Beruflich Dokumente
Kultur Dokumente
TOPIC PAGE
General Principles 1
Constitutional Limitations 53
Double Taxation & Tax Exemptions 80
Local Taxation 96
Real Property Taxation 110
Tariff and Customs Laws 128
Court of Tax Appeals 143
Comparison of Remedies 152
NIRC Remedies 187
Case Doctrines 227
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Lorenzo where it was held that motor "registration fees." The term is
vehicle registration fees are in reality repeated four times in the body
taxes from the payment of which PAL thereof. Equally so, mention is
is exempt by virtue of its legislative made of the "fee for
franchise. registration." The conclusion is
Appellee Edu denied the request for difficult to resist therefore that
refund basing his action on the the Motor Vehicle Act requires
decision in Republic v. Philippine the payment not of a tax but of
Rabbit Bus Lines, Inc., to the effect a registration fee under the
that motor vehicle registration fees are police power.
regulatory exceptional and not revenue In direct refutation is the ruling
measures and, therefore, do not come in Calalang v. Lorenzo, where the
within the exemption granted to PAL Court, on the other hand, held:
under its franchise. Hence, PAL filed The charges prescribed by the
the complaint against Commissioner Revised Motor Vehicle Law for
Romeo F. Edu and National Treasurer the registration of motor
Carbonell with the CFI of Rizal. vehicles are in section 8 of that
Elevate and Carbonell filed a motion to law called "fees". But the
dismiss alleging that the complaint appellation is no impediment to
states no cause of action. The their being considered taxes if
resolution of the motion to dismiss was taxes they really are. For not
deferred by the Court until after trial on the name but the object of the
the merits. charge determines whether it is
On April 24, 1973, CFI dismissed the a tax or a fee. Taxes are for
appellant's complaint, "moved by the revenue, whereas fees are
later ruling laid down in the case exceptional. for purposes of
of Republic v. Philippine Rabbit Bus regulation and inspection and
Lines, Inc." From this judgment, PAL are for that reason limited in
appealed to CA which certified the amount to what is necessary to
case to us. cover the cost of the services
rendered in that connection.
ISSUE: Hence, a charge fixed by
Whether the motor vehicle statute for the service to be
registration fee is a tax or a person, when by an officer,
regulatory fee. where the charge has no
Whether the respondent relation to the value of the
administrative agency be required services performed and where
to refund the amounts stated in the the amount collected eventually
complaint of PAL finds its way into the treasury of
the branch of the government
HELD: whose officer or officers
TAXES. Resolving the issue in collected the chauffeur, is not a
the Philippine Rabbit case, this Court fee but a tax."
held: As proof that the money
"The registration fee which collected is not intended for the
defendant-appellee had to pay expenditures of that office, the
was imposed by Section 8 of law itself provides that all such
the Revised Motor Vehicle Law. money shall accrue to the funds
Its heading speaks of for the construction and
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1979, were correctly imposed because (5) All taxes, fees and other
the tax exemption in the franchise of charges on the registration,
PAL was repealed during the period. license, acquisition, and transfer
However, an amended franchise was of airtransport equipment, motor
given to PAL in 1979. Section 13 of vehicles, and all other personal
Presidential Decree No. 1590, now or real property of the gravitates
provides: (Pres. Decree 1590, 75 OG No.
In consideration of the franchise 15, 3259, April 9, 1979).
and rights hereby granted, the PAL's current franchise is clear and
grantee shall pay to the specific. It has removed the ambiguity
Philippine Government during found in the earlier law. PAL is now
the lifetime of this franchise exempt from the payment of any tax,
whichever of subsections (a) fee, or other charge on the registration
and (b) hereunder will result in and licensing of motor vehicles. Such
lower taxes. payments are already included in the
(a) The basic corporate income basic tax or franchise tax provided in
tax based on the grantee's Subsections (a) and (b) of Section 13,
annual net taxable income P.D. 1590, and may no longer be
computed in accordance with exacted.
the provisions of the Internal Petition partially GRANTED. The
Revenue Code; or prayed for refund of registration fees
(b) A franchise tax of two per paid in 1971 is DENIED.
cent (2%) of the gross
revenues, derived by the ESSO STANDARD EASTERN, INC. vs.
grantees from all specific, THE COMMISSIONER OF INTERNAL
without distinction as to REVENUE
transport or nontransport
corporations; provided that with FACTS:
respect to international air CTA Case No. 1251: Petitioner ESSO
transport service, only the gross deducted from its gross income for
passengers, mail, and freight 1959, as part of its ordinary and
revenues. from its outgoing necessary business expenses, the
flights shall be subject to this amount it had spent for drilling and
law. exploration of its petroleum
The tax paid by the grantee concessions which was disallowed by
under either of the above the respondent CIR on the ground that
alternatives shall be in lieu of all the expenses should be capitalized
other taxes, duties, royalties, and might be written off as a loss only
registration, license and other when a "dry hole" should result. ESSO
fees and charges of any kind, then filed an amended return where it
nature or description imposed, asked for the refund of P323,279.00 by
levied, established, assessed, reason of its abandonment as dry
or collected by any municipal, holes of several of its oil wells. Also
city, provincial, or national claimed as ordinary and necessary
authority or government, expenses in the same return was the
agency, now or in the future, amount of P340,822.04, representing
including but not limited to the margin fees it had paid to the Central
following: Bank on its profit remittances to its
New York head office.
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of which is plain and unambiguous, exchange and hence should not form
since such legislative history may only part of the exchange rate, suffice it to
be resorted to for the purpose of state that SC held the contrary for the
solving doubt, not for the purpose of reason that a tax is levied to provide
creating it. revenue for government operations,
Apart from the above consideration, while the proceeds of the margin fee
there are at least two cases where we are applied to strengthen our country's
have held that a margin fee is not a tax international reserves.
but an exaction designed to curb the The margin fee was imposed by the
excessive demands upon our State in the exercise of its police
international reserve. power and not the power of taxation.
In Caltex (Phil.) Inc. v. Acting Alternatively, ESSO prays that if
Commissioner of Customs, 2 the Court margin fees are not taxes, they should
stated through Justice Jose P. nevertheless be considered necessary
Bengzon: and ordinary business expenses and
A margin levy on foreign therefore still deductible from its gross
exchange is a form of exchange income. The fees were paid for the
control or restriction designed to remittance by ESSO as part of the
discourage imports and profits to the head office in the Unites
encourage exports, and States. Such remittance was an
ultimately, 'curtail any excessive expenditure necessary and proper for
demand upon the international the conduct of its corporate affairs.
reserve' in order to stabilize the The applicable provision is Section
currency. The different 30(a) of the National Internal Revenue
measures of exchange control Code reading as follows:
or restriction cover different SEC. 30. Deductions from gross
phases of foreign exchange income in computing net income there
transactions, i.e., in quantitative shall be allowed as deductions
restriction, the control is on the (a) Expenses:
amount of foreign exchange (1) In general. All the
allowable. In the case of the ordinary and necessary
margin levy, the immediate expenses paid or incurred
impact is on the rate of foreign during the taxable year in
exchange; in fact, its main carrying on any trade or
function is to control the business, including a
exchange rate without changing reasonable allowance for
the par value of the peso as salaries or other compensation
fixed in the Bretton Woods for personal services actually
Agreement Act. For a member rendered; traveling expenses
nation is not supposed to alter while away from home in the
its exchange rate (at par value) pursuit of a trade or business;
to correct a merely temporary and rentals or other payments
disequilibrium in its balance of required to be made as a
payments. By its nature, the condition to the continued use
margin levy is part of the rate of or possession, for the purpose
exchange as fixed by the of the trade or business, of
government. property to which the taxpayer
As to the contention that the margin has not taken or is not taking
levy is a tax on the purchase of foreign
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regulate the practice of massage, that Ordinance No. 3659 has restricted the
the Municipal Board of Manila has the practice of massage to only hygienic
power to enact the Ordinance, and that and aesthetic massage prohibits or
permit fee of P100.00 is moderate and does not allow qualified massagists to
not unreasonable. practice therapeutic massage in their
ORDINANCE No. 3659: AN massage clinics. Appellant also
ORDINANCE REGULATING THE contends that the license fee of
OPERATION OF MASSAGE CLINICS P100.00 for operator in Section 2 of
IN THE CITY OF MANILA AND the Ordinance is unreasonable, nay,
PROVIDING PENALTIES FOR unconscionable.
VIOLATIONS THEREOF.
SEC. 2. Permit Fees. No
person shall engage in the
operation of a massage clinic or
in the occupation of attendant or ISSUE:
helper therein without first Whether the City of Manila has the
having obtained a permit power to regulate and fix the license
therefor from the Mayor. For fees of massagists; Whether the
every permit granted under the license fee of P100.00 is
provisions of this Ordinance, unconscionable.
there shall be paid to the City
Treasurer the following annual HELD:
fees: It appears that the purpose of the
(a) Operator of a Ordinance is not to regulate the
massage P100.00 practice of massage, much less to
(b) Attendant or restrict the practice of licensed and
helper 5.00 qualified massagists of therapeutic
massage in the Philippines. The
Said permit, which shall be renewed purpose is to prevent the commission
every year, may be revoked by the of immorality and the practice of
Mayor at any time for the violation of prostitution in an establishment
this Ordinance. masquerading as a massage clinic
Appellant contends that the City of where the operators thereof offer to
Manila is without authority to regulate massage or manipulate superficial
the operation of massagists and the parts of the bodies of customers for
operation of massage clinics within its hygienic and aesthetic purposes. This
jurisdiction; that under the New intention can readily be understood by
Charter of Manila, Republic Act 409, the building requirements requiring
said power to regulate and fix license that there be separate rooms for male
fees of massagists has been and female customers; that instead of
withdrawn or omitted; that the Director said rooms being separated by
of Health has issued Administrative permanent partitions and swinging
Order No. 10, dated May 5, 1953, doors, there should only be sliding
prescribing "rules and regulations curtains between them, among others.
governing the examination for This intention of the Ordinance was
admission to the practice of massage, correctly ascertained by Judge
and the operation of massage clinics, Hermogenes Concepcion, presiding in
offices, or establishments in the the trial court, in his order of dismissal
Philippines"; that Section 1 (a) of where he said: "What the Ordinance
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ways than one. It appears that from for paying the reforestation charges
July 31, 1948 to December 29, 1956, and also explained why not all
defendant Mambulao Lumber denuded areas are being reforested.
Company paid to the Republic of the
Philippines P8,200.52 for 'reforestation ISSUE:
charges' and for the period Whether the sum of P9,127.50 paid by
commencing from April 30, 1947 to defendant-appellant company to
June 24, 1948, said defendant paid plaintiff-appellee as reforestation
P927.08 to the Republic of the charges from 1947 to 1956 may be set
Philippines for 'reforestation charges'. off or applied to the payment of the
These reforestation were paid to the sum of P4,802.37 as forest charges
plaintiff in pursuance of Section 1 of due and owing from appellant to
Republic Act 115 which provides that appellee.
there shall be collected, in addition to It is appellant's contention that said
the regular forest charges provided sum of P9,127.50, not having been
under Section 264 of Commonwealth used in the reforestation of the area
Act 466 known as the NIRC, the covered by its license, the same is
amount of P0.50 on each cubic meter refundable to it or may be applied in
of timber... cut out and removed from compensation of said sum of
any public forest for commercial P4,802.37 due from it as forest
purposes. The total amount of the charges.
reforestation charges paid by
Mambulao Lumber Company is HELD:
P9,127.50, and it is the contention of We find appellant's claim devoid of any
the defendant Mambulao Lumber merit. Section 1 of Republic Act No.
Company that since the RP has not 115, provides:
made use of those reforestation SECTION 1. There shall be
charges collected from it for reforesting collected, in addition to the
the denuded area of the land covered regular forest charges provided
by its license, the RP should refund for under the National Internal
said amount, or, if it cannot be Revenue Code, the amount of
refunded, at least it should be fifty centavos on each cubic
compensated with what Mambulao meter of timber for the first and
Lumber Company owed the RP for second groups and forty
reforestation charges. In line with this centavos for the third and fourth
thought, defendant Mambulao Lumber groups cut out and removed
wrote the director of forestry, on from any public forest for
February 21, 1957 letter and commercial purposes. The
requested "that our account with your amount collected shall be
bureau be credited with all the expended by the Director of
reforestation charges that you have Forestry, with the approval of
imposed on us from July 1, 1947 to the Secretary of Agriculture and
June 14, 1956, amounting to around Natural Resources (commerce),
P2,988.62 ...". This letter was for reforestation and
answered by the director of forestry on afforestation of watersheds,
March 12, 1957, in which the director denuded areas and cogon and
of forestry quoted an opinion of the open lands within forest
secretary of justice, to the effect that reserves, communal forest,
he has no discretion to extend the time national parks, timber lands,
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sand dunes, and other public of a tax which forms a part of the
forest lands, which upon Reforestation Fund, payable by him
investigation, are found needing irrespective of whether the area
reforestation or afforestation, or covered by his license is reforested or
needing to be under forest not. Said fund, as the law expressly
cover for the growing of provides, shall be expended in
economic trees for timber, carrying out the purposes provided for
tanning, oils, gums, and other thereunder, namely, the reforestation
minor forest products or or afforestation, among others, of
medicinal plants, or for denuded areas needing reforestation
watersheds protection, or for or afforestation.
prevention of erosion and floods Appellant maintains that the principle
and preparation of necessary of a compensation in Article 1278 NCC
plans and estimate of costs and is applicable, such that the sum of
for reconnaissance survey of P9,127.50 paid by it as reforestation
public forest lands and for such charges may compensate its
other expenses as may be indebtedness to appellee in the sum of
deemed necessary for the P4,802.37 as forest charges. But in the
proper carrying out of the view we take of this case, appellant
purposes of this Act. and appellee are not mutually creditors
All revenues collected by virtue and debtors of each other.
of, and pursuant to, the Consequently, the law on
provisions of the preceding compensation is inapplicable.
paragraph and from the sale of And the weight of authority is to the
barks, medical plants and other effect that internal revenue taxes, such
products derived from as the forest charges in question, can
plantations as herein provided be the subject of set-off or
shall constitute a fund to be compensation.
known as Reforestation Fund, A claim for taxes is not such a
to be expended exclusively in debt, demand, contract or
carrying out the purposes judgment as is allowed to be
provided for under this Act. All set-off under the statutes of set-
provincial or city treasurers and off, which are construed
their deputies shall act as uniformly, in the light of public
agents of the Director of policy, to exclude the remedy in
Forestry for the collection of the an action or any indebtedness
revenues or incomes derived of the state or municipality to
from the provisions of this Act. one who is liable to the state or
Note that there is nothing in the law municipality for taxes. Neither
which requires that the amount are they a proper subject of
collected as reforestation charges recoupment since they do not
should be used exclusively for the arise out of the contract or
reforestation of the area covered by transaction sued on.
the license of a licensee or The general rule, based on
concessionaire, and that if not so grounds of public policy is well-
used, the same should be refunded to settled that no set-off is
him. The conclusion seems to be that admissible against demands for
the amount paid by a licensee as taxes levied for general or local
reforestation charges is in the nature governmental purposes. The
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adjoining areas, real estate values Whether the judgment in favor of the
have gone up in the area. Government against the estate of
Petition DISMISSED. Walter Scott Price for internal revenue
taxes may be executed.
