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Green Notes 2014

Taxation Law
Prepared by: Justice Japar B. Dominador

ESSENTIAL NOTATIONS IN TAXATION: The power to tax includes the power to

A PRE-BAR REVIEW GUIDE destroy if it is used validly as an implement of
the police power in discouraging and in effect,
ultimately prohibiting certain things or
I. GENERAL PRINCIPLES enterprises inimical to the public welfare xxx
Q. Explain the pronouncement of (Cruz, Constitutional Law, 2000 Ed., p. 87).
the Supreme Court that the
power of taxation is purely
legislative Describe the Scope of the Power to Tax
The power of taxation is the most
Essentially, this means that in the
absolute of all powers of the government (Sison
legislature primarily lies the discretion to
v. Ancheta, 130 SCRA 654). It has the broadest
determine the nature (kind), object (purpose),
scope of all the powers of government because
extent (rate), coverage (subjects) and situs
in the absence of limitations, it is considered as
(place) of taxation. It has the authority to
unlimited, plenary, comprehensive and
prescribe a certain tax at a specific rate for a
particular public purpose on persons or things
within its jurisdiction. In other words, the
However, the power of taxation should
legislature wields the power to define what tax
be exercised with caution to minimize injury to
shall be imposed, why it should be imposed,
the proprietary rights of the taxpayer. It must
how much tax shall be imposed, against whom
be exercised fairly, equally and uniformly, lest
(or what) it shall be imposed and where it shall
the tax collector kill “the hen that lays the
be imposed (CREBA v. Romulo, 614 SCRA 605,
golden egg” (Roxas v. CTA, 23 SCRA 276).

Q. Expound on the theory that the Q. Discuss the meaning and

power of taxation is considered implication of the LIFEBLOOD
as a principal attribute of DOCTRINE.
1. By enforcing the tax lien, the
A principal attribute of sovereignty, the BIR availed itself of the most expeditious way to
exercise of taxing power derives its source from collect the tax. Taxes are the lifeblood of the
the very existence of the state whose social government and their prompt and certain
contract with its citizens obliges it to promote availability is an imperious need (CIR v. Pineda,
public interest and common good. The theory 21 SCRA 105).
behind the exercise of the power to tax
emanates from necessity; without taxes, 2. The government is not bound
government cannot fulfill its mandate of by the errors committed by its agents. In the
promoting the general welfare and well-being performance of its government functions, the
of the people (CIR v. BPI, 521 SCRA 373, 387- State cannot be estopped by the neglect of its
388). agents and officers. Taxes are the lifeblood of
the nation through which the government
agencies continue to operate and with which
Q. Briefly discuss the dictum that the state effects its functions for the welfare of
“the power to tax involves the its constituents. The errors of certain
power to destroy.” administrative officers should never be allowed
to jeopardize the government’s financial
In Mactan Cebu International Airport
position (CIR v. CTA, 234 SCRA 348).
Authority v. Marcos, 261 SCRA 667, 679, the
Supreme Court stressed that taxation is a
3. The BIR is authorized to collect
destructive power which interferes with the
estate tax deficiency through the summary
personal and property rights of the people and
remedy of levying upon the sale of real
takes from them a portion of their property for
properties of a decedent, without the cognition
the support of the government.

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Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

and authority of the court sitting in probate within reasonable bounds what is necessary for
over the supposed will of the decedent, its protection and expedient for its promotion.
because the collection of the estate tax is If objective and methods alike are
executive in character. As such, the estate tax is constitutionally valid, there is no reason why
exempted from the application of the statute of the state may not levy taxes to raise funds for
non-claims, and this is justified by the necessity their prosecution and attainment. Taxation
of government funding, immortalized in the may be made the implement of the State’s
maxim “Taxes are the lifeblood of the police power.”
government and should be collected without
unnecessary hindrance.” However, such 2. In Tio v. Videogram Regulatory
collection should be made in accordance with Board, 151 SCRA 208, the levy of a 30% tax
law as any arbitrariness will negate the very under PD 1987, was imposed primarily for
reason for government itself (MARCOS II v. CA, answering the need for regulating the video
273 SCRA 47). industry, particularly because of the rampant
film piracy, the flagrant violation of intellectual
4. Taxes are the lifeblood of the property rights, and the proliferation of
government and so should be collected without pornographic videotapes, and therefore VALID.
unnecessary hindrance. Philex’s claim that it While the direct beneficiaries of the said decree
had no obligation to pay the excise tax liabilities is the movie industry, the citizens are held to be
within the prescribed period since it still has its indirect beneficiaries.
pending claims for VAT input credit/refund with
the BIR is UNTENABLE (Philex Mining
Corporation v. CIR, 294 SCRA 687).
Q. May the power of taxation be
used as an implement of the
Q. State the DOCTRINE OF SYMBIOTIC power of eminent

This doctrine is enunciated in the case of YES. The Supreme Court in the case of
CIR v. ALGUE, INC., 158 SCRA 9, which states CIR v. Central Luzon Drug Corp., 456 SCRA 414,
that: “Taxes are what we pay for civilized 445 held: “Tax measures are but “enforced
society. Without taxes, the government would contributions exacted on pain of penal
be paralyzed for lack of the motive power to sanctions” and “clearly imposed for a public
activate and operate it. Hence, despite the purpose. In recent years, the power to tax has
natural reluctance to surrender part of one’s indeed become a most effective tool to realize
hard-earned income to the taxing authorities, social justice, public welfare, and the equitable
every person who is able to must contribute his distribution of wealth.
share in the burden of running the government.
The government, for its part, is expected to While it is declared commitment under
respond in the form of tangible and intangible Section 1 of RA 7432, social justice “cannot be
benefits intended to improve the lives of the invoked to trample on the rights of property
people and enhance their material and moral owners who under our Constitution and laws
values.” are also entitled to protection. The social
justice consecrated in our [C]onstitution [is] not
intended to take away rights from a person and
Q. When is Taxation considered an give them to another who is not entitled
implement of Police Power? thereto. For this reason, a just compensation
for income that is taken away from respondent
1. In Walter Lutz v. J. Antonio
(Central Luzon Drug Corp.) becomes necessary.
Araneta, 98 Phil. 148, the SC upheld the validity
It is in the tax credit (now tax deduction) that
of the tax law increasing the existing tax on the
our legislators find support to realize social
manufacture of sugar. “The protection and
justice, and no administrative body can alter
promotion of the sugar industry is a matter of
that fact.”
public concern; the legislature may determine

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Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

Q. What are the essentials of the Q. Distinguish direct tax from

principle of administrative indirect tax.
Direct tax refers to one assessed upon
It requires that (a) each tax should be the property, person, business income, etc., of
clear and plain to the taxpayers; (b) capable of those who pay them, whereas indirect tax
enforcement by an adequate and well-trained includes those levied on commodities before
staff of officials; (c) convenient as to time and they reach the consumer, and are paid by those
manner of payment; and (d) not duly upon whom they ultimately fall, not as taxes,
burdensome upon or discouraging to business but as part of the market price of the
activity. commodity (Cooley, Tax. 61).

Q. What does the principle of INHERENT LIMITATIONS ON THE POWER TO

Fiscal Adequacy as a TAX
characteristic of a sound tax
system require? Q. What is meant by “public
purpose” as an inherent
It requires that the sources of revenues limitation on the power of
must be adequate to meet government taxation?
expenditures and their variations (Abakada
Guro, et al. v. Ermita, 469 SCRA 1; Chavez vs The term “public purpose” is not
Ongpin, 186 SCRA 331). defined. It is an elastic concept that can be
hammered to fit modern standards.
Jurisprudence states that “public purpose”
Q. Are taxes subject of set-off? should be given a broad interpretation. It does
not only pertain to those purposes which are
1. The income tax liability of traditionally viewed as essentially government
Francia cannot be compensated with the functions, such as building roads and delivery of
amount owed by the government as basic services, but also includes those purposes
compensation for his expropriated property. A designed to promote social justice. Thus, public
taxpayer may not set-off taxes due from claims money may now be used for the relocation of
he may have against the government. Taxes illegal settlers, low-cost housing and urban or
cannot be the subject of compensation because agrarian reform (Planters Products, Inc. v.
the government and taxpayer are not mutually Fertiphil Corporation, 548 SCRA 485 [2008]).
creditors and debtors of each other and a claim
for taxes is not such debt, demand, contract or
judgment as is allowed to be set-off. The Public v. Private interest
collection of a tax cannot await the results of a
lawsuit against the government (Francia v. IAC, In the case of Pascual v. Secretary of
162 SCRA 753). Public Works, 110 PHIL 331, the SC held that
the appropriation for construction of feeder
2. The claim of Philex for VAT roads on land belonging to a private person is
refund is still pending litigation, and still has to not valid, and donation to the government of
be determined by the CTA. A fortiori, the the said land 5 months after the approval and
liquidated debt of Philex to the government effectivity of the Act for the purpose of giving a
cannot, therefore, be set off against the semblance of legality to the appropriation does
unliquidated claim which Philex conceived as not cure the basic defect. Incidental advantage
existing in its favor. Debts are due to the to the public or to the State, which results from
government in its corporate capacity, while the promotion of private enterprises, does not
taxes are due to the government in its justify the use of public funds.
sovereign capacity (Philex v. CIR, 294 SCRA 687).

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Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

Tax Situs of Shares of Stock of the Philippines and thus exempt from real
estate tax. A government instrumentality like
The SC held that the actual situs of the
MIAA falls under Section 133(o) of the Local
shares of stock left by non-resident alien Government Code, which states xxx, the
decedent is in the Philippines. The owner exercise of the taxing powers of provinces,
residing in California has extended activities cities, municipalities, and barangays shall not
here with respect to her intangibles so as to extend to the levy of the following: xxx (o)
avail herself of the protection and benefit of the Taxes, fees or charges of any kind on the
Philippine laws. Accordingly, the Philippine National Government, its agencies and
government had the jurisdiction to tax the same instrumentalities and local government units.
(Wells Fargo Bank v. Collector, 70 Phil. 235).
This has been echoed in the recent case
of Philippine Fisheries Development Authority v.
Exemption from Taxation of The Municipality of Navotas, 534 SCRA 490,
Government Agencies wherein the Supreme Court ruled that PFDA,
The Constitution is silent on whether being an instrumentality of the national
Congress is prohibited from taxing the government, is exempt from real property tax
properties of the agencies of the government. but the exemption does not extend to the
In MCIAA v. Marcos, 261 SCRA 667, the portions of the Navotas Fishing Port Complex
Supreme Court held that nothing can prevent (NFPC) that were leased to taxable or private
Congress from decreeing that even persons and entities for their beneficial use.
instrumentalities or agencies of the government
performing governmental functions may be
subject to tax. Q. Is Philippine Reclamation
Authority (PRA) exempt from
Tax exemption of property owned by real property tax?
the Republic of the Philippines refers to
property owned by the government and its YES. It is exempt from real property tax.
agencies which to do not have separate and First. PRA is not a government-owned or
distinct personalities. “The government does controlled corporation but an instrumentality
not part with its title by reserving them, but of the National Government vested with
simply gives notice to the world that it desires corporate powers and performing an essential
them for a certain purpose.” As its title remains public service pursuant to Section 2(10) of the
with the Republic, the reserved land is clearly Introductory Provisions of the Administrative
covered by tax exemption. Code. Second. Real properties of PRA are owned
by the Republic of the Philippines. Section
However, the exemption does not
234(a) of the Local Government Code exempts
extend to improvements on the public land.
from real estate tax any “[r]eal property owned
Consequently, the warehouse constructed on
by the Republic of the Philippines.” [Republic v.
the reserved land by NDC should properly be
City of Parañaque, 677 SCRA 246 (2012)]
assessed real estate tax as such improvement
does not appear to belong to the public (NDC v.
Cebu City, 215 SCRA 382).
Q. Explicate the Destination
Principle in the imposition of
value added tax.
Q. Is Manila International Airport
Authority considered an According to the Destination Principle,
instrumentality of the National goods and services are taxed only in the country
Government exempt from local where these are consumed. In connection with
taxation? the said principle, the Cross Border Doctrine
mandates that no VAT shall be imposed to form
YES. In Manila International Airport
part of the cost of the goods destined for
Authority v. Court of Appeals (495 SCRA 591,
consumption outside the territorial border of
615), the Supreme Court held that the real
the taxing authority. Hence, actual export of
properties of MIAA are owned by the Republic
goods and services from the Philippines to a

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Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

foreign country must be free of VAT while those distinctions which make real differences; (2)
destined for use or consumption within the these are germane to the purposes of the law;
Philippines shall be imposed with 10% VAT (3) the classification applies not only to present
(Now 12% under R.A. No. 9337). Export conditions but also to future conditions; (4) the
processing zones are to be managed as a classification applies only to those who belong
separate customs territory from the rest of the to the same class. In the case of Ormoc Sugar
Philippines and, thus, for tax purposes, are Company, Inc. v. the Treasurer of Ormoc City,
effectively considered as foreign territory. For 22 SCRA 603, the SC held an ordinance
this reason, sales by persons from the Philippine unconstitutional for taxing only sugar produced
customs territory to those inside the export and exported by the Ormoc Sugar Co., Inc.. The
processing zones are already taxed as exports classification, to be reasonable, should be in
(Atlas Consolidated Mining and Development terms applicable to future conditions as well.
Corporation v. CIR, 524 SCRA 73, 103). The taxing ordinance should not be singular and
exclusive as to exclude any substantially
established sugar central, of the same class as
CONSTITUTIONAL LIMITATIONS ON THE plaintiff, from the coverage of the tax.
The equal protection clause does not
require universal application of the laws on all
Q. When does the power of persons or things without distinction. What the
taxation impinge the due clause requires is equality among equals as
process clause? determined according to a valid classification.
The due process clause may be invoked By classification is meant the group of persons
where a taxing statute is so arbitrary that it or things similar to each other in certain
finds no support in the Constitution, as where it particulars and different from all others in these
can be shown to amount to a confiscation of same particulars (Abakada Guro Party List v.
property (Reyes v. Almanzor, 196 SCRA 322). Ermita, supra).

