Pointers in Taxation Law. Nov 2015docx

Pointers in Taxation Law 2015 Bar Examinations Professor Victoria V. Loanzon With the assistance of Atty. Gerald Co, CPA and Atty. Clemente L. Reyes IV (Both admitted to the Practice of Law on April 24, 2015) I. General Principles Q. What is the nature of the taxing power of government? A. The power to tax is inherent to the state but constitutional provisions limit the exercise thereof. Taxes are mandatory impositions and not a contract between the state and the taxpayer (in invitum) because consent which is an essential element of contract is absent. It has the power to destroy as it puts restraint on personal and property rights. Q. What is the two-fold nature of the power to tax? A. The two-fold nature of the power of taxation is inherent power and legislative power. It is inherent because it is an exercise of sovereign powers and not granted by the Constitution. The primary purpose of taxation is to generate funds for the state to finance the needs of the citizens and promote the common good. This is carried out by way of legislation. Q. What are the relevant theories which govern the state’s inherent power to tax? A. Relevant Theories: Necessity Theory – existence of government is a necessity, therefore it has the right to compel citizens and property to pay taxes; Benefits – ProtectionTheory – payment of taxes allows a citizen to enjoy benefits in an organized society; and Life Blood Theory – taxes constitute the lifeblood of the country and taxes support the operations of government and the public services extended to the people. Lifeblood Theory: Western Mindanao Power Corp v. CIR, 2013: Taxes are the lifeblood of the nation. The Philippines has been struggling to improve its tax efficiency collection for the longest time with minimal success. Consequently, the Philippines has suffered the economic adversities arising from poor tax collections, forcing the government to continue borrowing to fund the budget deficits. National Power Corporation v. City of Cabanatuan, (2003) are the lifeblood of the government, for without taxes, the government can neither exist nor endure.

Q. What is the distinction between the power to tax and the exercise of police power? A. Chevron v. BCDA and CDC: When the purpose of the imposition of a royalty fee upon an oil company is not for the purpose of generating revenue but a recognition that the oil industry is imbued with public interest, then the royalty fee will be considered as a regulatory fee. *Simply stated an imposition that is for revenue is generally a tax while an imposition that has another purpose such as regulation is an exercise of police power.

Q. What are the constitutional proscriptions in enacting tax laws? A. All tax measures must originate from the House of Representatives but Senate may propose or concur with amendments. The rule on taxation must be uniform and equitable; Congress shall evolve a progressive system of taxation (tax rate and tax base are directly proportional as against proportional system which has a fixed rate regardless of tax base; and regressive system where the tax rate and tax base are inversely proportional). The constitutional provision has been interpreted to mean simply that "direct taxes are to be preferred [and] as much as possible, indirect taxes should be minimized. (Tolentino v. Secretary of Finance, 1995)

The Constitution has delegated legislative power to the President to impose tariff rates, import and export quotas, tonnage and wharfage dues and other duties or imposts within the framework of the national development program. Charitable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries and all lands, buildings and improvements, actually, directly and exclusively (ADE) used for religious, charitable or educational purposes are tax exempt. ADE means solely used for the purposes enumerated in the Constitution. Note also that it is the use of property that determines exemption not the use of income coming from such property. (Lung Center of the Philippines v. Quezon City, 2004) Any law granting tax exemption must be approved by majority of all members of Congress. All money collected for a special purpose (special levy or tax as contrasted to general tax) shall be dedicated only for that purpose and any excess shall be transferred to the general fund of the government. All local government units may impose tolls (ex. use of roads), charges (ex. special assessment for certain activities) and fees (ex. building permits, business permits) in line with the principle of local autonomy ; except for non-payment of community taxes/poll taxes, non-payment of other taxes such as real property taxes may subject one to imprisonment. While taxes are not subject to set-off or compensation and over payment when proven forces the government to restore to the taxpayer the amount it overpaid (solution indebiti).

