October 2010 Philippine Supreme Court Decisions on Tax Law

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

Assessment; validity of assessment notice; lack of control number.  The formality of a control number in the assessment notice is not a requirement for its validity; rather the contents thereof should inform the taxpayer of the declaration of deficiency tax against the taxpayer. Both the formal letter of demand and the notice of assessment shall be void if the former failed to state the fact, the law, rules and regulations or jurisprudence on which the assessment is based, which is a mandatory requirement under section 228 of the National Internal Revenue Code. Commissioner of Internal Revenue vs Hon. Raul M. Gonzalez, Secretary of Justice, L.M. Camus Engineering Corporation (represented by Luis M. Camus and Lino D. Mendoza), G.R. No. 177279, October 13, 2010.

Income tax; irrevocability of option to carry-over of excess income tax credits; prospective application. Section 76 (on irrevocability of option to carry-over excess income tax credit) of the 1997 National Internal Revenue Code (1997 NIRC) and its companion provisions should be applied following the general rule on the prospective application of laws such that they operate to govern the conduct of corporate taxpayers the moment the 1997 NIRC took effect on January 1, 1998. At the time the taxpayer filed its final adjustment return for 1997 on April 15, 1998, the 1997 NIRC was already in force. Thus, section 76 of the same is controlling . Commissioner of Internal Revenue vs McGeorge Food Industries, Inc., G.R. No. 174157, October 20, 2010.

Income tax; irrevocability of option to carry-over of excess income tax credits; changes from previous provision. Section 76 (on irrevocability of option to carry-over excess income tax credit) of the 1997 National Internal Revenue Code (1997 NIRC) wrought two changes to its predecessor,  section 69 of the 1977 National Internal Revenue Code: (i) it mandates that the taxpayer’s exercise of its option to either seek refund or crediting is irrevocable and (ii) the taxpayer’s decision to carry-over and apply its current overpayment to future tax liability continues until the overpayment has been fully applied, no matter how many cycles it takes. Commissioner of Internal Revenue vs McGeorge Food Industries, Inc., G.R. No. 174157, October 20, 2010.

Value-added tax; refund or credit of unutilized input value-added tax; start of prescriptive period. Section 112 (A) of the National Internal Revenue Code (NIRC) is the applicable provision in determining the start of the two-year period for claiming a refund or credit of unutilized input value-added tax (VAT). Sections 204 (C) and 229 of the NIRC are inapplicable as both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. Thus, the two-year period should be reckoned from the close of the taxable quarter when the sales were made. Commissioner of Internal Revenue vs Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010.

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March 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

Here are selected March 2010 rulings of the Supreme Court of the Philippines on criminal law and procedure:

Criminal Law

1.     Revised Penal Code

Acts of lasciviousness; elements. The crime of Acts of Lasciviousness, as defined in Article 336 of the Revised Penal Code, has the following elements: (1) that the offender commits any act of lasciviousness or lewdness; (2) that it is done under any of the following circumstances: (a) by using force or intimidation; or (b) when the offended party is deprived of reason or otherwise unconscious; or (c) when the offended party is under 12 years of age; and (3) that the offended party is another person of either sex. Salvador Flordeliz y Abenojar v. People of the Philippines, G.R. No. 186441, March 3, 2010.

Arson; categories. There are actually two categories of arson, namely: Destructive Arson under Article 320 of the Revised Penal Code and Simple Arson under Presidential Decree No. 1316. Said classification is based on the kind, character and location of the property burned, regardless of the value of the damage caused. Article 320 contemplates the malicious burning of structures, both public and private, hotels, buildings, edifices, trains, vessels, aircraft, factories and other military, government or commercial establishments by any person or group of persons.  On the other hand, Presidential Decree No. 1316 covers houses, dwellings, government buildings, farms, mills, plantations, railways, bus stations, airports, wharves and other industrial establishments. People of the Philippines v. Jessie Villegas Murcia, G.R. No. 182460, March 9, 2010.

Arson; evidence. In the prosecution for the crime of arson, proof of the crime charged is complete where the evidence establishes: (1) the corpus delicti, that is, a fire because of criminal agency; and (2) the identity of the defendant as the one responsible for the crime. In arson, the corpus delicti rule is satisfied by proof of the bare fact of the fire and of it having been intentionally caused. People of the Philippines v. Jessie Villegas Murcia,  G.R. No. 182460, March 9, 2010.

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April 2009 Decisions on Constitutional and Related Laws

Here are selected April 2009 decisions of the Supreme Court on constitutional and related laws:

Constitutional Law

Administrative regulation; void. Executive Order No. 566, which grants the CHED the power to regulate review center, is unconstitutional as it expands Republic Act No. 7722,. The CHED’s coverage under RA 7722 is limited to public and private institutions of higher education and degree-granting programs in all public and private post-secondary educational institutions.  EO 566 directed the CHED to formulate a framework for the regulation of review centers and similar entities.    A review center is not an institution of higher learning as contemplated by RA 7722.  It does not offer a degree-granting program that would put it under the jurisdiction of the CHED. Review Center Associations of the Philippines vs. Executive Secretatry Eduardo Ermita, et al., G.R. No. 180046,  April 2, 2009.

Agrarian reform; coverage. For the parcels of land subject of this petition to come within the coverage of P.D. No. 27, it is necessary to determine whether the land is agricultural. Here, the subject parcels of land cannot be considered as within the ambit of P.D. No. 27 considering that the subject lots were reclassified by the DAR Secretary as suited for residential, commercial, industrial or other urban purposes way before petitioner filed a petition for emancipation under P.D. No. 27.  Laureano V. Hermoso, et al. vs. Heirs of Antonio Francia and Petra Francia, G.R. No. 166748,  April 24, 2009.

Compensation. Officers who in good faith have discharged the duties pertaining to their office are legally entitled to the compensation attached to the office for the services they actually rendered. Although the present petition must inevitably be dismissed on a technicality that serves as penalty for the pernicious practice of forum shopping, the Court nevertheless cannot countenance the refund of the compensation differential corresponding to petitioner’s tenure as HEDF head with the upgraded rank of Director III, since she had actually rendered services in the office with the elevated grade for that period.  Alicia D. Tagaro vs. Ester A. Garcia, etc.,G.R. No. 173931, April 2, 2009.

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