Professional Documents
Culture Documents
LOCAL TAXES
PROGRESSIVE DEVELOPMENT CORPORATION v. QUEZON CITY
G.R. No. L-36081, April 24, 1989
FACTS: On December 24, 1969, the City Council of Quezon City
adopted Ordinance No. 7997, otherwise known as the Market Code of
Quezon City. Section 3 of said ordinance provides that privately
owned and operated public markets shall submit monthly to the
Treasurer's Office, a certified list of stallholders showing the amount of
stall fees or rentals paid daily by each stallholder, ... and shall pay 10%
of the gross receipts from stall rentals to the City, ... , as supervision
fee.
On July 15, 1972, Progressive Development Corporation
(Progressive), owner and operator of a public market known as the
"Farmers Market & Shopping Center" filed a Petition for Prohibition
with Preliminary Injunction against Quezon City on the ground that the
supervision fee or license tax imposed by the above-mentioned
ordinance is in reality a tax on income which Quezon City may not
impose, the same being expressly prohibited by Republic Act No.
2264, as amended, otherwise known as the Local Autonomy Act.
In its Answer, Quezon City, through the City Fiscal, contended that it
had authority to enact the questioned ordinances, maintaining that the
tax on gross receipts imposed therein is not a tax on income.
The lower court ruled that the questioned imposition is not a tax on
income, but rather a privilege tax or license fee which local
governments, like Quezon City, are empowered to impose and collect.
ISSUE: Whether the tax imposed by Quezon City on gross receipts of
stall rentals is properly characterized as partaking of the nature of an
income tax.
RULING: No. The tax imposed in the controverted ordinance
constitutes, not a tax on income, not a city income tax (as
distinguished from the national income tax imposed by the National
Internal Revenue Code) within the meaning of Section 2 (g) of the
Local Autonomy Act, but rather a license tax or fee for the regulation of
the business in which Progressive is engaged. While it is true that the
amount imposed by the questioned ordinances may be considered in
determining whether the exaction is really one for revenue or
prohibition, instead of one of regulation under the police power, it
nevertheless will be presumed to be reasonable.
VII. REAL PROPERTY TAXES
LUNG CENTER OF THE PHILIPPINESv s .QUEZON CITY and
CONSTANTINO P. ROSAS
G.R. No. 144104 June 29, 2004
FACTS:The petitioner, a non-stock and non-profit entity is the
registered owner of a parcel of land where erected in the
middle of the aforesaid lot is a hospital known as the Lung Center of
the Philippines. A big space at the ground floor is being leased to
private parties, for canteen and small store spaces, and to medical or
professional practitioners who use the same as their private clinics for
their patients whom they charge for their professional services. Almost
one-half of the entire area on the left side of the building along Quezon
Avenue is vacant and idle, while a big portion on the right side, at the
corner of Quezon Avenue and Elliptical Road, is being leased for
commercial purposes to a private enterprise known as the Elliptical
Orchids and Garden Center.
On June 7, 1993, both the land and the hospital building of the
petitioner were assessed for real property taxes in the amount of
P4,554,860 by the City Assessor of Quezon City but the former filed a
Claim for Exemption from real property taxes with the City Assessor,
predicated on its claim that it is a charitable institution.
ISSUE:
Whether or not the petitioners real properties are exempted from realty
tax exemptions.
RULING:
Even as we find that the petitioner is a charitable institution, those
portions of its real property that are leased to private entities are not
exempt from real property taxes as these are not actually, directly and
exclusively used for charitable purposes. What is meant by actual,
direct and exclusive use of the property for charitable purposes is the
direct and immediate and actual application of the property itself to the
purposes for which the charitable institution is organized.
Hence, a claim for exemption from tax payments must be clearly
shown and based on language in the law too plain to be mistaken.
Under Section 2 of Presidential Decree No. 1823, the petitioner does
not enjoy any property tax exemption privileges for its real properties
as well as the building constructed thereon. If the intentions were
otherwise, the same should have been among the enumeration of tax
exempt privileges under Section 2.
DIGITAL TELECOMMUNICATIONS PHIL., INC. vs. PROVINCE OF
PANGASINAN ETC. (G. R. No. 152534/ February 23, 2007)
Facts:On Nov 13, 1992, the Province of Pangasinan granted Digitel a
provincial franchise under Provincial Ordinance No 18-92 which
required the grantee to pay franchise and real property taxes.
