Beruflich Dokumente
Kultur Dokumente
171251
March 5, 2012
Facts: Petitioner Lascona Land Co., Inc. was assessed for alleged deficiency
income tax in the amount of P753,266.56 for the taxable year 1993. Petitioner
filed a protest with the respondent Commissioner of the Internal Revenue (CIR),
but it was denied on the ground that it has become final, executory and
demandable as is it was not elevated to the Court of Tax Appeals (CTA) as
required in the last paragraph of Section 228 of the Tax Code. Petitioner
appealed before the CTA alleging that the CIR erred in ruling that the failure to
appeal to the CTA within 30 days from the lapse of the 180-day period rendered
the assessment final and executory. However, the CIR maintained its argument
that petitioners failure to file an appeal after the lapse of the 180-day
reglementary period required by law resulted to the finality of the assessment.
Issue: Whether or not the subject assessment has become final and executory.
Ruling: No.
When the law provided for the remedy to appeal the inaction of the CIR, it did not
intend to limit it to a single remedy of filing an appeal after the lapse of the 180day prescribed period. Precisely, when a taxpayer protested an assessment, he
naturally expects the CIR to decide either positively or negatively. A taxpayer
cannot be prejudiced if he chooses to wait for the final decision of the CIR on the
protested assessment. More so, because the law and jurisprudence have always
contemplated a scenario where the CIR will decide on the protested assessment.
It must be emphasized, however, that in case of the inaction of the CIR on the
protested assessment, the taxpayer has two options, either: (1) file a petition for
review with the CTA within 30 days after the expiration of the 180-day period; or
(2) await the final decision of the Commissioner on the disputed assessment and
appeal such final decision to the CTA within 30 days after the receipt of a copy of
such decision, these options are mutually exclusive and resort to one bars the
application of the other.
In the case at bar, petitioner opted to await the final decision of the
Commissioner on the protested assessment, it then has the right to appeal such
final decision to the Court by filing a petition for review within 30 days after
receipt of a copy of such decision or ruling, even after the expiration of the 180day period fixed by law for the Commissioner of Internal Revenue to act on the
disputed assessments.
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September 7, 2011
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April 6, 2011
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ATP from the BIR. Without this proof, the invoices or receipts would have no
probative value for the purpose of refund. In the case of Intel, we emphasized
that It is not specifically required that the BIR authority to print be reflected or
indicated therein. Indeed, what is important with respect to the BIR authority to
print is that it has been secured or obtained by the taxpayer, and that invoices or
receipts are duly registered.
The non-presentation of the ATP and the failure to indicate the word "zero-rated"
in the invoices or receipts are fatal to a claim for credit/refund of input VAT on
zero-rated sales. The failure to indicate the ATP in the sales invoices or receipts,
on the other hand, is not. In this case, petitioner failed to present its ATP and to
print the word "zero-rated" on its export sales invoices. Thus, the CTA ruled
correctly.
2. No.
To claim a refund of input VAT on capital goods, Section 112 (B) of the NIRC
requires that: (1) The claimant must be a VAT registered person; (2) The input
taxes claimed must have been paid on capital goods; (3) The input taxes must
not have been applied against any output tax liability; and (4) The administrative
claim for refund must have been filed within two years after the close of the
taxable quarter when the importation or purchase was made. Section 4.106-1(b)
of RR No. 7-95 defines capital goods as goods or properties with estimated
useful life greater that one year and which are treated as depreciable assets
under Section 29 (f), used directly or indirectly in the production or sale of taxable
goods or services. Based on this definition, the Supreme Court affirmed the
findings of the CTA that training materials, office supplies, posters, banners, Tshirts, books, and the other similar items reflected in petitioners Summary of
Importation of Goods are not capital goods. The reduction in the refundable input
VAT on capital goods from P15,170,082.00 to P9,898,867.00 is proper.
