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THIRD DIVISION

BASES CONVERSION AND G.R. No. 205466

DEVELOPMENT
AUTHORITY, Present:
Petitioner, LEONEN,J.,
Chairperson,
HERNANDO,
INTING;
- versus - DELOS SANTOS, and
ROSARIO, JJ.

COMMISSIONER OF Promulgated:
INTERNAL REVENUE,
Respondent. January 11, 2021
x- - - - - - - - - - - - - - - - - - - - - - - - - -~\~\)C...,~~~
- - - - - - - - - - - - - - - - - -x

DECISION

HERNANDO, J.:

This Petition for Review1 assails the October 10, 20122 and December
11, 2012 3 Resolutions of the Court of Tax Appeals (CTA) En Banc in CTAEB
No. 900 4 which dismissed the Petition for Review filed by petitioner Bases
Conversion and Development Authority (BCDA) against respondent
Commissioner of Internal Revenue (CIR), 5 and denied BCDA's Motion for
Reconsideration, 6 respectively.

1 Rollo, pp. 3-31.

2 Id. at 33-36; penned by Presiding Justice Ernesto D. Acosta and concurred in by Associate Justices Juanita
C. Castaneda, Jr., Lovell R. Baustista, Caesar A. Casanova, Olga Palanca-Enriquez, Esperanza R. Fabon-
Victorino, Cielito N. Mindaro-Grulla. Associate Justices Erlinda P. Uy and Amelia Cotangco-Manalastas,
on leave.
Id. at 37-40; penned by Presiding Justice Ernesto D. Acosta and concurred in by Associate Justices Juanito
C. Castaneda, Jr., Lovell R. Baustista, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N.
Mindaro-Grulla, and Amelia Cotangco-Manalastas. Associate Justices Erlinda P. Uy and Olga Palanca-
Enriquez, no part.
4
ld.at3.
5 Id. at 36.
6
Id. at 40.
Decision 2 G.R. No. 205466

Antecedents:

This case involves the question of whether the BCDA is exempt from
payment of docket fees before the CTA. The BCDA claims exemption for
being a government instrumentality pursuant to Section 22, Rule 141 of the
Rules of Court, as amended. 7 The CIR, on the other hand, disputes BCDA's
status as a government instrumentality, and therefore posits that it is not
exempt from payment.

The undisputed facts are as follows.

On February 16, 2011, BCDA filed via registered mail a Petition for
Review with Request for Exemption from Payment of Filing Fees (Petition for
Review) with the CTA involving its claim for refund against the CIR. 8 The
deadline for filing the Petition for Review fell on February 16, 2011. 9

On March 1, 2011, the BCDA received a letter of even date from Atty.
Elvessa P. Apolinario (Atty. Apolinario), CTA's Executive Clerk of Court IV,
acknowledging the receipt of the Petition for Review. 10 However, in the same
letter, Atty. Apolinario informed the BCDA that she was returning the said
Petition for Review as it was not deemed filed without the payment of the
correct legal fees:

Dear Atty. Creencia:

Please be advised that we received on February 24, 2011, your

Request for Exemption from Payment of Filing Fees with the Petition for
Review of Bases Conversion and Development Authority (BCDA) v.
Commissioner of Internal Revenue. A similar request was denied by the
CTA's First Division in CTA Case No. 8176, entitled "Bases Conversion and
Development Authority v. Commissioner of Internal Revenue," pursuant to
its Resolutions, promulgated on October 20, 2010 and February 8, 2011.
Similarly, the Supreme Court has issued a certification, dated January 20,
2011, addressed to Atty. Theresa G. Cinco-Bactat, Executive Clerk of Court
III, stating that the Bases Conversion and Development Authority is not
exempt from the payment oflegal fees.

