Tax Law

1

2018 GOLDEN BEACON TAXATION Dean 1.

GENERAL

By: MANUEL R. BUSTAMANTE

PRINCIPLES

TAXES are the enforced contribution by the law-making body of the state by support of the government and all public

from persons virtue of its needs.

and property levied sovereignty for the

Essential

characteristics of taxes 1. It is an enforced contribution 2. It is proportionate in character 3. It is levied by the law-making body of the state 4. It is levied for public purpose 5. It is generally payable in money 6. It is levied on persons and property by the State jurisdiction over the person or property. NATURE

OF

THE

TAXING

which has

POWER

It is inherent in sovereignty - The power of taxation is inherent in sovereignty as an incident or attribute thereof, being essential to the existence of every government. It exists apart from the Constitution and without being expressly conferred by the people. Constitutional provisions concerning operate as grants of the power to the limitations upon a power which would limit. It is legislative in character and exclusively legislative and cannot judicial branch of government. Hence,

the power of taxation do not government . They merely constitute otherwise be practically without

The be only

power of taxation is pecuniary exercised by the executive or Congress can impose taxes.

THE

POWER TO TAX INCLUDES THE POWER TO DESTROY in the sense that a lawful tax cannot be defeated just because its exercise would be destructive of his business for otherwise every lawful tax would become unlawful and no taxation whatever could be levied . The tax if in accordance with the limitations , constitutional or otherwise, cannot be judicially restraint merely because of its prejudicial results to the taxpayer. THE

POWER

TO

TAX IS NOT THE POWER WHILE THIS COURT SITS

TO

DESTROY

This should be understood as referring to a situation imposed violates its limits and injustice, not sanctioned by law is done to the taxpayer.

Taxes

cannot

be

subject

of

set-off

or

where the tax the fundamental

compensation

Taxes are not in the nature of contracts between the parties but grow out of duty to and are the positive acts of the government to the making and enforcement of which, the personal consent of the individual taxpayers is not required . A taxpayer cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected . The collection of a tax cannot await the results of the lawsuit against the government. Exceptions: 1. the government and the taxpayer each other; 2. it is due and demandable; 3. it is fully liquidated.

are

creditors

and

debtors

of

2

*** A taxpayer cannot refuse to pay his taxes when they fall due simply because he has a claim against the government or that the collection of the tax is contingent on the result of the lawsuit it filled with the government. (Philex Mining Corp. vs. CIR, G.R. No. 125704, August 28, 1998).

*** A corporation’s outstanding claims for reimbursement against the Oil Price Stabilization Fund (OPSF) cannot be offset against its contributions to said fund. PD 1956, as amended, explicitly provides that the source of the OPSF is taxation. A taxpayer may not offset taxes due from claims that he may have against the Government. Taxes and debts cannot be the subject of compensation because the Government and the taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not a debt , demand, contract or judgment as is allowable to be set off . (Caltex Philippines vs. Commission

on

Audit,

G.R.

No.

92585,

May

8,

1992).

*** No compensation is legally authorized where it appears that the parties involved are not creditors and debtors of each other (Art. 1279, Civil Code). In the case at bar , what was sought to be set off against the taxpayer’s real estate tax liability to the City of Pasay was the amount of money that the taxpayer was supposed to receive as payment for his property that was expropriated by the National Government. (Francia vs. Intermediate Appellate Court, G.R. No. L-67649, June 28, 1988). *** In this case, what appeared to be due and demandable debt of the Government to the estate of the late Walter Scott Price , as payment for the latter’s services, was allowed as a set-off against the transfer taxes due from the decedent’s estate. The Court opined, citing Arts. 1279 and 1290 of the Civil Code , that when two obligations are both due and demandable of the two obligations takes effect by operations of law. (Domingo vs. Garlitos, G.R. No. L-18994, June 29, 1963). STAGES IN IMPOSITION OF TAXES 1. LEVY - enactment of tax laws 2. ASSESSMENT - ascertaining the amount 3. COLLECTION - getting of tax imposed

of

tax

due

BASIC PRINCIPLES OF SOUND TAX SYSTEM 1. FISCAL AUTONOMY - sources of revenue must be sufficient to meet the demands of public expenditures. 2. THEORETICAL JUSTICE tax burden should be in proportion to taxpayer’s ability to pay. 3. ADMINISTRATIVE FEASIBILITY - tax must be clear and concise; capable of proper enforcement; not burdensome; convenient to time and manner of payment. **** Violation of theoretical justice doctrine would be fatal because the Constitution mandates that taxation is equitable. An unequitable tax measure, however, may be declared void because of the constitutional provision requiring taxation to be equitable.

TAXATION

MUST

BE

To be Uniform - persons and taxed at the same rate. To be Equitable ability to pay.

tax

UNIFORM

properties

should

be

of

imposed

AND EQUITABLE the in

same

class

proportion

should to

be

taxpayer’s

*** Uniformity in taxation means that all taxable articles or kinds of property of the same classes shall be taxed at the same rate . A tax is uniform when it operates with the same force and effect in every place where the subject of it is found . (Churchill vs. Concepcion, G.R.

No.

11572,

September

*** Uniformity of merely requires situated are to vs.

Del

Rosario,

G.R.

22,

1916).

taxation, like the kindred concept of equal protection, that all subjects or objects of taxation, similarly be treated alike both in privileges and liabilities . (Tan No.

109289,

October

3,

1994).

*** Taxation is said to be equitable when its burden falls on those better able to pay. Taxation is progressive when its rate goes up depending on the resources of the person affected . (Reyes vs. Almanzor, G.R. 49839-46, April 26, 1991).

3

DIRECT

TAXES

vs.

INDIRECT

DIRECT TAXES are demanded from the the tax and which he cannot shift estate tax & donor’s tax.

pay tax,

TAXES

very person who to another . e.g. -

should income

INDIRECT TAXES are demanded from one person with expectation that he can shift the burden to someone else, not a tax but as part of the purchase price . e.g. value added excise and percentage tax.

the as tax,

*** The sales tax that is passed on to the purchaser as part of the purchase price of the commodity is tax on the seller, and not the buyer. Hence, if the buyer happens to be tax-exempt , the seller is nonetheless liable for the payment of the tax as the same is a tax not on the buyer but actually a tax on the seller. When the consumer or end-user of a manufactured product is taxexempt, such exemption covers only those taxes for which such consumer or end-user is directly liable. Indirect taxes are not included. Hence, the manufacturer cannot claim exemption from the payment of sales tax; neither can the consumer nor buyer of the product demand the refund of the tax that the manufacturer might have passed. (Philippine Acetylene Co. vs. Commissioner of Internal Revenue, G.R. No. L-19707, August

17,

1967).

*** Where but the contractor contractee. February

the exemption from indirect tax is evident intention is to exempt the may no longer shift or pass

27,

(Commissioner 1987).

DIFFERENCE

of

Internal

BETWEEN

Revenue

PHIL.

vs.

John

ACETYLENE

given to contractor on any Gotamco

&

AND

the so tax Sons,

contractee , that the to the G.R.

GOTAMCO

L-31092,

CASE

In the Phil. Acetylene case , the Napocor is exempt from “direct taxes” while in Gotamco case, the WHO is exempt from both “direct and indirect taxes .” Hence, if the buyer is exempt from indirect taxes, the seller cannot shift the tax to the former and as such he can avail of such benefit , but if the buyer is only exempted from “taxes,” the seller cannot allege the exemption for his benefit because the exemption on the part of the buyer is only with respect to direct taxes and not indirect taxes.

COMMISSIONER

vs.

CENTRAL

456 SCRA 414,

G.R.

LUZON No.

DRUG

159647,

CORPORATION

April 15, 2005

The 20 percent discount required by the law to be given to senior citizens is a tax credit , not merely a tax deduction from the gross income or gross sale of the establishment concerned. A after A Q: If which BIR a

tax the tax in to tax

credit is used by the tax has been computed; deduction

a taxable apply the refund in

before

the

private

tax

is

establishment

only

computed.

year a drug store has no tax due tax credits , can the drug store claim lieu of tax credit? Explain.

on from

A: NO, the drugstore cannot claim from the BIR a tax refund in lieu of tax credit. There is nothing in the law that grants a refund when the drugstore has no tax liability against which the tax credit can be used . A tax credit is in the nature of a tax exemption and in case of doubt, the doubt should be resolved in strictissimi juris against the claimant. Q: Can discount

the from

BIR require their gross

the drugstore income?

to

deduct

the

amount

of

the

A: NO. Tax credit which reduces the tax liability is different from a tax deduction which merely reduces the tax base. Since the law allowed the drugstores to claim in full the discount as a tax credit, the BIR is not allowed to expand or contract the legislative mandate.

