Beruflich Dokumente
Kultur Dokumente
LAW ON TAXATION
2014 BAR EXAMINATIONS
I. General Principles of Taxation
A. Definition and concept of taxation
Taxation is the power by which the sovereign raises revenue to defray the
necessary expenses of the government. It is merely a way of apportioning
the cost of government among those who in some measure are privileged
to enjoy its benefits and must bear its burdens. It includes, in its broadest
and most general sense, every charge or burden imposed by the sovereign
power upon persons, property, or property rights for the use and support of
the government and to enable it to discharge its appropriate functions, and
in that broad definition there is included a proportionate levy upon persons
or property and all the various other methods and devices by which
revenue is exacted from persons and property for public purposes. (51 Am.
Jur 34-35)
Taxation is described as a destructive power which interferes with the
personal and property rights of the people and takes from them a portion of
their property for the support of the government. (Paseo Realty &
Development Corporation v. Court of Appeals, GR No. 119286, October 13,
2004)
B. Nature of taxation
Taxation is inherent in nature, being an attribute of sovereignty. (Chamber
of Real Estate and Builders Association, Inc. v. Romulo, 614 SCRA 605
(2010))
As an incident of sovereignty, the power to tax has been described as
unlimited in its range, acknowledging in its very nature no limits, so that
security against its abuse is to be found only in the responsibility of the
legislature which imposes the tax on the constituency who are to pay it.
(Mactan Cebu International Airport Authority v. Marcos, 261 SCRA 667
(1996))
The power of taxation is an essential and inherent attribute of sovereignty,
belonging as a matter of right to every independent government, without
being expressly conferred by the people. (Pepsi-Cola Bottling Company of
the Phil. V. Mun. of Tanauan, Leyte, 69 SCRA 460)
The power to tax is inherent in the State, such power being inherently
legislative, based on the principle that taxes are a grant of the people who
are taxed, and the grant must be made by the immediate representative of
the people, and where the people have laid the power, there it must remain
and be exercised. (Commissioner of Internal Revenue v. Fortune Tobacco
Corporation, 559 SCRA 160 (2008))
The power of taxation is essentially a legislative function. The power to tax
includes the authority to:
(1) determine the
(a) nature (kind);
(b) object (purpose);
(c) extent (amount of rate);
(d) coverage (subjects and objects);
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(e) apportionment of the tax (general or limited application); (f) situs (place)
of the imposition; and
(g) method of collection;
(2) grant tax exemptions or condonations; and
(3) specify or provide for the administrative as well as judicial remedies that
either the government or the taxpayer may avail themselves in the proper
implementation of the tax measure. (Petron v. Pililla, GR No. 158881, April
16, 2008)
In other words, the legislature wields the power to define what tax shall be
imposed, why it should be imposed, how much tax shall be imposed,
against whom (or what) it shall be imposed and where it shall be imposed.
It has been the settled law that municipal license fees could be classified
into those imposed for regulating occupations or regular enterprises, for the
regulation or restriction of non-useful occupations or enterprises and for
revenue purposes only. Licenses for non-useful occupations are also
incidental to the police power and the right to exact a fee may be implied
from the power to license and regulate, but in fixing the amount of the
license fees the municipal corporations are allowed a much wider discretion
in this class of cases. (ERMITA-MALATE HOTEL AND MOTEL
OPERATORS ASSOCIATION, INC., HOTEL DEL MAR INC. and GO CHIU
v. THE HONORABLE CITY MAYOR OF MANILA, G.R. No. L-24693, July
31, 1967)
2. Power of eminent domain
Be it stressed that the privilege enjoyed by senior citizens does not come
directly from the State, but rather from the private establishments
concerned. Accordingly, the tax credit benefit granted to these
establishments can be deemed as their just compensation for private
property taken by the State for public use. (COMMISSIONER OF
INTERNAL REVENUE v. CENTRAL LUZON DRUG CORPORATION G.R.
No. 159647 April 15, 2005)
Besides, the taxation power can also be used as an implement for the
exercise of the power of eminent domain. Tax measures are but "enforced
contributions exacted on pain of penal sanctions" and "clearly imposed for
a public purpose." In recent years, the power to tax has indeed become a
most effective tool to realize social justice, public welfare, and the equitable
distribution of wealth. (COMMISSIONER OF INTERNAL REVENUE v.
CENTRAL LUZON DRUG CORPORATION G.R. No. 159647 April 15,
2005)
E. Purpose of taxation
1. Revenue-raising
2. Non-revenue/special or regulatory
The Court was satisfied that the coco-levy funds were raised pursuant to
law to support a proper governmental purpose. They were raised with the
use of the police and taxing powers of the State for the benefit of the
coconut industry and its farmers in general. (PAMBANSANG KOALISYON
NG MGA SAMAHANG MAGSASAKA AT MANGGAGAWA SA NIYUGAN v.
EXECUTIVE SECRETARY G.R. Nos. 147036-37 April 10, 2012)
In relation to the regulatory purpose of the imposed fees, the imposition
questioned must relate to an occupation or activity that so engages the
public interest, morals, safety and development as to require regulation for
the protection and promotion of such public interest; the imposition must
the statutory taxpayer who is directly liable to pay the excise tax on its
petroleum products, is entitled to a refund or credit of the
excise taxes it paid for petroleum products sold to international
carriers (
February 19, 2014)
c) Kinds of tax exemption (i) Express
(ii) Implied
It bears repeating that the law looks with disfavor on tax exemptions and
he who would seek to be thus privileged must justify it by words too plain to
be mistaken and too categorical to be
misinterpreted. (WESTERN MINOLCO CORPORATION
COMMISSIONER OF INTERNAL
REVENUE, G.R. No. L-61632, August 16, 1983)
v.
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(iii) Contractual
Nevertheless, since taxation is the rule and exemption therefrom the
exception, the exemption may thus be withdrawn at the pleasure of the
taxing authority. The only exception to this rule is where the exemption was
granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the nonimpairment clause of the Constitution. (MCIAA v. Marcos, G.R. No. 120082
September 11, 1996)
d) Rationale/grounds for exemption
v.
The PPI says that the discriminatory treatment of the press is highlighted
by the fact that transactions, which are profit oriented, continue to enjoy
exemption under R.A. No. 7716 but an enumeration of some of these
transactions will suffice to show that by and large this is not so and that the
exemptions are granted for a purpose. As the Solicitor General says, such
exemptions are granted, in some cases, to encourage agricultural
production and, in other cases, for the personal benefit of the end-user
rather than for profit.
v. THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
115455, October 30, 1995)
e) Revocation of tax exemption
v.
(ARTURO M. TOLENTINO
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In recent years, the increasing social challenges of the times expanded
the scope of state activity, and taxation has become a tool to realize social
justice and the equitable distribution of wealth, economic progress and the
protection of local industries as well as public welfare and similar
objectives. Taxation assumes even greater significance with the ratification
of the 1987
Constitution. (BATANGAS POWER CORPORATION
BATANGAS CITY and NATIONAL POWER
CORPORATION, G.R. No. 152675, April 28, 2004)
Since the law granted the press a privilege, the law could take back
the privilege anytime without offense to the Constitution. The reason is
simple: by granting exemptions, the State does not forever waive the
exercise of its sovereign prerogative; indeed, in withdrawing the exemption,
the law merely subjects the press to the same tax burden to which other
businesses have long ago been subject. (ARTURO M. TOLENTINO v. THE
SECRETARY OF FINANCE and
THE COMMISSIONER OF INTERNAL REVENUE, G.R. No. 115455,
October 30, 1995)
The rule is that a special and local statute applicable to a particular
case is not repealed by a later statute which is general in its terms,
provisions and application even if the terms of the general act are broad
enough to include the cases in the special law unless there is manifest
the most explicit and categorical language. Tax refunds (or tax credits), on
the other hand, are not founded principally on legislative grace but on the
legal principle which underlies all quasi-contracts abhorring a persons
unjust enrichment at the expense of another. (COMMISSIONER OF
INTERNAL REVENUE v. FORTUNE TOBACCO CORPORATION, G.R.
Nos. 167274-75, July 21, 2008)
(COMMISSIONER OF INTERNAL REVENUE v. FORTUNE TOBACCO
CORPORATION, G.R. Nos. 167274-75, September 11, 2013)
c) Tax rules and regulations (i) General rule only
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There is parity between tax refund and tax exemption only when the
former is based either on a tax exemption statute or a tax refund statute.
Obviously, that is not the situation here since Fortune Tobaccos claim for
refund is premised on its erroneous payment of the tax, or better
still, the governments exaction in the absence of a law.
As a necessary corollary, when the taxpayers entitlement to a refund
stands undisputed, the State should not misuse technicalities and
legalisms, however exalted, to keep money not belonging to it. The
government is not exempt from the application of solutio indebiti, a basic
postulate proscribing one, including the State, from enriching himself or
herself at the expense
of another.
While administrative agencies, such as the Bureau of Internal
Revenue, may issue regulations to implement statutes, they are without
authority to limit the scope of the statute to less than what it provides, or
extend or expand the statute beyond its terms, or in any way modify explicit
provisions of the law. Hence, in case of discrepancy between the basic law
and an interpretative or administrative ruling, the basic law prevails. (FORT
BONIFACIO DEVELOPMENT
CORPORATION v. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 173425, September 4,
2012)
Revenue Memorandum Circulars (RMCs) must not override, supplant, or
modify the law, but must remain consistent and in harmony with the law
they seek to apply and implement.
(COMMISSIONER OF INTERNAL REVENUE v. SM PRIME
HOLDINGS, INC. 613 SCRA 774 (2010))
Admittedly the government is not estopped from collecting taxes legally due
because of mistakes or errors of its agents. But like other principles of law,
this admits of exceptions in the
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interest of justice and fair play, as where injustice will result to the
taxpayer. (COMMISSIONER
OF INTERNAL REVENUE v.
COURT OF APPEALS, G.R. No. 117982, February 6, 1997)
"When a statute is susceptible of the meaning placed upon it by a ruling of
the government agency charged with its enforcement and the [l]egislature
thereafter [reenacts] the provisions [without] substantial change, such
action is to some extent confirmatory that the ruling carries out the
legislative purpose." (COMMISSIONER OF INTERNAL REVENUE v.
AMERICAN EXPRESS INTERNATIONAL, INC. (PHILIPPINE BRANCH),
G.R. No. 152609, June 29, 2005)
d) Penal provisions of tax laws
In criminal cases, statutes of limitations are acts of grace, a surrendering by
the sovereign of its right to prosecute. They receive strict construction in
favour of the Government and limitations in such cases will not be
presumed in the absence of clear legislation. (LIM, et al. v. COURT OF
APPEALS, G.R. No. 48134-37, October 18, 1990)
e) Non-retroactive application to taxpayers
Revenue statutes are substantive laws and in no sense must their
application be equated with that of remedial laws. As well said in a prior
case, revenue laws are not intended to be liberally construed.
Section 30(E) and (G) of the NIRC requires that an institution be "operated
exclusively" for charitable or social welfare purposes to be completely
exempt from income tax. An institution under Section 30(E) or (G) does not
lose its tax exemption if it earns income from its for-profit activities. Such
income from for-profit activities, under the last paragraph of Section 30, is
merely subject to income tax, previously at the ordinary corporate rate but
now at the preferential 10% rate pursuant to Section 27(B).
