IBARRA P. ORTEGA, G.R. No.

176150 Ankylosis,[3]which claims the SSS granted for a total monthly

Petitioner,
Present: pension of 23 months.[4]

- versus - QUISUMBING, J., Chairperson,

CARPIO MORALES, After the expiration of his disability pension, petitioner
SOCIAL SECURITY TINGA, filed with the SSS Malabon Branch Office on April 26, 2000 a
COMMISSION, and VELASCO, JR., and
claim for total permanent disability benefits.[5] His application,
SOCIAL SECURITY SYSTEM, DE CASTRO,* JJ.
Respondents. docketed as BO-0000-1755, was denied, however, on the
Promulgated: ground that he was already granted disability benefits for the
June 25, 2008
x-------------------------------------------- same illness and physical examination showed no progression
- - - - - - -x of illness.[6] Dr. Juanillo Descalzo III, SSS Malabon Branch
senior physician, observed that petitioner merely had a slight
DECISION limitation of grasping movement for both hands.[7]

Aggrieved, petitioner filed before the SSC an unverified

CARPIO MORALES, J.:
Petition of June 19, 2000,[8] alleging that the SSS denied his
application despite the fact that his attending physician, Dr.
Petitioner Ibarra P. Ortega assails the Court of Appeals August
Rafael Recto, Jr., diagnosed him to be suffering from Trigger
7, 2006 Decision[1] dismissing his petition for review and
finger 4th (L) and thumb (L)[9] while another private medical
upholding the denial by respondent Social Security
practitioner, Dr. Flo dela Cruz, diagnosed him to be also
Commission (SSC) of his application for total permanent
suffering from Bronchial Asthma, Hypertension and
disability benefits, and the Resolution[2] of January 16, 2007
[10]
Gastro-Esophageal Reflux Disease.
denying his motions for reconsideration and inhibition.

