Here are select June 2014 ruling of the Supreme Court of the Philippines on commercial

law:
Corporations; capacity to sue of dissolved corporations. The trustee of a corporation
may continue to prosecute a case commenced by the corporation within three years
from its dissolution until rendition of the final judgment, even if such judgment is
rendered beyond the three-year period allowed by Section 122 of the Corporation Code.
However, there is nothing in the said cases which allows an already defunct corporation
to initiate a suit after the lapse of the said three-year period. On the contrary, the
factual circumstances in the abovecited cases would show that the corporations
involved therein did not initiate any complaint after the lapse of the three-year period.
In fact, as stated above, the actions were already pending at the time that they lost
their corporate existence.
In the present case, petitioner filed its complaint not only after its corporate existence
was terminated but also beyond the three-year period allowed by Section 122 of the
Corporation Code. Thus, it is clear that at the time of the filing of the subject complaint
petitioner lacks the capacity to sue as a corporation. To allow petitioner to initiate the
subject complaint and pursue it until final judgment, on the ground that such complaint
was filed for the sole purpose of liquidating its assets, would be to circumvent the
provisions of Section 122 of the Corporation Code. Alabang Development Corporation v.
Alabang Hills Village Association and Rafael Tinio, G.R. No. 187456, June 2, 2014.
Corporations; refusal to allow inspection is a criminal offense. We find inaccurate the
pronouncement of the RTC that the act of refusing to allow inspection of the stock and
transfer book is not a punishable offense under the Corporation Code. Such refusal,
when done in violation of Section 74( 4) of the Corporation Code, properly falls within
the purview of Section 144 of the same code and thus may be penalized as an
offense. Aderito Z. Yujuico and Bonifacio C. Sumbilla v. Cezar T. Quiambao and Eric C.
Pilapil, G.R. No. 180416, June 2, 2014.
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June 2014 Philippine Supreme Court

Decisions on Legal and Judicial Ethics
Posted on July 1, 2014 by Ramon G. Songco Posted in Legal Ethics, Philippines - Cases, Philippines Law

Here are select June 2014 rulings of the Supreme Court of the Philippines on legal and
judicial ethics:
Attorney; Disbarment; Effect of withdrawal. A disbarment case was filed by Quiachon
against her lawyer Atty. Ramos who represented her in a labor case before NLRC and a
special proceeding case before the RTC. During the pendency of the proceedings,
complainant withdrew the disbarment case. The Supreme Court held that the
withdrawal of a disbarment case against a lawyer does not terminate or abate the
jurisdiction of the IBP and of this Court to continue an administrative proceeding against
a lawyer-respondent as a member of the Philippine Bar. The complainant in a
disbarment case is not a direct party to the case, but a witness who brought the matter

to the attention of the Court. In this case, Atty. Ramos violated Canon Rules 18.03 and
18.04 of the Code of Professional Responsibility. Thus, the appropriate penalty should be
imposed despite the desistance of complainant or the withdrawal of the charges. Adelia
V. Quiachon v. Atty. Joseph Ador A. Ramos, A.C. No. 9317, June 4, 2014.
Attorney; Quantum of proof in administrative cases. An administrative complaint for
dishonesty was filed against Atty. Molina for having advised his clients to enforce a
contract on complainants client who was never a party to the agreement. The Supreme
Court in dismissing the complaint held that when it comes to administrative cases
against lawyers, two things are to be considered: quantum of proof, which requires
clearly preponderant evidence; and burden of proof, which is on the complainant. Here,
the complaint was without factual basis. The allegation of giving legal advice was not
substantiated in this case, either in the complaint or in the corresponding hearings. Bare
allegations are not proof. Even if Atty. Molina did provide his clients legal advice, he still
cannot be held administratively liable without any showing that his act was attended
with bad faith or malice. The default rule is presumption of good faith. Atty. Alan F.
Paguia v. Atty. Manuel T. Molina,A.C. No. 9881, June 4, 2014.
Court personnel; Dishonesty. Ampong was dismissed from the Civil Service Commission
for dishonesty, however, remained employed in the RTC. The Supreme Court has
already held in its August 26, 2008 Decision that Ampong was administratively liable for
dishonesty in impersonating and taking the November 1991 Civil Service Eligibility
Examination for Teachers on behalf of one Decir. Under section 58(a) of the Uniform
Rules on Administrative Cases in the Civil Service (URACCS), the penalty of dismissal
carries with it the following administrative disabilities: (a) cancellation of civil service
eligibility; (b) forfeiture of retirement benefits; and (c) perpetual disqualification from reemployment in any government agency or instrumentality, including any governmentowned and controlled corporation or government financial institution. Ampong should
be made to similarly suffer the same. Every employee of the Judiciary should be an
example of integrity, uprightness, and honesty. Court personnel are enjoined to adhere
to the exacting standards of morality and decency in their professional and private
conduct in order to preserve the good name and integrity of the courts of justice. Here,
Ampong failed to meet these stringent standards set for a judicial employee and does
not, therefore, deserve to remain with the Judiciary.Office of the Court Administrator v.
Sarah P. Ampong, etc., A.M. No. P-13-3132, June 4, 2014.
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April 2014 Philippine Supreme Court

