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drugs and medicines,there is no inventivestep if the invention re-sults from the mere dis-covery of a new form ornew property of aknown substance whichdoes not result in theenhancement of theknown efficacy of thatsubstance, or the merediscovery of any newproperty or new use fora known substance, orthe mere use of a

known process unlesssuch known process re-sults in a new productthat employs at leastone new reactant."

Section 72 of RepublicAct No. 8293, other-wise known as theIntellectual PropertyCode of the Philip-pines, is herebyamended to read asfollows:

"SEC. 72. Limitations ofPatent Rights. - The own-er of a patent has noright to prevent third par-ties from performing,without his authorization,the acts referred to inSection 71 hereof in thefollowing circumstances:

"72.1. Using a patentedproduct which has beenput on the market in the

AMENDMENTS TO RE-PUBLIC ACT NO. 8293,OTHERWISE KNOWNAS THE INTELLECTUALPROPERTY CODE OFTHE PHILIPPINES

Section 22 of Repub-lic Act No. 8293, oth-erwise known as theIntellectual PropertyCode of the Philip-pines, is herebyamended to read asfollows:

"SEC. 22. Non-Patentable Inventions . -The following shall beexcluded from patentprotection:

"22.1. Discoveries, sci-entific theories andmathematical methods,and in the case of drugsand medicines, themere discovery of a newform or new property ofa known substancewhich does not result inthe enhancement of theknown efficacy of thatsubstance, or the merediscovery of any newproperty or new use fora known substance, orthe mere use of aknown process unlesssuch known process re-sults in a new productthat employs at least

one new reactant."For the purpose of thisclause, salts, esters,ethers, polymorphs,metabolites, pure form,particle size, isomers,mixtures of isomers,complexes, combina-tions, and other deriva-tives of a known sub-stance shall be consid-ered to be the samesubstance, unless theydiffer significantly inproperties with regard

to efficacy;"22.2. x x x;"22.3. x x x;"22.4. x x x;"22.5. x x x; and"22.6. x x x.

"Section 26 of Re-public Act No. 8293,otherwise known asthe IntellectualProperty Code of thePhilippines, is here-by amended to readas follows:

"SEC. 26. InventiveStep . - 26.1. An inven-tion involves an in-ventive step if, havingregard to prior art, it isnot obvious to a personskilled in the art at thetime of the filing date orpriority date of the ap-plication claiming theinvention. (n)"26.2. In the case of

Republic Act No. 9502 June 6, 2008 AN ACT PROVIDING FOR CHEAPER AND QUALITY MEDICINES, AMENDING FOR THE PURPOSE

REPUBLIC ACT NO. 8293 OR THE INTELLECTUAL PROPERTY CODE, REPUBLIC ACT NO. 6675 ORTHE GENERICS ACT OF 1988, AND REPUBLIC ACT NO. 5921 OR THE PHARMACY LAW, AND FOR

OTHER PURPOSES

JULY 2009VOLUME II, ISSUE No. 7

L C AL C AL C A

LINESLINESLINES

Inside this issue:

RA 9502 2

BIR Issuances 9

SEC issuance 13

Jurisprudence 14

JLs Corner 21
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Philippines by the ownerof the product, or withhis express consent,insofar as such use isperformed after thatproduct has been so puton the said market: Pro-vided, That, with regardto drugs and medicines,the limitation on patentrights shall apply after adrug or medicine hasbeen introduced in the

Philippines or anywhereelse in the world by thepatent owner, or by anyparty authorized to usethe invention: Provided,further, That the right toimport the drugs andmedicines contemplatedin this section shall beavailable to any govern-ment agency or any pri-vate third party;

"72.2. Where the act is

done privately and on anon-commercial scale orfor a non-commercialpurpose: Provided, Thatit does not significantlyprejudice the economicinterests of the owner ofthe patent;

"72.3. Where the actconsists of making orusing exclusively forexperimental use of theinvention for scientificpurposes or educationalpurposes and such otheractivities directly relatedto such scientific or edu-cational experimentaluse;

"72.4. In the case ofdrugs and medicines,where the act includestesting, using, makingor selling the inventionincluding any data relat-

ed thereto, solely for

any law of the Philip-pines or of anothercountry that regulatesthe manufacture, con-struction, use or sale ofany product: Provided,That, in order to pro-tect the data submittedby the original patentholder from unfaircommercial use provid-ed in Article 39.3 of theAgreement on Trade-

Related Aspects of In-tellectual PropertyRights (TRIPS Agree-ment), the IntellectualProperty Office, in con-sultation with the ap-propriate governmentagencies, shall issuethe appropriate rulesand regulations neces-sary therein not laterthan one hundredtwenty (120) days afterthe enactment of this

law;

"72.5. Where the actconsists of the prepara-tion for individual cas-es, in a pharmacy or bya medical professional,of a medicine in ac-cordance with a medi-cal shall apply after adrug or medicine hasbeen introduced in thePhilippines or anywhereelse in the world by thepatent owner, or byany party authorized touse the invention: Pro-vided, further, That theright to import thedrugs and medicinescontemplated in thissection shall be availa-ble to any governmentagency or any privatethird party;

"74.3. All cases arising

from the implementa-

tion of this provisionshall be cognizable bycourts with appropriate

jurisdiction provided bylaw."No court, except theSupreme Court of thePhilippines, shall issueany temporary re-straining order or pre-liminary injunction orsuch other provisionalremedies that will pre-

vent its immediate exe-cution.

"74.4. The IntellectualProperty Office (IPO),in consultation with theappropriate govern-ment agencies, shallissue the appropriateimplementing rules andregulations for the useor exploitation of pa-tented inventions ascontemplated in this

section within one hun-dred twenty (120) daysafter the effectivity ofthis law."

Section 76.1 of Re-public Act No. 8293,otherwise known asthe IntellectualProperty Code of thePhilippines, is here-by amended to readas follows:

"SEC. 76. Civil Actionfor Infringement. - 76.1.The making, using, of-fering for sale, selling,or importing a patentedproduct or a productobtained directly or indi-rectly from a patentedprocess, or the use of apatented process with-out the authorization ofthe patentee constitutespatent infringement:

Continuation of RA 9502

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Provided, That, thisshall not apply to in-

stances covered by Sec-tions 72.1 and 72.4(Limitations of PatentRights); Section 74 (Useof Invention by Govern-ment); Section 93.6(Compulsory Licensing);and Section 93-A(Procedures on Issuanceof a Special CompulsoryLicense under the TRIPSAgreement) of thisCode.

"76.2. x x x;"76.3. x x x;"76.4. x x x;"76.5. x x x; and"76.6. x x x."

Section 93 of Re-public Act No. 8293,otherwise known asthe IntellectualProperty Code of thePhilippines, is here-

by amended to readas follows:

"SEC. 93. Grounds forCompulsory Licensing. -The Director General ofthe Intellectual PropertyOffice may grant a li-cense to exploit a pa-tented invention, evenwithout the agreementof the patent owner, infavor of any person whohas shown his capabilityto exploit the invention,under any of the follow-ing circumstances:

"93.1. National emer-gency or other circum-stances of extreme ur-gency;

"93.2. Where the publicinterest, in particular,national security, nutri-tion, health or the de-velopment of other vital

sectors of the nationaleconomy as determined

by the appropriateagency of the Govern-ment, so requires; or

"93.3. Where a judicialor administrative bodyhas determined that themanner of exploitationby the owner of the pa-tent or his licensee isanti-competitive; or

"93.4. In case of publicnon-commercial use ofthe patent by the pa-tentee, without satisfac-tory reason;

"93.5. If the patentedinvention is not beingworked in the Philip-pines on a commercialscale, although capableof being worked, with-out satisfactory reason:Provided, That the im-portation of the patent-

ed article shall consti-tute working or usingthe patent; (Secs. 34,34-A, 34-B, R.A. No.165a) and

"93.6. Where the de-mand for patenteddrugs and medicines isnot being met to an ad-equate extent and onreasonable terms, asdetermined by the Sec-retary of the Depart-

ment of Health."

