I. General Principles 1. Phil. Coconut Coconut Producers Producers vs vs Republic Republic G.R. 177857 177857 24 Jan Jan 2012 2012 - rcide rcide 2. C!R vs "# Pri$e %oldin&s %oldin&s GR 18'505 18'505 2( )eb 2010 *is p+r to t, destructiv destructive e )C"/ SM Prime and First Asia are Filipino domestic corporations. The BIR assessed them for VAT Deficiency Deficiency from cinema sales: SP Prime !ears "###$% First Asia !ear &'''% "###% "##"% and "##($. Both corporations protested the assessments )*t the +IR denied all of them. Respondents raised the matter ,ith the +TA -ia petition for re-ie,.
The +TA di-isi di-ision on r*led in their fa-or and stated stated that the acti-ity acti-ity of sho,in sho,in cinematora cinematoraphic phic films is not a ser-ice co-ered )y the VAT *nder the /IR+% )*t one co-ered )y am*sement ta0 *nder the 1ocal Go-ernment +ode. 2n reconsideration% the +TA en )anc affirmed the +TA di-ision and r*led that Section of the /IR+ sets forth an e0ha*sti-e en*meration of ,hat ser-ices are intended to )e s*)4ect to VA VAT. And And since the sho,in or e0hi)ition of motion pict*res% films or mo-ies )y cinema operators or proprietors is not amon the en*merated acti-ities contemplated in the phrase 5sale or e0chane of ser-ices%5 then ross receipts deri-ed )y cinema6 theater operators or proprietors from admission tic7ets in sho,in motion pict*res% film or mo-ie are not s*)4ect to VAT VAT. +IR ar*es that Section of the /IR+ is not e0ha*sti-e )eca*se it co-ers all sales of ser-ices *nless e0empted )y la,. Respondents% ho,e-er% ar*e that a plain readin of Section of the /IR+ of &''8 sho,s that the ross receipts of proprietors or operators of cinemas6theaters deri-ed from p*)lic admission are not amon the ser-ices s*)4ect to VAT. !""/ 92/ ross receipts deri-ed from admission tic7ets )y cinema6theater operators or proprietors are s*)4ect to VAT R!3G/
/o% they are not. 9hile the en*meration of ser-ices s*)4ect to VA VAT *nder Section of the /IR+ is not e0ha*sti-e )eca*se the ,ords% 5incl*din%5 5similar ser-ices%5 and 5shall li7e,ise incl*de%5 indicate that the en*meration is )y ,ay of e0ample only% +onress did not intend to co-er cinema6 theater operators or proprietors to )e co-ered )y VA VAT *nder the phrase 5similar ser-ices.5 To hold other, other,ise ise ,o*ld ,o*ld impos imposee an *nreas *nreasona ona)le )le )*rden )*rden on cinema cinema6th 6theat eater er ho* ho*ses ses operat operators ors or proprietors% ,ho ,o*ld )e payin an additional &#; VAT VAT on top of the (#; am*sement ta0 imposed )y Section &<# of the 1G+ of &''&% or a total of <#; ta0. S*ch imposition ,o*ld res*lt in in4*stice% as persons ta0ed *nder the /IR+ of &''8 ,o*ld )e in a )etter position than those ta0ed *nder the 1G+ of &''&. The po,er of ta0ation is sometimes called also the po,er to destroy. Therefore% it sho*ld )e e0ercised ,ith ca*tion to minimi=e in4*ry to the proprietary rihts of a ta0payer. It m*st )e e0ercised fairly% e>*ally and *niformly% lest the ta0 collector 7ill the 5hen that lays the olden e.5 And% in order to maintain the eneral p*)lic?s tr*st and confidence in the Go-ernment this po,er m*st )e *sed 4*stly and not treachero*sly. treachero*sly. '. "outh "outh ric rican an ir+a ir+as s GR 180' 180'5( 5( )eb )eb 1(6 2010 2010 *set o o o o
FA+TS: Petitioner is a forein corporation e0istin *nder the la,s of So*th Africa. It is an internal air carrier ,ith no landin rihts in the Philippines. It is not reistered ,ith the S@+. It only has a sales aent Aerotel$ ,hich sells passae doc*ments for offline caro and passeners )et,een ports o*tside Philippine territory. In "###% it paid Php &.8 million as ".; Gross Philippine Billins GPB$. In "##(% it filed for a ref*nd of said amo*nt% claimin that it is erroneo*sly paid ta0. Cnheeded )y the +IR% it raised the case to the +TA% ,hich
r*led that So*th African is lia)le for ("; income ta0 for the sale of passae doc*ments instead of the ".; GPB. As s*ch% it raised the case to the S+. ISSC@: &$ 9as 9as So*th Africans sale of offline passae doc*ments s*)4ect to ("; income ta0 "$ +an the GPB paid )y ) y So*th African offset offset its deficiency income ta0 RC1I/G: &$ !es. So*th Africans offline passae doc*ments are s*)4ect to income ta0Enot GPB. Cnder the &''8 /IR+% a person is lia)le for GPB as lon as the carriae of passeners and caro occ*r to or from the Philippines. This is not a case ,ith So*th African )eca*se it does not ha-e landin rihts in the Philippines nor a*thori=ed to fly in or o*t of the co*ntry. Follo,in its r*lin in +IR -. British 2-erseas Air,ays% the S+ f*rther said that if offline air carriers ha-e eneral sales aents in the Philippines% then they are considered enaed in or doin )*siness in the Philippines and any income made thro*h said aents are s*)4ect to the ("; corporate income ta0. The +o*rt co*ld not *phold petitioners stretched contention that 4*st )eca*se it ,as e0empt from GPB% then it is also e0empt from all other income ta0es. /o s*ch intention to e0empt can )e leaned from the lan*ae of the leislat*re in the ta0 code. See Sec. "3 A$&$ A$($a$. The former is the eneral r*le ("; income ta0 on forein corporations doin )*siness in the Philippines$% ,hile the latter is an e0ception ".; GPB for international air carriers for caro persons oriinatin from and to the Philippines.$ "$ !es. Follo,in the case of +IR -. +TA% GR &#&&% H*ly "&% &''<% erroneo*sly paid ta0 may offset deficiency ta0% )*t this of co*rse ass*mes that the ta0 ret*rn filed )y the ta0payer is -alid. In this case% do*)t has )een cast as to the -alidity of petitioners ta0 ret*rn precisely )eca*se it erroneo*sly )elie-ed that it ,as s*)4ect to ".; GPB% not ("; income ta0. The S+% therefore% remanded the case )ac7 to the +TA for reception of f*rther e-idence to find o*t ho, m*ch petitioners ta0 lia)ility is.
4. riete riete GR 1(4152 1(4152 21 Jan Jan 2010 2010 *inter *interpre prettn ttn o o ta, la+s la+s
FA+TS: H*lieta Ariete ,as chared of earnin s*)stantial income in &''<' ,itho*t payin income ta0 )y the Special In-estiation Di-ision. The Re-en*e District of Da-ao del /orte had no records of income ta0 ret*rns for the said years. Respondent admitted her nonfilin of income ta0 ret*rns and s*)se>*ently filed the same for &''(' *nder the Vol*ntary Assessment Proram VAP$. 1ater% ho,e-er% the Reional Director recommended that respondent )e assessed ,ith deficiency income ta0es for &''(' amo*ntin to P&'&%<(.#<. Respondent then filed an Assessment Protest ,ith Prayer for Rein-estiation ,hich ,as denied. She later filed a petition for re-ie, ,ith the +TA% assailin the BIR decision denyin the re>*est for rein-estiation and disappro-in her a-ailment of the VAP% VAP% as ,ell as the iss*ance of the fo*r assessment notices. +TA cancelled the deficiency assessments% statin that respondent ,as not yet *nder in-estiation )y the SID ,hen she filed her income ta0 ret*rns and the case aainst her ,as not d*ly recorded in the 2fficial Reistry Boo7 of the BIR. +TA f*rther reasoned that the rationale )ehind the VAP is to i-e ta0payers a final opport*nity to come *p ,ith clean slate )efore they ,ill )e dealt ,ith strictly for not payin correct ta0es. Acco Accord rdin in to the the +TA +TA% amon amon the the )ene )enefi fits ts that that can can )e a-ai a-aile led d of )y the the ta0p ta0pay ayer er are: are: &$ &$ a )on )onaa fide fide rectification of filin errors and assessment of ta0 lia)ilities *nder the VAP shall relie-e the ta0payerapplicant from any criminal criminal or ci-il lia)ility lia)ility incident to the misdeclarati misdeclaration on of incomes% p*rchases% p*rchases% ded*ctions% ded*ctions% etc.% and nonfilin of a ret*rn "$ the ta0payer ,ho shall a-ail of the VAP shall )e lia)le only for the payment of the )asic ta0 d*e. +TA r*led that e-en if respondent -iolated the /IR+% she ,as i-en the chance to rectify her fa*lt and )e a)sol-ed of criminal and ci-il lia)ilities incident to her nonfilin of income ta0 )y -irt*e of the VAP that she is not dis>*alified to a-ail the VAP% and that she has no more lia)ilities after payin the correspondin ta0es d*e. +A affirmed. The +A e0plained that the persons ,ho may a-ail of the VAP are those ,ho are lia)le to pay any of the a)o-ecited internal re-en*e ta0es for the a)o-e specified period ,ho d*e to inad-ertence or other,ise% has *nderdeclared his internal re-en*e ta0 lia)ilities or has not filed the re>*ired ta0 ret*rns. The +A rationali=ed that the BIR *sed a )road lan*ae to define the persons >*alified to a-ail of the VAP )eca*se the BIR intended to reach as many ta0payers as possi)le s*)4ect only to the e0cl*sion of those cases specially en*merated. The +A r*led that in applyin the r*les of stat*tory constr*ction% the e0ceptions en*merated in
r*led that So*th African is lia)le for ("; income ta0 for the sale of passae doc*ments instead of the ".; GPB. As s*ch% it raised the case to the S+. ISSC@: &$ 9as 9as So*th Africans sale of offline passae doc*ments s*)4ect to ("; income ta0 "$ +an the GPB paid )y ) y So*th African offset offset its deficiency income ta0 RC1I/G: &$ !es. So*th Africans offline passae doc*ments are s*)4ect to income ta0Enot GPB. Cnder the &''8 /IR+% a person is lia)le for GPB as lon as the carriae of passeners and caro occ*r to or from the Philippines. This is not a case ,ith So*th African )eca*se it does not ha-e landin rihts in the Philippines nor a*thori=ed to fly in or o*t of the co*ntry. Follo,in its r*lin in +IR -. British 2-erseas Air,ays% the S+ f*rther said that if offline air carriers ha-e eneral sales aents in the Philippines% then they are considered enaed in or doin )*siness in the Philippines and any income made thro*h said aents are s*)4ect to the ("; corporate income ta0. The +o*rt co*ld not *phold petitioners stretched contention that 4*st )eca*se it ,as e0empt from GPB% then it is also e0empt from all other income ta0es. /o s*ch intention to e0empt can )e leaned from the lan*ae of the leislat*re in the ta0 code. See Sec. "3 A$&$ A$($a$. The former is the eneral r*le ("; income ta0 on forein corporations doin )*siness in the Philippines$% ,hile the latter is an e0ception ".; GPB for international air carriers for caro persons oriinatin from and to the Philippines.$ "$ !es. Follo,in the case of +IR -. +TA% GR &#&&% H*ly "&% &''<% erroneo*sly paid ta0 may offset deficiency ta0% )*t this of co*rse ass*mes that the ta0 ret*rn filed )y the ta0payer is -alid. In this case% do*)t has )een cast as to the -alidity of petitioners ta0 ret*rn precisely )eca*se it erroneo*sly )elie-ed that it ,as s*)4ect to ".; GPB% not ("; income ta0. The S+% therefore% remanded the case )ac7 to the +TA for reception of f*rther e-idence to find o*t ho, m*ch petitioners ta0 lia)ility is.
4. riete riete GR 1(4152 1(4152 21 Jan Jan 2010 2010 *inter *interpre prettn ttn o o ta, la+s la+s
FA+TS: H*lieta Ariete ,as chared of earnin s*)stantial income in &''<' ,itho*t payin income ta0 )y the Special In-estiation Di-ision. The Re-en*e District of Da-ao del /orte had no records of income ta0 ret*rns for the said years. Respondent admitted her nonfilin of income ta0 ret*rns and s*)se>*ently filed the same for &''(' *nder the Vol*ntary Assessment Proram VAP$. 1ater% ho,e-er% the Reional Director recommended that respondent )e assessed ,ith deficiency income ta0es for &''(' amo*ntin to P&'&%<(.#<. Respondent then filed an Assessment Protest ,ith Prayer for Rein-estiation ,hich ,as denied. She later filed a petition for re-ie, ,ith the +TA% assailin the BIR decision denyin the re>*est for rein-estiation and disappro-in her a-ailment of the VAP% VAP% as ,ell as the iss*ance of the fo*r assessment notices. +TA cancelled the deficiency assessments% statin that respondent ,as not yet *nder in-estiation )y the SID ,hen she filed her income ta0 ret*rns and the case aainst her ,as not d*ly recorded in the 2fficial Reistry Boo7 of the BIR. +TA f*rther reasoned that the rationale )ehind the VAP is to i-e ta0payers a final opport*nity to come *p ,ith clean slate )efore they ,ill )e dealt ,ith strictly for not payin correct ta0es. Acco Accord rdin in to the the +TA +TA% amon amon the the )ene )enefi fits ts that that can can )e a-ai a-aile led d of )y the the ta0p ta0pay ayer er are: are: &$ &$ a )on )onaa fide fide rectification of filin errors and assessment of ta0 lia)ilities *nder the VAP shall relie-e the ta0payerapplicant from any criminal criminal or ci-il lia)ility lia)ility incident to the misdeclarati misdeclaration on of incomes% p*rchases% p*rchases% ded*ctions% ded*ctions% etc.% and nonfilin of a ret*rn "$ the ta0payer ,ho shall a-ail of the VAP shall )e lia)le only for the payment of the )asic ta0 d*e. +TA r*led that e-en if respondent -iolated the /IR+% she ,as i-en the chance to rectify her fa*lt and )e a)sol-ed of criminal and ci-il lia)ilities incident to her nonfilin of income ta0 )y -irt*e of the VAP that she is not dis>*alified to a-ail the VAP% and that she has no more lia)ilities after payin the correspondin ta0es d*e. +A affirmed. The +A e0plained that the persons ,ho may a-ail of the VAP are those ,ho are lia)le to pay any of the a)o-ecited internal re-en*e ta0es for the a)o-e specified period ,ho d*e to inad-ertence or other,ise% has *nderdeclared his internal re-en*e ta0 lia)ilities or has not filed the re>*ired ta0 ret*rns. The +A rationali=ed that the BIR *sed a )road lan*ae to define the persons >*alified to a-ail of the VAP )eca*se the BIR intended to reach as many ta0payers as possi)le s*)4ect only to the e0cl*sion of those cases specially en*merated. The +A r*led that in applyin the r*les of stat*tory constr*ction% the e0ceptions en*merated in
pararaph (of RM2 /o. ''8% as ,ell as those added in RM2 /o. ('8% sho*ld )e strictly constr*ed and a nd all do*)ts sho*ld )e resol-ed in fa-or of the eneral pro-ision stated *nder pararaph " rather than the said e0ceptions. A e0plained that it is clear from the ,ordins of RM2 /o. ''8 that the recordin in the 2fficial Reistry Boo7 of the BIR is a mandatory re>*irement )efore a ta0payerapplicant *nder the VAP may )e e0cl*ded from its co-erae as this re>*irement ,as preceded )y the ,ord and. The *se of the con4*nction and in s*)pararaph (.< of RM2 /o. ''8 m*st )e *nderstood in its *s*al and common meanin for the p*rpose of determinin ,ho are dis>*alified from a-ailin of the )enefits *nder the VAP. This interpretation is more in faithf*l compliance ,ith the mandate of the RM2s. P@TITI2/@RS +1AIM: The VAP% )ein in the nat*re of a ta0 amnesty% m*st )e strictly constr*ed aainst the ta0payerapplicant s*ch that petitioners fail*re to record the information in the 2fficial Reistry Boo7 of the BIR does not no t affect respondents dis>*alification from a-ailment of the )enefits )e nefits *nder the VAP Ta0payers ,ho are *nder in-estiation for nonfilin of income ta0 ret*rns )efore their a-ailment of the VAP VAP are not co-ered )y the proram and are not entitiled to its )enefits the *nderlyin reason for the dis>*alification is that a-ailment of the VAP )y s*ch ta0payer is no loner -ol*ntary. Petitioner asserts that -ol*ntariness is the -ery essence of the Vol*ntary Assessment Proram. R@SP2/D@/TS +1AIM: ,here the terms of a stat*te are clear and *nam)i*o*s% no interpretation is called for% and the la, is applied as ,ritten% for application is the first d*ty of the co*rt% and interpretation% only ,here literal application is impossi)le or inade>*ate. ISSC@: 9hether or not the recordin in the 2fficial Reistry Boo7 of the BIR of the information filed )y the informer *nder Sec. "3&% /IR+ is a mandatory re>*irement )efore a ta0payerapplicant may )e e0cl*ded from the co-erae of the VAP. RC1I/G: Ver)a 1eis. It is ,ellsettled that ,here the lan*ae of the la, is clear and *ne>*i-ocal% it m*st )e i-en its literal application and applied ,itho*t interpretation. The eneral r*le of re>*irin re>*irin adherence adherence to the letter letter in constr*in constr*in stat*tes stat*tes applies ,ith partic*lar partic*lar strictness strictness to ta0 la,s and pro-isions of a ta0in act are not to )e e0tended )y implication. A caref*l readin of the RM2s pertainin to the VAP VAP sho,s that the recordin of the information in the 2fficial Reistry Boo7 of the BIR is a mandatory re>*irement )efore a ta0payer may )e e0cl*ded from the co-erae of the VAP. 2n "8 2cto)er &''8% the +IR% in implementin the VAP% VAP% iss*ed RM2 /o. ''8 to i-e errin ta0payers ta0pa yers a final opport*nity to come *p ,ith a clean slate. Any person lia)le to pay income ta0 on )*siness and compensation income% -al*eadded ta0 and other percentae ta0es *nder Titles II% IV and V% respecti-ely% of the Ta0 +ode for the ta0a)le years &''( to &''% ,ho d*e to inad-ertence or other,ise% has not filed the re>*ired ta0 ret*rn may a-ail of the )enefits *nder the VAP. VAP.J"(K RM2 /o. ''8 also en*merates the persons or cases that are e0cl*ded from the co-erae of the VAP. (. Persons6+ases not co-ered The follo,in shall )e e0cl*ded from the co-erae of the VAP *nder this 2rder: 000 (.<. Persons *nder in-estiation as a res*lt of -erified information filed )y an informer *nder Section "3& of the /IR+% as amended% and dul recorded in the icial Re&istr 9oo o the 9ureau )efore the date of a-ailment *nder the VAP 0 0 0 Boldfacin s*pplied$
2n (# 2cto)er &''8% the +IR iss*ed RM2 /o. #'8 ,hich s*pplements RM2 /o. ''8 and amended Item /o. (.< to read as: (. Persons6+ases not co-ered The follo,in shall )e e0cl*ded from the co-erae of the VAP *nder this 2rder: 000 (.< Persons *nder in-estiation )y the Ta0 Fra*d Di-ision and6or the Reional Special In-estiat In-estiation ion Di-isions Di-isions as a res*lt res*lt of -erified information information filed )y an informer informer *nder Section "3& of the /IR+% as amended% and dul recorded in the icial Re&istr VAP Boldfacin s*pplied$ 9oo o the 9ureau )efore the date of a-ailment *nder VAP
2n "8 /o-em)er &''8% the +IR iss*ed RM2 /o. ('8 and clarified iss*es related to the implementation of the VAP. RM2 /o. ('8 pro-ides:
(. Persons6cases not co-ered: 000 (.< Persons *nder in-estiation )y the Ta0 Fra*d Di-ision and6or the Reional Special In-estiation Di-isions as a res*lt of -erified information filed )y an informer *nder Section "3& of the /IR+% as amended% and dul recorded in the icial Re&istr VAP Cnderscorin in the 9oo o the 9ureau )efore the date of a-ailment *nder the VAP oriinal% )oldfacin s*pplied$ It is e-ident from these RM2s that the +IR ,as consistent in *sin the ,ord and and has e-en *nderscored the ,ord in RM2 /o. ('8. This denotes that in addition to the filin of the -erified information% the same sho*ld also )e d*ly recorded in the 2fficial Reistry Boo7 of the BIR. The con4*ncti-e ,ord and is not ,itho*t leal sinificance. It means in addition to. The ,ord and% ,hether it is *sed to connect ,ords% phrases or f*ll sentences% m*st )e accepted as )indin toether and as relatin to one another. And in stat*tory constr*ction implies con4*nction or *nion.
It is s*fficiently clear that for a person to )e e0cl*ded from the co-erae of the VAP% the -erified information m*st not only )e filed *nder Section "3&Kof the Ta0 +ode% it m*st also )e d*ly recorded in the 2fficial Reistry Boo7 of the BIR )efore the date of a-ailment *nder the VAP. This interpretation of Item (.< of RM2 /os. ' '8% #'8% and ('8 is f*rther )olstered )y the fact that on &" 2cto)er "##% the BIR iss*ed Re-en*e Re*lations RR$ /o. &3"## and reiterated the same pro-ision in the implementation of the @nhanced Vol*ntary Assessment Proram @VAP$. RR /o. &3"## reads: S@+TI2/ &. +2V@RAG@. 0 0 0 Any person% nat*ral or 4*ridical% incl*din estates and tr*sts% lia)le to pay any of the a)o-ecited internal re-en*e ta0es for the a)o-e specified period6s ,ho% d*e to inad-ertence or other,ise% erroneo*sly paid his6its internal re-en*e ta0 lia)ilities or failed to file ta0 ret*rns6pay ta0es% may a-ail of the @VA @VAP% e0cept those fallin *nder any of the follo,in instances: 000
). Persons *nder in-estiation as a res*lt of -erified information filed )y a Ta0 Informer *nder Section "3" of the /IR+% d*ly processed and recorded in the 9!R icial Re&istr 9oo on or )efore the effecti-ity of these re*lations. Boldfacin s*pplied$ 9hen a ta0 pro-ision spea7s *ne>*i-ocally% it is not the pro-ince of a +o*rt to scan its ,isdom or its policy. The more correct co*rse of dealin ,ith a >*estion of constr*ction is to ta7e the ,ords to mean e0actly ,hat they say. 9here a pro-ision of la, e0pressly limits its application to certain transactions% it cannot )e e0tended to other transactions )y interpretation.
