Professional Documents
Culture Documents
G.R. No. 150947, July 15, 2003, the Supreme Court reiterated its previous
outside the realm of judicial power. This matter is addressed to the sound
Internal Revenue to appeal the same, the Supreme Court reversed the
decision of the CA, which relied on the earlier final CA decision and which
also affirmed the decision of the Court of Tax Appeals (CTA) and BIR
Ruling No. UN 140-94, April 19, 1994 to the effect that PLDT is exempt
and spare parts necessary in the conduct of its business under its franchise
considering that it was only liable for the 3% franchise tax on gross
since taxes pertaining to PLDTs franchise or earnings are its direct liability.
earnings, are outside the purview of the in lieu provision. PLDT is subject
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importations. Under the principle of stare decisis or rule of binding
precedent, the general rule is that decisions of the Supreme Court have the
force and effect of law and are binding upon the courts. However, this is not
a hard and fast rule. There should be no blind adherence to precedent. What
is important is that the court decision must be right. CIR vs. PLDT, G.R.
Reversing DBP vs. CA and the Com. of Customs, G.R. No. 86625,
Dec. 22, 1989, 180 SCRA 612, the Supreme Court ruled that RA 1125, the
CTA Charter, is a special law vis--vis P.D. 242, which is now embodied in
corporations, the OSG, in cases where it acts as counsel, and the DOJ, in all
other cases, shall serve as arbiter. However, in tax cases covered under
CIR, & Tirso Savellano, G.R. No. 109976 & PNB vs. CA, CTA, Tirso B.
Savellano and CIR, G.R. No. 112800, April 26, 2005, En Banc.
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B. COMPROMISE
predecessor if the same is contrary to law. Also, the CTA has the power of
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file a surety bond for not more than double the amount with the
Court. (Sec. 11, RA 1125, amended by Sec. 9, RA 9282)
restraining order) from enforcing and implementing Republic Act No. 9337,
upholding the laws constitutionality and lifting the TRO upon finality of its
decision. Hence, the new VAT took effect on November 1, 2005. The effect
of the TRO issued by the Supreme Court is to postpone the effectivity of the
law up to the time of finality of its decision on the merits of the case.
Association of Pilipinas Shell Dealers, et al. vs. Cesar V. Purisima, et al. &
Francis Joseph G. Escudero, et al. vs. Cesar V. Purisima, et al., G.R. Nos.
168461 & 168463, Res. July 1, 2005, issuing TRO and consolidating cases
Alcantara, et al. vs. Hon. Executive Sec. Eduardo R. Ermita, et al., G.R.
No. 168056 & Aquilino Q. Pimentel, et al. vs. Exec. Secretary Eduardo R.
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D. PROTEST MUST BE MADE 30 DAYS FROM
RECEIPT OF FINAL ASSESSMENT
assessment against PNB, dated 16 January 1991 for failure to protest within
the 30-day prescribed period. However, the Supreme Court found that the
significant BIR letter was the one issued against PNB on 08 October 1986,
wherein the BIR assessed PNB for its withholding tax liability on the interest
earnings and /or yields from PNOCs money placements with the bank. It had
30 days from receipt to protest the BIRs assessment. PNB did not take any
action as to the said assessment so that upon the lapse of the period to protest,
the withholding tax assessment became final and unappealable, and could no
longer be disputed. PNOC vs. CA, CIR, & Tirso Savellano, supra.
deficiency DST & GRT was protested. Formal Letter of Demand with
Assessment Notices was received on Aug. 30, 2004 & appealed to CTA on
Sept. 29, 2004. CTA 1st Div. dismissed petition for lack of jurisdiction as
there was failure to protest final assessment. Allied Banking Corp. vs. CIR,
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E. APPEALABLE DECISION; APPEAL PERIOD
A January 24, 1991 final demand letter for tax deficiency assessments issued
and signed by the Chief of the Accounts Receivable and Billing Division of
the BIR, acting in behalf of CIR, is final and executory and subject to appeal
amended by RA 8424. the CIR may delegate any power vested upon him by
Inc. vs. CIR, CTA & CA, G.R. No. 148380, December 9, 2005.