A new Section 93-Ais inserted afterSection 93 of Re-public Act No. 8293,otherwise known asthe IntellectualProperty Code ofthe Philippines, toread as follows:

"SEC. 93-A. Procedureson Issuance of a Special

Compulsory License un-der the TRIPS Agree-

ment. - 93-A.1. The Di-rector General of theIntellectual PropertyOffice, upon the writtenrecommendation of theSecretary of the Depart-ment of Health, shall,upon filing of a petition,grant a special compul-sory license for the im-portation of patenteddrugs and medicines.The special compulsorylicense for the importa-tion contemplated underthis provision shall bean additional specialalternative procedure toensure access to qualityaffordable medicinesand shall be primarilyfor domestic consump-tion: Provided, That ad-equate remunerationshall be paid to the pa-tent owner either by theexporting or importing

country. The compulso-ry license shall also con-tain a provision direct-ing the grantee the li-cense to exercise rea-sonable measures toprevent the re-exportation of the prod-ucts imported under thisprovision.

"The grant of a specialcompulsory license un-der this provision shall

be an exception to Sec-tions 100.4 and 100.6 ofRepublic Act No. 8293and shall be immediate-ly executory.

"No court, except theSupreme Court of thePhilippines, shall issueany temporary restrain-ing order or preliminaryinjunction or such otherprovisional remediesthat will prevent the

Page 3VOLUME II, ISSUE No. 7

grant of the specialcompulsory license.

"93-A.2. A compulso-ry license shall also beavailable for the man-ufacture and export ofdrugs and medicinesto any country havinginsufficient or nomanufacturing capaci-ty in the pharmaceuti-cal sector to addresspublic health prob-lems: Provided, That,a compulsory licensehas been granted bysuch country or suchcountry has, by notifi-cation or otherwise,allowed importationinto its jurisdiction ofthe patented drugsand medicines fromthe Philippines incompliance with theTRIPS Agreement.

"93-A.3. The right togrant a special com-

pulsory license underthis section shall notlimit or prejudice therights, obligations andflexibilities providedunder the TRIPSAgreement and underPhilippine laws, partic-ularly Section 72.1and Section 74 of theIntellectual PropertyCode, as amendedunder this Act. It isalso without prejudice

to the extent to whichdrugs and medicinesproduced under acompulsory licensecan be exported asallowed in the TRIPSAgreement and appli-cable laws.

"Section 94 ofRepublic Act No.8293, otherwiseknown as the In-tellectual Property


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Code of the Philip-pines, is herebyamended to read asfollows:

"SEC. 94. Period for Fil-ing a Petition for a Com-pulsory License. - 94.1. Acompulsory license maynot be applied for on theground stated in Subsec-tion 93.5 before the expi-ration of a period of four(4) years from the dateof filing of the applicationor three (3) years from

the date of the patentwhichever period expireslast.

"94.2. A compulsory li-cense which is applied foron any of the groundsstated in Subsections93.2, 93.3, 93.4, and93.6 and Section 97 maybe applied for at anytime after the grant ofthe patent. (Sec. 34(1),R. A. No. 165)"

Section 95 of Repub-lic Act No. 8293, oth-erwise known as theIntellectual PropertyCode of the Philip-pines, is herebyamended to read asfollows:

"SEC. 95. Requirementto Obtain a License onReasonable Commercial

Terms. - 95.1. The li-cense will only be grant-ed after the petitionerhas made efforts to ob-tain authorization fromthe patent owner on rea-sonable commercialterms and conditions butsuch efforts have notbeen successful within areasonable period oftime.

"95.2. The requirement

under Subsection 95.1shall not apply in any ofthe following cases:

"(a) Where the petitionfor compulsory licenseseeks to remedy a prac-tice determined after

judicial or administrativeprocess to be anti-competitive;

"(b) In situations of na-tional emergency orother circumstances ofextreme urgency;

"(c) In cases of publicnon-commercial use;and

"(d) In cases where thedemand for the patent-ed drugs and medicinesin the Philippines is notbeing met to an ade-quate extent and onreasonable terms, asdetermined by the Sec-retary of the Depart-ment of Health.

"95.3. In situations ofnational emergency orother circumstances ofextreme urgency, theright holder shall be no-tified as soon as reason-ably practicable.

"95.4. In the case ofpublic non-commercialuse, where the govern-

ment or contractor,without making a patentsearch, knows or hasdemonstrable groundsto know that a valid pa-tent is or will be used byor for the government,the right holder shall beinformed promptly.

"95.5. Where the de-mand for the patenteddrugs and medicines inthe Philippines is not

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being met to an ade-quate extent and onreasonable terms, asdetermined by theSecretary of the De-partment of Health,the right holder shallbe informed prompt-ly."

Section 147 ofRepublic Act No.8293, otherwiseknown as the In-tellectual PropertyCode of the Philip-

pines, is herebyamended to readas follows:

"SEC. 147. RightsConferred. - 147.1.Except in cases of im-portation of drugs andmedicines allowedunder Section 72.1 ofthis Act and of off-patent drugs andmedicines, the ownerof a registered markshall have the exclu-sive right to preventall third parties nothaving the owner'sconsent from using inthe course of tradeidentical or similarsigns or containers forgoods or serviceswhich are identical orsimilar to those inrespect of which thetrademark is regis-

tered where such usewould result in a like-lihood of confusion. Incase of the use of anidentical sign for iden-tical goods or ser-vices, a likelihood ofconfusion shall bepresumed.

"There shall be noinfringement of trade-marks or tradenamesof imported or sold


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patented drugs andmedicines allowed underSection 72.1 of this Act,as well as imported orsold off-patent drugsand medicines: Provid-ed, That, said drugs andmedicines bear the reg-istered marks that havenot been tampered, un-lawfully modified, orinfringed upon, underSection 155 of thisCode.

"147.2. x x x."

Section 159 of Re-public Act No. 8293,otherwise known asthe IntellectualProperty Code ofthe Philippines, ishereby amended toread as follows:

"SEC. 159. Limitationsto Actions for Infringe-ment. - Notwithstandingany other provision ofthis Act, the remediesgiven to the owner of aright infringed underthis Act shall be limitedas follows:

"159.1. x x x;"159.2 x x x;"159.3 x x x; and"159.4 There shall beno infringement oftrademarks or trade-names of imported or

sold drugs and medi-cines allowed underSection 72.1 of this Act,as well as imported orsold off-patent drugsand medicines: Provid-ed, That said drugs andmedicines bear the reg-istered marks that havenot been tampered, un-lawfully modified, orinfringed upon as de-fined under Section 155of this Code."

CHAPTER 3--DRUGS ANDMEDICINES PRICE REGU-

LATION

The President of the Phil-ippines, upon recommen-dation of the Secretary ofthe Department ofHealth, shall have thepower to impose maxi-mum retail prices overany or all drugs andmedicines as enumerated

in the List of Drugs andMedicines that areSubject to Price Regu-lation .

The power to imposemaximum retail pricesover drugs and medi-cines shall be exercisedwithin such period oftime as the situation maywarrant as determinedby the President of thePhilippines. No court,except the SupremeCourt of the Philippines,shall issue any tempo-rary restraining order orpreliminary injunction orpreliminary mandatoryinjunction that will pre-vent the immediate exe-cution of the exercise ofthis power of the Presi-dent of the Philippines.The Secretary of the De-partment of Health is

authorized to establishand initiate a price moni-toring and regulationsystem for drugs andmedicines. The Secre-tary of the Departmentof Health may also createsuch bodies, consultativecouncils, from which ad-vice may be sought inthe implementation of adrug or medicine pricemonitoring and regula-tion policy. Such bodies


or consultative coun-cils created by theSecretary of the De-partment of Healthshall coordinate itsefforts together withother governmentagencies.The Secretary of theDepartment of Healthshall have the follow-ing powers:

(A) Power to Recom-mend the Maxi-mum Retail Price

of Drugs and Med-icines Subject toPrice Regulation -(1) Upon applica-tion or motu pro-prio when thepublic interest sorequires, the Sec-retary of the De-partment ofHealth shall havethe power to de-termine the maxi-mum retail pricesof drugs and med-icines which shallbe recommendedto the President ofthe Philippines forapproval. In orderthat affordableprices of drugsand medicinesfrom the differentmanufacturers,importers, trad-ers, distributors,

wholesalers, orretailers shall bemade available tothe public, theSecretary of theDepartment ofHealth, as he/shemay deem fit andafter a proper de-termination, shallhave such ap-proved maximumretail prices ofdrugs and medi-


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cines published;

(2) In recommending themaximum retailprice, the Secretaryof the Department ofHealth shall considerthe following factors:

(a) Retail prices of drugsand medicines that aresubject to regulation inthe Philippines and in

other countries;(b) The supply availablein the market;

(c) The cost to the man-ufacturer, importer, trad-er, distributor, wholesal-er or retailer of the fol-lowing, but not limitedto:

(i) The exchange rate ofthe peso to the foreign

currency with which thedrug or any of its compo-nent, ingredient or rawmaterial was paid for;

(ii) Any change in theamortization cost of ma-chinery brought about byany change in the ex-change rate of the pesoto the foreign currencywith which the machin-ery was bought throughcredit facilities;

(iii) Any change in thecost of labor broughtabout by a change inminimum wage; or

(iv) Any change in thecost of transporting ordistributing the medi-cines to the area of des-tination;

d) Such other factors or

conditions which will aidin arriving at a just andreasonable maximumprice; and

(3) No retailer shall selldrugs and medicinesat a retail price ex-ceeding the maxi-mum retail price ap-proved by the Presi-dent of the Philip-pines as provided in

Section 17 of thisAct: Provided, That,the Secretary of theDepartment of Healthshall immediatelyundertake a study onthe prevailing pricesof drugs and medi-cines subject to priceregulation and pro-vide an initial list ofdrugs and medicines,which maximum re-tail prices he/she

shall recommend tothe President of thePhilippines.

