Beruflich Dokumente
Kultur Dokumente
TAXATION 2
TAX REMEDIES DIGEST COMPILATION
1) Commissioner Of Internal Revenue vs. Lascona Land Co., Inc. CA-G.R.
SP No. 58061. October 25, 2005
Facts: This is a petition for review that seeks to annul the CTA decision
withdrawing the deficiency in income tax liability of Lascona Land Co.
Sometime in March 1998, the Commissioner of Internal Revenue (herein
petitioner) issued Assessment Notice No. 0000047-93-407 against Lascona Land
Co., Inc. (herein respondent) informing the latter of its alleged deficiency income
tax for the year 1993 in the amount of P753,266.56.3 As a consequence,
respondent filed a letter protest on April 20, 1998 which was denied by the OIC,
Regional Director, Bureau of Internal Revenue (BIR), Revenue Region No. 8,
Makati City.
The case was filed in the Court of Tax Appeals (CTA). After due proceedings, the
CTA rendered the assailed Decision dated January 4, 2000 nullifying the subject
assessment. In seeking reconsideration thereof, petitioner further justified its
action declaring the said assessment final, executory and demandable.
The CTA based its decision on Section 3 (3.1.5) of Revenue Regulations No. 1299:
If the Commissioner or his duly authorized representative fails to act on the
taxpayers protest within one hundred eighty (180) days from date of submission,
by the taxpayer, of the required documents in support of his protest, the taxpayer
may appeal to the Court of Tax Appeals within thirty (30) days from the lapse of
the said 180-day period, otherwise, the assessment shall become final,
executory and demandable.
Hence this petition.
Issue: Whether or not the contention of the CIR is correct.
Held: YES. In the case at bar, it is undisputed that respondent filed its protest on
April 20, 1998 and must have submitted its supporting documents within 60 days
therefrom or until June 19, 1998. Thereafter, the petitioner has 180 days or until
December 16, 1998 within which to act on the subject protest. In turn, respondent
has another 30 days reckoned from its actual receipt of the latters decision, if
any, or the lapse of the 180-day period counted from December 17, 1998 or until
January 16, 1999, whichever comes first, to elevate its appeal to the CTA.
However, records show that respondent appealed to the said court only on April
12, 1999, after almost three (3) months from the lapse of the 180-day period. As
such, its appeal was clearly filed out of time rendering the disputed assessment
final and demandable.
receipt, if the CIRs ruling is adverse.It must however be noted that these two
remedies are mutually exclusive
3) Oceanic Wireless Network, Inc., petitioner, vs. Commissioner of Internal
Revenue, The Court of Tax Appeals, and The Court of Appeals,
respondents. G.R. No. 148380. December 9, 2005.
Facts: This is a Petition for Review on Certiorari seeking to reverse and set aside
the Decision of the Court of Appeals for lack of jurisdiction.
On March 17, 1988, Oceanic Wireless Network (petitioner) received from the
Bureau of Internal Revenue (BIR) deficiency tax assessments for the taxable
year 1984 in the total amount of P8,644,998.71. Petitioner filed its protest against
the tax assessments and requested a reconsideration or cancellation of the same
in a letter to the BIR Commissioner.
Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts
Receivable and Billing Division, Mr. Severino B. Buot, reiterated the tax
assessments while denying petitioners request for reinvestigation. Said letter
likewise requested petitioner to pay within 10 days from receipt thereof,
otherwise the case shall be referred to the Collection Enforcement Division of the
BIR National Office for the issuance of a warrant of distraint and levy without
further notice.
Upon petitioners failure to pay the subject tax assessments within the prescribed
period, the Assistant Commissioner for Collection, acting for the Commissioner of
Internal Revenue, issued the corresponding warrants of distraint and/or levy and
garnishment.
Petitioner filed a Petition for Review with the Court of Tax Appeals (CTA) to
contest the issuance of the warrants to enforce the collection of the tax
assessments. The CTA dismissed the petition for lack of jurisdiction.
Petitioner filed a Motion for Reconsideration arguing that the demand letter
cannot be considered as the final decision of the Commissioner of Internal
Revenue on its protest because the same was signed by a mere subordinate and
not by the Commissioner himself.
With the denial of its motion for reconsideration, petitioner consequently filed a
Petition for Review with the Court of Appeals contending that there was no final
decision to speak of because the Commissioner had yet to make a personal
determination as regards the merits of petitioners case.
The Court of Appeals denied the petition. Hence, this petition for review.
Issues:
1. Whether or not the BIRs right to assess has already prescribed. NO
2. Whether or not the deficiency assessments are void for failure to state the law
and facts to which the assessments are made. NO
3. Whether or not petitioner is liable for deficiency income tax. YES
Held:
1. NO. BIRs right has not yet prescribed and the assessment notices are valid.
At the time of the execution of the waiver, there was no preliminary assessment
issued yet against petitioner where the kind and amount of tax could be referred
to. Such details cannot be specified in the waiver since it was still
unascertainable at the time. Since the period of respondent to assess was
extended up to July 31, 1999 in view of the waiver, the deficiency assessments
issued against petitioner on July 30, 1999 are within the period allowed by law.
