Sie sind auf Seite 1von 90

LOUIS BAROK C.

BIRAOGO,
Petitioner,

G.R. No. 192935

- versus THE PHILIPPINE TRUTH COMMISSION


OF 2010,
Respondent.
x-----------------------x
REP. EDCEL C. LAGMAN,
REP. RODOLFO B. ALBANO, JR., REP.
SIMEON A. DATUMANONG, and REP.
ORLANDO B. FUA, SR.,
Petitioners,

- versus -

EXECUTIVE SECRETARY PAQUITO N.


OCHOA, JR. and DEPARTMENT OF
BUDGET AND MANAGEMENT
SECRETARY FLORENCIO B. ABAD,
Respondents.

G.R. No. 193036


Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.
Promulgated:
December 7, 2010

x -------------------------------------------------------------------------------------- x

DECISION
MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries,


it does not assert any superiority over the other departments; it does not in
reality nullify or invalidate an act of the legislature, but only asserts the
solemn and sacred obligation assigned to it by the Constitution to

determine conflicting claims of authority under the Constitution and to


establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them.
--- Justice Jose P. Laurel[1]
The role of the Constitution cannot be overlooked. It is through the Constitution that the
fundamental powers of government are established, limited and defined, and by which
these powers are distributed among the several departments.[2] The Constitution is the
basic and paramount law to which all other laws must conform and to which all persons,
including the highest officials of the land, must defer.[3] Constitutional doctrines must
remain steadfast no matter what may be the tides of time. It cannot be simply made to
sway and accommodate the call of situations and much more tailor itself to the whims
and caprices of government and the people who run it.[4]
For consideration before the Court are two consolidated cases[5] both of which
essentially assail the validity and constitutionality of Executive Order No. 1, dated July
30, 2010, entitled Creating the Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted
by petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo
assails Executive Order No. 1 for being violative of the legislative power of Congress
under Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority
of the legislature to create a public office and to appropriate funds therefor.[7]
The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition
filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong,
and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of
Representatives.
The genesis of the foregoing cases can be traced to the events prior to the historic May
2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch
condemnation of graft and corruption with his slogan, Kung walang corrupt, walang
mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this
noble objective, catapulted the good senator to the presidency.

To transform his campaign slogan into reality, President Aquino found a need for
a special body to investigate reported cases of graft and corruption allegedly committed
during the previous administration.
Thus, at the dawn of his administration, the President on July 30, 2010, signed
Executive Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth
Commission). Pertinent provisions of said executive order read:
EXECUTIVE ORDER NO. 1
CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010
WHEREAS, Article XI, Section 1 of the 1987 Constitution of the
Philippines solemnly enshrines the principle that a public office is a public
trust and mandates that public officers and employees, who are servants of
the people, must at all times be accountable to the latter, serve them with
utmost responsibility, integrity, loyalty and efficiency, act with patriotism
and justice, and lead modest lives;
WHEREAS, corruption is among the most despicable acts of defiance of
this principle and notorious violation of this mandate;
WHEREAS, corruption is an evil and scourge which seriously affects the
political, economic, and social life of a nation; in a very special way it
inflicts untold misfortune and misery on the poor, the marginalized and
underprivileged sector of society;
WHEREAS, corruption in the Philippines has reached very alarming
levels, and undermined the peoples trust and confidence in the
Government and its institutions;
WHEREAS, there is an urgent call for the determination of the truth
regarding certain reports of large scale graft and corruption in the
government and to put a closure to them by the filing of the appropriate
cases against those involved, if warranted, and to deter others from
committing the evil, restore the peoples faith and confidence in the
Government and in their public servants;
WHEREAS, the Presidents battlecry during his campaign for the
Presidency in the last elections kung walang corrupt, walang mahirap
expresses a solemn pledge that if elected, he would end corruption and the
evil it breeds;
WHEREAS, there is a need for a separate body dedicated solely to

investigating and finding out the truth concerning the reported cases of
graft and corruption during the previous administration, and which will
recommend the prosecution of the offenders and secure justice for all;
WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292,
otherwise known as the Revised Administrative Code of the Philippines,
gives the President the continuing authority to reorganize the Office of the
President.
NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of
the Republic of the Philippines, by virtue of the powers vested in me by
law, do hereby order:
SECTION 1. Creation of a Commission. There is hereby created the
PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the
COMMISSION, which shall primarily seek and find the truth on, and
toward this end, investigate reports of graft and corruption of such scale
and magnitude that shock and offend the moral and ethical sensibilities of
the people, committed by public officers and employees, their coprincipals, accomplices and accessories from the private sector, if any,
during the previous administration; and thereafter recommend the
appropriate action or measure to be taken thereon to ensure that the full
measure of justice shall be served without fear or favor.
The Commission shall be composed of a Chairman and four (4) members
who will act as an independent collegial body.
SECTION 2. Powers and Functions. The Commission, which shall have
all the powers of an investigative body under Section 37, Chapter 9, Book
I of the Administrative Code of 1987, is primarily tasked to conduct a
thorough fact-finding investigation of reported cases of graft and
corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private
sector, if any, during the previous administration and thereafter submit its
finding and recommendations to the President, Congress and the
Ombudsman.
In particular, it shall:
a)
Identify and determine the reported cases of such graft and
corruption which it will investigate;
b)
Collect, receive, review and evaluate evidence related to or regarding
the cases of large scale corruption which it has chosen to investigate, and
to this end require any agency, official or employee of the Executive
Branch, including government-owned or controlled corporations, to
produce documents, books, records and other papers;

c)
Upon proper request or representation, obtain information and
documents from the Senate and the House of Representatives records of
investigations conducted by committees thereof relating to matters or
subjects being investigated by the Commission;
d)
Upon proper request and representation, obtain information from the
courts, including the Sandiganbayan and the Office of the Court
Administrator, information or documents in respect to corruption cases
filed with the Sandiganbayan or the regular courts, as the case may be;
e)
Invite or subpoena witnesses and take their testimonies and for that
purpose, administer oaths or affirmations as the case may be;
f)
Recommend, in cases where there is a need to utilize any person as a
state witness to ensure that the ends of justice be fully served, that such
person who qualifies as a state witness under the Revised Rules of Court
of the Philippines be admitted for that purpose;
g)
Turn over from time to time, for expeditious prosecution, to the
appropriate prosecutorial authorities, by means of a special or interim
report and recommendation, all evidence on corruption of public officers
and employees and their private sector co-principals, accomplices or
accessories, if any, when in the course of its investigation the Commission
finds that there is reasonable ground to believe that they are liable for graft
and corruption under pertinent applicable laws;
h)
Call upon any government investigative or prosecutorial agency such
as the Department of Justice or any of the agencies under it, and the
Presidential Anti-Graft Commission, for such assistance and cooperation
as it may require in the discharge of its functions and duties;
i)
Engage or contract the services of resource persons, professionals
and other personnel determined by it as necessary to carry out its mandate;
j)
Promulgate its rules and regulations or rules of procedure it deems
necessary to effectively and efficiently carry out the objectives of this
Executive Order and to ensure the orderly conduct of its investigations,
proceedings and hearings, including the presentation of evidence;
k)
Exercise such other acts incident to or are appropriate and necessary
in connection with the objectives and purposes of this Order.
SECTION 3. Staffing Requirements. x x x.
SECTION 4. Detail of Employees. x x x.

SECTION 5. Engagement of Experts. x x x


SECTION 6. Conduct of Proceedings. x x x.
SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.
SECTION 8. Protection of Witnesses/Resource Persons. x x x.
SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony.
Any government official or personnel who, without lawful excuse, fails to
appear upon subpoena issued by the Commission or who, appearing before
the Commission refuses to take oath or affirmation, give testimony or
produce documents for inspection, when required, shall be subject to
administrative disciplinary action. Any private person who does the same
may be dealt with in accordance with law.
SECTION 10. Duty to Extend Assistance to the Commission. x x x.
SECTION 11. Budget for the Commission. The Office of the President
shall provide the necessary funds for the Commission to ensure that it can
exercise its powers, execute its functions, and perform its duties and
responsibilities as effectively, efficiently, and expeditiously as possible.
SECTION 12. Office. x x x.
SECTION 13. Furniture/Equipment. x x x.
SECTION 14. Term of the Commission. The Commission shall
accomplish its mission on or before December 31, 2012.
SECTION 15. Publication of Final Report. x x x.
SECTION 16. Transfer of Records and Facilities of the Commission. x x
x.
SECTION 17. Special Provision Concerning Mandate. If and when in the
judgment of the President there is a need to expand the mandate of the
Commission as defined in Section 1 hereof to include the investigation of
cases and instances of graft and corruption during the prior
administrations, such mandate may be so extended accordingly by way of
a supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is

declared unconstitutional, the same shall not affect the validity and
effectivity of the other provisions hereof.
SECTION 19. Effectivity. This Executive Order shall take effect
immediately.
DONE in the City of Manila, Philippines, this 30th day of July 2010.
(SGD.) BENIGNO S. AQUINO III
By the President:
(SGD.) PAQUITO N. OCHOA, JR.
Executive Secretary
Nature of the Truth Commission
As can be gleaned from the above-quoted provisions, the Philippine Truth
Commission (PTC) is a mere ad hoc body formed under the Office of the President with
the primary task to investigate reports of graft and corruption committed by third-level
public officers and employees, their co-principals, accomplices and accessories during the
previous administration, and thereafter to submit its finding and recommendations to the
President, Congress and the Ombudsman. Though it has been described as an
independent collegial body, it is essentially an entity within the Office of the President
Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc
body is one.[8]
To accomplish its task, the PTC shall have all the powers of an investigative body
under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not,
however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render
awards in disputes between contending parties. All it can do is gather, collect and assess
evidence of graft and corruption and make recommendations. It may have subpoena
powers but it has no power to cite people in contempt, much less order their arrest.
Although it is a fact-finding body, it cannot determine from such facts if probable cause
exists as to warrant the filing of an information in our courts of law. Needless to state, it
cannot impose criminal, civil or administrative penalties or sanctions.
The PTC is different from the truth commissions in other countries which have
been created as official, transitory and non-judicial fact-finding bodies to establish the

facts and context of serious violations of human rights or of international humanitarian


law in a countrys past.[9] They are usually established by states emerging from periods
of internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional
justice.
Truth commissions have been described as bodies that share the following
characteristics: (1) they examine only past events; (2) they investigate patterns of abuse
committed over a period of time, as opposed to a particular event; (3) they are temporary
bodies that finish their work with the submission of a report containing conclusions and
recommendations; and (4) they are officially sanctioned, authorized or empowered by the
State.[10] Commissions members are usually empowered to conduct research, support
victims, and propose policy recommendations to prevent recurrence of crimes. Through
their investigations, the commissions may aim to discover and learn more about past
abuses, or formally acknowledge them. They may aim to prepare the way for
prosecutions and recommend institutional reforms.[11]
Thus, their main goals range from retribution to reconciliation. The Nuremburg
and Tokyo war crime tribunals are examples of a retributory or vindicatory body set up to
try and punish those responsible for crimes against humanity. A form of a reconciliatory
tribunal is the Truth and Reconciliation Commission of South Africa, the principal
function of which was to heal the wounds of past violence and to prevent future conflict
by providing a cathartic experience for victims.
The PTC is a far cry from South Africas model. The latter placed more emphasis
on reconciliation than on judicial retribution, while the marching order of the PTC is the
identification and punishment of perpetrators. As one writer[12] puts it:
The order ruled out reconciliation. It translated the Draconian code
spelled out by Aquino in his inaugural speech: To those who talk about
reconciliation, if they mean that they would like us to simply forget about
the wrongs that they have committed in the past, we have this to say:
There can be no reconciliation without justice. When we allow crimes to
go unpunished, we give consent to their occurring over and over again.
The Thrusts of the Petitions
Barely a month after the issuance of Executive Order No. 1, the petitioners asked

the Court to declare it unconstitutional and to enjoin the PTC from performing its
functions. A perusal of the arguments of the petitioners in both cases shows that they are
essentially the same. The petitioners-legislators summarized them in the following
manner:
(a) E.O. No. 1 violates the separation of powers as it arrogates the
power of the Congress to create a public office and appropriate funds for
its operation.
(b) The provision of Book III, Chapter 10, Section 31 of the
Administrative Code of 1987 cannot legitimize E.O. No. 1 because the
delegated authority of the President to structurally reorganize the Office of
the President to achieve economy, simplicity and efficiency does not
include the power to create an entirely new public office which was
hitherto inexistent like the Truth Commission.
(c) E.O. No. 1 illegally amended the Constitution and pertinent
statutes when it vested the Truth Commission with quasi-judicial powers
duplicating, if not superseding, those of the Office of the Ombudsman
created under the 1987 Constitution and the Department of Justice created
under the Administrative Code of 1987.
(d) E.O. No. 1 violates the equal protection clause as it selectively
targets for investigation and prosecution officials and personnel of the
previous administration as if corruption is their peculiar species even as it
excludes those of the other administrations, past and present, who may be
indictable.
(e) The creation of the Philippine Truth Commission of 2010
violates the consistent and general international practice of four decades
wherein States constitute truth commissions to exclusively investigate
human rights violations, which customary practice forms part of the
generally accepted principles of international law which the Philippines is
mandated to adhere to pursuant to the Declaration of Principles enshrined
in the Constitution.
(f) The creation of the Truth Commission is an exercise in futility,
an adventure in partisan hostility, a launching pad for trial/conviction by
publicity and a mere populist propaganda to mistakenly impress the people
that widespread poverty will altogether vanish if corruption is eliminated
without even addressing the other major causes of poverty.
(g) The mere fact that previous commissions were not
constitutionally challenged is of no moment because neither laches nor
estoppel can bar an eventual question on the constitutionality and validity

of an executive issuance or even a statute.[13]

In their Consolidated Comment,[14] the respondents, through the Office of the


Solicitor General (OSG), essentially questioned the legal standing of petitioners and
defended the assailed executive order with the following arguments:
1] E.O. No. 1 does not arrogate the powers of Congress to create a
public office because the Presidents executive power and power of control
necessarily include the inherent power to conduct investigations to ensure
that laws are faithfully executed and that, in any event, the Constitution,
Revised Administrative Code of 1987 (E.O. No. 292), [15] Presidential
Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No.
9970,[17] and settled jurisprudence that authorize the President to create
or form such bodies.
2] E.O. No. 1 does not usurp the power of Congress to appropriate
funds because there is no appropriation but a mere allocation of funds
already appropriated by Congress.
3] The Truth Commission does not duplicate or supersede the
functions of the Office of the Ombudsman (Ombudsman) and the
Department of Justice (DOJ),because it is a fact-finding body and not a
quasi-judicial body and its functions do not duplicate, supplant or erode
the latters jurisdiction.
4] The Truth Commission does not violate the equal protection
clause because it was validly created for laudable purposes.

The OSG then points to the continued existence and validity of other executive
orders and presidential issuances creating similar bodies to justify the creation of the PTC
such as Presidential Complaint and Action Commission (PCAC) by President Ramon B.
Magsaysay, Presidential Committee on Administrative Performance Efficiency
(PCAPE)by President Carlos P. Garcia and Presidential Agency on Reform and
Government Operations (PARGO) by President Ferdinand E. Marcos.[18]
From the petitions, pleadings, transcripts, and memoranda, the following are the
principal issues to be resolved:
1.
Whether or not the petitioners have the legal
standing to file their respective petitions and question Executive Order No.
1;

2.
Whether or not Executive Order No. 1 violates
the principle of separation of powers by usurping the powers of Congress
to create and to appropriate funds for public offices, agencies and
commissions;
3. Whether or not Executive Order No. 1 supplants the powers of
the Ombudsman and the DOJ;
4. Whether or not Executive Order No. 1 violates the equal
protection clause; and
5. Whether or not petitioners are entitled to injunctive relief.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1,
the Court needs to ascertain whether the requisites for a valid exercise of its power of
judicial review are present.
Like almost all powers conferred by the Constitution, the power of judicial review is
subject to limitations, to wit: (1) there must be an actual case or controversy calling for
the exercise of judicial power; (2) the person challenging the act must have the standing
to question the validity of the subject act or issuance; otherwise stated, he must have a
personal and substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement; (3) the question of constitutionality must be
raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis
mota of the case.[19]
Among all these limitations, only the legal standing of the petitioners has been put at
issue.
Legal Standing of the Petitioners
The OSG attacks the legal personality of the petitioners-legislators to file their
petition for failure to demonstrate their personal stake in the outcome of the case. It

argues that the petitioners have not shown that they have sustained or are in danger of
sustaining any personal injury attributable to the creation of the PTC. Not claiming to be
the subject of the commissions investigations, petitioners will not sustain injury in its
creation or as a result of its proceedings.[20]
The Court disagrees with the OSG in questioning the legal standing of the
petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily
invokes usurpation of the power of the Congress as a body to which they belong as
members. This certainly justifies their resolve to take the cudgels for Congress as an
institution and present the complaints on the usurpation of their power and rights as
members of the legislature before the Court. As held in Philippine Constitution
Association v. Enriquez,[21]
To the extent the powers of Congress are impaired, so is the power
of each member thereof, since his office confers a right to participate in the
exercise of the powers of that institution.
An act of the Executive which injures the institution of Congress
causes a derivative but nonetheless substantial injury, which can be
questioned by a member of Congress. In such a case, any member of
Congress can have a resort to the courts.
Indeed, legislators have a legal standing to see to it that the prerogative, powers
and privileges vested by the Constitution in their office remain inviolate. Thus, they are
allowed to question the validity of any official action which, to their mind, infringes on
their prerogatives as legislators.[22]
With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to
question the creation of the PTC and the budget for its operations.[23] It emphasizes
that the funds to be used for the creation and operation of the commission are to be taken
from those funds already appropriated by Congress. Thus, the allocation and
disbursement of funds for the commission will not entail congressional action but will
simply be an exercise of the Presidents power over contingent funds.
As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or
is in danger of sustaining, any personal and direct injury attributable to the
implementation of Executive Order No. 1. Nowhere in his petition is an assertion of a

clear right that may justify his clamor for the Court to exercise judicial power and to
wield the axe over presidential issuances in defense of the Constitution. The case of
David v. Arroyo[24] explained the deep-seated rules on locus standi. Thus:
Locus standi is defined as a right of appearance in a court of justice
on a given question. In private suits, standing is governed by the realparties-in interest rule as contained in Section 2, Rule 3 of the 1997 Rules
of Civil Procedure, as amended. It provides that every action must be
prosecuted or defended in the name of the real party in interest.
Accordingly, the real-party-in interest is the party who stands to be
benefited or injured by the judgment in the suit or the party entitled to the
avails of the suit.Succinctly put, the plaintiffs standing is based on his own
right to the relief sought.
The difficulty of determining locus standi arises in public suits.
Here, the plaintiff who asserts a public right in assailing an allegedly
illegal official action, does so as a representative of the general public. He
may be a person who is affected no differently from any other person. He
could be suing as a stranger, or in the category of a citizen, or taxpayer. In
either case, he has to adequately show that he is entitled to seek judicial
protection. In other words, he has to make out a sufficient interest in the
vindication of the public order and the securing of relief as a citizen or
taxpayer.
Case law in most jurisdictions now allows both citizen and
taxpayer standing in public actions. The distinction was first laid down in
Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit
is in a different category from the plaintiff in a citizens suit. In the former,
the plaintiff is affected by the expenditure of public funds, while in the
latter, he is but the mere instrument of the public concern. As held by the
New York Supreme Court in People ex rel Case v. Collins: In matter of
mere public right, howeverthe people are the real partiesIt is at least the
right, if not the duty, of every citizen to interfere and see that a public
offence be properly pursued and punished, and that a public grievance be
remedied. With respect to taxpayers suits, Terr v. Jordan held that the right
of a citizen and a taxpayer to maintain an action in courts to restrain the
unlawful use of public funds to his injury cannot be denied.
However, to prevent just about any person from seeking judicial
interference in any official policy or act with which he disagreed with, and
thus hinders the activities of governmental agencies engaged in public
service, the United State Supreme Court laid down the more stringent
direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v. Ullman.
The same Court ruled that for a private individual to invoke the judicial
power to determine the validity of an executive or legislative action, he

must show that he has sustained a direct injury as a result of that action,
and it is not sufficient that he has a general interest common to all
members of the public.
This Court adopted the direct injury test in our jurisdiction. In
People v. Vera, it held that the person who impugns the validity of a statute
must have a personal and substantial interest in the case such that he has
sustained, or will sustain direct injury as a result. The Vera doctrine was
upheld in a litany of cases, such as, Custodio v. President of the Senate,
Manila Race Horse Trainers Association v. De la Fuente, Pascual v.
Secretary of Public Works and Anti-Chinese League of the Philippines v.
Felix. [Emphases included. Citations omitted]

Notwithstanding, the Court leans on the doctrine that the rule on standing is a
matter of procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary
citizens, taxpayers, and legislators when the public interest so requires, such as when the
matter is of transcendental importance, of overreaching significance to society, or of
paramount public interest.[25]
Thus, in Coconut Oil Refiners Association, Inc. v. Torres,[26] the Court held that
in cases of paramount importance where serious constitutional questions are involved, the
standing requirements may be relaxed and a suit may be allowed to prosper even where
there is no direct injury to the party claiming the right of judicial review. In the first
Emergency Powers Cases,[27] ordinary citizens and taxpayers were allowed to question
the constitutionality of several executive orders although they had only an indirect and
general interest shared in common with the public.
The OSG claims that the determinants of transcendental importance[28] laid
down in CREBA v. ERC and Meralco[29] are non-existent in this case. The Court,
however, finds reason in Biraogos assertion that the petition covers matters of
transcendental importance to justify the exercise of jurisdiction by the Court. There are
constitutional issues in the petition which deserve the attention of this Court in view of
their seriousness, novelty and weight as precedents. Where the issues are of
transcendental and paramount importance not only to the public but also to the Bench and
the Bar, they should be resolved for the guidance of all.[30] Undoubtedly, the Filipino
people are more than interested to know the status of the Presidents first effort to bring
about a promised change to the country. The Court takes cognizance of the petition not
due to overwhelming political undertones that clothe the issue in the eyes of the public,

but because the Court stands firm in its oath to perform its constitutional duty to settle
legal controversies with overreaching significance to society.
Power of the President to Create the Truth Commission
In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth
Commission is a public office and not merely an adjunct body of the Office of the
President.[31] Thus, in order that the President may create a public office he must be
empowered by the Constitution, a statute or an authorization vested in him by law.
According to petitioner, such power cannot be presumed[32] since there is no provision
in the Constitution or any specific law that authorizes the President to create a truth
commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting
the President the continuing authority to reorganize his office, cannot serve as basis for
the creation of a truth commission considering the aforesaid provision merely uses verbs
such as reorganize, transfer, consolidate, merge, and abolish.[34] Insofar as it vests in
the President the plenary power to reorganize the Office of the President to the extent of
creating a public office, Section 31 is inconsistent with the principle of separation of
powers enshrined in the Constitution and must be deemed repealed upon the effectivity
thereof.[35]
Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a
public office lies within the province of Congress and not with the executive branch of
government. They maintain that the delegated authority of the President to reorganize
under Section 31 of the Revised Administrative Code: 1) does not permit the President to
create a public office, much less a truth commission; 2) is limited to the reorganization of
the administrative structure of the Office of the President; 3) is limited to the restructuring
of the internal organs of the Office of the President Proper, transfer of functions and
transfer of agencies; and 4) only to achieve simplicity, economy and efficiency.[36]
Such continuing authority of the President to reorganize his office is limited, and by
issuing Executive Order No. 1, the President overstepped the limits of this delegated
authority.
The OSG counters that there is nothing exclusively legislative about the creation
by the President of a fact-finding body such as a truth commission. Pointing to numerous
offices created by past presidents, it argues that the authority of the President to create
public offices within the Office of the President Proper has long been recognized.[37]

According to the OSG, the Executive, just like the other two branches of government,
possesses the inherent authority to create fact-finding committees to assist it in the
performance of its constitutionally mandated functions and in the exercise of its
administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the
plenary powers wielded by the President under Section 1 and his power of control under
Section 17, both of Article VII of the Constitution.[39]
It contends that the President is necessarily vested with the power to conduct factfinding investigations, pursuant to his duty to ensure that all laws are enforced by public
officials and employees of his department and in the exercise of his authority to assume
directly the functions of the executive department, bureau and office, or interfere with the
discretion of his officials.[40] The power of the President to investigate is not limited to
the exercise of his power of control over his subordinates in the executive branch, but
extends further in the exercise of his other powers, such as his power to discipline
subordinates,[41] his power for rule making, adjudication and licensing purposes[42]
and in order to be informed on matters which he is entitled to know.[43]
The OSG also cites the recent case of Banda v. Ermita,[44] where it was held
that the President has the power to reorganize the offices and agencies in the executive
department in line with his constitutionally granted power of control and by virtue of a
valid delegation of the legislative power to reorganize executive offices under existing
statutes.
Thus, the OSG concludes that the power of control necessarily includes the power
to create offices. For the OSG, the President may create the PTC in order to, among
others, put a closure to the reported large scale graft and corruption in the government.
[45]
The question, therefore, before the Court is this: Does the creation of the PTC fall
within the ambit of the power to reorganize as expressed in Section 31 of the Revised
Administrative Code? Section 31 contemplates reorganization as limited by the following
functional and structural lines: (1) restructuring the internal organization of the Office of
the President Proper by abolishing, consolidating or merging units thereof or transferring
functions from one unit to another; (2) transferring any function under the Office of the
President to any other Department/Agency or vice versa; or (3) transferring any agency

under the Office of the President to any other Department/Agency or vice versa.Clearly,
the provision refers to reduction of personnel, consolidation of offices, or abolition
thereof by reason of economy or redundancy of functions. These point to situations where
a body or an office is already existent but a modification or alteration thereof has to be
effected. The creation of an office is nowhere mentioned, much less envisioned in said
provision. Accordingly, the answer to the question is in the negative.
To say that the PTC is borne out of a restructuring of the Office of the President
under Section 31 is a misplaced supposition, even in the plainest meaning attributable to
the term restructure an alteration of an existing structure. Evidently, the PTC was not part
of the structure of the Office of the President prior to the enactment of Executive Order
No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,[46]
But of course, the list of legal basis authorizing the President to
reorganize any department or agency in the executive branch does not
have to end here. We must not lose sight of the very source of the power
that which constitutes an express grant of power. Under Section 31, Book
III of Executive Order No. 292 (otherwise known as the Administrative
Code of 1987), "the President, subject to the policy in the Executive Office
and in order to achieve simplicity, economy and efficiency, shall have the
continuing authority to reorganize the administrative structure of the
Office of the President." For this purpose, he may transfer the functions of
other Departments or Agencies to the Office of the President. In
Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that
reorganization "involves the reduction of personnel, consolidation of
offices, or abolition thereof by reason of economy or redundancy of
functions." It takes place when there is an alteration of the existing
structure of government offices or units therein, including the lines of
control, authority and responsibility between them. The EIIB is a bureau
attached to the Department of Finance. It falls under the Office of the
President. Hence, it is subject to the Presidents continuing authority to
reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power
of control. Control is essentially the power to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the former with that of the latter.[47] Clearly, the power of control is
entirely different from the power to create public offices. The former is inherent in the
Executive, while the latter finds basis from either a valid delegation from Congress, or his

inherent duty to faithfully execute the laws.


