ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Pointers in Taxation Law

r
2015 Bar Examinations

B a
e s
b l I. General Principles

R o
n power to tax is inherent to the state butr
Q. What is the nature of the taxing power of government?

a A.areThemandatory a
B between the state and the taxpayer (in invitum) because
constitutional provisions limit the exercise thereof. Taxes
h impositions and not a contract
C on personal and property rights. es
consent which is an essential element of contract is absent. It has the power to destroy as it puts restraint

b l
Q. What is the two-fold
R o nature of the power to tax?

because it is a
n
an exercise of sovereign powers and not granted a
r
A. The two-fold nature of the power of taxation is inherent power and legislative power. It is inherent

taxation h B of the citizens and promote the common

by the Constitution. The primary purpose of

good.C s
is to generate funds for the state to finance the needs
This is carried out by way of legislation.
l e
b
o– existence of government is a necessity, therefore it has the
Q. What are the relevant theories which govern the state’s inherent power to tax?
R
nto pay taxes; Benefits – ProtectionTheorya– paymentrconstituteofthetaxeslifeblood
A. Relevant Theories: Necessity Theory

a
right to compel citizens and property

B
allows

h
a citizen to enjoy benefits in an organized society; and Life Blood Theory – taxes

C
of the country and taxes support
s
the operations of government and the public

e
services extended to the

lTaxes
people.
Lifeblood Theory: Western Mindanao Power Corp v. CIR, 2013:
b are the lifeblood of the nation.

othe economic adversities arising from poor

The Philippines has been struggling to improve its tax efficiency collection for the longest time with
minimal success. Consequently, the Philippines has suffered
R
n (2003) are the lifeblood of the government,
tax collections, forcing the government to continue borrowing to fund the budget deficits.
a a rfor
h B
National Power Corporation v. City of Cabanatuan,

C s
without taxes, the government can neither exist nor endure.

l e
Q. What is the distinction between the power to tax and the exercise of police power?
b
o fee upon an oil
R
A. Chevron v. BCDA and CDC: When the purpose of the imposition of a royalty

n fee. r
company is not for the purpose of generating revenue but a recognition that the oil industry is imbued

a
with public interest, then the royalty fee will be considered as a regulatory

B a
C h
*Simply stated an imposition that is for revenue is generally a tax while an imposition that has another
s
e
purpose such as regulation is an exercise of police power.

b l
Q. What are the constitutional proscriptions in enacting tax laws?
A. All tax measures must originate from the House of Representatives but Senate may propose
o
R or concur
The rule on taxation must be uniform and equitable; Congress shall evolve a a
with amendments.
n
taxation (tax rate and tax base are directly proportional as against proportionalh
progressive system of

rate regardless of tax base; and regressive system where the tax rateC
system which has a fixed
and tax base are inversely
proportional).
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)

1
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

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

a r
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 usedB
Note also that it issthe use of property that determines exemption not the use of income coming from
for the purposes enumerated in the Constitution.

e
such property.l(Lung Center of the Philippines v. Quezon City, 2004)

o b
Any law granting tax exemption must be approved by majority of all members of Congress.
AllR
ndedicated only for that purpose and any excess r
money collected for a special purpose (special levy or tax as contrasted to general tax) shall be

a All local government units may impose tolls B a(ex. use of roads), charges (ex. special assessment for certain
shall be transferred to the general fund of the government.

h
C activities) s taxes/poll taxes, non-payment of other taxes such as real property
e
and fees (ex. building permits, business permits) in line with the principle of local autonomy ;

b l
except for non-payment of community
taxes may subject one to imprisonment.

R o
While taxes are not subject to set-off or compensation and over payment when proven forces the

n r
government to restore to the taxpayer the amount it overpaid (solution indebiti).

Q. Can h
a a
Brefuse to settle the assessment of a local
C s
a non-profit, non-stock educational institution
government for its building permit?
A. No. Angeles University Foundation v. City l
e
o b of Angeles: The DPWH implements the Building Code
through the Building Officials of all local government units. While there is incidental revenue to the local

Building Permit fee is an exercise ofR

government unit, the imposition of a Building Permit partakes of a regulatory nature. The imposition of

an any danger. r
police power to ensure compliance with the standards under the
Building Code to protect the public from

B a
Q. When enacting taxC
h s consider?
e
l to distribute the tax burden between
measures, what general guidelines must the legislator

individuals or classes of population; in general, to redistributeb

A. In enacting tax measures the legislator must exert every effort

some form subsidy by way of support to particular classeso

resources between individuals (to include

employees, the disabled); to provide basis for fiscalR

like the senior citizens, the poor, the retired

anthem less attractive). r

policy; to modify patterns of consumption or
employment (may have incentives or factors to make
B a
h s
Q. What are general characteristicsofC tax measures?
e
lexacted pursuant to
A. Taxes are enforced and never voluntary (does not need consent of the taxpayer);
b
omay result to distraint and
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
R
a nfor public/ governmental purpose; ar
levy of properties; taxes are personal and cannot be transferred or transmitted but the burden can be

B
shifted (in case of indirect taxes like VAT), purpose is to raise revenue

over the following person, property, transaction, rights h

s
proceeds of tax collection cannot be used for private purpose; levied by authority which has jurisdiction
C and privileges (which is the extent of
e
coverage/scope of powers).

b l
Q. Discuss the normal tax cycle.
R o
A. The Tax Cycle: n
abe raised, rates to be
Levy – Congress determines the persons, property or exercises to be taxed, amount to
imposed and manner of implementation.
C h
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.

2
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Q. What is the purpose of tax?

A. Fiscal when it raises funds or regulatory which it seeks to achieve social or economic goals.

ar
B
Q. Who are liable for tax?

s
A. For direct taxes, same person absorbs the tax (ex. income tax, PTR, CTC) and burden to pay cannot be
e
l
shifted while in indirect taxes, tax is paid by the person other than the one upon whom it is imposed, thus

o b
the burden can be shifted (ex. VAT). (Expect questions on VAT-exempt transactions and VATable
transactions).

R
n
a A. Consider persons (natural and juridical)
Q. What factors must be considered in imposing r
ato be taxed; consider residence of the tax payer (mobilia
taxes?

h B
C sequntur e s
personam); consider threshold period and threshold amount; determine situs of the tax to avoid

tax incident.
b l
double taxation; review reciprocity and comity principles under tax treaties which may operate for a given

o
Q. The employees R
the following n grounds: denial of due process, violative ofrthe equal protection clause, undue
of the Bureau of Customs assailed the constitutionality of the Attrition Law on

delegation ofapower, constitutes itself as a bill of attainder aand threatens their security of tenure.
Will theh B
C s
A. BOCEA v. Sec. Teves: No. The Attrition Billeis constitutional. There is a valid classification not
case prosper?

b l of BIR and BOC, being involved in revenue

violative of the equal protection clause as the employees

R o as the underperformance is indicated by a clear standard

collection, are different from other government employees. The law does not violate due process and
security of tenure; it is also not a bill of attainder

an a r
expressly provided and dismissal is subject to civil service substantive and procedural rules.