Thereafter, DIGITEL was granted by Republic Act No. 7678, a
legislative franchise authorizing the grantee to install, operate and
maintain telecommunications systems, this time, throughout the
Philippines. Under its legislative franchise, DIGITEL is liable for the
payment of a franchise tax "as may be prescribed by law of all gross
receipts of the telephone or other telecommunications businesses
transacted under it by the grantee," as well as real property tax "on its
real estate, and buildings "exclusive of this franchise."
The Province of Pangasinan, in its examination of its record found that
petitioner DIGITEL had a franchise tax deficiency for the years 1992-94
further alleging that DIGITEL had never paid any franchise tax to the
province since it started its operation in 1992. Accordingly, the
Sangguniang Panlalawigan passed Resolution No. 364 on 14 October
1994, categorically directing petitioner DIGITEL to pay the overdue
franchise tax otherwise its franchise shall be inoperative.
On 16 March 1995, Congress passed Republic Act No. 7925,
otherwise known as "The Public Telecommunications Policy Act of the
Philippines." Section 23 of this law entitled Equality of Treatment in the
Telecommunications Industry, provided for the ipso facto application to
any previously granted telecommunications franchises of any
advantage, favor, privilege, exemption or immunity granted under
existing franchises, or those still to be granted, to be accorded
immediately and unconditionally to earlier grantees.
The provincial franchise and real property taxes remained unpaid,
thus, the Province of Pangasinan filed a complaint for collection of sum
of money against Digitel for franchise tax and ad valorem tax based on
Sec 137 and 232 of the Local government Code (RA 7160). Digitel
argues that under its legislative franchise, the payment of a franchise
tax to the Bureau of Internal Revenue (BIR) would be "in lieu of all
taxes" on said franchise or the earnings therefrom. It further maintains
that its legislative franchise is subject to the immediate and
unconditional application of the tax exemption found in the franchises
of Globe, Smart and Bell, i.e., in Section 9 (b) of Republic Act No. 7229
and RA 7925.
Issues:
(1). Is DIGITEL exempt from the payment of provincial franchise tax?
(2). If not exempt, are DIGITELs real properties found within the
territorial jurisdiction of respondent Province of Pangasinan exempt
from the payment of real property taxes by virtue of the phrase
"exclusive of this franchise" found in Section 5 of its legislative
franchise, Republic Act No. 7678?
Ruling:
(1). No. The Supreme Court has already resolved this issue in the case
of Philippine Long Distance Telephone Company, Inc. v. City of Davao,
where it clarified the confusion brought about by the effect of Section
23 of Republic Act No.7925 that the word "exemption" as used in the
statute refers or pertains merely to an exemption from regulatory or
reporting requirements of the DOTC or the NTC and not to the
grantees tax liability. In that case, the Court held that in approving
Section 23 of Republic Act No. 7925, Congress did not intend it to
operate as a blanket tax exemption to all telecommunications entities;
thus, it cannot be considered as having amended petitioner PLDT s
ADDITIONAL CASES:
COMMISSIONER OF INTERNAL REVENUEv. PHILIPPINE GLOBAL
COMMUNICATIONS,
INC.
499 SCRA 53 (2006), THIRD DIVISION (Carpio Morales,J.)
The wordings of the Temporary Restraining Order suspended the
implementation of the E-VAT law in its
entirety, but not the collection of 10% VAT on service under the
National Internal Revenue Code.
By reason of a legislative franchise, Respondent Philippine Global
Communications, Inc. (PGCI) constructs, maintains and operates
communications system subject to 3% franchise tax under the Tax
Code. However, the said provision of the Tax Code on franchise tax
was amended by Section 12 of the Expanded Value Added Tax Law
(E-VAT Law) which omitted the 3% franchise tax imposed upon a
telecommunications company.
A Temporary Restraining Order (TRO) was subsequently issued by the
Court in the consolidated cases of Tolentino et al. v. Secretary of
Finance, et al., ordering all the respondents to cease and desist from
enforcing and/or implementing the E-VAT Law. By reason of the
suspension of the E- VAT Law, PGCI filed a claim for tax refund before
Respondent Commission of Internal Revenue (CIR) stating therein that
upon the effectivity of the E-VAT Law, it was no longer required to pay
the 3% franchise tax. Due to the inaction of CIR, PGCI filed a case
against it before the Court of Tax Appeals (CTA). CTA ruled that BIR
should refund the 3% to PGCI.