(B) Power to IncludeOther Drugs and Medi-cines in the List Subjectto Price Regulation - Up-on application or motuproprio when the publicinterest so requires andafter proper determina-tion, the Secretary of theDepartment of Healthmay order the inclusionof drugs and medicinesto the list subject of priceregulation under Section23 hereof.

(C) Power to ImplementCost-Containment andOther Measures - (1) TheSecretary of the Depart-ment of Health shallhave the power to imple-ment the fair price of

drugs and medicines forpurposes of public healthinsurance and govern-ment procurement basedon the order of the Presi-dent of the Philippinesimposing maximum retailprices; and

(2) The Secretary ofthe Department of Healthshall have the power toimplement any other

measures that the gov-ernment may avail of toeffectively reduce thecost of drugs and medi-cines that shall include,but not limited to, com-petitive bidding, pricevolume negotiations, andother appropriate mech-anisms that influencesupply, demand and ex-penditures on drugs andmedicines.

(D) Power to Impose Ad-ministrative Fines andPenalties - After due no-tice and hearing, theSecretary of the Depart-ment of Health shallhave the power to im-pose administrative finesagainst any person,manufacturer, importer,trader, distributor,wholesaler, retailer, orany other entity, in suchamount as it may deemreasonable, which in nocase shall be less thanFifty thousand pesos(Php50,000.00) nor morethan Five million pesos(Php5,000,000.00) forviolations of the maxi-mum retail price ap-proved by the Presidentof the Philippines pursu-ant to the provisions ofthis Chapter.

Continuation...

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(E) Power to DeputizeGovernment Entities -The Secretary of theDepartment of Healthshall have the power tocall upon and deputizeany official, agent, em-ployee, agency, or in-strumentality of the na-tional and local govern-ment for any assistancethat it may deem nec-essary to carry out the

purposes of this Chap-ter.

(F) Other Powers Nec-essary to ImplementProvisions of this Chap-ter - The Secretary ofthe Department ofHealth shall exercisesuch powers and func-tions as may be neces-sary to implement andenforce the provisionsof this Chapter of this

Act, including the powerto require the produc-tion and submission ofrecords, documents,books of account, billsof lading, input docu-ments, records of pur-chase and sale, financialstatements, and suchother documents, infor-mation and papers asmay be necessary toenable the Secretary ofthe Department ofHealth to carry out itsfunctions, duties, andresponsibilities. Accord-ingly, within thirty (30)days from the effectivityof this Act and everyDecember 31st of everyyear thereafter, everymanufacturer, importer,trader, distributor,wholesaler, and retailerof a drug and medicinewhether included in or


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excluded from the list ofdrugs and medicines thatare subject to price regu-lation shall furnish theSecretary of the Depart-ment of Health a list,containing on the mini-mum the correspondingprices and inventory, ofall drugs and medicines itmanufactures, imports,trades, distributes,wholesales, or retails,

data pertaining to thefactors enumerated un-der Section 19(A)(2),and any and all neces-sary information that theSecretary of the Depart-ment of Health may re-quire.

All decisions or orders ofthe Secretary of the De-partment of Health pur-suant to Section 19 Para-graphs (A) Power to Rec-

ommend the MaximumRetail Price of Drugs andMedicines Subject toPrice Regulation, (B)Power to Include OtherDrugs and Medicines inthe List Subject to PriceRegulation, (C) Power toImplement Cost-Containment and OtherMeasures, (D) Power toImpose AdministrativeFines and Penalties, (E)Power to Deputize Gov-ernment Entities, or (F)Other Powers Necessaryto Implement Provisionsof this Chapter, shall beimmediately operative.

Review of the Decisionsor Orders of the Secre-tary of the Departmentof Health.

A party adversely affect-ed by a decision, order or

ruling of the Secretary ofthe Department of Healthmay, within thirty (30)days from notice of suchdecision, order or ruling,or in case of a denial of amotion for reconsidera-tion thereof, within fif-teen (15) days after no-tice of such denial, file anappeal with the Court ofAppeals, which shallhave jurisdiction to re-

view such decision, orderor ruling.

The filing of a petition fora writ of certiorari or oth-er special remedies inthe Supreme Court shallin no case supersede orstay any decision, orderor ruling of the Secretaryof the Department ofHealth, unless the Su-preme Court shall so di-rect, and the petitioner

may be required by theSupreme Court to givebond in such form and ofsuch amount as may bedeemed proper.

List of Drugs and Medi-cines that are Subject to

Price Regulation

The list of drugs andmedicines that are sub-

ject to price regulationshall include, inter alia:

(a) All drugs and medi-cines indicated for treat-ment of chronic illnessesand life threatening con-ditions, such as, but notlimited to, endocrine dis-orders, e.g., diabetesmellitus; gastrointestinaldisorders, e.g., pepticulcer; urologic disorders,e.g., benign prostatichyperplasia (BPH); cardi-

ovascular diseases, e.g.,hypertension; pulmonarydiseases, e.g., pulmo-nary tuberculosis (PTB),asthma; auto-immunediseases, e.g., systemiclupus erythematosus(SLE); skin diseases,e.g., psoriasis; neuro-psychiatric disorders;other infectious diseases,e.g., human immunodefi-ciency virus-acquiredimmune deficiency syn-drome (HIV-AIDS); andother conditions such asorgan transplants andneoplasm;

(b) Drugs and medicinesindicated for preventionof diseases, e.g., vac-cines, immunoglobulin,anti-sera;

(c) Drugs and medicines

indicated for preventionof pregnancy, e.g., oralcontraceptives;

(d) Anesthetic agents;

(e) Intravenous fluids;

(f) Drugs and medicinesthat are included in thePhilippine National DrugFormulary (PNDF) Essen-tial Drug List; and

(g) All other drugs andmedicines which, fromtime to time, the Secre-tary of the Departmentof Health determines tobe in need of price regu-lation.

Illegal Acts of Price Ma-nipulation - Without prej-udice to the provisions ofexisting laws on goodsnot covered by this Act,

Continuation...

it shall be unlawful forany manufacturer, im-porter, trader, distribu-tor, wholesaler, retailer,or any person engagedin any method of dispo-sition of drugs andmedicines to engage inacts of price manipula-tion such as hoarding,profiteering, or illegalcombination or formingcartel, as defined under

Section 5 of RepublicAct No. 7581, otherwiseknown as the Price Act,and all other acts com-mitted in restraint oftrade.

AMENDMENTS TO RE-PUBLIC ACT NO.

6675, OTHERWISEKNOWN AS THE GE-

NERICS ACT OF 1988

Section 5 of Repub-lic Act No. 6675,otherwise known asthe Generics Act of1988, is herebyamended to read asfollows:

"SEC. 5. Posting andPublication . - The De-partment of Health shallpublish annually in ac-ceptable means of pub-

lic dissemination in atleast two (2) newspa-pers of general circula-tion in the Philippinesthe generic names, andthe corresponding brandnames under whichthey are marketed, ofall drugs and medicinesavailable in the Philip-pines."

Section 6 of Repub-lic Act No. 6675,

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products, the genericname shall appear prom-

inently and immediatelyabove the brand name inall product labels as wellas in advertising andother promotional mate-rials.