Q. How are tax measuresh

B
C interpreted?
e s and liberally in favor of
b l and there therefore the taxpayer has
A. As a general rule, tax statutes are construed strictly against the government

the burden of proof to show his claim (strictissimi juris);taxo

taxpayers; under the lifeblood theory, it frowns against exemptions

R Revenue., G.R. No. 185432, June 4, 2014: A

amnesty is never presumed.
Miramar Fish Company, Inc. v Commissioner of Internal
nrefund exemption, is construed strictly against
taxpayer. One of the conditions for a judicialaclaim of refund or credit under the VAT System
claim for tax refund or credit, like a claim for tax
a rtheis
compliance with the 120+30 day mandatoryh B
C and jurisdictional periods.
e s30, 2014: The
CIR v. San Roque Power Corp and other consolidated cases, G.R No. 205543, June
b
general rule is that a void law or administrative act cannot be the source of legal rightsl or duties. Article 7
R
Section 4 of the 1997 Tax Code provides that the "power to interpret the provisionso of this Code and other
of the Civil Code enunciates this general rule, as well as its exception. The Court said that although

a n the delegation of such power. ar

tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by

B
the Secretary of Finance," Section 7 of the same Code does not prohibit
h
Thus, "the Commissioner may delegate the powers vested in him under the pertinent provisions of this
s
such limitations and restrictions as may be imposed underC e
Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to

Secretary of Finance, upon recommendation of the Commissioner."

b l
rules and regulations to be promulgated by the

interpreted according to its clear, plain, and unequivocal language. The taxpayerR
The Court further held that provisions of the NIRC particularly Section 112(A) and (C) o must be

n
can file his

a
administrative claim for refund or credit within the two-year prescriptive period. If he files his

will have 120 days from such filing to decide the claim. If the Commissionerh
claim on the last day of the two-year prescriptive period, his claim is stillfiled on time. The Commissioner

C to file his judicial claim

decides the claim on the
th
120 day, or does not decide it on that day, the taxpayer still has 30 days
with the CTA.

Q. May a private company refuse to grant a 20% senior for its services?

3
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

A. No. Manila Memorial Park, Inc. and La Funeraria Paz-Sucat v. DSWD Secretary, 2013: The
validity of the 20% senior citizen discount and tax deduction scheme under RA 9257, as an exercise of
police power of the State, has already been settled in Carlos Superdrug Corporation. The discount given
to senior citizens meets all the requirements under the equal protection class. Senior citizens are

r
likewise exempt from 12% VAT imposition.

a
Bto consider in enacting revenue-raising measures?
s
Q. What are the factors

e
lmode of levy/collection.
A. Purpose is lawful, identify specific person, property or privilege to be taxed, specify schedule of the

o b
rate to be imposed;
taxation; and
distinguish if tax is direct or indirect; apportionment of the tax to be collected; situs of

RWhat may be the subject matter of taxes?r

anQ.A. Personal, Bawithout regard to class;
h
C Property
capitation or poll – fixed amount
sequipment;
l e
– subject to assessment based on area, location, use and normally distinguishes between land

b
and improvements which may include

rated transactions); and o

Excise – based on exercise of privileges or doing business (Expect questions on input/output tax and zero

Customs duties –n
R
imposed on commodities exported or imported.r
a B a
Q. MayCh e s
the provisions of a tax law be extended by implication?

b
A. No. CIR v. Ariete et al, 2010. It is well-settled l andthatapplied
where the language of the law is clear and

o
unequivocal, it must be given its literal application without interpretation. The general rule

RAssessment
of requiring adherence to the letter in construing statutes applies with particular strictness to tax laws

n Program (VAP) shows thatr

and provisions of a taxing act are not to be extended by implication. A careful reading of

a
the RMOs pertaining to the Voluntary

B a the recording of the

C
excluded from the coverage h
information in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer may be
of the VAP. .
s
e
lauthority of the assessor?
b
A. No.Camp John Hay Dev. Corp. v. Central Board ofo
Q. Is a claim for tax exemption tantamount to questioning the

RorAssessment Appeals (“CBAA”), 2013: The

anActquestions rand
Court held that a claim for tax exemption, whether full partial, does not deal with the authority of
localassessor to assess real property tax. Such claim
a
the correctness of the assessment
B
C h
compliance with the applicable provisions of Republic (RA) No. 7160 or the Local Government
s
Code

e
(LGC) of 1991, particularly as to requirement of payment under protest, is mandatory.

Q. PEZA holds a special charter and created by law. The main objective ofb
l
package of incentives to investors locating in areas identified as export o
the law is to provide a

the years, PEZA has established a number of these zones. May PEZAR
processing zones. Through

a nAUTHORITY; PROVINCE OF ar
be taxed as a corporate body?

h B
A. No.CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE

TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN vs. PHILIPPINE s

C
BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S.

ECONOMIC ZONE AUTHORITY, G.R No. 184203, G.R NO. 187583, November 26, 2014:Being an
l e
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
o b or
controlled corporation taxable for real property taxes. The PEZA’s predecessor, the EPZA, it was
R and
a n
declared non-profit in character with all its revenues devoted for its development, improvement,
maintenance. Consistent with this non- profit character, the EPZA was explicitly declared exempt from

granted to other persons may not be taxed with real property taxes. The PEZA
C hmay only lease its lands
real property taxes under its charter. Even the PEZA’s lands and building whose beneficial use have been

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.

4
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Q. When is there double taxation?

A. NURSERY CARE CORPORATION; SHOEMART, INC.; STAR APPLIANCE CENTER, INC.;
H&B, INC.; SUPPLIES STATION INC.; and HARDWARE WORKSHOP, INC. vs. ANTHONY
ACEVEDO, in his capacity as THE TREASURER OF MANILA; and THE CITY OF MANILA, G.R.

ar
NO. 180651, July 30, 2014: There is double taxation whenthe two taxes must be imposed on the same
subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during
B
the same taxing period; and the taxes must be of the same kind or character.

e s
Q. XYZ is l
separatelybfor the raw materials it used for manufacturing its products and for its finished
a cigarette manufacturing company. The Bureau of Internal Revenue assessed it

R o
products. Is the taxation of raw materials and the products resulting therefrom considered double

n r FACTORY vs. COURT OF APPEALS AND

taxation?

a A.COMMISSIONER
No. LA SUERTE CIGAR & CIGARETTE
B a
h s 141 (b). It is a partially prepared tobacco. The removal of the
OF INTERNAL REVENUE,
C is subject to the specific tax undereSection
G.R No. 125346, G.R Nos. 136328-29, G.R No.
144942, G.R No. 148605, G.R No. 158197, G.R. No. 165499, November 11, 2014: Stemmed leaf tobacco

b l makes the resulting stemmed leaf tobacco a prepared or partially

stem or midrib from the leaf tobacco

o
prepared tobacco. Since the Tax Code contained no definition of “partially prepared tobacco,” then the

Ron inproperty
term should be construed its general, ordinary, and comprehensive sense x xx.” Finally, excise taxes

a
manufactured or n produced in the Philippines for domestic r
are essentially taxes because they are levied on certain specified goods or articles
a sale or consumption or for any other

h B
disposition, and on goods imported. In this case, there is no double taxation in the prohibited sense

C the raw material was a part, because the

despite the
e sspecific tax is imposed by explicit provisions of
fact that they are paying the specific tax on the raw material and on the finished product
in which

b l (1) on the stemmed leaf tobacco; and (2) on

the Tax Code on two different articles or products:
cigar or cigarette

R o
Q. The City of Manila sought n r to business
claiming that the former is aa a
to enforce both Sections 14 and 21 of the Manila Revenue Code

h Bamount to invalid subject

tax on manufacturers, etc. while the latter applies

C
to excise, VAT or percentage
s
tax. Will the imposition of both sections double
eimposed on the same subject matter
l
taxation?

o b by the same taxing authority, within

A. Yes. There is in fact double taxation since both sections are being
(privilege of doing business within the city), for the same purpose,
R
the same taxing jurisdiction, for the same taxing period, and of the same kind or character (a local

an r
business tax imposed on gross sales or receipts).

