Académique Documents
Professionnel Documents
Culture Documents
Exemptions:
1. Basic Personal Exemption (P50,000)
Requisite: Income Tax Payer
2. Basic Personal Exemption as Benefactor of
Senior Citizen (P50,000)
Requisite: Benefactor
(a) any person related to the senior or not
(b) provides care or who gives any form of
assistance to him/her, and
(c) on whom the senior citizen is dependent
on for primary care and material support,
(4) certified by the City or Municipal Social
Welfare and Development Office.
3. Additional Exemptions of (P25,000) for each
dependents not exceeding 4
Requisites: Dependent must be
(1)
(a) legitimate, illegitimate or legally
adopted child;
Issue: Whether or not the two transportation Held: Yes, they are taxable as an unregistered
companies herein involved are liable to the partnership. Petitioners engaged, thru Lorenzo
payment of income tax as a corporation on the Ona, in the purchase and sale of corporate
theory that the Joint Emergency Operation securities. It is likewise admitted that all the profits
organized and operated by them is a corporation. from these ventures were divided among
petitioners proportionately in accordance with their
Held: It is a corporation. Considering that the respective shares in the inheritance. In these
Batangas Transportation and Laguna Bus operated circumstances, it is our considered view that rom
different lines, sometimes in different provinces or the moment petitioners allowed not only the
territories, under different franchises, with different incomes from their respective shares of the
equipment and personnel, it cannot possibly be true inheritance but even the inherited properties
and correct to say that the end of each year, the themselves to be used by Lorenzo Ona as a
gross receipts and income in the gross expense of common fund in undertaking several transactions
the 2 companies are exactly the same for purposes or in business with the intention of dividing profit to
of the payment of income tax. What was actually be shared by time proportionately, such act was
done in this case was that although no legal tantamount to actually contributing such incomes to
personality may have been created by the Joint a common fund and, in effect, they thereby formed
Emergency Operation, nevertheless, said Joint an unregistered partnership within the purview of
Emergency Operation joint venture or joint the above mentioned provision in the Tax Code.
management operated the business affairs of the 2
companies as though they constituted a single Obillos vs. CIR (1985)
entity ,company or partnership, thereby obtaining Facts:
substantial economy and profits in the operation. Issue:
Held: Their original purpose was to divide the lots
Ona vs. CIR (1972) for residential purposes. If later on they found it not
Facts: When Julia Bunales died, she left her feasible to build their residences on the lots
spouse and children her estate. Her children were because of the high cost of construction, then they
still minors then so the father became the had no choice but to resell the same to dissolve the
administrator of the estate who filed for petition of co-ownership. The division of the profit was merely
the project of partition which was approved by the incidental to the dissolution of the co-ownership.
court. Co-ownership who own properties which
Though approved the petition was produce income should not automatically be
approved, no division of the properties were ever considered partners of an unregistered partnership,
made. Lorenzo Ona used the properties in or a corporation, within the purview of the Income
business by leasing selling them and investing the Tax Law.
income derived therefrom and the proceeds from
the sales thereof in real properties and securities. Pascual vs. CIR (1988)
Every year, their shares were divided Facts:
among them though the petitioners do not actually Issue:
receive income. CIR subjected them to corporate Held: The essential elements of a partnership are
2, namely: (a) an agreement to contribute money,
Alyssa Africa Page 46
Taxation Law
property or industry to a common fund; and (b) Code, after deducting the corporate income tax
intent to divide the profits among the contracting imposed therein, shall be deemed to have been
parties. The first element is undoubtedly present in actually or constructively received by the partners
the case at bar, for admittedly, the petitioners have in the same taxable year and shall be taxed to them
agreed to, and did, contribute money and property in their individual capacity, whether actually
to a common fund. distributed or not.
In the instant case, petitioners bought 2
parcels of land in 1965. They did not sell the same 3. Kinds of Corporations
nor make any improvements thereon. In 1966, they i. Domestic
bought another 3 parcels of land from one seller. It ii. Resident Foreign Corporation
was only in 1968 when they sold the 2 parcels of iii. Non-resident Foreign Corporation
land after which they did not make any additional or
new purchase. The remaining 3 were sold by them Marubeni Corporation vs. CIR (1989)
in 1970. The transactions were isolated. The Facts: Marubeni Corporation, a foreign corporation
character of habituality peculiar to business duly organized and existing under the laws of
transactions for the purpose of gain was not Japan and duly licensed to engaged in business
present. under Philippine laws. Marubeni had equity
investments in AG&P Manila. In 1981, AG&P
AFISCO Insurance Corporation vs. CA (1999) declared and paid cash dividends to Marubeni for
Facts: the first and third quarters. AG&P as a withholding
Issue: agent, paid 15% branch profit remittance tax and
Held: The following unmistakably indicates a directly remitted the cash dividends to petitioners
partnership or an association covered by Section head office in Tokyo, Japan.
24 of the NIRC. In a letter dated January 29, 1981,
1. the pool has a common fund, consisting of petitioner, sought a ruling from the Bureau of
money and other valuables that are deposited in Internal Revenue on whether or not the dividends
the name and credit of the pool. This common fund petitioner received from AG&P are connected with
pays for the administration and operation expenses its conduct of business in the Philippines to
of the pool. consider it branch profits subject to 15% profit
2. The pool functions through an executive board, remittance tax under Section 24(b)(2) of the NIRC.
which resembles the board of directors of a The acting Commissioner replied by stating that
corporation, composed of one representative for investing in shares of stock is not an activity which
each of the ceding companies. is effectively connected with its trade or business in
3. Pool itself is not a reinsurer and does not issue the country.
any insurance policy; however, its work is Consequently, Marubeni, believing that as a
indispensable, beneficial, and economically useful Philippine branch of Marubeni Japan, it was in
to the business of the ceding company and Munich, effect a resident foreign corporation, wrote a letter
because without it they would not have received to the CIR to claim its refund or issuance of tax
their premiums. credit for the profit tax remittance erroneously paid
on dividends. In response, the CIR denied the claim
ii. Income of partners in a regular partnership on the ground that while it is not subject to profit
Sec. 73(D) remittance tax, because it is a non-resident
Section 73. Distribution of Dividends or Assets by stockholder, it is subject to dividend income of 25%
Corporations pursuant to Article 10(2)(b) of the Tax Treaty. The
(D) Net Income of a Partnership Deemed CTA affirmed the decision.
Constructively Received by Partners The taxable
income declared by a partnership for a taxable year Issue: Whether or not Marubeni Japan is a resident
which is subject to tax under Section 27(A) of this foreign corporation subject to only 10%
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intercorporate final tax on dividends received from operate from the Department of Education, Culture
a domestic corporation. and Sports (DECS), or the Commission on Higher
Education (CHED), or the Technical Education and
Held: The Solicitor General has adequately refuted Skills Development Authority (TESDA), as the case
petitioner's arguments in this wise: may be, in accordance with existing laws and
The general rule that a foreign corporation is regulations.
the same juridical entity as its branch office in
the Philippines cannot apply here. This rule is Requisites of Proprietary Educational
based on the premise that the business of the Institution
foreign corporation is conducted through its a. Private School
branch office, following the principal agent
b. Maintained and administered by private
relationship theory. It is understood that the
branch becomes its agent here. So that when individuals or groups
the foreign corporation transacts business in c. with issued permit to operate from DECS or
the Philippines independently of its branch, the CHED or TESDA in accordance with existing laws
principal-agent relationship is set aside. The and regulations
transaction becomes one of the foreign
corporation, not of the branch. Consequently, Unrelated Trade, Business or Other Activity
the taxpayer is the foreign corporation, not the
branch or the resident foreign corporation. Not substantially related to the exercise of
performance by such educational institution or
Corollarily, if the business transaction is conducted hospital of its primary purpose or function.
through the branch office, the latter becomes the
taxpayer, and not the foreign corporation. b. Sec. 34(A)(2) of the NIRC
Section 34. Deductions from Gross Income
iv. Others Except for taxpayers earning compensation income
1. Private Educational Institutions and Non- arising from personal services rendered under
Profit Hospitals employer-employee relationship where no
a. Sec. 27(B) of the NIRC deductions shall be allowed under this Section
Section 27. Rates of Income Tax on Domestic other than under Subsection (M) hereof, in
Corporations computing taxable income subject to income tax
(B) Proprietary Educational Institutions and under Sections 24(A); 25(A); 26; 27(A), (B) and (C);
Hospitals. Proprietary educational institutions and and 28(A)(1), there shall be allowed the following
hospitals which are nonprofit shall pay a tax of 10% deductions from gross income;
on their taxable income except those covered by (A) Expenses.