2001, petitioner received a BIR assessment dated May 25, 2001 for 1997
Gross Onshore Tax and DST for Special Savings Placements. It protested
the same on July 20, 2001. As the protest was not acted upon, it filed on
April 30, 2002 a petition for review. In a September 10, 2003 Resolution, the
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CTA Division dismissed petition as it was filed beyond the 30-day period
in support of its protest under Section 228 of the Tax Code. Due to failure to
file a motion for reconsideration, the Resolution became final and executory
misfiled and lost the September 10, 2003 Resolution. The CTA denied the
Decision dated June 7, 2005. On appeal, the Supreme Court held that relief
cannot be granted on the flimsy excuse that failure to appeal was due to the
cancellation had already prescribed. From July 20, 2001, the date of filing of
its protest, it had until September 18, 2001 to submit relevant documents and
from September 18, 2001, the Commissioner had until March 17, 2002 to
April 16, 2002 within which to appeal to the CTA. Petition for Review filed
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on April 30, 2002 was filed outside the jurisdictional 30-day period to
appeal. The 30-day period to appeal is jurisdictional. RCBC vs. CIR, G.R.
of 180-Day Period - The CTA held that under Section 228 of the NIRC, the
taxpayer has the option to appeal to the CTA the inaction of the
within 30 days from the expiry of 180 days from the submission of evidence
contesting the assessment. This was reversed by the Court of Appeals, which
held that appeal is mandatory, not optional. However, it should be noted that
under Section 3(a)(2), Rule 4 of the Revised Rules of the Court of Tax
Appeals, which was approved by the Supreme Court and effective December
15, 2005, the appeal is optional. Section 3(a)(2), Rule 4, RRCTA; Lascona
vs. CIR, CTA Case No. 5777, Jan. 4, 2000, reversed by the Court of
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F. PRESCRIPTION OF RIGHT TO COLLECT
not to suspend the running of the 3-year (now 5-year) prescriptive period to
period (then 3-years under Sec. 203, 1977 NIRC, now 5 years under Sec.
that is granted can suspend. Request for reconsideration does not. Protest
reinvestigation but letter did not raise any question of fact; neither did it
offer to present any new evidence. BIR September 10, 1992 letter to BPI
reinvestigation. Hence, assessment has prescribed. BPI vs. CIR, G.R. No.
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However, where there was referral to the examiner for verification,
income tax payments may apply for either a tax refund or a tax credit, but
not both. Failure to indicate a choice, however, will not bar a valid request
for a refund, should this option be chosen by the taxpayer later on. The fact
that it filled out the portion Prior Years Excess Credits in its 1999 Final
becomes irrevocable. Petitioner has chosen that option for its 1998
the amount will not be forfeited in the governments favor, because it may
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be claimed by petitioner as tax credits in the succeeding taxable years.
Philam Asset Management, Inc. vs. CIR, G.R No. 156637 & G.R. No.
over to the next taxable period. ITR amendment will not cure. SC & C
Cosmetech Co., Inc. vs. CIR, CTA EB 126, July 31, 2006.
the Manila International Container Port and the Chief Collector of the Port
of Manila which merely enumerated entry numbers and dates of release and
another presumption. The Supreme Court remanded the case back to the
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certified true copies or duplicate original copies of the consumption entries
for the questioned 1987 importations. CIR vs. Hantex Trading Co., Inc.,
G.R. No. 136975, March 31, 2005 (454 SCRA 301). In the remanded case
entitled Hantex Trading Co., Inc vs. CIR, CTA Case No. 5126, February 7,
2007, 1st Div., the CTA cancelled the assessments due to failure to submit
compensation for specified months of the years 1988 to 1991 on the ground
that that payment orders (POs) and confirmation receipts (CRs) reflected in
petitioners annual return were fake, not being issued by the BIR. It alleged
that the withholding tax was paid by its confidential payroll agent, who
BIR countered that in addition to the POs and CRs being spurious, the
checks were actually used for the purchase of loose documentary stamps by
various taxpayers other than petitioner. The Supreme Court affirmed the
ruling of both the CTA and the CA that there were no valid remittances of
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the withholding taxes. Both the CTA and the CA found that, although the
POs and CRs were genuine, the best evidence of payment were the checks
remitted through its payroll agent. The dorsal side of these checks contained
handwritten notes that they were used by different individuals and entities to
the BIRs Special Project Team. Benguet Corp. vs. CIR, G.R. No. 141212,
I. SUBSTANTIATION REQUIREMENT
is not sufficient. CIR vs. Manila Mining Corp., G.R. No. 153204, August
31, 2005, 3rd Div. Failure to present VAT ORs evidencing zero-rated sales
CTA EB No. 103, March 3, 2006. See Rule 12, Section 5, and Rule 13,
Affirming the CTA decision denying the claim for refund by the
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deposits, deposit substitutes and government securities it made allegedly on
behalf of various tax exempt employee trusts, the Supreme Court held that
funds from these employee trusts. Far East Bank and Trust Company vs.