2. NO. The purpose of Section 228 of the National Internal Revenue Code of
1997 in requiring that "the taxpayer be informed of the law and facts on which
assessment is made" is to give the taxpayer the opportunity to refute the findings
of the examiner and give a more accurate and detailed explanation regarding the
proposed assessment. In the case, there was substantial compliance with Sec.
228 of the NIRC because petitioner was able to protest the assessments
intelligently, thereby implying that it had actual knowledge of the factual and legal
bases of the assessments. The fact that petitioner was furnished the computation
and brief explanation of how the assessment for deficiency quarterly income tax
was arrived at, the requirement under Section 228 of the 1997 Tax Code is
deemed complied with. And even if petitioner was not furnished of the detailed
computation of the deficiency quarterly income tax, the same was discussed with
petitioner during the informal conference.
3. YES. Petitioner having failed to comply with the requirement of the law in
disputing an assessment, the same became final, executory and demandable.
Sec. 228 states that:
x x x If the protest is denied in whole or in part, or is not acted upon within one
hundred eighty (180) daysfrom submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the Court of Tax Appeals within
thirty (30) days from receipt of the said decision, or from the lapse of the one
hundred eighty (180)-day period; otherwise, the decision shall become final,
executory and demandable. Undoubtedly, a taxpayer has sixty (60) days from the
filing of the protest to submit the relevant documents to support its protest,
otherwise, the assessment becomes final. Within one hundred eighty(180) days
from the submission of the relevant documents, the respondent should act on the
protest. If the respondent rendered his decision within the period or failed to act
on it, the remedy of the taxpayer is to file within thirty (30) days from the receipt
of the decision or from the lapse of one hundred eighty(180) days, an appeal to
this court, otherwise, the assessment will become final, executory and
demandable. x x x
This the respondent did not follow through. Additionally, it could not escape
notice that at the time respondent filed her amended return, the 1997 NIRC was
not yet in effect. Hence, respondent had no reason at that time to think that the
filing of an amended return would constitute the written claim for refund required
by applicable law.
Facts: This is a petition for review on certiorari that seeks to set aside the
decision of the Court of Appeals (CA).
On April 14, 1998 Primetown Property Group. Inc. filed its final adjusted return.
On March 11, 1999 Gilbert Yap, vice chair of Primetown Property Group. Inc.,
filed for the refund or tax credit of income tax paid in 1997. However, it was not
acted upon. Thus Primetown filed a petition for review but the Court of Tax
Appeals dismissed it claiming that it was filed beyond the two-year reglementary
period provided by section 229 of the National Internal Revenue Code. The Court
of Tax Appeals further argued that in National Marketing Corp. vs. Tecson the
Supreme Court ruled that a year is equal to 365 days regardless of whether it is a
regular year or a leap year.
Issue: Whether or not petition was filed within the two-year period
Held: YES. Pursuant to EO 292 or the Administrative Code of 1987, a year shall
be understood to be 12 calendar months. The SC defined a calendar month as a
month designated in the calendar without regard to the number of days it may
contain. The court held that Administrative Code of 1987 impliedly repealed Art
13 of NCC as the provisions are irreconcilable. Primetown is entitled for the
refund since it is filed within the 2-year reglementary period.
The court therefore held that respondent's petition (filed on April 14, 2000) was
filed on the last day of the 24th calendar month from the day respondent filed its
final adjusted return. Hence, it was filed within the reglementary period.
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the
Administrative Code of 1987 deal with the same subject matter the computation
of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it
be a regular year or a leap year. Under the Administrative Code of 1987,
however, a year is composed of 12 calendar months. Needless to state, under
the Administrative Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of computing
legal periods under the Civil Code and the Administrative Code of 1987. For this
reason, we hold that Section 31, Chapter VIII, Book I of the Administrative Code
of 1987, being the more recent law, governs the computation of legal periods.
Lex posteriori derogat priori.
The months as contemplated in the Civil Code should be considered as 30 days.
A calendar month is a month designated in the calendar without regard to the
number of days it may contain.
A correct application of the Gibbs case according to the court is that a taxpayer
whose income is withheld at source will be deemed to have paid his tax liability at
the end of the tax year. It is from when the same falls due at the his latter date
then, or when the two-year prescriptive period under Section 306 of the Revenue
Code starts to run with respect to payments effected through the withholding tax
system..
