Taxation Law Slides - Atty. Acosta 2022-Bar-Lecture

Taxation Law
2022 BAR LECTURE

Topics
u Basic Principles of Taxation

u Local Taxation
u Remedies (Jurisdiction of Courts, Prescription, Remedies against
Assessment Notices)
Topics
u Political and International Law – General Principles of Taxation

u Definition, characteristics and purpose of taxation
u Power of taxation as distinguished from police power and eminent domain
u Scope and limitations of taxation
u Inherent and constitutional limitations of taxation
u Territoriality principle and situs of taxation
u Requisites of a valid tax
u Taxes as distinguished from other forms of exactions
Topics
u Political and International Law – General Principles of Taxation

u Doctrines in taxation
u Lifeblood theory
u Construction and interpretation of tax laws, rules and regulations
u Prospectivity of tax laws
u Imprescriptibility of taxes
u Double taxation
u Exemption for taxation
u Equitable recoupment
u Prohibition on compensation and set-off
Topics
u Political and International Law – Local Governments

u Local Taxation
u Fundamental principles of local and real property taxation
u Common limitations on taxing power of the LGU
u Requirements for a valid tax ordinance
u Procedure for approval and effectivity of tax ordinances
u Exemptions from real property taxes
Topics
u Remedial Law – Procedure in Tax Cases

u Tax Remedies under the Tax Code
u Tax Remedies under the Local Government Code of 1991
u Court of Tax Appeals
u Jurisdiction
u Procedures
u Appeal to the CTA en banc
u Civil cases – internal revenue taxes, local taxes, injunction
u Criminal cases
u Petition for review on certiorari to the Supreme Court

Basic principles of taxation in the
constitution
u Due process (substantive and procedural) – Article III, Sec. 1

u Substantive – reasonable and for a public purpose
u Procedural – assessment and collection are not arbitrary
u Equal protection (valid classification) – Article III, Sec. 1
u Rests on substantial distinctions
u Germane to the purpose of the law
u Not limited to existing conditions only
u Applies equally to all members of the same class
constitution
u Religious Freedom – Art. III, Sec. 5

u Sec. 30, Tax Code – income of nonstock corporations or association organized
and operated exclusively for religious purposes
u Non-impairment of contracts – Art. III, Sec. 10
u Prohibition against imprisonment for non-payment of poll tax – Art. III, Sec.
20
u Residence tax only
constitution
u Uniformity and equality of taxation and progressive system of taxation –

Art. III, Sec. 28
u All taxable articles or kinds of property of the same class shall be taxed at the
same rate
u Reasonable classification
u Progressive taxes – rate goes up depending on ability to pay
constitution
u Prohibition against taxation of real property of charitable institutions,

churches, parsonages or covenants, mosques and non-profit cemeteries –
Art. VI, Sec. 28
u RPT
u Actual, direct and exclusive use for Religious, Charitable, or Educational
purposes
constitution
u Prohibition against taxation of non-stock, non-profit educational institutions

– Art. XIV, Sec. 4
u All revenues and assets – RPT, local business tax, donor’s tax, customs duties,
VAT, percentage tax and income tax – non-stock, non-profit educational
institutions
u Actual, direct and exclusive use for Educational purposes
u Sec. 30, last paragraph of the Tax Code – not applicable
u All grants, endowments, donations or contributions used actually, directly and
exclusively for educational purposes – exempt from tax; see also Section 101,
Tax Code
constitution
u Prohibition against taxation of non-stock, non-profit educational institutions –

Art. XIV, Sec. 4
u Sec. 30 – Corporations exempt from income tax – including non-stock corporation or
association organized and operated exclusively for religious, charitable, scientific,
athletic or cultural purposes and government educational institutions
u “Notwithstanding the provisions in the preceding paragraphs, the income of
whatever kind and character of the foregoing organizations from any of their
properties, real or personal, or from any of their activities conducted for profit
regardless of the disposition made of such income, shall be subject to tax imposed
under this Code.”
u All gifts to charitable, religious, cultural or social welfare corporation, institution,
accredited nongovernment organization trust or philanthropic organization or
research institution or organization – exempt from donor’s tax – Section 101, Tax Code
u Government educational institutions – special law
constitution
u Prohibition against taxation of non-stock, non-profit educational institutions

– Art. XIV, Sec. 4
u Sec. 27(B), Tax Code - proprietary educational institutions
u The gross income from unrelated trade, business or activity should not exceed
50% of the total gross income.
u Excess of 50% - taxed like an ordinary corporation
constitution
u Majority vote of all members of Congress for grants of tax exemptions – Art.
VI, Sec. 28
u Tax refunds and tax amnesties – tax exemptions
u Does not cover revocation of tax exemptions
constitution
u Prohibition on use of tax levied for special purposes – Art. VI, Sec. 29
u Tax bills should originate exclusively in the House of Representatives – Art.
VI, Sec. 24
u Senate may propose or concur with amendments
u The initiative for filing revenue, tariff, or tax bills must come from the House of
Representatives on the theory that, elected as they are from the districts, the
members of the House can be expected to be more sensitive to the local needs
and problem
constitution
u President’s veto power on appropriation, revenue and tariff bills - Art. VI,
Sec. 27
u Line item veto
u Grant of power to the LGUs to create their own sources of revenue – Art. X,
Sec. 5
LOCAL BUSINESS TAXES
u Each local government unit shall have the power to create its own sources of
revenue and to levy taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of
local autonomy. Such taxes, fees and charges shall accrue exclusively to the
local governments (Sec. 5, Art. X, 1987 Constitution; Sec. 129, LGC).
u However, local governments have no power to tax instrumentalities of the
National Government like PAGCOR. This doctrine emanates from the
supremacy of the National Government over local governments. The power
to tax cannot be allowed to defeat an instrumentality or creation of the very
entity which has the inherent power to wield it. Local government in such a
system can only mean a measure of decentralization of the function of
government (Basco v. PAGCOR).
u To implement the constitutional provision, Congress enacted RA 7160 (Local
Government Code), effective Jan. 1, 1992.
• FUNDAMENTAL PRINCIPLES
• Taxation shall be uniform in each local government unit
• The collection of local taxes, fees, charges and other impositions shall in no case be let to
any private person
• The revenue collected under the Code shall inure solely to the benefit of, and subject to
disposition by, the local government unit levying the tax, fee, charge or other imposition,
unless otherwise specifically provided for in the Code
• Each LGU shall, as far as practicable, evolve a progressive system of taxation
• Taxes, fees, and charges shall be:
• equitable and based as far as practicable on taxpayer’s ability to pay;

• Levied and collected only for public purposes;
• Not be unjust, excessive, oppressive or confiscatory;
• not be contrary to law, public policy and national economic policy, nor in restraint of
trade (Sec. 130, LGC).
u COMMON LIMITATIONS ON LGUs

u Unless otherwise provided, the exercise of the taxing powers of LGUs
shall not extend to the levy of the following:
u Income tax, except when levied on banks and other financial institutions
u Documentary stamp tax
u Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis
causa, except as otherwise provided in the Code
u Customs duties, registration fees of vessels, etc.
u Taxes, fees and charges and other impositions upon goods carried into or
out of, or passing through, the territorial jurisdictions of local government
units in the guise of charges for wharfage, tolls for bridges or otherwise, or
other taxes, fees or charges in any form whatsoever upon such goods or
merchandise

u Taxes, fees and charges on agricultural and aquatic products when sold by the
marginal farmers or fishermen
u Taxes on business enterprises certified to by the BOI as pioneer or non-pioneer for
a period of 6 and 4 years, respectively, from the date of such registration
u Excise taxes on articles enumerated under NIRC and taxes, fees or charges on
petroleum products
u Percentage tax or VAT on sales or exchanges of goods or services or similar
transactions thereon, except as otherwise provided herein – Sec. 140
u Taxes on gross receipts of transportation contractors and persons engaged in the
transportation of passengers or freight for hire and common carriers by air, land or
water, except as provided for in this Code – common carriers
u Taxes on premiums paid for reinsurance or retrocession

u Taxes, fees or charges for the registration of motor vehicles and for
the issuance of all kinds of licenses or permits for the driving thereof,
except tricycles
u Taxes, fees or charges on Philippine products actually exported,
except as provided for in this Code
u Taxes, fees or charges on Countryside Business and Barangay
Enterprises and on cooperatives duly organized and registered
under RA 6810 and 6938
u Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities, and local governments (Sec. 133,
LGC).
• Preemption or exclusionary rule

• National Government elects to tax a particular area or subject – implied
withholding from the LGU the power to tax the same area or subject
• Petron Corp. v. Mayor of Navotas (GR No. 158881, April 16, 2008)
• FACTS
• Petron maintains a depot or bulk plant at Navotas Fishport complex and sells diesel fuels
to vessels used in commercial fishing around Metro Manila. Navotas enacted Ordinance
(New Navotas Revenue Code) imposing business taxes on persons engaged in the sale
of petroleum products.
• On Mar 1, 2002, Petron received assessment for P6.2 M. Petron protested assessment, but
this was denied by Navotas Treasurer. It was followed by Final Demand to Pay from the
Mayor within 5 days; otherwise, depot would be closed. Petron thru counsel replied to
the Mayor, but the Mayor did not respond to this last letter.
• On May 20, 2002, Petron filed with Malabon RTC a complaint for cancellation of
assessment for deficiency taxes with prayer for TRO. TRO was not issued by RTC upon
manifestation of respondents that they would not proceed with closure until RTC shall
have decided on the merits.
• However, case was pending, respondents refused to issue permits.
• Petron Corp. v. Mayor of Navotas

• Petron thus filed supplemental complaint with Preliminary
Mandatory Injunction. On May 5, 2003, RTC rendered decision
dismissing Petron’s complaint.
• Malabon RTC declared Art 232(h) of IRR void because the Code
purportedly does not contain a provision prohibiting the imposition
of business taxes on petroleum products.
• 11 days later, Petron received Closure Order. Petron sought TRO but
was denied. MR filed by Petron, but was also denied.
• Petron went directly to SC on pure legal question – the correct
interpretation of Sec 133(h) of LGC and applicability of Art 343(h) of
IRR.On Aug 4, 2003, SC issued TRO.

