Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 203536 February 4, 2015

CIVIL SERVICE COMMISSION, Petitioner,

vs.
MARIA RIZA G. VERGEL DE DIOS, Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari assailing the Amended Decision1 dated March 21, 2012
and Resolution2 dated September 17, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 114040.
The CA set aside its Decision3 dated October 20, 2011 which upheld the resolutions of the Civil
Service Commission (CSC) dismissing respondent Maria Riza G. Vergel de Dios from the service.

The facts follow.

The CSC conducted an investigation after receiving an anonymous complaint that several
employees of San Rafael Water District employed a fixer to pass the CSC's Career Service
Professional Examination on November 17, 2000. In the course of the investigation, CSC Director
Aurora C. De Leon received a phone call implicating respondent in the alleged irregularity. Director
De Leon's verification with the Integrated Records Management Office of the Central Office of the
CSC revealed that there were discrepancies in the signatures and pictures of the respondent in her
personal data sheets and on the picture seat plan used for said examination. Thus, respondent was
formally charged for dishonesty, grave misconduct, falsification of official documents and conduct
prejudicial to the best interest of the service.

In her defense, respondenttestified that she was the one who took the examination. Loline4 Padilla
testified that she accompanied respondent when she took the examination. Padilla admitted
however that she never saw respondent take the examination.

In its Decision5 dated August 26, 2008, the CSC Regional Office No. III found respondent guilty of
serious dishonesty, grave misconduct, and falsification of official documents, and dismissed her from
the service. The CSC Regional Office found that the picture pasted and the signature appearing on
the picture seat plan of the Career Service Professional Examination held at the CSC Central Office
onNovember 17, 2000 is different from the picturespasted and signatures appearing on respondent’s
personal data sheet accomplished on March 13, 2001 and personal data sheet accomplished on
July 14, 2006.6 Respondent’s motion for reconsideration was denied.

The CSC dismissed respondent’s appeal in its Resolution No. 0917217 dated December 11, 2009.
The dispositive portion thereof provides:

WHEREFORE, the appeal of Maria Riza G. Vergel de Dios, former Public Relations Officer A, San
Rafael Water District, San Rafael, Bulacan, is hereby DISMISSED. Accordingly, the Decision dated
August 26, 2008 rendered by the Civil Service Commission Regional Office (CSCRO) No. III, San
Fernando City, Pampanga finding her guilty of Serious Dishonesty, Grave Misconduct and
Falsification of Official Document and imposing upon her the penalty of dismissal from the service
including its accessory penalties of cancellation of eligibility, forfeiture of retirement benefits,
disqualification from taking future civil service examinations and perpetual disqualification from re-
entering the government service, is hereby AFFIRMED.8

The CSC agreed with its Regional Office that (1) the Vergel de Dios in the picture seat plan is not
the same Vergel de Dios whose picture is pasted in the personal data sheet and (2) the signatures
appearing therein pertain to different individuals.9 The CSC added:

The submitted documents show that the picture of Vergel de Dios as affixed in the [personal data
sheet] is obviously not the Maria Riza G. Vergel de Dios whose picture appears on the [picture seat
plan]. This may be seen in the discrepancies in her facial featuresspecifically the size of her head,
the prominence of the forehead, shape of her eyebrows, the difference of the full-face view, the
projection of the nose, the round shape of the face and the forehead, among others. Moreover, the
signatures of the respondent as affixed in the Picture Seat Plan (PSP) reflects a glaring difference to
the signature affixed in her Personal Data Sheet (PDS) accomplished on February 27, 2001. Such
difference in the manner by which the respective signatures were done clearly shows that they were
made by two different persons.10

In its Resolution No. 10072811 dated April 12, 2010, the CSC denied respondent’s motion for
reconsideration.

In its Decision dated October 20, 2011, the CA dismissed respondent’s petition for review and
agreed with the findings of the CSC. The falloof the CA decision reads:

WHEREFORE, premises considered, the petition is hereby DISMISSED. The assailed Resolution
Nos. 091721 and 100728 dated 11 December 2009 and 12 April 2010, respectively, of the Civil
Service Commission are hereby AFFIRMED.

SO ORDERED.12

On reconsideration, the CA issued the assailed Amended Decision dated March 21, 2012 which set
aside its Decision dated October 20, 2011 and reversed the CSC resolutions, to wit: WHEREFORE,
the earlier Decision of this Court dated 20 October 2011 is hereby RECALLEDand SET ASIDEand a
new one is entered GRANTINGthe instant petition. Resolution No. 091721 dated 11 December 2009
and Resolution No. 100728, both issued by the Civil Service Commission, are hereby
REVERSEDand SET ASIDE.

SO ORDERED.13

While the CA recognized the CSC’s strict procedures to ensure the integrity of its examinations, the
CA said that there is no showing that those procedures were followed when the purported
impersonation subject of this case happened. The CA noted that the room examiners were not
presented to prove that the examination procedures were strictly implemented. Thus, the CA held
that the discrepancy in respondent’s signatures and pictures on the personal data sheets and picture
seat plan can be the result of a simple mix up.14

The assailed Resolution dated September 17, 2012 denied the CSC’s motion for reconsideration.

Hence, this petition with the sole assignment of error:

x x x THE x x x COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT x
x x.15

The main issue is whether the CA erred in reversing the ruling of the CSC on the ground that the
discrepancies in respondent’s pictures and signatures in the picture seat plan and personal data
sheets were due to a possible mix up.

Petitioner argues that the presentation of the room examiners is not required to prove the
observance of the procedure in preparing the picture seat plan and in implementing the civil service
examination because of the presumption of regularity in the performance of official duty in favor of
public officers. Petitioner also argues that the personal data sheet and picture seat plan are public
documents which are admissible in evidence without proof of authenticity and due execution thereof.
Petitioner avers that the discrepancy in the signature and picture of the respondent in her personal
data sheet and picture seat planis tantamount tothe commission of misrepresentation in the personal
datasheet and fraudulent procurement of civil service eligibility. Respondent counters that despite
the presumption of regularity in the performance of official duty in favor ofpublic officers, the room
examiners must still be presented to prove that the examination procedures were complied with.
Respondent asserts that the issuance of her Certificate of Eligibility is also presumed regular.

The petition is meritorious.

We reverse the ruling of the CA thatthe discrepancies in respondent’s signatures and pictures on the
personal data sheets and picture seat plan can be the result of a simple mix up. This ruling is pure
speculation and is belied by the evidence on record.

Written on the picture seat plan isthe name of respondent in bold letters.16 On top of it is her
purported signature. Notably, respondent said that she was the one who took the examination. If we
believe her, then she was the one who wrote her name in bold letters and put the signature on top of
it. Thus, there was no mix up in her signature on the picture seat plan.