5. "an #i&uel Corp GR 184428 2' 3ov 2011
H*risdiction of +o*rt on Ta0 Appeals Delea)ility of tariff po,er to President FA+TS: Philcemcor% an association of at least eihteen &3$ domestic cement man*fact*rers filed ,ith the Department of Trade and Ind*stry DTI$ a petition see7in the imposition of safe*ard meas*res on ray Portland cement% in accordance ,ith the Safe*ard Meas*res Act SMA$. After the DTI$ iss*ed a pro-isional safe*ard meas*re% the application ,as referred to the Tariff +ommission for a formal in-estiation p*rs*ant to Section ' of the SMA and its Implementin R*les and Re*lations% in order to determine ,hether or not to impose a definiti-e safe*ard meas*re on imports of ray Portland cement. The Tariff +ommission held p*)lic hearin and cond*cted its o,n in-estiation and iss*ed its Formal In-estiation Report that Lno definiti-e eneral safe*ard meas*re )e imposed on the importation of ray Portland cement. The DTI Secretary then prom*lated a decision e0pressin its disareement ,ith the concl*sions of the Tariff +ommission )*t at the same time denyin Philcemcors application for safe*ard meas*res in liht of the Tariff +ommissions neati-e findins. Philcemcor challened this decision of the DTI Secretary )y filin ,ith the +o*rt of Appeals a petition for certiorari% Prohi)ition and Mandam*s see7in to set aside the DTI Decision as sell as the Tariff +ommissions Report. The appellate co*rt partially ranted the petition and r*led that it had 4*risdiction o-er the petition for certiorari since it alleed ra-e a)*se of discretion and also held that DTI Secretary ,as not )o*nd )y the fact*al findins of the Tariff +ommission. The So*thern +ross then filed the present petition% ar*in that the +o*rt of Appeals has no 4*risdiction o-er Philcemcors petition. Despite the fact the +o*rt of Appeals Decision had not yet )ecame final% its )indin force ,as cited )y the DTI Secretary ,hen he iss*ed a ne, Decision% ,herein he imposed a definiti-e safe*ard meas*re on the importation of ray Portland cement% in the form of a definiti-e safe*ard d*ty in the amo*nt of P"#.#6<# 7. )a for three years on imported ray Portland +ement. So*thern +ross filed a Temporary Restrainin 2rder and6or A 9rit of Preliminary In4*nction ,ith the +o*rt% see7in to en4oin the DTI Secretary from enforcin his ne, iss*ed Decision. Philcemcor then filed its opposition statin that it is not the +A )*t the +o*rt of Ta0 Appeals +TA$ that has 4*risdiction o-er the application *nder the la,. So*thern +ross then filed ,ith the +TA a Petition for Re-ie, aainst the Decision ,hich imposed the definite safe*ard meas*re )*t did not promptly inform +A a)o*t the filin. Philcemcor ar*ed ,ith the +TA that So*thern +ross resorted to for*m shoppin. The +o*rt in its decision ranted So*thern +rosss Petition ,hich n*llified the Decision of the DTI secretary and declared the Decision of the +o*rt of Appeals n*ll and -oid% and also concl*ded that the same had not committed for*m shoppin for there ,as no malicio*s intent to s*)-ert proced*ral r*les. Philcemcor and the DTI Secretary then promptly filed their respecti-e motions for reconsideration. The +o*rt @n Banc then resol-e the t,o central iss*es pertainin to the 4*risdictional aspect and to the s*)stanti-e aspect of ,hether the DTI Secretary may impose a eneral safe*ard meas*re despite a neati-e determination )y the Tariff +ommission and ,hether the Tariff +ommission co*ld -alidly e0ercise >*asi4*dicial po,ers in the e0ercise of its mandate *nder the SMA. In its resol*tion% the +o*rt directed the parties to maintain the stat*s >*o and *ntil f*rther orders from this +o*rt.
ISSC@S: I. H*risdiction to Re-ie, the Secretarys Decisions II. Re-ie,a)ility of the Tariff +ommissions Report RC1I/G: I. 2n the Iss*e of 4*risdiction% the DTI secretarys decisions ,hether imposin safe*ard meas*res or not N are s*)4ect to re-ie, )y the +o*rt of Ta0 Appeals p*rs*ant to Section "' of RA 33##. Cnder section "'% there are three re>*isites to ena)le the +TA to ac>*ire 4*risdiction o-er the petition for re-ie, contemplated therein &$ there m*st )e a r*lin )y the DTI Secretary "$ the petition m*st )e filed )y an interested party ad-ersely affected )y the r*lin and ($ s*ch r*lin m*st )e in Lin connection ,ith the imposition of a safe*ard meas*re. 2)-io*sly% there are differences )et,een La r*lin for the imposition of a safe*ard meas*re% and one iss*ed Lin connection ,ith imposition of a safe*ard meas*re. The first ad-erts to a sin*lar type of r*lin% namely one that imposes a safe*ard meas*re. The second does not contemplate only one 7ind of r*lin% )*t a myriad of r*lins iss*ed Lin connection ,ith the imposition of a safe*ard meas*re. II. The DTI Secretary is not )o*nd )y the Tariff +ommissions recommendations. The Po,er to impose Tariffs is essentially leislati-e it is delea)le only to the president. The application of safe*ard meas*res% ,hile primarily intended to protect domestic ind*stries% is essentially in the nat*re of a tariff imposition. P*rs*ant to the +onstit*tion% the imposition of tariffs and ta0es is a hihly pri=ed leislati-e preroati-e. P*rs*ant also to the +onstit*tion% s*ch po,er to fi0 tariffs may as an e0ception% )e deleated )y +onress to the President. Section "3 of Article VI of the +onstit*tion pro-ides for that e0ception. OThe moti-ation )ehind many ta0ation meas*res is the implementation of police po,er oals. Proressi-e income ta0es alle-iate the marin )et,een the rich and the poor. Ta0ation is distin*isha)le from police po,er as to the means employed to implement these p*)lic ood oals. Those doctrines that are *ni>*e to ta0ation arose from pec*liar considerations s*ch as those especially p*niti-e effects of ta0ation% and the )elief that ta0es are the life)lood of the state. These considerations necessitated the e-ol*tion of ta0ation as a distinct leal concept from police po,er. !et at the same time% it has )een reconi=ed that ta0ation may )e made the implement of the states police po,er.O (. :ia; vs "ec. o )inance6 GR 1<'007 Jul 1<6 2011 *toll vs ta, )C"/ Petitioners Renato V. Dia= and A*rora Ma. F. Tim)ol petitioners$ filed this petition for declaratory relief assailin the -alidity of the impendin imposition of -al*e added ta0 VAT$ )y the B*rea* of Internal Re-en*e BIR$ on the collections of toll,ay operators. Petitioners claim that% since the VAT ,o*ld res*lt in increased toll fees% they ha-e an interest as re*lar *sers of toll,ays in stoppin the BIR action. Additionally% Dia= claims that he sponsored the appro-al of Rep*)lic Act 88& the &''< @0panded VAT 1a, or @VAT 1a,$ and Rep*)lic Act 3<"< the &''8 /ational Internal Re-en*e +ode or the /IR+$ at the o*se of Representati-es. Tim)ol% on the other hand% claims that she ser-ed as Assistant Secretary of the Department of Trade and Ind*stry and cons*ltant of the Toll Re*latory Board TRB$ in the past administration.
Petitioners hold the -ie, that +onress did not% ,hen it enacted the /IR+% intend to incl*de toll fees ,ithin the meanin of 5sale of ser-ices5 that are s*)4ect to VAT that a toll fee is a 5*sers ta0%5 not a sale of ser-ices that to impose VAT on toll fees ,o*ld amo*nt to a ta0 on p*)lic ser-ice and that% since VAT ,as ne-er factored into the form*la for comp*tin toll fees% its imposition ,o*ld -iolate the nonimpairment cla*se of the constit*tion. !""/ May toll fees collected )y toll,ay operators )e s*)4ected to -al*e added ta0 R!3G/ !es.
&$ VAT is imposed on Lall 7inds of ser-ices and toll,ay operators ,ho are enaed in constr*ctin% maintainin% and operatin e0press,ays are no different from lessors of property% transportation contractors% etc.
"$ /ot only do they fall *nder the )road term *nder &$ )*t also come *nder those descri)ed as Lall other franchise rantees ,hich is not confined only to leislati-e franchise rantees since the la, does not distin*ish. They are also not a franchise rantee *nder Section &&' ,hich ,o*ld ha-e made them s*)4ect to percentae ta0 and not VAT. ($ /either are the ser-ices part of the en*meration *nder Section &#' on VATe0empt transactions. <$ The toll fee is not a *sers ta0 and th*s it is permissi)le to impose a VAT on the said fee. The MIAA case does not apply and the +o*rt emphasi=ed that toll fees are not ta0es since they are not assessed )y the BIR and do not o to the eneral coffers of the o-ernment. Toll fees are collected )y pri-ate operators as reim)*rsement for their costs and e0penses ,ith a -ie, to a profit% ,hile ta0es are imposed )y the o-ernment as an attri)*te of its so-ereinty. @-en if the toll fees ,ere treated as *sers ta0% the VAT cannot )e deemed as a Qta0 on ta0 since the VAT is imposed on the toll,ay operator and the fact that it miht passon the same to the toll,ay *ser% it ,ill not ma7e the latter directly lia)le for VAT since the shifted VAT simply )ecomes part of the cost to *se the toll,ays. $ The assertion that the VAT imposed is not administrati-ely feasi)le i-en the manner )y ,hich the BIR intends to implement the VAT i.e.% ro*ndin off the toll rates and p*ttin any e0cess collection in an escro, acco*nt$ is not eno*h to in-alidate the la,. /ono)ser-ance of the canon of administrati-e feasi)ility ,ill not render a ta0 imposition in-alid Le0cept to the e0tent that specific constit*tional or stat*tory limitations are impaired.
7. state o 9eni&no oda6 Jr.6 GR 1471886 "ept146 2004 *avoidance vs evasion
Facts: Toda% ,hile he ,as still ali-e% ,as the o,ner of ''.''&; of the shares of stoc7 of +i)eles Ins*rance +orporation +I+$. 2n A**st (#% &'3'% he sold the properties of +I+ to Altonaa for &## million% ,ho on the same day sold the same to Royal Match Inc RMI$ for "## million. 2n &''<% Toda died. 2n March &''<% the BIR sent an assessment notice to the estate of Toda for deficiency income ta0 allein that the sale to Altonaa ,as tainted ,ith fra*d de-ised to e-ade ta0 lia)ility and that there ,as only one act*al sale% ,hich ,as the sale to RMI. The +TA r*led in fa-or of the estate of Toda statin that it ,as ta0 a-oidance and not ta0 e-asion. The +A affirmed the r*lin% hence this petition. Iss*es: &. 9hat is ta0 a-oidance and ta0 e-asion ". 9as there ta0 e-asion in this case R*lin: &. Ta0 a-oidance -. Ta0 e-asion a. a, avoidance is the ta0 sa-in de-ice ,ithin the means sanctioned )y la,. This method sho*ld )e *sed )y the ta0payer in ood faith and at arms lenth. ). a, evasion% on the other hand% is a scheme *sed o*tside of those la,f*l means and ,hen a-ailed of% it *s*ally s*)4ects the ta0payer to f*rther or additional ci-il or criminal lia)ilities i. )actors/ &. The end to )e achie-ed% i.e., the payment of less than that 7no,n )y the ta0payer to )e leally d*e% or the nonpayment of ta0 ,hen it is sho,n that a ta0 is d*e ". An accompanyin state of mind ,hich is descri)ed as )ein e-il% in )ad faith% ,illf*ll%or deli)erate and not accidental and (. A co*rse of action or fail*re of action ,hich is *nla,f*l. ". !es. All these factors are present in the instant case. ere% it is o)-io*s that the o)4ecti-e of the sale to Altonaa ,as to red*ce ta0 to only ; indi-id*al capital ains ta0% and not the (; corporate income ta0. Altonaas sole p*rpose of ac>*irin and transferrin title of the s*)4ect properties on the same day
,as to create a ta0 shelter. To allo, this ,hen it is pro-ed that Altonaa ,as merely a cond*it is to sanction a circ*m-ention of o*r ta0 la,s. ence% the sale to Altonaa sho*ld )e disrearded for income ta0 p*rposes. The t,o sale transactions sho*ld )e treated as a sinle direct sale )y +I+ to RMI.
!!.
!nherent i$itations
. Public Purpose Planters Products vs )ertiphil 548 "CR 485 )C"/
Petitioner PPI and respondent Fertiphil are pri-ate corporations incorporated *nder Philippine la,s% )oth enaed in the importation and distri)*tion of fertili=ers% pesticides and aric*lt*ral chemicals. Marcos iss*ed 1etter of Instr*ction 12I$ &<% imposin a capital reco-ery component of not less than Php&#.## le-y per )a of fertili=er. The le-y ,as to contin*e *ntil ade>*ate capital ,as raised to ma7e PPI financially -ia)le. Fertiphil remitted to the Fertili=er and Pesticide A*thority FPA$% ,hich ,as then remitted to the depository )an7 of PPI. Fertiphil paid P%3'%&<< to FPA from &'3 to &'3. After the &'3 @dsa Re-ol*tion% FPA -ol*ntarily stopped the imposition of the P&# le-y. Fertiphil demanded from PPI a ref*nd of the amo*nt it remitted% ho,e-er PPI ref*sed. Fertiphil filed a complaint for collection and damaes% >*estionin the constit*tionality of 12I &<% claimin that it ,as *n4*st% *nreasona)le% oppressi-e% in-alid and an *nla,f*l imposition that amo*nted to a denial of d*e process. PPI ar*es that Fertiphil has no loc*s standi to >*estion the constit*tionality of 12I /o. &< )eca*se it does not ha-e a 5personal and s*)stantial interest in the case or ,ill s*stain direct in4*ry as a res*lt of its enforcement.5 It asserts that Fertiphil did not s*ffer any damae from the imposition )eca*se5incidence of the le-y fell on the *ltimate cons*mer or the farmers themsel-es% not on the seller fertili=er company. !"""/
&. 92/ Fertiphil has loc*s standi to >*estion the constit*tionality of 12I /o. &<. ". 92/ P&# le-y *nder 12I /o. &< is a mere re*latory fee or for re-en*e eneration. (. 92/ the inherent limitation on the po,er to ta0 ,hich is for p*)lic p*rpose is ser-ed. R!3G/
&. Fertiphil has loc*s standi )eca*se it s*ffered direct in4*ry doctrine of standin is a mere proced*ral technicality ,hich may )e ,ai-ed. Fertiphil s*ffered harm from the enforcement of the 12I )eca*se it ,as compelled to factor in its prod*ct the P &#.## le-y. The le-y certainly rendered the fertili=er prod*cts of Fertiphil and other domestic sellers m*ch more e0pensi-e% ,hich ,o*ld possi)ly disco*rae clients from p*rchasin their prod*cts. Indeed 12I is *nconstit*tional for )ein *nla,f*l% *n4*st% *ncalled for% *nreasona)le% ine>*ita)le and oppressi-e )eca*se it fa-ors only one pri-ate domestic corporation% i.e. defendant PPI. The imposition of capital reco-ery component+R+$ of not less than P&#.## is tantamo*nt to illeal e0action amo*ntin to a denial of d*e process since the persons of entities ,hich had to )ear the )*rden of payin the +R+ deri-ed no )enefit there from. This is a larin e0ample of crony capitalism. ". The P&#.## le-y *nder 12I is for re-en*e eneration% th*s the imposition of the said le-y
,as an e0ercise )y the State of its ta0ation po,er. A plain readin of the 12I o)-io*sly s*pports the concl*sion that it is for re-en*e eneration )eca*se it e0pressly pro-ided that the le-y ,as imposed L*ntil ade>*ate capital is raised to ma7e PPI -ia)le. This miht res*lt to *n4*st enrichment on the part of PPI at the e0pense of Fertiphil if the demanded ref*nd )y the latter ,ill not )e ranted.
(. The inherent limitation on the imposition of ta0es shall )e intended for p*)lic p*rpose. This is not achie-ed in the iss*ance of 12I )eca*se it is e0pressly stip*lated in cla*se ( of the same la, that the le-y )e imposed to )enefit PPI% a pri-ate company that s*ch le-y )e contin*o*sly paid *ntil ade>*ate capital is raised for PPI to reco-er financial losses from the h*e corporate de)ts it inc*rred. +ontin*o*s payment connotes indefinite period% th*s e>*ity is not ser-ed on Fertiphil and p*)lic p*rpose is defeated. B. !nternational Co$it
"ec 26 rt !!6 Constitution
C. erritorialit C!R vs ".C. Johnson '0< "CR 87 *int=l >uridical double ta,n )acts/
Respondent% a domestic corporation entered into a license areement ,ith S+ Hohnson and Son% Cnited States of America CSA$% a nonresident forein corporation. In said areement% the respondent ,as ranted the riht to *se the trademar7% patents and technoloy o,ned )y the latter. For the *se of the trademar7 or technoloy% respondent ,as o)lied to pay S+ Hohnson and Son% CSA royalties )ased on a percentae of net sales and s*)4ected the same to "; ,ithholdin ta0 on royalty payments ,hich it paid for the period co-erin H*ly &''" to May &''(. 2n 2cto)er "'% &''(% respondent filed ,ith the International Ta0 Affairs Di-ision ITAD$ of the BIR a claim for ref*nd of o-erpaid ,ithholdin ta0 on royalties% assertin that it is only s*)4ect to &#; ,ithholdin ta0 p*rs*ant to the most fa-ored nation cla*se of the RPCS Ta0 Treaty in relation to the RP 9est Germany Ta0 Treaty. !ssue/
9hether or not respondent is entitled to a royalty rate of &#; *nder the most fa-ored nation cla*se as pro-ided in the RPCS Ta0 Treaty in relation to the RP9@ST Germany Ta0 Treaty Rulin&/
/o. The most fa-ored nation cla*se is intended to esta)lish the principle of e>*ality of international treatment )y pro-idin that the citi=ens or s*)4ects of the contractin nations may en4oy the pri-ilees accorded )y either party to those of the most fa-ored nation. The similarity in the circ*mstances of payment of ta0es is a condition for the en4oyment of most fa-ored nation treatment precisely to *nderscore the need for e>*ality of treatment. Both the RPCS Ta0 Treaty and the RP9est Germany Ta0 Treaty pro-ide for a ta0 on royalties for the *se of trademar7% patent% and technoloy. Article "< of the RPGermany Ta0 Treaty allo,s creditin aainst German income and corporation ta0 of "#; of the ross amo*nt of royalties paid *nder the la, of the Philippines ,hile Article "( of the RPCS Ta0 Treaty does not. Since the RPCS Ta0 Treaty does not i-e a matchin ta0 credit of "# ; for the ta0es paid to the Philippines on royalties as allo,ed *nder the RP9est Germany Ta0 Treaty% pri-ate respondent cannot )e deemed entitled to
the &#; rate ranted *nder the latter treaty for the reason that there is no payment of ta0es on royalties *nder similar circ*mstances.
:. 3on dele&ation o Po+er to a, 9?: vs r$ita )C"/ 2n May "<% "##% the President sined into la, Rep*)lic Act '((8. Petitioners are challenin the constit*tionality of the la,. Petitioners allee that the rant of stand)y a*thority to the President to increase the VAT rate is an a)dication )y +onress of its e0cl*si-e po,er to ta0 )eca*se s*ch deleation is not co-ered )y Section "3 "$% Article VI +onsti. They ar*e that VAT is a ta0 le-ied on the sale or e0chane of oods and ser-ices ,hich cant )e incl*ded ,ithin the p*r-ie, of tariffs *nder the e0emption deleation since this refers to c*stoms d*ties% tolls or tri)*te paya)le *pon merchandise to the o-ernment and *s*ally imposed on imported6e0ported oods. They also said that the President has po,ers to ca*se% infl*ence or create the conditions pro-ided )y la, to )rin a)o*t the conditions precedent. Moreo-er% they allee that no *idin standards are made )y la, as to ho, the Secretary of Finance ,ill ma7e the recommendation. !ssue/ 9hether or not the RA '((8?s stand)y a*thority to the @0ec*ti-e to increase the VAT rate% especially on acco*nt of the recommendatory po,er ranted to the Secretary of Finance% constit*tes *nd*e deleation of leislati-e po,er R!3G/ /o. For the deleation to )e -alid% it m*st )e complete and it m*st fi0 a standard. A s*fficient standard is one ,hich defines leislati-e policy% mar7s its limits% maps o*t its )o*ndaries and specifies the p*)lic aency to apply it.
In this case% it is not a dele&ation o le&islative po+er 9 a dele&ation o ascertain$ent o acts *pon ,hich enforcement and administration of the increased rate *nder the la, is continent. The leislat*re has made the operation of the &"; rate effecti-e Han*ary &% "##% continent *pon a specified fact or condition. It lea-es the entire operation or nonoperation of the &"; rate *pon fact*al matters o*tside of the control of the e0ec*ti-e. 3o discretion +ould be e,ercised b the President . As for the recommendatory po,er ranted to the Secretary of Finance% it is simply an a*thority to ascertain the e0istence of a fact. is f*nction is to ather and collate statistical data and other pertinent information and -erify if any of the t,o conditions laid o*t )y +onress is present. In doin so% he is not actin as the alter eo of the President% instead% he is actin as the aent of the leislati-e department. Con&ress did not dele&ate the po+er to ta, but the $ere i$ple$entation o the la+. . ,e$ption ro$ a,ation o Gov=t Constitutional i$itations 1. Coconut il Reineries vs orres G.R. 3o. 1'2527. Jul 2<6 2005 )C"/ Petition for Prohi)ition and In4*nction aainst the @0ec*ti-e Branch% the Bases +on-ersion • De-elopment A*thority B+DA$% the +lar7 De-elopment +orporation +D+$ and the S*)ic Bay Metropolitan A*thority SBMA$: &. from allo,in the operation of ta0 and d*tyfree shops in the S*)ic Special @conomic one SS@$ and the +lar7 Special @conomic one +S@$ ". to declare as *nconstit*tional% illeal% and -oid:
a. Sec. % @2 3#% April (% &''(% +S@ ). @2 '8A% H*ne &'% &''(% SS@ c. Sec. <% B+DA Board Resol*tion /o. '(##(<% May &3% &''(% +S@ •
RA 8""8 ,as enacted on March &(% &''" con-ersion of +lar7 and S*)ic military reser-ations and their e0tensions into alternati-e prod*cti-e *ses in the form of S@ S@+TI2/ &". Subic Special Economic Zone operated and manaed as a separate c*stoms territory ens*rin free flo, of oods and capital ta0 and d*tyfree importations of ra, materials% capital and e>* ipment. e0portation SS@ to the other parts of the Philippines s*)4ect to c*stoms d*ties and ta0es in lie* of payin ta0es% (; of the ross income )y all )*sinesses ,ithin the SS@ shall )e remitted to the o /atl Go-t &; to 1GC o De-t f*nd of &; of GI S@+TI2/ &. Clark and Other Special Economic Zone s*)4ect to the conc*rrence )y resol*tion of the 1GC directly affected% the President is a*thori=ed to create )y e0ec*ti-e proclamation a S@ co-erin the +lar7 military reser-ations and its conti*o*s @2 3#% April (% &''( Declared that +lar7 shall ha-e all the applica)le incenti-es ranted *nder RA 8""8 B+DA Board Resol*tion /o. '(##(<% May &3% &''( p*rs*ant to @2 3# allo,ed ta0 and d*tyfree sale at retail of cons*mer oods imported -ia +lar7 for cons*mption o*tside the +S@ @2 '8% H*ne &% &''( +larified the ta0 and d*ty free incenti-e ,ithin SS@ p*rs*ant to R.A. /o. 8""8: import ta0es and d*ties ta0 and d*tyfree importations apply only to ra, materials% capital oods and e>*ipment )ro*ht in )y )*siness enterprises into the SS@ e0portation from SS@ to other parts of the Philippines s*)4ect to re*lar @2 '8A% H*ne &'% &''( f*rther clarifyin the ta0 and d*tyfree pri-ilee ,ithin the SS@: −
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Petitioner@s ar&u$ents/ &. the iss*ances are *nconstit*tional and -oid for: a. they constit*te e0ec*ti-e la,ma7in ). contrary to RA 8""8 c. in -iolation of the +onstit*tion: i. Sec. &% Art. III e>*al protection cla*se$ ii. Sec. &'% Art. II prohi)ition of *nfair competition and com)inations in restraint of trade$ iii. Sec. &"% Art. II preferential *se of Filipino la)or% domestic materials and locally prod*ced oods$ ". assail the &## monthly and "## yearly ta0free shoppin pri-ilees ranted to SS@ residents li-in o*tside the Sec*red Area of the SS@ and to Filipinos aed & and o-er residin o*tside the SS@ Respondents@ ar&u$ents/
&. petitioners lac7 of leal standin do not stand to s*ffer direct in4*ry )ein mere s*ppliers of the local retailers operatin o*tside the S@ ". *nreasona)le delay in the filin of the petition% laches% and the propriety of the remedy of prohi)ition (. proced*ral fla,s
!""" A R!3G"/ &. 92/ there ,as e0ec*ti-e leislation )y rantin ta0 incenti-es in the importation of cons*mer oods% s*ch as those )ein sold in the d*tyfree shops% in -iolation of the limits in RA 8""8
a. To limit the ta0free importation pri-ilee of enterprises located inside the special economic =one only to ra+ $aterials6 capital and eBuip$ent clearly r*ns co*nter to the intention of the 1eislat*re to create a free port ,here the free flo, of goods or capital ,ithin% into% and o*t of the =ones is ins*red. The records of the Senate containin the disc*ssion of the concept of special economic =one in Section &" a$ of Rep*)lic Act /o. 8""8 sho, the leislati-e intent that consu$er &oods enterin& the "" +hich satis the needs o the ;one and are consu$ed there are not s*)4ect to d*ties and ta0es in accordance ,ith Philippine la,s. o,e-er% allo,in ta0 and d*tyfree remo-al of oods to certain individuals from the Sec*red Area of the SS@% are n*ll and -oid for )ein contrary to Section &" of Rep*)lic Act /o. 8""8. ).
