G.R. No. 162175.  June 28, 2010.

* Evidence; Notarial Law; Documents acknowledged before notaries public are

MIGUEL J. OSSORIO PENSION FOUNDATION, INCORPORATED, petitioner, vs. public documents and public documents are admissible in evidence without
COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents. necessity of preliminary proof as to their authenticity and due execution.—There is
a “common consent” or agreement among petitioner, VMC and VFC to co-own
Taxation; Trusts; Co-Ownership; The law expressly allows a co-owner (first the MBP lot in
co-owner) of a parcel of land to register his proportionate share in the name of his the proportion specified in the notarized Memorandum of Agreement.
co-owner (second co-owner) in whose name the entire land is registered—the In Cuizon v. Remoto, 472 SCRA 274 (2005), we held: Documents acknowledged
second co-owner serves as a legal before notaries public are public documents and public documents are admissible
trustee of the first co-owner insofar as the proportionate share of the first in evidence without necessity of preliminary proof as to their authenticity and
co-owner is concerned.—The law expressly allows a co-owner (first co-owner) of due execution. They have in their favor the presumption of regularity, and to
a parcel of land to register his proportionate share in the name of his co-owner contradict the same, there must be evidence that is clear, convincing and more
(second co-owner) in whose name the entire land is registered. The second co- than merely preponderant.
owner serves as a legal trustee of the first co-owner insofar as the proportionate Trusts; Co-Ownership; Land Titles; Torrens System; The trustor-beneficiary is
share of the first co-owner is concerned. The first co-owner remains the owner of not estopped from proving its ownership over the property held in trust by the
his proportionate share and not the second co-owner in whose name the entire trustee when the purpose is not to contest the disposition or encumbrance of the
land is registered. Article 1452 of the Civil Code provides: Art. 1452. If two or property in favor of an innocent third-party purchaser for value; The Torrens
more persons agree to purchase a property and by common consent the legal system was not established to foreclose a trustor or beneficiary from proving its
title is taken in the name of one of them for the benefit of all, a trust is created by ownership of a property titled in the name of another person when the rights of
force of law in favor of the others in proportion to the interest of each. (Emphasis an innocent purchaser or lien-holder are not involved.—The BIR argues that under
supplied)  For Article 1452 to apply, all that a co-owner needs to show is that the Torrens system, a third person dealing with registered property need not go
there is “common consent” among the purchasing co-owners to put the legal title beyond the TCT and since the registered owner is VMC, petitioner is estopped
to the purchased property in the name of one co-owner for the benefit of all. from claiming ownership of the MBP lot. This argument is grossly erroneous. The
Once this “common consent” is shown, “a trust is created by force of law.” The trustor-beneficiary is not estopped from proving its ownership over the property
BIR has no option but to recognize such legal trust as well as the beneficial held in trust by the trustee when the purpose is not to contest the disposition or
ownership of the real owners because the trust is created by force of law. The encumbrance of the property in favor of an innocent third-party purchaser for
fact that the title is registered solely in the name of one person is not conclusive value. The BIR, not being a buyer or claimant to any interest in the MBP lot, has
that he alone owns the property. not relied on the face of the title of the MBP lot to acquire any interest in the lot.
Same; Court of Tax Appeals (CTA); Generally, the factual findings of the There is no basis for the BIR to claim that petitioner is estopped from proving that
Court of Tax Appeals (CTA), a special court exercising expertise on the subject of it co-owns, as trustee of the Employees’ Trust Fund, the MBP lot. Article 1452 of
tax, are regarded as final, binding and conclusive upon the Supreme Court, the Civil Code recognizes the lawful ownership of the trustor-beneficiary over the
especially if these are substantially similar to the findings of the Court of Appeals property registered in the name of the trustee. Certainly, the Torrens system was
which is normally the final arbiter of questions of fact.—Generally, the factual not established to foreclose a trustor or beneficiary from proving its ownership of
findings of the CTA, a special court exercising expertise on the subject of tax, are a property titled in the name of another person when the rights of an innocent
regarded as final, binding and conclusive upon this Court, especially if these are purchaser or lien-holder are not involved. More so, when such other person, as in
substantially similar to the findings of the CA which is normally the final arbiter of the present case, admits its being a mere trustee of the trustor or beneficiary. The
questions of fact. However, there are recognized exceptions to this rule, such as registration of a land under the Torrens system does not create or vest title,
when the judgment is based on a misapprehension of facts.
1|Page
because registration is not one of the modes of acquiring ownership. A TCT is This would run afoul of the very intendment of the law.—Petitioner is a
merely an evidence of ownership over a particular property and its issuance in corporation that was formed to administer the Employees’ Trust Fund. Petitioner
favor of a particular person does not foreclose the possibility that the invested P5,504,748.25 of the funds of the Employees’ Trust Fund to purchase the
property may be co-owned by persons not named in the certificate, or that MBP lot. When the MBP lot was sold, the gross income of the Employees’ Trust
it may be held in trust for another person by the registered owner. Fund from the sale of the MBP lot was P40,500,000. The 7.5% withholding tax of
Same; Same; Article 1452 of the Civil Code expressly authorizes a person to P3,037,500 and broker’s commission were deducted from the proceeds.
purchase a property with his own money and to take conveyance in the name of In Commissioner of Internal Revenue v. Court of Appeals, 207 SCRA 487 (1992),
another.—No particular words are required for the creation of a trust, it being the Court explained the rationale for the tax-exemption privilege of income
sufficient that a trust is clearly intended. It is immaterial whether or not the derived from employees’ trusts: It is evident that tax-exemption is likewise to be
trustor and the trustee know that the relationship which they intend to create is enjoyed by the income of the pension trust. Otherwise, taxation of those earnings
called a trust, and whether or not the parties know the precise characteristic of would result in a diminution of accumulated income and reduce whatever the
the relationship which is called a trust because what is important is whether the trust beneficiaries would receive out of the trust fund. This would run afoul of the
parties manifested an intention to create the kind of relationship which in law is very intendment of the law.
known as a trust. The fact that the TCT, Deed of Absolute Sale and the Remittance Same; Same; Same; Same; A foundation existing for the purpose of holding
Return were in VMC’s name does not forestall the possibility that the property is title to, and administering, the tax-exempt Employees’ Trust Fund established for
owned by another entity because Article 1452 of the Civil Code expressly the benefit of the employees, has the personality to claim tax refunds due the
authorizes a person to purchase a property with his own money and to take Employees’ Trust Fund.—The tax-exempt character of petitioner’s Employees’
conveyance in the name of another. Trust Fund is not at issue in this case. The tax-exempt character of the Employees’
Same; Same; A resulting trust is based on the equitable doctrine that Trust Fund has long been settled. It is also settled that petitioner exists for the
valuable consideration and not legal title determines the equitable interest and is purpose of holding title to, and administering, the tax-exempt Employees’ Trust
presumed to have been contemplated by the parties.—In this case, the notarized Fund established for the benefit of VMC’s employees. As such, petitioner has the
Memorandum of Agreement and the certified true copies of the Portfolio Mix personality to claim tax refunds due the Employees’ Trust Fund.
Analysis prepared by Citytrust clearly prove that petitioner invested
P5,504,748.25, using funds of the Employees’ Trust Fund, to purchase the MBP PETITION for review on certiorari of the decision and resolution of the Court of
lot. Since the MBP lot was registered in VMC’s name only, a resulting trust is Appeals.
created by operation of law. A resulting trust is based on the equitable doctrine    The facts are stated in the opinion of the Court.
that valuable consideration and not legal title determines the equitable interest   Eva A. Vicencio-Rodriguez, Andrew T. Pandan and Myra Gift Malacaman-
and is presumed to have been contemplated by the parties. Based on this Go for petitioner.
resulting trust, the Employees’ Trust Fund is considered the beneficial co-owner   Alberto R. Bomediano, Jr. for respondent BIR.
of the MBP lot.
CARPIO, J.:
Same; Same; Taxation; Tax Exemtions; Employees’ Trust Funds; It is evident
The Case
that tax-exemption is likewise to be enjoyed by the income of the pension trust,
 The Miguel J. Ossorio Pension Foundation, Incorporated (petitioner or
otherwise, taxation of those earnings would result in a diminution of accumulated
MJOPFI) filed this Petition for Certiorari1 with Prayer for the Issuance of a
income and reduce whatever the trust beneficiaries would receive out of the trust
Temporary Restraining Order and/or Writ of Preliminary Injunction to reverse the
fund.
Court of Appeals’ (CA) Decision 2 dated 30 May 2003 in CA-G.R. SP No. 61829 as
well as the Resolution3 dated 7 November 2003 denying the Motion for
2|Page
Reconsideration. In the assailed decision, the CA affirmed the Court of Tax in the MBP lot is 49.59%. Petitioner’s investment manager, the Citytrust Banking
Appeals’ (CTA) Decision4 dated 24 October 2000. The CTA denied petitioner’s Corporation (Citytrust),8 in submitting its Portfolio Mix Analysis, regularly reported
claim for refund of withheld creditable tax of P3,037,500 arising from the sale of the Employees’ Trust Fund’s share in the MBP lot. 9 The MBP lot is covered by
real property of which petitioner claims to be a co-owner as trustee of the Transfer Certificate of Title No. 183907 (TCT 183907) with VMC as the registered
employees’ trust or retirement funds. owner.10
Petitioner claims that since it needed funds to pay the retirement and pension
The Facts benefits of VMC employees and to re-
_______________
Petitioner, a non-stock and non-profit corporation, was organized for the
purpose of holding title to and administering the employees’ trust or retirement 6  Id., at p. 6.
funds (Employees’ Trust Fund) established for the benefit of the employees of 7  Id., at p. 159. Excerpts of the Minutes of the Meeting of the Board of
Victorias Milling Company, Inc. (VMC). 5 Petitioner, as trustee, claims that the Trustees of the Miguel J. Ossorio Pension Foundation, Inc. held on 25 March 1992
income earned by the Employees’ Trust Fund is tax exempt under Section 53(b) of read as follows:
the National Internal Revenue Code (Tax Code). Mr. C.R. De Luzuriaga, Jr. informed the Board that VMC Co., Inc. and
_______________ some of its subsidiaries are buying Ayala-Alabang lots in Muntinlupa. He
inquired whether MJOPFI would be willing to invest in, or buy part, of the
1 Under Rule 65 of the Rules of Court. lots being purchased by VMC. Upon motion of Mr. Emilio Y. Hilado, Jr.
2 Penned by Associate Justice Renato C. Dacudao with Associate Justices seconded by Mr. Orlando D. Fuentes, it was unanimously-
Godardo A. Jacinto and Danilo B. Pine, concurring. Resolution No. 92-34
3 Penned by Associate Justice Renato C. Dacudao with Associate Justices RESOLVED, That MJOPFI buy one-half (½) of one (1) Ayala-Alabang lot
Mario L. Guariña III and Danilo B. Pine, concurring. thru [VMC Co., Inc.], the purchase price thereof to be paid thru VMC
4  Penned by Associate Judge Ramon O. De Veyra with Presiding Judge Ernesto and/or to be reimbursed to VMC.
D. Acosta and Associate Judge Amancio Q. Saga, concurring. 8  Now Bank of the Philippine Islands after their merger.
5 Rollo, p. 7. 9  Rollo, pp. 162-165. From 1994-1997, the Portfolio Mix Analysis reported
that P5,504,748.25 was invested in real estate, specifically on the Madrigal
612
Business Park I property.
612 SUPREME COURT REPORTS 10 Id., at p. 59.
ANNOTATED
Miguel J. Ossorio Pension 613
Foundation, Incorporated vs. Court VOL. 621, JUNE 28, 2010 613
of Appeals Miguel J. Ossorio Pension
Petitioner alleges that on 25 March 1992, petitioner decided to invest part of Foundation, Incorporated vs. Court
the Employees’ Trust Fund to purchase a lot 6 in the Madrigal Business Park (MBP of Appeals
lot) in Alabang, Muntinlupa. Petitioner bought the MBP lot through imburse advances made by VMC, petitioner’s Board of Trustees authorized the
VMC.7 Petitioner alleges that its investment in the MBP lot came about upon the sale of its share in the MBP lot.11
invitation of VMC, which also purchased two lots. Petitioner claims that its share

