Case Updates in Tax - BARLIS

CASE UPDATES IN TAXATION LAW (For the 2017 Bar) By: Jason R. Barlis Vice President for Administration, Saint Louis University, Baguio City Former Dean and Head, Department of Commercial Laws and Taxation and Department of Remedial Laws & Legal Ethics, Saint Louis University School of Law Bar Reviewer in Commercial Laws and Taxation, Albano Bar Review Center & ChanRobles Internet Bar Review SELECTED CASES PENNED BY JUSTICE BERSAMIN Chevron Philippines v. CIR, GR No. 210836, 01 September 2015 Facts: Chevron imported petroleum products. As an importer, it had to pay excise tax on the petroleum products. Subsequently, these products were sold to Clark Development Corporation, an entity that is exempt from direct and indirect taxes. As such, Chevron did not pass on to CDC the burden of the excise taxes paid on the importation of the petroleum products. Question: What is the nature of excise tax on petroleum products? Considering that CDC, the buyer, is an entity exempt from direct and indirect taxes, is Chevron entitled to claim for a refund of the excise tax? Answer: Excise tax on petroleum products is essentially a tax on property, the direct liability for which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt from excise tax is deemed illegal or erroneous, and should be credited or refunded to the payor pursuant to Section 204 of the NIRC. This is because the exemption granted under Section 135 of the NIRC must be construed in favor of the property itself, that is, the petroleum products. Question: Suppose that Chevron shifted the burden of the tax to CDC, will the latter be able to file a claim for refund? Answer: It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for the payment of which may fall on a person other than whoever actually bears the burden of the tax. Simply put, the statutory taxpayer may shift the economic burden of the excise tax payment to another — usually the buyer. In cases involving excise tax exemptions on petroleum products under Section 135 of the NIRC, the Court has consistently held that it is the statutory taxpayer, not the party who only bears the economic burden, who is entitled to claim the tax refund or tax credit. But the Court has also made clear that this rule does not apply where the law grants the party to whom the economic burden of the tax is shifted by virtue of an exemption from both direct and indirect taxes. In which case, such party must be allowed to claim the tax refund or tax credit even if it is not considered as the statutory taxpayer under the law. Mercado v. People, GR No. 167510, 08 July 2015 Facts: Accused is charged with the violation of Section 3602, in relation to Section 2503, of the Tariff and Customs Code of the Philippines. The Information alleges that he willfully, unlawfully and feloniously made an entry of various articles, in that by means of false and fraudulent invoice and declaration as regards the true kind, nature, quality and quantity of the goods such that the goods indicated or declared therein were 162 cartons of "personal effects of no commercial value", when in truth and in fact, they commercial in nature, so as to pay less duties. Although there was a discrepancy between the declaration made and the actual contents of the shipment, the accused firmly disavowed his participation in securing the clearance for the shipment as well as in preparing and filing the import documents. He insisted that being only the consignee of the shipment, he did not file the informal entry in the Bureau of Customs; that based on the documents, the filer was Consular Cargo; that he had no knowledge about the entry; that it was the broker who prepared the import entry declaration; that the papers were submitted by his brokers. The Office of the Solicitor General (OSG) contends that the declaration made in the IIDE by the broker as the accused’s agent-broker bound the latter as the consignee considering that he did not repudiate the declaration. Held: We disagree with the contention of the OSG. The only basis to hold the accused criminally liable under the declaration made by the broker would be if the two of them had acted pursuant to a conspiracy. But even if they had acted pursuant to a conspiracy, there must be an allegation to that effect in the information. We note, however, that the information did not charge the broker as the co-conspirator of the accused. Although the import documents, particularly in the IIDE, Permit to Deliver Import Goods and Bill of Lading, showed Al-mer Cargo Management as the consignee or importer, it was only the broker who made

the sworn declaration in the IIDE inasmuch as only his name and signature appeared therein. The accused’s name was nowhere to be found in said documents, which further showed no trace of his signature, or his participation in their preparation, or his conformity with their contents. Verily, the concrete proof showing that he had affirmed the declarations under oath, as to thereby subject himself to criminal responsibility for either falsification or perjury, was entirely lacking. The accused’s assertion that he had relied in good faith on the declarations made by his broker, who had based them on the information provided in the shipping documents by the foreign exporter, stood unrebutted by the Prosecution. If that was so, his intentional or deliberate participation in any misdeclaration or underdeclaration could not be properly presumed. In so saying, we cannot but conclude that the trial court wrongly found him criminally liable. Republic v. Team (Phils) Energy Corporation, GR No. 188016, 14 January 2015 Question: Taxpayer overpaid its quarterly corporate income tax. What are the options available to it, and what is the rationale for these options? Answer: Section 76 of the NIRC provides that in case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the excess quarterly income tax against income tax due for the taxable years of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor. These are the two alternative options of a corporate taxpayer under such scenario, and the choice of one option precludes the other. The first option is relatively simple. Any tax on income that is paid in excess of the amount due the government may be refunded, provided that a taxpayer properly applies for the refund. The second option works by applying the refundable amount, as shown on the FAR of a given taxable year, against the estimated quarterly income tax liabilities of the succeeding taxable year. These two options under Section 76 are alternative in nature. A corporation must signify its intention — whether to request a tax refund or claim a tax credit — by marking the corresponding option box provided in the FAR. While a taxpayer is required to mark its choice in the form provided by the BIR, this requirement is only for the purpose of facilitating tax collection. One cannot get a tax refund and a tax credit at the same time for the same excess income taxes paid. The logic behind the rule is to ease tax administration, particularly the self-assessment and collection aspects. Question: Taxpayer opted to avail itself of the remedy of refund, instead of the crediting mechanism. In order to be entitled to a refund, is it required that the taxpayer submit its quarterly returns to show that it did not carry-over the excess withholding tax to the succeeding quarter? Answer: No. When the taxpayer was able to establish prima facie its right to the refund by testimonial and object evidence, the BIR should have presented rebuttal evidence to shift the burden of evidence back to the respondent. Indeed, the petitioner ought to have its own copies of the respondent's quarterly returns on file, on the basis of which it could rebut the respondent's claim that it did not carry over its unutilized and excess creditable withholding taxes for the immediately succeeding quarters. The BIR's failure to present such vital document during the trial in order to bolster the petitioner's contention against the respondent's claim for the tax refund was fatal. Agriex Co. Ltd. v. Villanueva, G.R. No. 158150, 10 September 2014 Question: Considering that the Subic Special Economic Zone is by fiction of law a separate customs territory, which body has the authority to conduct seizure and forfeiture of goods therein—the SBMA or the Bureau of Customs? Answer: Both the SBMA and the Bureau of Customs have the power to seize and forfeit goods or articles entering the Subic Bay Freeport, except that SBMA's authority to seize and forfeit goods or articles entering the Subic Bay Freeport has been limited only to cases involving violations of RA No. 7227 or its IRR. There is no question therefore, that the authority of the Bureau of Customs is larger in scope because it covers cases concerning violations of the customs law. The authority of the Bureau of Customs to seize and forfeit goods and articles entering the Subic Bay Freeport does not contravene the nature of the Subic Bay Freeport as a separate customs authority. Indeed, the investors can generally and freely engage in any kind of business as well as import into and export out goods with minimum interference from the Government. Yet, the treatment of the Subic Bay Freeport as a separate customs territory cannot completely divest the Government of its right to intervene in the operations and management of the Subic Bay Freeport, especially when patent violations of the customs and tax laws are discovered. After all, Section 602 of the Tariff and Customs Code vests exclusive original jurisdiction in the Bureau of Customs over seizure and forfeiture cases in the enforcement of the tariff and customs laws. 2