Subsection (D) hereof: Provided, That if the gross (2) Expenses Allowable to Private Educational
income from unrelated trade, business or other Institutions. In addition to the expenses allowable
activity exceeds 50% of the total gross income as deductions under this Chapter, a private
derived by such educational institutions or hospitals educational institution, referred to Under Section
from all sources, the tax prescribed in Subsection 27(B) of this Code, may at its option elect either: (a)
(A) hereof shall be imposed on the entire taxable to deduct expenditures otherwise considered as
income. For purposes of this Subsection, the term capital outlays of depreciable assets incurred
unrelated trade, business or other activity means during the taxable year for the expansion of school
any trade, business or other activity, the conduct of facilities, or (b) to deduct allowance for depreciation
which is not substantially related to the exercise or thereof under Subsection (F) hereof.
performance by such educational institution or
hospital of its primary purpose or function. A CIR vs. St. Lukes Medical Center (2012)
proprietary educational institution is any private Facts: BIR assessed a deficiency taxes against St.
school maintained and administered by private Lukes comprised of VAT, income tax, withholding
individuals or groups with an issued permit to tax on compensation and expanded withholding
Alyssa Africa Page 48
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tax. St. Lukes filed an administrative protest on the The Court finds that St. Luke's is a corporation that
ground that it was except under Section 30(E) and is not "operated exclusively" for charitable or social
(G) of the NIRC. It was later on appealed to the welfare purposes insofar as its revenues from
paying patients are concerned. This ruling is based
CTA. The CTA First Division and En Banc decision
not only on a strict interpretation of a provision
partially granted St. Lukes petition on account that granting tax exemption, but also on the clear and
St. Lukes is a charitable institution which does not plain text of Section 30(E) and (G). Section 30(E)
lose its charitable character and its exemption from and (G) of the NIRC requires that an institution be
taxation merely because recipients of its benefits "operated exclusively" for charitable or social
who are able to pay are required to do so, where welfare purposes to be completely exempt from
funds derived in this manner are devoted to the income tax. An institution under Section 30(E) or
(G) does not lose its tax exemption if it earns
charitable purposes of the institution.
income from its for-profit activities. Such income
from for-profit activities, under the last paragraph of
Issue: Whether St. Lukes is liable for deficiency Section 30, is merely subject to income tax,
income tax in 1998 under Section 27(B) of the previously at the ordinary corporate rate but now at
NIRC, which imposes a preferential tax rate of 10% the preferential 10% rate pursuant to Section 27(B).
on the income of proprietary non-profit hospitals A tax exemption is effectively a social subsidy
granted by the State because an exempt institution
Held: The Court partly grants the petition of the BIR is spared from sharing in the expenses of
but on a different ground. We hold that Section government and yet benefits from them. Tax
27(B) of the NIRC does not remove the income tax exemptions for charitable institutions should
exemption of proprietary non-profit hospitals under therefore be limited to institutions beneficial to the
Section 30(E) and (G). Section 27(B) on one hand, public and those which improve social welfare. A
and Section 30(E) and (G) on the other hand, can profit-making entity should not be allowed to exploit
be construed together without the removal of such this subsidy to the detriment of the government and
tax exemption. The effect of the introduction of other taxpayers.
Section 27(B) is to subject the taxable income of
two specific institutions, namely, proprietary non- St. Luke's fails to meet the requirements under
profit educational institutions 36 and proprietary non- Section 30(E) and (G) of the NIRC to be completely
profit hospitals, among the institutions covered by tax exempt from all its income. However, it remains
Section 30, to the 10% preferential rate under a proprietary non-profit hospital under Section
Section 27(B) instead of the ordinary 30% 27(B) of the NIRC as long as it does not distribute
corporate rate under the last paragraph of Section any of its profits to its members and such profits are
30 in relation to Section 27(A)(1). reinvested pursuant to its corporate purposes. St.
Luke's, as a proprietary non-profit hospital, is
Section 27(B) of the NIRC imposes a 10% entitled to the preferential tax rate of 10% on its net
preferential tax rate on the income of (1) proprietary income from its for-profit activities.
non-profit educational institutions and (2)
proprietary non-profit hospitals. The only 2. International Carrier
qualifications for hospitals are that they must be a. Sec. 28(A)(3) of the NIRC
proprietary and non-profit. "Proprietary" means Section 28. Rates of Income Tax on Foreign
private, following the definition of a "proprietary Corporations
educational institution" as "any private school (A) Tax on Resident Foreign Corporations
maintained and administered by private individuals
(3) International Carrier. An international carrier
or groups" with a government permit. "Non-profit"
means no net income or asset accrues to or doing business in the Philippines shall pay a tax of
benefits any member or specific person, with all the 2 % on its Gross Philippine Billings as defined
net income or asset devoted to the institution's hereunder:
purposes and all its activities conducted not for (a) International Air Carrier Gross
profit. Philippine Billings refers to the amount of gross
revenue derived from carriage of persons,
"Non-profit" does not necessarily mean "charitable."
excess baggage, cargo and mail originating
c. Sec. 1 of RA No. 10378 dated March 7, 2013 ... "Gross Philippine billings" includes gross
revenue realized from uplifts anywhere in
i. Secs. 1 to 4 of RR No. 15-13 dated September the world by any international carrier doing
20, 2013 business in the Philippines of passage
documents sold therein, whether for
CIR vs. British Overseas Airways Corporation passenger, excess baggage or mail
(1987) provided the cargo or mail originates from
Facts: the Philippines. ...
Issue:
South African Airways vs. CIR (2010) 3. Foreign Currency Deposit Units
Facts: a. Sec. 27(D)(3) of the NIRC
Issue: Section 27. Rates of Income Tax on Domestic
Held: the general rule is that resident foreign Corporations
corporations shall be liable for a 32% income tax on (D) Rate of Tax on Certain Passive Incomes
their income from within the Philippines, except for (3) Tax on Income Derived under the Expanded
resident foreign corporations that are international Foreign Currency Deposit System Income
carriers that derive income "from carriage of
persons, excess baggage, cargo and mail derived by a depository bank under the expanded
originating from the Philippines" which shall be foreign currency deposit system from foreign
taxed at 2 1/2% of their Gross Philippine Billings. currency transactions with nonresidents, offshore
Petitioner, being an international carrier with no banking units in the Philippines, local commercial
flights originating from the Philippines, does not fall banks, including branches of foreign banks that
under the exception. As such, petitioner must fall may be authorized by the Bangko Sentral ng
under the general rule. This principle is embodied
Pilipinas (BSP) to transact business with foreign
in the Latin maxim, exception firmat regulam in
casibus non exceptis, which means, a thing not currency deposit system units and other depository
being excepted must be regarded as coming within banks under the expanded foreign currency deposit
the purview of the general rule.11 system shall be exempt from all taxes, except net
To reiterate, the correct interpretation of the above income from such transactions as may be specified
provisions is that, if an international air carrier by the Secretary of Finance, upon recommendation
maintains flights to and from the Philippines, it shall by the Monetary Board to be subject to the regular
be taxed at the rate of 2 1/2% of its Gross income tax payable by banks; Provided, however,
Philippine Billings, while international air carriers That interest income from foreign currency loans
that do not have flights to and from the Philippines granted by such depository banks under said
but nonetheless earn income from other activities in
expanded foreign system to residents other than
the country will be taxed at the rate of 32% of such
income. offshore banking units in the Philippines or other
depository banks under the expanded system, shall
be subject to a final tax at the rate of 10%.
Air Canada vs. CIR (2016) Any income of nonresidents, whether
Facts: individuals or corporations, from transactions with
Issue: depository banks under the expanded system shall
Held: The tax (Gross Philippine be exempt from income tax.
Billings)attaches only when the carriage
of persons, excess baggage, cargo,and mail b. Sec. 28(A)(7)(b) of the NIRC
originated from thePhilippines in a continuous Section 28. Rates of Income Tax on Foreign
anduninterrupted flight, regardless ofwhere the Corporations
passage documents weresold. Not having (A) Tax on Resident Foreign Corporations.
flights to and from thePhilippines, petitioner is (7) Tax on Certain Incomes Received by a Resident
clearly notliable for the Gross PhilippineBillings Foreign Corporation.
tax.While petitioner is taxable as aresident foreign (b) Income Derived under the Expanded Foreign
corporation underSection 28(A)(1) of the Currency Deposit System Income derived by a
Alyssa Africa Page 51
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depository bank under the expanded foreign Section 28. Rates of Income Tax on Foreign
currency deposit system from foreign currency Corporations
transactions with nonresidents, offshore banking (A) Tax on Resident Foreign Corporations.
units in the Philippines, local commercial banks (4) Offshore Banking Units The provisions of any
including branches of foreign banks that may be law to the contrary notwithstanding, income derived
authorized by the Bangko Sentral ng Pilipinas by offshore banking units authorized by the Bangko
(BSP) to transact business with foreign currency Sentral ng Pilipinas (BSP), from foreign currency
deposit system units and other depository banks transactions with nonresidents, other offshore
under the expanded foreign currency deposit baking units, local commercial banks, including
system shall be exempt from all taxes, except net branches of foreign banks that may be authorized
income from such transactions as may be specified by the Bangko Sentral ng Pilipinas (BSP) to
by the Secretary of Finance, upon recommendation transact business with offshore banking units shall
by the Monetary Board to be subject to the regular be exempt from all taxes except net income from
income tax payable by banks: Provided, however, such transactions as may be specified by the
That interest income from foreign currency loans Secretary of Finance, upon recommendation of the
granted by such depository banks under said Monetary Board, which shall be subject to the
expanded system to residents other than regular income tax payable by banks; Provided,
depository banks under the expanded system shall however, That any interest income derived from
be subject to final tax at the rate of 10% foreign currency loans granted to residents, other
Any income of nonresidents, whether than offshore banking units or local commercial
individuals or corporations, from transactions with banks, including total branches of foreign banks
depository banks under the expanded system shall that may be authorized by the BSP to transact
be exempt from income tax. business with offshore banking units, shall be
subject only to a final tax at the rate of 10%.
c. Sec. 5 of RR No. 14-12 dated November 7, Any income of nonresidents, whether
2012 individuals or corporations, from transactions with
Section 5. Tax Treatment of Interest Income from said offshore banking units shall be exempt from
FCDU income tax.