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 On 14 March 1997, VMC negotiated the sale of the MBP lot with Metropolitan Miguel J. Ossorio Pension
Bank and Trust Company, Inc. (Metrobank) for P81,675,000, but the Foundation, Incorporated vs. Court
consummation of the sale was withheld. 12 On 26 March 1997, VMC eventually of Appeals
sold the MBP lot to Metrobank. VMC, through its Vice President Rolando Rodriguez and Assistant
_______________ Vice President Teodorico Escober, signed the Deed of Absolute Sale as the sole
vendor.
11 Id., at p. 166. Excerpts of the Minutes of the Meeting of the Board of
Metrobank, as withholding agent, paid the Bureau of Internal Revenue (BIR)
Trustees of the petitioner held on 24 July 1996 read as follows:
P6,125,625 as withholding tax on the sale of real property.
2.  Mr. Gerardo B. Javellana informed the Board that there is a need
Petitioner alleges that the parties who co-owned the MBP lot executed a
to raise cash to pay pension benefits. Upon motion of Mr. Rolando Hautea,
notarized Memorandum of Agreement as to the proceeds of the sale, the
seconded by Mr. Orlando D. Fuentes, it was unanimously-
pertinent provisions of which state:13
Resolution No. 96-46
2. The said parcels of land are actually co-owned by the following:
RESOLVED, that MJOPFI’s property consisting of 500 sq. m. situated at
Block 4, Lot 1 Covered by TCT No. 183907
Madrigal Park in Alabang, Muntinglupa, be sold at the best price available,
and that any of the corporate officers, namely, Mr. C.R. De Luzuriaga, Jr., or % SQ.M. AMOUNT
Mr. Rolando Hautea, or Mr. Orlando D. Fuentes be authorized to sign the MJOPFI 49.59% 450.00 P 5,504,748.25
required deed of sale.
VMC 32.23% 351.02 3,578,294.70
12 Id., at p. 167. Excerpts of the Minutes of the Meeting of the Board of
VFC 18.18% 197.98 2,018,207.30
Directors of VMC on 17 March 1997 read as follows:
3. Since Lot 1 has been sold for P81,675,000.00 (gross of 7.5% withholding
Mr. Gerardo Javellana informed the Board that pursuant to previous
tax and 3% broker’s commission, MJOPFI’s share in the proceeds of the sale is
authority from the Board, VMC sold the Lot 1, Block 4 of the land,
P40,500,000.00 (gross of 7.5% withholding tax and 3% broker’s commission.
registered in VMC’s name as TCT No. 183907 of the Registry of Deeds of
However, MJO Pension Fund is indebted to VMC representing pension benefit
Makati, which land is co-owned with Miguel J. Ossorio Pension Foundation,
advances paid to retirees
Inc. and Victorias Insurance Factors Corp., in favor of Metro Bank on March
_______________
14, 1997 for P81,675,000.00; that Metro Bank issued a check in favor of
VMC of P75,549,375.00 (which is less of P6,125,625.00 withholding tax),
moves meant that it did not pay VMC, because a check amounted to payment
which was supposed to have been deposited with Urban Bank, but in view
only when cashed, upon motion of Mr. Manuel Manalac, seconded by Mr.
of the latter’s freezing all VMC’s deposits, VMC advised Metro Bank not to
Gerardo Javellana, it was unanimously—
fund the check (to stop payment), which it did. However, Metro Bank
RESOLVED, That in the event matters would not be amicably resolved or
thereafter refused to release the proceeds of the check to VMC, saying that
ironed out with Metrobank, a letter be sent to Metrobank rescinding or cancelling
it would apply part of the proceeds of the sale to the obligations of VMC to
the deed of sale of Lot 1, Block 4 at the Madrigal Business Part (sic) in Muntinlupa,
Metrobank. As Metrobank’s
with TCT No. 183907.
614 13 Id., at p. 13.
614 SUPREME COURT REPORTS 615
ANNOTATED

