International Exchange Bank vs. CIR GRN 171266/520 SCRA 688 April 4, 2007 Carpio-Morales; J.

; FACTS: An examination of book of accounts of the bank resulted to an assessment of tax liabilities of the latter amounting to P465,158,118.31 for 1996 and P17,033,311,974.23 for 1997. Details of PAN included: Savings-Deposit-ESO amounting to P9,845,800.27 should be treated as time deposits considering that its features are very much the same as time deposits... subject to DST. CTA ordered payment of DST on SA-FSD. ISSUE: Whether or not SA-FSD evidenced by a passbook is subject to DST? RULING: As correctly found by CTA, En Bans, a passbook representing an interest earning deposit account issued by a bank qualifies as a certificate of deposit earning interest. In this case, a depositor of savings deposit FSD is required to keep the money with the bank for at least 30 days in order to yield a higher interest pertaining only to a regular savings deposit the only difference lies on the evidence of deposits a SA-FSD is evidence by a passbook, while a time deposit is evidence by a certificate of time deposit.

Osmea vs. Orbos 220 SCRA 703 Facts: Petitioner seeks to have Sec.8, paragraph 1 C of PD 1956, as amended by EO 137 declared unconstitutional for being undue and invalid delegation of legislative power to the Energy regulatory Board. Under the assailed law, the ERB is given the authority to impose additional amounts on petroleum products and to impose additional amounts to augment the resources of the fund. He argue that the money collected pursuant to PD 1956 must be treated as a special fund, not as a trust account or a trust fund, and that if a special tax is collected for a special purpose it shall be treated as a special fund to be used only for the purpose indicated. Issue: is there undue delegation of legislative power? Ruling: No. for a valid delegation of power, it is essential that the law delegating the power must be 1. Complete in itself, that it must set forth the policy to be executed by the delegate 2. It must fix the standard limits of which are sufficiently determinate or determined to which the delegate must conform. While the funds may be referred to as taxes, they are enacted in the exercise of the police power of the state. The fund remains subject to the review and accounting of the COA. These measures comply

with the constitutional description of a special fund.

ERNESTO M. MACEDA vs. HON. CATALINO MACARAIG, JR., et al G.R. No. No. 88291 May 31, 1991 and G.R. No. No. 88291 June 8, 1993 FACTS: Commonwealth Act No. 120 created the NPC as a public corporation to undertake the development of hydraulic power and the production of power from other sources. Several laws were enacted granting NPC tax and duty exemption privileges such as taxes, duties, fees, imposts, charges and restrictions of the Republic of the Philippines, its provinces, cities and municipalities "directly or indirectly," on all petroleum products used by NPC in its operation. However P.D. No. 1931 withdrew all tax exemption privileges granted in favour of government-owned or controlled corporations including their subsidiaries but empowered the President and/or the then Minister of Finance, upon recommendation of the FIRB to restore, partially or totally, the exemption withdrawn. BIR ruled that the exemption privilege enjoyed by NPC under said section covers only taxes for which it is directly liable and not on taxes which are only shifted to it. In 1986, BIR Commissioner Tan, Jr. states that all deliveries of petroleum products to NPC are tax exempt, regardless of the period of delivery. Thereafter, the FIRB issued several Resolutions in different occasions restoring the tax and duty exemption privileges of NPC indefinite period due to the restoration of the tax exemption privileges of NPC, NPC applied with the BIR for a "refund of Specific Taxes paid on petroleum products. On August 6, 1987, the Secretary of Justice, Opinion opined that "the power conferred upon Fiscal Incentives Review Board constitute undue delegation of legislative power and, therefore, unconstitutional. However, respondents Finance Secretary and the Executive Secretary declared that "NPC under the provisions of its Revised Charter retains its exemption from duties and taxes imposed on the petroleum products purchased locally and used for the generation of electricity. Thereafter investigations were made for the refund of the tax payments of the NPC which includes Millions of pesos Tax refund. Petitioner, as member of the Philippine Senate introduced as Resolution Directing the Senate Blue Ribbon Committee, In Aid of Legislation, to conduct a Formal and Extensive Inquiry into the Reported Massive Tax Manipulations and Evasions by Oil Companies, particularly Caltex (Phils.) Inc., Pilipinas Shell and Petrophil, Which Were Made Possible By Their Availing of the Non-Existing Exemption of National Power Corporation (NPC) from Indirect Taxes, Resulting Recently in Their Obtaining A Tax Refund Totalling P1.55 Billion From the Department of Finance. ISSUE: Whether or not respondent NPC is legally entitled to the questioned tax and duty refunds. RULING:

Yes. In G.R. No. No. 88291 the Supreme Court ruled in favour of exempting NPC to the said taxes. Also in G.R. No. No. 88291 the Supreme Court ruled in favour of respondents. NPC under the provisions of its Revised Charter retains its exemption from duties and taxes imposed on the petroleum products purchased locally and used for the generation of electricity. Presidential Decree No. 938 amended the tax exemption of NPC by simplifying the same law in general terms. It succinctly exempts NPC from "all forms of taxes, duties, fees, imposts, as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings." the NPC electric power rates did not carry the taxes and duties paid on the fuel oil it used. The point is that while these levies were in fact paid to the government, no part thereof was recovered from the sale of electricity produced. As a consequence, as of our most recent information, some P1.55 B in claims represent amounts for which the oil suppliers and NPC are "out-of-pocket. There would have to be specific order to the Bureaus concerned for the resumption of the processing of these claims.