There is a need for proof of persuasive

character as would lead to a violation thereof. Q. A law withdrawing the
Absent such a showing, the presumption of exemption granted to the press
validity must prevail. was challenged as
discriminatory by giving
broadcast media favored
Q. Is classification allowed in treatment.
The taxing power has the authority to is now required to pay VAT, it is not because it
make reasonable and natural classification for is being singled out but only because of the
purposes of taxation, but the government’s act removal of the exemption previously granted by
must not be prompted by a spirit of hostility, or law. Further, the press is taxed on its
at the very least discrimination that finds no transactions involving printing and publication,
support in reason. It suffices then that the laws which are different from the transactions of
operate equally and uniformly on all persons broadcast media. There is a reasonable basis
under similar circumstances or that all persons for the classification (Tolentino v. Secretary of
must be treated in the same manner, the Finance, 235 SCRA 630).
conditions not being different both in the
privileges conferred and the liabilities imposed
(Sison v. Ancheta, 130 SCRA 654). Q. What is the controlling
The equal protection clause applies doctrine on exemption from
only to persons or things identically situated taxation of real property of
and does not bar a reasonable classification of religious, charitable and
the subject of taxation, and a classification is educational institutions?
reasonable where: (1) it is based on substantial

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Green Notes 2014
Taxation Law
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In the case of Lung Center of the institutions use the property “actually, directly
Philippines v. Quezon City and Constantino P. and exclusively” for charitable purposes.
Rosas, City Assessor of Quezon City, 433 SCRA
119, the prevailing rule on the application of tax
exemption to properties incidentally used for Q. What is the requisite proof for
religious, charitable and educational purposes, exemption from realty
as enunciated in the case of Herrera v. QC-BAA, taxation?
3 SCRA 187, has now been abandoned. In
resolving the issue of whether or not the To be exempt from realty taxation,
portions of the real property of Lung Center there must be proof of actual and direct and
that are leased to private entities are exempt exclusive use of the lands, buildings and
from real property taxes, the Supreme Court improvements for religious or charitable
reexamined the intent of the constitutional purposes (Province of Abra v. Hernando, 107
provision granting tax exemption of properties SCRA 104).

Thus, the records of the Constitutional

Commission reveal that what is exempted is not Q. What is double taxation?
the institution itself; those exempted from real When does it arise? How is it prevented?
estate taxes are lands, buildings and
improvements actually, directly and exclusively Double taxation means taxing the same
used for religious, charitable or educational thing or activity twice during the same tax
purposes. period (Villanueva v. City of Iloilo, 26 SCRA 578).
It takes place when a person is a resident of a
Citing the case of St. Louis Young Men’s contracting state and derives income from, or
Christian Association v. Gehner, 47 S.W.2d 776 owns capital in, the other contracting state, and
which held that if real property is used for one both states impose tax on that income or
or more commercial purposes, it is not capital.
exclusively used for the exempted purposes but
is subject to taxation, the Supreme Court Tax conventions such as the RP-US Tax
explained that “What is meant by actual, direct Treaty are drafted with a view towards the
and exclusive use of the property for charitable elimination of international juridical double
institutions is the direct and immediate and taxation. In CIR v. S.C. Johnson and Sons, Inc.,
actual application of the property itself to the 309 SCRA 87, however, it was held that since
purposes for which the charitable institution is the RP-US Tax treaty does not give a matching
organized. It is not the use of the income from credit of 20% for the taxes paid to the
the real property that is determinative of Philippines on royalties as allowed under the
whether the property is used for tax-exempt RP-West Germany Tax Treaty, S.C. Johnson
purposes.” (Phils.) is not entitled to the 10% rate granted
under the latter treaty for the reason that there
In sum, the Court ruled that the is no payment of taxes on royalties under
portions of the land leased to private entities as similar circumstances.
well as those parts of the hospital leased to
private individuals are not exempt from taxes.
Q. Define international juridical
In the most recent case of CIR v. St. double taxation.
Luke's Medical Center, Inc., 682 SCRA 66, the
Supreme Court held that St. Luke's is not It is the imposition of comparable taxes
automatically exempt from real property tax in two or more states on the same taxpayer in
even if it meets the test of charity. To be respect of the same subject matter and for
exempt, Section 28(3), Article VI of the identical periods. (P. Baker, Double Taxation
Constitution requires that a charitable Conventions and International Law [1994], p.
11, citing the Committee on Fiscal Affairs of the

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Green Notes 2014
Taxation Law
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Organization for Economic Cooperation and fraud (Yutivo Sons Hardware Co. v. CTA, 1 SCRA
Development [OECD]). 160).
A taxpayer has the legal right to
TAX EVASION decrease the amount of what otherwise would
be his taxes or altogether avoid them by means
Q. Does an affidavit executed by which the law permits. Therefore, a man may
revenue officers constitute a perform an act that he honestly believes to be
tax assessment? sufficient to exempt him from taxes. He does
not incur fraud thereby even if the act is
An affidavit executed by revenue thereafter found to be insufficient (Court
officers stating the tax liabilities of a taxpayer Holding Co. v. Commr., 2 T.Cl. 531).
and attached to a criminal complaint for tax Tax evasion connotes the integration of
evasion, is not an assessment that can be three factors: (1) the end to be achieved, i.e.,
questioned before the CTA. An assessment the payment of less than that known by
contains not only a computation of tax taxpayer to be legally due, or the non-payment
liabilities, but also a demand for payment within of tax when it is shown that a tax is due; (2) an
a prescribed period (CIR v. PASCOR Realty and accompanying state of mind which is described
Development Corp., 309 SCRA 402). as being “evil”, in “bad faith”, “willful”, or
“deliberate and not accidental”; and (3) a
course of action or failure of action which is
Q. Is prior assessment necessary unlawful (Commissioner of Internal Revenue v.
before a taxpayer may be The Estate of Benigno P. Toda, Jr., G.R. No.
charged with tax evasion? 147188, September 14, 2004, 438 SCRA 290).

NO. In case of failure to file a return,

the tax may be assessed or a proceeding in TAXPAYER’S SUIT
court may be begun without an assessment. An
assessment is not necessary before a taxpayer Q. What is a taxpayer’s suit?
may be prosecuted if there is a prima facie When is it proper?
showing of a willful and deliberate attempt to
file a fraudulent return with the intent to evade A taxpayer’s suit requires illegal
and defeat tax. A criminal complaint is expenditure of taxpayers’ money. Jurisprudence
instituted not to demand payment, but to dictates that a taxpayer may be allowed to sue
penalize the taxpayer for violation of the Tax where there is a claim that public funds are
Code (Ungab v. Cusi, 97 SCRA 877; CIR v. illegally disbursed or that public money is being
PASCOR Realty and Development Corp., supra). deflected to any improper purpose, or that
public funds are wasted through the
enforcement of an invalid or unconstitutional
TAX EVASION AND TAX AVOIDANCE law or ordinance. (Remulla v. Maliksi, 706 SCRA
DISTINGUISHED 35, 18 September 2013)

In Maceda v. Macaraig, 197 SCRA 771,

Tax evasion connotes fraud through the the SC sustained the right of Sen. Maceda as
taxpayer to file a petition questioning the
use of pretenses and forbidden devices to
lessen or defeat taxes. On the other hand, tax legality of the tax refund to NPC by way of tax
avoidance is a legal means used by the taxpayer credit certificates, and the use of tax certificates
to reduce taxes (Benny v. Commr., 25 T.Cl.78). by oil companies to pay for their tax and duty
liabilities to the BIR and Bureau of Customs.
The intention to minimize taxes, when
used in the context of fraud, must be proven by However, in Gonzales v. Marcos, 65
clear and convincing evidence amounting to SCRA 624, the SC held that the taxpayer had no
more than mere preponderance. Mere legal personality to assail the validity of E.O. 30
understatement of tax in itself does not prove creating the Cultural Center of the Philippines

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Green Notes 2014
Taxation Law
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as the assailed order does not involve the use of obeyed. Thus, it is the ministerial duty of
public funds. The funds came by way of the President to immediately impose the
donations and contributions, not by taxation. 12% rate upon the existence of any of the
conditions specified by Congress. This is a
duty which cannot be evaded by the
Q. Are government contracts President. Inasmuch as the law specifically
covered by the taxpayer’s suit? uses the word shall, the exercise of
discretion by the President does not come
YES. In the recent case of Abaya v. into play. It is a clear directive to impose the
Ebdane, Jr. (515 SCRA 720, 757-758), the 12% VAT rate when the specified conditions
Supreme Court stressed that the prevailing are present. The time of taking into effect
doctrine in the taxpayer’s suits is to allow of the 12% VAT rate is based on the
taxpayers to question contracts entered into by happening of a certain specified
the national government or government-owned contingency, or upon the ascertainment of
and controlled corporations allegedly in certain facts or conditions by a person or
contravention of law. A taxpayer is allowed to body other than the legislature itself.
sue where there is a claim that public funds are
illegally disbursed, or that public money is being
deflected to any improper purpose, or that The Secretary of Finance is an agent of
there is a wastage of public funds through the Congress in making his
recommendation to the President on
enforcement of an invalid or unconditional law.
Significantly, a taxpayer need not be a party to the existence of either of the
the contract to challenge its validity. conditions
 In making his recommendation to the
President on the existence of either of the
DECISIONAL RULINGS ON REFORMED EVAT two conditions, in the present case, the
LAW (RA 9337) Secretary of Finance is not acting as the
alter ego of the President or even her
No undue delegation of legislative subordinate. In such instance, he is not
power subject to the power of control and
 The case before the Court is not a direction of the President. He is acting as
delegation of legislative power. It is simply a the agent of the legislative department, to
delegation of ascertainment of facts upon determine and declare the event upon
which enforcement and administration of which its expressed will is to take effect.
the increase rate under the law is The Secretary of Finance becomes the
contingent. The legislature has made the means or tool by which legislative policy is
determined and implemented, considering
operation of the 12% rate effective January
1, 2006, contingent upon a specified fact or that he possesses all the facilities to gather
condition. It leaves the entire operation or data and information and has a much
non-operation of the 12% rate upon factual broader perspective to properly evaluate
maters outside of the control of the them. His function is to gather and collate
executive. No discretion would be statistical data and other pertinent
exercised by the President. Highlighting information and verify if any of the two
the absence of discretion is the fact that conditions laid out by Congress is present.
the word shall is used in the common His personality in such instance is in reality
proviso. The use of the word shall but a projection of that of Congress. Thus,
connotes a mandatory order. Its use in a being the agent of Congress and not of the
statute denotes an imperative obligation President, the President cannot alter or
and is inconsistent with the idea of modify or nullify, or set aside the findings of
discretion. Where the law is clear and the Secretary of Finance and to substitute
unambiguous, it must be taken to mean the judgment of the former for that of the
exactly what it says, and courts have no latter.
choice but to see to it that the mandate is

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Green Notes 2014
Taxation Law
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VAT rates are uniform privileges. The state may change or take
away rights, which were created by the law
 Uniformity in taxation means that all of the state, although it may not take away
taxable articles or kinds of property of the property, which was vested by virtue of
same class shall be taxed at the same rate. such rights. Under the previous system of
Different articles may be taxed at different single-stage taxation, taxes paid at every
amounts provided that the rate is uniform level of distribution are not recoverable
on the same class everywhere with all from the taxes payable, although it
people at all times. In this case, the tax law becomes part of the cost, which is
is uniform as it provides a standard rate of deductible from the gross revenue. x x x It
0% or 10% (or 12%) on all goods and is worth mentioning that Congress admitted
services. Section 4, 5 and 6 of R.A. No. that the spread-out of the creditable input
9337, amending Sections 106, 107 and 108, tax in this case amounts to a 4-year
respectively, of the NIRC, provide for a rate interest-free loan to the government. In
of 10% (or 12%) on sale of goods and the same breath, Congress also justified its
properties, importation of goods, and sale move by saying that the provision was
of services and use or lease of properties. designed to raise an annual revenue of 22.6
These same sections also provide for a 0% billion. The legislature also dispelled the
rate on certain sales and transaction. fear that the provision will fend off foreign
Neither does the law make any distinction investments, saying that foreign investors
as to the type of industry or trade that will have other tax incentives provided by law,
bear the 5-year amortization of input tax and citing the case of China, where despite
paid on purchase of capital goods or the 5% a 17.5% non-creditable VAT, foreign
final withholding tax by the government. It investments were not deterred. Again, for
must be stressed that the rule of uniform whatever is the purpose of the 60-month
taxation does not deprive Congress of the amortization, this involves executive
power to classify subjects of taxation, and economic policy and legislative wisdom in
only demands uniformity within the which the Court cannot intervene.
particular class.