Commissioner of Internal Revenue
vs. HON. LORENZO C. GARLITOS HELD:
NO. The ordinary procedure by which
FACTS: to settle claims of indebtedness
In Melecio R. Domingo vs. Hon. Judge against the estate of a deceased
S. C. Moscoso (GR No. L-14674, person, as an inheritance tax, is for the
January 30, 1960), the SC declared as claimant to present a claim before the
final and executory the order for the probate court so that said court may
payment by the estate and inheritance order the administrator to pay the
taxes, charges, and penalties, amount thereof.
amounting to P40,058.55, issued by
CFI Leyte in Special Proceedings No. A writ of execution is not the proper
14 entitled In the matter of the procedure allowed by the Rules of
Intestate Estate of the Late Walter Court for the payment of debts and
Scott Price. expenses of administration. The
proper procedure is for the court to
In order to enforce the claims against order the sale of personal estate or the
the estate, the fiscal presented a sale or mortgage of real property of the
petition dated June 21, 1961, to the deceased and all debts or expenses of
CFI for execution of the judgment. This administrator and with the written
was denied holding that the execution notice to all the heirs legatees and
is not justifiable as the Government is devisees residing in the Philippines,
indebted to the estate under according to Rule 89, Section 3, and
administration for P262,200 (as Rule 90, Section 2; and when sale or
payment to the Leyte Cadastral mortgage of real estate is to be made,
Survey, Inc.). Thus, the order of the the regulations contained in Rule 90,
payment of the CIR was deferred until Section 7, should be complied.
the Government shall have paid its
accounts to the administratix, Simeona Execution may issue only where the
Price because it is only fair for the devisees, legatees or heirs have
Government, as a debtor, to its entered into possession of their
accounts to its citizens-creditors before respective portions in the estate prior
it can insist in the prompt payment of to settlement and payment of the debts
the latters account to it, special taking and expenses of administration and it
into consideration that the amount due is later ascertained that there are such
to the Government draws interests debts and expenses to be paid, in
while the credit due to the State does which case "the court having
not accrue any interest. jurisdiction of the estate may, by order
for that purpose, after hearing, settle
Hence, this petition for certiorari and the amount of their several liabilities,
mandamus against CFI Leyte Judge and order how much and in what
Ron Lorenzo C. Garlitos. manner each person shall contribute,
and may issue execution if
ISSUE: circumstances require (Rule 89,
Section 6, Rule 74, Section 4).
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ART. 1200. When all the requisites On December 13, 1982, DGLC filed
mentioned in article 1279 are present, before the CIR a claim for refund in the
compensation takes effect by amount of P120,825.11, representing
operation of law, and extinguished 25% of the specific taxes actually paid
both debts to the concurrent amount, on the above-mentioned fuels and oils
even though the creditors and debtors that were used by DGLC in its
are not aware of the compensation. operations as forest concessionaire.
The claim was based on Insular
Therefore, the CIR has no clear right Lumber Co. vs. CTA and Section 5 of
to execute the judgment for taxes RA 1435 which reads:
against the estate of the deceased
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Section 5. The proceeds of the oil (from July 1, 1980 to January 19,
additional tax on manufactured oils 1981), and on manufactured oils other
shall accrue to the road and bridge than lubricating oils (from July 1, 1980
funds of the political subdivision for to January 4, 1981) had prescribed.
whose benefit the tax is Disallowed on the ground that they
collected: Provided, however, That were not included in the original claim
whenever any oils mentioned above filed before the CIR were the claims for
are used by miners or forest refund on purchases of manufactured
concessionaires in their operations, 25 oils from January 1, 1980 to June 30,
per centum of the specific tax paid 1980 and from February 1, 1982 to
thereon shall be refunded by the June 30, 1982. In regard to the other
Collector of Internal Revenue upon purchases, the CTA granted the
submission of proof of actual use of claim, but it computed the refund
oils and under similar con ditions based on rates deemed paid under RA
enumerated in subparagraphs 1 and 2 1435, and not on the higher rates
of section 1 hereof, amending section actually paid by DGLC under the
142 of the Internal Revenue Code: NIRC.
Provided, further, That no new road
shall be constructed unless the routes Insisting that the basis for computing
or location thereof shall have been the refund should be the increased
approved by the Commissioner of rates prescribed by Sections 153 and
Public Highways after a determination 156 of the NIRC, DGLCr elevated the
that such road can be made part of an matter to the CA, which affirmed the
integral and articulated route in the CTA Decision. Hence, this petition for
Philippine Highway System, as review under Rule 45 of the RoC.
required in section 26 of the Philippine
Highway Act of 1953. ISSUE:
Whether DGLC is entitled under RA
DGLC complied with the procedure for 1435 to the refund of 25% of the
refund, including the submission of amount of specific taxes it actually
proof of the actual use of the paid on various refined and
aforementioned oils in its forest manufactured mineral oils and other oil
concession as required. DGLC, in products taxed under Section 153 and
support of its claim for refund, 156 of the 1977 (Section 142 and 145
submitted to the CIR affidavits of its of the 1939) NIRC. (Whether the
general manager, the president of the refund should be based on the
Philippine Wood Products Association, increased rates of specific taxes which
and 3 disinterested persons, all it actually paid as prescribed in Sec.
attesting that the said manufactured 153 and 156 of the NIRC OR on
diesel and fuel oils were actually used specific taxes deemed paid under Sec.
in the exploitation and operation of its 1 and 2 of RA 1435.)
forest concession.
HELD:
On January 20, 1983, DGLC filed at NO. DGLC is entitled to refund under
the CTA a petition for review. CTA Sec. 5 of RA 1435. DGLC is entitled to
found DGLC entitled to a partial refund a partial refund under Sec. 5 of RA
of specific taxes the latter had paid in 1432 which was enacted to provide
the amount of P2,923.15, ruling that means for increasing the Highway
the claim on purchases of lubricating Special Fund.
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the oils used in aviation by citizens and two provisions renumbering them and
corporations of foreign countries which prescribing higher rates. Accordingly,
do not grant equivalent refunds or DGLC paid specific taxes on
exemptions in respect to similar oils petroleum products purchased from
used in aviation by citizens and July 1, 1980 to July 31, 1982 under the
corporations of the Philippines. ff. statutory provisions.
SEC. 2. Section 145 of the National From February 8, 1980 to March 20,
Internal Revenue Code, as amended, 1981, Sections 153 and 156 provided
is further amended to read as follows: as follows:
SEC. 145. Specific Tax on Diesel fuel SEC. 153. Specific tax on
oil. -- On fuel oil, commercially known manufactured oils and other fuels. --
as diesel fuel oil, and on all similar fuel On refined and manufactured mineral
oils, having more or less the same oils and motor fuels, there shall be
generating power, there shall be collected the following taxes which
collected, per metric ton, one peso. shall attach to the articles hereunder
enumerated as soon as they are in
Section 5. The proceeds of the existence as such:
additional tax on manufactured oils (a) Kerosene, per liter of volume
shall accrue to the road and bridge capacity, seven centavos;
funds of the political subdivision for (b) Lubricating oils, per liter of
whose benefit the tax is volume capacity, eighty centavos;
collected: Provided, however, That (c) Naphtha, gasoline and all
whenever any oils mentioned above other similar products of distillation,
are used by miners or forest per liter of volume capacity, ninety-one
concessionaires in their operations, centavos: Provided, That, on premium
twenty-five per centum of the specific and aviation gasoline, the tax shall be
tax paid thereon shall be refunded by one peso per liter of volume capacity;
the Collector of Internal Revenue upon (d) On denatured alcohol to be
submission of proof of actual use of used for motive power, per liter of
oils and under similar conditions volume capacity, one
enumerated in subparagraphs one and centavo: Provided, That, unless
two of section one hereof, amending otherwise provided for by special laws,
section one hundred forty-two of the if the denatured alcohol is mixed with
Internal Revenue Code:Provided, gasoline, the specific tax on which has
further, That no new road shall be already been paid, only the alcohol
constructed unless the route or content shall be subject to the tax
location thereof shall have been herein prescribed. For the purposes of
approved by the Commissioner of this subsection, the removal of
Public Highways after a determination denatured alcohol of not less than one
that such road can be made part of an hundred eighty degrees proof (ninety
integral and articulated route in the per centum absolute alcohol) shall be
Philippine Highway System, as deemed to have been removed for
required in section twenty-six of the motive power, unless shown to the
Philippine Highway Act of 1953. contrary;
(e) Processed gas, per liter of
Subsequently, the 1977 NIRC, PD volume capacity, three centavos;
1672, and EO 672 amended the 1st
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(f) Thinners and solvents, per premium and aviation gasoline, the tax
liter of volume capacity, fifty-seven shall be one peso and ten centavos
centavos; and one peso, respectively, per liter of
(g) Liquefied petroleum gas, per volume capacity;
kilogram, fourteen (d) On denatured alcohol to be
centavos: Provided, That, liquefied used for motive power, per liter of
petroleum gas used for motive power volume capacity, one
shall be taxed at the equivalent rate as centavo; Provided, That unless
the specific tax on diesel fuel oil; otherwise provided for by special laws,
(h) Asphalts, per kilogram, eight if the denatured alcohol is mixed with
centavos; gasoline, the specific tax on which has
(i) Greases, waxes and already been paid, only the alcohol
petrolatum, per kilogram, fifty content shall be subject to the tax
centavos; herein prescribed. For the purpose of
(j) Aviation turbo jet fuel, per liter this subsection, the removal of
of volume capacity, fifty-five centavos. denatured alcohol of not less than one
(As amended by Sec. 1, P.D. No. hundred eighty degrees proof
1672.) (ninety per centum absolute alcohol)
shall be deemed to have been
SEC. 156. Specific tax on diesel fuel removed for motive power, unless
oil. -- On fuel oil, commercially known shown to the contrary;
as diesel fuel oil, and on all similar fuel (e) Processed gas, per liter of
oils, having more or less the same volume capacity, three centavos;
generating power, per liter of volume (f) Thinners and solvents, per
capacity, seventeen and one-half liter of volume capacity, sixty-one
centavos, which tax shall attach to this centavos;
fuel oil as soon as it is in existence as (g) Liquefied petroleum gas, per
such. kilogram, twenty-one
centavos: Provided, That, liquified
Then on March 21, 1981, these petroleum gas used for motive power
provisions were amended by EO 672 shall be taxed at the equivalent rate as
to read: the specific tax on diesel fuel oil;
(h) Asphalts, per kilogram, twelve
SEC. 153. Specific tax on centavos;
manufactured oils and other fuels. -- (i) Greases, waxes and
On refined and manufactured mineral petrolatum, per kilogram, fifty
oils and motor fuels, there shall be centavos;
collected the following taxes which (j) Aviation turbo-jet fuel, per liter
shall attach to the articles hereunder of volume capacity, sixty-four
enumerated as soon as they are in centavos.
existence as such:
(a) Kerosene, per liter of volume SEC. 156. Specific tax on diesel fuel
capacity, nine centavos; oil. -- On fuel oil, commercially known
(b) Lubricating oils, per liter of as diesel fuel oil, and all similar fuel
volume capacity, eighty centavos; oils, having more or less the same
(c) Naphtha, gasoline and all generating power, per liter of volume
other similar products of distillation, capacity, twenty-five and one-half
per liter of volume capacity, one peso centavos, which tax shall attach to this
and six centavos: Provided, That on
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BOE Resolution No. 87-01 dated opinion that LOI 1416 which
February 7, 1987 as implemented by implements the exemption from
OEA Order No. 87-03-095 indicating payment of OPSF imposts as effected
that (sic) February 7, 1987 as the by OEA has no legal basis.
effectivity date that (sic) oil companies
should pay OPSF impost on export It was further emphasized that
sales of petroleum products. Effective payment to Caltex of the amount
February 7, 1987 sales to international authorized shall be subject to
vessels/airlines should not be included availability of funds of OPSF as of May
as part of its domestic sales. Changing 31, 1989 and applicable auditing rules
the effectivity date of the resolution and regulations; and that the
from February 7, 1987 to October 20, aggrieved party has 30 days within
1987 as covered by subsequent ERB which to appeal the decision of the
Resolution No. 88-12 dated November COA with regard to the disallowances
18, 1988 has allowed Caltex to include in accordance with the law.
in their domestic sales volumes to
international vessels/airlines and claim On September 8, 1989, Caltex filed an
the corresponding reimbursements Omnibus Request for Reconsideration
from OPSF during the period. It is our based on the ff. grounds:
opinion that the effectivity of the said 1. COA disallowed claims are
resolution should be February 7, 1987. authorized under existing rules,
orders, resolutions, circulars issued
c. Inventory losses Settlement of by the Department of Finance and
Ad Valorem the ERB pursuant to EO 137.
We reviewed the system of handling 2. Admnistrative interpretations in the
Borrow and Loan (BLA) transactions course of exercise of executive
including the related BLA agreement, power by the Department of
as they affect the claims for Finance and the ERB are legal and
reimbursements of ad valorem taxes. should be respected and applied
We observed that oil companies unless declared null and void by
immediately settle ad valorem taxes courts or repealed by legislation.
for BLA transaction (sic). Loan 3. Legal basis for retention of offset
balances therefore are not tax paid arrangement, as authorized by the
inventories of Caltex subject to executive branch of government,
reimbursements but those of the remains valid.
borrower. Hence, we recommend
reduction of the claim for July, August, On November 6, 1989, Caltex filed
and November, 1987 amounting to with the COA a Supplemental
P14,034,786 Omnibus Request for Reconsideration.
.
d. Sales to Atlas/Marcopper On February 16, 1990, COA, with
LOI No. 1416 dated July 17, 1984 Chairman Domingo taking no part and
provides that "I hereby order and direct with Commissioner Fernandez
the suspension of payment of all taxes, dissenting in part, handed down
duties, fees, imposts and other Decision No. 1171 affirming the
charges whether direct or indirect due disallowance for recovery of financing
and payable by the copper mining charges, inventory losses, and sales to
companies in distress to the national Marcopper and Atlas, while allowing
and local governments." It is our
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Hence, this petition for review under statutory exemption from taxation
Rule 45 of the RoC. should be manifest and unmistakable
from the language of the law on which
ISSUE: it is based. Thus, the claimed
Is the income derived from rentals of exemption must expressly be granted
real property owned by the YMCA in a statute stated in a language too
(established as a welfare, clear to be mistaken.
educational, and charitable non-profit
organization) subject to income tax In the instant case, the exemption
under the NIRC and the Constitution? claimed by the YMCA is expressly
disallowed by the very wording of the
HELD: last paragraph of then Section 27 of
YES. The NIRC provides: the NIRC which mandates that the
income of exempt organizations (such
SEC. 27. Exemptions from tax on as the YMCA) from any of their
corporations. -- The following properties, real or personal, be subject
organizations shall not be taxed under to the imposed by the same
this Title in respect to income received Code. Because the last paragraph of
by them as such -- said section unequivocally subjects to
tax the rent income f the YMCA from
(g) Civic league or organization not its rental property,the Court is duty-
organized for profit but operated bound to abide strictly by its literal
exclusively for the promotion of social meaning and to refrain from resorting
welfare; to any convoluted attempt at
construction.
(h) Club organized and operated
exclusively for pleasure, recreation, A reading of the last par. of Sec. 27
and other non-profitable purposes, no shows that the income from any
part of the net income of which inures property of exempt organizations, as
to the benefit of any private well as that arising from any activity it
stockholder or member; conducts for profit, is taxable. The
phrase any of their activities
Notwithstanding the provision in the conducted for profit does not qualify
preceding paragraphs, the income of the word properties. This makes
whatever kind and character of the income from the property of the
foregoing organization from any of organization taxable, regardless of
their properties, real or personal, or how that income is used -- whether for
from any of their activities conducted profit or for lofty non-profit purposes.
for profit, regardless of the disposition
made of such income, shall be subject The rental income is taxable
to the tax imposed under this Code. regardless of whence such income is
(as amended by Pres. Decree No. derived and how it used or disposed
1457) of. Where the law does not distinguish,
neither should we.