B a
C
Q. What is the nature of Documentary Stamp h Tax (“DST”)?
s
l e
b
A. DST partakes of Excise Tax. Prudential Bank v. CIR, 2011: DST on time deposits
CIR v. Bank of Commerce, 2013: Liability for payment of DST is for account of

R o the Seller
Fort Bonifacio Dev. Corp v. CIR, 2013. DST is an excise tax levied on the exercise by persons of

* note that this was asked in the 2014 bar even though excluded a
privileges conferred by law.
n a r
h in the coverage
Philacor Credit Corp v. CIR, 2013: DST is due the person (1) making; (2) signing; (3) issuing; (4) s
B
C e
accepting; or (5) transferring the taxable documents.
b l
Q. When is DST imposed?
R o
COMMISSIONER OF INTERNAL REVENUE vs. PILIPINAS SHELLnPETROLEUM
CORPORATION, G.R No. 192398, September 29, 2014:DST is in the nature ofa
it is imposed upon the privilege, opportunity or facility offered at exchangesh
an excise tax because

business. DST is a tax on documents, instruments, loan agreements,C

for the transaction of the
and papers evidencing the
acceptance, assignment, or transfer of an obligation, right or property incident thereto. DST is thus
imposed on the exercise of these privileges through the execution of specific instruments, independently
of the legal status of the transactions giving rise thereto. In a merger of two corporations, the transfer of
real properties not conveyed to or vested by means of any specific deed, instrument or writing is not

5
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

subject to DST.R.A No. 9243, entitled “An Act Rationalizing the Provisions of the Documentary Stamp
Tax of the National Internal Revenue Code of 1997” was enacted and took effect on April 27, 2004,
which exempts the transfer of real property of a corporation, which is a party to the merger or
consolidation, to another corporation, which is also a party to the merger or consolidation, from the

r
payment of DST.

a
B with instruction to debit an account and pay a person subject to DST?
s AND SHANGHAI BANKING CORPORATION LIMITED-PHILIPPINE
Q. Is an electronic message

BRANCHESl
A. No. THE HONGKONG
e
debit o
b
2014:On review
vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 166018 & 167728, June 4,
with the Supreme Court, it held that an electronic message containing instructions to

R their respective local or foreign currency accounts in the Philippines and pay a certain named

anCode. They are also not bills of exchange duer

recipient also residing in the Philippines is not transaction contemplated under Section 181 of the Tax

B a to their non-negotiability. Hence, they are not subject to

h DST.

C Q. National Power Corporationes(“NAPOCOR”) transferred its franchise to the newly-created

b l (“TRANSCO”). At the time of transfer, NAPOCOR had
pending franchise taxo
National Transmission Corporation

R to TRANSCO?
obligations to the local government. May the liability to pay delinquent

n POWER CORPORATION vs.aPROVINCIAL r

franchise tax be transferred

a
Q. Yes. NATIONAL GOVERNMENT OF
B OF BATAAN) and THE REGISTER
h
BATAAN, SANGGUNIANG PANLALAWIGAN OF BATAAN, PASTOR B. VICHUACO (IN HIS

C OF THE PROVINCE OF BATAAN,eG.R.

OFFICIAL CAPACITY AS PROVINCIAL TREASURER
s No. 180654, April 21,2014. A corporation that
lbutCorporation
OF DEEDS

o b
has been ordered to pay franchise tax delinquency
had been transferred to the National Transmission
which facilities, including its nationwide franchise,
(TRANSCO) by operation of law during

Rthe one liable.

the time of the alleged delinquency, cannot be ordered to pay as it is not the proper party subject to the

an r
local franchise tax, the transferee being

a
B input tax under Section
C
Q. What is the 120+30 Rule h s
in a Claim for refund or credit of unutilized
112 of NIRC?
e
l claim must be filed with BIR
b
A. Mindanao Geothermal v. CIR, 2013: Requisites – first, administrative

made; second, judicial claim must be made within 30o

within two years after the close of taxable quarter when zero-rated or effectively zero rated sales were
R within
days from receipt of BIR decision on tax

Nippon Express Corp v. CIR, 2013: Failure ofa

n
refund/credit claim or if no action is received from the BIR 120 days.
a rthe
h B
BIR to act on a claim within 120 days, will allow

C 2013: The failure to observe the 120-dayesperiod to claim

taxpayer to seek relief within 30 days from the lapse of said 120 day period.

refund/credit is considered prematurely filed and CTA cannot take cognizance of thel
CIR v. Visayas Geothermal Power Co.,

o b judicial claim.

Q. What is the effect of the non-observance of the 120 day period? R

A. COMMISSIONER OF INTERNAL REVENUE vs. CEaLUZON n GEOTHERMAL POWER ar
h
within the two (2)-year prescriptive period. The taxpayer failed to comply with the 120-day period as it s
COMPANY, INC., G.R No. 190198, September 17, 2014. Two claims for refund of the VAT were filed B
C after the filing of the administrative claim.e
filed its judicial claim in C.T.A Case No. 6792 four (4) days
The Court held that only C.T.A Case No. 6792 should be dismissed on the ground of lack of jurisdiction
b l
for being prematurely filed.
However, the Court held that since C.T.A Case No. 6837, the judicial claim was filed a dayR
o
of the administrative claim, the same should be sustained based on equitable estoppeln
after the filing

a was in place. The

having been filed

supposed jurisdictional defect which would have attended the filling of its h
i.e., from December 10, 2003 to October 6, 2010, when BIR Ruling No. DA-489-03

C
judicial claim before the
expiration of the 120-day period was cured.

Q. Is the 120+30 day rule always mandatory?

6
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

A. No. TAGANITO MINING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE,

G.R. No. 198076, November 19, 2014 and G.R. No. 201195, November 26, 2014: 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

r
lapse of the 120+30 day period in consonance with the principle of equitable estoppel. Since Taganito

a
filed its judicial claim with the CTA on February 19, 2004, clearly within the period of exception of

B
December 10, 2003 to October 6, 2010. Its judicial claim was, therefore, not prematurely filed and should

s
not have been dismissed by the CTA En Banc.

The SC ruledl
e
o b 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
R
Section 112. A petition filed prior to the lapse of the 120-day period prescribed under said Section would
n
a DA-489-03, a rnature of the 120+30 day period under BIR Ruling No.
be premature for violating the doctrine on the exhaustion ofadministrative remedies. There is, however,

B
an exception to the mandatory and jurisdictional
h
C lapse
dated December 10, 2003, expressly
of the 120-day period befores
stated that the “taxpayer-claimant need not wait for the

e
it could seek judicial relief with the CTA by way of Petition for
Review.”
b l
R
Q. What are the purposes o of the aforementioned 120+30 periods?

REVENUE, a
A. ROHM APOLLO n SEMICONDUCTOR PHILIPPINESavs.rofCOMMISSIONER OF INTERNAL

h for filing a judicial claim for the refund orB

G.R. No. 168950, January 14, 2015.Section 112(D) the 1997 Tax Code states the time

C sor credit;asanda waiting

requirements tax credit of input VAT. The legal provision
speaks of two periods: the period of 120 days,
e
which serves period to give time for the
lCTA. It is the 30-day period that is at issue in this case.
to the period for filing a judicial claim withb
CIR to act on the administrative claim for a refund the period of 30 days, which refers

o
the

R
an2011. This Court reiterates that, the requirement a rof [printing] the BIR
Q. What is the purpose of the requirement for printing of sales invoices and official receipts?

permit to print on the faceh

Silicon Valley, Phils., Inc. v. CIR,
B mechanism adopted by
the Bureau of InternalC
es Without producing the
of the sales invoices and official receipts is a control

Authority to Print, the taxpayer cannot claim any tax refund/tax l

Revenue to safeguard the interest of the government.

b
credit.

