CD: CIR v. BPI

September 2, 2010 at 11:55 am (2009, Case Digests) (, )

CIR v. BPI
G.R. No. 178490 July 7, 2009
Chico-Nazario, J.

Doctrine:
1. The phrase “for that taxable period” merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer.

2. When circumstances show that a choice has been made by the taxpayer to carry over the excess income tax as credit, it should be respected; but when indubitable circumstances clearly show that another choice, a tax refund, is in order, it should be granted. As to which option the taxpayer chose is generally a matter of evidence.

“Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and thereby enrich itself at the expense of its law-abiding citizens.”

Facts:
In filing its Corporate Income Tax Return for the Calendar Year 2000, BPI carried over the excess tax credits from the previous years of 1997, 1998 and 1999. However, BPI failed to indicate in its ITR its choice of whether to carry over its excess tax credits or to claim the refund of or issuance of a tax credit certificate.

BPI filed with the Commissioner of Internal Revenue (CIR) an administrative claim for refund. The CIR failed to act on the claim for tax refund of BPI. Hence, BPI filed a Petition for Review before the CTA, whom denied the claim.

The CTA relied on the irrevocability rule laid down in Section 76 of the National Internal Revenue Code (NIRC) of 1997, which states that once the taxpayer opts to carry over and apply its excess income tax to succeeding taxable years, its option shall be irrevocable for that taxable period and no application for tax refund or issuance of a tax credit shall be allowed for the same.

The Court of Appeals reversed the CTA decision stating that there was no actual carrying over of the excess tax credit, given that BPI suffered a net loss in 1999, and was not liable for any income tax for said taxable period, against which the 1998 excess tax credit could have been applied.

The Court of Appeals further stated that even if Section 76 was to be construed strictly and literally, the irrevocability rule would still not bar BPI from seeking a tax refund of its 1998 excess tax credit despite previously opting to carry over the same. The phrase “for that taxable period” qualified the irrevocability of the option of BIR to carry over its 1998 excess tax credit to only the 1999 taxable period; such that, when the 1999 taxable period expired, the irrevocability of the option of BPI to carry over its excess tax credit from 1998 also expired.

Issue:
1. What is the period captured by the irrevocability rule?
2. Whether or not the taxpayer’s failure to mark the option chosen is fatal to whatever claim

Held:
1. The last sentence of Section 76 of the NIRC of 1997 reads: “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 tax refund or issuance of a tax credit certificate shall be allowed therefor.” The phrase “for that taxable period” merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer.

In the present case, the excess income tax credit, which BPI opted to carry over, was acquired by the said bank during the taxable year 1998. The option of BPI to carry over its 1998 excess income tax credit is irrevocable; it cannot later on opt to apply for a refund of the very same 1998 excess income tax credit.

2. No. Failure to signify one’s intention in the FAR does not mean outright barring of a valid request for a refund, should one still choose this option later on. The reason for requiring that a choice be made in the FAR upon its filing is to ease tax administration (Philam Asset Management, Inc. v. CIR G.R. No. 156637 and No. 162004, 14 December 2005). When circumstances show that a choice has been made by the taxpayer to carry over the excess income tax as credit, it should be respected; but when indubitable circumstances clearly show that another choice – a tax refund – is in order, it should be granted. Therefore, as to which option the taxpayer chose is generally a matter of evidence.

“Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and thereby enrich itself at the expense of its law-abiding citizens.”

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CD: Aspillaga v. Aspillaga

August 18, 2010 at 3:49 pm (2009, Case Digests) (, , )

ASPILLAGA v. ASPILLAGA
G.R. No. 170925 October 26, 2009
Quisumbing, J.

Doctrine:
The fact that certain psychological conditions will hamper their performance of their marital obligations does not mean that they suffer from psychological incapacity as contemplated under Article 36 of the Family Code. Psychological disorders do not manifest that both parties are truly incapacitated to perform the basic marital covenants. Mere difficulty is not synonymous to incapacity. Psychological incapacity is reserved to the most serious cases of personality disorder.

Facts:
Rodolfo Aspillaga filed a petition for annulment of marriage on the ground of psychological incapacity on the part of Aurora Aspillaga. Aurora alleged upon her return to Manila, she discovered that while she was in Japan, Rodolfo brought into their conjugal home her cousin, Lecita Rose A. Besina, as his concubine. Aurora alleged that Rodolfo’s cohabitation with her cousin led to the disintegration of their marriage and their eventual separation.

During trial, expert witness Dr. Eduardo Maaba explained that both parties are psychologically incapacitated. The RTC found the parties psychologically incapacitated to enter into marriage.

The CA reversed the RTC decision and declared the marriage of Rodolfo and Aurora Aspillaga valid. Petitioner filed a motion for reconsideration, but the motion was also denied. Hence this petition.

Issue:
Whether or not the marriage is void on the ground of the parties’ psychological incapacity

Held:
No. As early as 1995, in Santos v. Court of Appeals (G.R. No. 112019, January 4, 1995), it has been categorically ruled that:

Psychological incapacity required by Art. 36 must be characterized by (a) gravity, (b) juridical antecedence, and (c) incurability. The incapacity must be grave or serious such that the party would be incapable of carrying out the ordinary duties required in marriage; it must be rooted in the history of the party antedating the marriage, although the overt manifestations may emerge only after the marriage; and it must be incurable or, even if it were otherwise, the cure would be beyond the means of the party involved.

