Income Tax case digest 2

G.R. No. 175410               November 12, 2014

SMI-ED PHILIPPINES TECHNOLOGY, INC., Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

D E C I S I O N

LEONEN, J.:

In an action for the refund of taxes allegedly erroneously paid, the Court of Tax Appeals may determine whether there are taxes that should have been paid in lieu of the taxes paid. Determining the proper category of tax that should have been paid is not an assessment. It is incidental to determining whether there should be a refund.

A Philippine Economic Zone Authority (PEZA)-registered corporation that has never commenced operations may not avail the tax incentives and preferential rates given to PEZA-registered enterprises. Such corporation is subject to ordinary tax rates under the National Internal Revenue Code of 1997.

FACTS: SMI-Ed Philippines is a PEZA-registered corporation authorized “to engage in the business of manufacturing ultra high-density microprocessor unit package.”6

SMI-Ed Philippines “failed to commence operations.”. On August 1, 2000, it sold its buildings and some of its installed machineries and equipment to Ibiden Philippines, Inc., another PEZA-registered enterprise, for ¥2,100,000,000.00 (₱893,550,000.00). SMI-Ed Philippines was dissolved on November 30, 2000. In its quarterly income tax return for year 2000, SMI-Ed Philippines subjected the entire gross sales of itsproperties to 5% final tax on PEZA registered corporations. SMI-Ed Philippines paid taxes amounting to ₱44,677,500.00.

On Feb 2, 2001, SMI-Ed Philippines filed an administrative claim for the refund of ₱44,677,500.00 with the Bureau of Internal Revenue (BIR). SMIEd Philippines alleged that the amount was erroneously paid. It also indicated the refundable amount in its final income tax return filed on March 1, 2001. It also alleged that it incurred a net loss of ₱2,233,464,538.00.

The BIR – did not act on SMI-Ed Philippines’ claim, which prompted the latter to file a petition for review before the Court of Tax Appeals on September 9, 2002.

PETITIONER ARGUMENTS:

  • Court of Tax Appeals Second Division erroneously assessed the 6% capital gains tax on the sale of SMI-Ed Philippines’ equipment, machineries, and buildings. Section 27(D)(5) of the National Internal Revenue Code of 1997 is clear that the 6% capital gains tax on domestic corporations applies only on the sale of lands and buildings and not to machineries and equipment.

 

  •  
  • It also argued that the Court of Tax Appeals Second Division cannot make an assessment at the first instance. Its jurisdiction to make an assessment since its jurisdiction, with respect to the decisions of respondent, is merely appellate.
  • Even if the Court of Tax Appeals Second Division has such power, the period to make an assessment had already prescribed under Section 203 of the National Internal Revenue Code of 1997 since the return for the erroneous payment was filed on September 13, 2000. This is more than three (3) years from the last day prescribed by law for the filing of the return.

The Court of Tax Appeals Second Division denied SMI-Ed Philippines’ claim for refund in the decision dated December 29, 2004, WITH THE findings:

    • The court found that SMI-Ed Philippines’ administrative claim for refund and the petition for review with the Court of Tax Appeals were filed within the two-year prescriptive period.
  • However, fiscal incentives given to PEZA-registered enterprises may be availed only by PEZA-registered enterprises that had already commenced operations. Since SMI-Ed Philippines had not commenced operations, it was not entitled to the incentives of either the income tax holiday or the 5% preferential tax rate. Payment of the 5% preferential tax amounting to ₱44,677,500.00 was erroneous. (so erroneous ang self-assessment ni SMI)

 

    • After finding that SMI-Ed Philippines sold properties that were capital assets under Section 39(A)(1) of the National Internal Revenue Code of 1997, the Court of Tax Appeals Second Division subjected the sale of SMIEd Philippines’ assets to 6% capital gains tax under Section 27(D)(5) of the same Code and Section 2 of Revenue Regulations No. 8-98. It was found liable for capital gains tax amounting to ₱53,613,000.00. Therefore, SMIEd Philippines must still pay the balance of ₱8,935,500.00 as deficiency tax “which respondent should perhaps look into.
  • In its comment, respondent argued that the Court of Tax Appeals’ determination of petitioner’s liability for capital gains tax was not an assessment.