In this regard, I am returning the Petition for Review, posted on

February 16, 2011, as the same is not deemed filed without payment of the
correct legal fees_ I I

7 RULES OF COURT, Rule 141, Sec. 22 states:

Section 22. Government exempt. The Republic of the Philippines, its agencies and
instrumentalities are exempt from paying the legal fees provided in the rule. Local
governments and government-owned or controlled corporations with or without independent
charters are not exempt from paying such fees.
xxxx
8
Rollo, p. 6.
9 Id. at 5-6.
IC Id. at 6.
11 ld.at]48.
Decision 3 G.R. No. 205466

Subsequent letters were exchanged between Atty. Apolinario, who

insisted that the BCDA was required to pay docket fees, and the BCDA, which
maintained otherwise and insisted on its status as a government
instrumentality. 12

On April 7, 2011, the BCDApaid the docket fees under protest. 13

On December 27, 2011, the CIR filed a Motion to Dismiss 14 the

BCDA's Petition for Review on the ground of prescription and/or lack of
jurisdiction. 15 The CIR argued that since the deadline to file the Petition for
Review was on February 16, 2011, and the docket fees were paid only on
April 7, 2011, then the Petition for Review was not filed on time. 16 Thus, the
CTA Second Division did not acquire jurisdiction over the case. 17

Ruling of the CTA Second Division:

On February 3, 2012, the CTA Second Division resolved the CIR's

Motion to Dismiss through a Resolution 18 dismissing the BCDA's Petition for
Review for non-payment of docket fees. 19 The CTA Second Division held that
timely payment of docket fees was essential before the court can acquire
jurisdiction over the case. 20 Since the docket fees were not paid on time, the
CTA Second Division did not acquire jurisdiction.21

The dispositive portion of the Resolution reads:

WHEREFORE, premises considered, the present Petition for

Review is hereby DENIED DUE COURSE, and, accordingly DISMISSED
for non-payment of docket fees.

SO ORDERED. 22

The BCDA moved for reconsideration which was, however, denied by

the CTA Second Division. 23 Hence, the BCDA appealed to the CTA En Banc
through a Petition for Review. 24

12
Id. at 6.
13
Id. at 7.
14 Id. at 162-167.

15 Id. at 7.
16 id. at 163-165.

i, Id.
18 Id. at 41-44; penned by Associate Justice C. Castaneda, Jr. and concurred io by Associate Justice Caesar A.
Casanova. Associate Justice Cielito N. Mindaro-Grulla, on official business.
19 Id. at 44.

zo Id. at 43.
z1 Id.
2
• Id. at 44.
23 Id. at 56-63; penned by Associate Justice Juanito C. Castaneda, Jr. and concurred in by Associate Justices

Caesar A. Casanova and Cielito N. Mindaro-Grulla.

24
Id. at 64-85.
Decision 4 G.R. No. 205466

Ruling of the CTA En Banc:

In its assailed October 10, 2012 Resolution, the CTA En Banc denied
due course to the BCDA's Petition for Review. 25 It affirmed the CTA Second
Division's ruling that the court acquired no jurisdiction due to the belated
payment of docket fees. 26 The CTA En Banc rejected the BCDA's argument
that it was exempt from payment, citing the Certification dated January 20,
2011 issued by Ma. Lourdes C. Perfecto, Deputy Clerk of Court and Chief of
the Judicial Records Office of the Supreme Court, stating that the BCDA was
not exempt from paying the legal fees for petitions before the Supreme
Court. 27

The dispositive portion of the resolution reads:

WHEREFORE, premises considered, the Petition for Review is

hereby DENIED DUE COURSE for lack of merit and is, accordingly
DISMISSED.

SO ORDERED. 28

The BCDA once again moved for reconsideration which was, however,
denied by the CTA En Banc in its December 11, 2012 Resolution for failure to
include a notice of hearing in the motion. 29 Hence, this Petition.

Arguments of the BCDA:

BCDA insists that being a government instrumentality, it is exempt

from payment of docket fees pursuant to Section 22, Rule 141 of the Rules of
Court, as amended. 30 It anchors its status as a government instrumentality on
Section 1 of Executive Order No. 596 series of 2006, Republic Act (RA) No.
10149, and this Court's pronouncements in Manila International Airport
Authority v. Court ofAppeals and Philippine Fisheries Development Authority
v. Court of Appeals,31 where this Court discussed the nature of Manila
International Airport Authority as a government instrumentality and cited the
BCDA as among the other government instrumentalities in the country. 32

As to the lack of notice of hearing in its Motion for Reconsideration, the

BCDA argues that such notice is not applicable to the CTA En Banc since it is
not a trier of fact. 33 Further, the BCDA notes that under the Revised Rules of
Court of Tax Appeals, the filing of a motion for reconsideration is only

