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Prof. Dabu - Review Notes in Taxation
Prof. Dabu - Review Notes in Taxation
Suggested Answer: They are limitations in the exercise of the power to tax. They
are not grants of the power to tax, taxation being an attribute of
sovereignty.
The above provision requires the concurrence of a majority of all the members of
the Congress, not majority of the attendees constituting a quorum.
6. The President has the power to fix tariff rates. (Art. VI, Sec. 28, parr. 2)
Question: May the delegated power of the President to fix tariff rates be exercised
by his department secretaries?
Suggested Answer:
The power delegated to the President under Sec.28 (2), Article VI may be
exercised in accordance with legislative sanction, by the alter egos of the
President, such as department secretaries – for purposes of the President’s
exercise of power to impose tariffs. Generally, the Sec. of Finance acts as his alter
ego. The President or the alter egos may be properly deemed as agents of
Congress to perform an act that inherently belongs as a matter of right to Congress.
(Southern Cross Cement Corp. Vs. Cement Manufacturers Association of the
Philippines, 465 SCRA 532)-
Suggested Answer:
Flowing from the basic precept of constitutional law that no law is irreparable,
Congress, in the legitimate exercise of its lawmaking powers, can enact a law
withdrawing a tax exemption. (Republic vs. Caguiao, 536 SCRA 193).
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
4. TAXPAYER’S SUIT – the case directly involves the illegal disbursement of public
funds derived from taxation.
Asia Pacific Planters vs. City of Urdaneta, 566 SCRA 219 --- A city acquires
ownership of the money loaned to it, making the money public funds.
Jumamil vs. Café, 470 SCRA 475 – A taxpayer need not be a party to the
contract to challenge its validity. Parties suing as taxpayer must prove
sufficient interest in preventing illegal expenditure of money raised by
taxation.
5. ESTOPPEL -
GENERAL RULE: The government is not estopped by the mistakes or errors of
its agents, erroneous application and enforcement of law by public officers do
not bar the subsequent correct application of statutes. (E. Rodriguez, Inc. vs.
Collector, L-23041, July 31, 1969; CIR vs. Manila Bankers Life Ins. Co., G.R.
No. 169103. March 16, 2011)
6. INJUNCTION:
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
General Rule: The NIRC provides that Injunction does not lie against the
government in the enforcement and collection of internal revenue taxes.
Regular courts cannot issue injunction, because of the Lifeblood doctrine. The NIRC
provides that there shall be no delay in the collection and enforcement of internal
revenue taxes.
Exception: The Court of Tax Appeals may issue Injunction in the exercise of its
appellate jurisdiction, provided the taxpayer will suffer irreparable injury; and he
must comply with Rule 58 of the Rules of Court (posting of a bond)
The LGC does not contain the same provision. Therefore, regular courts may issue
injunction in the collection of local and real property taxes provided, taxpayer will
suffer irreparable injury and comply with Rule 58.
Question: May the Commissioner delegate his powers under the Tax Code?
Question: How will you describe the income tax situs of the Philippines?
B. RECOGNITION OF INCOME
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
This principle requires that revenue must be earned before it is recorded. The fact
of recognition is not the actual receipt of certain income; but the right to receive
which must be unconditional
2. Minimum wage earners (MWE) – worker in the private sector who are paid
the statutory minimum wage or to an employee in the public sector with
compensation income of not more than the statutory minimum wage in the
non-agricultural sector where he is assigned.
1. gross sales/receipts does not exceed VAT Threshold of P3M – may avail:
a) graduated rate; or
b) 8% on gross sales/receipts in excess of Php250,000;
provided he signified his intention to avail of this rate and gross
receipts does not exceed Vat threshold of P3M.
2. Election is irrevocable for the taxable year.
3. Option of 8% Income Tax Rate Not Available to:
a. Vat registered taxpayer regardless of gross sales/receipts;
b. Taxpayer subject to other percentage tax under Title V of the Tax Code;
c. Partners in General Professional Partnership on their distributive share;
d. Gross Income exceeds the Vat Threshold of Php3M.