Further claiming to be afflicted with rheumatoid arthritis

Petitioner, a member of respondent Social Security System
of both hands affecting all fingers and both
(SSS), filed claims for partial permanent disability benefits on
[11]
palms, petitioner contended that the medical opinion of the
account of his condition of Generalized Arthritis and Partial
SSS physician who interviewed him for less than three
minutes cannot prevail over the findings of his physicians who
have been treating him over a long period of time.
Before taking cognizance of his appeal, the SSC directed the
exhaustion of administrative remedies, by letter of June 30,
2000. The matter was thus referred to the SSS Office of the
Medical Program Director for review of petitioners disability
[12]
claim.
Meanwhile, by letter of July 17, 2000, the SSS Legal
Department denied a reconsideration of the denial of his
[13]
claim, prompting petitioner to submit a letter-opposition
of August 15, 2000.[14]
Upon referral of the SSC, the SSS Medical Program
Department, through Dr. Carlota A. Cruz-Tutaan and Dr.
Jesus S. Tan, confirmed that, upon examination of petitioner,
there was no progression of his illness,[15] prompting petitioner
to submit a letter-opposition of November 11, 2000 charging
the SSS medical officers of issuing fraudulent medical
findings.[16] Unperturbed, the SSS Medical Program
Department stood its ground and denied with finality
petitioners claim, by letter of November 22, 2000.[17]
On January 29, 2001, SSC finally docketed petitioners June
19, 2000 petition as SSC Case No. 1-15115-2001,[18] after
petitioner complied with SSCs directives[19] to verify the
petition and submit certain document-annexes. SSS then filed
its Answer of May 31, 2001,[20] to which petitioner submitted a
Reply of June 25, 2001.[21] After the August 10, 2001 pre-
hearing conference,[22] the SSS filed its Position Paper
of September 7, 2001 while petitioner submitted his Reply
of October 19, 2001.
By Resolution of April 3, 2002,[23] the SSC denied petitioners
claim for entitlement to total permanent disability for lack of
merit. And it opined that, considering that he had reached the
retirement age of 60, on March 19, 1998, with 41 contributions
to his name, petitioner may opt:
(a) [t]o continue paying to the SSS monthly
contributions (including employers share)
on his own to complete the required 120
monthly contributions in order to avail of
the retirement pension benefit;
(b) [to] leave his monthly contributions with the
SSS for his and his familys future benefits;
or
(c) [to a]vail of the lump sum retirement
benefit.[24]
Petitioner moved for reconsideration of the Resolution. The
SSC thus directed the SSS to file its comment[25] and, by a
subsequent order, to conduct a domiciliary visit and physical
examination on petitioner to ascertain whether he could
already qualify for such benefit.[26] In compliance therewith, Dr.
Rebecca Sison, SSS senior physician, examined petitioner
on August 29, 2002 and found no sufficient basis to warrant
the granting of total permanent disability benefits to him.[27]
Petitioners motion for reconsideration having been denied by
[28]
Order of January 29, 2003, petitioner appealed via Rule 43
to the Court of Appeals[29] which promulgated in CA-G.R. SP
No. 75653 the assailed issuances affirming in toto the SSC
Resolution and Order.
There is at the outset a need to thresh out procedural
issues attending the petition drafted by petitioner himself,
apparently without the aid of counsel. While the petition was
admittedly filed as a petition for certiorari under Rule 65, it
contains a rider averring that it was filed also as a petition for
review on certiorari under Rule 45.[30]
In not granting imprimatur to this type of unorthodox strategy,
the Court ruled, in a similar case,[31] that a party should not
join both petitions in one pleading. A petition cannot be
subsumed simultaneously under Rule 45 and Rule 65 of the
Rules of Court, nor may it delegate upon the court the task of
determining under which rule the petition should fall.[32] It is a
firm judicial policy that the remedies of appeal and certiorari
are mutually exclusive and not alternative or successive.[33]
Palpably, petitioner crafted this unconventional two-headed
petition under no other pretext but to second-guess at the
appropriate remedy. His apparent bewilderment led him to
later rectify a supposed typographical error in the caption such
that instead of petition for review, the title be read as a petition
for certiorari.[34] The subsequent filing of the Correction of
Clerical Errors served no redeeming purpose as it only
evinced petitioners decision to consider the petition as a
special civil action for certiorari, which is an improper remedy.
It bears stressing that Rule 45 and Rule 65 pertain to
different remedies and have distinct applications.[35] It is
axiomatic that the remedy of certiorari is not available where
the petitioner has the remedy of appeal or some other plain,
speedy and adequate remedy in the course of law.[36] The
petition for review under Rule 45 covers the mode of appeal
from a judgment, final order, resolution or one which
completely disposes of the case, like the herein assailed
Decision and Resolution of the appellate court. There being
already a final judgment at the time of the filing of the petition,
a petition for review under Rule 45 is the appropriate remedy.
Petitioner failed to carve out an exception to this rule, as he
did not and could not illustrate the inadequacy of an appeal as
a remedy that could promptly relieve him from the injurious
effects of the assailed judgment.[37] In fact, by seeking the
same kind of reliefs via two remedies rolled into one pleading,
he implicitly admits that an appeal suffices. Moreover, the
probability of divergent rulings, a scenario transpiring in G & S
Transport Corp. v. CA,[38] is far from obtaining in this case
since the assailed issuances emanated from only one court
and cannot be elevated separately in different fora.
While the Court may dismiss a petition outright for being an
improper remedy,[39] it may, in certain instances where a
petition was filed on time both under Rules 45 and 65 and in
the interest of justice, proceed to review the substance of the
petition and treat it as having been filed under Rule
[40]
45. Either way, however, the present petition just the same
merits dismissal since it puts to issue questions of fact rather
than questions of law which are appropriate for review under a
Rule 45 petition.
It is settled that the Court is not a trier of facts and accords
great weight to the factual findings of lower courts or agencies
whose function is to resolve factual matters.[41] It is not for the
[42]
Court to weigh evidence all over again. Moreover, findings
of fact of administrative agencies and quasi-judicial bodies,
which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only
respect but finality when affirmed by the Court of Appeals.[43]
The requisite quantum of proof in cases filed before
administrative or quasi-judicial bodies is neither proof beyond
reasonable doubt nor preponderance of evidence. In this type
of cases, a fact may be deemed established if it is supported
by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a
conclusion.[44] In this case, substantial evidence abounds.
The conclusion that petitioner is not entitled to total permanent
disability benefits under the Social Security Law was reached
after petitioner was examined not just by one but four SSS
physicians, namely, Dr. Juanillo Descalzo III, Dr. Carlota A.
Cruz-Tutaan, Dr. Jesus S. Tan and Dr. Rebecca Sison.
The initial physical examination and interview revealed that
petitioner had slight limitation of grasping movement for both
hands. According to Dr. Descalzo, this finding was not enough
to grant an extension of benefit since petitioner had already
received benefits equivalent to 30% of the body. Responding
to the allegation that the April 2000 physical examination was
performed in a short period of time, the doctor credibly
explained that petitioners movements were already being
monitored and evaluated from a distance as part of the
examination of his extremities in order to minimize malingering
and overacting.[45]
Meanwhile, the medical findings of Dr. Carlota A. Cruz-
Tutaan and Dr. Jesus S. Tan in August and September 2000
were summarized as follows:
Heart:
- manifest regular rhythm
- no murmurs
Lungs:
- on ausculation showed no evidence of wheezing
- breath sounds are normal and;
- he is not in a state of respiratory distress
Hypertension:
- Blood Pressure is 140/80, hence, under control
Extremities: (Hands)
- No deformities noted except for the right
small finger, the distal interphalangeal
joint is bent at about 30. No abnormal
limitation of movement noted on all the
fingers, grasping has improved.[46]
Contrary to petitioners asseverations, the SSC did not ignore
the certifications of petitioners attending physicians as, in fact,
it ordered the SSS in June 2001 to conduct an investigation as
to the medical findings and final diagnosis by his attending
physicians.[47] It was surfaced that petitioners medical records
in the custody of Dr. Flo dela Cruz could not be found as they
were allegedly destroyed by inundation.[48] And it was found
that the July 10, 2001 letter-certification by Dr. Rafael Recto,
Jr. only narrated the recurring condition of petitioners trigger
finger, the administration to him of local steroid injections, and
the performance of surgical release on his left 4th trigger finger
on June 16, 1998; and that he was diagnosed on August 28,
2000 with mallet finger (R, 5th), for which he was advised to
undergo reconstructive surgery.[49]
Adopting a liberal attitude and exercising sound
discretion, the SSC even directed the conduct of another
physical examination on petitioner to judiciously resolve his
motion for reconsideration.Pursuant thereto,
Dr. Sison physically examined petitioner in August 2002, the
results of which were reflected in a medical report, viz:
Physical Examination:
General Survey: well nourished, well
developed, conscious, coherent
but talks with sarcasm and
arrogance.
EENT: normocephalic, pinkish conjunctiva,
anicteric sclerae; negative tonsillo-
pharyngeal congestion
 C/L: clear breath sounds, no wheezes; (-) Total Permanent disability.[50] (Underscoring
dyspnea supplied)
Heart: normal rate, regular rhythm.
Abdomen: negative tenderness
Extremeties: no neurological and sensory deficit
no gross deformity, (+) scar, 4th finger (L) Dr. Sison subsequently noted that petitioners
no loss of grasping power for large and small Electrocardiograph, Chest X-ray, Kidney and Urinary Bladder
objects
no loss of opposition between thumb and Ultrasound indicated his condition as normal,[51] which
forefingers conclusion was arrived at by going through the same medical
can bend fully to reach toes
documents presented by petitioner following a series of tests
can bend both knees fully without pain or
difficulty conducted on him by hospitals of his choice.
can raise both arms above shoulder level
without pain and difficulty
can bend both elbows without limitation From the foregoing recital of petitioners medical history, the
SSC concluded that petitioner is not entitled to total permanent
The member was requested to submit recent
ECG, x-rays and other laboratory work-up disability benefits under the Social Security Law, the pertinent
results but he could not locate them during visit provisions of which read:
and would still look for the said medical
documents and mail them to SSS.
xxxx
He was then advised to come to SSS, Diliman
(d) The following disabilities shall be deemed
Branch for ECG and x-ray, however he refused.
permanent total:
He also refused to affix his signature on the
1. Complete loss of sight of both
medical field service form to confirm the visit of
eyes;
our Medical Officer.
2. Loss of two limbs at or above
the ankle or wrists;
Based on these recent physical
3. Permanent complete paralysis
examination findings and functional assessment
of two limbs;
and the medical certificate (Form MMD 102)
4. Brain injury resulting to
with final diagnosis of Trigger Finger, there is no
incurable imbecility or
sufficient basis that warrants the granting of
insanity; and
 5. Such cases as determined and related permanent partial disabilities to a
and approved by the SSS. maximum of one hundred percent (100%), in
which case, the member shall be deemed as
xxxx permanently totally disabled.[52]
(f) If the disability is permanent partial and such
disability occurs after thirty-six (36) monthly
contributions have been paid prior to the
semester of disability, the benefit shall be the Indeed, the evidence indicates that petitioners condition at the
monthly pension for permanent total disability time material to the case does not fall under the enumeration
payable not longer than the period designated
in the following schedule: in the above-quoted provisions of the Social Security
COMPLETE Law. Moreover, as correctly held by the appellate court, the
AND PERMANENT NUMBER OF
proviso of such provisions on the percentage degree of
LOSS OF USE OF MONTHS
One thumb 10 disability applies when there is a related deterioration of the
One index finger 8 illness previously considered as partial permanent disability. In
One middle finger 6
One ring finger 5 this case, there is dearth of evidence on the proposition that
One little finger 3 petitioners array of illnesses is related to Generalized Arthritis
One big toe 6
One hand 39 and Partial Ankylosis of the specific body parts.
One arm 50
One foot 31
Petitioners reliance on jurisprudence[53] on work-
One leg 46
One ear 10 connected disability claims insofar as it relates to a
Both ears 20 demonstration of disability to perform his trade and
Hearing of one ear 10
Hearing of both ears 50 profession[54] is misplaced.
Sight of one eye 25
(g) The percentage degree of disability which is
equivalent to the ratio that the designated Claims under the Labor Code for compensation and
number of months of compensability bears to under the Social Security Law for benefits are not the same as
seventy-five (75), rounded to the next higher
to their nature and purpose. On the one hand, the pertinent
integer, shall not be additive for distinct,
separate and unrelated permanent partial provisions of the Labor Code govern compensability of work-
disabilities, but shall be additive for deteriorating related disabilities or when there is loss of income due to
work-connected or work-aggravated injury or illness.[55] On the
other hand, the benefits under the Social Security Law are
intended to provide insurance or protection against the
hazards or risks of disability, sickness, old age or death, inter
alia, irrespective of whether they arose from or in the
course of the employment.[56] And unlike under the Social
Security Law, a for the first time on appeal[,] and documents forming no part of
disability is total and permanent under the Labor Code if as a
result of the injury or sickness the employee is unable to
perform any gainful occupation for a continuous period
exceeding 120 days regardless of whether he loses the use of
any of his body parts.[57]
The Court notes that the main issue petitioner proffers is
whether he is entitled to total permanent disability benefits
from the SSS given his angioplasty operation of the heart,
coronary artery disease, ischemic heart disease, severe
hypertension and a host of other serious illnesses filed with
the SSS[.][58]
A perusal of the records shows that when the case was
already submitted for decision before the appellate court,
petitioner manifested that he suffered a heart attack
[59]
on February 25, 2004, for which he claimed to have
undergone a coronary angiogram on March 9, 2005 and a
coronary angioplasty on September 27, 2005 at the Philippine
Heart Center.[60]
Unfortunate as these events were, the appellate court
correctly ruled that it could not consider such allegation of
subsequent events since a factual question may not be raised
the proofs before the appellate court will not be considered in
disposing of the issues of an action.[61]
The issues in every case are limited to those
presented in the pleadings. The object of the pleadings is to
draw the lines of battle between
the litigants and to indicate fairly the nature of the claims or
defenses of
both parties.[62] A change of theory on appeal is not
allowed.[63] In this case, the matter of petitioners serious heart
condition was not raised in his application before the SSS or
in his June 19, 2000petition before the SSC.
Fair play dictates that the SSS be afforded the opportunity to
properly meet the issue[64] with respect to the new ailments
besetting petitioner, in line with the actual practice that only
qualified government physicians, by virtue of their oath as civil
service officials, are competent to examine persons and issue without any recourse in his legal bout respecting his
medical certificates which will be used by the government for a supervening claims anchored mainly on Coronary Artery
[65]
specific official purpose. This holds greater significance Disease 1VD and Diabetes Mellitus Type 2, these illnesses
where there exist differences or doubts as to the medical having been found to be dissimilar from the subject matter of
condition of the person. the present action.[67]