Upon comparison of respondent’s signatures, the CSC found that respondent’s signature on the
picture seat plan is different from her signatures on her personal data sheets. We also examined
respondent’s signatures on the picture seat plan and personal data sheet17 and we agree with the
CSC that the signatures are different. We also agree with the CSC that the pictures of respondent on
the picture seat plan and personal data sheets are different. If only to stress, we again quote the
finding of the CSC:

The submitted documents show that the picture of Vergel de Dios as affixed in the [personal data
sheet] is obviously not the Maria Riza G. Vergel de Dios whose picture appears on the [picture seat
plan]. This may be seen in the discrepancies in her facial featuresspecifically the size of her head,
the prominence of the forehead, shape of her eyebrows, the difference of the full-face view, the
projection of the nose, the round shape of the face and the forehead, among others. Moreover, the
signatures of the respondent as affixed in the Picture Seat Plan (PSP) reflects a glaring difference to
the signature affixed in her Personal Data Sheet (PDS) accomplished on February 27, 2001. Such
difference in the manner by which the respective signatures were done clearly shows that they were
made by two different persons.18

As we said in Office of the Court Administrator v. Bermejo19 :

It is difficult to believe that respondent could not have noticed that her picture was put on top of a
different name and that her name was accompanied by the picture of another person. There was a
space provided for the signature of the examinee. Thus, respondent could not have missed that she
was signing – if indeed she was signing her own name – the box with a different picture. She
proffers no sufficient explanation for this discrepancy.

We thus entertain no doubt that someone impersonated respondent and took the examination for
her.

We also agree with petitioner thatthe presentation of the room examiners is not required to prove the
observance of the procedure in preparing the picture seat plan and in implementing the civil service
examination. More so inthis case where the supposed mix up in the picture seat plan was proven
wrong by the records. We stress that CSC examiners enjoy a presumption of regularity in the
administration of the civil service examination. We held in Donato, Jr. v. Civil Service
Commission20 that:

x x x Those government employees who prepared the [picture seat plan] and who supervised the
conduct of the Career Service SubProfessional Examination on August 5, 1990, enjoy the
presumption that they regularly performed their duties and this presumption cannot be disputed by
mere conjectures and speculations.

In the present case, respondent failed to controvert aforesaid presumption. Thus, the CSC
examiners are conclusively deemed to have regularly performed their duties in relation to the
administration of the civil service examination.

Similarly, there is also no need to present the room examiners to establish the authenticity and due
execution of the picture seat plan. The picture seat plan is a public document which is admissible
1âwphi1

inevidence without need of proof of its authenticity and due execution.21 Pertinently, Section 23, Rule
132 of the Rules of Court provides that "[d]ocumentsconsisting of entries in public records made in
the performance of a duty by a public officer are prima facieevidence of the facts therein stated." As
a public document, the picture seat plan need not be identified or presented by the custodian thereof
in order to be admissible in evidence.22 In Antillon v. Barcelon,23 we explained the legislative policy
behind the admissibility of public documents, to wit: "[w]ere there no exception for official statements,
hosts of officials would be found devoting the greater partof their time to attending as witnesses in
the court or delivering their depositions before an officer."

Respondent committed serious dishonesty24 when she declared in her personal data sheet that she
took and passed the civil service examination on November 17, 2000. The evidence at hand also
disproved her testimony that she herself took the examination. In Advincula v. Dicen,25 we referred to
the personal data sheet as the repository of all relevant information about any government employee
or official. Thus, we declared that concealment of any information therein warrants the imposition of
administrative penalty. Specifically, in De Guzman v. Delos Santos,26 we ruled that the making of an
untruthful statement in the personal data sheet amounts to dishonesty and falsification of official
document, which warrant dismissal from service upon commission of the first offense.

Civil service rules also provide that any act which includes the fraudulent procurement and/or use of
fake/spurious civil service eligibility, the giving of assistance to ensure the commission or
procurement of the same, or any other act which amounts to violation of the integrity of civil service
examinations is to be categorized as grave offense of dishonesty, grave misconduct or conduct
prejudicial tothe best interest of the service.27

Respondent must therefore be held administratively liable for serious dishonesty, grave misconduct,
and falsification of official document in view of her misrepresentation in the personal data sheet and
the commission of fraud in connection with the civil service examination on November 17, 2000.
WHEREFORE, the petition for review on certiorari is hereby GRANTED. The Amended Decision
dated March 21, 2012 and Resolution dated September 17, 2012 of the Court of Appeals in CA-G.R.
SP No. 114040 are REVERSED and SET ASIDE. The Resolution No. 091721 dated December 11,
2009 and Resolution No. 100728 dated April 12, 2010 of the Civil Service Commission are
REINSTATED and UPHELD.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 192785 February 4, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
JOMER BUTIAL, Accused-Appellant.

RESOLUTION

DEL CASTILLO, J.:

The prosecution's evidence must establish that the illegal drug presented in court is the same illegal·
drug actually recovered from appellant.1

This is an appeal from the February 26, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R. CR-
HC No. 03170 which affirmed in toto the December 3, 2007 Decision3 of the Regional Trial Court
(RTC) of Tabaco City, Branch 17 in Criminal Case No. T-3864 finding Jomer Butial (appellant) guilty
of violating ·Section 5,4 Article II of !J2ublic Act No. 9165 or the Comprehensive Dangerous Drugs
Act of 2002.

Factual Antecedents

On December 16, 2002,an Information5 was filed against appellant, the accusatory portion of which
reads as follows:

That on or about the 21st day of October, 2002, at 10:35 o’clock in the morning, more or less, at
Purok 4, Barangay Sto. Cristo, Tabaco City, Philippines, and within the jurisdiction ofthis Honorable
Court, the above-named accused, with deliberate intent to violate the law, did then and there
willfully, unlawfully, knowingly and criminally sell,deliver and give away to a poseurbuyer,
METHAMPHETAMINE HYDROCHLORIDE otherwise known as "SHABU", contained in two (2)
transparent plastic sachets each weighing approximately 0.1 gm., without the necessary government
authority, to the detriment of public welfare.
ACTS CONTRARY TO LAW.6

After appellant pleaded "not guilty" to the charge, pre-trial and trial ensued.

Version of the Prosecution

The prosecution presented as witnesses Gilbert Borlagdan (Borlagdan), PO2 Roy Martirez (PO2
Martirez), SPO4 Rosalino Bonavente (SPO4 Bonavente), SPO4 Benito Bognaloc and SPO1 Carlos
H. Desuasido (SPO1 Desuasido).7 From their testimonies, the following version emerged:

The Chief of Police of Tabaco Cityinstructed PO2 Martirez and SPO4 Bonavente to conduct a buy-
bust operation on appellant after receiving information that he was selling illegal drugs. Thus, on
October 21, 2002, PO2 Martirez arranged for Borlagdan, a police asset, toact as a poseur-buyer and
gave him four P100 bills as marked money. PO2 Martirez, SPO4 Bonavente and Borlagdan
proceeded to Purok4, Sto. Cristo, Tabaco City to entrap appellant.