Question: What if the taxpayer opted to avail of the 8% rate, but at the end of the
taxable year his gross sales/receipts and other income exceeded the P3M VAT
Threshold, how will his income be computed.? What will happen to the payments he
made for the 1st to 3rd quarters of the year at the rate of 8%?
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
Suggested Answer: His total income, including his income for the 1st to 3rd
quarters shall be computed based on the graduated rate. The income payments he
made at the rate of 8% for the 1st to 3rd quarters shall be deducted from the ttotal
income tax due for the said taxable year.
a. General Rule: Upon the sale or exchange of property, the entire amount of the
gain or loss, as the case may be, shall be recognized.
Gain is taxable and loss is deductible. [Sec. 40 (C)(3)]
b. Presumptive gain – the law declares that when one sells his real property
classified as capital asset, there is a gain derived there from, any cost will not be
recognized, any loss will not be recognized.
Note: If interest income is derived from sources outside the Phi. – not passive
income; Included in the gross income subject to regular income tax.
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
TRAIN LAW – PCSO and Lotto winnings in excess of P10,000 –20% FIT
1) GPP – exempt; partners are taxable on their distributive share from the
Income of the GPP
- may avail of itemized deductions or Optional Standard DedUction (OSD)
but if GPP availed of itemized or OSD – partner can no longer claim any
deduction on his distributive share from the GPP
C. ASSESSMENT AND COLLECTION OF INTERNAL REVENUE TAXES
****a process of ascertaining the correct taxes payable by the taxpayer at a given
taxable year;
****a notice sent to the taxpayer informing him of his tax liabilities, penalties,
interests and charges, with a demand to pay on or before the date specified
therein.
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
Question: Why is a LOA necessary before a revenue examiner can examine the
books of accounts of the taxpayer?
Suggested Answer:
The power to examine was not statutorily given to Rev. Officer; but to the
Commissioner of Internal Revenue (Sec. 6(A), NIRC), and for the Rev. Officer to
exercise such power, authority must be given by the CIR or his duly Authorized
Representative. (Nanox Phil, Inc. v. CIR –CTA EB No. 1629, April 15, 2019)
c. Issuance of Notice of Discrepancy (ND) - sent to the taxpayer to fully afford the
taxpayer an opportunity to present and explain his side on the discrepancies found.
(RR 22-2020). The time and date of the Discussion of Discrepancy shall be
indicated in the notice. The Discrepancy discussion shall not extend beyond thirty
(30) days from receipt of the ND. If the taxpayer disagrees with ND, he must
present documents to prove his position within the period said 30-day period.
Effect of non-appearance - deemed waiver to contest the discrepancy and
admits the discrepancy. The revenue officer, will indorse the issuance of a PAN.
FAN becomes FINAL AND EXECUTORY if not protested or disputed within 30 days
from receipt by the taxpayer. If disputed or protested timely, the FAN becomes a
DISPUTED ASSESSMENT which is appealable to the CTA
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
2. will not become final and 2. Final and executory if not disputed
executory or protested within 30 days from receipt
3. cannot be converted disputed 3. can be converted to disputed
assessment assessment if protested timely
4. not appealable to CTA 4. appealable to CTA
1. waiver not necessarily be in the form prescribed by RMO 20-90 or RDAO 05-01;
2. executed before the expiration of the period to assess or to collect taxes;
3. signed by the taxpayer himself, his duly authorized representative, or by any of
the responsible officials for corporations
4. the expiry date of the period agreed upon to assess or collect the tax is
indicated.
5. need not specify the taxes to be assessed nor the amount thereof;
---except in cases of waiver for collection of taxes
6. taxpayer has the burden to ensure that the waiver is validly executed by its
authorized representative. (He cannot thereafter be invalidated on the ground that
the taxpayer’s representative who participated in the conduct of the audit is not
authorized to sign the waiver.)
7. notarization of the waiver – optional
8. can be accepted by the Commissioner’s authorized representative as prescribed
in existing regulations, the revenue district officer, or the group supervisor
designated in the Letter of Authority for the audit.
9. To be valid, there are only two dates that need to be present on the waiver:
(a) the date of execution, and
(b) the expiry date of the period the taxpayer waives the statute of limitations.