 

  • Such determination was necessary to settle the question regarding the tax consequence of the sale of the properties. This is clearly within the Court of Tax Appeals’ jurisdiction under Section 7 of Republic Act No. 9282.42 Respondent also argued that “petitioner failed to justify its claim for refund.”

CTA EN BANC- AFFIRMED CTA DIVISION’S RULING

SMI-Ed Philippines filed a petition for review before this court on December 27, 2006, praying for the grant of its claim for refund and the reversal of the Court of Tax Appeals En Banc’s decision.

ISSUES:

  1. The honorable CTA En Banc grievously erred and acted beyond its jurisdiction when it assessed for deficiency tax in the first instance.
  2. Even assuming that the honorable CTA En Banc has the right to make an assessment against the petitioner-appellant, it grievously erred in finding that the machineries and equipment sold by the petitioner-appellant is subject to the six percent (6%) capital gains tax under Section 27(D)(5) of the Tax Code.33

HELD:

  1. Jurisdiction of the Court of Tax Appeals- there is jurisdiction

The term “assessment” refers to the determination of amounts due from a person obligated to make payments. In the context of national internal revenue collection, it refers the determination of the taxes due from a taxpayer under the National Internal Revenue Code of 1997.

The power and duty to assess national internal revenue taxes are lodged with the BIR.

Section 2 of the National Internal Revenue Code of 1997 provides:

SEC. 2. Powers and Duties of the Bureau of Internal Revenue. – The Bureau of Internal Revenue shall be under the supervision and control of the Department of Finance and its powers and duties shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.

The Bureau shall give effect to and administer the supervisory and police powers conferred to it by this Code or other laws. (Emphasis supplied) The BIR is not mandated to make an assessment relative to every return filed with it. Tax returns filed with the BIR enjoy the presumption that these are in accordance with the law. Tax returns are also presumed correct since these are filed under the penalty of perjury.. Generally, however, the BIR assesses taxes when it appears, after a return had been filed, that the taxes paid were incorrect or false, or fraudulent. The BIR also assesses taxes when taxes are due but no return is filed.

Thus:

SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement.–

(A) Examination of Returns and Determination of Tax Due. – After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative.

The Court of Tax Appeals has no power to make an assessment at the first instance. On matters such as tax collection, tax refund, and others related to the national internal revenue taxes, the Court of Tax Appeals’ jurisdiction is appellate in nature.

Thus, the BIR first has to make an assessment of the taxpayer’s liabilities. When the BIR makes the assessment, the taxpayer is allowed to dispute that assessment before the BIR. If the BIR issues a decision that is unfavorable to the taxpayer or if the BIR fails to act on a dispute brought by the taxpayer, the BIR’s decision or inaction may be brought on appeal to the Court of Tax Appeals. The Court of Tax Appeals then acquires jurisdiction over the case.

When the BIR’s unfavorable decision is brought on appeal to the Court of Tax Appeals, the Court of Tax Appeals reviews the correctness of the BIR’s assessment and decision. In reviewing the BIR’s assessment and decision, the Court of Tax Appeals had to make its own determination of the taxpayer’s tax liabilities. The Court of Tax Appeals may not make such determination before the BIR makes its assessment and before a dispute involving such assessment is brought to the Court of Tax Appeals on appeal.

The Court of Tax Appeals’ jurisdiction is not limited to cases when the BIR makes an assessment or a decision unfavorable to the taxpayer. Because Republic Act No. 1125 also vests the Court of Tax Appeals with jurisdiction over the BIR’s inaction on a taxpayer’s refund claim, there may be instances when the Court of Tax Appeals has to take cognizance of cases that have nothing to do with the BIR’s assessments or decisions.

WHEN THE BIR FAILS TO ACT ON A CLAIM FOR REFUND OF VOLUNTARILY BUT MISTAKENLY PAID TAXES, FOR EXAMPLE, THERE IS NO DECISION OR ASSESSMENT INVOLVED.

Taxes are generally self-assessed. They are initially computed and voluntarily paid by the taxpayer. The government does not have to demand it. If the tax payments are correct, the BIR need not make an assessment. The self-assessing and voluntarily paying taxpayer, however, may later find that he or she has erroneously paid taxes. Erroneously paid taxes may come in the form of amounts that should not have been paid. Thus, a taxpayer may find that he or she has paid more than the amount that should have been paid under the law. Erroneously paid taxes may also come in the form of tax payments for the wrong category of tax. Thus, a taxpayer may find that he or she has paid a certain kind of tax that he or she is not subject to.