Subject to 7.5% Final Withholding Tax if received
by: b. Sec. 6 of RR No. 14-12 dated November 7,
a. citizens 2012
b. resident citizens
c. domestic corporations 5. Regional or Area Headquarters and Regional
d. resident foreign corporations Operating Headquarters of Multinational
Companies
Non-residents whether individuals or corporations
are EXEMPT. a. Secs. 22(DD) and 22(EE)
Section 22. Definitions. When used in this Title:
Joint ownership by non-resident and resident (50- (DD) The term regional or area headquarters shall
50) mean a branch established in the Philippines by
multinational companies and which headquarters
Interest Income from Foreign Currency Loans do not earn or derive income from the Philippines
Granted by Such Depository Banks to Residents and which act as supervisory, communications and
(except Offshore Banking Units or other Depository coordinating center for their affiliates, subsidiaries,
banks) 10% final tax or branches in the Asia-Pacific Region and other
4. Offshore Banking Units foreign markets.
a. Sec. 28(A)(4) of the NIRC (EE) The term regional operating headquarters
shall mean a branch established in the Philippines
Alyssa Africa Page 52
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by multinational companies which are engaged in
any of the following services: general administration 6. Other Non-Resident Foreign Corporations
and planning; business planning and coordination; a. Secs. 28(B)(2) to 4
sourcing and procurement of raw materials and Section 28. Rates of Income Tax on Foreign
components; corporate finance advisory services; Corporations
marketing control and sales promotion; training and (B) Tax on Nonresident Foreign Corporation
personnel management; logistic services; research (2) Nonresident Cinematographic Film Owner,
and development services and product Lessor or Distributor. A cinematographic film
development; technical support and maintenance; owner, lessor or distributor shall pay a tax of 25% of
data processing and communication; and business its gross income from all sources within the
development. Philippines
(3) Nonresident Owner or Lessor of Vessels
Regional Area Headquarters Chartered by Philippine Nationals A nonresident
a. Branch established in the Philippines by owner of lessor of vessels shall be subject to a tax
multinational companies; of 4 % of gross rentals, lease or charter fees from
b. Headquarters do not derive income from the leases or charters to Filipino citizens or
Philippines corporations, as approved by the Maritime Industry
c. Acts as supervisory, communications, and Authority.
coordinating center for their affiliates, subsidiaries (4) Nonresident Owner or Lessor of Aircraft,
or branches in the Asia-Pacific Region and other Machineries and Other Equipment Rentals,
foreign markets charters and other fees derived by a nonresident
lessor of aircraft, machineries and other equipment
Regional Operating Headquarters shall be subject to a tax of 7 % of gross rentals or
a. Branch established in the Philippines by fees.
multinational companies;
b. Engaged in any of the following services: (a) 4. Exempt Corporations
general administration and planning; (b) business i. GOCCS
planning and coordination; (c) sourcing and 1. Sec. 27(C) of the NIRC
procurement of raw materials and components; (d) Section 27. Rates of Income Tax on Domestic
corporate finance advisory services; (e) marketing Corporations.
control and sales promotion; (f) training and (C) Government-owned or Controlled Corporations,
personnel management; (g) logistic services; (i) Agencies or Instrumentalities The provisions of
research and development services and product existing special or general laws to the contrary
development; (j) technical support and notwithstanding, all corporations, agencies, or
maintenance; (k) date processing and instrumentalities owned or controlled by the
communication; and (l) business development Government, except the GSIS, SSS, Philippine
Insurance Corporation (PHIC), the local water
Section 28. Rates of Income Tax on Foreign districts (LWDs) and PCSO shall pay such rate of
Corporations tax upon their taxable income as are imposed by
(A) Tax on Resident Foreign Corporations this Section upon corporations or associations
(6) Regional or Area Headquarters and Regional engaged in a similar business, industry, or activity.
Operating Headquarters of Multinational
Companies NOTE: PAGCOR was deleted from exempt GOCCs
(a) Regional or area headquarters as defined in per R.A. No. 9337.
Section 22(DD) shall not be subject to income tax.
(b) Regional operating headquarters as defined in 2. RA 10026 dated March 11, 2010
Section 22(EE) shall pay a tax of 10% of their
taxable income. PAGCOR vs. The BIR (2014)
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Facts: (F) Business league, chamber of commerce, or
Issue: board of trade, not organized for profit and no
part of the net income of which insures to the
benefit of any private stockholder or individual;
Held: In other words, there was no need for
(G) Civic league or organization not organized
Congress to grant tax exemption to petitioner with for profit but operated exclusively for the
respect to its income from gaming operations as promotion of social welfare;
the same is already exempted from all taxes of any (H) A nonstock and nonprofit educational
kind or form, income or otherwise, whether national institution;
or local, under its Charter, save only for the five (I) Government educational institution;
percent (5%) franchise tax. The exemption (J) Farmers or other mutual typhoon or fire
insurance company, mutual ditch or irrigation
attached to the income from gaming operations
company, mutual or cooperative telephone
exists independently from the enactment of R.A. company, or like organization of a purely local
No. 8424. To adopt an assumption otherwise would character, the income of which consist solely of
be downright ridiculous, if not deleterious, since assessments, dues and fees collected from
petitioner would be in a worse position if the members for the sole purpose of meeting its
exemption was granted (then withdrawn) than when expenses; and
it was not granted at all in the first place. (K) Farmers, fruit growers, or like association
organized and operated as a sales agent for the
purpose of marketing the products of its
members and turning back to them the proceeds
of sales, less the necessary selling expenses on
ii. Sec. 30 of the NIRC the basis of the quantity of produce finished by
Section 30. Exemptions from Tax on them;
Corporations. The following organizations shall Notwithstanding the provisions in the preceding
not be taxed under this Title in respect to income paragraphs, the income of whatever kind and
received by them as such: character of the foregoing organizations from
(A) Labor, agricultural or horticultural any of their properties, real or personal, or from
organization not organized principally for profit; any of their activities conducted for profit
(B) Mutual savings bank not having a capital regardless of the disposition made of such
stock represented by shares, and cooperative income, shall be subject to tax imposed under
bank without capital stock organized and this Code.
operated for mutual purposes and without profit;
(C) A beneficiary society, order or association,
operating for the exclusive benefit of the 1. DOF Order No. 137-87 dated December 16,
members such as a fraternal organization 1987
operating under the lodge system, or a mutual
aid association or a non-stock corporation
organized by employees providing for the
payment of life, sickness, accident, or there 2. DOF Order No. 149-95 dated November 24,
benefits exclusively to the members of such 1995
society, order, or association, or nonstock Non-stock, non-profit educational institutions are
corporation or their dependents; exempt from taxes on all their revenues and assets
(D)Cemetery company owned and operated used actually, directly, and exclusively for
exclusively for the benefit of its members;
educational purposes.
(E) Nonstock corporation or association
organized and operated exclusively for religious,
charitable, scientific, athletic, or cultural Subject to taxes on income from trade, business or
purposes, or for the rehabilitation of veterans, no other activity the conduct of which is not related to
part of its net income or asset shall belong to or the exercise or performance by such educational
inure to the benefit of any member, organizer, institution of its educational purpose or function.
officer of any specific person;
iv. Sec. 27(D)(1) and (3) Domestic 19 Lender Rule borrowing must be made from 20
Corporations or more individual or corporate lenders at any one
time. If 19 or less it is not deemed as a deposit
v. Sec. 28(A)(7)(a) and (b) Resident Foreign substitute.
Corporations
viii. Long-Term Deposits
vi. Sec. 28(B)(1)(5)(a) Non-resident Foreign 1. Sec. 3 of RR No. 14-12
Corporation 2. Sec. 22(F) of the NIRC
Section 28. Rates of Income Tax on Foreign
Corporations. BDO vs. Republic of the Philippines (2015)
(B) Tax on Nonresident Foreign Corporation Meaning of "at any one time"
(1) In General. Except as otherwise provided in
Thus, from the point of view of the financial market,
this Code, a foreign corporation not engaged in
the phrase "at any one time" for purposes of
trade or business in the Philippines shall pay a tax determining the "20 or more lenders" would mean
equal to 35% of the gross income received during every transaction executed in the primary or
each taxable year from all sources within the secondary market in connection with the purchase
Philippines, such as interests, dividends, rents, or sale of securities.
royalties, salaries, premiums (except reinsurance For example, where the financial assets involved
premiums), annuities, emoluments or other fixed or are government securities like bonds, the reckoning
determinable annual, periodic or casual gains, of "20 or more lenders/investors" is made at any
profits and income, and capital gains, except capital transaction in connection with the purchase or sale
gains subject to tax under subparagraph 5(c): of the Government Bonds
Provided, That effective January 1, 2009, the rate When, through any of the foregoing transactions,
of income tax shall be 30%. funds are simultaneously obtained from 20 or
(5) Tax on Certain Incomes Received by a morelenders/investors, there is deemed to be a
Nonresident Foreign Corporation. public borrowing and the bonds at that point intime
(a) Interest on Foreign Loans. A final withholding are deemed deposit substitutes. Consequently, the
tax at the rate of 20% is hereby imposed on the seller is required to withhold the 20% final
amount of interest on foreign loans contracted on or withholding tax on the imputed interest income from
after August 1, 1986 the bonds
Basis of Liability
Purpose behind the accumulation of the income
and not the consequence of accumulation. If the
failure to pay dividends is due to some other
causes, such as the use of undistributed earnings
and profits for the reasonable needs of the
business, such purpose would not generally make
the accumulated or undistributed earnings subject
to the tax.
CIR vs. Manning (1975) Sale, Barter or Exchange of Shares of Stock Listed
Facts: and Traded Through the Local Stock Exchange.
Issue: There shall be levied, assessed and collected on
Held: every sale, barter, exchange or other disposition of
Shares of Stock Listed and Traded through the
Local Stock Exchange other than the sale by a
CIR vs. CA (1999) dealer of securities, under the following rules:
Facts: (a) Tax Rate. A stock transaction tax at the rate
Issue: of one-half of one percent (1/2 of 1%) based on the
Held: amount determined in subsection (b) hereunder.
(b) Tax Base. Gross selling price or gross value
iv. Liquidating Dividends in money of the shares of stock sold, bartered,
exchanged or otherwise disposed which shall be
1. Sec. 73(A) of the NIRC
assumed and paid by the seller or transferor
Section 73. Distribution of Dividends or Assets by through the remittance of the stock transaction tax
Corporation by the seller or transferor's broker.
