2000digests.tax

San Beda College of Law 2001 Centralized Bar Operations

Case Digests Taxation Law TABLE OF CONTENTS A TA! A"NE A"NEST ST# # Republic of the Phil. vs. Court of Appeals G.R. No. 109193, February 1, 2000............................... 2000.......................................................... ........................... 2

B TA! $EF $EF%N %ND D P!"Fa#ily $avi%&s a%' vs. Court of Appeals G.R. No. 122()0, April April 12, 2000 ............................................... ............................................... ...............2 ............ ...2

C &"'$O'E$L# &"'$O'E$L# ACC%"%LAT ACC%"%LATED ED EA$N&N(S EA$N&N(S TA! TA! Cya%a#i* Phil., !%c. vs. Court of Appeals, et al. G.R. No. 10)0+, 10)0+, -a%uary 20, 2000................................................... 2000.......................................................... .......3 3

D 'E$CEN 'E$CENT TA(E TA! TA! Protectors $ervices vs. Court of Appeals, et al. GR No. 11)1+, 11)1+, April 12, 2000................................. 2000............................................................ ................................. ......( (

E DED%CT&ON DED%CT&ONS S F$O" T)E ($OSS ($OSS ESTA ESTATE Co##issio%er of !%ter%al Reve%ue vs. Court of Appeals G.R. No. 12320+, 12320+, /arch 22, 2000 ................................................. ................................................. .......... 

F *A *AL% L%E E ADD ADDED ED TA TA! Co##issio%er of !%ter%al Reve%ue vs. Court of Appeals G.R. No.123, No.123, /arch 30, 2000................................................... 2000................................................... .......... +

( FO$FE&T%$ FO$FE&T%$E E '$OCEED&N(S '$OCEED&N(S &N T)E B%$EA% B%$EA% OF C%STO" C%STO"S S he ureau of Custo#s  he co%o#ic !%telli&e%ce ureau vs. 4&ario  /o%teliba%o /o%teliba%o G.R. No. 13)0)1, 13)0)1, /arch 30, 2000........................................ +

)TA! A"NEST#+ D&S'OS&T&ON OF CA'&TAL ASSET ON CAS) BAS&S *S &NSTALL"ENT ibia%o 5. 5. a6as, -r. -r. vs. Court of Appeals, et al. G.R. No. 1029+, February 10, 2000............................... 2000.......................................................... ........................... 

& TA! AD"&N&ST$AT&*E $E(%LAT&ONS 7arriso% /otors Corporatio% vs. Rachel A. Navarro G.R. No. 1322+9, Ap April ril 2, 2000........................................................... 2000........................................................... ...... )

, ACTS OF -&T))OLD&N( A(ENTS OF A (O*E$N"ENT CO$'O$AT&ON  A8uce%a . . Garcia vs. vs. 4ffice of the 4#bu*s#a% 4#bu*s#a%,, et al. G.R. No. 1210, February 1+, 2000...................................... 2000.................................................. ................... .......9 9

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A Tax Anest $E'%BL&C OF T)E ')&L&''&NES 7s CO%$T OF A''EALS ($ No 108189 Fe5rar :. 2000 Fa3ts+

!% 199, the !R issue* a% assess#e%t %otice a%* letter a&ai%st private respo%*e%t Precisio% Pri%ti%& *e#a%*i%& pay#e%t of the *eficie%cy i%co#e ta for 19)1 i%clusive of i%terest. :espite repeate* *e#a%*s, ho;ever, the latter faile* to pay ;ithi% the perio* prescribe* by la;. Co%sees. .4. No. (1 *eclari%& a ta a#%esty o% u%pai* i%co#e taes ;as pro#ul&ate* o% Au&ust 22, 19)+, it ;as later a#e%*e* by .4. Nos. ( a%* +( to i%clu*e estate a%* *o%ors taes a%* taes o% busi%ess for the taable year 19)1"19). hereafter, Rev. Re&. (") ;as issue* to i#ple#e%t the la;. !t rec'o%e* the applicability of the ta a#%esty fro#  Au&ust 22, 19)+, the *ate ;he% .4. No. (1 too' effect. 7o;ever, .4. No. (1 co%tai%e* %o li#itatio% ;hatsoever *eli#iti%& its applicability to assess#e%ts #a*e prior to its coveri%& all ta liabilities i%curre* fro# 19)1"19). !f the .4. No. (1 ha* %ot bee% i%te%*e* to i%clu*e 19)1" 19) ta liabilities alrea*y assesse* prior to 22 Au&ust 19)+, the la; ;oul* have si#ply provi*e* i% its eclusio%ary clauses. !t *i* %ot. herefore, the co%clusio% is u%avoi*able, a%* it is that the eecutive or*er has bee% *esi&%e* to be i% the %ature of a &e%eral &ra%t of ta a#%esty sub?ect o%ly to cases specifically ecepte* by it.