In these instances, the taxpayer may ask for a refund. If the BIR fails to act on the request for refund, the taxpayer may bring the matter to the Court of Tax Appeals.

From the taxpayer’s self-assessment and tax payment up to his or her request for refund and the BIR’s inaction, the BIR’s participation is limited to the receipt of the taxpayer’s payment. The BIR does not make an assessment; the BIR issues no decision; and there is no dispute yet involved. Since there is no BIR assessment yet, the Court of Tax Appeals may not determine the amount of taxes due from the taxpayer. There is also no decision yet to review. However, there was inaction on the part of the BIR. That inaction is within the Court of Tax Appeals’ jurisdiction.

In other words, the Court of Tax Appeals may acquire jurisdiction over cases even if they do not involve BIR assessments or decisions.

In this case, the Court of Tax Appeals’ jurisdiction was acquired because petitioner brought the case on appeal before the Court of Tax Appeals after the BIR had failed to act on petitioner’s claim for refund of erroneously paid taxes. The Court of Tax Appeals did not acquire jurisdiction as a result of a disputed assessment of a BIR decision.

Petitioner argued that the Court of Tax Appeals had no jurisdiction to subject it to 6% capital gains tax or other taxes at the first instance. The Court of Tax Appeals has no power to make an assessment.

As earlier established, the Court of Tax Appeals has no assessment powers. In stating that petitioner’s transactions are subject to capital gains tax, however, the Court of Tax Appeals was not making an assessment. It was merely determining the proper category of tax that petitioner should have paid, in view of its claim that it erroneously imposed upon itself and paid the 5% final tax imposed upon PEZA-registered enterprises.

The determination of the proper category of tax that petitioner should have paid is an incidental matter necessary for the resolution of the principal issue, which is whether petitioner was entitled to a refund.

The issue of petitioner’s claim for tax refund is intertwined with the issue of the proper taxes that are due from petitioner. A claim for tax refund carries the assumption that the tax returns filed were correct.55 If the tax return filed was not proper, the correctness of the amount paid and, therefore, the claim for refund become questionable. In that case, the court must determine if a taxpayer claiming refund of erroneously paid taxes is more properly liable for taxes other than that paid.

If the taxpayer is found liable for taxes other than the erroneously paid 5% final tax, the amount of the taxpayer’s liability should be computed and deducted from the refundable amount.

Any liability in excess of the refundable amount, however, may not be collected in a case involving solely the issue of the taxpayer’s entitlement to refund. The question of tax deficiencyis distinct and unrelated to the question of petitioner’s entitlement to refund. Tax deficiencies should be subject to assessment procedures and the rules of prescription. The court cannot be expected to perform the BIR’s duties whenever it fails to do so either through neglect or oversight. Neither can court processes be used as a tool to circumvent laws protecting the rights of taxpayers.

Petitioner’s entitlement to benefits given to PEZA-registered enterprises

Petitioner is not entitled to benefits given to PEZA-registered enterprises, including the 5% preferential tax rate under Republic Act No. 7916 or the Special Economic Zone Act of 1995. This is because it never began its operation.

Essentially, the purpose of Republic Act No. 7916 is to promote development and encourage investments and business activities that will generate employment.59 Giving fiscal incentives to businesses is one of the means devised to achieve this purpose. It comes with the expectation that persons who will avail these incentives will contribute to the purpose’s achievement. Hence, to avail the fiscal incentives under Republic Act No. 7916, the law did not say that mere PEZA registration is sufficient.

Republic Act No. 7916 or The Special Economic Zone Act of 1995 provides that the fiscal incentives and the 5% preferential tax rate are available only to businesses operating within the Ecozone.60 A business is considered in operation when it starts entering into commercial transactions that are not merely incidental to but are related to the purposes of the business. It is similar to the definition of “doing business,” as applied in actions involving the right of foreign corporations to maintain court actions:

“a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization” Petitioner never started its operations since its registration on June 29, 199863 because of the Asian financial crisis.64 Petitioner admitted this.65 Therefore, it cannot avail the incentives provided under Republic Act No. 7916. It is not entitled to the preferential tax rate of 5% on gross income in lieu of all taxes. Because petitioner is not entitled to a preferential rate, it is subject to ordinary tax rates under the National Internal Revenue Code of 1997.

