LCA LINES | Volume IV, Issue No. 4

LCA LINES Serving your purpose, realizing your dreams.

Volume IV Issue No. 4 A P R I L 2 0 1 2

BIR ISSUANCES

I n s i d e t h i s

I s s u e:

BIR Issuances

1

Jurisprudence

12

JLs Corner

22

REVENUE REGULATIONS NO. 5-2012 issued on April 2, 2012 estab-lishes the policy on the binding effect of rulings issued prior to the effectivity of the Tax Reform Act of 1997. All rulings issued prior to January 1,

1998 shall no longer have any binding

effect. Consequently, these rulings

cannot be invoked as basis for any

current business transaction/s. Nei-

ther can these rulings be used as ba-

sis for securing legal tax opinions/

rulings.

REVENUE REGULATIONS NO. 6-2012 issued on April 2, 2012 clarifies the taxation on the sale of gold and other metallic minerals to Bangko Sentral ng Pilipinas (BSP) and other persons or entities, amending Reve-nue Regulations (RR) No. 7-2008, and further amending RR No. 2-98. Metallic minerals are subject to 2% Excise Tax rate based on either the actual market value of the gross out-put thereof at the time of removal, in case of those locally extracted or pro-duced; or the value used by the Bu-reau of Customs in computing tariff and duties, in case of importation. Possessors of said metallic minerals must be able to show proof that the Excise Tax has been paid thereon, otherwise, they shall be assessed and be held liable for the payment thereof. Sale of metallic minerals to persons and entities, except sale of gold to the BSP, is subject to 12% Value-Added Tax (VAT) if the value thereof ex-

ceeds the threshold set by the 1997 Tax Code and existing issuance. Sale of gold to the BSP is subject to 0% VAT if the seller is a VAT registered taxpayer. Sellers are subject to Income Tax at the rate prescribed under Section 24 (A), in case of individual taxpayers, and under Section 27 (A) of the 1997 Tax Code, in the case of corporations. Further, buyers of said metallic miner-als are required to withhold 5% of gross payments made and remit the same to the Government. In order for a seller/possessor of said metallic mineral to be able to claim the costs of said metallic mineral, said seller/possessor must be able to show proof of withholding and remit-tance of the 5% Withholding Tax on said product, otherwise all claimed costs and expenses associated there-with shall be disallowed. All buyers of metallic minerals are hereby constituted as agents for the collection of 2% Excise Tax on metal-lic minerals and the 5% Creditable Withholding Tax thereon. All penalties under existing laws and regulations shall attach to buyers who fail to with-hold and/or pay said taxes. The BSP, regardless whoever is sell-ing, is obliged to collect the 2% Ex-cise Tax on the actual market value of the gold sold to it, regardless of the purchase price it paid for the transac-tion, and remit the same to the BIR. If the seller is able to produce proof of payment of Excise Taxes on said

1


Volume IV Issue No. 4 A P R I L 2 0 1 2 FEB-

BIR ISSUANCES

goods, the BSP shall not be liable an-ymore for payment of Excise Taxes. BSP is likewise obliged to withhold and remit to the BIR the Creditable Withholding Taxes due from the sale, regardless whoever is selling. The withholding tax return shall be filed and payment shall be made within 10 days after the end of each month, ex-cept for taxes withheld for the month of December, which shall be filed on or before January 15 of the following year. However, if the BSP availed of the

Electronic Filing and Payment System

(EFPS), the deadline for electronic

filing of the applicable withholding tax

returns (BIR Form No. 1601-E) and

payment of taxes due thereon re-

mains on the 15th day of the following

month.

REVENUE REGULATIONS NO. 7-2012 issued on April 2, 2012 amends the consolidated Revenue Regula-tions on primary registration, updates and cancellation, particularly on the following:

a. Registration, updates and cancella-tion procedures; b. Venue, Forms & Documentary Re-quirements; c. Annual Registration Fee; d. Certification Fee; and e. Penalties for registration-related violations. The venue, forms and documentary

requirements for the registration of each type of applicant-taxpayer are listed in Annex A of the Regulations. Application for Taxpayer Identification Number (TIN) with incomplete docu-mentary requirements shall not be processed.

The TIN, once assigned to a particu-lar taxpayer, is non-transferable and there shall be no instance where two or several taxpayers are holders of the same TIN. Only one TIN shall be assigned to the taxpayer, regardless of variety of transactions e.g. employ-ee who is at the same time engaged in business. Once assigned with a TIN, a taxpayer is precluded from ap-plying for another TIN, except for banks with both Regular Banking Unit and with Foreign Currency Deposit Unit where each unit is assigned with different TINs. Any person who shall secure more than one TIN shall be subject to the penalty prescribed un-der Section 15 of the Regulations.

The estate of a deceased person or a trust under an irrevocable trust agree-ment shall be issued a TIN separate and distinct from the TIN of the de-ceased person and/or trustee.

Minors who are earning and/or who are under the circumstances pre-scribed under Executive Order (EO) No. 98, series of 1998 shall be sup-plied with TIN.

2



BIR ISSUANCES

Non-Resident Aliens Not Engaged in Trade or Business (NRANETB) or Non-Resident Foreign Corporations (NRFC) shall be issued TINs for pur-poses of withholding taxes on their income from sources within the Philip-pines. The withholding agent shall ap-ply for the TIN in behalf of the NRA-NETB or NRFC prior to or at the time of the filing of their monthly Withhold-ing Tax Return as applicant under EO 98, Series of 1998.

Branches of identified Large Taxpayer shall be registered at the Large Tax-payers Service (LTS) where the Head Office (HO) is registered. All incorpo-rators of corporations/associations (stock and non-stock), partners of partnerships and members of cooper-atives must have TINs.

While the application and issuance of TIN is generally made through the concerned BIR district office, the same, upon certain circumstances provided for by existing rules and reg-ulations, may be obtained either through the e-REG facility in the BIR website, or through the Security and Exchange Commission or through other facilities/agencies as may be made available in the future.

Applicants whose TINs have been se-cured through the e-REG facility shall complete their registration with the BIR district office (e.g. persons to en-gage in business/practice of profes-sion), but shall no longer be required

to fill out the forms for Application for Registration. Instead, a printout of the System Confirmation Page and the filled out on-line BIR Form 1901, which is the proof of e-TIN registra-tion, shall be submitted to the con-cerned BIR district office, together with the prescribed documentary re-quirements.