B Tax $efnd B'&;FA"&L# SA*&N(S BAN< 7s CO%$T OF A''EALS ($ No 122=>0 April 12. 2000 Fa3ts+

Petitio%er i%*icate* i% its 19)9 !%co#e a Retur% that it ;oul* apply the total refu%*able a#ou%t, i%clusive of the 19)) a%* 19)9 ta cre*it, as a ta cre*it for the succee*i%& taable year, 1990. @ater, petitio%er i%for#e* the !R that it ;oul* clai# the a#ou%t state* as the 19)9 ta cre*it as a ta refu%*, alle&i%& that it *i* %ot apply the total refu%*able a#ou%t to its 1990 A%%ual !R or other ta liabilities *ue to alle&e* busi%ess losses it i%curre* for the sa#e year. he% %o actio% fro# the !R ;as forthco#i%&, petitio%er file* its clai# ;ith the Court of  a Appeals. 7o;ever, the CA a%* the CA *e%ie* the clai# for ta refu%*. he respo%*e%ts rule* that there is %o basis to &ra%t the clai# for refu%* *ue to petitio%ers failure to sho; proof that it has %ot cre*ite* to its 1990 !R the total Pa&e 2 Taxation Law Committee: Eri3 $e3alde (Chairperson), ,ose *oltaire Batista (Subject Head & ED)! S5?e3t )eads+ Cel Caru%&ay, Geor&e 4rtha !!, -e%%ifer RocetesB "e5ers+ Russel Alaba*o, Acel Alisua&a, Pete Ca*avos, Clare%ce :e Gu8#a%, ri%a :e 5era, /aricel chave8, ria Gala%&, Abraha# Guiao, haro%e -ap8o%, @eah -i#e%e8, Ar%ol* Daba%lit, Richar* Di%&, @eah @ee, Rhoua% @oseria&a, Delly /allilli%, -u% /a%uel, Al#ar /ari#la, Risa /e%*o8a, Dare% Narcise, -ea%%ette Ne&re, @i8a Nofue%te, Fer*i%a%* Pere8, A%a @i8a Pural, Albert Rebosa, Roy Relato, Alla% Rosauro, Ro;e%a Rui8, :ay $ac*ala%, o#bet $evilla%o, Na%cy $iy, /ary A%%e $y

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refu%*able a#ou%t it previously *eclare* to be applie* as a ta cre*it i% 1990. $i%ce ta refu%*s are i% the %ature of ta ee#ptio%s, they are re&ar*e* as i% *ero&atio% of soverei&% authority a%* to be co%strue* strictissi#i ?uris a&ai%st the o%e clai#i%& the ee#ptio%. he petitio%er #ai%tai%e* that it suffere* a %et loss i% 1990 a%* that it coul* %ot have applie* the a#ou%t clai#e* as ta cre*its.

&sse+

!s a tapayer e%title* to a refu%*, represe%ti%& ecess cre*itable ;ithhol*i%& ta pai* for the previous year, eve% if it fails to prove that it has %ot applie* the sa#e as ta cre*it for the year it i%curre* a loss=