Insofar as the +S@ is concerned% it is e0cl*ded from the ta0 and d*tyfree incenti-es pro-ided *nder Rep*)lic Act /o. 8""8. 9hile Sec. &" of RA 8""8 e0pressly pro-ides for the rant of incenti-es to the SS@% it fails to ma7e any similar rant in fa-or of other economic =ones% incl*din the +S@. Ta0 and d*tyfree incenti-es )ein in the nat*re of ta0 e0emptions% the )asis thereof sho*ld )e cateorically and *nmista7a)ly e0pressed from the lan*ae of the stat*te.
c.
Petitioners o)4ection to the allo,ance of ta0free remo-al of oods from the special economic =ones as pre-io*sly a*thori=ed )y the >*estioned iss*ances has )ecome moot and academic. @ffecti-e Han*ary &% &'''% the rant of d*tyfree shoppin pri-ilees to domestic to*rists and to residents li-in ad4acent to SS@ and the +S@ had )een re-o7ed. Section " of @2 (#( 2cto)er "#% "###$ declared that all special shoppin pri-ilees are terminated e0cept for >*alified indi-id*als as pro-ided )y la,.
". 92/ @2 '8A is -iolati-e of petitioners riht to e>*al protection of the la,s%in a sense that pri-ate respondents operatin inside the SS@ are not different from the retail esta)lishments located o*tside% the prod*cts sold )ein essentially the same /o. The *aranty of the e>*al protection of the la,s is not -iolated )y a leislation )ased on a reasona)le classification% i.e.% it m*st &$ rest on s*)stantial distinction% "$ )e ermane to the p*rpose of the la,% ($ not )e limited to e0istin conditions only% and <$ apply e>*ally to all mem)ers of the same class. There are s*)stantial differences )et,een the )i in-estors ,ho are )ein l*red to esta)lish and operate their ind*stries in the socalled sec*red area and the present )*siness operators o*tside the area. @>*alprotection *arantee does not re>*ire territorial *niformity of la,s. As lon as there are act*al and material differences )et,een territories% there is no -iolation of the constit*tional cla*se. The classification is ermane to the p*rpose of RA 8""8% i.e to con-ert the lands formerly occ*pied )y the CS military )ases into economic or ind*strial areas% and e0tend economic
incenti-es to the esta)lishments ,ithin the =one to attract and enco*rae forein and local in-estors. The classification is not limited to the e0istin conditions% inasm*ch as the la, en-isioned the former military reser-ation to *ltimately de-elop into a selfs*stainin in-estment center. The classification applies e>*ally to all retailers fo*nd ,ithin the sec*red area. They are all similarly treated% )oth in pri-ilees ranted and in o)liations re>*ired. (. 92/ the rant of special ta0 e0emptions and pri-ilees a-e the pri-ate respondents *nd*e ad-antae o-er local enterprises ,hich do not operate inside the SS@% there)y creatin *nfair competition in -iolation of the constit*tional prohi)ition aainst *nfair competition and practices in restraint of trade /o. The mere fact that incenti-es and pri-ilees are ranted to certain enterprises to the e0cl*sion of others does not render the iss*ance *nconstit*tional for espo*sin *nfair competition. Said constit*tional prohi)ition cannot hinder the 1eislat*re from *sin ta0 incenti-es as a tool to p*rs*e its policies. <. 92/ @2 openly -iolated the State policy of promotin the preferential *se of Filipino la)or% domestic materials and locally prod*ced oods /o. The mere fact that said iss*ance a*thori=es the importation and trade of forein oods does not s*ffice to declare it *nconstit*tional on this ro*nd. 9hile the +onstit*tion does not enco*rae the *nlimited entry of forein oods% ser-ices and in-estments into the co*ntry% it does not prohi)it them either. In fact% it allo,s an e0chane on the )asis of e>*ality and reciprocity% fro,nin only on forein competition that is unfair . The @0ec*ti-e Department% ,ith its s*)se>*ent iss*ance of @0ec*ti-e 2rder /os. <<< and (#(% has pro-ided certain meas*res to pre-ent *nfair competition • •
Sec. % @2 3# Sec. <% B+DA Board Resol*tion /o. '(##(< are here)y declared /C11 and V2ID All portions of @2 '8A are -alid and effecti-e% e0cept the second sentences in pararaphs &." and &.(
1. 9?: vs r$ita 01 "ept 05 )acts/ RA '((8% amendin certain pro-isions of the /IR+% )ecame effecti-e on H*ly &% "##.
Petitioners >*estion the constit*tionality of Sections <% and of RA '((8. These >*estioned pro-isions imposes a &#; VAT on partic*lar transactions. They all contain a *niform proviso a*thori=in the President% *pon recommendation of the Secretary of Finance% to raise the VAT rate to &";% effecti-e Han*ary &% "##% after certain conditions ha-e )een satisfied. Petitioners ar*e that the la, is *nconstit*tional% as it constit*tes a)andonment )y +onress of its e0cl*si-e a*thority to fi0 the rate of ta0es *nder Article VI% Section "3"$ of the &'38 Philippine +onstit*tion. Petitioners also contend that these pro-isions are *nconstit*tional for )ein ar)itrary% oppressi-e% e0cessi-e% and confiscatory% etc. !ssue/ 9as there an *nd*e deleation of leislati-e po,er
R*lin: /o. The case )efore the +o*rt is not a deleation of leislati-e po,er. It is simply a deleation of ascertainment of facts *pon ,hich enforcement and administration of the increase rate *nder the la, is continent. The leislat*re has made the operation of the &"; rate effecti-e Han*ary &% "##% continent *pon a
specified fact or condition. It lea-es the entire operation or nonoperation of the &"; rate *pon fact*al matters o*tside of the control of the e0ec*ti-e. /o discretion ,o*ld )e e0ercised )y the President. The *se of the ,ord shall connotes a mandatory order. Th*s% it is the ministerial d*ty of the President to immediately impose the &"; rate *pon the e0istence of any of the conditions specified )y +onress. This is a d*ty ,hich cannot )e e-aded )y the President. It is a clear directi-e to impose the &"; VAT rate ,hen the specified conditions are present. The time of ta7in into effect of the &"; VAT rate is )ased on the happenin of a certain specified continency% or *pon the ascertainment of certain facts or conditions )y a person or )ody other than the leislat*re itself. !ssue/ Does the la, conform ,ith the r*le on *niformity and e>*ita)ility of ta0ation Rulin&/ !es. The ta0 la, is *niform as it pro-ides a standard rate of #; or &#; or &";$ on all oods and ser-ices. Sections <% and of RA '((8 pro-ide for a rate of &#; or &";$ on sale of oods and properties% importation of oods% and sale of ser-ices and *se or lease of properties. These same sections also pro-ide for a #; rate on certain sales and transaction.
/either does the la, ma7e any distinction as to the type of ind*stry or trade that ,ill )ear the 8#; limitation on the credita)le inp*t ta0% year amorti=ation of inp*t ta0 paid on p*rchase of capital oods or the ; final ,ithholdin ta0 )y the o-ernment. It m*st )e stressed that the r*le of *niform ta0ation does not depri-e +onress of the po,er to classify s*)4ects of ta0ation% and only demands *niformity ,ithin the partic*lar class. RA '((8 is also e>*ita)le. The la, is e>*ipped ,ith a threshold marin. The VAT rate of #; or &#; or &";$ does not apply to sales of oods or ser-ices ,ith ross ann*al sales or receipts not e0ceedin P&%##%###.##. Also% )asic marine and aric*lt*ral food prod*cts in their oriinal state are still not s*)4ect to the ta0% th*s ens*rin that prices at the rassroots le-el ,ill remain accessi)le. The disp*ted sales ta0 is also e>*ita)le. It is imposed only on sales of oods or ser-ices )y persons enaed in )*siness ,ith an areate ross ann*al sales e0ceedin P"##%###.##. Small corner sari-sari stores are conse>*ently e0empt from its application. 1i7e,ise e0empt from the ta0 are sales of farm and marine prod*cts% so that the costs of )asic food and other necessities% spared as they are from the incidence of the VAT% are e0pected to )e relati-ely lo,er and ,ithin the reach of the eneral p*)lic. !ssue/ Does the la, -iolate the r*le on proressi-ity of ta0ation Rulin&/ /o. The +onstit*tion does not really prohi)it the imposition of indirect ta0es% li7e the VAT. 9hat it simply pro-ides is that +onress shall 5e-ol-e a proressi-e system of ta0ation.5 The constit*tional pro-ision has )een interpreted to mean simply that direct ta0es are to )e preferred JandK as m*ch as possi)le% indirect ta0es sho*ld )e minimi=ed. Indeed% the mandate to +onress is not to prescri)e% )*t to e-ol-e% a proressi-e ta0 system. 2. an vs :el Rosario6 Jr. 2'7 "CR '24 *unior$itDeBual protectn E
FA+TS: These t,o consolidated special ci-il actions for prohi)ition challene% in G.R. /o. &#'"3'% the constit*tionality of Rep*)lic Act /o. 8<'% also commonly 7no,n as the Simplified /et Income Ta0ationn Scheme LS/IT$% amendin certain pro-isions of the /ational Internal Re-en*e Re*lations /o. "'(% prom*lated )y p*)lic respondents p*rs*ant to said la,. Petitioner intimates that Rep*)lic Act /o. 8<' desecrates the constit*tional re>*irement that ta0ation Lshall )e *niform and e>*ita)le in that the la, ,o*ld no, attempt to ta0 sinle proprietorships and professionals differently from the manner it imposes the ta0 on corporations and partnerships. Petitioners claim to )e ta0payers ad-ersely affected )y the contin*ed implementation of the amendatory leislation.
ISSC@: Does Rep*)lic Act /o. 8<' -iolate the +onstit*tion for imposin ta0es that are not *niform and e>*ita)le. RC1I/G: The Petition is dismissed. Cniformity of ta0ation% li7e the 7indred concept of e>*al protection% merely re>*ires that all s*)4ects or o)4ects of ta0ation% similarly sit*ated% are to )e treated ali7e )oth in pri-ilees and lia)ilities H*an 1*na S*)di-ision -s. Sarmiento% '& Phil. (8&$. Cniformity does not forfend classification as lon as: &$ the standards that are *sed therefor are s*)stantial and not ar)itrary% "$ the cateori=ation is ermane to achie-e the leislati-e p*rpose% ($ the la, applies% all thins )ein e>*al% to )oth present and f*t*re conditions% and <$ the classification applies e>*ally ,ell to all those )elonin to the same class Pepsi +ola -s. +ity of B*t*an% "< S+RA ( Basco -s. PAG+2R% &'8 S+RA 88&$. 9hat may instead )e percei-ed to )e apparent from the amendatory la, is the leislati-e intent to increasinly shift the income ta0 system to,ards the sched*lar approach in the income ta0ation of indi-id*al ta0payers and to maintain% )y and lare% the present lo)al treatment on ta0a)le corporations. 9e certainly do not -ie, this classification to )e ar)itrary and inappropriate. a-in arri-ed at this concl*sion% the plea of petitioner to ha-e the la, declared *nconstit*tional for )ein -iolati-e of d*e process m*st perforce fail. The d*e process cla*se may correctly )e in-o7ed only ,hen there is a clear contra-ention of inherent or constit*tional limitations in the e0ercise of the ta0 po,er.
'. "outhern Cross Ce$ent vs C#P 4(5 "CR 5'2 *dele&ated auth.
H*risdiction of +o*rt on Ta0 Appeals Delea)ility of tariff po,er to President FA+TS: Philcemcor% an association of at least eihteen &3$ domestic cement man*fact*rers filed ,ith the Department of Trade and Ind*stry DTI$ a petition see7in the imposition of safe*ard meas*res on ray Portland cement% in accordance ,ith the Safe*ard Meas*res Act SMA$. After the DTI$ iss*ed a pro-isional safe*ard meas*re% the application ,as referred to the Tariff +ommission for a formal in-estiation p*rs*ant to Section ' of the SMA and its Implementin R*les and Re*lations% in order to determine ,hether or not to impose a definiti-e safe*ard meas*re on imports of ray Portland cement. The Tariff +ommission held p*)lic hearin and cond*cted its o,n in-estiation and iss*ed its Formal In-estiation Report that Lno definiti-e eneral safe*ard meas*re )e imposed on the importation of ray Portland cement. The DTI Secretary then prom*lated a decision e0pressin its disareement ,ith the concl*sions of the Tariff +ommission )*t at the same time denyin Philcemcors application for safe*ard meas*res in liht of the Tariff +ommissions neati-e findins. Philcemcor challened this decision of the DTI Secretary )y filin ,ith the +o*rt of Appeals a petition for certiorari% Prohi)ition and Mandam*s see7in to set aside the DTI Decision as sell as the Tariff +ommissions Report. The appellate co*rt partially ranted the petition and r*led that it had 4*risdiction o-er the petition for certiorari since it alleed ra-e a)*se of discretion and also held that DTI Secretary ,as not )o*nd )y the fact*al findins of the Tariff +ommission. The So*thern +ross then filed the present petition% ar*in that the +o*rt of Appeals has no 4*risdiction o-er Philcemcors petition. Despite the fact the +o*rt of Appeals Decision had not yet )ecame final% its )indin force ,as cited )y the DTI Secretary ,hen he iss*ed a ne, Decision% ,herein he imposed a definiti-e safe*ard meas*re on the importation of ray Portland cement% in the form of a definiti-e safe*ard d*ty in the amo*nt of P"#.#6<# 7. )a for three years on imported ray Portland +ement. So*thern +ross filed a Temporary Restrainin 2rder and6or A 9rit of Preliminary In4*nction ,ith the +o*rt% see7in to en4oin the DTI Secretary from enforcin his ne, iss*ed Decision. Philcemcor then filed its opposition statin that it is not the +A )*t the +o*rt of Ta0 Appeals +TA$ that has 4*risdiction o-er the application *nder the la,. So*thern +ross then filed ,ith the +TA a Petition for Re-ie, aainst the Decision ,hich imposed the definite safe*ard meas*re )*t did not promptly inform +A a)o*t the filin. Philcemcor ar*ed ,ith the +TA that So*thern +ross resorted to for*m shoppin. The +o*rt in its decision ranted So*thern +rosss Petition ,hich n*llified the Decision of the DTI secretary and declared the Decision of the +o*rt of Appeals n*ll and -oid% and
also concl*ded that the same had not committed for*m shoppin for there ,as no malicio*s intent to s*)-ert proced*ral r*les. Philcemcor and the DTI Secretary then promptly filed their respecti-e motions for reconsideration. The +o*rt @n Banc then resol-e the t,o central iss*es pertainin to the 4*risdictional aspect and to the s*)stanti-e aspect of ,hether the DTI Secretary may impose a eneral safe*ard meas*re despite a neati-e determination )y the Tariff +ommission and ,hether the Tariff +ommission co*ld -alidly e0ercise >*asi4*dicial po,ers in the e0ercise of its mandate *nder the SMA. In its resol*tion% the +o*rt directed the parties to maintain the stat*s >*o and *ntil f*rther orders from this +o*rt. ISSC@S: I. H*risdiction to Re-ie, the Secretarys Decisions II. Re-ie,a)ility of the Tariff +ommissions Report RC1I/G: I. 2n the Iss*e of 4*risdiction% the DTI secretarys decisions ,hether imposin safe*ard meas*res or not N are s*)4ect to re-ie, )y the +o*rt of Ta0 Appeals p*rs*ant to Section "' of RA 33##. Cnder section "'% there are three re>*isites to ena)le the +TA to ac>*ire 4*risdiction o-er the petition for re-ie, contemplated therein &$ there m*st )e a r*lin )y the DTI Secretary "$ the petition m*st )e filed )y an interested party ad-ersely affected )y the r*lin and ($ s*ch r*lin m*st )e in Lin connection ,ith the imposition of a safe*ard meas*re. 2)-io*sly% there are differences )et,een La r*lin for the imposition of a safe*ard meas*re% and one iss*ed Lin connection ,ith imposition of a safe*ard meas*re. The first ad-erts to a sin*lar type of r*lin% namely one that imposes a safe*ard meas*re. The second does not contemplate only one 7ind of r*lin% )*t a myriad of r*lins iss*ed Lin connection ,ith the imposition of a safe*ard meas*re. II. The DTI Secretary is not )o*nd )y the Tariff +ommissions recommendations. The Po,er to impose Tariffs is essentially leislati-e it is delea)le only to the president. The application of safe*ard meas*res% ,hile primarily intended to protect domestic ind*stries% is essentially in the nat*re of a tariff imposition. P*rs*ant to the +onstit*tion% the imposition of tariffs and ta0es is a hihly pri=ed leislati-e preroati-e. P*rs*ant also to the +onstit*tion% s*ch po,er to fi0 tariffs may as an e0ception% )e deleated )y +onress to the President. Section "3 of Article VI of the +onstit*tion pro-ides for that e0ception. OThe moti-ation )ehind many ta0ation meas*res is the implementation of police po,er oals. Proressi-e income ta0es alle-iate the marin )et,een the rich and the poor. Ta0ation is distin*isha)le from police po,er as to the means employed to implement these p*)lic ood oals. Those doctrines that are *ni>*e to ta0ation arose from pec*liar considerations s*ch as those especially p*niti-e effects of ta0ation% and the )elief that ta0es are the life)lood of the state. These considerations necessitated the e-ol*tion of ta0ation as a distinct leal concept from police po,er. !et at the same time% it has )een reconi=ed that ta0ation may )e made the implement of the states police po,er.O 4. )ortune obacco GR 18000( 28 "ept 2011 *non dele&ation6 unior$it
Facts: In H*ne "##<% Fort*ne To)acco filed an administrati-e claim for ta0 ref*nd ,ith the +IR for erroneo*sly and6or illeally collected ta0es in the amo*nt of P<'& million.JK 9itho*t ,aitin for the +IRs action on its claim% Fort*ne To)acco filed ,ith the +TA a 4*dicial claim for ta0 ref*nd.J8K Fort*ne To)accos claim for ref*nd of o-erpaid e0cise ta0es is )ased primarily on ,hat it considers as an *na*thori=ed administrati-e leislation on the part of the +IR. Iss*e: 9hat is the r*le of *niformity of ta0 la,s R*lin: The +onstit*tion re>*ires that ta0ation sho*ld )e *niform and e>*ita)le.J"#K Cniformity in ta0ation re>*ires that all s*)4ects or o)4ects of ta0ation% similarly sit*ated% are to )e treated ali7e )oth in pri-ilees and lia)ilities. J"&K This re>*irement% ho,e-er% is *n,ittinly -iolated ,hen the pro-iso in Section & of RR &8'' is applied in certain cases. To ill*strate this point% ,e consider three )rands of ciarettes% all classified as lo,erpriced ciarettes *nder Section &<c$<$ of the &''8 Ta0 +ode% since their net retail price is )elo, P.## per pac7.
Altho*h the )rands all )elon to the same cateory% the pro-iso in Section &% RR &8'' a*thori=ed the imposition of different and rossly disproportionate$ ta0 rates see col*mn JDK$. It effecti-ely e0tended the >*alification stated in the third pararaph of Section &<c$ of the &''8 Ta0 +ode that ,as s*pposed to apply only d*rin the transition period !!!.
