Republic Act No

Republic Act No.
10708
December 9, 2015 An Act Enhancing Transparency In The Management And Accounting Of Tax
Incentives Administered By Investment Promotion Agencies
REPUBLIC ACT No. 10708
AN ACT ENHANCING TRANSPARENCY IN THE MANAGEMENT AND ACCOUNTING OF TAX

INCENTIVES ADMINISTERED BY INVESTMENT PROMOTION AGENCIES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:
SECTION 1. This Act shall be known as “The Tax Incentives Management and Transparency Act
(TIMTA)”.
SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State to promote fiscal
accountability and transparency in the grant and management of tax incentives by developing
means to promptly measure the government’s fiscal exposure on these grants and to enable the
government to monitor, review, and analyze the economic impact thereof and thereby optimize the
social benefit of such incentives.
SECTION 3. Definition of Terms. — As used in this Act:
a. Investment Promotion Agencies (IPAs) shall refer to government entities created by law,
executive order, decree or other issuance, in charge of promoting investments, administering
tax and non-tax incentives, and/or overseeing the operations of the different economic zones
and freeports in accordance with their respective charters. These include the Board of
Investments (BOI), Philippine Economic Zone Authority (PEZA), Bases Conversion and
Development Authority (BCDA), Subic Bay Metropolitan Authority (SBMA), Clark
Development Corporation (CDC), John Hay Management Corporation (JHMC), Poro Point
Management Corporation (PPMC), Bataan Technology Park, Inc. (BTPI), Cagayan
Economic Zone Authority (CEZA), Zamboanga City Special Economic Zone Authority
(ZCSEZA), Phividec Industrial Authority (PIA), Aurora Pacific Economic Zone and Freeport
Authority (APECO), Authority of the Freeport Area of Bataan (AFAB), Tourism Infrastructure
and Enterprise Zone Authority (TIEZA), and ail other similar authorities that may be created
by law in the future;
b. Tax incentives shall refer to fiscal incentives such as those which come in the form of
income tax holidays (ITH), exemptions, deductions, credits or exclusions from the tax base,
as provided by law, to registered business entities; and
c. Registered business entity shall refer to any individual, partnership, corporation, Philippine
branch of a foreign corporation, or other entity incorporated and/or organized and existing
under Philippine laws and registered with an IPA.
SECTION 4. Filing of Tax Returns and Submission of Tax Incentives Reports. — All registered
business entities are required to file their tax returns and pay their tax liabilities, on or before the
deadline as provided under the National Internal Revenue Code (NIRC), as amended, using the
electronic system for filing and payment of taxes of the Bureau of Internal Revenue (BIR).
For registered business entities availing of incentives administered by the IPAs, they shall file with
their respective IPAs a complete annual tax incentives report of their income-based tax incentives,
value-added tax and duty exemptions, deductions, credits or exclusions from the tax base as
provided in the charter of the IPA concerned, within thirty (30) days from the statutory deadline for
filing of tax returns and payment of taxes.
The IPAs shall, within sixty (60) days from the end of the statutory deadline for filing of the relevant
tax returns, submit to the BIR, their respective annual tax incentives reports based on the list of the
registered business entities who have filed said tax incentives report.
The details of the tax incentives reports, as provided in the preceding paragraphs, shall be provided
in the implementing rules and regulations (IRR) of this Act.
The foregoing provisions shall be without prejudice to the right of the BIR and the Bureau of
Customs (BOC) to conduct assessment within the prescribed period provided in the NIRC, as
amended, and the Tariff and Customs Code of the Philippines (TCCP), as amended, respectively.
SECTION 5. Monitoring of Tax Incentives. — The BIR and the BOC shall submit to the Department
of Finance (DOF), notwithstanding any law to the contrary: (a) the tax and duty incentives of
registered business entities as reflected in their filed tax returns and import entries; and (b) actual tax
and duty incentives as evaluated and determined by the BIR and the BOC.
The DOF shall maintain a single database for monitoring and analysis of tax incentives granted.
For purposes of monitoring and transparency, the DOF shall submit to the Department of Budget
and Management (DBM) the aggregate data on a sectoral and per industry basis of: (1) the amount
of tax incentives availed by registered business entities; (2) the estimate claims of tax incentives
immediately preceding the current year; (3) the programmed tax incentives for the current year; and
(4) the projected tax incentives for the following year. Such information shall be given to the
Oversight Committee created under Section 9 of this Act.
The aforesaid data shall be reflected by the DBM in the annual Budget of Expenditures and Sources
of Financing (BESF), which shall be known as the Tax Incentives Information (TII) section: Provided,
That the TII shall be limited to the aggregate data related to incentives availed of by registered
business entities based on the submissions of the DOF and the concerned IPAs, categorized by
sector, by IPA and type of incentive.
Nothing in this Act shall be construed to diminish or limit, in whatever manner, the amount of
incentives that EPAs may grant pursuant to their charters and existing laws; or to prevent, deter, or
delay the promotion and regulation of investments, processing of applications for registrations, and
evaluation of entitlement of incentives by IPAs.
SECTION 6. Conduct of Cost-Benefit Analysis on Investment Incentives. — The National Economic

and Development Authority (NEDA) is mandated to conduct cost-benefit analysis on the investment
incentives to determine the impact of tax incentives on the Philippine economy.
For this purpose, all heads of the IPAs shall submit to the NEDA the aggregate tax incentives, based
on the submissions of registered business entities as provided in Section 4 of this Act, and
aggregate investment-related data, both on a sectoral or per industry basis, which may include, but
not limited to, investment projects, investment cost, actual employment and export earnings.
SECTION 7. Penalties for Noncompliance with Filing and Reportorial Requirements. — Any
registered business entity which fails to comply with filing and reportorial requirements with the
appropriate IPAs and/or which fails to show proof of filing of tax returns using the electronic system
for filing and payment of taxes of the BIB shall be imposed the following penalties:
a. First (1st) violation — payment of a fine amounting to one hundred thousand pesos
(P100,000.00);
b. Second (2nd) violation — payment of a fine amounting to five hundred thousand pesos
(P500,000.00); and
c. Third (3rd) violation — cancellation of the registration of the registered business entity.
Provided, That if the failure to show such proof is not due to the fault of the registered business
entity, the same shall not be a ground for the suspension of the ITH and/or other income-based tax
incentives availment.
Any government official or employee who fails without justifiable reason to provide or furnish the
required tax incentives report or other data or information as required under this Act shall be
penalized, after due process, by a fine equivalent to the official’s or employee’s basic salary for a
period of one (1) month to six (6) months or by suspension from government service for not more
than one (1) year, or both, in addition to any criminal and administrative penalties imposable under
existing laws.
SECTION 8. Funding. — Such amount necessary to carry out the implementation of this Act shall be
sourced from the current General Appropriations Act (GAA). 1âw phi 1
SECTION 9. Joint Congressional Oversight Committee. — A Joint Congressional Oversight

Committee, herein referred to as the Oversight Committee, shall be constituted in accordance with
the provisions of this Act. The Oversight Committee shall be composed of the respective
Chairpersons of the Committees on Ways and Means of the Senate and of the House of
Representatives and four (4) additional members from each House, one of whom shall be the
Chairperson of the Senate Committee on Trade, Commerce and Entrepreneurship and the
Chairperson of the House Committee on Trade and Industry to be designated by the Senate
President and the Speaker of the House of Representatives, respectively. The Oversight Committee
shall monitor and ensure the proper implementation of this Act.
SECTION 10. Implementing Rules and Regulations. — The Secretaries of the DOF and the
Department of Trade and Industry (DTI), in coordination with the NEDA Director-General,
Commissioners of the BIR and BOC, and heads of concerned IPAs, shall, within sixty (60) days from
the effectivity of this Act, promulgate rules and regulations to faithfully implement the intent and
provisions of this Act: Provided, That the failure of the Secretaries of the DOF and DTI to promulgate
the rules and regulations shall not prevent the implementation of this Act upon its effectivity.
SECTION 11. Separability Clause. – If any provision of this Act is subsequently declared invalid or
unconstitutional, other provisions hereof which are not affected thereby shall remain in full force and
effect.
SECTION 12. Repealing Clause. – All other laws, acts, presidential decrees, executive orders,
issuances, presidential proclamations, rules and regulations or parts thereof which are contrary to
and inconsistent with any provision of this Act are hereby repealed, amended or modified
accordingly.
SECTION 13. Effectivity. – This Act shall take effect fifteen (15) days after its complete publication
either in the Official Gazette or in at least one (1) newspaper of general circulation.
Approved,
Republic Act 10653
February 12, 2015
An Act Adjusting The 13th Month Pay And Other Benefits Ceiling Excluded From The Computation Of
Gross Income For Purposes Of Income Taxation, Amending For The Purpose Section 32(B), Chapter Vi Of
The National Internal Revenue Code Of 1997, As Amended
REPUBLIC ACT No. 10653
AN ACT ADJUSTING THE 13th MONTH PAY AND OTHER BENEFITS CEILING EXCLUDED
FROM THE COMPUTATION OF GROSS INCOME FOR PURPOSES OF INCOME TAXATION,
AMENDING FOR THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED

assembled:
Section 1. Section 32(B), Chapter VI of the National Internal Revenue Code of the Philippines
(Republic Act No. 8424) is hereby amended as follows:
"SEC. 32. Gross Income. —
"x x x
"(B) Exclusions from Gross Income. — The following items shall not be included in gross income and
shall be exempt from taxation under this Title:
"xxx
"(7) Miscellaneous Items. — "xxx
"(e) 13th Month Pay and Other Benefits. — Gross benefits received by officials and employees of
public and private entities: Provided, however, That the total exclusion under this subparagraph shall
not exceed eighty-two thousand pesos (P82,000) which shall cover:
"xxx
"(iv) Other benefits such as productivity incentives and Christmas bonus: Provided, That every three
(3) years after the effectivity of this Act, the President of the Philippines shall adjust the amount
herein stated to its present value using the Consumer Price Index (CPI), as published by the
National Statistics Office (NSO)."
Section 2. Implementing Rules and Regulations. — The Secretary of Finance shall promulgate the
necessary rules and regulations for the faithful and effective implementation of the provisions of this
Act: Provided, That, the failure of the Secretary of Finance to promulgate the said rules and
regulations shall not prevent the implementation of this Act upon its effectivity.
Section 3. Repealing Clause. — All laws, orders, issuances, circulars, rules and regulations or parts
thereof which are inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.1âw phi 1
Section 4. Separability Clause. — If any provision of this Act is declared unconstitutional or invalid,
other parts or provisions hereof not affected thereby shall continue to be in full force and effect.
Section 5. Effectivity. — This Act shall take effect fifteen (15) days following its publication in at least
two (2) newspapers of general circulation.
Republic Act 10864
June 10, 2016
An Act Defining Raw Sugar Or Raw Cane Sugar, Amending Section 109(A) And (F) Of The National
Internal Revenue Code Of 1997, As Amended, And For Other Purposes
REPUBLIC ACT NO. 10864, June 10, 2016
AN ACT DEFINING RAW SUGAR OR RAW CANE SUGAR, AMENDING SECTION 109(A) AND
(F) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR
OTHER PURPOSES