4

Q: If a drugstore closes its business due to losses without being able to recoup the discount , can it claim reimbursement of the discount from the government on the ground that without such reimbursement, the law constitutes taking of private property for public use without just compensation? Explain. A: A drugstore, closing its business due to losses , reimbursement of the discount from the government . If continues to operate at a loss and no other compelling it to close shop, the credit can never and will be lost altogether.

cannot claim the business taxes , thus be applied

MANILA MEMORIAL PARK, INC. vs. DSWD & DOF SECRETARY G.R. No. 175356,

December 3, 2013, 711 SCRA 302

FACTS:

Upon the enactment of RA 9257 amending Sec. 4 of RA 7432 otherwise known as Expanded Senior Citizen Act , the DSWD and DOF issued IRRs allowing business establishment to claim 20% discount given to senior citizens as a tax deduction. Petitioner questions said tax treatment as it contravenes to the former Sec. 4 (a) of RA 7432 which allows 20% discount given to senior citizens as a tax credit . It further claims that allowing the 20% tax deduction scheme would violate Sec. 9 (1) Art. III of the Constitution which provides that “private property shall not be taken for public use without just compensation.

ISSUE:

Whether claimed as a constitutional.

or

not tax

the 20% deduction

discount to senior citizens that may be by private establishments, valid and

HELD:

YES. The 20% senior citizen discount is an exercise of public power where just compensation is not warranted contrary to the claim that it is an exercise of eminent domain which would render it unconstitutional because it is not a peso to peso reimbursement of the 20% discount given to senior citizens. The 20% discount is establishments to price their class of individuals, senior preferential concern.

TAX

a regulation products and citizens, for

EXEMPTION

vs.

affecting the ability of services relative to a which the Constitution

TAX

private special affords

AMNESTY

Tax Exemption is an immunity from the civil liability only . It an immunity or privilege, a freedom from a charge or burden which others are subjected. Tax Amnesty is an administrative liabilities arising general pardon given to all periods, hence, of retroactive

immunity from all criminal , from non-payment of taxes . taxpayers . It applies only to application.

is to

civil and It is a past tax

*** The salaries of justices and judges in the judiciary are taxable . The clear intent of the Constitutional Commission was to delete the proposed express grant of exemption from payment of income tax to members of the judiciary, so as to give substance to equality among the three branches of Government . (Nitafan vs. Commissioner of Internal Revenue,

G.R. No. L-78780, July

23,

1987).

*** The exemption from income tax on base-connected income of non-resident American base personnel under the U.S. Bases Treaty does not extend to the income realized from the sale by an American civilian base employee of his car inside the base to another American national. (Reagan vs. CIR, G.R. No. L-26379, December 27, 1969).

MANILA

INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS 495 SCRA 591,

FACTS:

G.R. No. 155650,

July

20,

2006

Upon the enactment of the 1991 Local Government Code , the tax exemption on real property tax enjoyed by the government-owned and controlled corporations like MIAA has been withdrawn . The City of Parañaque filed notice of assessment to MIAA to settle its tax obligations.

5

ISSUE: exempt

Whether or not from real property

the tax.

land

and

buildings

of

MIAA

are

HELD:

YES. MIAA is not a government-owned and controlled corporation but an instrumentality of the national government and thus exempt from local taxation. The real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax . Only the portions of the Manila International Airport Authority leased to private parties are subject to tax.

LUNG

CENTER

OF

THE

433 SCRA 119,

PHILIPPINES

G.R. No. 144104,

vs.

June

QUEZON

29,

CITY

2004

FACTS:

The Lung Center of the Philippines was established by virtue of PD 1823 as charitable institution . It is the registered owner of a parcel of land with a hospital in the middle , located at Quezon City. A big space at the ground floor is being leased to private parties, for canteen and small store spaces, and to medical or professional practitioners who use the same as their private clinics . A big portion of the land is being leased for commercial purposes to a private enterprise. The Lung Center accepts paying and non-paying patients . It also renders medical services to out-patients, both paying and non-paying. It also receives annual subsidies from the government. Both the land the hospital building were assessed for real property taxation.

ISSUE:

Whether Lung Center of the Philippines is within the context of the Constitution and thus exempt from real property taxes.

a its

charitable institution real properties are

HELD:

YES. To be exempt from real property tax , the land and buildings of Lung Center of the Philippines should be used actually , directly and exclusively for charitable purposes. Lung Center of the Philippines as a charitable institution does not lose its character as such and its exemptions from taxes simply because it derives income from paying patients, rentals of private persons and receives subsidies from the government so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve and no money inures to the private benefit of the persons managing or operating the institution.

TAX

AVOIDANCE

vs.

TAX

EVASION

A Tax Avoidance is the exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income, in order to avoid or reduce tax liability. Tax avoidance is also called TAX MINIMIZATION. A Tax Evasion is the use by the taxpayer of illegal or fraudulent means to defeat or lessen the payment of a tax. Tax evasion is punishable by law. DISTINCTION: Evasion should be applied to the accomplished by breaking the letter of the tax to report a taxable item, for example.

escape from law ; deliberate

taxation omission

Avoidance covers escape accompanied by legal procedures which be contrary to the intent of the sponsors of the tax laws nevertheless do not violate the letter of the law. Whereas sidesteps it.

the

tax

evader

breaks

the

law ,

the

tax

may but

avoider

*** A tax return which does not correctly reflect income may only be false but not necessarily fraudulent where it appears that the return was not prepared by the taxpayer himself but by his accountant and that after the original deficiency tax assessment was made , the same was subsequently reduced by the BIR by a substantial amount . Hence, the 50% surcharge for fraud may be dispensed with but the tax may still be assessed within the prescriptive period of ten years from discovery thereof. (Aznar vs. CTA, G.R. No. L-20569, August 23, 1974).

6

EQUAL

PROTECTION

CLAUSE

**** The remission or condonation of taxes due and payable to the exclusion of taxes already collected does not constitute unfair discrimination. Each set of taxes is a class by itself and the law would be open to attack as a class legislation only if all taxpayers belonging to one class were not treated alike. (Juan Luna Subdivision, Inc. vs. Sarmiento, G.R. No. L-3538, May 28, 1952).

**** A law (RA 3843) which imposes a preferential franchise tax rate of 2% on a particular franchise grantee while other franchise grantees are subject to 5% is not violative of the equal protection or equality of taxation rule in the Constitution. The legislature has the inherent power not only to select the subjects of taxation but also to grant tax exemptions . (Commissioner of Internal Revenue vs. Lingayen Gulf, G.R. No. L-23771,

August 4, 1988).

**** A

local tax which levies an ad valorem tax on motor vehicles registered in Manila without also taxing those which are registered outside the city but which enter the city and use its streets occasionally violates the rule on the equality of taxation. (Association of Customs Brokers vs. Municipality Board, G.R.

No. L-4376,

May

22,

1953).

NON-IMPAIRMENT

OF

CONTRACTS

**** Where a mining concession was granted under a Royal Decree and where it appears that under said decree , no other taxes except mentioned therein shall be imposed on mining and metallurgical industries , the levy of a tax on said mining claim plus an ad valorem tax on mineral output under a subsequent law (Act 1189) constitute an impairment of contract because a mining concession is a contract . (Casanovas vs. Hord, G.R. No. L-3473, March 22, 1907).

DOUBLE DOUBLE TAXATION means with the same jurisdiction or same year or taxing period.

TAXATION

taxing taxing

twice district

by for

Where double taxation occurs, the taxpayer uniformity rule or the equal protection guarantee.

the the may

same taxing same purpose seek

relief

authority in the under

the

**** Double taxation is not prohibited by the Constitution and there is double taxation when the same person is taxed by the same jurisdiction for the same purpose. This is not the case at bar , the ordinance in question imposes a tax on the sale or disposals of every “bottle or container” of liquor or intoxicating beverages, and as such is a typical tax or revenue measure, whereas the fee it pays annually is for a “second-class wholesale liquor license,” which is a license to engage in the business of wholesale liquor in Cebu City , and accordingly constitutes a regulatory measure, in the exercise of police power . (San Miguel Brewery vs. City of Cebu, G.R. No. L-20312, February 26, 1972).

SITUS

OF

Situs of taxation is the state tax a person, property or interest. place of taxation. The 1. 2. 3. 4. 5. 6. 7.

situs

of

taxation

of

the

TAXATION or In

country which has jurisdiction to short, situs of taxation is the

following:

Real Property tax - the place where it is located. Tangible Personal Property tax - where it is physically located. Intangible Personal Property tax - taxable in the domicile of the owner under the maxim of “Mobilia Seguuntur Personam” Income Tax - source of income Poll or Residence Tax - residents or domiciled of the state whether citizen or not Transfer Tax - where the transferor is a citizen or resident or where the property is located Business, Occupation and Transaction - place where the act is done or occupation is pursued.

7 **** The absence of flight operations to and from the Philippines is not determinative of the source of income or the situs of income taxation. The test of taxability is the “source” and the source of an income is that activity which produced the income . Income from the sale of tickets was derived from the Philippines. The word “source” conveys one essential idea, and that of origin, and the origin of the income herein is the Philippines. (CIR vs. British Overseas Airways Corp, G.R. No. L-657773-74, April 30, 1987) .

NON-RETROACTIVITY

OF

RULINGS

Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding section , or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayer except in the following cases: a) where the taxpayer deliberately misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue. b) where the facts subsequently Internal Revenue are materially different the ruling is based. c)

where

the

taxpayer

CIR

vs.

acted

in

BENGUET

gathered by from the bad

application

faith.