In this case, the SSS medical examiners are tasked by WHEREFORE, the petition is, in light of the foregoing
law to analyze the extent of personal incapacity resulting from disquisitions, DENIED.
disease or injury. Oftentimes, a physician who is adequately
versed in the knowledge of anatomy and physiology will find SO ORDERED.
himself deficient when called upon to express an opinion on
the permanent changes resulting from a disability. Unlike the
general practitioner who merely concerns himself with the
examination of his patient for purposes of diagnosis and
treatment, the medical examiner has to consider varied factors
and ascertain the claimants related history and subjective
complaints.[66] The members of this Court cannot strip their
judicial robe and don the physicians gown, so to speak, in a
pretense to correlate variances in medical findings.

OCIAL SECURITY G.R. No. 167050

COMMISSION,
Petitioner,
Present:

Finding no cogent reason to discuss the ancillary CORONA, C.J.,

Chairperson
issues, the Court dismisses the petition, without prejudice to VELASCO, JR.,
the filing of a new application by petitioner who is not left -versus- LEONARDO-DE CASTRO,
 PERALTA,* and
PEREZ, JJ.
As a brief backgrounder, Angeles had earlier filed a
complaint for illegal dismissal against BSD Agro and/or its
owner, Benjamin San Diego (San Diego). The Labor Arbiter
RIZAL POULTRY and
initially found that Angeles was an employee and that he was
LIVESTOCK ASSOCIATION,
INC., BSD AGRO INDUSTRIAL illegally dismissed. On appeal, however, the NLRC reversed
DEVELOPMENT Promulgated: the Labor Arbiters Decision and held that no employer-
CORPORATION and
employee relationship existed between Angeles and
BENJAMIN SAN DIEGO, June 1, 2011
Respondents. respondents. The ruling was anchored on the finding that the
x --------------------------------------------------------------------------------- duties performed by Angeles, such as carpentry, plumbing,
-------x painting and electrical works, were not independent and
DECISION integral steps in the essential operations of the company,
which is engaged in the poultry business.[4] Angeles elevated
PEREZ, J.: the case to the Court of Appeals via petition for certiorari. The
appellate court affirmed the NLRC ruling and upheld the
This petition for certiorari challenges the absence of employer-employee relationship.[5] Angeles moved
[1]
Decision dated 20 September 2004 and Resolution dated 9[2] for reconsideration but it was denied by the Court of
February 2005 of the Court of Appeals. The instant case Appeals.[6] No further appeal was undertaken, hence, an entry
stemmed from a petition filed by Alberto Angeles (Angeles) of judgment was made on 26 May 2001.[7]
before the Social Security Commission (SSC) to compel
respondents Rizal Poultry and Livestock Association, Inc. At any rate, the SSC did not take into consideration the
(Rizal Poultry) or BSD Agro Industrial Development decision of the NLRC. It denied respondents motion to dismiss
Corporation (BSD Agro) to remit to the Social Security System in an Order dated 19 February 2002. The SSC ratiocinated,
(SSS) all contributions due for and in his behalf. Respondents thus:
countered with a Motion to Dismiss[3] citing rulings of the
Decisions of the NLRC and other
National Labor Relations Commission (NLRC) and Court of tribunals on the issue of existence of employer-
Appeals regarding the absence of employer-employee employee relationship between parties are not
relationship between Angeles and the respondents. binding on the Commission. At most, such
 finding has only a persuasive effect and does
not constitute res judicata as a ground for
dismissal of an action pending before Us. While
it is true that the parties before the NLRC and in
this case are the same, the issues and subject
matter are entirely different.The labor case is for
illegal dismissal with demand for backwages
and other monetary claims, while the present
action is for remittance of unpaid SS[S]
contributions. In other words, although in both
suits the respondents invoke lack of employer-
employee relationship, the same does not
proceed from identical causes of action as one
is for violation of the Labor Code while the
instant case is for violation of the SS[S] Law.
Moreover, the respondents arguments
raising the absence of employer-employee
relationship as a defense already traverse the
very issues of the case at bar, i.e., the
petitioners fact of employment and entitlement
to SS[S] coverage. Generally, factual matters
should not weigh in resolving a motion to
dismiss when it is based on the ground of
failure to state a cause of action, but rather,
merely the sufficiency or insufficienciy of the
allegations in the complaint. x x x. In this
respect, it must be observed that the petitioner
very categorically set forth in his Petition, that
he was employed by the respondent(s) from
1985 to 1997.[8]
A subsequent motion for reconsideration filed by
respondents was likewise denied on 11 June 2002. The SSC
reiterated that the principle of res judicata does not apply in
this case because of the absence of the indispensable
element of identity of cause of action.[9]
Unfazed, respondents sought recourse before the
Court of Appeals by way of a petition for certiorari. The Court
of Appeals reversed the rulings of the SSC and held that there
is a common issue between the cases before the SSC and in
the NLRC; and it is whether there existed an employer-
employee relationship between Angeles and
respondents. Thus, the case falls squarely under the principle
of res judicata, particularly under the rule on conclusiveness of
judgment, as enunciated in Smith Bell and Co. v. Court of
Appeals.[10]
The Court of Appeals disposed, thus:
WHEREFORE, the petition
is GRANTED. The Order dated February 19,
2000 and the Resolution dated June 11, 2002
rendered by public respondent Social Security
Commissoin in SSC Case No. 9-15225-01 are
hereby REVERSED and SET ASIDE and the
respondent commission is ordered
to DISMISS Social Security Commission Case
No. 9-15225-01.[11]
After the denial of their motion for reconsideration in a
Resolution[12] dated 9 February 2005, petitioner filed the
instant petition.
 For our consideration are the issues raised by juridical entity. Thus, the finding of absence of employer-
petitioner, to wit: employee relationship between BSD Agro and Angeles could
not automatically extend to Rizal Poultry. Consequently, SSC
WHETHER OR NOT THE DECISION OF THE assails the order of dismissal of the case lodged before it.
NLRC AND THE COURT OF APPEALS,
FINDING NO EMPLOYER-EMPLOYEE
RELATIONSHIP, CONSTITUTES RES SSC also claims that the evidence submitted in the
JUDICATA AS A RULE ON SSC case is different from that adduced in the NLRC
CONCLUSIVENESS OF JUDGMENT AS TO
case. Rather than ordering the dismissal of the SSC case, the
PRECLUDE THE RELITIGATION OF THE
ISSUE OF EMPLOYER-EMPLOYEE Court of Appeals should have allowed SSC to resolve the case
RELATIONSHIP IN A SUBSEQUENT CASE on its merits by applying the Social Security Act of 1997.
FILED BEFORE THE PETITIONER.