Upon their arrival, Borlagdan walked towards a house which is under construction. PO2 Martirezand
SPO4 Bonavente, on the other hand, hid behind houses which were about seven meters away from
where Borlagdan was. Borlagdan approached appellant who was then working at the construction
site and asked if he could purchase shabu. When an agreement was reached, Borlagdan handed
overthe marked money to the appellant while the latter, in turn, gave him two plastic sachets
containing white crystalline substance. After the transaction, Borlagdan walked towards the place
where PO2 Martirez and SPO4 Bonavente were hiding. When he passedby them, Borlagdan
nodded his head as a signal that the sale was already consummated and gave the sachets to PO2
Martirez. Thereupon,the police officers came out of hiding. Theyimmediately approached appellant
who threw something on the ground. PO2 Martirez arrested appellant and brought him to the police
station. SPO4 Bonavente who was left behind searched the place where he saw appellant throw
something and found therein a plastic sachet containing white crystalline substance. He also
summoned for the owner of the house being constructed and asked for appellant’s belongings. He
was given a backpackwhich he brought to the police station.

Meanwhile at the police station, PO2 Martirez ordered appellant to empty his pockets and recovered
from him one ofthe four P100 bills used as marked money. PO2 Martirez then turned over the said
marked money and the two plastic sachets to the police investigator. When SPO4 Bonavente
arrived, he likewise gave appellant’s backpack to the police investigator, who, in turn, searched the
same. Found therein were more sachets containing white crystalline substance. Two days later, five
sachets with white crystalline substance were referred and delivered to the crime laboratory for
examination which all tested positive for shabu, viz:

xxxx

SPECIMEN SUBMITTED:

Five (5) heat-sealed transparent plastic sachets marked as "A" through "E" each with white
crystalline substance having the following markings and recorded net weights:

A = 3.7240 gram[s] B = 0.8642 gram C = 0.0513 gram8

D = 0.0336 gram E = 0.0313 gram

Version of the Defense

Appellant and two others, namely, Lourdes Benavides and Elsa San Buenaventura, both residents
of Purok4, Sto. Cristo, Tabacowho claimed to have witnessed appellant’s arrest, testified for the
defense. Their version of the incident is as follows:

While appellant was working at the construction site, Robert Sierra (Sierra) arrived and asked if
there is a vacancy. When appellant said that he had to ask the owner first, Sierra departed. A few
minutes later, PO2 Martirez and SPO4 Bonavente arrived and arrested appellant. They took him to
the police station. Thereat, PO2 Martirezopened appellant’s bag which was brought to the station by
SPO4 Bonavente. After asking him to identify the same, PO2 Martirez placed something inside the
bag and then closed it. Appellant was then ordered to open the bag. When he complied, picturesof
him holding the bag and the plastic sachets containing white crystalline substance were taken. PO2
Martirez also inserted a P100 bill into the back pocket ofhis pants and thereafter presented him to
the Chief of Police.

Ruling of the Regional Trial Court

The RTC gave credence to the testimonies of the prosecution’s witnesses. It convicted appellant of
the offense charged and disposed of the case in its December 3, 2007 Decision9 as follows:
WHEREFORE, from the foregoing, accused Jomer Butial is hereby found GUILTY of Violation
ofSection 5, Article II, Republic Act [No.] 9165, otherwise known as the Comprehensive Dangerous
Drugs Act of 2002, and he is hereby sentenced to suffer the penalty of life imprisonment and to pay
a fine of P500,000.00. Costs against accused.

SO ORDERED.10

Appellant filed a notice of appeal,11 which was approved by the RTC.12 Hence, the records of the case
were transmitted to the CA where the appeal was docketed as CA-G.R. CR-H.C. No. 03170.

Ruling of the Court of Appeals

Finding the RTC’s conviction of appellant to be well-supported by evidence, the CA, in its February
26, 2010 Decision,13 ruled as follows:

WHEREFORE, the instant appeal is DISMISSED for lack of merit and the challenged Decision dated
December 3, 2007 in Criminal Case No. T-3864 is AFFIRMED in TOTO.

SO ORDERED.14

Hence, this appeal.

Issues

For the first time in this appeal, appellant questions his warrantless arrest. He posits that his arrest
was illegal since he was not arrested in flagrante delicto. The police officers did not have personal
knowledge that he was committing a crime as they were hiding behind houses seven meters away
from the place where the alleged transaction took place and did not actually see the whole incident.
This being the case, the sachets allegedly seized from him cannot be used in evidence against him
being "fruits of a poisonous tree." Appellant also contends that the prosecution was unable to prove
all the elements of the offense of illegal sale of drugs. He likewise points to the failure of the police
officers to properly observe the procedure outlined in Section 21, RA 9165 and argues that the same
constitutes a break in the chain of custody.
 Our Ruling

The appeal must be granted.

The prosecution failed to show that the

identity and integrity of the corpus delicti
have been preserved.

There is merit in appellant’s contention that not all elements of the offense of illegal sale of
shabuwere proven and that there were unexplained gaps and irregularities in the chain of custody of
the seized items.

In a successful prosecution for the illegal sale of drugs, there must be evidence of the following
elements: "(1) the identities of the buyer and the seller, the object, and the consideration; and (2) the
delivery of the thing sold and the payment therefor."15 The evidence of corpus delictimust also be
established beyond doubt. In this case, the shabu"constitutes the very corpus delictiof the offense
and in sustaining a conviction under [RA 9165], the identity and integrity of the corpus delictimust
definitely be shown to have been preserved."16 "The chain of custody requirement performs this
function in buy-bust operations as it ensures that doubts concerning the identity of the evidenceare
removed."17

The initial link in the chain of custody starts with the seizure of the plastic sachets from appellant and
their marking bythe apprehending officer. "Marking after seizure is the starting point in the custodial
link, thus it is vital that the seized contraband is immediately marked because succeeding handlers
of the specimens will use the markings as reference. The marking of the evidence serves to
separate the marked evidence from the corpusof all other similar or related evidence from the time
they are seized from the accused until they are disposed atthe end of criminal proceedings,
obviating switching, ‘planting,’ or contamination of evidence."18 A review of the records, however,
reveals that the confiscated sachets subject of the illegal sale of shabuwere not marked. PO2
Martirez, himself, admitted that he did not put any markings on the two plastic sachets that were
handed to him by Borlagdan after the latter’s purchase of the same from appellant.19 While he
mentioned that the police investigator to whom he turned over the items wrote something down or
made someinitials thereon, he nevertheless could not remember who wrote the initials.20 And albeit
later, PO2 Martirez identified the police investigator as SPO1 Desuasido,21 the latter, however, when
called to the witness stand, did not testify that he made any markings on the said sachets or, at the
veryleast, that he received the same from PO2 Martirez. His testimony merely focused on the fact
that he prepared the affidavit of a certain Baltazar.22

While SPO4 Bonavente testified that he put markings on several sachets of shabuallegedly seized
from appellant, it cannot be gathered from his testimony that the ones he marked were those
sachets subject of this case. Instead, what it suggests is that those he marked were the sachets
belonging to appellant which he subsequently recovered, i.e., the one allegedly thrown away by
appellant and picked up by SPO4 Bonavente from the ground, and those found inside appellant’s
bag, viz:

[PROS. BROTAMONTE]- At that time[,] how was the buy-bust operation carried out?

