Zulueta vs. CA, G.R. No. 107383

FACTS:

Petitioner, the wife of private respondent, entered the clinic of her husband, a doctor of medicine, and in the presence of her mother, a driver and private respondents secretary, forcibly opened the drawers and cabinet in her husband’s clinic and took 157 documents consisting of private correspondence between private respondent and his alleged paramours, greetings cards, cancelled checks, diaries, passport, and photographs. The documents and papers were seized for use in evidence in a case for legal separation and for disqualification from the practice of medicine which petitioner had filed against her husband.

ISSUE:

W/N the documents taken by the wife admissible as evidence in the action for legal separation?

RULING:

No. Indeed the documents and papers in question are inadmissible in evidence. The constitutional injunction declaring the privacy of communication and correspondence [to be] inviolable is no less applicable simply because it is the wife (who thinks herself aggrieved by her husbands infidelity) who is the party against whom the constitutional provision is to be enforced. The only exception to the prohibition in the Constitution is if there is a lawful order [from a] court or when public safety or order requires otherwise, as prescribed by law. Any violation of this provision renders the evidence obtained inadmissible for any purpose in any proceeding.

The intimacies between husband and wife do not justify any one of them in breaking the drawers and cabinets of the other and in ransacking them for any telltale evidence of marital infidelity. A person, by contracting marriage, does not shed his/her integrity or his right to privacy as an individual and the constitutional protection is ever available to him or to her.

The law insures absolute freedom of communication between the spouses by making it privileged. Neither husband nor wife may testify for or against the other without the consent of the affected spouse while the marriage subsists. Neither may be examined without the consent of the other as to any communication received in confidence by one from the other during the marriage, save for specified exceptions.  But one thing is freedom of communication; quite another is a compulsion for each one to share what one knows with the other. And this has nothing to do with the duty of fidelity that each owes to the other.

People vs. Marti, G.R. No. 81561

FACTS:

Appellant was sending four gift-wrapped packages to a friend in Zurich, Switzerland. When asked by the proprietress of the forwarder if the packages could be examined, appellant assured that the packages simply contained books, cigars, and gloves. The four (4) packages were then placed inside a brown corrugated box one by two feet in size (1' x 2'). Styro-foam was placed at the bottom and on top of the packages before the box was sealed with masking tape, thus making the box ready for shipment.

Before delivery of appellant's box to the Bureau of Customs and/or Bureau of Posts, Mr. Job Reyes (proprietor), following standard operating procedure, opened the boxes for final inspection. When he opened appellant's box, a peculiar odor emitted therefrom. His curiousity aroused, he squeezed one of the bundles allegedly containing gloves and felt dried leaves inside. Opening one of the bundles, he pulled out a cellophane wrapper protruding from the opening of one of the gloves. He made an opening on one of the cellophane wrappers and took several grams of the contents thereof.

Job Reyes reported his discovery to the NBI.  It was found out later on that the package contained dried marijuana leaves.

An information was filed against appellant for violation of Dangerous Drugs Act.

Appellant contended that there was violation on his right against unreasonable search and seizure.

ISSUE:

Can accused/appellant validly claim that his constitutional right against unreasonable searches and seizure has been violated? Stated otherwise, may an act of a private individual, allegedly in violation of appellant's constitutional rights, be invoked against the State?

RULING:

We hold in the negative. In the absence of governmental interference, the liberties guaranteed by the Constitution cannot be invoked against the State.

The case at bar assumes a peculiar character since the evidence sought to be excluded was primarily discovered and obtained by a private person, acting in a private capacity and without the intervention and participation of State authorities.

The contraband in the case at bar having come into possession of the Government without the latter transgressing appellant's rights against unreasonable search and seizure, the Court sees no cogent reason why the same should not be admitted against him in the prosecution of the offense charged.

The constitutional proscription against unlawful searches and seizures therefore applies as a restraint directed only against the government and its agencies tasked with the enforcement of the law. Thus, it could only be invoked against the State to whom the restraint against arbitrary and unreasonable exercise of power is imposed.

If the search is made upon the request of law enforcers, a warrant must generally be first secured if it is to pass the test of constitutionality. However, if the search is made at the behest or initiative of the proprietor of a private establishment for its own and private purposes, as in the case at bar, and without the intervention of police authorities, the right against unreasonable search and seizure cannot be invoked for only the act of private individual, not the law enforcers, is involved. In sum, the protection against unreasonable searches and seizures cannot be extended to acts committed by private individuals so as to bring it within the ambit of alleged unlawful intrusion by the government.

