Vous êtes sur la page 1sur 12

CA affirmed the tax courts ruling on the ground that substantial evidence supported the factual findings

CHINA BANKING CORPORATION, petitioner, vs. COURT OF APPEALS, COURT OF TAX of the tax court. The 13th Division of the Court of Appeals, in its Decision of 16 October 2000[14] in CA-
APPEALS, and COMMISSIONER OF INTERNAL REVENUE, respondents. G.R. SP No. 50790, also affirmed the tax courts ruling on the ground that the 20% final withholding tax
does not form part of CBCs taxable gross receipts.
[G.R. No. 147938. June 10, 2003]
ISSUE AS TO THE TAX PAYER: Whether the 20% final withholding tax on interest income should form
part of CBCs gross receipts in computing the gross receipts tax on banks.
CORPORATION, respondent. ISSUE AS TO THE GOVERNMENT: Whether the final withholding tax on a bank’s interest income forms
part of its gross receipts in computing the gross receipts tax.


On 20 July 1994, CBC paid P12,354,933.00 as gross receipts tax on its income from interests on loan
investments, commissions, services, collection charges, foreign exchange profits and other operating We rule that the amount of interest income withheld in payment of the 20% final withholding tax forms
earnings during the second quarter of 1994. part of CBCs gross receipts in computing the gross receipts tax on banks.

On 19 July 1996, CBC filed with the Commissioner of Internal Revenue (Commissioner) a formal claim Section 121 of the Tax Code expressly subjects interest income to the gross receipts tax on banks. Such
for tax refund or credit of P1,140,623.82 from the P12,354,933.00 gross receipts tax that CBC paid for express inclusion of interest income in taxable gross receipts creates a presumption that the entire
the second quarter of 1994. To ensure that it filed its claim within the two-year prescriptive period,[6] CBC amount of the interest income, without any deduction, is subject to the gross receipts tax. As ruled by the
also filed on the same day a petition for review with the Court of Tax Appeals. Citing Asian Bank, CBC Supreme Court of New Mexico in Kewanee Industries, Inc. v. Reese,[64] -
argued that it was not liable for the gross receipts tax - amounting to P1,140,623.82 - on the sums withheld
by the Bangko Sentral ng Pilipinas as final withholding tax on CBCs passive interest income[7] in 1994. x x x There is a presumption that receipts of a person engaging in business are subject to the gross
receipts tax. For Kewanee to prevail, it must clearly overcome this presumption. Additionally, where an
Disputing CBCs claim, the Commissioner asserted that CBC paid the gross receipts tax pursuant to exception is claimed, the statute is construed strictly in favor of the taxing authority. The exemption must
Section 119 (now Section 121) of the National Internal Revenue Code (Tax Code) and pertinent Bureau be clearly and unambiguously expressed in the statute, and must be clearly established by the taxpayer
of Internal Revenue (BIR) regulations. The Commissioner argued that the final withholding tax on a banks claiming the right thereto. Thus, taxation is the rule and the claimant must show that his demand is within
interest income forms part of its gross receipts in computing the gross receipts tax.[8] The Commissioner the letter as well as the spirit of the law. (Citations and quotations omitted)
contended that the term gross receipts means the entire income or receipt, without any deduction.
To overcome this presumption, CBC must point to a specific provision of law allowing the deduction of
The Court of Tax Appeals ruled in favor of CBC and held that the 20% final withholding tax on interest the final withholding tax from its taxable gross receipts. CBC has failed to cite any provision of law allowing
the final tax as an exemption, deduction or exclusion. Thus, CBCs claim has no legal leg to stand on.
income does not form part of CBCs taxable gross receipts.

The CBC and the Commissioner both filed petitions for review under Rule 43 of the Rules of Court,
appealing the tax courts decision and resolution to the Court of Appeals. G.R. No. 162775 October 27, 2006
BELLO, in his capacity as CEO and President, petitioner,

On 30 January 1996, the Court of Tax Appeals in Asian Bank Corporation v. Commissioner of Internal vs.
Revenue[4] ruled that the 20% final withholding tax on a banks passive interest income does not form part
QUIÑONES, JR.,respondents.
part of their taxable gross income, considering that the CBA was not approved, much less submitted to
the BIR.

On various dates, petitioner employed the following persons at its Cebu station: Candido C. Quiñones,
Jr.; on February 1, 1975;3 Corsini R. Lagahit, as Studio Technician, also on February 1, 1975;4 Anatolio ISSUE AS TO THE TAXPAYER: whether their retirement benefits are exempt from income tax under
G. Otadoy, as Collector, on April 1, 1975;5 and Noemi Amarilla, as Traffic Clerk, on July 1, 1975.6 On Article 32 of the NIRC.
March 1, 1986, the government sequestered the station, including its properties, funds and other assets,
and took over its management and operations from its owner, Roberto Benedicto. ISSUE AS TO THE GOVERNMENT: whether the retirement benefits received by employees from their
employers constitute taxable income
In the meantime, the four (4) employees retired from the company and received, on staggered basis, their
retirement benefits under the 1993 Collective Bargaining Agreement (CBA) between petitioner and the HELD:
bargaining unit of its employees.
Yes. Under the NIRC, the retirement benefits of respondents are part of their gross income subject to
In the meantime, a P1,500.00 salary increase was given to all employees of the company, current and taxes. Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened
retired, effective July 1994. However, when the four retirees demanded theirs, petitioner refused and to prove the concurrence of the following elements: (1) a reasonable private benefit plan is maintained
instead informed them via a letter that their differentials would be used to offset the tax due on their by the employer; (2) the retiring official or employee has been in the service of the same employer for at
retirement benefits in accordance with the National Internal Revenue Code (NIRC). least 10 years; (3) the retiring official or employee is not less than 50 years of age at the time of his
retirement; and (4) the benefit had been availed of only once. Respondents were qualified to retire
The four (4) retirees filed separate complaints13 against IBC TV-13 Cebu and Station Manager Louella optionally from their employment with petitioner. However, there is no evidence on record that the 1993
F. Cabañero for unfair labor practice and non-payment of backwages before the NLRC, Regional CBA had been approved or was ever presented to the BIR; hence, the retirement benefits of respondents
Arbitration Branch VII. are taxable. Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on
said benefits and remit the same to the BIR. However, the Court agrees with respondents’ contention
The complainants averred that their retirement benefits are exempt from income tax under Article 32 of that petitioner did not withhold the taxes due on their retirement benefits because it had obliged itself to
the NIRC. Sections 28 and 72 of the NIRC, which petitioner relied upon in withholding their differentials, pay the taxes due thereon. This was done to induce respondents to agree to avail of the optional
do not apply to them since these provisions deal with the applicable income tax rates on foreign retirement scheme.
corporations and suits to recover taxes based on false or fraudulent returns.