(COMMISSIONER OF INTERNAL REVENUE v. ST. LUKE'S MEDICAL
CENTER, INC. G.R. No. 195909 September 26, 2012)
A gift tax is not a property tax, but an excise tax imposed on the transfer of
property by way of gift inter vivos, the imposition of which on property used
exclusively for religious purposes, does not constitute an impairment of the
Constitution. The phrase "exempt from taxation," as employed in the
Constitution should not be interpreted to mean exemption from all kinds of
taxes. (REV. FR. CASIMIRO LLADOC v. The COMMISSIONER OF
INTERNAL REVENUE, G.R. No. L-19201, June 16, 1965)
(v) Prohibition against taxation of non-stock, non-profit institutions
An organization may be considered as non-profit if it does not distribute any
part of its income to stockholders or members. However, despite its being a
tax exempt institution, any income such institution earns from activities
conducted for profit is taxable, as expressly provided in the last paragraph
of Section 30. (COMMISSIONER OF INTERNAL REVENUE v. ST. LUKE'S
MEDICAL CENTER, INC. G.R. No. 195909 September 26, 2012)
(vi) Majority vote of Congress for grant of tax exemption
The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ,
hence, the extension of the same to the John Hay SEZ finds no support
therein. The challenged grant of tax exemption would circumvent the
Constitution's imposition that a law granting any tax exemption must have
the concurrence of a majority of all the members of Congress. (JOHN HAY
PEOPLES ALTERNATIVE COALITION, et al. v. VICTOR LIM, et al., G. R.
No. 119775, October 24, 2003)
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(vii) Prohibition on use of tax levied for special purpose
The coco-levy funds, on the other hand, belong to the government and are
subject to its administration and disposition. Thus, these funds, including its
incomes, interests, proceeds, or profits, as well as all its assets, properties,
and shares of stocks procured with such funds must be treated, used,
administered, and managed as public funds; the coco-levy funds are
evidently special funds. (PAMBANSANG KOALISYON NG MGA
SAMAHANG MAGSASAKA AT MANGGAGAWA SA NIYUGAN v.
EXECUTIVE SECRETARY G.R. Nos. 147036-37 April 10, 2012)
(viii) Presidents veto power on appropriation, revenue, tariff bills
(ix) Non-impairment of jurisdiction of the Supreme Court
(x) Grant of power to the local government units to create its own sources
of revenue
For a long time, the country's highly centralized government structure has
bred a culture of dependence among local government leaders upon the
national leadership. The only way to shatter this culture of dependence is to
give the LGUs a wider role in the delivery of basic services, and confer
them sufficient powers to generate their own sources for the purpose.
(NATIONAL POWER CORPORATION v. CITY OF CABANATUAN G.R. No.
149110 April 9, 2003)
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An "item" in a revenue bill does not refer to an entire section imposing a
particular kind of tax, but rather to the subject of the tax and the tax rate;
thus, in the portion of a revenue bill which actually imposes a tax, a section
identifies the tax and enumerates the persons liable therefor with the
corresponding tax rate. To construe the word "item" as referring to the
whole section would tie the President's hand in choosing either to approve
the whole section at the expense of also approving a provision therein
On the other hand the registration fee of P1,000.00 imposed by Sec. 107
of the NIRC, as amended by Sec. 7 of R.A. No. 7716, although fixed in
amount, is really just to pay for the expenses of registration and
enforcement of provisions such as those relating to accounting in Sec. 108
of the NIRC. That the PBS distributes free bibles and therefore is not liable
to pay the VAT does not excuse it from the payment of this fee because it
also sells some copies.
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(ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE and THE
COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 115455, October 30, 1995)
The withdrawal of the exemption did not also violate freedom of religion as
regards the activities of PBS on religious articles, as the Free Exercise of
Religious clause does not prohibit imposing a generally applicable sale and
use tax on the sale of religious materials by a religious organization as held
by the US Supreme Court in Jimmy Swaggart Ministries v. Board of
Equalization (1990).
The VAT registration fee does not constitute censorship of such freedom as
held in the American Bible Society case. The fee is a mere administrative
fee and not imposed on the exercise of a privilege, much less a
constitutional right. But for the purpose of defraying cost of registration
which is a requirement and a central feature in the VAT system so as to
provide record of tax credits of the taxpayer.
(iv) Non-impairment of obligations of contracts
Contractual tax exemptions, in the real sense of the term and where the
non-impairment clause of the Constitution can rightly be invoked, are those
agreed to by the taxing authority in contracts, such as those contained in
government bonds or debentures, lawfully entered into by them under
enabling laws in which the government, acting in its private capacity, sheds
its cloak of authority and waives its governmental immunity. Truly, tax
exemptions of this kind may not be revoked without impairing the
obligations of contracts. but these contractual tax exemptions are not to be
confused with tax exemptions granted under franchisesthe latter
partakes the nature of a grant which is beyond the purview of the nonimpairment clause of the Constitution. (PHILIPPINE AMUSEMENT AND
GAMING CORPORATION (PAGCOR) v. THE BUREAU OF INTERNAL
REVENUE G.R. No. 172087 March 15, 2011)
(ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE
and THE COMMISSIONER OF INTERNAL REVENUE, G.R. No.
115455, October 30, 1995)
J. Stages of taxation 1. Levy
Levy is an exercise of the power to tax, which is exclusively legislative in
nature and character. Clearly, taxes are not levied by the executive branch
of government. (NPC v. Albay, 186 SCRA 198 (1990))
2. Assessment and collection 3. Payment
4. Refund
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Even though such taxation may affect particular contracts, as it may
increase the debt of one person and lessen the security of another, or may
impose additional burdens upon one class and release the burdens of
another, still the tax must be paid unless prohibited by the Constitution, nor
can it be said that it impairs the obligation of any existing contract in its true
legal sense." Indeed not only existing laws but also "the reservation of the
essential attributes of sovereignty, is read into contracts as a postulate of
the legal order." (ARTURO M. TOLENTINO v. THE SECRETARY OF
FINANCE and THE COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 115455, October 30, 1995)
K. Definition, nature, and characteristics of taxes
Taxes are enforced proportional contributions from persons and property,
levied by the State by virtue of its sovereignty for the support of the
N. Kinds of taxes
1. As to object
a) Personal, capitation, or poll tax b) Property tax
c) Privilege tax
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A contractor's tax is generally in the nature of an excise tax on the
exercise of a privilege of selling services or labor rather than a sale on
products; and is directly collectible from the person exercising the privilege.
Being an excise tax, it can be levied by the taxing authority only when the
acts, privileges or business are done or performed within the jurisdiction of
said authority. (COMMISSIONER OF INTERNAL REVENUE v. MARUBENI
CORPORATION, G.R. No.
137377, December 18, 2001)
A franchise tax is a tax on the privilege of transacting business in the
state and exercising corporate franchises granted by the state. It is not
levied on the corporation simply for existing as a corporation, upon its
property or its income, but on its exercise of the rights or privileges
granted to it by the government.
foreign
(5) Personal and additional exemption (R.A. No. 9504, Minimum Wage
Earner Law)
The increased personal and additional exemptions under the NIRC cannot
be availed of by the petitioner for purposes of computing his income tax
liability for the taxable year 1997. Since the NIRC took effect on January 1,
1998, the increased amounts of personal and additional exemptions under
Section 35, can only be allowed as deductions from the individual
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Both depletion and depreciation are predicated on the same basic
promise of avoiding a tax on capital. The allowance for depletion is based
on the theory that the extraction of minerals gradually exhausts the capital
investment in the mineral deposit. The purpose of the depiction deduction
is to permit the owner of a capital interest in mineral in place to make a taxfree recovery of that depleting capital asset. A depletion is based upon the
concept of the exhaustion of a natural resource whereas depreciation is
based upon the concept of the exhaustion of the property, not otherwise a
natural resource, used in a trade or business or held for the production of
income. Thus, depletion and depreciation are made applicable to different
types of assets. And a taxpayer may not deduct
that which the Code allows as of another. (
taxpayers gross or net income, as the case maybe, for the taxable year
1998 to be filed in 1999; the NIRC made no reference that the personal and
additional exemptions shall apply on income earned before January 1,
1998, and it is a rule that tax laws are to be applied prospectively unless its
retroactive application is expressly provided. (Carmelino F. Pansacola vs.
CIR, G.R. No. 159991, November 16, 2006)
(a) Basic personal exemptions
(b) Additional exemptions for taxpayer with dependents (c) Status-at-theend-of-the-year rule
(d) Exemptions claimed by non-resident aliens
(6) Items not deductible (a) General rules
(b) Personal, living or family expenses
(c) Amount paid for new buildings or for permanent improvements (capital
expenditures)
(d) Amount expended in restoring property (major
repairs)
(e) Premiums paid on life insurance policy covering life or any other officer
or employee financially interested
(f) Interest expense, bad debts, and losses from sales of property between
related parties
(g) Losses from sales or exchange or property
(h) Non-deductible interest
(i) Nondeductible taxes
(j) Non-deductible losses
(k) Losses from wash sales of stock or securities
(7) Exempt corporations
(a) Propriety educational institutions and hospitals (b) Government-owned
or controlled corporations (c) Others
10. Taxation of resident citizens, non-resident citizens, and resident aliens
a) General rule that resident citizens are taxable on income from all
sources within and without the Philippines
(i) Non-resident citizens
b) Taxation on compensation income
(i) Inclusions
(a) Monetary compensation
(1) Regular salary/wage
(2) Separation pay/retirement benefit not otherwise exempt
(3) Bonuses, 13th month pay, and other benefits not exempt
(4) Directors fees
(b) Non-monetary compensation
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St. Lukes is a proprietary non-stock and non-profit
paying patients but also derives profit from paying patients. It is subject to
the
hospital
catering to nonpreferential tax rate of 10% for its profit-generating activities under
sec. 27(B) of
NIRC; it cannot be exempt from income tax under sec. 30(E) and (G)
because it
is not organized and operated exclusively for charitable purposes,
which is a
requirement under the aforementioned provision. (
needs of the business, it must be shown that: (1) the controlling intention
of the
taxpayer is manifest at the time of accumulation, not intentions declared
subsequently,
which are mere afterthoughts; and (2) the accumulated profits must
be used within a
reasonable time after the close of the taxable year. (
17. Exemption from tax on corporations
YMCA, a non-stock non-profit corporation with charitable objectives,
claimed
exemption from payment of income tax by invoking the NIRC and the
Constitution.
While the income received by the organizations enumerated in Section
26 of the NIRC
is, as a rule, exempted from the payment of tax in respect to income
received by
them as such, the exemption does not apply to income derived from
any of their
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(Commissioner of Internal Revenue vs. Court of Appeals, et al., G.R. No.
124043, October 14, 1998)
Lung Center, charitable institution, does not lose its character as such and
its exemption from taxes simply because it derives income from paying
patients, whether out-patient, or confined in the hospital, or receives
subsidies from the government, so long as the money received is devoted
or used altogether to the charitable object which it is intended to achieve;
and no money inures to the private benefit of the persons managing or
operating the institution. However, it is not exempt from real property tax as
to the portions of the land leased to private entities as well as those parts of
the hospital leased to private individuals because under the Constitution, it
is only exempt when its real properties are actually, directly, and exclusively
used for charitable purposes. (Lung Center of the Phil. vs. Quezon City, et
al., G.R. No. 144104, June 29, 2004)
18. Taxation of partnerships
19. Taxation of general professional partnerships 20. Withholding tax
a) Concept b) Kinds
(i) Withholding of final tax on certain incomes
(ii) Withholding of creditable tax at source c) Withholding of VAT
d) Filing of return and payment of taxes withheld
(i) Return and payment in case of government employees (ii) Statements
and returns
e) Final withholding tax at source
Citytrust and Asianbank are domestic corporations which paid gross
receipts tax and claimed a refund on the basis of a CTA ruling that the 20%
FWT on a banks passive income does not form part of the taxable gross
receipts. The 20% FWT on a banks interest income forms part of the
taxable gross receipts because gross receipts means the entire receipts
without any deduction; moreover, the imposition of the 20% FWT and 5%
GRT does not constitute double taxation because GRT is a percentage tax
while FWT is an income tax, and the two concepts are different from each
other. (Commissioner of Internal Revenue vs. Citytrust Investment Phils.,
Inc., G.R. Nos. 139786 & 140857, September 27, 2006)
f) Creditable withholding tax
(i) Expanded withholding tax
(ii) Withholding tax on compensation
g) Timing of withholding
B. Estate tax
1. Basic principles
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properties, real or personal, or from any of their activities conducted for
profit,
2. Definition
3. Nature
4. Purpose or object
5. Time and transfer of properties
Post-mortem dispositions typically
(1) Convey no title or ownership to the transferee before the death of the
transferor; or, what amounts to the same thing, that the transferor should
retain the ownership (full or naked) and control of the property while alive;
(2) That before the [donors] death, the transfer should be revocable by the
transferor at will, ad nutum; but revocability may be provided for indirectly
by means of a reserved power in the donor to dispose of the properties
conveyed;
(3) That the transfer should be void if the transferor should survive the
transferee;
[4] [T]he specification in a deed of the causes whereby the act may be
revoked by the donor indicates that the donation is inter vivos, rather than a
disposition mortis causa;
[5] That the designation of the donation as mortis causa, or a provision in
the deed to the effect that the donation is to take effect at the death of the
donor are not controlling criteria; such statements are to be construed
together with the rest of the instrument, in order to give effect to the real
intent of the transferor; and
(6) That in case of doubt, the conveyance should be deemed donation inter
vivos rather than mortis causa, in order to avoid uncertainty as to the
ownership of the property subject of the deed. (GONZALO VILLANUEVA
vs. SPOUSES FROILAN, G.R. No. 172804, January 24, 2011)
The conveyance in question is not, first of all, one of mortis causa, which
should be embodied in a will. In this case, the monies subject of savings
account were in the nature of conjugal funds. In the case relied on, Rivera
v. People's Bank and Trust Co., we rejected claims that a survivorship
agreement purports to deliver one party's separate properties in favor of
the other, but simply, their joint holdings. (ROMARICO G. VITUG vs. THE
HONORABLE COURT OF APPEALS and ROWENA FAUSTINOCORONA, G.R. No. 82027, March 29, 1990)
But although the survivorship agreement is per se not contrary to law its
operation or effect may be violative of the law. For instance, if it be shown
in a given case that such agreement is a mere cloak to hide an inofficious
donation, to transfer property in fraud of creditors, or to defeat the legitime
of a forced heir, it may be assailed and annulled upon such grounds.