Because taxes are the lifeblood of the
nation, the Court has always applied Under the Constitution, what is
the doctrine of strict interpretation in exempted is not the institution itself;
construing tax those exempted from real estate taxes
exemptions. Furthermore, a claim of are lands, buildings and improvements
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corporation per Sections after the to tax as a tool for regulation. The
effectivity of said Code on January 1, power to tax which was called by
1992,which provides: Justice Marshall as the power to
destroy cannot be allowed to defeat an
It is hereby declared the policy of the instrumentality or creation of the very
State that the territorial and political entity which has the inherent power to
subdivisions of the State shall enjoy wield it.
genuine and meaningful local
autonomy to enable them to attain Hence, respondent Judge cannot
their fullest development as self-reliant therefore correctly say that the
communities and make them more questioned provisions of the Code do
effective partners in the attainment of not contain any distinction between a
national goals. Toward this end, the government corporation performing
State shall provide for a more governmental functions as against one
responsive and accountable local performing merely proprietary ones
government structure instituted such that the exemption privilege
through a system of decentralization withdrawn under the said Code would
whereby local government units shall apply to all government
be given more powers, authority, corporations. For it is clear from
responsibilities, and resources. The Section 133, in relation to Section 234,
process of decentralization shall of the LGC that the legislature meant
proceed from the national government to exclude instrumentalities of the
to the local government units. x x x national government from the taxing
powers of the local government units.
MR was denied. Hence, this petition
for review under Rule 45 of the RoC. As a general rule, the power to tax is
an incident of sovereignty and is
ISSUE: unlimited in its range, acknowledging
Whether MCIAA is liable to pay real in its very nature no limits, so that
property taxes to the City of Cebu. security against its abuse is to be
found only in the responsibility of the
HELD: legislature which imposes the tax on
YES. Local governments have no the constituency who are to pay it.
power to tax instrumentalities of the Nevertheless, effective limitations
National Government. The states have thereon may be imposed by the people
no power by taxation or otherwise, to through their Constitutions. Our
retard, impede, burden or in any Constitution, for instance, provides that
manner control the operation of the rule of taxation shall be uniform
constitutional laws enacted by and equitable and Congress shall
Congress to carry into execution the evolve a progressive system of
powers vested in the [national] taxation. So potent indeed is the
government. The doctrine emanates power that it was once opined that the
from the supremacy of the national power to tax involves the power to
government over local governments. destroy. Verily, taxation is a
Otherwise, mere creatures of the State destructive power which interferes with
can defeat national policies thru the personal and property rights of the
extermination of what local authorities people and takes from them a portion
may perceive to be undesirable of their property for the support of the
activities or enterprise using the power government. Accordingly, tax statutes
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must be construed strictly against the rule is where the exemption was
government and liberally in favor of the granted to private parties based on
taxpayer. But since taxes are what we material consideration of a mutual
pay for civilized society, or are the nature, which then becomes
lifeblood of the nation, the law frowns contractual and is thus covered by the
against exemptions from taxation and non-impairment clause of the
statutes granting tax exemptions are Constitution.
thus construed strictissimi juris against
the taxpayer and liberally in favor of The sections of the LGC speak of: (a)
the taxing authority. the limitations on the taxing powers of
local government units and the
Elsewise stated, taxation is the rule, exceptions to such limitations; and (b)
exemption therefrom is the the rule on tax exemptions and the
exception. However, if the grantee of exceptions thereto. The use
the exemption is a political subdivision of exceptions or provisos in these
or instrumentality, the rigid rule of sections, as shown by the following
construction does not apply because clauses:
the practical effect of the exemption is (1) unless otherwise provided
merely to reduce the amount of money herein in the opening paragraph of
that has to be handled by the Section 133;
government in the course of its (2) Unless otherwise provided
operations. in this Code in Section 193;
(3) not hereafter specifically
The power to tax is primarily vested in exempted in Section 232; and
the Congress; however, in our (4) Except as provided herein
jurisdiction, it may be exercised by in the last paragraph of Section 234
local legislative bodies, no longer
merely by virtue of a valid delegation initially hampers a ready
as before, but pursuant to direct understanding of the sections. The
authority conferred by Section 5, aforementioned clause in Section 133
Article X of the Constitution. Under the seems to be inaccurately worded.
latter, the exercise of the power may Instead of the clause unless otherwise
be subject to such guidelines and provided herein, with the herein to
limitations as the Congress may mean, of course, the section, it should
provide which, however, must be have used the clause unless
consistent with the basic policy of local otherwise provided in this Code. The
autonomy. former results in absurdity since the
section itself enumerates what are
Under Section 14 of R.A. No. 6958, beyond the taxing powers of local
MCIAA is exempt from the payment of government units and, where
realty taxes imposed by the National exceptions were intended, the
Government or any of its political exceptions are explicitly indicated in
subdivisions, agencies, and the next.
instrumentalities. Nevertheless, since
taxation is the rule and exemption Thus, reading together Sections 133,
therefrom the exception, the 232, and 234 of the LGC, as a general
exemption may thus be withdrawn at rule, as laid down in Section 133, the
the pleasure of the taxing taxing powers of local government
authority. The only exception to this units cannot extend to the levy of, inter
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Rule: Property of the state and of its The respect accorded by nations to
municipal subdivisions devoted to each other because they are equals
government uses and purposes is
generally deemed exempt from
taxation
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What are the Three Tests in When the tax levied upon constitutes a
Determining Compliance with the PRIOR RESTRAINT to the basic right
Equal Protection Clause? of thought and expression (Tolentino
vs. Secretary of Finance)
1. Rational Basis Test The
guaranty of the equal protection of Prior Restraint
the laws is not violated by
legislation based on reasonable Prior restraint means official
classification. This standard of governmental restrictions on the press
review is quite differential; or other forms of expression in
legislative classifications are advance of actual publication or
presumed to be valid largely for dissemination (Chavez vs. Gonzales,
the reason that the drawing of GR 168338)
lines that create distinctions is
peculiarly a legislative task and The Court held that the separate
unavoidable one (British American sales tax on newspapers with
Tobacco v. Camacho) circulation of over 20,000 imposed was
a deliberate and calculated device in
2. Strict Scrutiny Test It is applied the guise of tax to limit the circulation
when the challenge statute either: of information to which the public is
entitled in virtue of the Constitutional
guarantees. (Grossjean v. American
Press)
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pay and in implementation of the social impose, tariff rates, import and export
justice principle that the more affluent quotas, tonnage and wharfage dues
should contribute more for the and other duties or imposts, within the
communitys benefit and is best framework of the national development
exemplified by the increase in income program of the Government (Sec. 28
tax rate as net taxable income (2), Art. VI, 1987 Constitution).
increases.
Note: The provision provides that the
The constitution does not really President may increase tariff rates as
prohibit regressive taxes, what it authorized by law even for revenue
provides is that congress shall evolve purposes only
a progressive tax system.
TAX EXEMPTION OF PROPERTIES
Social Justice ACTUALLY, DIRECTLY, AND
EXCLUSIVELY USED FOR
It is neither communism, nor RELIGIOUS, CHARITABLE AND
despotism, nor atomism, nor anarchy, EDUCATIONAL PURPOSES
but the humanization of laws and the
equalization of social and economic Charitable institutions, churches and
force by the State so that justice in its personages or convents appurtenant
rational and objectively secular thereto, mosques, non-profit
conception may at least be cemeteries, and all lands, buildings,
approximated. Social justice means and improvements, actually, directly,
the promotion of the welfare of all the and exclusively used for religious,
people, the adoption by the charitable, or educational purposes
Government of measures calculated to shall be exempt from taxation (Sec.
insure economic stability of all 28(3), Art, VI of the Constitution).
competent elements of society,
through the maintenance of a proper It pertains to exemption from
economic and social equilibrium in the real property taxes only.
interrelations of the members of the
community, constitutionally, through Gifts made in favor of
the adoption of measures legally charitable, religious or
justifiable, or extra constitutionally, educational purposes still
through the exercise of powers subject to donor's gift tax
underlying the existence of all exemption (Lladoc v. CIR)
governments on the time-honored
principle of salus populi est suprema ACTUAL, DIRECT AND EXCLUSIVE;
lex. (Calalang v. Williams) MEANING
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well-settled that the CTA has exclusive Tax exemptions are not self-
jurisdiction over tax cases except executing. Particular exemption
when there is a violation of the to proprietary educational
constitutional limitations where the institutions will apply only after
Supreme Court may interfere. Congress has laid down the
conditions for its enjoyment.
EXEMPTION FORM TAXES OF THE All grants, donations or
REVENUES AND ASSETS OF contributions used actually for
EDUCATIONAL INSTITUTIONS, educational purposes are tax
INCLUDING GRANTS, exempt where it is non-stock,
ENDOWMENTS, DONATIONS, AND non-profit institution
CONTRIBUTIONS
a. not limited to revenues and
All revenues and assets of non-stock, assets derived from strictly
non-profit educational institutions used school operations but it also
actually, directly, and exclusively for extends to incidental to
educational purposes shall be exempt incidental income
from taxes and duties. Upon the
dissolution or cessation of the b. in case of incidental income
corporate existence of such it must not only owned and
institutions, their assets shall be operated by the school but
disposed of in the manner provided by facilities must be loacated in
law. Proprietary educational the school campus
institutions, including those
cooperatively owned, may likewise be c. unrelated income are
entitled to such exemptions, subject to taxable
the limitations provided by law,
including restrictions on dividends and d. use of school's income must
provisions for reinvestment. and be in consonance with
Subject to conditions prescribed by purposes for which school is
law, all grants, endowments, created
donations, or contributions used
actually, directly, and exclusively for CLASS RECITATION WITH
educational purposes shall be exempt SUGGESTED ANSWERS
from tax (Sec. 4(3) and (4), Art. XIV
of the Constitution) Q: Are income taxes on the
Philippine Daily Inquirer allowed
This does not apply to then?
properties or from any activities
conducted for profit Yes, the press is not exempt from
income taxation
Proprietary educational
institutions shall not be Q: May SBC issue a memorandum
categorized as tax exempt prohibiting the use of social
under Tax Code and their networking sites?
statues will have to be based
only on the Constitution Yes provided that this is done for
regulation purposes, i.e. disciplinary
action in relation to conduct of the
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1, 1997, based on the survey of their Tax Rates Imposed on Alcohol And
current net retail price. Tobacco Products, Amending For The
Purpose Sections 131, 141, 143, 144,
The survey revealed that Lucky Strike 145 and 288 of the NIRC of 1997, As
Filter, Lucky Strike Lights, and Lucky Amended), took effect on January 1,
Strike Menthol Lights, are sold at the 2005. The statute, among others,
current net retail price of P22.54,
P22.61 and P21.23, per pack, (4) provided a legislative freeze on
respectively. Commissioner of the BIR brands of cigarettes introduced
thus recommended the applicable tax between the period January 2, 1997
rate of P13.44 per pack inasmuch as to December 31, 2003, such that said
Lucky Strikes average net retail price cigarettes shall remain in the
is above P10.00 per pack. classification under which the BIR has
determined them to belong as
On September 1, 2003, BAT filed of December 31, 2003, until revised by
before the RTC of Makati, Branch 61, Congress.
a petition for injunction with prayer for
the issuance of a TRO and/or writ of ISSUE:
preliminary injunction seeking to enjoin Whether (1) Section 145 of the
the implementation of the National Internal Revenue Code
aforementioned law, regulations, and (NIRC), as recodified by Republic Act
memorandum order on the ground that (RA) 8424; (2) RA 9334, which further
they discriminate against new brands amended Section 145 of the NIRC
of cigarettes in violation of the equal on January 1, 2005; (3) Revenue
protection and uniformity provisions of Regulations Nos. 1-97, 9-2003, and
the Constitution. CIR filed an 22-2003; and (4) Revenue
Opposition to the application for Memorandum Order No. 6-2003 are
issuance for the TRO. RTC denied the violative of the equal protection and
application for TRO holding that the uniformity clauses of the Constitution.
courts have no authority to restrain the (Whether the classification freeze
collection of taxes. Meanwhile, the provision violates the equal protection
Sec. of Finance filed a Motion to and uniformity of taxation clauses of
Dismiss contending that the petition is the Constitution.)
premature for lack of actual
controversy or urgent necessity to HELD:
justify judicial intervention.
AS TO THE LAW: CONSTITUTIONAL
RTC denied the motion to dismiss and
issued a writ of preliminary injunction The alleged discrimination arising from
to enjoin the implementation of the legislative classification freeze
Revenue Regulations Nos. 1-97, 9- between the brands under Annex D
2003, 22-2003 and Revenue and petitioners newly introduced
Memorandum Order No. 6-2003. RTC brands arose only because the former
later upheld the constitutionality of the were classified based on their current
assailed law, order, and regulations. net retail price as of October 1,
Hence, this petition for review. 1996 and BATs newly introduced
brands were classified based on their
While the petition was pending, RA current net retail price as of 2003.
9334 (An Act Increasing The Excise Without this corresponding freezing of
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ethical implications thereof. Curiously, RA 9334 did not alter this classification
the classification freeze provision was freeze provision of RA 8240. On the
put in place of the periodic adjustment contrary, Congress affirmed this
and reclassification provision because freezing mechanism by clarifying the
of the belief that the latter would foster wording of the law. We can thus
an anti-competitive atmosphere in the reasonably conclude, as the
market. Yet, as it is, this same criticism deliberations on RA 9334 readily
is being foisted by BAT upon show, that the administrative concerns
the classification freeze provision. in tax administration, which moved
Congress to enact the classification
The classification freeze provision was freeze provision in RA 8240, were
in the main the result of Congresss merely continued by RA 9334. Indeed,
earnest efforts to improve the administrative concerns may provide a
efficiency and effectivity of the tax legitimate, rational basis for legislative
administration over sin products while classification. In the case at bar, these
trying to balance the same with other administrative concerns in the
state interests. In particular, the measurement and collection of excise
questioned provision addressed taxes on sin products are readily
Congresss administrative concerns apparent as afore-discussed.
regarding delegating too much
authority to the DOF and BIR as this Aside from the major concern
will open the tax system to potential regarding the elimination of potential
areas for abuse and areas for abuse and corruption from
corruption. Congress may have the tax administration of sin products,
reasonably conceived that a tax the legislative deliberations also show
system which would give the least that the classification freeze
amount of discretion to the tax provision was intended to generate
implementers would address the buoyant and stable revenues for
problems of tax avoidance and tax government. With the frozen tax
evasion. classifications, the revenue inflow
would remain stable and the
Congress sought to, among others, government would be able to predict
simplify the whole tax system for sin with a greater degree of certainty the
products to remove these potential amount of taxes that a cigarette
areas of abuse and corruption from manufacturer would pay given the
both the side of the taxpayer and the trend in its sales volume over
government. Without doubt, time. The reason for this is that the
the classification freeze provision was previously classified cigarette brands
an integral part of this overall would be prevented from moving either
plan. This is in line with one of the upward or downward their tax brackets
avowed objectives of the assailed law despite the changes in their net retail
to simplify the tax administration and prices in the future and, as a result, the
compliance with the tax laws that are amount of taxes due from them would
about to unfold in order to minimize remain predictable. The classification
losses arising from inefficiencies and freeze provision would, thus, aid in the
tax avoidance scheme, if not outright revenue planning of the government.
tax evasion.
The classification freeze
provision addressed Congresss
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the act of imposing a second tax would Used for religious, charitable, or
be of such nature that it is educational purposes.
confiscatory, then the second tax will
be invalid.
