BIR ISSUANCES FOR THE MONTH OF MARCH

MARCH 2010 VOLUME III, ISSUE No. 3

L C A L C A L C A
LINES LINES LINES
Inside this issue:
BIR issuances
for the month
of March
2
New Laws for
the month of
March
5
Jurisprudence 6
JLs Corner 12




Said offices must com-
municate with the con-
cerned taxpayers in-
volved in the BTI within
5 working days from the
date of the aforesaid trans-
action, or from the date of
discovery of the transac-
tion.

The Assistant Commis-
sioner of the responsible
office shall send an Ac-
cess to Records letter to
the taxpayer. The sub-
mission of the requested
documents by the tax-
payer within the pre-
scribed deadline must be
strictly enforced and failure
of the taxpayer to comply
should result in the institu-
tion of the available sanc-
tions, including the issu-
ance of subpoena duces
tecum.

For cases of requests for
ruling involving transac-
tions with an amount in
excess of P 1,000,000.00,
the BIR legal office receiv-
ing the copy of the ruling
request shall furnish a
copy to the BIR office hav-
ing jurisdiction over the
taxpayer who filed the re-
quest for a ruling. Said
BIR office shall request
for information on this
transaction using the
Access to Record form,
and submit a report on the
results of the evaluation to
the BIR legal office han-
dling the ruling request not
later than 15 working days
from receipt of the docu-
ments.





REVENUE MEMORAN-
DUM ORDER NO. 13-
2010

REVENUE MEMORANDUM
ORDER NO. 13-2010
amends Revenue Memo-
randum Order No. 6-2010
relative to the policies and
guidelines on stamping of
Income Tax Returns and
the audited Financial
Statements.

Item No. 2, Section III was
amended to read as fol-
lows:

2. The attachments to the
income tax returns shall
also be received in the
same manner as above,
but for the attached finan-
cial statements the same
shall be stamped received
only on the page of the
REVENUE MEMORANDUM
ORDER NO. 11-2010

REVENUE MEMORANDUM
ORDER NO. 11-2010 pre-
scribes the policies and
guidelines on the monitor-
ing, review and determina-
tion of the tax consequenc-
es of Big-Ticket Items.

A transaction is considered
as a Big-Ticket Item (BTI)
based on the following:

a. If the amount involved
exceeds P 200,000,000.
This threshold amount is
considered on a per single
and unrelated event or
transaction basis, and shall
not take into account the
summation or the total of
several unrelated and multi-
ple events or transactions.
b. If it involves a request
for ruling filed with the BIR
where the amount of the
transaction is over P
1,000,000.

The following offices shall
be responsible for the moni-
toring of BTI:

a. Large Taxpayers Ser-
vice (LTS) Regular
b. LTS Excise
c. Enforcement Service

Audit Certificate, the
Balance Sheet and
the Income State-
ment. Accordingly, the
other pages of the finan-
cial statements and its
attachments need not
anymore be stamped
received.




REVENUE MEMORAN-
DUM ORDER NO. 16-
2010


REVENUE MEMORAN-
DUM ORDER NO. 16-
2010 prescribes the pol-
icies and guidelines in
determining the output
Value-Added Tax (VAT)
liabilities of motels and
other similar establish-
ments, except hotels,
resorts and other estab-
lishments which do not
regularly allow short time
(less than 24 hours) stay
in their establishments.

Motels and other simi-
lar establishments shall
submit to the Revenue
District Office (RDO)
where they are regis-
tered a Sworn Declara-
tion within 10 days from
issuance of the Order,
and for each year there-
after on or before Janu-
ary 31 of each year.

The RDO concerned
shall evaluate the in-
BIR ISSUANCES
Page 2 L C A LINES
formation provided in
the Sworn Declaration
and compute the pre-
scribed revenues per
month of an establish-
ment. An Occupancy
Turnover Analysis Report
(OTAR), containing a
summary of the infor-
mation gathered from
the Sworn Declarations
of all establishments in
the District, and their pre-
scribed revenues per
month, shall be prepared
by the RDO using the for-
mat prescribed in the Or-
der. This shall be com-
pleted not later than the
last day of February each
year.

In accomplishing the
OTAR, the following
must be considered:

a. For peak periods cov-
ering the months of
January to February,
April to June, and De-
cember, the minimum
turnover/day of a par-
ticular establishment
shall be set at a con-
stant factor of 2.
b. For lean periods cov-
ering the other remain-
ing months of the year,
the minimum turnover /
day shall be 1.5.