4|Page
 VOL. 621, JUNE 28, 2010 615 616 SUPREME COURT REPORTS
Miguel J. Ossorio Pension ANNOTATED
Foundation, Incorporated vs. Court Miguel J. Ossorio Pension
of Appeals Foundation, Incorporated vs. Court
amounting to P21,425,141.54, thereby leaving a balance of P14,822,358.46 in of Appeals
favor of MJOPFI. Check for said amount of P14,822,358.46 will therefore be On 2 September 1997, petitioner replied that the applicable provision granting its
issued to MJOPFI as its share in the proceeds of the sale of Lot 1. The check claim for tax exemption is not Section 26 but Section 53(b) of the Tax Code.
corresponding to said amount will be deposited with MJOPFI’s account with BPI Petitioner claims that its co-ownership of the MBP lot is evidenced by Board
Asset Management & Trust Group which will then be invested by it in the usual Resolution Nos. 92-34 and 96-46 and the memoranda of agreement among
course of its administration of MJOPFI funds.” petitioner, VMC and its subsidiaries.17
Since the BIR failed to act on petitioner’s claim for refund, petitioner elevated
Petitioner claims that it is a co-owner of the MBP lot as trustee of the its claim to the Commissioner of Internal Revenue (CIR) on 26 October 1998. The
Employees’ Trust Fund, based on the notarized Memorandum of Agreement CIR did not act on petitioner’s claim for refund. Hence, petitioner filed a petition
presented before the appellate courts. Petitioner asserts that VMC has confirmed for tax refund before the CTA. On 24 October 2000, the CTA rendered a decision
that petitioner, as trustee of the Employees’ Trust Fund, is VMC’s co-owner of the denying the petition.18
MBP lot. Petitioner maintains that its ownership of the MBP lot is supported by On 22 November 2000, petitioner filed its Petition for Review before the Court
the excerpts of the minutes and the resolutions of petitioner’s Board Meetings. of Appeals. On 20 May 2003, the CA rendered a decision denying the appeal. The
Petitioner further contends that there is no dispute that the Employees’ Trust CA also denied petitioner’s Motion for Reconsideration. 19
Fund is exempt from income tax. Since petitioner, as trustee, purchased 49.59% Aggrieved by the appellate court’s Decision, petitioner elevated the case
of the MBP lot using funds of the Employees’ Trust Fund, petitioner asserts that before this Court.
the Employees’ Trust Fund's 49.59% share in the income tax paid (or
P3,037,697.40 rounded off to P3,037,500) should be refunded. 14 The Ruling of the Court of Tax Appeals
Petitioner maintains that the tax exemption of the Employees’ Trust Fund
rendered the payment of P3,037,500 as illegal or erroneous. On 5 May 1997, The CTA held that under Section 53(b) 20 [now Section 60(b)] of the Tax Code, it
petitioner filed a claim for tax refund.15 is not petitioner that is entitled to
On 14 August 1997, the BIR, through its Revenue District Officer, wrote _______________
petitioner stating that under Section 26 of the Tax Code, petitioner is not exempt
from tax on its income from the sale of real property. The BIR asked petitioner to 17 Id., at p. 16.
submit documents to prove its co-ownership of the MBP lot and its exemption 18 Id., at p. 17.
from tax.16 19 Id., at pp. 17-18.
_______________ 20 Section 53(b) of the Tax Code.
Section 53. Imposition of Tax.
14 Id., at p. 15. xxx
15 Id. (b)  Exception.—The tax imposed by this Title shall not apply to
16 Id. employee’s trust which forms part of a pension, stock bonus or profit-
sharing plan of an employer for the benefit of some or all of his employees
616
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 (1) if contributions are made to the trust by such employer, or employees, distributee shall be taxable to him in the year in which so distributed to the
or both for the purpose of distributing to such employees the earnings and extent that it exceeds the amount contributed by such employee or distributee.
principal of the fund accumulated by the trust in accordance with such 21 Rollo, pp. 114-115.
22 Id., at p. 115.
617
VOL. 621, JUNE 28, 2010 617 618
Miguel J. Ossorio Pension 618 SUPREME COURT REPORTS
Foundation, Incorporated vs. Court ANNOTATED
of Appeals Miguel J. Ossorio Pension
exemption from income tax but the income or earnings of the Employees’ Trust Foundation, Incorporated vs. Court
Fund. The CTA stated that petitioner is not the pension trust itself but it is a of Appeals
separate and distinct entity whose function is to administer the pension plan for The CTA ruled that these pieces of evidence are self-serving and cannot by
some VMC employees.21 The CTA, after evaluating the evidence adduced by the themselves prove petitioner’s co-ownership of the MBP lot when the TCT, the
parties, ruled that petitioner is not a party in interest. Deed of Absolute Sale, and the Monthly Remittance Return of Income Taxes
To prove its co-ownership over the MBP lot, petitioner presented the Withheld (Remittance Return) disclose otherwise. The CTA further ruled that
following documents: petitioner failed to present any evidence to prove that the money used to
a. Secretary’s Certificate showing how the purchase and eventual sale of the purchase the MBP lot came from the Employees’ Trust Fund. 23
MBP lot came about. The CTA concluded that petitioner is estopped from claiming a tax exemption.
b. Memoranda of Agreement showing various details: The CTA pointed out that VMC has led the government to believe that it is the
i. That the MBP lot was co-owned by VMC and petitioner on a 50/50 sole owner of the MBP lot through its execution of the Deeds of Absolute Sale
basis; both during the purchase and subsequent sale of the MBP lot and through the
ii. That VMC held the property in trust for North Legaspi Land registration of the MBP lot in VMC’s name. Consequently, the tax was also paid in
Development Corporation, North Negros Marketing Co., Inc., VMC’s name alone. The CTA stated that petitioner may not now claim a refund of
Victorias Insurance Factors Corporation, Victorias Science and a portion of the tax paid by the mere expediency of presenting Secretary’s
Technical Foundation, Inc. and Canetown Development Corporation. Certificates and memoranda of agreement in order to prove its ownership. These
iii. That the previous agreement (ii) was cancelled and it showed that documents are self-serving; hence, these documents merit very little weight. 24
the MBP lot was co-owned by petitioner, VMC and Victorias
Insurance Factors Corporation (VFC).22 The Ruling of the Court of Appeals