CIR V SC JOHNSON INC. June 25, 1999 Monday, January 26, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Taxation Facts: Respondent is a domestic corporation organized and operating under the Philippine Laws, entered into a licensed agreement with the SC Johnson and Son, USA, a non-resident foreign corporation based in the USA pursuant to which the respondent was granted the right to use the trademark, patents and technology owned by the later including the right to manufacture, package and distribute the products covered by the Agreement and secure assistance in management, marketing and production from SC Johnson and Son USA. For the use of trademark or technology, respondent was obliged to pay SC Johnson and Son, USA royalties based on a percentage of net sales and subjected the same to 25% withholding tax on royalty payments which respondent paid for the period covering July 1992 to May 1993 in the total amount of P1,603,443.00. On October 29, 1993, respondent filed with the International Tax Affairs Division (ITAD) of the BIR a claim for refund of overpaid withholding tax on royalties arguing that, the antecedent facts attending respondents case fall squarely within the same circumstances under which said MacGeorge and Gillette rulings were issued. Since the agreement was approved by the Technology Transfer Board, the preferential tax rate of 10% should apply to the respondent. So, royalties paid by the respondent to SC Johnson and Son, USA is only subject to 10% withholding tax. The Commissioner did not act on said claim for refund. Private respondent SC Johnson & Son, Inc. then filed a petition for review before the CTA, to claim a refund of the overpaid withholding tax on royalty payments from July 1992 to May 1993.

On May 7, 1996, the CTA rendered its decision in favor of SC Johnson and ordered the CIR to issue a tax credit certificate in the amount of P163,266.00 representing overpaid withholding tax on royalty payments beginning July 1992 to May 1993. The CIR thus filed a petition for review with the CA which rendered the decision subject of this appeal on November 7, 1996 finding no merit in the petition and affirming in toto the CTA ruling. Issue: Whether or not tax refunds are considered as tax exemptions. Held: It bears stress that tax refunds are in the nature of tax exemptions. As such they are registered as in derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the exemption. The burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the clearest grant of organic or statute law. Private respondent is claiming for a refund of the alleged overpayment of tax on royalties; however there is nothing on record to support a claim that the tax on royalties under the RP-US Treaty is paid under similar circumstances as the tax on royalties under the RP-West Germany Tax Treaty.

REPUBLIC BANK, PETITIONER, VS. COURT OF TAX APPEALS AND THE COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS. DECISION NOCON, J.: Petitioner Republic Bank appeals the decision of public respondent Court of Tax Appeals dated September 30, 1982 dismissing its Petition for Review, thereby affirming public respondent Commissioner of Internal Revenues assessment for petitioners reserve deficiency taxes inclusive of 25% surcharge for the taxable years 1969 and 1970 in the amounts of P1,325,768.82 and P1,953,132.67, respectively. The antecedent facts as briefly summarized by the Solicitor General are as follows: On 14 September 1971, respondent Commissioner assessed petitioner the amount of P1,060,615.06, plus 25% surcharge in the amount of P265,153.76, or a total of P1,325,768.82, as 1% monthly bank reserve deficiency tax for taxable year 1969. In a letter dated 6 October 1971, petitioner requested reconsideration of the assessment which respondent Commissioner denied in a letter dated 26 February 1973. On 5 April 1973, respondent Commissioner assessed petitioner the amount of P1,562,506.14, plus 25% surcharge in the amount of P390,626.53, or a total of P1,953,132.67, as 1% monthly bank reserve deficiency tax for taxable year 1970. In a letter dated 16 May 1973, petitioner requested reconsideration of the assessment which respondent Commissioner denied in a letter dated 6 May 1974. Petitioner contends that Section 249 of the Tax Code is no longer enforceable, because Section 126 of Act 1459, which was allegedly the

basis for the imposition of the 1% reserve deficiency tax, was repealed by Section 90 of Republic Act 337, the General Banking Act, and by Sections 100 and 101 of Republic Act 265. On 28 March 1973, petitioner filed a petition for review with the Tax Court, docketed as C.T.A. Case No. 2506, contesting the assessment for the taxable year 1969. On 3 July 1974, a similar petition, docketed as C.T.A. Case No. 2618, was filed contesting the assessment for the taxable year 1970. The cases, involving similar issues, were consolidated. After hearing, the Tax Court rendered a decision dated 30 September 1982 dismissing the petitions for review and upholding the validity of the assessments. Still not satisfied, petitioner filed this petition for review.[1] Petitioner urges that the issue to be resolved in this petition is: WHETHER SECTION 249 OF THE TAX CODE WHICH PROVIDES THAT THERE SHALL BE COLLECTED UPON THE AMOUNT OF RESERVE DEFICIENCIES INCURRED BY THE BANK x x x AS PROVIDED IN SECTION ONE HUNDRED TWENTY-SIX OF ACT NUMBERED ONE THOUSAND FOUR HUNDRED AND FIFTY-NINE (THE CORPORATION LAW) x x x ONE PER CENTUM PER MONTH HAS BEEN RENDERED INOPERATIVE BY THE REPEAL OF THE AFORESAID REFERRED PROVISION, I.E., SECTION ONE HUNDRED TWENTY-SIX OF THE CORPORATION LAW.[2] The second paragraph of Section 249 of the Tax Code of 1970 (C. A. No. 466 as amended by Rep. Act No. 6110) invoked by the respondent Commissioner in making the assessments provides that: There shall be collected upon the amount of reserve deficiencies incurred by the bank, and for the period of their duration, as provided in section one hundred twenty-six of Act Numbered one thousand four hundred and fifty-nine, as amended by Act Numbered three thousand six hundred and ten, one per centum per month. which paragraph was based on Sec. 26 of R.A. 337, the General Banking Act, and Sections 100, 101, and 106 of R.A. 265, the Central Bank Act, all providing for the reserve requirements on banking operations, while Section 126 of Act No. 1459 (The Corporation Law),as amended by Art. 3610, reads: SEC. 126. Whenever the reserve as defined in the last preceding section of any commercial banking corporation shall be below the amount required in that section such commercial banking corporation shall not diminish the amount of such reserve by making any new loans or discounts, or declare any dividend out of its profits until the required proportion between the aggregate amount of its deposits and its reserve has been restored. Reserve deficiencies shall be penalized at the rate of one per centum per month upon the amount of the deficiencies and for the periods of their duration in accordance with the regulation to be issued by the Bank Commissioner. The penalty assessed shall be collected by the Collector of Internal Revenue in accordance with the rules regulations and procedure to be determined by him. In the case of any commercial banking corporation whose reserve is continuously deficient for a period of thirty days, the business of such corporation may be wound up by the Bank Commissioner in accordance with section sixteen hundred and thirty-nine of Act numbered twenty-seven hundred and eleven, as amended, known as the Administrative Code[3] According to petitioner, Section 126 has been expressly repealed by Section 90 of the General Banking Act (R.A. No. 337), to wit:

Sec. 90. Sections one hundred seventy-five to one hundred eighty-three and one hundred ninety-nine to two hundred seventeen of the Code of Commerce, as amended, section one hundred three to one hundred forty-six and one hundred seventy-one to one hundred ninety of Act numbered fourteen hundred and fifty-nine, as amended; Acts Numbered Thirty-one hundred and fifty-four and Thirty-five hundred and twenty, and all laws or parts thereof, including those parts of special charters of the Philippine National Bank and other banking institutions in the Philippines which are inconsistent herewith, are hereby repealed. Both petitioner and public respondent agree that: x x x. The requirement on the maintenance of bank reserves, previously found in Section 126 of Act 1459 (The Corporation Law), remained prescribed, after its repeal, in a. Sec. 26, RA 337[4] subjecting the deposit liabilities of commercial banks including the Philippine National Bank to the reserve requirements and other conditions prescribed by the Monetary Board in accordance with the authority granted to it under the Central Bank Act. b. Sec. 100, RA 265[5] requiring banks to maintain reserves against their deposit liabilities; c. Sec. 101, RA 265[6] authorizing the Monetary Board to prescribe and to modify the minimum reserved ratios applicable to each class of peso deposits; d. Sec. 106, RA 265[7] imposing a penalty of 1/10 of 1% for violation of the Banking Law.[8] As petitioner Republic sees it, Section 249 of the Tax Code (CA 466), can no longer be enforced as the basis for which the tax is to be computed under Section 126, Act. 1459, is no longer in force. The Central Bank Act (R.A. 265), specifically Sections 100, 101, 105 and 106, by providing for a whole new set of rules in regard to reserve requirements and reserve deficiencies of banks clearly show that it was the legislative intent to remove the regulation of the operations of banks under the ambit of the Corporation Law (Art. 1459) and to place them under the purview of Central Bank Act (R.A. No. 265) and the General Banking Act (R.A. 337). Public respondents disagree and state that Section 249 of the then Tax Code (CA 466) is deemed to have ipso facto incorporated by reference the new legislations on bank reserves after the repeal of Section 126, Act. 1459. Petitioner Republic argues then that in case of a reserve deficiency, the violating bank would be liable at the same time for a tax of 1% a month (Second paragraph, Section 249, NIRC) payable to the Bureau of Internal Revenue as well as a penalty of 1/10 of 1% a day (Section 106, Central Bank Act) payable to the Central Bank. They argue that: As we examine the second paragraph of Section 249 of the Tax Code, we find nothing therein which says that such imposition is a tax rather than a penalty. It merely states that there shall be collected x x x as provided in Section one hundred twenty six of Act Numbered one thousand four hundred and fifty-nine x x x one per centum per month. On the contrary, the provision referred to (Section 126 of Act 1459) states that x x x reserve deficiencies shall be penalized at the rate of one per centum per month x x x the penalty assessed shall be collected by the Collector of Internal Revenue. It would be wrong, therefore, to say that the imposition in Section 249 of the Tax Code is a tax, not a penalty, because taken in the context of the referred statute, it is really a penalty. Such imposition was provided in the Tax Code and payable to the Collector of Internal Revenue

simply because at that time there was yet no Central Bank Act and General Banking Act nor a Monetary Board of Central Bank to regulate the operation of banks.[9] After a careful consideration of the facts of the case and the pertinent laws involved, We vote to deny the petition. Firstly, We would like to state that We find unfortunate petitioners act of quoting out of context the questioned provision in the Tax Code. Petitioner alleged that the second paragraph of Section 249 of the Tax Code merely states that there shall be collected x x x as provided in Section one hundred twenty one of Act numbered one thousand four hundred and fifty nine x x x one per centum per month. If petitioner had been candid and honest enough, it would have stated under what title and chapter of the Tax Code the second paragraph of Section 249 falls. As it then stood, the law stated: x x x TITLE VIII MISCELLANEOUS TAXES Sec. 249. Tax on Banks. xxx xxx xxx. There shall be collected upon the amount of reserve deficiencies incurred by the bank, and for the period of their duration, as provided in section one hundred twenty six of Act numbered one thousand four hundred and fifty-nine, as amended by Act Numbered Three thousand six hundred and ten, one per centum per month. xxx xxx xxx. (As amended by Rep. Act No. 6110)[10] Clearly, the law states a tax is to be collected. As the law stood during the years the petitioner was assessed for taxes on reserve deficiencies (1969 & 1970), petitioner had to pay twice the first, a penalty, to the Central Bank by virtue of Section 106 for violation of Secs. 100 and 101, all of the Central Bank Act and the second, a tax to the Bureau of Internal Revenue for incurring a reserve deficiency. As correctly analyzed by the petitioner and public respondents, the new legislations on bank reserves merely provided the basis for computation of the reserve deficiency of petitioner bank. Petitioner submits that it was not the legislative intention that banks with reserve deficiencies would pay twice as the Tax Code (CA 466, as amended by P.D. 69) enacted on January 1, 1973 did not contain said questioned provision. While petitioner might have a point, the wisdom of this legislation is not the province of the Court.[11] It is clear from the statutes then in force that there was no double taxation involved one was a penalty and the other was a tax. At any rate, We have upheld the validity of double taxation.[12] The payment of 1/10 of 1% for incurring reserve deficiencies (Section 106, Central Bank Act) is a penalty as the primary purpose involved is regulation,[13] while the payment of 1% for the same violation (Second Paragraph, Section 249, NIRC) is a tax for the generation of revenue which is the primary purpose in this instance.[14] Petitioner should not complain that it is being asked to pay twice for incurring reserve deficiencies. It can always avoid this predicament by not having reserve deficiencies. Petitioners case is covered by two special laws one a banking law and the other, a tax law. These two laws should receive such construction as to make them harmonize with each other and with the other body of preexisting laws.[15] Dura lex sed lex! II Corollary to this issue raised by petitioner bank, is the question on