495

SCRA 59

Whether or not Revenue Regulations should when they are prejudicial to the taxpayer.

HELD:

NO. The Tax Code or reversal of any rules of Internal Revenue shall revocation, modification or Clearly, the prejudice to VAT Ruling No. 008-92 is

BANK G.R.

have

retroactive

explicitly states that “Any revocation, modification, and regulations promulgated by the Commissioner not be given retroactive application if the reversal will be prejudicial to the taxpayer . respondent by the retroactive application of patently evident.

TAX TREATY DEUTSHE

Bureau of on which

CORPORATION

G.R. No. 145559, July 14, 2006,

ISSUE:

the facts

vs.

RMO

vs. COMMISSIONER OF INTERNAL REVENUE

No. 188550,

August 19, 2013, 704 SCRA 216

FACTS:

Deutshe Bank filed an administrative claim for refund with the BIR TAID on its 15% BPRP upon RBU profits and at the same time requested the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty. The claim for a refund was denied by the BIR on the ground that the application for a tax treaty relief was not filed with ITAD prior to the payment of Deutshe Bank of its BRPT and actual remittance of its branch profits to DB Germany or prior to its availment of the preferential rate of 10% under the RP-Germany Tax Treaty provisions. The tax court ruled that Deutshe Bank mandated under Section III paragraph (2) of (RMO) No. 1-2000.

ISSUE: deprive

Whether the Deutshe Bank

violated the 15 day Revenue Memorandum

period Order

failure to strictly comply with RMO No. 1-2000 of the benefits of the RP-Germany Tax Treaty.

will

HELD: the are

NO. Tax treaties are entered into to minimize, if not eliminate harshness of international juridical double taxation , which is why they also known as double tax treaty or double tax agreement.

The BIR must not impose additional requirements that should negate the availment of the reliefs provided for under international agreements . More so, when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the benefits under said agreement. Logically, non-compliance with international relations and unduly

tax treaties discourages

has negative implications foreign investors.

on

8

INQUIRE

INTO

BANK

DEPOSITS

As a general rule, the Commissioner of Internal Revenue has authority to inquire into the bank deposits of any person as provided RA 1405. However, there are some exceptions: 1) of

inquire into determining

the the

bank deposits gross estate

of of

a decedent for such decedent;

the

no in

purpose

2) in case a taxpayer offers to compromise the payment of his tax liabilities on the ground that his financial position demonstrates a clear inability to pay assessed , his offer shall not be considered unless he waives his privilege under the said law and such waiver shall serve as authority of the Commissioner to inquire into the bank deposits of said taxpayer.

COMMISSIONER

AUTHORITY

TO

COMPROMISE

Q: Under what conditions may the Commissioner of Internal authorized to compromise the payment of internal revenue tax? A: The compromise 1) the

Commissioner the payment

A reasonable taxpayer exists;

2) The inability to

of of

Internal Revenue may any internal revenue tax

doubt or

as

to

the

financial position of the pay the assessed tax.

validity

of

taxpayer

1) The excessively

of

tax or any assessed; or

2) The administration the collection of the

2. T A X Q: When

Internal portion

Revenue

may

thereof

and collection amount due.

the

of abate

claim a

Internal

be to

against clear

Revenue

or

cancel

to

be

unjustly

involved

do

not

appears

costs

be authorized where:

demonstrates

Q: Under what conditions may the Commissioner authorized to abate or cancel a tax liability? A: The Commissioner liability when:

Revenue

a

be tax

or

justify

RE M E D I E S will

the

3-year

prescriptive

period

to

assess

begin to

run? A: Payment made ON or BEFORE last day of payment fixed by law. period starts to run ON THE LAST DAY FOR PAYMENT OF TAX. Payment made AFTER the last period starts to run from

day fixed actual date

by law of payment.

RULES ON PRESCRIPTIVE PERIODS OF ASSESSMENT & COLLECTION 1. The prescriptive period three years. Exceptions:

of

assessment

of

internal

a) Where false or fraudulent returns are to file return, in which case the tax within ten (10) years after discovery of or omission. b) When signed by before the

revenue

taxes

filed or omission may be assessed the falsity , fraud

there is a waiver of the statute of limitations , the taxpayer and accepted by the commissioner lapse of three (3) year period.

is

9 2. The three (3) year period run “on the date of filing or whichever comes later.”

for assessment commences when the return is

3. The prescriptive period for collection is counted from the date of assessment either proceedings or judicial proceedings.

five by

(5)

to due

years, summary

Where no return filed, or the return filed was false or fraudulent, collection should be made within ten (10) years from the date of discovery of the failure to file returns or of the falsity or fraud in the return , if there is no prior assessment. Collection should be by judicial proceedings.

ABSENCE OF LETTER OF AUTHORITY (LOA) MEDICARD PHILIPPINES, INC. vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 222743, April 5, 2017, 822 SCRA 444

FACTS: Payment

Medicard System.

filed

Upon finding and VAT returns, Assessment Notice deficiency VAT.

its

Quarterly

VAT

filed and

through

Electronic

Filing

and

some discrepancies between Medicard’s Income Tax Return the CIR issued on September 20, 2007 a Preliminary (PAN) and Letter Notice (LN) against Medicard for

On January 4, 2008, Medicard (FAN). The CIR argued that since medical and/or hospital service, but services are not VAT exempt. Medicare include actual

Returns

received the Final Assessment Notice Medicard does not actually provide merely arranges for the same, its

its protest against the FAN direct rendition of medical and

arguing that its services laboratory services.

On February 14, 2008, the CIR issued a Tax Verification Notice (TVN) to verify the supporting documents of Medicard’s protest . Medicard submitted additional supporting documentary evidence in aid of its protest on March 18, 2008. On June 19, assessment denying

2009, Medicard received Medicard’s protest.

On July 20, 2009, Medicard filed a contending that the absence of a Letter right to due process.

CIR’s

final

petition for of Authority

decision review (LOA)

on

disputed

before CTA violated its

ISSUE Whether Medicard’s right

the to

absence of due process.

the

Letter

of

Authority

(LOA)

violates

RULING YES, the absence of Medicard’s right to due process decision and resolution.

the which

Letter of Authority warrants the reversal

(LOA) disregards of the assailed

An LOA is the authority given to the appropriate revenue officer assigned to perform assessment functions. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax. It is clear that under Section 6 of the NIRC that unless authorized by the Commissioner of Internal Revenue or by his duly authorized representative, through an LOA, an examination of the taxpayer cannot ordinarily be taken. In this case, there is no dispute that no LOA was issued prior to the issuance of a PAN and FAN against Medicard . The LN that was issued earlier was also not converted into an LOA contrary to Section 6 of the NIRC.

10 The Court cannot convert the LN into an LOA as required under the law even if the same was issued by the CIR himself . In the absence of such authority, the assessment or examination is a nullity.

PRESCRIPTION

OF

ASSESSMENT

AND

COLLECTION

CHINA BANKING CORPORATION vs. COMMISSIONER (CIR) G.R. No. 172509,

FACTS: exchange

CBC was engaged to the Central Bank

February 4, 2015, 749 SCRA 525 in transactions under the SWAP

involving sales transactions.

of

foreign

On April 19, 1989, CBC received an assessment from the BIR finding CBC liable for deficiency DST on sales of foreign exchange to the Central Bank for the years 1982 to 1985. On May reinvestigation.

8,

1989,

CBC

filed

a

letter

of

protest

On December 6, 2001, more than 12 years after protest, the Commissioner rendered a decision reiterating assessment and ordered the payment within 30 days.

and

a

the filing of the the deficiency DST

On appeal to the Supreme Court , CBC invoked for the first time the argument of prescription that the government has three years from April 19, 1989, the date CBC received the assessment of the BIR to collect the tax and within that frame , however, neither a warrant of distraint of levy was issued nor a collection case was filed in court.

ISSUES: (1) Whether the right of the DST is barred by the statute (2) of

Whether the request for the prescriptive period.

(3) the

Whether the issue of first time on appeal.

BIR to collect of limitation.

reinvestigation prescription

the

suspends cannot

assessed

the

be

running

raised

for

HELD:

(1) YES. The assessment of the tax is deemed made and the three – year period for collection of the assessed tax begins to run on the date the assessment notice had been released , mailed or sent by the BIR to the taxpayer. Thus, failure of the BIR to file a warrant of distraint or serve a levy on taxpayer’s properties nor file collection case in court within the three – year period is fatal. In this case, assuming date, the BIR had three however, the records show distraint or levy served on filed in court by the BIR

that April 19, 1989 is the reckoning years to collect the assessed DST , that there was neither a warrant of CBC’s properties nor a collection case within the three-year period.

The attempt of the Answer with a demand for CTA on March 11, 2002 is

BIR to collect the tax CBC to pay the assessed not deemed compliance with

through its DST in the Tax Code.