5% creditable withholding tax is a

VAT rates are equitable method of collection
 R.A. No. 9337 is also equitable. The law is  With regard to the 5% creditable
equipped with a threshold margin. The VAT withholding tax imposed on payments
rate of 0% or 10% (or 12%) does not apply made by the government for taxable
to sales of goods or services with gross transactions, Section 12 of R.A. No. 9337,
annual sales or receipts not exceeding which amended Section 114 of the NIRC,
P1,500,000.00. Also, basic marine and reads: ***Section 114(C) merely provides a
agricultural food products in their original method of collection, or as stated by
state are still not subject to the tax, thus respondents, a more simplified VAT
ensuring that prices at the grassroots level withholding system. The government in
will remain accessible. this case is constituted as a withholding
agent with respect to their payments for
Creditable input tax is a mere statutory goods and services. x x x The Court
privilege observes, however, that the law used the
word final. In tax usage, final, as opposed
 The input tax is not a property or a property to creditable, means full. Thus, it is
right within the constitutional purview of provided in Section 114(C): “final value-
the due process clause. A VAT-registered added tax at the rate of five percent (5%)”.
person’s entitlement to the creditable input
tax is a mere statutory privilege. The
distinction between statutory privileges and
vested rights must be borne in mind for
persons have no vested rights in statutory

Page 9 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

VAT is, by its nature, regressive taxes according to the taxpayers’ ability to
pay. In the case of the VAT, the law
 The VAT is an antithesis of progressive minimizes the regressive effects of this
taxation. By its very nature, it is regressive. imposition by providing for zero rating of
The principle of progressive taxation has no certain transactions (R.A. No. 7716, §3,
relation with the VAT system inasmuch as amending §102 (b) of the NIRC), while
the VAT paid by the consumer or business granting exemptions to other transactions.
for every goods bought or services enjoyed
is the same regardless of income. In other
words, the VAT paid eats the same portion II. INCOME TAXATION
of an income, whether big or small. The
disparity lies in the income earned by a Q. Distinguish Global Tax
person or profit margin marked by a Treatment from Schedular
business, such that the higher the income System of Income Taxation?
or profit margin, the smaller the portion of
A global system of taxation is one
the income or profit that is eaten by VAT. A
where the taxpayer is required to report all
converso, the lower the income or profit
income earned during a taxable period in one
margin, the bigger the part that the VAT
income tax return, which income shall be taxed
eats away. At the end of the day, it is really
under the same rule of income taxation. The
the lower income group or businesses with
Schedular system requires a separate return for
low-profit margins that is always hardest
each type of income and the tax is computed on
a per return or per schedule basis. Schedular
system provides for different tax treatment of
Imposition of regressive tax like VAT is different types of income.
not constitutionally prohibited
 The Constitution does not really prohibit
Q. What is Income?
the imposition of indirect taxes, like the
VAT. What it simply provides is that
Income refers to “an amount of money
Congress shall “evolve a progressive system
coming to a person within a specified time,
of taxation.” The Court stated in the
whether as payment for services, interest or
Tolentino case, thus: The Constitution does
profit from investment.” It means cash or its
not really prohibit the imposition of indirect
equivalent. It is gain derived and severed from
taxes which, like the VAT, are regressive.
capital, from labor or from both combined.
What it simply provides is that Congress
shall ‘evolve a progressive system of
Stock dividends issued by the
taxation.’ The constitutional provision has
corporation are considered unrealized gains,
been interpreted to mean simply that
and cannot be subjected to income tax until
‘direct taxes are … to be preferred [and] as
those gains have been realized. Before the
much as possible, indirect taxes should be
realization, stock dividends are nothing but a
minimized.’ (E. FERNANDO, THE
representation of an interest in the corporate
properties. As capital, it is not yet subject to
[Second ed. 1977]) Indeed, the mandate to
income tax. Capital is wealth or fund; whereas
Congress is not to prescribe, but to evolve,
income is profit or gain or the flow of wealth.
a progressive tax system. Otherwise, sales
The determining factor for the imposition of
taxes, which perhaps are the oldest form of
income tax is whether any gain or profit was
indirect taxes, would have been prohibited
derived from a transaction (CIR v. CA, 301 SCRA
with the proclamation of Art. VII, §17 (1) of
the 1973 Constitution from which the
present Art. VI, §28 (1) was taken. Sales
taxes are also regressive. Resort to indirect
taxes should be minimized but not avoided
entirely because it is difficult, if not
impossible, to avoid them by imposing such

Page 10 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

Q. What are the requisites of taxable exception. The burden of proof rests upon the
income? party claiming exemption to prove that it is in
fact covered by the exemption so claimed
1. There must be gain or profit; (Commissioner v. Mitsubishi Metal Corp., 181
2. That the gain or profit is realized or SCRA 215).
received, actually or constructively;
3. It is not exempted by law or treaty
from income tax Q. Is terminal leave pay taxable?

No. In the case of Re: Request of Atty.

Q. What are the sources of Bernardo Zialcita (Adm. Matter No. 90-6-015-
income? SC, October 18, 1990; 190 SCRA 851), the SC
held that terminal leave pay is the cash value of
The sources of income are: “the an employee’s accumulated leave credits,
property, activity or service that produces the hence, it cannot be considered compensation
income. For the source of income to be for services rendered; it cannot be viewed as
considered as coming from the Philippines, it is salary. It falls within the enumerated exclusions
sufficient that the income is derived from from gross income, and is therefore not subject
activity within the Philippines” (CIR v. BOAC, to tax.
149 SCRA 395).


ORGANIZED AS A Q. What are taxable unregistered
IS NOT IPSO FACTO ENTITLED TO A TAX The SC in Evangelista v. CIR, 102 Phil.
EXEMPTION 140, held that Sec. 24 [now Section 22(B)]
covered unregistered partnerships and even
associations or joint accounts which had no
There is no dispute that St. Luke’s is legal personalities apart from their individual
organized as a non-stock and non-profit members. xxx Accordingly, a pool of machinery
charitable institution. However, this does not insurers was a partnership taxable as a
automatically exempt St. Luke’s from paying corporation (Afisco Insurance Corp. v. CA, 302
taxes. This only refers to the organization of St. SCRA 1).
Luke’s. Even if St. Luke’s meets the test of
charity, a charitable institution is not ipso facto
tax exempt. To be exempt from income taxes, Q. Obillos sold his rights over two
Section 30(E) of the NIRC requires that a parcels of land to his four
charitable institution must be “organized and children so that they can build
operated exclusively” for charitable purposes. their residence, but the latter
Likewise, to be exempt from income taxes, after one (1) year sold them
Section 30(G) of the NIRC requires that the and paid the capital gains.
institution be “operated exclusively” for social Acting on the theory that the
welfare. [Commissioner of Internal Revenue v. children had formed an
St. Luke's Medical Center, Inc., 682 SCRA 66 (26 unregistered taxable
September 2012)] partnership or joint venture,
the BIR required the brothers
to pay corporate income tax.
Q. State the rule on construction Resolve.
of tax exemptions.
The children should not be treated as
Laws granting exemption from tax are having formed an unregistered partnership and
construed strictissimi juris against the taxpayer taxed corporate income tax on their shares of
and liberally in favor of the taxing power. the profits from the sale. Their original purpose
Taxation is the rule and exemption is the was to divide the lots for residential purposes.

Page 11 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

If later on they found it not feasible to build d. The debt must arise
their residences on the lots because of the high from the business or
cost of construction, then they had no choice trade of the taxpayer;
but to resell the same to dissolve the co- e. The taxpayer must also
ownership. The division of the profit was show that it is indeed
merely incidental to the dissolution of the co- uncollectible even in
ownership which was in the nature of things in the future (PRC v. CA,
a temporary state (Obillos Jr. v. CIR, 139 SCRA 256 SCRA 667).
438, 439). f. It must not arise from
transactions between
related taxpayers (RR 5-
Q. May a withholding agent file a 99, RR 25-2002).
written claim for refund?
Q. Is theoretical interest on
YES. In CIR v. Procter and Gamble PMC , capital deductible?
204 SCRA 377, the SC held that a withholding
agent is subject to and liable for deficiency NO. It is not deductible as it does
assessments, surcharges and penalties should not represent a charge arising under an
the amount of the tax withheld be finally found interest-bearing obligation (Sec. 79, Rev. Reg.
to be less than the amount that should have No. 2, cited in the case of PICOP v. CA, 250 SCRA
been withheld under the law. A “person liable 434).
for tax” has been held to be a “person subject
to tax” and properly considered a “taxpayer” x x
x By any reasonable standard, such a person Q. How are assets classified for
should be regarded as a party in interest, or as a income taxpayers?
person having sufficient legal interest, to bring a
suit for refund of taxes. The assets of a taxpayer are classified
for income tax purposes into ordinary and
capital assets. However, there is no rigid rule or
Q. The BIR disallowed PRC’s claim formula by which it can be determined with
for deduction for failure to finality whether property sold by a taxpayer
prove the worthlessness of the was held primarily for sale to costumers in the
debts. Is the disallowance ordinary course of his trade or business or
correct? whether it was sold as a capital asset. A
property initially classified as a capital asset
YES. There was no iota of documentary may thereafter be treated as an ordinary asset
evidence (e.g. collection letters, reports from if a combination of factors indubitably tend to
investigating fieldsman, police report/affidavit, show that the activity was in furtherance of or
etc.) to give support to the allegation of in the course of the taxpayer’s trade or
worthlessness. For debts to be considered business. Thus, a sale of inherited property
“worthless,” and qualify as “bad debts” making usually gives capital gain or loss even though
them deductible, the taxpayer should show the property has to be subdivided or improved
that: or both to make it saleable. However, if the
a. There is valid and inherited property is substantially improved or
subsisting debt; very actively sold or both, it may be treated as
b. The debt must be held primarily for sale to customers in the
actually ascertained to ordinary course of the heir’s business (Calasanz
be worthless and v. CIR, 144 SCRA 664).
uncollectible during the
taxable year;
c. The debt must be Q. Is an equity investment a
charged off during the capital or ordinary asset?
taxable year;