Q. Can a non-profit, non-stock educational institution refuse to settle the assessment of a local government for its building permit? A. No. Angeles University Foundation v. City of Angeles: The DPWH implements the Building Code through the Building Officials of all local government units. While there is incidental revenue to the local government unit, the imposition of a Building Permit partakes of a regulatory nature. The imposition of Building Permit fee is an exercise of police power to ensure compliance with the standards under the Building Code to protect the public from any danger. Q. When enacting tax measures, what general guidelines must the legislator consider? A. In enacting tax measures the legislator must exert every effort to distribute the tax burden between individuals or classes of population; in general, to redistribute resources between individuals (to include some form subsidy by way of support to particular classes like the senior citizens, the poor, the retired employees, the disabled); to provide basis for fiscal policy; to modify patterns of consumption or employment (may have incentives or factors to make them less attractive). Q. What are general characteristicsof tax measures? A. Taxes are enforced and never voluntary (does not need consent of the taxpayer); exacted pursuant to law (part of legislative power but limited by constitutional provisions; and must originate from the House of Representatives); exaction is always in the form of money but failure to pay may result to distraint and levy of properties; taxes are personal and cannot be transferred or transmitted but the burden can be shifted (in case of indirect taxes like VAT), purpose is to raise revenue for public/ governmental purpose; proceeds of tax collection cannot be used for private purpose; levied by authority which has jurisdiction over the following person, property, transaction, rights and privileges (which is the extent of coverage/scope of powers). Q. Discuss the normal tax cycle. A. The Tax Cycle: Levy – Congress determines the persons, property or exercises to be taxed, amount to be raised, rates to be imposed and manner of implementation. Assessment and Collection – The executive branch administers and implements all tax laws; and enforces the levy. Payment and/or Exercise of Remedies – Compliance results in payment but resistance will allow the government and the taxpayer to exercise both administrative and judicial remedies. Q. What is the purpose of tax? A. Fiscal when it raises funds or regulatory which it seeks to achieve social or economic goals. Q. Who are liable for tax?

A. For direct taxes, same person absorbs the tax (ex. income tax, PTR, CTC) and burden to pay cannot be shifted while in indirect taxes, tax is paid by the person other than the one upon whom it is imposed, thus the burden can be shifted (ex. VAT). (Expect questions on VAT-exempt transactions and VATable transactions). Q. What factors must be considered in imposing taxes? A. Consider persons (natural and juridical) to be taxed; consider residence of the tax payer (mobiliasequnturpersonam); consider threshold period and threshold amount; determine situs of the tax to avoid double taxation; review reciprocity and comity principles under tax treaties which may operate for a given tax incident. Q. The employees of the Bureau of Customs assailed the constitutionality of the Attrition Law on the following grounds: denial of due process, violative of the equal protection clause, undue delegation of power, constitutes itself as a bill of attainder and threatens their security of tenure. Will the case prosper? A. BOCEA v. Sec. Teves: No. The Attrition Bill is constitutional. There is a valid classification not violative of the equal protection clause as the employees of BIR and BOC, being involved in revenue collection, are different from other government employees. The law does not violate due process and security of tenure; it is also not a bill of attainder as the underperformance is indicated by a clear standard expressly provided and dismissal is subject to civil service substantive and procedural rules. Q. How are tax measures interpreted? A. As a general rule, tax statutes are construed strictly against the government and liberally in favor of taxpayers; under the lifeblood theory, it frowns against exemptions and there therefore the taxpayer has the burden of proof to show his claim (strictissimi juris);tax amnesty is never presumed. Miramar Fish Company, Inc. v Commissioner of Internal Revenue., G.R. No. 185432, June 4, 2014: A claim for tax refund or credit, like a claim for tax refund exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30 day mandatory and jurisdictional periods. CIR v. San Roque Power Corp and other consolidated cases, G.R No. 205543, June 30, 2014: The general rule is that a void law or administrative act cannot be the source of legal rights or duties. Article 7 of the Civil Code enunciates this general rule, as well as its exception. The Court said that 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, "the 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." The Court further held that provisions of the NIRC particularly Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal language. The taxpayer can file his administrative claim for refund or credit within the two-year prescriptive period. If he files his claim on the last day of the two-year prescriptive period, his claim is stillfiled on time. The Commissioner will have 120 days from such filing to decide the claim. If the Commissioner decides the claim on the 120th day, or does not decide it on that day, the taxpayer still has 30 days to file his judicial claim with the CTA. Q. May a private company refuse to grant a 20% senior for its services? A. No. Manila Memorial Park, Inc and La Funeraria Paz-Sucat v. DSWD Secretary, 2013: The validity of the 20% senior citizen discount and tax deduction scheme under RA 9257, as an exercise of police power of the State, has already been settled in Carlos Superdrug Corporation. The discount given to senior citizens meets all the requirements under the equal protection class. Senior citizens are likewise exempt from 12% VAT imposition. Q. What are the factors to consider in enacting revenue-raising measures? A. Purpose is lawful, identify specific person, property or privilege to be taxed, specify schedule of the rate to be imposed; distinguish if tax is direct or indirect; apportionment of the tax to be collected; situs of taxation; and mode of levy/collection. Q. What may be the subject matter of taxes? A. Personal, capitation or poll – fixed amount without regard to class;