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areas within Camp John Hay and Poro granting tax exemption must have the
Point for purposes of turning those concurrence of a majority of all the
places into principal tourist and members of Congress. Tax
recreation spots. President Ramos exemptions cannot be implied as it
issued Proclamation No. 420 which must be categorically and
established a SEZ on 288.1 hectares unmistakeably expressed.
of CJH. Under Section 3 of said act,
CJH was given all the applicable 3. DELPHER TRADES
incentives of the SEZ under Section 12 CORPORATION v. IAC
of RA 7227 and those applicable
incentives granted to the Export FACTS:
Processing Zones, the Omnibus Petitioner Delpher Trades Corp. and
Investment Code of 1987, the Foreign Delphin Pacheco were the owners of
Investment Act of 1991, and the new the Malinta Estate in the Municipality
investment laws that may hereinafter of Polo, who leased to Construction
be enacted. RESPONDENTS contend Components International Inc. the
that by extending the CJH SEZ same property and providing that
economic incentives similar to those during the existence or after the term
enjoyed by SUBIC SEZ, the of this lease the lessor should he
proclamation is merely implementing decide to sell the property leased shall
the legislative intent of said law and first offer the same to the lessee and
underscore that the govt s policy of the letter has the priority to buy under
bases conversion cannot be achieved similar conditions. Respondent Hydro
without extending the same tax Pipes on the other hand, was assigned
exemptions granted. with the rights and obligations of
Construction Components under the
ISSUE: above lease contract with the signed
Whether the grant of exemption to conformity and consent of lessors
CHJ SEZ is valid Delfin and Pelagia. Delpher Trades
acquired the property from Pelagia
HELD: Pacheco and Delphin Pacheco (a
While the grant of economic incentives deed of exchange was executed
may be essential to the creation and between lessors Delfin and Pelagia
success of SEZs, the grant thereof to Pacheco and defendant Delpher
CHJ SEZ cannot be sustained. The Trades Corporation whereby the
incentives under RA 7227 are former conveyed to the latter the
exclusive only to the SUBIC SEZ.It is leased property together with another
the legislature, unless limited by a parcel of land also located in Malinta
provision in the Constitution, that has Estate for 2,500 shares of stock of
full power to exempt any person or defendant corporation with a total
corporation or a class of property from value of P1,500,000.00). Respondent
taxation, its power to exempt being as however filed an amended complaint
broad as its power to tax. Other than for reconveyance in its favor on the
Congress, the Constitution may itself ground that it was not given the first
provide for specific tax exemptions, or option to buy the leased property
local govt may pass ordinances on pursuant to the proviso in the lease
exemption only from local taxes. The agreement.
challenged grant would circumvent the
Constitutions imposition that a law ISSUE:
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additional insurance that took effect in deficiency income tax for the year
1984 was an obligation subject to a 1989 in the amount of 79,099,999.22.
suspensive condition, but still a part of The new CIC asked for
the insurance sold to which Lincoln reconsideration, asserting that the
was liable for the payment of the assessment should be directed against
documentary stamp tax. the old CIC and not against the new
CIC which is owned by an entirely
While tax avoidance schemes and different set of stockholders; moreover
arrangements are not prohibited, tax Toda had undertaken to hold the buyer
laws cannot be circumvented in order free from all tax liabilities for the fiscal
to evade the payment of just taxes. In years 1987-1989.
the case at bar, to claim that the
increase in the amount insured by On 27 January 1995, the estate of
virtue of the automatic increase clause Benigno P. Toda received an
should not be included in the assessment notice dated 9 January
computation of the DST dues on the 1995 form the CIR. The estate
policy would be a clear evasion of the thereafter filed a letter of protest which
law requiring that the tax can be was dismissed by the CIR, stating that
computed on the basis of the amount Toda by covering up the additional
insured by the policy. gain of 100 million, which resulted in
the change of income structure of the
5. CIR VS. ESTATE OF BENIGNO proceeds of the sale of the two parcels
TODA of land and the building thereon to an
individual capital gains tax, thus
FACTS: evading the higher corporate income
On March 2, 1989 CIC authorized tax rate of 35%.
Benigno P. Toda, Jr. President and
owner of 99.991% of its issued and ISSUE:
outstanding capital stock, to sell the Whether or not there was tax evasion
building and the two parcels of land for
an amount not less than 90 million. On HELD:
30 August 1989, Toda purportedly sold Yes. Tax avoidance and Tax evasion
the property for 100 million to Rafael are the two most common ways used
A. Altonga, who in turn sold the same by taxpayers in escaping from
property on the same day to Royal taxation. Tax avoidance is the tax
Match Inc. for 200 million. For the sale saving device within the means
of the property to RMI altonga paid sanctioned by law. Tax evasion on the
capital gains tax of 10 million. other hand is a scheme used outside
those lawful means and when availed
On April 16, 1990 CIC filed its of, it usually subjects the taxpayer to
corporate annual income tax return of further or additional civil or criminal
the year 1989, declaring among other liabilities.
things its gain form the sale of real
property in the amount of 75,728.021. Tax evasion connotes the integration
On July 20 1990, Toda sold his entire of three factors (1) the end to be
shares of stocks in CIC to Le Hun T. achieved (2) an accompanying state of
Choa for 12.5 million. On 29 March mind which is described as being evil,
1994, the BIR sent an assessment in bad faith, willful, deliberate and not
notice and demand letter to the CIC of
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shall pay franchise tax equivalent to Code. The provision exempts from real
three percent (3%) of all gross receipts property tax all machineries and
of the business transacted under its equipment that are actually, directly,
franchise. But whether the franchise and exclusively used by the local water
tax exemption would include districts and GOCCs engaged in the
exemption from exactions by both the supply and distribution of water or
local and the national government is generation of electric power.
not unequivocal.
The LBAA denied the petition for
The uncertainty in the in lieu of all exemption.
taxes clause in R.A. No. 7294 on
whether SMART is exempted from ISSUE:
both local and national franchise tax Whether the machineries and
must be construed strictly against equipment are exempted from real
SMART which claims the exemption. property tax
SMARTs claim for exemption from
local business and franchise taxes HELD:
based on Section 9 of its franchise is Sec. 234(c) of the LGC is clear and
therefore unfounded. unambiguous. It grants tax exemption
to machineries and equipment that are
7. NAPOCOR v. CENTRAL BOARD actually, directly, and exclusively used
OF ASSESSMENT APPEALS by GOCCs. NAPOCOR is not the one
(CBAA) actually and directly using the
machines but BPPC. Further, applying
FACTS: the strictissimi juris standard,
First Private Power Corporation NAPOCOR failed to prove its claim for
(FPPC) entered into a BOT agreement exemption. Strictissimi juris provides
with NAPOCOR for the construction of that the claimant must show beyond
the 215 Megawatt Bauang Diesel doubt with clear and convincing
Power Plant in Payocpoc, Bauang, La evidence, the factual basis of the
Union. The agreement provided for the claim. The terms of the BOT provides
creation of the Bauang Private Power that actual, direct, and immediate
Plant Corporation (BPPC), which will ownership of the machineries lies with
own, manage, and operate the power BPPC while that of NAPOCOR is only
plant. BPPC will convert NAPOCORs contingent and not sufficient to support
supplied diesel fuel into electricity for a its claim for exemption. Hence, the
fee. BPPCs machineries were machineries and equipment are not tax
declared tax exempt by the Municipal exempt.
Assessors Office. This tax exemption
was questioned by Bauangs Vice
Mayor. The Deputy Executive Director
of the Department of Finance declared
that the machineries and equipment
are subject to real property tax.
Thereafter, a Notice of Assessment
was given to BPPC. NAPOCOR filed a
petition with the La Union Board of
Assessment Appeals (LBAA) invoking
Sec. 234(c) of the Local Government
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The following are the remedies A: Section 150 (a) of the Local
available to the taxpayer PRIOR Government Code is instructive in the
to assessment: case at bar: For purposes of collection
o Question the legality of of the taxes under Section 143 of this
ordinances (Sec. 187, Code, manufacturers, assemblers,
RA 7160) repackers, brewers, distillers, rectifiers
and compounders of liquor, distilled
The following are the remedies spirits and wines, millers, producers,
available to the taxpayer exporters, wholesalers, distributors,
AFTER assessment: dealers, contractors, banks, and others
o Protest of assessment financial institutions, and other
(Sec. 195, RA 7160) businesses, maintaining or operating
o Refund (Sec 196, RA branch or sales outlet making the sale
7160) or transaction, and the tax thereon
shall accrue and shall be paid to the
The following are the civil municipality where such branch or
remedies available to the Local sales outlet is located. In cases where
there is no such branch or sales outlet
104
105
municipality where such branch or however, That such appeal shall not
sales outlet is located xxx have the effect of suspending the
effectivity of the ordinance and the
CASE DIGESTS: accrual and payment of the tax, fee, or
charge levied therein: Provided, finally,
1. HON. FRANKLIN M. DRILON VS. That within thirty (30) days after receipt
MAYOR ALFREDO S. LIM of the decision or the lapse of the
sixty-day period without the Secretary
FACTS: of Justice acting upon the appeal, the
Four oil companies and a taxpayer aggrieved party may file appropriate
filed a petition questioning the legality proceedings with a court of competent
of Ordinance 7794 of the City of jurisdiction.
Manila, or the Manila Revenue Code.
The Secretary of Justice ruled against The assailed decision of the lower
the government, on the grounds that it court declares that the said section is
is procedurally infirm for non- unconstitutional because it grants the
compliance with the requirements of Secretary of Justice the power to
the law and that it is contrary to public review tax ordinances and
policy. This decision was reversed by consequently annul them, if found not
the Regional Trial Court. It also legal. As an offshoot, this grants him a
declared Section 187 of the Local power of control, which is in violation
Government Code as unconstitutional. of Article 10 of the 1987 Constitution.
106
107
because under Section 133 of the a grantee, it shall pay the tax
Local Government Code, common represented by 2% of gross earnings.
carriers are exempted from the taxing
authority of LGUs. To wit: RA 7160, upon its enactment, then
authorized local government units to
"Section 133. Common Limitations on impose a tax on business enjoying a
the Taxing Powers of Local franchise of 50% of 1% of the gross
Government Units. - Unless otherwise annual receipts for the preceding year.
provided herein, the exercise of the The City Treasurer of San Pablo city,
taxing powers of provinces, cities, acting under its Revenue Code,
municipalities, and barangays shall not imposed a business tax on
extend to the levy of the following : MERALCO. The latter paid under
xxx x protest, and filed an action with the
xx x xx Regional Trial Court to declare the
(j) Taxes on the gross Revenue Code of San Pablo City null
receipts of transportation and void. The Court Ruled in favor of
contractors and persons MERALCO.
engaged in the
transportation of ISSUE:
passengers or freight by Whether or not the City of San Pablo
hire and common may impose a local franchise tax
carriers by air, land or pursuant to the LGC upon the Manila
water, except as Electric Company which pays a tax
provided in this Code." equal to two percent of its gross
receipts in lieu of all taxes and
Petition granted. assessments of whatever nature
imposed by any national or local
4. CITY GOVERNMENT OF SAN authority on savings or income.
PABLO, LAGUNA vs. HONORABLE
BIENVENIDO V. REYES, in his HELD:
capacity as Presiding Judge, There is an implied repeal by the Local
Regional Trial Court Government Code of the Meralco
franchise insofar as the latter impose a
FACTS: 2% tax in lieu of all taxes and
Escudero Electric Services Company assessments of whatever nature.
was granted a legislative franchise to Section 137 of the LGC grants the
maintain and operate an electric light local government unit the authority to
and power system in the City of San impose franchise taxes
Pablo and nearby municipalities. notwithstanding any exemption
Under Section 10 of Act 3648, the granted by any law or other special
municipalities shall be paid by the laws." Likewise, under Section 193, to
grantee a tax equal to two percentum wit: unless otherwise provided in this
of the gross earnings from the electric Code, tax exemptions or incentives
current sold or supplied, and the same granted to, or presently enjoyed by all
shall be in lieu of all taxes and persons, whether natural or juridical,
assessments. The franchise was including government-owned or
subsequently transferred to Manila controlled corporations, except local
Electric Company (MERALCO) under water districts, cooperatives duly
Republic Act 2340. Under PD 551, as registered under R.A. 6938, non-stock
108
ISSUE:
Whether or not the amusement tax on
admission tickets is a national or local
tax
HELD:
The Local Tax Code of 1973,
particularly Section 13, states that the
province shall impose a tax on
admission to be collected from the
proprietors, lessees, or operators of
theaters, cinematographs, concert
halls, circuses and other places of
109
110
111
112
g. Forfeiture - If there is NO
bidder or highest bid is TAXPAYERS REMEDIES
insufficient to pay real
property tax and related A. Administrative
interest and costs, the Local
Treasurer shall purchase the 1. Protest on Tax Assessments
property in behalf of the
LGU. Process in Protest:
Notes: Legal Redemption within 1 a. File a petition under oath
year from forfeiture, owner may within 60days from the
redeem property by paying to treasurer receipt of the written notice
full amount of tax, interest, costs of of assessment to the Local
sale, otherwise ownership shall vest to Board of Assessment of
LGU. (Sec. 263, RA 7160). Appeals (LBAA) (Sec.
Sanggunian concerned may, by 229[a], RA 7160)
ordinance duly approved and with b. The LBAA shall decide the
notice of not less 20days, sell/dispose protest within 120 days from
by public auction of property acquired receipt of the appeal
by forfeiture (Sec. 264, RA 7160) c. The aggrieved taxpayer may
appeal to the Central Board
h. Further Levy levy may be of Assessment Appeals
repeated until full amount within 30days after receipt of
due, including all expenses, the adverse decision by the
is collected. LBAA or within 30days after
the 120-day period of the
3. Distraint of Personal Property LBAA to decide (Sec.
with notice of delinquency 229[a], RA 7160)
posted and published, personal d. The adverse decision of the
property may be distrained to CBAA may be appealed to
effect payment (Sec. 254, LGC) CTA en banc within 30days
from the receipt of notice
B. JUDICIAL (R.A.9282)
e. Appeal to the SC within 15
1. Civil Action judicial action days from receipt of adverse
filed by the Local Treasurer: decision of the CTA en banc
a. Within 5 years from the (Rule 43, Rules of Court)
date the tax is due (Sec.
266, RA 7160), or Note: Payment under Protest - No
b. 10 years from the protest shall be entertained unless the
DISCOVERY of fraud or tax be first paid (Sec. 252, RA 7160).
intent to evade payment Payment of the tax assessed under
(Sec. 270, RA 7160) protest is a condition sine qua non
before the trial court could assume
Note: A formal demand for payment of jurisdiction over the petition and for
the delinquent tax is not required for failure to do so, the RTC has no
the initiation of either remedy. It is jurisdiction to entertain it Under the
enough that a notice of delinquency is Doctrine of Exhaustion of
made, to be posted and published as Administrative Remedies, an error in
required under Sec. 254 of the LGC. the assessment must be
113
114
Q: What is the Formula for Real A: Under section 218 of the Local
Property Tax? Government Code the classification of
lands for purposes of assessment are
A: 1) Ascertain the assessment level of Commercial, Agricultural, Residential,
the property Mineral, Industrial, Timberland, and
2) Multiply the market value by the Special lands.
applicable assessment level of the
property Q: What is the difference between a
3) Find the tax rate which corresponds Commercial land and Industrial
to the class (use) of the property and land?
multiply the assessed value by the
applicable tax rates. (Lopez v City of A: Section 199 of the Local
Manila, et al.) Government Code provides that a
Commercial land is one devoted
For easy reference the formula for principally for the object of profit, and
computation of real property tax is set is not classified as agricultural,
forth, thus industrial, mineral, timber, or
residential land while Industrial land is
Market Value one devoted principally to industrial
xxx activity as capital investment and is not
115
116
117
118
119
buy the same and not just to lease Moreover, under article VI section 28
the lot, the titles are given to the (3) all lands and buildings actually,
buyer. What is the status of the land directly and exclusively used for
with respect to the buyer? religious purposes shall be exempt
from taxation. When the property was
Q: An accounting firm employs leased to dating daan and dating daan
3000 employees, 2500 of them were used it for exclusively religious
given laptops, are they taxable as purposes it is still exempt from real
real property? Are they considered property tax. However, when
machineries? datinddaan subleased the property to
another religious sect for profit it was
A: For purposes of taxation the term divested of its exempted status. Thus,
real property may include things dating daan is liable to pay real
which should generally be regarded as property tax.
personal property. For real property
tax purposes such personal properties Q: In a cinema, are the machineries
may be considered as real property, if used taxable? Is the Projector
they are essential and principal taxable? Are the bolted chairs
elements of the business being taxable?
conducted in the said land or building A: Yes. The real property tax is
(Caltex Phils. v. Central board of imposed on real property such as land,
assessments appeals et. al., 114 buildings, machinery and other
SCRA 296) improvements not otherwise
They are considered machineries specifically exempted under the code.
because the latter includes mobile (Sec. 232, RA 7160)
equipment, which are essential to an
industry. The projector is taxable. For purposes
of taxation the term real property may
Q: A property owned by The include things which should generally
Republic of the Philippines is be regarded as personal property. For
leased to Dating Daanfor purposes real property tax purposes such
of the latters weekly gathering. Is personal properties may be considered
the property taxable or not? The as real property, if they are essential
head of Dating Daan intended to and principal elements of the business
sublease the land to another being conducted in the said land or
religious sect for profit. Is it building (Caltex Phils. v. Central
taxable? board of assessments appeals et.
al., 114 SCRA 296), in the case at bar
A: First and foremost the following are projectors are necessary in cinemas.
exempt from real property taxes under
section 243 of the LGC (a) Real The bolted chairs for purposes of
property owned by the Republic of the taxation are taxable because they are
Philippines or any of its political considered real property under Article
subdivisions except when the 415 (3) of the New Civil Code. It is
beneficial use thereof has been attached to an immovable in a fixed
granted, for consideration or manner in such a way that it cannot be
otherwise, to a taxable person, the real separated therefrom without breaking
property prior to being leases to dating the material or deterioration of the
daan is exempt from real property tax. object.