The question is this, is there a valid delegation of power from Congress,
empowering the President to create a public office?
According to the OSG, the power to create a truth commission pursuant to the
above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.[48]
The said law granted the President the continuing authority to reorganize the national
government, including the power to group, consolidate bureaus and agencies, to abolish
offices, to transfer functions, to create and classify functions, services and activities,
transfer appropriations, and to standardize salaries and materials. This decree, in relation
to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as
Larin v. Executive Secretary.[49]
The Court, however, declines to recognize P.D. No. 1416 as a justification for the
President to create a public office. Said decree is already stale, anachronistic and
inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to
reorganize the administrative structure of the national government including the power to
create offices and transfer appropriations pursuant to one of the purposes of the decree,
embodied in its last Whereas clause:
WHEREAS, the transition towards the parliamentary form of
government will necessitate flexibility in the organization of the national
government.

Clearly, as it was only for the purpose of providing manageability and resiliency
during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus
oficioupon the convening of the First Congress, as expressly provided in Section 6,
Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with
this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the
last whereas clause of P.D. 1416
says it was enacted to prepare the
transition from presidential to
parliamentary.
Now,
in
a

parliamentary form of government,


the legislative and executive
powers are fused, correct?
SOLICITOR GENERAL CADIZ: Yes, Your Honor.
ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued.
Now would you agree with me that
P.D. 1416 should not be considered
effective anymore upon the
promulgation, adoption, ratification
of the 1987 Constitution.
SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your
Honor.
ASSOCIATE JUSTICE CARPIO: The power of the President to
reorganize the entire National
Government is deemed repealed, at
least, upon the adoption of the
1987 Constitution, correct.
SOLICITOR GENERAL CADIZ: Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D. No.
1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under
Section 17, Article VII of the Constitution, imposing upon the President the duty to
ensure that the laws are faithfully executed. Section 17 reads:
Section 17. The President shall have control of all the executive
departments, bureaus, and offices. He shall ensure that the laws be
faithfully executed. (Emphasis supplied).
As correctly pointed out by the respondents, the allocation of power in the three
principal branches of government is a grant of all powers inherent in them. The Presidents
power to conduct investigations to aid him in ensuring the faithful execution of laws in
this case, fundamental laws on public accountability and transparency is inherent in the
Presidents powers as the Chief Executive. That the authority of the President to conduct
investigations and to create bodies to execute this power is not explicitly mentioned in the
Constitution or in statutes does not mean that he is bereft of such authority.[51] As

explained in the landmark case of Marcos v. Manglapus:[52]


x x x. The 1987 Constitution, however, brought back the
presidential system of government and restored the separation of
legislative, executive and judicial powers by their actual distribution
among three distinct branches of government with provision for checks
and balances.
It would not be accurate, however, to state that "executive power"
is the power to enforce the laws, for the President is head of state as well
as head of government and whatever powers inhere in such positions
pertain to the office unless the Constitution itself withholds it.
Furthermore, the Constitution itself provides that the execution of the laws
is only one of the powers of the President. It also grants the President other
powers that do not involve the execution of any provision of law, e.g., his
power over the country's foreign relations.
On these premises, we hold the view that although the 1987
Constitution imposes limitations on the exercise of specific powers of the
President, it maintains intact what is traditionally considered as within the
scope of "executive power." Corollarily, the powers of the President
cannot be said to be limited only to the specific powers enumerated in the
Constitution. In other words, executive power is more than the sum of
specific powers so enumerated.
It has been advanced that whatever power inherent in the
government that is neither legislative nor judicial has to be executive. x x
x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully
executed. As stated above, the powers of the President are not limited to those specific
powers under the Constitution.[53] One of the recognized powers of the President
granted pursuant to this constitutionally-mandated duty is the power to create ad hoc
committees. This flows from the obvious need to ascertain facts and determine if laws
have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the
authority of the President to issue Administrative Order No. 298, creating an investigative
committee to look into the administrative charges filed against the employees of the
Department of Health for the anomalous purchase of medicines was upheld. In said case,
it was ruled:
The Chief Executives power to create the Ad hoc Investigating Committee

cannot be doubted. Having been constitutionally granted full control of the


Executive Department, to which respondents belong, the President has the
obligation to ensure that all executive officials and employees faithfully
comply with the law. With AO 298 as mandate, the legality of the
investigation is sustained. Such validity is not affected by the fact that the
investigating team and the PCAGC had the same composition, or that the
former used the offices and facilities of the latter in conducting the inquiry.
[Emphasis supplied]
It should be stressed that the purpose of allowing ad hoc investigating bodies to
exist is to allow an inquiry into matters which the President is entitled to know so that he
can be properly advised and guided in the performance of his duties relative to the
execution and enforcement of the laws of the land. And if history is to be revisited, this
was also the objective of the investigative bodies created in the past like the PCAC,
PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa
Commission. There being no changes in the government structure, the Court is not
inclined to declare such executive power as non-existent just because the direction of the
political winds have changed.
On the charge that Executive Order No. 1 transgresses the power of Congress to
appropriate funds for the operation of a public office, suffice it to say that there will be no
appropriation but only an allotment or allocations of existing funds already appropriated.
Accordingly, there is no usurpation on the part of the Executive of the power of Congress
to appropriate funds. Further, there is no need to specify the amount to be earmarked for
the operation of the commission because, in the words of the Solicitor General, whatever
funds the Congress has provided for the Office of the President will be the very source of
the funds for the commission.[55] Moreover, since the amount that would be allocated
to the PTC shall be subject to existing auditing rules and regulations, there is no
impropriety in the funding.
Power of the Truth Commission to Investigate
The Presidents power to conduct investigations to ensure that laws are faithfully executed
is well recognized. It flows from the faithful-execution clause of the Constitution under
Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents the
government as a whole and sees to it that all laws are enforced by the officials and
employees of his department. He has the authority to directly assume the functions of the
executive department.[57]

Invoking this authority, the President constituted the PTC to primarily investigate reports
of graft and corruption and to recommend the appropriate action. As previously stated, no
quasi-judicial powers have been vested in the said body as it cannot adjudicate rights of
persons who come before it. It has been said that Quasi-judicial powers involve the power
to hear and determine questions of fact to which the legislative policy is to apply and to
decide in accordance with the standards laid down by law itself in enforcing and
administering the same law.[58] In simpler terms, judicial discretion is involved in the
exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary
and must be clearly authorized by the legislature in the case of administrative agencies.
The distinction between the power to investigate and the power to adjudicate was
delineated by the Court in Cario v. Commission on Human Rights.[59] Thus:
"Investigate," commonly understood, means to examine, explore,
inquire or delve or probe into, research on, study. The dictionary definition
of "investigate" is "to observe or study closely: inquire into systematically:
"to search or inquire into: x x to subject to an official probe x x: to conduct
an official inquiry." The purpose of investigation, of course, is to discover,
to find out, to learn, obtain information. Nowhere included or intimated is
the notion of settling, deciding or resolving a controversy involved in the
facts inquired into by application of the law to the facts established by the
inquiry.
The legal meaning of "investigate" is essentially the same: "(t)o
follow up step by step by patient inquiry or observation. To trace or track;
to search into; to examine and inquire into with care and accuracy; to find
out by careful inquisition; examination; the taking of evidence; a legal
inquiry;" "to inquire; to make an investigation," "investigation" being in
turn described as "(a)n administrative function, the exercise of which
ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an
inquiry, judicial or otherwise, for the discovery and collection of facts
concerning a certain matter or matters."
"Adjudicate," commonly or popularly understood, means to
adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The
dictionary defines the term as "to settle finally (the rights and duties of the
parties to a court case) on the merits of issues raised: x x to pass judgment
on: settle judicially: x x act as judge." And "adjudge" means "to decide or
rule upon as a judge or with judicial or quasi-judicial powers: x x to award
or grant judicially in a case of controversy x x."
In the legal sense, "adjudicate" means: "To settle in the exercise of

judicial authority. To determine finally. Synonymous with adjudge in its


strictest sense;" and "adjudge" means: "To pass on judicially, to decide,
settle or decree, or to sentence or condemn. x x. Implies a judicial
determination of a fact, and the entry of a judgment."[Italics included.
Citations Omitted]
Fact-finding is not adjudication and it cannot be likened to the judicial function of
a court of justice, or even a quasi-judicial agency or office. The function of receiving
evidence and ascertaining therefrom the facts of a controversy is not a judicial function.
To be considered as such, the act of receiving evidence and arriving at factual conclusions
in a controversy must be accompanied by the authority of applying the law to the factual
conclusions to the end that the controversy may be decided or resolved authoritatively,
finally and definitively, subject to appeals or modes of review as may be provided by law.
[60] Even respondents themselves admit that the commission is bereft of any quasijudicial power.[61]
Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the
DOJ or erode their respective powers. If at all, the investigative function of the
commission will complement those of the two offices. As pointed out by the Solicitor
General, the recommendation to prosecute is but a consequence of the overall task of the
commission to conduct a fact-finding investigation.[62] The actual prosecution of
suspected offenders, much less adjudication on the merits of the charges against them,
[63] is certainly not a function given to the commission. The phrase, when in the course
of its investigation, under Section 2(g), highlights this fact and gives credence to a
contrary interpretation from that of the petitioners. The function of determining probable
cause for the filing of the appropriate complaints before the courts remains to be with the
DOJ and the Ombudsman.[64]
At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive
but is shared with other similarly authorized government agencies. Thus, in the case of
Ombudsman v. Galicia,[65] it was written:
This power of investigation granted to the Ombudsman by the 1987
Constitution and The Ombudsman Act is not exclusive but is shared with
other similarly authorized government agencies such as the PCGG and
judges of municipal trial courts and municipal circuit trial courts. The
power to conduct preliminary investigation on charges against public
employees and officials is likewise concurrently shared with the

Department of Justice. Despite the passage of the Local Government Code


in 1991, the Ombudsman retains concurrent jurisdiction with the Office of
the President and the local Sanggunians to investigate complaints against
local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to
investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states:
(1) Investigate and prosecute on its own or on complaint by any
person, any act or omission of any public officer or employee, office or
agency, when such act or omission appears to be illegal, unjust, improper
or inefficient. It has primary jurisdiction over cases cognizable by the
Sandiganbayan and, in the exercise of its primary jurisdiction, it may take
over, at any stage, from any investigatory agency of government, the
investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the


conduct of a preliminary investigation or the determination of the existence of probable
cause. This is categorically out of the PTCs sphere of functions. Its power to investigate
is limited to obtaining facts so that it can advise and guide the President in the
performance of his duties relative to the execution and enforcement of the laws of the
land. In this regard, the PTC commits no act of usurpation of the Ombudsmans
primordial duties.
The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1,
Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus,
can be shared with a body likewise tasked to investigate the commission of crimes.
Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC
are to be accorded conclusiveness. Much like its predecessors, the Davide Commission,
the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be
recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider
degree of latitude to decide whether or not to reject the recommendation. These offices,
therefore, are not deprived of their mandated duties but will instead be aided by the
reports of the PTC for possible indictments for violations of graft laws.
Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative
power of the President, the Court finds difficulty in upholding the constitutionality of
Executive Order No. 1 in view of its apparent transgression of the equal protection clause
enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1
reads:
Section 1. No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal
protection of the laws.
The petitioners assail Executive Order No. 1 because it is violative of this
constitutional safeguard. They contend that it does not apply equally to all members of
the same class such that the intent of singling out the previous administration as its sole
object makes the PTC an adventure in partisan hostility.[66] Thus, in order to be
accorded with validity, the commission must also cover reports of graft and corruption in
virtually all administrations previous to that of former President Arroyo.[67]
The petitioners argue that the search for truth behind the reported cases of graft
and corruption must encompass acts committed not only during the administration of
former President Arroyo but also during prior administrations where the same magnitude
of controversies and anomalies[68] were reported to have been committed against the
Filipino people. They assail the classification formulated by the respondents as it does not
fall under the recognized exceptions because first, there is no substantial distinction
between the group of officials targeted for investigation by Executive Order No. 1 and
other groups or persons who abused their public office for personal gain; and second, the
selective classification is not germane to the purpose of Executive Order No. 1 to end
corruption.[69] In order to attain constitutional permission, the petitioners advocate that
the commission should deal with graft and grafters prior and subsequent to the Arroyo
administration with the strong arm of the law with equal force.[70]
Position of respondents
According to respondents, while Executive Order No. 1 identifies the previous
administration as the initial subject of the investigation, following Section 17 thereof, the
PTC will not confine itself to cases of large scale graft and corruption solely during the
said administration.[71] Assuming arguendo that the commission would confine its

proceedings to officials of the previous administration, the petitioners argue that no


offense is committed against the equal protection clause for the segregation of the
transactions of public officers during the previous administration as possible subjects of
investigation is a valid classification based on substantial distinctions and is germane to
the evils which the Executive Order seeks to correct.[72] To distinguish the Arroyo
administration from past administrations, it recited the following:
First. E.O. No. 1 was issued in view of widespread reports of large
scale graft and corruption in the previous administration which have
eroded public confidence in public institutions. There is, therefore, an
urgent call for the determination of the truth regarding certain reports of
large scale graft and corruption in the government and to put a closure to
them by the filing of the appropriate cases against those involved, if
warranted, and to deter others from committing the evil, restore the
peoples faith and confidence in the Government and in their public
servants.
Second. The segregation of the preceding administration as the
object of fact-finding is warranted by the reality that unlike with
administrations long gone, the current administration will most likely bear
the immediate consequence of the policies of the previous administration.
Third. The classification of the previous administration as a
separate class for investigation lies in the reality that the evidence of
possible criminal activity, the evidence that could lead to recovery of
public monies illegally dissipated, the policy lessons to be learned to
ensure that anti-corruption laws are faithfully executed, are more easily
established in the regime that immediately precede the current
administration.
Fourth. Many administrations subject the transactions of their
predecessors to investigations to provide closure to issues that are pivotal
to national life or even as a routine measure of due diligence and good
housekeeping by a nascent administration like the Presidential
Commission on Good Government (PCGG), created by the late President
Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of
ill-gotten wealth of her predecessor former President Ferdinand Marcos
and his cronies, and the Saguisag Commission created by former President
Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and
independent citizens committee to investigate all the facts and
circumstances surrounding Philippine Centennial projects of his
predecessor, former President Fidel V. Ramos.[73] [Emphases supplied]
Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality
of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal
protection of the laws is embraced in the concept of due process, as every unfair
discrimination offends the requirements of justice and fair play. It has been embodied in a
separate clause, however, to provide for a more specific guaranty against any form of
undue favoritism or hostility from the government. Arbitrariness in general may be
challenged on the basis of the due process clause. But if the particular act assailed
partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is
the equal protection clause.[74]
According to a long line of decisions, equal protection simply requires that all
persons or things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed.[75] It requires public bodies and institutions to treat similarly
situated individuals in a similar manner.[76] The purpose of the equal protection clause
is to secure every person within a states jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the express terms of a statue or by its improper
execution through the states duly constituted authorities.[77] In other words, the concept
of equal justice under the law requires the state to govern impartially, and it may not draw
distinctions between individuals solely on differences that are irrelevant to a legitimate
governmental objective.[78]
The equal protection clause is aimed at all official state actions, not just those of
the legislature.[79] Its inhibitions cover all the departments of the government including
the political and executive departments, and extend to all actions of a state denying equal
protection of the laws, through whatever agency or whatever guise is taken. [80]
It, however, does not require the universal application of the laws to all persons or
things without distinction. What it simply requires is equality among equals as
determined according to a valid classification. Indeed, the equal protection clause permits
classification. Such classification, however, to be valid must pass the test of
reasonableness. The test has four requisites: (1) The classification rests on substantial
distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing
conditions only; and
(4) It applies equally to all members of the same class.[81] Superficial differences do
not make for a valid classification.[82]

For a classification to meet the requirements of constitutionality, it must include or


embrace all persons who naturally belong to the class.[83] The classification will be
regarded as invalid if all the members of the class are not similarly treated, both as to
rights conferred and obligations imposed. It is not necessary that the classification be
made with absolute symmetry, in the sense that the members of the class should possess
the same characteristics in equal degree. Substantial similarity will suffice; and as long as
this is achieved, all those covered by the classification are to be treated equally. The mere
fact that an individual belonging to a class differs from the other members, as long as that
class is substantially distinguishable from all others, does not justify the non-application
of the law to him.[84]
The classification must not be based on existing circumstances only, or so
constituted as to preclude addition to the number included in the class. It must be of such
a nature as to embrace all those who may thereafter be in similar circumstances and
conditions. It must not leave out or underinclude those that should otherwise fall into a
certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85]
and reiterated in a long line of cases,[86]
The guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws upon all citizens of the state. It is
not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons
according to the circumstances surrounding them. It guarantees equality,
not identity of rights. The Constitution does not require that things which
are different in fact be treated in law as though they were the same. The
equal protection clause does not forbid discrimination as to things that are
different. It does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to
operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. The very idea of classification is that
of inequality, so that it goes without saying that the mere fact of inequality
in no manner determines the matter of constitutionality. All that is required
of a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for

real differences, that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply
equally to each member of the class. This Court has held that the standard
is satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. [Citations
omitted]
Applying these precepts to this case, Executive Order No. 1 should be struck
down as violative of the equal protection clause. The clear mandate of the envisioned
truth commission is to investigate and find out the truth concerning the reported cases of
graft and corruption during the previous administration[87] only. The intent to single out
the previous administration is plain, patent and manifest. Mention of it has been made in
at least three portions of the questioned executive order. Specifically, these are:
WHEREAS, there is a need for a separate body dedicated solely to
investigating and finding out the truth concerning the reported cases of
graft and corruption during theprevious administration, and which will
recommend the prosecution of the offenders and secure justice for all;
SECTION 1. Creation of a Commission. There is hereby created the
PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the
COMMISSION, which shall primarily seek and find the truth on, and
toward this end, investigate reports of graft and corruption of such scale
and magnitude that shock and offend the moral and ethical sensibilities of
the people, committed by public officers and employees, their coprincipals, accomplices and accessories from the private sector, if any,
during the previous administration; and thereafter recommend the
appropriate action or measure to be taken thereon to ensure that the full
measure of justice shall be served without fear or favor.
SECTION 2. Powers and Functions. The Commission, which shall have
all the powers of an investigative body under Section 37, Chapter 9, Book
I of the Administrative Code of 1987, is primarily tasked to conduct a
thorough fact-finding investigation of reported cases of graft and
corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private
sector, if any, during the previous administration and thereafter submit its
finding and recommendations to the President, Congress and the
Ombudsman. [Emphases supplied]
In this regard, it must be borne in mind that the Arroyo administration is but just a
member of a class, that is, a class of past administrations. It is not a class of its own. Not
to include past administrations similarly situated constitutes arbitrariness which the equal

protection clause cannot sanction. Such discriminating differentiation clearly reverberates


to label the commission as a vehicle for vindictiveness and selective retribution.
Though the OSG enumerates several differences between the Arroyo
administration and other past administrations, these distinctions are not substantial
enough to merit the restriction of the investigation to the previous administration only.
The reports of widespread corruption in the Arroyo administration cannot be taken as
basis for distinguishing said administration from earlier administrations which were also
blemished by similar widespread reports of impropriety. They are not inherent in, and do
not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial
differences do not make for a valid classification.[88]