how the respondent Commissioner computed reserve deficiency taxes considering that Sec. 12 249, NIRC, speaks of computation of what it calls penalty on a per month basis while the Central Bank Act provides for the computation of the penalty on a per day basis. It claims that respondent Commissioner never informed them of the details of these assessments, considering the same involve complex and tedious computations. It is too late in the day for petitioner to raise this matter for Us to resolve.[16] The grounds alleged by the petitioner in its motion for reconsideration of the Commissioners assessments are the very same grounds raised in these petitions. Petitioner did not ask the Commissioner to explain how it arrived in computing these reserve deficiency taxes. Neither did petitioner raise this question before the Court of Tax Appeals. Be that as it may, respondent Commissioner explained in compliance with Our Resolution of December 17, 1984, that: 3. The reserve deficiency tax amounting to P1,325,768.82 and P1,953,132.67, including surcharge, was computed on the basis of the monthly averages of reserve deficiencies, using figures on daily reserve deficiencies as appearing in DSE Form No. 1 duly accomplished by the bank, required to be filed regularly with the Department of Supervision and Examination of the Central Bank x x x.[17] Thus, what the respondent commissioner did was just to add up all the daily reserve deficiencies as stated by petitioner itself in DSE Form No. 1 which it submitted to the Central Bank for one month, divide such total by the number of banking days in a month to get the average monthly reserve deficiency. For example, for January, 1970, the total daily average of reserve deficiencies being P175,228,031.73, the monthly average was obtained by dividing said figure by 21 banking days to get P8,344,196.75. The tax rate applied was 1% to get the reserve deficiency tax of P83,441.97.[18] Obviously, the respondent commissioner could not apply the tax rate of 1% on the daily reserve deficiency as the law (Second paragraph, Sec. 249, NIRC) calls only for a monthly computation. Mathematically, this is the right procedure in obtaining the monthly average of the daily reserve deficiencies. As can be seen, even if petitioner had validly raised said issue, the respondent Commissioner merely followed the law to the letter. III Lastly, petitioner bank in its brief mentions that in Letter of Instruction No. 1330 issued by President Marcos on June 6, 1983,[19] the Central Bank was ordered to assist petitioner by way of full condonation of all penalties and other sanctions of whatever kind, nature and description, as of the date they become due, on its legal reserve deficiencies. Consequently, petitioner insists that it is now exempted from what it claims are the penalties imposed by the second paragraph of Section 249, NIRC. A careful study of said LOI reveals that it was issued with respect to petitioner banks (thereafter renamed Republic Planters Bank) role in the governments sugar production and procurement program as the financial arm of the sugar industry when the Philippine Sugar Commission (PHILSUCOM), created by virtue of P.D. 388 (1974), bought the petitioner bank from the Roman family. The LOI itself states that: xxx xxx xxx WHEREAS, IN PURSUIT OF THE GOVERNMENTS SUGAR PRODUCTION AND PROCUREMENT PROGRAM, REPUBLIC PLANTERS BANK INCURRED OVERDRAFTS IN ITS CLEARING ACCOUNT WITH THE CENTRAL

BANK IN VIEW OF THE LATTERS INABILITY TO EFFECT SUBSTANTIAL REGULAR LOAN RELEASES THRU ITS REDISCOUNTING WINDOW DUE TO CERTAIN CONSTRAINTS ON DOMESTIC CEILINGS RESULTING IN THE DEPOSIT RESERVE DEFICIENCIES AND CORRESPONDING IMPOSITION OF PENALTIES FOR RESERVE DEFICIENCIES; WHEREAS, CONSIDERING THE MAGNITUDE OF THE AMOUNT OF THE RESERVE PENALTIES WHICH MAY AFFECT ITS VIABILITY AND IN ORDER TO RATIONALIZE THE SITUATION, IT IS IMPERATIVE THAT REPUBLIC PLANTERS BANK BE GIVEN APPROPRIATE RELIEF FROM ITS PRESENT PREDICAMENT BROUGHT ABOUT PRIMARILY BY THE IMPLEMENTATION OF THE GOVERNMENTS SUGAR PRODUCTION AND PROCUREMENT PROGRAM AND NOT BY REASON OF ANY MISMANAGEMENT OR UNSOUND BANKING PRACTICE ON THE OPERATION OF THE BANK.[20] The petition at bar involves the assessments for the years 1969 and 1970. This LOI definitely does not cover the years 1969 and 1970 as it was issued only on June 6, 1983 and covers the period when PHILSUCOM bought the then ailing Republic Bank from the Roman family and renamed it the Philippine Planters Bank to be used as its financial conduit for the sugar industry. Therefore, even on the thesis that the payment made (Second paragraph, Section 249, NIRC) is a penalty, this penalty for 1969 and 1970 can not be condoned as said LOI does not cover it. WHEREFORE, premises considered, the petition is denied with costs against petitioner.SO ORDERED. Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.Melo, J., no part. [1] Rollo, pp. 132-1