Q. What are the requirements for a tax refund or taxR

o
n OF INTERNAL REVENUE, G.R.rNo.
credit?

203774, March 11, 2015: The Supreme Court a reiterated that it is fatal if the taxpayer failed to a
A. CARGILL PHILIPPINES, INC vs. COMMISSIONER

h receipts in claims for a refund or credit ofB

print the

C made prior to the effectivity of R.A 9337.eAsVAT invoice is

word “zero-rated” on the VAT invoices or official input VAT

l isoftheimprinting
on zero-rated sales, even if the claims were

word “zero-rated” proceeds from the rule-making authority granted to the o

evidence of the payment of goods or services received from the seller. The requirement b
the seller’s best proof of the sale of goods or services to the buyer, while a VAT receipt buyer’s best
the

whose sales are zero-rated or effectively zero-rated, Section 112(A)n

R A VAT-registered person
Secretary of Finance by the

a sales were made within which such Bar

NIRC for the efficient enforcement of the same Tax Code and its amendments.
specifically provides for a two-year

taxpayer may apply for the issuance of a tax credit certificate h

prescriptive period after the close of the taxable quarter when the

Cor refund of creditable input tax. e s

b l
o
Q. May a claim of refund prosper if the VAT invoices do not indicate the transactions as zero-

R
rated?

INTERNAL REVENUE, G.R. No. 183531, March 25, 2015:The Court stressed n
A. No. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs. COMMISSIONER OF
awould
that the failure to
indicate the words “zero-rated” on the invoices and receipts issued by a taxpayer
denial of the claim for refund or tax credit.
C h result in the

Q. May the BIR impose conditions not included in a tax treaty for the application of tax relief?

7
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

A. No. Deutsche Bank v. CIR, 2013. A tax treaty is an agreement that provides for a uniform treatment
of a taxable event between agreeing countries. The Court reiterated that the purpose of a tax treaty is “it is
used to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer
avoid international juridical double taxation. Double taxation is the imposition of comparable taxes in two
or more states on the same taxpayer in respect of the same subject matter and for identical periods”

ar
Thus the Court held that the BIR cannot impose additional requirements that would negate the availment
B
of relief provided under international agreements

e s
b
Q. Are persons l selling aviation fuel exempt from paying taxes for selling their fuel to international
R o
air carriers?
A. Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497.

anduty a r This entails harmonization of national legislation with

February 19, 2014: Under the basic international law principle of pacta sunt servanda, the state has the

treaty provisions. Section 135 (a) of B

to fulfill its treaty obligations in good faith.
h
C Convention), Article 24 (9) of which
the National Internal Revenue Code embodies the country’s
shas been interpreted to prohibit taxation of aircraft fuel consumed
e
compliance with its undertakings under the 1944 Chicago Convention on International Aviation (Chicago

b
for international transport, and l various bilateral air service agreements not to impose excise tax on
o
aviation fuel purchased by international carriers from domestic manufacturers or suppliers on petroleum

in question should R
products sold to tax-exempt international carriers. Evidently, construction of the tax exemption provision

a
under internationalnagreements. In view of the foregoing theaCourt r held that respondent, as the statutory
give primary consideration to its broad implications on the country’s commitment

credit ofh
B
taxpayer who is directly liable to pay the excise tax on its petroleum products is entitled to a refund or

beenC e s tax under Section 135 (a) of the NIRC

the excise taxes it paid for petroleum products sold to international carriers, the latter having

l
granted exemption from the payment of said excise

b
Ro Internal Revenue Code
II. National

an B a r
Q. What is income?

C h s
e
A. Income consists of profit or gains as to the amount of money coming to a person or corporation over a
specified period of time.
b l of gross income, classification as to
source (compensation income, fringe benefits, professionalo
Income: definition, nature, tests when it becomes taxable; inclusions

R
income, income from business, income from

nyieldfinal r
dealings in property; passive income investment (ex. Final tax of 20% on interest income, royalty income

a a
except on royalty on books which is subject to 10%, on monetary benefit from deposit substitutes,

h
prizes or awards except PCSO and Lotto winnings);10%
B
tax on royalties on literary works, books

C s
and musical compositions (LBM); 10% on from winnings from horse races; 10% on cash and stock
dividends for Filipinos, annuities, proceeds from insurance policies, prizes and
eawards, pensions,
lschedule of rate and
refund); capital gains tax expect a question on this review Sec. 24(D) of the NIRCb
retirement benefit or separation pay; income from whatever source (ex. forgiveness of indebtedness, tax

Ro
for
for actual computation of final sale over a property transaction); Tax rates for non-resident aliens are
higher. Check relevant provisions.

a n a r
h B
s
Q.What are the elements of income?
A. Presence of gain or profit, such is realized actually or C constructively; and is not exempt by any law or
l e
b
treaty.

R o
n
Q. What is taxable income?

authorized under the NIRC or any special law; distinguish between ordinary incomea
A. Items earned or gained as gross income less deductions and/ or personal and additional exemptions, if

C h and ordinary loss.

Q. Who are liable to pay income tax?

Resident citizens with minimum wage earners considered as special class; non -resident citizens
(Overseas contract workers, seafarers); aliens (determine threshold as to amount and period), domestic

8
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

corporations (review principles on transfer pricing); foreign corporations (review profit sharing for
branches) including resident and non-resident foreign corporations, partnerships including general
partnerships, co-ownerships and estates and trusts.

a r
Q. What is included in income tax?

B and such other taxes as are or hereafter may be imposed and collected by the
A. Income tax, estate and donor’s taxes, value-added tax, other percentage taxes, excise taxes;

e s
documentary stamp taxes;

l
BIR.

o b
A.R
Q. What is the nature of capital gains tax?

nWORKS AND HIGHWAYS vs. ARLENE R. r

REPUBLIC OF THE PHAILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC
aSORIANO,
a gains is a tax on passive income, it is theBseller, G.R No. 211666, February 25, 2015: Capital

Ch general s
not the buyer, who generally would shoulder the tax. As a

e
rule, therefore, any of the parties to a transaction shall be liable for the full amount of the
documentary stamp tax due, unless

b l they agree among themselves on who shall be liable for the same.

R
Q. What are included when o a natural person is taxed?

a n a rtax payer under Section 35 (A) of the

A. Inclusions in compensation income, note exclusions and deductions (itemized and standard deductions.

NIRC.); h Bfinal tax);treatment

Memorize the amounts on personal exemption for individual

C s
Income derived from business or practice of profession; of passive income (final tax

minimum wage earners and those who grantedeexemptions under international agreements (those
and need not be reported since deduction is in the form of tax on capital gains; senior citizens,

employed with Asian Development Bank and IRRI)

b l are exempt from payment.
R o
a n schedule, allowable deductions (itemizedarand optional standard
Q. What are included when domestic corporations are taxed?

h
A. Covered transactions, payment
B
Cof transfer pricing if domestic corporationesdoes business in another foreign
deductions); treatment of passive incomes subject to tax and those not subject to tax; tax on capital gains;

lon the income of (1) proprietary non-

check also on principle

b
country; treatment of accumulated earnings.
Section 27(B) of the NIRC imposes a 10% preferential tax rate

R
profit educational institutions and (2) proprietary non-profit o hospitals. The only qualifications for
n as "any private school maintained
hospitals are that they must be proprietary and non-profit. "Proprietary" means private, following the
rand
administered by private individuals or groups"a a
definition of a "proprietary educational institution"

income or asset accrues to or benefits anyh

with a government permit. "Non-profit" means
B or asset
no net

Call its activities conducted not for profit. es

member or specific person, with all the net income

l
devoted to the institution's purposes and

b
oreal property tax?
Q. What real property owned by an educational institution is exempt from
R
a n taxes; while portions leased to ar
A. Angeles University Foundation v. City of Angles, 2012. Only portions actually, directly and

B
exclusively used for charitable purposes are exempt from real property
private entities are not exempt from such taxes.
C h s
l e
Q. Does the fact that a hospital accept paying patients affect its exemption from taxes?
A. CIR v. St. Luke’s Medical Center, 2012: As a general principle, a charitable institution does o b
R patients,
not lose

nto achieve; and

its character as such and its exemption from taxes simply because it derives income from paying

a
whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the

no money inures to the private benefit of the persons managing or operating theh
money received is devoted or used altogether to the charitable object which it is intended

C
institution.