For its part, petitioner averred that under Section 21 of the NIRC, the retirement benefits received by
employees from their employers constitute taxable income. While retirement benefits are exempt from G.R. No. 197590 November 24, 2014
taxes under Section 28(b) of said Code, the law requires that such benefits received should be in accord
with a reasonable retirement plan duly registered with the Bureau of Internal Revenue (BIR) after BUREAU OF INTERNAL REVENUE, as represented by the COMMISSIONER OF INTERNAL
compliance with the requirements therein enumerated. REVENUE,Petitioner,
On February 14, 2000, the Labor Arbiter rendered judgment in favor of the retirees. The NLRC held that MANLY, Respondents.
the benefits of the retirement plan under the CBAs between petitioner and its union members were subject FACTS AS TO TAXPAYER:
to tax as the scheme was not approved by the BIR. However, it had also been the practice of petitioner
to give retiring employees their retirement pay without tax deductions and there was no justifiable reason Antonio Manly is stockholder and EVP of Standard Realty corp, a family owned corporation while at the
for the respondent to deviate from such practice.
same time engaged in rental business. His wife, herein co accused is a housewife. the spouses were
Aggrieved, petitioner elevated the decision before the CA. the CA rendered judgment dismissing the able to acquire valuable properties such as the log house in Tagaytay City, a Toyota Rav 4 and a Toyota
petition for lack of merit. The appellate court declared that the salary differentials of the respondents are Prado.
FACTS AS TO THE GOVERNMENT: In Ungab v. Judge Cusi, Jr.,66 we ruled that tax evasion is deemed complete when the violator has
knowingly and willfully filed a fraudulent return with intent to evade and defeat a part or all of the
On April 27, 2005, the BIR issued LOA No. 2001 00012387 authorizing its revenue officers to investigate tax.67 Corollarily, an assessment of the tax deficiency is notrequired in a criminal prosecution for tax
respondent spouses for internal revenue tax liabilities for the year 2003 and prior years. evasion.68 However, in Commissioner of Internal Revenue v. Court of Appeals,69 we clarified that
although a deficiency assessment is not necessary, the fact that a tax is due must first be proved before
On June 6, 2005, BIR issued a letter to respondents requiring them to submit documentary evidence.
one can be prosecuted for tax evasion.
The Spouses failed to comply, thus on June 23, 2005, the revenue officers executed = a joint affidavit
In the case of income, for it to be taxable, there must be a gain realized or received by the taxpayer,
purporting to the declared annual income of the spouses for the years 1998-2003. In the said affidavit, it
was alleged that despite the modest income declared, the spouses were able to acquire valuable which is not excluded by law or treaty from taxation.71 The government is allowed to resort to all evidence
or resources available to determine a taxpayer’s income and to use methods to reconstruct his income.72
properties such as the log house in Tagaytay City, a Toyota Rav 4 and a Toyota Prado.
A method commonly used by the government isthe expenditure method, which is a method of
The revenue officers recommended the filing of criminal cases against the respondents, for failing to reconstructing a taxpayer’s income by deducting the aggregate yearly expenditures from the declared
supply the correct and accurate information in their ITRs for the years 2000, 2001 and 2003, punishable yearly income.73 The theory of this method is that when the amount of the money that a taxpayer spends
under Sec. 254 and 255, in relation to Sec. 248 (B) of R.A. 8424 (Tax Reform Act of 1997). during a given year exceeds his reported or declared income and the source of such money is
unexplained, it may be inferred that such expenditures represent unreported or undeclared income.
The State Prosecutor recommended for the filing of criminal charges against respondents: 3 counts of
violation of Sec. 254 (attempt to evade or defeat tax), 3 counts of violation of Sec. 255 (failure to supply Moreover, by just looking at the tables presented by petitioner, there is a manifest showing that
correct and accurate information), and 3 counts of violation of Sec. 255 (failure to pay). respondent spouses had under declared their income. The huge disparity between respondent Antonio’s
reported or declared annual income for the past several years and respondent spouses’ cash acquisitions
On July 27, 2009, Justice Secretary Agnes Devanadera reversed the resolution of the State Prosecutor. for the years 2000, 2001, and 2003 cannot be ignored. Infact, it makes uswonder how they were able to
She found no willful failure to pay or attempt to evade or defeat the tax on the part of the respondent purchase the properties in cash given respondent Antonio’s meager income.
spouses. She also pointed to the BIR’s failure to issue a deficiency tax assessment against respondents
is a prerequisite to the filing of criminal case for tax evasion. In view of the foregoing,we are convinced that there is probable cause to indict respondent spouses for
tax evasion as petitioner was able to show that a tax is due from them.
BIR filed a petition for certiorari before the CA, however, the petition was dismissed.
Tax evasion is deemed complete when the violator has knowingly and willfully filed fraudulent return with
Whether the spouses Manly can be sued for tax evasion? intent to evade and defeat a part or all of the tax.

