TAX II CASE
DIGESTS
IBRAHIM, HAZRA A.
LLB IV-A
1
ZAPANTA VS. POSADAS
G.R. NOS. L-29204-09 / 29 DECEMBER 1928
(DONATION INTER VIVOS VS. DONATION MORTIS CAUSA)
FACTS:
Father Braulio Pineda died in January 1925 without any ascendants or descendants
leaving a will in which he instituted his sister Irene Pineda as his sole heiress. During his
lifetime Father Braulio donated some of his property by the instruments to the six
plaintifffs, severally, with the condition that some of them would pay him a certain
amount of rice, and others of money every year, and with the express provision that
failure to fulfill this condition would revoke the donations ipso facto. These six plaintiff-
donees are relatives, and some of them brothers of Father Braulio Pineda. The
donations contained another clause that they would take effect upon acceptance. They
were accepted during Father Braulio's lifetime by every one of the donees.
Every one of the six plaintiffs filed a separate action against the Collector of Internal
Revenue and his deputy for the sums of which each of them paid, under protest, as
inheritance tax on the property donated to them, in accordance with section 1536 of the
Administrative Code, as amended by section 10 of Act No. 2835,
ISSUE:
Whether or not the donations made by Father Braulio Pineda to each of the plaintiffs
are donations inter vivos, or mortis causa?
RULING:
It was held that the donations to the six plaintiffs made by the deceased Father Braulio
Pineda are donations inter vivos, and therefore, not subject to the inheritance tax.
It is also so expressly stated in the instruments in which they appear that they were
made in consideration of the donor's affection for the donees, and of the services they
had rendered him, but he has charged them with the obligation to pay him a certain
amount of rice and money, respectively, each year during his lifetime, the donations to
become effective upon acceptance. Hence, they are not in the nature of donations mortis
causa but inter vivos.
2
PUIG VS. PENAFLORIDA
G.R. NO. L-15939/ 31 JANUARY 1966
(DONATION INTER VIVOS VS. DONATION MORTIS CAUSA)
FACTS:
On April 10, 1953, Carmen Ubalde Vda. de Parcon died in the City of Iloilo, without
forced heirs, leaving certain properties in the City and province of Iloilo. She left a will
and was survived by nephews and nieces, children of her predeceased brother, Catalino
Ubalde, and sister, Luisa Ubalde, married to Ariston Magbanua.
It also appears that besides her will, the deceased had executed two notarial deeds of
donation. One, entitled DONACION MORTIS CAUSA, was executed on November 24,
1948, in favor of her niece, Estela Magbanua, married to Mariano Peñ aflorida,
purporting to convey to the donee the properties covered by Transfer Certificates of
Title Nos. 2338 and 18951 of the Registry of Deeds of Iloilo.
On December 28, 1949, the deceased executed another deed of donation, also entitled
"ESCRITURA DE DONACION MORTIS CAUSA", in favor of the same donee, Estela
Magbanua Peñ aflorida, conveying to her three parcels of land covered by Transfer
Certificates of Title Nos. 925, 927 and 11042 of the Register of Deeds of Iloilo.
ISSUE:
Whether or not the donations are inter vivos or mortis causa?
RULING:
The donation of November 24, 1948, while somewhat ambiguous, should be held inter
vivos in character. Admittedly, it is designated as "mortis causa", and specifies that it will
take effect upon the death of the donor; but, these expressions are not controlling, and,
in the instance, are contradicted by other provisions indicating a contrary intent.
Turning now to the deed of donation also labelled mortis causa executed by and
between the same parties on December 28, 1949, the text thereof is clear that no
proprietary right was intended to pass to the alleged "donee" prior to the donor’s death,
and that the same was a true conveyance mortis causa, which by law is invalid because
it was not executed with the testamentary formalities required by the statutes in force
at the time. Hence, both donations are inter vivos.