. state a, *secs 84 E <7 and 1. :i;on vs. C F G.R. 3o. 140<44 F pril '06 2008 )acts/ At the time of the death of Hose Fernande=% his estate has claims ,hich e0ceeds the ross -al*e of his estate% ,hich ,as the reason ,hy at the time of filin of estate ta0 ret*rn% the ta0 d*e ,as /I1. o,e-er% post death de-elopments occ*rred ,here the creditors of the estate either condoned or red*ced its claim aainst it )y ,ay of compromise areements. For this reason% the BIR assessed the estate of Hose Fernande= ,ith deficiency ta0. Petitioner >*estions the assessment statin that the rec7onin time for ta0 lia)ility sho*ld )e the time of the filin of the estate ta0 ret*rn and not the date of the +ompromise Areements. Petitioners ar*e that the -al*e of the claims aainst the estate at the time of the filin of the estate ta0 ret*rn sho*ld )e the )asis for the ta0 ded*ctions and not the act*al amo*nt paid after s*ch ret*rn ,as filed. The +TA and +A r*led in fa-o*r of BIR despite failin to ma7e a formal offer of e-idence rationali=in that despite the fail*re% s*ch e-idence formed part of the records of the BIR hence can still )e appreciated in the decision. &. 9ere the e-idences not formally offered admissi)le !ssues/ ". 92/ the -al*e of the claims aainst the estate at the time of death is the )asis for the ded*ctions or the act*al amo*nt paid to the creditors after compromise areements ha-e )een entered into (. 9hat is the dateofdeath-al*ation principle Rulin&/ &. /o. The +TA is a co*rt of records% hence% no e-identiary -al*e can )e i-en the pieces of e-idence s*)mitted )y the BIR% as the r*les on doc*mentary e-idence re>*ire that these doc*ments m*st )e formally offered )efore the +TA. ". The -al*e of the claims at the time of death sho*ld )e the )asis for ded*ctions. Ta0 stat*tes )ein constr*ed strictissimi 4*ris aainst the o-ernment.J'K Any do*)t on ,hether a person% article or acti-ity is ta0a)le is enerally resol-ed aainst ta0ation. F*rther% s*ch constr*ction finds rele-ance and consistency in o*r R*les on Special Proceedins ,herein the term 5claims5 re>*ired to )e presented aainst a decedent?s estate is enerally constr*ed to mean de)ts or demands of a pec*niary nat*re ,hich co*ld ha-e )een enforced aainst the deceased in his lifetime% or lia)ility contracted )y the deceased )efore his death. Therefore% the claims e0istin at the time of death are sinificant to% and sho*ld )e made the )asis of% the determination of allo,a)le ded*ctions. (. Dateofdeath -al*ation states that the appropriate ded*ction aainst the ta0 lia)ility of the estate is the -al*e that the claim had at the date of the decedent?s death. 2. #arcos !!6 GR 1208806 June 56 1<<7 E illar$ea '. C!R vs Rees6 GR 15<(<46 Jan 276 200( *validit o ass@tH "ec 228 )C"/ In &''(% Maria Tancino died lea-in )ehind an estate ,orth P(" million. In &''8% a ta0 a*dit ,as cond*cted on the estate. Mean,hile% the /ational Internal Re-en*e +ode /IR+$ of &''8 ,as passed. @-ent*ally in &''3% the estate ,as iss*ed a final assessment notice FA/$ demandin the estate to pay P&<.' million in ta0es incl*si-e of s*rchare and interest the estates lia)ility ,as )ased on Section ""' of the JoldK Ta0 +ode. A=*cena Reyes% one of the heirs% protested the FA/. The +ommissioner of Internal Re-en*e +IR$ ne-ertheless iss*ed a ,arrant of distraint and6or le-y. Reyes aain protested the ,arrant )*t in March &'''% she offered a compromise and ,as ,illin to pay P& million in ta0es. er offer ,as denied. She contin*ed to ,or7 on another compromise )*t ,as e-ent*ally denied. The case reached the +o*rt of Ta0 Appeals ,here Reyes ,as also denied. In the +o*rt of Appeals% Reyes recei-ed a fa-ora)le 4*dment. !""/ 9hether or not the formal assessment notice is -alid.
R!3G/ /o. The /IR+ of &''8 ,as already in effect ,hen the FA/ ,as iss*ed. Cnder Section ""3 of the /IR+% ta0payers shall )e informed in ,ritin of the la, and the facts on ,hich the assessment is made: other,ise% the assessment shall )e -oid. In the case at )ar% the FA/ merely stated the amo*nt of lia)ility to )e sho*ldered )y the estate and the la, *pon ,hich s*ch lia)ility is )ased. o,e-er% the estate ,as not informed in ,ritin of the facts on ,hich the assessment of estate ta0es had )een made. The estate ,as merely informed of the findins of the +IR. Section ""3 of the /IR+ )ein remedial in nat*re can )e applied retroacti-ely e-en tho*h the ta0 in-estiation ,as cond*cted prior to the la,s passae. +onse>*ently% the in-alid FA/ cannot )e a )asis of a compromise% any proceedin emanatin from the in-alid FA/ is -oid incl*din the iss*ance of the ,arrant of distraint and6or le-y.
4. state o Juliana :ie;6 GR 1555416 Jan 276 2004 *validit o ass@t upon a&ent E Ganir 5. C!R vs C6 C6 Pa>unar6 GR 12'20(6 #arch 226 2000 *allo+. dedns
FA+TS: Pedro Pa4onar% a mem)er of the Philippine Sco*t% Bataan +ontinent% d*rin the second 9orld 9ar% ,as a part of the infamo*s Death March )y ,hich he s*ffered shoc7 and )ecame insane. is sister% Hosefina Pa4onar )ecame the *ardian o-er his person% ,hile his property ,as placed *nder *ardianship of the Philippine /ational Ban7 P/B$. P/B filed an acco*ntin of the decedents property *nder *ardianship. o,e-er% it didenot file an estate ta0 ret*rn% instead it ad-ised Pedro Pa4onars heirs to e0ec*te an e0tra4*dicial settlement and to pay the estate ta0. Hosefina Pa4onar ,as appointed as the re*lar administratri0 of Pedro Pa4onars estate. P*rs*ant to a second assessment )y the BIR for deficiency estate ta0% the estate of Pedro Pa4onar paid estate ta0. Hosefina Pa4onar% in her capacity as administratri0 and heir of Pedro Pa4onars estate filed a protest prayin that a portion of the estate ta0 paid )e ret*rned to the heirs. 9itho*t ,aitin for her protest to )e resol-ed% Hosefina Pa4onar filed a petition for re-ie, ,ith the +TA prayin for the ref*nd. The +TA ordered the +IR to ref*nd Hosefina Pa4onar. Amon the ded*ctions from the ross estate allo,ed )y the +TA ,ere the amo*nts representin the notarial fee for the e0tra 4*dicial settlement and the attorneys fees for *ardianship. ISSC@: 9hether the notarial fee paid for the e0tra 4*dicial settlement and the attorneys fees in the *ardianship proceedins may )e allo,ed as ded*ctions from the ross estate of decedent RC1I/G: !es. They sho*ld )e allo,ed as ded*cti)le e0penses from the ross estate. H*dicial e0penses are e0penses of administration. Administration e0penses% as an allo,a)le ded*ction from the ross estate of the decedent for p*rpose s of arri-in at the -al*e of the net estate% ha-e )een constr*ed )y federal and state co*rts of the Cnited States to incl*de all e0penses Lessential to the collection of the assets% payment of de)ts or the distri)*tion of the property to the persons entitled to it. In other ,ords% the e0penses m*st )e essential to the proper settlement of the estate. In this case% the notarial fee paid for the e0tra 4*dicial settlement is clearly ded*cti)le e0pense since s*ch settlement effected a distri)*tion of Pedro Pa4onars estate to his la,f*l heirs. Similarly% the attorneys fees paid to the P/B for actin as *ardian of Pedro Pa4onars property d*rin his lifetime sho*ld also )e considered as a ded*cti)le administration e0pense. 9. :onors a, *secs <8 E 104 (. Republic vs Gu;$an6 G.R. 3o. 1'2<(4. )ebruar 186 2000 *ele$ents6 donation
)C"/
Da-id Rey G*=man% a nat*ral)orn American citi=en% is the son of Simeon G*=man% a nat*rali=ed American citi=en% and elen Meyers G*=man% an American citi=en. Simeon died lea-in to his sole heirs elen and Da-id an estate consistin of se-eral parcels of land in B*lacan. elen e0ec*ted the &st *nreistered U*itclaim Deed con-eyin to Da-id her *ndi-ided interest in Simeons estate% and a "nd Deed confirmin the &st and f*rther encompassin all her other property in the Philippines. Da-id e0ec*ted an SPA ac7no,ledin the "nd deed. The Go-t filed a Petition for @scheat on the said share. RT+ dismissed the petition% holdin that the " deeds had no leal force and effect. +A affirmed. Go-t anchors its ar*ment on Art. II of the +onstit*tion% that Da-id co*ld not -alidly ac>*ire the interest% as they are in reality donations inter -i-os. Da-id maintains that he ac>*ired the property )y riht of accretion% ,ith the deeds merely declarin elen?s intention to reno*nce her share in the property and that if there ,as donation% the SPA does not indicate acceptance thereof. ISSC@ &: 92/ there ,as donation RC1I/G &: /one.The element of anim*s donandi ,as missin. 1i7e,ise% the " deeds% altho*h p*)lic doc*ments% lac7 the essential element of acceptance in the proper form. ( essential elements of a donation: a$ the red*ction of the patrimony of the donor )$ the increase in the patrimony of the donee and% c$ the intent to do an act of li)erality or anim*s donandi. For immo-a)les% the donation sho*ld )e made in a p*)lic doc*ment and% it sho*ld )e accepted in the same deed or in a separate p*)lic doc*ment. For the latter% s*ch acceptance m*st )e noted )oth in the deeds of acceptance and donation other,ise% the donation is n*ll and -oid.
ISSC@ ": 9as there a -alid rep*diation )y elen of her inheritance RC1I/G ": /one. The a)sence of a donation does not render the rep*diation made )y elen in fa-or of Da-id -alid% since elen had already accepted her share of the inheritance% )y e0ec*tin the Deed of @0tra4*dicial Settlement of the @state of Simeon% and thereafter reisterin said properties. ence% the " >*itclaim deeds she e0ec*ted && years after she had accepted the inheritance ha-e no leal force and effect. /e-ertheless% the n*llity of the rep*diation does not ipso facto operate to con-ert the parcels of land into res n*lli*s to )e escheated in fa-or of the Go-ernment. The parcels of land sho*ld re-ert to their pri-ate o,ner% elen% ,ho% altho*h )ein an American citi=en% is >*alified )y hereditary s*ccession to o,n the property. 7. CCR vs C!R6 G.R. 3o. 120721. )ebruar 2'6 2005 *&it ta,
Facts: D*rin the &'38 national elections% petitioners as partners of the A++RA la, firm% contri)*ted P33" &.(& each for the campain f*nds of Senator @dardo Anara ,ho is r*nnin for Senate. The BIR assessed each of the petitioners for their contri)*tions. 2n the other hand% petitioners claimed that political contri)*tions are not considered ifts *nder the /ational Internal Re-en*e +ode and that they are not lia)le for donors ta0. The claim for e0emption ,as denied )y the +ommissioner. Iss*e: 9hether or not political contri)*tions are ifts and th*s% s*)4ect to d onors ta0 R*lin: !es% political contri)*tions are ifts and are s*)4ect to donors ta0. Donation has the follo,in elements: a$ red*ction of the patrimony of the donor )$ increase in the patrimony of the done and c$ intent to do an act of li)erality or anim*s donandi. Petitioners contri)*tion of money ,itho*t any material consideration e-idences anim*s donandi. The fact that their p*rpose for donatin ,as to aid in the election of the done does not neate the presence of donati-e intent. Donati-e intent is a creat*re of the mind. It is pres*med present ,hen one i-es a part of ones patrimony to another ,itho*t consideration. F*rther% donati-e intent is not neated ,hen the person donatin has other intentions% moti-es or p*rposes ,hich do not contradict donati-e intent.
8. C!R vs 9) Goodrich6 G.R. 3o. 104171. )ebruar 246 1<<<
Facts: Pri-ate Respondent ,as an Americano,ned and controlled corporation. As a condition for appro-in the man*fact*re )y pri-ate respondent of tires and other r*))er prod*cts% the +entral Ban7 of the Philippines re>*ired that it sho*ld de-elop a r*))er plantation. In compliance ,ith this re>*irement% pri-ate respondent p*rchased from the Philippine o-ernment in &'&% *nder the P*)lic 1and Act and the Parity Amendment to the &'( +onstit*tion% certain parcels of land located in T*ma4*)on% Basilan% and there de-eloped a r*))er plantation. The 4*stice secretary rendered an opinion statin that% *pon the e0piration of the Parity Amendment on H*ly (% &'8<% the o,nership rihts of Americans o-er p*)lic aric*lt*ral lands% incl*din the riht to dispose or sell their real estate% ,o*ld )e lost. 2n the )asis of this 2pinion% pri-ate respondent sold to Silto,n Realty Philippines% Inc. on Han*ary "&% &'8<% its Basilan landholdin for P##%### paya)le in installments. In accord ,ith the terms of the sale% Silto,n Realty Philippines% Inc. leased the said parcels of land to pri-ate respondent for a period of " years% ,ith an e0tension of another " years at the latters option. Based on the BIRs 1etter of A*thority /o. &#&& dated April &<% &'8% the )oo7s and acco*nts of pri-ate respondent ,ere e0amined for the p*rpose of determinin its ta0 lia)ility for ta0a)le year &'8<. The e0amination res*lted in the April "(% &'8 assessment of pri-ate respondent for deficiency income ta0 in the amo*nt of P%##.(% ,hich it d*ly paid. S*)se>*ently the BIR also iss*ed 1etters of A*thority /os. #8<<"# RR and #8<<"& RR and Memorand*m A*thority Reference /o. 8<'&8 for the p*rpose of e0aminin Silto,ns )*siness% income and ta0 lia)ilities. 2n the )asis of this e0amination% the BIR commissioner iss*ed aainst pri-ate respondent on 2cto)er &#% &'3#% an assessment for deficiency in donors ta0 in the amo*nt of P&%#"#%3#% in relation to the pre-io*sly mentioned sale of its Basilan landholdins to Silto,n. Apparently% the BIR deemed the consideration for the sale ins*fficient% and the difference )et,een the fair mar7et -al*e and the act*al p*rchase price a ta0a)le donation. In a letter dated /o-em)er "<% &'3#% pri-ate respondent contested this assessment. 2n April '% &'3&% it recei-ed another assessment dated March &% &'3&% ,hich increased toP&%#'"%'<' the amo*nt demanded for the alleed deficiency donors ta0% s*rchare% interest and compromise penalty. Iss*e: 9hether or not the herein deficiency donors ta0 assessment for &'8< is -alid and in accordance ,ith la,
R*lin: !es. the fact that pri-ate respondent sold its real property for a price less than its declared fair mar7et -al*e did not )y itself 4*stify a findin of false ret*rn. Indeed% pri-ate respondent declared the sale in its &'8< ret*rn s*)mitted to the BIR. Within the five-year prescriptive period, the !" could have issued the #uestioned assessment, because the declared fair market value of said property $as of public record . This it did not do% ho,e-er% d*rin all those fi-e years. Moreo-er% the BIR failed to pro-e that respondent?s &'8< ret*rn had )een filed fra*d*lently. @>*ally. sinificant ,as its fail*re to pro-e respondent?s intent to e-ade the payment of the correct amo*nt of ta0. Inel*di)ly% the BIR failed to sho, that pri-ate respondent?s &'8< ret*rn ,as filed fra*d*lently ,ith intent to e-ade the payment of the correct amo*nt of ta0. Moreo-er% e-en tho*h a donor?s ta0% ,hich is defined as 5a ta0 on the pri-ilee of transmittin one?s property or property rihts to another or others ,itho*t ade>*ate and f*ll -al*a)le consideration%5 is different from capital ains ta0% a ta0 on the ain from the sale of the ta0payer?s property formin part of capital assets% J&8K the ta0 ret*rn filed )y pri-ate respondent to report its income for the year &'8< ,as s*fficient compliance ,ith the leal re>*irement to file a ret*rn. In other ,ords% the fact that the sale transaction may ha-e partly res*lted in a donation does not chane the fact that pri-ate respondent already reported its income for &'8< )y filin an income ta0 ret*rn. Since the BIR failed to demonstrate clearly that pri-ate respondent had filed a fra*d*lent ret*rn ,ith the intent to e-ade ta0% or that it had failed to file a ret*rn at all% the period for assessments has o)-io*sly prescri)ed. S*ch instances of nelience or o-ersiht on the part of the BIR cannot pre4*dice ta0payers% considerin that the prescripti-e period ,as precisely intended to i-e them peace of mind. !. ,cise ta,es 1. Chevron Phils. GR 2108'( "ept 16 2015 en banc )acts/ Chevron sold and delivered petroleu$ products to C:C in the period ro$ u&ust 2007 to :ece$ber 2007.5Chevron did not pass on to C:C the e,cise ta,es paid on the i$portation o the petroleu$ products sold to C:C in ta,able ear 2007H( hence6 on June 2(6 200<6 it iled an ad$inistrative clai$ or ta, reund or issuance o ta, credit certiicate in the a$ount o P(65426400.00.7 Considerin& that respondent Co$$issioner o !nternal Revenue *C!R did not act on the ad$inistrative clai$ or ta, reund or ta, credit6 Chevron elevated its clai$ to the C b petition or revie+ on June 2<6 200<.8 he case6 doceted as C Case 3o. 7<'<6 +as raled to the C=s )irst :ivision !ssue/ he lone issue or resolution is +hether Chevron +as entitled to the ta, reund or the ta, credit or the e,cise ta,es paid on the i$portation o petroleu$ products that it had sold to C:C in 2007 Rulin&/ Pursuant to "ection 1'5*c6 supra6 petroleu$ products sold to entities that are b la+ e,e$pt ro$ direct and indirect ta,es are e,e$pt ro$ e,cise ta,. he phrase +hich are b la+ e,e$pt ro$ direct and indirect ta,es describes the entities to +ho$ the petroleu$ products $ust be sold in order to render the e,e$ption operative. "ection 1'5*c should thus be construed as an e,e$ption in avor o the petroleu$ products on +hich the e,cise ta, +as levied in the irst place. he e,e$ption cannot be &ranted to the buers - that is6 the entities that are b la+ e,e$pt ro$ direct and indirect ta,es - because the are not under an le&al dut to pa the e,cise ta,. !nas$uch as its liabilit or the pa$ent o the e,cise ta,es accrued i$$ediatel upon i$portation and prior to the re$oval o the petroleu$ products ro$ the custo$shouse6 Chevron +as bound to pa6 and actuall paid such ta,es. 9ut the status o the petroleu$ products as e,e$pt ro$ the e,cise ta,es +ould be conir$ed onl upon their sale to C:C in 2007 *or6 or that $atter6 to an o the other entities or a&encies listed in "ection 1'5 o the 3!RC. 9eore then6 Chevron did not have an le&al basis to clai$ the ta, reund or the ta, credit as to the petroleu$ products
2. C!R v P!!P!3" "% PR# CRPR!3 GR 1884<76 1< )ebruar 2014
)C": Respondent is enaed in the )*siness of processin% treatin and refinin petrole*m for the p*rpose of prod*cin mar7eta)le prod*cts and the s*)se>*ent sale thereof. 2n H*ly &3% "##"% respondent filed ,ith the 1are Ta0payers A*dit In-estiation Di-ision II of the B*rea* of Internal Re-en*e BIR$ a formal claim for ref*nd or ta0 credit in the total amo*nt of P"3%#<%'".&% representin e0cise ta0es it alleedly paid on sales and deli-eries of as and f*el oils to -ario*s international carriers d*rin the period 2cto)er to Decem)er "##&. S*)se>*ently% on 2cto)er "&% "##"% a similar claim for ref*nd or ta0 credit ,as filed )y respondent ,ith the BIR co-erin the period Han*ary to March "##" in the amo*nt of P<&%&<%3"8.''. Aain% on H*ly (% "##(% respondent filed another formal claim for ref*nd or ta0 credit in the amo*nt of P(#%"%3'#. co-erin deli-eries from April to H*ne "##". Since no action ,as ta7en )y the petitioner on said claims% respondent filed petitions for re-ie, )efore the +TA on Septem)er and Decem)er of "##(. +TAs First Di-ision r*led that respondent is entitled to the ref*nd of e0cise ta0es in the red*ced amo*nt of P'%#&<%"3(.##. The +TA First Di-ision relied on a pre-io*s r*lin rendered )y the +TA @n Banc in the case of LPilipinas Shell Petrole*m +orporation -. +IR /o-. "##$ ,here the +TA also ranted respondents claim for ref*nd on the )asis of e0cise ta0 e0emption for petrole*m prod*cts sold to international carriers of forein reistry for their *se or cons*mption o*tside the Philippines. Petitioners MR ,as denied. 2n appeal% +TA @n Banc *pheld the r*lin of the First Di-ision. Petitioners MR ,ith +TA ,as li7e,ise denied. ence% this petition. !""": &$ 92/ Section &( intended the ta0 e0emption to apply to petrole*m prod*cts at the point of prod*ction "$ 92/ Philippine Acetylene +o.% Inc. -. +ommissioner of Internal Re-en*e and Maceda -. Macarai% Hr. are inapplica)le in the liht of pre-io*s r*lins of the B* rea* of Internal Re-en*e BIR$ and the +TA that the e0cise ta0 on petrole*m prod*cts sold to international carriers for *se or cons*mption o*tside the Philippines attaches to the article ,hen sold to said international carriers% as it is the article ,hich is e0empt from the ta0% not the international carrier and ($ 92/ the Decision of this +o*rt ,ill not only ha-e ad-erse impact on the domestic oil ind*stry )*t is also in -iolation of international areements on +hicao +on-ention on International A-iation. R!3G: &$ /o. Cnder Section &"' of the /IR+% e0cise ta0es are those applied to oods man*fact*red or prod*ced in the Philippines for domestic sale or cons*mption or for any other disposition and to thins imported. @0cise ta0es as *sed in o*r Ta0 +ode fall *nder t,o types N &$ specific ta0 ,hich is )ased on ,eiht or -ol*me capacity and other physical *nit of meas*rement% and "$ ad -alorem ta0 ,hich is )ased on sellin price or other specified -al*e of the oods. A-iation f*el is s*)4ect to specific ta0 *nder Section &<3 $ ,hich attaches to said prod*ct 5as soon as they are in e0istence as s*ch.5 It is e-ident that Am H*r aside% the c*rrent definition of an e0cise ta0 is that of a ta0 le-ied on a specific article% rather than one 5*pon the performance% carryin on% or the e0ercise of an acti-ity.5 That e0cise ta0 as presently *nderstood is a ta0 on property has no )earin at all on the iss*e of respondents entitlement to ref*nd. /or does the nat*re of e0cise ta0 as an indirect ta0 s*pports respondents post*lation that the ta0 e0emption pro-ided in Sec. &( attaches to the petrole*m prod*cts themsel-es and conse>*ently the domestic petrole*m man*fact*rer is not lia)le for the payment of e0cise ta0 at the point of prod*ction. As already disc*ssed in o*r Decision% to ,hich H*stice Bersamin conc*rs% 5the accr*al and payment of the e0cise ta0 on the oods en*merated *nder Title VI of the /IR+ prior to their remo-al at the place of prod*ction are a)sol*te and admit of no e0ception.5 This also *nderscores the fact that the e0emption from payment of e0cise ta0 is conferred on international carriers ,ho p*rchased the petrole*m prod*cts of respondent. "$ !es. 2n the )asis of Philippine Acetylene% in holdin that a ta0 e0emption )ein en4oyed )y the )*yer cannot )e the )asis of a claim for ta0 e0emption )y the man*fact*rer or seller of the oods for any ta0 d*e to it as the man*fact*rer or seller% cannot )e applied in the case at hand. Similarly% follo,in the prono*ncement in
Maceda -. Macari% Hr. holdin that Section &(a$ sho*ld )e constr*ed as prohi)itin the shiftin of the )*rden of the e0cise ta0 to the international carriers ,ho )*y petrole*m prod*cts from the local man*fact*rers% ,ill )e inapplica)le as ,ell. ($ !es. It m*st )e noted that Section &(a$ of the /IR+ and earlier amendments to the Ta0 +ode represent the Go-ernments compliance ,ith the +hicao +on-ention pertainin to e0emptions as stip*lated in air transport areements entered into )y the Philippine Go-ernment ,ith -ario*s co*ntries. The rationale for e0emption of f*el from national and local ta0es ,as e0pressed )y I+A2 as follo,s: ...The +o*ncil in &'& adopted a Resol*tion and Recommendation on the ta0ation of f*el% a Resol*tion on the ta0ation of income and of aircraft% and a Resol*tion on ta0es related to the sale or *se of international air transport. It ,as desined to reconi=e the *ni>*eness of ci-il a-iation and the need to accord ta0 e0empt stat*s to certain aspects of the operations of international air transport and ,as adopted )eca*se m*ltiple ta0ation on the aircraft% f*el% technical s*pplies and the income of international air transport% as ,ell as ta0es on its sale and *se% ,ere considered as ma4or o)stacles to the f*rther de-elopment of international air transport. /on o)ser-ance of the principle of reciprocal e0emption en-isaed in these policies ,as also seen as ris7in retaliatory action ,ith ad-erse reperc*ssions on international air transport ,hich plays a ma4or role in the de-elopment and e0pansion of international trade and tra-el. Indeed% the a-o,ed p*rpose of a ta0 e0emption is al,ays 5some p*)lic )enefit or interest% ,hich the la,ma7in )ody considers s*fficient to offset the monetary loss entailed in the rant of the e0emption.5 The e0emption from e0cise ta0 of a-iation f*el p*rchased )y international carriers for cons*mption o*tside the Philippines f*lfills a treaty o)liation p*rs*ant to ,hich o*r Go-ernment s*pports the promotion and e0pansion of international tra-el thro*h a-oidance of m*ltiple ta0ation and ens*rin the -ia)ility and safety of international air tra-el. In s*m% the constr*ction of the ta0 e0emption pro-ision in >*estion sho*ld i-e primary consideration to its )road implications on the co*ntries commitment *nder international areements. In -ie, of the foreoin reasons% the +o*rt r*led that respondent% as the stat*tory ta0payer ,ho is directly lia)le to pay the e0cise ta0 on its petrole*m prod*cts% is entitled to a ref*nd or credit of the e0cise ta0es it paid for petrole*m prod*cts sold to international carriers% the latter ha-in )een ranted e0emption from the payment of said e0cise ta0 *nder Sec. &( a$ of the /IR+.