assembled:chanRoblesvirtualLawlibrary
SECTION. 1. Section 109(A) and (F) of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“Sec. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2) hereof, the following
transactions shall be exempt from the value-added tax:ChanRoblesVirtualawlibrary
“(A) Sale or importation of agricultural and marine food products in their original state, livestock and
poultry of a kind generally used as, or yielding or producing foods for human consumption; and
breeding stock and genetic materials therefor.
“Products classified under this paragraph shall be considered in their original state even if they have
undergone the simple processes of preparation or preservation for the market, such as freezing,
drying, salting, broiling, roasting, smoking or stripping. Polished and/or hushed rice, corn grits, raw
sugar or raw cane sugar and molasses, ordinary salt and copra shall be considered in their original
state;cralawlawlibrary
“For this purpose, notwithstanding the process/es involved its production, ‘raw sugar or raw cane
sugar’ means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter
reading of less than 99.5 degrees.”
“x x x.
“(F) Services by agricultural contract growers and milling for others of palay into rice, corn into grits
and sugar cane into raw sugar or raw cane sugar.”
“x x x.”
Sec. 2. Implementing Rules and Regulating. - The Secretary of Finance, upon the recommendation
of the Commissioner of Internal Revenue, shall issue the implementing rules and regulations of this
Act within ninety (90) days starting from the effectivity of this Act: Provided, That the failure of the
concerned agencies to promulgate the said rules and regulations shall not prevent the
implementation of this Act upon its effectivity.
Sec. 3. Repealing Clause. - All laws, acts, decrees, executive orders, issuances, and rules and
regulations or parts thereof which are contrary to and inconsistent with any provision of this Act are
hereby repealed, amended, or modified accordingly.
Sec. 4. Separability Clause. - If any provision of this Act is subsequently declared unconstitutional,
the validity of the remaining provisions hereof shall remain in full force and effect.
Sec. 5. Effectivity. - This Act shall take effect immediately after its complete publication either in
the Official Gazetter or in a newspaper of general circulation in the Philippines.
Republic Act 10963
December 19, 2017
An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99,
100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175,
177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237,
249, 254, 264, 269, And 288; Creating New Sections 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, And
265-A; And Repealing Sections 35, 62, And 89; All Under Republic Act No. 8424, Otherwise Known As
The National Internal Revenue Code Of 1997, As Amended, And For Other Purposes
SUPREME COURT RULINGS
2015
1. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure may be
invoked only against a tribunal, board of officer exercising judicial of quasi-judicial
functions.
On February 17, 2012, the Department of Finance, upon the recommendation of the BIR, issued
Revenue Regulations No. 2-2012, which imposed VAT and excise tax on the importation of
petroleum and petroleum products from abroad and into the Freeport and Economic Zones. The
Petitioner, which represents the businesses and enterprises within the Clark Freeport Zone, filed
a petition for certiorari with the Supreme Court under Rule 65 of the Rules of Civil Procedure,
alleging that the Secretary of Finance acted with grave abuse of discretion in issuing RR 2-2012.
It argued that by imposing VAT and excise tax on the importation of petroleum and petroleum
products from abroad and into the Freeport and Economic Zones, RR 2-2012 unilaterally revoked
the tax exemption granted by RA No. 7227 and RA No. 9400 to the businesses and enterprises
operating within the Subic Special Economic Zone and Clark Freeport Zone.
The respondent argued, among others, that the petition must be denied outright because the
special civil action for certiorari cannot be used to assail RR 2-2012 which was issued by the
respondent in the exercise of their quasi-legislative or rule-making power.
The Court agreed with the respondent. According to the Court, a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure is a special civil action that may be invoked only against
a tribunal, board or officer exercising judicial or quasi-judicial functions. Respondents do not fall
within the ambit of a tribunal, board, or officer exercising judicial or quasi-judicial functions. They
issued RR 2-2012 in the exercise of their quasi-legislative or rule-making powers, and not judicial
or quasi-judicial functions. Respondents did not adjudicate the rights of the parties. RR 2-2012
was issued by the Secretary of Finance based on Section 244 of the NIRC. The application of
Section 244 of the NIRC is an exercise of quasi-legislative or rulemaking powers of the Secretary
of Finance. And since RR 2-2012 was issued by the Secretary of Finance based on Section 244
of the NIRC, such administrative issuance is therefore quasi-legislative in nature which is outside
the scope of petition for certiorari. (Clark Investors and
Locators Association, Inc. vs. Secretary of Finance and Commissioner of Internal
Revenue, G.R. No. 200670, July 6, 2015)
2. Transfer of real property is subject to documentary stamp taxes only in cases of sale.
Respondent La Tondena Distillers, Inc. entered into a Plan of Merger with Sugarland Beverage
Corporation and Metro Bottled Water Corporation, with the respondent as the surviving
corporation. The respondent requested from the BIR for a confirmation of the tax-free nature of
the merger. On September 26, 2001, the BIR issued a ruling stating that pursuant to Section
40(C)(2) and (6)(b) of the 1997 NIRC, no gain or loss shall be recognized by the absorbed
corporations. However, the transfer of assets, such as real properties, shall be subject to DST
imposed under Section 196 of the NIRC. Consequently, on various dates, the respondent paid
DST to the BIR. Later, claiming that it is exempt from paying the DST, respondent filed a claim
for the refund for the DST allegedly paid erroneously.
The Court, citing the earlier case of Commissioner of Internal Revenue vs. Pilipinas Shell
Petroleum Corporation, ruled that Section 196 of the NIRC pertains only to transactions where
real property is conveyed to a purchaser for a consideration. The phrase “granted, assigned,
transferred or otherwise conveyed” is qualified by the word “sold” which means that documentary
stamp tax under Section 196 is imposed on the transfer of real property by way of sale and does
not apply to all conveyances of real property. Thus, respondent is not liable to DST as the transfer
of real properties from the absorbed corporations to respondent was pursuant to a merger.
(Commissioner of Internal Revenue vs. La Tondena Distillers, Inc., G.R. Nos. 175188, July
05, 2015)
3. The CIR’s interpretation of a tax provision involves an exercise of her quasi-legislative

functions, the proper recourse against it is a review by the Secretary of Finance and
ultimately to the regular courts.
In June 2012, Petron imported liters of alkylate and paid VAT as evidenced by the Import Entry
and Internal Revenue Declaration. Based on the Final Computation, said importation was
subjected by the Collector of Customs of Limay, Bataan, upon instruction of the Commissioner of
Customs (COC), to excise taxes. The imposition of excise taxes was supposedly premised on
Customs Memorandum Circular (CMC) No. 164-2012, dated July 18, 20120, implementing the
Letter dated June 29, 2012 issued by the Commissioner of Internal Revenue, which states that
alkylate is a product of distillation similar to naphta and is subject to excise tax under Section
148(e) of the NIRC. Petron filed before the CTA a petition for review raising the issue of whether
its importation of alkylate as a blending component is subject to excise tax as contemplated under
Section 148(e) of the NIRC. The CIR asserts that the interpretation of the subject tax provision,
i.e, Section 148(e) of the NIRC, embodied in CMC No. 164-2012, is an exercise of her quasi-
legislative function which is reviewable by the Secretary of Finance, whose decision in turn, is
appealable to the Office of the President and, ultimately, to the regular courts, and that only her
quasi-judicial function or authority to decide disputed assessment, refund, penalties and the like
are subject to the exclusive appellate jurisdiction of the CTA. The Court agreed with the CIR.
According to the Court, the CTA is a court of special jurisdiction, with power to review by appeal
decision involving tax disputes rendered either by the CIR or the COC. Conversely, it has no
jurisdiction to determine the validity of a ruling issued by the CIR or the COC in the exercise of
their quasi-legislative powers to interpret tax laws. In this case, Petron’s tax liability was premised
on the COC’s issuance of CMC No. 164-2012, which gave effect to the CIR’s June 29, 2012 Letter
interpreting Section 148(e) of the NIRC as to include alkylate among the articles subject to
customs duties, hence, Petron’s petition before the CTA ultimately challenging the legality and
constitutionality of the CIR’s interpretation of a tax provision. The CTA had no jurisdiction to take
cognizance of the petition as its resolution would necessarily involve declaration of the validity or
constitutionality of the CIR’s interpretation of
Section 148(e) of the NIRC, which is subject to the exclusive review by the Secretary of Finance
and ultimately by the regular courts. Hence, as the CIR’s interpretation of a tax provision involves
an exercise of her quasi-legislative functions, the proper recourse against the subject tax ruling
expressed in RMC No. 164-2102 is a review by the Secretary of Finance and ultimately to the
regular courts. (Commissioner of Internal Revenue vs. Court of Tax Appeals and Petron
Corporation, G.R. No. 207843, July 15, 2015)
4. The duty to withhold tax on compensation arises upon its accrual.