CIR & CA, G.R No. 138919, May 2, 2006, 3rd Div.
proof that withholding tax was paid on the sale of acquired properties.
Schedule prepared to show that the taxes the withholding agent withheld did,
indeed, pertain to the taxes accruing on the sale of the acquired assets was
evidentiary weight. Far East Bank and Trust Company vs. Court of
Appeals, CTA & CIR, G.R No. 129130, Dec. 9, 2005, 1st Div.
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of loss with the Revenue District Officer pursuant to RR 12-77 is necessary
to prove fire loss. H. Tambunting Pawnshop, Inc. vs. CIR, CTA EB No.
operation and maintenance of its two power barges. This was subcontracted
to the taxpayer, which obtained BIR Ruling No. 023-95 dated February 14,
for its services is paid for in an acceptable foreign currency and accounted
for in accordance with BSP rules and regulations, the services shall be
paid 10% VAT for sale of services from April to December 1996. On
January 7, 1999, it secured VAT Ruling No. 003-99 dated January 7, 1999,
which reconfirmed BIR Ruling No. 023-95 to the effect that its sales to the
claim for refund with the BIR and subsequently a petition for review with
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the CTA to toll the running of the two-year prescriptive period under the Tax
Code. The CTA granted the refund and on appeal, the CA affirmed the CTA
decision. Hence, the BIR appealed the case to the Supreme Court.
Section 246 of the Tax Code. However, it held that both the CA and the
rate pursuant to then Section 102(b) [now 108(b)] of the Tax Code. The
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goods must likewise be performed for persons doing business
outside the Philippines.
xxx
Further, when the provider and recipient of services are
both doing business in the Philippines, their transaction falls
squarely under Section 102(a) governing domestic sale or
exchange of services. Indeed, this is a purely local sale or
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exchange of services subject to the regular VAT, unless of
course the transaction falls under the other provisions of
Section 102(b).
The Court further held that the BIRs filing of its Answer dated March
2, 2000 before the CTA contesting the claim for refund revokes the previous
rulings with prospective effect only considering Section 246 of the Tax Code
Contractor Mindanao, Inc., G.R. 153205, Jan. 22, 2007, 2nd Div.
under the law. VAT Ruling 048-98 is void. Even assuming that it revoked
the prior VAT Ruling 080-89, such ruling cannot be given retroactive effect
under Section 246 of the Tax Code. Moreover, the general rule is that rulings
can only have retroactive effect when it so explicitly states applies. In the
law. No amount of interpretation can ever revoke, repeal or modify what the
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law says. CIR vs. American Express International, Inc., G.R. No. 15609,
7727, the Bases Conversion and Development Act of 1992, and deemed
Congress by a majority of all its members may grant tax exemption together
with the Constitution and local governments on local tax exemption. John
Conversion Dev. Authority, G.R. No. 119775, October 24, 2003 (414 SCRA
356) & En Banc [Unanimous] Res. March 29, 2005. See also Coconut Oil
Refiners Association vs. Hon. Ruben Torres, G.R. No. 132527, July 29,
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L. MEANING OF GROSS
cannot be deducted for purposes of computing the gross receipts tax. The
by virtue of the extinguishment of its 20% final tax liability. CIR vs. Bank
of the Philippine Islands, G.R. No. 147374, June 26, 2006, 3rd Div., citing
CIR vs. Bank of Commerce, G.R. No. 149636, June 8, 2005, 459 SCRA
638; CIR vs. Solidbank Corp., G.R. No. 148191, November 25, 2005, 416
SCRA 436. The word gross must be used in its plain and ordinary
sum consisting of separate and specified parts. Gross is the antithesis of net.
