Académique Documents
Professionnel Documents
Culture Documents
25, 2003
Facts:
Solidbank filed its Quarterly Percentage Tax Returns reflecting gross
receipts amounting to P1,474,693.44. It alleged that the total included
P350,807,875.15 representing gross receipts from passive income
which was already subjected to 20%final withholding tax (FWT).
The Court of Tax Appeals (CTA) held in Asian Ban Corp. v
Commissioner, that the 20% FWT should not form part of its taxable
gross receipts for purposes of computing the tax.
Solidbank, relying on the strength of this decision, filed with the BIR a
letter-request for the refund or tax credit. It also filed a petition for
review with the CTA where the it ordered the refund.
The CA ruling, however, stated that the 20% FWT did not form part of
the taxable gross receipts because the FWT was not actually received
by the bank but was directly remitted to the government.
The Commissioner claims that although the FWT was not actually
received by Solidbank, the fact that the amount redounded to the
banks benefit makes it part of the taxable gross receipts in computing
the Gross Receipts Tax. Solidbank says the CA ruling is correct.
Issue:
Whether or not the FWT forms part of the gross receipts tax.
Held:
Yes. In a withholding tax system, the payee is the taxpayer, the person
on whom the tax is imposed. The payor, a separate entity, acts as no
more than an agent of the government for the collection of tax in order
to ensure its payment. This amount that is used to settle the tax
liability is sourced from the proceeds constitutive of the tax base.
These proceeds are either actual or constructive. Both parties agree
that there is no actual receipt by the bank. What needs to be
determined is if there is constructive receipt. Since the payee is the
real taxpayer, the rule on constructive receipt can be rationalized.
The Court applied provisions of the Civil Code on actual and
constructive possession. Article 531 of the Civil Code clearly provides
that the acquisition of the right of possession is through the proper
acts and legal formalities established. The withholding process is one
such act. There may not be actual receipt of the income withheld;
however, as provided for in Article 532, possession by any person
(1) Yes. In Far East Bank & Trust Co. v. Commissioner and Standard
Chartered Bank v.Commissioner, both promulgated on 16 November
2001, the tax court ruled that the final withholdingtax forms part of the
banks gross receipts in computing the gross receipts tax. The tax
court held thatSection 4(e) of Revenue Regulations No. 12-80 did not
prescribe the computation of the amount ofgross receipts but merely
authorized the determination of the amount of gross receipts on the
basis ofthe method of accounting being used by the taxpayer.
The
word gross must be used in its plain and ordinary meaning. It is
defined as whole, entire,total, without deduction.
(2) SC reversed the ruling of the CA that subjecting the Final
Withholding Tax (FWT) to the 5% ofgross receipts tax would result in
double taxation.
In CIR v. Solidbank Corporation, SC said that the
two taxes, subject of this litigation, are different from each other. The
basis of their imposition may be the same, but their natures are
different. NODOUBLE TAXATION
Double taxation means taxing the
same property twice when it should be taxed only once; that is,"xxx
taxing the same person twice by the same jurisdiction for the same
thing." It is obnoxious when the taxpayer is taxed twice, when it should
be but once. Otherwise described as "direct duplicate taxation," the
two taxes must be imposed on the same subject matter, for the same
purpose, by the same taxing authority, within the same jurisdiction,
during the same taxing period; and they must be of the same kind or
character.
CIR vs. BPI, G.R. No. 147375, June 26, 2006
Facts:This case arose from the assessment of DST made by the
former Banks Financing and Insurance Division of the BIR on the sale of
foreign exchange to the BSP under a SWAP arrangement. The
transaction starts with the offer of U.S. dollars (Spot sale) by BPI at a
the prevailing exchange rate to the BSP subject to the redemption at
maturity at an agreed exchange rate (forward). Upon acceptance of
the offer, BPI will cable its correspondent bank abroad to remit the
amount of U.S. dollars to the Federal Reserve Bank for credit to the
account of the BSP. As soon as BSP receives the credit advice from the
Federal Reserve Bank, it credits the account of BPI corresponding to
the peso equivalent of the foreign exchange sold.