[SPO4 Bonavente]- During that time we were in Sto. Cristo. When our asset got in the house and
came out he sent positive sign that he already bought the prohibited drugs. So I and Roy Martirez
immediately got inside the house.

Q- What happened next?

A- Upon seeing us[,] this Butial tried to escape and Roy Martirez grabbed him and they grappled
with each other. I saw Butial throw pieces of sachets and I picked up said sachets which contained
shabu.

Q- How many sachets?

A- Only one.

xxxx

Q- What happened next?

A- After two minutes[,] the owner of the house arrived. I asked him [for] the belongings of Butial and
he picked up the bag in the corner and handed it to me.

Xxxx

Q- Upon arrival at the Tabaco Police Station[,] what happened there particularly, insofar as the bag
was concerned?

A- I presented the bag to the desk officer for record purposes and to the duty investigator.

Q- What did you do with the bag after that?

A- The duty investigatorsearched the bag.

Q- Where were you when the bag was searched.

A- I was outside the investigation room and I was only informed that they found another sachet
inside the bag.

x xxx

Q- Tell us if you actuallywitnessed the procedure of the search?

A- No. Sir. I just saw the sachet already on the table when I was informed by the desk officer.

Q- Having seen the evidence already on the table[,] what did you do, if any?

A- I told the desk officer to prepare the papers to preserve the items.

Q- To preserve the integrity and identity of the supposed items[,] what else did you undertake, if
any?

A- I remember, I put my initials [on] the sachets.

Q- Can you still recall what items were those where you put your initials?

A- The sachets, sir.

Q- Can you still recall how many sachets were those?

A- I cannot recall.

Q- Those sachets that bear your initials, if the same will be shown to you again, will you be able to
identify them by way of your markings or initials?

A- Yes, sir.

Q- I have here several sachets containing crystalline substance [e]ncased in two bigger transparent
sachets which were turned over by the PNP Crime No. 5[,] please lookat [these] and tell us if you
could recognize [them]?

A- Yes, sir, I recognize [them].

xxxx

Q- I am showing to you the contents of one bigger transparent plastic packet consisting of two small
sachets with crystalline substance in [them]. Please look at [them] and tell us if you are familiar with
[them].

A- (Witness examining the very small sachets containing a very small amount of white crystalline
substance). This is not my initial.

Q- There is a marking which is not of the witness and said witness looking at the bigger transparent
packet from which these two plastic sachets came from. Look at[them] and tell us if you could
recognize [them].

A- (Witness looking and examining the bigger plastic and recogniz[ing] the initials as [those] of
Martirez).

Q- How about [the other] marking?

A- I do not know.

Q- How about these three other plastic sachets containing crystalline substance which I just took out
from the previously sealed plastic container?

A- [These are] my initials.

COURT INTERPRETER:

Witness acknowledging that it is his signature and also his marking on the other bigger one.

Two small and one bigger sachets. Smaller sachet with D-325-02 marked "A" with initial of
Bonavente. Smaller sachet D-325-02 marked "B" with initial of Bonavente. Smallest sachet D-325-
1âw phi 1

02 marked "C."23 (Emphases supplied)

Moreover, the Request for Laboratory Examination24 of the items seized suggests that the seized
items were improperly handled. As may be recalled, the police officers submitted five sachets of
shabufor laboratory examination. Aside from those three sachets marked by SPO4 Bonavente, the
two other sachets were listed and described as follows in the said request:

xxxx

2. Evidence/Documents submitted:

xxxx

a. Two (2) transparent plastic packets containing white crystalline suspected to be

Methamphetamine Hydrochloride (Shabu), approximately 0.1 gm. each, and One (1) P100.00 with
SN ES684504, all placed in a heat-sealed transparent plastic with marking [letter] "I" on both
sides;25 (Emphasis supplied)

Notably, the portion "and One (1) P100.00 with SN ES684504, all placed in a heat-sealed
transparent plastic with marking [letter] "I" on both sides" was obliterated by pen markings and the
erasure was initialed by SPO1 Desuasido. But even without the said erasure, the two transparent
plastic packets containing white crystalline substance appear to have no markings at all. Only the
heat-sealed transparent plastic supposedly containing them has the marking letter "I," which holds
no significance as the making of the said marking is also not supported by any testimony during trial.

Clearly, the absence of markings creates an uncertainty that the two sachets seized during the buy-
bust operation were part of the fivesachets submitted to the police crime laboratory. The
prosecution’s evidence failed to establish the marking of the two sachets of shabusubject of this
case, which is the first link in the chain of custody and which would have shown that the
shabupresented in evidence was the same specimen bought from appellant during the buy-bust
operation. The lack of certainty therefore on a crucial element of the crime i.e., the identity of the
corpus delicti, warrants the reversal of the judgment of conviction.26

The failure of the prosecution to identify the corpus delictiis more glaring after considering that none
of the fivesachets submitted to the police crime laboratory for qualitative examination and turned out
positive for shabuweighed close to the two plastic sachets that had an approximate weight of 0.1
gram each as stated in the Information. As previously mentioned, the police officers sent five
sachets that were marked and given corresponding weights, viz:

A = 3.72040 g B = 0.8642 g C = 0.0513 g

D = 0.0336 g E= 0.0313 g

It therefore appears that the sachets of shabuconfiscated during the buybust operation are totally
different from the sachets forwarded to the police crime laboratory and thereafter presented in
evidence.

