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Tax Remedies PDF
Tax Remedies PDF
– As regards Sec 110, while the law only provides for a tax
credit, a taxpayer who erroneously or excessively pays his
output tax is still entitled to recover the payments either
as a tax credit or refund. In this case, since petitioner has
available TIT, it filed a claim for refund. Thus, there is no
reason for denying its claim for tax refund/credit.
– The dispositive portion of our Sept 4, 2012 Decision,
directed CIR to either refund or issue TCC. We did not
outrightly direct the cash refund.
– In the earlier Fort Bonifacio case, we directed CIR to either
refund or issue TCC. This decision became final and
executory and entry of judgment was made in due course.
FORT BONIFACIO DEV CORP v. CIR & RDO, TAGUIG,
G.R. 173425, Jan 22, 2013
• FACTS
– Philacor is a domestic corporation engaged in retail financing.
Buyer of appliance executes a promissory note in favor of the
appliance dealer. Such promissory note is subsequently assigned
by the appliance dealer to Philacor.
– LA was issued and PAN was later on issued by BIR against
Philacor. BIR assessed deficiency DST on all promissory notes
purchased by Philacor. Philacor argued that the accredited
appliance dealers were required by law to affix DST until the
enactment of RA 7660, which took effect on Jan 15, 1994.
– Philacor filed petition for review. CTA held Philacor liable for DST
on two transactions – issuance of PN and the subsequent
assignment in favor of Philacor. MR filed with CTA division, but
denied. Appeal to CTA en banc made, and it ruled in favor of
BIR. Philacor then filed appeal to SC.
PHILACOR CREDIT CORP v. CIR, G.R. 169899, Feb 6,
2013
• SC RULING
– Philacor is not liable for DST on issuance of promissory notes.
– Who are liable to DST?
• Sec 173 names those who are primarily liable for DST and those who
would be secondarily liable. The persons primarily liable are the
person (1) making, (2) signing, (3) issuing, (4) accepting, or (5)
transferring the taxable document. Should these parties be exempted
from paying tax, the other party who is not exempt would then be
liable.
• Philacor did not make, sign, issue, accept or transfer the prom notes.
The acts of making, signing, issuing and transferring are unambiguous.
The buyers of appliances made, signed and issued the prom notes,
while the appliance dealer transferred these notes to Philacor, which
received or accepted them. “Acceptance” is, however, an act that is
not even applicable to promissory notes, but only to bills of exchange.
Its object to bind the drawee of a bill and make him an actual and
bound party to the instrument.
PHILACOR CREDIT CORP v. CIR, G.R. 169899, Feb 6,
2013
– In a ruling adopted by BIR as early as 1955, acceptance has been
given a narrow definition with respect to incoming foreign bills
of exchange, not the common usage of the word “accepting” as
in receiving.
– This ruling further clarifies that a party to a taxable transaction
who “accepts” any document in the ordinary meaning of the act
does not become primarily liable for the tax. In this regard, Sec
173 assumes materiality as it determines liability should the
parties who are primarily liable turn out to be exempted from
paying tax; the other party to the transaction then becomes
liable.
– RR 9-2000 interprets the law more widely so that all parties to a
transaction are primarily liable for the DST, and not only the
person making, signing, issuing, accepting or transferring the
same becomes liable as the law provides. But even under these
terms, the liability of Philacor is not a foregone conclusion.
PHILACOR CREDIT CORP v. CIR, G.R. 169899, Feb 6,
2013
– It would seem that Philacor is the person who ultimately benefits from
the issuance of the notes, if not the intended payee of these notes.
However, these observations pertain to facts and implications that are
found outside the terms of the documents and are contradictory to
their outright terms. To consider these externalities would go against
the doctrine that the liability for DST and the amount due are
determined from the document itself – examined through its form and
face – and cannot be affected by proof of facts outside it.
– Sec 42 of Regulation No. 26 (Mar 26, 1924) uses the word “can” which
is permissive, rather than the word “shall” which would make the
liability of the persons named definite and unconditional.
– We cannot interpret Sec 42 of Regulation 26 to mean that anyone who
“uses” the document, regardless of whether such person is a party to
the transaction, should be liable, as this reading would to beyond Sec
173 of the 1986 Tax Code – the law that the rule seeks to implement.
Implementing rules and regulations cannot amend a law for they are
intended to carry out, not supplant or modify, the law.
