Professional Documents
Culture Documents
SPURIOUS
The Petitioner Tridharma Marketing Corporation filed a Petition for Review seeking the
cancellation of the Respondent Commissioner of Internal Revenue assessment in the amount
of Php 4,473,228,657.86. Several issues were raised but the main issue is centered on the
disallowance made by the Respondent on the Petitioner’s purchases with Etheria Trading as
part of its cost of goods. The disallowance was premised on the result of a thorough audit and
third party cross verification of information wherein it was revealed that a certain Carlos
Adraque Ching, owner of Etheria Trading whose substantial purchases were made by the
Petitioner, does not exist anymore resulting to the findings of disallowance. The Respondent
insists that the Petitioner is engaged in fraudulent transactions. However, Petitioner countered
that there is no law or regulation which requires the Petitioner to verify the validity of spurious
supplier. The Court PARTIALLY GRANTED the Petition and clarified that any violation of
Etheria Trading should concern only Etheria Trading and the BIR, more so, the Petitioner has
nothing to do with purported violation. Consequently, the assessment was substantially
reduced to Php 54,715,611.53. [TRIDHARMA MARKETING CORPORATION VS
COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 8833, FEBRUARY 15,
2018]
ARTY LIABLE TO PAY CAPITAL GAINS TAX (CGT) & DOCUMENTARY STAMP
TAX (DST)
Petitioner, LKY Property Holding, Inc. filed a Petition for Review seeking the cancellation of
BIR assessment on CGT and DST as a result of its purchase of hotel from Mayon
International Hotel Inc. (MIHI) as evidenced by a Deed of Absolute Sale. The assessment is
premised on the interpretation of the BIR on the stipulationcontained in the deed that the
Petitioner shall advance the payment of CGT and DST that may fall due by virtue of the sale.
Petitioner denies that it agreed to shoulder the payment of CGT and DST and posits that it is
very clear in the Deed of Absolute Sale that it shall merely advance the amount for the
payment of the CGT and DST to MIHI who shall still bear the burden of paying the said
taxes. The amount advanced by Petitioner shall be deducted from the total purchase price
that the Petitioner would pay to MIHI. Hence, by agreement of the parties, MIHI, the seller,
shall bear the burden of paying the CGT and DST. The Court resolved to grant the Petition
for Review and cancelled the assessment citing that CGT is a tax imposed on the gains
presumed to have been realized by the seller, thus, the party liable to pay the CGT should
be the seller (i.e MIHI). Likewise, the decision to cancel the CGT and DST imposition is
premised on the fact that the BIR failed to issue a Formal Assessment Notice which is a
substantive prerequisite to tax collection, for it contains not only a computation of tax
liabilities but also a demand for payment within the prescribed period, thereby signaling the
time when penalties and interests begin to accrue against the taxpayer and enabling the latter
to determine his remedies therefor. [LKY PROPERTY HOLDINGS, INC. REPRESENTED
BY MR. WILBERT T. LEE VS. HON. KIM HENARES IN HER CAPACITY AS
COMMISSIONER OF INTERNAL REVENE & ESMERALDA TABULE IN HER
CAPACITY AS REVENUE REGIONAL DIRECTOR OF REVENUE REGION NO. 10,
CTA CASE No. 9066, DECEMBER 14, 2017]
SALE OF PROPERTY BY RETIREMENT PLAN ENTITY NOT SUBJECT TO VAT
The BIR has modified its earlier BIR Ruling No. 409-2015[December 14, 2015] stating that the
sale by the Coca-Cola Bottlers Philippines, Inc. Retirement Plan in favor of the Social Security
System (SSS) of the former’s 16.72% undivided shares in a parcel of land is subject to VAT. In
the modified ruling, the BIR has already considered that the sale of the subject lot in favor of the
SSS should have not been subjected to VAT since the said property was not held primarily for
sale to customers or held for lease in the ordinary course of trade or business. Likewise, the
subject property is not being used in business or trade as the seller is not engaged in real
estate business or any other business other than its main function or objective. In support, a BIR
district certification was submitted to effect that the real property has no existing improvement
nor is it used in business. [BIR RULING NO. 476-2017, OCTOBER 12, 2017]