DOMONDONs LATE BREAKERS

TAXATION
Ver. 2007

This Handou is s!e"ia##$ !re!ared o %ee he needs o& 're()ee* Re+ie,ees in Ta-a ion and is in ended o su!!#e%en he au hors #e" ures on he su./e" . 0 ries o 1se"ond(2uess3 !ro.a.#e 4ues ions ha %a$ .e as*ed in he 2007 Bar E-a%s in Ta-a ion "onsiderin2 se#e" ed Su!re%e De"isions u! o Au2us 2007. 0& he re"en de"isions are %ere rei era ions o& !rior do" rines hen he au hor has de"ided o s i"* o he o#der "ases.

GOOD LUCK TO EVERYBODY AND SEE YOU ALL IN COURT AS WORTHY OPPOSING COUNSELS.

GENERAL PRINCIPLES OF TAXATION

1. What is the power to tax ? What is its nature ? S566ESTED ANS)ER7 The !o,er o a- is an inheren !o,er o& he s a e e-er"ised hrou2h he #e2is#a ure i%!osin2 .urdens u!on su./e" s and o./e" s ,i hin i s /urisdi" ion o raise re+enues in order o %ee he #e2i i%a e o./e" s o& 2o+ern%en . 0 s na ure is ha i is .o h an inheren !o,er o& 2o+ern%en and an e-er"ise o& #e2is#a i+e !o,er. 0 is inheren in "hara" er .e"ause i "ou#d .e e-er"ised e+en in he a.sen"e o& a "ons i u iona# 2ran . 0 is an e-er"ise #e2is#a i+e !o,er .e"ause i is ha de!ar %en ha !ro%u#2a e ru#es and a-a ion is he !ro%u#2a ion o& ru#es8 su"h as ho, %u"h a- is o .e !aid8 ,ho !a$s he a-8 o ,ho% shou#d i .e !aid and ,hen i shou#d .e !aid. 2. Why are tax laws construed strictly against the State and liberally in favor of the State ? S566ESTED ANS)ER7 0n "ase o& dou. 8 a- #a,s %us .e "ons rued s ri" #$ a2ains he S a e and #i.era##$ in &a+or o& he a-!a$er .e"ause a-es8 as .urdens ,hi"h %us .e endured .$ he a-!a$er8 shou#d no .e !resu%ed o 2o .e$ond ,ha he #a, e-!ress#$ and "#ear#$ de"#ares. (Lincoln Philippine Life Insurance
Company, Inc., etc., v. Court of Appeals, et al., 29: S;RA 928 99<

3. Tax exem !"#$% a&e %!&"'!() '#$%!&*e+ a,a"$%! !-e !ax a)e& a$+ (".e&a(() "$ /a0#& #/ !-e S!a!e and %us .e "#ear#$ sho,n and .ased on #an2ua2e in he #a, oo !#ain o .e %is a*en (Davao Gulf Lumber Corporation v. Commissioner of Internal Revenue, et al., 29: S;RA 7=8 >>), .e"ause a-es are ne"essar$ &or he "on inued e-is en"e o& he S a e. 1. A &e0e&%a( #/ a BIR &*("$, /a0#&a.(e !# a !ax a)e& 2#*(+ $#! $e'e%%a&"() '&ea!e a e& e!*a( exem !"#$ "$ -"% /a0#&8 &or a& er a## he 2o+ern%en is ne+er es o!!ed &ro% "o##e" in2 a-es .e"ause o& %is a*es or errors on he !ar o& i s a2en s. (Lincoln Philippine Life Insurance Company, Inc., etc., v. Court of
Appeals, et al., 29: S;RA 928 99<

1 're!ared .$ 'ro&. A.e#ardo T. Do%ondon8 AB ?E"on<8 BS; ?A"" 2<8 LLB8 MA ?E"on<8 LLM8 D;L ?;and.<. La,$er(;'A(;us o%s Bro*er8 Mana2e%en ;onsu# an 8 'ro&essor o& La, and 're(Bar Re+ie,er.

3. As a 2enera# ru#e8 !-e &",-! #/ !-e ,#0e&$me$! !# '#((e'! !axe% "% "m &e%'&" !".(e .e"ause he +er$ e-is en"e o& he s a e de!ends u!on he e-er"ise o& his !o,er. Ho,e+er8 s a u es %a$ !ro+ide &or !res"ri! i+e !eriods &or he "o##e" ion o& !ar i"u#ar *inds o& a-es. 4. It is said that taxes are the lifeblood of the government and any delay in its collection would impair the rendition of government services. May the collection of taxes be restrained by a court ? S566ESTED ANS)ER7 As a 2enera# ru#e8 1No "our sha## ha+e he au hori $ o 2ran an in/un" ion o res rain he "o##e" ion o& an$ na iona# in erna# re+enue a-8 &ee or "har2e.3 ?Se". 21>8 N0R;< Ho,e+er8 he ;our o& Ta- A!!ea#s is e%!o,ered o en/oin he "o##e" ion o& a-es hrou2h ad%inis ra i+e re%edies ,hen "o##e" ion "ou#d /eo!ardi@e he in eres o& he 2o+ern%en or a-!a$er. ?Se".
118 Re!. A" No. 112A<

5.

What are the grounds and procedure for suspension of collection of taxes ?

S566ESTED ANS)ER7 )here he "o##e" ion o& he a%oun o& he a-!a$ers #ia.i#i $8 sou2h .$ %eans o& a de%and &or !a$%en 8 .$ #e+$8 dis rain or sa#e o& !ro!er $ o& he a-!a$er8 or .$ ,ha e+er %eans8 as !ro+ided under e-is in2 #a,s8 may jeopardize the interest of the government or the taxpayer 8 an in eres ed !ar $ %a$ &i#e a %o ion &or he sus!ension o& he "o##e" ion o& he a- #ia.i#i $ ?Se". 18 Ru#e 108 RR;TA e&&e" i+e De"e%.er 1A8 200A< ,i h he ;our o& Ta- A!!ea#s. The %o ion &or sus!ension o& he "o##e" ion o& he a- %a$ .e &i#ed o2e her ,i h he !e i ion &or re+ie, or ,i h he ans,er8 or in a se!ara e %o ion &i#ed .$ he in eres ed !ar $ a an$ s a2e o& he !ro"eedin2s.
?Se". :8 Ru#e 108 RR;TA e&&e" i+e De"e%.er 1A8 200A<

6. In !!" #osemarie$ a nonresident citizen$ was collected %hilippine income taxes on her incomes derived from sources without the %hilippines. &pon the enactment of the 'I#( of !!) which too* effect on +anuary $ !!,$ she filed a claim for refund of the taxes she paid praying for the retroactive application of the provision that subjects nonresident citizens to tax only on their incomes from within. Should the refund be granted ? S566ESTED ANS)ER7 No. Ta- #a,s8 un#i*e re%edia# #a,s8 are no o .e a!!#ied re roa" i+e#$. Re+enue #a,s are su.s an i+e #a,s and heir a!!#i"a ion %us no .e e4ua ed ,i h re%edia# #a,s. Re+enue #a,s are no in ended o .e #i.era##$ "ons rued8 and e-e%! ions are no 2i+en re roa" i+e a!!#i"a ion8 "onsiderin2 ha a-es are he #i&e.#ood o& he 2o+ern%en and in Ho#%es %e%ora.#e %e a!hor8 he !ri"e ,e !a$ &or "i+i#i@a ion8 a- #a,s %us .e &ai h&u##$ and s ri" #$ i%!#e%en ed. ?Commissioner of Internal
Revenue v.Acosta, etc.,6. R. No. 1AB0=>8 Au2us :8 2007<

7. a. .. ".

T-e !-&ee *& #%e% /#& !-e exe&'"%e #/ !-e !ax"$, #2e& are7 he re+enue !ur!oseC he su%! uar$ !ur!oseC and he "o%!ensa or$ !ur!ose.

18. T-e %*m !*a&) *& #%e #/ !axa!"#$ "% !# &#m#!e !-e ,e$e&a( 2e(/a&e a$+ !# &#!e'! !-e -ea(!-9 %a/e!) #& m#&a(% #/ !-e "$-a."!a$!%. 0 is in he /oin e-er"ise o& he !o,er o& a-a ion and !o#i"e !o,er ,here re2u#a or$ a-es are "o##e" ed. Ta-a ion %a$ .e %ade he i%!#e%en o& he s a es !o#i"e !o,er. The %o i+a ion .ehind %an$ a-a ion %easures is he i%!#e%en a ion o& !o#i"e !o,er 2oa#s. D outhern Cross Cement Corporation v. Cement
!anufacturers Association of the Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A "i in2 Lut" v. Araneta, 9> 'hi#. 1B>8 1A2 ?19AA<C in urn "i in2 Great Atl. # Pac. $ea Co. v. Gros%ean, :02 5.S. B12C &. . v. 'iutler, 297 5.S. 1C !cCulloch v. !arylan(, B )hea on :1=E The reader shou#d no e ha he Au2us :8 200A outhern Cross "ase is he de"ision on he %o ion &or re"onsidera ion o& he Fu#$ >8 200B outhern Cross de"ision.

The so("a##ed 1sin a-es3 on a#"oho# and o.a""o %anu&a" urers he#! dissuade he "onsu%ers &ro% e-"essi+e in a*e o& hese !o en ia##$ har%&u# !rodu" s. ? outhern Cross Cement Corporation v. Cement
!anufacturers Association of the Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A<

11. T-e '#m e$%a!#&) *& #%e #/ !axa!"#$ is o i%!#e%en he so"ia# /us i"e !ro+isions o& he "ons i u ion hrou2h he !ro2ressi+e s$s e% o& a-a ion8 ,hi"h ,ou#d resu# o e4ua# dis ri.u ion o& ,ea# h8 e ". 'ro2ressi+e in"o%e a-es a##e+ia e he %ar2in .e ,een ri"h and !oor. ? outhern Cross Cement
Corporation v. Cement !anufacturers Association of the Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A<

12.

What are the distinctions between a tax and a license fee ?

S566ESTED ANS)ER7 The &o##o,in2 are he dis in" ions .e ,een a a- and a #i"ense &ee7 a. PURPOSE: A a- is i%!osed &or re+enue !ur!oses )H0LE a #i"ense &ee is i%!osed &or re2u#a or$ !ur!oses. ?5n#ess i is a /oin e-er"ise o& .o h he !o#i"e !o,er and he !o,er o& a-a ion< .. BASIS: A a- is i%!osed under he !o,er o& a-a ion )H0LE a #i"ense &ee is i%!osed under !o#i"e !o,er. ". A;OUNT: There is no #i%i as o he a%oun o& a a- )H0LE he a%oun o& #i"ense &ee ha "ou#d .e "o##e" ed is #i%i ed o he "os o& he #i"ense and he e-!enses o& !o#i"e sur+ei##an"e and re2u#a ion. d. TI;E OF PAY;ENT: Ta-es are nor%a##$ !aid a& er he s ar o& a .usiness )H0LE a #i"ense &ee .e&ore he "o%%en"e%en o& .usiness. e. EFFECT OF NON<PAY;ENT: Gai#ure o !a$ a a- does no %a*e he .usiness i##e2a# )H0LE &ai#ure o !a$ a #i"ense &ee %a*es he .usiness i##e2a#. &. SURRENDER: Ta-es .ein2 he #i&e.#ood o& he s a e8 "anno .e surrendered e-"e! &or #a,&u# "onsidera ion )H0LE a #i"ense &ee %a$ .e surrendered ,i h or ,i hou "onsidera ion. 13. Taxa!"#$ "% +"%!"$,*"%-a.(e /&#m #("'e #2e& as o he %eans e%!#o$ed o i%!#e%en hese !u.#i" 2oa#s. Those do" rines ha are uni4ue o a-a ion arose &ro% !e"u#iar "onsidera ions su"h as hose es!e"ia##$ !uni i+e e&&e" s ? outhern Cross Cement Corporation v. Cement !anufacturers Association of the
Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A "i in2 5. S. ;hie& Marsha## ,ho on"e said8 he !o,er o a- in+o#+es he !o,er o des ro$8 !cCulloch v. !arylan(, B )hea on :1=8 "i ed in ison v. Ancheta, 6. R. No. L H A9B:18 Fu#$ 2A8 1:0 S;RA =AB< and he .e#ie& ha a-es are #i&e.#ood o& he s a e. ? outhern Cross Cement Corporation v. Cement !anufacturers Association of the Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A "i in2 1DTEa-es .ein2 he #i&e.#ood o& he 2o+ern%en 8 heir !ro%! and "er ain a+ai#a.i#i $ is o& he essen"e.3 ison v. Ancheta, i(., "i in2 )era v. *ernan(e", 6. R. No. L(:1:=B8 Mar"h :08 19798 >9 S;RA 199E

These "onsidera ions ne"essi a ed he e+o#u ion o& a-a ion as a dis in" #e2a# "on"e! &ro% !o#i"e !o,er. ? outhern Cross Cement Corporation, supra< If the +uestion as,s for an enumeration of the (istinctions bet-een the po-er of ta.ation an( police po-er, the can(i(ate shoul( reformulate no. /0 above. 11. T-e S*,a& A+=*%!me$! A'! 2-"'- "$'&ea%e+ ex"%!"$, !axe% #$ %*,a& 2a% e$a'!e+ !# %!a."(">e !-e %*,a& "$+*%!&) o !re!are i &or he #oss o& i s 4uo a in he 5.S. %ar*e 2a% (e0"e+ /#& a &e,*(a!#&) *& #%e !# &#!e'! a$+ &#m#!e !-e %*,a& "$+*%!&) 2-"'- "% a(%# /#& a *.("' *& #%e. ?Lut"
v. Araneta, 9> 'hi#. 1B><

The 'hi#su2in &und8 an i%!osi ion on su2ar8 o raise &unds o "ondu" resear"h &or he i%!ro+e%en o& he su2ar indus r$8 is &or he !ur!ose o& s a.i#i@in2 he su2ar indus r$ ,hi"h one o& he !i##ars o& he 'hi#i!!ine e"ono%$ ,hi"h a&&e" s he ,e#&are o& he S a e. The #e+$ is no so %u"h an e-er"ise o& he !o,er o&

a-a ion8 nor he i%!osi ion o& a s!e"ia# #e+$8 .u he e-er"ise o& !o#i"e !o,er ,hi"h is &or he 2enera# ,e#&are o& he en ire "oun r$8 here&ore &or a !u.#i" !ur!ose. (Republic v. 'acolo(1!urcia Co., et al.8 6.R. No. L(19>2B8
Fu#$ 98 19==<

13. Section -. /g0 of the %ublic Service 1ct authorizes the collection of 2x x x fees as reimbursement of its expenses in the authorization$ supervision and3or regulation of the public services4 x x x g0 5or each permit$ authorizing the increase in e6uipment$ the installation of new units or authorizing the increase of capacity$ or the extension of means or general extensions in the services$ twenty centavos for each one hundred pesos or fraction of the additional capital necessary to carry out the permit.7 /paraphrasing supplied0 Is it an imposition of a tax measure ? 8xplain. S566ESTED ANS)ER7 No. 0 is no a a- %easure .u a si%!#e re2u#a or$ !ro+ision &or he "o##e" ion o& &ees i%!osed !ursuan o he e-er"ise o& he S a es !o#i"e !o,er. A a- is i%!osed under he a-in2 !o,er o& 2o+ern%en !rin"i!a##$ &or he !ur!ose o& raisin2 re+enues. The #a, in 4ues ion8 ho,e+er8 %ere#$ au hori@es and re4uires he "o##e" ion o& &ees &or he rei%.urse%en o& he ;o%%issions e-!enses in he au hori@a ion8 su!er+ision andIor re2u#a ion o& !u.#i" ser+i"es. ?Republic, etc., v. International
Communications Corporation (ICC), 6. R. No. 1B1==78 Fu#$ 178 200=<

14. P#2e& #/ !axa!"#$ 'a$ a(%# .e *%e+ !# "m (eme$! #2e& #/ em"$e$! +#ma"$ . Ta- %easures are .u 3en&or"ed "on ri.u ions e-a" ed on !ain o& !ena# san" ions3 and 1"#ear#$ i%!osed &or !u.#i" !ur!ose.3 0n %os re"en $ears8 he !o,er o a- has indeed .e"o%e a %os e&&e" i+e oo# o rea#i@e so"ia# /us i"e8 !u.#i" ,e#&are8 and he e4ui a.#e dis ri.u ion o& ,ea# h. ?Commissioner of Internal Revenue v. Central Lu"on Dru2
Corporation, 6.R. No. 1A9=B78 A!ri# 1=8 200A<

15. T-e "$-e&e$! a$+ '#$%!"!*!"#$a( ("m"!a!"#$% !# !-e #2e& #/ !axa!"#$ a&e %a/e,*a&+% ,hi"h ,ou#d !re+en a.use in he e-er"ise o& his o her,ise un#i%i ed and !#enar$ !o,er. 16. What are the inherent limitations on the power of taxation ? S566ESTED ANS)ER7 The inheren #i%i a ions are a. P*.("' *& #%e. The re+enues "o##e" ed &ro% a-a ion shou#d .e de+o ed o a !u.#i" !ur!ose. .. N# "m &# e& +e(e,a!"#$ #/ (e,"%(a!"0e a*!-#&"!) !# !ax. On#$ he #e2is#a ure "an e-er"ise he !o,er o& a-es un#ess he sa%e is de#e2a ed o so%e o her 2o+ern%en a# .od$ .$ he "ons i u ion or hrou2h a #a, ,hi"h does no +io#a e an$ !ro+ision o& he "ons i u ion. ". Te&&"!#&"a("!). The a-in2 !o,er shou#d .e e-er"ised on#$ ,i hin erri oria# .oundaries o& he a-in2 au hori $. d. Re"o2ni ion o& ,#0e&$me$! exem !"#$%C and

e. O.%e&0a$'e #/ !-e &"$'" (e #/ '#m"!). ;o%i $ is he res!e" a""orded .$ na ions o ea"h o her .e"ause he$ are e4ua#s. On he o her hand a-a ion is an a" o& so+erei2n. Thus8 he !o,er shou#d .e i%!osed u!on e4ua#s ou o& res!e" . So%e au hori ies in"#ude no dou.#e a-a ion. 17. T-e !ax &e0e$*e% a&e /#& a *.("' *& #%e "/ *!"(">e+ /#& !-e .e$e/"! #/ !-e '#mm*$"!) "$ ,e$e&a(. An a# erna i+e %eanin2 is ha a- !ro"eeds shou#d .e u i#i@ed on#$ o a ain he o./e" i+es o& 2o+ern%en . 'u.#i" use is no #on2er "on&ined o he radi iona# no ion o& use .$ he !u.#i" .u he#d s$non$%ous ,i h !u.#i" in eres 8 !u.#i" .ene&i 8 !u.#i" ,e#&are8 and !u.#i" "on+enien"e. ?Commissioner of Internal Revenue v.
Central Lu"on Dru2 Corporation, 6.R. No. 1A9=B78 A!ri# 1=8 200A<

28. Tax a)e&%? %*"! "% a 'a%e 2-e&e !-e a'! '#m (a"$e+ #/ +"&e'!() "$0#(0e% !-e "((e,a( +"%.*&%eme$! #/ *.("' /*$+% +e&"0e+ /&#m !axa!"#$. ?Fus i"e Me#o8 dissen in2 in 3ilosbayan, Inc. v. Guin2ona,
4r.8 2:2 S;RA 110<

21. What is locus standi ? S566ESTED ANS)ER7 Locus stan(i is 1a ri2h o& a!!earan"e in a "our o& /us i"e on a 2i+en 4ues ion. ?Abaya v. 5b(ane, 6. R. No. 1=79198 Ge.ruar$ 1B8 2007< 0 is a !ar $s !ersona# and su.s an ia# in eres in he "ase8 su"h ha he !ar $ has sus ained or ,i## sus ain ?Ibi(.< dire" in/ur$ as a resu# o& he 2o+ern%en a" .ein2 "ha##en2ed. 0 "a##s &or %ore han /us a 2enera#i@ed 2rie+an"e. A !ar $ need no .e a !ar $ o he "on ra" o "ha##en2e i s +a#idi $. ?Ibi(.< NOTES AND ;OMMENTS77 a. T-e !e&m @"$!e&e%!A mea$% a ma!e&"a( "$!e&e%! 8 an in eres in issue a&&e" ed .$ he de"ree8 as
dis in2uished &ro% %ere in eres in he 4ues ion in+o#+ed8 or a %ere in"iden a# in eres . ? Abaya v. 5b(ane, 6. R. No. 1=79198 Ge.ruar$ 1B8 2007<

.. Ra!"#$a(e /#& locus standi. The ra iona#e &or re4uirin2 a !ar $ ,ho "ha##en2es he "ons i u iona#i $ o& a s a u e o a##e2e su"h a !ersona# s a*e in he ou "o%e o& he "on ro+ers$ is 1!# e$%*&e !-a! a '#$'&e!e a+0e&%e$e%% 2-"'- %-a& e$% !-e &e%e$!a!"#$ #/ "%%*e% * #$ 2-"'- !-e '#*&! %# (a&,e() +e e$+% /#& "((*m"$a!"#$ #/ +"//e&e$! '#$%!"!*!"#$a( B*e%!"#$%.3 ?Abaya v. 5b(ane, 6. R. No. 1=79198 Ge.ruar$ 1B8 2007< ". A(!e&$a!"0e %!a!eme$! #/ +#'!&"$e #/ .&*%-"$, a%"+e locus standi. 0n "ases o& !ara%oun i%!or an"e ,here serious "ons i u iona# 4ues ions are in+o#+ed8 he s andin2 re4uire%en s %a$ .e re#a-ed and a sui %a$ .e a##o,ed o !ros!er e+en ,here here is no dire" in/ur$ o he !ar $ "#ai%in2 he ri2h o& /udi"ia# re+ie,. D Coconut 6il Refiners Association, Inc., etc., et al., vs. $orres, etc., et al., 6. R. No. 1:2A278 Fu#$ 298 200A "i in2 'ayan ('a2on2 Alyansan2 !a,abayan) v. 7amora, 6. R. No. 1:>A708 O" o.er 108 20008 :B2 S;RA BB98 in urn "i in2 3ilosbayan, Inc. v. Guin2ona, 4r.8 6. R. No. 11::7A8 Ma$ A8 199B8 2:2 S;RA 110E 22. What are the re6uirements that must be met before taxpayers$ concerned citizens and legislators may be accorded standing to sue ? S566ESTED ANS)ER7 a. The "ase shou#d in+o#+e "ons i u iona# issuesC .. Gor a-!a$ers8 here %us .e a "#ai% o& i##e2a# dis.urse%en o& !u.#i" &unds or ha he a%easure is un"ons i u iona#. ". Gor +o ers8 here %us .e a sho,in2 o& o.+ious in eres in he +a#idi $ o& he e#e" ion #a, in 4ues ion. d. Gor "on"erned "i i@ens8 here %us .e a sho,in2 ha he issues raised are o& rans"enden a# i%!or an"e ,hi"h %us .e se #ed ear#$. e. Gor #e2is#a ors8 here %us .e a "#ai% ha he o&&i"ia# a" ion "o%!#ained o& in&rin2es u!on heir !rero2a i+es as #e2is#a ors. ?Davi(, et al., v. Presi(ent Gloria !acapa2al1Arroyo, etc., et al., 6. R. No. 171:9=8
Ma$ :8 200=<

NOTES AND ;OMMENTS7

a. Im &# e& !# "m (ea+ "$'*m.e$! P&e%"+e$!. 0%!#eadin2 he 'residen as res!onden durin2 her enure and in"u%.en"$ in o&&i"e de2rades he di2ni $ o& he o&&i"e8 harass her and de ra" s her &ro% he !er&or%an"e o& her &un" ions. )hi#e his %a$ .e so8 she is su./e" o i%!ea"h%en . ?En .an"8 Sando+a#(6u ierre@8 F. Davi(, et al., v. Presi(ent Gloria !acapa2al1Arroyo, etc., et al., 6. R. No. 171:9=8 Ma$ :8 200=< a. ReB*"%"!e% /#& '-a((e$,"$, '#$%!"!*!"#$a("!) #/ (a2. The !ar $ .rin2in2 sui %us sno, 1no on#$ ha he #a, or a" is in+a#id8 .u a#so ha he has sus ained or is in i%%edia e8 or i%%inen dan2er o& sus ainin2 so%e dire" in/ur$ as a resu# o& i s en&or"e%en and no %ere#$ ha he su&&ers here.$ in so%e inde&ini e ,a$.3 ? oriano III v. Lista, et al., 6. R. No. 1A:>>18 Mar"h 2B8 200:<

23. 9ocus standi being merely a matter of procedure$ have been waived in certain instances where a party who is not personally injured may be allowed to bring suit. :ive some examples. S566ESTED ANS)ER7 The &o##o,in2 are e-a%!#es o& ins an"es ,here sui s ha+e .een .rou2h .$ !ar ies ,ho ha+e no ha+e .een !ersona##$ in/ured .$ he o!era ion o& a #a, or an$ o her 2o+ern%en a" .u .$ "on"erned "i i@ens8 a-!a$ers or +o ers ,ho a" ua##$ sue in he !u.#i" in eres 7 a. Ta-!a$ers sui s o 4ues ion "on ra" s en ered in o .$ he na iona# 2o+ern%en or 2o+ern%en ( o,ned or "on ro##ed "or!ora ions a##e2ed#$ in "on ra+en ion o& he #a,. .. A a-!a$er is a##o,ed o sue ,here here is a "#ai% ha !u.#i" &unds are i##e2a##$ dis.ursed8 or ha !u.#i" %one$ is .ein2 de&#e" ed o an$ i%!ro!er !ur!ose8 or ha here is a ,as a2e o& !u.#i" &unds hrou2h he en&or"e%en o& an in+a#id or un"ons i u iona# #a,. ?Abaya v. 5b(ane, 6. R. No. 1=79198 Ge.ruar$ 1B8
2007<

21. ;he petitioners impugn the validity of the establishment of tax and duty<free shops within the Subic Special 8conomic =one /SS8=0 and the removal of consumer goods and items from the zones without payment of corresponding duties and taxes for the reason that this constitute executive legislation in violation of the rule on separation of powers$ that only 2raw material$ capital and e6uipment7 should be allowed the privilege. #ule on the objections and reason out your answer briefly. S566ESTED ANS)ER7 The o./e" ions shou#d no .e 2i+en "reden"e. 0 is #e2a# o se u! du#$ au hori@ed du $(&ree sho!s in he SSEJ o se## a- and du $(&ree "onsu%er i e%s in he Se"ured Area. This is in #ine ,i h he !o#i"$ enun"ia ed in he #a, ha 1 he Su.i" S!e"ia# E"ono%i" Jone sha## .e de+e#o!ed in o a se#&(sus ainin28 indus ria#8 "o%%er"ia#8 &inan"ia# and in+es %en "en er o 2enera e e%!#o$%en o!!or uni ies in and around he @one and o a ra" and !ro%o e !rodu" i+e &orei2n in+es %en s.3 )hi#e i is rue ha Se" ion 12 ?.< o& Re!. A" No. 7227 %en ions on#$ ra, %a eria#s8 "a!i a# and e4ui!%en 8 his does no ne"essari#$ %ean ha he a- and du $ &ree .u$in2 !ri+i#e2e is #i%i ed o hese $!es o& ar i"#es o he e-"#usion o& "onsu%er 2oods. 0 %us .e re%e%.ered ha in "ons ruin2 s a u es8 he !ro!er "ourse is o s ar ou and &o##o, he rue in en o& he Le2is#a ure and o ado! ha sense ,hi"h har%oni@es .es ,i h he "on e- and !ro%o es o he &u##es %anner he !o#i"$ and o./e" s o& he Le2is#a ure. The "on"e! o& inclusio unius est e.clusio alterius does no &ind a!!#i"a ion .e"ause he !hrase 1 aand du $(&ree i%!or a ions o& ra, %a eria#s8 "a!i a# and e4ui!%en 3 ,as %ere#$ "i ed as an e-a%!#e o& in"en i+es ha he SSEJ is au hori@ed o 2ran 8 in #ine ,i h i s .ein2 a &ree !or @one. Thus8 he #e2is#a i+e in en is ha "onsu%er 2oods en erin2 he SSEJ ,hi"h sa is&$ he needs o& he @one and are "onsu%ed here are no su./e" o du ies and a-es in a""ordan"e ,i h 'hi#i!!ine #a,. ?Coconut 6il Refiners Association,
Inc., etc., et al., v. $orres, etc., et al., 6. R. No. 1:2A278 Fu#$ 298 200A<

W#*(+ )#*& a$%2e& .e !-e %ame "/ a P&e%"+e$!"a( P&#'(ama!"#$ a((#2e+ /#& !-e ("m"!e+ 2"!-+&a2a( /&#m !-e C(a&C S e'"a( E'#$#m"' D#$e #& !-e E#-$ Ha) E'#$#m"' D#$e #/ '#$%*me& ,##+% !ax a$+ +*!)< /&ee F S566ESTED ANS)ER7 The ans,er ,ou#d no .e he sa%e. This i%e he 'residen ia# 'ro"#a%a ion ,ou#d .e in+a#id as he s a u or$ a- e-e%! !ri+i#e2e ,as 2ran ed on#$ o he Su.i" S!e"ia# E"ono%i" Jone and no o Fohn Ha$ or ;#ar*. This is so .e"ause he ;ons i u ion %anda es ha no #a, 2ran in2 a- e-e%! ion sha## .e !assed ,i hou he "on"urren"e o& a %a/ori $ o& a## he %e%.ers o& ;on2ress. ?Coconut 6il Refiners Association, Inc., etc., et al., v. $orres, etc., et al., 6. R. No. 1:2A278 Fu#$ 298 200A
"i in2 4ohn 8ay People9s Alternative Coalition, et al., v. Lim, etc., et al., 6.R. No. 11977A8 O" o.er 2B8 200:8 B1B S;RA :A=<

Gur her%ore8 he #a, is +er$ "#ear ha he 1e-!or a ion or re%o+a# o& 2oods &ro% he erri or$ o& he Su.i" S!e"ia# E"ono%i" Jone o o her !ar s o& he 'hi#i!!ine erri or$ sha## .e su./e" o "us o%s du ies and a-es under he ;us o%s and Tari&& ;ode and o her re#e+an a- #a,s o& he 'hi#i!!ines.3 ?Ibi(.< 23. ;he >1; law provides that$ the %resident$ upon the recommendation of the Secretary of 5inance$ shall$ effective +anuary $ ?.."$ raise the rate of value<added tax to twelve percent / ?@0 after any of the following conditions have been satisfied. 2/i0 value<added tax collection as a percentage of :ross Aomestic %roduct /:A%0 of the previous year exceeds two and four<fifth percent /? -3B@0 or /ii0 national government deficit as a percentage of :A% of the previous year exceeds one and one<half percent / C@0.7 Was there an invalid delegation of legislative power ? S566ESTED ANS)ER7 No. There is no undue de#e2a ion o& #e2is#a i+e !o,er .u on#$ o& he dis"re ion as o he e-e"u ion o& he #a,. This is "ons i u iona##$ !er%issi.#e. ;on2ress does no a.di"a e i s &un" ions or undu#$ de#e2a e !o,er 2-e$ "! +e%'&".e% 2-a! =#. m*%! .e +#$e9 2-# m*%! +# "!9 a$+ 2-a! "% !-e %'# e #/ -"% a*!-#&"!). 0n he a.o+e "ase he Se"re ar$ o& Ginan"e .e"o%es %ere#$ he a2en o& he #e2is#a i+e de!ar %en 8 o de er%ine and de"#are he e+en u!on ,hi"h i s e-!ressed ,i## a*es !#a"e. The 'residen "anno se aside he &indin2s o& he Se"re ar$ o& Ginan"e8 ,ho is no under he "ondi ions a" in2 as he e-e"u e a# er e2o or su.ordina e. . DAba,a(a Guro
Party List (etc.) v. 5rmita, etc., et al., 6. R. No. 1=>0A=8 Se! e%.er 18 200A and "o%!anion "ases "i in2 +arious "asesEE

24. T-e #2e& !# !ax %-#*(+ .e exe&'"%e+ #$() 2"!-"$ !-e !e&&"!#&"a( .#*$+a&"e% #/ !-e !ax"$, a*!-#&"!). 0n heor$8 i is on#$ ,i hin a s a es erri oria# .oundaries ha a s a e "ou#d 2i+e !ro e" ion8 hen"e i is on#$ ,i hin ha erri or$ ha i "ou#d de%and su!!or in he &or% o& a-es. 25. S"!*% #/ !axa!"#$ "% !-e (a'e #& !-e a*!-#&"!) !-a! -a% !-e !re%ised u!on he s$%.io i" re#a ion .e ,een he a-!a$er and he S a e. %* #2e& !# '#((e'! !axe% . 0 is

26. T-e (a'e !-a! ,"0e% &#!e'!"#$ "% !-e (a'e !-a! -a% !-e &",-! !# +ema$+ !-a! "! .e #&!e+ "$ !-e /#&m #/ !axe% %# "! '#*(+ '#$!"$*a(() ,"0e &#!e'!"#$.

27. T-e %"!*% #/ &ea( &# e&!) !axe% "% !-e (a'e 2-e&e !-e &# e&!) "% (#'a!e+ .e'a*%e "! "% !-a! (a'e !-a! ,"0e% &#!e'!"#$. T-e a ("'a.(e '#$'e ! "% lex situs #& lex rei sitae. 38. T-e %"!*% #/ !axa!"#$ #/ !a$,".(e e&%#$a( &# e&!) "% !-e (a'e 2-e&e !-e #2$e& "% (#'a!e+ .e"ause i is ha !#a"e ha 2i+es !ro e" ion o he o,ner ,hi"h !ro e" ion e- ends o he an2i.#e !ersona# !ro!er $. The a!!#i"a.#e "on"e! is mobilia se+uuntur personam. 31. I$!a$,".(e e&%#$a( &# e&!) ma) -a0e #.!a"$e+ a .*%"$e%% %"!*% "$ a a&!"'*(a& (a'e e0e$ "/ (#'a!e+ e(%e2-e&e. Thus8 he di+idends earned &ro% do%es i" "or!ora ions are "onsidered as in"o%e &ro% ,i hin8 irres!e" i+e ,here he shares o& s o"* o& su"h do%es i" "or!ora ion is #o"a ed. 32. T-e %"!*% #/ "$'#me !axa!"#$ "% +e!e&m"$e+ .) !-e $a!"#$a("!)9 &e%"+e$'e #/ !-e !ax a)e& a$+ %#*&'e #/ "$'#me. '#ease re&er o 2enera# !rin"i!#es o& in"o%e a-a ion under in"o%e a-a ion. 33. T-e %"!*% #/ ex'"%e !axe% "% !-e (a'e 2-e&e !-e (a'e !-a! ,"0e% &#!e'!"#$. &"0"(e,e "% exe&'"%e+ .e'a*%e "! "% !-a!

31. T-e %"!*% #/ !&a$%/e& !axe%9 %*'- a% e%!a!e a$+ +#$#&?% !axe%9 "% +e!e&m"$e+ .) !-e $a!"#$a("!) a$+ &e%"+e$'e #/ !-e !ax a)e& a$+ !-e (a'e 2-e&e !-e &# e&!) "% (#'a!e+. '#ease re&er o es a e and donors a-es.

33. +uliane a non<resident alien appointed as a commission agent by a domestic corporation with a sales commission of .@ all sales actually concluded and collected through her efforts. ;he local company withheld the amount of % .)$... from her sales commission and remitted the same to the DI#. She filed a claim for refund alleging that her sales commission is not taxable because the same was a compensation for her services rendered in :ermany and therefore considered as income from sources outside the %hilippines. Is her contention correct ? S566ESTED ANS)ER7 Kes. The i%!or an &a" or ,hi"h de er%ines he sour"e o& in"o%e o& !ersona# ser+i"es is no he residen"e o& he !a$or8 or he !#a"e ,here he "on ra" &or ser+i"e is en ered in o8 or he !#a"e o& !a$%en 8 .u he !#a"e -here the services -ere actually performe( . Sin"e he a" i+i $ o& se"urin2 he sa#es ,ere in 6er%an$8 hen he in"o%e did no ori2ina e &ro% sour"es &ro% ,i hin he 'hi#i!!ines. ?Commissioner of Internal Revenue v. 'aier1:ic,el, 6. R. No. 1A:79:8 Au2us
298 200=< NOTE7 0n he a.o+e "ase8 he Su!re%e ;our rei era ed he ru#e ha 1%#*&'e #/ "$'#meA re#a es o he !ro!er $8 a" i+i $ or ser+i"e ha !rodu"ed he in"o%e. )i h res!e" o rendi ion o& #a.or or !ersona# ser+i"e8 i is he !#a"e ,here he #a.or or ser+i"e ,as !er&or%ed ha de er%ines he sour"e o& he in"o%e. The a.o+e 'aier1:ic,el "ase dis"ussed he i%!or o& he #and%ar* "ases ? 8o-(en and '6AC) in+o#+in2 sour"es o& in"o%e &or a- !ur!oses .o h o& ,hi"h %a$ .e dan2erous &or Bar !ur!oses7

34. 1 domestic insurance company decided to reinsure with a foreign reinsurer the ris*s it has underta*en with its local clients. ;he foreign reinsurer does not have an office$ neither does it do business in the %hilippines. 1re the reinsurance premiums subject to %hilippine income taxation? ANS)ER7 Kes .e"ause he under a*in2 o& he &orei2n insuran"e "o%!an$ o inde%ni&$ he #o"a# insuran"e "o%!an$ is he a" i+i $ ha !rodu"ed he in"o%e. The reinsuran"e !re%iu%s re%i ed o he &orei2n reinsurer had &or heir sour"e he under a*in2 o inde%ni&$ he #o"a# insurer a2ains #ia.i#i $. Said under a*in2 is he a" i+i $ ha !rodu"ed here insuran"e !re%iu%s8 and he sa%e oo* !#a"e in he 'hi#i!!ines. The reinsured8 he #ia.i#i ies insured and he ris* ori2ina##$ under a*en .$ he #o"a# insuran"e "o%!an$8 u!on ,hi"h he reinsuran"e !re%iu%s and inde%ni $ ,ere .ased8 ,ere a## si ua ed in he 'hi#i!!ines. ?Ale.an(er 8o-(en # Co., Lt(. v. Collector of Internal Revenue,
121 'hi#. A79C 1: S;RA =01 ?19=A< "i ed in 'aier1:ic,el)

35. DE1($ a foreign airline company which does not maintain any flight to and from the %hilippines sold air tic*ets in the %hilippines$ through a general sales agent$ relating to the carriage of passengers and cargo between two points$ both outside the %hilippines. Is DE1( subject to income taxes on the sale of the tic*ets ? ANS)ER7 Kes. The sour"e o& in"o%e ,hi"h is a-a.#e is ha 1a" i+i $3 ,hi"h !rodu"ed he in"o%e. The 3sa#e o& i"*e s3 in he 'hi#i!!ines is he a" i+i $ ha de er%ines ,he her su"h in"o%e is a-a.#e in he 'hi#i!!ines. The i"*e s e-"han2ed hands here and !a$%en s &or &ares ,ere a#so %ade here in 'hi#i!!ine "urren"$. The si us o& he sour"e o& !a$%en s is he 'hi#i!!ines. The &#o, o& ,ea# h !ro"eeded &ro% and o""urred8 ,i hin he 'hi#i!!ine erri or$8 en/o$in2 he !ro e" ion a""orded .$ he 'hi#i!!ine 6o+ern%en . 0n "onsidera ion o& su"h !ro e" ion8 he &#o, o& ,ea# h shou#d share he .urden o& su!!or in2 he 2o+ern%en .
?Commissioner of Internal Revenue v. 'ritish 6verseas Air-ays Corporation ('6AC), 1B9 S;RA :9A "i ed in 'auer1 :ic,el)

36. What are the constitutional limitations on the power of taxation ? ANS)ER7 The 2enera# or indire" "ons i u iona# #i%i a ions as ,e## as he s!e"i&i" or dire" "ons i u iona# #i%i a ions. 37. What are the general or indirect constitutional limitations on the power of taxation ? ANS)ER7 The 2enera# or indire" "ons i u iona# #i%i a ions are he &o##o,in27 a. Due !ro"ess "#auseC .. E4ua# !ro e" ion "#auseC ". Greedo% o& he !ressC d. Re#i2ious &reedo%C e. No a*in2 o& !ri+a e !ro!er $ ,i hou /us "o%!ensa ionC &. Non(i%!air%en "#auseC 2. La,(%a*in2 !ro"ess7 1< Bi## shou#d e%.ra"e on#$ one su./e" e-!ressed in he i #e hereo&C 2< Three ?:< readin2s on hree se!ara e da$sC :< 'rin ed "o!ies in &ina# &or% dis ri.u ed hree ?:< da$s .e&ore !assa2e. h. 'residen ia# !o,er o 2ran re!rie+es8 "o%%u a ions and !ardons and re%i a# o& &ines and &or&ei ure a& er "on+i" ion .$ &ina# /ud2%en . 18. T-e % e'"/"' #& +"&e'! '#$%!"!*!"#$a( ("m"!a!"#$% a&e !-e /#((#2"$,: a. No i%!rison%en &or non(!a$%en o& a !o## a-C .. Ta-a ion sha## .e uni&or% and e4ui a.#eC ". ;on2ress sha## e+o#+e a !ro2ressi+e s$s e% o& a-a ionC d. A## a!!ro!ria ion8 re+enue or ari&& .i##s sha## ori2ina e e-"#usi+e#$ in he House o& Re!resen a i+es8 .u he Sena e %a$ !ro!ose and "on"ur ,i h a%end%en sC e. The 'residen sha## ha+e he !o,er o +e o an$ !ar i"u#ar i e% or i e%s in an a!!ro!ria ion8 re+enue8 or ari&& .i##8 .u he +e o sha## no a&&e" he i e% or i e%s o ,hi"h he does no o./e" C &. De#e2a ed !o,er o& he 'residen o i%!ose ari&& ra es8 i%!or and e-!or 4uo as8 onna2e and ,har&a2e dues7 1< De#e2a ion .$ ;on2ress 2< Throu2h a #a, :< Su./e" o ;on2ressiona# #i%i s and res ri" ions B< )i hin he &ra%e,or* o& na iona# de+e#o!%en !ro2ra%. 2. Ta- e-e%! ion o& "hari a.#e ins i u ions8 "hur"hes8 !arsona2es and "on+en s a!!ur enan here o8 %os4ues8 and a## #ands8 .ui#din2s and i%!ro+e%en s o& a## *inds a" ua##$8 dire" #$ and e-"#usi+e#$ used &or re#i2ious8 "hari a.#e or edu"a iona# !ur!osesC h. No a- e-e%! ion ,i hou he "on"urren"e o& %a/ori $ +o e o& a## %e%.ers o& ;on2ressC i. No use o& !u.#i" %one$ or !ro!er $ &or re#i2ious !ur!oses e-"e! i& !ries is assi2ned o he ar%ed &or"es8 !ena# ins i u ions8 2o+ern%en or!hana2e or #e!rosariu%C /. Mone$ "o##e" ed on a- #e+ied &or a s!e"ia# !ur!ose o .e used on#$ &or su"h !ur!ose8 .a#an"e i& an$8 o 2enera# &undsC *. The Su!re%e ;our Ls !o,er o re+ie, /ud2%en s or orders o& #o,er "our s in a## "ases in+o#+in2 he #e2a#i $ o& an$ a-8 i%!ose8 assess%en or o## or he #e2a#i $ o& an$ !ena# $ i%!osed in re#a ion o he a.o+eC #. Au hori $ o& #o"a# 2o+ern%en uni s o "rea e heir o,n sour"es o& re+enue8 o #e+$ a-es8 &ees and o her "har2es su./e" o 2uide#ines and #i%i a ions i%!osed .$ ;on2ress "onsis en ,i h he .asi" !o#i"$ o& #o"a# au ono%$C %. Au o%a i" re#ease o& #o"a# 2o+ern%en Ls /us share in na iona# a-esC n. Ta- e-e%! ion o& a## re+enues and asse s o& non(s o"*8 non(!ro&i edu"a iona# ins i u ions used a" ua##$8 dire" #$ and e-"#usi+e#$ &or edu"a iona# !ur!osesC

10

o. Ta- e-e%! ion o& a## re+enues and asse s o& !ro!rie ar$ or "oo!era i+e edu"a iona# ins i u ions su./e" o #i%i a ions !ro+ided .$ #a, in"#udin2 res ri" ions on di+idends and !ro+isions &or rein+es %en o& !ro&i sC !. Ta- e-e%! ion o& 2ran s8 endo,%en s8 dona ions or "on ri.u ions used a" ua##$8 dire" #$ and e-"#usi+e#$ &or edu"a iona# !ur!oses su./e" o "ondi ions !res"ri.ed .$ #a,. 11. EB*a( &#!e'!"#$ #/ !-e (a2 '(a*%e "% %*.=e'! !# &ea%#$a.(e '(a%%"/"'a!"#$. 0& he 2rou!in2s are "hara" eri@ed .$ su.s an ia# dis in" ions ha %a*e rea# di&&eren"es8 one "#ass %a$ .e rea ed and re2u#a ed di&&eren #$ &ro% ano her. The "#assi&i"a ion %us a#so .e 2er%ane o he !ur!ose o& he #a, and %us a!!#$ o a## hose .e#on2in2 o he sa%e "#ass. ($iu, et al., v. Court of Appeals, et al., 6.R. No. 127B108
Fanuar$ 208 1999<

12. C(a%%"/"'a!"#$9 !# .e 0a("+9 m*%! ?a< res on su.s an ia# dis in" ions8 ?.< .e 2er%ane o he !ur!ose o& he #a,8 ?"< no .e #i%i ed o e-is in2 "ondi ions on#$8 and ?d< a!!#$ e4ua##$ o a## %e%.ers o& he sa%e "#ass. ($iu, et al., v. Court of Appeals, et al., 6.R. No. 127B108 Fanuar$ 208 1999< 13. ;he law grant of tax and duty<free status under #ep. 1ct 'o. )??)$ to retailers inside the SS8= without granting the same to those outside the SS8=. Is there a violation of the e6ual protection clause ? ANS)ER7 There is no +io#a ion o& e4ua# !ro e" ion .e"ause here e-is s a +a#id "#assi&i"a ion as sho,n .e#o,7 a. Si2ni&i"an dis in" ions e-is .e ,een he ,o 2rou!s. Those ou side o& he SSEJ %ain ain heir .usiness ,i hin 'hi#i!!ine "us o%s erri or$ ,hi#e hose ,i hin he SSEJ o!era e ,i hin he so("a##ed 1se!ara e "us o%s erri or$.3 To 2ran he sa%e !ri+i#e2es ,ou#d "#ear#$ de&ea he s a ues in en o "ar+e a erri or$ ou o& he %i#i ar$ reser+a ions in Su.i" Ba$ ,here &ree &#o, o& 2oods and "a!i a# is %ain ained. .. The "#assi&i"a ion is 2er%ane o he !ur!ose o& Re!. A" No. 7227. As he#d in $iu, he rea# "on"ern o& he #a, is o "on+er he #ands &or%er#$ o""u!ied .$ he 5S %i#i ar$ .ases in o e"ono%i" or indus ria# areas. 0n &ur heran"e o& su"h o./e" i+e8 ;on2ress dee%ed i ne"essar$ o e- end e"ono%i" in"en i+es8 in er%s o& a "o%!#e e !a"*a2e o& a- in"en i+es and o her .ene&i s8 o he es a.#ish%en s ,i hin he @one o a ra" and en"oura2e &orei2n and #o"a# in+es ors. ". The "#assi&i"a ion is no #i%i ed o he e-is in2 "ondi ions ,hen he #a, ,as !ro%u#2a ed .u o &u ure "ondi ions as ,e##8 inas%u"h as he #a, en+isioned he &or%er %i#i ar$ reser+a ion o u# i%a e#$ de+e#o! in o a se#&(sus ainin2 in+es %en "en er. d. The "#assi&i"a ion a!!#ies e4ua##$ o a## re ai#ers &ound ,i hin he 1se"ured area.3 As ru#ed in $iu8 he indi+idua#s and .usinesses ,i hin he 1se"ured area83 .ein2 in #i*e "ir"u%s an"es or "on ri.u in2 dire" #$ o he a"hie+e%en o& he end !ur!oses o& he #a,8 are no "a e2ori@ed &ur her. The$ are a## si%i#ar#$ rea ed8 .o h in !ri+i#e2es 2ran ed and in o.#i2a ions re4uired. ?Coconut 6il Refiners Association, Inc., etc., et al., v.
$orres, etc., et al., 6. R. No. 1:2A278 Fu#$ 298 200A "i in2 $iu, et al., v. Court of Appeals, et al., G.R. :o. /0;</=, Fanuar$ 208 19998 :01 S;RA 27><

11. Is the statutory grant of tax and duty<free importation into the Subic Special 8conomic =one violative the 2preferential use7 concept of the (onstitution ? ANS)ER7 No. The %ere &a" ha he #a, au hori@es he i%!or a ion and rade o& &orei2n 2oods does no su&&i"e o de"#are i un"ons i u iona# on his 2round. )hi#e he ;ons i u ion does no en"oura2e he un#i%i ed en r$ o& &orei2n 2oods8 ser+i"es and in+es %en s in o he "oun r$8 i does no !rohi.i he% ei her. 0n &a" 8 i a##o,s an e-"han2e on he .asis o& e4ua#i $ and re"i!ro"i $8 &ro,nin2 on#$ in &orei2n "o%!e i ion ha is un&air. ?Coconut 6il Refiners Association,
Inc., etc., et al., v. $orres, etc., et al., 6. R. No. 1:2A278 Fu#$ 298 200A "i in2 $ana(a v. An2ara, 6. R. No. 11>29A8 Ma$ 28 19978 272 S;RA 1><

11

13. EB*a("!) a$+ *$"/#&m"!) #/ !axa!"#$ ma) mea$ !-e %ame a% eB*a( &#!e'!"#$. 0n su"h a "ase8 he er%s ,ou#d %ean ha a## su./e" s and o./e" s o& a-a ion ,hi"h are si%i#ar#$ si ua ed sha## .e su./e" o he sa%e .urdens and 2ran ed he sa%e !ri+i#e2es ,i hou an$ dis"ri%ina ion ,ha soe+er. 14. U$"/#&m"!) ma) -a0e a &e%!&"'!"0e mea$"$, +"//e&e$! /&#m eB*a("!) a$+ eB*a( &#!e'!"#$. 0 ,ou#d %ean hen ha he sa%e ra e sha## .e i%!osed &or he sa%e su./e" s and o./e" s ,i hin he erri oria# .oundaries o& a a-in2 au hori $. 15. I! "% "$-e&e$! "$ !-e #2e& !# !ax !-a! !-e S!a!e .e /&ee !# %e(e'! !-e %*.=e'!% #/ !axa!"#$9 and i has .een re!ea ed#$ he#d ha 8 Mine4ua#i ies ,hi"h resu# &ro% a sin2#in2 ou o& one !ar i"u#ar "#ass o& a-a ion8 or e-e%! ion8 in&rin2e no "ons i u iona# #i%i a ion .M (Commissioner of Internal Revenue, et al., v. antos,
et al., 277 S;RA =17<

16. 1 fixed annual license fee on those engaged in the business of general enterprise was also imposed on the sale of bibles by a religious sect. Is this valid or violative of the constitutionally guaranteed freedom of religion ? ANS)ER7 0 is no +a#id .e"ause i +io#a es he "ons i u iona##$ 2uaran eed &reedo% o& re#i2ion. As a #i"ense &ee is &i-ed in a%oun and unre#a ed o he re"ei! s o& he a-!a$er8 su"h a #i"ense &ee8 ,hen a!!#ied o a re#i2ious se" is a" ua##$ i%!osed as a "ondi ion &or he &ree e-er"ise o& re#i2ion. A #i"ense &ee 1res rains in ad+an"e hose "ons i u iona# #i.er ies o& !ress and re#i2ion and ine+i a.#$ ends o su!!ress heir e-er"ise.3 17. A (a2/*( !ax #$ a $e2 %*.=e'!9 #& a$ "$'&ea%e+ !ax #$ a$ #(+ #$e9 +#e% $#! "$!e&/e&e 2"!- a '#$!&a'! #& "m a"&% "!% #.(",a!"#$8 ,i hin he %eanin2 o& he "ons i u ion. E+en hou2h su"h a-a ion %a$ a&&e" !ar i"u#ar "on ra" s8 as i %a$ in"rease he de. o& one !erson and #essen he se"uri $ o& ano her8 or %a$ i%!ose addi iona# .urdens u!on one "#ass and re#ease he .urdens o& ano her8 s i## he a- %us .e !aid un#ess !rohi.i ed .$ he "ons i u ion8 nor "an i .e said ha i i%!airs he o.#i2a ions o& an$ e-is in2 "on ra" in i s rue and #e2a# sense. ($olentino v. ecretary of *inance, et al., an( companion cases, 2:A S;RA =:0< 38. U$+e& !-e $#2 &e0a"("$, C#$%!"!*!"#$9 2-e&e !-e&e "% $e"!-e& a ,&a$! $#& &#-"."!"#$ .) %!a!*!e9 !-e !ax"$, #2e& #/ (#'a( ,#0e&$me$!% m*%! .e +eeme+ !# ex"%! a(!-#*,- C#$,&e%% ma) &#0"+e %!a!*!#&) ("m"!a!"#$% a$+ ,*"+e("$e% in order o sa&e2uard he +ia.i#i $ and se#&(su&&i"ien"$ o& #o"a# 2o+ern%en uni s .$ dire" #$ 2ran in2 he% 2enera# and .road a- !o,ers. ? City Government of an Pablo,
La2una, et al., v. Reyes, et al., 6.R. No. 12770>8 Mar"h 2A8 1999<

31. T-e L#'a( G#0e&$me$! C#+e ex ("'"!() a*!-#&">e% &#0"$'e% a$+ '"!"e%9 $#!2"!-%!a$+"$, @a$) exem !"#$ ,&a$!e+ .) a$) (a2 #& #!-e& % e'"a( (a2A !# "m #%e a !ax #$ .*%"$e%%e% e$=#)"$, a /&a$'-"%e. 0ndi"a i+e o& he #e2is#a i+e in en o "arr$ ou he "ons i u iona# %anda e o& +es in2 .road a!o,ers o #o"a# 2o+ern%en uni s8 he Lo"a# 6o+ern%en ;ode has ,i hdra,n a- e-e%! ions or in"en i+es here o&ore en/o$ed .$ "er ain en i ies. (City Government of an Pablo, La2una, et al., v. Reyes, et al., 6.R. No.
12770>8 Mar"h 2A8 1999<

32. Philippine Lon2 Distance $elephone Company, Inc., v. City of Davao, et al., etc., G. R. :o. /<>?@;, Au2ust 00, 0==/8 u!he#d he au hori $ o& he ;i $ o& Da+ao8 a #o"a# 2o+ern%en uni 8 o i%!ose and "o##e" a #o"a# &ran"hise a- .e"ause he Lo"a# 6o+ern%en has ,i hdra,n a## a- e-e%! ions !re+ious#$ en/o$ed .$ a## !ersons and au hori@ed #o"a# 2o+ern%en uni s o i%!ose a a- on .usiness en/o$in2 a &ran"hise a- no ,i hs andin2 he 2ran o& a- e-e%! ion o he%. 33. @Pa&a+",m %-"/!A /&#m ex'(*%"0e C#$,&e%%"#$a( #2e& !# +"&e'! ,&a$! #/ !ax"$, #2e& !# (#'a( (e,"%(a!"0e .#+"e%. The !o,er o a- is no #on2er +es ed e-"#usi+e#$ on ;on2ressC #o"a# #e2is#a i+e .odies are no, 2i+en dire" au hori $ o #e+$ a-es8 &ees and o her "har2es !ursuan o Ar i"#e N8 se" ion A o& he 19>7 ;ons i u ion. ?'atan2as Po-er Corporation v. 'atan2as City, et al. 6. R. No. 1A2=7A8 and "o%!anion "ase8
A!ri# 2>8 200B "i in2 :ational Po-er Corporation v. City of Cabanatuan, 6. R. No. 1B91108 A!ri# 98 200:<

P#2e& !# !ax #/ LGU% $#! +"&e'! ,&a$! $#! me&e() +e(e,a!e+ #2e&.

