BPI Leasing Corporation vs. Court of Appeals

A certification against forum shopping signed by counsel without specific board authorization is defective and warrants dismissal, and a legislative revenue regulation applies prospectively unless expressly stated otherwise, barring retroactive application for tax refunds.

BLC, a corporation engaged in leasing properties, paid a 4% contractor's percentage tax for the calendar year 1986. On November 10, 1986, the Commissioner of Internal Revenue (CIR) issued RR 19-86, which subjected finance and leasing companies to a gross receipts tax instead. BLC recomputed its tax liability under the new regulation and sought a refund for the difference paid in 1986.

• Tax Payment: For the calendar year 1986, BLC paid the CIR a total of P1,139,041.49 representing the 4% contractor's percentage tax imposed by Section 205 of the National Internal Revenue Code (NIRC), based on gross rentals of P27,783,725.42.
• Issuance of RR 19-86: On November 10, 1986, the CIR issued Revenue Regulation 19-86. Section 6.2 thereof subjected finance and leasing companies registered under Republic Act 5980 to a gross receipts tax of 5%-3%-1% on actual income earned under Section 260 (now Section 122) of the NIRC, instead of the contractor's percentage tax.
• Claim for Refund: BLC recomputed its tax liability under the gross receipts tax, arriving at P361,924.44. On April 11, 1988, BLC filed a claim for refund of P777,117.05, representing the difference between the contractor's percentage tax previously paid and the recomputed gross receipts tax.
• Effectivity Provision: Section 7 of RR 19-86 provided that the regulation takes effect on January 1, 1987, and applies to all leases written on or after that date. BLC's rental income for 1986 was derived from lease transactions entered into prior to January 1, 1987.

• Retroactive Application: Petitioner argued that RR 19-86 should be applied retroactively to allow the claim for refund.
• Legislative Nature: Petitioner posited that RR 19-86 is legislative rather than interpretative in character, and thus should retroact to the date of effectivity of the law it seeks to interpret.
• Invalidity for Lack of Due Process: Assuming the regulation is legislative, petitioner maintained it is invalid for lack of prior notice, publication, and public hearing, citing CIR v. Fortune Tobacco.
• Substantial Compliance: Petitioner insisted that the certification against forum shopping signed by counsel constituted substantial compliance with Supreme Court Circular 28-91, as counsel had personal knowledge of the case history and the absence of other pending actions.

• Prospective Application: Respondent countered that the effectivity provision of RR 19-86 is clear and unequivocal, mandating prospective application only.
• Defective Certification: Respondent argued that the petition should be dismissed because the certification against forum shopping was signed by counsel of record and not by BLC through a duly authorized representative, violating Supreme Court Circular 28-91.

• Certification Against Forum Shopping: Whether the petition substantially complies with Supreme Court Circular 28-91 when the certification against forum shopping is signed by counsel without specific board authorization.
• Nature of Regulation: Whether RR 19-86 is legislative or interpretative in nature.
• Application of Regulation: Whether RR 19-86 applies prospectively or retroactively.
• Quantum of Evidence: Whether petitioner failed to meet the quantum of evidence required in tax refund cases.
• Estoppel: Whether petitioner is estopped from claiming a refund.

• Certification Against Forum Shopping: The petition was dismissed outright for failure to comply with Circular 28-91. Counsel must be specifically authorized by a board resolution to sign the certification; being counsel of record is insufficient. Substantial compliance is not allowed, as only the petitioner has actual knowledge of other filings.
• Nature of Regulation: RR 19-86 was deemed legislative in nature, having been issued pursuant to the rule-making power of the Secretary of Finance under Section 277 of the NIRC.
• Application of Regulation: RR 19-86 applies prospectively. Statutes and administrative rules operate prospectively unless legislative intent for retroactivity is manifest. Section 7 expressly states it takes effect January 1, 1987, for leases written on or after that date. Petitioner cannot invoke it for rentals received prior to January 1, 1987.
• Due Process Challenge: The argument that RR 19-86 is invalid for lack of notice and hearing fails. While Fortune Tobacco requires notice and hearing when a rule increases the tax burden, RR 19-86 lessens the burden. Invalidating it would destroy the very basis of petitioner's refund claim.
• Tax Refund Principle: Tax refunds are in the nature of tax exemptions, strictly construed against the claimant. Petitioner failed to justify the refund by the clearest grant of law.

