Vladimir Karl A.

Tolentino
Taxation 1

Documentary Stamp Tax:

G.R. No. 175188 July 15, 2015

COMMISSIONER OF INTERNAL REVENUE vs. LA TONDENA DISTILLERS, INC.

(LTDI [now GINEBRA SAN MIGUEL]

Facts:

On September 17, 2001, respondent La Tondeña Distillers, Inc. entered into a

Plan of Merger5 with Sugarland Beverage Corporation (SBC), SMC Juice, Inc.
(SMCJI), and Metro Bottled Water Corporation (MBWC).6 As a result of the merger,
the assets and liabilities of the absorbed corporations were transferred to
respondent, the surviving corporation.7 Respondent later changed its corporate
name to Ginebra San Miguel, Inc. (GSMI).8 On September 26, 2001, respondent
requested for a confirmation of the tax-free nature of the said merger from the
Bureau of Internal Revenue (BIR).9 On November 5, 2001, the BIR issued a ruling
stating that pursuant to Section 40(C)(2)10 and (6)(b)11 of the 1997 National Internal
Revenue Code (NIRC), no gain or loss shall be recognized by the absorbed
corporations as transferors of all assets and liabilities.12 However, the transfer of
assets, such as real properties, shall be subject to DST imposed under Section
19613 of the NIRC.

Issue: Whether or not the transfer of real property to a surviving corporation

pursuant to a merger is subject to Documentary Stamp Tax (DST).

Held: No, In a merger, the real properties are not deemed "sold" to the surviving
corporation and the latter could not be considered as "purchaser" of realty since the
real properties subject of the merger were merely absorbed by the surviving
corporation by operation of law and these properties are deemed automatically
transferred to and vested in the surviving corporation without further act or deed.

G.R. No. 166018 June 4, 2014

THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED-

PHILIPPINE BRANCHES vs. COMMISSIONER OF INTERNAL REVENUE

Facts:
 HSBC performs, among others, custodial services on behalf of its investor-
clients, corporate and individual, resident or non-resident of the Philippines, with
respect to their passive investments in the Philippines, particularly investments in
shares of stocks in domestic corporations. As a custodian bank, HSBC serves as the
collection/payment agent with respect to dividends and other income derived from its
investor-clients’ passive investments. HSBC’s investor-clients maintain Philippine
peso and/or foreign currency accounts, which are managed by HSBC through
instructions given through electronic messages. The said instructions are standard
forms known in the banking industry as SWIFT, or "Society for Worldwide Interbank
Financial Telecommunication." In purchasing shares of stock and other investment in
securities, the investor-clients would send electronic messages from abroad
instructing HSBC to debit their local or foreign currency accounts and to pay the
purchase price therefor upon receipt of the securities. Pursuant to the electronic
messages of its investor-clients, HSBC purchased and paid Documentary Stamp
Tax (DST) from September to December 1997 and also from January to December
1998 amounting to ₱19,572,992.10 and ₱32,904,437.30, respectively.

Issue: Whether or not the electronic messages is subject to DST.

Held: No, the electronic messages are not signed by the investor-clients as
supposed drawers of a bill of exchange; they do not contain an unconditional order
to pay a sum certain in money as the payment is supposed to come from a specific
fund or account of the investor-clients; and, they are not payable to order or bearer
but to a specifically designated third party. Thus, the electronic messages are not
bills of exchange. As there was no bill of exchange or order for the payment drawn
abroad and made payable here in the Philippines, there could have been no
acceptance or payment that will trigger the imposition of the DST under Section 181
of the Tax Code.

