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 tax
liabilities 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 input
credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of
P119,977,037.02 plus interest.
Therefore these claims for tax credit/refund should be applied against the tax
liabilities. 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 the
government 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 a
tax 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 lifeblood
of the government and so should be collected without unnecessary hindrance.
Evidently, to countenance Philex's whimsical reason would render ineffective our
tax 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 the
ground that it has a pending tax claim for refund or credit against the government
which has not yet been granted.

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 certificate
would 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 output
VAT.
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 failed
to 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 Motion
for Reconsideration of the above decision contending that it relied on Sec. 106 of
the 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 or
refund.
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 were
not 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 from
accredited banks on the export proceeds in foreign currency with the corresponding
conversion rate into Philippine currency, the courts a quo likewise could not
determine the veracity of the export sales as indicated in Atlas amended VAT
return.

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 the
Intestate 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 order
in 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 executory
the 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 Walter
Price. 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 is
indebted 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 the
concurrent amount. Therefore the petitioner has no clear right to execute the judgment for taxes
against the estate of the deceased Walter Price.