(A) Definition of Dividends The term dividends
when used in this Title means any distribution made Sale, Barter or Exchange, or Issuance of Shares
by a corporation to its shareholders out of its of Stock Through IPO. There shall be levied,
earnings or profits and payable to its shareholders, assessed and collected on every sale, barter,
exchange or other disposition through initial public
whether in money or in other property.
offering (IPO) of shares of stock in closely held
Where a corporation distributes all of its assets corporations, as defined in Sec. 2 (q) hereof, under
in complete liquidation or dissolution, the gain the following rules:
realized or loss sustained by the stockholder, CSTEHI
whether individual or corporate, is a taxable income (a) Tax Rates. A tax at the rates provided
or a deductible loss as the case may be. hereunder shall be imposed based on subsection
(b) hereof in accordance with the proportion of
shares of stock sold, bartered, exchanged or
2. RR. No. 6-2008 dated April 22, 2008
otherwise disposed to the total outstanding shares
Persons Liable to Tax of stock after the listing in the Local Stock
(a) Individual taxpayer, whether citizen or alien; Exchange: Proportion of Disposed Shares to
(b) Corporate taxpayer, whether domestic or Outstanding Shares Tax Rate Up to twenty-five
foreign; and percent (25%) 4% Over twenty-five percent (25%)
but not over thirty three and one-third percent (33
i. Definition of Fringe Benefits iv. RR No. 3-98 dated May 21, 1998 (exclude tax
Section 33. Special Treatment of Fringe Benefit. accounting rules)
(B) Fringe Benefit Defined For purposes of this Coverage
Section, the term fringe benefit means any good, Only those given or furnished to managerial or
service or other benefit furnished or granted in cash supervisory employees and not to the rank and file.
or in kind by an employer to an individual employee
(except rank-and-file employees as defined herein) Rank and File Employees
All employees who are holding neither managerial
ii. Fringe Benefits subject to FBT nor supervisory position.
Section 33. (B)
such as, but not limited to, the following: Managerial Employee
(1) Housing; One vested with powers or prerogatives to lay
(2) Expense account; down and execute management policies and/or to
(3) Vehicle of any kind; hire, transfer, suspend, lay-off, recall, discharge,
assign, or discipline employees.
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Taxation Law
subcontractor engaged in petroleum operations
Supervisory Employees in the Philippines; and
Those who, in the interest of the employer, (4) any of their Filipino individual employees
effectively recommend such managerial actions if who are employed and occupying the same
the exercise of such authority is not merely position as those occupied or held by the alien
routinary or clerical in nature but requires the use of employees
independent judgment. 15% Fringe Benefit Tax on the grossed-up
monetary value of the fringe benefit. The said tax
Determination of the Amount Subject to the base shall be computed by dividing the monetary
Fringe Benefit Tax value of the fringe benefit by 85%
(a) Valuation of the benefit granted; and
(b) Determination of the proportion or percentage of Taxation of Fringe Benefit Received by
the benefit which is subject to the fringe benefit tax. Employees in Special Economic Zones
Fringe benefits received by employees in special
Valuation of Fringe Benefits economic zones, including Clark Special Economic
(1) if the fringe benefit is granted in money, or is Zone and Subic Special Economic and Free Trade
directly paid for by the employer, then the value is Zone, are also covered by these regulations and
the amount granted or paid for. subject to the normal rate of fringe benefit tax or the
(2) if the fringe benefit is granted or furnished by special rates of 25% of 15% as provided above.
the employer in property other than money and
ownership is transferred to the employee, then the Fringe Benefits Subject to Fringe Benefit Tax
value of the fringe benefit shall be equal to the fair (1) Housing;
market value of the property as determined in (2) Expense account;
accordance with Sec. 6(E) of the Code(Authority of (3) Vehicle of any kind;
the Commissioner to Prescribe Real Property (4) Household personnel, such as maid, driver and
Values) others;
(3) if the fringe benefit is granted or furnished by (5) Interest on loan at less than market rate to the
the employer in property other than money but extent of the difference between the market rate
ownership is not transferred to the employee, the and the actual rate granted;
value of the fringe benefit is equal to the (6) Membership fees, dues and other expenses
depreciation value of the property. borne by the employer for the employee in social
athletic clubs or other similar organizations;
Taxation of Fringe Benefit of NRANEIB (7) Expenses for foreign travel;
25% fringe benefit tax shall be imposed on the (8) Holiday and vacation expenses;
grossed-up monetary value of the fringe benefit. (9) Educational assistance to the employer or his
Tax base shall be computed by dividing the dependents; and
monetary value of the fringe benefit by 75% (10) Life or health insurance and other non-life
insurance premiums or similar amounts in excess
Taxation of Fringe Benefits Received by: of what the law allows.
(1) an alien individual employed by regional or
area headquarters or regional operating (1) Housing Privilege
headquarters of a multinational company;
(2) an alien individual employed by an offshore 2. De Minimis Benefits
banking unit of a foreign bank established in
the Philippines; i. Definition
(3) an alien individual employed by a foreign Those of relatively small value and offered or
service contractor of by a foreign service furnished as a means of promoting the health,
goodwill, contentment and efficiency of an
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Taxation Law
employee, and those furnished for the convenience 'other benefits' excluded from gross income under
of the employer. Section 32 (b) (7) (e) of the Code. Provided that,
the excess of the de minimis benefits over their
ii. Enumeration of De Minimis Benefits respective ceilings prescribed by these regulations
List of De Minimis Benefits which are exempt shall be considered as part of other benefits and
from income and fringe benefits tax: the employee receiving it will be subject to tax only
a) Monetized unused vacation leave credits of on the excess over the P82,000.00 ceiling.
private employees not exceeding ten (10) days Provided, further, that MWEs receiving 'other
during the year and the monetized value of leave
credits paid to government officials and employees; benefits' exceeding the P82,000.00 limit shall be
b) Monetized value of vacation and sick leave taxable on the excess benefits, as well as on his
credits paid to government officials and employees; salaries, wages and allowances, just like an
c) Medical cash allowance to dependents of employee receiving compensation income beyond
employees not exceeding Php750 per employee the SMW. (Revenue Regulations 5-2011, as
per semester or Php125 per month; amended)
d) Rice subsidy of Php1,500 or one (1) sack of 50-
kg. rice per month amounting to not more than
Php1,500; RR. No. 3-98 dated May 21, 1998
e) Uniform and clothing allowance not exceeding RR No. 8-00 dated August 21, 2000
Php5,000 per annum; RR No. 10-00 dated December 14, 2000
f) Actual yearly medical benefits not exceeding RR No. 05-08 dated April 17, 2008
Php10,000 per annum; RR No. 5-11 dated March 16, 2011
g) Laundry allowance not exceeding Php300 per RR No. 8-12 dated May 11, 2012
month;
RR No. 1-15 dated January 1, 2015
h) Employee achievement awards, e.g., for length
of service or safety achievement, which must be in
the form of a tangible personal property other than
cash or gift certificate, with an annual monetary
value not exceeding Php10,000 received by the
employee under an established written plan which
does not discriminate in favor of highly paid
employees;
i) Gifts given during Christmas and major
anniversary celebrations not exceeding Php5,000
per employee per annum;
j) Daily meal allowance for overtime work not
exceeding twenty-five percent (25%) of the basic
minimum wage; and,
k) Benefits received by an employee by virtue of a
collective bargaining agreement (CBA) and
productivity incentive schemes provided that the
total annual monetary value received from both
CBA and productivity incentive schemes combined
do not exceed ten thousand pesos (Php10,000.00)
per employee per taxable year.
5. Bad Debts
i. Sec. 34(E) of the NIRC
(E) Bad Debts.
(1) In General. Debts due to the taxpayer
actually ascertained to be worthless and charged
off within the taxable year except those not
connected with profession, trade or business and
those sustained in a transaction entered into
between parties mentioned under Section 36(b)
ii. RR No. 5-99
3. Claims Against the Estate D. Exclusion from Net Estate and Exemptions
a. Requisites for Deductibility (Sections 86 C and 87)
i. Simple Loan
ii. Unpaid Obligation from Purchase of Goods (C) Share in the Conjugal Property. - the net
iii. Court Settlement share of the surviving spouse in the conjugal
partnership property as diminished by the
Dizon vs. CTA (2008) obligations properly chargeable to such property
Facts: shall, for the purpose of this Section, be deducted
Issue: from the net estate of the decedent.
Held: We express our agreement with the date-of-
death valuation rule, made pursuant to the ruling of Section 87 Exemption of Certain Acquisitions and
the U.S. Supreme Court in Ithaca Trust Co. v. Transmissions. - The following shall not be taxed:
United States. First. There is no law, nor do we (A) The merger of usufruct in the owner of the
discern any legislative intent in our tax laws, which naked title;
disregards the date-of-death valuation principle and (B) The transmission or delivery of the inheritance
particularly provides that post-death developments or legacy by the fiduciary heir or legatee to the
must be considered in determining the net value of fideicommissary;
the estate. It bears emphasis that tax burdens are (C) The transmission from the first heir, legatee or
not to be imposed, nor presumed to be imposed, donee in favor of another beneficiary, in
beyond what the statute expressly and clearly accordance with the desire of the predecessor; and
imports, tax statutes being construed strictissimi (D) All bequests, devises, legacies or transfers to
juris against the government. Any doubt on social welfare, cultural and charitable institutions,
whether a person, article or activity is taxable is no part of the net income of which inures to the
generally resolved against taxation.70 Second. Such benefit of any individual: Provided, however, That
construction finds relevance and consistency in our not more than thirty percent (30%) of the said
Rules on Special Proceedings wherein the term bequests, devises, legacies or transfers shall be
Section 14. Statement of Contributions and Section 100. Transfer for Less Than Adequate
Expenditures; Effect of Failure to File and Full Consideration. Where property, other
Statement. than real property referred to in Section 24(D), is
Every candidate and treasurer of the political party transferred for less than an adequate and full
shall, within 30 days after the day of the election, consideration in money or moneys worth, then the
file in duplicate with the offices of the Commission amount by which the fair market value of the
the full, true and itemized statement of all property exceeded the value of the consideration
contributions and expenditures in connection with shall, for the purpose of the tax imposed by this
the election. Chapter, be deemed as a gift, shall be included in
No person elected to any public offices shall enter computing the amount of gifts made during the
upon the duties of his office until he has filed the calendar year.
statement of contributions and expenditures herein
required. Philamlife vs. SOF, GR No. 210987 dated
The same prohibition shall apply if the political November 24, 2014
party which nominated the winning candidate fails 3. Manner of Computing the Donors Tax (Sec.
to file the statement required herein within the 12 RR No. 2-03)
period prescribed by this Act. 4. Tax Credit for Donors Taxes paid to a
Foreign Country [Sec. 101 (C)]
Except candidates for elective barangay office,
5. Renunciation of share in the conjugal
failure to file the statements or reports in
partnership or absolute community; and,
connection with electoral contributions and
hereditary estate (Sec. 11 RR No. 2-03)
expenditures are required herein shall constitute
6. Capacity to Buy
an administrative offense for which the offenders
Spouses Evono vs. DOF, CTA EB Case No. 705
shall be liable to pay an administrative fine ranging
dated June 4, 2011
from P1,000.00 to P30,000.00 in the discretion of
the Commission.