Based on the OTAR for a
motel, the concerned RDO
shall then notify the motel
operator of the proposed
additional output tax to
be paid for each month.
Upon receipt of the noti-
fication from the RDO,
the motel shall have the
option of amending its
VAT Returns for the
months in question, and
pay the corresponding
additional output tax
within ten (10) days
from receipt of the no-
tice. The amended VAT
Return(s) shall take into
account not only the ad-
ditional gross sales from
its room occupancy oper-
ations but shall also cov-
er the gross sales/
receipts from the other
operations mandated
under the National Inter-
nal Revenue Code, as
amended.

The RDO having jurisdic-
tion over a motel that
opts not to amend its
VAT returns shall recom-
mend to the Regional
Director the issuance
of a Mission Order for
the conduct of surveil-
lance activities or other
appropriate enforcement
measures on the con-
cerned motel in order
to determine its true and
correct tax liabilities.
Surveillance activities or
other appropriate en-
forcement measures
may include the post-
ing of BIR personnel
on the premises of the
concerned motel for a
period of not less than
10 days to determine
the volume of business
transactions entered
into by the establish-
ment over a given
period of time. Should
the surveillance activity/
enforcement measure
disclose the understate-
ment of taxable gross
sales by 30% or more
of the motels correct
taxable sales for the
taxable quarter, the
motel shall be consid-
ered subject to the
Oplan Kandado proce-
dures prescribed in
Revenue Memorandum
Order No. 3-2009.
The imposition of sanc-
tions against a motel
under the Oplan Kan-
dado Program, shall not
preclude the BIR from
filing the appropriate
tax evasion charges
under the Run After
Tax Evaders (RATE) Pro-
gram, if evidence so
requires, against the
concerned motel or the
responsible officers of
the establishment.

tion in the taxpayers
books and records and
use any evidence availa-
ble to contravene their
accuracy. In this con-
nection, the provisions
of Revenue Administra-
tive Memorandum Or-
der No. 1-2000 shall be
followed. The BIR shall
rely on Revenue Memo-
randum Circular No. 23-
2000 in making deficien-
cy tax assessments
based on the Best Evi-
dence Obtainable. Fur-
thermore, Section 6 (c)
of the National Internal
Revenue Code allows the
BIR to prescribe the min-
imum taxable base for
which internal revenue
taxes shall be deter-
mined.
The National Investiga-
tion Division (NID) shall
verify the existence of a
taxpayers high value
assets and/or conspicu-
ous spending by ac-
cessing the records of
appropriate government
and private entities, such
as but not limited to the
following:

a. Land Transportation
Office;
b. Bureau of Immigra-
tion ;
c. Airline and shipping
companies ;
d. Maritime Industry Au-
thority;
e. Civil and Aeronautics
Board;
f. Manila Electric Compa-
ny;
g. Land Registration Au-
thority;
h. Registries of Deeds;
i. Resorts, membership
clubs, or similar estab-
lishments;
j. Homeowners associa-
tions;
k. Real estate develop-
ment companies;
l. Credit card companies;
m. Statement of Assets,
Liabilities, and Net
worth and/or Amnesty
Returns filed under Re-
public Act 9480.
The Assistant Commis-
sioner, Enforcement Ser-
vice (ACIR, ES) shall es-
tablish linkages with var-
ious agencies for authori-
ty to secure information/
documents on individual.
He shall also access the
BIRs Integrated Tax
System (ITS) for infor-
mation on the taxpayer
such as:

a. Taxpayers Identifica-
tion Number;
b. Registered address;
c. Registered business/
es;
d. Returns filed;
e. Amount of taxes paid.

The information gathered
from the said entities
shall then be evaluated
vis--vis the data ex-
tracted from the ITS. The
economic use/beneficial
ownership of properties
shall be considered in the
evaluation process.
Thus, all properties
registered under the
name of his/her child
or, whether emancipat-
ed or a minor, or any
other relative shall be
considered as those of
the taxpayer when the
property is not proven
Page 3 VOLUME III, ISSUE No. 3
BIR ISSUANCES
REVENUE MEMORAN-
DUM ORDER NO. 19-
2010


REVENUE MEMORANDUM
ORDER NO. 19-2010
prescribes the policies
and guidelines in the
conduct of investiga-
tions relative to the
Taxpayers Lifestyle
Check System (TLCS) to
properly determine tax
compliance of individu-
als.

