Legally Yours,  Taxation Law

Del Castillo Case Doctrines (Taxation Law)

Del Castillo Case Doctrines

Summaries of case doctrines penned by Justice Del Castillo.

Taxation Law

Angeles City v. Angeles Electric Corporation
G.R. No. 166134, June 29, 2010
The collection of local taxes may be subject to an injunction. Unlike the NIRC, the Local Tax Code does not contain any specific provision prohibiting courts from enjoining the collection of local taxes. Such statutory lapse or intent may have allowed preliminary injunction where local taxes are involved but cannot negate the procedural rules and requirements under Rule 58 of the Rules of Court.
Belle Corporation v. Commissioner of Internal Revenue
G.R. No. 181298, March 2, 2011The option to carry-over the excess income tax payments by the taxpayer under Section 76 of the NIRC is irrevocable. Once a taxpayer opted to carry-over its excess income tax payments, it can no longer seek refund of the unutilized excess input tax payments. However, taxpayers may apply the unutilized excess income tax payments as a tax credit until such has been fully applied.

Bureau of Internal Revenue v. Court of Appeals
G.R. No. 197590, November 24, 2014

The expenditure method is a method of reconstructing a taxpayer’s income by deducting the aggregate yearly expenditures from the declared yearly income. Thus, when the amount of the money that a taxpayer spends during a given year exceeds his reported or declared income and the source of such money is unexplained, it may be inferred that such expenditures represent unreported or undeclared income.

Bureau of Internal Revenue v. Manila Home Textile, Inc.
G.R. No. 203057, June 6, 2016

Tax exemptions are construed stictissimi juris. Taxation is the rule and tax exemption the exception. Tax exemptions should only be granted only by clear and unequivocal provision of law.

Commissioner of Internal Revenue v. Aichi Forging Company of Asia
G.R. No. 184823, October 6, 2010

Section 112(A) of the NIRC is the applicable provision in determining the start of the two-year period for claiming a refund/credit of unutilized input VAT. Sections 204(C) and 229 of the NIRC are applicable only to such instances of erroneous payment or illegal collection of internal revenue taxes.

Commissioner of Internal Revenue v. Far East Bank & Trust Company (now Bank of the Philippine Island)
G.R. No. 13854, March 15, 2010

A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the following requisites:

1) the claim must be filed with the CIR within the two-year period from the date of payment of the tax;
2) it must be shown on the return that the income received was declared as part of the gross income; and
3) the fact of withholding must be established by a copy of a statement duly issues by the payor to the payee is showing the amount paid and the amount of the tax withheld.

Commissioner of Internal Revenue v. La Tondena Distillers, Inc. (now Ginebra San Miguel)
G.R. No. 175188, July 15, 2015

Taxes must not be imposed beyond what the law expressly and clearly declares. Tax laws must be construed strictly against the State and liberally in favor of the taxpayer.

Commissioner of Internal Revenue v. SM Prime Holdings
G.R. No. 183505, February 26, 2010

Section 108 of the NIRC is not exhaustive. Among those included in the enumeration is the “lease of motion picture, films, tapes, and discs”. This, however, is not the same as showing or exhibition of motion pictures or films. When the intent of the law is not apparent, legislative intent is looked into. In this case, the legislature never intended operators or proprietors of cinema/theater houses to be covered by VAT.

Commissioner of Internal Revenue v. Smart Communication
G.R. Nos. 179045-46, August 25, 2010

The person entitled to claim a tax refund is the taxpayer. However, in case the taxpayer does not file a claim for refund, the withholding agent may file the claim.

A withholding agent has a legal right to file a claim for refund for two reasons;
1) he is considered a “taxpayer” under the NIRC as he is personally liable for the withholding tax as well as deficiency assessments, surcharges, and penalties; and
2) as an agent of the taxpayer, his authority to file the necessary income tax return and to remit the tax withheld to the government impliedly includes the authority to file a claim for refund and to bring an action for recovery of such claim.

Commissioner of Internal Revenue v. Toledo Power Company
G.R. No. 196415, December 2, 2015

As a rule, taxes cannot be subject to compensation because the government and the taxpayer are not creditors and debtors of each other. However, there have been several cases where the determination of the taxpayer’s liability in a refund case is allowed permitting the offsetting of taxes.

Dumaguete Cathedral Credit Cooperative (DCCO) v. Commissioner of Internal Revenue
G.R. No. 182722, January 22, 2010

The State extends all forms of assistance to cooperatives, as a policy declared under Article 2 of RA 6938. One of such assistance is providing cooperatives a preferential tax treatment and this extends to the members of the cooperatives. Although the tax exemption only mentions cooperatives, this should be construed to include the members, pursuant to Article 126 of RA 6938.

Fort Bonifacio Development Corp. v. Commissioner of Internal Revenue
G.R. No. 173425, September 4, 2012

Prior payment of taxes is not required to avail of the transitional input tax because it is not a tax refund per se but a tax credit. Tax refund is the money that a taxpayer overpaid and is thus returned by the taxing authority. Tax credit, on the other hand, is an amount subtracted directly from one’s total tax liability. Thus, unlike a tax refund, prior payment of taxes is not a prerequisite to avail of a tax credit.

Silicon Philippines, Inc. v. Commissioner of Internal Revenue
G.R. No. 172378, January 17, 2011

In a claim for credit or refund of input VAT attributable to zero-rated sales, Section 112 (A) of the NIRC lays down four requisites, to wit:

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 taxable quarter when such sales were made; and
4) the creditable input tax due or paid must be attributed to such sales (except transitional input tax) to the extent that such input tax has not been applied against the output tax.

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