(ROMARICO G. VITUG vs. THE HONORABLE COURT OF APPEALS and
ROWENA FAUSTINO- CORONA, G.R. No. 82027, March 29, 1990)
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6. Classification of decedent
7. Gross estate vis-a-vis net estate
8. Determination of gross estate and net estate 9. Composition of gross
estate
10. Items to be included in gross estate
11. Deductions from estate
As held in Propstra v. U.S., where a lien claimed against the estate was
certain and enforceable on the date of the decedent's death, the fact that
the claimant subsequently settled for lesser amount did not preclude the
estate from deducting the entire amount of the claim for estate tax
purposes. These pronouncements essentially confirm the general principle
that post-death developments are not material in determining the amount of
4. Purpose or object
5. Requisites of valid donation
Neither is the survivorship agreement a donation inter vivos, for obvious
reasons, because it was to take effect after the death of one party.
Secondly, it is not a donation between the spouses because it involved no
conveyance of a spouse's own properties to the other. (ROMARICO G.
VITUG vs. THE HONORABLE COURT OF APPEALS and ROWENA
FAUSTINO- CORONA, G.R. No. 82027, March 29, 1990)
In the case at bar, when the spouses Vitug opened savings account, they
merely put what rightfully belonged to them in a money-making venture.
They did not dispose of it in favor of the other, which would have arguably
been sanctionable as a prohibited donation. (ROMARICO G. VITUG vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINOCORONA, G.R. No. 82027, March 29, 1990)
The granting clause shows that Diego donated the properties out of love
and affection for the donee which is a mark of a donation inter vivos;
second, the reservation of lifetime usufruct indicates that the donor
intended to transfer the naked ownership over the properties; third, the
donor reserved sufficient properties for his maintenance in accordance with
his standing in society, indicating that the donor intended to part with the six
parcels of land; lastly, the donee accepted the donation. (SPS. AGRIPINO
GESTOPA and ISABEL SILARIO GESTOPA vs. COURT OF APPEALS,
G.R. No. 111904, October 5, 2000)
In the case of Alejandro vs. Geraldez, 78 SCRA 245 (1977), we said that an
acceptance clause is a mark that the donation is inter vivos. Acceptance is
a requirement for donations inter vivos.
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
49
Donations mortis causa, being in the form of a will, are not required to be
accepted by the donees during the donors' lifetime. (SPS. AGRIPINO
GESTOPA and ISABEL SILARIO GESTOPA vs. COURT OF APPEALS,
G.R. No. 111904, October 5, 2000)
Crucial in resolving whether the donation was inter vivos or mortis causa is
the determination of whether the donor intended to transfer the ownership
over the properties upon the execution of the deed. (SPS. AGRIPINO
GESTOPA and ISABEL SILARIO GESTOPA vs. COURT OF APPEALS,
G.R. No. 111904, October 5, 2000)
A remuneratory donation is one where the donee gives something to
reward past or future services or because of future charges or burdens,
when the value of said services, burdens or charges is less than the value
of the donation. (De Luna v. Abrigo, G.R. No. L-57455, January 18, 1990)
6. Transfers which may be constituted as donation
a) Sale/exchange/transfer of property for insufficient consideration b)
Condonation/remission of debt
7. Transfer for less than adequate and full consideration
8. Classification of donor
9. Determination of gross gift
10. Composition of gross gift
11. Valuation of gifts made in property
12. Tax credit for donors taxes paid in a foreign country
13. Exemptions of gifts from donors tax
14. Person liable
15. Tax basis
D. Value-Added Tax (VAT) 1. Concept
As its name implies, the Value-Added Tax system is a tax on the value
added by the taxpayer in the chain of transactions. For simplicity and
efficiency in tax collection, the VAT is imposed not just on the value added
by the taxpayer, but on the entire selling price of his goods, properties or
services. (COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE
POWER CORPORATION, G.R. No. 187485, February 12, 2013)
However, the taxpayer is allowed a refund or credit on the VAT previously
paid by those who sold him the inputs for his goods, properties, or services.
The net effect is that the taxpayer pays the VAT only on the value that he
adds to the goods, properties, or services that he actually sells.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
50
VAT is a tax on transactions, imposed at every stage of the distribution
process on the sale, barter, exchange of goods or property, and on the
performance of services, even in the absence of profit attributable thereto.
The term "in the course of trade or business" requires the regular conduct
or pursuit of a commercial or an economic activity, regardless of whether or
not the entity is profit-oriented. (COMMISSIONER OF INTERNAL
REVENUE vs. COURT OF APPEALS, G.R. No. 125355, March 30, 2000)
The VAT is not a license tax; it is not a tax on the exercise of a privilege,
much less a constitutional right. It is imposed on the sale, barter, lease or
exchange of goods or properties or the sale or exchange of services and
the lease of properties purely for revenue purposes.
2. Characteristics/Elements of a VAT-Taxable transaction
VAT is not a singular-minded tax on every transactional level; its
assessment bears direct relevance to the taxpayer's role or link in the
production chain. Hence, as affirmed by Section 99 [now Sec. 105] of the
Tax Code and its subsequent incarnations, the tax is levied only on the
sale, barter or exchange of goods or services by persons who engage in
such activities, in the course of trade or business. (COMMISSIONER OF
INTERNAL REVENUE vs. MAGSAYSAY LINES, INC., G.R. No. 146984.
July 28, 2006)
The Court rules that given the undisputed finding that the transaction in
question was not made in the course of trade or business of the seller,
NDC that is, the sale is not subject to VAT pursuant to Section 99 [now Sec.
105] of the Tax Code, no matter how the said sale may hew to those
transactions deemed sale as defined under Section 100 [now Sec. 106].
(COMMISSIONER OF INTERNAL REVENUE vs. MAGSAYSAY LINES,
INC., G.R. No. 146984. July 28, 2006)
Goods or properties must be used directly or indirectly in the production or
sale of taxable goods and services. (Kepco Philipppines Corp. v. CIR, G.R.
No. 179356, December 14, 2009)
it is immaterial whether the primary purpose of a corporation indicates that
it receives payments for services rendered to its affiliates on a
reimbursement-on-cost basis only, without realizing profit, for purposes of
determining liability for VAT on services rendered. As long as the entity
provides service for a fee, remuneration or consideration, then the service
rendered is subject to VAT. (COMMISSIONER OF INTERNAL REVENUE
vs. COURT OF APPEALS, G.R. No. 125355, March 30, 2000)
51
(ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE and THE
COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 115455, October 30, 1995)
Thus, there must be a sale, barter or exchange of goods or properties
before any VAT may be levied. Certainly, there was no such sale, barter or
exchange in the subsidy given by SIS to Sony; it was but a dole out by SIS
and not in payment for goods or properties sold, bartered or exchanged by
Sony. (COMMISSIONER OF INTERNAL REVENUE vs. SONY
PHILIPPINES, INC., G.R. No. 178697, November 17, 2010)
3. Impact of tax
4. Incidence of tax
Under Section 105 of the Tax Code, VAT is imposed on any person who, in
the course of trade or business, sells or renders services for a fee. In other
words, the seller of services, who in this case is the tollway operator, is the
person liable for VAT. The latter merely shifts the burden of VAT to the
tollway user as part of the toll fees. (RENATO V. DIAZ and AURORA MA. F.
TIMBOL vs. THE SECRETARY OF FINANCE, G.R. No. 193007, July 19,
2011)
territory are deemed exports and treated as export sales. (CIR v. Seksui
Jushi Phils, Inc. G.R. No. 149671, July 21, 2006)
For as long as the goods remain within the zone, whether we call it an
economic zone or a freeport zone, for as long as we say in this law that all
goods entering this particular territory will be duty-free and tax-free, for as
long as they remain there, consumed there or re-exported or destroyed in
that place, then they are not subject to duties and taxes in accordance with
the laws of the Philippines. (Coconut Oil Refiners Association v. Executive
Secretary, G.R. No. 132527, July 29, 2005)
7. Persons liable
8. VAT on sale of goods or properties
Goods, as commonly understood in the business sense, refer to the
product which the VAT- registered person offers for sale to the public. With
respect to real estate dealers, it is the real properties themselves which
constitute their goods. Such real properties are the operating assets of the
real estate dealer. (Fort Bonifacio Development Corporation vs. CIR, G.R.
Nos. 158885 and 170630, April 2, 2009)
a) Requisites of taxability of sale of goods or properties
9. Zero-rated sales of goods or properties, and effectively zero-rated sales
of goods or properties
Zero-rated transactions generally refer to the export sale of goods and
supply of services. The tax rate is set at zero and when applied to the tax
base, such rate obviously results in no tax chargeable against the
purchaser. The seller of such transactions charges no output tax, but can
claim a refund of or a tax credit certificate for the VAT previously charged
by suppliers. (COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES), G.R. No. 153866, February 11, 2005)
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
53
Mindanao IIs sale of the Nissan Patrol is said to be an isolated transaction.
However, it does not follow that an isolated transaction cannot be an
incidental transaction for purposes of VAT liability. Indeed, a reading of
Section 105 of the 1997 Tax Code would show that a transaction "in the
course of trade or business" includes "transactions incidental thereto."
(MINDANAO II GEOTHERMAL PARTNERSHIP vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 193301, March 11, 2013)
Prior to the sale, the Nissan Patrol was part of Mindanao IIs property,
plant, and equipment. Therefore, the sale of the Nissan Patrol is an
incidental transaction made in the course of Mindanao IIs business which
should be liable for VAT. (MINDANAO II GEOTHERMAL PARTNERSHIP
vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 193301, March
11, 2013)
refund of the amount it paid as VAT on the ground that its transaction with
PAGCOR was subject to zero rate as it was rendered to a tax-exempt
entity. The Court ruled that PAGCOR and Acesite were both exempt from
paying VAT. (PHILIPPINE AMUSEMENT AND GAMING CORPORATION
(PAGCOR) vs. THE BUREAU OF INTERNAL REVENUE, G.R. No.
