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Castaneda2007(Tax Cases)

Castaneda2007(Tax Cases)

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Published by: jojitus on Jun 21, 2010
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11/20/2010

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Philippine Institute of Certified Public Accountants (PICPA)SEMINAR ON TAX UPDATES
Wednesday, February 28, 2007Grand Ballroom, Hotel Intercontinental, Makati City
LATEST TAX DECISIONS INVOLVINGTHE COURT OF TAX APPEALS (CTA)
JUANITO C. CASTAÑEDA, JR.
 Associate Justice, Court of Tax Appeals
In
Commissioner of Internal Revenue (CIR) vs. Michel J. Lhuiller,
G.R. No. 150947, July 15, 2003, the Supreme Court reiterated its previousdeclarations that it has the final say in legal disputes:x x x The Supreme Court by tradition and in our systemof judicial administration, has the last word on what the law is;it is the final arbiter of any justifiable controversy. There isonly one Supreme Court from whose decisions all other courtsshould take their bearings.“Determining whether this tax exemption is wise or advantageous isoutside the realm of judicial power. This matter is addressed to the sounddiscretion of the lawmaking department of government.”
CIR v. Philippine Airlines, Inc.
, G.R. 160528, Oct. 9, 2006, 1
st
Div.
 
 2
A.
 
PRINCIPLE OF
 STARE DECISIS 
 
Holding that it is not bound by an earlier decision of the Court of Appeals (CA), which became final for failure of the Commissioner of Internal Revenue to appeal the same, the Supreme Court reversed thedecision of the CA, which relied on the earlier final CA decision and whichalso 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 exemptfrom all taxes, including VAT on its importations of equipment, machineriesand spare parts necessary in the conduct of its business under its franchiseconsidering that it was only liable for the “3% franchise tax on grossreceipts which shall be in lieu of all taxes on its franchise or earningsthereof” under Section 12 of RA 7082 (PLDT Franchise). The clause
inlieu of all taxes
” in Sec. 12 of R.A. 7082 is immediately followed by thelimiting or qualifying clause “
on this franchise or earnings thereof 
”,suggesting that the exemption is limited to taxes imposed directly on PLDTsince taxes pertaining to PLDT’s franchise or earnings are its direct liability.Accordingly, indirect taxes, not being taxes on PLDT’s franchise or earnings, are outside the purview of the “
in lieu
” provision. PLDT is subjectto VAT & previously to advance sales tax or compensating tax on its
 
 3
importations. Under the principle of 
 stare decisis
or rule of binding precedent, the general rule is that decisions of the Supreme Court have theforce and effect of law and are binding upon the courts. However, this is nota hard and fast rule. There should be no blind adherence to precedent. Whatis important is that the court decision must be right.
CIR vs. PLDT 
,
G.R. No. 140230, Dec. 15, 2005, 3
rd
Div.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, theCTA Charter, is a special law vis-à-vis P.D. 242, which is now embodied inthe Revised Administrative Code. P.D. 242 provides that in disputes between government agencies and government-owned or controlledcorporations, the OSG, in cases where it acts as counsel, and the DOJ, in allother cases, shall serve as arbiter. However, in tax cases covered undeSection 7 of RA 1125, jurisdiction pertains to the CTA.
 PNOC vs. CA,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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