The aforequoted ruling presents two alternative reckoning dates, (1) the end of
the tax year; and (2) when the tax liability falls due. In the instant case, it is
undisputed that the petitioner corporation's withholding agents had paid the
corresponding taxes withheld at source to the Bureau of Internal Revenue from
February to December 1981. Petitioner corporation is not claiming a refund of
overpaid withholding taxes, per se. It is asking for the recovery the refundable or
creditable amount determined upon the petitioner corporation's filing of the its
final adjustment tax return on or before 15 April 1982 when its tax liability for the
year 1981 fell due. The petitioner corporation's taxable year is on a calendar year
basis, hence, with respect to the 1981 taxable year, ACCRA had until 15 April
1982 within which to file its final adjustment return. The petitioner corporation
duly complied with this requirement
Anent claims for refund, section 8 of Revenue Regulation No. 13-78 issued by
the Bureau of Internal Revenue requires that:
Section 8. Claims for tax credit or refund Claims for tax credit or refund of
income tax deducted and withheld on income payments shall be given due
course only when it is shown on the return that the income payment received
was declared as part of the gross income and the fact of withholding is
established by a copy of the statement, duly issued by the payor to the payee
(BIR Form No. 1743-A) showing the amount paid and the amount of tax withheld
therefrom.
The term "return" in the case of domestic corporations like ACCRA refers to the
final adjustment return. It bears emphasis at this point that the rationale in
computing the two-year prescriptive period with respect to the petitioner
corporation's claim for refund from the time it filed its final adjustment return is the
fact that it was only then that ACCRA could ascertain whether it made profits or
incurred losses in its business operations. The "date of payment", therefore, in
ACCRA's case was when its tax liability, if any, fell due upon its filing of its final
adjustment return on April 15, 1982.
9) College of Oral & Dental Surgery vs. Court of Tax Appeals, et al. (102 Phil
912)
Facts: The College of Oral and Dental Surgery is an educational institution, duly
organized and existing under the laws of the Philippines and located at 1858
Oroquieta, Manila.
In a letter sent to the Collector of Internal Revenue dated November 14, 1952,
said institution, through counsel, protested against the collection and claimed for
the refund of the sums of P4,333.39 and P500 paid under official receipt Nos. A89348 a-nd A-350887 for income tax corresponding to 1950 and the amount of
P2,434.50 paid under official receipt No. A-34431 for income tax corresponding
to 1951. lt was claimed that the school was exempted from the payment of said
tax in virtue of section 27, paragraph (f) of the National Internal Revenue Code.
This petition for refund was denied by the Collector of Internal Revenue on
January 12, 1953, pointing out the existence of Republic Act No. 82 amending
section section 27 (e) of the Tax Code and the interpretation thereof given by the
Secretary of Justice in Opinion No. 78, series of 1950, making taxable any
income derived from activities conducted for profit, irrespective of the disposition
made of such income. Thereafter, the taxpayer sent another letter requesting for
the reconsideration of said decision but the Collector deferred action on the same
pending the outcome of the case of Jesus Sacred Heart College vs. Collector of
Internal Revenue then awaiting decision of the Supreme Court, for the reason
that the issue involved therein was similar to the instant case. (The decision in
the case of Jesus Sacred Heart College vs. Collector, 95 Phil., 6).
On April 20, 1955, the Collector of Internal Revenue denied the request for
reconsideration on the ground that while it was true that the profits realized by
the College of Oral and Dental Surgery were used for the expansion and
improvement of the school and that no part thereof apparently injured to the
benefit of any individual stockholder, yet considering that the records proved that
Dr. Aldecoa, as president of the institution, received a salary of Pl,000 a month
and his wife a monthly compensation of P200 as treasurer thereof; and that as
the corporation could be dissolved any time because the period of its existence
was not fixed and upon its dissolution the properties could be divided among the
stockholders, the Aldecoa family in effect actually derived some benefits in the
operation of the same.
On April 29, 1955, the College of Oral and Dental Surgery filed a petition with the
Court of Tax Appeals (CTA Case No. 121) seeking to review the decision of the
Collector and praying for the refund of the aforementioned amount alleged to
have been erroneously collected. Respondent timely filed an answer denying the
material averments of the petition and set up the special defense that petitioner
did not come within the exemption of section 27 (e) of the Tax Code nor was the
decision of the Supreme Court in the case of Jesus Sacred Heart College
applicable to it. And on November 12, 1955, with leave of court, respondent filed
a motion to dismiss for the reason that the Tax Court had no jurisdiction over the
subject matter of the action as said case was instituted beyond the 2-year
prescriptive period provided for by Section 306 of the Tax Code.
This motion was accordingly opposed by petitioner and on December 19, 1955,
the Court of Tax Appeals, with one Judge concurring in a separate opinion,
issued a resolution dismissing the petition on the ground that the court acquired
no jurisdiction to entertain the same, it appearing that the case was filed 2 years
after the taxes sought to be refunded had been paid. As the motion filed by the
taxpayer for the reconsideration of the same was denied for lack of merit, the
matter was brought to this Court on appeal, petitioner ascribing to the lower
Court the commission of several errors. But reducing the interrelated issues to
bare essentials, the only question presented by the instant case could be boiled
down into whether or not in 1955, petitioner could still invoke court action for the
recovery of taxes paid in 1951 and 1952 or after the lapse of 2 years from the
date said payment were made; and, consequently, whether the Court of Tax
Appeals erred in dismissing the petition filed therein for lack of jurisdiction.