 

Imposition of capital gains tax

The Court of Tax Appeals found that petitioner’s sale of its properties is subject to capital gains tax.

For petitioner’s properties to be subjected to capital gains tax, the properties must form part of petitioner’s capital assets.

Section 39(A)(1) of the National Internal Revenue Code of 1997 defines “capital assets”:

SEC. 39. Capital Gains and Losses. –

(A) Definitions.- As used in this Title –

(1) Capital Assets.- the term ‘capital assets’ means property held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade orbusiness, or property used in the trade or business, of a character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34; or real property used in trade or business of the taxpayer. (Emphasis supplied) Thus, “capital assets” refers to taxpayer’s property that is NOT any of the following:

  1. Stock in trade;
  2. Property that should be included inthe taxpayer’s inventory at the close of the taxable year;
  3. Property held for sale in the ordinary course of the taxpayer’s business;
  4. Depreciable property used in the trade or business; and
  5. Real property used in the trade or business.

The properties involved in this case include petitioner’s buildings, equipment, and machineries. They are not among the exclusions enumerated in Section 39(A)(1) of the National Internal Revenue Code of 1997. None of the properties were used in petitioner’s trade or ordinary course of business because petitioner never commenced operations. They were not part of the inventory. None of themwere stocks in trade. Based on the definition of capital assets under Section 39 of the National Internal Revenue Code of 1997, they are capital assets.

Respondent insists that since petitioner’s machineries and equipment are classified as capital assets, their sales should be subject to capital gains tax. Respondent is mistaken.

Capital gains of individuals and corporations from the sale of real properties are taxed differently. Individuals are taxed on capital gains from sale of all real properties located in the Philippines and classified as capital assets. Therefore, only the presumed gain from the sale of petitioner’s land and/or building may be subjected to the 6% capital gains tax. The income from the sale of petitioner’s machineries and equipment is subject to the provisions on normal corporate income tax.

To determine, therefore, if petitioner is entitled to refund, the amount of capital gains tax for the sold land and/or building of petitioner and the amount of corporate income tax for the sale of petitioner’s machineries and equipment should be deducted from the total final tax paid. Petitioner indicated, however, in its March 1, 2001 income tax return for the 11-month period ending on November 30, 2000 that it suffered a net loss of ₱2,233,464,538.00.69

The BIR did not make a deficiency assessment for this declaration. Neither did the BIR dispute this statement in its pleadings filed before this court. There is, therefore, no reason todoubt the truth that petitioner indeed suffered a net loss in 2000.

Since petitioner had not started its operations, it was also not subject to the minimum corporate income tax of 2% on gross income.70 Therefore, petitioner is not liable for any income tax.

 

Prescription

Section 203 of the National Internal Revenue Code of 1997 provides that as a general rule, the BIR has three (3) years from the last day prescribed by law for the filing of a return to make an assessment. If the return is filed beyond the last day prescribed by law for filing, the three-year period shall run from the actual date of filing. This court said that the prescriptive period to make an assessment of internal revenue taxes is provided “primarily to safeguard the interests of taxpayers from unreasonable investigation.” Accordingly, the government must assess internal revenue taxes on time so as not to extend indefinitely the period of assessment and deprive the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of reasonable period of time.73

Rules derogating taxpayers’ right against prolonged and unscrupulous investigations are strictly construed against the government.74

The BIR had three years from the filing of petitioner’s final tax return in 2000 to assess petitioner’s taxes. Nothing stopped the BIR from making the correct assessment. The elevation of the refund claim with the Court of Tax Appeals was not a bar against the BIR’s exercise of its assessment powers.

The BIR, however, did not initiate any assessment for deficiency capital gains tax.78 Since more than a decade have lapsed from the filing of petitioner’s return, the BIR can no longer assess petitioner for deficiency capital gains taxes, if petitioner is later found to have capital gains tax liabilities in excess of the amount claimed for refund.

The Court of Tax Appeals should not be expected to perform the BIR’s duties of assessing and collecting taxes whenever the BIR, through neglect or oversight, fails to do so within the prescriptive period allowed by law.