• SC DECISION
• Sec. 133 prescribes the limitations on capacity of LGUs to exercise their taxing
powers. Paragraph (h) of Sec 133 mentions 2 kinds of taxes which cannot be
imposed by LGUs, namely: (a) excise tax on articles under NIRC, and (b) taxes, fees
or charges on petroleum products.
• Art 232 of IRR enumerates list of businesses subject to business taxes and paragraph
(h) thereof does not allow imposition of local business taxes “on any business not
otherwise specified in the preceding paragraphs which the sanggunian concerned
may deem proper to tax,” but subject to this qualification “any business engaged in
the production, distribution or sale of oil, gasoline and other petroleum products
shall not be subject to any local tax imposed on this article.”
• Petron argues that business taxes on its sale of diesel fuels partakes of an excise tax,
which is a tax upon the performance, carrying on, or the exercise of an activity.

• On second issue, the Court said there is no doubt that following the 1987
Constitution and the LGC, the fiscal autonomy of LGUs has received greater
affirmation than ever.
• Thus, respondent cites that in City Government of San Pablo v. Reyes, the SC stated
“in interpreting statutory provisions on municipal fiscal powers, doubts will have to be
resolved in favor of municipal corporations.” Such policy is also echoed in Sec 5(a)
of the LGC, which states that “any provision on a power of LGU shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved
in favor of devolution of powers and of the lower LGU.”
• However, Sec 5(b) proceeds that “in case of doubt, any tax ordinance or revenue
measure shall be construed strictly against the LGU enacting it, and liberally in favor
of the taxpayer.”
• Evidently, local fiscal autonomy should not necessarily translate into abject
deference to the power of local government units to impose taxes.

• Congress has the constitutional authority to impose limitations on the power to tax
of LGUs, and Sec. 133 of LGC is one such limitation. The provision is the explicit
statutory impediment to the enjoyment of absolute taxing power by LGU, not to
mention the reality that such power is a delegated power.
• Another example is Sec 133(g), where LGUs are disallowed from levying business
taxes on enterprises certified by BOI. The phrase “taxes, fees or charges on
petroleum products” does not qualify the kind of taxes, fees or charges.
• The absence of such qualification leads to the conclusion that all sorts of taxes on
petroleum products, including business taxes, are prohibited by Sec 133(h), LGC.
Where the law does not distinguish, we should not distinguish.
• The earlier reference in paragraph (h) to excise taxes comprehends a wider
range of subjects of taxation (all excisable products), while the later reference to
“taxes, fees or charges” pertains only to one class of articles, specifically
petroleum products.
• Oil is a commodity whose supply and price affect the ebb and flow
of the lifeblood of the nation. Its shortage of supply or a slight, upward
spiral in its price shakes our economic foundation. There is an
inevitable link between the fluctuation of oil prices and the prices of
every other commodity. Subjecting petroleum products to business
taxes apart from the taxes already imposed by Congress in this age of
deregulation would lead to the same result had they been taxed
during the era of oil deregulation.
• While Sec 133(h), LGC does not generally bar the imposition of
business taxes on articles burdened by excise taxes under the NIRC –
tobacco, alcohol, mineral and miscellaneous products, it specifically
prohibits LGUs from extending the levy of any kind of taxes, fees or
• RESIDUAL TAXING POWERS

• Sec. 186, LGC
• Local government units may exercise the power to levy taxes, fees or
charges on any base or subject not otherwise specifically enumerated
herein or taxed under the provisions of the Tax Code or other applicable
laws
• Provided, that the taxes, fees or charges shall not be unjust, excessive,
oppressive, confiscatory or contrary to declared national policy
• Provided, further, that the ordinance levying such taxes, fees or charges
shall not be enacted without any prior public hearing conducted for the
purpose.
• Tax on any base or subject not otherwise specifically

enumerated in LGC or in the NIRC, and the tax
ordinance shall not be enacted without any prior public
hearing conducted for the purpose (Sec. 186, LGC).
• Although the Sanggunian had the control of records or
the better means of proof regarding the facts (that no
public hearing was held) alleged, petitioners are not
relieved from the burden of proving their averments
(People v. Pajenado, 31 SCRA 812). Proof that public
hearings were not held falls on petitioners’ shoulders
(Reyes v. CA, 320 SCRA 486).
• Local Taxing Authority

• Sec. 132
• The power to impose a tax, fee or charge or to
generate revenue under the LGC shall be
exercised by the sanggunian of the local
government unit concerned through an
appropriate ordinance.
• REVIEW OF TAX ORDINANCES

• Necessity of a quorum (Sec. 53, LGC)
• Submission for approval to the local chief executive (Sec. 54, LGC) –
Veto (15 days – province; 10 days – city/municipality); override of veto
– 2/3 of all members
• Ultra vires
• Prejudicial to the public welfare (Sec. 55, LGC)
• Public hearings – Sec. 187, LGC
•REVIEW OF TAX ORDINANCES

•Within 3 days after its approval, copies of the approved tax ordinance of the
municipality or city shall be furnished to the provincial Sanggunian, and in the case of
barangay ordinances, within 10 days from enactment, copies shall be forwarded to
the municipal Sanggunian, or the city Sanggunian, for review of the ordinance (Sec 56,
LGC).
•The provincial or city or municipal Sanggunian shall review the tax ordinance within 30
days after receipt of a copy thereof. If, within the 30 day period, the provincial,
municipal or city Sanggunian takes no action, the tax ordinance shall be deemed
approved.
• If the provincial Sanggunian finds that the ordinance is beyond the power conferred
upon the city or municipal sanggunian, it shall declare the ordinance invalid in whole
or in part.
•REVIEW OF TAX ORDINANCES

•If they find the barangay ordinance inconsistent with the law or city/municipal
ordinance, the Sanggunian shall return the same with recommendations, in which
case the barangay ordinance is suspended until such time the revision called for is
effected (Sec. 57, LGC).
• EFFECTIVITY OF TAX ORDINANCES

• Publication – Sec. 188, LGC
• Public Dissemination – Sec. 189, LGC
• APPEAL TO SECRETARY OF JUSTICE
• Any question on the constitutionality or legality of tax ordinances or revenue

measures may be raised on appeal within 30 days from the effectivity thereof
to the Secretary of Justice, who shall render a decision within 60 days from
the date of receipt of the appeal.
• The appeal shall not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax, fee or charge levied
therein.
• Within 30 days after receipt of the decision or the lapse of 60-day period
without the Secretary of Justice acting upon the appeal, the aggrieved party
may file the appropriate proceedings with a court of competent jurisdiction
(Sec. 187, LGC) within 30 days. – Court of Appeals
• The Secretary of Justice can only review the constitutionality or legality of the tax
ordinance. If warranted, he can revoke it on either or both grounds, but he cannot
substitute his own judgment for the local government (Drilon v. Lim, 235 SCRA 135).
• The three (3) periods in Sec. 187, LGC are mandatory (Hagonoy Market Vendors Asso
v. Mun of Hagonoy, GR , Feb 6, 2002).
• The power to tax is the most effective instrument to raise needed revenue. Any delay
in implementing tax measures would be to the detriment of the public; hence,
protests over tax ordinances are required to be done with certain time frames
(Mactan Cebu Intl Airport v Marcos, 261 SCRA 667).
• The 3 separate periods are prerequisites before seeking redress in court (Reyes v CA,
GR , Dec 10, 1999) and are set to prevent delays as well as enhance the orderly and
speedy discharge of judicial functions.
• De Lima v. City of Manila, GR No. 222886, October 17, 2018

• Ordinance No. 8331
• Retail business operators claimed that Section 104 of the ordinance is
unconstitutional, and illegal for being excessive and contrary to limitations
set forth under the LGC
• Specifically, the retail business operators alleges that Manila increased the
LBT rates from 0.2% to 3% and 1%, which is beyond the 10% limit on
increase under Sec. 191 of the LGC.
• Sec. of Justice declared the Sec. 104 of the ordinance void

• While the MR is pending, Manila filed a Petition for Review Ad Cautelam
before the RTC
• RTC treated the petition as a petition for certiorari under Rule 65 and
thereafter dismissed the petition for lack of jurisdiction
• CA set aside the decision of the RTC and remanded the case to the RTC

