The constitutional provision has been interpreted to mean simply that "direct taxes are to be
preferred [and] as much as possible, indirect taxes should be minimized. (Tolentino v. Secretary
of Finance, 1995)
The Constitution has delegated legislative power to the President to impose tariff rates, import
and export quotas, tonnage and wharfage dues and other duties or imposts within the framework
of the national development program.
Charitable institutions, churches and personages or convents appurtenant thereto, mosques,
non-profit cemeteries and all lands, buildings and improvements, actually, directly and
exclusively (ADE) used for religious, charitable or educational purposes are tax exempt.
ADE means solely used for the purposes enumerated in the Constitution.
Note also that it is the use of property that determines exemption not the use of income coming
from such property. (Lung Center of the Philippines v. Quezon City, 2004)
Any law granting tax exemption must be approved by majority of all members of Congress.
All money collected for a special purpose (special levy or tax as contrasted to general tax) shall
be dedicated only for that purpose and any excess shall be transferred to the general fund of the
government.
All local government units may impose tolls (ex. use of roads), charges (ex. special assessment
for certain activities) and fees (ex. building permits, business permits) in line with the principle of
local autonomy; except for non-payment of community taxes/poll taxes, non-payment of other
taxes such as real property taxes may subject one to imprisonment.
While taxes are not subject to set-off or compensation and over payment when proven forces the
government to restore to the taxpayer the amount it overpaid (solutio indebiti).
Q. Can a non-profit, non-stock educational institution refuse to settle the assessment of a
local government for its building permit?
A. No. The DPWH implements the Building Code through the Building Officials of all local
government units. While there is incidental revenue to the local government unit, the imposition
of a Building Permit partakes of a regulatory nature. The imposition of Building Permit fee is
an exercise of police power to ensure compliance with the standards under the Building Code to
protect the public from any danger. (Angeles University Foundation v. City of Angeles)
Q. When enacting tax measures, what general guidelines must the legislator consider?
A. In enacting tax measures the legislator must exert every effort to distribute the tax burden
between individuals or classes of population; in general, to redistribute resources between
individuals (to include some form subsidy by way of support to particular classes like the senior
citizens, the poor, the retired employees, the disabled); to provide basis for fiscal policy; to
modify patterns of consumption or employment (may have incentives or factors to make them
less attractive).
Q. What are general characteristics of tax measures?
A. Taxes are enforced and never voluntary (does not need consent of the taxpayer); exacted
pursuant to law (part of legislative power but limited by constitutional provisions; and must
originate from the House of Representatives); exaction is always in the form of money but failure
to pay may result to distraint and levy of properties; taxes are personal and cannot be transferred
or transmitted but the burden can be shifted (in case of indirect taxes like VAT), purpose is to
raise revenue for public/ governmental purpose; proceeds of tax collection cannot be used for
private purpose; levied by authority which has jurisdiction over the following person, property,
transaction, rights and privileges (which is the extent of coverage/scope of powers).
Q. Discuss the normal tax cycle.
A. The Tax Cycle:
Levy Congress determines the persons, property or exercises to be taxed, amount to be raised,
rates to be imposed and manner of implementation.
Assessment and Collection The executive branch administers and implements all tax laws; and
enforces the levy.
Payment and/or Exercise of Remedies Compliance results in payment but resistance will allow
the government and the taxpayer to exercise both administrative and judicial remedies.
Q. What is the purpose of tax?
A. Fiscal when it raises funds or regulatory when it seeks to achieve social or economic goals.
of the rate to be imposed; distinguish if tax is direct or indirect; apportionment of the tax to be
collected; situs of taxation; and mode of levy/collection.
Q. What may be the subject matter of taxes?
A. Personal, capitation or poll fixed amount without regard to class;
Property subject to assessment based on area, location, use and normally distinguishes between
land and improvements which may include equipment;
Excise based on exercise of privileges or doing business (Expect questions on input/output tax
and zero rated transactions); and
Customs duties imposed on commodities exported or imported.
Q. May the provisions of a tax law be extended by implication?
A. Yes. It is well settled that where the language of the law is clear and unequivocal, it must be
given its literal application and applied without interpretation. The general rule of requiring
adherence to the letter in construing statutes applies with particular strictness to tax laws and
provisions of a taxing act are not to be extended by implication. A careful reading of
the RMOs pertaining to the Voluntary Assessment Program (VAP) shows that the recording of
the information in the Official Registry Book of the BIR is a mandatory requirement before a
taxpayer may be excluded from the coverage of the VAP. (CIR v. Ariete et al, 2010)
Q. Is a claim for tax exemption tantamount to questioning the authority of the assessor?
A. No. A claim for tax exemption, whether full or partial, does not deal with the authority of local
assessor to assess real property tax. Such claim questions the correctness of the assessment and
compliance with the applicable provisions of Republic Act (RA) No. 7160 or the Local
Government Code (LGC) of 1991, particularly as to requirement of payment under protest, is
mandatory. (Camp John Hay Dev. Corp. v. Central Board of Assessment Appeals (CBAA),
2013)
Q. PEZA holds a special charter and created by law. The main objective of the law is to
provide a package of incentives to investors locating in areas identified as export processing
zones. Through the years, PEZA has established a number of these zones. May PEZA be
taxed as a corporate body?
