March 2012 Philippine Supreme Court Decisions on Tax Law

Here are select March 2012 rulings of the Supreme Court of the Philippines on tax law:

National Internal Revenue Code; assessment; remedies. In case the Commissioner of Internal Revenue failed to act on the disputed assessment within the 180-day period from date of submission of documents, a taxpayer can either: (1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period; or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. These options are mutually exclusive and resort to one bars the application of the other. In arguing that the assessment became final and executory by the sole reason that petitioner failed to appeal the inaction of the Commissioner within 30 days after the 180-day reglementary period, respondent, in effect, limited the remedy of Lascona, as a taxpayer, under Section 228 of the National Internal Revenue Code to just one, that is – to appeal the inaction of the Commissioner on its protested assessment after the lapse of the 180-day period. This is incorrect. The word “decisions” in paragraph 1, Section 7 of Republic Act No. 1125, has been interpreted to mean the decisions of the Commissioner of Internal Revenue on the protest of the taxpayer against the assessments. Taxpayers cannot be left in quandary by the Commissioner’s inaction on the protested assessment.  The taxpayers must be informed informed of its action in order that the taxpayer should be able to take recourse to the tax court at the opportune time. Finally, as pointed out by the Court of Tax Appeals, to adopt the interpretation of the Commissioner will not only sanction inefficiency, but will likewise condone the Bureau of Internal Revenue’s inaction Lascona Land, Inc. vs. Commissioner of Internal Revenue, G.R. No. 171251, March 5, 2012.

National Internal Revenue Code; Omnibus Investments Code; Revenue Regulation No. 5-2000; tax credit certificate (TCC); assignment of TCC. Under the Omnibus Investments Code, tax credit certificates (TCC) are granted to entities registered with the Board of Investment (BOI) and are given for taxes and duties paid on raw materials used for the manufacture of their export products. A TCC may be used by the grantee assignee in the payment of its direct internal revenue tax liability. It may also be transferred to an assignee subject to the following conditions: 1) the TCC transfer is made with the prior approval of the Commissioner of Internal Revenue or his duly authorized representative; 2) the transfer of a TCC is limited to one transfer only; and 3) the transferee shall strictly use the TCC for the payment of the assignee’s direct internal revenue tax liability. The processing of a TCC is entrusted to a specialized agency called the “One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center” (“Center”). A TCC may be assigned through a Deed of Assignment, which the assignee submits to the Center for its approval. Upon approval of the deed, the Center will issue a DOF Tax Debit Memo (DOF-TDM), [38] which will be utilized by the assignee to pay the latter’s tax liabilities for a specified period. Upon surrender of the TCC and the DOF-TDM, the corresponding Authority to Accept Payment of Excise Taxes (ATAPET) will be issued by the Bureau of Internal Revenue (BIR) Collection Program Division and will be submitted to the issuing office of the BIR for acceptance by the Assistant Commissioner of Collection Service. This act of the BIR signifies its acceptance of the TCC as payment of the assignee’s excise taxes. Issued TCCs are immediately valid and effective and are not subject to a post-audit as a suspensive condition. A transferee in good faith and for value has the right to rely on the validity and effectivity of the TCCs that were assigned to it. Commissioner of Internal Revenue vs. Petron Corporation, G.R. No. 185568, March 21, 2012.

(Caren thanks Ma. Luisa D. Manalaysay for assisting in the preparation of this post.)