12 WARNING: T-e /#((#2"$, +#'!&"$e "% a(&ea+) a.a$+#$e+. 'o,er o& #o"a# 2o+ern%en s o a- is on#$ a de#e2a ed !o,er. Lo"a# 2o+ern%en s do no ha+e he inheren !o,er o a- e-"e! o he e- en ha su"h !o,er %i2h .e de#e2a ed o he% ei her .$ he .asi" #a, or s a u e. 'resen #$8 under Ar i"#e N o& he 19>7 ;ons i u ion a 2enera# de#e2a ion o& ha !o,er has .een 2i+en in &a+or o& #o"a# 2o+ern%en uni s. ? !anila 5lectric Company v. Province of La2una, et al., G.R. :o. />/>AB, !ay A, /BBB)

31. T-e /*$+ame$!a( (a2 +"+ $#! "$!e$+ !-e +"&e'! ,&a$! !# (#'a( ,#0e&$me$! *$"!% !# .e a.%#(*!e a$+ *$'#$+"!"#$a(8 he "ons i u iona# o./e" i+e o.+ious#$ is o ensure ha 8 ,hi#e #o"a# 2o+ern%en uni s are .ein2 s ren2 hened and %ade %ore au ono%ous8 he #e2is#a ure %us s i## see o i ha 7 a. he a-!a$er ,i## no .e o+er(.urdened or sadd#ed ,i h %u# i!#e and unreasona.#e i%!osi ionsC .. ea"h #o"a# 2o+ern%en uni ,i## ha+e i s &air share o& a+ai#a.#e resour"esC ". he resour"es o& he na iona# 2o+ern%en ,i## .e undu#$ dis ur.edC and d. #o"a# a-a ion ,i## .e &air8 uni&or% and /us . (!anila 5lectric Company v. Province of La2una, et al., G.R. :o. />/>AB, !ay A, /BBB re&erred o !o,er as %ere#$ a de#e2a ed !o,er hen"e he #i%i a ions. The au hor ho,e+er ho#ds ha ,he her he !o,er is dire" 2ran or %ere#$ a de#e2a ed !o,er8 he a.o+e #i%i a ions &ind a!!#i"a ion8 as he !o,er is su./e" o su"h 2uide#ines and #i%i a ions as ;on2ress %a$ !ro+ide.) 33. T-e 2"!-+&a2a( #/ a !ax exem !"#$ %-#*(+ $#! .e '#$%!&*e+ a% &#-"."!"$, /*!*&e ,&a$!% #/ exem !"#$ /&#m a(( !axe%. 0ndeed8 he 2ran o& a-in2 !o,ers o #o"a# 2o+ern%en uni s under he Lo"a# 6o+ern%en ;ode does no a&&e" he !o,er o& ;on2ress o 2ran e-e%! ions o "er ain !ersons8 !ursuan o a de"#ared na iona# !o#i"$. The #e2a# e&&e" o& he "ons i u iona# 2ran o #o"a# 2o+ern%en s si%!#$ %eans ha in in er!re in2 s a u or$ !ro+isions on %uni"i!a# a-in2 !o,ers8 dou. s %us .e reso#+ed in &a+or o& %uni"i!a# "or!ora ions. (Philippine Lon2 Distance $elephone Company, Inc., v. City of Davao, et al., etc., 6. R. No.
1B:>=78 Au2us 228 2001<

34. W-e$ C#$,&e%% a &#0e+ a &#0"%"#$ ha 8 1An$ ad+an a2e8 &a+or8 !ri+i#e2e8 e-e%! ion8 or i%%uni $ 2ran ed under e-is in2 &ran"hises8 or %a$ herea& er .e 2ran ed8 sha## i!so &a" o .e"o%e !ar o& !re+ious#$ 2ran ed e#e"o%%uni"a ions &ran"hises and sha## .e a""orded i%%edia e#$ and un"ondi iona##$ o he 2ran ees o& su"h &ran"hises7 'ro+ided8 ho,e+er8 Tha he &ore2oin2 sha## nei her a!!#$ o nor a&&e" !ro+isions o& e#e"o%%uni"a ions &ran"hises "on"ernin2 erri or$ "o+ered .$ he &ran"hise8 he #i&e s!an o& he &ran"hise8 or he $!e o& ser+i"e au hori@ed .$ he &ran"hise.3 ?5nders"orin2 su!!#ied< !-e&e 2a% $# "$!e$!"#$ /#& "! !# # e&a!e a% a .(a$Ce! !ax exem !"#$ !# a(( !e(e'#mm*$"'a!"#$% e$!"!"e%. A!!#$in2 he ru#e o& s ri" "ons ru" ion o& #a,s 2ran in2 a- e-e%! ions and he ru#e ha dou. s shou#d .e reso#+ed in &a+or o& %uni"i!a# "or!ora ions in in er!re in2 s a u or$ !ro+isions on %uni"i!a# a-a ion8 i ,as he#d ha said !ro+isions "anno .e "onsidered as e- endin2 i s a!!#i"a ion o &ran"hises su"h as ha o& 'LDT. (Philippine
Lon2 Distance $elephone Company, Inc., v. City of Davao, et al., etc.8 6. R. No. 1B:>=78 Au2us 228 2001)

35. D#*.(e !axa!"#$ "$ "!% ,e$e&"' %e$%e9 !-"% mea$% !ax"$, !-e %ame %*.=e'! #& #.=e'! !2"'e +*&"$, !-e %ame !axa.(e e&"#+. 0n i s !ar i"u#ar sense8 i %a$ %ean dire" du!#i"a e a-a ion8 ,hi"h is !rohi.i ed under he "ons i u ion .e"ause i +io#a es he "on"e! o& e4ua# !ro e" ion8 uni&or%i $ and e4ui a.#eness o& a-a ion. 0ndire" du!#i"a e a-a ion is no ana he%a i@ed .$ he a.o+e "ons i u iona# #i%i a ions. 36. T-e e(eme$!% #/ +"&e'! +* ("'a!e !axa!"#$ a&e: a. Sa%e 1< Su./e" or o./e" is a-ed ,i"e 2< Ta-in2 au hori $ :< Ta-in2 !ur!ose B< Ta-in2 !eriod .. Ta-in2 a## o& he su./e" s or o./e" s &or he &irs i%e ,i hou a-in2 a## o& he% &or he se"ond i%e. 0& an$ o& he e#e%en s are a.sen hen here is indire" du!#i"a e a-a ion ,hi"h is no !rohi.i ed .$ he "ons i u ion.

13

37. D#*.(e !axa!"#$ a 0a("+ +e/e$%e a,a"$%! !-e (e,a("!) #/ a !ax mea%*&e "/ !-e +#*.(e !axa!"#$ "% +"&e'! +* ("'a!e !axa!"#$8 .e"ause i ,ou#d +io#a e he e4ua# !ro e" ion "#ause o& he "ons i u ion. 48. W-e$ a$ "!em #/ "$'#me "% !axe+ "$ !-e P-"(" "$e% a$+ a$#!-e& '#*$!&)9 !-"% 2#*(+ .e C$#2$ a% "$!e&$a!"#$a( =*&"+"'a( +#*.(e o& "o%!ara.#e a-es in ,o or %ore s a es on he sa%e a-!a$er in res!e" &or iden i"a# 2rounds. (Commissioner of Internal Revenue v. .C. 4ohnson an(
Fune 2A8 1999<

!-e %ame "$'#me "% !axe+ "$ !axa!"#$ ,hi"h is he i%!osi ion o& he sa%e su./e" %a er and
on, Inc., et al., 6.R. No. 12710A8

41. What are the methods for avoiding double taxation /indirect duplicate taxation0 ? S566ESTED ANS)ER7 The &o##o,in2 are he %e hods o& a+oidin2 dou.#e a-a ion7 a. Ta- rea ies ,hi"h e-e%! s &orei2n na iona#s &ro% #o"a# a-a ion and #o"a# na iona#s &ro% &orei2n a-a ion under he !rin"i!#e o& re"i!ro"i $. .. Ta- "redi s ,here &orei2n a-es are a##o,ed as dedu" ions &ro% #o"a# a-es ha are due o .e !aid. ". A##o,in2 &orei2n a-es as a dedu" ion &ro% 2ross in"o%e. 42. Tax '&e+"! 2enera##$ re&ers o an a%oun ha is su. ra" ed dire" #$ &ro% ones o a# a- #ia.i#i $8 an a##o,an"e a2ains he a- i se#&8 or a dedu" ion &ro% ,ha is o,ned. A a- "redi redu"es he a- due8 in"#udin2 H,hene+er a!!#i"a.#e H he in"o%e a- ha is de er%ined a& er a!!#$in2 he "orres!ondin2 a- ra es o a-a.#e in"o%e. ?Commissioner of Internal Revenue v. Central
Lu"on Dru2 Corporation, 6. R. No. 1A9=B78 A!ri# 1A8 200A<

43. A !ax +e+*'!"#$ is de&ined as a su. ra" ion &ro in"o%e &or a- !ur!oses8 or an a%oun ha is a##o,ed .$ #a, o redu"e in"o%e !rior o he a!!#i"a ion o& he a- ra e o "o%!u e he a%oun o& a- ,hi"h is due. A a- dedu" ion redu"es he in"o%e ha is su./e" o a- in order o arri+e a a-a.#e in"o%e.
?Commissioner of Internal Revenue v. Central Lu"on Dru2 Corporation, 6. R. No. 1A9=B78 A!ri# 1A8 200A<

41. ;he petitioners allege that the #<>1; law is constitutional because the Dicameral (onference (ommitted has exceeded its authority in including provisions which were never included in the versions of both the Fouse and Senate such as inserting the stand<by authority to the %resident to increase the >1; from .@ to ?@G deleting entirely the no pass<on provisions found in both the Fouse and Senate DillsG inserting the provision imposing a ).@ limit on the amount of input tax to be credited against the output taxG and including the amendments introduced only by Senate Dill 'o. !B. regarding other *inds of taxes in addition to the value<added tax. ;hus$ there was a violation of the constitutional mandate that revenue bills shall originate exclusively from the Fouse of #epresentatives. 1re the contentions of such weight as to constitute grave abuse of discretion which may invalidate the law ? 8xplain briefly. S566ESTED ANS)ER7 No. There ,as no 2ra+e a.use o& dis"re ion .e"ause a## he "han2es and %odi&i"a ions %ade .$ he Bi"a%era# ;on&eren"e ;o%%i ee ,ere 2er%ane o su./e" s o& he !ro+isions re&erred o i &or re"on"i#ia ion. The Bi"a%era# ;on&eren"e ;o%%i ee %ere#$ e-er"ised he /udi"ia##$ re"o2ni@ed #on2(s andin2 #e2is#a i+e !ra" i"e o& 2i+in2 said "on&eren"e "o%%i ee a%!#e #a i ude &or "o%!ro%isin2 di&&eren"es .e ,een he Sena e and he House. DAba,a(a Guro Party List (etc.) v. 5rmita, etc., et al., 6. R. No. 1=>0A=8 Se! e%.er 18
200A and "o%!anion "ases "i in2 Philippine 4u(2es Association v. Par(o, 6. R. No. 10A:718 No+e%.er 118 199:8 227 S;RA 70:C $olentino v. ecretary of *inance, et al., 6. R. No. 11ABAA8 Au2us 2A8 199B8 2:AS;RA =:0E

44. ;he >1; is assailed as being regressive and therefore violative of the mandate to evolve a progressive system of taxation. Ao you agree ? 8xplain your answer. S566ESTED ANS)ER7 No. The VAT does no +io#a e he !ro2ressi+e s$s e% o& a-a ion. The %anda e o ;on2ress is no o !res"ri.e .u o e+o#+e a !ro2ressi+e s$s e% o& a-a ion. O her,ise8 sa#es a-es ,hi"h !erha!s are he o#des &or% o& indire" a-es8 ,ou#d ha+e .een !rohi.i ed ,i h he !ro"#a%a ion o& he "ons i u iona# !ro+ision. Sa#es a-es are a#so re2ressi+e. . DAba,a(a Guro Party List (etc.) v. 5rmita, etc.,

14 et al., 6. R. No. 1=>0A=8 Se! e%.er 18 200A and "o%!anion "ases "i in2 $olentino v. ecretary of *inance, et al., 6. R. No. 11ABAA8 Au2us 2A8 199B8 2:A S;RA =:0E

45. A(( &e0e$*e% a$+ a%%e!% #/ $#$<%!#'C9 $#$< &#/"! e+*'a!"#$a( "$%!"!*!"#$% !-a! a&e a'!*a(()9 +"&e'!() a$+ ex'(*%"0e() *%e+ /#& e+*'a!"#$a( *& #%e% %-a(( .e exem ! /&#m !axa!"#$. 46. Re0e$*e% a$+ a%%e!% #/ &# &"e!a&) e+*'a!"#$a( "$%!"!*!"#$%9 "$'(*+"$, !-#%e 2-"'- a&e '## e&a!"0e() #2$e+9 ma) .e e$!"!(e+ !# exem !"#$% %*.=e'! !# ("m"!a!"#$% &#0"+e+ .) (a2 "$'(*+"$, &e%!&"'!"#$% #$ +"0"+e$+% a$+ &#0"%"#$% /#& &e"$0e%!me$!%. There is no #a, a he !resen ,hi"h 2ran s e-e%! ions8 o her he e-e%! ions 2ran ed o "oo!era i+es. 47. What is a tax amnesty ? S566ESTED ANS)ER7 A a- a%nes $ is a 2enera# !ardon or in en iona# o+er#oo*in2 .$ he S a e o& i s au hori $ o i%!ose !ena# ies on !ersons o her,ise 2ui# $ o& e+asion or +io#a ion o& a re+enue or a a- #a,.
(Commissioner of Internal Revenue v. !arubeni Corporation, 6.R. No. 1:7:778 De"e%.er 1>8 2001<

NOTES AND ;OMMENTS7 a. T-e *& #%e #/ !ax am$e%!) is o ?a< 2i+e a- e+aders ,ho ,ish o re#en a "han"e o s ar a "#ean
s#a e8 and o ?.< 2i+e he 2o+ern%en a "han"e o "o##e" un"o##e" ed a- &ro% a- e+aders ,i hou ha+in2 o 2o hrou2h he edious !ro"ess o& a a- "ase. ('anas, 4r. v. Court of Appeals, et al., 6.R. No. 1029=78 Ge.ruar$ 108 2000)

58. Aistinguish tax amnesty from tax exemption. S566ESTED ANS)ER7 a. Ta- a%nes $ is an i%%uni $ &ro% a## "ri%ina#8 "i+i# and ad%inis ra i+e #ia.i#i ies arisin2 &ro% non!a$%en o& a-es ?People v. Castane(a, G.R. :o. L1<@??/, eptember /A, /B??) )H0LE a a- e-e%! ion is an i%%uni $ &ro% "i+i# #ia.i#i $ on#$. 0 is an i%%uni $ or !ri+i#e2e8 a &reedo% &ro% a "har2e or .urden o ,hi"h o hers are su./e" ed. (*lorer v. heri(an, />; In(. 0?, >@ :5 >@A) .. Ta- a%nes $ a!!#ies on#$ o !as a- !eriods8 hen"e o& re roa" i+e a!!#i"a ion (Castane(a, supra< )H0LE a- e-e%! ion has !ros!e" i+e a!!#i"a ion. 51. Aefine tax avoidance and tax evasion. S566ESTED ANS)ER7 Ta- a+oidan"e is he use o& #e2a##$ !er%issi.#e %eans o redu"e he a,hi#e a- e+asion is he use o& i##e2a# %eans o es"a!e he !a$%en o& a-es. NOTES AND ;OMMENTS7 a. Tax a0#"+a$'e '#$$#!e% !-e "$!e,&a!"#$ #/ !-&ee /a'!#&%:
1< he end o .e a"hie+ed8 i.e.8 he !a$%en o& #ess han ha *no,n .$ he a-!a$er o .e #e2a##$ due8 or he non(!a$%en o& a- ,hen i is sho,n ha a a- is dueC 2< an a""o%!an$in2 s a e o& %ind ,hi"h is des"ri.ed as .ein2 1e+i#3 on 1.ad &ai h83 1,i##&u#83 or 3de#i.era e and no a""iden a#3C and :< a "ourse o& a" ion or &ai#ure o& a" ion ,hi"h is un#a,&u#. ? Commissioner of Internal Revenue v. $he 5state of 'eni2no P. $o(a, 4r., , etc., 6. R. No. 1B71>>8 Se! e%.er 1B8 200B<

52. Aistinguish between the tax avoidance and tax evasion. S566ESTED ANS)ER7 a. Ta- a+oidan"e is #e2a# ,hi#e a- e+asion is i##e2a#. .. The o./e" i+e o& a- a+oidan"e in %os ins an"es is %ere#$ o redu"e he a- ha is due ,hi#e is a- e+asion he o./e" is o en ire#$ es"a!e he !a$%en o& a-es. 53. What are the reasons why national taxes cannot be the subject of compensation and set<off with debts ? S566ESTED ANS)ER7 a. The #i&e.#ood heor$C .. Ta-es are no "on ra" ua# o.#i2a ions .u arise ou o& a du $ o8 and are he !osi i+e a" s o& 2o+ern%en 8 o he %a*in2 and en&or"in2 o& ,hi"h he !ersona# "onsen o& he indi+idua# a-!a$er is no re4uired. (Republic v. !ambulao Lumber Co., B S;RA =22<

15

". The 2o+ern%en and he a-!a$er are no %u ua##$ "redi ors and de. ors o& ea"h o her and a "#ai% &or a-es is no su"h de. 8 de%and8 "on ra" or /ud2%en as is a##o,ed o .e se (o&&. (Calte. Philippines,
Inc. v. Commission on Au(it, 0=? CRA ;0@, ;A@)

51. C#m e$%a!"#$ a*es !#a"e .$ o!era ion o& #a,8 ,here he #o"a# 2o+ern%en and he a-!a$er are in heir o,n ri2h re"i!ro"a##$ de. ors and "redi ors o& ea"h o her8 and ha he de. s are .o h due and de%anda.#e8 in "onse4uen"e o& Ar i"#es 127> and 1279 o& he ;i+i# ;ode. (Domin2o v. Garlitos, > S;RA BB:< 53. I$ 'a%e #/ a !ax #0e& a)me$!9 2-e&e !-e BIR?% #.(",a!"#$ !# &e/*$+ #& %e!<#// a&"%e% /&#m !-e m#me$! !-e !ax 2a% a"+ *$+e& !-e &"$'" (e #/ solutio indebeti. (Commissioner of Internal Revenue v. 5sso
tan(ar( 5astern, Inc, 172 SR;A :=B<

54. B*! $#!e 'estle %hil. v. (ourt of 1ppeals$ et al.$ :.#. 'o. H- -$ +uly "$ ?.. ,hi"h he#d ha in order &or he ru#e on solutio in(ebeti o a!!#$ i is an essen ia# "ondi ion ha he !e i ioner %us &irs sho, ha i s !a$%en o& he "us o%s du ies ,as in e-"ess o& ,ha ,as re4uired .$ he #a, a he i%e he su./e" 1= i%!or a ions o& %i#* and %i#* !rodu" s ,ere %ade. 5n#ess sho,n o her,ise8 he dis!u a.#e !resu%! ion o& re2u#ari $ o& !er&or%an"e o& du $ #ies in &a+or o& he ;o##e" or o& ;us o%s. 55. A +"&e'! !ax "% a !ax /#& 2-"'- a !ax a)e& "% +"&e'!() ("a.(e #$ !-e !&a$%a'!"#$ #& .*%"$e%% "! e$,a,e% "$9 2"!-#*! !&a$%/e&&"$, !-e .*&+e$ !# %#me#$e e(%e. E-a%!#es are indi+idua# and "or!ora e in"o%e a-es8 rans&er a-es8 and residen"e a-es. ?Aba,a(a Guro Party List (etc.) v. 5rmita, etc., et al., 6. R. No.
1=>0A=8 Se! e%.er 18 200A and "o%!anion "ases8 "i in2 !ace(a v. !acarai2, 4r., 6.R. No. >>2918 Fune >8 199:8 22: S;RA 217<

56. T-e ma"$ +"//e&e$'e .e!2ee$ +"&e'! !axe% a$+ "$+"&e'! !axe% is ha he .urden o& dire" a-es "ou#d no .e shi& ed .$ he a-!a$er o ano her ,hi#e he .urden o& indire" a-es "ou#d .e shi& ed o ano her !erson8 su"h he .urden +a#ue(added a-es .ein2 shi& ed or rans&erred .$ he a-!a$er8 he se##er8 o he .u$er. 57. 1cesite is the owner and operator of restaurant which caters to the patrons of a casino operated by %1:(E# within its premises. it billed %1:(E# for the cost of the food and beverages consumed by the %1:(E#Is patrons as well as the lease of the premises plus the >1; on these items. %1:(E# paid 1cesite minus the >1; claiming exemption while 1cesite$ in order to avoid legal implications$ paid the %H. million tax and applied for a refund on the ground of solutio indebeti. 1cesite cites the tax exemption grant in %1:(E#Is franchise as follows4 C$he e.emptions herein 2rante( for earnin2s (erive( from the operations con(ucte( un(er the franchise specifically from the payment of any ta., income, or other-ise, as -ell as any form of char2es, fees or levies, shall inure to the benefit of and extend to corporation/s0$ association /s0$ agency /cies0$ or individual/s0 with whom the (orporation or operator has any contractual relationship in connection with the operations of the casino /s0 authorized to be conducted under this 5ranchise an( to those receivin2 compensation or other remuneration from the Corporation or operator as a result of essential facilities furnishe( an(Dor technical services ren(ere( to the Corporation or operator.E (emphasis supplie() ;he DI# denied the claim on the ground that %1:(E# is exempt only from direct taxes and not from indirect taxes so 1cesite may not avail of the exemption. Is this correct ? ANS)ER7 No. As he #a, is ,orded he e-e%! ion &#o,s o A"esi e. The #a, is "#ear ha e-e%! ion e- ends he e-e%! ion o en i ies or indi+idua#s dea#in2 ,i h 'A6;OR. he

?Commissioner of Internal Revenue v. Acesite (Philippines) 8otel Corporation, 6. R. No. 1B729A8 Ge.ruar$ 1=8 2007< NOTE7 The a.o+e ho#din2 shou#d .e di&&eren ia ed &ro% Philippine Acetylene Co. v. Commissioner of Internal Revenue, 0= CRA /=A@, ,here he a- e-e%! ion did no &#o, o !ri+a e en i ies. ? Abaya v. 5b(ane, 6. R. No. 1=79198 Ge.ruar$ 1B8 2007<

NATIONAL INTERNAL REVENUE CODE

THE BUREAU OF INTERNAL REVENUE

16

1. Re . A'! N#. 11839 !-e Ba$C De #%"!% Se'&e') La2 &#-"."!% "$B*"&) "$!# .a$C +e #%"!%. A% ex'e !"#$% !# Re . A'! N#. 11839 !-e C#mm"%%"#$e& #/ I$!e&$a( Re0e$*e "% #$() a*!-#&">e+ !# "$B*"&e "$!# !-e .a$C +e #%"!% #/: a. a de"eden o de er%ine his 2ross es a eC and .. an$ a-!a$er ,ho has &i#ed an a!!#i"a ion &or "o%!ro%ise o& his a- #ia.i#i $ .$ reason o& &inan"ia# in"a!a"i $ o !a$ his a- #ia.i#i $. DSe". A ?G<8 N0R; o& 1997E ". A a-!a$er ,ho au hori@es he ;o%%issioner o in4uire in o his .an* de!osi s.

INCO;E TAXATION
1. T-e Tax C#+e -a% "$'(*+e+ *$+e& !-e !e&m @'#& #&a!"#$A a&!$e&%-" %9 $# ma!!e& -#2 '&ea!e+ or or2ani@ed8 /oin (s o"* "o%!anies8 /oin a""oun s ?cuentas en participacion <8 asso"ia ions8 or insuran"e "o%!anies. DSe". 2B no, Se". 2B ?B< o& he N0R; o& 1997E 2. 0n 5van2elista v. Collector, /=0 Phil. /<=, he Su!re%e ;our he#d "i in2 Mer ens ha !-e !e&m a&!$e&%-" "$'(*+e% a s$ndi"a e8 2rou!8 !oo#8 /oin +en ure or o her unin"or!ora ed or2ani@a ion8 hrou2h or .$ %eans o& ,hi"h an$ .usiness8 &inan"ia# o!era ion8 or +en ure is "arried on. 3. Ce&!a"$ .*%"$e%% #&,a$">a!"#$% +# $#! /a(( *$+e& !-e 'a!e,#&) #/ @'#& #&a!"#$%A *$+e& !-e Tax C#+e8 and here&ore no su./e" o a- as "or!ora ions8 in"#ude7 a. 6enera# !ro&essiona# !ar nershi!sC .. Foin +en ure or "onsor iu% &or%ed &or he !ur!ose o& under a*in2 "ons ru" ion !ro/e" s en2a2in2 in !e ro#eu%8 "oa#8 2eo her%a#8 and o her ener2$ o!era ions8 !ursuan o an o!era ion or "onsor iu% a2ree%en under a ser+i"e "on ra" ,i h he 6o+ern%en . D1s sen en"e8 Se". 22 ?B<8 B0R; o& 1997E 1. C#<-e"&% 2-# #2$ "$-e&"!e+ &# e&!"e% 2-"'- &#+*'e "$'#me %-#*(+ $#! a*!#ma!"'a(() .e '#$%"+e&e+ a% a&!$e&% #/ a$ *$&e,"%!e&e+ '#& #&a!"#$ %*.=e'! !# "$'#me !ax /#& !-e /#((#2"$, &ea%#$%: a. he sharin2 o& 2ross re urns does no o& i se#& es a.#ish a !ar nershi!8 ,he her or no he !ersons sharin2 he% ha+e a /oin or "o%%on ri2h or in eres in an$ !ro!er $ &ro% ,hi"h he re urns are deri+ed. There %us .e an un%is a*a.#e in en ion o &or% a !ar nershi! or /oin +en ure . (6billos, 4r. v. Commissioner of
Internal Revenue, />B CRA <>@)

.. There is no "on ri.u ion or in+es %en o& addi iona# "a!i a# o in"rease or e-!and he inheri ed !ro!er ies8 %ere#$ "on inuin2 he dedi"a ion o& he !ro!er $ o he use o ,hi"h i had .een !u .$ heir &ore.ears. ?Ibi(.< ". 'ersons ,ho "on ri.u e !ro!er $ or &unds o a "o%%on en er!rise and a2ree o share he 2ross re urns o& ha en er!rise in !ro!or ion o heir "on ri.u ion8 .u ,ho se+era##$ re ain he i #e o heir res!e" i+e "on ri.u ion8 are no here.$ rendered !ar ners. The$ ha+e no "o%%on s o"* "a!i a#8 and no "o%%uni $ o& in eres as !rin"i!a# !ro!rie ors in he .usiness i se#& &ro% ,hi"h he !ro"eeds ,ere deri+ed. ?E#e%en s o& he La, o& 'ar nershi! .$ G#o$d R. Me"he%8 2 nd Ed.8 Se". >:8 !. 7B "i ed in Pascual v.
Commissioner of Internal Revenue, /@@ CRA A@=<

3. T-e '#mm#$ #2$e&%-" #/ &# e&!) +#e% $#! "!%e(/ '&ea!e a a&!$e&%-" .e!2ee$ !-e #2$e&%8 hou2h he$ %a$ use i &or !ur!ose o& %a*in2 2ains8 and he$ %a$8 ,i hou .e"o%in2 !ar ners8 are a%on2 he%se#+es as o he %ana2e%en and use o& su"h !ro!er $ and he a!!#i"a ion o& he !ro"eeds here&ro%.. ? purloc, v,. Filson, /<0 .F. >@>, /@= :o. App. /< 8 "i ed in Pascual v. Commissioner of Internal
Revenue, /@@ CRA A@=<

4. T-e "$'#me /&#m !-e &e$!a( #/ !-e -#*%e9 .#*,-! /&#m !-e ea&$"$,% #/ '#<#2$e+ &# e&!"e%9 %-a(( .e !&ea!e+ a% !-e "$'#me #/ a$ *$&e,"%!e&e+ a&!$e&%-" o .e a-a.#e as a "or!ora ion .e"ause o& he "#ear in en ion o& he .ro hers o /oin o2e her in a +en ure &or %a*in2 %one$ ou o& ren a#s.

17

5. I$'#me is 2ain deri+ed and se+ered &ro% "a!i a#8 &ro% #a.or or &ro% .o h "o%.ined. Gor e-a%!#e8 o a- a s o"* di+idend ,ou#d .e o a- a "a!i a# in"rease ra her han he in"o%e. (Commissioner of Internal
Revenue v. Court of Appeals, et al., G.R. :o. /=?A;@, 4anuary 0=, /BBB)

6. The er% !axa.(e "$'#me %eans he !er inen i e%s o& 2ross in"o%e s!e"i&ied in he Ta- ;ode8 #ess he dedu" ions andIor !ersona# and addi iona# e-e%! ions8 i& an$8 au hori@ed &or su"h $!es o& in"o%e .$ he Ta- ;ode or o her s!e"ia# #a,s. ?Se". :18 N0R; o& 1997< 7. T-e 'a$'e((a!"#$ a$+ /#&,"0e$e%% #/ "$+e.!e+$e%% %a$ a%oun o ?a< !a$%en o& in"o%eC ?.< 2i& C or o a ?"< "a!i a# ransa" ion de!endin2 u!on he "ir"u%s an"es. 18. 0& an indi+idua# !er&or%s ser+i"es &or a "redi or ,ho8 in "onsidera ion hereo&8 "an"e#s he de. 8 i is in"o%e o he e- en o& he a%oun rea#i@ed .$ he de. or as "o%!ensa ion &or his ser+i"es. 11. An inso#+en de. or does no rea#i@e a-a.#e in"o%e &ro% he "an"e##a ion or &or2i+eness .
(Commissioner v. immons Gin Co., <> *( >0; CCA /=th)

12. The inso#+en de. or rea#i@es in"o%e resu# in2 &ro% he "an"e##a ion or &or2i+eness o& inde. edness ,hen he .e"o%es so#+en . (La,elan( Grocery Co., v. Commissioner >@ '$A (*) 0?B) 13. 0& a "redi or %ere#$ desires o .ene&i a de. or and ,i hou an$ "onsidera ion here&or "an"e#s he a%oun o& he de. i is a 2i& &ro% he "redi or o he de. or and need no .e in"#uded in he #a ers in"o%e. 11. 0& a "or!ora ion o ,hi"h a s o"*ho#der is inde. ed &or2i+es he de. 8 he ransa" ion has he e&&e" o& !a$%en o& a di+idend. ?Se". A08 Re+. Re2s. No. 2< 13. The G(#.a( %)%!em #/ "$'#me !axa!"#$ is a s$s e% e%!#o$ed ,here he a- s$s e% +ie,s indi&&eren #$ he a- .ase and 2enera##$ rea s in "o%%on a## "a e2ories o& a-a.#e in"o%e o& he indi+idua#.
($an v. (el Rosario, 4r., 0>; CRA >0<, >>/)

14. The S'-e+*(a& %)%!em #/ "$'#me !axa!"#$ is a s$s e% e%!#o$ed ,here he in"o%e area %en +aries and is %ade o de!end on he *ind or "a e2or$ o& a-a.#e in"o%e o& he a-!a$er. ($an v.
(el Rosario, 4r., 0>; CRA >0<, >>/)

15. 5nder he Na iona# 0n erna# Re+enue ;ode he 2#o.a# s$s e% is a!!#i"a.#e o a-a.#e "or!ora ions and he s"hedu#ar o indi+idua#s. 16. T-e ,e$e&a( &"$'" (e% #/ "$'#me !axa!"#$ "$ !-e P-"(" "$e% OR he si us o& in"o%e a-a ion in he 'hi#i!!ines OR he sour"e ru#e o& in"o%e a-a ion as a!!#ied in he 'hi#i!!ines. a. A "i i@en o& he 'hi#i!!ines residin2 herein is a-a.#e on a## in"o%e deri+ed &ro% sour"es ,i hin and ,i hou he 'hi#i!!ines. .. A nonresiden "i i@en is a-a.#e on#$ on in"o%e deri+ed &ro% sour"es ,i hin he 'hi#i!!ines. ". An indi+idua# "i i@en o& he 'hi#i!!ines ,ho is ,or*in2 and deri+in2 in"o%e &ro% a.road as an o+erseas "on ra" ,or*er is a-a.#e on#$ on in"o%e &ro% sour"es ,i hin he 'hi#i!!ines7 'ro+ided8 Tha a sea%an ,ho is a "i i@en o& he 'hi#i!!ines and ,ho re"ei+es "o%!ensa ion &or ser+i"es rendered a.road as a %e%.er o& he "o%!#e%en o& a +esse# en2a2ed e-"#usi+e#$ in in erna iona# rade sha## .e rea ed as an o+erseas "on ra" ,or*er. d. An a#ien indi+idua#8 ,he her residen or no o& he 'hi#i!!ines8 is a-a.#e on#$ on in"o%e deri+ed &ro% sour"es ,i hin he 'hi#i!!ines. e. A do%es i" "or!ora ion is a-a.#e on a## in"o%e deri+ed &ro% sour"es ,i hin and ,i hou he 'hi#i!!ines. &. A &orei2n "or!ora ion8 ,he her en2a2ed or no in rade or .usiness in he 'hi#i!!ines8 is a-a.#e on#$ on in"o%e deri+ed &ro% sour"es ,i hin he 'hi#i!!ines. ?Se". 2:8 N0R; o& 1997< 17. C#m e$%a!"#$ "$'#me "% '#$%"+e&e+ a% -a0"$, .ee$ ea&$e+ "$ !-e (a'e 2-e&e !-e %e&0"'e 2a% &e$+e&e+ and no "onsidered as sour"ed &ro% he !#a"e o& ori2in o& he %one$.

18

28. Pa)me$! /#& %e&0"'e%9 #!-e& !-a$ '#m e$%a!"#$ "$'#me9 "% '#$%"+e&e+ a% -a0"$, .ee$ ea&$e+ a! !-e (a'e 2-e&e !-e a'!"0"!) #& %e&0"'e 2a% e&/#&me+. 21. A non(residen a#ien8 ,ho has s a$ed in he 'hi#i!!ines &or an a22re2a e !eriod o& %ore han 1>0 da$s durin2 he "a#endar $ear 20018 sha## .e "onsidered as a non(residen a#ien doin2 .usiness in he 'hi#i!!ines. ;onse4uen #$8 he sha## .e su./e" o in"o%e a- on his in"o%e deri+ed &ro% sour"es &ro% ,i hin he 'hi#i!!ines. DSe". 2A ?A< ?1<8 N0R;E He is a##o,ed o a+ai# o& he i e%i@ed dedu" ions in"#udin2 he !ersona# and addi iona# e-e%! ions su./e" o he ru#e on re"i!ro"i $. 22. T-e /#((#2"$, %-a(( .e '#$%"+e&e+ a% de minimis .e$e/"!% $#! %*.=e'! !# 2"!--#(+"$, a- on "o%!ensa ion in"o%e o& .o h %ana2eria# and ran* and &i#e e%!#o$ees7 a. Mone i@ed unused +a"a ion #ea+e "redi s o& e%!#o$ees no e-"eedin2 en ?10< da$s durin2 he $earC .. Medi"a# "ash a##o,an"e o de!enden s o& e%!#o$ees no e-"eedin2 '7A0.00 !er e%!#o$ee !er se%es er or '12A !er %on hC ". Ri"e su.sid$ o& '18000.00 or one ?1< sa"* o& A0(*2. ri"e !er %on h a%oun in2 o no %ore han '18000.00C d. 5ni&or%s and "#o hin2 a##o,an"e no e-"eedin2 ':8000.00 !er annu%C e. A" ua# $ear#$ %edi"a# .ene&i s no e-"eedin2 '108000.00 !er annu%C &. Laundr$ a##o,an"e no e-"eedin2 ':00 !er %on hC 2. E%!#o$ees a"hie+e%en a,ards8 e.2. &or #en2 h o& ser+i"e or sa&e $ a"hie+e%en 8 ,hi"h %us .e in he &or% o& a an2i.#e !ersona !ro!er $ o her han "ash or 2i& "er i&i"a e8 ,i h an annua# %one ar$ +a#ue no e-"eedin2 '108000.00 re"ei+ed .$ an e%!#o$ee under an es a.#ished ,ri en !#an ,hi"h does no dis"ri%ina e in &a+or o& hi2h#$ !aid e%!#o$eesC h. 6i& s 2i+en durin2 ;hris %as and %a/or anni+ersar$ "e#e.ra ions no e-"eedin2 'A8000 !er e%!#o$ee !er annu%C i. G#o,ers8 &rui s8 .oo*s8 or si%i#ar i e%s 2i+en o e%!#o$ees under s!e"ia# "ir"u%s an"es8 e.2. on a""oun o& i##ness8 %arria2e8 .ir h o& a .a.$8 e ".C and /. Dai#$ %ea# a##o,an"e &or o+er i%e ,or* no e-"eedin2 ,en $ &i+e !er"en ?2AO< o& he .asi" %ini%u% ,a2e. The a%oun o& (e minimis .ene&i s "on&or%in2 o he "ei#in2 herein !res"ri.ed sha## no .e "onsidered in de er%inin2 he ':08000 "ei#in2 o& 1o her .ene&i s3 !ro+ided under Se" ion :2 ?B<?7<?e< o& he ;ode. Ho,e+er8 i& he e%!#o$er !a$s %ore han he "ei#in2 !res"ri.ed .$ hese re2u#a ions8 he e-"ess sha## .e a-a.#e o he e%!#o$ee re"ei+in2 he .ene&i s on#$ i& su"h e-"ess is .e$ond he ':08000.00 "ei#in28 !ro+ided8 &ur her8 ha an$ a%oun 2i+en .$ he e%!#o$er as .ene&i s o i s e%!#o$ees8 ,he her "#assi&ied as (e minimis .ene&i s or &rin2e .ene&i s8 sha## "ons i u e as dedu" i.#e e-!ense u!on su"h e%!#o$er . DSe".
2.7>.1 ?A< ?:<8 Re+. Re2s. 2(9> as a%ended .$ Re+. Re2s. No. >(2000E

23. I$'#me %*.=e'! !# @/"$a( !axA &e/e&% !# a$ "$'#me '#((e'!e+ !-&#*,- !-e 2"!--#(+"$, !ax %)%!em. The !a$or o& he in"o%e ,i hho#ds he a- and re%i s i o he 2o+ern%en as a &ina# se #e%en o& he in"o%e a- as a &ina# se #e%en o& he in"o%e a- due on said in"o%e. The re"i!ien is no #on2er re4uired o in"#ude he in"o%e su./e" ed o a &ina# a- as !ar o& his 2ross in"o%e in his in"o%e a- re urn. 21. Aistinguish exclusions from deductions. S566ESTED ANS)ER7 a. E-"#usions &ro% 2ross in"o%e re&er o a &#o, o& ,ea# h o he a-!a$er ,hi"h are no rea ed as !ar o& 2ross in"o%e &or !ur!oses o& "o%!u in2 he a-!a$ers a-a.#e in"o%e8 due o he &o##o,in2 reasons7 ?1< 0 is e-e%! ed .$ he &unda%en a# #a,C ?2< 0 is e-e%! ed .$ s a u eC and ?:< 0 does no "o%e ,i hin he de&ini ion o& in"o%e ?Se". =18 Re+. Re2s. No. 2< )H0LE dedu" ions are he a%oun s ,hi"h he #a, a##o,s o .e su. ra" ed &ro% 2ross in"o%e in order o arri+e a ne in"o%e.