Issue: Whether or not the claim for the refund was made within the prescribed
period
Held: NO. There is no controversy that the taxes sought to be recovered where
paid on May 15, 1951, September 15, 1951 and May 15, 1952, and that although
the claim for the refund of the same was filed wlith the Collector of Internal
Revenue on November 14, 1952, the request for the reconsideration of the
latter's decision was denied only on April 20, 1955. Meanwhile, no proceeding in
court was instituted for that purpose in the intervening period. Although the filing
of the claim with the Collector of Internal Revenue is intended as a notice to said
official that unless the tax or penalty alleged to have been erroneously or illegally
collected is refunded court action will follow, this does not imply that the taxpayer
must wait for the action of the Collector before bringing the matter to court.
Indeed, it must be observed that under said provisions, the taxpayer's failure to
comply with the requirement regarding the institution of the action or proceeding
in court within 2 years after the payment of the taxes bars him from the recovery
of the same, irrespective of whether a claim for the refund of such taxes filed with
the Collector of Internal Revenue is still pending action of the latter.
10) BPI Leasing Corp. vs. Court of Appeals, et al. (416 SCRA 4)
Facts:
This is a petition for review on certiorari assailing the decision of the Court of
Appeals denying the motion for reconsideration. The assailed decision and
resolution affirmed the decision of the Court of Tax Appeals (CTA) which denied
petitioner BPI Leasing Corporations (BLC) claim for tax refund in CTA Case No.
4252.
BPI Leasing Corporation is a corporation engaged in the business of leasing
properties. For the calendar year 1986, BLC paid the Commissioner of Internal
Revenue (CIR) a total of P1,139,041.49 representing 4% contractors percentage
tax then imposed by Section 205 of the National Internal Revenue Code (NIRC),
based on its gross rentals from equipment leasing for the said year amounting to
P27,783,725.42.
On November 10, 1986, the CIR issued Revenue Regulation 19-86. Section 6.2
thereof provided that finance and leasing companies registered under Republic
Act 5980 shall be subject to gross receipt tax of 5%-3%-1% on actual income
earned. This means that companies registered under Republic Act 5980, such as
BLC, are not liable for contractors percentage tax under Section 205 but are,
instead, subject to gross receipts tax under Section 260 (now Section 122) of the
NIRC. Since BLC had earlier paid the aforementioned contractors percentage
tax, it re-computed its tax liabilities under the gross receipts tax and arrived at the
amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount of
P777,117.05, representing the difference between the P1,139,041.49 it had paid
as contractors percentage tax and P361,924.44 it should have paid for gross
receipts tax. Four days later, to stop the running of the prescriptive period for
refunds, petitioner filed a petition for review with the CTA. CTA dismissed the
petition and denied BLCs claim of refund. The CTA held that Revenue Regulation
19-86, as amended, may only be applied prospectively such that it only covers all
leases written on or after January 1, 1987. The CTA ruled that, since BLCs rental
income was all received prior to 1986, it follows that this was derived from lease
transactions prior to January 1, 1987, and hence, not covered by the revenue
regulation.
Issue:
1) Whether or not Revenue Regulation 19-86 is legislative rather than
interpretative in character
RULING: The Court finds the questioned revenue regulation to be legislative in
nature. LEGISLATIVE
2) Whether or not its application should be prospective or retroactive.
PROSPECTIVE
Held:
1) Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated
pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an
express grant of authority to the Secretary of Finance to promulgate all needful
rules and regulations for the effective enforcement of the provisions of the NIRC.
The Court recognized that the application of Section 277 calls for none other than
the exercise of quasi-legislative or rule-making authority. Verily, it cannot be
disputed that Revenue Regulation 19-86 was issued pursuant to the rule-making
power of the Secretary of Finance, thus making it legislative, and not
interpretative as alleged by BLC.
2) The principle is well entrenched that statutes, including administrative rules
and regulations, operate prospectively only, unless the legislative intent to the
contrary is manifest by express terms or by necessary implication. In the present
case, there is no indication that the revenue regulation may operate retroactively.
Furthermore, there is an express provision stating that it shall take effect on
January 1, 1987, and that it shall be applicable to all leases written on or after the
said date. Being clear on its prospective application, it must be given its literal
meaning and applied without further interpretation. Thus, BLC is not in a position
to invoke the provisions of Revenue Regulation 19-86 for lease rentals it received
prior to January 1, 1987.
In conclusion, the court held that although interest payment for delinquent taxes
is not deductible as tax under Section 30(c) of the Tax Code and section 80 of
the Income Tax Regulations, the taxpayer is not precluded thereby from claiming
said interest payment as deduction under section 30(b) of the same Code.