PHILACOR CREDIT CORP v. CIR, G.R. 169899, Feb 6,
2013
• Philacor is not liable for DST on assignment of promissory notes
– As an assignee or transferee of the prom notes, Philacor is not liable as
this transaction is not taxed under the law.
– CIR argues that DST is levied on the exercise of privileges thru the
execution of specific instruments or the privilege to enter into a
transaction. Thus, DST should be imposed on every exercise of the
privilege to enter into a transaction. There is nothing in Sec 180 of the
1986 Tax Code that supports this argument; the argument is even
contradicted by the way the provisions on DST were drafted.
– Philacor correctly pointed out that there are provisions in the 1997 Tax
Code that specifically impose the DST on the transfer and/or
assignment of documents evidencing particular transactions (Secs.
175, 176, 178, 198, 183-185, 194-195). We can safely conclude that
where the law did not specify that such transfer and/or assignment is
to be taxed, there would be no basis to recognize an imposition. The
list does not include the assignment or transfer of evidence of
indebtedness; rather, it is the renewal of these that is taxable.
PHILACOR CREDIT CORP v. CIR, G.R. 169899, Feb 6,
2013
• SC RULING
• 1. San Roque must comply with the 120-day waiting period.
This is mandatory and jurisdictional. Failure to comply
violates the doctrine of exhaustion of administrative
remedies and renders the petition PREMATURE and
without a cause of action; hence, the court cannot acquire
jurisdiction.
CIR v. SAN ROQUE POWER CORP
• 2. CTA charter: CTA can review on appeal decisions of
CIR involving claims for refunds, or in case of inaction,
which is deemed a denial. In this case, there is no CIR
decision to be reviewed by the CTA.
• 3. Art. 5, NCC: Acts executed against mandatory or
prohibited laws shall be void, except when the law
itself authorizes its validity. Here, there is no such law.
• 4. A person committing a void act contrary to the
mandatory provision of law cannot claim or acquire
any right from his void act. This doctrine is repeated in
Art. 2254, NCC.
PHILEX MINING CORP v. CIR
• PHILEX MINING v. CIR (2013)
• Oct 21, 2005 – Philex filed original VAT return for Q3
2005
• Mar 20, 2006 – It filed administrative claim with BIR
• Oct 17, 2007 – It filed petition for review with CTA
• SC RULING
• 1. Philex timely filed its administrative claim. Even if
the 2-year prescriptive period is computed from the
date of payment of the output tax under Sec 229, it
filed its claim on time.
PHILEX MINING CORP v. CIR
• 2. CIR had until July 17, 2006, the last day of the
120-day period, to decide Philex’s claim
• 3. Since CIR did not act on the claim on or before
July 17, 2006, Philex had until Aug 17, 2006, the
last day of the 30-day period, to file its judicial
claim.
• 4. However, Philex filed its judicial claim only on
Oct 17, 2007, or 426 days after the last day of
filing; hence, the case is dismissed for LATE
FILING.
FORT BONIFACIO DEV CORP v. CIR, G.R. 164155 &
175543, Feb 25, 2013
• FACTS
– In 1992, RA 7227 was enacted that created BCDA. On Feb 3, 1995,
BCDA established Fort Bonifacio Dev Corp, as a wholly-owned
government corporation.
– On Feb 7, 1995, RP transferred by land grant (thru Special Patent
3596) a 214-hectare land in Fort Bonifacio to FBDC, which in turn
executed a prom note for P71.2 B in favor of government. RP assigned
PN to BCDA, which assigned it back to FBDC as full payment of
subscriptions to FBDC’s authorized capital stock.
– On Feb 8, 1995, RP executed a Deed of Absolute Sale with Quitclaim in
favor of FBDC covering the 214 has for P71.2 B.
– On Feb 19, 1995, Reg of Deeds issued Original Cert of Title.
– On Feb 24, 1995, Congress enacted RA 7917, declaring exempt from all
forms of taxes the proceeds of government sale of Fort Boni land.
– Subsequently, BCDA sold at public bidding 55% of its shares in FBDC to
private investors.
FORT BONIFACIO DEV CORP v. CIR, G.R. 164155 &
175543, Feb 25, 2013
– On Sept 15, 1998, CIR issued LA for FBDC’s 1995 tax audit.
– On Dec 10, 1999, CIR issued FAN for def DST based on RP’s
sale to FBDC of Fort Boni land.
– FBDC protested the FAN. On Jan 6, 2000, FBDC wrote a
letter to CIR, invoking RA 7917.