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Facts: Petitioners Renato Diaz and Aurora Ma. F. Timbol filed a petition for
declaratory relief assailing the validity of the impending imposition of value-added
tax (VAT) by the Bureau of Internal Revenue (BIR) on the collections of tollway
operators. They alleged that the Congress when it enacted the NIRC did not
intend to include toll fees within the meaning of "sale of services" that are subject
to VAT; that a toll fee is a "users tax," not a sale of services; that to impose VAT
on toll fees would amount to a tax on public service; and that, since VAT was
never factored into the formula for computing toll fees, its imposition would
violate the non-impairment clause of the constitution. The government averred
that the NIRC imposes VAT on all kinds of services of franchise grantees,
including tollway operations, except where the law provides otherwise; that the
Court should seek the meaning and intent of the law from the words used in the
statute; and that the imposition of VAT on tollway operations has been the subject
as early as 2003 of several BIR rulings and circulars.
Issue: Whether or not toll fees collected by tollway operators may be subjected
to value- added tax.
Ruling: Yes.
If the legislative intent was to exempt tollway operations from VAT, as petitioners
so strongly allege, then it would have been well for the law to clearly say so. Tax
exemptions must be justified by clear statutory grant and based on language in
the law too plain to be mistaken. The operation by the government of a tollway
does not change the character of the road as one for public use. Someone must
pay for the maintenance of the road, either the public indirectly through the taxes
they pay the government, or only those among the public who actually use the
road through the toll fees they pay upon using the road. The tollway system is
even a more efficient and equitable manner of taxing the public for the
maintenance of public roads.
The charging of fees to the public does not determine the character of the
property whether it is for public dominion or not. Article 420 of the Civil Code
defines property of public dominion as "one intended for public use." Even if the
government collects toll fees, the road is still "intended for public use" if anyone
can use the road under the same terms and conditions as the rest of the
public. The charging of fees, the limitation on the kind of vehicles that can use
the road, the speed restrictions and other conditions for the use of the road do
not affect the public character of the road.
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February 8, 2010
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The levy, collection and assessment of the 10% VAT was further deferred by
R.A. No. 8761 until December 31, 2000, and by R.A. No. 9010, until December
31, 2002;
With no further deferments given by law, the levy, collection and assessment
of the 10% VAT on banks, non-bank financial intermediaries, finance companies,
and other financial intermediaries not performing quasi-banking functions were
finally made effective beginning January 1, 2003;
Finally, with the enactment of R.A. No. 9238 in 2004, the services of banks,
non-bank financial intermediaries, finance companies, and other financial
intermediaries not performing quasi-banking functions were specifically
exempted from VAT, 28 and the 0% to 5% percentage tax on gross receipts on
other non-bank financial intermediaries was re-imposed under Section 122 of the
Tax Code of 1997.
At the time of the disputed assessment, that is, for the year 2000, pawnshops
were not subject to 10% VAT under the general provision on "sale or exchange of
services" as defined under Section 108 (A) of the Tax Code of 1997, which
states: "'sale or exchange of services' means the performance of all kinds of
services in the Philippines for others for a fee, remuneration or consideration."
Instead, due to the specific nature of its business, pawnshops were then subject
to 10% VAT under the category of non-bank financial intermediaries.
Since petitioner is a non-bank financial intermediary, it is subject to 10% VAT for
the tax years 1996 to 2002; however, with the levy, assessment and collection of
VAT from non-bank financial intermediaries being specifically deferred by law,
then petitioner is not liable for VAT during these tax years. But with the full
implementation of the VAT system on non-bank financial intermediaries starting
January 1, 2003, petitioner is liable for 10% VAT for said tax year. And beginning
2004 up to the present, by virtue of R.A. No. 9238, petitioner is no longer liable
for VAT but it is subject to percentage tax on gross receipts from 0% to 5%, as
the case may be. Since the imposition of VAT on pawnshops, which are nonbank financial intermediaries, was deferred for the tax years 1996 to 2002,
petitioner is not liable for VAT for the tax year 1999.
In dodging liability for documentary stamp tax on its pawn tickets, petitioner
argues that such tickets are neither securities nor printed evidence of
indebtedness. The argument fails. True, the law does not consider said ticket as
an evidence of security or indebtedness. However, for purposes of taxation, the
same pawn ticket is proof of an exercise of a taxable privilege of concluding a
contract of pledge. There is therefore no basis in petitioner's assertion that a DST
is literally a tax on a document and that no tax may be imposed on a pawn ticket.
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March 9, 2010
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Capital is a fund or property existing at one distinct point in time while income
denotes a flow of wealth during a definite period of time. Income is gain derived
and severed from capital.