In the case of corporations/partnerships (including GOCCs), which upon registration with the SEC has already been assigned with a TIN, the Application for Registra-tion (BIR Form 1903) shall be com-pleted and submitted to the BIR dis-trict office which has jurisdiction over its principal place of business. The articles of incorporation, together with the SEC Registration Certificate where the TIN is indicated, as well as proof of authority given to its repre-sentative must be submitted to the concerned BIR district office during the completion of registration of its business.

The submission of a Mayors Permit prior to registration is mandatory. Pro-vided, however, that if it is still in pro-cess with the concerned Local Gov-ernment Unit (LGU), a duly stamped Received application for Mayors Permit will temporarily suffice to quali-fy him/ her/ it for registration, provid-ed, further that a duly approved per-mit shall be submitted within 30 calen-dar days from date of registration. Failure to submit the same shall sub-ject the taxpayer to Tax Compliance

3



BIR ISSUANCES

Verification Drive/ocular inspection to be conducted by the BIR district of-fice.

Consequently, if upon validation it can be determined that the business is non-existent and fails to file regularly the tax returns/declarations for his/her/its registered tax types, the BIR district office shall observe the proce-dures on tagging of the taxpayers status as Inactive.

Business taxpayers and those re-quired to issue receipts, shall submit the following requirements to com-plete their registration:

a. Application for Authority to Print (ATP) Receipts/Invoices; b. Registration of Manual Books of Accounts; or c. Application for Permit to use Com-puterized Accounting System (CAS) or components thereof, if applicable; d. Application for Permit to use Loose Leaf Accounting Records, if applica-ble; e. Application for Permit to use Cash Register Machine (CRM)/Point of Sales (POS) Machines, and the like, if applicable; f. Permit to Operate for taxpayers en-gaged in activities/transactions involv-ing products subject to excise taxes. As a general rule, it shall be mandato-ry for the BIR district office to process and issue simultaneously the Certifi-cate of Registration (COR), ATP and register the books of accounts of busi-ness taxpayers immediately after reg-istration and upon complete submis-

sion of the requirements within the period prescribed under the existing process provided by the BIR Citizens Charter. The BIR district office must ensure that taxpayers will be issued their registration certificates/permits (COR, ATP, Books of Accounts) upon commencement of their business.

Issuance of TIN Card for the first time shall be free of charge subject to the provisions of Section 15 of the Regu-lations. The same must be processed and released to the applicant within the same day upon submission to the BIR district office of complete docu-mentary requirements after the cut-off period of 1:00 p.m. TIN Cards shall be automatically issued to registered tax-payers except those TINs issued un-der EO 98, series of 1998/ONETT wherein issuance of the TIN card is optional and only upon request to the BIR district office where the taxpayer is registered.

For eREG applicants who are em-ployees or those registered under EO 98 whose TIN are generated by Em-ployers/Authorized Users, the System Confirmation Page and filled out online BIR Form 1902/BIR Form 1904T shall be presented to the con-cerned BIR district office for the issu-ance of the TIN card. The concerned BIR district office shall only issue the TIN card upon submission of the doc-uments prescribed in Annex "A" of the Regulations.

4



BIR ISSUANCES

The cost of processing of the initial TIN Card shall not be charged and collected from the applicant. Subse-quent requests for the issuance of TIN Card due to loss or damage shall be charged with a fee amounting to P100.00, subject to change upon evaluation and approval of the Com-missioner of Internal Revenue (CIR), to cover cost of reprinting. Applica-tions for TIN Card of registered tax-payers can be made at any computer-ized BIR district office regardless of registered address of applicant.

Individuals engaged in business or practice of profession and juridical en-tities, unless otherwise exempted, shall:

a. Pay Annual Registration Fee (ARF), if applicable; b. Secure COR; c. Proceed to Secondary Registration; d. Get Ask for Receipt notice, if ap-plicable; and e. Attend the taxpayers initial briefing to be conducted by the BIR district office for new registrants in order to apprise them of their rights and du-ties/responsibilities. In lieu of the briefing, the BIR district office may distribute information materials on registration to its new applicants in CD format to be developed by the Taxpayer Assistance Service. Every person subject to any internal revenue tax to be filed/paid periodical-ly shall complete its registration with the BIR as follows:

a. For self-employed individuals, es-tates and trusts, corporations and

their branches, if any on or before the commencement of business b. For corporations (Taxable or Non-taxable)/ONETT before payment of any tax due c. For partnerships, associations, co-operatives, Government Agencies and Instrumentalities (GAIs) before or upon filing of any applicable tax re-turn, statement or declaration as re-quired by the Code, as amended d. For employees or individuals who are registering with the BIR for the first time by reason of employment within 10 days from date of employ-ment e. For individuals required to secure TIN for their transactions with govern-ment agencies (applications under EO 98, series of 1998) they shall apply for their TIN from any BIR dis-trict office (thru the eREG System) at any time before they complete their transaction with the government agency The COR shall only be issued to indi-viduals engaged in business or prac-tice of profession and to juridical per-sons (whether taxable or exempt) by the BIR district office concerned (i.e., BIR district office of HO/Branch/Facility) upon compliance with the re-quirements for registration. Issuance of COR, whether upon registration or upon update of taxpayers infor-mation, is not subject to payment of Certification Fee unless the taxpayer requested for a certified copy of said COR, in which case, the same shall be subject to the payment of Certifica-tion Fee.

5



BIR ISSUANCES

Employees, ONETT taxpayers, and/or persons who have secured a TIN un-der EO 98, series of 1998 with the BIR shall not be issued a COR. On the other hand, each HO and/or branch shall be issued with a COR within the period/time prescribed un-der the existing BIR Citizens Char-ter. Persons issued with COR shall post or exhibit his/its original COR and duly validated ARF Return at his/its principal place of business and at each branch and/or facility in a way that is clearly and easily visible to the public.

An ARF in the amount of P 500.00 for every HO and/or branch shall be paid upon registration and every year thereafter on or before January 31. However, the following shall be ex-empt from the imposition of ARF:

a. Cooperatives duly registered with the Cooperative Development Author-ity; b. Individual residents earning purely compensation income c. OCWs/OFWs; d. Marginal Income Earners; e. GAIs, in the discharge of their gov-ernmental functions; f. LGUs, in the discharge of their gov-ernmental functions; g. Tax exempt corporations such as those enumerated under Section 30 of the Code, as amended, in pursu-ance of tax-exempt activities; h. Non-stock/non-profit organizations not engaged in business; i. Persons subject to tax under one-

time transactions; j. Persons registered under EO 98, series of 1998; and k. Facility/ies where no sales transac-tions occur. Any profit-oriented activity pursued by GAIs, LGUs and/or tax-exempt entity, which partakes the nature of an activi-ty similar to those undertaken by those engaged in business shall be treated as an activity in pursuance of a business for which the payment of ARF must be imposed. The ARF shall likewise be paid in cases where parts of the activities or undertakings con-ducted in a facility of the business in-volve sales transactions regardless of the frequency of the occurrence thereof.