CIR V. NEXT MOBILE, GR 212825 Dec 7, 2015- A taxpayer who is in bad faith
cannot impugn the validity of the waiver.
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
3. PROTEST THE FAN – The taxpayer must state in the protest the nature of the
protest whether by reconsideration or reinvestigation.
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
NOTE a. The administrative claim must be filed within 2 years from the close
of the quarter when VAT was paid.
b. The judicial claim may be filed even after two years, provided it is filed
within 30 days from receipt of the decision or expiration of
the 90 day- period for CIR to decide on the admin. claim.
c. The 90 and 30 days periods are mandatory and jurisdictional.
D. DONOR’S TAX
a. Tax base – total gifts for the calendar year less P250,000 = tax rate 6%
b. Taxpayer – donor;; due date – 30 days from date of donation
c. Sec. 99 of the Tax Code was amended, and the provision on “stranger” was
deleted.
d. Methods used in computing donor’s tax: cumulative or split method
e. Transfer in contemplation of death - sale, transfer or exchange of property
made in the ordinary course of business
(bona fide, at arm’s length, and free from donative intent) considered made in
full and adequate consideration in money or money’s worth.
f. Exemption of certain gifts made by residents
a. to national gov’t or agency not conducted for profit, or LGU
b. in favor of educational or charitable, religious, cultural, NGO, provided not
more than 30% thereof is used for admin. Purposes
Exemption of gifts made by NRA – same as (a) and (b)
Tax credit – pay in foreign country – donor is citizen or resident
Valuation if gift personal property – FMV
Real property – zonal Or FMV (higher)
EN BANC JURISDICTION.
1. Decisions, resolutions on MRecon or new trial of a division (CTA) in the
exercise of its appellate jurisdiction;
a. from administrative agencies—BIR, BOC, Dept. of Finance Dept. of Trade,
Dept. of Agriculture;
b. Decisions, resolutions of RTC:
i) local tax cases
ii) tax collection cases involving final and executory assessments
iii) Decision orders on MRecon/New trial in the exercise of its exclusive
original Jurisdiction;
2. Decision on MRecon/New Trial of the court in division in the exercise of its
exclusive original jurisdiction – NIRC, TCCP (CMTA)
3. CTA (division) decision in the exercise of its exclusive appellate jurisdiction in
criminal cases mentioned above.
4. Decision of RTC in the exercise of their appellate jurisdiction over criminal
cases mentioned above
CASES:
1. LASCONA LAND CO., INC. v. COMM. , G.R. No. 171251, March 5, 2012
Facts: On March 27, 1998, the CIR issued an assessment notice against Lascona
Land Co., Inc. (Lascona) for deficiency income tax for the year 1993. The protest
filed on April 20, 1998 was denied by the CIR on March 3, 1999 on the ground that
the assessment had already become final and executory for failure to appeal to the
CTA within 30 days from the lapse of the 180 day period for CIR to decide on the
protest pursuant to Sec. 228 of the NIRC.
On appeal, the CTA nullified the subject assessment and held that: in cases
of inaction by the CIR on the protested assessment, Section 228 of the NIRC
provided two options for the taxpayer: (1) appeal to the CTA within thirty (30) days
from the lapse of the one hundred eighty (180)-day period, or (2) wait until the
Commissioner decides on his protest before he elevates the case.
The CIR moved for reconsideration and argued that subject assessment is
already final, executory and demandable pursuant to Section 3 (3.1.5) of Revenue
Regulations No. 12-99 dated September 6, 1999 which reads, thus:
Page 15 of 27
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
emphasized that in cases of discrepancy, Section 228 of the NIRC must prevail
over the revenue regulations. The CA dismissed the CIR’s appeal.
Issue: Whether the subject assessment has become final, executory and
demandable for failure of petitioner to file an appeal before the CTA within thirty
(30) days from the lapse of the 180)-day period pursuant to Section 228 of the
NIRC.