As a final note, it does notescape the Court’s attention that there was also no testimony from the
police officers thatthey conducted a physical inventory and took photographs of the sachets of shabu
confiscated from appellant pursuant to Section 21(1)27 of Article II of RA 9165. Their sworn
statements did not mention any inventory-taking or photographing of the same. They also did not
bother to offer any justification for this omission.28 At this point, it is apt to restate the Court's
pronouncement in People v. ,Pepino-Consulta:29
[T]he Court cannot emphasize enough that zealousness on the part of law enforcement agencies in
the pursuit of drug peddlers is indeed laudable. However, it is of paramount importance that the
procedures laid down by law be complied with, especially those that involve the chain of custody of
the illegal drugs. This is necessary in order to dispel even the most infinitesimal of doubts on the
outcome of arrests any buy-bust operations, so as not to render naught the efforts and the resources
put forth in the apprehension and prosecution of violators of our drug laws.30

WHEREFORE, the appeal is GRANTED. . The February 26, 2010 Decision of the Court of Appeals
in CA-G.R. CR-HC No. 03170 affirming the December 3, 2007 Decision of the Regional Trial Court
of Tabaco City, Branch 17, in Criminal Case No. T-3864, finding appellant Jomer Butial guilty of
Violating Section 5, Article II of Republic Act No. 9165, is REVERSED and SET ASIDE and a new
one is entered ACQUITTING him of the charge. Criminal Case No. T-3864 is DISMISSED.

The Director of the Bureau of Corrections is ordered to immediately release appellant Jomer Butial
from detention, unless he is confined for another lawful cause, and to report to this Court compliance
within five days from receipt of this Resolution.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 174581 February 4, 2015

ATTY. LEO N. CAUBANG, Petitioner,

vs.
JESUS G. CRISOLOGO and NANETTE B. CRISOLOGO, Respondents.

DECISION

PERALTA, J.:

For the Court's resolution is a Petition for Review under Rule 45 of the Rules of Court which
petitioner Atty. Leo N. Caubang filed, questioning the Decision1 of the Court of Appeals (CA), dated
May 22, 2006, and its Resolution2dated August 16, 2006 in CA-G.R. CV. No. 68365. The CA
affirmed the Decision3 of the Regional Trial Court (RTC) of Davao City, Branch 12, dated August 1,
2000, with modifications, in Civil Case No. 27168-99.

The facts, as gathered from the records, are as follows:

On December 17, 1993, respondents spouses Jesus and Nannette Crisologo (the Spouses
Crisologo) obtained an Express Loan in the amount of P200,000.00 from PDCP Development Bank
Inc. (PDCP Bank). On January 26, 1994, the Spouses Crisologo acquired another loan from the
same bank, this time a Term Loan of P1,500,000.00 covered by a Loan Agreement. As security for
both loans,the spouses mortgaged their property covered by Transfer Certificate of Title (TCT) No.
T-181103. Upon release of the Term Loan, they were given two (2) promissory notes, for the amount
of P500,000.00 on February 9, 1994 and P1,000,000.00 on February 21, 1994.

Under the promissory notes, the Spouses Crisologo agreed to pay the principal amount of the loan
over a periodof three (3) years in twelve (12) equal quarterly amortizations. Although they were able
to pay the Express Loan, starting August 22, 1994, however, or after payment of the first few
installments on the other loans, the spouses defaulted in the amortizations. Despite several
demands made by the bank,the spouses still failed to pay.

On May 31, 1996, the spouses received a detailed breakdown of their outstanding obligation.
Finding the charges to be excessive, they wrote a letter to the bank proposing to pay their loan in full
with a request that the interest and penalty charges be waived. The manager of PDCP Bank, Davao
Branch, advised them to deposit theirP1,500,000.00 obligation as manifestation of their intent to pay
the loan. As a counter-offer, the spouses agreed to deposit the amount but on the condition that the
bank should first return to them the title over the mortgaged property. The bank did not reply until
July 7, 1997, where they senta letter denying the spouses’ counteroffer and demanding payment of
the loan already amounting to P2,822,469.90. By October 20, 1997, the debt had ballooned
to P3,041,287.00. For failure to settle the account, the Davao branch of the bank recommended the
foreclosure of the mortgage to its head office. On March 20, 1998, PDCP Bank filed a Petition for the
Extrajudicial Foreclosure of the Mortgage.

On June 8, 1998, petitioner Leo Caubang, as Notary Public, prepared the Notices of Sale,
announcing the foreclosure of the real estate mortgage and the sale of the mortgaged property at
public auction on July 15, 1998. He caused the posting of said notices in three (3) public places: the
Barangay Hall of Matina, City Hall of Davao,and Bangkerohan Public Market. Publication was,
likewise, made in the Oriental Daily Examiner, one of the local newspapers in Davao City.

On July 15, 1998, Caubang conducted the auction sale of the mortgaged property, with the bank as
the only bidder. The bank bidded for P1,331,460.00, leaving a deficiencyof P2,207,349.97.
1âwphi1

Thereafter, a Certificate of Sale in favor of the bank was issued.

Later, the Spouses Crisologo were surprised to learn that their mortgaged property had already been
soldto the bank. Thus, they filed a Complaint for Nullity of Extrajudicial Foreclosure and Auction Sale
and Damages against PDCP Bank and Caubang.

On August 1, 2000, the Davao RTC rendered a Decision nullifying the extrajudicial foreclosure of the
real estate mortgage for failure to comply with the publication requirement, the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered:

1. Declaring the Extra-Judicial Foreclosure sale of plaintiffs’ property, covered by TCT No. T-
181103, null and void.

2. Ordering the Register of Deeds for the City of Davao to cancel Entry No. 113255 on TCT
No. T-181103, the entry relative to the Certificate of Sale executed by Atty. Leo Caubang on
August 5, 1998, and if a new title has been issued to defendant PDCP, to cancel the same,
and to reinstate TCT No. T-181103 in the name of Nannette B. Crisologo, of legal age,
Filipino, married to Jesus Crisologo, and a resident of Davao City, Philippines.

All the other claims of the parties are disallowed.

No pronouncement as to costs.

SO ORDERED.4

The Spouses Crisologo appealed before the CA, seeking a partial modification of the RTC Decision,
insofar as their claims for moral and exemplary damages, attorney’s fees, and costs of suit were
concerned. On May 22, 2006, the appellate court modified the decretal portion to read:
WHEREFORE, judgment is hereby rendered:

1. Declaring the Extra-Judicial Foreclosure sale of plaintiffs’ property, covered by TCT # T-

181103, null and void.

2. Ordering the Register of Deeds for the City of Davao to cancel Entry No. T-181103, the
entry relative to the Certificate of Sale executed by Atty. Leo Caubang on August 5, 1998,
and if a new title has been issued to defendant PDCP, to cancel the same, and to reinstate
TCT No. T-181103 in the name of Nannette B. Crisologo, of legal age, Filipino, married to
Jesus Crisologo, and a resident of Davao City, Philippines; and

3. Atty. Caubang is ordered to pay appellants the sum of P41,500.00 as attorney’s fees
and P30,248.50 as litigation expenses.

All other claims of the parties are disallowed.

SO ORDERED.5

Caubang filed a Motion for Reconsideration, but the same was denied. Hence, he filed the present
petition.

Caubang mainly assails the CA’s ruling on the publication of the notices in the Oriental Daily
Examiner. He firmly contends that the CA’s finding was based on assumptions and speculations.

The petition lacks merit.