• The determination by the Secretary of Justice of the constitutionality or
legality of the ordinance involves an exercise of quasi-judicial power that is
the proper subject of a Special Civil Action for Certiorari cognizable by the
Court of Appeals (Rule 43)
• The new rates imposed violated Sec. 191 of the LGC
• TAX REMEDIES OF LGU FOR COLLECTION OF TAX
• Administrative remedy
• Tax lien (Sec. 173, LGC), and distraint and levy (Sec. 175 and 176, LGC)
• Judicial remedy
• Civil action
• PRESCRIPTIVE PERIOD
• To assess: Without fraud, 5 years from the date they became due
• In case of fraud, 10 years from discovery of fraud or intent to evade payment.
• To collect: 5 years from date of assessment
• Periods may be suspended when (a) the Treasurer is legally prevented from making the
assessment or collection; (b) taxpayer requests for reinvestigation and executes a waiver in writing
before expiration of period; and (c) taxpayer is out of the country or otherwise cannot be located
(Sec. 194(d), LGC).
• TAX REMEDIES OF TAXPAYER PRIOR TO ASSESSMENT
• Question constitutionality or legality of ordinance (e.g., tax is unjust, confiscatory or
oppressive) by filing an administrative appeal to Secretary of Justice within 30 days from
date of effectivity (Sec. 187)
• Action for declaratory relief
• TAX REMEDIES OF TAXPAYER AFTER AN ASSESSMENT
• Protest of the assessment within sixty (60) days from receipt of assessment (Sec. 195, LGC)
• Action for refund within 2 years from date of payment (Sec. 196, LGC)
• Injunction against the collection of tax. Unless such suit is forbidden by statute, a court of
equity generally will interfere to prevent by injunction the collection of wrongful taxes,
provided there is no other adequate remedy to redress the injury to property which would
be inflicted by enforcing payment of the tax (Valley Trading Co v. CFI et al, 171 SCRA 501
(1989).
• PROTEST OF ASSESSMENT
• When the correct tax, fee or charge is not paid, the local treasurer shall issue a notice of
assessment within the applicable prescriptive period (Sec. 194, LGC), stating the nature
of the levy, amount of deficiency, surcharge, interest and penalty.
• Taxpayer may file a written protest against the assessment with the local treasurer within
60 days from receipt; otherwise, the assessment shall become final and executory.
• The treasurer shall decide the protest within 60 days from the date of its filing.
• If the treasurer finds the assessment to be wholly or partly correct, he shall deny the
protest with notice to taxpayer.
• The taxpayer shall have 30 days from date of receipt of the denial of the protest or from
the lapse of the 60-day period within which to appeal with the court of competent
jurisdiction; otherwise, the assessment becomes conclusive and unappealable (Sec. 195,
LGC).
ADMINISTRATIVE AND JUDICIAL REMEDIES
Assessment of Local Taxes under Section 195, LGC
Original Jurisdiction: RTC
Denial of
Protest
City
CTA
Treasurer’s 60 Days City Treasurer 30 Days 30 Days CTA 15 Days 15 Days SUPREME
Protest must decide RTC En
Notice of within 60- Division Banc COURT
Assessment days.
MR / MNT MR / MNT MR / MNT

City Treasurer’s
Inaction
Assessment of Local Taxes under Section 195, LGC
Original Jurisdiction: MTC
Denial of
Protest
City
CTA
Treasurer’s 60 Days City Treasurer 30 Days 15 Days 30 Days 15 Days SUPREME
Protest must decide MTC RTC En
Notice of within 60- Banc COURT
Assessment days.

City Treasurer’s
Inaction
• CLAIM FOR REFUND
• Erroneously or illegally collected
• The filing of a written claim for refund with the local treasurer is a condition precedent
for maintaining a court action. If the treasurer does not act on the written claim for
refund and the 2-year period is about to expire, the taxpayer should initiate the court
action for refund and consider the inaction of the treasurer as a denial of his claim.
• The LGC failed to specifically provide for a period of appeal in the event a decision is
made by the treasurer on the claim for refund, similar to that obtaining in the case of a
denial on a written protest of assessment.
• It would seem that the Court may entertain the appeal so long as the case for refund is
filed with it within the 2-year period and written claim for refund or credit had earlier
been submitted to the treasurer.
• The applicable Statute of Limitations - within 6 years from payment thereof as a case of
• CLAIM FOR REFUND

• Reckoning point – date of payment of tax, fee or charge OR date the taxpayer is
entitled to a refund or credit (supervening cause)
Refund of Local Taxes under Section 196, LGC
Original Jurisdiction: RTC
Denial of
Refund
Date of 2 Years 30 Days 15 Days CTA SUPREME

Payment Administrative Must be within the RTC CTA 15 Days
Claim 2-year period. Division En Banc COURT

of Tax

2-year period
about to lapse
Refund of Local Taxes under Section 196, LGC
Original Jurisdiction: MTC
Denial of
Refund
Date of 2 Years 15 Days 30 Days SUPREME

Administrative CTA 15 Days
Payment Must be within the MTC RTC En Banc COURT
of Tax Claim 2-year period

2-year period
about to lapse
• CITY TREASURER OF MANILA V. PHILIPPINE BEVERAGE PARTNERS, INC. (G.R No. 233556,
September 11, 2019)
• SOA – January 17, 2007
• Protest – ordinance should be declared null and void and double taxation; tender of
payment for LBT and regulatory fees for the 1st quarter of 2007
• After denial of protest, Coca-Cola paid the LBT.
• Refund claim
• Complaint for the Revision of SOA and Refund or Credit of LBT with the RTC
• CITY TREASURER OF MANILA V. PHILIPPINE BEVERAGE PARTNERS, INC. (G.R No. 233556,
September 11, 2019)
• SC Ruling
• A taxpayer who had protested and paid an assessment is not precluded from later on
instituting an action for refund or credit
• A taxpayer may protest an assessment and alternatively: (a) appeal the assessment in
court; or (b) pay the tax and thereafter seek a refund.
• “There are two condition that must be satisfied in order to successfully prosecute an action
for refund in case the taxpayer had received an assessment:
• PAY THE TAX AND ADMINISTRATIVELY ASSAIL WITHIN 60 DAYS THE ASSESSMENT BEFORE THE LOCAL
TREASURER, WHETHER IN A LETTER-PROTEST OR IN A CLAIM FOR REFUND;
• BRING AN ACTION IN COURT WITHIN 30 DAYS FROM DECISION OR INACTION BY THE LOCAL
TREASURER, WHETHER SUCH ACTION IS DENOMINATED AS AN APPEAL FROM ASSESSMENT AND/OR
CLAIM FOR REFUND OF ERRONEOUSLY OR ILLEGALLY COLLECTED TAX
Action for Refund in case Taxpayer Received an Assessment or Assessment where Taxpayer paid under Protest as explained by the
Supreme Court in City Treasurer of Manila v. Philippine Beverage Partners, Inc. (G.R. No. 233556, September 11, 2019)
Protest with
No Payment
Taxpayer’s
Option 1
Denial of
Protest
Local
Treasurer’s 60 Days City Treasurer 30 Days 30 Days CTA 15 Days CTA 15 Days SUPREME
Protest must decide RTC
Notice of within 60- Division En Banc COURT
Assessment days.
Taxpayer’s Local Treasurer’s

Option 2 Inaction
Payment Supreme Court: xxx There is really no particular form or style necessary for the protest of an
assessment or claim of refund of taxes. What is material is the substance of the letter submitted to
+ the local treasurer. xxx Must administratively question the validity or correctness of assessment.
Protest with Written Payment of taxes under protest and filing of its refund does not:
Payment Protest 1. Abandon the questioning of the validity or correctness of the assessment
OR 2. Allow the taxpayer to seek refund under Section 196 within two years from payment. Taxpayer
Claim for must file question the assessment within the 60 days from receipt of Notice of Assessment and
Refund then file before a court within 30 days after denial or 60-day inaction of the City Treasurer.
REAL PROPERTY TAXES
• The realty tax is enforced throughout the Phil and not merely
in a particular municipality or city, but the proceeds of the
tax accrue to the province, city or municipality and barrio
where the realty taxed is situated.
• The province or city or a municipality within the MMA may
levy an annual ad valorem tax on real property such as
land, building, machinery, and other improvement not
hereinafter specifically exempted (Sec. 232, LGC).
• Direct tax on ownership (as a general rule)
REAL PROPERTY TAXES - PROPERTY
• The tax is imposed on real property such as land, buildings, machinery and
other improvements not otherwise specifically exempted under the Code
(Sec. 232, LGC).
• “Machinery” embraces machines, equipment, mechanical contrivances,
instruments, appliances or apparatus which may or may not be attached,
permanently or temporarily, to the real property. It includes the physical
facilities for production, the installations and appurtenant service facilities;
those which are mobile, self-powered or self-propelled and not permanently
attached to the real property but are actually, directly and essentially used to
meet the needs of the particular industry, business or activity, and which by
their very nature and purpose are designed for, or necessary to its
manufacturing, mining, commercial, industrial or agricultural purposes (Sec.
199(o), LGC).
• “Improvements” refers to valuable addition made to a property or an

amelioration in its condition, amounting to more than a mere repair or
replacement of parts involving capital expenditures and labor which is
intended to enhance the value, beauty or utility or to adopt it for new
or further purpose (Sec. 199(m), LGC).
• Two tanks not embedded in the land are real property, because they
are improvements on the land, enhancing its utility and rendering it
useful to the oil industry. They have been installed with some degree of
permanence as receptacles for considerable quantities of oil needed
by Meralco for its operations.
• The transformers, electric posts, transmission lines, insulators and electric
meters of Meralco may qualify as “machinery” under the LGC subject
to RPT (Meralco v. City Assessor and City Treasurer of Lucena City, GR
No. 166102, August 5, 2015)
• Even if these are not permanently attached, they are still actually, directly
and exclusively used to meet the needs of the particular industry and by
their very nature and purpose necessary for the business purpose.
• Machinery and equipment consisting of underground tanks, elevated

tanks, water tanks, gasoline pumps, computing pumps, water pumps,
car washer, car and truck hoists, air compressors and similar articles,
installed by Caltex in its gasoline stations, located on leased lands, are
real property subject to tax (Caltex Phil v. CBAA)
• Power barges, which are floating and movable, are real property
subject to tax. Art 415(a) of NCC provides that “docks and structures
which though floating are intended by their nature and object to
remain at a fixed place on a river, lake or coast” are considered
immovable property.
• The mere understanding with NPC under the Agreement that it shall be
responsible for the payment of real property taxes and assessments
does not justify its exception. The privilege granted to NPC cannot be
extended to FELS. The covenant does not bind third persons not privy
thereto (FELS Energy v. Prov of Batangas, 2007).
REAL PROPERTY TAXES
“Fresh Period-Rule” does not apply
Not satisfied MR MR
with the action
of the local
assessor in the
60 Days 30 Days 15 Days
assessment of 30 Days CTA SUPREME
property under
Notice of LBAA CBAA En Banc
Assessment COURT
Sec. 201-225
MR / MNT
120 Days to Decide
Sec. 231, LGC – Appeal on