WHETHER OR NOT RESPONDENT COURT Respondents assert that the findings of the NLRC are
OF APPEALS MAY ORDER OUTRIGHT THE conclusive upon the SSC under the principle of res
DISMISSAL OF THE SSC CASE IN THE judicata and in line with the ruling in Smith Bell v. Court of
CERTIORARI PROCEEDINGS BEFORE IT.[13]
Appeals. Respondents argue that there is substantially an
SSC maintains that the prior judgment rendered by the
identity of parties in the NLRC and SSC cases because
NLRC and Court of Appeals, that no employer-employee
Angeles himself, in his Petition, treated Rizal Poultry, BSD
relationship existed between the parties, does not have the
Agro and San Diego as one and the same entity.
force of res judicataby prior judgment or as a rule on the
conclusiveness of judgment. It contends that the labor dispute
Respondents oppose the view proffered by SSC that
and the SSC claim do not proceed from the same cause of
the evidence to prove the existence of employer-employee
action in that the action before SSC is for non-remittance of
relationship obtaining before the NLRC and SSS are entirely
SSS contributions while the NLRC case was for illegal
different.Respondents opine that the definition of an employee
dismissal. The element of identity of parties is likewise
always proceeds from the existence of an employer-employee
unavailing in this case, according to SSC. Aside from SSS
relationship.
intervening, another employer, Rizal Poultry, was added as
respondent in the case lodged before the SSC. There is no
In essence, the main issue to be resolved is
showing that BSD Agro and Rizal Poultry refer to the same
whether res judicata applies so as to preclude the SSC from
resolving anew the existence of employer-employee again be litigated between the parties and their privies,
relationship, which issue was previously determined in the whether or not the claim, demand, purpose, or subject matter
NLRC case. of the two actions is the same.[16]

Res judicata embraces two concepts: (1) bar by prior

Thus, if a particular point or question is in issue in the
judgment as enunciated in Rule 39, Section 47(b) of the Rules
second action, and the judgment will depend on the
of Civil Procedure; and (2) conclusiveness of judgment in Rule
determination of that particular point or question, a former
39, Section 47(c).[14]
judgment between the same parties or their privies will be final

There is bar by prior judgment when, as between the and conclusive in the second if that same point or question

first case where the judgment was rendered and the second was in issue and adjudicated in the first suit. Identity of cause

case that is sought to be barred, there is identity of parties, of action is not required but merely identity of issue.[17]

subject matter, and causes of action. In this instance, the

judgment in the first case constitutes an absolute bar to the The elements of res judicata are: (1) the judgment

second action.[15] sought to bar the new action must be final; (2) the decision
must have been rendered by a court having jurisdiction over

But where there is identity of parties in the first and the subject matter and the parties; (3) the disposition of the

second cases, but no identity of causes of action, the first case must be a judgment on the merits; and (4) there must be

judgment is conclusive only as to those matters actually and as between the first and second action, identity of parties,

directly controverted and determined and not as to matters subject matter, and causes of action. Should identity of parties,

merely involved therein. This is the concept of res subject matter, and causes of action be shown in the two

judicata known as conclusiveness of judgment. Stated cases, then res judicata in its aspect as a bar by prior

differently, any right, fact or matter in issue directly adjudicated judgment would apply. If as between the two cases, only

or necessarily involved in the determination of an action before identity of parties can be shown, but not identical causes of

a competent court in which judgment is rendered on the merits action, then res judicata as conclusiveness of judgment

is conclusively settled by the judgment therein and cannot applies.[18]

 Verily, the principle of res judicata in the mode of
conclusiveness of judgment applies in this case. The first
element is present in this case. The NLRC ruling was affirmed
by the Court of Appeals. It was a judicial affirmation through a
decision duly promulgated and rendered final and executory
when no appeal was undertaken within the reglementary
period. The jurisdiction of the NLRC, which is a quasi-judicial
body, was undisputed. Neither can the jurisdiction of the Court
of Appeals over the NLRC decision be the subject of a
dispute. The NLRC case was clearly decided on its merits;
likewise on the merits was the affirmance of the NLRC by the
Court of Appeals.
With respect to the fourth element of identity of parties,
we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly
identical. Rizal Poultry was impleaded as additional
respondent in the SSC case. Jurisprudence however does not
dictate absolute identity but only substantial identity.[19] There
is substantial identity of parties when there is a community of
interest between a party in the first case and a party in the
second case, even if the latter was not impleaded in the first
case.[20]
BSD Agro, Rizal Poultry and San Diego were litigating
under one and the same entity both before the NLRC and the
SSC. Although Rizal Poultry is not a party in the NLRC case,
there are numerous indications that all the while, Rizal Poultry
was also an employer of Angeles together with BSD Agro and
San Diego. Angeles admitted before the NLRC that he was
employed by BSD Agro and San Diego from 1985 until
1997.[21] He made a similar claim in his Petition before the
SSC including as employer Rizal Poultry as
respondent.[22] Angeles presented as evidence before the SSC
his Identification Card and a Job Order to prove his
employment in Rizal Poultry. He clarified in his Opposition to
the Motion to Dismiss[23] filed before SSC that he failed to
adduce these as evidence before the NLRC even if it would
have proven his employment with BSD Agro. Most
significantly, the three respondents, BSD Agro, Rizal Poultry
and San Diego, litigated as one entity before the SSC. They
were represented by one counsel and they submitted their
pleadings as such one entity. Certainly, and at the very least, a
community of interest exists among them. We therefore rule
that there is substantial if not actual identity of parties both in
the NLRC and SSC cases.
As previously stated, an identity in the cause of action need
not obtain in order to apply res judicata by conclusiveness of
judgment. An identity of issues would suffice.