A. No. Being an instrumentality of the national government, the PEZA cannot be taxed by local
government units. Although a body corporate vested with some corporate powers, the PEZA is
not a government-owned or controlled corporation taxable for real property taxes. The PEZAs
predecessor, the EPZA, it was declared non-profit in character with all its revenues devoted for its
development, improvement, and maintenance. Consistent with this non- profit character, the
EPZA was explicitly declared exempt from real property taxes under its charter. Even the
PEZAs lands and building whose beneficial use have been granted to other persons may not be
taxed with real property taxes. The PEZA may only lease its lands and buildings to
PEZA-registered economic zone enterprises and entities. These PEZA- registered enterprises and
entities, which operate within economic zones, are not subject to real property taxes. (CITY OF
LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF
BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND
EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF
BATAAN vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R No. 184203, G.R NO.
187583, November 26, 2014)
Q. What is the cross border doctrine of the VAT system?
A. The cross border doctrine states that no VAT shall be imposed to form part of the cost of
goods destined for consumption outside of the territorial border of the taxing authority.
Accordingly, the sales made by suppliers from a customs territory to a purchaser located within
an ECOZONE will be considered as exportations. (Commissioner of Internal Revenue v.
Toshiba Information Equipment (PHILS.) Inc., G.R. No. 150154, August 9, 2005)
Q. What is the Destination Principle of the VAT system?
A. The destination principle states that goods and services are taxed only in the country where
they are consumed (Commissioner of Internal Revenue v. American Express International,
G.R. No. 152609, June 29, 2005)
Q. Can an entity located within an ECOZONE seek from BIR the refund of its unutilized
input taxes?
(TRANSCO) by operation of law during the time of the alleged delinquency, cannot be ordered to
pay as it is not the proper party subject to the local franchise tax, the transferee being the one
liable. (NATIONAL POWER CORPORATION vs. PROVINCIAL GOVERNMENT OF
BATAAN, SANGGUNIANG PANLALAWIGAN OF BATAAN, PASTOR B. VICHUACO
(IN HIS OFFICIAL CAPACITY AS PROVINCIAL TREASURER OF BATAAN) and
THE REGISTER OF DEEDS OF THE PROVINCE OF BATAAN, G.R. No. 180654, April
21, 2014)
Q. What is the 120+30 Rule in a Claim for refund or credit of unutilized input tax under
Section 112 of NIRC?
A. Requisites first, administrative claim must be filed with BIR within two years after the close
of taxable quarter when zero-rated or effectively zero rated sales were made; second, judicial
claim must be made within 30 days from receipt of BIR decision on tax refund/credit claim or if
no action is received from the BIR within 120 days. (Mindanao Geothermal v. CIR, 2013)
Nippon Express Corp v. CIR, 2013: Failure of BIR to act on a claim within 120 days will allow
the taxpayer to seek relief within 30 days from the lapse of said 120 day period.
CIR v. Visayas Geothermal Power Co., 2013: The failure to observe the 120-day period to claim
refund/credit is considered prematurely filed and CTA cannot take cognizance of the judicial
claim.
Northern Mindanao Power Corporation vs. Commissioner of Internal Revenue, G.R. No.
185115, February 18, 2015: In case the BIR fails to act on a claim for refund within the 120-day
period prescribed by law, the taxpayer only has 30 days counted from the expiration of the
120-day period to appeal the unacted claim with the CTA. A taxpayers non-compliance with the
mandatory period of 30 days is fatal to its refund claim on the ground of prescription.
Consequently, the CTA acquires no jurisdiction over the taxpayers claim as the petition was
belatedly filed.
Silicon Philippines v. CIR, 2 Mar 2016: Upon filing of the administrative claim, the BIR is given
a period of 120 days within which to (1) grant a refund or issue the tax credit certificate for
creditable input taxes; or (2) make a full or partial denial of the claim for a tax refund or tax
credit. Failure on the part of respondent to act on the application within the 120-day period shall
be deemed a denial. Note that the 120-day period begins to run from the date of submission of
complete documents supporting the administrative claim. If there is no evidence showing that the
taxpayer was required to submit or actually submitted additional documents after the filing of
the administrative claim, it is presumed that the complete documents accompanied the claim
when it was filed.