ISSUE: Whether or not PGCI was exempted from paying franchise
taxes during the effectivity of the TRO suspending the enforcement of
the E-VAT Law
HELD: Under Section 12 of the E-VAT Law, the 3% franchise tax on
telephone and/or telegraph systems and radio broadcasting stations
to which category PGCI belongs was omitted. Under Section 3 of the
E-VAT Law, however, PGCIs sale of services is subject to VAT, thus,
under the E-VAT Law, PGCI ceased to be liable to pay the 3%
franchise tax. It instead is made liable to pay 10% VAT on sale of
services.
The effectivity of the E-VAT Law was, however, suspended, by this
Court when it issued a TRO pending the resolution of the Tolentino et
al. cases challenging the constitutionality of the law. The wording of the
order leaves no doubt that what was restrained by the TRO was the
implementation of the E-VAT law in its entirety.
That the provisions of the Tax Code, prior to their amendment by the EVAT Law, were to apply in the interim, that is, while the TRO in
Tolentino et al. was effective, is clearly reflected in Revenue
Memorandum Circular No. 27-94 issued by CIR which directed all
internal revenue officers to comply
with the following directives, to wit: 3. All VAT and non-VAT persons
shall be governed by the provisions of the National Internal Revenue
Codep rior to its amendment by Republic Act No. 7716x x
Republic Act (R.A.) No. 9238 classified pawnshops as Other Nonbank Financial Intermediaries, hence already exempt from VAT.
With the enactment of R.A. No. 9238 in 2004, the services of banks,
non-bank financial intermediaries, finance companies, and other
financial intermediaries not performing quasi-banking functions were
specifically exempted from VAT, and the 0% to 5% percentage tax on
gross receipts on other non-bank financial intermediaries was
reimposed under Section 122 of the Tax Code of 1997. Since the
imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, petitioner
Tambunting Pawnshop is not liable for VAT for the tax year 1999.
On the issue of liability for documentary stamp tax (DST) on
petitioners pawn tickets, the Court held that DST is an excise tax on
the exercise of a right or privilege to transfer obligations, rights or
properties incident thereto; pledge is among these privileges, the
exercise of which is subject to DST. Tambunting Pawnshop, Inc. v.
Commissioner of Internal Revenue, G.R. No. 179085,
January 21, 2010
CIR v. BPI
G.R. No. 178490 July 7, 2009
Chico-Nazario, J.
Doctrine:
1. The phrase for that taxable period merely identifies the excess
income tax, subject of the option, by referring to the taxable period
when it was acquired by the taxpayer.
2. When circumstances show that a choice has been made by the
taxpayer to carry over the excess income tax as credit, it should be
respected; but when indubitable circumstances clearly show that
another choice, a tax refund, is in order, it should be granted. As to
which option the taxpayer chose is generally a matter of evidence.
Technicalities and legalisms, however exalted, should not be misused
by the government to keep money not belonging to it and thereby
enrich itself at the expense of its law-abiding citizens.
Facts:
In filing its Corporate Income Tax Return for the Calendar Year 2000,
BPI carried over the excess tax credits from the previous years of
1997, 1998 and 1999. However, BPI failed to indicate in its ITR its
choice of whether to carry over its excess tax credits or to claim the
refund of or issuance of a tax credit certificate.
BPI filed with the Commissioner of Internal Revenue (CIR) an
administrative claim for refund. The CIR failed to act on the claim for
tax refund of BPI. Hence, BPI filed a Petition for Review before the
CTA, whom denied the claim.
The CTA relied on the irrevocability rule laid down in Section 76 of the
National Internal Revenue Code (NIRC) of 1997, which states that
once the taxpayer opts to carry over and apply its excess income tax to
succeeding taxable years, its option shall be irrevocable for that
taxable period and no application for tax refund or issuance of a tax
credit shall be allowed for the same.
The Court of Appeals reversed the CTA decision stating that there was
no actual carrying over of the excess tax credit, given that BPI suffered
a net loss in 1999, and was not liable for any income tax for said
taxable period, against which the 1998 excess tax credit could have
been applied.