_______________ The CA declared that the findings of the CTA involved three types of
documentary evidence that petitioner presented to prove its contention that it
plan, and (2) if under the trust instrument it is impossible, at any time prior to purchased 49.59% of the MBP lot with funds from the Employees’ Trust Fund: (1)
satisfaction of all liabilities with respect to employees under the trust, for any part the memoranda of agreement executed by petitioner and other VMC subsidiaries;
of the corpus or income to be (within the taxable year or thereafter) used for, or (2) Secretary’s Certificates containing excerpts of the minutes of meetings
diverted to, purposes other than for the exclusive benefit of his conducted by the respective boards of directors or trustees of VMC and
employees: Provided, That any amount actually distributed to any employee or

6|Page
petitioner; (3) Certified True Copies of the Portfolio Mix Analysis issued by The Issues
Citytrust re-
_______________ The issues presented are:
1. Whether petitioner or the Employees’ Trust Fund is estopped from claiming
23 Id., at p. 116. that the Employees’ Trust Fund
24 Id., at pp. 116-117.  
_______________
619  
VOL. 621, JUNE 28, 2010 619 25 Id., at p. 66.
Miguel J. Ossorio Pension 26 Id., at p. 67.
Foundation, Incorporated vs. Court
of Appeals 620
garding the investment of P5,504,748.25 in Madrigal Business Park I for the years 620 SUPREME COURT REPORTS
1994 to 1997.25 ANNOTATED
The CA agreed with the CTA that these pieces of documentary evidence Miguel J. Ossorio Pension
submitted by petitioner are largely self-serving and can be contrived easily. The Foundation, Incorporated vs. Court
CA ruled that these documents failed to show that the funds used to purchase the of Appeals
MBP lot came from the Employees’ Trust Fund. The CA explained, thus: is the beneficial owner of 49.59% of the MBP lot and that VMC merely held
“We are constrained to echo the findings of the Court of Tax Appeals in regard 49.59% of the MBP lot in trust for the Employees’ Trust Fund.
to the failure of the petitioner to ensure that legal documents pertaining to its 2. If petitioner or the Employees’ Trust Fund is not estopped, whether they have
investments, e.g. title to the subject property, were really in its name, considering sufficiently established that the Employees’ Trust Fund is the beneficial owner
its awareness of the resulting tax benefit that such foresight or providence would of 49.59% of the MBP lot, and thus entitled to tax exemption for its share in
produce; hence, genuine efforts towards that end should have been exerted, this the proceeds from the sale of the MBP lot.
notwithstanding the alleged difficulty of procuring a title under the names of all
the co-owners. Indeed, we are unable to understand why petitioner would allow The Ruling of the Court
the title of the property to be placed solely in the name of petitioner’s alleged co-
owner, i.e. the VMC, although it allegedly owned a much bigger (nearly half), We grant the petition.
portion thereof. Withal, petitioner failed to ensure a “fix” so to speak, on its The law expressly allows a co-owner (first co-owner) of a parcel of land to
investment, and we are not impressed by the documents which the petitioner register his proportionate share in the name of his co-owner (second co-owner) in
presented, as the same apparently allowed “mobility” of the subject real estate whose name the entire land is registered. The second co-owner serves as a legal
assets between or among the petitioner, the VMC and the latter's subsidiaries. trustee of the first co-owner insofar as the proportionate share of the first co-
Given the fact that the subject parcel of land was registered and sold under the owner is concerned. The first co-owner remains the owner of his proportionate
name solely of VMC, even as payment of taxes was also made only under its share and not the second co-owner in whose name the entire land is registered.
name, we cannot but concur with the finding of the Court of Tax Appeals that Article 1452 of the Civil Code provides:
petitioner's claim for refund of withheld creditable tax is bereft of solid juridical “Art. 1452. If two or more persons agree to purchase a property and by
basis.”26 common consent the legal title is taken in the name of one of them for the