"(d) Drug outlets, includ-ing drugstores, hospitaland non-hospital phar-macies and nontradition-al outlets such as super-markets and stores, shallinform any buyer aboutany and all other drugproducts having thesame generic name, to-gether with their corre-sponding prices so thatthe buyer may adequate-ly exercise his option.Within one (1) year afterthe approval of this Act,the drug outlets referredto herein shall post inconspicuous places intheir establishments a

list of drug products withthe same generic nameand their correspondingprices.

"(e) There shall appearprominently on the labelof a generic drug the fol-lowing statement: thisproduct has the sametherapeutic efficacy asany other generic prod-uct of the same name."

Section 8 of RepublicAct No. 6675, other-wise known as theGenerics Act of 1988,is hereby amendedto read as follows:

"SEC. 8. Required Pro-duction . - Subject to therules and regulationspromulgated by the Sec-retary of Health, everydrug manufacturing com-

pany operating in thePhilippines shall be re-

quired to produce, dis-tribute and make widelyavailable to the generalpublic an unbranded ge-neric counterpart of theirbranded product."

Section 12 of Repub-lic Act No. 6675, oth-erwise known as theGenerics Act of 1988,is hereby amendedto read as follows:

"SEC. 12. Penalty . - (A)Any person who shallviolate Section 6(a) or 6(b) of this Act shall sufferthe penalty graduatedhereunder, viz:

"(a) for the first convic-tion, he shall suffer thepenalty of reprimandwhich shall be officiallyrecorded in the appropri-

ate books of the Profes-sional Regulation Com-mission.

"(b) for the second con-viction, the penalty offine in the amount of notless than Ten thousandpesos (Php10,000.00)but not exceeding Twen-ty-five thousand pesos(Php25,000.00), at thediscretion of the court.

"(c) for the third convic-tion, the penalty of finein the amount of not lessthan Twenty-five thou-s a n d p e s o s(Php25,000.00) but notexceeding Fifty thousandpesos (Php50,000.00)and suspension of hislicense to practice hisprofession for sixty (60)days at the discretion ofthe court.

"(d) for the fourth andsubsequent convictions,

the penalty of fine of notless than One hundredt h o u s a n d p e s o s(Php100,000.00) andsuspension of his licenseto practice his professionfor one (1) year or long-er at the discretion of thecourt.

"(B) Any juridical personwho violates Sections 6(c), 6(d), 7 or 8 shallsuffer the penalty of afine of not less than Onehundred thousand pesos(Php100,000.00) andsuspension or revocationof license to operatesuch drug establishmentor drug outlet at the dis-cretion of the court: Pro-vided, That its officersdirectly responsible forthe violation shall sufferthe penalty of fine of atleast Forty thousand pe-

sos (Php40,000.00) andsuspension or revocationof license to practice pro-fession, if applicable, andby imprisonment of notless than six (6) monthsnor more than one (1)year or both fine andimprisonment at the dis-cretion of the court: and,a list of drug productswith the same genericname and their corre-sponding prices.

Provided, further, That ifthe guilty party is an al-ien, he shall be ipso factodeported after service ofsentence without need offurther proceedings.

"(C) The Secretary ofHealth shall have theauthority to impose ad-ministrative sanctionssuch as suspension orcancellation of license to

otherwise knownas the Generics

Act of 1988, ishereby amendedto read as follows:

"SEC. 6. Who ShallUse Generic Terminol-ogy . - (a) All govern-ment health agenciesand their personnel aswell as other govern-ment agencies shalluse generic terminolo-gy or generic namesin all transactions re-lated to purchasing,prescribing, dispens-ing and administeringof drugs and medi-cines.

"(b) All medical, den-tal and veterinarypractitioners, includ-ing private practition-ers, shall write pre-scriptions using thegeneric name. Thebrand name may beincluded if so desired.

"(c) Any organizationor company involvedin the manufacture,importation, repack-ing, marketing and/ordistribution of drugsand medicines shallindicate prominentlythe generic name ofthe product. In thecase of brand name

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operate or recommendsuspension of license topractice profession to theProfessional RegulationCommission as the casemay be for the violationof this Act.

"The administrative sanc-tions that shall be im-posed by the Secretaryof the Department ofHealth shall be in a grad-uated manner in accord-ance with Section 12.A.

"An administrative casemay be instituted inde-pendently from the crim-inal case: Provided, That,the dismissal of the crim-inal case or the with-drawal of the same shallin no instance be aground for the dismissalof the administrativecase."

AMENDMENTS TO RE-PUBLIC ACT NO. 5921,AS AMENDED, OTHER-WISE KNOWN AS THE

PHARMACY LAW

Section 25 of RepublicAct No. 5921, as amend-ed, otherwise known asthe Pharmacy Law, ishereby amended to readas follows:

"SEC. 25. Sale of medi-

cine, pharmaceuticals,drugs and devices . - Nomedicine, pharmaceuti-cal, or drug, except forthose which are non-prescription or over-the-counter, of whatever na-ture and kind or deviceshall be compounded,dispensed, sold or resold,or otherwise be madeavailable to the consum-ing public except througha prescription drugstore

or hospital pharmacy,duly established in ac-cordance with the provi-sions of this Act. Non-prescription or over-the-counter drugs may besold in their originalpackages, bottles, con-tainers or in small quan-tities, not in their originalcontainers to the con-suming public throughsupermarkets, conven-ience stores and otherretail establishments.

"Pharmaceutical, drug orbiological manufacturingestablishments, import-ers and wholesalers ofdrugs, medicines, or bio-logic products, shall notsell their products for re-sale except only to retaildrug outlets, hospitalpharmacies or to otherdrug wholesalers underthe supervision of a reg-istered pharmacist, andsupermarkets, conven-ience stores, other retailestablishments for over-the-counter drugs, dulylicensed by the Bureau ofFood and Drugs."

REVENUE MEMORAN-DUM ORDER NO. 22-

2009

Issued to further amendRevenue MemorandumOrder No. 68-94, asamended by RMO No. 24-2007 on the preparation

and consolidation of BIRForm No. 1770 MonthlySummary of Tax ReturnsFiled.

Procedures

(1) The Data ProcessingSection in the RevenueDistrict Offices/concerned divisions inLarge Taxpayers Service(LTS) shall:

A. Prepare BIR FormNo. 1770 in triplicate

copies.

B. Submit the origi-nal copy duly signedby Revenue DistrictOfficer /Divis ionChief to the Assis-tant Commissioner,Policy and PlanningService, Attention:Chiefs, Statistics Di-vision, not laterthan the 15 th dayof the followingmonth, copy fur-nished the RegionalDirector /Assis tantCommissioner, LargeTaxpayer Service.The duplicate copyshall be retained asfile.

C. Submit thru emailto the Chief, Statis-tics Division on orbefore deadline stat-

ed in II.1.b the re-port that matcheswith the hard copyduly signed by theRevenue District Of-ficer/Division Chief.

(2) The Statistics Divi-sion shall:

A. Require/monitortimely submission ofBIR Form No. 1770from the RDO/Division

Chief.

B. Prepare a con-solidated report ontax returns(monthly and cumu-lative) on or beforethe last working dayof each month.

(3) The report formatof BIR Form No.1770 is hereby modi-fied as follows:

A. Additional col-

umns for the num-ber of returns filedin previous year.

B. Columns for theincrease/(decrease)in the number ofreturns filed wereprovided.

C. Columns for thep e r c e n t a g e i n -crease/(decrease) inthe number of re-turns filed were re-quired.

REVENUE MEMO-RANDUM ORDER NO.

23-2009

In carrying outaudit and investigation

activities in accordancewith this Order, thefollowing policies andguidelines shall be ob-served.

A. Coverage

1. The National Inves-tigation Division (NID)shall have the authori-ty, subject to the ap-proval of the Commis-sioner, to conduct an

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10/21

holding and remittanceof taxes.

Procedures

1. To initiate an audit/investigation, the NIDshall submit a memo-randum request direct-ly to the Office of theCommissioner (OCIR),identifying the conglom-erate/group of compa-nies that is to be audit-ed, and providing a briefbackground of the con-glomerate/group, aswell as the justificationsfor the conduct of anaudit/investigation.

2. In the event that theCommissioner shouldapprove the conduct ofthe requested audit/investigation, the OCIRshall cause the prepara-tion of the correspond-ing Letter of Authority(LA) for the concernedconglomerate/group, forthe signature of the

Commissioner.3. To avoid the double-issuance of LAs for asingle conglomerate/group of companies, theNID shall inform theLarge Taxpayers Service(LTS) of the RegionalOffice having original

jurisdiction over theconcerned taxpayer(s)that the NID has beenauthorized to conduct

an audit/investigationon the taxpayer.