12) CIR vs. TMX Sales & CTA (205 SCRA 184)
Facts: Respondent TMX Sales, Inc., a domestic corporation, filed its quarterly
income tax return for the first quarter of 1981, declaring an income of
P571,174.31, and consequently paying an income tax thereon of P247,010.00 on
May 15, 1981. During the subsequent quarters, however, TMX Sales, Inc.
suffered losses so that when it filed on April 15, 1982 its Annual Income Tax
Return for the year ended December 31, 1981, it declared a gross income of
P904,122.00 and total deductions of P7,060,647.00, or a net loss of
P6,156,525.00 (CTA Decision, pp. 1-2; Rollo, pp. 45-46).
Thereafter, on July 9, 1982, TMX Sales, Inc. thru its external auditor, SGV & Co.
filed with the Appellate Division of the Bureau of Internal Revenue a claim for
refund in the amount of P247,010.00 representing overpaid income tax. (Rollo, p.
30)
The claim was not acted upon by the Commissioner of Internal Revenue, so
on March 14, 1984, TMX Sales, Inc. filed a petition for review before the Court of
Tax Appeals against the Commissioner of Internal Revenue, praying that the
petitioner, as private respondent therein, be ordered to refund to TMX Sales, Inc.
the amount of P247,010.00, representing overpaid income tax for the taxable
year ended December 31, 1981.
In his answer, the Commissioner of Internal Revenue averred that "granting,
without admitting, the amount in question is refundable, the petitioner (TMX
Sales, Inc.) is already barred from claiming the same considering that more than
two (2) years had already elapsed between the payment (May 15, 1981) and the
filing of the claim in Court (March 14, 1984). (Sections 292 and 295 of the Tax
Code of 1977, as amended)."
On April 29, 1988, the Court of Tax Appeals rendered a decision granting the
petition of TMX Sales, Inc. and ordering the Commissioner of Internal Revenue
to refund the amount claimed.
Issue: Whether or not TMX Sales Inc. is entitled to a refund considering that two
years has already elapsed since the payment of the tax
Ruling: YES. Petition of CIR is denied. Sec. 292, par. 2 of the National Internal
Revenue Code stated that in any case, no such suit or proceeding shall be
begun after the expiration of two years from the date of the payment of the tax or
penalty regardless of any supervening cause that may arise after payment. This
should be interpreted in relation to the other provisions of the Tax Code. The
most reasonable and logical application of the law would be to compute the 2year prescriptive period at the time of the filing of the Final Adjustment Return or
the Annual Income Tax Return, where it can finally be ascertained if the tax payer
has still to pay additional income tax or if he is entitled to a refund of overpaid
income tax. Since TMX filed the suit on March 14, 1984, it is within the 2-year
prescriptive period starting from April 15, 1982 when they filed their Annual
Income Tax Return.
Important! Since the two-year prescriptive period should be counted from the
filing of the Adjustment Return on April 15, 1982, TMX Sales, Inc. is not yet
barred by prescription.
The petition of CIR is therefore denied
14) Hongkong & Shanghai Banking Corporation vs. Commissioner (93 Phil
145)
Facts: In the years 1912-1915 inclusive, Pujalte & Co., a general mercantile
partnership, was engaged in the business of lumbering in Mindanao. Said
company removed from the forest and milled at its say mills during this period, a
total of 6,087.54 cubic meters of timber. The forest charges amounted to
P8,328.93. Upon the execution of bonds in the aggregate sum of P2,000 to
secure the payment of the forest charges due the government, the Collector of
Internal Revenue permitted Pujalte & Co. to remove this timber from the public
forests for shipment by sea on saw mill invoices without prior payment of the
forest charges. From the timber so removed by Pujalte & Co., railroad ties were
manufactured in its saw mills at Manila for the Manila Railroad Co. Six thousand
three hundred and five railroad ties so manufactured were rejected by the Manila
Railroad Co.
In February, 1915, the firm of Pujalte & Co. was indebted to the Hongkong and
Shanghai Banking Corporation in a large sum of money. Being unable to pay its
debt in specie, the company assigned to the bank, among other things, a large
quantity of the railroad ties manufactured at its mills. The bank sold and disposed
of these ties at various times until in May, 1916, there remained with it some
2,000 railroads ties of the lot acquired.
The internal revenue charges on the forest products removed from the public
forests of Mindanao by Pujalte & Co. not having been paid, on May 2, 1916, the
Collector of Internal Revenue caused delinquency proceedings to be
commenced and had issued a distress warrant. Later, on May 15, 1916, the
Collector of Internal Revenue caused an additional distress levy to be made upon
the 6,305 ties, which it will be remembered, had been assigned by Pujalte & Co.
to the Hongkong & Shanghai Banking Corporation. Proceeding in accordance
with this action, the Collector of Internal Revenue seized the 2,000 ties in the
possession of the bank. Until the date last mentioned, the bank had no notice of
the tax.