Taxpayer accrued bonuses in the taxable years 1996 and 1997, although no withholding taxes
were withheld in the year of accrual. The taxpayer was then assessed for deficiency withholding
taxes in the year of accrual. Taxpayer maintained that the liability of the employer to withhold the
tax does not arise until such bonus is actually distributed, citing Section 72 of the 1977 NIRC
which states that every employer making payment of wages shall deduct and withhold upon such
wages. Since the supposed bonuses were not distributed to the officers and employees in 1996
and 1997 but were distributed in the succeeding year when the amounts of bonuses were finally
determined, taxpayer asserts that its duty to withhold tax during those years did not arise. The
Court agrees with the assessment. The Court ruled that the taxpayer is liable for the withholding
tax on the bonuses since it claimed the same as expense in the year they were accrued. (ING
Bank N.V. vs. Commissioner of Internal Revenue, G.R. No. 167679, July 22,
2015)
5. Excise taxes paid on imported petroleum products and subsequently sold to Clark
Development Corporation may be refunded to the taxpayer.
Chevron sold and delivered petroleum products to Clark Development Corporation (CDC).
Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum
products sold to CDC. Hence, it filed a claim for refund.
The CTA denied the claim for refund. The Supreme Court, however, granted the refund.
According to the Supreme Court, the excise taxes that Chevron paid on its importation of
petroleum products subsequently sold to CDC were illegal and erroneous, and should be credited
or refunded to Chevron in accordance with Section 204 of the NIRC. Section 135(C) of the NIRC
should be construed as an exemption in favor of the petroleum products on which the excise tax
was levied in the first place. The exemption cannot be granted to the buyers – that is, the entities
that are by law exempt from direct and indirect taxes – because they are not under any legal duty
to pay the excise tax. The payment of excise tax by Chevron upon its importation of petroleum
products was deemed illegal and erroneous upon the sale of the petroleum products to CDC.
Section 204 of the NIRC explicitly allowed Chevron as the statutory taxpayer to claim the refund
or the credit of the excise taxes paid. (Chevron Philippines, Inc. vs.
Commissioner of Internal Revenue, G.R. No. 210836, September 1, 2015)
6. A waiver of the statute of limitations that does not comply with the requisites for its
validity specified under RMO No. 20-90 and RDAO 01-05 is generally invalid, but may still
be valid due to peculiar circumstances.
The general rule is that a waiver of the statute of limitations that does not comply with the
requisites for its validity specified under RMO No. 20-90 and RDAO 01-05 is generally invalid and
ineffective to extend the prescriptive period to assess taxes. However, due to peculiar
circumstances and as exception to the general rule, the supposedly invalid waivers may be
considered valid for the following reasons:
a. The parties in the case are in pari delicto or “in equal fault”. In pari delicto connotes that the
two parties to a controversy are equally guilty and they shall have no action against each other.
b. Parties must come to Court with clean hands. Parties who do not come to Court with clean
hand cannot be allowed to benefit from their own wrongdoing. Taxpayer should not be allowed to
benefit from the flaws in its own waivers and successfully insist on their invalidity in order to evade
its responsibility to pay taxes.
c. Taxpayer is estopped from questioning the validity of its waivers. While it is true that the
Court had repeatedly held that the doctrine of estoppel must be sparingly applied as an exception
to the statute of limitations for assessment of taxes, the Court finds that the application of the
doctrine in this case is justified. Verily, the application of estoppel in this case would promote the
administration of the law, prevent injustice and avert the accomplishment of a wrong. The
taxpayer executed 5 waivers and delivered them to the BIR and did not raise any objection against
their validity until the BIR assessed taxes against it. Moreover, the application of the estoppel is
necessary to prevent the undue injury that the government would suffer because of the
cancellation of the BIR’s assessment of taxpayer’s tax liabilities.
d. The Court cannot tolerate a highly suspicious situation. In this case, after the taxpayer
voluntarily executing the waivers, insisted on their invalidity by raising the very same defects it
caused. On the other hand, the BIR miserably failed to exact from the taxpayer compliance with
its rules. The BIR’s negligence in the compliance of its duties was so gross such that it seemed
that it consented to the mistakes in the waivers. Such a situation is dangerous and open to abuse
by unscrupulous taxpayers who intend to escape their responsibility to pay taxes by mere
expedient of hiding behind technicalities. The BIR’s right to assess and collect taxes should not
be jeopardized merely because of the mistakes and lapses of its officers, especially in cases like
this where the taxpayer is obviously in bad faith. (Commissioner of Internal Revenue vs. Next
Mobile, Inc. G.R. No. 212825,
December 07, 2015)
7. The reckoning of the 120-day period within which the BIR to decide on a claim for
refund/tax credit is the last submission of the supporting documents. Starting June 14,
2014, the 120-day period shall be counted from the filing of the administrative claim.
On May 15, 2008, taxpayer filed an administrative claim for refund of unutilized input VAT for the
first semester of 2007, including supporting documents. On August 28, 2008, taxpayer submitted
additional documents to the BIR. It elevated the matter to the CTA on January 23, 2009, in view
of the inaction of the BIR. The CTA denied the claim. Among others, the CTA En Banc ruled that
the taxpayer failed to seasonably file its petition. Counting from the date it filed its administrative
claim on May 15, 2008, the CTA En Banc ruled that the BIR had 120 days to act on the claim
(until September 12, 2008), and the taxpayer had 30 days from then, or until October 12, 2008 to
question the inaction before the CTA. Considering that the taxpayer only filed its petition for review
in January 23, 2009, the CTA En Banc concluded that the petition for review was belatedly filed.
For the tax court, the 120-day period could not commence on the day the taxpayer filed its last
supporting document on August 28, 2008, because to allow such would give the taxpayer
unlimited discretion to indefinitely extend the 120-day period by simply filing the required
documents piecemeal. On appeal to the Supreme Court, the SC reversed the CTA En Banc’s
decision and ruled in favor of the taxpayer. According to the SC, the CIR had 120 days from the
date of submission of complete documents to decide a claim for tax credit or refund. The rule, as
summarized by the
SC, is that from the date an administrative claim for excess unutilized VAT is filed, a taxpayer has
30 days within which to submit the documentary requirements sufficient to support his claim,
unless given further extension by the BIR. Then, upon filing by the taxpayer of his complete
documents to support his application, or expiration of the period given, the BIR has 120 days
within which to decide the claim for tax credit or refund. Should the taxpayer, on the date of filing,
manifest that he no longer wishes to submit any other additional documents to complete his
administrative claim, the 120-day period allowed to the BIR begins to run from the date of filing.
In all cases, whatever documents a taxpayer intends to file to support his claim must be completed
within the 2-year period under Section 112(A) of the NIRC. The 30-day period from denial of the
claim or from the expiration of the 120-day period within which to appeal the denial or inaction of
the BIR to the CTA must be respected.
The foregoing rules should only be made applicable to those claims for tax credit or refund filed
prior to June 11, 2014. As it now stands, RMC 54-2014, dated June 11, 2014, mandates that the
claimant has to submit complete documents upon filing of the administrative claim. The reckoning
of the 120-day period has been withdrawn from the taxpayer by RMC 54-2014. It is now required
that at the time he files his administrative claim, he has to complete his supporting documents
and attest that he will no longer submit any other documents to prove his claim. The taxpayer is
barred from submitting additional documents after he had filed his administrative claim. Thus, the
120-day has to be counted from the filing of the administrative claim. (Pilipinas Total Gas, Inc.
vs. Commissioner of Internal Revenue, G.R. No. 207112, December 08, 2015)
SUPREME COURT RULING