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

9
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

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
Tax for services rendered by a resident corporation outside Philippine territory: Accenture, Inc. v.
CIR, 2012: The Court held that that the recipient of the service should be doing business outside the

ar
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)
B
(2). If the provider and recipient of the "other services" are both doing business in the Philippines, the

e s
payment of foreign currency is irrelevant. Otherwise, those subject to the regular VAT under Section 102

l
(a) can avoid paying the VAT by simply stipulating payment in foreign currency inwardly remitted by the

o b
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

Ron the generosity of the taxpayer. The provider of services can choose to pay the regular VAT or avoid it

n r
by stipulating payment in foreign currency inwardly remitted by the payer-recipient. Such interpretation

a a
removes Section 102 (a) as a tax measure in the Tax Code, an interpretation this Court cannot sanction. A

Bof services are both doing business in the Philippines, their

h tax is a mandatory exaction, not a voluntary contribution. x xx

C transaction falls squarely under Sections 102 (a) governing domestic sale or exchange of services. Indeed,
e
Further, when the provider and recipient

this is a purely local sale or l

o b
transaction falls under the other
exchange of services subject to the regular VAT, unless of course the
provisions of Section 102 (b).’
R
a n
Q. What taxes are imposed on non-resident foreign corporations?
a r
h B interest
C streaty or provision
A. Non-resident foreign corporations are liable only for income derived from Philippine sources, rate and
schedule of payment, tax liability on certain
e
incomes
l
like on foreign loans, intra corporate

b
dividends; may enjoy certain exemptions under tax of special laws; treatment of

o
accumulated earnings.

R
n
Q. What is the Minimum Corporation Income Tax (“MCIT”)?
A. Under R.A. 8424, MCIT isa a r corporation even if
h B The following entities are
a mandatory imposition for both domestic and foreign

Cof MCIT:
the deductible expenses exceed
s
gross income. The rate is 2% of gross income.
e
l
exempted from payment
1. Domestic proprietary educational institutions;

o b
R
2. Domestic non-profit hospital;

an r
3. Domestic depository banks under the expanded foreign currency deposit system;

B a
5. Resident foreign offshore banking units; h
4. Resident foreign international carrier;

C e s
6. Resident foreign regional operating headquarters; and
b ltax holiday benefits
Ro
7. Firms enjoying special tax rate under PEZA, BCDA and those enjoying income
like those registered with the BOI.

athenNIRC B a r
h
Estate Tax and Donor’s Taxes under

C e s
A. Only the net value of the estate is liable to tax. A schedule of brackets of amount of net value b
Q. How do you determine the value of estate to be taxed?
l
corresponding rate schedule per bracket are imposed.
R o and the

a n
Q. Who are liable to pay estate taxes?

C h
A. Residents and citizens covering all properties, real or personal, tangible or intangible, wherever
situated; and non-resident aliens covering only properties in the Philippines provided, that, with respect to
intangible personal property, its inclusion in the gross estate is subject to the rule on reciprocity.

10
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Q. What is gross estate?

A. Decedent’s interest at the time of his death, transfer in contemplation of death, property transfers
subject to revocation, property passing under a general power of appointment, proceeds of life insurance;
and property transfers for insufficient consideration

a r
Bbe deducted from the estate:
Q. What may be deducted from the estate?

e
A. The following mays
1. Expenses, l
b losses, indebtedness and taxes (funeral expenses, judicial expenses, claims against the estate,

o previously taxed (transfers for public use, family home, standard deduction, medical expenses
claims against insolvent persons, unpaid mortgages, taxes and casualty losses); and

R
2. Property
n r the corresponding holding period and the tax rate
and amounts received by heirs under R.A. 4917 on Retirement Benefits of Private Employee). Please
a review a
BSection 86(A) (2) of the NIRC.
the concept of vanishing deduction and

C h s
based on the value of the property under

e
l for purposes of donor’s tax?
b
Q. Who are considered strangers

o
R
A. Read on definition, transactions covered and schedule of payment based on brackets as to the value of
the donation (Section 16 of the NIRC); for the “stranger”, a flat rate of 30% is imposed; the following are

descendant; a
n a rline within the fourth civil degree of
NOT “strangers”- brother, sister (whether by whole or half blood), spouse, ancestor and lineal

h B
and relative by consanguinity in the collateral

C s
relationship.

Q. What items are not subject to donor’s tax?l

e
A. Dowries or gifts made on account ofo
b
entity created by any of its agencies R
marriage, gifts made or for use of the national government or

naccredited rtrust cultural

which is not conducted for profit, or to any political subdivision of

a
said government; and gifts in favor
a
of an educational and/or charitable, religious,

B
or social

h
welfare corporation, institution, non- governmental organization, or philanthropic

C
organization or research institution or organization.

e s
Q. When is the donor’s tax due? b l
R
A. A taxpayer is liable for donor’s tax upon the transfer by oany person, resident or non-resident, of any
an r
property by gift. The transfer must be completed by either by actual or constructive delivery of the
property to the done.
B a
C h s
l e
o b
R
Q. Can political campaign contributions be covered by donor’s tax?

an r
A. Campaign contributions which have been fully acknowledged by a political candidate or a political
party and included in the Statement of Expenses submitted to the COMELEC are exempt from donor’s
B a
C h
tax. Therefore, failure to include the same as part of the campaign expense reported to the COMELEC
s
e
will subject such amounts of donation to donor’s tax.

b l
Q. What are the rules on protest and refund for income tax?
A. A taxpayer may protest any assessment administratively; taxes may be paid under protest.
R o
General Rule: Refund may be requested by the taxpayer within two years from payment.
a n
C h
Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly
Mirant Phils., Operation Corporation), G.R. No. 179260 (2014: There are three essential conditions
for the grant of a claim for refund of creditable withholding income tax, to wit:
(1) The claim is filed with the Commissioner of Internal Revenue within the two-year period from the
date of payment of the tax;

11
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

(2) It is shown on the return of the recipient that the income payment received was declared as part of the
gross income; and
(3) The fact of withholding is established by a copy of a statement duly issued by the payor to the payee
showing the amount paid and the amount of the tax withheld therefrom.

a r
Bproperty, levy of real property; civil action and criminal action.
Q. What may the government resort to in case of tax payer delinquency?

e s
A. Distraint of personal

b l
R o Tax Remedies under the NIRC

n
a Q.A. What a r
Letter of authority issued for tax B
are the steps in the assessment process?
h
C presents satisfactory proof); releasesof preliminary assessment in case of unsatisfactory explanation
audit, notice of informal conference (terminated if taxpayer

l e15 days to request for reconsideration; service of formal letter of

b
and if taxpayer disagrees, he has

o formal demand and must submit supporting documents within 60 days

demand/ notice of assessment if basis for reconsideration is not meritorious; taxpayer may file a protest