assessment shall not suspend the
collection of the RPT, without
prejudice to subsequent adjustment
depending upon the final outcome
of the appeal
REAL PROPERTY TAXES
u NPC v. CBAA, LBAA-LA UNION
u Under the BOT Agreement, can the GOCC (NPC) be deemed the actual, direct and
exclusive user of machinery and equipment for tax exemption? If not, can it pass on its
tax-exempt status to its BOT partner, a private corporation, thru the BOT agreement?
u GOCC is exempt from RPT when it owns and/or actually uses the machinery and
equipment for generation and transmission of electric power. In this case, it is BPPC, a
non-government entity, which owns, maintains and operates the machinery and
equipment. Using these, it generates electricity, which it then sells to NPC. NPC is not the
registered owner of machinery and equipment. This is confirmed by BOT Agreement.
u Thus, Sec. 234(C) does not apply.
u Liability for payment of RPT is determined by law and not by agreement of the parties. It
must be expressly granted by law.
u Tax exemption is also not transferable. And it is strictly construed.
u SC cited FELS Energy v. Prov of Batangas, where it was provided that NPC shall pay all of
FELS’real estate taxes and assessments. Exemption of NPC was not recognized since it
was not the actual, direct and exclusive user of the barge.
.
REAL PROPERTY TAXES
u NPC v. CBAA, LBAA-LA UNION

u That BOT Agreement is merely a financing scheme,
where BPPC is the financier and NPC is the actual user of
properties is belied by the BOT Agreement itself.
u The proponent will construct the project at its own cost
and subsequently operates and manages it.
u At the end of 15 years, the proponent transfers the
ownership of the facility to NPC. Thus, BPPC has
complete ownership – both legal and beneficial – of the
project (NPC v. CBAA, LBAA-La Union, GR , Jan 30, 2009).
REAL PROPERTY TAXES - EXEMPTION
u Real property owned by the Republic of the Phil or any of its political
subdivision, except when the beneficial use has been granted, for
consideration or otherwise, to a taxable person
u Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, non-profit or religious cemeteries, and all lands, buildings
and improvements actually, directly and exclusively used for religious,
charitable or educational purposes
u All machineries and equipment that are actually, directly and exclusively
used by local water districts and GOCC engaged in the supply and
distribution of water and/or generation and transmission of electric power
u All real property owned by duly registered cooperatives under RA 6938; and
u Machinery and equipment used for pollution control and environmental
protection (Sec. 234, LGC)
u Except as provided herein, any exemption from payment of RPT

previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including all GOCCs, are hereby withdrawn upon
the effectivity of this Code (Jan 1, 1992).
u TESTS OF EXEMPTION
u Ownership exemption (government and cooperatives)
u Character exemption (charitable institution, churches and non-profit or
religious cemeteries)
u Usage exemption (religious, charitable or educational purposes; local
water districts and GOCCs engaged in water and electric power;
pollution control and environmental protection)
u The test of exemption from taxation is the use of the property for the
purposes mentioned in the Constitution (Abra Valley College v.
Aquino, 162 SCRA 106).
u If a property, although owned by a religious, charitable and
educational institution, is used for non-exempt purpose, the exemption
from tax shall not attach (Herrera v. QC-BAA, 3 SCRA 187).
u Tax exemptions or incentives were withdrawn upon the effectivity of

LGC, except those granted to LWDs, cooperatives under RA 6938, non-
stock, non-profit hospitals and educational institutions, and unless
provided in the LGC.
u Even as to real property owned by the RP or its political subdivisions,
exemption is withdrawn if beneficial use has been granted to a
taxable person for consideration or otherwise.
u SC noted the terms “RP” and “National Government” are not
interchangeable. The former is broader and synonymous with the
“Govt of the RP”. The latter refers to the entire machinery of the central
government (Mactan Cebu Intl Airport Authority v. Marcos, 1996).
u Sec. 3, RA 470 (Local Tax Code) exempts from taxation “property owned by
the Republic of the Phil..”
u The law makes no distinction between property held in a sovereign,
government or political capacity and those possessed in a private,
proprietary and patrimonial character. Where the law does not distinguish,
neither may we.
u Taxes are financial burdens imposed for the purpose of raising revenues with
which to defray the cost of operation of the government, and a tax on the
property of the government, whether national or local, would merely have
the effect of taking money from one pocket to put it in another pocket
(Board of Assessment Appeals, Laguna v. CTA and NWSA).
u “Government instrumentalities” vested with corporate powers or government
corporate entities (performs government or public functions) are exempt
from RPT, but GOCCs are subject to tax (MIAA case).
u CA 182, which created NDC, contains no provision exempting from payment

of RPT on properties it may acquire. Besides, these properties are not devoted
to public use but were acquired for resale to qualified persons.
u Also, NDC does not come under municipal or public corporations in the sense
that it may sue and be sued (NDC v. Prov of N Ecija, L-41223, 1983)2.
President reserved public land for warehousing purposes in favor of GOCC.
Land is exempt from real property tax. The tax exemption of “property owned
by the Republic of the Phil.” refers to properties owned by the government
and by its agencies which do not have separate and distinct personalities
(unincorporated entities).
u In this case, what appears to have been ceded to NDC was merely the
administration of the property while the government retains ownership of
what has been declared for warehousing purposes. The government does
not part with its title by reserving the land for a certain purpose (NDC v. Pacis,
215 SCRA 382).
u MIAA v. CITY OF PARANAQUE
u MIAA owns airport lands and buildings located in Paranaque City.
u MIAA is not a GOCC under Sec 2(13) of the Introductory Provisions of the
Administrative Code because it is not organized as a stock or non-stock corporation.
Neither is MIAA a GOCC under Sec 16, Art XII of the 1987 Constitution because MIAA
is not required to meet the text of economic viability.
u MIAA is a government instrumentality vested with corporate powers and performing
essential public services pursuant to Sec 2(10) of the Administrative Code.
u As a government instrumentality, MIAA is not subject to any kind of tax by local
governments under Sec 133(o) of LGC. The exception to the exemption in Sec 234(a)
does not apply to MIAA because MIAA is not a taxable entity under the LGC. Such
exception applies only if the beneficial use of real property owned by the Republic is
given to a taxable entity. The airport lands and buildings of MIAA are properties
devoted to public use and thus are properties of public dominion, owned by the
State or the Republic (MIAA v. CA, 2006).
u MIAA v. PASAY CITY
u MIAA owns airport lands and buildings located in Pasay City.
u “Instrumentality” refers to any agency of the national government, not integrated
within the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions and GOCC.
u “Instrumentality” includes … GOCC (Sec 2(10) Adm Code). This means that a
government instrumentality may or may not be a GOCC. Obviously, the term
government instrumentality is broader than the term GOCC.
u “GOCC” refers to any agency organized as a stock or non-stock corporation, vested
with functions relating to public needs whether governmental or proprietary in
nature, and owned by the Government directly or through its instrumentalities either
wholly, or, where applicable as in the case of stock corporations to the extent of at
least 51% of its capital stock.
u MIAA v. PASAY CITY

u Since MIAA is a government instrumentality vested with corporate powers to perform
efficiently its governmental functions, MIAA is like any other government
instrumentality, the only difference is that MIAA is vested with corporate powers.
u When the law vests in a government instrumentality corporate powers, the
instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a
government instrumentality exercising not only governmental but also corporate
powers.
u Thus, MIAA exercises the governmental powers of eminent domain, police authority
and the levying of fees and charges.
u At the same time, MIAA exercises “all the powers of a corporation under the
Corporation Law, insofar as these powers are not inconsistent with the provisions of
this E.O. Hence, MIAA is not liable to pay RPT (GR No , Apr 2, 2009).
u LRTA v. CBAA
u Real property is classified for assessment purposes on the basis of actual use, which is
defined as “the purpose for which the property is principally or predominantly utilized
by the person in possession of the property.”
u Unlike public roads which are open for use by everyone, the LRT is accessible only to
those who pay the required fare. It is thus apparent that petitioner does not exist
solely for public service, and that the LRT carriageways and terminal stations are not
exclusively for public use.
u Although petitioner is a public utility, it is nonetheless profit-earning. It actually uses
those carriageways and terminal stations in its public utility business and earns money
therefrom.
u Real property owned by the government or any of its political subdivisions and any
GOCC so exempt by its charter is exempt from RPT, but this exemption shall not apply
where the beneficial use has been granted, for consideration or otherwise to a
taxable person.
u Records of the Constitutional Commission reveal that what is exempted is

not the institution itself; those exempted from real estate taxes are lands,
buildings and improvements actually, directly and exclusively used for
religious, charitable or educational purposes.
u What is meant by actual, direct and exclusive use of the property for
charitable institutions is the direct and immediate and actual application
of the property itself to the purposes for which the charitable institution is
organized. It is not the use of the income from the real property that is
determinative of whether the property is used for tax-exempt purposes.
u In sum, SC ruled the portions of the land leased to private entities as well
as those parts of the hospital leased to private individuals are not exempt
from taxes (Lung Center of the Phil v. QC Assessor, GR , June 29, 2004).
u Is machinery used actually, directly and exclusively for educational