3
DEL ROSARIO VS. FERRER
G.R. NO. 187056 /20 SEPTEMBER 2010
(DONATION INTER VIVOS VS. DONATION MORTIS CAUSA)
FACTS:
Spouses Guadalope and Leopoldo Gonzales gave properties to their two children and a
grandchild Jarabini through a document denominated as Donation Mortis Causa.
“Although denominated as a donation mortis causa, which in law is the equivalent of a
will, the deed had no attestation clause and was witnessed by only two persons. The
named donees, however, signified their acceptance of the donation on the face of the
document.” Upon Guadalope’s death, Leopoldo assigned his rights to his daughter
Asuncion. After Leopoldo’s death, Jarabini filed a petition for the probate of the
Donation Mortis Causa. Asuncion opposed. The Regional Trial Court decided in favor of
Jarabini saying: “the donation was in fact one made inter vivos, the donors intention
being to transfer title over the property to the donees during the donors lifetime, given
its irrevocability”. And since the property was already donated to Jarabini, Leopoldo
could not have assigned the same property to another because the same was no longer
his. Asuncion appealed to the Court of Appeals which reversed the RTC decision.
Jarabini elevated the matter to the Supreme Court on the sole issue of whether the
donation was mortis causa or inter vivos.
ISSUE:
Whether or not the donation is inter-vivos or mortis causa?
RULING:
The donation was inter vivos. The Court said: “the express irrevocability of the donation
is the distinctive standard that identifies the document as a donation inter vivos. Here,
the donors plainly said that it is our will that this Donation Mortis Causa shall be
irrevocable and shall be respected by the surviving spouse. The intent to make the
donation irrevocable becomes even clearer by the proviso that a surviving donor shall
respect the irrevocability of the donation. Consequently, the donation was in reality a
donation inter vivos.” Another basis for the Court’s ruling is the fact that “the three
donees signed their acceptance of the donation, which acceptance the deed required.
This Court has held that an acceptance clause indicates that the donation is inter vivos,
since acceptance is a requirement only for such kind of donations.
Donations mortis causa, being in the form of a will, need not be accepted by the donee
during the donors lifetime.” Since the donation was inter vivos, the ownership of the
property passed to Jarabini even before the death of Guadalope and Leopoldo. The RTC
was correct in saying that Leopoldo could not have validly assigned the property to
Asuncion because it was already owned by Jarabini.
4
ABELLO VS. CIR
G. R. NO. 120721 / 23 FEBRUARY 2005
(DEFINITION OF GIFT/DONATION)
FACTS:
During the 1987 national elections, petitioners, who are partners in the ACCRA law firm,
contributed P882,661.31 each to the campaign funds of Senator Edgardo Angara, then
running for the Senate. The BIR then assessed each of the petitioners P263,032.66 for
their contributions. Petitioners questioned the assessment claiming that political or
electoral contributions are not considered gifts under NIRC therefore, not liable for
donors tax. The claim for exemption was denied by the Commissioner.
ISSUE:
Whether the contributions are liable for donor's tax.
RULING:
Yes. The NIRC does not define transfer of property by gift. However, the Civil Code, by
reference, considers such as donations. The present case falls squarely within the
definition of a donation: an act of liberality whereby a person disposes gratuitously of a
thing or right in favor of another, who accepts it.
There was intent to do an act of liberality or animus donandi was present since each of
the petitioners gave their contributions without any consideration.
Taken together with the Civil Code definition of donation, Section 91 of the NIRC is clear
and unambiguous, thereby leaving no room for construction.
Petitioners contribution of money without any material consideration evinces animus
donandi. The fact that their purpose for donating was to aid in the election of the donee
does not negate the presence of donative intent.
This Court holds that the BIR is not precluded from making a new interpretation of the
law, especially when the old interpretation was flawed. It is a well-entrenched rule that
"erroneous application and enforcement of the law by public officers do not block
subsequent correct application of the statute" (PLDT v. Collector of Internal Revenue, 90
Phil. 676), "and that the Government is never estopped by mistake or error on the part of
its agents"
5
REV. FR. CASIMIRO LLADOC VS. CIR
G.R. NO. L-19201 / JUNE 16, 1965
(DONOR’S TAX NOT A PROPERTY TAX)
FACTS:
M.B. Estate, Inc. donated P10,000.00 in cash to the parish priest of Victorias, Negros
Occidental, for the construction of a new Catholic Church in the locality. The total
amount was actually spent for the purpose intended.