(if not, the protest isR

within the 30-day period of the

n r or notice of final decision of the

deemed waived); if the Commissioner does not decide the matter within 180 days

lapse of thea180 day period for the Commissioner to decide a

or decides with finality that the taxpayer is liable for the assessment ; taxpayer has 30 days from the

h Bdays) to 2012);
C s
Commissioner of the Internal Revenue ( even beyond 180 file an appeal with the Court of Tax

division of the CTA and an appeal can further bee

Appeals (Lascona Land v Commissioner of Internal Revenue, case is heard initially by a

Section 4 (A) RULE, 8 in relation to Rule 43 of

b lthe Rules of Civil Procedure) and the final arbiter is
made with the CTA en banc ( within 15 days under

been expanded to include not only civil o

the Supreme Court. Through the enactment of Republic Act No. 9282, the jurisdiction of the CTA has
Rtax cases but also cases that are criminal in nature, as well as
an a r
local tax cases, property taxes and final collection of taxes.

Q. What cases are withinh

B
C the jurisdiction of the Court of Tax Appeals?
e sprior to R.A. 9282, the Court of
b
A. Pursuant to the provisions of Republic Act No. 1125 and other laws
l
o in cases involving disputed assessments,
Tax Appeals retains exclusive appellate jurisdiction to review by appeal, the following:
1. Decisions of the Commissioner of Internal Revenue
R
other matters arising under the National n
a Internal Revenue Code or other law or Bpartaofrlaw
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or

2. Decisions of the Commissioner C

h
administered by the Bureau of Internal Revenue;
sduties, fees or
other money charges; seizure, detention or release of property affected; fines, e
of Customs in cases involving liability for customs

b
penalties imposed in relation thereto; or other matters arising under the Customs l Law or other law
forfeitures or other

oof Customs favorable to the

or part of law administered by the Bureau of Customs [Rep. Act. No. 1125, (1954), Sec. 7];
R
n and r
3. In automatic review cases where such decisions of the Commission

a
taxpayer is elevated to the Secretary of Finance (Sec. 2315, TCC);

B a
h
4. Decisions of the Secretary of Trade and Industry, in the case of non-agricultural product,
C imposition of the Anti-Dumping Duty,e
commodity or article, or the Secretary of Agriculture, in the case of agricultural product,
s
Countervailing and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a)l
commodity or article, in connection with the

(p), and Republic Act 8800].

o b and

Under Republic Act Number 9282, the CTA's original appellate jurisdiction was expandedR
n
to include the

a
following:

Customs Code;
C h
1. Criminal cases involving violations of the National Internal Revenue Code and the Tariff and

2. Decisions of the Regional Trial Courts (RTC) in local tax cases;

3. Decisions of the Central Board of Assessment Appeals (CBAA) in cases involving the
assessment and taxation of real property; and

12
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

4. Collection of internal revenue taxes and customs duties the assessment of which have already
become final.
Q. Will a case for tax evasion fail without a deficiency tax assessment?

r
A. No. BUREAU OF INTERNAL REVENUE, as represented by the COMMISSIONER OF

a
INTERNAL REVENUE vs. COURT OF APPEALS, SPOUSES ANTONIO VILLAN MANLY, and

B
RUBY ONG MANLY, G.R No. 197590, November 24, 2014: The Court ruled that tax evasion is deemed

s
complete when the violator has knowingly and willfully field a fraudulent return with intent to evade and

e
defeat a part of all of the tax. Corollarily, an assessment of the tax deficiency is not required in a criminal
l
b
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
o
R ELECTRIC COOPERATIVE vs. COMMISSIONER
first be proved before one can be prosecuted for tax evasion.

n193100, December 10, 2014: The Court held r

SAMAR-I OF INTERNAL REVENUE, G.R No.

a islegalsubstantially complied with whenever thea

that the notice requirement under section 228 of the NIRC

B taxpayer
C h s
bases of the deficiency taxes assessment,
had been fully informed in writing of the factual and
which enabled the latter to file an effective protest.

l e
b
A. CHINA BANKINGo
Q. When is a tax assessment deemed made?

R 04,CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.

collection of then r notice had been released, mailed

No. 172509, February 2015. The assessment of the tax is deemed made and the three-year period for

to the taxpayer. Thus, failure of the BIRa

aBIRassessed tax begins to run on the date the assessment

h properties nor file collection case within theB

or sent by the to file a warrant of distraint or serve a levy

Cto collect the tax through its Answer with ea demand

on taxpayer’s
s three-year period is fatal. Also, the attempt of

the CTA is not deemed compliance with the Taxl

the BIR for the taxpayer to pay the assessed DST in

b Code.

Ro
n REVENUE vs. PHILIPPINE NATIONAL r BANK, G.R. No.
Q. What constitutes proof of taxes withheld?
A.COMMISSIONER OF INTERNAL a a
Btax withheld at source is the
h
180290 September 29, 2014: The Court held that the certificate of creditable
s to be presented and to testify
executed and preparedC e
competent proof of establish the fact that taxes are withheld. It is not necessary for the person who

personally to prove the authenticity of the certificates.

b l
the certificate of creditable tax withheld source

R o
that the taxpayer cannot avail of a tax amnesty program?
a n
Q. Is a deficiency VAT assessment tantamount to an assessment for withholding tax liabilities such
a r
A. No. Indirect taxes, like VAT and exciseh Bor passedin
C s
tax, are different from withholding taxes. To distinguish,

on to another person, such as when the tax is imposed upon goods before reaching e
indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted

ultimately pays for it. On the other hand, in case of withholding taxes, the incidence
b l and burden of
the consumer who

R o
taxation fall on the same entity, the statutory taxpayer. The burden of taxation is not shifted to the
withholding agent who merely collects, by withholding, the tax due from income payments to entities

an a r
arising from certain transactions and remits the same to the government.

h
Q. What are the requirements for entitlement of a corporate taxpayer for a refund or the issuance s
B
C e
of tax credit certificate involving excess withholding taxes?
l
b OF
INTERNAL REVENUE vs. TEAM (PHILS.) ENERGY CORPORATION (FORMERLYo
A. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER

PHILS ENERGY CORPORATION), G.R. No. 188016, January 14, 2015: The CourtR
MIRANT

n
held that the

a
following requisites must be complied with to sustain the claim for refund:

of the NIRC;
C h
1) That the claim for refund was filed within the two-year reglamentary period pursuant to Sec. 229

2) When it is shown on the ITR that the income payment received is being declared part of the tax
payer’s 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

13
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Q. Is the CTA prohibited from determining whether taxes should have been paid because it is an
assessment beyond its jurisdiction?

r
A. No. SMI-ED PHILIPPINES TECHNOLOGY, INC. vs. COMMISSIONER OF INTERNAL

a
REVENUE, G.R. No. 175410, November 12, 2014: The Supreme Court ruled that in an action for the

B
refund of taxes allegedly erroneously paid, the Court of Tax Appeals may determine whether there are

s
taxes that should have been paid is not assessment. It is incidental to determining whether there should be
a refund.
l e
o b
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY vs. SECRETARY
R
OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, G.R No. 210987, November 24,

a n a r
2014: The Court ruled that, the CTA can now rule not only on the propriety of an assessment or tax

B
treatment of a certain transaction, but also on the validity of the revenue regulation or revenue

Ch s
memorandum circular on which the said assessment is based.

e
l remedies always required in questioning illegal assessments?
b
Q. Is exhaustion of administrative

o
R BY GOVERNOR ENRIQUE T. GARCIA,OF JR.,
A. CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF

TALENTO, INn r187583, November 26,vs.2014:

BATAAN, REPRESENTED AND EMERLINDA S.

