G.R. No.

170257               September 7, 2011

RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
PONENTE: MENDOZA, J.:

FACTS:

January 23, 1997, RCBC executed 2 waivers of Defense of Prescription.  Under the
statute of limitation of the NIRC covering the Internal Revenue Taxes due for 1994 and
1995 extending the assessment up to Dec. 31, 2000.   January 27, 2000: RCBC
received a formal letter of demand together with assessment notices for deficiency
taxes.  RCBC filed a Protest and then, a Petition for Review before the CTA pursuant to
Sec. 228 of the 1997 Tax Code.
Dec. 6, 2000: It again received a letter of demand which drastically reduced the
deficiency tax except from the onshore tax and document stamp tax (DST). RCBC
argued the validity of the waivers for not being signed and for the onshore tax, it should
not be primarily liable since it is only a withholding agent. CTA terminated the
assessment for other deficiencies except for the FCDU shore tax and DST charging
20% deficiency tax.  Being denied in CTA en banc, it raised the matter to the Supreme
Court.  While the case is pending, the DST deficiency was paid after the BIR approved
its application for abatement.

Issue:
Wether RCBC as payee bank can be held liable for deficiency on shore tax which is
mandatory by law to be collected at source in the form of a final withholding tax.

Ruling:
Petition is denied.  As held in Chamber of Real Estate and Builder's Association Inc. v.
Executive Sec., the purpose of the withholding tax system are:

to provide the taxpayer with a convenient way of paying his tax liability
to ensure the collection of tax
to improve the governments cashflow.
Under the withholding tax system, the payor is the taxpayer upon whom the tax is
imposed, while the withholding agent simply acts as an agent or a collector of the
government to ensure the collection of taxes The liability of the withholding agent is
independent from that of the taxpayer.  The former cannot be made liable for the tax
due because it is the latter who earned the income subject to withholding tax.  The
withholding agent is liable only insofar as he failed to perform his duty to withhold the
tax and remit the same to the government. The liability for the tax, however, remains
with the taxpayer because the gain was realized and received by him. RCBC cannot
evade its liability for FCDU Onshore Tax by shifting the blame on the payor-borrower as
the withholding agent.   The CTA, as a specialized court dedicated exclusively to the
study and resolution of tax problems, has developed an expertise on the subject of
taxation and shall be accorded the highest respect and shall be presumed valid, in the
absence of any clear and convincing proof to the contrary

G.R. No. 153866             February 11, 2005

COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
SEAGATE TECHNOLOGY (PHILIPPINES), respondent.
PONENTE: PANGANIBAN, J.:

FACTS:
A VAT-registered enterprise, STP has principal office address at the new Cebu
Township One, Special Economic Zone, Barangay Cantao-an, Naga, Cebu. STP
is registered with the Philippine Export Zone Authority (PEZA) and certified to engage in
the manufacture of recording components primarily used in computers for export. VAT
returns were filed for the period 1 April 1998 to 30 June 1999. With supporting
documents, a claim for refund of VAT input taxes in the amount of 28 million pesos
(inclusive of the 12-million VAT input taxes subject of this Petition for Review) was filed
on 4 October 1999. CIR did not act promptly upon STP's claim so the latter elevated the
case to the CTA for review in order to toll the running of the two-year prescriptive
period. On appeal, CIR asserted that by virtue of the PEZA registration alone of STP,
the latter is not subject to the VAT. According to CIR, STP's sales transactions intended
for export are not exempt.

Issue:
Is STP entitled to refund or tax credit for puchases?

Ruling:
Yes, STP is entitled to refund or tax credit

As a PEZA-registered enterprise within a special economic zone, STP is entitled to the

fiscal incentives and benefit provided for in either PD 66 or EO 226. It shall, moreover,
enjoy all privileges, benefits, advantages or exemptions under both Republic Act Nos.
(RA) 7227 and 7844. Its sales transactions intended for export may not be exempt, but
like its purchase transactions, they are zero-rated. No prior application for the effective
zero rating of its transactions is necessary. Being VAT-registered and having
satisfactorily complied with all the requisites for claiming a tax refund of or credit for the
input VAT paid on capital goods purchased, STP is entitled to such VAT refund or
credit. STP, which as an entity is exempt, is different from its transactions which are not
exempt. The end result, however, is that it is not subject to the VAT. The non-taxability
of transactions that are otherwise taxable is merely a necessary incident to the tax
exemption conferred by law upon it as an entity, not upon the transactions themselves.

G.R. No. L-19201             June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner,
vs.
The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX
APPEALS, respondents.
Hilado and Hilado for petitioner.
Office of the Solicitor General for respondents.
PONENTE: PAREDES, J.:

FACTS:

M.B. Estate, Inc. donated P10,000.00 in cash to the parish priest of Victorias, Negros
Occidental, for the construction of a new Catholic Church in the locality. The total
amount was actually spent for the purpose intended. A year later, M.B. Estate, Inc., filed
the donor's gift tax return. CIR issued an assessment for donee's gift tax against the
parish, of which petitioner was the priest. Petitioner filed a protest which was denied by
the CIR. He then filed an appeal with the CTA citing that he was not the parish priest at
the time of donation, that there is no legal entity or juridical person known as the
"Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the
donee's gift tax and that assessment of the gift tax is unconstitutional. 
The CTA denied the appeal thus this case.