19

.. E-"#usions !er ain o he "o%!u a ion o& 2ross in"o%e )H0LE dedu" ions !er ain o he "o%!u a ion o& ne in"o%e. ". E-"#usions are so%e hin2 re"ei+ed or earned .$ he a-!a$er ,hi"h do no &or% !ar o& 2ross in"o%e )H0LE dedu" ions are so%e hin2 s!en or !aid in earnin2 2ross in"o%e. An e-a%!#e o& an e-"#usion &ro% 2ross in"o%e are #i&e insuran"e !ro"eeds8 and an e-a%!#e o& a dedu" ion are #osses. 23. W-a! a&e ex'(*+e+ /&#m ,&#%% "$'#me F S566ESTED ANS)ER7 a. 'ro"eeds o& #i&e insuran"e !o#i"ies !aid o he heirs or .ene&i"iaries u!on he dea h o& he insured ,he her in a sin2#e su% or o her,ise. .. A%oun s re"ei+ed .$ he insured as a re urn o& !re%iu%s !aid .$ hi% under #i&e insuran"e8 endo,%en or annui $ "on ra" s ei her durin2 he er%8 or a %a uri $ o& he er% %en ioned in he "on ra" 8 or u!on surrender o& he "on ra" . ". Va#ue o& !ro!er $ a"4uired .$ 2i& 8 .e4ues 8 de+ise8 or des"en . d. A%oun s re"ei+ed8 hrou2h a""iden or hea# h insuran"e or )or*%ens ;o%!ensa ion A" s as "o%!ensa ion &or !ersona# in/uries or si"*ness8 !#us he a%oun s o& an$ da%a2es re"ei+ed on ,he her .$ sui or a2ree%en on a""oun o& su"h in/uries or si"*ness. e. 0n"o%e o& an$ *ind o he e- en re4uired .$ an$ rea $ o.#i2a ion .indin2 u!on he 6o+ern%en o& he 'hi#i!!ines. &. Re ire%en .ene&i s re"ei+ed under Re!u.#i" A" No. 7=B1. Re ire%en re"ei+ed &ro% reasona.#e !ri+a e .ene&i !#an a& er "o%!#ian"e ,i h "er ain "ondi ions. A%oun s re"ei+ed &or .e$ond "on ro# se!ara ion. Gorei2n so"ia# se"uri $8 re ire%en 2ra ui ies8 !ensions8 e ". 5SVA .ene&i s8 SSS .ene&i s and 6S0S .ene&i s. 24. What are the conditions for excluding retirement benefits from gross income$ hence tax< exempt ? S566ESTED ANS)ER7 a. Re ire%en .ene&i s re"ei+ed under Re!u.#i" A" No. 7=B1 and hose re"ei+ed .$ o&&i"ia#s and e%!#o$ees o& !ri+a e &ir%s8 ,he her indi+idua# or "or!ora e8 in a""ordan"e ,i h he e%!#o$ers reasona.#e !ri+a e .ene&i !#an a!!ro+ed .$ he B0R. .. Re irin2 o&&i"ia# or e%!#o$ee 1< 0n he ser+i"e o& he sa%e e%!#o$er &or a #eas en ?10< $earsC 2< No #ess han &i& $ ?A0< $ears o& a2e a i%e o& re ire%en C :< A+ai#ed o& he .ene&i o& e-"#usion on#$ on"e. DSe". :2 ?B< ?=< ?a<8 N0R; o& 1997E The re irin2 o&&i"ia# or e%!#o$ee shou#d no ha+e !re+ious#$ a+ai#ed o& he !ri+i#e2e under he re ire%en !#an o& he sa%e or ano her e%!#o$er . D1s !ar.8 Se". 2.7> ?B< ?1<8 Re+. Re2s. No. 2(9>E 25. Se a&a!"#$ G&e!"&eme$!H a) ex'(*+e+ /&#m ,&#%% "$'#me9 -e$'e !ax<exem !: a. An$ a%oun re"ei+ed .$ an o&&i"ia#8 e%!#o$ee or .$ his heirs8 .. Gro% he e%!#o$er ". As a "onse4uen"e o& se!ara ion o& su"h o&&i"ia# or e%!#o$ee &ro% he ser+i"e o& he e%!#o$er .e"ause o& 1< Dea h8 si"*ness or o her !h$si"a# disa.i#i $C or 2< Gor an$ "ause .e$ond he "on ro# o& said o&&i"ia# or e%!#o$ee DSe". :2 ?B< ?=< ?.<8 N0R; o& 1997E8 su"h as re ren"h%en 8 redundan"$ and "essa ion o& .usiness. D1s !ar.8 Se". 2.7> ?B<8 ?1< ?.<8 Re+. Re2s.
No. 2(9>E

26. I!em">e+ +e+*'!"#$% /&#m ,&#%% "$'#me a$+ 2-# ma) a0a"(: a. O&+"$a&) a$+ $e'e%%a&) rade8 .usiness or !ro&essiona# ex e$%e%. .. The a%oun o& "$!e&e%! !aid or in"urred ,i hin a a-a.#e $ear on inde. edness in "onne" ion ,i h he a-!a$ers !ro&ession8 rade or .usiness. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese

20

e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. ". Taxe% !aid or in"urred ,i hin he a-a.#e $ear in "onne" ion ,i h he a-!a$ers !ro&ession. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. d. Ordinar$ (#%%e%8 #osses &ro% "asua# $8 he& or e%.e@@#e%en C and ne o!era in2 #osses. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. e. Ba+ +e.!% due o he a-!a$er8 a" ua##$ as"er ained o .e ,or h#ess and "har2ed o&& ,i hin he a-a.#e $ear8 "onne" ed ,i h !ro&ession8 rade or .usiness8 no sus ained .e ,een re#a ed !ar ies. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. &. De &e'"a!"#$ or a reasona.#e a##o,an"e &or he e-haus ion8 ,ear and ear ?in"#udin2 reasona.#e a##o,an"e &or o.so#es"en"e< o& !ro!er $ used in rade or .usiness. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. 2. De (e!"#$ or dedu" ion arisin2 &ro% he e-haus ion o& a non(re!#a"ea.#e asse 8 usua##$ a na ura# resour"e. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. h. C-a&"!a.(e and o her '#$!&".*!"#$%. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. i. Re%ea&'- a$+ +e0e(# me$! e-!endi ures rea ed as de&erred e-!enses !aid or in"urred .$ he a-!a$er in "onne" ion ,i h his rade8 .usiness or !ro&ession8 no dedu" ed as e-!enses and "har2ea.#e o "a!i a# a""oun .u no "har2ea.#e o !ro!er $ o& a "hara" er ,hi"h is su./e" o de!re"ia ion or de!#e ion. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese

21

e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. /. C#$!&".*!"#$% !# e$%"#$ !&*%!%. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Do%es i" "or!ora ions8 es a es and rus s %a$ a#so dedu" his e-!ense. Nonresiden "i i@ens and &orei2n "or!ora ions on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. *. I$%*&a$'e &em"*m% &or hea# h and hos!i a#i@a ion. Residen "i i@ens8 residen a#ien indi+idua#s and nonresiden a#ien indi+idua#s ,ho are en2a2ed in rade and .usiness8 on heir 2ross in"o%es o her &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese e-!enses. Nonresiden "i i@ens and nonresiden a#ien indi+idua# en2a2ed in rade or .usiness in he 'hi#i!!ine on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" hese !re%iu%s. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" hese !re%iu%s. #. Pe&%#$a( a$+ a++"!"#$a( exem !"#$%. Residen "i i@ens8 and residen a#ien on heir 2ross in"o%es and &ro% "o%!ensa ion in"o%e are a##o,ed o dedu" hese !re%iu%s. Nonresiden "i i@ens on heir 2ross in"o%es &ro% ,i hin %a$ a#so dedu" his e-!ense. Nonresiden a#ien indi+idua#s en2a2ed in rade or .usiness in he 'hi#i!!ines are a##o,ed o dedu" hese e-e%! ions under re"i!ro"i $. Nonresiden a#ien indi+idua#s no en2a2ed in rade or .usiness in he 'hi#i!!ines are no a##o,ed o dedu" his e-!ense. 27. O&+"$a&) ex e$%e% +"%!"$,*"%-e+ /&#m 'a "!a( ex e$+"!*&e%. Ordinar$ e-!enses are hose ,hi"h are "o%%on o in"ur in he rade or .usiness o& he a-!a$er )H0LE "a!i a# e-!endi ures are hose in"urred o i%!ro+e asse s and .ene&i s &or %ore han one a-a.#e $ear. Ordinar$ e-!enses are usua##$ in"urred durin2 a a-a.#e $ear and .ene&i s su"h a-a.#e $ear. Ne"essar$ e-!enses are hose ,hi"h are a!!ro!ria e or he#!&u# o he .usiness. 38. What are the re6uisites for the deductibility of business expenses ? S566ESTED ANS)ER7 The &o##o,in2 are he re4uisi es &or dedu" i.i#i $ o& .usiness e-!enses7 a. ;o%!#ian"e ,i h he .usiness es 7 1< Mus .e ordinar$ and ne"essar$C 2< Mus .e !aid or in"urred ,i hin he a-a.#e $earC :< Mus .e !aid or in"urred in "arr$in2 on a rade or .usiness. B< Mus no .e .ri.es8 *i"*.a"*s or o her i##e2a# e-!endi ures .. ;o%!#ian"e ,i h he su.s an ia ion es . 'roo& .$ e+iden"e or re"ords o& he dedu" ions a##o,ed .$ #a, in"#udin2 "o%!#ian"e ,i h he .usiness es . 31. What are the re6uisites for the deductibility of ordinary and necessary trade$ business$ or professional expenses$ li*e expenses paid for legal and auditing services ? S566ESTED ANS)ER7 a. he e-!ense %us .e ordinar$ and ne"essar$C .. i %us ha+e .een !aid or in"urred durin2 he a-a.#e $ear de!enden u!on he %e hod o& a""oun in2 u!on he .asis o& ,hi"h he ne in"o%e is "o%!u ed. ". i %us .e su!!or ed .$ re"ei! s8 re"ords or o her !er inen !a!ers. ?Commissioner of Internal
Revenue v, Isabela cultural Corporation, 6. R. No. 1722:18 Ge.ruar$ 128 2007<

32. ;M: (orporation issuing the accrual method of accounting. In ?..B JK= 9aw 5irm and 1D( 1uditing 5irm rendered various services which were billed by these firms only during the following year ?..". Since the bills for legal and auditing services were received only in ?.." and

22

paid in the same year$ ;M: deducted the same from its ?.." gross income. ;he DI# disallowed the deduction ? Who is correct$ ;M: or DI# ? 8xplain. ANS)ER7 The B0R. TM6 shou#d ha+e dedu" ed he !ro&essiona# and #e2a# &ees in he $ear he$ ,ere in"urred in 200A and no in 200= .e"ause a he i%e he ser+i"es ,ere rendered in 200A8 here ,as a#read$ an o.#i2a ion o !a$ he%. ?Commissioner of Internal Revenue v, Isabela Cultural Corporation, 6. R. No.
1722:18 Ge.ruar$ 128 2007< NOTES7

a. A''#*$!"$, me!-#+% &or a- !ur!oses "o%!rise a se o& ru#es &or de er%inin2 ,hen and ho, o re!or in"o%e and dedu" ions. ?Commissioner of Internal Revenue v, Isabela cultural Corporation, 6. R. No. 1722:18 Ge.ruar$ 128 2007< The ,o ?2< !rin"i!a# a""oun in2 %e hods &or re"o2ni ion o& in"o%e are he ?a< a""rua# %e hodC and he ?.< "ash %e hod. .. Re'#,$"!"#$ #/ "$'#me a$+ ex e$%e% *$+e& !-e a''&*a( me!-#+ #/ a''#*$!"$, . A%oun s o& in"o%e a""rue ,here he ri2h o re"ei+e he% .e"o%es &i-ed8 ,here here is "rea ed an en&or"ea.#e #ia.i#i $. Lia.i#i ies8 are in"urred ,hen &i-ed and de er%ina.#e in na ure ,i hou re2ard o inde er%ina"$ %ere#$ o& i%e o& !a$%en . . ?Commissioner of Internal Revenue v, Isabela cultural Corporation, 6. R. No. 1722:18 Ge.ruar$ 128 2007< The a""rua# o& in"o%e and e-!ense is !er%i ed ,hen he a##(e+en s es has .een %e . ?Ibi(.< ". A((<e0e$!% !e%!. This es re4uires7 1< &i-in2 o& a ri2h o in"o%e or #ia.i#i $ o !a$C and 2< he a+ai#a.i#i $ o& he reasona.#e a""ura e de er%ina ion o& su"h in"o%e or #ia.i#i $. The es does no de%and ha he a%oun o& su"h in"o%e or #ia.i#i $ .e *no,n a.so#u e#$8 on#$ ha a a-!a$er has a his dis!osa# he in&or%a ion ne"essar$ o "o%!u e he a%oun ,i h reasona.#e a""ura"$. The a##(e+en s es is sa is&ied ,here "o%!u a ion re%ains un"er ainC i& i s .asis is un"han2ea.#e8 he es is sa is&ied ,here a "o%!u a ion %a$ .e un*no,n8 .u is no as %u"h as un*no,a.#e8 ,i hin he a-a.#e $ear. The a%oun o& #ia.i#i $ does no ha+e o .e de er%ined e-a" #$8C i %us .e de er%ined ,i h 1reasona.#e a""ura"$3 i%!#ies so%e hin2 #ess han an e-a" or "o%!#e e#$ a""ura e a%oun . The !ro!rie $ o& an a""rua# %us .e /ud2ed .$ he &a" ha a a-!a$er *ne,8 or "ou#d reasona.#$ .e e-!e" ed o ha+e *no,n8 a he "#osin2 o& i s .oo*s &or he a-a.#e $ear. A""rua# %e hod o& a""oun in2 !resen s #ar2e#$ a 4ues ion o& &a" C su"h ha he a-!a$er .ears he .urden o& !roo& o& es a.#ishin2 he a""rua# o& an i e% o& in"o%e or dedu" ion. ?Commissioner of Internal Revenue v, Isabela cultural Corporation, 6. R. No. 1722:18 Ge.ruar$ 128 2007< d. 5nder he 'a%- me!-#+ in"o%e is o .e "ons rued as in"o%e &or a- !ur!oses on#$ u!on a" ua# re"ei! o& he "ash !a$%en . 0 is a#so re&erred o as he 1"ash re"ei! s and dis.urse%en s %e hod3 .e"ause .o h he re"ei! and dis.urse%en s are "onsidered. Thus8 in"o%e is re"o2ni@ed on#$ u!on a" ua# re"ei! o& he "ash !a$%en .u no dedu" ions are a##o,ed &ro% he "ash in"o%e un#ess a" ua##$ dis.ursed hrou2h an a" ua# !a$%en in "ash. 33. The /&"$,e .e$e/"!% !ax is a &ina# ,i hho#din2 a- i%!osed on he 2rossed(u! %one ar$ +a#ue o& &rin2e .ene&i s &urnished8 2ran ed or !aid .$ he e%!#o$er o he e%!#o$ee8 e-"e! ran* and &i#e e%!#o$ees.
D1s !ar.8 Se". 2.:: ?A<8 Re+. Re2s. No. :(9>E

31. F#& *& #%e% #/ !axa!"#$9 /&"$,e .e$e/"! mea$% a$) ,##+9 %e&0"'e9 #& #!-e& .e$e/"! /*&$"%-e+ #& ,&a$!e+ "$ 'a%- #& "$ C"$+ .) a$ em (#)e& !# a$ "$+"0"+*a( em (#)ee Gex'e ! &a$C a$+ /"(e em (#)ee%H9 su"h as .u no #i%i ed o7 a. Housin2C .. E-!ense a""oun C ". Vehi"#e o& an$ *indC d. Househo#d !ersonne#8 su"h as %aid8 dri+er and o hersC e. 0n eres on #oan a #ess han %ar*e ra e o he e- en o& he di&&eren"e .e ,een he %ar*e ra e and a" ua# ra e 2ran edC &. Me%.ershi! &ees8 dues and o her e-!enses .orne .$ he e%!#o$er &or he e%!#o$ee in so"ia# and a h#e i" "#u.s or o her si%i#ar or2ani@a ionsC 2. E-!enses &or &orei2n ra+e#C h. Ho#ida$ and +a"a ion e-!ensesC i. Edu"a iona# assis an"e o he e%!#o$ee or his de!enden sC and /. Li&e or hea# h insuran"e and o her non(#i&e insuran"e !re%iu%s or si%i#ar a%oun s in e-"ess o& ,ha he #a, a##o,s . DSe". :: ?B<8 N0R; o& 1997C 1s !ar.8 Se". 2.:: ?B<8 Re+. Re2s. No. :(9>E

23

33. F&"$,e .e$e/"!% !-a! a&e $#! %*.=e'! !# !-e /&"$,e .e$e/"!% !ax: a. )hen he &rin2e .ene&i is re4uired .$ he na ure o&8 or ne"essar$ o he rade8 .usiness or !ro&ession o& he e%!#o$erC or .. )hen he &rin2e .ene&i is &or he "on+enien"e or ad+an a2e o& he e%!#o$er. DSe". :2?A<8 N0R; o&
1997C 1s !ar.8 Se". 2.:: ?A<8 Re+. Re2s. No. :(9>E

". Grin2e .ene&i s ,hi"h are au hori@ed and e-e%! ed &ro% in"o%e a- under he Ta- ;ode or under an$ s!e"ia# #a,C d. ;on ri.u ions o& he e%!#o$er &or he .ene&i o& he e%!#o$ee o re ire%en 8 insuran"e and hos!i a#i@a ion .ene&i !#ansC e. Bene&i s 2i+en o he ran* and &i#e e%!#o$ees8 ,he her 2ran ed under a "o##e" i+e .ar2ainin2 a2ree%en or no C and &. De minimis .ene&i s as de&ined in he ru#es and re2u#a ions o .e !ro%u#2a ed .$ he Se"re ar$ o& Ginan"e u!on re"o%%enda ion o& he ;o%%issioner o& 0n erna# Re+enue. D1s !ar.8 Se". :2 ?;<8 N0R; o& 1997C
Se". 2.:: ?;<8 Re+. Re2s. No. :(9>E

34. Ae minimis .e$e/"!% a&e /a'"("!"e% a$+ &"0"(e,e% ?su"h as en er ain%en 8 %edi"a# ser+i"es8 or so("a##ed 1"our es$ dis"oun s3 on !ur"hases<8 &urnished or o&&ered .$ an e%!#o$er o his e%!#o$ees. The$ are no "onsidered as "o%!ensa ion su./e" o in"o%e a- and "onse4uen #$ o ,i hho#din2 a-8 i& su"h &a"i#i ies are o&&ered or &urnished .$ he e%!#o$er %ere#$ as a %eans o& !ro%o in2 he hea# h8 2ood,i##8 "on en %en 8 or e&&i"ien"$ o& his e%!#o$ees. DSe". 2.7>81 ?A< ?:<8 Re+. Re2s. 2(9> as a%ended .$ Re+. Re2s. No.
>(2000E

35. P&e/e&&e+ %-a&e% a&e '#$%"+e&e+ 'a "!a( &e,a&+(e%% #/ !-e '#$+"!"#$% *$+e& 2-"'- %*'%-a&e% a&e "%%*e+ a$+ +"0"+e$+% #& @"$!e&e%!%A a"+ !-e&e#$ a&e $#! a((#2e+ a% +e+*'!"#$% /&#m !-e ,&#%% "$'#me #/ '#& #&a!"#$%. ?Re+enue Me%orandu% ;ir"u#ar No. 17(71< 36. Ba+ +e.!% are hose ,hi"h resu# &ro% he ,or h#essness or un"o##e" i.i#i $8 in ,ho#e or in !ar 8 o& a%oun s due he a-!a$er .$ o hers8 arisin2 &ro% %one$ #en or &ro% un"o##e" i.#e a%oun s o& in"o%e &ro% 2oods so#d or ser+i"es rendered. ?Se". 2.a8 Re+. Re2s. A(99< 13. T-e /#((#2"$, a&e &e(a!e+ a&!"e%: a. Me%.ers o& he sa%e &a%i#$. The &a%i#$ o& an indi+idua# sha## in"#ude on#$ his .ro hers and sis ers ?,he her .$ he ,ho#e or ha#&(.#ood<8 s!ouse8 an"es ors8 and #inea# des"endan sC .. An indi+idua# and a "or!ora ion %ore han &i& $ !er"en ?A0O< in +a#ue o& he ou s andin2 s o"* o& ,hi"h is o,ned8 dire" #$ or indire" #$8 .$ or &or su"h indi+idua#C ". T,o "or!ora ions %ore han &i& $ !er"en ?A0O< in +a#ue o& he ou s andin2 s o"* o& ,hi"h is o,ned8 dire" #$ or indire" #$8 .$ or &or he sa%e indi+idua#C d. A 2ran or and a &idu"iar$ o& an$ rus C or e. The &idu"iar$ o& a rus and he &idu"iar$ o& ano her rus i& he sa%e !erson is a 2ran or ,i h res!e" o ea"h rus C or &. A &idu"iar$ o& a rus and a .ene&i"iar$ o& su"h. DSe". := ?B<8 N0R; o& 1997E 37. ReB*"%"!e% /#& 0a("+ +e+*'!"#$ #/ .a+ +e.!% /&#m ,&#%% "$'#me: a. There %us .e an e-is in2 inde. edness due o he a-!a$er ,hi"h %us .e +a#id and #e2a##$ de%anda.#eC .. The sa%e %us .e "onne" ed ,i h he a-!a$ers rade8 .usiness or !ra" i"e o& !ro&essionC ". The sa%e %us no .e sus ained in a ransa" ion en ered in o .e ,een re#a ed !ar iesC d. The sa%e %us .e a" ua##$ "har2ed o&& he .oo*s o& a""oun s o& he a-!a$er as o& he end o& he a-a.#e $earC and e. The de. %us .e a" ua##$ as"er ained o .e ,or h#ess and un"o##e" i.#e durin2 he a-a.#e $earC &. The de. s are un"o##e" i.#e des!i e di#i2en e&&or e-er ed .$ he a-!a$er . DSe". :B ?E< ?1<8 N0R; o&
1997C Se". :8 Re+. Re2s. No. A(99 rei era ed in Re+. Re2s. No. 2A(2002C Philippine Refinin2 Corporation v. Court of Appeals, et al., 0A@ CRA @@;E

24

2. Mus ha+e .een re!or ed as re"ei+a.#es in he in"o%e a- re urn o& he "urren or !rior $ears. ?Se".
10:8 Re+. Re2s. No. 2< 7

18. The @!ax .e$e/"! &*(eA !osi s ha he re"o+er$ o& .ad de. s !re+ious#$ a##o,ed as dedu" ion in he !re"edin2 $ear or $ears sha## .e in"#uded as !ar o& he a-!a$ers 2ross in"o%e in he $ear o& su"h re"o+er$ o he e- en o& he in"o%e a- .ene&i o& said dedu" ion. 11. 0& in he $ear he a-!a$er "#ai%ed dedu" ion o& .ad de. s ,ri en(o&&8 he rea#i@ed a redu" ion o& he in"o%e a- due &ro% hi% on a""oun o& he said dedu" ion8 his su.se4uen re"o+er$ hereo& &ro% his de. or sha## .e rea ed as a re"ei! o& rea#i@ed a-a.#e in"o%e. ?Se". B8 Re+. Re2s. A(99< 12. 0& he said a-!a$er did no .ene&i &ro% he dedu" ion o& he said .ad de. ,ri en(o&& .e"ause i did no resu# o an$ redu" ion o& his in"o%e a- in he $ear o& su"h dedu" ion ?i.e. ,here he resu# o& his .usiness o!era ion ,as a ne #oss e+en ,i hou dedu" ion o& he .ad de. s ,ri en(o&&<8 hen his su.se4uen re"o+er$ hereo& sha## .e rea ed as a %ere re"o+er$ or a re urn o& "a!i a#8 hen"e8 no rea ed as re"ei! o& rea#i@ed a-a.#e in"o%e. ?Se". B8 Re+. Re2s. A(99< 13. De &e'"a!"#$ is he 2radua# di%inu ion in he use&u# +a#ue o& an2i.#e !ro!er $ resu# in2 &ro% ordinar$ ,ear and ear and &ro% nor%a# o.so#es"en"e. The er% is a#so a!!#ied o a%or i@a ion o& he +a#ue o& in an2i.#e asse s he use o& ,hi"h in he rade or .usiness is de&ini e#$ #i%i ed in dura ion. 11. T-e me!-#+% #/ +e &e'"a!"#$ a&e !-e /#((#2"$,: a. S rai2h #ine %e hodC .. De"#inin2 .a#an"e %e hodC ". Su% o& $ears di2i s %e hodC and d. An$ o her %e hod !res"ri.ed .$ he Se"re ar$ o& Ginan"e u!on he re"o%%enda ion o& he ;o%%issioner o& 0n erna# Re+enue7 1< A!!or ion%en o uni s o& !rodu" ionC 2< Hours o& !rodu" i+e useC :< Re+a#ua ion %e hodC and B< sin*in2 &und %e hod. 13. What are personal and additional exemptions ? S566ESTED ANS)ER7 These are he heore i"a# !ersona8 #i+in2 and &a%i#$ e-!enses o& an indi+idua# a##o,ed o .e dedu" ed &ro% he 2ross or ne in"o%e o& an indi+idua# a-!a$er. These are ar.i rar$ a%oun s ,hi"h ha+e .een "a#"u#a ed .$ our #a,%a*ers o .e rou2h#$ e4ui+a#en o he %ini%u% o& su.sis en"e8 a*in2 in o a""oun he !ersona# s a us and addi iona# 4ua#i&ied de!enden s o& he a-!a$er. The$ are &i-ed a%oun s in he sense ha he a%oun s ha+e .een !rede er%ined .$ our #a,%a*ers and un i# our #a,%a*ers %a*e ne, ad/us %en s on hese !ersona# e-e%! ions8 he a%oun s a##o,ed o .e dedu" ed .$ a a-!a$er are &i-ed as !rede er%ined .$ ;on2ress. DPansacola v. Commissioner of
Internal Revenue, 6. R. No. 1A99918 No+e%.er 1=8 200= "i in2 !a(ri2al an( Paterno v. Rafferty an( Concepcion, :> 'hi#. B1B8 B1> ?191><E

14. Ca "!a( a%%e!% sha## re&er o a## rea# !ro!er ies he#d .$ a a-!a$er8 ,he her or no "onne" ed ,i h his rade or .usiness8 and ,hi"h are no in"#uded a%on2 he rea# !ro!er ies "onsidered as ordinar$ asse s. ?Se". 2.a8 Re+. Re2s. No. 7(200:< The er% 1"a!i a# asse s3 %eans !ro!er $ he#d .$ he a-!a$er ?,he her or no "onne" ed ,i h his rade or .usiness<8 B5T DOES NOT 0N;L5DE7 a. S o"* in rade o& he a-!a$er8 or .. O her !ro!er $ o& a *ind ,hi"h ,ou#d !ro!er#$ .e in"#uded in he in+en or$ o& he a-!a$er i& on hand a he "#ose o& he a-a.#e $ear8 or ". 'ro!er $ he#d .$ he a-!a$er !ri%ari#$ &or sa#e o "us o%ers in he ordinar$ "ourse o& his rade or .usiness8 or

25

d. 'ro!er $ used in he rade or .usiness8 o& a "hara" er ,hi"h is su./e" o he a##o,an"e &or de!re"ia ionC or rea# !ro!er $ used in he rade or .usiness o& he a-!a$er . DSe". :9 ?A< ?1<8 N0R; o& 19978 "a!i a#i@ed ,ords8
nu%.erin2 and arran2e%en su!!#iedC Se". 2.a8 Re+. Re2s. No. 7(200:E

15. Exam (e% #/ 'a "!a( a%%e!%: a. S o"* and se"uri ies he#d .$ a-!a$ers o her han dea#ers in se"uri iesC .. Fe,e#r$ no used &or rade and .usinessC ". Residen ia# houses and #ands o,ned and used as su"hC d. Au o%o.i#es no used in rade and .usinessC e. 'ain in2s8 s"u#! ures8 s a%! "o##e" ions8 o./e" s o& ar s ,hi"h are no used in rade or .usinessC &. 0nheri ed #ar2e ra" s o& a2ri"u# ura# #and ,hi"h ,ere su.di+ided !ursuan o he 2o+ern%en %anda e under #and re&or%8 hen so#d o enan s . (Ro.as v. Court of $a. Appeals, etc. L10A=<>, April 0@, /B@?) 2. 1Rea# !ro!er $ used .$ an e-e%! "or!ora ion in i s e-e%! o!era ions8 su"h as a "or!ora ion in"#uded in he enu%era ion o& Se" ion :0 o& he ;ode8 sha## no .e "onsidered used &or .usiness !ur!oses8 and here&ore "onsidered as "a!i a# asse .3 ?#as sen en"e8 : rd !ar.8 Se". :..8 Re+. Re2s. No. 7(200:< h. 1Rea# !ro!er $8 ,he her sin2#e de a"hed8 o,nhouse8 or "ondo%iniu% uni 8 no used in rade or .usiness as e+iden"ed .$ a "er i&i"a ion &ro% he Baran2a$ ;hair%an or &ro% he head o& ad%inis ra ion8 in "ase o& "ondo%iniu% uni 8 o,nhouse or a!ar %en 8 and as +a#ida ed &ro% he e-is in2 a+ai#a.#e re"ords o& he Bureau o& 0n erna# Re+enue8 o,ned .$ an indi+idua# en2a2ed in .usiness8 sha## .e rea ed as "a!i a# asse .3 ?#as !ar.8 Se". :...8 Re+. Re2s. No. 7(200:< 16. O&+"$a&) a%%e!% %-a(( &e/e& !# a(( &ea( &# e&!"e% % e'"/"'a(() ex'(*+e+ /&#m !-e +e/"$"!"#$ #/ 'a "!a( a%%e!%9 na%e#$7 a. S o"* in rade o& a a-!a$er or o her rea# !ro!er $ o& a *ind ,hi"h ,ou#d !ro!er#$ .e in"#uded in he in+en or$ o& a a-!a$er i& on hand a he "#ose o& he a-a.#e $earC or .. Rea# !ro!er $ he#d .$ he a-!a$er !ri%ari#$ &or sa#e o "us o%ers in he ordinar$ "ourse o& his rade or .usinessC or ". Rea# !ro!er $ used in rade or .usiness ?i.e. .ui#din2s andIor i%!ro+e%en s<8 o& a "hara" er ,hi"h is su./e" o he a##o,an"e &or de!re"ia ionC or d. Rea# !ro!er $ used in rade or .usiness o& he a-!a$er. ?Se". 2. .8 Re+. Re2s. No. 7(200:< 17.. Exam (e% #/ #&+"$a&) a%%e!% -e$'e $#! 'a "!a( a%%e!%: a. The %a"hiner$ and e4ui!%en o& a %anu&a" urin2 "on"ern su./e" o de!re"ia ionC .. The ra" ors8 rai#ers and ru"*s o& a hau#in2 "o%!an$C ". The "ondo%iniu% .ui#din2 o,ned .$ a rea# $ "o%!an$ he uni s o& ,hi"h are &or ren or &or sa#eC d. The ,ood8 !ain 8 +arnish8 nai#s8 2#ue8 e ". ,hi"h are he ra, %a eria#s o& a &urni ure &a" or$C e. 0nheri ed !ar"e#s o& #and o& su.s an ia# areas #o"a ed in he hear o& Me ro Mani#a8 ,hi"h ,ere su.di+ided in o s%a##er #o s hen so#d on ins a##%en .asis a& er in rodu"in2 "o%!ara i+e#$ +a#ua.#e i%!ro+e%en s no &or he !ur!ose o& si%!#$ #i4uida in2 he es a e .u o %a*e he% %ore sa#ea.#e C he e%!#o$%en o& an a orne$(in(&a" &or he !ur!ose o& de+e#o!in28 %ana2in28 ad%inis erin2 and se##in2 he #o sC sa#es %ade ,i h &re4uen"$ and "on inui $C annua# sa#es in"o%e &ro% he sa#es ,as "onsidera.#eC and he heir ,as no a s ran2er o he rea# es a e .usiness. ($ua"on, 4r. v. Lin2a(, A? CRA /;=) &. 0nheri ed a2ri"u# ura# !ro!er $ i%!ro+ed .$ in rodu" ion o& 2ood roads8 "on"re e 2u ers8 draina2e and #i2h in2 s$s e%s "on+er s he !ro!er $ o an ordinar$ asse . The !ro!er $ &or%s !ar o& he s o"* in rade o& he o,ner8 hen"e an ordinar$ asse . This is so8 as he o,ner is no, en2a2ed in he .usiness o& su.di+idin2 rea# es a e. ?Calasan" v. Commissioner of Internal Revenue, /<< CRA at p. @;0) 38. Tax !&ea!me$! #/ &ea( &# e&!"e% !-a! -a0e .ee$ !&a$%/e&&e+. Rea# !ro!er ies "#assi&ied as "a!i a# or ordinar$ asse in he hands o& he se##erI rans&eror %a$ "han2e heir "hara" er in he hands o& he .u$erI rans&eree. The "#assi&i"a ion o& su"h !ro!er $ in he hands o& he .u$erI rans&eree sha## .e de er%ined in a""ordan"e ,i h he &o##o,in2 ru#es7 a. Rea# !ro!er $ rans&erred hrou2h su""ession or dona ion o he heir or donee ,ho is no en2a2ed in he rea# es a e .usiness ,i h res!e" o he rea# !ro!er $ inheri ed or dona ed8 and ,ho does no

26

su.se4uen #$ use su"h !ro!er $ in rade or .usiness8 sha## .e "onsidered as a "a!i a# asse in he hands o& he heir or donee. .. Rea# !ro!er $ re"ei+ed as di+idend .$ s o"*ho#ders ,ho are no en2a2ed in he rea# es a e .usiness and ,ho no su.se4uen #$ use su"h rea# !ro!er $ in rade or .usiness sha## .e rea ed as "a!i a# asse s in he hands o& he re"i!ien e+en i& he "or!ora ion ,hi"h de"#ared he rea# !ro!er $ di+idend is en2a2ed in rea# es a e .usiness. ". The rea# !ro!er $ re"ei+ed in an e-"han2e sha## .e rea ed as ordinar$ asse in he hands o& he rans&eree in he "ase o& a a-(&ree e-"han2e .$ a-!a$er no en2a2ed in rea# es a e .usiness o a a-!a$er ,ho is en2a2ed in rea# es a e .usiness8 or o a a-!a$er ,ho8 e+en i& no en2a2ed in rea# es a e .usiness8 ,i## use in .usiness he !ro!er $ re"ei+ed in he e-"han2e . ?Se". :.&.8 Re+. Re2s. No. 7(200:< 31. T-e !ax "% @"m #%e+ * #$ 'a "!a( ,a"$% &e%*me+ !# -a0e .ee$ &ea(">e+ /&#m !-e %a(e9 ex'-a$,e9 #& #!-e& +"% #%"!"#$ #/ &ea( &# e&!) (#'a!e+ "$ !-e P-"(" "$e%9 '(a%%"/"e+ a% 'a "!a( a%%e!%.A DSe". 2B ?D< ?1P<8 N0R; o& 1997E Re+enue Re2u#a ions No. 7(200: has de&ined rea# !ro!er $ as ha+in2 1 he sa%e %eanin2 a ri.u ed o ha er% under Ar i"#e B1A o& Re!u.#i" A" No. :>=8 o her,ise *no,n as he QCivil Co(e of the Philippines.9 ?Se". 2."8 Re+. Re2s. No. 7(200:< 32. T&a$%a'!"#$% '#0e&e+ .) !-e &e%*me+ 'a "!a( ,a"$% !ax #$ &ea( &# e&!): a. sa#e8 .. e-"han2e8 ". or o her dis!osi ion8 in"#udin2 pacto (e retro sa#es and o her &or%s o& "ondi iona# sa#es . DSe". 2B
?D< ?1<8 N0R; o& 19978 nu%.erin2 and arran2e%en su!!#iedE

d. 1Sa#e8 e-"han2e8 or o her dis!osi ion3 in"#udes a*in2 .$ he 2o+ern%en hrou2h "onde%na ion !ro"eedin2s. (Gutierre" v. Court of $a. Appeals, et al., /=/ Phil. ;/>G Gon"ales v. Court of $a. Appeals, et al., /0/
Phil. ?@/)

33. I$ 'a%e !-e m#&!,a,#& exe&'"%e% -"% &",-! #/ &e+em !"#$ ,i hin one ?1< $ear &ro% he issuan"e o& he "er i&i"a e o& sa#e8 in a &ore"#osure o& %or 2a2e sa#e o& rea# !ro!er $8 no "a!i a# 2ains a- sha## .e i%!osed .e"ause no "a!i a# 2ains has .een deri+ed .$ he %or 2a2or and no sa#e or rans&er o& rea# !ro!er $ ,as rea#i@ed. DSe". : ?1<8 Re+. Re2s. No. B(99E 31. I$ 'a%e #/ $#$<&e+em !"#$ #/ !-e &# e&!) %#(+ u!on a &ore"#osure o& %or 2a2e sa#e8 he !resu%ed "a!i a# 2ains a- sha## .e i%!osed8 .ased on he .id !ri"e o& he hi2hes .idder .u on#$ u!on he e-!ira ion o& he one $ear !eriod o& rede%! ion !ro+ided &or under Se". = o& A" No. :1:A8 as a%ended .$ A" No. B11>8 and sha## .e !aid ,i hin hir $ ?:0< da$s &ro% he e-!ira ion o& he said one($ear rede%! ion !eriod. DSe". : ?2<8 Re+. Re2s. No. B(99E 33. T-e .a%"% /#& !-e /"$a( &e%*me+ 'a "!a( ,a"$% !ax #/ %"x e& 'e$! G4IH is ,hi"he+er is he hi2her o& he a. 2ross se##in2 !ri"e8 or .. he "urren &air %ar*e +a#ue as de er%ined .e#o,7 1< he &air %ar*e +a#ue or rea# !ro!er ies #o"a ed in ea"h @one or area as de er%ined .$ he ;o%%issioner o& 0n erna# Re+enue a& er "onsu# a ion ,i h "o%!e en a!!raisers .o h &ro% he !ri+a e and !u.#i" se" orsC or 2< he &air %ar*e +a#ue as sho,n in he s"hedu#e o& +a#ues o& he 'ro+in"ia# and ;i $ Assessors. DSe". 2B ?D< ?1< in re#a ion o Se". = ?E<8 .o h o& he N0R; o& 1997E 0 does no %a er ,he her here ,as an a" ua# 2ain or #oss .e"ause he a- is a 1!resu%ed3 "a!i a# 2ains a-. 0 is he ransa" ion ha is a-ed no he 2ain. 34. H#(+"$, e&"#+ $#! a ("e+ o he a-a ion o& he !resu%ed "a!i a# 2ains deri+ed &ro% he sa#e o& rea# !ro!er $ "onsidered as "a!i a# asse s. 35. T-e !ax ("a."("!)9 #/ "$+"0"+*a( !ax a)e&% G$#! '#& #&a!eH9 "/ a$)9 #$ ,a"$% /&#m %a(e% #& #!-e& +"% #%"!"#$% #/ &ea( &# e&!)9 '(a%%"/"e+ a% 'a "!a( a%%e!%9 !# !-e ,#0e&$me$! or an$ o& i s !o#i i"a#

27

su.di+isions or a2en"ies or o 2o+ern%en o,ned or "on ro##ed "or!ora ions sha## .e de er%ined8 a he o! ion o& he a-!a$er8 .$ in"#udin2 he !ro"eeds as !ar o& 2ross in"o%e o .e su./e" ed o he a##o,a.#e dedu" ions andIor !ersona# and addi iona# e-e%! ions8 hen o he s"hedu#ar a- DSe". 2B ?D< ?1<8 in re#a ion o Se". 2B ?A< ?1<8 .o h o& he N0R; o& 1997 E or he &ina# !resu%ed "a!i a# 2ains a- o& si- !er"en ?=O<. DSe". 2B ?D<
?1< in re#a ion o Se". = ?E<8 .o h o& he N0R; o& 1997E

36. T-e %e((e& #/ !-e &ea( &# e&!)9 '(a%%"/"e+ a% a 'a "!a( a%%e!9 a)% !-e &e%*me+ 'a "!a( ,a"$% !ax ,he her7 a. an indi+idua# DSe". 2B ?D< ?1<8 N0R; o& 1997EC 1< ;i i@en8 ,he her residen or no DIbi(.EC 2< Residen a#ien DIbi(.EC :< Nonresiden a#ien en2a2ed in rade or .usiness in he 'hi#i!!ines DSe". 2A ?A< ?:< in re#a ion o
Se". 2B ?D< ?1<8 .o h o& he N0R; o& 1997EC

B< Nonresiden a#ien no en2a2ed in rade or .usiness in he 'hi#i!!ines DSe". 2A ?B< in re#a ion o
Se". 2B ?D< ?1<8 .o h o& he N0R; o& 1997EC

.. an es a e or rus ?Ibi(.<C ". a do%es i" "or!ora ion. DSe". 27 ?D< ?A<8 N0R; o& 1997E 37. Ex'e !e+ /&#m !-e a)me$! #/ !-e &e%*me+ 'a "!a( ,a"$% !ax a&e !-#%e &e%*me+ !# -a0e .ee$ &ea(">e+ /&#m !-e +"% #%"!"#$ .) $a!*&a( e&%#$% #/ !-e"& &"$'" a( (a'e #/ &e%"+e$'e a. he !ro"eeds o& ,hi"h is &u##$ u i#i@ed in a"4uirin2 or "ons ru" in2 a ne, !rin"i!a# residen"eC .. ,i hin ei2h een ?1>< "a#endar %on hs &ro% he da e o& sa#e or dis!osi ion ". he B0R ;o%%issioner sha## ha+e .een du#$ no i&ied .$ he a-!a$er ,i hin hir $ ?:0< da$s &ro% he da e o& sa#e or dis!osi ion hrou2h a !res"ri.ed re urn o& his in en ion o a+ai# o& he a- e-e%! ionC and d. he said a- e-e%! ion "an on#$ .e a+ai#ed o& on"e e+er$ en ?10< $ears. DSe". 2B ?D< ?2<8 N0R; o&
1997E

48. 1 final withholding tax /5W;0 of ?.@ on passive income is collected from the interest income of ban*s. It li*ewise has to pay a B@ gross receipts tax /:#;0 on gross receipts which includes their passive income. JK= Dan* now claims that the :#; should be computed after deducting the ?.@ passive income tax on the ground that the monies or receipts that do not redound to the benefit of the taxpayer are not part of its gross receipts. ;o impose the :#; without deducting the ?.@ would be double taxation. It also contends that since the ?.@ was withheld at source and is paid directly to the government$ then the ban* has not received the same. ;hus$ it should not be included in the gross receipts subject to tax. #esolve the issue of whether the ?.@ 5W; on the ban*Is passive income form part of the taxable gross receipts for the purpose of computing the B@ :#;. S566ESTED ANS)ER7 No. The ,ord 12ross3 %us .e used in i s !#ain and ordinar$ %eanin2. 0 is de&ined as 1,ho#e8 en ire8 o a#8 ,i hou dedu" ion.3 Thus8 he 20O shou#d no .e dedu" ed &or !ur!oses o& "o%!u in2 he AO 2ross re"ei! s a-. Re"ei! %a$ ei her .e a" ua# or "ons ru" i+e. There is !rior o he ,i hho#din2 a "ons ru" i+e re"ei! o& he in eres 8 o her,ise here ,ou#d .e no in eres &ro% ,here he 20O a- %a$ .e ,i hhe#d &ro%. There is no dou.#e a-a ion .e"ause here are ,o *inds o& a-es8 he 20O G)T ,hi"h is an in"o%e a- and he AO 6RT ,hi"h is a !er"en a2e a-. ?Commissioner of Internal Revenue v. Citytrust Investment Phils.,
Inc., 6. R. No. 1:97>=8 Se! e%.er 278 200= and "o%!anion "ase<

NOTES AND ;OMMENTS7 a. (ommissioner of Internal #evenue v. Manila +oc*ey (lub$ 186 P-"(. 621 G1748H "% +"//e&e$! /&#m (ommissioner of Internal #evenue v. (itytrust Investment %hils.$ Inc.$ G. R. N#. 1375649 Se !em.e& 259 2884 a$+ '#m a$"#$ 'a%e. Mani#a Fo"*e$ ;#u. !aid a%use%en a-es on i s "o%%ission in he
o a# a%oun o& .e s "a##ed ,a2er &unds and did no in"#ude he ARO o& he &und ,hi"h ,en o he Board on Ra"es and o he o,ners o& horses and /o"*e$s. The Su!re%e ;our ru#es ha he 2ross re"ei! s o& Mani#a Fo"*e$ ;#u. shou#d no

28 in"#ude he ARO .e"ause a# hou2h de#i+ered o he ;#u.8 su"h %one$ has .een es!e"ia##$ ear%ar*ed .$ #a, or re2u#a ion &or o her !ersons. Mani#a Fo"*e$ does no a!!#$ .e"ause ,ha ha!!ened here ,as ear%ar*in2 and no ,i hho#din2. Ear%ar*in2 is no he sa%e as ,i hho#din2. A%oun s ear%ar*ed do no &or% !ar o& 2ross re"ei! s .e"ause hese are .$ #a, or re2u#a ion reser+ed &or so%e !erson o her han he a-!a$er8 a# hou2h de#i+ered or re"ei+ed. On he "on rar$8 a%oun s ,i hhe#d &or% !ar o& 2ross re"ei! s .e"ause here are in "ons ru" i+e !ossession and no su./e" o an$ reser+a ion8 he ,i hho#din2 a2en .ein2 %ere#$ a "ondui in he "o##e" ion !ro"ess. ? Commissioner of Internal Revenue v. Citytrust Investment Phils., Inc., 6. R. No. 1:97>=8 Se! e%.er 278 200= and "o%!anion "ase<

.. T-e&e a&e +"%!"$'!"#$% .e!2ee$ !-e 28I FWT #$ "$!e&e%! "$'#me a$+ !-e 3I GRT #$ .a$C%. S"$'e !-e !2# a&e +"//e&e$! !-e&e "% $# +#*.(e !axa!"#$.
1< G)T is an in"o%e a- under Ti #e 00 o& he ;ode ?Ta- on 0n"o%e< ,hi#e 6RT is a !er"en a2e aunder Ti #e V o& he Ta- ;ode. 2< 'er"en a2e a- is a na iona# a- %easured .$ a "er ain !er"en a2e o& he 2ross se##in2 !ri"e or 2ross +a#ue in %one$ o& 2oods so#d8 .ar ered or i%!or edC or o& he 2ross re"ei! s or earnin2s deri+ed .$ an$ !erson en2a2ed in he sa#e o& ser+i"es ,hi#e an in"o%e a- is a na iona# a- i%!osed on he ne or 2ross in"o%e rea#i@ed in a a-a.#e $ear. :< 0n"o%e a- is su./e" o ,i hho#din2 ,hi#e !er"en a2e is no . ? Commissioner of Internal Revenue v. Citytrust Investment Phils., Inc., 6. R. No. 1:97>=8 Se! e%.er 278 200= and "o%!anion "ase<

41. MD( was incorporated in !" and engaged in commercial ban*ing operations since !,). En May ??$ !,)$ it ceased operations that year by reason of insolvency and its assets and liabilities were placed under the charge of a government<appointed receiver. En +une ?H$ !!!$ the DS% authorized MD( to operate as a thrift ban*. In ?...$ It filed its tax return for the year !!! paying the amount of %HH million computed in accordance with the minimum corporate income tax /M(I;0. It sought the DI#Is ruling on whether it is entitled to the four /-0 year grace period for paying on the basis of M(I; rec*oned from !!!. DI# then ruled that cessation of business activities as a result of being placed under involuntary receivership may be an economic reason for suspending the imposition of the M(I;. 1s a result of the ruling MD( filed an application for refund of the %HH million. Aue to the DI#Is inaction$ MD( filed a petition for review with the (;1. ;he (;1 denied the petition on the ground that MD( is not a newly organized corporation. In a volte facie the DI# now maintains that MD( should pay the M(I; beginning +anuary $ !!, as it did not close its business operations in !,) but merely suspended the same. 8ven if placed under receivership$ the corporate existence was never affected. ;hus$ it falls under the category of an existing corporation recommencing its ban*ing operations. Should the refund be granted ? S566ESTED ANS)ER7 Kes. The M;0T sha## .e i%!osed .e2innin2 in he &our h a-a.#e $ear i%%edia e#$ &o##o,in2 he $ear in ,hi"h he "or!ora ion "o%%en"ed i s .usiness o!era ions. DSe". 27 ?E< ?1<8
N0R; o& 1997E

The da e o& "o%%en"e%en o& o!era ions o& a hri& .an* is he da e i ,as re2is ered ,i h he SE; or he da e ,hen he ;er i&i"a e o& Au hori $ o O!era e ,as issued o i .$ he Mone ar$ Board8 ,hi"he+er "o%es #a er. ?Se". =8 Re+. Re2s. No. B(9A< ;#ear#$ hen. MB; is en i #ed o he 2ra"e !eriod o& &our $ears &ro% Fune 2:8 1999 ,hen i ,as au hori@ed .$ he BS' o o!era e as a hri& .an* .e&ore he M;0T shou#d .e a!!#ied o i . ?!anila 'an,in2
Corporation v. Commissioner of Internal Revenue, 6. R. No. 1=>11>8 Au2us 2=8 200=<

e&"#+ . 1A %ini%u% "or!ora e in"o%e a- o& ,o !er"en ?2O< o& he 2ross in"o%e as o& he end o& he a-a.#e $ear8 as de&ined herein8 is here.$ i%!osed on a "or!ora ion a-a.#e under his Ti #e8 .e2innin2 on he &our h a-a.#e $ear i%%edia e#$ &o##o,in2 he $ear in ,hi"h su"h "or!ora ion "o%%en"ed i s .usiness o!era ions8 ,hen he %ini%u% "or!ora e in"o%e a- is 2rea er han he a- "o%!u ed under Su.se" ion ?A< o& his se" ion &or he a-a.#e $ear.3 DSe". 27 ?E< ?1<8 N0R; o& 1997E .. Pe&"#+ 2-e$ a '#& #&a!"#$ .e'#me% %*.=e'! !# !-e ;CIT. 1?A< S!e"i&i" ru#es &or de er%inin2 he !eriod ,hen a "or!ora ion .e"o%es su./e" o he M;0T ?%ini%u% "or!ora e in"o%e a-< (

NOTES AND ;OMMENTS7 a. T-e ;CIT a$+ 2-e$ %-#*(+ .e "m #%e+ a$+ !-e /#*& G1H )ea& ,&a'e

29 Gor !ur!oses o& he M;0T8 he a-a.#e $ear in ,hi"h .usiness o!era ions "o%%en"ed sha## .e he $ear in ,hi"h he do%es i" "or!ora ion re2is ered ,i h he Bureau o& 0n erna# Re+enue ?B0R<. Gir%s ,hi"h ,ere re2is ered ,i h B0R in 199B and ear#ier $ears sha## .e "o+ered .$ he M;0T .e2innin2 Fanuar$ 18 199>. - - -3 ?Re+. Re2s. No. 9(9>< !anila 'an,in2 Corporation v. Commissioner of Internal Revenue, 6. R. No. 1=>11>8 Au2us 2=8 200= did no a!!#$ Re+. Re2s. No. 9(9> .e"ause Re+. Re2s. No. B(9A s!e"i&i"a##$ re&ers o hri& .an*s.< ". P*& #%e #/ !-e /#*& G1H )ea& ,&a'e e&"#+. The in en o& ;on2ress re#a i+e o he M;0T is o 2ran a &our ?B< H $ear sus!ension o& a- !a$%en o ne,#$ or2ani@ed "or!ora ions. ;or!ora ions s i## s ar in2 heir .usiness o!era ions ha+e o s a.i#i@e heir +en ure in order o o. ain a s ron2ho#d in he indus r$. 0 does no "o%e as a sur!rise hen ,hen %an$ "o%!anies re!or ed #osses in heir ini ia# $ears o& o!era ions. Thus8 in order o a##o, ne, "or!ora ions o 2ro, and de+e#o! a he ini ia# s a2es o& heir o!era ions8 he #a,%a*in2 .od$ sa, he need o !ro+ide a 2ra"e !eriod o& &our $ears &ro% heir re2is ra ion .e&ore he$ !a$ heir %ini%u% "or!ora e in"o%e a-. ?!anila 'an,in2 Corporation v. Commissioner of Internal Revenue, 6. R. No. 1=>11>8 Au2us 2=8 200=<

TRANSFER TAXES
1. The ,&#%% e%!a!e /#& *& #%e% #/ e%!a!e !axa!"#$ #/ F"(" "$# '"!">e$%9 2-e!-e& &e%"+e$!% #& $#$&e%"+e$!% a$+ &e%"+e$! a("e$ in"#udes he +a#ue a he i%e o& his dea h o& a## his rea# !ro!er $8 ,here+er si ua ed8 !ersona# !ro!er $8 ,he her an2i.#e8 in an2i.#e or %i-ed8 ,here+er si ua ed8 o he e- en o& he in eres e-is in2 herein o& he de"eden a he i%e o& his dea h. 2. The ,&#%% e%!a!e /#& *& #%e% #/ e%!a!e !axa!"#$ #/ $#$<&e%"+e$! a("e$% in"#udes he +a#ue a he i%e o& his dea h o& a## he rea# !ro!er $ si ua ed in he 'hi#i!!ines8 !ersona# !ro!er $ ,he her an2i.#e8 in an2i.#e or %i-ed8 si ua ed in he 'hi#i!!ines8 o he e- en o& he in eres herein o& he de"eden a he i%e o& his dea h. 3. I!em% +e+*'!".(e /&#m !-e ,&#%% e%!a!e #/ a &e%"+e$! #& $#$&e%"+e$! F"(" "$# +e'e+e$! #& &e%"+e$! a("e$ +e'e+e$!: GEPTTS ;ANH a. E-!enses8 #osses8 "#ai%s8 inde. edness and a-esC .. 'ro!er $ !re+ious#$ a-edC ". Trans&ers &or !u.#i" useC d. The Ga%i#$ Ho%e u! o a +a#ue no e-"eedin2 '1 %i##ionC e. S andard dedu" ion o& '1 %i##ionC &. Medi"a# e-!enses no e-"eedin2 'A008000.00C 2. A%oun o& e-e%! re ire%en re"ei+ed .$ he heirs under Re!. A" Mo. B917C h. Ne share o& he sur+i+in2 s!ouse in he "on/u2a# !ar nershi!. 1. No e+er$ in er(+i+os rans&er in an i"i!a ion o& dea h is "onsidered 1 rans&er in "on e%!#a ion o& dea h3 &or !ur!oses o& de er%inin2 he !ro!er $ o .e in"#uded in he 2ross es a e o& a de"eden . 3. To .e "onsidered a @!&a$%/e& "$ '#$!em (a!"#$ #/ +ea!- 3 1 he de"eden has a an$ i%e %ade a rans&er8 .$ rus or o her,ise8 in "on e%!#a ion o& or in ended o a*e e&&e" in !ossession or en/o$%en a or a& er dea h3 DSe". >A ?B<8 N0R; o& 1997E. 0 is "#ear ha he !ro!er ies are no rans&erred in "on e%!#a ion o& or in ended o a*e e&&e" in !ossession or en/o$%en a or a& er dea h. 4. There is no rans&er in "on e%!#a ion o& dea h i& here is no sho,in2 he rans&eror 1re ained &or his #i&e or &or an$ !eriod ,hi"h does no in &a" end .e&ore his dea h7 ?1< he !ossession or en/o$%en o&8 or he ri2h o he in"o%e &ro% he !ro!er $8 or ?2< he ri2h 8 ei her a#one or in "on/un" ion ,i h an$ !erson8 o desi2na e he !erson ,ho sha## !ossess or en/o$ he !ro!er $ or he in"o%e here&ro%.3 DSe". >A ?B<8 N0R; o&
1997E

5. The a!!ro+a# o& he "our si in2 in !ro.a e8 or as a se #e%en ri.una# o+er he es a e o& he de"eased is no a %anda or$ re4uire%en &or he "o##e" ion o& he es a e. The !ro.a e "our is de er%inin2 issues ,hi"h are no a2ains he !ro!er $ o& he de"eden 8 or a "#ai% a2ains he es a e as su"h8 .u is

30

a2ains he in eres or !ro!er $ ri2h ,hi"h he heir8 #e2a ee8 de+isee8 e ". has in he !ro!er $ &or%er#$ he#d .$ he de"eden . The no i"es o& #e+$ ,ere re2u#ar#$ issued ,i hin he !res"ri! i+e !eriod. The a- assess%en ha+in2 .e"o%e &ina#8 e-e"u or$ and en&or"ea.#e8 he sa%e "an no #on2er .e "on es ed .$ %eans o& a dis2uised !ro es . (!arcos, II v. Court of Appeals, et al., 0;> CRA <;) 6. ne 2i& s. )hen he donee or .ene&i"iar$ is a s ran2er8 he a- !a$a.#e .$ he donor sha## .e :0O o& he

7. F#& *& #%e% #/ !-e +#$#&?% !ax9 a %!&a$,e& is !erson ,ho is no a7 1?1< Bro her8 sis er ?,he her .$ ,ho#e or ha#&(.#ood<8 s!ouse8 an"es or and #inea# des"endan C or ?2< Re#a i+e .$ "onsan2uini $ in he "o##a era# #ine ,i hin he &our h de2ree o& re#a ionshi! .3 DSe". 99 ?B<8
N0R; o& 1997E

18. The a%oun o& '1008000.00 dona ed durin2 a "a#endar $ear is e-e%! &ro% donors a-. DSe". 99
?A<8 N0R; o& 1997E

11. The dona ion o& a !ri@e o an a h#e e in an in erna iona# s!or s ourna%en he#d a.road and san" ioned .$ he na iona# s!or s asso"ia ion is e-e%! &ro% donors a-. ?Se". 18 Re!. A" No. 7AB9< 12. A non(residen "i i@en or a#ien is e-e%! on#$ &ro% he !a$%en o& donors a-es i& his 2i& s are %ade o or &or he use o& he Na iona# 6o+ern%en or an$ en i $ "rea ed .$ an$ o& i s a2en"ies ,hi"h is no "ondu" ed &or !ro&i 8 or o an$ !o#i i"a# su.di+ision o& he said 6o+ern%en . 13. A non(residen "i i@en or a#ien is su./e" o donors a- ,here he 2i& is no %ade in &a+or o& an edu"a iona# andIor "hari a.#e8 re#i2ious8 "u# ura# or so"ia# ,e#&are "or!ora ion8 ins i u ion8 &ounda ion8 rus or !hi#an hro!i" or2ani@a ion or resear"h ins i u ion or "or!ora ion ,hi"h does no use %ore han :0O o& he dona ion &or ad%inis ra ion !ur!oses. 11. P#("!"'a( '#$!&".*!"#$% a&e exem ! i& re2is ered ,i h he ;OMELE; irres!e" i+e o& ,he her dona ed o a !o#i i"a# !ar $ or indi+idua#.

