposited the rents in arrears in the bank, this fact cannot alter the legal situation of private respondent since the account was opened in private respondent's name. Clearly, there was cause for the ejectment of private respondent. Although the increase in monthly rentals from P700.00 to P1,800.00 was in excess of 20% allowed by B.P. Blg. 877, as amended by R.A. No. 6828, what private respondent could have done was to deposit the original rent of P700.00 either with the judicial authorities or in a bank in the name of, and with notice to, petitioner. As this Court held in Uy v. Court of Appeals (178 SCRA 671, 676 [1989]): 'The records reveal that the new rentals demanded since 1979 (P150.00 per month) exceed that allowed by law so refusal on the part of the lessor to accept was justified. However, what the lessee should have done was to deposit in 1979 the previous rent. This deposit in the Bank was made only in 1984 indicating a delay of more than four years. 'From the foregoing facts, it is clear that the lessor was correct in asking for the ejectment of the delinquent lessee. Moreover, he should be granted not only the current rentals but also all the rentals in arrears. This is so even if the lessor himself did not appeal because as ruled by this Court, there have been instances when substantial justice demands the giving of the proper reliefs.' x x x "While advance rentals appear to have been made to be applied for the payment of rentals due from the eleventh year to the twentieth year of the lease, to wit'3. That upon the signing and execution of this Contract, the LESSEE shall pay the LESSOR ONE MILLION TWENTY THOUSAND PESOS ONLY (P1,020,000.00) Philippine Currency representing advance rental to be applied on the monthly rental for period from the eleventh to the twentieth year', "the records show that such advance rental had already been applied for rent on the property for the period of August, 1985 to November, 1989. "Thus, when respondent stopped paying any rent at all beginning April, 1994, it gave petitioner good ground for instituting ejectment proceedings. We reiterate the ruling in T & C Development Corporation, supra, that if ever petitioner took exception to the unilateral or illegal increase in rental rate, it should not have completely stopped paying rent but should have deposited the original rent amount with the judicial authorities or in a bank in the name of, and with notice to, petitioner. This circumstance, i.e., respondent's failure to pay rent at the old rate, does not appear in G.R. No. 129887. Thus, while we are bound by the findings of this Court's Second Division in that case under the principle of stare decisis, the fact that respondent's failure to pay any rentals beginning April 1994, which provided ground for its ejectment from the premises, justifies our departure from the outcome of G.R. No. 129887. In this case, we uphold petitioner's right to eject respondent from the leased premises."

It bears stressing that the facts of the instant case and those of G.R. Nos. 129887 and 137980 are substantially the same. The only difference is the site of respondent bank. The opposing parties are likewise the same. Clearly, in light of the Decisions of this Court in G.R. Nos. 129887 and 137980, which we follow as precedents, respondent Banco Filipino may not be ejected on the ground of expiration of the lease. However, since it stopped paying the rents beginning April 1994, its eviction from the premises is justified. WHEREFORE, the petition is GRANTED. The assailed Resolution of the Court of Appeals in CA- G.R. SP No. 44257 is MODIFIED insofar as it denies petitioner Tala's prayer for ejectment of respondent Banco Filipino. Judgment is rendered ordering respondent Banco Filipino to vacate the subject premises and to restore possession thereof to petitioner Tala. Respondent is also ordered to pay Tala the monthly rental of P21,100.00 computed from April 1994 up to the time it vacates the premises.
1wphi1. nt

Costs against respondent. SO ORDERED. Melo, Vitug, Gonzaga-Reyes, JJ., concur. Panganiban, J., no part, former counsel of a party.

******************************************************************************************* ** J.R.A. PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE G.R. No. 177127 October 11, 2010 Del Castillo, J. Doctrine: - The absence of the word zero rated on the invoices/receipts is fatal to a claim for credit/refund of input VAT. - Stare decisis et non quieta movere. Courts are bound by prior decisions. Thus, once a case has been decided one way, courts have no choice but to resolve subsequent cases involving the same issue in the same manner. Facts: Petitioner, a PEZA Corporation, filed applications for tax credit/refund of unutilized input VAT on its zero-rated sales for the taxable quarters of 2000. The claim for credit/refund, however, remained unacted by the respondent. Hence, petitioner was constrained to file a petition before the CTA. The CTA eventually denied the petition for lack of the word zero-rated on the invoices/receipts. Issue: Whether or not the failure to print the word zero-rated on the invoices/receipts is fatal to a claim for credit/ refund of input VAT on zero-rated sales

