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Philex Mining vs. CIR

Philex Mining Corporation appealed a decision ordering it to pay excise tax, arguing it had pending claims for VAT input credit or refund against the government that should offset its tax liability. However, the court ruled that tax cannot be the subject of offset or compensation because the government and taxpayer are not mutual creditors in the sovereign and corporate capacities of each. Taxes are due when owed to the government in its sovereign role, regardless of any claims a taxpayer has against the government, which must be resolved separately through lawsuits.

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Jo Lumbres
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140 views1 page

Philex Mining vs. CIR

Philex Mining Corporation appealed a decision ordering it to pay excise tax, arguing it had pending claims for VAT input credit or refund against the government that should offset its tax liability. However, the court ruled that tax cannot be the subject of offset or compensation because the government and taxpayer are not mutual creditors in the sovereign and corporate capacities of each. Taxes are due when owed to the government in its sovereign role, regardless of any claims a taxpayer has against the government, which must be resolved separately through lawsuits.

Uploaded by

Jo Lumbres
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Philex Mining vs.

Commission of Internal Revenue FACTS: Philex Mining Corporation assails the decision of the CA which affirmed the decision of the court of tax appeals ordering philex to pay its excise tax liability. Philex refused to pay and contended that it has pending claims for vat input credit or refund against the government which should be made compensate or set-off its tax liability since both had already became due and demandable, as well as fully liquidated. Hence, legal compensation can properly take place.

ISSUE: WON tax can be subject for set-off?

HELD: NO. Tax cannot be the subject for compensation for simple reason that the government and the tax payer are not mutual creditors and debtors of each other. Debts are due in the government in its corporate capacity while taxes are due to the government in its sovereign capacity. A taxpayer cannot refuse to pay his taxes when they fall due simply because he has a claim against the government that the collection of the tax is contingent on the result of the law suit it filed against the government. We have consistently ruled that there can be no off-setting of taxes against the claims that the taxpayer may have against the government. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected. The collection of a tax cannot await the results of a lawsuit against the government.

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