RETURNS AND

WITHHOLDING

1. I$'#me !ax &e!*&$% .ein2 *.("' +#'*me$!%8 un i# "on ro+er ed .$ "o%!e en e+iden"e8 are "o%!e en e+iden"e8 are prima facie "orre" ,i h res!e" o he en ries herein. (Ropali $ra(in2 v. :LRC, et al.,
29= S;RA :098 :17<

2. 1;a&&"e+ "$+"0"+*a(%9 2-e!-e& '"!">e$%9 &e%"+e$! #& $#$<&e%"+e$! a("e$%9 2-# +# $#! +e&"0e "$'#me *&e() /&#m '#m e$%a!"#$ %-a(( /"(e a &e!*&$ /#& !-e !axa.(e )ea& !# "$'(*+e !-e "$'#me #/ .#!% #*%e%9 .u ,here i is i%!ra" i"a.#e &or he s!ouses o &i#e one re urn8 ea"h s!ouse %a$ &i#e a se!ara e re urn o& in"o%e .u he re urns so &i#ed sha## .e "onso#ida ed .$ he Bureau &or !ur!oses o& +eri&i"a ion.3
DSe" ion A1 ?D< o& he N0R; o& 1997E

3. I$+"0"+*a(% &eB*"&e+ !# /"(e a$ "$'#me !ax &e!*&$. a. E+er$ Gi#i!ino "i i@en residin2 in he 'hi#i!!inesC .. E+er$ Gi#i!ino "i i@en residin2 ou side he 'hi#i!!ines on his in"o%e &ro% sour"es ,i hin he 'hi#i!!inesC ". E+er$ a#ien residin2 in he 'hi#i!!ines on in"o%e deri+ed &ro% sour"es ,i hin he 'hi#i!!inesC and d. E+er$ nonresiden a#ien en2a2ed in rade or .usiness or in he e-er"ise o& !ro&ession in he 'hi#i!!ines. DSe". A1 ?A< ?1<8 N0R; o& 1997E 1. I$+"0"+*a(% 2-# a&e $#! &eB*"&e+ !# /"(e a$ "$'#me !ax &e!*&$.

31

a. An indi+idua# ,hose 2ross in"o%e does no e-"eed his o a# !ersona# and addi iona# e-e%! ions &or de!enden s8 Provi(e(, Tha a "i i@en o& he 'hi#i!!ines and an$ a#ien indi+idua# en2a2ed in .usiness or !ra" i"e o& !ro&ession ,i hin he 'hi#i!!ines sha## &i#e an in"o%e a- re urn re2ard#ess o& he a%oun o& 2ross in"o%eC .. An indi+idua# ,i h res!e" o !ure "o%!ensa ion in"o%e &or ser+i"es in ,ha e+er &or% !aid8 in"#udin28 .u no #i%i ed o &ees8 sa#aries8 ,a2es8 "o%%issions8 and si%i#ar i e%s8 deri+ed &ro% sour"es ,i hin he 'hi#i!!ines8 he in"o%e a- on ,hi"h has .een "orre" #$ ,i hhe#d8 Provi(e(, Tha an indi+idua# deri+in2 "o%!ensa ion "on"urren #$ &ro% ,o or %ore e%!#o$ers a an$ i%e durin2 he a-a.#e $ear sha## &i#e an in"o%e a- re urn7 Provi(e(, further, Tha an indi+idua# ,hose !ure "o%!ensa ion in"o%e deri+ed &ro% sour"es ,i hin he 'hi#i!!ines e-"eeds Si- $ housand !esos ?'=08000.00<8 sha## a#so &i#e an in"o%e are urnC ". An indi+idua# ,hose so#e in"o%e has .een su./e" o &ina# ,i hho#din2 a-C d. An indi+idua# ,ho is e-e%! &ro% in"o%e a- !ursuan o he !ro+isions o& he N0R; o& 19978 and o her #a,s8 2enera# or s!e"ia#. DSe". A1 ?A< ?2<8 N0R; o& 1997E 3. A$ "$+"0"+*a( 2-# "% $#! &eB*"&e+ !# /"(e a$ "$'#me !ax &e!*&$ ma) $e0e&!-e(e%% .e &eB*"&e+ !# /"(e a$ "$/#&ma!"#$ &e!*&$. DSe". A1 ?A< ?:<8 N0R; o& 1997E 4. A '#& #&a!"#$ /"(e% "!% "$'#me !ax &e!*&$ a$+ a)% "!% "$'#me !ax /#*& G1H !"me% +*&"$, a %"$,(e !axa.(e )ea&. Suar er#$ re urns are re4uired o .e &i#ed &or he &irs hree 4uar ers8 hen a &ina# ad/us %en re urn is &i#ed "o+erin2 he o a# a-a.#e in"o%e &or he ,ho#e a-a.#e $ear8 .e i "a#endar or &is"a#. 5. A$ "$+"0"+*a( ea&$"$, /&#m !-e &a'!"'e #/ -"% &#/e%%"#$ #& 2-# e$,a,e% "$ !&a+e #& .*%"$e%% /"(e% -"% "$'#me !ax &e!*&$ a$+ a)% -"% "$'#me !ax /#*& G1H !"me% +*&"$, a %"$,(e !axa.(e )ea&. Suar er#$ re urns are re4uired o .e &i#ed &or he &irs hree 4uar ers8 hen an annua# in"o%e a- re urn is &i#ed "o+erin2 he o a# a-a.#e in"o%e &or he ,ho#e o& he !re+ious "a#endar $ear. 6. T-e *& #%e #/ !-e a.#0e /#*& G1H !"me% a )ea& &eB*"&eme$! "% !# maCe a0a"(a.(e %*//"'"e$! /*$+% !# mee! !-e .*+,e!a&) &eB*"&eme$!%9 on a 4uar er#$ .asis here.$ in"reasin2 2o+ern%en #i4uidi $. 0 a#so eases hardshi!s on he !ar o& indi+idua#s ,ho are re4uired o %a*e his &our i%e re urn. Thus8 he a-!a$er does no ha+e o raise #ar2e su%s o& %one$ in order o !a$ he a-. 7. A$ "$+"0"+*a( ea&$"$, *&e() '#m e$%a!"#$ "$'#me /"(e% #$() #$e a$$*a( "$'#me !ax &e!*&$ "o+erin2 he o a# a-a.#e "o%!ensa ion in"o%e &or he ,ho#e o& he !re+ious "a#endar $ear. 18. U$+e& !-e 2"!--#(+"$, !ax %)%!em9 !axe% "m #%e+ #& &e%'&".e+ .) !-e NIRC #/ 1775 a&e !# .e +e+*'!e+ a$+ 2"!--e(+ .) !-e a)#&% /&#m a)me$!% ma+e !# a)ee% /#& !-e /#&me& !# a) +"&e'!() !# !-e B*&ea* #/ I$!e&$a( Re0e$*e. 0 is a#so *no,n as "o##e" ion o& he a- a sour"e. 11. A 2"!--#(+"$, a,e$! "% ex ("'"!() ma+e e&%#$a(() ("a.(e *$+e& !-e Tax C#+e /#& !-e a)me$! #/ !-e !ax &eB*"&e+ !# .e 2"!--e(+9 in order o "o%!e# he ,i hho#din2 a2en o ,i hho#d he aunder an$ and a## "ir"u%s an"es. 0n e&&e" 8 he res!onsi.i#i $ &or he "o##e" ion o& he a- as ,e## as he !a$%en hereo& is "on"en ra ed u!on he !erson o+er ,ho% he 6o+ern%en has /urisdi" ion. ?Gi#i!inas S$n he i" Gi.er ;or!ora ion +. ;our o& A!!ea#s8 e a#.8 6.R. Nos. 11>B9> T 12B:778 O" o.er 128 1999< The s$s e% &a"i#i a es a- "o##e" ion. 12. The ,o ?2< $!es o& ,i hho#din2 a sour"e are he 1< &ina# ,i hho#din2 a-C and 2< "redi a.#e ,i hho#din2 a-. 13. U$+e& !-e /"$a( 2"!--#(+"$, !ax %)%!em !-e am#*$! #/ "$'#me !ax 2"!--e(+ .) !-e 2"!--#(+"$, a,e$! "% '#$%!"!*!e+ a% a /*(( a$+ /"$a( a)me$! #/ !-e "$'#me +*e /&#m !-e a)ee #$ !-e %a"+ "$'#me .
D1s sen en"e8 1s !ar.8 Se". 2.A7 ?A<8 Re+. Re2s. No. 2(9>E

32

The #ia.i#i $ &or !a$%en o& he a- res s !ri%ari#$ on he !a$or or he ,i hho#din2 a2en .. Thus8 in "ase o& his &ai#ure o ,i hho#d he a- or in "ase o& under ,i hho#din28 he de&i"ien"$ a- sha## .e "o##e" ed &ro% he !a$or ,i hho#din2 a2en . The !a$ee is no re4uired o &i#e an in"o%e a- re urn &or he !ar i"u#ar in"o%e. 11. U$+e& !-e '&e+"!a.(e 2"!--#(+"$, !ax %)%!em9 !axe% 2"!--e(+ #$ 'e&!a"$ "$'#me a)me$!% a&e "$!e$+e+ !# eB*a( #& a! (ea%! a &#x"ma!e !-e !ax +*e /&#m !-e a)ee #$ !-e %a"+ "$'#me. The in"o%e re"i!ien is s i## re4uired o &i#e an in"o%e a- re urn andIor !a$ he di&&eren"e .e ,een he a,i hhe#d and he a- due on he in"o%e. D1s and 2nd sen en"es8 Se". 2A7?B<8 Re+. Re2s. No. 2(9>E 13. T-e !2# C"$+% #/ '&e+"!a.(e 2"!--#(+"$, !axe% are ?a< a-es ,i hhe#d on in"o%e !a$%en s "o+ered .$ he e-!anded ,i hho#din2 a-C and ?.< a-es ,i hhe#d on "o%!ensa ion in"o%e. 14. Pa)me$!% !# !-e /#((#2"$, a&e exem ! /&#m !-e &eB*"&eme$! #/ 2"!--#(+"$, #& 2-e$ $# 2"!--#(+"$, !axe% &eB*"&e+: a. Na iona# 6o+ern%en and i s ins ru%en a#i ies in"#udin2 !ro+in"ia#8 "i $8 or %uni"i!a# 2o+ern%en sC .. 'ersons en/o$in2 e-e%! ion &ro% !a$%en o& in"o%e a-es !ursuan o he !ro+isions o& an$ #a,8 2enera# or s!e"ia#8 su"h as .u no #i%i ed o he &o##o,in27 1< Sa#es o& rea# !ro!er $ .$ a "or!ora ion ,hi"h is re2is ered ,i h and "er i&ied .$ he HL5RB or H5D;; as en2a2ed in so"ia#i@ed housin2 !ro/e" ,here he se##in2 !ri"e o& he house and #o or on#$ he #o does no e-"eed '1>08000.00 in Me ro Mani#a and o her hi2h#$ ur.ani@ed areas and '1A08000.00 in o her areas or su"h ad/us ed a%oun o& se##in2 !ri"e &or so"ia#i@ed housin2 as %a$ #a er .e de er%ined and ado! ed .$ he HL5RBC 2< ;or!ora ions re2is ered ,i h he Board o& 0n+es %en s and en/o$in2 e-e%! ions &ro% in"o%e under he O%ni.us 0n+es %en ;ode o& 1997C :< ;or!ora ions e-e%! &ro% in"o%e a- under Se". :08 o& he Ta- ;ode8 #i*e he SSS8 6S0S8 he ';SO8 e ". Ho,e+er8 in"o%e !a$%en s arisin2 &ro% an$ a" i+i $ ,hi"h is "ondu" ed &or !ro&i or in"o%e deri+ed &ro% rea# or !ersona# !ro!er $ sha## .e su./e" o a ,i hho#din2 a- . ?Se". A7.A8
Re+. Re2s. No. 2(9><

15. 21I erroneously withheld the amount of B@ from the selling price of boo*s authored by 2W7 when the correct rate should have been .@ only. Since 2W7 is out of the country$ 217 applied for a refund of the excess withholding of B@. May 217 properly apply for the refund ? 8xplain. S566ESTED ANS)ER7 Kes. 0n a!!#i"a ions &or re&und8 he ,i hho#din2 a2en is a a-!a$er .e"ause i& he does no !a$ he a- sha## .e "o##e" ed &ro% hi%. (Commissioner of Internal Revenue v. Procter # Gamble Philippine !anufacturin2 Corporation, 20B S;RA :778 :>:(:>=<8 NOTES AND ;OMMENTS7 a. F#& !ax am$e%!) *& #%e%9 !-e 2"!--#(+"$, a,e$! "% $#! a !ax a)e& .e"ause he is %ade o !a$
he a- ,here he &ai#s o ,i hho#d as a !ena# $ and no ha he a- is due &ro% hi%. ? Commissioner of Internal Revenue v. Court of Appeals, et al.8 6.R. No. 10>A7=8 Fanuar$ 208 19998 he Anscor case)

PENALTIES9 INTERESTS AND SURCHARGES

1. What are surtaxes or surcharges ? S566ESTED ANS)ER7 Sur a-es or sur"har2es8 a#so *no,n as he "i+i# !ena# ies8 are he a%oun s i%!osed in addi ion o he a- re4uired. The$ are in he na ure o& !ena# ies and sha## .e "o##e" ed a he sa%e i%e8 in he sa%e %anner8 and as !ar o& he a-. DSe".2B> ?A<8 N0R; o& 1997E 2. What are the two /?0 *inds of civil penalties ? S566ESTED ANS)ER7 a. he 2AO sur"har2e &or #a e &i#in2 or #a e !a$%en DSe". 2B> ?A<8 N0R; o& 1997E ?a#so *no,n as he de#in4uen"$ sur"har2e<8 and .. he A0O ,i##&u# ne2#e" or &raud sur"har2e . DSe". 2B> ?B<8 Ibi(.E

33

3. Aefine deficiency income tax. S566ESTED ANS)ER7 De&i"ien"$ in"o%e a- is he a%oun .$ ,hi"h he a- i%!osed under he N0R; o& 1997 e-"eeds he a%oun sho,n as he a- due .$ he a-!a$er u!on his re urn. DSe". A= ?B< ?1<8
N0R; o& 1997E

1. De/"'"e$') "$!e&e%!9 +e/"$e+. The in eres assessed and "o##e" ed on an$ un!aid a%oun o& a- a he ra e o& 20O !er annu% or su"h hi2her ra e as %a$ .e !res"ri.ed .$ re2u#a ions8 &ro% he da e !res"ri.ed &or !a$%en un i# he a%oun is &u##$ !aid . DSe". 2B9 ?A< ?B<8 N0R; o& 1997E 3. De("$B*e$') "$!e&e%!9 +e/"$e+. The in eres assessed and "o##e" ed on he un!aid a%oun un i# &u##$ !aid ,here here is &ai#ure on he !ar o& he a-!a$er o !a$ he a%oun die on an$ re urn re4uired o .e &i#edC or he a%oun o& he a- due &or ,hi"h no re urn is re4uiredC or a de&i"ien"$ a-8 or an$ sur"har2e or in eres hereon8 on he da e a!!earin2 in he no i"e and de%and .$ he ;o%%issioner o& 0n erna# Re+enue. DSe".2B9 ?"<8 N0R; o& 1997E 4. 1fter resolving the issues the DI# (ommissioner reduced the assessment. Was it proper to impose delin6uency interest despite the reduction of the assessment ? Why ? ANS)ER7 Kes. The in en ion o& he #a, is o dis"oura2e de#a$ in he !a$%en o& a-es due o he S a e and in his sense he sur"har2e and in eres "har2ed are no !ena# .u "o%!ensa or$ in na ure H he$ are "o%!ensa ion o he S a e &or he de#a$ in !a$%en 8 or &or he "on"o%i an use o& he &unds .$ he a-!a$er .e$ond he da e he is su!!osed o ha+e !aid he% o he S a e. ?'an, of the Philippine Islan(s v.
Commissioner of Internal Revenue, 6. R. No. 1:70028 Fu#$ 278 200=<

5. C#m &#m"%e e$a(!)9 +e/"$e+. The a%oun a2reed u!on .e ,een he a-!a$er and he 6o+ern%en o .e !aid as a !ena# $ in "ases o& a "o%!ro%ise. 6. 1s a result of divergent rulings on whether it is subject to tax or not$ the taxpayer was not able to pay his taxes on time. Imposed surcharges and interests for such delay$ the taxpayer not invo*es good faith with the DI# countering by saying that good faith is not a valid defense for violation of a special law. 5urthermore$ the DI# further raises the defense that the government is not bound by the errors of its agents. Who is correct ? ANS)ER7 The a-!a$er is "orre" . The se #ed ru#e is ha 2ood &ai h and hones .e#ie& ha one is no su./e" o a- on he .asis o& !re+ious in er!re a ion o& 2o+ern%en a2en"ies as*ed o i%!#e%en he a-8 are su&&i"ien /us i&i"a ion o de#e e he i%!osi ion o& sur"har2es. ?!ichel 4. Lhuillier Pa-nshop, Inc. v.
Commissioner of Internal Revenue, 6. R. No. 1==7>=8 Se! e%.er 118 200=<

TARIFF AND CUSTO;S CODE

1. When does importation begin$ and why is it important to *now whether importation has already begun or not ? S566ESTED ANS)ER7 0%!or a ion .e2ins ,hen he "on+e$in2 +esse# or air"ra& en ers he /urisdi" ion o& he 'hi#i!!ines ,i h in en ion o un#ade herein. ?Se". 12028 T;;'< The /urisdi" ion o& he Bureau o& ;us o%s o en&or"e he !ro+isions o& he T;;' in"#udin2 sei@ure and &or&ei ure a#so .e2ins &ro% he .e2innin2 o& i%!or a ion. Thus8 he Bureau o& ;us o%s o. ains /urisdi" ion o+er i%!or ed ar i"#es on#$ a& er i%!or a ion has .e2un. 2. When is importation deemed terminated and why is it important to *now whether importation has already ended? S566ESTED ANS)ER7 0%!or a ion is dee%ed er%ina ed u!on !a$%en o& he du ies8 a-es and o her "har2es due u!on he a2en"ies8 or se"ured o .e !aid8 a he !or o& en r$ and he #e2a# !er%i &or ,i hdra,a# sha## ha+e .een 2ran ed.

34

0n "ase he ar i"#es are &ree o& du ies8 a-es and o her "har2es8 un i# he$ ha+e #e2a##$ #e& he /urisdi" ion o& he "us o%s. ?Se". 12028 T;;'< The Bureau o& ;us o%s #oses /urisdi" ion o en&or"e he T;;' and o %a*e sei@ures and &or&ei ures a& er i%!or a ion is dee%ed er%ina ed. 3. T-e /(ex".(e !a&"// '(a*%e "% a &#0"%"#$ "$ !-e Ta&"// a$+ C*%!#m% C#+e 8 ,hi"h i%!#e%en s he "ons i u iona##$ de#e2a ed !o,er o he 'residen o& he 'hi#i!!ines8 in he in eres o& na iona# e"ono%$8 2enera# ,e#&are andIor na iona# se"uri $ u!on re"o%%enda ion o& he NEDA ?a< o in"rease8 redu"e or re%o+e e-is in2 !ro e" i+e ra es o& i%!or du $8 !ro+ided ha 8 he in"rease shou#d no .e hi2her han 100O ad +a#ore%C ?.< o es a.#ish i%!or 4uo a or o .an i%!or s o& an$ "o%%odi $8 and ?"< o i%!ose addi iona# du $ on a## i%!or s no e-"eedin2 10O ad +a#ore%8 a%on2 o hers. 1. C*%!#m% +*!"e% +e/"$e+. ;us o%s du ies is he na%e 2i+en o a-es on he i%!or a ion and e-!or a ion o& "o%%odi ies8 he ari&& or a- assessed u!on %er"handise i%!or ed &ro%8 or e-!or ed o8 a &orei2n "oun r$. ?:estle Phils. v. Court of Appeals, et al., 6.R. No. 1:B11B8 Fu#$ =8 2001< 3. S e'"a( '*%!#m% +*!"e% a&e a++"!"#$a( "m #&! +*!"e% "m #%e+ #$ % e'"/"' C"$+% #/ "m #&!e+ a&!"'(e% *$+e& 'e&!a"$ '#$+"!"#$%. The s!e"ia# "us o%s du ies under he Tari&& and ;us o%s ;ode ?T;;'< are he an i(du%!in2 du $8 he "oun er+ai#in2 du $8 he dis"ri%ina or$ du $8 and he %ar*in2 du $8 and under he Sa&e2uard Measures A" ?SMA< addi iona# ari&&s as sa&e2uard %easures. 4. T-e % e'"a( '*%!#m% +*!"e% a&e "m #%e+ /#& !-e &#!e'!"#$ #/ '#$%*me&% a$+ ma$*/a'!*&e&%9 a% 2e(( a% P-"(" "$e &#+*'!%. 5. D*m "$, +*!) "% a$ a++"!"#$a( % e'"a( +*!) am#*$!"$, !# !-e +"//e&e$'e .e!2ee$ !-e ex #&! &"'e a$+ !-e $#&ma( 0a(*e #/ %*'- &#+*'!9 '#mm#+"!) #& a&!"'(e ?Se". :01 ?s< ?1<8 T;;8 as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 1999.3< i%!osed on he i%!or a ion o& a !rodu" 8 "o%%odi $ or ar i"#e o& "o%%er"e in o he 'hi#i!!ines a #ess han i s nor%a# +a#ue ,hen des ined &or do%es i" "onsu%! ion in he e-!or in2 "oun r$ ,hi"h is "ausin2 or is hrea enin2 o "ause %a eria# in/ur$ o a do%es i" indus r$8 or %a eria##$ re ardin2 he es a.#ish%en o& a do%es i" indus r$ !rodu"in2 he #i*e !rodu" . DSe". :01 ?s< ?A<8
T;;8 as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993E

6. T-e a$!"<+*m "$, +*!) "% "m #%e+ a. )here a !rodu" 8 "o%%odi $ or ar i"#e o& "o%%er"e is e-!or ed in o he 'hi#i!!ines a a !ri"e #ess han i s nor%a# +a#ue ,hen des ined &or do%es i" "onsu%! ion in he e-!or in2 "oun r$8 .. and su"h e-!or a ion is "ausin2 or is hrea enin2 o "ause %a eria# in/ur$ o a do%es i" indus r$8 or %a eria##$ re ards he es a.#ish%en o& a do%es i" indus r$ !rodu"in2 he #i*e !rodu" . DSe". :01 ?a<8 T;;8 as
a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993E

7. N#&ma( 0a(*e /#& *& #%e% #/ "m #%"$, !-e a$!"<+*m "$, +*!) is he "o%!ara.#e !ri"e a he da e o& sa#e o& #i*e !rodu" 8 "o%%odi $8 or ar i"#e in he ordinar$ "ourse o& rade ,hen des ined &or "onsu%! ion in he "oun r$ o& e-!or . DSe". :01 ?s< ?: <8 T;;8 as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2
A" o& 19993E

18. T-e "m #%"$, a*!-#&"!) /#& !-e a$!"<+*m "$, +*!) "% !-e Se'&e!a&) #/ T&a+e a$+ I$+*%!&) "$ !-e 'a%e #/ $#$<a,&"'*(!*&a( &#+*'!9 '#mm#+"!)9 #& a&!"'(e #& !-e Se'&e!a&) #/ A,&"'*(!*&e9 "$ !-e 'a%e #/ a,&"'*(!*&a( &#+*'!9 '#mm#+"!) #& a&!"'(e9 a& er &or%a# in+es i2a ion and a&&ir%a i+e &indin2 o& he Tari&& ;o%%ission. DSe". :01 ?a<8 T;;8 as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993E 11. E0e$ 2-e$ a(( !-e &eB*"&eme$!% /#& !-e "m #%"!"#$ -a0e .ee$ /*(/"((e+9 !-e +e'"%"#$ #$ 2-e!-e& #& $#! !# "m #%e a +e/"$"!"0e a$!"<+*m "$, +*!) &ema"$% !-e &e&#,a!"0e #/ !-e Ta&"// C#mm"%%"#$. DSe". :01 ?a<8 T;;8 as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993E Thus8 he "a.ine se"re aries "ou#d no "on ra+ene he re"o%%enda ion o& he Tari&& ;o%%ission. The$ "ou#d no i%!ose he an i(du%!in2 du $ or an$ s!e"ia# "us o%s du $ ,i hou he &a+ora.#e re"o%%enda ion o& he Tari&& ;o%%ission.

35

12. I$ !-e +e!e&m"$a!"#$ #/ 2-e!-e& !# "m #%e !-e a$!"<+*m "$, +*!)9 !-e Ta&"// C#mm"%%"#$9 ma) '#$%"+e& am#$, #!-e&%9 !-e e//e'! #/ "m #%"$, a$ a$!"<+*m "$, +*!) #$ !-e 2e(/a&e #/ !-e '#$%*me&% a$+J#& !-e ,e$e&a( *.("'9 a$+ #!-e& &e(a!e+ (#'a( "$+*%!&"e%. ?Se". :01 ?a<8 T;;8 as a%ended
.$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993<

13. T-e am#*$! #/ a$!"<+*m "$, +*!) !-a! ma) .e "m #%e+ "% !-e +"//e&e$'e .e!2ee$ !-e ex #&! &"'e a$+ !-e $#&ma( 0a(*e #/ %*'- &#+*'!9 '#mm#+"!) #& a&!"'(e. ?Se". :01 ?s< ?1<8 T;;8 as a%ended .$
Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993<

The an i(du%!in2 du $ sha## .e e4ua# o he %ar2in o& du%!in2 on su"h !rodu" 8 "o%%odi $ or ar i"#e herea& er i%!or ed o he 'hi#i!!ines under si%i#ar "ir"u%s an"es8 in addi ion o ordinar$ du ies8 a-es and "har2es i%!osed .$ #a, on he i%!or ed !rodu" 8 "o%%odi $ or ar i"#e. 11. C#*$!e&0a"("$, +*!"e% are addi iona# "us o%s du ies i%!osed on an$ !rodu" 8 "o%%odi $ or ar i"#e o& "o%%er"e ,hi"h is 2ran ed dire" #$ or indire" #$ .$ he 2o+ern%en in he "oun r$ o& ori2in or e-!or a ion8 an$ *ind or &or% o& s!e"i&i" su.sid$ u!on he !rodu" ion8 %anu&a" ure or e-!or a ion o& su"h !rodu" "o%%odi $ or ar i"#e8 and he i%!or a ion o& su"h su.sidi@ed !rodu" 8 "o%%odi $8 or ar i"#e has "aused or hrea ens o "ause %a eria# in/ur$ o a do%es i" indus r$ or has %a eria##$ re arded he 2ro, h or !re+en s he es a.#ish%en o& a do%es i" indus r$. ?Se". :028 T;;' as a%ended .$ Se" ion 18 R.A. No. >7A1< 13. T-e "m #%"$, a*!-#&"!) /#& !-e '#*$!e&0a"("$, +*!"e% "% !-e Se'&e!a&) #/ T&a+e a$+ I$+*%!&) "$ !-e 'a%e #/ $#$<a,&"'*(!*&a( &#+*'!9 '#mm#+"!)9 #& a&!"'(e #& !-e Se'&e!a&) #/ A,&"'*(!*&e9 "$ !-e 'a%e #/ a,&"'*(!*&a( &#+*'!9 '#mm#+"!) #& a&!"'(e9 a& er &or%a# in+es i2a ion and a&&ir%a i+e &indin2 o& he Tari&& ;o%%ission. E+en ,hen a## he re4uire%en s &or he i%!osi ion ha+e .een &u#&i##ed8 he de"ision on ,he her or no o i%!ose a de&ini i+e an i(du%!in2 du $ re%ains he !rero2a i+e o& he Tari&& ;o%%ission . ?Se". :01 ?a<8 T;;8
as a%ended .$ Re!. A" No. >7A28 1An i(Du%!in2 A" o& 19993<

14. T-e '#*$!e&0a"("$, +*!) "% eB*"0a(e$! !# !-e 0a(*e #/ !-e % e'"/"' %*.%"+). 15. ;a&C"$, +*!"e% are he addi iona# "us o%s du ies i%!osed on &orei2n ar i"#es ?or i s "on ainers i& he ar i"#e i se#& "anno .e %ar*ed<8 no %ar*ed in an$ o&&i"ia# #an2ua2e in he 'hi#i!!ines8 in a "ons!i"uous !#a"e as #e2i.#$8 inde#i.#$ and !er%anen #$ in su"h %anner as o indi"a e o an u# i%a e !ur"haser in he 'hi#i!!ines he na%e o& he "oun r$ o& ori2in. 16. T-e C#mm"%%"#$e& #/ C*%!#m% "m #%e% !-e ma&C"$, +*!). 17. T-e ma&C"$, +*!) "% eB*"0a(e$! !# /"0e e&'e$! G3IH a+ 0a(#&em. 28. A +"%'&"m"$a!#&) +*!) is a ne, and addi iona# "us o%s du $ i%!osed u!on ar i"#es ,ho##$ or in !ar he 2ro, h or !rodu" o&8 or i%!or ed in a +esse#8 o& an$ &orei2n "oun r$ ,hi"h i%!oses8 dire" #$ or indire" #$8 u!on he dis!osi ion or rans!or a ion in ransi hrou2h or ree-!or a ion &ro% su"h "oun r$ o& an$ ar i"#e ,ho##$ or in !ar he 2ro, h or !rodu" o& he 'hi#i!!ines8 an$ unreasona.#e "har2e8 e-a" ion8 re2u#a ion or #i%i a ion ,hi"h is no e4ua##$ en&or"ed u!on #i*e ar i"#es o& e+er$ &orei2n "oun r$8 or dis"ri%ina es a2ains he "o%%er"e o& he 'hi#i!!ines8 dire" #$ or indire" #$8 .$ #a, or ad%inis ra i+e re2u#a ion or !ra" i"e8 .$ or in res!e" o an$ "us o%s8 onna2e8 or !or du $8 &ee8 "har2e8 e-a" ion8 "#assi&i"a ion8 re2u#a ion8 "ondi ion8 res ri" ion or !rohi.i ion8 in su"h %anner as o !#a"e he "o%%er"e o& he 'hi#i!!ines a a disad+an a2e "o%!ared ,i h he "o%%er"e o& an$ &orei2n "oun r$. 21. T-e P&e%"+e$! #/ !-e P-"(" "$e% "m #%e% !-e +"%'&"m"$a!#&) +*!"e%.

22. Sa/e,*a&+ mea%*&e% are e%er2en"$ %easures8 in"#udin2 ari&&s8 o !ro e" do%es i" indus ries and !rodu"ers &ro% in"reased i%!or s ,hi"h in&#i" or "ou#d in&#i" serious in/ur$ on he%. The ;TA is +es ed ,i h /urisdi" ion o re+ie, de"isions o& he Se"re ar$ o& Trade and 0ndus r$ i%!osin2 sa&e2uard %easures as !ro+ided under Re!. A" No. >>00 he Sa&e2uard Measures A" ?SMA<. ? outhern
Cross Cement Corporation v. $he Philippine Cement !anufacturers Corp., et al., 6. R. No. 1A>AB08 Fu#$ >8 200B<

36

The DT0 Se"re ar$ "anno i%!ose he sa&e2uard %easures i& he Tari&& ;o%%ission does no &a+ora.#$ re"o%%end i s i%!osi ion. 23. Im #%"$, a*!-#&"!) /#& %a/e,*a&+ mea%*&e%. T-e "m #%"$, a*!-#&"!) /#& !-e '#*$!e&0a"("$, +*!"e% "% !-e Se'&e!a&) #/ T&a+e a$+ I$+*%!&) "$ !-e 'a%e #/ $#$<a,&"'*(!*&a( &#+*'!9 '#mm#+"!)9 #& a&!"'(e #& !-e Se'&e!a&) #/ A,&"'*(!*&e9 "$ !-e 'a%e #/ a,&"'*(!*&a( &#+*'!9 '#mm#+"!) #& a&!"'(e9 a& er &or%a# in+es i2a ion and a&&ir%a i+e &indin2 o& he Tari&& ;o%%ission. 21. i%!or s. Sa/e,*a&+% mea%*&e% !-a! ma) .e "m #%e+. Addi iona# ari&&s8 i%!or 4uo as or .annin2 o&

23. T-e .a%"% #/ +*!"a.(e 0a(*e #/ me&'-a$+"%e !-a! "% %*.=e'! !# a+ 0a(#&em '*%!#m% +*!"e% !-e !&a$%a'!"#$ 0a(*e9 ,hi"h sha## .e he !ri"e a" ua##$ !aid or !a$a.#e &or he 2oods ,hen so#d &or e-!or o he 'hi#i!!ines8 ad/us ed .$ addin2 "er ain "os e#e%en s o he e- en ha he$ are in"urred .$ he .u$er .u are no in"#uded in he !ri"e a" ua##$ !aid or !a$a.#e &or he i%!or ed 2oods8 and %a$ in"#ude he &o##o,in27 a. ;os o& "on ainers and !a"*in28 .. 0nsuran"e8 and ". Grei2h . ?Se". 2018 T;; as a%ended .$ Se". 18 Re!. A" No. 91:A< 24. T-e a.#0e !&a$%a'!"#$ 0a(*e "% !-e &"ma&) me!-#+ #/ +e!e&m"$"$, +*!"a.(e 0a(*e. I/ !-e !&a$%a'!"#$ 0a(*e #/ !-e "m #&!e+ a&!"'(e '#*(+ $#! .e +e!e&m"$e+ *%"$, !-e a.#0e9 !-e /#((#2"$, a(!e&$a!"0e me!-#+% %-#*(+ .e *%e+ #$e a/!e& !-e #!-e&: a. Transa" ion +a#ue o& iden i"a# 2oods .. Transa" ion +a#ue o& si%i#ar 2oods ". Dedu" i+e %e hod d. ;o%!u ed %e hod e. Ga##.a"* %e hod 25. Fow and to whom should claims for refund of customs duties be made ? S566ESTED ANS)ER7 A## "#ai%s &or re&und o& du ies sha## .e %ade in ,ri in2 and &or,arded o he ;o##e" or o& ;us o%s o ,ho% su"h du ies are !aid8 ,ho u!on re"ei! o& su"h "#ai%8 sha## +eri&$ he sa%e .$ he re"ords o& his O&&i"e8 and i& &ound o .e "orre" and in a""ordan"e ,i h #a,8 sha## "er i&$ he sa%e o he ;o%%issioner o& ;us o%s ,i h his re"o%%enda ion o2e her ,i h a## ne"essar$ !a!ers and do"u%en s. 5!on re"ei! .$ he ;o%%issioner o& su"h "er i&ied "#ai% he sha## "ause he sa%e o .e !aid i& &ound "orre" . ?Se". 170>8 T;;< 26. What is mean by the term 2entry7 in (ustoms 9aw ? S566ESTED ANS)ER7 0 has a ri!#e %eanin2. a. he do"u%en s &i#ed a he ;us o%s houseC .. he su.%ission and a""e! an"e o& he do"u%en sC and ". ;us o%s de"#ara ion &or%s or "us o%s en r$ &or%s re4uired o .e a""o%!#ished .$ !assen2ers o& in"o%in2 +esse#s or !assen2er !#anes as en+isa2ed under Se". 2A0A o& he T;;' ?Gai#ure o de"#are .a22a2e<. ?4ar(ele"a v. People, 6.R. No. 1=A2=A8 Ge.ruar$ =8 200=< 27. 1 flight stewardess arrived from Singapore. &pon her arrival she was as*ed whether she has anything to declare. She answered none$ and she submitted her 2(ustoms Daggage Aeclaration 5orm7 which she accomplished and signed with nothing or written on the space for items to be declared. When her hanger bag was examined some pieces of jewelry were found concealed within the lining of said bag. She was then convicted of violating of Sec. H". of the ;ariff and (ustoms (ode for unlawful importation which penalizes any person who shall fraudulently import or bring into the %hilippines any article contrary to law.

37

She now appeals claiming that lower court erred n convicting her under Sec. H". when the facts alleged both in the information and those shown by the prosecution constitute the offense under Sec. ?B.B 25ailure to Aeclare Daggage$7 of which she was ac6uitted. Is she correct ? S566ESTED ANS)ER7 No. Se". :=01 does no de&ine a "ri%e. 0 %ere#$ !ro+ides8 inter alia, he ad%inis ra i+e re%edies ,hi"h "an .e resor ed o .$ he Bureau o& ;us o%s ,hen sei@in2 du ia.#e ar i"#es &ound he .a22a2e o& an$ !erson arri+in2 in he 'hi#i!!ines ,hi"h is no in"#uded in he a""o%!#ished .a22a2e de"#ara ion su.%i ed o he "us o%s au hori ies8 and he ad%inis ra i+e !ena# ies ha su"h !erson %us !a$ &or he re#ease o& su"h 2oods i& no i%!or ed "on rar$ o #a,. Su"h ad%inis ra i+e !ena# ies are inde!enden o& he "ri%ina# #ia.i#i $ &or s%u22#in2 ha %a$ .e i%!osed under Se". :=018 and o her !ro+isions o& he T;; ,hi"h "an on#$ .e de er%ined a& er he a!!ro!ria e "ri%ina# !ro"eedin2s8 !res"indin2 &ro% he ou "o%e in an$ ad%inis ra i+e "ase ha %a$ ha+e .een &i#ed and dis!osed o& .$ he "us o%s au hori ies. 0ndeed he se"ond !ara2ra!h o& Se". 2A0A !ro+ides ha no hin2 sha## !re+en he .rin2in2 o& a "ri%ina# a" ion a2ains he o&&ender &or s%u22#in2 under Se" ion :=01. ?4ar(ele"a v. People, 6. R. No. 1=A2=A8
Ge.ruar$ =8 200=<

"$e%. A !erson arri+in2 in he 'hi#i!!ines ,i h .a22a2e "on ainin2 du ia.#e ar i"#es is .ound o de"#are he sa%e in a## res!e" s. 0n order o %ee he "on+enien"e o& he ra+e#ers8 a si%!#e and %ore e-!edi ious %e hod o& "us o%s "#earan"e is !ro+ided &or .a22a2es o""u!$in2 he !assa2e herein &or 2oods i%!or ed in he re2u#ar %anner. O&&i"ia# en r$ &or%s and &or%s o& .a22a2e de"#ara ion are su!!#ied o he !assen2ers o .e &i##ed .e&ore he "us o%s o&&i"er. The ra+e#er has he .urden o& "arr$in2 &or,ard i e%s ha ha+e o .e de"#ared .e&ore e-a%ina ion o& he "ar2o has .e2un. Ade4ua e re!or in2 o& du ia.#e %er"handise .ein2 .rou2h in o he "oun r$ is a.so#u e#$ ne"essar$ o he en&or"e%en o& "us o%s #a,s8 and &ai#ure o "o%!#$ ,i h hose re4uisi es is as "onde%na.#e as &ai#ure o !a$ "us o%s du ies. ?4ar(ele"a v. People, 6. R. No. 1=A2=A8 Ge.ruar$ =8 200= "i in2 +arious "ases< .. Sm*,,("$,9 +e/"$e+. The a" o& i%!or in2 or e-!or in2 an$ ar i"#e "on rar$ o #a,. Le2a##$8 i is de&ined as un#a,&u# i%!or a ion or e-!or a ion. 15n#a,&u# 0%!or a ion. H An$ !erson ,ho sha## &raudu#en #$ i%!or or .rin2 in o he 'hi#i!!ines8 or assis in so doin28 an$ ar i"#e8 "on rar$ o #a,8 or sha## re"ei+e8 "on"ea#8 .u$8 se##8 or in an$ %anner &a"i#i a e he rans!or a ion8 "on"ea#%en 8 or sa#e o& su"h ar i"#e a& er i%!or a ion8 *no,in2 he sa%e o ha+e .een i%!or ed "on rar$ o #a,8 sha## .e 2ui# $ o& s%u22#in2.3 ?1s !ar.8 Se". :=018 T;;< Se". :=01 is a !ena# !ro+ision. 0 de&ines he "ri%e o& s%u22#in2 and !ro+ides "o%!ound !ena# ies o& 2radua ed &ine and i%!rison%en .ased on he a!!raised +a#ues o& he i%!or ed ar i"#es o .e de er%ined in he %anner !ro+ided in he T;;. Se". :=01 ,as desi2ned o su!!#e%en he e-is in2 !ro+isions o& he T;; a2ains he %eans #eadin2 u! o s%u22#in2 ,hi"h %i2h render i .ene&i"ia# .$ a su.s an i+e and "ri%ina# s a e%en se!ara e#$ !ro+idin2 &or he !unish%en o& s%u22#in2. ?4ar(ele"a v. People, 6. R. No. 1=A2=A8 Ge.ruar$ =8 200=< ". P*& #%e #/ Se'. 3481 . The #a, ,as no in ended o %er2e in o one and he sa%e o&&ense a## he %an$ a" s ,hi"h are "#assi&ied and !unished .$ di&&eren !ena# ies8 !ena# or ad%inis ra i+e8 .u o #e2is#a e a2ains he o+er a" o& s%u22#in2 i se#&. This is %ani&es ed .$ he use o& he ,ords 1&raudu#en #$3 and 3"on rar$ o #a,3 in he #a,. . ?4ar(ele"a v. People, 6. R. No. 1=A2=A8 Ge.ruar$ =8 200=< ". Pa)me$! "% $#! a +e/e$%e "$ %m*,,("$,. 1)hen u!on ria# &or +io#a ion o& his se" ion8 he de&endan is sho,n o ha+e !ossession o& he ar i"#e in 4ues ion8 !ossession sha## .e dee%ed su&&i"ien e+iden"e o au hori@e "on+i" ion8 un#ess he de&endan sha## e-!#ain he !ossession o he sa is&a" ion o& he "our 7 'ro+ided8 ho,e+er8 Tha !a$%en o& he a- due a& er a!!rehension sha## no "ons i u e a +a#id de&ense in an$ !rose"u ion under his se" ion.3 ?#as !ar.8 Se". :=018 T;;< 38. Fow is smuggling committed ? S566ESTED ANS)ER7 S%u22#in2 is "o%%i ed .$ an$ !erson ,ho7 a. &raudu#en #$ i%!or s or .rin2s in o he "oun r$ an$ ar i"#e "on rar$ o #a,C .. assis s in so doin2 an$ ar i"#e "on rar$ o #a,C or ". re"ei+es8 "on"ea#s8 .u$s8 se##s or in an$ %anner &a"i#i a es he rans!or a ion8 "on"ea#%en or sa#e o& su"h 2oods a& er i%!or a ion8 *no,in2 he sa%e o ha+e .een i%!or ed "on rar$ o #a,. ?4ar(ele"a
v. People, 6.R. No. 1=A2=A8 Ge.ruar$ =8 200= "i in2 Ro(ri2ue" v. Court of Appeals, 6. R. No. 11A21>8 Se! e%.er 1>8 199A8 2B> S;RA 2>>8 29=<

NOTES AND ;OMMENTS7 a. D*!) #/ e&%#$ a&&"0"$, "$ !-e P-"("

NOTES AND ;OMMENTS7

a. Im #&!a!"#$ "onsis s o& .rin2in2 an ar i"#e in o he "oun r$ &ro% he ou side. 0%!or a ion .e2ins ,hen he "on+e$in2 +esse# or air"ra& en ers he /urisdi" ion o& he 'hi#i!!ines ,i h in en ion o un#oad herein.

38 .. W-e$ *$(a2/*( "m #&!a!"#$ "% '#m (e!e. 0n he a.sen"e o& a .ona &ide in en o %a*e en r$ and !a$ du ies ,hen he !rohi.i ed ar i"#e en ers he 'hi#i!!ine erri or$. 0%!or a ion is "o%!#e e ,hen he a-a.#e8 du ia.#e "o%%odi $ is .rou2h ,i hin he #i%i s o& he !or o& en r$. En r$ hrou2h a "us o% house is no he essen"e o& he a" . ?4ar(ele"a v. People, 6.R. No. 1=A2=A8 Ge.ruar$ =8 200=<

31. ;he (ollector of (ustoms sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all 6uestions touching on the seizure and forfeiture of dutiable goods. #;(s are precluded from assuming cognizance over such matters even through petitions of certiorari$ prohibition or mandamus. ($he 'ureau of Customs, et al., v. 62ario, et al., 6.R. No. 1:>0>18 Mar"h
208 2000<

What is the rationale for this doctrine ? S566ESTED ANS)ER7 a. Re2iona# Tria# ;our s ha+e no /urisdi" ion o re!#e+in a !ro!er $ ,hi"h is su./e" o sei@ure and &or&ei ure !ro"eedin2s &or +io#a ion o& he Tari&& and ;us o%s ;ode o her,ise8 a" ions &or &or&ei ure o& !ro!er $ &or +io#a ion o& he ;us o%s #a,s "ou#d easi#$ .e under%ined .$ he si%!#e de+i"e o& re!#e+in. ?De
la *uente v. De )eyra, et al., 120 S;RA BAA<

.. The do" rine o& e-"#usi+e "us o%s /urisdi" ion o+er "us o%s "ases o he e-"#usion o& he RT;s is an"hored u!on he !o#i"$ o& !#a"in2 no unne"essar$ hindran"e on he 2o+ern%en s dri+e8 no on#$ o !re+en s%u22#in2 and o her &rauds u!on ;us o%s8 ". .u %ore i%!or an #$8 o render e&&e" i+e and e&&i"ien he "o##e" ion o& i%!or and e-!or du ies due he S a e8 ,hi"h ena.#es he 2o+ern%en o "arr$ ou he &un" ions i has .een ins i u ed o !er&or%.
(4ao, et al., v. Court of Appeals, et al., an( companion case, 2B9 S;RA :A8 B:<

d. The issuan"e .$ re2u#ar "our s o& ,ri s o& !re#i%inar$ in/un" ion in sei@ure and &or&ei ure !ro"eedin2s .e&ore he Bureau o& ;us o%s %a$ arouse sus!i"ion ha he issuan"e or 2ran ,as &or "onsidera ion o her han he s ri" %eri s o& he "ase. ?7uno v. Cabre(o, B02 S;RA 7A D200:E< e. 5nder he do" rine o& !ri%ar$ /urisdi" ion8 he Bureau o& ;us o%s has e-"#usi+e ad%inis ra i+e /urisdi" ion o "ondu" sear"hes8 sei@ures and &or&ei ures o& "on ra.and ,i hou in er&eren"e &ro% he "our s. 0 "ou#d "ondu" sear"hes and sei@ures ,i hou need o& a /udi"ia# ,arran e-"e! i& he sear"h is o .e "ondu" ed in a d,e##in2 !#a"e. )here an ad%inis ra i+e o&&i"e has o. ained a e"hni"a# e-!er ise in a s!e"i&i" su./e" 8 e+en he "our s %us de&er o his e-!er ise. 32. 217 claiming to be the owner of a vessel which is the subject of customs warrant of seizure and detention sought the intercession of the #;( to restrain the Dureau of (ustoms from interfering with his property rights over the vessel. Would the suit prosper? S566ESTED ANS)ER7 No. His re%ed$ ,as no ,i h he RT; .u ,i h he ;TA8 as issues o& o,nershi! o& 2oods in he "us od$ o& "us o%s o&&i"ia#s are ,i hin he !o,er o& he ;TA o de er%ine. The ;o##e" or o& ;us o%s has e-"#usi+e /urisdi" ion o+er sei@ure and &or&ei ure !ro"eedin2s and ria# "our s are !re"#uded &ro% assu%in2 "o2ni@an"e o+er su"h %a ers e+en hrou2h !e i ions &or "er iorari8 !rohi.i ion or %anda%us. ?Commissioner of Customs v. Court of Appeals, et al., 6. R. Nos. 111202(0A8 Fanuar$
:18 200=<

33. T-e '*%!#m% a*!-#&"!"e% +# $#! -a0e !# &#0e !# !-e %a!"%/a'!"#$ #/ !-e '#*&! !-a! !-e a&!"'(e% #$ .#a&+ a 0e%%e( 2e&e "m #&!e+ /&#m a.&#a+ #& a&e "$!e$+e+ !# .e %-" e+ a.&#a+ .e/#&e !-e) ma) exe&'"%e !-e #2e& !# e//e'! '*%!#m% %ea&'-e%9 %e">*&e%9 #& a&&e%!% &#0"+e+ .) (a2 a$+ '#$!"$*e 2"!- !-e a+m"$"%!&a!"0e -ea&"$,%. ($he 'ureau of Customs, et al., v. 62ario, et al.8 6.R. No. 1:>0>18
Mar"h 208 2000<

31. The Tari&& and ;us o%s ;ode a##o,s he Bureau o& ;us o%s o resor o he a+m"$"%!&a!"0e &eme+) #/ %e">*&e9 %*'- a% .) e$/#&'"$, !-e !ax ("e$ #$ !-e "m #&!e+ a&!"'(e 2-e$ !-e "m #&!e+ a&!"'(e% '#*(+ .e /#*$+ a$+ .e %*.=e'! !# %e">*&e a$+ /#&/e"!*&e. 33. The Tari&& and ;us o%s ;ode a##o,s he Bureau o& ;us o%s o resor o he =*+"'"a( &eme+) #/ /"("$, a$ a'!"#$ "$ '#*&! 2-e$ !-e "m #&!e+ a&!"'(e% '#*(+ $#! a$)m#&e .e /#*$+.