172087, March 15, 2011)
No prior application for the effective zero rating of its transactions is
necessary. The BIR regulations additionally requiring an approved prior
application for effective zero rating cannot prevail over the clear VAT nature
of respondent's transactions. Other than the general registration of a
taxpayer the VAT status of which is aptly determined, no provision under
our VAT law requires an additional application to be made for such
taxpayer's transactions to be considered effectively zero-rated.
(COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES), G.R. No. 153866, February 11, 2005)
54
The Omnibus Investments Code of 1987 recognizes as export sales the
sales of export products to another producer or to an export trader,
provided that the export products are actually exported. For purposes of
VAT zero-rating, such producer or export trader must be registered with the
BOI and is required to actually export more than 70% of its annual
production. (ATLAS CONSOLIDATED MINING AND DEVELOPMENT
CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.
Nos. 141104 & 148763, June 8, 2007)
In terms of the VAT computation, zero rating and exemption are the same,
but the extent of
relief that results from either one of them is not. In both instances of zero
rating, there is total relief for the purchaser from the burden of the tax but in
an exemption there is only partial relief, because the purchaser is not
allowed any tax refund of or credit for input taxes paid. (COMMISSIONER
OF INTERNAL REVENUE vs. SEAGATE TECHNOLOGY (PHILIPPINES),
G.R. No. 153866, February 11, 2005)
10. 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
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
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
11. Change or cessation of status as VAT-registered person
a) Subject to VAT
(i) Change of business activity from VAT taxable status to VAT-exempt
status
(ii) Approval of request for cancellation of a registration due to reversion to
exempt status
(iii) Approval of request for cancellation of registration due to desire to
revert to exempt status after lapse of 3 consecutive years
b) Not subject to VAT
(i) Change of control of a corporation
(ii) Change in the trade or corporate name
(iii) Merger or consolidation of corporations
12. VAT on importation of goods
a) Transfer of goods by tax exempt persons
13. VAT on sale of service and use or lease of properties
55
Service has been defined as the art of doing something useful for a person
or company for a fee or useful labor or work rendered or to be rendered
another for a fee. (CIR v. American Express International, Inc., G.R. No.
152609, June 29, 2005)
By qualifying "services" with the words "all kinds," Congress has given the
term "services" an all-encompassing meaning. The listing of specific
services are intended to illustrate how pervasive and broad is the VAT's
reach rather than establish concrete limits to its application; thus, every
activity that can be imagined as a form of "service" rendered for a fee
should be deemed included unless some provision of law especially
excludes it. (RENATO V. DIAZ and AURORA MA. F. TIMBOL vs. THE
SECRETARY OF FINANCE, G.R. No. 193007, July 19, 2011)
Tollway operators not only come under the broad term "all kinds of
services," they also come under the specific class described in Section 108
as "all other franchise grantees" who are subject to VAT, "except those
under Section 119 of this Code." Tollway operators are franchise grantees
and they do not belong to exceptions (the low-income radio and/or
television broadcasting companies with gross annual incomes of less than
P10 million and gas and water utilities) that Section 119 spares from the
payment of VAT. (RENATO V. DIAZ and AURORA MA. F. TIMBOL vs. THE
SECRETARY OF FINANCE, G.R. No. 193007, July 19, 2011)
In specifically including by way of example electric utilities, telephone,
telegraph, and broadcasting companies in its list of VAT-covered
businesses, Section 108 opens other companies rendering public service
for a fee to the imposition of VAT. Businesses of a public nature such as
public utilities and the collection of tolls or charges for its use or service is a
franchise. (RENATO V. DIAZ and AURORA MA. F. TIMBOL vs. THE
SECRETARY OF FINANCE, G.R. No. 193007, July 19, 2011)
In the case of CIR v. Court of Appeals (CA), the Court had the occasion to
rule that services rendered for a fee even on reimbursement-on-cost basis
only and without realizing profit are also subject to VAT. In that case,
COMASERCO rendered service to its affiliates and, in turn, the affiliates
paid the former reimbursement-on-cost which means that it was paid the
cost or
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
a) Requisites for taxability 14. Zero-rated sale of services 15. VAT exempt
transactions
56
expense that it incurred although without profit. (COMMISSIONER OF
INTERNAL REVENUE vs. SONY PHILIPPINES, INC., G.R. No. 178697,
November 17, 2010)
Among those included in the enumeration is the lease of motion picture
films, films, tapes and discs. This, however, is not the same as the
showing or exhibition of motion pictures or films. The legislative intent is not
to impose VAT on persons already covered by the amusement tax and this
holds true even in the case of cinema/theater operators taxed under the
LGC of 1991 precisely because the VAT law was intended to replace the
percentage tax on certain services. (CIR v. SM Prime Holdings, Inc. and
First Asia Realty Development Corp., G.R. No. 183505, February 26, 2010)
An exempt transaction involves goods or services which, by their nature,
are specifically listed in and expressly exempted from the VAT under the
Tax Code, without regard to the tax status VAT-exempt or not of the
party to the transaction. Indeed, such transaction is not subject to the VAT,
but the seller is not allowed any tax refund of or credit for any input taxes
paid. (COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES), G.R. No. 153866, February 11, 2005)
An exempt party, on the other hand, is a person or entity granted VAT
exemption under the Tax Code, a special law or an international agreement
to which the Philippines is a signatory, and by virtue of which its taxable
transactions become exempt from the VAT. Such party is also not subject to
the VAT, but may be allowed a tax refund of or credit for input taxes paid,
depending on its registration as a VAT or non-VAT taxpayer.
(COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES), G.R. No. 153866, February 11, 2005)
a) VAT exempt transactions, in general
VAT registered taxpayers, who do not have any output VAT. The phrase
"except transitional input tax" in Section 112 of the Tax Code was inserted
to distinguish creditable input tax from transitional input tax credit. (FORT
BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 173425, January 22, 2013)
It is apparent that the transitional input tax credit operates to benefit
newly VAT-registered persons, whether or not they previously paid taxes in
the acquisition of their beginning inventory of goods, materials and
supplies. During that period of transition from non-VAT to VAT
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
status, the transitional input tax credit serves to alleviate the impact of the
VAT on the taxpayer. (FORT BONIFACIO DEVELOPMENT
CORPORATION vs.COMMISSIONER OF INTERNAL REVENUE, G.R. No.
173425, January 22, 2013)
18. Persons who can avail of input tax credit
In a VAT-exempt transaction, the seller is not allowed to charge VAT to his
customer. Since no output tax is shifted by the seller, there is no output tax
against which the related input taxes may be credited. Neither can he credit
this input tax against the VAT due on other sales. In this case, he is treated
as the end user who will shoulder the cost of the input VAT.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
Unlike the input taxes related to exempt sales, input taxes related to zerorated sales may be credited against output taxes on other sales and in
case it is not fully utilized, the excess may be carried over to the
succeeding quarter or quarters and there is no prescription period for the
carry-over. The law gives the taxpayer another option for the recovery of
used input taxes: application for refund or tax credit certificate.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
19. Determination of output/input tax; VAT payable; excess input tax credits
a) Determination of output tax
b) Determination of input tax creditable
c) Allocation of input tax on mixed transactions
d) Determination of the output tax and VAT payable and computation of
VAT payable or excess tax credits
20. Substantiation of input tax credits
21. Refund or tax credit of excess input tax
If, however, the input taxes exceed the output taxes, the excess shall be
carried over to the succeeding quarter or quarters. Should the input taxes
result from zero-rated or effectively zero-rated transactions or from the
acquisition of capital goods, any excess over the output taxes shall instead
be refunded to the taxpayer or credited against other internal revenue
taxes. (COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES), G.R. No. 153866, February 11, 2005)
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58
While a tax liability is essential to the availment or use of any tax credit,
prior tax payments are not. On the contrary, for the existence or grant
solely of such credit, neither a tax liability nor a
prior tax payment is needed. (FORT BONIFACIO DEVELOPMENT
CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 173425, January 22, 2013)
As regards Section 110, while the law only provides for a tax credit, a
taxpayer who erroneously or excessively pays his output tax is still entitled
to recover the payments he made either as a tax credit or a tax refund. In
this case, since petitioner still has available transitional input tax credit, it
filed a claim for refund to recover the output VAT it erroneously or
excessively paid for the 1st quarter of 1997. Thus, there is no reason for
denying its claim for tax refund/credit. (FORT BONIFACIO DEVELOPMENT
CORPORATION vs.COMMISSIONER OF INTERNAL REVENUE, G.R. No.
173425, January 22, 2013)
The input VAT is not "excessively" collected as understood under Section
229 because at the time the input VAT is collected the amount paid is
correct and proper. The person legally liable for the input VAT cannot claim
that he overpaid the input VAT by the mere existence of an "excess" input
VAT. The term "excess" input VAT simply means that the input VAT
available as credit exceeds the output VAT, not that the input VAT is
excessively collected because it is more than what is legally due. Thus, the
taxpayer who legally paid the input VAT cannot claim for refund or credit of
the input VAT as "excessively" collected under Section 229.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
If such "excess" input VAT is an "excessively" collected tax, the taxpayer
should be able to seek a refund or credit for such "excess" input VAT
whether or not he has output VAT. The VAT System does not allow such
refund or credit and such "excess" input VAT is not an "excessively"
collected tax under Section 229. (COMMISSIONER OF INTERNAL
REVENUE vs. SAN ROQUE POWER CORPORATION, G.R. No. 187485,
February 12, 2013)
a) Who may claim for refund/apply for issuance of tax credit certificate
Having determined that respondent's purchase transactions are subject to
a zero VAT rate, the tax refund or credit is in order. To repeat, the VAT is a
tax imposed on consumption, not on business. Although respondent as an
entity is exempt, the transactions it enters into are not necessarily so. The
VAT payments made in excess of the zero rate that is imposable may
certainly be refunded or credited. (COMMISSIONER OF INTERNAL
REVENUE vs. SEAGATE TECHNOLOGY (PHILIPPINES), G.R. No.
153866, February 11, 2005)
b) Period to file claim/apply for issuance of tax credit certificate
The Court, in San Roque, ruled that equitable estoppel had set in when
respondent issued BIR Ruling No. DA-489-03 which was a general
interpretative rule, which effectively misled all taxpayers into filing
premature judicial claims with the CTA. Thus, taxpayers could rely on the
ruling from its issuance on 10 December 2003 up to its reversal on 6
October 2010, when CIR v. Aichi Forging Company of Asia, lnc. was
promulgated. (PROCTER & GAMBLE ASIA PTE LTD. vs.COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 202071, February 19, 2014)
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59
Even if the law does not expressly state that the Ironcons excess
creditable VAT withheld is refundable, it may be the subject-of a claim for
refund as an erroneously collected tax under Sec. 204 (C) and 229 of the
NIRC. It should be clarified that this ruling only refers to creditable VAT
withheld pursuant to Sec. 114 of the NIRC prior to its amendment. After its
amendment by R.A. 9337, the amount withheld under Sec. 114 of the NIRC
is now treated as final VAT, no longer under the creditable withholding tax
system (CIR v. Ironcon Builders and Development Corp., G.R. No. 180042,
February 8, 2010)
In a nutshell, the rules on the determination of the prescriptive period for
filing a tax refund or credit of unutilized input VAT, as provided in Section
112 of the Tax Code, are as follows:
(1) An administrative claim must be filed with the CIR within two years
after the close of the taxable quarter when the zero-rated or effectively
zero-rated sales were made.
60
(2) The CIR has 120 days from the date of submission of complete
documents in support of the administrative claim within which to decide
whether to grant a refund or issue a tax credit certificate. The 120-day
period may extend beyond the two-year period from the filing of the
administrative claim if the claim is filed in the later part of the two-year
period. If the 120-day period expires without any decision from the CIR,
then the administrative claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the CTA within 30 days from the
receipt of the CIRs decision denying the administrative claim or from the
expiration of the 120-day period without any action from the CIR.