Nursery Care Corporation, et al. v. Acevedo and the City of Manila, G.R. No. 180651, 30 July 2014 Facts: The City of Manila assessed and collected taxes from the individual petitioners pursuant to Section 15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code of Manila. At the same time, the City of Manila imposed additional taxes upon the petitioners pursuant to Section 21 of the Revenue Code of Manila, as amended, as a condition for the renewal of their respective business licenses. Section 21 of the Revenue Code of Manila imposes a tax on businesses subject to excise, value-added or percentage taxes under the NIRC. Petitioners initially paid the tax under protest, and subsequently, they formally requested the Office of the City Treasurer for the tax credit or refund of the local business taxes paid under protest. The petitioners point out that although Section 21 of the Revenue Code of Manila was not itself unconstitutional or invalid, its enforcement against the petitioners constituted double taxation because the local business taxes under Section 15 and Section 17 of the Revenue Code of Manila were already being paid by them. The respondents counter, however, that double taxation did not occur from the imposition and collection of the tax pursuant to Section 21 of the Revenue Code of Manila; that the taxes imposed pursuant to Section 21 were in the concept of indirect taxes upon the consumers of the goods and services sold by a business establishment. Held: The Court holds that all the elements of double taxation concurred upon the City of Manila's assessment on and collection from the petitioners of taxes pursuant to Section 21 of the Revenue Code of Manila. Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold goods and services in the course of trade or business based on a certain percentage of his gross sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed the tax on a person who sold goods and services in the course of trade or business but only identified such person with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer (Section 17), all the taxes — being imposed on the privilege of doing business in the City of Manila in order to make the taxpayers contribute to the city's revenues — were imposed on the same subject matter and for the same purpose. Secondly, the taxes were imposed by the same taxing authority (the City of Manila) and within the same jurisdiction in the same taxing period (i.e., per calendar year). And thirdly, the taxes were all in the nature of local business taxes. Luzon Hydro Corporation v. CIR, G.R. No. 188260, 13 November 2013 A claim for refund or tax credit for unutilized input VAT may be allowed only if the following requisites concur, namely: (a) the taxpayer is VAT-registered; (b) the taxpayer is engaged in zero-rated or effectively zero-rated sales; (c) the input taxes are due or paid; (d) the input taxes are not transitional input taxes; (e) the input taxes have not been applied against output taxes during and in the succeeding quarters; (f) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; (g) for zero-rated sales under Sections 106 (A) (2) (1) and (2); 106 (B); and 108 (B) (1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas; (h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (i) the claim is filed within two years after the close of the taxable quarter when such sales were made H Tambunting Pawnshop v. CIR, G.R. No. 173373, 29 July 2013. The rule that tax deductions, being in the nature of tax exemptions, are to be construed in strictissimi juris against the taxpayer is well settled. Corollary to this rule is the principle that when a taxpayer claims a deduction, he must point to some specific provision of the statute in which that deduction is authorized and must be able to prove that he is entitled to the deduction which the law allows. An item of expenditure, therefore, must fall squarely within the language of the law in order to be deductible. A mere averment that the taxpayer has incurred a loss does not automatically warrant a deduction from its gross income. Habawel v. Court of Tax Appeals, G.R. No. 174759, 7 September 2011 Taxpayer filed a claim for refund overpaid real property tax with the City Treasurer. When the claim was denied, taxpayer filed a special civil action for mandamus before the Regional Trial Court. RTC dismissed the case on the ground that there was failure to exhaust administrative remedies, and that mandamus was not proper because the grant of a tax refund was not a ministerial duty. Thereafter, the taxpayer appealed the case to the CTA. Does the CTA have jurisdiction to entertain the appeal? The CTA has no jurisdiction. Section 7(a)(3) of Republic Act No. 9282 covers only appeals of the “(d)ecisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction.” The provision is clearly limited to local tax disputes decided by the Regional Trial Courts. In contrast, Section 7(a)(5) of RA 9282 grants the CTA cognizance of appeals of the “(d)ecisions 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

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decided by the provincial or city board of assessment appeals.” Section 7(a)(3) is not applicable in this case because a real property tax, being an ad valorem tax, could not be treated as a local tax. OTHER NOTABLE CASE UPDATES CIR v. United Cadiz Sugar Farmers Association Multi-Purpose Cooperative, G.R. No. 209776, 07 December 2016. What is the VAT consequence of sale of sugar? Sugar is an agricultural food product. Notably, tax regulations differentiate between raw sugar and refined sugar. For internal revenue purposes, the sale of raw cane sugar is exempt from VAT because it is considered to be in its original state. On the other hand, refined sugar is an agricultural product that can no longer be considered to be in its original state because it has undergone the refining process; its sale is thus subject to VAT. CIR v. Liquigaz Philippines Corporation, G.R. No. 215534, 18 April 2016. Will a void Final Decision on the Disputed Assessment (FDDA) render the assessment void? Section 228 of the NIRC provides that an assessment shall be void if the taxpayer is not informed in writing of the law and the facts on which it is based. It is, however, silent with regard to a decision on a disputed assessment by the CIR which fails to state the law and facts on which it is based. This void is filled by RR No. 12-99 where it is stated that failure of the FDDA to reflect the facts and law on which it is based will make the decision void. It, however, does not extend to the nullification of the entire assessment. A decision of the CIR on a disputed assessment differs from the assessment itself. Hence, the invalidity of one does not necessarily result to the invalidity of the other — unless the law or regulations otherwise provide. As established, an FDDA that does not inform the taxpayer in writing of the facts and law on which it is based renders the decision void. Therefore, it is as if there was no decision rendered by the CIR. It is tantamount to a denial by inaction by the CIR, which may still be appealed before the CTA and the assessment evaluated on the basis of the available evidence and documents. The merits of the EWT and FBT assessment should have been discussed and not merely brushed aside on account of the void FDDA. To recapitulate, a "decision" differs from an "assessment" and failure of the FDDA to state the facts and law on which it is based renders the decision void — but not necessarily the assessment. Tax laws may not be extended by implication beyond the clear import of their language, nor their operation enlarged so as to embrace matters not specifically provided. Spouses Pacquiao v. Court of Tax Appeals, G.R. No. 213394, 06 April 2016 Ordinarily, before the CTA issues a writ of injunction against the collection of a tax, there is a requirement to post a bond. May the bond requirement be dispensed with? Yes. Whenever it is determined by the courts that the method employed by the CiR in the collection of tax is not sanctioned by law, the bond requirement under Section 11 of R.A. No. 1125 should be dispensed with. The purpose of the rule is not only to prevent jeopardizing the interest of the taxpayer, but more importantly, to prevent the absurd situation wherein the court would declare "that the collection by the summary methods of distraint and levy was violative of law, and then, in the same breath require the petitioner to deposit or file a bond as a prerequisite for the issuance of a writ of injunction." May an assessment for an internal revenue tax liability be based on estimates based on best possible sources? No. A taxpayer should be informed in writing of the law and the facts on which the assessment is made, otherwise, the assessment is void. An assessment, in order to stand judicial scrutiny, must be based on facts. The presumption of the correctness of an assessment, being a mere presumption, cannot be made to rest on another presumption. CIR v. GJM Philippines Manufacturing, Inc., G.R. No. 202695, 29 February 2016 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. Here, 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 controversion, the direct denial of which shifts the burden to the sender to prove that the mailed letter was, in fact, received by the addressee. To prove the fact of mailing, it is essential to present the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the taxpayer or its authorized representative. And if said documents could not be located, the CIR should have, at the very least, submitted to the Court a certification issued by the Bureau of Posts and any other pertinent document executed with its intervention. The Court does not put much credence to the self-serving documentations made by the BIR personnel, especially if they are unsupported by substantial evidence establishing the fact of mailing. 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 4

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. The BIR's failure to prove 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. CE Casecnan Water and Energy Company v. Province of Nueva Ecija, G.R. No. 196278. June 17, 2015 In a local tax case, when the RTC acts with grave abuse of discretion amounting to lack or excess of jurisdiction, which court has jurisdiction to try a special civil action for certiorari? It is the Court of Tax Appeals (CTA) which has the exclusive jurisdiction. In the recent case of City of Manila v. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014, the Court ruled that the CTA likewise has the jurisdiction to issue writs of certiorari or to determine whether there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the CTA's exclusive appellate jurisdiction, thus: The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA, Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law and that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these cases. Taxpayer files a case for injunction to enjoin a Province from collecting a real property tax assessment. Is the case for injunction an ordinary civil action; hence, appeals or petitions for certiorari should be before the CA and not the CTA? No. It is a local tax case. In praying to restrain the collection of RPT, the taxpayer also implicitly questions the propriety of the assessment of such RPT. This is because in ruling as to whether to restrain the collection, the RTC must first necessarily rule on the propriety of the assessment. In other words, in filing an action for injunction to restrain collection, the taxpayer was in effect also challenging the validity of the RPT assessment. It is therefore a local tax case and any appeal or petition for certiorari to question the RTC’s Orders should be brought before the CTA and not the CA. Eastern Telecommunications Philippines v. CIR, G.R. No. 183531. March 25, 2015 ETPI is a domestic corporation engaged in telecommunications. It has various international service agreements with international telecommunications carriers and handles incoming telecommunications services for non-resident foreign telecommunication companies and the relay of said international calls within and around other places in the Philippines. The non-resident foreign corporations pays ETPI in US dollars inwardly remitted through the Philippine local banks. ETPI, however, the receipts it issued did not indicate that its transactions are zero-rated. It argues that the imprint of the word "zero-rated" on the face of the sales invoice or receipt is merely required in RR No. 7-95 which cannot prevail over a taxpayer's substantive right to claim a refund or tax credit for its input taxes. Is ETPI entitled to zero-rating? An applicant for a claim for tax refund or tax credit must not only prove entitlement to the claim but also compliance with all the documentary and evidentiary requirements The requirement in RR 7-95 proceeds from the rule-making authority granted to the Secretary of Finance under Section 245 of the 1977 NIRC (Presidential Decree 1158) for the efficient enforcement of the tax code and of course its amendments. The requirement is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. As aptly explained by the CTA's First Division, the appearance of the word "zero-rated" on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not collect. Further, the printing of the word "zero-rated" on the invoice helps segregate sales that are subject to 10% (now 12%) VAT from those sales that are zero-rated. Silicon Philippines, Inc. v. CIR, G.R. No. 173241. March 25, 2015 SUMMARY OF RULES ON PRESCRIPTIVE PERIODS FOR CLAIMING REFUND OR CREDIT OF INPUT VAT The lessons of this case may be summed up as follows: A. Two-Year Prescriptive Period 5

1. 2.