The remittance of SSS contributions is mandated by
Section 22(a) of the Social Security Act of 1997, viz:
SEC. 22. Remittance of Contributions. -
(a) The contributions imposed in the preceding
Section shall be remitted to the SSS within the
first ten (10) days of each calendar month
following the month for which they are
applicable or within such time as the
Commission may prescribe. Every employer
required to deduct and to remit such
contributions shall be liable for their payment
and if any contribution is not paid to the SSS as
herein prescribed, he shall pay besides the
contribution a penalty thereon of three percent
(3%) per month from the date the contribution
falls due until paid. x x x.
The mandatory coverage under the Social Security Act
is premised on the existence of an employer-employee
relationship.[24] This is evident from Section 9(a) which
provides:
SEC. 9. Coverage. - (a) Coverage in the
SSS shall be compulsory upon all employees
not over sixty (60) years of age and their
employers: Provided, That in the case of
domestic helpers, their monthly income shall
not be less than One thousand pesos
(P1,000.00) a month x x x.
Section 8(d) of the same law defines an employee as
any person who performs services for an employer in which
either or both mental or physical efforts are used and who
receives compensation for such services, where there is an
employer-employee relationship. The illegal dismissal case
before the NLRC involved an inquiry into the existence or non-
existence of an employer-employee relationship. The very
same inquiry is needed in the SSC case. And there was no
indication therein that there is an essential conceptual
difference between the definition of employee under the Labor
Code and the Social Security Act.
In the instant case, therefore, res judicata in the concept of
conclusiveness of judgment applies. The judgment in the
NLRC case pertaining to a finding of an absence of employer-
employee relationship between Angeles and respondents is
conclusive on the SSC case.
A case in point is Smith Bell and Co. v. Court of
Appeals[25] which, contrary to SSC, is apt and proper
reference. Smith Bell availed of the services of private
respondents to transport cargoes from the pier to the
company's warehouse. Cases were filed against Smith Bell,
one for illegal dismissal before the NLRC and the other one
with the SSC, to direct Smith Bell to report all private
respondents to the SSS for coverage. While the SSC case
was pending before the Court of Appeals, Smith Bell
presented the resolution of the Supreme Court in G.R. No. L-
44620, which affirmed the NLRC, Secretary of Labor, and
Court of Appeals finding that no employer-employee
relationship existed between the parties, to constitute as bar to
the SSC case. We granted the petition of Smith Bell and
ordered the dismissal of the case. We held that the
controversy is squarely covered by the principle of res
judicata, particularly under the rule on conclusiveness of
judgment. Therefore, the judgment in G.R. No. L-44620 bars
the SSC case, as the relief sought in the latter case is
inextricably related to the ruling in G.R. No. L-44620 to the
effect that private respondents are not employees of Smith
Bell.
The fairly recent case of Co v. People,[26] likewise applies to
the present case. An information was filed against Co by
private respondent spouses who claim to be employees of the
former for violation of the Social Security Act, specifically for
non-remittance of SSS contributions. Earlier, respondent
spouses had filed a labor case for illegal dismissal. The NLRC
finally ruled that there was no employer-employee relationship
between her and respondent spouses. Co then filed a motion
to quash the information, arguing that the facts alleged in the
Information did not constitute an offense because respondent
spouses were not her employees. In support of her motion,
she cited the NLRC ruling. This Court applied Smith Bell and
declared that the final and executory NLRC decision to the
effect that respondent spouses were not the employees of
petitioner is a ruling binding in the case for violation of the
Social Security Act. The Court further stated that the doctrine
of conclusiveness of judgment also applies in criminal
cases.[27]
Applying the rule on res judicata by conclusiveness of
judgment in conjunction with the aforecited cases, the Court of
Appeals aptly ruled, thus:
In SSC Case No. 9-15225-01, private
respondent Angeles is seeking to compel herein
petitioners to remit to the Social Security
System (SSS) all contributions due for and in
his behalf, whereas in NLRC NCR CA 018066-
99 (NLRC RAB-IV-5-9028-97 RI) private
respondent prayed for the declaration of his
dismissal illegal. In SSC No. 9-15225-01,
private respondent, in seeking to enforce his
alleged right to compulsory SSS coverage,
alleged that he had been an employee of
petitioners; whereas to support his position in
the labor case that he was illegally dismissed by
petitioners BSD Agro and/or Benjamin San
Diego, he asserted that there was an employer-
employee relationship existing between him and
petitioners at the time of his dismissal in
1997. Simply stated, the issue common to both
cases is whether there existed an employer-
employee relationship between private
respondent and petitioners at the time of the
 acts complaint of were committed both in SSC
Case No. 9-15225-01 and NLRC NCR CA
018066-99 (NLRC RAB-IV-5-9028-977-RI). SO ORDERED.
HINOGUIN VS. ECC
The issue of employer-employee
relationship was laid to rest in CA GR. SP. No. NOVEMBER 17, 2013 ~ VBDIAZ
55383, through this Courts Decision dated
October 27, 2000 which has long attained
finality. Our affirmation of the NLRC decision of Hinoguin vs Employees Compensation Commission
May 18, 1999 was an adjudication on the merits GR 84307
of the case.
Facts:
Considering the foregoing
Sgt. Lemick Hinoguin was a sergeant in A company, 14th
circumstances, the instant case falls squarely
under the umbrage of res judicata, particularly, Infantry Battalion, 5th Infantry Division, Philippine Army.
under the rule on conclusiveness of
judgment. Following this rule, as enunciated
in Smith Bell and Co. and Carriaga, Jr. cases, On August 1, 1985, Sgt. Hinoguin, Cpl. Rogelio Clavo and Dft.
We hold that the relief sought in SSC Case No.
9-15225-01 is inextricably related to Our ruling Nicomedes Alibuyog sought permission from Capt. Frankie
in CA GR SP No. 55383 to the effect that
private respondent was not an employee of Besas, to go on overnight pass to Aritao, Nueva Viscaya.
petitioners.[28] Capt. Besas orally granted them permission to go to Aritao
and to take their issued firearms with them considering that
The NLRC decision on the absence of employer-
Aritao was regarded as a critical place.
employee relationship being binding in the SSC case, we
affirm the dismissal by Court of Appeals of the SSC case.
The three soldiers went to Dft. Alibuyogs home for a meal and

WHEREFORE, premises considered, the petition some drinks. At around 7:00 PM, the soldiers headed back to
is DENIED. The Court of Appeals Decision dated 20 the headquarters. They boarded a tricycle. When they reached
September 2004, as well as its Resolution dated 9 February the poblacion, Alibuyog dismounted from the tricycle. Not
2005, is AFFIRMED. noticing that his rifles safety lever was on semi-automatic, he
accidentally touched the trigger, firing a single shot in the
process and hitting Sgt. Hinoguin in the left lower abdomen.
Sgt. Hinoguin died a few days after the incident.
In the investigation conducted by the 14th Infantry Battalion, it
was found that the shooting of Sgt. Hinoguin was purely
accidental in nature and that he died in the line of duty. The
Life of Duty Board of Officers recommended that all benefits
due the legal dependents of the late Sgt. Hinoguin be given.
However, when the father of the deceased made a claim from
GSIS, the same was denied on the ground that the deceased
was neither at his work place nor performing his duty as a
soldier of the Philippine Army at the time of his death. This
denial was confirmed by the respondent ECC.
Issue: WON the death of Sgt. Hinoguin is compensable.
Held:
Article 167 (k) of the Labor Code as amended defines a
compensable injury quite simply as any harmful change in
the human organism from any accident arising out of and in
the course of the employment. The Amended (Implementing)
Rules have, however, elaborated considerably on the simple
and succinct statutory provision. Rule III, Section 1 (a) reads:
SECTION 1. Grounds. (a) For the injury and the resulting
disability or death to be compensable, the injury must be the
result of an employment accident satisfying all of the following
grounds:
(1) The employee must have been injured at the place work
requires him to be;
(2) The employee must have been performing his official
functions; and
(3) If the injury is sustained elsewhere, the employee must
have been executing an order for the employer.
The concept of a work place referred to in Ground 1, for
instance, cannot always be literally applied to a soldier on
active duty status, as if he were a machine operator or a
worker in an assembly line in a factory or a clerk in a particular
fixed office. Obviously, a soldier must go where his company is
stationed. In the instant case, Aritao, Nueva Viscaya was not,
of course, Carranglan, Nueva Ecija. Aritao being
approximately 1-1/2 hours away from the latter by public
transportation. But Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog
had permission from their Commanding Officer to proceed to
Aritao, and it appears to us that a place which soldiers have
secured lawful permission to be at cannot be very different,
legally speaking, from a place where they are required to go
by their commanding officer. They were not on vacation leave.
Thus, we think that the work-connected character of Sgt.
Hinoguins injury and death was not effectively precluded by
the simple circumstance that he was on an overnight pass to
go to the home of Dft. Alibuyog, a soldier under his own
command. Sgt. Hinoguin did not effectively cease performing
official functions because he was granted a pass. While
going to a fellow soldiers home for a few hours for a meal and
some drinks was not a specific military duty, he was
nonetheless in the course of performance of official functions.

It may be noted in this connection that a soldier on active duty

status is really on 24 hours a day official duty status and is
subject to military discipline and military law 24 hours a day.
He is subject to call and to the orders of his superior officers at
all times, 7 days a week, except, of course, when he is on
vacation leave status (which Sgt. Hinoguin was not). Indeed, it
appears to us that a soldier should be presumed to be on
official duty unless he is shown to have clearly and
unequivocally put aside that status or condition temporarily by,
e.g., going on an approved vacation leave.
 also stockholder and president. Petitioner filed his income tax
returns for the years 1945 to 1951, paying the following taxes:

AMOUNT OF
YEAR
TAX
1945 P 918.31
1946 1,393.42
1947 5,923.57
1948 700.34
1949 538.07
1950 3,837.00
1951 2,971.00
G.R. No. L-11875 December 28, 1963
In 1948 a verification of his income tax returns for the years
WILLIAM LI YAO, petitioner, 1945 to 1947 was made and a deficiency income tax in the
vs. amount of P5,470.98 was assessed against him, which he
COLLECTOR OF INTERNAL REVENUE, respondent. paid.