Certainly, an income tax is arbitrary and confiscatory if it taxes capital because
capital is not income. In other words, it is income, not capital, which is subject to
income tax. However, the MCIT is not a tax on capital. The MCIT is imposed on
gross income which is arrived at by deducting the capital spent by a corporation
in the sale of its goods, i.e., the cost of goods and other direct expenses from
gross sales. Clearly, the capital is not being taxed.
Furthermore, the MCIT is not an additional tax imposition. It is imposed in lieu of
the normal net income tax, and only if the normal income tax is suspiciously low.
The MCIT merely approximates the amount of net income tax due from a
corporation, pegging the rate at a very much reduced 2% and uses as the base
the corporation's gross income.
In sum, petitioner failed to support, by any factual or legal basis, its allegation
that the MCIT is arbitrary and confiscatory. The Court cannot strike down a law
as unconstitutional simply because of its yokes. Taxation is necessarily
burdensome because, by its nature, it adversely affects property rights. The party
alleging the law's unconstitutionality has the burden to demonstrate the
supposed violations in understandable terms.
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May 5, 2010
Facts: On April 15, 1999, respondent Kudos Metal Corporation filed its Annual
Income Tax Return for the taxable year 1998. A review and audit of respondents
records ensued after petitioner Bureau of Internal Revenue (BIR) served
respondent with a subpoena duces tecum for its documents. On December 10,
2001, Nelia Pasco, respondents accountant, executed a Waiver of the Defense
of Prescription, which was notarized on January 22, 2002, received by the BIR
Tax Fraud Division on February 4, 2002. This was followed by a second Waiver
of Defense of Prescription executed by Pasco on February 18, 2003, notarized
on February 19, 2003, received by the BIR Tax Fraud Division on February 28,
2003. On August 25, 2003, the BIR issued a Preliminary Assessment Notice for
the taxable year 1998 against the respondent. This was followed by a Formal
Letter of Demand with Assessment Notices for taxable year 1998, dated
September 26, 2003. Respondent challenged the assessments by filing its
protest on the assessment.
The BIR rendered a final decision on the matter, requesting the immediate
payment of tax liabilities amounting to P25,624,048.76. Believing that the
governments right to assess taxes had prescribed, respondent filed a Petition for
Review with the CTA. The CTA Second Division issued a Resolution canceling
the assessment notices issued against respondent for having been issued
beyond the prescriptive period. It found the first Waiver of the Statute of
Limitations incomplete and defective for failure to comply with the provisions of
Revenue Memorandum Order (RMO) No. 20-90. Petitioner moved for
reconsideration but the CTA Second Division denied such motion. On appeal, the
CTA En Banc affirmed the cancellation of the assessment notices. Petitioner
sought reconsideration but the same was unavailing.
Issue: Whether or not the waivers of prescriptive period to assess are valid.
Ruling: No.
The waivers executed by respondents accountant did not extend the period
within which the assessment can be made. Section 222 (b) of the NIRC provides
that the period to assess and collect taxes may only be extended upon a written
agreement between the CIR and the taxpayer executed before the expiration of
the three-year period. RMO 20-9017 and RDAO 05-0118 lay down the procedure
for the proper execution of the waiver, to wit: (1) The waiver must be in the
proper form prescribed by RMO 20-90. The phrase "but not after ______ 19
___", which indicates the expiry date of the period agreed upon to assess/collect
the tax after the regular three-year period of prescription, should be filled up; (2)
The waiver must be signed by the taxpayer himself or his duly authorized
representative. In the case of a corporation, the waiver must be signed by any of
its responsible officials. In case the authority is delegated by the taxpayer to a
representative, such delegation should be in writing and duly notarized; (3) The
waiver should be duly notarized; (4) The CIR or the revenue official authorized by
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him must sign the waiver indicating that the BIR has accepted and agreed to the
waiver. The date of such acceptance by the BIR should be indicated. However,
before signing the waiver, the CIR or the revenue official authorized by him must
make sure that the waiver is in the prescribed form, duly notarized, and executed
by the taxpayer or his duly authorized representative; (5) Both the date of
execution by the taxpayer and date of acceptance by the Bureau should be
before the expiration of the period of prescription or before the lapse of the period
agreed upon in case a subsequent agreement is executed; and (6) The waiver
must be executed in three copies, the original copy to be attached to the docket
of the case, the second copy for the taxpayer and the third copy for the Office
accepting the waiver. The fact of receipt by the taxpayer of his/her file copy must
be indicated in the original copy to show that the taxpayer was notified of the
acceptance of the BIR and the perfection of the agreement.
