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2007 Cases (1). COMMISSIONER OF INTERNAL REVENUE versus ISABELA CULTURAL CORPORATION (ICC) (G.R. 172231 12 February 2007) Facts: The ICC, received from the BIR an assessment for deficiency income tax arising from the BIR‟s disallowance of ICC‟s claimed expense deductions for professional and security services billed to and paid by ICC in 1986 in the amount of P333,196.86, to wit: (a) Expenses for the auditing services of SGV & Co., for the year ending December 31, 1985; (b) Expenses for the legal services [inclusive of retainer fees] of the law firm Bengzon Zarraga Narciso Cudala Pecson Azcuna & Bengson for the years 1984 and 1985. (c) Expense for security services of El Tigre Security & Investigation Agency for the months of April and May 1986. (d) The alleged understatement of ICC‟s interest income on the three promissory notes due from Realty Investment, Inc. and for deficiency expanded withholding tax in the amount of P4,897.79, inclusive of surcharges and interest, both for the taxable year 1986 for alleged failure of ICC to withhold 1% expanded withholding tax on its claimed P244,890.00 deduction for security services. ICC sought a reconsideration of the subject assessments. However, it received a final notice before seizure demanding payment of the amounts stated in the said notices. ICC then went to the CTA which rendered a decision canceling and setting aside the assessment notices issued against ICC. It held that the claimed deductions for professional and security services were properly claimed by ICC. BIR then filed a petition for review with the CA, which affirmed the CTA decision, thus the present case before the SC. Issue: Are these deductions allowed? Decision: (1). The requisites for the deductibility of ordinary and necessary trade, business, or professional expenses, like expenses paid for legal and auditing services, are: (a) the expense must be ordinary and necessary; (b) it must have been paid or incurred during the taxable year; (c) it must have been paid or incurred in carrying on the trade or business of the taxpayer; and (d) it must be
supported by receipts, records or other pertinent papers. The requisite that it must have been paid or incurred during the taxable year is further qualified by Section 45 of the National Internal Revenue Code (NIRC) which states that: "[t]he deduction provided for in this Title shall be taken for the taxable year in which „paid or accrued‟ or „paid or incurred‟, dependent upon the method of accounting upon the basis of which the net income is computed x x x". (2). ICC uses the accrual method of accounting and pursuant to Revenue Audit Memorandum Order No. 1-2000, expenses not being claimed as deductions by a taxpayer in the current year when they are incurred cannot be claimed as deduction from income for the succeeding year. Thus, a taxpayer who is authorized to deduct certain expenses and other allowable deductions for the current year but failed to do so cannot deduct the same for the next year. 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. The test does not demand that the amount of income or liability be known absolutely, only that a taxpayer has at his disposal the information necessary to compute the amount with reasonable accuracy. The all-events test is satisfied where computation remains uncertain, if its basis is unchangeable; the test is satisfied where a computation may be unknown, but is not as much as unknowable, within the taxable year. The amount of liability does not have to be determined exactly; it must be determined with "reasonable accuracy." Accordingly, the term "reasonable accuracy" implies something less than an exact or completely accurate amount. (3). The expenses for legal services pertain to the 1984 and 1985 legal and retainer fees of the law firm Bengzon Zarraga Narciso Cudala Pecson Azcuna & Bengson, and for reimbursement of the expenses of said firm in connection with ICC‟s tax problems for the year 1984. From the nature of the claimed deductions and the span of time during which the firm was retained since 1960, ICC can be expected to have reasonably known the retainer fees charged by the firm as well 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. The defense of delayed billing by the firm and the company, which under the circumstances, is not sufficient to exempt it from being charged with knowledge of the reasonable amount of the expenses for legal and auditing services (4). 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. ICC thus failed to discharge the burden of proving that the claimed expense deductions for the professional services were allowable deductions for the taxable year 1986. Hence, per Revenue Audit Memorandum Order No. 1-2000, they cannot be validly deducted from its gross income for the said year and were therefore properly disallowed by the BIR. (5). As to the expenses for security services, the records show that these expenses were incurred by ICC in 1986 and could therefore be properly claimed as deductions for the said year. (6). On the purported understatement of interest income from the promissory notes of Realty Investment, Inc., findings of the CTA and the Court of Appeals that no such understatement exists are sustained and that only simple interest computation and not a compounded one should have been applied by the BIR. There is indeed no stipulation between the latter and ICC on the application of compounded interest. Under Article 1959 of the Civil Code, unless there is a stipulation to the contrary, interest due should not further earn interest. (7). The findings of the CTA and the Court of Appeals that ICC truly withheld the required withholding tax from its claimed deductions for security services and remitted the same to the BIR is supported by payment order and confirmation receipts. Hence, the Assessment Notice for deficiency expanded withholding tax was properly cancelled and set aside. (2). FELS ENERGY INC. VS. PROVINCE OF BATANGAS (G.R. 168557 / 2-162007) NAPOCOR VS. LBAA OF BATANGAS (G.R. 170628 16 February 2007) Facts: NAPOCOR (NPC) entered into a lease contract with Polar Energy, Inc. over diesel engine power barges moored in Batangas providing that NAPOCOR shall be responsible for the payment of all taxes imposed by the National Government to which POLAR may be or become subject to or in relation to the performance of their obligations under the agreement and all real estate taxes and assessments, rates and other charges in respect of the Power Barges. POLAR subsequently assigned its rights under the Agreement to FELS. FELS then received an assessment from the Provincial Assessor of Batangas for real property taxes on the power barges. NPC acting on behalf of FELS sought reconsideration of the Provincial Assessor‟s assessment to assess real property taxes on the power barges which was denied by the Provincial Assessor. NPC then filed a petition with the LBAA. The LBAA denied the petition. The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the barges–FELS, a private corporation–is the one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not
The CA denied the petition of NPC for being prescribed. The privilege granted to petitioner NPC cannot be extended to FELS. – The following are exempted from payment of the real property tax:x x x(c) All machineries and equipment that are actually. Assuming that power barges are subject to real estate tax. Finally. Section 226 of R. are intended by their nature and object to remain at a fixed place on a river. does not justify the exemption. the LBAA also ruled that the petition was filed out of time. x x x Indeed. POLAR owns the power barges as stipulated in the agreement.A. whether or not it should be NPC which should be made to pay the same under the law? (4). No. personal properties and therefore. in this case. directly and exclusively used by the government owned or controlled corporation. The CBAA issued a reversed its earlier decision. Assuming that power barges are real properties. The Provincial Assessor filed an MR which was opposed by FELS and NPC. otherwise known as the Local Government Code of 1991. power barges are categorized as immovable property by destination. 7160. the Province of Batangas. Thus. Issues: (1). Hence. or coast" are considered immovable property. which reads: SECTION 234. not subject to real property tax? (2). No. Local Board of Assessment Appeals. the law states that the machinery must be actually. The covenant is between FELS and NPC and does not bind a third person not privy thereto. such a privilege can only be granted to NPC and cannot be extended to FELS.A. provides:SECTION 226. (5). whether they are exempt from real estate tax under Section 234 of the Local Government Code ("LGC")? (3). – Any owner or person having legal interest in the property who is not satisfied with the 4 . Are power barges. 7160. being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work. Subsequently the petition of FELS was denied. these present petitions.justify the exemption of FELS.1 of the Agreement. lake. Aggrieved. FELS appealed to the CBAA. which are floating and movable. FELS and NPC filed separates petition for review before the CA. The mere undertaking of petitioner NPC under Section 10. that it shall be responsible for the payment of all real estate taxes and assessments. It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R. What is the proper remedy for assailed assessments issued by Assessor‟s Office and does it prescribe? Ruling: (1) (2) (3) : Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which. though floating. directly and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power. Exemptions from Real Property Tax. The CBAA rendered a decided that the power barges exempt from real property tax.
action of the provincial. The CA affirmed in toto the decision of the CTA holding that PAGCOR was not only exempt from direct taxes but was also exempt from indirect taxes like the VAT and consequently. No. PAGCOR paid the amount due to Acesite minus VAT while the latter paid the VAT to the CIR as it feared the legal consequences of non-payment of the tax. It then filed a petition with the CTA which ordered the refund. (3). For the period January 1996 to April 1997. It also caters food and beverages to PAGCOR‟s casino patrons through the hotel‟s restaurant outlets. Acesite tried to shift the said taxes to PAGCOR by incorporating it in the amount assessed to PAGCOR but the latter refused to pay the taxes on account of its tax exempt status. the right of the local government to collect the taxes due with respect to the taxpayer‟s property becomes absolute upon the expiration of the period to appeal. it is this last action which gives the owner of the property the right to appeal to the LBAA. Is PAGCOR exempt from both direct and indirect taxes such as VAT? (2). the transactions between respondent Acesite and PAGCOR were "effectively zerorated" because they involved the rendition of services to an entity exempt from indirect taxes. precluding the taxpayer from questioning the correctness of the assessment. It also bears stressing that the taxpayer‟s failure to question the assessment in the LBAA renders the assessment of the local assessor final. If the taxpayer fails to appeal in due course. city or municipal assessor in the assessment of his property may. 2007) Facts: Acesite is the owner and operator of the Holiday Inn Manila Pavilion Hotel along UN Avenue in Manila. The last action of the local assessor on a particular assessment shall be the notice of assessment. thus. THE COMMISIONER OF INTERNAL REVENUE versus ACESITE (PHILIPPINES) HOTEL CORPORATION ( G. 147295/ February 16. The CIR went to the SC on certiorari. together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. or from invoking any defense that would reopen the question of its liability on the merits. Thus.R. The procedure likewise does not permit the property owner the remedy of filing a motion for reconsideration before the local assessor. Acesite incurred VAT from its rental income and sale of food and beverages to PAGCOR . appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose. It eases a portion of the hotel‟s premises to PAGCOR for casino operations. What is basis of tax refund? 5 . Issue: (1). executory and demandable. Acesite belatedly arrived at the conclusion that its transaction with PAGCOR was subject to zero rate as it was rendered to a tax-exempt entity and eventually filed fro refund with the CIR but the latter failed to resolve the same. within sixty (60) days from the date of receipt of the written notice of assessment.
(G. Although. Tax refunds are based on the principle of quasi-contract or solutio indebiti. or services sold or leased. Verily. the charter creating PAGCOR.D. that is. it is strictly construed against the claimant who must discharge such burden convincingly. INC. fair dealing is expected by our taxpayers from the BIR and this duty demands that the BIR should refund without any unreasonable delay what it has erroneously collected. PANGASINAN ETC. does not denigrate the fact that PAGCOR is exempt from an indirect tax. or charged as an additional 10% to the value. when it was not aware that the transactions it had with PAGCOR were zero-rated at the time it made the payments.. No. in which case it is computed as 1/11 of such value. differently worded. the seller or lessor has the option to follow either way in charging its clients and customer. A close scrutiny thereof clearly gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect. Be that as it may. Considering the foregoing discussion. The unmistakable conclusion is that PAGCOR is not liable for VAT and neither is Acesite as the latter is effectively subject to zero percent rate. respondent Acesite had discharged this burden as found by the CTA and the CA. 1869. vs. (2). Acesite has clearly shown that it paid the subject taxes under a mistake of fact. PAGCOR is undoubtedly exempt from such taxes because the law exempts from taxes persons or entities contracting with PAGCOR in casino operations. In fact. the provision clearly exempts PAGCOR from indirect taxes. charging an additional 10% of the gross sales and rentals. (4). 2007) PROVINCE OF Facts: On Nov 13. it goes one step further by granting tax exempt status to persons dealing with PAGCOR in casino operations. properties.Ruling: It is undisputed that P. VAT can either be incorporated in the value of the goods. which cannot be allowed unless granted in the most explicit and categorical language. grants the latter an exemption from the payment of taxes. Indeed. there are undoubtedly erroneous payments of the VAT pertaining to the effectively zero-rate transactions between Acesite and PAGCOR. DIGITAL TELECOMMUNICATIONS PHIL. Acesite followed the latter method that is. Although the law does not specifically mention PAGCOR‟s exemption from indirect taxes. the Province of Pangasinan granted Digitel a provincial franchise under Provincial Ordinance No 18-92 which required the grantee to pay 6 . the use of either method. R. Since an action for a tax refund partakes of the nature of an exemption. like VAT. Verily. In the instant case. 152534/ February 23. 1992. The BIR must release the refund to respondent without any unreasonable delay.
" The Province of Pangasinan. DIGITEL was granted by Republic Act No. in its examination of its record found that petitioner DIGITEL had a franchise tax deficiency for the years 1992-94 further alleging that DIGITEL had never paid any franchise tax to the province since it started its operation in 1992. It further maintains that its legislative franchise is subject to the immediate and unconditional application of the tax exemption found in the franchises of Globe. i." Section 23 of this law entitled Equality of Treatment in the Telecommunications Industry. categorically directing petitioner DIGITEL to pay the overdue franchise tax otherwise its franchise shall be inoperative. Under its legislative franchise. v. otherwise known as "The Public Telecommunications Policy Act of the Philippines. in Section 9 (b) of Republic Act No. a legislative franchise authorizing the grantee to install. Smart and Bell. Accordingly. provided for the ipso facto application to any previously granted telecommunications franchises of any advantage. and buildings "exclusive of this franchise. thus.e. Congress passed Republic Act No. On 16 March 1995. 7678? Ruling: (1). operate and maintain telecommunications systems. DIGITEL is liable for the payment of a franchise tax "as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under it by the grantee.. or those still to be granted. Digitel argues that under its legislative franchise. the payment of a franchise tax to the Bureau of Internal Revenue (BIR) would be "in lieu of all taxes" on said franchise or the earnings therefrom.franchise and real property taxes. No. exemption or immunity granted under existing franchises. the Sangguniang Panlalawigan passed Resolution No. Republic Act No. Thereafter. throughout the Philippines. 364 on 14 October 1994." as well as real property tax "on its real estate. If not exempt. Is DIGITEL exempt from the payment of provincial franchise tax? (2). 7 . The Supreme Court has already resolved this issue in the case of Philippine Long Distance Telephone Company. to be accorded immediately and unconditionally to earlier grantees The provincial franchise and real property taxes remained unpaid. privilege. this time. City of Davao. are DIGITEL‟s real properties found within the territorial jurisdiction of respondent Province of Pangasinan exempt from the payment of real property taxes by virtue of the phrase "exclusive of this franchise" found in Section 5 of its legislative franchise. 7229 and RA 7925. where it clarified the confusion brought about by the effect of Section 23 of Republic Act No. Issues: (1). favor. 7925. 7678. the Province of Pangasinan filed a complaint for collection of sum of money against Digitel for franchise tax and ad valorem tax based on Sec 137 and 232 of the Local government Code (RA 7160). Inc.
from 1 January 1996. The fact is that the term "exemption" in Sec 23 is too general. R. Congress did not intend it to operate as a blanket tax exemption to all telecommunications entities. Smart and Bell. 7716. even if it is granted. City of Davao. The thrust of the law is to promote gradually the deregulation of the entry. taking into consideration the above. it cannot be considered as having amended petitioner PLDT‟s franchise so as to entitle it to exemption from the imposition of local franchise taxes. No. thus. There is nothing in the language of nor in the proceedings of both the House of Representatives and the Senate in enacting R. petitioner DIGITEL ceased to be liable for national franchise tax and in its stead is imposed a 10% VAT in accordance with Section 108 of the Tax Code. a consideration of the law itself in its entirety and the proceedings of both Houses of Congress is in order. made inoperative for lack of a franchise tax. And. The foregoing pronouncement notwithstanding. and operations of all public telecommunications entities and thus promote a level playing field in the telecommunications industry. A cardinal rule in statutory construction is that legislative intent must be ascertained from a consideration of the statute as a whole and not merely of a particular provision. pricing. x x x Hence. including those whose exemptions had been withdrawn by the LGC. 7925 is a legislative enactment designed to set the national policy on telecommunications and provide the structures to implement it to keep up with the technological advances in the industry and the needs of the public. the Court already sustained the power of Congress to grant exemptions over and above the 8 . the "in-lieu-of-all-taxes" clause/provision in the legislative franchises of Globe. In that case.7925 – that the word "exemption" as used in the statute refer‟s or pertain‟s merely to an exemption from regulatory or reporting requirements of the DOTC or the NTC and not to the grantee‟s tax liability. In the afore-quoted case of PLDT v. Therefore. 7925 which shows that it contemplates the grant of tax exemptions to all telecommunications entities. abolishing the franchise tax imposed on telecommunications companies effective 1 January 1996 and in its place is imposed a 10 percent Value-Added-Tax (VAT). in view of the passage of Republic Act No. (2). the exemption must be interpreted in strictissimi juris against the taxpayer.A.A. No. 7925. has now become functus officio. among others. The tax exemption must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. the Court held that in approving Section 23 of Republic Act No. Tax exemption are highly disfavored. The second issue boils down to a dispute between the inherent taxing power of Congress and the delegated authority to tax of the local government borne by the 1987 Constitution.