The demand was made almost thirteen years from the date from which the prescriptive period is to be reckoned . Thus, the attempt to collect the tax was made beyond the three-year prescriptive period. (2) NO, suspended by

the the

The fact reinvestigation period.

that did

running of request for the not

taxpayer toll the

the statute reinvestigation. in this running

of

limitations

was

not

case may have requested a of the three-year prescriptive

Under Section 320 of the NIRC, the act of reinvestigation alone does not suspend the period . should first be granted, in order to effect suspension.

requesting a The request

11 In the present case, there is no showing from the records that the Commissioner ever granted the request for reinvestigation filed by the CBC. That being the case, it cannot be said that the running of the three-year prescriptive period was effectively suspended. (3) NO. If the pleading or the evidence on record show that the claim is barred by prescription, the court is mandated to claim even if prescription is not raised as a defense. To determine prescription, what is essential only is that the facts demonstrating the lapse of the prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegation of the plaintiff, or otherwise established by the evidence. Estoppel or waiver prevents rule against raising the issue of appeal.

the government prescription for

Under the rule on taxation, government from collecting taxes, it or negligence of its agent.

estoppel is not

from invoking the first time

does not bound by

the on

prevent the the mistake

The rule is based on the political law concept “the king can do wrong” which liken to a king : it does not commit mistakes , and it does not sleep on its rights . Thus, the mistake or negligence of government officials should not bind the state , lest it bring harm to the government and ultimately the people , in whom sovereignty resides.

4. In case of a false or fraudulent return with intent to evade tax or failure to file a return , a proceeding in court for the collection of such tax may be filed without assessment within ten (10) years after discovery. When return filed was not false or fraudulent, and there is no prior assessment, collection should be made within three (3) years from the date of filing the return (or from the last day required by law for filing, if return was filed before such last date ). Collection should be by judicial proceeding.

COMMISSIONER OF INTERNAL REVENUE vs. ASALUS CORPORATION G.R. No. 221590, February 22, 2017, 818 SCRA 543

FACTS:

On January 10, 2011, CIR (PAN) finding respondent Asalus liable filed its protest against the PAN but

issued Preliminary Assessment for deficiency VAT for 2007 . it was denied by the CIR.

Notice Asalus

On August 26, 2014, Asalus received the Final Assessment Notice (FAN) stating that it was liable for deficiency VAT for 2007 . Thereafter, Asalus filed a supplemental protest stating that the deficiency VAT assessment had prescribed pursuant to Section 203 of the NIRC. The CIR claims that Asalus was informed in the PAN of the year prescriptive period and that the FAN made specific reference there was substantial understatement in Asalus’ income which exceeded of what was declared in its VAT returns , according to an investigation.

tenthat 30% audit

ISSUE applies

Whether when

the there

ten-year prescriptive is an understatement

period under Sec. of income in the

222 of return.

NIRC

RULING YES, applies in

the this

ten-year case.

prescriptive

period

under

Sec.

222

of

the

NIRC

Generally, internal revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the return , or where the return is filed beyond the period , from the day the return was actually filed.

12 Under Section 222 of the NIRC , false or fraudulent return with intent return, the assessment may be made of the falsity, fraud, or omission.

however, states that in case of a to evade tax or failure to file a within ten years from the discovery

Under Section 248 (B) of the NIRC, there is a prima facie of a false return if there is a substantial under declarations of taxable sales , receipt, or income. The failure to report sales, receipts, or income in an amount exceeding 30% of what is declared in the returns constitute substantial underdeclaration. In this case, there was undeclared VATable sales more than 30% of that declared in Asalus’ VAT return . Hence, failure to overcome the presumption of falsify of the returns warranted the application of the tenyear prescription period for assessment under Section 222 of NIRC.

Q: Can the suspension of

taxpayer and the Commissioner agree the prescriptive period to assess?

on

the

A: YES. If before the expiration of the time prescribed (3 years) for assessment, both the commissioner and the taxpayer have agreed in writing to its assessment after such time , the tax may be assessed within the period agreed upon . The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. Q: Can a taxpayer waive his right to to assess for any deficiency tax has this waiver be made?

claim that prescribed ?

the period When can

A: YES, a taxpayer may waive the said right. He may renounce his right to invoke the defense of prescription even after the prescribed period. There is nothing unlawful or immoral about this kind of waiver. Just like any other right, the right to avail of the defense of prescription is waivable. Q: Is the filing of a wrong return return scenario wherein the prescriptive (10) years and not three (3) years?

equivalent to period would

a nonbe ten

A: YES. In the case of Butuan Sawmill, the ruling was to the effect that since no percentage tax return was actually filed by the taxpayer to effect the sales of its log , the 10 year prescriptive period for cases where no returns are filed applies. Q: The BIR levied and sold the properties of the decedent without the prior approval of the probate court . The estate questions its legality on the ground that the probate or settlement court’s approval is necessary before the government can collect estate taxes. Decide. A: In the case of Marcos vs. Court of Appeals, the SC stated that the approval of the court sitting in probate is not mandatory in the collection of estate taxes . There is nothing in the Tax Code and in the pertinent remedial laws that implies the necessity of the probate court’s approval of the State’s claim for estate taxes before the same can be enforced and collected.

LACK OF TERMINATION LETTER BY BIR

13

ASIATRUST DEVELOPMENT BANK, INC. vs. COMMISSIONER OF INTERNAL REVENUE G.R. Nos. 201530 & 201680, April 19, 2017, 823 SCRA 648

FACTS:

Asiatrust manifested that it availed of the Tax Abatement Program (TAP) for its deficiency final withholding tax-trust assessments for fiscal years ending June 30, 1996, 1997 and 1998, and that on June 29, 2007 , it paid the basic taxes for the fiscal years 1996, 1997 and 1998, respectively. Asiatrust also claimed that on March 6, 2008 , it availed of the provision of RA 9480 , otherwise known as the Tax Amnesty Law of 2007. The CTA it cannot be Program.

En Banc established

ruled that in the absence of a termination letter , that Asiatrust validly availed of the Tax Abatement

ISSUE (TAP)

Whether Asiatrust considered to have availed without a termination letter from CIR.

of

Tax

Abatement

Program

RULING the

NO, Asiatrust had not given Tax Abatement Program (TAP).

a

substantial

proof

that

it

had

availed

Based on the guidelines by RR No. 15-06 on the implementation of the one-time administrative abatement of all penalties/surcharges and interest on delinquent accounts and assessments, the last step in the tax abatement process is the issuance of the termination letter. The presentation of the termination letter is essential as it proves that the taxpayer’s application for tax abatement has been approved . Thus, without a termination letter, a tax assessment cannot be considered closed and terminated. In this case, Asiatrust failed to present a termination letter from the BIR. Instead, it presented a Certification issued by the BIR to prove that it availed of the Tax Abatement Program (TAP) and paid the basic tax. These documents, however, do not prove that Asiatrust’s application for tax abatement has been approved. If at all, these documents only prove Asiatrust’s payments of basic taxes, which is not a ground to consider its deficiency tax assessment closed and terminated.

INDIVIDUALS

NOT

REQUIRED

TO

FILE

INCOME

TAX

RETURN

1) an individual whose gross income does not exceed his total personal and additional exemptions for dependents, UNLESS, that a citizen of the Philippines, who has more than one employer and any alien individual engaged in business or practice of profession within the Philippines shall file an income tax returns regardless of the amount of gross income. 2) an individual whose pure compensation derived from the Philippines does not exceed Php60,000.00 otherwise file income tax return. 3) an individual withholding tax.

whose

4) an individual the provisions of

who the

Q:

Can

prosecution

A:

As

criminal a

general

EXCEPTIONS: of

as

1. to afford the accused.

rule,

sole

income

is exempt Code and

for

criminal

summarized adequate

has

from other

tax

been

evasion

Brocka

protection

to

subjected

to

final

income tax pursuant to laws, general or special.

prosecution in

sources within he shall also

vs. the

be

cannot

enjoined? be

enjoined.

Enrile: constitutional

rights

14

2. when necessary for the orderly administration avoid oppression or multiplicity of action.

of

3.

subjudice.

to

when

there

is

a

prejudicial

4. when the authority.

acts

of

5. when the regulation.

prosecution

or

6.

where

7. when 8. where 9. the

the

court

double it’s

of

a

the

officer is

had

jeopardy case

where the charges lust for vengeance.

question

of are

is

is

are

without

or

an

invalid

law ,

under

no

which

jurisdiction clearly

persecution manifestly

over

justice

in

the

or

excess

ordinance offense.

apparent. rather false

than and

prosecution. motivated

by

10. where there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied. Q: Should the fact before a taxpayer can

that be

the deficiency taxes be first prosecuted for tax evasion?

A: The SC in the case of CIR vs. CA held that prosecuted for willful attempt to evade or defeat fact that a tax is due must first be proved.

established

before one any tax,

is the

The SC did not subscribe to the ruling in Ungab vs. Cusi that the lack of a final determination of FORTUNE’s correct tax liability is not a bar to criminal prosecution , and that while a precise computation and assessment is required for a civil action to collect tax deficiencies, the Tax Code does not require such computation and assessment prior to criminal prosecution. be

For criminal prosecution a prima facie showing

to of

proceed before assessment, there must a willful attempt to evade taxes.

Unless the BIR has made a final supposed to be the correct taxes , the in the crucible of criminal prosecution.