A year later, M.B. Estate, Inc., filed the donor's gift tax return. CIR issued an assessment
for donee's gift tax against the parish, of which petitioner was the priest.
Petitioner filed a protest which was denied by the CIR. He then filed an appeal with the
CTA citing that he was not the parish priest at the time of donation, that there is no legal
entity or juridical person known as the "Catholic Parish Priest of Victorias," and,
therefore, he should not be liable for the donee's gift tax and that assessment of the gift
tax is unconstitutional.
The CTA denied the appeal thus this case.
ISSUE:
Whether petitioner and the parish are liable for the donee's gift tax.
RULING:
Yes for the parish. The Constitution only made mention of property tax and not of excise
tax as stated in Section 22, par 3. The assessment of the CIR did not rest upon general
ownership; it was an excise upon the use made of the properties, upon the exercise of
the privilege of receiving the properties. A gift tax is not a property tax, but an excise tax
imposed on the transfer of property by way of gift inter vivos, the imposition of which
on property used exclusively for religious purposes, does not constitute an impairment
of the Constitution.
No for the petitioner. The Court ordered petitioner to be substituted by the Head of
Diocese to pay the said gift tax after the CIR and Solicitor General did not object to such
substitution.
6
LORENZO VS. POSADAS
G.R NO. 43082 / 18 JUNE 1937
(ACCRUAL OF ESTATE TAX)
FACTS:
Thomas Hanley died, leaving a will and considerable amount of real and personal
properties. The will bequeathed Matthew Hanley, Thomas' nephew, the money and the
real estate. Also stipulated was that the property will only be given ten years after
Thomas' death.
The CFI appointed PJM Moore as considered trustee to administer the real properties.
Moore acted as trustee until he resigned and Pablo Lorenzo was appointed in his stead.
Juan Posadas, the CIR, assessed inheritance tax against the estate amounting to
P2,057.74. Lorenzo paid the tax after he was ordered by the CFI due to the CIR's motion.
Lorenzo claimed that the inheritance tax should have been assessed after 10 years and
asked for a refund. The CIR denied the protest and reassessed Lorenzo of P1,191.27
which represents interest due on the tax and which was not included in the original
assessment.
ISSUES :
Whether or not the inheritance tax be computed from its value ten years later.
RULING:
NO. The Court held that a transmission by inheritance is taxable at the time of the
predecessor's death, notwithstanding the postponement of the actual possession or
enjoyment of the estate by the beneficiary, and the tax measured by the value of the
property transmitted at that time regardless of its appreciation or depreciation.
7
MARCOS II VS. CA
G.R. NO. 120880 / 05 JUNE 1997
(ACCRUAL OF ESTATE TAX)
FACTS:
Following the death of former President Marcos in 1989, a Special Tax Audit Team was
created on June 27, 1990 to conduct investigations and examinations of tax liabilities of
the late president, his family, associates and cronies. The investigation disclosed that the
Marcoses failed to file a written notice of death of the decedent estate tax return and
income tax returns for the years 1982 to 1986, all in violation of the Tax Code. Criminal
charges were field against Mrs. Marcos for violation of Secs. 82, 83 and 84, NIRC.
The CIR thereby caused the preparation of the estate tax return for the estate of the late
president, the income returns of the Marcos spouses for 1985 and 1986 and the income
tax returns of petitioner Marcos II for 1982 to 1985. On July 26, 1991, the BIR issued
deficiency estate tax assessments and the corresponding deficiency income tax
assessments. Copies of deficiency estate and income tax assessments were served
personally and constructively on August 26, 1991 and September 12, 1991 upon Mrs.
Marcos. Likewise, copies of the deficiency income tax assessments against petitioner
Marcos were personally and constructively served. Formal assessment notices were
served upon Mrs. Marcos on October 20, 1992.