x x x CIR vs. Bank of Commerce, G.R. No. 149636, June 8, 2005, 459
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M. PAWN TICKET SUBJECT TO DST
contract of pledge. At any rate, it is not said ticket that creates the
pawnshops obligation to pay DST but the exercise of the privilege to enter
pawn ticket. Michel J. Lhuillier Pawnshop, Inc. vs. CIR, G.R. No. 166786,
documentary stamp tax and capital gains tax under Section 176 of the Tax
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Code. Campagnie Financiere Sucres et Denrees vs. CIR, G.R. No. 133834,
O. INVALID PAYMENT
transferee are held jointly and severally liable for any fraudulent act or
violation of the pertinent laws, rules and regulations relating to the transfer
of the subject TCCs and there was determination that TCCs were
of its agents in issuance of TDMs. CIR vs. Pilipinas Shell Petroleum Corp.,
CTA EB No. 64, April 28, 2006 (4-2); Petron Corp. v. CIR, CTA Case No.
Customs, G.R. 165027, Oct. 12, 2006, 1st Div., the Supreme Court sustained
the right of the government to collect unpaid customs duties and taxes
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Attention must be given to the fact that taxes are the
lifeblood of the nation through which the government agencies
continue to operate and with which the State effects its
functions for the welfare of its constituents. It is also settled
that taxes are the lifeblood of the government and their prompt
and certain availability is an imperious need. So then, the
determination of the validity or invalidity of the TCCs cannot
be regarded as a prejudicial issue that must first be resolved
with finality in the Criminal Cases filed before the
Sandiganbayan. The Government should not and must not
await the result of the criminal proceedings in the
Sandiganbayan before it can collect the outstanding customs
duties and taxes of the petitioner for such will unduly restrain
the Government in doing its functions. The machineries of the
Government will not be able to function well if the collection of
taxes will be delayed so much so if its collection will depend on
the outcome of any criminal proceedings on the guise that the
issue of collection of taxes is a prejudicial issue that need to be
first resolved before enforcing its collection.
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P. DONATION YEAR DEDUCTIBLE
12, 2007, 3rd Div., reversing the decision of the CA affirming the CTA on
this point, the high court disallowed the deduction of legal and auditing
expenses billed in the year 1986 for work rendered by a law firm in 1984
and 1985 and for auditing services rendered by an auditing firm in the year
1985 pursuant to the all events test used for purposes of determining
held:
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For a taxpayer using the accrual method, the
determinative question is, when do the facts present themselves
in such a manner that the taxpayer must recognize income or
expense? The accrual of income and expense is permitted when
the all-events test has been met. This test requires: (1) fixing of
a right to income or liability to pay; and (2) the availability of
the reasonable accurate determination of such income or
liability.
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to have known, at the closing of its books for the taxable
year. Accrual method of accounting presents largely a
question of fact; such that the taxpayer bears the burden of
proof of establishing the accrual of an item of income or
deduction.
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as the compensation for its legal services. The failure to
determine the exact amount of the expense during the taxable
year when they could have been claimed as deductions cannot
thus be attributed solely to the delayed billing of these liabilities
by the firm. For one, ICC, in the exercise of due diligence
could have inquired into the amount of their obligation to the
firm, especially so that it is using the accrual method of
accounting. For another, it could have reasonably determined
the amount of legal and retainer fees owing to its familiarity
with the rates charged by their long time legal consultant.
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In the same vein, the professional fees of SGV & Co. for
auditing the financial statements of ICC for the year 1985
cannot be validly claimed as expense deductions in 1986. This
is so because ICC failed to present evidence showing that even
with only reasonable accuracy, as the standard to ascertain its
liability to SGV & Co. in the year 1985, it cannot determine the
professional fees which said company would charge for its
services.
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