Professional Documents
Culture Documents
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ORGANIZER, OFFICER OR ANY SPECIFIC PERSON. BEING A MERE NONPROFIT CORPORATION OR ASSOCIATION ENTITLES THE HOSPITAL TO
A 10% TAX RATE, BUT IF IT IS ALSO A NON-STOCK CORPORATION, IT
BECOMES TAX-EXEMPT. St. Lukes Medical Center, Inc. vs. CIR, CTA Case No.
6993 dated November 21, 2008.
ADMISSION OF PAY PATIENTS DOES NOT DETRACT FROM THE
CHARITABLE CHARACTER OF A HOSPITAL IF ITS FUNDS ARE
NONETHELESS DEVOTED EXCLUSIVELY TO THE MAINTENANCE OF
THE INSTITUTION. Ibid.
IF THE SALE OF PROPERTIES IS SUBJECT TO SUSPENSIVE CONDITIONS
(e.g. JUDICIAL TITLING, EXEMPTION FROM CARP BY THE DAR), THE
CAPITAL GAINS TAX AND THE DOCUMENTARY STAMP TAX DUE
THEREON SHALL ONLY ACCRUE UPON THE FULFILLMENT OF SAID
CONDITIONS. BIR Ruling No. DA (C-113) 368-2008 dated October 29, 2008.
COURT OF TAX APPEALS (CTA) RULES THAT IN A CLAIM FOR REFUND
OF UNUTILIZED INPUT VAT ATTRIBUTABLE TO THE ZERO-RATED SALE
OF SERVICES, IT IS ESSENTIAL TO PROVE THAT THE RECIPIENT OF THE
SERVICE IS DOING BUSINESS OUTSIDE THE PHILIPPINES.
The CTA considered insufficient the petitioner-taxpayers presentation of official
receipts, billing statements, memo invoices-receivable, memo invoices-payable and bank
statements. The CTA added that even in petitioner-taxpayers testimonial evidence, there
is nothing to establish that the services were rendered to foreign clients doing business
outside the Philippines. That the clients are foreign clients is not sufficient as the said
foreign clients may also be engaged in business in the Philippines, in which case the sale
of services are subject to 12% VAT. Accenture, Inc. vs. CIR, CTA Case No. 7046 dated
November 13, 2008.
CTA REITERATES THAT, FOR VAT PURPOSES, SALES INVOICES MUST
SUPPORT THE SALE OF GOODS OR PROPERTIES WHEREAS OFFICIAL
RECEIPTS MUST SUPPORT THE SALE OF SERVICES. (Takenaka Corporation
Philippine Branch vs. CIR, CTA Case No. 6886 dated November 4, 2008. NOTE:
Includes the usual dissent of Justice Acosta on the matter.)
IN A CLAIM FOR REFUND OF UNUTILIZED INPUT VAT, THE
APPROPRIATE DOCUMENT TO SUBSTANTIATE INPUT VAT CREDITS ON
PAYMENTS MADE TO NON-RESIDENTS IS BIR FORM NO. 1600, THE
MONTHLY REMITTANCE RETURN OF VALUE-ADDED TAX AND OTHER
PERCENTAGE TAXES WITHHELD.
BANK REMITTANCES ARE
INSUFFICIENT BECAUSE THEY DO NOT SHOW THE AMOUNT OF VAT
PAID AND THE COURT CANNOT VERIFY THEREFROM THE
REMITTANCE OF WITHHOLDING VAT. GST Philippines, Inc. vs. CIR, CTA
Case No. 6489 dated November 13, 2008.
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PURSUANT TO RA 9136 (THE EPIRA LAW), POWER GENERATION
COMPANIES BECAME SUBJECT TO 0%VAT. IT MUST BE ESTABLISHED,
HOWEVER, THAT THE ENTITY: (1) IS A GENERATION COMPANY AND (2)
DERIVES SALES FROM POWER GENERATION. CE Luzon Geothermal Power
Company, Inc. vs. CIR, CTA Case No. 6792 dated November 25, 2008.