PROBABLE CAUSE FOR BUREAU OF INTERNAL REVENUE

vs.

determination of what is taxpayer should be placed

TAX EVASION CA

& SPOUSE MANLY

G.R. No. 197590, November 24, 2014, 741 SCRA 536

FACTS:

Manly is a stockholder & executive vice president owned realty corporation and also engaged in rental business. On April 27, 2005, BIR issued Letter of revenue officers to investigate Spouses Manly’s for taxable year 2003 and prior years. On June 6, 2005, BIR issued a them to submit documentary evidence to cash purchase of a 256-square meter Toyota Rav 4 and a Toyota Prado.

of

family-

Authority (LA) authorizing its internal revenue tax liabilities

letter to Manly spouses substantiate the source log cabin in Tagaytay

requiring of their City , a

Since Spouses Manly failed to comply with the letter, the revenue officers concluded that Manly’s Income Tax Return (ITR) for taxable years 2000, 2001 and 2003 were underdeclared . And since the underdeclaration exceeded 30% of the reported or declared income, it was considered a prima facie evidence of fraud with intent to evade the payment of proper tax due to the government.

15 The BIR, thus, recommended the filing of Spouses Manly for failing to supply correct and their ITRs. tax

The Spouses assessment.

ISSUE: prosecuted

HELD: prosecuted

Manly

Whether a for tax

deficiency evasion.

said

assessment

is

complaint

due

cases against information in

to

lack

deficiency

is

necessary

before

one

can

be

not

necessary

before

one

can

be

evasion is deemed complete when the violator filed a fraudulent return with intent to evade of the tax.

Corollarily, an assessment criminal prosecution for tax

before

the

NO. A deficiency assessment for tax evasion.

In this case, tax knowingly and willfully defeat a part or all a

opposed

criminal accurate

of the evasion.

tax

deficiency

However, it is necessary to prove the one can be prosecuted for tax evasion.

fact

is that

*** A warrant of distraint and levy (wdl) is proof of the assessment and renders hopeless a reconsideration, being tantamount to an outright denial and makes it deemed rejected. The remedy is to file within fifteen (15) days distraint and levy.

an appeal from the

*** The Court of Tax Appeals collection of internal revenue pending appeal only when: 1) in the opinion will jeopardize the taxpayer;

of the interest

(CTA) taxes

to the Court issuance of

not a

has and

required tax

is

in due

of

the finality request for of the same

of a

Tax Appeals warrant of

is empowered to suspend the and custom duties in cases

court the of the

collection by the BIR government and/or the

2) the taxpayer is willing to deposit the amount being collected or to file a surety bond for not more than double the amount of the tax to be fixed by the court.

PRESCRIPTIVE The taxpayer the commissioner’s Tax Appeals and payment.

PERIOD

FOR

CLAIM

OF

REFUND

has within thirty (30) days from receipt decision to file the appeal to the Court within two (2) years from the date

of of of

PREMATURE FILING AT CTA BEFORE THE 120-DAY PERIOD SAN ROQUE POWER CORPORATION vs. COMMISSIONER (CIR) G.R. No. 205543,

FACTS: power

San Roque is generation business.

The corporation filed incurred creditable input goods. San or tax 2006.

Roque credit

a

June 30, 2014, 727 SCRA 565

domestic

corporation

principally

engaged

in

the

a claim for refund allegedly that in 2006 , it taxes from its purchase of imported capital

subsequently filed of its creditable

with input

the BIR separate claim for refund taxes for all four quarters of

16 Meanwhile, San Roque filed its amended administrative claims for third and fourth quarters of 2006 on September 21, 2007 , however, CTA denied the petition for having no jurisdiction thereof being premature invocation of the judicial relief.

ISSUE: jurisdiction

Whether the premature judicial over the judicial relief.

HELD:

NO. There is no mandatory and jurisdictional and over a judicial claim that is period. The taxpayer at anytime within on the last day filed on time. the that with

can the of

claim

There with

render

CTA

to

acquire

dispute that the 120 – day period is that the CTA does not acquire jurisdiction filed before the expiration of the 120 – day

file his administrative claim for refund or credit two-year prescriptive period . If he files his claims the two-year prescriptive period , his claim is still

The Commissioner will have 120 day Commissioner decides on the 120 th day, the taxpayer still has 30 the CTA.

claim

would

the the a

are, however, the CTA.

two

exceptions

from such filing of day or does not days to file his to

the

premature

the claim . If decide it on judicial claim

filing

of

judicial

The first exception is if the Commissioner, through a specific ruling, misleads a particular taxpayer to premature file a judicial claim with the CTA. Such specific ruling is applicable only to such particular taxpayer. The second exception is where the Commissioner through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing premature judicial claims with the CTA. In question equitable of the

these cases, the Commissioner cannot be allowed to later on the CTA’s assumption of jurisdiction over such claims since estoppel has set in as expressly authorized under Section 248 Tax Code.

INACTION

OF TO

COMMISSIONER EQUIVALENT DENIAL OF CLAIM

COMMISSIONER (CIR) vs. TEAM SUAL CORPORATION (TSC) G.R. No. 205055, July 18, 2014, 730 SCRA 242

FACTS: refund 2004.

of

On December 21, its input VAT,

2005, which

TSC filed it incurred

On April 24, 2006, due to the with CTA and prayed for the refund for its alleged unutilized input VAT of

On March 4, tax credit of

2010, TSC.

CTA

On appeal to the revenue (CIR) claimed that for its failure to submit the 120-day period to act

granted

an for

administrative claim the four quarters

BIR’s inaction, TSC or issuance of tax for the year 2004. the

claim

for

a

filed credit

refund

for of

a petition certification or

issuance

CTA en banc , the Commissioner of internal TSC is not entitled for refund or tax credit the complete documents in RMO 53-98 within on the claim.

ISSUES (1) Whether day period is credit.

the failure deemed a

(2) Whether the warrant the grant of

HELD:

of the Commissioner to denial of its application

failure to submit the tax refund or credit.

complete

act for

within the 120tax refund or

documents

would

not

(1) YES. Under Section 112 (C) of the NIRC, in case of failure on the part of the Commissioner to act on the application , the taxpayer affected may, within 30 days after the expiration of the 120-day period , appeal the inacted claim with the CTA.

17

by tax 2005, 2006,

If the Commissioner fails law, such “inaction shall refund.

to be

In

filed its administrative claim on 21 a period of 120 days or until

this case, when TSC the Commissioner had to act on the claim.

Thus, 2006, or Hence, the

TSC filed its petition for review with within 30 days after the expiration judicial claim was not prematurely filed.

(2) NO. There revenue regulations enumerated in RMO VAT. The documents x x.”

decide within “a specific period” required deemed a denial ” of the application for

the of

December 20 April

CTA on 24 April the 120-day period .

is nothing in Section 112 of the NIRC or relevant that require submission of the complete documents 53-98 for a grant of a refund or credit of input

subject of RMO to be submitted by

53-98 states that it a taxpayer upon audit a of

grant of an audit

a his

refund being

“checklist of Tax Liabilities or credit conducted

of by

Moreover, if TSC indeed failed to submit the complete documents support of its application, the Commissioner could have informed TSC its failure. Hence, TSC is entitled to the refund or tax credit.

in of

the the

In this case, TSC was applying for input tax. There was no allegation Commissioner.

is of

COMMISSIONER OF INTERNAL REVENUE vs. GOODYEAR PHILIPPINES, INC. G.R. No. 216130, August 3, 2016, 799 SCRA 489

FACTS:

Goodyear Tire and Rubber Company (GTRC), a U.S. foreign company, was the sole and exclusive subscriber of all preferred shares of stock of the respondent Goodyear. The Board of Directors of respondent authorized the redemption of GTRC preferred shares. BIR Tax.

Respondent filed an application for relief from double to confirm that the redemption was not subject to

As a representing

conservative 15% FWT

approach, respondent withheld on November 3, 2008.

On October 21, 2010, respondent filed BIR. Thereafter, or on November 3, 2010, the CTA.

a it

and

taxation with the Philippine Income

remitted

an

amount

claim for refund before the filed a judicial claim before

ISSUES days

1) Whether the filing of administrative and judicial claims only 13 apart satisfy the requirement of exhaustion of administrative remedy.

2) Whether preferred shares

the net capital gain by GRTC from the redemption of should be subject to 15% Final Withholding Tax (FWT).

its

RULINGS 1) YES. Section 229 of the Tax Code states that judicial claims for refund must be filed within two (2) years from the date of payment of the tax or penalty, providing further that the same may not be maintained until a claim for refund or credit has been duly filed with the Commissioner of Internal Revenue. Verily, the primary purpose of filing an administrative claim was to serve as notice to the CIR that court action would follow unless the tax or penalty alleged to have been collected erroneously or illegally is refunded. To clarify, Section 229 of the Tax Code, however, does not mean that the taxpayer must await the final resolution of its administrative claim for refund, since doing so would be tantamount to the taxpayer’s forfeiture of its right to seek judicial recourse should the two (2) year prescriptive period expire without the appropriate judicial claim being filed.

