Investment Law Digests

Compilation of Case Digests
In
Investment Law
Submitted by:
Augustus Caesar M. Baares
2009 0014
Submitted to:
Atty. Mary Jude V. Cantorias
1
Table of Contents
Case Title
Page
Garcia vs. Board of Investments,

177 SCRA 374, September 07, 1989
Garcia vs. Board of Investments,

191 SCRA 288, November 09, 1990
Garcia vs. Executive Secretary,

204 SCRA 516, December 02, 1991
Toshiba Information Equipment (Phils.), Inc. vs.

Commissioner of Internal Revenue,
614SCRA 526, March 09, 2010
Phillips Seafood (Philippines) Corporation vs.

Board of Investments,
578 SCRA 113,February 04, 2009
11
Atlas Consolidated Mining and Development Corporation vs.

524 SCRA 73, June 08, 2007
13
Garcia vs. J.G. Summit Petrochemical Corporation,

516 SCRA 493, February 23, 2007
15
National Economic Protectionism Association vs. Ongpin,

171 SCRA 657, April 10, 1989
17
Commissioner of Internal Revenue vs. Petron Corporation,

668 SCRA 735, March 21,2012
19
First Lepanto Ceramics, Inc. vs. Court of Appeals,

231 SCRA 30, March 10, 1994
22

24

237 SCRA 519, October 07, 1994
26
Phillpine Amusement and Gaming Corporation (PAGCOR) vs.

Fontana Development Corporation,
622 SCRA 461, June 29, 2010
28
Commissioner of Internal Revenue vs.

Toshiba Information Equipment (Phils.), Inc.,
466 SCRA 211, August 09, 2005
30
Pilipinas Shell Petroleum Corporation vs.

541 SCRA 316, December 21, 2007
33
John Hay Peoples Alternative Coalition vs. Lim,

414 SCRA 356, October 24, 2003
36
Communication Materials and Design, Inc. vs. Court of Appeals,

260 SCRA 673, August 22, 1996
40
Schmid & Oberly, Inc. vs. RJL Martinez Fishing Corp.,

166 SCRA 493, October 18, 1988
43
Pilipinas Kao, Inc. vs. Court of Appeals,

372 SCRA 548, December 18, 2001
45
MR Holdings, Ltd. vs. Bajar,

380 SCRA 617, April 11, 2002
47
Vinoya vs. National Labor Relations Commission,

324 SCRA 469, February 02, 2000
50
Case Title
Page
Panasonic Communications Imaging Corporation of the Philippines vs.

53
Cargill, Inc. vs. Intra Strata Assurance Corporation,

615 SCRA 304, March 15, 2010
55
Executive Secretary vs. Southwing Heavy Industries, Inc.,

482 SCRA 673, February 20,2006
58
Namuhe vs. Ombudsman,

298 SCRA 298, October 29, 1998
60
Telecommunications and Broadcast Attorneys of the Philippines, Inc.

vs. Commission on Elections,
289 SCRA 337, April 21, 1998
62
Avon Insurance PLC vs. Court of Appeals,

278 SCRA 312, August 29, 1997
65
JG Summit Holdings, Inc. vs. Court of Appeals,

345 SCRA 143, November 20, 2000
67
Columbia Pictures, Inc. vs. Court of Appeals,

261 SCRA 144, August 28, 1996
69
Commissioner of Internal Revenue vs. Seagate Technology (Philippines),

451 SCRA 132, February 11, 2005
72
JG Summit Holdings, Inc. vs. Court of Appeals,

412 SCRA 10, September 24, 2003
74
Indophil Textile Mill Workers Union vs. Calica,

205 SCRA 697, February 03, 1992
76
La Chemise Lacoste, S.A. vs. Fernandez,

129 SCRA 373, May 21, 1984
78
Petron Corporation vs. Commission of Internal Revenue,

626 SCRA 100, July 28, 2010
80
Garcia vs. Board of Investments

177 SCRA 374
September 07, 1989
Facts:
Taiwanese investors in a petrochemical project formed the Bataan Petrochemical
Corporation (BPC) and applied with BOI for registration as a new domestic producer of
petrochemicals. Its application specified Bataan as the plant site. One of the terms and
conditions for registration of the project was the use of "naphtha cracker" and "naphtha"
as feedstock or fuel for its petrochemical plant. The petrochemical plant was to be a
joint venture with PNOC. BPC was issued a certificate of registration on February 24,
1988 by BOI.
However, in February, 1989, A.T. Chong, chairman of USI Far East Corporation, the
major investor in BPC, personally delivered to Trade Secretary Jose Concepcion a letter
dated January 25, 1989 advising him of BPC's desire to amend the original registration
certification of its project by changing the job site from Limay, Bataan, to Batangas. The
reason adduced for the transfer was the insurgency and unstable labor situation, and
the presence in Batangas of a huge liquefied petroleum gas (LPG) depot owned by the
Philippine Shell Corporation.
On May 25, 1989, BOI approved the revision of the registration of BPCs registration of
the petrochemical project on the ground that Bataan was preferred over Batangas as
the site of the petrochemical complex.
Petitioner questioned the BOI act in the Supreme Court through a petition for certiorari.
Issue:
Whether or not the investor has the final say in choosing the location for the business?
Held:
No.
Bataan was the original choice as the plant site of the BOI to which the BPC agreed.
That is why it organized itself into a corporation bearing the name Bataan. There is
available 576 hectares of public land precisely reserved as the petrochemical zone in
Limay, Bataan under P.D. No. 1803. There is no need to buy expensive real estate for
the site unlike in the proposed transfer to Batangas. The site is the result of careful
study long before any covetous interests intruded into the choice. The site is ideal. It is
not unduly constricted and allows for expansion. The respondents have not shown nor
reiterated that the alleged peace and order situation in Bataan or unstable labor
situation warrant a transfer of the plant site to Batangas. Certainly, these were taken
into account when the firm named itself Bataan Petrochemical Corporation. Moreover,
the evidence proves the contrary.
Garcia vs. Board of Investments

191 SCRA 288
November 09, 1990
Facts:
Former
Bataan
Petrochemical
Corporation
(BPC),
now
Luzon
Petrochemical
Corporation, formed by a group of Taiwanese investors, was granted by the BOI its
license to have its plant site for the products naphta cracker and naphta to be based
in Bataan. In February 1989, one year after the BPC began its production in Bataan, the
corporation applied to the BOI to have its plant site transferred from Bataan to
Batangas. Despite vigorous opposition from petitioner Cong. Enrique Garcia and others,
the BOI granted private respondent BPCs application, stating that the investors have
the final choice as to where to have their plant site because they are the ones who risk
capital for the project.
Issue:
Whether or not the BOI resolution is prejudicial to national interest?
Held:
Yes. According to Section 1, Article XII of the constitution, The State shall promote
industrialization and full employment based on sound agricultural development and
agrarian reform, through industries that make full and efficient use of human and natural
resources, and which are competitive in both domestic and foreign markets. However,
the State shall protect Filipino enterprises against unfair foreign competition and trade
practices.
6
Garcia vs. Executive Secretary

204 SCRA 516
December 02, 1991
Facts:
Petitioner and intervenor Senator Vicente Paterno question the constitutionality of RA
7042 on the following grounds:
-
Under Section 5 of the said law, a foreign investor may do business in the
Philippines or invest in a domestic enterprise up to 100% of its capital without
need of prior approval.
Section 7 of the said law assumes that so long as foreign investments are not in
areas covered by the list ( Foreign Investment Negative List in Section 8), such
investments are not detrimental to but are good for the national economy.
Section 9 because if a Philippine national believes that an area of investment

should be included in list C, the burden is on him to show that the criteria
enumerated in said section are met.
Finally, the petitioner claims that the transitory provisions of RA 7042, which allow
practically unlimited entry of foreign investments for three years, subject only to a
supposed Transitory Foreign Investment Negative List, not only completely
deregulates foreign investments but would place Filipino enterprises at a fatal
disadvantage in their own country.
Issue: Whether or not Republic Act No. 7042 is unconstitutional for doing away with
important requirements for doing business in the Philippines?
Held: The constitutional challenge must be rejected for failure to show that there is an
indubitable ground for it, not to say even a necessity to resolve it.
The policy of the courts is to avoid ruling on constitutional questions and to presume
that the acts of the political departments are valid in the absence of a clear and
unmistakable showing to the contrary. To doubt is to sustain. This presumption is based
on the doctrine of separation of powers which enjoins upon each department a
becoming respect for the acts of the other departments. The theory is that as the joint
act of Congress and the President of the Philippines, a law has been carefully studied
and determined to be in accordance with the fundamental law before it was finally
enacted.
In the case at bar, the law is challenged on broad constitutional principles and the
proposition that the Filipino investor is unduly discriminated against in his own land. Due
process is invoked. The provisions on nationalism are cited. Economic dependency is
deplored. In the light, however, of the explanation given by the Solicitor General and of
the
Intervenor in their respective
Comments, we
hold
that the
cause
of
unconstitutionality has not been proved by the petitioner.
Toshiba Information Equipment (Phils.), Inc. vs. Commissioner of Internal

Revenue
614 SCRA 526
March 09, 2010
Facts:
Toshiba is a domestic corporation principally engaged in the business of manufacturing
and exporting of electric machinery, equipment systems, accessories, parts,
components, materials and goods of all kinds, including those relating to office
automation and information technology and all types of computer hardware and
software, such as but not limited to HDD-CD-ROM and personal computer printed
circuit board. It is registered with the Philippine Economic Zone Authority (PEZA) as an
Economic Zone (ECOZONE) export enterprise in the Laguna Technopark, Inc., as
evidenced by Certificate of Registration No. 95-99 dated September 27, 1995. It is also
registered with Regional District Office No. 57 of the Bureau of Internal Revenue (BIR)
in San Pedro, Laguna, as a VAT-taxpayer with Taxpayer Identification No. (TIN) 004739-137.
On, October 16, 2000, upon a motion of Toshiba, the Court of Tax appeals granted a
refund of unutilized input VAT payments for the amount of P1,385,282.08. The
Commissioner of Internal Revenue was therefore ordered to issue a tax certificate for
the same amount representing unutilized input taxes paid by Toshiba on its purchases
of taxable goods and services for the period January 1 to June 30, 1997.
Issue:
Whether or not Toshiba was VAT-registered and its export sales were subject to VAT at
zero percent (0%) rate and is rightfully to be issued a tax credit certificate representing
unutilized VAT payments?
Held:
Yes. Upon the failure of the CIR to timely plead and prove before the CTA the defenses
or objections that Toshiba was VAT-exempt under Section 24 of Republic Act No. 7916,
and that its export sales were VAT-exempt transactions under Section 103(q) of the Tax
Code of 1977, as amended, the CIR is deemed to have waived the same.
The CIR did not argue straight away in his Answer in CTA Case No. 5762 that Toshiba
had no right to the credit/refund of its input VAT payments because the latter was VATexempt and its export sales were VAT-exempt transactions. The Pre-Trial Brief[36] of
the CIR was equally bereft of such allegations or arguments. The CIR passed up the
opportunity to prove the supposed VAT-exemptions of Toshiba and its export sales when
the CIR chose not to present any evidence at all during the trial before the CTA.[37] He
missed another opportunity to present the said issues before the CTA when he waived
the submission of a Memorandum. The CIR had waited until the CTA already rendered
its Decision dated October 16, 2000 in CTA Case No. 5762, which granted the claim for
credit/refund of Toshiba, before asserting in his Motion for Reconsideration that Toshiba
was VAT-exempt and its export sales were VAT-exempt transactions.
More importantly, the arguments of the CIR that Toshiba was VAT-exempt and the
latters export sales were VAT-exempt transactions are inconsistent with the explicit
admissions of the CIR in the Joint Stipulation of Facts and Issues (Joint Stipulation) that
Toshiba was a registered VAT entity and that it was subject to zero percent (0%) VAT on
its export sales.
10
Phillips Seafood (Philippines) Corporation vs. Board of Investments

578 SCRA 113
February 04, 2009
Facts:
Petitioner Phillips Seafood (Philippines) Corporation is a domestic corporation engaged
in the export of processed crabmeat and other seafood products. Petitioner was
incorporated on 20 October 1992 and registered under its previous corporate name of
Phillips Seafood Masbate, Inc.
On 08 January 1993, petitioner registered with respondent Bureau of Investments (BOI)
as an existing and expansion producer of soft shell crabs and other seafood products,
on a non-pioneer status under Certificate of Registration No. EP 93-219. Petitioners
plant was situated in Pia, Masbate, while its administrative office was then located
in Cebu City before
it
was
subsequently
relocated
to
Calong-Calong,
Airport
Subdivision, Bacolod City.