Page 12 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

An equity investment is a capital, not DE MINIMIS BENEFITS

ordinary, asset of the investor the sale or
Revenue Regulations No. 5-2011 further
exchange of which results in either a capital
gain or a capital loss. The gain or loss is amended Revenue Regulation Nos. 5-2008, 5-
ordinary when the property sold or exchanged 2010, 10-2000 and 3-98, with respect to “De
is not a capital asset (China Banking Corporation Minimis Benefits”.
v. CA, 336 SCRA 178). Rice subsidy of P1,500 or one sack of 50
kg. rice per month amounting to not more than
P1,500 and uniform and clothing allowance not
OPTIONAL STANDARD DEDUCTION exceeding P5,000 per annum (RR 8-2012) are
(OSD) FOR INDIVIDUAL considered as “de minimis” benefits, which are
AND CORPORATE TAXPAYERS not subject to the fringe benefits tax (per
Section 2.33(c) of Revenue Regulations No. 3-
98) and Income Tax as well as withholding tax
on corporation income of both managerial and
A. Individual Taxpayers rank and file employees (per Section 2.78.1
The OSD allowed to individual taxpayers (A)(3)(c) and (d) of Revenue Regulations No.
shall be a maximum of forty percent (40%) of 298).
gross sales or gross receipts during the taxable Monetary value of fruits, flowers or
year. It should be emphasized that the “cost of books given on special occasions are deleted.
sales” in case of individual seller of goods, or Any other benefit not included in the
the “cost of services” in the case of individual enumeration shall not be considered “de
seller of services, is not allowed to be deducted minimis” benefits and are therefore subject to
for purposes of determining the basis of the income tax and withholding tax on
OSD pursuant to this Section inasmuch as the compensation income.
law (RA 9504) is specific as to the basis thereof
which states that for individuals, the basis of
the 40% OSD shall be the “gross sales” or “gross
receipts” and not “gross income” (Revenue MINIMUM WAGE EARNERS ARE NOT
Minimum wage earner shall refer to a
worker in the private sector paid the statutory
B. Corporate Taxpayers minimum wage, or to an employee in the public
sector with compensation income of not more
In the case of corporate taxpayers than the statutory minimum wage in the non-
subject to tax under Sections 27(A) and 28(A)(1) agricultural sector where he/she is assigned. He
of the Code, as amended, the OSD allowed shall is not required to file an income tax return (Sec.
be in an amount not exceeding forty percent 5, R.A. No. 9504).
(40%) of their gross income.
For purposes of these Regulations,
“Gross Income” shall mean the gross sales less Q. Explain the nature of personal
sales returns, discounts and allowances and exemptions.
cost of goods sold. “Gross sales” shall include
only sales contributory to income taxable under Personal exemptions are the theoretical
Sec. 27(A) of the Code. “Cost of goods sold” personal, living and family expenses of an
individual allowed to be deducted from the
shall include the purchase price or cost to
produce the merchandise and all expenses gross or net income of an individual taxpayer.
directly incurred in bringing them to their These are arbitrary amounts which have been
present location and use (Revenue Regulations calculated by our lawmakers to be roughly
No. 16-2008). equivalent to the minimum of subsistence,
taking into account the personal status and
additional qualified dependents of the taxpayer.
They are fixed amounts in the sense that the

Page 13 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

amounts have been predetermined by our Q. Are advertising expenses

lawmakers as provided under Section 35 (A) and incurred to protect Brand
(B). Unless and until our lawmakers make new Franchise deductible?
adjustments on these personal exemptions, the
amounts allowed to be deducted by a taxpayer Advertising is generally of two kinds: (1)
are fixed as predetermined by Congress advertising to stimulate the current sale of
(Pansacola v. Commissioner of Internal merchandise or use of services and (2)
Revenue, 507 SCRA 81). advertising designed to stimulate the future sale
of merchandise or use of services. The second
type involves expenditures incurred, in whole or
in part, to create or maintain some form of
ALLOWANCE OF PERSONAL EXEMPTION FOR goodwill for the taxpayer's trade or business or
INDIVIDUAL TAXPAYERS for the industry or profession of which the
taxpayer is a member. If the expenditures are
There shall be allowed a basic personal for the advertising of the first kind, then, except
exemption amounting to Fifty Thousand Pesos as to the question of the reasonableness of
(P50,000) for each individual taxpayer. In the amount, there is no doubt such expenditures
case of married individual where only one of are deductible as business expenses. If,
the spouses is deriving gross income, only such however, the expenditures are for advertising
spouse shall be allowed the personal exemption of the second kind, then normally they should
(Sec. 4(A), R.A. No. 9504). be spread out over a reasonable period of time.
The protection of branch franchise is
ADDITIONAL EXEMPTION FOR DEPENDENTS analogous to the maintenance of goodwill or
title to one's property. This is a capital
There shall be allowed an additional expenditure which should be spread out over a
exemption of Twenty-Five Thousand Pesos reasonable period of time.
(P25,000) for each dependent not exceeding
four (4). The additional exemption for Respondent corporation's venture to
dependents shall be claimed by only one of the protect its brand franchise was tantamount to
spouses in the case of married individuals. efforts to establish a reputation. This was akin
to the acquisition of capital assets and
In the case of legally separated spouses, therefore expenses related thereto were not to
additional exemptions may be claimed only by be considered as business expenses but as
the spouse who has custody of the child or capital expenditures. [Commissioner of
children: Provided, That the total amount of International Revenue v. General Foods (Phils.),
additional exemptions that may be claimed by Inc., 401 SCRA 545, (2003)]
both shall not exceed the maximum additional
A ‘dependent’ means a legitimate,
illegitimate or legally adopted child chiefly
dependent upon and living with the taxpayer if Q. What are the remedies
such dependent is not more than twenty-one available to an aggrieved
(21) years of age, unmarried and not gainfully taxpayer under the Tax Code?
employed or if such dependent, regardless of
1. Administrative (Extra-
age, is incapable of self-support because of
mental or physical defect (Sec. 4(B), R.A. No.
2. Judicial
Two administrative
remedies accorded to the
taxpayer under the Tax Code:
b. administrative protest,
which is a protest against

Page 14 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

the assessment and is filed Commissioner cannot be considered a formal

before payment; and, assessment. Even a cursory perusal of the said
letter would reveal three key points: 1. It was
c. claim for refund filed with not addressed to the taxpayers. 2. There was no
the CIR after payment. demand made on the taxpayers to pay the tax
liability, nor a period for payment set therein. 3.
The letter was never mailed or sent to the
THE SENDING OF A PRELIMINARY taxpayers by the Commissioner. In fine, the said
ASSESSMENT NOTICE (PAN) TO recommendation letter served merely as the
prima facie basis for filing criminal informations
TAXPAYER TO INFORM HIM OF THE that the taxpayers had violated Section 45 (a)
ASSESSMENT MADE IS BUT PART and (d), and 110, in relation to Section 100, as
OF THE DUE PROCESS REQUIREMENT IN THE penalized under Section 255, and for violation
ISSUANCE OF A of Section 253, in relation to Section 252 9(b)
and (d) of the Tax Code. [Adamson v. Court of
 The use of the word “shall” in TOLL
subsection 3.1.2 of Revenue THE 30-DAY PERIOD TO APPEAL TO THE COURT OF
Regulations 12-99 describes the TAX APPEALS
mandatory nature of the service of a
PAN. The persuasiveness of the right to In the case at bar, petitioner's
due process reaches both substantial administrative protest was denied by Final Decision
and procedural rights and the failure of on Disputed Assessment dated August 2, 2005
the CIR to strictly comply with the issued by respondent and which petitioner received
requirements laid down by law and its on August 4, 2005. Under the above-quoted Section
own rules is a denial of Metro Star's 228 of the 1997 Tax Code, petitioner had 30 days to
right to due process. Thus, for its failure appeal respondent's denial of its protest to the CTA.
to send the PAN stating the facts and Since petitioner received the denial of its
the law on which the assessment was administrative protest on August 4, 2005, it had until
made as required by Section 228 of R.A. September 3, 2005 to file a petition for review
No. 8424, the assessment made by the before the CTA Division. It filed one, however, on
CIR is void. [Commissioner of Internal October 20, 2005, hence, it was filed out of time. For
Revenue v. Metro Star Superama, Inc., a motion for reconsideration of the denial of the
637 SCRA 633, (2010)] administrative protest does not toll the 30-day
period to appeal to the CTA. [Fishwealth Canning
Corporation v. Commissioner of Internal Revenue,
Q. When may tax refund be
In the context in which it is used in the
NIRC, an assessment is a written notice and
demand made by the BIR on the taxpayer for
the settlement of a due tax liability that is there The taxpayer may file a claim for refund
definitely set and fixed. A written or credit with the BIR within 2 years after
communication containing a computation by a payment of the tax, before any suit in the CTA is
revenue officer of the tax liability of a taxpayer commenced. The 2-year prescriptive period
and giving him an opportunity to contest or should be computed from the time of filing of
disprove the BIR examiner's findings is not an the Adjustment Return (or Annual Income Tax
assessment since it is yet indefinite. We rule Return) and final payment of the tax for the
that the recommendation letter of the

Page 15 of 34
Green Notes 2014
Taxation Law
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year (PBCom v. CIR, 301 SCRA 241; BPI v. CIR, of thirty (30) days from the date
363 SCRA 840; CIR v. TMX Sales, 205 SCRA 184) of receipt of denial of protest.
Using this example for
The “date of payment” in ACCRAIN’s illustration, let us take a taxpayer
case was when its tax liability, if any, fell due who has an erroneously paid
upon its filing of its final adjustment return capital gains tax in August 1992.
(ACCRA Investments Corporation v. CA, 204 Sometime in August 1994, an
SCRA 957). assessment was issued against
The prescriptive period of two years him for deficiency income tax for
should commence to run only from the time the same taxable year.
that the refund is ascertained, which can only Supposing, he immediately
be determined after a final adjustment return is protested the said assessment
accomplished (CIR v. PHILAMLIFE Insurance Co., but the BIR did not immediately
244 SCRA 446). act on his protest, will he still
wait for the [BIR's] decision
Therefore, the filing of quarterly income before he can go to [the CTA] to
tax returns and payment of quarterly income file his claim for refund? What
tax should only be considered mere about if the two-year period to
installments of the annual tax due. These appeal his refund is [nearing
quarterly tax payments should be treated as expiration], will he still wait
advances or portions of the annual income tax indefinitely for the decision on
due, to be adjusted at the end of the calendar his protest, so he can file both
or fiscal year (CIR v. TMX Sales, Inc., supra). suits simultaneously with this
In the case of a corporate dissolution, Court? Of course, the answer will
the two year prescriptive period should be be No.
counted 30 days after the approval by the SEC
of its plan for dissolution (BPI v. CIR, supra) Now, let us reverse the
scenario. Supposing, the [BIR's]
assessment came first but this
Q. Does taxpayer's deficiency time no protest was made by the
income tax constitute a bar to taxpayer. [H]ence, the
his claim for refund of income assessment became final and
tax? executory and so, the [BIR] filed a
collection case in the regular trial
No. In the case of CIR v. Citytrust court. During the pendency of
Banking Corporation, 499 SCRA 477, 482, the the collection suit, taxpayer
Supreme Court accorded judicial imprimatur to discovered that he made an
the following ratiocination of the CTA: erroneous payment of a different
kind of tax. To avoid multiplicity
“[W]e refuse to take of suits, will the [BIR] allow the
cognizance of petitioner's taxpayer to ventilate his claim for
deficiency tax assessment refund in the same collection
because to do so would create case? Of course, the [BIR] will
utter confusion among taxpayers. object on the ground of
It is of common knowledge that jurisdiction.”
the laws or rules governing claims
for refund are separate and  In claims for refund, it is necessary that
distinct from those applicable to the tax be paid in full, and that the
assessment appeals. For claim for refund in the BIR as well as the
example, the period of time to proceedings in the CTA be commenced
appeal a refund case is within (2) within two years counted from the
years from the date of payment, payment of the tax.
while the filing of an assessment
appeal requires the observance

Page 16 of 34
Green Notes 2014
Taxation Law
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 “A taxpayer who has paid the tax, THE TWO-YEAR PRESCRIPTIVE PERIOD FOR THE
whether under protest or not, and who FILING OF
is claiming a refund of the same, must: TAX REFUND IS RECKONED FROM THE FILING
(1) file a written claim for SHOULD THE TWO-YEAR PERIOD BE
refund with the CIR within COMPUTED?
2 years from the date of
his payment of the tax, Both Article 13 of the Civil Code and
and Section 31, Chapter VIII, Book I of the
Administrative Code of 1987 deal with the same
(2) appeal to the CTA within subject matter—the computation of legal
30 days from receipt of the periods. Under the Civil Code, a year is
equivalent to 365 days whether it be a regular
CIR’s decision or ruling
denying his claim for year or a leap year. Under the Administrative
refund (Sec. 11, RA 1125). Code of 1987, however, a year is composed of
The 30-day period to 12 calendar months. Needless to state, under
appeal should be within the Administrative Code of 1987, the number of
the 2-year period. days is irrelevant. There obviously exists a
manifest incompatibility in the manner of
If, however, the CIR takes time in computing legal periods under the Civil Code
and the Administrative Code of 1987. For this
deciding the claim, and the period of
two years is about to end, the suit or reason, we hold that Section 31, Chapter VIII,
proceeding must be started in the CTA Book I of the Administrative Code of 1987,
BEFORE the end of the two-year period being the more recent law, governs the
without awaiting the decision of the computation of legal periods. Lex posteriori
CIR” (Gibbs v. CTA, 107 Phil 232). derogat priori (CIR v. Primetown Property
Group, Inc., 531 SCRA 436 [2007]).


