LAW ON TAXATION

TRANSFER & LOCAL TAXES AND REMEDIES

I. Transfer Taxes

A. Estate tax (Sec. 84-97 of NIRC, RR No. 17-93, Estate Tax Regulations, as amended by
RR 2-2003, Secs. 22-27 of RA 10963, RR Nos. 6-2013, 6-2014, and 12-2018)

1. Basic principles, concept, and definition

2. Classification of decedent
3. Nature
4. Determination of gross estate and net estate
a. Decedent’s interest
b. Transfer in contemplation of death
c. Revocable transfers
d. Property passing under a general power of appointment
e. Proceeds of life insurance
f. Prior interests
g. Transfers for insufficient consideration

5. Allowable deductions from estate

6. Exclusions from estate and exemption of certain acquisitions and transmissions
7. Period of Filing of notice of death and estate tax returns

➢ Lorenzo v. Posadas, G.R. No. 43082, 18 June 1937

➢ Collector v. Fisher, 1 SCRA 93
➢ Marcos v. CA and CIR, G.R. No. 120880 June 5, 1997
➢ CIR v. Estate of Toda, G.R. No. 147188 Sept. 14, 2004
➢ Estate of Alcantara v. BIR, CTA Case No. 3714, June 7, 1990
➢ Dizon v. Court of Tax Appeals, G.R. No. 140944, April 30, 2008

B. Donor’s tax (Secs. 98-104 of the NIRC, as amended by Secs. 28-30 of RA 10963, RMC
35-208, and RR 12-2018)

1. Basic principles, concept, and definition

2. Requisites of valid donation
3. Transfers which may be constituted as donation
a) Sale/exchange/transfer of property for insufficient consideration
b) Condonation/remission of debt
c) Bona fide arms-length transfers
d) Renunciation of inheritance; exception

4. Determination of gross gift

a. Composition of gross gift
b. Valuation of gifts made in property
c. Exemption of certain gifts

5. Tax credit for donor’s taxes paid to a foreign country

6. Filing of return and payment

➢ Osorio v. Osorio, G.R. No. L-16544, March 30, 1921

➢ The Phil. American Life and Gen. Insurance Co. v. Sec. of Finance and CIR, G.R. No.
210987, Nov. 24, 2014
➢ Abello, et. Al. v. CIR and CA, G.R. No. 120721, Feb. 23, 2005
➢ CIR v. Toenec Phils., Inc. CTA EB No. 1520, Oct. 23, 2017
 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

C. Value-Added Tax (Secs. 104-115, Title IV, NIRC, as amended by RAs 7716, 8241, 8424,
9238, 9337, 9361, 9511 and 10378 and 10864, as amended by RA 10963, RR 16-2011,
RMC 7-2006, RR 13-2018)

1. Concept, Characteristics/Elements of a VAT-Taxable transaction

2. Impact and Incidence of tax
3. Destination Principle; Cross Border Doctrine
4. Imposition of VAT on transfer of goods by tax exempt persons
5. Transactions deemed sale
a) Transfer, use or consumption not in the course of business of
goods/properties originally intended for sale or use in the course of
business
b) Distribution or transfer to shareholders, investors or creditors
c) Consignment of goods if actual sale not made within 60 days from date
of consignment
d) Retirement from or cessation of business with respect to inventories on hand
6. Zero-rated sales of goods or properties, and effectively zero-rated sales of goods
or properties
7. VAT exempt transactions
8. Input and Output tax
9. Refund or tax credit of excess input tax
a. San Roque doctrine
b. Enhanced VAT refund system
10. Filing of returns and payment

➢ Tolentino v. Secretary of Finance, G.R. No. 115455, Oct. 30, 1995

➢ CIR v. American Express Int’l, G.R. No. 152609, June 29, 2005
➢ CIR v. COMASERCO, G.R. No. 125355, March 30, 2000
➢ Contex v. CIR, G.R. No. 151135, July 2, 2004
➢ Toshiba Information Equipment (Phils.) Inc. v. CIR, G.R. No. 157594, March 9, 2010
➢ CIR v. Seagate Technology (PHL), G.R. No. 153866, Feb. 11, 2005
➢ FSM Cinemas, Inc. v. CIR, CTA Case No. 8551, March 2, 2016
➢ BATELEC v. CIR, CTA Case No. 8423, June 1, 2018
➢ Nippon Express Corp. v. CIR, G.R. No. 191495, July 23, 2018
➢ Luzon Hydro Corp. v. Commissioner 721 Phil 202 (2013)
➢ Kepco Philippines Corporation v. Commissioner 650 Phil. 525, 542 (2010)
➢ Team Energy Corporation v. CIR/Republic of the Philippines v. Team Energy Corporation
G.R. Nos. 197663 & 197770, 14 March 2018
➢ CIR v. San Roque, G.R. No. 187845, Feb. 12, 2013