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benefit of all, a trust is created by force of law in favor of the others in _______________
proportion to the interest of each.” (Emphasis supplied)
27 Far East Bank and Trust Company v. Court of Appeals, G.R. No. 129130, 9
For Article 1452 to apply, all that a co-owner needs to show is that there is December 2005, 477 SCRA 49, 52.
“common consent” among the purchasing co-owners to put the legal title to the 28 Recognized exceptions to this rule are: (1) when the findings are grounded
purchased property in the name of one co-owner for the benefit of all. Once this entirely on speculation, surmises or conjectures; (2) when the inference made is
“common consent” is shown, “a trust is created by force of law.” The BIR has no manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
option but to recognize such legal trust as well as the beneficial ownership of the discretion; (4) when the judgment is based on misapprehension of facts; (5) when
real owners because the trust is created by force of law. The fact that the title is the findings of fact are conflicting; (6) when in making its findings the Court of
registered Appeals went beyond the issues of the case, or its findings are contrary to the
621 admissions of both the appellee and the appellant; (7) when the findings are
VOL. 621, JUNE 28, 2010 621 contrary to the trial court; (8) when the findings are conclusions without citation
Miguel J. Ossorio Pension of specific evidence on which they are based; (9) when the facts set forth in the
Foundation, Incorporated vs. Court petition as well as
of Appeals
622
solely in the name of one person is not conclusive that he alone owns the
622 SUPREME COURT REPORTS
property.
Thus, this case turns on whether petitioner can sufficiently establish that ANNOTATED
petitioner, as trustee of the Employees’ Trust Fund, has a common agreement Miguel J. Ossorio Pension
with VMC and VFC that petitioner, VMC and VFC shall jointly purchase the MBP Foundation, Incorporated vs. Court
lot and put the title to the MBP lot in the name of VMC for the benefit petitioner, of Appeals
VMC and VFC. Petitioner contends that the CA erred in evaluating the documents as self-
We rule that petitioner, as trustee of the Employees’ Trust Fund, has more serving instead of considering them as truthful and genuine because they are
than sufficiently established that it has an agreement with VMC and VFC to public documents duly notarized by a Notary Public and presumed to be regular
purchase jointly the MBP lot and to register the MBP lot solely in the name of unless the contrary appears. Petitioner explains that the CA erred in doubting the
VMC for the benefit of petitioner, VMC and VFC. authenticity and genuineness of the three memoranda of agreement presented
as evidence. Petitioner submits that there is nothing wrong in the execution of
Factual findings of the CTA will be reviewed the three memoranda of agreement by the parties. Petitioner points out that
VMC authorized petitioner to administer its Employees’ Trust Fund which is
when judgment is based on a misapprehension of facts. basically funded by donation from its founder, Miguel J. Ossorio, with his shares
Generally, the factual findings of the CTA, a special court exercising expertise of stocks and share in VMC's profits.29
on the subject of tax, are regarded as final, binding and conclusive upon this Petitioner argues that the Citytrust report reflecting petitioner’s investment in
Court, especially if these are substantially similar to the findings of the CA which is the MBP lot is concrete proof that money of the Employees’ Trust Funds was used
normally the final arbiter of questions of fact. 27 However, there are recognized to purchase the MBP lot. In fact, the CIR did not dispute the authenticity and
exceptions to this rule,28 such as when the judgment is based on a existence of this documentary evidence. Further, it would be unlikely for Citytrust
misapprehension of facts.

8|Page
to issue a certified copy of the Portfolio Mix Analysis stating that petitioner of the whole property or deprive petitioner of its rights as a co-owner. 32 Petitioner
invested in the MBP lot if it were not true. 30 argues that under the Torrens system, the issuance of a TCT does not create or
Petitioner claims that substantial evidence is all that is required to prove vest a title and it has never been recognized as a mode of acquiring ownership. 33
petitioner’s co-ownership and all the pieces of evidence have overwhelmingly The issues of whether petitioner or the Employees’ Trust Fund is estopped
proved that petitioner is a co-owner of the MBP lot to the extent of 49.59% of the from claiming 49.59% ownership in the MBP lot, whether the documents
MBP lot. Petitioner explains: presented by petitioner are self-serving, and whether petitioner has proven its
_______________ exemption from tax, are all questions of fact which could only be resolved after
reviewing, examining and evaluating the probative value of the evidence
in the petitioner’s main and reply briefs are not disputed by the respondent; (10) presented. The CTA ruled that the documents presented by petitioner cannot
when the findings of fact are premised on the supposed absence of evidence and prove its co-ownership over the MBP lot especially that the TCT, Deed of Absolute
contradicted by the evidence on record; or (11) when the Court of Appeals Sale and the Remittance Return disclosed that VMC is the sole owner and
manifestly overlooked certain relevant facts not disputed by the parties, which, if taxpayer.
properly considered, would justify a different conclusion. However, the appellate courts failed to consider the genuineness and due
execution of the notarized Memorandum of
29 Rollo, pp. 351-352. _______________
30 Id., at p. 353.
31 Id., at p. 354.
623 32 Id., at p. 357.
VOL. 621, JUNE 28, 2010 623 33 Id., at p. 358.
Miguel J. Ossorio Pension
Foundation, Incorporated vs. Court 624
of Appeals 624 SUPREME COURT REPORTS
“Thus, how the parties became co-owners was shown by the excerpts of the ANNOTATED
minutes and the resolutions of the Board of Trustees of the petitioner and those Miguel J. Ossorio Pension
of VMC. All these documents showed that as far as March 1992, petitioner Foundation, Incorporated vs. Court
already expressed intention to be co-owner of the said property. It then decided of Appeals
to invest the retirement funds to buy the said property and culminated in it Agreement acknowledging petitioner’s ownership of the MBP lot which provides:
owning 49.59% thereof. When it was sold to Metrobank, petitioner received its 2. The said parcels of land are actually co-owned by the following:
share in the proceeds from the sale thereof. The excerpts and resolutions of the BLOCK 4, LOT 1 COVERED BY TCT NO. 183907
parties’ respective Board of Directors were certified under oath by their
respective Corporate Secretaries at the time. The corporate certifications are % SQ.M AMOUNT
accorded verity by law and accepted as prima facie evidence of what took place in .
the board meetings because the corporate secretary is, for the time being, the MJOP 49.59 450.0 P 5,504,748.25
board itself.”31 FI % 0
VMC 32.23 351.0                 
Petitioner, citing Article 1452 of the Civil Code, claims that even if VMC
registered the land solely in its name, it does not make VMC the absolute owner % 2 3,578,294.70
9|Page
 VFC 18.18 197.9                   of an innocent third-party purchaser for value. The BIR, not being a buyer or
% 8 2,018,207.30 claimant to any interest in the MBP lot, has not relied on the face of the title of
Thus, there is a “common consent” or agreement among petitioner, VMC and the MBP lot to acquire any interest in the lot. There is no basis for the BIR to claim
VFC to co-own the MBP lot in the proportion specified in the notarized that petitioner is estopped from proving that it co-owns, as trustee of the
Memorandum of Agreement. Employees’ Trust Fund, the MBP lot. Article 1452 of the Civil Code recognizes the
In Cuizon v. Remoto,34 we held: lawful ownership of the trustor-beneficiary over the property registered in the
“Documents acknowledged before notaries public are public documents and name of the trustee. Certainly, the Torrens system was not established to
public documents are admissible in evidence without necessity of preliminary foreclose a trustor or beneficiary from proving its ownership of a property titled
proof as to their authenticity and due execution. They have in their favor the in the name of another person when the rights of an innocent purchaser or lien-
presumption of regularity, and to contradict the same, there must be evidence holder are not involved. More so, when such other person, as in the present case,
that is clear, convincing and more than merely preponderant.” admits its being a mere trustee of the trustor or beneficiary.
The registration of a land under the Torrens system does not create or vest
The BIR failed to present any clear and convincing evidence to prove that the title, because registration is not one of the modes of acquiring ownership. A TCT
notarized Memorandum of Agreement is fictitious or has no legal effect. Likewise, is merely an evidence of ownership over a particular property and its issuance in
VMC, the registered owner, did not repudiate petitioner’s share in the MBP lot. favor of a particular person does not foreclose the possibility that the property
Further, Citytrust, a reputable banking institution, has prepared a Portfolio Mix may be co-owned by persons not named in the certificate, or that it may be held
Analysis for the years 1994 to 1997 showing that petitioner invested in trust for another person by the registered owner. 35
P5,504,748.25 in the MBP lot. Absent any proof that the Citytrust bank records  
have _______________
_______________
35 Naval v. Court of Appeals, G.R. No. 167412, 22 February 2006, 483 SCRA
34 G.R. No. 143027, 11 October 2005, 472 SCRA 274, 282. 102, 113.