• Certification Against Forum Shopping by Corporations — The certification against forum shopping must be executed by the petitioner itself or a specifically authorized representative. For corporations, physical acts like signing documents can be performed only by natural persons duly authorized by corporate bylaws or a specific act of the board of directors. Counsel of record cannot routinely sign the certification without specific board authorization.
• Legislative vs. Interpretative Rules — A legislative rule implements primary legislation by providing details thereof, constituting an exercise of quasi-legislative authority. An interpretative rule provides guidelines for the law the agency enforces. Revenue regulations issued pursuant to the rule-making power of the Secretary of Finance under Section 277 of the NIRC are legislative in nature.
• Prospectivity of Administrative Regulations — Statutes and administrative rules and regulations operate prospectively only, unless the legislative intent to the contrary is manifest by express terms or by necessary implication.
• Strict Construction of Tax Refunds/Exemptions — Tax refunds are in the nature of tax exemptions, regarded as in derogation of sovereign authority, and are strictly construed against the person or entity claiming the exemption. The burden of proof rests on the claimant to justify the exemption by the clearest grant under Constitutional or statutory law.
• Due Process in Administrative Rulemaking — When an administrative rule goes beyond merely facilitating the implementation of the law and substantially increases the burden of those governed, the agency must afford affected parties a chance to be heard and be informed before the issuance gains the force of law. This requirement does not apply when the rule is beneficial and lessens the burden on taxpayers.

• "Corporations have no powers except those expressly conferred upon them by the Corporation Code and those that are implied by or are incidental to its existence. These powers are exercised through their board of directors and/or duly authorized officers and agents. Hence, physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by specific act of the board of directors."
• "The principle is well entrenched that statutes, including administrative rules and regulations, operate prospectively only, unless the legislative intent to the contrary is manifest by express terms or by necessary implication."
• "When an administrative rule goes beyond merely providing for the means that can facilitate or render less cumbersome the implementation of the law and substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard and, thereafter, to be duly informed, before the issuance is given the force and effect of law."

• BA Savings Bank v. Sia, 336 SCRA 484 (2000) — Followed. The certification against forum shopping may be signed by a specifically authorized lawyer with personal knowledge of the facts, but this does not allow any lawyer to routinely sign without specific authority.
• Mendigorin v. Cabantog, G.R. No. 136449, August 22, 2002 — Followed. Substantial compliance with the certification against forum shopping is not allowed; only the petitioner has actual knowledge of other filings.
• Paper Industries Corporation of the Philippines v. Court of Appeals, 250 SCRA 434 (1995) — Followed. Recognized that the application of Section 277 of the NIRC calls for the exercise of quasi-legislative or rule-making authority.
• CIR v. Fortune Tobacco, et al., 261 SCRA 236 (1996) — Distinguished. Nullified a revenue circular for lack of notice and hearing because it increased the tax burden; RR 19-86, however, lessens the burden.
• CIR v. Michel J. Lhuillier Pawnshop, Inc., G.R. No. 150947, July 15, 2003 — Distinguished. Reiterated the Fortune Tobacco doctrine requiring notice and hearing when administrative rules increase the burden on those governed.

• Section 205, National Internal Revenue Code (NIRC) — Imposed the 4% contractor's percentage tax paid by BLC for the year 1986.
• Section 260 (now Section 122), NIRC — Imposes the gross receipts tax applicable to finance and leasing companies under RR 19-86.
• Section 277 (now Section 244), NIRC — Grants the Secretary of Finance the authority to promulgate all needful rules and regulations for the effective enforcement of the NIRC. Served as the legal basis for RR 19-86, establishing its legislative nature.
• Section 7, Revenue Regulation 19-86 — Provided the effectivity clause, stating that the regulation takes effect on January 1, 1987, and applies to all leases written on or after that date. Applied to bar BLC's refund claim for leases written prior to the effectivity date.
• Section 2, Rule 42, Rules of Court (Supreme Court Circular 28-91) — Requires the submission of a certification against forum shopping. Applied to dismiss the petition due to the certification being signed by counsel without specific board authorization.

Davide, Jr., C.J., Panganiban, Ynares-Santiago, and Carpio, JJ.