Whether the BIR rules in favor of or against the taxpayer or does not act at all on the
administrative claim within the period of 120 days from the submission of complete documents,
the taxpayer may resort to a judicial claim before the CTA. The judicial claim shall be filed
within a period of 30 days after the receipt of respondent's decision or ruling or after the
expiration of the 120-day period, whichever is sooner.
Q. What is the effect of the non-observance of the 120-day period?
A. Two claims for refund of the VAT were filed within the two-year prescriptive periods. The
taxpayer failed to comply with the 120-day period as it filed its judicial claim in C.T.A Case No.
6792 four (4) days after the filing of the administrative claim. The Court held that only C.T.A
Case No. 6792 should be dismissed on the ground of lack of jurisdiction for being prematurely
filed.
However, the Court held that since C.T.A Case No. 6837, the judicial claim was filed a day after
the filing of the administrative claim, the same should be sustained based on equitable estoppel
having been filed i.e., from December 10, 2003 to October 6, 2010, when BIR Ruling No.
DA-489-03 was in place. The supposed jurisdictional defect, which would have attended the
filling of its judicial claim before the expiration of the 120-day period, was cured.
(COMMISSIONER OF INTERNAL REVENUE vs. CE LUZON GEOTHERMAL POWER
COMPANY, INC., G.R No. 190198, September 17, 2014)
Q. Is the 120+30 day rule always mandatory?
A. No. As an exception to the mandatory and jurisdictional nature of the 120+30 day period,
judicial claims filed between December 10, 2003 or from the issuance of BIR Ruling No.
DA-489-03, up to October 6, 2010 need not wait for the lapse of the 120+30 day period in
consonance with the principle of equitable estoppel. Since Taganito filed its judicial claim with
the CTA on February 19, 2004, clearly within the period of exception of December 10, 2003 to
October 6, 2010. Its judicial claim was, therefore, not prematurely filed and should not have been
dismissed by the CTA En Banc.
The SC ruled that the jurisdiction of the CTA over decisions or inaction of the CIR is only
appellate in nature and, thus, necessarily requires the prior filing of an administrative case before
the CIR under Section 112. A petition filed prior to the lapse of the 120-day period prescribed
under said Section would be premature for violating the doctrine on the exhaustion of
administrative remedies. There is, however, an exception to the mandatory and jurisdictional
nature of the 120+30 day period under BIR Ruling No. DA-489-03, dated December 10, 2003,
expressly stated that the taxpayer-claimant need not wait for the lapse of the 120-day period
before it could seek judicial relief with the CTA by way of Petition for Review. (TAGANITO
MINING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No.
198076, November 19, 2014 and G.R. No. 201195, November 26, 2014)
Q. What are the purposes of the aforementioned 120+30 periods?
A. Section 112(D) of the 1997 Tax Code states the time requirements for filing a judicial claim
for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period
of 120 days, which serves as a waiting period to give time for the CIR to act on the
administrative claim for a refund or credit; and the period of 30 days, which refers to the
period for filing a judicial claim with the CTA. It is the 30-day period that is at issue in this
case. (ROHM APOLLO SEMICONDUCTOR PHILIPPINES vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 168950, January 14, 2015)
Q. What is the purpose of the requirement for printing of sales invoices and official
receipts?
A. In Silicon Valley, Phils., Inc. v. CIR, 2011, the Supreme Court reiterated that the requirement
of [printing] the BIR permit to print on the face of the sales invoices and official receipts is a
control mechanism adopted by the Bureau of Internal Revenue to safeguard the interest of the
government. Without producing the Authority to Print, the taxpayer cannot claim any tax
refund/tax credit.
Q. Differentiate a VAT invoice from a VAT receipt.
A. A VAT invoice is necessary for every sale, barter or exchange of goods or properties while a
VAT official receipt properly pertains to every lease of goods or properties, and every sale, barter
or exchange of services. In other words, the VAT invoice is the seller's best proof of the sale of
the goods or services to the buyer while the VAT receipt is the buyer's best evidence of the
payment of goods or services received from the seller. (NIPPON EXPRESS (PHILIPPINES)
CORP v. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 185666, February 4,
2015)
Q. What are the requirements for a tax refund or tax credit?
A. The Supreme Court reiterated that it is fatal if the taxpayer failed to print the word
zero-rated on the VAT invoices or official receipts in claims for a refund or credit of input
VAT on zero-rated sales, even if the claims were made prior to the effectivity of R.A 9337. A
VAT invoice is the sellers best proof of the sale of goods or services to the buyer, while a VAT
receipt is the buyers best evidence of the payment of goods or services received from the seller.
