March 2010 Philippine Supreme Court Decisions on Tax Law

Here are selected March 2010 rulings of the Supreme Court of the Philippines on tax law:

Constitutionality; justiciable controversy. A dispute ripens into a judicial controversy by the mere enactment of a questioned law or the approval of a challenged act, even without any other overt act. Thus, there is no need to wait until the concerned taxpayers have shut down their operations as a result of the questioned minimum corporate income tax (MCIT) or creditable withholding tax (CWT). Chamber of Real Estate and Builders’ Associations, Inc. vs. The Hon. Executive Secretary Alberto Romulo, et al., G.R. No. 160756, March 9, 2010.

Court of Tax Appeals; issues not raised. Failure by the Commissioner of Internal Revenue (CIR) to timely plead and prove before the CTA the defenses that Toshiba was VAT-exempt under Republic Act No. 7916 and that its export sales were VAT-exempt under the Tax Code is deemed a waiver of such defenses. Toshiba Information Equipment (Phils.), Inc. vs. Commissioner of Internal Revenue, G.R. No. 157594, March 9, 2010.

CTA; judicial admissions. An admission made in a stipulation of facts at pre-trial by the parties is considered a judicial admission and, under the Rules of Court, requires no proof. Such admission may be controverted only by a showing that it was made through a palpable mistake or that no such admission was made. Toshiba Information Equipment (Phils.), Inc. vs. Commissioner of Internal Revenue, G.R. No. 157594, March 9, 2010.

Creditable withholding tax (CWT); constitutionality; due process. Imposition of CWT does not constitute a deprivation of property without due process because seller may claim tax refund if net income is less than the taxes withheld. Practical problems in claiming tax refund do not affect the constitutionality and validity of CWT as a method of collecting tax. Chamber of Real Estate and Builders’ Associations, Inc. vs. The Hon. Executive Secretary Alberto Romulo, et al., G.R. No. 160756, March 9, 2010.

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February 2010 Philippine Supreme Court Decisions on Political Law

Here are selected February 2010 rulings of the Supreme Court of the Philippines on political law:

Constitutional Law

Equal protection;  requisites. The equal protection clause does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. The test developed by jurisprudence here and yonder is that of reasonableness, which has four requisites:

(1) The classification rests on substantial distinctions;

(2) It is germane to the purposes of the law;

(3) It is not limited to existing conditions only; and

(4) It applies equally to all members of the same class.

The assailed Decision readily acknowledged that these deemed-resigned provisions satisfy the first, third and fourth requisites of reasonableness. It, however, proffers the dubious conclusion that the differential treatment of appointive officials vis-à-vis elected officials is not germane to the purpose of the law.  Eleazar P. Quinto and Gerino A. Tolentino, Jr. vs. Commission on Elections, G.R. No. 189698, February 22, 2010.

Expropriation;  private use.  It is well settled that the taking of private property by the Government’s power of eminent domain is subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the property owner. These requirements partake of the nature of implied conditions that should be complied with to enable the condemnor to keep the property expropriated.

More particularly, with respect to the element of public use, the expropriator should commit to use the property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the power of eminent domain, namely, the particular public purpose for which the property will be devoted. Accordingly, the private property owner would be denied due process of law, and the judgment would violate the property owner’s right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking of private property, consequent to the Government’s exercise of its power of eminent domain, is always subject to the condition that the property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of just compensation received. In such a case, the exercise of the power of eminent domain has become improper for lack of the required factual justification.  Mactan-Cebu International Airport Authority (MCIAA) and Air Transportation Office (ATO) vs. Bernardo Lozada, et al., G.R. No. 176625, February 25, 2010.

Gerrymandering; meaning. “Gerrymandering” is a term employed to describe an apportionment of representative districts so contrived as to give an unfair advantage to the party in power. Fr. Joaquin G. Bernas, a member of the 1986 Constitutional Commission, defined “gerrymandering” as the formation of one legislative district out of separate territories for the purpose of favoring a candidate or a party. The Constitution proscribes gerrymandering, as it mandates each legislative district to comprise, as far as practicable, a contiguous, compact and adjacent territory.