It is only the administrative claim that must be filed within the two-year prescriptive period. (Aichi) The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made. (San Roque) 3. The only other rule is the Atlas ruling, which applied only from 8 June 2007 to 12 September 2008. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. (San Roque) B. 120+30 Day Period 1. The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period. 2. The 30-day period always applies, whether there is a denial or inaction on the part of the CIR. 3. As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. (Aichi and San Roque) 4. As an exception to the general rule, premature filing is allowed only if filed between 10 December 2003 and 5 October 2010, when BIR Ruling No. DA-489-03 was still in force. (San Roque) 5. Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA-489-03 was in force. (San Roque) Republic v. Soriano, G.R. No. 211666. February 25, 2015 An individual taxpayer’s real property classified as capital asset was expropriated by the government. The DPWH decided to withhold the capital gains tax on the sale. Was this action taken by the DPWH proper? With respect to the capital gains tax, We find merit in petitioner's posture that pursuant to Sections 24 (D) and 56 (A) (3) of the 1997 National Internal Revenue Code (NIRC), capital gains tax due on the sale of real property is a liability for the account of the seller. Section 24 (D) provides that a final tax of six percent (6%) based on the gross selling price or current fair market value, whichever is higher, is imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets…Provided, That the tax liability, if any, on gains from sales or other disposition of real property to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations shall be determined either under Section 24(A) or under this Subsection, at the option of the taxpayer. Thus, it has been held that since capital gains is a tax on passive income, it is the seller, not the buyer, who generally would shoulder the tax. Accordingly, the BIR, in its BIR Ruling No. 476-2013, dated December 18, 2013, constituted the DPWH as a withholding agent to withhold the six percent (6%) final withholding tax in the expropriation of real property for infrastructure projects. As far as the government is concerned, therefore, the capital gains tax remains a liability of the seller since it is a tax on the seller's gain from the sale of the real estate. (Comment: Section 24(D) provides that in case of sales made to the government, there is alternative taxation in that the transaction can either be taxed using capital gains tax under Section 24(D), or, to include the gain as part of the gross income under Section 24(A). If this were so, then the act of DPWH of withholding the capital gains tax would deprive the taxpayer of the availment of the option to use Section 24(A) as the basis of taxation.) Demaala v. Commission on Audit, G.R. No. 199752, 17 February 2015 A Province enacted an Ordinance imposing a special education fund tax at a rate of 0.5% of the assessed value of the property. COA questioned this on the ground that in Section 235 of the Local Government Code, it provides that “a province or city, or a municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax.” According to COA, if a province will impose the tax, it has no discretion but to adopt the 1% rate and that it cannot be lower (like the 0.5% imposed by the province. Resolve. There are, in this case, three (3) considerations that illumine our task of interpretation: (1) the text of Section 235, which is cast in permissive language through the use of the word “may”; (2) the seminal purpose of fiscal autonomy; and (3) the jurisprudentially established preference for weighing the scales in favor of autonomy of local government units. We find it to be in keeping with harmonizing these considerations to conclude that Section 235's specified rate of 1% is a maximum rate rather than an immutable edict. Accordingly, it was well within the power of the Sangguniang Panlalawigan of the Province to enact an ordinance providing for additional levy on real property tax for the special education fund at the rate of 0.5% rather than at 1%. Nippon Express (Philippines) Corp. v. CIR, G.R. No. 185666. February 4, 2015 A VAT invoice is necessary for every sale, barter or exchange of goods or properties while a VAT official receipt properly pertains to every lease of goods or properties, and every sale, barter or exchange of services. In other words, the VAT invoice is the seller's best proof of the sale of the goods or services to the buyer while the VAT receipt is the buyer's best evidence of the payment of goods or services received from the seller.

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Thus, the High Court concluded that VAT invoice and VAT receipt should not be confused as referring to one and the same thing. Certainly, neither does the law intend the two to be used interchangeably. China Banking Corporation v. CIR, G.R. No. 172509. February 4, 2015. When a taxpayer requests for reinvestigation of a tax liability, will it toll the running of the prescriptive period to collect the tax? No. A request for reinvestigation alone will not suspend the statute of limitations. Two things must concur to stop the running of the period: there must be a request for reinvestigation and the CIR must have granted it. The taxpayer failed to raise, at the administrative level or even in the lower courts, the defense of prescription of the right of the government to collect the tax. May the same be raised, for the first time, on appeal to the Supreme Court? Yes, but only when the pleadings or the evidence on record show that the claim is barred by prescription. Winebrenner & Inigo Insurance Brokers v. CIR, G.R. No. 206526. January 28, 2015 Section 76 of the NIRC affords two remedies to a corporate taxpayer which overpays its quarterly income tax payments: (1) to file a claim for refund; or (2) to credit the overpayment against the tax liabilities of the succeeding quarters of the next taxable years. The taxpayer decides to file a claim for refund. The claim was denied because the quarterly ITRs of the taxpayer for the following taxable year were not submitted in evidence. Instead, what was presented was the following year’s Annual ITR. Is it required for a taxpayer filing a claim for refund based on overpayment of quarterly payments to prove that no carry over has been made? There is no question that those who claim must not only prove its entitlement to the excess credits, but likewise must prove that no carry-over has been made in cases where refund is sought. Should the quarterly ITRs of the following year be submitted in evidence? In this case, the fact of having carried over the taxpayer’s excess credits to succeeding taxable year is in issue. According to the CTA En Banc and the CIR, the only evidence that can sufficiently show that carrying over has been made is to present the quarterly ITRs. The Court, however, cannot take the same view. Proving that no carry-over has been made does not absolutely require the presentation of the quarterly ITRs. Any document other than quarterly ITRs may be used to establish that indeed the non-carry over clause has been complied with, provided that such is competent, relevant and part of the records. In this case, the annual ITR (including any other proof that may be sufficient to the Court) can sufficiently reveal whether carry over has been made in subsequent quarters. CBK Power Company, Limited. v. CIR, G.R. Nos. 193383-84. January 14, 2015. Taxpayers can avail themselves of preferential tax treatments pursuant to tax treaties entered into by the Philippines with other countries. Under RMO 1-2000, before taxpayers can avail themselves of tax treaty reliefs, they must first secure a ruling from the International Tax Affairs Division (ITAD) of the BIR. A taxpayer failed to comply with RMO 1-2000. Can the taxpayer still avail of the preferential tax rate? The imposition under RMO 1-2000 is not found at all in the applicable tax treaties. The BIR should not impose additional requirements that would negate the availment of the reliefs provided for under international agreements, especially since said tax treaties do not provide for any prerequisite at all for the availment of the benefits under said agreements. Analyze the following data: WHEN FINAL INCOME TAXES WERE WITHHELD February 2003 May 2003