An individuals taxable
income may be estab-
lished by using direct
evidence, whenever
available. Indirect meth-
ods can be used, howev-
er, when one or more of
the following conditions,
among others, prevail:

a. The taxpayer main-
tains no books and rec-
ords.
b. The taxpayers books
and records are not
available.
c. The taxpayers books
and records are inade-
quate.
d. The taxpayer with-
holds books and records
from investigation/
verification by authorized
Revenue Officers.

The fact that the tax-
payers books and rec-
ords reflect the figures
on the income and
business tax returns,
however, does not pre-
vent the use of the
indirect method of
proof. The Revenue Of-
ficer can still look beyond
the self-serving declara-
Page 4 L C A LINES

to have been acquired
under any of the
means enumerated un-
der the New Civil Code of
the Philippines and the
tax thereon has been
properly paid, and/or the
child or relative has no
independent means suffi-
cient for the acquisition
of the properties.

If the taxpayers net
worth has increased in
a given year or he
has acquired substan-
tial assets and incurred
substantial spending
disproportionate to his
declared income, and
was verified from the ITS
that he has not filed an
Income Tax Return for
that period, then such
fact constitutes a prima
facie evidence of fraud
and/or substantial un-
der-declaration of taxes
warranting the issuance
of a Letter of Authority
to investigate the tax-
payer.

The ACIR, ES shall coor-
dinate with the Infor-
mation Systems Group
for the development of
an Electronic Data Ware-
house wherein all infor-
mation gathered in the
TLCS shall be stored for
reference and use. The
Special Investigation Di-
vision of the Regional
Offices and other BIR
audit offices shall also
be authorized to imple-
ment the TLCS upon
the approval of the
Commissioner of Internal
Revenue.


REVENUE MEMORAN-
DUM CIRCULAR NO.
12-2010

REVENUE MEMORANDUM
CIRCULAR NO. 12-2010
circularizes the full text
Joint Rules and Regu-
lations Implementing
Articles 60, 61 and
144 of Republic Act (RA)
No. 9520, otherwise
known as the Philippine
Cooperative Code of
2008 in relation to the
National Internal Reve-
nue Code, as amend-
ed, which was signed
by the Department of
Finance, Bureau of Inter-
nal Revenue and Cooper-
ative Development Au-
thority last February 5,
2010.

The following are speci-
fied in the Joint Rules
and Regulations:

a. Tax exemptions of
duly registered Cooper-
atives which transact
business with members
only;
b. Taxability/exemption
of duly registered Coop-
eratives which transact
business with members
and non-members;
c. Taxability of unrelated
income of Cooperatives;
d. Taxability of Coopera-
tives to other internal
revenue taxes;
e. Taxability of mem-
bers/share holders of
Cooperatives;
f. Documents to be at-
tached to the letter-
application for the issu-
ance of Certificate of Tax
Exemption/Ruling;
g. Validity of Certificate
of Tax Exemption/Ruling;
h. Application for renew-
al of Certificate of Tax
Exemption/Ruling;
i. Examination of books
of accounts and other
accounting records of the
Cooperatives;
j. Compromise settle-
ment of any tax liability
unpaid by Cooperatives.

REVENUE MEMORAN-
DUM CIRCULAR NO.
16-2010

REVENUE MEMORANDUM
CIRCULAR NO. 16-2010
requires the taxpayers
to disclose their elec-
tion to avail of the
Optional Standard De-
duction (OSD) for taxa-
ble year 2009.
Taxpayers who are elect-
ing to avail the OSD are
required to check the
appropriate box in the
Income Tax return filed
for the first quarter of
taxable year 2009,
whether such taxpayer is
adopting the calendar or
fiscal year. One the elec-
tion is made, the same
type of deduction must
be consistently applied
for all the succeeding
quarterly returns and in
the final Income Tax re-
turn for the taxable year.
Failure to indicate the
election to avail of the
OSD shall be considered
as having availed of the
itemized deductions
allowed under Section
34 of the Tax Code,
as amended. Any tax-
payer who is required
but fails to file the
Income Tax return for
the first quarter shall
be considered as having
availed of the itemized
deductions option for
taxable year 2009. Pro-
vided, however, that
newly registered taxpay-
ers shall disclose their
election to avail of the
OSD in their initial quar-
terly Income Tax return,
which is required to be
filed for taxable year
2009.