Property – subject to assessment based on area, location, use and normally distinguishes between land and improvements which may include equipment; Excise – based on exercise of privileges or doing business (Expect questions on input/output tax and zero rated transactions); and Customs duties – imposed on commodities exported or imported. Q. May the provisions of a tax law be extended by implication? A. Yes.CIR v. Ariete et al, 2010. It is well-settled that where the language of the law is clear and unequivocal, it must be given its literal application and applied without interpretation. The general rule of requiring adherence to the letter in construing statutes applies with particular strictness to tax laws and provisions of a taxing act are not to be extended by implication. A careful reading of the RMOs pertaining to the Voluntary Assessment Program (VAP) shows that the recording of the information in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer may be excluded from the coverage of the VAP. . Q. Is a claim for tax exemption tantamount to questioning the authority of the assessor? A. No.Camp John Hay Dev. Corp. v. Central Board of Assessment Appeals (“CBAA”), 2013: The Court held that a claim for tax exemption, whether full or partial, does not deal with the authority of localassessor to assess real property tax. Such claim questions the correctness of the assessment and compliance with the applicable provisions of Republic Act (RA) No. 7160 or the Local Government Code (LGC) of 1991, particularly as to requirement of payment under protest, is mandatory. Q. PEZA holds a special charter and created by law. The main objective of the law is to provide a package of incentives to investors locating in areas identified as export processing zones. Through the years, PEZA has established a number of these zones. May PEZA be taxed as a corporate body? A. No.CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R No. 184203, G.R NO. 187583, November 26, 2014:Being an instrumentality of the national government, the PEZA cannot be taxed by local government units. Although a body corporate vested with some corporate powers, the PEZA is not a government-owned or controlled corporation taxable for real property taxes. The PEZA’s predecessor, the EPZA, it was declared non-profit in character with all its revenues devoted for its development, improvement, and maintenance. Consistent with this non- profit character, the EPZA was explicitly declared exempt from real property taxes under its charter. Even the PEZA’s lands and building whose beneficial use have been granted to other persons may not be taxed with real property taxes. The PEZA may only lease its lands and buildings to PEZA-registered economic zone enterprises and entities. These PEZA- registered enterprises and entities, which operate within economic zones, are not subject to real property taxes.

Q. When is there double taxation? A. NURSERY CARE CORPORATION; SHOEMART, INC.; STAR APPLIANCE CENTER, INC.; H&B, INC.; SUPPLIES STATION INC.; and HARDWARE WORKSHOP, INC. vs. ANTHONY ACEVEDO, in his capacity as THE TREASURER OF MANILA; and THE CITY OF MANILA, G.R. NO. 180651, July 30, 2014: There is double taxation whenthe two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character.

Q. XYZ is a cigarette manufacturing company. The Bureau of Internal Revenue assessed it separately for the raw materials it used for manufacturing its products and for its finished products. Is the taxation of raw materials and the products resulting therefrom considered double taxation? A. No. LA SUERTE CIGAR & CIGARETTE FACTORY vs. COURT OF APPEALS AND COMMISSIONER OF INTERNAL REVENUE, G.R No. 125346, G.R Nos. 136328-29, G.R No. 144942, G.R No. 148605, G.R No. 158197, G.R. No. 165499, November 11, 2014: Stemmed leaf tobacco is subject to the specific tax under Section 141 (b). It is a partially prepared tobacco. The removal of the stem or midrib from the leaf tobacco makes the resulting stemmed leaf tobacco a prepared or partially

prepared tobacco. Since the Tax Code contained no definition of “partially prepared tobacco,” then the term should be construed in its general, ordinary, and comprehensive sense x xx.” Finally, excise taxes are essentially taxes on property because they are levied on certain specified goods or articles manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition, and on goods imported. In this case, there is no double taxation in the prohibited sense despite the fact that they are paying the specific tax on the raw material and on the finished product in which the raw material was a part, because the specific tax is imposed by explicit provisions of the Tax Code on two different articles or products: (1) on the stemmed leaf tobacco; and (2) on cigar or cigarette