'. )ortune obacco GR 18000( 28 "ept 2011 *non-dele&ation6 unior$it
Facts: Prior to Han*ary &% &''8% the e0cises ta0es on ciarettes ,ere in the form of ad valorem ta0es% p*rs*ant to Section &<" of the &'88 /ational Internal Re-en*e +ode %&'' (a) Code$. Beinnin Han*ary &% &''8% RA 3"<# too7 effect and a shift from ad valorem to specific ta0es ,as made. A portion of Section &<"c$ of the &'88 Ta0 +ode% as amended )y RA 3"<#% reads in part: LThe specific ta0 from any )rand of ciarettes ,ithin the ne0t three ($ years of effecti-ity of this Act shall not )e lo,er than the ta0 J,hichK is d*e from each )rand on 2cto)er &% &''. 000 The rates of specific ta0 on ciars and ciarettes *nder pararaphs &$% "$% ($ and <$ hereof% shall )e increased )y t,el-e percent &";$ on Han*ary &% "###. To implement the &"; increase in specific ta0es mandated *nder Section &< of the &''8 Ta0 +ode and aain p*rs*ant to its r*lema7in po,ers% the +IR iss*ed RR &8''% ,hich reads partly: LPro-ided% ho,e-er% that the ne, specific ta0 rate for any e0istin )rand of ciars JandK ciarettes pac7ed )y machine% distilled spirits% ,ines and fermented li>*ors shall not )e lo,er than the e0cise ta0 that is act*ally )ein paid prior to Han*ary &% "###. P*rs*ant to these la,s% respondent Fort*ne To)acco +orporation paid in ad-ance e0cise ta0es and filed an
administrati-e claim for ta0 ref*nd ,ith the +IR for erroneo*sly and6or illeally collected ta0es in the amo*nt of P<'& million. In its decision% the +TA First Di-ision r*led in fa-or of Fort*ne To)acco and ranted its claim for ref*nd. The +TA First Di-isions r*lin ,as *pheld on appeal )y the +TA en banc. The +IRs motion for reconsideration of the +TA en banc*s decision ,as denied in a resol*tion. Iss*e: 9hether or not Section & of RR &8'' is an *na*thori=ed administrati-e leislation on the part of the +IR. R*lin: !es. The pro-iso in Section & of RR &8'' clearly ,ent )eyond the terms of the la, it ,as s*pposed to implement% and therefore entitles Fort*ne To)acco to claim a ref*nd of the o-erpaid e0cise ta0es collected p*rs*ant to this pro-ision. The r*le on *niformity of ta0ation is -iolated )y the pro-iso in Section &% RR &8''. Cniformity in ta0ation re>*ires that all s*)4ects or o)4ects of ta0ation% similarly sit*ated% are to )e treated ali7e )oth in pri-ilees and lia)ilities. Altho*h the )rands all )elon to the same cateory% the pro-iso in Section &% RR &8'' a*thori=ed the imposition of different and rossly disproportionate$ ta0 rates. It effecti-ely e0tended the >*alification stated in the third pararaph of Section &<c$ of the &''8 Ta0 +ode that ,as s*pposed to apply only d*rin the transition period. In the process% the +IR also perpet*ated the *ne>*al ta0 treatment of similar oods that ,as s*pposed to )e c*red )y the shift from ad -alorem to specific ta0es. The +o*rt f*rther said that the omission in the la, in fact re-eals the leislati-e intent not to adopt the hiher ta0 r*le. It appears that despite its a,areness of the need to protect the increase of e0cise ta0es to increase o-ernment re-en*e% +onress *ltimately decided aainst adoptin the hiher ta0 r*le. 4. "an #i&uel Corp *above GR 184428 2' 3ov 2011 *interprttn ta, la+s
FA+TS: 2n Han*ary &% &''3% Rep*)lic Act R.A.$ /o. 3<"< or the Ta0 Reform Act of &''8 too7 effect. It reprod*ced% as Section &<( fermented li>*or$ thereof% the pro-isions of Section &<# of the old /ational Internal Re-en*e +ode as amended )y R.A. /o. 3"<# ,hich )ecame effecti-e on Han*ary &% &''8. Section &<( pro-ides that: LThe e0cise ta0 from any )rand of fermented li>*or ,ithin the ne0t three ($ years from the effecti-ity of Rep*)lic Act /o. 3"<# shall not )e lo,er than the ta0 ,hich ,as d*e from each )rand on 2cto)er &% &''. The rates of e0cise ta0 on fermented li>*or *nder pararaphs a$% )$ and c$ hereof shall )e increased )y t,el-e percent &";$ on Han*ary &% "###. Re-. Re. /2. &8'' ,as s*)se>*ently passed increasin the applica)le ta0 rates on fermented li>*or )y &"; )*t ,ith a >*alification that: Lthe ne, specific ta0 rate for any e0istin )rand of ciars% ciarettes pac7ed )y machine% distilled spirits% ,ines and fermented li>*ors shall not )e lo,er than the e0cise ta0 that is act*ally )ein paid prior to Han*ary &% "###. San Mi*el contended that the said >*alification has no )asis in the plain ,ordin of Section &<( and filed a claim for ta0 ref*nd or credit for erroneo*sly paid e0cise ta0es. +IR contends that the >*alification in the last pararaph of Section &% Re-. Re. /2. &8'' pro-idin for the ne, specific ta0 rate for any )rand of ciars% ciarettes pac7ed )y machine% distilled spirits% ,ines and fermented li>*ors shall not )e lo,er than the e0cise ta0 that is act*ally )ein paid prior to Han. &% "###% is a -alid administrati-e interpretation of Sec. &<(% Ta0 Reform Act of &''8 and that it carries o*t the leislati-e intent )ehind the enactment of R.A. /o. 3(<#: to increase o-ernment re-en*es thro*h the collection of hiher e0cise ta0es on fermented li>*or. ISSC@: o, sho*ld ta0 la,s )e interpreted RC1I/G:
Ta0 stat*tes are constr*ed strictissimi +uris aainst the o-ernment. In case of discrepancy )et,een the )asic la, and a r*le or re*lation iss*ed to implement said la,% the )asic la, pre-ails as said r*le or re*lation cannot o )eyond the terms and pro-isions of the )asic la,. The o)4ect of iss*in BIR re-en*e re*lations is to esta)lish parameters or *idelines ,ithin ,hich o*r ta0 la,s sho*ld )e implemented% and not to amend or modify its s*)stanti-e meanin and import. As held in Commissioner of !nternal "evenue v. ortune (obacco Corporation, 0 0 0 The r*le in the interpretation of ta0 la,s is that a stat*te ,ill not )e constr*ed as imposin a ta0 *nless it does so clearly% e0pressly% and *nam)i*o*sly. A ta0 cannot )e imposed ,itho*t clear and e0press ,ords for that p*rpose. Accordinly% the eneral r*le of re>*irin adherence to the letter in constr*in stat*tes applies ,ith pec*liar strictness to ta0 la,s and the pro-isions of a ta0in act are not to )e e0tended )y implication. 0 0 0 As )*rdens% ta0es sho*ld not )e *nd*ly e0acted nor ass*med )eyond the plain meanin of the ta0 la,s.
ence% ,hile it may )e tr*e that the interpretation ad-ocated )y petitioner +IR is in f*rtherance of its desire to raise re-en*es for the o-ernment% s*ch no)le o)4ecti-e m*st yield to the clear pro-isions of the la,% partic*larly since% in this case% the terms of the said la, are clear and lea-e no room for interpretation.
In this case% the >*estioned >*alification *nder Re-. Re. &8'' m*st )e str*c7 do,n as in-alid and of no effect. Section &<( of the Ta0 Reform Act of &''8 is clear and *nam)i*o*s. It pro-ides for t,o periods: the first is the (year transition period )einnin Han*ary &% &''8% the date ,hen R.A. /o. 3"<# too7 effect% *ntil Decem)er (&% &''' and the second is the period thereafter. D*rin the (year transition period 6 Section &<( pro-ides that the e0cise ta0 from any )rand of fermented li>*orshall not )e lo,er than the ta0 ,hich ,as d*e from each )rand on 2cto)er &% &''. After the transitory period% Section &<( pro-ides that the e0cise ta0 rate shall )e the fi*res pro-ided *nder pararaphs a$% )$ and c$ of Section &<( )*t increased )y &";% ,itho*t reard to ,hether s*ch rate is lo,er or hiher than the ta0 rate that is act*ally )ein paid prior to Han*ary &% "### and therefore% ,itho*t reard to ,hether the re-en*e collection startin Han*ary &% "### may t*rn o*t to )e lo,er than that collected prior to said date. Re-en*e Re*lations /o. &8''% ho,e-er% created a ne+ ta, rate ,hen it added in the last pararaph of Section & thereof% the >*alification that the ta0 d*e after the &"; increase )ecomes effecti-e shall not )e lo,er than the ta0 act*ally paid prior to Han*ary &% "###. As there is nothin in Section &<( of the Ta0 Reform Act of &''8 ,hich clothes the BIR ,ith the po,er or a*thority to r*le that the ne, specific ta0 rate sho*ld not )e lo,er than the e0cise ta0 that is act*ally )ein paid prior to Han*ary &% "###% s*ch interpretation is clearly an in-alid e0ercise of the po,er of the Secretary of Finance to interpret ta0 la,s and to prom*late r*les and re*lations necessary for the effecti-e enforcement of the Ta0 Reform Act of &''8. 5. :ia&eo Phils !nc.
18'55'. 3ov. 126 2012 *+ho can ile clai$ 4 reund
)acts/ Petitioner )ro*ht from its s*pplier ra, alcohol for *se in man*fact*re of its li>*or prod*cts. The s*pplier imported the ra, alcohol and paid the related e0cise ta0es thereon )efore the same ,ere sold to petitioner. Petitioner then e0ported its locally man*fact*red prod*cts. 9ithin " years from the time the s*pplier paid the e0cise ta0es% petitioner filed ,ith the BIR applications for ta0 ref*nd6iss*ance of ta0 credit certificates correspondin to the e0cise ta0es ,hich the s*pplier paid )*t passed on to it as part of the p*rchase price of the s*)4ect ra, alcohol in-o7in Sec. &(#D$ of the Ta0 +ode.
D*e to the inaction of the +IR% petitioner filed a petition for re-ie, ,ith the +TA. The +IR assailed that petitioner lac7ed the leal personality to instit*te the claim for ref*nd )eca*se it ,as not the one ,ho paid the alleed e0cise ta0es )*t its s*pplier.
!ssue/ 9hether petitioner has the leal personality to file the claim for ref*nd or ta0 credit for the e0cise ta0es paid )y its s*pplier Rulin&/ /o. The riht to claim a ref*nd or )e credited ,ith the e0cise ta0es )elons to it s*pplier. The phrase Lany e0cise ta0 paid thereon shall )e credited or ref*nded5 in Sec. &(#D$ of the Ta0 +ode re>*ires that the claimant )e the same person ,ho paid the e0cise ta0. The proper party to >*estion% or see7 a ref*nd of% an indirect ta0 is the stat*tory ta0payer% the person on ,hom the ta0 is imposed )y la, and ,ho paid the same e-en if he shifts the )*rden thereof to another.
@0cise ta0es are ta0es on property ,hich are imposed on 5oods man*fact*red or prod*ced in the Philippines for domestic sales or cons*mption or for any other disposition and to thins imported.5 Tho*h e0cise ta0es are paid )y the man*fact*rer or prod*cer )efore remo-al of domestic prod*cts from the place of prod*ction or )y the o,ner or importer )efore the release of imported articles from the c*stomsho*se% the same parta7e of the nat*re of indirect ta,es ,hen it is passed on to the s*)se>*ent p*rchaser. !ndirect ta,es are defined as those ,herein the lia)ility for the payment of the ta0 falls on one person )*t the )*rden thereof can )e shifted to another person. 9hen the seller passes on the ta0 to his )*yer% he% in effect% shifts the ta0 )*rden% not the lia)ility to pay it% to the p*rchaser as part of the price of oods sold or ser-ices rendered.
Accordinly% ,hen the e0cise ta0es paid )y the s*pplier ,ere passed on to Diaeo% ,hat ,as shifted is not the ta0 per se )*t an additional cost of the oods sold. Th*s% the s*pplier remains the stat*tory ta0payer e-en if Diaeo% the p*rchaser% act*ally sho*lders the )*rden of ta0.
. 1.
!nco$e CR9 vs Ro$ulo GR 1(075( #arch <6 2010 *inco$e6 #C!
)C"/ +R@BA assails the imposition of the minim*m corporate income ta0 M+IT$ as )ein -iolati-e of the d*e process cla*se as it le-ies income ta0 e-en if there is no reali=ed ain. They also >*estion the credita)le ,ithholdin ta0 +9T$ on sales of real properties classified as ordinary assets statin that &$ they inore the different treatment of ordinary assets and capital assets "$ the *se of ross sellin price or fair mar7et -al*e as )asis for the +9T and the collection of ta0 on a per transaction )asis and not on the net income at the end of the year$ are inconsistent ,ith the ta0 on ordinary real properties ($ the o-ernment collects income ta0 e-en ,hen the net income has not yet )een determined and <$ the +9T is )ein le-ied *pon real estate enterprises )*t not on other enterprises% more partic*larly those in the man*fact*rin sector. !""/ Are the impositions of the M+IT on domestic corporations and properties classified as ordinary assets *nconstit*tional
+9T on income from sales of real
%:/ /2. M+IT does not ta0 capital )*t only ta0es income as sho,n )y the fact that the M+IT is arri-ed at )y ded*ctin the capital spent )y a corporation in the sale of its oods% i.e.% the cost of oods and other direct e0penses from ross sales. Besides% there are s*fficient safe*ards that e0ist for the M+IT: &$ it is only imposed on the
|
The re*lations on +9T did not shift the ta0 )ase of a real estate )*siness income ta0 from net income to GSP or FMV of the property sold since the ta0es ,ithheld are in the nat*re of ad-ance ta0 payments and they are th*s 4*st installments on the ann*al ta0 ,hich may )e d*e at the end of the ta0a)le year. As s*ch the ta0 )ase for
the sale of real property classified as ordinary assets remains to )e the net ta0a)le income and the *se of the GSP or FMV is )eca*se these are the only factors reasona)ly 7no,n to the )*yer in connection ,ith the performance of the d*ties as a ,ithholdin aent. /either is there -iolation of e>*al protection e-en if the +9T is le-ied only on the real ind*stry as the real estate ind*stry is% )y itself% a class on its o,n and can )e -alidly treated different from other )*sinesses. 2.
"outh rican ir+as6 GR 180'5(6 )ebruar 1(6 2010 *GP96 sec 286 3!RC E illar$ea
'.
C!R vs C '01 "CR 152 *inco$e vs capitalH stoc divH rede$ptn - &anir
4.
C!R vs C 2<8 "CR 8' *I#C not an educ@l instn.H "ec. '0
FA+TS: Pri-ate respondent !M+A is a nonstoc7% nonprofit instit*tion ,hich cond*cts -ario*s prorams and acti-ities that are )eneficial to the p*)lic% especially the yo*n people% p*rs*ant to its reliio*s% ed*cational and charita)le o)4ecti-es. In &'3#% !M+A earned an income from leasin o*t a portion of its premises to small shop o,ners% li7e resta*rants and canteen operators and from par7in fees collected from nonmem)ers. The +IR iss*ed an assessment to pri-ate respondent incl*din s*rchare and interest for deficiency income ta0% e0panded ,ithholdin ta0es on rentals and professional fees and deficiency ,ithholdin ta0 on ,aes. !M+A formally protested the assessment. The +IR denied the claims of !M+A. The latter filed a petition for re-ie, ,ith the +TA ,hich in t*rn r*led in fa-o*r of !M+A. ISSC@: 9hether or not the income of !M+A from rentals of small shops and par7in fees is e0empt from ta0ation RC1I/G: /o. Ta0es are the life)lood of the nation% the +o*rt has al,ays applied the doctrine of strict interpretation in constr*in ta0 e0emptions. In this case% the e0emption claimed )y !M+A is e0pressly disallo,ed )y the -ery ,ordin of the last pararaph of then Section "8 of the /IR+ ,hich mandates that the income of e0empt orani=ations s*ch as the !M+A from any of their properties% real or personal% )e s*)4ect to the ta0 imposed )y the same +ode. A readin of the last pararaph inel*di)ly sho,s that the income from any property of e0empt orani=ations% as ,ell as that arisin from any acti-ity it cond*cts for profit is ta0a)le. The phrase Lany of their acti-ities cond*cted for profit does not >*alify the ,ord Lproperties. This ma7es the properties of !M+A ta0a)le reardless of ho, that income is *sed,hether for profit or for nonprofit p*rposes. 5.
C!R vs Buaesh GR170'8< ct20D10 *sec 27 *165 CG6 "ec 1<( :"
)C"/
A>*afresh Seafoods Inc. sold to Philips Seafoods% Inc. " parcels of land ,ith impro-ements% located in Ro0as +ity% for P(.&M. It then filed a +GT Ret*rn% payin P&3W +GT$ and P<.W DST$. BIR recei-ed a report that the lots sold ,ere *nder-al*ed for ta0ation p*rposes. After in-estiation% the properties ,ere determined to )e commercial% ,ith V of P"W6m". A>*afresh protested. BIR denied the same% as ,ell as the appeal. A>*afresh then filed a petition for re-ie, )efore the +TA% allein that the predefined V ,as P#6m" and that it ,as classified as residential% *nder the &'' Re-ised onal Val*es of Real Properties. +TA r*led in fa-or of A>*afresh. +IR filed an MR ,hich ,as denied. +IR then appealed to the +TA En anc% ,hich dismissed the same% th*s this petition for re-ie, on certiorari.
Petitioner ar*es that: &$ the re>*irement of cons*ltation ,ith competent appraisers is mandatory only ,hen it is prescri)in RP -al*es Nform*lation or chane is made in the sched*le of V "$ it merely classify the property as commercial and apply the correspondin V for s*ch classification )ased on the e0istin sched*le of V in Ro0as +ity onal Val*ation G*idelines Secs &.) and ".a$
!""/
92/ the predefined =onal -al*e as residential% or commercial as later determined )y the BIR SID% sho*ld )e *sed in determinin the FMV of A>*afreshs property s*)4ect to +GT and DST
R!3G/
Predefined =onal -al*e as residential. Cnder Sec. "8D$$ of the /IR+ of &''8% a CG of ; is imposed on the ains pres*med to ha-e )een reali=ed in the sale% e0chane or disposition of lands and6or )*ildins ,hich are not acti-ely *sed in the )*siness of a corporation and ,hich are treated as capital assets )ased on the GSP or FMV% as determined in accordance ,ith Section @$ of the /IR+% ,hiche-er is hiher. Cnder Sec. &' of the /IR+% :" is )ased on the consideration contracted to )e paid or on its FMV% determined in accordance ,ith Section @$ of the /IR+% ,hiche-er is hiher. In determinin the -al*e of +GT and DST arisin from the sale of a property% the +IR has the po,er to prescri)e RP Val*es and di-ide the Philippines into =ones% *pon cons*ltation ,ith competent appraisers )oth from the p*)lic and pri-ate sectors JSection @$ of the /IR+K. For p*rposes of comp*tin IR ta0% the -al*e of the property shall )e the )# as determined )y the +IR or as sho,n in the sched*le of -al*es of the Pro-incial and +ity Assessors% ,hiche-er is hiher. Since IR ta0es% s*ch as +GT and DST% are assessed on the )asis of -al*ation% the =onal -al*ation e0istin at the time of the sale sho*ld )e ta7en into acco*nt. In the case at )ar% the s*)4ect properties ,ere already s*)4ect to a =onal -al*ation of P#6m "% )ein residential. The +IR cannot *nilaterally chane the =onal -al*ation of the s*)4ect properties to commercial ,itho*t first cond*ctin a ree-al*ation of the =onal -al*es. It li7e,ise failed to pro-e that it had complied ,ith Re-en*e Memorand*m /o. 3' ,hich pro-ides for the proced*res on the esta)lishment of the V of RP$% and that a re-ision of the &'' Re-ised onal Val*es of Real Properties ,as made prior to the sale of the s*)4ect properties. Secs. &)$ and "a$ of the Ro0as +ity onal Val*ation G*idelines% moreo-er% does not apply in this case )eca*se it operates only ,hen 5no =onal -al*ation has )een prescri)ed.5 @-en ass*min arguendo that the s*)4ect properties ,ere *sed for commercial p*rposes% the same remains to )e residential for V p*rposes. Act*al *se is not considered for =onal -al*ation% )*t the predominant *se of other classification of properties located in the =one. It is *ndisp*ted that the entire Barrio Banica has )een classified as residential. (.