625 626
VOL. 621, JUNE 28, 2010 625 626 SUPREME COURT REPORTS
Miguel J. Ossorio Pension ANNOTATED
Foundation, Incorporated vs. Court Miguel J. Ossorio Pension
of Appeals Foundation, Incorporated vs. Court
been tampered or falsified, and the BIR has presented none, the Portfolio Mix of Appeals
Analysis should be given probative value. No particular words are required for the creation of a trust, it being sufficient
The BIR argues that under the Torrens system, a third person dealing with that a trust is clearly intended. 36 It is immaterial whether or not the trustor and
registered property need not go beyond the TCT and since the registered owner is the trustee know that the relationship which they intend to create is called a
VMC, petitioner is estopped from claiming ownership of the MBP lot. This trust, and whether or not the parties know the precise characteristic of the
argument is grossly erroneous. The trustor-beneficiary is not estopped from relationship which is called a trust because what is important is whether the
proving its ownership over the property held in trust by the trustee when the parties manifested an intention to create the kind of relationship which in law is
purpose is not to contest the disposition or encumbrance of the property in favor known as a trust.37

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 The fact that the TCT, Deed of Absolute Sale and the Remittance Return were Petitioner has sufficiently proven that it had a “common consent” or
in VMC’s name does not forestall the possibility that the property is owned by agreement with VMC and VFC to jointly purchase the MBP lot. The absence of
another entity because Article 1452 of the Civil Code expressly authorizes a petitioner’s name in the TCT does not prevent petitioner from claiming before the
person to purchase a property with his own money and to take conveyance in BIR that the Employees’ Trust Fund is the beneficial owner of 49.59% of the MBP
the name of another. lot and that VMC merely holds 49.59% of the MBP lot in trust, through petitioner,
In Tigno v. Court of Appeals, the Court explained, thus: for the benefit of the Employees’ Trust Fund.
“An implied trust arises where a person purchases land with his own money The BIR has acknowledged that the owner of a land can validly place the title
and takes conveyance thereof in the name of another. In such a case, the to the land in the name of another person. In BIR Ruling [DA-(I-012) 190-09] dated
property is held on resulting trust in favor of the one furnishing the consideration 16 April 2009, a certain Amelia Segarra purchased a parcel of land and registered
for the transfer, unless a different intention or understanding appears. The trust it in the names of Armin Segarra and Amelito Segarra as trustees on the condition
which results under such circumstances does not arise from a contract or an that upon demand by Amelia Segarra, the trustees would transfer the land in
agreement of the parties, but from the facts and circumstances; that is to say, the favor of their sister, Arleen May Segarra-Guevara. The BIR ruled that an implied
trust results because of equity and it arises by implication or operation of law.” 38 trust is deemed created by law and the transfer of the land to the beneficiary is
not subject to capital gains tax or creditable withholding tax.
In this case, the notarized Memorandum of Agreement and the certified true
copies of the Portfolio Mix Analysis prepared by Citytrust clearly prove that Income from Employees’ Trust Fund is
petitioner invested P5,504,748.25, using funds of the Employees’ Trust Fund, to
purchase the MBP lot. Since the MBP lot was registered in VMC’s name only, a Exempt from Income Tax
resulting trust is created by opera- Petitioner claims that the Employees’ Trust Fund is exempt from the payment
_______________ of income tax. Petitioner further claims that as trustee, it acts for the Employees’
Trust Fund, and can file the claim for refund. As trustee, petitioner con-
36 Civil Code, Article 1444. _______________
37 DE LEON, HECTOR, COMMENTS AND CASES ON PARTNERSHIP, AGENCY AND TRUSTS ,
5th ed., p. 665 (1999). 39 Buan Vda. de Esconde v. Court of Appeals, 323 Phil. 81, 89; 253 SCRA 66, 73
38 G.R. No. 110115, 8 October 1997, 280 SCRA 262, 271. (1996).

627 628
VOL. 621, JUNE 28, 2010 627 628 SUPREME COURT REPORTS
Miguel J. Ossorio Pension ANNOTATED
Foundation, Incorporated vs. Court Miguel J. Ossorio Pension
of Appeals Foundation, Incorporated vs. Court
tion of law. A resulting trust is based on the equitable doctrine that valuable of Appeals
consideration and not legal title determines the equitable interest and is siders itself as the entity that is entitled to file a claim for refund of taxes
presumed to have been contemplated by the parties. 39 Based on this resulting erroneously paid in the sale of the MBP lot. 40
trust, the Employees’ Trust Fund is considered the beneficial co-owner of the The Office of the Solicitor General argues that the cardinal rule in taxation is
MBP lot. that tax exemptions are highly disfavored and whoever claims a tax exemption