The election to avail of
the OSD or itemized de-
duction, as signified in
the return, shall be irrev-
ocable for taxable year
2009 upon filing thereof.
Any subsequent amend-
ment of such Income
Tax return filed for the
first/initial quarter of
taxable year 2009 shall
not affect the irrevoca-
ble character of the elec-
tion to avail of the OSD
or itemized deduction, as
the case may be.





REVENUE MEMORAN-
DUM CIRCULAR NO.
18-2010

Page 5 L C A LINES

To see the full text of the
law, go to: http://
www.senate.gov.ph/
r epubl i c_act s/r a%
2010021.pdf


REPUBLIC ACT 10026

An Act Granting In-
come Tax Exemption to
Local Water Districts
by amending Section
27 (C) of the NIRC of
1997, as amended, and
adding Sections 289-A
to the Code for the pur-
pose

March 11, 2010


FEATURES :

Grants tax exemption
to local water districts and
condonation of past years
deficiency income tax as-
sessments.
the President subject to
rules and regulations on
the necessity and rele-
vance that may be prom-
ulgated upon enactment
of the law.

Penalizes officers/
employees of the Bureau
of Internal revenue for
unlawful divulgence of
information obtained
from banks and financial
institutions pursuant to
Section 6 (F) of the NIRC
to persons other than
the requesting foreign
tax authority.

Seeks to provide for
sanctions for officers of
banks and financial insti-
tutions for willful refusal
to supply information
and strict obligation of
the requesting foreign
tax authority to maintain
confidentiality of the in-
formation received.

REVENUE MEMORAN-
DUM CIRCULAR NO.
18-2010 issued on
March 8, 2010 clarifies
the coverage and taxa-
bility of amusement
places under Section
125(b) of the National
Internal Revenue Code
(NIRC) of 1997, as
amended.
Amusement places,
which offer the same
pleasurable diversion en-
tertainment and function
(like night and day clubs
and cabarets), now in-
clude videoke bars, kara-
oke bars, karaoke televi-
sions, karaoke boxes and
music lounges. As such,
the proprietors, lessees or
operators of the said
establishments are
deemed also subject to
the 18% amusement tax
under Section 125(b) of
the NIRC of 1997, as
amended, and not to the
12% VAT on gross re-
ceipts.



REPUBLIC ACT 10021

Exchange of Infor-
mation on Tax Mat-
ters Act of 2009

March 5, 2010

FEATURES:

Authorizes the Com-
missioner to inquire into
bank deposits and other
related information held
by financial institutions
to supply information to
a requesting foreign tax
authority pursuant to a
convention or agree-
ment to which the Phi-
lippines is a signatory,
subject to specific re-
quirements as to the
relevance of the tax
information requested.

Allows the request-
ing foreign tax authority
to examine the
income tax returns of
taxpayers upon order of
NEW LAWS FOR THE MONTH OF MARCH
NEW LAWS FOR THE MONTH OF MARCH
Page 6 VOLUME III, ISSUE No. 3

To see the full text of the
law, go to: http://
www. o p . g o v . p h /
d i r e c t i v e s /
RA10026.pdf

REPUBLIC ACT 10028
Expanded Breastfeed-
ing Promotion Act of
2009
March 16, 2010

FEATURES:
All private enterprises
as well as government
agencies, including gov-
ernment-owned and con-
trolled corporations are
required to put up a lacta-
tion stations
A l s o ma n d a t e s
lactation period for
nursing employees who
are granted break inter-
vals in addition to the
regular time-off for meals
to express milk . The
additional period shall not
be less than a total of 40
minutes for every eight-
hour working period.

To see the full text of the
law, go to: http://
www . o p . g o v . p h /
d i r e c t i v e s /
RA10028.pdf

REPUBLIC ACT 10029
Philippine Psychology
Act of 2009
March 16, 2010

FEATURES:
Individuals planning
to offer psychological
services must now pass
a state licensure exami-
nation before they can
practice in the country
h t t p : / /
www. o p . g o v . p h /
d i r e c t i v e s /
RA10029.pdf




It further emphasized
JURISPRUDENCE
PEOPLE OF THE PHIL-
IPPINES
vs.
VICTORIO PAGKA-
LINAWAN

G.R. No. 184805
March 3, 2010

FACTS: A confidential
informant arrived and
reported the illegal activ-
ities of a certain Berto,.
The Police immediately
formed a buy-bust team.
The team recovered from
him two (2) sachets of
shabu . The appropriate
markings were made on
them. Berto was identi-
fied later on as Victorio
Pagkalinawan (Berto).
The white crystalline sub-
stance recovered from
Berto was found positive
to the test for Me-
thylamphetamine Hydro-
chloride, also known as
shabu, a dangerous drug.