WHEN REMITTANCE RETURN FILED 03/10/03 06/10/03

LAST DAY OF THE 2-YEAR PRESCRIPTIVE PERIOD 03/10/05 06/10/05

WHEN ADMINISTRATIVE CLAIM WAS FILED

WHEN PETITION FOR REVIEW WAS FILED

March 4, 2005 March 4, 2005

03/09/05 03/09/05

The CIR claims that there was failure to exhaust administrative remedies, as he was not afforded reasonable time to rule on the claim for refund. Resolve. With respect to the remittance filed on March 10, 2003, the Court agrees with the ratiocination of the CTA En Banc in debunking the alleged failure to exhaust administrative remedies. Had CBK Power awaited the action of the Commissioner on its claim for refund prior to taking court action knowing fully well that the prescriptive period was about to end, it would have lost not only its right to seek judicial recourse but its right to recover the final withholding taxes it erroneously paid to the government thereby suffering irreparable damage. Also, while it may be argued that, for the remittance filed on June 10, 2003 that was to prescribe on June 10, 2005, CBK Power could have waited for, at the most, three (3) months from the filing of the 7

administrative claim on March 4, 2005 until the last day of the two-year prescriptive period ending June 10, 2005, that is, if only to give the BIR at the administrative level an opportunity to act on said claim, the Court cannot, on that basis alone, deny a legitimate claim that was, for all intents and purposes, timely filed in accordance with Section 229 of the NIRC. There was no violation of Section 229 since the law, as worded, only requires that an administrative claim be priorly filed. Banco De Oro v. Republic of the Philippines, G.R. No. 198756, January 13, 2015 In 2001, the government, through the Bureau of Treasury, issued Php35B worth of zero-coupon treasury bonds (denominated as PEACe Bonds). The bonds were issued to RCBC for a discounted price of Php10B. This means that after the ten-year life of the bonds, the government has to pay Php35B to the bondholder. It appears that RCBC sourced its funds to pay the Php10B from the government from an undisclosed number of investors. The same day that the bonds were issued by the government to RCBC, the latter immediately transferred the bonds in favor of the undisclosed number of investors. The latter, in turn, resold the bonds to several financial institutions, which also resold the bonds to various investors. At the time of the issue, the BIR issued a ruling that the bonds are free from the 20% final tax on interest income from bank deposits or deposit substitutes, considering that the bonds were originally issued to a single purchaser, RCBC. However, a few days after the maturity of the bonds in 2011, the BIR issued a ruling stating that the bonds are considered as deposit substitutes since government bonds are deposit substitutes regardless of the number of purchasers/lenders at the time of origination/issuance. Questions: 1. Are the bonds considered deposit substitutes? 2. Is the difference between the discounted issue price of P10B and the maturity value of Php35B considered as a trading gain that is exempt from income tax under 3. Is the collection of the tax barred by prescription? Deposit substitutes It may seem that there was only one lender — RCBC on behalf of CODE-NGO — to whom the PEACe Bonds were issued at the time of origination. However, RCBC Capital released the PEACe Bonds to various undisclosed investors at a purchase price of approximately P12 on the same day when the PEACe Bonds were supposedly issued to CODE-NGO/RCBC. In reality, therefore, the entire P10 billion borrowing received by the Bureau of Treasury in exchange for the P35 billion worth of PEACe Bonds was sourced directly from the undisclosed number of investors to whom RCBC Capital/CODE-NGO distributed the PEACe Bonds — all at the time of origination or issuance. At this point, however, we do not know as to how many investors the PEACe Bonds were sold to by RCBC Capital. Should there have been a simultaneous sale to 20 or more lenders/investors, the PEACe Bonds are deemed deposit substitutes within the meaning of Section 22 (Y) of the 1997 National Internal Revenue Code and RCBC Capital/CODE-NGO would have been obliged to pay the 20% final withholding tax on the interest or discount from the PEACe Bonds. Further, the obligation to withhold the 20% final tax on the corresponding interest from the PEACe Bonds would likewise be required of any lender/investor had the latter turned around and sold said PEACe Bonds, whether in whole or part, simultaneously to 20 or more lenders or investors. The Bureau of Internal Revenue's interpretation as expressed in the three 2001 BIR Rulings is not consistent with law. Its interpretation of "at any one time" to mean at the point of origination alone is unduly restrictive. BIR Ruling No. 370-2011 is likewise erroneous insofar as it stated (relying on the 2004 and 2005 BIR Rulings) that "all treasury bonds . . . regardless of the number of purchasers/lenders at the time of origination/issuance are considered deposit substitutes." Being the subject of this petition, it is, thus, declared void because it completely disregarded the 20 or more lender rule added by Congress in the 1997 National Internal Revenue Code. Tax-exempt trading gains The interest income earned from bonds is not synonymous with the "gains" contemplated under Section 32 (B) (7) (g) of the 1997 National Internal Revenue Code, which exempts gains derived from trading, redemption, or retirement of long-term securities from ordinary income tax. The term "gain" as used in Section 32 (B) (7) (g) does not include interest, which represents forbearance for the use of money. Gains from sale or exchange or retirement of bonds or other certificate of indebtedness fall within the general category of "gains derived from dealings in property" under Section 32 (A) (3), while interest from bonds or other certificate of indebtedness falls within the category of "interests" under Section 32 (A) (4). The use of the term "gains from sale" in Section 32 (B) (7) (g) shows the intent of Congress not to include interest as referred under Sections 24, 25, 27, and 28 in the exemption. Hence, the "gains" contemplated in Section 32 (B) (7) (g) refers to: (1) gain realized from the trading of the bonds before their maturity date, which is the difference between the selling price of the bonds in the secondary market and the price at which the bonds were purchased by the seller; and (2) gain realized by the last holder of the bonds when the bonds are redeemed at maturity, which is the difference between the proceeds from the retirement of the bonds and the price at which such last holder acquired the bonds. For discounted instruments, like the zero-coupon bonds, the trading gain shall be the excess of the selling price over the book value or accreted value (original issue price plus accumulated discount from the time of purchase up to the time of sale) of the instruments. 8

Thus, should the PEACe Bonds be found to be within the coverage of deposit substitutes, the proper procedure was for the Bureau of Treasury to pay the face value of the PEACe Bonds to the bondholders and for the Bureau of Internal Revenue to collect the unpaid final withholding tax directly from RCBC Capital/CODE-NGO, or any lender or investor if such be the case, as the withholding agents. Prescription The three (3)-year prescriptive period under Section 203 of the 1997 National Internal Revenue Code to assess and collect internal revenue taxes is extended to 10 years in cases of (1) fraudulent returns; (2) false returns with intent to evade tax; and (3) failure to file a return, to be computed from the time of discovery of the falsity, fraud, or omission. Thus, should it be found that RCBC Capital/CODE-NGO sold the PEACe Bonds to 20 or more lenders/investors, the Bureau of Internal Revenue may still collect the unpaid tax from RCBC Capital/CODENGO within 10 years after the discovery of the omission. PAGCOR v. BIR, G.R. No. 215427, December 10, 2014 Clarifying the tax liability on the income of PAGCOR: Section 1 of R.A. No. 9337, amending Section 27 (c) of R.A. No. 8424, by excluding petitioner from the enumeration of GOCCs exempted from corporate income tax, is valid and constitutional. In addition, we hold that: 1. PAGCOR’s tax privilege of paying five percent (5%) franchise tax in lieu of all other taxes with respect to its income from gaming operations, pursuant to P.D. 1869, as amended, is not repealed or amended by Section 1 (c) of R.A. No. 9337; 2. PAGCOR’s income from gaming operations is subject to the five percent (5%) franchise tax only; and 3. PAGCOR’s income from other related services is subject to corporate income tax only. Samar-I Electric Cooperative v. CIR, G.R. No. 193100, December 10, 2014 The formal assessment notice and the demand letter issued to the taxpayer were not accompanied by a written explanation of the legal and factual bases of the deficiency taxes assessed. However, the taxpayer was given a copy of the results and findings of the tax examiner, copies of the working papers, and the details of discrepancies attached to the preliminary assessment. Is the assessment valid? Although the FAN and demand letter issued to petitioner were not accompanied by a written explanation of the legal and factual bases of the deficiency taxes assessed against the petitioner, the records showed that respondent in its letter dated April 10, 2003 responded to petitioner's October 14, 2002 letterprotest, explaining at length the factual and legal bases of the deficiency tax assessments and denying the protest. Considering the foregoing exchange of correspondence and documents between the parties, we find that the requirement of Section 228 was substantially complied with. Respondent had fully informed petitioner in writing of the factual and legal bases of the deficiency taxes assessment, which enabled the latter to file an "effective" protest, much unlike the taxpayer's situation in Enron. Petitioner's right to due process was thus not violated. City of Manila v. Judge Colet, G.R. No. 120051. December 10, 2014 City of Manila passed an ordinance, Section 21(B) of which levies a percentage tax on transportation carriers. The petitioners, transport operators, contend that the ordinance violates Section 133(j) of the Local Government Code which expressly states that the taxing powers of the LGUs shall not extend to the transportation business. On the other hand, the City countered that Section 143(h) of the Code explicitly authorizes the imposition of a tax “on any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax: Provided, That on any business subject to the excise, value-added or percentage tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year.” The City argues that this provision authorizes a local government (city/municipality) to impose a tax on those businesses subject to excise, VAT or percentage tax. And since the transportation business is subject to percentage tax, then, the provision of Section 143(h) applies. The Court ruled that Section 133 (j) of the LGC prevails over Section 143 (h) of the same Code, and Section 21 (B) of the Manila Revenue Code, as amended, was manifestly in contravention of the former. Section 133 (j) of the LGC is a specific provision that explicitly withholds from any LGU, i.e., whether the province, city, municipality, or barangay, the power to tax the gross receipts of transportation contractors, persons engaged in the transportation of passengers or freight by hire, and common carriers by air, land, or water. In contrast, Section 143 of the LGC defines the general power of the municipality (as well as the city, if read in relation to Section 151 of the same Code) to tax businesses within its jurisdiction. While paragraphs (a) to (g) thereof identify the particular businesses and fix the imposable tax rates for each, paragraph (h) is apparently the "catch-all provision" allowing the municipality to impose tax "on any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax[.]” 9