120
CASE DIGESTS
Q: Is an Elevator considered
machinery or improvements? 1. CALTEX PHILIPPINES v CBAA
121
said machines and equipment are We hold that the said equipment and
personal property subject to realty tax. machinery, as appurtenances to the
gas station building or shed owned by
ISSUE: Caltex (as to which it is subject to
Whether or not the questioned realty tax) and which fixtures are
property are real property to be subject necessary to the operation of the gas
to realty tax. station, for without them the gas
station would be useless, and which
HELD: have been attached or affixed
Section 2 of the Assessment Law permanently to the gas station site or
provides that the realty tax is due "on embedded therein, are taxable
real property, including land, buildings, improvements and machinery within
machinery, and other improvements" the meaning of the Assessment Law
not specifically exempted in section 3 and the Real Property Tax Code.
thereof. This provision is reproduced Improvements on land are commonly
with some modification in the Real taxed as realty even though for some
Property Tax Code which provides: purposes they might be considered
SEC. 38. Incidence of Real Property personalty (84 C.J.S. 181-2, Notes 40
Tax. There shall be levied, assessed and 41). "It is a familiar phenomenon
and collected in all provinces, cities to see things classed as real property
and municipalities an annual ad for purposes of taxation which on
valorem tax on real property, such as general principle might be considered
land, buildings, machinery and other personal property" (Standard Oil Co. of
improvements affixed or attached to New York vs. Jaramillo, 44 Phil. 630,
real property not hereinafter 633).
specifically exempted.
The Code contains the following 2. LUNG CENTER OF THE PHILS v
definitions in its section 3: QUEZON CITY
k) Improvements is a valuable
addition made to property or an FACTS:
amelioration in its condition, amounting The petitioner Lung Center of
to more than mere repairs or the Philippines is a non-stock and non-
replacement of waste, costing labor or profit entity established on January 16,
capital and intended to enhance its 1981 by virtue of Presidential Decree
value, beauty or utility or to adapt it for No. 1823. It is the registered owner of
new or further purposes. a parcel of land, particularly described
m) Machinery shall embrace as Lot No. RP-3-B-3A-1-B-1, SWO-04-
machines, mechanical contrivances, 000495, located at Quezon Avenue
instruments, appliances and apparatus corner Elliptical Road, Central District,
attached to the real estate. It includes Quezon City. Erected in the middle of
the physical facilities available for the aforesaid lot is a hospital known as
production, as well as the installations the Lung Center of the Philippines. A
and appurtenant service facilities, big space at the ground floor is being
together with all other equipment leased to private parties, for canteen
designed for or essential to its and small store spaces, and to medical
manufacturing, industrial or agricultural or professional practitioners who use
purposes (See sec. 3[f], Assessment the same as their private clinics for
Law). their patients whom they charge for
their professional services. Almost
122
123
124
imposed by the City. MIAA then paid mention of one person, thing, or act
some of the real estate tax already excludes all others. An international
due. airport is not among the exceptions
mentioned in Section 193 of the Local
MIAA admits that the MIAA Charter Government Code. Thus, respondents
has placed the title to the Airport assert that MIAA cannot claim that the
Lands and Buildings in the name of Airport Lands and Buildings are
MIAA. However, MIAA points out that it exempt from real estate tax.
cannot claim ownership over these
properties since the real owner of the Respondents also cite the ruling of this
Airport Lands and Buildings is the Court in Mactan International Airport v.
Republic of the Philippines. The MIAA Marcos where we held that the Local
Charter mandates MIAA to devote the Government Code has withdrawn the
Airport Lands and Buildings for the exemption from real estate tax granted
benefit of the general public. Since the to international airports. Respondents
Airport Lands and Buildings are further argue that since MIAA has
devoted to public use and public already paid some of the real estate
service, the ownership of these tax assessments, it is now estopped
properties remains with the State. The from claiming that the Airport Lands
Airport Lands and Buildings are thus and Buildings are exempt from real
inalienable and are not subject to real estate tax.
estate tax by local governments.
ISSUE:
MIAA also points out that Section 21 of Whether the Airport Lands and
the MIAA Charter specifically exempts Buildings of MIAA are exempt from
MIAA from the payment of real estate real estate tax under existing laws.
tax. MIAA insists that it is also exempt
from real estate tax under Section 234 HELD:
of the Local Government Code The Airport Lands and Buildings of
because the Airport Lands and MIAA are property of public dominion
Buildings are owned by the Republic. and therefore owned by the State or
To justify the exemption, MIAA invokes the Republic of the Philippines.
the principle that the government
cannot tax itself. MIAA points out that No one can dispute that properties of
the reason for tax exemption of public public dominion mentioned in Article
property is that its taxation would not 420 of the Civil Code, like "roads,
inure to any public advantage, since in canals, rivers, torrents, ports and
such a case the tax debtor is also the bridges constructed by the State," are
tax creditor. owned by the State. The term "ports"
includes seaports and airports. The
Respondents invoke Section 193 of MIAA Airport Lands and Buildings
the Local Government Code, constitute a "port" constructed by the
which expressly withdrew the tax State. Under Article 420 of the Civil
exemption privileges of "government- Code, the MIAA Airport Lands and
owned and-controlled corporations" Buildings are properties of public
upon the effectivity of the Local dominion and thus owned by the State
Government Code. Respondents also or the Republic of the Philippines.
argue that a basic rule of statutory
construction is that the express
125
Section 234(a) of the Local (CHH) in Cebu City. In the late 1990s,
Government Code exempts from real respondent constructed the CHH
estate tax any "[r]eal property owned Medical Arts Center
by the Republic of the Philippines." (CHHMAC). Thereafter Certificate of
Section 234(a) provides: Occupancy was issued to the center
with a classification of Commercial
SEC. 234. Exemptions from Real Clinic.
Property Tax. The following are
exempted from payment of the real Petitioner City Assessor of Cebu City
property tax: assessed the CHHMAC building as
(a) Real property owned by the commercial with a market value of
Republic of the Philippines or any of its PhP 28,060,520 and an assessed
political subdivisions except when the value of PhP 9,821,180 at the
beneficial use thereof has been assessment level of 35% for
granted, for consideration or commercial buildings, and not at the
otherwise, to a taxable person; 10% special assessment currently
xxx. imposed for CHH and its other
separate buildingsthe CHHs Dietary
This exemption should be read in and Records Departments.
relation with Section 133(o) of the
same Code, which prohibits local Thus, respondent asserting that
governments from imposing "[t]axes, CHHMAC is part of CHH and ought to
fees or charges of any kind on the be imposed the same special
National Government, its agencies assessment level of 10% with that of
and instrumentalities x xx." The real CHH. Respondent further contended in
properties owned by the Republic are its position paper that CHHMAC
titled either in the name of the building is actually, directly, and
Republic itself or in the name of exclusively part of CHH and should
agencies or instrumentalities of the have a special assessment level of
National Government. The 10% as provided under City Tax
Administrative Code allows real Ordinance LXX. Respondent asserted
property owned by the Republic to be that the CHHMAC building is similarly
titled in the name of agencies or situated as the buildings of CHH,
instrumentalities of the national housing its Dietary and Records
government. Such real properties Departments, are completely separate
remain owned by the Republic and from the main CHH building and are
continue to be exempt from real estate imposed the 10% special assessment
tax. level. In fine, respondent argued that
the CHHMAC, though not actually
4. CITY ASSESSOR OF CEBU v indispensable, is nonetheless
ASSOCIATION OF BENEVOLA De incidental and reasonably necessary to
CEBU CHHs operations.
FACTS: ISSUE:
Respondent Association of Benevola Whether or not CHHMAC building is
de Cebu, Inc. is a non-stock, non-profit liable to pay the 35% assessment
organization organized under the laws level.
of the Republic of the Philippines and
is the owner of Chong Hua Hospital HELD:
126
127
128
129
a. Is exported into the under Sec. 301 and 302 of the TCCP
Philippines fall within the exclusive appellate
b. At a price less than its jurisdiction of the Court of Tax Appeals
normal value (CTA)
c. When destined for domestic
consumption Amount of anti-dumping duty
2. And such exportation
a. Is causing or The difference between the export
b. Is threatening to cause price and the normal value of such
material injury to a domestic product, commodity or article.
industry or
c. Materially retards the Countervailing duty defined
establishment of a domestic
industry producing the like 1. Additional customs duties
product. imposed on
2. Any product, commodity or
What is the normal value for article of commerce
purposes of anti-dumping? 3. Which is granted directly or
indirectly
a. The comparable price a. By the government in the
b. At the date of sale country of origin or
c. Of like product, commodity or exportation
article b. Any kind or form of specific
d. In the ordinary course of trade subsidy
e. When destined for consumption c. Upon the production,
in the country of export manufacture or exportation
of such product, commodity
Who is the imposing authority of or article and
Anti-dumping duties? 4. The importation of such
subsidized product, commodity
a. The Secretary of Trade and or article
Industry in the case of non- a. Has caused or
agricultural product, commodity b. Threatens to cause material
or article injury to a domestic industry
b. The Secretary of Agriculture in c. Has materially retarded the
the case of agricultural product, growth or prevents the
commodity or article after formal establishment of a domestic
investigation and affirmative industry
finding of the Tariff Commission
c. The decision on whether or not Kinds of specific subsidies
to impose a definitive anti-
dumping duty remains the 1. Bounty
prerogative of the Tariff - Cash award paid to an
Commission. exporter or manufacturer
2. Subsidy
Where to appeal? - Fiscal incentives not in the
form of direct cash award to
The decisions of the DTI and DA encourage manufacturers or
Secretaries involving dumping duties exporters
130
3. Subvention
- Any assistance other than a Imposing authority for marking
bounty or subsidy given by a duties
government for the
manufacture and/or - Commissioner of Customs
exportation of an article
Instances when the Commissioner
Amount of countervailing duty of the BOC may except imported
article from the marking
The duty shall be equivalent to the requirement:
bounty, subsidy or subvention.
1. Such article is incapable of
Imposing authority for being marked
countervailing duties 2. Such article cannot be marked
prior to shipment to the
1. The DTI Secretary in the case Philippines without injury
of non-agricultural product, 3. Such article cannot be marked
commodity or article or prior shipment to the Philippines
2. The DA Secretary in the case of except at an expense
agricultural product, commodity economically prohibitive of its
or article after formal importation
investigation and affirmative 4. The marking of a container will
finding of the Tariff Commission reasonably indicate the origin of
3. The decision on whether or not such article
to impose a definitive 5. Such article is a crude
countervailing duty remains the substance
prerogative of the Tariff 6. Such article is imported for use
Commission. by the importer and not
intended for sale in its imported
Marking Duty defined or any other form
7. Such article is to be processed
1. Additional customs duties into the Philippines by the
imposed on foreign articles or importer for his account
its container if the article itself otherwise then for the purpose
cannot be marked of concealing the origin of such
a. Not marked in any official article and in such manner that
language of the Philippines any mark contemplated would
b. In a conspicuous place be necessarily be obliterated,
i. As legibly, indelibly and destroyed or permanently
permanently concealed
ii. In such manner as to 8. An ultimate purchaser by
indicate to an ultimate reason of the character of such
purchaser in the article must necessarily know
Philippines the name of the country of origin of such
the country of origin article even though it is not
2. The duty shall be five percent marked to indicate its origin
(5%) ad valorem of the articles 9. Such article was produced more
than twenty (20) years prior to
131
132
133
134
Anti-Dumping Countervailing Discriminatory Safeguard
Marking Duty Flexible Tariff Clause
Duty Duty Duty Measures
Definition
Additional Additional Imposes directly
A special duty
customs duties customs duties or indirectly upon
imposed on the
imposed on any imposed on the disposition or
importation of a
product, foreign articles or transportation in
product,
commodity or its container if the transit through or
commodity or 2) In the interest of national
article of article itself not re-exportation
article of economy; general welfare and
commerce which marked in any from such
commerce into or national security, the
is granted directly official language country of any
the Philippines at President upon
or indirectly by of the Philippines article wholly or These are
less than its recommendation of the NEDA
the government in a conspicuous in part the growth emergency
normal value is empowered:
in the country of place as legibly, of product in the measures
when destined for a) To increase, reduce or
origin or indelibly and Philippines any including tariffs,
domestic remove existing protective rates
exportation any permanently unreasonable to protect
consumption in of import duty, provided that the
kind or form of in such manner charge, exaction, domestic
the exporting increase should not be higher
specific subsidy as to indicate to regulation or industries and
country which than 100% ad valorem.
upon the an ultimate limitation which is producers from
importation is b) To establish import
production, purchaser in the not equally increased imports
causing or is quota or to ban imports to any
manufacture or Philippines the enforced upon which inflict or
threatening to commodity.
exportation of name of the like articles of could inflict
cause material c) To impose additional
such product, country of origin. every foreign serious injury on
injury to a duty on all imports not
commodity or country or them.
domestic industry exceeding 10% ad valorem.
article and the discriminates
or materially d) To modify the forms of
importation of against the
retards the duty whether ad valorem or
such subsidized commerce of the
establishment of specific.
product, Philippines
a domestic
commodity or directly or
industry
article has indirectly by law
producing the like
caused or or administrative
product.
threatens to regulation or
135
136
price level.
Purpose
Protect local Protect local Prevent possible Protect domestic
Protect interest of national
industries from industries from deceptions as to Protect national industries and
economy, general welfare and
undue undue the origin of interest producers from
national security.
competition competition goods increased imports
Amount/Rate of Duty
5% ad valorem a. sufficient to
redress or
Difference
Not exceeding prevent injury to
between export Amount of Shall not exceed 10% ad
100% of ad domestic
price and normal subsidy valorem
valorem industries
price
b. Volume Test or
Price Test
137
138
139
3. JAO v. CA ISSUE
Whether or not the Bureau of Customs
FACTS: has lost jurisdiction to order the
Bureau of Customs, received seizure of the items?
information regarding the presence of
allegedly untaxed vehicles and parts in HELD
the premises owned by a certain Pat No. The Collector of Customs when
Hao. After conducting a surveillance of sitting in forfeiture proceedings
the two places. District Collector of constitutes a tribunal expressly vested
Customs issued the warrants of by law with jurisdiction to hear and
seizure and detention upon determine the subject matter of such
recommendation of respondent proceedings without any interference
Maglipon. from the Court of First Instance.