The public needs to be enlightened why Executive Order No. 1 chooses to limit
the scope of the intended investigation to the previous administration only. The OSG
ventures to opine that to include other past administrations, at this point, may
unnecessarily overburden the commission and lead it to lose its effectiveness.[89] The
reason given is specious. It is without doubt irrelevant to the legitimate and noble
objective of the PTC to stamp out or end corruption and the evil it breeds.[90]
The probability that there would be difficulty in unearthing evidence or that the
earlier reports involving the earlier administrations were already inquired into is beside
the point. Obviously, deceased presidents and cases which have already prescribed can no
longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct
simultaneous investigations of previous administrations, given the bodys limited time and
resources. The law does not require the impossible (Lex non cogit ad impossibilia).[91]
Given the foregoing physical and legal impossibility, the Court logically
recognizes the unfeasibility of investigating almost a centurys worth of graft cases.
However, the fact remains that Executive Order No. 1 suffers from arbitrary
classification. The PTC, to be true to its mandate of searching for the truth, must not
exclude the other past administrations. The PTC must, at least, have the authority to
investigate all past administrations. While reasonable prioritization is permitted, it should
not be arbitrary lest it be struck down for being unconstitutional. In the often quoted
language of Yick Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in


appearance, yet, if applied and administered by public authority with an
evil eye and an unequal hand, so as practically to make unjust and illegal
discriminations between persons in similar circumstances, material to their
rights, the denial of equal justice is still within the prohibition of the
constitution. [Emphasis supplied]
It could be argued that considering that the PTC is an ad hoc body, its scope is
limited. The Court, however, is of the considered view that although its focus is
restricted, the constitutional guarantee of equal protection under the laws should not in
any way be circumvented. The Constitution is the fundamental and paramount law of the
nation to which all other laws must conform and in accordance with which all private
rights determined and all public authority administered.[93] Laws that do not conform to
the Constitution should be stricken down for being unconstitutional.[94] While the
thrust of the PTC is specific, that is, for investigation of acts of graft and corruption,
Executive Order No. 1, to survive, must be read together with the provisions of the
Constitution. To exclude the earlier administrations in the guise of substantial distinctions
would only confirm the petitioners lament that the subject executive order is only an
adventure in partisan hostility. In the case of US v. Cyprian,[95] it was written: A rather
limited number of such classifications have routinely been held or assumed to be
arbitrary; those include: race, national origin, gender, political activity or membership in
a political party, union activity or membership in a labor union, or more generally the
exercise of first amendment rights.
To reiterate, in order for a classification to meet the requirements of
constitutionality, it must include or embrace all persons who naturally belong to the class.
[96] Such a classification must not be based on existing circumstances only, or so
constituted as to preclude additions to the number included within a class, but must be of
such a nature as to embrace all those who may thereafter be in similar circumstances and
conditions. Furthermore, all who are in situations and circumstances which are relative to
the discriminatory legislation and which are indistinguishable from those of the members
of the class must be brought under the influence of the law and treated by it in the same
way as are the members of the class.[97]
The Court is not unaware that mere underinclusiveness is not fatal to the validity

of a law under the equal protection clause.[98] Legislation is not unconstitutional merely
because it is not all-embracing and does not include all the evils within its reach.[99] It
has been written that a regulation challenged under the equal protection clause is not
devoid of a rational predicate simply because it happens to be incomplete.[100] In
several instances, the underinclusiveness was not considered a valid reason to strike down
a law or regulation where the purpose can be attained in future legislations or regulations.
These cases refer to the step by step process.[101] With regard to equal protection
claims, a legislature does not run the risk of losing the entire remedial scheme simply
because it fails, through inadvertence or otherwise, to cover every evil that might
conceivably have been attacked.[102]
In Executive Order No. 1, however, there is no inadvertence. That the previous
administration was picked out was deliberate and intentional as can be gleaned from the
fact that it was underscored at least three times in the assailed executive order. It must be
noted that Executive Order No. 1 does not even mention any particular act, event or
report to be focused on unlike the investigative commissions created in the past. The
equal protection clause is violated by purposeful and intentional discrimination.[103]
To disprove petitioners contention that there is deliberate discrimination, the OSG
clarifies that the commission does not only confine itself to cases of large scale graft and
corruption committed during the previous administration.[104] The OSG points to
Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the


judgment of the President there is a need to expand the mandate of the
Commission as defined in Section 1 hereof to include the investigation of
cases and instances of graft and corruption during the prior
administrations, such mandate may be so extended accordingly by way of
a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the
discretion to expand the scope of investigations of the PTC so as to include the acts of
graft and corruption committed in other past administrations, it does not guarantee that
they would be covered in the future. Such expanded mandate of the commission will still
depend on the whim and caprice of the President. If he would decide not to include them,

the section would then be meaningless. This will only fortify the fears of the petitioners
that the Executive Order No. 1 was crafted to tailor-fit the prosecution of officials and
personalities of the Arroyo administration.[105]

The Court tried to seek guidance from the pronouncement in the case of Virata v.
Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2
and 14) does not violate the equal protection clause. The decision, however, was devoid
of any discussion on how such conclusory statement was arrived at, the principal issue in
said case being only the sufficiency of a cause of action.
A final word
The issue that seems to take center stage at present is - whether or not the
Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review
with respect to recent initiatives of the legislature and the executive department, is
exercising undue interference. Is the Highest Tribunal, which is expected to be the
protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine
of separation of powers? Time and again, this issue has been addressed by the Court, but
it seems that the present political situation calls for it to once again explain the legal basis
of its action lest it continually be accused of being a hindrance to the nations thrust to
progress.
The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987
Constitution, is vested with Judicial Power that includes the duty of the courts of justice
to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave of abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the government.
Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review
which is the power to declare a treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation
unconstitutional. This power also includes the duty to rule on the constitutionality of the
application, or operation of presidential decrees, proclamations, orders, instructions,

ordinances, and other regulations. These provisions, however, have been fertile grounds
of conflict between the Supreme Court, on one hand, and the two co-equal bodies of
government, on the other. Many times the Court has been accused of asserting superiority
over the other departments.
To answer this accusation, the words of Justice Laurel would be a good source of
enlightenment, to wit: And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; it does not in
reality nullify or invalidate an act of the legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them.[107]
Thus, the Court, in exercising its power of judicial review, is not imposing its own
will upon a co-equal body but rather simply making sure that any act of government is
done in consonance with the authorities and rights allocated to it by the Constitution.
And, if after said review, the Court finds no constitutional violations of any sort, then, it
has no more authority of proscribing the actions under review. Otherwise, the Court will
not be deterred to pronounce said act as void and unconstitutional.
It cannot be denied that most government actions are inspired with noble
intentions, all geared towards the betterment of the nation and its people. But then again,
it is important to remember this ethical principle: The end does not justify the means. No
matter how noble and worthy of admiration the purpose of an act, but if the means to be
employed in accomplishing it is simply irreconcilable with constitutional parameters,
then it cannot still be allowed.[108] The Court cannot just turn a blind eye and simply
let it pass. It will continue to uphold the Constitution and its enshrined principles.
The Constitution must ever remain supreme. All must bow to the
mandate of this law. Expediency must not be allowed to sap its strength
nor greed for power debase its rectitude.[109]

Lest it be misunderstood, this is not the death knell for a truth commission as
nobly envisioned by the present administration. Perhaps a revision of the executive
issuance so as to include the earlier past administrations would allow it to pass the test of
reasonableness and not be an affront to the Constitution. Of all the branches of the

government, it is the judiciary which is the most interested in knowing the truth and so it
will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be
emphasized that the search for the truth must be within constitutional bounds for ours is
still a government of laws and not of men.[110]
WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby
declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause
of the Constitution.
As also prayed for, the respondents are hereby ordered to cease and desist from
carrying out the provisions of Executive Order No. 1.
SO ORDERED.

G.R. No. 96409 February 14, 1992


CITIZEN J. ANTONIO M. CARPIO, petitioner,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF LOCAL GOVERNMENTS,
THE SECRETARY OF NATIONAL DEFENSE and THE NATIONAL TREASURER,
respondents.
PARAS, J.:
At the very outset, it should be well to set forth the constitutional provision that is at the
core of the controversy now confronting us, thus:
Article XVI, Section 6:
The State shall establish and maintain one police force, which stall be national in scope
and civilian in character, to be administered and controlled by a national police
commission. The authority of local executives over the police units in their jurisdiction
shall be provided by law. 1
With the aforequoted provision in mind, Congress passed Republic Act No. 6975 entitled
"AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A
REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT,
AND FOR OTHER PURPOSES" as the consolidated version of House Bill No. 23614
and Senate Bill No. 463.
Following the said Act's approval by President Corazon C. Aquino on December 13,
1990, it was published on December 17, 1990. 2
Presently, however, petitioner as citizen, taxpayer and member of the Philippine Bar
sworn to defend the Constitution, filed the petition now at bar on December 20, 1990,
seeking this Court's declaration of unconstitutionality of RA 6975 with prayer for
temporary restraining order.
But in an en banc resolution dated December 27, 1990, We simply required the public
respondents to file their Comment, without however giving due course to the petition and
the prayer therein. Hence, the Act took effect after fifteen days following its publication,
or on January 1, 1991. 3
Before we settle down on the merits of the petition, it would likewise be well to discuss
albeit briefly the history of our police force and the reasons for the ordination of Section
6, Article XVI in our present Constitution.
During the Commonwealth period, we had the Philippine Constabulary as the nucleus of
the Philippine Ground Force (PGF), now the Armed Forces of the Philippines (AFP). The
PC was made part of the PGF but its administrative, supervisory and directional control
was handled by the then Department of the Interior. After the war, it remained as the
"National Police" under the Department of National Defense, as a major service
component of the AFP. 4
Later, the Integration Act of 1975 5 created the Integrated National Police (INP) under
the Office of the President, with the PC as the nucleus, and the local police forces as the

civilian components. The PC-INP was headed by the PC Chief who, as concurrent
Director-General of the INP, exercised command functions over the INP. 6
The National Police Commission (NAPOLCOM) 7 exercised administrative control and
supervision while the local executives exercised operational supervision and direction
over the INP units assigned within their respective localities. 8
The set-up whereby the INP was placed under the command of the military component,
which is the PC, severely eroded the INP's civilian character and the multiplicity in the
governance of the PC-INP resulted in inefficient police service. 9 Moreover, the
integration of the national police forces with the PC also resulted in inequities since the
military component had superior benefits and privileges. 10
The Constitutional Commission of 1986 was fully aware of the structural errors that beset
the system. Thus, Com. Teodulo C. Natividad explained that:
xxx xxx xxx
MR. NATIVIDAD. . . . The basic tenet of a modern police organization is to remove it
from the military. 11
xxx xxx xxx
Here in our draft Constitution, we have already made a constitutional postulate that the
military cannot occupy any civil service position [in Section 6 of the Article on the Civil
Service 12] Therefore, in keeping with this and because of the universal acceptance that a
police force is a civilian function, a public service, and should not be performed by
military force, one of the basic reforms we are presenting here is that it should be
separated from the military force which is the PC. 13
xxx xxx xxx
Furthermore:
xxx xxx xxx
. . . the civilian police cannot blossom into full profession because most of the key
positions are being occupied by the military So, it is up to this Commission to remove the
police from such a situation so that it can develop into a truly professional civilian police.
. . . 14
Hence, the "one police force, national in scope, and civilian in character" provision that is
now Article XVI, Section 6 of the 1987 Constitution.
And so we now come to the merits of the petition at hand.
In the main, petitioner herein respectfully advances the view that RA 6975 emasculated
the National Police Commission by limiting its power "to administrative control" over the
Philippine National Police (PNP), thus, "control" remained with the Department
Secretary under whom both the National Police Commission and the PNP were placed.
15

We do not share this view.


To begin with, one need only refer to the fundamentally accepted principle in
Constitutional Law that the President has control of all executive departments, bureaus,
and offices to lay at rest petitioner's contention on the matter.
This presidential power of control over the executive branch of government extends over
all executive officers from Cabinet Secretary to the lowliest clerk 17 and has been held by
us, in the landmark case of Mondano vs. Silvosa, 18 to mean "the power of [the
President] to alter or modify or nullify or set aside what a subordinate officer had done in
the performance of his duties and to substitute the judgment of the former with that of the
latter." It is said to be at the very "heart of the meaning of Chief Executive." 19
Equally well accepted, as a corollary rule to the control powers of the President, is the
"Doctrine of Qualified Political Agency". As the President cannot be expected to exercise
his control powers all at the same time and in person, 20 he will have to delegate some of
them to his Cabinet members.
Under this doctrine, which recognizes the establishment of a single executive, 21 "all
executive and administrative organizations are adjuncts of the Executive Department, the
heads of the various executive departments are assistants and agents of the Chief
Executive, and, except in cases where the Chief Executive is required by the Constitution
or law to act in person on the exigencies of the situation demand that he act personally,
the multifarious executive and administrative functions of the Chief Executive are
performed by and through the executive departments, and the acts of the Secretaries of
such departments, performed and promulgated in the regular course of business, unless
disapproved or reprobated by the Chief Executive presumptively the acts of the Chief
Executive." 22 (emphasis ours)
Thus, and in short, "the President's power of control is directly exercised by him over the
members of the Cabinet who, in turn, and by his authority, control the bureaus and other
offices under their respective jurisdictions in the executive department." 23
Additionally, the circumstance that the NAPOLCOM and the PNP are placed under the
reorganized Department of Interior and Local Government is merely an administrative
realignment that would bolster a system of coordination and cooperation among the
citizenry, local executives and the integrated law enforcement agencies and public safety
agencies created under the assailed Act, 24 the funding of the PNP being in large part
subsidized by the national government.
Such organizational set-up does not detract from the mandate of the Constitution that the
national police force shall be administered and controlled by a national police
commission as at any rate, and in fact, the Act in question adequately provides for
administration and control at the commission level, as shown in the following provisions,
to wit:
Sec. 14. Powers and Functions of the Commission. The Commission shall exercise the
following powers and functions:
xxx xxx xxx
(i) Approve or modify plans and programs on education and training, logistical
requirements, communications, records, information systems, crime laboratory, crime
prevention and crime reporting;

(j) Affirm, reverse or modify, through the National Appellate Board, personnel
disciplinary actions involving demotion or dismissal from the service imposed upon
members of the Philippine National Police by the Chief of the PNP;
(k) Exercise appellate jurisdiction through .the regional. appellate boards over
administrative cases against policemen and over decisions on claims for police benefits;
xxx xxx xxx
Sec. 26. The Command and direction of the PNP shall be vested in the Chief of the
PNP . . . Such command and direction of the Chief of the PNP may be delegated to
subordinate officials with respect to the units under their respective commands, in
accordance with the rules and regulations prescribed by the Commission. . . .
xxx xxx xxx
Sec. 35. . . . To enhance police operational efficiency and effectiveness, the Chief of the
PNP may constitute such other support units as may be necessary subject to the approval
of the Commission. . . .
xxx xxx xxx
Sec. 37. . . . There shall be established a performance evaluation system which shall be
administered in accordance with the rules, regulations and standards; and a code of
conduct promulgated by the Commission for members of the PNP. . . .
xxx xxx xxx
Petitioner further asserts that in manifest derogation of the power of control of the
NAPOLCOM over the PNP, RA 6975 vested the power to choose the PNP Provincial
Director and the Chiefs of Police in the Governors and Mayors, respectively; the power
of "operational supervision and control" over police units in city and municipal mayors;
in the Civil Service Commission, participation in appointments to the positions of Senior
Superintendent to Deputy Director-General as well as the administration of qualifying
entrance examinations; disciplinary powers over PNP members in the "People's Law
Enforcement Boards" and in city and municipal mayors. 25
Once more, we find no real controversy upon the foregoing assertions.
It is true that when the Constitutional Commissioners of 1986 provided that the authority
of local executives over the police units in their jurisdiction shall be provided by law,
they intended that the day-to-day functions of police work like crime, investigation, crime
prevention activities, traffic control, etc., would be under the operational control of the
local executives as it would not be advisable to give full control of the police to the local
executives. 26
They reasoned that in the past, this gave rise to warlordism, bossism, and sanctuaries for
vices and abuses. 27
It would appear then that by vesting in the local executives the power to choose the
officers in question, the Act went beyond the bounds of the Constitution's intent.
Not so. We find light in the principle of constitutional construction that every
presumption should be indulged in favor of constitutionality and the court in considering
the validity of the statute in question should give it such reasonable construction as can be
reached to bring it within the fundamental
law. 28

Under the questioned provisions, which read as follows:


D. PARTICIPATION OF LOCAL EXECUTIVES IN THE ADMINISTRATION OF THE
PNP.
Sec. 51. Powers of Local Government Officials over the PNP Units or Forces.
Governors and mayors shall be deputized as representatives of the Commission in their
respective territorial jurisdictions. As such, the local executives shall discharge the
following functions:
a.) Provincial Governor (1) . . .
The provincial governor shall choose the provincial director from a list of three (3)
eligibles recommended by the PNP Regional Director.
4) . . . City and municipal mayors shall have the following authority over the PNP units in
their respective jurisdictions:
i.) Authority to choose the chief of police from a list of five (5) eligibles recommended by
the Provincial Police Director. . . . (Emphasis ours)
full control remains with the National Police Commission.
We agree, and so hold, with the view of the Solicitor General that "there is no usurpation
of the power of control of the NAPOLCOM under Section 51 because under this very
same provision, it is clear that the local executives are only acting as representatives of
the NAPOLCOM. . . . As such deputies, they are answerable to the NAPOLCOM for
their actions in the exercise of their functions under that section. Thus, unless
countermanded by the NAPOLCOM, their acts are valid and binding as acts of the
NAPOLCOM." 29 It is significant to note that the local officials, as NAPOLCOM
representatives, will choose the officers concerned from a list of eligibles (those who
meet the general qualifications for appointment to the PNP) 30 to be recommended by
PNP officials.
The same holding is true with respect to the contention on the operational supervision and
control exercised by the local officials. Those officials would simply be acting as
representatives of the Commission.
As regards the assertion involving the Civil Service Commission, suffice it to say that the
questioned provisions, which read:
Sec. 31. Appointment of PNP Officers and Members. The Appointment of the officers
and members of the PNP shall be effected in the following manner:
a.) Police Officer I to Senior Police Officer IV. Appointed by the PNP regional director
for regional personnel or by the Chief of the PNP for national headquarters personnel and
attested by the Civil Service Commission;
b.) Inspector to Superintendent. Appointed by the Chief of the PNP, as recommended
by their immediate superiors, and attested by the Civil Service Commission;
c.) Senior Superintendent to Deputy Director-General. Appointed by the President
upon recommendation of the Chief of the PNP, with proper endorsement by the Chairman
of the Civil Service
Commission . . .
Sec. 32. Examinations for Policemen. The Civil Service Commission shall administer
the qualifying entrance examinations for policemen on the basis of the standards set by
the NAPOLCOM.
precisely underscore the civilian character of the national police force, and will

undoubtedly professionalize the same.


The grant of disciplinary powers over PNP members to the "People's Law Enforcement
Boards" (or the PLEB) and city and municipal mayors is also not in derogation of the
commission's power of control over the PNP.
Pursuant to the Act, the Commission exercises appellate jurisdiction, thru the regional
appellate boards, over decisions of both the PLEB and the said mayors. This is so under
Section 20(c). Furthermore, it is the Commission which shall issue the implementing
guidelines and procedures to be adopted by the PLEB for in the conduct of its hearings,
and it may assign NAPOLCOM hearing officers to act as legal consultants of the PLEBs
(Section 43-d4, d5).
As a disciplinary board primarily created to hear and decide citizen's complaints against
erring officers and members of the PNP, the establishment of PLEBs in every city, and
municipality would all the more help professionalize the police force.
Petitioner would likewise have this Court imagine that Section 12 of the questioned Act,
the pertinent portion of which reads:
Sec. 12. Relationship of the Department with the Department of National Defense.
During a period of twenty- four (24) months from the effectivity of this Act, the Armed
Forces of the Philippines (AFP) shall continue its present role of preserving the internal
and external security of the State: Provided, that said period may be extended by the
President, if he finds it justifiable, for another period not exceeding twenty-four (24)
months, after which, the Department shall automatically take over from the AFP the
primary role of preserving internal security, leaving to the AFP its primary role of
preserving external security.
xxx xxx xxx
constitutes an "encroachment upon, interference with, and an abdication by the President
of, executive control and commander-in-chief powers."
That We are not disposed to do for such is not the case at all here. A rejection thus of
petitioner's submission anent Section 12 of the Act should be in order in the light of the
following exchanges during the CONCOM deliberations of Wednesday, October 1, 1986:
xxx xxx xxx
MR. RODRIGO. Just a few questions. The President of the Philippines is the
Commander-in-Chief of all the armed forces.
MR. NATIVIDAD. Yes, Madam President.
MR. RODRIGO. Since the national police is not integrated with the armed forces, I do
not suppose they come under the Commander-in-Chief powers of the President of the
Philippines.
MR. NATIVIDAD. They do, Madam President. By law they are under the supervision
and control of the President of the Philippines.
MR. RODRIGO. Yes, but the President is not the Commander-in-Chief of the national
police.
MR. NATIVIDAD. He is the President.
MR. RODRIGO. Yes, the Executive. But they do not come under that specific provision
that the President is Commander-in-Chief of all the armed forces.
MR. NATIVIDAD. No, not under the Commander-in-Chief provision.
MR. RODRIGO. There are two other powers of the President. The President has control
over departments, bureaus and offices, and supervision over local governments. Under

which does the police fall, under control or under supervision?


MR. NATIVIDAD. Both, Madam President.
MR. RODRIGO. Control and Supervision.
MR. NATIVIDAD. Yes, in fact, the National Police Commission is under the Office of
the President. (CONCOM RECORDS, Vol. 5, p. 296)
It thus becomes all too apparent then that the provision herein assailed precisely gives
muscle to and enforces the proposition that the national police force does not fall under
the Commander-in-Chief powers of the President. This is necessarily so since the police
force, not being integrated with the military, is not a part of the Armed Forces of the
Philippines. As a civilian agency of the government, it properly comes within, and is
subject to, the exercise by the President of the power of executive control.
Consequently, Section 12 does not constitute abdication of commander-in-chief powers.
It simply provides for the transition period or process during which the national police
would gradually assume the civilian function of safeguarding the internal security of the
State. Under this instance, the President, to repeat, abdicates nothing of his war powers. It
would bear to here state, in reiteration of the preponderant view, that the President, as
Commander-in-Chief, is not a member of the Armed Forces. He remains a civilian whose
duties under the Commander-in-Chief provision "represent only a part of the organic
duties imposed upon him. All his other functions are clearly civil in nature." 31 His
position as a civilian Commander-in-Chief is consistent with, and a testament to, the
constitutional principle that "civilian authority is, at all times, supreme over the military."
(Article II, Section 3, 1987 Constitution)
Finally, petitioner submits that the creation of a "Special Oversight Committee" under
Section 84 of the Act, especially the inclusion therein of some legislators as members
(namely: the respective Chairmen of the Committee on Local Government and the
Committee on National Defense and Security in the Senate, and the respective Chairmen
of the Committee on Public Order and Security and the Committee on National Defense
in the House of Representatives) is an "unconstitutional encroachment upon and a
diminution of, the President's power of control over all executive departments, bureaus
and offices."
But there is not the least interference with the President's power of control under Section
84. The Special Oversight Committee is simply an ad hoc or transitory body, established
and tasked solely with planning and overseeing the immediate "transfer, merger and/or
absorption" into the Department of the Interior and Local Governments of the "involved
agencies." This it will undertake in accordance with the phases of implementation already
laid down in Section 85 of the Act and once this is carried out, its functions as well as the
committee itself would cease altogether. 32 As an ad hoc body, its creation and the
functions it exercises, decidedly do not constitute an encroachment and in diminution of
the power of control which properly belongs to the President. What is more, no executive
department, bureau or office is placed under the control or authority, of the committee. 33
As a last word, it would not be amiss to point out here that under the Constitution, there
are the so-called independent Constitutional Commissions, namely: The Civil Service
Commission, Commission on Audit, and the Commission on Elections. (Article IX-A,
Section 1)
As these Commissions perform vital governmental functions, they have to be protected

from external influences and political pressures. Hence, they were made constitutional
bodies, independent of and not under any department of the government. 34 Certainly,
they are not under the control of the President.
The Constitution also created an independent office called the "Commission on Human
Rights." (Article XIII, Section 17[1]).However, this Commission is not on the same level
as the Constitutional Commissions under Article IX, although it is independent like the
latter Commissions. 35 It still had to be constituted thru Executive Order No. 163 (dated
May 5, 1987).
In contrast, Article XVI, Section 6 thereof, merely mandates the statutory creation of a
national police commission that will administer and control the national police force to be
established thereunder.
This commission is, for obvious reasons, not in the same category as the independent
Constitutional Commissions of Article IX and the other constitutionally created
independent Office, namely, the Commission on Human Rights.
By way of resume, the three Constitutional Commissions (Civil Service, Audit, Elections)
and the additional commission created by the Constitution (Human Rights) are all
independent of the Executive; but the National Police Commission is not. 36 In fact, it
was stressed during the CONCOM deliberations that this commission would be under the
President, and hence may be controlled by the President, thru his or her alter ego, the
Secretary of the Interior and Local Government.
WHEREFORE, having in view all of the foregoing holdings, the instant petition is hereby
DISMISSED for lack of merit.
SO ORDERED.