The succeeding proviso of Section 143 (h) of the LGC, viz., "Provided, That on any business subject to the excise, value-added or percentage tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year[,]" is not a specific grant of power to the municipality or city to impose business tax on the gross sales or receipts of such a business. Rather, the proviso only fixes a maximum rate of imposable business tax in case the business taxed under Section 143 (h) of the LGC happens to be subject to excise, value added, or percentage tax under the NIRC. The omnibus grant of power to municipalities and cities under Section 143 (h) of the LGC cannot overcome the specific exception/exemption in Section 133 (j) of the same Code. This is in accord with the rule on statutory construction that specific provisions must prevail over general ones. A special and specific provision prevails over a general provision irrespective of their relative positions in the statute. Generalia specialibus non derogant. Where there is in the same statute a particular enactment and also a general one which in its most comprehensive sense would include what is embraced in the former, the particular enactment must be operative, and the general enactment must be taken to affect only such cases within its general language as are not within the provisions of the particular enactment CIR v. The Stanley Works Sales (Phils.), Inc., G.R. No. 187589. December 3, 2014 The statute of limitations on the right to assess and collect a tax means that once the period established by law for the assessment and collection of taxes has lapsed, the government's corresponding right to enforce that action is barred by provision of law. The period to assess and collect deficiency taxes may be extended only upon a written agreement between the CIR and the taxpayer prior to the expiration of the three-year prescribed period in accordance with Section 222 (b) of the NIRC. In relation to the implementation of this provision, the CIR issued Revenue Memorandum Order (RMO) No. 20-90 10 on 4 April 1990 to provide guidelines on the proper execution of the Waiver of the Statute of Limitations. In Philippine Journalist, Inc. v. CIR, the Court categorically stated that a Waiver must strictly conform to RMO No. 20-90. The BIR cannot claim the benefits of extending the period to collect the deficiency tax as a consequence of the Waiver when, in truth it was the BIR's inaction which is the proximate cause of the defects of the Waiver. The BIR has the burden of ensuring compliance with the requirements of RMO No. 20-90, as they have the burden of securing the right of the government to assess and collect tax deficiencies. This right would prescribe absent any showing of a valid extension of the period set by the law. To emphasize, the Waiver was not a unilateral act of the taxpayer; hence, the BIR must act on it, either by conforming to or by disagreeing with the extension. A waiver of the statute of limitations, whether on assessment or collection, should not be construed as a waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer and the BIR to extend the period to a date certain, within which the latter could still assess or collect taxes due. The waiver does not imply that the taxpayer relinquishes the right to invoke prescription unequivocally. CIR v. Basf Coating + Inks Phils., Inc., G.R. No. 198677. November 26, 2014 The Notice of Assessment was sent to a wrong address. This notwithstanding, the BIR issued a First Notice Before Issuance of Warrant of Distraint and Levy. Discuss the propriety of the action of the BIR. It might not also be amiss to point out that petitioner's issuance of the First Notice Before Issuance of Warrant of Distraint and Levy violated respondent's right to due process because no valid notice of assessment was sent to it. An invalid assessment bears no valid fruit. The law imposes a substantive, not merely a formal, requirement. To proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the cardinal principle in administrative investigations: that taxpayers should be able to present their case and adduce supporting evidence. In the instant case, respondent has not properly been informed of the basis of its tax liabilities. Without complying with the unequivocal mandate of first informing the taxpayer of the government's claim, there can be no deprivation of property, because no effective protest can be made. City of Lapu-Lapu v. PEZA, G.R. No. 184203. November 26, 2014 In real property taxation, once an assessment has already been issued by the assessor, the proper remedy of a taxpayer depends on whether the assessment was erroneous or illegal. An erroneous assessment "presupposes that the taxpayer is subject to the tax but is disputing the correctness of the amount assessed." With an erroneous assessment, the taxpayer claims that the local assessor erred in determining any of the items for computing the real property tax, i.e., the value of the real property or the portion thereof subject to tax and the proper assessment levels. In case of an erroneous assessment, the taxpayer must exhaust the administrative remedies provided under the Local Government Code before resorting to judicial action. Thus, the taxpayer must first pay the real property tax under protest as required by Section 252 of the Local Government Code. Exhaustion of administrative remedies under the Local Government Code is necessary in cases of erroneous assessments where the correctness of the amount assessed is assailed. The taxpayer must first pay the tax then file a protest with the Local Treasurer within 30 days from date of payment of tax. If protest is denied or upon the lapse of the 60-day period to decide the protest, the taxpayer may appeal to the Local Board of Assessment Appeals within 60 days from the denial of the protest or the lapse of the 60-day period 10

to decide the protest. The Local Board of Assessment Appeals has 120 days to decide the appeal. If the taxpayer is unsatisfied with the Local Board's decision, the taxpayer may appeal before the Central Board of Assessment Appeals within 30 days from receipt of the Local Board's decision. On the other hand, an assessment is illegal if it was made without authority under the law. In case of an illegal assessment, the taxpayer may directly resort to judicial action without paying under protest the assessed tax and filing an appeal with the Local and Central Board of Assessment Appeals. In case of an illegal assessment where the assessment was issued without authority, exhaustion of administrative remedies is not necessary and the taxpayer may directly resort to judicial action. The taxpayer shall file a complaint for injunction before the Regional Trial Court to enjoin the local government unit from collecting real property taxes. The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax case decided by the Regional Trial Court. The appeal shall be filed within fifteen (15) days from notice of the trial court's decision. In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint for injunction to enjoin the impending sale of the real property at public auction. In case the local government unit has already sold the property at public auction, the taxpayer must first deposit with the court the amount for which the real property was sold, together with interest of 2% per month from the date of sale to the time of the institution of action. The taxpayer may then file a complaint to assail the validity of the public auction. The decisions of the Regional Trial Court in these cases shall be appealable before the Court of Tax Appeals, and the latter's decisions appealable before this court through a petition for review on certiorari under Rule 45 of the Rules of Court. In Mactan Cebu International Airport Authority v. Hon. Marcos, this court classified the exemptions from real property taxes into ownership, character, and usage exemptions. Ownership exemptions are exemptions based on the ownership of the real property. The exemptions of real property owned by the Republic of the Philippines, provinces, cities, municipalities, barangays, and registered cooperatives fall under this classification. Character exemptions are exemptions based on the character of the real property. Thus, no real property taxes may be levied on charitable institutions, houses and temples of prayer like churches, parsonages, or convents appurtenant thereto, mosques, and non profit or religious cemeteries. Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may be levied on real property such as: (1) lands and buildings actually, directly, and exclusively used for religious, charitable or educational purpose; (2) machineries and equipment actually, directly and exclusively used by local water districts or by government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and (3) machinery and equipment used for pollution control and environmental protection. BIR v. Court of Appeals, G.R. No. 197590. November 24, 2014 The BIR issued a notice to the spouses Manly requiring them to substantiate the source of their income that would justify the purchase of a Php17M worth of log cabin in Tagaytay City. It also appears that for the period from 1998-2003, the spouses purchased motor vehicles. However, their income, as reflected in their tax returns, could not justify the spending they have incurred. After an investigation conducted by the BIR, the spouses Manly were charged for tax evasion. The DOJ, however, refused to file the case for tax evasion, as it found no probable cause to indict. The BIR, imputing grave abuse of discretion on the part of the DOJ, filed an action for certiorari before the CA. Was there grave abuse of discretion? The spouses Manly were charged for tax evasion for substantially under-declaring their income. In the case of income, for it to be taxable, there must be a gain realized or received by the taxpayer, which is not excluded by law or treaty from taxation. The government is allowed to resort to all evidence or resources available to determine a taxpayer's income and to use methods to reconstruct his income. A method commonly used by the government is the expenditure method, which is a method of reconstructing a taxpayer's income by deducting the aggregate yearly expenditures from the declared yearly income. The theory of this method is that when the amount of the money that a taxpayer spends during a given year exceeds his reported or declared income and the source of such money is unexplained, it may be inferred that such expenditures represent unreported or undeclared income. We are convinced that there is probable cause to indict the spouses Manly for tax evasion as the BIR was able to show that a tax is due from them. From the figures presented by the BIR, there is a manifest showing that spouses Manly had underdeclared their income. The huge disparity between Antonio Manly's reported or declared annual income for the past several years and the spouses' cash acquisitions for the years 2000, 2001, and 2003 cannot be ignored. In fact, it makes us wonder how they were able to purchase the properties in cash given Antonio's meager income. There was, therefore, a grave abuse of discretion on the part of the DOJ when it failed to find probable cause for tax evasion. Philippine American Life and General Insurance Company v. The Secretary of Finance, G.R. No. 210987, 24 November 2014 PhilamLife owns PhilamCare shares. In 2009, to divest itself of ownership in PhilamCare, PhilamLife held a competitive bidding of the shares. STI Investments emerged as the winning bidder. To facilitate the transfer of the ownership of shares, the necessary documentary stamps tax and capital gains taxes were paid. However, PhilamLife was informed of potential donor’s tax liability under Section 100 of the NIRC, as it appeared that the 11