Decisions on Tax Law
Posted on May 9, 2014 by Carina C. Laforteza Posted in 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.)
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April 2014 Philippine Supreme Court

Decisions on Legal and Judicial Ethics
Posted on May 7, 2014 by Ramon G. Songco Posted in Legal Ethics, Philippines - Cases

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 Austrias alleged partiality cannot be determined by
simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light
especially of a judges 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 judges
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.
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April 2014 Philippine Supreme Court

Decisions on Commercial Law
Posted on May 5, 2014 by Hector M. de Leon Jr. Posted in Commercial Law, Philippines Cases, Philippines - Law Taggedcorporation, merger

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--vis the corporation for Mapuas 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.
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April 2014 Philippine Supreme Court

Decisions on Legal and Judicial Ethics
Posted on May 2, 2014 by Ramon G. Songco Posted in Legal Ethics, Philippines - Cases

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 Austrias alleged partiality cannot be determined by
simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light
especially of a judges 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 judges
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.
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March 2014 Philippine Supreme Court

Decisions on Tax Law
Posted on April 18, 2014 by Carina C. Laforteza Posted in Philippines - Cases, Philippines - Law, Tax
Law

Here are select March 2014 rulings of the Supreme Court of the Philippines on tax law:
National Internal Revenue Code; value-added tax; zero-rated or effectively zero-rated
sales; unutilized input value-added tax; claims for tax credit or refund; period to file
appeal with the Court of Tax Appeals. Section 112 (D) of the National Internal Revenue
Code provides the Commissioner of Internal Revenue a 120-day period from submission
of complete documents in support of the administrative claim within which to act on
claims for refund/applications for issuance of the tax credit certificate. Upon denial of
the claim or application, or upon expiration of the 120-day period, the taxpayer only has
30 days within which to appeal said adverse decision or unacted claim before the CTA,
otherwise, said judicial claim shall be considered as filed out of time.Commissioner of
Internal Revenue v. Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing,
Inc.), G.R. No. 169778, March 12, 2014.
National Internal Revenue Code; value-added tax; unutilized input VAT; claims for tax
credit or refund; prescriptive periods. (1) An administrative claim must be filed with the
Commissioner of Internal Revenue (CIR) within two years after the close of the taxable
quarter when the zero-rated or effectively zero-rated sales were made. (2) The CIR
has 120 days from the date of submission of complete documents in support of the
administrative claim within which to decide whether to grant a refund or issue a tax
credit certificate. The 120-day period may extend beyond the two-year period from the
filing of the administrative claim if the claim is filed in the later part of the two-year
period. If the 120-day period expires without any decision from the CIR, then the
administrative claim may be considered to be denied by inaction. (3) A judicial claim
must be filed with the Court of Tax Appeals (CTA) within 30 days from the receipt of the
CIRs decision denying the administrative claim or from the expiration of the 120-day
period without any action from the CIR. (4) All taxpayers can rely on Bureau of Internal
Revenue Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up
to its reversal by the Court in the Aichi case on October 6, 2010, as an exception to the
mandatory and jurisdictional 120+30 day periods. Commissioner of Internal Revenue v.
Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.), G.R. No. 169778,
March 12, 2014.