18 In the case at bar, records show that both administrative and judicial claims for refund of respondent for its erroneous withholding and remittance of FWT were indubitably filed within the two (2) year prescriptive period. Notably, Section 229 of the Tax Code , as worded, only required that an administrative claim should first be filled . It bears stressing that respondent could not be faulted for resorting to court action , considering that the prescriptive period stated therein was about to expire. Had respondent awaited the action of petitioner knowing fully well that the prescriptive period was about to lapse , it would have resultantly forfeited its right to seek a judicial review of its claim , thereby suffering irreparable damage. Thus, respondent correctly and timely sought judicial redress, notwithstanding that its administrative and judicial claims were filed only 13 days apart. 2) NO, the redemption price representing the amount of its preferred shares received by GFRC could not be treated as accumulated dividends in arrear that could be subjected to 15% Final Withholding Tax (FWT). Verily, 2003 to and in availability respondent

respondent’s annual financial statements (AFS) covering the years 2009 show that it did not have unrestricted retained earnings , fact, operated from a position of deficit. Thus, absent the of unrestricted retained earnings, the board of directors of had no power to issue dividends.

It is also worth mentioning that one of the primary features of an ordinary dividend is that the distribution should be in the nature of a recurring return on stock, which, however, does not obtain in this case.

3. LOCAL TAXATION The Local Taxing Constitution in Section

Power is 5 Article

directly X, to

conferred wit:

by

the

1987

“Each local government unit shall have the power to create it own sources of revenue and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the local governments.” ***** Congress cannot abolish local taxing power which is expressly granted by the Fundamental Law. The only authority conferred to Congress is to provide the guidelines and limitations on the local government’s exercise of the power to tax through the enactment of the 1991 Local Government Code. ***** The imposition of a tax, fee or charges or the generation of revenue under the Local Government Code, shall be exercised by the Sanggunian of the local government unit concerned through an appropriate ordinance. --- the city or municipal mayor nor governor alone could not order collection of any tax as the same is exercised by the Sanggunian of local government concerned through an appropriate ordinance. **** Any question raised on appeal thereof. **** Remedies collection of

on the constitutionality or legality of a tax ordinance may be to the Secretary of Justice within 30 days form the effectivity

available to the local government taxes, fees and charges are:

units

to

(a) Administrative remedies of distraint of personal property kind whether tangible or intangible and levy of real property therein; and (b) Judicial remedy by institution of an ordinary civil collection with the regular courts of proper jurisdiction.

**** Professional

the the

enforce

the

of whatever and interest action

for

Tax Receipt (PTR) is collected by the city government or the provincial government from the professionals who practice their professions payable either in the place they maintain their principal office or the place of their residence.

19 CITY

OF

MANILA

G.R. No.

FACTS:

The otherwise known Alfredo S. Lim

vs.

120051,

HON. ANGEL VALERA

December

10,

City Council of as Manila Revenue on June 29, 1993.

2014,

Manila Code

744

SCRA

COLET

265

enacted Ordinance No. 7794 and approved by then Mayor

Under Section 21 (B) of the Manila Revenue imposes business tax on transportation business.

Code,

as

amended,

Ten (10) petitions were filed against City of Manila challenging the unconstitutionality of Section 21 (B) of the Manila Revenue Code being in violation of the guidelines and limitations on the taxing power of the Local Government Unit.

ISSUE:

Whether

the

City

of

HELD:

NO. The power of is not true for the LGUs guidelines and limitations that

Manila

has

an

inherent

taxation is inherent in whose power must be Congress may provide.

power

to

tax.

the state , the same exercised within the

In the case at bar, the sanggunian of the municipality or city cannot enact an ordinance imposing business tax on the gross receipts of transportation business as they are prohibited from doing so under Section 133 (j) of the LGC. The power to tax is an attribute of sovereignty and such , it is inherent in the State. Such, however, is not true for provinces, cities, municipalities and barangays as they are not the sovereign , rather, they are mere “territorial and political subdivision of the Republic of the Philippines. Section 5, Article X of the 1987 Constitution, the power to tax is no longer vested exclusively on Congress . The Constitution has given direct authority to each local government unit to levy taxes , fees and other charges subject to such guidelines and limitations by Congress in the enactment of RA 7160 otherwise known as the Local Government Code of 1991.

4. REAL PROPERTY TAXATION *** Fundamental 1) The value;

Principles appraisal

of

must

2) Classification use;

for

3) Assessment

must

and

property

taxation:

be

at

current

assessment be

4) Appraisal, assessment, private persons; and 5) Appraisal

real

on

must

the

levy

assessment

CALTEX

the

PHIL.

be

basis

and must

vs.

on of

collection be

and

the

basis

uniform shall

fair of

market actual

classification; not

let

to

equitable.

CBAA

G.R. No. L-50466, May 31, 1982 The machines and equipment in question consist of underground tanks , elevated tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoist, truck hoist, air compressors and tireflaters. We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by Caltex as to which it is subject to realty tax and which fixtures are necessary to the operation of the gas station, for without them the gas station would be useless , are taxable improvements and machinery within the meaning of the Assessment Law and the Real Property Tax Code. Gasoline station equipment and machineries are permanent fixtures for purposes of realty taxation. Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty. It is a familiar phenomenon to see things classed as real

20 property for purposes be considered personal **** Properties

exempt

of taxation property.

from

real

which

property

on

general

principle

might

taxes:

1) Real property owned by the Republic of the Philippines or any of its political subdivision except when the beneficial use thereof has been granted for consideration or otherwise to a taxable person; 2) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries, and all lands, buildings and improvements actually, directly and exclusively used for religious, charitable or educational purposes; 3) All machineries and equipment that are actually , directly exclusively used by local water utilities and government-owned controlled corporation engaged in the supply and distribution water and/or generation and transmission of electric power; 4) All provided

real property owned for under RA 6938;

5) Machinery and environmental protection.

by and

equipment

**** Public hearings must be imposing real property taxes.

duly

registered

used

observed

in

for

the

cooperatives

pollution

enactment

control

of

an

and and of as and

ordinance

**** May

local governments impose an annual realty tax in addition to the basic real property tax in addition to the basic real property tax on idle or vacant lots located in residential subdivisions within their respective territorial jurisdictions? A: Not all local government units may do so. Only provinces, cities and municipalities within Metro Manila area, may impose an ad valorem tax not exceeding 5% of the assessed value of idle or vacant residential lots in a subdivision, duly approved by proper authorities regardless of area.

SPS.

RAMON

&

ROSITA

TAN

vs.

BANTEGUI

G.R. No. 154027, October 24, 2005, 473 SCRA 663 The auction tax sale did not conform to the requirements prescribed under PD 464. No notice of tax delinquency was given to the delinquent owner or to her representatives. The auction sale of real property for the collection of delinquent taxes is in personam and not in rem . Although sufficient in proceedings in rem like land registration, mere notice by publication will not suffice, considering that the procedure in tax sale is in personam. It is incumbent upon the city treasurer to send the notice directly to the taxpayer — the registered owner of the property in order to protect the latter’s interests . Although preceded by proper advertisement and publication, an auction sale is void absent an actual notice to a delinquent taxpayer.

5. CUSTOMS AND TARIFF CODE **** The basis of dutiable value of an imported article subject to an ad valorem tax under the Tariff and Customs Code is its transaction value, which shall be the price actually paid or payable for the goods when sold for export to the Philippines, adjusted by adding certain cost elements to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods.

COUNTERVAILING

DUTY vs. DUMPING Distinctions:

DUTY

1) BASIS: The countervailing duty is imposed whenever there is granted upon the imported article by the country of origin a specific subsidy upon its production , manufacture or exportation and this results or threatens injury to local industry while the basis for the imposition of dumping duty is the importation and sale of imported items at below their normal value causing or likely to cause injury to local industry.

21

2) AMOUNT: The countervailing duty imposed is value of the specific subsidy while the dumping to the margin of dumping which is equal between the export price to the Philippines and of the imported article. Requirements for tax nationals (residents): six

exemptions

1) they have stayed (6) months;

in

on

a

conditionally

foreign

country

equivalent to the duty is equivalent to the difference the normal value

free

for

importation

a

period

of

of

2) for military attaché, they must have served abroad for than two (2) years and served his tour of duty and availed of the tax exemption for the past four years.

returning

at

least

not had

less not

Flexible Tariff Clause refers to the authority given to the President to adjust tariff rates under Section 401 of the Tariff and Customs Code , which is the enabling law that made effective the delegation of the taxing power to the President under the Constitution. **** Regular courts seizure & forfeiture **** Decision Commissioner Q: of

have no jurisdiction to replevin a property proceedings at the Bureau of Customs.

of the of Customs.

What is Customs?

the

Collector

basis

of

the

of

Customs

automatic

is

review

subject

appealable

procedure

in

to the

of the

Bureau

A: Automatic review is intended to protect the interest of the Government in the collection of taxes and custom duties in seizure and protest cases . Without such automatic review, neither the Commissioner of Customs nor the Secretary of Finance would know about the decision laid down by the Collector favoring the taxpayer.

6. ESTATE TAXATION KINDS

OF

TAXPAYERS

1.

Citizen without

2.

Resident

3.