Issue:Will the transaction give rise to the imposition of the DST?
Held: The SC ruled that the sale of foreign currency per se is not
subject to DST. However, the facility used in the transaction of the
business is the one that is subject to documentary stamp tax.
The SC observed that Section 195 (now Section 182) of the NIRC
covers foreign bills of exchange, letters of credit, and orders for the
payment of money, drawn in the Philippines but payable in a foreign
country. From this enumeration, two common elements need to be
present: (1) drawing the instrument or ordering a drawee, within the
Philippines; and (2) ordering the drawee to pay another person a
specified amount of money outside the Philippines. Clearly, what is
being taxed is the facility that allows a party to draw the draft or make
the order to pay within the Philippines and have the payment made in
another country.
It bears emphasis to mention at this point that while Section 195
(now Section 182) includes within its coverage orders for payment of
money by telegraph or otherwise drawn in but payable out of the
Philippines the documentary stamp tax regulations (RR No. 26) is
more explicit when it said:
Section 51: What may be regarded as telegraphic transfer. If a local
bank cables to a certain bank in a foreign country with which bank said
local bank has a credit, and directs that foreign bank to pay to another
bank or person in the same locality a certain sum of money, the
document for and in respect such transaction will be regarded as a
telegraphic transfer, taxable under the provisions of Section 1449(i) of
the Administrative Code.
This makes the sale of foreign exchange under a swap
arrangement a transaction subject to the DST because of the facility
used in its consummation. There is a cable instruction from the local
bank in the Philippines where payment of foreign currency has to take
place abroad. This is a taxable telegraphic transfer within the
contemplation of law.
CIR vs. City Trust Investment Phils./Asianbank Corp. vs. CIR, G.R. No.
139786, G.R. No. 140857, Sept. 27, 2006
Facts:
Citytrust reported its total gross receipts and paid the 5% GRT
corresponding to it. Citytrust claimed for tax refund, seeking to be
reimbursed of the 5% GRT it paid on the portion of 20% FWT
contending that the 20% final tax on the passive income was already
deducted and withheld by various withholding agents. Hence, the
actual or the exact amount received, as its passive income was less
the 20% final tax and to include the same would constitute double
taxation. SC held that the 20% FWT is included in computing the 5%
GRT and such does not amount to double taxation. The GRT is a
percentage tax, while the FWT is an income tax. The two concepts are
different from each other.
Issue:
WON the 20% FWT on a bank's interest income forms part of the
taxable gross receipts for the purpose of computing the 5% GRT?
Held:
NO
Numerous cases are unanimous in defining "gross receipts" as "the
entire receipts without any deduction. The Tax Code does not provide
a definition of the term "gross receipts". Accordingly, the term is
properly understood in its plain and ordinary meaning and must be
taken to comprise of the entire receipts without any deduction. The
word "gross" must be used in its plain and ordinary meaning. It is
defined as "whole, entire, total, without deduction." Gross is the
antithesis of net.
Republic of the Philippines vs. Sunlife Assurance Company of Canada,
G.R. No. 158085, Oct. 14, 2005
FACTS:
Sun Life Assurance Company of Canada (Sun Life) is a mutual life
insurance company organized and existing under the laws of Canada.
Sun Life is registered and authorized by the Securities and Exchange
Commission (SEC) and the Insurance Commission (IC) to engaged in
business in the Philippines as a mutual life insurance company. Sun Life
filed with the Commissioner of Internal Revenue (CIR) its insurance
premium tax return for the third quarter of 1997, and paid the
necessary premium taxes. Sun Life also filed with the CIR its
documentary stamp tax (DST) declaration returns and paid the total
amount there for the Court of Tax Appeals (CTA) held in one case that
mutual life insurance companies are purely cooperative companies and
are exempt from payment of premium tax and DST. Sun Life filed with
the CIR an administrative claim for tax credit of its alleged erroneously
paid premium tax and DST. CIR failed to act upon the claim for tax
credit
Issue:
Was Sun Life a purely cooperative company/association under Sec.
