tax1 compilation of cases

8/10/2019 TAX1 Compilation of Cases

1/3

PHILEX MINING CORPORATION, vs. COMMISSIONER OF INTERNAL

REVENUE G.R. No. 125704 August 28, 1998

FACTS:

On August 5, 1992, the BIR sent a letter to Philex asking it to settle its taxliabilities for the 2nd, 3rd and 4th quarter of 1991 as well as the 1st and 2nd quarter

of 1992 in the total amount of P123,821.982. Philex protested the demand for

payment of the tax liabilities stating that it has pending claims for VAT inputcredit/refund for the taxes it paid for the years 1989 to 1991 in the amount ofP119,977,037.02 plus interest.

Therefore these claims for tax credit/refund should be applied against the taxliabilities. BIR denied the position of Philex. In its letter, it stated that since these

pending claims have not yet been established or determined with certainty, it

follows that no legal compensation can take place.

ISSUE:

Whether or not taxes could be the subject of set-off or legal compensation.

RULING:

No. Taxes cannot be subject to compensation for the simple reason that thegovernment and the taxpayer are not creditors and debtors of each other. Claims

for taxes are neither debts nor contracts. There is a material distinction between atax and debt. Debts are due to the Government in its corporate capacity, while

taxes are due to the Government in its sovereign capacity. Taxes are the lifebloodof the government and so should be collected without unnecessary hindrance.

Evidently, to countenance Philex's whimsical reason would render ineffective ourtax collection system. Too simplistic, it finds no support in law or in jurisprudence.

To be sure, we cannot allow Philex to refuse the payment of its tax liabilities on theground that it has a pending tax claim for refund or credit against the governmentwhich has not yet been granted.


2/3

ATLAS CONSOLIDATED MINING AND DEVELOPMENT

CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.No. 159490, February 18, 2008

FACTS:

On September 20, 1993, Atlas applied with the BIR for the issuance of a tax

credit certificate or refund under Section 106(b) of the Tax Code. The certificatewould represent the VAT it paid for the first quarter of 1993 in the amount of PhP

7,907,662.53, which corresponded to the input taxes not applied against any outputVAT.

On February 22, 1995, Atlas then filed with the CTA and on October 13,

1997, the CTA rendered a Decision against Atlas. The CTA held that Atlas failedto present sufficient evidence to warrant the grant of tax credit or refund for the

alleged input taxes paid by Atlas. It found that the documents submitted by Atlas

did not comply with Revenue Regulation No. 3-88. Atlas timely filed its Motionfor Reconsideration of the above decision contending that it relied on Sec. 106 ofthe Tax Code which merely required proof that the foreign exchange proceeds has

been accounted for in accordance with the regulations of the Central Bank of the

Philippines (CBP). Consequently, Atlas asserted that the documents it presented,coupled with the testimony of its Accounting and Finance Manager, sufficiently

proved its case. The Motion for Reconsideration was denied.Atlas appealed and the CA denied and dismissed Atlas petition on the

ground of insufficiency of evidence to support Atlas action for tax credit or

refund.

ISSUE:

Whether or not Atlas has sufficiently proven entitlement to a tax credit orrefund.

RULING:No. The Rules of Court, which is suppletory in quasi-judicial proceedings,

particularly Sec. 349 of Rule 132, Revised Rules on Evidence, is clear that no

evidence which has not been formally offered shall be considered. Thus, where the

pertinent invoices or receipts purportedly evidencing the VAT paid by Atlas werenot submitted, the courts a quo evidently could not determine the veracity of the

input VAT Atlas has paid. Moreover, when Atlas likewise failed to submit

pertinent export documents to prove actual export sales with due certification fromaccredited banks on the export proceeds in foreign currency with the corresponding

conversion rate into Philippine currency, the courts a quo likewise could notdetermine the veracity of the export sales as indicated in Atlas amended VAT

return.


3/3

MELECIO R. DOMINGO, as Commissioner of Internal Revenue vs. HON.

LORENZO C. GARLITOS, in his capacity as Judge of the Court of First

Instance of Leyte, and SIMEONA K. PRICE, as Administratrix of theIntestate Estate of the late Walter Scott Price, G.R. No. L-18994, June 29, 1963

FACTS:This is a petition for certiorari and mandamus against the judge of CFI of

Leyte, Ron. Garlitos, seeking to annul certain orders of the court and for an orderin this Court directing the respondent court below to execute the judgment in favor

of the Government against the estate of Walter Scott Price for internal revenue

taxes. In Domingo vs. Moscoso, the Supreme Court declared as final and executorythe order of the lower court for the payment of estate and inheritance taxes, charges

and penalties amounting to Php 40,058.55 by the estate of the of the late WalterPrice. The petitioner for execution filed by the fiscal was denied by the lower

court. The court held that the execution is unjustified as the Government isindebted to the estate for Php 262, 200 and ordered the amount of inheritance taxes

can be deducted from the Governments indebtedness to the estate.

ISSUE:

Whether or not a tax and a debt may be compensated.

RULING:

The court having jurisdiction of the Estate had found that the claim of the

Estate against the government has been recognized and the amount has already

been appropriated by a corresponding law, Rep. Act No. 2700. Both the claim of the

Government for inheritance taxes and the claim of the intestate for services rendered

have already become overdue and demandable as well as fully liquidated.Compensation takes place by operation of law and both debts are extinguished to theconcurrent amount. Therefore the petitioner has no clear right to execute the judgment for taxes

against the estate of the deceased Walter Price.

tax1 compilation of cases

Documents