ECONOMICa a
HER CAPACITY AS PROVINCIAL TREASURER BATAAN PHILIPPINE

held thath B
ZONE AUTHORITY, G.R. No. 184203, G.R No. The Court

C s the Regional
in case of an illegal assessment where the assessment was issued without authority, exhaustion
of administrative
e
remedies is not necessary and the taxpayer

government unit from collecting real propertyl

may directly resort to judicial action. The

b
taxpayer shall file a complaint for injunction before Trial Court to enjoin the local
taxes. The party unsatisfied with the decision of the

R o
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

an r
fifteen (15) days from notice of the trial court’s decision.
a
B REVENUE, G.R.
h sfrom the date of submission of
No. 185666, FebruaryC e
NIPPON EXPRESS (PHILIPPINES) CORP vs. COMMISSIONER OF INTERNAL
04, 2015:The Court held the BIR has 120 days
complete documents in support of the administrative claim within
b l which to decide whether to grant a
R
within the 120-day period prescribed by law, the taxpayer has oonly has 30 days after the expiration of the
refund or issue a tax credit certificate. In case of failure on the part of the BIR to act on the application

n
120-day period to appeal the unacted claim with the CTA.
Be careful not to confuse this with the 180 daya a r
h B
period for the CIR to decide an assessment protest.

C
Q. What is the principle of exhaustion of administrative remedies in tax casese
s
action may be instituted?
b l before a judicial

A.Commissioner of Internal Revenue vs. Team Sual Corporationo

R (Formerly Mirant Sual

anofCode r
Corporation), G.R. No. 194105. February 5, 2014: Taxpayer submits that the requirement to exhaust the
120-day period under Section 112 (c) of the National Internal Revenue prior to filing the judicial

B a
non-observance of the same merely results in lack of cause ofh
claim with the Court of Tax Appeals (CTA) is a doctrine of “exhaustion administrative remedies.” The

C action which may be waived for failure to

e s
l
timely invoke the same.
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
o b
the absence of any clear and convincing proof to the contrary, the Court must presumeR
of the Court of Tax Appeals (CTA) are accorded the highest respect and will not be lightly set aside. In

rendered a decision which is valid in every respect.

a n that the CTA

The City of Manila, etc. et al. v. Hon. Caridad H. Grecia-Cuerdo etc.,h

Cthe special civil action for
et al, G.R. No. 175723.
February 4, 2014. Petitioners availed of the wrong remedy when they filed
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.

14
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

III. Local Taxation

Q. What taxes may local government unit collect?

feesand charges. (TFC).

ar
A. Under Section 5 of Article X of the Constitution, local government units are allowed to collect tolls,

B
e s
l on Taxing Power of Local Government Units:
Q. What are the limitations to the taxing power of local governments?

b
A. Limitations
o
2. R
1. Uniform (limited to taxes, fees and charges)

n Equitable
a 3. Progressive a r
h B
C 5. Not unjust, excessive, oppressive
4. Imposed for a public purpose
e sor confiscatory
b l
6. Not contrary to law
o
Rmust inure to the benefit of the LGU
7. Collection cannot be let to private person

a n
8. Revenue derived
a r
h B
Cexceptions/instances where the local governmente s cannot impose taxes.
l
Q. Cite
A. The exceptions are:
1. When the property is owned byo
b
R
the Republic and the instrumentality is performing a

an directly and exclusively used forBreligious, ar charitable and/or

governmental function;
2. When use of the property is actually,
educational purposes;
3. When property is C
h scorporation charged with the
owned by a government owned and controlled
l e
4. When property is owned by cooperatives registered underb
provision of water and power;

5. When machineries are used for pollution control ando

the provisions of R.A.6938; and

R environmental protection (Sec. 234, LGC).

No. 169234. October 2, 2013.Section 252 and a

New cases: Camp John Hay Development Corporation n v. Central Board of Assessment Appeals,rG.R.
Section 222 of the Local Government Code setsaout the
h B with the
Cto be collected. Two conditions must be met:ehisstheprotest
administrative remedies available to a taxpayer or real property owner who does not agree

l
assessment of the real property tax sought taxpayer/real

b
property owner questioning the assessment should first pay the tax due before can be

the property not satisfied with the action of the provincial, city or municipal o
entertained. Secondly, within the period prescribed by law, any owner or person having legal interest in

R (LBAA) of the province or

assessor in the assessment of

city concerned. Thereafter, within thirty days from receipt, he may n r

his property may file an appeal with the Local Board of Assessment Appeals

a Appeals a
elevate, by filing a notice of appeal,

Camp John Hay Development Corporation v. Central Boardh B

the adverse decision of the LBAA with the Central Board of Assessment

Creal property taxes does not actually questione

of Assessment Appeals, G.R. No. 169234.
s
l
October 2, 2013. A claim for exemption from payment of

of the assessment by the local assessor

o b
the assessor’s authority to assess and collect such taxes, but pertains to the reasonableness or correctness

Smart Communications, Inc. v. Municipality of Malvar, Batangas, G.R. No. 20442. February 18,
R
a
have the power to create its own sources of revenues and to levy taxes, fees, and charges n subject to such
2014. Section 5, Article X of the 1987 Constitution provides that “[e]ach local government unit shall

C h
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,

15
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

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. vs. Hon. Angel Valera
Colet, as Presiding judge, Regional Trial Court of Manila (Br.43), et al. G.R No. 120051, December 10,

a r
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.
Btaxes actually,
s
Lung Center of the Philippines (LCP) v. Quezon City, G.R. No. 144104, June 29, 2004): LCP is not

liable for those e

liable for real property directly and exclusively used for charitable purposes but will be

b
shops, canteen,lstore shops and medical clinics of private medical practitioners. The use of profits derived
leased to private parties from which it derives income like those spaces leased as coffee

R o
from these leases will not determine the exemption but the primary factor is the character of lease of the
leased premises.

anCity a
of Pasig v. Republic, G.R. No. 185023, August

B
r 24, 2011: The general rule is: Properties owned by
h the Republic are exempt from payment of real property tax.

C properties where the beneficial useehass been granted for consideration or otherwise to a taxable person.
Exception to the Rule: The local government unit may impose real property tax on those portions of

b l
GSIS v. City of Manila: o
R anyTheliability
Court held that properties of GSIS within the jurisdiction of the City of

GSIS leased to an r
Manila are exempt from from real property tax except its property along T.M. Kalaw which
a private entity.
B a
h
Cv. C.A. and City of Paranaque: While thereeissa general perception that MIAA is a government-
lit is an instrumentality of the national government. As
MIAA

an instrumentality of the national governmentb

owned and controlled corporation, the Court that

Rofor its properties within the jurisdiction of the city.

performing a governmental function, the City of Paranaque
cannot hold it liable for real property taxes

a n Authority (“MCIAA”) v. City of Lapu-Lapu, a r G.R. No. 181756,

June 15, 2015: Propertiesh
Mactan-Cebu International Airport
Bpublic purposes consisting
Cairfield, runway, taxiway and lots which suchesfacilities are situated are exempt
of MCIAA actually, solely an exclusively used for

l
of passenger terminals,

b
from real property tax.