LASCONA LAND vs. CIR, G.R. No. 171251

CIR issued an assessment notice against Lascona informing the latter of its alleged deficiency income tax for the year 1993.  Lascona filed a letter protest but was denied by BIR due to failure to appeal with the CTA after the lapse of the 180-day reglementary period provided under Sec. 228 of the NIRC which resulted to the finality of the assessment.

Section 228, when the law provided for the remedy to appeal the inaction of the CIR, it did not intend to limit it to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period. Precisely, when a taxpayer protested an assessment, he naturally expects the CIR to decide either positively or negatively. A taxpayer cannot be prejudiced if he chooses to wait for the final decision of the CIR on the protested assessment. More so, because the law and jurisprudence have always contemplated a scenario where the CIR will decide on the protested assessment.

It must be emphasized, however, that in case of the inaction of the CIR on the protested assessment, while we reiterate − the taxpayer has two options, either: (1) file a petition for review with the CTA within 30 days after the expiration of the 180-day period; or (2) await the final decision of the Commissioner on the disputed assessment and appeal such final decision to the CTA within 30 days after the receipt of a copy of such decision, these options are mutually exclusive and resort to one bars the application of the other.

Accordingly, considering that Lascona opted to await the final decision of the Commissioner on the protested assessment, it then has the right to appeal such final decision to the Court by filing a petition for review within thirty days after receipt of a copy of such decision or ruling, even after the expiration of the 180-day period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments.[17] Thus, Lascona, when it filed an appeal on April 12, 1999 before the CTA, after its receipt of the Letter[18] dated March 3, 1999 on March 12, 1999, the appeal was timely made as it was filed within 30 days after receipt of the copy of the decision.

CIR vs. PRIMETOWN PROPERTY, G.R. No. 162155, Case Digest

On March 11, 1999, Primetown Property Group, Inc., through its vice chair, applied for the refund or credit of income tax respondent paid in 1997 due to the slowdown of the real estate industry where respondent suffered losses. With this, it contended that it was not liable for income taxes. Nevertheless, respondent paid its quarterly corporate income tax and remitted creditable withholding tax from real estate sales to the BIR therefore, respondent was entitled to tax refund or tax credit.

On May 13, 1999, revenue officer required respondent to submit additional documents to support its claim.  Respondent complied but its claim was not acted upon. Thus, on April 14, 2000, it filed a petition for review in the Court of Tax Appeals (CTA).

On December 15, 2000, the CTA dismissed the petition as it was filed beyond the two-year prescriptive period for filing a judicial claim for tax refund or tax credit as it found that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a refund or credit commenced on that date.

Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative Code of 1987 deal with the same subject matter the computation of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of 12 calendar months. Needless to state, under the Administrative Code of 1987, the number of days is irrelevant.

There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the more recent law, governs the computation of legal periods.

We therefore hold that respondent's petition (filed on April 14, 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. Hence, it was filed within the reglementary period.

BDO vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 198756, Case Digest

The term ‘deposit substitutes’ shall mean an alternative form of obtaining funds from the public (the term 'public' means borrowing from twenty (20) or more individual or corporate lenders at any one time) other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower’s own account, for the purpose of relending or purchasing of receivables and other obligations, or financing their own needs or the needs of their agent or dealer.

Under the 1997 National Internal Revenue Code, Congress specifically defined “public” to mean “twenty (20) or more individual or corporate lenders at any one time.”  Hence, the number of lenders is determinative of whether a debt instrument should be considered a deposit substitute and consequently subject to the 20% final withholding tax.

20-lender rule

Petitioners contend that “there [is] only one (1) lender (i.e. RCBC) to whom the BTr issued the Government Bonds.”¹⁶⁹  On the other hand, respondents theorize that the word “any” “indicates that the period contemplated is the entire term of the bond and not merely the point of origination or issuance[,]”¹⁷⁰ such that if the debt instruments “were subsequently sold in secondary markets and so on, in such a way that twenty (20) or more buyers eventually own the instruments, then it becomes indubitable that funds would be obtained from the “public” as defined in Section 22(Y) of the NIRC.”¹⁷¹  Indeed, in the context of the financial market, the words “at any one time” create an ambiguity.

Meaning of “at any one time”

Thus, from the point of view of the financial market, the phrase “at any one time” for purposes of determining the “20 or more lenders” would mean every transaction executed in the primary or secondary market in connection with the purchase or sale of securities.