11 | P a g e
must justify his right by the clearest grant of law. Tax exemption cannot arise by To hold legal title to, control, invest and administer in the manner provided,
implication and any doubt whether the exemption exists is strictly construed pursuant to applicable rules and conditions as established, and in the interest and
against the taxpayer.41 Further, the findings of the CTA, which were affirmed by for the benefit of its beneficiaries and/or participants, the private pension plan as
the CA, should be given respect and weight in the absence of abuse or established for certain employees of Victorias Milling Company, Inc., and other
improvident exercise of authority.42 pension plans of Victorias Milling Company affiliates and/or subsidiaries, the
Section 53(b) and now Section 60(b) of the Tax Code provides: pension funds and assets, as well as accruals, additions and increments thereto,
“SEC. 60. Imposition of Tax.— and such amounts as may be set aside or accumulated for the benefit of the
(A) Application of Tax.—x x x participants of said pension plans; and in furtherance of the foregoing and as may
(B)  Exception.—The tax imposed by this Title shall not apply to employee’s be incidental thereto.”43 (Emphasis supplied)
trust which forms part of a pension, stock bonus or profit-sharing plan of an
employer for the benefit of some or all of his employees (1) if contributions are Petitioner is a corporation that was formed to administer the Employees’
made to the trust by such employer, or employees, or both for the purpose of Trust Fund. Petitioner invested P5,504,748.25 of the funds of the Employees’
distributing to such employees the earnings and principal of the fund Trust Fund to purchase the MBP lot. When the MBP lot was sold, the gross
accumulated by the trust in accordance with such plan, and (2) if under the trust income of the Employees’ Trust Fund from the sale of the MBP lot was
instrument it is impossible, at any time prior to the satisfaction of all liabilities P40,500,000. The 7.5% withholding tax of P3,037,500 and broker’s commission
with respect to employees under the trust, for any part of the corpus or income were deducted from the proceeds. In Commissioner of Internal Revenue v. Court
to be (within the taxable year or thereafter) used for, or diverted to, purposes of Appeals,44 the Court explained the rationale for the tax-exemption privilege of
other than for the exclusive benefit of his employees: Provided, That any amount income derived from employees’ trusts:
actually distributed to any employee or distributee shall be taxable to him in the “It is evident that tax-exemption is likewise to be enjoyed by the income of
year in which so distributed to the extent that it exceeds the amount contributed the pension trust. Otherwise, taxation of those earnings would result in a
by such employee or distributee.” diminution of accumulated income and reduce whatever the trust beneficiaries
would receive out of the trust fund. This would run afoul of the very intendment
Petitioner’s Articles of Incorporation state the purpose for which the of the law.”
corporation was formed:
_______________ In Miguel J. Ossorio Pension Foundation, Inc. v. Commissioner of Internal
Revenue,45 the CTA held that petitioner is
40 Rollo, p. 361. _______________
41 Id., at p. 324.
42 Id., at p. 325. 43 Id., at p. 128.
44 G.R. No. 95022, 23 March 1992, 207 SCRA 487, 495.
629 45 CTA Case No. 4244, 2 November 1990. On 2 November 1990, the CTA
VOL. 621, JUNE 28, 2010 629 rendered this decision which was affirmed by the CA in a decision dated 20
Miguel J. Ossorio Pension January 1993 in CA G.R. SP No. 23980 and which became final and executory on 3
Foundation, Incorporated vs. Court August 1993. In compliance with
of Appeals 630
Primary Purpose
630 SUPREME COURT REPORTS

12 | P a g e
 ANNOTATED 631
Miguel J. Ossorio Pension
VOL. 621, JUNE 28, 2010 631
Foundation, Incorporated vs. Court
of Appeals Miguel J. Ossorio Pension
entitled to a refund of withholding taxes paid on interest income from direct Foundation, Incorporated vs. Court
loans made by the Employees’ Trust Fund since such interest income is exempt of Appeals
from tax. The CTA, in recognizing petitioner’s entitlement for tax exemption, In a letter dated January 18, 1974 addressed to Victorias Milling Co., Inc., the
explained: Bureau of Internal Revenue ruled that “the income of the trust fund of your
“In or about 1968, Victorias Milling Co., Inc. established a retirement or retirement benefit plan is exempt from income tax, pursuant to Rep. Act 4917 in
pension plan for its employees and those of its subsidiary companies pursuant to relation to Section 56(b) of the Tax Code.”
a 22-page plan. Pursuant to said pension plan, Victorias Milling Co., Inc. makes a In accordance with petitioner’s Articles of Incorporation (Annex A), petitioner
(sic) regular financial contributions to the employee trust for the purpose of would “hold legal title to, control, invest and administer, in the manner
distributing or paying to said employees, the earnings and principal of the funds provided, pursuant to applicable rules and conditions as established, and in the
accumulated by the trust in accordance with said plan. Under the plan, it is interest and for the benefit of its beneficiaries and/or participants, the private
imposable, at any time prior to the satisfaction of all liabilities with respect to pension plan as established for certain employees of Victorias Milling Co., Inc.
employees under the trust, for any part of the corpus or income to be used for, or and other pension plans of Victorias Milling Co. affiliates and/or subsidiaries,
diverted to, purposes other than for the exclusive benefit of said employees. the pension funds and assets, as well as the accruals, additions and increments
Moreover, upon the termination of the plan, any remaining assets will be applied thereto, and such amounts as may be set aside or accumulated of said pension
for the benefit of all employees and their beneficiaries entitled thereto in plans. Moreover, pursuant to the same Articles of Incorporations, petitioner is
proportion to the amount allocated for their respective benefits as provided in empowered to “settle, compromise or submit to arbitration, any claims, debts or
said plan. damages due or owing to or from pension funds and assets and other funds and
The petitioner and Victorias Milling Co., Inc., on January 22, 1970, entered into assets of the corporation, to commence or defend suits or legal proceedings and
a Memorandum of Understanding, whereby they agreed that petitioner would to represent said funds and assets in all suits or legal proceedings.”
administer the pension plan funds and assets, as assigned and transferred to it in Petitioner, through its investment manager, the City Trust Banking
trust, as well as all amounts that may from time to time be set aside by Victorias Corporation, has invested the funds of the employee trust in treasury bills,
Milling Co., Inc. “For the benefit of the Pension Plan, said administration is to be Central Bank bills, direct lending, etc. so as to generate income or earnings for
strictly adhered to pursuant to the rules and regulations of the Pension Plan and the benefit of the employees-beneficiaries of the pension plan. Prior to the
of the Articles of Incorporation and By Laws” of petitioner. effectivity of Presidential Decree No. 1959 on October 15, 1984, respondent did
The pension plan was thereafter submitted to the Bureau of Internal Revenue not subject said income or earning of the employee trust to income tax because
for registration and for a ruling as to whether its income or earnings are exempt they were exempt from income tax pursuant to Sec. 56(b), now Sec. 54(b) of the
from income tax pursuant to Rep. Act 4917, in relation to Sec. 56(b), now Sec. Tax Code and the BIR Ruling dated January 18, 1984 (Annex D). (Boldfacing
54(b), of the Tax Code. supplied; italicization in the original)
_______________ xxx
It asserted that the pension plan in question was previously submitted to the
the decision, the CIR refunded to petitioner the amounts of P780,352.28 on 23 Bureau of Internal Revenue for a ruling as to whether the income or earnings of
September 1994 and P312,606.40 on 19 September 1996. the retirement funds of said plan are exempt from income tax and in a letter