2001 in the CTA a petition for the revival of its June 15. 1992. the CTA declared that its June 15. The fact that Republic Act No. in the alternative. payment of the shipment‟s value plus damages. The BOC Commissioner and the respondent then filed separate petitions in the CA which were consolidated. As such decision could not be executed. however. Nos. respondent Province of Pangasinan can only levy real property tax on the remaining real properties of the grantee located within its territorial jurisdiction not part of the above-stated classification. 1992. the CTA reversed the forfeiture decree issued by the Bureau of Customs and ordered the release of the UNIMEX shipment subject to the payment of customs duties. In one case. hence. It prayed for the immediate release by BOC of its shipment or. 2002. he was declared in default. 1992 decision could no longer be executed due to the loss of respondent‟s shipment so it ordered the BOC Commissioner to pay respondent the commercial value of the goods based on the prevailing exchange rate at the time of their importation which payment shall be taken from the sale or sales of the goods or properties seized or forfeited by the Bureau of Customs. In view of the unequivocal intent of Congress to exempt from real property tax those real properties actually. In its decision of September 19. During the ex parte presentation of respondent‟s evidence. (5).R. The BOC Commissioner failed to file his answer. UNIMEX filed on September 5. merely applies from the time of the effectivity of petitioner DIGITEL‟s legislative franchise and not a moment sooner.power of the local government‟s delegated taxing authority notwithstanding the source of such power. The said CTA decision became final and executory on July 20. directly and exclusively used by petitioner DIGITEL in the pursuit of its franchise. As counsel failed to file a motion for writ of execution. knowing fully well that the Local Government Code had already withdrawn exemptions from real property taxes. chose to restore such immunity even to a limited degree. REPUBLIC OF THE PHILIPPINES represented by the Commissioner of Customs vs UNIMEX MICRO ELECTRONIC (G. 166309-10/ 09 March 2007) Facts: In a decision dated June 15. 7678 was a later piece of legislation can be taken to mean that Congress. Said exemption. 1992 decision. BOC informed the court that the subject shipment could no longer be found at its warehouses. the CA held that the BOC Commissioner was liable for the value of the subject shipment as the same was 9 .
this rule is not absolute. In the case at bar. it cannot be altered or modified. In fact. 1992 CTA decision became final and executory. Issues: (1). Even if the CTA had maintained its original decision. UNIMEX is diligently trying to fight for what it believes is right.It is clear from the records that UNIMEX was not guilty of negligence or omission. It added that respondent was also entitled to legal interest not at the rate of 6% per annum but at 12% per annum for the actual damages awarded. Is the Bureau of Customs liable for actual damages? Ruling: (1). Certainly. yet it does not mean that it was sleeping on its right for it filed a case against the shipping agent 10 . parties do not dispute the fact that after the June 15. it ruled that the CTA erred in using as basis the prevailing peso-dollar exchange rate at the time of the importation instead of the prevailing rate at the time of actual payment pursuant to RA 4100. Is the Bureau of Customs liable for interest? (4). said judgment may be modified. giving rise to a presumption that a party has abandoned it or declined to assert it. Laches is the failure or negligence to assert a right within a reasonable time. IT may have failed to secure a writ of execution with this court when the [CTA decision] became final and executory due to wrong legal advice. However. Neither did it abandon its claim against petitioner. from the moment it intervened in the proceedings before the Bureau of Customs up to the present time. Also. a final judgment may be altered when its execution becomes impossible or unjust. Where facts or events transpire after a decision has become executory.lost while in its custody. still petitioner would have been unable to comply with it for the obvious reason that there was nothing more to deliver to respondent. (2). this fact presented a supervening event warranting the modification of the CTA decision. Is UNIMEX guilty of laches? (3). The general rule is that once a decision becomes final and executory. which facts constitute a supervening cause rendering the final judgment unenforceable. There was never negligence or omission to assert its right within a reasonable period of time on the part of UNIMEX. In the other case however. Is there modification of Decision? Can the CTA modify its earlier decision? (2). It is not a mere question of lapse or passage of time but is principally a question of the inequity or unfairness of permitting a right or claim to be asserted. respondent‟s goods were inexplicably lost while under the BOC‟s custody.
if there was any monetary obligation mentioned. (3). otherwise. Laches cannot stall respondent‟s right to recover what is due to it especially where BOC‟s negligence in the safekeeping of the goods appears indubitable. There is no denying that BOC exhibited gross carelessness and ineptitude in the performance of its duty as it could not even explain why or how the goods vanished while in its custody. fees and other charges before the release of the goods can be had. With this. Therefore. but whatever one is bound to render to another. Consequently. there should be a monetary obligation and the debtor was in default… Interest is not chargeable against petitioner except when it has expressly stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where damages sustained by the owner take the form of interest at the legal rate. such as tax where the law imposes personal liability therefor.and/or the sub-agent." Therefore. There is default when after demand is made either judicially or extrajudicially. In other words. Our decision subject of this action for revival [of judgment] did not refer to any monetary obligation by [petitioner] towards the [respondent]. duties. This case does not involve a monetary obligation to be covered by Article 2209. the government was never a debtor to the petitioner in order that [Article] 2209 could apply. legal interest upon the finality of the decision of this case until the value of the goods is fully paid (as forbearance of credit) is likewise bereft of any legal anchor 11 . Nor was it in default for there was no monetary obligation to pay in the first place. it referred to the obligation of [respondent] to pay the correct taxes. the term "debt" embraces not merely money due by contract. In one case. there [was never] an occasion wherein petitioner had abandoned or declined to assert its right. As clearly provided in [Article 2209]. Interest may be paid either as compensation for the use of money (monetary interest) referred to in Article 1956 of the New Civil Code or as damages (compensatory interest) under Article 2209 above cited. it is difficult to exonerate petitioner from liability. interest is demandable if: a) there is monetary obligation and b) debtor incurs delay. the Supreme Court held: "In a comprehensive sense. There is no dispute that this case was originally filed questioning the seizure of the shipment by the Bureau of Customs. we would countenance a wrong and exacerbate respondent‟s loss which to this day has remained unrecompensed.a. In fact. either for contract or the requirement of the law. for interest to be demandable under Article 2209. the CA‟s imposition of the 12% p.
and that. No. Thereupon. The situation does not allow us to reject respondent‟s claim on the mere invocation of the doctrine of state immunity. Government Liability For Actual Damages Although it may be gainsaid that the satisfaction of respondent‟s demand will ultimately fall on the government. 1993." 6). 145526/ March 16." it cannot be held liable for governmental acts (jus imperii).R.(4). Petitioner attributed these claims to its sales of gold to the Central Bank. Petitioner appealed to the Court of Appeals (CA). under the political doctrine of "state immunity. The circumstances of this case warrant its exclusion from the purview of the state immunity doctrine. Due to respondent‟s continuous inaction and the imminent expiration of the twoyear period for beginning a court action for tax credit or refund. we still hold that petitioner cannot escape its liability. 2007) Facts: On March 31. petitioner brought its claims to the Court of Tax Appeals (CTA) by way of a petition for review. petitioner filed this appeal by certiorari 12 . ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION vs COMMISSIONER OF INTERNAL REVENUE (G. We are not likewise unaware of its lackadaisical attitude in failing to provide a cogent explanation on the goods‟ disappearance. copper concentrates to Philippine Associated Smelting and Refining Corporation (PASAR) and pyrite to Philippine Phosphates. Succinctly. upon payment of the necessary customs duties by respondent. The CTA denied petitioner‟s claims on the grounds of prescription and insufficiency of evidence. (Philphos) on the theory that these were zero-rated transactions resulting in refundable or creditable input taxes under Section 106(b) of the Tax Code of 1986. Petitioner‟s motion for reconsideration was denied for lack of merit. the doctrine must be fairly observed and the State should not avail itself of this prerogative to take undue advantage of parties that may have legitimate claims against it. petitioner‟s "payment shall be taken from the sale or sales of goods or properties seized or forfeited by the Bureau of Customs. petitioner Atlas Consolidated Mining and Development Corporation presented to Commissioner of Internal Revenue applications for refund or tax credit of excess input taxes. Accordingly. The CA reversed the CTA‟s ruling on the matter of prescription but affirmed the latter‟s decision in all other respects. Inc. considering that they were in its custody and that they were in fact the subject of litigation. The Court cannot turn a blind eye to BOC‟s ineptitude and gross negligence in the safekeeping of respondent‟s goods.
13 . The petitioner is not entitled to tax refund. Without presenting these pre-marked documents as evidence. It does not relieve respondent of its imperative task of pre-marking photocopies of sales receipts and invoices and submitting the same to the court after the independent CPA shall have examined and compared them with the originals. A judicial claim for refund or tax credit in the CTA is not an original action but an appeal by way of petition for review of a previous. Therefore. The circular was promulgated to avoid the timeconsuming procedure of presenting. which either expressly or impliedly suggests that summaries and schedules of input VAT payments. There is nothing in CTA Circular No. even if certified by an independent CPA. should have had no bearing in a judicial claim for refund in the CTA which was "entirely independent of and distinct from the administrative claim? 3. as amended by CTA Circular No. it was necessary for petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit 3. by words too plain to be mistaken. Whether or not the summary and certification of an independent certified public accountant required by CTA Circular 1-95(1)12 "constitute the principal evidence" and rendered superfluous the submission of VAT invoices and receipts? Ruling: 1. a petitioner has to convince the appellate court that the quasi-judicial agency did not have any reason to deny its claims. 1-95. required petitioner to (1) show that its sales qualified for zero-rating under the laws then in force and (2) present sufficient evidence that those sales resulted in excess input taxes. that the legislature intended to entitle them to such claims. 2. 10-97. suffice as evidence of input VAT payments. The rule.Issues: 1. identifying and marking of documents before the Court. unsuccessful administrative claim. Whether or not the documentary requirements imposed by Revenue Regulations 3-88 applied only to administrative claims for refund or tax credit. Whether or not the petitioner is entitled for the tax refund? 2. It has always been the rule that those seeking tax refunds or credits bear the burden of proving the factual bases of their claims and of showing. It complied with the first requirement but failed in the second requirement. In this case. the court cannot verify the authenticity and veracity of the independent auditor‟s conclusions. as in every appeal or petition for review. in this case.
1743.622.1. petitioner filed with the Commissioner of Internal Revenue (CIR) an administrative claim for refund of creditable taxes withheld for the year 1995 in the amount of P1.884. Issue: Whether or not the CA erred in affirming the disallowance by the CTA of P1. the CTA disallowed the P1.342.00.476.241.R.603.691. However. 2007) Facts : In its BIR Form No. BANCO FILIPINO SAVINGS & MORTGAGE BANK VS.40-portion of petitioner‟s claim for refund as these are covered by Exhibits "AA" through "HH". the Petition for Review on Certiorari under Rule 45 of the Rules of Court. 14 . petitioner filed a Petition for Review with the CTA on April 13. 1743-750 (Certificate of Creditable Tax Withheld at Source) issued by various payors and reflecting taxes deducted and withheld on petitioner-payee‟s income from the rental of its real properties.576. As the CIR failed to act on its claim.00.603.691. Its Motion for Reconsideration was also denied. W-2) for the Year 1995 executed by Oscar Lozano covering P720.481. On February 4. 6-85 (as amended). specifically that petitioner‟s claim is not properly documented. including: 1) Certificate of Income Tax Withheld on Compensation (BIR Form No. indicating various amounts it withheld and remitted to the BIR (Exhibits "C" through "Z").155682 / March 27. It attached to its Petition several documents.60-portion of petitioner‟s claim for tax refund on the ground that its Exhibit "II" and Exhibits "C" through "Z" lack probative value as these are not in BIR Form No.103. which are all in BIR Form No.60 of petitioner‟s claim for tax refund on the ground that the latter‟s Exhibit "II" and Exhibits "C" through "Z" lack probative value as not being in accordance with BIR Form No. (G. The CTA issued the October 5. The CTA allowed the P18.(7).00. 1702 or Corporation/Partnership Annual Income Tax Return for fiscal year 1995.No. 1998. representing the prior year‟s excess tax credit of P11. respondent CIR interposed special and affirmative defenses. Petitioner filed a Petition for Review with the CA but the CA dismissed the same. 7431. and 2) Monthly Remittance Return of Income Taxes Withheld under BIR Form No.576.622. In his Answer. the form required under Revenue Regulations No. to support a claim for refund.1. 1743W issued by petitioner. Banco Filipino Savings and Mortgage Bank (petitioner) declared a net operating loss of P211.00 as tax withheld on rental income paid to petitioner (Exhibit "II").00 and creditable withholding taxes of P1. COURT OF APPEALS ET AL.00 and total tax credit of P13. hence. 1998.918. 1999 Decision granting only a portion of petitioner‟s claim for refund.
" of BIR Form No. 1999. 1743. and requesting it to appear for an informal conference to present its side. 1999 a "Notice to Taxpayer" from the Assistant Commissioner.Ruling: There are three conditions for the grant of a claim for refund of creditable withholding tax: the claim is filed with the CIR within the two-year period from the date of payment of the tax. (8)." IBank subsequently received on November 16.23 for 1997. petitioner. the requisite information regarding withholding taxes from the sale of acquired assets can be found in BIR Form No. COMMISSIONER OF INTERNATIONAL REVENUE (G. BIR Form No. As described in Section 6 of Revenue Regulations No. 1743. It readily identifies the payor.158. 2007 ) Facts: On april 13.118. INT'L EXCHANGE BANK VS.R. No. After discussions. 1743.974. 1743-750. 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. 171266 April 4. it is shown on the return of the recipient that the income payment received was declared as part of the gross income. the income payment and the tax withheld. Enforcement Service of the BIR. The third condition is specifically imposed under Section 10 of Revenue Regulation No. petitioner was personally served with an undated PreAssessment Notice (PAN) assessing it of deficiency on: 15 .31 for 1996 and P17. On January 6. 2000. 6-85.311.1. Petitioner‟s Exhibits "C" through "Z" cannot take the place of BIR Form No.1 and its Exhibit "II. the parties resolved issues relating to transactions involving payment of final withholding and gross receipts taxes. CIR served a Letter of Authority to International Exchange Bank (IBank) directing the examination of petitioner‟s books of accounts and other accounting records for the year 1997 and "unverified prior years. and. It is complete in the relevant details which would aid the courts in the evaluation of any claim for refund of creditable withholding taxes.033.1 is a written statement issued by the payor as withholding agent showing the income or other payments made by the said withholding agent during a quarter or year and the amount of the tax deducted and withheld therefrom. 6-85 (as amended) At the time material to this case. notifying it of the results of the examination re its tax liabilities amounting to P465.
751.183. and an accompanying demand letter requesting payment thereof within 30 days. IBank filed a petition for review before the CTA. amounting to P25. it may "see the Assistant Commissioner-Enforcement Service to clarify issues arising from the investigation and/or review. petitioner received a Formal Assessment Notice (FAN) for deficiency DST on its RRPA and FSD. (3). the imposition of surcharges was patently without legal authority.492.720.16 inclusive of surcharges. Government Securities Purchased-RRP is subject to DST under Section 180 of the NIRC. in the amounts of P25. there is no law imposing DST on its FSD.55 for 1997. and assuming that DST was payable.15 for 1996 and P75. the assessments are null and void for having been issued without any authority and due process. since this falls under the classification of Deposits Substitutes as defined by RR 3-97 while Savings DepositFSD should be treated as time deposits considering that its features are very much the same as time deposits (interest rates. As the BIR failed to act on the protest. (2). and (4).180. According to the PAN." and its failure to do so within 15 days from receipt of the PAN would mean that it was agreeable. Purchases of securities from the BSP or Government Securities Purchased-Reverse Repurchase Agreement (RRPA). The PAN advised petitioner that in case it was not agreeable to the above-quoted findings.77 and P22. these are certificate[s] of deposits subject to Documentary Stamp Tax under Section 180 of the NIRC which provides among others that certificate[s] of deposits bearing interest and others not payable on sight or demand are subject to DST.(a). and were made beyond the prescribed period for making assessments. In substance. respectively.492. On January 12. as amended. there is no law imposing DST on RRPA. it is the BSP which is liable therefor.55. 2000 a protest letter alleging that the assessments should be reconsidered on the grounds that: (1). respectively.15 and P75.838. the deficiency assessments pertaining to savings deposits-FSD were UPHELD and IBank was 16 . However. FSD for the taxable years 1996 and 1997. be CANCELLED and WITHDRAWN. terms). for the years 1996 and 1997.383.180. CTA First Division ordered that the IBank‟s deficiency assessments pertaining to the reverse purchase agreements in the amounts of P6. Acting on the FAN. IBank filed on February 11.383. including surcharges. and (b). assuming the deficiency assessments for DST were proper.751. 2000.302.
In both cases. it is necessary to determine whether petitioner‟s Savings Account-Fixed Savings Deposit (SA-FSD) has the same nature and characteristics as a time deposit. bills of exchange. RULING: The applicable provision is Section 180 of the Tax Code. certificate of deposit. 2000 until fully paid pursuant to Section 249 of the 1997 NIRC. bills of exchange (between points within the Philippines).ORDERED to PAY the amount of P71. instruments and securities issued by the Government or any of its instrumentalities or certificates of deposits drawing interest. 7660. and on each renewal of any such note. whether negotiable or non-negotiable. certificates of deposit bearing interest and others not payable on sight or demand. petitioner‟s argument that the savings deposit-FSD is withdrawable anytime as opposed to a time deposit which has a maturity date. The only difference lies on the evidence of deposit. thus.A.30) on each two hundred pesos. .005. the deposit may be withdrawn anytime but the depositor gets to earn a lower rate of interest. drafts. of the face value of any such agreement. In this case. bill of exchange. or fractional part thereof." 17 . he earns interest pertaining only to a regular savings deposit.757. 180. or orders for the payment of any sum of money otherwise than at sight or on demand. a depositor of a savings depositFSD is required to keep the money with the bank for at least thirty (30) days in order to yield a higher interest rate.On all loan agreements signed abroad wherein the object of the contract is located or used in the Philippines. a savings deposit-FSD is evidenced by a passbook. Thus. which reads: Sec. Instead. Stamp tax on all loan agreements. or on all promissory notes. drafts. instruments and securities issued by the government or any of its instrumentalities. draft. (Emphasis and underscoring supplied) In resolving the issue. A depositor is allowed to withdraw his time deposit even before its maturity subject to bank charges on its pre-termination and the depositor loses his entitlement to earn the interest rate corresponding to the time deposit. is not tenable. ISSUE: Whether or not petitioner‟s FSD is subject to DST for the years assessed. the deposit earns interest pertaining only to a regular savings deposit. while a time deposit is evidenced by a certificate of time deposit. The same feature is present in a time deposit. or note: Provided. the instant petition before the SC. xxx. promissory notes. Otherwise.77 representing deficiency DST for the years 1996 and 1997 plus 20% delinquency interest from February 12. there shall be collected a documentary stamp tax of Thirty centavos (P0. as amended by R. except bank notes issued for circulation. CTA En banc affirmed the CTA Division.