– Since CIR did not act on protest, FBDC filed petition for
review after the lapse of 180-day period.
– On Mar 5, 2003, CTA rendered decision denying FBDC’s
petition and affirming DST assessment. Special patent was
treated as separate and distinct from Deed of Absolute
Sale. Special patent was exempt, but Deed of Sale was
not.
FORT BONIFACIO DEV CORP v. CIR, G.R. 164155 &
175543, Feb 25, 2013
• SC RULING
– Sec 28(A)(5), NIRC imposes 15% BPRT, but by virtue of tax
treaty, we are bound to extend to a branch in the Phil the
benefit of 10% BPRT.
• FACTS
– Prior to Jan 1, 1997, FTC cigarette brands were subject to ad
valorem tax under Sec 142, 1977 Tax Code.
– On Jan 1, 1997, RA 8240 became effective. This law shifts to
specific tax system in imposing excise taxes on cigarette brands
under Sec 145, 1997 Tax Code.
– On Dec 16, 1999, RR 17-99 was issued, to implement a 12%
increase of excise tax on cigarettes packed by machines by Jan 1,
2000. RR 17-99 provides that the new specific tax rate for any
existing brand packed by machine shall not be lower than the
excise tax that is actually being paid prior to Jan 1, 2000.
– FTC paid excise taxes on all its cigarettes removed from the
place of production, but subsequently filed claims for refund for
the period from Jan 1, 2000 to Dec 31, 2001.
– FTC filed petition for review in view of inaction by BIR.
CIR v. FORTUNE TOBACCO CORP, G.R. 167274-75 &
192576, Sept 11, 2013
– CIR filed MR, but this was denied on Mar 17, 2004.
– On Dec 10, 2003, CIR filed a petition for review with CA
questioning the CTA Resolution issued in CTA Cases 6365
and 6383.
– On Apr 28, 2004, CIR filed another petition with CTA
questioning CTA decision in CTA Case 6612.
– In consolidated CA decision dated Sept 28, 2004, CA
denied CIR’s petitions and affirmed FTC’s refund claims.
– MR filed with CA by CIR, but this was denied.
– On May 4, 2005, CIR filed petition for review on certiorari
with SC. Supplemental petition was filed.
– On July 21, 2008, SC affirmed the findings of CA and
granted refund.
CIR v. FORTUNE TOBACCO CORP, G.R. 167274-75 &
192576, Sept 11, 2013
• SC RULING
– The state of things under the premises ought not to
remain uncorrected. And the BIR cannot plausibly raise a
valid objection for such approach. BIR knew where it was
coming from when it appealed, first before the CA and
then to this Court, the award of refund to FTC and the
rationale underpinning the award. BIR cannot plausibly, in
good faith, seek refuge on the basis of slip on the
formulation of the fallo of a decision to evade a duty.
– On the other hand, FTC has discharged its burden of
establishing its entitlement to the refund. The favorable
rulings of the tax court, appellate court and finally, this
court, say as much.
CIR v. FORTUNE TOBACCO CORP, G.R. 167274-75 &
192576, Sept 11, 2013
– In the interest of justice and orderly proceedings, this Court
should make the corresponding clarification on the fallo of its
July 21, 2008 decision in GR Nos. 162274-75. It is an established
rule that when the dispositive portion of a judgment, which has
meanwhile become final and executory, contains a clerical error
or an ambiguity arising from an inadvertent omission, such error
or ambiguity may be clarified by reference to the body of the
decision itself.
– After scrutiny of the body of the decision, the Court finds it
necessary to render a judgment nunc pro tunc and address an
error in the fallo of said decision. The object of the judgment
nunc pro tunc is not the rendering of a new judgment and the
ascertainment of new rights, but is one placing in proper form
on the record, that has been previously rendered, to make it
speak the truth.
CIR v. FORTUNE TOBACCO CORP, G.R. 167274-75 &
192576, Sept 11, 2013
– Sec 145 states that during the transition period (i.e., within the next 3 years
from the effectivity of the Tax Code), the excise tax from any brand of
cigarettes shall not be lower than the tax due from each brand on 1 Oct 1996.
This qualification, however, is conspicuously absent as regards the 12%
increase which is to be applied on cigars and cigarettes packed by machine. By
adding the above qualification, RR 17-99 effectively imposes a tax which is the
higher amount between the ad valorem tax being paid at the end of the 3-
year transition period and the specific tax under paragraph C, as increased by
12% -- a situation not supported by the plain wording of Sec. 145 of the Code.