Q. The City of Manila sought to enforce both Sections 14 and 21 of the Manila Revenue Code claiming that the former is a tax on manufacturers, etc. while the latter applies to business subject to excise, VAT or percentage tax. Will the imposition of both sections amount to invalid double taxation? A. Yes. There is in fact double taxation since both sections are being imposed on the same subject matter (privilege of doing business within the city), for the same purpose, by the same taxing authority, within the same taxing jurisdiction, for the same taxing period, and of the same kind or character (a local business tax imposed on gross sales or receipts).

Q. What is the nature of Documentary Stamp Tax (“DST”)? A. DST partakes of Excise Tax. Prudential Bank v. CIR, 2011: DST on time deposits CIR v. Bank of Commerce, 2013: Liability for payment of DST is for account of the Seller Fort Bonifacio Dev. Corp v. CIR, 2013. DST is an excise tax levied on the exercise by persons of privileges conferred by law * note that this was asked in the 2014 bar even though excluded in the coverage Philacor Credit Corp v. CIR, 2013: DST is due the person (1) making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the taxable documents.

Q. When is DST imposed? COMMISSIONER OF INTERNAL REVENUE vs. PILIPINAS SHELL PETROLEUM CORPORATION, G.R No. 192398, September 29, 2014:DST is in the nature of an excise tax because it is imposed upon the privilege, opportunity or facility offered at exchanges for the transaction of the business. DST is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, or transfer of an obligation, right or property incident thereto. DST is thus imposed on the exercise of these privileges through the execution of specific instruments, independently of the legal status of the transactions giving rise thereto. In a merger of two corporations, the transfer of real properties not conveyed to or vested by means of any specific deed, instrument or writing is not subject to DST.R.A No. 9243, entitled “An Act Rationalizing the Provisions of the Documentary Stamp Tax of the National Internal Revenue Code of 1997” was enacted and took effect on April 27, 2004, which exempts the transfer of real property of a corporation, which is a party to the merger or consolidation, to another corporation, which is also a party to the merger or consolidation, from the payment of DST.

Q. Is an electronic message with instruction to debit an account and pay a person subject to DST? A. No. THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED-PHILIPPINE BRANCHES vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 166018 & 167728, June 4, 2014:On review with the Supreme Court, it held that an electronic message containing instructions to debit their respective local or foreign currency accounts in the Philippines and pay a certain named

recipient also residing in the Philippines is not transaction contemplated under Section 181 of the Tax Code. They are also not bills of exchange due to their non-negotiability. Hence, they are not subject to DST.