The requirement of imprinting the word zero-rated proceeds from the rule-making authority
granted to the Secretary of Finance by the NIRC for the efficient enforcement of the same Tax
Code and its amendments. A VAT-registered person whose sales are zero-rated or effectively
zero-rated, Section 112(A) specifically provides for a two-year prescriptive period after the close
of the taxable quarter when the sales were made within which such taxpayer may apply for the
issuance of a tax credit certificate or refund of creditable input tax. (CARGILL PHILIPPINES,
INC vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 203774, March 11, 2015)
Q. May a claim of refund prosper if the VAT invoices do not indicate the transactions as
zero-rated?
A. No. The Court stressed that the failure to indicate the words zero-rated on the invoices and
receipts issued by a taxpayer would result in the denial of the claim for refund or tax credit.
(EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs. COMMISSIONER OF
10
real property taxes; while portions leased to private entities are not exempt from such taxes.
(Angeles University Foundation v. City of Angles, 2012)
Q. What taxes are imposed on a hospital?
A. As a general principle, a charitable institution does not lose its character as such and its
exemption from taxes simply because it derives income from paying patients, whether
out-patient, or confined in the hospital, or receives subsidies from the government, so long as the
money received is devoted or used altogether to the charitable object which it is intended to
achieve; and no money inures to the private benefit of the persons managing or operating the
institution. (CIR v. St. Lukes Medical Center, 2012)
Q. What taxes are imposed on resident foreign corporations?
A. General rule foreign corporations are liable for income derived from Philippine sources; may
enjoy certain incentives if covered by a treaty or special provision of law (registration under the
Board of Investments and the Philippine Economic Zone Authority); minimum corporate tax due
and schedule of payment; treatment of other incomes; liability for capital gains tax; treatment of
accumulated earnings
Q. Enumerate the different kinds of resident foreign corporations and discuss their tax
liabilities, if any.
A. Philippine Branch is a foreign corporation in the Philippines that is allowed by the SEC to do
business in the Philippines in such activities it normally does in its home country. It is normally
taxable in like manner as a local corporation 12% VAT, 30% corporate income tax, and such
other applicable internal revenue taxes. Also, repatriation of its operational income in the
Philippines is subject to 15% branch profit remittance tax.
Representative Office is a foreign corporation licensed to do business in the Philippines to deal
directly with the clients of its parent company abroad on information dissemination, as
communication center, product promotion, and quality control for exports. It is not allowed to
earn income in the Philippines, thus not subject to income tax.
Regional Operating Headquarters in the Philippines (ROHQ) is a special type of income
producing foreign corporation. The income to be generated is limited to specific services rendered
to its affiliates, branches, and subsidiaries within the Asia-Pacific Region. It is subject to a special
income tax rate of 10% and 12% VAT in the Philippines. Repatriation of its operational income
in the Philippines is subject to 15% branch profit remittance tax.
Regional Area Headquarters (RAHQ) is a non-income generating foreign corporation tasked to
act as a supervisory, communications, or coordinating center for its subsidiaries, affiliates, and
branches in the Asia-Pacific region. It is only a cost center and is not allowed to earn income.
Air Canada v. Commissioner of Internal Revenue, G.R. No. 169507, January 11, 2016: An
offline international air carrier is a resident foreign corporation for income tax purposes. In
this case, the Court applied the doctrine in CIR v. British Overseas Airways Corporation that an
international air carrier with no landing rights in the Philippines is a resident foreign corporation
if its local sales agent sells and issues tickets in its behalf. An offline international carrier selling
passage tickets in the Philippines, through a local general sales agent, is considered a resident
foreign corporation doing business in the Philippines. As such, it is taxable on income derived
from sources within the Philippines, and not on Gross Philippine Billings, subject to any
applicable tax treaty.
Accenture, Inc. v. CIR, 2012: Tax for services rendered by a resident corporation outside
Philippine territory: The Court held that that the recipient of the service should be doing
business outside the Philippines to qualify for zero-rating is the only logical interpretation of
Section 102(b) (2) of the 1977 Tax Code, as we explained in Burmeister: This can only be the
logical interpretation of Section 102 (b) (2). If the provider and recipient of the "other services"
are both doing business in the Philippines, the payment of foreign currency is irrelevant.