D. Filing and Payment of Returns (Sec. 103) /
The fine shall be paid within 30 days from receipt (Sec. 13 RR No. 2-03)
of notice of such failure; otherwise, it shall be 1. Requirements
enforceable to a writ of execution issued by the
Section 103. Filing of Return and Payment of
Commission against the properties of the offender.
Tax.
It shall be the duty of every city or municipal
(A) Requirements. any individual who makes any
election registrar to advise in writing, by personal
transfer by gift (except those which, under Section
delivery or registered mail, within 5 days from the
101, are exempt from the tax provided for in this
date of election all candidates residing in his
Chapter) shall, for the purpose of the said tax,
jurisdiction to comply with their obligation to file
make a return under oath in duplicate. The return
their statements of contributions and expenditures.
shall set forth:
For the commission of a second or subsequent
(1) Each gift made during the calendar year which
offense under this section, the administrative fine
is to be included in computing net gifts;
shall be from P2,000.00 to P60,000.00 in the
discretion of the Commission. In addition, the (2) The deductions claimed and allowable;
offender shall be subject to perpetual (3) Any previous net gifts made during the same
disqualification to hold public office. calendar year;
(4) The name of the donee; and
RR No. 7-2011 dated February 16, 2011 (5) Such further information as may be required by
rules and regulations made pursuant to law
RMC 30-2016 dated March 14, 2016
2. Time and Place of Filing
Abello vs. CIR, GR No. 120721 dated February Section 103. Filing of Return and Payment of
23, 2005 Tax.
(B) Time and Place of Filing and Payment. The
2. Transfer for Less than adequate and full return of the donor required in this Section shall be
consideration (Sec. 100) (RR No. 6-2008 on filed within 30 days after the date the gift is made
shares of stock as amended by RR 6-2013) and the tax due thereon shall be paid at the time of
Alyssa Africa Page 126
Taxation Law
filing. Except in case where the Commissioner I. Preliminary Matters
otherwise permits, the return shall be filed and the a. Nature and characteristic of VAT in general
tax paid to an authorized agent bank, the Revenue Sec. 4.105.-2 of RR No. 16-05
District Officer, Revenue Collection Officer or duly Section 4.105-2. Nature and Characteristics of
authorized Treasurer of the city or municipality VAT. VAT is a tax on consumption levied on the
where the donor was domiciled at the time of the sale, barter, exchange or lease of goods or
transfer, or if there be no legal residence in the properties and services in the Philippines and on
Philippines, with the Office of the Commissioner. In importation of goods into the Philippines. The seller
the case of the gifts made by a nonresident, the is the one statutorily liable for the payment of the
return may be filed with the Philippine Embassy or tax but the amount of the tax may be shifted or
Consulate in the country where he is domiciled at passed on to the buyer, transferee or lessee of the
the time of the transfer, or directly with the Office of goods, properties or services. This rule shall
the Commissioner. likewise apply to existing contracts of sale or lease
of goods, properties or services at the time of the
Section 13 (RR No. 2-03) effectivity of RA No. 9337. However, in the case of
For this purpose, the term OFFICE OF THE importation, the importer is the one liable for the
COMMISSIONER shall refer to the Revenue VAT.
District Office (RDO) having jurisdiction over the
BIR-National Office Building which houses the CIR vs. Magsaysay Lines (2006)
Office of the Commissioner, or presently, to the Facts: The National Development Corporation
Revenue District Office No. 39 South Quezon decided to sell to private enterprise all of its shares
City. in its wholly-owned subsidiary the National Marine
Corporation (NMC). The NDC decided to sell in one
3. Notice of Donation Exemption from lot its NMC shares and 5 of its ships. The NMC
Donors Tax (RR No. 2-03) shares and the vessels were offered for public
bidding but under the condition that the highest
Section 13. Filing of Returns and Payment of
bidder will pay VAT of 10% on the value of the
Donors Tax
vessels. Magsasay Lines offered and was awarded
(C) Notice of Donation by a Donor Engaged in the ships. Payment of VAT was then secured
Business. In order to be exempt from donors tax through a Letter of Credit by the bidders.
and to claim full deduction of the donation given to Later on, bidders filed a formal request for a
qualified donee institutions duly accredited by the ruling on whether or not the sale of the vessels was
Philippine Council for NGO Certification, Inc. subject to VAT with the BIR. The parties came to an
(PCNC), the donor engaged in business shall give agreement that should no favorable ruling be
a notice of donation on every donation worth at received from the BIR, NDC was authorized to
least P50,000.00 to the Revenue District Officer draw on the Letter of Credit upon written demand
which has jurisdiction over his place of business the amount needed for the payment of VAT. BIR
within 30 days after receipt of the qualified donee ruled that the sale of the vessels was subject to
institutions duly issued Certificate of Donation, VAT.
which shall be attached to the said Notice of Private respondents moved for the
Donation, stating that not more than 30% of the reconsideration of the VAT Ruling but it was denied.
said donation/gifts for the taxable year shall be In the CTA, the CIR argued that the sale of the
used by such accredited non-stock, non-profit vessels is among those transactions deemed
corporation/NGO institution (qualified-donee sale. The CTA ruled that the sale of a vessel was
institution) for administration purposes pursuant to an isolated transaction, not done in the ordinary
the provisions of Section 101(A)(3) and (B)(2) of course of NDCs business, and was thus not
the Code. subject to VAT, which under Section 99 of the Tax
Code, was applied only to sales in the course of
Value-Added Tax trade or business. The CTA further held that the
(Sections 105-115 of the NIRC, amended by RA sale of the vessels could not be deemed sale, and
Nos. 9337 and 10378; Implemented by RR No. thus subject to VAT, as the transaction did not fall
16-05 as amended by RR Nos. 4-07 and RR No. under the enumeration of transactions deemed sale
16-2011) as listed either in Section 100(b) of the Tax Code,
or Section 4 of RR No. 5-87.
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the Special Economic Zone in Naga, Cebu.
Issue: Whether or not the sale of the vessels is Business companies operating under the said zone
subject to VAT. are exempt from all internal revenue taxes including
VAT. Seagate filed VAT returns for April 1, 1998 to
Held: No, it is not subject to VAT. VAT is ultimately June 30, 1999. An administrative claim for refund of
a tax on consumption, even though it is assessed VAT input taxes were filed by Seagate to which
on many levels of transactions on the basis of a Seagate received no final action.
fixed percentage. It is the end user of consumer The CTA granted the claim for refund and was
goods or services which ultimately shoulders the affirmed by the CA on the ground that neither
tax, as the liability therefrom is passed on to the Section 109 of the Tax Code nor Secs,. 4.106-1
end users by the providers of these goods or and 4.103-1 of RR 7-95 were applicable. Having
services who in turn may credit their own VAT paid the input VAT on the capital goods it
liability (or input VAT) from the VAT payments they purchased, respondent correctly filed the
receive from the final consumer (or output administrative judicial claims for tis refund within
VAT).17 The final purchase by the end consumer the 2 year prescriptive period.
represents the final link in a production chain that
itself involves several transactions and several acts Issue: Whether or not respondent is entitled to
of consumption. The VAT system assures fiscal refund or issuance of Tax Credit Certificate
adequacy through the collection of taxes on every representing unutilized input VAT paid on capital
level of consumption, yet assuages the goods purchased for the period April 1, 1998 to
manufacturers or providers of goods and services June 30, 1999.
by enabling them to pass on their respective VAT
liabilities to the next link of the chain until finally the Held: Yes, it is entitled. Viewed broadly, the VAT is
end consumer shoulders the entire tax liability. a uniform tax ranging, at present, from 0 percent to
Yet VAT is not a singular-minded tax on every 10 percent levied on every importation of goods,
transactional level. Its assessment bears direct whether or not in the course of trade or business, or
relevance to the taxpayers role or link in the imposed on each sale, barter, exchange or lease of
production chain. Hence, as affirmed by Section 99 goods or properties or on each rendition of services
of the Tax Code and its subsequent in the course of trade or business 29 as they pass
incarnations,19 the tax is levied only on the sale, along the production and distribution chain, the tax
barter or exchange of goods or services by persons being limited only to the value added 30 to such
who engage in such activities, in the course of goods, properties or services by the seller,
trade or business. These transactions outside the transferor or lessor.31 It is an indirect tax that may
course of trade or business may invariably be shifted or passed on to the buyer, transferee or
contribute to the production chain, but they do so lessee of the goods, properties or services. 32 As
only as a matter of accident or incident. As the such, it should be understood not in the context of
sales of goods or services do not occur within the the person or entity that is primarily, directly and
course of trade or business, the providers of such legally liable for its payment, but in terms of its
goods or services would hardly, if at all, have the nature as a tax on consumption.33 In either case,
opportunity to appropriately credit any VAT liability though, the same conclusion is arrived at.
as against their own accumulated VAT collections If at the end of a taxable quarter the output
since the accumulation of output VAT arises in the taxes38 charged by a seller39 are equal to the input
first place only through the ordinary course of trade taxes40 passed on by the suppliers, no payment is
or business. required. It is when the output taxes exceed the
The conclusion that the sale was not in the input taxes that the excess has to be paid. 41 If,
course of trade or business, which the CIR does however, the input taxes exceed the output taxes,
not dispute before this Court, should have the excess shall be carried over to the succeeding
definitively settled the matter. Any sale, barter or quarter or quarters.42 Should the input taxes result
exchange of goods or services not in the course from zero-rated or effectively zero-rated
of trade or business is not subject to VAT. transactions or from the acquisition of capital
goods,43 any excess over the output taxes shall
CIR vs. Seagate Technology (Phils) (2005) instead be refunded44 to the taxpayer or
Facts: Seagate Technology Philippines is a VAT credited45 against other internal revenue taxes.
and PEZA registered entity and is operating from
SEC. 118 Percentage Tax on International b. Zero Rated Sale of Goods (Sec. 106)
Carriers. - [82]
(A) International air carriers doing; business in the c. Zero Rated Sale of Services (Sec. 108 B)
Philippines on their gross receipts derived from CIR vs. American Express (2005)
transport of cargo from the Philippines to another CIR vs. Burmeister and Wain (2007)
country shall pay a tax of three percent (3%) of CIR vs. Acesite (2007)
their quarterly gross receipts.