39

34. I$%!a$'e% 2-e&e !-e&e "% $# &",-! #/ &e+em !"#$ #/ %e">e+ a$+ /#&/e"!e+ a&!"'(e%: a. There is &raudC .. The i%!or a ion is a.so#u e#$ !rohi.i ed8 or ". The re#ease o& he !ro!er $ ,ou#d .e "on rar$ o #a,. ($rans2lobe International, Inc. v. Court of Appeals,
et al., 6.R. No. 12==:B8 Fanuar$ 2A8 1999<

35. 0n A"nar v. Court of $a. Appeals, A? CRA A/B 8 rei era ed in *arolan, 4r. v. Court of $a. appeals, et al., 0/; CRA 0B? 8 he Su!re%e ;our "#ari&ied ha !-e /&a*+ '#$!em (a!e+ .) (a2 m*%! .e a'!*a( a$+ $#! '#$%!&*'!"0e. 0 %us .e in en iona#8 "onsis in2 o& de"e! ion8 ,i##&u##$ and de#i.era e#$ done or resor ed o in order o indu"e ano her o 2i+e u! so%e ri2h . 36. ReB*"%"!e% /#& /#&/e"!*&e #/ "m #&!e+ ,##+%: a. )ron2&u# %a*in2 .$ he o,ner8 i%!or er8 e-!or er or "onsi2nee o& an$ de"#ara ion or a&&ida+i 8 or he ,ron2&u# %a*in2 or de#i+er$ .$ he sa%e !erson o& an$ in+oi"e8 #e er or !a!er H a## ou"hin2 on he i%!or a ion or e-!or a ion o& %er"handise. .. he &a#si $ o& su"h de"#ara ion8 a&&ida+i 8 in+oi"e8 #e er or !a!erC and ". an in en ion on he !ar o& he i%!or erI"onsi2nee o e+ade he !a$%en o& he du ies due.
(Republic, etc., v. $he Court of Appeals, et al.8 6.R. No. 1:90A08 O" o.er 28 2001<

37. En +anuary )$ !,!$ the vessel M3> 7Star 1ce$ 7coming from Singapore laden with cargo$ entered the %ort of San 5ernando$ 9a &nion for needed repairs. When the Dureau of (ustoms later became suspicious that the vesselIs real purpose in doc*ing was to smuggle cargo into the country$ seizure proceedings were instituted and subse6uently two Warrants of Seizure and Aetention were issued for the vessel and its cargo. (esar does not own the vessel or any of its cargo but claimed a preferred maritime lien. (esar then brought several cases in the #;( to enforce his lien. Would these suits prosper ? S566ESTED ANS)ER7 No. The Bureau o& ;us o%s ha+in2 &irs o. ained !ossession o& he +esse# and i s 2oods has o. ained /urisdi" ion o he e-"#usion o& he ria# "our s. )hen ;esar has i%!#eaded he +esse# as a de&endan o en&or"e his a##e2ed %ari i%e #ien8 in he RT;8 he .rou2h an a" ion in rem under he ;ode o& ;o%%er"e under ,hi"h he +esse# %a$ .e a a"hed and so#d. Ho,e+er8 he .asi" o!era i+e &a" is he a" ua# or "ons ru" i+e !ossession o& he res .$ he ri.una# e%!o,ered .$ #a, o "ondu" he !ro"eedin2s. This %eans ha o a"4uire /urisdi" ion o+er he +esse#8 as a de&endan 8 he ria# "our %us ha+e o. ained ei her a" ua# or "ons ru" i+e !ossession o+er i . Nei her ,as a""o%!#ished .$ he RT; as he +esse# ,as a#read$ in he !ossession o& he Bureau o& ;us o%s.
?Commissioner of Customs v. Court of Appeals, et al., 6. R. Nos. 111202(0A8 Fanuar$ :18 200=<

NOTES AND ;OMMENTS7 a. F#&/e"!*&e #/ %e">e+ ,##+% "$ !-e B*&ea* #/ C*%!#m% "% "$ !-e $a!*&e #/ a &#'ee+"$, in rem9 i.e. dire" ed a2ains he res or i%!or ed 2oods and en ai#s a de er%ina ion o& he #e2a#i $ o& heir i%!or a ion. 0n
his !ro"eedin28 i is in #e2a# "on e%!#a ion he !ro!er $ i se#& ,hi"h "o%%i s he +io#a ion and is rea ed as he o&&ender8 ,i hou re&eren"e ,ha soe+er o he "hara" er or "ondu" o& he o,ner. The issue is #i%i ed o ,he her he i%!or ed 2oods shou#d .e &or&ei ed and dis!osed o& in a""ordan"e ,i h #a, &or +io#a ion o& he Tari&& and ;us o%s ;ode. .($rans2lobe International, Inc. v. Court of Appeals, et al.8 6.R. No. 12==:B8 Fanuar$ 2A8 1999< Gor&ei ure o& sei@ed 2oods in he Bureau o& ;us o%s is a !ro"eedin2 a2ains he 2oods and no a2ains he o,ner. ?Asian $erminals, Inc. v. 'autista1Ricafort, 6 .R. No. 1==9018 O" o.er 278 200= "i in2 $rans2lobe)

18. T-e C#((e'!#& #/ C*%!#m% * #$ &#.a.(e 'a*%e !-a! !-e a&!"'(e% a&e "m #&!e+ #& ex #&!e+9 #& a&e a!!em !e+ !# .e "m #&!e+ #& ex #&!e+9 "$ 0"#(a!"#$ #/ !-e !a&"// a$+ '*%!#m% (a2% %-a(( "%%*e a 2a&&a$! #/ %e">*&e. ?Se". =8 Ti #e 0008 ;AO No. 9(9:< 0& he sear"h and sei@ure is o .e "ondu" ed in a d,e##in2 !#a"e8 hen a sear"h ,arran shou#d .e issued .$ he re2u#ar "our s no he Bureau o& ;us o%s. There %a$ .e ins an"es ,here no ,arran s issued .$ he Bureau o& ;us o%s or he re2u#ar "our s is re4uired8 as in sear"h and sei@ures o& %o or +ehi"#es and +esse#s.

40

11. Sm*,,(e+ ,##+% %e">e+ .) 0"&!*e #/ a '#*&! 2a&&a$! %-#*(+ .e %*&&e$+e&e+ !# !-e '#*&! !-a! "%%*e+ !-e 2a&&a$! a$+ $#! !# !-e B*&ea* #/ C*%!#m% .e"ause he 2oods are in custo(ia le2is.

REPUBLIC ACT NO. 11239 CREATING THE COURT OF TAX APPEALS INCLUDING EURISDICTION OF THE CTA9 AS A;ENDED
1. T-e C#*&! #/ Tax A ea(% "% !-e % e'"a( !ax '#*&! '&ea!e+ *$+e& Re *.("' A'! N#. 1123 8 as a%ended .$ R. A. No. 92>28 and is "o%!osed o& a 'residin2 Fus i"e and &i+e Asso"ia e Fus i"es8 or2ani@ed in o ,o di+isions. 2. Why was the (ourt of ;ax 1ppeals created ? S566ESTED ANS)ER7 a. To !re+en de#a$ in he dis!osi ion o& a- "ases .$ he hen ;our s o& Girs 0ns an"e ?no, RT;s<8 in +ie, o& he .a"*#o2 o& "i+i#8 "ri%ina#8 and "adas ra# "ases a""u%u#a in2 in he do"*e s o& su"h "our sC and .. To ha+e a .od$ ,i h s!e"ia# *no,#ed2e ,hi"h ordinar$ Fud2es o& he hen ;our s o& Girs 0ns an"e ?no, RT;s<8 are no #i*e#$ o !ossess8 hus !ro+idin2 &or an ade4ua e re%ed$ &or a s!eed$ de er%ina ion o& a- "ases. ?&rsal v. Court of $a. Appeals, et al., 101 'hi#. 209C Lacsamana, et al., etc., v. C$A, et
al., 102 'hi#. 9:1<

NOTES AND ;OMMENTS7 a. CTA % e'"a(">e+ '#*&!. B$ he +er$ na ure o& i s &un" ions8 he ;TA is a hi2h#$ s!e"ia#i@ed "our
s!e"i&i"a##$ "rea ed &or he !ur!ose o& re+ie,in2 a- and "us o%s "ases. i is dedi"a ed e-"#usi+e#$ o he s ud$ and "onsidera ion o& re+enue(re#a ed !ro.#e%s and has ne"essari#$ de+e#o!ed an e-!er ise on he su./e" . ?F. 'an2ani.an in outhern Cross Cement Corporation v. Cement !anufacturers Association of the Philippines, et al., 6. R. No. 1A>AB08 Au2us :8 200A8 "i in2 +arious "ases in his se!ara e o!inion o he de"ision on he %o ion &or re"onsidera ion< .. C#*&! #/ Tax A ea(% "% $#! ,#0e&$e+ %!&"'!() .) !e'-$"'a( &*(e% #/ e0"+e$'e. ?Se". >8 Re!. A" No. 112A< )hi#e his %a$ .e so ru#es o& !ro"edure are no ends in he%se#+es .u are !ri%ari#$ in ended as oo#s in he ad%inis ra ion o& /us i"e8 he !resen a ion o& he !ur"hase re"ei! s andIor in+oi"es is no %ere !ro"edura# e"hni"a#i $ ,hi"h %a$ .e disre2arded "onsiderin2 ha i is he on#$ %eans .$ ,hi"h he ;TA %a$ as"er ain and +eri&$ he ru h o& he a-!a$ers "#ai%s. ?Commissioner of Internal v. !anila !inin2 Corporation, 6. R. No. 1A:20B8 Au2us :18 200A<

3. T-e (e,a( &eme+"e% *$+e& !-e NIRC #/ 1775 a$+ #!-e& (a2% a+ai#a.#e o an a22rie+ed a-!a$er %a$ .e "#assi&ied in o he a- re%edies ,i h res!e" o7 a. assess%en C .. "o##e" ion8 and ". re&und o& in erna# re+enue a-es. The re%edies %a$ a#so .e "#assi&ied in o he ad%inis ra i+e or he /udi"ia# re%edies. 1. T-e (e,a( &eme+"e% *$+e& !-e NIRC #/ 1775 a0a"(a.(e !# a$ a,,&"e0e+ !ax a)e& a! !-e a+m"$"%!&a!"0e (e0e( ,i h res!e" o assess%en o& in erna# re+enue a-es are he &o##o,in27 a. 5!on re"ei! o& a !re(assess%en no i"e8 he a-!a$er sha## res!ond o he sa%e ,i hin &i& een ?1A< da$s &ro% re"ei! ,hi"h is he !eriod !ro+ided &or .$ i%!#e%en in2 ru#es and re2u#a ions. D:rd !ar.8 Se".
22> ?e<8 N0R; o& 1997E

.. 5!on he issuan"e o& an assess%en no i"e8 he a-!a$er sha## !ro es ad%inis ra i+e#$ .$ &i#in2 a re4ues &or re"onsidera ion or rein+es i2a ion ,i hin hir $ ?:0< da$s &ro% re"ei! o& he assess%en in su"h &or% and %anner as %a$ .e !res"ri.ed .$ i%!#e%en in2 ru#es and re2u#a ions. ". )i hin si- $ ?=0< da$s &ro% he &i#in2 o& he !ro es 8 a## re#e+an su!!or in2 do"u%en s sha## .e su.%i edC o her,ise he assess%en sha## .e"o%e &ina#. ?B h !ar.8 Ibi(.< 3. T-e (e,a( &eme+"e% *$+e& !-e NIRC #/ 1775 a0a"(a.(e !# a$ a,,&"e0e+ !ax a)e& a! !-e =*+"'"a( (e0e( ,i h res!e" o assess%en o& in erna# re+enue a-es7 a. 0& he !ro es is denied in ,ho#e or in !ar 8 or .. is no a" ed u!on ,i hin one hundred ei2h $ ?1>0< da$s &ro% su.%ission o& do"u%en s8 ". he a-!a$er ad+erse#$ a&&e" ed .$ he de"ision or ina" ion %a$ a!!ea# o he ;our o& TaA!!ea#s ,i hin hir $ ?:0< da$s &ro% re"ei! o& he said de"ision8 or &ro% he #a!se o& he one hundred ei2h $

41

?1>0< H da$ !eriodC o her,ise8 he de"ision sha## .e"o%e &ina#8 e-e"u or$ and de%anda.#e. D#as !ar.8 Se".
22> ?e<8 N0R; o& 1997E

d. On a!!ea#8 he a-!a$er shou#d a!!#$ &or he issuan"e o& a ,ri o& !re#i%inar$ in/un" ion o en/oin he B0R &ro% "o##e" in2 he a- su./e" o& he a!!ea#. e. A de"ision o& a di+ision o& he ;our o& Ta- A!!ea#s ad+erse o he a-!a$er or he 2o+ern%en %a$ .e he su./e" o& a %o ion &or re"onsidera ion or ne, ria#8 a denia# o& ,hi"h is a!!ea#a.#e o he ;our o& Ta- A!!ea#s en banc .$ %eans o& a !e i ion &or re+ie,. . &. A de"ision o& he ;our o& Ta- A!!ea#s en banc ad+erse o he a-!a$er or he 2o+ern%en %a$ .e a!!ea#ed o he Su!re%e ;our hrou2h a !e i ion &or re+ie, on "er iorari &i#ed ,i h &i& een ?1A< da$s &ro% no i"e8 and e- endi.#e &or /us i&ia.#e reasons &or hir $ ?:0< da$s on#$. 4. T-e (e,a( &eme+) *$+e& !-e NIRC #/ 1775 a0a"(a.(e !# a$ a,,&"e0e+ !ax a)e& a! !-e a+m"$"%!&a!"0e (e0e( ,i h res!e" o re&und or re"o+er$ o& a- erroneous#$ or i##e2a##$ "o##e" ed8 is o &i#e a "#ai% &or re&und or "redi ,i h he ;o%%issioner o& 0n erna# Re+enue. ?1s !ar.8 Se". 2298 N0R; o& 1997< 5. What is the legal remedy under the 'I#( of !!) at the judicial level with respect to refund or recovery of tax erroneously or illegally collected ? S566ESTED ANS)ER. The #e2a# re%ed$ under he N0R; o& 1997 a he /udi"ia# #e+e# ,i h res!e" o re&und or re"o+er$ o& a- erroneous#$ or i##e2a##$ "o##e" ed8 is he &i#in2 o& a sui or !ro"eedin2 ,i h he ;our o& Ta- A!!ea#s a. .e&ore he e-!ira ion o& ,o ?2< $ears &ro% he da e o& !a$%en o& he a- re2ard#ess o& an$ su!er+enin2 "ause ha %a$ arise a& er !a$%en ?2nd !ar.8 Se". 2298 N0R; o& 1997<8 or .. ,i hin hir $ ?:0< da$s &ro% re"ei! o& he denia# .$ he ;o%%issioner o& he a!!#i"a ion &or re&und or "redi . ?Se". 118 R.A. No. 112A< 6. The ,o ?2< $ear !eriod and he hir $ ?:0< da$ !eriod shou#d .e a!!#ied on a ,hi"he+er "o%es &irs .asis. Thus8 i& he :0 da$s is ,i hin he 2 $ears8 he :0 da$s a!!#ies8 i& he 2 $ear !eriod is a.ou o #a!se .u here is no de"ision $e .$ he ;o%%issioner ,hi"h ,ou#d ri22er he :0(da$ !eriod8 he a-!a$er shou#d &i#e an a!!ea#8 des!i e he a.sen"e o& a de"ision . (Commissioners, etc. v. Court of $a. Appeals, et al., G.
R. :o. ?0@/?, !arch /@, /B?B, unrep.)

7. )here he a-!a$er is a "or!ora ion he ,o $ear !res"ri! i+e !eriod &ro% 1da e o& !a$%en 3 &or re&und o& in"o%e a-es shou#d .e he da e ,hen he "or!ora ion &i#ed i s &ina# ad/us %en re urn no on he da e ,hen he a-es ,ere !aid on a 4uar er#$ .asis. (Philippine 'an, of Communications v. Commissioner of
Internal Revenue, et al., G.R. :o. //0=0<, 4anuary 0?, /BBB)

6enera##$ s!ea*in2 i is he Gina# Ad/us %en Re urn8 in ,hi"h a%oun s o& he 2ross re"ei! s and dedu" ions ha+e .een audi ed and ad/us ed8 ,hi"h is re&#e" i+e o& he resu# s o& he o!era ions o& a .usiness en er!rise. 0 is on#$ ,hen he re urn8 "o+erin2 he ,ho#e $ear8 is &i#ed ha he a-!a$er ,i## .e a.#e o as"er ain ,he her a a- is s i## due or re&und "an .e "#ai%ed .ased on he ad/us ed and audi ed &i2ures.
('an, of the Philippine Islan(s v. Commissioner of Internal Revenue, G.R. :o. /<<@A>, Au2ust 0?, 0==/<

18. Ou #ine o& a- re%edies o& a a-!a$er and he 2o+ern%en re#a i+e o ASSESSMENT o& in erna# re+enue a-es. a. The a-!a$er &i#es his a- re urn. .. A Le er o& Au hori $ is issued au hori@in2 B0R e-a%iner o audi or e-a%ine he a- re urn and de er%ines ,he her he &u## and "o%!#e e a-es ha+e .een !aid. ". 0& he e-a%iner is sa is&ied ha he a- re urn is ru#$ re&#e" i+e o& he a-a.#e ransa" ion and a## a-es ha+e .een !aid8 he !ro"ess ends. Ho,e+er8 i& he e-a%iner is no sa is&ied ha he a- re urn is ru#$ re&#e" i+e o& he a-a.#e ransa" ion and ha he a-es ha+e no .een &u##$ !aid8 a No i"e o& 0n&or%a# ;on&eren"e is issued in+i in2 he a-!a$er o e-!#ain ,h$ he shou#d no .e su./e" o addi iona# a-es. d. 0& he a-!a$er a ends he in&or%a# "on&eren"e and he e-a%iner is sa is&ied ,i h he e-!#ana ion o& he a-!a$er8 he !ro"ess is a2ain ended. 0& he a-!a$er i2nores he in+i a ion o he in&or%a# "on&eren"e8 or i& he e-a%iner is no sa is&ied ,i h a-!a$ers e-!#ana ion88 and he .e#ie+es ha !ro!er a-es shou#d .e assessed8 he ;o%%issioner o& 0n erna#

42

Re+enue or his du#$ au hori@ed re!resen a i+e sha## hen no i&$ he a-!a$er o& he &indin2s in he &or% o& a !re(assess%en no i"e. The !re(assess%en no i"e re4uires he a-!a$er o e-!#ain ,i hin &i& een ?1A< da$s &ro% re"ei! ,h$ no no i"e o& assess%en and #e er o& de%and &or addi iona# a-es shou#d .e dire" ed o hi%. e. 0& he ;o%%issioner is sa is&ied ,i h he e-!#ana ion o& he a-!a$er8 hen he !ro"ess is a2ain ended. 0& he a-!a$er i2nores he !re(assess%en no i"e .$ no res!ondin2 or his e-!#ana ions are no a""e! ed .$ he ;o%%issioner8 hen a no i"e o& assess%en and a #e er o& de%and is issued. The no i"e o& assess%en %us .e issued .$ he ;o%%issioner o he a-!a$er ,i hin a !eriod o& hree ?:< $ears &ro% he i%e he a- re urn ,as &i#ed or shou#d ha+e .een &i#ed ,hi"he+er is he #a er o& he ,o e+en s. )here he a-!a$er did no &i#e a a- re urn or ,here he a- re urn &i#ed is &a#se or &raudu#en 8 hen he ;o%%issioner has a !eriod o& en ?10< $ears &ro% dis"o+er$ o& he &ai#ure o &i#e a a- re urn or &ro% dis"o+er$ o& he &raud ,i hin ,hi"h o issue an assess%en no i"e. The runnin2 o& he a.o+e !res"ri! i+e !eriods %a$ ho,e+er .e sus!ended under "er ain ins an"es. The no i"e o& assess%en %us .e issued ,i hin he !res"ri! i+e !eriod and %us "on ain he &a" s8 #a, and /uris!ruden"e re#ied u!on .$ he ;o%%issioner. O her,ise i ,ou#d no .e +a#id. &. The a-!a$er shou#d hen &i#e an ad%inis ra i+e !ro es .$ &i#in2 a re4ues &or re"onsidera ion or rein+es i2a ion ,i hin hir $ ?:0< da$s &ro% re"ei! o& he assess%en no i"e. The a-!a$er "ou#d no i%%edia e#$ in er!ose an a!!ea# o he ;our o& Ta- A!!ea#s .e"ause here is no de"ision $e o& he ;o%%issioner ha "ou#d .e he su./e" o& a re+ie,. To .e +a#id he ad%inis ra i+e !ro es %us .e &i#ed ,i hin he !res"ri! i+e !eriod8 %us sho, he error o& he Bureau o& 0n erna# Re+enue and he "orre" "o%!u a ions su!!or ed .$ a s a e%en o& &a" s8 and he #a, and /uris!ruden"e re#ied u!on .$ he a-!a$er. There is no need o !a$ under !ro es . 0& he !ro es ,as no seasona.#$ &i#ed he assess%en .e"o%es &ina# and "o##e" i.#e and he Bureau o& 0n erna# Re+enue "ou#d use i s ad%inis ra i+e and /udi"ia# re%edies in "o##e" in2 he a-. 2. )i hin si- $ ?=0< da$s &ro% &i#in2 o& he !ro es 8 a## re#e+an su!!or in2 do"u%en s sha## .e su.%i ed8 o her,ise he assess%en sha## .e"o%e &ina# and "o##e" i.#e and he B0R "ou#d use i s ad%inis ra i+e and /udi"ia# re%edies o "o##e" he a-. On"e an assess%en has .e"o%e &ina# and "o##e" i.#e8 no e+en he B0R ;o%%issioner "ou#d "han2e he sa%e. Thus8 he a-!a$er "ou#d no !a$ he a-8 hen a!!#$ &or a re&und8 and i& denied a!!ea# he sa%e o he ;our o& Ta- A!!ea#s. h. 0& he !ro es is denied in ,ho#e or in !ar 8 or is no a" ed u!on ,i hin one hundred ei2h $ ?1>0< da$s &ro% he su.%ission o& do"u%en s8 he a-!a$er ad+erse#$ a&&e" ed .$ he de"ision or ina" ion %a$ a!!ea# o he ;our o& Ta- A!!ea#s ,i hin hir $ ?:0< da$s &ro% re"ei! o& he ad+erse de"ision8 or &ro% he #a!se o& he one hundred ei2h $ ?1>0(< da$ !eriod8 ,i h an a!!#i"a ion &or he issuan"e o& a ,ri o& !re#i%inar$ in/un" ion o en/oin he B0R &ro% "o##e" in2 he a- su./e" o& he a!!ea#. 0& he a-!a$er &ai#s o so a!!ea#8 he denia# o& he ;o%%issioner or he ina" ion o& he ;o%%issioner ,ou#d resu# o he no i"e o& assess%en .e"o%in2 &ina# and "o##e" i.#e and he B0R "ou#d hen u i#i@e i s ad%inis ra i+e and /udi"ia# re%edies o "o##e" he a-. i. A de"ision o& a di+ision o& he ;our o& Ta- A!!ea#s ad+erse o he a-!a$er or he 2o+ern%en %a$ .e he su./e" o& a %o ion &or re"onsidera ion or ne, ria#8 a denia# o& ,hi"h is a!!ea#a.#e o he ;our o& Ta- A!!ea#s en banc .$ %eans o& a !e i ion &or re+ie,. . The ;our o& Ta- A!!ea#s8 has a !eriod o& ,e#+e ?12< %on hs &ro% su.%ission o& he "ase &or de"ision ,i hin ,hi"h o de"ide. /. 0& he de"ision o& he ;our o& Ta- A!!ea#s en banc a&&ir%s he denia# o& he !ro es .$ he ;o%%issioner or he assess%en in "ase o& &ai#ure .$ he ;o%%issioner o de"ide he a-!a$er %us &i#e a !e i ion &or re+ie, on "er iorari ,i h he Su!re%e ;our ,i hin &i& een ?1A< da$s &ro% no i"e o& he /ud2%en on 4ues ions o& #a,. An e- ension o& hir $ ?:0< da$s %a$ &or /us i&ia.#e reasons .e 2ran ed. 0& he a-!a$er does no so a!!ea#8 he de"ision o& he ;our o& Ta- A!!ea#s ,ou#d .e"o%e &ina# and his has he e&&e" o& %a*in2 he assess%en a#so &ina# and "o##e" i.#e. The B0R "ou#d hen use i s ad%inis ra i+e and /udi"ia# re%edies o "o##e" he a-. 11. What is the burden of taxpayers see*ing tax refunds or credits ?

43

S566ESTED ANS)ER7 0 has a#,a$s .een he ru#e ha hose see*in2 a- re&unds or "redi s .ear he .urden o& !ro+in2 he &a" ua# .asis o& heir "#ai%s and o& sho,in28 .$ ,ords oo !#ain o .e %is a*en8 ha he #e2is#a ure in ended o en i #e he% o su"h "#ai%s. ?Atlas Consoli(ate( !inin2 an( Development Corporation
v. Commissioner of Internal Revenue, 6. R. No. 1BAA2=8 Mar"h 1=8 20078 See Commissioner of Internal Revenue v. ea2ate $echnolo2y (Philippines) 6. R. No. 1A:>==8 11 Ge.ruar$ 200A8 BA1 S;RA 1:2<

12. What is the nature of proceedings before the (ourt of ;ax 1ppeals ? S566ESTED ANS)ER7 Girs 8 a /udi"ia# "#ai% &or re&und or a- "redi in he ;TA is .$ no %eans an ori2ina# a" ion8 .u ra her an a!!ea# .$ ,a$ o& !e i ion &or re+ie, o& a !re+ious8 unsu""ess&u# ad%inis ra i+e "#ai%. There&ore8 as in e+er$ a!!ea# or !e i ion &or re+ie,8 a !e i ioner has o "on+in"e he a!!e##a e "our ha he 4uasi(/udi"ia# a2en"$ a +uo did no ha+e an$ reason o den$ i s "#ai%s. Se"ond8 "ases &i#ed in he ;TA are #i i2a ed (e novo. Thus8 a !e i ioner shou#d !ro+e e+er$ %inu e as!e" o& i s "ase .$ !resen in28 &or%a##$ o&&erin2 and su.%i in2 i s e+iden"e o he ;TA. Sin"e i is "ru"ia# &or a !e i ioner in a /udi"ia# "#ai% &or re&und or a- "redi o sho, ha i s ad%inis ra i+e "#ai% shou#d ha+e .een 2ran ed in he &irs !#a"e8 !ar o& he e+iden"e o .e su.%i ed o he ;TA %us ne"essari#$ in"#ude ,ha e+er is re4uired &or he su""ess&u# !rose"u ion o& an ad%inis ra i+e "#ai%. ?Atlas
Consoli(ate( !inin2 an( Development Corporation v. Commissioner of Internal Revenue, 6. R. No. 1BAA2=8 Mar"h 11=8 2007<

13. What is the jurisdiction of the (ourt of ;ax 1ppeals ? S566ESTED ANS)ER7 1a. Ex'(*%"0e a e((a!e =*&"%+"'!"#$ !# &e0"e2 .) a ea(9 a% -e&e"$ &#0"+e+: 1. De"isions o& he ;o%%issioner o& 0n erna# Re+enue in "ases in+o#+in2 dis!u ed assess%en s8 re&unds o& in erna# re+enue a-es8 &ees or o her "har2es8 !ena# ies8 in re#a ion here o8 or o her %a ers arisin2 under he Na iona# 0n erna# Re+enue ;ode or o her #a,s ad%inis ered .$ he Bureau o& 0n erna# Re+enueC ?D0V0S0ON< 2. 0na" ion .$ he ;o%%issioner o& 0n erna# Re+enue in "ases in+o#+in2 dis!u ed assess%en s8 re&unds or in erna# re+enue a-es8 &ees or o her "har2es8 !ena# ies in re#a ion here o8 or o her %a er arisin2 under he Na iona# 0n erna# Re+enue ;ode or o her #a,s ad%inis ered .$ he Bureau o& 0n erna# Re+enue8 ,here he Na iona# 0n erna# Re+enue ;ode !ro+ides a s!e"i&i" !eriod o& a" ion8 in ,hi"h "ase he ina" ion sha## .e dee%ed a denia#C ?The ina" ion on re&unds in ,o $ears &ro% he i%e a- ,as !aid. Thus8 i& he !res"ri! i+e !eriod o& ,o $ears is a.ou o e-!ire8 he a-!a$er shou#d in er!ose a !e i ion &or re+ie, ,i h he ;TA H D0V0S0ON< :. De"isions8 orders or reso#u ions o& he Re2iona# Tria# ;our s in #o"a# a- "ases ori2ina##$ de"ided or reso#+ed .$ he% in he e-er"ise o& heir ori2ina# or a!!e##a e /urisdi" ionC ?0& ori2ina# D0V0S0ONC i& a!!e##a e 5: 'A:C< B. De"isions o& he ;o%%issioner o& ;us o%s in "ases in+o#+in2 #ia.i#i $ &or "us o%s du ies8 &ees or o her %one$ "har2es8 sei@ure8 de en ion or re#ease o& !ro!er $ a&&e" ed8 &ines8 &or&ei ures or o her !ena# ies in re#a ion here o8 or o her %a ers arisin2 under he ;us o%s La, or o her #a,s ad%inis ered .$ he Bureau o& ;us o%sC ?D0V0S0ON< A. De"isions o& he ;en ra# Board o& Assess%en A!!ea#s in he e-er"ise o& i s a!!e##a e /urisdi" ion o+er "ases in+o#+in2 he assess%en and a-a ion o& rea# !ro!er $ ori2ina##$ de"ided .$ he !ro+in"ia# or "i $ .oard o& assess%en a!!ea#sC ?5: 'A:C< =. De"isions o& he Se"re ar$ o& Ginan"e on "us o%s "ases e#e+a ed o hi% au o%a i"a##$ &or re+ie, &ro% de"isions o& he ;o%%issioner o& ;us o%s ,hi"h are ad+erse o he 6o+ern%en under Se" ion 2:1A o& he Tari&& and ;us o%s ;odeC ?This has re&eren"e o &or&ei ure "ases ,here he de"ision is o re#ease he sei@ed ar i"#es H D0V0S0ON< 7. De"isions o& he Se"re ar$ o& Trade and 0ndus r$8 in "ase o& nona2ri"u# ura# !rodu" 8 "o%%odi $ or ar i"#e8 and he Se"re ar$ o& A2ri"u# ure in he "ase o& a2ri"u# ura# !rodu" 8 "o%%odi $ or ar i"#e8 in+o#+in2 du%!in2 and "oun er+ai#in2 du ies under Se" ion :01 and :028 res!e" i+e#$8 o& he Tari&& and ;us o%s ;ode8 and sa&e2uard %easures under Re!u.#i" A" No. >>008 ,here ei her !ar $ %a$ a!!ea# he de"ision o i%!ose or no o i%!ose said du ies. ?D0V0S0ON< .. E*&"%+"'!"#$ #0e& 'a%e% "$0#(0"$, '&"m"$a( #//e$%e% a% -e&e"$ &#0"+e+:

44

1. Ex'(*%"0e #&","$a( =*&"%+"'!"#$ #0e& a(( '&"m"$a( 'a%e% arisin2 &ro% +io#a ions o& he Na iona# 0n erna# Re+enue ;ode or Tari&& and ;us o%s ;ode and o her #a,s ad%inis ered .$ he Bureau o& 0n erna# Re+enue or he Bureau o& ;us o%s7 Provi(e(, ho-ever, Tha o&&enses or &e#onies %en ioned in his !ara2ra!h ,here he !rin"i!a# a%oun o& a-es and &ees8 e-"#usi+e o& "har2es and !ena# ies "#ai%ed8 is #ess han One %i##ion !esos ?'180008000.00< or ,here here is no s!e"i&ied a%oun "#ai%ed sha## .e ried .$ he re2u#ar ;our s and he /urisdi" ion o& he ;TA sha## .e a!!e##a e. An$ !ro+ision o& #a, or he Ru#es o& ;our o he "on rar$ no ,i hs andin28 he "ri%ina# a" ion and he "orres!ondin2 "i+i# a" ion &or he re"o+er$ o& "i+i# #ia.i#i $ &or a-es and !ena# ies sha## a a## i%es .e si%u# aneous#$ ins i u ed ,i h8 and /oin #$ de er%ined in he sa%e !ro"eedin2 .$ he ;TA8 he &i#in2 o& he "ri%ina# a" ion .ein2 dee%ed o ne"essari#$ "arr$ ,i h i he &i#in2 o& he "i+i# a" ion8 and no ri2h o reser+e he &i#in2 o& su"h "i+i# a" ion se!ara e#$ &ro% he "i+i# a" ion ,i## .e re"o2ni@ed. 2. Ex'(*%"0e a e((a!e =*&"%+"'!"#$ "$ '&"m"$a( #//e$%e%: a< O+er a!!ea#s &ro% he /ud2%en s8 reso#u ions or orders o& he Re2iona# Tria# ;our s in a- "ases ori2ina##$ de"ided .$ he%8 in heir res!e" i+e erri oria# /urisdi" ion. .< O+er !e i ions &or re+ie, o& he /ud2%en s8 reso#u ions or orders o& he Re2iona# Tria# ;our s in he e-er"ise o& heir a!!e##a e /urisdi" ion o+er a- "ases ori2ina##$ de"ided .$ he Me ro!o#i an Tria# ;our s8 Muni"i!a# Tria# ;our s and Muni"i!a# ;ir"ui Tria# ;our s in heir res!e" i+e /urisdi" ion. ". E*&"%+"'!"#$ #0e& !ax '#((e'!"#$ 'a%e%: 1. E-"#usi+e ori2ina# /urisdi" ion in a- "o##e" ion "ases in+o#+in2 &ina# and e-e"u or$ assess%en s &or a-es8 &ees8 "har2es and !ena# ies7 Provi(e(, ho-ever, Tha "o##e" ion "ases ,here he !rin"i!a# a%oun o& a-es and &ees8 e-"#usi+e o& "har2es and !ena# ies8 "#ai%ed is #ess han One %i##ion !esos ?'180008000< sha## .e ried .$ he !ro!er Muni"i!a# Tria# ;our 8 Me ro!o#i an Tria# ;our and Re2iona# Tria# ;our . 2. E-"#usi+e a!!e##a e /urisdi" ion in a- "o##e" ion "ases7 a. O+er a!!ea#s &ro% /ud2%en s8 reso#u ions8 or orders o& he Re2iona# Tria# ;our s in a- "o##e" ion "ases ori2ina##$ de"ided .$ he%8 in heir res!e" i+e erri oria# /urisdi" ion. .. O+er !e i ions &or re+ie, o& he /ud2%en s8 reso#u ions or orders o& he Re2iona# Tria# ;our s in he e-er"ise o& heir a!!e##a e /urisdi" ion o+er a- "o##e" ion "ases ori2ina##$ de"ided .$ he Me ro!o#i an Tria# ;our s8 Muni"i!a# Tria# ;our s and Muni"i!a# ;ir"ui Tria# ;our s8 in heir res!e" i+e /urisdi" ion.3 ?Se". 78 R. A. No. 112A8 as a%ended .$ R. A. No. 92>28 e%!hasis and ,ords in !aren heses su!!#ied< 11. A ("'a."("!) #/ %roton %ilipinas (orporation vs. #epublic$ etc.$ :. #. 'o. "B.?)$ Ectober "$ ?..". The "ase ,as de"ided on &a" ua# an e"eden s .e&ore R.A.No. 92>2 ,hi"h 2ran s "ri%ina# /urisdi" ion o he ;our o& Ta- A!!ea#s i& he +a#ue o& he a- is '1 %i##ion or %ore. 0n er!re in2 he !ro+isions o& Re!u.#i" A" No. >2B98 ,hi"h !ro+ides ha he "i+i# a" ion &or re"o+er$ o& "i+i# #ia.i#i $ shou#d .e /oin #$ de er%ined in he "ri%ina# !ro"eedin2 .$ he Sandi2an.a$an or a!!ro!ria e "our s8 he !rohi.i ion o& reser+a ion o& he "ri%ina# as!e" 8 he Su!re%e ;our said ha a- "o##e" ion "ases %a$ .e ried se!ara e#$8 and no .e&ore he Sandi2an.a$an in Re!. A" No. :019 "ases. This is so .e"ause8 Re!. A" No. :019 is si#en on he de&ini ion o& "i+i# #ia.i#i $ and he a!!#i"a ion o& Ar . 10B o& he Re+ised 'ena# ;ode does no "o+er a-es. ;onse4uen #$8 he Su!re%e ;our ru#ed ha on he a"o##e" ion "ase he RT; ,ou#d ha+e /urisdi" ion. I$!e& &e!a!"#$ .) !-e a*!-#& "$ !-e (",-! #/ Re . A'!. 7262. 0& i is a "ri%ina# "ase "o2ni@a.#e .$ he Sandi2an.a$an8 hen his "our re ains /urisdi" ion8 ,i h he "i+i# /urisdi" ion .ein2 "o2ni@a.#e .$ he ;TA or he #o,er "our s de!endin2 on he a%oun . 0& he issue is a !ure#$ a- "ase8 e+en i& i in+o#+es "ases "o2ni@a.#e .$ he Sandi2an.a$an8 hen /urisdi" ion +es s u!on he ;TA or he #o,er "our s de!endin2 on he a%oun o& he a-. 13. What is the characteristic of a DI# denial of a protest such as would enable the taxpayer to appeal the same to the (ourt of ;ax 1ppeals ?

45

S566ESTED ANS)ER7 The ;o%%issioner o& 0n erna# Re+enue shou#d a#,a$s indi"a e o he a-!a$er in "#ear and une4ui+o"a# #an2ua2e ,hene+er his a" ion on an assess%en 4ues ioned .$ a a-!a$er "ons i u es his &ina# de er%ina ion on he dis!u ed assess%en . On he .asis o& his s a e%en indu.i a.#$ sho,in2 ha he ;o%%issioners "o%%uni"a ed a" ion is his &ina# de"ision on he "on es ed assess%en 8 he a22rie+ed a-!a$er ,ou#d hen .e a.#e o a*e re"ourse o he a- "our a he o!!or une i%e. )i hou need#ess di&&i"u# $8 he a-!a$er ,ou#d .e a.#e o de er%ine ,hen his ri2h o a!!ea# o he a- "our a""rues. ?Commissioner of Internal Revenue v. 'an, of the Philippines
Islan(s, 6. R. No. 1:B0=28 A!ri# 178 2007 "i in2 6ceanic Fireless :et-or,, Inc. v. Commissioner of Internal Revenue, 6. R. No. 1B>:>08 9 De"e%.er 200A8 B77 S;RA 20A8 211(2128 "i in2 uri2ao 5lectric Co., Inc. v. Court of $a. Appeals, 6. R. No. L(2AB2>98 2> Fune 197B8 A7 S;RA A2:<

NOTES AND ;OMMENTS7 a. Rea%#$% /#& !-e &*(e &eB*"&"$, CIR?% *$eB*"0#'a( (a$,*a,e #$ -"% a'!"#$ #$ !-e &#!e%!.
1< 0 ,ou#d o.+ia e a## desire and o!!or uni $ on he !ar o& he a-!a$er o "on inua##$ de#a$ he &ina#i $ o& he assess%en H and8 "onse4uen #$8 he "o##e" ion o& he a%oun de%anded as a-es H .$ re!ea ed re4ues s &or re"o%!u a ion and re"onsidera ion. 2< On he !ar o& he ;o%%issioner o& 0n erna# Re+enue8 his ,ou#d en"oura2e his o&&i"e o "ondu" a "are&u# and horou2h s ud$ o& e+er$ 4ues ioned assess%en and render a "orre" and de&ine de"ision hereon in he &irs ins an"e. :< This ,ou#d a#so de er he ;o%%issioner o& 0n erna# Re+enue &ro% un&air#$ %a*in2 he a-!a$er 2ro!e in he dar* and s!e"u#a e as o ,hi"h a" ion "ons i u es he de"ision a!!ea#a.#e o he a- "our . B< O& 2rea er i%!or 8 his ru#e o& "ondu" ,ou#d %ee a !ressin2 need &or &air !#a$8 re2u#ari $8 and order#iness in ad%inis ra i+e a" ion. . ?Commissioner of Internal Revenue v. 'an, of the Philippines Islan(s, 6. R. No. 1:B0=28 A!ri# 178 2007 "i in2 6ceanic Fireless :et-or,, Inc. v. Commissioner of Internal Revenue, 6. R. No. 1B>:>08 9 De"e%.er 200A8 B77 S;RA 20A8 211(2128 "i in2 uri2ao 5lectric Co., Inc. v. Court of $a. Appeals, 6. R. No. L(2AB2>98 2> Fune 197B8 A7 S;RA A2:<

14. (ite acts of DI# (ommissioner that may be considered as denial of a protest which serve as basis for appeal to the (ourt of ;ax 1ppeals. S566ESTED ANS)ER7 a. Gi#in2 .$ he B0R o& a "i+i# sui &or "o##e" ion o& he de&i"ien"$ a- is "onsidered a denia# o& he re4ues &or re"onsidera ion. ?Commissioner of Internal Revenue v. &nion hippin2 Corporation, 1>A S;RA AB7< .. An indi"a ion o he a-!a$er .$ he ;o%%issioner 1in "#ear and une4ui+o"a# #an2ua2e3 o& his &ina# denia# no he issuan"e o& he ,arran o& dis rain and #e+$. )ha is he su./e" o& he a!!ea# is he &ina# de"ision no he ,arran o& dis rain . (Commissioner of Internal Revenue v. &nion hippin2 Corporation, 1>A S;RA
AB7)

". A B0R de%and #e er sen o he a-!a$er a& er his !ro es o& he assess%en no i"e is "onsidered as he &ina# de"ision o& he ;o%%issioner on he !ro es . ( uri2ao 5lectric Co., Inc. v. Court of $a. Appeals, et al.,
A7 S;RA A2:<

d. A #e er o& he B0R ;o%%issioner rei era in2 o a a-!a$er his !re+ious de%and o !a$ an assess%en is "onsidered a denia# o& he re4ues &or re"onsidera ion or !ro es and is a!!ea#a.#e o he ;our o& Ta- A!!ea#s. (Commissioner v. Ayala ecurities Corporation, 70 S;RA 20B< e. Gina# no i"e .e&ore sei@ure "onsidered as "o%%issioners de"ision o& a-!a$ers re4ues &or re"onsidera ion ,ho re"ei+ed no o her res!onse. Commissioner of Internal Revenue v. Isabela Cultural Corporation8 6.R. No. 1:A2108 Fu#$ 118 2001 he#d ha no on#$ is he No i"e he on#$ res!onse re"ei+ed7 i s "on en and enor su!!or s he heor$ ha i ,as he ;0Rs &ina# a" re2ardin2 he re4ues &or re"onsidera ion. The +er$ i #e e-!ress#$ indi"a ed ha i ,as a final no i"e !rior o sei@ure o& !ro!er $. The #e er i se#& "#ear#$ s a ed ha he a-!a$er ,as .ein2 2i+en 1 his LAST O''ORT5N0TK3 o !a$C o her,ise8 i s !ro!er ies ,ou#d .e su./e" ed o dis rain and #e+$. 15. ;he taxpayer seasonably protested the assessment issued by the (ommissioner of Internal #evenue. Auring the pendency of the protest the (I# issued a warrant of distraint and levy to collect the taxes subject of the protest. 1s counsel what advice shall you give the taxpayer. 8xplain briefly your answer. ANS)ER7 The a-!a$er shou#d a!!ea#8 .$ ,a$ o& a !e i ion &or re+ie,8 o he ;our o& Ta- A!!ea#s no on he 2round o& he denia# o& he !ro es .u on o her %a er arisin2 under he !ro+isions o& he Na iona#

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0n erna# Re+enue ;ode. The a" ua# issuan"e o& a ,arran o& dis rain and #e+$ in "er ain "ases "anno .e "onsidered a &ina# de"ision on a dis!u ed assess%en . To .e a +a#id de"ision on a dis!u ed assess%en 8 he de"ision o& he ;o%%issioner or his du#$ au hori@ed re!resen a i+e sha## ?a< s a e he &a" s8 he a!!#i"a.#e #a,8 ru#es and re2u#a ions8 or /uris!ruden"e on ,hi"h su"h de"ision is .ased8 o her,ise8 he de"ision sha## .e +oid8 in ,hi"h "ase he sa%e sha## no .e "onsidered a de"ision on he dis!u ed assess%en C and ?.< ha he sa%e is his &ina# de"ision. ?Se". :.1.=8 Re+. Re2s. 12(99< These "ondi ions are no "o%!#ied ,i h .$ he %ere issuan"e o& a ,arran o& dis rain and #e+$. (Commissioner of Internal Revenue v. &nion hippin2 Corp., 1>A S;RA AB7) Gur her%ore8 a %o ion &or he sus!ension o& he "o##e" ion o& he a- %a$ .e &i#ed o2e her ,i h he !e i ion &or re+ie, ?Se". :8 Ru#e 108 RR;TA e&&e" i+e De"e%.er 1A8 200A< .e"ause he "o##e" ion o& he a- %a$ /eo!ardi@e he in eres o& he a-!a$er. 16. A% a ,e$e&a( &*(e9 !-e&e m*%! a(2a)% .e a +e'"%"#$ #/ !-e C#mm"%%"#$e& #/ I$!e&$a( Re0e$*e #& C#mm"%%"#$e& #/ C*%!#m% .e/#&e !-e C#*&! #/ Tax A ea(%9 2#*(+ -a0e =*&"%+"'!"#$. 0& here is no su"h de"ision8 he ,ou#d .e dis%issed &or #a"* o& /urisdi" ion un#ess he "ase &a##s under an$ o& he &o##o,in2 e-"e! ions. 17. I$%!a$'e% 2-e&e !-e C#*&! #/ Tax A ea(% 2#*(+ -a0e =*&"%+"'!"#$ e0e$ "/ !-e&e "% $# +e'"%"#$ )e! .) !-e C#mm"%%"#$e& #/ I$!e&$a( Re0e$*e: a. )here he ;o%%issioner has no a" ed on he dis!u ed assess%en a& er a !eriod o& 1>0 da$s &ro% su.%ission o& "o%!#e e su!!or in2 do"u%en s8 he a-!a$er has a !eriod o& :0 da$s &ro% he e-!ira ion o& he 1>0 da$ !eriod ,i hin ,hi"h o a!!ea# o he ;our o& Ta- A!!ea#s. ?#as !ar.8 Se". 22> ?e<8
N0R; o& 1997G Commissioner of Internal Revenue v. Isabela Cultural Corporation, G.R. :o. />A0/=, 4uly //, 0==/)

.. )here he ;o%%issioner has no a" ed on an a!!#i"a ion &or re&und or "redi and he ,o $ear !eriod &ro% he i%e o& !a$%en is a.ou o e-!ire8 he a-!a$er has o &i#e his a!!ea# ,i h he ;our o& TaA!!ea#s .e&ore he e-!ira ion o& ,o $ears &ro% he i%e he a- ,as !aid. 0 is dishear enin2 enou2h o a a-!a$er o .e *e! ,ai in2 &or an inde&ini e !eriod &or he ru#in28. 0 ,ou#d %a*e %a ers %ore e-as!era in2 &or he a-!a$er i& he doors o& /us i"e ,ou#d .e "#osed &or su"h a re#ie& un i# a& er he ;o%%issioner8 ,ou#d ha+e8 a his !ersona# "on+enien"e8 2i+en his 2o si2na#.
(Commissioner of Customs, et al, v. Court of $a. Appeals, et al., G.R. :o. ?0@/?, !arch /@, /B?B, unrep.)