selling price of the shares sold was lower than their book value based on the financial statements of PhilamCare as of the end of 2008. PhilamLife then requested for a ruling to confirm that the sale was not subject to donor's tax, pointing out, in its request, that the transaction cannot attract donor's tax liability since there was no donative intent and, ergo, no taxable donation, and that donor's tax does not apply to sale of shares sold in an open bidding process. The CIR, however, denied PhilamLife’s request. PhilamLife subsequently requested the Secretary of Finance to review the CIR’s action, but the Secretary affirmed the CIR’s ruling. Not contented, PhilamLife elevated the matter to the Court of Appeals via Petition for Review under Rule 43. May donor’s tax be imposed under Section 100 of the NIRC even if there was no donative intent and that the sale was under a competitive bidding process? The absence of donative intent, if that be the case, does not exempt the sales of stock transaction from donor's tax since Sec. 100 of the NIRC categorically states that the amount by which the fair market value of the property exceeded the value of the consideration shall be deemed a gift. Thus, even if there is no actual donation, the difference in price is considered a donation by fiction of law. Under Section 4 of the NIRC, the CIR has the power to interpret tax laws, subject to review by the Secretary of Finance. Where does one seek immediate recourse from the adverse ruling of the Secretary of Finance in its exercise of its power of review under Sec. 4? Admittedly, there is no provision in law that expressly provides where exactly the ruling of the Secretary of Finance under the adverted NIRC provision is appealable to. However, We find that Sec. 7 (a) (1) of RA 1125, as amended, addresses the seeming gap in the law as it vests the CTA, albeit impliedly, with jurisdiction over the CA petition as "other matters" arising under the NIRC or other laws administered by the BIR. As stated: Sec. 7. Jurisdiction. — The CTA shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: 1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue. Even though the provision suggests that it only covers rulings of the Commissioner, We hold that it is, nonetheless, sufficient enough to include appeals from the Secretary's review under Sec. 4 of the NIRC. In the case of British American Tobacco v. Camacho, G.R. No. 163583, August 20, 2008, the Supreme Court ruled that where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. On the other hand, in Asia International Auctioneers, Inc. v. Parayno, Jr., G.R. No. 163445, December 18, 2007, the Court held that if is assailed are rulings or opinions of the Commissioner on tax treatments, jurisdiction over the controversy is lodged with the CTA. Which court then would have jurisdiction in the event that the taxpayer simultaneously raises the issue of validity of law or regulation and the administrative ruling or opinion on tax treatments? In the recent case of City of Manila v. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014, the Court en banc has ruled that the CTA now has the power of certiorari in cases within its appellate jurisdiction. The case diametrically opposes British American Tobacco to the effect that it is now within the power of the CTA, through its power of certiorari, to rule on the validity of a particular administrative rule or regulation so long as it is within its appellate jurisdiction. Hence, it can now rule not only on the propriety of an assessment or tax treatment of a certain transaction, but also on the validity of the revenue regulation or revenue memorandum circular on which the said assessment is based. CIR v. Bank of Commerce, G.R. No. 180529. November 13, 2013 Traders Royal Bank (TRB) and Bank of Commerce (BOC) entered into a Purchase and Sale Agreement whereby TRB sold to BOC certain identified recorded assets in consideration of BOC assuming identified recorded liabilities of TRB. In the agreement, it was stipulated that BOC and TRB shall continue to exist as separate corporations with distinct corporate personalities. Subsequently, BOC received an assessment from BIR. The assessment was addressed to “Traders Royal Bank (now Bank of Commerce).” BOC protested the assessment, arguing that it should not be liable for the tax. The BIR argued that BOC can be held liable for the tax assessment of TRB as BOC assumed the obligations and liabilities of TRB pursuant to the Purchase and Sale Agreement. The Court ruled that BOC cannot be held liable for the tax assessment of TRB. The two corporations remained to have their separate personalities notwithstanding the Purchase and Sale Agreement. Moreover, the agreement did not result into a merger of the two banks; thus, BOC cannot be held liable for the obligations that were not specifically assumed by it. CIR v. San Roque Power Corporation, G.R. No. 187485. February 12, 2013 Taganito Mining Corporation v. CIR, G.R. No. 196113. February 12, 2013 Philex Mining Corporation v. CIR, G.R. No. 197156. February 12, 2013 (See also: Ruling on the Motion for Reconsideration dated 08 October 2013)

12

These are cases involving claims for refund of input VAT. In these cases, the Court explained the seemingly conflicting rulings in connection with the period of filing a claim on input tax credits. The Facts: CIR v. San Roque Power Corporation, G.R. No. 187485. February 12, 2013: On 28 March 2003, San Roque filed an amended quarterly VAT return for the year 2001 by increasing its input VAT. It filed its claim for refund on even date. Due to the BIR’s inaction, it filed a Petition for Review with the CTA on 10 April 2003. Taganito Mining Corporation v. CIR, G.R. No. 196113. February 12, 2013: Taganito filed a written claim for refund of input VAT on 14 November 2006. Ninety two days later, or nn 14 February 2007, as the BIR did not yet act of the claim for refund, Taganito filed its Petition for Review with the CTA. Philex Mining Corporation v. CIR, G.R. No. 197156. February 12, 2013: On October 21, 2005, Philex filed its Original VAT Return for the third quarter of taxable year 2005 and Amended VAT Return for the same quarter on December 1, 2005. On March 20, 2006, Philex filed its claim for refund/tax credit. However, due to the CIR's failure to act on such claim, on October 17, 2007, pursuant to Sections 112 and 229 of the NIRC of 1997, as amended, Philex filed a Petition for Review with the CTA. Common Facts: On 10 December 2003, the BIR, in response to response to a query made by the One Stop Shop InterAgency Tax Credit and Drawback Center of the Department of Finance, the government agency tasked with processing tax refunds and credits, issued Ruling No. DA-489-03. It provides that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review." Prior to this ruling, the BIR held that the expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed. On 08 June 2007, the Supreme Court promulgated Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue. In the said case, it stated that refundable or creditable input VAT and illegally or erroneously collected national internal revenue tax are the same, insofar as both are monetary amounts which are currently in the hands of the government but must rightfully be returned to the taxpayer. Known as the Atlas doctrine, it states that the two-year prescriptive period to file a claim for refund should be counted from the date of payment of the output VAT, not from the close of the taxable quarter when the sales involving the input VAT were made. On 12 September 2008, the Supreme Court abandoned the Atlas doctrine when it ruled on the case of the CIR v. Mirant Pagbilao Corporation, G.R. No. 172129, 12 September 2008. The Mirant doctrine counts the two-year prescriptive period from the "close of the taxable quarter when the sales were made" as expressly stated in the law, which means the last day of the taxable quarter. And on 06 October 2010, the Supreme Court further clarified in CIR v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, that the failure to await the decision of the Commissioner or the lapse of 120-day period prescribed in Section 112 (D) amounts to a premature filing. In this case, the High Court ruled that once the taxpayer files a written claim for refund with the BIR within the two-year period provided in Section 112, the BIR should be given a period of 120 days to resolve the matter. Within this 120-day period, if the BIR acts adversely, the taxpayer may appeal within 30 days from receipt of the adverse decision. But if the BIR does not act, the taxpayer has 30 days from the lapse of the 120-day period to appeal. Failure to appeal within the said 30-day period will result into the finality of the assessment. This is known as the “120+30” day rule. Issue: Were the Petitions of San Roque, Taganito and Philex timely filed? Ruling: The Court explained the 120+30 day rule held in Aichi and compared this with the Altas Doctrine and the Mirant Doctrine regarding claims for refund of inputs taxes. The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-year prescriptive period under Section 229, should be effective only from its promulgation on 8 June 2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should be governed by Section 112 (A) following the verba legis rule. The Mirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule, thus applying Section 112 (A) in computing the two-year prescriptive period in claiming refund or credit of input VAT. The Atlas doctrine has no relevance to the 120+30 day periods under Section 112 (C) because the application of the 120+30 day periods was not in issue in Atlas. The application of the 120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112 (C) is plain, clear, and unambiguous. When Section 112 (C) states that "the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents," the law clearly gives the Commissioner 120 days within which to decide the taxpayer's claim. Resort to the courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing 13