G.R. No. 88979 February 7, 1992


LYDIA O. CHUA, petitioner,
vs.
THE CIVIL SERVICE COMMISSION, THE NATIONAL IRRIGATION
ADMINISTRATION and THE DEPARTMENT OF BUDGET AND MANAGEMENT,
respondents.
PADILLA, J.:
Pursuant to the policy of streamlining and trimming the bureaucracy, Republic Act No.
6683 was approved on 2 December 1988 providing for benefits for early retirement and
voluntary separation from the government service as well as for involuntary separation
due to reorganization. Deemed qualified to avail of its benefits are those enumerated in
Sec. 2 of the Act, as follows:
Sec. 2. Coverage. This Act shall cover all appointive officials and employees of the
National Government, including government-owned or controlled corporations with
original charters, as well as the personnel of all local government units. The benefits
authorized under this Act shall apply to all regular, temporary, casual and emergency
employees, regardless of age, who have rendered at least a total of two (2) consecutive
years of government service as of the date of separation. Uniformed personnel of the
Armed Forces of the Philippines including those of the PC-INP are excluded from the
coverage of this Act.
Petitioner Lydia Chua believing that she is qualified to avail of the benefits of the
program, filed an application on 30 January 1989 with respondent National Irrigation
Administration (NIA) which, however, denied the same; instead, she was offered
separation benefits equivalent to one half (1/2) month basic pay for every year of service
commencing from 1980. A recourse by petitioner to the Civil Service Commission
yielded negative results. 1 Her letter for reconsideration dated 25 April 1989 pleaded
thus:
xxx xxx xxx
With due respect, I think the interpretation of the Honorable Commissioner of RA 6683
does not conform with the beneficent purpose of the law. The law merely requires that a
government employee whether regular, temporary, emergency, or casual, should have two
consecutive years of government service in order to be entitled to its benefits. I more than
meet the requirement. Persons who are not entitled are consultants, experts and
contractual(s). As to the budget needed, the law provides that the Department of Budget
and Management will shoulder a certain portion of the benefits to be allotted to
government corporations. Moreover, personnel of these NIA special projects art entitled
to the regular benefits, such (sic) leaves, compulsory retirement and the like. There is no
reason why we should not be entitled to RA 6683.
xxx xxx xxx 2
Denying the plea for reconsideration, the Civil Service Commission (CSC) emphasized:
xxx xxx xxx
We regret to inform you that your request cannot be granted. The provision of Section 3.1
of Joint DBM-CSC Circular Letter No. 89-1 does not only require an applicant to have
two years of satisfactory service on the date of separation/retirement but further requires

said applicant to be on a casual, emergency, temporary or regular employment status as of


December 2, 1988, the date of enactment of R.A. 6683. The law does not contemplate
contractual employees in the coverage.
Inasmuch as your employment as of December 31, 1988, the date of your separation from
the service, is co-terminous with the NIA project which is contractual in nature, this
Commission shall sustain its original decision.
xxx xxx xxx 3
In view of such denial, petitioner is before this Court by way of a special civil action for
certiorari, insisting that she is entitled to the benefits granted under Republic Act No.
6683. Her arguments:
It is submitted that R.A. 6683, as well as Section 3.1 of the Joint DBM-CSC Circular
Letter No. 89-1 requires an applicant to be on a casual, emergency, temporary or regular
employment status. Likewise, the provisions of Section 23 (sic) of the Joint DBM-CSC
Circular Letter No. 88-1, implementing guidelines of R.A. No. 6683, provides:
"2.3 Excluded from the benefits under R.A. No. 6683 are the following:
a) Experts and Consultants hired by agencies for a limited period to perform specific
activities or services with a definite expected output: i.e. membership in Task Force, PartTime, Consultant/Employees.
b) Uniformed personnel of the Armed Forces of the Philippines including those of the
Philippine Constabulary and Integrated National Police (PC-INP).
c) Appointive officials and employees who retire or elect to be separated from the service
for optional retirement with gratuity under R.A. No. 1616, 4968 or with pension under
R.A. No. 186, as amended by R.A. No. 6680 or P.D. No. 1146, an amended, or viceversa.
d) Officials and employees who retired voluntarily prior to the enactment of this law and
have received the corresponding benefits of that retirement/separation.
e) Officials and employees with pending cases punishable by mandatory separation from
the service under existing civil service laws, rules and regulations; provided that if such
officials and employees apply in writing within the prescriptive period for the availment
of the benefits herein authorized, shall be allowed only if acquitted or cleared of all
charges and their application accepted and approved by the head of office concerned."
Based on the above exclusions, herein petitioner does not belong to any one of them. Ms.
Chua is a full time employee of NIA entitled to all the regular benefits provided for by the
Civil Service Commission. She held a permanent status as Personnel Assistant A, a
position which belongs to the Administrative Service. . . . If casuals and emergency
employees were given the benefit of R.A. 6683 with more reason that this petitioner who
was holding a permanent status as Personnel Assistant A and has rendered almost 15
years of faithful, continuous service in the government should be similarly rewarded by
the beneficient (sic) purpose of the law. 4
The NIA and the Civil Service Commission reiterate in their comment petitioner's
exclusion from the benefits of Republic Act No. 6683, because:
1. Petitioner's employment is co-terminous with the project per appointment papers kept
by the Administrative Service in the head office of NIA (the service record was issued by

the Watershed Management and Erosion Control Project (WMECP), Pantabangan, Nueva
Ecija). The project, funded by the World Bank, was completed as of 31 December 1988,
after which petitioner's position became functus officio.
2. Petitioner is not a regular and career employee of NIA her position is not included
in its regular plantilla. She belongs to the non-career service (Sec. 6, P.D. No. 807) which
is inherently short-lived, temporary and transient; on the other hand, retirement
presupposes employment for a long period. The most that a non-career personnel can
expect upon the expiration of his employment is financial assistance. Petitioner is not
even qualified to retire under the GSIS law.
3. Assuming arguendo that petitioner's appointment is permanent, security of tenure is
available only for the term of office (i.e., duration of project).
4. The objective of Republic Act No. 6683 is not really to grant separation or retirement
benefits but reorganization 5 to streamline government functions. The application of the
law must be made consistent with the purpose for which it was enacted. Thus, as the
expressed purpose of the law is to reorganize the government, it will not have any
application to special projects such as the WMECP which exists only for a short and
definite period. This being the nature of special projects, there is no necessity for offering
its personnel early retirement benefits just to induce voluntary separation as a step to
reorganization. In fact, there is even no need of reorganizing the WMECP considering its
short and limited life-span. 6
5. The law applies only to employees of the national government, government-owned or
controlled corporations with original charters and local government units.
Due to the impossibility of reconciling the conflicting interpretations of the parties, the
Court is called upon to define the different classes of employees in the public sector (i.e.
government civil servants).
Who are regular employees? The Labor Code in Art. 280 (P.D. No. 492, as amended)
deems an employment regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer. No equivalent definition can be found in P.D.No. 807 (promulgated on 6
October 1975, which superseded the Civil Service Act of 1965 R.A. No. 2260) or in
the Administrative Code of 1987 (Executive Order No. 292 promulgated on 25 July
1987). The Early Retirement Law itself (Rep. Act No. 6683) merely includes such class
of employees (regular employees) in its coverage, unmindful that no such specie is
employed in the public sector.
The appointment status of government employees in the career service is classified as
follows:
1. permanent one issued to a person who has met the requirements of the position to
which appointment is made, in accordance with the provisions of the Civil Service Act
and the Rules and Standards promulgated in pursuance thereof; 7
2. temporary In the absence of appropriate eligibles and it becomes necessary in the
public interest to fill a vacancy, a temporary appointment should be issued to a person
who meets all the requirements for the position to which he is being appointed except the
appropriate civil service eligibility: Provided, That such temporary appointment shall not
exceed twelve months, but the appointee may be replaced sooner if a qualified civil
service eligible becomes available. 8

The Administrative Code of 1987 characterizes the Career Service as:


(1) Open Career positions for appointment to which prior qualification in an appropriate
examination is required;
(2) Closed Career positions which are scientific, or highly technical in nature; these
include the faculty and academic staff of state colleges and universities, and scientific and
technical positions in scientific or research institutions which shall establish and maintain
their own merit systems;
(3) Positions in the Career Executive Service; namely, Undersecretary, Assistant
Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant
Regional Director, Chief of Department Service and other officers of equivalent rank as
may be identified by the Career Executive Service Board, all of whom are appointed by
the President.
(4) Career officers, other than those in the Career Executive Service, who are appointed
by the President, such as the Foreign Service Officers in the Department of Foreign
Affairs;
(5) Commission officers and enlisted men of the Armed Forces which shall maintain a
separate merit system;
(6) Personnel of government-owned or controlled corporations, whether performing
governmental or proprietary functions, who do not fall under the non-career service; and
(7) Permanent laborers, whether skilled, semi-skilled, or unskilled. 9
The Non-Career Service, on the other hand, is characterized by:
. . . (1) entrance on bases other than those of the usual tests of merit and fitness utilized
for the career service; and (2) tenure which is limited to a period specified by law, or
which is coterminous with that of the appointing authority or subject to his pleasure, or
which is limited to the duration of a particular project for which purpose employment was
made.
Included in the non-career service are:
1. elective officials and their personal or confidential staff;
2. secretaries and other officials of Cabinet rank who hold their positions at the pleasure
of the President and their personal confidential staff(s);
3. Chairman and Members of Commissions and boards with fixed terms of office and
their personal or confidential staff;
4. contractual personnel or those whose employment in the government is in accordance
with a special contract to undertake a specific work or job requiring special or technical
skills not available in the employing agency, to be accomplished within a specific period,
which in no case shall exceed one year and performs or accomplishes the specific work or
job, under his own responsibility with a minimum of direction and supervision from the
hiring agency.
5. emergency and seasonal personnel. 10
There is another type of non-career employee:
Casual where and when employment is not permanent but occasional, unpredictable,
sporadic and brief in nature (Caro v. Rilloroza, 102 Phil. 70; Manuel v. P.P. Gocheco

Lumber Co., 96 Phil. 945)


Consider petitioner's record of service:
Service with the government commenced on 2 December 1974 designated as a laborer
holding emergency status with the NIA Upper Pampanga River Project, R & R
Division. 11 From 24 March 1975 to 31 August 1975, she was a research aide with
temporary status on the same project. On 1 September 1975 to 31 December 1976, she
was with the NIA-FES III; R & R Division, then on 1 January 1977 to 31 May 1980, she
was with NIA UPR IIS (Upper Pampanga River Integrated Irrigation Systems) DRD.
On 1 June 1980, she went to NIA W.M.E.C.P. (Watershed Management & Erosion
Control Project) retaining the status of temporary employee. While with this project, her
designation was changed to personnel assistant on 5 November 1981; starting 9 July
1982, the status became permanent until the completion of the project on 31 December
1988. The appointment paper 12 attached to the OSG's comment lists her status as coterminus with the Project.
The employment status of personnel hired under foreign assisted projects is
considered co-terminous, that is, they are considered employees for the duration of the
project or until the completion or cessation of said project (CSC Memorandum Circular
No. 39, S. 1990, 27 June 1990).
Republic Act No. 6683 seeks to cover and benefits regular, temporary, casual and
emergency employees who have rendered at least a total of two (2) consecutive years
government service.
Resolution No. 87-104 of the CSC, 21 April 1987, provides:
WHEREAS, pursuant to Executive Order No. 966 dated June 22, 1984, the Civil Service
Commission is charged with the function of determining creditable services for retiring
officers and employees of the national government;
WHEREAS, Section 4 (b) of the same Executive Order No. 966 provides that all
previous services by an officer/employee pursuant to a duly approved appointment to a
position in the Civil Service are considered creditable services, while Section 6 (a)
thereof states that services rendered on contractual, emergency or casual status are noncreditable services;
WHEREAS, there is a need to clarify the aforesaid provisions inasmuch as some
contractual, emergency or casual employment are covered by contracts or appointments
duly approved by the Commission.
NOW, therefore, the Commission resolved that services rendered on contractual,
emergency or casual status, irrespective of the mode or manner of payment therefor shall
be considered as creditable for retirement purposes subject to the following conditions:
(emphasis provided)
1. These services are supported by approved appointments, official records and/or other
competent evidence. Parties/agencies concerned shall submit the necessary proof of said
services;
2. Said services are on full time basis and rendered prior to June 22, 1984, the effectivity
date of Executive Order No. 966; and
3. The services for the three (3) years period prior to retirement are continuous and fulfill
the service requirement for retirement.
What substantial differences exist, if any, between casual, emergency, seasonal, project,
co-terminous or contractual personnel? All are tenurial employees with no fixed term,

non-career, and temporary. The 12 May 1989 CSC letter of denial 13 characterized herein
petitioner's employment as co-terminous with the NIA project which in turn was
contractual in nature. The OSG says petitioner's status is co-terminous with the Project.
CSC Memorandum Circular No. 11, series of 1991 (5 April 1991) characterizes the status
of a co-terminous employee
(3) Co-terminous status shall be issued to a person whose entrance in the service is
characterized by confidentiality by the appointing authority or that which is subject to his
pleasure or co-existent with his tenure.
The foregoing status (co-terminous) may be further classified into the following:
a) co-terminous with the project When the appointment is co-existent with the
duration of a particular project for which purpose employment was made or subject to the
availability of funds for the same;
b) co-terminous with the appointing authority when appointment is co-existent with
the tenure of the appointing authority.
c) co-terminous with the incumbent when appointment is co-existent with the
appointee, in that after the resignation, separation or termination of the services of the
incumbent the position shall be deemed automatically abolished; and
d) co-terminous with a specific period, e.g. "co-terminous for a period of 3 years" the
appointment is for a specific period and upon expiration thereof, the position is deemed
abolished.
It is stressed, however, that in the last two classifications (c) and (d), what is termed coterminous is the position, and not the appointee-employee. Further, in (c) the security of
tenure of the appointee is guaranteed during his incumbency; in (d) the security of tenure
is limited to a specific period.
A co-terminous employee is a non-career civil servant, like casual and emergency
employees. We see no solid reason why the latter are extended benefits under the Early
Retirement Law but the former are not. It will be noted that Rep. Act No. 6683 expressly
extends its benefits for early retirement to regular, temporary, casual and emergency
employees. But specifically excluded from the benefits are uniformed personnel of the
AFP including those of the PC-INP. It can be argued that, expressio unius est exclusio
alterius. The legislature would not have made a specific enumeration in a statute had not
the intention been to restrict its meaning and confine its terms and benefits to those
expressly mentioned 14 or casus omissus pro omisso habendus est A person, object or
thing omitted from an enumeration must be held to have been omitted intentionally. 15
Yet adherence to these legal maxims can result in incongruities and in a violation of the
equal protection clause of the Constitution.
The case of Fegurin, et al. v. NLRC, et al., 16 comes to mind where, workers belonging
to a work pool, hired and re-hired continuously from one project to another were
considered non-project-regular and permanent employees.
Petitioner Lydia Chua was hired and re-hired in four (4) successive projects during a span
of fifteen (15) years. Although no proof of the existence of a work pool can be assumed,
her service record cannot be disregarded.
Art. III, Sec. 1 of the 1987 Constitution guarantees: "No person shall be deprived of life,
liberty, or property without due process of law, nor shall any person be denied the equal
protection of the laws."
. . . In Felwa vs. Salas, L-26511, Oct. 29, 1966, We ruled that the equal protection clause

applies only to persons or things identically situated and does not bar a reasonable
classification of the subject of legislation, and a classification is reasonable where (1) it is
based on substantial distinctions which make real differences; (2) these are germane to
the purpose of the law; (3) the classification applies not only to present conditions but
also to future conditions which are substantially identical to those of the present; (4) the
classification applies only to those who belong to the same class. 17
Applying the criteria set forth above, the Early Retirement Law would violate the equal
protection clause were we to sustain respondents' submission that the benefits of said law
are to be denied a class of government employees who are similarly situated as those
covered by said law. The maxim of Expressio unius est exclusio alterius should not be the
applicable maxim in this case but the doctrine of necessary implication which holds that:
No statute can be enacted that can provide all the details involved in its application. There
is always an omission that may not meet a particular situation. What is thought, at the
time of enactment, to be an all-embracing legislation may be inadequate to provide for
the unfolding events of the future. So-called gaps in the law develop as the law is
enforced. One of the rules of statutory construction used to fill in the gap is the doctrine
of necessary implication. The doctrine states that what is implied in a statute is as much a
part thereof as that which is expressed. Every statute is understood, by implication, to
contain all such provisions as may be necessary to effectuate its object and purpose, or to
make effective rights, powers, privileges or jurisdiction which it grants, including all such
collateral and subsidiary consequences as may be fairly and logically inferred from its
terms. Ex necessitate legis. And every statutory grant of power, right or privilege is
deemed to include all incidental power, right or privilege. This is so because the greater
includes the lesser, expressed in the Maxim, in eo plus sit, simper inest et minus. 18
During the sponsorship speech of Congressman Dragon (re: Early Retirement Law), in
response to Congressman Dimaporo's interpellation on coverage of state university
employees who are extended appointments for one (1) year, renewable for two (2) or
three (3) years, 19 he explained:
This Bill covers only those who would like to go on early retirement and voluntary
separation. It is irrespective of the actual status or nature of the appointment one received,
but if he opts to retire under this, then he is covered.
It will be noted that, presently Pending in Congress, is House Bill No. 33399 (a proposal
to extend the scope of the Early Retirement Law). Its wording supports the submission
that Rep. Act No. 6683 indeed overlooked a qualified group of civil servants. Sec. 3 of
said House bill, on coverage of early retirement, would provide:
Sec. 3. Coverage. It will cover all employees of the national government, including
government-owned or controlled corporations, as well as the personnel of all local
government units. The benefits authorized under this Act shall apply to all regular,
temporary, casual, emergency and contractual employees, regardless of age, who have
rendered at least a total of two (2) consecutive years government service as of the date of
separation. The term "contractual employees" as used in this Act does not include experts
and consultants hired by agencies for a limited period to perform specific activities or
services with definite expected output.

Uniformed personnel of the Armed Forces of the Philippines, including those of the PCINP are excluded from the coverage of this Act. (emphasis supplied)
The objective of the Early Retirement or Voluntary Separation Law is to trim the
bureaucracy, hence, vacated positions are deemed abolished upon early/voluntary
retirement of their occupants. Will the inclusion of co-terminous personnel (like the
petitioner) defeat such objective? In their case, upon termination of the project and
separation of the project personnel from the service, the term of employment is
considered expired, the officefunctus officio. Casual, temporary and contractual
personnel serve for shorter periods, and yet, they only have to establish two (2) years of
continuous service to qualify. This, incidentally, negates the OSG's argument that coterminous or project employment is inherently short-lived, temporary and transient,
whereas, retirement presupposes employment for a long period. Here, violation of the
equal protection clause of the Constitution becomes glaring because casuals are not even
in the plantilla, and yet, they are entitled to the benefits of early retirement. How can the
objective of the Early Retirement Law of trimming the bureaucracy be achieved by
granting early retirement benefits to a group of employees (casual) without plantilla
positions? There would, in such a case, be no abolition of permanent positions or
streamlining of functions; it would merely be a removal of excess personnel; but the
positions remain, and future appointments can be made thereto.
Co-terminous or project personnel, on the other hand, who have rendered years of
continuous service should be included in the coverage of the Early Retirement Law, as
long as they file their application prior to the expiration of their term, and as long as they
comply with CSC regulations promulgated for such purpose. In this connection,
Memorandum Circular No. 14, Series of 1990 (5 March 1990) implementing Rep. Act
No. 6850, 20 requires, as a condition to qualify for the grant of eligibility, an aggregate or
total of seven (7) years of government service which need not be continuous, in the career
or non-career service, whether appointive, elective, casual, emergency, seasonal,
contractual or co-terminous including military and police service, as evaluated and
confirmed by the Civil Service Commission. 21 A similar regulation should be
promulgated for the inclusion in Rep. Act No. 6683 of co-terminous personnel who
survive the test of time. This would be in keeping with the coverage of "all social
legislations enacted to promote the physical and mental well-being of public servants" 22
After all, co-terminous personnel, are also obligated to the government for GSIS
contributions, medicare and income tax payments, with the general disadvantage of
transience.
In fine, the Court believes, and so holds, that the denial by the respondents NIA and CSC
of petitioner's application for early retirement benefits under Rep. Act No. 6683 is
unreasonable, unjustified, and oppressive, as petitioner had filed an application for
voluntary retirement within a reasonable period and she is entitled to the benefits of said
law. While the application was filed after expiration of her term, we can give allowance
for the fact that she originally filed the application on her own without the assistance of
counsel. In the interest of substantial justice, her application must be granted; after all she
served the government not only for two (2) years the minimum requirement under the
law but for almost fifteen (15) years in four (4) successive governmental projects.
WHEREFORE, the petition is GRANTED.
Let this case be remanded to the CSC-NIA for a favorable disposition of petitioner's

application for early retirement benefits under Rep. Act No. 6683, in accordance with the
pronouncements in this decision.
SO ORDERED.
G.R. No. 187485
February 12, 2013
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
SAN ROQUE POWER CORPORATION, Respondent.
X----------------------------X
G.R. No. 196113
TAGANITO MINING CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
x----------------------------x
G.R. No. 197156
PHILEX MINING CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
CARPIO, J.:
The Cases
G.R. No. 187485 is a petitiOn for review1 assailing the Decision2 promulgated on 25
March 2009 as well as the Resolution3 promulgated on 24 April 2009 by the Court of Tax
Appeals En Banc (CTA EB) in CTA EB No. 408. The CTA EB affirmed the 29 November
2007 Amended Decision4 as well as the 11 July 2008 Resolution5 of the Second Division
of the Court of Tax Appeals (CTA Second Division) in CTA Case No. 6647. The CTA
Second Division ordered the Commissioner of Internal Revenue (Commissioner) to
refund or issue a tax credit for P483,797,599.65 to San Roque Power Corporation (San
Roque) for unutilized input value-added tax (VAT) on purchases of capital goods and
services for the taxable year 2001.
G.R. No. 196113 is a petition for review6 assailing the Decision7 promulgated on 8
December 2010 as well as the Resolution8 promulgated on 14 March 2011 by the CTA
EB in CTA EB No. 624. In its Decision, the CTA EB reversed the 8 January 2010
Decision9 as well as the 7 April 2010 Resolution10of the CTA Second Division and
granted the CIRs petition for review in CTA Case No. 7574. The CTA EB dismissed, for
having been prematurely filed, Taganito Mining Corporations (Taganito) judicial claim
for P8,365,664.38 tax refund or credit.
G.R. No. 197156 is a petition for review11 assailing the Decision12promulgated on 3
December 2010 as well as the Resolution13 promulgated on 17 May 2011 by the CTA EB
in CTA EB No. 569. The CTA EB affirmed the 20 July 2009 Decision as well as the 10
November 2009 Resolution of the CTA Second Division in CTA Case No. 7687. The
CTA Second Division denied, due to prescription, Philex Mining Corporations (Philex)
judicial claim for P23,956,732.44 tax refund or credit.
On 3 August 2011, the Second Division of this Court resolved14 to consolidate G.R. No.
197156 with G.R. No. 196113, which were pending in the same Division, and with G.R.
No. 187485, which was assigned to the Court En Banc. The Second Division also
resolved to refer G.R. Nos. 197156 and 196113 to the Court En Banc, where G.R. No.

187485, the lower-numbered case, was assigned.