Petitioner was granted an Income Tax Holiday (ITH) for six (6) years beginning July
1993 to July 1999, for locating in a less-developed area in accordance with Article 40 of
Executive Order (E.O.) No. 226, otherwise known as The Omnibus Investments Code of
1987.
Petitioner was able to acquire the operations of a subsidiary, the Phillips Seafood
Philippines, Inc. and requested BOI for a transfer to another office in Roxas City and to
continue the operations of PSPI while still enjoying the benefits of the Income Tax
Holiday previously granted to it.
On September 25, 2003, BOI informed the petitioner that the ITH previously granted
would be applicable only to the period from August 13, 1999 to October 21, 1999 or
before petitioners transfer to a not less-developed area
11
Issue:
Whether or not Phillips Seafood Corporation can still demand for the Income Tax
Holidays previously granted despite the fact that its situation has already changed?
Held:
The right to appeal is not a constitutional, natural or inherent right it is a statutory
privilege and of statutory origin and, therefore, available only if granted or provided by
statute. It may be exercised only in the manner prescribed by, and in accordance with,
the provisions of the law. Thus, in determining the appellate procedure governing
administrative agencies exercising quasi-judicial or regulatory functions such as
respondent BOI, a perusal of the legislative enactments creating them is imperative.
E.O. No. 226 contains no provision specifically governing the remedy of a party whose
application for an ITH has been denied by the BOI in the same manner that Articles 7
and 36 thereof allow recourse to the Office of the President in certain instances.
Nevertheless, Article 82 of E.O. No. 22 is the catch-all provision allowing the appeal to
the courts from all other decisions of respondent BOI involving the other provisions of
E.O. No. 226. The intendment of the law is undoubtedly to afford immediate judicial
relief from the decision of respondent BOI, save in cases mentioned under Articles 7
and 36.
Thus, petitioner should have immediately elevated to the Court of Appeals the denial by
respondent BOI of its application for an ITH. From the letter dated 09 October 2003 of
respondent BOI, which informed petitioner that its ITH would be extended only from 13
August 1999 to 21 October 1999, petitioner appealed to the Office of the President, a
recourse that is not sanctioned by either the Rules of Civil Procedure or by the Omnibus
Investments Code of 1987.
12
Atlas Consolidated Mining and Development Corporation vs.

Commissioner of Internal Revenue
524 SCRA 73
June 08, 2007
Facts:
A t l a s C o n so l i d a t e d i s a ze r o - r a te d VAT p e r so n f o r b e i n g a n exporter of
copper concentrates.
On January 1994, Atlas filed its VAT return for the fourth quarter of 1993, showing a total
input tax and an excess VAT credit. Then, on January 1996, Atlas filed for a tax refund
or tax credit certificate with CIR.
However, the CTA denied Atlas claim for refund due to Atlas failure to comply
with the documentary requirements prescribed under Sec. 16 of RR No. 5-87, as
amended by RR No. 3-88.C T A d e n i e d A t l a s M R s t a t i n g t h a t A t l a s
h a s f a i l e d t o substantiate its claim that it has not applied its alleged excess in put
taxes to any of its subsequent quarters output tax liability.
The CA affirmed CTAs ruling.
Issue:
Whether or not Atlas Consolidated Mining is entitled to claim a tax refund?
Held:
When claiming tax refund/credit, the VAT-registered taxpayer m u s t b e a b l e
t o e s t a b l i s h t h a t i t d o e s n o t h a v e r e f u n d a b l e o r creditable input VAT, and
the same has not been applied against its output VAT liabilities information which are
supposed to be reflected in the taxpayers VAT returns.
Thus, an application for tax refund/credit must be accompanied by copies of the
taxpayers VAT return/s for the taxable quarter/s concerned.
13
The formal offer of evidence of Atlas failed to include photocopy o f i t s e x p o r t

d o c u m e n t s , a s r e q u i r e d . W i t h o u t t h e e x p o r t documents, the purchase
invoice/receipts submitted by Atlas as p r o o f o f i t s i n p u t t a x e s c a n n o t b e
v e r i f i e d a s b e i n g d i r e c t l y attributable to the goods so exported.
Atlas claim for credit or refund of input taxes cannot be granted due to its failure to show
convincingly that the same has not been applied to any of its output tax liability as
provided under Sec.106(a) of the Tax Code.
14
Garcia vs. J.G. Summit Petrochemical Corporation

516 SCRA 493
February 23, 2007
Facts:
Petitioner Enrique T. Garcia comes to this Court a third time on a matter involving the
establishment
of
petrochemical
plant
in
the
country.
Petitioner now asks this Court to declare whether Presidential Decree (P.D.) Nos. 949
and 1803, the laws creating a petrochemical complex in Limay, Bataan, prohibit the
establishment of a petrochemical facility outside of it.
Respondent J.G. Summit Petrochemical Corporation was registered by the BOI as a
new domestic producer of polyethylene and polypropylene resins, for which it was
issued on May 24, 1994 BOI Certificate of Registration No. DP-94-001. As a preregistration condition, it was required to submit to the BOI the exact location of its plant
within ninety (90) days from the date of the approval of its application.
On February 4, 1996, the BOI caused the publication of respondent's amended
application for registration in a newspaper of general publication to enable interested
persons to file their sworn objections within one (1) week from said publication. In due
time, petitioner and concerned residents of barangay Simlong, Batangas submitted
separate letters of opposition.
Petitioner objected to the Batangas plant site, citing as basis the 1990 decision of this
Court in G.R. No. 92024, which annulled the Board's approval of the change of plant
site from Bataan to Batangas, and of feedstock from naphtha only to naphtha and/or
liquefied petroleum gas (LPG). He argued that by the said decision, this Court declared
the Bataan petrochemical zone as the only possible site for petrochemical plants as
provided for under P.D. Nos. 949 and 1803. On May 24, 1996, the BOI dismissed
petitioner's opposition, reconfirmed respondent's registration, and approved the
amendment
of
the
latter's
certificate,
with
Batangas
as
the
plant
site.
15
Without moving for a reconsideration of the May 24, 1996 BOI decision, petitioner filed a
petition for review before the CA.
Issue:
Whether or not the petitioner has legal standing?
Held:
There is no merit in the public respondents' [referring to the BOI and Department of
Trade and Industry] contention that the petitioner has `no legal interest' in the matter of
the transfer of the BPC petrochemical plant from the province of Bataan to the province
of Batangas. The provision in the Investments Code requiring publication of the
investor's application for registration in the BOI is implicit recognition that the proposed
investment or new industry is a matter of public concern on which the public has a right
to be heard. And, when the BOI approved BPC's application to establish its
petrochemical plant in Limay, Bataan, the inhabitants of that province, particularly the
affected community in Limay, and the petitioner herein as the duly elected
representative of the Second District of Bataan acquired an interest in the project which
they have a right to protect. Their interest in the establishment of the petrochemical
plant in their midst is actual, real, and vital because it will affect not only their economic
life but even the air they will breathe.
16
National Economic Protectionism Association vs. Ongpin

171 SCRA 657
April 10, 1989
Facts:
After the lifting of martial law in 1981, Marcos issued PD 1789 and some other PDs. The
said PD was issued in order to suspend for one year the requirement that in order for
companies to validly operate in the country it must be compose of at least 60% Filipino.
NEPA assailed the said PD averring that as taxpayers and Filipinos they will be greatly
adversed by such PD. The Sol-Gen commented that NEPA et al have no personality
and standing to sue in the absence of an actual controversy concerning the
enforcement of the PD in question.
Issue:
Whether or not the National Economic Protectionism Association had legal personality
in the case?
Held:
NEPA et al question the constitutionality of Sections 1 and 3 of PD 1892 in relation to
PD 1789, the 1981 Investment Priorities Plan and EO 676, as being violative of the due
process and equal protection clauses of the 1973 Constitution as well as Sections 8 & 9
of Article 14 thereof, and seek to prohibit Ongpin from implementing said laws. Yet, not
even one of the petitioners has been adversely affected by the application of those
provisions. No actual conflict has been alleged wherein the petitioner could validly and
possibly say that the increase in foreign equity participation in non-pioneer areas of
investment from the period of Dec 2, 1983 to Dec 4, 1984 had any direct bearing on
them, such as considerable rise in unemployment, real increase in foreign investment,
unfair competition with Philippine nationals, exploitation of the countrys natural
resources by foreign investors under the decrees. Petitioners advance an abstract,
17
hypothetical issue which is in effect a petition for an advisory opinion from the SC. The
power of courts to declare a law unconstitutional arises only when the interests of
litigants require the use of that judicial authority for their protection against actual
interference, a hypothetical threat being insufficient. Bona fide suit. Judicial power is
limited to the decision of actual cases and controversies. The authority to pass on the
validity of statutes is incidental to the decision of such cases where conflicting claims
under the Constitution and under a legislative act assailed as contrary to the
Constitution are raised. It is legitimate only in the last resort, and as necessity in the
determination of real, earnest, and vital controversy between litigants.
18
Commissioner of Internal Revenue vs. Petron Corporation

668 SCRA 735
March 21, 2012
Facts:
Petron, a Board of Investment (BOI)-registered enterprise, was an assignee of several
Tax Credit Certificates (TCCs) from various BOI-registered enterprises for the taxable
years 1995-1998. Petron subsequently utilized said TCCs to pay its excise taxes
for said taxable years. The TCCs had a Liability Clause which provided:
Both the TRANSFEROR and the TRANSFEREE shall be jointly and severally liable for
any fraudulent act or violation of the pertinent laws, rules and regulations relating to the
transfer of this TAX CREDIT CERTIFICATE.
Sometime in 1999, a post-audit of said TCCs was conducted by the DOF. The TCCs
and the TDMs were cancelled by reason of fraud. The DOF found that said TCCs were
fraudulently obtained by the transferors and subsequently the same was fraudulently
transferred to Petron. Thus, On January 30, 2002, The CIR issued an assessment
against Petron for deficiency excise taxes for the taxable years1995 to 1998 based on
the ground that the TCCs utilized by petitioner in its payment of excise taxes have been
cancelled by the DOF for having been fraudulently issued and transferred.
Subsequently, Petron filed a protest letter regarding said assessment.
In 2002, the CIR served a Warrant of Distraint and/or Levy on petitioner to enforce
payment of the tax deficiencies. Construing the Warrant of Distraint and/or Levy as the
final adverse decision of the BIR on its protest of the assessment, Petron filed a petition
before the CTA contending that the assignment/transfer of the TCCs to petitioner by the
TCC holders was submitted to, examined and approved by the concerned government
agencies which processed the assignment in accordance with law and revenue
regulations and that the assessment and collection of alleged excise tax deficiencies
19
sought to be collected by the BIR against petitioner through the January 30, 2002 letter
are already barred by prescription.
The CTA Second Division ruled for the CIR. Petron appealed the decision to the CTA En
banc which, in turn, reversed the CTA 2 nd Division decision, based on the following on
the ground that Petron was considered an innocent transferee of the subject TCCs and
may not be prejudiced by a re-assessment of excise tax liabilities that respondent has
already settled, when due, with the use of theTCCs.
Issue:
Whether or not Petron is still liable to pay its excise taxes?
Held:
No. There is no showing that Petron has participated in any fraudulent act to evade the
payment of excise taxes.
RR 5-2000 prescribes the regulations governing the manner of issuance of TCCs and
the conditions for their use, revalidation and transfer. Under the said regulation, a TCC
may be used by the grantee or its assignee in the payment of its direct internal revenue
tax liability. It may be transferred in favor of an assignee subject to the following
conditions: 1) the TCC transfer must be with prior approval of the Commissioner or the
duly authorized representative; 2) the transfer of a TCC should be limited to one transfer
only; and 3) the transferee shall strictly use the TCC for the payment of the assignees
direct internal revenue tax liability and shall not be convertible to cash. A TCC is valid
only for 10 years subject to the following rules: (1) it must be utilized within five (5) years
from the date of issue; and (2) it must be revalidated thereafter or be otherwise
considered invalid.
20
The processing of a TCC is entrusted to a specialized agency called the One-StopShop Inter-Agency Tax Credit and Duty Drawback Center to expedite the processing
and approval of tax credits and duty drawbacks.
A TCC may be assigned through a Deed of Assignment, which the assignee submits to
the Center for its approval. Upon approval of the deed, the Center will issue a DOF Tax
Debit Memo (DOF-TDM), which will be utilized by the assignee to pay the latters tax
liabilities for a specified period. Upon surrender of the TCC and the DOF-TDM, the
corresponding Authority to Accept Payment of Excise Taxes (ATAPET) will be issued by
the BIR Collection Program Division and will be submitted to the issuing office of the
BIR for acceptance by the Assistant Commissioner of Collection Service. This act of the
BIR signifies its acceptance of the TCC as payment of the assignees excise taxes.
Thus, it is apparent that a TCC undergoes a stringent process of verification by various
specialized government agencies before it is accepted as payment of an assignees tax
liability. The CIR had no allegation that there was a deviation from the process for the
approval of the TCCs which Petron used as payment to settle its excise tax liabilities for
the years 1995 to 1998.
Petron, in this case, was not proven to have had any participation in or knowledge of the
CIRs allegation of the fraudulent transfer and utilization of the subject TCCs.
Respondents status as a transferee in good faith and for value of these TCCs has been
established and even stipulated upon by petitioner. Respondent was thereby provided
ample protection from the adverse findings subsequently made by the Center. Given the
circumstances, the CIRs invocation of the non-applicability of estoppel in this case is
misplaced.
21
First Lepanto Ceramics, Inc. vs. Court of Appeals

