Professional Documents
Culture Documents
AND REMEDIES
By:
JUSTICE JAPAR B. DIMAAMPAO
Transcribed by:
Abunales, Bernardo,
Bernardo, Evidente, Pabalay,
Pabalay, Rafael, Ramos
Updated by:
Anonymous Lawyer
(2019)
House Rules:
1. Do not come to class unprepared.
2. Class recitations will include probable bar questions and recent jurisprudence.
3. Do not pull a sleep in class, or else, you will be asked to step ou t of the room.
4. Do not talk to your seatmate or classmate. Listen to your classmate’s recitation instead.
5. Observe proper court decorum in class as if you are already a lawyer.
6. Raise your hand if you want to go to the restroom.
7. Answer the questions briefly, concisely, and with legal basis.
8. I am only here to guide you, not to terrorize you.
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serve, public improvements for the enjoyment of
the citizenry, and those which come within the
GENERAL PRINCIPLES
State’s territory and facilities and protection which
Part I
a government is supposed to provide.
Taxes,
Taxes, on the other hand, are enforced proportional civilized society. Without taxes, the government
contributions from persons and property, levied by would be paralyzed for lack of the m otive power to
the state by virtue of its sovereignty for the support activate and operate it. Hence, despite the natural
of the government and for all its public needs. reluctance to surrender part of one’s hard-earned
income to the taxing authorities, every person who
NATURE OF THE TAXING POWER is able to must contribute his share in the burden
The taxing power has two natures; of running the government. The government, for its
1. Taxation as an inherent Attribute of part, is expected to respond in the form of tangible
Sovereignty; and intangible benefits intended to improve the
2. Taxation is Legislative in Character lives of the people and enhance their material and
moral values.”
Inherent Attribute of Sovereignty
The power of taxation is an incident of sovereignty LIFEBLOOD THEORY
as it is inherent in the state,
state , belonging as a matter of
right to every independent government. It does not Dimaampao: Now, holistic approach --- interplay
need constitutional conferment. of lifeblood theory and tax remedies. This
happened in the last bar exams. In enunciating
Constitutional provisions do not give rise to the certain rule, the court cited lifeblood theory and
power to tax but merely impose limitations on you must mark this with Sec. 112 of NIRC. Sec. 112
what would otherwise be an invincible power. was asked in the bar for three consecutive bar
exams. It will come out again.
Legislative in Character
The power to tax is inherent in the State, and the Now you must know how the court mentioned
state is free to select the object of taxation, such as lifeblood theory here. Sec. 112 is about tax remedy
being exclusively vested in the legislature, except on value-added tax. Sec. 112 provides for remedies
where the constitution provides otherwise. [1] on tax refund or tax credit involving VAT.
Q: What is the Life Blood Doctrine There are three prescriptive periods there: the 2-
A: The lifeblood doctrine is one that is enunciated year period, the 90-day period under the TRAIN
by the Supreme Court in Commissioner of Internal Law (no longer 120 days), and the 30-day period.
Revenue v. Pineda, [2] as follows: taxes are the Explain how they are applied.
lifeblood of the government and their prompt and
certain availability is an imperi ous need.” This The 2-year period must be observed in filing tax
means that, without taxes, the State can neither refund with the BIR, reckoned from the close of
exist nor endure. Taxes should be collected without taxable year.
unnecessary hindrance.
The 90-day period refers to the period within
Q: What is the Necessity Theory? which the BIR Commissioner must render decision
A:
A: The necessity theory, as pronounced by the from the submission of the claim.
Supreme Court in Philippine Guaranty Co., Inc. v.
Revenue , [3] states that
Commissioner of Internal Revenue, The 30-day period must be observed in appealing
taxation is a power predicated upon necessity. It is the decision of the BIR Commissioner to the Court
a necessary burden to preserve the State’s of Tax Appeals from the receipt of the adverse
sovereignty and a means to give the citizenry an decision.
army to resist aggression, a navy to defend its
shores from invasion, a corps of civil servants to
1
Article VI, Sec. 28[2]. 3 G.R. No. L-22074. April 30, 1965 (13 SCRA 775)
2 G.R. No. L-22734. September 15, 1967 (21 SCRA 4 G.R. No. L-28896. February 17, 1988
105)
Q: What does lifeblood doctrine require Q: What is the principle of strictissimi juris?
regarding the rule of payment under protest? A: This principle states that tax exemptions are
A:
A: The lifeblood doctrine requires strict strictly construed against the taxpayer and
compliance of this rule. liberally construed in favor of the government.
Dimaampao: Payment under protest is thus Q: What are the exceptions to the principle of
consistent with the lifeblood doctrine, and as such strictissimi juris?
their collection cannot be curtailed by injunction or A: The exceptions
exceptions to the principle
principle of strictissimi
any like action; otherwise, the state or, in this case, juris are:
juris are:
the local government unit, shall be crippled in 1. When the law expressly provides for
dispensing the needed services to the people, and liberal interpretation or construction
construction of
its machinery gravely disabled. tax exemptions;
2. When the grantee of tax exemption is a
Pineda,[3] came out in the difficult bar exam
CIR v. Pineda, religious or charitable institution;
in 1999 where only 5% passed taxation. 3. When the grantee of tax exemption is the
government, its political subdivisions or
Q: What is the ruling of the Court in this c ase? instrumentalities; [5]
A: This case enunciates that the Bureau of Internal 4. When the taxpayer falls within the
Revenue has the necessary discretion to avail itself purview of exemption by clear legislative
of the most expeditious way to collect taxes intent; [6]
because taxes are the lifeblood of the government
and their prompt and certain availability is an
imperious need.
When do you apply this rule; that “tax exemption Q: Is there an exception to this rule?
is the general rule and taxation is the A: Yes, Domingo v. Garlitos. [5] The
A: Yes, that is the case of Domingo
exemption” ? peculiar circumstance therein is the enactment of
A: The general rule is that
that taxation is the rule and R.A. No. 2700 appropriating certain amount of
exemption is the exemption. It shall apply when the money for the taxpayer’s claim that made such
grantee is a municipal corporation, and the claim due and demandable or liquidated. Thus, the
property is not held in private ownership but a Court allowed compensation.
public property.
Dimaampao: YMCA v. CIR, [6] also came out in the
Dimaampao:
Dimaampao: This case is asked thrice already in bar exams. YMCA claimed that as a non -stock, non-
the bar examinations. profit organization, it should be exempt from
income taxation with regard to its profits on
Q: What is the jurisprudential ruling of the Court leasing its facilities to non-exempt entities.
in Ferdinand Marcos II v. Court of Ap peals, [2] ?
A: The
A: The Court ruled therein that the approval of the Q: What is ruling in that landmark case?
court, sitting in probate or as a settlement tribunal A: YMCA is taxable on its rental income. The
over the deceased’s estate, is not a mandatory exemption provided in Section 30(e) of the NIRC
requirement in the collection of estate taxes. must be strictly construed against YMCA.
Moreover, it is taxable because the Tax Code
Explanation: The collection of taxes does not provides that the income of charitable
necessitate the approval of the probate court organizations, such as YMCA, from any of their
because taxes are the lifeblood of the government properties, real or personal, or from any of their
and should be collected without unnecessary activities conducted for profit regardless of the
hindrance. To require the approval of the probate disposition made of such income, shall be subject
court is a cause of delay to the collection of taxes. to tax.
Q: Is there a provision that before the BIR can Q: What does YMCA stand for?
collect taxes there must be approval of the A: YMCA is short for Young Men’s Christian
probate court? Association.
A: No. There is none.
Read Section 30(e) of the NIRC;
Q: Is there a revenue regulation to that effect?
A: No.
A: No. There is none. Non-stock corporation or association
organized and operated exclusively for
1 J. Cooley, pp. 1414-1415. 4 Republic v. Mambulao Lumber Co., 4 SCRA 622;
Read the last paragraph of Section 30 of the NIRC. Q: Is the letter of the BIR to the taxpayer
That is the YMCA doctrine; qualified?