R. It denied reconsideration in a resolution dated May 27.63: In a letter dated December 10. although not obliged under existing laws at that time and stating that “this constitutes the final decision of this office on the matter. 1991. 2007 ) Facts: In two notices dated October 28. On February 18. It declared that the proper assessments were those contained in the May 8. 1991 letter which provided the reasons for the claimed deficiencies. that the alleged deficiency documentary stamp tax has no basis as these are subject to a compromise agreement between CIR and BAP. BANK OF THE PHILIPPINE ISLANDS (G. 1991 explaining the basis of the assessments. Issues: 18 . 1995. BPI filed a petition for review in the CTA. we shall inform you of the taxpayer‟s decision on whether to pay or protest the assessment. BPI received a letter from CIR dated May 8. The CTA ruled that BPI failed to file its protest on time under Section 270 of the National Internal Revenue Code (NIRC) of 1986 and Section 7 in relation to Section 11 of RA 1125. even in the vaguest terms. The CIR elevated the case to this Court. BPI repliedthe CIR‟s "deficiency assessments" are no assessments at all. In a decision dated November 16. 134062/ April 17.(9). “As soon as this is explained and clarified in a proper letter of assessment. Thus.” On July 6. 1991. received by BPI on January 21.656. 1988 notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases therefor. The taxpayer is not informed. 1988. COMMISSIONER OF INTERNAL REVENUE VS. the CTA dismissed the case for lack of jurisdiction since the subject assessments had become final and unappealable. On appeal. 1992. 1988. BPI requested a reconsideration of the assessments stated in the CIR‟s May 8.488. the assessment cannot be protested since the letter does not even tell the taxpayer what particular percentage tax is involved and how the examiner arrived at the deficiency.” On June 27. 1991 letter. No. 1992. why it is being assessed a deficiency. that as to the alleged deficiency percentage tax. petitioner CIR assessed respondent bank BPI‟s deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of P129. 1991. It ruled that the October 28. 1996. the CA reversed the tax court‟s decision and resolution and remanded the case to the CTA for a decision on the merits. it held that BPI filed the petition for review in the CTA on time. This was denied in a letter dated December 12.
That would be judicial legislation. BPI should have protested the same within 30 days from receipt thereof. Are the October 28. On the first issue. nothing less. the assessment shall be void” was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997. Jurisprudence. simply required that the assessments contain a computation of tax liabilities. Is BPI liable for the said taxes? Ruling: (1)." Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based. assessments were made pursuant to the prevailing law which was Section 270 (now renumbered Section 228) of the NIRC. Hence. The fact that the amendment was necessary showed that. we shall inform you of the taxpayer‟s decision on whether to pay or protest the 19 . the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. Evidently. Furthermore. on the other hand. The Court cannot read into the law what obviously was not intended by Congress. otherwise. Considering that the October 28. The December 10. BPI‟s theory that they were deprived of due process when the CIR failed to inform it of the factual and legal bases of the assessments even if these were not called for under the old law was debunked when BPI was given the opportunity to discuss with the CIR the assessment when the latter issued the former a Pre-Assessment Notice which BPI ignored and that the examiners themselves went to BPI and talked to them. the only requirement was for the CIR to "notify" or inform the taxpayer of his "findings. Are the assessments issued to BPI for deficiency percentage and documentary stamp taxes for 1986 final and unappealable? and (3).(1). 1988 reply it sent to the CIR did not qualify as a protest since the letter itself stated that "as soon as this is explained and clarified in a proper letter of assessment. Under the former Section 270. the statute had an entirely different meaning. The provision that “the taxpayers shall be informed in writing of the law and the facts on which the assessment is made. 1988 notices sufficiently met the requirements of a valid assessment under the old law and jurisprudence. 1988 notices valid assessments. there were two instances when an assessment becomes final and unappealable: (1) when it was not protested within 30 days from receipt and (2) when the adverse decision on the protest was not appealed to the CTA within 30 days from receipt of the final decision. there was no doubt the October 28. the amount the taxpayer was to pay and a demand for payment within a prescribed period. 1988 notices were valid assessments. (2). prior to the introduction of the amendment. (2).
and financial responsibilities of the organization. from then on. stated that it was his "final decision … on the matter.. On June 8." BPI therefore had 30 days from the time it received the decision on June 27. 8 in a letter dated April 22. 1987. Petitioner. Respondent. barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits. 1991 response. CIR. Inc. Thus.O. The inevitable conclusion is that BPI‟s failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable. (3).R. Prior to effectivity thereof. vs. BPI did not regard this letter as a protest against the assessments. 168129/ 24 April 2007) Facts: The Philippine Health Care Providers. it is exempt from the VAT coverage. On July 25. issued VAT Ruling No. E. 273. (10) COMMISSIONER OF INTERNAL REVENUE.. This Ruling was subsequently confirmed by Regional Director Osmundo G. BPI must nevertheless be deemed to have failed to appeal the CIR‟s final decision regarding the disputed assessments within the 30-day period provided by law. by its own declaration. 1992. 20 . Healthcare wrote the CIR inquiring whether the services it provides to the participants in its health care program are exempt from the payment of the VAT. As a matter of fact. INC. 1994. No. thereby resolving the third issue of the case. Umali of Revenue Region No. No. 1991 to appeal but it did not. Even if we considered the December 10. 1988. 1988 notices as valid or proper assessments. maintain. way beyond the reglementary period. PHILIPPINE HEALTH CARE PROVIDERS. 1988 letter as a protest. BPI must now suffer the repercussions of its omission and be liable for the said taxes. BPI was. the CTA correctly dismissed BPI‟s appeal for lack of jurisdiction. 231-88 stating that as a provider of medical services. The CIR.assessment. legal. imposing VAT was issued. conduct and operate a prepaid group practice health care delivery system or a health maintenance organization to take care of the sick and disabled persons enrolled in the health care plan and to provide for the administrative. in his May 8. (G. is a corporation organized to establish. BPI never deemed this a protest since it did not even consider the October 28. through the VAT Review Committee of the Bureau of Internal Revenue (BIR)." Hence. Instead it filed a request for reconsideration and lodged its appeal in the CTA only on February 18.
hospital and veterinary services except those rendered by professionals The import of the above provision is plain. binding. It contemplates the exemption from VAT of taxpayers engaged in the performance of medical. specialists. but merely arranges for the same. more so where these do not conflict with the findings of the Court of Appeals. 231-88 providing exemption from VAT have retroactive application? Ruling: (1). dental. Such medical services will be dispensed in a hospital or clinic owned. 21 . or accredited by Health Care. diagnostic. It was protested by healthcare. an individual must enroll in Health Care's health care program and pay an annual fee. and conclusive upon this Court.A. Section 103 of the NIRC specifies the exempt transactions from the provision of Section 102. and veterinary services. Enrollment in Health Care's health care program is on a year-toyear basis and enrollees are issued identification cards. and corrective medical services to be dispensed by Health Care's duly licensed physicians. and other professional technical staff participating in said group practice health care delivery system established and operated by Health Care. hospital. 7716 (Expanded VAT or E-VAT Law) took effect substantially adopting the provisions of EO 273 on VAT and RA 7716 on E-VAT.On January 1. individuals enrolled in Health Care's health care program are entitled to preventive. To be entitled to receive such medical services from Health Care. thus: Medical. Under the prepaid group practice health care delivery system adopted by Health Care. 1999. Republic Act (R. a special court exercising particular expertise on the subject of tax. It is a doctrine that findings of fact of the CTA. dental. as respondent does not actually provide medical and/or hospital services.) No. as provided under Section 103 on exempt transactions. its services are not VAT-exempt. It requires no interpretation. the BIR sent Preliminary Assessment Notice to Healthcare for deficiency VAT and DST for the years 1996/1997. On October 1. operated. Perforce. We note that these factual findings of the CTA were neither modified nor reversed by the Court of Appeals. are generally regarded as final. 1996. Issues: (1) Are the services subject to VAT? (2) Does VAT Ruling No. CIR then sent a demand letter with attached four assessments for the same taxes which were also protested by Healthcare.
168498/ 24 April 2007) Facts: This involves a deficiency assessment for DST on special savings accounts and gross onshore tax imposed on RCBC by the BIR. 2004 in C. 231-88 from the BIR.T.COMMISSIONER OF INTERNAL REVENUE. Respondent. circulars. Case No. 2005 in C. 2006.(2).T. Section 246 of the 1997 Tax Code. (G. 2004 and November 5. provides that rulings. believed in good faith that it was VAT exempt for the taxable years 1996 and 1997 on the basis of VAT Ruling No. Respondent. the term "health maintenance organization" was yet unknown or had no significance for taxation purposes. or (3) where the taxpayer acted in bad faith. EB No. There is no showing that respondent "deliberately committed mistakes or omitted material facts" when it obtained VAT Ruling No. RCBC claims in its motion for reconsideration that its former counsel‟s failure to file petition for review with the Court of Tax Appeals within the period set by Section 228 of the National Internal Revenue Code of 1997 (NIRC) was excusable Issue: Is the petition for review filed out of time? Ruling: 22 . (2) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based. The exceptions to this rule are: (1) where the taxpayer deliberately misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue.R. In an earlier SC Decision dated June 16. The CTA held that respondent's letter which served as the basis for the VAT ruling "sufficiently described" its business and "there is no way the BIR could be misled by the said representation as to the real nature" of said business. vs.A. Petitioner. as amended.A. the SC affirmed the Decision of the Court of Tax Appeals En Banc dated June 7. 6475. 231-88. 231-88 was issued in respondent's favor. The said resolutions of the CTA dismissed the petition for review filed by RCBC on the ground that the same was beyond the 30 day period after the expiration of the 180 day period of inaction on the part of the BIR. It is thus apparent that when VAT Ruling No. (11). RIZAL COMMERCIAL BANKING CORPORATION. rules and regulations promulgated by the Commissioner of Internal Revenue have no retroactive application if to apply them would prejudice the taxpayer. therefore. No. 50 and Resolutions of the Court of Tax Appeals Second Division dated May 3.
If indeed there was negligence, this is obviously on the part of petitioner‟s own counsel whose prudence in handling the case fell short of that required under the circumstances. He was well aware of the motion filed by the respondent for the Court to resolve first the issue of this Court‟s jurisdiction on July 15, 2003, that a hearing was conducted thereon on August 15, 2003 where both counsels were present and at said hearing the motion was submitted for resolution. Petitioner‟s counsel apparently did not show enthusiasm in the case he was handling as he should have been vigilant of the outcome of said motion and be prepared for the necessary action to take whatever the outcome may have been. Such kind of negligence cannot support petitioner‟s claim for relief from judgment. Besides, tax assessments by tax examiners are presumed correct and made in good faith, and all presumptions are in favor of the correctness of a tax assessment unless proven otherwise.4 Also, petitioner‟s failure to file a petition for review with the Court of Tax Appeals within the statutory period rendered the disputed assessment final, executory and demandable, thereby precluding it from interposing the defenses of legality or validity of the assessment and prescription of the Government‟s right to assess. In case the Commissioner failed to act on the disputed assessment within the 180-day period from date of submission of documents, a taxpayer can either: 1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period; or 2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. However, these options are mutually exclusive, and resort to one bars the application of the other. In the instant case, the Commissioner failed to act on the disputed assessment within 180 days from date of submission of documents. Thus, RCBC opted to file a petition for review before the Court of Tax Appeals. Unfortunately, the petition for review was filed out of time, i.e., it was filed more than 30 days after the lapse of the 180-day period. Consequently, it was dismissed by the Court of Tax Appeals for late filing. Petitioner did not file a motion for reconsideration or make an appeal; hence, the disputed assessment became final, demandable and executory. Based on the foregoing, petitioner can not now claim that the disputed assessment is not yet final as it remained unacted upon by the Commissioner; that it can still await the final decision of the Commissioner and thereafter appeal the same to the Court of Tax Appeals. This legal maneuver cannot be countenanced. After availing the first option, i.e., filing a petition for review which was however filed out of time, petitioner can not successfully resort to the second option, i.e., awaiting the final decision of the Commissioner and appealing the same to the Court of Tax Appeals, on the pretext that there is yet no final decision on the disputed assessment because of the Commissioner‟s inaction.
(12). PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OF APPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and the CITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007) Facts: Beginning October 31, 1981, the then Ministry of Public Works and Highways reclaimed from the sea a 21-hectare parcel of land in Barangay Tanza, Iloilo City, and constructed thereon the Iloilo Fishing Port Complex (IFPC), consisting of breakwater, a landing quay, a refrigeration building, a market hall, a municipal shed, an administration building, a water and fuel oil supply system and other port related facilities and machineries. Upon its completion, the same was turned over to the Philippine Fisheries Development Authority (PFDA) for its operation. Notwithstanding said turn over, title to the land and buildings of the IFPC remained with the Republic of the Philippines. PFDA in the meantime leased portions of IFPC to private firms and individuals engaged in fishing related businesses. In May 1988, the City of Iloilo assessed the entire IFPC for real property taxes. The assessment remained unpaid for the fiscal years 1988 and 1989 amounted to P5,057,349.67, inclusive of penalties and interests. To satisfy the tax delinquency, the City of Iloilo scheduled on August 30, 1990, the sale at public auction of the IFPC. The PFDA assailed such assessment on the ground that it is exempt from payment of real estate tax. Issues: (1). Is PFDA liable to pay real property tax to the City of Iloilo? (2). Can IFPC be sold at public auction to satisfy the tax delinquency? Ruling: To resolve said issues, the Court has to determine (1) whether the Authority is a government owned or controlled corporation (GOCC) or an instrumentality of the national government; and (2) whether the IFPC is a property of public dominion. PFDA is not a GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the PFDA leased to
private entities. With respect to these properties, PFDA is liable to pay real property tax. Nonetheless, the IFPC, being a property of public dominion cannot be sold at public auction to satisfy the tax delinquency. The Court makes a distinction between a GOCC and an instrumentality. For an entity to be considered as a GOCC, it must either be organized as a stock or non-stock corporation. Two requisites must concur before one may be classified as a stock corporation, namely: (1) that it has capital stock divided into shares, and (2) that it is authorized to distribute dividends and allotments of surplus and profits to its stockholders. If only one requisite is present, it cannot be properly classified as a stock corporation. As for non-stock corporations, they must have members and must not distribute any part of their income to said members. PFDA is actually a national government instrumentality which is defined as an agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or nonstock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Thus, the Authority which is tasked with the special public function to carry out the government‟s policy "to promote the development of the country‟s fishing industry and improve the efficiency in handling, preserving, marketing, and distribution of fish and other aquatic products," exercises the governmental powers of eminent domain, and the power to levy fees and charges. At the same time, the Authority exercises "the general corporate powers conferred by laws upon private and government-owned or controlled corporations." On the basis of these parameters , PFDA should be classified as an instrumentality of the national government. As such, it is generally exempt from payment of real property tax, except those portions which have been leased to private entities. (2). PFDA is classified as an instrumentality of the national government which is liable to pay taxes only with respect to the portions of the property, the beneficial use of which were vested in private entities. When local governments invoke the power to tax on national government instrumentalities, such power is construed strictly against local governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt whether a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when local governments seek to tax national government instrumentalities.20
Inc. without Congressional fiat. In the same vein. on government reclaimed. In Chavez v. be subject of a sale. On March 21. said portions cannot be sold at public auction to satisfy the tax delinquency. she was assigned in a foreign country. 1996 to December 31. and others of similar character. 1997. banks. 154068 / August 3. On June 17. roadsteads. torrents.xxxx” The Iloilo fishing port which was constructed by the State for public use and/or public service falls within the term "port" in Article 420 of the Civil Code and being a property of public dominion the same cannot be subject to execution or foreclosure sale. 1997. ROSEMARIE ACOSTA. foreshore and marshy lands of the public domain. Acosta and her husband filed with the BIR their Joint Individual Income Tax Return for the year 1996. 1996.Thus. such as roads. COMMISSIONER OF INTERNAL REVENUE. the port built by the State in the Iloilo fishing complex is a property of the public dominion and cannot therefore be sold at public auction. No. 141. and are intended for some public service or for the development of the national wealth. (G. 2007) Facts: Acosta is an employee of Intel Manufacturing Phils. the real property tax assessments issued by the City of Iloilo should be upheld only with respect to the portions leased to private persons.084. Intel withheld the taxes due on her compensation income and remitted to the Bureau of Internal Revenue (BIR) the amount of P308. (2) Those which belong to the State. In order to satisfy the tax. Acosta. thus: The salient provisions of CA No. (Intel). as represented by Virgilio A. Article 420 of the Civil Code also provides that the following things are property of public dominion: (1) Those intended for public use. 141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-agricultural lands under Section 59 (d).. CA No. ports and bridges constructed by the State. public or private. the City of Iloilo has to resort to other means of satisfying such delinquency. In case PFDA fails to pay the real property taxes due thereon. Lands classified under Section 59 (d) are the only alienable or disposable lands for nonagricultural purposes that the government could sell to private parties. Public Estates Authority it was held that reclaimed lands are lands of the public domain and cannot. Abogado. rivers.56.R. without being for public use. provide that the only way the government can sell to private parties government reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. 26 . For the period January 1. canals. (13). shores. vs. During that period.
