April 2011 Philippine Supreme Court Decisions on Tax Law

Here are selected April 2011 rulings of the Supreme Court of the Philippines on tax law:

National Internal Revenue Code; irrevocability of option to carry-over excess income tax payments. When the taxpayer opted to carry over its unutilized creditable withholding tax from 1997 to taxable year 1998, the carry-over could no longer be converted into a claim for tax refund because of the irrevocability rule provided in Section 76 of the National Internal Revenue Code of 1997. Thereby, the taxpayer became barred from claiming the refund. Commissioner of Internal Revenue vs. PL Management International Philippines, Inc., G.R. No. 160949, April 4, 2011.

National Internal Revenue Code; carrying-over excess income tax payments; prescription.  In view of its irrevocable choice, taxpayer remained entitled to utilize that amount of excess creditable withholding tax as tax credit in succeeding taxable years until fully exhausted. In this regard, prescription did not bar it from applying the amount as tax credit considering that there was no prescriptive period for the carrying over of the amount as tax credit in subsequent taxable years. Commissioner of Internal Revenue vs. PL Management International Philippines, Inc., G.R. No. 160949, April 4, 2011.

Public Transport Assistance Program- Pantawid Pasada

Joint Circular No. 1 of the Departments of Energy, Finance, Budget and Management, Interior and Local Government and Transportation and Communications was issued on April 27, 2011 to implement Executive Order No. 32, Series of 2011, entitled “Instituting the Public Transport Assistance Program- Pantawid Pasada” (PTAP).  President Aquino issued this executive order to cushion the impact of the high cost of fuel on the public transportation sector, particularly the jeepney and tricycle drivers, who have been clamoring for the repeal of the Oil Deregulation Law and the law imposing value-added tax on petroleum products.

Under the Joint Circular, the initial funding of P450 million for the PTAP will be sourced from the DOE-Special Account in the General Fund (SAGF) – 15 specifically from the Gas-Malampaya Revenue.  P300 million of the fund will be released to the DOE for the jeepney driver beneficiaries and P150 million to the DILG for the tricycle driver beneficiaries.

April 2011 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are selected April 2011 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; negligence. A complaint for disciplinary action was filed against Atty. Macario Ga due to his failure to reconstitute or turn over to his client the records of the case in his possession. The Code of Professional Responsibility mandates lawyers to serve their clients with competence and diligence.  Rule 18.03 and Rule 18.04 state:  Rule 18.03.  A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable; Rule 18.04.  A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client’s request for information.  Respondent Atty. Ga breached these duties when he failed to reconstitute or turn over the records of the case to his client, herein complainant Gone. His negligence manifests lack of competence and diligence required of every lawyer.  His failure to comply with the request of his client was a gross betrayal of his fiduciary duty and a breach of the trust reposed upon him by his client.  Respondent’s sentiments against complainant Gone is not a valid reason for him to renege on his obligation as a lawyer.  The moment he agreed to handle the case, he was bound to give it his utmost attention, skill and competence.  Public interest requires that he exert his best efforts and all his learning and ability in defense of his client’s cause.  Those who perform that duty with diligence and candor not only safeguard the interests of the client, but also serve the ends of justice.  They do honor to the bar and help maintain the community’s respect for the legal profession.  Patricio Gone v. Atty. Macario Ga, A.C. No. 7771, April 6, 2011.

Court personnel; conduct unbecoming.  Sheriff Villarosa’s failure to comply with Section 9 of Rule 39 by delaying the deposit of the final amount he received (from a judgment debtor pursuant to a writ of execution) and not delivering the other amounts to the Clerk of Court; and to faithfully account for the amounts he received thru his failure to deliver the exact amounts, are clear manifestation of conduct unbecoming of a government employee, tantamount to grave abuse of authority and dishonesty.  The Code of Conduct and Ethical Standards for Public Officials and Employees enunciates the state policy to promote a high standard of ethics in public service, and enjoins public officials and employees to discharge their duties with utmost responsibility, integrity and competence. Section 4 of the Code lays down the norms of conduct which every public official and employee shall observe in the discharge and execution of their official duties, specifically providing that they shall at all times respect the rights of others, and refrain from doing acts contrary to law, good morals, good customs, public policy, public order, and public interest. Thus, any conduct contrary to these standards would qualify as conduct unbecoming of a government employee.   Ma. Chedna Romero v. Pacifico B. Villarosa, Jr., Sheriff IV, RTC, Br 17 Palompon, Leyte, A.M. No. P-11-2913, April 12, 2011.

April 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected April 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President of the Jewelry Department in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence. Jurisprudence provides for two requisites for dismissal on the ground of loss of trust and confidence; (1) the employee concerned must be holding a position of trust and confidence, and (2) there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary. Furthermore, the burden of establishing facts as bases for an employer’s loss of confidence is on the employer. The court held that the termination of petitioner was without just cause and therefore illegal.  Although the first requisite was present, the respondent failed to satisfy the second requisite.  Respondent bank was not able to show any concrete proof that petitioner had participated in the approval of the questioned accounts. The invocation by respondent of the loss of trust and confidence as ground for petitioner’s termination has therefore no basis at all. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011.

Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant Vice-President in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent bank. The court held that petitioner was illegally dismissed. As provided in Article 282 of the Labor Code, an employer may terminate an employee’s employment for fraud or willful breach of trust reposed in him. However, in order to constitute a just cause for dismissal, the act complained of must be ‘work-related’ such as would show the employee concerned to be unfit to continue working for the employer. The act of betrayal of trust, if any, must have been committed by the employee in connection with the performance of his function or position. The court found that the element of ‘work-connection’ was not present in this case since petitioner was assigned under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards, which was under a different department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011.

April 2011 Philippine Supreme Court Decisions on Political Law

Here are selected April 2011 rulings of the Supreme Court of the Philippines on political law.

Constitutional Law

Cityhood Laws; Equal protection. The petitioners in this case reiterate their position that the Cityhood Laws violate Section 6 and Section 10 of Article X of the Constitution, the Equal Protection Clause, and the right of local governments to a just share in the national taxes. This was denied by the Supreme Court. Congress clearly intended that the local government units covered by the Cityhood Laws be exempted from the coverage of R.A. No. 9009 (the Cityhood Law). The House of Representatives adopted Joint Resolution No. 29, entitled Joint Resolution to Exempt Certain Municipalities Embodied in Bills Filed in Congress before June 30, 2001 from the coverage of Republic Act No. 9009.  However, the Senate failed to act on Joint Resolution No. 29. Even so, the House of Representatives readopted Joint Resolution No. 29 as Joint Resolution No. 1 during the 12th Congress, and forwarded Joint Resolution No. 1 to the Senate for approval. Again, the Senate failed to approve Joint Resolution No. 1.  Thereafter, the conversion bills of the respondents were individually filed in the House of Representatives, and were all unanimously and favorably voted upon by the Members of the House of Representatives. The bills, when forwarded to the Senate, were likewise unanimously approved by the Senate. The acts of both Chambers of Congress show that the exemption clauses ultimately incorporated in the Cityhood Laws are but the express articulations of the clear legislative intent to exempt the respondents, without exception, from the coverage of R.A. No. 9009.  Thereby, R.A. No. 9009, and, by necessity, the LGC, were amended, not by repeal but by way of the express exemptions being embodied in the exemption clauses. League of Cities of the Philippines etc., et al. v. COMELEC, et al./League of Cities of the Philippines etc., et al. v. COMELEC, et al./League of Cities of the Philippines etc., et al. v. COMELEC, et al., G.R. No. 176951/G.R. No. 177499/G.R. No. 178056. April 12, 2011.

Cityhood Laws; Just share in national taxes. The share of local government units is a matter of percentage under Section 285 of the Local Government Code (LGC), not a specific amount.  Specifically, the share of the cities is 23%, determined on the basis of population (50%), land area (25%), and equal sharing (25%). This share is also dependent on the number of existing cities, such that when the number of cities increases, then more will divide and share the allocation for cities. However, the Supreme Court noted that the allocation by the National Government is not a constant, and can either increase or decrease. With every newly converted city becoming entitled to share the allocation for cities, the percentage of internal revenue allotment (IRA) entitlement of each city will decrease, although the actual amount received may be more than that received in the preceding year. That is a necessary consequence of Section 285 and Section 286 of the LGC. In this case, since the conversion by the Cityhood Laws is not violative of the Constitution and the LGC, the respondents are thus also entitled to their just share in the IRA allocation for cities. League of Cities of the Philippines etc., et al. v. COMELEC, et al./League of Cities of the Philippines etc., et al. v. COMELEC, et al./League of Cities of the Philippines etc., et al. v. COMELEC, et al., G.R. No. 176951/G.R. No. 177499/G.R. No. 178056. April 12, 2011.

April 2011 Philippine Supreme Court Decisions on Civil Law

Here are selected April 2011 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Conjugal partnership property; mortgage; consent of spouse. The husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife. Should the husband do so, then the contract is voidable. Article 173 of the Civil Code allows Aguete to question Ros’ encumbrance of the subject property. However, the same article does not guarantee that the courts will declare the annulment of the contract. Annulment will be declared only upon a finding that the wife did not give her consent. In the present case, we follow the conclusion of the appellate court and rule that Aguete gave her consent to Ros’ encumbrance of the subject property.

The application for loan shows that the loan would be used exclusively “for additional working [capital] of buy & sell of garlic & virginia tobacco.” In her testimony, Aguete confirmed that Ros engaged in such business, but claimed to be unaware whether it prospered. Aguete was also aware of loans contracted by Ros, but did not know where he “wasted the money.” Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to the support of the family cannot be deemed to be his exclusive and private debts. Joe A. Ros and Estrella Aguete v. Philippine National Bank, Laoag Branch, G.R. No. 170166. April 6, 2011.

Contract; determinacy of object. That the kasunduan did not specify the technical boundaries of the property did not render the sale a nullity. The requirement that a sale must have for its object a determinate thing is satisfied as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties.  As portion of the kasunduan shows, there is no doubt that the object of the sale is determinate. Domingo Carabeo v. Spouses Dingco, G.R. No. 190823, April 4, 2011.