Otherwise, those subject to the regular VAT under Section 102 (a) can avoid paying the VAT by
simply stipulating payment in foreign currency inwardly remitted by the recipient of services. To
interpret Section 102 (b) (2) to apply to a payer-recipient of services doing business in the
Philippines is to make the payment of the regular VAT under Section 102 (a) dependent on the
generosity of the taxpayer. The provider of services can choose to pay the regular VAT or avoid it
11
12
value of the donation (Section 16 of the NIRC); for the stranger, a flat rate of 30% is imposed;
the following are NOT strangers- brother, sister (whether by whole or half blood), spouse,
ancestor and lineal descendant; and relative by consanguinity in the collateral line within the
fourth civil degree of relationship.
Q. What items are not subject to donors tax?
A. Dowries or gifts made on account of marriage, gifts made or for use of the national
government or entity created by any of its agencies which is not conducted for profit, or to any
political subdivision of said government; and gifts in favor of an educational and/or charitable,
religious, cultural or social welfare corporation, institution, accredited non- governmental
organization, trust or philanthropic organization or research institution or organization.
13
14
Q. Will a case for tax evasion fail without a deficiency tax assessment?
A. No. BUREAU OF INTERNAL REVENUE, as represented by the COMMISSIONER OF
INTERNAL REVENUE vs. COURT OF APPEALS, SPOUSES ANTONIO VILLAN MANLY,
and RUBY ONG MANLY, G.R No. 197590, November 24, 2014: The Court ruled that tax
evasion is deemed complete when the violator has knowingly and willfully field a fraudulent
return with intent to evade and defeat a part of all of the tax. Corollarily, an assessment of the tax
deficiency is not required in a criminal prosecution for tax evasion. However, in Commissioner of
Internal Revenue v. Court of Appeals, the Court clarified that although a deficiency assessment is
not necessary, the fact that a tax is due must first be proved before one can be prosecuted for tax
evasion. (Commissioner of Internal Revenue v. Kepco Ilijan Corporation, G.R. No. 199422,
June 21, 2016)
SAMAR-I ELECTRIC COOPERATIVE vs. COMMISSIONER OF INTERNAL REVENUE,
G.R No. 193100, December 10, 2014: The Court held that the notice requirement under section
228 of the NIRC is substantially complied with whenever the taxpayer had been fully informed in
writing of the factual and legal bases of the deficiency taxes assessment, which enabled the latter
to file an effective protest.
Q. Discuss the Expenditure Method in reconstructing a taxpayers income.
A. The Expenditure Method is a method used by the government to reconstruct the income of a
taxpayer by deducting the aggregate yearly expenditures from the declared yearly income. he
theory of this method is that when the amount of the money that a taxpayer spends during a given
year exceeds his reported or declared income and the source of such money is unexplained, it
may be inferred that such expenditures represent unreported or undeclared income. (BUREAU
OF INTERNAL REVENUE, as represented by the COMMISSIONER OF INTERNAL
REVENUE vs. COURT OF APPEALS, SPOUSES ANTONIO VILLAN MANLY, and RUBY
ONG MANLY, G.R No. 197590, November 24, 2014)
Q. When is a tax assessment deemed made?
A. . The assessment of the tax is deemed made and the three-year period for collection of the
assessed tax begins to run on the date the assessment notice had been released, mailed or sent by
the BIR to the taxpayer. Thus, failure of the BIR to file a warrant of distraint or serve a levy on
taxpayers properties nor file collection case within the three-year period is fatal. Also, the
attempt of the BIR to collect the tax through its Answer with a demand for the taxpayer to pay the
assessed DST in the CTA is not deemed compliance with the Tax Code. (CHINA BANKING
CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 172509,
February 04, 2015)
Q. Will a request for reinvestigation suspend the statute of limitations?
A. No. A request for reinvestigation alone will not suspend the statute of limitations. Two things
must concur: there must be a request for reinvestigation and the CIR must have granted it.
(CHINA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 172509, February 04, 2015)
Q. Ms. Sarmiento, Next Mobile Incs Director of Finance, executed several waivers of the
statute of limitations to extend the three-year prescriptive period of assessment for taxes
due. Naturally, BIR issued its assessment beyond the prescriptive period. Thereafter, Ms.
Sarmiento contests the issued assessment arguing that her waivers were void because of the
following: (a) waivers were executed without a notarized board authority; (b) the dates of
acceptance by BIR were not indicated therein; (c) several irregularities were present in the
subject waivers; and (d) estoppel does not apply in questioning the validity of waiver of the
statute of limitations. Are the Waivers valid? the BIRs right to assess already prescribed?
A. No. The general rule is that a waiver of the statute of limitations that does not comply with the
requisites for its validity specified under RMO No. 20-90 and RDAO 01-05 is generally invalid
and ineffective to extend the prescriptive period to assess taxes. However, due to peculiar
circumstances and as an exception to the general rule, the supposedly invalid waivers may be
considered valid for the following reasons:
First, the parties are in pari delicto or in equal fault. The two parties to a controversy are equally
guilty and they shall have no action against each other.