UNUTILIZED EXCESS CREDITABLE VAT WITHHELD FROM SALES OF
GOODS OR SERVICES TO THE GOVERNMENT IS REFUNDABLE. Schneider
Electric Industries, S.A. vs. CIR, CTA Case No. 6786 dated November 27, 2008.
SUPREME COURT RULES THAT IN A CLAIM FOR REFUND OF INDIRECT
TAXES, SUCH AS EXCISE TAX, THE STATUTORY TAXPAYER OR THE
PARTY DIRECTLY LIABLE TO PAY THE TAX IS THE PROPER PARTY TO
CLAIM THE REFUND.
Excise tax on petroleum is an indirect tax. Although the burden to pay an indirect tax can
be passed on to the purchaser of the goods, the liability to pay the indirect tax remains
with the petroleum manufacturer or seller. When the manufacturer or seller decides to
shift the burden of the excise tax to the tax-exempt purchaser, the tax becomes a part of
the price of the commodity. In a claim for refund of excise taxes, the petroleum
manufacturer who is the statutory taxpayer is the proper party to claim the refund. The
exempt entitys remedy is to invoke its tax exemption before buying the petroleum so that
the petroleum manufacturer would not pass on the excise taxes as part of the purchase
price. Silkair (Singapore) Pte. Ltd. vs. CIR, GR Nos. 171383 & 172379 dated
November 14, 2008.
HOWEVER, CTA ALLOWS A PEZA-REGISTERED ENTERPRISE TO CLAIM
A REFUND OF EXCISE TAXES PASSED ON TO IT BY THE STATUTORY
TAXPAYER.
However, in another case, the CTA allowed an EPZA registered enterprise to claim a
refund of excise taxes passed on to it by the petroleum manufacturer. The CTA ruled that
the fact that it was not the EPZA registered enterprise which paid the taxes directly to the
BIR does not have an adverse effect on the claim for refund as the law granting the
exemption makes no distinction as to the circumstance when the law shall apply.
Philippine Associated Smelting and Refining Corporation vs. CIR, CTA EB Case No.
351 dated November 12, 2008.
CTA REITERATES REQUIREMENTS OF A VALID WAIVER OF THE
STATURE OF LIMITATIONS AS ENUMERATED IN REVENUE
MEMORANDUM ORDER (RMO) NO. 20-90.
A waiver of the statute of limitations is not an ordinary agreement but a derogation of the
taxpayers right to security against prolonged and unscrupulous investigations. It must be
carefully and strictly construed. It is governed not by the general provisions of the New
Civil Code but by the NIRC. It cannot, therefore, be argued that only the essential
elements of a contract (i.e., consent, object certain and cause) are necessary for its
validity. CIR v. Intel Technologies Philippines, Inc., CTA EB No. 379 dated November
18, 2008.
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CONSIDERED AN INDICATION OF THE UNLIKELIHOOD THAT THE
CORPORATION HAS A PERMANENT ESTABLISHMENT IN THE
PHILIPPINES. BIR Ruling No. DA-ITAD 70-08 dated October 29, 2008.
THE ASSIGNMENT OF OVERSEAS DISTRIBUTION RIGHTS BY A NONRESIDENT FOREIGN JAPANESE CORPORATION TO A PHILIPPINE
CORPORATION IS NOT SUBJECT INCOME TAX UNDER THE RP-JAPAN
TAX TREATY.
The consideration received by M Japan, a Japanese corporation engaged in the
manufacture, sale, supply and distribution of marine propellers and stern equipment and
not registered as a corporation/partnership in the Philippines, from M Phils, a domestic
corporation, for the assignment by M Japan to M Phils of the right to sell, supply and
distribute to overseas customers payable in 60 equal monthly installments is not subject
to Philippine income tax under the RP-Japan Tax Treaty. The payments are not in the
nature of business profits as the right to sell, supply or distribute to overseas customers is
not the type of gods or merchandise sold by M Japan. The payments are also not in the
nature of royalties which can include payments for the letting or leasing of intangible or
tangible (industrial, commercial or scientific equipment) property since the person who
lets or leases property does not extinguish or diminish his ownership and interest over the
property when the same is let or leased to another person. The payments are actually in
the nature of capital gains but Article 13 of the RP-Japan Tax Treaty applies only if the
property is situated in the State concerned (i.e., the Philippines). Since the intangible
assigned constituting the right to sell, supply and distribute to overseas customers is not
situated in the Philippines, Article 13 dealing with capital gains does not apply. The
payments are in the nature of other income covered by Article 22 of the RP-Japan Tax
Treaty, which makes such payments taxable only in Japan where the alienator is a
resident. BIR Ruling No. DA-ITAD 72-08 dated October 29, 2008.
