TAXATION II

VER ANGELO N. SUMABAT

(ADOPTED FROM THE SYLLABUS OF ATTY. ROBERTO BELARMINO M. LOCK CPA)

TRANSFER TAXES

(Secs. 84 to 104 of the NIRC, as amended by RA No. 10963. Implemented by Revenue Regulations
(“RR”) No. 2-03, as amended by RR No. 12-2018)

I. Estate Tax

A. Nature of Estate Tax

1. Definition
2. Fixed Rate (Sec. 84) (amended by RA No. 10963)
3. Accrual of Estate Tax vs. Liability for Payment (Sec. 3 of RR No. 12-2018)
4. Property Tax or Excise Tax?
Separate Opinion of Justice Bersamin in CIR vs. Pilipinas Shell, GR No. 188497 dated
February 19, 2014

B. Composition of the Gross Estate (Sec. 104) / (Sec. 4 of RR No. 12-2018)

1. Residents and Citizens
2. Nonresident aliens
a. Rule on Reciprocity
b. Rules on Intangible Personal Property
CIR vs. Fisher (1 SCRA 93)
3. Gross Estate (Secs. 85 and 104)
a. Valuation Rules (Secs. 85 and 88) (Sec. 5 of RR No. 18-2013)
1. Real Property
2. Personal Property
3. Shares of Stock
4. Usufruct
b. Decedent’s Interest
c. Transfer in Contemplation of Death
d. Revocable Transfer
e. Property Passing Under General Power of Appointment - Correlate with Sec.
87(b) and (c)
f. Proceeds of Life Insurance
g. Prior Interest
h. Transfers for Insufficient Consideration
i. Capital of Surviving Spouse

C. Deductions from the Gross Estate (Sec. 86, as amended by RA No. 10963) (Sec. 6 of RR No. 12-
2018)
1. Allowed to Residents and Citizens
2. Allowed to Nonresident aliens
a. Limitation under RA No. 10963, Sec. 7 RR No. 12-2018
3. Allowable Deductions (As amended by RA No. 10963)
a. Standard Deduction (As amended by RA No. 10963)
b. Claims against the Estate
Dizon vs. CTA (GR No. 140944 dated April 30, 2008)
c. Claims against insolvent persons
d. Unpaid Mortgages, Taxes and Casualty Losses
 e. Vanishing Deduction
1. Requisites for deductibility
2. Rationale for grant
g. Transfers for Public Use
h. Family Home (As amended by RA No. 10963)
i. Amount Received by Heirs Under Republic Act No. 4917

D. Exclusion from Net Estate and Exemptions (Secs. 86 C and 87)

E. Foreign Estate Tax Credit/s (Sec. 86 D)
F. Estate Tax Returns and Payment of Tax (Secs. 90 and 91) (Sec. 9 of RR 12-2018)
1. When required and contents
2. Time of Filing / Extension of time to file (as amended by RA No. 10963)
3. Place of Filing
4. Time of Payment / Extension of time to pay / Installment (as amended by RA No. 10963)
5. CPA Certification (as amended by RA No. 10963)
G. Other Matters
1. Who is liable to pay? [Sec. 91 (C)]
Estate of Vda. De Gabriel vs. CIR (GR No. 155541 dated January 27, 2004)
a. Discharge of Executor or Administrator from Personal Liability (Sec. 92)
b. Liability of Heirs
CIR vs. Pineda (21 SCRA 105)
2. Payment Before Delivery by Executor Sec. 94
Marcos II vs. CA (273 SCRA 47)
3. Duties of Certain Officers (Sec. 95)
4. Restitution of Tax Upon Satisfaction of Outstanding Obligations (Sec. 96)
5. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights (Sec. 97)
As amended by RA No. 10963
Sec. 10 of RR No. 12-2018
RMC No. 62-2018 dated June 28, 2018

