July 2013 Philippine Supreme Court Decisions on Tax Law

Here are select July 2013 rulings of the Supreme Court of the Philippines on tax law:

National Internal Revenue Code; value-added tax; claims for tax refund or credit. Before an administrative claim for refund or tax credit can be granted, there must be a showing that all documentary and evidentiary requirements are satisfied. The taxpayer claiming the refund must comply with the invoicing and accounting requirements mandated by the National Internal Revenue Tax Code, as well as the revenue regulations implementing them.

Thus, the change of taxpayer’s name to “Bonifacio GDE Water Corporation,” being unauthorized and without approval of the Securities and Exchange Commission, and the issuance of official receipts under that name which were presented to support taxpayer’s claim for tax refund, cannot be used to allow the grant of tax refund or issuance of a tax credit certificate in taxpayer’s favor. The absence of official receipts issued in its name is tantamount to noncompliance with the substantiation requirements provided by law. Bonifacio Water Corporation (formerly Bonifacio Vivendi Water Corporation) v. The Commissioner of Internal Revenue, G.R. No. 175142, July 22, 2013.

National Internal Revenue Code; value-added tax; capital goods; definition. “Capital goods or properties” refer to goods or properties with estimated useful life greater than one year and which are treated as depreciable assets under Section 29(f) of the National Internal Revenue Code, used directly or indirectly in the production or sale of taxable goods or services. Thus, payment for services relating to the construction of the capital assets were not considered capital assets considering, especially, that the same were not recorded in the taxpayer’s property, plant and equipment account. Bonifacio Water Corporation (formerly Bonifacio Vivendi Water Corporation) v. The Commissioner of Internal Revenue, G.R. No. 175142, July 22, 2013.

Factual findings of the Court of Tax Appeals; grave abuse of discretion. It is doctrinal that the Supreme Court will not lightly set aside the conclusions reached by the Court of Tax Appeals (CTA) which, by the very nature of its function of being dedicated exclusively to the resolution of tax problems, has accordingly developed an expertise on the subject unless there has been an abuse or improvident exercise of authority. In Barcelon, Roxas Securities, Inc. v. Commissioner of Internal Revenue, the Court held that it accords the findings of fact by the CTA with the highest respect. It ruled that factual findings made by the CTA can only be disturbed on appeal if they are supported by substantial evidence or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in every respect. Bonifacio Water Corporation (formerly Bonifacio Vivendi Water Corporation) v. The Commissioner of Internal Revenue, G.R. No. 175142, July 22, 2013.

(Caren thanks Grace Ann C. Lazaro for assisting in the preparation of this post.)

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