The Court of Appeals further stated that even if Section 76 was to be
construed strictly and literally, the irrevocability rule would still not bar
BPI from seeking a tax refund of its 1998 excess tax credit despite
previously opting to carry over the same. The phrase for that taxable
period qualified the irrevocability of the option of BIR to carry over its
1998 excess tax credit to only the 1999 taxable period; such that, when
the 1999 taxable period expired, the irrevocability of the option of BPI
to carry over its excess tax credit from 1998 also expired.
Issue:
1. What is the period captured by the irrevocability rule?
2. Whether or not the taxpayers failure to mark the option chosen is
fatal to whatever claim
Held:
1. The last sentence of Section 76 of the NIRC of 1997 reads: Once
the option to carry-over and apply the excess quarterly income tax
against income tax due for the taxable quarters of the succeeding
taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for tax
refund or issuance of a tax credit certificate shall be allowed
therefor. The phrase for that taxable period merely identifies the
excess income tax, subject of the option, by referring to the taxable
period when it was acquired by the taxpayer.
In the present case, the excess income tax credit, which BPI opted to
carry over, was acquired by the said bank during the taxable year
1998. The option of BPI to carry over its 1998 excess income tax credit
is irrevocable; it cannot later on opt to apply for a refund of the very
same 1998 excess income tax credit.
2. No. Failure to signify ones intention in the FAR does not mean
outright barring of a valid request for a refund, should one still choose
this option later on. The reason for requiring that a choice be made in
the FAR upon its filing is to ease tax administration (Philam Asset
Management, Inc. v. CIR G.R. No. 156637 and No. 162004, 14
December 2005). When circumstances show that a choice has been
made by the taxpayer to carry over the excess income tax as credit, it
should be respected; but when indubitable circumstances clearly show
that another choice a tax refund is in order, it should be granted.
Therefore, as to which option the taxpayer chose is generally a matter
of evidence.
Technicalities and legalisms, however exalted, should not be misused
by the government to keep money not belonging to it and thereby
enrich itself at the expense of its law-abiding citizens.
1997 TAX REFORM ACT CANNOT BE APPLIED
RETROACTIVELY; WRITTEN CLAIM IS
CONDITION PRECEDENT TO FILING A PETITION
FOR REVIEW PRIOR THERETO
Under Section 230 of the old Tax Code, an actual written claim for
refund is required. Amended income tax return filed on June 17, 1997
cannot be considered as a written claim. Section 204(c) of the 1997
NIRC (RA 8424, the 1997 Tax Reform Act), provides in pertinent part:
That a return filed showing an overpayment shall be considered as a
written claim for credit or refund, can only operate prospectively. The
new Tax Code became effective only on January 1, 1998. Tax refunds
are in the nature of tax exemptions which are construed strictissimi
juris against the taxpayer and liberally in favor of the government. CIR
vs. BPI, G.R. No. 134062, April 17, 2007.
STATUTORY TAXPAYER IS PROPER PARTY TO CLAIM FOR
REFUND OF INDIRECT TAXES; INDIRECT TAX EXEMPTION MUST
BE CLEARLY GRANTED; 15-DAY APPEAL PERIOD TO CTA EN
BANC IS JURISDICTIONAL; SERVICE TO COUNSEL OF RECORD
BINDS PETITIONER
Petitioner Silkair, a Singapore-based international air carrier, sought a
refund of excise tax paid by Petron Corporation as manufacturer, which
shifted the burden of the tax to purchaser Silkair. The CTA Division
denied against the claim since it was not the taxpayer. On September
12, 2005, a new counsel entered appearance without the withdrawal of
the original counsel. Its original counsel of record received on October
3, 2005 a copy of the September 22, 2005 Resolution of the CTA
Division denying its motion for reconsideration of the decision. On
October 13, 2005, the original counsel withdrew its appearance with
conformity of petitioner and the new counsel requested for an official
copy of the Resolution. On October 14, 2005, the new counsel
received a copy of the Resolution and requested on October 28, 2005
an extension of time to file petition. The Court En Banc gave it until
November 14, 2005. Upon request, another extension until November
24, 2005 was granted and on November 17, 2005, Silkair filed its
petition. By Resolution of May 19, 2006, the CTA En Banc dismissed
the petition for being filed out of time notwithstanding the grant of
extension. On petition for certiorari, the Supreme Court affirmed the