Held: Yes. The absence of the word zero rated on the invoices/receipts is fatal to a claim for credit/refund of input VAT. This has been squarely resolved in Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) v. Commissioner of Internal Revenue (G.R. No. 178090, 612 SCRA 28, February 8, 2010). In that case, the claim for tax credit/refund was denied for non-compliance with Section 4.108-1 of Revenue Regulations No. 7-95, which requires the word zero rated to be printed on the invoices/receipts covering zero-rated sales. From the abovementioned decision, the Court ruled that the appearance of the word zerorated on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not collect. Stare decisis et non quieta movere. Courts are bound by prior decisions. Thus, once a case has been decided one way, courts have no choice but to resolve subsequent cases involving the same issue in the same manner [Agencia Exquisite of Bohol, Incorporated v. Commissioner of Internal Revenue, G.R. Nos. 150141, 157359 and 158644, February 12, 2009, 578 SCRA 539, 550]. 1. Design, plan, or purpose the legislature had in drafting, proposing, debating, and enacting a particular statue. 2. Also known as the plain meaning rule, this rule provides that where the language of the law is clear and unequivocal, it must be given its literal application and applied without interpretation. Plain Meaning Rule - If the statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. This is rule rests on the valid presumption that the words employed by the legislature in a statute correctly express its intention or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by use of such words as are found in the statute.[1] It is also known as "verba legis".
Verba legis is an expression regularly used by Thomas Aquinas to mean 'the letter of the law'. When we contrast 'the letter of the law' with 'the spirit of the law', the medieval scholastic term for 'letter of the law' is verba legis. Legis - it means a law contract

Verba Legis - The words of the law", or "words of a law" The expression is used in the first meaning several times in the Vulgata, the first translation of the Bible into Latin. 3. Whole statute rule is a principle of statutory construction that a statute should be considered in its
entirety, and that the words used within it should be given their ordinary meaning unless there is a clear indication to the contrary. It is based on the proposition that words and phrases of a statute are to be read in context with neighboring words and phrases in the same statute to produce a harmonious whole.

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CHAPTER III BASIC GUIDELINES IN THE CONSTRUCTION ANDINTERPRETATION OF LAWS 1. LEGISLATIVE INTENT The object of all interpretation and construction of statutes is to ascertain the meaning and intention of the legislature, to the end thatthe same may be enforced.Legislative intent is determined principally from the language of thestatute. 2. VERBA LEGIS If the language of the statute is plain and free from ambiguity, andexpress a single, definite, and sensible meaning, that meaning isconclusively presumed to be the meaning which the legislature intendedto convey. 3. STATUTES AS A WHOLE A cardinal rule in statutory construction is that legislative intent must beascertained from a consideration of the statute as a whole and notmerely of a particular provision. A word or phrase might easily convey ameaning which is different from the one actually intended.A statute should be construed as a whole because it is not to bepresumed that the legislature has used any useless words, and becauseit is dangerous practice to base the construction upon only a part of it,since one portion may be qualified by other portions. 4. SPIRIT AND PURPOSE OF THE LAW When the interpretation of a statute according to the exact and literalimport of its words would lead to absurd or mischievous consequences,or would thwart or contravene the manifest purpose of the legislature in its enactment, it should be construed according to its spirit and reason,disregarding or modifying, so far as may be necessary, the strict letter of the law. When the reason of the law ceases, the law itself ceases. Doctrine of necessary implications. What is implied in a statute is asmuch a part thereof as that which is expressed. 5. CASUS OMISSUS When a statute makes specific provisions in regard to severalenumerated cases or objects, but omits to make any provision for a caseor object which is analogous to those enumerated, or which stands uponthe same reason, and is therefore within the general scope of the statute,and it appears that such case or object was omitted by inadvertence or because it was overlooked or unforeseen, it is called a casus omissus. Such omissions or defects cannot be supplied by the courts. The rule of casus omissus pro omisso habendus est can operate andapply only if and when the omission has been clearly established. 6. STARE DECISIS It is the doctrine that, when court has once laid down a principle, andapply it to all future cases, where facts are substantially the same,regardless of whether the parties and properties are the same. 7. Stare Decisis . Follow past precedents and do not disturb what has beensettled. Matters already decided on the merits cannot be relitigatedagain and again. Stare decisis et non quieta movere (follow past precedents and do notdisturb what has been settled.