Q. National Power Corporation (“NAPOCOR”) transferred its franchise to the newly-created National Transmission Corporation (“TRANSCO”). At the time of transfer, NAPOCOR had pending franchise tax obligations to the local government. May the liability to pay delinquent franchise tax be transferred to TRANSCO? Q. Yes. NATIONAL POWER CORPORATION vs. PROVINCIAL GOVERNMENT OF BATAAN, SANGGUNIANG PANLALAWIGAN OF BATAAN, PASTOR B. VICHUACO (IN HIS OFFICIAL CAPACITY AS PROVINCIAL TREASURER OF BATAAN) and THE REGISTER OF DEEDS OF THE PROVINCE OF BATAAN, G.R. No. 180654, April 21,2014. A corporation that has been ordered to pay franchise tax delinquency but which facilities, including its nationwide franchise, had been transferred to the National Transmission Corporation (TRANSCO) by operation of law during the time of the alleged delinquency, cannot be ordered to pay as it is not the proper party subject to the local franchise tax, the transferee being the one liable. Q. What is the 120+30 Rule in a Claim for refund or credit of unutilized input tax under Section 112 of NIRC? A. Mindanao Geothermal v. CIR, 2013: Requisites – first, administrative claim must be filed with BIR within two years after the close of taxable quarter when zero-rated or effectively zero rated sales were made; second, judicial claim must be made within 30 days from receipt of BIR decision on tax refund/credit claim or if no action is received from the BIR within 120 days. Nippon Express Corp v. CIR, 2013: Failure of BIR to act on a claim within 120 days, will allow the taxpayer to seek relief within 30 days from the lapse of said 120 day period. CIR v. Visayas Geothermal Power Co., 2013: The failure to observe the 120-day period to claim refund/credit is considered prematurely filed and CTA cannot take cognizance of the judicial claim. Q. What is the effect of the non-observance of the 120 day period? A. COMMISSIONER OF INTERNAL REVENUE vs. CE LUZON GEOTHERMAL POWER COMPANY, INC., G.R No. 190198, September 17, 2014. Two claims for refund of the VAT were filed within the two (2)-year prescriptive period. The taxpayer failed to comply with the 120-day period as it filed its judicial claim in C.T.A Case No. 6792 four (4) days after the filing of the administrative claim. The Court held that only C.T.A Case No. 6792 should be dismissed on the ground of lack of jurisdiction for being prematurely filed. However, the Court held that since C.T.A Case No. 6837, the judicial claim was filed a day after the filing of the administrative claim, the same should be sustained based on equitable estoppel having been filed i.e., from December 10, 2003 to October 6, 2010, when BIR Ruling No. DA-489-03 was in place. The supposed jurisdictional defect which would have attended the filling of its judicial claim before the expiration of the 120-day period was cured. Q. Is the 120+30 day rule always mandatory? A. No. TAGANITO MINING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 198076, November 19, 2014 and G.R. No. 201195, November 26, 2014: As an exception to the mandatory and jurisdictional nature of the 120+30 day period, judicial claims filed between December 10, 2003 or from the issuance of BIR Ruling No. DA-489-03, up to October 6, 2010 need not wait for the lapse of the 120+30 day period in consonance with the principle of equitable estoppel. Since Taganito filed its judicial claim with the CTA on February 19, 2004, clearly within the period of exception of December 10, 2003 to October 6, 2010. Its judicial claim was, therefore, not prematurely filed and should not have been dismissed by the CTA En Banc. The SC ruled that the jurisdiction of the CTA over decisions or inaction of the CIR is only appellate in nature and, thus, necessarily requires the prior filing of an administrative case before the CIR under Section 112. A petition filed prior to the lapse of the 120-day period prescribed under said Section would be premature for violating the doctrine on the exhaustion ofadministrative remedies. There is, however, an exception to the mandatory and jurisdictional nature of the 120+30 day period under BIR Ruling No. DA-489-03, dated December 10, 2003, expressly stated 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.”

Q. What are the purposes of the aforementioned 120+30 periods? A. ROHM APOLLO SEMICONDUCTOR PHILIPPINES vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 168950, January 14, 2015.Section 112(D) of the 1997 Tax Code states the time requirements for filing a judicial claim for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the CIR to act on the administrative claim for a refund or credit; and the period of 30 days, which refers to the period for filing a judicial claim with the CTA. It is the 30-day period that is at issue in this case.