13 | P a g e
dated January 18,1984, the Bureau ruled that the earnings of the trust funds of In Citytrust Banking Corporation as Trustee and Investment Manager of
the Various Retirement Funds v. Commissioner of Internal Revenue,46 the CTA granted
632 Citytrust’s claim for
_______________
632 SUPREME COURT REPORTS
ANNOTATED 46 CTA Case No. 5083, 9 March 1998. In a Resolution dated 13 July 1998, the
Miguel J. Ossorio Pension Court of Appeals in CA G.R. SP No. 47375 ruled:
Foundation, Incorporated vs. Court
633
of Appeals
VOL. 621, JUNE 28, 2010 633
pension plan are exempt from income tax under Sec. 56(b) of the Tax
Code. (Emphasis supplied) Miguel J. Ossorio Pension
“A close review of the provisions of the plan and trust instrument Foundation, Incorporated vs. Court
disclose that in reality the corpus and income of the trust fund are not at of Appeals
no time used for, or diverted to, any purpose other than for the exclusive refund on withholding taxes paid on the investments made by Citytrust in behalf
benefit of the plan beneficiaries. This fact was likewise confirmed after of the trust funds it manages, including petitioner.47 Thus:
verification of the plan operations by the Revenue District No. 63 of the “In resolving the second issue, we note that the same is not a case of first
Revenue Region No. 14, Bacolod City. Section X also confirms this fact by impression. Indeed, the petitioner is correct in its adherence to the clear ruling
providing that if any assets remain after satisfaction of the requirements of laid by the Supreme Court way back in 1992 in the case of Commissioner of
all the above clauses, such remaining assets will be applied for the benefits Internal Revenue vs. The Honorable Court of Appeals, The Court of Tax Appeals
of all persons included in such classes in proportion to the amounts and GCL Retirement Plan, 207 SCRA 487 at page 496, supra, wherein it was
allocated for their respective benefits pursuant to the foregoing priorities. succinctly held:
“In view of all the foregoing, this Office is of the opinion, as it hereby xxx
holds, that the income of the trust fund of your retirement benefit plan is There can be no denying either that the final withholding tax is
exempt from income tax pursuant to Republic Act 4917 in relation to collected from income in respect of which employees’ trusts are declared
Section 56(b) of the Tax Code. (Annex “D” of Petition)” exempt (Sec. 56(b), now 53(b), Tax Code). The application of the
withholdings system to interest on bank deposits or yield from deposit
This CTA decision, which was affirmed by the CA in a decision dated 20 substitutes is essentially to maximize and expedite the collection of income
January 1993, became final and executory on 3 August 1993. taxes by requiring its payment at the source. If an employees’ trust like the
The tax-exempt character of petitioner’s Employees’ Trust Fund is not at issue GCL enjoys a tax-exempt status from income, we see no logic in
in this case. The tax-exempt character of the Employees’ Trust Fund has long withholding a certain percentage of that income which it is not supposed
been settled. It is also settled that petitioner exists for the purpose of holding title to pay in the first place.
to, and administering, the tax-exempt Employees’ Trust Fund established for the    x x x
benefit of VMC’s employees. As such, petitioner has the personality to claim tax Similarly, the income of the trust funds involved herein is exempt from the
refunds due the Employees’ Trust Fund. payment of final withholding taxes.”

This CTA decision became final and executory when the CIR failed to file a
Petition for Review within the extension granted by the CA.
14 | P a g e
_______________ 49  Likewise, in BIR Ruling [DA-(C-033) 139-09] dated 5 March 2009, the BIR
confirmed that the sale of the Bank of the Philippine Islands Group of Companies
For failure of the Commissioner of Internal Revenue to file the Petition for Retirement Fund’s (BPI RTF) capital assets is exempt from capital gains tax and
Review within the extension granted which expired on 11 April 1998, this case is from the creditable expanded withholding tax.
considered abandoned and withdrawn and is ordered dismissed.
47  Citytrust was refunded the amount of P5,114,260.44 representing 635
erroneously paid final withholding taxes on the investments made by Citytrust in VOL. 621, JUNE 28, 2010 635
behalf of the trust funds it manages. Of this amount, petitioner was refunded Miguel J. Ossorio Pension
P293,482.49. Foundation, Incorporated vs. Court
of Appeals
Similarly, in BIR Ruling [UN-450-95], Citytrust wrote the BIR to request for a
Fund, is entitled to claim the tax refund of P3,037,500 which was erroneously
ruling exempting it from the payment of withholding tax on the sale of the land
paid in the sale of the MBP lot.
by various BIR-approved trustees and tax-exempt private employees’ retirement
Wherefore, we GRANT the petition and SET ASIDE the Decision of 30 May
benefit trust funds48 represented by Citytrust. The BIR ruled that the private
2003 of the Court of Appeals in CA-G.R. SP No. 61829. Respondent Commissioner
employees benefit trust funds, which included petitioner, have met the
of Internal Revenue is directed to refund petitioner Miguel J. Ossorio Pension
requirements of the law and the regulations and therefore qualify as reasonable
Foundation, Incorporated, as trustee of the Employees’ Trust Fund, the amount of
retirement benefit plans within the contemplation of Republic Act No. 4917 (now
P3,037,500, representing income tax erroneously paid.
Sec. 28(b)(7)(A), Tax Code). The income from the trust fund investments is
SO ORDERED.
therefore exempt from the payment of income tax and consequently from the
Peralta, Abad, Perez** and Mendoza, JJ., concur.
payment of the creditable withholding tax on the sale of their real property. 49
Petition granted, judgment set aside.
Thus, the documents issued and certified by Citytrust showing that money
from the Employees’ Trust Fund was invested in the MBP lot cannot simply be Notes.—Section 28(b) of CA 186 as amended by RA 4968 in no uncertain
brushed aside by the BIR as self-serving, in the light of previous cases holding that terms bars the creation of any insurance or retirement plan—other than the GSIS
Citytrust was indeed handling the money of the Employees’ Trust Fund. These —for government officers and employees, in order to prevent the undue and
documents, together with the notarized Memorandum of Agreement, clearly inequitous proliferation of such plans. (Conte vs. Commission on Audit, 264 SCRA
establish that petitioner, on behalf of the Employees’ Trust Fund, indeed invested 19 [1996])
in the purchase of the MBP lot. Thus, the Employees’ Trust Fund owns 49.59% of It is not always necessary that the cestui que trust should be named, or even
the MBP lot. be in esse at the time the trust is created in his favor—it is enough that the
Since petitioner has proven that the income from the sale of the MBP lot beneficiaries are sufficiently certain or identifiable. (Development Bank of the
came from an investment by the Employees' Trust Fund, petitioner, as trustee of Philippines vs. Commission on Audit, 422 SCRA 459 [2004])
the Employees’ Trust A necessary consequence of the special exemption enjoyed alone by
_______________ employees’ trusts would be a necessary segregation in the accounting of such
income, interest or otherwise, earned from those trusts from that earned by the
48  The list of BIR-approved duly trusteed and tax-exempt private employee’s other clients of the trustee. (Far East Bank and Trust Company vs. Commissioner
retirement benefit trust funds includes petitioner Miguel J. Ossorio Pension of Internal Revenue, 488 SCRA 473 [2006])
Foundation, Inc. Trust Fund under Trust Account No. TA # 5C-019A. ——o0o——
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 **  Designated additional member per Raffle dated 2 June 2010.

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