)eld+

>es. !t is u%*ispute* that petitio%er ha* ecess ;ithhol*i%& taes for the year  19)9 a%* ;as thus e%title* to a refu%*. Pursua%t to $ec. +9 of the 19)+ a Co*e ;hich state* that a corporatio% e%title* to a refu%* #ay opt either E1 to obtai% such refu%* or E2 to cre*it sai* a#ou%t for the succee*i%& taable year. !% the prese%t case, the Retur% clearly sho;e* that petitio%er suffere* a %et loss i% 1990. Co%trary to the hol*i%& of the CA a%* the CA, petitio%er coul* %ot have applie* the a#ou%t as a ta cre*it. !t shoul* be stresse* that the ratio%ale of the rules of proce*ure is to secure a  ?ust *eter#i%atio% of every actio%. hey are tools *esi&%e* to facilitate the attai%#e%t of ?ustice. ut there ca% be %o ?ust *eter#i%atio% of the prese%t actio% if ;e i&%ore, o% &rou%*s of strict tech%icality, the Retur% sub#itte* before the CA a%* eve% before this Court. o repeat, the u%*ispute* fact is that petitio%er suffere* a %et loss i% 1990B accor*i%&ly, it i%curre* %o ta liability to ;hich the ta cre*it coul* be applie*. Co%sees. Althou&h the ta co*e specifies J?u*icial epe%ses of the testa#e%tary or  i%testate procee*i%&sK, there is %o reaso% ;hy epe%ses i%curre* i% the a*#i%istratio% a%* settle#e%t of the estate i% etra?u*icial procee*i%&s shoul* %ot be allo;e*. 7o;ever, *e*uctio% is li#ite* to such a*#i%istratio% epe%ses as are actually a%* %ecessarily i%curre* i% the collectio% of the assets of the estate, pay#e%t of the *ebts, a%* *istributio% of the re#ai%*er  a#o%& those e%title* thereto. !t is clear that the etra?u*icial settle#e%t ;as for the purpose of pay#e%t of taes a%* the *istributio% of the estate to the heirs. he eecutio% of the etra?u*icial settle#e%t %ecessitate* the %otari8atio% of the sa#e. !t follo;s the% that the %otarial fee ;as i%curre* pri#arily to settle the estate of the *ecease* Pa?o%ar. $ai* a#ou%t shoul* the% be co%si*ere* as a*#i%istratio% epe%se actually a%* %ecessarily i%curre* i% the collectio% of assets of the estate, pay#e%t of *ebts a%* *istributio% of the re#ai%*er a#o%& those e%title* thereto.  Attor%eys fees o% the other ha%* to be *e*uctible fro# the &ross estate #ust be esse%tial to the settle#e%t of the estate. he a#ou%t clai#e* as *e*uctible ;as i%curre* as attor%eys fees i% the &uar*ia%ship procee*i%&s. he &uar*ia%ship procee*i%& i% this case ;as %ecessary for the *istributio% of the property of the *ecease*. As correctly poi%te* out by the respo%*e%t CA, the PN ;as appoi%te* &uar*ia% over the assets of the *ecease*, a%* that assets of the *ecease* for# part of his &ross estate.

Pa&e  Taxation Law Committee: Eri3 $e3alde (Chairperson), ,ose *oltaire Batista (Subject Head & ED)! S5?e3t )eads+ Cel Caru%&ay, Geor&e 4rtha !!, -e%%ifer RocetesB "e5ers+ Russel Alaba*o, Acel Alisua&a, Pete Ca*avos, Clare%ce :e Gu8#a%, ri%a :e 5era, /aricel chave8, ria Gala%&, Abraha# Guiao, haro%e -ap8o%, @eah -i#e%e8, Ar%ol* Daba%lit, Richar* Di%&, @eah @ee, Rhoua% @oseria&a, Delly /allilli%, -u% /a%uel, Al#ar /ari#la, Risa /e%*o8a, Dare% Narcise, -ea%%ette Ne&re, @i8a Nofue%te, Fer*i%a%* Pere8, A%a @i8a Pural, Albert Rebosa, Roy Relato, Alla% Rosauro, Ro;e%a Rui8, :ay $ac*ala%, o#bet $evilla%o, Na%cy $iy, /ary A%%e $y

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F *ale Added Tax CO""&S&ONE$ OF &NTE$NAL $E*EN%E 7s CO%$T OF A''EALS ($ No 129 "ar34 90. 2000 Fa3ts+ he !R issue* a% assess#e%t to private respo%*e%t corporatio% for the *eficie%cy value"a**e* ta for taable year 19)). he corporatio% averre* that si%ce it ;as %ot e%&a&e* i% busi%ess, it ;as %ot liable to pay 5A. Further#ore, it co%te%*e* that the ter# Ji% the course of tra*e or busi%essK reA@A ;as o% cash basis. Petitio%er #ai%tai%s that the procee*s of the pro#issory %otes, %ot yet *ue, ;hich he *iscou%te* to A>A@A shoul* %ot be i%clu*e* as i%co#e reali8e* i% 19+. Petitio%er states that the ori&i%al a&ree#e%t i% the :ee* of $ale shoul* %ot be affecte* by the subse