ISSUE: Whether or not a
buy-bust operation is a
form of entrapment,
therefore legal.

RULING: A buy-bust
operation is a form of en-
trapment and is therefore
legal.

Instigation is the means
by which the accused is
lured into the commission
of the offense charged in
order to prosecute him.
On the other hand, en-
trapment is the employ-
ment of such ways and
means for the purpose of
trapping or capturing a
lawbreaker.


One form of entrapment
is the buy-bust operation.
It is legal and has been
proved to be an effective
method of apprehending
drug peddlers, provided
due regard to constitu-
tional and legal safe-
guards is undertaken.

In order to determine the
validity of a buy-bust op-
eration, this Court has
consistently applied the
objective test. In Peo-
ple v. Doria, the Court
stressed that in applying
the objective test, the
details of the purported
transaction during the
buy-bust operation must
be clearly and adequate-
ly shown, i.e., the initial
contact between the po-
seur-buyer and the
pusher, the offer to pur-
chase, and the promise
or payment of the con-
sideration until the con-
summation of the sale by
the delivery of the illegal
drug subject of the sale.

in her capacity as PEZA
Director General, advised
Mercado of the termina-
tion of her appointment
effective on the closing
hours of the day. On
even date, the PEZA
Board convened in an
executive session and
passed a Resolution ap-
pointing Wilhelm G.
Ortaliz (Ortaliz), a CESO
eligible, as Deputy Direc-
tor General for Policy and
Planning effective imme-
diately.

Mercado thereupon filed
with the Regional Trial
Court (RTC) of Pasay
City a petition for prohi-
bition, quo warranto and
damages with prelimi-
nary prohibitory /
mandatory injunction
and/or temporary re-
straining order question-
ing the PEZA Board Res-
olution appointing Ortaliz
as Deputy Director Gen-
eral for Policy and Plan-
ning.

ISSUE: Whether or not
the appointment of
Ortaliz is illegal.


RULING: The appoint-
Page 7
L C A LINES
JURISPRUDENCE
what is known as a
decoy solicitation, is not
prohibited by law and
does not render the buy-
bust operation invalid.



PEZA BOARD OF DI-
RECTORS and
LILIA B. DE LIMA
vs.
GLORIA J. MERCADO

G.R. No. 172144 March
9, 2010




FACTS: Gloria J. Mercado
(Mercado) was appointed
as Group Manager for Pol-
icy and Planning of PEZA.
Her appointment was
temporary in nature.

Mercado was promoted to
the position of Deputy
Director General for Policy
and Planning. Her ap-
pointment indicated the
same as on permanent
basis, but with the follow-
ing annotation: NO SE-
CURITY OF TENURE UN-
LESS HE/SHE OBTAINS
CESO (Career Executive
Service Officer) OR CSEE
(Career Service Executive
Eligibility) ELIGIBILITY.

Lilia B. de Lima (de Lima),
that the manner by
which the initial contact
was made, whether or
not through an inform-
ant, the offer to pur-
chase the drug, the pay-
ment of the buy-bust
money, and the delivery
of the illegal drug,
whether to the informant
alone or the police of-
ficer, must be subject of
strict scrutiny by courts
to insure that law-
abiding citizens are not
unlawfully induced to
commit an offense.

In the instant case, the
evidence clearly shows
that the police officers
used entrapment, not
instigation, to capture
Berto in the act of selling
a dangerous drug. The
facts categorically show
a typical buy-bust opera-
tion as a form of entrap-
ment. The police offic-
ers conduct was within
the acceptable standards
for the fair and honora-
ble administration of jus-
tice.

The acts of the informant
and the poseur-buyer in
pretending that they
were in need of shabu
instigated or induced
Berto to violate the Anti-
Drugs Law, the police
officers act of soliciting
drugs from Berto during
a buy-bust operation, or
Page 8 VOLUME III, ISSUE No. 3
ment of Ortaliz is not
illegal.