140
4. ACTING COMMISSIONER OF
CUSTOMS v. CA HELD:
Yes. Upon the facts of the case, the
FACTS: requirement of the law that the
Andrulis representing himself as an existence of probable cause should
American businessman on joint first be shown before firing of the
ventures with his Filipino forfeiture proceedings, had been fully
counterparts, arrived in Manila and met. When Andrulis was apprehended
checked in at the Century Park at the MIA and was found to have in
Sheraton Hotel. Two days later he left his possession the various foreign
the hotel surreptitiously without paying currencies, he could not produce the
for his bills. The Chief Security Officer required Central Bank authorization
of the Hotel, immediately tipped-off the allowing him to bring them out of the
Customs authorities on Andrulis country. This constituted prima facie
intention to abscond. MIA, the evidence of infringement of the
Customs authorities looked for provisions of CB Circular No. 534 and
Andrulis from among the passengers provided sufficient basis for the seizure
who were already on board Philippine of the said foreign exchange.
Airlines bound for Singapore. Probable cause having been shown,
Apprehensive, Andrulis locked himself the burden of proof was upon Andrulis
inside the airplanes comfort room. to establish that he fell within the
After some negotiations Andrulis finally purview of the exception prescribed in
yielded to the authorities and the second paragraph of the Section 3
surrendered the luggage he was of CB Circular No. 534 in that he
carrying which, when opened by the actually brought into the country the
authorities, contained various foreign foreign currencies and was just taking
currencies. them out.
141
captain of the ship was not able to without any interference from the Court
present documents or papers for the of First Instance.
"Champion" cigarettes. He and the
crew were arrested for smuggling.
Lucky Star I was also seized. from import duties after complying with
the formalities prescribed by the
A warrant of seizure and detention was regulations as promulgated by the
issued by the Collector of Customs Commissioner of Customs. (Section
against the vessel and articles seized 105, TCC)
for violation of Section 2530 (a) of the
Tariff and Customs Code as to the
vessel.
ISSUE:
Whether or not the Court of First
Instance has jurisdiction to take
cognizance of the complaint for the
release of the vessel M/V Lucky Star I,
which is the subject of a seizure and
forfeiture proceedings before the
Collector of Customs?
HELD:
No. The exclusive jurisdiction over
seizure and forfeiture cases vested in
the Collector of Customs precludes a
Court of First Instance from assuming
cognizance over such cases. The
Collector of Customs when sitting in
forfeiture proceedings constitutes a
tribunal expressly vested by law with
jurisdiction to hear and determine the
subject matter of such proceedings
142
134
Anti-Dumping Countervailing Discriminatory Safeguard
Marking Duty Flexible Tariff Clause
Duty Duty Duty Measures
Definition
Additional Additional Imposes directly
A special duty
customs duties customs duties or indirectly upon
imposed on the
imposed on any imposed on the disposition or
importation of a
product, foreign articles or transportation in
product,
commodity or its container if the transit through or
commodity or 2) In the interest of national
article of article itself not re-exportation
article of economy; general welfare and
commerce which marked in any from such
commerce into or national security, the
is granted directly official language country of any
the Philippines at President upon
or indirectly by of the Philippines article wholly or These are
less than its recommendation of the NEDA
the government in a conspicuous in part the growth emergency
normal value is empowered:
in the country of place as legibly, of product in the measures
when destined for a) To increase, reduce or
origin or indelibly and Philippines any including tariffs,
domestic remove existing protective rates
exportation any permanently unreasonable to protect
consumption in of import duty, provided that the
kind or form of in such manner charge, exaction, domestic
the exporting increase should not be higher
specific subsidy as to indicate to regulation or industries and
country which than 100% ad valorem.
upon the an ultimate limitation which is producers from
importation is b) To establish import
production, purchaser in the not equally increased imports
causing or is quota or to ban imports to any
manufacture or Philippines the enforced upon which inflict or
threatening to commodity.
exportation of name of the like articles of could inflict
cause material c) To impose additional
such product, country of origin. every foreign serious injury on
injury to a duty on all imports not
commodity or country or them.
domestic industry exceeding 10% ad valorem.
article and the discriminates
or materially d) To modify the forms of
importation of against the
retards the duty whether ad valorem or
such subsidized commerce of the
establishment of specific.
product, Philippines
a domestic
commodity or directly or
industry
article has indirectly by law
producing the like
caused or or administrative
product.
threatens to regulation or
135
136
price level.
Purpose
Protect local Protect local Prevent possible Protect domestic
Protect interest of national
industries from industries from deceptions as to Protect national industries and
economy, general welfare and
undue undue the origin of interest producers from
national security.
competition competition goods increased imports
Amount/Rate of Duty
a. sufficient to
redress or
Difference
Not exceeding prevent injury to
between export Amount of Shall not exceed 10% ad
5% ad valorem 100% of ad domestic
price and normal subsidy valorem
valorem industries
price
b. Volume Test or
Price Test
137
138
139
3. JAO v. CA ISSUE
Whether or not the Bureau of Customs
FACTS: has lost jurisdiction to order the
Bureau of Customs, received seizure of the items?
information regarding the presence of
allegedly untaxed vehicles and parts in HELD
the premises owned by a certain Pat No. The Collector of Customs when
Hao. After conducting a surveillance of sitting in forfeiture proceedings
the two places. District Collector of constitutes a tribunal expressly vested
Customs issued the warrants of by law with jurisdiction to hear and
seizure and detention upon determine the subject matter of such
recommendation of respondent proceedings without any interference
Maglipon. from the Court of First Instance.
140
4. ACTING COMMISSIONER OF
CUSTOMS v. CA HELD:
Yes. Upon the facts of the case, the
FACTS: requirement of the law that the
Andrulis representing himself as an existence of probable cause should
American businessman on joint first be shown before firing of the
ventures with his Filipino forfeiture proceedings, had been fully
counterparts, arrived in Manila and met. When Andrulis was apprehended
checked in at the Century Park at the MIA and was found to have in
Sheraton Hotel. Two days later he left his possession the various foreign
the hotel surreptitiously without paying currencies, he could not produce the
for his bills. The Chief Security Officer required Central Bank authorization
of the Hotel, immediately tipped-off the allowing him to bring them out of the
Customs authorities on Andrulis country. This constituted prima facie
intention to abscond. MIA, the evidence of infringement of the
Customs authorities looked for provisions of CB Circular No. 534 and
Andrulis from among the passengers provided sufficient basis for the seizure
who were already on board Philippine of the said foreign exchange.
Airlines bound for Singapore. Probable cause having been shown,
Apprehensive, Andrulis locked himself the burden of proof was upon Andrulis
inside the airplanes comfort room. to establish that he fell within the
After some negotiations Andrulis finally purview of the exception prescribed in
yielded to the authorities and the second paragraph of the Section 3
surrendered the luggage he was of CB Circular No. 534 in that he
carrying which, when opened by the actually brought into the country the
authorities, contained various foreign foreign currencies and was just taking
currencies. them out.
141
captain of the ship was not able to without any interference from the Court
present documents or papers for the of First Instance.
"Champion" cigarettes. He and the
crew were arrested for smuggling.
Lucky Star I was also seized. from import duties after complying with
the formalities prescribed by the
A warrant of seizure and detention was regulations as promulgated by the
issued by the Collector of Customs Commissioner of Customs. (Section
against the vessel and articles seized 105, TCC)
for violation of Section 2530 (a) of the
Tariff and Customs Code as to the
vessel.
ISSUE:
Whether or not the Court of First
Instance has jurisdiction to take
cognizance of the complaint for the
release of the vessel M/V Lucky Star I,
which is the subject of a seizure and
forfeiture proceedings before the
Collector of Customs?
HELD:
No. The exclusive jurisdiction over
seizure and forfeiture cases vested in
the Collector of Customs precludes a
Court of First Instance from assuming
cognizance over such cases. The
Collector of Customs when sitting in
forfeiture proceedings constitutes a
tribunal expressly vested by law with
jurisdiction to hear and determine the
subject matter of such proceedings
142
Concurrence or
CTA Laws Composition Division Quorum Affirmative Jurisdiction
Vote
1 Presiding Judge Exclusive
R.A. 1125 2
2 Associate Judges Appellate
2 Divisions with 3
1 Presiding Justice Justices each
Exclusive
5 Associate
Appellate
Justices Chairmen: en banc 4 en banc 4
R.A. 9282
1. Presiding Justice Division 2 Division 2
Exclusive
May sit en banc or (1st Division)
Original
in 2 Divisions 2. Most Senior
Associate Justice
3 Divisions with 3
Justices each
1 Presiding Justice
Exclusive
8 Associate Chairmen:
Appellate
Justices 1. Presiding Justice en banc 5 en banc 5
R.A 9503
(1st Division) Division 2 Division 2
Exclusive
May sit en banc or 2. 2 Most Senior
Original
in 3 Divisions Associate
Justices
143
144
145
146
In appeals in both civil and What is the procedure for the taking
criminal cases where the Court of evidence by a justice?
grants a new trial in accordance
with Sec. 2, Rule 53 and Sec. Taking of evidence by a
12, Rule 124 of the rules of justice. The Court may,
court (Sec. 2, Rule 12, Revised motuproprio or upon proper
Rules of the Court of Tax motion, direct that a case, or
Appeals). any issue therein, be assigned
to one of its members for the
What is the procedure for the taking taking of evidence, when the
of evidence? determination of a question of
fact arises at any stage of the
The Court may, upon proper proceedings, or when the taking
motion on or its initiative, direct of an account is necessary, or
that a case, or any issue when the determination of an
thereof, be assigned to one of issue of fact requires the
its members for the taking of examination of a long account.
evidence: The hearing before such justice
o when the determination shall proceed in all respects as
of a question of fact though the same had been
arises upon motion or made before the Court.
otherwise in any stage of
the proceedings, or Upon the completion of such
o when the taking of an hearing, the justice concerned
account is necessary, or shall promptly submit to the
o when the determination Court a written report thereon,
of an issue of fact stating therein his findings and
requires the examination conclusions. Thereafter, the
of a long account. The Court shall render its decision
hearing before such on the case, adopting,
member shall proceed in modifying, or rejecting the
all respects as though report in whole or in part, or, the
Court may, in its discretion,
147
148
Who may file a motion for new trial 5, Rule 15, Revised Rules of
or reconsideration? Court of Tax Appeals)
149
Q:Does the Court of Tax Appeals A: The following are instances where
have jurisdiction over tax cases the CTA has no jurisdiction:
where an appeal was filed before 1. The CTA has no power motu
the Commissioner of Internal proprio to review tax cases. It
Revenue has rendered a decision? can resolve cases only in aid of
its original or appellate
A: Generally, the Court of Tax Appeals jurisdiction.
cannot acquire jurisdiction over the 2. Questions of unfair competition
case in the absence of the decision of involving the use of simplified
the BIR Commissioner because it can bookkeeping records. Reason:
only review on appeal the decision of The case does not involve any
the Commissioner. The exceptions assessment or refund of tax, or
are: other matter under the NIRC.
150
151
Superior to all liens, charges Lien on the property subject Attaches on the goods Ground
or encumbrances to tax superior to all liens, regardless of the ownership
charges or encumbrances while the goods are still in Lien shall not valid against
the custody or control of the any mortgagee, purchaser,
government or judgment creditor until
Extinguished upon full notice of such lien shall be
payment of delinquent local Extinguished upon payment filed by the Commissioner in
taxes, fees, and charges plus of the tax and the related the office of the Register of
1. Governments Lien surcharge and interest interests and expenses Applicable only when the Deeds of the province or city
(Section 173, LGC) (Section 257, LGC) importation is neither where the property of the
prohibited nor improperly taxpayer is situated or
made located.
152
153
1. Delinquent taxpayer is
retiring from any
business subject to tax
2. Delinquent taxpayer is
intending to leave the
Philippines
3. Delinquent taxpayer is
intending to remove his
property therefrom
4. Delinquent taxpayer is
intending to hide or
conceal his property
5. Delinquent taxpayer is
intending to perform any
act tending to obstruct
the proceedings for
collecting the tax due or
which may be due from
him
3. Levy Real property and interest in After the expiration of the - Ground
and rights to real property time required to pay the
(Section 174, LGC) basic real property tax or any After the expiration of the
other tax, real property time required to pay the
154
155
Local taxes, fees, or charges The LGU concerned may Judicial action (civil and Form and Mode of
may be collected within five enforce the collection of the criminal) is normally availed Proceeding:
(5) years from the date of basic real property tax by of when the tax lien is lost
assessment by administrative civil action in any court of through the release of the Instituted in behalf of the
or judicial action (Section competent jurisdiction. The goods. government
194[c], LGC) civil action shall be filed in Enforced by the BIR
accordance with Section 270 Brought in the name of
of the LGC (Section 266, the Government of the
Judicial action and Republic of the
LGC)
proceedings instituted in Philippines
behalf of the Government Conducted by legal
shall be subject to the officers of the BIR
4. Judicial Action
supervision and control of Approval of the
the Commissioner. Commissioner required
(Sec. 220, NIRC)
Remedy for enforcement
Civil and criminal actions are of statutory penal
instituted in the name of the provisions shall be
government and shall be subject to the approval of
conducted by customs the Commissioner (Sec.
officers. No civil or criminal 221, NIRC)
action for recovery of duties
nor the enforcement of any
fine, penalty or forfeiture
shall be filed in court without
156
- - a. Administrative Fines -
-applied when the
importation is unlawful or
involves articles which are
prohibited from being
imported, including the
vessel
e. Forfeitures
157
Jurisdiction: Bureau of
Customs (exclusive and
original), from the moment
the goods are actually in the
possession or control, even
as no warrant of seizure or
detention had previously
been issued by the Collector
of Customs in connection
with the seizure and
forfeiture proceedings
(Republic v. CFI, GR No. L-
43747).
158
159
Within 60 days from receipt Appeal to the Local Board Availed of when the legality The assessment that will be
of the notice of assessment, of Assessment Appeals: or correctness of the the subject of the protest of
the taxpayer may file a assessment or appraisal is the taxpayer is the Formal
written protest with the local Any owner or person having questioned by the importer. Letter of Demand or the Final
treasurer; otherwise, the legal interest in the property
Assessment Notice
assessment shall be final who is not satisfied with the
and executor assessment of the provincial,
city, or municipal assessor Payment under protest, as
may, within 60 days from the well as the payment of the
date of the receipt of the corresponding docket fees is
If the local treasurer finds the written notice, appeal to the required (Sec. 2308, TCCP).
protest to be wholly or Board of Assessment
1. Protest against
assessment partially meritorious, he shall Appeals of the province or
issue a notice cancelling, city by filing a petition under General Rule: Any importer
wholly or partially, the oath together with the copies or interested party, if
assessment. of tax declarations and such dissatisfied with the
affidavits to support the published value, may within
appeal (Section 226, LGC) 15 days from the date of
If the local treasurer finds the publication or within 15 days
assessment to be wholly or from the date the importer is
partially correct, he shall Appeal to the Central entitled to refund if payment
deny the protest wholly or Board of Assessment is rendered erroneous or
partially with notice to Appeals: illegal by events occurring
160
taxpayer. The owner of the property or after the payment may file a
the person having legal protest.
interest therein who is not
satisfied with the decision of
the LBAA may, within 30
Effect of non-filing of protest:
days after receipt of the
The action of the collector
decision of LBAA, appeal to
shall be final and conclusive
the CBAA.
against him, except as to
matters collectible for
manifest clerical error.
Exception: No protest is
required in seizure cases.