D. Percentage Taxes
E. Excise Tax
F. Documentary Stamp Tax

II. Tax remedies under the NIRC

1. Taxpayer’s remedies

a) Assessment
(i) Concept of assessment
(a) Requisites for valid assessment

➢ MEDICARD v. CIR, G.R. No. 222743, 05 April 2017

➢ CIR v. Mcdonald’s Philippines, CTA EB No. 1535, 04 January 2018

(b) Constructive methods of income determination

 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

(c) Inventory method for income determination

(d) Jeopardy assessment
(e) Tax delinquency and tax deficiency

(ii) Power of the Commissioner to make assessments and prescribe

additional requirements for tax administration and enforcement
(a) Power of the Commissioner to obtain information, and
to summon/examine, and take testimony of persons

(iii) When assessment is made

(a) Prescriptive period for assessment
(1) False, fraudulent, and non-filing of returns

(b) Suspension of running of statute of limitations

(iv) Civil Penalties

(a) Delinquency Interest and Deficiency Interest
(b) Surcharge
(c) Compromise penalties

(v) Assessment process and reglementary periods

(a) Letter of Authority

➢ MEDICARD v. CIR, G.R. No. 222743, 05 April 2017

➢ CIR v. Mcdonald’s Philippines, CTA EB No. 1535, 04 January 2018

(b) Notice of informal conference

(c) Issuance of Preliminary Assessment Notice
i. Exceptions to issuance of preliminary assessment notice
(d) Issuance of formal letter of demand (FLD) and assessment
notice/final assessment notice (FAN)
(e) Disputed assessment

(vi) Collection
(a) Requisites
(b) Prescriptive period

(vii) Protesting an assessment

(1) Period to file protest
(2) Sub poena duces tecum and submission of supporting documents
(3) Effect of failure to protest

(viii) Rendition of decision by Commissioner

(a) Denial of protest
(1) Commissioner’s actions equivalent to denial of protest
(a) Filing of criminal action against taxpayer
(b) Issuing a warrant of distraint and levy
(2) Inaction by Commissioner
(viii) Remedies of taxpayer to action by Commissioner
(a) In case of denial of protest
(b) In case of inaction by Commissioner within 180 days from
submission of documents
(c) Effect of failure to appeal

c) Recovery of tax erroneously or illegally collected

(i) Grounds and requisites for refund or issuance of tax credit

 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

(ii) Requirements for refund as laid down by cases

(a) Necessity of written claim for refund
(b) Claim containing a categorical demand for reimbursement
(c) Filing of administrative claim for refund and the suit/proceeding
before the CTA within 2 years from date of payment regardless
of any supervening cause
(v) Who may claim/apply for tax refund/tax credit
(a) Taxpayer/withholding agents of non-resident foreign corporation
(vi) Prescriptive period for recovery of tax erroneously or illegally collected

2. Government remedies

a) Administrative remedies

(i) Tax lien

(ii) Levy and sale of real property
(iii) Forfeiture of real property to the government for want of bidder
(iv) Further distraint and levy
(v) Suspension of business operation
(vi) Non-availability of injunction to restrain collection of tax

b) Judicial remedies

➢ CIR v. Avon Products Manufacturing, Inc. (G.R. No. 201398-99 & 201418-19, 03 October
2018)
➢ CIR v. Fitness by Design, Inc. (G.R. No. 215957, 09 November 2016)
➢ CIR v. Merial (CTA Case no. 8370 26 August 2015)
➢ CIR v. BPI (G.R. No. 224327)
➢ Mannasoft Technology Corp. v. CIR (CTA Case No. 8745)
➢ CIR v. Kudos Metal Corporation, 632 Phil. 314 (2010)
➢ CIR v. PDI (G.R. No. 213943)
➢ CIR v. Gonzales and LMCEC (G.R. No. 177279, 13 October 2010)
➢ PNOC v. CA and CIR, G.R. No. 109976, 26 April 2005
➢ Nippon Metal Tech Phils. vs CIR (CTA Case EB No. 1273)
➢ CIR v. Hermano San Miguel (CTA Case No. 8095)
➢ BPI v. CIR G.R. No. 139736, Oct. 17, 2005
➢ Commissioner of Internal Revenue v. Enron Subic Power Corporation, G.R. No. 166387,
January 19, 2009
➢ RCBC v. CIR, G.R. No. 168498, April 24, 2007
➢ CIR v. First Express Pawnshop Company, Inc., G.R. No. 172045-46, June 16, 2009
➢ Allied Banking Corporation v. CIR, G.R. No. 175097

III. Local Government Code of 1991, as amended

A. Local government taxation

1. Fundamental principles
2. Specific taxing power of Local Government Units
a) Taxing powers of provinces
b) Taxing powers of cities
c) Taxing powers of municipalities
d) Taxing powers of barangays
e) Common revenue raising powers
f) Community tax
3. Common limitations on the taxing powers of LGUs
7. Collection of business tax
a) Tax period and manner of payment
 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

b) Accrual of tax
c) Time of payment
d) Penalties on unpaid taxes, fees or charges
e) Authority of treasurer in collection and inspection of books