Section 27 (1), of the
Civil Service Law pro-
vides:

(1) Permanent sta-
tus. A permanent
appointment shall
be issued to a per-
son who meets all
the requirements
for the position to
which he is being
appointed, includ-
ing the appropri-
ate eligibility pre-
scribed, in accord-
ance with the provi-
sions of law, rules
and standards
promulgated in pur-
suance thereof.
(emphasis and un-
derscoring supplied)

In the CES under which
the position of PEZA
Deputy Director General
for Policy and Planning
is classified, the acquisi-
tion of security of ten-
ure which presupposes
a permanent appoint-
ment is governed by the
Rules and Regulations
promulgated by the CES
Board.

For an examinee or an
incumbent to be a
member of the CES and
be entitled to security of
tenure, she/he must
pass the CES examina-
tions, be conferred CES
eligibility, comply with the
other requirements pre-
scribed by the CES Board,
and be appointed to a
CES rank by the Presi-
dent.

Admittedly, before and up
to the time of the termi-
nation of her appoint-
ment, Mercado did not go
through the four stages of
CES eligibility examina-
tions.

Since, it is admitted that
Mercado, who acquired an
MNSA degree in 1993,
had not undergone the
second, third and fourth
stages of the CES eligibil-
ity examinations prior to
her appointment or during
her incumbency as Depu-
ty Director General up to
the time her appointment
was terminated, she was
not a CES eligible, as in-
deed certified to by the
CES Board. Not being a
CES eligible, she had no
security of tenure, hence,
the termination by the
PEZA Board of her ap-
pointment, as well as the
appointment in her stead
of CES eligible by Ortaliz,
were not illegal.

Removing the CES eligibil-
ity requirement for the
Deputy Director General
position could not have
been the intention of the
framers of the law. It
bears noting that the po-
sition is a high-ranking
one which requires spe-
cialized knowledge and
experience in certain are-
as including law, econom-
ics, public administration
and similar fields, hence,
to remove it from the CES
would be absurd.

The Civil Service Commis-
sion CESB in fact has cer-
tified that the position
requires the appropriate
CES eligibility. It is set-
tled that the construction
given to a statute by an
administrative agency
charged with the interpre-
tation and application of
that statute is entitled to
great respect and should
be accorded great weight
by the courts.

LAND BANK OF THE
PHILIPPINES
vs.
CORAZON M. VILLEGAS
G.R. No. 180384
------------------------
LAND BANK OF THE
PHILIPPINES
vs.
HEIRS OF CATALINO V.
NOEL
and PROCULA P. SY
G.R. No. 180891
March 26, 2010

FACTS: Land Bank of
the Philippines (LBP) filed
cases for determination of
just compensation against
Corazon M. Villegas
(Villegas) in Civil Case
and heirs of Catalino V.
Noel and Procula P. Sy
(heirs) before the Region-
al Trial Court (RTC) of
Dumaguete City, Branch
32, sitting as a Special
Agrarian Court for the
province of Negros Orien-
tal. Villegas property as
well as the heirs property
happened to be outside
the regular territorial ju-
risdiction of RTC Branch
32 of Dumaguete City.

ISSUE: Whether or not
an RTC, acting as Special
Agrarian Court, has juris-
diction over just compen-
sation cases involving ag-
ricultural lands located
outside its regular juris-
diction but within the
province where it is desig-
nated as an agrarian
court under the Compre-
hensive Agrarian Reform
Law of 1998.

RULING: The RTC acting
as Special Agrarian Court,
has jurisdiction over just
compensation cases in-
volving agricultural lands
located outside its regular
jurisdiction but within the
province where it is desig-
nated as an agrarian
court under the Compre-
hensive Agrarian Reform
Law of 1998.

Jurisdiction is the
courts authority to hear
and determine a case.
The courts jurisdiction
over the nature and sub-
ject matter of an action is
conferred by law. In this
case, the law that confers
jurisdiction on Special
Agrarian Courts designat-
ed by the Supreme Court
in every province is Re-
public Act (R.A.) 6657 or
the Comprehensive Agrar-
ian Reform Law of 1988.
Sections 56 and 57 are
the relevant provisions:
SEC. 56. Special
Agrarian Court. - The
Supreme Court shall
designate at least one
(1) branch of the Re-
gional Trial Court
(RTC) within each
province to act as a
Special Agrarian
Court.