Ruling: NO, the assessment is not yet final and executory. Sec. 228 of the
NIRC provides that in case the Commissioner failed to act on the disputed
assessment within the 180-day period from date of submission of documents, a
taxpayer can either: (1) file a petition for review with the Court of Tax Appeals
within 30 days after the expiration of the 180-day period; or (2) await the final
decision of the Commissioner on the disputed assessments and appeal such final
decision to the Court of Tax Appeals within 30 days after receipt of a copy of such
decision,
When the law provided for the remedy to appeal the inaction of the CIR, it did
not intend to limit it to a single remedy of filing of an appeal after the lapse of the
180-day prescribed period. When a taxpayer protested an assessment, he naturally
expects the CIR to decide either positively or negatively. A taxpayer cannot be
prejudiced if he chooses to wait for the final decision of the CIR on the
protested assessment
Lascona opted to await the final decision of the Commissioner on the
protested assessment, it then has the right to appeal such final decision by
filing a petition for review within 30 days after receipt of a copy of such
decision or ruling, even after the expiration of the 180-day period.
DOCTRINES:
1. Sec. 228 of the NIRC provides a taxpayer two (2) options in case the
Commissioner failed to act on the disputed assessment within the 180-day period
from date of submission of documents:
(1) file a petition for review with the Court of Tax Appeals within 30 days
after the expiration of the 180-day period; OR
(2) await the final decision of the Commissioner on the disputed
assessments and appeal such final decision to the Court of
Tax Appeals within 30 days after receipt of a copy of such decision;
Page 16 of 27
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
as any arbitrariness will negate the very reason for government itself. It is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure.
______________
2. Metrobank & Trust Company, v.CIR, G.R. No. 182582 APR 17 2017 _
Facts:
Soldibank Corporation extended to ‘Luzon Hydro Corporation (LHC) a foreign
currency denominated loan in the principal amount of US$123,780,000.00. In their
Agreement, LHC agreed to shoulder all the corresponding internal revenue taxes
required by law to be deducted or withheld on the said loan, the filing of tax returns
and remittance of the taxes withheld to the BIR. On September 1, 2000, Metrobank
acquired Solidbank, and assumed the latter's rights and obligations under the loan
Agreement.
LHC paid Metro bank and withheld the ten percent (10%) final tax on the
interest portions of the said payments and remitted the same to BIR in March and
October 2001. Metrobank claimed it mistakenly paid the said tax and included the
same in the Monthly returns for March and October 2001. On December 27, 2002,
Metrobanki filed a letter to the BIR requesting for the refund thereof.
In view of CIR’s inaction, Metrobank filed its judicial claim for refund via a
petition for review before the CTA on September 10, 2003. The CIR averred that:
(a) the claim for refund is subject to administrative investigation; ( b) Metro bank
must prove that there was double payment of the tax sought to be refunded; ( c)
such claim must be filed within the prescriptive period laid down by law; (d) the
burden of proof to establish the right to a refund is on the taxpayer; and ( e) claims
for tax refunds are in the nature of tax exemptions, and as such, should be
construed strictissimi juris against the taxpayer. CTA Division and En Banc denied
the claim for refund for March 2001 final tax on the ground of prescription.
Metrobank had until April 25, 2003 to file its administrative and judicial claim for
refund for March 2001 only on September 10. 2003. .
Issue: Whether or not the CTA En Banc correctly held that Metrobank's claim for
refund relative to its March 2001 final tax had already prescribed.
Ruling: YES, the claim for refund of the March 2001 final tax had already
prescribed. Sec. 204 (now Sec. 229) of the Tax Code, as amended, provides that
no credit or refund of taxes or penalties shall be allowed unless the taxpayer files in
writing with the Commissioner a claim for credit or refund within two (2) years after
the payment of the tax or penalty.
The two (2)-year prescriptive period commences to run from the time the
refund is ascertained, i.e., the date such tax was paid, and not upon the discovery
by the taxpayer of the erroneous or excessive payment of taxes. In the case at bar,
it is undisputed that Metrobank's final withholding tax liability in March 2001 was
remitted to the BIR on April 25, 2001. As such, it only had until April 25, 2003 to file
its administrative and judicial claims for refund, but the judicial claim for March 2001
was filed only on September 2003. A taxpayer must prove not only his entitlement
to a refund, but also his compliance with the procedural due process as
nonobservance of the prescriptive periods within which to file the administrative and
the judicial claims would result in the denial of his claim.