In the instant case, Dr. Maaba failed to reveal that the psychological conditions were grave or serious enough to bring about an incapacity to assume the essential obligations of marriage. Indeed, Dr. Maaba was able to establish the parties’ personality disorder; however, he failed to link the parties’ psychological disorders to his conclusion that they are psychologically incapacitated to perform their obligations as husband and wife. The fact that these psychological conditions will hamper their performance of their marital obligations does not mean that they suffer from psychological incapacity as contemplated under Article 36 of the Family Code. Mere difficulty is not synonymous to incapacity.

It must be stressed that psychological incapacity must be more than just a “difficulty,” “refusal” or “neglect” in the performance of some marital obligations (Republic v. CA). The intention of the law is to confine the meaning of “psychological incapacity” to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage (Tongol v. Tongol, G.R. No. 157610, October 19, 2007).

Psychological disorders do not manifest that both parties are truly incapacitated to perform the basic marital covenants. Moreover, there is nothing that shows incurability of these disorders. Incompatibility and irreconcilable differences cannot be equated with psychological incapacity as understood juristically.

As to Rodolfo’s allegation that Aurora was a spendthrift, the same likewise fails to convince. While disagreements on money matters would, no doubt, affect the other aspects of one’s marriage as to make the wedlock unsatisfactory, this is not a ground to declare a marriage null and void. In fact, the Court takes judicial notice of the fact that disagreements regarding money matters are a common, and even normal, occurrence between husbands and wives.

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CD: Continental Steel v. Montaño

August 16, 2010 at 12:25 pm (2009, Case Digests) (, , )

Continental Steel v. Montaño
G.R. No. 182836 October 13, 2009
Chico-Nazario, J.

Doctrines:
Life is not synonymous with civil personality. One need not acquire civil personality first before he/she could die. Even a child inside the womb already has life.

In case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor.

Facts:
Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental Steel) filed a claim for Paternity Leave, Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the Collective Bargaining Agreement (CBA).

The claim was based on the death of Hortillano’s unborn child. Hortillano’s wife had a premature delivery while she was in the 38th week of pregnancy. The female fetus died during labor due to fetal Anoxia secondary to uteroplacental insufficiency.

Petitioner immediately granted Hortillano’s claim for paternity leave but denied his claims for bereavement leave and other death benefits.

It was maintained by Hortillano, through the Labor Union, that the provisions of the CBA did not specifically state that the dependent should have first been born alive or must have acquired juridical personality so that his/her subsequent death could be covered by the CBA death benefits.

Petitioner argued that the express provision of the CBA did not contemplate the death of an unborn child, a fetus, without legal personality. It claimed that there are two elements for the entitlement to the benefits, namely: (1) death and (2) status as legitimate dependent, none of which existed in Hortillano’s case. Continental Steel contended that only one with civil personality could die, relying on Articles 40, 41 and 42 of the Civil Code which provides:

Article 40. Birth determines personality; but the conceived child shall be considered born for all purposes that are favorable to it, provided it be born later with the conditions specified in the following article.

Article 41. For civil purposes, the fetus is considered born if it is alive at the time it is completely delivered from the mother’s womb. However, if the fetus had an intra-uterine life of less than seven months, it is not deemed born if it dies within twenty-four hours after its complete delivery from the maternal womb.

Article 42. Civil personality is extinguished by death. The effect of death upon the rights and obligations of the deceased is determined by law, by contract and by will.

Hence according to the petitioner, the unborn child never died because it never acquired juridical personality. Proceeding from the same line of thought, Continental Steel reasoned that a fetus that was dead from the moment of delivery was not a person at all. Hence, the term dependent could not be applied to a fetus that never acquired juridical personality.

Labor arbiter Montaño argued that the fetus had the right to be supported by the parents from the very moment he/she was conceived. The fetus had to rely on another for support; he/she could not have existed or sustained himself/herself without the power or aid of someone else, specifically, his/her mother.

Petitioner appealed with the CA, who affirmed the Labor Arbiter’s resolution. Hence this petition.

Issues:
1. Whether or not only one with juridical personality can die
2. Whether or not a fetus can be considered as a dependent
3. Whether or not any ambiguity in CBA provisions shall be settled in favor of the employee

Held:
1. No. The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal definition of death is misplaced. Article 40 provides that a conceived child acquires personality only when it is born, and Article 41 defines when a child is considered born. Article 42 plainly states that civil personality is extinguished by death. The issue of civil personality is not relevant in this case.

The above provisions of the Civil Code do not provide at all a definition of death. Moreover, while the Civil Code expressly provides that civil personality may be extinguished by death, it does not explicitly state that only those who have acquired juridical personality could die.

Life is not synonymous with civil personality. One need not acquire civil personality first before he/she could die. Even a child inside the womb already has life.

No less than the Constitution recognizes the life of the unborn from conception, that the State must protect equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior to the child being delivered, qualifies as death.

2. Yes. Even an unborn child is a dependent of its parents. Hortillano’s child could not have reached 38-39 weeks of its gestational life without depending upon its mother, Hortillano’s wife, for sustenance. The CBA did not provide a qualification for the child dependent, such that the child must have been born or must have acquired civil personality. Without such qualification, then child shall be understood in its more general sense, which includes the unborn fetus in the mother’s womb.

3. Time and again, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor. In the same way, the CBA and CBA provisions should be interpreted in favor of labor. As decided by this Court, any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy. (Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)])

Bereavement leave and other death benefits are granted to an employee to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It cannot be said that the parents’ grief and sense of loss arising from the death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents whose child was born alive but died subsequently.

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