CTA RULES THAT UNDER THE REVISED MAKATI REVENUE CODE, A
CORPORATION INVOLVED IN FINANCING THE CONSTRUCTION AND
OPERATION OF PRIVATE POWER PLANTS THROUGH BUILD-OPERATETRANSFER (BOT) ARRANGEMENTS WITH CUSTOMERS IS CONSIDERED
A CONTRACTOR AND IS SUBJECT TO LOCAL TAXES AS SUCH BY THE
LOCAL GOVERNMENT WHERE ITS PRINCIPAL OFFICE IS LOCATED.
The Local Government Code of 1991 defines a contractor as essentially including any
person, whether natural or juridical, engaged in the sale of service for a fee. A BOT
arrangement involves not only the financing of a project but also the construction,
maintenance and operation thereof. Thus, a corporation which finances a BOT
arrangement by advancing capital to employ and pay for the services of a contractor
which will build power plants is taxable by the local government unit where the principal
office is located considering that all the documents and deals are arranged therein even if
the power plants are in different localities. In addition, while uncollected sales are
deductible from the tax base, it is incumbent upon the taxpayer to present proof as
regards which part of the sales are uncollected. Linberg Philippines, Inc. vs. City of
Makati, CTA EB Case No. 349 dated November 11, 2008.
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SURCHARGE AND PENALTIES ON LOCAL TAXES MAY BE IMPOSED BY
THE LOCAL GOVERNMENT IF THE TAXPAYER MISREPRESENTED
ITSELF AND CAUSED A DIFFERENT CLASSIFICATION AND TAX RATE TO
BE APPLIED TO IT. Ibid.
UNLIKE FOR VAT PURPOSES, AN EXPORTER FOR PURPOSES OF
IMPOSING LOCAL BUSINESS TAX SHALL REFER TO THOSE
PRINCIPALLY ENGAGED IN THE BUSINESS OF EXPORTING GOODS AND
MERCHANDISE, AS WELL AS, MANUFACTURERS AND PRODUCERS
WHOSE GOODS OR PRODUCTS ARE BOTH SOLD DOMESTICALLY AND
ABROAD AS PROVIDED UNDER ARTICLE 232 OF THE IMPLEMENTING
RULES AND REGULATIONS OF THE LOCAL GOVERNMENT CODE OF
1991.
The classification does not depend on the transaction but on the person. Hence, a
company that does not export its products but sells it to local companies, which in turn
utilize said products as inputs in the manufacture of other products that are exported
abroad, is taxable as a manufacturer and not an exporter under The Local Government
Code. Steniel Mindanao Packaging Corporation vs. City Treasurer of Davao City,
CTA AC No. 39 dated November 27, 2008.
Note: The information provided herein is general and may not be applicable in all
situations. It should not be acted upon without specific legal advice based on particular
situations. If you have any questions, please feel free to contact any of the following at
telephone number (632) 633-9418, facsimile number (632) 633-1911, or at the indicated
e-mail address:
Atty. Carlos G. Baniqued
Atty. Laura Victoria A.S. Yuson-Layug
Atty. Terence Conrad H. Bello
Atty. Suzette A. Celicious
Atty. Madeline L. Zialcita-Villapando
Atty. Kathleen L. Saga
Atty. Excelsis V. Antolin
Atty. Cheryll Ann R. Trinidad
Atty. Bernadette V. Quiroz
cgbaniqued@baniquedlaw.com
lvyusonlayug@baniquedlaw.com
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sacelicious@baniquedlaw.com
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klsaga@baniquedlaw.com
evantolin@baniquedlaw.com
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bvquiroz@baniquedlaw.com
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