918. first.37 plus interests in the amount of P14. (14).76.455. ). strict compliance with the conditions imposed for the return of revenue collected is a doctrine consistently applied in this jurisdiction. 150301/ 02 October 2007) Facts: The controversy arose when respondent Municipality of Navotas assessed the real estate taxes allegedly due from petitioner Philippine Fisheries Development Authority (PFDA) for the period 1981-1990 on properties under its jurisdiction. through Municipal Treasurer Florante M. the claimant must show indubitably the specific provision of law from which her right arises. management and operation located inside the Navotas Fishing Port Complex (NFPC). The assessed taxes remained unpaid despite the demands made by the municipality which prompted it. to afford the CIR an opportunity to correct the action of subordinate officers. it cannot be allowed to exist upon a mere vague implication or inference nor can it be extended beyond the ordinary and reasonable intendment of the language actually used by the legislature in granting the refund. and paid the BIR P17. Claiming that the income taxes withheld and paid by Intel and Acosta resulted in an overpayment of P340. On October 8. filed an amended return and a Non-Resident Citizen Income Tax Return. she filed on April 15. Ruling: A claimant must first file a written claim for refund.through her representative. This obviously is intended.274. No. As tax refunds involve a return of revenue from the government. to give notice to petitioner on October 29. and the notice should then be borne in mind in estimating the revenue available for expenditure. 1997. Tax refunds are in the nature of tax exemptions which are construed strictissimi juris against the taxpayer and liberally in favor of the government. To repeat. THE HONORABLE COURT OF APPEALS (G.R. she filed another amended return indicating an overpayment of P358.693. 1990 that the NFPC will be 27 . Issue: Does the CTA have jurisdiction over petitions for review when there is failure to file mandatory written claim for refund before the CIR.92.63. and second. before resorting to an action in court. categorically demanding recovery of overpaid taxes with the CIR. 1999 a petition for review with the Court of Tax Appeals (CTA) which was opposed by CIR for alleged failure of respondent to file the mandatory written claim for refund before the CIR. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. Barredo. to notify the government that such taxes have been questioned.
is exempt from real property tax but the exemption does not extend to the portions of the NFPC that were leased to taxable or private persons and entities for their beneficial use. a corporation with principal office in Pasig City.682. The exemption does not apply when the beneficial use of the government property has been granted to a taxable person.D. Section 234 (a) of the Code states that real property owned by the Republic of the Philippines or any of its political subdivisions is exempted from payment of the real property tax "except when the beneficial use thereof has been granted. the exercise of the taxing powers of provinces. (15). respectively. charges of any kind on the national government. 176667 November 22. cities. (ERICSSON). as of June 30. Eusebio.885. and marketing of telecommunication facilities/system. 977. Issue: Is NFPC exempt from payment of real property tax? Ruling: Local government units. municipalities. Hon.00. Inc. inclusive of penalties. pursuant to the fiscal autonomy granted by the provisions of Republic Act No. and pursuant to Presidential Decree (P.ERICSSON TELECOMMUNICATIONS. represented by its City Mayor. engineering. 1990 in order that the municipality will be able to collect the delinquent realty taxes which. 2000 issued by the City Treasurer of Pasig City. being an instrumentality of the national government. In an Assessment Notice dated October 25. 1990. No. PFDA.304.993. ( G. for consideration or otherwise. Vicente P. Petitioner sought the deferment of the auction sale claiming that the NFPC is owned by the Republic of the Philippines. and local government units.51. is engaged in the design. can impose realty taxes on juridical persons subject to the limitations enumerated in Section 133 of the Code. based on its gross revenues as reported in its 28 . to a taxable person. versus CITY OF PASIG. to wit: – Unless otherwise provided herein." As a rule. it was assessed a business tax deficiency for the years 1998 and 1999 amounting to P9. INC..128.R. 7160 or the 1991 Local Government Code.) No. amounted to P23.00 and P4. et al.466. fees. 2007) Facts: Ericsson Telecommunications. it (PFDA) is not a taxable entity. its agencies and instrumentalities.sold at public auction on November 30. and barangays shall not extend to the levy of the following “xxxxx” (o) taxes.
Gross receipts include money or its equivalent actually or constructively received in consideration of services rendered or articles sold.audited financial statements for the years 1997 and 1998. 2001. reiterating its position that the local business tax should be based on gross receipts and not gross revenue. Issue: Is local business tax on contractors based on gross receipts or gross revenue? Ruling: The applicable provision is subsection (e). receivables. and dividends). respectively. This is in consonance with the International Financial Reporting Standards. The law is clear. interest. this time based on business tax deficiencies for the years 2000 and 2001.51 and P4. Again. including the amount charged or materials supplied with the services and the deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person excluding discounts if determinable at the time of sales. In contrast. based on its gross revenues for the years 1999 and 2000. The provision specifically refers to gross receipts which is defined under Section 131 of the Local Government Code. and the amount can be determined with reasonable 29 . excise tax. sales return. compensation or service fee. including the value of services rendered or articles sold. The City of Pasig issued another Notice of Assessment on November 19. This is because it uses the accrual method of accounting.665.242. Protest dated December 21. and other assets) arising from the ordinary operating activities of an enterprise (such as sales of goods. in accordance with the following schedule of gross receipts for the preceding calendar year. where income is reportable when all the events have occurred that fix the taxpayer's right to receive the income. exchanged or leased. which is measured at the fair value of the consideration received or receivable. 2002. gross revenue covers money or its equivalent actually or constructively received. The audited financial statements of ERICSSON reflect income or revenue which accrued to it during the taxable period although not yet actually or constructively received or paid. exchanged or leased. whether actual or constructive. and value-added tax (VAT).775. royalties. as to include the total amount of money or its equivalent representing the contract price. Section 143 of the same Code covering contractors and other independent contractors which provides that the municipality may impose taxes on contractors and other independent contractors. a Protest was filed on January 21. amounting to P4. the payment of which is yet to be received. 2000 was filed by ERICSSON claiming that the computation of the local business tax should be based on gross receipts and not on gross revenue.93.710. which defines revenue as the gross inflow of economic benefits (cash. sales of services.
the CIR.JR. They filed a complaint before the RTC of Olongapo City. in his capacity as Commissioner of the Bureau of Internal Revenue (BIR). THE REVENUE DISTRICT OFFICER. issued several revenue regulations relating to the tax incentives of companies within the zone. Special Economic Zone. GUILLERMO L.accuracy. BIR. THE REGIONAL DIRECTOR. through the recommendation of then Commissioner of Internal Revenue (CIR) Liwayway Vinzons-Chato. INC. ASIA INTERNATIONAL AUCTIONEERS. Consequently. and SUBIC BAY MOTORS CORPORATION. They are engaged in the importation of mainly secondhand or used motor vehicles and heavy transportation or construction equipment which they sell to the public through auction. (AIAI) and Subic Bay Motors Corporation are corporations organized under Philippine laws with principal place of business within the SSEZ. Parayno. respondent committed a palpable error when it assessed petitioner's local business tax based on its gross revenue as reported in its audited financial statements. issued Revenue Memorandum Circular (RMC) No. and the OSG filed with the CA a petition for 30 . Thus. 2003. Jr. the BIR Revenue District Officer of the SSEZ. and not the actual receipt.A. the BIR Regional Director of Region III. 7227 creating the Subic Special Economic Zone (SSEZ) and extending a number of economic or tax incentives therein. (16). 31-2003 and other revenue regulations and RMC‟s for being unconstitutional and an ultra vires act. Region III. HON. PARAYNO. the right to receive income. as Section 143 of the Local Government Code and Section 22(e) of the Pasig Revenue Code clearly provide that the tax should be computed based on gross receipts. Inc. praying for the nullification of RMC No. and OFFICE OF THE SOLICITOR GENERAL ( GR 163445/ 18 December 2007) Facts: Congress enacted Republic Act (R.. 31-2003 setting the “Uniform Guidelines on the Taxation of Imported Motor Vehicles through the Subic Free Port Zone and Other Freeport Zones that are Sold at Public Auction. The imposition of local business tax based on petitioner's gross revenue will inevitably result in the constitutionally proscribed double taxation – taxing of the same person twice by the same jurisdiction for the same thing – inasmuch as petitioner's revenue or income for a taxable year will definitely include its gross receipts already reported during the previous year and for which local business tax has already been paid.) No. Subsequently the Secretary of Finance. then CIR Guillermo L.” Asia International Auctioneers. BIR. determines when to include the amount in gross income. On June 3. VS.
B. It is a real estate developer engaged in the development and marketing of low. 2008 CASES (17).certiorari under Rule 65 of the Rules of Court with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin the trial court from exercising jurisdiction over the case. COMMISSIONER OF INTERNAL REVENUE. subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. The power to decide disputed assessments. Respondent ( GR 171956/ 18 January 2008) Facts: State Land Investment Corporation. and in Cavite and Bulacan. petitioner. Petitioner VS.A.” They were issued pursuant to the power of the CIR under Section 4 of the National Internal Revenue Code.A. fees or other charges. or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner. No. Issue: Does the trial court have jurisdiction over the subject matter of this case? Ruling: The assailed revenue regulations and revenue memorandum circulars are actually rulings or opinions of the CIR on the tax treatment of motor vehicles sold at public auction within the SSEZ to implement Section 12 of R. STATE LAND INVESTMENT CORPORATION. Petitioners contend that based on Section 7 of R. No. They argue that in the instant case. medium and high cost subdivision projects in the cities of Manila. there is no decision of the respondent CIR on any disputed assessment to speak of as what is being questioned is purely the authority of the CIR to impose and collect value-added and excise taxes. 7227 which provides that “exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines. is a corporation duly organized and existing under the laws of the Republic of the Philippines. 1125 that the CTA “shall exercise exclusive appellate jurisdiction to review by appeal…” decisions of the CIR. 31 . Pasay and Quezon. penalties imposed in relation thereto. refunds of internal revenue taxes.
thus.289. Petitioner opted to apply this amount as tax credit to the succeeding taxable year 1998. reflecting taxable income of P27.793.00.742.05 against its income tax liability of P9. in order to toll the running of the two-year prescriptive period and there being no immediate action on the part of the CIR. as the case may be. or Be refunded the excess amount paid. leaving a balance of P9.51 remained unutilized.084. petitioner filed a petition for review with the Court of Tax Appeals (CTA) which denied the same. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either: (a) (b) Pay the excess tax still due.54.742.51.270. 1997. 1999. Petitioner filed with the BIR a claim for refund of its unutilized tax credit for the year 1997 in the amount P 9. petitioner again filed with the BIR its annual income tax return for the calendar year ending December 31. Petitioner charged the said amount against its 1997 excess credit of P13.632.51 as excess creditable withholding taxes paid for taxable year 1997 Under Section 69 (now Section 76) of the Tax Code then in force.51 representing the excess creditable withholding tax for taxable year 1997? .05. the amount of P13.187.929. Final Adjustment Return.00 with tax due in the amount of P9.742. inclusive of its prior year‟s excess tax credits of P9.793. After applying its total tax credits of P23.165.929.523.51.703.959. 32 . 1998.51.54. 1997. On April 13.270. Ruling: Commissioner of Internal Revenue is ordered to refund to petitioner the amount of P9. 2000. On April 15. declaring a minimum corporate income tax due in the amount of P4. – Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. the instant petition to the SC. Its total tax credits for the same year amounted to P23.328.742. Issue: Is Stateland entitled to the refund of P9.270. it its annual income tax return for the calendar year ending December 31.On April 15. thus: Section 69. a corporation entitled to a refund of excess creditable withholding tax may either obtain the refund or credit the amount to the succeeding taxable year.703.00.632.723.270.165.959.
Heavily militating against respondent Commissioner is the ancient principle that no one. No. as lessee. BATHALA MARKETING INDUSTRIES. Inc. Technicalities and legalisms. Consequently. petitioners. shall enrich oneself at the expense of another. equity and fair play are on the side of petitioner. INC.." and thus. 150806/ 28 January 2008) Facts: In May 1997. for a monthly rental of P1. Excess income taxes paid in a year that could not be applied to taxes due the following year may be refunded the next year.It is expressly understood by the parties hereto that the rental rate stipulated is based on the present rate of assessment on the property. Civil Code. not even the state.In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid. it has the obligation to return it. vs.69. Thus.25 square meters. Substantial justice. 2154. (18). simple justice requires the speedy refund of the wrongly held taxes. Makati City. located at 2208 Pasong Tamo Street. Bathala Marketing Industries. Under the principle of solutio indebiti provided in Art. provided that the claim for such a refund is made within two years after payment of the tax. for a term of four (4) years from May 1. Almeda (Ponciano) representing the lessor over a portion of the Almeda Compound. if the excess income taxes paid in a given taxable year have not been entirely used by a taxable corporation against its quarterly income tax liabilities for the next taxable year. Section 69 clearly provides that a taxable corporation is entitled to a tax refund when the sum of the quarterly income taxes it paid during a taxable year exceeds its total income tax due also for that year. renewed its Contract of Lease with Ponciano L. at its option. the refundable amount that is shown on its final adjustment return may be credited. EUFEMIA ALMEDA and ROMEL ALMEDA. against its quarterly income tax liabilities for the next taxable year.348. the BIR received something "when there [was] no right to demand it.348. (G.R.. should not be misused by the government to keep money not belonging to it. 1997 unless sooner terminated. consisting of 7. respondent. Indeed. .107. the unused amount of the excess may still be refunded. and that in case the assessment should 33 . however exalted. thereby enriching itself at the expense of its law-abiding citizens. SIXTH . the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year.
the person primarily liable for the payment of VAT is the lessor who may choose to pass it on to the lessee or absorb the same. The inevitable implication is that the lessor intended not to avail of the option granted him by law to shift the 10% VAT upon the lessee-appellee. 7716. 99 of the NIRC. the lease of real property in the ordinary course of business. the original lessor.00. The word "may" in the statute. generally speaking. whether for commercial or residential use. Bathala contends that VAT may not be imposed as the rentals fixed in the contract of lease were supposed to include the VAT therein. More significantly. however. charge or burden be imposed by authorities on the lot and building where the leased premises are located. considering that their contract was executed on May 1. granting the lessor the option to pass on to the lessee the 10% VAT. denotes that it is directory in nature. Notwithstanding the mandatory payment of the 10% VAT by the lessor. despite the applicability of the rule under Sec. In short. In response. 1997 when the VAT law had long been in effect. Ponciano L. under the terms of the statute. 1996. the actual shifting of the said tax burden upon the lessee is clearly optional on the part of the lessor. is subject to 10% VAT. LESSEE shall be entitled to reduction in the stipulated rental. 1996. likewise in proportion to the portion leased by him. when the rental herein provided becomes due. After the death of Ponciano and during effectivity of the contract. Almeda did not charge the lessee-appellee the 10% VAT nor provided for its additional imposition when they renewed the contract of lease in May 1997.hereafter be increased or any new tax. Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay the stipulated amount set forth in their contract. the lessors advised Bathala that Value Added Tax (VAT) on its monthly rentals shall be collected.A. as amended by R. It is generally permissive only and operates to confer discretion. the additional rental or charge corresponding to the portion hereby leased. petitioners are estopped from shifting to respondent the burden of paying the VAT. Issue: Ruling: Clearly. provided. said lessor did not actually collect a 10% VAT on the monthly rental due from the lessee-appellee after the execution of the May 1997 contract of lease. when the gross annual receipts exceed P500. to existing contracts of lease as of January 1. 34 Is Bathala subject to VAT? . In this case. that in the event that the present assessment or tax on said property should be reduced. Beginning January 1. LESSEE shall pay.000.
As employer and withholding agent. Neither that proofs of payment could be derived from the “Summary of Gross Compensation and Tax Withheld for 1995.on the other hand. Tax refunds. CIR. On November 20.alleging that the separation pay received by the employees are exempt from payment of income tax in accordance with Section 28(b)(7)(B) of the 1977 National Internal Revenue Code. It was found that the cash salary vouchers [with respect to the rank-andfile] for the final/terminal pay did not have acknowledgement receipts. Commissioner of Internal Revenue (.909. because it enumerated the amounts of income taxes withheld on per district/area basis. it is incumbent on PLDT as a 35 . Thus. PLDT filed a claim for judicial refund before the Court of Tax Appeals (CTA).707. averred that PLDT failed to show proof of payment of separation pay and remittance of the alleged withheld taxes. In compliance with labor law requirements. No.(19). Is PLDT entitled to the refund? (2). The CTA denied PLDT‟s claim ruling that it failed to sufficiently prove that the terminated employees received separation pays and that taxes were withheld therefrom and remitted to the BIR. Is it essential to prove that the employees received the income payments as part of gross income and the fact of withholding? Ruling: (1).20. Under then Section 28 (b)(7)(B) [NOW Section 32(B)6(b)] of the NIRC. it deducted from the separation pay withholding taxes in the total amount of P23.” which PLDT submitted to support its claim. 157264/ 31 January 2008) FACTS: In 1995.909. like tax exemptions. the documents from which said finding was made were not submitted.R. PLDT vs. PLDT terminated several rank-and-file.707. supervisory and executive employees due to redundancy. 1997. and the taxpayer bears the burden of establishing the factual basis of his claim for a refund. are construed strictly against the taxpayer and liberally in favor of the taxing authority. it was held to be good only as proofs of authorization for payment and not actual payment. Issues: (1). As the BIR took no action on its claim. And while there was a certification [pursuant to CTA circular 1-95) from SGV that it had been able to trace the remittance. PLDT filed with the BIR a claim for tax credit or refund of the P23.20 which it remitted to the Bureau of Internal Revenue (BIR). it paid them separation and other benefits.
When the BIR did not act on Silkair‟s application.R. (Silkair). 1743. Singapore-DavaoCebu-Singapore. Failure to present these documents is fatal to PLDT's case (20). On December 19. (2). February 6. Ltd. a corporation organized under the laws of Singapore which has a Philippine representative office. and Singapore-Cebu-Singapore routes. 2008] Facts: Silkair (Singapore) Pte. Ltd. Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payer to the payee (BIR Form No. 2001. Only when there is an excess of the amount of tax so withheld over the tax due on the payee‟s return can a refund become possible. the auditing firm hired by PLDT. supervisors. and rank and file staff members of PLDT. While the records of the case contain the Alphabetical List of Employee from Whom Taxes Were Withheld for the year 1995 and the Monthly Remittance Returns of Income Taxes Withheld for December 1995.” While SGV. SILKAIR (Singapore) PTE. Silkair filed with the BIR a written application for the refund of excise taxes it claimed to have paid on its purchases of jet fuel from Petron Corporation from January to June 2000. Commissioner of Internal Revenue (CIR) (G.claimant for refund on behalf of each of the separated employees to show that each employee did x x x reflect in his or its own return the income upon which any creditable tax is required to be withheld at the source. A taxpayer must thus do two things to be able to successfully make a claim for the tax refund: (a) declare the income payments it received as part of its gross income and (b) establish the fact of withholding. certified that it had "been able to trace the remittance of the withheld taxes summarized in the C[ash] S[alary] V[ouchers] to the Monthly Remittance Return of Income Taxes Withheld for the appropriate period covered by the final payment made to the concerned executives. No. 173594. is an online international air carrier operating the Singapore-Cebu-Davao-Singapore. vs.1) showing the amount paid and the amount of tax withheld therefrom. the documents from which SGV "traced" the former to the latter have not been presented."27 the same cannot be appreciated in PLDT's favor as the courts cannot verify such claim. it filed petition for review 36 .