(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the
time of its issuance on 10 December 2003 up to its reversal by this Court in
Aichi on 6 October
2010, as an exception to the mandatory and jurisdictional 120+30 day
periods. (COMMISSIONER OF INTERNAL REVENUE vs.TOLEDO
POWER, INC., G.R. No. 183880, January 20, 2014)
The lessons of this case may be summed up as follows: A. Two-Year
Prescriptive Period
1. It is only the administrative claim that must be filed within the twoyear prescriptive period. (Aichi)
2. The proper reckoning date for the two-year prescriptive period is the
close of the taxable quarter when the relevant sales were made. (San
Roque)
3. The only other rule is the Atlas ruling, which applied only from 8 June
2007 to 12 September 2008. Atlas states that the two-year prescriptive
period for filing a claim for tax refund or credit of unutilized input VAT
payments should be counted from the date of filing of the VAT return and
payment of the tax. (San Roque)
B. 120+30 Day Period
1. The taxpayer can file an appeal in one of two ways: (1) file the judicial
claim within thirty days after the Commissioner denies the claim within the
120-day period, or (2) file
the judicial claim within thirty days from the expiration of the 120-day period
if the Commissioner does not act within the 120-day period.
2. The 30-day period always applies, whether there is a denial or inaction
on the part of the CIR.
3. As a general rule, the 3 0-day period to appeal is both mandatory and
jurisdictional. (Aichi and San Roque)
4. As an exception to the general rule, premature filing is allowed only if
filed between
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61
10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03
was still in force. (San Roque)
5. Late filing is absolutely prohibited, even during the time when BIR Ruling
No. DA-489- 03 was in force. (San Roque) (COMMISSIONER OF
INTERNAL REVENUE vs. MINDANAO II GEOTHERMAL PARTNERSHIP,
G.R. No. 191498, January 15, 2014)
It is indisputable that compliance with the 120-day waiting period is
mandatory and jurisdictional. Failure to comply with the 120-day waiting
period violates a mandatory provision of law. It violates the doctrine of
exhaustion of administrative remedies and renders the petition premature
and thus without a cause of action, with the effect that the CTA does not
acquire jurisdiction over the taxpayers petition. (MINDANAO II
GEOTHERMAL PARTNERSHIP vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 193301, March 11, 2013)
Stated otherwise, the two-year prescriptive period does not refer to the
filing of the judicial claim with the CTA but to the filing of the administrative
claim with the Commissioner. As held in Aichi, the "phrase within two years
x x x apply for the issuance of a tax credit or refund refers to applications
for refund/credit with the CIR and not to appeals made to the CTA."
(MINDANAO II GEOTHERMAL PARTNERSHIP vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 193301, March 11, 2013)
San Roque's failure to comply with the 120-day mandatory period
renders its petition for review with the CTA void as Article 5 of the Civil
Code provides, "Acts executed against provisions of mandatory or
prohibitory laws shall be void, except when the law itself authorizes their
validity." San Roque's void petition for review cannot be legitimized by the
CTA or this Court because Article 5 of the Civil Code states that such void
petition cannot be legitimized "except when the law itself authorizes [its]
validity," and there is no law authorizing the petition's validity.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
Sec. 112(A) clearly provides in no uncertain terms that unutilized input VAT
payments not otherwise used for any internal revenue tax due the taxpayer
must be claimed within two years reckoned from the close of the taxable
quarter when the relevant sales were made pertaining to the input VAT
regardless of whether said tax was paid or not. The reckoning frame would
always be the end of the quarter when the pertinent sales or transaction
was made, regardless when the input VAT was paid.(COMMISSIONER OF
INTERNAL REVENUE vs. MIRANT PAGBILAO CORPORATION, G.R. No.
172129. September 12, 2008)
This prescriptive period has no relation to the date of payment of the
"excess" input VAT since the "excess" input VAT may have been paid for
more than two years but this does not bar the filing of a judicial claim for
"excess" VAT under Section 112 (A), which has a different reckoning period
from Section 229. Moreover, the person claiming the refund or credit of the
input VAT is not the person who legally paid the input VAT.
(COMMISSIONER OF INTERNAL REVENUE vs. SAN ROQUE POWER
CORPORATION, G.R. No. 187485, February 12, 2013)
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The mere filing by a taxpayer of a judicial claim with the CTA before the
expiration of the 120- day period cannot operate to divest the
Commissioner of his jurisdiction to decide an administrative claim within the
120-day mandatory period, unless the Commissioner has clearly given
cause for equitable estoppel to apply as expressly recognized in Section
246 of the Tax Code. (COMMISSIONER OF INTERNAL REVENUE vs.
SAN ROQUE POWER CORPORATION, G.R. No. 187485, February 12,
2013)
Because the 120+30 day period is jurisdictional, the issue of whether
petitioner complied with the said time frame may be broached at any stage,
even on appeal. (NIPPON EXPRESS (PHILIPPINES) CORPORATION vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 196907, March 13,
2013)
c) Manner of giving refund
d) Destination principle or cross-border doctrine 22. Invoicing requirements
62
For a judicial claim for refund to prosper, however, respondent must not
only prove that it is a VAT registered entity and that it filed its claims within
the prescriptive period.It must substantiate the input VAT paid by purchase
invoices or official receipts: 1) A "sales or commercial invoice" is a written
account of goods sold or services rendered indicating the prices charged
therefor or a list by whatever name it is known which is used in the ordinary
course of business evidencing sale and transfer or agreement to sell or
transfer goods and services; and 2) A "receipt" on the other hand is a
written acknowledgment of the fact of payment in money or other
settlement between seller and buyer of goods, debtor or creditor, or person
rendering services and client or customer. (ATLAS CONSOLIDATED
MINING AND DEVELOPMENT CORPORATION vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. Nos. 141104 & 148763, June 8, 2007)
a) Invoicing requirements in general
The requisite that the receipt be issued showing the name, business style,
if any, and address of the purchaser, customer or client is precise so that
when the books of accounts are subjected to a tax audit examination, all
entries therein could be shown as adequately supported and proven as
legitimate business transactions. The absence of official receipts issued in
the taxpayer's name is tantamount to non-compliance with the
substantiation requirements provided by law. (BONIFACIO WATER
CORPORATION (formerly BONIFACIO VIVENDI WATER CORPORATION)
vs. THE COMMISSIONER OF INTERNAL REVENUE, G.R. No. 175142,
July 22, 2013)
Taxpayers claiming for a refund or tax credit certificate must comply with
the strict and mandatory invoicing and accounting requirements provided
under the 1997 NIRC, as amended, and its implementing rules and
regulations. Thus, the change of petitioner's name to "Bonifacio GDE Water
Corporation," being unauthorized and without approval of the SEC, and the
issuance of official receipts under that name which were presented to
support petitioner's claim for tax refund, cannot be used to allow the grant
of tax refund or issuance of a tax credit certificate in petitioner's favor.
(BONIFACIO WATER CORPORATION (formerly BONIFACIO VIVENDI
WATER CORPORATION) vs. THE COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 175142, July 22, 2013)
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Failure to print the word zero-rated on the invoices or receipts is fatal to a
claim for credit of refund of input VAT on zero-rated sales (J.R.A.
Philippines, Inc. v. CIR, G.R. No. 177127, October 11, 2010)
If the claim for refund/ tax credit certificate is based on the existence of
zero-rated sales by the taxpayer but it fails to comply with the invoicing
requirements in the issuance of sales invoices (e.g. failure to indicate the
TIN), its claim for tax credit/refund of VAT on its purchases shall be denied
considering that the invoice it is issuing to its customers does not depict its
being a VAT- registered taxpayer whose sales are classified as zero-rated
sales. Nonetheless, this treatment is without prejudice to the right of the
taxpayer to charge the input taxes to the appropriate expense account or
asset account subject to depreciation, whichever is applicable (Panasonic
Comm. Imaging Corp. of the Phil. v. CIR, G.R. No. 178090, February 8,
2010)
b) Invoicing and recording deemed sale transactions
c) Consequences of issuing erroneous VAT invoice or VAT official receipt
23. Filing of return and payment
24. Withholding of final VAT on sales to government
TAX REMEDIES UNDER THE NIRC a) Assessment
(i) Concept of assessment
(a) Requisites for valid assessment
(b) Constructive methods of income determination
63
An assessment contains not only a computation of tax liabilities, but also
a demand for payment within a prescribed period. It also signals the time
when penalties and protests begin to accrue against the taxpayer. To
enable the taxpayer to determine his remedies thereon, due process
requires that it must be served on and received by the taxpayer.
Accordingly, an affidavit, which was executed by revenue officers stating
the tax liabilities of a taxpayer and attached to a criminal complaint for tax
evasion, cannot be deemed an assessment that can be questioned before
the Court of Tax Appeals. (CIR vs
Pascor Realty and Development Corp., GR no. 128315, June 29, 1999)
The rule is that in the absence of the accounting records of a
taxpayer, his tax liability may be determined by estimation. The petitioner is
not required to compute such tax liabilities with mathematical exactness.
Approximation in the calculation of the taxes due is justified. To hold
otherwise would be tantamount to holding that skillful concealment is an
invincible barrier to proof. However, the rule does not apply where the
estimation is arrived at arbitrarily and capriciously. In fine, then, the
petitioner acted arbitrarily and capriciously in relying on and giving weight
to the machine copies of the Consumption Entries in fixing the tax
deficiency assessments against the respondent. (CIR vs Hantex Trading
Co., GR no. 136975, March 31, 2005)
The "best evidence" envisaged in Section 16 of the 1977 NIRC [now
Sec. 6, 1997 NIRC], as amended, includes the corporate and accounting
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
64
records of the taxpayer who is the subject of the assessment process, the
accounting records of other taxpayers engaged in the same line of
business, including their gross profit and net profit sales. The law allows the
BIR access to all relevant or material records and data in the person of the
taxpayer. It places no limit or condition on the type or form of the medium
by which the record subject to the order of the BIR is kept. The purpose of
the law is to enable the BIR to get at the taxpayers records in whatever
form they may be kept. Such records include computer tapes of the said
records prepared by the taxpayer in the course of business.68 In this era of
developing information-storage technology, there is no valid reason to
immunize companies with computer-based, record-keeping capabilities
from BIR scrutiny. The standard is not the form of the record but where it
might shed light on the accuracy of the taxpayers return.
However, the best evidence obtainable under Section 16 of the
1977
NIRC [now Sec. 6, 1997 NIRC], as amended, does not include mere
photocopies of records/documents. The petitioner, in making a preliminary
and final tax deficiency assessment against a taxpayer, cannot anchor the
said assessment on mere machine copies of records/documents. Mere
photocopies of the Consumption Entries have no probative weight if offered
as proof of the contents thereof. (CIR vs Hantex Trading Co., GR no.
136975, March 31, 2005)
(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
For the purpose of safeguarding taxpayers from any unreasonable
examination, investigation or assessment, our tax law provides a statute of
limitations in the collection of taxes. Thus, the law on prescription, being a
remedial measure, should be liberally construed in order to afford such
protection. As a corollary, the exceptions to the law on prescription should
perforce be strictly construed. Sec. 15 of the NIRC, on the other hand,
provides that "[w]hen a report required by law as a basis for the
assessment of any national internal revenue tax shall not be forthcoming
within the time fixed by law or regulation, or when there is reason to believe
that any such
report is false, incomplete, or erroneous, the Commissioner of Internal
Revenue shall assess the proper tax on the best evidence obtainable."
Clearly, Section 15 does not provide an exception to the statute of
limitations on the issuance of an assessment, by allowing the initial
assessment to be made on the basis of the best evidence available. Having
made its initial assessment in the manner prescribed, the commissioner
could not have been authorized to issue, beyond the five-year prescriptive
period, the second and the third assessments under consideration before
us. (CIR vs BF Goodrich Phils., Inc., GR no. 104171, February 24, 1999)
(iii) When assessment is made
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An assessment is deemed made only when the collector of internal
revenue releases, mails or sends such notice to the taxpayer. (CIR vs
Pascor Realty and
Development Corp., GR no. 128315, June 29, 1999)
(a)Prescriptive period for assessment
The statute of limitations on assessment and collection of taxes is for the
protection of the taxpayer and, thus, shall be construed liberally in his favor.
