August 2013 Philippine Supreme Court Decisions on Tax Law

Here are select August 2013 rulings of the Supreme Court of the Philippines on tax law:

Tariff and Customs Code; Central Bank Circular No. 1389; Prohibited goods v. regulated goods. Central Bank Circular No. 1389 dated April 13, 1993 classified imports into three (3) categories, namely: (a) “freely importable commodities” or those commodities which are neither “regulated” nor “prohibited” and the importation of which may be effected without any prior approval of or clearance from any government agency; (b) “regulated commodities” or those commodities the importation of which require clearances/permits from appropriate government agencies; and (c) “prohibited commodities” or those commodities the importation of which are not allowed by law.  Under Annex 1 of the foregoing circular, rice and corn, which are subject goods in this case, are enumerated as “regulated” commodities. Regulated goods may be released in detention by the filing of a cash bond. Thus, the Court of Tax Appeals did not gravely abuse its discretion when it granted respondent’s motion to release since there lies cogent legal bases to support the conclusion that subject goods were merely “regulated” and not “prohibited” commodities. Secretary of the Department of Finance v. Court of Tax Appeals and Kutangbato Conventional Trading Multi-Purpose Cooperative, G.R. No. 168137, August 7, 2013

Grave abuse of discretion; concept. In order to be qualified as “grave,” the abuse of discretion must be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal to perform the duty or to act at all in contemplation of law. Finding that this characterization does not fit the Court of Tax Appeal’s (CTA) exercise of discretion in this case, the Court held that no grave abuse of discretion attended CTA’s grant of respondent’s motion to release the subject goods. Secretary of the Department of Finance v. Court of Tax Appeals and Kutangbato Conventional Trading Multi-Purpose Cooperative, G.R. No. 168137, August 7, 2013

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August 2013 Philippine Supreme Court Decisions on Civil Law

Here are select August 2013 rulings of the Supreme Court of the Philippines on civil law:

Compensation; Concept; Requisites. Compensation is a mode of extinguishing to the concurrent amount, the debts of persons who in their own right are creditors and debtors of each other. The object of compensation is the prevention of unnecessary suits and payments through the mutual extinction by operation of law of concurring debts.  Article 1279 of the Civil Code provides for the requisites for compensation to take effect:

Article 1279. In order that compensation may be proper, it is necessary:

(1)That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;

(2)That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;

(3)That the two debts be due;

(4)That they be liquidated and demandable;

(5)That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14, 2013.

Compensation; when both debts are liquidated and demandable.  A debt is liquidated when the amount is known or is determinable by inspection of the terms and conditions of relevant documents. Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14, 2013.

Contracts; determination of nature of contract. In determining the nature of a contract, courts are not bound by the title or name given by the parties. The decisive factor in evaluating such agreement is the intention of the parties, as shown not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement. As such, therefore, documentary and parol evidence may be submitted and admitted to prove such intention. Hur Tin Yang v. People of the Philippines, G.R. No. 195117, August 14, 2013.

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August 2013 Philippine Supreme Court Decisions on Criminal Law and Procedure

Here are select August 2013 rulings of the Supreme Court of the Philippines on criminal law and procedure:

1.            Revised Penal Code

Crime of Open Disobedience; elements. The Municipal Trial Court (MTC) did not gravely abuse its discretion in dismissing Criminal Case No. 46400 for lack of probable cause. The dismissal ought to be sustained since the records clearly disclose the unmistakable absence of the integral elements of the crime of Open Disobedience. While the first element, i.e., that the offender is a judicial or executive officer, concurs in view of Atty. Fria’s position as Branch Clerk of Court, the second and third elements of the crime evidently remain wanting. To elucidate, the second element of the crime of Open Disobedience is that there is a judgment, decision, or order of a superior authority made within the scope of its jurisdiction and issued with all legal formalities. In this case, it is undisputed that all the proceedings in Civil Case No. 03-110 have been regarded as null and void due to Branch 203’s lack of jurisdiction over the said case. Hence, since it is explicitly required that the subject issuance be made within the scope of a superior authority’s jurisdiction, it cannot therefore be doubted that the second element of the crime of Open Disobedience does not exist. Proceeding from this discussion, the third element of the crime, i.e., that the offender, without any legal justification, openly refuses to execute the said judgment, decision, or order, which he is duty bound to obey, cannot equally exist. Indubitably, without any jurisdiction, there would be no legal order for Atty. Fria to implement or, conversely, disobey. The Law Firm of Chavez Miranda and Aseoche, et al v. Atty. Josejina C. Fria, G.R. No. 183014, August 7, 2013.