25
Id. at 36.
26 Id. at 34-35.
27
Id. at 35.
28
Id. at 36.
29
Id. at 38.
30 Id at 14-23.
31 Id. at 15-18.
32 Rollo, pp. 14-23.
33
Id. at 23-24.
Decision 5 G.R. No. 205466

optional. 34 Assuming arguendo that a notice of hearing is required, the BCDA

requests for liberality from the Court since the motion is on its face
meritorious and the interest of substantial justice would be served by giving
due course to such motion. 35

In its Manifestation36 dated November 6, 2019, the BCDA calls this

Court's attention to the promulgation of the June 20, 2018 case of Bases
Conversion and Development Authority v. Commissioner of Internal
Revenue, 37 which involves the same parties and the same issue of the BCDA's
exemption from payment of docket fees. 38 In the said case, this Court ruled in
favor of the BCDA and pronounced it to be exempt from payment of docket
fees pursuant to its status as a government instrumentality. 39

Arguments of the CIR:

In its Comrnent, 40 the CIR maintains that the BCDA is not exempt from
payment of docket fees based on the Certification dated January 20, 2011. 41
Further, it contends that the notice of hearing is mandatory pursuant to Section
5, Rule 15 of the Rules of Court. 42 Since the Motion for Reconsideration did
not contain a notice of hearing, the same was a mere scrap of paper which did
not toll the reglementary period for filing an appeal. 43 Thus, the October 10,
2012 Resolution of the CTA En Banc already attained finality. 44

Issues

The Petition raises the following issues:

A. THE CTA EN BANC ERRED IN AFFIRMING THE CTA'S SECOND

DIVISION'S RESOLUTION DENYING DUE COURSE AND DISMISSING
BCDA'S PETITION FOR REVIEW FOR NON PAYMENT OF THE
PRESCRIBED DOCKET FEES WITHIN THE REGLEMENTARY PERIOD.

B. THE CTA EN BANC ERRED IN RULING THAT BCDA IS NOT

EXEMPT FROM PAYMENT OF LEGAL FEES. 45

34
Id. at 24.
35
Id. at 24-25.
36
Id at 236-238.
37
G.R. No. 205925, June 20, 2018.
38
Rollo, pp. 236-238.
39 Id.
40
Id. at 193-212.
41
Id. at 197.
42
Id at 207. RULES OF COURT, Rule 15, Sec. 4 states:
Section 4. Hearing of motion. - Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion shall be set for hearing
by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be
served in sucb a marmer as to ensure its receipt by the other party at least three (3) days before
the date of hearing, unless the court for good cause sets the hearing on shorter notice.
43
Rollo, p. 208.
44
Id. at 210.
45
Id. at 8.
Decision 6 G.R. No. 205466

Our Ruling

The Petition is meritorious.

The BCDA is a government

instrumentality and therefore exempt
from payment of docket fees.

The resolution of this case hinges on whether the BCDA is a

government instrumentality and consequently exempt from payment of docket
fees under Section 22, Rule 131 of the Rules of Court, as amended:
Section. 22. Government exempt. The Republic of the Philippines, its
agencies and instrumentalities are exempt from paying the legal fees
provided in the rule. Local governments and government-owned or controlled
corporations with or without independent charters are not exempt from paying
such fees. (Emphasis supplied)

Significantly, this issue has already been resolved in Bases Conversion

and Development Authority v. Commissioner ofInternal Revenue, 46 where this
Court affirmed BCDA's status as a government instrumentality:

BCDA is a government instrumentality

vested with corporate powers. As such,
it is exempt from the payment of docket
fees.

At the crux of the present petition is the issue of whether or

not BCDA is a government instrumentality or a government-owned and -
controlled corporation (GOCC). If it is an instrumentality, it is exempt from
the payment of docket fees. If it is a GOCC, it is not exempt and as such
non-payment thereof would mean that the tax court did not acquire
jurisdiction over the case and properly dismissed it for BCDA's failure to
settle the fees on time.