Though the statute of limitations on assessment and collection of national
internal revenue taxes benefits both the Government and the taxpayer, it
principally intends to afford protection to the taxpayer against unreasonable
investigation. The indefinite extension of the period for assessment is
unreasonable because it deprives the said taxpayer of the assurance that
he will no longer be subjected to further investigation for taxes after the
become final, executory and enforceable for failure of the taxpayer to assail
the same as provided in Section
228 can no longer be contested. (
148380, December 9, 2005)
Oceanic Network Wireless Inc., GR
The request for reinvestigation and reconsideration was in effect
considered denied by petitioner when the latter filed a civil suit for collection
of deficiency income. Under the circumstances, the Commissioner of
Internal Revenue, not having clearly signified his final action on the
disputed assessment, legally the period to appeal has not commenced to
run. Thus, it was only when private respondent received the summons on
the civil suit for collection of deficiency income on December 28, 1978 that
the period to appeal commenced to run. (CIR vs Union Shipping
Corporation,
GR L-66160, May 21, 1990)
The letter of February 18, 1963, in the view of the Court, is
tantamount to a denial of the reconsideration or protest of the respondent
corporation on the assessment made by the petitioner, considering that the
said letter is in itself a reiteration of the demand by the Bureau of Internal
Revenue for the settlement of the assessment already made, and for the
immediate payment of the sum of P758, 687.04 in spite of the vehement
protest of the respondent corporation on April 21, 1961. This certainly is a
clear indication of the firm stand of petitioner against the reconsideration of
the disputed assessment in view of the continued refusal of the respondent
corporation to execute the waiver of the period of limitation upon the
assessment in question. (CIR vs Ayala Securities Corp., GR L29485, March 31, 1976)
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(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
In case the Commissioner failed to act on the disputed assessment within
the 180-day period from date of submission of documents, a taxpayer can
either: (1) file a petition for review with the Court of Tax Appeals within 30
days after the expiration of the 180-day period; or (2) await the final
decision of the Commissioner on the disputed assessments and appeal
such final decision to the Court of Tax Appeals within 30 days after receipt
of a copy of such decision. (RCBC vs CIR, G.R. No. 168498, April 24,
2007)
(c) Effect of failure to appeal b) Collection
(i) Requisites
(ii) Prescriptive periods
The BIR has three years, counted from the date of actual filing of the return
or from the last date prescribed by law for the filing of such return,
whichever comes later, to assess a national internal revenue tax or to begin
a court proceeding for the collection thereof without an assessment. In
case of a false or fraudulent return with intent to evade tax or the failure to
file any return at all, the prescriptive period for assessment of the tax due
shall be 10 years from discovery by the BIR of the falsity, fraud, or
omission. When the BIR validly issues an assessment, within either the
three-year or ten-year period, whichever is appropriate, then the BIR has
another three years [now 5 years under Sec. 222, 1997 NIRC] after the
assessment within which to collect the national internal revenue tax due
thereon by distraint, levy, and/or court proceeding. (BPI vs CIR, GR
139736, October 17, 2005)
Under Section 223(c) of the Tax Code of 1977, as amended, it is not
essential that the Warrant of Distraint and/or Levy be fully executed so that
it can suspend the running of the statute of limitations on the collection of
the tax. It is enough that the proceedings have validly began or
commenced and that their execution has not been suspended by reason of
the voluntary desistance of the respondent BIR Commissioner. Existing
jurisprudence establishes that distraint and levy proceedings are validly
begun or commenced by the issuance of the Warrant and service thereof
on the taxpayer. It is only logical to require that the Warrant of Distraint
and/or Levy be, at the very least, served upon the taxpayer in order to
suspend the running of the prescriptive period for collection of an assessed
tax, because it may only be upon the service of the Warrant that the
taxpayer is informed of the denial by the BIR of any pending protest of the
said taxpayer, and the resolute intention of the BIR to collect the tax
assessed. (BPI vs CIR, GR 139736, October 17, 2005)
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
71
While we may agree with the Court of Tax Appeals that a mere request for
reexamination or reinvestigation may not have the effect of suspending the
running of the period of limitation for in such case there is need of a written
agreement to extend the period between the Collector and the taxpayer,
there are cases however where a taxpayer may be prevented from setting
up the defense of prescription even if he has not previously waived it in
writing as when by his repeated requests or positive acts the Government
has been, for good reasons, persuaded to postpone collection to make him
feel that the demand was not unreasonable or that no harassment or
injustice is meant by the Government. (CIR vs Kudos Metal Corp., GR
178087, May 5, 2010)
The running of the prescription period where the acts of the taxpayer did
not prevent the government from collecting the tax. Partial payment would
not prevent the government from suing the taxpayer. Because, by such act
of payment, the government is not thereby persuaded to postpone
collection to make him feel that the demand was not unreasonable or that
no harassment or injustice is meant. (CIR vs Philippine Global
Communication, GR 167146, October 31, 2006)
The act of requesting a reinvestigation alone does not suspend the period.
The request should first be granted, in order to effect suspension. The
burden of proof that the taxpayers request for reinvestigation had been
actually granted shall be on respondent BIR Commissioner. The grant may
be expressed in communications with the taxpayer or implied from the
actions of the respondent BIR Commissioner or his authorized BIR
representatives in response to the request for reinvestigation. (BPI vs CIR,
GR 139736, October 17, 2005)
(iii) Distraint of personal property including garnishment
(a) Summary remedy of distraint of personal property
(1) Purchase by the government at sale upon distraint
(2) Report of sale to the Bureau of Internal Revenue (BIR) (3) Constructive
distraint to protect the interest of the government
(iv) Summary remedy of levy on real property (a) Advertisement and sale
(b) Redemption of property sold
(c) Final deed of purchaser
(v) Forfeiture to government for want of bidder (a) Remedy of enforcement
of forfeitures
(1) Action to contest forfeiture of chattel (b) Resale of real estate taken for
taxes
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72
The prohibition against examination of or inquiry into a bank deposit
under Republic Act 1405 does not preclude its being garnished to insure
satisfaction of a judgment. Indeed there is no real inquiry in such a case,
and if existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is hard to conceive that it was ever
within the intention of Congress to enable debtors to evade payment of
their just debts, even if ordered by the Court, through the expedient of
converting their assets into cash and depositing the
same in a bank. (PCIB vs CA, GR 84526, January 28, 1991)
same to its tax liability for the succeeding taxable periods; or (2) refund the
amount or issue tax credit certificate. Once the carry-over option is taken,
actually or constructively, it becomes irrevocable. It can never be refunded.
The controlling factor for the operation of the irrevocability rule is that the
taxpayer chose an option; and once it had already done so, it could no
longer make another one. No application for refund or tax credit certificate
shall be allowed. The option of the BPI to carry-over the 1998 excess
credits is irrevocable. BPI cannot anymore apply for the refund in the event
it is unable to credit the said excess. The crediting of the excess credits in
the succeeding taxable periods has no prescription unlike the claim for
refund which prescribes after two years from the filing of the ITR. In the
event the taxpayer fails to make an appropriate marking of its option in the
ITR, does not mean that the taxpayer is barred from choosing his option
later on. The reason for requiring that a choice be made upon the filing of
the ITR is to ease tax administration. Failure to make a choice means that
the taxpayer is still uncertain and would show simple negligence or plain
oversight. The taxpayer may still make his choice later but once the choice
is made, irrevocability of the said choice sets in. (CIR vs. BPI, 592 SCRA
219)
(i) Grounds and requisites for refund
(ii) Requirements for refund as laid down by cases
In cases before tax courts, Rules of Court applies only by analogy or in a
suppletory character and whenever practicable and convenient shall be
liberally construed in order to promote its objective of securing a just,
speedy and inexpensive disposition of every action and proceeding. Since
it is not disputed that petitioner is entitled to tax exemption, it should not be
precluded from presenting evidence to substantiate the amount of refund it
is claiming on mere technicality especially in this case, where the failure to
present invoices at the first instance was adequately explained by
petitioner. (Philippine Phosphate Fertilizer Corp. vs CIR, GR 141973, June
28, 2005)
A claimant must first file a written claim for refund, categorically
demanding recovery of overpaid taxes with the CIR, before resorting to an
action in court. This obviously is intended, first, to afford the CIR an
opportunity to correct the action of subordinate officers; and second, to
notify the government that such taxes have been questioned, and the
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notice should then be borne in mind in estimating the revenue available
for expenditure. (CIR vs Acosta, GR 154068, August 3, 2007)
(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
Section 230 [now Sec. 229, 1997 NIRC] of the Tax Code, as couched,
particularly its statute of limitations component, is, in context, intended to
apply to suits for the recovery of internal revenue taxes or sums
erroneously, excessively, illegally or wrongfully collected. Black defines the
term erroneous or illegal tax as one levied without statutory authority. In the
strict legal viewpoint, therefore, PNBs claim for tax credit did not proceed
from, or is a consequence of overpayment of tax erroneously or illegally
collected. It is beyond cavil that respondent PNB issued to the BIR the
check for P180 Million in the concept of tax payment in advance, thus
eschewing the notion that there was error or illegality in the payment. (CIR
vs PNB, GR 161997, October 25, 2005)
75
This two-year prescriptive period is intended to apply to suits or
proceedings for the recovery of taxes, penalties or sums erroneously,
excessively, illegally or wrongfully collected. Accordingly, an availment of a
tax credit granted by law may have a different prescriptive period. Absent
any specific provision in the Tax Code or special laws, that period would be
ten years under Article 1144 of the Civil Code. (Concurring opinion of
Justice Vitug in CIR vs The Philippine American Life Insurance
Co., G.R. No. 105208, May 29, 1995)
Whenever applicable, the two-year prescriptive period starts from the full
and final payment of the tax sought to be recovered. (Concurring opinion of
Justice Vitug in CIR vs The Philippine American Life Insurance
Co., G.R. No. 105208, May 29, 1995)
For corporations, the two-year prescriptive period within which to
claim a refund commences to run, at the earliest, on the date of the filing of
the adjusted final tax return. The rationale in computing the two-year
prescriptive period with respect to the petitioner corporation's claim for
refund from the time it filed its final adjustment return is the fact that it was
only then that ACCRAIN could ascertain whether it made profits or incurred
losses in its business operations. (ACCRA Investments vs CA,
G.R. No. 96322, December 20, 1991)
Even if the two (2)-year prescriptive period, if applicable, had already
lapsed, the same is not jurisdictional and may be suspended for reasons of
equity and other special circumstances. Records show that the BIRs very
own conduct led PNB to believe all along that its original intention to apply
the advance payment to its future income tax obligations will be respected
by the BIR. (CIR vs PNB, GR 161997, October 25, 2005)
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The claim for refund with the Commissioner of Internal Revenue and the
subsequent action before the Court of Tax Appeals regarding the refund
should all be done within the said period of two years. (CIR vs NPC, G.R.
No. L-18874 January 30, 1970)
(iii) Legal basis of tax refunds
(iv) Statutory basis for tax refund under the tax code
(a) Scope of claims for refund
(b) Necessity of proof for claim or refund
(c) Burden of proof for claim of refund
Tax refunds, like tax exemptions, are construed strictly against the
taxpayer. The claimants have the burden of proof to establish the factual
basis of their claim for refund or tax credit. (Hitachi Global vs CIR, G.R. No.