Statutes granting tax exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. it must not be enlarged by construction. among others.” It invokes Maceda v. inspection fees and other duties or taxes imposed in the territory of the first Contracting Party. May 31. otherwise known as an Act to Maximize the Contribution of Senior Citizens to Nation Building. without a clear showing of legislative intent. (21). Court of Appeals. Jr. Grant Benefits and Special Privileges and for other purposes. a 20% sales discount on purchases of medicines by qualified senior citizens. passed on April 23. 7432. 88291. and if an exemption is found to exist. it is no longer a tax but part of the price which the buyer has to pay to obtain the article. In its answer. Court of Tax Appeals. M.A.before the CTA based on Section 135(b) of the NIRC and Article 4(2) of the Air Transport Agreement between the RP and the Singapore (RP-Singapore Agreement). Issue: Is Silkair entitled to tax refund or credit of excise taxes it claimed to have paid on its purchases of jet fuel from Petron? Held: The exemption granted under Section 135 (b) of the NIRC of 1997 and the RP-Singapore Agreement cannot. 37 . 197 SCRA 771] which upheld the claim for tax credit or refund by the National Power Corporation (NPC) on the ground that the NPC is exempt even from the payment of indirect taxes.E. and the Commissioner of Internal Revenue ( GR 160193/ 03 March 2008) Facts: This case involves R.R. granting. the CIR alleged that Silkair failed to prove that the sale of the petroleum products was directly made from a domestic oil company to the international carrier. No. Holding Corporation versus The Hon. [G. Silkair lost its case before the CTA division and CTA en banc. Macaraig. 1991. and when added to the cost of the goods sold to the buyer. 1992. Silkair argues that it is exempt from indirect taxes because the RPSingapore Agreement grants exemption “from the same customs duties. be construed as including indirect taxes. The excise tax on petroleum products is the direct liability of the manufacturer/producer.
M. and to toll the running of the two-year prescriptive period in filing a claim for refund. CTA reduced M. the law sought to be implemented. 2-94 Section 2 (i) of the BIR issued on August 22. claiming the 20% sales discount it granted to qualified senior citizens.E. M.A. RA 7432. The implementing RR 2-94 that considers such discount as mere deductions to the taxpayer's gross income or gross sales clearly clashes with the clear language of RA 7432. M.E. Sec. filed an appeal before the CTA.) filed its 1995 Corporate Annual Income Tax Return. upon its effectivity on March 21. CA dismissed the petition and the Motion for Reconsideration. Is the 20% discount treated as tax credit or tax deduction on the part of the establishment granting the discount? (2). or The Expanded Senior Citizens Act of 2003. was signed into law.E. 2000. RA 9257. M. the applicable law. treated the discount as deductions from its gross income purportedly in accordance with R. Privileges for the Senior Citizens. stating that it overpaid its income tax owing to the BIR‟s erroneous interpretation of Section 4(a) of R. Issues: (1). amending RA 7432. on February 26. 1993.R. arguing that the discount to Senior Citizens should be treated as tax credit under Section 4(a) of R. – The senior citizens shall be entitled to the following: 38 . However.E.E. 1996.E. Ruling: (1). is unequivocal on this. 4(a) of RA 9257 provides: SEC. The deductions M.R. 424. M.E. CTA rendered a decision in favor of M. 2-94.00. 4. filed a petition for review to the Supreme Court. Holding Corporation (M. M. Is the term “cost” to be claimed as tax credit ( now tax deduction) equivalent to acquisition cost. a new tax treatment for sales discount purchases of qualified senior citizens of medicines. as gross income as provided under R. and not as mere deductions from M. 1996.E. ushering in. 2004. The 20% sales discount to senior citizens may be claimed by an establishment owner as tax credit. went to the CA on a petition for review. it filed the return under protest.‟s claim for sales discount and consequently lowered the refundable amount. claimed amounted to Php 603.A. 1996. However. sent BIR a letter-claim dated December 6. 7432.On April 15. It filed a Motion for Reconsideration.E. On December 27. which was denied.E. On April 25. 2004. 7432. Due to the inaction of the BIR.E. However.
BIR issued an “assessment/demand notices” for deficiency withholding tax at source (SWAP transactions) and DST for the years 1982-1986. no longer as tax credit. restaurants and recreation centers. BPI filed a protest on the demand/assessment notices. In Bicolandia Drug Corporation (formerly Elmas Drug Corporation) v.E. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. That the total amount of the claimed tax deduction net of value added tax if applicable. 1989. Provided.(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and similar lodging establishments. Commissioner of Internal Revenue. (22). x x x. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. There we categorically said that it is the Government that should fully shoulder the cost of the sales discount granted to senior citizens. the 20% sales discount granted by establishments to qualified senior citizens is to be treated as tax deduction. xxxx The establishment may claim the discounts granted under (a). Accordingly. On April 20. BPI requested for an opportunity to present or submit additional documentation on the SWAP 39 . (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. Thus. 4(a) of RA 7432 as referring to the amount of the 20% discount extended by a private establishment to senior citizens in their purchase of medicines. It also filed a supplemental protest on May 8. further. The word "cost" shall not mean the theoretical acquisition cost of the medicines purchased by qualified senior citizens. as amended. (2). M. (f). That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted. starting taxable year 2004. 1993. On April 7. Bank of Philippine Islands (formerly Far East Bank and Trust Company) versus The Commissioner of Internal Revenue ( GR 174942/ 07 March 2008) Facts: BPI was issued a Pre-Assessment Plan (PAN) and it requested for the details of the alleged deficiency taxes. is entitled to a tax credit equivalent to the actual 20% sales discount it granted to qualified senior citizens. 1989. On March 12. 1989. we interpreted the term "cost" found in Sec.
—The running of the statute of limitations provided in Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection. In order to suspend the running of the prescriptive periods for assessment and collection. the present action before the SC. the request for reinvestigation must be granted by the CIR. the deficiency DST assessment was reiterated and BPI was ordered to pay the deficiency DST within 30 days from receipt of such order. That if the taxpayer informs the Commissioner of any change in address. that the CIR had granted the request for reinvestigation filed by BPI. expressly or impliedly. (Emphasis supplied) The above section is plainly worded. On the other hand. not acted upon by the BIR. The petition for review was denied. suspend the prescriptive period of assessment and collection? Ruling: In order to determine whether the prescriptive period for collecting the tax deficiency was effectively tolled by BPI‟s filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR. It also executed several waivers of the Statute of Limitations the last of which was effective until December 31. Issues: Does a motion for reinvestigation filed by a taxpayer. On August 9. 40 . when the taxpayer requests for a re-investigation which is granted by the Commissioner. shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter. BPI‟s letters of protest and submission of additional documents pertaining to its SWAP transactions. which states: Sec. which were never even acted upon. and no property could be located.transactions. What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation. and when the taxpayer is out of the Philippines. cannot be said to have persuaded the CIR to postpone the collection of the deficiency DST. Suspension of running of statute. In this case. or a member of his household with sufficient discretion. CIR issued a final decision on BPI‟s protest ordering the withdrawal and cancellation of the deficiency withholding tax assessment and considering the same as closed and terminated. 320. 2002. we need to examine Section 320 of the Tax Code of 1977. the running of the statute of limitations will not be suspended. his authorized representative. when the warrant of distraint and levy is duly served upon the taxpayer. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected: Provided. 1994. There is nothing in the records of this case which indicates. thus. in respect of any deficiency. much less granted. as he considered BPI‟s letters of protest to be.
Issues: Is the 20% discount to senior citizens treated as tax credit deductible from future tax liabilities OR tax deduction from the gross income or gross sales of the establishment? Ruling: 41 .The inordinate delay of the CIR in acting upon and resolving the request for reinvestigation filed by BPI and in collecting the DST allegedly due from the latter had resulted in the prescription of the government‟s right to collect the deficiency. operating eight drugstores under the business name and style "Mercury Drug. the law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens. As this Court declared in Republic of the Philippines v. Without such a legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents. Ablaza. granted 20% sales discount in the total amount of P 2. ( 23) Commissioner of Internal Revenue versus Central Luzon Drug Corporation (LUZON) ( GR No. law-abiding citizens.00 on the ground that the overpaid tax was the result of the wrongful implementation of RA 7432. to the Government because tax officers would be obliged to act promptly in the making of assessment.4 million.. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficent purpose of affording protection to the taxpayer within the contemplation of the Commission which recommend the approval of the law.798 million to qualified Senior Citizens on their purchases of medicines covering the calendar year 1997. LUZON filed a claim for refund or credit of alleged overpaid income tax for the taxable year 1997 in the amount of P2. On 19 March 1999. not to determine the latter‟s real liability. but to take advantage of every opportunity to molest peaceful. and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers. Respondent treated the 20% sales discount as a deduction from gross sales in compliance with RR 2-94 instead of treating it as a tax credit as provided under Section 4(a) of RA 7432.660.829. It subsequently filed under protest its 1997 Corporate Annual Income Tax Return reflecting a nil income tax liability due to alleged net loss incurred from business operations of P 2. 159610/ 12 June 2008) Facts: LUZON.
circuses." The law (RA 7432) cannot be amended by a mere regulation because "administrative agencies in issuing these regulations may not enlarge. which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. Chapter VII of the National Internal Revenue Code. plain and simple. RR 2-94 treats the senior citizens' discount in the same manner as the allowable deductions provided in Section 34. Under RA 7432. the senior citizens' discount granted as a tax credit cannot be refunded. carnivals and other similar places of culture.The 20% senior citizens' discount required by RA 7432 may be claimed as a tax credit and not merely a tax deduction from gross sales or gross income. Congress has granted the tax credit benefit to all covered establishments 42 . cinema houses. The Court declared. recreation centers. drugstores. not a present. the amount of 20% discount shall be deducted from the gross income for income tax purposes and from gross sales of the business enterprise concerned for purposes of the VAT and other percentage taxes. Congress granted the tax credit benefit to all covered establishments without conditions. the tax credit can be availed of and carried over to the next taxable year. RR 2-94 on the said RA 7432 interpreted the tax credit provision as the amount representing 20% discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services. Prior payment of tax liability is not a pre-condition before a taxable entity can avail of the tax credit. However. When the law says that the cost of the discount may be claimed as a tax credit. However. concert halls. there being a dichotomy in the law and the revenue regulation. The net loss incurred in a taxable year does not preclude the grant of tax credit because by its nature. "Where there is no tax liability or where a private establishment reports a net loss for the period. theaters." It is irrefutable that under RA 7432. tax liability. hotels and similar lodging establishments." Hence. For recording/bookkeeping requirement. it means that the amountwhen claimed ― shall be treated as a reduction from any tax liability. Tax credit is defined as a peso-for-peso reduction from a taxpayer's tax liability. the tax credit may still be deducted from a future. On the other hand. it cannot engraft additional requirements not contemplated by the legislature. It is a direct subtraction from the tax payable to the government. RR 2-94 treated the amount of senior citizens' discount as a tax deduction which is only a subtraction from gross income resulting to a lower taxable income. restaurants. RR 2-94 affords merely a fractional reduction in the taxes payable to the government depending on the application. alter or restrict the provisions of the law it administers. leisure and amusement. the definition provided in Section 2(i) of RR 2-94 cannot be given effect.
376. ( G. RA 9257 now specifically provides that this discount should be treated as tax deduction.826. FMF President Enrique Fernandez executed a waiver of the three-year prescriptive period for the BIR to assess internal revenue taxes. 167765/ 30 June 2008) Facts: On April 15. 1999. FMF immediately filed a protest on November 3. NOTE: Contrary to the provision in RA 7432 (old law) where the senior citizens' discount granted by all covered establishments can be claimed as tax credit. vs. The BIR then sent FMF preassessment notices. it received BIR‟s Demand Letter and Assessment Notice No. respondent. there is now a new tax treatment for senior citizens' discount granted by all covered establishments. informing it of its alleged tax liabilities.348. 1999 from the BIR. LUZON is entitled to claim the amount of P2. 1999. 1996. 1999. neither a tax liability nor a prior tax payment is required for the existence or grant of a tax credit.R. 1999. On October 18. Thus. 1996. 1999 to allow it to present evidence to dispute the BIR assessments. On May 8. FMF DEVELOPMENT CORPORATION. it filed an amended return and declared a loss of P2. This discount should be considered as a deductible expense from gross income and no longer as tax credit. 1999 reflecting FMF‟s alleged deficiency taxes and accrued interests 43 . FMF received amended pre-assessment notices dated October 6.63 as tax credit despite incurring net loss from business operations for the taxable year 1997. 1999 but on the same day. On January 22. On February 9. all dated October 6. FMF filed a protest against these notices with the BIR and requested for a reconsideration/reinvestigation. COMMISSIONER OF INTERNAL REVENUE. Therefore. FMF filed its Corporate Annual Income Tax Return for taxable year 1995 and declared a loss of P3. 1998.805. Revenue District Officer (RDO) Rogelio Zambarrano informed FMF that the reinvestigation had been referred to Revenue Officer Alberto Fortaleza. petitioner. He also advised FMF of the informal conference set on February 2. hence extending the assessment period until October 31. 33-1-00487-95 dated October 25. No.541. The waiver was accepted and signed by RDO Zambarrano.without conditions. With the effectivity of RA 9257 on 21 March 2004. (24).932.
It also ordered FMF to immediately settle its tax liabilities. 20-90. FMF filed a letter of protest on the assessment invoking the defense of prescription by reason of the invalidity of the waiver. In the case of a corporation. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed. 1999. the original copy to be attached to the docket of the case. as hereinafter provided. 44 . shall sign the waiver indicating that the Bureau has accepted and agreed to the waiver. Has the three year period to assess prescribed? Ruling: The original three year period to assess maybe extended by the execution of a valid waiver. FMF filed a petition for review with the CTA challenging the validity of the assessment. the BIR insisted that the waiver is valid because it was signed by the RDO. 3. The date of such acceptance by the Bureau should be indicated. the following procedures should be followed: 1. The fact of receipt by the taxpayer of his/her file copy shall be indicated in the original copy. 4. which implements Sections 203 and 222 (b). In its reply. The waiver shall be signed by the taxpayer himself or his duly authorized representative. Treating this as BIR‟s final decision. judicial action will be taken. The waiver must be executed in three (3) copies. Is there a valid waiver? (2). where the taxpayer and the BIR agreed in writing that the period to issue an assessment and collect the taxes due is extended to an agreed upon date. 2. Under RMO No. a duly authorized representative of petitioner.On November 24. the waiver must be signed by any of its responsible officials. the Commissioner of Internal Revenue or the revenue official authorized by him. Soon after the waiver is signed by the taxpayer. The waiver should be signed by the designated BIR officers. otherwise. the second copy for the taxpayer and the third copy for the Office accepting the waiver. The waiver must be in the prescribed form . Issues: (1).
Applying RMO No. Assessment Notice No.531.345. 1999. Firstly. RESPONDENT ( GR No. 33-1-00487-95 dated October 25.00. VS. a motion for reconsideration was filed and likewise was denied. Philamlife and Read-Rite. Any revenue official found not to have complied with this Order resulting in prescription of the right to assess/collect shall be administratively dealt with. PERF REALTY CORPORATION.00 and income tax due of P2. considering that the case involves an amount of more than P1 million. 1999.280. PERF showed in its 1997 ITR an overpayment of income taxes in the amount of P1. the waiver in question here was defective and did not validly extend the original three-year prescriptive period. the waiver was signed only by a revenue district officer. assuming the amended return was substantially different from the original return. 1999. due to the inaction of the BIR. PERF filed 45 . a requisite necessary to determine whether the waiver was validly accepted before the expiration of the original three-year period. Secondly.125. Even if the three-year period be counted from May 8. 20-90. withheld and subsequently remitted creditable withholding taxes in the total amount of P3. Bear in mind that the waiver in question is a bilateral agreement.00.504. PETITIONER. The foregoing procedures shall be strictly followed. PERF filed an administrative claim with the appellate division of the BIR for refund of overpaid income taxes in the amount of P1. 1998.621.504. The waiver was incomplete and defective and thus.250. it did not contain the date of acceptance by the Commissioner of Internal Revenue.00. The CTA denied the petition.430. and the period to assess is not yet about to prescribe. In fine. was issued beyond the three-year prescriptive period. thus necessitating the very signatures of both the Commissioner and the taxpayer to give birth to a valid agreement. the three-year prescriptive period was not tolled nor extended and continued to run until April 15. it was not proven that respondent was furnished a copy of the BIR-accepted waiver. PERF filed a petition for review with the Court of Tax Appeals (CTA) seeking for the refund of the overpaid income taxes in the amount of P1.00. 20-90.504. After deducting the creditable withholding taxes from its total income tax due of P2. 1999. For the year 1997. 1996. Lastly. On November 3. PERF filed its Annual Income Tax Return (ITR) for the year 1997 showing a net taxable income in the amount of P6.621. On December 3.5. still.280.00. its tenants. 163345/ 04 July 2008) Facts: On April 14.250.00. (2).280. (25) COMMISSIONER OF INTERNAL REVENUE. the date of filing of the amended return. the subject assessment is definitely considered time-barred. a case which affects the reckoning point of the prescriptive period. when it should have been signed by the Commissioner as mandated by the NIRC and RMO No.
are: (a) That the claim for refund was filed within the two (2) year period as prescribed under Section 230 of the National Internal Revenue Code.125.153. respectively. Hence. 1999 and December 3.531. Is the failure of the taxpayer to indicate in the return its option to claim for refund or credit material? Ruling: The requisites for a claim for refund. The amount of P3.076.250.00 leaves the refundable amount of P1.125. and H).00.a petition for review with the CA. (c ) That the fact of withholding is established by a copy of a statement (BIR Form 1743.813. (b) That the income upon which the taxes were withheld were included in the return of the recipient. We see no cogent reason not to apply the same principle here. Based on the records.18 withheld from PERF's rental income of P83.00 pertaining to a rental income of P70.604. D.621. this petition.1) duly issued by the payor (withholding agent) to the payee.00.81.153. PERF is claiming only the amount of P3. Issues: (1). PERF presented certificates of creditable withholding tax at source reflecting creditable withholding taxes in the amount of P4.00 less the income tax due of PERF of P2. showing the amount paid and the amount of tax withheld therefrom. PERF filed its administrative and judicial claims for refund on November 3. 46 .504.072.531. it submitted in evidence the Monthly Remittance Returns of its withholding agents to prove the fact of remittance of said taxes to the BIR.18 corresponding to the rental income of P83. In addition.604.076. It is settled that findings of fact of the CTA are entitled to great weight and will not be disturbed on appeal unless it is shown that the lower courts committed gross error in the appreciation of facts.280.079. 1999.072. Although the certificates of creditable withholding tax at source for 1997 reflected a total amount of P4. petitioner to refund the said overpayment. The CA ruled in favor of PERF ordering the CIR. CIR filed a motion for reconsideration which was denied by the CA.81 (Exhibits B. E. C. which are within the two-year prescriptive period under Section 230 (now 229) of the National Internal Tax Code. Did PERF comply with the requisites for refund? (2).