the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and elementary. When Section 112 (C) states that "the taxpayer affected may, within thirty (30) days from receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals," the law does not make the 120+30 day periods optional just because the law uses the word "may." The word "may" simply means that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of the decision, or within 30 days from the expiration of the 120-day period. Certainly, by no stretch of the imagination can the word "may" be construed as making the 120+30 day periods optional, allowing the taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner. As to San Roque: Clearly, San Roque failed to comply with the 120-day waiting period, the time expressly given by law to the Commissioner to decide whether to grant or deny San Roque's application for tax refund or credit. It is indisputable that compliance with the 120-day waiting period is mandatory and jurisdictional. San Roque cannot rely on the Atlas doctrine because San Roque filed its petition for review with the CTA more than four years before Atlas was promulgated. The Atlas doctrine did not exist at the time San Roque failed to comply with the 120-day period. Thus, San Roque cannot invoke the Atlas doctrine as an excuse for its failure to wait for the 120-day period to lapse. San Roque, therefore, cannot benefit from BIR Ruling No. DA-489-03 because it filed its judicial claim prematurely on 10 April 2003, before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003. To repeat, San Roque cannot claim that it was misled by the BIR into filing its judicial claim prematurely because BIR Ruling No. DA-489-03 was issued only after San Roque filed its judicial claim. Failure to comply with the 120-day waiting period violates a mandatory provision of law. It violates the doctrine of exhaustion of administrative remedies and renders the petition premature and thus without a cause of action, with the effect that the CTA does not acquire jurisdiction over the taxpayer's petition. Philippine jurisprudence is replete with cases upholding and reiterating these doctrinal principles. As to Taganito: Taganito, however, filed its judicial claim with the CTA on 14 February 2007, after the issuance of BIR Ruling No. DA-489-03 on 10 December 2003. Truly, Taganito can claim that in filing its judicial claim prematurely without waiting for the 120-day period to expire, it was misled by BIR Ruling No. DA-489-03. Thus, Taganito can claim the benefit of BIR Ruling No. DA-489-03, which shields the filing of its judicial claim from the vice of prematurity. As to Philex: Philex's situation is not a case of premature filing of its judicial claim but of late filing, indeed very late filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means nonexhaustion of the 120-day period for the Commissioner to act on an administrative claim. Philex cannot claim the benefit of BIR Ruling No. DA-489-03 because Philex did not file its judicial claim prematurely but filed it long after the lapse of the 30-day period following the expiration of the 120-day period. In fact, Philex filed its judicial claim 426 days after the lapse of the 30-day period. Question: The general rule pursuant to the Aichi doctrine is that concerning input VAT refunds, the 120-day period is mandatory and jurisdictional. Discuss two exceptions to this rule. Answer: 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. There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a specific ruling, misleads a particular taxpayer to prematurely 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 prematurely judicial claims with the CTA. In these cases, 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. A general interpretative rule issued by the Commissioner may be relied upon by taxpayers from the time the rule is issued up to its reversal by the Commissioner or by the Supreme Court. Section 246 of the NIRC is not limited to a reversal only by the Commissioner because this Section expressly states, "Any revocation, modification or reversal" without specifying who made the revocation, modification or reversal. Hence, a reversal by the Supreme Court is covered under Section 246. Question: Rulings are generally applicable only to a particular taxpayer. Is this rule applicable to BIR Ruling No. DA-489-03? Answer: BIR Ruling No. DA-489-03 is a general interpretative rule because it was a response to a query made, not by a particular taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. This government agency is also the addressee, or the entity responded to, in BIR Ruling No. DA-48903. Thus, while this government agency mentions in its query to the Commissioner the administrative claim 14

of Lazi Bay Resources Development, Inc., the agency was in fact asking the Commissioner what to do in cases like the tax claim of Lazi Bay Resources Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period. Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are mandatory and jurisdictional. This approach is consistent with Section 246 of the NIRC, as applied with the “doctrine of operative fact.” Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect. This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into a rule or ruling, will not suffice because such a mere administrative practice may not be uniformly and consistently applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the general public and can be availed of only by those with informal contacts with the government agency. Question: Is BIR Ruling No. DA-489-03 a binding ruling even if it were issued merely by a Deputy Commissioner? Answer: Yes. Although Section 4 of the 1997 Tax Code provides that the "power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance," Section 7 of the same Code does not prohibit the delegation of such power. Thus, "[t]he Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner." Sta. Lucia Realty and Development, Inc. v. City of Pasig, G.R. No. 166838, 15 June 2011 Before a local government can collect real estate tax on properties falling under its territorial jurisdiction, it is imperative to first show that these properties are unquestionably within its geographical boundaries. A local government unit can legitimately exercise powers of government only within the limits of its territorial jurisdiction because beyond these limits, its acts are ultra vires. Although it is true that “Pasig” is the locality stated in the transfer certificates of title of the subject properties, both taxpayer and the municipality of Cainta aver that the metes and bounds of the subject properties, as they are described in the certificates, reveal that they are within Cainta’s boundaries. This only means that there may be a conflict between the location as stated and the location as technically described in the certificates. Mere reliance therefore on the face of the certificates will not suffice as they can only be conclusive evidence of the subject properties’ locations if both the stated and described locations point to the same area. The Antipolo regional trial court, wherein the boundary dispute case between Pasig and Cainta is pending, would be able to best determine once and for all the precise metes and bounds of both Pasig’s and Cainta’s respective territorial jurisdictions. The resolution of this dispute would necessarily ascertain the extent and reach of each local government’s authority, a prerequisite in the proper exercise of their powers, one of which is the power of taxation The City of Manila v. Hon. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014 Question: Does the CTA have jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case? Answer: Yes. Section 7(a)(3) of RA 9282 provides that the CTA shall have exclusive appellate jurisdiction to review by appeal, decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. While there is no categorical statement under RA 1125 as well as the amendatory RA 9282, which provides that the CTA has jurisdiction over petitions for certiorari assailing interlocutory orders issued by the RTC in local tax cases filed before it, Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law and that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these cases. Indeed, in order for any appellate court, to effectively exercise its appellate jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is 15

deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not total. If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same subject matter — precisely the split-jurisdiction situation which is anathema to the orderly administration of justice. Bonifacio Water Corporation v. CIR, G.R. No. 175142, July 22, 2013 Petitioner Bonifacio Water Corporation filed a claim for refund of unutilized input tax credits. Among its documentary evidence for its claim for input VAT are official receipts in the name of "Bonifacio GDE Water Corporation." It appears, however, that the change of its name was unauthorized. The Supreme Court held that the change of petitioner's name to "Bonifacio GDE Water Corporation," being unauthorized and without approval of the SEC, and the issuance of official receipts under that name which were presented to support petitioner's claim for tax refund, cannot be used to allow the grant of tax refund or issuance of a tax credit certificate in petitioner's favor. The absence of official receipts issued in its name is tantamount to non-compliance with the substantiation requirements provided by law. SM Land, Inc. v. City of Manila, G.R. No. 197151, October 22, 2012 May the thirty-day period to file a Petition for Review from the RTC to the CTA be the subject of a motion for extension of time? Section 11 of Republic Act No. 9282 and Section 3(a), Rule 8 of the Revised Rules of the CTA states that an appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. It is also true that the same provisions are silent as to whether such 30-day period can be extended or not. However, Section 11 of Republic Act No. 9282 does state that the Petition for Review shall be filed with the CTA following the procedure analogous to Rule 42 of the Revised Rules of Civil Procedure. Section 1, Rule 42 of the Revised Rules of Civil Procedure provides that the Petition for Review of an adverse judgment or final order of the RTC must be filed with the Court of Appeals within: (1) the original 15-day period from receipt of the judgment or final order to be appealed; (2) an extended period of 15 days from the lapse of the original period; and (3) only for the most compelling reasons, another extended period not to exceed 15 days from the lapse of the first extended period. Following by analogy, Section 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-day original period for filing a Petition for Review with the CTA under Section 11 of Republic Act No. 9282, as implemented by Section 3 (a), Rule 8 of the Revised Rules of the CTA, may be extended for a period of 15 days. No further extension shall be allowed thereafter, except only for the most compelling reasons, in which case the extended period shall not exceed 15 days. United International Pictures AB v. CIR, G.R. No. 168331, October 11, 2012 Section 76 of the NIRC provides that a corporate taxpayer may have the option to carry-over and apply the excess quarterly income tax against income due for the taxable quarters of the succeeding taxable years. Once a corporation exercises the option to carry-over, such option is irrevocable "for that taxable period" and no application for cash refund or issuance of a tax credit certificate shall be allowed therefore. The question is, is a corporation perpetually barred to refund its tax overpayment for taxable year once the option is exercised? Or, is the irrevocability limited only to that taxable period when the option was availed of? What is the meaning of the irrevocability which is “for that taxable period" under the law? The last sentence of Section 76 of the NIRC of 1997 reads: "Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for tax refund or issuance of a tax credit certificate shall be allowed therefore." The phrase "for that taxable period" merely identifies the excess income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer. In the present case, the excess income tax credit, which BPI opted to carry over, was acquired by the said bank during the taxable year 1998. The option of BPI to carry over its 1998 excess income tax credit is irrevocable; it cannot later on opt to apply for a refund of the very same 1998 excess income tax credit. The Court of Appeals mistakenly understood the phrase "for that taxable period" as a prescriptive period for the irrevocability rule . . . . The evident intent of the legislature, in adding the last sentence to Section 76 of the NIRC of 1997, is to keep the taxpayer from flip-flopping on its options, and avoid confusion and complication as regards said taxpayer's excess tax credit. The interpretation of the Court of Appeals only delays the flip-flopping to the end of each succeeding taxable period. Lascona Land Co., Inc. v. CIR, G.R. No. 171251, March 5, 2012 What is the effect of the failure of a taxpayer to appeal within 30 days from the lapse of the 180-day period for the BIR to rule on protested assessments? 16

In RCBC v. CIR, G.R. No. 168498, April 24, 2007, the Court has held 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. These options are mutually exclusive and resort to one bars the application of the other. PAGCOR v. BIR, G.R. No. 172087. March 15, 2011 Is PAGCOR still exempt from corporate income tax and VAT with the enactment of R.A. No. 9337? Under Section 1 of R.A. No. 9337, amending Section 27 (c) of the National Internal Revenue Code of 1977, petitioner is no longer exempt from corporate income tax as it has been effectively omitted from the list of GOCCs that are exempt from it. In this case, PAGCOR failed to prove that it is still exempt from the payment of corporate income tax, considering that Section 1 of R.A. No. 9337 amended Section 27 (c) of the National Internal Revenue Code of 1997 by omitting PAGCOR from the exemption. The legislative intent, as shown by the discussions in the Bicameral Conference Meeting, is to require PAGCOR to pay corporate income tax; hence, the omission or removal of PAGCOR from exemption from the payment of corporate income tax. It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. Thus, the express mention of the GOCCs exempted from payment of corporate income tax excludes all others. Not being excepted, petitioner PAGCOR must be regarded as coming within the purview of the general rule that GOCCs shall pay corporate income tax, expressed in the maxim: exceptio firmat regulam in casibus non exceptis However, PAGCOR is exempt from the payment of VAT, because PAGCOR's charter, P.D. No. 1869, is a special law that grants petitioner exemption from taxes. Republic v. Aquafresh Seafoods, Inc., G.R. No. 170389. October 20, 2010. While the CIR has the authority to prescribe real property values and divide the Philippines into zones, the law is clear that the same has to be done upon consultation with competent appraisers both from the public and private sectors. It is undisputed that at the time of the sale of the subject properties found in Barrio Banica, Roxas City, the same were classified as "RR," or residential, based on the 1995 Revised Zonal Value of Real Properties. Petitioner, thus, cannot unilaterally change the zonal valuation of such properties to "commercial" without first conducting a re-evaluation of the zonal values as mandated under Section 6 (E) of the NIRC. Petitioner's act of re-classifying the subject properties from residential to commercial cannot be done without first complying with the procedures prescribed by law. It bears to stress that ALL the properties in Barrio Banica were classified as residential, under the 1995 Revised Zonal Values of Real Properties. Thus, petitioner's act of classifying the subject properties involves a re-classification and revision of the prescribed zonal values. Even assuming arguendo that the subject properties were used for commercial purposes, the same remains to be residential for zonal value purposes. It appears that actual use is not considered for zonal valuation, but the predominant use of other classification of properties located in the zone. Again, it is undisputed that the entire Barrio Banica has been classified as residential. Quezon City v. RCBC, G.R. No. 171033, August 3, 2010 What is the period of redemption of a property sold at public auction to answer for a real property tax liability? The owner of the delinquent real property or person having legal interest therein, or his representative, has the right to redeem the property within one (1) year from the date of sale upon payment of the delinquent tax and other fees. Verily, the period of redemption of tax delinquent properties should be counted not from the date of registration of the certificate of sale, as previously provided by Section 78 of P.D. No. 464, but rather on the date of sale of the tax delinquent property, as explicitly provided by Section 261 of R.A. No. 7160. Nonetheless, the government of Quezon City, pursuant to the taxing power vested on local government units by Section 5, Article X of the 1987 Constitution and R.A. No. 7160, enacted City Ordinance No. SP-91, S-93, otherwise known as the Quezon City Revenue Code of 1993, providing, among other things, that the one-year redemption period should be counted from the date of the annotation of the sale of the property at the proper registry. To harmonize the provisions of the two laws and to maintain the policy of the law to aid rather than to defeat the owner's right to redeem his property, Section 14 (a), Paragraph 7 of City Ordinance No. SP-91, S93 should be construed as to define the phrase "one (1) year from the date of sale" as appearing in Section 261 of R.A. No. 7160, to mean "one (1) year from the date of the annotation of the sale of the property at the proper registry." Republic v. Marcos II, G.R. Nos. 130371 & 130855. August 4, 2009 Is the failure to file a tax return considered as a “crime involving moral turpitude?”

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The "failure to file an income tax return" is not a crime involving moral turpitude as the mere omission is already a violation regardless of the fraudulent intent or willfulness of the individual. This conclusion is supported by the provisions of the NIRC as well as previous Court decisions which show that with regard to the filing of an income tax return, the NIRC considers three distinct violations: (1) a false return, (2) a fraudulent return with intent to evade tax, and (3) failure to file a return. However, the filing of a "fraudulent return with intent to evade tax" is a crime involving moral turpitude as it entails willfulness and fraudulent intent on the part of the individual. The same, however, cannot be said for "failure to file a return" where the mere omission already constitutes a violation. Thus, this Court holds that even if the conviction of respondent Marcos II is affirmed, the same not being a crime involving moral turpitude cannot serve as a ground for his disqualification. Spouses Montano v. Francisco, G.R. No. 160380. July 30, 2009 Who is entitled to the notice of tax delinquency proceedings, particularly the requirements regarding the publication and notice of an auction sale? In Talusan v. Tayag, the Court held that for purposes of the collection of real property taxes, the registered owner of the property is considered the taxpayer. Hence, only the registered owner is entitled to a notice of tax delinquency and other proceedings relative to the tax sale. In this case, the Court of Appeals correctly held that the GSIS, as the registered owner of the subject property, was the taxpayer that was entitled to the notice of tax delinquency and that of the auction sale, as well as other related notices. It found that the GSIS was not deprived of its property without due process and that notice was regularly served. It pointed out that it had already upheld the validity of the assessment of the real property taxes upon GSIS and the auction sale proceedings in GSIS v. City Assessor of Iloilo City.

Good Luck To All 2017 Bar Candidates! We Are Praying for Your Success! From: ABRC Family

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