LABRADOR, J.: In 1952 the Collector of Internal Revenue, believing that

This is a petition filed by William Li Yao for the review of a
decision of the Court of Tax Appeals in C.T.A. Case No. 30,
entitled "William Li Yao, petitioner, vs. Collector of Internal
Revenue, respondent." The record discloses that petitioner is
a naturalized Filipino of Chinese parents, the eldest son of a
prosperous local businessman by the name of Li Chay Too,
who died sometime in 1948. In 1945 petitioner organized the
Li Yao and Company and made himself managing partner;
from 1948 to February 1955 he was president of, and owned
shares in, the Li Chay Too and Sons, Inc.; and in 1950 he
organized a corporation known as the Far East Realty and
Investment Co. (known as FERIN for short) of which he was
petitioner had not reported his true incomes for the previous
years, appointed a team to examine his books, on July 30,
1952 an additional assessment of P898,794.02 was made
against him for the years 1945 to 1951, inclusive. A second
team of investigators was appointed on June 30, 1953 this
team recommended a deficiency income tax assessment of
P2,722,030.33. This team employed what is known as the net
worth or inventory method. A third team was appointed,
headed by BIR Examiner Quesada. This team recommended
an assessment of P1,505,768.54 against petitioner; the
inventory method was also used in making this assessment.
Demand was made for the collection of said assessment on
August 10, 1954, so petitioner herein presented a petition with family expenses
the Court of Tax Appeal for the review of the said assessment.
Less personal
After hearing the Court of Tax Appeals, after revising the exemptions 3,500.00
various items contained in the assessment of BIR Examiner
Quesada, made various findings of fact on the issues Amount subject to tax 25,038.50
presented by the parties and thereafter rendered a decision in
which it found that the amount of the income tax deficiency
Tax due thereon 1,082.31
due from petitioner P424,536.77. The resume of the
assessment made in the decision of the Court of Tax Appeals Less tax already paid 1,111.74
is as follows:
(29.43)
1945 No deficiency tax due =============
Assets admitted by
parties 1946
Add assets established
at trial: P 41,538.50 Assets admitted by
Funds held in trust by 143,910.89 both parties
father, Li Chay Too Add assets established P 148,326.77
Net Worth as of P 185,449.39 at trial: 90,032.43
December 31, 1945 cash funds from loans
Less Net Worth as of Total assets P 238,359.20
January 1, 1945: Liabilities established
Assets admitted by at trial 100,000.00
Parties P 500.00 Net worth as of
Add assets proven at 159,910.89 December 31, 1946
trial Less net worth as of
Funds held in trust by 160,410.89 Jan. 1, 1946 185,449.39
father, Li Chay Too
Decrease in net worth
Increase in net worth in in 1946 (P 47,090.19)
P25,038.50
1945
3,500.00 Add non-deductible
Add non-deductible
expenditures: expenditures:
28,538.50 Personal living and
Personal living and
family expenses 3,500.00
Income tax paid in Income tax paid
previous year 918.91 in previous year 1,393.42
(P 42,671.88) Net Income P 29,024.19
Net loss =============
Less personal
exemptions 3,500.00
1947
Amount subject
Assets admitted to tax 25,524.19
by parties P 184,453.45
Tax due thereon 3,795.32
Add assets
Less tax already
established at
paid 10,055.78
trial:
Cash funds from No deficiency tax (P 6,260.46)
loans P78,036.52 due =============
Total assets P 262,489.97
1948
Liabilities
established at Assets admitted
trial 100,000.00 by parties P 176,933.76
Net worth as of Add assets
December 31, established at
1947 P162,489.97 trial:
Cash funds from
Less net worth
loans 50,384.93
as of Jan. 1,
1947 138,359.20 Investments in
Tan Pee Cu Yek
Increase in net
Chim and Co 30,000.00
worth in 1947 P 24,130.77
Total assets P 257,318.69
Add: non-
deductible Less liabilities
expenditures: established at
trial 100,000.00
Personal, living
and family Net worth as of
expenses 3,500.00 December 31, P 157,318.69
1948 Assets admitted
by parties P 435,405.83
Less net worth
as of Jan. 1, Add assets
1948 2,489.97 established at
trial:
Decrease in net
China Banking
worth in 1948 (P 5,171.28)
Corporation
Add non- Time Deposit 60,000.00
deductible
Investment in
expenditures:
Tan Pee Cu Yek
Personal, living Chim and Co 30,000.00
and family
Total assets P 525,405.83
expenses 20,000.00
Liabilities
Income tax paid
established at
in previous year 11,394.55
trial 163,000.00
Net Income P 26,223.27
Net worth as of
Less personal December 31,
exemptions 3,500.00 1949 P 362,405.83
Amount subject Less net worth
to tax P 22,723.27 as of Jan. 1,
Tax due thereon 3,179.11 1949 157,318.69