3.1. In notifying theLTS or the RegionalOffice concerned, theNID shall make useof the pro-forma no-tification provided inAnnex A of this Or-d e r .

4. The NID shall, imme-diately upon receipt ofthe signed LA from theOCIR, notify the con-

investigation/on the fol-lowing taxpayers and theirrespective officers:

Inter-related compa-nies and conglomer-ates, including related

individual taxpayers,from certain indus-tries;Local GovernmentUnits (LGUs);National GovernmentAgencies (NGAs); andGovernment Ownedand Controlled Corpo-rations (GOCCs)

2. The audit of inter-related companies and

conglomerates, includingrelated individual taxpay-ers, shall be undertakento ensure that such tax-payers are clearly reflect-ing income and expensesthat are attributable tocontrolled and inter-related transactions.Various schemes beingemployed by conglomer-ates and group of com-panies to reduce theamount of taxes dueshall be identified, suchas (but not limited to):the use of tax-exemptentities of those withspecial tax privileges;inter-related companyloans and advances; costsharing; and the supplyof goods and services.

2.1. In the conduct ofaudits of inter-relatedcompanies and con-glomerates, particularattention should begiven to transfer pric-ing issues, whichshould be consideredin the audit findings ofthe aforesaid estab-lishments.

3. The audit of LGUs,NGAs and GOCCs shallbe undertaken to ensurestrict compliance with therequirements of internal

revenue laws and regula-tions on the correct with-

cerned taxpayer(s) of thechange of jurisdiction forthe audit/investigation,using pro- forma Noticeof Change of Jurisdic-tion.

5. In the event that anLA [including Tax Verifi-cation Notices (TVNs)]has already been issuedby the LTS or the Re-gional Office, the sameshall be considered asautomatically invalidat-ed. The investigatingunit concerned shallthen, upon receipt of theNotification from theNID, forward the entiredocket of their investiga-tion to the NID, for con-solidation.

5.1. In the event thatno LA has yet beenissued, the LTS or theRegional Office con-cerned shall desistfrom issuing an LA (orTVN) to the taxpayer(s) identified by theNID.

6. In the conduct of au-dits/investigations underthis Order, and in orderto facilitate the develop-ment of cases for theRATE Program, the NIDis hereby authorized toobtain, from any Bureauoffice, any internal reve-nue information that mayassist in the conduct ofs u c h a u d i t s /investigations.

6.1. The Division mayalso communicatewith other Govern-ment offices, agenciesand instrumentalitiesin gathering data per-tinent to an audit/investigation. In suchinstance, the NIDshall prepare, for thesignature of the Com-missioner, the appro-priate communicationto request from theconcerned Govern-ment office the infor-


11/21

mation needed in fora particular audit/investigation.

7. All other subsequentactivities following theconduct of an audit/

investigation (i.e. sub-mission of audit reports,issuance of AssessmentNotices, etc.) shall ob-serve the establishedrules and regulations forthe conduct of such ac-tivities, subject to finalreview and approval bythe Commissioner.

8. Cases that are foundto be qualified for theRATE Program, followingthe conduct of an audit/investigation under thisOrder, shall be given pri-ority, and all concernedOffices must take thenecessary action thereinwithin ten (10) daysfrom their receipt of thereport of investigation.

REVENUE MEMORAN-DUM ORDER NO. 24-

2009

Issued to facilitate theproper identification andmonitoring of certain taxpayments subject to Ex-panded Withholding Tax,the Bureau of InternalRevenue created the Al-phanumeric Tax Code

(ATC) of selected revenuesource per Revenue Regu-lation No. 2-2009.

KIND OF TAX ISSUANCE/LEGAL BA-

SIS/ REASONS

BIRFORM

NO.

ATC

Withholding Tax at source Subject to creditable withholding tax Withholding on gross amount of interest on the refund of me-

ter deposit whether paid directly to the customers orapplied against customers billings of:

Residential and GeneralService customerswhose monthly elec-tricity consumptionexceeds 200 kwh asclassi ied byMERALCO

RR No. 2 -2009

1601 E

Individual WI660

Corporate WC660

Non -Residential cus-tomers whosemonthly electricityconsumption ex-ceeds 200 kwh asclassi ied byMERALCO

RR No. 2 -2009

1601 E

Individual WI661

Corporate WC661

Withholding Tax at source

Subject to creditable withholding tax Withholding on gross amount of interest on the refund of meterdeposit whether paid directly to the customers or applied againstcustomers billings of:

Residential and GeneralService customerswhose monthly elec-tricity consumptionexceeds 200 kwh asclassi ied by otherelectric DistributionUtilities (DU)

RR No. 2 -2009

1601 E

Individual WI662

Corporate WI662

Non -Residential cus-tomers whosemonthly electricityconsumption ex-ceeds 200 kwh asclassi ied by otherDUs

RR No. 2 -2009

1601 E

Individual WI663

Corporate WI663


12/21

Page 12

REVENUE MEMORAN-DUM ORDER 26-2009

The existing eTINSystem is enhanced tocater to the growing de-mands of the public for anon-line facility for TIN is-suance, and hereby re-named to eRegistration System. The improve-ments on the system in-clude:

A.Security features that

properly identify the fol-lowing category of users:

i. Self-employed individ-uals such as Single Pro-prietors and Profession-als, and Mixed IncomeEarners (e.g. employeeand single proprietorand/or professional atthe same time);

ii. Employers applyingTINs in behalf of theiremployees;

iii. Authorized Govern-ment Agencies and In-strumentalities (GAIs)for Executive Order(EO) No. 98 applicants.

B. Additional registrationservices such as on-linepayment facility for pay-ment of the Annual Regis-tration Fee (ARF) andGeneration of the Certifi-cate of Registration(COR).

C. A more user-friendlyand effective eRegistra-tion System.

The following shall beidentified as users ofthe eRegistration Sys-tem:

i. Self-employed Individu-als:

A.Single Proprietor a

natural person engagedin trade or business

B.Professional a natu-ral person engaged inthe performance of ser-vice for others for a fee

C.Mixed Income Earn-er employee derivingincome from compensa-tion who is also a single

proprietor and/or prac-ticing his/her professionat the same time.

ii. Third Party users:

1. Employers applyingfor TINs in behalf oftheir employees.

2. Authorized GAIs ap-plying TINs in behalfof taxpayers transact-ing with their officepursuant to EO No.98, which requiresthat a TIN be issuedto parties transactingwith governmentagencies. The GAI isidentified as an entityresponsible for pro-cessing permits, li-censes, clearance,official paper and doc-uments.

3. Other Authorized Us-ers who are grantedaccess to the Systemby the BIR.

iii. Revenue District Office(RDO) users:

1. Taxpayer Service Sec-tion (TSS) Personnel

of:

A. N o n -computerized Reve-nue District Offices(RDOs) to generateTIN, encode pre-generated TINs andgenerate reports fromeRegistration System.

B . Compute r i zedRDOs to generate re-ports from eRegistra-tion System.

2. Personnel detailed in jobfairs in coordination with

the Local GovernmentUnits (LGUs) and otherparties.

A penalty of P1,000.00for every instance butn o t t o e x c e e dP25,000.00 shall beimposed on eRegistra-tion System users whosupplied erroneous/invalid information.

Penalty provided underSection 236 and Section275 of the Tax Code arelikewise reiterated inthis Order. To wit:

SEC. 236. Registration Re-quirements.

Only one Taxpayer Identifica-tion Number (TIN) shall beassigned to a taxpayer. Anyperson who shall secure morethan one Tax IdentificationNumber shall be criminally lia-ble under the provision of Sec-tion 275 on Violation of OtherProvisions of this Code or Reg-ulations in General

SEC. 275. Violation of OtherProvisions of this Code or Rulesand Regulations in General. Any person who violates anyprovision of this Code or any

rule or regulation promulgatedby the Department of Finance,

for which no specific penalty isprovided by law, shall, uponconviction for each act oromission, be punished by a

fine of not more than OneThousand Pesos (P1,000.00)or suffer imprisonment of notmore than six (6) months, orboth.


13/21

above for the preced-ing year;

F. Gross purchases ofP5,000,000 and abovefor the precedingyear;

G. Total excise tax pay-

ment of at leastP100,000 for the pre-ceding year.