15
Second, Parties must come to court with clean hands. Parties ho do not come to Court with clean
hands cannot be allowed to benefit from their own wrongdoing. Taxpayer should not be allowed
to benefit from the flaws in its own waivers and successfully insist on their invalidity in order to
evade its responsibility to pay taxes.
Third, taxpayer is estopped from questioning the validity of its Waivers. Verily, the application
of estoppel in this case would promote the administration of the law, prevent injustice and avert
the accomplishment of a wrong. Finally, the Court cannot tolerate a highly suspicious situation.
In this case, the taxpayer, on one hand, after voluntarily executing the Waivers insisted on their
invalidity by raising the very same defects it caused. On the other hand, the BIR miserably failed
to exact from the taxpayer strict compliance with the rules. (COMMISSIONER OF INTERNAL
REVENEU v. NEXT MOBILE, INC., G.R. NO.212825, DECEMBER 7, 2015)
Q. How to prove that a tax assessment was made?
A. The Court held that in order to prove the fact of mailing, it is essential to present the registry
receipt issued by the Bureau of Posts or the Registry return card, which would have been signed
by the taxpayer or its authorized representative. And if said documents could not be located, the
CIR should have, at the very least, submitted to the Court a certification issued by the Bureau of
Posts and any other pertinent document executed with its intervention. The Court does not put
much credence to the self-serving documentations made by the BIR personnel, especially if they
are unsupported by substantial evidence establishing the fact of mailing.
While it is true that an assessment is made when the notice is sent within the prescribed period,
the release, mailing, or sending of the same must still be clearly and satisfactorily proved.
Mere notations made without the taxpayer's intervention, notice or control, and without adequate
supporting evidence cannot suffice. Otherwise, the defenseless taxpayer would be unreasonably
placed at the mercy of the revenue offices. The BIR's failure to prove GJM's receipt of the
assessment leads to no other conclusion but that no assessment was issued. Consequently, the
government's right to issue an assessment for the said period has already prescribed.
(COMMISSIONER
OF
INTERNAL
REVENEU
v.
GJM
PHILIPPINES
MANUFACTURING, 29 Feb 2016)
Q. What constitutes proof of taxes withheld?
A. The Court held that the certificate of creditable tax withheld at source is the competent proof
of establish the fact that taxes are withheld. It is not necessary for the person who executed and
prepared the certificate of creditable tax withheld source to be presented and to testify personally
to prove the authenticity of the certificates. (COMMISSIONER OF INTERNAL REVENUE vs.
PHILIPPINE NATIONAL BANK, G.R. No. 180290 September 29, 2014)
16
payor to the payee showing the amount paid and the amount of the tax withheld therefrom.
Q. What may the government resort to in case of taxpayers delinquency?
A. Distraint of personal property, levy of real property; civil action and criminal action.
Q. What are the requirements for entitlement of a corporate taxpayer for a refund or the
issuance of tax credit certificate involving excess withholding taxes?
A The Court held that the following requisites must be complied with to sustain the claim for
refund:
1) That the claim for refund was filed within the two-year reglementary period pursuant to
Sec. 229 of the NIRC;
2) When it is shown on the ITR that the income payment received is being declared part of
the tax payers gross income; and
3) When the fact of withholding is established by a copy of the withholding tax statement,
duly issued by the payor to the payee, showing the amount paid and income tax withheld
from that account. . REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
COMMISSIONER OF INTERNAL REVENUE vs. TEAM (PHILS.) ENERGY
CORPORATION (FORMERLY MIRANT PHILS ENERGY CORPORATION), G.R. No.
188016, January 14, 2015)
Q. Is the CTA prohibited from determining whether taxes should have been paid because it
is an assessment?
A. No. The Supreme Court ruled that 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
is not assessment. It is incidental to determining whether there should be a refund. (SMI-ED
PHILIPPINES TECHNOLOGY, INC. vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 175410, November 12, 2014)
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY vs.
SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, G.R No.
210987, November 24, 2014: The Court ruled that, the CTA can now rule not only on the
propriety of an assessment or tax treatment of a certain transaction, but also on the validity of the
revenue regulation or revenue memorandum circular on which the said assessment is based.
CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF
BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND
EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF
BATAAN vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R. No. 184203, G.R No.