G.R. No. 187485
CIR v. San Roque Power Corporation
The Facts
The CTA EBs narration of the pertinent facts is as follows:
[CIR] is the duly appointed Commissioner of Internal Revenue, empowered, among
others, to act upon and approve claims for refund or tax credit, with office at the Bureau
of Internal Revenue ("BIR") National Office Building, Diliman, Quezon City.
[San Roque] is a domestic corporation duly organized and existing under and by virtue of
the laws of the Philippines with principal office at Barangay San Roque, San Manuel,
Pangasinan. It was incorporated in October 1997 to design, construct, erect, assemble,
own, commission and operate power-generating plants and related facilities pursuant to
and under contract with the Government of the Republic of the Philippines, or any
subdivision, instrumentality or agency thereof, or any governmentowned or controlled
corporation, or other entity engaged in the development, supply, or distribution of energy.
As a seller of services, [San Roque] is duly registered with the BIR with TIN/VAT No.
005-017-501. It is likewise registered with the Board of Investments ("BOI") on a
preferred pioneer status, to engage in the design, construction, erection, assembly, as well
as to own, commission, and operate electric power-generating plants and related
activities, for which it was issued Certificate of Registration No. 97-356 on February 11,
1998.
On October 11, 1997, [San Roque] entered into a Power Purchase Agreement ("PPA")
with the National Power Corporation ("NPC") to develop hydro-potential of the Lower
Agno River and generate additional power and energy for the Luzon Power Grid, by
building the San Roque Multi-Purpose Project located in San Manuel, Pangasinan. The
PPA provides, among others, that [San Roque] shall be responsible for the design,
construction, installation, completion, testing and commissioning of the Power Station
and shall operate and maintain the same, subject to NPC instructions. During the
cooperation period of twenty-five (25) years commencing from the completion date of
the Power Station, NPC will take and pay for all electricity available from the Power
Station.
On the construction and development of the San Roque Multi- Purpose Project which
comprises of the dam, spillway and power plant, [San Roque] allegedly incurred, excess
input VAT in the amount of 559,709,337.54 for taxable year 2001 which it declared in
its Quarterly VAT Returns filed for the same year. [San Roque] duly filed with the BIR
separate claims for refund, in the total amount of 559,709,337.54, representing
unutilized input taxes as declared in its VAT returns for taxable year 2001.
However, on March 28, 2003, [San Roque] filed amended Quarterly VAT Returns for the
year 2001 since it increased its unutilized input VAT to the amount of 560,200,283.14.
Consequently, [San Roque] filed with the BIR on even date, separate amended claims for
refund in the aggregate amount of 560,200,283.14.
[CIRs] inaction on the subject claims led to the filing by [San Roque] of the Petition for
Review with the Court [of Tax Appeals] in Division on April 10, 2003.
Trial of the case ensued and on July 20, 2005, the case was submitted for decision.15
The Court of Tax Appeals Ruling: Division
The CTA Second Division initially denied San Roques claim. In its Decision16 dated 8

March 2006, it cited the following as bases for the denial of San Roques claim: lack of
recorded zero-rated or effectively zero-rated sales; failure to submit documents
specifically identifying the purchased goods/services related to the claimed input VAT
which were included in its Property, Plant and Equipment account; and failure to prove
that the related construction costs were capitalized in its books of account and subjected
to depreciation.
The CTA Second Division required San Roque to show that it complied with the
following requirements of Section 112(B) of Republic Act No. 8424 (RA 8424)17 to be
entitled to a tax refund or credit of input VAT attributable to capital goods imported or
locally purchased: (1) it is a VAT-registered entity; (2) its input taxes claimed were paid
on capital goods duly supported by VAT invoices and/or official receipts; (3) it did not
offset or apply the claimed input VAT payments on capital goods against any output VAT
liability; and (4) its claim for refund was filed within the two-year prescriptive period
both in the administrative and judicial levels.
The CTA Second Division found that San Roque complied with the first, third, and fourth
requirements, thus:
The fact that [San Roque] is a VAT registered entity is admitted (par. 4, Facts Admitted,
Joint Stipulation of Facts, Records, p. 157). It was also established that the instant claim
of 560,200,823.14 is already net of the 11,509.09 output tax declared by [San Roque]
in its amended VAT return for the first quarter of 2001. Moreover, the entire amount of
560,200,823.14 was deducted by [San Roque] from the total available input tax
reflected in its amended VAT returns for the last two quarters of 2001 and first two
quarters of 2002 (Exhibits M-6, O-6, OO-1 & QQ-1). This means that the claimed input
taxes of 560,200,823.14 did not form part of the excess input taxes of 83,692,257.83,
as of the second quarter of 2002 that was to be carried-over to the succeeding quarters.
Further, [San Roques] claim for refund/tax credit certificate of excess input VAT was
filed within the two-year prescriptive period reckoned from the dates of filing of the
corresponding quarterly VAT returns.
For the first, second, third, and fourth quarters of 2001, [San Roque] filed its VAT returns
on April 25, 2001, July 25, 2001, October 23, 2001 and January 24, 2002, respectively
(Exhibits "H, J, L, and N"). These returns were all subsequently amended on March 28,
2003 (Exhibits "I, K, M, and O"). On the other hand, [San Roque] originally filed its
separate claims for refund on July 10, 2001, October 10, 2001, February 21, 2002, and
May 9, 2002 for the first, second, third, and fourth quarters of 2001, respectively,
(Exhibits "EE, FF, GG, and HH") and subsequently filed amended claims for all quarters
on March 28, 2003 (Exhibits "II, JJ, KK, and LL"). Moreover, the Petition for Review
was filed on April 10, 2003. Counting from the respective dates when [San Roque]
originally filed its VAT returns for the first, second, third and fourth quarters of 2001, the
administrative claims for refund (original and amended) and the Petition for Review fall
within the two-year prescriptive period.18
San Roque filed a Motion for New Trial and/or Reconsideration on 7 April 2006. In its 29
November 2007 Amended Decision,19 the CTA Second Division found legal basis to
partially grant San Roques claim. The CTA Second Division ordered the Commissioner
to refund or issue a tax credit in favor of San Roque in the amount of 483,797,599.65,
which represents San Roques unutilized input VAT on its purchases of capital goods and
services for the taxable year 2001. The CTA based the adjustment in the amount on the

findings of the independent certified public accountant. The following reasons were cited
for the disallowed claims: erroneous computation; failure to ascertain whether the related
purchases are in the nature of capital goods; and the purchases pertain to capital goods.
Moreover, the reduction of claims was based on the following: the difference between
San Roques claim and that appearing on its books; the official receipts covering the
claimed input VAT on purchases of local services are not within the period of the claim;
and the amount of VAT cannot be determined from the submitted official receipts and
invoices. The CTA Second Division denied San Roques claim for refund or tax credit of
its unutilized input VAT attributable to its zero-rated or effectively zero-rated sales
because San Roque had no record of such sales for the four quarters of 2001.
The dispositive portion of the CTA Second Divisions 29 November 2007 Amended
Decision reads:
WHEREFORE, [San Roques] "Motion for New Trial and/or Reconsideration" is hereby
PARTIALLY GRANTED and this Courts Decision promulgated on March 8, 2006 in the
instant case is hereby MODIFIED.
Accordingly, [the CIR] is hereby ORDERED to REFUND or in the alternative, to ISSUE
A TAX CREDIT CERTIFICATE in favor of [San Roque] in the reduced amount of Four
Hundred Eighty Three Million Seven Hundred Ninety Seven Thousand Five Hundred
Ninety Nine Pesos and Sixty Five Centavos (483,797,599.65) representing unutilized
input VAT on purchases of capital goods and services for the taxable year 2001.
SO ORDERED.20
The Commissioner filed a Motion for Partial Reconsideration on 20 December 2007. The
CTA Second Division issued a Resolution dated 11 July 2008 which denied the CIRs
motion for lack of merit.
The Court of Tax Appeals Ruling: En Banc
The Commissioner filed a Petition for Review before the CTA EB praying for the denial
of San Roques claim for refund or tax credit in its entirety as well as for the setting aside
of the 29 November 2007 Amended Decision and the 11 July 2008 Resolution in CTA
Case No. 6647.
The CTA EB dismissed the CIRs petition for review and affirmed the challenged
decision and resolution.
The CTA EB cited Commissioner of Internal Revenue v. Toledo Power, Inc.21 and
Revenue Memorandum Circular No. 49-03,22 as its bases for ruling that San Roques
judicial claim was not prematurely filed. The pertinent portions of the Decision state:
More importantly, the Court En Banc has squarely and exhaustively ruled on this issue in
this wise:
It is true that Section 112(D) of the abovementioned provision applies to the present case.
However, what the petitioner failed to consider is Section 112(A) of the same provision.
The respondent is also covered by the two (2) year prescriptive period. We have
repeatedly held that the claim for refund with the BIR and the subsequent appeal to the
Court of Tax Appeals must be filed within the two-year period.
Accordingly, the Supreme Court held in the case of Atlas Consolidated Mining and
Development Corporation vs. Commissioner of Internal Revenue that the two-year
prescriptive period for filing a claim for input tax is reckoned from the date of the filing
of the quarterly VAT return and payment of the tax due. If the said period is about to
expire but the BIR has not yet acted on the application for refund, the taxpayer may

interpose a petition for review with this Court within the two year period.
In the case of Gibbs vs. Collector, the Supreme Court held that if, however, the Collector
(now Commissioner) takes time in deciding the claim, and the period of two years is
about to end, the suit or proceeding must be started in the Court of Tax Appeals before the
end of the two-year period without awaiting the decision of the Collector.
Furthermore, in the case of Commissioner of Customs and Commissioner of Internal
Revenue vs. The Honorable Court of Tax Appeals and Planters Products, Inc., the
Supreme Court held that the taxpayer need not wait indefinitely for a decision or ruling
which may or may not be forthcoming and which he has no legal right to expect. It is
disheartening enough to a taxpayer to keep him waiting for an indefinite period of time
for a ruling or decision of the Collector (now Commissioner) of Internal Revenue on his
claim for refund. It would make matters more exasperating for the taxpayer if we were to
close the doors of the courts of justice for such a relief until after the Collector (now
Commissioner) of Internal Revenue, would have, at his personal convenience, given his
go signal.
This Court ruled in several cases that once the petition is filed, the Court has already
acquired jurisdiction over the claims and the Court is not bound to wait indefinitely for no
reason for whatever action respondent (herein petitioner) may take. At stake are claims
for refund and unlike disputed assessments, no decision of respondent (herein petitioner)
is required before one can go to this Court. (Emphasis supplied and citations omitted)
Lastly, it is apparent from the following provisions of Revenue Memorandum Circular
No. 49-03 dated August 18, 2003, that [the CIR] knows that claims for VAT refund or tax
credit filed with the Court [of Tax Appeals] can proceed simultaneously with the ones
filed with the BIR and that taxpayers need not wait for the lapse of the subject 120-day
period, to wit:
In response to [the] request of selected taxpayers for adoption of procedures in handling
refund cases that are aligned to the statutory requirements that refund cases should be
elevated to the Court of Tax Appeals before the lapse of the period prescribed by law,
certain provisions of RMC No. 42-2003 are hereby amended and new provisions are
added thereto.
In consonance therewith, the following amendments are being introduced to RMC No.
42-2003, to wit:
I.) A-17 of Revenue Memorandum Circular No. 42-2003 is hereby revised to read as
follows:
In cases where the taxpayer has filed a "Petition for Review" with the Court of Tax
Appeals involving a claim for refund/TCC that is pending at the administrative agency
(Bureau of Internal Revenue or OSS-DOF), the administrative agency and the tax court
may act on the case separately. While the case is pending in the tax court and at the same
time is still under process by the administrative agency, the litigation lawyer of the BIR,
upon receipt of the summons from the tax court, shall request from the head of the
investigating/processing office for the docket containing certified true copies of all the
documents pertinent to the claim. The docket shall be presented to the court as evidence
for the BIR in its defense on the tax credit/refund case filed by the taxpayer. In the
meantime, the investigating/processing office of the administrative agency shall continue
processing the refund/TCC case until such time that a final decision has been reached by
either the CTA or the administrative agency.

If the CTA is able to release its decision ahead of the evaluation of the administrative
agency, the latter shall cease from processing the claim. On the other hand, if the
administrative agency is able to process the claim of the taxpayer ahead of the CTA and
the taxpayer is amenable to the findings thereof, the concerned taxpayer must file a
motion to withdraw the claim with the CTA.23 (Emphasis supplied)
G.R. No. 196113
Taganito Mining Corporation v. CIR
The Facts
The CTA Second Divisions narration of the pertinent facts is as follows:
Petitioner, Taganito Mining Corporation, is a corporation duly organized and existing
under and by virtue of the laws of the Philippines, with principal office at 4th Floor, Solid
Mills Building, De La Rosa St., Lega[s]pi Village, Makati City. It is duly registered with
the Securities and Exchange Commission with Certificate of Registration No. 138682
issued on March 4, 1987 with the following primary purpose:
To carry on the business, for itself and for others, of mining lode and/or placer mining,
developing, exploiting, extracting, milling, concentrating, converting, smelting, treating,
refining, preparing for market, manufacturing, buying, selling, exchanging, shipping,
transporting, and otherwise producing and dealing in nickel, chromite, cobalt, gold,
silver, copper, lead, zinc, brass, iron, steel, limestone, and all kinds of ores, metals and
their by-products and which by-products thereof of every kind and description and by
whatsoever process the same can be or may hereafter be produced, and generally and
without limit as to amount, to buy, sell, locate, exchange, lease, acquire and deal in lands,
mines, and mineral rights and claims and to conduct all business appertaining thereto, to
purchase, locate, lease or otherwise acquire, mining claims and rights, timber rights,
water rights, concessions and mines, buildings, dwellings, plants machinery, spare parts,
tools and other properties whatsoever which this corporation may from time to time find
to be to its advantage to mine lands, and to explore, work, exercise, develop or turn to
account the same, and to acquire, develop and utilize water rights in such manner as may
be authorized or permitted by law; to purchase, hire, make, construct or otherwise,
acquire, provide, maintain, equip, alter, erect, improve, repair, manage, work and operate
private roads, barges, vessels, aircraft and vehicles, private telegraph and telephone lines,
and other communication media, as may be needed by the corporation for its own
purpose, and to purchase, import, construct, machine, fabricate, or otherwise acquire, and
maintain and operate bridges, piers, wharves, wells, reservoirs, plumes, watercourses,
waterworks, aqueducts, shafts, tunnels, furnaces, cook ovens, crushing works, gasworks,
electric lights and power plants and compressed air plants, chemical works of all kinds,
concentrators, smelters, smelting plants, and refineries, matting plants, warehouses,
workshops, factories, dwelling houses, stores, hotels or other buildings, engines,
machinery, spare parts, tools, implements and other works, conveniences and properties
of any description in connection with or which may be directly or indirectly conducive to
any of the objects of the corporation, and to contribute to, subsidize or otherwise aid or
take part in any operations;
and is a VAT-registered entity, with Certificate of Registration (BIR Form No. 2303) No.
OCN 8RC0000017494. Likewise, [Taganito] is registered with the Board of Investments
(BOI) as an exporter of beneficiated nickel silicate and chromite ores, with BOI
Certificate of Registration No. EP-88-306.

Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue
vested with authority to exercise the functions of the said office, including inter alia, the
power to decide refunds of internal revenue taxes, fees and other charges, penalties
imposed in relation thereto, or other matters arising under the National Internal Revenue
Code (NIRC) or other laws administered by Bureau of Internal Revenue (BIR) under
Section 4 of the NIRC. He holds office at the BIR National Office Building, Diliman,
Quezon City.
[Taganito] filed all its Monthly VAT Declarations and Quarterly Vat Returns for the
period January 1, 2005 to December 31, 2005. For easy reference, a summary of the
filing dates of the original and amended Quarterly VAT Returns for taxable year 2005 of
[Taganito] is as follows:
Exhibit(
Nature of
Quarter
Mode of filing
Filing Date
s)
the Return
L to L-4
Original
Electronic
April 15, 2005
M to M1st
Amended
Electronic
July 20, 2005
3
N to N-4
Amended
Electronic
October 18, 2006
Q to Q-3
Original
Electronic
July 20, 2005
2nd
R to R-4
Amended
Electronic
October 18, 2006
U to U-4
Original
Electronic
October 19, 2005
3rd
V to V-4
Amended
Electronic
October 18, 2006
Y to Y-4
Original
Electronic
January 20, 2006
4th
Z to Z-4
Amended
Electronic
October 18, 2006
As can be gleaned from its amended Quarterly VAT Returns, [Taganito] reported zerorated sales amounting to P1,446,854,034.68; input VAT on its domestic purchases and
importations of goods (other than capital goods) and services amounting to
P2,314,730.43; and input VAT on its domestic purchases and importations of capital
goods amounting to P6,050,933.95, the details of which are summarized as follows:
Input VAT
on
Domestic Input VAT on
Perio
Purchases Domestic
d
Zero-Rated
and
Purchases and
Total Input VAT
Cover Sales
Importatio Importations
ed
ns
of Capital
of Goods
Goods
and
Services
01/01
/05 P551,179,871 P1,491,88
P239,803.22
P1,731,683.78
03/31
.58
0.56
/05
04/01
/05 64,677,530.7 204,364.1
5,811,130.73
6,015,494.90
06/30
8
7
/05

07/01
/05 480,784,287. 144,887.6
144,887.67
09/30
30
7
/05
10/01
/05 350,212,345. 473,598.0
473,598.03
12/31
02
3
/05
TOT
P1,446,854,0 P2,314,73
P6,050,933.95
P8,365,664.38
AL
34.68
0.43
On November 14, 2006, [Taganito] filed with [the CIR], through BIRs Large Taxpayers
Audit and Investigation Division II (LTAID II), a letter dated November 13, 2006
claiming a tax credit/refund of its supposed input VAT amounting to 8,365,664.38 for
the period covering January 1, 2004 to December 31, 2004. On the same date, [Taganito]
likewise filed an Application for Tax Credits/Refunds for the period covering January 1,
2005 to December 31, 2005 for the same amount.
On November 29, 2006, [Taganito] sent again another letter dated November 29, 2004 to
[the CIR], to correct the period of the above claim for tax credit/refund in the said amount
of 8,365,664.38 as actually referring to the period covering January 1, 2005 to
December 31, 2005.
As the statutory period within which to file a claim for refund for said input VAT is about
to lapse without action on the part of the [CIR], [Taganito] filed the instant Petition for
Review on February 17, 2007.
In his Answer filed on March 28, 2007, [the CIR] interposes the following defenses:
4. [Taganitos] alleged claim for refund is subject to administrative
investigation/examination by the Bureau of Internal Revenue (BIR);
5. The amount of 8,365,664.38 being claimed by [Taganito] as alleged unutilized input
VAT on domestic purchases of goods and services and on importation of capital goods for
the period January 1, 2005 to December 31, 2005 is not properly documented;
6. [Taganito] must prove that it has complied with the provisions of Sections 112 (A) and
(D) and 229 of the National Internal Revenue Code of 1997 (1997 Tax Code) on the
prescriptive period for claiming tax refund/credit;
7. Proof of compliance with the prescribed checklist of requirements to be submitted
involving claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98,
otherwise there would be no sufficient compliance with the filing of administrative claim
for refund, the administrative claim thereof being mere proforma, which is a condition
sine qua non prior to the filing of judicial claim in accordance with the provision of
Section 229 of the 1997 Tax Code. Further, Section 112 (D) of the Tax Code, as amended,
requires the submission of complete documents in support of the application filed with
the BIR before the 120-day audit period shall apply, and before the taxpayer could avail
of judicial remedies as provided for in the law. Hence, [Taganitos] failure to submit proof
of compliance with the above-stated requirements warrants immediate dismissal of the
petition for review.
8. [Taganito] must prove that it has complied with the invoicing requirements mentioned
in Sections 110 and 113 of the 1997 Tax Code, as amended, in relation to provisions of
Revenue Regulations No. 7-95.

9. In an action for refund/credit, the burden of proof is on the taxpayer to establish its
right to refund, and failure to sustain the burden is fatal to the claim for refund/credit
(Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466 cited in Collector of Internal Revenue vs.
Manila Jockey Club, Inc., 98 Phil. 670);
10. Claims for refund are construed strictly against the claimant for the same partake the
nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31
SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp. vs.
Commissioner of Internal Revenue, 124 SCRA 1211).
SPECIAL AND AFFIRMATIVE DEFENSES
11. The Court of Tax Appeals has no jurisdiction to entertain the instant petition for
review for failure on the part of [Taganito] to comply with the provision of Section 112
(D) of the 1997 Tax Code which provides, thus:
Section 112. Refunds or Tax Credits of Input Tax.
xxx
xxx
xxx
(D) Period within which refund or Tax Credit of Input Taxes shall be Made. In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred (120) days from the date of submission of
complete documents in support of the application filed in accordance with Subsections
(A) and (B) hereof.
In cases of full or partial denial for tax refund or tax credit, or the failure on the part of
the Commissioner to act on the application within the period prescribed above, the
taxpayer affected may, within thirty (30) days from the receipt of the decision denying the
claim or after the expiration of the one hundred twenty dayperiod, appeal the decision or
the unacted claim with the Court of Tax Appeals. (Emphasis supplied.)
12. As stated, [Taganito] filed the administrative claim for refund with the Bureau of
Internal Revenue on November 14, 2006. Subsequently on February 14, 2007, the instant
petition was filed. Obviously the 120 days given to the Commissioner to decide on the
claim has not yet lapsed when the petition was filed. The petition was prematurely filed,
hence it must be dismissed for lack of jurisdiction.
During trial, [Taganito] presented testimonial and documentary evidence primarily aimed
at proving its supposed entitlement to the refund in the amount of 8,365,664.38,
representing input taxes for the period covering January 1, 2005 to December 31, 2005.
[The CIR], on the other hand, opted not to present evidence. Thus, in the Resolution
promulgated on January 22, 2009, this case was submitted for decision as of such date,
considering [Taganitos] "Memorandum" filed on January 19, 2009 and [the CIRs]
"Memorandum" filed on December 19, 2008.24
The Court of Tax Appeals Ruling: Division
The CTA Second Division partially granted Taganitos claim. In its Decision25 dated 8
January 2010, the CTA Second Division found that Taganito complied with the
requirements of Section 112(A) of RA 8424, as amended, to be entitled to a tax refund or
credit of input VAT attributable to zero-rated or effectively zero-rated sales.26
The pertinent portions of the CTA Second Divisions Decision read:
Finally, records show that [Taganitos] administrative claim filed on November 14, 2006,
which was amended on November 29, 2006, and the Petition for Review filed with this
Court on February 14, 2007 are well within the two-year prescriptive period, reckoned

from March 31, 2005, June 30, 2005, September 30, 2005, and December 31, 2005,
respectively, the close of each taxable quarter covering the period January 1, 2005 to
December 31, 2005.
In fine, [Taganito] sufficiently proved that it is entitled to a tax credit certificate in the
amount of 8,249,883.33 representing unutilized input VAT for the four taxable quarters
of 2005.
WHEREFORE, premises considered, the instant Petition for Review is hereby
PARTIALLY GRANTED. Accordingly, [the CIR] is hereby ORDERED to REFUND to
[Taganito] the amount of EIGHT MILLION TWO HUNDRED FORTY NINE
THOUSAND EIGHT HUNDRED EIGHTY THREE PESOS AND THIRTY THREE
CENTAVOS (P8,249,883.33) representing its unutilized input taxes attributable to zerorated sales from January 1, 2005 to December 31, 2005.
SO ORDERED.27
The Commissioner filed a Motion for Partial Reconsideration on 29 January 2010.
Taganito, in turn, filed a Comment/Opposition on the Motion for Partial Reconsideration
on 15 February 2010.
In a Resolution28 dated 7 April 2010, the CTA Second Division denied the CIRs motion.
The CTA Second Division ruled that the legislature did not intend that Section 112
(Refunds or Tax Credits of Input Tax) should be read in isolation from Section 229
(Recovery of Tax Erroneously or Illegally Collected) or vice versa. The CTA Second
Division applied the mandatory statute of limitations in seeking judicial recourse
prescribed under Section 229 to claims for refund or tax credit under Section 112.
The Court of Tax Appeals Ruling: En Banc
On 29 April 2010, the Commissioner filed a Petition for Review before the CTA EB
assailing the 8 January 2010 Decision and the 7 April 2010 Resolution in CTA Case No.
7574 and praying that Taganitos entire claim for refund be denied.
In its 8 December 2010 Decision,29 the CTA EB granted the CIRs petition for review
and reversed and set aside the challenged decision and resolution.
The CTA EB declared that Section 112(A) and (B) of the 1997 Tax Code both set forth
the reckoning of the two-year prescriptive period for filing a claim for tax refund or credit
over input VAT to be the close of the taxable quarter when the sales were made. The CTA
EB also relied on this Courts rulings in the cases of Commissioner of Internal Revenue v.
Aichi Forging Company of Asia, Inc. (Aichi)30 and Commisioner of Internal Revenue v.
Mirant Pagbilao Corporation (Mirant).31 Both Aichi and Mirant ruled that the two-year
prescriptive period to file a refund for input VAT arising from zero-rated sales should be
reckoned from the close of the taxable quarter when the sales were made. Aichi further
emphasized that the failure to await the decision of the Commissioner or the lapse of 120day period prescribed in Section 112(D) amounts to a premature filing.
The CTA EB found that Taganito filed its administrative claim on 14 November 2006,
which was well within the period prescribed under Section 112(A) and (B) of the 1997
Tax Code. However, the CTA EB found that Taganitos judicial claim was prematurely
filed. Taganito filed its Petition for Review before the CTA Second Division on 14
February 2007. The judicial claim was filed after the lapse of only 92 days from the filing
of its administrative claim before the CIR, in violation of the 120-day period prescribed
in Section 112(D) of the 1997 Tax Code.
The dispositive portion of the Decision states:

WHEREFORE, the instant Petition for Review is hereby GRANTED. The assailed
Decision dated January 8, 2010 and Resolution dated April 7, 2010 of the Special Second
Division of this Court are hereby REVERSED and SET ASIDE. Another one is hereby
entered DISMISSING the Petition for Review filed in CTA Case No. 7574 for having
been prematurely filed.
SO ORDERED.32
In his dissent,33 Associate Justice Lovell R. Bautista insisted that Taganito timely filed its
claim before the CTA. Justice Bautista read Section 112(C) of the 1997 Tax Code (Period
within which Refund or Tax Credit of Input Taxes shall be Made) in conjunction with
Section 229 (Recovery of Tax Erroneously or Illegally Collected). Justice Bautista also
relied on this Courts ruling in Atlas Consolidated Mining and Development Corporation
v. Commissioner of Internal Revenue (Atlas),34 which stated that refundable or
creditable input VAT and illegally or erroneously collected national internal revenue tax
are the same, insofar as both are monetary amounts which are currently in the hands of
the government but must rightfully be returned to the taxpayer. Justice Bautista
concluded:
Being merely permissive, a taxpayer claimant has the option of seeking judicial redress
for refund or tax credit of excess or unutilized input tax with this Court, either within 30
days from receipt of the denial of its claim, or after the lapse of the 120-day period in the
event of inaction by the Commissioner, provided that both administrative and judicial
remedies must be undertaken within the 2-year period.35
Taganito filed its Motion for Reconsideration on 29 December 2010. The Commissioner
filed an Opposition on 26 January 2011. The CTA EB denied for lack of merit Taganitos
motion in a Resolution36 dated 14 March 2011. The CTA EB did not see any justifiable
reason to depart from this Courts rulings in Aichi and Mirant.
G.R. No. 197156
Philex Mining Corporation v. CIR
The Facts
The CTA EBs narration of the pertinent facts is as follows:
[Philex] is a corporation duly organized and existing under the laws of the Republic of
the Philippines, which is principally engaged in the mining business, which includes the
exploration and operation of mine properties and commercial production and marketing
of mine products, with office address at 27 Philex Building, Fairlaine St., Kapitolyo,
Pasig City.
[The CIR], on the other hand, is the head of the Bureau of Internal Revenue ("BIR"), the
government entity tasked with the duties/functions of assessing and collecting all national
internal revenue taxes, fees, and charges, and enforcement of all forfeitures, penalties and
fines connected therewith, including the execution of judgments in all cases decided in its
favor by [the Court of Tax Appeals] and the ordinary courts, where she can be served
with court processes at the BIR Head Office, BIR Road, Quezon City.
On October 21, 2005, [Philex] filed its Original VAT Return for the third quarter of
taxable year 2005 and Amended VAT Return for the same quarter on December 1, 2005.
On March 20, 2006, [Philex] filed its claim for refund/tax credit of the amount of
23,956,732.44 with the One Stop Shop Center of the Department of Finance. However,
due to [the CIRs] failure to act on such claim, on October 17, 2007, pursuant to Sections
112 and 229 of the NIRC of 1997, as amended, [Philex] filed a Petition for Review,

docketed as C.T.A. Case No. 7687.


In [her] Answer, respondent CIR alleged the following special and affirmative defenses:
4. Claims for refund are strictly construed against the taxpayer as the same partake the
nature of an exemption;
5. The taxpayer has the burden to show that the taxes were erroneously or illegally paid.
Failure on the part of [Philex] to prove the same is fatal to its cause of action;
6. [Philex] should prove its legal basis for claiming for the amount being refunded.37
The Court of Tax Appeals Ruling: Division
The CTA Second Division, in its Decision dated 20 July 2009, denied Philexs claim due
to prescription. The CTA Second Division ruled that the two-year prescriptive period
specified in Section 112(A) of RA 8424, as amended, applies not only to the filing of the
administrative claim with the BIR, but also to the filing of the judicial claim with the
CTA. Since Philexs claim covered the 3rd quarter of 2005, its administrative claim filed
on 20 March 2006 was timely filed, while its judicial claim filed on 17 October 2007 was
filed late and therefore barred by prescription.
On 10 November 2009, the CTA Second Division denied Philexs Motion for
Reconsideration.
The Court of Tax Appeals Ruling: En Banc
Philex filed a Petition for Review before the CTA EB praying for a reversal of the 20 July
2009 Decision and the 10 November 2009 Resolution of the CTA Second Division in
CTA Case No. 7687.
The CTA EB, in its Decision38 dated 3 December 2010, denied Philexs petition and
affirmed the CTA Second Divisions Decision and Resolution.
The pertinent portions of the Decision read:
In this case, while there is no dispute that [Philexs] administrative claim for refund was
filed within the two-year prescriptive period; however, as to its judicial claim for
refund/credit, records show that on March 20, 2006, [Philex] applied the administrative
claim for refund of unutilized input VAT in the amount of 23,956,732.44 with the One
Stop Shop Center of the Department of Finance, per Application No. 52490. From March
20, 2006, which is also presumably the date [Philex] submitted supporting documents,
together with the aforesaid application for refund, the CIR has 120 days, or until July 18,
2006, within which to decide the claim. Within 30 days from the lapse of the 120-day
period, or from July 19, 2006 until August 17, 2006, [Philex] should have elevated its
claim for refund to the CTA. However, [Philex] filed its Petition for Review only on
October 17, 2007, which is 426 days way beyond the 30- day period prescribed by law.
Evidently, the Petition for Review in CTA Case No. 7687 was filed 426 days late. Thus,
the Petition for Review in CTA Case No. 7687 should have been dismissed on the ground
that the Petition for Review was filed way beyond the 30-day prescribed period; thus, no
jurisdiction was acquired by the CTA in Division; and not due to prescription.
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED
DUE COURSE, and accordingly, DISMISSED. The assailed Decision dated July 20,
2009, dismissing the Petition for Review in CTA Case No. 7687 due to prescription, and
Resolution dated November 10, 2009 denying [Philexs] Motion for Reconsideration are
hereby AFFIRMED, with modification that the dismissal is based on the ground that the
Petition for Review in CTA Case No. 7687 was filed way beyond the 30-day prescribed
period to appeal.

SO ORDERED.39
G.R. No. 187485
CIR v. San Roque Power Corporation
The Commissioner raised the following grounds in the Petition for Review:
I. The Court of Tax Appeals En Banc erred in holding that [San Roques] claim for refund
was not prematurely filed.
II. The Court of Tax Appeals En Banc erred in affirming the amended decision of the
Court of Tax Appeals (Second Division) granting [San Roques] claim for refund of
alleged unutilized input VAT on its purchases of capital goods and services for the taxable
year 2001 in the amount of P483,797,599.65. 40
G.R. No. 196113
Taganito Mining Corporation v. CIR
Taganito raised the following grounds in its Petition for Review:
I. The Court of Tax Appeals En Banc committed serious error and acted with grave abuse
of discretion tantamount to lack or excess of jurisdiction in erroneously applying the
Aichi doctrine in violation of [Taganitos] right to due process.
II. The Court of Tax Appeals committed serious error and acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in erroneously interpreting the
provisions of Section 112 (D).41
G.R. No. 197156
Philex Mining Corporation v. CIR
Philex raised the following grounds in its Petition for Review:
I. The CTA En Banc erred in denying the petition due to alleged prescription. The fact is
that the petition was filed with the CTA within the period set by prevailing court rulings
at the time it was filed.
II. The CTA En Banc erred in retroactively applying the Aichi ruling in denying the
petition in this instant case.42
The Courts Ruling
For ready reference, the following are the provisions of the Tax Code applicable to the
present cases:
Section 105:
Persons Liable. Any person who, in the course of trade or business, sells, barters,
exchanges, leases goods or properties, renders services, and any person who imports
goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of
this Code.
The value-added tax is an indirect tax and the amount of tax may be shifted or passed on
to the buyer, transferee or lessee of the goods, properties or services. This rule shall
likewise apply to existing contracts of sale or lease of goods, properties or services at the
time of the effectivity of Republic Act No. 7716.
xxxx
Section 110(B):
Sec. 110. Tax Credits.
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax
exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input
tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or
quarters: [Provided, That the input tax inclusive of input VAT carried over from the

previous quarter that may be credited in every quarter shall not exceed seventy percent
(70%) of the output VAT:]43 Provided, however, That any input tax attributable to zerorated sales by a VAT-registered person may at his option be refunded or credited against
other internal revenue taxes, subject to the provisions of Section 112.
Section 112:44
Sec. 112. Refunds or Tax Credits of Input Tax.
(A) Zero-Rated or Effectively Zero-Rated Sales. Any VAT-registered person, whose
sales are zero-rated or effectively zero-rated may, within two (2) years after the close of
the taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against output
tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2) (a)
(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange
proceeds thereof had been duly accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the
taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or
exempt sale of goods or properties or services, and the amount of creditable input tax due
or paid cannot be directly and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales.
(B) Capital Goods.- A VAT registered person may apply for the issuance of a tax credit
certificate or refund of input taxes paid on capital goods imported or locally purchased, to
the extent that such input taxes have not been applied against output taxes. The
application may be made only within two (2) years after the close of the taxable quarter
when the importation or purchase was made.
(C) Cancellation of VAT Registration. A person whose registration has been cancelled
due to retirement from or cessation of business, or due to changes in or cessation of status
under Section 106(C) of this Code may, within two (2) years from the date of
cancellation, apply for the issuance of a tax credit certificate for any unused input tax
which may be used in payment of his other internal revenue taxes
(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of submission
of complete documents in support of the application filed in accordance with Subsection
(A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on
the part of the Commissioner to act on the application within the period prescribed above,
the taxpayer affected may, within thirty (30) days from the receipt of the decision denying
the claim or after the expiration of the one hundred twenty day-period, appeal the
decision or the unacted claim with the Court of Tax Appeals.
(E) Manner of Giving Refund. Refunds shall be made upon warrants drawn by the
Commissioner or by his duly authorized representative without the necessity of being
countersigned by the Chairman, Commission on Audit, the provisions of the
Administrative Code of 1987 to the contrary notwithstanding: Provided, that refunds
under this paragraph shall be subject to post audit by the Commission on Audit.
Section 229:
Recovery of Tax Erroneously or Illegally Collected. No suit or proceeding shall be

maintained in any court for the recovery of any national internal revenue tax hereafter
alleged to have been erroneously or illegally assessed or collected, or of any penalty
claimed to have been collected without authority, or of any sum alleged to have been
excessively or in any manner wrongfully collected, until a claim for refund or credit has
been duly filed with the Commissioner; but such suit or proceeding may be maintained,
whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years
from the date of payment of the tax or penalty regardless of any supervening cause that
may arise after payment: Provided, however, That the Commissioner may, even without a
written claim therefor, refund or credit any tax, where on the face of the return upon
which payment was made, such payment appears clearly to have been erroneously paid.
(All emphases supplied)
I. Application of the 120+30 Day Periods
a. G.R. No. 187485 - CIR v. San Roque Power Corporation
On 10 April 2003, a mere 13 days after it filed its amended administrative claim with the
Commissioner on 28 March 2003, San Roque filed a Petition for Review with the CTA
docketed as CTA Case No. 6647. From this we gather two crucial facts: first, San Roque
did not wait for the 120-day period to lapse before filing its judicial claim; second, San
Roque filed its judicial claim more than four (4) years before the Atlas45 doctrine, which
was promulgated by the Court on 8 June 2007.
Clearly, San Roque failed to comply with the 120-day waiting period, the time expressly
given by law to the Commissioner to decide whether to grant or deny San Roques
application for tax refund or credit. It is indisputable that compliance with the 120-day
waiting period is mandatory and jurisdictional. The waiting period, originally fixed at 60
days only, was part of the provisions of the first VAT law, Executive Order No. 273,
which took effect on 1 January 1988. The waiting period was extended to 120 days
effective 1 January 1998 under RA 8424 or the Tax Reform Act of 1997. Thus, the
waiting period has been in our statute books for more than fifteen (15) years before San
Roque filed its judicial claim.
Failure to comply with the 120-day waiting period violates a mandatory provision of law.
It violates the doctrine of exhaustion of administrative remedies and renders the petition
premature and thus without a cause of action, with the effect that the CTA does not
acquire jurisdiction over the taxpayers petition. Philippine jurisprudence is replete with
cases upholding and reiterating these doctrinal principles.46
The charter of the CTA expressly provides that its jurisdiction is to review on appeal
"decisions of the Commissioner of Internal Revenue in cases involving x x x refunds of
internal revenue taxes."47 When a taxpayer prematurely files a judicial claim for tax
refund or credit with the CTA without waiting for the decision of the Commissioner, there
is no "decision" of the Commissioner to review and thus the CTA as a court of special
jurisdiction has no jurisdiction over the appeal. The charter of the CTA also expressly
provides that if the Commissioner fails to decide within "a specific period" required by
law, such "inaction shall be deemed a denial"48 of the application for tax refund or credit.
It is the Commissioners decision, or inaction "deemed a denial," that the taxpayer can
take to the CTA for review. Without a decision or an "inaction x x x deemed a denial" of
the Commissioner, the CTA has no jurisdiction over a petition for review.49
San Roques failure to comply with the 120-day mandatory period renders its petition for

review with the CTA void. Article 5 of the Civil Code provides, "Acts executed against
provisions of mandatory or prohibitory laws shall be void, except when the law itself
authorizes their validity." San Roques void petition for review cannot be legitimized by
the CTA or this Court because Article 5 of the Civil Code states that such void petition
cannot be legitimized "except when the law itself authorizes [its] validity." There is no
law authorizing the petitions validity.
It is hornbook doctrine that a person committing a void act contrary to a mandatory
provision of law cannot claim or acquire any right from his void act. A right cannot spring
in favor of a person from his own void or illegal act. This doctrine is repeated in Article
2254 of the Civil Code, which states, "No vested or acquired right can arise from acts or
omissions which are against the law or which infringe upon the rights of others."50 For
violating a mandatory provision of law in filing its petition with the CTA, San Roque
cannot claim any right arising from such void petition. Thus, San Roques petition with
the CTA is a mere scrap of paper.
This Court cannot brush aside the grave issue of the mandatory and jurisdictional nature
of the 120-day period just because the Commissioner merely asserts that the case was
prematurely filed with the CTA and does not question the entitlement of San Roque to the
refund. The mere fact that a taxpayer has undisputed excess input VAT, or that the tax was
admittedly illegally, erroneously or excessively collected from him, does not entitle him
as a matter of right to a tax refund or credit. Strict compliance with the mandatory and
jurisdictional conditions prescribed by law to claim such tax refund or credit is essential
and necessary for such claim to prosper. Well-settled is the rule that tax refunds or credits,
just like tax exemptions, are strictly construed against the taxpayer.51 The burden is on
the taxpayer to show that he has strictly complied with the conditions for the grant of the
tax refund or credit.
This Court cannot disregard mandatory and jurisdictional conditions mandated by law
simply because the Commissioner chose not to contest the numerical correctness of the
claim for tax refund or credit of the taxpayer. Non-compliance with mandatory periods,
non-observance of prescriptive periods, and non-adherence to exhaustion of
administrative remedies bar a taxpayers claim for tax refund or credit, whether or not the
Commissioner questions the numerical correctness of the claim of the taxpayer. This
Court should not establish the precedent that non-compliance with mandatory and
jurisdictional conditions can be excused if the claim is otherwise meritorious, particularly
in claims for tax refunds or credit. Such precedent will render meaningless compliance
with mandatory and jurisdictional requirements, for then every tax refund case will have
to be decided on the numerical correctness of the amounts claimed, regardless of noncompliance with mandatory and jurisdictional conditions.
San Roque cannot also claim being misled, misguided or confused by the Atlas doctrine
because San Roque filed its petition for review with the CTA more than four years before
Atlas was promulgated. The Atlas doctrine did not exist at the time San Roque failed to
comply with the 120- day period. Thus, San Roque cannot invoke the Atlas doctrine as an
excuse for its failure to wait for the 120-day period to lapse. In any event, the Atlas
doctrine merely stated that the two-year prescriptive period should be counted from the
date of payment of the output VAT, not from the close of the taxable quarter when the
sales involving the input VAT were made. The Atlas doctrine does not interpret, expressly
or impliedly, the 120+3052 day periods.

In fact, Section 106(b) and (e) of the Tax Code of 1977 as amended, which was the law
cited by the Court in Atlasas the applicable provision of the law did not yet provide for
the 30-day period for the taxpayer to appeal to the CTA from the decision or inaction of
the Commissioner.53 Thus, the Atlas doctrine cannot be invoked by anyone to disregard
compliance with the 30-day mandatory and jurisdictional period. Also, the difference
between the Atlas doctrine on one hand, and the Mirant54 doctrine on the other hand, is a
mere 20 days. The Atlas doctrine counts the two-year prescriptive period from the date of
payment of the output VAT, which means within 20 days after the close of the taxable
quarter. The output VAT at that time must be paid at the time of filing of the quarterly tax
returns, which were to be filed "within 20 days following the end of each quarter."
Thus, in Atlas, the three tax refund claims listed below were deemed timely filed because
the administrative claims filed with the Commissioner, and the petitions for review filed
with the CTA, were all filed within two years from the date of payment of the output
VAT, following Section 229:
Date of Filing
Date of Filing
Period
Return
Date of Filing
Administrative
Covered
& Payment of
Petition With CTA
Claim
Tax
2nd Quarter,
1990
Close of
20 July 1990
21 August 1990
20 July 1992
Quarter
30 June 1990
3rd Quarter,
1990
Close of
18 October
21 November
9 October 1992
Quarter
1990
1990
30 September
1990
4th Quarter,
1990
Close of
20 January
19 February 1991 14 January 1993
Quarter
1991
31 December
1990
Atlas paid the output VAT at the time it filed the quarterly tax returns on the 20th, 18th,
and 20th day after the close of the taxable quarter. Had the twoyear prescriptive period
been counted from the "close of the taxable quarter" as expressly stated in the law, the tax
refund claims of Atlas would have already prescribed. In contrast, the Mirant doctrine
counts the two-year prescriptive period from the "close of the taxable quarter when the
sales were made" as expressly stated in the law, which means the last day of the taxable
quarter. The 20-day difference55 between the Atlas doctrine and the later Mirant doctrine
is not material to San Roques claim for tax refund.
Whether the Atlas doctrine or the Mirant doctrine is applied to San Roque is immaterial
because what is at issue in the present case is San Roques non-compliance with the 120day mandatory and jurisdictional period, which is counted from the date it filed its

administrative claim with the Commissioner. The 120-day period may extend beyond the
two-year prescriptive period, as long as the administrative claim is filed within the twoyear prescriptive period. However, San Roques fatal mistake is that it did not wait for the
Commissioner to decide within the 120-day period, a mandatory period whether the Atlas
or the Mirant doctrine is applied.
At the time San Roque filed its petition for review with the CTA, the 120+30 day
mandatory periods were already in the law. Section 112(C)56 expressly grants the
Commissioner 120 days within which to decide the taxpayers claim. The law is clear,
plain, and unequivocal: "x x x the Commissioner shall grant a refund or issue the tax
credit certificate for creditable input taxes within one hundred twenty (120) days from the
date of submission of complete documents." Following the verba legis doctrine, this law
must be applied exactly as worded since it is clear, plain, and unequivocal. The taxpayer
cannot simply file a petition with the CTA without waiting for the Commissioners
decision within the 120-day mandatory and jurisdictional period. The CTA will have no
jurisdiction because there will be no "decision" or "deemed a denial" decision of the
Commissioner for the CTA to review. In San Roques case, it filed its petition with the
CTA a mere 13 days after it filed its administrative claim with the Commissioner.
Indisputably, San Roque knowingly violated the mandatory 120-day period, and it cannot
blame anyone but itself.
Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA
the decision or inaction of the Commissioner, thus:
x x x the taxpayer affected may, within thirty (30) days from the receipt of the decision
denying the claim or after the expiration of the one hundred twenty day-period, appeal the
decision or the unacted claim with the Court of Tax Appeals. (Emphasis supplied)
This law is clear, plain, and unequivocal. Following the well-settled verba legis doctrine,
this law should be applied exactly as worded since it is clear, plain, and unequivocal. As
this law states, the taxpayer may, if he wishes, appeal the decision of the Commissioner
to the CTA within 30 days from receipt of the Commissioners decision, or if the
Commissioner does not act on the taxpayers claim within the 120-day period, the
taxpayer may appeal to the CTA within 30 days from the expiration of the 120-day
period.
b. G.R. No. 196113 - Taganito Mining Corporation v. CIR
Like San Roque, Taganito also filed its petition for review with the CTA without waiting
for the 120-day period to lapse. Also, like San Roque, Taganito filed its judicial claim
before the promulgation of the Atlas doctrine. Taganito filed a Petition for Review on 14
February 2007 with the CTA. This is almost four months before the adoption of the Atlas
doctrine on 8 June 2007. Taganito is similarly situated as San Roque - both cannot claim
being misled, misguided, or confused by the Atlas doctrine.
However, Taganito can invoke BIR Ruling No. DA-489-0357 dated 10 December 2003,
which expressly ruled that the "taxpayer-claimant need not wait for the lapse of the 120day period before it could seek judicial relief with the CTA by way of Petition for
Review." Taganito filed its judicial claim after the issuance of BIR Ruling No. DA-48903 but before the adoption of the Aichi doctrine. Thus, as will be explained later, Taganito
is deemed to have filed its judicial claim with the CTA on time.
c. G.R. No. 197156 Philex Mining Corporation v. CIR
Philex (1) filed on 21 October 2005 its original VAT Return for the third quarter of

taxable year 2005; (2) filed on 20 March 2006 its administrative claim for refund or
credit; (3) filed on 17 October 2007 its Petition for Review with the CTA. The close of
the third taxable quarter in 2005 is 30 September 2005, which is the reckoning date in
computing the two-year prescriptive period under Section 112(A).
Philex timely filed its administrative claim on 20 March 2006, within the two-year
prescriptive period. Even if the two-year prescriptive period is computed from the date of
payment of the output VAT under Section 229, Philex still filed its administrative claim
on time. Thus, the Atlas doctrine is immaterial in this case. The Commissioner had until
17 July 2006, the last day of the 120-day period, to decide Philexs claim. Since the
Commissioner did not act on Philexs claim on or before 17 July 2006, Philex had until
17 August 2006, the last day of the 30-day period, to file its judicial claim. The CTA EB
held that 17 August 2006 was indeed the last day for Philex to file its judicial claim.
However, Philex filed its Petition for Review with the CTA only on 17 October 2007, or
four hundred twenty-six (426) days after the last day of filing. In short, Philex was late by
one year and 61 days in filing its judicial claim. As the CTA EB correctly found:
Evidently, the Petition for Review in C.T.A. Case No. 7687 was filed 426 days late. Thus,
the Petition for Review in C.T.A. Case No. 7687 should have been dismissed on the
ground that the Petition for Review was filed way beyond the 30-day prescribed period;
thus, no jurisdiction was acquired by the CTA Division; x x x58(Emphasis supplied)
Unlike San Roque and Taganito, Philexs case is not one of premature filing but of late
filing. Philex did not file any petition with the CTA within the 120-day period. Philex did
not also file any petition with the CTA within 30 days after the expiration of the 120-day
period. Philex filed its judicial claim long after the expiration of the 120-day period, in
fact 426 days after the lapse of the 120-day period. In any event, whether governed by
jurisprudence before, during, or after the Atlas case, Philexs judicial claim will have to
be rejected because of late filing. Whether the two-year prescriptive period is counted
from the date of payment of the output VAT following the Atlas doctrine, or from the
close of the taxable quarter when the sales attributable to the input VAT were made
following the Mirant and Aichi doctrines, Philexs judicial claim was indisputably filed
late.
The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The
inaction of the Commissioner on Philexs claim during the 120-day period is, by express
provision of law, "deemed a denial" of Philexs claim. Philex had 30 days from the
expiration of the 120-day period to file its judicial claim with the CTA. Philexs failure to
do so rendered the "deemed a denial" decision of the Commissioner final and
inappealable. The right to appeal to the CTA from a decision or "deemed a denial"
decision of the Commissioner is merely a statutory privilege, not a constitutional right.
The exercise of such statutory privilege requires strict compliance with the conditions
attached by the statute for its exercise.59 Philex failed to comply with the statutory
conditions and must thus bear the consequences.
II. Prescriptive Periods under Section 112(A) and (C)
There are three compelling reasons why the 30-day period need not necessarily fall
within the two-year prescriptive period, as long as the administrative claim is filed within
the two-year prescriptive period.
First, Section 112(A) clearly, plainly, and unequivocally provides that the taxpayer "may,
within two (2) years after the close of the taxable quarter when the sales were made,