MAIN PETITION: Payment under protest, institution of complaint to recover back
the sum paid, answer by the Government, trial, and judgment followed in due
course. In this judgment, handed down by the Honorable James A. Ostrand, it
was declared that a lien for taxes existed on the 2,000 railroad ties levied upon
by the Collector of Internal Revenue and claimed as its property by the
Hongkong & Shanghai Banking Corporation, not for the full sum of P8,328.93
due as forest charges on the timber removed from the forests of Mindanao by
Pujalte & Co., but only for the sum of P316.43, which is the tax upon the timber
used for the manufacture of the ties. The court ordered the Collector of Internal
Revenue to refund to the Hongkong and Shanghai Banking Corporation the sum
of P8,012.50, with interest at 6 per cent per annum from February 1, 1917. No
costs were allowed. Following timely motions for a new trial, denial, and
exceptions thereto, both parties have appealed.
Issue: Whether or not the lien follow the property subject to the tax into the
hands of a third party when at the time of transfer, no demand for payment had
been made and when the purchaser had no notice of the existence of the lien?
Held: NO. In order that the lien may follow the property into the hands of a third
party, it is further essential that the latter should have notice, either actual or
constructive. The reason is the benevolence of our Constitution which prohibits
the taking of property without due process of law. Internal revenue laws are to be
construed fairly for the government and justly for the citizen. They should receive
a liberal construction to carry out the purposes of their enactment.
The plaintiff was not of course personally liable for any part of the internal
revenue taxes due the Government from Pujalte & Co. On the date the railroad
ties were transferred from Pujalte & Co. to the Hongkong & Shanghai Banking
Corporation no demand for payment of the tax had been made. The bonds in
favor of the Government were still presumably subsisting. No demand in fact was
made until over a year later when distraint proceedings were initiated. When the
Hongkong & Shanghai Banking Corporation purchased and acquired these 2,000
ties in February, 1915, there was nothing to show that Pujalte & Co. were
delinquent tax payers. No public record could be consulted to protect the
purchaser from loss by reason of the existence of a secret lien. A businessman of
ordinary prudence could not be expected to foresee that the personal property
which he had taken in satisfaction of a debt was burdened by a tax. On this date,
because no demand had been made and because the plaintiff had no notice of
the tax, there was no valid subsisting lien upon the ties.
15) Republic of the Phil. vs. Ramon G. Enriquez (166 SCRA 608)
Facts: This is an appeal by way of certiorari.
Commissioner of the Internal Revenue served a Warrant of Distraint of Personal
Property on the Maritime Company of the Philippines to satisfy various deficiency
taxes of Maritime Company of the Philippines. The First Coast Guard District
acknowledged receipt from the Commissioner of several barges, vehicles and 2
bodegas of spare parts belonging to taxpayer Maritime.
Ramon Enriquez the Deputy Sheriff of Manila levied on 2 barges of Maritime
pursuant to a writ of execution issued in a Civil Case involving Maritime where
the aforesaid company lost. Enriquez then scheduled a public auction sale
including the aforementioned properties.
The Commissioner wrote the sheriff informing him that the barges were no longer
owned by Maritime as the said barges had been distained and seized by the BIR
in satisfaction of the deficiency taxes. This letter was filed on June 19, 1986 at
the office of the sheriff.
On June 23, 1986, the sheriff sold the 2 barges and issued certificates of sale to
the highest bidder which was the levying creditor.
On June 24, 1986, Commissioner filed a petition for prohibition praying that the
respondent be ordered to desist and refrain from further proceedings in
connection with the execution and that respondents notice of levy be null and
void. The CA dismissed the petition holding that the sheriff did not commit grave
abuse of discretion.
Issue: Whether or not the BIR warrant of distraint and notice of seizure of
personal property is valid and effective as against the writ of execution issued by
RTC and the levy on execution and auction sale of the barges in question.
Held: YES. BIR warrant of distraint is valid. It is settled that the claim of the
government predicated on a tax lien is superior to the claim of a private litigant
predicated on a judgment. The tax lien attaches not only from the service of the
warrant of distraint of personal property but from the time the tax became due
and payable. Besides, the distraint on the subject properties of Maritime
Company of the Philippines as well as the notice of their seizure were made by
petitioner, through the Commissioner of Internal Revenue, long before the writ of
execution was issued by the RTC. There is no question then that at the time the
writ of execution was issued, the two (2) barges, MCP-1 and MCP-4, were no
longer properties of the Maritime Company of the Philippines. The power of the
court in execution of judgments extends only to properties unquestionably
belonging to the judgment debtor. Execution sales affect the rights of the
judgment debtor only, and the purchaser in an auction sale acquires only such
right as the judgment debtor had at the time of sale. It is also well-settled that the
sheriff is not authorized to attach or levy on property not belonging to the
judgment debtor.