II. Donor’s Tax

A. Nature of Donor’s Tax

Lladoc vs. Vs. CIR (14 SCRA 292)
Pirovano vs. CIR (14 SCRA 232)
Abello vs. CIR, GR No. 120721 dated February 23, 2005
1. Definition
2. Composition of Gross Gift (Secs. 98 and 104)
3. Tax Exempt Net Gift (Sec. 99) (As amended by RA No. 10963)
4. Fixed Rate (Sec. 99) (as amended by RA No. 10963)
5. Gift Splitting
B. Composition of the Gross Gifts (Sec. 104)
1. Residents and Citizens
2. Nonresident alien
a. Rule on Reciprocity
b. Rules on Intangible Personal Property
3. Corporations
4. Valuation of Gifts made in property (Sec. 102)
5. Exemption of Certain Gifts (Sec. 101) (as amended by RA No. 10963)
a. Residents and Citizens
b. Nonresident aliens
c. Corporations
C. Other Matters
1. Rule on Political Contributions [Sec. 99C]
Secs. 13 and 14 RA No. 7166
RR No. 7-2011 dated February 16, 2011
RMC 30-2016 dated March 14, 2016
compare with Abello vs. CIR, GR No. 120721 dated February 23, 2005

2. Transfer for Less than adequate and full consideration (Sec. 100) (as amended by RA No.
10963) compare with Philamlife vs. SOF, GR No. 210987 dated November 24, 2014
3. Manner of Computing the Donor’s Tax (Sec. 14 RR No. 12-2018)
4. Tax Credit for Donor’s Taxes paid to a Foreign Country [Sec. 101 (C)]
5. Renunciation of share in the conjugal partnership or absolute community; and,
hereditary estate (Sec. 11 RR No. 2-03)
6. Capacity to Buy
Sps. Evono vs. DOF, CTA EB Case No. 705 dated June 4, 2012

D. Filing and Payment of Returns (Sec. 103) / (Sec. 15 RR No. 12-2018)

1. Requirements
2. Time and Place of Filing
3. Notice of Donation – Exemption from Donor’s Tax

VALUE-ADDED TAX

Sections 105-115 of the NIRC, amended by RA Nos.

9337, 10378 and RA 10963

Implemented by RR Nos. 16-05 as amended by RR Nos.

4-07 and RR 13-2018 (among others)

I. PRELIMINARY MATTERS

a. Nature and characteristic of VAT in general

Sec. 4.105.-2 of RR No. 16-05

CIR vs. Magsaysay Lines GR No. 146984 dated July 28, 2006
CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
Concurring Opinion of Justice Abad – Fort Bonifacio Development Corp. vs. CIR,
GR No. 173425 dated September 4, 2012.

b. VAT as an indirect tax

Contex vs. CIR GR No. 151135 dated July 2, 2004

c. Persons Liable (Sec. 105)

i. Persons liable in general

CIR vs. CA and Commonwealth Management Services GR No. 125355 dated March
30, 2000.
ii. Who are required to register for VAT (Sec. 236 G, as amended by RA
10963)
 iii. Optional VAT Registration (Sec. 236 H, as amended by RA 10963) Sec.
109(2), Q/As 6, 30 and 31 of RMC No. 46-2008 dated February 1, 2008,
Sec. 4-109-2 of RR No. 13-2018

iv. VAT vs. Percentage Tax

1. Sec. 109(BB) vs. Sec. 116 (as amended by RA 10963)

d. Meaning of the phrase “in the course of trade of business” (Sec. 105)

Sec. 4.105-3 of RR No. 16-05

CIR vs. Magsaysay Lines GR No. 146984 dated July 28, 2006
Mindanao II Geothermal Partnership vs. CIR, GR No. 193301 dated March 11, 2013
CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010
Power Sector Assets and Liabilities Management Corporation vs. CIR, GR No.
198146 dated August 8, 2017
e. Exceptions to the Rule of Regularity

f. Output Tax vs. Input Taxes

i. Sources of Input Tax (Sec. 110 A) (as amended by RA 10963)

ii. Excess Output or Input Tax (Sec. 111 B)

iii. Rule on Input Tax on Capital Goods (Sec. 110A) (as amended by RA 10963)