As stated by the Office of the Solicitor General, the Province of Dinagat Islands consists of one island and about 47 islets closely situated together, without the inclusion of separate territories. It is an unsubstantiated allegation that the province was created to favor Congresswoman Glenda Ecleo-Villaroman.  Rodolfo G. Navarro, et al. vs. Executive Secretary Eduardo Ermita, et al., G.R. No. 180050, February 10, 2010.

House of Representative Electoral Tribunal (HRET);  jurisdiction. The HRET has jurisdiction over the question of qualifications of petitioners Abayon and Palparan as nominees of Aangat Tayo and Bantay party-list organizations, respectively, who took the seats at the House of Representatives that such organizations won in the 2007 elections.

Section 17, Article VI of the Constitution provides that the HRET shall be the sole judge of all contests relating to, among other things, the qualifications of the members of the House of Representatives. Since party-list nominees are “elected members” of the House of Representatives no less than the district representatives are, the HRET has jurisdiction to hear and pass upon their qualifications. By analogy with the cases of district representatives, once the party or organization of the party-list nominee has been proclaimed and the nominee has taken his oath and assumed office as member of the House of Representatives, the COMELEC’s jurisdiction over election contests relating to his qualifications ends and the HRET’s own jurisdiction begins.  Electoral Tribunal, et al. /Congressman Jovito S. Palparan, Jr. vs. House of Representatives Electoral Tribunal (HRET), et al., G.R. No. 189466/G.R. No. 189506,. February 11, 2010.

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December 2009 Philippine Supreme Court Decisions on Political Law

Here are selected December 2009 rulings of the Supreme Court of the Philippines on political law and related laws:

Constitutional Law

Bill of rights;  eminent domain.  Expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines also falls within the ambit of the term expropriation.  National Power Corporation vs. Hon. Amer Ibrahim, etc., et al., G.R. No. 183297, December 23, 2009.

Bill of Rights; eminent domain. In computing for the value of the land subject to acquisition, the formula provided in DAO No. 6, Series of 1992, as amended, requires that figures pertaining to the Capitalized Net Income (CNI) and Market Value (MV) of the property be used as inputs in arriving at the correct land valuation. Thus, the applicable formula, as correctly used by the LBP in its valuation, is LV (Land Value) = (CNI x 0.9) + (MV x 0.1).

To arrive at the figure for the CNI of lands planted to a combination of crops, Item II B.5 of the said administrative order provides that the same should be computed based on the combination of actual crops produced on the covered land.  Land Bank of the Philippines vs. Kumassie Plantation Company Incorporated/Kumassie Plantation Company Incorporated vs. Land Bank of the Philippines, et al.  G.R. No. 177404/G.R. No. 178097. December 4, 2009.

Bill of rights; eminent domain; interest. The taking of property under CARL is an exercise by the State of the power of eminent domain. A basic limitation on the State’s power of eminent domain is the constitutional directive that private property shall not be taken for public use without just compensation. Just compensation refers to the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition, or the fair value of the property as between one who receives and one who desires to sell. It is fixed at the time of the actual taking by the State. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value, to be computed from the time the property is taken up to the time when compensation is actually paid or deposited with the court.  National Power Corporation vs. Hon. Amer Ibrahim, etc., et al., G.R. No. 183297, December 23, 2009.

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November 2009 Philippine Supreme Court Decisions on Political Law

Here are selected November 2009 Philippine Supreme Court decisions on political law:

Constitutional Law

Civil Service Commission; jurisdiction. TThe Civil Service Commission (CSC) Caraga has jurisdiction to conduct the preliminary investigation of a possible administrative case of dishonesty against PO1 Capablanca for alleged CSP examination irregularity.

The CSC, as the central personnel agency of the Government, is mandated to establish a career service, to strengthen the merit and rewards system, and to adopt measures to promote morale, efficiency and integrity in the civil service. The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. Specifically, Section 91 of Republic Act (RA) No. 6975 (1990) or the “Department of Interior and Local Government Act of 1990” provides that the “Civil Service Law and its implementing rules and regulations shall apply to all personnel of the Department,” to which herein petitioner belongs.