COMMISSIONER OF INTERNAL REVENUE. The requirement is only for the purpose of easing tax administration particularly the self-assessment and collection aspects. (26). PERF did not mark the refund box in its 1997 FAR. In another case. vs. Neither did it perform any act indicating that it chose tax credit. Section 76 of the NIRC offers two options: (1) filing for tax refund and (2) availing of tax credit. the excise tax is already paid by Petron. is the person liable for the payment of the excise tax as shown in the Excise Tax Returns filed with the BIR. it pays the excise tax due on the petroleum products thus removed.. Petron is the taxpayer that is primarily. In fact. Under these circumstances.00. Petron.R. Even before the aviation jet fuel is purchased from Petron..SILKAIR (SINGAPORE) PTE. 47 . as manufacturer or producer. Petron. 171383 & 172379/ 14 November 2008) Facts: This pertains to the motion for reconsideration of the earlier decision of the Supreme Court denying the claim for refund or issuance of TCC‟s for the excise taxes paid by Silkair for the purchase of aviation jet fuel from Petron from 1 January 1999 to 30 June 1999. LTD.(2). petitioner. should this option be chosen by the taxpayer later on. Issue: Who is entitled to claim for the refund of the excise taxes? Ruling: When Petron removes its petroleum products from its refinery in Limay." That action coupled with the filing of a claim for refund indicates that PERF opted to claim a refund. The excise tax is due from the manufacturers of the petroleum products and is paid upon removal of the products from their refineries. respondent. directly and legally liable for the payment of the excise taxes. will not bar a valid request for a refund. PERF is entitled to a refund of its 1997 excess tax credits in the amount of P1. Petron can transfer to its customers the amount of the excise tax paid by treating it as part of the cost of the goods and tacking it on to the selling price. Silkair claims for refund or issuance of TCC‟s for the excise taxes for the period 1 July 1999 to 31 December 1999. in its 1998 ITR. Stated otherwise. However. Bataan. Nos. PERF left blank the portion "Less: Tax Credit/ Payments. In this case.504. The failure of respondent to indicate its option in its annual ITR to avail itself of either the tax refund or tax credit is not fatal to its claim for refund. The two options are alternative and the choice of one precludes the other. Failure to indicate a choice. however. (G.280. since an excise tax is an indirect tax.
hence. 48 . Ramos to create a Special Economic Zone (SEZ) in a portion of Camp John Hay (CJH) in Baguio City. In the previous case of John hay Peoples Alternative Coalition vs. CJH filed a petition for declaratory relief questioning the assessment issued by the BOC. Petron. Among these incentives are the exemption from the payment of taxes." Petitioner is neither a "person liable for tax" nor "a person subject to tax. and the operation of the SEZ as a special customs territory providing for tax and duty free importations of raw materials. Petron. is the "person subject to tax. (27)." In this case. (G. is the proper party that can claim the refund of the excise taxes paid to the BIR. petitioner. 172457/ 24 December 2008) Facts: Proclamation No. The Bureau of Customs followed suit by requiring the payment of duties and taxes on all importations of Camp John Hay. capital and equipment. Section 3 of the Proclamation granted to the newly created SEZ the same incentives then already enjoyed by the Subic SEZ. BALTAZAR. BUREAU OF INTERNAL REVENUE. Even if the tax is shifted by Petron to its customers and even if the tax is billed as a separate item in the aviation delivery receipts and invoices issued to its customers. CJH DEVELOPMENT CORPORATION. 2003 declared the aforesaid Section 3 of Proclamation No. BUREAU OF CUSTOMS. and DISTRICT COLLECTOR OF CUSTOMS EDWARD O. is the "person liable for tax. as the statutory taxpayer.R. the Supreme Court in its decision dated October 24. Office of the City Treasurer of Baguio sent a demand letter requiring payment of real estate tax. vs. for businesses located inside the SEZ. Lim. which paid the excise tax upon removal of the products from its Bataan refinery. both local and national. petitioner cannot be considered the taxpayer. In the meantime. 420 (the Proclamation) was issued by then President Fidel V. No." There is also no legal duty on the part of petitioner to pay the excise tax.being the manufacturer. the retroactive application by the BOC of the decision of the Supreme Court in the earlier case and further claimed that the assessment was null and void because it violated the non-retroactive principle under the Tariff and Customs Code. 420 as null and void and of no legal force and effect. respondents. Hence. Petron remains the taxpayer because the excise tax is imposed directly on Petron as the manufacturer.
modify or alter an act of the Legislature. and (d) the issue involved must be ripe for judicial determination. the decision of the Court of Tax Appeals can be appealed to this Court. Precisely. CJH is not left without recourse. Moreover. 32 Afterwards. or other written instrument. The Court cannot repeal. contract. CA No. 55 is still in effect and holds sway. CJH alleges that CA No. the proper subject matter of a declaratory relief is a deed. The Tariff and Customs Code (TCC) provides for the administrative and judicial remedies available to a taxpayer who is minded to contest an assessment. (c) the party seeking declaratory relief must have a legal interest in the controversy. (2). or the construction or validity of statute or ordinance. modify or reverse the decision or action of the Collector.R. As a substantive law that has not been repealed by another statute. Is the remedy of declaratory relief proper? (2). 55 has already been repealed by the Rules of Court. he may file the necessary appeal to the Court of Tax Appeals. 119775 be applied retroactively? Ruling: (1). No. the remedy of declaratory relief against the assessment made by the BOC is proper. 49 . The TCC provides that a protest can be raised provided that payment first be made of the amount due. CJH hinges its petition on the demand letter or assessment sent to it by the BOC. There are other remedies available to a party who is not agreeable to a decision whether it be a question of law or fact.31 If the party is not satisfied with the ruling of the Commissioner. Can the decision in G. will. (b) the controversy must be between persons whose interests are adverse. a party may file a motion for a clarificatory judgment. subject of course to certain reglementary periods.Issues: (1). The requisites for a petition for declaratory relief to prosper are: (a) there must be a justiciable controversy. The decision of the Collector can be reviewed by the Commissioner of Customs who can approve. In case of ambiguity of the decision. A petition for declaratory relief cannot properly have a court decision as its subject matter. However. One of the requisites of a declaratory relief is that the issue must be ripe for judicial determination. the party may file a motion for reconsideration or new trial in order that the defect may be corrected. If it involves a decision of an appellate court. This means that litigation is inevitable or there is no adequate relief available in any other form or proceeding. it is really not the demand letter which is the subject matter of the petition. thus. it has removed from the courts‟ jurisdiction over petitions for declaratory relief involving tax assessments.
It further questions the classification made by the LGU of some of its properties as real properties when it believes them to be personal properties. dated January 23. In 1986. In the same year of 1985. Inc. 65.Then Pres Marcos issued PD No. 1987. amounting to one million eight hundred twenty-five thousand nine hundred twenty-eight pesos and twelve centavos (P1. vs. In Memorandum Order No. requiring the Minister of Finance to immediately restore the tax exemption of all electric cooperatives. 1987.825. withdrawing all exemptions from or any preferential treatment in the payment of duties. the LGU filed a complaint for collection of delinquent real property taxes against DAVAO for the years 1984 until 1989. Corazon C. 1987 and effective July 1. 1955. DAVAO ORIENTAL ELECTRIC COOPERATIVE.928. 93 which withdrew all tax and duty exemptions granted to private entities effective March 10. FIRB No. then Pres. INC. 269. 24-87 restored the tax and duty exemption privileges of electric cooperatives under PD No. FIRB Resolution No.( c ) 2009 CASES (28). fees. 24-87 retroacts to the date of withdrawal of said exemptions. Davao Oriental Electric Cooperative. Respondent. several memoranda were then issued reiterating the withdrawal of the exemption. (G. the Provincial Assessor sent the Notice of Assessment to petitioner which duly received it. in the same year of 1986. hence. (DAVAO) an electric cooperative. Marcos issued PD No. Petitioner. is granted a number of tax and duty exemption privileges to electric cooperatives. Aquino issued Executive Order (EO) No. Issues: 50 . No. the implementation of the EO 93 was suspended until June 30. 24-87 explicitly reads. not subject to realty tax. DAVAO contends that it was exempt from the payment of real estate taxes from 1984 to 1989 because the restoration of tax exemptions under FIRB Resolution No. 1987. and other charges granted to private business enterprises and/or persons engaged in any economic activity.12). THE PROVINCE OF DAVAO ORIENTAL.. It then failed to declare the value of its properties and the Office of the Provincial Assessor assessed its properties and in 1985. then Pres. 2008.R. In May 1990. However. imposts. taxes. among others that the tax exemption of electric cooperatives is restored effective 01 July 1987. 170901/ 20 January 2009) Facts: Under PD 269.
" There is no other way to construe it. 1987. it assails the classification of its poles. FIRB Resolution No. station equipment. they are personal properties. Section 64 of PD No. . A claim for exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. use. The language of the law is plain and unambiguous. from receipt of assessment. 1985. How do we construe tax exemption? (3). the law must be taken to mean exactly what it says. purpose. Are the assets of the electric cooperative real or personal properties? Ruling: (1). towers and fixtures.(1). Petitioner is deemed to have admitted the correctness of the assessment of its properties. 464 requires that the taxpayer must first pay under protest the tax assessed against him before he could seek recourse from the courts to assail its validity. became final. A cursory reading of the resolution restoring the exemption bares no indicia of retroactivity of its application. Taxes are the lifeblood of the nation. DAVAO cannot now assail the validity of the tax assessment against it before the courts. In addition. as computed and issued by the Office of the Provincial Assessor. In addition. line transformers. 269 . (2). 51 . It failed to exhaust its administrative remedies. etc. Is the cooperative exempt from payment of tax? (2). petitioner does not deny having duly received the two Notices of Assessment dated October 8. It also admits that it did not file a protest before the Board of Assessment Appeals to question the assessment. 24-87 is crystal clear in stating that "the tax and duty exemption privileges of electric cooperatives granted under the terms and conditions of Presidential Decree No. the court has always applied the doctrine of strict interpretation in construing tax exemptions. Having failed to appeal the assessment of its properties to the Board of Assessment Appeals within the period of 60 days in accordance with 30 PD 464." However. overhead conductors and devices. exemption therefrom is the exception (3). When the language of the law is clear and unequivocal. 1985 on October 10. as real properties "when by [their] nature. DAVAO contests the assessment of its properties claiming that the tax declarations covering its properties were issued without prior consultation. and without its knowledge and consent. . and destination and by substantive law and jurisprudence. Elsewise stated. are restored effective July 1. and the consequence for such failure is clear – the tax assessment. taxation is the rule.
5618 ordering Commissioner of Internal Revenue to deduct respondent‟s 1996 tax liability from the amount claimed and to refund (or to issue tax credit certificates) in the amount of P4. 34 of the Bureau of Internal Revenue (BIR). Respondent.892.007. vs.369. (G. it attained finality. it filed a petition for review in the CTA on March 15.574 in Revenue District Office No. AB.791. 5618. 5618) asking for the refund of its excess income tax payments in 1996 amounting to P5.285. the CTA granted the petition but ordered the BIR to refund (or to issue tax credit certificates) only to the extent of P6. as of June 23.768. in comparing respondent‟s 1997 income tax return and the certificate of tax withheld issued by its withholding agent. Thus. United Pictures revised its pending administrative claim for refund. 1999. Issue: What is the treatment of CTA findings of facts? Ruling: 52 .357. While the said petition was pending. it‟s claim for refund totaled P10. No. BIR filed a petition for certiorari in the Court of Appeals (CA) asserting that the CTA committed grave abuse of discretion when it granted United Pictures a tax refund. 169565 January 21. COMMISSIONER OF INTERNAL REVENUE. Aggrieved. the CTA rendered a decision in CTA Case No. 1998. it found that United Pictures understated its income. Thus.669) and claimed the creditable tax withheld in 1997 (or P6. Facts: On April 14. 1998.7 After trial. Because the BIR failed to act on its administrative claim. the CTA found that United Pictures complied with all the requirements for the refund of creditable withholding taxes. It added the amount of its 1996 tax liability (or P1.05. UNITED INTERNATIONAL PICTURES. Petitioner. respondent filed an administrative claim for refund of its excess income tax payments in 1997 amounting to P4. 2009) Issue: Findings of Facts by the CTA.243) as the amount of total refund. 2000. the CA affirmed the findings of the CTA and dismissed the petition. Nonetheless. respondent United International Pictures filed a petition for review in the Court of Tax Appeals (CTA) (CTA Case No. However.R. Neither party assailed the decision.578.327. thus.748.(29). On October 1.194. In view of the decision in CTA Case No.
manage and operate the power plant/station. PROVINCIAL TREASURER. 171470/ 30 January 2009) Facts: On January 11. retroactive to 1995. that these properties be dropped from the assessment roll pursuant to Section 206 of the LGC. For a fee. its findings of fact are binding on the Court unless such findings are not supported by substantial evidence. 1998. LA UNION.CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA). NAPOCOR elevated the issue to CBAA NAPOCOR appealed the LBAA ruling to the CBAA. No. 30026 to 30033 and 30037) with the LBAA. Bauang. thus.05. There is no reason to disturb the CTA‟s findings of fact. LA UNION and MUNICIPAL ASSESSOR OF BAUANG. Issues: 53 . LOCAL BOARD OF ASSESSMENT APPEALS (LBAA) OF LA UNION. BPPC moved to intervene on the ground that it has a direct interest in the outcome of the litigation. and not NAPOCOR. and assume and perform FPPC‟s obligations under the BOT agreement. The Municipal Assessor of Bauang then issued a Notice of Assessment and Tax Bill to BPPC assessing/taxing the machineries and equipments. For this reason. and. direct and exclusive user of the equipment and machineries. The CBAA subsequently dismissed the appeal based on its finding that the BPPC. 7160 (the Local Government Code or LGC). The petition asked that. (30). The BOT Agreement provided. the machineries covered by the tax declarations be exempt from real property tax under Section 234(c) of Republic Act No. via an Accession Undertaking. La Union.Under our tax system. The LBAA denied NAPOCOR‟s petition for exemption. vs. On October 5.892. the exemption under Section 234(c) does not apply. ( G. As pointed out by the CA. is the actual. First Private Power Corporation (FPPC) entered into a BOT agreement with NAPOCOR for the construction of the 215 Megawatt Bauang Diesel Power Plant in Payocpoc. the CTA exhaustively explained why it granted the refund albeit less than what respondent claimed. the CTA is a highly specialized body that reviews tax cases. NATIONAL POWER CORPORATION. 1993. The CTA concluded that United Pictures was entitled to refund but only to the extent of P6.R. NAPOCOR filed a petition (styled In Re Petition to Declare Exempt the Revised and Retroactive to 1995 Tax Declaration Nos. Petitioner.285. Section 234(c) of the LGC. for the creation of the Bauang Private Power Corporation (BPPC) that will own. BPPC will convert NAPOCOR‟s supplied diesel fuel into electricity and deliver the product to NAPOCOR. Respondents.
that it shall be responsible for the payment of all real estate taxes and assessments. direct. – the owner of a barge used in generating electricity under an agreement with NAPOCOR. et al. 54 . direct and exclusive user of the barge as required by Sec. can the GOCC be deemed the actual. 234 (c). The mere undertaking of petitioner NPC under Section 10. (c) [local water districts and] government-owned or –controlled corporations engaged in the [supply and distribution of water and/or] generation and transmission of electric power.). we hold that FELS is considered a taxable entity. and the rule that doubts should be resolved in favor of provincial corporations. the Province of Batangas. Inc. directly. The covenant is between FELS and NPC and does not bind a third person not privy thereto. Exempt from real property taxation are: (a) all machineries and equipment. Time and again. in this case. can it pass on its tax-exempt status to its BOT partner. We concluded in that case that we could not recognize the tax exemption claimed. The privilege granted to petitioner NPC cannot be extended to FELS.1 of the Agreement. Thus. Inc. What is the Real property tax implications of a Build-Operate-Transfer (BOT) agreement between a government-owned and controlled corporation (GOCC) that enjoys tax exemption and a private corporation? (2). since NAPOCOR was not the actual.(1). In FELS Energy. If not. Local Board of Assessment Appeals of Batangas. and exclusive user of machineries and equipment for tax exemption purposes? (3). Their agreement provided that NAPOCOR shall pay all of FELS‟ real estate taxes and assessments. The Province of Batangas (that was consolidated with NAPOCOR v. the Supreme Court has stated that taxation is the rule and exemption is the exception. the Province of Batangas assessed real property taxes against FELS Energy. v. and exclusively used by. Under the terms of the BOT Agreement. (b) [that are] actually. applying the rule of strict construction of laws granting tax exemptions. through the BOT agreement Ruling: NAPOCOR‟s basis for its claimed exemption – Section 234(c) of the LGC – is clear and not at all ambiguous in its terms. a private corporation. does not justify the exemption. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted.