In the case at bar, the waivers executed by respondents accountant were
executed without the notarized written authority of Pasco to sign the waiver in
behalf of respondent; the waivers failed to indicate the date of acceptance, and
the fact of receipt by the respondent of its file copy was not indicated in the
original copies of the waivers. Due to the defects in the waivers, the period to
assess or collect taxes was not extended. Consequently, the assessments were
issued by the BIR beyond the three-year period and are void.
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Facts: Respondent Angeles City Electric Corporation (AEC), which was granted
a legislative franchise to generate and distribute electricity in Angeles City,
Pampanga, pays a franchise tax of two percent (2%) of its gross receipts to the
BIR. When the Local Government Code (LGC) of 1991 was passed into law, the
Sangguniang Panlungsod of Angeles City enacted a tax ordinance known as the
Revised Revenue Code of Angeles City (RRCAC) which imposed a local
franchise tax upon AEC. Metro Angeles Chamber of Commerce and Industry Inc.
(MACCI) of which AEC is a member filed a petition seeking the reduction of the
tax rates and a review of the provisions of the RRCAC was filed by, claiming that
the ordinance is oppressive. The petition was referred to the Bureau of Local
Government Finance (BLGF) and an indorsement was issued to the City
Treasurer of Angeles City, instructing the latter to make representations with the
Sanggunian for the appropriate amendment of the RRCAC.
On 2004, the City Treasurer issued a Notice of Assessment to AEC for payment
of business tax, license fee and other charges for the period 1993 to 2004
amounting to P94,861,194.10. AEC protested the assessment but the City
Treasurer denied the protest. AEC appealed to the RTC of Angeles City via a
Petition for Declaratory Relief. The City Treasurer however levied on the real
properties of AEC and a Notice of Auction Sale was published announcing that a
public auction of the levied properties would be held. This prompted AEC to file
with the RTC an Urgent Motion for Issuance of Temporary Restraining Order
(TRO) and/or Writ of Preliminary Injunction. After due notice and hearing, the
RTC issued a TRO and a Writ of Preliminary Injunction. Angeles City filed a
motion for dissolution of preliminary injunction, contending that the RTC cannot
enjoin the collection of taxes pursuant to the LGC, but the RTC denied such
motion.
Issue: Whether or not the RTC can enjoin the collection of local taxes.
Ruling: No.
The LGC does not specifically prohibit an injunction enjoining the collection of
taxes. A principle deeply embedded in our jurisprudence is that taxes being the
lifeblood of the government should be collected promptly, without unnecessary
hindrance or delay. In line with this principle, the National Internal Revenue Code
of 1997 (NIRC) expressly provides that no court shall have the authority to grant
an injunction to restrain the collection of any national internal revenue tax, fee or
charge imposed by the code. The situation, however, is different in the case of
the collection of local taxes as there is no express provision in the LGC
prohibiting courts from issuing an injunction to restrain local governments from
collecting taxes. Unlike the National Internal Revenue Code, the Local Tax Code
does not contain any specific provision prohibiting courts from enjoining the
collection of local taxes. Nevertheless, it must be emphasized that although there
is no express prohibition in the LGC, injunctions enjoining the collection of local
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taxes are frowned upon. Courts therefore should exercise extreme caution in
issuing such injunctions.
No grave abuse of discretion was committed by the RTC in the issuance of the
writ of preliminary injunction because the two requisites to warrant the issuance
of such, which are the existence of a clear and unmistakable right that must be
protected and an urgent and paramount necessity for the writ to prevent serious
damage, have been satisfied. The Court then had no other recourse but to grant
the prayer for the issuance of a writ of preliminary injunction considering that if
the respondent will not be restrained from doing the acts complained of, it will
preempt the Court from properly adjudicating on the merits the various issues
between the parties, and will render moot and academic the proceedings before
the court. The petition was dismissed.