(B) International shipping carriers doing business d. Automatic zero-rate vs. Effectively zero-rate
in the Philippines on their gross receipts derived CIR vs. Seagate Technology (Phils) (2005)
from transport of cargo from the Philippines to CIR vs. Toshiba Information Equipment (2005)
another country shall pay a tax equivalent to three
percent (3%) of their quarterly gross receipts. e. Destination Principle and Cross Border
Doctrine
2. Sec. 4.108-2 Nos. 11 and 12 of RR no. 16-05 CIR vs. American Express (2005)
Section 4.108-2 Meaning of Sale or Exchange of CIR vs. Toshiba Information Equipment (2005)
Services. The term sale or exchange of services Revenue Memorandum Circular No. 74-99
means the performance of all kinds of services in
the Philippines for others for a fee, remuneration or f. Zero Rated Sales vs. Exempt Sales
consideration, whether in kind or in cash, including CIR vs. Cebu Toyo Corp. (2005)
those performed or rendered by the following:
g. Enumeration of Exempt Transactions *Sec.
(11) transportation contractors on their transport of 109) Sec. 4.109-1(B) of RR No. 16-05
goods or cargoes, including persons who transport
goods or cargoes for hire and other domestic h. Exempt Persons vs. Exempt Transactions
common carriers by land relative to their transport CIR vs. Seagate Technology (Phils) (2005)
of goods or cargoes;
(12) common carriers by air and sea relative to their IV. Transitional and Presumptive Input Tax
transport of passenger, goods or cargoes from one Sec. 111
place in the Philippines to another place in the Sec. 4.111-1 of RR No. 16-05
Philippines; Fort Bonifacio Development vs. CIR (2009)
Fort Bonifacio Development vs. CIR (2014)
3. Sec. 4.108-3 of RR No. 16-05
V. VAT Refund
ii. Lease of Properties a. Compare with Sec. 204 and 229
1. Sec. 4.108-3 of RR No. 16-05 b. Grounds
2. Lease of Residential Units (Sec. 4.109-1 (B) c. Periods
(q) of RR No. 16-05_ RMC No. 54-2014
3. Secs. 109q, 109w, 116, 236G and 236H RMC No. 57-2013
iii. Professional Services Contex vs. CIR (2004)
iv. Medical Services Atlas Consolidated Mining vs. CIR (2007)
1. Sec. 4.109-1 (B)(g) of RR No. 16-05 CIR vs. Mirant Pagbilao Corp. (2008)
Philippine Healthcare Providers vs. CIR (2007) CIR vs. Aichi Forging Company (2010)
v. Cinema Operators/Proprietors Facts:
CIR vs. SM Prime Holdings, Inc. (2010) On September 30, 2004, respondent Aichi
vi. VAT on Toll Fees Forging Company of Asia, Inc. filed a claim for
Diaz vs. The Secretary of Finance and CIR refund/credit of input VAT for the period of July 1,
(2011) 2002 to September 30, 2002 with the petitioner
vii. Franchise Grantees (PAGCOR) Commissioner of Internal Revenue. On the same
PAGCOR vs. The BIR (2011) day, Aichi likewise filed a Petition for Review with
the CTA for the refund/credit of the same.
Section 5. Power of the Commissioner to Obtain SEC. 6. Power of the Commissioner to Make
Information and to Summon/Examine, and Take Assessments and Prescribe Additional
Testimony of Persons. - - In ascertaining the Requirements for Tax Administration and
correctness of any return, or in making a return Enforcement. -
when none has been made, or in determining the (A) Examination of Return and Determination of
liability of any person for any internal revenue tax, Tax Due. After a return has been filed as required
or in collecting any such liability, or in evaluating tax under the provisions of this Code, the
compliance, the Commissioner is authorized: Commissioner or his duly authorized representative
(A) To examine any book, paper, record, or other may authorize the examination of any taxpayer and
data which may be relevant or material to such the assessment of the correct amount of tax:
inquiry; Provided, however, That failure to file a return shall
(B) To obtain on a regular basis from any person not prevent the Commissioner from authorizing the
other than the person whose internal revenue tax examination of any taxpayer.
liability is subject to audit or investigation, or from The tax or any deficiency tax so assessed shall be
any office or officer of the national and local paid upon notice and demand from the
governments, government agencies and Commissioner or from his duly authorized
instrumentalities, including the Bangko Sentral ng representative.
Pilipinas and government-owned or -controlled Any return, statement of declaration filed in any
corporations, any information such as, but not office authorized to receive the same shall not be
limited to, costs and volume of production, receipts withdrawn: Provided, That within three (3) years
or sales and gross incomes of taxpayers, and the from the date of such filing, the same may be
names, addresses, and financial statements of modified, changed, or amended: Provided, further,
corporations, mutual fund companies, insurance That no notice for audit or investigation of such
companies, regional operating headquarters of return, statement or declaration has in the
multinational companies, joint accounts, meantime been actually served upon the taxpayer.
associations, joint ventures of consortia and
(B) Failure to Submit Required Returns,
registered partnerships, and their members;
Statements, Reports and other Documents. -
(C) To summon the person liable for tax or required When a report required by law as a basis for the
to file a return, or any officer or employee of such assessment of any national internal revenue tax
person, or any person having possession, custody, shall not be forthcoming within the time fixed by
or care of the books of accounts and other laws or rules and regulations or when there is
accounting records containing entries relating to the reason to believe that any such report is false,
business of the person liable for tax, or any other
Alyssa Africa Page 142
Taxation Law
incomplete or erroneous, the Commissioner shall immediately, the Commissioner shall declare the
assess the proper tax on the best evidence tax period of such taxpayer terminated at any time
obtainable. and shall send the taxpayer a notice of such
In case a person fails to file a required return or decision, together with a request for the immediate
other document at the time prescribed by law, or payment of the tax for the period so declared
willfully or otherwise files a false or fraudulent terminated and the tax for the preceding year or
return or other document, the Commissioner shall quarter, or such portion thereof as may be unpaid,
make or amend the return from his own knowledge and said taxes shall be due and payable
and from such information as he can obtain through immediately and shall be subject to all the penalties
testimony or otherwise, which shall be prima facie hereafter prescribed, unless paid within the time
correct and sufficient for all legal purposes. fixed in the demand made by the Commissioner.
(C) Authority to Conduct Inventory-taking, (E) Authority of the Commissioner to Prescribe
Surveillance and to Prescribe Presumptive Real Property Values. - The Commissioner is
Gross Sales and Receipts. - The Commissioner hereby authorized to divide the Philippines into
may, at any time during the taxable year, order different zones or areas and shall, upon
inventory-taking of goods of any taxpayer as a consultation with competent appraisers both from
basis for determining his internal revenue tax the private and public sectors, determine the fair
liabilities, or may place the business operations of market value of real properties located in each
any person, natural or juridical, under observation zone or area. For purposes of computing any
or surveillance if there is reason to believe that internal revenue tax, the value of the property shall
such person is not declaring his correct income, be, whichever is the higher of:
sales or receipts for internal revenue tax purposes. (1) The fair market value as determined by the
The findings may be used as the basis for Commissioner; or
assessing the taxes for the other months or (2) The fair market value as shown in the schedule
quarters of the same or different taxable years and of values of the Provincial and City Assessors.
such assessment shall be deemed prima facie (F) Authority of the Commissioner to Inquire
correct. into Bank Deposit Accounts and Other Related
When it is found that a person has failed to issue information held by Financial Institutions. -
receipts and invoices in violation of the Notwithstanding any contrary provision of Republic
requirements of Sections 113 and 237 of this Code, Act No. 1405, Republic Act No. 6426, otherwise
or when there is reason to believe that the books of known as the Foreign Currency Deposit Act of the
accounts or other records do not correctly reflect Philippines, and other general or special laws, the
the declarations made or to be made in a return Commissioner is hereby authorized to inquire into
required to be filed under the provisions of this the bank deposits and other related information
Code, the Commissioner, after taking into account held by financial institutions of:
the sales, receipts, income or other taxable base of (1) A decedent to determine his gross estate; and
other persons engaged in similar businesses under (2) Any taxpayer who has filed an application for
similar situations or circumstances or after compromise of his tax liability under Section 204(A)
considering other relevant information may (2) of this Code by reason of financial incapacity to
prescribe a minimum amount of such gross pay his tax liability.
receipts, sales and taxable base, and such amount
In case a taxpayer files an application to
so prescribed shall be prima facie correct for
compromise the payment of his tax liabilities on his
purposes of determining the internal revenue tax
claim that his financial position demonstrates a
liabilities of such person.
clear inability to pay the tax assessed, his
(D) Authority to Terminate Taxable Period. - application shall not be considered unless and until
When it shall come to the knowledge of the he waives in writing his privilege under Republic Act
Commissioner that a taxpayer is retiring from No. 1405, Republic Act No. 6426, otherwise known
business subject to tax, or is intending to leave the as the Foreign Currency Deposit Act of the
Philippines or to remove his property therefrom or Philippines, or under other general or special laws,
to hide or conceal his property, or is performing any and such waiver shall constitute the authority of the
act tending to obstruct the proceedings for the Commissioner to inquire into the bank deposits of
collection of the tax for the past or current quarter the taxpayer.