purposes exempt from RPT?
u Non-stock, non-profit educational institution? (Art. XIV, Sec. 4(3),
Constitution)
REAL PROPERTY TAXES –
FUNDAMENTAL PRINCIPLES
u The appraisal (process of determining value of property; put in writing the
value of property), assessment (notice that amount of tax is due and
demand for payment), levy and collection of real property for taxation
purposes shall be guided by the following:
u Real property shall be appraised at its current and fair market value
u Real property shall be classified for assessment purposes on the basis of its
actual use
u Real property shall be assessed on the basis of a uniform classification within
each local political subdivision
u The appraisal, assessment and levy of real property and the collection of the
real property tax shall not be let to any private person
u The appraisal and assessment of real property shall be equitable (Sec. 198,
LGC)
REAL PROPERTY TAXES –
FUNDAMENTAL PRINCIPLES
u The RPT for any year shall accrue on the first day of January and from
that date it shall constitute a lien on the property which shall be
superior to any other lien, mortgage, or encumbrance of any kind
whatsoever, and shall be extinguished only upon payment of the
delinquent tax (Sec. 246, LGC).
u The collection of the RPT with interest and related expenses, and the
enforcement of the remedies in this Title, shall be the responsibility of
the city or municipal treasurer concerned. He may deputize the
barangay treasurer for all taxes on real property located in the
barangay, provided he is bonded and the premium on such bond
shall be paid by the city or municipal government (Sec. 247, LGC).
REAL PROPERTY TAXES – TAX REMEDIES
OF GOVERNMENT (COLLECTION)
u Administrative remedies
u Levy and sale or forfeiture of property
u Tax lien
u Judicial remedies
u Civil action
u PRESCRIPTIVE PERIODS
u To collect (administrative or judicial)
u 5 years from date they become due, without fraud
u 10 years from discovery of fraud or intent to evade payment
u RPT accrues on January 1
u Special levy accrues on the first day of the quarter following the effectivity of the
REAL PROPERTY TAXES – TAX REMEDIES
OF GOVERNMENT (COLLECTION)
u When RPT becomes delinquent, the treasurer shall immediately cause a notice of
delinquency to be posted in the capitol or municipal hall and in a publicly accessible
and conspicuous place.
u The notice of delinquency shall also be published once a week for 2 consecutive
weeks in a newspaper of general circulation in the province, city or municipality.
u Such notice shall state that distraint or levy may be issued and unless the tax and
penalties are paid before of the year for which the tax is due, the delinquent real
property will be sold at public auction, except when the notice of assessment or
special assessment is contested administratively or judicially. Transfer of title to the
purchaser shall be subject to the right of redemption of the delinquent owner or any
person having legal interest therein within one (1) year from the date of sale (Sec.
254, LGC).In case of failure to pay the tax, the unpaid amount shall be subject to 2%
interest per month until the delinquent tax shall have been fully paid, but in no case
shall total interest exceed 36 months (Sec. 255, LGC).
REAL PROPERTY TAXES – REMEDIES OF
TAXPAYER
u No protest shall be entertained, unless the tax is first paid.

u There are cases decided by the Supreme Court where the taxpayer is
allowed to just file a surety bond, instead of paying the amount of real
property tax being contested.
u When a taxpayer desires for any reason to pay his tax under protest,
he shall indicate the amount or portion thereof which he is contesting,
and such protest shall be annotated on the tax receipts by writing
thereon the word “paid under protest.” The amount paid under protest
shall be held in trust by the treasurer.
u The protest shall be confirmed in writing, with a statement of the
ground therefor, within 30 days from date of payment of tax.
TAXPAYER
u The protest shall be filed with the provincial, city or municipal treasurers
within the MMA, who shall decide the protest within 60 days from the
receipt of the protest.
u If the protest is:
u Decided in favor of the taxpayer, the amount of the tax protested
against may be refunded or applied as tax credit to any other existing
or future tax liability of the protestant, or
u Denied or upon the lapse of 60 days without the protest being finally
decided, the taxpayer may appeal to the LBAA (Sec. 252, LGC).
TAXPAYER
u The LBAA shall decide the appeal within 120 days from receipt of the
appeal. The decision of LBAA, which must be based on substantial
evidence presented at the hearing or least contained in the records,
may be appealed within 30 days from receipt thereof by the taxpayer
to the CBAA, whose decision shall be final and executory (Sec. 229,
LGC).
u Decisions of CBAA are appealable to CTA En Banc within 30 days from
date of receipt (RA 9282).
TAXPAYER
u Repayment of Excessive Collection – Section 253

u 2 years from the date the taxpayer is entitled to such reduction
u Treasurer has 60 days to decide
u Remedy is to file an appeal to the LBAA then to the CBAA (similar to the remedy upon
denial of protest)
REAL PROPERTY TAXES
“Fresh Period-Rule” does not apply
MR MR
1. Protest must be within 30 days from payment.
Correctness and 30 Days 30 Days 15 Days

Reasonableness Notice of 30 Days CTA SUPREME
Payment of Tax LBAA CBAA En Banc
of the Assessment COURT
Assessment
Protest must be filed with the
City of Treasurer – 60days to
Camp John Hay Development v. CBAA MR / MNT
decide. 120 Days to Decide
G.R. No. 169234, 2 October 2013
Tax remedies – ASSESSMENT CYCLE
Filing of tax return Law prescribes due date
Tax audit by BIR (Letter of Authority – 30 days from 120 days (no need to revalidate an eLA)
issuance)
Notice of Discrepancy and Discussion of Discrepancy (RR 30 days

22-2020)
Preliminary Assessment Notice (PAN) 10 days from conclusion of discussion
Response (direct) to (protest) PAN 15 days from receipt
Formal Letter of Demand (FLD) and Final Assessment 15 days from receipt; 3 years or 10 years
Notice (FAN)
Protest of FAN – reconsideration / reinvestigation 30 days

TAX REMEDIES – ASSESSMENT CYCLE
Submission of Supporting Documents 60 days
BIR Action – cancel assessment; deny protest; 180 days

revise assessment
BIR Inaction 180 days
Appeal to Commissioner 30 days; Inaction – 180 days
Appeal to the CTA 30 days from receipt or lapse of 180-day period (an
MR to the CIR will not toll the 30-day period)
Motion for Recon - CTA 15 days from receipt

TAX REMEDIES – ASSESSMENT
Appeal to CTA En Banc CYCLE
15 days from receipt
Appeal to the SC 15 days from receipt

u Filing of return and payment of tax

u Self-assessment of tax (taxpayer determines his tax liability)
u Pay-as-you-file system (pay tax upon filing of tax return)
u Where to file return and pay tax?
u Large Taxpayer (corporation): EFPS
u Non-large taxpayer: RDO where principal place of business of taxpayer is located
u Individual
u Self-employed: RDO where principal place of business of taxpayer is located
u Employee: Place of residence or employment
u Real property transaction
u RDO where real property is located (RR 8-98), unless seller or transferor is a Large Taxpayer, in
which case, CAR/TCL shall be issued by LTO where it is registered (RR 4-2008). Beginning
March 16, 2009, all transactions shall be done with the RDO where real property is located
Tax remedies – ASSESSMENT
u Assess
u To impose a tax
u To charge with a tax
u To declare a tax to be payable
u To apportion a tax to be paid or contributed
u To fix a rate
u To fix or settle a sum to be paid by way of tax
u To set, fix or charge a certain sum of each taxpayer
u To settle determine or fix the amount of tax to be paid
Tax remedies – kinds of taxes
u TAXES WHICH DO NOT REQUIRE ASSESSMENT TO ESTABLISH TAX

LIABILITY/DELINQUENCY
u Self-assessing tax (Tupaz vs Ulep, 316 SCRA 118)
u Tax paid is lower than tax due per return filed
u TAXES WHICH REQUIRE ASSESSMENT TO ESTABLISH ADDITIONAL
TAX LIABILITY
u Deficiency tax liability (after a tax audit)
u Tax period is terminated
u Tax lien (Sec. 219, NIRC)
u Dissolving corporation (Sec. 52( c), NIRC)
Tax remedies – TAX AUDIT
u AUDIT NOTICES
u Letter of Authority (LA)
u Tax Verification Notice (TVN)
u Letter Notice (LN)
u CONTENTS OF LA (now electronically generated)

u Date of issue
u Name, address and TIN of taxpayer
u Name and designation of revenue officer(s) authorized to conduct
tax audit
u Scope of examination
u Kinds of taxes
u Period
u Approving official
u Revenue Officers assigned and basis of audit
u Telephone number(s) of BIR office
u CONTENTS OF LA (now electronically generated)

u Sec. 235, NIRC
u For income tax purposes, more than 1 examination of books for one
taxable year is not allowed, except in the following cases:
u Fraud, irregularity or mistakes, as determined by the CIR
u Taxpayer requests reinvestigation
u Verification of compliance with withholding tax laws and regulations
u Verification of capital gains tax liabilities
u In the exercise of the Commissioner’s power under Section 5(B) to obtain
information from other persons
• REQUIREMENTS OF LA
– No erasures on LA
– LA shall cover only one year; 2008 and unverified prior years is not allowed
– LA must be served within 30 days from date of issue
– Audit must be completed within 120 days from date of service. However, if not
finished within the said period, no need to revalidate eLA.
– Only revenue officers named in LA are authorized to look at books and records
– Audit must be done generally in taxpayer’s place of business
– Signed by the Revenue Regional Director
• TAX VERIFICATION NOTICE

– Non-audit cases; Sec. 6(A), NIRC
– Verification and processing of all capital gains tax returns
– Verification and processing of withholding tax returns involving property
transactions
– Verification and processing of estate and donor’s tax returns, where the gross
estate or gross gift is below the audit threshold under the existing audit program
– Verification and processing of claims for tax credit or refund, where the gross sales
or receipts and claims are below the audit threshold
– Protested cases under re-investigation in the RDOs
• LETTER NOTICE
– RELIEF/SLSP System
– Taxpayers with discrepancy on their income, sales and/or purchases
(domestic or imported)
– Issue LA
• MEDICARD CASE (GR NO. 222743, APRIL 5, 2017)

• Differences between LOA and LN
– LOA – addressed to a revenue officer – specifically required under
the NIRC before an examination may be had; LN – not found in the
NIRC and is only for the purpose of notifying the taxpayer that a
discrepancy is found based on the BIR’s RELIEF system.
– LOA – valid only for 30 days from date of issue; LN – no limitation
– LOA – 120 days to conduct examination; LN - no limitation
• MEDICARD CASE (GR NO. 222743, APRIL 5, 2017)

• “An LOA cannot be dispensed with just because none of the
financial books or records being physically kept by MEDICARD was
examined. To begin with, Section 6 of the NIRC requires an authority
from the CIR or from his duly authorized representatives before an
examination of a taxpayer may be made. The requirement of
authorization is therefore not dependent on whether the taxpayer
may be required to physically open his books and financial records
but only on whether a taxpayer is being subject to examination.”
• SONY CASE (GR 178697, November 17, 2010)