)9C vs C!R 488 "CR 47' * I $ e$ploees@ trust ta, ,e$pt $
FA+TS: F@BT+ see7s ref*nd of ta0es ,ronf*lly paid on the income earned )y se-eral retirement f*nds of pri-ate employees held )y it in their )ehalf. F@BT+ is the tr*stee of -ario*s retirement plans esta)lished )y
se-eral companies for its employees. As s*ch% it is a*thori=ed to hold% manae% in-est and rein-est the assets of these plans. Petitioner *tili=ed s*ch a*thority to in-est these retirement f*nds in -ario*s money mar7et placements% )an7 deposits% deposit s*)stit*te instr*ments and o-ernment sec*rities. These in-estments necessarily earned interest income. Petitioners claim for ref*nd centers on the ta0 ,ithheld )y the -ario*s ,ithholdin aents% and paid to the +IR for the fo*r <$ >*arters of &''(% on the aforementioned interest income. It is alleed that the total final ,ithholdin ta0 on interest income paid for that year amo*nted to P%#<'%'8&.3(. The claims for ref*nd ,ere denied )y +TA for fail*re to s*)mit the necessary doc*mentary proof of transaction that ,o*ld ordinarily sho, the fact of p*rchase of treas*ry )ills or money mar7et placements. ISSC@: 9hether or not income from employees tr*st are e0empt from income ta0. RC1I/G: !es% income from employees tr*st are e0empt from income ta0 )y -irt*e of R.A. /o. <'&8. Same e0emption ,as pro-ided in R.A. 3<"<% the ta0 reform act of &''8% and is no, fo*nd *nder Section #B$ of the /IR+. F@BT+ paid the income ta0 it ,as not lia)le for ,hen it ,ithheld s*ch ta0 on interest income for &''(. S*ch ta0es ,ere erroneo*sly assessed or collected. o,e-er% petitioner filed the claim for ref*nd )eyond the "year period and it failed to s*)mit doc*mentary proofs of transactions% i.e.% confirmation receipts and p*rchase orders% as the )est e-idence on the participation of the f*nds from these employees tr*sts. These doc*ments are -ital to esta)lish the e0tent of the in-estments made )y petitioner from the employees tr*st% as distin*ished from those made from other acco*nt so*rces% and correspondinly% the amo*nt of ta0es ,ithheld from the interest income deri-ed from these employees tr*st alone. To concl*de this case% the +o*rt said: It is traic that the *ltimate loss to )e )orne )y the tardy claim for the ref*nd ,o*ld )e not )y the petitioner )an7% )*t the h*ndreds of pri-ate employees ,hose retirement f*nds ,ere reposed in petitioners tr*st. o,e-er% the damae ,as s*stained d*e to m*ltiple le-els of incompetence on the part of the petitioner ,hich this +o*rt cannot simply i-e sanction to. Many of the socalled proced*ral h*rdles co*ld ha-e )een o-erloo7ed% e-en )y this +o*rt% )*t in the end% the claim for ta0 ref*nd ,as simply not pro-en ,ith the partic*larity demanded of an action see7in to siphon off the nations life)lood.
7.
#JP)! vs C A C!R6 G.R. 1(21756 June 286 2010 *sec. (0 I $ e$ploees= trusts e,e$pt
Facts: Petitioner is a nonstoc7% nonprofit corporation orani=ed for the p*rpose of holdin title to and administerin the employees tr*st or retirement f*nds esta)lished for the )enefit of the employees of Victorias Millin +ompany% Inc. VM+$. Petitioner in-ested part of the @mployees Tr*st F*nd to p*rchase a lot. Petitioner claims that it is a coo,ner of the p*rchased lot as tr*stee of the @mployees Tr*st F*nd. F*rthermore% petitioner asserted that% as tr*stee% the income earned )y the @mployees Tr*st F*nd is ta0 e0empt and it can act to file the claim of ref*nd.
Iss*e: 9hether or not the @mployees Tr*st F*nd is e0empt from payment of income ta0
R*lin: !es. Petitioner is a corporation that ,as formed to administer the @mployees Tr*st F*nd. It is e-ident that ta0e0emption is li7e,ise to )e en4oyed )y the income of the pension tr*st. 2ther,ise% ta0ation of those
earnins ,o*ld res*lt in the dimin*tion of acc*m*lated income and red*ce ,hate-er the tr*st )eneficiaries ,o*ld recei-e o*t of the tr*st f*nd. F*rthermore% a fo*ndation e0istin for the p*rpose of holdin title to% and administerin the ta0 e0empt @mployees Tr*st F*nd esta)lished for the )enefit of VM+s employees% has the personality to claim ta0 ref*nds d*e the @mployees Tr*st F*nd.
8.
C!R vs Pilipinas "hell6 GR 1<2'<86 "ept. 2<6 2014 *sec.406 806 :" E
Facts: 2n April "8% &'''% a merer too7 place )et,een t,o corporations ,here)y all the assets and lia)ilities of the a)sor)ed corporation ,ere transferred to the s*r-i-in entity. Amon the assets transferred ,ere real properties. For the transfer of these real properties% a doc*mentary stamp ta0 ,as paid )y the s*r-i-in corporation *nder Section &' of the &''8 Ta0 +ode. Reali=in that the doc*mentary stamp ta0 ,as erroneo*sly paid on the transfer of the real property as a res*lt of the merer% the s*r-i-in corporation applied for the ref*nd of the DST paid. Iss*e: &$ 9hether the transfer of real properties is s*)4ect to doc*mentary stamp ta0 *nder Section &' of the Ta0 +ode R*lin: /o. The S*preme +o*rt held that the DST is only imposed on all con-eyances% deeds% instr*ments or ,ritin ,here realty sold shall )e con-eyed to a p*rchaser or p*rchasers for a consideration *nder Section &' of Ta0 +ode of &''8 Ta0 +ode. Section &' of the &''8 Ta0 +ode does not apply to all 7inds of transfers and con-eyances of real property for -al*a)le consideration. It is imposed on the transfer of realty )y ,ay of sale and does not apply to all con-eyances of real property. The fact that Section &' refers to ,ords Lsold% Lp*rchaser and Lconsideration *ndo*)tedly leads to the concl*sion that only sales of real property are contemplated therein. In a merer% the real properties are not deemed Lsold to the s*r-i-in corporation and the latter co*ld not )e considered as Lp*rchaser of realty since the real properties s*)4ect of the merer ,ere merely a)sor)ed )y the s*r-i-in corporation )y operation of la, and these properties are deemed a*tomatically transferred to and -ested in the s*r-i-in corporation ,itho*t f*rther act or deed. Therefore% this is not s*)4ect to DST. !. 1.
,penses PRC vs. C 25( "CR ((7 *reB. or bad debts e,p.
PR+ -. +A G.R. /o. &&38'<% May 3% &'' Facts: The +TA disallo,ed PR+s claim for )ad de)ts in the amo*nt of P('%("<."8. The +A affirmed the r*lin the +TA. Iss*e: 9hat are the re>*irements in order for a de)t to )e considered as L,orthless% and there)y >*alify as L)ad de)ts ma7in them ded*cti)le R*lin: The ta0payer sho*ld sho, that: &$ there is a -alid and s*)sistin de)t "$ the de)t m*st )e act*ally ascertained to )e ,orthless and *ncollecti)le d*rin the ta0a)le year ($ the de)t m*st )e chared off d*rin the ta0a)le year and <$ the de)t m*st arise from the )*siness or trade of the ta0payer. Additionally% )efore a de)t can )e considered ,orthless% the ta0payer m*st also sho, that it is indeed *ncollecti)le e-en in the f*t*re. F*rthermore% there are steps to )e *nderta7en )y the ta0payer to pro-e that he e0erted dilient efforts to collect the de)ts% -i=.: &$ sendin of statement of acco*nt "$ sendin of collection letter ($ i-in the acco*nt to a la,yer for collection and <$ filin a collection case in co*rt.
PR+ failed to pro-ide doc*mentary e-idence to s*pport its assertion that the de)ts ,ere indeed *ncollecti)le and can )e considered as )ad de)ts as to ma7e them ded*cti)le. It only pro-ided the testimony of its acco*ntant *ns*pported )y doc*mentary e-idence. Th*s% the +TA and +A ,as correct in disallo,in the ded*ction of said amo*nt as a ded*cti)le )ad de)ts e0pense. 2.
China 9an vs C ''( "CR 17< *cap &ainDloss - cas
'.
C!R vs General )oods 401 "CR 545 *reB. or advertisin& e,p.
+IR -s. General Foods Phils$ JG.R. /o. &<(8". April "<% "##(K Facts: Respondent General Foods% ,hich is enaed in the man*fact*re of )e-eraes% filed its income ta0 ret*rn for the fiscal year endin Fe)r*ary "3% &'3. In said ta0 ret*rn% respondent corporation claimed as ded*ction% amon other )*siness e0penses% the amo*nt of P'%<&%"< for media ad-ertisin for Tan. 2n May (&% &'33% the +ommissioner disallo,ed #; of the ded*ction claimed )y respondent corporation. +onse>*ently% respondent corporation ,as assessed deficiency income ta0es. The latter filed a motion for reconsideration )*t the same ,as denied. 2n Septem)er "'% &'3'% respondent corporation appealed to the +TA )*t the appeal ,as dismissed. Arie-ed% respondent corporation filed a petition for re-ie, at the +o*rt of Appeals ,hich rendered a decision re-ersin and settin aside the decision of the +TA. ence% this instant petition. Iss*e: 9hether or not the s*)4ect media ad-ertisin e0pense for Tan inc*rred )y respondent corporation ,as an ordinary e0pense f*lly ded*cti)le *nder the /IR+. R*lin: /o. To )e ded*cti)le from ross income% the s*)4ect ad-ertisin e0pense m*st comply ,ith the follo,in re>*isites: a$ the e0pense m*st )e ordinary and necessary )$ it m*st ha-e )een paid or inc*rred d*rin the ta0a)le year c$ it m*st ha-e )een paid or inc*rred in carryin on the trade or )*siness of the ta0payer and d$ it m*st )e s*pported )y receipts% records or other pertinent papers. In the case at )ar% the s*)4ect ad-ertisin e0pense ,as not ordinary on the ro*nd that it failed the t,o conditions set )y C.S. 4*rispr*dence: first% reasona)leness of the amo*nt inc*rred and second% the amo*nt inc*rred m*st not )e a capital o*tlay to create ood,ill for the prod*ct and6or pri-ate respondents )*siness. The +o*rt finds the P'%<&%"< claimed as media ad-ertisin e0pense for Tan alone to )e inordinately lare and hence% *nreasona)le. F*rthermore% the protection of )rand franchise is analoo*s to the maintenance of ood,ill or title to ones property. Respondent corporation inc*rred the s*)4ect ad-ertisin e0pense in order to protect its )rand franchise and the +o*rt considers this as a capital o*tlay. ence% the instant petition is ranted and p*rs*ant to Sections "<3 and "<' of the Ta0 +ode% respondent General Foods Phils.$% Inc. is here)y ordered to pay its deficiency income ta0 in the amo*nt of P"%(%&<&.<"% pl*s "; s*rchare for late payment and "#; ann*al interest comp*ted from A**st "% &'3'% the date of the denial of its protest% *ntil the same is f*lly paid. 4. C!R v C and "#!% ?!3 A )R3C% R"" C. GR 3o. -541086 17 Januar 1<84
)C": Smith Wline and French 2-erseas +ompany is a m*ltinational firm domiciled in Philadelphia% Pennsyl-ania% and licensed to do )*siness in the Philippines. It is enaed in the importation% man*fact*re and sale of pharmace*ticals dr*s and chemicals. In its &'8& oriinal income ta0 ret*rn% Smith Wline declared a net ta0a)le income of P&%<3'%"88 and paid P&&%"<8 as ta0 d*e. It appears ho,e-er that sometime in 2cto)er% &'8"% Smith Wline recei-ed from its international independent a*ditors% an a*thenticated certification to the effect that the Philippine share in the *nallocated o-erhead e0penses of the main office for the year ended Decem)er (&% &'8& ,as act*ally "&'%<8 P&%<"8%<3<$. It f*rther stated in the certification that the allocation ,as made on the )asis of the percentae of ross income in the Philippines to ross income of the corporation as a ,hole. By reason of the ne, ad4*stment% Smith Wline?s ta0 lia)ility ,as reatly red*ced from P&&%"<8 to P&3%''" res*ltin in an o-erpayment of P("<%". By -irt*e of the a*thenticated certification% Smith Wline filed its amended ret*rn on March &% &'8( and filed a formal claim for the ref*nd of the alleed o-erpayment. S*)se>*ently% ,itho*t a,aitin the action of the +ommissioner of Internal Re-en*e on its claim% Smith Wline filed a petition for re-ie, ,ith the +o*rt of Ta0 Appeals on April "% &'8<. In its decision of March "&% &'3#% the Ta0 +o*rt ordered the +ommissioner to ref*nd the o-erpayment or rant a ta0 credit to Smith Wline. The +ommissioner appealed to this +o*rt. !"": Is Smith Wlines share of the head office o-erhead e0penses inc*rred o*tside the Philippines ded*cti)le R!3G: !es. Smith Wline share of the head office e0penses inc*rred o*tside the Philippines is ded*cti)le. S@+. (8. Income fro m so*rces ,ithin the Philippines. 000 000 000 )$ /et income from so*rces in the Philippines. E From the items of ross income specified in s*)section a$ of this section there shall )e ded*cted the e0penses% losses% and other ded*ctions properly apportioned or allocated thereto and a rata)le part of any e0penses% losses% or other ded*ctions ,hich cannot definitely )e allocated to some item or class of ross income. The remainder% if any% shall )e incl*ded in f*ll as net income from so*rces ,ithin the Philippines. 000 000 000 Re-en*e Re*lations /o. " of the Department of Finance contains the follo,in pro-isions on the ded*ctions to )e made to determine the net income from Philippine so*rces: S@+. &#. Apportionment of ded*ctions. E From the items specified in section (8a$% as )ein deri-ed specifically from so*rces ,ithin the Philippines there shall )e ded*cted the e0penses% losses% and other ded*ctions properly apportioned or allocated thereto and a rata)le part of any other e0penses% losses or ded*ctions ,hich can not definitely )e allocated to some item or class of ross income. The remainder shall )e incl*ded in f*ll as net income from so*rces ,ithin the Philippines. The rata)le part is )ased *pon the ratio of ross income from so*rces ,ithin the Philippines to the total ross income.
@0ample: A nonresident alien indi-id*al ,hose ta0a)le year is the calendar year% deri-ed ross income from all so*rces for &'(' of P&3#%###% incl*din therein: Interest on )onds of a domestic corporation P'%### Di-idends on stoc7 of a domestic corporation <%### Royalty for the *se of patents ,ithin the Philippines &"%### Gain from sale of real property located ,ithin the Philippines &&%### Total P(%### that is% onefifth of the total ross income ,as from so*rces ,ithin the Philippines. The remainder of the ross income ,as from so*rces ,itho*t the Philippines% determined *nder section (8c$. The e0penses of the ta0payer for the year amo*nted to P83%###. 2f these e0penses the amo*nt of P3%### is properly allocated to income from so*rces ,ithin the Philippines and the amo*nt of P<#%### is properly allocated to income from so*rces ,itho*t the Philippines. The remainder of the e0pense% P(#%###% cannot )e definitely allocated to any class of income. A rata)le part thereof% )ased *pon the relation of ross income from so*rces ,ithin the Philippines to the total ross income% shall )e ded*cted in comp*tin net income from so*rces ,ithin the Philippines. Th*s% these are
ded*cted from the P(%### of ross income from so*rces ,ithin the Philippines e0penses amo*ntin to P&<%### Jrepresentin P3%### properly apportioned to the income from so*rces ,ithin the Philippines and P%###% a rata)le part onefifth$ of the e0penses ,hich co*ld not )e allocated to any item or class of ross income.K The remainder% P""%###% is the net income from so*rces ,ithin the Philippines. From the foreoin pro-isions% it is manifest that ,here an e0pense is clearly related to the prod*ction of Philippinederi-ed income or to Philippine operations e.. salaries of Philippine personnel% rental of office )*ildin in the Philippines$% that e0pense can )e ded*cted from the ross income ac>*ired in the Philippines ,itho*t resortin to apportionment. The o-erhead e0penses inc*rred )y the parent company in connection ,ith finance% administration% and research and de-elopment% all of ,hich direct )enefit its )ranches all o-er the ,orld% incl*din the Philippines% fall *nder a different cateory ho,e-er. These are items ,hich cannot )e definitely allocated or identified ,ith the operations of the Philippine )ranch. For &'8&% the parent company of Smith Wline spent &%#88%8('. Cnder section (8)$ of the Re-en*e +ode and section &# of the re*lations% Smith Wline can claim as its ded*cti)le share a rata)le part of s*ch e0penses )ased *pon the ratio of the local )ranch?s ross income to the total ross income% ,orld,ide% of the m*ltinational corporation. Smith Wline li7e,ise s*)mits that it has presented ample e-idence to s*pport its claim for ref*nd. In s*m% the +o*rt r*led that Smith Wlines amended &'8& ret*rn is in conformity ,ith the la, and re*lations. Th*s% the Ta0 +o*rt correctly held that the ref*nd or credit of the res*ltin o-erpayment is in order.
!!. !nco$e a,ation 1. Cana$id vs C '22 "CR ('8 *!$p. cc. arnin&s t, )acts/ Petitioner +yanamid ,as imposed a s*rta0 on improper acc*m*lation of profits. Petitioner contends that it acc*m*lated its earnins and profits for reasona)le )*siness re>*irements to meet ,or7in capital needs and retirement of inde)tedness. The +TA and conse>*ently% the +A denied the Petitioners petition and appeal findin that the amo*nt of their s*rpl*s is more than the amo*nt of their lia)ilities. !ssues/ &. 9hat is the acc*m*lated earnins ta0 ". 9hat is the Bardhal Form*la Is it applica)le in this case (. Is the petitioner lia)le for acc*m*lated earnins ta0 Rulin&s/ &. The ta0 on improper acc*m*lation of s*rpl*s is essentially a penalty ta0 desined to compel corporations to distri)*te earnins so that the said earnins )y shareholders co*ld% in t*rn% )e ta0ed. ". 5Bardahl5 form*la ,as de-eloped to meas*re corporate li>*idity. The form*la re>*ires an e0amination of ,hether the ta0payer has s*fficient li>*id assets to pay all of its c*rrent lia)ilities and any e0traordinary e0penses reasona)ly anticipated% pl*s eno*h to operate the )*siness d*rin one operatin cycle. /o% it is not applica)le in this case as it is not a precise r*le and is *sed merely for administrati-e con-enience. (. !es. @-en if the petitioner is a p*)licly held corporation% the en*meration for the e0emption of acc*m*lated earnins ta0 is e0cl*si-e and the petitioner is not one of them. Ta0 e0emption is constr*ed aainst the one ,ho claims it. Moreo-er% the )*rden to dispro-e the determination of the +IR is *pon the petitioner. They ha-e to sho, their intent to *se the s*rpl*s for leitimate )*siness needs at the time of acc*m*lation and not declared s*)se>*ently thereafter% and e-en then% these m*st )e *sed ,ithin a reasona)le time after the close of the ta0a)le year. 2.
Facts:
#anilaban 4<< "CR 782 *#C!
Monetary Board of the angko Sentral ng ilipinas BSP$ iss*ed Resol*tion /o. #% p*rs*ant to Sec. "'% R.A. " the +entral Ban7 Act$% prohi)itin petitioner from enain in )*siness )y reason of insol-ency. Th*s% petitioner ceased operations that year and its assets and lia)ilities ,ere placed *nder the chare of a o-ernment appointed recei-er. RA 3"<" too7 effect ,hich introd*ced the imposition of the minim*m corporate income ta0 on domestic and resident forein corporations. &" years since petitioner stopped its )*siness operations% the BSP a*thori=ed it to operate as a thrift )an7. Prior to the filin of its income ta0 ret*rn% or on Decem)er "3% &'''% petitioner contends that since it res*med operations in &'''% it ,ill pay its minim*m corporate income ta0 only after fo*r <$ years thereafter. BIR r*led that petitioner is entitled to the fo*r <$year race period. Since it reopened in &'''% the minim*m corporate income ta0 may )e imposed 5not earlier than "##"% i.e. the fo*rth ta0a)le year )einnin &'''. Iss*e: 9hether petitioner is entitled to a ref*nd of its minim*m corporate income ta0 paid to the BIR for ta0a)le year &'''
R*lin: !es. The intent of +onress relati-e to the minim*m corporate income ta0 is to rant a fo*r <$year s*spension of ta0 payment to ne,ly formed corporations. Re-en*e Re*lations /o. <' states that the date of commencement of operations of a thrit ban is the date it ,as reistered ,ith the S@+ or the date ,hen the +ertificate of A*thority to 2perate ,as iss*ed to it )y the Monetary Board of the BSP% ,hiche-er comes later. In this case% Re-en*e Re*lations /o. <' is applica)le to the petitioner. ence% it is entitled to a race period of fo*r <$ years co*nted from H*ne "(% &''' ,hen it ,as a*thori=ed )y the BSP to operate as a thrift )an7. +onse>*ently% it sho*ld only pay its minim*m corporate income ta0 after fo*r <$ years from &'''.
'.
)ilinvest GR 1('(5'6 Jul 1<6 2011 *sec. 40 c
)C"/ Petitioner claimed for a ref*nd or in the alternati-e% iss*ance of a ta0 credit certificate T++$ in the amo*nt of P <%&83%&(<.## representin e0cess credita)le ,ithholdin ta0es for ta0a)le years &''<%&'' and &''. +TA dismissed the case for ins*fficiency of e-idence its &''8 income ta0 ret*rn. +A assailed the decision of +TA and denied petition of Filin-est. The S+ initially denied petition for re-ie, )*t on April (% "##"% case ,as refiled on a petition for reconsideration. !""/ 9hether petitioner is entitled to the ta0 credit anent ins*fficient e-idence. R!3G/ +A erred in r*lin that petitioner failed to dischare the )*rden of pro-in that it is entitled to the ref*nd )eca*se of the latters fail*re to attach its &''8 ITR. It is ,orth nothin that *nder Section "(# of /IR+ and Section &# of Re-en*e Re*lation /o. &"3<% the +IR is i-en the po,er to rant a ta0 credit or ref*nd e-en ,itho*t a ,ritten claim therefore% if the former determines from the face of the ret*rn that payment had clearly )een erroneo*sly made. The +IRs f*nction is not merely to recei-e the claims for ref*nd )*t it is also i-en the positi-e d*ty to determine the -eracity of s*ch claim. Simply )y e0ercisin the +IRs po,er to e0amine and -erify petitioners claim for ta0 e0emption are ranted )y la,% respondent +IR co*ld ha-e easily -erified petitioners claim )y representin the latters &''8 ITR% the oriinal of ,hich it has in its files. ence% *nder sol*tio inde)iti% the Go-ernment has to restore to petitioners the s*ms representin erroneo*s payments of ta0es.
4.
C!R vs P%!#G36 GR175124 "ept 2 Ret - illar$ea
5.
C!R vs #cGeor&e GR174157 ct20D10 *sec 7( irrevocable but unused... - Ganir
(.