Otherwise. The SSDA is a form of a savings deposit evidenced by a passbook and earning a higher interest rate than a regular savings account. not sufficient to support its claim for tax exemption. the depositor will not earn the preferred interest 55 .Consistent with the BOT concept and as implemented. vs. cannot be construed as a certificate of deposit subject to DST under Section 180 of the 1977 NIRC. (31). BPPC – the ownermanager-operator of the project – is the actual user of its machineries and equipment. 170574/ 30 January 2009) Facts: PBCORP is a domestic corporation duly licensed as a banking institution which offered for the taxable years 1996 and 1997 "Special/Super Savings Deposit Account" SSDA to its depositors. It further insists that the SSDA.R. on SSDA. Issue: Is the SSDA product considered as “certificate of deposit drawing interest " as used in Section 180 of the 1977 NIRC and therefore subject to DST? Ruling: Based on these features. the money is subject to a holding period in order to earn a higher interest rate. respectively. while NAPOCOR‟s is contingent and. Section 180 of the 1977 NIRC. Petitioner. Although the money placed in the SSDA can be withdrawn anytime. CIR assessed the bank of deficiency documentary stamp taxes (DST) for the taxable years 1996 and 1997. BPPC‟s ownership and use of the machineries and equipment are actual. Respondent. The bank maintains that the tax assessments are erroneous because Section 180 of the 1977 NIRC does not include deposits evidenced by a passbook among the enumeration of instruments subject to DST. in case of premature withdrawal. at this stage of the BOT Agreement. as amended and in particular merely refers to certificates of deposits drawing interest.). it is clear that the SSDA is a certificate of deposit drawing interest subject to DST even if it is evidenced by a passbook and nonnegotiable in character: 1. INC. Petitioner asserts that the language of the law is clear and requires no interpretation. and immediate. COMMISSIONER OF INTERNAL REVENUE. direct. being issued in the form of a passbook. PHILIPPINE BANKING CORPORATION (NOW: GLOBAL BUSINESS BANK. No. (G. Petitioner explains that the SSDA is a necessary offshoot of the deregulated interest rate regime in bank deposits.
1998. against Agencia Exquisite of Bohol.000. vs. This condition is identical to that imposed on a time deposit that is withdrawn before maturity. 84-PT-13-95-98-5-0-63. pursuant to then Section 116 of the National Internal Revenue Code of 1977. then Commissioner of Internal Revenue Jose U. Exquisite Pawnshop and Jewelry. 1991. (AEBI) demanding payment in the sum of P106. 3. 15-91 classifying the pawnshop business as akin to the lending investor‟s business activity "which is broad enough to encompass the business of lending money at interest by any person whether natural or juridical" and imposing on both a 5% lending investor's tax based on their gross income. dated April 20.538. 158644/ 12 February 2009) Facts: On March 11. Agencia Exquisite of Bohol.000. Inc. 53 (32). Aside from the substantial amount of money required. as amended. if the depositor withdraws the money and the balance falls below the "minimum balance" of P50. Issue: 56 . 2.59 representing the 5% lending investors‟ tax for 1995. 1999. in an SSDA. Ong issued Revenue Memorandum Order (RMO) No. ( GR 157359/ 12 February 2009). Commissioner of Internal Revenue ( G. Pursuant to these issuances. Inc. Commissioner of Internal Revenue (GR 150141/ 12 February 2009). AEBI filed its Administrative Protest which the BIR Revenue Regional Director denied in a Letter-Decision dated February 3. On the issue of penalty. the interest is reduced. this amount must be maintained within a certain period just like a time deposit.R No. the Bureau of Internal Revenue (BIR) issued Assessment Notice No. This amount is even larger than what is needed to open a time deposit which is P20. Inc. plus interest and charges On June 28. Commissioner of Internal Revenue versus Agencia Exquisite of Bohol. Subsequently the issue reached the Supreme Court. Inc. the depositor must place a substantial amount of money of not less than P50.ranging from 8% or higher but only the normal interest rate on regular savings deposit.000. 1998. In order to qualify for an SSDA. vs.
R. Lhuillier Pawnshop. (G. while pawnshops are indeed engaged in the business of lending money. THERESE JUNE D.. P159.96. 2009) Facts: On June 20. Again. 273.242. 1993.995. in their capacities as President. COMMISSIONER OF COURT OF APPEALS.363. LUCAS G. The notice contained a schedule for preliminary conference. de los Reyes.. this Court reiterated its ruling in Lhuillier that pawnshops are not included in the term lending investors for the purpose of imposing the 5% percentage tax. On October 12. ADAMSON. in Commissioner of Internal Revenue v. ( G. COURT OF APPEALS and LIWAYWAY VINZONS-CHATO. and SARA S. 2009) INTERNAL REVENUE. Trustworthy Pawnshop. Respondents. DE LOS REYES. Therese June D. DE LOS REYES. as amended by Executive Order No.21 was paid as capital gains tax for the transaction. AMC sold to APAC Philippines. Inc. No. Petitioner. The shares were valued at P7. vs. another 229. No.789. and SARA S. 1990.Are pawnshops subject to 5% gross income lending investor‟s tax? Ruling: In Commissioner of Internal Revenue v. Inc. (33). Adamson.360. (AAI) to APAC Holding Limited (APAC). 1990. Michel J. 1990. vs. LUCAS G. Lucas G. Petitioners. Adamson and Sara S. 124557/May 21. ADAMSON. they cannot be deemed "lending investors" for the purpose of imposing the 5% lending investor‟s tax. Thus. 57 . 120935/May 21. Inc. the CIR issued a "Notice of taxpayer" to AMC.00. in her capacity as Commissioner of the Bureau of Internal Revenue. ADAMSON MANAGEMENT CORPORATION.00. On October 15. this Court held that pawnshops are not included in the term lending investors for the purpose of imposing the 5% percentage tax under then Section 116 of the National Internal Revenue Code of 1977. Respondents. Treasurer and Secretary of Adamson Management Corporation.897 common shares of stock in Adamson and Adamson.1 On June 22.870 common shares of stock in AAI for P17. THERESE JUNE D.718. ADAMSON. Lucas Adamson and AMC sold 131.R. Inc. ADAMSON. COURT OF TAX APPEALS. AMC paid the capital gains tax of P352. informing them of deficiencies on their payment of capital gains tax and Value Added Tax (VAT).
Adamson and Sara S. State Prosecutor found probable cause. the CIR filed with the Department of Justice (DOJ) her Affidavit of Complaint against AMC. petitioner filed an Affidavit of Complaint with the Department of Justice. On October 10. and there were still pending relevant Supreme Court and CTA cases. and acting thereupon. 1994.On October 22. Adamson. Lucas G. Therese June D. Adamson. in relation to Section 100. the Commissioner filed a Petition for Review with the Court of Appeals assailing the trial court‟s dismissal of the criminal cases alleging that a formal assessment is not a condition prerequisite prior to the filing of the criminal complaints against taxpayers. in order to commence criminal action against the latter for tax evasion. as penalized under Section 255. It ruled that the complaints for tax evasion filed by the CIR should be regarded as a decision of the Commissioner regarding the tax liabilities of the petitioners. Therese June D. and 110. in Criminal Case Nos. assessment of tax deficiency is not required because the offense of tax evasion is complete or consummated when the offender has knowingly and willfully filed a fraudulent return with intent to evade the tax. Lucas G. In parallel circumstances. They filed a Motion to Dismiss or Suspend the Proceedings.R. the trial court denied the motion. which has jurisdiction to determine the civil and criminal tax liability of the respondents therein. 1993. It further held that the said cases cannot proceed independently of the assessment case pending before the CTA. On March 21. in relation to Section 252 (b) and (d) of the National Internal Revenue Code (NIRC). No. without an accompanying assessment of the tax deficiency of private respondents. 124557: On December 1. the trial court granted the Motion. A Motion for Reconsideration was however filed. this time assailing the trial court‟s lack of jurisdiction over the nature of the subject cases. and appealable to the CTA. AMC. and for violation of Section 253. 1993. Adamson and Sara S. de los Reyes for tax evasion in violation of Sections 45 (a) and (d). the following events preceded G. 1994. They invoked the grounds that there was yet no final assessment of their tax liability. On August 8. the Court of Appeals reversed the trial court‟s decision and reinstated the criminal complaints. She argued that the criminal complaints for tax evasion may proceed independently from the assessment cases pending before the CTA. petitioners were charged before the RTC of Makati. 1994. 94-1842 to 94-1846. The appellate court held that. de los Reyes filed a letter request for re-investigation with 58 . 1995. On April 29. Initially. It ruled that private respondents filed false and fraudulent returns with intent to evade taxes. After the preliminary investigation. in a criminal prosecution for tax evasion.
the Commissioner filed the petition for review under G. It did not state a demand or a period for payment. In the present case. and it must be in accord with Section 6 of Revenue Regulation No. not to the taxpayers.the Commissioner of the "Examiner‟s Findings" earlier issued by the Bureau of Internal Revenue (BIR). 1994. 124557 Issues: (1). on the ground that it was premature. Does the CTA have jurisdiction over both civil and criminal cases involving tax? RULING: (1). She contended that.R. She maintained that she had not yet issued a formal assessment of tax liability. Is an “affidavit complaint” executed by the CIR providing for the computation of tax considered as a valid assessment? (2). which pointed out the tax deficiencies. with regard to the protest provided under Section 229 of the NIRC. it was addressed to the justice secretary. there must first be a formal assessment issued by the Commissioner. No. The Commissioner moved to dismiss the petition. and the tax deficiency amounts mentioned in her criminal complaint with the DOJ were given only to show the difference between the tax returns filed and the audit findings of the revenue examiner. the revenue officers‟ Affidavit merely contained a computation of respondents‟ tax liability. Therese June D. An 59 . The Court of Appeals sustained the CTA‟s denial of the Commissioner‟s Motion to Dismiss. Adamson. The Commissioner appealed to the Court of Appeals on the ground that the CTA acted with grave abuse of discretion. de los Reyes filed a Petition for Review with the CTA. as she had not yet issued a formal assessment of the tax liability of therein petitioners. Adamson and Sara S. 1994 before the Commissioner could act on their letterrequest. On March 15. AMC. Lucas G. Worse. the CTA denied the Motion to Dismiss. On September 19. 12-85. They assailed the Commissioner‟s finding of tax evasion against them. Is assessment required before the filing of the criminal complaint? (4). and the filing of the criminal informations with the RTC as a denial of petitioners‟ protest regarding the tax deficiency. It considered the criminal complaint filed by the Commissioner with the DOJ as an implied formal assessment. Is the recommendation letter of the CIR addressed to the DOJ considered as a valid assessment? (3). Thus.
the said recommendation letter served merely as the prima facie basis for filing criminal informations that the taxpayers had violated Section 45 (a) and (d). In fine. Therese June D. What private respondents received was a notice from the DOJ that a criminal case for tax evasion had been filed against them. (2). nor a period for payment set therein. That the BIR examiners‟ Joint Affidavit attached to the Criminal Complaint contained some details of the tax liabilities of private respondents does not ipso facto make it an assessment. Adamson. and 110. A written communication containing a computation by a revenue officer of the tax liability of a taxpayer and giving him an opportunity to contest or disprove the BIR examiner‟s findings is not an assessment since it is yet indefinite. The purpose of the Joint Affidavit was merely to support and substantiate the Criminal Complaint for tax evasion. the commissioner opted instead to file a criminal case for tax evasion. 2. and for violation of Section 253. it was not meant to be a notice of the tax due and a demand to the private respondents for payment thereof. not to issue an assessment. Although the revenue officers recommended the issuance of an assessment. The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint for tax evasion. The Commissioner denied that she issued a formal assessment of the tax liability of AMC. Even a cursory perusal of the said letter would reveal three key points: 1. We rule that the recommendation letter of the Commissioner cannot be considered a formal assessment. in relation to taxation. in relation to Section 252 9(b) and (d) of the Tax Code. is simply understood to mean: "A notice to the effect that the amount therein stated is due as tax and a demand for payment thereof.assessment. In the context in which it is used in the NIRC. not a notice that the Bureau of Internal Revenue had made an assessment. She admits though that she wrote the recommendation letter addressed to the Secretary of the DOJ recommending the filing of criminal complaints against AMC and the aforecited persons for fraudulent returns and tax evasion. an assessment is a written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed. Lucas G." Even these definitions fail to advance private respondents‟ case. Clearly. Adamson and Sara S. There was no demand made on the taxpayers to pay the tax liability. It was not addressed to the taxpayers. in relation to Section 100.24 60 . The letter was never mailed or sent to the taxpayers by the Commissioner. de los Reyes." "Fixes the liability of the taxpayer and ascertains the facts and furnishes the data for the proper presentation of tax rolls. 3. as penalized under Section 255.
at any time within ten years after the discovery of the falsity. and 110.The latest statute dealing with the jurisdiction of the CTA is Republic Act No. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return. with intent to evade and defeat the tax. Limited. the gross disparity in the taxes due and the amounts actually declared by the private respondents constitutes badges of fraud. (3). there was a preliminary finding of gross discrepancy in the computation of the capital gains taxes due from the sale of two lots of AAI shares. the said recommendation letter served merely as the prima facie basis for filing criminal informations that the taxpayers had violated Section 45 (a) and (d). Section 269 of the NIRC (now Section 222 of the Tax Reform Act of 1997) provides: In the case of a false or fraudulent return with intent to evade tax or of failure to file a return. 9282 which expanded the jurisdiction of the CTA.In fine. That in a fraud assessment which has become final and executory. the Commissioner has not issued an assessment of the tax liability of private respondents. first to APAC and then to APAC Philippines. and for violation of Section 253. or a proceeding in court after the collection of such tax may be begun without assessment. the tax may be assessed. or in cases where the Commissioner has not acted within the period prescribed by the NIRC. 61 . fraud or omission: Provided. a proceeding in court after the collection of such tax may be begun without assessment. and paid the taxes they have declared due therefrom. An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax. We now go to the issue of whether the CTA has no jurisdiction to take cognizance of both the criminal and civil cases here at bar. In the cases at bar. Upon investigation of the examiners of the BIR. the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for collection thereof. they did not change the jurisdiction of the CTA to entertain an appeal only from a final decision or assessment of the Commissioner. the rulings of the Commissioner are appealable to the CTA. (4). in relation to Section 100. The law is clear. and the government‟s failure to discover the error and promptly to assess has no connections with the commission of the crime. The private respondents had already filed the capital gains tax return and the VAT returns. When fraudulent tax returns are involved as in the cases at bar. A crime is complete when the violator has knowingly and willfully filed a fraudulent return. as penalized under Section 255. in relation to Section 252 9(b) and (d) of the Tax Code. 1125 (An Act Creating the Court of Tax Appeals) as amended. Under Republic Act No. However. Arguably. The examiners also found that the VAT had not been paid for VAT-liable sale of services for the third and fourth quarters of 1990.
Petitioner.(34). 2002 the respondent. Shell was assessed and required to pay customs duties and internal revenue taxes. Shell sent a letter objecting to the cancellation of the TCCs claiming that it had been denied due process when Shell‟s evenly dated letter-objection was not considered. February 20. Respondent. formally demanded from Shell payment of the amounts corresponding to the listed TCCs previously cancelled. After conducting a post-audit investigation. ( G. both the BIR and the BOC accepted and allowed Shell to use them to pay and settle its tax liabilities. the Secretary of the DOF. informed Shell that it was cancelling the TCCs transferred to and used as payment by the oil company. In its reply dated December 23. or even Shell‟s participation in the alleged fraud. Shell‟s November 3 letter was not acted upon and instead. 1999 was sent to Shell requiring it to replace the amount equivalent to the amount of the cancelled TCCs used by Shell to satisfy its customs duties and taxes. Shell settled its liabilities for customs duties and internal revenue taxes using tax credit certificates (TCCs) that were transferred to it for value by several Board of Investment (BOI)-registered companies. 1999. vs. Except for the amount due. it discovered that the TCCs had been fraudulently secured by the original grantees who thereafter transferred them to Shell.R. through letters dated February 15. 1999. COMMISSIONER OF CUSTOMS. No. and the BOI. the Bureau of Internal Revenue (BIR). the Bureau of Customs (BOC). For these importations. 2009) Facts: Shell is a domestic corporation engaged in the importation of petroleum and its by-products into the country. In 1997 and 1998. 176380/June 18. No categorical finding however was made regarding Shell‟s participation in the fraud. Valera. had not been sufficiently established. On November 3. 1999. PILIPINAS SHELL PETROLEUM CORPORATION. the respondent‟s collection letters were worded. In view of the cancellation. the Secretary of Finance on behalf of One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (the Center). On the same date of November 3. a letter dated November 19. On the belief that the TCCs were actually good and valid. Shell maintained that the cancellation was improper since this was done without affording the corporation its right to due process. Shell was required to pay the BIR and BOC the amounts corresponding to the TCCs Shell had used to settle its liabilities. through Atty. composed of the following government agencies: the Department of Finance (DOF). Three years later. Deputy Commissioner for Revenue Collections Monitoring Group. as follows: 62 . and April 12. It further claimed that the existence of fraud in the issuance and transfer of the TCCs.
the respondent sought to recover the amounts covered by the cancelled TCCs. the Center‟s November 3 letter. In these collection cases. can be the subject of an appeal before the CTA. formal demand is hereby being made upon you to pay back the total amount of x x x within five (5) days from receipt thereof. Before Shell could reply to the said letters. b. None of these letters. and Shell paid these liabilities using the TCCs transferred to it as payment. however. Failure on your part to settle your obligation would constrain the Bureau of Customs to initiate legal action in the regular court. The parties argue over which act serves as the decision of the respondent which under the law. formally demanding the amount covered by the cancelled TCCs. Shell‟s import tax liabilities had long been computed and ascertained in the original assessments. signed by the Secretary of Finance. Shell received three sets of letters: a. Is this a tax protest case appealable to the CTA? (2). The present case does not involve a tax protest case within the jurisdiction of the CTA to resolve. Valera. and from which act the 30-day period to appeal shall be reckoned. Issues: (1). The letters merely reissued the original assessments 63 . the respondent‟s collection letters issued through Atty. can be considered as liquidation or an assessment of Shell‟s import tax liabilities that can be the subject of an administrative tax protest proceeding before the respondent whose decision is appealable to the CTA. the respondent‟s November 19 letter requiring it to replace the amount equivalent to the amount of the cancelled TCCs used by Shell. 2002 the summons in one of the three collection cases filed by respondent against Shell before the Regional Trial Court (RTC) of Manila.In as much as the same [TCCs] were reported as having been utilized to pay your government obligations earlier. informing it of the cancellation of the TCCs. Shell received on April 23. It is even an error to consider the letters as a "reassessment" because they refer to the same tax liabilities on the same importations covered by the original assessments. What is the proper remedy of Shell in invoking the validity of the TCC‟s? RULING: (1). Please consider this as our last and final demand. and c. In fact.
the issues it raised in its petition were all related to the fact and efficacy of the payments made. No inquiry can be made therein as to the merits of the original case or the justness of the judgment relied upon. 9257.A. When Shell went to the CTA. We hereby confirm that this assessment has long been final. These are payment and collection issues. not tax protest issues within the CTA‟s jurisdiction to rule upon. II. No. PART 2 ( REPUBLIC ACTS / REVENUE REGULATIONS/STATUTES) A. based on this case. Otherwise Known as the “ Expanded Senior Citizens Act of 2003 ” 64 . the tax liabilities of Shell under the original assessments were considered unpaid. and this recognition of finality removes all perceived hindrances. (2). 4-2006 Implementing the Tax Privileges Provisions of R. Shell‟s remedy against the cancellation should have been a certiorari petition before the regular courts. but by the Center. hence. where the assessment has already become final and executory. A case becomes ripe for filing with the RTC as a collection matter after the finality of the respondent‟s assessment. on account of the cancellation of the TCCs. specifically the genuineness of the TCCs. 2007 Revenue Regulations (1). However. the appropriate forum for Shell under the circumstances of this case should be at the collection cases before the RTC where Shell can put up the fact of its payment as a defense. to the continuation of the collection suits. Alternatively. As the CTA has no jurisdiction over decisions of the Center. Records do not show that Shell ever availed of this remedy. REVENUE REGULATIONS NO. not a tax protest case before the CTA. the absence of due process in the enforcement of the decision to cancel the TCCs. We declared on the matter of collection that: a suit for the collection of internal revenue taxes. the action to collect is akin to an action to enforce the judgment. and the application of estoppel. the facts surrounding the fraud in originally securing the TCCs. 1 – 2007 SUBJECT: Amending Revenue Regulations No. To be very precise.that were previously settled by Shell with the use of the TCCs. the letters and the actions for collection. Shell‟s petition before the CTA principally questioned the validity of the cancellation of the TCCs – a decision that was made not by the respondent CIR .