As regards the claim for refund for October 2001 tax payment for
insufficiency of evidence, the claim was denied. Metrobank’s motion for
reconsideration was partially granted and it was allowed to present further evidence
regarding its claim for refund for the October 2001 final tax
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
DOCTRINES:
3. CE Luzon Geothermal Power Corp. v. CIR, GR No. 197526, July 26, 2017
4. Western Mindanao Power Corp. v. CIR, G.R. No. 181138. June 13, 2012.
Facts:
WMPC, a domestic corporation engaged in the production and sale of
electricity is a VAT-registered taxpayer; and sells electricity solely to NAPOCOR.
On June 20, 2000 and June 13, 2001 it filed applications for tax credit
certificate of its INPUT VAT for the taxable 3rd and 4th quarters of 1999 and all the
taxable quarters of 2000, on the ground that since NAPOCOR is exempt from the
payment of all forms of taxes under Sec. 13 of RA 6395; hence WMPC’s power
generation to NAPOCOR is zero-rated. CIR failed to act on the said request,
WMPC’s petition was dismissed by CTA Second Division noting that the VAT
returns filed did not reflect any zero rated or effectively zero-rated sales and the
invoices and OR did not contain the phrase “zero-rated”. CTA En banc affirmed the
dismissal.
Issue: Whether the CTA En Banc was correct in dismissing the claim for a refund
or tax credit on Input VAT on the ground that WMPC’s official receipts do not
contain the phrase “zero-rated”.
Ruling: YES, the dismissal was correct. WMPC’S claim for refund or tax credit of
INPUT VAT is based on Sec. 112 (A) of the Tax Code. When the claim for refund is
based on a statute granting tax exemption, it partakes of the nature of a tax
exemption; hence, the rule that a statute granting tax exemption is strictly construed
against the person claiming it applies to the claim.
Therefore, the applicant for tax refund or tax credit must prove not only
entitlement to the grant of the claim under substantive law, but must show
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
satisfaction of all documentary and evidentiary requirements for such claim. The
mere fact that WMPC’S application for zero-rating has been approved by the CIR
does not, by itself, justify the grant of a refund or tax credit. The taxpayer must
further comply with the invoicing and accounting requirements mandated by the Tax
Code and the revenue regulations implementing the Code
DOCTRINES:
1. When the claim for refund is based on a statute granting tax exemption, it
partakes of the nature of a tax exemption; hence, the rule that a statute granting tax
exemption is strictly construed against the person claiming it applies to the claim.
2. Under the NIRC (Sec. 10[A] (1)) , a creditable input tax should be evidenced
by a VAT invoice or official receipt, which may only be considered as such when it
complies with the requirements of Sec. 4.108-1 of RR 7-95.
3. RR 7-95 proceeds from the rule-making power of the Sec. of Finance granted
by the Tax Code for the efficient enforcement of its provisions and subsequent
amendments. In several cases, it has been held that the RR 7-95 is reasonable and
in accord with the efficient collection of VAT from covered sales of goods and
services
___________________
Issues: 1. Whether the filing of the protest by BPI suspends the running of the
statutory period to collect said tax.
2. Whether the issuance of the warrant of distraint and/or levy suspends
the period to collect the subject DST
Ruling:
1. The protest filed by petitioner BPI did not constitute a request for
reinvestigation, granted by the respondent BIR Commissioner, nor a
reconsideration, but a protest based on question of law. The same protest letter
did not raise any question of fact; neither did it offer to present any new evidence. In
BIR’s letter to petitioner BPI, dated 10 September 1992, the BIR itself referred to the
protest of petitioner BPI as a request for reconsideration. These considerations
would lead the Court to deduce that the protest letter of petitioner BPI was in the
nature of a request for reconsideration, rather than a request for reinvestigation and,
consequently, Section 224 of the Tax Code of 1977, as amended, on the
suspension of the running of the statute of limitations should not apply.