9elle vs C!R GR 1812<8 Jan10D11 *sec7( option irrevocable
FA+TS: Petitioner Belle% a domestic corporation enaed in the real estate and property )*siness% filed ,ith the BIR its income ta0 ret*rn ITR$ for the first >*arter of &''8. S*)se>*ently% it filed ,ith the BIR its second >*arter ITR% declarin an o-erpayment of ta0es. In -ie, of the o-erpayment% no ta0es ,ere paid for the second and third >*arters of &''8. Instead of claimin the amo*nt as a ta0 ref*nd% petitioner decided to apply it as a ta0 credit to the s*cceedin ta0a)le year )y mar7in the ta0 credit option )o0 in its &''8 ITR. 2n April &"% "##% petitioner filed ,ith the BIR an administrati-e claim for ref*nd its *n*tili=ed e0cess income ta0 payments for the ta0a)le year &''8. /ot,ithstandin the filin of the administrati-e claim for ref*nd% petitioner carried o-er the e0cess amo*nt to the ta0a)le year &'''. D*e to the inaction of the respondent +IR and in order to toll the r*nnin of the t,oyear prescripti-e period% petitioner appealed its claim for ref*nd of *n*tili=ed e0cess income ta0 payments for the ta0a)le year &''8 -ia petition for re-ie,. The +TA denied the petition. ISSC@: 9hether petitioner is entitled to a ref*nd of its e0cess income ta0 payments for the ta0a)le year &''8 RC1I/G: /o. In case the corporation is entitled to a ref*nd of the e0cess estimated >*arterly income ta0es paid% the ref*nda)le amo*nt sho,n on its final ad4*stment ret*rn may )e credited aainst the >*arterly income ta0 lia)ilities for the ta0a)le >*arters of the s*cceedin ta0a)le years. 2nce the option to carry o-er and apply the e0cess >*arterly income ta0 aainst income ta0 d*e for the ta0a)le >*arters of the s*cceedin ta0a)le years has )een made% s*ch option shall )e considered irre-oca)le for that ta0a)le period and no application for ta0 ref*nd or iss*ance of ta0 credit certificate shall )e allo,ed therefor. Cnder Section 8 of the /IR+% in case of o-erpayment of income ta0es% the remedies are still the same and the a-ailment of one remedy still precl*des the other. The carryo-er of e0cess income ta0 payments is no loner limited to the s*cceedin ta0a)le year. Cn*tili=ed e0cess income ta0 payments may no, )e accr*ed o-er to the s*cceedin ta0a)le years *ntil f*lly reali=ed. In this case% since the petitioner carried o-er its &''8 e0cess income ta0 payments to the s*cceedin ta0a)le year &''3% it may no loner file a claim for ref*nd of *n*tili=ed ta0 credits for ta0a)le year &''8. 2nce the option to carry o-er e0cess income ta0 payments to the s*cceedin years has )een made% it )ecomes irre-oca)le. Th*s% applications for ref*nd of the *n*tili=ed e0cess income ta0 payments may no loner )e allo,ed.
7.
C!R vs "on GR178(<7 3ov17D10 * dole out not atable/ sub> to It, - #alca$po
8.
,,on GR 180<0< Jan1
)C"/ ,,on6 a orei&n corporation6 purchased ro$ Calte, and Petron Jet -1 uel and other petroleu$ products. ,cise ta,es +ere paid or and re$itted b Calte, and Petron6 but passed on to ,,on +hich ulti$atel shouldered the sa$e. n ct '06 200'6 it iled a petition or revie+ +ith the C clai$in& a reund or ta, credit or the e,cise ta,es it paid upon the sale o the uel to international carriers. he C 1st :ivision dis$issed ,,on@s
clai$ and denied the subseBuent #R. ,,on then iled a petition or revie+ +ith the C n 9anc6 +hich also dis$issed the sa$e and the #R. hus6 this petition or revie+ on certiorari under R45. ,,on ar&ues that the sub>ect o the e,e$ption is neither the seller nor the buer o the petroleu$ products6 but the products the$selves6 so lon& as the are sold to international carriers or use in international li&ht operations6 or to e,e$pt entities covered b ta, treaties6 conventions and other international a&ree$ents or their use or consu$ption6 a$on& other conditions. hus6 the e,e$ption +ill appl re&ardless o +hether the sa$e +ere sold b its $anuacturer or its distributor. C!R posits that e,cise ta,es are indirect ta,es. s ,,on is not the ta,paer pri$aril liable to pa6 and not e,e$pted ro$ pain& the e,cise ta,6 it is not the proper part to clai$ or the reund o the sa$e.
!""/ 3 ,,on6 as the distributor and vendor o petroleu$ products to international carriers re&istered in orei&n countries +hich have e,istin& bilateral a&ree$ents +ith the Philippines6 can clai$ a reund o the e,cise ta,es paid b the $anuacturers but passed on *to ,,on as part o the purchase price
R!3G/ 3o. he proper part to Buestion6 or to see a reund o6 an indirect ta,6 is the statutor ta,paer6 or the person on +ho$ the ta, is i$posed b la+ and +ho paid the sa$e6 even i he shits the burden thereo to another. s ,,on is not the part statutoril liable or pa$ent o e,cise ta,es under "ection 1'06 in relation to "ection 12< o the 3!RC6 it is not the proper part to clai$ a reund o an ta,es erroneousl paid. ,cise ta,es are indirect ta,es6 +herein the liabilit or the pa$ent o the ta, alls on one person but the burden thereo can be shited or passed on to another person6 such as +hen the ta, is i$posed upon &oods beore reachin& the consu$er +ho ulti$atel pas or it. hen the seller passes on the ta, to his buer6 he6 in eect6 shits the ta, burden6 not the liabilit to pa it6 to the purchaser6 as part o the &oods sold or services rendered. ,cise ta,es are i$posed +hen/ 1 the articles sub>ect to ta, belon& to an o the cate&ories o &oods enu$erated in itle ! o the 3!RCH 2 said articles are or do$estic sale or consu$ption6 e,cludin& those that are actuall e,ported. %o+ever6 under "ec. 1'5 o the 3!RC6 petroleu$ products sold to international carriers o orei&n re&istr on their use or consu$ption outside the Philippines are e,e$pt ro$ e,cise ta,6 provided that the petroleu$ products sold to such international carriers shall be stored in a bonded stora&e tan and $a be disposed o onl in accordance +ith the rules and re&ulations to be prescribed b the "ecretar o )inance6 upon reco$$endation o the Co$$issioner.
!"" 2/ 3 in eectivel holdin& that onl petroleu$ products purchased directl ro$ the $anuacturers or producers are e,e$pt ro$ e,cise ta,es6 the C 1st :ivision sanctioned a unilateral a$end$ent o e,istin& bilateral a&ree$ents +hich the Philippines has +ith other countries6 in violation o the basic international principle o pacta sunt servanda
R!3G 2/ 3o. )irst6 the indin&s o act o the C 1st :ivision +hen petitioner sold the Jet -1 uel to international carriers6 it did so ree o ta,6 ne&ates an violation o the e,e$ption ro$ e,cise ta, o the petroleu$ products sold to international carriers insoar as this case is concerned. "econdl6 the ri&ht o international carriers to invoe the e,e$ption &ranted under "ection 1'5 *a o the 1<<7 3!RC has neither been aected nor restricted in an +a b the rulin& o C 1st :ivision. t the point o sale6 the international carriers are ree to invoe the e,e$ption ro$ e,cise ta,es o the petroleu$ products sold to the$. astl6 the la+-$ain& bod is presu$ed to have enacted a later la+ +ith the no+led&e o all other la+s involvin& the sa$e sub>ect $atter.
<. C!R vs P39 GR 1802<06 "ept 2<6 2014 *+Dholdin& ta, cert.
Facts: After payment of its Ta0 1ia)ilities% Respondent P/B alleed that they o-erpaid their ta0 d*es in the amo*nt of "(%8"% (<8.3( pesos. The Respondent filed for a ta0 credit certificate )*t ,as not acted *pon )y the BIR. ence% respondent filed )efore the +TA ,hich r*led in their fa-o*r. Petitioner no, comes )efore the S*preme +o*rt for relief. Iss*es: &. Is the respondent re>*ired to present proof of act*al remittance of the ta0es ,hich ,as ,ithheld from them in order that a ref*nd ,ill )e ranted ". Is the respondent re>*ired to pro-e the -alidity of a certificate of credita)le ta0 ,ithheld at so*rce and a*thenticate the same R*lins: &. /o. Proof of act*al remittance is not a condition to claim for a ref*nd of *n*tili=ed ta0 credits. Cnder Sections 8 and 3 of the &''8 /ational Internal Re-en*e +ode% as amended% it is the payor,ithholdin aent% and not the payeeref*nd claimant s*ch as respondent% ,ho is -ested ,ith the responsi)ility of ,ithholdin and remittin income ta0es. ". /o. The certificate of credita)le ta0 ,ithheld at so*rce is the competent proof to esta)lish the fact that ta0es are ,ithheld. It is not necessary for the person ,ho e0ec*ted and preparedthe certificate of credita)le ta0 ,ithheld at so*rce to )e presented and to testify personally to pro-e the a*thenticity of the certificates. Besides% these certificates can )e ta7en at face -al*e since the e0ec*tion of these certificates are made *nder the penalty of per4*ry. Since the respondent has clearly its claim of ref*nd thro*h the said certificates% the )*rden no, is ,ith the +IR to ref*te that &$ the certificate is not complete "$ it is false or ($ it ,as not iss*ed re*larly. This did not happen in the instant case VIII. VAT &. @astern Telecom &3((&% Mar "% "#& effect if no L# rated on in-oice$ ". ATT -s +IR% GR&3"(<% A* (6&# *re> for t0 ref*nd in # rated tran0s$ (. Atlas% GR &'<8&% Han*ary "% "#&&. Vol*mino*s records. @-idence. )acts/ Atlas +onsolidated is a =erorated VAT person for )ein an e0porter of copper concentrates. 2n Han*ary &''<% Atlas filed its VAT ret*rn for the fo*rth >*arter of &''(% sho,in a total inp*t ta0 and an e0cess VAT credit. Then% on Han*ary &''% Atlas filed for a ta0 ref*nd or ta0 credit certificate ,ith +IR. o,e-er% the +TA denied Atlas claim for ref*nd d*e to Atlas fail*re to comply ,ith the doc*mentary re>*irements prescri)ed *nder Sec. & of RR /o. 38% as amended )y RR /o. (33. +TA denied Atlas MR statin that Atlas has failed to
s*)stantiate its claim that it has not applied its alleed e0cess in p*t ta0es to any of its s*)se>*ent >*arters o*tp*t ta0 lia)ility. The +A affirmed +TAs r*lin. ISSC@ /o. &: 9hat are the doc*ments re>*ired to claim for VAT inp*t ref*nd Iss*e /o. ": 96/ Atlas is entitled to claim to a ta0 ref*nd. R*lin: 9hen claimin ta0 ref*nd6credit% the VATreistered ta0payer m*st )e a)le to esta)lish that it does not ha-e ref*nda)le or credita)le inp*t VAT% and the same has not )een applied aainst its o*tp*t VAT lia)ilities N information ,hich are s*pposed to )e reflected in the ta0payers VAT ret*rns. Th*s% an application for ta0 ref*nd6credit m*st )e accompanied )y copies of the ta0payers VAT ret*rn6s for the ta0a)le >*arter6s concerned. The formal offer of e-idence of Atlas failed to incl*de photocopy of its e0port doc*ments% as re>*ired. 9itho*t the e0port doc*ments% the p*rchase in-oice6receipts s*)mitted )y Atlas as proof of its inp*t ta0es cannot )e -erified as )ein directly attri)*ta)le to the oods so e0ported. Atlas claim for credit or ref*nd of inp*t ta0es cannot )e ranted d*e to its fail*re to sho, con-incinly that the same has not )een applied to any of its o*tp*t ta0 lia)ility as pro-ided *nder Sec. &#a$ of the Ta0 +ode.
<. .
San Ro>*e Po,er GR &38<3 &" Fe) "#&( Secs &&" X and ""'$ en )anc +BW Po,er GR "#"#% Sept (#% "#&< L $ en )anc
)C": This is a case of +BW Po,er assailin the dismissal of its 4*dicial claim for ta0 credit of *n*tili=ed inp*t VAT on the ro*nd of premat*re filin. +BW Po,er is a partnership enaed in hydropo,er eneration. The BIR allees that +BWs sale of electricity to /P+ is s*)4ect to #; VAT.
2n March "% "##'% petitioner filed an administrati-e claim ,ith the BIR for the iss*ance of a ta0 credit certificate for P3.3 million% ,hich amo*nt represented *n*tili=ed inp*t ta0es. The ne0t day% March "8% "##'% petitioner filed a petition for re-ie, ,ith the +o*rt of Ta0 Appeals since respondent had not yet iss*ed a final decision on its administrati-e claim. Respondent raised premat*rity of 4*dicial claim as one of its defenses in its ans,er. !"": 9as petitioners 4*dicial and administrati-e claims for the iss*ance of ta0 credit certificates timely and in accordance ,ith Sec. &&" of the /IR+ R!3G:
(imeliness of +udicial claims
&. General Rule: +ompliance ,ith the &"#day and the (#day periods *nder Section &&" of the Ta0 +ode is mandatory and 4*risdictional. ". ,ception/ Those Val*eadded Ta0 ref*nd cases that ,ere premat*rely i.e.% )efore the lapse of the &"# day period$ filed ,ith the +TA )et,een Decem)er &#% "##( ,hen the BIR R*lin /o. DA<3'#( ,as iss*ed$ and 2cto)er % "#&#. (. General Rule/ +laims for ref*nd or ta0 credit of e0cess inp*t VAT are o-erned )y Section &&" of the /IR+% not )y Section ""'. Petitioners 4*dicial claims ,ere timely filed for fallin *nder the e0ception pro-ided )y 4*rispr*dence.
In G.R. /o. "#"#% petitioner filed its 4*dicial claim on March "8% "##'% only a day after it had filed its administrati-e claim on March "% "##'. In G.R. /o. "#((% petitioner filed its 4*dicial claim on April "(% "##3 for the ta0a)le period of Han*ary &% "## to March (&% "##% 4*st "( days after it had filed its administrati-e claim on March (&% "##3. Petitioner also filed its 4*dicial claim on H*ly "<% "##3 for the ta0a)le period of April &% "## to Decem)er (&% "##% only a day after it had filed its administrati-e claim on H*ly "(% "##3. In all these three% petitioner failed to comply ,ith the &"#day ,aitin period% the time e0pressly i-en )y la, to the +IR to decide ,hether to rant or deny its application for ta0 ref*nd or credit. /e-ertheless% since the 4*dicial claims ,ere filed ,ithin the ,indo, created in San Ro>*e J"##("#&#K% the petitions are e0empted from the strict application of the &"#day mandatory period. (imeliness of administrative claims General Rule: +laims for the iss*ance of ta0 credit certificates or ref*nd of credita)le inp*t VAT relati-e to eroRated or @ffecti-ely eroRated Sales m*st )e made )y a VATreistered person ,ithin " years after the close of the ta0a)le >*arter ,hen the sales ,ere made. ,ception/ For the period H*ne 3% "##8 *ntil Septem)er &"% "##3 ,hen the Atlas Doctrine ,as o-ernin% the "year period is rec7oned% not after the close of the ta0a)le >*arter ,hen the sales ,ere made% )*t from the date of payment of the o*tp*t VAT.
In the instant case% petitioner filed its "## U*arter " Inp*t VAT claims on H*ly "(% "##3. Petitioners VAT claims sho*ld ha-e )een filed o*t of time. o,e-er% )eca*se petitioners claims are ,ithin the Atlas Doctrine% petitioners administrati-e claims are deemed timely filed.
.
Silicon Phils GR &8("<&% March "% "#& r*les on prescript- prds$
"ilicon Phils vs. C!R )acts/ Silicon Philippines% Inc. is a corporation d*ly orani=ed and e0istin *nder the la,s of the Philippines. It is reistered ,ith the BIR as a VATta0payer and ,ith the B2I as a preferred pioneer enterprise. Then% on May% &'''% Silicon filed ,ith the +IR an application for credit6ref*nd of *n*tili=ed inp*t VAT for the period of 2ct. &% &''3 to Dec. (&% &''3. D*e to the inaction of the +IR% Silicon filed a Petition for Re-ie, ,ith the +TA Di-ision. Silicon alleed that the *arter of &''3% it enerated and recorded =erorated e0port sales paid to Silicon in accepta)le forein c*rrency and that for the said period% Silicon paid inp*t VAT in the total amo*nt ,hich ha-e not )een applied to any o*tp*t VAT. The +IR% on the other hand% raised the defenses that: &$ Silicon did not sho, that it complied ,ith the pro-isions of Sec. ""' of the Ta0 +ode "$ That claims for ref*nd are constr*ed strictly aainst the claimant similar to the nat*re of e0emption from ta0es and ($ That Silicon failed to pro-e that is entitled for ref*nd. The +TA Di-ision ranted Silicons claim for ref*nd of *n*tili=ed inp*t VAT on capital oods. o,e-er% it denied Silicons claim for credit6ref*nd of inp*t VAT attri)*ta)le to its =erorated e0port sales. It is )eca*se Silicon failed to present an A*thority to Print ATP$ from the BIR neither did it print on its e0port sales in-oices the ATP and the ,ord =erorated. Silicon mo-ed for reconsideration claimin that it is not re>*ired to sec*re an ATP since it has a LPermit to Adopt +omp*teri=ed Acco*ntin Doc*ments s*ch as Sales In-oice and 2fficial Receipts from the BIR. And that the printin of the ,ord L=erorated on its e0port sales in-oices is not necessary )eca*se all its finished prod*cts are e0ported to its mother company% Intel +orp.% a nonresident corporation and a nonVAT reistered entity. Petitioner% in a re-ie, for certiorari% see7s the re-ersal and settin aside of the: &$ the Decisionof the +TA en )anc ,hich affirmed the Decision and Resol*tion of the +TA Di-ision in +TA +ase /o. &8# and "$
Resol*tion of the +TA en )anc ,hich denied the Motion for Reconsideration of the petitioner. The +TA Di-ision only ranted the claim of SPI for ta0 credit6ref*nd of inp*t Val*e Added. D*rin the pendency of the petition% the co*rt prom*lated on Fe)r*ary &"% "#&( its decision on consolidated cases of San Ro>*e ,hich settled the r*le on prescripti-e periods for claimin credit6ref*nd of inp*t VAT *nder section &&" of the &''8 Ta0 code. !ssue/ 9hether or not Silicon entitled to claim from ref*nd of Inp*t VAT attri)*ta)le to its =erorated sales. Rulin&/ Beca*se the (#day period for filin its 4*dicial claim had already prescri)ed )y the time Silicon filed its Petition for Re-ie, ,ith the +TA Di-ision% the +TA Di-ision ne-er ac>*ired 4*risdiction o-er the said Petition. The +TA Di-ision had a)sol*tely no 4*risdiction to act *pon% ta7e coni=ance of% and render 4*dment *pon the Petition for Re-ie, of SPI in +TA +ase /o. &8#% reardless of the merit of the claim of SPI. The +o*rt stresses that the &"#6(#day prescripti-e periods are mandatory and 4*risdictional% and are not mere technical re>*irements. The +o*rt sho*ld not esta)lish the precedent that noncompliance ,ith mandatory and 4*risdictional conditions can )e e0c*sed if the claim is other,ise meritorio*s% partic*larly in claims for ta0 ref*nds or credit. S*ch precedent ,ill render meaninless compliance ,ith mandatory and 4*risdictional re>*irements. 3 1/ The co*rt in r*lin% cited Sections &&# and &&" of the Ta0 +ode incl*din the 4*rispr*dence and administrati-e r*lins on the same section in the collecti-e case of San Ro>*e. Section &&"+$ e0pressly rants the +ommissioner &"# days ,ithin ,hich to decide the ta0payers claim. The la, is clear% plain% and *ne>*i-ocal: L0 0 0 the +ommissioner shall rant a ref*nd or iss*e the ta0 credit certificate for credita)le inp*t ta0es ,ithin one h*ndred t,enty &"#$ days from the date of s*)mission of complete doc*ments. Follo,in the -er)a leis doctrine% this la, m*st )e applied e0actly as ,orded since it is clear% plain% and *ne>*i-ocal. The ta0payer cannot simply file a petition ,ith the +TA ,itho*t ,aitin for the +ommissioners decision ,ithin the &"#day mandatory and 4*risdictional period. The +TA ,ill ha-e no 4*risdiction )eca*se there ,ill )e no Ldecision or Ldeemed a denial decision of the +ommissioner for the +TA to re-ie,. Section &&"+$ also e0pressly rants the ta0payer a (#day period to appeal to the +TA the decision or inaction of the +ommissioner% th*s: 0 0 0 the ta0payer affected may% ,ithin thirty (#$ days from the receipt of the decision denyin the claim or after the e0piration of the one h*ndred t,enty day period% appeal the decision or the *nacted claim ,ith the +o*rt of Ta0 Appeals. Follo,in the ,ell settled -er)a leis doctrine% this la, sho*ld )e applied e0actly as ,orded since it is clear% plain% and *ne>*i-ocal. As this la, states% the ta0payer may% if he ,ishes% appeal the decision of the +ommissioner to the +TA ,ithin (# days from receipt of the +ommissioners decision% or if the +ommissioner does not act on the ta0payers claim ,ithin the &"#day period% the ta0payer may appeal to the +TA ,ithin (# days from the e0piration of the &"#day period. 3 *Re&ardin& the ta, reundDcredit/ Since ATP is not indicated in the in-oices or receipts% the only ,ay to -erify ,hether the in-oices or receipts are d*ly reistered is )y re>*irin the claimant to present its ATP from the BIR. 9itho*t ,hich% the in-oices ,o*ld ha-e no pro)ati-e -al*e for the p*rpose of ref*nd. /o. The co*rt held. /ational Internal Re-en*e +ode -al*eadded ta0 =erorated or effecti-ely =erorated sales *n*tili=ed inp*t -al*eadded ta0 claims for ta0 credit or ref*nd period to file appeal ,ith the +o*rt of Ta0 Appeals. Section &&" D$ of the /ational Internal Re-en*e +ode pro-ides the +ommissioner of Internal Re-en*e a &"#day period from s*)mission of complete doc*ments in s*pport of the administrati-e claim ,ithin ,hich to act on claims for ref*nd6applications for iss*ance of the ta0 credit certificate. Cpon denial of the claim or application% or *pon e0piration of the &"#day period% the ta0payer only has (# days ,ithin ,hich to appeal said ad-erse decision or *nacted claim )efore the +TA% other,ise% said 4*dicial claim shall )e considered as filed o*t of time. 8. Toledo P,r GR &'&8' A* &#% "#& sec &&" &"# Y (# days Z r*les$ 8.