” (3). 8. REVENUE REGULATIONS NO. subject to the limitations as may be provided for by law. date of transaction and invoice number for every sale transaction to senior citizen. that any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or applied for a tax credit certificate which may be used in the payment of internal revenue taxes. VAT Payable (Excess Output) or Excess Input Tax . Otherwise Known as the Consolidated Value-Added Tax Regulations of 2005. the excess input tax shall be carried over to the succeeding quarter or quarters.2005. 16. sales discount granted.Salient Features: “ Sec.00 20. REVENUE REGULATIONS NO. Provided.110-7. which shall include the name of the senior citizen. Xxx xxx xxx. 14-2007: Tax on Non-governmental 65 . other implementing rules. – VAT on sales of goods or services with sales discounts granted by establishments enumerated under Section 8 hereof shall be computed in accordance with the following illustration: Amount of sale (without the VAT) Less: 20% sales discount P100. Salient Features: “ SEC. 4.60 Vatable sale P 80. 2-2007 Amending Certain Provisions of Revenue Regulations No. “xxxx If the input tax inclusive of input tax carried over from the previous quarter exceeds the output tax.60 P89. –x x x “(5) The business establishment giving sales discounts to qualified senior citizens is required to keep separate and accurate record of sales.00 9.00 Plus: 12% VAT (based on P80) Total amount to be paid by the senior citizen (2). “ Sec. gross sales/receipts. as well as. Basis of Computation of Value-Added Tax on Sale to Senior Citizens . OSCA ID. Availment by Establishments of Sales Discounts as Deduction from Gross Income . however. 10.
and e. SECTION 4.000.Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities Salient Features: Microfinance . exemption from taxes for which they are directly liable. however. minimum requirements for savings. the maximum individual loan amount provided for microfinance loans is P150.00) – 66 . 3% percentage tax under Section 116 of the Tax Code of 1997. subject to periodic determination of the Department of Trade and Industry to reflect economic changes. that the other party to the taxable document/transaction who is not exempt shall be the one directly liable for the tax.000.00 B. Documentary stamp tax (DST) imposed under Title VII of the Tax Code of 1997. as enumerated in paragraph A of this Section.00. Value -added tax (VAT).000. Consistent with the provisions of RA 8425.is a credit and savings mobilization program exclusively intended for the poor to improve the asset base of households and expand the access to savings of the poor.000. c. Annual Registration Fee of P500. Income tax from operations b. provided. Tax Treatment of Microfinance Services Rendered by Cooperatives – Duly registered credit cooperatives dealing/transacting with members only shall be exempt from paying the following taxes for which they are directly liable: a. For credit cooperatives with accumulated reserves and undivided net savings of more than Ten Million Pesos (P10.free arrangements. collateral. alternative loan repayments. simplified loan application procedures.00) – i.000. and d. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans. group character loans. For cooperatives with accumulated reserves and undivided net savings of not more than Ten Million Pesos (P10. Duly registered cooperatives dealing/transacting business with both members and nonmembers a. as amended. b. and small denominated savers' instruments.
regardless of classification. as amended. shall be subject to tax under the Tax Code of 1997. The tax base for credit cooperatives liable to income tax shall be the net surplus arising from business transactions with non-members. provided that the same is not consequently imposed on interest individually received by members. are exempt from income taxes. as amended. all income of cooperatives which undertake microfinance activities in addition to their registered purpose except credit cooperatives and multi-purpose cooperatives which have one of its business activities as those performed by credit cooperatives. Exemption from VAT under Section 109(M) and 3% tax under Section 116. all cooperatives. 1987 (i. and which are not in respect of their registered activities covered by Section 30 of the Tax Code of 1997. whether dealing purely with members or both members and nonmembers. in respect of income received by them as such. Notwithstanding the foregoing. as amended.e. provided. that at least twenty five percent of the net income of the cooperative is returned to the members in the form of interest and/or patronage fund. they shall be subject to income tax at the full rate on the amount allocated for interests on capital. income of such NGOs from microfinance activities. after deducting the amounts from the statutory reserve funds as provided for in the Cooperative Code and other laws. However. including those arising from all microfinance activities. the ten year period shall be reckoned from March 10. ii. regardless of the disposition made of such income.. Moreover. Subject to all other internal revenue taxes unless otherwise provided by law. Exemption from income tax for a period of 10 years from the date of registration with the CDA. both of the Tax Code. the tax exemption is valid only up to March 10. 93. For cooperatives whose exemption were removed by Executive Order No. shall be subject to appropriate taxes under the Tax Code of 1997. 67 . Tax Treatment of Microfinance Services Rendered by Nongovernmental Organizations All NGOs falling under the enumeration of Section 30 of the Tax Code of 1997. as amended. are considered as withholding agents and are required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding.i. 1997) After the lapse of such ten year period. This is applicable to all cooperatives. as amended. SECTION 5. iii.
500. 24. goodwill. Rice subsidy of P1.00 .00 or one (1) sack of 50 kg. whether or not engaged in microfinance activities. “An Act Amending Sections 22. or efficiency of his employees such as (1). 9504. 10 . REVENUE REGULATIONS NO. 51.stock.00 per annum. 79 of RA 8424 as amended “ (Effectivity Date: 06 July 2008) REVENUE REGULATIONS NO.000. 51. are still also required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding as specified in Revenue Memorandum Circular No. 76-2003 B. 8424. (2) Uniform and Clothing allowance not exceeding P4.500. 34. 5-2008: Further Amendments to Revenue Regulations Nos.Similarly. 2008 (1).2000. With Respect to “De Minimis Benefits” . Salient Features: “xxxxx The following shall be considered as “de minimis” benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees: xxxxx” “xxxxxxx The term “DE MINIMIS” benefits which are exempt from the fringe benefit tax shall. 24. 2-98 and 3-98. in general. 10. REPUBLIC ACT NO 9504 “An Act Amending Sections 22. as Last Amended by Revenue Regulations No. rice per month amounting to not more than P1 . contentment. non-profit NGOs.2008 Implementing Pertinent Provisions of Republic Act No. Otherwise Known as The National Internal Revenue Code ” Relative to the Withholding of Income Tax on Compensation and Other Concerns”. 34. 68 . Xxxxxx” (2). non. be limited to facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health. and 79 of Republic Act No. 35. as Amended. 35.
00 per employee per annum.Salient Features: (A). Provided that. not subject to withholding tax on compensation income of both managerial and rank and file employees: (a) Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year and the monetized value of leave credits paid to government officials and employees.00 per annum..00 ceiling of „other benefits‟ excluded from gross income under Section 32(b)(7)(e) of the Code. e. the excess of the „ de minimis’ benefits over the irrespective ceilings prescribed by these regulations shall be considered as part of „other benefits‟ and the employee receiving it will be subject to tax only on the excess over the P30. The amount of ‘de minimis’ benefits conforming to the ceiling herein prescribed shall not be considered in determining the P30.00 or one (1) sack of 50-kg. (i) Flowers. and (j) Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage.000.500. etc. on account of illness. (e) Actual yearly medical benefits not exceeding P10.g.00 per employee per semester or P125 per month. e. rice per month amounting to not more than P1. with an annual monetary value not exceeding P10. (f) Laundry allowance not exceeding P300.00 per month.00 per annum. DE MINIMIS BENEFITS “XXXXX (2). fruits. The following shall be considered as "de minimis" benefits not subject to income tax..000.500. which must be in the form of a tangible personal property other than cash or gift certificate. marriage. books.000 .00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees. (b) Medical cash allowance to dependents of employees not exceeding P750. for length of service or safety achievement.00. 69 .00 ceiling.g.. (d) Uniforms and clothing allowance not exceeding P4. or similar items given to employees under special circumstances. birth of a baby. (c) Rice subsidy of P1.000.000. (g) Employees achievement awards. (h) Gifts given during Christmas and major anniversary celebrations not exceeding P5. hence.000.
Holiday pay. Any amount given by the employer as benefits to its employees. honoraria. The aforesaid income shall likewise be exempted from income tax. except income subject to final tax. MWEs receiving other income. applicable to the place where he/she is assigned. just like an employee receiving compensation income beyond the SMW. benefits in excess of the allowable statutory amount of P30. Provided.Provided. fringe benefits. or practice of profession. (B).00. as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE).000. from withholding tax. consequently. therefore. overtime pay. taxable allowances and other taxable income other than the SMW. in addition to compensation income are not exempted from income tax on their entire income 70 . that an employee who receives/earns additional compensation such as commissions. Minimum Wage Earners The following income payments are exempted from withholding tax on compensation: the requirements of (13) Compensation income of MWEs who work in the private sector and being paid the Statutory M inimum Wage (SMW). The RTWPB of each region shall determine the wage rates in the different regions based on established criteria and shall be the basis of exemption from income tax for this purpose. that MWEs receiving „other benefits‟ exceeding the P30. overtime pay. shall constitute as deductible expense upon such employer. „Statutory Minimum Wage‟ (SMW) shall refer to the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB). whether classified as “ de minimis” benefits or fringe benefits. hazard pay and night shift differential pay shall not enjoy the privilege of being a MWE and.000. such as income from the conduct of trade. the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Bureau of Internal Revenue . as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/Natio nal Wages and Productivity Commission (NWPC). Where compensation is paid in property other than money. night shift differential pay and hazard pay earned by the aforementioned MWE shall likewise be covered by the above exemption. holiday pay.00 limit shall be taxable on the excess benefits. however. as well as on his salaries. wages and allowances. further . business. his/her entire earnings are not exempt from income tax and.
however. 2305). ( C ). 16 . not married. . in computing taxable income subject to income tax under Sections 24(A). chiefly dependent and living with the taxpayer. whichever is applicable . 3. (C). if incapable of self-support by reason of physical or mental defect. 1902) or in the Certificate of Update of Exemption and of Employer‟s and Employee‟s Information (BIR Form No.000. the SMW. as amended. Additional exemption is at P 25. Dependent pertains to a child of whatever kind and status.00 per child. overtime pay. that where the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign sources. 8424. AS AMENDED BY SECTION 3 OF REPUBLIC ACT NO. is hereby amended to read as follows: "SEC. Personal Exemptions/Additional Exemptions Individual taxpayers regardless of status are entitled to P50. Section 34(L) of Republic Act No. otherwise known as the National Internal Revenue Code of 1997. 25(A). notwithstanding. and regardless of age. 34.earned during the taxable year. Provided. (D). The husband shall be the proper claimant of the additional exemption for qualified dependent children unless he explicitly waives his rig ht in favor of his wife in the Application for Registration (BIR Form No. Holiday pay. 26. and 28(A)(1). Deductions from Gross Income. (B). DEALING ON THE OPTIONAL STANDARD DEDUCTION (OSD) ALLOWED TO INDIVIDUALS AND CORPORATIONS IN COMPUTING THEIR TAXABLE INCOME Salient Features: SEC.2008 IMPLEMENTING THE PROVISIONS OF SECTION 34(L) OF THE TAX CODE OF 1997. the employed spouse within the Philippines shall be automatically entitled to claim the additional exemptions for children. not more than 21 years of age. Optional Standard Deduction (OSD) REVENUE REGULATIONS NO.Except for taxpayers earning compensation income arising from personal services rendered under an employeremployee relationship where no deductions shall be allowed under this Section other than under Subsection (M)hereof.000 personal exemption. night shift differential pay and hazard pay shall still be exempt from withholding tax. 9504. This rule. 27(A). not gainfully employed. there shall be allowed the following deductions from the gross income: 71 .
That except when the Commissioner otherwise permits. Taxable estates and trusts 2. Resident Alien iv. . as may be required by the rules and regulations promulgated by the Secretary of Finance. "x x x." SEC."(A) Expenses. Resident Citizen ii. Resident foreign corporation ( C ). may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts. Domestic corporation ii. PERSONS COVERED. . Non-resident citizen iii. he shall be considered as having availed himself of the deductions allowed in the preceding Subsections. or the said corporation shall keep such records pertaining to his gross income as defined in Section 32 of this Code during the taxable year. Such election when made in the return shall be irrevocable for the taxable year for which the return is made: Provided. further. if applicable): 1. it may elect a standard deduction in an amount not exceeding forty percent (40%) of it gross income as defined in Section 32 of this Code. Unless the taxpayer signifies in his return his intention to elect the optional standard deduction. other special laws. the said individual shall keep such records pertaining to his gross sales or gross receipts. an individual subject to tax under Section 24. Individuals: i. items of ordinary and necessary expenses allowed under Sections 34 (A) to (J) and (M). That an individual who is entitled to and claimed for the optional standard shall not be required to submit with his tax return such financial statements otherwise required under this Code: Provided. "(L) Optional Standard Deduction. "(M) x x x. Corporations: i. as the case may be. In the case of a corporation subject to tax under section 27(A) and 28(A)(1). 2009 72 . Section 37.In lieu of the deductions allowed under the preceding Subsections.e. upon recommendation of the Commissioner.The following may be allowed to claim OSD in lieu of the itemized deductions (i. 2. other than a nonresident alien.
computerized tomography scans and blood tests). Otherwise Known as the Magna Carta for Persons with Disability. Medical and dental privileges in private facilities. in coordination with the Philippine Health Insurance Corporation (Philhealth). SEC.g. as a result of mental. concert halls. Sports and recreation centers. viz: 1.. SALES DISCOUNTS WHICH MAY BE CLAIMED BY PERSONS WITH DISABILITY. 9442.g. aircon fares and on public railways such as LRT. If the promotional fare discount is higher than the 20% discount privilege. a record of such an impairment. in coordination with Philhealth. physical or sensory impairment to perform an activity in a manner or within the range considered normal for human being. Disability – shall mean a physical or mental impairment that substantially limits one or more psychological. circuses. Theaters.. REVENUE REGULATIONS NO. All drugstores regarding purchase of medicine. Domestic air and sea transportation based on the actual fare except promotional fare. x-rays. MRT. Land transportation privileges in bus fares such as ordinary. carnivals and other similar places of culture. 4. and 6. or being regarded as having such an impairment. Medical and dental privileges in government facilities. computerized tomography scans and blood tests) subject to guidelines to be issued by the DOH. and such other similar infrastructure 73 . physiological or anatomical function of an individual or activities of such individuals. leisure and amusement. entitled “ An Act Amending Republic Act 7277. subject to guidelines to be issued by the DOH. such as but not limited to diagnostic and laboratory fees (e. 3.(1). Hotels and similar lodging establishments and restaurants. PNR.” Relative to the Tax Privileges of Persons with Disability and Tax Incentives for Establishments Granting Sales Discount Salient Features: Person with disability – shall refer to an individual suffering from restriction or different abilities. 3. cinema houses. the person with disability may choose the promotional fare and should no longer be entitled to the 20% discount privilege. including professional fees of attending doctors. 3. and 7. x-rays. 5. such as but not limited to diagnostic and laboratory fees (e. 1-2009 Rules and Regulations Implementing Republic Act No. 2. Persons with disability shall be entitled to claim at least twenty percent (20%) discount from the following establishments relative to the sale of goods or services for their exclusive use or enjoyment.
(2).57. 10-2009 Amending Further Secs.Five percent (5%).57.2. 4.3 of Revenue Regulations No. clarifying that sub-paragraph (W) as recently issued under Revenue Regulations No. established and operated by public or private entity. REVENUE REGULATIONS NO. “Sec.57. and Other Concerns Salient Features: Income payments made by political parties and candidates of local and national elections of all their campaign expenditures. SUBJECT 2-98.” 74 .2: xxx xxx xxx “(D) All individuals. Toll fees of skyways and expressways are likewise subject to at least 20% discount. 2. as amended.3 Persons required to deduct and withhold – The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.Establishments granting sales discounts to persons with disability on their sale of goods and/or services specified under Section 3 above shall be entitled to deduct the said sales discount from their gross income. this privilege can be availed only by a person with disability owning the vehicle. juridical persons and political parties.98.57. 2. as amended. 8-2009 Amending Further Secs.57.58 of Revenue Regulations No. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM GROSS INCOME . SEC. Subjecting to Creditable Withholding Tax the Income Payments Made by Political Parties and Candidates of Local and National Elections of All Their Campaign Expenditures and Income Payments Made by an Individual or Juridical Person Forming Part of Their Campaign Contributions to Candidates of Local and National Elections and to Political Parties REVENUE REGULATIONS NO. . however. with respect to their income payments made as campaign expenditures and/or purchase of goods and services intended as campaign contributions.that will be constructed.2 and 2. 2. and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates . 8-2009 should be sub-paragraph (X).2 and 2.
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