231 SCRA 30
March 10, 1994
Facts:
BOI granted petitioners application to amend its BOI certificate of registration by
changing the scope of its registered product from glazed floor tiles to ceramic tiles.
Oppositor Mariwasa filed a petitioner for review with the CA. CA granted the preliminary
injunction. Petitioner says that the CA has no jurisdiction as it is vested exclusively with
the SC within 30 days from receipt of the decision pursuant to the Omnibus Investments
Code and therefore, Mariwasa has lost its right to appeal. Mariwasa counters that
whatever inconsistencies that the Omnibus Investment Code and the Judiciary
Reorganization Act have been resolved by SC Circular 1-91.
Issue:
Whether Mariwasa correctly filed its appeal with the CA?
Held:
YES. B.P. 129s objective is providing a uniform procedure of appeal from decisions of
all quasi-judicial agencies for the benefit of the bench and the bar. The obvious lack of
deliberation in the drafting of our laws could perhaps explain the deviation of some of
our laws from the goal of uniform procedure which B.P. 129 sought to promote.
Although a circular is not strictly a statute or law, it has, however, the force and effect of
law according to settled jurisprudence
The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91
because the former grants a substantive right which is prohibited under the Constitution.
These simply deal with procedural aspects which this Court has the power to regulate
by virtue of its constitutional rule-making powers. Circular 1-91 simply transferred the
22
venue of appeals from decisions of this agency to respondent Court of Appeals and
provided a different period of appeal, i.e., fifteen (15) days from notice. It did not make
an incursion into the substantive right to appeal.
23

253 SCRA 552
February 09, 1996
Facts:
Petitioner assailed the conflicting provisions of B.P. 129, EO 226 (Art. 82) and a circular,
1-91 issued by the Supreme Court which deals with the jurisdiction of courts for appeal
of cases decided by quasi-judicial agencies such as the Board of Investments (BOI).
BOI granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI
certificate of registration by changing the scope of its registered product from "glazed
floor tiles" to "ceramic tiles." Oppositor Mariwasa filed a motion for reconsideration of
the said BOI decision while oppositor Fil-Hispano Ceramics, Inc. did not move to
reconsider the same nor appeal therefrom. Soon rebuffed in its bid for reconsideration,
Mariwasa filed a petition for review with CA.
CA temporarily restrained the BOI from implementing its decision. The TRO lapsed by
its own terms twenty (20) days after its issuance, without respondent court issuing any
preliminary injunction.
Petitioner filed a motion to dismiss and to lift the restraining order contending that CA
does not have jurisdiction over the BOI case, since the same is exclusively vested with
the Supreme Court pursuant to Article 82 of the Omnibus Investments Code of 1987.
Petitioner argued that the Judiciary Reorganization Act of 1980 or B.P. 129 and Circular
1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a Final
Order or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot be
the basis of Mariwasa's appeal to respondent court because the procedure for appeal
laid down therein runs contrary to Article 82 of E.O. 226, which provides that appeals
from decisions or orders of the BOI shall be filed directly with the Supreme Court.
24
While Mariwasa maintains that whatever inconsistency there may have been between
B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal, has already
been resolved by Circular 1-91 of the Supreme Court, which was promulgated on
February 27, 1991 or four (4) years after E.O. 226 was enacted.
Issue:
Whether or not the Court of Appeals has jurisdiction over the case?
Held:
YES. Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as
the manner and method of enforcing the right to appeal from decisions of the BOI are
concerned. Appeals from decisions of the BOI, which by statute was previously allowed
to be filed directly with the Supreme Court, should now be brought to the Court of
Appeals.
25

237 SCRA 519
October 07, 1994
Facts:
This is a MR of the previous case. Petitioner's contention is that Circular No. 1-91
cannot be deemed to have superseded art. 82 of the Omnibus Investments Code of
1987 (E.O. No. 226) because the Code, which President Aquino promulgated in the
exercise of legislative authority, is in the nature of a substantive act of Congress
defining the jurisdiction of courts pursuant to Art. VIII, 2 of the Constitution.
Issue:
Whether Mariwasa correctly filed its appeal with the CA?
Held:
YES (as in previous case). Art. 78 of the Omnibus Investment Code on Judicial Relief
was thereafter amended by B.P. Blg. 129, 3 by granting in 9 thereof exclusive
appellate jurisdiction to the CA over the decisions and final orders of quasi-judicial
agencies. When the Omnibus Investments Code was promulgated on July 17, 1987, the
right to appeal from the decisions and final orders of the BOI to the Supreme Court was
again granted. By then, however, the present Constitution had taken effect. 4 The
Constitution now provides in Art. VI, 30 that "No law shall be passed increasing the
appellate jurisdiction of the Supreme Court as provided in this Constitution without its
advice and concurrence." This provision is intended to give the Supreme Court a
measure of control over cases placed under its appellate jurisdiction. For the
indiscriminate enactment of legislation enlarging its appellate jurisdiction can
26
unnecessarily burden the Court and thereby undermine its essential function of
expounding the law in its most profound national aspects.
Now, art. 82 of the 1987 Omnibus Investments Code, by providing for direct appeals to
the Supreme Court from the decisions and final orders of the BOI, increases the
appellate jurisdiction of this Court. Since it was enacted without the advice and
concurrence of this Court, this provision never became effective, with the result that it
can never be deemed to have amended BPBlg. 129, 9.
27
Philippine Amusement and Gaming Corporation (PAGCOR)

vs. Fontana Development Corporation
622 SCRA 461
June 29, 2010
Facts:
Philippine Amusement and Gaming Corporation (PAGCOR) is a government owned and
controlled corporation created under Presidential Decree (PD) No. 1869 to enable the
Government to regulate and centralize all games of chance authorized by existing
franchise or permitted by law. Section 10 thereof conferred on PAGCOR a franchise of
twenty-five (25) years or until July 11, 2008, renewable for another twenty-five (25)
years.
On April 3, 1993, then President Fidel V. Ramos issued Executive Order (EO) No. 80.
Under Section 5 thereof, the Clark Special Economic Zone (CSEZ) was given all the
applicable incentives granted to Subic Bay Special Economic Zone (SSEZ). Among
others, the CSEZ shall have all the applicable incentives in the Subic Special Economic
and Free Port Zone under RA 7227 and those applicable incentives granted in the
Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign
Investments Act of 1991 and new investments laws which may hereinafter be enacted.
On December 23, 1999, PAGCOR granted private respondent Fontana Development
Corporation (FDC) (formerly RN Development Corporation) the authority to operate and
maintain a casino inside the CSEZ under a Memorandum of Agreement (MOA)
On October 6, 2008, after a series of dialogues and exchange of position papers,

PAGCOR notified FDC that its [new] standard Authority to Operate shall now govern
and regulate FDCs casino operations in place of the previous MOA. FDC moved for the
reconsideration of the said decision but the same was denied. On November 5, 2008,
28
PAGCOR instructed FDC to remit its franchise fees in accordance with the Authority to
Operate.
Issue:
Whether or not PAGCOR issued the license (MOA) under PD 1869 or under Executive
Order No. (EO) 80, Section 5?
Held:
It is beyond doubt that PAGCOR did not revoke or terminate the MOA based on any of
the grounds enumerated in No. 1 of Title VI, nor did it terminate it based on the period of
effectivity of the MOA specified in Title I and Title II, No. 4 of the MOA. Without explicitly
terminating the MOA, PAGCOR simply informed FDC on July 18, 2008 that it is giving
the latter an extension of the MOA on a month-to-month basis in gross contravention of
the MOA. Worse, PAGCOR informed FDC only on October 6, 2008 that the MOA is
deemed expired on July 11, 2008 without an automatic renewal and is replaced with a
10-year SAO. Clearly it is in breach of the MOAs stipulated effectivity period which is
co-terminus with that of the franchise granted to PAGCOR in accordance with Sec. 10
of PD 1869 including any extension. Hence, PAGCORs disregard of the MOA is without
legal basis and must be nullified. PAGCOR has to respect the December 23, 1999 MOA
it entered into with FDC, especially considering the huge investment poured into the
project by the latter in reliance and pursuant to the MOA in question.
29

Toshiba Information Equipment (Phils.), Inc.
466SCRA 211
August 09, 2005
Facts:
Toshiba was organized and established as a domestic corporation, duly-registered with
the Securities and Exchange Commission on 07 July 1995, [3] with the primary purpose
of engaging in the business of manufacturing and exporting of electrical and mechanical
machinery, equipment, systems, accessories, parts, components, materials and goods
of all kinds, including, without limitation, to those relating to office automation and
information technology, and all types of computer hardware and software, such as HDD,
CD-ROM and personal computer printed circuit boards. [4]
On 27 September 1995, respondent Toshiba also registered with the Philippine
Economic Zone Authority (PEZA) as an ECOZONE Export Enterprise, with principal
office in Laguna Technopark, Bian, Laguna. [5] Finally, on 29 December 1995, it
registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and a
withholding agent.[6]
Respondent Toshiba filed its VAT returns for the first and second quarters of taxable
year 1996, reporting input VAT in the amount of P13,118,542.00[7] and P5,128,761.94,[8]
respectively, or a total of P18,247,303.94. It alleged that the said input VAT was from its
purchases of capital goods and services which remained unutilized since it had not yet
engaged in any business activity or transaction for which it may be liable for any output
VAT.[9] Consequently, on 27 March 1998, respondent Toshiba filed with the One-Stop
Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance
(DOF) applications for tax credit/refund of its unutilized input VAT for 01 January to 31
March 1996 in the amount of P14,176,601.28,[10] and for 01 April to 30 June 1996 in the
amount of P5,161,820.79,[11] for a total of P19,338,422.07. To toll the running of the twoyear prescriptive period for judicially claiming a tax credit/refund, respondent Toshiba,
on 31 March 1998, filed with the CTA a Petition for Review.
30
The CTA then ordered CIR to grant the tax credit/ refund to herein respondent Toshiba.
Petitioner then brought the matter to the Supreme Court.
Issue:
Whether or not TOSHIBA is entitled to the tax credit/ refund of its input VAT on its
purchases of capital goods and services?
Held:
Yes. An ECOZONE enterprise is a VAT-exempt entity. Sales of goods, properties, and
services by persons from the Customs Territory to ECOZONE enterprises shall be
subject to VAT at zero percent (0%).
Since respondent Toshiba is a PEZA-registered enterprise, it is subject to the five
percent (5%) preferential tax rate imposed under Chapter III, Section 24 of Republic Act
No. 7916, otherwise known as The Special Economic Zone Act of 1995, as amended.
According to the said section, [e]xcept for real property taxes on land owned by
developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income
earned by all business enterprises within the ECOZONE shall be paid The five
percent (5%) preferential tax rate imposed on the gross income of a PEZA-registered
enterprise shall be in lieu of all national taxes, including VAT. Thus, petitioner CIR
contends that respondent Toshiba is VAT-exempt by virtue of a special law, Rep. Act No.
7916, as amended.
Indubitably, no output VAT may be passed on to an ECOZONE enterprise since it is a
VAT-exempt entity. The VAT treatment of sales to it, however, varies depending on
whether the supplier from the Customs Territory is VAT-registered or not.
Sales of goods, properties and services by a VAT-registered supplier from the Customs
Territory to an ECOZONE enterprise shall be treated as export sales. If such sales are
31
made by a VAT-registered supplier, they shall be subject to VAT at zero percent (0%). In
zero-rated transactions, the VAT-registered supplier shall not pass on any output VAT to
the ECOZONE enterprise, and at the same time, shall be entitled to claim tax
credit/refund of its input VAT attributable to such sales. Zero-rating of export sales
primarily intends to benefit the exporter (i.e., the supplier from the Customs Territory),
who is directly and legally liable for the VAT, making it internationally competitive by
allowing it to credit/refund the input VAT attributable to its export sales.
Meanwhile, sales to an ECOZONE enterprise made by a non-VAT or unregistered
supplier would only be exempt from VAT and the supplier shall not be able to claim
credit/refund of its input VAT.
Even conceding, however, that respondent Toshiba, as a PEZA-registered enterprise, is
a VAT-exempt entity that could not have engaged in a VAT-taxable business, this Court
still believes, given the particular circumstances of the present case, that it is entitled to
a credit/refund of its input VAT.
32
Pilipinas Shell Petroleum Corporation vs.