G.R. No. 167679 July 22, 2015

ING BANK N.V., engaged in banking operations in the Philippines as ING

BANK N.V. MANILA BRANCH vs. COMMISSIONER OF INTERNAL REVENUE

Facts:

This is a Petition for Review3 appealing the April 5, 2005 Decision4 of the
Court of Tax Appeals En Banc, which in turn affirmed the August 9, 2004
Decision5 and November 12, 2004 Resolution6 of the Court of Tax Appeals Second
Division. The August 9, 2004 Decision held petitioner ING Bank, N.V. Manila Branch
(ING Bank) liable for (a) deficiency documentary stamp tax for the taxable years
1996 and 1997 in the total amount of ₱238,545,052.38 inclusive of surcharges; (b)
deficiency onshore tax for the taxable year 1996 in the total amount of ₱997,333.89
inclusive of surcharges and interest; and (c) deficiency withholding tax on
compensation for the taxable years 1996 and 1997 in the total amount of
₱564,542.67 inclusive of interest. The Resolution denied ING Bank’s Motion for
Reconsideration.7
Issue: Whether the assessment for deficiency withholding tax on compensation is
proper.

Held: Yes, the tax on compensation income is withheld at source under the
creditable withholding tax system wherein the tax withheld is intended to equal or at
least approximate the tax due of the payee on the said income.

G.R. No. 192398 September 29, 2014

COMMISSIONER OF INTERNAL REVENUE vs. PILIPINAS SHELL PETROLEUM

CORPORATION

Facts:

Petitioner is the duly appointed Commissioner of Internal Revenue who holds

office at the Bureau of Internal Revenue (BIR) National Office located at Agham
Road, Diliman, Quezon City. Respondent Pilipinas Shell Petroleum Corporation
(PSPC) is a corporation organized and existing under the laws of the Philippines and
was incorporated to construct, operate and maintain petroleum refineries, works,
plant machinery, equipment dock and harbor facilities and auxiliary works and other
facilities of all kinds and used in or in connection with the manufacture of products of
all kinds which are wholly or partly derived from crude oil. On April 27, 1999,
respondent entered into a Plan of Merger with its affiliate, Shell Philippine Petroleum
Corporation (SPPC), a corporation organized and existing under the laws ofthe
Philippines. In the Plan of Merger, it was provided that the entire assets and liabilities
of SPPC will be transferred to, and absorbed by, respondent as the surviving entity.
The Securities and Exchange Commission approved the merger on July 1, 1999.

Issue: Whether or not SPPC is entitled to a refund.

Held: Yes, the transfer of real properties from SPPC to respondent is not subject to
documentary stamp tax considering that the same was not conveyed to or vested in
respondent by means of any specific deed, instrument or writing. There was no deed
of assignment and transfer separately executed by the parties for the conveyance of
the real properties. The conveyance of real properties not being embodied in a
separate instrument but is incorporated in the merger plan, thus, respondent is not
liable to pay documentary stamp tax.

G.R. No. 197515 July 2, 2014

COMMISSIONER OF INTERNAL REVENUE vs. UNITED SALVAGE AND
TOWAGE (PHILS.), INC.

Facts:

Respondent is engaged in the business of sub-contracting work for service

contractors engaged in petroleum operations in the Philippines.2 During the taxable
years in question, it had entered into various contracts and/or sub-contracts with
several petroleum service contractors, such as Shell Philippines Exploration, B.V.
and Alorn Production Philippines for the supply of service vessels. In the course of
respondent’s operations, petitioner found respondent liable for deficiency income tax,
withholding tax, value-added tax (VAT) and documentary stamp tax (DST) for
taxable years 1992,1994, 1997 and 1998.4Particularly, petitioner, through BIR
officials, issued demand letters with attached assessment notices for withholding tax
on compensation (WTC) and expanded withholding tax (EWT) for taxable years
1992, 1994 and 1998.

Issue: Whether or not the Expanded Withholding Tax Assessments issued by

petitioner against the respondent for taxable year 1994 was without any factual and
legal basis.

Held: Yes, a mere perusal of the FAN for the deficiency EWT for taxable year
1994will show that other than a tabulation of the alleged deficiency taxes due, no
further detail regarding the assessment was provided by petitioner. Only the resulting
interest, surcharge and penalty were anchored with legal basis.45 Petitioner should
have at least attached a detailed notice of discrepancy or stated an explanation why
the amount of ₱48,461.76 is collectible against respondent46 and how the same was
arrived at.