Issue:
Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the
Parish priest at the time of donation, Catholic Parish priest of Victorias did not have
juridical personality as the constitutional exemption for religious purpose is valid. 
 Ruling:
Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of
the Constitution contemplates exemption only from payment of taxes assessed on such
properties as Property taxes contradistinguished from Excise taxes The imposition of
the gift tax on the property used for religious purpose is not a violation of
the Constitution. A gift tax is not a property by way of gift inter vivos.

The head of the Diocese and not the parish priest is the real party in interest in the
imposition of the donee's tax on the property donated to the church for religious
purpose.

G.R. No. 204142               November 19, 2014

HONDA CARS PHILIPPINES, INC., Petitioner,
vs.
HONDA CARS TECHNICAL SPECIALIST AND SUPERVISORS
UNION, Respondent.
Ponente: BRION, J.:
Facts:
On December 8, 2006, petitioner Honda Cars Philippines, Inc., (company) and
respondent Honda Cars Technical Specialists and Supervisory Union (union), the
exclusive collective bargaining representative of the company’s supervisors and
technical specialists, entered into a collective bargaining agreement (CBA) effective
April 1, 2006 to March 31, 2011. Prior to April 1, 2005, the union members were
receiving a transportation allowance of 3,300.00 a month. On September 3, 2005, the
company and the union entered into a Memorandum of Agreement (MOA) converting
the transportation allowance into a monthly gasoline allowance starting at 125 liters
effective April 1,2005. The allowance answers for the gasoline consumed by the union
members for official business purposes and for home to office travel and vice-versa.
The company claimed that the grant of the gasoline allowance is tied up to a similar
company policy for managers and assistant vice-presidents (AVPs), which provides that
in the event the amount of gasoline is not fully consumed, the gasoline not used may be
converted into cash, subject to whatever tax may be applicable. Since the cash
conversion is paid in the monthly payroll as an excess gas allowance, the company
considers the amount as part of the managers’ and AVPs’ compensation that is subject
to income tax on compensation. Accordingly, the company deducted from the union
members salaries the withholding tax corresponding to the conversion to cash of their
unused gasoline allowance. The union, on the other hand, argued that the gasoline
allowance for its members is a "negotiated item" under Article XV, Section 15 of the new
CBA on fringe benefits. It thus opposed the company’s practice of treating the gasoline
allowance that, when converted into cash, is considered as compensation income that
is subject to withholding tax. The disagreement between the company and the union on
the matter resulted in a grievance which they referred to the CBA grievance procedure
for resolution. As it remained unsettled there, they submitted the issue to a panel of
voluntary arbitrators as required by the CBA.

Issue:
whether the cash conversion of the gasoline allowance shall be subject to fringe benefit
tax or the graduated income tax rate on compensation; and whether the company
wrongfully withheld income tax on the converted gas allowance.
Ruling:
Under paragraph 1, Section 4 of the NIRC, the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the NIRC and other tax laws, subject to review
by the Secretary of Finance. Consequently, if the company and/or the union desire/s to
seek clarification of these issues, it/they should have requested for a tax ruling  from the
Bureau of Internal Revenue (BIR). Any revocation, modification or reversal of the CIR’s
ruling shall not be given retroactive application if the revocation, modification or reversal
will be prejudicial to the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the BIR;
(b) Where the facts subsequently gathered by the BIR are materially different from the
facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
On the other hand, if the union disputes the withholding of tax and desires a refund of
the withheld tax, it should have filed an administrative claim for refund with the CIR.
Paragraph 2, Section 4 of the NIRC expressly vests the CIR original jurisdiction over
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other tax matters. The union has no cause of action against the company
.Under the withholding tax system, the employer as the withholding agent acts as both
the government and the taxpayer’s agent. Except in the case of a minimum wage
earner, every employer has the duty to deduct and withhold upon the employee’s wages
a tax determined in accordance with the rules and regulations to be prescribed by the
Secretary of Finance, upon the CIR’s recommendation. As the Government’s agent, the
employer collects tax and serves as the payee by fiction of law. As the employee’s
agent, the employer files the necessary income tax return and remits the tax to the
Government. Based on these considerations, we hold that the union has no cause of
action against the company. The company merely performed its statutory duty to
withhold tax based on its interpretation of the NIRC, albeit that interpretation may later
be found to be erroneous. The employer did not violate the employee's right by the
mere act of withholding the tax that may be due the government. Moreover, the NIRC
only holds the withholding agent personally liable for the tax arising from the breach of
his legal duty to withhold, as distinguished from his duty to pay tax. Under Section 79
(B) of the NIRC, if the tax required to be deducted and withheld is not collected from the
employer, the employer shall not be relieved from liability for any penalty or addition to
the unwithheld tax. Thus, if the BIR illegally or erroneously collected tax, the recourse of
the taxpayer, and in proper cases, the withholding agent, is against the BIR, and not
against the withholding agent. The union's cause of action for the refund or non-
withholding of tax is against the taxing authority, and not against the employer. Section
229 of the NIRC provides: Sec. 229. Recovery of Tax Erroneously or Illegally Collected.
- No suit or proceeding shall be maintained in any court for the recovery of any national
internal revenue tax hereafter alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected without authority, or of any
sum alleged to have been excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the Commissioner; but such suit or
proceeding may be maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.