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February 6, 2008
Facts: Petitioner, Silkair (Singapore) Pte. Ltd., a corporation organized under the
laws of Singapore which has a Philippine representative office, is an online
international air carrier operating domestic routes. Petitioner filed with the Bureau
of Internal Revenue (BIR) a refund worth P 4,000,000.00 for excise taxes it
claimed to have paid on its purchases of jet fuel from Petron Corporation
(Petron). The Second Division of the CTA, however, denied the petition on the
ground that the excise tax was imposed on Petron as manufacturer and that
should any claim arise, it should be filed by the latter and that where the burden
of tax is shifted to the purchaser (petitioner in this case), the amount passed on
to it is no longer a tax but an added cost to the goods purchased.
Issue: Whether or not petitioner Silkair is the proper party to claim for refund or
tax credit.
Ruling: No.
The proper party to question, or seek a refund of an indirect tax is the statutory
taxpayer, the person on whom the tax is imposed by law and who paid the same
even if he shifts the burden thereof to another. Section 130 (A) (2) of the NIRC
provides that "unless otherwise specifically allowed, the return shall be filed and
the excise tax paid by the manufacturer or producer before removal of domestic
products from place of production." Thus, Petron Corporation, not Silkair, is the
statutory taxpayer which is entitled to claim a refund based on Section 135 of the
NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and
Singapore.
Even if Petron Corporation passed on to Silkair the burden of the tax, the
additional amount billed to Silkair for jet fuel is not a tax but part of the price
which Silkair had to pay as a purchaser.
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(1)
Processing, manufacturing or repacking goods for other persons doing
business outside the Philippines which goods are subsequently exported, where
the services are paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP);
(2)
Services other than those mentioned in the preceding sub-paragraph, the
consideration for which is paid for in acceptable foreign currency and accounted
for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP);
(3)
Services rendered to persons or entities whose exemption under special
laws or international agreements to which the Philippines is a signatory
effectively subjects the supply of such services to zero rate;
(4)
and
(5)
Services performed by subcontractors and/or contractors in processing,
converting, or manufacturing goods for an enterprise whose export sales exceed
seventy percent (70%) of total annual production.
Another essential condition for qualification to zero-rating under the tax code is
that the recipient of such services is doing business outside the Philippines.
Services other than processing, manufacturing, or repacking of goods must
likewise be performed for persons doing business outside the Philippines. If the
provider and recipient of the other services are both doing business in the
Philippines, the payment of foreign currency is irrelevant. Otherwise, those
subject to the regular VAT under Section 102(a) can avoid paying the VAT by
simply stipulating payment in foreign currency inwardly remitted by the recipient
of services.
In this case, the payer-recipient of respondents services is the Consortium which
is a joint-venture doing business in the Philippines. While the Consortiums
principal members are non-resident foreign corporations, the Consortium itself is
doing business in the Philippines.
Respondent, as subcontractor of the Consortium, operates and maintains
NAPOCORs power barges in the Philippines. NAPOCOR pays the Consortium,
through its non-resident partners, partly in foreign currency outwardly remitted.
In turn, the Consortium pays respondent also in foreign currency inwardly
remitted and accounted for in accordance with BSP rules. This payment scheme
does not entitle respondent to 0% VAT.
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June 8, 2007
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It is Section 102(b)(2) which finds special relevance to this case. The VAT is a tax
on consumption "expressed as a percentage of the value added to goods
or services" purchased by the producer or taxpayer. As an indirect tax on
services, its main object is the transaction itself or, more concretely, the
performance of all kinds of services conducted in the course of trade or business
in the Philippines. These services must be regularly conducted in this country;
undertaken in "pursuit of a commercial or an economic activity;" for a valuable
consideration; and not exempt under the Tax Code, other special laws, or any
international agreement. Yet even as services may be subject to VAT, our tax
laws extend the benefit of zero-rating the VAT due on certain services. Under the
last paragraph of Section 102(b), services performed by VAT-registered persons
in the Philippines, when paid in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the BSP, are zero-rated. Petitioner
invokes the "destination principle," citing that respondents services, while
rendered to a non-resident foreign corporation, are not destined to be consumed
abroad. Hence, the onus of taxation of the revenue arising there from is also
within the Philippines. The Court in American Express debunked this
argument. As a general rule, the VAT system uses the destination principle as a
basis for the jurisdictional reach of the tax. Goods and services are taxed only in
the country where they are consumed. Thus, exports are zero-rated, while
imports are taxed. Confusion in zero rating arises because petitioner equates the
performance of a particular type of service with the consumption of its output
abroad. The consumption contemplated by law does not imply that the service be
done abroad in order to be zero-rated. Consumption is the use of a thing in a way
that thereby exhausts it. Applied to services, the term means the performance or
successful completion of a contractual duty, usually resulting in the performer's
release from any past or future liability. Its services, having been performed in the
Philippines, are therefore also consumed in the Philippines. Unlike goods,
services cannot be physically used in or bound for a specific place when
their destination is determined. Instead, there can only be a predetermined end
of a course when determining the service location or position for legal purposes.