The Supreme
Court may designate
more branches to con-
stitute such additional
Special Agrarian
Courts as may be nec-
essary to cope with
the number of agrari-
an cases in each prov-
ince. In the designa-
tion, the Supreme
Court shall give pref-
erence to the Regional
Trial Courts which
have been assigned to
handle agrarian cases
or whose presiding
judges were former
judges of the defunct
Court of Agrarian Re-
lations.

The Regional
Trial Court (RTC)
judges assigned to
said courts shall exer-
cise said special juris-
diction in addition to
the regular jurisdiction
of their respective
courts.

SEC. 57. Special Juris-
diction. - The Special
Agrarian Courts shall
have original and ex-
clusive jurisdiction
over all petitions for
the determination of
just compensation to
landowners, and the
prosecution of all
criminal offenses un-
der this Act. The Rules
of Court shall apply to
all proceedings before
the Special Agrarian
Courts unless modified
by this Act.

The Special Agrarian
Courts shall decide all
appropriate cases un-
der their special juris-
diction within thirty
(30) days from sub-
mission of the case for
decision.


A branch of an RTC desig-
nated as a Special Agrari-
an Court for a province
has the original and ex-
clusive jurisdiction over
all petitions for the de-
termination of just com-
pensation in that prov-
ince. Special Agrarian
Courts have original and
exclusive jurisdiction over
two categories of cases:
(1) all petitions for the
determination of just
compensation to landown-
ers, and (2) the prosecu-
tion of all criminal offens-
es under R.A. 6657.

By special jurisdiction,
Special Agrarian Courts
exercise power in addition
to or over and above the
ordinary jurisdiction of the
RTC, such as taking cog-
nizance of suits involving
agricultural lands located
outside their regular terri-
torial jurisdiction, so long
as they are within the
province where they sit as
Special Agrarian Courts.

R.A. 6657 requires the
designation by the Su-
preme Court before an
RTC Branch can func-
tion as a Special Agrari-
an Court. The Supreme
Court has not designat-
ed the single sala courts
of RTC, Branch 64 of
Guihulngan City and
RTC, Branch 63 of Bay-
awan City as Special
Agrarian Courts. Con-
sequently, they cannot
hear just compensation
cases just because the
lands subject of such
cases happen to be
within their territorial
jurisdiction.
Since RTC, Branch 32 of
Dumaguete City is the
designated Special
Agrarian Court for the
province of Negros Ori-
ental, it has jurisdiction
over all cases for deter-
mination of just com-
pensation involving ag-
ricultural lands within
that province, regard-
less of whether or not
those properties are
outside its regular terri-
torial jurisdiction.
WHITE DIAMOND
TRADING CORPORA-
TION and/or JERRY
L C A LINES
Page 9
UY and JESSIE UY
vs.
NATIONAL LABOR RE-
LATIONS COMMIS-
SION, NORLITO ES-
COTO, MARY GRACE
PASTORIL and MARIA
MYRNA OMELA
G.R. No. 186019
March 29, 2010

FACTS: White Diamond
Trading Corporation
(WDTC) is engaged in
buying and selling second
hand motor vehicles; Jer-
ry Uy (Jerry) is its owner
and Jessie Uy (Jessie) its
President. The company
employed Maria Myrna
Omela (Omela) in 1999 as
assistant secretary, Mary
Jane Pastoril (Pastoril) in
2000 as secretary, and
Norlito Escoto (Escoto) in
2001 as salesman.

In February 2004, Escoto
consummated the sale of
a Toyota Town Ace to
Teodoro Aquino (Aquino)
for P200,000.00. Aquino
tried but failed to haggle
for a lower price. While
the purchase price indi-
cated in the original copy
of the receipt issued to
Aquino was
P200,000.00, it was only
P190,000.00 in the du-
plicate copy that re-
mained with the compa-
ny. The receipt was is-
sued by Omela to Aquino
after he gave Omela
P200,000.00 in cash,
which amount Aquino
counted in the presence
of Pastoril. Pastoril then
took out the deed of sale
and handed it to Aquino.
The deed showed that
the consideration for the
sale to be P190,000.00.

March 2004, the compa-
ny terminated the em-
ployment of Escoto,
Omela and Pastoril. The
three employees filed a
complaint for illegal dis-
missal against WDTC and
its two top officers.