BCDA is a government instrumentality vested with corporate

powers. As such, it is exempt from the payment of docket fees required
under Section 21, Rule 141 of the Rules of Court, to wit:

RULE 141
LEGAL FEES

SEC. 1. Payment offees. - Upon the filing of the pleading or other

application which initiates an action or proceeding, the fees
prescribed therefor shall be paid in full.

xxxxxxxxx

46
Supra, note 37.
Decision 7 G.R. No. 205466

SEC. 21. Government exempt. -The Republic of the Philippines,

its agencies and instrumentalities, are exempt from paying the
legal fees provided in this rule. Local governments and
government-owned or controlled corporations with or without
independent charters are not exempt from paying such fees.
(Emphasis Ours)

Section 2 (10) and (13) of the Introductory

Provisions of the Administrative Code of 1987 provides for the definition ofa
government "instrumentality" and a "GOCC," to wit:

SEC. 2. General Terms Defined. - x x x

(IO) Instrumentality refers to any agency of the National

Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. xx x

xxxxxxxxx

(13) Government-owned or controlled corporation refers to any

agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one
(51) percent of its capital stock: x x x. (Emphasis Ours)

The grant of these corporate powers is likewise stated in Section

3 of Republic Act (R.A.) No. 7227, also known as The Bases Conversion and
Development Act of 1992 which provides for BCDA's manner of creation, to
wit:

Sec. 3. Creation of the Bases Conversion and Development

Authority. - There is hereby created a body corporate to be known
as the Bases Conversion and Development Authority, which shall
have the attribute of perpetual succession and shall be vested with
the powers of a corporation. (Emphasis Ours)

From the foregoing, it is clear that a government instrumentality may be

endowed with corporate powers and at the same time retain its classification as
a government "instrumentality" for all other purposes.

In the 2006 case of lvfanila International Airport Authority v. CA, the

Court, speaking through Associate Justice Antonio T. Carpio, explained in this
wise:

Many government instrumentalities are vested with

corporate powers but they do not become stock or non-stock
corporations, which is a necessary condition before an agency or
instrumentality is deemed a [GOCC]. Examples are the Mactan
International Airport Authority, the Philippine Ports Authority, the
University of the Philippines and Bangko Sentral ng Pilipinas. All
these government instrumentalities exercise corporate powers but
Decision 8 G.R. No. 205466

they are not organized as stock or non-stock corporations as

required by Section 2 (13) of the Introductory
Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government
corporate entities. However, they are not [GOCCs] in the strict
sense as understood under the Administrative Code, which is the
governing law defining the legal relationship or
status of government entities.

Moreover, in the 2007 case of Philippine Fisheries Development

Authority v. CA, the Court reiterated that a government instrumentality retains
its classification as such albeit having been endowed with some if not all
corporate powers. The relevant portion of said decision reads as follows:

Indeed, the Authority is not a GOCC but an

instrumentality of the government. The Authority has a capital stock
but it is not divided into shares of stocks. Also, it has no
stockholders or voting shares. Hence, it is not a stock corporation.
Neither is it a non-stock corporation because it has no members.

The Authority is actually a national government

instrumentality which is define[ d] as an agency of the national
government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds and
enjoying operational autonomy, usually through a charter. When the
law vests in a government instrumentality corporate powers, the
instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not
only governmental but also corporate powers.

As previously mentioned, in order to qualify as a GOCC, one must be

organized either as a stock or non-stock corporation. Section
3 of the Corporation Code defines a stock corporation as one whose "capital
stock is divided into shares and x x x authorized to distribute to the
holders of such shares dividends xx x."

Section 6 ofR.A. No. 7227 provides for BCDA's capitalization, to wit:

Sec. 6. Capitalization. - The Conversion Authority shall have an

authorized capital of One hundred billion pesos
(Pl00,000,000,000.00) which may be fully subscribed by the
Republic of the Philippines and shall either be paid up from the
proceeds of the sales of its land assets as provided for in Section
8 of this Act or by transferring to the Conversion Authority
properties valued in such amount.

An initial operating capital in the amount of seventy million pesos

(P70,000,000.00) is hereby authorized to be appropriated out of any
funds in the National Treasury not otherwise appropriated which
shall be covered by preferred shares of the Conversion Authority
retireable vvithin two (2) years.
Decision 9 G.R. No. 205466

Based on the foregoing, it is clear that BCDAhas an authorized

capital of Php 100 Billion, however, it is not divided into
shares of stock. BCDA has no voting shares. There is likewise no provision
which authorizes the distribution of dividends and allotments of surplus and
profits to BCDA's stockholders. Hence, BCDA is not a stock corporation.