apply for the issuance of a tax credit certificate or refund of the creditable input tax due or
paid to such sales." In short, the law states that the taxpayer may apply with the
Commissioner for a refund or credit "within two (2) years," which means at anytime
within two years. Thus, the application for refund or credit may be filed by the taxpayer
with the Commissioner on the last day of the two-year prescriptive period and it will still
strictly comply with the law. The twoyear prescriptive period is a grace period in favor of
the taxpayer and he can avail of the full period before his right to apply for a tax refund or
credit is barred by prescription.
Second, Section 112(C) provides that the Commissioner shall decide the application for
refund or credit "within one hundred twenty (120) days from the date of submission of
complete documents in support of the application filed in accordance with Subsection
(A)." The reference in Section 112(C) of the submission of documents "in support of the
application filed in accordance with Subsection A" means that the application in Section
112(A) is the administrative claim that the Commissioner must decide within the 120-day
period. In short, the two-year prescriptive period in Section 112(A) refers to the period
within which the taxpayer can file an administrative claim for tax refund or credit. Stated
otherwise, the two-year prescriptive period does not refer to the filing of the judicial
claim with the CTA but to the filing of the administrative claim with the Commissioner.
As held in Aichi, the "phrase within two years x x x apply for the issuance of a tax credit
or refund refers to applications for refund/credit with the CIR and not to appeals made to
the CTA."
Third, if the 30-day period, or any part of it, is required to fall within the two-year
prescriptive period (equivalent to 730 days60), then the taxpayer must file his
administrative claim for refund or credit within the first 610 days of the two-year
prescriptive period. Otherwise, the filing of the administrative claim beyond the first 610
days will result in the appeal to the CTA being filed beyond the two-year prescriptive
period. Thus, if the taxpayer files his administrative claim on the 611th day, the
Commissioner, with his 120-day period, will have until the 731st day to decide the claim.
If the Commissioner decides only on the 731st day, or does not decide at all, the taxpayer
can no longer file his judicial claim with the CTA because the two-year prescriptive
period (equivalent to 730 days) has lapsed. The 30-day period granted by law to the
taxpayer to file an appeal before the CTA becomes utterly useless, even if the taxpayer
complied with the law by filing his administrative claim within the two-year prescriptive
period.
The theory that the 30-day period must fall within the two-year prescriptive period adds a
condition that is not found in the law. It results in truncating 120 days from the 730 days
that the law grants the taxpayer for filing his administrative claim with the Commissioner.
This Court cannot interpret a law to defeat, wholly or even partly, a remedy that the law
expressly grants in clear, plain, and unequivocal language.
Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal
language. The taxpayer can file his administrative claim for refund or credit at anytime
within the two-year prescriptive period. If he files his claim on the last day of the twoyear prescriptive period, his claim is still filed on time. The Commissioner will have 120
days from such filing to decide the claim. If the Commissioner decides the claim on the
120th day, or does not decide it on that day, the taxpayer still has 30 days to file his
judicial claim with the CTA. This is not only the plain meaning but also the only logical

interpretation of Section 112(A) and (C).


III. "Excess" Input VAT and "Excessively" Collected Tax
The input VAT is not "excessively" collected as understood under Section 229 because at
the time the input VAT is collected the amount paid is correct and proper. The input VAT
is a tax liability of, and legally paid by, a VAT-registered seller61 of goods, properties or
services used as input by another VAT-registered person in the sale of his own goods,
properties, or services. This tax liability is true even if the seller passes on the input VAT
to the buyer as part of the purchase price. The second VAT-registered person, who is not
legally liable for the input VAT, is the one who applies the input VAT as credit for his own
output VAT.62 If the input VAT is in fact "excessively" collected as understood under
Section 229, then it is the first VAT-registered person - the taxpayer who is legally liable
and who is deemed to have legally paid for the input VAT - who can ask for a tax refund
or credit under Section 229 as an ordinary refund or credit outside of the VAT System. In
such event, the second VAT-registered taxpayer will have no input VAT to offset against
his own output VAT.
In a claim for refund or credit of "excess" input VAT under Section 110(B) and Section
112(A), the input VAT is not "excessively" collected as understood under Section 229. At
the time of payment of the input VAT the amount paid is the correct and proper amount.
Under the VAT System, there is no claim or issue that the input VAT is "excessively"
collected, that is, that the input VAT paid is more than what is legally due. The person
legally liable for the input VAT cannot claim that he overpaid the input VAT by the mere
existence of an "excess" input VAT. The term "excess" input VAT simply means that the
input VAT available as credit exceeds the output VAT, not that the input VAT is
excessively collected because it is more than what is legally due. Thus, the taxpayer who
legally paid the input VAT cannot claim for refund or credit of the input VAT as
"excessively" collected under Section 229.
Under Section 229, the prescriptive period for filing a judicial claim for refund is two
years from the date of payment of the tax "erroneously, x x x illegally, x x x excessively
or in any manner wrongfully collected." The prescriptive period is reckoned from the date
the person liable for the tax pays the tax. Thus, if the input VAT is in fact "excessively"
collected, that is, the person liable for the tax actually pays more than what is legally due,
the taxpayer must file a judicial claim for refund within two years from his date of
payment. Only the person legally liable to pay the tax can file the judicial claim for
refund. The person to whom the tax is passed on as part of the purchase price has no
personality to file the judicial claim under Section 229.63
Under Section 110(B) and Section 112(A), the prescriptive period for filing a judicial
claim for "excess" input VAT is two years from the close of the taxable quarter when the
sale was made by the person legally liable to pay the output VAT. This prescriptive period
has no relation to the date of payment of the "excess" input VAT. The "excess" input VAT
may have been paid for more than two years but this does not bar the filing of a judicial
claim for "excess" VAT under Section 112(A), which has a different reckoning period
from Section 229. Moreover, the person claiming the refund or credit of the input VAT is
not the person who legally paid the input VAT. Such person seeking the VAT refund or
credit does not claim that the input VAT was "excessively" collected from him, or that he
paid an input VAT that is more than what is legally due. He is not the taxpayer who
legally paid the input VAT.

As its name implies, the Value-Added Tax system is a tax on the value added by the
taxpayer in the chain of transactions. For simplicity and efficiency in tax collection, the
VAT is imposed not just on the value added by the taxpayer, but on the entire selling price
of his goods, properties or services. However, the taxpayer is allowed a refund or credit
on the VAT previously paid by those who sold him the inputs for his goods, properties, or
services. The net effect is that the taxpayer pays the VAT only on the value that he adds to
the goods, properties, or services that he actually sells.
Under Section 110(B), a taxpayer can apply his input VAT only against his output VAT.
The only exception is when the taxpayer is expressly "zero-rated or effectively zerorated" under the law, like companies generating power through renewable sources of
energy.64 Thus, a non zero-rated VAT-registered taxpayer who has no output VAT
because he has no sales cannot claim a tax refund or credit of his unused input VAT under
the VAT System. Even if the taxpayer has sales but his input VAT exceeds his output VAT,
he cannot seek a tax refund or credit of his "excess" input VAT under the VAT System. He
can only carry-over and apply his "excess" input VAT against his future output VAT. If
such "excess" input VAT is an "excessively" collected tax, the taxpayer should be able to
seek a refund or credit for such "excess" input VAT whether or not he has output VAT.
The VAT System does not allow such refund or credit. Such "excess" input VAT is not an
"excessively" collected tax under Section 229. The "excess" input VAT is a correctly and
properly collected tax. However, such "excess" input VAT can be applied against the
output VAT because the VAT is a tax imposed only on the value added by the taxpayer. If
the input VAT is in fact "excessively" collected under Section 229, then it is the person
legally liable to pay the input VAT, not the person to whom the tax was passed on as part
of the purchase price and claiming credit for the input VAT under the VAT System, who
can file the judicial claim under Section 229.
Any suggestion that the "excess" input VAT under the VAT System is an "excessively"
collected tax under Section 229 may lead taxpayers to file a claim for refund or credit for
such "excess" input VAT under Section 229 as an ordinary tax refund or credit outside of
the VAT System. Under Section 229, mere payment of a tax beyond what is legally due
can be claimed as a refund or credit. There is no requirement under Section 229 for an
output VAT or subsequent sale of goods, properties, or services using materials subject to
input VAT.
From the plain text of Section 229, it is clear that what can be refunded or credited is a
tax that is "erroneously, x x x illegally, x x x excessively or in any manner wrongfully
collected." In short, there must be a wrongful payment because what is paid, or part of it,
is not legally due. As the Court held in Mirant, Section 229 should "apply only to
instances of erroneous payment or illegal collection of internal revenue taxes." Erroneous
or wrongful payment includes excessive payment because they all refer to payment of
taxes not legally due. Under the VAT System, there is no claim or issue that the "excess"
input VAT is "excessively or in any manner wrongfully collected." In fact, if the "excess"
input VAT is an "excessively" collected tax under Section 229, then the taxpayer claiming
to apply such "excessively" collected input VAT to offset his output VAT may have no
legal basis to make such offsetting. The person legally liable to pay the input VAT can
claim a refund or credit for such "excessively" collected tax, and thus there will no longer
be any "excess" input VAT. This will upend the present VAT System as we know it.
IV. Effectivity and Scope of the Atlas , Mirant and Aichi Doctrines

The Atlas doctrine, which held that claims for refund or credit of input VAT must comply
with the two-year prescriptive period under Section 229, should be effective only from its
promulgation on 8 June 2007 until its abandonment on 12 September 2008 in Mirant. The
Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the
date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive
period for claiming refund or credit of input VAT should be governed by Section 112(A)
following the verba legis rule. The Mirant ruling, which abandoned the Atlas doctrine,
adopted the verba legis rule, thus applying Section 112(A) in computing the two-year
prescriptive period in claiming refund or credit of input VAT.
The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C)
because the application of the 120+30 day periods was not in issue in Atlas. The
application of the 120+30 day periods was first raised in Aichi, which adopted the verba
legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The
language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states
that "the Commissioner shall grant a refund or issue the tax credit within one hundred
twenty (120) days from the date of submission of complete documents," the law clearly
gives the Commissioner 120 days within which to decide the taxpayers claim. Resort to
the courts prior to the expiration of the 120-day period is a patent violation of the doctrine
of exhaustion of administrative remedies, a ground for dismissing the judicial suit due to
prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the
doctrine of exhaustion of administrative remedies.65 Such doctrine is basic and
elementary.
When Section 112(C) states that "the taxpayer affected may, within thirty (30) days from
receipt of the decision denying the claim or after the expiration of the one hundred
twenty-day period, appeal the decision or the unacted claim with the Court of Tax
Appeals," the law does not make the 120+30 day periods optional just because the law
uses the word "may." The word "may" simply means that the taxpayer may or may not
appeal the decision of the Commissioner within 30 days from receipt of the decision, or
within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the
imagination can the word "may" be construed as making the 120+30 day periods
optional, allowing the taxpayer to file a judicial claim one day after filing the
administrative claim with the Commissioner.
The old rule66 that the taxpayer may file the judicial claim, without waiting for the
Commissioners decision if the two-year prescriptive period is about to expire, cannot
apply because that rule was adopted before the enactment of the 30-day period. The 30day period was adopted precisely to do away with the old rule, so that under the VAT
System the taxpayer will always have 30 days to file the judicial claim even if the
Commissioner acts only on the 120th day, or does not act at all during the 120-day
period. With the 30-day period always available to the taxpayer, the taxpayer can no
longer file a judicial claim for refund or credit of input VAT without waiting for the
Commissioner to decide until the expiration of the 120-day period.
To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed
strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit
under the VAT System is compliance with the 120+30 day mandatory and jurisdictional
periods. Thus, strict compliance with the 120+30 day periods is necessary for such a
claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine,

except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December
2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the
120+30 day periods as mandatory and jurisdictional.
V. Revenue Memorandum Circular No. 49-03 (RMC 49-03) dated 15 April 2003
There is nothing in RMC 49-03 that states, expressly or impliedly, that the taxpayer need
not wait for the 120-day period to expire before filing a judicial claim with the CTA.
RMC 49-03 merely authorizes the BIR to continue processing the administrative claim
even after the taxpayer has filed its judicial claim, without saying that the taxpayer can
file its judicial claim before the expiration of the 120-day period. RMC 49-03 states: "In
cases where the taxpayer has filed a Petition for Review with the Court of Tax Appeals
involving a claim for refund/TCC that is pending at the administrative agency (either the
Bureau of Internal Revenue or the One- Stop Shop Inter-Agency Tax Credit and Duty
Drawback Center of the Department of Finance), the administrative agency and the court
may act on the case separately." Thus, if the taxpayer files its judicial claim before the
expiration of the 120-day period, the BIR will nevertheless continue to act on the
administrative claim because such premature filing cannot divest the Commissioner of his
statutory power and jurisdiction to decide the administrative claim within the 120-day
period.
On the other hand, if the taxpayer files its judicial claim after the 120- day period, the
Commissioner can still continue to evaluate the administrative claim. There is nothing
new in this because even after the expiration of the 120-day period, the Commissioner
should still evaluate internally the administrative claim for purposes of opposing the
taxpayers judicial claim, or even for purposes of determining if the BIR should actually
concede to the taxpayers judicial claim. The internal administrative evaluation of the
taxpayers claim must necessarily continue to enable the BIR to oppose intelligently the
judicial claim or, if the facts and the law warrant otherwise, for the BIR to concede to the
judicial claim, resulting in the termination of the judicial proceedings.
What is important, as far as the present cases are concerned, is that the mere filing by a
taxpayer of a judicial claim with the CTA before the expiration of the 120-day period
cannot operate to divest the Commissioner of his jurisdiction to decide an administrative
claim within the 120-day mandatory period, unless the Commissioner has clearly given
cause for equitable estoppel to apply as expressly recognized in Section 246 of the Tax
Code.67
VI. BIR Ruling No. DA-489-03 dated 10 December 2003
BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under
Section 246 of the Tax Code. BIR Ruling No. DA-489-03 expressly states that the
"taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek
judicial relief with the CTA by way of Petition for Review." Prior to this ruling, the BIR
held, as shown by its position in the Court of Appeals,68 that the expiration of the 120day period is mandatory and jurisdictional before a judicial claim can be filed.
There is no dispute that the 120-day period is mandatory and jurisdictional, and that the
CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration
of the 120-day period. There are, however, two exceptions to this rule. The first exception
is if the Commissioner, through a specific ruling, misleads a particular taxpayer to
prematurely file a judicial claim with the CTA. Such specific ruling is applicable only to
such particular taxpayer. The second exception is where the Commissioner, through a

general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers
into filing prematurely judicial claims with the CTA. In these cases, the Commissioner
cannot be allowed to later on question the CTAs assumption of jurisdiction over such
claim since equitable estoppel has set in as expressly authorized under Section 246 of the
Tax Code.
Section 4 of the Tax Code, a new provision introduced by RA 8424, expressly grants to
the Commissioner the power to interpret tax laws, thus:
Sec. 4. Power of the Commissioner To Interpret Tax Laws and To Decide Tax Cases.
The power to interpret the provisions of this Code and other tax laws shall be under the
exclusive and original jurisdiction of the Commissioner, subject to review by the
Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under this Code or
other laws or portions thereof administered by the Bureau of Internal Revenue is vested
in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax
Appeals.
Since the Commissioner has exclusive and original jurisdiction to interpret tax laws,
taxpayers acting in good faith should not be made to suffer for adhering to general
interpretative rules of the Commissioner interpreting tax laws, should such interpretation
later turn out to be erroneous and be reversed by the Commissioner or this Court. Indeed,
Section 246 of the Tax Code expressly provides that a reversal of a BIR regulation or
ruling cannot adversely prejudice a taxpayer who in good faith relied on the BIR
regulation or ruling prior to its reversal. Section 246 provides as follows:
Sec. 246. Non-Retroactivity of Rulings. Any revocation, modification or reversal of
any of the rules and regulations promulgated in accordance with the preceding Sections
or any of the rulings or circulars promulgated by the Commissioner shall not be given
retroactive application if the revocation, modification or reversal will be prejudicial to the
taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are
materially different from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith. (Emphasis supplied)
Thus, a general interpretative rule issued by the Commissioner may be relied upon by
taxpayers from the time the rule is issued up to its reversal by the Commissioner or this
Court. Section 246 is not limited to a reversal only by the Commissioner because this
Section expressly states, "Any revocation, modification or reversal" without specifying
who made the revocation, modification or reversal. Hence, a reversal by this Court is
covered under Section 246.
Taxpayers should not be prejudiced by an erroneous interpretation by the Commissioner,
particularly on a difficult question of law. The abandonment of the Atlas doctrine by
Mirant and Aichi69 is proof that the reckoning of the prescriptive periods for input VAT
tax refund or credit is a difficult question of law. The abandonment of the Atlasdoctrine
did not result in Atlas, or other taxpayers similarly situated, being made to return the tax
refund or credit they received or could have received under Atlas prior to its
abandonment. This Court is applying Mirant and Aichiprospectively. Absent fraud, bad

faith or misrepresentation, the reversal by this Court of a general interpretative rule issued
by the Commissioner, like the reversal of a specific BIR ruling under Section 246, should
also apply prospectively. As held by this Court in CIR v. Philippine Health Care
Providers, Inc.:70
In ABS-CBN Broadcasting Corp. v. Court of Tax Appeals, this Court held that under
Section 246 of the 1997 Tax Code, the Commissioner of Internal Revenue is precluded
from adopting a position contrary to one previously taken where injustice would result to
the taxpayer. Hence, where an assessment for deficiency withholding income taxes was
made, three years after a new BIR Circular reversed a previous one upon which the
taxpayer had relied upon, such an assessment was prejudicial to the taxpayer. To rule
otherwise, opined the Court, would be contrary to the tenets of good faith, equity, and fair
play.
This Court has consistently reaffirmed its ruling in ABS-CBN Broadcasting
Corp.1wphi1 in the later cases of Commissioner of Internal Revenue v. Borroughs, Ltd.,
Commissioner of Internal Revenue v. Mega Gen. Mdsg. Corp., Commissioner of Internal
Revenue v. Telefunken Semiconductor (Phils.) Inc., and Commissioner of Internal
Revenue v. Court of Appeals. The rule is that the BIR rulings have no retroactive effect
where a grossly unfair deal would result to the prejudice of the taxpayer, as in this case.
More recently, in Commissioner of Internal Revenue v. Benguet Corporation, wherein the
taxpayer was entitled to tax refunds or credits based on the BIRs own issuances but later
was suddenly saddled with deficiency taxes due to its subsequent ruling changing the
category of the taxpayers transactions for the purpose of paying its VAT, this Court ruled
that applying such ruling retroactively would be prejudicial to the taxpayer. (Emphasis
supplied)
Thus, the only issue is whether BIR Ruling No. DA-489-03 is a general interpretative
rule applicable to all taxpayers or a specific ruling applicable only to a particular
taxpayer.
BIR Ruling No. DA-489-03 is a general interpretative rule because it was a response to a
query made, not by a particular taxpayer, but by a government agency tasked with
processing tax refunds and credits, that is, the One Stop Shop Inter-Agency Tax Credit
and Drawback Center of the Department of Finance. This government agency is also the
addressee, or the entity responded to, in BIR Ruling No. DA-489-03. Thus, while this
government agency mentions in its query to the Commissioner the administrative claim
of Lazi Bay Resources Development, Inc., the agency was in fact asking the
Commissioner what to do in cases like the tax claim of Lazi Bay Resources
Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period.
Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers
can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December
2003 up to its reversal by this Court in Aichi on 6 October 2010, where this Court held
that the 120+30 day periods are mandatory and jurisdictional
However, BIR Ruling No. DA-489-03 cannot be given retroactive effect for four reasons:
first, it is admittedly an erroneous interpretation of the law; second, prior to its issuance,
the BIR held that the 120-day period was mandatory and jurisdictional, which is the
correct interpretation of the law; third, prior to its issuance, no taxpayer can claim that it
was misled by the BIR into filing a judicial claim prematurely; and fourth, a claim for tax
refund or credit, like a claim for tax exemption, is strictly construed against the taxpayer.

San Roque, therefore, cannot benefit from BIR Ruling No. DA-489-03 because it filed its
judicial claim prematurely on 10 April 2003, before the issuance of BIR Ruling No. DA489-03 on 10 December 2003. To repeat, San Roque cannot claim that it was misled by
the BIR into filing its judicial claim prematurely because BIR Ruling No. DA-489-03
was issued only after San Roque filed its judicial claim. At the time San Roque filed its
judicial claim, the law as applied and administered by the BIR was that the Commissioner
had 120 days to act on administrative claims. This was in fact the position of the BIR
prior to the issuance of BIR Ruling No. DA-489-03. Indeed, San Roque never claimed
the benefit of BIR Ruling No. DA-489-03 or RMC 49-03, whether in this Court, the
CTA, or before the Commissioner.
Taganito, however, filed its judicial claim with the CTA on 14 February 2007, after the
issuance of BIR Ruling No. DA-489-03 on 10 December 2003. Truly, Taganito can claim
that in filing its judicial claim prematurely without waiting for the 120-day period to
expire, it was misled by BIR Ruling No. DA-489-03. Thus, Taganito can claim the
benefit of BIR Ruling No. DA-489-03, which shields the filing of its judicial claim from
the vice of prematurity.
Philexs situation is not a case of premature filing of its judicial claim but of late filing,
indeed very late filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial
claim, which means non-exhaustion of the 120-day period for the Commissioner to act on
an administrative claim. Philex cannot claim the benefit of BIR Ruling No. DA-489-03
because Philex did not file its judicial claim prematurely but filed it long after the lapse of
the 30-day period following the expiration of the 120-day period. In fact, Philex filed its
judicial claim 426 days after the lapse of the 30-day period.
VII. Existing Jurisprudence
There is no basis whatsoever to the claim that in five cases this Court had already made a
ruling that the filing dates of the administrative and judicial claims are inconsequential, as
long as they are within the two-year prescriptive period. The effect of the claim of the
dissenting opinions is that San Roques failure to wait for the 120-day mandatory period
to lapse is inconsequential, thus allowing San Roque to claim the tax refund or credit.
However, the five cases cited by the dissenting opinions do not support even remotely the
claim that this Court had already made such a ruling. None of these five cases mention,
cite, discuss, rule or even hint that compliance with the 120-day mandatory period is
inconsequential as long as the administrative and judicial claims are filed within the twoyear prescriptive period.
In CIR v. Toshiba Information Equipment (Phils.), Inc.,71 the issue was whether any
output VAT was actually passed on to Toshiba that it could claim as input VAT subject to
tax credit or refund. The Commissioner argued that "although Toshiba may be a VATregistered taxpayer, it is not engaged in a VAT-taxable business." The Commissioner cited
Section 4.106-1 of Revenue Regulations No. 75 that "refund of input taxes on capital
goods shall be allowed only to the extent that such capital goods are used in VAT-taxable
business." In the words of the Court, "Ultimately, however, the issue still to be resolved
herein shall be whether respondent Toshiba is entitled to the tax credit/refund of its input
VAT on its purchases of capital goods and services, to which this Court answers in the
affirmative." Nowhere in this case did the Court discuss, state, or rule that the filing dates
of the administrative and judicial claims are inconsequential, as long as they are within
the two-year prescriptive period.