2016
1. The the premature filing of a claim for refund or credit if input VAT before the CTA
warrants the dismissal since no jurisdiction is acquired by the tax court.
On March 11, 2002, taxpayer filed an administrative claim for refund of unutilized input VAT
covering the year 2007. Thereafter, fearing that the period for filing a judicial claim for refund was
about to expire, the taxpayer proceeded to file a petition for review before the CTA, without waiting
for the action of the BIR. The CTA granted the claim but at a reduced amount. On appeal to the
Supreme Court, the SC reversed the CTA decision on the ground that the petition before the CTA
was prematurely filed, and therefore the CTA lacked jurisdiction to entertain the judicial claim.
Citing the case of CIR vs. Aichi Forging Company of Asia, Inc. (646 Phil 710 – 2010), the
premature filing of a claim for refund or credit if input VAT before the CTA warrants the dismissal,
inasmuch as no jurisdiction is acquired by the tax court. The taxpayer filed its petition for review
with the CTA on March 26, 2002 or a mere 15 days after it filed its administrative claim. It did not
wait for the lapse of the 120-day period expressly provided for by law within which the BIR shall
grant or deny the application for refund. The 120-day period is mandatory and jurisdictional and
that the CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration of
the 120-day period. (Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation,
G.R. No. 180434, January 20, 2016)
2. Taxpayer’s lapse in procedures makes the BIR’s assessment final, executory and
demandable.
On January 17, 2008, taxpayer received a Final Assessment Notice (FAN), demanding payment
of deficiency fringe benefits tax (FBT). On January 24, 2008, taxpayer filed a protest to the FAN
addressed to the Regional Director (“RD”) of Revenue Region No. 6 of the BIR. On August 14,
2008, taxpayer elevated its protest to the Commissioner, there being no actual action taken
thereon as of such date. In a letter dated September 23, 2008, taxpayer was informed that the
Legal Division of Revenue Region No. 6 sustained the revenue officer on the imposition of FBT
against it based on the provisions of Revenue Regulations (RR) No. 3-98 and that its protest was
forwarded to the Assessment Division for further action. On November 19, 2008, taxpayer
received a letter from the OIC-Regional Director, Revenue Region No. 6, stating that its letter
protest was referred to Revenue District Office No. 33 for appropriate action.
On March 11, 2009, taxpayer filed the Petition for Review before the CTA alleging BIR’s inaction
in its protest on the disputed deficiency FBT. The Supreme Court dismissed the petition on the
ground that the filing of petition before the CTA was premature. According to the SC, a textual
reading of Section 3.1.5 of RR 12-99 gives a protesting taxpayer only three options:
1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the
taxpayer may appeal to the CTA within 30 days from receipt of the whole or partial denial of the
protest.
2. If the protest is wholly or partially denied by the CIR's authorized representative, then the
taxpayer may appeal to the CIR within 30 days from receipt of the whole or partial denial of the
protest.
3. If the CIR or his authorized representative failed to act upon the protest within 180 days from
submission of the required supporting documents, then the taxpayer may appeal to the CTA within
30 days from the lapse of the 180-day period.
To further clarify the three options: A whole or partial denial by the CIR's authorized representative
may be appealed to the CIR or the CTA. A whole or partial denial by the CIR may be appealed to
the CTA. The CIR or the CIR's authorized representative's failure to act may be appealed to the
CTA. There is no mention of an appeal to the CIR from the failure to act by the CIR's authorized
representative.
Taxpayer did not wait for the RD or the CIR's decision on its protest. Taxpayer made separate
and successive filings before the RD and the CIR before it filed its petition with the CTA.
Taxpayer's protest to the RD on 24 January 2008 was filed within the 30-day period prescribed in
Section 228 and Section 3.1.5 of RR 12-99. The RD did not release any decision on taxpayer's
protest. Thus, taxpayer was unable to make use of the first option as described above to justify
an appeal to the CTA. The effect of the lack of decision from the RD is the same, whether to
consider taxpayer’s April 2008 submission of documents or not.
Under the third option described above, even if leeway is granted to taxpayer and consider its
unspecified April 2008 submission, taxpayer still should have waited for the RD's decision until
27 October 2008, or 180 days from 30 April 2008. Taxpayer then had 30 days from 27 October
2008, or until 26 November 2008, to file its petition before the CTA. Taxpayer, however, did not
make use of the third option. Taxpayer did not file a petition before the CTA on or before 26
November 2008.
Under the second option, taxpayer ought to have waited for the RD's whole or partial denial of its
protest before it filed an appeal before the CIR. Taxpayer rendered the second option moot when
it formulated its own rule and chose to ignore the clear text of Section 3.1.5 of RR 12-99. Taxpayer
"elevated an appeal" to the CIR on 13 August 2008 without any decision from the RD, then filed
a petition before the CTA on 11 March 2009. A textual reading of Section 228 and Section 3.1.5
will readily show that neither Section 228 nor Section 3.1.5 provides for the remedy of an appeal
to the CIR in case of the RD's failure to act. The third option states that the remedy for failure to
act by the CIR or his authorized representative is to file an appeal to the CTA within 30 days after
the lapse of 180 days from the submission of the required supporting documents. Taxpayer clearly
failed to do this.
If we consider, for the sake of argument, taxpayer’s submission before the CIR as a separate
protest and not as an appeal, then such protest should be denied for having been filed out of time.
Taxpayer only had 30 days from 17 January 2008 within which to file its protest. This period ended
on 16 February 2008. Taxpayer filed its submission before the CIR on 13 August 2008.When
taxpayer filed its petition before the CTA, it is clear that taxpayer failed to make use of any of the
three options described above. A petition before the CTA may only be made after a whole or
partial denial of the protest by the CIR or the CIR's authorized representative.
When taxpayer filed its petition before the CTA on 11 March 2009, there was still no denial of
taxpayer's protest by either the RD or the CIR. Therefore, under the first option, taxpayer's petition
before the CTA had no cause of action because it was prematurely filed. The CIR made an
unequivocal denial of taxpayer's protest only on 18 July 2011, when the CIR sought to collect
from taxpayer. The CIR's denial further puts taxpayer in a bind, because it can no longer amend
its petition before the CTA.
Taxpayer has clearly failed to comply with the requisites in disputing an assessment as provided
by Section 228 and Section 3.1.5 of RR 12-99. Indeed, taxpayer's lapses in procedure have made
the BIR's assessment final, executory and demandable. (Philippine Amusement and Gaming
Corporation vs. Bureau of Internal Revenue, G.R. No. 208731, January 27, 2015)
3. Compliance with the 120+30 day period in a claim for refund of unutilized input taxes is
jurisdictional.
Taxpayer filed its administrative claims for refund of the VAT paid on imported capital goods, as
follows:
2nd quarter of 2001 - filed on October 16, 2001
3rd quarter of 2001 – filed on September 04, 2002
4th quarter of 2001 – filed on September 04, 2002
Because of the continuous inaction by the BIR on the administrative claims of the taxpayer, the
latter filed separate petitions for review before the CTA, as follows:
2nd quarter of 2001 - filed on 30 July 2003
3rd quarter of 2001 – filed on 20 October 2003
4th quarter of 2001 - filed on 30 December 2003
On appeal to the Supreme Court, the SC dismissed the case for lack of jurisdiction on the part of
the CTA. According to the SC, upon the filing of an administrative claim, the BIR is given a period
of 120 days within which to (1) grant a refund or issue the tax credit certificate for creditable input
taxes; or (2) make a full or partial denial of the claim for a tax refund or tax credit. Failure on the
part of the BIR to act on the application within the 120-day period shall be deemed a denial. The
120-day period begins to run from the date of submission of complete documents supporting the
administrative claim. If there is no evidence showing that the taxpayer was required to submit - or
actually submitted - additional documents after the filing of the administrative claim, it is presumed
that the complete documents accompanied the claim when it was filed. Considering that there is
no evidence in this case showing that taxpayer made later submissions of documents in support
of its administrative claims, the 120-day period within which the BIR was allowed to act on the
claims shall be reckoned from 16 October 2001 and 4 September 2002. Whether respondent
rules in favor of or against the taxpayer - or does not act at all on the administrative claim - within
the period of 120 days from the submission of complete documents, the taxpayer may resort to a
judicial claim before the CTA. The judicial claim shall be filed within a period of 30 days after the
receipt of the BIR’s decision or ruling or after the expiration of the 120-day period, whichever is
sooner. Aside from a specific exception to the mandatory and jurisdictional nature of the periods
provided by the law, any claim filed in a period less than or beyond the 120+30 days provided by
the NIRC is outside the jurisdiction of the CTA. As shown by the table below, the judicial claims
of the taxpayer were filed beyond the 120+30 day period:
Taxable Administrati End of the End of the Judicial Number of

Quarter of ve 120-day 30-day Claim Filed Days Late
2001 Claim Filed Period Period
2nd 16 October 13 February 15 March 30 July 2003 502 days

2001 2002 2002
3rd 4 September 2 January 1 February 20 October 261 days

2002 2003 2003 2003
4th 4 September 2 January 1 February 30 December 332 days

2002 2003 2003 2003
As things stood, the CTA had no jurisdiction to act upon, take cognizance of, and render judgment
upon the petitions for review filed by the taxpayer. The judicial claims filed with the CTA were
dismissed for lack of jurisdiction. (Silicon Philippines, Inc. vs. Commissioner of Internal
Revenue, G.R. No. 182387, March 02, 2016)
4. The requirement for depositing an amount or posting a surety bond as a condition for
the suspension of the collection of taxes may be dispensed with.
In May 2012, the BIR issued Formal Letter of Demand against Spouses Emmanuel and Jinkee
Pacquiao, finding them liable for deficiency income tax and VAT amounting to P766,899,530.62
for taxable year 2008 and P1,433,421,214.61 for 2009, inclusive of the interests and surcharges.
The Spouses questioned the findings of the BIR. In May 2013, the BIR issued its Final Decision
on Disputed Assessment (FDDA) addressed to Emmanuel Pacquiao only, informing him that the
BIR found him liable for deficiency income tax and VAT for taxable years 2008 and 2009 which,
inclusive of interests and surcharges, amounted to a total of P2,261,217,439.92. Subsequently,
the BIR issued Preliminary Collection Letters (PCL) demanding that both Emmanuel and Jinkee
Pacquiao pay the amount of P2,261,217,439.92, inclusive of the interests and surcharges. The
BIR then later issued Final Notice Before Seizure (FNBS) informing them of their last opportunity
to make the necessary settlement of deficiency income and VAT liabilities before the BIR would
proceed against their property. Through a series of installment, the Spouses paid the VAT liability
in the total amount of P32,196,534.40.
But aggrieved that they are being made liable for deficiency income tax, the Spouses filed a
Petition for Review with the CTA.
Pending the resolution by the CTA of the petition, the Spouses sought from the BIR the
suspension of the issuance of warrants of distraint and/or levy and warrants of garnishment. In a
letter, the BIR denied the request and instead informed the Spouses that despite their initial
payment, the amount to be collected from both of them still amounted to P3,259,643,792.24 for
deficiency income tax for the taxable years 2008 and 2009 and P46,920,235.74 for deficiency
VAT for the same period. A warrant of distraint and/or levy was also included in the letter. The
Spouses filed a motion before the CTA to lift the warrants of distraint, levy and garnishment issued
by the BIR. As to the cash deposit or bond requirement under Section 11 of Republic Act No.
1125, they questioned the necessity thereof arguing that the BIR’s assessment is highly
questionable. The CTA granted and ordered the BIR to desist from collecting the deficiency tax
assessment, but required the Spouses to deposit the amount of P3,298,514,894.35 or post a
bond in the amount of P4,947,772,341.53. The request for reconsideration for the reduction of
the amount of the bond was denied.
Spouses filed a petition before the Supreme Court arguing, among others, that the CTA acted
with grave abuse of discretion amounting to lack or excess of jurisdiction in requiring the Spouses
to post a cash bond in the amount of P3,298,514,894.35 or a surety bond in the amount of
P4,947,772,341.53.
As held by the Supreme Court, based on Section 11 of RA 1125, appeal will not suspend the
collection of tax. However, when in the view of the CTA, the collection may jeopardize the interest
of the government and/or the taxpayer, it may suspend said collection and require the taxpayer
to either deposit the amount claimed or to file a surety bond. Citing the case of Collector of Internal
Revenue v. Avelino (100 Phil 327, 1956) and Collector of Internal Revenue v. Zulueta (100 Phil
872, 1957), the Supreme Court held that the CTA has ample authority to dispense with the deposit
of the amount claimed or the filing of the required bond, whenever the method employed by the
BIR in the collection of tax jeopardizes the interest of the taxpayer for being patently in violation
of law. Whenever it is determined by the courts that the method employed by the BIR in the
collection of tax is not sanctioned by law, the bond requirement under Section 11 of RA 1125
should be dispensed with. In this case, the Supreme Court noted that the CTA should have
conducted a preliminary hearing and received evidence so it could have properly determined
whether the requirement of providing the required security under Section 11 of RA 1125 could be
reduced or dispensed with. The case was remanded to the CTA to conduct preliminary hearing.
(Spouses Emmanuel D. Pacquiao and Jinkee J. Pacquiao vs. The Court of Tax Appeals –
First Division and the Commissioner of Internal Revenue, G.R. No. 213394, April 05, 2016)
5. A final decision on disputed assessment that is declared void does not necessarily
result in a void assessment.
The taxpayer was issued formal letter of demand/formal assessment notice (FAN), assessing it
for, among others, deficiency expanded withholding tax (EWT) and deficiency fringe benefits tax
(FBT), together with the attached details of discrepancies. After the taxpayer protested the
assessment, the BIR issued the final decision on disputed assessment (FDDA) still finding the
taxpayer liable for deficiency EWT and FBT, but at amounts different from those stated in the FAN
without stating the factual bases. On appeal, the CTA ruled that the EWT and FBT assessment
was void for failure of the FDDA to provide the details thereof.
On appeal to the Supreme Court, the Court noted that Section 3.1.6 of RR No. 12-99 specifically
requires that the decision of the Commissioner or his duly authorized representative on a disputed
assessment to state the facts, law and rules and regulations, or jurisprudence on which the
decision is based. Failure to do so will invalidate the FDDA. Thus, the Supreme Court agreed with
the CTA that the FDDA was void for failure to comply with the requirements of RR No. 12-99 that
the FDDA shall state the facts and the law on which the decision is based. While it provided for
the legal basis for the assessment, it fell short of informing the taxpayer of the factual bases
thereof. Thus, the FDDA as regards the EWT and FBT tax deficiency did not comply with the
requirement in Section 3.1.6 of RR 12-99, for failure to inform the taxpayer of the factual basis
thereof. As the amounts in the FDDA are different from those in the FAN, it becomes even more
imperative that the FDDA contains details of the discrepancy. Failure to do so would deprive the
taxpayer adequate opportunity to prepare an intelligent appeal.
The Court, however, made a distinction between an assessment and a decision. According to the
Court, the invalidity of one does not necessarily result to the invalidity of the other – unless the
law or regulations otherwise provide. The nullification of the FDDA does not extend to the
nullification of the entire assessment. An FDDA that does not inform the taxpayer in writing of the
facts and law on which it is based renders the decision void. It is as if there was no decision
rendered. It is tantamount to a denial by inaction, which may still be appealed before the CTA and
the assessment evaluated on the bases of the available evidence and documents. The merits of
the EWT and FBT assessment should have been discussed and not merely brushed aside on
account of the void FDDA. To recapitulate, a “decision” differs from an “assessment” and failure
of the FDDA to state the facts and law on which it is based renders the decision void – but not
necessarily the assessment. The case is remanded to the CTA for the assessment on EWT and
FBT. (Commissioner of Internal Revenue vs. Liquigaz Philippines Corporation, G.R. No.
215534, April 18, 2016)
6. Real property taxation of submarine cable systems.