C u;on Geother$al GR 200841-42 u& 2(6 2015
Facts: +@ 1*=on is a domestic corporation enaed in the )*siness of po,er eneration. It filed its >*arterly VAT ret*rns for the year "##% ,hich reflected an o-erpayment of P"#%<%##<.38. +@ 1*=on maintained that
its o-erpayment ,as d*e to its domestic p*rchases of noncapital oods and ser-ices% ser-ices rendered )y non residents% and importation of noncapital oods. 2n /o-em)er (#% "##% +@ 1*=on filed an administrati-e claim for ref*nd of its *n*tili=ed inp*t VAT in the amo*nt of P"#%<%##<.38 )efore BIR. Thereafter% on Han*ary (% "##8% it filed a 4*dicial claim for ref*nd% )y ,ay of a petition for re-ie,% )efore the +TA. The +TA Di-ision partially ranted +@ 1*=on?s claim for ta0 ref*nd. B*t the +TA En anc set aside the +TA Di-ision?s findins% holdin that +@ 1*=on?s premat*re filin of its claim di-ested the +TA of 4*risdiction. Iss*e: 9hether or not +@ 1*=ons claim for ref*nd sho*ld )e dismissed on the ro*nd of premat*rity. R*lin: The case sho*ld )e remanded to the +TA En anc for its resol*tion on the merits. The r*le o-ernin a ta0payer?s claim for ref*nd of *n*tili=ed inp*t VAT is fo*nd in Section &&"& of the /IR+. In the case of C!" v. /ichi orging Company of /sia, !nc., it ,as held that the o)ser-ance of the &"#day period is a mandatory and 4*risdictional re>*isite to the filin of a 4*dicial claim for ref*nd )efore the +TA. As s*ch% its nono)ser-ance ,o*ld ,arrant the dismissal of the 4*dicial claim for lac7 of 4*risdiction. o,e-er% BIR R*lin /o. DA<3'#( e0pressly declared that the 5ta0payerclaimant need not ,ait for the lapse of the &"#day period )efore it co*ld see7 4*dicial relief ,ith the +TA )y ,ay of Petition for Re-ie,. So d*rin the period of Decem)er &#% "##( ,hen BIR R*lin /o. DA<3'#( ,as iss*ed$ to 2cto)er % "#&# ,hen the Aichi case ,as prom*lated$% ta0payersclaimants need not o)ser-e the &"#day period )efore it co*ld file a 4*dicial claim for ref*nd of e0cess inp*t VAT )efore the +TA. ere% records sho, that +@ 1*=on?s administrati-e and 4*dicial claims ,ere filed on /o-em)er (#% "## and Han*ary (% "##8% respecti-ely% or d*rin the period of effecti-ity of BIR R*lin /o. DA<3'#( and% th*s% fell ,ithin the ,indo, period stated , i.e .% ,hen ta0payerclaimants need not ,ait for the e0piration of the &"#day period )efore see7in 4*dicial relief. o,e-er% the S*preme +o*rt cannot instantly rant +@ 1*=on?s ref*nd claim. This is )eca*se the determination of +@ 1*=on?s entitlement to s*ch claim% if any% ,o*ld necessarily in-ol-e fact*al iss*es ,hich are )eyond the pale of 4*dicial re-ie, *nder a R*le < petition ,here only p*re >*estions of la,% not of fact% may )e resol-ed. ence% the pr*dent co*rse of action is to remand the case to the +TA @n Banc for resol*tion on the merits.
I.
Assinment
Best @-idence 2)taina)le sec % /IR+$
&. Mindanao B*s% GR 1&"38(% Fe)r*ary "<% &'& &
SEC. 112. Refunds or Tax Credits of Input Tax. (A) Zero-rated or Eectively Zero-rated Sales . - any VAT-registered person, whose sales are zero-rated or efeti!ely zero-rated "ay, within two (2) years after the close of the taxable quarter when the sales were made, apply #or the iss$ane o# a ta% redit erti&ate or re#$nd o# redita'le inp$t ta% d$e or paid attri'$ta'le to s$h sales, e%ept transitional inp$t ta%, to the e%tent that s$h inp$t ta% has not 'een applied against o$tp$t ta% % % %. %%%% (C) Period within which Refund or Tax Credit of Input Taxes shall e !ade. - n proper ases, the Co""issioner shall grant a re#$nd or iss$e the ta% redit erti&ate #or redita'le inp$t ta%es within one hundred twenty (120) days from the date of submission of complete documents in s$pport o# the appliation &led in aordane with S$'setion (A) hereo#. n ase o# #$ll or partial denial o# the lai" #or ta% re#$nd or ta% redit, or the #ail$re on the part o# the Co""issioner to at on the appliation within the period presri'ed a'o!e, the ta%payer afeted "ay, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the ourt of !ax "ppeals# % % % % (E"phases and $ndersoring s$pplied)
)C"/ Petitioner is a common carrier enaed in transportin passeners and freiht )y means of a*to)*ses in /orthern Mindanao% *nder certificates of p*)lic con-enience iss*ed )y the P*)lic Ser-ice +ommission. Sometime in Septem)er% &'(% an aent of the respondent +ollector of Internal Re-en*e e0amined the )oo7s of acco*nts of the petitioner and fo*nd that the freiht tic7ets *sed )y it do not contain the re>*ired doc*mentary stamp ta0. Said aent too7 ,ith him ## )oo7lets of tic7ets *sed )y the petitioner and co*nted the freiht receipts contained therein. e co*nted &%(# freiht tic7ets. Ass*min that each freiht tic7et co-ers )aae -al*ed at more than P.##% the +ollector of Internal Re-en*e% *pon recommendation of the aent% assessed aainst the petitioner the s*m of P&%8#<.&% e0cl*si-e of compromise penalty% as doc*mentary stamp ta0es from Han*ary &% &'<3 *p to Septem)er &% &'(. !""/ 9hether or not petitioner is lia)le for the assessed DST R!3G/ !es. Petitioners claim that the comp*tation made )y therespondent is not )ased *pon the )est a-aila)le e-idence% )*t on mere pres*mptions is de-oid of merit. The aent of the B*rea* of Internal Re-en*e ,ho in-estiated the petitioner?s )oo7s of acco*nts fo*nd it impossi)le to co*nt one )y one the freiht tic7ets contained in *sed )oo7lets d*mped inside the petitioner?s )odea% )eca*se the )oo7lets ,ere so n*mero*s and most of them ,ere either torn or destroyed. The proced*re follo,ed )y said aent% ,hich is the a-erae method% in ascertainin the total n*m)er of freiht tic7ets *sed d*rin the period *nder re-ie,% can not )e impro-ed )eca*se an act*al co*nt of the freiht tic7ets is practically impossi)le. The a-erae method is the only ,ay )y ,hich the aent co*ld determine the n*m)er of )oo7lets *sed d*rin the period in >*estion. The aent also correctly ass*med that the -al*e of the oods co-ered )y each freiht tic7et is not less than P.##. It is a common practice of passeners in the r*ral areas not to sec*re receipts for caroes of small -al*e and to demand receipts only for -al*a)le caro. If the freiht tic7ets ,ere iss*ed% the )aae carried m*st ha-e )een -al*a)le eno*h.
2n the other hand% it ,as the d*ty of petitioner to present e-idence to sho, inacc*racy in the a)o-e method of assessment% )*t it failed to do so. The claim of petitioner that the freiht tic7ets iss*ed )y it are not )ills of ladin s*)4ect to doc*mentary stamp ta0 m*st also )e dismissed. Bills of 1adin% in modern 4*rispr*dence% are not those iss*ed )y masters of -essels alone they no, comprehend all forms of transportation% ,hether )y sea or land% and incl*des the receipts for caro transported. Section ""8 of the /ational Internal Re-en*e +ode imposes the ta0 on receipts for oods or effects shipped from one port or place to another port or place in the Philippines. The *se of the ,ord place after port and of the% ,ord ?receipt? sho,s that the receipts for oods shipped on land are incl*ded. ". Sy Po% GR 13&<<% A**st &3% &'33 FA+TS: Bonifacia Sy Po is the ,ido, of Po Bien Sin ,ho died in Sept. 8% &'3#% ,ho ,as the sole proprietor of Sil-er +*p 9ine Factory in +e)* for the years &'<8". By order of the Sec. of Finance% Sil-er +*p ,as in-estiated )y the BIR for alleed ta0 e-asion. o,e-er% Mr. Po Bien Sin did not reprod*ce the doc*ments s*)4ect of a s*)poena d*ces tec*m. So% the team% assisted )y P+ +ompany% entered Sil-er +*ps factory )odea and sei=ed different )rands of alcohol prod*cts consistin of &% cases. The res*lt of the in-estiation prompted the commissioner to assess Mr. Po Bien Sin for deficiency income ta0 for &'&'8# P8MY$ and for deficiency specific ta0 for Han."% &'<Han. &'% &'8" PMY$. ISSC@: 9hether or not the assessments ha-e -alid leal )asis. RC1I/G: !es. Section &)$ pro-ides for the po,er of the +ommissioner of Internal Re-en*e to ma7e assessments.
)$ Fail*re to s*)mit re>*ired ret*rns% statements% reports and other doc*ments. 9hen a report re>*ired )y la, as a )asis for the assessment of an national internal re-en*e ta0 shall not )e forthcomin ,ithin the time fi0ed )y la, or re*lation or ,hen there is reason to )elie-e that any s*ch report is false% incomplete% or erroneo*s% the +ommissioner of Internal Re-en*e shall assess the proper ta0 on the )est e-idence o)taina)le. In case a person fails to file a re>*ired ret*rn or other doc*ment at the time prescri)ed )y la,% or ,illf*lly or other,ise% files a false or fra*d*lent ret*rn or other doc*ments% the +ommissioner shall ma7e or amend the ret*rn from his o,n 7no,lede and from s*ch information as he can o)tain thro*h testimony or other,ise% ,hich shall )e prima facie correct and s*fficient for all leal p*rposes. The r*le on the L)est e-idence o)taina)le applies ,hen a ta0 report re>*ired )y la, for the p*rpose of assessment is not a-aila)le or ,hen the ta0 report is incomplete or fra*d*lent. In this case% the persistent fail*re of Po Bien Sin and petitioner to present their )oo7s of acco*nts for e0amination for the ta0a)le years in-ol-ed left the +ommissioner no other leal option e0cept to resort to the po,er conferred *pon him *nder Section &. The ta0 fi*res arri-ed )y the +IR are not ar)itrary. There are clear indications of the petitioners commission of fra*d to depri-e the Go-ernment of the ta0es d*e. From HanDec &'8#% Sil-er +*p *sed tho*sands of *nta0ed distilled alcohol in prod*ction and false entries ,ere entered in the official reister )oo7s to hide the same. The ta0 assessments )y ta0 e0aminers are pres*med correct and made in ood faith. The ta0payer has the d*ty to pro-e other,ise. All pres*mptions are in fa-or of the correctness of ta0 assessments.
(. ante0% GR &('8% March (&% "## .
Ta0 Remedies
Assinment: +ompare
Cna) -s +*si '8 S+RA 388 ass. not a pre re>*isite$ +IR -s +A "8 S+RA "## Fort*ne To)acco case$
+ases on Assessment &. +IR -s BPI% "& S+RA (8(. Apr "##8 ". Barcelon -s +IR GR &8#< #8 A* # prescriptn$ (. FMF De-?t +orp S+RA '3 Sec """ )$ /IR+$ <. W*dos Metal% &83#38 May "#&#. ,ai-er . Metro Star S*perama% GR &3(8&% Dec 3% "#&#. PA/ part of d*e process. . Allied Ban7% && S+RA '". Fe) "#&#. @stoppel. 8. Gon=ales 1M +am*s @n?% GR &88"8' 2ct &(% "#&#. Final ass?t. +ases on Prescription &. BPI -s +iR &('8(. 2ct &8% "## ". BPI -s +IR &8<'<". Mar 8% "##3 (. +IR -s. Phil Glo)al &8&<. 2ct (&% "## <. am)recht U*ist% GR &'""% /o- &8% "#&#. Rein-estiation. Ta0 +redit6Ref*nd &. +IR -s P/B &&''8. 2ct "% "## ". Sil7air% << S+RA &##. Fe) "##3 FA+TS: Sil7air Sinapore$ Pte.% 1td.% a Sinaporean corporation enaed in international air carriae% filed ,ith the B*rea* of Internal Re-en*e an application for the ref*nd of P<%8%<#.8' e0cise ta0es paid for 4et f*el from Petron +orporation from Han*ary to H*ne "###. It )ased its claim from Section &( of the &''8 /IR+% and
Article <"$ of the Air Transport Areement )et,een RP and Sinapore. BIR has not acted *pon said application so Sil7air filed a Petition for Re-ie, ,ith the +o*rt of Ta0 Appeals% Second Di-ision. BIR opposed said petition on the ro*nd that the e0cise ta0 on petrole*m% )ein a direct lia)ility of the man*fact*rer or prod*cer% )ecomes part of the price ,hen added to the cost of said ood sold to the )*yer. +TA% Second Di-ision% in its decision on "8 May "##% dismissed said petition on the ro*nd that the latter is not the proper claimant% and li7e,ise denied Sil7airs s*)se>*ent Motion for Reconsideration therefor. ISSC@: 9hether or not Sil7air is the proper party to claim for the ta0 credit. RC1I/G: /o% Sil7air is not the proper claimant for the ta0 credit. Petron +orporation is the proper claimant. S+ held that the proper party to claim ref*nd of the ta0 credit [is the stat*tory ta0payer% the person\ ,ho paid said ta0 imposed )y la, e-en if he shifts the )*rden thereof to another. Section &(#A$ "$ th*s pro-ides [ *nless other,ise specifically allo,ed% the ret*rn shall )e filed and the e0cise ta0 paid )y the man*fact*rer or prod*cer )efore remo-al of domestic prod*cts from place of prod*ction. Petron% not Sil7air% is th*s the one entitled to claim ref*nd )ased on Section &( of the /IR+ of &''8 and Article<"$ of the Air Transport Areement )et,een RP and Sinapore. The ta0 )*rden passed )y Petron to Sil7air is no loner a ta0 )*t a part of the p*rchase price. The )est that Sil7air may do% if allo,ed% is only to see7 reim)*rsement of the ta0 )*rden from Petron. F*rthermore% e0emption ranted )y la, does not incl*de indirect ta0es. An indirect ta0% i.e.% e0cise ta0 on petrole*m prod*cts% is that in ,hich the incidence of ta0ation person stat*torily lia)le to pay$ falls on one person% and the impact of ta0ation )*rden of ta0ation$ falls on another. S+ r*led that [the e0emption ranted *nder Section &( )$ of the /IR+ of &''8 and Article <"$ of the AirTransport Areement )et,een RP and Sinapore cannot% ,itho*t a clear sho,in of leislati-e intent% )e constr*ed as incl*din indirect ta0es. S+ f*rther e0plained that [stat*tes rantin ta0 e0emptions m*st )e constr*ed in strictissimi 4*ris aainst the ta0payer and li)erally in fa-or of the ta0in a*thority% and if an e0emption isfo*nd to e0ist% it m*st not )e enlared )y constr*ction.
(. Smart% GR &8'#< A**st "% "#&#. 9ithholdin aent can file claim.
C!R v. "$art6 G.R. 3o. 17<045-4(6 u&ust 256 2010 9ithholdin aent can file claim$ )C"/ Smart +omm*nications% Inc. entered into ( areements for prorammin and cons*ltancy ser-ices ,ith Prism Transacti-e M$ Sdn. Bhd. Prism$% a nonresident corporation orani=ed *nder the la,s of Malaysia. Cnder the said areements% Prism ,as to pro-ide prorammin and cons*ltancy ser-ices for the installation of the Ser-ice Do,nload Manaer SDM$ and the +hannel Manaer +M$% and for the installation and implementation of Smart Money and Mo)ile Ban7in Ser-ice SIM Applications and Pri-ate Te0t Platform. Prism )illed Smart CS<8%3"".< in H*ne "##&. Thin7in that these payments constit*te royalties% SMART ,ithheld CS&(%'.&6P8%##3.3<#.<( representin the "; royalty ta0 *nder the RPMalaysia Ta0 Treaty. In Sept. "% "##&% SMART filed its Monthly Remittance Ret*rn of Final Income Ta0es 9ithheld for A**st "##&. 9ithin the "year period to claim a ref*nd% SMART filed claim for ref*nd of the P8MY. +IR failed to act on the ref*nd claim. SMART filed a petition for re-ie, ,ith the +TA. SMARTs claim for ref*nd is ro*nded on the contention that: a$ the payments made to Prism ,ere not royalties )*t )*siness profits% p*rs*ant to the definition of royalties *nder the RPMalaysia Ta0 Treaty and the +ommentaries of the 2r for @conomic +ooperation and De-t 2@+D$ +ommittee on Fiscal Affairs thro*h the Technical Ad-isory Gro*p on Treaty +haracteri=ation of @lectronic +ommerce Payments )$ *nder Art.8% RPMalaysia Ta0 Treaty% )*siness profits are ta0a)le in the Philippines only if attri)*ta)le to a permanent esta)lishment in the Philippines% ,hile Prism has no permanent esta)lishments in the Philippines%
th*s its payments to Prism sho*ld not )e ta0ed. +IR maintains that as a ,ithholdin aent% a$ SMART is not a partyininterest to file the claim for ref*nd )$ ass*min it is the proper party% there is no sho,in that the payments made to Prism constit*te )*siness profits. +TA *pheld SMARTs riht as ,ithholdin aent to file claim for ref*nd% )*t held that it ,as entitled only to partial ref*nd P(MY$% r*lin that altho*h the payment for the +M and SIM application areements are )*siness profits not s*)4ect to ta0$ *nder the RPMalaysia Ta0 Treaty% the payments for the SDM Areement is a royalty s*)4ect to ,ithholdin ta0. +TA en )anc affirmed and said that altho*h SMART and Prism are *nrelated entities% s*ch does not affect the stat*s of SMARTs direct and independent lia)ility *nder the ,ithholdin ta0 system. !"""/ a$ 9hether SMART has the riht to file the claim for ref*nd. )$ 9hether the payments made to Prism constit*te )*siness profits or royalties. R!3G/ a$ !es% the ,ithholdin aent may file a claim for ref*nd. Cnder Sections "#<c$ and ""' of the /IR+% the person entitled to claim a ta0 ref*nd is the ta0payer. o,e-er% in case the ta0payer does not file a claim for ref*nd% the ,ithholdin aent may file the claim. The leal interest of the ,ithholdin aent to file claim for ref*nd is not dependent on the relation )et,een the ta0payer and the ,ithholdin aent% altho*h s*ch relation miht increase the ,ithholdin aents interest. A ,ithholdin aent has a leal riht to file claim for ref*nd for t,o reasons: &$ e is considered a ta0payer *nder the /IR+ as he is personally lia)le for the ,ithholdin ta0 as ,ell as for deficiency assessments% s*rchares% and penalties% sho*ld the amo*nt of the ta0 ,ithheld )e finally fo*nd to )e less than the amo*nt that sho*ld ha-e )een ,ithheld *nder the la, "$ As an aent of the ta0payer% his a*thority to file the necessary income ta0 ret*rn and to remit the ta0 ,ithheld to the o-ernment impliedly incl*des the a*thority to file a claim for ref*nd and to )rin an action for reco-ery of s*ch claim.
o,e-er% ,hile the ,ithholdin aent has the riht to reco-er the ta0es erroneo*sly6illeally collected% he ne-ertheless has the o)liation to remit the same to the principal ta0payer. As an aent of the ta0payer% it is his d*ty to ret*rn ,hat he has reco-ered other,ise% he ,o*ld )e *n4*stly enrichin himself at the e0pense of the principal ta0payer from ,hom the ta0es ,ithheld and from ,hom he deri-es his leal riht to file a claim for ref*nd. )$ The payments for the +M and the SIM Application Areements constit*te )*siness profits. Cnder the RPMalaysia Ta0 Treaty% the term royalties is defined as payments of any 7ind recei-ed as consideration for: i$ the *se of% or the riht to *se% any patent% trade mar7% desin or model% plan% secret form*la or process% any copyriht of literary% artistic or scientific ,or7% or for the *se of% or the riht to *se% ind*strial% commercial% or scientific e>*ipment% or for information concernin ind*strial% commercial or scientific e0perience ii$ the *se of% or the riht to *se% cinematoraph films% or tapes for radio or tele-ision )roadcastin. These are ta0ed at the rate of "; of the ross amo*nt. Cnder the same Treaty% the )*siness profits of an enterprise of a +ontractin State is ta0a)le only in that State% *nless the enterprise carries on )*siness in the other +ontractin State thro*h a permanent esta)lishment. The term permanent esta)lishment is defined as a fi0ed place of )*siness ,here the enterprise is ,holly or partly carried on. o,e-er% e-en if there is no fi0ed place of )*siness% an enterprise of a +ontractin State is deemed to ha-e a permanent esta)lishment in the other +ontractin State if it carries on s*per-isory acti-ities in that other State for more than si0 months in connection ,ith a constr*ction% installation or assem)ly pro4ect ,hich is )ein *nderta7en in that other State.
Prism does not ha-e a permanent esta)lishment in the Philippines. ence% )*siness profits deri-ed from Prisms dealins ,ith respondent are not ta0a)le. The >*estion is ,hether the payments made to Prism *nder the SDM% +M% and SIM Application areements are )*siness profits and not royalties. The pro-isions in the areements are clear. Prism has intellect*al property riht o-er the SDM proram% )*t not o-er the +M and SIM Application prorams as the proprietary rihts of these prorams )elon to respondent. In other ,ords% o*t of the payments made to Prism% only the payment for the SDM proram is a royalty s*)4ect to a "; ,ithholdin ta0. A ref*nd of the erroneo*sly ,ithheld royalty ta0es for the payments pertainin to the +M and SIM Application Areements is therefore in order. <. Fort*ne To)acco ' S+RA &# sol*tio inde)iti$ . F@BT+% &8(3<. Mar &% "#&#. Re>*isites
I.
1ocal Go-ernment Ta0ation &. /P+ -s +a)anat*an <#& S+RA "' ". PI1R@+A -s DI1G <#( S+RA 3 (. P1DT -s 1a*na <8 S+RA '( <. +oca +ola -s Manila <'( S+RA "8' proced*re re: ta0 ordinance$ . Petron -s Tianco & S+RA <3< limitn of p,rs of 1GCs$ . San H*an -s +astro <& S+RA " protest$ 8. Berdin -s Mascari]as " S+RA '" ta0 ord$ 3. 1epanto -s Am)anloc% GR. &3#('% 6"'6&# e0tractn of minerals
II. Real Property Ta0ation &. M+IAA -s Marcos "& S+RA 8 mciaa is a occ$ ". MIAA -s +A <' S+RA '& miaa not a occ$ (. M+IAA -s 1ap*lap*% GR &3&8% & H*ne "#& <. PFDA -s +A (< S+RA <'# o-t instrmntlty e0empt from realty ta0$ . PPA -s +*rata GR &<"&&% H*ne ""% "##' PPA is a o-t instrmntlty$ . Aneles Cni-. -s +ity GR &3'''' "8 H*ne "#&" AD@ *sed\.$ 8. /P+ -s U*e=on GR &8&3 " Han "#&# AD@ *sed\.$ 3. Pasi -s P+GG% GR &3#"(% "< A* "#&& III.
Tariff +*stoms +ode &. +hia -s Actin +o+ &88 S+RA 8 Searches% 4*ris0n$ sample ,arrant ". +h*a -s Villan*e-a GR &8'& &Dec"## primary 4*ris0n$ (. +2+ -s +A <3& S+RA &#' 4*ris0n retroacts\ <. SBMA &#"8#. April "(% "#&# 4*ris0n . Pilipinas Shell GR&&'( # Mar "##3 collectn s*it . +2+ -s +TA P+2+% GR &("'"' "8 Mar "### sec &#($ fra*d 8. Farolan% Hr. -s +TA "&8 S+RA "'' no fra*d 3. +IR -s +TA &8&&&8. Fe) &(% "##' sec &#" fra*d$ '. Garcia -s @0ec. Sec. "&& S+RA "&' Sec. <#& tariff po,ers$ &#. A7)ayan -s A>*ino &8#&. H*ly &% "##3 treaty neo$ &&. Hardele=a &". Fe). % "## *ndeclared )aae Z sm*lin &". @l Greco &88&33. Dec. <% "##3 fa7e do0$ &(. +o+ -s Manila Star Ferry% Inc. ""8 S+RA (&8 fine only &<. Feeder Intl -s +A &'8 S+RA 3<" forfeit*reOcompare Mla Star Ferry case