1. Sec. 4.110-3 of RR No. 16-05 as amended by Sec. 16 of RR 4-2007

2. Sec. 4.110-3 of RR No. 13-2018

iv. Substantiation of Input Tax Credits (Sec. 4.110-8 of RR No. 16-05)

CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010

II. VAT ON GOODS AND SERVICES

a. Definition of goods and services (Sec. 106 and Sec. 108)

b. VAT base for goods and services (Sec. 106 and Sec.108)

c. Meaning of gross selling price and gross receipts (Sec. 106 and Sec.108)

i. Sec. 11 of RR No. 4-07

Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017

d. Rules on sales of Real Property

i. Rule on Sales on Instalment [RR No. Sec. 4.106-3 of RR No. 16-05 as

amended by Sec. 3 of RR No. 4-07]

ii. Exempt Real Property / Real Property used in Business Sec. 109(P) [Sec.
4.109-1(B)(1)(p) of RR No. 13-2018] as amended by RA 10963

e. VAT on Importations (Sec. 107)

i. Exempt Importations under Sec. 109 (as amended by RA 10963)

 ii. Transfer of Goods by Tax-exempt Persons (Sec. 107 B)

f. Transactions deemed sale (Sec. 106 B)

i. Rationale of Imposition

ii. Enumeration – Sec. 4.106-7 RR No. 16-05

iii. Tax Base of Transactions Deemed Sale

g. Rules for Certain Services

i. Common Carriers

1. Secs. 108, 109(S) 116, 117 and 118 (as amended by RA 10963)

2. Sec. 4.108-2 Nos. 11 and 12 of RR No. 16-05

3. Sec. 4.108-3 of RR No. 16-05

ii. Lease of Properties

1. Sec. 4.108-3 of RR No. 16-05

2. Lease of Residential Units

a. Secs. 109(Q), 109(BB), 116, 236(G) and 236(H) (as amended

by RA 10963)

b. Sec. 4.109.1(B)(1)(q) of RR No. 13-2018

iii. Professional Services

iv. Medical Services

1. Sec. 4.109-1 (B)(g) of RR No. 16-05

Philippine Healthcare Providers vs. CIR GR No. 168129 dated April 24, 2007
v. Cinema Operators / Proprietors

CIR vs. SM Prime Holdings, Inc. GR No. 183505 dated February 26, 2010

vi. VAT on Toll Fees

Diaz vs. The Secretary of Finance and CIR, GR No. 193007. July 19, 2011

vii. Franchise Grantees (PAGCOR)

PAGCOR vs. The BIR, G.R. No. 172087. March 15, 2011

III. ZERO RATED SALES OF GOODS AND SERVICES and VAT EXEMPT SALES

a. Nature of Zero Rated Sales

b. Zero Rated Sale of Goods (Sec. 106) (as amended by RA No. 10963)

i. Sec. 4.106-5 of RR No. 13-2018

ii. Provisions vetoed by the President

 c. Zero Rated Sale of Services (Sec. 108 B) (as amended by RA No. 10963)

i. Sec. 4.108-5 of RR No. 13-2018

ii. Provisions vetoed by the President

CIR vs. American Express GR No. 152609 dated June 29, 2005
CIR vs. Burmeister and Wain GR No. 153205 dated Jaunary22, 2007
CIR vs. Acesite GR No. GR No. 147295 dated February 16, 2007

d. Automatic zero-rate vs. Effectively zero-rate

CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9, 2005

e. Destination principle and cross border doctrine

CIR vs. American Express GR No. 152609 dated June 29, 2005
CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9, 2005
Coral Bay Nickel Corporation vs. CIR, GR No. 190506 dated June 13, 2016
Revenue Memorandum Circular No. 74-99

f. Zero Rated Sales vs. Exempt Sales

CIR vs. Cebu Toyo Corp. GR No. 149073 dated February 16, 2005

g. Enumeration of Exempt Transactions (Sec. 109 as amended by RA No. 10963) Sec.