Section 12 of Executive Order (EO) No. 292 or the “Administrative Code of 1987,” enumerates the powers and functions of the CSC. In addition, Section 28, Rule XIV of the Omnibus Civil Service Rules and Regulations specifically confers upon the CSC the authority to take cognizance over any irregularities or anomalies connected with the examinations. To carry out this mandate, the CSC issued Resolution No. 991936, or the Uniform Rules on Administrative Cases in the Civil Service, empowering its Regional Offices to take cognizance of cases involving CSC examination anomalies.

Based on the foregoing, it is clear that the CSC acted within its jurisdiction when it initiated the conduct of a preliminary investigation on the alleged civil service examination irregularity committed by the petitioner. Eugenio S. Capablanca vs. Civil Service Commission, G.R. No. 179370, November 18, 2009.

Civil Service Commission; jurisdiction. It has already been settled in Cruz v. Civil Service Commission that the appellate power of the CSC will only apply when the subject of the administrative cases filed against erring employees is in connection with the duties and functions of their office, and not in cases where the acts of complainant arose from cheating in the civil service examinations.  Eugenio S. Capablanca vs. Civil Service Commission, G.R. No. 179370, November 18, 2009.

Constitutionality;  equal protection. The equal protection guarantee under the Constitution is found under its Section 2, Article III, which provides: “Nor shall any person be denied the equal protection of the laws.” Essentially, the equality guaranteed under this clause is equality under the same conditions and among persons similarly situated. It is equality among equals, not similarity of treatment of persons who are different from one another on the basis of substantial distinctions related to the objective of the law; when things or persons are different in facts or circumstances, they may be treated differently in law.

Appreciation of how the constitutional equality provision applies inevitably leads to the conclusion that no basis exists in the present case for an equal protection challenge. The law can treat barangay officials differently from other local elective officials because the Constitution itself provides a significant distinction between these elective officials with respect to length of term and term limitation. The clear distinction, expressed in the Constitution itself, is that while the Constitution provides for a three-year term and three-term limit for local elective officials, it left the length of term and the application of the three-term limit or any form of term limitation for determination by Congress through legislation. Not only does this disparate treatment recognize substantial distinctions, it recognizes as well that the Constitution itself allows a non-uniform treatment. No equal protection violation can exist under these conditions.

From another perspective, we see no reason to apply the equal protection clause as a standard because the challenged proviso did not result in any differential treatment between barangay officials and all other elective officials. This conclusion proceeds from our ruling on the retroactivity issue that the challenged proviso does not involve any retroactive application.  Commission on Elections vs. Conrado Cruz, et al., G.R. No. 186616, November 20, 2009.

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Constitutionality of law penalizing loitering

Article 202 of the Revised Penal Code penalizes any person found loitering about public or semi-public buildings or places or tramping or wandering about the country or the streets without visible means of support. It provides:

Art. 202. Vagrants and prostitutes; penalty. — The following are vagrants:

1.     Any person having no apparent means of subsistence, who has the physical ability to work and who neglects to apply himself or herself to some lawful calling;

2.     Any person found loitering about public or semi-public buildings or places or tramping or wandering about the country or the streets without visible means of support;

3.     Any idle or dissolute person who lodges in houses of ill fame; ruffians or pimps and those who habitually associate with prostitutes;

4.     Any person who, not being included in the provisions of other articles of this Code, shall be found loitering in any inhabited or uninhabited place belonging to another without any lawful or justifiable purpose;

5.     Prostitutes.

For the purposes of this article, women who, for money or profit, habitually indulge in sexual intercourse or lascivious conduct, are deemed to be prostitutes.

Any person found guilty of any of the offenses covered by this articles shall be punished by arresto menor or a fine not exceeding 200 pesos, and in case of recidivism, by arresto mayor in its medium period to prision correccional in its minimum period or a fine ranging from 200 to 2,000 pesos, or both, in the discretion of the court.