– This is not the first time that BIR officials had ventured in the area of
unauthorized administrative legislation. In CIR v. Reyes, respondent was not
informed in writing of the law and the facts on which the assessment of estate
taxes was made. She was merely notified of the findings. The court held in
case of discrepancy between the law as amended and the implementing
regulation based on the old law, the former necessarily prevails. The law must
still be followed, even though the existing regulation at that time provided for
a different procedure.
FIRST e-BANK TOWER CONDO CORP v. BIR, SCA 12-
1236, Sept 5, 2013
• CIR issued RMC 65-2012 dated Oct 31, 2012 which imposes income tax
and VAT on association dues, membership fees and other charges of
condominium corporations, which are non-stock, non-profit corporations.
• Petitioner averred the operative mandate of RMC is unjust, oppressive and
confiscatory.
– It is unjust, because it directly and actually burdens the unit owners with
income tax and VAT on their own money pooled together and spent
exclusively for the purpose of maintaining and preserving the building and its
premises which they themselves own and possess.
– To tax the collected association dues, membership fees and other assessments
is to diminish and impair the legitimate exercise of the owners’ right to
possess and enjoy one’s own property.
– It is oppressive and confiscatory, because it directly and actually exacts upon
the unit owners, comprising the condominium corporation, with the duty to
shell out additional sums of money to pay for income tax and VAT, when in
truth, petitioner is already in dire financial strait and hard up in its every day
corporate existence.
– It would violate the due process clause.
FIRST e-BANK TOWER CONDO CORP v. BIR, SCA 12-
1236, Sept 5, 2013
• Petitioner thru the Makati Commercial Estate Asso, Inc. has sent letter dated Dec
5, 2012 to BIR, requesting for deferment of the implementation, and another
letter dated Dec 19, 2012 for the attention of RDO, South Makati, announcing
continuing judicial consignation of income tax and VAT purportedly due under the
questioned RMC. It also alleged that petitioner has not committed any act to
breach RMC 65-2012, since any or all amounts of taxes due are placed in custodia
legis by way of continuing judicial consignation.
• BIR thru the OSG commented that declaratory relief is no longer proper since the
RMC already took effect on Oct 31, 2012. BIR Litigation Division alleged the
petition lacks proper or insufficient verification, and the petition should be
dismissed applying the doctrine of primary jurisdiction. Courts cannot and will not
determine a controversy on a question within the jurisdiction of the administrative
tribunal prior to the resolution of that question by said administrative tribunal.
Clearly, petitioner has not exhausted all administrative remedies prior to its resort
to this Court. The income tax and VAT should be remitted directly to the BIR; the
collection of the taxes should not be unduly delayed or hampered by incidental
matters. BIR said the RMC is already a clarificatory issuance of pertinent laws
under the NIRC and was issued to clarify the taxability of association dues and fees
FIRST e-BANK TOWER CONDO CORP v. BIR, SCA 12-
1236, Sept 5, 2013
• FACTS
– Based on the LN, CIR issued FAN on Dec 30, 2010 for
2007 deficiency income tax and VAT, which was
predicated solely on alleged undeclared purchase
transaction.
– Taxpayer protested the assessment by failing to state
the specific facts and law upon which it is based (i.e.,
the details of the discrepancy in the SLS submitted by
suppliers were not itemized), and since no action was
taken BIR on the protest within the 180 day period,
petitioner filed petition on Sept 16, 2011.
AGRINURTURE, INC v. CIR, CTA Case 8345, May 29,
2013
• CTA RULING
– Petitioner was informed of the factual and legal bases of the
assessment and was given opportunity to contest the same. There is
no reason for this Court to sustain petitioner’s allegation that
assessment was void for failure to state the assessment’s factual basis
inasmuch as it was based on examination by respondent of
petitioner’s tax returns and the TPI Relief per SLS submitted by
petitioner’s suppliers.
– Basic is the rule that assessments are presumed correct and made in
good faith. It is presumed, however, that such assessment was based
on sufficient evidence. This rule for tax initiated suits is premised on
several factors other than the normal evidentiary rule imposing proof
obligation on the petitioner-taxpayer: the presumption of
administrative regularity; the likelihood that taxpayer will have access
to relevant information; and the desirability of bolstering the record-
keeping requirements of the NIRC.
AGRINURTURE, INC v. CIR, CTA Case 8345, May 29,
2013
Email: vic.mamalateo@vcmlaw.com.ph
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