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June 2012 Philippine Supreme Court

Decisions on Tax Law

Posted on July 18, 2012 by Carina C. Laforteza Posted in Philippines - Cases, Philippines -
Law, Tax Law Tagged non-stock corporation, value added tax
Here are select June 2012 rulings of the Supreme Court of the Philippines on tax law:
National Internal Revenue Code; Revenue Regulations No. 7-95; refund of input VAT; printing
of zero-rated on official receipt. Revenue Regulations No. 7-95, which took effect on 1
January 1996, proceeds from the rule-making authority granted to the Secretary of Finance by
the National Internal Revenue Code for the efficient enforcement of the same Tax Code and its
amendments. In Panasonic Communications Imaging Corporation of the Philippines v.
Commissioner of Internal Revenue, the Court had ruled that this provision is reasonable and is
in accord with the efficient collection of VAT from the covered sales of goods and services.
Moreover, the Court held in Kepco Philippines Corporation v. Commissioner of Internal
Revenue that the subsequent incorporation of Section 4.108-1 of RR 7-95 in Section 113 (B) (2)
(c) of Republic Act No. 9337 actually confirmed the validity of the imprinting requirement on
VAT invoices or official receipts a case falling under the principle of legislative approval of
administrative interpretation by reenactment. The Court has consistently held as fatal the failure
to print the word zero-rated on the VAT invoices or official receipts in claims for a refund or
credit of input VAT on zero-rated sales, even if the claims were made prior to the effectivity of
R.A. 9337. Western Mindanao Power Corporation vs. Commissioner of Internal Revenue, G.R.
No. 181136, June 13, 2012.
Republic Act No. 6055; Presidential Decree No. 1096 (National Building Code of the
Philippines); Republic Act No. 7160 (Local Government Code of 1991); exemption of non-stock
non-profit foundations; building permit fee. Republic Act (R.A.) No. 6055 granted the following
tax exemptions to educational institutions like petitioner which converted to non-stock, non-
profit educational foundations: exemption from the payment of all taxes, import duties,
assessments, and other charges imposed by the Government on all income derived from or
property, real or personal, used exclusively for the educational activities of the Foundation. On
the other hand, under the National Building Code, only public buildings and traditional
indigenous family dwellings are exempted from the payment of building permit fees. Hence, not
being expressly included in the enumeration of structures to which the building permit fees does
not apply, petitioners claim for exemption rests solely on its interpretation of the term other
charges imposed by the National Government in the tax exemption clause of R.A. No. 6055. A
charge is broadly defined as the price of, or rate for, something, while the word fee
pertains to a charge fixed by law for services of public officers or for use of a privilege under
control of government. As used in the Local Government Code of 1991 (R.A. No. 7160),
charges refers to pecuniary liability, as rents or fees against persons or property, while fee
means a charge fixed by law or ordinance for the regulation or inspection of a business or
activity. That charges in its ordinary meaning appears to be a general term which could cover a
specific fee does not support petitioners position that building permit fees are among those
other charges from which it was expressly exempted. Note that the other charges mentioned
in R.A. No. 6055 is qualified by the words imposed by the Government on all property used
exclusively for the educational activities of the foundation. Building permit fees are not
impositions on property but on the activity subject of government regulation. While it may be
argued that the fees relate to particular properties, i.e., buildings and structures, they are actually
imposed on certain activities the owner may conduct either to build such structures or to repair,
alter, renovate or demolish the same. Since building permit fees are regulatory impositions and
not charges on property, they are not impositions from which the petitioner is exempt. Angeles
University Foundation vs. City of Angeles, et al., G.R. No. 189999, June 27, 2012.