or year or to render the same totally or partly
ineffective unless such proceedings are begun
Alyssa Africa Page 143
Taxation Law
(3) A specific taxpayer or taxpayers subject of a The Commissioner shall forward the information as
request for the supply of tax information from a promptly as possible to the requesting foreign tax
foreign tax authority pursuant to an international authority. To ensure a prompt response, the
convention or agreement on tax matters to which Commissioner shall confirm receipt of a request in
the Philippines is a signatory or a party of: writing to the requesting tax authority and shall
Provided, That the information obtained from the notify the latter of deficiencies in the request, if any,
banks and other financial institutions may be used within sixty (60) days from receipt of the request.
by the Bureau of Internal Revenue for tax If the Commissioner is unable to obtain and provide
assessment, verification, audit and enforcement the information within ninety (90) days from receipt
purposes. of the request, due to obstacles encountered in
In case of a request from a foreign tax authority for furnishing the information or when the bank or
tax information held by banks and financial financial institution refuses to furnish the
institutions, the exchange of information shall be information, he shall immediately inform the
done in a secure manner to ensure confidentiality requesting tax authority of the same, explaining the
thereof under such rules and regulations as may be nature of the obstacles encountered or the reasons
promulgated by the Secretary of Finance, upon for refusal.
recommendation of the Commissioner. The term "foreign tax authority," as used herein,
The Commissioner shall provide the tax information shall refer to the tax authority or tax administration
obtained from banks and financial institutions of the requesting State under the tax treaty or
pursuant to a convention or agreement upon convention to which the Philippines is a signatory or
request of the foreign tax authority when such a party of.
requesting foreign tax authority has provided the (G) Authority to Accredit and Register Tax
following information to demonstrate the Agents. - The Commissioner shall accredit and
foreseeable relevance of the information to the register, based on their professional competence,
request: integrity and moral fitness, individuals and general
(a) The identity of the person under examination or professional partnerships and their representatives
investigation; who prepare and file tax returns, statements,
(b) A statement of the information being sought, reports, protests, and other papers with or who
including its nature and the form in which the said appear before, the Bureau for taxpayers. Within
foreign tax authority prefers to receive the one hundred twenty (120) days from January 1,
information from the Commissioner; 1998, the Commissioner shall create national and
(c) The tax purpose for which the information is regional accreditation boards, the members of
being sought; which shall serve for three (3) years, and shall
(d) Grounds for believing that the information designate from among the senior officials of the
requested is held in the Philippines or is in the Bureau, one (1) chairman and two (2) members for
possession or control of a person within the each board, subject to such rules and regulations
jurisdiction of the Philippines; as the Secretary of Finance shall promulgate upon
the recommendation of the Commissioner.
(e) To the extent known, the name and address of
any person believed to be in possession of the Individuals and general professional partnerships
requested information; and their representatives who are denied
accreditation by the Commissioner and/or the
(f) A statement that the request is in conformity with
national and regional accreditation boards may
the law and administrative practices of the said
appeal such denial to the Secretary of Finance,
foreign tax authority, such that if the requested
who shall rule on the appeal within sixty (60) days
information was within the jurisdiction of the said
from receipt of such appeal. Failure of the
foreign tax authority then it would be able to obtain
Secretary of Finance to rule on the Appeal within
the information under its laws or in the normal
the prescribed period shall be deemed as approval
course of administrative practice and that it is in
of the application for accreditation of the appellant.
conformity with a convention or international
agreement; and (H) Authority of the Commissioner to Prescribe
Additional Procedural or Documentary
(g) A statement that the requesting foreign tax
Requirements. - The Commissioner may prescribe
authority has exhausted all means available in its
the manner of compliance with any documentary or
own territory to obtain the information, except those
procedural requirement in connection with the
that would give rise to disproportionate difficulties.
Alyssa Africa Page 144
Taxation Law
submission or preparation of financial statements Arranging for An appointment
accompanying the tax returns. - Revenue officer must make a telephone or
personal call to the taxpayer himself and NOT his
Section. 7.Authority of the Commissioner to representative.
Delegate Power. - The Commissioner may
delegate the powers vested in him under the Serving of Letter of Authority
pertinent provisions of this Code to any or such Must be served by the Revenue Officer assigned to
subordinate officials with the rank equivalent to a the case and no one else on the first opportunity
division chief or higher, subject to such limitations to have personal contact with the taxpayer.
and restrictions as may be imposed under rules What is served:
and regulations to be promulgated by the Secretary a. Letter of Authority
of Finance, upon recommendation of the b. Taxpayers Bill of Rights
Commissioner: Provided, however, That the Letter of Authority
following powers of the Commissioner shall not be a. Authorizes or empowers a designated
delegated: Revenue Officer to examine, verify and
(a) The power to recommend the promulgation of scrutinize a taxpayers books and records in
rules and regulations by the Secretary of Finance; relation to his internal revenue tax liabilities for
(b) The power to issue rulings of first impression or a particular period.
to reverse, revoke or modify any existing ruling of b. Must be served or presented to the taxpayer
the Bureau; within 30 days from date of issue; otherwise, it
(c) The power to compromise or abate, under Sec. becomes null and void unless revalidated.
204 (A) and (B) of this Code, any tax liability: c. Taxpayers right to refuse its service if
Provided, however, That assessments issued by presented beyond the 30 day period
the regional offices involving basic deficiency taxes depending on the policy set by top
of Five hundred thousand pesos (P500,000) or management
less, and minor criminal violations, as may be d. How Revalidation Made by issuing a new
determined by rules and regulations to be Letter of Authority or by just simply stamping
promulgated by the Secretary of finance, upon the words Revalidated on _ on the face of the
recommendation of the Commissioner, discovered copy of the Letter of Authority issued.
by regional and district officials, may be
compromised by a regional evaluation board which Revenue Memorandum Order No. 44-2010 dated
shall be composed of the Regional Director as May 12, 2010
Chairman, the Assistant Regional Director, the
heads of the Legal, Assessment and Collection (NOTE: Contains rules on electronic issuance of
Divisions and the Revenue District Officer having letters of authority.)
jurisdiction over the taxpayer, as members; and
(d) The power to assign or reassign internal Revenue Memorandum Order No. 69-2010 dated
revenue officers to establishments where articles August 11, 2010
subject to excise tax are produced or kept.
(NOTE: Guidelines on the Issuance of Electronic
Letters of Authority, Tax Verification Notices, and
Revenue Regulations (RR) No. 12-99 dated
Memoranda of Assignment)
September 6, 1999, as amended by RR No. 18-
2013 dated November 28, 2013
CIR vs. Sony Phils, Inc. G.R. No. 178697,
http://www.bir.gov.ph/taxpayerrights/taxpayerrig
November 17, 2010
hts.htm
Facts: On November 24, 1998, the CIR issued a
Republic Act No. 10021
letter of authority authorizing revenue officers to
examine the books of accounts of Sony for the
1. Tax Audit Process
period 1997 and unverified prior years. On
2. Letter of Authority/Audit Notice/Tax
December 6, 1999, a preliminary assessment for
Verification Notice
1997 deficiency taxes and penalties was issued by
CIR. Sony protested and sought re-evaluation. The
Revenue Audit Memorandum Order No. 1-00
CTA partially granted the appeal and ordered the
Contact with Taxpayer
withdrawal and cancellation of deficiency
Alyssa Africa Page 145
Taxation Law
assessment for value-added tax for 1997 for lack of persons in which case, another or separate
merit. Hence, the case was raised with the SC. examination and inspection may be made.
The CIR insists that the LOA, although it states Examination and inspection of books of accounts
the period 1997 and unverified prior years, should and other accounting records shall be done in the
be understood to mean the fiscal year ending in taxpayer's office or place of business or in the office
March 31, 1998. of the Bureau of Internal Revenue. All corporations,
partnerships or persons that retire from business
Issue: Whether or not the Letter of Authority should shall, within ten (10) days from the date of
be understood to mean the fiscal year ending retirement or within such period of time as may be
March 31, 1998. allowed by the Commissioner in special cases,
submit their books of accounts, including the
Held: No, the Court cannot agree. According to subsidiary books and other accounting records to
RMO 43-90, a Letter of Authority should cover a the Commissioner or any of his deputies for
taxable period not exceeding 1 taxable year. The examination, after which they shall be returned.
practice issuing LOAs covering audit of unverified Corporations and partnerships contemplating
prior years is hereby prohibited. If the audit of a tax dissolution must notify the Commissioner and shall
payer shall include more than one taxable period, not be dissolved until cleared of any tax liability.
the other periods or years shall be specifically Any provision of existing general or special law to
indicated in the LOA. the contrary notwithstanding, the books of accounts
The CIR went beyond the scope of their authority and other pertinent records of tax-exempt
because the deficiency VAT assessment they organizations or grantees of tax incentives shall be
arrived at was based on records from January to subject to examination by the Bureau of Internal
March 1998 or using the fiscal year which ended in Revenue for purposes of ascertaining compliance
March 31, 1998. If the CIR wanted or intended the with the conditions under which they have been
investigation to include the year 1998, it should granted tax exemptions or tax incentives, and their
have been done so by including it in the LOA or tax liability, if any.
issuing another LOA.
The deficiency VAT assessment should have RR No. 17-2013 dated September 27, 2013
been disallowed.
RR No. 5-2014 dated July 30, 2014
3. Preservation of Books of Accounts and tax
records 4. Tax Assessment
Section. 235. Preservation of Books and CIR vs. Pascor Realty (GR No. 128315 dated
Accounts and Other Accounting Records. - All June 29, 1999)
the books of accounts, including the subsidiary Facts:
books and other accounting records of
corporations, partnerships, or persons, shall be Issues: (1) Whether or not the criminal complaint
preserved by them for a period beginning from the for tax evasion can be construed as an
last entry in each book until the last day prescribed assessment; and (2) Whether or not an
by Section 203 within which the Commissioner is assessment is necessary before criminal charges
authorized to make an assessment. The said books for tax evasion may be instituted;
and records shall be subject to examination and
inspection by internal revenue officers: Provided, Held: (1) No, it cannot be construed as an
That for income tax purposes, such examination assessment. Not all documents coming from the
and inspection shall be made only once in a taxable BIR containing a computation of the tax liability can
year, except in the following cases: be deemed assessments.