The ARF shall be paid, in full amount, to an Authorized Agent Bank (AAB) located within the BIR district office or to the Revenue Collection Officer (RCO) or duly authorized Treasurer of the City or Municipality where each place of business or branch is regis-tered, or thru the BIR-accredited pay-ment facilities such as Electronic Fil-ing and Payment System (EFPS) and G-Cash.

Payment of ARF shall be made thru EFPS for taxpayers mandated to use EFPS such as Large Taxpayer, Top 20,000 Corporations, Top 5,000 Indi-viduals, etc. for their respective HO and Branches. Registration occurring during the interim period of the initial year shall be imposed with the same full amount of P 500.00 as ARF.

6



BIR ISSUANCES

When any individual who has paid the ARF dies, and the same business is continued by the person or persons interested in his estate, those continu-ing the business should register as a separate entity reflecting in said regis-tration that it is pursuing the business enterprise as heirs of the estate of the decedent. Accordingly, the person or persons interested in the estate should, within 30 days from the death of the decedent, submit to the con-cerned BIR district office inventories of goods or stocks at the time of death of the registered individual up-on registration and the ARF should be paid. This requirement shall also be applicable in the case of transfer of ownership or change of name of the business establishment.

Every person, who is required to reg-ister with the BIR under Section 4 of the Regulations, shall register each type of internal revenue tax for which he/it is obligated to file a return or pay taxes due thereon. Such person shall update the BIR for any changes in his/its registration information.

Generally, registration of tax types by a business entity consists of but not limited to the following internal reve-nue taxes/fees:

a. Income tax; b. Value-Added Tax (VAT) and/or Percentage Tax; c. Withholding tax on compensation; d. Creditable Withholding Tax at source on certain income payments;

e. Final Withholding Tax on certain income payments; f. Documentary Stamp Tax; g. Excise tax; and h. Annual Registration Fee. The nature of the business to which the taxpayer belongs shall be taken into consideration in determining the type of taxes that must be registered.

In order to avoid the generation of in-valid stop-filer cases in the BIRs da-tabase, only those tax types, which the taxpayer is expected to regularly/periodically file the return and/or pay the tax shall be registered. In case a taxpayer fails to update his tax types prior to filing/payment of a tax return, the duly authorized BIR personnel must register the corresponding tax type for the Tax Return to be filed/paid except for VAT and/or Percent-age Taxes, which must be applied for by the taxpayer. The BIR personnel initiating the update in behalf of the taxpayer must inform him of such up-date, in writing, to give due notice on his obligation to subsequently file the return on a regular basis on or before the prescribed deadline for filing.

The registration of Income Tax as a tax type does not automatically carry with it the registration of VAT and/or Percentage Tax as a covered/registered tax type. For marginal in-come earners, the activities of such individuals are considered principally for subsistence or livelihood. Moreo-ver, they are not required to pay any ARF although they are required to

7



BIR ISSUANCES

register as taxpayers for being poten-tial Income and Withholding Tax filers. For purposes of registration, they will be registered for the tax type Income Tax and Form Type 1701. Notwith-standing their exemption from busi-ness taxes and ARF, they are liable to pay Income Taxes similar to any other individual engaged in business or practice of profession, after applying the allowable deductions against their Gross Income/Sales/Receipts and personal/additional exemptions grant-ed under the Tax Code.

For those enjoying Income Tax holi-days, or exemption from other taxes for a limited time, as granted pursuant to special laws, the type of taxes the taxpayer is exempt from paying on the account thereof, the effectivity and expiry date shall be indicated. Howev-er, upon expiration thereof, it shall be the duty of the taxpayer to update his/its registration and/or the BIR district office must be duly informed in writ-ing.

The rules in determining the proper tax type of a taxpayer (i.e., whether VAT or other Percentage Taxes) are specified in the Regulations.

In case a registered person transfers his registered address to a new loca-tion, it shall be his duty to inform the BIR district office where he is regis-tered of such fact by filing the pre-scribed BIR Form specifying therein the complete address where he in-tends to transfer. The guidelines rela-tive to transfer of registration of non-business individuals, local employees and taxpayers engaged in business or

practice of profession (individual/non-individual) are specified in the Regu-lations.

The new BIR district office of the transferred taxpayer shall issue the COR immediately after the transfer of the taxpayers registration by the old BIR district office. The COR, Sales Invoice/Official Receipt (SI/OR) used in the old business location can still be used in the new business location without penalty, until a new COR and ATP is issued by the new BIR district office; provided that the taxpayer can show a copy of duly received update form filed with the old BIR district of-fice; provided further that the taxpayer shall stamp the new address on the old SI/OR when the same is to be is-sued in the new business address. In cases all the SI/OR are consumed prior to the online transfer of its rec-ords in the BIRs ITS database, the taxpayer shall still apply with the old BIR district office for an ATP for the new sets of receipts/invoices. The fil-ing of tax returns and payment of tax-es to the new BIR district office shall commence following the issuance of the new COR. The new BIR district office shall be responsible for notify-ing the taxpayer concerned that the transfer of registration has already been completed.

Any person registered in accordance with Section 4(2) of the Regulations shall, whenever applicable, update his registration information with the BIR district office where he is registered using BIR Form/s prescribed by the

8



BIR ISSUANCES

BIR. The instances when a taxpayer must update his registration infor-mation include (but are not limited to) the following:

a. A change in the nature of the busi-ness from sale of taxable goods and/or services to being VAT-exempt;

b. A person whose transactions are exempt from VAT but voluntarily reg-istered under the VAT system, and after the lapse of 3 years after his reg-istration applies for cancellation of his VAT registration. However, the op-tional registration as a VAT taxpayer of a franchise grantee of radio and/or television broadcasting whose gross receipts for the preceding year did not exceed P 10,000,000.00 shall be ir-revocable;

c. A VAT-registered person whose gross sales or receipts for 3 consecu-tive years did not exceed the amount of P 1,919,500.00; Provided, That every 3 years thereafter, the amount therein stated shall be adjusted to its present value using the Consumer Price Index, as published by the Na-tional Statistics Office (NSO); Provid-ed further, that such adjustment shall be published through Revenue Regu-lations to be issued not later than March 31 of each year. Upon updat-ing his registration, the taxpayer shall become liable to the Percentage Tax imposed under Section 116 of the Code, as amended. A short period return for the remaining period that he was VAT-registered shall be filed within 25 days from the date of can-cellation of his VAT registration as a tax type and at the same time register

for Percentage Tax as his new tax type; and

d. Any other changes/updates in reg-istration information previously sup-plied, including cancellation or change in any tax types.

