Justice Teresita Leonardo-De Castro Cases (20082015)

SCOPE AND LIMITATIONS OF

TAXATION
(Constitutional Limitations)
It is already well-settled that although
the power to tax is inherent in the
State, the same is not true for the
LGUs to whom the power must be
delegated by Congress and must be
exercised within the guidelines and
limitations that Congress may
provide. In the case at bar,
the sanggunian of the municipality or
city cannot enact an ordinance
imposing business tax on the gross
receipts
of
transportation
contractors, persons engaged in the
transportation of passengers or
freight by hire, and common carriers
by air, land, or water, when
said sanggunian
was
already
specifically prohibited from doing so.
Any exception to the express
prohibition under Section 133(j) of
the LGC should be just as specific
and unambiguous. Section 21(B) of
the Manila Revenue Code, as
amended, is null and void for being
beyond the power of the City of
Manila and its public officials to
enact, approve, and implement
under the LGC. - City of Manila,
Hon. Alfredo S. Lim, as Mayor of
the City of Manila, et al. vs. Hon.
Angel Valera Colet, as Presiding
Judge, Regional Trial Court of
Manila (Br. 43), et al., G.R. No.
120051, December 10, 2014
TAX CREDIT OR REFUND
The tax burden for an indirect tax
may be shifted to another. However,
the tax liability remains with the
statutory taxpayer. As such, it is the
statutory taxpayer who is the proper
party to question, or claim a refund
or tax credit of an indirect tax. Silkair (Singapore) PTE. Ltd., vs.
Commissioner
of
Internal
Revenue,
G.R.
No.
184398,
February 25, 2010
Under the old rule, whether a PEZAregistered enterprise was exempt or
subject to VAT depended on the type
of fiscal incentives availed of by the
said enterprise. If the PEZAregistered enterprise is paying the
5% preferential tax in lieu of all other
taxes,
it
cannot
claim
tax
credit/refund for the VAT paid on
purchases.
Conversely, if
the
taxpayer is availing of the income tax
holiday, it can claim VAT credit.
However, upon the issuance by the
BIR of RMC No. 74-99 on October
15, 1999, the Cross Border Doctrine

was clearly established. In effect,

PEZA-registered enterprises are
VAT-exempt and no VAT can be
passed on to them. Thus, any sale
by a supplier from the Customs
Territory to a PEZA-registered
enterprise as export sale should not
be burdened by output VAT; hence, it
is now impossible to claim for a tax
credit/refund. - Toshiba Information
Equipment
(Phils.),
Inc.
vs.
Commissioner
Of
Internal
Revenue, G.R. No. 157594, March
9, 2010
MERGER OR CONSOLIDATION OF
CORPORATIONS
When the BIR had ruled that a
purchase and sale agreement
between two banks did not result in
their merger, and that the CIR had
previously ruled that the same two
banks are not merged, the buyer
bank is not liable for the deficiency
DST of the seller bank. Commissioner
of
Internal
Revenue vs. Bank of Commerce,
G.R. No. 180529, November 13,
2013
DISSOLUTION OF A
CORPORATION
Bangko Sentral ng Pilipinas placed
Rural Bank of Tuba (RBTI) under
receivership with the Philippine
Deposit Insurance Corporation as
the receiver. Accordingly, PDIC filed
a petition for assistance in the
liquidation of RBTI which was
approved by the trial court. As an
incident of the proceeding, BIR
intervened as one of the creditors of
RBTI. BIR contends that a tax
clearance is required before the
approval of project of distribution of
the assets of a bank. In denying their
contention, the Court held that
Section 52(C) of the Tax Code of
1997 is not applicable to banks
ordered placed under liquidation by
the Monetary Board, and a tax
clearance is not a prerequisite to the
approval of the project of distribution
of the assets of a bank under
liquidation by the PDIC. - Philippine
Deposit Insurance Corporation vs.
Bureau Of Internal Revenue, G.R.
No. 172892, June 13, 2013
VAT (Transitional Input Tax)
The BIR cannot issue a revenue
regulation contrary to what the NIRC
provides such when the said
regulation limits the coverage of the