For example, where the financial assets involved are government securities like bonds, the reckoning of “20 or more lenders/investors” is made at any transaction in connection with the purchase or sale of the Government Bonds.

PhilAm LIFE vs. Secretary of Finance, G.R. No. 210987, Case Digest

Philam Life sold its shares in Philam Care Health Systems to STI Investments Inc., the highest bidder.  After the sale was completed, Philam life applied for a tax clearance and was informed by BIR that there is a need to secure a BIR Ruling due to a potential donor’s tax liability on the sold shares.

ISSUE on DONOR’S TAX:

W/N the sales of shares sold for less than an adequate consideration be subject to donor’s tax?

PETITIONER’S CONTENTION:

The transaction cannot attract donor’s tax liability since there was no donative intent and, ergo, no taxable donation, citing BIR Ruling [DA-(DT-065) 715-09] dated November 27, 2009; that the shares were sold at their actual fair market value and at arm’s length; that as long as the transaction conducted is at arm’s length––such that a bonafide business arrangement of the dealings is done in the ordinary course of business––a sale for less than an adequate consideration is not subject to donor’s tax; and that donor’s tax does not apply to sale of shares sold in an open bidding process.

CIR DENYING THE REQUEST:

Through BIR Ruling No. 015-12. As determined by the Commissioner, the selling price of the shares thus sold was lower than their book value based on the financial statements of Philam Care as of the end of 2008.  The Commissioner held donor’s tax became imposable on the price difference pursuant to Sec. 100 of the National Internal Revenue Code (NIRC):

SEC. 100. Transfer for Less Than Adequate and full Consideration. - Where property, other than real property referred to in Section 24(D), is transferred for less than an adequate and full consideration in money or money’s worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

RULING:

The price difference is subject to donor’s tax.       

Petitioner’s substantive arguments are unavailing. The absence of donative intent, if that be the case, does not exempt the sales of stock transaction from donor’s tax since Sec. 100 of the NIRC categorically states that the amount by which the fair market value of the property exceeded the value of the consideration shall be deemed a gift. Thus, even if there is no actual donation, the difference in price is considered a donation by fiction of law.

Moreover, Sec. 7(c.2.2) of RR 06-08 does not alter Sec. 100 of the NIRC but merely sets the parameters for determining the “fair market value” of a sale of stocks. Such issuance was made pursuant to the Commissioner’s power to interpret tax laws and to promulgate rules and regulations for their implementation.

Lastly, petitioner is mistaken in stating that RMC 25-11, having been issued after the sale, was being applied retroactively in contravention to Sec. 246 of the NIRC.26 Instead, it merely called for the strict application of Sec. 100, which was already in force the moment the NIRC was enacted.

ISSUE on TAX REMEDIES:

The issue that now arises is this––where does one seek immediate recourse from the adverse ruling of the Secretary of Finance in its exercise of its power of review under Sec. 4?

Petitioner essentially questions the CIR’s ruling that Petitioner’s sale of shares is a taxable donation under Sec. 100 of the NIRC. The validity of Sec. 100 of the NIRC, Sec. 7 (C.2.2) and RMC 25-11 is merely questioned incidentally since it was used by the CIR as bases for its unfavourable opinion. Clearly, the Petition involves an issue on the taxability of the transaction rather than a direct attack on the constitutionality of Sec. 100, Sec.7 (c.2.2.) of RR 06-08 and RMC 25-11. Thus, the instant Petition properly pertains to the CTA under Sec. 7 of RA 9282.

As a result of the seemingly conflicting pronouncements, petitioner submits that taxpayers are now at a quandary on what mode of appeal should be taken, to which court or agency it should be filed, and which case law should be followed.

Petitioner’s above submission is specious (erroneous).

CTA, through its power of certiorari, to rule on the validity of a particular administrative rule or regulation so long as it is within its appellate jurisdiction. Hence, it can now rule not only on the propriety of an assessment or tax treatment of a certain transaction, but also on the validity of the revenue regulation or revenue memorandum circular on which the said assessment is based.

Guided by the doctrinal teaching in resolving the case at bar, the fact that the CA petition not only contested the applicability of Sec. 100 of the NIRC over the sales transaction but likewise questioned the validity of Sec. 7(c.2.2) of RR 06-08 and RMC 25-11 does not divest the CTA of its jurisdiction over the controversy, contrary to petitioner’s arguments.