PUBLIC INTEREST CENTER, INC., LAUREANO T. ANGELES, AND JOCELYN P. CELESTINO,PETITIONERS, VS. HONORABLE VICENTE Q. ROXAS, IN HIS CAPACITY AS PRESIDING JUDGE, REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 227, REPUBLIC OF THE PHILIPPINES, NATIONAL POWER CORPORATION, WESTINGHOUSE ELECTRIC CORPORATION, WESTINGHOUSE ELECTRIC S.A., WESTINGHOUSE INTERNATIONAL PROJECTS COMPANY, RESPONDENTS. DECISION Carpio Morales, J.: Challenged via petition for certiorari is the Quezon City Regional Trial Courts Resolution dated April 17, 1996 dismissing the Complaint of Public Interest Center, Inc., Laureano T. Angeles and Jocelyn P. Celestino (petitioners) in Civil Case No. Q-95-25597, and Order dated June 18, 1996, denying petitioners motion for reconsideration. The antecedent facts, as culled from the records of the case, are as follows: On February 9, 1976, respondent National Power Corporation (NPC) entered into a contract (the Contract) with respondent Westinghouse Electric S.A. (WESA), an affiliate or subsidiary of respondent Westinghouse Electric Corporation (WESTINGHOUSE), whereby WESA undertook to construct in favor of the NPC a 620-megawatt nuclear power plant at Morong, Bataan and to supply equipment, machineries and services therefor.[1] WESA subsequently executed a deed of assignment transferring all its rights and responsibilities in the Contract to its construction arm-agent,

respondent Westinghouse International Projects Company (WIPCO).[2] In 1986, President Corazon Aquino issued Executive Order (E.O.) No. 55, which was later amended by E.O. No. 98, transferring ownership of the already constructed power plant, which had become known as the Bataan Nuclear Power Plant (BNPP), its equipment, materials and facilities, records and uranium fuel, to the National Government or its duly constituted agency.[3] Pursuant to E.O. No. 55, as amended, the National Government assumed all remaining foreign and local obligations incurred by the NPC in financing the construction of the BNPP.[4] In 1988, the Aquino administration instituted a complaint against WESTINGHOUSE in New Jersey, U.S.A. WESTINGHOUSE later filed an arbitration case in Geneva, Switzerland.[5] On September 27, 1995, President Fidel Ramos authorized the following government officials as members of a Government Panel to conduct exploratory discussions with WESTINGHOUSE for the possible settlement of pending legal proceedings: Chief Presidential Legal Counsel Antonio T. Carpio,[6] Solicitor General Raul T. Goco, Assistant Secretary Cyril Del Callar, General Counsel Alberto L. Pangcog, and Counsel Mark Augenblick.[7] Subsequently or on October 4, 1995, President Ramos issued E.O. No. 265, which amended E.O. No. 315 dated January 1, 1988, creating the Presidential Committee on the Bataan Nuclear Power Plant (PC-BNPP Committee). E.O. No. 265 provided that the PC-BNPP Committee[8] shall be the coordinating and policy-making body on the BNPP, including policies arising from negotiations for a fair commercial settlement of all pending legal claims that will provide a substantial net benefit to the country, which shall submit its recommendations on BNPP-related policies to the President for approval.[9] On October 11, 1995, the PC-BNPP Committee issued a RESOLUTION ADOPTING THE ESSENTIAL TERMS AND CONDITIONS ARRIVED AT BY THE GOVERNMENT PANEL AND WESTINGHOUSE REPRESENTATIVES DURING THE EXPLORATORY DISCUSSIONS FROM SEPTEMBER 29, 1995 TO OCTOBER 9, 1995 FOR A COMPROMISE SETTLEMENT OF THE BNPP CONTROVERSY AND FAVORABLY RECOMMENDING APPROVAL THEREOF TO HIS EXCELLENCY, THE PRESIDENT, the salient points of which Resolution follow: xxxx NOTING that after a series of talks which started on September 29, 1995, the government panel and Westinghouse representatives (Mr. Briskman and Mr. Robert Gross) on October 9,1995, eventually agreed in principle on a settlement involving a package of more than $100 MILLION, consisting of the following: (1) $40 Million in cash (transferable by wire to a bank account specified by the Republic) (2) Two (2) newly manufactured 501-F Econopac combustion turbines, FOB Houston, at 160 MW each or a total of 320 MW valued at $30 Million each, or a total of $60 Million (3) Relinquishment by Westinghouse of the right to recover more than $200,000 in attorneys fees previously awarded by the New Jersey court. NOTING that in exchange for the foregoing cash and utilities, the parties would secure a dismissal with prejudice of the pending lawsuits, appeals and arbitration between the Republic and National Power

Corporation, on one hand, and Westinghouse, its affiliates and Burns & Roe, on the other hand, involving the BNPP controversy and that the Republic would direct National Power Corporation and other government agencies to lift the ban against Westinghouse equipment and technology; xxxx OBSERVING that the present offer of Westinghouse of $40 Million in cash plus two (2) 501-Fs worth $60 Million represents the highest cash offer (since its $10 Million cash offer in 1992) and the most advantageous in kind offer (no discount/rebate component or any corresponding obligation on the side of the Republic); HAVING IN MIND the uncertainty of the results of the arbitration, the possibility that some of Westinghouses counterclaims may partly offset any recovery, the prospect that even a favorable arbitration award could be limited to the $40 million cap under the original BNPP contract and that even if the government eventually wins the appeal of the New Jersey verdict, substantial costs would have to be incurred to pursue a new trial, which result is also uncertain; RECOGNIZING that the present offer of Westinghouse will result in greater net economic benefits to the Republic than any previous settlement offer; xxxx NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED that PC-BNPP, with the endorsement of the Republics lawyers and negotiating panel, adopts the foregoing essential terms of the settlement agreement and respectfully recommends to His Excellency, President Fidel V. Ramos, the acceptance and approval thereof.[10] (Underscoring supplied) On October 13, 1995, the Settlement Agreement reflected in the above-questioned Resolution of the PC-BNPP was forged by the Republic and NPC on one hand, and respondent WESTINGHOUSE corporations on the other.[11] On November 14, 1995, petitioners, as taxpayers, filed with the Regional Trial Court (RTC) of Quezon City a Complaint against herein private respondents, for declaration of nullity of the BNPP contract with application for the issuance of a temporary restraining order and preliminary injunction. [12] Herein public respondent, Branch 227 of the Quezon City RTC, set the hearing of petitioners application for the issuance of a temporary restraining order on November 28, 1995 on which date only petitioners and respondents Republic and NPC appeared. No representative of the WESTINGHOUSE corporations having showed up, public respondent directed petitioners to secure a certification from the Securities and Exchange Commission (SEC) on who the resident agent, if any, of said corporations[13] was. On the same scheduled date of hearing, the Solicitor General, on behalf of respondents Republic and NPC, moved for the dismissal of the Complaint on the ground that petitioners were engaged in forum-shopping, their counsel Atty. Crispin T. Reyes having previously filed cases[14] with causes of action identical thereto.While Atty. Reyes did not deny having previously filed, in Manila, a complaint, he argued that he was not among the plaintiffs in the complaint filed in Quezon City. Nevertheless, he withdrew as counsel for the plaintiffs herein petitioners.[15] On December 4, 1995, petitioners filed an Amended Complaint[16] praying for the following reliefs:

WHEREFORE, it is most respectfully prayed [that]: xxxx (2) after due hearing, a preliminary mandatory injunction issue upon a bond executed to the party enjoined in an amount to be fixed by the court ordering defendants National Power Corporation and the Republic of the Philippines to stop and/or not to perform further implementation/execution of their obligation/undertaking under the null and void [B]NPP Nuclear Plant Contract between the National Power Corporation and Westinghouse executed on February 9, 1976 in Manila, Philippines; likewise, from further continuing the payments for the contracted loans/interest based thereon unless otherwise securitized; and also from further implementing/executing their undertaking/obligations under the Settlement Agreement between Republic of the Philippines-National Power Corporation and Westinghouse negotiated on October 9, 1995 and allegedly executed on October 13, 1995; (3) after hearing on the merits, judgment be rendered declaring the [B]NPP Nuclear Plant Contract executed on February 9, 1976 in Manila and all amendments thereto, together with the loan contracts based thereon, as well as the Settlement Agreement executed on October 13, 1995 by defendant Republic of the Philippines/NAPOCOR with Westinghouse, as inexistent and void ab initio; (4) ordering defendants NAPOCOR and the REPUBLIC OF THE PHILIPPINES to reconvey/turn over the [B]NPP Nuclear Plant equipment and machineries to defendant WESTINGHOUSE ELECTRIC CORPORATION and/or its corporate agents and to restitute or refund to the former all payments paid for the [B]NPP Nuclear Plant to said Westinghouse, with legal interest from the filing of this complaint; (5) making the preliminary mandatory injunction permanent, and ordering defendant jointly and severally to pay plaintiffs reasonable attorneys fees pursuant to Article 2208 (2) and (11), Civil Code of the Philippines, with costs against defendants; . . . (Underscoring supplied) In essence, the Amended Complaint assailed the validity of and sought to nullify the following contracts: (a) The BNPP Contract;(b) The loan contracts entered into by the Republic and NPC to finance the construction of the BNPP; and (c) The Settlement Agreement entered into by the Republic and NPC with WESTINGHOUSE on October 13, 1995 in settlement of the claims arising from the Contract. The Republic filed a Motion to Dismiss (With Opposition to the Application for Preliminary Mandatory Injunction)[17] to petitioners Amended Complaint on the following grounds: (a) lis pendens and/or forumshopping; (b) lack of legal capacity of petitioners to sue; and (c) lack of cause of action.[18] For its part, the NPC filed its Comment/Motion To Dismiss Plaintiffs Amended Complaint,[19] alleging that the Amended Complaint failed to state a cause of action against it. By Order of January 25, 1996, public respondent directed, among other things, petitioners and the Republic and NPC to file their respective memoranda.[20] On February 26, 1996, petitioners, in compliance with public respondents order, filed a manifestation that per certification of the SEC, the new resident agent of WIPCO was ACCRA Agents, Inc. Summons was thereupon served upon ACCRA Agents, Inc.WIPCO soon filed a Motion to Dismiss[21] petitioners Amended Complaint on the following grounds: (a)

petitioners have no legal capacity to sue; (b) the Amended Complaint states no cause of action; and (c) assuming the existence of a cause of action, the same is nonetheless barred by the statute of limitations. By the assailed Resolution of April 17, 1996, public respondent DISMISSED petitioners complaint, holding as follows: xxxx I. that, with respect to the first cause of action (i) plaintiffs have violated Supreme Court Administrative Circular 04-94, otherwise known as the Anti-Forum Shopping Rule, which carries with it, among others, the penalty of dismissal of the action; II. that, with respect to the second cause of action, (i) this Court has no territorial jurisdiction over foreign and international bodies situated abroad, more so, if such bodies are foreign and international courts; (ii) this Court has no original and exclusive jurisdiction over the issue of invalidating compromise agreements entered into in foreign and international courts to settle foreign lawsuits pending before such foreign and international courts; (iii) this Court has no jurisdiction to enjoin court proceedings relative to the compromise agreement entered into in foreign and international courts to settle pending foreign lawsuits; (iv) the application for preliminary mandatory injunction of plaintiffs is denied for lack of merit . . . (v) the second cause of action did not allege constitutional, public interest, and judicial policy issues so as to qualify plaintiffs under the relaxed rule, as having standing, . . . (vi) this Court has not acquired jurisdiction over the persons of foreign defendants WELCO and WESA. . . (Underscoring supplied) Petitioners Motion for Reconsideration of public respondents Resolution dismissing their complaint having been denied by the other assailed Order of June 18, 1996, they filed the present Petition for Certiorari and Mandamus With Application for A Writ Of Preliminary Injunction And Prayer For A Temporary Restraining Order directly with this Court in view of the transcendental importance of the issues involved. Petitioners contend that in dismissing their Amended Complaint, public respondent abdicated its constitutional duty to exercise judicial review over the validity of the BNPP Contract, the loan contracts, and the 1995 Settlement Agreement. Petitioners further contend that, contrary to the finding of public respondent, petitioners did not commit forum-shopping since there is no identity of parties and causes of action in the instant case and in the complaint filed before the Manila RTC. Finally, petitioners contend that they have sufficiently established that the injury caused to them by the contracts are actual, direct and immediate to thus clothe them with standing. The Solicitor General and WIPCO, opposing the petition, argue that no grave abuse of discretion attended the issuance by public respondent of the assailed resolutions considering that, among other things, petitioners are guilty of forum-shopping; petitioners have no legal standing; and the propriety of entering into a settlement agreement involves a political question and is not subject to judicial review. The issues then are: (1) Whether petitioners have legal standing;(2) Whether petitioners are engaged in forum-shopping;