Under Section 3 of Act No. 3135:6

Section 3. Notice of sale; posting; when publication required.– Notice shall be given by posting
notices ofthe sale for not less than twenty days in at least three public places ofthe municipality or
city where the property is situated, and if such property is worth more than four hundred pesos, such
notices shall also be published once a week for at least three consecutive weeksin a newspaper of
general circulation in the municipality or city.7

Caubang never made an effort toinquire as to whether the Oriental Daily Examinerwas indeed a
newspaper of general circulation, as required by law. It was shown that the Oriental Daily Examineris
not even on the list of newspapers accredited to publish legal notices, as recorded in the Davao
RTC’s Office of the Clerk of Court. It also has no paying subscribers and it would only publish
whenever there are customers. Since there was no proper publication of the notice of sale, the
Spouses Crisologo, as well as the rest of the general public, were never informed thatthe mortgaged
property was about to be foreclosed and auctioned. As a result,PDCP Bank became the sole bidder.
This allowed the bank to bid for a very low price (P1,331,460.00) and go after the spouses for a
bigger amount as deficiency. 1âw phi 1
The principal object of a notice of sale in a foreclosure of mortgage is not so much to notify the
mortgagor as to inform the public generally of the nature and condition of the property to be sold,
and of the time, place, and terms of the sale. Notices are given to secure bidders and prevent a
sacrifice of the property. Therefore, statutory provisions governing publication of notice of mortgage
foreclosure sales must be strictly complied with and slight deviations therefrom will invalidate the
notice and render the sale, at the very least, voidable. Certainly, the statutory requirements of
posting and publication are mandated and imbued with public policy considerations. Failure to
advertise a mortgage foreclosure sale in compliance with the statutory requirements constitutes a
jurisdictional defect, and any substantial error in a notice of sale will render the notice insufficient and
will consequently vitiate the sale.8

Since it was Caubang who caused the improper publication of the notices which, in turn, compelled
the Spouses Crisologo to litigate and incur expenses involving the declaration of nullity of the auction
sale for the protection of their interest on the property, the CA aptly held that Caubang shall be the
one liable for the spouses' claim for litigation expenses and attorney's fees.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated May 22, 2006,
and its Resolution dated August 16, 2006, in CA-G.R. CV. No. 68365, are hereby AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 172509 February 4, 2015

CHINA BANKING CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

DECISION

SERENO, CJ:

This Rule 45 Petition1 requires this Court to address the question of prescription of the government's
right to collect taxes. Petitioner China Banking Corporation (CBC) assails the Decision2 and
Resolution3 of the Court of Tax Appeals (CTA) En Banc in CTA En Banc Case No. 109. The CTA En
Banc affirmed the Decision4 in CTA Case No. 6379 of the CTA Second Division, which had also
affirmed the validity of Assessment No. FAS-5-82/85-89-000586 and FAS-5-86-89-00587. The
Assessment required petitioner CBC to pay the amount of P11,383,165.50, plus increments accruing
thereto, as deficiency documentary stamp tax (DST) for the taxable years 1982 to 1986.

FACTS
Petitioner CBC is a universal bank duly organized and existing under the laws of the Philippines. For
the taxable years 1982 to 1986, CBC was engaged in transactions involving sales of foreign
exchange to the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas), commonly
known as SWAP transactions.5 Petitioner did not file tax returns or pay tax on the SWAP
transactions for those taxable years.

On 19 April 1989, petitioner CBC received an assessment from the Bureau of Internal Revenue
(BIR) finding CBC liable for deficiency DST on the sales of foreign bills of exchangeto the Central
Bank. The deficiency DST was computed as follows:

Deficiency Documentary Stamp Tax

Amount

For the years 1982 to 1985 P8,280,696.00

For calendar year 1986 P2,481,975.60
Add : Surcharge P620,493.90 P3,102.469.50

P11 ,383,165.50 6

On 8 May 1989, petitioner CBC, through its vice-president, sent a letter of protest to the BIR. CBC
raised the following defenses: (1) double taxation, as the bank had previously paidthe DST on all its
transactions involving sales of foreign bills of exchange to the Central Bank; (2) absence of liability,
as the liability for the DST in a sale of foreign exchange through telegraphic transfers to the Central
Bank falls on the buyer ―in this case, the Central Bank; (3) due process violation, as the bank’s
records were never formally examined by the BIR examiners; (4) validity of the assessment, as it did
not include the factual basis therefore; (5) exemption, as neither the taxexempt entity nor the other
party was liable for the payment of DST before the effectivity of Presidential Decree Nos. (PD) 1177
and 1931 for the years 1982 to 1986.7 In the protest, the taxpayer requested a reinvestigation so as
to substantiate its assertions.8

On 6 December 2001, more than 12 years after the filing of the protest, the Commissioner of Internal
Revenue (CIR) rendered a decision reiterating the deficiency DST assessment and ordered the
payment thereof plus increments within 30 days from receipt of the Decision.9

On 18 January 2002, CBC filed a Petition for Review with the CTA. On 11 March 2002, the CIR filed
an Answer with a demand for CBC to pay the assessed DST.10

On 23 February 2005, and after trial on the merits, the CTA Second Division denied the Petition of
CBC. The CTA ruled that a SWAP arrangement should be treated as a telegraphic transfer subject
to documentary stamp tax.11

On 30 March 2005, petitioner CBC filed a Motion for Reconsideration, but it was denied in a
Resolution dated 14 July 2005.

On 5 August 2005, petitioner appealed to the CTA En Banc. The appellate tax court, however,
dismissed the Petition for Review in a Decision dated 1 December 2005. CBC filed a Motion for
Reconsideration on 21 December 2005, but it was deniedin a 20 March 2006 Resolution.
The taxpayer now comes to this Court with a Rule 45 Petition, reiterating the arguments it raised at
the CTA level and invoking for the first time the argument of prescription. Petitioner CBC states that
the government has three years from 19 April 1989, the date the former received the assessment of
the CIR, to collect the tax. Within that time frame, however, neither a warrant of distraint or levy was
issued, nor a collection case filed in court.

On 17 October 2006, respondentCIR submitted its Comment in compliance with the Court’s
Resolution dated 26 June 2006.12 The Comment did not have any discussion on the question of
prescription.

On 21 February 2007, the Court issued a Resolution directing the parties to file their respective
Memoranda. Petitioner CBC filed its Memorandum13 on 26 April 2007. The CIR, on the other hand,
filed on 17 April 2007 a Manifestation stating thatit was adopting the allegations and authorities in its
Comment in lieu of the required Memorandum.14

ISSUE

Given the facts and the arguments raised in this case, the resolution of this case hinges on this
issue: whether the right of the BIR to collect the assessed DST from CBC isbarred by prescription.15

RULING OF THE COURT

We grant the Petition on the ground thatthe right of the BIR to collect the assessed DST is barred by
the statute of limitations.