However, the law clearly provides for an exception to the destination principle;
that is, for a zero percent VAT rate for services that are performed in the
Philippines, paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the BSP.
Further, the cost of respondent's service to be zero-rated need not be tacked in
as part of the cost of goods exported. The law neither imposes such requirement
nor associates services with exported goods. It simply states that the services
performed by VAT-registered persons in the Philippines if paid in acceptable
foreign currency and accounted for in accordance with the rules and regulations
of the BSP, are zero-rated. The service rendered by respondent is clearly
different from the product that arises from the rendition of such service. The
activity that creates the income must not be confused with the main business in
the course of which that income is realized. The law neither makes a qualification
nor adds a condition in determining the tax situs of a zero-rated service. Under
this criterion, the place where the service is rendered determines the jurisdiction
to impose the VAT. Performed in the Philippines, such service is necessarily
subject to its jurisdiction, for the State necessarily has to have "a substantial
connection" to it, in order to enforce a zero rate. The place of payment is
immaterial; much less is the place where the output of the service will be further
or ultimately used.
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December 9, 2005
Facts: On March 17, 1988, 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.
Issue: Whether the demand letter for tax deficiency issued and signed by a
subordinate officer who was acting in behalf of the CIR is deemed final and
executor and subject to an appeal to the CTA.
Ruling: Yes.
A demand letter for payment of delinquent taxes may be considered a decision
on a disputed or protested assessment. The determination on whether or not a
demand letter is final is conditioned upon the language used or the tenor of the
letter being sent to the taxpayer. In this case, the letter of demand,
unquestionably constitutes the final action taken by the Bureau of Internal
Revenue on petitioners request for reconsideration when it reiterated the tax
deficiency assessments due from petitioner, and requested its payment. Failure
to do so would result in the issuance of a warrant of distraint and levy to enforce
its collection without further notice. In addition, the letter contained a notation
indicating that petitioners request for reconsideration had been denied for lack of
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Facts: The Manila Banking Corp. was incorporated in 1961 and was engaged in
commercial banking industry until 1987. On May 22, 1987, Bangko Sentral ng
Pilipinas issued a resolution prohibiting the bank from engaging in business by
reason of insolvency. The bank ceased to operate. Meanwhile, Comprehensive
Tax Reform Act of 1987 became effective. One of the changes introduced by this
law is the imposition of Minimum Corporate Income Tax (MCIT). On 1999, the
bank was authorized by the BSP to operate as a thrift bank. Petitioner sent a
request letter to the BIR on whether it is entitled to the four (4)-year grace period
to pay its minimum corporate income tax as provided by the new law. The
following year, it filed with the BIR its income tax return for taxable year 1999.
The BIR then issued a ruling stating that the petitioner is entitled to the four (4)year grace period. Pursuant to the ruling, the bank filed with the BIR a claim for
refund of the sum it earlier paid. Due to inaction of the BIR, the bank filed with the
CTA a petition for review. The CTA denied the petition, finding that the banks
payment of corporate income tax is in order, contending that the bank is not a
new corporation. It is the same corporation registered with the SEC, there was
merely an interruption of business operations.
Issue: Whether the bank is entitled to a refund of its minimum corporate income
tax paid to the BIR for taxable year 1999.
Ruling: Revenue Regulation No. 4-95 implementing certain provisions of R.A.