– LOA – for the period 1997 and unverified prior years
– Revenue Officers went beyond the scope of their authority because
the deficiency VAT assessment they arrived at was based on records
from January to March 1998 or using the fiscal year which ended in
March 31, 1998
– LOA should cover a taxable period not exceeding one taxable year
Tax remedies – Notice of discrepancy
• Notice of Discrepancy
• 30 days from receipt of notice
• If it is found that the taxpayer is still liable for deficiency tax or taxes after
presenting his side, and that the taxpayer is not amenable, the case shall
be endorsed to the reviewing office and approving official in the National
Office or the Revenue Regional Office, for issuance of a deficiency tax
assessment in the form of a PAN within 10 days from the conclusion of the
discussion.
Tax remedies – PAN
• Preliminary Assessment Notice

• PAN and FAN are part of due process
u GENERAL RULE: PAN must be issued by BIR before issuing FAN and demand letter
u EXCEPTIONS: FLD/FAN will be issued outright
u Deficiency tax is the result of mathematical error
u Discrepancy is between amount withheld and amount of withholding tax remitted
u Taxpayer who opted to claim refund/tax credit also carried over and applied the same against tax of
next taxable quarter
u Excise tax due has not been paid
u Violation of condition of tax-free importation (Sec. 228, NIRC))
• Taxpayer was assessed based on best evidence rule. BIR allegedly sent PAN for
deficiency taxes which taxpayer denied. Taxpayer acknowledged receipt of FAN.
• Sec 228 of the Tax Code clearly requires that the taxpayer must first be informed
that he is liable for deficiency taxes thru the sending of a Preliminary Assessment
Notice (PAN). The law imposes a substantive, not merely a formal requirement.
• The sending of a PAN to taxpayer to inform him of the assessment made is part of
the “due process requirement in the issuance of a deficiency tax assessment,” the
absence of which renders nugatory any assessment made by the tax authorities.
• The due process requirement in the issuance of assessments is prescribed in Rev
Regs No. 12-99. These are mandatory with the use of the word “shall” in the
regulation in issuing Notice of Informal Conference, Pre-Assessment Notice, and
Final Assessment Notice (CIR v. Metro Superama, Inc, GR 185371, Dec 8, 2010).
u WHEN TO FILE REPLY?

u Within 15 days from date of receipt of PAN
u Extension or further extension may be requested from BIR – highly probable not to be granted
u CONTENT OF REPLY?
u Explanation to every item of income or deduction or other matter questioned by revenue officer
u Factual and/or legal bases, including applicable jurisprudence
u Prays for total or partial cancellation of PAN
u QUESTION OF FACT OR LAW
u Question of fact: Truth or falsity?
u Question of law: Law on certain set of facts?
u DUE PROCESS OF LAW
u Issuance of FAN and and Final Letter of Demand is tantamount to denial of Reply to PAN. Essential
elements of due process are notice and opportunity to present one’s side (Phil. Health Care
Providers vs. CIR)
u CIR v. Metro Star Superama (No. 185371, December 8, 2010)

u FACTS
u BIR issued preliminary 15-day letter to Metro Star stating the deficiency taxes due
from Metro Star for 1999
u 5 months later, Metro Star received a Formal Letter of Demand from the BIR for the
same deficiency taxes
u After being served with a WDL to enforce the collection of taxes, Metro Star
appealed to the BIR but its appeal was denied.
u Claiming that it did not receive a PAN and was, therefore, not accorded due
process, Metro Star appealed to the CTA
u The CTA ruled in favor of Metro Star and invalidated the assessments issued b the BIR
u CIR argued that a PAN was mailed, although Metro Star denied receiving it. The CIR
also argued that even assuming that no PAN was issued, Metro Star nevertheless
was accorded due process since it was issued a Formal Letter of Demand
u Was the Formal Letter of Demand valid even if Metro Star did not receive the PAN?
u No. Section 228 of the Tax Code clearly states that a PAN has to be sent to the taxpayer
where the latter is informed that he is liable for deficiency taxes. This is a substantive and not
merely a formal requirement.
u Under RR 12-99, the PAN is part of the “due process requirement in the issuance of a
deficiency tax assessment,” the absence of which renders nugatory any assessment made
by the tax authorities. The use of the word “shall” in RR 12-00 describes the mandatory
nature of the service of a PAN.
Tax remedies – FAN
u ASSESSMENT?
u Written notice of tax liability of a taxpayer
u Contains computation of tax liability and a demand for the payment of tax
u LEGAL EFFECTS OF ISSUANCE OF FAN?
u Creates legal obligation on the part of taxpayer to pay tax to government
u If taxpayer files timely protest, assessment does not become final and executory
u Taxpayer does not have to pay the deficiency tax assessment, but deficiency
interest shall start to run from date the tax was due up to date of payment
u Business of taxpayer does not become illegal by reason of non-payment of
deficiency tax, unlike local business taxes
u ESSENTIAL REQUIREMENTS
u FAN contains name, address, and TIN; kind of tax; period covered; basic tax and
penalties; date tax must be paid
u FAN and demand letter must state facts, law or jurisprudence; otherwise, assessment is
void (CIR v. Enron Subic Power Corporation, G.R. No. 166387, Jan. 19, 2009; RR 18-2013.
Sec. 228, NIRC)
u Taxpayer was fairly informed since it was able to categorically explain how
assessment came about (Toledo Power Co. vs. CIR)
u PAN has audit sheet but did not explain how assessment was arrived. Demand letter
did not contain the information on law and facts (HPCO Agridev Corp vs. CIR)
u Signed by Commissioner or his authorized representative
u Issued within the prescriptive period under the law or the extended period agreed upon
between the parties
u Issued after the 15-day period to file a reply lapses
u (i) personal service at the registered or known address of the taxpayer, or
“wherever he may be found,” (ii) substituted service, where the taxpayer is not
present at the registered or known address, or refuses to accept the notice, or
(iii) by mail.
u Refusal to accept/Absence - the revenue officers concerned shall bring a
barangay official and two disinterested witnesses (meaning, persons other than
employees of the BIR), so that they may personally observe and attest to such
act of refusal/absence.
u Substituted Service – Clerk or person-in-charge (known or registered address) or
person of legal age (residence)
u FAN was issued on account of a valid letter of authority
u Must be issued within the prescriptive period
u 3 years and 10 years
u Waiver of Statute of Limitations
u Suspension of Running of Statute of Limitations (NIRC, Sec. 223)
u Period during which the Commissioner is prohibited from making the assessment
and for 60 days thereafter
u When the taxpayer cannot be located in the address given by him in the return
filed
u When the taxpayer is out of the Philippines
u Is there a violation of due process when the FAN is issued on the same day as the
PAN?
• BASF Coatings + Inks Phil v. CIR
• The running of the period to assess and collect shall be suspended, if taxpayer’s
whereabouts is not known, in order not to prejudice the government.
• However, SC notes that respondent was aware where petitioner may be located.
– 1. Petitioner caused publication of Notice of Dissolution in Aug 22, 29 and Sept 5, 2001
issues of Malaya, which included address in Laguna of petitioner.
– 2. Respondent conducted tax audit for 1999 at its Canlubang, Laguna address.
• The failure of BIR to note where to send PAN and FAN should not be taken against BASF.
When the deficiency assessments were sent to old address despite proper notification of
new address, the running of 3-year period to assess was not suspended.
• The law on prescription being a remedial measure should be interpreted in a way
conducive to bringing about the beneficent purpose of affording protection to the
taxpayer (BPI v. CIR, GR 174942, Mar 7, 2008).
• Due process requires that petitioner must actually receive the PAN and FAN (Estate of Diez
v. CIR; CIR v. Pascor Realty & Dev Corp).
• BASF Coatings + Inks Phil v. CIR

• As there are no notices sent to petitioner, assessments are void. In CIR v. Reyes, the SC ruled
that if there is no valid notice sent, the assessment is void. The reason is that “the law
imposes a substantive, not merely a formal requirement. To proceed heedlessly with tax
collection without first establishing a valid assessment is evidently violative of the cardinal
principle in administrative investigations: that taxpayers should be able to present their case
and adduce supporting evidence. xxx.”
• A void assessment cannot give rise to an obligation to pay deficiency taxes, and it divests
the taxing authority of the right to collect them.
u WHEN ASSESSMENT MUST BE ISSUED?

u TAX RETURN FILED
u Not false or fraudulent (3 years from DATE OF FILING OF RETURN)
u Each kind of tax has separate filing due date
u False or fraudulent (10 years FROM DATE OF DISCOVERY)
u NO TAX RETURN FILED ( 10 years from discovery of non-filing)
u WHEN IS ASSESSMENT MADE OR DEEMED MADE?

u ISSUE DATE of FAN
u DATE OF SERVICE OR MAILING (for prescription purposes from last day of
the 3 year or 10 year period and reckoning period for collection
purposes, China Bank Case)
u Mere notation of mailing cannot suffice
u Presumption in the course of mail. To have this benefit of presumption
, BIR has to show that it was mailed and was mailed to correct person
and correct address and it was post-paid.
u DATE OF RECEIPT (the reckoning period of your filing of protest)
u IF ASSESSMENT DUE DATE FALLS ON SATURDAY, GOVERNMENT HAS NEXT
BUSINESS DAY WITHIN WHICH TO ASSESS (CIR v. Western Pacific Corp)
Tax remedies – PROTEST
u PROTEST LETTER MUST BE FILED WITHIN 30 DAYS FROM DATE OF RECEIPT OF ASSESSMENT
u NATURE OF PROTEST (suspends the prescription period for collection; this has to
be a request for recon or request for reinvestigation)
u Request for RECONSIDERATION – based on evidence and arguments already
submitted
u Request
for REINVESTIGATION - based on new or additional evidence and
arguments (60 days from filing of protest to submit additional evidence)
u DATE OF RECEIPT OF ASSESSMENT
u CONTENTS OF PROTEST LETTER – applicable laws, rules and jurisprudence
u FINDINGS TO WHICH TAXPAYER AGREES
u No action on protest until admitted tax is paid
u FINDINGSTO WHICH TAXPAYER DOES NOT AGREE AND STATEMENT OF FACTS
AND/OR LAW
u RELEVANT SUPPORTING DOCUMENTS

u Documents necessary to support the legal basis in disputing a tax
assessment as determined by the taxpayer
u The BIR can only inform the taxpayer to submit additional
documents
u The BIR cannot demand what type of supporting documents
should be submitted. (CIR v. First Express Pawnshop, Inc.)
u CONSEQUENCES OF ABSENCE OF VALID AND TIMELY PROTEST

u Makes assessment final and executory; merit of the case or validity of the
assessment cannot be raised by taxpayer
u Appeal to CTA by taxpayer is no longer available or ineffective; CTA
cannot acquire jurisdiction over the case; motion to dismiss may be filed
by BIR
u BIR may pursue collection of taxes and penalties, administratively and/or
judicially
u Compromise of assessment is still possible
u DECISION OF REGIONAL DIRECTOR ON THE PROTEST IS NOT FINAL AND MAY