The taxpayer was issued an Assessment for Real Property Taxation. In essence, the provincial
Assessor of Batangas has determined that the submarine cable systems are taxable real
property, a determination that was contested between the taxpayer and the assessors in an
exchange of letters. On February 7, 2003 and March 4, 2003, the taxpayer received a Warrant of
Levy and Notice of Auction Sale, respectively, from the Provincial Assessor of Batangas. On
March 10, 2003, taxpayer filed a Petition for Prohibition and Declaration of Nullity of Warrant of
Levy, Notice of Auction Sale and/or Auction Sale with the Regional Trial Court (RTC) of Batangas.
The RTC dismissed the petition for failure of the taxpayer to follow the requisite payment under
protest as well as failure to appeal to the Local Board of Assessment Appeals (LBAA), as provided
under Section 206 and 226 of the Local Government Code (LGC). The Court of Appeals affirmed
the decision of the RTC.
The taxpayer appealed to the Supreme Court (SC) asserting that recourse to the LBAA or
payment of tax under protest is inapplicable since there is no question of fact involved or that the
question involved is not the reasonableness of the amount assessed but the authority and power
of the assessor to impose tax. Taxpayer contends that there is only a pure question of law since
the issue is whether the submarine cable system, which it claims lies in international waters is
taxable. On appeal to the Supreme Court, the Court ruled as follows:
1. In disputes involving real property taxation, the general rule is to require the taxpayer to first
avail of administrative remedies and pay the tax under protest before allowing any resort to a
judicial action, except when the assessment itself is alleged to be illegal or is made without legal
authority. For example, prior resort to administrative action is required when among the issues
raised is an allegedly erroneous assessment, like when the reasonableness of the amount is
challenged, while direct court action is permitted when only the legality, power, validity or authority
of the assessment itself is in question. Stated differently, the general rule of a prerequisite
recourse to administrative remedies applies when questions of fact are raised, but the exception
of direct court action is allowed when purely questions of law are involved.
Taxpayer’s case is one replete with questions of fact instead of pure questions of law, which
renders its filing in a judicial forum improper because it is instead cognizable by local
administrative bodies like the LBAA, which are the proper venues for trying these factual issues.
Verily, what is alleged by taxpayer in its petition as "the crux of the controversy," that is, "whether
or not an indefeasible right over a submarine cable system that lies in international waters can be
subject to real property tax in the Philippines," is not the genuine issue that the case presents -
as it is already obvious and fundamental that real property that lies outside of Philippine territorial
jurisdiction cannot be subjected to its domestic and sovereign power of real property taxation -
but, rather, such factual issues as the extent and status of taxpayer’s ownership of the system,
the actual length of the cable/s that lie in Philippine territory, and the corresponding assessment
and taxes due on the same, because the assessors imposed and collected the assailed real
property tax on the finding that at least a portion or some portions of the submarine cable system
that taxpayer owns or co-owns lies inside Philippine territory. Taxpayer’s disagreement with such
findings of the administrative bodies presents little to no legal question that only the courts may
directly resolve.
2. Submarine or undersea communications cables are akin to electric transmission lines which
the Court has recently declared in Manila Electric Company v. City Assessor and City Treasurer
of Lucena City, as "no longer exempted from real property tax" and may qualify as "machinery"
subject to real property tax under the LGC. To the extent that the equipment's location is
determinable to be within the taxing authority's jurisdiction, the Court sees no reason to distinguish
between submarine cables used for communications and aerial or underground wires or lines
used for electric transmission, so that both pieces of property do not merit a different treatment in
the aspect of real property taxation. Both electric lines and communications cables, in the strictest
sense, are not directly adhered to the soil but pass through posts, relays or landing stations, but
both may be classified under the term "machinery" as real property under Article 415(5) of the
Civil Code for the simple reason that such pieces of equipment serve the owner's business or
tend to meet the needs of his industry or works that are on real estate.
3. As the Court takes judicial notice that Nasugbu is a coastal town and the surrounding sea falls
within what the United Nations Convention on the Law of the Sea (UNCLOS) would define as the
country's territorial sea (to the extent of 12 nautical miles outward from the nearest baseline, under
Part II, Sections 1 and 2) over which the country has sovereignty, including the seabed and
subsoil, ·it follows that indeed a portion of the submarine cable system lies within Philippine
territory and thus falls within the jurisdiction of the said local taxing authorities. It easily belies
taxpayer’s contention that the cable system is entirely in international waters.
(Capitol Wireless, Inc. vs. The Provincial Treasurer of Batangas, the Provincial Assessor
of Batangas, the Municipal Treasurer and Assessor of Nasugbu, Batangas, G.R. No.
180110, May 30, 2016)
Court of Tax Appeals Rulings

2017
1. The defense of lack of authority of the revenue officers may be considered if raised
during trial. In the instant case, the taxpayer was able to raise the matter during the cross
examination.
The taxpayer was assessed with several deficiency taxes. It raised as a defense, among others,
the lack of authority of the revenue officers who conducted the audit. The revenue officer named
in the Letter of Authority (LOA) was eventually transferred. The Revenue Officers who replaced
the original officer were not issued a new LOA, but were merely given a Memorandum of
Assignment. The CTA First Division, in its initial decision, refused to consider the argument as
the same was not raised in the Petition for Review.
The Court in an Amended Decision reversed itself and ruled that the assessment is void since
the examiners who conducted the examination were not armed with a valid LOA. The Court also
cited the Supreme Court Ruling in the Medicard case, where the SC ruled that the question of
authority may be considered if raised during the trial. In the instant case, the taxpayer was able
to raise the matter during the cross examination of Group Supervisor Lumagui.
As regards the authority of the revenue officers who continued the audit, the Court ruled that the
Tax Code requires the issuance of an LOA. Further, RMO 43-90 specifically mandates the
issuance of a new LOA in case of transfers. Thus, there being no new LOA, the revenue officers
who continued the audit were without authority. The assessment is therefore void.
(Splash Corporation v. Commissioner of Internal Revenue, CTA Case No. 8483 August
18, 2017)
2. Decision of a Revenue District Officer in claims for VAT refund may be elevated to the
CTA.
The taxpayer filed a claim for refund of its unutilized input VAT in relation to its zero-rated sales.
It filed its administrative claim for refund within the two year prescriptive period. The Revenue
District Officer (RDO) issued a letter denying the said claim on the ground that the taxpayer failed
to deduct the amount of claim in its vat return. This prompted the taxpayer to file a Motion for
Reconsideration (MR) on the said denial. In the said MR, the taxpayer attached the vat return
where it deducted the input vat that is subject of the claim for refund. The taxpayer counted the
120 day period for the BIR to decide the claim for refund, from its filing of the MR and submission
of the vat return showing the deduction of the input vat.
The court ruled that it has no jurisdiction over the case, due to the taxpayer’s failure to comply
with the 120-30 day rule. The court ruled that the taxpayer should have counted the 30 days from
its receipt of the denial by the RDO. The fact that it submitted additional documents in its MR is
of no moment. The additional documents submitted were also included in the taxpayer’s
administrative claim. As such, the submission made in its MR is actually a mere resubmission of
documents. Thus, the counting of the 120 days commenced upon its filing of the administrative
claim, and not upon its submission of additional documents along with the MR.
(Emerson Electric (Asia) Limited – ROHQ v. Commissioner of Internal Revenue, CTA Case
No. 8768, August 03, 2017)
3. Regardless of whether actual documents of the taxpayer were examined or not, an LOA
must be duly issued to the revenue officers who are conducting the audit.
The taxpayer was assessed with various deficiency taxes. The taxpayer alleged that there was
no Letter of Authority (LOA) issued to the revenue officers. Only a Memorandum of Assignment
(MOA) was issued as their authority to examine. The BIR insists that there was no need to issue
an LOA for the investigation since there was no need to examine documents. The assessment
was based on a purely legal issue.
The Court stressed the importance of the issuance of an LOA. It applied the Supreme Court (SC)
decision in the Medicard case, where the SC ruled that regardless of whether actual documents
of the taxpayer were examined or not, an LOA must be duly issued to the revenue officers who
are conducting the audit. Without a valid LOA authorizing such officers, the assessment is void.
(EDS Manufacturing Inc. v. Commissioner of Internal Revenue, CTA EB No. 1493, June 01,
2017)
4. ERC Registration is a requirement to prove zero rating of renewable energy companies.
The taxpayer is claiming for a refund of its input VAT incurred in relation to its zero-rated sales.
The taxpayer claims that its sales of power generated through renewable sources are subject to
VAT zero-rating.
The Court ruled that the taxpayer failed to prove that it is a renewable energy generating company.
Particularly, the Court noted that it did not submit its Energy Regulatory Commission (ERC)
Registration to prove the same. The Court did not consider the Certificate of Endorsement from
the Department of Energy, since the same explicitly states that the VAT zero rating is conditioned
upon compliance with ERC requirements. As such, the taxpayer failed to prove that it is entitled
to VAT zero-rating and consequently to vat refund.
(Hedcor Sibulan Inc. v. Commissioner of Internal Revenue, CTA Case No. 8014 August 05,
2017)
5. An RE developer’s purchases of local supply of goods, properties and services needed