No. 7906 provides: Sec. 6. Period of exemption. All thrift banks created and
organized under the provisions of the Act shall be exempt from the payment of all
taxes, fees, and charges of whatever nature and description, except the
corporate income tax imposed under Title II of the NIRC and as specified in
Section 2(A) of these regulations, for a period of five (5) years from the date of
commencement of operations; while for thrift banks which are already existing
and operating as of the date of effectivity of the Act (March 18, 1995), the tax
exemption shall be for a period of five (5) years reckoned from the date of such
effectivity. For purposes of these regulations, date of commencement of
operations shall be understood to mean the date when the thrift bank was
registered with the Securities and Exchange Commission or the date when the
Certificate of Authority to Operate was issued by the Monetary Board of the
Bangko Sentral ng Pilipinas, whichever comes later. As mentioned earlier,
petitioner bank was registered with the BIR in 1961. However, in 1987, it was
found insolvent by the Monetary Board of the BSP and was placed under
receivership. After twelve (12) years, or on June 23, 1999, the BSP issued to it a
Certificate of Authority to Operate as a thrift bank. Earlier, or on January 21,
1999, it registered with the BIR. Then it filed with the SEC its Articles of
Incorporation which was approved on June 22, 1999. It is clear from the abovequoted provision of Revenue Regulations No. 4-95 that the date of
commencement of operations of a thrift bank is the date it was registered with the
SEC or the date when the Certificate of Authority to Operate was issued to it by
the Monetary Board of the BSP, whichever comes later.
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Ruling:
The issue of whether the 20% FWT on a banks interest income forms part of the
taxable gross receipts for the purpose of computing the 5% GRT is no longer
novel. As commonly understood, the term gross receipts means the entire
receipts without any deduction. Deducting any amount from the gross receipts
changes the result, and the meaning, to net receipts. Any deduction from gross
receipts is inconsistent with a law that mandates a tax on gross receipts, unless
the law itself makes an exception. This interpretation has remained unchanged
throughout the various re-enactments of the present Section 121 of the Tax
Code. On the presumption that the legislature is familiar with the
contemporaneous interpretation of a statute given by the administrative agency
tasked to enforce the statute, the reasonable conclusion is that the legislature
has adopted the BIRs interpretation. In other words, the subsequent reenactments of the present Section 121, without changes in the term interpreted
by the BIR, confirm that its interpretation carries out the legislative purpose.
Actual receipt of interest income is not limited to physical receipt. Actual receipt
may either be physical receipt or constructive receipt. When the depositary bank
withholds the final tax to pay the tax liability of the lending bank, there is prior to
the withholding a constructive receipt by the lending bank of the amount
withheld. From the amount constructively received by the lending bank, the
depositary bank deducts the final withholding tax and remits it to the government
for the account of the lending bank. Thus, the interest income actually received
by the lending bank, both physically and constructively, is the net interest plus the
amount withheld as final tax.
NOTE: There is no double taxation because The GRT is a percentage tax under
Title V of the Tax Code ([Section 121], Other Percentage Taxes), while the FWT
is an income tax under Title II of the Code (Tax on Income). The two concepts
are different from each other. This Court defined that a percentage tax is a
national tax measured by a certain percentage of the gross selling price or gross
value in money of goods sold, bartered or imported; or of the gross receipts or
earnings derived by any person engaged in the sale of services. It is not
subject to withholding. An income tax, on the other hand, is a national tax
imposed on the net or the gross income realized in a taxable year. It is subject
to withholding. Thus, there can be no double taxation here as the Tax Code
imposes two different kinds of taxes.
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Facts: The Quezon City government enacted City Ordinance No. 357, Series of
1995 Section 3 of which reads: The City Assessor shall undertake a general
revision of real property assessments using as basis the newly approved
schedule specified in Sections 1 and 2 hereof. He shall apply the new
assessment level of 15% for residential and 40% for commercial and industrial
classification, respectively as prescribed in Section 8 (a) of the 1993 Quezon City
Revenue Code to determine the assessed value of the land. Provided; however,
that parcels of land sold, ceded, transferred and conveyed for remuneratory
consideration after the effectivity of this revision shall be subject to real estate tax
based on the actual amount reflected in the deed of conveyance or the current
approved zonal valuation of the Bureau of Internal Revenue prevailing at the time
of sale, cession, transfer and conveyance, whichever is higher, as evidenced by
the certificate of payment of the capital gains tax issued therefor. Allied Banking
Corporation, a purchaser of a parcel of land, questioned its validity.