4.109-1 (B) of RR Nos. 16-05, 4-07 and 13-2018

h. Exempt Persons vs. Exempt Transactions

CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005

IV. TRANSITIONAL AND PRESUMPTIVE INPUT TAX

Sec. 111
Sec. 4.111-1 of RR No. 16-05
Fort Bonifacio Development vs. CIR GR No. 158885 dated April 2, 2009
Fort Bonifacio Development vs. CIR GR No. 175707 dated November 19, 2014

V. VAT REFUND

a. Compare with Secs. 204 and 229

b. Grounds

c. Periods (as amended by RA 10963)

Sec. 112 of the NIRC (as amended by RA 10963)

RMC No. 17-2018
Sec. 112-1 of RR No. 13-2018
Contex vs. CIR GR No. 151135 dated July 2, 2004
Atlas Consolidated Mining vs. CIR GR Nos. 141104 and 148763 dated June 8, 2007
CIR vs. Mirant Pagbilao Corp. GR No. 172129 dated September 12, 2008
 CIR vs. San Roque Power (GR No. 187485 dated February 12, 2013) and other cases
(take note of old rule and compare with new provision under the TRAIN Law)
Microsoft Phils., Inc. vs. CIR, GR No. 180173 dated April 6, 2011
Coca-Cola Bottlers Philippines, Inc. vs. CIR, GR No. 222428 dated February 19, 2018

VI. OTHER MATTERS

a. Invoicing Requirements (Sec. 113)

i. Authority to Print

Silicon Phils., Inc. vs. CIR, GR No. 172378 dated January 17, 2011 (take note
of RMO No. 12-2013)

b. Information which must be contained [Sec. 113(B)]

c. Consequences of Issuing Erroneous VAT Invoice [Sec. 113(D)] [RR No. 4.113-4 of
RR No. 16-05]

d. Filing of Monthly and Quarterly VAT Returns and Payment of VAT (Sec. 114(A) as
amended by RA 10963)

e. Withholding VAT [Sec. 114 (C) as amended by RA No. 10963] [Sec. 4.114-2 of RR
No. 13-2018]

i. Government payments

ii. Services Rendered by Non-residents

iii. Withholding VAT Returns/Time of Payment

f. Power of the Commissioner to Suspend Business Operations (Sec. 5) [Sec. 4.115-1

of RR No. 16-05]

REMEDIES UNDER THE NIRC

A. Assessment and Collection of Internal Revenue Taxes

1. Tax Audit Process / Assessment Process

a. Overview
CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016
b. Letter of Authority / Audit Notice
Sec. 6(A) (as amended by RA 10963) and Sec. 13 of the NIRC
Revenue Audit Memorandum Order No. 1-00 (Service of Letter of Authority only)
Revenue Memorandum Order No. 43-90 dated September 20, 1990 (as cited in the SC
Cases)
Revenue Memorandum Order No. 44-2010 dated May 12, 2010
Revenue Memorandum Order No. 69-2010 dated August 11, 2010
CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010
CIR vs. De La Salle, GR No. 198841 dated November 9, 2016
Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017

c. Number of times a taxpayer may be audited

Sec. 235 of the NIRC
 2. Preservation of Books of Accounts and tax records
Sec. 235 of the NIRC
RR No. 17-2013 dated September 27, 2013
RR No. 5-2014 dated July 30, 2014

3. Tax Assessment in General

CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)
SMI-ED Technology Corporation, Inc. vs. CIR, GR No. 175410 dated November 12, 2014
CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016

4. Certain Powers of the Commissioner/BIR in relation to a tax audit/tax assessment:

a. Power to Obtain Information

Sec. 5(B)
Revenue Memorandum Circular No. 12-2018 dated February 22, 2018

b. Power of the Commissioner to assess deficiency tax / best evidence obtainable

Sec. 6(B) of the NIRC
Revenue Memorandum Circular No. 23-00 dated November 27, 2000
Bonifacia Sy Po vs. CTA (164 SCRA 524)
Fitness By Design, Inc. vs. CIR (GR No. 177982 dated October 17, 2008)

