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Taxation Law 1

Cases: Power of the CIR to


Exemption under RA 7459
Cases: Power of the CIR to Exemption under RA 7459
• Philippine Airlines, Inc.
(PAL) vs. Commissioner of
Internal Revenue
(GR 206079-80)
1.) Power of the CIR
2.) Exemption under its
(PAL) franchise. (PD
1590)
Cases: Power of the CIR to Exemption under RA 7459
• COMMISSIONER OF
INTERNAL REVENUE v.
COVANTA ENERGY
PHILIPPINE HOLDINGS,
(GR 203160)
 Interpretation of tax
amnesty law
Cases: Power of the CIR to Exemption under RA 7459
• SPLASH CORPORATION v.
COMMISSIONER OF
INTERNAL REVENUE (CTA
CASE 8904)
 Exemption under RA 7459
Philippine Airlines, Inc. (PAL) vs. Commissioner of
Internal Revenue (GR 206079-80)
• Facts:
 The CIR through the Agent
Banks imposed a withholding
tax on the bank deposits of
PAL which earned interest.

PAL then filed a request for


refund before the BIR who
then failed to act on the
request.
Philippine Airlines, Inc. (PAL) vs. Commissioner of Internal
Revenue (GR 206079-80)
• Facts:
 Due to the inaction of the BIR on its
request PAL it elevated the case to the
CTA.

 Upon the elevation of the case before


the Courts the BIR denied the claim
because it claimed that PAL failed to
prove that it is entitled to a refund.

 On the other hand the PAL claimed that


it did not have to do so since they were
granted the exemption under its
franchise.
Philippine Airlines, Inc. (PAL) vs. Commissioner of
Internal Revenue (GR 206079-80)
• Facts:
 CTA Special Division:
 Partially Granted: PAL is
entitled to the refund for the
withholding tax deducted by JP
Morgan and Chase Bank
because it is the only claim it
was able to prove.
CTA En Banc:
They upheld the decision of
the CTA Special Division and
they also upheld the right of
the CTA Special Division to
hold a trial de novo.
Philippine Airlines, Inc. (PAL) vs. Commissioner of
Internal Revenue (GR 206079-80)
• Doctrine (Power of the CIR):
 The Commissioner has the power
to decide on tax refunds, but his or
her decision is subject to the
exclusive jurisdiction of the CTA.
The failure of the CIR to act on a tax
refund will be considered as a
denial and will put the same under
the jurisdiction of the CTA.
The power of the Court of Tax
Appeals to exercise its appellate
jurisdiction does not preclude it
from considering new evidence
Philippine Airlines, Inc. (PAL) vs. Commissioner of Internal
Revenue (GR 206079-80)
• Doctrine (Exemption under its (PAL)
franchise. (PD 1590)):
 The PAL is exempted from paying
withholding tax over its deposits which
earned interest income in accordance
with its franchise under PD 1590 and
therefore it is not necessary for them
to prove that they were actually
exempted from paying the said taxes.
 The Congress has never envisioned to
remove its exemption because despite
the various changes in our tax laws the
Congress has never expressly revoked
the said exemption.
COMMISSIONER OF INTERNAL REVENUE v. COVANTA
ENERGY PHILIPPINE HOLDINGS, (GR 203160)
• Facts:
 Covanta was assessed to have a
deficiency in its value added tax and
expanded withholding tax remittance by
the BIR.
 Covanta then questioned the claim of
the CIR and thereafter filed a letter of
protest before the BIR who failed to act
on the same.
 Due to the Agency’s inaction Covanta
went on to the CTA and there manifested
that they have availed of the tax amnesty
granted under RA 9480.
 The CIR then argued that they cannot
avail of the same because they failed to
comply with the documentary
requirements specifically their SALN.
COMMISSIONER OF INTERNAL REVENUE v. COVANTA
ENERGY PHILIPPINE HOLDINGS, (GR 203160)
• Facts:
 CTA Second Division:
 Partially granted: They
are ordered to pay a
fraction of the amount
being asked by the BIR.
 CTA en banc:
 Affirmed the decision of
the CTA 2nd Division.
COMMISSIONER OF INTERNAL REVENUE v. COVANTA
ENERGY PHILIPPINE HOLDINGS, (GR 203160)
• Doctrine (Interpretation of tax
amnesty law):
 Although by nature a tax amnesty
law is a tax exemption and as such it
must be strictly construed against
the person claiming the exemption
or amnesty the same cannot
disregard the plain text of the law.
 In this case the law is clear that as
soon as the tax payer submits all the
documentary requirements of the
law they are already entitled to the
tax amnesty and as to the contents
of the said documents the tax payer
enjoys a presumption of that it is
true and correct and that it must be
debunked by a 3rd person claiming
otherwise.
SPLASH CORPORATION v. COMMISSIONER OF INTERNAL
REVENUE (CTA CASE 8904)
• Facts:
 Splash is the seller of the
products of Dr. Hortaleza which
were subject to tax exemption
under RA 7459 and it claimed the
said tax exemptions as to the
sale of the said products.
 The CIR on the other under
claims that they are not covered
by the exemption and thus their
sale of the products were subject
to taxation.
SPLASH CORPORATION v. COMMISSIONER OF INTERNAL
REVENUE (CTA CASE 8904)
• Doctrine (Exemption under RA
7459):
 The exemption granted to the
inventor under RA 7459 extends
even to the manufacturer or seller
of the said products, specifically its
income when it comes to the sale of
the products, even if the latter was
not the inventor himself. That being
said the same is still subject to the
limitations and period of time
provided under the law.

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