Tax refunds are not founded principally TAX IS THE STATUTORY TAXPAYER
on legislative grace but on the legal principle
which underlies all quasi-contracts abhorring a Excise taxes, which apply to articles
person’s unjust enrichment at the expense of manufactured or produced in the Philippines for
another. The dynamic of erroneous payment of domestic sale or consumption or for any other
tax fits to a tee the prototypic quasi-contract, disposition and to things imported into the
solutio indebiti, which covers not only mistake Philippines, is basically an indirect tax. While the tax
in fact but also mistake in law. is directly levied upon the manufacturer/importer
upon removal of the taxable goods from its place of
Under the Tax Code itself, apparently in production or from the customs custody, the tax, in
recognition of the pervasive quasi-contract reality, is actually passed on to the end consumer as
principle, a claim for tax refund may be based part of the transfer value or selling price of the
on the following: (a) erroneously or illegally goods, sold, bartered or exchanged. In early cases,
assessed or collected internal revenue taxes; (b) we have ruled that for indirect taxes (such as valued-
penalties imposed without authority; and (c) added tax or VAT), the proper party to question or
any sum alleged to have been excessive or in seek a refund of the tax is the statutory taxpayer, the
any manner wrongfully collected. (CIR v. person on whom the tax is imposed by law and who
Fortune Tobacco Corporation, 559 SCRA 160 paid the same even when he shifts the burden
[2008]). thereof to another. Thus, in Contex Corporation v.
Commissioner of Internal Revenue, we held that
while it is true that petitioner corporation should not
have been liable for the VAT inadvertently passed on
to it by its supplier since their transaction is a zero-

Page 17 of 34
Green Notes 2014
Taxation Law
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rated sale on the part of the supplier, the petitioner days within which to file a
is not the proper party to claim such VAT refund. petition for review with the
Rather, it is the petitioner’s suppliers who are the CTA.
proper parties to claim the tax credit and accordingly
refund the petitioner of the VAT erroneously passed B. Should the Commissioner deny
on to the latter. [Silkair (Singapore) Pte. Ltd. v. the taxpayer’s protest, then he
Commissioner of Internal Revenue, 664 SCRA has a period of 30 days from
33 (2012)] receipt of said denial within
which to file a petition for
review with the CTA.
Commissioner of Internal Revenue
v. PERF Realty Corporation  The subject of a JUDICIAL REVIEW is the
557 SCRA 165 (2008) decision of the CIR on the protest
against assessment, not the assessment
The CTA, citing Section 10 of Revenue itself (CIR v. Villa, 22 SCRA 3).
Regulations 6-85 and Citibank, N.A. v. Court of
Appeals, determined the requisites for a claim
for refund, thus: 1) That the claim for refund APPLICATION FOR THE ISSUANCE OF A TAX
was filed within the two (2) year period as CREDIT CERTIFICATE OR
prescribed under Section 230 of the National REFUND OF CREDITABLE INPUT TAX DUE OR
Internal Revenue Code; 2) That the income
upon which the taxes were withheld were ZERO-RATED SALES MUST BE FILED WITH THE
included in the return of the recipient; 3) That COMMISSIONER OF
the fact of withholding is established by a copy INTERNAL REVENUE WITHIN TWO YEARS
of a statement (BIR Form 1743.1) duly issued by AFTER THE CLOSE
the payor (withholding agent) to the payee, OF THE TAXABLE QUARTER
showing the amount paid and the amount of
tax withheld therefrom. Applying the two-year period to judicial
claims would render nugatory Section 112(D)
Section 76 offers two options: (1) filing (now Section 112 (C)) of the NIRC, which
for tax refund and (2) availing of tax credit. The already provides for a specific period within
two options are alternative and the choice of which a taxpayer should appeal the decision or
one precludes the other. However, in Philam inaction of the CIR. The second paragraph of
Asset Management, Inc. v. Commissioner of Section 112(C) of the NIRC, as amended,
Internal Revenue, 447 SCRA 772 (2005), the envisions two scenarios: (1) when a decision is
Court ruled that failure to indicate a choice, issued by the CIR before the lapse of the 120-
however, will not bar a valid request for a day period; and (2) when no decision is made
refund, should this option be chosen by the after the 120-day period. In both instances, the
taxpayer later on. The requirement is only for taxpayer has 30 days within which to file an
the purpose of easing tax administration appeal with the CTA. Indeed, the 120-day
particularly the self-assessment and collection period is crucial in filing an appeal with the CTA.
aspects. [See Commissioner of Internal Revenue v. AICHI
Forging Company of Asia, Inc., 632 SCRA 422,
Commencement of 30-day within
which to appeal to the CTA COMPLIANCE WITH THE 120-DAY WAITING
not acted on the taxpayer’s
protest within a period of 180 Section 112(C) provides that the
days from submission of all Commissioner shall decide the application for refund
relevant documents, then the or credit “within one hundred twenty (120) days
taxpayer has a period of 30 from the date of submission of complete documents
days from the lapse of said 180 in support of the application filed in accordance with

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Green Notes 2014
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Subsection (A).” The reference in Section 112(C) of tax as one levied without statutory
the submission of documents “in support of the authority. In the strict legal viewpoint,
application filed in accordance with Subsection (A)” therefore, PNB’s claim for tax credit did
means that the application in Section 112(A) is the not proceed from, or is a consequence
administrative claim that the Commissioner must of overpayment of tax erroneously or
decide within the 120-day period. In short, the two- illegally collected. It is beyond cavil that
year prescriptive period in Section 112(A) refers to respondent PNB issued to the BIR the
the period within which the taxpayer can file an check for P180 Million in the concept of
administrative claim for tax refund or credit. Stated tax payment in advance, thus
otherwise, the two-year prescriptive period does eschewing the notion that there was
not refer to the filing of the judicial claim with the error or illegality in the payment. What
CTA but to the filing of the administrative claim in effect transpired when PNB wrote its
with the Commissioner. [Commissioner of Internal July 28, 1997 letter was that
Revenue v. San Roque Power Corporation, 690 SCRA respondent sought the application of
336, (12 February 2013] amounts advanced to the BIR to future
annual income tax liabilities, in view of
THE OPTION TO CARRY-OVER AND APPLY THE its inability to carry-over the remaining
EXCESS QUARTERLY amount of such advance payment to
INCOME TAX AGAINST INCOME TAX DUE FOR the four (4) succeeding taxable years,
THE TAXABLE not having incurred income tax liability
BE CONSIDERED IRREVOCABLE FOR THAT Prescriptive period for tax credit is 10

Section 76 provides that a taxpayer has the 2. In Commissioner v. Phil-Am Life, the
option to file a claim for refund or to carry-over its Court ruled that an availment of a tax
excess income tax payments. The option to carry- credit due for reasons other than the
over, however, is irrevocable. Thus, once a taxpayer erroneous or wrongful collection of
opted to carry-over its excess income tax payments, taxes may have a different prescriptive
it can no longer seek refund of the unutilized excess period. Absent any specific provision
income tax payments. The taxpayer, however, may in the Tax Code or special laws, that
apply the unutilized excess income tax payments as period would be ten (10) years under
a tax credit to the succeeding taxable years until Article 1144 of the Civil Code.
such has been fully applied pursuant to Section 76 of Significantly, Commissioner v. Phil-Am
the NIRC. [Belle Corporation v. Commissioner of Life is partly a reiteration of a previous
Internal Revenue, 644 SCRA 433 (2011) holding that even if the two (2)-year
prescriptive period, if applicable, had
already lapsed, the same is not
Commissioner of Internal Revenue v. jurisdictional any may be suspended
Philippine National Bank for reasons of equity and other special
474 SCRA 303 circumstances.

Tax payment in advance does not

amount to erroneous or illegal collection Q. State the remedies available to
the government to enforce
1. Section 230 of the Tax Code (now collection of taxes, fees and
Section 229), as couched, particularly charges.
its statute of limitations component, is, 1. Distraint of personal property
in context, intended to apply to suits such as goods, chattels, or
for the recovery of internal revenue effects, including stocks and
taxes or sums erroneously, excessively, other securities, debts, credits,
illegally or wrongfully collected. Black bank accounts and interest in
defines the term erroneous or illegal

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Green Notes 2014
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and rights to personal property Cases Which Cannot Be Compromised

[Sec. 207(A)]
1. Withholding tax cases, unless the
2. Levy or seizure of real applicant-taxpayer invokes
properties and interest in or provisions of law that cast doubt
rights to real property (Sec. on the taxpayer’s obligation to
207(B), NIRC) withhold;
3. Tax Lien (Sec. 219, NIRC) 2. Criminal tax fraud cases confirmed
as such by the Commissioner of
4. Civil or Criminal action (Sec. Internal Revenue or his duly
205, NIRC) authorized representative;
5. Compromise (Sec. 204, NIRC) 3. Criminal violation already filed in
6. Forfeiture (Sec. 224, NIRC) court;

7. Civil Penalties (Sec. 248, NIRC) 4. Delinquent accounts with duly

approved schedule of installment
 The Commissioner has the power to payments;
approve the filing of tax collection cases
(Republic v. Hizon, 320 SCRA 574). 5. Cases where final reports of
reinvestigation or reconsiderations
 The BIR is authorized to issue a warrant of have been issued resulting to
garnishment against the bank account of reduction in the original
a taxpayer despite the pendency of a assessment and the taxpayer is
protest (Yabes v. Flojo, 15 SCRA 278). agreeable to such decision by
Nowhere in the Tax Code is the signing the required agreement
Commissioner required to rule first on the form for the purpose. On the
protest before he can institute collection other hand, other protested cases
proceedings on the tax assessed. The shall be handled by the Regional
legislative policy is to give the Evaluation Board (REB) or the
Commissioner much latitude in the National Evaluation Board (NEB) on
speedy and prompt collection of taxes a case to case basis;
because taxes are the lifeblood of the 6. Cases which become final and
government (Republic v. Lim Tian Teng executory after final judgment of a
Sons., Inc., 16 SCRA 584). court, where compromise is
requested on the ground of
 In Marcos II v. CA, 273 SCRA 47, the SC doubtful validity of the
ruled that the approval of the court sitting assessment; and
in probate is not a mandatory
requirement in the collection of estate 7. Estate tax cases where
taxes. compromise is requested on the
ground of financial incapacity of
 The 3-year prescriptive period for the taxpayer (Rev. Regs. No. 30-
assessment of the tax liability commences 2002).
to run after the last day prescribed by law
for the filing of the return; but if the
return was amended substantially, the Commissioner of Internal Revenue v. Hantex
period starts from the filing of the Trading Co., Inc.
amended return (CIR v. Phoenix 454 SCRA 301
Assurance, Co. Ltd., 14 SCRA 52). Meaning of best evidence obtainable

1. The “best evidence” envisaged in

Section 16 of the 1977 NIRC (now Sec.
6) includes the corporate and
accounting records of the taxpayer who

