January 2011 Philippine Supreme Court Decisions on Tax Law

Here are selected January 2011 rulings of the Supreme Court of the Philippines on tax law:

National Internal Revenue Code; section 76; option to carry-over excess income tax payments to succeeding taxable years; option irrevocable. Under section 76 of the National Internal Revenue Code (Tax Code) in case of overpayment of income taxes, a corporation may either file a claim for refund or carry-over the excess payments to the succeeding taxable year and the availment of one remedy precludes the other. However, unlike section 69 of the previous Tax Code, the carry-over of excess income tax payments is no longer limited to the succeeding taxable year but is carried over to the succeeding taxable year until fully utilized. Moreover, the option to carry-over excess income tax payments is not irrevocable. Hence; unutilized excess income tax payments may no longer be refunded. Belle Corporation vs Commissioner of Internal Revenue, G.R. No. 181298, January 10, 2011.

National Internal Revenue Code; value-added tax; claim for credit or refund of input value-added tax; requirements. In its section 112 (A), the National Internal Revenue Code sets down the following requirements in a claim for credit or refund of input value-added tax (VAT): (1) the taxpayer must be VAT registered, (2) the taxpayer must be engaged in sales which are zero-rated or effectively zero-rated, (3) the claim must be filed within two years after the close of the taxable quarter when such sales were made, and (4) the creditable input VAT due or paid must be attributable to such sales, except the transitional input VAT, to the extent that such input VAT has not been applied against the output VAT.  Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) vs Commissioner of Internal Revenue, G.R. No. 172378, January 17, 2011.

National Internal Revenue Code; value-added tax; claim for credit or refund of input value-added tax; authority to print. The authority to print (ATP) need not be reflected or indicated in the invoices or receipts because there is no law or regulation requiring it. In the absence of such law or regulation, failure to print the ATP on the invoices or receipts should not result in the outright denial of a claim or the invalidation of the invoices or receipts for purposes of claiming a refund. However, section 238 of the National Internal Revenue Code (Tax Code) expressly requires persons engaged in business to secure an ATP from the Bureau of Internal Revenue prior to printing invoices or receipts. Under section 112 (A) of the Tax Code, a claimant must be engaged in sales which are zero-rated or effectively zero-rated. To prove this, duly registered invoices or receipts evidencing zero-rated sales must be presented. However, since the ATP is not indicated in the invoices or receipts, the only way to verify whether the invoices or receipts are duly registered is by requiring the claimant to present its ATP from the BIR. Without this proof, the invoices or receipts would have no probative value for the purpose of refund.  Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) vs Commissioner of Internal Revenue, G.R. No. 172378, January 17, 2011.

National Internal Revenue Code; value-added tax; claim for credit or refund of input value-added tax; printing of “zero-rated.” Failure to print the word “zero-rated” on the sales invoices or receipts is fatal to a claim for refund of input value-added tax on zero-rated sales. As explained in the case of Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) vs Commissioner of Internal Revenue, compliance with section 4.108-1 of Revenue Regulations No. 7-95, requiring the printing of the word “zero-rated” on the invoice covering zero-rated sales, is essential as this regulation proceeds from the rule-making authority of the Secretary of Finance under section 244 of the National Internal Revenue Code.  Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) vs Commissioner of Internal Revenue, G.R. No. 172378, January 17, 2011.

National Internal Revenue Code; value-added tax; claim for credit or refund of input value-added tax; documentary requirements. When claiming tax refund or credit, the value-added taxpayer must be able to establish that it does have refundable or creditable input value-added tax (VAT), and the same has not been applied against its output VAT liabilities- information which are supposed to be reflected in the taxpayer’s VAT returns. Thus, an application for tax refund or credit must be accompanied by copies of the taxpayer’s VAT return or returns for taxable quarter or quarters concerned. Atlas Consolidated Mining and Development Corporation vs Commissioner of Internal Revenue, G.R. No. 159471, January 26, 2011.

National Internal Revenue Code; coverage of excise tax. Excise taxes are imposed under Title VI of the National Internal Revenue Code (Tax Code). They apply to specific goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition, and to those that are imported. In effect, these taxes are imposed when the following conditions concur: (1) the articles subject to tax belong to any of the categories of goods enumerated in Title VI of the Tax Code and (2) that said articles are for domestic sale or consumption, excluding those that are actually exported. There are certain exemptions to the coverage of excise taxes, such as petroleum products sold to international carriers and exempt entities or agencies such as under section 135 of the Tax Code. Exxonmobil Petroleum and Chemical Holdings, Inc.- Philippine Branch vs Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011.

National Internal Revenue Code; excise tax; section 135. Under section 135 of the National Internal Revenue Code (Tax Code), petroleum products sold to international carriers of [Philippine or] foreign registry for their use or consumption outside the Philippines are exempt from excise tax, provided that the petroleum products sold to such international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue. Exxonmobil Petroleum and Chemical Holdings, Inc.- Philippine Branch vs Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011.

National Internal Revenue Code; nature of excise tax. Excise taxes are of the nature of indirect taxes, the liability for payment of which may fall on a person other than he who actually bears the burden of the tax. Accordingly, the party liable for the tax can shift the burden to another, as part of the purchase price of the goods or services. Although the manufacturer/seller is the one who is statutorily liable for the tax, it is the buyer who actually shoulders or bears the burden of the tax, albeit not in the nature of a tax, but part of the purchase price or the cost of the goods or services sold. Exxonmobil Petroleum and Chemical Holdings, Inc.- Philippine Branch vs Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011.

National Internal Revenue Code; excise tax; refund; proper party. The proper party to question, or to seek a refund of, an indirect tax, is the statutory taxpayer, or the person on whom the tax is imposed by law and who paid the same, even if he shifts the burden thereof to another. Exxonmobil Petroleum and Chemical Holdings, Inc.- Philippine Branch vs Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011.

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