541 SCRA 316
December 21, 2007
Facts:
In 1988, BIR sent a collection letter to Petitioner Pilipinas Shell Petroleum Corporation
(PSPC) for alleged deficiency excise tax liabilities of PhP 1,705,028,008.06 for the
taxable years 1992 and 1994 to 1997, inclusive of delinquency surcharges and interest.
As basis for the collection letter, the BIR alleged that PSPC is not a qualified transferee
of the TCCs it acquired from other BOI-registered companies. These alleged excise tax
deficiencies covered by the collection letter were already paid by PSPC with TCCs
acquired through, and issued and duly authorized by the Center, and duly covered by
Tax Debit Memoranda (TDM) of both the Center and BIR, with the latter also issuing the
corresponding Accept Payment for Excise Taxes (APETs).
PSPC protested the collection letter, but it was denied. Because of respondent inaction
on a motion for reconsideration PSPC filed a petition for review before the CTA.
In 1999, the CTA ruled that the use by PSPC of the TCCs was legal and valid, and that
respondents attempt to collect alleged delinquent taxes and penalties from PSPC
without an assessment constitutes denial of due process. Respondent elevated CTA
Decision to the Court of Appeals (CA) through a petition for review.
Despite the pendency of this case, PSPC received assessment letter from respondent
for excise tax deficiencies, surcharges, and interest based on the first batch of cancelled
TCCs and TDM covering PSPCs use of the TCCs. All these cancelled TDM and TCCs
were also part of the subject matter of the now pending before the CA.
PSPC protested the assessment letter, but the protest was denied by the BIR,
constraining it to file another case before the CTA. Subsequently, CTA ruled in favor of
33
PSPC and accordingly cancelled and set aside the assessment issued by the
respondent. Respondent motion for reconsideration of the above decision which was
rejected thus respondent appealed the above decision before the CTA En Banc.
The CTA En Banc ruled in favor of respondent and ordered PSPC to pay the amount of
P570,577,401.61 as deficiency excise tax for the taxable years 1992 and 1994 to 1997,
inclusive of 25% surcharge and 20% interest.
Issue:
Whether or not petitioner is liable for the assessment of deficiency excise tax after the
validly issued TCCs were subsequently cancelled for having been issued fraudulently
Held:
No. Petitioner is not liable for the assessment of deficiency excise tax.
In the instant case, with due application, approval, and acceptance of the payment by
PSPC of the subject TCCs for its then outstanding excise tax liabilities in 1992 and 1994
to 1997, the subject TCCs have been canceled as the money value of the tax credits
these represented have been used up. Therefore, the DOF through the Center may not
now cancel the subject TCCs as these have already been canceled and used up after
their acceptance as payment for PSPCs excise tax liabilities. What has been used up,
debited, and canceled cannot anymore be declared to be void, ineffective, and canceled
anew.
Besides, it is indubitable that with the issuance of the corresponding TDM, not only is
the TCC canceled when fully utilized, but the payment is also final subject only to a
post-audit on computational errors. Under RR 5-2000, a TDM is a certification, duly
issued by the Commissioner or his duly authorized representative, reduced in a BIR
Accountable Form in accordance with the prescribed formalities, acknowledging that the
34
taxpayer named therein has duly paid his internal revenue tax liability in the form of and
through the use of a Tax Credit Certificate, duly issued and existing in accordance with
the provisions of these Regulations. The Tax Debit Memo shall serve as the official
receipt from the BIR evidencing a taxpayers payment or satisfaction of his tax
obligation. The amount shown therein shall be charged against and deducted from the
credit balance of the aforesaid Tax Credit Certificate.
Thus, with the due issuance of TDM by the Center and TDM by the BIR, the payments
made by PSPC with the use of the subject TCCs have been effected and consummated
as the TDMs serve as the official receipts evidencing PSPCs payment or satisfaction of
its tax obligation. Moreover, the BIR not only issued the corresponding TDM, but it also
issued ATAPETs which doubly show the payment of the subject excise taxes of PSPC.
Based on the above discussion, we hold that respondent erroneously and without
factual and legal basis levied the assessment. Consequently, the CTA En Banc erred in
sustaining respondents assessment.
35
John Hay Peoples Alternative Coalition vs. Lim

414 SCRA 356
October 24, 2003
Facts:
Republic Act 7227, entitled "An Act Accellerating the Convetsion of Military Reservations
into other Productive uses, Creating the Bases Conversion and Development Authority
for this Purpose, Providing Funds Therefor and for other purposes," otherwise known as
the "Bases Conversion and Development Act of 1992," was enacted on 13 March 1992.
The law set out the policy of the government to accelerate the sound and balanced
conversion into alternative productive uses of the former military bases under the 1947
Philippines-United States of America Military Bases Agreement, namely, the Clark and
Subic military reservations as well as their extensions including the John Hay Station
(Camp John Hay) in the City of Baguio. RA 7227 created the Bases Conversion and
Development Authority' (BCDA), vesting it with powers pertaining to the multifarious
aspects of carrying out the ultimate objective of utilizing the base areas in accordance
with the declared government policy.
RA 7227 likewise created the Subic Special Economic [and Free Port] Zone (Subic
SEZ) the metes and bounds of which were to be delineated in a proclamation to be
issued by the President of the Philippines; and granted the Subic SEZ incentives
ranging from tax and duty-free importations, exemption of businesses therein from local
and national taxes, to other hall-narks of a liberalized financial and business climate. RA
7227 expressly gave authority to the President to create through executive
proclamation, subject to the concurrence of the local government units directly affected,
other Special Economic Zones (SEZ) in the areas covered respectively by the Clark
military reservation, the Wallace Air Station in San Fernando, La Union, and Camp John
Hay. On 16 August 1993, BCDA entered into a Memorandum of Agreement and Escrow
Agreement with Tuntex (B.V.L) Co., Ltd. (TUNTEX) and Asiaworld Internationale Group,
Inc. (ASIAWORLD), private corporations registered under the laws of the British Virgin
Islands, preparatory to the formation of a joint venture for the development of Poro Point
36
in La Union and Camp John Hay as premier tourist destinations and recreation centers.
4 months later or on 16 December 16, 1993, BCDA, TUNTEX and ASIAWORLD
executed a Joint Venture Agreements whereby they bound themselves to put up a joint
venture company known as the Baguio International Development and Management
Corporation which would lease areas within Camp John Hay and Poro Point for the
purpose of turning such places into principal tourist and recreation spots, as originally
envisioned by the parties under their AZemorandmn of Agreement. The Baguio City
government meanwhile passed a number of resolutions in response to the actions taken
by BCDA as owner and administrator of Camp John Hay. By Resolution of 29
September 1993, the Sangguniang Panlungsod of Baguio City officially asked BCDA to
exclude all the barangays partly or totally located within Camp John Hay from the reach
or coverage of any plan or program for its development.
By a subsequent Resolution dated 19 January 1994, the sanggunian sought from BCDA
an abdication, waiver or quitclaim of its ownership over the home lots being occupied by
residents of 9 barangays surrounding the military reservation. Still by another resolution
passed on 21 February 1994, the sanggunian adopted and submitted to BCDA a 15point concept for the development of Camp John Hay. The sanggunian's vision
expressed, among other things, a kind of development that affords protection to the
environment, the making of a family-oriented type of tourist destination, priority in
employment opportunities for Baguio residents and free access to the base area,
guaranteed participation of the city government in the management and operation of the
camp, exclusion of the previously named nine barangays from the area for
development, and liability for local taxes of businesses to be established within the
camp." BCDA, TUNTEX and ASIAWORLD agreed to some, but rejected or modified the
other proposals of the sanggunian." They stressed the need to declare Camp John Hay
a SEZ as a condition precedent to its full development in accordance with the mandate
of RA 7227. On 11 May 1994, the sanggunian passed a resolution requesting the Mayor
to order the determination of realty taxes which may otherwise be collected from real
properties of Camp John Hay. The resolution was intended to intelligently guide the
sanggunian in determining its position on whether Camp John Hay be declared a SEZ,
37
the sanggunian being of the view that such declaration would exempt the camp's
property and the economic activity therein from local or national taxation. More than a
month later, however, the sanggunian passed Resolution 255, (Series of 1994),"
seeking and supporting, subject to its concurrence, the issuance by then President
Ramos of a presidential proclamation declaring an area of 285.1 hectares of the camp
as a SEZ in accordance with the provisions of RA 7227.
Together with this resolution was submitted a draft of the proposed proclamation for
consideration by the President. On 5 July 1994 then President Ramos issued
Proclamation 420 (series of 1994), "creating and designating a portion of the area
covered by the former Camp John Hay as the John Hay Special Economic Zone
pursuant to Republic Act 7227." The John Hay Peoples Alternative Coalition, et. al. filed
the petition for prohibition, mandamus and declaratory relief with prayer for a temporary
restraining order (TRO) and/or writ of preliminary injunction on 25 April 1995
challenging, in the main, the constitutionality or validity of Proclamation 420 as well as
the legality of the Memorandum of Agreement and Joint Venture Agreement between
the BCDA, and TUNTEX and ASIAWORLD.
Issue:
Whether the petitioners have legal standing in filing the case questioning the validity of
Presidential Proclamation 420?
Held:
It is settled that when questions of constitutional significance are raised, the court can
exercise its power of judicial review only if the following requisites are present: (1) the
existence of an actual and appropriate case; (2) a personal and substantial interest of
the party raising the constitutional question; (3) the exercise of judicial review is pleaded
at the earliest opportunity; and (4) the constitutional question is the lis mota of the case."
38
RA 7227 expressly requires the concurrence of the affected local government units to
the creation of SEZs out of all the base areas in the country.'"
The grant by the law on local government units of the right of concurrence on the bases'
conversion is equivalent to vesting a legal standing on them, for it is in effect a
recognition of the real interests that communities nearby or surrounding a particular
base area have in its utilization. Thus, the interest of petitioners, being inhabitants of
Baguio, in assailing the legality of Proclamation 420, is personal and substantial such
that they have sustained or will sustain direct injury as a result of the government act
being challenged."
Theirs is a material interest, an interest in issue affected by the proclamation and not
merely an interest in the question involved or an incidental interest," for what is at stake
in the enforcement of Proclamation 420 is the very economic and social existence of the
people of Baguio City. Moreover, Petitioners Edilberto T. Claravall and Lilia G. Yaranon
were duly elected councilors of Baguio at the time, engaged in the local governance of
Baguio City and whose duties included deciding for and on behalf of their constituents
the question of whether to concur with the declaration of a portion of the area covered
by Camp John Hay as a SEZ. Certainly then, Claravall and Yaranon, as city officials
who voted against" the sanggunian Resolution No. 255 (Series of 1994) supporting the
issuance of the now challenged Proclamation 420, have legal standing to bring the
present petition.
39
Communication Materials and Design, Inc. vs. Court of Appeals