BE APPEALED TO THE COMMISSIONER (Reconsideration) (Rev. Regs. No. 12-
99) –
u 30 days
u Remedy of taxpayer to the denial of protest is appeal to the CTA
u Decision of CIR on disputed assessment is appealable to CTA, but CIR’s
power can be delegated to subordinate officials
u Appeal to CTA necessitates payment of expensive filing fee and lawyer’s
professional fee
u PRIOR EXHAUSTION OF ADMINISTRATIVE REMEDIES GIVES ADMINISTRATIVE
AUTHORITIES THE OPPORTUNITY TO DECIDE CONTROVERSIES WITHIN THEIR
u FORM OF DENIAL OF PROTEST
u DIRECT DENIAL
u Revenue Regulations No. 12-99, as amended by RR 18-2013
u MR filed with the CIR shall not toll period to appeal.
u INDIRECT DENIAL
u Final Notice Before Seizure (Isabela Cultural Corp vs CIR)
u Warrant of Distraint and Levy
u Filing of civil action by BIR
u Referral to SOLGEN of case
u Inaction of Commissioner
u Lascona Land Co. vs. CIR (2000); RR 18-2013; mutually exclusive rule
Tax remedies – APPEAL
u A request for reconsideration on the CIR’s denial of the protest shall not toll the 30-day period
to appeal to the CTA
u JUDICIAL APPEAL
u FINAL DECISION OF COMMISSIONER MAY BE APPEALED TO COURT OF TAX
APPEALS
u Where a taxpayer filed a valid protest within 30 days from date of receipt of
assessment and on same day also filed with CTA a petition for review, there is
yet no final decision of CIR on the protest that is appealable to CTA (Moog
Controls Corp vs. CIR, CTA Case No. 6700, Oct 18, 2004)
u CTA DIVISION DECISION IS APPEALED TO CTA EN BANC (RA 9282)
u COURT OF APPEALS EN BANC DECISION APPEALED TO SUPREME COURT
• CTA has exclusive appellate jurisdiction to review by appeal

“decisions of CIR in cases involving disputed assessments.” (RA 9282)
• The word “decisions” means decisions of the CIR on the protest of
taxpayer against the assessment..
u The 30-day period to appeal is jurisdictional and failure to comply

would bar the appeal and deprive the CTA of its jurisdiction. Such
period is mandatory, and it is beyond the power of the courts to
extend the same (Chan Kian vs CTA, 105 Phil 906 (1959).
u The options granted to the taxpayer in case of inaction by the CIR is
mutually exclusive and resort to one bars the application of the other.
Petition for review was filed out of time (more than 30 days after lapse
of 180 days); hence, disputed assessment became final and
executory.
u After availing of the first option (filing petition for review with CTA),
petitioner cannot successfully resort to the second option (awaiting
final decision of CIR) on the pretext that there is yet no final decision
on the disputed assessment because of CIR’s inaction.
ADMINISTRATIVE REMEDIES: ASSESSMENT
Letter of Notice Audit Investigation
Letter of Authority
(120 Days)
Preliminary Assessment Final Assessment Notice

Notice of Discrepancy Notice (PAN) (FAN)
30 Days 15 Days 30 Days
DISCUSSION OF
REPLY PROTEST
DISCREPANCY
Submission of supporting documents may be

during or after the Discussion of Discrepancy Request for Request for
provided the submission is within 30 days from Reconsideration Reinvestigation
receipt of Notice of Discrepancy
60 Days
Submission of Submission of Relevant

Supporting Supporting Documents
Documents
JUDICIAL REMEDIES
Overview: Protest of Assessment
180 DAYS
INACTION
30 Days
Taxpayer’s Mutually
Option Exclusive
30 Days CTA 15 Days CTA 15 Days SUPREME
CIR Division En Banc COURT
Does NOT toll
reglementary period
MR
PROTEST FDDA
MR /MNT MR / MNT
CIR Decision: 30 Days
CIR Inaction: 180 Days
CIR’s Duly Administrative Appeal

Authorized
Representative
(Request for Reconsideration)
CIR
30 Days
CANCEL
MR = Motion for Reconsideration
MNT = Motion for New Trial
TAX REMEDIES - TAXPAYER
u TYPES OF REMEDIES
u Substantive remedies
u To question legality of law, rules or regulations
u To question validity of assessment
u Procedural remedies
u To raise non-compliance with administrative procedures
u To raise lack of notice or receipt of notice
u Administrative remedies
u To protest deficiency tax assessment
u To file claim for refund or tax credit
u Judicial remedies
u To file petition for review with CTA
u To answer civil actions for the collection of tax
u ADMINISTRATIVE REMEDY
u AFTER PAYMENT OF TAX
u TAX CREDIT, OR
u REFUND
u CARRY OVER OF EXCESS PAYMENT TO NEXT QUARTER OR YEAR

u JUDICIAL REMEDY
u APPEAL TO COURT OF TAX APPEALS
• ADMINISTRATIVE REMEDY
– BEFORE PAYMENT OF TAX
• File timely and valid protest against the assessment
– Tax amnesty
– VAP
• Protest the assessment as a void assessment that cannot become valid
– Failure to state factual and/or legal basis (Sec. 228, NIRC)
– Invalid waiver
– Invalid letter of authority or beyond the scope of tax audit
– Prescription of the right to assess or to collect assessed tax
• Offer to settle assessed tax by way of compromise or abatement
• Compromise – Sec. 204

• Grounds
• Doubtful validity of the claim against the taxpayer
• Financial incapacity of the taxpayer

• Cases which may be compromised
• Delinquent accounts
• Pending admin cases under admin protest after issuance of final assessment notice to the
taxpayer
• Civil ta cases being disputed before the courts
• Collection cases filed in courts
• Criminal violations – except if already filed in court or involving criminal tax fraud

• Cases which can not be compromised
• Withholding tax cases, unless the applicant TP invokes provisions of law that cast doubt on the
taxpayer’s obligation to withhold
• Criminal tax fraud cases confirmed as such by the CIR or his duly authorized rep
• Criminal violations already filed in court
• Delinquent accounts with duly approved schedule of installment payments
• Cases where final reports of reinvestigation or reconsideration have been issued resulting to
reduction in the original assessment and TP already agreed
• Cases which become final and executory after final judgment of a court, where compromise
is requested on the ground of doubtful validity
• Estate tax cases where compromise is requested on the ground of financial incapacity
• Abatement – Sec. 204

• Taxes or any portion thereof appears to be unjustly or excessively assessed
• The administration and collection costs do not justify the collection of the amount due
u Prescription
u Except as otherwise provided in Sec. 222 (Exceptions as to period of
limitation of assessment and collection of taxes), taxes shall be
assessed within three (3) years after the last day prescribed by law for
the filing of the return.
u No proceeding in court without assessment for the collection of taxes
shall be begun after the expiration of prescriptive period (Sec. 203,
NIRC).
u In case of a false or fraudulent return with intent to evade tax or of
failure to file a return, the tax may be assessed, or a proceeding in
court for the collection of such tax may be filed without assessment,
at any time within ten (10) years after the discovery of the falsity,
fraud or omission (Sec. 222(a), NIRC).
u Prescription for (Criminal) Violations of any Provision of this Code

u All violations of any provision of this Code shall prescribe after five
(5) years.
u Prescription shall begin to run from the day of the commission of
the violation of the law, and if the same be not known at the time,
from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
u Prescription shall be interrupted when proceedings are instituted
against the guilty persons and shall begin to run again if the
proceedings are dismissed for reasons not constituting jeopardy.
u The term of prescription shall not run when the offender is absent
from the Philippines (Sec. 281, NIRC).
u The 3-year period within which to assess any deficiency tax

commences after the last day prescribed by law for the filing of the
income tax return.
u For VAT, each taxable quarter shall have its own prescriptive period.
VAT return is filed quarterly and a final return is not required at the
end of the year.
u In case of creditable withholding taxes, the 3-year period shall be
counted from the last day required by law for filing monthly
remittance return. Each monthly return is already a complete return.
The annual information return submitted to BIR is just an annual report
of income payments and taxes withheld and is not in the nature of a
final adjustment return (HPCO Agridev Corp. vs. CIR, CTA Case No.
6355, July 18, 2002)
u Extension of Statute of Limitations (Sec. 222(b))

u RMO 20-90 and RMO 14-2016
u Date of execution shall be indicated in the waiver
u Signed by taxpayer
u Expiry date of period should be indicated
u All revenue taxes can be covered; except when waiver is for collection of a particular
tax
u Taxpayer is charged with the burden of ensuring that the waivers are validly executed
- authority of representative shall not thereafter be contested to invalidate waiver
u Need not be notarized – waiver needs to just be in writing
u Waiver shall take legal effect upon execution – voluntary act – not bilateral anymore
u Accepted prior to expiration
u Doctrine of pari delicto

u CIR v. Next Mobile, Inc., GR No. 212825, December 7, 2015
u SEC 223 – Suspension of running of statute of limitations

u During which CIR is prohibited from making assessment or
beginning distraint or levy or proceeding in court and for 60 days
thereafter
u When taxpayer requests for reinvestigation, which is granted by
CIR
u When taxpayer cannot be located in the address given by him in
the return filed, unless he informs CIR of change of address
u When WDL is duly served upon taxpayer or his representative and
no property could be located; and
u When taxpayer is out of the Philippines
u REFUND
u INCOME TAX/OTHER INTERNAL REVENUE TAXES (EXCEPT VAT)
u Taxpayer filed a written claim for refund or tax credit, stating the
factual and/or legal bases
u Claim was filed with BIR within the prescriptive period
u Taxpayer erroneously or illegally paid the tax to the government,
which is evidenced by a return filed and official receipt issued
u Petition for review was filed with the CTA within the prescriptive
period
u There is no deficiency tax against the taxpayer
Regular Refund (Sec. No required period for
BIR to resolve claim.
229)
30 Days
Denial of Refund
Date of 2 Years
Payment Administrative
of Tax Claim
2-year period about NOTE: Filing of petition for
to lapse review must be within the
two-year period.
NOTE: Filing of administrative CTA