Grounds
A written claim for refund or When an assessment is Drawback (Secs. 1701-
credit shall be filed with the found to be illegal or 1708, TCCP) 1. Taxes are erroneously or
local treasurer within two (2) erroneous and the tax is illegally received or
2. Tax Refund or Tax Credit years from the date of the accordingly reduced or An allowance made by the penalties imposed
government upon the duties without authority
payment of the tax, fee, or adjusted, the taxpayer may
due on the imported 2. Value of internal revenue
charge OR from the date the file a written claim for the stamps when they are
taxpayer is entitled to a refund or credit for taxes and merchandise when the
retuned in good condition
importer, instead of selling it
161
refund or credit (Section interest with the provincial or here, re-exports it or by the purchaser, and, in
196, LGC) city treasurer within two (2) refunding of such duties if his discretion, redeem or
years from the date the already paid. This allowance change unused stamps
that have been rendered
taxpayer is entitled to such amounts, in some cases, to
unfit for use (Sec. 204,
reduction or adjustment. the whole of the original NIRC)
duties; in others, to a part
only (Blacks Law
Dictionary).
The provincial or city
treasurer is required to How
decide within 60 days from Taxpayer files in writing
with the Commissioner a
the receipt thereof. If the
claim for credit or refund
claim is denied or not acted within 2 YEARS after the
upon within 60 days, the payment of the tax or
taxpayer may appeal with the penalty.
regular courts and NOT Commissioner may, even
Court of Tax Appeals without a written claim
(Section 253, LGC) therefor, refund or credit
any tax, where on the
face of the return upon
which payment was
made. (Sec. 228, NIRC)
162
Tax Credit
163
Exceptions:
164
1703, TCCP).
3. Upon satisfactory proof of
the injury, destruction, or
loss by theft, fire or other
causes of any article as
follows:
a. While within the limits
of any port of entry
prior to unlading under
customs supervision
b. While remaining in
customs custody after
unlading
c. While in transit under
bond from the port of
entry to any port in the
Philippines.
d. While released under
bond to export, except
in case of loss by theft
(Sec. 1704, TCCP).
- -
165
Authority
Commissioner of Internal
Revenue
5. Appeal to the Courts Appeal to the RTC Appeal to the Court of Appeal to the Court of Appeal to the Court of
Appeals Appeals Appeals
The taxpayer shall have 30
166
days from the receipt of the The party adversely affected Within 30 days from the If the protest is denied in
denial of the protest OR from by the decision of the CBAA receipt of the decision of the whole or in part or not acted
the lapse of the 60-day may appeal such decision to Commissioner or the upon within 180 DAYS from
period prescribed within the Court of Appeals within Secretary of Finance to the submission of documents
which to appeal with the 15 from receipt of the division of the Court of Tax within 30 DAYS from the
Regional Trial Court CBAAs decision (Rule 43, Appeals (Sec. 2403, TCCP; receipt of the decision or
(Section 195, LGC) Rules of Court) Sec. 7, RA 1125 as from the lapse of the 180
amended by Sec. 9, RA DAY-period
9282)
6. Other Remedies
a. Protest against newly Protest against newly a. Settlement of any
enacted ordinance enacted ordinance Seizure by Payment of
To the Secretary of Justice, Fine or Redemption (Sec.
within 30 days from the To the Secretary of Justice, 2307, TCCP).
effectivity; within 30 days from the
effectivity; b. Abandonment
The renunciation by an
importer of all his interests
Decision of the Secretary of and property rights in
Justice must be rendered Decision of the Secretary of imported articles (Sec. 180,
within 60 days from the date Justice must be rendered TCCP). It can be express
of the receipt of the appeal; within 60 days from the date (Sec. 1801[a]) or implied
of the receipt of the appeal; (Sec. 1801[b]).
.
Taxpayer must file an
167
NOTE:
NOTE:
*The appeal to the Secretary
of Justice shall not suspend *The appeal to the Secretary
the effectivity of the of Justice shall not suspend
ordinance the effectivity of the
ordinance
b.Declaratory Relief
168
169
prescriptive period for collection be collected within 5 years from be collected within 5 years from the
would be 3 years from the date of the date of assessment by date they become due.
assessment. administrative or judicial action. 2. In case of fraud or intent to
2. Any internal revenue tax which has 2. In case of fraud or intent to evade evade payment, such action may
been assessed within the period of payment within 10 years from be instituted for the collection of the
limitation as prescribed in Sec. discovery of fraud. same within 10 years from the
222(a), within 5 years following the discovery of such fraud or intent to
assessment of the tax. evade payment.
3. False or fraudulent return or non-
filing of return: the BIR may file an
ordinary action to collect even
without an assessment. The
period to collect is 10 years,
reckoned from the date of
discovery of falsity or fraud or non-
filing.
4. Waiver of the Statute of
Limitations: Within the period
agreed upon between the
Commissioner and the taxpayer.
1. The Commissioner is prohibited The prescriptive periods shall be The period of prescription within
from making the assessment or suspended during which: which to collect shall be suspended
beginning distraint or levy or a for the time during which:
proceeding in court and for 60 days 1. The treasurer is legally prevented
thereafter; from making the assessment or 1. The treasurer is legally
Suspension of Prescriptive
2. When the taxpayer requests for collection; prevented from collecting the tax;
Periods
reinvestigation which is granted by 2. The taxpayer requests for 2. The owner of the property or
the Commissioner; reinvestigation and executes a the person having legal interest
3. When the taxpayer cannot be waiver in writing before the therein requests for reinvestigation
located in the address given by him expiration of the period within and executes a waiver in writing
in the return filed upon which the which to assess or collect; before the expiration of the period
tax is being assessed or collected; 3. The taxpayer is out of the country within which to collect;
170
4. When the warrant of distraint or or otherwise cannot be located 3. The owner of the property or
levy is duly served upon the (Sec. 194, LGC). the person having legal interest
taxpayer, his authorized therein is out of the country or
representative, or a member of his otherwise cannot be located (Sec.
household with sufficient discretion 270, LGC).
and no property could be located;
5. When the taxpayer is out of
the Philippines.
171
172
(20) days after the notice to the the property is located, and to the
owner and the publication and delinquent taxpayer
posting of the notice Note:
a) if delinquent taxpayer
4) Release of distrained property is absent from the Philippines,
upon payment prior to sale to his agent or the manager of
the business in respect to which
5) Sale- If no payment has been the liability arose;
made as mentioned in the b) if no agent or manager,
preceding number, the officer to the occupant of the property
conducting the sale shall sell the in question.
goods distrained at public auction
to the highest bidder for cash. 3) If the levy was not issued before or
Within five (5) days after the sale, simultaneously with the warrant of
the local treasurer shall make distraint of the personal property
report of the proceedings in writing and the personal property is not
to the local chief executive sufficient to cover the delinquency,
concerned. Should the said the provincial, city or municipal
property be not disposed of within treasurer shall proceed with the
120 days from the date of distraint, levy within 30 days after execution
the same shall be considered as of the distraint.
sold to the LGU concerned
4) Publication- Within 30 days after
6) Disposition of proceeds- the the levy, the local treasurer shall
proceeds shall be applied to the to publicly advertise for sale or
satisfy the tax plus the surcharges, auction the property to satisfy the
interest and other penalties incident claim and the cost of sale. Such
to the delinquency and the advertisement shall cover 30 days.
expenses of the distraint and sale. The notice of advertisement shall
The excess shall be returned to the be posted at the main entrance of
owner of the property sold the municipal building or city hall
AND in a public and conspicuous
PROCEDURE FOR LEVY FOR place in the barangay where the
PURPOSES OF SATISYING LOCAL real property is located, and by
TAXES (Sections 176-180, LGC) publication once a week for three
weeks in a newspaper of general
1) Provincial, city or municipal circulation in the province, city or
treasurer shall prepare a duly municipality where the property is
authenticated certificate showing located
the name of the taxpayer, the tax,
fee, or charge due. It shall operate 5) Sale- held at the main entrance of
with force throughout the the of the provincial, city or
Philippines. municipal building, or on the
property to be sold, or at any place
2) Written notice of the levy shall be as determined by the local
mailed to or served upon the treasurer conducting the sale
assessor AND the Register of
Deeds of the province or city where
173
*The remedies by distraint and levy 6) If there is a bidder and the bid is
may be repeated if necessary until the sufficient to cover the delinquent
full amount due, including all taxes, interests and costs, the
expenses, is collected (Section 184, bidder pays and the local treasurer
LGC) shall report the sale to the
sanggunian within 30 days after the
sale. The local treasurer shall
174
175
Actual
seizure
of
the
articles;
Listing
of
description,
appraisal
and
classification
of
seized
property
Report
of
the
seizure
to
the
Commissioner
of
Customs
and
the
Chairman
of
the
Commissioner
on
Audit
Issuance
by
the
Collector
of
a
Warrant
of
Detention
Settlement
through
payment
Formal
hearing
District
Collector
issues
the
decision
176
CUSTOMS PROTESTS
Payment
under
Protest
within
30
days
after
the
discharge
of
the
last
package
Filing
of
the
Protest
with
the
Collector
within
15
days
after
the
payment
and
payment
of
docket
Issuance
of
the
order
of
hearing
by
the
collector
within
15
days
from
receipt
If
the
DECISION
of
the
COLLECTOR
is
ADVERSE
If
COLLECTOR
SUSTAINS
the
PROTEST
(renders
to
the
taxpayer,
the
adverse
party
must
file
a
a
decision
adverse
to
the
NOTICE
OF
APPEAL
with
the
COLLECTOR,
copy
government(importers
protest
is
granted),
furnished
the
Commissioner,
within
15
days
such
decision,
together
with
the
entire
records
from
notification.
of
the
case,
shall
be
automatically
elevated
to
the
Commissioner
of
Customs
for
automatic
review
within
5
days
from
the
promulgation
thereof.
The
Collector
shall
transmit
all
records
of
the
proceedings
to
the
Commissioner.
No
appeal
shall
be
heard
if
filed
beyond
the
period
to
AUTOMATIC
REVIEW
BY
THE
COMMISSIONER.
appeal
The
Commissioner
shall
render
a
decision
within
30
days
from
the
receipt
of
the
records
If
the
decision
of
the
If
the
decision
is
of
the
case
from
the
collector
and
shall
notify
Commissioner
is
adverse
to
the
the
appellant
or
aggrieved
party.
adverse
to
the
government,
taxpayer,
appeal
to
automatic
appeal
to
the
CTA
within
30
the
Secretary
of
If
the
Commissioner
If
the
Commissioner
days
from
receipt
of
Finance
reversed
the
decision
of
affirms
the
decision
of
the
decision
the
Collector,
the
the
Collector
or
no
person
aggrieved
by
the
decision
was
rendered
decision
has
30
days
within
30
days,
If
there
is
NO
DECISION
after
30
days
or
if
the
from
receipt
of
the
automatic
review
by
the
DECISION
is
ADVERSE
to
the
GOVERNMENT,
the
decision
to
appeal
to
SOF.
Period
to
decide
decision
appealed
from
becomes
FINAL
and
the
CTA
shall
be
30
days.
EXECUTORY.
If
the
decision
of
the
commissioner
is
ADVERSE
to
the
taxpayer,
the
person
aggrieved
by
the
decision
has
30
days
from
receipt
of
the
177
decision
to
appeal
to
the
CTA
DISTRAINT
178
Government Ground: When the amount bid for the property under distraint is not equal to
Purchase the amount of the tax or is very much less than the actual market value of the
articles offered for sale(Sec. 212, NIRC)
Forfeiture to Why?
Government
For want of bidder (if the highest bid is for an amount insufficient to pay
(Sec. 215, the taxes, penalties, and costs)
NIRC) How?
179
Redemption
Period?
How?
LEVY
Grounds After the expiration of the time required to pay the delinquent tax or delinquent
revenue
180
*If after distraint of personal property proceed with levy after 30 DAYS after
execution of the distraint.
Release At any time before the day fixed for the sale, the taxpayer may discontinue all
proceedings by paying the taxes, penalties, and interest. (Sec. 213, NIRC)
Redemption When?
Redemption
Period?
181
How?
How?
182
When an article locally purchased or imported by an exempt person, such as, but not
limited to, vehicles, capital equipment, machineries, and spare parts, has been sold,
traded, or transferred to non-exempt persons
Taxpayers shall be informed in writing of the law and the facts on which the assessment
is made; otherwise the assessment shall be void.
3. Taxpayers Reply (within 15 days from notice)
4. Issuance of Final Assessment Notice (upon failure to reply)
5. PROTEST
File request for reconsideration or reinvestigation within 30 DAYS from receipt of the
assessment.
Submit all relevant supporting documents within 60 DAYS from filing of protest.
6. Appeal to the CTA
If the protest is denied in whole or in part or not acted upon within 180 DAYS from
submission of documents within 30 DAYS from the receipt of the decision or from the
lapse of the 180 DAY-period
If not appealed, the decision shall become final, executory, and demandable.
183
OTHER COMPARISONS
Not less than 20 days after notice to Not less than 20 days after notice
the owner or possessor of the to the owner and possessor and
Time of sale
property and the publication or the publication or posting of such
posting of such notice. notice.
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1.Posting a notice at the main entrance 1.Posting a notice at the main entrance
of the municipal building; and of the municipal building;
2.In a public and conspicuous place in 2.In a public and conspicuous place in
the barrio or district in which the real the barrio or district in which the real
Posting and Publication
estate lies; and estate lies; and
3.By publication once a week for three 3.By publication once a week for three
weeks in a newspaper of general weeks in a newspaper of general
circulation in the municipality or city circulation in the municipality or city
where the property is located. where the property is located.
The Revenue Collection Officer may, The local treasurer may, by ordinance
upon approval of the Revenue District duly approved, advance an amount
Advance of the cost Officer, advance an amount sufficient sufficient to defray the costs of
to defray the costs of collection by collection by means of the remedies
means of summary remedies. provided in the law.
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PROTEST
Exception: If the
taxpayer only
disputes or protests
against the validity General Rule:
of some of the Required.
issues raised, the
taxpayer shall be
required to pay the Exception: Where
Payment in deficiency tax or the question raised is
Not Required Required
Protest taxes attributable to
on the very authority
the undisputed
and power of the
issues. No action
assessor to impose
shall be taken on
the assessment and
the taxpayers
of the treasurer to
disputed issues collect the tax.
until the taxpayer
has paid the
deficiency tax or
taxes attributable to
the undisputed
issues (RR12-99).