c. Power to issue Subpoena Duces Tecum

Secs. 5(C) and 266 of the NIRC
Revenue Memorandum Order No. 045-10 dated May 12, 2010
Revenue Memorandum Order No. 10-13 dated April 17, 2013
Revenue Memorandum Order No. 08-14 dated January 29, 2014

d. Power to Inquire into Bank Deposit Accounts

Sec. 6(F) of the NIRC, as amended by RA No. 10021

B. Prescriptive period to assess and collect

1. Prescription in General
a. Rationale/Construction/Interpretation
Republic vs. Ablaza (108 Phil 1105)
b. Counting of periods (Art. 13 of NCC vs. Sec. 31 of Revised Admin Code)
CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007)

2. Prescriptive period to Assess and Collect

a. Period for Assessment – General Rule/Ordinary Prescription
Sec. 203 of the NIRC
b. Period for Collection – General Rule
Sec. 222(c) of the NIRC

c. Matters that may affect the prescriptive period

1. Wrong Form/Return
Butuan Sawmill, Inc. vs. CTA (GR No. L-20601, February 28, 1966)
2. Amended Return
CIR vs. Phoenix (GR No. L-19727, May 20, 1965)
3. Defective Return
CIR vs. Gonzales (18 SCRA 757)
 4. False Return, Fraudulent Return, Omission to File a Return/Extraordinary
Prescription
Sec. 222(a) of the NIRC
Sec. 248(B) of the NIRC
Aznar vs. CTA (58 SCRA 519)
CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
CIR vs. Philippine Daily Inquirer, Inc., (GR No. March 22, 2017)
CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9, 2016)

5. Suspension of the prescriptive period

Secs. 223 and 91(B) of the NIRC
Republic vs. Ker (18 SCRA 208)
CIR vs. United Salvage and Towage (Phils.), Inc. (GR No. 197515 dated July 2, 2014)
-compare with Republic vs. Ker
Continental Micronesia, Inc. – Phil. Branch vs. CIR (CTA Case No. 6191, March 22,
2006)
BPI vs. CIR (GR No. 139736, October 17, 2005)
CIR vs. BASF Coating + Inks Phils., Inc. (GR No. 198677 dated November 26, 2014)

6. Waiver of the Statute of Limitations

New Requirements under RMO 14-2016 dated April 4, 2016
Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004)
CIR vs. Kudos Metal (GR No. 178087, May 5, 2010)
RCBC vs. CIR (GR No. 170257, September 7, 2011)
CIR vs. Next Mobile, Inc. (GR No. 212825 dated December 29, 2015)
Asian Transmission Corporation vs. CIR, GR No. 230861 dated September 19, 2018

7. Estoppel
CIR vs. Suyoc (104 Phil. 819)

C. Requisites of a valid assessment

Sec. 228 of the NIRC
RR No. 12-99, as amended by RR No. 18-2013, further amended by RR No. 7-2018

1. Due Process and Pre-assessment Notice

Collector vs. Benipayo (4 SCRA 182)
CIR vs. Enron Subic (GR No. 166387 dated January 19, 2009)
CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)
A Brown Co., Inc. vs. CIR (CTA Case No. 6357, June 7, 2004)
CIR vs. Menguito (GR No. 167550, September 17, 2008)
CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010
CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9, 2016)
Samar-I Electric Cooperative vs. CIR, GR No. 193100 dated December 10, 2014
CIR vs. Avon Products Manufacturing, Inc., GR Nos. 201398-99 dated October 3, 2018

2. Modes of Service of Assessments

3. When Assessment Deemed made / Assessments sent by registered mail
Nava vs. CIR (GR No. L-19470, January 30, 1965)
Barcelon, Roxas Securities vs. CIR, (GR No. 157064, dated August 7, 2006)

D. Protesting an assessment
 1. Reinvestigation vs. Reconsideration
RR No. 18-2013
BPI vs. CIR (GR No. 139736, October 17, 2005)
2. Contents of a valid protest
RR No. 18-2013
3. Protest against a PAN / FAN
Sec. 228 and RR No. 18-2013
4. Submission of relevant documents / 60-day period
RR No. 18-2013
Prulife of UK Insurance Corp vs. CIR (CTA Case No. 6774 dated September 11, 2007)
CIR vs. First Express Pawnshop (GR Nos. 172045-06 dated June 16, 2009)