15 Days
CTA 15 Days SUPREME
claim must be within the two- En Banc COURT
Division
year period.
VAT Refund
MR / MNT MR / MNT
Close of
Taxable Denial of Refund
Quarter 2 Years
Administrative
when the
sales were Claim 30 Days
made BIR Inaction
BIR is required to resolve

claim within 90 days.
CTA
Jurisdiction of the CTA in Divisions Jurisdiction of the CTA En Banc

Exclusive original or appellate jurisdiction to Exclusive appellate jurisdiction to review by
review by appeal: appeal:
1. Decisions of the CIR in cases involving 1. Decisions or resolutions on MR or MNT of
disputed assessments, refunds of internal the CTA in Division in the exercise of its
revenue taxes, fees or other charges, exclusive appellate jurisdiction over tax
penalties in relation thereto, or other laws collection cases decided by the RTCs in the
administered by the BIR exercise of their original jurisdiction involving
final and executory assessments for taxes,
fees, charges and penalties, where the
principal amount of taxes and penalties
claimed is less than Php1M
CTA

2. Inaction by the CIR in cases involving 2. Decisions, resolutions or orders of the
assessments, refunds of internal revenue RTCs in tax collection cases decided or
taxes, fees or other charges, penalties in resolved by them in the exercise of their
relation thereto, or other matters arising appellate jurisdiction;
under the Tax Code or other laws 3. Decisions, resolutions or orders on
administered by the BIR, where the Tax motions for reconsideration or new trial of
Code or other applicable law provides a the CTA in Division in the exercise of its
specific period for action exclusive original jurisdiction over tax
collection cases
CTA

2. 4. Decisions, resolutions or orders on MRs or
MNTs of the CTA in Division in the exercise of
its exclusive original jurisdiction involving
criminal offenses arising from violations of
the Tax Code and other laws administered
by the BIR.
3. 5. Decisions, resolutions or orders on MRs or
MNTs of the CTA in Division in the exercise of
its exclusive appellate jurisdiction over
criminal offenses mentioned in no. 4
4. 6. Decisions, resolutions or orders of the RTCs
in the exercise of their appellate jurisdiction
over criminal offenses
CTA
Exclusive jurisdiction over cases involving criminal Decisions,
offenses:
1. Original jurisdiction over criminal offenses
arising from violations of the Tax Code and
other laws administered by the BIR where the
principal amount of taxes and fees, exclusive
of charges and penalties claimed is Php1M or
more
2. Appellate jurisdiction over appeals from the
judgments, resolutions or orders of the RTCs in
their original jurisdiction in criminal offenses
arising from violations of the Tax Code and
other tax laws, where the principal amount of
taxes, exclusive of charges and penalties
claimed is less than Php1M or where there is
no specified amount claimed
CTA

Exclusive jurisdiction over tax collection
cases:
1. Original jurisdiction in tax collection cases
involving final and executory assessments
for taxes, fees, charges and penalties
where the principal amount of taxes and
fees, exclusive of charges and penalties
claimed is Php1M or more; or
2. Appellate jurisdiction over appeals from
the judgments, resolutions or orders of
the RTCs in tax collection cases originally
decided by them within their respective
territorial jurisdiction.
CTA
u City of Manila v. Grecia – Cuerdo, 715 SCRA 182

u The power of the CTA includes that of determining whether or not there
has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the RTC in issuing an interlocutory order in cases
falling within the exclusive appellate jurisdiction of the tax court.
u BDO v. Republic of the Philippines, 800 SCRA 392; DOF v. Asia United
Bank, GR Nos. 240163 & 240168-69, December 1, 2021
u CTA has jurisdiction to rule on the validity of tax laws or regulation
administrative issuances
CTA
u CTA En Banc – Petition for Review – Rule 43 – 30 days

u CTA Division – Rule 43 – 15 days
u CBAA
u RTC (In the exercise of its appellate jurisdiction)
u CTA Division – Petition for Review (Rule 42) 30 days
u Criminal cases – notice of appeal - 15 days
u MR/MNT – condition precedent – Commissioner of Customers v.
Marina Sales, Inc., GR No. 183868, November 22, 2010
u SC – Petition for Review on Certiorari – Rule 45 – 15 days
CTA
u Section 218, Tax Code – No court shall have the authority to grant an
injunction to restrain the collection of any internal revenue tax, fee or
charge imposed by the Tax Code
u Sec. 11, RA 1125, as amended – when in the opinion of the CTA the
collection by the CIR, Commissioner of Customers, Secretary of
Finance, etc. may jeopardize the interest of the Government and/or
the taxpayer, the CTA at any stage of the proceeding may suspend
the collection and require the taxpayer either to deposit the amount
claimed or to file a surety bond for not more than double the amount
CTA
u Pacquiao v. Commissioner of Internal Revenue, GR NO. 213394, April

6, 2016
u Sec. 11 of RA 1125, as amended – appeal to the CTA will not suspend the
payment, levy, distraint, and/or sale of property
u Collection may jeopardize the interest of the government and/or the
taxpayer
u Deposit or surety bond
u CTA can dispense with the deposit or surety bond requirement whenever
the method employed by the CIR in the collection of tax jeopardizes the
interests of a taxpayer for being patently in violation of the law
CTA
u Tridharma Marketing Corporation v. CTA, GR No. 215950, June 20,

2016
u If the amount of the surety bond is too high that it will practically deny
the taxpayer the meaningful opportunity to contest the validity of the
assessments and
u Would likely impoverish the taxpayer as to force it out of its business
u The amount the surety bond is void and must be lowered

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Taxation Law

2022 BAR LECTURE

u Basic Principles of Taxation

u Political and International Law – General Principles of Taxation

u Political and International Law – General Principles of Taxation

u Political and International Law – Local Governments

u Remedial Law – Procedure in Tax Cases

u Petition for review on certiorari to the Supreme Court

u Due process (substantive and procedural) – Article III, Sec. 1

u Religious Freedom – Art. III, Sec. 5

u Uniformity and equality of taxation and progressive system of taxation –

u Prohibition against taxation of real property of charitable institutions,

u Prohibition against taxation of non-stock, non-profit educational institutions

u Prohibition against taxation of non-stock, non-profit educational institutions –

u Prohibition against taxation of non-stock, non-profit educational institutions

• equitable and based as far as practicable on taxpayer’s ability to pay;

u COMMON LIMITATIONS ON LGUs

u COMMON LIMITATIONS ON LGUs

u COMMON LIMITATIONS ON LGUs

• Preemption or exclusionary rule

• Petron Corp. v. Mayor of Navotas

• Petron Corp. v. Mayor of Navotas

• Petron Corp. v. Mayor of Navotas

• Petron Corp. v. Mayor of Navotas

• RESIDUAL TAXING POWERS

• Tax on any base or subject not otherwise specifically

• Local Taxing Authority

• REVIEW OF TAX ORDINANCES

•REVIEW OF TAX ORDINANCES

•REVIEW OF TAX ORDINANCES

• EFFECTIVITY OF TAX ORDINANCES

• APPEAL TO SECRETARY OF JUSTICE

• Any question on the constitutionality or legality of tax ordinances or revenue

• APPEAL TO SECRETARY OF JUSTICE

• APPEAL TO SECRETARY OF JUSTICE

• De Lima v. City of Manila, GR No. 222886, October 17, 2018

• De Lima v. City of Manila, GR No. 222886, October 17, 2018

• De Lima v. City of Manila, GR No. 222886, October 17, 2018

MR / MNT MR / MNT MR / MNT

MR / MNT MR / MNT MR / MNT

• CLAIM FOR REFUND

Date of 2 Years 30 Days 15 Days CTA SUPREME

Claim 2-year period. Division En Banc COURT

MR / MNT MR / MNT MR / MNT

Date of 2 Years 15 Days 30 Days SUPREME

MR / MNT MR / MNT MR / MNT

MR / MNT MR / MNT MR / MNT

Taxpayer’s Local Treasurer’s

• “Improvements” refers to valuable addition made to a property or an

• Machinery and equipment consisting of underground tanks, elevated

“Fresh Period-Rule” does not apply

Sec. 231, LGC – Appeal on

u NPC v. CBAA, LBAA-LA UNION

u Except as provided herein, any exemption from payment of RPT

u Tax exemptions or incentives were withdrawn upon the effectivity of

u CA 182, which created NDC, contains no provision exempting from payment

u MIAA v. PASAY CITY

u Records of the Constitutional Commission reveal that what is exempted is

u Is machinery used actually, directly and exclusively for educational

u No protest shall be entertained, unless the tax is first paid.

u Repayment of Excessive Collection – Section 253

“Fresh Period-Rule” does not apply

Correctness and 30 Days 30 Days 15 Days