174212, October 20, 2010)
The Commissioners contention that a tax refund partakes the nature of a
tax exemption does not apply to the tax refund to which Fortune Tobacco is
entitled. There is parity between tax refund and tax exemption only when
the former is based either on a tax exemption statute or a tax refund
statute. Obviously, that is not the situation here. Quite the contrary, Fortune
Tobaccos claim for refund is premised on its erroneous payment of the tax,
or better still the governments exaction in the absence of a law. (CIR vs
Fortune Tobacco Corp., GR 167274-75, July 21, 2008)
(d) Nature of erroneously-paid tax/illegally assessed collected (e) Tax
refund vis-a-vis tax credit
(f) Essential requisites for claim of refund (v) Who may claim/apply for tax
refund/tax credit
(a) Taxpayer/withholding agents of non-resident foreign corporation
A withholding agent is a proper party to claim tax refund. He is liable to pay
the tax and subject to tax. The withholding agent is constituted
76
Formally, a tax refund requires a physical return of the sum erroneously
paid by the taxpayer, while a tax credit involves the application of the
reimbursable amount against any sum that may be due and collectible from
the taxpayer. On the practical side, the taxpayer to whom the tax is
refunded would have the option, among others, to invest for profit the
returned sum, an option not proximately available if the taxpayer chooses
instead to receive a tax credit. (CIR vs Philippine Phosphate Fertilizer
Corporation, G.R. No. 144440, September 1, 2004)
The proper party to question, or seek a refund of an indirect tax is the
statutory taxpayer, the person on whom the tax is imposed by law and who
paid the same even if he shifts the burden thereof to another. Even if
Petron Corporation passed on to Silkair the burden of the tax, the additional
amount billed to Silkair for jet fuel is not a tax but part of the price which
Silkair had to pay as a purchaser. (Silkair vs CIR, G.R. Nos.
(PNOC vs CA,
(PNOC vs CA,
The discretionary authority to compromise granted to the BIR
Commissioner is never meant to be absolute, uncontrolled and
unrestrained. No such unlimited power may be validly granted to any officer
of the government, except perhaps in cases of national emergency. The
BIR Commissioner would have to exercise his discretion within the
parameters set by the law, and in case he abuses his discretion, the CTA
may correct
such abuse if the matter is appealed to them.
G.R. No. 109976, April 26,
2005)
RMO No. 39-86 expressly allows a withholding agent, who failed to
withhold the required tax because of neglect, ignorance of the law, or his
belief that he was not required by law to withhold tax, to apply for a
compromise settlement of his withholding tax liability under E.O. No. 44. A
withholding agent, in such a situation, may compromise the withholding tax
assessment against him precisely because he is being held directly
accountable for the tax. RMO No. 39-86 distinguishes between the
withholding agent in the foregoing situation from the withholding agent who
withheld the tax but failed to remit the amount to the Government. A
withholding agent in the latter situation is the one disqualified from applying
for a compromise settlement because he is being made accountable as an
agent, who held funds in trust for the Government. (PNOC vs CA, G.R. No.
109976, April 26, 2005)
b) Abatement
The BIR may therefore abate or cancel the whole or any unpaid portion of a
tax liability, inclusive of increments, if its assessment is excessive or
erroneous;or if the administration costs involved do not justify the collection
of the amount due. No mutual concessions need be made, because an
excessive or erroneous tax is not compromised; it is abated or canceled.
Only correct taxes should be paid. (People vs Sandiganbayan, GR 152532,
August 16, 2005)
F. Organization and Function of the Bureau of Internal Revenue 1. Rulemaking authority of the Secretary of Finance
The authority of the Minister of Finance (now the Secretary of Finance),
in conjunction with the Commissioner of Internal Revenue, to promulgate
all needful rules and regulations for the effective enforcement of internal
revenue laws cannot be controverted. Neither can it be disputed that such
rules and regulations, as well as administrative opinions and rulings,
ordinarily should deserve weight and respect by the courts. Much more
fundamental than either of the above, however, is that all such issuances
must not override, but must remain consistent and in harmony with, the law
they seek to apply and implement. Administrative rules and regulations are
intended to
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
carry out, neither to supplant nor to modify, the law. (CIR vs CA, G.R.
No. 108358,
January 20, 1995)
a) Authority of Secretary of Finance to promulgate rules and regulations
b) Specific provisions to be contained in rules and regulations
c) Non-retroactivity of rulings
2. Power of the Commissioner to suspend the business operation of a
taxpayer
III. Local Government Code of 1991, as amended
A. Local government taxation 1. Fundamental principles
An ordinance carries with it the presumption of validity. The question of
reasonableness
79
The fundamental law did not intend the delegation to be absolute and
unconditional; the
58. (Valley Trading Co., Inc. v. CFI of Isabela, Branch II, G.R. No. L49529, March 31, 1989)
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
3. Imposition of real property tax
a) Power to levy real property tax
b) Exemption from real property tax
85
As a general principle, a charitable institution does not lose its character
as such and its
exemption from taxes simply because it derives income from paying
patients, whether out- patient, or confined in the hospital, or receives
subsidies from the government, so long as the money received is devoted
or used altogether to the charitable object which it is intended to achieve;
and no money inures to the private benefit of the persons managing or
operating the
institution. (Lung Center of the Phil. v. Quezon City, G.R. No. 144104,
June 29, 2004)
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order
to be entitled to
the exemption, the petitioner is burdened to prove, by clear and
unequivocal proof, that (a) it is a charitable institution; and (b) its real
properties are ACTUALLY, DIRECTLY and EXCLUSIVELY used for
charitable purposes. "Exclusive" is defined as possessed and enjoyed to
the exclusion of others; debarred from participation or enjoyment; and
"exclusively" is defined, "in a manner to exclude; as enjoying a privilege
exclusively." (Lung Center of the Phil. v. Quezon City, G.R.
No. 144104, June 29, 2004)
Under Section 234(a), real property owned by the Republic is exempt from
real estate tax except when the government gives the beneficial use of the
real property to a taxable entity. The justification for the exception to the
exemption is that the real property, although owned by the Republic, is not
devoted to public use or public service but devoted to the private gain of a
taxable person. (Manila International Airport Authority v. Court of Appeals,
G.R. No. 155650, July 20, 2006)
In MIAA v. Court of Appeals & Paranaque City, 495 SCRA 591 [2006], the
Supreme Court resolved this issue that MIAA is not a government owned or
controlled corporation but a government instrumentality vested with
corporate powers and performing essential public services. MIAA is not
subject to any local tax except when its properties are used by taxable
entity or 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. They are owned by the
State or the Republic under Art. 420 of the NCC. Hence, the properties of
MIAA are exempted from the real property tax under Sec. 234(a) LGC.
Only those portions of the NAIA Pasay properties which are leased to
taxable persons like private parties are the ones subject to the real property
tax by Pasay City. (MIAA v. City of Pasay, 583 SCRA 234)
4. Appraisal and assessment of real property tax
a) Rule on appraisal of real property at fair market value
Real properties shall be appraised at the current and fair market value
prevailing in the locality where the property is situated and classified for
assessment purposes on the basis of its actual use. (Allied Banking
Corporation, etc., v. Quezon City Government, et al., G. R. No. 154126,
October 11, 2005)
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In fixing the value of real property, assessors have to consider all the
circumstances and
elements of value and must exercise prudent discretion in reaching
conclusions. (Allied Banking
It has been ruled that the notices and publication, as well as the legal
requirements for
a tax delinquency sale, are mandatory; and the failure to comply
therewith can invalidate the sale. The prescribed notices must be sent to
comply with the requirements of due process. (De
Knecht v. Court of Appeals, G.R. No. 108015, 109234, May 20, 1998)
The delinquent taxpayer referred to under Sec. 72 of PD No. 464 is the
actual owner of
the property at the time of the delinquency and mere compliance by the
provincial or city treasurer with Sec. 65 of the decree is no longer enough.
The notification to the right person, i.e., the real owner, is an essential and
indispensable requirement of the law, non-compliance with which renders
the auction sale void. (Estate of Jacob v. Court of Appeals, G.R. No.
120435,
120974, December 22, 1997)
(ii) Local governments lien
(iii) Remedies in general
(iv) Resale of real estate taken for taxes, fees or charges
(v) Further levy until full payment of amount due
6. Refund or credit of real property tax a) Paymentunderprotest
b) Repayment of excessive collections
7. Taxpayers 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
b) Payment of real property tax under protest
(i) File protest with local treasurer
The protest contemplated under Sec. 252 of R.A. 7160 is needed where
there is a
question as to the reasonableness of the amount assessed. Hence, if a
taxpayer disputes the reasonableness of an increase in a real estate tax
assessment, he is required to "first pay the tax" under protest; otherwise,
the city or municipal treasurer will not act on his protest. (Ty v.
Trampe, G.R. No. 117577, December 01, 1995)
The trial court has no jurisdiction to entertain a Petition for Prohibition
absent
petitioner's payment, under protest, of the tax assessed as required by
Sec. 64 of the
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RPTC. Payment of the tax assessed under protest, is a condition sine
qua non before the trial court could assume jurisdiction over the petition
and failure to do so, the RTC has no
jurisdiction to entertain it. (Manila Electric Co. v. Barlis, G.R. No. 114231,
May 18, 2001)
Under then Sec. 30 of PD 464 [now under Sec. 226, LGC], having failed to
appeal the real property assessments to the LBAA, taxpayer now cannot
assail the validity of the tax assessment before the courts. For failure to
exhaust administrative remedies, the assessment became final. Under Sec.
64 of PD 464 [now under Sec. 252, LGC), the taxpayer must first pay under
protest and then assail the validity of the assessment. (Davao Oriental
Electric Coop vs. Prov. Dvo. of Oriental, 576 SCRA 645)
(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
IV. Tariff and Customs Code of 1978, as amended
A. Tariff and duties, defined
B. General rule: all imported articles are subject to duty.
1. Importation by the government taxable
C. Purpose for imposition
D. Flexible tariff clause
E. Requirements of importation
The term "entry" in Customs law has a triple meaning. It means (1) the
documents filed
at the Customs house; (2) the submission and acceptance of the
documents; and (3) the procedure of passing goods through the Customs
house. (Jardeleza v. People, G.R. No. 165265,
February 06, 2006)
Smuggling is committed by any person who: (1) fraudulently imports
or brings into the
Philippines any article contrary to law; (2) assists in so doing any article
contrary to law; or (3) receives, conceals, buys, sells or in any manner
facilitate the transportation, concealment or sale of such goods after
importation, knowing the same to have been imported contrary to
law. (Jardeleza v. People, G.R. No. 165265, February 06, 2006)
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In order to warrant forfeiture, it is not necessary that the vessel or aircraft
must itself
90
The Tariff and Customs law subjects to forfeiture any article which is
removed contrary
to law from any public or private warehouse under customs supervision,
or released irregularly from Customs custody. Before forfeiture proceedings
are instituted the law requires the presence of probable cause; once
established, the burden of proof is shifted to the claimant. (Carrara Marble
Phil., Inc. v. Commissioner of Customs, G.R. No. 129680, September
01, 1999)
carry the contraband. There is nothing in the law that so requires.
(Llamado v. Commissioner of
Customs, G.R. No. L-28809, May 16, 1983)
2. Other fraudulent practices
G. Classification of goods
1. Taxable importation 2. Prohibited importation
Prohibited importations are subject to forfeiture whether the importation is
direct or indirect such as when the shipper and the consignee are one and
the same person. (Paterok v. Bureau of Customs, G.R. Nos. 90660-61,
January 21, 1991)
Although the illegally imported articles may not be absolutely
prohibited, but only
qualifiedly prohibited under Sec. 102 (K) of the Tariff and Customs
Code, for it may be imported subject to certain conditions, it is nonetheless
prohibited and is a contraband (Comm. of Customs vs. CTA & Dichoco, L33471, Jan. 31, 1972), and the legal effects of the importation of qualifiedly
prohibited articles are the same as those of absolutely prohibited articles.
(Auyong
Hian v. CTA, G.R. No. L-28782, September 12, 1974)
3. Conditionally-free importation
H. Classification of duties
1. Ordinary/regular duties
a) Ad valorem; methods of valuation
(i) Transaction value
(ii) Transaction value of identical goods (iii) Transaction value of similar
goods (iv) Deductive value
(v) Computed value
(vi) Fallback value
b) Specific
2. Special duties
a) Dumpingduties
b) Countervailing duties
c) Marking duties
d) Retaliatory/discriminatory duties
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e) Safeguard
I. Remedies
1. Government
a) Administrative/extrajudicial
(i) Search, seizure, forfeiture, arrest
91
It is quite clear that seizure and forfeiture proceedings under the tariff and
customs laws
are not criminal in nature as they do not result in the conviction of the
offender nor in the imposition of the penalty provided for in section 3601 of
the Code. As can be gleaned from Section 2533 of the code, seizure
proceedings, such as those instituted in this case, are purely civil and
administrative in character, the main purpose of which is to enforce the
administrative fines or forfeiture incident to unlawful importation of goods or
their deliberate
possession. (People v. Court of First Instance of Rizal, G.R. No. L41686, November 17, 1980)
In administrative proceedings, such as those before the BOC, technical
rules of
procedure and evidence are not strictly applied and administrative due
process cannot be fully equated with due process in its strict judicial sense.