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together with interest on purchase 3. Dies and other equipment used for
price at 15% per annum from the the printing or making of any
date of sale to the date of internal revenue stamp, label or tag
redemption. which is in imitation of or purports
The owner shall not, however, be to be a lawful stamp, label or tag.
deprived of the possession of said (Sec. 268, NIRC)
property and shall be entitled to the 4. All tax-paid articles which are
rents and other income thereof until allowed to remain in a distillery,
the expiration of the time allowed distillery warehouse, bonded
for its redemption. warehouse or other place where
made unless specially authorized
C. FORFEITURE IN FAVOR OF THE (Sec. 268, NIRC);
GOVERNMENT 5. Articles withdrawn from said place
or from Customs custody or
If there is no bidder for the real imported into the country without
property or if the highest bid is not payment of the requisite tax (Sec.
sufficient to pay the taxes, penalties 268, NIRC).
and costs, the Internal Revenue
Officer conducting the sale shall Enforcement of the remedy of
declare the property forfeited to the forfeitures
Government in satisfaction of the 1. Forfeiture of personal property,
claim. (Sec. 215, NIRC) chattels and removable fixtures:
Enforced by the seizure, sale or
Resale of real estate taken for taxes destruction of the specific forfeited
The Commissioner shall have charge property.
of any real estate obtained by the 2. Forfeiture of real property:
Government in payment of taxes, Enforced by a judgment of
penalties or costs arising under this condemnation and sale in a legal
Code or in compromise or adjustment action or proceeding civil or
of any claim. criminal as the case may require
(Sec. 224, NIRC)
The Commissioner may:
1. Sell and dispose of the same at a When property to be sold or
public auction upon giving of not destroyed
less than 20 days notice; or 1. Forfeited chattels and removable
2. Dispose of the same at a private fixtures sold in the same manner
sale with the approval of the and under the same conditions as
Secretary of Finance (Sec. 216, the public notice and the time and
NIRC). manner of sale as are prescribed
for sales of personal property
Specific Instances Where Forfeiture distrained for the non-payment of
is Imposed taxes;
1. Liquor or tobacco shipped under a 2. Distilled spirits, liquors, cigars,
false name or brand (Sec. 262, cigarettes, other manufactured
NIRC); products of tobacco and all
2. All chattels, machinery, and apparatus used in or about the illicit
removable fixtures of any sort used production of such articles
in the unlicensed production of destroyed by the order of the
articles (Sec. 268, NIRC); Commissioner when the sale or
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shall be filed by the CIR in the office of Commissioner and four (4) Deputy
the Register of Deeds of the province Commissioners.
or city where the property of the
taxpayer is situated or located (Sec. Authority of the Commissioner to
219, NIRC). Abate Taxes (Sec. 204 (B), NIRC)
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the penalty but shall also order the independent of any attempt on the
payment of the taxes subject of the part of the tax payer to evade
criminal case as finally decided by payment. It is neither a mere
the CIR (Sec. 205, NIRC). consequence of the felonious acts
charged nor is it a mere civil liability
Any person convicted of a crime derived from a crime (Republic v.
penalized by the NIRC shall, in Patanao).
addition to being liable for the
payment of the tax, be subject to the The civil liability to pay taxes arises
penalties imposed herein (Sec. not because of felony but upon
253(a), NIRC). taxpayers failure to pay taxes.
Criminal liability in taxation arises
Form and mode of proceeding as a result of ones liability to pay
Same with civil action (Sec. 220, taxes.
NIRC)
2. Effect of subsequent
Jurisdiction: satisfaction of civil liability
1. Court of Tax Appeals on The subsequent satisfaction of civil
criminal offenses arising from liability by payment or prescription
violations of the NIRC or TCC and DOES NOT extinguish the
other laws administered by the BIR taxpayers criminal liability (People
and the BOC where the principal v. Tierra).
amount of taxes and fees exclusive
of charges and penalties claimed 3. No subsidiary imprisonment
isP1,000,000 and above. In case of insolvency on the part of
2. Regional Trial Court, the taxpayer, subsidiary
Municipal Trial Court, imprisonment CANNOT be
Metropolitan Trial Court on imposed as regards the tax which
criminal offenses arising from he is sentenced to pay.
violations of the NIRC or TCC and
other laws administered by the BIR However, it may be imposed in
and the BOC, where the principal cases of failure to pay the fine
amount of taxes and fees, imposed (Sec. 280, NIRC).
exclusive of charges and penalties
claimed is less than P1,000,000 4. Criminal action may be filed
OR where there is no specified despite the lapse of the period to
amount claimed (Sec. 7, R.A. No. file a civil action for collection of
9282). taxes.
When the civil action arising from
Important principles on criminal tax delinquency has prescribed, the
actions BIR has only 5 years from
1. Effect of acquittal of the assessment within which to collect
taxpayer in a criminal action the tax through criminal action in
It does NOT necessarily result in which case, would prescribe after
the exoneration of said taxpayer lapse of 5 years from discovery of
from his civil liability to pay taxes. crime AND institution of
proceedings (Sec. 281, NIRC).
Rationale: The duty to pay tax is
imposed by statute prior to and
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COLLECTION
B. Fraudulent return The following rules shall govern for the
For the 10-year prescriptive period to prescriptive period of collection of
apply based on fraud, such must first taxes:
be proved as a fact by the BIR.
1. Collection under a normal or
Such fact in a fraud assessment which ordinary assessment (one with the
has already become final and 3-year period to assess)
executory shall be judicially taken
cognizance of in a civil or criminal Two (2) views:
action for the collection thereof (Sec. First view: 5 years from the time the
222(a), NIRC). assessment was made. Under the
old Tax Code, the prescriptive period
The following instances negate the for collection under both normal and
existence of fraud and preclude the abnormal assessment is 3 years.
application of the 10-year prescriptive
period: Under the new Tax Code, the
1. The CIR failed to impute fraud prescriptive period for collection
in the assessment notice or demand under abnormal assessment is 5
for payment; years, hence it can be concluded
2. The CIR failed to allege fraud in that the prescriptive period under
his answer to the taxpayers petition normal assessment is also 5 years.
for review when the case is appealed (SABABAN, Taxation Law Review
to the CTA (ABAN, supra at pp. (2008), p.182)
274-275);
3. Mere understatement of gross Second view: 3 years from the time
earnings does not of itself prove the assessment was made. The 5-
fraud (Yutivo Sons v. CTA). year period refers to an instance
where there is an assessment issued
C. Failure to file a return on the basis of false or fraudulent
return or the absence of a return
The following constitutes failure to file (Sec. 222(c), NIRC in relation to
to warrant the 10-year prescriptive Sec. 222(a), NIRC) or in the instance
period: of an extended assessment under
1. A deficient return which prevented Sec. 222(d) of the NIRC. The
the CIR from computing taxes dues. interpretation should be in favor of
Such defective return is the same as the taxpayer, providing for a shorter
if no return is filed at all (CIR v. period of 3 years from the issuance
Gonzales); and of an assessment, because the 5-
2. Failure to report income in the year period places a law-abiding
returns which were clearly not taxpayer in the same category as
exempted from tax. The Court did not one who is not law-abiding, i.e.,
treat this as a simple omission as the who files a false or fraudulent return,
same involved substantial sums or one who does not file a tax return,
(Standard Chartered Bank v. CIR). etc. (DOMONDON, Bar Reviewer in
Taxation, Vol. I (2008), pp.414-415).
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204
205
206
attributable thereto (RR No. 18- which taxpayer could not produce
2013, Sec. 3.1.4). (Standard Chartered Bank v. CIR).
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208
assessed but wherein he also gave period to appeal to the CTA (RR
the warning that in the event the No. 18-2013, Sec. 3.1.4).
taxpayer failed to pay the same, he
would be constrained to enforce Effect of failure to appeal to the
the collection thereof by means of CTA within the 30-day period:
the remedies prescribed by law The assessment shall become
(Reyes v. CIR). final, executory and demandable
(RR No. 18-2013, Sec. 3.1.4).
Example: Final Notice Before
Seizure. The very title expressly 2. FDDA by duly authorized
indicated that it was final notice representative either:
prior to seizure of property. The a. File administrative appeal to the
letter itself clearly stated that the CIR within 30 days from receipt of
taxpayer was being given this the FDDA through request for
LAST OPPORTUNITY to pay; reconsideration (RR No. 18-2013
otherwise, its properties would be Sec. 3.1.4); or
subjected to distraint and levy (CIR
v. Isabela Cultural Corp.). Note: No request for
reinvestigations shall be allowed
Indirect denial of protest (without in administrative appeal and only
FDDA) issues raised in the decision of
Without rendering an FDDA on the the CIRs duly authorized
merits of the protest, the CIR or his representative shall be
duly authorized representative entertained by the CIR (RR No.
nevertheless executed administrative 18-2013 Sec. 3.1.4).
actions which the Court considered
as denial thereof b. Appeal to the CTA within 30
days from receipt of FDDA (RR
IV. Remedies of the taxpayer in case No. 18-2013 Sec. 3.1.4).
of denial of protest or
administrative appeal or in case of Effect of filing the administrative
inaction appeal: The administrative appeal
filed with the CIR will toll the 30-day
Direct denial of protest through period and the denial of the
FDDA administrative appeal or the
1. FDDA by CIR either: inaction of the CIR is the one
a. File a motion for reconsideration appealable to the CTA (CIR v.
with the CIR (RR No. 18-2013, International Pharmaceuticals,
Sec. 3.1.4, Fishweath Canning Inc.).
Corp. v. CIR, G.R. No. 179343,
January 21, 2010); or Effect of failure to file the
b. Appeal to the CTA within 30 administrative appeal or appeal
days from receipt of FDDA (RR to the CTA within the 30-day
No. 18-2013, Sec. 3.1.4). period: The assessment shall
become final, executory and
BUT: The motion for demandable.
reconsideration of the decision with
the CIR will NOT toll the 30-day Direct denial of administrative
appeal through FDDA
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"(c) When a taxpayer who opted to "If the protest is denied in whole or in
claim a refund or tax credit of excess part, or is not acted upon within one
creditable withholding tax for a taxable hundred eighty (180) days from
period was determined to have carried submission of documents, the
over and automatically applied the taxpayer adversely affected by the
same amount claimed against the decision or inaction may appeal to the
estimated tax liabilities for the taxable Court of Tax Appeals within thirty (30)
quarter or quarters of the succeeding days from receipt of the said decision,
taxable year; or or from the lapse of the one hundred
eighty (180)-day period; otherwise, the
"(d) When the excise tax due on decision shall become final, executory
excisable articles has not been paid; or and demandable.
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ISSUE:
Whether or not the Final Notice Before
Seizure on February 9, 1995
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67, Legazpi City to proceed with the mail shifts the burden upon the party
investigation based on the best favored by the presumption to prove
evidence obtainable preparatory to the that the mailed letter was indeed
issuance of assessment notice. received by the addressee. It also
found that there was no clear showing
The Revenue District Officer issued a that Metro Star actually received the
Preliminary 15-day Letter, which stated alleged PAN. It, accordingly, ruled that
that a post audit review was held and it the Formal Letter of Demand in 2002,
was ascertained that there was as well as the Warrant of Distraint
deficiency value-added and and/or Levy dated in 2003 were void,
withholding taxes due from MetroStar. as Metro Star was denied due
MetroStar received a Formal Letter of process.
Demand from Revenue District No. 67,
Legazpi City, assessing petitioner the The CIR sought reconsideration of the
amount of P292,874.16. for deficiency decision of the CTA-Second Division,
value-added and withholding taxes for but the motion was denied. Aggrieved,
the taxable year 1999. Subsequently, the CIR filed a petition for review with
Revenue District Office No. 67 sent a the CTA-En Banc, but the petition was
copy of the Final Notice of Seizure, dismissed. The motion for
giving MetroStar last opportunity to reconsideration filed by the CIR was
settle its deficiency tax liabilities within likewise denied by the CTA-En Banc.
ten (10) [days] from receipt thereof, The CIR, insisting that Metro Star
otherwise the BIR shall be constrained received the PAN, dated January 16,
to serve and execute the Warrants of 2002, and that due process was
Distraint and/or Levy and Garnishment served nonetheless because the latter
to enforce collection. received the Final Assessment Notice
(FAN), comes now before this Court
MetroStar received from Revenue with the sole
District Office No. 67 a Warrant of
Distraint and/or Levy demanding ISSUE:
payment of deficiency value-added tax Whether or not Metro Star was denied
and withholding tax payment in the due process.
amount of P292,874.16. MetroStar
filed with the Office of the HELD:
Commissioner a Motion for The Court agrees with the CTA that the
Reconsideration, which was denied. CIR failed to discharge its duty and
present any evidence to show that
Denying that it received a Preliminary Metro Star indeed received the PAN
Assessment dated January 16, 2002. It could have
Notice (PAN) and claiming that it was simply presented the registry receipt or
not accorded due process, Metro the certification from the postmaster
Star filed a petition for review with the that it mailed the PAN, but failed.
CTA. The CTA-Second Division Neither did it offer any explanation on
granted the petition of Metro Star, why it failed to comply with the
stating that [w]hile there [is] a requirement of service of the PAN. It
disputable presumption that a mailed merely accepted the letter of Metro
letter [is] deemed received by the Stars chairman dated April 29, 2002,
addressee in the ordinary course of that stated that he had received the
mail, a direct denial of the receipt of FAN dated April 3, 2002, but not
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the PAN; that he was willing to pay the procedural rights and the failure of the
tax as computed by the CIR; and that CIR to strictly comply with the
he just wanted to clarify some matters requirements laid down by law and its
with the hope of lessening its tax own rules is a denial of Metro Stars
liability. right to due process. Thus, for its
failure to send the PAN stating the
This now leads to the question: Is the facts and the law on which the
failure to strictly comply with notice assessment was made as required by
requirements prescribed under Section Section 228 of R.A. No. 8424, the
228 of the National Internal Revenue assessment made by the CIR is void.
Code of 1997 and Revenue
Regulations (R.R.) No. 12-99 The Court need not belabor to discuss
tantamount to a denial of due process? the matter of Metro Stars failure to file
Specifically, are the requirements of its protest, for it is well-settled that a
due process satisfied if only the FAN void assessment bears no fruit.
stating the computation of tax liabilities PETITION is DENIED. #
and a demand to pay within the
prescribed period was sent to the 5. Lacsona Land vs. Commissioner
taxpayer? of Internal Revenue
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The CIR moved for reconsideration, for review with the CTA within 30 days
which was denied. Dissatisfied the CIR after the expiration of the 180 day
appealed to the CA, which granted the period 2.) Await the final decision of
petition. Lascana moved for the CIR on the disputed assessment
reconsideration in the appellate court and appeal such final decision to the
which was denied. Hence this petition. CTA within 30 days after the receipt of
a copy of such decision. These options
ISSUE: are mutually exclusive and resort to
Whether or not the subject one bars the application of the other.
assessment has become final after the
alpse of the 30 day period of appeal
from the lapse of the 180 day period of
inaction
HELD:
No. Under Sec. 228 of the NIRC, if the
protest is denied in whole or in part, or
is not acted upon within 180 days from
submission of documents, the
taxpayer adversely affected by the
decision or inaction may appeal to the
CTA within 30 days from the receipt of
said decision or from the lapse of 180
days; otherwise the decision shall
become final, executor and
demandable.
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nothing legislative in
CONSTITUTIONAL LIMITATIONS ascertaining the existence of
facts or conditions as the
1. Bagatsing vs. Ramirez basis of the taking into effect
GR No. L-41631, December 17, of the law. The power to
1976 make laws necessarily
Under the Constitution, each involves a discretion as to
local government unit shall what it shall be, which
have the power to create its constitutionality may not be
own sources of revenue and done, and delegation of
to levy taxes, subject to such authority or discretion as to
provisions as may be its execution be exercised
provided by law. under and in pursuance of
The entrusting of the the law, to which no valid
collection of the fees does objection can be made.
not destroy the public The power of the State to
purpose of the ordinance. make reasonable and
So long as the purpose is natural classifications for
public, it does not matter purposes of taxation has
whether the agency through long been established and
which the money is the judiciary will not interfere
dispensed is public or with such prerogative.
private. The right to tax There is no arbitrary and
depends upon the ultimate confiscatory imposition of
use, purpose, and object for tax burden in the imposition
which the fund is raised. It is of the VAT because as the
not dependent on the nature buyer pays the input tax to
or character of the person or the seller, the seller will
corporation whose subsequently remit such
intermediate agency is to be input tax to the BIR, thus,
used in applying it. The there is no retention of any
people may be taxed for a tax collection.
public purpose, although it Uniform taxation does not
be under the direction of an preclude the Congress from
individual or private exercising its power to
corporation. classify subjects of taxation
and only demands uniformity
2. ABAKADA GURO Party List vs. within a particular class.
Ermita The Constitution does not
GR No. 168056, October 18, 2005 really prohibit the imposition
Delegation of legislative of indirect taxes like the
power is different from VAT. What it simply provides
delegation of ascertainment is that Congress shall evolve
of facts upon which a progressive system of
enforcement and taxation.
administration under the law
is contingent. The former 3. Eastern Theatrical Co., Inc. vs.
cannot be delegated while Alfonso
the latter can be. There is GR No. L-1104, May 31, 1949
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