ISSUE: Whether or not
the CA erred in affirming
the NLRC decision finding
that Pastoril had been
illegally dismissed.

RULING: The CA erred
in affirming the NLRC
decision finding that Pas-
toril had been illegally
dismissed.

Pastoril was as actively
involved as Escoto and
Omela in the sale of the
Toyota Town Ace that
resulted in a loss to the
company. All three par-
ticipated in making
WDTC believe that Aqui-
no bought the Toyota
Town Ace for
P190,000.00 when in
fact, Aquino paid
P200,000.00 for the ve-
hicle.
Escoto undisputably
closed the sale, while
Omela received the pur-
chase price of
P200,000.00 from Aqui-
no, Omela then gave
Aquino a receipt indicat-
ing P200,000.00 as the
purchase price, although
the duplicate copy of the
receipt (left with the
company) showed the
price of P190,000.00.
Pastoril thereafter handed
Aquino the deed of sale,
likewise indicating
P190,000.00 as consider-
ation for the sale.

Pastorils involvement in
the questionable transac-
tion was much more than
handing over to Aquino
his copy of the deed of
sale. The payment of the
purchase price, the issu-
ance of the receipt and
the handing of the deed
of sale to Aquino were not
separate isolated acts.
They occurred in one
continuous logical se-
quence with the play-
ers in close proximity
with one another.

FLORDELIZA EMILIO
vs.
BILMA RAPAL

G.R. No. 181855
VOLUME III, ISSUE No. 3 Page 10

March 30, 2010




FACTS: Flordeliza Emilio
(Emilio), was the regis-
tered owner of a parcel of
land whereon she built a
house.

Bilma Rapal (Rapal) had
been leasing a portion of
the house.

In early 1996, Emilio bor-
rowed P10,000 from Ra-
pal. By Emilios claim,
she accepted Rapals offer
to extend her an addition-
al P60,000.00 loan upon
the condition that the lat-
ter would not pay the
monthly rentals from Feb-
ruary 1996 until Decem-
ber 1998, as the total
amount of P70,000.00
would serve as advance
rentals.

A Sale and Transfer of
Rights over a Portion of a
Parcel of Land was exe-
cuted by Emilio whereby
she sold to Rapal 27 sq.
m. of her lot, together
with the house construct-
ed thereon, for a consid-
eration of P90,000.00.

Emilio later claimed that
she signed the deed,
without its contents hav-
ing been explained to her.
She thus filed a complaint
with the Regional Trial
Court (RTC), for refor-
mation of document, al-
leging that the deed of
sale and transfer must be
reformed, there being no
intention on her part to
sell the property.



ISSUE: Whether or not
the action for reformation
of instrument should
prosper.


RULING: The action for
reformation of instrument
should not prosper.

For an action for refor-
mation of instrument to
prosper, the following
requisites must concur:
(1) there must have been
a meeting of the minds of
the parties to the con-
tract; (2) the instrument
does not express the true
intention of the parties;
and (3) the failure of the
instrument to express the
true intention of the par-
ties is due to mistake,
fraud, inequitable conduct
or accident.

The Supreme Court (SC)
was not convinced in her
claim that she did not un-
derstand the contents of
the deed, given that in
her pleadings which are in
English, Emilio stated un-
der oath that she read
and understood the same;
and that she testified in
court in English as borne
by the Transcript of Sten-
ographic Notes, and her
request/demand letters
addressed to the Baran-
gay Captain were also
written in English. There
being no proof of any
mistake, fraud, inequita-
ble conduct or accident,
and no proof either that
that the instrument did
not express the true in-
tention of the parties, the
action of Emilio must fail.

Notarized documents, like
the deed in question, en-
joy the presumption of
regularity which can be
overturned only by clear,
convincing and more than
merely preponderant evi-
dence which Emilio failed
to discharge.


Page 11
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VOLUME III, ISSUE No. 3 Page 12
Volume III Issue 3
March 2010
LAGUNDI-CARONAN AND ASSOCIATES
J
L
s
C
O
R
N
E
R




THE WILL
A man went to his lawyer and said, "I would like to make a will
but I don't know exactly how to go about it."
The lawyer said, "No problem, leave it all to me."
The man looked somewhat upset and said, "Well, I knew you
were going to take the biggest slice, but I would like to leave a
litle to my children too!"