A: No, because the assessment must contain final
Notwithstanding the provisions in the assessment or determination .
preceding paragraphs, the income of
whatever kind and character of the Q: What is assessment in real property taxation?
foregoing organizations from any of A: Assessment under real property taxation is the
their properties, real or personal, or act or process of determining the value of a
from any of their activities conducted property, or proportion thereof subject to tax,
for profit regardless of the disposition including the discovery, listing, classification, and
made of such income, shall be subject to appraisal of properties. [4]
tax imposed under this Code.
(Emphasis supplied) Q: What are the requisites or conditions for a
valid assessment of real property tax? There are
Stages, Aspects, and Phases of taxation five requisites.
Explain the stages or aspects of taxation. These A: In Meralco v. Narvales,
Narvales , the Supreme Court
aspects do not refer to the fundamental principles enumerated the following guideline: (K-A-L-M-A)
of taxation. This is so basic. 1. The assessment must contain the kind of
property;
The stages of taxation are; (L-A-P
( L-A-P)) 2. It must set forth the assessed value of the
(1) Levy or imposition,
imposition, which refers to the real property;
enactment of tax laws; 3. It must indicate the level of assessment;
(2) Assessment and collection, which
collection, which provides for 4. It must specify the fair market value of the
the implementation, enforcement or property;
administration of tax laws; and 5. It must clearly indicate the actual use of
(3) Payment,
Payment, which is defined as the compliance property.
by the taxpayer.
Q:What is assessment in customs law?
Q: What is the nature of levy or imposition? A: In Pilipinas Shell Petroleum Corporation v.
A: It is legislative in nature. Customs, [5] the Supreme Court
Commissioner of Customs,
ruled that assessment in customs law is known as
Q: What is the nature of assessment and liquidation. It refers to the final computation and
collection? ascertainment of the collector of duties on
A: They are administrative in nature. imported merchandise, based on official reports as
to the quantity, character and value thereof, and
Q: What is the technical term for levy or the collector’s finding of the
the applicable rate of duty.
imposition?
A: It
A: It is the impact of taxation.
taxation . Taxation as Inherent Power of the state
Q: What is the technical term for payment? Q: Why is the power to tax inherent in a
A: It is the incidence of taxation.
taxation. sovereign State?
A: It is considered inherent in a sovereign State
DIMAAMPAO: You take note of these cases: because it is a necessary attribute of sovereignty.
Appeals; [1]
1. Adamson v. Court of Appeals; Without this power, no sovereign State can exist
Narvales ; [2]
2. Meralco v. Narvales; nor endure. The power to tax proceeds upon the
3. Pilipinas Shell Petroleum Corporation v. theory that the existence of a government is a
Customs; [3]
Commissioner of Customs; necessity and this power is an essential and
inherent attribute of sovereignty, belonging as a
Fundamental Principles of a Sound Tax System It protects the local industry by imposing certain
taxes upon imported goods or articles.
Q: What are the three fundamental principles of
a sound taxation system? Briefly explain each. It may be used as an implement of the police power
A: The three fundamental principles of a sound of the State through the imposition of taxes with
taxation are fiscal adequacy, theoretical justice, and the end in view of regulating a particular activity.
administrative feasibility.
Dimaampao: The Supreme Court ruled in CIR v.
Fiscal adequacy dictates that sources of revenue Central Luzon Drug Corporation, [1] that in recent
must be sufficient to meet government years, the power to tax has become the most
expenditures. effective tool to realize social justice, public
welfare, and the equitable distribution of wealth.
Theoretical justice mandates that taxes must be This is an abandoned doctrine.
imposed based on the taxpayer’s ability to pay.
Mark the case of Manila Memorial Park, Inc. v.
Administrative feasibility requires that tax laws DSWD Secretary, [2], which abandons the Central
must be capable of effective and efficient Luzon ruling. The power of taxation w as used as an
enforcement. implement of police power in this case.
Q: What is the reason behind this ruling? Q: What is the situs of real property tax?
A: It is levied with a regulatory purpose. The l evy is A: Its situs is the state or country where it is
primarily in the exercise of the police po wer for the located, regardless whether its owner is a resident
general welfare of the entire city. It is greatly or a non-resident.
imbued with public interest. Removing slum areas
in Quezon City is not only beneficial to the Q: What about income tax? Can we tax income
underprivileged and homeless constituents but derived from sources without? Whose income
advantageous to the real property owners as well. derived from sources without is subject to
The situation will improve the value of the their Philippine income tax? So, when we tax the
property investments, fully enjoying the same in income of a resident citizen derived from sources
view of an orderly, secure, and safe community, without, what is the criterion?
and will enhance the quality of life of the poor, A: The situs of income tax depends upon the
making them law-abiding constituents and better nationality and residence of the taxpayer. If the
consumers of business products. taxpayer is both a resident and a national of the
Philippines, the income is taxed upon sources
INHERENT LIMITATIONS derived from within and without the Philippines.
The inherent limitations on taxation are as follows; Otherwise, the taxpayer is taxed upon sources
1. Public purpose; derived from within the Philippines only.
2. Territoriality;
3. International comity; Q: What about community tax?
4. Exemption from taxation of government A: Community taxes are imposed on the residence
agencies and instrumentalities; of the taxpayer.
5. Non-delegation of the power to tax;
Q: Can estate tax be imposed upon property
Public purpose situated outside the Philippines?
The Supreme Court ruled that the term “public A: Yes, if the decedent is a citizen of the Philippines.
purpose” is not defined. It is an elastic concept that
can be hammered to fit modern standards. It Dimaampao: The same is true in case of donor’s
should be given a broad interpretation. [2] tax. Provided that the donor is a citizen, even if the
property donated is situated outside the
Q: What is the test to determine if the purpose is Philippines, the same can be the subject of donor’s
for the public? Is it the number of persons tax.
benefitted?
A: “Public” may refer to a special group of persons. Q: What is the Cross Border Doctrine?
The senior citizens are a special group of persons A: The Cross Border Doctrine mandates that no
who have contributed to the general welfare and VAT shall be imposed to form part of the cost of the
common good of the nation in the prime of their goods destined for consumption outside the
lives. [3] territorial border of the taxing authority. Hence,
actual export of goods and services from the
TERRITORIALITY Philippines to a foreign country must be free of
Let us focus on the principle of territoriality. This VAT, while those destined for use or consumption
might come out in the bar exam. It is about a within the Philippines shall be imposed with 10%
doctrine in value-added tax. VAT.
Q: What is the meaning of Destination Principle? Q: What are export processing zones? What is
A: It is a principle applied in value-added tax. It the tax treatment on the sales of goods or
dictates that value-added tax may be imposed on services within these export processing zones?
Q: Does it have a constitutional basis? MIAA filed with the Court of Appeals an original petition for
A: YES. Article 2, Section 2 of the Constitution states prohibition and injunction, with prayer for preliminary injunction or
that the Philippines adopts the generally accepted temporary restraining order. MIAA argues that the Airport Lands
and Buildings are for the benefit of the general public thus, the
principles of international law as the law of the
ownership of these properties remains with the State and are not
land. Such generally accepted principle pertains to subject to real estate tax by local governments.
the sovereign equality of nations. Neither can we
impose real property tax on the foreign embassies Respondents invoke Section 193 of the Local Government Code,
which expressly withdrew the tax exemption privileges of
as these are extension of territories of sovereign "government-owned and-controlled corporations" upon the
states. effectivity of the Local Government Code. Respondents also argue
that a basic rule of statutory construction is that the express mention
of one person, thing, or act excludes all others. An international
EXEMPTION FROM TAXATION OF
airport is not among the exceptions mentioned in Section 193 of the
GOVERNMENT AGENCIES AND Local Government Code. Thus, respondents assert that MIAA
INSTRUMENTALITIES cannot claim that the Airport Lands and Buildings are exempt from
real estate tax.