Non-resident

Composition

2. for

alien -

alien -

Gross

only

citizen

-

within

and

properties

Estate

non-resident

3. transfer

in

4. transfer

for

6. proceeds revocable; 7. transfer 8. property

Exclusions

properties

ESTATE

of

the

TAXATION

PURPOSES:

value

of

the

properties

without

the

Philippines.

within

the

from

1. insurance 2. accruals

alien -

only

contemplation insufficient

of

within

Philippines.

decedent

citizen and non-resident citizen within and without the Philippines.

5. revocable is

GROSS

and non resident the Philippines.

of

1. for properties

FOR

properties

and

resident

situated

in

the

alien -

all

Philippines.

death;

consideration;

transfer; of

life

insurance

conditioned passing

Gross

under

where

the

beneficiary’s

SSS

or

appointment

survivorship; a

general

power

of

Estate

proceeds from

on

policy

other

benefits

from

GSIS

appointment.

and

22 3. proceeds of life irrevocably appointed; 4. transfer consideration;

by

insurance

way

of

5. transfer of property political subdivisions;

Deductions

from

Gross

bonafide

to

the

5% of lower;

2. medical expenses exceed Php500,000;

incurred

4. property

6. the

for

family

7. standard 8. amount 9. net *** Prohibition a) if

a

losses,

claims,

previously

5. transfer

where

sale

national

for

the

an

beneficiary

adequate

government

or

was

and

to

any

not

to

full

of

its

Estate

1. funeral expenses Php200,000 whichever is

3. expenses,

policies

gross

within

estate

one

indebtedness

taxed

public

the

(vanishing

but

year

prior

to

and

taxes;

exceed

death

not

to

deduction);

use;

home;

deduction; received

share on

of

by

heirs;

the

surviving

withdrawal

bank

has

of

spouse

bank

knowledge

in

deposits

the

upon

conjugal

partnership.

depositor’s

death:

of

b) the death of a person 1) who maintained a bank deposit 2) alone or jointly with another. c) it

shall

not

allow

any

withdrawal

d) UNLESS the Commissioner of estate taxes have been paid.

7.

DONOR’S

Revenue

deposit has

for elective positions shall Omnibus Election Code.

*** Donated lot shall be for deduction from gross

For the is not:

Internal

said

account.

certified

that

the

TAXATION

*** Donation to candidate donor’s tax but under

*** Sale of a donation.

from

based income.

shares

of

stock

purpose

of

the

below

by

b. A relative by consanguinity degree of relationship. the

gift

the

the

acquisition

fair

market

tax,

a

stranger

whole

or

half-blood),

donor’s

a. Brother, sister (whether and lineal ascendant, or

Gift Splitting is spreading avail of lower donor’s tax.

on

in

the

over

not

collateral numerous

line

be

subject

cost

as

value

is

is

a

calendar

basis

considered

person

spouse, within

a

of

ancestor,

the

years

who

fourth in

order

to

*** In order that donations to non-stock, non-profit educational institution may be exempt from the donor’s tax, it is required that not more than 30% of the said gift shall be used by the donee-institution for administration purposes.

23

8. INCOME

TAXATION

***Income is all wealth mere return of capital.

that

Exclusions

Income:

from

Gross

1)

Proceeds

of

2)

Amount

3)

Gift,

4)

Interest

5)

compensation

life

received

bequests on

flows

insurance by

and

the

taxpayer

other

than

as

a

policy;

insured

as

return

of

premium;

devises;

government for

into

securities;

injuries

or

sickness;

6) retirement benefits, pensions: at least 10 years of service & 50 years of age; with approved retirement plan and availed once ; age requirement below 50 years is excluded when separated beyond the control of the employee; 7)

separation

pay

beyond

the

control

of

the

employee;

8) prizes and awards made primarily in recognition of religious , charitable, scientific, educational, artistic, literary or civic achievement but only if: (a) the recipient was selected without any action on his part to enter the contest or proceeding; (b) the recipient is not required to render substantial future services as a condition to receiving the prize or reward. *** A “fringe benefit” is defined as being furnished or granted in cash or in kind employee. on tax

any good, service or other benefit by an employer to an individual

It is the employer who is legally required to pay an income tax the fringe benefit. The fringe benefit tax is imposed as final withholding placing the legal obligation to remit the tax on the employer.

*** In order that debts be considered as bad debts because they have become worthless, the taxpayer should establish that during the year for which the deduction is sought, a situation developed as a result of which it became evident in the exercise of sound , objective business judgment that there remained no practical but only vaguely theoretical prospect that the debt would ever be paid.

POSSIBLE Q:

Explain

the

symbiotic

relationship

Q

&

A

theory

A: It is said that taxes are what we pay for civilized society . Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one’s hard-earned income to the taxing authorities , every person who is able to must contribute his share in the running of the government . The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. Q: In matters committed by

involving taxes, its agents?

is

the

government

bound

by

the

errors

A: NO. It is axiomatic that the government cannot and must not be estopped particularly in matters involving taxes . Taxes are the lifeblood of the nation through which the government agencies continue to operate and with which the state effects its functions for the welfare of its constituents. The errors of certain administrative officers should never be allowed to jeopardize the government’s financial position. Q: Proclamation No. 430 reserved certain parcel of lands in Cebu for warehousing purposes under the administration of the National Warehousing Corporation (now NDC). A warehouse was built thereon. Are the land and warehouse subject to real estate tax?

24 A: As to the reserved by the As to which is stockholder. Q: Is reserve imposed

land, it Republic.

is It

the warehouse, separate and

exempt is still

from taxation b ecause it owned by the Republic.

it is not exempt distinct from the

there a double taxation deficiency tax and at for the same violation?

if the

since it is government

a surcharge same time

was

owned which

is imposed another tax

simply by Is

NDC its

upon bank is likewise

A: No double taxation. The payment of 1/10 of 1% for incurring deficiencies is a penalty as the primary purpose is regulation , while the payment of 1% of the same violation is a tax for the generation of revenue which is the primary purpose in this instance . This is covered by tax laws - the other one is a banking law. Q:

Distinguish

global

system

of

taxation

from

schedular

system

of

taxation.

A: A global system of taxation is one where the taxpayer is required to report all income earned during a taxable period in one income tax return, which income shall be taxed under the same rule of income taxation; whereas, a schedular system of taxation requires a separate return for each type of income and the tax is computed on a per return or per schedule basis. Schedular system provides for different tax treatment of different types of income. Q:

Define

capital

asset.

A: Capital asset means connected with his trade

property held by the taxpayer (whether or business), but does not include:

a) stock in trade which would properly in

of the taxpayer or other be included in the inventory

b) property held by the taxpayer primarily for the ordinary course of his trade or business;

c) property used in allowance for depreciation; d) real Q:

What

property of the

is

property

meant

used

by

the trade and in

trade

theoretical

or or

business

business

sale and

of

the

or

not

of a kind taxpayer. to

customers

subject

to

the

taxpayer.

interest?

A: It is an interest “calculated” or computed (and not incurred or paid) for the purpose of determining the “opportunity cost” of investing funds in a given business. Such theoretical or computed interest does not arise from a legally demandable interest-bearing obligation incurred by the taxpayer who, however, wishes to find out, e.g. whether he would have been better off by lending out his funds and earning interest rather than investing such funds in his business. Q: Is

theoretical

interest

on

capital

A: NO. It is not deductible as under an interest-bearing obligation. Q:

What

is

meant

by

jeopardy

deductible? it

does

not

represent

a

change

arising

assessment?

A: It is a tax assessment which was made without the benefit of complete or partial audit by an authorized revenue officer who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer’s failure to comply with audit and/or pertinent records or to substantiate all or any of the deductions, exemptions or credits claimed in his return.

PURPOSE

OF

TAXATION

PLANTERS PRODUCTS, INC. vs. FERTIPHIL CORPORATION 548

SCRA

485,

G.R.

No. 166066,

March 14,

2008

25 FACTS:

Pursuant to the LOI 1465 which provided for the imposition of a capital recovery component on the domestic sale of all grades of fertilizers in the Philippines, Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount collected to the FEBC , the depository bank of Planters Products, Inc. (PPI). After the 1986 EDSA Revolution, FPA voluntarily stopped the imposition of the P10 levy . With the return of democracy, Fertiphil demanded from PPI a refund of the amounts it paid but PPI refused to accede to the demand invoking the State’s legitimate exercise of the power of taxation.

ISSUE:

Whether of the

exercise

or not the P10 power of taxation.

levy

under

LOI

No.

1465

is

a

valid

HELD:

NO. The imposition of the levy was an exercise by the State of its power of taxation . While it is true that the power of taxation can be used as an implement of police power , the primary purpose of the levy is revenue generation. If the purpose is primarily revenue or if revenue is at least one of the real and substantial purposes , then the exaction is properly called a tax. The P10 levy under LOI No. 1465 is too excessive to serve as a mere regulatory measure. The levy, no doubt, was a big burden on the seller or the ultimate consumer. It increased the price of a bag of fertilizer by as much as five percent . The P10 levy is unconstitutional because it was not for a public purpose . The levy was imposed to give undue benefit to PPI.