Angeles University Foundation v. City of Angeles:R

o
n r
While AUF claimed that being an educational

and not a tax imposition. Therefore, AUFa

arequirements
institution, it should be exempt from payment from its Building Permit, and the Court held that the

h B
Building Permit is in the nature of a regulatory measure is liable

a tax imposed by the local government. C s

to pay the Building Permit in compliance with the of the National Building Code as it is not

l e
b
Ro
Bayantel v. Quezon City: The claim from exemption from payment of local government taxes must be
explicitly provided in the congressional franchise of the public utility company.

a n a r
h B
s
Tax Delinquency Auction Sale:
C e
l
Requisites:
1. Notice to delinquent property owner

o b
R
2. Assessment of delinquency
3. Publication in a newspaper of general circulation

a n
h
4. Auction sale must in public
5. Property Owner has a period of one year to redeem the auctioned property
6. After the lapse of the redemption period, a Deed of Sale is executed
C
7. Transfer of ownership to the winning bidder

16
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Protest on Real Property Assessment

General Rule: The taxpayer must first settle the tax due to the local government unit with a notice

r
of protest.

B a
Thereafter, the taxpayer files a protest to the Local Board of Assessment Appeals (LBAA) chaired
by the Register of Deeds in the locality.

e s
The decision of the LBAA is appealable to the Central Board of Assessment Appeals (CBAA)

b l
R o V. Tariff and Customs Code of 1978, as amended

n r
A. IMPORT DUTIES

a Q.A. What
Tariff duties are levied on importedB
are ordinary import duties?
a
h
C scheme to artificially or temporarily s
goods either as a revenue generating measure or a protective

l e inflate prices to protect a country’s domestic output and its industries

b
from their foreign counterparts. With the exception of certain articles which can be imported duty-free,

o
upon compliance with certain prescribed conditions or formalities, goods are levied ordinary import

sensitive agriculturalR
duties under the Most Favored Nation (MFN) treatment,ranging from Free/Zero to 30% except in cases of

n r
products which are accorded a certain degree of protection via higher tariff rates

a are levied ordinary import duties ranging froma

reaching to as high as 65%. On the other hand, under the Common Effective Preferential Tariff (CEPT)

h B duties.
Scheme, goods 0% to 5%, except also in cases of sensitive

C s
agricultural products which are subject to as high as 40% tariff

l e
Q. What are special duties under the Tariff Code?
b
o import duties, taxes and charges imposed by law on the
imported product under the followingR
A. These are levied in addition to the ordinary

n r
circumstances:

a B a
h
C The anti-dumping duty is a special duty eimposed
Q. Define the following terms:
s in the event that a specific
kind or class of foreign article, is being imported into, sold or is l
a. Anti-Dumping Duty:

an export price less than its normal value in the ordinary

o b likely to be sold in the Philippines, at
course of trade for a like product,

R retarding the establishment of a domestic

commodity or article destined for consumption in the exporting country which is causing or threatening to

an r
cause material injury to a domestic industry, or materially
industry producing similar product.
B a
h
C duty is a special duty charged whenever s any product,
b. Countervailing Duty: The countervailing
l e
b
commodity or article of commerce is granted directly or indirectly by the government in the country of

exportation of such product, commodity or article, and the importation o

origin or exportation, any kind or form of specific subsidy upon the production, manufacture or

commodity or article has caused or threatens to cause material injuryR

of such subsidized product,

an industry. r
to a domestic industry or has
materially retarded the growth or prevents the establishment of a domestic

B a
C h s
e
:
c. Marking Duty The marking of articles (or its containers) is a prerequisite for every article or container
imported into the Philippines in accordance with Section 303 of the TCCP. In case of failure to mark an
b l
Ro
article or its container at the time of importation, there shall be levied upon such article a marking duty
of 5% ad valorem.

a n
h
d. Discriminatory Duty: The discriminatory duty is imposed by the President by proclamation upon

C
articles of a foreign country which discriminate against Philippine commerce or against goods
coming from the Philippines as stipulated under Section 304 of the TCCP. The amount of additional
duty to be levied shall not exceed 100% ad valorem based on the dutiable value of imported articles.

e. General Safeguard Measure: The general safeguard measure is applied by the Secretary of Trade and

17
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Industry, in the case of non-agricultural products, or the Secretary of Agriculture, in the case of
agricultural products, upon positive final determination of the Tariff Commission that a product is being
imported into the country in increased quantities, whether absolute or relative to domestic production, as
to cause or threaten to cause serious injury to the domestic industry. In the case of non-agricultural

r
products, however, the Secretary of Trade and Industry shall first establish that the application of such

a
safeguard measures will be in the course of public interest.

B
e s
The general safeguard measure shall be limited to the extent of redressing or preventing the injury and to

b l
facilitate adjustments by the domestic industry from the adverse effects directly attributed to the increased
imports.
o
R Safeguard Duty: An additional special safeguard duty is imposed on an agricultural product
nwhenever the cumulative import volume in r
a actual
f.Special
a
B
a given year exceeds its trigger volume and when the
h
C Secretary of Agriculture. es
c.i.f. (Cost, Insurance and Freight) import price falls below its trigger price. The safeguard
duty is imposed by the Commissioner of Customs through the Secretary of Finance upon request by the

b l
R o
a
B. EXPORT DUTIES n a r
h B
C
Q. What domestic items remain subject to export
e s
duties?
A. Logs are the only remaining products subjectl
b
oHowever,
The export duty imposed on logs is 20% of the
to the duty under Section 514 of the TCCP, as amended.
gross Free on Board (FOB) value at the time of shipment

R
based on the prevailing rate of exchange. only planted trees are subject to the export duty,

Natural Resources Memorandum n

aOrder No. 8 (issued June 20, 1986). Bar
since all naturally grown trees are banned from being exported under Ministry of Environment and

Ch e s
l
C. Remedies

1. The Commissioner of Customs has jurisdiction in caseso

b
R affected; fines, forfeitures or other penalties
involving liability for customs duties, fees or

n1125, (1954), Sec. 7]. r

other money charges; seizure, detention or release of property

aNo. a
imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law

h B
administered by the Bureau of Customs [Rep. Act.

C
2. Decisions of the Commission of Customs favorable to the taxpayer are elevated e
s
Finance (Sec. 2315, TCC); and
b l to the Secretary of

R o
nproduct, commodity or article, in ar
3. The Secretary of Trade and Industry has jurisdiction in the case of non-agricultural product, commodity
a B
or article, while the Secretary of Agriculture, in the case of agricultural

C h
connection with the imposition of the Anti-Dumping Duty, Countervailing and Safeguard Duty [Republic
s
e
Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and (p), and Republic Act 8800].

b l
4. Decisions/ Resolutions of the DTI and DA Secretaries may be elevated to the Tariff Commission.

R o
5. Decisions of the Tariff Commission are appealable to the CTA.
a n
6. CTA decisions are appealable to the Supreme Court. Ch

18
www.chanroblesbar.com : www.chanroblesbar.com.ph
 ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

D. Search

Q. When is a judicial warrant required for a customs search?

ar
Under 2208-2211 of the Tariff and Customs Code, customs officers, policemen and other persons duly
authorized may enter enclosures, vessels and aircrafts, search vehicles beasts and persons. However,
B
when a dwelling house is to be searched, it requires a judicial search warrant

e s
b l
R o
a n a r
B
Ch e s
b l
R o
an B a r
Ch e s
bl
Ro
an B ar
Ch e s
bl
R o
an Ba r
Ch e s
bl
Ro
an B a r
Ch e s
b l
R o
a n
Ch

19
www.chanroblesbar.com : www.chanroblesbar.com.ph