ISSUE:
Whether or not the proper avenue of assessment and collection was taken by
respondent bureau.
RULING:
Apart from failing to file the required estate tax return within the time required for
filing the same, petitioner and other Marcos heirs never questioned the assessment
served upon them, allowing the same to lapse into finality, and prompting the BIR to
collect said taxes by levying upon the properties left by the late President Marcos.
The Notice of Levy upon real property were issued within the prescriptive period and in
accordance with Sec. 222 of the Tax Code. The deficiency tax assessment, having
become final, executory and demandable, the same can now be collected through the
summary remedy of distraint and levy pursuant to Sec. 205 of the Tax Code.
8
VIDAL DE ROCES VS. POSADAS
G.R. NO. L-34937 / 13 MARCH 1933
(DONATIONS IN CONTEMPLATION OF DEATH)
FACTS:
On March 1o and 12, 1925, Esperanza Tuazon, by means of public documents, donated
certain parcel of lands situated in Manila to the plaintiffs herein who with their
respective husbands accepted them in the same public documents which were duly
recorded in the registry of deeds. By virtue of said donations, the plaintiffs took
possession of the said lands, received the fruits thereof and obtained the corresponding
transfer certificate of title. On January 25, 1926, the donor died in the city of Manila
leaving the forced heir and her will which was admitted to probate, she bequeathed to
each of the donees the sum of Php5,000. After the estate had been distributed among
the instituted legatees and before the delivery of their respective shares, the appellee
herein, as collector of internal revenue, ruled that the appellant as donees and legatees
should pay as inheritance taxes the sums of Php16,673 and Php13,951.45 respectively.
At first, the appellants refused to pay the aforementioned taxes but, at the insistence of
the appellee in order not to delay the adjudication of the legacies, they agreed at last to
pay them under protest. Hence, plaintiff-appellants filed an action to recover the taxes
paid under protest.
Issue: Whether or not inheritance tax should be imposed on donations inter vivos.
Held: Yes. The tax collected by the appellee on the properties donated in 1925 really
constitutes an inheritance tax imposed on the transmission of said properties in
contemplation or in consideration of the donor’s death and under circumstance that the
donees were later instituted as the former’s legatees. For this reason, the law considers
such transmission in the form of gifts inter vivos, as advances on the inheritance and
nothing therein violates any constitutional provision, in as much as said legislation is
within the power of the legislature.
It may be inferred from the allegations contained in par 2 and 7 thereof that said
donations inter vivos were made in consideration of the donor’s death. We refer to the
allegations that such transmissions were effected in the month of March 1925, that the
donor died in January 1926, and that the donees were instituted legatees in the donor’s
will which was admitted in probate. It is from these allegations, especially the last, that
we infer a presumption juris tantum that said donations were made mortis causa and,
as such are subject to payment of inheritance tax.
9
TOLENTINO VS. SEC. OF FINANCE
G.R. NO. 115455/ 26 AUGUST 1994
(NATURE OF VAT, CONSTITUTIONALITY OF VAT)
FACTS:
The value-added tax (VAT) is levied on the sale, barter or exchange of goods and
properties as well as on the sale or exchange of services. RA 7716 seeks to widen the tax
base of the existing VAT system and enhance its administration by amending the
National Internal Revenue Code. There are various suits challenging the
constitutionality of RA 7716 on various grounds. One contention is that RA 7716 did
not originate exclusively in the House of Representatives as required by Art. VI, Sec. 24
of the Constitution, because it is in fact the result of the consolidation of 2 distinct bills,
H. No. 11197 and S. No. 1630. There is also a contention that S. No. 1630 did not pass 3
readings as required by the Constitution.
ISSUE:
Whether or not RA 7716 violates Art. VI, Secs. 24 and 26(2) of the Constitution
RULING:
The argument that RA 7716 did not originate exclusively in the House of
Representatives as required by Art. VI, Sec. 24 of the Constitution will not bear analysis.