Section 8 ofR.A. No. 7227 provides an enumeration ofBCDA's

purposes and their corresponding percentage shares in the sales
proceeds ofBCDA. Section 8 likewise states that after distribution of the
proceeds acquired from BCDA's activities, the balance, if any, shall accrue and
be remitted to the National Treasury, to wit:

Sec. 8. Funding Scheme. - The capital of the Conversion Authority

shall come from the sales proceeds and/or transfers of certain Metro
Manila milita..ry camps, including all lands covered by Proclamation
No. 423, series of 1957, commonly known as Fort Bonifacio and
Villamar (Nicholas) Air Base xx x.

xxxxxxxxx

The President is hereby authorized to sell the above lands, in whole

or in part, which are hereby declared alienable and disposable
pursuant to the provisions of existing laws and regulations
governing sales of government properties: provided, that no sale or
disposition of such lands will be undertaken until a development
plan embodying projects for conversion shall be approved by the
President in accordance with paragraph (b), Sec. 4, of this Act.
However, six (6) months after approval of this Act, the President
shall authorize the Conversion Authority to dispose of certain areas
in Fort Bonifacio and Villamar as the latter so determines. The
Conversion Authority shall provide the President a report on any
such disposition or plan for disposition within one (1) month from
such disposition or preparation of such plan. The proceeds from
any sale, after deducting all expenses related to the
sale, of portions of Metro Manila military camps as authorized
under this Act, shall be used for the following purposes with their
corresponding percent shares of proceeds:

(1) Thirty-two and five-tenths percent (35.5%) - To finance the

transfer of the AFP military camps and the construction of new
camps, the self-reliance and modernization program of the AFP, the
concessional and long-term housing loan assistance and livelihood
assistance to AFP officers and enlisted men and their families, and
the rehabilitation and expansion of the AFP's medical facilities;

(2) Fifty percent (50%) - To finance the conversion and the

commercial uses of the Clark and Subic military reservations and
their extensions;

(3) Five Percent (5%) -To finance the concessional and long-term
housing loan assistance for the homeless of Metro Manila,
Olongapo City, Angeles City and other affected municipalities
contiguous to the base areas as mandated herein; and
Decision 10 G.R. No. 205466

(4) The balance shall accrue and be remitted to the National

Treasury to be appropriated thereafter by Congress for the sole
purpose of financing programs and projects vital for the economic
upliftment of the Filipino people. (Emphasis Ours)

The remaining balance, if any, from the proceeds ofBCDA's activities

shall be remitted to the National Treasury. The National Treasury is not a
stockholder ofBCDA. Hence, none of the proceeds from BCDA's activities will
be allotted to its stockholders.

BCDA also does not qualify as a non-stock corporation because it is not

organized for any of the purposes mentioned under Section
88 of the Corporation Code, to wit:

Sec. 88. Purposes. - Non-stock corporations may be formed or

organized for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social, civic service, or similar
purposes, like trade industry, agricultural and like chambers, or any
combination thereof, subject to the special provisions of this Title
governing particular classes of non-stock corporations.

A cursory reading of Section 4 ofR.A. No. 7227 shows that BCDAis

organized for a specific purpose - to own, hold and/or administer the military
reservations in the country and implement its conversion to other productive
uses, to wit:

Sec. 4. Purposes of the Conversion Authority. - The Conversion

Authority shall have the following purposes:

(a) To own, hold and/or administer the military

reservations of John Hay Air Station, Wallace Air Station,
O'Donnell Transmitter Station, San Miguel Naval Communications
Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those
portions of Metro Manila military camps which may be transferred
to it by the President;

(b) To adopt, prepare and implement a comprehensive and

detailed development plan embodying a list of projects including
but not limited to those provided in the Legislative-Executive Bases
Council (LEBC) framework plan for the sound and balanced
conversion of the Clark and Subic military reservations and
their extensions consistent with ecological and environmental
standards into other productive uses to promote the economic and
social development of Central Luzon in particular and the country
in general;

(c) To encourage the active participation of the private sector in

transforming the Clark and Subic military reservations and
their extensions into other productive uses;

(d) To serve as the holding company of subsidiary

companies created pursuant to Section 16 of this Act and to invest
in Special Economic Zones declared under Sections 12 and
15 of this Act;
Decision 11 G.R. No. 205466

(e) To manage and operate through private sector companies

developmental projects outside the jurisdiction of subsidiary
companies and Special Economic Zones declared by presidential
proclamations and established under this Act;