28. I$%!a$'e% 2-e&e !-e C#*&! #/ Tax A ea(% 2#*(+ -a0e =*&"%+"'!"#$ e0e$ "/ !-e&e "% $# +e'"%"#$ #/ !-e C#mm"%%"#$e& #/ C*%!#m%7 a. De"isions o& he Se"re ar$ o& Trade and 0ndus r$ or he Se"re ar$ o& A2ri"u# ure in an i(du%!in2 and "oun er+ai#in2 du $ "ases are a!!ea#a.#e o he ;our o& Ta- A!!ea#s ,i hin hir $ ?:0< da$s &ro% re"ei! o& su"h de"isions. .. 0n "ase o& au o%a i" re+ie, .$ he Se"re ar$ o& Ginan"e in sei@ure or &or&ei ure "ases ,here he +a#ue o& he i%!or a ion e-"eeds 'A %i##ion or ,here he de"ision o& he ;o##e" or o& ;us o%s ,hi"h &u##$ or !ar ia##$ re#eases he shi!%en sei@ed is a&&ir%ed .$ he ;o%%issioner o& ;us o%s. ". 0n "ase o& au o%a i" re+ie, .$ he Se"re ar$ o& Ginan"e o& a de"ision o& a ;o##e" or o& ;us o%s a" in2 &a+ora.#$ u!on a "us o%s !ro es . 21. A% a ,e$e&a( &*(e9 @N# '#*&! %-a(( -a0e !-e a*!-#&"!) !# ,&a$! a$ "$=*$'!"#$ !# &e%!&a"$ !-e '#((e'!"#$ #/ a$) $a!"#$a( "$!e&$a( &e0e$*e !ax9 /ee #& '-a&,e .3 ?Se". 21>8 N0R;< 1No a!!ea# a*en o he ;TA &ro% he de"ision o& he ;o%%issioner o& 0n erna# Re+enue or he ;o%%issioner o& ;us o%s or he Re2iona# Tria# ;our 8 !ro+in"ia#8 "i $ or %uni"i!a# reasurer or he Se"re ar$ o& Ginan"e8 he Se"re ar$ o& Trade and 0ndus r$ and Se"re ar$ o& A2ri"u# ure8 as he "ase %a$ .e sha## sus!end he !a$%en 8 #e+$8 dis rain 8 andIor sa#e o& an$ !ro!er $ o& he a-!a$er &or he sa is&a" ion o& his a#ia.i#i $ as !ro+ided .$ e-is in2 #a,7 'ro+ided8 ho,e+er8 Tha ,hen in he o!inion o& he ;our he "o##e" ion .$ he a&ore%en ioned 2o+ern%en a2en"ies %a$ /eo!ardi@e he in eres o& he 6o+ern%en andIor he a-!a$er he ;our a an$ s a2e o& he !ro"eedin2 %a$ sus!end he said "o##e" ion and re4uire he a-!a$er ei her o de!osi he a%oun "#ai%ed or o &i#e a sure $ .ond &or no %ore han dou.#e he a%oun ,i h he ;our .3 ?Se". 118 Re!. A" No. 112A8 as a%ended .$ Se".98 Re!. A" No. 92>2 <

47

The Su!re%e ;our %a$ en/oin he "o##e" ion o& a-es under i s 2enera# /udi"ia# !o,er .u i shou#d .e a!!aren ha he sour"e o& he !o,er is no s a u or$ .u "ons i u iona#. The Su!re%e ;our did no 2ran he !ro+isiona# re%ed$ !ra$ed &or in outhern Cross Cement Corporation v. $he Philippine Cement !anufacturers Corp., et al., 6. R. No. 1A>AB08 Fu#$ >8 200B &or i ,ou#d .e an a%oun o en/oinin2 he "o##e" ion o& a-es8 a !ere%! or$ /udi"ia# a" ,hi"h is radi iona##$ &ro,ned u!on un#ess here is a "#ear s a u or$ .asis &or i . E+iden is he "#ear #e2is#a i+e in en ha he i%!osi ion o& sa&e2uard %easures8 des!i e he a+ai#a.i#i $ o& /udi"ia# re+ie,8 shou#d no .e en/oined no ,i hs andin2 an$ i%e#$ a!!ea# o& he i%!osi ion. This so .e"ause he Sa&e2uard Measures A" s a es ha he &i#in2 o& a !e i ion &or re+ie, .e&ore he ;TA does no s o!8 sus!end8 or o her,ise o## he i%!osi ion or "o##e" ion o& he a!!ro!ria e ari&& du ies or he ado! ion o& o her a!!ro!ria e sa&e2uard %easures. 22. Ge$e&a( &*(e: 1The ru#e is ha in he a.sen"e o& a""oun in2 re"ords o& a a-!a$er8 his a- #ia.i#i $ %a$ .e de er%ined .$ es i%a ion. The !e i ioner ?;o%%issioner o& 0n erna# Re+enue< is no re4uired o "o%!u e su"h a- #ia.i#i ies ,i h %a he%a i"a# e-a" ness. A!!ro-i%a ion in he "a#"u#a ion o& a-es due is /us i&ied. To ho#d o her,ise ,ou#d .e an a%oun o ho#din2 ha s*i##&u# "on"ea#%en is an in+in"i.#e .arrier o !roo&.3 DCommissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc. 6. R. No. 1:=97A8 Mar"h :18 200A "i in2 &nite( tates v. 4ohnson, :19 5.S. 12:: ?19B:<E 1Ho,e+er8 he ru#e does no a!!#$ ,here he es i%a ion is arri+ed a ar.i rari#$ and "a!ri"ious#$.3 DCommissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc., "i in2 &nite(
tates v. Rin(s,opf, 10A 5.S.B1> ?1>>1<E

23. ;ea$"$, #/ K.e%! e0"+e$'e #.!a"$a.(eM under Se". = ?B<8 N0R; o& 1997. This %eans ha he ori2ina# do"u%en s %us .e !rodu"ed. 0& i "ou#d no .e !rodu"ed8 se"ondar$ e+iden"e %us .e addu"ed. ?8ante. $ra(in2 Co., Inc. v. Commissioner of Internal Revenue8 ;A ( 6.R. S' No. B71728 Se! e%.er :08 199>< NOTES AND ;OMMENTS7 a. T-e %e'#$+a&) e0"+e$'e re&erred o are hose ha %a$ .e addu"ed usin2 he 2enera# %e hods &or
re"ons ru" in2 a a-!a$ers in"o%e or he indire" a!!roa"h o a- in+es i2a ion. The 1.es e+iden"e3 en+isa2ed in Se" ion 1= o& he 1977 N0R; Dno, Se". = ?B<8N0R; o& 1997E 1in"#udes he "or!ora e and a""oun in2 re"ords o& he a-!a$er ,ho is he su./e" o& he assess%en !ro"ess8 he a""oun in2 re"ords o& o her a-!a$ers en2a2ed in he sa%e #ine o& .usiness8 in"#udin2 heir 2ross !ro&i and ne !ro&i sa#es.3 ? Commissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc. 6. R. No. 1:=97A8 Mar"h :18 200A "i in2 De Leon8 $he :ational Internal Revenue Co(e Annotate(, !. :7< 1Su"h e+iden"e a#so in"#udes da a8 re"ord8 !a!er8 do"u%en or an$ e+iden"e 2a hered .$ in erna# re+enue o&&i"ers &ro% o her a-!a$ers ,ho had !ersona# ransa" ions or &ro% ,ho% he su./e" a-!a$er re"ei+ed an$ in"o%eC and re"ord8 da a8 do"u%en and in&or%a ion se"ured &ro% 2o+ern%en o&&i"es or a2en"ies8 su"h as he SE;8 he ;en ra# Ban* o& he 'hi#i!!ines8 he Bureau o& ;us o%s8 and he 1Tari&& and ;us o%s ;o%%ission.3 ? sic, Commissioner v. 8ante. $ra(in2 Co., Inc., supra< 1The #a, a##o,s he B0R a""ess o a## re#e+an or %a eria# re"ords or da a in he !erson o& he a-!a$er. 0 !#a"es no #i%i or "ondi ion on he $!e or &or% o& he %ediu% .$ ,hi"h he re"ord su./e" o& he order o& he B0R is *e! .3 ?Ibi(.< 'ur!ose o& he 1.es e+iden"e o. aina.#e3 ru#e under Se"8 = ?B<8 N0R; o& 1997. 1The !ur!ose o& he #a, is o ena.#e he B0R o 2e a he a-!a$ers re"ords in ,ha e+er &or% he$ %a$ .e *e! .3 ?Commissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc. 6. R. No. 1:=97A8 Mar"h :18 200A<

21. Se'. 4 GBH #/ !-e NIRC #/ 1775 a((#2% !-e BIR !# maCe #& ame$+ a !ax &e!*&$ /&#m -"% #2$ C$#2(e+,e #& #.!a"$e+ !-&#*,- !e%!"m#$) #& #!-e&2"%e . Thus8 he ;o%%issioner o& 0n erna# Re+enue in+es i2a es 3an$ "ir"u%s an"e ,hi"h #ed hi% o .e#ie+e ha he a-!a$er had a-a.#e in"o%e #ar2er han ha re!or ed. Ne"essari#$8 his in4uir$ ,ou#d ha+e o .e ou side o& he .oo*s .e"ause he$ su!!or ed he re urn as &i#ed. He %a$ a*e he s,orn es i%on$ o& he a-!a$er8 he %a$ a*e he es i%on$ o& hird !ar iesC he %a$ e-a%ine and su.!oena8 i& ne"essar$8 raders and .ro*ers a""oun s and .oo*s and he a-!a$ers .oo*s o& a""oun s. The ;o%%issioner is no .ound o &o##o, an$ se o& !a erns. The e-is en"e o& unre!or ed in"o%e %a$ .e sho,n .$ an$ !ar i"u#ar !roo& ha is a+ai#a.#e in he "ir"u%s an"es o& he !ar i"u#ar si ua ion. DCommissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc. "i in2 Campbell, 4r., v. Guetersloh,
2>7 G.2d >7> ?19=1<E

;i in2 i s ru#in2 in a !re+ious "ase8 a 15.S. a!!e##a e "our de"#ared ha ,here he re"ords o& he a-!a$er are %ani&es #$ ina""ura e and in"o%!#e e8 he ;o%%issioner %a$ #oo* o o her sour"es o& in&or%a ion o es a.#ish in"o%e %ade .$ he a-!a$er durin2 he $ears in 4ues ion. ?Ibi(., in urn "i in2 3enney
v. Commissioner, 111 G.2d :7B<

48

23. The &o##o,in2 are he ,e$e&a( me!-#+% +e0e(# e+ .) !-e B*&ea* #/ I$!e&$a( Re0e$*e /#& &e'#$%!&*'!"$, a !ax a)e&?% "$'#me ,here he re"ords do no sho, he rue in"o%e or ,here no re urn ,as &i#ed or ,ha ,as &i#ed ,as a &a#se and &raudu#en re urn ?a< 'er"en a2e %e hodC ?.< Ne ,or h %e hod.C ?"< Ban* de!osi %e hodC ?d< ;ash e-!endi ure %e hodC ?e< 5ni and +a#ue %e hodC ?&< Third !ar $ in&or%a ion or a""ess o re"ords %e hodC ?2< Sur+ei##an"e and assess%en %e hod. ?;ha! er N000. 0ndire" A!!roa"h o 0n+es i2a ion8 Hand.oo* on
Audi 'ro"edures and Te"hni4ues H Vo#u%e 08 !!. =>(7B<

24. T-"&+ a&!) "$/#&ma!"#$ #& a''e%% !# &e'#&+% me!-#+. The B0R %a$ re4uire hird !ar ies8 !u.#i" or !ri+a e o su!!#$ in&or%a ion o he B0R8 and hus8 1o. ain on a re2u#ar .asis &ro% an$ !erson o her han he !erson ,hose in erna# re+enue a- #ia.i#i $ is su./e" o audi or in+es i2a ion8 or &ro% an$ o&&i"e or o&&i"er o& he na iona# and #o"a# 2o+ern%en s8 2o+ern%en a2en"ies and ins ru%en a#i ies in"#udin2 he Ban2*o Sen ra# n2 'i#i!inas and 2o+ern%en (o,ned or H"on ro##ed "or!ora ions8 an$ in&or%a ion su"h as8 .u no #i%i ed o8 "os s and +o#u%e o& !rodu" ion8 re"ei! s or sa#es and 2ross in"o%es o& a-!a$ers8 and he na%es 8 addresses8 and &inan"ia# s a e%en s o& "or!ora ions8 %u ua# &und "o%!anies8 insuran"e "o%!anies8 re2iona# o!era in2 head4uar ers or %u# ina iona# "o%!anies8 /oin a""oun s8 asso"ia ions8 /oin +en ures or "onsor ia and re2is ered !ar nershi!s8 and heir %e%.ersC ---3 DSe". A ?B<8 N0R; o& 1997< 25. A &e<a%%e%%me$! $#!"'e is a #e er sen .$ he Bureau o& 0n erna# Re+enue o a a-!a$er as*in2 hi% o e-!#ain ,i hin a !eriod o& &i& een ?1A< da$s &ro% re"ei! ,h$ he shou#d no .e he su./e" o& an assess%en no i"e. 0 is !ar o& he due !ro"ess ri2h s o& a a-!a$er. As a 2enera# ru#e8 he B0R "ou#d no issue an assess%en no i"e ,i hou &irs issuin2 a !re(assess%en no i"e .e"ause i is !ar o& he due !ro"ess ri2h s o& a a-!a$er o .e 2i+en no i"e in he &or% o& a !re( assess%en no i"e8 and &or hi% o e-!#ain ,h$ he shou#d no .e he su./e" o& an assess%en no i"e. 26. I$%!a$'e% 2-e&e a &e<a%%e%%me$! $#!"'e "% $#! &eB*"&e+ .e/#&e a $#!"'e #/ a%%e%%me$! "% %e$! !# !-e !ax a)e&. a. )hen he &indin2 &or an$ de&i"ien"$ a- is he resu# o& %a he%a i"a# error in he "o%!u a ion o& he a- as a!!earin2 on he &a"e o& he re urnC or .. )hen a dis"re!an"$ has .een de er%ined .e ,een he a- ,i hhe#d and he a%oun a" ua##$ re%i ed .$ he ,i hho#din2 a2en C or ". )hen a a-!a$er o! ed o "#ai% a re&und or a- "redi o& e-"ess "redi a.#e ,i hho#din2 a- &or a a-a.#e !eriod ,as de er%ined o ha+e "arried o+er and au o%a i"a##$ a!!#ied he sa%e a%oun "#ai%ed a2ains he es i%a ed a- #ia.i#i ies &or he a-a.#e 4uar er or 4uar ers o& he su""eedin2 a.#e $earC or d. )hen he e-"ess a- due on e-"isa.#e ar i"#es has no .een !aidC or e. )hen an ar i"#e #o"a##$ !ur"hased or i%!or ed .$ an e-e%! !erson8 su"h as8 .u no #i%i ed o +ehi"#es8 "a!i a# e4ui!%en 8 %a"hineries and s!are !ar s8 has .een so#d8 rade or rans&erred o non(e-e%! !ersons. ?Se". 22>8 N0R; o& 1997< 27. The ,ord assess%en ,hen used in "onne" ion ,i h a-a ion8 %a$ ha+e %ore han one %eanin2. ;#&e '#mm#$() !-e 2#&+ @a%%e%%me$!A mea$% !-e #//"'"a( 0a(*a!"#$ #/ a !ax a)e&?% &# e&!) /#& *& #%e #/ !axa!"#$. T-e a.#0e +e/"$"!"#$ #/ a%%e%%me$! /"$+% a ("'a!"#$ *$+e& !a&"// a$+ '*%!#m% !axa!"#$ a% 2e(( a% (#'a( ,#0e&$me$! !axa!"#$. Gor &ea( &# e&!) !axa!"#$9 !-e&e ma) .e a % e'"a( mea$"$, !# !-e .*&+e$% !-a! a&e "m #%e+ * #$ &ea( &# e&!"e% !-a! -a0e .ee$ .e$e/"!e+ .) a *.("' 2#&C% ex e$+"!*&e #/ a (#'a( ,#0e&$me$!. 0 is so%e i%es "a##ed a s!e"ia# assess%en or a s!e"ia# #e+$. (Commissioner of Internal Revenue v. Pascor Realty
an( Development Corporation, et al., 6.R. No. 12>:1A8 Fune 298 1999<

F#& "$!e&$a( &e0e$*e !axa!"#$ a%%e%%me$! a% (a)"$, a !ax. The u# i%a e !ur!ose o& an assess%en o su"h a "onne" ion is o as"er ain he a%oun ha ea"h a-!a$er is o !a$. (Commissioner of Internal
Revenue v. Pascor Realty an( Development Corporation, et al., 6.R. No. 12>:1A8 Fune 298 1999<

49

38. A$ a%%e%%me$! "% a $#!"'e +*() %e$! !# !-e !ax a)e& 2-"'- "% +eeme+ ma+e #$() 2-e$ !-e BIR &e(ea%e%9 ma"(% #& %e$+% %*'- $#!"'e !# !-e !ax a)e&. (Commissioner of Internal Revenue v. Pascor Realty
an( Development Corporation, et al., 6.R. No. 12>:1A8 Fune 298 1999<

31. What is a self<assessed tax ? S566ESTED ANS)ER7 A a- ha he a-!a$er hi%se#& assesses or "o%!u es and !a$s o he a-in2 au hori $. 0 is a a- ha se#&(assessed .$ he a-!a$er ,i hou he in er+en ion o& an assess%en .$ he a- au hori $ o "rea e he a- #ia.i#i $. The Ta- ;ode &o##o,s he !a$(as($ou(&i#e s$s e% o& a-a ion under ,hi"h he a-!a$er "o%!u es his o,n a- #ia.i#i $8 !re!ares he re urn8 and !a$s he a- as he &i#es he re urn. The !a$(as($ou(&i#e s$s e% is a se#&(assessin2 a- re urn. 0n erna# re+enue a-es are se#&(assessin2. DDissen o& F. ;ar!io in Philippine :ational 6il Company v. Court
of Appeals, et al., 6. R. No. 10997=8 A!ri# 2=8 200A and "o%!anion "ase "i in2 $upa" v. &lep, :1= S;RA 11> ?1999< in urn "i in2 Vi u2 and A"os a8 $a. La- an( 4urispru(ence, 1s edi ion8 19978 !. 2=7E

A "#ear e-a%!#e o& a se#&(assessed a- is he annua# in"o%e a-8 ,hi"h he a-!a$er hi%se#& "o%!u es and !a$s ,i hou he in er+en ion o& an$ assess%en .$ he B0R. The annua# in"o%e a- .e"o%es due and !a$a.#e ,i hou need o& an$ !rior assess%en .$ he B0R. The B0R %a$ or %a$ no in+es i2a e or audi he annua# in"o%e a- re urn &i#ed .$ he a-!a$er. The a-!a$ers #ia.i#i $ &or he in"o%e a- does no de!end on ,he her or no he B0R "ondu" s su"h su.se4uen in+es i2a ion or audi . Ho,e+er8 i& he a-in2 au hori $ is &irs re4uired o in+es i2a e8 and a& er su"h in+es i2a ion o issue he a- assess%en ha "rea es he a- #ia.i#i $8 hen he a- is no #on2er se#&(assessed. ?Dissen o& F. ;ar!io in
Philippine :ational 6il Company v. Court of Appeals, et al., 6. R. No. 10997=8 A!ri# 2=8 200A and "o%!anion "ase<

32. En Ectober ?,$ !,, taxpayer ban* received a notice of assessment from the DI# informing it that deficiency taxes are due from the said taxpayer ban* without any findings of law or fact but supported only with a computation. En Aecember .$ !,,$ the taxpayer ban* counsel filed a letter that 2as soon as this is explained and clarified in a proper notice of assessment$ we shall inform you of the taxpayerIs decision on whether to pay or protest the assessment.7 ;he taxpayer ban* insists that the assessment was not valid. Ef course$ DI# too* the opposite view contending further that there was no seasonable protest$ hence the tax is sue and collectible. Who is correct ? S566ESTED ANS)ER7 The B0R is "orre" . 5nder he o#d #a, Se". 2708 i is enou2h %ere#$ ha he B0R ;o%%issioner sha## 1no i&$ he a-!a$er o& his &indin2s.3 The s a e%en 8 1The a-!a$er sha## .e in&or%ed in ,ri in2 o& he #a, and he &a" s on ,hi"h he assess%en is %adeC o her,ise he assess%en sha## .e +oid3 is an a%end%en o Se". 270 ?no, renu%.ered o Se". 22>< ,hi"h oo* e&&e" on#$ so%e i%e in 199> u!on he e&&e" i+i $ o& he Ta- Re&or% A" o& 1997. The a-!a$er .an* "ounse#s De"e%.er 108 19>> is no a seasona.#e !ro es .e"ause i ,as &i#ed hir $ ?:0< da$s a& er re"ei! o& he assess%en on O" o.er 2>8 19>>. ?Commissioner of Internal Revenue v.
'an, of Philippine Islan(s, 6. R. No. 1:B0=28 A!ri# 178 2007<

33. What are the prescriptive periods for ma*ing assessments of internal revenue taxes ? S566ESTED ANS)ER7 a. Three ?:< $ears &ro% he #as da$ ,i hin ,hi"h o &i#e a re urn or ,hen he re urn ,as a" ua##$ &i#ed8 ,hi"he+er is #a er ?Se". 20:8 N0R; o& 1997<C .. en $ears &ro% dis"o+er$ o& he &ai#ure o &i#e he a- re urn or dis"o+er$ o& &a#si $ or &raud in he re urn DSe". 222 ?a<8 N0R; o& 1997 C or ". ,i hin he !eriod a2reed u!on .e ,een he 2o+ern%en and he a-!a$er ,here here is a ,ai+er o& he !res"ri! i+e !eriod &or assess%en ?Se". 222 ?.<8 N0R; o& 1997<. 31. Gor he !ur!ose o& sa&e2uardin2 a-!a$ers &ro% an$ unreasona.#e e-a%ina ion8 in+es i2a ion or assess%en 8 our a- #a, !ro+ides a s a u e o& #i%i a ions in he "o##e" ion o& a-es. DCommissioner of Internal
Revenue v. '.*. Goo(rich Phils, Inc., ?no- ime Darby International $ire Co., Inc. <, et al., 6.R. No. 10B1718 Ge.ruar$ 2B8 1999.:0: S;RA AB=C Philippine 4ournalists, Inc. v. Commissioner of Internal Revenue, 6. R. No. 1=2>A28 De"e%.er 1=8 200BCE8 as ,e## as heir assess%en s.

50

33. 5nreasona.#e in+es i2a ion "on e%!#a es "ases ,here he !eriod &or assess%en e- ends inde&ini e#$ .e"ause his de!ri+es he a-!a$er o& he assuran"e ha i ,i## no #on2er .e su./e" ed o &ur her in+es i2a ion &or a-es a& er he e-!ira ion o& a reasona.#e !eriod o& i%e . ?Philippine 4ournalists, Inc. v.
Commissioner of Internal Revenue, 6. R. No. 1=2>A28 De"e%.er 1=8 200B ,i h no e o see Republic v. Abla"a, 10> 'hi#. 110A. 110><

La,s on !res"ri! ion shou#d .e #i.era##$ "ons rued in &a+or o& he a-!a$er. Reason7 &or he !ur!ose o& sa&e2uardin2 a-!a$ers &ro% an unreasona.#e e-a%ina ion8 in+es i2a ion or assess%en 8 our a- #a,s !ro+ide a s a u e o& #i%i a ion on he "o##e" ion o& a-es. Thus8 he #a, on !res"ri! ion8 .ein2 a re%edia# %easure8 shou#d .e #i.era##$ "ons rued in order o a&&ord su"h !ro e" ion8 As a "oro##ar$8 he e-"e! ions o he #a, on !res"ri! ion shou#d !er&or"e .e s ri" #$ "ons rued . DPhilippine 4ournalists, Inc. v. Commissioner of
Internal Revenue, 6. R. No. 1=2>A28 De"e%.er 1=8 200B "i in2 Commissioner of Internal Revenue v. '.*. Goo(rich Phils, Inc (no- ime Darby International $ire Co., Inc.),., et al., 6.R. No. 10B1718 Ge.ruar$ 2B8 19998 :0: S;RA AB=E The !res"ri! i+e !eriod ,as !re"ise#$ in ended o 2i+e he a-!a$ers !ea"e o& %ind. (Commissioner of Internal Revenue v. '.*. Goo(rich Phils., Inc., et al., G.R. :o. /=</;/, *ebruary 0<, /BBB)

34. A @=e# a&+) a%%e%%me$!A is a de#in4uen"$ a- assess%en ,hi"h ,as assessed ,i hou he .ene&i o& "o%!#e e or !ar ia# audi .$ an au hori@ed re+enue o&&i"er8 ,ho has reason o .e#ie+e ha he assess%en and "o##e" ion o& a de&i"ien"$ a- ,i## .e /eo!ardi@ed .$ de#a$ .e"ause o& he a-!a$ers &ai#ure o "o%!#$ ,i h he audi and in+es i2a ion re4uire%en s o !resen his .oo*s o& a""oun s andIor !er inen re"ords8 or o su.s an ia e a## or an$ o& he dedu" ions8 e-e%! ions8 or "redi s "#ai%ed in his re urn. DSe". :.1
?a<8 Re+. Re2s. No. =(2000<

Feo!ard$ assess%en is an indi"a ion o& he dou. &u# +a#idi $ o& he assess%en 8 hen"e i %a$ .e su./e" o a "o%!ro%ise. DSe". :.1 ?a<8 Re+. Re2s. No. =(2000E 35. Auring +ulianaIs lifetime$ her business affairs were managed by the %hilippine ;rust (ompany /%hiltrust0. She died on 1pril H$ ?.. .;wo days after her death$ %hiltrust$ through its ;rust Efficer$ filed her Income ;ax #eturn for ?...$ without indicating that +uliana died. En May ??$ ?.. $ %hiltrust filed a verified petition with the #;( for appointment as Special 1dministrator. ;his was denied by the court who appointed one of the heirs as Special 1dministrator. %hiltrustIs motion for reconsideration was denied. 1fter an investigation by the DI# of the decedentIs income tax liability$ it sent$ on 'ovember ,$ ?..H$ a demand letter and a 'otice of 1ssessment to +uliana c3o %hiltrust at the latterIs address which was stated in the !!, Income ;ax #eturn. 'o response was made neither was the DI# advised that +uliana already died. En +une ,$ ?..B$ the DI# (ommissioner issued warrants of distraint and levy to enforce collection of the deficiency income tax liability which was served on +ulianaIs heir. En 'ovember ??$ ?..B$ the DI# filed with the estate court a motion for allowance of claim. ;he heir claimed that there was no proper service of the notice of assessment and that the filing of the motion was time<barred. En the other hand the DI# made the submission that both the issuance of the assessment notice and the motion were all properly made on %hiltrust. 5urthermore the lapse of the H.<day period within which to protest made the assessment final$ executory and uncontestable and not time barred. #ule on the conflicting claims of the parties. S566ESTED ANS)ER7 0 ,ou#d ru#e in &a+or o& he heir. There ,as no !ro!er ser+i"e o& he no i"e o& assess%en .e"ause he dea h o& Fu#iana au o%a i"a##$ se+ered he #e2a# re#a ionshi! o& !rin"i!a# and a2en .e ,een her and 'hi# rus . The se+ered re#a ionshi! "ou#d no .e re+i+ed on he %ere &a" ha 'hi# rus &i#ed her Ta- Re urn ,o da$s a& er her dea h. 'hi# rus s &ai#ure o &i#e a no i"e o& dea h su./e" s i o !ena# san" ions ,hi"h do no in"#ude he inde&ini e o##in2 o& he !res"ri! i+e !eriod &or %a*in2 de&i"ien"$ a- assess%en s8 or he ,ai+er o& he no i"e re4uire%en &or su"h assess%en s. ?5state of the late 4uliana Die" )(a. (e Gabriel v. Commissioner of Internal
Revenue, 6.R. No. 1AAAB18 Fanuar$ 278 200B<

36. What are the re6uirements for the validity of a formal letter of demand and assessment notice ? S566ESTED ANS)ER7 a. There %us ha+e .een !re+ious#$ issued a !re(assess%en no i"e un i# e-"e! edC

51

.. 0 %us ha+e .een issued !rior o he !res"ri! i+e !eriodC and ". The #e er o& de%and "a##in2 &or !a$%en o& he a-!a$ers de&i"ien"$ a- or a-es sha## s a e he &a" s8 he #a,8 ru#es and re2u#a ions8 or /uris!ruden"e on ,hi"h he assess%en is .ased8 o her,ise8 he &or%a# #e er o& de%and and assess%en no i"e sha## .e +oid. ?Se". :.1.B8 Re+. Re2s. No. 12(99< 37. What is the presumption that flows from a taxpayerIs failure to protest an assessment ? S566ESTED ANS)ER7 1Ta- assess%en s .$ a- e-a%iners are !resu%ed "orre" and %ade in 2ood &ai h. The a-!a$er has he du $ o !ro+e o her,ise. 0n he a.sen"e o& !roo& o& an$ irre2u#ari ies in he !er&or%an"e o& du ies8 an assess%en du#$ %ade .$ a Bureau o& 0n erna# Re+enue e-a%iner and a!!ro+ed .$ his su!erior o&&i"ers ,i## no .e dis ur.ed. A## !resu%! ions are in &a+or o& he "orre" ness o& aassess%en s.3 ?Commissioner of Internal Revenue v. 'an, of Philippine Islan(s., 68 R. No. 1:B0=28 A!ri# 178 2007
"i in2 y Po v. Court of Appeals, 6. R. No. L(>1BB=8 1> Au2us 19>>8 1=B S;RA A2B8 A:08 "i a ions o%i ed<

18. What are the reasons for presumption of correctness of assessments ? S566ESTED ANS)ER7 a. Li&e.#ood heor$ .. 'resu%! ion o& re2u#ari $ ?Commissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc., 68 R. No. 1:=97A8 Mar"h :18 200A< in he !er&or%an"e o& !u.#i" &un" ions. ?Commissioner of Internal Revenue v. $ua"on,
Inc., 17: S;RA :97<

". The #i*e#ihood ha he a-!a$er ,i## ha+e a""ess o he re#e+an in&or%a ion DCommissioner of Internal Revenue, supra "i in2 &nite( tates v. Re.ach, B>2 G.2d 10 ?197:<. The "er iorari ,as denied .$ he 5ni ed S a es Su!re%e ;our on No+e%.er 198 197:< d. The desira.i#i $ o& .o#s erin2 he re"ord(*ee!in2 re4uire%en s o& he N0R;. ?Ibi(.< 11. :ive instances where prima facie correctness of a tax assessment does not apply. S566ESTED ANS)ER7 The 1prima facie "orre" ness o& a a- assess%en does no a!!#$ u!on !roo& ha an assess%en is u er#$ ,i hou &ounda ion8 %eanin2 i is ar.i rar$ and "a!ri"ious. )here he B0R has "o%e ou ,i h a 1na*ed assess%en 3 i.e.8 ,i hou an$ &ounda ion "hara" er8 he de er%ina ion o& he adue is ,i hou ra iona# .asis.3 DCommissioner of Internal Revenue v. 8ante. $ra(in2 Co., Inc., 68 R. No. 1:=97A8 Mar"h :18 200A "i in2 &nite( tates v. 4anis, B9 L. Ed. 2d 10B= ?197=<C B2> 5S B:: ?197=<E 0n su"h a si ua ion8 1 he de er%ina ion o& he ;o%%issioner "on ained in a de&i"ien"$ no i"e disa!!ears .3 DCommissioner of Internal
Revenue, supra "i in2 a 5.S. ;our o& A!!ea#s ru#in28 in Clar, an( Clar, v. Commissioner of Internal Revenue, 2== G. 2d =9> ?19A9<E 1Hen"e8 he de er%ina ion .$ he ;TA %us res on a## he e+iden"e in rodu"ed and i s u# i%a e de er%ina ion %us &ind su!!or in "redi.#e e+iden"e.3 DCommissioner of Internal Revenue, supraE

12. What are the instances that suspends the running of the prescriptive periods /Statute of 9imitations0 within which to ma*e an assessment and the beginning of distraint or levy or of a proceeding in court for the collection$ in respect of any tax deficiencies? S566ESTED ANS)ER7 a. )hen he ;o%%issioner is !rohi.i ed &ro% %a*in2 he assess%en 8 or .e2innin2 dis rain 8 or #e+$ or !ro"eedin2 in "our and &or si- $ ?=0< da$s herea& erC .. )hen he a-!a$er re4ues s &or and is 2ran ed a rein+es i2a ion .$ he "o%%issionerC ". )hen he a-!a$er "ou#d no .e #o"a ed in he address 2i+en .$ hi% in he re urn &i#ed u!on ,hi"h he a- is .ein2 assessed or "o##e" edC d. )hen he ,arran o& dis rain and #e+$ is du#$ ser+ed u!on he a-!a$er8 his au hori@ed re!resen a i+e8 or a %e%.er o& his househo#d ,i h su&&i"ien dis"re ion8 and no !ro!er $ "ou#d .e #o"a edC and e. )hen he a-!a$er is ou o& he 'hi#i!!ines. NOTES AND ;OMMENTS7 The ho#din2 in Commissioner of Internal Revenue v. Court of Appeals, et al., G.R. :o. //A;/0, *ebruary 0A, /BBB ?;arna ion "ase< ha he ,ai+er o& he !eriod &or assess%en %us .e in ,ri in2 and ha+e he ,ri en "onsen o& he B0R ;o%%issioner is s i## do" rina# .e"ause o& he !ro+isions o& Se". 22:8 N0R; o& 1997 ,hi"h !ro+ides &or he sus!ension o& he !res"ri! i+e !eriod7

52

13. T-e %",$a!*&e% #/ .#!- !-e C#mm"%%"#$e& a$+ !-e !ax a)e&9 a&e &eB*"&e+ /#& a 2a"0e& #/ !-e &e%'&" !"0e e&"#+8 hus a uni#a era# ,ai+er on he !ar o& he a-!a$er does no sus!end he !res"ri! i+e !eriod. DCommissioner of Internal Revenue v. Court of Appeals, et al., 6.R. No. 11A7128 Ge.ruar$ 2A8 1999 ?;arna ion
"ase<E

11. %hilippine +ournalists$ Inc. /%+I0 filed its 1nnual Income ;ax #eturn for the calendar year ended Aecember H $ !!- which showed a net income of %H. million and the tax due as % . million. 1n examination of %+IIs boo*s of account and other accounting records for the period +anuary $ !!- to Aecember H $ !!- showed deficiency >1;$ Income ;ax and Withholding ;ax in the total amount of % L?) million. Auring the September ??$ !!) informal conference with the #evenue Aistrict Efficer$ %+IIs (omptroller executed a waiver of statute of limitations provided for under sections ??H and ??- of the 'I#(. En Ectober B$ !!,$ the DI# issued a %re<1ssessment 'otice which was followed by 1ssessment3Aemand 'o.HH< <...)B)<!- stating a total deficiency taxes in the amount of % million for income tax$ >1; and expanded withholding taxes$ inclusive of interest and compromise penalty. En March "$ !!!$ the DI# sent to %+I a %reliminary (ollection 9etter to pay the assessment within . days from receipt. En 'ovember .$ !!!$ a 5inal 'otice Defore Seizure was issued giving %+I . days from receipt within which to pay. %+I received the final notice on 'ovember ?-$ !!! and on 'ovember ?"$ !!! %+I as*ed that it be clarified on how the tax liability of % million was arrived at and re6uested for an extension of H. days from receipt of the clarification within which to reply. %+I$ through a follow<up letter$ asserted it never received 1ssessment3Aemand 'o. HH< <...)B)<!-. En March ?,$ ?... %+I received a Warrant of Aistraint and3or 9evy. %+I then appealed to the (;1. ;he following issues are for resolution in the appeal4 a. Aoes the (;1 have jurisdiction over the appeal ? b. Was the Waiver of the Statute of 9imitations valid ? c. Were the 1ssessment3Aemand and the Warrant of Aistraint and3or 9evy valid ? Will the appeal prosper? 8xplain briefly your answer. S566ESTED ANS)ER7 Kes8 i ,i## !ros!er. a. The ;TA has /urisdi" ion o de er%ine i& he ,arran o& dis rain and #e+$ issued .$ he B0R is +a#id and o ru#e i& he )ai+er o& he S a u e o& Li%i a ions ,as +a#id#$ e&&e" ed. This is so .e"ause he ;TA has e-"#usi+e a!!e##a e /urisdi" ion o re+ie, .$ a!!ea# de"isions o& he ;o%%issioner o& 0n erna# Re+enue in "ases in+o#+in2 1o her %a ers arisin2 under he Na iona# 0n erna# Re+enue ;ode or o her #a,s ad%inis ered .$ he Bureau o& 0n erna# Re+enue.3 DSe". 7 ?a< ?1<. R. A. No. 112A8 as a%ended .$ R. A. No. 92>2< Thus i ,as !re+ious#$ ru#ed ha he ;TA had /urisdi" ion o a" on a !e i ion o in+a#ida e and annu# he dis rain orders o& he ;o%%issioner. DKnares(San ia2o8 F. Philippine 4ournalists, Inc. v. Commissioner of Internal Revenue, 6. R. No. 1=2>A28 De"e%.er 1=8 200B "i in2 Panrto%a v. Davi(, 111 'hi#. 197C 1 S;RA =0> ?19=1<E Li*e,ise u!he#d .$ he Su!re%e ;our ,as he de"ision o& he ;TA de"#arin2 se+era# ,ai+ers e-e"u ed .$ he a-!a$er as nu## and +oid8 hus in+a#ida in2 he assess%en s issued .$ he B0R. ?Ibi(., "i in2 Commissioner of
Internal Revenue v. Court of Appeals, 6. R. No. 11A7128 2A Ge.ruar$ 19998 :0: S;RA =1B<

.. The )ai+er o& he S a u e o& Li%i a ions is no +a#id .e"ause i did no s!e"i&$ a de&ini e a2reed da e .e ,een he B0R and 'F08 ,i hin ,hi"h he &or%er %a$ assess and "o##e" re+enue a-es. Gur her%ore8 he ,ai+er is a#so de&e" i+e &ro% he 2o+ern%en side .e"ause i ,as si2ned on#$ .$ a re+enue dis ri" o&&i"er8 and no he ;o%%issioner8 as so re4uired. Gina##$8 'F0 ,as no &urnished a "o!$ o& he ,ai+er. ". The ,ai+er do"u%en is in"o%!#e e and de&e" i+e and hus he hree($ear !res"ri! i+e !eriod ,i hin ,hi"h o assess ,as no o##ed or e- ended and "on inued o run un i# A!ri# 178 199>. ;onse4uen #$8 Assess%en IDe%and No. ::(1(0007A7(9B issued on De"e%.er 98 199> ,as in+a#id .e"ause i ,as issued .e$ond he hree ?:< $ear !eriod. 0n he sa%e %anner8 he )arran o& Dis rain andIor Le+$ ,hi"h 'F0 re"ei+ed on Mar"h 2>8 2000 is a#so nu## and +oid &or ha+in2 .een issued !ursuan o an in+a#id assess%en .
?Philippine 4ournalists, Inc. v. Commissioner of Internal Revenue, 6. R. No. 1=2>A28 De"e%.er 1=8 200B<

13. What is the procedure for suspension of collection of taxes ? S566ESTED ANS)ER7 )here he "o##e" ion o& he a%oun o& he a-!a$ers #ia.i#i $8 sou2h .$ %eans o& a de%and &or !a$%en 8 .$ #e+$8 dis rain or sa#e o& !ro!er $ o& he a-!a$er8 or .$ ,ha e+er %eans8 as !ro+ided under e-is in2 #a,s8 %a$ /eo!ardi@e he in eres o& he 2o+ern%en or he a-!a$er8 an

53

in eres ed !ar $ %a$ &i#e a %o ion &or he sus!ension o& he "o##e" ion o& he a- #ia.i#i $ ?Se". 18 Ru#e 108 RR;TA e&&e" i+e De"e%.er 1A8 200A< ,i h he ;our o& Ta- A!!ea#s. The %o ion &or sus!ension o& he "o##e" ion o& he a- %a$ .e &i#ed o2e her ,i h he !e i ion &or re+ie, or ,i h he ans,er8 or in a se!ara e %o ion &i#ed .$ he in eres ed !ar $ a an$ s a2e o& he !ro"eedin2s. ?Se". :8 Ru#e 108 RR;TA e&&e" i+e De"e%.er 1A8 200A< 14. What are the two ways of protesting an assessment notice for an internal revenue tax ? 1lternatively$ what are the two types of protests ? 8xplain briefly. S566ESTED ANS)ER7 a. Re4ues &or re"onsidera ion ,hi"h re&ers o a !#ea &or re(e+a#ua ion o& an assess%en on he .asis o& e-is in2 re"ords ,i hou need o& addi iona# e+iden"e. 0 %a$ in+o#+e .o h a 4ues ion o& &a" or o& #a, or .o h. .. Re4ues &or rein+es i2a ion ,hi"h re&ers o a !#ea &or re(e+a#ua ion o& an assess%en on he .asis o& ne,#$(dis"o+ered e+iden"e or addi iona# e+iden"e ha a a-!a$er in ends o !resen in he in+es i2a ion. 0 %a$ a#so in+o#+e a 4ues ion o& &a" or #a, or .o h. ?Commissioner of Internal Revenue v.
Philippine Global Communication, Inc., 6. R. No. 1=71B=8 O" o.er :18 200= "i in2 Re+. Re2s. No. 12(>A<

15. What is that type of protest that suspends the running of the statute of limitations for the beginning of distraint or levy or a proceeding in court for collection ? Why ? S566ESTED ANS)ER7 0 is ha $!e o& !ro es 1,hen he a-!a$er re4ues s &or a rein+es i2a ion ,hi"h is 2ran ed .$ he ;o%%issioner3 ?Se". 22:8 N0R; o& 1997<8 ha sus!ends he runnin2 o& he s a u e o& #i%i a ions &or "o##e" ion o& he a-. ?Commissioner of Internal Revenue v. Philippine Global Communication, Inc., 6. R. No. 1=71B=8 O" o.er :18 200= "i in2 Se". 2718 no, Se". 22:8 N0R; o& 1997< )hen a a-!a$er de%ands a rein+es i2a ion8 he i%e e%!#o$ed in rein+es i2a ion shou#d .e dedu" ed &ro% he o a# !eriod o& #i%i a ion.
DCommissioner of Internal Revenue, supra "i in2 Republic v. Lope", 117 'hi#. A7A8 A7>C 7 S;RA A==8 A=>(A=9 ?19=:<E

5ndou. ed#$8 a rein+es i2a ion8 ,hi"h en ai#s he re"e! ion and e+a#ua ion o& addi iona# e+iden"e8 ,i## a*e %ore i%e han a re"onsidera ion o& a a- assess%en ,hi"h ,i## .e #i%i ed o he e+iden"e a#read$ a handC his /us i&ies ,h$ he &or%er "an sus!end he runnin2 o& he s a u e o& #i%i a ions on "o##e" ion o& he assessed a-8 ,hi#e he #a er "anno . ?Commissioner of Internal Revenue v. Philippine Global Communication, Inc.,
6. R. No. 1=71B=8 O" o.er :18 200= "i in2 'an, of Philippine Islan(s v. Commissioner of Internal Revenue, 6. R. No. 1:97:=8 17 O" o.er 200A8 B7: S;RA 20A8 2:0(2:1<

16. What are the re6uirements for the validity of a taxpayerIs protest ? S566ESTED ANS)ER7 a. 0 %us .e &i#ed ,i hin he re2#e%en ar$ !eriod o& hir $ ?:0< da$s &ro% re"ei! o& he no i"e o& assess%en . .. The a-!a$er %us no on#$ sho, he errors o& he Bureau o& 0n erna# Re+enue .u a#so he "orre" "o%!u a ion hrou2h 1< A s a e%en o& he &a" s8 he a!!#i"a.#e #a,8 ru#es and re2u#a ions8 or /uris!ruden"e on ,hi"h he a-!a$ers !ro es is .ased8 2< 0& here are se+era# issues in+o#+ed in he dis!u ed assess%en and he a-!a$er &ai#s o s a e he &a" s8 he a!!#i"a.#e #a,8 ru#es and re2u#a ions8 or /uris!ruden"e in su!!or o& his !ro es a2ains so%e o& he se+era# issues on ,hi"h he assess%en is .ased8 he sa%e sha## .e "onsidered undis!u ed issue or issues8 in ,hi"h "ase8 he a-!a$er sha## .e re4uired o !a$ he "orres!ondin2 de&i"ien"$ a- or a-es a ri.u a.#e here o. ?Se". :.1.A8 Re+. Re2s. 12(99< ". )i hin si- $ ?=0< da$s &ro% &i#in2 o& he !ro es 8 he a-!a$er sha## su.%i a## re#e+an su!!or in2 do"u%en s. DB h !ar.8 Se". 22> ?e<8 N0R; o& 1997E 17. A '#m &#m"%e "% a '#$!&a'! ,here.$ he !ar ies8 .$ %a*in2 re"i!ro"a# "on"essions8 a+oid a #i i2a ion or !u an end o one a#read$ "o%%en"ed. ?Ar . 202>8 ;i+i# ;ode< A "o%!ro%ise !ena# $ "ou#d no .e i%!osed .$ he B0R8 i& he a-!a$er did no a2ree. A "o%!ro%ise .ein28 .$ i s na ure8 %u ua# in essen"e re4uires a2ree%en . The !a$%en %ade under !ro es "ou#d on#$ si2ni&$ ha here ,as no a2ree%en ha had e&&e" i+e#$ .een rea"hed .e ,een he !ar ies. ?)(a.
(e an A2ustin, et al., v. Commissioner of Internal Revenue, G. R. :o. />?<?A, eptember /=, 0==/)

54

38. What tax cases may be the subject of a compromise ? S566ESTED ANS)ER7 The &o##o,in2 "ases %a$8 u!on a-!a$ers "o%!#ian"e ,i h he .asis &or "o%!ro%ise8 .e he su./e" %a er o& "o%!ro%ise se #e%en 7 a. De#in4uen a""oun sC .. ;ases under ad%inis ra i+e !ro es a& er issuan"e o& he Gina# Assess%en No i"e o he a-!a$er ,hi"h are s i## !endin2 in he Re2iona# O&&i"es8 Re+enue Dis ri" O&&i"es8 Le2a# Ser+i"e8 Lar2e Ta-!a$er Ser+i"e ?LTS<8 ;o##e" ion Ser+i"e8 En&or"e%en Ser+i"e and o her o&&i"es in he Na iona# O&&i"eC ". ;i+i# a- "ases .ein2 dis!u ed .e&ore he "our sC d. ;o##e" ion "ases &i#ed in "our sC e. ;ri%ina# +io#a ions8 o her han hose a#read$ &i#ed in "our 8 or hose in+o#+in2 "ri%ina# a- &raud.
?Se". 28 Re+. Re2s. No. :0(2002<

31. What tax cases could not be the subject of compromise ? S566ESTED ANS)ER7 a. )i hho#din2 a- "ases un#ess he a!!#i"an ( a-!a$er in+o*es !ro+isions o& #a, ha "as dou. on he a-!a$ers o.#i2a ion o ,i hho#d.C .. ;ri%ina# a- &raud "ases8 "on&ir%ed as su"h .$ he ;o%%issioner o& 0n erna# Re+enue or his du#$ au hori@ed re!resen a i+eC ". ;ri%ina# +io#a ions a#read$ &i#ed in "our C d. De#in4uen a""oun s ,i h du#$ a!!ro+ed s"hedu#e o& ins a##%en !a$%en sC e. ;ases ,here &ina# re!or s o& rein+es i2a ion or re"onsidera ion ha+e .een issued resu# in2 o redu" ion in he ori2ina# assess%en and he a-!a$er is a2reea.#e o su"h de"ision .$ si2nin2 he re4uired a2ree%en &or% &or he !ur!ose. On he o her hand8 o her !ro es ed "ases sha## .e hand#ed .$ he Re2iona# E+a#ua ion Board ?REB< or he Na iona# E+a#ua ion Board ?NEB< on a "ase o "ase .asisC &. ;ases ,hi"h .e"o%e &ina# and e-e"u or$ a& er &ina# /ud2%en o& a "our ,here "o%!ro%ise is re4ues ed on he 2round o& dou. &u# +a#idi $ o& he assess%en C and 2. Es a e a- "ases ,here "o%!ro%ise is re4ues ed on he 2round o& &inan"ia# in"a!a"i $ o& he a-!a$er . ?Se". 28 Re+. Re2s. No. :0(2002< 32. T-e C#mm"%%"#$e& ma) '#m &#m"%e !-e a)me$! #/ a$) "$!e&$a( &e0e$*e !ax 2-e$: a. A reasona.#e dou. as o he +a#idi $ o& he "#ai% a2ains he a-!a$er e-is s !ro+ided ha he %ini%u% "o%!ro%ise en ered in o is e4ui+a#en o &or $ !er"en ?B0O< o& he .asi" a-C or .. The &inan"ia# !osi ion o& he a-!a$er de%ons ra es a "#ear ina.i#i $ o !a$ he assessed a!ro+ided ha he %ini%u% "o%!ro%ise en ered in o is e4ui+a#en o en !er"en ?10O< o& he .asi" assessed a0n he a.o+e ins an"es he ;o%%issioner is a##o,ed o en er in o a "o%!ro%ise on#$ i& he .asi" ain+o#+ed does no e-"eed One %i##ion !esos ?'180008000.00<8 and he se #e%en o&&ered is no #ess han he !res"ri.ed !er"en a2es. DSe". 20B ?A<8 N0R; o& 1997E 0n ins an"es ,here he ;o%%issioner is no au hori@ed8 he "o%!ro%ise sha## .e su./e" o he a!!ro+a# o& he E+a#ua ion Board "o%!osed o& he ;o%%issioner and he &our ?B< De!u $ ;o%%issioners. 33. T-e C#mm"%%"#$e& #/ I$!e&$a( Re0e$*e "% a*!-#&">e+ !# a.a!e #& 'a$'e( a !ax ("a."("!)9 2-e$7 a. The a- or an$ !or ion hereo& a!!ears o .e un/us #$ or e-"essi+e#$ assessedC or .. The ad%inis ra ion and "o##e" ion "os s in+o#+ed do no /us i&$ he "o##e" ion o& he a%oun due.
DSe". 20B ?B<8 N0R; o& 1997E

31. What is the prescriptive period for collecting internal revenue taxes ? S566ESTED ANS)ER7 There are hree ?:< !res"ri! i+e !eriods &or he "o##e" ion o& an in erna# re+enue a-7 a. ;o##e" ion u!on a &a#se or &raudu#en re urn or no re urn ,i hou assess%en . 0n "ase o& a &a#se or &raudu#en re urn ,i h he in en o e+ade a- or o& &ai#ure o &i#e a re urn8 1a !ro"eedin2 in "our &or he "o##e" ion o& su"h a- %a$ .e &i#ed ,i hou assess%en 8 a an$ i%e ,i hin en ?10< $ears a& er he dis"o+er$ o& he &a#si $8 &raud or o%ission.3 DSe". 222 ?a<8 N0R; o& 1997<

55

.. ;o##e" ion u!on a &a#se or &raudu#en re urn or no re urn ,i h assess%en . An$ in erna# re+enue a- ,hi"h has .een assessed ?.e"ause he re urn is &a#se or &raudu#en ,i h in en o e+ade a- or o& &ai#ure o &ai# a re urn<8 ,i hin a !eriod o& en ?10< $ears &ro% dis"o+er$ o& he &a#si $8 &raud or o%ission 1 ma) .e '#((e'!e+ .) +"%!&a"$! #& (e0) #& .) a &#'ee+"$, "$ '#*&! 2"!-"$ /"0e G3H )ea&% /#((#2"$, !-e a%%e%%me$! #/ !-e !ax.3 DSe". 222 ?"<8 in re#a ion o Se". 222 ?a< N0R; o& 19978 e%!hasis su!!#ied< ". ;o##e" ion u!on an e- ended assess%en . )here a a- has .een assessed ,i h he !eriod a2reed u!on .e ,een he ;o%%issioner and he a-!a$er in ,ri in2 ?,hi"h shou#d ini ia##$ .e ,i hin hree ?:< $ears &ro% he i%e he re urn ,as &i#ed or shou#d ha+e .een &i#ed<8 or an$ e- ensions .e&ore he e-!ira ion o& he !eriod a2reed u!on8 he !ax @ma) .e '#((e'!e+ .) +"%!&a"$! #& (e0) #& .) a &#'ee+"$, "$ '#*&! 2"!-"$ !-e e&"#+ a,&ee+ * #$ "$ 2&"!"$, .e/#&e !-e ex "&a!"#$ #/ !-e /"0e G3H )ea& e&"#+ . The !eriod so a2reed u!on %a$ .e e- ended .$ su.se4uen ,ri en a2ree%en s %ade .e&ore he e-!ira ion o& he !eriod !re+ious#$ a2reed u!on.3 DSe". 222 ?d<8 in re#a ion o Se"s. 222 ?.< and 20:8 N0R; o& 19978 e%!hasis su!!#ied< d. ;o##e" ion u!on a re urn ha is no &a#se or &raudu#en 8 or ,here he assess%en is no an e- ended assess%en . 1E-"e! as !ro+ided in Se" ion 2228 in erna# re+enue a-es sha## .e assessed ,i hin hree ?:< $ears a& er he #as da$ !res"ri.ed .$ #a, &or he &i#in2 o& he re urn8 and $# &#'ee+"$, "$ '#*&! 2"!-#*! a%%e%%me$! /#& !-e '#((e'!"#$ #/ %*'- !axe% %-a(( .e .e,*$ a/!e& !-e ex "&a!"#$ #/ %*'- e&"#+ C 'ro+ided8 Tha in "ase ,here a re urn is &i#ed .e$ond he !eriod !res"ri.ed .$ #a,8 he hree ?:< $ear !eriod sha## .e "o%!u ed &ro% he da$ he re urn ,as &i#ed. Gor !ur!oses o& his Se" ion8 a re urn &i#ed .e&ore he #as da$ !res"ri.ed .$ #a, &or he &i#in2 hereo& sha## .e "onsidered &i#ed on su"h #as da$.3 ?Se". 20:8 N0R; o&
19978 e%!hasis su!!#ied<

NOTES AND ;OMMENTS7

a. B#!- !-e /#&me& Se'. 2479 NIRC #/ 1755 a$+ Se'.222 #/ NIRC #/ 1775 +# $#! &e/e& !# a @&e,*(a& &e!*&$.A 0 is "#ear ha in ena" in2 Se". 2228 en i #ed 1E-"e! ions as o he !eriod o& #i%i a ion o& assess%en and "o##e" ion o& a-es83 he N0R; o& 1997 has e#i%ina ed su.(!ara2ra!h " o& he &or%er Se". 2=9 o& he N0R;8 a#so en i #ed 1E-"e! ions as o he !eriod o& #i%i a ion o& assess%en and "o##e" ion o& a-es.3 Said Se". 2=9 ?"<8 reads 1An$ in erna# re+enue a- ,hi"h has .een assessed ,i hin he !eriod o& #i%i a ion a.o+e(!res"ri.ed %a$ .e "o##e" ed .$ dis rain or #e+$ or .$ a !ro"eedin2 in "our ,i hin hree $ears &o##o,in2 he assess%en o& he a-.3 A !erusa# o& Se". 222 o& he N0R; is "#ear ha i "o+ers on#$ hree s"enarios on#$. 1< No assess%en ,as %ade u!on a &a#se or &raudu#en re urn or o%ission o &i#e a re urnC 2< an assess%en ,as %ade u!on a &a#se or &raudu#en re urn or o%ission o &i#e a re urnC and :< an e- ended assess%en issued ,i hin a !eriod a2reed u!on .$ he ;o%%issioner and he a-!a$er. The sa%e s"enarios are hose re&erred o in he &or%er Se". 2=9 ,hi"h !ro+ided &or a !res"ri! i+e !eriod &or "o##e" ion o& hree ?:< $ears. 0 is "#ear here&ore ha nei her Se". 222 nor he &or%er Se". 2=9 !ro+ide &or an ins an"e ,here he assess%en ,as %ade u!on a 1re2u#ar re urn3 or one ha is no &a#se or &raudu#en 8 or ha here ,as an a2ree%en o e- end he !eriod &or assess%en . Resor shou#d here&ore .e %ade o he hree ?:< $ear !eriod re&erred o in Se". 20: o& he N0R; o& 1997 ,hi"h reads8 1E-"e! as !ro+ided in Se" ion 2228 in erna# re+enue a-es sha## .e assessed ,i hin hree ?:< $ears a& er he #as da$ !res"ri.ed .$ #a, &or he &i#in2 o& he re urn8 and $# &#'ee+"$, "$ '#*&! 2"!-#*! a%%e%%me$! /#& !-e '#((e'!"#$ #/ %*'- !axe% - - - 1 ?!ara!hrasin2 and e%!hasis su!!#ied<

33. What is solutio indebeti as applied to tax cases ? S566ESTED ANS)ER7 This is erroneous !a$%en o& a-es and o""urs ,hen he a-!a$er !a$s under a %is a*e o& &a" 8 as &or he ins an"e in a "ase ,here he is no a,are o& an e-is in2 e-e%! ion in his &a+or a he i%e he !a$%en ,as %ade. Su"h !a$%en is he#d o .e no +o#un ar$ and here&ore8 "an .e re"o+ered or re&unded. ?Commissioner of Internal Revenue v. Acesite (Philippines) 8otel Corporation, 6. R. No.
1B729A8 Ge.ruar$ 1=8 2007<

34. What are the reasons for re6uiring the filing of an administrative application for refund or credit with the Dureau of Internal #evenue before a case may be filed with the (ourt of ;ax 1ppeals ? S566ESTED ANS)ER7 The &i#in2 o& an ad%inis ra i+e "#ai% &or re&und ,i h he B0R8 .e&ore &i#in2 a "ase ,i h he ;our o& Ta- A!!ea#s8 is ne"essar$ &or he &o##o,in2 reasons7 a. To a&&ord he ;o%%issioner an o!!or uni $ o "orre" his errors or ha o& su.ordina e o&&i"ers.
(Gon"ales v. Court of $a. Appeals, et al., /< CRA ;B)

.. To no i&$ he 6o+ern%en ha su"h a-es ha+e .een 4ues ioned and he no i"e shou#d .e .orne in %ind in es i%a in2 he re+enue a+ai#a.#e &or e-!endi ures. ('erme%o v. Collector, G.R. :o. L1>=0?, 4uly 0?,
/BA=)

56

35. 1s a general rule the filing of an application for refund or credit with the Dureau of Internal #evenue is an administrative precondition before a suit may be filed with the (ourt of ;ax 1ppeals. Is there any exception ? S566ESTED ANS)ER7 Kes. The &ai#ure o &irs &i#e a ,ri en "#ai% &or re&und or "redi is no &a a# o a !e i ion &or re+ie, in+o#+in2 a dis!u ed assess%en ,here an assess%en ,as dis!u ed .u he !ro es ,as denied .$ he Bureau o& 0n erna# Re+enue. To ho#d ha he a-!a$er has no, #os he ri2h o a!!ea# &ro% he ru#in2 on he dis!u ed assess%en and re4uire hi% o &i#e a "#ai% &or a re&und o& he a-es !aid as a "ondi ion !re"eden o his ri2h o a!!ea#8 ,ou#d in e&&e" re4uire o& hi% o 2o hrou2h a use#ess and need#ess "ere%on$ ha ,ou#d on#$ de#a$ he dis!osi ion o& he "ase8 &or he ;o%%issioner ,ou#d "er ain#$ disa##o, he "#ai% &or re&und in he sa%e ,a$ as he disa##o,ed he !ro es a2ains he assess%en . The #a,8 shou#d no .e in er!re ed as o resu# in a.surdi ies. (v(a. (e an A2ustin., etc., v. Commissioner of Internal Revenue, G.R. :o. />?<?A, eptember /=, 0==/ "i in2 Roman Catholic Archbishop of Cebu v. Collector of Internal Revenue, < CRA 0;B)
NOTE7 Re'#$'"("a!"#$ .e!2ee$ a.#0e !2# $*m.e&% G34 a$+ 35H. An a!!#i"a ion &or re&und or "redi under Se". 229 o& he N0R; o& 1997 is re4uired ,here he "ase &i#ed .e&ore he ;TA is a re&und "ase8 ,hi"h is no !re%ised u!on a dis!u ed assess%en . There is no need &or a !rior a!!#i"a ion &or re&und or "redi 8 i& he re&und is %ere#$ a "onse4uen"e o& he reso#u ion o& he B0Rs denia# o& a !ro es ed assess%en .

