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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New Poll: Plagiarism in the Philippine Supreme Court?

The Supreme Court has finally spoken – Justice Mariano C. del Castillo is not guilty of plagiarism (see In the matter of the charges of plagiarism, etc., against Associate Justice Mariano C. Del Castillo, October 12, 2010).  Not all justices agreed with the ruling (see Justice Maria Lourdes P.A. Sereno’s dissenting opinion here).

The Supreme Court also ordered several faculty members of the UP College of Law to show cause why they should not be disciplined as members of the Bar for signing a statement entitled “Restoring Integrity: A Statement by the Faculty of the University of the Philippines College of Law on the Allegations of Plagiarism and Misrepresentation in the Supreme Court.” (see Re: Letter of the UP Law Faculty entitled “Restoring Integrity: A Statement by the Faculty of the University of the Philippines College of Law on the Allegations of Plagiarism and Misrepresentation in the Supreme Court, October 19, 2010).  Again, not all justices agreed (see Justice Sereno’s dissenting opinion here and Justice Conchita Carpio-Morales’ dissenting opinion here).

If you were a justice of the Supreme Court, how would you vote?  See ballot on the right hand side column.

Regulations Update: Freeport Area of Bataan Act of 2009

The Rules and Regulations Implementing the Provisions of Republic Act No. 9728, Otherwise Known as “The Freeport Area of Bataan Act of 2009” was among the implementing rules and regulations published in June 2010 to implement the various laws passed by the Fourteenth Congress. Republic Act No. 9728 was passed by both houses of Congress in September 2009 and lapsed into law on October 23, 2010 without the signature of the President.

Republic Act No. 9728 converted the existing Bataan Economic Zone located in Mariveles, Bataan into a special economic zone to be known as the Freeport Area of Bataan (FAB). Under the Implementing Rules, the FAB is a separate customs territory consisting of the Bataan Economic Zone and the entire Municipality of Mariveles. As such, all articles may be imported by FAB enterprises into the FAB free of customs and import duties and national internal revenue taxes.

FAB enterprises enjoy the incentives under the Special Economic Zone Act of 1995 or the Omnibus Investments Code of 1987. Registration as FAB enterprise is open to nationals and business enterprises of any country in any area of economic activity, except those where the Constitution limits the ownership to Filipinos or Philippine nationals. FAB enterprises, however, must not source more than 30% of its income from the Customs Territory (or the area of the Philippines outside the FAB); otherwise, all of its income shall be subject to the tax laws of the Customs Territory and customs duties and taxes must be paid for sale of articles to the Customs Territory.

It is interesting that the Board of Directors of the Authority of the Freeport Area of Bataan (AFAB) shall be composed of nine members, with two representatives from the National Government, one representative from the Province of Bataan, to be nominated by the Provincial Board, one representative from the Congressional District to be nominated by the Congressman, one representative from the Municipality of Mariveles, to be nominated by the Municipal Council, and one representative each from the domestic investors, the foreign investors and the workers working within the FAB.

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Exciting Changes in 2010

As we usher in the new year, we also usher in exciting changes to Lexoterica. You may have already noticed the new look and layout of the blawg.  More exciting is the entry of new bloggers, all excellent lawyers I am honored to be associated with (see “About the Bloggers” page).  Watch out for their postings in the coming weeks.

As we begin the new year, I take this opportunity to thank the readers of the blawg:

  • judges and lawyers who use the blawg to update themselves on the latest laws and jurisprudence;
  • law professors and students who use the blawg in their study of law;
  • bar reviewees who use the blawg to prepare for the bar examinations; and
  • businessmen and other laymen who use the blawg to gain a basic understanding of Philippine law.

Thank you also to those who shared the blawg via email and to those who provided links to the blawg.

I wish you a blessed and peaceful 2010!

Season’s Greetings

A good friend sent me this piece written by Fr. Horacio de la Costa, S.J.   Merry Christmas and a Happy New Year to All!

Heaven is Here: Down is Up and Up is Down


Christmas is when we celebrate the unexpected; it is the festival of surprise. This is the night when shepherds wake to the songs of angels; when the Earth has a star for a satellite; when wise men go on a fool’s errand, bringing gifts to a Prince they have not seen, in a country they do not know.

This is the night when one small donkey bears on its back the weight of the world’s desire, and an ox plays host to the Lord of heaven.

This is the night when we are told to seek our King, not in a palace but in a stable. Although we have stood here, year after year, as our fathers before us, the wonder has not faded, nor will it ever fade; the wonder of that moment when we push open the little door, and enter, and entering find in the arms of a Mother, who is a Virgin, a Baby Who is a God.

Chesterton has said it for all of us: the only way to view Christmas properly is to stand on one’s head.

Was there ever a house more topsy-turvy than the House of Christmas, the cave where Christ was born?

For here, suddenly, in the very heart of Earth, is Heaven; down is up and up is down, the angels and the stars look down on God who made them, and God looks up at the things He made.

There is no room in an inn for Him who made room, and to spare, for the Milky Way; and where God is homeless, all men are at home.

We were promised a Savior, but we never dreamed that God himself would come to save us. We knew that He loved us, but we never dared to think that He loved us so much as to become like us.

But that is the way God gives. His gifts are never quite what we expect, but always something better than we hoped for.

We can only dream of things too good to be true; God has a habit of giving things too good to be false.

That is why our faith is a faith in the unexpected, a religion of surprise.

Now more than ever, living in times so troubled, facing a future so uncertain, we need such faith. We need it for ourselves, and we need it to give to others.

We must remind the world that if Christmas comes in the depth of winter, it is that there may be an Easter in the spring.