121, NIRC, organized and conducted solely by the members thereof for
the exclusive benefit of each member and not for profit, and thus
exempt from having to pay premium tax and DST?
Held:
YES. NIRC's definition of a "cooperative": association conducted by the
members thereof with the money collected from among themselves
and solely for their own protection and not for profit. Sun Life is a
cooperative engaged in a mutual life insurance business -- (1) it is
managed by its members, its management and affairs are conducted
by member-policyholders; (2) it is operated with money collected from
its members[-policyholders]; and (3) it is licensed for the mutual
protection of its members, not for the profit of anyone under the Tax
Code, although respondent is a cooperative, registration with the
Cooperative Development Authority (CDA) is not necessary in order for
it to be exempt from premium tax and DST.
Phil. Basketball Association vs. CTA, G.R. No. 119122, Aug. 8, 2000
FACTS:
The PBA received an assessment letter from the Commissioner of
Internal Revenue (CIR) for the payment of deficiency amusement tax.
The PBA contested the assessment by filing a protest with the CIR who
denied the same. The PBA then filed a petition for review with the
Court of Tax Appeals (CTA), in which they held against the PBA.
The PBA filed an appeal with the Court of Appeals which was also
denied.
ISSUES:
Whether the amusement tax on admission tickets to PBA games is a
national tax.
Whether the cession of advertising and streamer spaces to Vintage
Enterprises, Inc. subject to amusement tax.
Held:
YES. The Local Tax Code does not provide for professional basketball
games but rather in PD 1959. It is clear that the "proprietor, lessee or
operator of professional basketball games" is required to pay an
amusement tax of 15% of their gross receipts to the BIR, which
payment is a national tax.
YES. The definition of gross receipts is broad enough to embrace the
cession of advertising and streamer spaces as the same embraces all
the receipts of the proprietor, lessee or operator of the amusement
place. The law being clear, there is no need for an extended
interpretation.
British American Tobacco v Jose Camacho et al., G.R. No. 163583,
August 20, 2008; motion for reconsideration, April 15, 2009
Facts:
To implement RA 8240, the Bureau of Internal Revenue (BIR) issued
Revenue Regulations No. 1-97, 2 whichclassified the existing brands of
cigarettes as those duly registered or active brands prior to January 1,
1997. New brands,or those registered after January 1, 1997, shall be
initially assessed at their suggested retail price until such time that
theappropriate survey to determine their current net retail price is
conducted. In June 2001 British American Tobaccointroduced into the
market Lucky Strike Filter, Lucky Strike Lights and Lucky Strike Menthol
Lights cigarettes, with a suggested retail price of P9.90 per pack. 3
Pursuant to Sec. 145 (c) quoted above, the Lucky Strike brands were
initially assessed the excise tax at P8.96 per pack.On February 17,
2003, Revenue Regulations No. 9-2003, amended Revenue Regulations
No. 1-97 by providing, among others, a periodic review every two years
or earlier of the current net retail price of new brands and variants
thereof forthe purpose of establishing and updating their tax
classification. Pursuant thereto, Revenue Memorandum Order No. 62003 5 was issued on March 11, 2003, prescribing the guidelines and
procedures in establishing current net retail pricesof new brands of
cigarettes and alcohol products. Subsequently, Revenue Regulations
No. 22-2003 6 was issued on August 8, 2003 to implement the revised
tax classification of certain new brands introduced in the market after
January 1, 1997, based on the survey of their current net retail price.
The survey revealed that Lucky Strike Filter, Lucky StrikeLights, and
Lucky Strike Menthol Lights, are sold at the current net retail price of
P22.54, P22.61 and P21.23, per pack,respectively. Respondent
Commissioner of the Bureau of Internal Revenue thus recommended
the applicable tax rate of P13.44 per pack inasmuch as Lucky Strike's
average net retail price is above P10.00 per pack. Thus filed before
Held: A judicious perusal of the records show that the decision of the
appellate court had becamefinal and executory due to the untimely
filing of the motion for reconsideration. Thus the ad valorem
ASSESSMEN T for the purchases to small miners stands.