36. What is the nature of the taxpayerIs remedy of either to as* for a refund of excess tax payments or to apply the same in payment of succeeding taxable periodsI taxes ? ANS)ER7 Se". =9 o& he 1977 N0R; ?no, Se". 7= o& he N0R; o& 1997< !ro+ides ha an$ e-"ess o& he o a# 4uar er#$ !a$%en s o+er he a" ua# in"o%e a- "o%!u ed in he ad/us %en or &ina# "or!ora e in"o%e a- re urn8 sha## ei her ?a< .e re&unded o he "or!ora ion8 or ?.< %a$ .e "redi ed a2ains he es i%a ed 4uar er#$ in"o%e a- #ia.i#i ies &or he 4uar ers o& he su""eedin2 a-a.#e $ear. To ease he ad%inis ra ion o& a- "o##e" ion8 hese re%edies are in he a# erna i+e and he "hoi"e o& one !re"#udes he o her. Sin"e he Ban* has "hosen he a- "redi a!!roa"h i "anno an$%ore a+ai# o& he a- re&und.
(Philippine 'an, of Communications v. Commissioner of Internal Revenue, et al., 6.R. No. 11202B8 Fanuar$ 2>8 1999<

NOTES AND ;OMMENTS7 a. T-e '-#"'e9 "% ,"0e$ !# !-e !ax a)e&9 2-e!-e& !# '(a"m /#& &e/*$+ *$+e& Se'. 54 #& -a0e "!% ex'e%% a-es a!!#ied as a- "redi &or he su""eedin2 a-a.#e $ear8 su"h e#e" ion is no &ina#. 'rior +eri&i"a ion and
a!!ro+a# .$ he ;o%%issioner o& 0n erna# Re+enue is re4uired. The a+ai#%en o& he re%ed$ o& a- "redi is no a.so#u e and %anda or$. 0 does no "on&er an a.so#u e ri2h on he !ar o& he a-!a$er o a+ai# o& he a- "redi s"he%e i& i so "hooses. Nei her does i i%!ose a du $ on he !ar o& he 2o+ern%en o si .a"* and a##o, an i%!or an &a"e o& a- "o##e" ion o .e a he so#e "on ro# and dis"re ion o& he a-!a$er. ? Paseo Realty # Development Corporation v. Court of Appeals, et al., 6. R. No. 1192>=8 O" o.er 1:8 200B<

37. Aiscuss the difference between tax refund and tax credit. S566ESTED ANS)ER7 0 %a$ .e ha here is no essen ia# di&&eren"e .e ,een a a- re&und and a a- "redi sin"e .o h are %o+es o& re"o+erin2 a-es erroneous#$ or i##e2a##$ !aid o he 2o+ern%en . Ke 8 here are un%is a*a.#e &or%a# and !ra" i"a# di&&eren"es .e ,een he ,o %odes. Gor%a##$8 a are&und re4uires a !h$si"a# re urn o& he su% erroneous#$ !aid .$ he a-!a$er8 ,hi#e a a- "redi in+o#+es he a!!#i"a ion o& he rei%.ursa.#e a%oun a2ains an$ su% ha %a$ .e due and "o##e" i.#e &ro% he a-!a$er. On he !ra" i"a# side8 he a-!a$er o ,ho% he a- is re&unded ,ou#d ha+e he o! ion8 a%on2 o hers8 o in+es &or !ro&i he re urned su%8 an o! ion no !ro-i%a e#$ a+ai#a.#e i& he a-!a$er "hooses ins ead o re"ei+e a a- "redi . ?Commissioner of Customs v. Philippine Phosphate *ertili"er Corporation, 6. R. No. 1BBBB08
Se! e%.er 18 200B<

48. In early 1pril !!! JK= Dan* advanced the amount of % ,. million to the DI# its income tax payment for the ban*Is !!! operations in response for the governmentIs call to generate more revenues for national development. In separate letters dated 1pril ! and ?!$ !!! and May -$ !!! JK= re6uested for the issuance of a ;ax (redit (ertificate /;((0 to be utilized against future tax obligations of the ban*. Dy the end of !!!$ a credit balance in the amount of %)H million remain which was carried over for the years ?... to ?..- but was not availed of because JK= incurred losses during the period. En +uly ?,$ ?..B %'D reiterated its re6uest for the issuance of a ;(( for the %)H million

57

balance. ;he DI# rejected the re6uest on the ground of among others prescription having been applied for beyond the two<year reglementary period for filing claims for refund as set forth in Sec. ??! of the 'I#( of !!). Fas the claim prescribed ? 8xplain briefly your answer. S566ESTED ANS)ER7 The "#ai% has no !res"ri.ed. Se". 229 o& he Ta- ;ode8 as "ou"hed8 !ar i"u#ar#$ i s s a u e o& #i%i a ions "o%!onen 8 is in "on e- in ended o a!!#$ o sui s &or an$ na iona# in erna# re+enue a- 1a##e2ed o ha+e .een erroneous#$ or i##e2a##$ assessed or "o##e" ed8 or o& an$ !ena# $ "#ai%ed o ha+e .een "o##e" ed ,i hou au hori $8 or o& an$ su% a##e2ed o ha+e e-"essi+e#$ or in an$ %anner ,ron2&u##$ "o##e" ed.3 Ana#$@in2 he under#$in2 reason .ehind he ad+an"e !a$%en ? o he#! he 2o+ern%en < %ade .$ NKJ i ,ou#d .e i%!ro!er o rea he sa%e as erroneous8 ,ron2&u# or i##e2a# !a$%en o& a- ,i hin he %eanin2 o& Se". 229 o& he N0R; o& 1997. An a+ai#%en o& a- "redi due &or reasons o her han he erroneous or ,ron2&u# "o##e" ion o& a-es %a$ ha+e a di&&eren !res"ri! i+e !eriod. ?Commissioner of Internal Revenue v. Philippine :ational 'an,, 6.R. No.
1=19978 O" o.er 2A8 200A "i in2 Commissioner of Internal Revenue v. $he Philippine Life Insurance Co., et al . 6.R. No. 10A20>8 Ma$ 298 199A< A.sen an$ s!e"i&i" !ro+ision in he Ta- ;ode or s!e"ia# #a,s8 ha !eriod ,ou#d .e en ?10< $ears under Ar i"#e 11BB o& he ;i+i# ;ode. ?Commissioner of Internal Revenue v. Philippine :ational 'an,, supra<

41. 1D( Dan* filed with the DI# an application for a tax credit3refund for alleged excess payments of its gross receipts tax /:#;0 for the H rd and -th 6uarters of ?..H and the entire ?..amounting to % - million. Since no action was ta*en by the (ommissioner on its claim$ 1D( filed a case with the (;1 on Ectober ,$ ?..B to comply with the two<year reglementary period and avoid the prescription of its action. Enly +uly H.$ ?..)$ the (;1 rendered a decision denying the claim for 1D(Is failure to file its formal offer of evidence in the (;1. 1D( Dan* now see*s refuge in Enate v. (ourt of 1ppeals$ H?. %hil. H--G ?B. S(#1 ?,H / !!B0 where the Supreme (ourt allowed evidence$ not formally offered$ to be considered on condition that4 / 0 evidence must have been identified by testimony duly recorded and /?0 it must have been incorporated in the records of the case. Is 1D( correct ? S566ESTED ANS)ER7 No. A a- re&und s in he na ure o& a a- e-e%! ion ,hi"h %us .e "ons rued strictissimi %uris a2ains he a-!a$er. The a-!a$er %us !resen "on+in"in2 e+iden"e o su.s an ia e a "#ai% &or re&und. )i hou an$ do"u%en ar$ e+iden"ed on re"ord8 AB; &ai#ed o dis"har2e he .urden o& !ro+in2 i s ri2h o a a- "redi I a- re&und. ?*ar 5ast 'an, # $rust Company v. Commissioner of Internal
Revenue, 6. R. No. 1B9A>98 Se! e%.er 1A8 200=<

42. A %"m*(!a$e#*% /"("$, #/ !-e a ("'a!"#$ 2"!- !-e BIR /#& &e/*$+J'&e+"! a$+ !-e "$%!"!*!"#$ #/ !-e '#*&! %*"! 2"!- !-e CTA "% a((#2e+. There is no need o ,ai &or a B0R denia#. REASONS7 a. The !osi i+e re4uire%en o& Se" ion 2:0 N0R; ?no, Se". 2298 N0R; o& 1997<C .. The do" rine ha de#a$ o& he ;o%%issioner in renderin2 de"ision does no e- end he !ere%! or$ !eriod &i-ed .$ he s a u eC ". The #a, &i-ed he sa%e !eriod ,o $ears &or &i#in2 a "#ai% &or re&und ,i h he ;o%%issioner under Se". 20B8 !ar. :8 N0R; ?no, Se". 20B D;E8 N0R; o& 1997<8 and &or &i#in2 sui in "our under Se". 2:08 N0R; ?no, Se". 2298 N0R; o& 1997<8 un#i*e in !ro es s o& assess%en s under Se". 229 ?no, Se". 22>8 N0R; o& 1997<8 ,hi"h &i-ed he !eriod ? hir $ da$s &ro% re"ei! o& de"ision< &or a!!ea#in2 o he "our 8 hus "#ear#$ i%!#$in2 ha he !rior de"ision o& he ;o%%issioner is ne"essar$ o a*e "o2ni@an"e o& he "ase.
(Commissioner of Internal Revenue v. 'an, of Philippine Islan(s, etc. et al., CA1G.R. P :o. ></=0, eptember B, /BB<G Gibbs v. Collector of Internal Revenue, et al., /=; Phil, 0>0G 4ohnston Lumber Co. v. C$A, /=/ Phil. /A/)

43. T-e ,&a$! #/ a &e/*$+ "% /#*$+e+ #$ !-e a%%*m !"#$ !-a! !-e !ax &e!*&$ "% 0a("+9 i.e. ha he &a" s s a ed herein are rue and "orre" . ?Commissioner of Internal Revenue v. Court of $a. Appeals, 6. R. No.
10==118 Fu#$ 218 199B8 2:B S;RA :B>< )i hou he a- re urn i ,ou#d .e +ir ua##$ i%!ossi.#e o de er%ine ,he her he !ro!er a-es ha+e .een assessed and !aid. A& er a##8 i is a-io%a i" ha a "#ai%an has he .urden o& !roo& o es a.#ish he &a" ua# .asis o& his or her "#ai% &or a- "redi or re&und. Ta- re&unds8 #i*e a- e-e%! ions8 are "ons rued s ri" #$

58 a2ains he a-!a$er . ?Paseo Realty # Development Corporation v. Court of Appeals, et al., 6. R. No. 1192>=8 O" o.er 1:8 200B< Ho,e+er8 in 'PI1*amily avin2s 'an, v. Court of Appeals8 :>= 'hi#. 719C :2= S;RA =B1 ?2000<8 re&und ,as

2ran ed8 des!i e he &ai#ure o !resen he a- re urn8 .e"ause o her e+iden"e ,as !resen ed o !ro+e ha he o+er!aid a-es ,ere no a!!#ied. ?Ibi(.< 41. What are the three /H0 conditions for the grant of a claim for refund of creditable withholding tax ? S566ESTED ANS)ER7 a. The "#ai% is &i#ed ,i h he ;o%%issioner o& 0n erna# Re+enue ,i hin he ,o($ear !eriod &ro% he da e o& he !a$%en o& he a-. .. 0 is sho,n on he re urn o& he re"i!ien ha he in"o%e !a$%en re"ei+ed ,as de"#ared as !ar o& he 2ross in"o%eC and ". The &a" o& ,i hho#din2 is es a.#ished .$ a "o!$ o& a s a e%en du#$ issued .$ he !a$ee sho,in2 he a%oun !aid and he a%oun o& a- ,i hhe#d here&ro%. ?'anco *ilipino avin2s an( !ort2a2e 'an, v. Court
of Appeals, et al., 6. R. No. 1AA=>28 Mar"h 278 2007<

NOTES AND ;OMMENTS7 a. P&##/ #/ /a'! #/ 2"!--#(+"$,. 1Se". 10. Claim for ta. cre(it or refun(. H ?a< ;#ai%s &or Ta- ;redi or
Re&und o& 0n"o%e a- dedu" ed and ,i hhe#d on in"o%e !a$%en s sha## .e 2i+en due "ourse on#$ ,hen i is sho,n on he re urn ha he in"o%e !a$%en re"ei+ed has .een de"#ared as !ar o& he 2ross in"o%e and he &a" o& ,i hho#din2 is es a.#ished .$ a "o!$ o& he )i hho#din2 Ta- S a e%en du#$ issued .$ he !a$or o he !a$ee sho,in2 he a%oun !aid and he a%oun o& he a- ,i hhe#d here&ro% ...E ?Re+. Re2s. No. =(>A8 as a%ended< The do"u%en ,hi"h %a$ .e a""e! ed as e+iden"e o& he hird "ondi ion8 ha is8 he &a" o& ,i hho#din28 %us e%ana e &ro% he !a$or i se#&8 and no %ere#$ &ro% he !a$ee8 and %us indi"a e he na%e o& he !a$or8 he in"o%e !a$%en .asis o& he a- ,i hhe#d8 he a%oun o& he a- ,i hhe#d and he na ure o& he a- !aid. . ? 'anco *ilipino avin2s an( !ort2a2e 'an, v. Court of Appeals, et al., 6. R. No. 1AA=>28 Mar"h 278 2007<

43. What should be established by a taxpayer for the grant of a tax refund ? Why ? S566ESTED ANS)ER7 A a-!a$er needs o es a.#ish no on#$ ha he re&und is /us i&ied under he #a,8 .u a#so he "orre" a%oun ha shou#d .e re&unded. 0& he #a er re4uisi e "anno .e as"er ained ,i h !ar i"u#ari $8 here is "ause o den$ he re&und8 or a##o, i on#$ o he e- en o& he su% ha is a" ua##$ !ro+en as due. Ta- re&unds !ar a*e o& he na ure o& a- e-e%! ions and are hus "ons rued strictissimi %uris a2ains he !erson "#ai%in2 he e-e%! ion. The .urden in !ro+in2 he "#ai% &or re&und ne"essari#$ &a##s on he a-!a$er. ?*ar 5ast 'an, $rust an( Company, etc., v. Commissioner of Internal Revenue, et al., 6. R. No. 1:>9198
Ma$ 28 200=<

44. What are the re6uisites for the refund of illegally deducted taxes from the income of an employeesI trust fund ? S566ESTED ANS)ER7 )ha has o .e es a.#ished8 as a %a er o& e+iden"e8 is ha he a%oun sou2h o .e re&unded o he .an*( rus ee "orres!onds o he a- ,i hhe#d on he in eres in"o%e earned &ro% he e-e%! e%!#o$ees rus . The need o .e de er%ina e is i%!or an 8 s!e"ia##$ i& he .an* rus ee8 in he ordinar$ "ourse o& i s .an*in2 .usiness8 earns in eres in"o%e no on#$ &ro% i s in+es %en s o& e%!#o$ees rus s8 .u on a ,ho#e ran2e o& a""oun s ,hi"h do no en/o$ he sa%e .road e-e%! ion as e%!#o$ees rus s. ?*ar 5ast 'an, $rust an( Company, etc., v. Commissioner of Internal Revenue, et al., 6. R. No.
1:>9198 Ma$ 28 200=<

NOTES AND ;OMMENTS7 a. Em (#)ee%? !&*%! /*$+9 +e/"$e+. An e%!#o$ees rus &und is a rus es a.#ished .$ an e%!#o$er o
!ro+ide re ire%en 8 !ension8 or o her .ene&i s o e%!#o$ees ( i is a se!ara e a-a.#e en i $ es a.#ished &or he e-"#usi+e .ene&i o& he e%!#o$ees. ?Development 'an, of the Philippines v. Commission on Au(it, B22 S;RA BA9< .. I$'#me #/ em (#)ee%? !&*%! "% !ax exem !. 1An$ !ro+ision o& #a, o he "on rar$ no ,i hs andin28 he re ire%en .ene&i s re"ei+ed .$ o&&i"ia# and e%!#o$ees o& !ri+a e &ir%s8 ,he her indi+idua# or "or!ora e8 in a""ordan"e ,i h a reasona.#e !ri+a e .ene&i !#an %ain ained .$ he e%!#o$er sha## .e e-e%! &ro% a## a-es and sha## no .e #ia.#e o a%end%en 8 #e+$ or sei@ure .$ or under an$ #e2a# or e4ui a.#e !ro"ess ,ha soe+er e-"e! o !a$ a de. o& he o&&i"ia#

59 or e%!#o$ee "on"erned o he !ri+a e .ene&i !#an or ha arisin2 &ro% #ia.i#i $ i%!osed in a "ri%ina# a" ion - - - 1 ?Se". 18 Re!. A" B917< A a-(e-e%! e%!#o$ees rus &und is re&erred o under he N0R; o& 1997 as a 1reasona.#e !ri+a e re ire%en !#an8 ,hi"h %eans 1a !ension8 2ra ui $8 s o"* .onus or !ro&i (sharin2 !#an %ain ained .$ an e%!#o$er &or he .ene&i o& so%e or a## o& his o&&i"ia#s or e%!#o$ees8 ,herein "on ri.u ions are %ade .$ su"h e%!#o$er &or he o&&i"ia#s or e%!#o$ees8 or .o h8 &or he !ur!ose o& dis ri.u in2 o su"h o&&i"ia#s and e%!#o$ees he earnin2s and !rin"i!a# o& he &und hus a""u%u#a ed8 and ,herein i is !ro+ided in said !#an ha a no i%e sha## an$ !ar o& he "or!us or in"o%e o& he &und .e used &or8 or .e di+er ed o8 an$ !ur!ose o her han &or he e-"#usi+e .ene&i o& he said o&&i"ia#s or e%!#o$ees.3 DSe". :2 ?B< ?= < ?a<8 N0R; o& 1997E ". Ex!e$! #/ exem !"#$. The a- e-e%! ion en/o$ed .$ e%!#o$ees rus is a.so#u e irres!e" i+e o& he na ure o& he a-. 0 does no a!!#$ on#$ o he a- on in eres in"o%e &ro% %one$ %ar*e !#a"e%en s8 .an* de!osi s8 o her de!osi su.s i u e ins ru%en s and 2o+ern%en se"uri $8 .e"ause he sour"e o& he in eres in"o%e does no ha+e an$ e&&e" on he e-e%! ion en/o$ed .$ e%!#o$ees rus s. ? *ar 5ast 'an, $rust an( Company, etc., v. Commissioner of Internal Revenue, et al., 6. R. No. 1:>9198 Ma$ 28 200=<

45. 1 ban*<trustee of employee trusts filed an application for the refund of taxes withheld on the interest incomes of the investments made of the funds of the employeesI trusts. Instead of presenting separate accounts for interest incomes made of these investments$ the ban*<trustee instead presented witness to establish that it would next to impossible to single out the specific transactions involving the employeesI trust funds from the totality of all interest income from its total investments. En the above basis will the application for refund prosper ? S566ESTED ANS)ER7 No. The a!!#i"a ion &or re&und ,i## no !ros!er. The .an*( rus ee needs o es a.#ish no on#$ ha he re&und is /us i&ied under he #a, ?,hi"h is so .e"ause in"o%es o& e%!#o$ees rus s are a- e-e%! <8 .u a#so he "orre" a%oun ha shou#d .e re&unded. Ta- re&unds !ar a*e o& he na ure o& a- e-e%! ions and are hus "ons rued strictissimi %uris a2ains he !erson or en i $ "#ai%in2 he e-e%! ion. The .urden in !ro+in2 he a%oun o .e re&unded ne"essari#$ &a##s on he .an*( rus ee8 and here is an a!!aren &ai#ure o do so. A ne"essar$ "onse4uen"e o& he s!e"ia# e-e%! ion en/o$ed a#one .$ e%!#o$ees rus s ,ou#d .e a ne"essar$ se2re2a ion in he a""oun in2 o& su"h in"o%e8 in eres or o her,ise8 earned &ro% hose rus s &ro% ha earned .$ he o her "#ien s o& he .an*( rus ee. ?*ar 5ast 'an, an( $rust Company, etc., v. Commissioner, etc., et al., 6.R. No. 1:>9198 Ma$ 28 200=< The a%oun s ha are he e-e%! earnin2s o& he e%!#o$ees rus has no .een sho,n as he$ ha+e .een "o%%in2#ed ,i h he in eres in"o%e o& he o her "#ien s o& he .an*( rus ee.

LOCAL GOVERN;ENT CODE ON TAXATION

LOCAL TAXATION
1. T-e /*$+ame$!a( &"$'" (e% #/ (#'a( !axa!"#$ are7 a. 5ni&or%i $C .. Ta-es8 &ees8 "har2es and o her i%!osi ions sha## .e e4ui a.#e and .ased on a.i#i $ o !a$8 &or !u.#i" !ur!oses8 no un/us 8 e-"essi+e8 o!!ressi+e or "on&is"a or$8 no "on rar$ o #a,8 !u.#i" !o#i"$8 na iona# e"ono%i" !o#i"$ or in res rain o& radeC ". The #e+$ and "o##e" ion sha## no .e #e o an$ !ri+a e !ersonC d. 0nures so#e#$ o he #o"a# 2o+ern%en uni #e+$in2 he a-C e. The !ro2ressi+i $ !rin"i!#e %us .e o.ser+ed. 2. A (a2 2-"'- +e &"0e% (#'a( ,#0e&$me$! *$"!% #/ !-e"& #2e& !# !ax 2#*(+ .e *$'#$%!"!*!"#$a(. The "ons i u ion has de#e2a ed o #o"a# 2o+ern%en s he !o,er o #e+$ a-es8 &ees and o her "har2es. This "ons i u iona# de#e2a ion %a$ on#$ .e re%o+ed .$ a "ons i u iona# a%end%en . 3. T-e a*!-#&"!) *$+e& !-e L#'a( G#0e&$me$! C#+e !# '#((e'! !axe% #$ B*a&&) &e%#*&'e% a #$() !# !-#%e ex!&a'!e+ /&#m *.("' (a$+%. ?Se". 1:B in re#a ion o Se". 1:>8 Lo"a# 6o+ern%en ;ode< ("e%

60

1. T-e L#'a( G#0e&$me$! C#+e &#-"."!% (#'a( ,#0e&$me$! *$"!% /&#m '#((e'!"$, ex'"%e !axe% #$ a&!"'(e% e$*me&a!e+ *$+e& !-e NIRC9 a$+ !axe%9 /ee% #& '-a&,e% #$ e!&#(e*m &#+*'!% . ?Se". 1:: DhE8 Lo"a# 6o+ern%en ;ode in re#a ion o he Ta- ;ode<. )hi#e he Ta- ;ode #e+ies a a- on a## 4uarr$ resour"es8 re2ard#ess o& ori2in8 ,he her e- ra" ed &ro% !u.#i" or !ri+a e #ands8 he Lo"a# 6o+ern%en ;ode au hori@es he #o"a# 2o+ern%en uni o i%!ose su"h a-es on hose a*en &ro% !u.#i" #ands. Thus8 4uarr$ resour"es e- ra" ed &ro% !ri+a e #ands are a-a.#e under he N0R; and no .$ #o"a# 2o+ern%en uni s. ?$he Province of
'ulacan, et al., v. $he Court of Appeals, etc., et al., 299 S;RA BB2<

3. T-e &"ma&) &ea%#$ /#& !-e 2"!-+&a2a( #/ !ax exem !"#$ &"0"(e,e% ,&a$!e+ !# ,#0e&$me$! #2$e+ a$+ '#$!&#((e+ '#& #&a!"#$% and a## o her uni s o& 2o+ern%en ,as ha su"h !ri+i#e2e resu# ed o serious a- .ase erosion and dis or ions in he a- rea %en o& si%i#ar#$ si ua ed en er!rises8 hen"e resu# in2 in he need &or hese en i ies o share in he re4uire%en s o& de+e#o!%en 8 &is"a# or o her,ise8 .$ !a$in2 he a-es and o her "har2es due he%. ?Philippine Ports Authority v. City of Iloilo, 6. R. No. 1097918 Fu#$ 1B8 200:< 4. 'ational %ower (orporation /'%(0 is of the insistence that it is not subject to the payment of franchises taxes imposed by the %rovince of Isabela because all of its shares are owned by the #epublic of the %hilippines. It is thus$ an instrumentality of the 'ational :overnment which is exempt from local taxation. 1s such it is not a private corporation engaged in 2business enjoying franchise7 Is such contention meritorious ? S566ESTED ANS)ER7 No. Philippine Lon2 Distance $elephone Company, Inc., v. City of Davao, et al., etc., G. R. :o. /<>?@;, Au2ust 00, 0==/ 8 u!he#d he au hori $ o& he ;i $ o& Da+ao8 a #o"a# 2o+ern%en uni 8 o i%!ose and "o##e" a #o"a# &ran"hise a- .e"ause he Lo"a# 6o+ern%en ;ode has ,i hdra,n a## a- e-e%! ions !re+ious#$ en/o$ed .$ a## !ersons and au hori@ed #o"a# 2o+ern%en uni s o i%!ose a a- on .usiness en/o$in2 a &ran"hise a- no ,i hs andin2 he 2ran o& a- e-e%! ion o he%. 5. P&#/e%%"#$a( !ax ma) .e "m #%e+ .) a &#0"$'e #& '"!) .*! $#! .) a m*$"'" a("!) #& .a&a$,a). a. Transa" ion a-ed7 E-er"ise or !ra" i"e o& !ro&ession re4uirin2 2o+ern%en #i"ensure e-a%ina ion. .. Ta- ra e7 No .e e-"eed ':00.00. ". Ta- .ase7 Reasona.#e "#assi&i"a ion .$ he san22unian. d. E-"e! ion7 'a$%en o one !ro+in"e or "i $ no #on2er su./e" o an$ o her na iona# or #o"a# a-8 #i"ense or &ee &or he !ra" i"e o& su"h !ro&ession in an$ !ar o& he 'hi#i!!ine !ro&essiona#s e-"#usi+e#$ e%!#o$ed in he 2o+ern%en . e. Da e o& !a$%en 7 or on .e&ore Fanuar$ :1 or en2a2in2 in he !ro&ession. &. '#a"e o& !a$%en 7 'ro+in"e or "i $ ,here he !ro&essiona# !ra" i"es his !ro&ession or ,here he %ain ains his !rin"i!a# o&&i"e in "ase he !ra" i"es his !ro&ession in se+era# !#a"es. 6. ReB*"&eme$!%: An$ indi+idua# or "or!ora ion e%!#o$in2 a !erson su./e" o !ro&essiona# asha## re4uire !a$%en .$ ha !erson o& he a- on his !ro&ession .e&ore e%!#o$%en and annua##$ herea& er. An$ !erson su./e" o he !ro&essiona# a- sha## ,ri e in deeds8 re"ei! s8 !res"ri! ions8 re!or s8 .oo*s o& a""oun 8 !#ans and desi2ns8 sur+e$s and %a!s8 as he "ase %a$ .e8 he nu%.er o& he o&&i"ia# re"ei! issued o hi%. &. E-e%! ion7 'ro&essiona#s e-"#usi+e#$ e%!#o$ed in he 2o+ern%en sha## .e e-e%! &ro% !a$%en .
?Se". 1:98 L6;< NOTE7 Gor he !ur!ose o& "o##e" in2 he a-8 he !ro+in"ia# or "i $ reasurer or his du#$ au hori@ed re!resen a i+e sha## re4uire &ro% su"h !ro&essiona#s heir "urren annua# re2is ra ion "ards issued .$ "o%!e en au hori $ .e&ore a""e! in2 !a$%en o& heir !ro&essiona# a- &or he "urren $ear. The 'R; sha## #i*e,ise re4uire he !ro&essiona#s !resen a ion o& !roo& o& !a$%en .e&ore re2is ra ion o& !ro&essiona#s or rene,a# o& heir #i"enses. ?#as !ar.8 Ar . 22>8 Ru#es and Re2u#a ions 0%!#e%en in2 he Lo"a# 6o+ern%en ;ode o& 1991<

7. Who are the professionals who$ if they are in practice of their profession$ are subject to professional tax ?

61

S566ESTED ANS)ER7 The !ro&essiona#s su./e" o he !ro&essiona# a- are on#$ hose ,ho ha+e !assed he .ar e-a%ina ions8 or an$ .oard or o her e-a%ina ions "ondu" ed .$ he 'ro&essiona# Re2u#a ion ;o%%ission ?'R;<. &or e-a%!#e8 a #a,$er ,ho is a#so a ;er i&ied 'u.#i" A""oun an ?;'A< %us !a$ he !ro&essiona# a- i%!osed on #a,$ers and ha &i-ed &or ;'As8 i& he is o !ra" i"e .o h !ro&essions. DSe". 2:>
?&<8 Ru#e NNN8 Ru#es and Re2u#a ions 0%!#e%en in2 he Lo"a# 6o+ern%en ;ode o& 1991E

18. J (ity issued a notice of assessment against 1D( (ondominium (orporation for unpaid business taxes. ;he (ondominium (orporation is a duly constituted condominium corporation in accordance with the (ondominium 1ct which owns and holds title to the common and limited common areas of the condominium. Its membership comprises the unit owners and is authorized under its Dy<9aws to collect regular assessments from its members for operating expenses$ capital expenditures on the common areas and other special assessments as provided for in the Master Aeed with ?Aeclaration of #estrictions of the (ondominium. 1D( (ondominium (orporation insists that the J (ity #evenue (ode and the 9ocal :overnment (ode do not contain provisions upon which the assessment could be based. #esolve the controversy. S566ESTED ANS)ER7 AB; is "orre" . ;ondo%iniu% "or!ora ions are 2enera##$ e-e%! &ro% #o"a# .usiness a-a ion under he Lo"a# 6o+ern%en ;ode8 irres!e" i+e o& an$ #o"a# ordinan"e ha see*s o de"#are o her,ise. N ;i $8 is au hori@ed under he Lo"a# 6o+ern%en ;ode8 o i%!ose a a- on .usiness8 ,hi"h is de&ined under he ;ode as 3 rade or "o%%er"ia# a" i+i $ re2u#ar#$ en2a2ed in as a %eans o& #i+e#ihood or ,i h a +ie, o !ro&i .3 B$ i s +er$ na ure a "ondo%iniu% "or!ora ion is no en2a2ed in .usiness8 and an$ !ro&i ha i deri+es is %ere#$ in"iden a#8 hen"e i %a$ no .e su./e" o .usiness a-es. ?Iamane , etc. v. 'A Lepanto
Con(ominium Corporation, 6. R. No. 1AB99:8 O" o.er 2A8 200A<

11. S"!*% #/ m*$"'" a( !axa!"#$ 2-e&e !-e&e "% $# .&a$'-9 %a(e% #//"'e #& 2a&e-#*%e. Gor !ur!oses o& "o##e" in2 .usiness a-es8 %anu&a" urers8 asse%.#ers8 re!a"*ers8 .re,ers8 dis i##ers8 re" i&iers and "o%!ounders o& #i4uor8 dis i##ed s!iri s and ,ines8 %i##ers8 !rodu"ers8 e-!or ers8 ,ho#esa#ers8 dis ri.u ors8 dea#ers8 "on ra" ors8 .an*s and o her &inan"ia# ins i u ions8 and o her .usiness sha## re!or 0n "ases ,here here is no su"h .ran"h8 sa#es o&&i"e8 or ,arehouse in he #o"a#i $ ,here he sa#e is %ade8 !-e %a(e %-a(( .e &e'#&+e+ "$ !-e &"$'" a( #//"'e a(#$, 2"!- !-e %a(e% ma+e .) %a"+ &"$'" a( #//"'e a$+ !-e !ax %-a(( a''&*e !# !-e '"!) #& m*$"'" a("!) 2-e&e %a"+ &"$'" a( #//"'e "% (#'a!e+. DSe". 1A0 ?a<8 L6;C Ar . 2B: ?.<
?2<8Ru#es and Re2u#a ions 0%!#e%en in2 he Lo"a# 6o+ern%en ;ode o& 1991E

12. S"!*% #/ m*$"'" a( !axa!"#$ 2-e&e !-e&e "% a /a'!#&)9 &#=e'! #//"'e9 (a$! #& (a$!a!"#$ "$ *&%*"! #/ .*%"$e%%. The &o##o,in2 sa#es a##o"a ion sha## a!!#$ o %anu&a" urers8 asse%.#ers8 "on ra" ors8 !rodu"ers8 and e-!or ers ,i h a &a" or$8 !ro/e" o&&i"e8 !#an or !#an a ion in !ursui o& a .usiness8 a. !-"&!) e&'e$! G38IH o& a## sa#es re"orded in he !rin"i!a# o&&i"e sha## .e a-a.#e .$ he "i $ or %uni"i!a#i $ ,here he !rin"i!a# o&&i"e is #o"a ed8 and .. %e0e$!) e&'e$! G58IH o& a## sa#es re"orded in he !rin"i!a# o&&i"e sha## .e a-a.#e .$ he "i $ or %uni"i!a#i $ ,here he &a" or$8 !ro/e" o&&i"e8 !#an or !#an a ion is #o"a ed. L65s ,here on#$ e-!eri%en a# &ar%s are #o"a ed sha## no .e en i #ed o he a.o+e sa#es a##o"a ion.
DSe". 1A0 ?a<8 L6;C Ar . 2B: ?.< ?:<8Ru#es and Re2u#a ions 0%!#e%en in2 he Lo"a# 6o+ern%en ;ode o& 19918 nu%.erin2 and arran2e%en su!!#iedE

On(si e sa#es o& "o%%er"ia# 4uan i $ %ade .$ e-!eri%en a# &ar%s sha## .e si%i#ar#$ i%!osed he "orres!ondin2 a- and a##o"a ed as sho,n a.o+e. D2nd !ar.8 Ar . 2B: ?a< ?A<8 Ibi(.E 13. S"!*% #/ m*$"'" a( !axa!"#$ 2-e&e !-e %a(e% a&e ma+e .) &#*!e !&*'C%9 0a$%9 #& 0e-"'(e%. a. Gor rou e sa#es %ade in a #o"a#i $ ,here a %anu&a" urer8 !rodu"er8 ,ho#esa#er8 re ai#er or dea#er has a .ran"h or sa#es o&&i"e or ,arehouse8 he sa#es are re"orded in he .ran"h8 sa#es o&&i"e or ,arehouse and he a- due hereon is !aid o he L65 ,here su"h .ran"h8 sa#es o&&i"e or ,arehouse is #o"a ed. DAr .
2B: ?d< ?1<8 Ru#es and Re2u#a ions 0%!#e%en in2 he Lo"a# 6o+ern%en ;ode o& 1991E

.. Gor rou e sa#es %ade in a #o"a#i $ ,here a %anu&a" urer8 !rodu"er8 ,ho#esa#er8 re ai#er or dea#er has no .ran"h8 sa#es o&&i"e or ,arehouse8 he sa#es are re"orded in he .ran"h8 sa#es o&&i"e or ,arehouse

62

&ro% ,here he rou e ru"*s ,i hdra, heir !rodu" s &or sa#e8 and he a- due on su"h sa#e is !aid o he L65 ,here su"h .ran"h8 sa#es o&&i"e or ,arehouse is #o"a ed. DAr . 2B: ?d< ?2<8 Ibi(.E ". The L65s ,here he rou e ru"*s8 %en ioned a.o+e8 de#i+er %er"handise "anno i%!ose an$ aon said ru"*s e-"e! he annua# &i-ed a- au hori@ed o .e i%!osed .$ he !ro+in"e or "i $ on e+er$ de#i+er$ ru"* or +an or an$ %o or +ehi"#e used .$ %anu&a" urers8 !rodu"ers8 ,ho#esa#ers8 dea#ers8 or re ai#ers in he de#i+er$ and dis ri.u ion o& dis i##ed s!iri s8 &er%en ed #i4uors8 so& drin*s8 "i2ars and "i2are es8 and o her !rodu" s as %a$ .e de er%ined .$ he san22unian2 panlala-i2an, or panlun2so(. DAr . 2B: ?d< ?:<8 Ibi(.E d. 0n addi ion o he annua# &i-ed a-8 "i ies %a$ a#so "o##e" &ro% he sa%e %anu&a" urers8 !rodu"ers8 ,ho#esa#ers8 re ai#ers8 and dea#ers usin2 rou e ru"*s a %a$ors !er%i &ee ,hi"h sha## .e i%!osed in a #o"a# a- ordinan"e. DAr . 2B: ?d< ?B<8 Ibi(.E 11. En ) 1ugust ?...$ (ity of Manila$ ;ax Erdinance 'o. )!,, was declared null and void and of no effect by the Secretary of +ustice. 5or failure of the (ity to move for reconsideration the decision lapsed into finality. En ?? 5ebruary ?.. $ the (ity enacted ;ax Erdinance 'o. ,. which amended certain provisions of ;ax Erdinance 'o. )!,,. May ;ax Erdinance 'o. ,. be enforced ? S566ESTED ANS)ER7 No. 0& an order or #a, su"h as Ta- Ordinan"e No. 79>> is in+a#id8 hen i does no #e2a##$ e-is 8 here shou#d .e no o""asion or need o a%end i . DCoca1Cola 'ottlers Philippines, Inc. v. City of !anila, et al., 6. R. No. 1A=2A28 Fune 278 200= "i in2 People v. Lim, 10> 'hi#. 1091 ?19=0<E8 hen"e TaOrdinan"e No. >011 is a#so in+a#id and "anno .e en&or"ed.

REAL PROPERTY TAXATION

1. What are the fundamental principles of real property taxation ? S566ESTED ANS)ER7 The &unda%en a# !rin"i!#es o& rea# !ro!er $ a-a ion are7 a. A!!raisa# a "urren and &air %ar*e +a#ueC .. ;#assi&i"a ion &or assess%en on he .asis o& a" ua# useC ". Assess%en on he .asis o& uni&or% "#assi&i"a ionC d. A!!raisa#8 assess%en 8 #e+$ and "o##e" ion sha## no .e #e o a !ri+a e !ersonC e. A!!raisa# and assess%en sha## .e e4ui a.#e.
NOTE7 Rea# !ro!er ies sha## .e a!!raised a he "urren and &air %ar*e +a#ue !re+ai#in2 in he #o"a#i $ ,here he !ro!er $ is si ua ed and "#assi&ied &or assess%en !ur!oses on he .asis o& i s a" ua# use. ? Allie( 'an,in2 Corporation, etc., v. Jue"on City Government, et al., 6. R. No. 1AB12=8 O" o.er 118 200A<

2. Who determines the fair mar*et value of properties ? ANS)ER7 The reasona.#e %ar*e +a#ue is de er%ined .$ he assessor in he &or% o& a s"hedu#e o& &air %ar*e +a#ues. The s"hedu#e is hen ena" ed .$ he #o"a# san22unian. 3. What is the fair mar*et value of properties ? ANS)ER7 Gair %ar*e +a#ue is he !ri"e a ,hi"h a !ro!er $ %a$ .e so#d .$ a se##er ,ho is no "o%!e##ed o se## and .ou2h .$ a .u$er ,ho is no "o%!e##ed o .u$8 a*in2 in o "onsidera ion a## uses o ,hi"h he !ro!er $ is ado! ed and %i2h in reason .e a!!#ied. The "ri erion es a.#ished .$ he s a u e "on e%!#a es a h$!o he i"a# sa#e. Hen"e8 he .u$ers need no .e a" ua# and e-is in2 !ur"hasers. ?Allie( 'an,in2 Corporation, etc., v. Jue"on City Government, et al., 6. R. No.
1AB12=8 O" o.er 118 200A "i in2 Army an( :avy Club, !anila v. $rini(a(, BB 'hi#. :>: < NOTE7 0n &i-in2 he +a#ue o& rea# !ro!er $8 assessors ha+e o "onsider a## he "ir"u%s an"es and e#e%en s o& +a#ue and %us e-er"ise !ruden dis"re ion in rea"hin2 "on"#usions. D Allie( 'an,in2 Corporation, etc., v. Jue"on City Government, et al., 6. R. No. 1AB12=8 O" o.er 118 200A "i in2 Reyes v. Alman"or, 19= S;RA :228 :27 ?1991<E< P&e a&a!"#$ #/ /a"& ma&Ce! 0a(*e%: a. The "i $ or %uni"i!a# assessor sha## !re!are a s"hedu#e o& &air %ar*e +a#ues &or he di&&eren "#asses o& rea# !ro!er $ si ua ed in heir res!e" i+e Lo"a# 6o+ern%en 5ni s &or he ena" %en o& an ordinan"e .$ he san22unian "on"ernedC and .. The s"hedu#e o& &air %ar*e +a#ues sha## .e !u.#ished in a ne,s!a!er o& 2enera# "ir"u#a ion in he !ro+in"e8 "i $ or %uni"i!a#i $ "on"erned or he !os in2 in he !ro+in"ia# "a!i o# or o her !#a"es as re4uired .$ #a,. (Lope" v. City of !anila, et al., 6.R. No. 1271:98 Ge.ruar$ 198 1999<

63 P&# #%e+ /a"& ma&Ce! 0a(*e% #/ &ea( &# e&!) '#$!a"$"$, !-e %'-e+*(e m*%! .e *.("%-e+ "$ /*(( &or ,here a+ai#a.#e8 ,i hin en ?10< da$s o& i s a!!ro+a#8 and "a!i o#8 "i $8 %uni"i!a# or baran2ay ha## &or a %ini%u% o& et al,. 6.R. No. 1191728 Mar"h 2A8 1999< "$ a (#'a( ,#0e&$me$! *$"! a% 2e(( a% !-e #&+"$a$'e hree ?:< "onse"u i+e da$s in a ne,s!a!er o& #o"a# "ir"u#a ion8 !os ed in a #ease ,o ?2< !ro%inen !#a"es in he !ro+in"ia# hree ?:< "onse"u i+e ,ee*s. (*i2uerres v. Court of Appeals,

1. What are the approaches in estimating the fair mar*et value of real property for real property tax purposes ? ANS)ER7 a. Sa#es Ana#$sis A!!roa"h. The sa#es !ri"e !aid in a" ua# %ar*e ransa" ions is "onsidered .$ a*in2 in o a""oun +a#id sa#es da a a""u%u#a ed &ro% a%on2 he Re2is rar o& Deeds8 no aries !u.#i"8 a!!raisers8 .ro*ers8 dea#ers8 .an* o&&i"ia#s8 and +arious sour"es s a ed under he Lo"a# 6o+ern%en ;ode. .. 0n"o%e ;a!i a#i@a ion A!!roa"h. The +a#ue o& an in"o%e(!rodu"in2 !ro!er $ is no %ore han he re urn deri+ed &ro% i . An ana#$sis o& he in"o%e !rodu"ed is ne"essar$ in order o es i%a e he su% ,hi"h %i2h .e in+es ed in he !ur"hase o& he !ro!er $. ". Re!rodu" ion "os a!!roa"h is a &or%a# a!!roa"h used e-"#usi+e#$ n a!!raisin2 %an(%ade i%!ro+e%en s su"h as .ui#din2s and o her s ru" ures8 .ased on su"h da a as %a eria#s and #a.or "os s o re!rodu"e a ne, re!#i"a o& he i%!ro+e%en . The assessor uses an$ or a## o& hese a!!roa"hes in ana#$@in2 he da a 2a hered o arri+e a he es i%a ed &air %ar*e +a#ue o .e in"#uded in he ordinan"e "on ainin2 he s"hedu#e o& &air %ar*e +a#ues.
?Allie( 'an,in2 Corporation, etc., v. Jue"on City Government, et al., 6. R. No. 1AB12=8 O" o.er 118 200A "i in2 Lo"a# Assess%en Re2u#a ions No. 1(92<

3. Muezon (ity passed an ordinance whereby the 2parcels of land sold$ ceded. ;ransferred and conveyed for remuneratory consideration after the effectivity of this revision shall be subject to real estate tax based on the actual amount reflected in the deed of conveyance or the current approved zonal valuation of the Dureau of Internal #evenue prevailing at the time of sale$ cession$ transfer and conveyance$ whichever is higher$ as evidenced by the certificate of payment of the capital gains tax issued therefore.7 Is the proviso for the basis in determining the value for real property tax purposes valid ? ANS)ER7 No. The !ro+iso .ein2 "on rar$ o !u.#i" !o#i"$ and &or res rainin2 rade is no +a#id &or he &o##o,in2 reasons7 a. 0 %anda es an e-"#usi+e ru#e in de er%inin2 he &air %ar*e +a#ue and de!ar s &ro% he es a.#ished !ro"edures su"h as he sa#es ana#$sis a!!roa"h8 he in"o%e "a!i a#i@a ion a!!roa"h and he re!rodu" ion a!!roa"h !ro+ided under he ru#es i%!#e%en in2 he s a u e. 0 undu#$ in er&eres ,i h he du ies s a u ori#$ !#a"ed u!on he #o"a# assessor .$ "o%!#e e#$ dis!ensin2 ,i h his ana#$sis and dis"re ion ,hi"h he Lo"a# 6o+ern%en ;ode and he re2u#a ions re4uire o .e e-er"ised. An ordinan"e ha "on ra+enes an$ s a u e is ultra vires and +oid. .. The 1"onsidera ion a!!roa"h3 in he ordinan"e is i##e2a# sin"e 1 he a!!raisa#8 assess%en 8 #e+$ and "o##e" ion o& rea# !ro!er $ a- sha## no .e #e o an$ !ri+a e !erson38 i ,i## a#so "o%!#e e#$ des ro$ he &unda%en a# !rin"i!#e in rea# !ro!er $ a-a ion H ha rea# !ro!er $ sha## .e "#assi&ied8 +a#ued and assessed on he .asis o& i s a" ua# use re2ard#ess o& ,here #o"a ed8 ,hoe+er o,ns i 8 and ,hoe+er uses i . A##o,in2 he !ar ies o a !ri+a e sa#e o di" a e he &air %ar*e +a#ue o& he !ro!er $ ,i## dis!ense ,i h he dis in" ions o& a" ua# use s a ed in he Lo"a# 6o+ern%en ;ode and in he re2u#a ions. ". The in+a#idi $ is no "ured .$ he !rhase 1,hi"he+er is hi2her3 .e"ause an in e2ra# !ar o& ha s$s e% s i## !er%i s +a#uin2 rea# !ro!er $ in disre2ard o& i s 1a" ua# use.3 d. The ordinan"e ,ou#d resu# o rea# !ro!er $ assess%en s %ore han on"e e+er$ hree ?:< $ears and ha is no he "on2ressiona# in en as sho,n in he !ro+isions o& he Lo"a# 6o+ern%en ;ode and he re2u#a ions. ;onse4uen #$8 he rea# !ro!er $ a- .urden shou#d no .e in er!re ed o in"#ude hose .e$ond ,ha he ;ode or he re2u#a ions e-!ress#$ "#ear#$ s a e. e. The !ro+iso ,ou#d !ro+ide a "hi##in2 e&&e" on rea# !ro!er $ o,ners or ad%inis ra ors o en er &ree#$ in o "on ra" s re&#e" in2 he in"reasin2 +a#ue o& rea# !ro!er ies in a""ordan"e ,i h !re+ai#in2 %ar*e "ondi ions.