Mandatory ElectronicFiling and Payment

The top 5,000 Individualtaxpayers engaged intrade or business or prac-tice of profession are re-quired to file returns andremit the taxes withheldthru the Electronic Filingand Payment System(EFPS).

SECURITIES and EX-CHANGE COMMISSION

No. 10SERIES of 2009

To further protect the in-

terests of planholders andenable Pre-Need Compa-nies to efficiently meettheir contractual obliga-tions to them, the Com-mission resolved toamend Rules 16.2 and16.3 of the New Rules onthe Registration and Saleof Pre-Need Plans as fol-lows:

Rule 16.2:

16.2. The minimum con-tributions to the TrustFund shall be 50% of theamount collected for lifeplans and 60% of the to-tal amount collected forother plans unless a high-er deposit contribution isdetermined by the actu-ary and approved by theCommission.

Rule 16.3:

16.3. In case of install-ment payments, the mini-

mum contributions to thetrust funds shall be in ac-cordance with the follow-ing schedule:

The foregoing contribution

rates to the trust fundshall apply to the follow-ing pre-need plans:

(a) Existing Plans

1. Additional plans regis-tered on or after July15, 2009;

2. Unsold balance of pre-viously registeredplans subject of anapplication for priceincrease filed on orafter July 15, 2009;and

3.Unsold balance of previ-ously registered planssubject of an applicationfor conversion to anothertype of plan filed on orafter July 15, 2009.

(b) New plans registeredon or after July 15, 2009

Applications for in-

crease in price andconversion of previ-ously registered plansfiled before July 15,2009 shall not be cov-ered by this Memo-randum Circular.

Hundred ThousandPesos (P300,000)within the same taxa-ble year. For thispurpose, agriculturalproducts in their origi-nal state as used in

these regulations,shall only includecorn, coconut, copra,palay, rice, cassava,sugar cane, coffee,fruits, vegetables,marine food products,poultry livestocks.

Supplier of goods-Onepercent (1%)

Supplier of services-TwoPercent (2%)

Top 20,000 private corpo-rations shall include a cor-porate taxpayer who hasbeen determined and no-tified by the Bureau ofInternal Revenue (BIR) ashaving satisfied any of thefollowing criteria:

A. Classified and dulynotified by the Com-missioner as a largetaxpayer under Reve-

nue Regulations No. 1-98, as amended, orbelonging to the fivethousand (5,000) pri-vate corporations un-der RR 12-94, or tothe top ten thousand(10,000) private cor-porations under RR 17-2003, unless previ-ously de-classified assuch or had alreadyceased business oper-ations (automatic in-clusion)

B. VAT payment or paya-ble, whichever ishigher, of at leastP100,000 for the pre-ceding year;

C. Annual income taxdue of at leastP200,000 for the pre-ceding year;

D. Total percentage taxpaid of at leastP100,000 for the pre-ceding year;

E. Gross sales ofP10,000,000 and

REVENUE REGULA-TIONS NO. 6-2009

Section 2.57.2. of Reve-nue Regulations No. 2-98,

as amended, is herebyfurther amended to readas follows:Sec. 2.57.2. Incomepayments subject tocreditable withholdingtax and rates pre-scribed thereon. Except as herein other-wise provided, there shallbe withheld a creditableincome tax at the ratesherein specified for eachclass of payee from thefollowing items on incomepayments to persons re-siding in the Philippines:xxx xxx xxx

(M) Income paymentsmade by the toptwenty thousand(20,000) privatecorporations oftheir local/residentsupplier of goodsand local/resident

supplier of goodsand local/residentsupplier of servicesother than thosecovered by otherrates of withholdingtax.- Income pay-ments made by any ofthe top 20,000 privatecorporations, as de-termined by the Com-missioner, to theirlocal/resident supplierof goods and local/

resident supplier ofservices, includingnon-resident aliensengaged in trade orbusiness in the Philip-pines. Provided, how-ever, that for pur-chases involving agri-cultural products intheir original state,the tax required to bewithheld under thissub-section shall onlyapply to purchases inexcess of the cumula-tive amount of Three


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PEOPLE OF THEPHILIPPINES

vs.JOJO MUSA y SAN-TOS, ROBERT CARI-O y FERRERAS, AU-GUST DAYRIT y HER-NANDEZ, CESAR DO-

MONDON, JR. y SACRIZ, and MI-CHAEL GARCIA y

DELA CRUZJuly 3, 2009, G.R.

No. 170472

FACTS: On or about 11June 2001, Jojo Musa y

Santos (Musa), Robert

Carino y Ferreras

(Carino), August Dayrit y

Hernandez (Dayrit), Cesar

Domondon, Jr. y Sacriz

(Domondon) and Michael

Garcia y Dela Cruz

(Garcia), conspiring andconfederating together

rob and divest from Nan-

cy Bonifacio y Galvo

(Bonifacio) of her belong-

ings. And on the occasion

and by reason of said rob-

bery, accused Roberto

Barredo (Barredo) armed

with a gun, assault and

shoot Bonifacios boy-

friend Harold Herrera

(Herrera), which directly

caused the latters death.

The prosecution and the

defense agreed at the pre

-trial that the deceased

Barredo would be exclud-

ed from the Information.

The defense presented a

different version of

events.

The Regional Trial Court

(RTC) convicted Musa,

Carino, Dayrit, Domondon

and Garcia for having

committed the crime of

Robbery with Homicide.

On appeal, the Court of

Appeals (CA) affirmed the

RTC decision with the

modification that the

awarded moral damages

be increased.

ISSUE: Whether or not

the People proved Musa,

Carino, Dayrit, Domondon

and Garcias guilt beyond

reasonable doubt.

RULING: The People

proved Musa, Carino,

Dayrit, Domondon and

Garcias guilt beyond rea-

sonable doubt.

Bonifacios testimonyfinds full support and cor-

roboration from the testi-

mony of another passen-

ger. The narration of

events by the other wit-

ness coincided with Boni-

facios testimony on ma-

terial points.

These testimonies, whenconsidered together, lead

to no conclusion other than

Musa, Carino, Dayrit, Do-

mondon and Garcias direct

participation in the robberywhere Herrera was shot and

killed.

The totality test has been

formulated precisely to as-

sure fairness as well as

compliance with constitu-

tional due process require-

ments in out-of-court iden-tification. Applying this

test, the SC found Boni-

facios out -of-court identifi-

cation to be reliable and,

hence, admissible. First ,

she testified that she was

seated on the first seat of

the jeepneys left rear side.

From this vantage point,she had a good view of the

faces of the four persons

clinging to the jeepney as

well as the two who were

seated inside. Second , no

competing event took place

to draw her attention from

the hold-up. Nothing in the

records shows the presence

of any distraction that could

have disrupted her atten-

tion at the time of the rob-

bery or that could have pre-

vented her from having a

clear view of the faces and

appearances of the robbers.

Third , the identification took

place within five days after

the robbery; Fourth , she

described the suspects to a

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15/21

police inspector prior to

identifying them in the

police station. Finally ,

nothing persuasive sup-

ports Musa, Carino, Day-

rit, Domondon and Garci-

as contention that their

identification at the police

station was the result of

an unduly suggestive pro-

cedure. When Bonifacio

went to the Marikina Po-

lice Station, the police

merely informed her of

the date when Musa, Ca-

rino, Dayrit, Domondon

and Garcia were arrested.

Afterwards, she identified

them as the persons who

were her co-passengers

and who participated in

the robbery.

Alibi is generally viewedwith suspicion because of

its inherent weakness and

unreliability. For this de-

fense to prosper, jurispru-

dence demands the physi-

cal impossibility of the

presence of the accused

at the locus criminis or its

immediate vicinity at thetime of the incident.

Where the least chance

exists for the accused to

be present at the crime

scene, the defense of alibi

fails.

In the present case, Mu-

sa, Carino, Dayrit, Do-mondon and Garcia failed

dia Dailisan (Dalisan) filed a

Complaint for Annulment of

Contract of Sale involving a

parcel of land. They alleged

that Spouses Henry O (O)

and Pacita Cheng (Cheng)

took advantage of Javiers

illiteracy and deceived him

to sign a Deed of Sale over

the subject property and

that Sps. O and Cheng did

not pay in full the contract

price.