WHEREFORE, the Court of Tax Appeals’ November 3, 2006 decision is SET ASIDE. The Bureau of Internal Revenue is ordered to refund petitioner SMI-Ed Philippines Technology, Inc. the amount of 5% final tax paid to the BIR, less the 6% capital gains tax on the sale of petitioner SMI-Ed Philippines Technology, Inc. ‘s land and building. In view of the lapse of the prescriptive period for assessment, any capital gains tax accrued from the sale of its land and building that is in excess of the 5% final tax paid to the Bureau of Internal Revenue may no longer be recovered from petitioner SMI-Ed Philippines Technology, Inc.

 

G.R. No. 211666, February 25, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Petitioners, v. ARLENE R. SORIANO, Respondent.

D E C I S I O N

PERALTA, J.:

FACTS:

On October 20, 2010, petitioner Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH), filed a Complaint3 for expropriation against respondent Arlene R. Soriano, the registered owner of a parcel of land. 4 In its Complaint, petitioner averred that pursuant to Republic Act (RA) No. 8974, otherwise known as �An Act to Facilitate the Acquisition of Right-Of-Way, Site or Location for National Government Infrastructure Projects and for other Purposes,� the property sought to be expropriated shall be used in implementing the construction of the North Luzon Expressway (NLEX)- Harbor Link Project (Segment 9) from NLEX to MacArthur Highway, Valenzuela City.

Petitioner duly deposited to the Acting Branch Clerk of Court the amount of P420,000.00 representing 100% of the zonal value of the subject property.

According to the RTC, the records of the case reveal that petitioner adduced evidence to show that the total amount deposited is just, fair, and equitable. Specifically, in its Position Paper, petitioner alleged that pursuant to a Certification issued by the Bureau of Internal Revenue (BIR), Revenue Region No. 5, the zonal value of the subject property in the amount of P2,100.00 per square meter is reasonable, fair, and just to compensate the defendant for the taking of her property in the total area of 200 square meters.

Records of this case show that the Land Bank Manager�s Check Nos. 0000016913 dated January 21, 2011 in the amount of Php400,000.00 and 0000017263 dated April 28, 2011 in the amount of Php20,000.00 issued by the Department of Public Works and Highways (DPWH) are already stale. Thus, the said Office is hereby directed to issue another Manager�s check. The court ordered to pay defendant Arlene R. Soriano the sum of Four Hundred Twenty Thousand Pesos (Php420,000.00) for the 200 square meters as fair, equitable, and just compensation with legal interest at 12% per annum from the taking of the possession of the property, subject to the payment of all unpaid real property taxes and other relevant taxes, if there be any..

Petitioner:

Petitioner maintains that if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value computed from the time the property is taken up to the time when compensation is actually paid or deposited with the court.14

ISSUE:
(tax related) BASED ON THE NATIONAL INTERNAL REVENUE CODE OF 1997 AND THE LOCAL GOVERNMENT CODE, IT IS RESPONDENT’S OBLIGATION TO PAY THE TRANSFER TAXES.

 

HELD: IT IS RESPONDENT’S OBLIGATION TO PAY THE TRANSFER TAXES.

AS TO CAPITAL GAINS TAX DUE ON THE SALE OF REAL PROPERTY:

Sections 24(D) and 56(A)(3) of the 1997 National Internal Revenue Code (NIRC), capital gains tax due on the sale of real property is a liability for the account of the seller, to wit:chanRoblesvirtualLawlibrary

Section 24. Income Tax Rates:

(D) Capital Gains from Sale of Real Property. �

(1) In General. � The provisions of Section 39(B) notwithstanding, a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: Provided, That the tax liability, if any, on gains from sales or other disposition of real property to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations shall be determined either under Section 24(A)or under this Subsection, at the option of the taxpayer.chanrobleslaw

x x x x

Section 56. Payment and Assessment of Income Tax for Individuals and Corporations. �

(A) Payment of Tax �

x x x x

(3) Payment of Capital Gains Tax. – The total amount of tax imposed and prescribed under Section 24 (c), 24(D), 27(E)(2), 28(A)(8)(c) and 28(B)(5)(c) shall be paid on the date the return prescribed therefor is filed by the person liable thereto: Provided, That if the seller submits proof of his intention to avail himself of the benefit of exemption of capital gains under existing special laws, no such payments shall be required : Provided, further, That in case of failure to qualify for exemption under such special laws and implementing rules and regulations, the tax due on the gains realized from the original transaction shall immediately become due and payable, subject to the penalties prescribed under applicable provisions of this Code: Provided, finally, That if the seller, having paid the tax, submits such proof of intent within six (6) months from the registration of the document transferring the real property, he shall be entitled to a refund of such tax upon verification of his compliance with the requirements for such exemption.

cralawlawlibrary
Thus, IT HAS BEEN HELD THAT SINCE CAPITAL GAINS IS A TAX ON PASSIVE INCOME, IT IS THE SELLER, NOT THE BUYER, WHO GENERALLY WOULD SHOULDER THE TAX.24

As far as the government is concerned, therefore, the capital gains tax remains a liability of the seller since it is a tax on the seller’s gain from the sale of the real estate.25cralawred

AS TO THE DOCUMENTARY STAMP TAX:

Petitioner cites Section 196 of the 1997 NIRC as its basis in saying that the documentary stamp tax is the liability of the seller, viz.:chanRoblesYet, a perusal of the provision cited above does not explicitly impute the obligation to pay the documentary stamp tax on the seller. In fact, according to the BIR, all the parties to a transaction are primarily liable for the documentary stamp tax, as provided by Section 2 of BIR Revenue Regulations No. 9-2000, which reads:26cralawred

SEC. 2. Nature of the Documentary Stamp Tax and Persons Liable for the Tax.

(a) In General.The documentary stamp taxes under Title VII of the Code is a tax on certain transactions. It is imposed against “the person making, signing, issuing, accepting, or transferring” the document or facility evidencing the aforesaid transactions. Thus, in general, it may be imposed on the transaction itself or upon the document underlying such act. Any of the parties thereto shall be liable for the full amount of the tax due: Provided, however, that as between themselves, the said parties may agree on who shall be liable or how they may share on the cost of the tax.

(b) Exception. – Whenever one of the parties to the taxable transaction is exempt from the tax imposed under Title VII of the Code, the other party thereto who is not exempt shall be the one directly liable for the tax.27cralawlawlibrary
As a general rule, therefore, any of the parties to a transaction shall be liable for the full amount of the documentary stamp tax due, unless they agree among themselves on who shall be liable for the same.

In this case, there is no agreement as to the party liable for the documentary stamp tax due on the sale of the land to be expropriated.� But while petitioner rejects any liability for the same, this Court must take note of petitioner�s Citizen�s Charter,28 which functions as a guide for the procedure to be taken by the DPWH in acquiring real property through expropriation under RA 8974.� The Citizens Charter, issued by petitioner DPWH itself on December 4, 2013, explicitly provides that the documentary stamp tax, transfer tax, and registration fee due on the transfer of the title of land in the name of the Republic shall be shouldered by the implementing agency of the DPWH, while the capital gains tax shall be paid by the affected property owner.29

Thus, while there is no specific agreement between petitioner and respondent, petitioner�s issuance of the Citizen�s Charter serves as its notice to the public as to the procedure it shall generally take in cases of expropriation under RA 8974. Accordingly, it will be rather unjust for this Court to blindly accede to petitioner�s vague rejection of liability in the face of its issuance of the Citizen�s Charter, which contains a clear and unequivocal assumption of accountability for the documentary stamp tax. Had petitioner provided this Court with more convincing basis, apart from a mere citation of an indefinite provision of the 1997 NIRC, showing that it should be respondent-seller who shall be liable for the documentary stamp tax due on the sale of the subject property, its rejection of the payment of the same could have been sustained.

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED.In addition, respondent Arlene R. Soriano is ORDERED to pay for the capital gains tax due on the transfer of the expropriated property, while the documentary stamp tax, transfer tax, and registration fee shall be for the account of petitioner.

 

 

 

 

SUPREME TRANSLINER, INC.,

– versus –

BPI FAMILY SAVINGS BANK, INC.

G.R. No. 165617 (February 25, 2011)

 

VILLARAMA, JR., J.:

 

This case involves the question of the correct redemption price payable to a mortgagee bank as purchaser of the property in a foreclosure sale.

 

 

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