16) Southern Cross Cement Corp. vs. Phil. Cement Manufacturers Corp., et
al. (434 SCRA 65)
Facts:
The case centers on the interpretation of provisions of Republic Act No. 8800, the
Safeguard Measures Act (SMA), which was one of the laws enacted by Congress
soon after the Philippines ratified the General Agreement on Tariff and Trade
(GATT) and the World Trade Organization (WTO) Agreement. The SMA provides
the structure and mechanics for the imposition of emergency measures, including
tariffs, to protect domestic industries and producers from increased imports which
inflict or could inflict serious injury on them.
Philippine Cement Manufacturers Assoc. filed a petition seeking the imposition of
safeguard measures on grey Portland cement with the DTI. The DTI Secretary
then issued a provisional safeguard measure and referred the petition to the Tariff
Commision.
After the Tariff Commissions investigation, it reported that there is no need for
definitivesafeguard measures. The DTI Secretary then denied Philcemors
petition but expressed his opinion that he disagreed with the Tariff Commissions
findings.
Philcemor challenged the decision of the CA.The CA ruled that the DTI secretary
was not bound by the Tariff Commisions report since it was merely
recommendatory. Based on this decision, the DTI Secretary then imposed a
definitve safeguard measure on importation of gray Portland cement for 3 years.
Southern cross challenges the CA decision and the safeguard by the DTI
Secretary.
Issue: Whether or not the CA has jurisdiction over the case which is concerned
with imposition of safeguard measures
Held: NO. It is not the CA, but the CTA has jurisdiction. Under Section 29 of the
SMA, there are three requisites to enable the CTA to acquire jurisdiction over the
petition for review contemplated therein: (i) there must be a ruling by the DTI
Secretary; (ii) the petition must be filed by an interested party adversely affected
by the ruling; and (iii) such ruling must be in connection with the imposition of a
safeguard measure. The first two requisites are clearly present. The third
requisite deserves closer scrutiny.
Contrary to the stance of the public respondents and Philcemcor, in this case
where the DTI Secretary decides not to impose a safeguard measure, it is the
CTA which has jurisdiction to review his decision. The reasons are as follows:
First. Split jurisdiction is abhorred. The law expressly confers on the CTA, the
tribunal with the specialized competence over tax and tariff matters, the role of
judicial review without mention of any other court that may exercise corollary or
ancillary jurisdiction in relation to the SMA.
Second. The interpretation of the provisions of the SMA favors vesting
untrammeled appellate jurisdiction on the CTA.
A plain reading of Section 29 of the SMA reveals that Congress did not expressly
bar the CTA from reviewing a negative determination by the DTI Secretary nor
conferred on the Court of Appeals such review authority. Respondents note, on
the other hand, that neither did the law expressly grant to the CTA the power to
review a negative determination. However, under the clear text of the law, the
CTA is vested with jurisdiction to review the ruling of the DTI Secretary in
connection with the imposition of a safeguard measure. Had the law been
couched instead to incorporate the phrase the ruling imposing a safeguard
measure, then respondents claim would have indisputable merit. Undoubtedly,
the phrase in connection with not only qualifies but clarifies the succeeding
phrase imposition of a safeguard measure. As expounded later, the phrase also
encompasses the opposite or converse ruling which is the non-imposition of a
safeguard measure.
Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens
Et Absurdum.
Even assuming arguendo that Section 29 has not expressly granted the CTA
jurisdiction to review a negative ruling of the DTI Secretary, the Court is
precluded from favoring an interpretation that would cause inconvenience and
absurdity. Adopting the respondents position favoring the CTAs minimal
jurisdiction would unnecessarily lead to illogical and onerous results.
17) Commissioner of Internal Revenue vs. Cebu Portland Cement Co., et al.
(156 SCRA 535)
Facts: There was a CTA decision ordering the petitioner Commissioner of
Internal Revenue to refund to the Cebu Portland Cement Company, respondent,
P 359,408.98 representing overpayments of ad valorem taxes on cement sold by
it. Execution of judgement was opposed by the petitioner CIR citing that private
respondent had an outstanding sales tax liability to which the judgment debt had
already been credited. In fact, there was still a P4 M plus balance they owed. The
Court of Tax Appeals, in holding that the alleged sales tax liability of the private
respondent was still being questioned and therefore could not be set-off against
the refund, granted private respondent's motion. The private respondent
questioned the assessed tax based on Article 186 of the Tax Code, contending
that cement was adjudged a mineral and not a manufactured product; and thusly
they were not liable for their alleged tax deficiency. Thereby, petitioner filed this
petition for review.
Issue: Whether or not the enforcement of assessment of taxes is valid even if it
is a subject of a pending case or it is still being contested
Held: NO. The argument that the assessment cannot as yet be enforced
because it is still being contested loses sight of the urgency of the need to collect
taxes as "the lifeblood of the government." If the payment of taxes could be
postponed by simply questioning their validity, the machinery of the state would
grind to a halt and all government functions would be paralyzed. That is the
reason why, save for the exception already noted, the Tax Code provides:
Sec. 291.
Injunction not available to restrain collection of tax. No court
shall have authority to grant an injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed by this Code.
