Documente Academic
Documente Profesional
Documente Cultură
160756
March 9, 2010
Exempt
1.5%
3.0%
5.0%
taxable year.
(2) Carry Forward of Excess Minimum Tax. Any excess
of the [MCIT] over the normal income tax as computed
under Subsection (A) of this Section shall be carried
forward and credited against the normal income tax for
the three (3) immediately succeeding taxable years.
(3) Relief from the [MCIT] under certain conditions. The
Secretary of Finance is hereby authorized to suspend the
imposition of the [MCIT] on any corporation which suffers
losses on account of prolonged labor dispute, or because
of force majeure, or because of legitimate business
reverses.
The Secretary of Finance is hereby authorized to
promulgate, upon recommendation of the Commissioner,
the necessary rules and regulations that shall define the
terms and conditions under which he may suspend the
imposition of the [MCIT] in a meritorious case.
(4) Gross Income Defined. For purposes of applying
the [MCIT] provided under Subsection (E) hereof, the
term gross income shall mean gross sales less sales
returns, discounts and allowances and cost of goods
sold. "Cost of goods sold" shall include all business
expenses directly incurred to produce the merchandise
to bring them to their present location and use.
For trading or merchandising concern, "cost of goods sold" shall
include the invoice cost of the goods sold, plus import duties,
freight in transporting the goods to the place where the goods are
actually sold including insurance while the goods are in transit.
For a manufacturing concern, "cost of goods manufactured and
sold" shall include all costs of production of finished goods, such
as raw materials used, direct labor and manufacturing overhead,
freight cost, insurance premiums and other costs incurred to bring
the raw materials to the factory or warehouse.
In the case of taxpayers engaged in the sale of service, "gross
income" means gross receipts less sales returns, allowances,
discounts and cost of services. "Cost of services" shall mean all
direct costs and expenses necessarily incurred to provide the
services required by the customers and clients including (A)
salaries and employee benefits of personnel, consultants and
specialists directly rendering the service and (B) cost of facilities
directly utilized in providing the service such as depreciation or
rental of equipment used and cost of supplies: Provided, however,
that in the case of banks, "cost of services" shall include interest
expense.
On August 25, 1998, respondent Secretary of Finance
(Secretary), on the recommendation of the Commissioner of
Internal Revenue (CIR), promulgated RR 9-98 implementing
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Exempt
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1.5%
3.0%
5.0%
xxx
xxx
xxx
xxx
xxx
xxx
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xxx
Respondents aver that the first three requisites are absent in this
case. According to them, there is no actual case calling for the
exercise of judicial power and it is not yet ripe for adjudication
because
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CWT
a) Taxes withheld on certain
income payments are intended to
equal or at least approximate the
tax due of the payee on said
income.
Again, it is stressed that the CWT is creditable against the tax due
from the seller of the property at the end of the taxable year. The
seller will be able to claim a tax refund if its net income is less
than the taxes withheld. Nothing is taken that is not due so there
is no confiscation of property repugnant to the constitutional
guarantee of due process. More importantly, the due process
requirement applies to the power to tax.79 The CWT does not
impose new taxes nor does it increase taxes.80 It relates entirely
to the method and time of payment.
Petitioner protests that the refund remedy does not make the
CWT less burdensome because taxpayers have to wait years and
may even resort to litigation before they are granted a
refund.81 This argument is misleading. The practical problems
encountered in claiming a tax refund do not affect the
constitutionality and validity of the CWT as a method of collecting
the tax.1avvphi1
Petitioner complains that the amount withheld would have
otherwise been used by the enterprise to pay labor wages,
materials, cost of money and other expenses which can then save
the entity from having to obtain loans entailing considerable
interest expense. Petitioner also lists the expenses and pitfalls of
the trade which add to the burden of the realty industry: huge
investments and borrowings; long gestation period; sudden and
unpredictable interest rate surges; continually spiraling
development/construction costs; heavy taxes and prohibitive "upfront" regulatory fees from at least 20 government agencies.82
Petitioners lamentations will not support its attack on the
constitutionality of the CWT. Petitioners complaints are essentially
matters of policy best addressed to the executive and legislative
branches of the government. Besides, the CWT is applied only on
the amounts actually received or receivable by the real estate
entity. Sales on installment are taxed on a per-installment
basis.83 Petitioners desire to utilize for its operational and capital
expenses money earmarked for the payment of taxes may be a
practical business option but it is not a fundamental right which
can be demanded from the court or from the government.
No Violation of Equal Protection
Petitioner claims that the revenue regulations are violative of the
VITUG, J.:
These two consolidated special civil actions for prohibition
challenge, in G.R. No. 109289, the constitutionality of Republic
Act No. 7496, also commonly known as the Simplified Net Income
Taxation Scheme ("SNIT"), amending certain provisions of the
National
Internal
Revenue
Code
and,
in
G.R. No. 109446, the validity of Section 6, Revenue Regulations
No. 2-93, promulgated by public respondents pursuant to said
law.