To begin with, it is not the law but the revenue bill which is required by the Constitution
to originate exclusively in the House of Representatives. To insist that a revenue statute
and not only the bill which initiated the legislative process culminating in the enactment
of the law must substantially be the same as the House bill would be to deny the
Senate’s power not only to concur with amendments but also to propose amendments.
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff
or tax bills, bills authorizing an increase of the public debt, private bills and bills of local
application must come from the House of Representatives on the theory that, elected as
they are from the districts, the members of the House can be expected to be more
sensitive to the local needs and problems. Nor does the Constitution prohibit the filing
in the Senate of a substitute bill in anticipation of its receipt of the bill from the House,
so long as action by the Senate as a body is withheld pending receipt of the House bill.
10
ABAKADA GURO PARTYLIST VS. ERMITA
G.R.NO. 168056 / 1 SEPTEMBER 2005
(CONTITUTIONALITY OF VAT, CONCEPT OF VAT)
FACTS:
Petitioners ABAKADA GURO Party List challenged the constitutionality of R.A. No. 9337
particularly Sections 4, 5 and 6, amending Sections 106, 107 and 108, respectively, of
the National Internal Revenue Code (NIRC).
Petitioners argue that the law is unconstitutional, as it constitutes abandonment by
Congress of its exclusive authority to fix the rate of taxes under Article VI, Section 28(2)
of the 1987 Philippine Constitution. They further argue that VAT is a tax levied on the
sale or exchange of goods and services and cannot be included within the purview of
tariffs under the exemption delegation since this refers to customs duties, tolls or
tribute payable upon merchandise to the government and usually imposed on
imported/exported goods.
ISSUE:
Whether or not VAT is constitutional.
RULING:
As a prelude, the Court deems it apt to restate the general principles and concepts of
value-added tax (VAT), as the confusion and inevitably, litigation, breeds from a
fallacious notion of its nature. The VAT is a tax on spending or consumption. It is levied
on the sale, barter, exchange or lease of goods or properties and services. Being an
indirect tax on expenditure, the seller of goods or services may pass on the amount of
tax paid to the buyer, with the seller acting merely as a tax collector. The burden of VAT
is intended to fall on the immediate buyers and ultimately, the end-consumers. In the
Philippines, the value-added system of sales taxation has long been in existence, albeit
in a different mode. Prior to 1978, the system was a single-stage tax computed under
the "cost deduction method" and was payable only by the original sellers. The single-
stage system was subsequently modified, and a mixture of the "cost deduction method"
and "tax credit method" was used to determine the value-added tax payable. Under the
"tax credit method," an entity can credit against or subtract from the VAT charged on its
sales or outputs the VAT paid on its purchases, inputs and imports.
It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273,
that the VAT system was rationalized by imposing a multi-stage tax rate of 0% or 10%
on all sales using the "tax credit method."
11
CIR VS. MAGSAYSAY LINES, INC.
G.R. NO. 146984 / 28 JUNE 2006
(NATURE OF VAT, “IN THE COURSE OF TRADE/BUSINESS”)
FACTS:
Because of a government program of privatization, National Development
Company(NDC) decided to sell its National Marine Corporation(NMC) shares and five of
its ships. In a VAT Ruling, it was held that the sale was subject to VAT since NDC was a
VAT-registered enterprise and the transaction is incident to its normal VAT-registered
activity of leasing out personal property.
ISSUE:
Whether or not the sale by NDC whose VAT-registered activity is leasing out personal
property is subject to VAT considering that such sale was made pursuant to a
government program of privatization.
RULING:
No, the sale of the vessels is not subject to VAT since it was not in the ordinary course of
trade or business of NDC. “Course of business” is what is usually done in the
management of trade or business. It connotes regularity. In the case at bar, the sale was
an isolated transaction. The sale which was involuntary and made pursuant to the
declared policy of government for privatization could no longer be repeated or carried
on with regularity. It should be emphasized that the normal VAT-registered activity of
NDC is leasing personal property. Any sale, barter, or exchange of goods or services not
in the course of trade or business is not subject to tax.