Whether the issuance of a deficiency tax assessment is a prerequisite to the filing of criminal case for tax G.R. No. 169899 February 06, 2013
HELD: vs.
No, the issuance of a deficiency tax assessment is not a prerequisite to the filing of criminal case for tax COMMISSIONER OF INTERNAL REVENUE, Respondent.
ISSUE AS TO THE GOVERNMENT: Whether or not DST applies to PN.
Philacor is a domestic corporation engaged in the business of retail financing. A prospective buyer of a
home appliance – with neither cash nor any credit card – may purchase appliances on installment basis HELD:
from an appliance dealer. After Philacor conducts a credit investigation and approves the buyer’s
No, Philacor is not liable for the DST on the issuance of the PN.
application, the buyer executes a unilateral promissory note in favor of the appliance dealer.

Philacor received Pre-Assessment Notices of deficiency taxes for this year. Philacor’s Finance Manager,
Under Section 173 of the National Internal Revenue Code, the persons primarily liable for the payment
contested the tentative computations of deficiency taxes (totaling P20,037,013.83) through a letter dated
of DST are the persons (1) making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the taxable
April 17, 1995. Philacor protested the PANs, with a request for reconsideration and reinvestigation. It
documents, instruments or papers. Should these parties be exempted from paying tax, the other party
alleged that the assessed deficiency income tax was erroneously computed when it failed to take into
who is not exempt would then be liable. In this case, petitioner Philacor is engaged in the business of
account the reversing entries of the revenue accounts and income adjustments, such as repossessions,
retail financing. Through retail financing, a prospective buyer of home appliance may purchase an
write-offs and legal accounts. As for the deficiency DST, Philacor claims that the accredited appliance
appliance on installment by executing a unilateral promissory note in favor of the appliance dealer, and
dealers were required by law to affix the documentary stamps on all promissory notes purchased until
the same promissory note is assigned by the appliance dealer to Philacor. Thus, under this arrangement,
the enactment of Republic Act No. 7660, otherwise known as An Act Rationalizing Further the Structure
Philacor did not make, sign, issue, accept or transfer the promissory notes. It is the buyer of the
and Administration of the Documentary Stamp Tax, which took effect on January 15, 1994. In addition,
appliances who made, signed and issued the documents subject to tax while it is the appliance dealer
Philacor filed, on the following day, a supplemental protest, arguing that the assessments were void for
who transferred these documents to Philacor which likewise indisputably received or “accepted” them.
failure to state the law and the facts on which they were based.
Acceptance, however, is an act that is not even applicable to promissory notes, but only to bills of
FACTS AS TO THE GOVERNMENT: exchange. Under the Negotiable Instruments Law, the act of acceptance refers solely to bills of exchange.
In a ruling adopted by the Bureau of Internal Revenue as early as 1995, “acceptance” has been defined
Pursuant to Letter of Authority No. 17107, Revenue Officer Celestino Mejia examined Philacor’s books as having reference to incoming foreign bills of exchange which are accepted in the Philippines by the
of accounts and other accounting records for the fiscal year August 1, 1992 to July 31, 1993. drawees thereof, and not as referring to the common usage of the word as in receiving. Thus, a party to
a taxable transaction who “accepts” any documents or instruments in the plain and ordinary meaning
Similarly, the Bureau of Internal Revenue (BIR) failed to take into account the reversing entries of
does not become primarily liable for the tax.
repossessions, legal accounts, and write-offs when it computed the percentage tax; thus, the total income
reported, that the BIR arrived at, was not equal to the actual receipts of payment from the customers. The word "accepting" appearing in Section 210 of the National Internal Revenue Code has reference to
incoming foreign bills of exchange which are accepted in the Philippines by the drawees thereof.
CTA Division rendered decision. It concluded that Philacor failed to declare part of its income, making it
Accordingly, the documentary stamp tax on freight receipts is due at the time the receipts are issued and
liable for deficiency income tax and percentage tax. However, it also found that the Commissioner of
from the transportation company issuing the same. The fact that the transportation contractor issuing the
Internal Revenue (CIR) erred in his analysis of the entries in Philacor’s books thereby considerably
freight receipts shifts the burden of the tax to the shipper does not make the latter primarily liable to the
reducing Philacor’s liability to a deficiency income tax of P1,757,262.47 and a deficiency percentage tax
payment of the tax
of P613,987.86. The CTA also ruled that Philacor is liable for the DST on the issuance of the promissory
notes and their subsequent transfer or assignment. Noting that Philacor failed to prove that the DST on SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ,
its promissory notes had been paid for these two transactions, the CTA held Philacor liable for deficiency
DST of P673,633.88. Petitioners,

ISSUE AS TO THE TAXPAYER: WON Philacor is liable for the DST on the issuance of the PN. - versus -
BPI FAMILY SAVINGS BANK, INC., mortgagee to satisfy not only the principal loan but also interest and penalty charges, cost of publication
and expenses of the foreclosure proceedings.
Hence, these petitions separately filed by the mortgagors and the bank.
G.R. No. 165617


For non-payment of the loan, the mortgage was extrajudicially foreclosed and the property was sold to
- versus - the bank as the highest bidder in the public auction conducted by the Office of the Provincial Sheriff
of Lucena City. On August 7, 1996, a Certificate of Sale[2] was issued in favor of the bank and the same
SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ, was registered on October 1, 1996.

G.R. No. 165837 Before the expiration of the one-year redemption period, the mortgagors notified the bank of their intention
to redeem the property. Accordingly, the Statement of Account[3] was prepared by the bank indicating the
FACTS AS TO TAXPAYER: total amount due under the mortgage loan agreement with Capital Gains Tax included.