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Green Notes 2014
Taxation Law
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is the subject of the assessment the contents thereof. The reason for
process, the accounting records of this is that such copies are mere scraps
other taxpayers engaged in the same of paper and are of no probative value
line of business, including their gross as basis for any deficiency income or
profit and net profit sales. Such business taxes against a taxpayer.
evidence also includes data, record,
paper, document or any evidence
gathered by internal revenue officers Estimation may be the basis of tax
from other taxpayers who had personal liability.
transactions or from whom the subject 4. The rule is that in the absence of the
taxpayer received any income; and accounting records of a taxpayer, his
record, data, document and tax liability may be determined by
information secured from government estimation. The petitioner is not
offices or agencies, such as the SEC, the required to compute such tax liabilities
Central Bank of the Philippines, the with mathematical exactness.
Bureau of Customs, and the Tariff and Approximation in the calculation of the
Customs Commission. taxes due is justified. To hold otherwise
would be tantamount to holding that
skillful concealment is an invincible
BIR is not bound by the technical rules barrier to proof. However, the rule does
of evidence not apply where the estimation is
2. The best evidence obtainable may arrived at arbitrarily and capriciously.
consist of hearsay evidence, such as the
testimony of third parties or accounts  PRESCRIPTION (Suspension of the
or other records of other taxpayers Statutory Period for Collection).
similarly circumstanced as the taxpayer
subject of the investigation, hence, Section 229 (now 228) of the Tax Code
mandates that a request for
inadmissible in a regular proceeding in
reconsideration must be made within
the regular courts. Moreover, the
general rule is that administrative 30 days from the taxpayer’s receipt of
agencies such as the BIR are not bound the tax deficiency assessment,
by the technical rules of evidence. It can otherwise the assessment becomes
accept documents which cannot be final, unappealable and therefore
admitted in a judicial proceeding where demandable (Republic v. Hizon, supra).
the Rules of Court are strictly observed.  A valid waiver of the statute of limitations
It can choose to give weight or under paragraphs (b) and (d) of Section
disregard such evidence, depending on 224 of the Tax Code of 1977 (Sec. 223,
its trustworthiness. NIRC as amended by RA 8424), as
amended, must be: (1) in writing; (2)
Photocopies of records/documents agreed to by both the Commissioner and
inadmissible in evidence the taxpayer; (3) before the expiration of
the ordinary prescriptive periods for
3. The best evidence obtainable under assessment and collection; and (4) for a
Section 16 of the 1977 NIRC, as definite period beyond the ordinary
amended, does not include mere prescriptive periods for assessment and
photocopies of records/documents. collection. The period agreed upon can
The BIR, in making a preliminary and still be extended by subsequent written
final tax deficiency assessment against a agreement, provided that it is executed
taxpayer, cannot anchor the said prior to the expiration of the first period
assessment on mere machine copies of agreed upon (BPI v. CIR, 473 SCRA 205).
records/documents. Mere photocopies
of the Consumption Entries have no
probative weight if offered as proof of

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Green Notes 2014
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 With the issuance of RR No. 12-85 on 27 4. Appellate jurisdiction over

November 1985 providing the above- decisions of the Central Board of
quoted distinctions between a request for Assessment Appeals over cases
reconsideration and a request for involving the assessment of
reinvestigation, the two types of protest taxation of real property.
can no longer be used interchangeably
and their differences so lightly brushed
aside. It bears to emphasize that under JURISDICTION OVER BOTH CIVIL AND
Section 224 of the Tax Code of 1977 (now CRIMINAL ASPECTS
Sec. 223), the running of the prescriptive
period for collection of taxes can only be The vesting of jurisdiction over both the
suspended by a request for civil and criminal aspects of a tax case in one
reinvestigation, not a request for court will likewise effectively enhance and
reconsideration. Undoubtedly, a maximize the development of jurisprudence
reinvestigation, which entails the and judicial precedence on tax matters which is
reception and evaluation of additional of vital importance to revenue administration.
evidence, will take more time than a The concentration of tax cases in one court will
reconsideration of a tax assessment, enhance the disposition of these cases since it
which will be limited to the evidence will take them out of the jurisdiction of regular
already at hand; this justifies why the courts which, admittedly, do not have the
former can suspend the running of the expertise in the field of taxation.
statute of limitations on collection of the
assessed tax, while the latter can not.

IV. THE NEW COURT OF TAX APPEALS [ Section 7, R.A. 9282 ]

I. Exclusive Appellate Jurisdiction to

1. Exclusive original jurisdiction over (1) Decisions of the Commissioner

criminal cases arising from of Internal Revenue in cases
violations of the NIRC or the Tariff involving disputed assessments,
and Customs Code and other laws refunds of internal revenue
administered by the BIR and the taxes, fees or other charges,
BOC where the principal amount of penalties in relation thereto, or
taxes and penalties involved is P1 other matters arising under the
million or more and appellate NIRC or other laws
jurisdiction in lieu of the Court of administered by the BIR [via a
Appeals over decisions of the petition for review under Rule
Regional Trial Court where the 42].
amount is less than P1 million; (2) Inaction by the Commissioner
2. Exclusive original jurisdiction over of Internal Revenue in cases
tax collection cases where the involving disputed assessments,
principal amount of taxes and refunds of internal revenue
penalties involved is P1 million or taxes, fees or other charges,
more and the appellate jurisdiction penalties in relation thereto, or
over decisions of the Regional Trial other matters arising under the
Court where the amount is less NIRC or other laws
than P1 million; administered by the BIR, where
the NIRC provides a specific
3. Appellate jurisdiction over period for action, in which case
decisions of the Regional Trial the inaction shall be deemed a
Courts in local tax cases; and denial [via a petition for review

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Green Notes 2014
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under Rule 42]. 302 of the Tariff and Customs

Code, respectively, and
(3) Decisions, orders or resolutions
safeguard measures under RA.
of the RTC in local tax cases 8808, where either party may
originally decided or resolved appeal the decision to impose
by them in the exercise of their or not to impose said duties
original or appellate jurisdiction [via a petition for review under
[via a petition for review under Rule 42].
Rule 43].
(4) Decisions of the Commissioner
of Customs in cases involving Who may appeal?
liability of customs duties, fees Any party adversely affected by a
or other money charges, decision, ruling or inaction of the Commissioner
seizure, detention or release of of Internal Revenue, the Commissioner of
property affected, fines, Customs, the Secretary of Finance, the
forfeitures or other penalties in Secretary of Trade and Industry, the Secretary
relation thereto, or other of Agriculture or the Regional Trial Court, may
matters arising under the file an appeal with the CTA:
Customs Law or other laws
administered by the Bureau of (a.) within thirty (30) days after receipt
Customs [via a petition for of such decision or ruling; OR
review under Rule 42].
(b.) after the expiration of the period
(5) Decisions of the Central Board fixed by law for action referred to
of Assessment Appeals in the in Section 7 (a)(2) of RA. 9282, in
exercise of its appellate which case the inaction shall be
jurisdiction over cases involving deemed a denial.
the assessment and taxation of
real property originally decided What are the modes of appeal?
by the Provincial or City Board
of Assessment Appeals [via a (1.) Appeal may be made by filing a
petition for review under Rule petition for review before the CTA
43]. under a procedure analogous to
that provided for under Rule 42 of
(6) Decisions of the Secretary of the 1997 Rules of Civil Procedure,
Finance in customs cases within 30 days from the receipt of
elevated to them automatically the decision or ruling or from the
for review from decisions of the expiration of the period fixed by
Commissioner of Customs law for the official concerned to
which are adverse to the act in cases of inaction. A division
government under Section of the CTA shall hear the appeal.
2315 of the Tariff and Customs
Code [via a petition for review All other cases involving rulings,
under Rule 42] orders or decisions filed with the
CTA as provided for in Section 7 of
(7) Decisions of the Secretary of RA 9282 shall be raffled to its
Trade and Industry in cases of divisions. A party adversely
non-agricultural product, affected by a ruling, order or
commodity or article, and the decision of a division of the CT A
Secretary of Agriculture in may file a motion for
cases of agricultural product, reconsideration or new trial before
commodity or article involving the same division.
dumping and countervailing
duties under Sections 301 and

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(2.) Appeals with respect to decisions or decision (Sec. 3, 3.1.6, Revenue Regulations 12-
rulings of the Central Board of 99).
Assessment Appeals and the
Regional Trial Court in the exercise
of its appellate jurisdiction, may be Oceanic Wireless Network, Inc. v.
made by filing a petition for review Commissioner of Internal Revenue
under a procedure analogous to 477 SCRA 205
that provided for under Rule 43 of
the 1997 Rules of Civil Procedure
with the CTA which shall hear the RULINGS
case en banc
1. A demand letter for payment of
A party adversely affected by a delinquent taxes may be considered a
resolution of a division of the CTA decision on a disputed or protested
on a motion for reconsideration or assessment. The determination on
new trial, may file a petition for whether or not a demand letter is final
review with the CTA en banc. is conditioned upon the language used
or the tenor of the letter being sent to
(3.) A Petition for Review on Certiorari the taxpayer.
may be filed by a party adversely
affected by a decision or ruling of 2. We laid down the rule that the
the CTA en banc, through a Commissioner of Internal Revenue
verified petition before the should always indicate to the taxpayer
Supreme Court pursuant to Rule in clear and unequivocal language what
45 of the 1997 Rules of Civil constitutes his final determination of
Procedure. the disputed assessment, thus: . . . we
deem it appropriate to state that the
Commissioner of Internal Revenue
Q. What may be appealed? should always indicate to the taxpayer
in clear an unequivocal language
It is the decision of the CIR on the whenever his action on an assessment
protest of the taxpayer against assessment, not questioned by a taxpayer constitutes
the assessment itself, which is appealable to the his final determination on the disputed
CTA. A letter of the Commissioner reminding a assessment, as contemplated by
taxpayer of his obligation to pay taxes which Sections 7 and 11 of Republic Act No.
reiterates a previous demand for the settlement 1125, as amended. On the basis of his
of an assessment is in effect a decision on the statement indubitably showing that the
disputed assessment. This letter is tantamount Commissioner’s communicated action
to a denial of the request for reconsideration or is his final decision on the contested
protest of the taxpayer (CIR v. Ayala Securities assessment, the aggrieved taxpayer
Corp., 70 SCRA 204). would then be able to take recourse to
the tax court at the opportune time.
Without needless difficulty, the
Q. What may constitute taxpayer would be able to determine
Administrative Decision on a when his right to appeal to the tax
Disputed Assessment? court accrues.
3. The general rule is that the
The decision of the Commissioner or his Commissioner of Internal Revenue may
duly authorized representative shall: (a) state delegate any power vested upon him by
the facts, the applicable law, rules and law to Division Chiefs or to officials of
regulations, or jurisprudence on which such higher rank. He cannot, however,
decision is based, otherwise, the decision shall delegate the four powers granted to
be void, in which case, the same shall not be him under the National Internal
considered a decision on a disputed
assessment; and (b) that the same is his final

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Green Notes 2014
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Revenue Code (NIRC) enumerated in Administrative Code of the Philippines. On the

Section 7. other hand, R.A. No. 1125 is a special law
dealing with a specific subject matter the
4. The authority to make tax assessments creation of the CTA, which shall exercise
may be delegated to subordinate exclusive appellate jurisdiction over the tax
officers. Said assessment has the same disputes and controversies enumerated therein.
force and effect as that issued by the
Commissioner himself, if not reviewed Following the rule on statutory
or revised by the latter such as in this construction involving a general and a special
case. law previously discussed, then P.D. No. 242
should not affect R.A. No. 1125, specifically
In Commissioner of Internal Revenue v. Section 7 thereof on the jurisdiction of the CTA,
constitutes an exception to P.D. No. 242.
Isabela Cultural Corporation, 361 SCRA 71, the
Supreme Court held that a final demand letter Disputes, claims and controversies falling under
from the Bureau of Internal Revenue, Section 7 of R.A. No. 1125, even though solely
reiterating to the taxpayer the immediate among government offices, agencies, and
payment of a tax deficiency assessment instrumentalities, including government-owned
previously made, is tantamount to a denial of and controlled corporations, remain in the
the taxpayer’s request for reconsideration. exclusive appellate jurisdiction of the CTA. Such
Such letter amounts to a final decision on a a construction resolves the alleged
inconsistency or conflict between the two
disputed assessment and is thus appealable to
the Court of Tax Appeals. statutes, and the fact that P.D. No. 242 is the
more recent law is no longer significant
(Philippine National Oil Company v. Court of
PNB sought the suspension of the BASED ON
proceedings in CTA Case No. 4249, after it
contested the deficiency withholding tax INVESTIGATION IS APPEALABE TO THE CTA
assessment against it and the demand for
payment thereof before the DOJ, pursuant to Allied Banking Corporation received the
P.D. No. 242. The CTA, however, correctly Formal Letter of Demand with Assessment
sustained its jurisdiction and continued the Notices, which partly reads:
proceedings in CTA Case No. 4249; and, in
effect, rejected DOJ’s claim of jurisdiction to “It is requested that the above
administratively settle or adjudicate BIR’s deficiency tax be paid
assessment against PNB. immediately upon receipt
hereof, inclusive of penalties
Sustained herein is the contention of incident to delinquency. This is
private respondent Savellano that P.D. No. 242 our final decision based on
is a general law that deals with administrative investigation. If you disagree,
settlement or adjudication of disputes, claims you may appeal the final
and controversies between or among decision within thirty (30) days
government offices, agencies and from receipt hereof, otherwise
instrumentalities, including government-owned said deficiency tax assessment
or controlled corporations. Its coverage is broad shall become final, executory
and sweeping, encompassing all disputes, and demandable.”
claims and controversies. It has been
incorporated as Chapter 14, Book IV of E.O. No.
292, otherwise known as the Revised