The Regional Trial Court(RTC) rendered a decision

in favor of Sps. Javier and

Dailisan declaring as null

and void the Deed of Sale,

ordering the Register of

Deeds to cancel the Trans-

fer Certificate of Title issued

in favor of Sps. O and

Cheng and ordering Sps. Oand Cheng to return the

sum of P20,000.00 to Sps.

Javier and Dailisan.

Sps. O and Cheng filed a

Notice of Appeal which was

denied by the RTC for hav-

ing been belatedly filed. On

the other hand, Sps. Javier

and Dailisan filed a Motion

for Reconsideration but the

same was also denied in an

Order dated October 16,

1989.

Thirteen years thereafter,

Sps. O and Cheng allegedly

discovered that no copy of

the October 16, 1989 Order

was sent to Sps. Javier and

to demonstrate by clear

and convincing evidence

that they were so far

away from the scene of

the crime so that it was

physically impossible for

them to have been at the

crime scene at the time of

its commission. In other

words, their alibi did not

meet the requirements of

time and place. Thus,

their alibi cannot also

stand in the face of their

positive identification by

credible witnesses as the

perpetrators of the crime.

The well-settled rule is

that positive identifica-

tion, when categorical,

consistent, and not at-

tended by any showing of

ill-motive on the part of

the witnesses, prevailsover an alibi that is not

substantiated by clear and

convincing evidence; alibi,

under these circumstanc-

es, becomes a negative

and self-serving evidence

undeserving of any weight

in law.

SPS. HENRY O andPACITA CHENG,

vs.SPS. JOSE JAVIER andCLAUDIA DAILISAN,

July 3, 2009, G.R. No.182485

FACTS: Spouses Jose

Javier (Javier) and Clau-


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Dailisan; hence they filed

an Urgent Ex-Parte Motion

for the transmittal of the

said Order to Sps. Javier

and Dailisan and their

counsel of record which

was granted by the RTC.

Meanwhile, Sps. O and

Cheng filed a Manifesta-

tion that their previous

counsel received a copy of

the October 16, 1989 Or-

der sometime in Novem-

ber 1989 thus making the

service of another copy

superfluous and unneces-

sary. Nonetheless, a copy

of the October 16, 1989

Order was still served up-

on them. Thereafter, Sps.

Javier and Dailisan moved

for the execution of judg-

ment but the same was

denied by the RTC.

Sps. Javier and Dailisan

appealed to the Court of

Appeals (CA) which set

aside the RTC Order and

directed the RTC to issue

a writ of execution.

The Court of Appeals de-

nied Sps. O and Chengs

Motion for Reconsidera-

tion.

ISSUES:

1. Whether or not the De-cision dated 29 October

1987 became Final and

Executory only in 2002;

2. Whether or not Sps.

Javier and Dailisan are

guilty of estoppel in pais

or laches.

RULING:

With regard to the first

issue, the Decision dated

29 October 1987 did not

become Final and Execu-

tory only in 2002.

Section 8, Rule 13 of the

Rules of Court states that:

SEC. 8. Completeness of

service . Personal service

is complete upon actual

delivery. Service by ordi-

nary mail is complete up-

on the expiration of five

(5) days after mailing,

unless the court otherwise

provides. Service by reg-

istered mail is complete

upon actual receipt by the

addressee; but if he fails

to claim his mail from the

post office within five (5)

days from the date of first

notice of the postmaster,

service shall take effect at

the expiration of such

time.

Pursuant to the foregoing

rule, when Sps. O and

Chengs former counsel

received in November of1989 a copy of the Octo-

ber 16, 1989 Order by

registered mail, service is

deemed completed. Since

they chose not to file an

appeal, the October 29,

1987 Decision became

final and executory after

the lapse of 15 days from

the date of receipt of the

October 16, 1989 Order.

With regard to the second

issue, Sps. Javier and

Dailisan were found guilty

of laches, the essence of

which is the failure or ne-

glect, for an unreasonable

and unexplained length of

time to do that which, by

exercising due diligence,

could or should have been

done earlier; it is the neg-

ligence or omission to

assert a right within a

reasonable time, warrant-

ing a presumption that

the party entitled to as-

sert it either has aban-

doned it or declined to

assert it. Laches is not

concerned with the mere

lapse of time, rather, the

party must have been

afforded an opportunity to

pursue his claim in order

that the delay may suffi-

ciently constitute laches.

In the instant case, the

October 29, 1987 Deci-sion became final and ex-

ecutory in 1989. Howev-

er, Sps. Javier and Dai-

lisan moved for its execu-

tion only on January 24,

2003. Having slept on

their right to enforce the

judgment for more than

13 years, Sps. Javier and

Dailisan are now barred

by the statute of limita-

tions from asking for its

execution.

COMMISSIONER OF IN-TERNAL REVENUE

vs.BANK OF THE PHILIP-

PINE ISLANDSJuly 7, 2009, G.R. No.

178490

FACTS: On 15 April

1999, BPI filed with the

Bureau of Internal Reve-nue (BIR) its final adjust-

ed Corporate Annual In-

come Tax Return (ITR) for

the taxable year ending

on 31 December 1998.

For the same taxable year

1998, BPI already made

income tax payments for

the first three quarters.The bank also received

income in 1998 from vari-

ous third persons, which,

were already subjected to

expanded withholding

taxes. BPI additionally

acquired foreign tax credit

when it paid the United

States government taxeson the operations of for-

L C A LINES Page 16


17/21

mers New York Branch.

Finally, respondent BPI

had carried over excess

tax credit from the prior

year, 1997.

Crediting the aforemen-

tioned amounts against

the total tax due from it

at the end of 1998, BPI

computed an overpay-

ment to the BIR of income

taxes.

BPI opted to carry over its

1998 excess tax credit to

the succeeding taxable

year ending 31 December

1999. For 1999, howev-

er, BPI ended up with (1)

a net loss; (2) still unap-

plied excess tax credit

carried over from 1998;

and (3) more excess tax

credit, acquired in 1999.

So in 1999, the total ex-cess tax credits of BPI

increased, which it once

more opted to carry over

to the following taxable

year.

For the taxable year end-

ing 31 December 2000,

BPI declared in its Corpo-

rate Annual ITR: (1) zerotaxable income; (2) ex-

cess tax credit carried

over from 1998 and

1999; and (3) even more

excess tax credit, gained

in 2000. This time, BPI

failed to indicate in its ITR

its choice of whether to

carry over its excess taxcredits or to claim the

mitted reversible error in

holding that the

irrevocability rule under

Section 76 of the Tax

Code does not operate to

bar BPI from asking for a

tax refund

The taxpayer with excess

income tax are given the

option to either (1) refund

the amount; or (2) credit

the same to its tax liabil-

ity for succeeding taxable

periods.

Section 76 of the NIRC of1997 , laid down the ir-revocability rule :

Section 76. Final Adjust-

ment Return . - Every cor-

poration liable to tax un-

der Section 24 shall file a

final adjustment return

covering the total net in-

come for the preceding

calendar or fiscal year. If

the sum of the quarterly

tax payments made dur-

ing the said taxable year

is not equal to the total

tax due on the entire tax-

able net income of that

year the corporation shalleither:

(a) Pay the excess tax

still due; or

(b) (b) Be refunded the

excess amount paid,

as the case may be.

In case the corporation is

entitled to a refund ofthe excess estimated

quarterly income taxes

paid, the refundable

amount shown on its final

adjustment return may be

credited against the esti-mated quarterly income

tax liabilities for the taxa-

ble quarters of the suc-

ceeding taxable years.

Once the option to car-ry-over and apply theexcess quarterly in-come tax against in-come tax due for the

taxable quarters of thesucceeding taxableyears has been made,such option shall beconsidered irrevocablefor that taxable periodand no application fortax refund or issuanceof a tax credit certifi-

cate shall be allowedtherefor.

Section 76 remainsclear and unequivo-cal. Once the carry-over option is taken,actually or construc-tively, it becomes ir-revocable. There is noexception or qualification

to the irrevocability rule .

Hence, the controlling

factor for the operation of

the irrevocability rule is

that the taxpayer chose

an option; and once it had

already done so, it could

refund of or issuance of a

tax credit certificate for

the amounts thereof.

BPI filed with the Com-

missioner of Internal Rev-

enue (CIR) an administra-

tive claim for refund, rep-

resenting its excess cred-

itable income tax for

1998.

The CIR failed to act on

the claim for tax refund of

BPI. Hence, BPI filed a

Petition for Review before

the Court of Tax Appeals

(CTA).