The cancellation of business registra-tion of an individual shall not automat-ically cancel his TIN. The TIN shall remain active subject to subsequent updates on his registration. In this case, the BIR district office shall end date the particular registered form/tax type of such taxpayer in the ITS data-base upon complete submission of the requirements for cancellation of business registration. If subsequently, such taxpayer engages in a taxable activity (e.g. employment or establish-ment of a new business), the con-cerned BIR district office shall make the necessary updates on the regis-tration records of such taxpayer corre-sponding to his new activity.

In the case of juridical entities, the BIR district office shall prepare a monthly list of non-individual taxpay-ers filing for cancellation of business registration for submission to the As-sistant Commissioner Information Systems Operations Service, through the Revenue Data Centers (RDC), for purposes of tagging said taxpayers as Inactive. Once tagged as Inactive, such taxpayer shall no longer be in-cluded in the roster of active taxpay-ers under the concerned BIR district office.

9



BIR ISSUANCES

In the case of TIN issued to an estate of a decedent under ONETT, upon full payment of the Estate Tax by the heirs, administrator or executor, the issued TIN of the estate shall be tagged as Inactive. The tagging of said taxpayer as inactive shall be coursed through the RDC of con-cerned BIR district office. However, in case of additional properties discov-ered after payment of the Estate Tax, the TIN previously issued for such es-tate shall be updated to Active sta-tus in order to facilitate the filing of the amended Estate Tax Return and shall be cancelled upon full settlement of the tax liabilities of the estate.

Registered taxpayers who failed to file any tax return for 2 consecutive years or more shall be tagged as Inactive and an investigation shall be initiated. As such, upon classification as Inac-tive, all CRM/POS Permits issued to them as well as any unused Official Receipts/Invoices for which a valid ATP has been previously granted, shall be deemed cancelled/invalidated as of date of tagging.

Provided that the Inactive self-employed individual is not likewise employed, non-filing of tax return shall qualify him for tagging as Inactive. Where such taxpayer is also regis-tered as an employee, he or she will not be tagged as Inactive but any un-used Official Receipts/Invoices, for which a valid ATP has been previous-ly granted for his or her business, shall be deemed cancelled/invalidated upon end-dating of its registered business tax types.

The cancellation of registration may either pertain to cancellation of busi-ness registration and/or the assigned TIN. Application for TIN/Registration cancellation shall take place upon:

a. Death of individual; b. Full settlement of the tax liabilities of the estate; c. Discovery of a taxpayer having multiple TINs; and d. Dissolution, merger or consolida-tion of juridical person. Any request for certification that may be requested by a taxpayer from the BIR district office where he is regis-tered on matters relating to his regis-tration shall be charged with a fee in an amount not exceeding P 100.00, in addition to the Documentary Stamp Tax imposed under Section 188 of the Code, as amended, subject to change upon approval of the CIR thru a sub-sequent issuance. The Certification Fee shall be collected on each set of documents regardless of the number of pages of such document.

The following violations related to pri-mary registration shall be penalized as follows:

a. Failure to register (those who are found unregistered during TCVD subject to the penalties under pre-vailing revenue issuances

b. Late Registration (those who are voluntary registering, but beyond the prescribed period as indicated in the-se Regulations) compromise penal-ty of P 1,000.00, in addition to the un-

10



BIR ISSUANCES

paid ARF and penalties due thereon for every year that the business is in operation. This provision shall not ap-ply to application for TIN of employ-ees c. Late payment of ARF subject to 25% surcharge and 20% interest per annum and P 200.00 penalty d. Failure to register a branch or facili-ty subject to penalty of P 1,000.00 per unregistered branch or facility e. Acquisition of Multiple TINs aside from the criminal liability that may be imposed, P 1,000.00 for every TIN acquired in excess of one f. Failure to and/or erroneous supply of information P 1,000.00 for every error/omission, but not to exceed P 25,000.00 g. Any violation of the provisions of these Regulations shall be subject to penalties provided under Sections 254 and 275, and other pertinent pro-visions of the Code, as amended. Portions of the Regulations, which can be implemented immediately giv-en the present capabilities of the BIR Registration System shall strictly be complied with upon the effectivity of the Regulations. Nevertheless, for provisions hereof, which can only be implemented as the enhancements are put in place in the registration da-tabase, transitory procedures shall be provided in a separate Revenue Memorandum Order to be issued for the purpose. Pending the issuance of

transitory procedures, existing rules and procedures (status quo) shall be observed in the meantime.

11

JURISPRUDENCE

FIRST DIVISION G.R. No. 188497 April 25, 2012 COMMISSIONER OF INTERNAL REVE-

NUE, Petitioner, vs.

PILIPINAS SHELL PETROLEUM CORPORA-TION, Respondent.

FACTS:

Respondent Pilipinas Shell Petroleum Corporation is engaged in the business of pro-cessing, treating and refining petroleum for the purpose of producing marketable products and the subsequent sale thereof.

On July 18, 2002, respondent filed with

the Large Taxpayers Audit & Investigation Divi-sion II of the Bureau of Internal Revenue (BIR) a formal claim for refund or tax credit in the total amount of P28,064,925.15, representing excise taxes it allegedly paid on sales and deliveries of gas and fuel oils to various international carriers during the period October to December 2001. Subsequently, on October 21, 2002, a similar claim for refund or tax credit was filed by re-spondent with the BIR covering the period Janu-ary to March 2002 in the amount of P41,614,827.99. Again, on July 3, 2003, re-spondent filed another formal claim for refund or tax credit in the amount ofP30,652,890.55 cover-ing deliveries from April to June 2002.

Since no action was taken by the petition-

er on its claims, respondent filed petitions for re-view before the CTA. In its decision on the con-solidated cases, the CTAs First Division ruled that respondent is entitled to the refund of excise taxes.

Petitioners motion for reconsideration

was denied by the CTA First Division. Petitioner elevated the case to the CTA

En Banc which upheld the ruling of the First Divi-sion. The CTA pointed out the specific exemp-tion mentioned under Section 135 of the National Internal Revenue Code of 1997 (NIRC) of petro-leum products sold to international carriers such

as respondents clients.