Drilon vs. Lim, G.R. No. 112497, Case Digest

Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law."  His conclusion was that the challenged section gave to the Secretary the power of control and not of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view, a violation not only of Article X, specifically Section 4 thereof,  and of Section 5 on the taxing powers of local governments,  and the policy of local autonomy in general.

Secretary Drilon set aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness, of the tax measure.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision.

An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision.

Mactan Int’l Airport vs. Lapu-lapu City, G.R. No. 181756, Case Digest

Petitioner, Mactan-Cebu International Airport Authority (MCIAA) was created by Congress under Republic Act No. 6958.  Upon its creation, petitioner enjoyed exemption from realty taxes imposed by the National Government or any of its political subdivision.  However, upon the effectivity of the LGC the Supreme Court rendered a decision that the petitioner is no longer exempt from realty estate taxes. 

Respondent City issued to petitioner a Statement of Real Estate Tax assessing the lots comprising the Mactan International Airport which included the airfield, runway, taxi way and the lots on which these are built.  Petitioner contends that these lots, and the lots to which they are built, are utilized solely and exclusively for public purposes and are exempt from real property tax.  Petitioner based its claim for exemption on DOJ Opinion No. 50. 

Respondent issued notices of levy on 18 sets of real properties of petitioners.  Petitioner filed a petition for Prohibition, TRO, and a writ of preliminary injunction with RTC Lapulapu which sought to enjoin respondent City from issuing the warrant of levy against petitioner’s properties from selling them at public auction for delinquency in realty tax obligations.

Petitioner claimed before the RTC that it had discovered that respondent City did not pass any ordinance authorizing the collection of real property tax, a tax for the special education fund (SEF), and a penalty interest for its nonpayment. Petitioner argued that without the corresponding tax ordinances, respondent City could not impose and collect real property tax, an additional tax for the SEF, and penalty interest from petitioner.

RTC granted the writ of preliminary which was later on lifted upon motion by the respondents.

(fait accompli)

RULING OF THE CA:  Court of Appeals held that petitioner’s airport terminal building, airfield, runway, taxiway, and the lots on which they are situated are not exempt from real estate tax reasoning as follows: Under the Local Government Code (LGC for brevity), enacted pursuant to the constitutional mandate of local autonomy, all natural and juridical persons, including government-owned or controlled corporations (GOCCs), instrumentalities and agencies, are no longer exempt from local taxes even if previously granted an exemption. The only exemptions from local taxes are those specifically provided under the Code itself, or those enacted through subsequent legislation.

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us as follows:

1. We DECLARE the airport terminal building, the airfield, runway, taxiway and the lots on which they are situated NOT EXEMPT from the real estate tax imposed by the respondent City of Lapu-Lapu;
2. We DECLARE the imposition and collection of the real estate tax, the additional levy for the Special Education Fund and the penalty interest as VALID and LEGAL. However, pursuant to Section 255 of the Local Government Code, respondent city can only collect an interest of 2% per month on the unpaid tax which total interest shall, in no case, exceed thirty-six (36) months;

We DECLARE the sale in public auction of the aforesaid properties and the eventual forfeiture and purchase of the subject property by the respondent City of Lapu-Lapu as NULL and VOID. However, petitioner MCIAA’s property is encumbered only by a limited lien possessed by the respondent City of Lapu-Lapu in accord with Section 257 of the Local Government Code.

RULING OF THE SUPREME COURT:

MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local Government Code. Such exception applies only if the beneficial use of real property owned by the Republic is given to a taxable entity.

Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion. Properties of public dominion are owned by the State or the Republic.

As properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.

1. Petitioner’s properties that are actually, solely and exclusively used for public purpose, consisting of the airport terminal building, airfield, runway, taxiway and the lots on which they are situated, EXEMPT from real property tax imposed by the City of Lapu-Lapu.
2. VOID all the real property tax assessments, including the additional tax for the special education fund and the penalty interest, as well as the final notices of real property tax delinquencies, issued by the City of Lapu-Lapu on petitioner’s properties, except the assessment covering the portions that petitioner has leased to private parties.
3. NULL and VOID the sale in public auction of 27 of petitioner’s properties and the eventual forfeiture and purchase of the said properties by respondent City of Lapu-Lapu. We likewise declare VOID the corresponding Certificates of Sale of Delinquent Property issued to respondent City of Lapu-Lapu.