Prescription Has Set In.

To recall, the Bureau of Internal Revenue (BIR) issued the assessment for deficiency DST on 19
April 1989, whenthe applicable rule was Section 319(c) of the National Internal Revenue Code of
1977, as amended.16 In that provision, the time limit for the government to collect the assessed tax is
set at three years, to be reckoned from the date when the BIR mails/releases/sends the assessment
notice to the taxpayer. Further, Section 319(c) states that the assessed tax must be collected by
distraint or levy and/or court proceeding withinthe three-year period.

With these rules in mind, we shall now determine whether the claim of the BIR is barred by time. In
this case, the records do not show when the assessment notice was mailed, released or sent to
CBC. Nevertheless, the latest possible date that the BIR could have released, mailed orsent the
assessment notice was on the same date that CBC received it, 19 April 1989. Assuming therefore
that 19 April 1989 is the reckoning date, the BIR had three years to collect the assessed DST.
However, the records of this case show that there was neither a warrant of distraint or levy servedon
CBC's properties nor a collection case filed in court by the BIR within the three-year period.

The attempt of the BIR to collect the tax through its Answer with a demand for CBC to pay the
assessed DST in the CTA on 11 March 2002 did not comply with Section 319(c) ofthe 1977 Tax
Code, as amended. The demand was made almost thirteen years from the date from which the
prescriptive period is to be reckoned. Thus, the attempt to collect the tax was made way beyond the
three-year prescriptive period.

The BIR’s Answer in the case filed before the CTA could not, by any means, have qualified as a
collection case as required by law. Under the rule prevailing at the time the BIR filed itsAnswer, the
regular courts, and not the CTA, had jurisdiction over judicialactions for collection of internal revenue
taxes. It was only on 23 April 2004, when Republic Act Number 9282 took effect,17 that the
jurisdiction of the CTA was expanded to include, among others, original jurisdiction over collection
cases in which the principal amount involved is one million pesos or more. Consequently, the claim
of the CIR for deficiency DST from petitioner is forever lost, as it is now barred by time. This Court
has no other option but to dismiss the present case.

The running of the statute of limitations was not suspended by the request for reinvestigation.

The fact that the taxpayer in this case may have requested a reinvestigation did not toll the running
of the three-year prescriptive period. Section 320 of the 1977 Tax Code states:

Sec. 320. Suspension of running of statute.—The running of the statute of limitations provided in
Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a
proceeding in court for collection, in respect of any deficiency, shall be suspended for the period
during which the Commissioner is prohibited from making the assessment or beginning distraint or
levy or a proceeding in court and for sixty days thereafter; when the taxpayer requests for a re-
investigation which is granted by the Commissioner;when the taxpayer cannot be located in the
address given by him in the return filed upon which a tax is being assessed or collected: Provided,
That if the taxpayer informs the Commissioner of any change in address, the running of the statute
of limitations will not be suspended; when the warrant of distraint and levy is duly served upon the
taxpayer, his authorized representative, or a member of his household with sufficient discretion, and
no property could be located; and when the taxpayer is out of the Philippines. (Emphasis supplied)

The provision is clear. A request for reinvestigation alone will not suspend the statute of limitations.
Two things must concur: there must be a request for reinvestigation and the CIR must have granted
it. BPI v. Commissioner of Internal Revenue18 emphasized this rule by stating:

In the case of Republic of the Philippines v. Gancayco, taxpayer Gancayco requested for a thorough
reinvestigation of the assessment against him and placed at the disposal of the Collector of Internal
Revenue all the [evidence] he had for such purpose; yet, the Collector ignored the request, and the
records and documents were not at all examined. Considering the given facts, this Court
pronounced that—

x x x. The act of requesting a reinvestigation alone does not suspend the period. The request should
first be granted, in order to effect suspension. (Collector v. Suyoc Consolidated, supra; also Republic
v. Ablaza, supra). Moreover, the Collector gaveappellee until April 1, 1949, within which to submit his
evidence, which the latter did one day before. There were no impediments on the part of the
Collector to file the collection case from April 1, 1949 x x x.

In Republic of the Philippines v. Acebedo, this Court similarly found that —

. . . [T]he defendant, after receiving the assessment notice of September 24, 1949, asked for a
reinvestigation thereof on October 11, 1949 (Exh. "A"). There is no evidence that this request was
considered or acted upon. In fact, on October 23, 1950 the then Collector of Internal Revenue issued
a warrant of distraint andlevy for the full amount of the assessment (Exh. "D"), but there was follow-
up of this warrant. Consequently, the request for reinvestigation did not suspend the running of the
period for filing an action for collection. (Emphasis in the original)

The Court went on to declare thatthe burden of proof that the request for reinvestigation had been
actually granted shall be on the CIR. Such grant may be expressed in its communications with the
taxpayer or implied from the action of the CIR orhis authorized representative in response to the
request for reinvestigation.
There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had
granted the request for reinvestigation filed by BPI. What is reflected in the records is the piercing
silence and inaction of the CIR on the request for reinvestigation, as he considered BPI's letters of
protest to be.

In the present case, there is no showing from the records that the CIR ever granted the request for
reinvestigation filed by CBC. That being the case, it cannot be said that the running of the three-year
prescriptive period was effectively suspended.

Failure to raise prescription at the administrative level/lower court as a defense is of no moment.

When the pleadings or the evidence on record show that the claim is barred by prescription, the
court must dismiss the claim even if prescription is not raised as a defense.

We note that petitioner has raised the issue of prescription for the first time only before this
Court.While we are mindful of the established rule of remedial law that the defense of prescription
must be raised at the trial court that has also been applied for tax cases.19 Thus, as a rule, the failure
to raise the defense of prescription at the administrative level prevents the taxpayer from raising it at
the appeal stage.

This rule, however, is not absolute.

The facts of the present case are substantially identical to those in the 2014 case, Bank of the
Philippine Islands (BPI) v. Commissioner of Internal Revenue.20 In that case, petitioner received an
assessment notice from the BIR for deficiency DST based on petitioner’s SWAP transactions for the
year 1985 on 16 June 1989. On 23 June 1989, BPI, through its counsel, filed a protest requesting
the reinvestigation and/or reconsideration of the assessment for lack of legal or factual bases.
Almost ten years later, the CIR, in a letter dated 4 August 1998, deniedthe protest. On 4 January
1999, BPI filed a Petition for Review with the CTA. On 23 February 1999,the CIR filed an Answer
with a demand for BPI to pay the assessed DST. It was only when the case ultimately reached this
Court that the issue of prescription was brought up. Nevertheless, the Court ruled that the CIR could
no longer collect the assessed tax due to prescription. Basing its ruling on Section 1, Rule 9 of the
Rules of Court and on jurisprudence, the Court held as follows:

In a Resolution dated 5 August 2013, the Court, through the Third Division, found that the assailed
tax assessment may be invalidated because the statute of limitations on the collection of the alleged
deficiency DST had already expired, conformably with Section 1, Rule 9 of the Rules of Court and
the Bank of the Philippine Islands v. Commissioner of Internal Revenue decision. However, to afford
due process, the Court required both BPI and CIR to submit their respective comments on the issue
of prescription.