(3) Whether the validity of the Contract and the contracts of loan entered into by the Republic and NPC with foreign banks to finance the construction of the BNPP, and the propriety of entering into a Settlement Agreement are subject to judicial review; and (4) Whether courts may set aside a final judgment rendered by a foreign court. Legal Standing In Integrated Bar of the Philippines v. Zamora,[22] this Court defined legal standing as follows: Legal standing or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged. The term interest means a material interest, an interest in issue affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. The gist of the question of standing is whether a party alleges such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions. (Citations omitted; emphasis supplied) In public suits, the plaintiff, representing the general public, asserts a public right in assailing an allegedly illegal official action. The plaintiff may be a person who is affected no differently from any other person, and could be suing as a stranger, or as a citizen or taxpayer. To invest him with locus standi, the plaintiff has to adequately show that he is entitled to judicial protection and has a sufficient interest in the vindication of the asserted public right.[23]In the case of taxpayers suits, the party suing as a taxpayer must prove that he has sufficient interest in preventing the illegal expenditure of money raised by taxation. Thus, taxpayers have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law.[24] More particularly, the taxpayer must establish that he has a personal and substantial interest in the case and that he has sustained or will sustain direct injury as a result of its enforcement[25] or that he stands to be benefited or injured by the judgment in the case, or is entitled to the avails of the suit.[26] Petitioners allegations in their Amended Complaint that the loan contracts entered into by the Republic and NPC are serviced or paid through a disbursement of public funds are not disputed by respondents, hence, they are invested with personality to institute the same. Forum-Shopping Forum shopping exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another, or when he institutes two or more actions or proceedings grounded on the same cause, on the gamble that one or the other court would make a favorable disposition.[27] As explained by this Court in First Philippine International Bank v. Court of Appeals, forum-shopping exists where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other. Thus, there is forum-shopping when, between an action pending before this Court and another one, there exist: a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief

being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful amount to res judicata in the action under consideration; said requisites also constitutive of the requisites for auter action pendant or lis pendens. . . . [W]here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest.[28] In determining whether forum shopping exists, it is important to consider the vexation caused the courts and parties-litigants by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.[29] In the present case, it is evident that, vis a vis the abovementioned complaint filed in Manila, there exists identity of parties or interests represented, as well as identity of rights or causes of action and reliefs sought. Thus, the first complaint which was instituted before the Manila RTC by the Anti-Graft League of the Philippines, et al. as taxpayers suit,[30] Anti-Graft League of the Philippines, Inc., et al. v. Westinghouse Electric Corp., et al., docketed as Civil Case No. 93-66916, sought to declare null and void the Contract, as well as the same loan contracts entered into by herein respondents Republic and NPC with foreign banks, and to restrain said respondents from making further payments in compliance with the loan contracts.[31] It appears that the first complaint was dismissed by the Manila RTC upon a motion to dismiss.[32] It further appears that instead of filing an appeal, the therein petitioners Anti-Graft League of the Philippines, Inc. et al. filed a petition for certiorari with this Court, which was dismissed by Resolution dated March 1, 1995,[33] and that thereafter or on July 12, 1995, they filed a petition for mandamus[34] with the Court of Appeals praying for the following reliefs: . . . that a temporary restraining order be ISSUED ex-parte enjoining respondent NATIONAL POWER CORPORATION and the REPUBLIC OF THE PHILIPPINES from paying the loans in question they contracted with respondent banks and insurance companies for a period of TWENTY (20) DAYS from date of issuance; that after notice to respondents and within said period, said temporary restraining order be CONVERTED into a preliminary injunction with bond as may be fixed by the Court; that after hearing, judgment be RENDERED making the preliminary injunction permanent and ordering respondent court to reinstate Civil Case No. 93-66916 and to declare respondents WESTINGHOUSE ELECTRIC CORP. (WELCO) and WESTINGHOUSE INTERNATIONAL PROJECTS CO. (WIPCO), respondents foreign banks and insurances companies IN DEFAULT . . . (Emphasis supplied) The above-said petition for mandamus was still pending before the appellate court when herein petitioners filed their complaint, later amended, before the Quezon City RTC. Petitioners do not deny that the first complaint and the petition for mandamus (first set of cases) and their complaint subject of the present petition involve the same causes of action, are founded upon the same set