for the development, construction and installation of its plant facilities are zero-rated. It
should not have paid input taxes on the same.
In this case, although the taxpayer was able to prove that it is engaged in zero-rated sales,
specifically, the sale of power generated through renewable sources of energy, it was not able to
prove that input taxes is refundable. The taxpayer’s purchases of local supply of goods, properties
and services needed for the development, construction and installation of its plant facilities are
zero-rated. It should not have paid input taxes on its purchases of goods and services from vat-
registered suppliers because such purchases were zero-rated. Accordingly, no input tax should
have been shifted or passed on to the taxpayer.
The taxpayer’s recourse for its purchases of goods and services, where it paid vat, is not a claim
for refund against the BIR, but to seek reimbursement of its alleged input vat paid from its
suppliers of goods and services since its purchases of local goods, properties and services
needed for the development, construction and installation of the plant facilities as well as its
purchases of goods, properties and services for the whole process of exploration and
development of renewable energy sources up to its conversion into power, including but not
limited to the services performed by subcontractors or contractors, are subject to zero percent
VAT.
(Hedcor Sibulan, Inc. vs. CIR, CTA Case No. 8990, August 1, 2017)
6. The 10 year prescriptive period will not apply if there is only a mistake in the application
of the law as to when a final withholding tax must be filed and paid.
During a special meeting of the Board of Directors on December 22, 2006, the Board declared a
cash dividend in favor of the stockholders of record as of March 31, 2016, payable on or before
January 31, 2007. The taxpayer paid the cash dividends to its stockholders on February 2, 2007.
It then filed its Monthly Remittance Form of Final Income Taxes Withheld (Form No. 1601-F) on
March 10, 2007. It likewise paid the FWT on March 10, 2007, but was only confirmed only on
March 12, 2007.
The taxpayer received a PAN dated January 9, 2013, assessing it for penalties in connection with
the supposed late payment of the FWT on cash dividends. On February 27, 2013, it received the
Assessment Notice with FLD reiterating the assessment in the PAN.
As regards the issue on prescription, the court ruled that the assessment has prescribed. In this
case, clearly more than three years have elapsed from the filing of the return (March 10, 2007) to
the issuance of the PAN (January 28, 2013) and FLD (February 27, 2013).
As to the presence of falsity or fraud with intent to evade the FWT or penalties, the court in division
found that the return was false due to the fact that it declared in its FWT Return the dividends
payment as a February transaction instead of January (since it was declared that the cash
dividends were payable on or before January 31, 2007). Pursuant to Section 2.57.4 of RR 2-98,
the FWT return and FWT due should have been filed and paid on or before February 10, 2007.
However, the Court En Banc disagrees with the Division’s findings. According to the Court En
Banc, the act of considering the cash dividends as income payments for the month of February
(instead of January) and paying the withholding tax due only on March 10, 2007 (instead of
February, 2007) was a mistake, but such mistake is not considered as a falsity which would trigger
the operation of the 10-year prescriptive period. First, there was no design to mislead or deceive
on the part of the taxpayer, since the mistake in filing arose from the taxpayer’s mistake in applying
RR 2-98 with respect to the period when to withhold the FWT. Second, there was no intentional
non-disclosure or omission so as to put the BIR at a disadvantage in the investigation since the
BIR was not prevented from issuing the deficiency assessment within the general 3-year
prescriptive period. Finally, there was no fraudulent intent or wilful intent to evade the payment of
the correct amount of tax, or the penalties and interest.
(CIR vs. Hoya Glass Disc Philippines, Inc. (CTA EB No. 1524 & 1529, August 16, 2017))
7. Neither the law nor the implementing regulations provide that in a claim for refund of
input VAT that there be zero-rated or effectively zero-rated transactions at the time the
claimed input VAT was incurred or paid.
The taxpayer purchased September 2012 from Cebu Light Industrial Park, Inc. 5 parcels of land
in Lapu-Lapu City that is located inside the PEZA Zone. The taxpayer thereafter executed a
Contract of Lease with Knowles Electronics (Philippines) involving the 5 parcels of land on
January 2013.
Knowles Electronics is an entity registered with the PEZA and a qualified enterprise for the
purpose of VAT zero-rating of its transactions with its local suppliers of goods, properties and
services. The taxpayer filed an administrative claim for refund on its purchase of the 5 parcels of
land. The CTA Division granted the refund, hence this appeal.
The CTA En Banc dismissed the Petition of the BIR. The court ruled that in a claim for refund of
input VAT that there be zero-rated or effectively zero-rated transactions at the time the claimed
input VAT was incurred or paid. Neither does it provide that the input tax in the purchase of land
be refunded only when it was sold or input tax thereon be apportioned to the period of lease.
Neither does the law nor the implementing regulations provide that the option to carry over to the
succeeding quarters any unutilized input tax or to file a claim for refund and availing of an option
precludes choosing that of the other.
\What the law and the implementing regulations provide is that the taxpayer who has zero-rated
or effectively zero-rated transactions were allowed to apply for the issuance of a tax credit
certificate or a tax refund for input taxes paid, in addition to the option to carry forward the input
taxes against future output tax liabilities.
In the case at bar, it is immaterial that there are no reported zero-rated sale for 2012 when the
purchase of land was made, as long as the input tax in relation thereto has not been applied
against output tax.
(CIR vs. KEP (PHILIPPINES) Realty Corporation (CTA EB No. 1504, August 18, 2017))
8. The ONETT Computation Sheet is not the assessment contemplated under Section 228
of the NIRC that would require a protest from the taxpayer and that the CTA can take
jurisdiction of.
The taxpayer was the highest bidder in a public auction of a real property and was issued a
Certificate of Sale which was registered and annotated on the title. After the period to redeem the
subject property expired, Landbank went to the BIR to pay the corresponding Expanded
Withholding Tax (EWT) and Documentary Stamp Tax (DST) for the purpose of consolidating the
title in its name.
However, the BIR assessed the taxpayer for surcharges, interests and penalties for the alleged
late payment per the ONETT Computation Sheet. The taxpayer paid the imposition to avoid
additional penalties. It sent a letter to the Regional Director of the BIR, protesting the imposition
of the surcharges, interests, and penalties. The protest was denied. The taxpayer elevated the
denial to the CIR by way of a Motion for Reconsideration/Appeal on the Denial of Protest. Due to
the alleged inaction, the taxpayer elevated the case via a Petition for Review with the CTA
Division.
The Court ruled that the ONETT Computation Sheet is not the assessment contemplated under
Section 228 of the NIRC that would require a protest from the taxpayer. An Assessment informs
the taxpayer that he or she has tax liabilities, but not all documents coming from the BIR
containing a computation of the tax liability can be deemed assessments. Assessments contains
not only a computation of tax liabilities, but also a demand for payment within a prescribed period.
Moreover, it is clear that instead of filing an administrative claim for refund under Section 229 of
the NIRC, the taxpayer filed a letter-protest pursuant to Section 228, questioning the imposition
of the surcharges, interests and penalties, which is the wrong remedy.
(Land Bank of the Philippines vs. CIR (CTA EB No. 1462, August 1, 2017))
9. In order to render a tax return made by a taxpayer to be a 'false return', there must appear
a design to mislead or deceive on the part of the taxpayer, or at least culpable negligence.
A mistake, not culpable in respect of its value would not constitute a false return.
The taxpayer seeks for the revocation of the Collection Notice on the ground that it did not receive
any notice of assessment and that the period to assess by the BIR has prescribed. On the other
hand, the BIR claims that the prescriptive period should be ten (10) years as the case involves a
substantial under-declaration of income, amounting to falsity or fraud on the taxpayer’s part.
The Court ruled that if the taxpayer denies having received an assessment from the BIR, it then
becomes incumbent upon the latter to prove by competent evidence that such notice was indeed
received by the addressee. In this case, records show that the BIR presented the corresponding
Registry Receipts to prove that the PAN and the Assessment Notices were issued and served to
the taxpayer at his registered business address, through registered mail. Thus, the BIR was able
to prove receipt of the PAN and the FAN, despite the taxpayer’s denial.
Further, in order to render a tax return made by a taxpayer to be a 'false return', there must appear
a design to mislead or deceive on the part of the taxpayer, or at least culpable negligence. A
mistake, not culpable in respect of its value would not constitute a false return.
In the taxpayer’s Final/Amended Annual ITR for taxable year 2006, there was no amount stated
in the total sales. However, a scrutiny of said ITR would reveal that the Net Income, Taxable
Income, and Tax Due declared were in accordance with the financial statements submitted by the
taxpayer. Hence, there is no substantial under-declaration and/or fraud to speak of, and so
Section 203 of the NIRC of 1997, as amended, will apply and the prescriptive period of three
years will govern.
Records show that the taxpayer filed his Final/Amended ITR for the year 2006 on June 12, 2007;
thus, BIR had until June 12, 2010 to issue the FAN. The BIR admitted that it only sent the PAN
on December 28, 2010 and the FAN on January 24, 2011, which are beyond the prescriptive
period.
(Villanueva, Jr. vs. CIR. (CTA Case No. 8935; August 18, 2017))
10. R.A. No. 8791 is contemplating a scenario where the mortgagor is a juridical person
and the mortgagee, who would foreclose the subject property, is a bank. However, the BSP
is not considered a bank.
BF Towns Corp., as accommodation mortgagor; BFSMB, as borrower-bank; and the taxpayer, as