The CTA ruled that since

BPI had opted to carry

over its 1998 excess tax

credit to 1999 and 2000,

it was barred from filing a

claim for the refund of the

same.

BPI filed a Motion for Re-

consideration, but the

CTA denied the same.

BPI filed an appeal with

the Court of Appeals (CA),

which reversed the deci-

sion of the CTA, holding

that BPI was entitled to a

refund of the excess in-

come tax it paid for 1998.


the CA committed reversi-

ble error in holding that

the irrevocability rule

under Section 76 of the

Tax Code does not oper-

ate to bar BPI from asking

for a tax refundRULING: The CA com-


18/21

no longer make another

one. Consequently, after

the taxpayer opts to carry

over its excess tax credit

to the following taxable

period, the question of

whether or not it actually

gets to apply said tax

credit is irrelevant. Sec-

tion 76 of the NIRC of

1997 is explicit in stating

that once the option to

carry over has been

made, no application for

tax refund or issuance of

a tax credit certificate

shall be allowed therefor.

In the present case, the

excess income tax credit,

which BPI opted to carry

over, was acquired by the

said bank during the taxa-

ble year 1998. The option

of BPI to carry over its

1998 excess income tax

credit is irrevocable; it

cannot later on opt to ap-

ply for a refund of the

very same 1998 excess

income tax credit.

The choice by BPI of the

option to carry over its

1998 excess income tax

credit to succeeding taxa-

ble years, which it explic-

itly indicated in its 1998

ITR, is irrevocable, re-

gardless of whether it was

able to actually apply the

said amount to a tax lia-bility. The reiteration by

BPI of the carry over op-

tion in its ITR for 1999

was already a superfluity,

as far as its 1998 excess

income tax credit was

concerned, given the ir-

revocability of the initial

choice made by the bank

to carry over the said

amount.

LAND BANK OF THEPHILIPPINES,

vs.ROWENA O. PADEN

July 7, 2009, G.R. No.157607

FACTS: Land Bank of

the Philippines (LBP) hired

Rowena O. Paden (Paden)

as Contractual Secretary

III in its Bansalan Branch

in Davao del Sur. Prior to

her regularization, the

Paden assumed the posi-

tion of Executive Assistant

I as a probationary em-

ployee pending receipt of

the background investiga-

tion on her. As a require-

ment to her assumption

of the position of Execu-

tive Assistant I, Paden

executed an Affidavit with

Waiver of Rights.

In the documents that she

submitted to support her

application, Paden indicat-

ed that she had no chil-

dren and designated one

Cyril Rose O. Paden (Cyril

Rose) as her sister. A

subsequent background

investigation revealed

that Cyril Rose is not the

Padens sister but is really

her daughter. Shortly

thereafter, Paden, in an

Affidavit sought to explain

the discrepancy.

In response to the exe-

cuted Affidavit, LBP gave

notice to the Paden that

she would be dropped

from the rolls indicating

that the probationary pe-

riod has already expired.

Paden sought reconsider-

ation, but the LBP denied

her request.

Paden filed an appeal with

the CSC. The CSC dis-

missed the appeal out-

right for having been filed

beyond the reglementary

period, and for failure to

pay the appeal fee.

Paden filed a motion for

reconsideration. The

same was granted and

ordered LBP for Padens

reinstatement to her for-

mer position as Executive

Assistant I under perma-

nent status.

LBP filed a motion for re-consideration before the

CSC, but the same was

denied.

The CA dismissed the

LBPs petition and af-

firmed the findings of the

CSC.


LBP deprived Paden of

due process.

RULING: LBP deprived

Paden of due process.

LBP did not give Paden

sufficient notice of termi-

nation or a notice of un-

satisfactory conduct prior

to the expiration of her

probationary period, and

that there was no basis to

drop Paden from the rolls

on the cited ground.

Article IX (B), Section 2

(3) of the 1987 Constitu-

tion expressly provides

that no officer or em-

ployee of the civil serviceshall be removed or sus-

pended except for causeprovided by law. The

aforementioned constitu-

tional provision does not

distinguish between a

regular employee and a

probationary employee.

The constitutional guaran-

ty of security of tenure in

the civil service has two

legal ramifications. The

prohibition against sus-

pension or dismissal of an

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officer or employee of the

Civil Service except for

cause provided by law is

a guaranty of bothprocedural and sub-

stantive due process. Not only must removal or

suspension be in accord-

ance with the procedure

prescribed by law, but

also they can only be

made on the basis of a

valid cause provided by

law.

Procedural due process

basically requires that

suspension or dismissal

comes only after notice

and hearing. Thus, the

minimum requirements of

due process are: (1) that

the employees or officers

must be informed of the

charges preferred againstthem , and the formal way

by which the employees

or officers are informed is

by furnishing them with a

copy of the charges made

against them; and (2)

that they must have a

reasonable opportunity to

present their side of thematter, that is to say,

their defenses against the

charges and to present

evidence in support of

their defenses.

Measured against these

standards, the notice giv-

en to Paden clearly does

not amount to a valid no-tice of termination, as it

and YOLANDA DELOSREYES,

vs.RENE R. RELOS

July 3, 2009, G.R. No.164315

FACTS: Alcatel offered

Rene R. Relos (Relos) nu-

merous work projects

with their company.

On the last project given

to Relos, Alcatel informed

Relos that the project

would be completed and

that his contract with Al-

catel would expire. Al-

catel asked Relos to settle

all his accountabilities

with the company and

advised him that he would

be called if it has future

projects that require his

expertise.

Relos filed a complaint for

illegal dismissal, separa-

tion pay, unpaid wages,

unpaid overtime pay,

damages, and attorneys

fees against Alcatel. Re-

los alleged that he was a

regular employee of Al-

catel and that he was dis-

missed during the exist-

ence of the project.

The Labor Arbiter (LA)

declared that Relos was a

regular employee of Al-

catel and ruled that he

was illegally dismissed

and, therefore, entitled to

back wages.

Alcatel appealed to the

National Labor Relations

Commission (NLRC) which

reversed the LAs decision

and dismissed Relos com-

plaint for illegal dismissal.

It declared that Relos was

a project employee and

that he was not illegally

dismissed but that his

employment contract ex-

pired.

Relos filed a motion for

reconsideration however

the same was denied.

The Court of Appeals (CA)

set aside the NLRCs Deci-

sion and reinstated the

LAs Decision.

ISSUES: 1. Whether or

not Relos was a regular

employee or a project

employee;

2. Whether or not Relos

was illegally dismissed.

RULING: With regard to

the first issue, Relos is

considered a project em-

ployee.

The specific projects for

which Relos was hired and

the periods of employ-

ment were specified in hisemployment contracts.

The services he rendered,

the duration and scope of

each employment are

clear indications that Re-

los was hired as a project

employee.

The principal test for de-

termining whether a par-ticular employee is a pro-

merely stated that the

Paden was being dropped

from the rolls; nowherein the notice was aspecification of the

LBPs factual and legal

reasons for terminatingthe respondents ser-

vices. This is a violationof due process since it

strikes at its essence

the opportunity to be

heard or the opportuni-

ty for Paden to adequately

and intelligently mount a

defense against the

charges made by LBP.

Thus, Paden was com-

pletely left in the dark on

why her services were

being summarily termi-

nated. In addition, the

records of this case are

bereft of any evidencethat the LBPs notice to

Paden was supported by

any document justifying

the notice of termination.

The ground LBP invoked is

not sufficient basis for

Padens dismissal, and

that her dismissal was

effected without the ob-servance of both proce-

dural and substantive due

process.

ALCATEL PHILIPPINES,INC.,


20/21

ject employee or a regular

employee is whether the

project employee was as-

signed to carry out a spe-

cific project or undertak-

ing, the duration and

scope of which were spec-

ified at the time the em-

ployee is engaged for the

project. Project may

refer to a particular job or

undertaking that is within

the regular or usual busi-

ness of the employer, but

which is distinct and sep-

arate and identifiable as

such from the undertak-

ings of the company.

Such job or undertaking

begins and ends at deter-

mined or determinable

times.

With respect to the se-

cond issue, Relos cannot

considered as illegally

dismissed.

The employment of a pro-

ject employee ends on the

date specified in the em-

ployment contract.

Therefore, being a project

employee, Relos was not

illegally dismissed but his

employment terminated

upon the expiration of his

employment contract.

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Carig SurTuguegarao City

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LCA LINES | Volume II, Issue No. 7

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