187583, November 26, 2014: The Court held that in case of an illegal assessment where the
assessment was issued without authority, exhaustion of administrative remedies is not necessary
and the taxpayer may directly resort to judicial action. The taxpayer shall file a complaint for
injunction before the Regional Trial Court to enjoin the local government unit from collecting
real property taxes. The party unsatisfied with the decision of the Regional Trial Court shall file
an appeal, not a petition for certiorari, before the Court of Tax Appeals, the complaint being a
local tax case decided by the Regional Trial Court. The appeal shall be filed within fifteen (15)
days from notice of the trial courts decision.
NIPPON EXPRESS (PHILIPPINES) CORP vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 185666, February 04, 2015: The Court held the BIR has 120 days from
the date of submission of complete documents in support of the administrative claim within
which to decide whether to grant a refund or issue a tax credit certificate. In case of failure on the
part of the BIR to act on the application within the 120-day period prescribed by law, the taxpayer
has only has 30 days after the expiration of the 120-day period to appeal the unacted claim with
the CTA.
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invoke the same. (Commissioner of Internal Revenue vs. Team Sual Corporation (Formerly
Mirant Sual Corporation), G.R. No. 194105. February 5, 2014)
Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly
Mirant Phils., Operation Corporation), G.R. No. 179260, April 2, 2014. The findings and
conclusions of the Court of Tax Appeals (CTA) are accorded the highest respect and will not be
lightly set aside. In the absence of any clear and convincing proof to the contrary, the Court must
presume that the CTA rendered a decision which is valid in every respect.
The City of Manila, etc. et al. v. Hon. Caridad H. Grecia-Cuerdo etc., et al, G.R. No. 175723.
February 4, 2014: Petitioners availed of the wrong remedy when they filed the special civil
action for certiorari under Rule 65 of the Rules of Court with the Court in assailing the
resolutions of the Court of Appeals (CA) which dismissed their petition filed with the said court
and their motion for reconsideration of such dismissal. Hence, in the instant case, petitioner
should have filed a petition for review on certiorari under Rule 45, which is a continuation of the
appellate process over the original case.
Clark Investors and Locators Association, Inc. vs. Secretary of Finance and Commissioner
of Internal Revenue, G.R. No. 200670, July 6, 2015: A petition for certiorari (Rule 65) cannot
be invoked against the Secretary of Finance and Commissioner of Internal Revenue as they do
not fall within the ambit of a tribunal, board, or officer exercising judicial or quasi-judicial
functions in issuing Revenue Regulations. On the contrary, what they exercise in issuing these
Revenue Regulations is their quasi-legislative or rule-making power, thus, outside the scope of a
petition for certiorari.
V. Local Taxation
Q. What taxes may local government unit collect?
A. Under Section 5 of Article X of the Constitution, local government units are allowed to collect
tolls, fees and charges. (TFC).
Q. Are submarine or underwater cables considered real property, thus subject to real
property tax under the LGC?
A. Yes. Submarine or underwater cables are akin to electric transmission lines which the Court
declared in Manila Electric Company v. City Assessor and City Treasurer of Lucena City (G.R.
No. 166202, August 5, 2015), as no longer exempted from real property tax and may qualify as
machinery subject to real property tax. Both electric lines and communication cables, in the
strictest sense, are not directly adhered to the soil but pass through posts, relay or landing stations,
but both may be classified under the term machinery as real property under Article 415(5) of
the New Civil Code for the simple reason that such pieces of equipment serve the owner's
business or tend to meet the needs of his industry or works that are on real estate. (Capitol
Wireless, Inc., v. The Provincial Treasurer of Batangas, et al., G.R. No. 180110, May 30, 2016)
Q. Is a golf course considered a place of amusement subject to amusement tax?
A: No. Following the principle of ejusdem generis, a golf course cannot be considered a place of
an amusement subject to amusement of tax. In so ruling, the Court cited its pronouncements in
Pelizloy Realty Corporation v. The Province of Benguet wherein it held that amusement taxes
cannot be imposed on admission fees to resorts, swimming pools, bath houses, hot springs, and
tourist spots as they do not belong to the same category or class as theaters, cinemas, concert
halls, circuses, and boxing stadia. (ALTA VISTA GOLF AND COUNTRY CLUB v. THE CITY
OF CEBU, et al., G.R. No. 180235, January 20, 2016)
Mactan-Cebu International Airport Authority (MCIAA) v. City of Lapu-Lapu and Elena T.
Pacaldo, G.R. No. 181756, June 15, 2015: Mactan-Cebu International Airport Authority
(MCIAA) is a government instrumentality and not a government-owned or controlled corporation
(GOCC). Thus, its properties actually, solely and exclusively used for public purposes, consisting
of airport terminal building, airfield, runway, taxiway and the lots on which they are situated are
not subject to real property tax under Section 133(o) and 234(a) of the LGC. Moreover, when a
tax exemption is strictly construed against the taxpayer claiming the exemption. However, when
Congress grants an exemption to a national government instrumentality from local taxation, such
exemption is construed liberally in favor of the national government instrumentality.