Issue: Whether section 3 can be the basis of collecting real property taxes?
Ruling: No.
The proviso in question is invalid as it adopts a method of assessment or
appraisal of real property contrary to the Local Government Code, its
Implementing Rules and Regulations and the Local Assessment Regulations No.
1-92 issued by the Department of Finance. Local Assessment Regulations No. 192 suggests three approaches in estimating the fair market value, namely: (1) the
sales analysis or market data approach; (2) the income capitalization approach;
and (3) the replacement or reproduction cost approach. The Code did not intend
to have a rigid rule for the valuation of property, which is affected by a multitude
of circumstances which no rule could foresee or provide for. Accordingly, this
Court holds that the proviso directing that the real property tax be based on the
actual amount reflected in the deed of conveyance or the prevailing BIR zonal
value is invalid not only because it mandates an exclusive rule in determining the
fair market value but more so because it departs from the established procedures
stated in the Local Assessment Regulations No. 1-92 and unduly interferes with
the duties statutorily placed upon the local assessor by completely dispensing
with his analysis and discretion which the Code and the regulations require to be
exercised. Using the consideration appearing in the deed of conveyance to
assess or appraise real properties is not only illegal since the appraisal,
assessment, levy and collection of real property tax shall not be left to any private
person, but it will completely destroy the fundamental principle in real property
taxation that real property shall be classified, valued and assessed on the basis
of its actual use regardless of where located, whoever owns it, and whoever uses
it. Necessarily, allowing the parties to a private sale to dictate the fair market
value of the property will dispense with the distinctions of actual use stated in the
Code and in the regulations.
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Facts: In April 1991, respondent Philippine National Bank (PNB) issued to the
Bureau of Internal Revenue (BIR) PNB Cashiers Check for P180,000,000.00.
The check represented PNBs advance income tax payment for the banks 1991
operations and was remitted in response to then President Corazon C. Aquinos
call to generate more revenues for national development. The BIR acknowledged
receipt of the amount by issuing Payment Order and BIR Confirmation Receipt.
Later, PNB requested the issuance of a tax credit certificate (TCC) to be utilized
against future tax obligations of the bank. For the first and second quarters of
1991, PNB also paid additional taxes amounting to P6,096,150.00 and
P26,854,505.80, respectively. Inclusive of the P180 Million aforementioned, PNB
paid and BIR received in 1991 the aggregate amount of P212, 950,656.79. This
final figure, if tacked to PNBs prior years excess tax credit (P1,385,198.30) and
the creditable tax withheld for 1991 (P3,216,267.29), adds up to
P217,552,122.38. By the end of 1991, PNBs annual income tax liability, per its
1992 annual income tax return, amounted to P144,253,229.78, which, when
compared to its claimed total credits and tax payments of P217,552,122.38,
resulted to a credit balance in its favor in the amount of P73,298,892.60. This
credit balance was carried-over to cover tax liability for the years 1992 to 1996,
but, as PNB alleged, was never applied owing to the banks negative tax position
for the said inclusive years, having incurred losses during the 4-year period. On
July 28, 1997, PNB wrote then BIR Commissioner to inform her about the above
developments and to reiterate its request for the issuance of a TCC, this time for
the unutilized balance of its advance payment made in 1991 amounting to
P73,298,892.60. Replying, the BIR Commissioner denied PNBs claim for tax
credit on the reason, among others, that the same has already prescribed on the
ground that it was filed beyond the two (2) year prescriptive period.
Issue: Can PNB claim for the issuance of TCC even beyond the two-year
prescriptive period under Section 230(now Section 229) of the NIRC?
Ruling: Yes.
PNBs request for issuance of a tax credit certificate on the balance of its
advance income tax payment cannot be treated as a simple case of excess
payment as to be automatically covered by the two (2)-year limitation in Section
230. Section 230 of the Tax Code, as couched, particularly its statute of
limitations component, is, in context, intended to apply to suits for the recovery of
internal revenue taxes or sums erroneously, excessively, illegally or wrongfully
collected. Considering the special circumstance that the tax credit PNB has
been seeking is to be sourced not from any tax erroneously or illegally collected
but from advance income tax payment voluntarily made in response to then
President Aquinos call to generate more revenues for the government, in no way
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