260 SCRA 673
August 22, 1996
Facts:
Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI) and ASPAC
MULTI-TRADE INC., (ASPAC) are both domestic corporations.. Private Respondents
ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC) are corporations duly
organized and existing under the laws of the State of Alabama, USA. There is no
dispute that ITEC is a foreign corporation not licensed to do business in the Philippines.
ITEC entered into a contract with ASPAC referred to as Representative Agreement.
Pursuant to the contract, ITEC engaged ASPAC as its exclusive representative in the
Philippines for the sale of ITECs products, in consideration of which, ASPAC was paid a
stipulated commission. Through a License Agreement entered into by the same
parties later on, ASPAC was able to incorporate and use the name ITEC in its own
name. Thus , ASPAC Multi-Trade, Inc. became legally and publicly known as ASPACITEC
(Philippines).
One year into the second term of the parties Representative Agreement, ITEC decided
to terminate the same, because petitioner ASPAC allegedly violated its contractual
commitment as stipulated in their agreements. ITEC charges the petitioners and
another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL),
the President of which is likewise petitioner Aguirre, of using knowledge and information
of ITECs products specifications to develop their own line of equipment and product
support, which are similar, if not identical to ITECs own, and offering them to ITECs
former customer.
The complaint was filed with the RTC-Makati by ITEC, INC. Defendants filed a MTD the
complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is
a foreign corporation doing business in the Philippines without the required BOI
authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping
40
which justifies the application against it of the principle of forum non conveniens. The
MTD was denied.
Petitioners elevated the case to the respondent CA on a Petition for Certiorari and
Prohibition under Rule 65 of the Revised ROC. It was dismissed as well. MR denied,
hence this Petition for Review on Certiorari under Rule 45.
Issue:
1. Did the Philippine court acquire jurisdiction over the person of the petitioner
corporation despite allegations of lack of capacity to sue because of non-registration?
2. Can the Philippine court give due course to the suit or dismiss it, on the principle of
forum non convenience?
Held:
1. YES; We are persuaded to conclude that ITEC had been engaged in or doing
business in the Philippines for some time now. This is the inevitable result after a
scrutiny of the different contracts and agreements entered into by ITEC with its various
business contacts in the country. Its arrangements, with these entities indicate
convincingly that ITEC is actively engaging in business in the country.
A foreign corporation doing business in the Philippines may sue in Philippine Courts
although not authorized to do business here against a Philippine citizen or entity who
had contracted with and benefited by said corporation. To put it in another way, a party
is estopped to challenge the personality of a corporation after having acknowledged the
same by entering into a contract with it. And the doctrine of estoppel to deny corporate
existence applies to a foreign as well as to domestic corporations. One who has dealt
with a corporation of foreign origin as a corporate entity is estopped to deny its
corporate existence and capacity.
41
In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin over this commonly
used scheme of defaulting local companies which are being sued by unlicensed foreign
companies not engaged in business in the Philippines to invoke the lack of capacity to
sue of such foreign companies. Obviously, the same ploy is resorted to by ASPAC to
prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge
possibly acquired in violation of fiduciary arrangements between the parties.
2. YES; Petitioners insistence on the dismissal of this action due to the application, or
non application, of the private international law rule of forum non conveniens defies
well-settled rules of fair play. According to petitioner, the Philippine Court has no venue
to apply its discretion whether to give cognizance or not to the present action, because
it has not acquired jurisdiction over the person of the plaintiff in the case, the latter
allegedly having no personality to sue before Philippine Courts. This argument is
misplaced because the court has already acquired jurisdiction over the plaintiff in the
suit, by virtue of his filing the original complaint. And as we have already observed,
petitioner is not at liberty to question plaintiffs standing to sue, having already acceded
to the same by virtue of its entry into the Representative Agreement referred to earlier.
Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts
of the case, whether to give due course to the suit or dismiss it, on the principle of forum
non convenience. Hence, the Philippine Court may refuse to assume jurisdiction in spite
of its having acquired jurisdiction.
Conversely, the court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met:
1) That the Philippine Court is one to which the parties may conveniently resort to;
2) That the Philippine Court is in a position to make an intelligent decision as to the law
and
the
facts;
and,
3) That the Philippine Court has or is likely to have power to enforce its decision.
The aforesaid requirements having been met, and in view of the courts disposition to
give due course to the questioned action, the matter of the present forum not being the
most convenient as a ground for the suits dismissal, deserves scant consideration.
42
Schmid & Oberly, Inc. vs. RJL Martinez Fishing Corp., 166 SCRA 493, October 18,
1988
Facts:
RJL MARTINEZ is a corporation engaged in the business of deep-sea fishing. As RJL
MARTINEZ needed electric generators for some of its boats and SCHMIID sold electric
generators of different brands, negotiations between them for the acquisition thereof
took place. The parties had two separate transactions over "Nagata"-brand generators.
The first transaction was the sale of three (3) generators. In this transaction, it is not
disputed that SCHMID was the vendor of the generators. The company supplied the
generators from its stockroom; it was also SCHMID which invoiced the sale. The
second transaction, which gave rise to the present controversy, involves twelve (12)
"Nagata"-brand generators. Nagata shipped to the Schmid the generators and RJL paid
the amount of the purchase price, through an irrevocable line of credit.
All fifteen (15) generators subject of the two transactions burned out after continuous
use. RJL MARTINEZ informed SCHMID about this development and in turn, SCHMID
brought the matter to the attention of NAGATA CO. The tests revealed that the
generators were overrated. SCHMID replaced the three (3) generators subject of the
first sale with generators of a different brand. However, as to the second sale, 3 were
shipped to Japan and the remaining 9 were not replaced.
And since not all of the generators were replaced or repaired, RJL MARTINEZ formally
demanded that it be refunded the cost of the generators and paid damages. SCHMID in
its reply maintained that it was not the seller of the twelve (12) generators and thus
refused to refund the purchase price therefor. Schmid opposes such liability averring
that it was merely the indentor in the sale between Nagata Co., the exporter and RJL
Martinez, the importer. As mere indentor, it avers that is not liable for the sellers implied
warranty against hidden defects, Schmid not having personally assumed any such
warranty.
Issue:
43
Whether or not the second transaction between the parties was a sale or an indent
transaction?
Held:
The second transaction between the parties was an indent transaction. The Rules and
Regulations to Implement Presidential Decree No. 1789 (the Omnibus Investments
Code) lumps "indentors" together with "commercial brokers" and "commission
merchants".
An indentor is a middleman in the same class as commercial brokers and commission
merchants. A broker is generally defined as one who is engaged, for others, on a
commission, negotiating contracts relative to property with the custody of which he has
no concern; the negotiator between other parties, never acting in his own name but in
the name of those who employed him; he is strictly a middleman and for some purpose
the agent of both parties. There are 3 parties to an indent transaction, (1) buyer, (2)
indentor, and (3) supplier who is usually a non-resident manufacturer residing in the
country where the goods are to be bought. The chief feature of a commercial broker and
a commercial merchant is that in effecting a sale, they are merely intermediaries or
middle-men, and act in a certain sense as the agent of both parties to the transaction.
The admissions of the parties and the facts appearing on record more than suffice to
warrant the conclusion that SCHMID was not a vendor, but was merely an indentor, in
the second transaction.
RJL has failed to prove that SCHMID had given a warranty on the twelve (12)
generators subject of the second transaction. Even assuming that a warranty was given,
there is no way to determine whether there has been a breach thereof, considering that
its nature or terms and conditions have not been shown.
Pilipinas Kao, Inc. vs. Court of Appeals, 372 SCRA 548, December 18, 2001
44
Facts:
Petitioner is engaged in the manufacture for export of methyl esters, refined glycerine
and fatty alcohols. It initially registered with respondent BOI as an Export Producer
pursuant to Republic Act No. 6135, as amended, otherwise known as the Export
Incentive Act Under this registration approved by BOI.
Batas Pambansa Blg. 391, otherwise known as the Investment Policy Act of 1983 was
enacted in 1983, to amend P.D. 1789. The new law provided, among others, for tax
incentives for new and expanding export producer. To avail itself of these tax incentives,
petitioner applied with BOI for registration of its expanded production capacity. BOI
approved petitioner's application and consequently issued in its favor a certificate of
registration as an expanding export producer on a pioneer status to the extent of the
expanded or additional capacity.
As an expanding export producer on a pioneer status, petitioner was entitled to certain
incentives granted under that law. Among such incentives were the "tax credit on net
value earned" provided in Article 48(c) in relation to Article 45(c) of the law and the "tax
credit on net local content of exports" as provided in Article 48(d), thereof. These
provisions are cited in the decision of respondent court in CA-G.R. SP No. 24979
quoted earlier in this decision.
The initial application by petitioner for tax credit incentives for the year 1987 was
approved by BOI substantially as applied for. But those applied for in 1988 and onwards
were drastically reduced by BOI with the adoption and application of a deductible "base
figure" provided in its Tax Credit on NLC and NVE Manual of Operations. The use of the
"base figure" precipitated the present controversy because of the considerable
diminution of what petitioner considered to be the fiscal incentives it deserved under the
law.
Issue:
45
Whether or not BOI's Manual of Operations is valid?
Held:
The absence of publication is a fatal omission that renders the Manual of Operations
void and of no effect.
The Manual of Operations is not just an internal rule affecting only the personnel of BOI.
As implemented by BOI, its effects reach out to petitioner and enterprises similarly
situated to diminish considerably what the law intends to grant by way of incentives.
For the exception to apply, the Manual of Operations must not affect the rights of the
public. But it did in a very substantial way.
Furthermore, as respondent admit, the Manual of Operations was meant to enforce or
implement.
Clearly then, publication of the Manual of Operations was a mandatory requirement for
its effectivity and BOI's failure to comply with the expressed provision of the law and the
teachings in Taada is a fatal omission.
We, therefore, rule that the ''Tax Credit on NLC and NVE Manual of Operations"
(Manual of Operations) of respondent Board of Investment (BOI) has no legal effect
insofar as it adopts as a "base figure" for net value earned (NVE) the "highest attained
production volume" in the period preceding the registration of petitioner's additional or
expanded capacity.
We rule that only the expanded or additional capacity of petitioner registered under B.P.
Blg. 1789, as amended by B.P. Blg. 391, is entitled to the tax credit provided therein,
and not the pre-existing registered capacity.
MR Holdings, Ltd. vs. Bajar, 380 SCRA 617, April 11, 2002
46
Facts:
Under a "Principal Loan Agreement" and "Complementary Loan Agreement," Asian
Development Bank (ADB), a multilateral development finance institution, agreed to
extend to Marcopper Mining Corporation (Marcopper) a loan to finance the latter's
mining project. The principal loan was sourced from ADB's ordinary capital resources,
while the complementary loan was funded by the Bank of Nova Scotia, a participating
finance institution. ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation
which owns 40% of Marcopper, executed a "Support and Standby Credit Agreement"
whereby the latter agreed to provide Marcopper with cash flow support for the payment
of its obligations to ADB. To secure the loan, Marcopper executed in favor of ADB a
"Deed of Real Estate and Chattel Mortgage", covering substantially all of its
(Marcopper's) properties and assets in Marinduque.
It was registered with the Register of Deeds. When Marcopper defaulted in the payment
of its loan obligation, Placer Dome, in fulfillment of its undertaking under the "Support
and Standby Credit Agreement," and presumably to preserve its international credit
standing, agreed to have its subsidiary corporation, MR Holding, Ltd., assumed
Marcopper's obligation to ADB. Consequently, in an "Assignment Agreement" ADB
assigned to MR Holdings all its rights, interests and obligations under the principal and
complementary loan agreements, ("Deed of Real Estate and Chattel Mortgage," and
"Support and Standby Credit Agreement"). Marcopper likewise executed a "Deed of
Assignment" in favor of MR Holdings. Meanwhile, it appeared that Solidbank
Corporation (Solidbank) obtained a Partial Judgment against Marcopper from the RTC,
Branch 26, Manila. The RTC of Manila issued a writ of execution pending appeal
directing Carlos P. Bajar, sheriff, to require Marcopper "to pay the sums of money to
satisfy the Partial Judgment."
Issue:
Whether or not MR Holdings' participation under the "Assignment Agreement" and the
"Deed of Assignment" constitutes doing business.?
47
Held:
MR Holdings was engaged only in isolated acts or transactions. Single or isolated acts,
contracts, or transactions of foreign corporations are not regarded as a doing or carrying
on of business. Typical examples of these are the making of a single contract, sale, sale
with the taking of a note and mortgage in the state to secure payment therefor,
purchase, or note, or the mere commission of a tort. In these instances, there is no
purpose to do any other business within the country. Therefore, MR Holdings needs no
license to sue before Philippine courts for it does an isolated transaction or a cause of
action entirely independent of any business transaction .
Batas Pambansa 68, otherwise known as "The Corporation Code of the Philippines," is
silent as to what constitutes doing" or "transacting" business in the Philippines.
Fortunately, jurisprudence has supplied the deficiency and has held that the term
"implies a continuity of commercial dealings and arrangements, and contemplates, to
that extent, the performance of acts or works or the exercise of some of the functions
normally incident to, and in progressive prosecution of, the purpose and object for which
the corporation was organized." The traditional case law definition has metamorphosed
into a statutory definition, having been adopted with some qualifications in various
pieces of legislation in Philippine jurisdiction, such as Republic Act 7042 (Foreign
Investment Act of 1991), and Republic Act 5455. There are other statutes defining the
term "doing business," and as may be observed, one common denominator among
them all is the concept of "continuity." The expression "doing business" should not be
given such a strict and literal construction as to make it apply to any corporate dealing
whatever. At this early stage and with MR Holdings' acts or transactions limited to the
assignment contracts, it cannot be said that it had performed acts intended to continue
the business for which it was organized. Herein, at this early stage and with MR
Holdings' acts or transactions limited to the assignment contracts, it cannot be said that
it had performed acts intended to continue the business for which it was organized. It
may not be amiss to point out that the purpose or business for which MR Holdings was
48
organized is not discernible in the records. No effort was exerted by the Court of
Appeals to establish the nexus between MR Holdings' business and the acts supposed
to constitute "doing business." Thus, whether the assignment contracts were incidental
to MR Holdings' business or were continuation thereof is beyond determination. The
Court of Appeals' holding that MR Holdings was determined to be "doing business" in
the Philippines is based mainly on conjectures and speculation. In concluding that the
"unmistakable intention" of MR Holdings is to continue Marcopper's business, the Court
of Appeals hangs on the wobbly premise that "there is no other way for petitioner to
recover its huge financial investments which it poured into Marcopper's rehabilitation
without it (petitioner) continuing Marcopper's business in the country." Absent overt acts
of MR Holdings from which we may directly infer its intention to continue Marcopper's
business, the Supreme Court cannot give its concurrence. Significantly, a view
subscribed upon by many authorities is that the mere ownership by a foreign
corporation of a property in a certain state, unaccompanied by its active use in
furtherance of the business for which it was formed, is insufficient in itself to constitute
doing business. Further, long before MR Holdings assumed Marcopper's debt to ADB
and became their assignee under the two assignment contracts, there already existed a
"Support and Standby Credit Agreement" between ADB and Placer Dome whereby the
latter bound itself to provide cash flow support for Marcopper's payment of its
obligations to ADB.
49
Vinoya vs. National Labor Relations Commission,

324 SCRA 469
February 02, 2000
Facts:
Private respondent Regent Food Corporation is a domestic corporation principally
engaged in the manufacture and sale of various food products. Private respondent
Ricky See, on the other hand, is the president of RFC and is being sued in that capacity.
Petitioner Alexander Vinoya, the complainant, worked with RFC as sales representative
until his services were terminated on 25 November 1991.
The parties presented conflicting versions of facts.
Petitioner Alexander Vinoya claims that he applied and was accepted by RFC as sales
representative on 26 May 1990. On the same date, a company identification car was
issued to him by RFC. Petitioner alleges that he reported daily to the office of RFC, in
Pasig City, to take the latters van for the delivery of its products. According to petitioner,
during his employ, he was assigned to various supermarkets and grocery stores where
he booked sales orders and collected payments for RFC.
Private respondent Regent Food Corporation, on the other hand, maintains that no
employer-employee relationship existed between petitioner and itself. It insists that
petitioner is actually an employee of PMCI, allegedly an independent contractor, which
had a Contract of Service with RFC.
When petitioner filed a complaint for illegal dismissal before the Labor Arbiter, PMCI
was initially impleaded as one of the respondents. However, petitioner thereafter
withdrew his charge against PMCI and pursued his claim solely against RFC.
Subsequently, RFC filed a third party complaint against PMCI.
Issue:
50
1. Whether petitioner was an employee of RFC or PMCI.