ISSUES: 1. Whether or not the herein respond-

ent as manufacturer or producer of petroleum products is exempt from the payment of excise tax on such petroleum products it sold to interna-tional carriers.

2. Whether or not the herein respondent is entitled to claim tax refund of the excise taxes it has paid.

HELD: 1. No, the respondent is not exempt. Consid-

ering that the excise taxes attaches to pe-

troleum products "as soon as they are in

existence as such,"there can be no outright

exemption from the payment of excise tax

on petroleum products sold to international

carriers. The sole basis then of respond-

ents claim for refund is the express grant of

excise tax exemption in favor of internation-

al carriers under Sec. 135 (a) for their pur-

chases of locally manufactured petroleum

products. Pursuant to our ruling in Philip-

pine Acetylene, a tax exemption being en-

joyed by the buyer cannot be the basis of a

claim for tax exemption by the manufacturer

or seller of the goods for any tax due to it

as the manufacturer or seller. The excise

tax imposed on petroleum products under

Sec. 148 is the direct liability of the manu-

facturer who cannot thus invoke the excise

tax exemption granted to its buyers who are

international carriers.

2. No. As to whether respondent has the right to

file a claim for refund or tax credit for the ex-cise taxes it paid for the petroleum products sold to international carriers, the Solicitor General contends that (2)Sec. 130 (D) is ex-plicit on the circumstances under which a taxpayer may claim for a refund of excise

Volume IV Issue No. 4 A P R I L 2012

12

JURISPRUDENCE

taxes paid on manufactured products, which express enumeration did not include those excise taxes paid on petroleum prod-ucts which were eventually sold to interna-tional carriers (expression unius est exclu-sio alterius). Further, the Solicitor General asserts that contrary to the conclusion made by the CTA, the principles laid down by this Court in Maceda v. Macaraig, Jr. and Philippine Acetylene Co. v. Commis-sioner of Internal Revenue are applicable to this case. Respondent must shoulder the excise taxes it previously paid on petroleum products which it later sold to international carriers because it cannot pass on the tax burden to the said international carriers which have been granted exemption under Sec. 135 (a) of the NIRC. Considering that respondent failed to prove an express grant of a right to a tax refund, such claim cannot be implied; hence, it must be denied.

Under Chapter II "Exemption or Condi-tional Tax-Free Removal of Certain Goods" of Title VI, Sections 133, 137, 138, 139 and 140 cover conditional tax-free removal of specified goods or articles, whereas Sec-tions 134 and 135 provide for tax exemp-tions. While the exemption found in Sec. 134 makes reference to the nature and quality of the goods manufactured (domestic dena-tured alcohol) without regard to the tax sta-tus of the buyer of the said goods, Sec. 135 deals with the tax treatment of a specified article (petroleum products) in relation to its buyer or consumer. Respondents failure to make this important distinction apparently led it to mistakenly assume that the tax ex-emption under Sec. 135 (a) "attaches to the goods themselves" such that the excise tax should not have been paid in the first place.

THIRD DIVISION G.R. No. 185829 April 25, 2012

ARMANDO ALILING, Petitioner, vs.

JOSE B. FELICIANO, MANUEL F. SAN

MATEO III, JOSEPH R. LARIOSA, and WIDE WIDE WORLD EXPRESS CORPORA-

TION, Respondents.

FACTS:

Respondent Wide Wide World Express Corporation (WWWEC) offered to employ pe-titioner Armando Aliling (Aliling) as "Account Executive (Seafreight Sales)," with the follow-ing compensation package: a monthly salary of PhP 13,000, transportation allowance of PhP 3,000, clothing allowance of PhP 800, cost of living allowance of PhP 500, each pay-able on a per month basis and a 14th month pay depending on the profitability and availa-bility of financial resources of the company. The offer came with a six (6)-month probation period condition with this express caveat: "Performance during [sic] probationary period shall be made as basis for confirmation to Regular or Permanent Status."

Aliling and WWWEC inked an Employ-

ment Contract7 under the following terms, among others: Conversion to regular status shall be de-

termined on the basis of work perfor-mance; and

Employment services may, at any time, be terminated for just cause or in accord-ance with the standards defined at the time of engagement.

Training then started. However, in-

stead of a Seafreight Sale assignment, WWWEC asked Aliling to handle Ground Ex-press (GX), a new company product launched on June 18, 2004 involving domes-tic cargo forwarding service for Luzon. Mar-keting this product and finding daily contracts for it formed the core of Alilings new assign-ment.

Barely a month after, Manuel F. San

Mateo III (San Mateo), WWWEC Sales and Marketing Director, emailed Aliling9 to ex-press dissatisfaction with the latters perfor-mance.


13

JURISPRUDENCE

October 4, 2004, Aliling filed a Com-

plaint17 for illegal dismissal due to forced res-ignation, nonpayment of salaries as well as damages with the NLRC against WWWEC.

Refuting Alilings basic posture,

WWWEC stated in its Position Paper dated November 22, 2004 that, in addition to the letter-offer and employment contract adverted to, WWWEC and Aliling have signed a letter of appointment on June 11, 2004 containing this provision: Failure to meet the job re-quirements during the probation stage means that your services may be terminated without prior notice and without recourse to sepa-ration pay.

ISSUES:

1. Whether or not the petitioner is a regular employee.

2. Whether or not petitioner was legally dis-missed.

3. Whether or not petitioner is entitled to payment of backwages and separation pay.

HELD:

1. Yes. The CA ruled that petitioner was a regular employee from the outset inas-much as he was not informed of the standards by which his probationary em-ployment would be measured.

Petitioner was regularized from

the time of the execution of the em-ployment contract on June 11, 2004, although respondent company had ar-bitrarily shortened his tenure. As point-ed out, respondent company did not make known the reasonable standards under which he will qualify as a regular employee at the time of his engage-ment. Hence, he was deemed to have been hired from day one as a regular employee. To note, the June 2, 2004 letter-offer itself states that the regular-ization standards or the performance

norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC has failed to prove that an agreement as regards thereto has been reached. Clearly then, there were actually no performance stand-ards to speak of. And lest it be over-looked, Aliling was assigned to GX trucking sales, an activity entirely dif-ferent to the Seafreight Sales he was originally hired and trained for. Thus, at the time of his engagement, the standards relative to his assignment with GX sales could not have plausibly been communicated to him as he was under Seafreight Sales.