of facts, and are taxpayers suits. Nevertheless, they argue that the first set of cases and the present case do not have identity of parties since they were not among the petitioners in the former. Furthermore, petitioners assert that a taxpayers suit is not a class suit, hence, judgment in one case does not amount to res judicata in the other. At all events, petitioners contend that there is no absolute identity of causes of action since their Amended Complaint includes the nullification of the Settlement Agreement, which was not raised in the first set of cases. Petitioners position does not impress. A taxpayers action has been defined as follows: A taxpayers bill is essentially a class bill and can be filed only in the common interest of all the taxpayers of the municipality, to prevent the wrongful expenditure of the money of the municipality or the wasting of its assets. Schlanger v. West Berwick Borough, 261 Pa. 605, 608, 104 A. 764. A class bill, as its name implies, is a bill by several members of a class, on behalf of themselves and all others in the class, and no relief can be granted upon it, except upon a ground which is common to all the members of the class. [Citing cases]. Ashcom v. Westmont Borough, 298 Pa. 203, 208, 148 A. 112, 114.[35] (Emphasis supplied) As to plaintiffs, both suits are brought by the plaintiff as a citizen and taxpayer, besides as an individual, and therefore they are taxpayer class actions. x x x, In Holman v. Bridges, 165 Ga. 296(2), 140 S.E. 886, this court held: Where a taxpayer or property owner brings an action against a county or its officers upon a matter of public or general interest to all other taxpayers of such political subdivision, and the action either expressly or by necessary implication is on their behalf, they are equally bound by the adjudication , and a judgment is a bar to any subsequent proceeding by them or any of them seeking similar relief upon the same facts. x x x[36] (Emphasis supplied) The general principle of class actions that a judgment in favor of or against the parties representing the general class is, under the doctrine of res judicata, in favor of or against all who are thus represented applies to litigations instituted by taxpayers. Accordingly, in a suit brought by citizens and taxpayers to determine a public right or a matter of public interest, all citizens and taxpayers are regarded as parties to the proceedings by representation and are bound by the judgment rendered therein.[37] The plaintiff there was another taxpayer of the city, suing in the status of citizen and taxpayer, and the city itself was a co-defendant. The action was instituted September 3, 1958. The first count of the complaint, Inter alia, charged the affiliation agreement here in question to be void, illegal and of no effect because the City ignored the requirements of the local budget law, N.J.S. 40:2-1 et seq., particularly 40:2-29 and the law pertaining to municipal contracts, particularly 40:50-6, as to the necessity for either budgeting the contract or passing an appropriation ordinance * * *. Subsequently the plaintiff in that action made a motion for summary judgment on the first count alone, and defendants moved for summary judgment on all counts. We have examined the briefs and affidavits submitted to the trial court on those motions, and it appears therefrom that the matter of the alleged invalidity of the affiliation agreement for alleged noncompliance with N.J.S.A. 40:2-29 and 40:50-6 was argued to the court. The judgment of the court denied plaintiffs motion and granted those of

defendants. No appeal therefrom was taken. xxxx Petitioner first seeks to avoid the effect of the prior judgment on the ground that the subject matter of the two respective proceedings differs. However, this is not, properly speaking, a case of different subject matter, but of different causes of action. Such a difference is immaterial if a postulate of law essential to the success of the party in the later proceeding has been distinctly put in issue and adjudicated Contra in the earlier, particularly where, as here, the subject matter in both proceedings arises out of the same transaction. See 30A Am.Jur., Judgments, s 360, p. 401; Restatement, Judgments, ss 68, 70, comment pp. 319, 320; N.J. Highway Authority v. Renner, 18 N.J. 485, 493, 494, 114 A.2d 555 (1955); Mazzilli v. Accident, etc., Casualty Ins. Co., etc., 26 N.J. 307, 314, 139 A.2d 741 (1958) (quotation from City of Paterson v. Baker, 51 N.J.Eq. 49, 26 A. 324 (Ch.1893)). Nor will it avail petitioner that the taxpayer in the earlier action was one other than herself. A taxpayer attacking governmental action in which he has no peculiar personal or special interest is taken to be suing as a representative of all taxpayers as a class. The general rule is that in the absence of fraud or collusion a judgment for or against a governmental body in such an action is binding and conclusive on all residents, citizens and taxpayers with respect to matters adjudicated which are of general and public interest. 50 C.J.S. Judgments s 796, p. 337; cf. Edelstein v. Asbury Park, 51 N.J.Super. 368, 389, 143 A.2d 860 (App.Div.1958); see also 18 McQuillin, Municipal Corporations (3d ed. 1950), s 52.50, pp. 124, 125; 52 Am.Jur., Taxpayers Actions, s 38, p. 26.[38] (Emphasis and underscoring supplied) Hence, it is to no avail that petitioners invoke lack of identity of parties. For petitioners in the first set of cases and in the instant case are suing under a common or general interest on a subject matter in a representative capacity, for the benefit of all taxpayers as a class. As this Court has repeatedly ruled, identity of parties needed to satisfy the requirement in lis pendens or res judicata requires only an identity of interest, not a literal identity of parties.[39] As regards identity of causes of action, petitioners do not deny that the first set of cases the complaint filed in Manila and the petition for mandamus filed before the Court of Appeals involves the same causes of action grounded on the same set of facts as that of the Amended Complaint filed by them. Indeed, the petition for mandamus essentially sought to review the Manila RTC order dismissing the first complaint. Petitioners incorporation of an additional cause of action in their Amended Complaint filed before the Quezon City RTC, occasioned merely by subsequent events, does not absolve petitioners from forum shopping. Additionally, petitioners violated the requirement to report to the courts the fact that a similar action had been filed or is already pending before the courts, regardless of who initiated such similar action. For Section 5, Rule 7 of the Rules of Court requires: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such pending

action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. (Emphasis and underscoring supplied) Granted that petitioners were initially unaware of the existence of the first set of cases, albeit their counsel was one of the petitioners therein, such fact was already brought to their attention during the hearing of their application for a temporary restraining order[40] conducted after the filing of their Complaint. When petitioners subsequently filed their Amended Complaint, however, they failed to report the pendency of the petition for mandamus before the appellate court bearing on the dismissal by the Manila RTC of the complaint filed by the Anti-Graft League of the Philippines, Inc. Public respondents dismissal of the Amended Complaint on the ground of forum shopping is thus in order. This leaves it unnecessary to pass on the rest of the issues. WHEREFORE, the petition is DENIED. Costs against petitioners. SO ORDERED. Quisumbing, (Chairperson), Tinga, and Velasco, Jr., JJ., concur. Carpio, J., no part, member of Govt. and mentioned on pages 2 and 3. ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBINGAssociate JusticeChairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the Courts Division. REYNATO S. PUNO Chief Justice