2. Whether petitioner was lawfully dismissed.
Held:
Given the above standards and the factual milieu of the case, the Court has to agree
with the conclusion of the Labor Arbiter that PMCI is engaged in labor-only contracting.
First of all, PMCI does not have substantial capitalization or investment in the form of
tools, equipment, machineries, work premises, among others, to qualify as an
independent contractor. Second, PMCI did not carry on an independent business nor
did it undertake the performance of its contract according to its own manner and
method, free from the control and supervision of its principal, RFC. Third, PMCI was not
engaged to perform a specific and special job or service, which is one of the strong
indicators that an entity is an independent contractor as explained by the Court in the
cases of Neri and Fuji. As stated in the Contract of Service, the sole undertaking of
PMCI was to provide RFC with a temporary workforce able to carry out whatever
service may be required by it. Lastly, in labor-only contracting, the employees recruited,
supplied or placed by the contractor perform activities which are directly related to the
main business of its principal. In this case, the work of petitioner as sales representative
is directly related to the business of RFC.
Based on the foregoing, PMCI can only be classified as a labor-only contractor and, as
such, cannot be considered as the employer of petitioner.
However, even granting that PMCI is an independent contractor, as RFC adamantly
suggests, still, a finding of the same will not save the day for RFC. A perusal of the
Contract of Service entered into between RFC and PMCI reveals that petitioner is
actually not included in the enumeration of the workers to be assigned to RFC. Even if
we use the "four-fold test" to ascertain whether RFC is the true employer of petitioner
the same result would be achieved
51
Having determined the real employer of petitioner, we now proceed to ascertain the
legality of his dismissal from employment.
As the employer, RFC has the burden of proving that the dismissal of petitioner was for
a cause allowed under the law and that petitioner was afforded procedural due process.
Sad to say, RFC failed to discharge this burden. Indeed, RFC never pointed to any valid
or authorized cause under the Labor Code which allowed it to terminate the services of
petitioner. Its lone allegation that the dismissal was due to the expiration or completion
of contract is not even one of the grounds for termination allowed by law. Neither did
RFC show that petitioner was given ample opportunity to contest the legality of his
dismissal. In fact, no notice of such impending termination was ever given him.
Petitioner was, thus, surprised that he was already terminated from employment without
any inkling as to how and why it came about. Petitioner was definitely denied due
process. Having failed to establish compliance with the requirements on termination of
employment under the Labor Code, the dismissal of petitioner is tainted with illegality.
Panasonic Communications Imaging Corporation of the Philippines vs.

52
612 SCRA 18
February 08, 2010
Facts:
Petitioner
Panasonic
Communications
Imaging
Corporation
of
the Philippines (Panasonic) produces and exports plain paper copiers and their subassemblies, parts, and components. It is registered with the Board of Investments as a
preferred pioneer enterprise under the Omnibus Investments Code of 1987. It is also a
registered value-added tax (VAT) enterprise.
From April 1 to September 30, 1998 and from October 1, 1998 to March 31, 1999,
petitioner Panasonic generated export sales amounting to US$12,819,475.15 and
US$11,859,489.78, respectively, for a total of US$24,678,964.93. Believing that these
export sales were zero-rated for VAT under Section 106(A)(2)(a)(1) of the 1997 National
Internal Revenue Code as amended by Republic Act (R.A.) 8424 (1997 NIRC)
Panasonic paid input VAT of P4,980,254.26 and P4,388,228.14 for the two periods or a
total of P9,368,482.40 attributable to its zero-rated sales.
Claiming that the input VAT it paid remained unutilized or unapplied, on March 12, 1999
and July 20, 1999 petitioner Panasonic filed with the Bureau of Internal Revenue (BIR)
two separate applications for refund or tax credit of what it paid. When the BIR did not
act on the same, Panasonic filed on December 16, 1999 a petition for review with the
CTA, averring
the inaction of the respondent Commissioner of Internal Revenue (CIR)
on
its
applications.
Issue:
53
Whether or not the CTA en banc correctly denied petitioner Panasonics claim for refund
of the VAT it paid as a zero-rated taxpayer on the ground that its sales invoices did not
state on their faces that its sales were zero-rated.
Held:
This Court held that, since the BIR authority to print is not one of the items required to
be indicated on the invoices or receipts, the BIR erred in denying the claim for
refund. Here, however, the ground for denial of petitioner Panasonics claim for tax
refundthe absence of the word zero-rated on its invoicesis one which is
specifically and precisely included in the enumeration provided. Consequently, the BIR
correctly denied Panasonics claim for tax refund.
This Court will not set aside lightly the conclusions reached by the CTA which, by the
very nature of its functions, is dedicated exclusively to the resolution of tax problems
and has accordingly developed an expertise on the subject, unless there has been an
abuse or improvident exercise of authority.[17] Besides, statutes that grant tax
exemptions are construed strictissimi juris against the taxpayer and liberally in favor of
the taxing authority. Tax refunds in relation to the VAT are in the nature of such
exemptions. The general rule is that claimants of tax refunds bear the burden of
proving
the
factual
basis
of
their
claims. Taxes
are
the
lifeblood
of
the
nation. Therefore, statutes that allow exemptions are construed strictly against the
grantee and liberally in favor of the government.
Cargill, Inc. vs. Intra Strata Assurance Corporation

54
615 SCRA 304

March 15, 2010
Facts:
Petitioner Cargill, Inc. (petitioner) is a corporation organized and existing under the laws
of the State of Delaware, United States of America. Petitioner and Northern Mindanao
Corporation (NMC) executed a contract dated 16 August 1989 whereby NMC agreed to
sell to petitioner 20,000 to 24,000 metric tons of molasses, to be delivered from 1
January to 30 June 1990 at the price of $44 per metric ton. The contract provided that
CARGILL was to open a letter of Credit with the BPI. NMC was permitted to draw up
500,000 representing the minimum price of the contract. The contract was amended 3
times (in relation to the amount and the price).But the third amendment required NMC to
put up a performance bond which was intended to guarantee NMCs performance to
deliver the molasses during the prescribed shipment periods. In compliance, INTRA
STRATA issued a performance bond to guarantee NMCs delivery. NMC was only able
to deliver 219551 metric tons out of the agreed 10,500.Thus CARGILL sent demand
letters to INTRA claiming payment under the performance and surety bonds. When
INTRA failed to pay, CARGILL filed a complaint.
CARGILL NMC and INTRA entered into a compromise agreement approvedby the
court, such provided that NMC would pay CARGILL 3 million uponsigning and would
deliver to CARGILL 6,991 metric tons of molasses. However, NMC still failed to comply
with its obligation under the compromise agreement. Hence, trial proceeded against
respondent.
Issue:
55
Whether or not petitioner is doing or transacting business in the Philippines in

contemplation of the law and established jurisprudence?
Whether or not CARGIL, an unlicensed foreign corporation, has legal capacity to sue
before Philippine courts?
Held:
The principal issue in this case is whether petitioner, an unlicensed foreign corporation,
has legal capacity to sue before Philippine courts. Under Article 123of the Corporation
Code, a foreign corporation must first obtain a license and a certificate from the
appropriate government agency before it can transact business in the Philippines.
Where a foreign corporation does business in the Philippines without the proper license,
it cannot maintain any action or proceeding before Philippine courts as provided under
Section 133 of the Corporation Code. However, in the present case such transaction is
an isolated transaction therefore license and a certificate from the appropriate
government agency before it can transact business in the Philippines is not necessary.
We find that the Court of Appeals finding that petitioner was doing business is not
supported by evidence.
Furthermore, a review of the records shows that the trial court was correct in holding
that the advance payment of $500,000 was released to NMC in accordance with the
conditions provided under the "red clause" Letter of Credit from which said amount was
drawn. The Head of the International Operations Department of the Bank of Philippine
Islands testified that the bank would not have paid the beneficiary if the required
documents were not complete. It is a requisite in a documentary credit transaction that
the documents should conform to the terms and conditions of the letter of credit;
otherwise, the bank will not pay. The Head of the International Operations Department
of the Bank of Philippine Islands also testified that they received reimbursement from
the issuing bank for the $500,000 withdrawn by NMC. Thus, respondent had no
56
legitimate reason to refuse payment under the performance and surety bonds when
NMC failed to perform its part under its contract with petitioner.
Executive Secretary vs. Southwing Heavy Industries, Inc.
57
482 SCRA 673

February 20, 2006
Facts:
The undisputed facts show that on December 12, 2002, President Gloria MacapagalArroyo, through Executive Secretary Alberto G. Romulo, issued EO 156, entitled
"Providing for a comprehensive industrial policy and directions for the motor vehicle
development program and its implementing guidelines." The said provision prohibits
the importation of all types of used motor vehicles in the country including the Subic Bay
Freeport, or the Freeport Zone, subject to a few exceptions. Consequently, three
separate actions for declaratory relief were filed by Southwing Heavy Industries Inc.,
Subic Integrated Macro Ventures Corp, and Motor Vehicle Importers
Association
of Subic Bay Freeport Inc.praying that judgment be rendered declaring Article 2,

Section3.1 of the EO 156 unconstitutional and illegal .
Issue:
Whether or not the Private Respondents have the legal standing in questioning the said
law?
Whether or not Article2, Section 3.1 of EO 156 is a valid exercise of thePresidents
quasilegislative power?
Held:
Yes. Petitioners argue that respondents will not be affected by the importation ban
considering that their certificate of registration and tax exemption do not authorize them
to engage in the importation and/or trading of used cars. The established rule that the
constitutionality of a law or administrative issuance can be challenged by one who will
sustain a direct injury as a result of its enforcement has been satisfied in the instant
case.
58
The broad subject of the prohibited importation is all types of used motor
vehicles.Respondents would definitely suffer a direct injury from the implementation of
EO 156 because their certificate of registration and tax exemption authorize them to
trade and/or import new and used motor vehicles and spare parts, except used cars.
Other types of motor vehicles imported and/or traded by respondents and not falling within
the category of used cars would thus be subjected to the ban to the prejudice of their
business. Undoubtedly, respondents have the legal standing to assail the validity of EO 156.2.
Yes but Police power is inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals, and general welfare of society. It is
lodged primarily with the legislature. By virtue of a valid delegation of legislative power,
it may also be exercised by the President and administrative boards, as well as the
lawmaking bodies on all municipal levels, including the barangay.
Such delegation confers upon the President quasi-legislative power which may be
defined as the authority delegated by the law-making body to the administrative body to
adopt rules and regulations intended to carry out the provisions of the law and
implement legislative policy provided that it must comply with the requisites provided by
law.
Said provision is declared VALID insofar as it applies to the Philippine territory outside
the presently fenced-in former Subic Naval Base area and VOID with respect to its
application to the secured fenced-in former Subic Naval Base area.
Namuhe vs. Ombudsman

298 SCRA 298
59
October 29, 1998

Facts:
Petitioners Jimmie F. Tel-Equen, Rolando D. Ramirez and Rudy P. Antonio were
employed at the Mountain Province Engineering District (MPED) of the Department of
Public Works and Highways in Bontoc, Mountain Province. Tel-Equen was the district
engineer, Ramirez the assistant district engineer, and Antonio the chief of the
construction section. On the other hand, Petitioners Romulo H. Mabunga and Romeo
C. Namuhe were the district engineer and construction section chief, respectively, of the
Ifugao Engineering District (IED) in Lagawe, Ifugao.
The petitioners were among the respondents in the Administrative Complaint filed by the
OMB.
In
connection
with the purported public bidding held for the Bailey bridge
components for use in Mainit, Mountain Province, they were charged with dishonesty,
falsification of official documents, grave misconduct, gross neglect of duty, violation of
office rules and regulations and conduct prejudicial to the best interest of the service. As
earlier stated, the OMB dismissed petitioners from the government service in the first
assailed Resolution and denied reconsideration in the second challenged Order.
Hence, these three petitions] were directly filed before this Court under Rule 45 of the
Rules of Court. The Court ordered the consolidation of these cases.
Issue:
Whether or not the Supreme Court has jurisdiction over appeals of administrative
decisions of the OMB?
Held:
60
In light of the recent ruling in Fabian v. Desierto et al. this Court has no jurisdiction over
the present petitions. In the interest of justice, these petitions should be referred and
transferred to the Court of Appeals.
The transfer of the consolidated petitions at bar to the Court of Appeals would not impair
any substantive right of the petitioners, as the matter relates to procedure only. Worth
repeating is the Courts elucidation on the matter in Fabian. Instead of dismissing the
petitions for lack of jurisdiction, we find that referring and transferring these petitions to
the Court of Appeals is more in consonance with justice and due process.
The consolidated cases are hereby referred and transfered for final disposition to the
Court of Appeals, which shall pro hac vice consider them petitions for review under
Rule 43, without prejudice to its requiring the parties to submit such amended or
supplemental pleadings and additional documents or records as it may deem necessary
and proper in the premises.
Telecommunications and Broadcast Attorneys of the Philippines, Inc. vs.