Based on the facts estab-

lished in this case in light of extant jurisprudence, the CAs holding as to the kind of employment petitioner enjoyed is correct.

2. Yes, the Petitioner was illegally

dismissed. To justify fully the dismissal of

an employee, the employer must, as a rule, prove that the dismissal was for a just cause and that the employ-ee was afforded due process prior to dismissal. As a complementary prin-ciple, the employer has the onus of proving with clear, accurate, con-sistent, and convincing evidence the validity of the dismissal.

WWWEC had failed to dis-

charge its twin burden in the instant case.

First off, the attendant circumstances

in the instant case aptly show that the issue of petitioners alleged failure to achieve his quota, as a ground for terminating employ-ment, strikes the Court as a mere after-

thought on the part of WWWEC. Consider: Lariosas letter of September 25, 2004 al-ready betrayed managements intention to dismiss the petitioner for alleged unauthor-


14

JURISPRUDENCE

ized absences. Aliling was in fact made to explain and he did so satisfactorily. But, look and behold, WWWEC nonetheless pro-ceeded with its plan to dismiss the petitioner for non-satisfactory performance, although the corresponding termination letter dated October 6, 2004 did not even specifically state Alilings "non-satisfactory perfor-mance," or that Alilings termination was by reason of his failure to achieve his set quo-ta.

At any event, assuming for argument

that the petitioner indeed failed to achieve his sales quota, his termination from em-ployment on that ground would still be un-justified.

3. Yes. As earlier explained, Aliling cannot be rightfully considered as a mere proba-tionary employee. Accordingly, the proba-tionary period set in the contract of employ-ment dated June 11, 2004 was of no mo-ment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization as a regular employee of the company without a fixed term of employ-ment. Thus, he is entitled to backwages reckoned from the time he was illegally dis-missed on October 6, 2004, with a PhP 17,300.00 monthly salary, until the finality of this Decision. Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 in-structs:

Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee ex-cept for a just cause or when authorized by this Title. An employee who is unjustly dis-missed from work shall be entitled to rein-statement without loss of seniority rights and other privileges and to his full backwages,

inclusive of allowances, and to his other benefits or their monetary equivalent com-puted from the time his compensation was withheld from him up to the time of his actual reinstatement.

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained relationship.

G.R. No. 172538 April 25, 2012

ISABELO ESPERIDA, LORENZO HIPOLITO, and ROMEO DE BELEN, Petitioners,

vs. FRANCO K. JURADO, JR., Respondent

FACTS:

On February 5, 2001, petitioners Isa-beloEsperida, Lorenzo Hipolito, and Romeo de Belen filed a Complaint for illegal dismis-sal against respondent Franco K. Jurado, Jr. before the Labor Arbiter.

On March 14, 2002, the Labor Arbiter

rendered a Decision3 in favor of petitioners, declaring that they have been illegally dis-missed and awarding them their correspond-ing backwages and separation pay.

Respondent sought recourse before

the Court of Appeals (CA) docketed as CA-G.R. SP No. 81118. The CA rendered a De-cision dismissing the petition and affirming the assailed Resolution of the NLRC. Re-spondent then filed a motion for reconsider-ation of the decision, which was eventually denied in the Resolution.

However, during the pendency of

the motion for reconsideration, or on July 21, 2005, respondent filed before the CA a Petition to Declare Petitioners in Contempt of Court against the petitioners. In the said petition, respondent sought to declare herein petitioners guilty of indirect con-tempt of court on the basis of their alleged acts of dishonesty, fraud, and falsification


15

JURISPRUDENCE

of documents to mislead the CA to rule in their favour. Finding the petition to be suffi-cient in form and substance, the CA issued a Resolution ordering herein petitioners to file their Answer within 15 days from notice, showing cause why they should not be ad-judged guilty of indirect contempt of court.

On February 8, 2006, counsel for peti-

tioners filed his entry of appearance, together with a motion for extension of time, seeking that petitioners be granted 15 days from Febru-ary 3, 2006, or up to February 18, 2006, within which to submit their Answer to the petition. This action of the petitioners was denied by the court.

The case was then submitted for deci-

sion.On February 21, 2006, the petitioners filed a Second Motion for Extension alleging that the Answer to the petition is due on February 18, 2006, but due to counsels work load, they are praying that they be allowed to submit their An-swer until February 28, 2006.

On March 20, 2006, petitioners counsel

also filed an Omnibus Motion (For Reconsider-ation of the March 02, 2006 Resolution; and For Admission of Respondents An-swer), reasoning that the late filing of the mo-tion for extension was because counsel was so tied up with the preparations of equally im-portant paper works and pleadings for the oth-er cases which he is also handling. Counsel explained that he failed to give instructions to his liaison officer to mail the motion on the same day. Also, personal service was not pos-sible due to the considerable distance between the parties respective offices

The CA denied both Motions.

ISSUE: Whether or not the Honorable Court of

Appeals erred in considering the case submit-ted for decision without giving the petitioners their inherent and inalienable right to due pro-cess of law.

HELD: Yes. Sections 3 and 4, Rule 71 of the Rules of Court, specifically outlines the proce-dural requisites before the accused may be punished for indirect contempt. First, there must be an order requiring the respondent to show cause why he should not be cited for contempt. Second, the respondent must be given the opportunity to comment on the charge against him. Third, there must be a hearing and the court must investigate the charge and consider respondent's answer. Finally, only if found guilty will respondent be punished accordingly. The law requires that there be a charge in writing, duly filed in court, and an opportunity given to the person charged to be heard by himself or counsel. What is most essential is that the alleged con-temner be granted an opportunity to meet the charges against him and to be heard in his defenses. This is due process, which must be observed at all times. In the case at bar, petitioners were in-deed given ample opportunity to file their An-swer. In denying petitioners Omnibus Motion and Second Motion for Extension, the CA rati-ocinated that the justifications advanced by petitioners do not warrant the grant of liberality in the application of the Rules and their omis-sions are unpardonable and should not be tol-erated. It must be stressed, however, that indi-rect contempt proceedings partake of the na-ture of a criminal prosecution; hence, strict rules that govern criminal prosecutions also apply to a prosecution for criminal contempt; the accused is to be afforded many of the pro-tections provided in regular criminal cases;

and proceedings under statutes governing them are to be strictly construed. Moreover, in contempt proceedings, if the answer to the contempt charge is satisfactory, the contempt proceedings end. In the present recourse, pe-titioners plead for the liberal application of the Rules. Admittedly, in their Omnibus Motion before the appellate court, petitioners counsel acknowledged his shortcomings in complying


16

JURISPRUDENCE

with the resolution of the court and took full responsibility for such oversight and omission. Petitioners counsel also reasoned that the lack of personal service of the motion for ex-tension was due to the considerable distance between the parties respective offices and that the failure of filing the motion for exten-sion on time was due to the fact that counsels liaison officer failed to follow his instructions. Indeed, counsels liaison officer attested such facts in his Explanation/Affidavit, which was attached to the Omnibus Motion. More im-portantly, also attached to the Omnibus Mo-tion was petitioners Answer to the petition to cite them in contempt.