Even if the said protest be considered a request for reinvestigation, the same
must be granted by the Commissioner to effect a suspension of the period. This is
very clear in Section 223 and as pronounced by the Court in the case of Republic
of the Philippines v. Gancayco, 120 Phil. 376 (1964) where taxpayer Gancayco
requested for a thorough reinvestigation of the assessment against him and
submitted all the evidence for such purpose; but, the Collector ignored the request,
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Review Notes in Taxation Law
Prof. Carmencita C. Dabu
and the records and documents were not at all examined. The Court held in the said
case that:
Since the CIR did not grant the BPI’s alleged request for reinvestigation, the same
did not suspend the running of the period to collect the tax assessed.
DOCTRINE:
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Prof. Carmencita C. Dabu
Facts:
This petition was filed on the following grounds:
a. The FDDA and PCL were issued against petitioner Pacquiao only; but
the Warrant of Distraint and/or Levy/Garnishment issued by the CIR,
however, were made against the assets of both petitioners.
e. Petitioners were not given a copy of the Warrants. Sections 207 and
208 of the Tax Code require the Warrant of Distraint and/or
Levy/Garnishment be served upon the taxpayer.
Issue:
Whether or not there is need for the petitioners to comply with the
requirement of Sec. 11 of RA 1125.
Ruling: The Supreme Court ruled that inasmuch as this case involves a question
of fact, whether petitioners are exempt from the requirement of Sec. 11 of RA 1125
considering that means employed by the CIR in collecting the tax is not sanctioned
by law. The CTA should have set the case for preliminary hearing to ascertain
whether the petitioners are exempt from the said requirement; whether the CIR
employed legal and proper means to collect the subject taxes. In this regard, the
case was remanded to the CTA for further proceedings for the said purpose, and
pending said determination, the CIR was ordered to cease and desist from
implementing the said warrants. At this early stage of the proceedings, it is
premature for this Court to rule on the issues of whether or not the warrants were
defectively issued; or whether the service thereof was done in violation of the rules;
or whether or not respondent's assessments were valid. These matters are
evidentiary in nature, the resolution of which can only be made after a full-
blown trial.
DOCTRINES:
1. The appeal to the CTA does not suspend the collection of the tax assessed,
unless a TRO or injunction is issued by the CTA provided the taxpayer deposit with
the court the amount claimed or posts a surety bond, pursuant to Sec. 11 of RA
1125, the law creating the CTA.
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
6. CIR v. GJM Phil. Mfg. Inc., G.R. No. 202695, Feb. 29, 2016, 785 SCRA 253
Facts:
GJM informed BIR that due to the bankruptcy of its parent company it will
cancel its registration in Makati City and will transfer to Rosario, Cavite. The said
request was confirmed by the BIR. GJM filed its income tax return for 1999 on April
12, 2000. BIR sent a Letter of Informal Conference to GJM relative to its income tax
deficiency for taxable year 1999. Thereafter, BIR issued a Preliminary Assessment
Notice and an undated Assessment Notice; and Final Notice before seizure; but the
latter claimed that it did not receive any assessment notice. A warrant of distraint
and levy was issued; hence GJMA filed a Letter of Protest with the BIR which was
denied; hence, GJM filed a petition for review with the CTA En Banc affirmed the
CTA Division decision granting the petition and cancelling the the assessment
notice and warrant of distraint and levy.
Issues:
1. Who has the burden to prove receipt of the assessment notice?
2. Whether or not the right of the government to assess had already
prescribe
Ruling:
1. If the taxpayer denies having received an assessment from the BIR, it
then becomes incumbent upon the latter to prove by competent evidence that such
notice was indeed received by the addressee. The onus probandi has shifted to the
BIR to show by contrary evidence that GJM indeed received the assessment in the
due course of mail. It has been settled that while a mailed letter is deemed received
by the addressee in the course of mail, this is merely a disputable presumption
subject to contravention, the direct denial of which shifts the burden to the sender to
prove that the mailed letter was, in fact, received by the addressee.
While it is true that an assessment is made when the notice is sent within the
prescribed period, the release, mailing, or sending of the same must still be clearly
and satisfactorily proved. Mere notations made without the taxpayer's intervention,
notice or control, and without adequate supporting evidence cannot suffice.
Otherwise, the defenseless taxpayer would be unreasonably placed at the mercy of
the revenue offices.