Under Article 420 of the Civil Code, the Airport Lands and
Petitioner is before us now claiming that this Court, in the 2006
Buildings of MIAA, being devoted to public use, are properties of
MIAA case, had expressly declared that petitioner, while vested
public dominion and thus owned by the State or the Republic of the
with corporate powers, is not considered a government-owned or
Philippines. Article 420 specifically mentions "ports x x x
controlled corporation, but is a government instrumentality like the
constructed by the State," which includes public airports and
Manila International Airport Authority (MIAA), Philippine Ports
seaports, as properties of public dominion and owned by the
Authority (PPA), University of the Philippines, and Bangko Sentral
Republic. As properties of public dominion owned by the Republic,
ng Pilipinas (BSP). Petitioner alleges that as a government
there is no doubt whatsoever that the Airport Lands and Buildings
instrumentality, all its airport lands and buildings are exempt from
are expressly exempt from real estate tax under Section 234(a) of
real estate taxes imposed by respondent City.
the Local Government Code. This Court has also repeatedly ruled
Q: What is this Doctrine of Pre-emption? Q: Can you think of a case where the Supreme
A: The imposition of these limitations is a classic Court held that this ordinance is discriminatory?
application of that Doctrine. Pre-empt. To pre-empt A: Ormoc Sugar Co. vs. Treasurer of Ormoc City ;
the exercise. Here, where it not for these Motor vehicles in Manila; Association of Customs
limitations, local government units may impose Brokers vs. Manila
these taxes. But the national government elects to
over these field or area of taxation thereby Dimaampao: There was this tax imposed on
withholding this power to tax on the part of local export sale made by Ormoc Sugar Co. The ruling of
government units. So those taxes which may not be the Court was clearly, the tax was discriminatory. It
covered by these, they can be imposed by local singled out a particular sugar industry. It applied
government units. In other words, if the national only to existing conditions. To conform with that
government does not impose taxes on certain condition number 2 that it must apply to both
subject, that may be taxed by the LGU. [1] present and future conditions
1
Victorias Milling vs. Municipality of Victorias, 25
SCRA 192
Dimaampao: These are the words of the Supreme Before the government will take your property as a
Court in the ponencia of Chief Justice Enrique result of your failure to pay your tax, there has to
Fernando, which was given judicial imprimatur by be notice. That is why we have this Notice of
the Supreme Court. I will look for these words Assessment. That is mandated by due process.
which were mentioned in the recent case of
Camacho: Directive; Not judicially imposable right; In your book, I hope you have come across the case
moral incentives. of Reyes vs. Almanzor . [1] That’s a case that shows a
classic violation of due process. It is about a l and in
Q: Is it a directive to Congress? Is it mandatory? Tondo, Manila that has been the subject of real
A: No. That’s why the word “shall” is misleading. property assessment. That the land was in the
The operative word there is “evolve.” nature of a residential and therefore subject to the
This question came out in Political Law. The That where contracts were executed before the
question in taxation has something to do with passage of a law, a subsequent tax law may be filed
Value Added Tax. These are the two cases: (1) by Congress imposing tax on these certain
Tolentino et al vs. Secretary of Finance [1] and (2) contracts, that is allowed. Because it does not
American Bible Society vs. City of Manila. [2] involve exemption. So, your knowledge of
exemption comes into play.
In the latter case, the City of Manila is requiring a
religious society to pay a certain fee or amount Q: When is tax exemption irrevocable? When is it
before it could sell its religious articles. Is that revocable?
valid? A: It is revocable if it is based on franchise, equity,
public policy, economic policy, the state can
That’s an undue restraint in the exercise of unilaterally revoke that. On the other hand, tax
religious profession. exemption is irrevocable if that revocation would
result in violation of non-impairment clause- and
On the other hand, in the Tolentino case, there is no that is when it is based on contract whereby
violation. VAT can be imposed on the sale of valuable consideration is given.
religious articles. What cannot be imposed are
regulatory fees. The right is the religious freedom BILLS TO ORIGINATE FROM THE HOUSE OF
to disseminate, to sell. That could not be the subject REPRESENTIVES
of a fee because that is a regulation. You cannot We now come to the most important, and this is the
regulate that. But the imposition of sales tax or issue that will eventually be passed upon by the
VAT, that’s allowed. Court in the TRAIN Law and this I think has been
raised by the petitioners. You read again Tolentino
NON-IMPAIRMENT CLAUSE et al. vs. Secretary of Finance. You read the original,
The old case is the Tolentino case. Casanova vs 235 SCRA 630.
Court - new case. Justice Vitug asked this in the bar
exams. It has something to do with revocation of The contention of Speaker Alvarez, as you might
tax exemptions. You associate that with revocation have heard him, is that the insertion of the tax on
of tax exemption. coal is unconstitutional because it was not in the
version of the House. On the other hand, Senator
Exemption may be granted under Congressional Drilon, opines otherwise – we have the power to
franchise. Congress may grant a franchise subject amend. Is the Senate making an amendment? Is
to amendment or repeal. that tax on coal found in the original version of the
House? I’m sure the court will be guided by this.
Q: Can that be revoked unilaterally? What’s the ruling of the Court here? How did the
1 G.R. No. 115455. October 30, 1995 2 G.R. No. L-9637. April 30, 1957
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1 G.R. No. 144104. June 29, 2004 2 National Power Corp. vs. Central Board of
Q: What is the rationale of granting tax So, this is a legally available tax opportunity. You
exemptions? can take advantage of that. So when are you going
A: Charitable institutions provide for free goods to sell your capital asset, within what period? Sell it
and services to the public which would otherwise after twelve months.
fall on the shoulders of the government. Thus, as a
matter of efficiency, the government forgoes taxes Dimaampao: What about a classic example of tax
which should have been spent to address public evasion? Have you read the case of CIR v. Toda, Jr.
needs, because certain private entities already [2] case? The mother of all tax evasion cases
assume a part of the burden. This is the rationale according to one author. There the Court cited the
for the tax exemption of charitable institutions. The elements of Tax evasion, what are the elements? I
loss of taxes by the government is compensated by must pressure you to memorize this.
its relief from doing public works which would
have been funded from the appropriations from Q: What are the elements of tax evasion?
the Treasury. A: Tax evasion connotes three factors;
1. The end to be achieved i.e. the payment of
Q: So, what are the three reasons for the grant of less than that known by the taxpayer to be
exemptions? legally due, or the non-payment of tax
A: The reasons for the grant of tax exemptions are; when it is shown that tax is due;
1. They perform ministrant functions that 2. An accompanying state of mind which is
would have done by the government; described as being “evil”, in “bad faith”,
2. In exchange for those taxes that have been “willful”, or “deliberate and not
forgone, are the services that these accidental”;
charitable institutions render; 3. A course of action or failure of action which
3. The loss of taxes is compensated by the is unlawful;
relief it gives to the government to
perform certain acts that may require Dimaampao: Have you heard of estate planning
appropriation from the Treasury; scheme? Did I not mention the case of Delcar Trade
vs IAC[3] ? Read that, I might ask you that in your
TAX AVOIDANCE AND TAX EVASION exam.
Now, let’s go to tax evasion.
Q: What is estate planning? Please memorize
Q: In 1998 Bar Exam, it asked, what is the that.
distinction between tax avoidance and tax A: The preparation of the management of the
evasion? person’s estate through wills, trust, insurance
A: Tax Evasion (Tax Dodging) - Willful act to defeat policies, and other arrangements designed to
or circumvent the law in order to illegally reduce reduce administration costs and estate tax
one’s tax liability. liabilities.