G.R. No. 171101 April 24, 2012 HACIENDA LUISITA, INCORPO-

RATED, Petitioner, LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING CORPO-

RATION, Petitioners-in-Intervention, vs.

PRESIDENTIAL AGRARIAN REFORM COUN-CIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN RE-FORM; ALYANSA NG MGA MANGGAGA-

WANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNI-GA1 and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR AN-

DAYA, Respondents. EN BANC

FACTS:

Before the Court are the Motion to Clari-fy and Reconsider Resolution of November 22, 2011 dated December 16, 2011 filed by peti-tioner Hacienda Luisita, Inc. (HLI) and the Mo-tion for Reconsideration/Clarification dated De-cember 9, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya (collectively referred to as "Mallari, et al.").

In Our July 5, 2011 Decision in the

above-captioned case, this Court denied the petition for review filed by HLI and affirmed the

assailed Presidential Agrarian Reform Council (PARC) Resolution No. 2005-32-01 dated De-cember 22, 2005 and PARC Resolution No. 2006-34-01 dated May 3, 2006 with the modifi-cation that the original 6,296 qualified farm-worker-beneficiaries of Hacienda Luisita (FWBs) shall have the option to remain as stockholders of HLI.

In Our July 5, 2011 Decision, We stated

that "HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land distribution to the FWBs." We also ruled that the date of the "taking" is November 21, 1989, when PARC approved HLIs SDP per PARC Resolution No. 89-12-2.

Upon separate motions of the parties for

reconsideration, the Court, by Resolution of November 22, 2011, recalled and set aside the option thus granted to the original FWBs to re-main as stockholders of HLI, while maintaining that all the benefits and homelots received by all the FWBs shall be respected with no obliga-tion to refund or return them. The allegations of HLI:

1. In its Motion for Clarification and Partial Reconsideration, HLI disagrees with the foregoing ruling (July 5, 2011) and con-tends that the "taking" should be reck-oned from finality of the Decision of this Court, or at the very least, the reckoning period may be tacked to January 2, 2006, the date when the Notice of Cov-erage was issued by the DAR pursuant to PARC Resolution No. 2006-34-01 re-calling/revoking the approval of the SDP.

2. HLI contends that since the SDP is a modality

which the agrarian reform law gives the land-owner as alternative to compulsory coverage, then the FWBs cannot be considered as owners and possessors of the agricultural lands of Hacienda Luisita at the time the SDP was approved by PARC. It further claims that the approval of the SDP is not akin to a No-


17

JURISPRUDENCE

tice of Coverage in compulsory coverage situations because stock distribution option and compulsory acquisition are two (2) dif-ferent modalities with independent and sep-arate rules and mechanisms. Concomitant-ly, HLI maintains that the Notice of Cover-age issued on January 2, 2006 may, at the very least, be considered as the date of "taking" as this was the only time that the agricultural lands of Hacienda Luisita were placed under compulsory acquisition in view of its failure to perform certain obligations under the SDP.

The allegation of Mallari, et al:

1. Mallari, et al. are of a similar view. They contend that Tarlac Development Corpo-ration (Tadeco), having as it were major-ity control over HLI, was never deprived of the use and benefit of the agricultural lands of Hacienda Luisita. Upon this premise, Mallari, et al. claim the "date of taking" could not be at the time of the approval of the SDP. For their part, Mal-lari, et al. argue that the date of "taking" for valuation purposes is a factual issue best left to the determination of the trial courts.

The allegations of Alyansa ng mga Manggaga-wa ng Bukid sa Hacienda Luisita (AMBALA):

1. Alleges that HLI should not be paid just compensation altogether. It argues that when the Court of Appeals (CA) dismissed the case the government of then President Ferdinand E. Marcos initially instituted and won against Ta-deco, the CA allegedly imposed as a condition for its dismissal of the action that should the stock distribution pro-gram fail, the lands should be distribut-ed to the FWBs, with Tadeco receiving by way of compensation only the amount of PhP 3,988,000.

2. AMBALA further contends that if HLI

or Tadeco is, at all, entitled to just compensation, the "taking" should be

reckoned as of November 21, 1989, the date when the SDP was approved, and the amount of compensation should be PhP 40,000 per hectare as this was the same value declared in 1989 by Tadeco to ensure that the FWBs will not control the majority stockholdings in HLI. At the other end of the spectrum, AMBALA alleges that HLI should no longer be paid just com-pensation for the agricultural land that will be distributed to the FWBs, since the Manila Regional Trial Court (RTC) already rendered a decision ordering the Cojuangcos to transfer the control of Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the land to small farmers after com-pensating the landowners P3.988 mil-lion. In the event, however, that this Court will rule that HLI is indeed enti-tled to compensation, AMBALA con-tends that it should be pegged at forty thousand pesos (PhP 40,000) per hec-tare, since this was the same value that Tadeco declared in 1989 to make sure that the farmers will not own the majority of its stocks.

ISSUES:

(1) Whether or not the Honora-ble Court erred in ruling that in deter-mining the just compensation, the date of "taking" is November 21, 1989, when PARC approved HLIS SDP [STOCK DISPTRIBUTION PLAN] "in view of the fact that this is the time that the FWBS were considered to own and possess the agricultural lands in Hacienda Luisita.

(2) Whether or not the revocation of the option on the part of the original FWBs to remain as stockholders of HLI was proper.

(3)Whether or not distribution to the qualified FWBs of the proceeds from the sale of the converted land and of the 80.51-hectare Subic-Clark-Tarlac Ex-pressway (SCTEX ) land was proper.


18

JURISPRUDENCE

(4) Whether or not just compensa-tion shall be paid to HLI for the homelots given to the FWBs.

HELD:

1. No. The Court maintain that the date of "taking" is November 21, 1989, the date when PARC approved HLIs SDP per PARC Resolution No. 89-12-2, in view of the fact that this is the time that the FWBs were considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition. Further, any doubt should be resolved in favor of the FWBs.

