April 2014 Philippine Supreme Court Decisions on Tax Law

Here are select April 2014 rulings of the Supreme Court of the Philippines on tax law:

National Internal Revenue Code; income tax; creditable withholding tax; refund; requisites. There are three essential conditions for the grant of a claim for refund of creditable withholding income tax, to wit: (1) the claim is filed with the Commissioner of Internal Revenue within the two-year period from the date of payment of the tax; (2) it is shown on the return of the recipient that the income payment received was declared as part of the gross income; and (3) the fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld therefrom. Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014.

National Internal Revenue Code; income tax; tax credit or refund; corporations; irrevocability rule. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor. Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014.

Court of Tax Appeals; findings and conclusions of the CTA are accorded highest respect. The findings and conclusions of the Court of Tax Appeals (CTA) are accorded the highest respect and will not be lightly set aside. The CTA, by the very nature of its functions, is dedicated exclusively to the resolution of tax problems and has accordingly developed an expertise on the subject unless there has been an abusive or improvident exercise of authority. Consequently, its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Its findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, the Court must presume that the CTA rendered a decision which is valid in every respect. Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014.

(Caren thanks Charles Icasiano for assisting in the preparation of this post.)

April 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select April 2014 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Court personnel; simple misconduct. An administrative case was filed against Melchor Tiongson, a Court of Appeals (CA) employee who was assigned to be the head watcher during the 2011 bar examinations. The complaint alleged that she brought a digital camera inside the bar examination rooms, in violation of the Instructions to Head Watchers. The Court held that in administrative proceedings, substantial evidence is the quantum of proof required for a finding of guilt, and this requirement is satisfied if there is reasonable ground to believe that the employee is responsible for the misconduct. Misconduct means transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by an employee. Any transgression or deviation from the established norm of conduct, work related or not, amounts to a misconduct. In this case, there was substantial evidence to prove that Tiongson committed a misconduct. Tiongson was held liable for simple misconduct only, because the elements of grave misconduct were not proven with substantial evidence, and Tiongson admitted his infraction before the Office of the Bar Confidant. As a CA employee, Tiongson disregarded his duty to uphold the strict standards required of every court employee, that is, to be an example of integrity, uprightness and obedience to the judiciary. Re: Melchor Tiongson, Head Watcher, During the 2011 Bar Examinations, B.M. No. 2482, April 1, 2014.

Judges; bias and partiality must be proven by clear and convincing evidence. The Court held that the truth about Judge Austria’s alleged partiality cannot be determined by simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light especially of a judge’s  sacred  obligation  under  his  oath  of  office  to  administer  justice without respect to the person, and to give equal right to the poor and rich. There should be clear and convincing evidence to prove the charge; mere suspicion of partiality is not enough. In this case, aside from being speculative and judicial in character, the circumstances cited by the complainant were grounded on mere opinion and surmises. The complainant also failed to adduce proof indicating the judge’s predisposition to decide the case in favor of one party. Antonio M. Lorenzana v. Judge Ma. Cecilia I. Austria, RTC, Br. 2, Batangas City, A.M. No. RTJ-09-2200, April 2, 2014.

April 2014 Philippine Supreme Court Decisions on Commercial Law

Here are select April 2014 rulings of the Supreme Court of the Philippines on commercial law:

Corporate officers; liability. On  the  issue  of  the  solidary  obligation  of  the  corporate officers impleaded vis-à-vis the corporation for Mapua’s illegal dismissal, “[i]t is hornbook principle that personal liability of corporate directors, trustees or officers attaches only when: (a) they assent to a patently unlawful act of the corporation,  or  when  they  are  guilty  of  bad  faith  or  gross  negligence  in directing  its  affairs,  or  when  there  is  a  conflict  of  interest resulting  in damages  to  the  corporation,  its  stockholders  or  other  persons; (b)  they consent to the issuance of watered down stocks or when, having knowledge of  such  issuance,  do  not  forthwith  file  with  the  corporate  secretary  their written objection; (c) they agree to hold themselves personally and solidarily liable with the corporation; or (d) they are made by specific provision of law personally answerable fortheir corporate action.SPI Technologies, Inc., et al. v. Victoria K. Mapua,G.R. No. 199022, April 7, 2014.

Corporate officers; liability. A corporation has a personality separate and distinct from its officers and board of directors who may only be held personally liable for damages if it is proven that they acted with malice or bad faith in the dismissal of an employee. Absent any evidence on record that petitioner Bautista acted maliciously or in bad faith in effecting the termination of respondent, plus the apparent lack of allegation in the pleadings of respondent that petitioner Bautistaacted in such manner, the doctrine of corporate fiction dictates that only petitioner corporation should be held liable for the illegal dismissal of respondent. Mirant (Philippines) Corporation, et al. v. Joselito A. Caro,G.R. No. 181490, April 23, 2014.

Corporations; merger; concept. Merger is a re-organization of two or more corporations that results in their consolidating into a single corpor ation, which is one of the constituent corporations, one disappearing or dissolving and the other surviving.  To put it another way, merger is the absorption of one or more corporations by another existing corporation, which retains its identity and takes over the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed corporation(s).  The absorbing corporation continues its existence while the life or lives of the other corporation(s) is or are terminated. Bank of Commerce v. Radio Philippines Network, Inc., et al.,G.R. No. 195615, April 21, 2014.

April 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select April 2014 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Court personnel; simple misconduct. An administrative case was filed against Melchor Tiongson, a Court of Appeals (CA) employee who was assigned to be the head watcher during the 2011 bar examinations. The complaint alleged that she brought a digital camera inside the bar examination rooms, in violation of the Instructions to Head Watchers. The Court held that in administrative proceedings, substantial evidence is the quantum of proof required for a finding of guilt, and this requirement is satisfied if there is reasonable ground to believe that the employee is responsible for the misconduct. Misconduct means transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by an employee. Any transgression or deviation from the established norm of conduct, work related or not, amounts to a misconduct. In this case, there was substantial evidence to prove that Tiongson committed a misconduct. Tiongson was held liable for simple misconduct only, because the elements of grave misconduct were not proven with substantial evidence, and Tiongson admitted his infraction before the Office of the Bar Confidant. As a CA employee, Tiongson disregarded his duty to uphold the strict standards required of every court employee, that is, to be an example of integrity, uprightness and obedience to the judiciary. Re: Melchor Tiongson, Head Watcher, During the 2011 Bar Examinations, B.M. No. 2482, April 1, 2014.

Judges; bias and partiality must be proven by clear and convincing evidence. The Court held that the truth about Judge Austria’s alleged partiality cannot be determined by simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light especially of a judge’s  sacred  obligation  under  his  oath  of  office  to  administer  justice without respect to the person, and to give equal right to the poor and rich. There should be clear and convincing evidence to prove the charge; mere suspicion of partiality is not enough. In this case, aside from being speculative and judicial in character, the circumstances cited by the complainant were grounded on mere opinion and surmises. The complainant also failed to adduce proof indicating the judge’s predisposition to decide the case in favor of one party. Antonio M. Lorenzana v. Judge Ma. Cecilia I. Austria, RTC, Br. 2, Batangas City, A.M. No. RTJ-09-2200, April 2, 2014.