Category: LATEST SUPREME COURT CASES


DISPOSITIVE:

WHEREFORE, the petition is DENIED for lack of merit. The August 11, 2015 Decision and January 19, 2016 Resolution of the Court of Tax Appeals En Banc in CTA EB No. 1139 are hereby AFFIRMED.

So Ordered.

SUBJECTS/DOCTRINES/DIGEST:

WHAT HAPPENED IN THIS CASE?

BIR ASSESSED YUMEX PHILIPPINES FOR IMPROPERLY ACCUMULATED EARNINGS TAX (IAET). SUPREME COURT SAID THIS IS WRONG BECAUSE BIR DID NOT FIRST ESTABLISH PRIMA FACIE WHY IT DEEMED SUCH EARNINGS AS IMPROPERLY ACCUMULATED. BIR SHOULD EXPRESSLY DESCRIBE ANY OF THE PRIMA FACIE INSTANCES OF IMPROPERLY ACCUMULATED EARNINGS.

The BIR simply assessed respondent for IAET by imposing the ten percent (10%) IAET tax rate on all of the latter’s income from registered activities enjoying ITH without first establishing prima facie why it deemed such income as improperly accumulated. Respondent is clearly not a holding or investment company; and nowhere in the PAN, Details of Discrepancies, or the FLD/F AN did the BIR expressly describe any of the prima facie instances of improperly accumulated earnings and profits.

For its part, respondent was able to prove that it had accumulated its earnings from previous years for a reasonable business purpose. Respondent needed funds for a new project, i.e., the manufacture of Heat Run Oven[1]Controlled Rack, which started commercial operations in June 2007 and was also duly registered with the PEZA. Respondent had to acquire new machinery and equipment as well as a separate exclusive building space for the project. Petitioner did not cross-examine respondent’s witness on this matter or present evidence to refute that respondent’s accumulated income was actually for a reasonable need in its business operations.

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DISPOSITIVE:

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated 01 June 2018 rendered by the Court of Appeals, Division of Five, and Resolution dated 26 February 2019 rendered by the Court of Appeals, Special Division of Five, Special Former Third Division, in CA-G.R. SP No. 150941 are REVERSED and SET ASIDE. Accordingly, the Decision dated 21 October 2016 of Branch 95, Regional Trial Court of Quezon City, as well as all issuances rendered pursuant thereto, are declared NULL and VOID.

The case is hereby REMANDED to Branch 95, Regional Trial Court of Quezon City for further proceedings. The presiding judge of the said court is mandated to issue anew the required summons to petitioner corporation and proceed with the trial of the case with dispatch.

So Ordered.

SUBJECTS/DOCTRINES/DIGEST:

WHAT IS GRAVE ABUSE OF DISCRETION?

Grave abuse of discretion means such capnc10us or whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion must be grave, as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and the abuse must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to having acted without jurisdiction. 105

WHY WAS THERE GRAVE ABUSE OF DISCRETION IN THIS CASE?

THE CASE WAS ONLY FOR SPECIFIC PERFORMANCE FOR PAYMENT OF CGT AND DST AND TURN OVER OF POSSESSION OF SUBJECT PROPERTY. YET THE WRIT OF EXECUTION DIRECTED THE CANCELLATION OF DERIVATIVE TITLES EMANATING FROM TCT NO 185260 AND ISSUANCE OF NEW TITLE IN NAME OF RESPONDENT. ALSO SUMMONS WAS ALLOWED BY PUBLICATION LEADING TO DEFAULT OF PETITIONER.

If only to emphasize the gravity of the abuse of discretion committed, petitioner corporation was stripped of, not only the possession of the subject property, but likewise, title thereto. To reiterate, the writ of execution included the cancellation of its derivative titles emanating from TCT No. 185260 and the issuance of a new title in the name of respondent. This, despite the fact that the case is simply one for specific performance for the payment of CGT and DST and the turn over of possession of the subject property.

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The manifest abuse of discretion exhibited by Judge Bellosillo in allowing the service of summons through publication,. which led to the issuance of judgment of default against petitioner corporation and in expanding the dispositive portion of the Decision dated 16 October 2016 by issuing a writ of execution containing terms neither appearing in said decision nor in the complaint for specific performance, must not be countenanced. Moreso, the wanton disregard of basic procedural requirements led to the deprivation of due process of law on the part of petitioner corporation.

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DISPOSITIVE:

WHEREFORE, the petition is GRANTED. The Decision dated August 16, 2019 and the Resolution dated August 24, 2020 of the Court of Appeals in CA-G.R. CR No. 41782 are hereby REVERSED and SET ASIDE. Accordingly, petitioner Joel David y Mangio is ACQUITTED of the crime charged. The Director of the Bureau of Corrections is ORDERED to: (a) cause the immediate release of petitioner, unless heis being lawfully held in custody for any other reason; and (b) inform the Court of the action taken within five (5) days from receipt of this Decision.

 Let entry of judgment be issued immediately.

So Ordered.

SUBJECTS/DOCTRINES/DIGEST:

IN CASE THERE IS NON-COMPLIANCE WITH THE CHAIN OF CUSTODY PROCEDURE THE PROSECUTOR MUST PROVE THAT THE APPREHENDING OFFICERS EXERTED GENUINE AND SUFFICIENT EFFORTS TO SECURE THE PRESENCE OF THE REQUIRED WITNESSES.

As a general rule, compliance with the chain of custody procedure is strictly enjoined as the same has been regarded “not merely as a procedural technicality but as a matter of substantive law.”28 Nonetheless, anent the witness requirement, non-compliance may be permitted if the prosecution proves that the apprehending officers exerted genuine and sufficient efforts to secure the presence of such witnesses, albeit they eventually failed to appear. While the earnestness of these efforts must be examined on a case-to-case basis, the overarching objective is for the Court to be convinced that the failure to comply was reasonable under the given· circumstances.29 Thus, mere statements of unavailability, absent actual serious attempts to contact the required witnesses, are unacceptable as justified grounds for non[1]compliance. 30 These considerations arise from the fact that police officers are ordinarily given sufficient time – beginning from the moment they have received the information about the activities of the accused until the time of his arrest – to prepare for a buy-bust operation, and consequently, make the necessary arrangements beforehand, knowing fully well that they would have to strictly comply with the chain of custody rule. 31

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IN THIS CASE PO3 FLORES DID NOT OFFER ANY JUSTIFICATION FOR THE EVENTUAL ABSENCE OF A DOJ REPRESENTATIVE.

However, as earlier stated, it is incumbent upon the prosecution to account for these witnesses’ absence by presenting a justifiable reason therefor or, at the very least, by showing thaf genuine and sufficient efforts were exerted by the apprehending officers to secure their presence. Here, while PO3 Flores did attempt to secure all three witnesses, he did not offer any justification for the eventual absence of the DOJ representative, much less any explanation or detail as to the exact efforts exerted to secure their presence. In view of this unjustified deviatio1:1 from the chain of custody rule, the Court is therefore constrained to conclude that the integrity and evidentiary value of the item purportedly seized from David were compromised, which consequently warrants his acquittal.

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