Extinguishment of criminal liability by the death of the accused prior to final judgment; effect of death of the accused pending appeal of his conviction on his civil liability ex delicto. Article 89, paragraph 1 of the Revised Penal Code states that, “Criminal liability is totally extinguished by the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability therefore is extinguished only when the death of the offender occurs before final judgment.” Given the foregoing, it is clear that the death of the accused pending appeal of his conviction extinguishes his criminal liability, as well as his civil liability ex delicto. Since the criminal action is extinguished inasmuch as there is no longer a defendant to stand as the accused, the civil action instituted therein for recovery of civil liability ex delicto is ipso facto extinguished, grounded as it is on the criminal case. Undeniably, Amistoso’s death on December 11, 2012 preceded the promulgation by the Supreme Court (SC) of its Decision on January 9, 2013. When Amistoso died, his appeal before the SC was still pending and unresolved. The SC ruled upon Amistoso’s appeal only because it was not immediately informed of his death. Amistoso’s death on December 11, 2012 renders the SC’s Decision dated January 9, 2013, even though affirming Amistoso’s conviction, irrelevant and ineffectual. Moreover, said Decision has not yet become final, and the SC still has the jurisdiction to set it aside. People of the Philippines v. Anastacio Amistoso y Broca, G.R. No. 201447, August 28, 2013.

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Investing in the Future: Implementing Rules of the Enhanced Basic Education Act of 2013

Not long after the passage of the Enhanced Basic Education Act of 2013, the Implementing Rules and Regulations (“IRR”) of this law was issued on September 4, 2013 through the joint efforts of the Department of Education (“DepEd”), the Commission on Higher Education (“CHED”) and the Technical Education and Skills Development Authority (“TESDA”).  The IRR applies to the following educational institutions: (1) Higher Education Institutions (“HEIs”); (2) Technical-Vocational Institutions (“TVIs”); (3) Teacher Education Institutions (“TEIs”); (4) foundations; and (5) all public and private basic educational institutions and learning centers.

Enhanced Curriculum for Basic Education

Premised on the need for an educational reform to produce globally competitive Filipino graduates, every parent, guardian or person having custody of a child is mandated to enroll such child in basic education which covers kindergarten, elementary and secondary education.    Alternative learning systems for out-of-school students and those with special needs are also considered in the IRR as part of the basic education program.  This is somehow similar to the prior educational system providing for a Specialized Educational Service for differently-abled students and for out-of-school youth and adults.  Unlike the previous Education Act (BP Blg. 232), however, the IRR of the Enhanced Basic Education Act enumerated the following programs to address the physical, intellectual, psychosocial and cultural needs of students:

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August 2013 Philippine Supreme Court Decisions on Commercial Law

Here are select August 2103 rulings of the Supreme Court of the Philippines on commercial law:

Insurance; prohibition against removal of property. Here, by the clear and express condition in the renewal policy, the removal of the insured property to any building or place required the consent of Malayan. Any transfer effected by the insured, without the insurer’s consent, would free the latter from any liability.

Insurance; rescission. Considering that the original policy was renewed on an “as is basis,” it follows that the renewal policy carried with it the same stipulations and limitations. The terms and conditions in the renewal policy provided, among others, that the location of the risk insured against is at the Sanyo factory in PEZA. The subject insured properties, however, were totally burned at the Pace Factory. Although it was also located in PEZA, Pace Factory was not the location stipulated in the renewal policy. There being an unconsented removal, the transfer was at PAP’s own risk. Consequently, it must suffer the consequences of the fire. Thus, the Court agrees with the report of Cunningham Toplis Philippines, Inc., an international loss adjuster which investigated the fire incident at the Pace Factory, which opined that “[g]iven that the location of risk covered under the policy is not the location affected, the policy will, therefore, not respond to this loss/claim.” It can also be said that with the transfer of the location of the subject properties, without notice and without Malayan’s consent, after the renewal of the policy, PAP clearly committed concealment, misrepresentation and a breach of a material warranty.

Accordingly, an insurer can exercise its right to rescind an insurance contract when the following conditions are present, to wit:

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The Philippine Design Competitiveness Act: Pushing Filipino Creativity and Innovation to Greater Heights

There’s a much brighter future in store for our Filipino designers.

Republic Act No. 10557, or the “Philippine Design Competitiveness Act”, has been enacted and signed into law by President Benigno Aquino III last May 15, 2013.

The Act aims to boost competitiveness of the Filipino design industry with the following objectives: (1) creating forward-thinking and long-range direction and strategy for the design industry; (2) promoting national awareness on the use of design as a tool for economic competitiveness and social innovation; (3) integrating design into other industries and aspects of society; (4) incorporating design as a priority component in national planning and development; and  (5) encouraging innovation and creativity in the use of raw materials and natural resources (see Section 3).

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