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Green Notes 2014
Taxation Law
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A careful reading of the Formal Letter of Q. What are deductible funeral

Demand with Assessment Notices leads us to expenses?
agree with Allied Banking Corporation that the
instant case is an exception to the rule on The term “FUNERAL EXPENSES” is not
exhaustion of administrative remedies, i.e., confined to its ordinary or usual meaning. They
estoppel on the part of the administrative include:
agency concerned. [Allied Banking Corporation (a) The mourning apparel of the
v. Commissioner of Internal Revenue, 611 SCRA surviving spouse and unmarried
692 (2010)] minor children of the deceased
bought and used on the
occasion of the burial;
COMMISSIONER FAILED (b) Expenses for the deceased’s
TO ACT ON THE DISPUTED ASSESSMENT wake, including food and
WITHIN THE 180-DAY drinks;
PERIOD FROM THE DATE OF SUBMISSION OF (c) Publication charges for death
DOCUMENTS notices;
In RCBC v. CIR, the Court has held that in (d) Telecommunication expenses
case the Commissioner failed to act on the disputed incurred in informing relatives
assessment within the 180-day period from date of of the deceased;
submission of documents, a taxpayer can either: (1)
(e) Cost of burial plot, tombstones,
file a petition for review with the Court of Tax
monument or mausoleum but
Appeals within 30 days after the expiration of the
not their upkeep. In case the
180-day period; or (2) await the final decision of the
deceased owns a family estate
Commissioner on the disputed assessments and
or several burial lots, only the
appeal such final decision to the Court of Tax
value corresponding to the plot
Appeals within 30 days after receipt of a copy of
where he is buried is
such decision.[Lascona Land Co., Inc. v.
Commissioner of Internal Revenue, 667 SCRA
455 (2012)] (f) Interment and/or cremation
fees and charges; and

V. ESTATE AND DONOR’S TAX (g) All other expenses incurred for
the performance of the rites
The gifts referred to in Section 1540 of and ceremonies incident to
the Revised Administrative Code are those interment.
donations inter vivos that take effect Expenses incurred after the interment,
immediately or during the lifetime of the donor such as for prayers, masses, entertainment, or
but are made in consideration or in the like are not deductible. Any portion of the
contemplation of death. Gifts inter vivos, the funeral and burial expenses borne or defrayed
transmission of which is not made in by relatives and friends of the deceased are not
contemplation of the donor’s death, should not deductible.
be included within the said legal provision for it
would amount to imposing a direct tax on
property and not on the transmission thereof. Q. What are the requisites for
The law considers such transmissions in the deductibility of claims against
form of gifts inter vivos, as advances on the estate?
inheritance and nothing therein violates any
constitutional provision, inasmuch as said Requisites for Deductibility of Claims
legislation is within the power of the Legislature Against the Estate:
(Vidal de Roces v. Posadas, 58 Phil. 111, 113).

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(a) The liability represents a property), whichever is lower, but

personal obligation of the not exceeding P1,000,000.
deceased existing at the time of
his death except unpaid
obligations incurred incident to VI. VALUE ADDED TAX
his death such as unpaid
funeral expenses (i.e., expenses TOLL FEES COLLECTED BY TOLL OPERATORS
incurred up to the time of MAY BE SUBJECTED TO VALUE-ADDED TAX
interment) and unpaid medical
expenses which are classified  Section 108(A) of the Code clearly
under a different category of states that services of all other
deductions pursuant to these franchise grantees are subject to VAT,
Regulations; except as may be provided under
Section 119 of the Code. Tollway
(b) The liability was contracted in
operators are not among the franchise
good faith and for adequate
grantees subject to franchise tax under
and full consideration in money
the latter provision. Neither are their
or money’s worth;
services among the VAT-exempt
(c) The claim must be a debt or transactions under Section 109 of the
claim which is valid in law and Code.
enforceable in court;
 x x x The grant of tax exemption is a
(d) The indebtedness must not matter of legislative policy that is within
have been condoned by the the exclusive prerogative of Congress.
creditor or the action to collect The Court's role is to merely uphold this
from the decedent must not legislative policy, as reflected first and
have prescribed. foremost in the language of the tax
statute. Thus, any unwarranted burden
that may be perceived to result from
Q. What are the conditions for the enforcing such policy must be properly
allowance of family home as referred to Congress. The Court has no
deduction from the gross discretion on the matter but simply
estate? applies the law.

Conditions for the allowance of FAMILY  The VAT on franchise grantees has been
HOME as deduction from the gross estate: in the statute books since 1994 when
1. The family home must be the R.A. 7716 or the Expanded Value Added
actual residential home of the Tax law was passed. It is only now,
decedent and his family at the time however, that the executive has
of his death, as certified by the earnestly pursued the VAT imposition
Barangay Captain of the locality against tollway operators. The
where the family home is situated; executive exercises exclusive discretion
in matters pertaining to the
2. The total value of the family home implementation and execution of tax
must be included as part of the laws. Consequently, the executive is
gross estate of the decedent; and more properly suited to deal with the
immediate and practical consequences
3. Allowable deduction must be in an
of the VAT imposition. [Diaz v. Secretary
amount equivalent to the current
of Finance, 654 SCRA 96, (2011)]
fair market value of the family
home as declared or included in
the gross estate, or the extent of
the decedent’s interest (whether
conjugal/community or exclusive

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It is apparent that the transitional input defined as the money that a taxpayer overpaid
tax credit operates to benefit newly VAT- and is thus returned by the taxing authority. Tax
registered persons, whether or not they credit, on the other hand, is an amount
previously paid taxes in the acquisition of their subtracted directly from one's total tax liability.
beginning inventory of goods, materials and It is any amount given to a taxpayer as a
supplies. During that period of transition from subsidy, a refund, or an incentive to encourage
non-VAT to VAT status, the transitional input investment. [Fort Bonifacio Development
tax credit serves to alleviate the impact of the Corporation v. Commissioner of Internal
VAT on the taxpayer. At the very beginning, the Revenue, 689 SCRA 76 (22 January 2013)]
VAT-registered taxpayer is obliged to remit a
significant portion of the income it derived from
its sales as output VAT. The transitional input REVENUE REGULATIONS 16-2011
tax credit mitigates this initial diminution of the INCREASE THE THRESHOLD AMOUNTS
taxpayer's income by affording the opportunity
to offset the losses incurred through the  Sale of residential lot from P1,500,000
remittance of the output VAT at a stage when to P1,919,500 (Selling Price)
the person is yet unable to credit input VAT
payments.  Sale of house and lot from P2,500,000
to P3,199,200 (Selling Price)
There is another point that weighs
against the CTA's interpretation. Under Section  Lease of residential unit from P10,000
105 of the Old NIRC, the rate of the transitional to P12,800/month
input tax credit is “8% (now 2%) of the value of
such inventory or the actual value-added tax  Sale or lease of goods or properties or
paid on such goods, materials and supplies, performance of services from
whichever is higher.” If indeed the transitional P1,500,000 to P1,919,500 (Gross Annual
input tax credit is premised on the previous Sales or Receipts)
payment of VAT, then it does not make sense to
afford the taxpayer the benefit of such credit
based on “8% (now 2%) of the value of such VII. LOCAL TAXATION
inventory” should the same prove higher than
the actual VAT paid. This intent that the CTA Q. Explain the doctrine of
alluded to could have been implemented with supremacy of the National
ease had the legislature shared such intent by Government over local
providing the actual VAT paid as the sole basis governments.
for the rate of the transitional input tax credit.
[Fort Bonifacio Development Corporation v. Local governments have no power to
Commissioner of Internal Revenue, et al., 583 tax instrumentalities of the National
SCRA 168 (2009)] Government. Settled is the rule that the states
have no power by taxation or otherwise, to
retard, impede, burden or any manner control
the operation of constitutional laws enacted by
PRIOR PAYMENT OF VALUE-ADDED TAXES IS Congress to carry into execution the powers
NOT vested in the federal government (McCulloch v.
A PREREQUISITE BEFORE A TAXPAYER COULD Maryland, 4 Wheat 316, 4 L Ed. 597)
Taxing Power of LGUs
A transitional input tax credit is not a
tax refund per se but a tax credit. Logically, prior In case of doubt, any tax ordinance or
payment of taxes is not required before a revenue measure shall be construed strictly
taxpayer could avail of transitional input tax against the local government unit enacting it
credit. It is settled that tax credit is not and liberally in favor of the taxpayer. Any tax
synonymous to tax refund. Tax refund is exemption, incentive or relief granted by any

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Green Notes 2014
Taxation Law
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local government shall be construed strictly hence, the strictissimi juris rule does not apply.
against the person claiming it (Sec. 5(b), RA The en banc explains that these two terms
7160). actually mean the same thing, such that the rule
that tax exemption should be applied in
In interpreting statutory provisions on strictissimi juris against the taxpayer and
municipal taxing powers, doubts should be liberally in favor of the government applies
resolved in favor of municipal corporations equally to tax exclusions:
(PLDT v. Province of Laguna, 467 SCRA 93).
Indeed, both in their
Section 193 of the Local Government nature and in their effect
Code buttresses the withdrawal of extant tax
there is no difference
exemption privileges. The general rule is that between tax exemption and
tax exemptions or incentives granted to or tax exclusion. Exemption is
presently enjoyed by natural or juridical persons an immunity or privilege; it is
are withdrawn upon the effectivity of the LGC freedom from a charge or
except with respect to those entities expressly burden to which others are
enumerated. In the same vein, the express subjected. Exclusion, on the
withdrawal upon effectivity of the LGC of all other hand, is the removal of
exemptions except only as provided therein, otherwise taxable items
can no longer be invoked by MERALCO to from the reach of taxation,
disclaim liability for the local tax (Mactan Cebu e.g., exclusions from gross
International Airport Authority v. Marcos, 261 income and allowable
SCRA 667; City Government of San Pablo, deductions. Exclusion is thus
Laguna v. Reyes, 305 SCRA 362). also an immunity or privilege
which frees a taxpayer from
Q. Section 12 of RA 7082 a charge to which others are
embodies the so-called “in-lieu- subjected. Consequently,
of-all taxes” clause, the rule that tax exemption
whereunder PLDT shall pay a
should be applied in
franchise tax equivalent to
strictissimi juris against the
three percent (3%) of all its taxpayer and liberally in
gross receipts, which franchise favor of the government
tax shall be “in lieu of all applies equally to tax
taxes”. Invoking its authority exclusions. To construe
under Section 137 of RA 7160, otherwise the ‘in lieu of all
the Province of Laguna, taxes’ provision invoked is to
through its Local Legislative be inconsistent with the
Assembly enacted Provincial theory that R.A. No. 7925, §
Ordinance No. 01-92, imposing 23 grants tax exemption
a franchise tax upon all because of a similar grant to
businesses enjoying a Globe and Smart (PLDT v.
franchise, PLDT included. PLDT City of Bacolod, 463 SCRA
invoked the “in-lieu-of-all- 528, 540).
taxes” clause and Section 23 of
RA No. 7925 also known as the Q. Discuss the meaning of the
“most-favored treatment” doctrine of preemption in local
clause providing for an equality government taxation.
of treatment in the
telecommunications industry. Preemption in the matter of taxation
RESOLVE. simply refers to an instance where the national
government elects to tax a particular area,
PLDT is subject to franchise tax. The impliedly withholding from the local
Supreme Court rejected PLDT’s contention that government the delegated power to tax the
“in-lieu-of-all taxes” clause does not refer to same field. This doctrine rests upon the
“tax exemption” but to “tax exclusion” and

Page 29 of 34
Green Notes 2014
Taxation Law
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intention of Congress. Conversely, should OR HOLD IN ABEYANCE THE PAYMENT OF