STRICTISSIMI JURIS OF TAX EXEMPTIONS DAVAO ELECTRIC COOPERATIVE vs. PROVINCE OF DAVAO ORIENTAL 576 SCRA 645, G.R. No. 170901, January 20, 2009

FACTS:

Petitioner was organized under P.D. 269 . The same granted a number of tax and duty exemption privileges to electric cooperatives . In 1984, PD 1955 withdrew all exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts, and other charges granted to private business enterprises and/or persons engaged in any economic activity . PD 2008 issued on January 8, 1986 subsequently restored exemptions withdrawn by PD 1955. In December 1986, Executive Order (EO) No. 93 withdrew all tax and duty exemptions granted to private entities effective March 10, 1987 . Finally on July 1, 1987, FIRB No. 24-87 restored the tax and duty exemption privileges of electric cooperatives under PD 269. In May 1990, the Province of Davao Oriental filed a complaint for collection of delinquent real property taxes against petitioner for the years 1984 to 1989 but petitioner cooperative contends that it was exempt from the payment of real estate taxes from 1984 to 1989 because the restoration of tax exemption under FIRB No. 24-87 retroacts to the date of withdrawal of said exemptions.

ISSUE: 87 be

Whether or not the given retroactive effect.

tax

exemption

under

FIRB

Resolution

No.

24-

HELD:

NO. FIRB Resolution No. 24-87 is crystal clear in stating that “the tax and duty exemption privileges of electric cooperatives granted under the terms and conditions of PD 269 are restored effective July 1, 1987 .” There is no other way to construe it . The language of the law is plain and unambiguous. When the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. Further, because taxes are the lifeblood of the nation , the court has always applied the doctrine of strict interpretation in construing tax exemptions. A claim for exemption from tax payments must be clearly shown and be based on language too plain to be mistaken . Elsewhere stated, taxation is the rule, exemption thereof is the exception.

EXEMPTION FROM REAL PROPERTY TAX PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. COURT OF APPEALS G.R. No. 169836, July 31, 2007, 528 SCRA 706

26 Philippine Fisheries Development Authority (PFDA), being an instrumentality of the national government, is exempt from real property tax but the exemption does not extend to the portions of the Navotas Fishing Port Complex (NFPC) that were leased to taxable or private persons and entities for their beneficial use. The Court rules that PFDA is not GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the NFPC which the authority leased to private entities.

WHAT

IS

***

The appeal:

THE CTA

APPELLATE

shall

exercise

exclusive

review

3.

Decisions of

Regional Trial Court (RTC)

4.

Decisions

Commissioner

5.

Decisions of Central Board of Assessment Appeals (CBAA) on exercise of appellate jurisdiction over real property tax cases decided by LBAA

6.

Decisions of Department of Finance (DOF) elevated to him on automatic review due versus the government

7.

Decisions of DTI (on non-agricultural Agriculture (on agricultural products) countervailing duties.

Authority

CITY OF MANILA

of

Internal

of

to

Revenue

to

Inaction

of

Internal

jurisdiction

2.

Commissioner

of

CTA?

Decisions

of

Commissioner

appellate

OF

1.

CTA

of

JURISDICTION

Revenue on

by

(CIR) (CIR)

local tax cases

Customs

issue

vs.

on to

custom adverse

cases decision

products) and Department of involving dumping and

Writ

of

Certiorari

HON. CARIDAD G. CUERDO

G.R. No. 175723, February 4, 2014,

715

SCRA

182

FACTS: 2002 local their

The City of Manila assessed local business taxes for the year against SM Group of Retail Business in addition to the regular business taxes assessment as a precondition for the issuance of business permits.

On January 24, 2004, SM Group filed a complaint with the RTC for “Refund of Illegally and/or Erroneously Collected Local Business Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction.” On July 9, 2004, the RTC preliminary injunction. The City of but the RTC denied it. the

granted the application for a writ of Manila filed a motion for reconsideration

Petitioner City of Manila filed a CA assailing orders of the RTC.

The CA dismissed the petition jurisdiction over the said petition. The CA ruled that tax refund, which was pursuant to its expanded

ISSUE: issue

HELD:

Whether writ of

or not certiorari.

special for

civil

certiorari

action holding

for that

since appellate jurisdiction over SMs filed with the RTC, is vested jurisdiction under RA 9282.

CTA

has

jurisdiction

over

the

Certiorari it

has

with no

complaint in the

for CTA

power

to

YES. Since appellate jurisdiction over complaint for tax refund is vested in the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should likewise be filed in the same court.

27 It is more in consonance with logic and legal soundness that grant of appellate jurisdiction to the CTA over tax cases filed in decided by the RTC carries with it the power to issue a writ certiorari when necessary in aid of such appellate jurisdiction.

PROPER PARTY TO CLAIM A

the and of

TAX REFUND

EXXONMOBIL PETROLEUM & CHEMICAL HOLDINGS, INC. vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 180909, January 19, 2011, 640 SCRA 203

FACTS:

Exxon is a foreign corporation authorized to do business in the Philippines. In pursuit of its business , Exxon purchased from Caltex and Petron jet A-1 fuel and other petroleum products. However, Caltex and Petron had paid and remitted the excise taxes on the purchases of Exxon. Two years later, Exxon filed an administrative claim for refund with the BIR.

ISSUE: the

Whether or not excise taxes paid.

Exxon

is

the

proper

party

to

claim

refund

for

HELD;

NO. The excise tax, when passed to the purchaser, becomes part of the purchase price. Excise taxes are of the nature of indirect taxes , the liability for payment of which may fall on a person other than he who actually bears the burden of the tax . The party liable for the tax can shift the burden to another , as part of the purchase price of the goods or services. In a case where the party statutorily liable for the tax is different from the party who bears the burden of such tax , the proper party to question, or to seek a refund of an indirect tax , is the statutory taxpayer, or the person on whom the tax is imposed by law and who passed the same, even if he shifts the burden thereof to another . Therefore, Exxon is not the party statutorily liable for payment of excise tax and it is not the proper party to claim a refund of any taxes erroneously paid.

SILKAIR (Singapore) PTE, LTD. vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 166482, January 25, 2012, 664 SCRA 33

FACTS:

Silkair is a foreign corporation duly licensed to do business in the Philippines as on-line international carrier . It purchased aviation fuel from Petron, the latter paying the excise taxes thereon. Later on, Silkair filed an administrative claim for refund on the purchase of jet fuel from Petron, which it alleged to have been erroneously paid.

ISSUE: claim paid

Whether Silkair has the legal personality for refund of excise taxes allegedly to to its supplier of aviation fuel.

HELD:

NO. The person entitled to claim taxpayer, the person on whom the tax paid the same even when he shifts the

JURISDICTION OF CTA ATTY. DENIS

ON

to file have

an been

administrative erroneously

a tax refund is the statutory is imposed by law and who burden thereof to another.

REAL

PROPERTY

TAXES

HABAWEL vs. COURT OF TAX APPEALS

G.R. No. 1747590, September 7, 2011, 657 SCRA 138

FACTS:

Surfield sought from Mandaluyong City Treasurer refund of excess realty taxes paid. After the City government denied its claim, Surfield brought an action for mandamus with the RTC . However, RTC dismissed the petition. the

Unsatisfied, appeal for

ISSUE: property

Surfield elevated the lack of jurisdiction.

Whether CTA tax cases.

has

jurisdiction

case

over

to

the

CTA ,

decisions

of

however

the

CTA

RTC

denied

in

real

28

HELD:

NO. The CTA has no jurisdiction over decisions of the RTC in real property tax cases. LGC covers only appeals of the decisions, orders or resolutions of the RTC in local taxes . The provision is clearly limited to local tax disputes decided by the RTC . In contrast, the CTA is cognizance of appeals of the decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals. Real property tax, being an ad valorem tax, could not be treated as a local tax.

EFFECT

OF WITHDRAWAL AGAINST CTA

OF AN DECISION

APPEAL

CENTRAL LUZON DRUG CORPORATION vs. COMMISSIONER OF BIR G.R. No. 181371, March 2, 2011, 644 SCRA 433

FACTS:

Petitioner is a duly registered corporation engaged in the retail of medicines and other pharmaceutical products operating under the name of “Mercury Drug.” Central Luzon filed with the Commissioner of Internal Revenue a request for the issuance of a tax credit certificate representing the 20% sales discount granted to senior citizens. The following day, Central Luzon filed with the CTA a petition for review, however, the CTA denied the claim for insufficiency of evidence. Unsatisfied, Central Luzon filed a review on certiorari before the SC . However, instead of filing a reply to the comments of the CTA , Central Luzon filed a Motion to Withdraw on the theory that it would just be included in its future claims for issuance of a tax certificate.

ISSUE: the

CTA

Whether final.

the

motion

to

withdraw

rendered

HELD:

the

assailed

decision

of

YES. By withdrawing the appeal, Central Luzon is deemed to have accepted the decision of the CTA. And since CTA had already denied Central Luzon’s request for the issuance of a tax certificate for insufficiency of evidence, it may no longer be included in its future claims. Central Luzon cannot be allowed to circumvent the denial of its request for a tax credit by abandoning its appeal and filing a new claim. An appellant who withdraws his appeal x xx must face the consequence of his withdrawal , such as the decision becomes final and executory.

***** GODSPEED *****