12
CIR VS. PLDT
G.R.NO. 140230/ 15 DECEMBER 2005
(DIRECT TAXES VS. INDIRECT TAXES. “IN LIEU OF ALL TAXES” CLAUSE)
FACTS:
PLDT is a grantee of a franchise under Republic Act (R.A.) No. 7082 to install, operate
and maintain a telecom system throughout the Philippines.It imports various
equipment, machineries and spare parts for its business on different occasion from
1992 to 1994.PLDT paid the BIR the amount of P164, 510,953.00, broken down as
follows: (a) compensating tax of P126,713,037.00; advance sales tax of P12,460,219.00
and other internal revenue taxes of P25,337,697.00. For similar importations made
between March to May 1994, PLDT paid P116, 041,333.00 valueadded tax (VAT). On
March 15, 1994, PLDT addressed a letter to the BIR seeking a confirmatory ruling on its
tax exemption privilege under Section 12 of R.A. 7082, with a provision that: the
grantee, shall pay a franchise tax equivalent to three percent (3%) of all gross receipts
of the telephone or other telecommunications businesses transacted under this
franchise by the grantee, its successors or assigns, and the said percentage shall be in
lieu of all taxes on this franchise or earnings thereof. When its claim was not acted upon
by the BIR, PLDT went to the CTA.
ISSUE:
Whether or Not the 3% franchise tax exempts the PLDT from paying all other taxes,
including indirect taxes.
RULING:
Direct taxes are those exacted from the very person who, it is intended or desired,
should pay them. They are impositions for which a taxpayer is directly liable on the
transaction or business he is engaged in. Indirect taxes are taxes wherein the liability
for the payment of the tax falls on one person but the burden thereof can be shifted or
passed on to another person, such as when the tax is imposed upon goods before
reaching the consumer who ultimately pays for it. The NIRC classifies VAT as "an
indirect tax … the amount of [which] may be shifted or passed on to the buyer,
transferee or lessee of the goods". The 10% VAT on importation of goods partakes of an
excise tax levied on the privilege of importing articles. It is not a tax on the franchise of a
business enterprise or on its earnings. It is imposed on all taxpayers who import goods
(unless such importation falls under the category of an exempt transaction under Sec.
109 of the Revenue Code) whether or not the goods will eventually be sold, bartered,
exchanged or utilized for personal consumption.
13
CIR VS. SEAGATE TECH.
G.R. NO. 153866/ 11 FEBRUARY 2005
(NATURE OF VAT, TAX REFUND OF UNUTILIZED INPUT TAX, PEZA-REGISTERED
ENTITIES, EXEMPT TRANSACTIONS VS. EXEMPT ENTITIES)
FACTS:
Respondent is a resident foreign corporation registered in and operating from the
Philippine Economic Zone Authority (PEZA) to engage in the manufacturing of
recording components primarily used in computers for export. On October 4, 1999, it
filed an administrative claim for refund of VAT input taxes covered by its VAT returns
for the period April 1, 1998 to June 30, 1999. The CIR did not act upon said
administrative claim and prompting respondent to elevate it to the CTA.
ISSUE:
Whether or not respondent is not subject to VAT and therefore entitled to refund or
credit for VAT paid.
RULING:
Yes. Special Laws expressly grant preferential tax treatment to business establishments
registered and operating within an ecozone, which by law is considered as a separate
customs territory. As such, respondent is exempt from all internal revenue taxes,
including the VAT, and regulations pertaining thereto. It has opted for the income tax
holiday regime, instead of the 5% preferential tax regime. As a matter of law and
procedure, its registration status entitling it to such tax holiday can no longer be
questioned. Its sales transactions intended for export may not be exempt, but like its
purchase transactions, they are zero-rated. No prior application for the effective zero
rating of its transactions is necessary. Being VAT-registered and having satisfactorily
complied with all the requisites for claiming a tax refund or credit for the input VAT
paid on capital goods purchased, respondent is entitled to such VAT refund or credit,
14
CIR VS. SEKISUI PHILS. INC.