Del Rosario vs. Hamoy, L-77154, June 30, 1987
Facts:
For want of a one-peso documentary stamp in a special power of
attorney for pre-trial purposes, in lieu of the personal appearance of
the plaintiff, the petitioner in this case, the respondent Judge declared
him non-suited and dismissed the complaint "for failure of the plaintiff
to appear for pre-trial conference. The respondent Judge manifestly
erred. He acted with indecent haste. He could have easily required the
counsel for the plaintiff to buy the required one-peso documentary
stamp outside the court room and affix the same to the special power
of attorney and that respite would not have taken ten minutes. Had he
been less technical and more sensible, the present proceedings and
the consequent waste of time of this Court and of his own would have
been avoided.
Issue:
WON the documentary stamp may be affixed at the time the taxable
document is presented in evidence?
Held:
Yes.
What the probate court should have done was to require the petitioner
or proponent to affix the requisite thirty-centavo documentary stamp
to the notarial acknowledgment of the will which is the taxable portion
of that document.
That procedure may be implied from the provision of section 238 that
the non-admissibility of the document, which does not bear the
requisite documentary stamp, subsists only "until the requisite stamp
or stamps shall have been affixed thereto and cancelled."
Thus, it was held that the documentary stamp may be affixed at the
time the taxable document is presented in evidence (Del Castillo vs.
Held:
Yes
Theinsurancepolicieswiththecorrespondingdocumentarystampsaffixedarethebest
evidencetoprovepaymentofsaiddocumentarystamptax.Thisrulehoweverdoesnot
precludetheadmissibilityofotherproofswhichareuncontradictedandofconsiderable
weight,suchas:copiesoftheapplicationsformanagerschecks,copiesofthemanagers
checkvouchersofthebankshowingthepurchasesofdocumentarystamps
ISSUE:
W/N the probate correct was correct in dismissing the petition on the
ground of failure to affix the documentary stamp to the will
HELD:
The Court held that the lower court manifestly erred in declaring that,
because no documentary stamp was affixed to the will, there was no
will and testament to probate and, consequently, the alleged action
must of necessity be dismissed.
What the probate court should have done was to require the petitioner
or proponent to affix the requisite thirty-centavo documentary stamp
to the notarial acknowledgment of the will which is the taxable portion
of that document. The documentary stamp may be affixed at the time
the taxable document is presented in evidence.
Lincoln Phil. Life Insurance Company, Inc. (now Jardine-CMG Life
Insurance Com., Inc. vs. CA, G.R. No. 118043, July 23, 1998
FACTS:
Jardine-CMG Life Insurance Company, Inc., is a domestic corporation
engaged in the life insurance business. It issued 50,000 shares of stock
as stock dividends, with a par value of P100 or a total of P5 million.
Petitioner paid documentary stamp taxes on each certificate on the
basis of its par value.
The CIR decided that the book value of the shares should be used as a
basis for determining the amount of the documentary stamp tax. The
CIR issued a deficiency documentary stamp tax assessment of
P78,991.25 in excess of the par value of the stock dividends.
Petitioner appealed to the CTA which held that the amount of the
documentary stamp tax should be based on the par value stated on
each certificate of stock reversing the CIR's decision. The CIR appealed
with the CA and again held in favor of the CIR.
ISSUE: Whether the amount to be paid for stock dividends as
documentary stamp tax, is the par value or the book value of the
shares.
RULING:
The par value. The Court reaffirmed the CTA's decision.
Petitioner is correct in basing the assessment on the book value
thereof rejecting the principles enunciated in Commissioner of Internal
Revenue vs. Heald Lumber Co. as the said case refers to purchases of
no-par certificates of stocks and not to stock dividends.
The documentary stamp tax is not levied upon the shares of stock per
se but rather on the privilege of issuing certificates of stock.
It is clear that stock dividends are shares of stock and not certificates
of stock which merely represent them. There is no reason for
determining the actual value of such dividends for purposes of the
documentary stamp tax if the certificates representing them indicate a
par value.