61
Commission on Elections
289 SCRA 337
April 21, 1998
Facts:
Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an
organization of lawyers of radio and television broadcasting companies. They are suing
as citizens, taxpayers, and registered voters. The other petitioner, GMA Network, Inc.,
operates radio and television broadcasting stations throughout the Philippines under a
franchise granted by Congress.
Petitioners challenge the validity of Section 92, B.P. No. 881 which provides:
Comelec Time- The Commission shall procure radio and television time to be known as
the Comelec Time which shall be allocated equally and impartially among
the candidates within the area of coverage of all radio and television stations. For this
purpose, the franchises of all radio broadcasting and television stations are hereby
amended so as to provide radio or television time, free of charge, during the period of
campaign.Petitioner claims that it suffered losses running to several million pesos in
providing COMELEC Time in connection with the 1992 presidential election and 1995
senatorial election and that it stands to suffer even more should it be required to do so
again this year. Petitioners claim that the primary source of revenue of the radio
andtelevision stations is the
sale
of air time
to
advertisers and
to
require
these stations to provide free air time is to authorize unjust taking ofprivate property.
Issue:
Whether or not Section 92 of B.P. No. 881 denies radio and television broadcast
companies the equal protection of the laws?
Whether or not Section 92 of B.P. No. 881 constitutes taking of property without due
process of law and without just compensation?
62
Held:
Petitioners argument is without merit. All broadcasting, whether radio or by
television stations, is licensed by the government. Airwave frequencies have to be
allocated as there are more individuals who want to broadcast that there are
frequencies to assign. Radio and television broadcasting companies, which are given
franchises, do not own the airwaves and frequencies through which they transmit
broadcast signals and images. They are merely given the temporary privilege to use
them. Thus, such exercise of the privilege may reasonably be burdened with the
performance by the grantee of some form of public service. In granting the privilege to
operate broadcast stations and supervising radio and television stations, the state
spends
considerable
public
funds
in
licensing
and
supervising
them.
The argument that the subject law singles out radio and television stations to provide
free air time as against newspapers and magazines which require payment of just
compensation for the print space they may provide is likewise without merit. Regulation
of the broadcast industry requires spending of public funds which it does not do in the
case of print media. To require the broadcast industry to provide free air time for
COMELEC
is
fair
exchange
for
what
the
industry
gets.
As radio and television broadcast stations do not own the airwaves, no private
property is taken by the requirement that they provide air time to the COMELEC.
To affirm the validity of 92 of B.P. Blg. 881 is to hold public broadcasters to their
obligation to see to it that the variety and vigor of public debate on issues in an election
is maintained. For while broadcast media are not mere common carriers but entities
with free speech rights, they are also public trustees charged with the duty of ensuring
that the people have access to the diversity of views on political issues. This right of the
people is paramount to the autonomy of broadcast media. To affirm the validity of 92,
therefore, is likewise to uphold the peoples right to information on matters of public
concern. The use of property bears a social function and is subject to the states duty to
63
intervene for the common good. Broadcast media can find their just and highest reward
in the fact that whatever altruistic service they may render in connection with the holding
of elections is for that common good.
Avon Insurance PLC vs. Court of Appeals

278 SCRA 312
August 29, 1997
64
Facts:
Respondent Yupangco Cotton Mills filed a complaint against several foreign reinsurance
companies (among which are petitioners) to collect their alleged percentage liability
under contract treaties between the foreign insurance companies and the international
insurance broker C.J. Boatright, acting as agent for respondent Worldwide Surety and
Insurance Company.
Yupangco Cotton Mills engaged to secure with Worldwide Security and Insurance Co.
Inc., several of its properties totaling P200 Million. These contracts were covered by
reinsurance treaties between Worldwide Surety and Insurance, and several foreign
reinsurance companies including the petitioners through CJ Boatwright acting as agent
of Worldwide Surety and Insurance.
A Fire then razed the properties insured on December 1969 and May 2, 1981. A Deed
of Assignment made by Worldwide Surety and Insurance acknowledged a remaining
balance still due and assigned to Yupangco.
The reinsurer is questioning also the service of summons through extraterritorial service
under Sect 17 Rule 14 of the Rules of Court nor through the Insurance Commissioner
under Sec 14.
Yupangco also contends that since the reinsurers question the jurisdiction of the court
they are deemed to have submitted to the jurisdiction of the court.
Issue:
Whether or not the international reinsurers are doing business in the Philippines?
Held:
65
No, international reinsurers are not doing business in the Philippines and the
Philippine court has not acquired jurisdiction over them. The reinsurance treaties
between the petitioners and Worldwide Surety and Insurance were made through an
international insurance broker and not through any entity or means remotely connected
with the Philippines.
The purpose of the law in requiring that foreign corporations doing business in the
country be licensed to do so, is to subject the foreign corporations doing business in the
Philippines to the jurisdiction of the courts, otherwise ,a foreign corporation illegally
doing business here because of its refusal or neglect to obtain the required license and
authority to do business may successfully though unfairly plead such neglect or illegal
act so as to avoid service and thereby impugn the jurisdiction of the local courts.
When a defendant voluntarily appears, he is deemed to have submitted himself to the

jurisdiction of the court. This is not, however, always the case. Admittedly, and without
subjecting himself to the courts jurisdiction, the defendant in an action can, by special
appearance object to the courts assumption on the ground of lack of jurisdiction. If he
so wishes to assert this defense, he must do so seasonably by motion for the purpose
of objecting to the jurisdiction of the court, otherwise, he shall be deemed to have
submitted himself to that jurisdiction.
In this instance, however, the petitioners from the time they filed their motions to
dismiss, their submission have been consistently and unfailingly to object to the trial
courts assumption of jurisdiction, anchored on the fact that they are all foreign
corporations not doing business in the Philippines.
JG Summit Holdings, Inc. vs. Court of Appeals

66
345 SCRA 143

November 20, 2000
Facts:
The National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy
Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction, operation, and
management of the Subic National Shipyard, Inc. (SNS), which subsequently became
the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA,
NIDC
and
Kawasaki
would
maintain
shareholding proportion of 60%-40%,
respectively. One of the provisions of the JVA accorded the parties the right of first
refusal should either party sell, assign or transfer its interest in the joint venture.
Pursuant to President Aquinos Proclamation No.5, which established the Committee on
Privatization (COP) and Asset Privatization Trust (APT), and allowed for the disposition
of the governments non-performing assets, the latter allowed Kawasaki Heavy
Industries to choose a company to which it has stockholdings, to top the winning bid of
JG Summit Holdings over PHILSECO. JG Summit protested alleging that such act
would effectively increase Kawasakis interest in PHILSECOa shipyard is a public
utilityand thus violative of the Constitution.
Issue:
Whether or not respondents act is valid?
Held:
No, respondents act is not valid, a shipyard such as PHILSECO being a public utility as
provided by law and which Article XII of the Constitution applies.
67
Notably, paragraph 1.4 of the JVA accorded the parties the right of first refusal under
the same terms. This phrase implies that when either party exercises the right of first
refusal under paragraph 1.4, they can only do so to the extent allowed them by
paragraphs 1.2 and 1.3 of the JVA or under the proportion of 60%-40% of the shares of
stock. Thus, should the NIDC opt to sell its shares of stock to a third party, Kawasaki
could only exercise its right of first refusal to the extent that its total shares of stock
would not exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC,
on the other hand, may purchase even beyond 60% of the total shares. As a
government corporation and necessarily a 100% Filipino-owned corporation, there is
nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the
Constitution clearly limits only foreign capitalization.
It was thus error for the Court of Appeals to conclude that petitioner was estopped from
contesting the validity of the ASBR and the bidding procedure conducted pursuant to it.
It is clear from the provisions of the ASBR itself that the basic rules on fair competition in
public biddings have been disregarded. Although petitioner had the opportunity to
examine the ASBR before it participated in the bidding, it cannot be estopped from
questioning the unconstitutional, illegal and inequitable provisions thereof. Estoppel is
unavailing in this case; otherwise, it would stamp validity to an act that is prohibited by
law or against public policy.
68
Columbia Pictures, Inc. vs. Court of Appeals

261 SCRA 144
August 28, 1996
Facts:
Complainants thru counsel lodged a formal complaint with the National Bureau of
Investigation for violation of PD No. 49, as amended, and sought its assistance in their
anti-film piracy drive. Agents of the NBI and private researchers made discreet
surveillance on various video establishments in Metro Manila including Sunshine Home
Video Inc. (Sunshine for brevity), owned and operated by Danilo A. Pelindario with
address at No. 6 Mayfair Center, Magallanes, Makati, Metro Manila.
NBI Senior Agent Lauro C. Reyes applied for a search warrant with the court a
quo against Sunshine seeking the seizure, among others, of pirated video tapes of
copyrighted films all of which were enumerated in a list attached to the application; and,
television sets, video cassettes and/or laser disc recordings equipment and other
machines and paraphernalia used or intended to be used in the unlawful exhibition,
showing, reproduction, sale, lease or disposition of videogram tapes in the premises
above described.
In the course of the search of the premises indicated in the search warrant, the NBI
Agents found and seized various video tapes of duly copyrighted motion pictures/films
owned or exclusively distributed by private complainants, and machines, equipment,
television sets, paraphernalia, materials, accessories all of which were included in the
receipt for properties accomplished by the raiding team. Copy of the receipt was
furnished and/or tendered to Mr. Danilo A. Pelindario, registered owner-proprietor of
Sunshine Home Video.
69
Issue:
Whether or not the petitioner has legal standing in our courts?
Held:
Petitioner has legal standing in our courts. Based on Article 133 of the Corporation
Code and gauged by such statutory standards, petitioners are not barred from
maintaining the present action. There is no showing that, under our statutory or case
law, petitioners are doing, transacting, engaging in or carrying on business in the
Philippines as would require obtention of a license before they can seek redress from
our courts. No evidence has been offered to show that petitioners have performed any
of the enumerated acts or any other specific act indicative of an intention to conduct or
transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange Commission stating
that its records do not show the registration of petitioner film companies either as
corporations or partnerships or that they have been licensed to transact business in the
Philippines, while undeniably true, is of no consequence to petitioners right to bring
action in the Philippines. Verily, no record of such registration by petitioners can be
expected to be found for, as aforestated, said foreign film corporations do not transact
or do business in the Philippines and, therefore, do not need to be licensed in order to
take recourse to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus
Investments Code lists, among others
(1)
Soliciting orders, purchases (sales) or service contracts. Concrete and
specific solicitations by a foreign firm, or by an agent of such foreign firm, not acting
independently of the foreign firm amounting to negotiations or fixing of the terms and
70
conditions of sales or service contracts, regardless of where the contracts are actually
reduced to writing, shall constitute doing business even if the enterprise has no office or
fixed place of business in the Philippines. The arrangements agreed upon as to manner,
time and terms of delivery of the goods or the transfer of title thereto is immaterial. A
foreign firm which does business through the middlemen acting in their own names,
such as indentors, commercial brokers or commission merchants, shall not be deemed
doing business in the Philippines. But such indentors, commercial brokers or
commission merchants shall be the ones deemed to be doing business in the
Philippines.
(2)
Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an independent status, i.e., it

transacts business in its name and for its own account, and not in the name or for the
account of a principal. Thus, where a foreign firm is represented in the Philippines by a
person or local company which does not act in its name but in the name of the foreign
firm, the latter is doing business in the Philippines.
The fact that petitioners are admittedly copyright owners or owners of exclusive
distribution rights in the Philippines of motion pictures or films does not convert such
ownership into an indicium of doing business which would require them to obtain a
license before they can sue upon a cause of action in local courts.
71

Seagate Technology (Philippines)
451 SCRA 132
February 11, 2005
Facts:
Seagate is a resident foreign corporation duly registered with the Securities and
Exchange Commission to do business in the Philippines, with principal office
address at the new Cebu Township One, Special Economic Zone, Barangay
Cantao-an, Naga, Cebu. It is registered with the Philippine Export Zone Authority
(PEZA) and has been issued PEZA Certificate No. 97-044 pursuant to Presidential
Decree No. 66, as amended, to engage in the manufacture of recording
components primarily used in computers for export. Such registration was made on
6 June 1997. It is also a VAT registered entity. An administrative claim for refund of
VAT input taxes in the amount of PHP 28,369.88 was filed on October 4, 1999. No
final action has been received by Seagate from the CIR on its claim for VAT refund .
Seagate thus elevated the case to the CTA by way of petition for review in order to
toll the running of the two year prescriptive period
Issue:
72
Whether or not Seagate is entitled to the refund or issuance of Tax Credit Certificate?
Held:
Yes, Seagate is entitled to the refund or issuance of Tax Credit Certificate. Special laws
expressly grant preferential tax treatment to business establishments registered and
operating within an ecozone, which by law is considered as a separate customs
territory. As such, respondent is exempt from all internal revenue taxes, including the
VAT, and regulations pertaining thereto. It has opted for the income tax holiday regime,
instead of the 5 percent preferential tax regime. As a matter of law and procedure, its
registration status entitling it to such tax holiday can no longer be questioned. Its sales
transactions intended for export may not be exempt, but like its purchase transactions,
they are zero-rated. No prior application for the effective zero rating of its transactions
is necessary. Being VAT-registered and having satisfactorily complied with all the
requisites for claiming a tax refund of or credit for the input VAT paid on capital goods
purchased, respondent is entitled to such VAT refund or credit.
73
JG Summit Holdings, Inc. vs. Court of Appeals