8. Taxpayer’s remedies
a) Periods of assessment and collection of local taxes, fees or charges
b) Protest of assessment
c) Claim for refund of tax credit for erroneously or illegally collected tax, fee
or charge

9. Civil remedies by the LGU for collection of revenues

a) Local government’s lien for delinquent taxes, fees or charges
b) Civil remedies, in general
(i) Administrative action
(ii) Judicial action

➢ City of Manila v. Cosmos Bottling Corporation, G.R. No. 196681, 27 June 2018

B. Real property taxation

1. Fundamental principles
2. Nature of real property tax
3. Imposition of real property tax
a) Power to levy real property tax
b) Exemption from real property tax
4. Appraisal and assessment of real property tax
5. Collection of real property tax
a) Date of accrual of real property tax and special levies
b) Collection of tax
(i) Collecting authority
(ii) Duty of assessor to furnish local treasurer with assessment rolls
(iii) Notice of time for collection of tax
c) Periods within which to collect real property tax

7. Taxpayer’s remedies

a) Contesting an assessment of value of real property

(i) Appeal to the Local Board of Assessment Appeals
(ii) Appeal to the Central Board of Assessment Appeals
(iii) Effect of payment of tax

➢ Smart vs. City of Davao, G.R. No. 155491, 16 September 2008

➢ Napocor vs. Province of Quezon, et al., G. R. No.171596 dated January 25,
2010 (MR)
➢ Napocor vs. Province of Quezon, et al, G.R. No. 171586 dated 17 July 2009.
(Decision)
➢ Camp John Hay Development Corporation vs. CBAA, G.R. No. 169234, 2
October 2013
➢ John Hay Peoples Alternative Coalition vs. Lim G.R. No. 119775, 460 Phil. 530
➢ Commissioner of Internal Revenue vs. Philippine Airlines G.R. No. 180043, 04
July 2009
➢ City Government of Quezon City vs. Bayan Telecommunications, Inc G.R. No.
162015, March 6, 2006.
➢ Digitel Telecommunication Philippines, Inc. vs. Province of Pangasinan G. R.
No. 152534, February 23, 2007.
➢ Digitel Telecommunications Philippines, Inc. vs. City Government of Batangas,
et al G. R. No.156040, 11 December 2008
 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

➢ National Grid Corporation of the Philippines vs. Ofelia M. Oliva and Ofelia M.
Oliva vs. National Grid Corporation of the Philippines, G.R. No. 213157
and G.R. No. 213558, 10 August 2016

b. Payment of real property tax under protest

(i) File protest with local treasurer
(ii) Appeal to the Local Board of Assessment Appeals
(iii) Appeal to the Central Board of Assessment
Appeals
(iv) Appeal to the CTA
(v) Appeal to the Supreme Court

➢ Team Pacific Corporation Vs. Josephine Daza G.R. No. 167732, July 11, 2019
➢ Yamane v. BA Lepanto, G.R. No. 154993, Oct. 25, 2005

c. Cases filed directly to regular courts

➢ Ty v. Trampe G.R. No. 117577 01 December 1995

➢ National Power Corporation v. Navotas, et. Al, G.R. No. 192300, 24 November
2014
➢ Herarc Corporation v. The Provincial Assessor of Batangas, et. al, G.R. No.
210736, 05 September 2018

IV. Judicial Remedies (R.A. No. 1125, as amended, and the Revised Rules of the
Court of Tax Appeals)

A. Jurisdiction of the Court of Tax Appeals (RA 9282)

1. Exclusive appellate jurisdiction over civil tax cases

a) Cases within the jurisdiction of the court en banc
b) Cases within the jurisdiction of the court in divisions

➢ Yamane v. BA Lepanto, G.R. No. 154993, Oct. 25, 2005

2. Criminal cases

a) Exclusive original jurisdiction

b) Exclusive appellate jurisdiction in criminal cases

B. Procedures

1. Filing an action for collection of taxes

a) Internal revenue taxes

b) Local taxes

2. Civil cases

a) Who may appeal, mode of appeal, effect of appeal

(i) Suspension of collection of tax
a) Injunction not available to restrain collection
(ii) Taking of evidence
(iii) Motion for reconsideration or new trial

➢ Tridharma Marketing Corp. v. CTA, G.R. No. 215950, 20 June 2016

➢ Pacquiao v. CTA, G.R. No. 213294, 06 April 2016
 LAW ON TAXATION
Transfer & Local Taxes and Remedies
Atty. Jules R. Valdez, CPA

b) Appeal to the CTA, en banc

c) Petition for review on certiorari to the Supreme Court

3. Criminal cases

a) Institution and prosecution of criminal actions

b) Institution of civil action in criminal action

4. Appeal to the CTA En Banc

5. Petition for review on certiorari to the Supreme Court