mortgagee, entered into a real estate mortgage (REM) where a property registered under the
name of BF Town was used as collateral. The mortgaged property was foreclosed with the
taxpayer as the purchaser; and the Certificate of Sale was registered on December 20, 2011. On
April 23, 2012, the taxpayer paid the capital gains tax due on the sale; applying the one (1) year
redemption period under Act No. 3135, claiming that it is not considered a bank under the laws.
However, the BIR assessed the taxpayer for surcharges, interest, and compromise penalty
(penalties); applying the three month redemption period under R.A. No. 8791. The BIR considered
BSP as a bank. The taxpayer now contests the alleged penalties, contending that it had paid the
taxes on time.
The Court ruled that R.A. No. 8791 is contemplating a scenario where the mortgagor is a juridical
person and the mortgagee, who would foreclose the subject property, is a bank.
However, the taxpayer is not considered a bank under the law and jurisprudence. R.A. No. 8791
defines and classifies banks which does not include the BSP. There is no showing that it is
engaged in the lending of funds obtained in the form of deposits and collects interest and charges
as commission; and that it falls under any of the banks as classified.
Correspondingly, the period of redemption under Section 47 of R.A. No. 8791 is not applicable to
the subject transaction. Rather, it is the one-year period of redemption under Section 6 of Act No.
3135, as amended by Act No. 4118, which must be applied thereto.
Considering that the subject Certificate of Sale was registered on December 20, 2011, the period
of redemption ends only on December 20, 2012. From the expiration of the said redemption
period, petitioner has thirty (30) days, or until January 19, 2013, within which to file the Capital
Gains Tax Return and remit the capital gains tax due. In view of petitioner's timely payment of the
capital gains tax due on April 23, 2012, way ahead of the January 19, 2013 deadline, the taxpayer
should not be held liable for penalties for the alleged late payment of tax. Thus, since the taxpayer
paid for the erroneously assessed penalties, it is entitled to a tax refund.
(BSP vs. CIR, CTA Case No. 9010; August 18, 2017)
11. Income Tax Return cannot be used as basis in counting the three year prescriptive
period for franchise tax assessment.
The BIR issued the Final Assessment Notice (FAN) for deficiency Franchise Tax and Compromise
Penalty. The taxpayer now assails the assessments and the penalties imposed claiming that the
period to assess the taxpayer has expired.
The Court ruled that the taxpayer filed only its income tax return but not a franchise tax return;
and the assessment notice attached to the FAN pertains to a deficiency franchise tax instead of
income tax. On franchise taxes, NIRC provides that quarterly returns shall be filed and paid
twenty-five (25) days after the end of each taxable quarter. Since the BIR only discovered the
non-payment/non-filing of franchise tax return by the taxpayer only on September 7, 2007 when
the latter submitted its books of accounts, the 10-year prescriptive period and not the 3-year
period to assess will apply.
Hence, when the BIR issued the assailed FAN on February 26, 2008 or about four years after its
payment of income tax due, the period of limitation has not yet prescribed. Besides, what is being
assessed is not income tax but rather, franchise tax.
As regards compromise penalty, for it to be imposed, the taxpayer should agree or consent to
such imposition and the absence of such agreement renders such compromise penalty
unauthorized and illegal. If the offer is rejected by the taxpayer, BIR cannot enforce it except
through a criminal action. In this case, there was neither consent on the part of the petitioner nor
indication of willingness to pay said compromise penalty during the period of BIR investigation
nor at the trial before the CTA. Hence, the imposition of compromise penalty was unauthorized
and illegal.
(Calumpit Water District vs. CIR, CTA Case No. 9493, August 12, 2017)
12. An amended decision is a different decision, and thus, is a proper subject of a motion
for reconsideration.
The taxpayer is a PEZA registered company that exported nickel cobalt mixed sulfide to SMM
(Japanese company), which qualifies as VAT zero-rated sales. It has incurred and paid VAT input
taxes from its purchases. It filed an application for tax refund which the CTA Division partially
granted.
Both the taxpayer and the BIR filed their respective Motions for Reconsideration. The CTA
Division then rendered the assailed Amended Decision, which denied the BIR’s Motion for
Reconsideration and partially granted the taxpayer’s Motion for Partial Reconsideration.
Thereafter, both parties filed their respective Petition for Review with the CTA En banc.
The Court ruled that in order for the Court En Banc to take cognizance of an appeal via a petition
for review, a timely motion for reconsideration or new trial must first be filed with the CTA Division
that issued the assailed decision or resolution. Failure to do so is a ground for the dismissal of
the appeal as the word 'must' indicates that the filing of a prior motion is mandatory and not merely
directory.
The same is true in the case of an amended decision. The rules of the CTA defines an amended
decision as any action modifying or reversing a decision of the Court En Banc or in Division. An
amended decision is a different decision, and thus, is a proper subject of a motion for
reconsideration.
In the instant cases, both parties failed to file their respective motions for reconsideration of the
Amended Decision dated October 11, 2016. Thus, applying the Supreme Court ruling in the
Asiatrust case, the Court ruled that it has no recourse but to dismiss the parties' respective
Petitions for Review as the assailed Amended Decision has already attained finality.
• DISSENTING OPINION of Justice Del Rosario
If the amended decision results from a re evaluation of the parties' respective positions which the
Court originally rejected but which it eventually considered as meritorious (in whole or in part), I
submit that a second motion for reconsideration of the amended decision is unwarranted. To allow
a second motion for reconsideration raising the same ground which the amended decision already
considered would render the proscription against a second Motion for Reconsideration
meaningless even as it would result to unnecessary delay in the disposition of cases. Thus, it is
only the party adversely affected by the assailed Amended Decision that should seek a
reconsideration thereof. Here, considering that the assailed Amended Decision already granted
albeit partially the CIR's motion, it is procedurally improper for him to file another Motion for
Reconsideration of the assailed Amended Decision, which, in essence, would be in the nature of
a prohibited second motion.
 DISSENTING OPINION of Justice RINGPIS-LIBAN:
In the case of Asiatrust, a formal hearing was held which became the foundation of the amended
decision in Asiatrust. Therefore, it is only proper that the Commissioner of Internal Revenue in
Asiatrust file a motion for reconsideration to the amended decision as to the findings made by the
Court in division during the hearing. In this case of Coral Bay, no hearing was set nor additional
evidence presented for the resolution of the parties' motions for reconsiderations. Hence, I am of
the humble opinion that Asiatrust does not apply in this case, and that outright dismissals of the
consolidated Petitions for Review are unwarranted.
(CIR vs. Coral Bay Nickel Corporation (CTA EB No. 1543) & Coral Bay Nickel Corporation
vs. CIR (CTA EB No. 1546))
13. To be entitled to the exemption of a non-stock, non-profit educational institution as
provided in the Constitution, the taxpayer should have shown that all its income have been
used actually and exclusively for educational purpose.
The taxpayer is a non-stock, non profit educational institution as evidenced by Amended Articles
of Incorporation and New By-Laws. To be entitled to the exemption of a non-stock, non-profit
educational institution as provided in the Constitution, the taxpayer should have shown that all its
income have been used actually and exclusively for educational purpose. However, as shown by
the records, the donation and rental income mentioned in the Financial Statements (FS) of the
taxpayer have no breakdown as to its components. Thus, the Court said that it could not really
trace if the subject donation and the taxpayer’s earnings from the use of facilities and rental
income have, indeed, formed part of the so-called "General Fund" of the taxpayer’s FS, which
was allegedly used to defray the expenses it incurred.
The taxpayer is also liable for VAT because it merely insisted that the ICPA had already confirmed
the veracity and authenticity of its registration as non VAT taxpayer, without submitting the original
for comparison. However, the Rules of the Court of Tax Appeals provides that findings and
conclusions of the ICPA may be challenged by the parties and shall not be conclusive upon the
Court which may, in whole or in part, adopt such findings and conclusion subject to verification.
CTA Rules also provides that when the parties stipulate that a commissioner's findings of fact
shall be final, only questions of law shall thereafter be considered. In the instant case, there was
no such stipulation by the parties, the court-commissioned ICPA was not even mentioned in the
Joint Stipulation of Facts and Issues that was filed.
Further, the taxpayer cannot avail of either the 40% standard deduction under the NIRC or of the
10% preferential income tax rate being given to proprietary educational institutions. Petitioner,
being a non-stock, non-profit education institution, is generally a tax-exempt entity. Thus, it should
not have been taxed on income received by them as such, provided it has complied with the
requisites under the constitution.
Lastly simultaneous deficiency and delinquency interests are allowed by law and equity. The
answer is in the law itself, which does not merely allow but prescribes simultaneous imposition.
(CIR vs. De La Salle Lipa, Inc. (CTA EB No. 1424) & De La Salle Lipa, Inc., vs. CIR (CTA EB
No. 1430))
14. The two-year prescriptive period for filing an administrative claim for refund or
issuance of tax credit certificate begins to run from the close of the taxable quarter, “when
the relevant sales were made”, not from the time the input VAT was incurred.
The taxpayer is a registered Renewable Energy Developer. On 2013, the taxpayer filed with the
BIR its administrative claims for refund for the alleged unutilized VAT input taxes incurred in 2011.
An examination of the quarterly VAT Returns filed for taxable year 2011 reveals that the taxpayer
had no sales declared during the said period. In addition, taxpayer’s manager, Mr. Helenio
Seraspi confirmed that the taxpayer had no sales during the taxable year 2011 and had only
started selling during the first quarter of 2014.
The Court ruled that in order to be entitled to a refund of excess input VAT attributable to zero-
rated sales, the input VAT being refunded must be attributable to the zero-rated or effectively
zero-rated sales of the taxpayer and that the two-year prescriptive period for filing an
administrative claim for refund or issuance of tax credit certificate begins to run from the close of
the taxable quarter, “when the relevant sales were made”, not from the time the input VAT was
incurred.
The Court finds that the taxpayer’s claim for refund that was filed with the BIR in year 2013 was
prematurely filed since the two-year prescriptive period for filing an administrative claim for refund
or issuance of tax credit certificate begins to run from the close of the taxable quarter, “when the
relevant sales were made”, not from the time the input VAT was incurred. In this case, the two
year period must be counted from its first sale on year 2014. Also, the judicial claims, which are
the subject of the Petition for Review cannot be given due course since there was no zero-rated
or effectively zero-rated sales during the subject periods.
(Maibarara Geothermal Inc., vs CIR (CTA Case nos., 8699, 8732, 8771 and 8811; August 18,
2017))
15. Since there is no input VAT that should be paid by the taxpayer on the zero-rated
purchases, it necessarily follows that they are not entitled to refund or issuance of tax
credit certificate from the said purchases of goods and services.
The taxpayer is a renewable energy company. It filed its administrative claims for refund for
unutilized VAT input taxes for the year 2012
The Court agreed with the taxpayer that the sale of power generated through renewable sources
of energy is among the transactions subject to zero percent VAT under Section 108 (B)(7) of the
NIRC of 1997. Thus, the taxpayer’s purchases of local supply of goods, properties and services
needed for the development, construction and installation of its plant facilities are subject to zero
percent VAT, since the taxpayer is a registered RE Developer of Geothermal Energy Resources,
hence, no output VAT shall be shifted to or passed on to the RE Developer.
Therefore, no input VAT shall be paid by the RE Developer from said purchases. Since there is
no input VAT that should be paid by the taxpayer on the zero-rated purchases, it necessarily
follows that they are not entitled to refund or issuance of tax credit certificate from the said
purchases of goods and services.
The Court held that even though an indirect tax like VAT is allowed to be shifted to the buyer, the
reporting and remittance of the VAT paid to the BIR remained with the seller. Thus, even
assuming, that the taxpayer paid the input VAT on its purchases which are subject to zero-
percent, the supplier/seller is still the proper party to claim for the tax refund, and not the taxpayer.
(Maibarara Geothermal Inc., vs CIR (CTA Case nos., 8871, 8937, 8999, & 9042; August 02,
2017))
16. The unused input tax of a dissolved corporation, as of the date of the merger or
consolidation, shall be absorbed by the surviving or new corporation.
The court held that the unused input tax of a dissolved corporation, as of the date of the merger
or consolidation, shall be absorbed by the surviving or new corporation.
Also, Section 80 of Batas Pambansa Blg. 68 provides that a merger shall have the effect of ipso
jure transferring all the rights and properties of the absorbed corporation to the surviving
corporation.
Consequently, the unused input tax credits of Mytel were absorbed by or ipso jure transferred to
the taxpayer from the effectivity date of the merger. Hence, the assessment disallowing the
unused input tax of the absorbed corporation is not proper and the same should be cancelled.
Moreover, any tax benefit derived by the taxpayer from such carry-over redounds to the
succeeding period; thus at most, the taxpayer may only be assessed in the succeeding period.
(My Solid Technologies & Devices Corporation vs CIR (CTA Case No. 8854; August 04,
2017))
17. An assessment that is made beyond the 3 year prescriptive period is void.
The Court held that the government can assess internal revenue taxes within three (3) years from
the last day prescribed by law for the filing of tax return, or the actual date of filing of such return,
whichever comes later. Hence, an assessment notice issued after the three-year prescriptive
period is invalid and ineffective.
In this case, the taxpayer filed its Income Tax Return (ITR) for fiscal year 2006-2007 on October
13, 2007. Since the taxpayer’s fiscal year ended on June 30, 2007, the last day to file its ITR for
that year was October 15, 2007. Hence, counting three years from the taxpayer’s last day to file
the ITR, the BIR had until October 14, 2010 to issue the assessment. However, the taxpayer
received the FAN only on April 11, 2014 which is clearly beyond the prescriptive period given to
assess. Considering that the assessment was made beyond the prescriptive period, the
assessment is void.
(Norkis Trading Company, Inc. vs CIR, CTA Case No. 8862, August 16, 2017 )
18. RMC 90-2012 is an administrative rule with the force of law. Hence it cannot be attacked
collaterally.
San Mig Light (bottle) is subject to an excise tax of 15php per liter, and the San Mig Light (can) is
subject to 20.57php per liter. However, RMC No. 90-2012 subjected both to 20.57php excise tax.
To remove the products from the breweries, San Miguel paid the excise tax due. It then filed its
administrative claim for refund and collaterally attacked RMC No. 90-2012.
A collateral attack on a presumably valid law is not allowed. The constitutionality or validity of
laws, orders or such other rules with the force of law cannot be attacked collaterally. In the case
at bar, the Court cannot determine petitioner’s entitlement to a tax refund or tax credit without
going into the validity of RMC No. 90-2012.
While RMC’s are issuances that publish pertinent and applicable portions, as well as
amplifications of laws, rules, regulations and precedents issued by the BIR and other
agencies/offices, it must be determined what kind of issuance RMC No. 90-2012 so it can be
determined if it can be attacked collaterally, to wit:
a. A legislative rule, which is subordinate legislation; or
b. An Interpretative rule, which is for enforcement guidelines of an administrative agency
In the case at bar, RA 10351 imposes an excise tax at 15php/liter if the net retail price per liter of
volume capacity is 50.60php or less, and 20php/liter if the net retail price per liter of volume
capacity is more than 50.60php per liter.
Based on the foregoing, the RMC 90-2012 is an administrative rule with the force of law. Hence
it cannot be attacked collaterally.
(San Miguel Brewery, Inc v. CIR, CTA Case No. 8955, August 18, 2017)
The taxpayer was assessed for deficiency Documentary Stamp Tax (DST) for the year 2009,
consisting of surcharge, interests and compromise penalties. The taxpayer questions the validity
of the assessment and the surcharges.
19. A FAN with no demand for payment is void.
The Court ruled that the assessment is void. A close perusal of the FAN reveals that both failed to demand
payment of the surcharge, interest and compromise penalty mentioned therein within a specific period.
While the FAN specifically states that the taxpayer is requested to pay its aforesaid deficiency
surcharge and interest through the duly authorized agent bank in which the taxpayer is enrolled
within the time shown in the enclosed assessment notice, the due date in the enclosed FAN was
conspicuously left blank.
In Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation, the
Supreme Court emphasized the requirement for an assessment to contain a specific demand for
payment within a prescribed period thus:
"An assessment contains not only a computation of tax liabilities, but also a demand for payment
within a prescribed period. It also signals the time when penalties and interests begin to accrue
against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process
requires that it must be served on and received by the taxpayer… To start with, an assessment
must be sent to and received by a taxpayer, and must demand payment of the taxes described
therein within a specific period…”
(Saturn Holdings, Inc. v. CIR, CTA Case No. 9085, August 18, 2017 )
20. A waiver is valid if both the BIR and the taxpayer are in pari delicto.
The taxpayer filed a Petition for Review before the CTA for the cancellation and setting aside of
the assessment by the BIR for alleged deficiency income tax, VAT, and EWT. The taxpayer
questioned the validity of the waivers since the same were signed by its President and General
Manager who is allegedly not authorized to sign for lack of specific Board Resolution. It also
alleged that the waivers failed to specify the kind and amount of taxes.
The Court ruled that the parties were in pari delicto. The taxpayer, despite a defective waiver
failed to assail the same in its letter protest. In the same vein, it is using the defective waivers to
avoid tax liability when the consequences therefor were not in its favor. On the part of the BIR, it
failed to determine whether the waivers complied with RMO 20-90 and RDAO 05-01 and follow
the procedure dictated therein. The taxpayer was found liable to pay the deficiency income tax,
VAT, and EWT plus interests, surcharges, and penalties.
(Telstar Marketing Corporation V. CIR, CTA Case No. 8900, August 18, 2017 )
21. Simultaneous receipt of the PAN and the FAN by the taxpayer renders the assessment
void.
The taxpayer filed a Petition for Review seeking to lift, invalidate, and annul the Warrant of
Garnishment and Final Assessment Notice by the BIR for deficiency taxes. The taxpayer
questioned the validity of the assessment for failure to observe due process. The BIR, on the
other hand, questioned the jurisdiction of the CTA.
The Court ruled that the assessments are void for failure to comply with due process. As testified
to by the taxpayer's witnesses and undisputed by the BIR’s witnesses, the taxpayer
simultaneously received the PAN dated December 27, 2013 and the FAN dated January 14, 2014
on January 7, 2014. Clearly, the FAN was issued and received prior to the lapse of the 15-day
period given to the taxpayer to respond to the PAN. This is a denial of petitioner's right to due
process. As such, the FAN is void.
(Travel Warehouse vs. CIR, CTA Case No. 9103)