Evangeline Siton and Krystel Kate Sagarano were charged with vagrancy under Article 202 (2) of the Revised Penal Code. Instead of submitting their counter-affidavits as directed, they filed separate Motions to Quash on the ground that Article 202 (2) is unconstitutional for being vague and overbroad.

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Religious Speech or Indecent Speech?

On August 10, 2004, at around 10:00 p.m., petitioner Eliseo Soriano, as host of the program Ang Dating Daan, aired on UNTV 37, made the following remarks:

Lehitimong anak ng demonyo; sinungaling;

 Gago ka talaga Michael, masahol ka pa sa putang babae o di ba. Yung putang babae ang gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana ang itaas, o di ba! O, masahol pa sa putang babae yan. Sabi ng lola ko masahol pa sa putang babae yan. Sobra ang kasinungalingan ng mga demonyong ito.

Two days later, several members of the Iglesia Ni Cristo (INC) filed affidavit complaints with the MTCRB. The MTRCB sent petitioner a notice of the hearing on August 16, 2004 in relation to the alleged use of some cuss words in the August 10, 2004 episode of Ang Dating Daan.

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April 2009 Decisions on Commercial, Labor and Tax Laws

Here are selected April 2009 decisions of the Supreme Court on commercial, labor and tax laws:

Commercial Law

BOT;  public bidding. In a situation where there is no other competitive bid submitted for the BOT project, that project would be awarded to the original proponent thereof.  However, when there are competitive bids submitted, the original proponent must be able to match the most advantageous or lowest bid; only when it is able to do so will the original proponent enjoy the preferential right to the award of the project over the other bidder.  These are the general circumstances covered by Section 4-A of Republic Act No. 6957, as amended. In the instant case, AEDC may be the original proponent of the NAIA IPT III Project; however, the Pre-Qualification Bids and Awards Committee (PBAC) also found the People’s Air Cargo & Warehousing Co., Inc. Consortium (Paircargo), the predecessor of PIATCO, to be a qualified bidder for the project.  Upon consideration of the bid of Paircargo/PIATCO, the PBAC found the same to be far more advantageous than the original offer of AEDC.  It is already an established fact in Agan that AEDC failed to match the more advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28 November 1996; and since it did not exercise its right to match the most advantageous proposal within the prescribed period, it cannot assert its right to be awarded the project. Asia’s Emerging Dragon Corp. vs. DOTC, et al./Republic of the Philippines etc. et al. vs. Hon. CA, et al., G.R. No. 169914/G.R. No. 174166,  April 7, 2009.

Dividends. Dividends are payable to the stockholders of record as of the date of the declaration of dividends or holders of record on a certain future date, as the case may be, unless the parties have agreed otherwise. A transfer of shares which is not recorded in the books of the corporation is valid only as between the parties; hence, the transferor has the right to dividends as against the corporation without notice of transfer but it serves as trustee of the real owner of the dividends, subject to the contract between the transferor and transferee as to who is entitled to receive the dividends. Imelda O. Cojuangco, Prime Holdings, Inc., and the Estate of Ramon U. Cojuangco vs. Sandiganbayan, Republic of the Philippines and the Sheriff of Sandiganbayan, G.R. No. 183278, April 24, 2009.

Holdover. As a general rule, officers and directors of a corporation hold over after the expiration of their terms until such time as their successors are elected or appointed. Sec. 23 of the Corporation Code contains a provision to this effect. The holdover doctrine has, to be sure, a purpose which is at once legal as it is practical. It accords validity to what would otherwise be deemed as dubious corporate acts and gives continuity to a corporate enterprise in its relation to outsiders.

Authorities are almost unanimous that one who continues with the discharge of the functions of an office after the expiration of his or her legal term––no successor having, in the meantime, been appointed or chosen––is commonly regarded as a de factoofficer, even where no provision is made by law for his holding over and there is nothing to indicate the contrary. By fiction of law, the acts of such de facto officer are considered valid and effective. Dr. Hans Christian M. Señeres vs. Commission on Elections and Melquiades A. Robles, G.R. No. 178678, April 16, 2009.

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