On April 24, 1995, Supreme Transliner, Inc. represented by its Managing Director, Moises C. Alvarez, ISSUE AS TO TAXPAYER: whether the foreclosing mortgagee should pay capital gains tax upon
and Paulita S. Alvarez, obtained a loan in the amount of P9,853,000.00 from BPI Family Savings Bank execution of the certificate of sale, and if paid by the mortgagee, whether the same should be shouldered
with a 714-square meter lot covered by Transfer Certificate of Title No. T-79193 in the name of Moises by the redemptioner.
C. Alvarez and Paulita S. Alvarez, as collateral.[1]
AS TO THE GOVERNMENT: WON capital gains tax applies even before the expiration of the redemption
The mortgagors requested for the elimination of liquidated damages and reduction of attorneys fees and period.
interest (1% per month) but the bank refused. On May 21, 1997, the mortgagors redeemed the property
by paying the sum of P15,704,249.12. A Certificate of Redemption[4] was issued by the bank on May 27,
1997. RR No. 4-99 issued on March 16, 1999, further amends RMO No. 6-92 relative to the payment of Capital
Gains Tax and Documentary Stamp Tax on extrajudicial foreclosure sale of capital assets initiated by
On June 11, 1997, the mortgagors filed a complaint against the bank to recover the allegedly unlawful
banks, finance and insurance companies.
and excessive charges totaling P5,331,237.77, with prayer for damages and attorneys fees, docketed as
Civil Case No. 97-72 of the Regional Trial Court of Lucena City, Branch 57. SEC. 3. CAPITAL GAINS TAX.
On February 14, 2002, the trial court rendered its decision[5] dismissing the complaint and the banks (1) In case the mortgagor exercises his right of redemption within one year from the issuance of
counterclaims. the certificate of sale, no capital gains tax shall be imposed because no capital gains has been
derived by the mortgagor and no sale or transfer of real property was realized.
The mortgagors appealed to the CA (CA-G.R. CV No. 74761) which, by Decision[7] dated April 6,
2004 reversed the trial court. In this case, the retroactive application of RR No. 4-99 is more consistent with the policy of aiding the
exercise of the right of redemption. As the Court of Tax Appeals concluded in one case, RR No. 4-99 has
The CA ruled that attorneys fees and liquidated damages were already included in the bid price
curbed the inequity of imposing a capital gains tax even before the expiration of the redemption period
of P10,372,711.35 as per the recitals in the Certificate of Sale that said amount was paid to the foreclosing
[since] there is yet no transfer of title and no profit or gain is realized by the mortgagor at the time of After trial, the Court of Tax Appeals Second Division rendered its Decision upholding the assessments
foreclosure sale but only upon expiration of the redemption period. for 1996 and 1997 deficiency withholding tax on compensation, 1996 deficiency onshore tax and 1996
and 1997 deficiency documentary stamp tax on special savings accounts.
Considering that herein petitioners-mortgagors exercised their right of redemption before the expiration
of the statutory one-year period, petitioner bank is not liable to pay the capital gains tax due on the On December 8, 2004, ING Bank filed its appeal before the Court of Tax Appeals En Banc.23 The Court
extrajudicial foreclosure sale. There was no actual transfer of title from the owners-mortgagors to the of Tax Appeals En Banc denied due course to ING Bank’s Petition for Review and dismissed the same
foreclosing bank. Hence, the inclusion of the said charge in the total redemption price was unwarranted for lack of merit.
and the corresponding amount paid by the petitioners-mortgagors should be returned to them.
ISSUE AS TO THE TAXPAYER: Whether ING Bank may validly avail itself of the tax amnesty granted
by Republic Act No. 9480;
‘G.R. No. 167679 July 22, 2015
ISSUE AS TO THE GOVERNMENT: Whether petitioner ING Bank is liable for deficiency withholding tax
on accrued bonuses for the taxable years 1996 and 1997.
ING BANK N.V., engaged in banking operations in the Philippines as ING BANK N.V. MANILA
COMMISSIONER OF INTERNAL REVENUE, Respondent. 1. YES. Taxpayers with pending tax cases may avail themselves of the tax amnesty program under RA
In CS Garment, Inc. v. CIR, this court has declared the exception ‘issues and cases which were ruled by
On January 3, 2000, ING Bank received a Final Assessment Notice11 dated December 3, 1999.12 The
any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer’ under BIR
Final Assessment Notice also contained the Details of Assessment13 and 13 Assessment Notices "issued
Revenue MC No. 19-2008 as invalid, for going beyond the scope of the provisions of the Tax Amnesty
by the Enforcement Service of the Bureau of Internal Revenue.
On February 2, 2000, ING Bank "paid the deficiency assessments for [the] 1996 compromise penalty,
Neither the law nor the implementing rules state that a court ruling that has not attained finality would
1997 deficiency documentary stamp tax and 1997 deficiency final tax in the respective amounts of
preclude the availment of the benefits of the Tax Amnesty Law. Both R.A. 9480 and DOF Order No. 29-
₱1,000.00, ₱1,000.00 and ₱75,013.25 [the original amount of ₱73,752.47 plus additional
07 are quite precise in declaring that "tax cases subject of final and executory judgment by the courts"
interest]."16 ING Bank, however, "protested [on the same day] the remaining ten (10) deficiency tax
are the ones excepted from the benefits of the law.
assessments in the total amount of ₱672,576,939.18."
Petitioner ING Bank showed that it complied with the requirements under RA 9480. The CIR never
ING Bank filed a Petition for Review before the Court of Tax Appeals on October 26, 2000. This case questioned that petitioner ING Bank fully complied with the requirements for tax amnesty under the law.
was docketed as C.T.A. Case No. 6187.18 The Petition was filed to seek "the cancellation and withdrawal Moreover, the contestability period of one (1) year from the time of petitioner ING Bank’s availment of the
of the deficiency tax assessments for the years 1996 and 1997, including the alleged deficiency
tax amnesty law on December 14, 2007 lapsed. Correspondingly, it is fully entitled to the immunities and
documentary stamp tax on special savings accounts, deficiency onshore tax, and deficiency withholding
tax on compensation mentioned above.” privileges mentioned under Section 6 of RA 9480.