It goes without saying that this injunction is available not only when the
assessment is already being questioned in a court of justice but more so if, as in
the instant case, the challenge to the assessment is still-and only-on the
administrative level. There is all the more reason to apply the rule here because
it appears that even after crediting of the refund against the tax deficiency, a
balance of more than P 4 million is still due from the private respondent.
The court further held that to require the petitioner to actually refund to the
private respondent the amount of the judgment debt, which he will later have the
right to distrain for payment of its sales tax liability is in our view an Idle ritual. We
hold that the respondent Court of Tax Appeals erred in ordering such a charade.
18) Francis A. Churchill, et al. vs. James J. Rafferty (032 Phil 580)
Facts: This is an appeal from the decision of the Court of First Instance
Francis A. Churchill and Stewart Tait are involved in the advertising business,
particularly in billboard advertising. Their billboards located upon private lands in
the Province of Rizal were removed upon complaints and by the orders of the
defendant Collector of Internal Revenue by virtue of the provisions of subsection
(b) of section 100 of Act No. 2339.
Appellees, in their supplementary complaint challenge the power of the of the
Collector of Internal Revenue to remove any sign, signboard, or billboard upon
the ground that the same is offensive to the sight or is otherwise a nuisance and
maintain that the billboards in question in no sense constitute a nuisance and
are not deleterious to the health, morals, or general welfare of the community, or
of any persons. Defendant Collector of Internal Revenue avers that after due
investigation made upon the complaints of the British and German Consuls, the
defendant decided that the billboard complained of was and still offensive to the
sight and is otherwise a nuisance.
Issue: Whether or not the prohibition for the offensive billboard is valid?
Held: YES. A provision in an internal revenue law prohibiting the courts from
enjoining the collection for an internal revenue tax is valid as opposed to the due
process and equal protection of the law clauses of the bill of rights of the Organic
Act. Such legislation has been upheld by the United States Supreme Court
Nor is such a provision of law invalid as curtailing the jurisdiction of the courts of
the Philippine Islands as fixed by section 9 of the Organic Act; a) because
jurisdiction was never conferred upon Philippine courts to enjoin the collection of
taxes imposed by the Philippine Commission; and b) because, in the present
case, another adequate remedy has been provided by payment and protest
19) Quirico P. Ungab vs. Vicente N. Cusi, Jr. (97 SCRA 877)
Facts:: This case is a petition for certiorari and prohibition with preliminary
injunction and restraining order to annul and set aside the informations filed in
the Court of First Instance of Davao, all entitled: "People of the Philippines,
plaintiff, versus Quirico Ungab, accused;" and to restrain the respondent Judge
from further proceeding with the hearing and trial of the said cases.
Criminal charges were filed against Quirico Ungab, a banana saplings producer,
for allegedly evading payment of taxes and other violations of the NIRC. Ungab,
subsequently filed a motion to quash on the ground that (1) the information are
null and void for want of authority on the part of the State Prosecutor to initiate
and prosecute the said cases; and (2) that the trial court has no jurisdiction to
take cognizance of the case in view of his pending protest against the
assessment made by the BIR examiner. The trial court denied the motion
prompting the petitioner to file a petition for certiorari and prohibition with
preliminary injunction and restraining order to annul and set aside the information
filed.
Issue: Whether or not the Ungab is correct in saying that he is not liable
Held: NO. The contention is without merit. What is involved here is not the
collection of taxes where the assessment of the Commissioner of Internal
Revenue may be reviewed by the Court of Tax Appeals, but a criminal
prosecution for violations of the National Internal Revenue Code which is within
the cognizance of courts of first instance. While there can be no civil action to
enforce collection before the assessment procedures provided in the Code have
been followed, there is no requirement for the precise computation and
assessment of the tax before there can be a criminal prosecution under the
Code.
Besides, it has been ruled that a petition for reconsideration of an assessment
may affect the suspension of the prescriptive period for the collection of taxes,
but not the prescriptive period of a criminal action for violation of law. Obviously,
the protest of the petitioner against the assessment of the District Revenue
Officer cannot stop his prosecution for violation of the National Internal Revenue
Code. Accordingly, the respondent Judge did not abuse his discretion in denying
the motion to quash filed by the petitioner.
The court dismissed Ungabs petition.
against the taxpayer, and (2) the taxpayer's financial position demonstrates a
clear inability to pay. Definitely, neither requisite is present in the case of the
Marcoses, because under the Agreement they are effectively conceding the
validity of the claims against their properties, part of which they will be allowed to
retain. Nor can the PCGG grant of tax exemption fall within the power of the
commissioner to abate or cancel a tax liability. This power can be exercised only
when (1) the tax appears to be unjustly or excessively assessed, or (2) the
administration and collection costs involved do not justify the collection of the tax
due. In this instance, the cancellation of tax liability is done even before the
determination of the amount due. In any event, criminal violations of the Tax
Code, for which legal actions have been filed in court or in which fraud is
involved, cannot be compromised.