(a) Fraud, irregularity or mistakes, as determined To start with, an assessment must be sent to and
by the Commissioner; received by a taxpayer, and must demand payment
(b) The taxpayer requests reinvestigation; of the taxes described therein within a specific
(c) Verification of compliance with withholding tax period. Thus, the NIRC imposes a 25 percent
laws and regulations; penalty, in addition to the tax due, in case the
(d) Verification of capital gains tax liabilities; and taxpayer fails to pay deficiency tax within the time
(e) In the exercise of the Commissioner's power prescribed for its payment in the notice of
under Section 5(B) to obtain information from other assessment. Likewise, an interest of 20 percent per
Alyssa Africa Page 146
Taxation Law
annum, or such higher rates as may be prescribed 5. Pre-assessment Notice (PAN)/when not
by rules and regulations, is to be collected form the required
date prescribed for its payment until the full RR 18-2013
payment. 12 3.1.1 Preliminary Assessment Notice (PAN). If
The issuance of an assessment is vital in after review and evaluation by the Commissioner or
determining, the period of limitation regarding its his duly authorized representative, as the case may
proper issuance and the period within which to be, it is determined that there exists sufficient basis
protest it. Section 203 of the NIRC provides that to assess the taxpayer for any deficiency tax or
internal revenue taxes must be assessed within taxes, the said Officer shall issue to the taxpayer, a
three years from the last day within which to file the Preliminary Assessment Notice (PAN) for the
return. Section 222, on the other hand, specifies a proposed assessment. It shall show in detail the
period of ten years in case a fraudulent return with facts and the law, rules and regulations, or
intent to evade was submitted or in case of failure jurisprudence on which the proposed assessment
to file a return. Also, Section 228 of the same law is based.
states that said assessment may be protested only If the taxpayer fails to respond within 15 days
within thirty days from receipt thereof. Necessarily, from the date of receipt of the PAN, he shall be
the taxpayer must be certain that a specific considered in default, in which case a Formal Letter
document constitutes an assessment. Otherwise, of Demand and Final Assessment Notice
confusion would arise regarding the period within (FLD/FAN) shall be issued calling for payment of
which to make an assessment or to protest the the taxpayers deficiency tax liability, inclusive of
same, or whether interest and penalty may accrue the applicable penalties.
thereon. If the taxpayer, within 15 days from the date of
It should also be stressed that the said document is receipt of the PAN, responds that he/it disagrees
a notice duly sent to the taxpayer. Indeed, an with the findings of deficiency tax or taxes, an
assessment is deemed made only when the FLD/FAN shall be issued within 15 days from
collector of internal revenue releases, mails or filing/submission of the taxpayers response, calling
sends such notice to the taxpayer. for payment of the taxpayers deficiency tax liability,
In the present case, the revenue officers' Affidavit inclusive of the applicable penalties.
merely contained a computation of respondents' tax
liability. It did not state a demand or a period for Requisites of a Valid PAN:
payment. Worse, it was addressed to the justice 1. Must be issued by the CIR or his duly authorized
secretary, not to the taxpayers. representative. The duly authorized representatives
(2) No, it is not necessary. The issuance of are:
an assessment must be distinguished from the a. Revenue Regional Directors;
filing of a complaint. Before an assessment is b. ACIR-LTS; and
issued, there is, by practice, a pre-assessment c. ACIR- Enforcement and Advocacy
notice sent to the taxpayer. The taxpayer is then Service
given a chance to submit position papers and 2. Must be served to the taxpayer personally and if
documents to prove that the assessment is not practicable, by substituted service or by mail;
unwarranted. If the commissioner is unsatisfied, an 3. Must be in writing and contain the facts and law
assessment signed by him or her is then sent to the on which the proposed assessment is based.
taxpayer informing the latter specifically and clearly 4. The assessment was conducted within the scope
that an assessment has been made against him or and authority given by a valid Letter of Authority.
her. In contrast, the criminal charge need not go
through all these. The criminal charge is filed 3.1.2 Exceptions to Prior Notice of the
directly with the DOJ. Thereafter, the taxpayer is Assessment. Pursuant to Section 228 of the Tax
notified that a criminal case had been filed against Code, as amended, a PAN shall not be required in
him, not that the commissioner has issued an any of the following cases:
assessment. It must be stressed that a criminal (i) When the finding for any deficiency tax is the
complaint is instituted not to demand payment, but result of the mathematical error in the computation
to penalize the taxpayer for violation of the Tax of the tax appearing on the face of the tax return
Code. filed by the taxpayer; or
Republic vs. Enriquez (166 SCRA 608) d. When penalties may be waived
CIR vs. NLRC (238 SCRA 42) Lhuillier Pawnshop vs. CIR (GR No. 166786
Hong Kong Shanghai Bank vs. Rafferty (39 dated September 11, 2006)
SCRA 145)
e. Rule on prima facie fraud
5. No injunction to restrain collection of taxes Sec. 248(B), NIRC
Sec. 218, NIRC Aznar vs.CIR (58 SCRA 519)
Rule 10, Revised Rules of the CTA, AM No. 05- Javier vs. CIR (199 SCRA 824)
11-07-CTA dated November 22, 2005, as
amended on September 16, 2008 B. Crimes / Offenses / Penalties / Forfeitures
xiii. Taxes, Fees, or Charges on Philippine vi. Amusement Tax (Sec. 140) as amended by
Products Actually Exported; RA No. 9640 dated May 21, 2009
1. Correlate with Sec. 143 (c) Pelizloy Realty Corp., vs. Province of Benguet,
GR No. 183137, April 10, 2013 (Compare with
xiv. TFC on CBBEs under RA No. 6810 and RA old case of PBA vs. CA GR No. 119122, August
6983 8, 2000)
Alta Vista Golf and Country Club vs. The City of
xv. TFC on the National Government, its Cebu, GR No. 180235 dated January 20, 2016
agencies and instrumentalities and LGUs
Philippine Fisheries Devt Authority vs. CA GR vii. Annual Fixed Tax on Delivery Trucks / Vans
No. 169836, GR No. July 31, 2007 (Sec. 141)
Mactan Cebu International Airport Authority vs.
Marcos GR No. 120082, Sept. 11, 1996 b. Municipalities
MIAA vs. CA GR No. 155650, July 20, 2006 i. Business Taxes (Sec. 143)
MIAA vs. City of Pasay GR No. 163072, April 2, Ericsson Telecommunication vs. City of Pasig
2009 GR No. 176667, November 22. 2007
City of Davao City vs. RTC GR No. 127383, Facts:
August 18, 2005 Ericsson Telecommunications, Inc. was
(To be discussed together with Secs.232 and assessed a business tax deficiency for the years
234 on Real Property Tax) 1998 and 1999 and was issued an Assessment
Notice dated October 25, 2000. Petitioner Ericsson
III. TAXING AND OTHER REVENUE RASING filed protest dated December 21, 2000 claiming that
POWERS OF LGUS the computation erroneous as the local business
a. Provinces tax was based on gross receipts and not on gross
i. Local Transfer Tax (Sec. 135) revenue on which he was taxed. Another Notice of
ii. Business Tax on Printing and Publication Assessment was issued to the petitioner by the
(Sec. 136) respondent City of Pasig on November 19, 2001,
iii. Franchise Tax (Sec. 137) this time based on business tax deficiencies for
NPC vs. City of Cabanatuan GR No. 149110, 2000 and 2001. A protest was again filed by the
April 9, 2003 petitioner on January 21, 2002. Respondent denied
Quezon City vs. ABS-CBN GR No. 166408. the protest and gave it 30 days within which to
October 6, 2008 appeal the denial. The petitioner filed a petition for
City of Iriga vs. Camarines Sur III Electric review with the RTC for the annulment and
Cooperative, Inc., GR No. 192945, September 5, cancellation of his deficiency local business taxes.
2012 The respondent claims that the RTC has no
Smart Communications vs. City of Davao GR jurisdiction over the case. This petition was denied.
No. 155491, September 16, 2008 (Also read The CA likewise denied the petition.
x.Further Distraint and Levy (Sec. 184) ii. Publication (Sec. 188)
Coca-Cola Bottlers vs. City of Manila - GR No.
xi. Personal Property Exempt from Distraint or 156252, June 27, 2006
Levy (Sec. 185)
iii. Periods of Assessment and Collection (Sec.
C. Taxpayers Remedies 194)
i. Question Constitutionality of Ordinance (Sec.
187) iv. Protest of Assessment (Sec. 195)
Drilon vs. Lim GR No. 111249, August 4, 1994 San Juan vs. Castro GR No. 174617,
Facts: December 27, 2007
The Secretary of Justice had, on appeal to PLDT vs. City of Balanga, CTA EB Case No. 413,
him of four oil companies and a taxpayer, declared June 3, 2009
Ordinance No. 7794, known as the Manila Revenue China Banking vs. City Treasurer of Manila, GR
Code null and void for non-compliance with the No. 204117 dated July 1, 2015 (jurisdiction
prescribed procedure under Section 187 of the issue)
Local Government Code. In a petition for certiorari
filed by the City of Manila, the RTC revoked the v. Appeal to the CTA
resolution and sustained the ordinance. The RTC
likewise declared that Section 187 of the Local vi. Claim for Refund (Sec. 196)
Government Code is unconstitutional because it Alabang Supermarket Corporation vs. City of
vests in the Secretary of Justice of the power of Muntinlupa, CTA EB Case No. 386
control over local governments in violation of the February 12, 2009 (read also case decided by
policy of local autonomy mandated in the the CTA Division)
Constitution and of the specific provision therein Mindanao Shopping Destination Corp. Vs.
conferring on the President of the Philippines only Davao City, CTA AC No. 6, May 31, 2011
the power of supervision over local governments.
vii. Is injunction available?
Issue: Whether or not Section 187 of the Local Angeles City vs. Angeles Electric Corporation,
Government Code is unconstitutional. GR No. 166134 dated June 29, 2010.
Cagayan Electric Power and Light Co., Inc., vs. c. Fundamental Principles (Sec. 198)
City of Cagayan de Oro, GR No. 191761,
November 14, 2012. d. Important Definitions (Sec. 199)