64

)hi#e he Lo"a# 6o+ern%en ;ode !ro+ides ha he assess%en o& rea# !ro!er $ sha## no .e in"reased on"e e+er$ hree ?:< $ears8 he 4ues ioned !ro+iso su./e" s he !ro!er $ o a hi2her assess%en e+er$ i%e a sa#es ransa" ion is %ade. Rea# !ro!er $ o,ners ,ou#d here&ore !os !one sa#es un i# a& er he #a!se o& he hree ?:< $ear !eriod8 or i& he$ do so ,i hin he said !eriod he$ sha## .e "o%!e##ed o dis!ose o& he !ro!er $ a a !ri"e no e-"eedin2 he #as !rior "on+e$an"e in order o a+oid a hi2her a- assess%en . 0n he a.o+e ,o s"enarios rea# !ro!er $ o,ners are e&&e" i+e#$ !re+en ed &ro% o. ainin2 he .es !ri"e !ossi.#e &or heir !ro!er ies and undu#$ ha%!ers he e4ui a.#e dis ri.u ion o& ,ea# h. ?Allie( 'an,in2
Corporation, etc., v. Jue"on City Government, et al., 6. R. No. 1AB12=8 O" o.er 118 200A<

4. Fow is the assessment level fixed ? ANS)ER7 The assess%en #e+e# is &i-ed .$ ordinan"es o& he a!!ro!ria e san22unian. 5. Fow is the tax rate fixed ? ANS)ER7 The a- ra e is &i-ed .$ ordinan"es o& he a!!ro!ria e san22unian. 6. What is the nature of a tax declaration ? S566ESTED ANS)ER7 As a ru#e8 a- de"#ara ions or rea# $ a- !a$%en s o& !ro!er $ are no "on"#usi+e e+iden"e o& o,nershi!8 ne+er he#ess8 he$ are 2ood in(icia o& !ossession in he "on"e! o& o,ner8 &or no one in his ri2h %ind ,ou#d .e !a$in2 a-es &or a !ro!er $ ha is no in his a" ua# or "ons ru" i+e !ossession. The$ "ons i u e a #eas !roo& ha he ho#der has a "#ai% o& i #e o+er he !ro!er $. The +o#un ar$ de"#ara ion o& a !ie"e o& !ro!er $ &or a-a ion !ur!oses %ani&es s no on#$ ones sin"ere and hones desire o o. ain i #e o he !ro!er $ and announ"es his ad+erse "#ai% a2ains he S a e and a## o her in eres ed !ar ies8 .u a#so he in en ion o "on ri.u e needed re+enues o he 2o+ern%en . Su"h an a" s ren2 hens ones bona fi(e "#ai% o& a"4uisi ion o& o,nershi!. ?'uenaventura, et al., v. Republic, 6. R.
No. 1==>=A8 !arch 28 2007 "i in2 8eirs of Fune 200:8 B0B S;RA 19:8 199 H 200< implicio antia2o v. 8eirs of !ariano 5. antia2o, 6. R. No. 1A1BB08 17

NOTES AND ;OMMENTS7 a. De(a)e+ !ax +e'(a&a!"#$ $e,a!e% '(a"m #/ #%%e%%"#$ "$ '#$'e ! #/ #2$e&. A a- de"#ara ion
is a 2ood indi"a ion o& !ossession in he "on"e! o& o,ner. Ho,e+er8 de#a$ed de"#ara ion o& !ro!er $ &or a- !ur!oses ne2a es a "#ai% o& "on inuous8 e-"#usi+e8 and unin erru! ed !ossession in he "on"e! o& o,ner. ? 8eirs of !arina C. Re2ala(o, et al., etc., v. Republic of the Philippines, 6. R. No. 1=>1AA8 Ge.ruar$ 1A8 2007<

..

N#$<+e'(a&a!"#$ #/ a

&# e&!) /#& !ax

*& #%e% +#e% $#! $e'e%%a&"() $e,a!e #2$e&%-" .

? ps. A"ana v. Lumbo, et al., 6. R. No. 1A7A9:8 Mar"h 228 2007 ;&. Republic v. Court of Appeals, 6. R. No. 11=::728 1> Fanuar$ 20018 :B9 S;RA BA18 B=2<

7. :ive examples of personal property under the civil law that may be considered as real property for purposes of taxes. S566ESTED ANS)ER7 'ersona# !ro!er $ under he "i+i# #a, %a$ .e "onsidered as rea# !ro!er $ &or !ur!oses o& a-es ,here he !ro!er $ is essen ia# o he "ondu" o& he .usiness. a. 5nder2round an*s are essen ia# o he "ondu" o& he .usiness o& a 2aso#ine s a ion ,i hou ,hi"h i ,ou#d no .e o!era iona#. ?Calte. Phils., Inc. v. Central 'oar( of Assessment Appeals, et al., 11B S;RA
29=<

.. Li2h Rai# Transi ?LRT< i%!ro+e%en s su"h as .ui#din2s8 "arria2e,a$s8 !assen2er er%ina#s s a ions8 and si%i#ar s ru" ures do no &or% !ar o& he !u.#i" roads sin"e he &or%er are "ons ru" ed o+er he #a er in su"h a ,a$ ha he &#o, o& +ehi"u#ar ra&&i" ,ou#d no .e i%!aired. The "arria2e,a$s and er%ina#s ser+e a &un" ion di&&eren &ro% he !u.#i" roads. Gur her%ore8 he$ are no o!en o use .$ he 2enera# !u.#i" hen"e no e-e%! &ro% rea# !ro!er $ a-es. E+en 2ran in2 ha he na iona# 2o+ern%en o,ns he "arria2e,a$s and er%ina# s a ions8 he !ro!er $ is no e-e%! .e"ause heir .ene&i"ia# use has .een 2ran ed o LRTA a a-a.#e en i $. (Li2ht Rail $ransit Authority v. Central 'oar( of Assessment Appeals, et al., 6. R.
No. 127:1=8 O" o.er 128 2000<

18. Rea( &# e&!) !ax +e'(a&a!"#$% @a&e ,##+ indicia #/ #%%e%%"#$ "$ !-e '#$'e ! #/ a$ #2$e&8 &or no one in his ri2h %ind ,ou#d .e !a$in2 a-es &or a !ro!er $ ha is no in his a" ua# or "ons ru" i+e !ossession.3 DConsoli(ate( Rural 'an, (Ca2ayan )alley), Inc. v. Court of Appeals, et al., 6.R. No.

65 1:21=18 Fanuar$ 178 200A "i in2 8eirs of implicio antia2o v. 8eirs of !ariano 5. antia2o, 6. R. No. 1A1BB08 17 Fune 200:8 B0B S;RA a !. 191C Llarena v. !apili, 6.R. No.1B=:B18 7 Au2us 200:8 B0> B>B8 B91<

11. T-e &e%!&"'!"#$ * #$ !-e #2e& #/ '#*&!% !# "m ea'- !ax a%%e%%me$! 2"!-#*! a &"#& a)me$!9 *$+e& &#!e%!9 #/ !-e !axe% a%%e%%e+ "% '#$%"%!e$! 2"!- !-e +#'!&"$e !-a! !axe% a&e !-e ("/e.(##+ #/ !-e $a!"#$9 and as su"h heir "o##e" ion "anno .e "ur ai#ed .$ in/un" ion or an$ #i*e a" ionC o her,ise8 he s a e or8 in his "ase8 he #o"a# 2o+ern%en uni 8 sha## .e "ri!!#ed in dis!ensin2 he needed ser+i"es o he !eo!#e8 and i s %a"hiner$ 2ra+e#$ disa.#ed. (!anila 5lectric Company v. 'arlis, 6.R. No. 11B2:18
Ma$ 1>8 2001<

Thus8 he ria# "our has no /urisdi" ion o en er ain a !e i ion &or !rohi.i ion a.sen !a$%en under !ro es o& he a- assessed. ?Ibi(.)
NOTE7 )hi#e he a.o+e Ma$ 1>8 2001 de"ision ,as se aside .$ he Su!re%e ;our ,hen i 2ran ed he !e i ioners se"ond %o ion &or re"onsidera ion on Fune 298 200B8 he au hor su.%i s ha he a.o+e ru#in2 in he Ma$ 1>8 2001 de"ision is s i## +a#id8 .e"ause ,ha ,as re+ersed in he se"ond %o ion &or re"onsidera ion ,as he 2arnish%en o& Mera#"os asse s .e"ause ,he her or no an assess%en ,as issued o Mera#"o has o .e reso#+ed .$ he #o,er "our .

12. U$ a"+ &ea(!) !axe% a!!a'- !# !-e &# e&!) a$+ "% '-a&,ea.(e a,a"$%! !-e e&%#$ 2-# -a+ a'!*a( #& .e$e/"'"a( *%e a$+ #%%e%%"#$ #/ "! &e,a&+(e%% #/ 2-e!-e& #& $#! -e "% !-e #2$e&. To i%!ose he rea# !ro!er $ a- on he su.se4uen o,ner ,hi"h ,as nei her he o,ner no he .ene&i"ia# user o& he !ro!er $ durin2 he desi2na ed !eriods ,ou#d no on#$ .e "on rar$ o #a, .u a#so un/us . ;onse4uen #$8 MERAL;O he &or%er o,nerIuser o& he !ro!er $ ,as re4uired o !a$ he a- ins ead o& he ne, o,ner NA'O;OR. (!anila 5lectric Company v. 'arlis, G.R. :o. //<0>/, !ay /?, 0==/)
NOTE7 The a.o+e Ma$ 1>8 2001 de"ision ,as se aside .$ he Su!re%e ;our ,hen i 2ran ed he !e i ioners se"ond %o ion &or re"onsidera ion on Fune 298 200B. The au hor su.%i s ha he a.o+e ru#in2 in he Ma$ 1>8 2001 de"ision is s i## +a#id8 no on he .asis o& he Ma$ 1>8 2001 de"ision8 in he #i2h o& !ronoun"e%en s o& he Su!re%e ;our in o her "ases. Thus8 do no "i e he do" rine as e%ana in2 &ro% he Ma$ 1>8 2001 de"ision.

13. Se'&e!a&) #/ E*%!"'e 'a$ !aCe '#,$">a$'e #/ a 'a%e "$0#(0"$, !-e '#$%!"!*!"#$a("!) #& (e,a("!) #/ !ax #&+"$a$'e% 2-e&e !-e&e a&e /a'!*a( "%%*e% "$0#(0e+. (*i2uerres v. Court of Appeals, et al., G.R. :o.
//B/;0, !arch 0A, /BBB)

Tax a)e& /"(e% a ea( !# !-e Se'&e!a&) #/ E*%!"'e9 2"!-"$ 38 +a)% /&#m e//e'!"0"!) !-e&e#/. 0n "ase he Se"re ar$ de"ides he a!!ea#8 a !eriod a#so o& :0 da$s is a##o,ed &or an a22rie+ed !ar $ o 2o o "our . Bu i& he Se"re ar$ does no a" hereon8 a& er he #a!se o& =0 da$s8 a !ar $ "ou#d a#read$ see* re#ie& in "our ,i hin :0 da$s &ro% he #a!se o& he =0 da$ !eriod. These hree se!ara e !eriods are "#ear#$ 2i+en &or "o%!#ian"e as a !rere4uisi e .e&ore see*in2 redress in a "o%!e en "our . Su"h s a u or$ !eriods are se o !re+en de#a$s as ,e## as enhan"e he order#$ and s!eed$ dis"har2e o& /udi"ia# &un" ions. Gor his reason he "our s "ons rue hese !ro+isions o& s a u es as %anda or$. (Reyes, et al., v. Court of Appeals, et al.8 6.R. No. 11>2::8 De"e%.er 108 1999< 11. P*.("' -ea&"$,% a&e ma$+a!#&) &"#& !# a &#0a( #/ !ax #&+"$a$'e 8 .u his s i## re4uires he a-!a$er o addu"e e+iden"e o sho, ha no !u.#i" hearin2s e+er oo* !#a"e. (Reyes, et al., v. Court of Appeals, et al., 6.R. No. 11>2::8 De"e%.er 108 1999< 'u.#i" hearin2s are re4uired o .e "ondu" ed !rior o he ena" %en o& an ordinan"e i%!osin2 rea# !ro!er $ a-es. ?*i2uerres v. Court of Appeals, et al., 6.R. No. 1191728
Mar"h 2A8 1999<

13. T-e '#$'*&&e$! a$+ %"m*(!a$e#*% &eme+"e% a//#&+e+ (#'a( ,#0e&$me$! *$"!% "$ e$/#&'"$, '#((e'!"#$ #/ &ea( &# e&!) !axe%: a. Dis rain o& !ersona# !ro!er $C .. Sa#e o& de#in4uen rea# !ro!er $8 and ". ;o##e" ion o& rea# !ro!er $ a- hrou2h ordinar$ "our a" ion. 14. T-e &eme+) #/ (e0) 'a$ .e *&%*e+ .) *!!"$, * /#& %a(e !-e &ea( &# e&!) %*.=e'! #/ !ax 8 i.e.8 he de#in4uen !ro!er $ u!on ,hi"h he a- #ien a a"hes8 re2ard#ess o& he !resen o,ner or !ossessor hereo&. Ho,e+er his re%ed$ is on#$ one o& he o her re%edies. (!anila 5lectric Company v. 'arlis, 6.R. No.
11B2:18 Ma$ 1>8 2001<

66 NOTE7 The a.o+e Ma$ 1>8 2001 de"ision ,as se aside .$ he Su!re%e ;our ,hen i 2ran ed he !e i ioners se"ond %o ion &or re"onsidera ion on Fune 298 200B. The au hor su.%i s ha he a.o+e ru#in2 in he Ma$ 1>8 2001 de"ision is s i## +a#id8 no on he .asis o& he Ma$ 1>8 2001 de"ision8 in he #i2h o& !ronoun"e%en s o& he Su!re%e ;our in o her "ases. Thus8 do no "i e he do" rine as e%ana in2 &ro% he Ma$ 1>8 2001 de"ision.

15. T-e LGU '#*(+ a(%# a0a"( #/ !-e &eme+) #/ +"%!&a"$! a$+ (e0) #/ e&%#$a( &# e&!) %*.=e'!"$, a$) e&%#$a( &# e&!) #/ !-e !ax a)e& !# exe'*!"#$. hus8 he issuan"e o& he ,arran s o& 2arnish%en o+er MERAL;Os .an* de!osi s ,as no i%!ro!er or irre2u#ar. (!anila 5lectric Company v. 'arlis,
et al.8 6.R. No. 11B2:18 Ma$ 1>8 2001< NOTE7 The a.o+e Ma$ 1>8 2001 de"ision ,as se aside .$ he Su!re%e ;our ,hen i 2ran ed he !e i ioners se"ond %o ion &or re"onsidera ion on Fune 298 200B. The au hor su.%i s ha he a.o+e ru#in2 in he Ma$ 1>8 2001 de"ision is s i## +a#id8 no on he .asis o& he Ma$ 1>8 2001 de"ision8 in he #i2h o& !ronoun"e%en s o& he Su!re%e ;our in o her "ases. Thus8 do no "i e he do" rine as e%ana in2 &ro% he Ma$ 1>8 2001 de"ision.

16. N#!"'e a$+ *.("'a!"#$9 a% 2e(( a% !-e (e,a( &eB*"&eme$!% /#& a !ax +e("$B*e$') %a(e9 a&e ma$+a!#&)8 and he &ai#ure o "o%!#$ here,i h "an in+a#ida e he sa#e. The !res"ri.ed no i"es %us .e sen o "o%!#$ ,i h he re4uire%en s o& due !ro"ess . (De 3necht, et al,. v. Court of AppealsG De 3necht, et al., v.
8onorable ayo, 290 S;RA 22:82:=<

17. T-e &ea%#$ .e-"$+ !-e $#!"'e &eB*"&eme$! "% !-a! !ax %a(e% a&e a+m"$"%!&a!"0e &#'ee+"$,% 2-"'- a&e in personam "$ $a!*&e. (Pu"on v. Abellera, 1=9 S;RA 7>98 79AG De Asis v. I.A.C., 1=9 S;RA :1B< 28. What are the steps to be followed for the mandatory conduct of :eneral #evision of #eal %roperty 1ssessments ? S566ESTED ANS)ER7 a. 're!ara ion o& S"hedu#e o& Gair Mar*e Va#uesC .. Ena" %en o& Ordinan"es7 1< Le+$in2 an annua# 1a( valorem3 a- on rea# !ro!er $ and an addi iona# a- a""ruin2 o he S!e"ia# Edu"a ion GundC 2< Gi-in2 he assess%en #e+e#s o .e a!!#ied o he %ar*e +a#ues o& rea# !ro!er iesC :< 'ro+idin2 he ne"essar$ a!!ro!ria ions o de&ra$ e-!enses in"iden o 2enera# re+ision o& rea# !ro!er $ assess%en s8C and B< Ado! in2 he S"hedu#e o& Gair Mar*e Va#ues !re!ared .$ he assessors. ?Lope" v. City of
!anila, et al., 6.R. No. 1271:98 Ge.ruar$ 198 1999<

21. 589S 8nergy$ Inc.$ had a contract to supply '%( with the electricity generated by 589SI power barges. ;he contract also stated that '%( shall be responsible for all real estate taxes and assessments. 589S then received an assessment of real property taxes on its power barges from the %rovincial 1ssessor of Datangas. If filed a motion for reconsideration with the %rovincial 1ssessor. a. &pon denial$ 589S elevated the matter to the 9ocal Doard of 1ssessment 1ppeals /9D110$ where it raised the following issues4 0 Since '%( is tax<exempt then 589Is should also be tax<exempt because of its contract with '%(. ?0 ;he power barges are not real property subject to real property taxes. b. &pon the other hand the 9ocal ;reasurer insists that the assessment has attained a state of finality hence the appeal to the 9D11 should be dismissed. #ule on the conflicting contentions. S566ESTED ANS)ER7 a. A## he "on en ions o& GELS are ,i hou %eri 7 1< N'; is no he o,ner o& he !o,er .ar2es nor he o!era or o& he !o,er .ar2es. The ae-e%! ion !ri+i#e2e 2ran ed o N'; "anno .e e- ended o GELS. he "o+enan is .e ,een N'; and GELs and does no .ind a hird !erson no !ri+$ o he "on ra" su"h as he 'ro+in"e o& Ba an2as. 2< The Su!re%e ;our o& Ne, Kor* in Consoli(ate( 5(ison Company of :e- Ior,, Inc., et al., v. $he City of :e- Ior,, et al., >0 Mis". 2d 10=A ?197A< "i ed in *5L 5ner2y, Inc., v. Province of 'atan2as, 6. R. No. 1=>AA78 Ge.ruar$ 1=8 2007 and "o%!anion "ase8 he#d ha .ar2es on ,hi"h

67

,ere %oun ed 2as ur.ine !o,er !#an s desi2na ed o 2enera e e#e" ri"a# !o,er8 he &ue# oi# .ar2es ,hi"h su!!#ied &ue# oi# o he !o,er !#an .ar2es8 and he a""essor$ e4ui!%en %oun ed on he .ar2es ,ere su./e" o rea# !ro!er $ a-es. Moreo+er8 Ar i"#e B1A?9< o& he ;i+i# ;ode !ro+ides ha 1DdEo"*s and s ru" ures ,hi"h8 hou2h &#oa in28 are in ended .$ heir na ure and o./e" o re%ain a a &i-ed !#a"e on a ri+er8 #a*e or "oas 3 are "onsidered i%%o+a.#e !ro!er $ .$ des ina ion .ein2 in ended .$ he o,ner &or an indus r$ or ,or* ,hi"h %a$ .e "arried on in a .ui#din2 or on a !ie"e o& #and and ,hi"h end dire" #$ o %ee he needs o& said indus r$ or ,or*. .. The Treasurer is "orre" . The !ro"edure do no a##o, a %o ion &or re"onsidera ion o .e &i#ed ,i h he 'ro+in"ia# Assessor. To a##o, he !ro"edure ,ou#d indeed in+i e "orru! ion in he s$s e% o& a!!raisa# and assess%en . i "on+enien #$ "our s a 2ra& (!rone si ua ion ,here +a#ues o& rea# !ro!er $ a$ .e ini ia##$ se unreasona.#$ hi2h8 and hen su.se4uen #$ redu"ed u!on he re4ues o& a !ro!er $ o,ner. 0n he #a er ins an"e8 a##usions o& !ossi.#e "o+er8 i##i"i rade(o&& "anno .e a+oided8 and in &a" "an "on+enien #$ a*e !#a"e. Su"h o""asion &or %is"hie& %us .e !re+en ed and e-"ised &ro% our s$s e%. ?*5L 5ner2y, Inc., v. Province of 'atan2as, 6. R. No.
1=>AA78 Ge.ruar$ 1=8 2007 and "o%!anion "ase8 "i in2 Callanta v. 6ffice of the 6mbu(sman. 6. R. Nos. 11A2A:(7B8 Fanuar$ :08 199>8 2>A S;RA =B><

NOTES AND ;OMMENTSC a. A $#!"'e #/ a%%e%%me$! "%%*e+ .) a (#'a( a%%e%%#& "% $#! !-e %*.=e'! #/ a m#!"#$ /#& &e'#$%"+e&a!"#$ !-a! m*%! .e a ea(e+ !# !-e LBAA. The #as a" ion o& he #o"a# assessor on a !ar i"u#ar
assess%en sha## .e he no i"e o& assess%en . 0 is his #as a" ion ,hi"h 2i+es he o,ner o& he !ro!er $ he ri2h o a!!ea# o he LBAA. The !ro"edure does no !er%i he !ro!er $ o,ner he re%ed$ o& &i#in2 a %o ion &or re"onsidera ion .e&ore he #o"a# assessor8 ?*5L 5ner2y, Inc., v. Province of 'atan2as, 6. R. No. 1=>AA78 Ge.ruar$ 1=8 2007 and "o%!anion "ase8 "i in2 Callanta v. 6ffice of the 6mbu(sman. 6. R. Nos. 11A2A:(7B8 Fanuar$ :08 199>8 2>A S;RA =B><

22. A s!e"ia# #e+$ or s!e"ia# assess%en is an i%!osi ion .$ a !ro+in"e8 a "i $8 a %uni"i!a#i $ ,i hin he Me ro!o#i an Mani#a Area8 a %uni"i!a#i $ or a .aran2a$ u!on rea# !ro!er $ s!e"ia##$ .ene&i ed .$ a !u.#i" ,or*s e-!endi ure o& he L65 o re"o+er no %ore han =0O o& su"h e-!endi ure. 23. T-e &ea( &# e&!) !axe% !-a! ma) .e '#((e'!e+ .) &#0"$'e%9 '"!"e% a$+ m*$"'" a("!"e% 2"!-"$ !-e ;e!&# ;a$"(a a&ea a&e !-e .a%"' &ea( &# e&!) !ax9 !-e % e'"a( e+*'a!"#$ /*$+9 a$+ !-e a+ 0a(#&em !ax #$ "+(e (a$+%. 5n#i*e he s!e"ia# #e+$8 he #e+$ and "o##e" ion o& rea# !ro!er $ a-es are #i%i ed on#$ o he a.o+e #o"a# 2o+ern%en uni s. 21. I/ !-e ,&#*$+ /#& !-e &#!e%! "% 0a("+"!) #/ !-e &ea( &# e&!) !ax #&+"$a$'e and no he unreasona.#eness o& he a%oun "o##e" ed he a- %us .e !aid under !ro es 8 and he issue o& #e2a#i $ %a$ .e raised o he !ro!er "our s on "er iorari ,i hou need o& e-haus in2 ad%inis ra i+e re%edies. 23. I/ !-e ,&#*$+ /#& !-e &#!e%! "% *$&ea%#$a.(e$e%% #/ !-e am#*$!% '#((e'!e+ !-e&e "% $ee+ !# a) *$+e& &#!e%! and ad%inis ra i+e re%edies %us .e resor ed o .e&ore re"ourse o he !ro!er "our s. 24. P&#'e+*&e /#& &e/*$+ #/ &ea( &# e&!) !axe% .a%e+ #$ *$&ea%#$a.(e$e%% #& ex'e%%"0e$e%% #/ am#*$!% '#((e'!e+. a. 'a$%en under !ro es a he i%e o& !a$%en or ,i hin hir $ ?:0< da$s herea& er8 !ro es .ein2 #od2ed o he !ro+in"ia#8 "i $ or in he "ase o& a %uni"i!a#i $ ,i hin he Me ro Mani#a Area he %uni"i!a# reasurer. .. The reasurer has a !eriod o& si- $ ?=0< da$s &ro% re"ei! o& he !ro es ,i hin o de"ide. ". )i hin hir $ ?:0< da$s &ro% re"ei! o& reasurers de"ision or i& he reasurer does no de"ide8 ,i hin hir $ ?:0< da$s &ro% he e-!ira ion o& he si- $ ?=0< !eriod &or he reasurer o de"ide8 he a-!a$er shou#d &i#e an a!!ea# ,i h he Lo"a# Board o& Assess%en A!!ea#s. d. The Lo"a# Board o& Assess%en A!!ea#s has 120 da$s &ro% re"ei! o& he a!!ea# ,i hin ,hi"h o de"ide. e. The ad+erse de"ision o& he Lo"a# Board o& Assess%en A!!ea#s shou#d .e a!!ea#ed ,i hin hir $ ?:0< da$s &ro% re"ei! o he ;en ra# Board o& Assess%en A!!ea#s.

68

&. The ad+erse de"ision o& he ;en ra# Board o& Assess%en A!!ea#s sha## .e a!!ea#ed o he ;our o& Ta- A!!ea#s ?5n 'anc< .$ %eans o& a !e i ion &or re+ie, ,i hin hir $ ?:0< da$s &ro% re"ei! o& he ad+erse de"ision. 2. The de"ision o& he ;TA %a$ .e he su./e" o& a %o ion &or re"onsidera ion or ne, ria# a& er ,hi"h an a!!ea# %a$ .e in er!osed .$ %eans o& a !e i ion &or re+ie, on "er iorari dire" ed o he Su!re%e ;our on !ure 4ues ions o& #a, ,i hin a !eriod o& &i& een ?1A< da$s &ro% re"ei! e- endi.#e &or a !eriod o& hir $ ?:0< da$s. 25. 1 (ity Erdinance adopting a method of assessment was nullified by the Supreme (ourt. 1 taxpayer who has paid his real property taxes on the basis of the nullified ordinance now posits that the return of the real property tax erroneously collected and paid is a necessary conse6uence of the Supreme (ourtIs nullification of the ordinance and there is no need to claim for a refund. Is this correct ? S566ESTED ANS)ER7 No. The en i #e%en o a a- re&und does no ne"essari#$ "a## &or he au o%a i" !a$%en o& he su% "#ai%ed. The a%oun o& he "#ai% .ein2 a &a" ua# %a er8 i %us s i## .e !ro+en in he nor%a# "ourse and in a""ordan"e ,i h he ad%inis ra i+e !ro"edure &or o. ainin2 a re&und o& rea# !ro!er $ a-es8 as !ro+ided under he Lo"a# 6o+ern%en ;ode. ?Allie( 'an,in2 Corporation, etc., v. Jue"on
City Government, et al., 6. R. No. 1AB12=8 Se! e%.er 1A8 200=< NOTE7 0n he a.o+e Allie( 'an,in2 "ase8 he Su!re%e ;our !ro+ided &or he s ar in2 da e o& "o%!u in2 he ,o( $ear !res"ri! i+e !eriod ,i hin ,hi"h o &i#e he "#ai% ,i h he Treasurer8 ,hi"h is &ro% &ina#i $ o& he De"ision. The !ro"edure o .e &o##o,ed is ha sho,n .e#o,.

26. P&#'e+*&e /#& &e/*$+ #/ &ea( &# e&!) !axe% .a%e+ #$ 0a("+"!) #/ !-e !ax mea%*&e #& solutio indebeti. a. 'a$%en under !ro es no re4uired8 "#ai% %us .e dire" ed o he #o"a# reasurer8 ,i hin ,o ?2< $ears &ro% he da e he a-!a$er is en i #ed o su"h redu" ion or read/us %en 8 ,ho %us de"ide ,i hin si- $ ?=0< da$s &ro% re"ei! . .. The denia# .$ he #o"a# reasurer o& he !ro es ,ou#d &a## ,i hin he Re2iona# Tria# ;our s ori2ina# /urisdi" ion8 he re+ie, .ein2 he ini ia# /udi"ia# "o2ni@an"e o& he %a er. Des!i e he #an2ua2e o& Se" ion 19A o& he Lo"a# 6o+ern%en ;ode ,hi"h s a es ha he re%ed$ o& he a-!a$er ,hose !ro es is denied .$ he #o"a# reasurer is 1 o a!!ea# ,i h he "our o& "o%!e en /urisdi" ion83 #a.e#in2 he said re+ie, as an e-er"ise o& a!!e##a e /urisdi" ion is ina!!ro!ria e sin"e he denia# o& he !ro es is no he /ud2%en or order o& a #o,er "our 8 .u o& a #o"a# 2o+ern%en o&&i"ia#. ?Iamane , etc. v. 'A Lepanto Con(ominium Corporation, 6. R.
No. 1AB99:8 O" o.er 2A8 200A<

". The de"ision o& he Re2iona# Tria# ;our shou#d .e a!!ea#ed .$ %eans o& a !e i ion &or re+ie, dire" ed o he ;our o& Ta- A!!ea#s ?Di+ision<. d. The de"ision o& he ;our o& Ta- A!!ea#s ?Di+ision< %a$ .e he su./e" o& a re+ie, .$ he ;our o& Ta- A!!ea#s ?en banc<. e. The de"ision o& he ;our o& Ta- A!!ea#s ? en banc< %a$ .e he su./e" o& a !e i ion &or re+ie, on "er iorari on !ure 4ues ions o& #a, dire" ed o he Su!re%e ;our . 27. C-a&"!a.(e "$%!"!*!"#$%9 '-*&'-e% a$+ a&%#$a,e% #& '#$0e$!% a *&!e$a$! !-e&e!#9 m#%B*e%9 $#$< &#/"! 'eme!e&"e%9 a$+ a(( (a$+%9 .*"(+"$,% a$+ "m &#0eme$!% !-a! a&e a'!*a(()9 +"&e'!() a$+ ex'(*%"0e() *%e+ /#& &e(","#*%9 '-a&"!a.(e #& e+*'a!"#$a( *& #%e% a&e exem ! /&#m !axa!"#$.
DSe".2> ?:< Ar i"#e V08 19>7 ;ons i u ionE

38. T-e '#$%!"!*!"#$a( !ax exem !"#$% &e/e& #$() !# &ea( &# e&!) ha are a" ua##$8 dire" #$ and e-"#usi+e#$ used &or re#i2ious8 "hari a.#e or edu"a iona# !ur!oses8 and ha he on#$ "ons i u iona##$ re"o2ni@ed e-e%! ion &ro% a-a ion o& re+enues are hose earned .$ non(!ro&i 8 non(s o"* edu"a iona# ins i u ions ,hi"h are a" ua##$8 dire" #$ and e-"#usi+e#$ used &or edu"a iona# !ur!oses. (Commissioner of
Internal Revenue v. Court of Appeals, et al., 29> S;RA >:<

The "ons i u iona# a- e-e%! ion "o+ers !ro!er $ a-es on#$. )ha is e-e%! ed is no he ins i u ion i se#&8 hose e-e%! ed &ro% rea# es a e a-es are #ands8 .ui#din2s and i%!ro+e%en s a" ua##$8 dire" #$ and e-"#usi+e#$ used &or re#i2ious8 "hari a.#e or edu"a iona# !ur!oses. ?Lun2 Center of the Philippines v. Jue"on
City, et al., etc., 6. R. No. 1BB10B8 Fune 298 200B "i in2 Fus i"e Da+ide<

69

31. T-e 1733 C#$%!"!*!"#$ %!a!e+ !-a! !-e (a$+%9 .*"(+"$,%9 a$+ "m &#0eme$!% a&e @*%e+ ex'(*%"0e()A .*! !-e &e%e$! C#$%!"!*!"#$ &eB*"&e% !-a! !-e (a$+%9 .*"(+"$,% a$+ "m &#0eme$!% a&e @a'!*a(()9 +"&e'!() a$+ ex'(*%"0e() *%e+.A The "han2e shou#d no .e i2nored. Re#ian"e on !as de"isions ,ou#d ha+e su&&i"ed ,ere he ,ords 1a" ua##$3 as ,e## as 7dire" #$3 are no added. There %us .e !roo& here&ore o& he a" ua# and dire" use o .e e-e%! &ro% a-a ion. ?Lun2 Center of the Philippines v. Jue"on City,
et al., etc., 6. R. No. 1BB10B8 Fune 298 200B "i in2 Province of Abra v. 8ernan(o, 107 S;RA 10A<

32. W-a! "% mea$! .) @a'!*a(9 +"&e'! a$+ ex'(*%"0e *%eA #/ !-e &# e&!) /#& '-a&"!a.(e *& #%e% "% !-e +"&e'! a$+ "mme+"a!e a$+ a'!*a( a ("'a!"#$ #/ !-e &# e&!) "!%e(/ o he !ur!oses &or ,hi"h he "hari a.#e ins i u ion is or2ani@ed. 0 is no he use o& he in"o%e &ro% he rea# !ro!er $ ha is de er%ina i+e o& ,he her he !ro!er $ is used &or a-(e-e%! !ur!oses. 0& rea# !ro!er $ is used &or one or %ore "o%%er"ia# !ur!oses8 i is no e-"#usi+e#$ used &or he e-e%! ed !ur!ose .u is su./e" o a-a ion8. The ,ords 1do%inan use3 or 1!rin"i!a# use3 "anno .e su.s i u ed &or he ,ords 1used e-"#usi+e#$3 ,i hou doin2 +io#en"e o he ;ons i u ion and he #a,. So#e#$ is s$non$%ous ,i h e-"#usi+e#$. ?Lun2 Center of the Philippines v. Jue"on City, et al., etc., 6. R. No. 1BB10B8 Fune 298
200B<

33. P#&!"#$% #/ !-e (a$+ #/ a '-a&"!a.(e "$%!"!*!"#$9 %*'- a% a -#% "!a(9 (ea%e+ !# &"0a!e e$!"!"e% a% 2e(( a% !-#%e a&!% #/ !-e -#% "!a( (ea%e+ !# &"0a!e "$+"0"+*a(% a&e $#! exem ! /&#m &ea( &# e&!) !axe%. On he o her hand8 he !or ion o& he #and o""u!ied .$ he hos!i a# and !or ions o& he hos!i a# used &or i s !a ien s8 ,he her !a$in2 or non(!a$in28 are e-e%! &ro% rea# !ro!er $ a-es. ?Lun2 Center of the
Philippines v. Jue"on City, et al., etc., 6. R. No. 1BB10B8 Fune 298 200B<

31. A% a ,e$e&a( &"$'" (e9 a '-a&"!a.(e "$%!"!*!"#$ +#e% $#! (#%e "!% '-a&a'!e& a% %*'- a$+ "!% exem !"#$ /&#m !axe% %"m () .e'a*%e "! +e&"0e% "$'#me /&#m a)"$, a!"e$!%9 2-e!-e& #*!< a!"e$!9 #& '#$/"$e+ "$ !-e -#% "!a(9 #& &e'e"0e% %*.%"+"e% /&#m !-e ,#0e&$me$!. So #on2 as he %one$ re"ei+ed is de+o ed or used a# o2e her o he "hari a.#e o./e" ,hi"h i is in ended o a"hie+eC and no %one$ inures o he !ri+a e .ene&i o& he !ersons %ana2in2 or o!era in2 he ins i u ion . ?Lun2 Center of the Philippines v.
Jue"on City, et al., etc., 6. R. No. 1BB10B8 Fune 298 200B<

33. What property are exempt from the payment of real property tax under the 9ocal :overnment (ode ? S566ESTED ANS)ER7 a. Rea# !ro!er $ o,ned .$ he Re!u.#i" o& he 'hi#i!!ines or an$ o& i s !o#i i"a# su.di+isions e-"e! ,hen he .ene&i"ia# use hereo& has .een 2ran ed o a a-a.#e !erson &or a "onsidera ion or o her,iseC .. ;hari a.#e ins i u ions8 "hur"hes8 !arsona2es or "on+en s a!!ur enan here o8 %os4ues8 non( !ro&i or re#i2ious "e%e eries8 and a## #ands8 .ui#din2s and i%!ro+e%en s a" ua##$8 dire" #$ and e-"#usi+e#$ used &or re#i2ious8 "hari a.#e and edu"a iona# !ur!osesC ". Ma"hineries and e4ui!%en 8 a" ua##$8 dire" #$ and e-"#usi+e#$ used .$ #o"a# ,a er dis ri" sC and 2o+ern%en o,ned and "on ro##ed "or!ora ions en2a2ed in he su!!#$ and dis ri.u ion o& ,a er and 2enera ion and rans%ission o& e#e" ri" !o,erC d. Rea# !ro!er $ o,ned .$ du#$ re2is ered "oo!era i+esC e. Ma"hiner$ and e4ui!%en used &or !o##u ion "on ro# and en+iron%en a# !ro e" ion. 34. 1re port and other facilities owned by the %hilippine %orts 1uthority exempt from real property taxes ? S566ESTED ANS)ER7 No. The &a" ha he !or and i s &a"i#i ies and a!!ur enan"es8 o,ned .$ he 'hi#i!!ine 'or s Au hori $ ?''A<8 are a""essi.#e o he 2enera# !u.#i" does no e-e%! i &ro% he !a$%en o& rea# !ro!er $ a-es. These are !a ri%onia# !ro!er ies o& ''A8 no &or !u.#i" use8 and ha he o!era ion o& he !or and i s &a"i#i ies and he ad%inis ra ion o& i s .ui#din2s are in he na ure o& ordinar$ .usiness. ''A is a !ro&i earnin2 "or!ora ion8 hen"e i s !a ri%onia# !ro!er ies are su./e" o a-. DPhilippine
Ports Authority v. City of Iloilo, et al., 6. R. No. 1B:21B8 No+e%.er 118 200B "i in2 Li2ht Rail $ransit Authority v. Central 'oar( of Assessment Appeals, :B2 S;RA =92 ?2000<E

NOTES AND ;OMMENTS7

70

a. Wa&e-#*%e% (#'a!e+ "$ #&!% a&e &# e&!) %*.=e'! !# &ea( &# e&!) !axe% . 'or s "ons ru" ed .$ he S a e are !ro!er ies o& he !u.#i" do%inion under Ar . B20 o& he ;i+i# ;ode ,hi"h enu%era es hese as !ro!er ies in ended &or !u.#i" use. Be ha as i %a$8 a ,arehouse8 ,hi"h8 a# hou2h #o"a ed ,i hin he !or is dis in" &ro% he !or i se#&. Thus8 i is su./e" o a-. The ,arehouse8 in he "ase a .ar8 %a$ no .e he#d as !ar o& he !or 8 "onsiderin2 i s se!ara.#e na ure as an i%!ro+e%en u!on he !or 8 and he &a" ha i is no o!en &or use .$ e+er$one and &ree#$ a""essi.#e o he !u.#i". 0n he sa%e ,a$ ha he Su!re%e ;our on"e ru#ed8 ha he e-e%! ion o& !u.#i" !ro!er $ &ro% a-a ion does no e- end o i%!ro+e%en s %ade hereon .$ ho%es eaders or o""u!an s a heir o,n e-!ense8 i #i*e,ise u!he#d he a-a.i#i $ o& he ,arehouse8 in he "ase a .ar8 i .ein2 a %ere i%!ro+e%en .ui# on an a##e2ed !ro!er $ o& !u.#i" do%ain. ?Philippine Ports Authority v. City of Iloilo, 6. R. No. 1097918 Fu#$ 1B8
200:< This is s i## 2ood do" rine.

35. ;he Manila International 1irport 1uthority /MI110 was subject to real property taxes by the municipality of %arana6ue on its airport lands$ and buildings on the ground that the 9ocal :overnment (ode has withdrawn exemptions previously enjoyed by government<owned and controlled corporations. MI11 contends otherwise as it claims it is not a government owned or controlled corporation. Who is correct. S566ESTED ANS)ER7 M0AA is "orre" .e"ause i is no a 2o+ern%en o,ned or "on ro##ed "or!ora ion .u an ins ru%en a#i $ o& he 2o+ern%en ha is e-e%! &ro% a-a ion. 0 is no a s o"* "or!ora ion .e"ause i s "a!i a# is no di+ided in o shares8 nei her is i a non(s o"* "or!ora ion .e"ause here are no %e%.ers. 0 is ins ead an ins ru%en a#i $ o& he 2o+ern%en u!on ,hi"h he #o"a# 2o+ern%en s are no a##o,ed o #e+$ a-es8 &ees or o her "har2es. An ins ru%en a#i $ 1re&ers o an$ a2en"$ o& he Na iona# 6o+ern%en 8 no in e2ra ed ,i hin he de!ar %en &ra%e,or* +es ed ,i h s!e"ia# &un" ions or /urisdi" ion .$ #a,8 endo,ed ,i h so%e i& no a## "or!ora e !o,ers8 ad%inis erin2 s!e"ia# &unds8 and en/o$in2 o!era iona# au ono%$8 usua##$ hrou2h a "har er. This er% in"#udes re2u#a or$ a2en"ies "har ered ins i u ions and 2o+ern%en (o,ned or "on ro##ed "or!ora ions.3 DSe". 2 ?10<8 0n rodu" or$ 'ro+isions8 Ad%inis ra i+e ;ode o& 19>7 E 0 is an ins ru%en a#i $ e-er"isin2 no on#$ 2o+ern%en a# .u a#so "or!ora e !o,ers. 0 e-er"ises 2o+ern%en a# !o,ers o& e%inen do%ain8 !o#i"e !o,er au hori $8 and #e+$in2 o& &ees and "har2es. Gina##$8 he air!or #ands and .ui#din2s are !ro!er $ o,ned .$ he 2o+ern%en ha are de+o ed o !u.#i" use and are !ro!er ies o& he !u.#i" do%ain. ?!anila International Airport Authority v. Court of Appeals, et
al., 6. R. No. 1AA=A08 Fu#$ 208 200=<

36. T-e &"ma&) &ea%#$ /#& !-e 2"!-+&a2a( #/ !ax exem !"#$ &"0"(e,e% ,&a$!e+ !# ,#0e&$me$!< #2$e+ a$+ '#$!&#((e+ '#& #&a!"#$% a$+ a(( #!-e& *$"!% #/ ,#0e&$me$! ,as ha su"h !ri+i#e2e resu# ed o serious a- .ase erosion and dis or ions in he a- rea %en o& si%i#ar#$ si ua ed en er!rises8 hen"e resu# in2 in he need &or hese en i ies o share in heir re4uire%en s o& de+e#o!%en 8 &is"a# or o her,ise8 .$ !a$in2 he a-es and o her "har2es due &ro% he%. ?Philippine Ports Authority v. City of Iloilo, 6.R. No. 1097918 Fu#$ 1B8 200B
"i in2 !actan Cebu International Airport Authority v. !arcos, 2=1 S;RA ==7<

37. ;wo /?0 parcels of land previously owned by :SIS and sold to private parties were bought at public auction by a private individual to satisfy real property tax delin6uencies. Since the original ownerIs duplicate ;(; could not be found$ the buyer sought the registration of the land in her name. ;he court ordered the cancellation of :SISI title and the issuance of a new title in the buyerIs name. :SIS now annulment of the decision claiming that it is exempt from payment of real property taxes in accordance with its charter #. 1. 'o. ,?! which provides among others that$ 21ccordingly$ notwithstanding any laws to the contrary$ the :SIS$ its assets$ revenues$ including all accruals thereto$ and benefits paid shall be exempt from all taxes$ assessment fees$ charges or duties of all

71

*inds.7 /Sec. H!0 It is the claim of :SIS that the above provisions of #.1. 'o. ,?! $ a later law$ abrogated the provisions of #.1. 'o. ) ".. Is the contention of :SIS tenable? S566ESTED ANS)ER7 No. E+en i& he "har er o& 6S0S 2enera##$ e-e%! s i &ro% a- #ia.i#i ies8 he !res"ri! ion is no so en"o%!assin2 as o %a*e he a- e-e%! ion a!!#i"a.#e o he !ro!er ies in dis!u e. The !ro!er ies ,ere a#read$ rans&erred and he a#iena ion o& he !ro!er ies so#d .$ 6S0S ,as he !ro-i%a e "ause and ne"essar$ "onse4uen"e o& he de#in4uen a-es due. ?Government ervice Insurance ystem v. City
Assessor of Iloilo City, et al., 6.R. No. 1B71928 Fune 278 200= "i in2 City of 'a2uio v. 'usue2o, No. L(297728 1> Se! e%.er 19>08 100 S;RA 11=<

The a##e2a ion o& he re!ea# o& R.A. No. 71=0 .$ R.A. >2918 is no "on+in"in2. Re!ea# "anno .e assu%edC he in en ion o re+o*e %us .e "#ear and %ani&es . To .rin2 a.ou an i%!#ied re!ea#8 he ,o #a,s %us .e "#ear#$ re!u2nan in a,a$ ha he #a er #a, R.A. >291 "ou#d no e-is ,i hou nu##i&$in2 he ear#ier #a,8 R. A. No. 71=0. ?Government ervice Insurance ystem, supra< Se". :9 o& R.A. No. >291 shou#d .e read "onsis en #$ ,i h i s a+o,ed !ur!ose H he %ain enan"e o& i s a" uaria# so#+en"$ o &inan"e he re ire%en 8 disa.i#i $ and #i&e insuran"e .ene&i s o& i s %e%.ers. The a-( e-e%! !ro!er ies and asse s o& 6S0S re&erred o hose ha re%ained a i s dis!osa# and use8 ei her &or in+es %en or &or in"o%e 2enera in2 !ur!oses. 'ro!er ies ,hose a" ua# and .ene&i"ia# use had .een rans&erred o !ri+a e a-a.#e !ersons8 &or "onsidera ion or o her,ise8 are e-"#uded and are hus a-a.#e. .
?Ibi(, "i in2 Rubia v. Government ervice Insurance ystem, 6.R. No. 1A1B:98 21 Fune 200B8 B:2 S;RAA29<<

18. 1 telecommunications company was granted by (ongress on +uly ?.$ !!?$ after the effectivity of the 9ocal :overnment (ode on +anuary $ !!?$ a legislative franchise with tax exemption privileges which partly reads$ 2;he grantee$ its successors or assigns shall be liable to pay the same taxes on their real estate$ buildings and personal property , e.clusive of this franchise, as other persons or corporations are now or hereafter may be re6uired by law to pay.7 ;his provision existed in the companyIs franchise prior to the effectivity of the 9ocal :overnment (ode. 1 (ity then enacted an ordinance in !!H imposing a real property on all real properties located within the city limits$ and withdrawing all tax exemptions previously granted. 1mong properties covered are those owned by the company from which the (ity is now collecting %-H million. ;he properties of the company were then scheduled by the (ity for sale at public auction. ;he company then filed a petition for the issuance of a writ of prohibition claiming exemption under its legislative franchise. ;he (ity defended its position raising the following4 a. ;here was no exhaustion of administrative remedies because the matter should have first been filed before the 9ocal Doard of 1ssessment 1ppealsG b. ;he companyIs properties are exempt from tax under its franchise. #esolve the issues raised. S566ESTED ANS)ERS7 a. There is no need o e-haus ad%inis ra i+e re%edies as he a!!ea# o he LBAA is no a s!eed$ and ade4ua e re%ed$ ,i hin he #a,. This is so .e"ause he !ro!er ies are a#read$ s"hedu#ed &or au" ion sa#e. Gur her%ore one o& he re"o2ni@ed e-"e! ions o he ru#e on e-haus ion is ha i& he issue is !ure#$ #e2a# in "hara" er ,hi"h is so in his "ase. .. The !ro!er ies are e-e%! &ro% a-a ion. The 2ran o& a-in2 !o,ers o #o"a# 2o+ern%en s under he ;ons i u ion and he Lo"a# 6o+ern%en ;ode does no a&&e" he !o,er o& ;on2ress o 2ran ae-e%! ions. The er% 1e-"#usi+e o& his &ran"hise3 is in er!re ed o %ean !ro!er ies a" ua##$8 dire" #$ and e-"#usi+e#$ used in he radio or e#e"o%%uni"a ions .usiness. The su.se4uen !ie"e o& #e2is#a ion ,hi"h rei era ed he !hrase 1e-"#usi+e o& his &ran"hise3 &ound in he !re+ious a- e-e%! ion 2ran o he "o%!an$ is an e-!ress and rea# in en ion on he !ar o& ;on2ress o on"e a2ains re%o+e &ro% he L6;s de#e2a ed a-in2 !o,er8 a## o& he "o%!an$s !ro!er ies ha are a" ua##$8 dire" #$ and e-"#usi+e#$ used in he !ursui o& i s &ran"hise. ?$he City Government of Jue"on City, et al., v. 'ayan $elecommunications, Inc., 6.
R. No. 1=201A8 Mar"h =8 200=<

NOTES AND ;OMMENTS7

72

a. N#!e !-e '#$/*%"#$ "$ !-e +e'"%"#$. 0 "i ed Ma" an ;e.u ,hi"h s a ed ha he a-in2 !o,er o& #o"a# 2o+ern%en uni s is 1no #on2er %ere#$ .$ +ir ue o& a +a#id de#e2a ion as .e&ore8 .u !ursuan o dire" au hori $3 .u in he "on"#udin2 !or ion re&erred o i as 1 he L6;s de#e2a ed a-in2 !o,er.3 )hi"h is ,hi"h8 de#e2a ed or dire" 2ran U The au hor su.%i s ha he ,ei2h o& /uris!ruden"e sho,s ha i is a dire" 2ran no a de#e2a ed !o,er. 0& a 4ues ion is as*ed hen s a e i is a dire" 2ran .

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