(f) To establish a [sic] mechanisms in coordination with the

appropriate local government units to effect meaningful
consultation regarding the plans, programs and projects within
the regions where such plans, programs and/or project development
are part of the conversion of the Clark and Subic military
reservations and their extensions and the surrounding communities
as envisioned in this Act; and

(g) To plan, program and undertake the readjustment,

relocation, or resettlement of population within the Clark and
Subic military reservations and their extensions as may be
deemed necessary and beneficial by the Conversion Authority, in
coordination with the appropriate government agencies and local
government units. (Emphases Ours)

From the foregoing, it is clear that BCDA is neither a stock nor a non-
stock corporation. BCDA is a government instrumentality vested with corporate
powers. Under Section 21, Rule 141 of the Rules of Court, agencies and
instrumentalities of the Republic of the Philippines are exempt from paying
legal or docket fees. Hence, BCDA is exempt from the payment of docket
fees. 47 (Citations omitted.)

As extensively discussed above, the BCDA is a government

instrumentality because it falls under the definition of an instrumentality under
the Administrative Code of 1987, i.e., "any agency of the National
Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter." 48 It is vested with corporate powers
under Section 3 of RA No. 7227. 49 Despite having such powers, however, the
BCDA is considered neither a stock corporation because its capital is not
divided into shares of stocks, nor a non-stock corporation because it is not
organized for any of the purposes mentioned under Section
88 of the Corporation Code. Instead, the BCDA is a government
instrumentality organized for the specific purpose of owning, holding and/or
administering the military reservations in the country and implementing their
conversion to other productive uses. 50

47
Id.
48 REVISED ADMINISTRATIVE CODE, Introductory Provisions, Sec. 2 (! 0).
49 Section 3 of Republic Act No. 7227 provides:
Section 3. Creation ofthe Bases Conversion and Development Authority. - There is hereby
created a body corporate to be known as the Bases Conversion and Development Authority,
which shail have the attribute of perpetual succession and shall be vested with the
powers of a corporation. (Emphasis supplied.)
50 Section 4 of Republic Act No. 7227.
Decision 12 GR. No. 205466

Being a government instrumentality, the BCDA is exempt from

payment of legal fees including docket fees pursuant to Section 22, Rule 141
of the Rules of Court, as amended. Thus, it was erroneous for the CTA En
Banc to affirm the CTA Second Division's dismissal of the BCDA's Petition
for Review. That the BCDA belatedly filed the docket fees did not strip the
CTA Second Division of jurisdiction as it was exempt from payment in the
first place.

A notice of hearing is required in BCDA's

Motion for Reconsideration.

In its Petition, the BCDA argues that a notice of hearing is not required
in motions before the CTA En Banc. 51 This argument is unmeritorious. Section
5, Rule 2 of the Revised Rules of Procedure of the CTA expressly requires a
notice to the parties of the hearings conducted by the CTA En Banc. 52
Specifically for motions for reconsideration, Section 3, Rule 15 of the same
requires the notice to be set for hearing. 53 Suppletorily, notice of hearing is
likewise required under Sections 4 and 5, Rule 15 of the Rules of Court. 54
Thus, the BCDA was required to include a notice of hearing in its Motion for