provision in the NIRC. Such revenue

regulation shall not produce any effect
and cannot be source of any right. Fort Bonifacio Development
Corporation vs. Commissioner Of
Internal Revenue, Regional Director,
Revenue Region No. 8, and Chief
Assessment Division, Revenue
Region No. 8, G.R. No. 158885,
October 2, 2009
Section 112(A) and (C) must be
interpreted according to its clear,
plain, and unequivocal language.
The
taxpayer
can
file
his
administrative claim for refund or
credit at anytime within the two-year
prescriptive period. If he files his
claim on the last day of the two-year
prescriptive period, his claim is still
filed on time. The Commissioner will
have 120 days from such filing to
decide
the
claim.
If
the
Commissioner decides the claim on
the 120th day, or does not decide it
on that day, the taxpayer still has 30
days to file his judicial claim with the
CTA. This is not only the plain
meaning but also the only logical
interpretation of Section 112(A) and
(C).
San
Roque
Power
Corporation vs. Commissioner of
Internal Revenue, G.R. No. 205543,
June 30, 2014
The Court has consolidated these 3
petitions as they involve the same
parties, similar facts and common
questions of law. This is not the first
time that Fort Bonifacio Development
Corporation (FBDC) has come to this
Court about these issues against the
very same respondents (CIR), and
the Court En Banc has resolved
them in two separate, recent cases
that are applicable here. It is of
course axiomatic that a rule or
regulation must bear upon, and be
consistent with, the provisions of the
enabling statute if such rule or
regulation is to be valid. In case of
conflict between a statute and an
administrative order, the former must
prevail. To be valid, an administrative
rule or regulation must conform, not
contradict, the provisions of the
enabling law. An implementing rule
or regulation cannot modify, expand,
or subtract from the law it is intended
to implement. Any rule that is not
consistent with the statute itself is
null and void. To recapitulate, RR 795, insofar as it restricts the
definition of "goods" as basis of
transitional input tax credit under
Section 105 is a nullity. - Fort
Bonifacio
Development
Corporation vs. Commissioner of

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Justice Teresita Leonardo-De Castro Cases (20082015)

Internal Revenue and Revenue
District Officer, Revenue District
No. 44, Taguig and Pateros,
Bureau of Internal Revenue, G.R.
No. 175707, November 19, 2014
For failure of Silicon to comply with
the provisions of Section 112(C) of
the NIRC, its judicial claims for tax
refund or credit should have been
dismissed by the CTA for lack of
jurisdiction. The Court stresses that
the 120/30-day prescriptive periods
are mandatory and jurisdictional, and
are not mere technical requirements.
Silicon
Philippines,
Inc.
(Formerly
Intel
Philippines
Manufacturing,
Inc.)
vs.
Commissioner
of
Internal
Revenue, G.R. No. 173241, March
25, 2015
DOCUMENTARY STAMPS TAX
JEC contented that it overpaid
documentary stamp tax but the court
ruled that it failed to prove such
contention. A documentary stamp tax
is in the nature of an excise tax. It is
not imposed upon the business
transacted but is an excise upon the
privilege, opportunity or facility
offered at exchanges for the
transaction of the business. It is an
excise upon the facilities used in the
transaction of the business separate
and apart from the business
itself. Documentary stamp taxes are
levied on the exercise by persons of
certain privileges conferred by law for
the creation, revision, or termination
of specific legal relationships through
the execution of specific instruments.
- Jaka Investments Corporation
vs. Commissioner of Internal

Revenue, G.R. No. 147629, July 28,

2010
Documentary stamp tax is a tax on
documents,
instruments,
loan
agreements, and papers evidencing
the acceptance, assignment, sale or
transfer of an obligation, right or
property incident thereto. It is in the
nature of an excise tax because it is
imposed
upon
the
privilege,
opportunity or facility offered at
exchanges for the transaction of the
business. It is an excise upon the
facilities used in the transaction of
the business distinct and separate
from
the
business
itself.
Commissioner
of
Internal
Revenue vs. Manila Bankers' Life
Insurance Corporation, G.R. No.
169103, March 16, 2011
An electronic message containing
instructions to debit their respective
local or foreign currency accounts in
the Philippines and pay a certain
named recipient also residing in the
Philippines
is
not
transaction
contemplated under Section 181 of
the Tax Code. They are also not bills
of exchange due to their nonnegotiability. Hence, they are not
subject to DST. - The Hongkong
and
Shanghai
Banking
Corporation
Limited-Philippine
Branches vs. Commissioner of
Internal Revenue, G.R. No. 166018
& 167728, June 4, 2014
JUDICIAL REMEDIES
The appellate jurisdiction of the
Court of Tax Appeals (CTA) is not
limited to cases which involve
decisions of the Commissioner of

Internal Revenue (CIR) on matters

relating to assessments or refunds.
The issue of prescription of the
Bureau of Internal Revenues (BIRs)
right to collect taxes may be
considered as covered by the term
other matters over which the Court
of Tax Appeals (CTA) has appellate
jurisdiction.
Requisites before the Period to
Enforce
Collection
may
be
Suspended (a) that the taxpayer
requests for reinvestigation, and (b)
that petitioner grants such request. Commissioner
of
Internal
Revenue vs. Hambrecht & Quist
Philippines, Inc., G.R. No. 169225,
November 17, 2010
PNB has not demonstrated any
cogent reason for the SC to take an
exception and excuse PNBs blatant
disregard of the basic procedural
rules in a petition for review.
Furthermore, the timely perfection of
an
appeal
is
a
mandatory
requirement. One cannot escape the
rigid observance of this rule by
claiming oversight, or in this case,
lack of foresight. Neither can it be
trifled with as a mere technicality to
suit the interest of a party. Verily, the
periods for filing petitions for review
and for certiorari are to be observed
religiously. Just as the losing party
has the privilege to file an appeal
within the prescribed period, so does
the winner have the right to enjoy the
finality of the decision. - Philippine
National Bank vs. Commissioner
Of Internal Revenue, G.R. No.
172458, December 14, 2011

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