Only the CIR filed his comment on 9 December 2013. In his Comment, the CIR argues that the issue
of prescription cannot be raised for the first time on appeal. The CIR further alleges that even
assuming that the issue of prescription can be raised, the protest letter interrupted the prescriptive
period to collect the assessed DST, unlike in the Bank of the Philippine Islands case. x x x x

We deny the right of the BIR to collect the assessed DST on the ground of prescription. Section 1,
Rule 9 of the Rules of Court expressly provides that:

Section 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that
there is another action pending between the same parties for the same cause, or that the action is
barred by prior judgment or by the statute of limitations, the court shall dismiss the claim.

If the pleadings or the evidence on record show that the claim is barred by prescription, the court is
mandated to dismiss the claim even if prescription is not raised as a defense.In Heirs of Valientes v.
Ramas,we ruled that the CA may motu propriodismiss the case on the ground of prescription despite
failure to raise this ground on appeal. The court is imbued with sufficient discretion to review matters,
not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving
at a complete and just resolution of the case. More so, when the provisions on prescription were
enacted to benefit and protect taxpayers from investigation after a reasonable period of time.

Thus, we proceed to determine whether the period to collect the assessed DST for the year 1985
has prescribed.

To determine prescription, what is essential only is that the facts demonstrating the lapse of the
prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegations
of the plaintiff’s complaint, or otherwise established by the evidence. Under the then applicable
Section 319(c) [now, 222(c)] of the National Internal Revenue Code (NIRC) of 1977, as amended,
any internal revenue tax which has been assessed within the period of limitation may be collected by
distraint or levy, and/or court proceeding within three years following the assessment of the tax. The
assessment of the tax is deemed made and the three-year period for collection of the assessed tax
begins to run on the date the assessment notice had been released, mailed or sent by the BIR to the
taxpayer.

In the present case, although there was no allegation as to when the assessment notice had been
released, mailed or sent to BPI, still, the latest date that the BIR could have released, mailed or sent
the assessment notice was on the date BPI received the same on 16 June 1989. Counting the three-
year prescriptive period from 16 June 1989, the BIR had until 15 June 1992 to collect the assessed
DST.But despite the lapse of 15 June 1992, the evidence established that there was no warrant of
distraint or levy served on BPI’s properties, or any judicial proceedings initiated by the BIR.

The earliest attempt of the BIR to collect the tax was when it filed its answer in the CTA on 23
February 1999, which was several years beyond the three-year prescriptive period. However, the
BIR’s answer in the CTA was not the collection case contemplated by the law. Before 2004 or the
year Republic Act No. 9282 took effect, the judicial action to collect internal revenue taxes fell under
the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set in to bar
the collection of the assessed DST. (Emphasis supplied)

BPI thus provides an exception to the rule against raising the defense of prescription for the first
timeon appeal: the exception arises when the pleadings or the evidence on record show that the
claim is barred by prescription.

In this case, the fact that the claim of the government is time-barred is a matter of record. As can be
seen from the previous discussion on the determination of the prescription of the right of the
government to claim deficiency DST, the conclusion that prescription has set in was arrived at using
the evidence on record. The date of receipt of the assessment notice was not disputed, and the date
of the attempt to collect was determined by merely checking the records as to when the Answer of
the CIR containing the demand to pay the tax was filed.

Estoppel or waiver prevents the government from invoking the rule against raising the issue of
prescription for the first time on appeal.
In this case, petitioner may have raised the question of prescription only on appeal to this Court. The
BIR could have crushed the defense by the mere invocation of the rule against setting up the
defense of prescription only at the appeal stage. The government, however, failed to do so. On the
contrary, the BIR was silent despite having the opportunity to invoke the bar against the issue of
prescription. It is worthy of note that the Court ordered the BIR to file a Comment. The government,
however, did not offer any argument in its Comment about the issue of prescription, even if petitioner
raised it in the latter’s Petition. It merely fell silent on the issue. It was given another opportunity to
meetthe challenge when this Court ordered both parties to file their respective memoranda. The CIR,
however, merely filed a Manifestation thatit would no longer be filing a Memorandum and, in lieu
thereof,it would be merely adopting the arguments raised in its Comment. Its silence spoke loudly of
its intent to waive its right to object to the argument of prescription.

We are mindful of the rule in taxation that estoppeldoes not prevent the government from collecting
taxes; it is not bound by the mistake or negligence of its agents. The rule isbased on the political law
concept "the king can do no wrong,"21 which likens a state to a king: it does not commit mistakes, and
it does not sleep on its rights. The analogy fosters inequality between the taxpayer and the
government, with the balance tilting in favor of the latter. This concept finds justification in the theory
and reality that government is necessary, and it must therefore collect taxes if it is to survive. Thus,
the mistake or negligence of government officials should not bind the state, lest it bring harm to the
government and ultimately the people, in whom sovereignty resides.22

Republic v. Ker & Co. Ltd.23 involved a collection case for afinal and executory assessment. The
taxpayer nevertheless raised the prescription of the right to assess the tax as a defense before the
Court of First Instance. The Republic, instead of objecting to the invocation of prescription as a
defense by the taxpayer, litigated on the issue and thereafter submitted it for resolution. The
Supreme Court ruled for the taxpayer, treating the actuations of the government as a waiver of the
right to invoke the defense of prescription. Ker effectively applied to the government the rule of
estoppel. Indeed, the no-estoppel rule is not absolute.

The same ingredients in Ker - procedural matter and injustice -obtain in this case. The procedural
matter consists in the failure to raise the issue of prescription at the trial court/administrative level,
and injustice in the fact that the BIR has unduly delayed the assessment and collection of the DST in
this case. The fact is that it took more than 12 years for it to take steps to collect the assessed tax.
The BIR definitely caused untold prejudice to petitioner, keeping the latter in the dark for so long, as
to whether it is liable for DST and, if so, for how much.

CONCLUSION

Inasmuch as the government's claim for deficiency DST is barred by prescription, it is no longer
necessary to dwell on the validity of the assessment.

WHEREFORE, the Petition is GRANTED. The Court of Tax Appeals En Banc Decision dated 1
December 2005 and its Resolution dated 20 March 2006 in CTA EB Case No. 109 are hereby
REVERSED and SET ASIDE. A new ruling is entered DENYING respondent's claim for deficiency
DST in the amount of P11,383, 165.50.

SO ORDERED.