Republic Act No

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Republic Act No.

REPUBLIC ACT No. 10708

AN ACT ENHANCING TRANSPARENCY IN THE MANAGEMENT AND ACCOUNTING OF TAX

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

SECTION 3. Definition of Terms. — As used in this Act:

SECTION 6. Conduct of Cost-Benefit Analysis on Investment Incentives. — The National Economic

SECTION 9. Joint Congressional Oversight Committee. — A Joint Congressional Oversight

Republic Act 10653

February 12, 2015

REPUBLIC ACT No. 10653

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

"SEC. 32. Gross Income. —

"(7) Miscellaneous Items. — "xxx

Republic Act 10864

June 10, 2016

REPUBLIC ACT NO. 10864, June 10, 2016

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

Republic Act 10963

December 19, 2017

3. The CIR’s interpretation of a tax provision involves an exercise of her quasi-legislative

4. The duty to withhold tax on compensation arises upon its accrual.

SUPREME COURT RULING

Taxable Administrati End of the End of the Judicial Number of

2nd 16 October 13 February 15 March 30 July 2003 502 days

3rd 4 September 2 January 1 February 20 October 261 days

4th 4 September 2 January 1 February 30 December 332 days

6. Real property taxation of submarine cable systems.

Court of Tax Appeals Rulings

4. ERC Registration is a requirement to prove zero rating of renewable energy companies.

5. An RE developer’s purchases of local supply of goods, properties and services needed

BF Towns Corp., as accommodation mortgagor; BFSMB, as borrower-bank; and the taxpayer, as

• DISSENTING OPINION of Justice Del Rosario

a. A legislative rule, which is subordinate legislation; or

b. An Interpretative rule, which is for enforcement guidelines of an administrative agency

(Travel Warehouse vs. CIR, CTA Case No. 9103)

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