Tax Avoidance (Tax Minimization) - It is the act of Q: If a person fails to pay tax, will he be liable for
taking advantage of legally available tax tax evasion? Mere understatement of income,
opportunities in order to minimize one’s tax will that amount to tax evasion?
liability. A: No, there has to be fraud! That is the defense of
a taxpayer, e.g. honest mistake.
Dimaampao: Can you give an example of tax
avoidance relative to income tax? Okay, I will give Dimaampao: I mentioned in my example tax
you an example. When you sell capital assets, avoidance with regard to sale of capital asset.
personal property. Apply this holding period rule.
Holding period rule, Sec. 39 (b) [1] of the National Q: What is another form of tax avoidance? When
Internal Revenue Code. When you sell capital asset, you deposit your money in the bank, that would
this is what you should do, so that, should gain be earn interest income, hence it will be subject to
20% final tax. Now, how do you minimize it?
computing net capital gain, net capital loss, and net income: 3 159 SCRA 349
Q: Which of the kinds double taxation is The focus is on the income or capital itself. It
prohibited? eliminates double taxation.
A: Direct double Taxation.
Credit Method
Q: Why is direct double taxation prohibited? The tax paid or levied in the state of source is
A: Direct double taxation is prohibited because it credited against the tax levied in the state o
would amount to confiscation of property without residence.
due process of law.
The focus is upon the tax. It o nly minimizes double
Dimaampao: Another probable bar question is taxation.
International Juridical Double Taxation as
enunciated in CIR v S. C. Johnson & Sons. [2] Dimaampao: Think of Manny Pacquiao, for you to
understand this tax credit method. He earns
Q: What do you understand by that? income from the US, he also earns income here. He
A: International Juridical Double Taxation refers to is taxed in both jurisdictions; thus he is claiming the
the imposition of comparable taxes in two or more taxes he paid in the US as a deduction from his tax
states on the same taxpayer in respect of the same liability in the Phils. It’s a classical definition of that.
subject matter and for incidental periods. Again there is that double taxation, but to minimize
its effect there is that tax credit. So, it does not
Double taxation usually takes place when a person eliminate double taxation here, it only minimizes.
is resident of a contracting state and derives
income from, or owns capital in, the other There is a case I mentioned in your book, which
contracting state and both states impose tax on that involves double taxation. It’s about Ericsson
income or capital. Telecommunications vs. City of Pasig. You mark
that case, it’s a possible bar question. It’s a classic
Q: Is that an example of direct or i ndirect double case of direct double taxation. It boils down to the
taxation? tax base.
A: This is an example of indirect double taxation
because the tax is imposed by different jurisdiction Q: What is that case all about? What must be the
and taxing authority. tax base?
Dimaampao: Sec. 143 of RA 7160 provides that Dimaampao: You must bear in mind that there are
the tax base for local business tax should be gross four major tax statutes, namely;
sales or gross receipts, not gross revenue. Gross 1. National Internal Revenue Code, as
Sales are derived from the sale of goods and amended by the TRAIN Act; [1]
properties, on the other hand, gross receipts are 2. Local Government Code; [2]
derived from sale of services. 3. Real Property Taxation; [3]
4. Customs Modernization and Tariffs Act; [4]
Q: So, with that, how will that amount to double
taxation? Which is broader, gross sales or gross Q: What is the general rule?
revenue? A: As a general rule, taxes are imprescriptible as
A: Gross revenue, because it covers both gross sales they are the life blood of the government. However,
and gross receipts. So that, when the local tax statutes may provide for statute of l imitations.
government of Pasig prescribed it as the tax base,
that compounded the tax because a portion of it has Q: What are the period for the statute of
already been paid in the previous year. That is the limitations?
simplification of the ruling. A: Under the NIRC – the statute of limitation for
assessment of tax if a return is filed is within three
Q: In case of a building can it be taxed twice? (3) years from the last day prescribed by law for
A: YES. the filing of the return or if filed after the last day,
within three (3) years from the date of actual filing.
Q: What is the tax that is imposed by the local If no return is filed or the return filed is false or
and national government? fraudulent, the period to assess is within ten (10)
A: Real Property tax for the local government and years from the discovery of the omission, fraud, or
income tax imposed by the National Government falsity.
for the lease of the building because rent Income is
subject to income tax. Any internal revenue tax which has been assessed
within the period of limitation as prescribed in
Q: In estate tax, what is that form of or paragraph (a) of Section 22 may be collected by
method/device which may minimize the effect of distraint or levy or by proceeding in court within
double taxation? five (5) years following the assessment of the ta x.
A: Vanishing deduction.
Under the tariff and Customs Code – it does not
Dimaampao: Do you recall there is double taxation express any general statute of limitations; it
there? This property has been taxed in the previous provides, however, that “when articles have been
decedent, and when its transferred it was taxed in entered and passed free of duty of final
the present decedent.Vanishing deduction adjustments of duties made, with subsequent
presupposes double taxation. Because the same delivery, such entry and passage free of duty or
property forms part of the two estate, hence it is settlements of duties will after the expiration of
taxed twice. The purpose of double taxation is to three (3) years from the date of the final payment
reduce, minimize, lessen double taxation. of duties, in the absence of fraud or protest or
compliance audit pursuant to the provision of this
Q: What are its elements? Code, be final and conclusive upon all parties,
A: Its elements are as follows; unless the liquidation of the import entry was
1. Death of the decedent occurring within 5 merely tentative. [5]
years from the transfer of the property
through succession;
Q: What is that tax? Q: If you question this TRAIN Law, what will you
A: Improperly Accumulated Earnings Tax. file, a taxpayer suit or a citizen suit?
A: A citizen’s suit because t here is a public concern
Dimaampao: You cannot compel corporations to which may affect the people. It involves the general
report this. In effect it s imprescriptible. welfare of the people.
Q: Now when do you apply or consider that Taxes Dimaampao: What about this doctrine of
are imprescriptible? transcendental importance? There are tax cases
A: If the law is silent. which involves matters of transcendental
importance. Its an exception of the requirement of
Dimaampao: Yes! If the law is silent, if it did not locus standi.
provide for any limitations! Thus, you cannot apply
this rule to those 4 kinds of tax since the law In making this one of the coverage, it only pertains
provides for prescriptive periods. to tax cases.
NATURE AND PROSEPCTIVITY OF TAX LAWS So locus standi may be relaxed when a cases has
As a rule tax laws apply prospectively, except when transcendental importance. So, you need not prove
it provides for its retroactive application. this so called locus standi.
Exception to the exception as held in Republic vs Q: does the doctrine of locus standii this apply to
Oasan Vda. De Fernandez , is when its retroactive the TRAIN Act?
1 Sec. 194, Local Government Code. 3 Sec. 270, Local Government Code.
2 Sec. 194, Local Government Code. 4 G.R. No. L-31685. July 31, 1975.
--xXx--
TAX REMEDIES
In the bar examination, this came out;
PART I
Q: What are the remedies of the government? Q: Which comes first, assessment or collection?
A: These are: A: Assessment precedes collection except when the
1. Compromise; unpaid tax is a tax due per return as in the case of a
2. Enforcement of a tax lien; self-assessed income tax under the pay-as-you-file
3. Forfeiture; system in which case collection may be instituted
4. Distraint of personal property; without need of assessment.
5. Levy of real property;
6. Civil action; Q: Is assessment a condition sine qua non to
7. Criminal action; collection insofar as the NIRC is concerned?
8. Civil penalties; A: NO. Sections 203 and 222 of the NIRC do not
require prior assessment before collection may be
Q: What is the purpose of the remedies insofar as made. Therefore, collection may be made with or
the government is concerned? without prior assessment.