Petitioners claim to be taxpayers adversely affected by the
continued implementation of the amendatory legislation.
In G.R. No. 109289, it is asserted that the enactment of Republic
Act
No. 7496 violates the following provisions of the Constitution:
Article VI, Section 26(1) Every bill passed by
the Congress shall embrace only one subject
which shall be expressed in the title thereof.
Article VI, Section 28(1) The rule of taxation
shall be uniform and equitable. The Congress
shall evolve a progressive system of taxation.
Article III, Section 1 No person shall be
deprived of . . . property without due process of
law, nor shall any person be denied the equal
protection of the laws.
In G.R. No. 109446, petitioners, assailing Section 6 of Revenue
Regulations No. 2-93, argue that public respondents have
The Court has given due course to both petitions. The parties, in
compliance with the Court's directive, have filed their respective
memoranda.
G.R. No. 109289
Petitioner contends that the title of House Bill No. 34314,
progenitor of Republic Act No. 7496, is a misnomer or, at least,
deficient for being merely entitled, "Simplified Net Income Taxation
Scheme
for
the
Self-Employed
and Professionals Engaged in the Practice of their Profession"
(Petition in G.R. No. 109289).
The full text of the title actually reads:
An Act Adopting the Simplified Net Income
Taxation Scheme For The Self-Employed and
Professionals Engaged In The Practice of Their
Profession, Amending Sections 21 and 29 of the
National Internal Revenue Code, as Amended.
The pertinent provisions of Sections 21 and 29, so referred to, of
the National Internal Revenue Code, as now amended, provide:
Sec. 21. Tax on citizens or residents.
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(f) Simplified Net Income Tax for the SelfEmployed and/or Professionals Engaged in the
Practice of Profession. A tax is hereby
imposed upon the taxable net income as
determined in Section 27 received during each
taxable year from all sources, other than income
covered by paragraphs (b), (c), (d) and (e) of
this section by every individual whether
a citizen of the Philippines or an alien residing in
the Philippines who is self-employed or
practices his profession herein, determined in
accordance with the following schedule:
Not over P10,000 3%
Over P10,000 P300 + 9%
but not over P30,000 of excess over P10,000
Over P30,000 P2,100 + 15%
but not over P120,00 of excess over P30,000
Over P120,000 P15,600 + 20%
but not over P350,000 of excess over P120,000
apply to corporations.
applies only to individuals.
It
support
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.
In any case, no such suit or proceeding shall be filed after the
expiration of two (2) years from the date of payment of the
tax or penalty regardless of any supervening cause that may
arise after payment:Provided, however, That the Commissioner
may, even without a claim therefor, refund or credit any tax, where
on the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid.
(emphasis supplied)
The CTA found that respondent filed its final adjusted return on
April 14, 1998. Thus, its right to claim a refund or credit
commenced on that date.13
The tax court applied Article 13 of the Civil Code which states:
Respondent
moved
for
reconsideration
denied.16 Hence, it filed an appeal in the CA.17
Art. 13. When the law speaks of years, months, days or nights, it
shall be understood that years are of three hundred sixty-five
days each; months, of thirty days; days, of twenty-four hours, and
nights from sunset to sunrise.
In computing a period, the first day shall be excluded, and the last
included. (emphasis supplied)
but
it
was
month
1998
1998
9th
calendar
month
December 15,
1998
t
o
January 14,
1999
10t
h
calendar
month
January 15,
1999
t
o
February 14,
1999
11th calendar
month
February 15,
1999
t
o
Both Article 13 of the Civil Code and Section 31, Chapter VIII,
Book I of the Administrative Code of 1987 deal with the same
subject matter the computation of legal periods. Under the Civil
Code, a year is equivalent to 365 days whether it be a regular
year or a leap year. Under the Administrative Code of 1987,
however, a year is composed of 12 calendar months. Needless to
state, under the Administrative Code of 1987, the number of days
is irrelevant.
12t
h
calendar
month
t
o
13t
h
calendar
month
t
o
14t
h
calendar
month
t
o
15t
h
calendar
month
t
o
16t
h
calendar
month
t
o
17t
h
calendar
month
t
o
September 14,
1999
18t
h
calendar
month
September 15,
1999
t
o
October 14,
1999
19t
h
calendar
month
October 15,
1999
t
o
November 14,
1999
20t
h
calendar
month
November 15,
1999
t
o
December 14,
1999
21st calendar
month
December 15,
1999
t
o
January 14,
2000
22n
d
calendar
month
January 15,
2000
t
o
February 14,
2000
23r
d
calendar
month
February 15,
2000
t
o
24t
h
calendar
month
t
o
1st
calendar
month
t
o
2nd
calendar
month
t
o
3rd
calendar
month
t
o
4th
calendar
month
t
o
5th
calendar
month
t
o
September 14,
1998
6th
calendar
month
September 15,
1998
t
o
October 14,
1998
7th
calendar
month
October 15,
1998
t
o
November 14,
1998
8th
calendar
November 15,
December 14,
Year
2