412 SCRA 10
September 24, 2003
Facts:
The National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy
Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction, operation, and
management of the Subic National Shipyard, Inc. (SNS), which subsequently became
the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA,
NIDC
and
Kawasaki
would
maintain
shareholding proportion of 60%-40%,
respectively. One of the provisions of the JVA accorded the parties the right of first
refusal should either party sell, assign or transfer its interest in the joint venture.
Pursuant to President Aquinos Proclamation No.5, which established the Committee on
Privatization (COP) and Asset Privatization Trust (APT), and allowed for the disposition
of the governments non-performing assets, the latter allowed Kawasaki Heavy
Industries to choose a company to which it has stockholdings, to top the winning bid of
JG Summit Holdings over PHILSECO. JG Summit protested alleging that such act
would effectively increase Kawasakis interest in PHILSECOa shipyard is a public
utilityand thus violative of the Constitution.
74
Issue:
Whether a shipyard is a public utility whose capitalization must be sixty percent (60%)
owned by Filipinos
Held:
A shipyard has been considered a public utility merely by legislative declaration.
Absent this declaration, there is no more reason why it should continuously be regarded
as such. The fact that the legislature did not clearly and unambiguously express its
intention to include shipyards in the list of public utilities indicates that that it did not
intend to do so. Thus, a shipyard reverts back to its status as non-public utility prior to
the enactment of the Public Service Law.
This interpretation is in accord with the uniform interpretation placed upon it by the
Board of Investments (BOI), which was entrusted by the legislature with the preparation
of annual Investment Priorities Plan (IPPs). The BOI has consistently classified
shipyards as part of the manufacturing sector and not of the public utilities sector. The
enactment of Batas Pambansa Blg. 391 did not alter the treatment of the BOI on
shipyards. It has been, as at present, classified as part of the manufacturing and not of
the public utilities sector.
Furthermore, of the 441 Ship Building and Ship Repair (SBSR) entities registered with
the MARINA, none appears to have an existing franchise. If we continue to hold that a
shipyard is a public utility, it is a necessary consequence that all these entities should
have obtained a franchise as was the rule prior to the enactment of P.D. No. 666. But
MARINA remains without authority, pursuant to P.D. No. 474 to issue franchises for the
operation of shipyards
75
Indophil Textile Mill Workers Union vs. Calica

205 SCRA 697
February 03, 1992
Facts:
Petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent Indophil
Textile Mills, Inc. executed a collective bargaining agreement. Indophil Acrylic
Manufacturing Corporation was formed and registered with the Securities and
Exchange Commission. Subsequently, Acrylic applied for registration with the Board of
Investments for incentives under the 1987 Omnibus Investments Code. The application
was approved on a preferred non-pioneer status.
Acrylic became operational and hired workers according to its own criteria and
standards. Sometime in July, 1989, the workers of Acrylic unionized and a duly certified
collective bargaining agreement was executed. In 1990 or a year after the workers of
Acrylic have been unionized and a CBA executed, the petitioner union claimed that the
plant facilities built and set up by Acrylic should be considered as an extension or
expansion of the facilities of private respondent Company pursuant to Section 1(c),
Article I of the CBA.
76
The petitioner's contention was opposed by private respondent which submits that it is a
juridical entity separate and distinct from Acrylic.
Issue:
Whether or not Indophil Acrylic is a separate and distinct entity from respondent
company for purposes of union representation?
Whether or not the operations in Indophil Acrylic Corporation are an extension or
expansion of private respondent Company?
Held:
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic,
alleging that the creation of the corporation is a devise to evade the application of the
CBA between petitioner Union and private respondent Company. While we do not
discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the
relief sought. The fact that the businesses of private respondent and Acrylic are related,
that some of the employees of the private respondent are the same persons manning
and providing for auxiliary services to the units of Acrylic, and that the physical plants,
offices and facilities are situated in the same compound, it is our considered opinion that
these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.
Hence, the Acrylic not being an extension or expansion of private respondent, the rankand-file employees working at Acrylic should not be recognized as part of, and/or within
the scope of the petitioner, as the bargaining representative of private respondent.
77
La Chemise Lacoste, S.A. vs. Fernandez

129 SCRA 373
May 21, 1984
Facts:
The petitioner is a foreign corporation, organized and existing under the laws of France
and not doing business in the Philippines, It is undeniable from the records that it is the
actual owner of the abovementioned trademarks used on clothing and other goods
specifically sporting apparels sold in many parts of the world and which have been
marketed in the Philippines since 1964, The main basis of the private respondent's case
is its claim of alleged prior registration.
Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg. No.
SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE
LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts,
sportswear and other garment products of the company. Two years later, it applied for
the registration of the same trademark under the Principal Register.
78
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights,
title, and interest in the trademark "CHEMISE LACOSTE & DEVICE"
The petitioner filed its application for registration of the trademark "Crocodile Device"
(Application Serial No. 43242) and "Lacoste" (Application Serial No. 43241).
The petitioner filed with the National Bureau of Investigation (NBI) a letter-complaint
alleging therein the acts of unfair competition being committed by Hemandas and
requesting their assistance in his apprehension and prosecution. The NBI conducted an
investigation and subsequently filed with the respondent court two applications for the
issuance of search warrants which would authorize the search of the premises used
and occupied by the Lacoste Sports Center and Games and Garments both owned and
operated by Hemandas.
Issue:
Whether or not La Chemise Lacoste has capacity to sue?
Held:
Yes, as early as 1927, this Court was, and it still is, of the view that a foreign corporation
not doing business in the Philippines needs no license to sue before Philippine courts
for infringement of trademark and unfair competition. Thus, in Western Equipment and
Supply Co. v. Reyes (51 Phil. 115), this Court held that a foreign corporation which has
never done any business in the Philippines and which is unlicensed and unregistered to
do business here, but is widely and favorably known in the Philippines through the use
therein of its products bearing its corporate and trade name, has a legal right to
maintain an action in the Philippines to restrain the residents and inhabitants thereof
from organizing a corporation therein bearing the same name as the foreign
corporation, when it appears that they have personal knowledge of the existence of
such a foreign corporation, and it is apparent that the purpose of the proposed domestic
corporation is to deal and trade in the same goods as those of the foreign corporation.
79
Petron Corporation vs. Commission of Internal Revenue

626 SCRA 100
July 28, 2010
Facts:
A corporation engaged in the production of petroleum products, Petron is a Board of
Investment (BOI) registered enterprise in accordance with the provisions of the
Omnibus Investment Code, under Certificates of Registration No. 89-1037 and D95136.
Pursuant to Deeds of Assignment executed in its favor, Petron acquired Tax
Credit Certificates (TCCs) from, among others, the following BOI-registered entities.
The assignments of the TCCs were duly approved by the Department of Finance OneStop Shop Inter-Agency Tax Credit and Duty Drawback Center (the Center), a tax credit
window created under Administrative Order No. 226. Issued DOF Tax Debit Memos
(DOF-TDMs) by the Center, Petron, as assignee of said TCCs, utilized the same to pay
its excise tax liabilities for the years 1993 to 1997. Upon Petrons surrender of the DOFTDMs, TCCs and Deeds of Assignment, the corresponding Authorities to Accept
Payment of Excise Taxes (ATAPETs) were further issued by the BIR Collection Program
80
Division. Together with the aforesaid documents, the ATAPETs were further submitted
to the BIR Head Office which issued BIR-TDMs signed by the Assistant Commissioner
of Collection Service, signifying acceptance of the TCCs as payment of Petrons excise
taxes.
Pursuant to its undertaking under the aforesaid Deeds of Assignment, Petron
issued Credit Notes (CNs) in an equivalent amount in favor of its assignors which, by
themselves or thru their own assignees, used the same to avail of fuel products from the
former.[8] On the ground, however, that its use of TCCs issued to said grantees was
invalid for being violative of Rule IX of the Rules and Regulations issued by the BOI to
implement Presidential Decree No. 1789[9] and Batas PambansaBlg. 391.
Issue:
Whether or not the transferability of the TCCs issued in favor of the original grantees is
primarily governed by Article 21 of EO 226?
Held:
The transferability of the TCCs issued in favor of the original grantees is primarily
governed by Article 21 of EO 226 which provides that, the tax credit certificates issued
by the Board (of Investments) pursuant to laws repealed by this Code but without in any
way diminishing the scope of negotiability under their laws of issue are transferable
under such conditions as may be determined by the Board after consultation with the
Department of Finance. In turn, the Implementing Rules and Regulations (IRR) of EO
226 incorporated the October 5, 1982 Memorandum of Agreement (MOA) between the
Ministry of Finance (MOF) and the BOI, which pertinently provides the following
guidelines for the transfer of said TCCs.
As a BOI-registered enterprise under Certificates of Registration No. 89-1037 and D95136, Petron is undoubtedly a qualified transferee of the TCCs originally issued in favor
81
of its assignors. In finding that the assignments of the TCCs in favor of Petron were
likewise fraudulent, however, the CTA En Banc ruled that the aforesaid October 5, 1982
MOA between the MOF and the BOI was amended by the said agencies August 29,
1989 MOA which additionally required that the TCC-assignee should be a domestic
capital equipment supplier or a raw material and/or component supplier of the
transferor. Underscoring the fact that the assignments were approved upon the
representation that the TCCs were to be used as payment for oil products purchased
from Petron, the CTA En Banc found that the grantees Financial Statements indicated
that they could not have consumed fuels at the levels represented to the Center and
that Petron had not, in fact, delivered petroleum products in consideration of the
assignment of the TCCs.
82

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Compilation of Case Digests

Garcia vs. Board of Investments,

Garcia vs. Board of Investments,

Garcia vs. Executive Secretary,

Toshiba Information Equipment (Phils.), Inc. vs.

Phillips Seafood (Philippines) Corporation vs.

Atlas Consolidated Mining and Development Corporation vs.

Garcia vs. J.G. Summit Petrochemical Corporation,

National Economic Protectionism Association vs. Ongpin,

Commissioner of Internal Revenue vs. Petron Corporation,

First Lepanto Ceramics, Inc. vs. Court of Appeals,

First Lepanto Ceramics, Inc. vs. Court of Appeals,

First Lepanto Ceramics, Inc. vs. Court of Appeals,

Phillpine Amusement and Gaming Corporation (PAGCOR) vs.

Commissioner of Internal Revenue vs.

Pilipinas Shell Petroleum Corporation vs.

John Hay Peoples Alternative Coalition vs. Lim,

Communication Materials and Design, Inc. vs. Court of Appeals,

Schmid & Oberly, Inc. vs. RJL Martinez Fishing Corp.,

Pilipinas Kao, Inc. vs. Court of Appeals,

MR Holdings, Ltd. vs. Bajar,

Vinoya vs. National Labor Relations Commission,

Panasonic Communications Imaging Corporation of the Philippines vs.

Cargill, Inc. vs. Intra Strata Assurance Corporation,

Executive Secretary vs. Southwing Heavy Industries, Inc.,

Namuhe vs. Ombudsman,

Telecommunications and Broadcast Attorneys of the Philippines, Inc.

Avon Insurance PLC vs. Court of Appeals,

JG Summit Holdings, Inc. vs. Court of Appeals,

Columbia Pictures, Inc. vs. Court of Appeals,

Commissioner of Internal Revenue vs. Seagate Technology (Philippines),

JG Summit Holdings, Inc. vs. Court of Appeals,

Indophil Textile Mill Workers Union vs. Calica,

La Chemise Lacoste, S.A. vs. Fernandez,

Petron Corporation vs. Commission of Internal Revenue,

Garcia vs. Board of Investments

Garcia vs. Board of Investments

Whether or not the BOI resolution is prejudicial to national interest?

Garcia vs. Executive Secretary

Section 9 because if a Philippine national believes that an area of investment

Intervenor in their respective

unconstitutionality has not been proved by the petitioner.

Toshiba Information Equipment (Phils.), Inc. vs. Commissioner of Internal

Phillips Seafood (Philippines) Corporation vs. Board of Investments

Subdivision, Bacolod City.

Atlas Consolidated Mining and Development Corporation vs.

The formal offer of evidence of Atlas failed to include photocopy o f i t s e x p o r t

Garcia vs. J.G. Summit Petrochemical Corporation

National Economic Protectionism Association vs. Ongpin

Commissioner of Internal Revenue vs. Petron Corporation

First Lepanto Ceramics, Inc. vs. Court of Appeals

First Lepanto Ceramics, Inc. vs. Court of Appeals

First Lepanto Ceramics, Inc. vs. Court of Appeals

Philippine Amusement and Gaming Corporation (PAGCOR)

On October 6, 2008, after a series of dialogues and exchange of position papers,

Commissioner of Internal Revenue vs.

Pilipinas Shell Petroleum Corporation vs.

John Hay Peoples Alternative Coalition vs. Lim

Communication Materials and Design, Inc. vs. Court of Appeals

Whether or not BOI's Manual of Operations is valid?

Vinoya vs. National Labor Relations Commission,

1. Whether petitioner was an employee of RFC or PMCI.

Panasonic Communications Imaging Corporation of the Philippines vs.