A: These remedies available to the government are
designed to ensure the collection of taxes. In Q: What is meant by assessment?
resorting to these remedies, the government must A: An assessment contains not only a computation
observe/comply with the legal parameters that are of tax liabilities, but also a demand for payment
set forth in the tax laws. within a prescribed period. It also signals the time
when penalties and interests begin to accrue
Q: On the other hand, what is the underlying against the taxpayer. To enable the taxpayer to
purpose of the remedies that may be resorted to determine his remedies thereon, due process
by the taxpayer? requires that it must be served on and received by
A: The purpose of these t axpayer’s remedies is to the taxpayer. [55]
safeguard the interests of the taxpayers against
unreasonable or arbitrary assessment, collection Dimaampao: Adamson v. Court of Appeals [56] is the
or investigation. authoritative definition. You memorize that.
Dimaampao: These remedies are either Q: What is meant by assessment under the NIRC?
administrative or judicial. A: It is a written notice and demand made by the
BIR on a taxpayer for the settlement of due tax
Q: What is the difference between these liability that is set and fixed within a prescribed
administrative and judicial remedies? period.
A: Administrative remedies are those that do not
require judicial proceedings, whereas judicial Dimaampao: This is a defective definition.
remedies are those that require /necessitate
/warrant judicial actions or proceedings. Q: What are the requisites of a valid assessment
under the NIRC?
Dimaampao: Do not use the word “exercise.” We A: The requisites of a valid assessment under the
are not talking about power. Use the words NIRC are as follows:
“resorted to,” “availed of” because these are 1. It must be a written notice and demand;
remedies. 2. It must state the due tax liability of a
taxpayer;
ASPECTS OF TAXATION 3. The taxpayer’s tax liability must be final;
There are two aspects of taxation; 4. It must state the law and the facts upon
1. Assessment; and which it is based. [57]
58
Commissioner v. Pascor (G.R. No. 128315. June 29, 1999) 61 Section 43 of the NIRC.
Section 199(f), Local Government Code.
59 62 Collector v. Jamir, 4 SCRA 718.
60 Pilipinas Shell Petroleum Corporation v. Customs
Dimaampao: Read Campbell v. Guetersloh and Q: Does Section 203 apply to assessment and
Kenny v. Commissioner, as cited in CIR v. Hantex collection?
Trading Co., Inc. [64] A: YES. It is in the law. With due respect to the BIR,
it not only applies to assessment, but also
Q: Can mere photocopies of records/documents collection.
constitute best evidence obtainable?
A: NO. They have no probative weight if offered as Q: When do you reckon the three-year period?
proof of the contents thereof. [65] A: It is reckoned from the last day prescribed by
law for the filing of the return or from the day the
Dimaampao: Best evidence obtainable allows the return was filed.
BIR to use the networth investigation method.
Q: In the case of individual taxpayers, when will
Q: How do you apply this method? be the deadline for filing the return?
A: The steps are as follows; A: In case of individual taxpayers, the deadline is
Step 1: Get the difference of networth end April 15 of the applicable year.
and networth beginning.
Step 2: Add the non-deductible expenses Q: What about the corporate taxpayers?
which understated the income. A: In case of corporate taxpayers, the tax return is
Step 3: Deduct the exclusions which filed quarterly. If it has adopted the calendar year
overstated the income. period, the deadline for filing the final adjusted
Step 4: Compare the total amount obtained return is April 15. If it has adopted the fiscal year
with the taxpayer’s taxable income reported in the period, the deadline is the 15 th day of the fourth
return. If there is discrepancy between the two, t his month following the close of the fiscal year. [67]
will be the subject of assessment.
Q: If the return has been amended, when do you
Q: When is it proper for the BIR to fix the commence/reckon the three-year period?
presumed gross sales or receipts? A: It depends. If the amendment is substantial, the
A: It is resorted to in the following cases; three-year period will be reckoned from the filing
1. When it is found that a person has failed to of the substantially amended return. Otherwise,
issue receipts and invoices in violation of the period will be reckoned from the date of the
the requirements of Sections 113 and 237 original filing.
of this Code; or
2. When there is reason to believe that the Q: What is the distinction between Section 203
books of accounts or other records do not and Section 222?
correctly reflect the declarations made or A: In Section 203, the return is neither false nor
to be made in a return required to be filed fraudulent. Section 222, on the other hand,
under the provisions of this Code. [66] contemplates three situations *triple F* : when a
false or fraudulent return is filed, or when there is
Dimaampao: Collector v. Jamir discusses the other failure or omission to file a return.
method of assessment: the expenditures method.
Q: How do you apply the five-year period in
Q: How does it apply? Section 222?
A: It is applied by deducting the aggregate yearly A: The five-year period only applies to collection. It
expenditures from the declared yearly income, not is reckoned from the assessment of the tax.
the expenditures incurred each month, from the
public policy.
Q: What is the difference between tax lien and
Q: Why can we not compromise criminal cases forfeiture?
not attended by fraud if it is already filed in A: In tax lien, the excess, after satisfying the tax
court? liability, will go to the taxpayer. In forfeiture, all the
A: It is because the BIR no longer has jurisdiction. proceeds of the sale will go to the coffers of the
It is now the court which has jurisdiction, and the government. [79]
BIR can no longer interfere.
Dimaampao: The issue in CIR v. NLRC [80] involves
Q: Why can we not compromise final judgments the determination of who has the superior claim to
or final reports? the barges.
A: It is because they are already binding upon the
taxpayer. Q: Between a claim based on judgment and a
claim based on tax lien, which will prevail?
Dimaampao: Take note there is a qualification in Explain.
estate tax cases. A: The government’s claim predicated upon a tax
lien is superior to a claim based on judgment. The
Q: What does the qualification imply? reasons are as follows;
A: It is not an absolute that estate tax cases may be 1. A tax lien attaches upon all property and
compromised. This means that estate tax cases rights to property of the taxpayer in case
where the ground for compromise is the financial he fails to pay taxes. [81]
incapacity of the taxpayer cannot be compromised. 2. It attaches from the moment the taxpayer
fails to pay the tax. Thus, there is nothing
Q: Why can we not compromise estate tax cases left to be attached by the sheriff for a claim
where the request for compromise is based on based on judgment because the
financial incapacity of the taxpayer? government has acquired tax lien on the
A: When there is a case filed with the property.
Commissioner, all issues are passed upon. That is
why that can no longer be raised. This rule is based
Section 257. Local Governments Lien. - Section 254. Notice of Delinquency in the
The basic real property tax and any other Payment of the Real Property Tax. -
tax levied under this Title constitutes a lien
on the property subject to tax, superior to x x x
all liens, charges or encumbrances in favor
of any person, irrespective of the owner or (b) Such notice shall specify the date upon
possessor thereof, enforceable by which the tax became delinquent and shall
administrative or judicial action, and may state that personal property may be
only be extinguished upon payment of the distrained to effect payment.
tax and the related interests and expenses.
Q: Is distraint available under the Old Customs
Q: May the Collector of Customs avail of the Code?
enforcement of tax lien? A: No. There is no such remedy in this law to that
A: Under the Customs and Tariff Modernization Act effect.
(R.A. No. 10863), the answer is NO. However, under
the Old Customs Code, the answer is yes. Q: Is distraint available under the CMTA?
A: Yes as provided by Section 1134(a)
Q: What is the subject of distraint?
A: The subject of distraint is personal property, Section 1134. Summary Remedies.—
such as goods, chattels, or effects of the taxpayer, as
well as stocks and other securities, debts, credits, (A) Distraint of Personal
bank accounts, and interest in and rights to Property.— Upon failure of the person
personal property. owing any delinquent duty, tax and other
charges to pay at the time required, the
Q: What is the subject of levy? Commissioner shall seize and distraint the
A: On the other hand, the subject of levy is real goods, chattels or effects, and the personal
property or any interest therein. property, including stocks and other
securities, debts, credits, hank accounts, and
Dimaampao: It is clear under Section 207(a) that interests in and rights to personal property
the BIR is allowed to resort to distraint. of such persons, in sufficient quantity to
satisfy the duty, tax or other charge and the
Q: Is distraint an available remedy under the expenses of the distraint and the cost of the
LGC? subsequent sale.