Less tax already Increase in net

paid 700.00 worth in 1949 P 205,087.14

Deficiency tax P 2,478.77 Add non-

deductible
Add: 50% expenditures:
surcharge 1,239.38
Personal, living
P 3,718.15 and family
Total tax due ============= expenses 20,000.00
Income tax paid
1949 in previous year 700.34
Net Income P 225,787.48 Race Horses 11,500.00
Less personal Total Assets P1,053,773.50
exemptions 3,500.00
Liabilities
Net income established at
before deduction trial 445,500.00
of inheritance P 222,287.48
Net worth as of
Less inheritance 72,392.91 Dec. 31, 1950 608,273.50
Amount subject Less net worth
to tax 149,894.57 as of Jan. 1,
1950 362,405.83
Tax due thereon 47,137.82
Increase in net
Less tax already
worth in 1950 P 245,867.67
paid 538.07
Add: non-
Deficiency tax P 46,599.75
deductible
Add: 50% expenditures:
surcharge 23,299.87
Personal, living
P 69,899.62 and family
Total tax due ============= expenses 20,000.00
Income tax paid
1950 in previous year 538.07
Assets admitted Net Income 266,405.74
by parties P 842,273.50
Less personal
Add assets exemptions 4,200.00
established at
Amount subject
trial:
to tax P 262,205.74
Investments in
Tan Pee Cu Yek Tax due thereon 125,977.00
Chim and Co 30,000.00
Less tax already
Investments in paid 3,837.00
FERIN through
Deficiency tax P 122,140.00
others 170,000.00
Add: 50% Less personal
surcharge 61,070.00 exemptions 4,800.00
P 183,210.00 Amount subject to tax 242,422.44
Total tax due =============
Tax due thereon P 114,777.00
Less tax already paid 2,971.00
1951
Deficiency tax 111,806.00
Assets admitted by P
parties 1,630,658.94 Add: 50 % surcharge 55,903.00
Add assets established at P 167,709.00
trial: Total tax due ===========
Investments in Tan Pee
Cu Yek Chim and Co 30,000.00
Investments in FERIN
through others 200,000.00 Summary of Tax Due
Race Horses 11,500.00
1945 None
Total Assets 1,872,158.94
1946 None
Liabilities established at
trial 1,040,500.00 1947 None
Net worth as of Dec. 31, 1948 P 3,718.15
1951 831,658.94
1949 69,899.62
Less net worth as of Jan.
1, 1951 608,273.50 1950 183,210.00
Increase in net worth 223,385.44 1951 167,709.00
Add: non-deductible Total tax due P 424,536.77
Personal, living and ===========
family expenses 20,000.00
Income tax paid in Petitioner Li Yao sought to reconsider the decision and
previous year 3,839.00 the assessment, alleging that the sum of P5,470.98
Net Income P 247,222.44 paid by him as additional tax for the years 1945 to 1947
should be credited against his deficiency income taxes,
so that instead of P424,536.77 this sum due should be Seng
only P411,294.12, following the decision in the case of
University of Santo Tomas vs. Collector of Internal Li Chiu Ka 20,000.00
Revenue, C.T.A. Case No. 10, dated June 4, 1956, in
which the doctrine of equitable recoupment was Li Tong Na 20,000.00
applied provided the two requirements for its Ko Chiu Seng 10,000.00
applicability are met. The court approved this petition
for recoupment and reduced the assessment to Carlos M. Go 10,000.00
P411,293.80.
Dee Mong @ 25,000.00
Lim Sing
Both petitioner and respondent appealed from the
decision of the Court of Tax Appeals petitioner's Arturo 10,000.00
appeal is within the case G.R. No. L-11875 and the Mercado
respondent's appeal is case G.R. No. L-11861. This
decision deals with Li Yao's appeal. Go Hoc 20,000.00
Ong Chin P 30,000.00
Two principal questions are raised by petitioner Li Yao
before Us, the first of which questions the validity of the TOTAL P 315,000.00
net worth method of inventory used against him, and ===========
the second assails the Court of Tax Appeals, refusal to
grant petitioner's request that the deficiency income
The procedure adopted by the Court of Tax Appeal in
assessed be distributed evenly over the taxable years.
passing upon the first of these alleged obligations is as
We will leave these questions for the present until after
follows:
We have decided the appeal raised against various
items of the assessment.
. . . that when a taxpayer claims he owes
money to another for the purpose of reducing
The first issue relates to the disapproval of various
his tax liability, particularly the Net Worth
items, claimed by petitioner to be his obligations, which
Expenditure (Inventory) Method of investigation
are as follows:
is employed against him, his admission (claim)
must corroborated by other evidence
J. Crisostomo P100,000.00 independent of the admission itself. For
Chavez example, the promissory note, if there be any,
should be produced for the inspection of the
Li Chick Eng 50,000.00 Court and government counsel. The alleged
Ong Tiao 20,000.00 creditor must be produced in Court to confirm
the taxpayer's admission and to give
 government's counsel an opportunity to cross-
examine him, unless he is dead, outside of the
Philippines, or unable to testify for one reason
or another. If the taxpayer is in business, his
books as required of him by the National
Internal Revenue Code should be produced
showing the corresponding entry or entries of
his alleged liabilities. If for one reason or
another the alleged creditor is not available as a
witness, his financial capacity to extend the loan
should at least be established.
Attacking the above procedure counsel for petitioner
argues that in the inventory method the burden of proof
lies with the Government; that the taxpayer completes
his obligation if he furnishes the lead by presenting the
evidence of the obligation, and it is thereafter
incumbent the Government to follow the lead to
determine if the alleged liabilities actually or really
existed.
We find no merit or sense in the above contention. The
taxpayer has no means of proving the existence of the
obligation and it is he that must produce such proof.
The obligation and it is he that must produce such
proof. The procedure followed by the Court of Tax
Appeals is that laid down by the rules on evidence; that
is, that the taxpayer who alleges thereof by
preponderance of evidence. This rule is not only a legal
one. In the nature of things, the obligor or taxpayer has
the means of proving that the obligation does not exist
or has been paid; the Government collecting the tax
cannot be expected to find the evidence itself, because
it is natural that the taxpayer would try to suppress
such evidence as may prove that the obligation still
exists. The court below ruled, in relation to the
obligation or the supposed loan given by Crisostomo
Chavez, as follows:
Although this loan is evidenced by a duplicate
promissory note, Exhibit JJJJ, we find the
explanation of petitioner regarding the
reproduction of the original note marked Exhibit
55-A from which Exhibit JJJJ was taken, to be
highly fantastic. This alleged creditor was seen
by the Court on several occasions loitering in
the Court promises during the early stages of
the trial of this case. However, when his turn
came to testify as witness for the respondent,
he could not be served with a summons. He
was cited by respondent's counsel precisely to
confirm or repudiate the contents of an affidavit
which he executed dated July 6, 1955 denying
having made such a loan. Considering the past
criminal record of this alleged creditor, his
failure to testify before this Court upon being
cited to do so and the explanation of petitioner
regarding the two controversial promissory
notes Exhibits 55 and JJJJ, which we believe to
be much too strained and fantastic, we cannot
give credit to this alleged liability of petitioner.
We agree with the court below; the supposed duplicate
of the promissory note could well have been fabricated.
Furthermore, the supposed creditor had denied the
existence of the loan in an affidavit and the taxpayer
failed to produce him in evidence. Lastly the taxpayer
suppressed the evidence to show that the obligation
still exists and if he did so it is because the same would
be unfavorable to his claim.
In connection with the loans of Ong Tiao Seng for
P20,000.00, Li Chiu Ka for P20,000.00, Li Tong Na for
P20,000.00, Ko Chiu Seng for P10,000.00, Carlos M.
Go for P10,000.00 and Lim Siong for P25,000.00, We,
also agree with the court below that as petitioner had
not presented the supposed creditors to confirm the
existence of the loans, and no explanation had been
given for such failure to present them, the existence of
these loans cannot be considered as proven. The
petitioner suppressed evidence which should favor him,
and his suppression of such evidence proves that said
evidence would be unfavorable to him if produced. As
to the other loans that had been disapproved for the
same reason, we find the ruling of the court below
correct.
One of the items subject of the appeal is the
P30,000.00 investment in the Tan Pee, Cu Yek Chim
and Co., Inc. The said amount represent shares of
stocks issued in the name of Li Yao, petitioner, now
contending that Tan Pee transferred the shares to Li
Yao in 1948, as he felt ill and was in danger of death,
and that when he recovered in the year 1952 he
decided to recall the shares and so requested Li Yao to
endorse the certificates of stock back to him, which Li
Yao did. Thereafter the shares were again placed in
the name of Tan Pee. After analyzing the evidence
submitted to support the claim of petitioner that Tan
Pee did not intend ultimately to transfer his stocks to
his son-in-law Li Yao, the court below declared that the
explanation was not sufficient to refute the presumption
that the transfer of said stocks was made for a valid
consideration, in the ordinary course of business, so
that it considered the item an unreported asset of
petitioner for the years 1948 to 1951. After reading the
arguments presented by petitioner and considering that
the witnesses for petitioner herein are his father-in-law
and his wife and their testimonies failed to convince the
judges of the court below, this Court finds no potent
reason why the findings of the court below that heard
the evidence should be disturbed.
Another item subject of the appeal is the amount of
P60,000.00 deposited with the China Banking
Corporation in the name of petitioner as of the end of
the year 1949. Petitioner claims that one by the name
of James Li, a friend of his, came to the Philippines
from Hongkong 1949 bringing with him $30,000.00 in
cash which he intended to invest in the local textile
business, so petitioner alleges he deposited this sum
with the China Banking Corporation in his name; that
the sum was withdrawn 1949 upon instruction of James
Li and delivered to an emissary of the latter by the
name of Chen Heng. As the supposed owner of the
fund, James Li was not presented to corroborate
petitioner's claim that he owned the money, nor any
other circumstances proved to corroborate petitioner's
explanation, the court below held that the evidence was
insufficient and declared the sum as an asset of the
petitioner. We also find no reason for disturbing the
conclusion of fact and of law made by the court below.
It is strange that no evidence of any kind was ever
presented to corroborate the story that the sum
belonged to petitioner's friend James Li; no written or
testimonial evidence was also presented to prove that
the amount, after it was withdrawn from the bank, was