E. Decision / Inaction on the Pending Protest

1. The 180-day period to Decide

Sec. 228
RR No. 18-2013

2. Final Decision on a Disputed Assessment (“FDDA”)

a. Contents of a Valid FDDA
RR No. 18-2013
CIR vs. Liquigaz Philippines Corporation, GR No. 215534 dated April 18, 2016

3. Actions tantamount to a Denial of the Pending Protest

Oceanic Wireless Network, Inc. vs. CIR (GR No. 14380, dated December 9, 2005)
Advertising Associates vs. CA (133 SCRA 765)
CIR vs. Algue (158 SCRA 9)
Yabes vs. Flojo (GR No. L-46954, July 20, 1982)
CIR vs. Union Shipping (185 SCRA 547)
CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001)

4. Inaction during the 180-day period / Appeal to the Court of Tax Appeals
Sec. 228
RR No. 18-2013
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008
Lascona Land vs. CIR (GR No. 171251, March 5, 2012)
RCBC vs. CIR (GR No. 168498, April 24, 2007)
PAGCOR vs. BIR, GR No. 208731 dated January 27, 2016
Fishwealth Canning Corp. vs. CIR (GR No. 179343 dated January 21, 2010)
Allied Banking Corporation vs. CIR (GR No. 175097 dated February 5, 2010)

5. Administrative Appeal with the CIR

RR No. 18-2013

6. Assessment Becomes Final and Executory for Failure to Protest /Appeal

RCBC vs. CIR (GR No. 168498, April 24, 2007)
Marcos II vs. CA (GR No. 120880 dated June 5, 1997)
Republic vs. Ker (18 SCRA 208)
Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004)
CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010
 CIR vs. Concepcion (22 SCRA 1058)

F. Collection / Remedies of the Government

1. Prescriptive period to collect

Secs. 222(c) and 222(a)

2. Administrative remedies / Summary Remedies

Secs. 205-217
Republic vs. Hizon (GR No. 130430. December 13, 1997)
CIR vs. Hambrecht & Quist Philippines, Inc. (GR No. 169225 November 17, 2010)

a. Distraint of personal property

Secs. 205-207, 217, 208-209, 210, 212, NIRC
Revenue Memorandum Circular No. 5-01 dated February 19, 2001

b. Levy of Real Property

Secs. 205-207, 217, 208-209, 213-214, NIRC

c. Forfeiture
Sec. 215, NIRC
Castro vs. CIR (GR No. L-12174, April 26, 1962)

d. Tax lien
Sec. 219, NIRC

Republic vs. Enriquez (166 SCRA 608)

CIR vs. NLRC (238 SCRA 42)
Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145)

e. No injunction to restrain collection of taxes

Sec. 218, NIRC
Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008
Revenue Memorandum Order No. 42-10 dated May 4, 2010.
Spouses Pacquiao vs. the CTA, GR No. 213394 dated April 6, 2016.
Tridharma Marketing Corporation vs. CTA, GR No. 215950 dated June 20, 2016

3. Judicial Remedies
Sec. 205
Secs. 220-221, NIRC
Republic vs. Hizon (GR No. 130430 December 13, 1997)
Fernandez Hermanos vs. CIR (GR No. L-21551, September 30, 1969)
PNOC vs. CIR (GR No. 109976, April 26, 2005)

G. Statutory Offenses and Penalties

1. Civil Penalties / Surcharge / Interest

Secs. 247-251, NIRC
RR No. 12-99, as amended by RR No. 18-2013

a. Mandatory Imposition of Penalties

 Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996)
BPI vs. CIR (GR No. 137002, July 27, 2006)

b. 25% and 50% Surcharge

Sec. 248 and RR No. 12-99 as amended by 18-2013
Castro vs. CIR (GR No. L-12174, April 26, 1962)

c. Applicable Interest Rate

Sec. 249 as amended by RA 10963
RR No. 21-2018 dated September 14, 2018

d. When penalties may be waived

Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11, 2006)