Bank accounts shall be garnished by serving (B) Levy on Real Property. — After the
a warrant of garnishment upon the expiration of the period within which to pay
importer and upon the president, manager, the duty, tax and other charges as
treasurer, or other responsible officer of the prescribed in this section, real property may
bank Upon the receipt of the warrant of be levied upon, before, simultaneously, or
garnishment, the bank shall turn over to the after the distraint of personal property
Commissioner so much of the bank accounts belonging to the importer. To this end, the
as may be sufficient to satisfy the claim of Commissioner or the duly authorized
the government. representative shall prepare a duly
authenticated certificate showing the name
A report on the distraint shall, within ten of the importer and the amounts of the duty
(10) days from receipt of the warrant, be and tax and penalty due. The certificate
submitted by the Commissioner to the shall operate with the force of a legal
Secretary of Finance: Provided, That the execution throughout the Philippines.
Commissioner shall have the power to lift
such order of distraint subject to the rules The levy shall be effected by writing upon
and regulations promulgated pursuant to the certificate a description of the property
this Act. on which levy is made. At the same time,
written notice of the levy shall be mailed to
Dimaampao: It is clear under Section 207(b) that or served upon the register of deeds of the
the BIR is allowed to resort to levy. province or city where the property is
located and upon the importer, or if the
Q: Is levy available under the LGC? latter is not in the Philippines, upon the
A: Yes as provided by Section 176 of the Local agent or the manager of the business from
Government Code.
--xXx--
Q: When can the BIR resort to constructive
distraint?
A: To safeguard the interest of the Government, the
Commissioner may place under constructive
distraint the property of any taxpayer:
1. When he is retiring from any business
subject to tax;
2. When he is intending to leave the
Philippines;
3. When he is intending to remove his
property therefrom or to hide or conceal
his property; or
4. When he is intending to perform any act
tending to obstruct the proceedings for
collecting the tax due or which may be due
from him. (Section 206, NIRC)
82
Section 206, NIRC.
Preliminary Assessment
Protest under the NIRC
Q: Is preliminary assessment notice required?
Q: What must be protested? A: Yes. The sending of a Preliminary Assessment
A: The final assessment notice or final letter of Notice (PAN) to taxpayer to inform him of the
demand assessment made is but part of the due process
requirement in the issuance of a Deficiency Tax
Q: Is notice of informal conference under Rev. Assessment, the absence of which renders
Reg. 12-1999 required? nugatory any assessment by the tax authorities.
A: YES.
Q: What is the prescriptive period to respond?
Q: Is notice of informal conference under Rev. A: 15 days from receipt of PAN.
Reg. 18-2013 required?
A: NO LONGER REQUIRED. Q: When there is no response given within 15
days, what will happen?
Q: What do you file? A: The BIR will issue the Final Assessment Notice
A: Request for reinvestigation or reconsideration (FAN) or Final Letter of Demand (FLD).
Q: Does this apply to reconsideration? Q: Is tax refund available under the Local
A: NO. Government Code?
Justice DIMAAMPAO: You don’t find that in the Justice DIMAAMPAO: So, it’s 2-2-2 except customs
NIRC. Under the NIRC sec. 229 is from the date of duties. So, its 12 months or 1 year.
payment. Here (LGC) is from the date of payment
or from the time he is entitled thereto. I am talking Q: What is the difference between 12 months and
about Sec. 196 of RA 7160 of Local Government 1year?
Taxation. A: Art. 13 of New Civil Code provides that “It shall
be understood that years are of three hundred
Q: What do you think the difference or its legal sixty-five days each”. In Administrative Code, a year
implications “from the time he is entitled is counted 12 months regardless of the number of
thereto”? the days in each month.
A: Under Sec. 229 of the NIRC, it means that the
doctrine of supervening cause or event does not The law says 12 months from the payment of duties
apply. and taxes.
Q: Does the doctrine of Supervening event apply Tax Refund under the NIRC
in the Local Government Code? So Let’s us focus on Sec. 229, we can review here a
A: YES. Due to that provision “from the time he is lot of jurisprudence. I hope you recall. I think I cited
entitled thereto.” 38 decisions of the court from page 225 to 242.
Some of them has already asked in the bar exam.
Example; With that number of cases, this serve as a notice of
For instance, local tax was paid in 2016. In 2017, you that this is the most favorite bar question next
there was finding to effect that this taxpayer was to protest.
exempt. What’s the reckoning date of the 2-year
period? 2016 or 2017? Q: What are the requisites for a tax refund under
the NIRC?
2017 is from the time he is entitled thereto. But if it A: The requisites are as follows;
were a revenue tax, you should count that from the 1. There must be a written claim for refund
date of payment. filed by the taxpayer with the
commissioner;
Q: Is tax refund available to Real property 2. The claim for refund must be a categorical
Taxation? demand for reimbursement;
A: YES. Section 253 allows refund. 3. The claim for refund must be filed within
two years from date of payment of the tax
Q: What is the Prescriptive period to claim syuch or penalty regardless of any supervening
refund? cause;
A: 2 years from the date of payment or from the
time he is entitled thereto. Therefore, the doctrine Q: What do you mean when you say “ categorical
of supervening cause applies. demand”?
84 Dimaampao, Tax Principles and Remedies, 2018, 85 CIR v. Toledo Power Company, 765 SCRA 511
p.265.
86 The 30-day period is under Section 228; xxx If the receipt of the said decision, or from the lapse of one hundred
protest is denied in whole or in part, or is not acted upon within eighty (180)-day period; otherwise, the decision shall become
one hundred eighty (180) days from submission of documents, final, executory and demandable.
the taxpayer adversely affected by the decision or inaction may 87 G.R. No. 105208. May 29, 1995.
appeal to the Court of Tax Appeals within thirty (30) days from 88 G.R. No. 161997 October 25, 2005
time you memorize that. HELD: YES. Said court, to our mind, committed no error. For
what is more indicative of the Collector's decision against
CASES reinvestigation than his insistence to collect the tax?
The revised assessment embodied in the Commissioner's letter After trial the Court of Tax Appeals rendered its decision
dated April 29, 1963 being, in legal contemplation, the final reversing the decision of the respondent Commissioner of
ruling reviewable by the tax court, the thirty-day appeal period Internal Revenue assessing petitioner the amount of
should be counted from May 8, 1963 (the day the petitioner P758,687.04 as surtax.
received a copy of the said letter). From May 8, 1963 to June 7,
1963 (the day the petitioner, by registered mail, sent to the From this decision, the Commissioner of Internal Revenue
Commissioner its letter of June 6, 1963 requesting for further interposed this appeal. Petitioner maintains that respondent
recomputation of the amount demanded from it) saw the lapse Court of Tax Appeals erred in holding that the letter dated
of thirty days. The June 6, 1963 request for further February 18, 1963, is a denial of the private respondent
recomputation, partaking of a motion for reconsideration, tolled corporation's protest against the assessment. Petitioner
the running of the thirty-day period from June 7, 1963 (the day contends that the letter dated February 18, 1963, is merely an
the petitioner sent its letter by registered mail) to July 16, 1963 ordinary office letter designed to remind delinquent taxpayers
(the day the petitioner received the letter of the Commissioner of their obligations to pay their taxes to the Government and,
dated June 28, 1963 turning down its request). The prescriptive certainly, not a decision on a disputed or protested assessment
period commenced to run again on July 16, 1963. The petitioner contemplated under Section 7(1) of R.A. 1125.
filed its petition for review with the tax court on August 1, 1963
— after the lapse of an additional sixteen days. The petition for ISSUE: Whether the letter dated February 18, 1963 is a dec ision
review having been filed beyond the thirty-day period, we rule on a disputed protest.
that the Court of Tax Appeals correctly dismissed the same.