RA 9480 confers no discretion on the CIR, its authority under RA 9480 is limited to determining whether
(a) the taxpayer is qualified to avail oneself of the tax amnesty; (b) all the requirements for availment
under the law were complied with; and (c) the correct amount of amnesty tax was paid within the period
prescribed by law.
2. YES. An expense, whether the same is paid or payable, shall be allowed as a deduction only if it is FACTS AS TO THE GOVERNMENT:
shown that the tax required to be deducted and withheld therefrom was paid to the BIR.
When CIR failed to act on petitioner’s claims, the latter filed petitioner for review with the CTA. CTA ruled
Under the NIRC, every form of compensation for personal services is subject to income tax and, in favor of petitioner and treated the 20% sales discount as tax credit rather than a deduction from the
consequently, to withholding tax. Petitioner ING Bank insists that the bonus accruals in 1996 and 1997 gross income. However, the CTA did not grant the full amount of claims because if found some
were not yet subject to withholding tax because these bonuses were actually distributed only in the discrepancies and irregularities in the cash slips submitted by petitioner. The CTA stated that the tax
succeeding years of their accrual when the amounts were finally determined. credit must be based on the actual cost of the medicine and not the whole amount of the 20% senior
citizens discount, thus the formula applied is: cost of sales/gross sales x amount of 20% sales discount.
The tax on compensation income is withheld at source under the creditable withholding tax system
wherein the tax withheld is intended to equal or at least approximate the tax due of the payee on the said The CA affirms the CTA decision. It interpreted the term "cost" as used in Section 4(a) of Republic Act
income. It was designed to enable (a) the individual taxpayer to meet his or her income tax liability on No. 7432 to mean the acquisition cost of the medicines sold to senior citizens. Hence, comes this petition
compensation earned; and (b) the government to collect at source the appropriate taxes on for review before the SC.
compensation. Taxes withheld are creditable in nature. Thus, the employee is still required to file an
income tax return to report the income and/or pay the difference between the tax withheld and the tax ISSUE AS TO THE TAXPAYER: Whether the claim for tax credit should be based on the full amount of
due on the income. For over withholding, the employee is refunded. Therefore, absolute or exact accuracy the 20% senior citizens’ discount or the acquisition cost of the merchandise sold.
in the determination of the amount of the compensation income is not a prerequisite for the employer’s
ISSUE AS TO THE GOVERNMENT: Whether the 20% sales discount granted by establishments to
withholding obligation to arise. qualified senior citizens be treated as tax deduction and not as tax credit.
-versus- July 20, 2011 The court ruled that the cost of discount should be computed on the actual amount of the discount
COMMISSIONER OF INTERNAL REVENUE, extended to senior citizens.
FACTS AS TO TAXPAYER: RA 7432, which grants, among others, sales discounts to senior citizens on the purchase of medicines,
imposes burden to private establishments amounting to taking of private property for public use with just
Pursuant to Republic Act No. 7432, petitioner Mercury Drug Corporation (petitioner), a retailer of compensation in the form of tax credit. However, said law does not provide how the cost of the discount
pharmaceutical products, granted a 20% sales discount to qualified senior citizens on their purchases of as tax credit be computed. Thus, the court construed the cost as referring to the amount of the 20% sales
medicines for the taxable year April to December 1993 and January to December 1994. With this, discount extended by establishments to senior citizens in the purchase of medicines.
petitioner claims an amount representing the 20% sales discount as deductions from its gross income.
Realizing that RA 7432 allows tax credit for the sales granted to senior citizens, petitioner filed with CIR However, the Court gave full accord to the factual findings of the Court of Tax Appeals with respect to the
claims for refund for the years 1993 and 1994. Computation of its overpayment of income tax was actual amount of the 20% sales discount. Thus the court held that petitioner is entitled to a tax credit
presented by petitioner. equivalent to the actual amounts of the 20% sales discount as determined by the Court of Tax Appeals.

Petitioner moved for partial reconsideration which CTA modified its ruling by increasing the taxable It is worthy to mention that Republic Act No. 7432 had undergone two (2) amendments; first in 2003 by
creditable tax amount. still unsatisfied with the decision, petitioner appealed with CA seeking partial Republic Act No. 9257 and most recently in 2010 by Republic Act No. 9994. The 20% sales discount
modification of the CTA resolution raising a legal issue on the basis of the computation of tax credit. granted by establishments to qualified senior citizens is now treated as tax deduction and not as tax
credit. As we have likewise declared in Commissioner of Internal Revenue v. Central Luzon Drug
Petitioner contended that the actual discount granted to the senior citizens, rather than the acquisition Corporation,[19] this case covers the taxable years 1993 and 1994, thus, Republic Act No. 7432 applies.
cost of the item availed by senior citizens, should be the basis for computation of tax credit.
G.R. No. 168331 : October 11, 2012 HELD:

Section 76. Final Adjustment Return. – Every corporation liable to tax under Section 27 shall file a final
adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum
FACTS AS TO TAXPAYER : United International Pictures (UIP) (petitioner) filed with the Bureau of of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the
Internal Revenue (BIR) its Corporation Annual Income Tax Return for the calendar year ended December entire taxable income of that year, the corporation shall either:
31, 1998 reflecting, among others, a net taxable income from operations in the sum of P24,961,200.00,
an income tax liability of P8,486,808.00, but with an excess income tax payment in the amount of (A) Pay the balance of tax still due; or
P4,325,152.00 arising from quarterly income tax payments and creditable taxes withheld at source. (B) Carry-over the excess credit; or
UIP opted to carry-over as tax credit to the succeeding taxable year the said overpayment by putting an (C) Be credited or refunded with the excess amount paid, as the case may be.
"x" mark on the corresponding box.
In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes
Later, UIP filed its Corporation Annual Income Tax Return for the calendar year ended December 31, paid, the excess amount shown on its final adjustment return may be carried over and credited against
1999 wherein it reported, among others, a taxable income in the amount of P7,071,651.00 , an income the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years.
tax due of P2,333,645.00, but with an excess income tax payment in the amount of P9,309,292.00. Once the option to carry-over and apply the excess quarterly income tax against income due for the
taxable quarters of the succeeding taxable years has been made, such option shall be considered
On the face of the 1999 return, UIP indicated its option by putting an "x" mark on the box "To be refunded." irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate
shall be allowed therefore. (Emphasis supplied)
On April 28, 2000, UIP filed with the BIR an administrative claim for refund in the amount of From the aforequoted provision, it is clear that once a corporation exercises the option to carry-over, such
P9,309,292.00. option is irrevocable "for that taxable period." Having chosen to carry-over the excess quarterly income
tax, the corporation cannot thereafter choose to apply for a cash refund or for the issuance of a tax credit
FACTS AS TO THE GOVERNMENT: certificate for the amount representing such overpayment.

As CIR did not act on UIP’ claim, the latter filed a petition for review that reached the Supreme Court. As 2. In claiming for the refund of excess creditable withholding tax, UIP must show compliance with the
respondent did not act on petitioners claim, the latter filed a petition for review before the Court of Tax following basic requirements:
Appeals (CTA) to toll the running of the two-year prescriptive period.
(1) The claim for refund was filed within two years as prescribed under Section 229 of the NIRC
On September 12, 2001, the CTA rendered a Decision3ςrνll denying petitioners claim for refund for of 1997;
taxable year 1998. It reasoned that since petitioner opted to carry over the 1998 tax overpayment as tax
credit to the succeeding taxable year, the same cannot be refunded pursuant to Section 76 of the National (2) The income upon which the taxes were withheld were included in the return of the recipient
Internal Revenue Code (NIRC) of 1997. (Section 10, Revenue Regulations No. 6-85);
On August 31, 2004, the CA annulled and set aside the decision of the CTA.
(3) The fact of withholding is established by a copy of a statement (BIR Form 1743.1) duly issued
by the payor (withholding agent) to the payee showing the amount paid and the amount of tax
ISSUE: 1. Whether UIP (petitioner) is perpetually barred to refund its tax overpayment for taxable year
withheld therefrom (Section 10, Revenue Regulations No. 6-85).
1998 since it opted to carry-over its excess tax.

2. whether petitioner had sufficiently proven entitlement to refund its tax overpayments for taxable year Here, it is undisputed that the claim for refund was filed within the two-year prescriptive period prescribed
1999. under Section 229 of the NIRC of 1997 and that the taxpayer was able to present its certificate of
creditable tax withheld from its payor. However, records show that petitioner failed to reconcile the ISSUE:
discrepancy between income payments per its income tax return and the certificate of creditable tax
withheld. WON Petitioners should pay for the transfer taxes

Therefore, UIP’s claim for tax refund for taxable year 1999 must be denied, since it failed to prove that HELD:
the income payments subjected to withholding tax were declared as part of the gross income or the
taxpayer. Regarding petitioner’s contention that it cannot be made to pay the value of the transfer taxes in the
nature of capital gains tax and documentary stamp tax, the same is partly meritorious.
G.R. No. 211666, February 25, 2015
With respect to the capital gains tax, the court finds merit in petitioner’s posture that pursuant to Sections
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS 24(D) and 56(A)(3) of the 1997 National Internal Revenue Code (NIRC), capital gains tax due on the sale
AND HIGHWAYS, Petitioners, v. ARLENE R. SORIANO, Respondent. of real property is a liability for the account of the seller. It has been held that since capital gains is a tax
on passive income, it is the seller, not the buyer, who generally would shoulder the tax.

FACTS AS TO TAXPAYER: As to the documentary stamp tax, petitioner cites Section 196 of the 1997 NIRC as its basis in saying
that the documentary stamp tax is the liability of the seller. The provision cited does not explicitly impute
Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH), filed the obligation to pay the documentary stamp tax on the seller. In fact, according to the BIR, all the parties
an expropriation case against respondent Arlene R. Soriano, pursuant to Republic Act (RA) No. 8974, to a transaction are primarily liable for the documentary stamp tax, as provided by Section 2 of BIR
otherwise known as “An Act to Facilitate the Acquisition of Right-Of-Way, Site or Location for National Revenue Regulations No. 9-2000. As a general rule, any of the parties to a transaction shall be liable for
Government Infrastructure Projects and for other Purposes”. The property sought to be expropriated shall the full amount of the documentary stamp tax due, unless they agree among themselves on who shall be
be used in implementing the construction of the North Luzon Expressway (NLEX)- Harbor Link Project liable for the same.
(Segment 9) from NLEX to MacArthur Highway, Valenzuela City.
In this case, there is no agreement as to the party liable for the documentary stamp tax due on the sale
FACTS AS TO THE GOVERNMENT: of the land to be expropriated. But petitioner’s Citizen’s Charter, which functions as a guide for the
procedure to be taken by the DPWH in acquiring real property through expropriation under RA 8974. The
Petitioner duly deposited to the Acting Branch Clerk of Court the amount of P420,000.00 representing
Citizen’s Charter, issued by petitioner DPWH itself on December 4, 2013, explicitly provides that the
100% of the zonal value of the subject property. According to the RTC, the records of the case reveal
documentary stamp tax, transfer tax, and registration fee due on the transfer of the title of land in the
that petitioner adduced evidence to show that the total amount deposited is just, fair, and equitable.
name of the Republic shall be shouldered by the implementing agency of the DPWH, while the capital
On November 15, 2013, the RTC rendered its Decision ordering the plaintiff to pay defendant Arlene R. gains tax shall be paid by the affected property owner.
Soriano Php2,100.00 per square meter or the sum of Four Hundred Twenty Thousand Pesos
(Php420,000.00) for the 200 square meters as fair, equitable, and just compensation with legal interest G.R. No. 198756 January 13, 2015
at 12% per annum from the taking of the possession of the property, subject to the payment of all unpaid
real property taxes and other relevant taxes, if there be any; and to pay the defendant consequential
damages which shall include the value of the transfer tax necessary for the transfer of the subject property
from the name of the defendant to that of the plaintiff.

