July 2013 Philippine Supreme Court Decisions on Tax Law

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

National Internal Revenue Code; excise tax; goods subject to excise tax; persons liable to pay.   Excise taxes are imposed on two (2) kinds of goods, namely: (a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition; and (b) things imported. With respect to the first kind of goods, Section 130 of the National Internal Revenue Code (the “Tax Code”) states that, unless otherwise specifically allowed, the taxpayer obligated to file the return and pay the excise taxes due thereon is the manufacturer/producer.On the other hand, with respect to the second kind of goods, Section 131 of the Tax Code states that the taxpayer obligated to file the return and pay the excise taxes due thereon is the owner or importer, unless the imported articles are exempt from excise taxes and the person found to be in possession of the same is other than those legally entitled to such tax exemption.While the Tax Code mandates the foregoing persons to pay the applicable excise taxes directly to the government, they may, however, shift the economic burden of such payments to someone else – usually the purchaser of the goods – since excise taxes are considered as a kind of indirect tax. Philippine Airlines, Inc. v. Commissioner of Internal Revenue, G.R. No. 198759, July 1, 2013.

National Internal Revenue Code; excise tax; statutory taxpayer as proper party to seek refund; exception. Since excise taxes are considered as a kind of indirect tax, the statutory taxpayer can transfer to its customers the value of the excise taxes it paid or would be liable to pay to the government by treating it as part of the cost of the goods and tacking it on to the selling price. This notwithstanding, pursuant to Section 204(c) of the Tax Code, the proper party to question, or seek a refund of, excise tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another. Accordingly, in cases involving excise tax exemptions on petroleum products under Section 135 of the Tax Code, the Court has consistently held that it is the statutory taxpayer who is entitled to claim a tax refund based thereon and not the party who merely bears its economic burden. However, the abovementioned rule should not apply to instances where the law clearly grants the party to which the economic burden of the tax is shifted an exemption from both direct and indirect taxes. In which case, the latter must be allowed to claim a tax refund even if it is not considered as the statutory taxpayer under the law.Thus, the propriety of a tax refund claim is hinged on the kind of exemption which forms its basis. If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim. Philippine Airlines, Inc. v. Commissioner of Internal Revenue, G.R. No. 198759, July 1, 2013.

June 2013 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select June 2013 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; the failure to file a brief resulting in the dismissal of an appeal constitutes inexcusable negligence. In Dalisay Capili v. Atty. Alfredo L. Bentulan, the Court held that the failure to file a brief resulting in the dismissal of an appeal constitutes inexcusable negligence.  In this case, the Court cannot accept as an excuse the alleged lapse committed by his client in failing to provide him a copy of the case records.

In the first place, securing a copy of the case records was within Atty. San Juan’s control and is a task that the lawyer undertakes.

Second, Atty. San Juan, unlike his client, knows or should have known, that filing an appellant’s brief within the reglementary period is critical in the perfection of an appeal. The preparation and the filing of the appellant’s brief are matters of procedure that fully fell within the exclusive control and responsibility of Atty. San Juan. It was incumbent upon him to execute all acts and procedures necessary and incidental to the perfection of his client’s appeal.

Third, Atty. San Juan lacked candor in dealing with his client. He omitted to inform Tomas of the progress of his appeal with the Court of Appeals. Worse, he did not disclose to Tomas the real reason for the Court of Appeal’s dismissal of the appeal. Neither did Atty. San Juan file a motion for reconsideration, or otherwise resort to available legal remedies that might have protected his client’s interest.

Dissension in the Court: June 2013

By a vote of seven justices, with three inhibiting, one absent, and four dissenting, the Supreme Court – in a decision penned by J. Perez and promulgated last June 25, 2013 – dismissed this petition for certiorari assailing the earlier Resolutions of public respondent COMELEC which ordered the cancellation of petitioner’s Certificate of Candidacy (CoC) for the position of Representative of the lone district of Marinduque.

This case stemmed from a petition to deny due course or to cancel petitioner Reyes’s CoC filed on October 2012 by private respondent Tan with the COMELEC alleging that Reyes misrepresented in her CoC that (a) she is single and a resident of Marinduque, when she is married to Rep. Mandanas of Bauan, Batangas and a resident of that town (and also of Quezon City as admitted in the Directory of Congressional Spouses of the House of Representatives), and (b) she is a Filipino citizen and not a permanent resident of another country, when she is an American citizen and a permanent resident of the United States.

In her answer, Reyes averred that (a) she is not legally married to Rep. Mandanas, thus his residence cannot be attributed to her, and (b) the evidence presented by Tan does not support the allegation that she is a permanent resident or citizen of the United States.

June 2013 Philippine Supreme Court Decisions on Civil Law

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

Civil Code

Contract; contract of carriage; definition; common carrier; definition; breach of contract of carriage; entitlement to damages; contract of services; standard of care required; damages; when recoverable; quasi-delict; solidary liability of joint tortfeasors. A contract of carriage is defined as one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. On its face, the airplane ticket is a valid written contract of carriage. This Court has held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.

Under Article 1732 of the Civil Code, this “persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public” is called a common carrier.

In contrast, the contractual relation between Sampaguita Travel and respondents is a contract for services. … Since the contract between the parties is an ordinary one or services, the standard of care required of respondent is that of a good father of a family under Article 1173 of the Civil Code. This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation. The test to determine whether negligence attended the performance of an obligation is: did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence.

April 2013 Philippine Supreme Court Decisions on Civil Law

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

Contract; Rescission; effect. Rescission entails a mutual restitution of benefits received. An injured party who has chosen rescission is also entitled to the payment of damages. Sandoval Shipyards, Inc. v. Philippine Merchant Marine Academy (PMMA); G.R. No. 188633. April 10, 2013

Obligation; Extinguishment of obligations; consignation; when tender of payment not necessary; judicial in character; difference between consignation and tender of payment. Under Article 1256 of the Civil Code, the debtor shall be released from responsibility by the consignation of the thing or sum due, without need of prior tender of payment, when the creditor is absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or when two or more persons claim the same right to collect, or when the title to the obligation has been lost.

Consignation is necessarily judicial. Article 1258 of the Civil Code specifically provides that consignation shall be made by depositing the thing or things due at the disposal of judicial authority. The said provision clearly precludes consignation in venues other than the courts.

Elsewhere, what may be made is a valid tender of payment, but not consignation. The two, however, are to be distinguished.

April 2013 Philippine Supreme Court Cases on Legal and Judicial Ethics

Here are select April 2013 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; practice of law; notary. The practice of law is imbued with public interest and “a lawyer owes substantial duties not only to his client, but also to his brethren in the profession, to the courts, and to the nation, and takes part in one of the most important functions of the State – the administration of justice – as an officer of the court.” Accordingly, ‘”lawyers are bound to maintain not only a high standard of legal proficiency, but also of morality, honesty, integrity and fair dealing.”

Similarly, the duties of notaries public are dictated by public policy and impressed with public interest. “Notarization is not a routinary, meaningless act, for notarization converts a private document to a public instrument, making it admissible in evidence without the necessity of preliminary proof of its authenticity and due execution.”

In misrepresenting himself as a notary public, respondent exposed party-litigants, courts, other lawyers and the general public to the perils of ordinary documents posing as public instruments. Respondent committed acts of deceit and falsehood in open violation of the explicit pronouncements of the Code of Professional Responsibility. Evidently, respondent’s conduct falls miserably short of the high standards of morality, honesty, integrity and fair dealing required from lawyers. Thus, he should be sanctioned. Efigenia M. Tenoso vs. Atty. Anselmo S. Echanez. A.C. No. 8384. April 11, 2013