HELD: YES. It is to be noted that the respondent Court of Tax
Appeals is a court of special appellate jurisdiction created under
R. A. No. 1125. Thus under Section 7 (1), R. A. 1125, the Court of
Tax Appeals exercises exclusive appellate jurisdiction to review
FACTS: Doroteo Yabes of Calamaniugan Cagayan was an HELD: YES.There is no reason for Us to disagree from or reverse
exclusive dealer of products of the International Harvester the Court of Tax Appeals' conclusion that under the
Macleod, Inc. He received on or about May 1, 1962, a letter from circumstances of this case, what may be considered as final
the Commissioner of Internal Revenue dated March 27, 1962, decision or assessment of the Commissioner is the filing of the
demanding payment of the amount of P15,976.81, as complaint for collection in the respondent Court of First
commercial broker's fixed and percentage taxes plus surcharges Instance of Cagayan, the summons of which was served on
and the sum of P2,530 as compromise penalty alledgely due petitioners on January 20, 1971, and that therefore the appeal
from Yabes for the years 1956-1960. with the Court of Tax Appeals in CTA Case No. 2216 was filed on
time.
Doroteo Yabes, protested the assessment on the ground that his
agreements with the International Harvester Macleod, Inc. were The respondent Court of First Instance of Cagayan can only
of purchase and sale, and not of agency, hence he c laimed he was acquire jurisdiction over this case filed against the heirs of the
not able to pay such kind of taxes. taxpayer if the assessment made by the Commissioner of
Internal Revenue had become final and incontestable. If the
Yabes requested for the reinvestigation, or review of the case by contrary is established, as this Court holds it to be, considering
the appellate division of the Bureau of Internal Revenue. In the aforementioned conclusion of the Court of Tax Appeals on
reply, the Commissioner informed Doroteo Yabes that his the finality and incontestability of the assessment made by the
request for reinvestigation was denied on the ground that he Commissioner is correct, then the Court of Tax Appeals has
has "not submitted any evidence to offset the findings of this exclusive jurisdiction over this case.
Office as to warrant a reinvestigation thereof".
Petitioners received the summons in Civil Case No. II-7 of the
Eight days later, the Commissioner advised Yabes that "the respondent Court of First Instance of Cagayan on January 20,
administrative appeal will be held in abeyance pending the 1971, and petitioners filed their appeal with the Court of Tax
resolution of the issues in a similar case. To give time for the Appeals in CTA Case No. 2216, on February 12, 1971, well within
Commissioner to study the case, Yabes filed a tax waiver on the thirty-day prescriptive period under Section 11 of Republic
October 20, 1962, extending the period of prescription to Act No. 1125. The Court of Tax Appeals has exclusive appellate
December 31, 1967. Doroteo Yabes died on March 13, 1963. The jurisdiction to review on appeal any decision of the Collector of
petitioners are the children of the deceased taxpayer. Internal Revenue in cases involving disputed assessments and
other matters arising under the National Internal Revenue Code.
After a lapse of about five years, the heirs of the deceased For want of jurisdiction over the case, the Court of First Instance
Doroteo Yabes received on August 4, 1967, a letter from the of Cagayan should have dismissed the complaint.
Commissioner dated July 27, 1967, requesting that they "waive
Advertising Assoc. v. CA
On January 10, 1979, private respondent filed with respondent CIR v. Isabela Cultural Corporation.
court its Petition for Review of t he petitioner's assessment of its G.R. No. 135210. July 11, 2001
deficiency income taxes , wherein it prays that judgment be
rendered holding that it is not liable for the payment of the FACTS: On February 23, 1990, respondent received from
income tax herein involved. petitioner an assessment letter, dated February 9, 1990,
demanding payment of the amounts of P333,196.86 and
Petitioner argues therefore that the period to appeal to the P4,897.79 as deficiency income t ax and expanded withholding
Court of Tax Appeals commenced to run from receipt of said tax for the taxable period from January 1, 1986 to December
warrant on November 25, 1976, so that on January 10, 1979 31, 1986. Respondent requested a reconsideration of the
when respondent corporation sought redress from the Tax
subject assessment with a waiver of Statute of Limitation.
Court, petitioner's decision has long become final a nd executory
In case of protest
To whom When to
What to file When to File To whom filed
appealed Appeal
Within 30
days from the
receipt of the
decision of
National Request for Within 30 days
Commissioner the
Internal Reinvestigation from the Court of Tax
of Internal Commissioner
Revenue Code or receipt if the Appeals;
[89]
Revenue or 180 days
Reconsideration; assessment;
from the date
of submission
of the
documents;
Within sixty
Within 60 days (60) days
Local
from the Regional Trial from the
Government Written protest; Local Treasurer;
notice of Court; receipt of the
Code [90]
Assessment; notice of
assessment;
Within sixty
Provincial (60) days
within thirty
treasurer, City Board of from the date
Real Property Payment under (30) days from
treasurer or Assessment of receipt of
Tax protest; [91] payment of the
municipal Appeals; [92] the written
tax;
treasurer; notice of
assessment
Within 15
days from the
Within 15 days
receipt of the
Payment under from the date Commissioner Court of Tax
Customs Code notice of
protest; [93] of payment of of Customs; Appeals
decision (Rule
taxes;
42, Rules of
Court)
Tax Refund
When to File To whom filed
National Internal Commissioner of Internal
Within 2 years from the date of payment;
Revenue Code; [94] Revenue
Local Government 2 years from the date of payment or from the
Local Treasurer;
Code; [95] time he is entitled thereto;
Within two (2) years from the date the Provincial treasurer, City
Real Property Tax; [96] taxpayer is entitled to such reduction or treasurer or municipal
adjustment; treasurer;
Within 12 months from the date of payment
Customs Code; [97] Commissioner of Customs;
of duties and taxes;
--xXx--
2 Section 4, Rule 8, A.M. No. 05-11-07-CTA, Revised 4 Section 3(b), Rule 8, A.M. No. 05-11-07-CTA, Revised
Rules of the Court of Tax Appeals. Rules of the Court of Tax Appeals.
3 Section 3(a), Rule 8, A.M. No. 05-11-07-CTA,
Revised Rules of the Court of Tax Appeals.
--xXx--
CTA RULING: Nonetheless, the CTA denied respondent’s claim A photocopy of the purchase invoice or
for refund of input VAT for failure to prove that it paid the receipt evidencing the value added tax
amounts claimed as such for the year 1991, no sales invoices, paid shall be submitted together with the
receipts or other documents as required under Section 2(c)(1) application. The original copy of the said
of Revenue Regulations No. 3-88 having been presented. The invoice/receipt, however, shall be
CTA explained that a mere listing of VAT invoices and receipts, presented for cancellation prior to the
even if certified to have been previously examined by an issuance of the Tax Credit Certificate or
independent certified public accountant, would not suffice to refund. (Emphasis and underscoring
establish the truthfulness and accuracy of the contents of such supplied)
invoices and receipts unless offered and actually verified by it
(CTA) in accordance with CTA Circular No. 1-95, as amended by xxx
CTA Circular No. 10-97, which requires that photocopies of
invoices, receipts and other documents covering said accounts Under Section 8 of RA 1125, the CTA is described as a court of
of payments be pre-marked by the party concerned and record. As cases filed before it are litigated de novo, party
submitted to the court. litigants should prove every minute aspect of their cases. No
evidentiary value can be given t he purchase invoices or receipts
CA RULING: By Decision39 of April 12, 2002, the Court of submitted to the BIR as the rules on documentary evidence
Appeals reversed the decision of the CTA and granted require that these documents must be formally offered before
respondent’s claim for refund or issuance of tax credit the CTA.
certificates in the amounts of ₱5,683,035.04 and ₱8,173,789.60.