Congress allow municipal corporations to cover TAXES
fields of taxation it already occupies, then the
doctrine of preemption will not apply (Victorias We are not unaware of the doctrine
Milling Co., Inc. v. Municipality of Victorias, that taxes are the lifeblood of the government,
Negros Occidental, 25 SCRA 192). without which it can not properly perform its
functions; and that appeal shall not suspend the
collection of realty taxes. However, there is an
LOCAL GOVERNMENT UNIT (LGU) HAS NO exception to the foregoing rule, i.e., where the
POWER TO IMPOSE BUSINESS TAXES ON taxpayer has shown a clear and unmistakable
PERSONS OR ENTITIES ENGAGED IN THE SALE right to refuse or to hold in abeyance the
OF PETROLEUM PRODUCTS payment of taxes. In this case we note that
respondent contested the revised assessment
Section 133 prescribes the limitations on the following grounds: that the subject
on the capacity of local government units to assessment pertained to properties that have
exercise their taxing powers otherwise granted been previously declared; that the assessment
to them under the LGC. Apparently, paragraph covered periods of more than 10 years which is
(h) of the Section mentions two kinds of taxes not allowed under the LGC; that the fair market
which cannot be imposed by local government value or replacement cost used by petitioner
units, namely: “excise taxes on articles included items which should be properly
excluded; that prompt payments of discounts
enumerated under the National Internal
Revenue Code [(NIRC)], as amended”; and were not considered in determining the fair
“taxes, fees or charges on petroleum products.” market value; and that the subject assessment
should take effect a year after or on January 1,
The language of Section 133(h) makes 2008. To our mind, the resolution of these
plain that the prohibition with respect to issues would have a direct bearing on the
petroleum products extends not only to excise assessment made by petitioner. Hence, it is
taxes thereon, but all “taxes, fees and charges.” necessary that the issues must first be passed
The earlier reference in paragraph (h) to excise upon before the properties of respondent are
taxes comprehends a wider range of subjects of sold in public auction. (Talento v. Escalada, Jr.,
taxation: all articles already covered by excise 556 SCRA 491, 500-501 [2008]).
taxation under the NIRC, such as alcohol
products, tobacco products, mineral products,
automobiles, and such non-essential goods as A TAX ORDINANCE MAY BE ASSAILED BEFORE
jewelry, goods made of precious metals, THE
perfumes, and yachts and other vessels SECRETARY OF JUSTICE WITHIN THIRTY (30)
intended for pleasure or sports. In contrast, the DAYS
later reference to “taxes, fees and charges” FROM EFFECTIVITY THEREOF
pertains only to one class of articles of the
many subjects of excise taxes, specifically, Clearly, the law requires that the
“petroleum products.” While local government dissatisfied taxpayer who questions the validity
units are authorized to burden all such other or legality of a tax ordinance must file his
class of goods with “taxes, fees and charges,” appeal to the Secretary of Justice, within 30
excepting excise taxes, a specific prohibition is days from effectivity thereof. In case the
imposed barring the levying of any other type of Secretary decides the appeal, a period also of
taxes with respect to petroleum products 30 days is allowed for an aggrieved party to go
(Petron Corporation v. Tiangco, 551 SCRA 484 to court. But if the Secretary does not act
[2008]). thereon, after the lapse of 60 days, a party
could already proceed to seek relief in court.
These three separate periods are clearly given
AN APPEAL SHALL NOT SUSPEND THE for compliance as a prerequisite before seeking
COLLECTION OF REALTY TAXES redress in a competent court. Such statutory
EXCEPT WHERE THE TAXPAYER HAS SHOWN A periods are set to prevent delays as well as
CLEAR AND UNMISTAKABLE RIGHT TO REFUSE enhance the orderly and speedy discharge of

Page 30 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

judicial functions. For this reason, the courts Gross revenue covers money or its
construe these provisions of statutes as equivalent actually or constructively received,
mandatory. [Cagayan Electric Power and Light including the value of services rendered or
Co., Inc. v. City of Cagayan De Oro, 685 SCRA articles sold, exchanged or leased, the payment
609, (14 November 2012)] of which is yet to be received. This is in
consonance with the International Financial
Reporting Standards, which defines revenue as
THERE IS NO EXPRESS PROVISION IN THE LGC the gross inflow of economic benefits (cash,
PROHIBITING receivables, and other assets) arising from the
ordinary operating activities of an enterprise
COURTS FROM ISSUING AN INJUNCTION TO (such as sales of goods, sales of services,
RESTRAIN LOCAL interest, royalties, and dividends), which is
GOVERNMENTS FROM COLLECTING TAXES measured at the fair value of the consideration
or receivable (Ericsson Telecommunications,
A principle deeply embedded in our Inc. v. City of Pasig, 538 SCRA 99 [2007]).
jurisprudence is that taxes being the lifeblood
of the government should be collected
promptly, without unnecessary hindrance or Q. Can the National Power
delay. In line with this principle, the National Corporation (NPC), a
Internal Revenue Code of 1997 (NIRC) expressly government-owned and
provides that no court shall have the authority controlled corporation, claim
to grant an injunction to restrain the collection tax exemption under Section
of any national internal revenue tax, fee or 234 of the Local Government
charge imposed by the Code. An exception to Code for the taxes due from
this rule obtains only when in the opinion of the Mirant Pagbilao Corporation
Court of Tax Appeals (CTA) the collection (Mirant) whose tax liabilities
thereof may jeopardize the interest of the the NPC has contractually
government and/or the taxpayer. Unlike the assumed?
National Internal Revenue Code, the Local Tax
Code does not contain any specific provision The stipulation between NPC and
prohibiting courts from enjoining the collection Mirant does not bind third persons who are not
of local taxes. Such statutory lapse or intent, privy to the contract between these parties.
however it may be viewed, may have allowed There is no privity between the local
preliminary injunction where local taxes are government units and the NPC, even though
involved but cannot negate the procedural rules both are public corporations. The tax due will
and requirements under Rule 58. [Angeles City not come from one pocket and go to another
v. Angeles Electric Corporation, 622 SCRA 43 pocket of the same governmental entity.
(2010)] Only the parties to the agreement can
exact and demand the enforcement of the
rights and obligations it established—only
LOCAL BUSINESS TAX SHALL BE BASED ON Mirant can demand compliance from the NPC
GROSS RECEIPTS for the payment of the real property tax the
NPC assumed to pay. The local government
The imposition of local business tax units cannot demand payment from the NPC.
based on gross revenue will inevitably result in
the constitutionally proscribed double The government-owned or controlled
taxation—taxing of the same person twice by corporation claiming exemption must be the
the same jurisdiction for the same thing— entity actually, directly, and exclusively using
inasmuch as petitioner’s gross revenue or the real properties, and the use must be
income for a taxable year will definitely include devoted to the generation and transmission of
its gross receipts already reported during the electric power. Although the plant's
previous year and for which local business tax machineries are devoted to the generation of
has already been paid. electric power, by the NPC's own admission and
as previously pointed out, Mirant—a private

Page 31 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

corporation—uses and operates them. That The proper ventilation of the legal issues
Mirant operates the machineries solely in raised is thus indicated. Certainly a CFI
compliance with the will of the NPC only (now RTC) is not therein included. It is
underscores the fact that NPC does not actually, devoid of jurisdiction” (Rallos v. Gako, 344
directly, and exclusively use them. SCRA 175).
The test of exemption is the use, not
the ownership of the machineries devoted to Classification of Customs Duties
the generation and transmission of electric
power. [National Power Corporation v. 1. Regular Duties — those imposed
Province of Quezon and Municipality of and collected merely as a source of
Pagbilao, 593 SCRA 47 (2009)] revenue.

a. Ad valorem Duty — Based

VII. TARIFF AND CUSTOMS CODE on the value of imported
 Seizure and forfeiture proceedings are
within the exclusive jurisdiction of the b. Specific Duty — Based on
Collector of Customs to the exclusion of dutiable weight of goods.
regular courts. Regional Trial Courts are
c. Alternating Duties — Which
devoid of competence to pass upon the
alternates ad valorem and
validity or regularity of seizure and
forfeiture proceedings conducted by the
Bureau of Customs and to enjoin or d. Compound Duty —
otherwise interfere with these proceedings Consisting of ad valorem and
(Jao v. CA, 249 SCRA 36). specific.

 The customs authorities do not have to 2. Special Duties — those imposed in

prove to the satisfaction of the court that additional to the ordinary customs
the articles on board a vessel were duties usually to protect local
imported from abroad or are intended to be industries against foreign
shipped abroad before they may exercise competition.
the power to effect customs’ searches, a. Anti-Dumping Duty —
seizures or arrests provided by law and Imposed upon foreign
continue with the administrative hearings. products with value lower
As held in Ponce v. Vinuya: “The than their fair market value
governmental agency concerned, the to the detriment of local
Bureau of Customs, is vested with exclusive products; it is the difference
authority. Even if it be assumed that in the between the export price
exercise of such exclusive competence a and the normal value of
taint of illegality may be correctly imputed, such product, commodity or
the most that can be said is that under article.
certain circumstances the grave abuse of
discretion conferred may oust it of such  Imposing authority —
jurisdiction. It does not mean however that The Secretary of Trade
correspondingly a CFI (now RTC) is vested and Industry (non-
with competence when clearly in the light agricultural products)
of the above decisions the law has not seen OR Secretary of
fit to do so. The proceeding before the Agriculture (agricultural
Collector of Customs is not final. An appeal products) after formal
lies to the Commissioner of Customs and investigation and
thereafter to the Court of Tax Appeals. It affirmative finding of
may even reach (the Supreme Court) the Tariff Commission.
through the appropriate petition for review.

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Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

b. Countervailing Duty — development program of the

Imposed upon foreign goods Government.
enjoying subsidy thus
allowing them to sell at  Under the Tariff and Customs Code Sec.
lower prices to the 401 — in the interest of national economy,
detriment of local products general welfare and/or national security,
similarly situated; it is the President, upon recommendation by
equivalent to the value of NEDA, is empowered:
the subsidy.
a. To increase, reduce or remove
 Imposing authority — existing protective rates of import
Secretary of Trade and duty, provided that the increase
Industry (non- shall not be higher than 100% ad
agricultural products); valorem;
Secretary of Agriculture
(agricultural products) b. To establish import quota or to
after formal ban imports to any commodity;
investigation and c. To impose additional duty on all
affirmative finding of imports not exceeding 10% ad
the Tariff Commission. valorem;

c. Marking Duty — Imposed d. To modify the forms of duty,

upon those not properly whether ad valorem or specific.
marked as to place of origin
of the goods. Exemption from payment of all duties and
taxes of officer or employee returning from
 Imposing authority — regular assignment abroad for reassignment to
Commissioner of the home office
Any officer or employee returning from
d. Discriminatory Duty — a regular assignment abroad for reassignment
Imposed upon goods coming to the home office x x x shall be exempt from
from countries that the payment of all duties and taxes on his
discriminate against personal and household effects, including one
Philippine products. (1) used motor car duly registered in his name
for at least six (6) months: Provided, however,
 Imposing authority —
That the exemption shall apply only to the value
President of the
of the motor car and to the aggregate assessed
value of said personal and household effects,
the latter not to exceed fifty percent (50%) of
the total amount received by such officer or
Flexible Tariff Clause
employee in salary and allowances during his
 Under Sec. 28, Article VI, 1987 Constitution latest assignment abroad but not to exceed four
— the Congress may, by law, authorize the (4) years: Provided, further, That this exception
President to fix, within specified limits, and shall not be availed of more often than once
subject to such limitations and restrictions every four (4) years (Republic Act No. 7157,
as it may impose: Section 81).

a. Tariff rates, imports and export

quotas, tonnage and wharfage IMPORTER’S FAILURE TO FILE REQUIRED
b. Other duties or imposts within THE LAST PACKAGE CONSTITUTES IMPLIED
the framework of the national ABANDONMENT OF ITS IMPORTATIONS

Page 33 of 34
Green Notes 2014
Taxation Law
Prepared by: Justice Japar B. Dominador

An importer’s failure to file the required

entries within a non-extendible period of 30
days from date of discharge of the last package
from the carrying vessel constitutes implied
abandonment of its importations. After the
lapse of this 30-day period, the abandoned
shipments become government property.
Under the Tariff and Customs Code
(TCC), imported articles must be entered within
a non-extendible period of 30 days from the
date of discharge of the last package from a
vessel. Otherwise, the BOC will deem the
imported goods impliedly abandoned in favor of
the government. Chevron argued that the
import entry declarations (IED) it filed within
the 30-day period for some of its oil shipments
is the entry contemplated by the TCC, and not
the import entry and internal revenue
declaration (IEIRD), which it failed to file within
the same period. The SC disagreed, holding that
both the IED and IEIRD should be filed within 30
days from the date of discharge of the last
package from the vessel or aircraft (Chevron
Phils. Inc. v. Commissioner of the Bureau of
Customs, 561 SCRA 710, 721-722, 728, 742).
--- God Bless ---


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