51
Rollo, pp. 23-25.
52 REVISED RULES OF PROCEDURE OF THE CTA, Rule 2, Sec. 5 states:
Section 5. Hearings. - The Court en bane or in Divisions shall conduct hearings on such
days and at such times and at such places as it may fix, with notice to the parties concerned.
However, the Friday of each week shall be devoted to hearing motions, unless, for special
reasons, the Court en bane or in Divisions shall, motu proprio or upon motion of a party, fix
another day for the hearing of any motion.
53 REVISED RULES OF PROCEDURE OF THE CTA, Rule 15, Sec. 3 and 6 state:
Section 3. Hearing of the motion. -The motion for reconsideration or new trial, as well
as the opposition thereto, shall embody all supporting arguments and the movant shall set the
same for bearing on the next available motion day. Upon the expiration of the period set
forth in the next preceding section, without any opposition having been filed by the other party,
the motion for reconsideration or new trial shall be considered submitted for resolution, unless
the Court deems it necessary to hear the parties on oral argument, in which case the Court shall
issue the proper order.
Section 6. Contents of Motion for Reconsideration or New Trial and Notice. - The
motion shall be in writing stating its grounds, a written notice of which shall be served by the
movant on the adverse party.
A motion for new trial shall be proved in the manner provided for proof of motions. A
motion for the cause mentioned in subparagraph (a) of the preceding section shall be supported
by affidavits of merits which may be rebutted by counter-affidavits. A motion for the cause
mentioned in subparagraph (b) of the preceding section shall be supported by affidavits of the
witnesses by whom such evidence is expected to be given, or by duly authenticated documents
which are proposed to be introduced in evidence.
A motion for reconsideration or new trial that does not comply with the foregoing
provisions shall be deemed proforma, which shall not toll the reglementary period for
appeal. (Emphasis supplied.)
54 RULES OF COURT, Rule 15, Sec. 4 and 5 state:
Section 4. Hearing of motion. - Except for motions which the court may act upon
without prejudicing the rigbts of the adverse party, every written motion shall be set for hearing
by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3) days before
the date of hearing, unless the court for good cause sets the hearing on shorter notice.
Section 5. Notice of hearing. -The notice of bearing shall be addressed to all parties
concerned, and shall specify the time and date of the hearing which must not be later than ten
(JO) days after the filing of the motion.
Decision 13 G.R. No. 205466

Reconsideration. That the filing of the motion is optional did not excuse non-
compliance since the BCDA opted to file such motion.

The importance of notice of hearing cannot be overemphasized. It is

intended to "prevent surprise and to afford the adverse party a chance to be
heard before the motion is resolved by the court" 55 . This is in keeping with the
fundamental principle of procedural due process. 56 "Where a motion has
no notice of hearing, it is considered pro forma and does not affect the
reglementary period for the filing of the requisite pleading." 57

Nevertheless, it is also well-settled that procedural rules may be relaxed

when a "stringent application of [the same] would hinder rather than serve the
demands of substantial justice". 58 This is because "rules of procedure must be
viewed as mere tools designed to facilitate the attainment of justice." 59 "Their
strict and rigid application, which would result in technicalities that tend to
frustrate rather than promote substantial justice, must be avoided." 60

Considering the special circumstances in this case, the Court deems it

appropriate to relax the technical rules of procedure. Undoubtedly, the
promulgation of Bases Conversion and Development Authority v.
Commissioner of Internal Revenue61 removed all doubts as to the BCDA's
status as a government instrumentality. The interest of substantial justice
would be better served by allowing the BCDA, which has consistently
maintained a well-grounded position, to obtain relief from the erroneous
rulings of the CTA.

All told, the BCDA is a government instrumentality vested with

corporate powers. As such, it is exempt from payment of docket fees pursuant
to Section 22, Rule 141 of the Rules of Court, as amended.

WHEREFORE, the Petition is hereby GRANTED. The October 10,

2012 and December 11, 2012 Resolutions ofthe CTAEn Banc are
hereby REVERSED and SET ASIDE. This case is REMANDED to the
Court of Tax Appeals for further proceedings in CTA Case No. 8263. No
pronouncement as to costs.

55 Mendez v. Shari'a District Court, 777 Phil. 143, 167 (2016), citing Leobrera v. Court ofAppeals, 252 Phil.
737,743 (1989).
56 Festin v. Zubiri, 811 Phil. 1, 10 (2017), citing Boiser v. Aguirre, .k, 497 Phil. 728, 734-735 (2005)
and Neri v. de/a Pefia, 497 Phil. 73, 80-81 (2005).
57 The Manila Banking Corp. v. Bases Conversion and Development Authority; 824 Phil. 193,210 (2018),
citing Jehan Shipping Corporation v. National Food Authority, 514 Phil. 166, _ (2005).
58 B.E. San Diego, Inc. v. Bernardo, G.R. No. 233135, December 5,2018.
59 Heirs of Spouses Arcilla v. Teodoro, 583 Phil. 540. 553 (2008), citing Barnes v. Padilla, 500 Phil. 303
(2005).
,o Id
61 Supra, note 36.
Decision 14 GR. No. 205466

SO ORDERED.

Associate Justice

WE CONCUR:

Associate Justice
Chairperson

l l - -B. INTING EDGAIL-::::A>S SANfOS

Associate Justice Associate Justice
Decision 15 G.R. No. 205466

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

DIOSDADO 1'f. PERALTA

Chief J~stice