2. Crimes / Offenses / Penalties / Forfeitures

Secs. 220-221, 224-226, NIRC
Secs. 253-281, NIRC
Revenue Memorandum Circular No. 101-90 dated November 26, 1990

a. Precondition before a criminal case may be filed

Ungab vs. Cusi (97 SCRA 877)
CIR vs. CA (257 SCRA 200)
CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)

b. Compromise Penalty
a. Nature and enforcement
Revenue Memorandum Order No. 7-15 dated January22, 2015
CIR vs. Liangga Bay Logging (GR No. L-35266, January 21, 1991)

c. Elements of tax evasion

CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September 14, 2004)

d. Persons liable in case taxpayer is a juridical entity

e. Payment of tax in criminal cases
Sec. 253 (a), NIRC
Sec. 205 (b) last paragraph

Republic vs. Patanao (GR No. L-22356, July 21, 1967)

Castro vs. CIR (GR No. L-12174, April 26, 1962)

f. Probable Cause
BIR vs CA, GR No. 197590 dated November 25, 2015
g. Crimes under Secs. 254 and 255
h. Civil liability in criminal cases
People vs. Mendez (CTA Criminal Case Nos. O-013 &O-015, January 5, 2011)
People vs. Kintanar (CTA Criminal Case No. O-030 dated August11, 2010)
People vs. Santos (CTA Criminal Case No. O-012dated January16, 2013)
People vs. Spouses Castillo (CTA CTA Criminal Case No. O-219 dated October 7, 2013)

i. Prescription of violations of the NIRC

Lim vs. CA (190 SCRA 616)
H. Claims for refund and credit of taxes/Remedy AFTER payment

1. Basis of Tax Refunds

CIR vs. Acesite Phils. (GR No. 147295, February 16, 2007)

2. Taxpayer/withholding agent
CIR vs. Procter & Gamble (204 SCRA 377)
CIR vs. Smart Communications, Inc. (GR Nos. 179045-46, August 25, 2010)
Honda Cars Philippines, Inc. vs. Honda Cars Technical Specialist and Supervisors Union
(GR No. 204142 dated November 19, 2014)
CIR vs. Philippine Associated Smelting and Refining Corporation, GR No. 186223 dated
October 1, 2014

3. Requisites for a valid claim for refund / Creditable Withholding Tax Cases
Koppel (Phils) vs. CIR (GR No. L-10550, September 19, 1961)
CIR vs. Meralco, GR No. 181459 dated June 9, 2014
CIR vs. Far East Bank GR No. 173854 March 15, 2010
CIR vs. Concepcion (22 SCRA 1058)
CIR vs. CA (234 SCRA 348)
PNB vs. CIR (GR No. 206019 dated March 18, 2015
CIR vs. PNB, GR No. 180290 dated September 29, 2014
CIR vs. Cebu Holdings, Inc., GR No. 189792 dated June 20, 2018

4. Refunds where written claim is not needed

Sec. 204 (3), NIRC
Sec. 229, NIRC
Vda de San Agustin vs. CIR, GR No. 138485, September 10, 2001

5. Refunds of Corporate taxpayers/Irrevocability Rule

Sec. 76, NIRC
ACCRA Investments vs. CA (204 SCRA 957)
CIR vs. TMX Sales (205 SCRA 184)
Systra Phils. Inc. vs. CIR (GR No. 176290, September 21, 2007)
Sithe Phils. Holdings vs. CIR (CTA Case No. 6274, April 4, 2003)
BPI-Family Savings Bank, Inc. vs. CA, CTA and CIR (GR No. 122480, April 12, 2000)
Philam Asset Management, Inc. vs. CIR (GR Nos. 156637/162004, December 14, 2005)
CIR vs. BPI (GR No. 178490, July 7, 2009)
Asia World Properties vs. CIR (GR No. 171766, July 29, 2010)
IMPSA Construction Corporation vs. CIR (CTA EB Case No. 685, May 24, 2011)
CIR vs. Rhombus Energy Incorporated (CTA EB Case No. 803, October 11, 2012)
Winbrenner & Inigo Insurance Brokers, Inc. (GR No. 206526 dated January 28, 2015)
Republic vs. Team (Phils.) Energy Corporation, (GR No. 188016 dated January 14, 2015)
– read also concurring opinion of CJ Sereno
University Physicians Services, Inc. – Management vs. CIR, GR No. 205955 dated March
7, 2018
Rhombus Energy, Inc. CIR, GR No. 206362 dated August 1, 2018