The essence of due process is simply an opportunity to be heard or, as
applied to administrative proceedings, an opportunity to explain one's side
or an opportunity to seek reconsideration of the action or ruling complained
of. (El Greco Ship Manning and Management Corporation v. Commissioner
of Customs, G.R. No.
177188, December 04, 2008)
It is settled that the Bureau of Customs acquires exclusive jurisdiction
over imported
goods for purposes of enforcing the Customs laws, from the moment the
goods are actually in possession and control of said Bureau even in the
absence of any warrant of seizure or
detention. (Papa v. Mago, G.R. No. L-27360, February 28, 1968)
Regional trial courts are devoid of any competence to pass upon the
validity or regularity
of seizure and forfeiture proceedings conducted by the BOC and to
enjoin or otherwise interfere with these proceedings. Regional trial courts
are precluded from assuming cognizance over such matters even through
petitions for certiorari, prohibition or mandamus. (Subic Bay Metropolitan
Authority v. Rodriguez, G.R. No. 160270, April 23, 2010)
Even if the seizure by the Collector of Customs were illegal, which
has yet to be proven,
we have said that such act does not deprive the Bureau of Customs of
jurisdiction thereon. The allegations of petitioners regarding the propriety of
the seizure should properly be ventilated before the Collector of Customs.
(Jao v. Court of Appeals, G.R. No. 104604, 111223, October
06, 1995)
A forfeiture proceeding is in the nature of a proceeding in rem, i.e.,
directed against
the res or imported articles and entails a determination of the legality of
their importation. In this proceeding, it is in legal contemplation the property
itself which commits the violation and is treated as the offender, without
reference whatsoever to the character or conduct of the
owner. (Transglobe International, Inc. v. Court of Appeals, G.R. No.
126634, January 25, 1999)
Settlement of the case by payment of the fine or redemption of the forfeited
property,
prior to the filing of the criminal action, does not extinguish the offender's
criminal liability
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under Section 3601 of the Tariff and Customs Code. (People v. Desiderio,
G.R. No. L-20805,
92
become final with no one the wiser except himself and the owner of the
goods. (Yaokasin v. Commissioner of
Customs, G.R. No. 84111, December 22, 1989)
Section 7 of Republic Act No. 1125, creating the Court of Tax Appeals, in
providing for
appeals from '(1) Decisions of the Collector of Internal Revenue in
cases involving disputed assessments, refunds of internal revenue taxes,
fees or other charges, penalties imposed in relation thereto, or other
matters arising under the National Internal Revenue Code or other law or
part of the law administered by the Bureau of Internal Revenue allows
an appeal from a decision of the Collector in cases involving 'disputed
assessments' as distinguished from cases involving 'refunds of internal
revenue taxes, fees or other charges, . . .'; To hold that the taxpayer has
now lost the right to appeal from the ruling on the disputed assessment but
must prosecute his appeal under Section 306 of the Tax Code, which
requires a taxpayer to file a claim for refund of the taxes paid as a condition
precedent to his right to appeal, would in effect require of him to go through
a useless and needless ceremony that would only delay the disposition of
the case, for the Collector (now Commissioner) would certainly disallow the
claim for refund in the same way as he disallowed the protest against the
assessment. (Vda. de San
Agustin v. Commr., G.R. No. 138485, September 10, 2001)
While the law confers on the CTA jurisdiction to resolve tax disputes in
general, this
does not include cases where the constitutionality of a law or rule is
challenged. Where what is assailed is the validity or constitutionality of a
law, or a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same. (British American Tobacco v. Camacho,
G.R. No.
163583, August 20, 2008)
The reviewable decision of the Bureau of Internal Revenue is that
contained in the letter
of its Commissioner, that such constitutes the final decision on the
matter which may be appealed to the Court of Tax Appeals and not the
warrants of distraint. It was likewise stressed that the procedure enunciated
is demanded by the pressing need for fair play, regularity and orderliness in
administrative action. (Commr. v. Union Shipping Corp., G.R. No. 66160,
May 21,
1990)
A final demand letter from the Bureau of Internal Revenue, reiterating to the
taxpayer
the immediate payment of a tax deficiency assessment previously made,
is tantamount to a
Bar Ops Pilipinas 2015 Philippine Association of Law Schools
94
denial of the taxpayer's request for reconsideration. Such letter amounts
to a final decision on a disputed assessment and is thus appealable to the
Court of Tax Appeals (CTA). (Commr. v.
Isabela Cultural Corp., G.R. No. 135210, July 11, 2001)
If the protest is denied in whole or in part, or is not acted upon within one
hundred
eighty (180) days from submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the Court of Tax Appeals
within (30) days from receipt of the said decision, or from the lapse of the
one hundred eighty (180)-day period; otherwise the decision shall become
final, executory and demandable.||| (Rizal Commercial Banking Corp. v.
Commr., G.R. No. 168498, June 16, 2006)
The period to appeal from a decision of the Commissioner of Internal
Revenue to the
Court of Tax Appeals under Republic Act No. 1125 is jurisdictional and
non-extendible and a taxpayer may not delay indefinitely a tax assessment
by reiterating his original defenses over and over again, without substantial
variation. (Filipinas Investment & Finance Corp. v. Commr.,
G.R. No. L-23501, May 16, 1967)
To allow a litigant to assume a different posture when he comes before
the court and
challenge the position he had accepted at the administrative level, would
be to sanction a procedure whereby the Court which is supposed to
review administrative determinations would not review, but determine
and decide for the first time, a question not raised at the administrative
forum. Thus, it is well settled that under the same underlying principle of
prior exhaustion of administrative remedies, on the judicial level, issues not
raised in the lower court cannot be raised for the first time on appeal.
(Commr. v. Wander Phils., Inc., G.R. No. 68375,
April 15, 1988)
By withdrawing the appeal, petitioner is deemed to have accepted the
decision of the
CTA. Petitioner cannot be allowed to circumvent the denial of its request
for a tax credit by abandoning its appeal and filing a new claim. (Central
Luzon Drug Corp. v. Commr., G.R. No.
181371, March 02, 2011)
Sec. 7 of RA 1125 provides that the CTA has exclusive appellate
jurisdiction to review by appeal decisions of the CIR in cases involving
disputed assessments. Likewise Sec. 4 of the 1997 NIRC [RA 8424]
provides that the CIR has the power to decide disputed assessments
subject to the exclusive appellate jurisdiction of the CTA. The latest law on
the jurisdiction of the CTA under Sec. 7 of RA 9282 provides that the CTA
exercises exclusive appellate jurisdiction to review by appeal decisions of
the CIR in cases involving disputed assessments. Thus the CTAs
jurisdiction is to entertain an appeal only from a final decision or
assessment of the CIR or in cases where the CIR has not acted within the
period prescribed by the NIRC. So when the CIR has not issued an
assessment, then there is nothing to protest or dispute. (Adamson vs.
Court of Appeals, 588 SCRA 27)
The period to appeal the decision or ruling of the RTC in local tax cases to
CTA via petition for review is governed by Sec. 11 of RA 9282 and Sec.
3(a), Rule 8 of the Revised Rules of CTA, which is 30 days from receipt of
decision or ruling. To appeal an adverse ruling of the RTC to the CTA the
taxpayer must file a petition for review with the CTA within 30 days from
receipt of the adverse decision or ruling. An extension may be granted for
15 days. With the several extensions asked the CTA can dismiss the
petition. Failure to comply with
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requirements would also be a ground to dismiss the petition. (City of Manila
vs. Coca Cola Bottlers Phils., 595 SCRA 299)
2. Criminal cases
a) Exclusive original jurisdiction
b) Exclusive appellate jurisdiction in criminal cases
B. Judicial procedures
1. Judicial action for collection of taxes
a) Internal revenue taxes
95
Nowhere in the Tax Code is the Collector of Internal Revenue required to
rule first on a
taxpayer's request for reinvestigation before he can go to court for the
purpose of collecting the tax assessed. On the contrary, Section 305 of the
same Code withholds from all courts, except the Court of Tax Appeals
under Section 11 of Republic Act 1125, the authority to restrain the
collection of any national internal-revenue tax, fee or charge, thereby
indicating the legislative policy to allow the Collector of Internal Revenue
much latitude in the speedy and prompt collection of taxes. (Republic v. Lim
Tian Teng Sons & Co., Inc., G.R. No. L-21731, March 31,
1966)
It is true that petitioner could not move for new trial on the basis of newly
discovered
evidence because in order to have a new trial on the basis of newly
discovered evidence, it must be proved that: (a) the evidence was
discovered after the trial; (b) such evidence could not have been
discovered and produced at the trial with reasonable diligence; (c) it is
material, not merely cumulative, corroborative or impeaching; and (d) it is of
such weight that, if admitted, will probably change the judgment. This does
not mean however, that petitioner is altogether barred from having a new
trial if the reasons put forth by petitioner could fall under mistake or
excusable negligence. (Philippine Phosphate Fertilizer Corp. v. Commr.,
G.R. No.
141973, June 28, 2005)
Before the CTA En Banc could take cognizance of the petition for review
concerning a
case falling under its exclusive appellate jurisdiction, the litigant must
sufficiently show that it sought prior reconsideration or moved for a new trial
with the concerned CTA division. Procedural rules are not to be trifled with
or be excused simply because their non-compliance may have resulted in
prejudicing a party's substantive rights. (Commisioner of Customs v.
Marina Sales, Inc., G.R. No. 183868, November 22, 2010)
The Commissioner of Internal Revenue, not having clearly signified his
final action on
the disputed assessment, legally the period to appeal has not
commenced to run. The request for reinvestigation and reconsideration
was in effect considered denied by CIR when the latter filed a civil suit for
collection of deficiency income. (Commissioner of Internal Revenue vs
Union
Shipping Corporation and the Court of Tax Appeals, G.R. No. L-66160,
May 21, 1990)
A letter of the BIR Commissioner reiterating to a taxpayer his previous
demand to pay an
assessment is considered a denial of the request for reconsideration or
protest and is appealable to the Court of Tax Appeals. (Commr. v. Ayala
Securities Corp., G.R. No. L-29485, March 31,
1976)
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b) Appeal to the CTA, en banc
3. Criminal cases
a) Institution and prosecution of criminal actions
(i) Institution of civil action in criminal action
97
The petition for review to be filed with the CTA en banc as the mode for
appealing a
decision, resolution, or order of the CTA Division, under Section 18 of
Republic Act No. 1125, as amended, is not a totally new remedy, unique to
the CTA, with a special application or use therein. Accordingly, doctrines,
principles, rules, and precedents laid down in jurisprudence by this Court
as regards petitions for review and appeals in courts of general jurisdiction
should likewise bind the CTA, and it cannot depart therefrom. (Santos v.
People, et al, G. R. No.
173176, August 26, 2008)
c) Petition for review on certiorari to the Supreme Court
BOC committed procedural missteps and the decision of the CTA division
has become final. The Supreme Court is without jurisdiction to review
decisions rendered by a division of the CTA but the decision of the CTA en
banc. Under Sec. 9 of RA 9282, a party affected by the ruling or decision of
a division of the CTA may file an MR within 15 days. Sec. 11 of RA 9282
provides that if the MR is denied, a petition for review is filed with the CTA
en banc. From an adverse ruling or decision from the CTA en banc, the
appeal by way of petition for review on certiorari under Rule 45 is filed with
the Supreme Court. Thus the Supreme Court has no jurisdiction to review