These sales invoices or receipts issued by the supplier are
In granting the refund, the appellate court held that there was necessary to substantiate the actual amount or quantity of
no need for respondent to present the photocopies of the goods sold and their selling price, and taken collectively are the
purchase invoices or receipts evidencing the VAT paid in view best means to prove the input VAT payments.
of Rule 26, Section 2 of the Revised Rules of Court and the
Resolutions of the CTA holding that the matters requested in Respondent contends, however, that the certification of the
respondent’s Request for Admissions in CTA No. 4968 were independent CPA attesting to the correctness of the contents of
deemed admitted by the CIR41 in light of its failure to file a the summary of suppliers’ invoices or receipts which were
verified reply thereto. examined, evaluated and audited by said CPA in accordance
with CTA Circular No. 1-95 as amended by CTA Circular No. 10-
CIR Contends: The CIR arguing that respondent’s failure to 97 should substantiate its claims.
submit documentary evidence to confirm the veracity of its
claims is fatal; and that the CTA, being a court of record, is not There is nothing, however, in CTA Circular No. 1-95, as amended
expected to go out of its way and dig into the records of the BIR by CTA Circular No. 10-97, which either expressly or impliedly
to supply the insufficient evidence presented by a party, and in suggests that summaries and schedules of input VAT payments,
fact it may set a definite rule that only evidence formally even if certified by an independent CPA, suffice as evidence of
presented will be c onsidered in deciding cases before it.44 input VAT payments.
MMC Contends: Respondent, in its Comment, avers that it The circular, in the interest of speedy administration of justice,
complied with the provisions of Section 2(c)(1) of Revenue was promulgated to avoid the time-consuming procedure of
Regulation No. 3-88 when it submitted the original receipts and presenting, identifying and marking of documents before the
invoices to the BIR, which fact of submission had been deemed Court. It does not relieve respondent of its imperative task of
admitted by petitioner, as confirmed by the CTA in its pre-marking photocopies of sales receipts and invoices and
Resolutions in both cases granting respondent’s Requests for submitting the same to the court after the independent CPA
Admissions therein. shall have examined and compared them with the originals.
Without presenting these pre-marked documents as evidence –
ISSUE: whether respondent adduced sufficient evidence to from which the summary and schedules were based, the court
prove its claim for refund of its input VAT for taxable year 1991 cannot verify the authenticity and veracity of the independent
in the amounts of ₱5,683,035.04 and ₱8,173,789.60. auditor’s conclusions.
HELD: NO. For a judicial claim for refund to prosper, however, Mere listing of VAT invoices and receipts, even if certified to
respondent must not only prove that it is a VAT registered entity have been previously examined by an independent certified
and that it filed its claims within the prescriptive period. It must public accountant, would not suffice to establish the
substantiate the input VAT paid by purchase invoices or official truthfulness and accuracy of the contents thereof unless offered
receipts. This respondent failed to do. and actually verified by this Court. CTA Circular No. 1-95, as
amended by CTA Circular No. 10-97, requires that the
Revenue Regulation No. 3-88 amending Revenue Regulation No. photocopies of invoices, receipts and other documents covering
5-87 provides the requirements in claiming tax credits/refunds.
YAOKASIN V. THE COMMISSIONER OF CUSTOMS On the other hand, the District C ollector and the Commissioner
G.R G.R. No. 84111 December 22, 1989 of Customs argue that since the June 7, 1988 decision is adverse
180 SCRA 591 to the government, the case should go to the Commissioner of
Customs on automatic review, pursuant to Memorandum Order
CASE DOCTRINE: Taxes being the lifeblood of the Government, No. 20-87, dated May 18, 1987, of former Acting Commissioner
Section 12, which the Commissioner of Customs in his Customs of Customs Alexander Padilla, which provides:
Memorandum Order No. 20-87, enjoined all collectors to follow
strictly, is intended to protect the interest of the Government in Decisions of the Collector of Customs in seizure and protest
the collection of taxes and customs duties in those seizure and cases are subject to review by the Commissioner upon appeal as
protest cases which, without the automatic review provided provided under existing laws; provided, however, that where a
therein, neither the Commissioner of Customs nor the Secretary of decision of the Collector of Customs in such seizure and protest
Finance would probably ever know about. Without the automatic cases is adverse to the government it shall automatically be
review by the Commissioner of Customs and the Secretary of reviewed by the Commissioner of Customs. (PD. No. 1, Annex C.)
Finance, a collector in any of our country's far-flung ports, would
have absolute and unbridled discretion to determine whether In view thereof, no releases in any seizure or like cases may be
goods seized by him are locally produced, hence, not dutiable or effected unless and until the decision of the Collector has been
of foreign origin, and therefore subject to payment of customs confirmed in writing by the Commissioner of Customs.
duties and taxes. His decision, unless appealed by the aggrieved
party (the owner of the goods), would become f inal with 'the no ISSUE: Whether or not the case should go to the Commissioner
one the wiser except himself and the owner of the goods. The of Customs on Automatic Review
owner of the goods cannot be expected to appeal the collector's
decision when it is favorable to him. A decision that is favorable to HELD: YES. Taxes being the lifeblood of the Government,
the taxpayer would correspondingly be unfavorable to the Section 12, which the Commissioner of Customs in his Customs
Government, but who will appeal the collector's decision in that Memorandum Order No. 20-87, enjoined all collectors to follow
case certainly not the collector. strictly, is intended to protect the interest of the Government in
the collection of taxes and customs duties in those seizure and
FACTS: On May 27, 1988, the Philippine Coast Guard seized protest cases which, without the automatic review provided
9000 bags/ sacks of refined sugar, which were being unloaded therein, neither the Commissioner of Customs nor the Secretary
from the M/V Tacloban, and turned them over to the c ustody of of Finance would probably ever know about. Without the
the Bureau of Customs. automatic review by the Commissioner of Customs and the
Secretary of Finance, a collector in any of our country's far-flung
The petitioner presented a sales invoice from the Jordan ports, would have absolute and unbridled discretion to
Trading of Iloilo (Annex A, Petition) to prove that the sugar was determine whether goods seized by him are locally produced,
purchased locally. The District Collector of Customs, however, hence, not dutiable or of foreign origin, and therefore subject to
proceeded with the seizure of the bags of sugar. payment of customs duties and taxes. His decision, unless
appealed by the aggrieved party (the owner of the goods),
On June 7, 1988, the District Collector of Customs ordered the would become final with 'the no one the wiser except himself
release of the sugar. and the owner of the goods. The owner of the goods cannot be
expected to appeal the collector's decision when it is favorable
On June 10, 1988, the decision, together with the entire records to him. A decision that is favorable to the taxpayer would
of the case, were transmitted to, and received by, the correspondingly be unfavorable to the Government, but who
Commissioner of Customs. will appeal the collector's decision in that case certainly not the
collector.
On July 4, 1988, the Commissioner of Customs by "2nd
Indorsement" returned to the District Collector of Customs the Evidently, it was to cure this anomalous situation (which may
folder of Tacloban S.I. No. 06-01 (R.P. vs. 9000 bags/sacks of have already defrauded our government of huge amounts of
refined sugar, MR. JIMMY YAOKASIN, consignee/claimant), uncollected taxes), that the provision for automatic review by
together with the proposed decision, for hearing and/or the Commissioner of Customs and the Secretary of Finance of
resolution of the government is motion for rec onsideration. unappealed seizure and protest cases was conceived t o protect
the government against corrupt and conniving customs
On the same date, July 4, 1988, petitioner applied for and collectors.
secured a writ of replevin from the Regional Trial Court of Leyte.
WHEREFORE, the petition for review is denied for lack of merit.
On July 12, 1988, respondent District Collector of Customs filed The temporary restraining order which we issued in this case is
an Answer assailing the court's jurisdiction. On the same day, hereby made permanent. Cost against the petitioner. SO
the District Collector and the Commissioner of Customs filed in ORDERED.
the Court of Appeals a Petition for certiorari and Prohibition