In Intel Technology Philippines, Inc. v. CIR,72 the Court stated: "The issues to be
resolved in the instant case are (1) whether the absence of the BIR authority to print or
the absence of the TIN-V in petitioners export sales invoices operates to forfeit its
entitlement to a tax refund/credit of its unutilized input VAT attributable to its zero-rated
sales; and (2) whether petitioners failure to indicate "TIN-V" in its sales invoices
automatically invalidates its claim for a tax credit certification." Again, nowhere in this
case did the Court discuss, state, or rule that the filing dates of the administrative and
judicial claims are inconsequential, as long as they are within the two-year prescriptive
period.
In AT&T Communications Services Philippines, Inc. v. CIR,73 the Court stated: "x x x
the CTA First Division, conceding that petitioners transactions fall under the
classification of zero-rated sales, nevertheless denied petitioners claim for lack of
substantiation, x x x." The Court quoted the ruling of the First Division that "valid VAT
official receipts, and not mere sale invoices, should have been submitted" by petitioner to
substantiate its claim. The Court further stated: "x x x the CTA En Banc, x x x affirmed x
x x the CTA First Division," and "petitioners motion for reconsideration having been
denied x x x, the present petition for review was filed." Clearly, the sole issue in this case
is whether petitioner complied with the substantiation requirements in claiming for tax
refund or credit. Again, nowhere in this case did the Court discuss, state, or rule that the
filing dates of the administrative and judicial claims are inconsequential, as long as they
are within the two-year prescriptive period.
In CIR v. Ironcon Builders and Development Corporation,74 the Court put the issue in
this manner: "Simply put, the sole issue the petition raises is whether or not the CTA
erred in granting respondent Ironcons application for refund of its excess creditable VAT
withheld." The Commissioner argued that "since the NIRC does not specifically grant
taxpayers the option to refund excess creditable VAT withheld, it follows that such refund
cannot be allowed." Thus, this case is solely about whether the taxpayer has the right
under the NIRC to ask for a cash refund of excess creditable VAT withheld. Again,
nowhere in this case did the Court discuss, state, or rule that the filing dates of the
administrative and judicial claims are inconsequential, as long as they are within the twoyear prescriptive period.
In CIR v. Cebu Toyo Corporation,75 the issue was whether Cebu Toyo was exempt or
subject to VAT. Compliance with the 120-day period was never an issue in Cebu Toyo. As
the Court explained:
Both the Commissioner of Internal Revenue and the Office of the Solicitor General argue
that respondent Cebu Toyo Corporation, as a PEZA-registered enterprise, is exempt from
national and local taxes, including VAT, under Section 24 of Rep. Act No. 7916 and
Section 109 of the NIRC. Thus, they contend that respondent Cebu Toyo Corporation is
not entitled to any refund or credit on input taxes it previously paid as provided under
Section 4.103-1 of Revenue Regulations No. 7-95, notwithstanding its registration as a
VAT taxpayer. For petitioner claims that said registration was erroneous and did not
confer upon the respondent any right to claim recognition of the input tax credit.
The respondent counters that it availed of the income tax holiday under E.O. No. 226 for
four years from August 7, 1995 making it exempt from income tax but not from other
taxes such as VAT. Hence, according to respondent, its export sales are not exempt from
VAT, contrary to petitioners claim, but its export sales is subject to 0% VAT. Moreover, it

argues that it was able to establish through a report certified by an independent Certified
Public Accountant that the input taxes it incurred from April 1, 1996 to December 31,
1997 were directly attributable to its export sales. Since it did not have any output tax
against which said input taxes may be offset, it had the option to file a claim for
refund/tax credit of its unutilized input taxes.
Considering the submission of the parties and the evidence on record, we find the petition
bereft of merit.
Petitioners contention that respondent is not entitled to refund for being exempt from
VAT is untenable. This argument turns a blind eye to the fiscal incentives granted to
PEZA-registered enterprises under Section 23 of Rep. Act No. 7916. Note that under said
statute, the respondent had two options with respect to its tax burden. It could avail of an
income tax holiday pursuant to provisions of E.O. No. 226, thus exempt it from income
taxes for a number of years but not from other internal revenue taxes such as VAT; or it
could avail of the tax exemptions on all taxes, including VAT under P.D. No. 66 and pay
only the preferential tax rate of 5% under Rep. Act No. 7916. Both the Court of Appeals
and the Court of Tax Appeals found that respondent availed of the income tax holiday for
four (4) years starting from August 7, 1995, as clearly reflected in its 1996 and 1997
Annual Corporate Income Tax Returns, where respondent specified that it was availing of
the tax relief under E.O. No. 226. Hence, respondent is not exempt from VAT and it
correctly registered itself as a VAT taxpayer. In fine, it is engaged in taxable rather than
exempt transactions. (Emphasis supplied)
Clearly, the issue in Cebu Toyo was whether the taxpayer was exempt from VAT or
subject to VAT at 0% tax rate. If subject to 0% VAT rate, the taxpayer could claim a
refund or credit of its input VAT. Again, nowhere in this case did the Court discuss, state,
or rule that the filing dates of the administrative and judicial claims are inconsequential,
as long as they are within the two-year prescriptive period.
While this Court stated in the narration of facts in Cebu Toyo that the taxpayer "did not
bother to wait for the Resolution of its (administrative) claim by the CIR" before filing its
judicial claim with the CTA, this issue was not raised before the Court. Certainly, this
statement of the Court is not a binding precedent that the taxpayer need not wait for the
120-day period to lapse.
Any issue, whether raised or not by the parties, but not passed upon by the Court, does
not have any value as precedent. As this Court has explained as early as 1926:
It is contended, however, that the question before us was answered and resolved against
the contention of the appellant in the case of Bautista vs. Fajardo (38 Phil. 624). In that
case no question was raised nor was it even suggested that said section 216 did not apply
to a public officer. That question was not discussed nor referred to by any of the parties
interested in that case. It has been frequently decided that the fact that a statute has been
accepted as valid, and invoked and applied for many years in cases where its validity was
not raised or passed on, does not prevent a court from later passing on its validity, where
that question is squarely and properly raised and presented. Where a question passes the
Court sub silentio, the case in which the question was so passed is not binding on the
Court (McGirr vs. Hamilton and Abreu, 30 Phil. 563), nor should it be considered as a
precedent. (U.S. vs. Noriega and Tobias, 31 Phil. 310; Chicote vs. Acasio, 31 Phil. 401;
U.S. vs. More, 3 Cranch [U.S.] 159, 172; U.S. vs. Sanges, 144 U.S. 310, 319; Cross vs.
Burke, 146 U.S. 82.) For the reasons given in the case of McGirr vs. Hamilton and Abreu,

supra, the decision in the case of Bautista vs. Fajardo, supra, can have no binding force in
the interpretation of the question presented here.76 (Emphasis supplied)
In Cebu Toyo, the nature of the 120-day period, whether it is mandatory or optional, was
not even raised as an issue by any of the parties. The Court never passed upon this issue.
Thus, Cebu Toyo does not constitute binding precedent on the nature of the 120-day
period.
There is also the claim that there are numerous CTA decisions allegedly supporting the
argument that the filing dates of the administrative and judicial claims are
inconsequential, as long as they are within the two-year prescriptive period. Suffice it to
state that CTA decisions do not constitute precedents, and do not bind this Court or the
public. That is why CTA decisions are appealable to this Court, which may affirm,
reverse or modify the CTA decisions as the facts and the law may warrant. Only decisions
of this Court constitute binding precedents, forming part of the Philippine legal system.77
As held by this Court in The Philippine Veterans Affairs Office v. Segundo:78
x x x Let it be admonished that decisions of the Supreme Court "applying or interpreting
the laws or the Constitution . . . form part of the legal system of the Philippines," and, as
it were, "laws" by their own right because they interpret what the laws say or mean.
Unlike rulings of the lower courts, which bind the parties to specific cases alone, our
judgments are universal in their scope and application, and equally mandatory in
character. Let it be warned that to defy our decisions is to court contempt. (Emphasis
supplied)
The same basic doctrine was reiterated by this Court in De Mesa v. Pepsi Cola Products
Phils., Inc.:79
The principle of stare decisis et non quieta movere is entrenched in Article 8 of the Civil
Code, to wit:
ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form
a part of the legal system of the Philippines.
It enjoins adherence to judicial precedents. It requires our courts to follow a rule already
established in a final decision of the Supreme Court. That decision becomes a judicial
precedent to be followed in subsequent cases by all courts in the land. The doctrine of
stare decisis is based on the principle that once a question of law has been examined and
decided, it should be deemed settled and closed to further argument. (Emphasis supplied)
VIII. Revenue Regulations No. 7-95 Effective 1 January 1996
Section 4.106-2(c) of Revenue Regulations No. 7-95, by its own express terms, applies
only if the taxpayer files the judicial claim "after" the lapse of the 60-day period, a period
with which San Roque failed to comply. Under Section 4.106-2(c), the 60-day period is
still mandatory and jurisdictional.
Moreover, it is a hornbook principle that a prior administrative regulation can never
prevail over a later contrary law, more so in this case where the later law was enacted
precisely to amend the prior administrative regulation and the law it implements.
The laws and regulation involved are as follows:
1977 Tax Code, as amended by Republic Act No. 7716 (1994)
Sec. 106. Refunds or tax credits of creditable input tax.
(a) x x x x
(d) Period within which refund or tax credit of input tax shall be made - In proper cases,
the Commissioner shall grant a refund or issue the tax credit for creditable input taxes

within sixty (60) days from the date of submission of complete documents in support of
the application filed in accordance with subparagraphs (a) and (b) hereof. In case of full
or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from receipt of the decision denying the claim or
after the expiration of the sixty-day period, appeal the decision or the unacted claim with
the Court of Tax Appeals.
Revenue Regulations No. 7-95 (1996)
Section 4.106-2. Procedures for claiming refunds or tax credits of input tax (a) x x x
xxxx
(c) Period within which refund or tax credit of input taxes shall be made. In proper
cases, the Commissioner shall grant a tax credit/refund for creditable input taxes within
sixty (60) days from the date of submission of complete documents in support of the
application filed in accordance with subparagraphs (a) and (b) above.
In case of full or partial denial of the claim for tax credit/refund as decided by the
Commissioner of Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals
within thirty (30) days from the receipt of said denial, otherwise the decision will become
final. However, if no action on the claim for tax credit/refund has been taken by the
Commissioner of Internal Revenue after the sixty (60) day period from the date of
submission of the application but before the lapse of the two (2) year period from the date
of filing of the VAT return for the taxable quarter, the taxpayer may appeal to the Court of
Tax Appeals.
xxxx
1997 Tax Code
Section 112. Refunds or Tax Credits of Input Tax
(A) x x x
xxxx
(D) Period within which Refund or Tax Credit of Input Taxes shall be made. In proper
cases, the Commissioner shall grant the refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of submission
of complete documents in support of the application filed in accordance with Subsections
(A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on
the part of the Commissioner to act on the application within the period prescribed above,
the taxpayer affected may, within thirty (30) days from the receipt of the decision denying
the claim or after the expiration of the hundred twenty day-period, appeal the decision or
the unacted claim with the Court of Tax Appeals.
There can be no dispute that under Section 106(d) of the 1977 Tax Code, as amended by
RA 7716, the Commissioner has a 60-day period to act on the administrative claim. This
60-day period is mandatory and jurisdictional.
Did Section 4.106-2(c) of Revenue Regulations No. 7-95 change this, so that the 60-day
period is no longer mandatory and jurisdictional? The obvious answer is no.
Section 4.106-2(c) itself expressly states that if, "after the sixty (60) day period," the
Commissioner fails to act on the administrative claim, the taxpayer may file the judicial
claim even "before the lapse of the two (2) year period." Thus, under Section 4.106-2(c)
the 60-day period is still mandatory and jurisdictional.

Section 4.106-2(c) did not change Section 106(d) as amended by RA 7716, but merely
implemented it, for two reasons. First, Section 4.106-2(c) still expressly requires
compliance with the 60-day period. This cannot be disputed.1wphi1
Second, under the novel amendment introduced by RA 7716, mere inaction by the
Commissioner during the 60-day period is deemed a denial of the claim. Thus, Section
4.106-2(c) states that "if no action on the claim for tax refund/credit has been taken by the
Commissioner after the sixty (60) day period," the taxpayer "may" already file the
judicial claim even long before the lapse of the two-year prescriptive period. Prior to the
amendment by RA 7716, the taxpayer had to wait until the two-year prescriptive period
was about to expire if the Commissioner did not act on the claim.80 With the amendment
by RA 7716, the taxpayer need not wait until the two-year prescriptive period is about to
expire before filing the judicial claim because mere inaction by the Commissioner during
the 60-day period is deemed a denial of the claim. This is the meaning of the phrase "but
before the lapse of the two (2) year period" in Section 4.106-2(c). As Section 4.106- 2(c)
reiterates that the judicial claim can be filed only "after the sixty (60) day period," this
period remains mandatory and jurisdictional. Clearly, Section 4.106-2(c) did not amend
Section 106(d) but merely faithfully implemented it.
Even assuming, for the sake of argument, that Section 4.106-2(c) of Revenue Regulations
No. 7-95, an administrative issuance, amended Section 106(d) of the Tax Code to make
the period given to the Commissioner non-mandatory, still the 1997 Tax Code, a much
later law, reinstated the original intent and provision of Section 106(d) by extending the
60-day period to 120 days and re-adopting the original wordings of Section 106(d). Thus,
Section 4.106-2(c), a mere administrative issuance, becomes inconsistent with Section
112(D), a later law. Obviously, the later law prevails over a prior inconsistent
administrative issuance.
Section 112(D) of the 1997 Tax Code is clear, unequivocal, and categorical that the
Commissioner has 120 days to act on an administrative claim. The taxpayer can file the
judicial claim (1) only within thirty days after the Commissioner partially or fully denies
the claim within the 120- day period, or (2) only within thirty days from the expiration of
the 120- day period if the Commissioner does not act within the 120-day period.
There can be no dispute that upon effectivity of the 1997 Tax Code on 1 January 1998, or
more than five years before San Roque filed its administrative claim on 28 March 2003,
the law has been clear: the 120- day period is mandatory and jurisdictional. San Roques
claim, having been filed administratively on 28 March 2003, is governed by the 1997 Tax
Code, not the 1977 Tax Code. Since San Roque filed its judicial claim before the
expiration of the 120-day mandatory and jurisdictional period, San Roques claim cannot
prosper.
San Roque cannot also invoke Section 4.106-2(c), which expressly provides that the
taxpayer can only file the judicial claim "after" the lapse of the 60-day period from the
filing of the administrative claim. San Roque filed its judicial claim just 13 days after
filing its administrative claim. To recall, San Roque filed its judicial claim on 10 April
2003, a mere 13 days after it filed its administrative claim.
Even if, contrary to all principles of statutory construction as well as plain common
sense, we gratuitously apply now Section 4.106-2(c) of Revenue Regulations No. 7-95,
still San Roque cannot recover any refund or credit because San Roque did not wait for
the 60-day period to lapse, contrary to the express requirement in Section 4.106-2(c). In

short, San Roque does not even comply with Section 4.106-2(c). A claim for tax refund or
credit is strictly construed against the taxpayer, who must prove that his claim clearly
complies with all the conditions for granting the tax refund or credit. San Roque did not
comply with the express condition for such statutory grant.
A final word. Taxes are the lifeblood of the nation. The Philippines has been struggling to
improve its tax efficiency collection for the longest time with minimal success.
Consequently, the Philippines has suffered the economic adversities arising from poor tax
collections, forcing the government to continue borrowing to fund the budget deficits.
This Court cannot turn a blind eye to this economic malaise by being unduly liberal to
taxpayers who do not comply with statutory requirements for tax refunds or credits. The
tax refund claims in the present cases are not a pittance. Many other companies stand to
gain if this Court were to rule otherwise. The dissenting opinions will turn on its head the
well-settled doctrine that tax refunds are strictly construed against the taxpayer.
WHEREFORE, the Court hereby (1) GRANTS the petition of the Commissioner of
Internal Revenue in G.R. No. 187485 to DENY the P483,797,599.65 tax refund or credit
claim of San Roque Power Corporation; (2) GRANTSthe petition of Taganito Mining
Corporation in G.R. No. 196113 for a tax refund or credit of P8,365,664.38; and (3)
DENIES the petition of Philex Mining Corporation in G.R. No. 197156 for a tax refund
or credit of P23,956,732.44.
SO ORDERED.

G.R. No. L-63915 April 24, 1985


LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF
ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
[MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records
Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing,
respondents.
ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right
recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the
principle that laws to be valid and enforceable must be published in the Official Gazette
or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel
respondent public officials to publish, and/or cause the publication in the Official Gazette
of various presidential decrees, letters of instructions, general orders, proclamations,
executive orders, letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234,
265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415,
427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644,
658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 10601061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808,
1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155,
161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228,
231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293,
297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382,
385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576,
587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532,
1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609,
1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742,
1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804,
1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840,
1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892,
1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044,
2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570,
574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852,
854-857.

f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92,
94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright
on the ground that petitioners have no legal personality or standing to bring the instant
petition. The view is submitted that in the absence of any showing that petitioners are
personally and directly affected or prejudiced by the alleged non-publication of the
presidential issuances in question 2 said petitioners are without the requisite legal
personality to institute this mandamus proceeding, they are not being "aggrieved parties"
within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use a rd
enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby
may file a verified petition in the proper court alleging the facts with certainty and
praying that judgment be rendered commanding the defendant, immediately or at some
other specified time, to do the act required to be done to Protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful
acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a
public right and its object is to compel the performance of a public duty, they need not
show any specific interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs.
Governor General, 3 this Court held that while the general rule is that "a writ of
mandamus would be granted to a private individual only in those cases where he has
some private or particular interest to be subserved, or some particular right to be
protected, independent of that which he holds with the public at large," and "it is for the
public officers exclusively to apply for the writ when public rights are to be subserved
[Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of
public right and the object of the mandamus is to procure the enforcement of a public
duty, the people are regarded as the real party in interest and the relator at whose
instigation the proceedings are instituted need not show that he has any legal or special
interest in the result, it being sufficient to show that he is a citizen and as such interested
in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual,
as a proper party to the mandamus proceedings brought to compel the Governor General
to call a special election for the position of municipal president in the town of Silay,
Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the proposition that
the relator is a proper party to proceedings of this character when a public right is sought
to be enforced. If the general rule in America were otherwise, we think that it would not
be applicable to the case at bar for the reason 'that it is always dangerous to apply a
general rule to a particular case without keeping in mind the reason for the rule, because,
if under the particular circumstances the reason for the rule does not exist, the rule itself
is not applicable and reliance upon the rule may well lead to error'

No reason exists in the case at bar for applying the general rule insisted upon by counsel
for the respondent. The circumstances which surround this case are different from those
in the United States, inasmuch as if the relator is not a proper party to these proceedings
no other person could be, as we have seen that it is not the duty of the law officer of the
Government to appear and represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to be
enforced by petitioners herein is a public right recognized by no less than the
fundamental law of the land. If petitioners were not allowed to institute this proceeding, it
would indeed be difficult to conceive of any other person to initiate the same, considering
that the Solicitor General, the government officer generally empowered to represent the
people, has entered his appearance for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own
effectivity dates. It is thus submitted that since the presidential issuances in question
contain special provisions as to the date they are to take effect, publication in the Official
Gazette is not indispensable for their effectivity. The point stressed is anchored on Article
2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said
article. In a long line of decisions, 4 this Court has ruled that publication in the Official
Gazette is necessary in those cases where the legislation itself does not provide for its
effectivity date-for then the date of publication is material for determining its date of
effectivity, which is the fifteenth day following its publication-but not when the law itself
provides for the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the
effectivity of laws with the fact of publication. Considered in the light of other statutes
applicable to the issue at hand, the conclusion is easily reached that said Article 2 does
not preclude the requirement of publication in the Official Gazette, even if the law itself
provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638
provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative
acts and resolutions of a public nature of the, Congress of the Philippines; [2] all
executive and administrative orders and proclamations, except such as have no general
applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court
of Appeals as may be deemed by said courts of sufficient importance to be so published;
[4] such documents or classes of documents as may be required so to be published by
law; and [5] such documents or classes of documents as the President of the Philippines
shall determine from time to time to have general applicability and legal effect, or which
he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate
notice of the various laws which are to regulate their actions and conduct as citizens.
Without such notice and publication, there would be no basis for the application of the
maxim "ignorantia legis non excusat." It would be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law of which he had no notice

whatsoever, not even a constructive one.


Perhaps at no time since the establishment of the Philippine Republic has the publication
of laws taken so vital significance that at this time when the people have bestowed upon
the President a power heretofore enjoyed solely by the legislature. While the people are
kept abreast by the mass media of the debates and deliberations in the Batasan Pambansa
and for the diligent ones, ready access to the legislative recordsno such publicity
accompanies the law-making process of the President. Thus, without publication, the
people have no means of knowing what presidential decrees have actually been
promulgated, much less a definite way of informing themselves of the specific contents
and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion
generica de leyes, se comprenden tambien los reglamentos, Reales decretos,
Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el
Gobierno en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be
published in the Official Gazette ... ." The word "shall" used therein imposes upon
respondent officials an imperative duty. That duty must be enforced if the Constitutional
right of the people to be informed on matters of public concern is to be given substance
and reality. The law itself makes a list of what should be published in the Official
Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to
what must be included or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general
applicability" is mandated by law. Obviously, presidential decrees that provide for fines,
forfeitures or penalties for their violation or otherwise impose a burden or. the people,
such as tax and revenue measures, fall within this category. Other presidential issuances
which apply only to particular persons or class of persons such as administrative and
executive orders need not be published on the assumption that they have been
circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or
"of general applicability" is a requirement of due process. It is a rule of law that before a
person may be bound by law, he must first be officially and specifically informed of its
contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which all form part of
the law of the land, the requirement of due process and the Rule of Law demand that the
Official Gazette as the official government repository promulgate and publish the texts of
all such decrees, orders and instructions so that the people may know where to obtain
their official and specific contents.
The Court therefore declares that presidential issuances of general application, which
have not been published, shall have no force and effect. Some members of the Court,
quite apprehensive about the possible unsettling effect this decision might have on acts
done in reliance of the validity of those presidential decrees which were published only
during the pendency of this petition, have put the question as to whether the Court's
declaration of invalidity apply to P.D.s which had been enforced or implemented prior to
their publication. The answer is all too familiar. In similar situations in the past this Court
had taken the pragmatic and realistic course set forth in Chicot County Drainage District
vs. Baxter Bank 8 to wit:

The courts below have proceeded on the theory that the Act of Congress, having been
found to be unconstitutional, was not a law; that it was inoperative, conferring no rights
and imposing no duties, and hence affording no basis for the challenged decree. Norton v.
Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559,
566. It is quite clear, however, that such broad statements as to the effect of a
determination of unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects-with respect to particular conduct, private and official.
Questions of rights claimed to have become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of public policy in the light of the
nature both of the statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the attention of
courts, state and federal and it is manifest from numerous decisions that an all-inclusive
statement of a principle of absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the
right of a party under the Moratorium Law, albeit said right had accrued in his favor
before said law was declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is "an operative fact which may have consequences
which cannot be justly ignored. The past cannot always be erased by a new judicial
declaration ... that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the
presidential decrees sought by petitioners to be published in the Official Gazette, only
Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive,
have not been so published. 10 Neither the subject matters nor the texts of these PDs can
be ascertained since no copies thereof are available. But whatever their subject matter
may be, it is undisputed that none of these unpublished PDs has ever been implemented
or enforced by the government. In Pesigan vs. Angeles, 11the Court, through Justice
Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents
of [penal] regulations and make the said penalties binding on the persons affected
thereby. " The cogency of this holding is apparently recognized by respondent officials
considering the manifestation in their comment that "the government, as a matter of
policy, refrains from prosecuting violations of criminal laws until the same shall have
been published in the Official Gazette or in some other publication, even though some
criminal laws provide that they shall take effect immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so
published, they shall have no binding force and effect.
SO ORDERED.

Das könnte Ihnen auch gefallen