G.R.NO. 149671 / 21 JULY 2006
(PEZA-REGISTERED ENTITIES)
FACTS:
Respondent is a domestic corporation whose principal office is located at the Special
Export Processing Zone, Laguna Technopark, Binan, Laguna. On November 11, 1998, it
filed two separate applications for tax credit/refund of VAT input taxes paid for the
period January 10, 1997 to March 1997 and April to June 1997, respectively.
ISSUE:
Whether or not respondent is entitled to the refund or issuance of tax credit certificate
for unutilized input taxes paid on domestic purchase of capital goods and services for
the period covering January to June 1997.
RULING:
Yes. While an EcoZone is geographically within the Philippines, it is deemed a separate
customs territory and is regarded in law as foreign soil. Sales of suppliers from outside
the borders of the EcoZone to this separate customs territory are deemed as exports
and treated as export sales. These sales are zero rated or subject to tax rate of zero
percent.
Since 100% of the products of the respondent are exported, all its transactions are
deemed export sales and are thus VAT zero-rated. It has been shown that respondent
has no output tax with which it could offset its unpaid input tax. Since the subject input
tax paid for its domestic purchases of capital goods and services remained unutilized, it
can claim a refund for the input VAT previously charged by its suppliers.
15
CIR VS. AMERICAN EXPRESS INTERNATIONAL INC.
G.R. NO. 152609 / 29 JUNE 2005
(ZERO-RATED SERVICES, CONCEPT OF INPUT TAX CREDIT, TAX REFUND OF
UNUTILIZED INPUT TAX)
FACTS:
Respondent is a servicing unit of American Express International- HongKong Branch
and is engaged primarily to facilitate the collections of AMEX receivables from car
members situated in the Philippines and payments to service establishments in the
country.
On March 23, 1999, it amended its quarterly VAT returns for the period January to
December 1997. On April 1, 1999, it filed with BIR a letter-request for the refund of its
1997 excess input taxes.
ISSUE:
Whether or not petitioner’s sale of service is VAT zero-rated.
RULING:
Yes. Respondent met all three requirements for exemption from the destination rule. Its
facilitation service is performed in the Philippines. It is a service other than “processing,
manufacturing, or repacking of goods”. Such service meets the statutory condition that
it be paid in acceptable foreign currency duly accounted for in accordance with BSP
rules and regulations. Hence, it should be zero-rated.
16
SILKAIR PTE. LTD. VS. CIR
G.R. NO. 173594 / 6 FEBRUARY 2008
(NATURE OF INDIRECT TAXES)
FACTS:
Petitioner is a corporation organized under the laws of Singapore which has a
Philippine representative office, is an online international air carrier. Silkair filed with
the Bureau of Internal Revenue (BIR) for the refund of excise taxes for their purchase of
jet fuel.
The CIR, in their reply, said that petitioner failed to prove that the sale of the fuel was
directly made from a domestic oil company to them. The excise tax on petroleum
products is the direct liability of the manufacturer/producer, and when added to the
cost of the goods sold to the buyer, it is no longer a tax but part of the price which the
buyer has to pay to obtain the article.
The CTA denying Silkair’s petition stated that as the excise tax was imposed
manufacturer of petroleum products, any claim for refund should be filed by the latter;
and where the burden of tax is shifted to the purchaser, the amount passed on to it is no
longer a tax but becomes an added cost of the goods purchased.
ISSUE:
Whether Silkair PTE. Ltd. can claim for tax credit.
RULING:
No. The proper party to question, or seek a refund of, an indirect tax is the statutory
taxpayer, the person on whom the tax is imposed by law and who paid the same even if
he shifts the burden thereof to another. Thus, Petron Corporation, not Silkair, is the
statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC
of 1997.
Even if Petron Corporation passed on to Silkair the burden of the tax, the additional
amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to
pay as a purchaser.
17
SAN ROQUE POWER CORP. VS. CIR
G.R. NO.180345 / 25 NOVEMBER 2009
(TAX REFUND OF UNUTIZED INPUT TAX)
18