2. The BIR failed to prove with competent evidence GJM's receipt of the
assessment, leads to no other conclusion but that no assessment was issued.
Consequently, the government's right to issue an assessment for the said period
has already prescribed. The assessment for deficiency DST is cancelled.
DOCTRINES:
1. When the taxpayer denies having received any assessment notice, the
burden is shifted on the CIR to prove receipt by competent evidence. Failing which
Page 22 of 27
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
will lead to a conclusion that no assessment was issued. Thus, the right of the
government to asses had already prescribed.
2. The assessment notice must be sent at the laterst updated address of the
taxpayer. While a mailed letter is deemed received by the addressee in the course
of mail, this is merely a disputable presumption which can be controverted by
competent evidence..
_________
7.
8
9. SILKAIR (SINGAPORE) PTE. LTD., vs. CIR, GR. No. 166482, Jan 25, 2012,
664 SCRA 33 -
Facts:
SILKAIR, a foreign corporation duly licensed by the SEC to do business in
the Phil., is an on-line international carrier operating the Cebu-Singapore-Cebu and
Davao-Singapore Davao routes. SILKAIR purchased aviation fuel from Petron Corp.
from July 1, 1998 to December 1, 1998, and paid the excise taxes due thereon.
Payment was made by Singapore Airlines for the benefit of SILKAIR. On Oct. 20,
1999, SILKAIR filed an administrative claim for refund of excise taxes on jet
fuel from Petron on the ground of erroneous payment based on Sec. 135(a)
and (b) of the 1997 Tax Code and Article 4 (2) of the Air Transport Agreement
between the Phil. government and Singapore Government.
For failure of CIR to act on said claim SILKAIR appealed to the CTA. Both
CTA and CA dismissed the petition on the ground that while SILKAIR is exempt
from paying excise taxes on petroleum products purchased in the Philippines by
virtue of Sec. 135 (b), it is not the proper party to seek for the refund; but Petron
Corp.-
Issue: Who is the proper party to file the claim for refund.
Ruling: For indirect taxes (i.e. excise tax and valued-added tax or VAT), the
proper party to question or seek a refund of the tax is the STATUTORY
TAXPAYER --- the person on whom the tax is imposed by law and who paid the
same even when he shifts the burden thereof to another; and in this case, it is
Petron Corp.
Page 23 of 27
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
a. The FDDA and PCL were issued against petitioner Pacquiao only; but
the Warrant of Distraint and/or Levy/Garnishment issued by the CIR,
however, were made against the assets of both petitioners.
e. Petitioners were not given a copy of the Warrants. Sections 207 and
208 of the Tax Code require the Warrant of Distraint and/or
Levy/Garnishment be served upon the taxpayer.
Issue:
Whether or not there is need for the petitioners to comply with the
requirement of Sec. 11 of RA 1125.
Ruling:
The Supreme Court ruled that inasmuch as this case involves a question of
fact, whether petitioners are exempt from the requirement of Sec. 11 of RA 1125
considering that means employed by the CIR in collecting the tax is not sanctioned
by law. The CTA should have set the case for preliminary hearing to ascertain
whether the petitioners are exempt from the said requirement; whether the CIR
employed legal and proper means to collect the subject taxes. In this regard, the
case was remanded to the CTA for further proceedings for the said purpose, and
pending said determination, the CIR was ordered to cease and desist from
implementing the said warrants. At this early stage of the proceedings, it is
premature for this Court to rule on the issues of whether or not the warrants were
defectively issued; or whether the service thereof was done in violation of the rules;
or whether or not respondent's assessments were valid. These matters are
evidentiary in nature, the resolution of which can only be made after a full
blown trial.
DOCTRINES:
1. The appeal to the CTA does not suspend the collection of the tax assessed,
unless a TRO or injunction is issued by the CTA provided the taxpayer deposit with
the court the amount claimed or posts a surety bond, pursuant to Sec. 11 of RA
1125, the law creating the CTA.
Page 24 of 27
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
of the security deposit or surety bond required in Section 11 of R.A. No. 1125 was
construed to refer to the PRINCIPAL AMOUNT OF THE DEFICIENCY TAXES
ONLY, excluding penalties, interests and surcharges.