actually sent to the supposed owner. Counsel for
petitioner contends that there is no prima
facie presumption in favor of the correctness of the
assessment made by the respondent. This is true, but
the question now involved is not the correctness of the
assessment but whether or not the amount of
P60,000.00 deposited with the China Banking
Corporation belong to Li Yao, petitioner herein. There
being no credible evidence presented that the said
amount belongs to James Li and not to Li Yao, then the
only reasonable inference is that the money must
belong to petitioner. The Court of Tax Appeals
therefore correctly included it among the assets of the
petitioner. The next items also disallowed by the Court
of Tax Appeals are the amounts of P100,000.00 each,
belonging to taxpayers Vicente Duazo and Delfin
Fulay. The findings of the Court of Tax Appeals on
these items are as follows:
Of the five, Gloria Pineda and Delfin Fulay are
the two persons upon whom suspicion could
rest because of their close association with
petitioner. As we have said, Gloria Pineda is the
private secretary and accountant of petitioner
and Delfin Fulay is his driver and bodyguard.
However, with respect to Gloria Pineda, who is
single, her income tax returns Exhibits 58, 59,
60, 61 and 62 for 1946 to 1951, inclusive, show
that she had a total net income of P25,299.50
during those years. From these returns, it is
quite apparent that the investment of
P25,000.00 attributed to her in 1950 which was
increased to P40,000.00 in 1951 is not far
beyond her reach. The relations of employer
and employee between petitioner and Gloria
Pineda cannot be considered, therefore, as a
decisive factor in determining whether she
could well afford to invest P40,000.00 in the
corporation headed by her employer.
The case of Delfin Fulay, who is admittedly a
bodyguard and driver of petitioner, is quite
different. The books of FERIN show that Delfin
Fulay invested P85,000.00 in said corporation
in 1950, which he increased to P100,000.00 in
1951. His income tax return for the years 1949,
Exhibit 66, and his return for 1951, Exhibit 67,
show that he had a total net income of only
P8,500.00 during those years. Could it be
possible for a mere hireling like Delfin Fulay,
with such a moderate income to have invested
such an enormous amount as P100,000.00 in
FERIN? The investment of Fulay in FERIN is so
highly disproportionate to his income, that we
find it impossible to believe the investment to be
his own. And if the investment did not come
from his own personal funds with his meager
salary as driver and bodyguard, from who else
could it have come but petitioner, considering
the latter's admission that he purposely saw to it
that the incorporators of FERIN were his close
friends and persons whom he could trust. From
all appearance, the petitioner could not have
chosen a person more trustworthy than Delfin
Fulay the "Man Friday" entrusted with the
protection of his life and limb.lawphil.net
The case of Vicente Duazo who is admittedly a
bodyguard and driver of petitioner's mother
would seem at first blush to be entirely different
from that of Delfin Fulay as far as relationship
with petitioner is concerned. It appears from the
evidence for the respondent that Vicente Duazo
declared a net come in his return for 1948,
Exhibit 63, the amount of P2,345.00; for 1949,
Exhibit 64, the amount of P1,640.00 and for
1950, Exhibit 65, the amount of P3,480.00 or a
total of P7,465.00. His investment in FERIN in
 1950 was P85,000.00 and in 1951, it was
increased to P100,000.00. It will be noted that
the net income of Vicente Duazo for three years
(1948, 1949, 1950) much less than that of
Delfin Fulay for two years (1949, 1951). Yet, far
from being just a mere coincidence, they
invested P25,000.00 each in FERIN in August
25, 1950.... This striking similarity in the
amounts invested at the same time, let alone
the disparity in the amounts of their respective
incomes, has led us to the conclusion that the
investments of these two persons in said
corporation came from only one source. And
the evidence on record indubitably point to
petitioner as the source considering his
admission that after the death of his father, he
was entrusted with the business affairs of his
family he being the eldest son and favorite of
the deceased.
We find no flaw in the facts and in the conclusion
arrived at that the two supposed stockholders in
FERIN, Duazo and Fulay, are mere dummies and said
facts an conclusion are hereby affirmed.
The last item questioned by petitioner is the sum of
P30,000.00 alleged to be his obligation to one Ong
Chiu. To support petitioner's claim is a copy of a
complaint in court against petitioner for the amount.
Respondent found one Benjamin Ong Chiu, who was
presented by respondent to show that he had no claim
or had filed no such action at the trial that his creditor is
not the one that respondent presented at the trial, but
petitioner did not present the one whom he claims to be
the real creditor. Assuming for the sake of argument
that the one presented by respondent is not the real
creditor, why did not petitioner present the supposed
real creditor? If there are nine Ong Chiu's well may he
have conceived of presenting a fictitious action in court
in the name of one of them. The case is the same as
the other cases above explained - one where petitioner
has failed to present corroborative evidence, or the real
creditor, to prove the existence of the debt in dispute.
Failure to adduce the proof required, the petitioner' own
testimony may not be held sufficient in law to prove his
claim of the existence of the obligation.
We next come to the question of the use of the
inventory method in assessing the income taxes due
from petitioner. The use of the inventory method is
authorized under Section 15 of the National Internal
Revenue Code (Com. Act No. 466), as amended,
which authorizes the Collector of Internal Revenue to
assess taxes due a taxpayer from any other available
fact or evidence. If a taxpayer commits a violation of
the law, hiding his income to evade payment of taxes,
the Government must be permitted to resort to all
evidence or sources available to determine his said
income, so that the tax may be collected for public
purposes. There is and there should be a presumption
of regularity accorded this action of the Collector of
Internal Revenue in assessing the tax on the best
evidence obtainable, otherwise it would be impossible
to assess taxes due from a dishonest taxpayer.
This form of assessment has also been adopted by the
Collector of Internal Revenue with the approval of this
Court in three cases, Perez vs. Collector, G.R. No. L-
10507, May 30, 1958; Collector vs. Reyes, G.R. Nos.
L-115534 and L-11558, Nov. 25, 1958; and Avelino vs.
Collector, No. L-17715, July 31, 1963. In the case at
bar the existence of assets or properties appearing in
the name of the taxpayer or in the name of his
dummies or friends, without the taxpayer being able to
give a definite reasonable explanation for their
existence, justifies the Court of Tax Appeals and this
Court to resort to the inventory method of assessment,
such being necessary and at the same time just and
equitable.
The last important legal question raised is petitioner's
claim that the unreported incomes which appeared
during the last years of the period of assessment
should not be considered as having been earned
during the years in which said incomes appeared but
should be spread throughout the whole period covered
by the assessment, that is, from 1945 to 1951. As
authority for this claim the case of U.S. v. Ridley, 120
Fed. Supp. 530 is cited. In the said case Claude Ridley
was assessed for the years through 1951, including
taxes, penalties and interests amounting to
$106,674.37. The spouses Claude Ridley were a frugal
couple, living in a small farm in which they resided and
kept a small store. No records were kept of the amount
of income earned and of the business transactions
entered into from time to time, and it was possible to
determine accurately not only the amount of income
received by Claude Ridley, but also to determine
accurately the years in which such income was
received. The purchases and expenditures made by
the spouses appeared through the years 1937 to 1951,
without any specific amount for any particular year. The
District Court held that inasmuch as the oral testimony
as well as the oral circumstances indicate that the
investment purchases were made from accumulated
savings rather than from current income and there
being no evidence to indicate greater income in one
year than in another, the income should be distributed
evenly through the years 1937 to 1951, inclusive.
The above decision does not sustain the argument
adduced by counsel for petitioner. The facts found in
the case at bar do not justify the petitioner's claim.
Petitioner does not claim that the amounts appearing in
the last period of the assessment were acquired
through savings or accumulated savings or
accumulated savings or any slow and continuous
process, such that the incomes cannot be distributed to
any particular year of the period of assessment.
On the other hand, Section 39 of the National Internal
Revenue Code requires the taxpayer to report yearly to
the Collector of Internal Revenue the income that he
gets during the year from whatever source and include
the same in the taxable year in which the income was
received by him. It is to be presumed that the income
was earned at the time that it appeared in the
possession or control of the taxpayer, in accordance
with the rule that the law has been followed. [Rule 123,
Section 69 (q), Rules of Court] Were we to sanction the
use of the spreading method claimed, We would be
tolerating a violation of the law or rule that the taxpayer
must report his income in the year it was earned. Under
the practice advocated, a taxpayer would be
encouraged to hide his income because in any case, if
his unreported income would be discovered afterwards
the said income, although appearing in one year, would
be distributed over a period of years. In other words,
we will have a rule, as advocated by petitioner's
counsel, that would be discourage the hiding of taxable
income because any discovery of any unreported
income could always be allowed to be distributed over
a period of years. In the case at bar, the distribution
over a period of years demanded by petitioner would
bring about a reduction of the tax assessed by the
Court of Tax Appeals from P424,536.77 to
P232,416.59 (see computation attached to Motion for
Reconsideration, Annex K of Petition for Review), or
about one-half of the assessment made by the Court of
Appeals. We are not prepared to permit such
unauthorized reduction in public taxes favorable to a
dishonest taxpayer and prejudicial to the interests of
the State.

WHEREFORE, finding no merit in the various

supposed errors attributed to the Court of Tax Appeals
in its decision, We hereby find that the decision is
justified by law and the evidence. Wherefore, the
decision appealed from is hereby affirmed, with costs
against the petitioner. So ordered.