Petitioner filed a Motion for Reconsideration, but the RTC ruled in favor of the respondent, thus, this RIZAL COMMERCIAL BANKING CORPORATION AND RCBC CAPITAL
petition. CORPORATION, Petitioners-Intervenors,
CAUCUS OF DEVELOPMENT NGO NETWORKS, Petitioner-Intervenor, Is the 10-year zero-coupon treasury bonds issued by the Bureau of Treasury subject to 20% Final
vs. Withholding Tax?
Under Sections 24(B)(1), 27(D)(1), and 28(A)(7) of the 1997 National Internal Revenue Code, a final
FACTS AS TO TAXPAYER: withholding tax at the rate of 20% is imposed on interest on any currency bank deposit and yield or any
Banco de Oro, et al. filed a petition for Certiorari, Prohibition and Mandamus under Rule 65 to the other monetary benefit from deposit substitutes and from trust funds and similar arrangements. Under
Supreme Court contending that the assailed 2011 BIR Ruling which ruled that “all treasury bonds are Section 22(Y), deposit substitute is an alternative form of obtaining funds from the public (the term 'public'
‘deposit substitutes’ regardless of the number of lenders, in clear disregard of the requirement of twenty means borrowing from twenty (20) or more individual or corporate lenders at any one time).
(20) or more lenders mandated under the NIRC. Furthermore it will cause substantial impairment of their
vested rights under the Bonds since the ruling imposes new conditions by “subjecting the PEACE Bonds
to the twenty percent (20%) final withholding tax notwithstanding the fact that the terms and conditions Hence, the number of lenders is determinative of whether a debt instrument should be considered a
thereof as previously represented by the Government, through respondents BTr and BIR, expressly state deposit substitute and consequently subject to the 20% final withholding tax. Furthermore the phrase “at
that it is not subject to final withholding tax upon their maturity.” any one time” for purposes of determining the “20 or more lenders” would mean every transaction
executed in the primary or secondary market in connection with the purchase or sale of securities.
In the case at bar, it may seem that there was only one lender — RCBC on behalf of CODE-NGO — to
A notice by the Bureau of Treasury (BTr) to all Government Securities Eligible Dealer (GSED) entitled
whom the PEACE Bonds were issued at the time of origination. However, a reading of the underwriting
Public Offering of Treasury Bonds denominated as the Poverty Eradication and Alleviation Certificates or agreement and RCBC term sheet reveals that the settlement dates for the sale and distribution by RCBC
the PEACE Bonds, announced that P30 Billion worth of 10-year Zero-Coupon Bonds will be auctioned
Capital (as underwriter for CODE-NGO) of the PEACE Bonds to various undisclosed investors.
on Oct. 16, 2011. The notice stated that the Bonds “shall be issued to not more than 19 buyers/lenders.
Lastly, it stated that “while taxable shall not be subject to the 20% final withholding tax” pursuant to the At this point, however, we do not know as to how many investors the PEACE Bonds were sold to by
BIR Revenue Regulation No. 020 2001. After the auction, RCBC which participated on behalf of CODE- RCBC Capital. Should there have been a simultaneous sale to 20 or more lenders/investors, the PEACE
NGO was declared as the winning bidder having tendered the lowest bids. On October 7, 2011, “the BIR Bonds are deemed deposit substitutes within the meaning of Section 22(Y) of the 1997 National Internal
issued the assailed 2011 BIR Ruling imposing a 20% FWT on the Government Bonds and directing the Revenue Code and RCBC Capital/CODE-NGO would have been obliged to pay the 20%final withholding
BTr to withhold said final tax at the maturity thereof. Furthermore the Bureau of Internal Revenue issued tax on the interest or discount from the PEACE Bonds. Further, the obligation to withhold the 20% final
BIR Ruling No. DA 378-201157 clarifying that the final withholding tax due on the discount or interest tax on the corresponding interest from the PEACE Bonds would likewise be required of any
earned on the PEACE Bonds should “be imposed and withheld not only on RCBC/CODE NGO but also lender/investor had the latter turned around and sold said PEACE Bonds, whether in whole or part,
onall subsequent holders of the Bonds. simultaneously to 20 or more lenders or investors.