_______________
11. Procter & Gamble Asia Pte Ltd., v. CIR, G.R. No. 205652, Sept. 7, 2017
Facts: P&G is a foreign (Singapore) corporation with a Regional Operating
Headquarter in the Philippines and a VAT-registered taxpayer.
On March 22, 2007 and May 2, 2007, P&G filed applications to BIR RDO
No. 49, for the refund or issuance of tax credit certificates (TCCs) of its input VAT
attributable to its zero-rated sales for the first and second quarters of 2005.
On October 6, 2010, while these cases were pending before the CTA
Division, the Supreme Court promulgated CIR v. Aichi Forging Company of Asia,
Inc. (Aichi) where it was held that compliance with the 120-day period granted
to the CIR, within which to act on an administrative claim for refund or credit
of unutilized input VAT under Section 112(C) of the Tax Code, as amended, is
mandatory and jurisdictional.
In the meantime, on February 12, 2013, the Supreme Court decided the
consolidated cases of CIR v. San Roque Power Corporation, etc. (San Roque),
where BIR Ruling No. DA-489-03 was recognized as an exception to the
mandatory and jurisdictional nature of the 120-day period.
Issues:
1. Whether the judicial claims filed by P&G were prematurely filed for non-
compliance with the 120-day period for CIR to decide on the claims for
refund under Sec. 112 (C).
2. Which of the two decisions should be applied in this case – Aichi or San
Roque?
3. Whether estoppel lie against the BIR in the issuance of BIR Ruling Nol. DA-189-
03 dated December 10, 2003?
Ruling:
NO, P&G’s judicial claims for refund filed on March 28, 2007 and June 8,
2007, respectively, or after the issuance of BIR Ruling No. DA-489-03, but before
the date when Aichi was promulgated were deemed timely filed and should not
Page 25 of 27
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
have been dismissed by the CTA. These cases were considered as exception to
the said 120 day mandatory requirement.
The Court held that BIR Ruling No. DA-489-03 dated December 10, 2003
furnishes a valid basis to hold the CIR in ESTOPPEL because the CIR had
misled taxpayers into filing judicial claims with the CTA even before the lapse
of the 120-day period. There is no dispute that the 120-day period is mandatory
and jurisdictional, and that the CTA does not acquire jurisdiction over a judicial
claim that is filed before the expiration of the 120-day period.
DOCTRINES:
Section 112 of the NIRC, as amended, provides for the rules on claiming
refunds or tax credits of unutilized input VAT. The CIR is given 120 days within
which to grant or deny a claim for refund. Upon receipt of CIR's decision or ruling
denying the said claim, or upon the expiration of the 120-day period without action
from the CIR, the taxpayer has 30 days within which to file a petition for review with
the CTA. Aichi reiterated the rule that the 120-day period for the CIR to decide on
the claim for refund is mandatory and jurisdictional.
Judicial claims for refund of unutilized input VAT attributable to zero dated or
effectively zero-dated transactions filed when BIR Ruling No. DA-489-03 dated
December 10, 2003 was issued up to October 6, 2010, when San Roque was
decided, the taxpayer need not wait for the 120-days for the CIR to decide,
provided, the same is filed within two years from the close of the quarter.
This means that claims for refund of unutilized input VAT attributable to
zero-rated or effectively zero-rated transactions for the period December 10, 2003
to October 6, 2010, the taxpayer need not wait for the 120-day period for the CIR to
decide to file a petition for review with the CTA. Both the administrative and judicial
claims should be filed within the two-year statute of limitations for December 10,
2003 up to October 6, 2010.
3. BIR Ruling No. DA-489-03 is a valid basis to hold the CIR in ESTOPPEL
because the CIR had misled taxpayers into filing judicial claims with the CTA even
Page 26 of 27
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PRE – WEEK REVIEW
Review Notes in Taxation Law
Prof. Carmencita C. Dabu
before the lapse of the 120-day period. The Commissioner cannot be allowed to
later on question the CTA's assumption of jurisdiction over such claim since
equitable estoppel has set in as expressly authorized under Section 246 of the
Tax Code,
_____________
Page 27 of 27
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