When the agricultural lands of Hac-

ienda Luisita were transferred by Tadeco to HLI in order to comply with CARP through the stock distribution option scheme, sealed with the imprimatur of PARC under PARC Resolution No. 89-12-2 dated November 21, 1989, Tadeco was consequently dispossessed of the afore-mentioned attributes of ownership. Nota-bly, Tadeco and HLI are two different enti-ties with separate and distinct legal per-sonalities. Ownership by one cannot be considered as ownership by the other.

Corollarily, it is the official act by

the government, that is, the PARCs approval of the SDP, which should be considered as the reckoning point for the "taking" of the agricultural lands of Hacienda Luisita. Although the transfer of ownership over the agricultural lands was made prior to the SDPs approval, it is this Courts consistent view that these lands officially became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP.

Further, if We adhere to HLIs

view that the Notice of Coverage is-sued on January 2, 2006 should, at the very least, be considered as the date of "taking" as this was the only time that the agricultural portion of the hacienda was placed under compulsory acquisi-tion in view of HLIs failure to perform certain obligations under the SDP, this Court would, in effect, be penalizing the qualified FWBs twice for acceding to the adoption of the stock distribution scheme: first, by depriving the qualified FWBs of the agricultural lands that they should have gotten early on were it not for the adoption of the stock distribution scheme of which they only became mi-nority stockholders; and second, by making them pay higher amortizations for the agricultural lands that should have been given to them decades ago at a much lower cost were it not for the landowners initiative of adopting the stock distribution scheme "for free."

By a vote of 8-6, the Court af-firmed its ruling that the date of "taking" in determining just compensation is No-vember 21, 1989 when PARC ap-proved HLIs stock option plan.

As regards the issue of interest on just compensation, We also leave this matter to the DAR and the LBP, subject to review by the RTC acting as a SAC.

2. Yes. On the propriety of the revocation of the option of the FWBs to remain as HLI stockholders, the Court, by unani-mous vote, agreed to reiterate its ruling in its November 22, 2011 Resolution that the option granted to the FWBs stays revoked.

Sec. 4, Art. XIII of the 1987 Constitution pro-

vides: Section 4. The State shall, by law,


19

JURISPRUDENCE

undertake an agrarian reform program founded on the right of farmers and regu-lar farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priori-ties and reasonable retention limits as the Congress may prescribe, taking into ac-count ecological, developmental, or equity considerations, and subject to the pay-ment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.

Based on the above-quoted provi-

sions, the notion of farmers and regular farmworkers having the right to own di-rectly or collectively the lands they till is abundantly clear.

The wording of the provision is un-

equivocal the farmers and regular farmworkers have a right TO OWN DI-RECTLY OR COLLECTIVELY THE LANDS THEY TILL.

The SDP was approved by PARC

even if the qualified FWBs did not and will not have majority stockholdings in HLI, contrary to the obvious policy by the government on agrarian reform. Such an adverse situation for the FWBs will not and should not be permitted to stand. For this reason, We maintain Our ruling that the qualified FWBs will no longer have the option to remain as stockholders of HLI.

A revisit of HLIs Proposal for

Stock Distribution under CARP and the Stock Distribution Option Agreement (SDOA) upon which the proposal was based reveals that the total assets of HLI is PhP 590,554,220, while the value

of the 4,915.7466 hectares is PhP 196,630,000. Consequently, the share of the farmer-beneficiaries in the HLI capital stock is 33.296% (196,630,000 divided by 590,554.220); 118,391,976.85 HLI shares represent 33.296%. Thus, even if all the holders of the 118,391,976.85 HLI shares unanimously vote to remain as HLI stockholders, which is unlikely, con-trol will never be placed in the hands of the farmer-beneficiaries. Control, of course, means the majority of 50% plus at least one share of the common shares and other voting shares. Apply-ing the formula to the HLI stockholdings, the number of shares that will constitute the majority is 295,112,101 shares (590,554,220 divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares needed by the FWBs to acquire control over HLI. Hence, control can NEVER be attained by the FWBs. There is even no assur-ance that 100% of the 118,391,976.85 shares issued to the FWBs will all be voted in favor of staying in HLI, taking into account the previous referendum among the farmers where said shares were not voted unanimously in favor of retaining the SDP. In light of the fore-going consideration, the option to re-main in HLI granted to the individual FWBs will have to be recalled and re-voked.

3. Yes. It cannot be denied that the advert-

ed 500-hectare converted land and the SCTEX lot once formed part of what would have been agrarian-distributable lands, in fine subject to compulsory CARP coverage. And, as stated in our July 5, 2011 Decision, were it not for the approval of the SDP by PARC, these large parcels of land would have been distributed and ownership transferred to the FWBs, subject to payment of just


20

JURISPRUDENCE

compensation, given that, as of 1989, the subject 4,915 hectares of Hacienda Luisita were already covered by CARP. Accordingly, the proceeds realized from the sale and/or disposition thereof should accrue for the benefit of the FWBs, less deductions of the 3% of the proceeds of said transfers that were paid to the FWBs, the taxes and ex-penses relating to the transfer of titles to the transferees, and the expenditures incurred by HLI and Centennary Hold-ings, Inc. for legitimate corporate pur-poses, as prescribed in our November 22, 2011 Resolution.

4. Yes. In the present recourse, HLI also

harps on the fact that since the home-lots given to the FWBs do not form part of the 4,915.75 hectares covered by the SDP, then the value of these homelots should, with the revocation of the SDP, be paid to Tadeco as the landowner.

The Court, by a unanimous vote, re-

solved to maintain its ruling that the FWBs shall retain ownership of the homelots given to them with no obliga-tion to pay for the value of said lots. However, since the SDP was already revoked with finality, the Court directs the government through the DAR to pay HLI the just compensation for said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that the taking of land for use in the agrarian reform program is "subject to the pay-ment of just compensation." Just com-pensation should be paid to HLI instead of Tadeco in view of the Deed of As-signment and Conveyance dated March 22, 1989 executed between Tadeco and HLI, where Tadeco transferred and conveyed to HLI the titles over the lots in question. DAR is ordered to compute the just compensation of the homelots in accordance with existing laws, rules and regulations.


21

JLs Corner

Laws are not masters but

servants, and he rules them

who obeys them.

-Henry Ward Beecher

V o l u m e I V I s s u e N o . 4 A P R I L 2012

22

LCA LINES | Volume IV, Issue No. 4

Documents

Transcript of LCA LINES | Volume IV, Issue No. 4