The Commissioner of the Internal Revenue countered that the BTr has no power to contractually grant a G.R. No. 197525 June 4, 2014
tax exemption in favour of Banco de Oro, et al.. Moreover, they contend that the word “any” in Section
22(Y) of the National Internal Revenue Code plainly indicates that the period contemplated is the entire VISAYAS GEOTHERMAL POWER COMPANY, Petitioner,
term of the bond and not merely the point of origination or issuance. vs.
Petitioner Visayas Geothermal Power Company (VGPC) is a special limited partnership duly organized In its October 29, 2009 Resolution,6 the CTA Second Division denied the separate motions for partial
and existing under Philippine Laws with its principal office at Milagro, Ormoc City, Province of Leyte. It is reconsideration filed by VGPC and the CIR. Thus, both VGPC and the CIR appealed to the CTA En Banc.
principally engaged in the business of power generation through geothermal energy and the sale of
generated power to the Philippine National Oil Company (PNOC),pursuant to the Energy Conversion In the assailed February 7, 2011 Decision,7 the CTA En Banc reversed and set aside the decision and
Agreement. resolution of the CTA Second Division, and dismissed the original petition for review for having been filed
prematurely, to wit:
VGPC filed with the Bureau of Internal Revenue (BIR)its Original Quarterly VAT Returns for the first to
fourth quarters of taxable year 2005 on April 25, 2005, July 25, 2005, October 25, 2006, and January 20, WHEREFORE, premises considered:
2006, respectively.
i. As regards CTA EB Case No. 562, the Petition for Review is hereby DISMISSED; and
On December 6, 2006, it filed an administrative claim for refund for the amount of 14,160,807.95 with the
ii. As regards CTA EB Case No. 561, the Petition for Review is hereby GRANTED.
BIR District Office No. 89 of Ormoc City on the ground that it was entitled to recover excess and unutilized
input VAT payments for the four quarters of taxable year 2005, pursuant to Republic Act (R.A.) No. 9136,3 Accordingly, the Decision, dated April 17, 2009, and the Resolution, dated October 29, 2009, of the CTA
which treated sales of generated power subject to VAT to a zero percent (0%) rate starting June 26, Former Second Division are hereby REVERSED and SET ASIDE, and another one is hereby entered
2001. DISMISSING the Petition for Review filed in CTA Case No. 7559 for having been filed prematurely.

Nearly one month later, on January3, 2007, while its administrative claim was pending, VGPC filed its The CTA En Banc explained that although VGPC seasonably filed its administrative claim within the two-
judicial claim via a petition for review with the CTA praying for a refund or the issuance of a tax credit year prescriptive period, its judicial claim filed with the CTA Second Division was prematurely filed under
certificate in the amount of 14,160,807.95, covering the four quarters of taxable year 2005. Section 112(D) of the National Internal Revenue Code (NIRC).Citing the case of CIR v. Aichi Forging
Company of Asia, Inc. (Aichi),9 the CTA En Banc held that the judicial claim filed 28 days after the
FACTS AS TO THE GOVERNMENT: petitioner filed its administrative claim, without waiting for the expiration of the 120-day period, was
In its April 17, 2009 Decision, the CTA Second Division partially granted the petition as follows: premature and, thus, the CTA acquired no jurisdiction over the case.

WHEREFORE, in view of the foregoing considerations, the Petition for Review is hereby PARTIALLY The VGPC filed a motion for reconsideration, but the CTA En Banc denied it in the assailed June 27,
GRANTED. Accordingly, respondent is ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX 2011 Resolution for lack of merit. It stated that the case of Atlas Consolidated Mining v. CIR (Atlas)10
CREDIT CERTIFICATE in favor of petitioner the reduced amount of SEVEN MILLION SIX HUNDRED relied upon by the petitioner had long been abandoned.
Hence, this petition.
representing unutilized input VAT paid on domestic purchases of non-capital goods and services,
services rendered by non-residents, and importations of non-capital goods for the first to fourth quarters ISSUE:
of taxable year 2005.
Whether VGPCI failed to observe the proper prescriptive period required by law for the filing of an appeal
The CTA Second Division found that only the amount of 7,699,366.37 was duly substantiated by the before the CTA because it filed its petition before the end of the 120-day period granted to the CIR to
required evidence. As to the timeliness of the filing of the judicial claim, the Court ruled that following the decide its claim for refund under Section 112(D) of the National Internal Revenue Code (NIRC).
case of Commissioner of Internal Revenue (CIR) v. Mirant Pagbilao Corporation (Mirant),5 both the
administrative and judicial claims were filed within the two-year prescriptive period provided in Section HELD:
112(A) of the National Internal Revenue Code of 1997 (NIRC),the reckoning point of the period being the
VGPCI’s judicial claim filed on September 30, 2003 was prematurely filed. However, the judicial claim
close of the taxable quarter when the sales were made.
filed on December 19, 2003 was properly filed because of the exception brought about by BIR Ruling DA-
VGPCI’s reliance on Gibbs and College of Oral & Dental Surgery is misplaced. At the time that both cases
were decided, there was no provision yet in the NIRC in force similar to Section 112.

VGPCI is also mistaken to argue that Section 229 is the more relevant provision of law. Section 229
applies only to taxes erroneously or illegally collected. The applicable provision of the NIRC is
undoubtedly Section 112, which deals specifically with creditable input tax.

The Court relied on the cases of Commissioner vs. Mirant, G.R. 172129, Commissioner vs. Aichi Forging,
G.R. 184823, and Commissioner vs. San Roque Power, G.R. No. 187485 to state that the appropriate
period for claiming a refund or a tax credit for unutilized input VAT is Section 112(A), and not Section 229
of the NIRC. Further, input VAT is not “excessively” collected as understood under Section 229 because
at the time the input VAT is collected, the amount paid is correct and proper.

The 120-day period under Section 112(D) is crucial in filing an appeal with the CTA.

The application of the 30-day period from receipt of the decision of the CIR or from the lapse of the 120-
day period (the “120+30 day period”) given to the taxpayer within which to file a petition for review with
the CTA is mandatory and jurisdictional.

However, the court took notice of the issuance by the BIR of Ruling No. DA-489-03 dated December 10,
2003 which allowed for the filing of a judicial claim without waiting for the end of the 120-day period
granted to the CIR to decide on the application for refund. Therefore, although the 120+30 day period in
Section 112(D) is mandatory and jurisdictional and must be applied from the effectivity of the 1997 Tax
Code on January 1, 1998, an exception shall be made for judicial claims filed from the issuance of BIR
Ruling No. DA 489-03 on December 10, 2003 until the promulgation of Commissioner vs. Aichi on
October 6, 2010.

Hence, the judicial claim filed on September 30, 2003 was prematurely filed and cannot be taken
cognizance of. However, the judicial claim filed on December 19, 2003 can be considered by the CTA
because of the exception brought about by the BIR Ruling.