Additional Cases:
Camp John Hay Development Corporation v. Central Board of Assessment Appeals, G.R. No.
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169234. October 2, 2013. Section 252 and Section 222 of the Local Government Code sets out
the administrative remedies available to a taxpayer or real property owner who does not agree
with the assessment of the real property tax sought to be collected. Two conditions must be met:
the taxpayer/real property owner questioning the assessment should first pay the tax due before
his protest can be entertained. Secondly, within the period prescribed by law, any owner or person
having legal interest in the property not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may file an appeal with the Local Board of
Assessment Appeals (LBAA) of the province or city concerned. Thereafter, within thirty days
from receipt, he may elevate, by filing a notice of appeal, the adverse decision of the LBAA with
the Central Board of Assessment Appeals
Camp John Hay Development Corporation v. Central Board of Assessment Appeals, G.R. No.
169234. October 2, 2013. A claim for exemption from payment of real property taxes does not
actually question the assessors authority to assess and collect such taxes, but pertains to the
reasonableness or correctness of the assessment by the local assessor
Smart Communications, Inc. v. Municipality of Malvar, Batangas, G.R. No. 20442. February
18, 2014. Section 5, Article X of the 1987 Constitution provides that [e]ach local government
unit shall have the power to create its own sources of revenues and to levy taxes, fees, and
charges subject to such guidelines and limitations as the Congress may provide, consistent with
the basic policy of local autonomy. The LGC defines the term charges as referring to pecuniary
liability, as rents or fees against persons or property, while the term fee means a charge fixed
by law or ordinance for the regulation or inspection of a business or activity. The effect is merely
incidental. Thus, the fees imposed in Ordinance No. 18 are not taxes. Considering that the fees in
Ordinance No. 18 are not in the nature of local taxes, and petitioner is questioning the
constitutionality of the same, the CTA correctly dismissed the petition for lack of jurisdiction.
City of Manila, Hon. Alfredo S. Lim, as Mayor of the City of Manila, et al. v. Hon. Angel
Valera Colet, as Presiding judge, Regional Trial Court of Manila (Br.43), et al. G.R No.
120051, December 10, 2014: The power to tax of local government units is a delegated power
and must be exercised within the guidelines and limitations that Congress may provide. taxing
power of local government units.
VI. Tariff and Customs Code of 1978, as amended
A. IMPORT DUTIES
Q. When does importation begin and deemed terminated?
A. Importation begins when the carrying vessel or aircraft enters the jurisdiction of the
Philippines with the intention to unlade therein. Importation is deemed terminated upon payment
of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of
entry and the legal permit for withdrawal shall have been granted, or in case said articles are free
of duties, taxes and other charges, until they have legally left the jurisdiction of Customs.
Q. What are ordinary import duties?
A. Tariff duties are levied on imported goods either as a revenue generating measure or a
protective scheme to artificially or temporarily inflate prices to protect a countrys domestic
output and its industries from their foreign counterparts. With the exception of certain articles
which can be imported duty-free, upon compliance with certain prescribed conditions or
formalities, goods are levied ordinary import duties under the Most Favored Nation (MFN)
treatment, ranging from Free/Zero to 30% except in cases of sensitive agricultural products which
are accorded a certain degree of protection via higher tariff rates reaching to as high as 65%. On
the other hand, under the Common Effective Preferential Tariff (CEPT) Scheme, goods are levied
ordinary import duties ranging from 0% to 5%, except also in cases of sensitive agricultural
products which are subject to as high as 40% tariff duties.
Q. What are special duties under the Tariff Code?
A. These are levied in addition to the ordinary import duties, taxes and charges imposed by law
on the imported product under the following circumstances:
Q. Define the following terms:
a. Anti-Dumping Duty: The anti-dumping duty is a special duty imposed in the event that a
specific kind or class of foreign article, is being imported into, sold or is likely to be sold in the
Philippines, at an export price less than its normal value in the ordinary course of trade for
a like product, commodity or article destined for consumption in the exporting country which is
causing or threatening to cause material injury to a domestic industry, or materially retarding the
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commodity or article, while the Secretary of Agriculture, in the case of agricultural product,
commodity or article, in connection with the imposition of the Anti-Dumping Duty,
Countervailing and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and
(p), and Republic Act 8800].
4. Decisions/ Resolutions of the DTI and DA Secretaries may be elevated to the Tariff
Commission.
5. Decisions of the Tariff Commission are appealable to the CTA.
6. CTA decisions are appealable to the Supreme Court.
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