6. Rule in case of Merger/Corporate taxpayers contemplating dissolution

Sec. 52 (C), NIRC
BPI vs. CIR (GR No. 144653, August 28, 2001)

7. When 2 year period does not apply

 CIR vs. PNB (GR No. 161997, October 25, 2005)

8. Remedy of the taxpayer

Sec. 229, NIRC
RA No. 9282, as amended by RA No. 9503
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008

a. CIR renders a decision

b. CIR does not render a decision
c. Appeal to the CTA

9. Interest on Tax Refunds

BDO vs. Republic, GR No. 198756 dated August 16, 2016
Sec. 79(C)(2)

10. Issuance of Tax Credit Certificate

Secs.203 (C), 230, NIRC
RR No. 05-00 dated July 19, 2000
RR No. 14-11 dated July 29, 2011

a. Tax Credit, Tax Credit Certificate, Tax Debit Memo

b. Sources of Tax Credit
c. Uses of Tax Credit
d. Sale / Assignment of Tax Credit
e. Validity, Conversion and Validation
f. Forfeiture of Cash Refunds / Tax Credit

11. Erroneously Refunded Tax

Guagua Electric Light vs. CIR (GR No. L-23611, April 24, 1967)

I. The Court of Tax Appeals

RA No. 9282, as amended by RA No. 9503
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as amended on
September 16, 2008

1. Why was the CTA created?

Philippine Refining Co. vs. CA (256 SCRA 661

2. Weight given to CTA decisions

3. Composition of the Court (No. of Divisions and Justices, the CTA En Banc)
4. Reversal of Decisions of CTA Division
5. Jurisdiction of CTA Division
a. Constitutionality/Validity of Regulations/Tax Laws
Philamlife vs. Secretary of Finance (GR No. 210987 dated November 24, 2014)
CIR vs. CTA and Petron Corporation, GR No. 207843 dated July 15, 2015
Banco De Oro vs. Republic (GR No. 198756, January 13, 2015) and resolution
on the Motion for reconsideration (GR No. 198756 dated August 16, 2016)

b. Civil/Criminal Cases
Adamson vs. CA (GR No. 120935, May 21, 2009)
 CIR vs. Hambrecht & Quist Philippines, Inc., G.R. No. 169225, November 17,
2010
City of Manila vs. Grecia-Cuerdo, GR No. 175723 dated February 4, 2014.
CIR vs. BPI, GR No. 224327 dated June 11, 2018
Gaw, Jr. vs. CIR, GR No. 222837 dated July 23, 2018

c. BIR vs. Government Agency

Power Sector Assets and Liabilities Management Corporation vs. CIR, GR No.
198146 dated August 8, 2017
CIR vs. Secretary of Justice, GR No. 209289 dated July 9, 2018

6. Jurisdiction of CTA EB
Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017

7. Suspension of Collection of Tax

8. Appeal to the SC

J. Abatement of Tax / Tax Compromise

Secs. 7 and 204, NIRC
RR No. 13-01
RR No. 30-02
RR No. 8-04
RR No. 4-12
RR No. 9-13

A. Authority of CIR to abate taxes

1. Grounds for abating taxes and penalties
2. Conditions
Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017

B. Power to compromise
1. Cases that can be compromised
2. Cases that cannot be compromised
3. Timing of payment of amount offered as compromise
4. Basis for acceptance of compromise settlement and rates
CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)