Q. What is the purpose of the requirement for printing of sales invoices and official receipts? Silicon Valley, Phils., Inc. v. CIR, 2011. This Court reiterates that, the requirement of [printing] the BIR permit to print on the face of the sales invoices and official receipts is a control mechanism adopted by the Bureau of Internal Revenue to safeguard the interest of the government. Without producing the Authority to Print, the taxpayer cannot claim any tax refund/tax credit. Q. What are the requirements for a tax refund or tax credit? A. CARGILL PHILIPPINES, INC vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 203774, March 11, 2015: The Supreme Court reiterated that it is fatal if the taxpayer failed to print the word “zero-rated” on the VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated sales, even if the claims were made prior to the effectivity of R.A 9337. A VAT invoice is the seller’s best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer’s best evidence of the payment of goods or services received from the seller. The requirement of imprinting the word “zero-rated” proceeds from the rule-making authority granted to the Secretary of Finance by the NIRC for the efficient enforcement of the same Tax Code and its amendments. A VAT-registered person whose sales are zero-rated or effectively zero-rated, Section 112(A) specifically provides for a two-year prescriptive period after the close of the taxable quarter when the sales were made within which such taxpayer may apply for the issuance of a tax credit certificate or refund of creditable input tax. Q. May a claim of refund prosper if the VAT invoices do not indicate the transactions as zero-rated? A. No. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 183531, March 25, 2015:The Court stressed that the failure to indicate the words “zero-rated” on the invoices and receipts issued by a taxpayer would result in the denial of the claim for refund or tax credit. Q. May the BIR impose conditions not included in a tax treaty for the application of tax relief? A. No. Deutsche Bank v. CIR, 2013. A tax treaty is an agreement that provides for a uniform treatment of a taxable event between agreeing countries. The Court reiterated that the purpose of a tax treaty is “it is used to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer avoid international juridical double taxation. Double taxation is the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods” Thus the Court held that the BIR cannot impose additional requirements that would negate the availment of relief provided under international agreements Q. Are persons selling aviation fuel exempt from paying taxes for selling their fuel to international air carriers? A. Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497. February 19, 2014: Under the basic international law principle of pactasuntservanda, the state has the duty to fulfill its treaty obligations in good faith. This entails harmonization of national legislation with treaty provisions. Section 135 (a) of the National Internal Revenue Code embodies the country’s compliance with its undertakings under the 1944 Chicago Convention on International Aviation (Chicago Convention), Article 24 (9) of which has been interpreted to prohibit taxation of aircraft fuel consumed for international transport, and various bilateral air service agreements not to impose excise tax on aviation fuel purchased by international carriers from domestic manufacturers or suppliers on petroleum products sold to tax-exempt international carriers. Evidently, construction of the tax exemption provision in question should give primary consideration to its broad implications on the country’s commitment

under international agreements. In view of the foregoing the Court held that respondent, as the statutory taxpayer who is directly liable to pay the excise tax on its petroleum products is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, the latter having been granted exemption from the payment of said excise tax under Section 135 (a) of the NIRC II. National Internal Revenue Code Q. What is income? A. Income consists of profit or gains as to the amount of money coming to a person or corporation over a specified period of time. Income: definition, nature, tests when it becomes taxable; inclusions of gross income, classification as to source (compensation income, fringe benefits, professional income, income from business, income from dealings in property; passive income investment (ex. Final tax of 20% on interest income, royalty income except on royalty on books which is subject to 10%, yield on monetary benefit from deposit substitutes, prizes or awards except PCSO and Lotto winnings);10% final tax on royalties on literary works, books and musical compositions (LBM); 10% on from winnings from horse races; 10% on cash and stock dividends for Filipinos, annuities, proceeds from insurance policies, prizes and awards, pensions, retirement benefit or separation pay; income from whatever source (ex. forgiveness of indebtedness, tax refund); capital gains tax expect a question on this review Sec. 24(D) of the NIRC for schedule of rate and for actual computation of final sale over a property transaction); Tax rates for non-resident aliens are higher. Check relevant provisions. Q.What are the elements of income? A. Presence of gain or profit, such is realized actually or constructively; and is not exempt by any law or treaty. Q. What is taxable income? A. Items earned or gained as gross income less deductions and/ or personal and additional exemptions, if authorized under the NIRC or any special law; distinguish between ordinary income and ordinary loss. Q. Who are liable to pay income tax? Resident citizens with minimum wage earners considered as special class; non -resident citizens (Overseas contract workers, seafarers); aliens (determine threshold as to amount and period), domestic corporations (review principles on transfer pricing); foreign corporations (review profit sharing for branches) including resident and non-resident foreign corporations, partnerships including general partnerships, co-ownerships and estates and trusts. Q. What is included in income tax? A. Income tax, estate and donor’s taxes, value-added tax, other percentage taxes, excise taxes; documentary stamp taxes; and such other taxes as are or hereafter may be imposed and collected by the BIR. Q. What is the nature of capital gains tax? A. REPUBLIC OF THE PHAILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R No. 211666, February 25, 2015: Capital gains is a tax on passive income, it is the seller, not the buyer, who generally would shoulder the tax. As a general rule, therefore, any of the parties to a transaction shall be liable for the full amount of the documentary stamp tax due, unless they agree among themselves on who shall be liable for the same. Q. What are included when a natural person is taxed? A. Inclusions in compensation income, exclusions and deductions (itemized and standard deductions. Memorize the amounts on personal exemption for individual tax payer under Section 35 (A) of the NIRC.); Income derived from business or practice of profession; treatment of passive income (final tax and need not be reported since deduction is in the form of final tax); tax on capital gains; senior citizens, minimum wage earners and those who granted exemptions under international agreements (those employed with Asian Development Bank and IRRI) are exempt from payment. Q. What are included when domestic corporations are taxed? A. Covered transactions, payment schedule, allowable deductions (itemized and optional standard deductions); treatment of passive incomes subject to tax and those not subject to tax; tax on capital gains; check also on principle of transfer pricing if domestic corporation does business in another foreign country; treatment of accumulated earnings.

Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of (1) proprietary nonprofit educational institutions and (2) proprietary non-profit hospitals. The only qualifications for hospitals are that they must be proprietary and non-profit. "Proprietary" means private, following the definition of a "proprietary educational institution" as "any private school maintained and administered by private individuals or groups" with a government permit. "Non-profit" means no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institution's purposes and all its activities conducted not for profit. Q. What taxes are imposed on an educational institution? A. Angeles University Foundation v. City of Angles, 2012. Only portions actually, directly and exclusively used for charitable purposes are exempt from real property taxes; while portions leased to private entities are not exempt from such taxes. Q. What taxes are imposed on a hospital: CIR v.St. Luke’s Medical Center, 2012: A. As a general principle, a charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to the private benefit of the persons managing or operating the institution. Q. What taxes are imposed on resident foreign corporations? A. General rule – foreign corporations are liable for income derived from Philippine sources; may enjoy certain incentives if covered by a treaty or special provision of law (registration under the Board of Investments and the Philippine Economic Zone Authority); minimum corporate tax due and schedule of payment; treatment of other incomes; liability for capital gains tax; treatment of accumulated earnings Tax for services rendered by a resident corporation outside Philippine territory: Accenture, Inc. v. CIR, 2012: The Court held that that the recipient of the service should be doing business outside the Philippines to qualify for zero-rating is the only logical interpretation of Section 102(b) (2) of the 1977 Tax Code, as we explained in Burmeister: “This can only be the logical interpretation of Section 102 (b) (2). If the provider and recipient of the "other services" are both doing business in the Philippines, the payment of foreign currency is irrelevant. Otherwise, those subject to the regular VAT under Section 102 (a) can avoid paying the VAT by simply stipulating payment in foreign currency inwardly remitted by the recipient of services. To interpret Section 102 (b) (2) to apply to a payer-recipient of services doing business in the Philippines is to make the payment of the regular VAT under Section 102 (a) dependent on the generosity of the taxpayer. The provider of services can choose to pay the regular VAT or avoid it by stipulating payment in foreign currency inwardly remitted by the payer-recipient. Such interpretation removes Section 102 (a) as a tax measure in the Tax Code, an interpretation this Court cannot sanction. A tax is a mandatory exaction, not a voluntary contribution. x xx Further, when the provider and recipient of services are both doing business in the Philippines, their transaction falls squarely under Section 102 (a) governing domestic sale or exchange of services. Indeed, this is a purely local sale or exchange of services subject to the regular VAT, unless of course the transaction falls under the other provisions of Section 102 (b).’ Q. What taxes are imposed on non-resident foreign corporations? A. Non-resident foreign corporations are liable only for income derived from Philippine sources, rate and schedule of payment, tax liability on certain incomes like interest on foreign loans, intra corporate dividends; may enjoy certain exemptions under tax treaty or provision of special laws; treatment of accumulated earnings Estate Tax and Donor’s Taxes under the NIRC Q. How do you determine the value of estate to be taxed? A. Only the net value of the estate is liable to tax. A schedule of brackets of amount of net value and the corresponding rate schedule per bracket are imposed. Q. Who are liable to pay estate taxes? A. Residents and citizens covering all properties, real or personal, tangible or intangible, wherever situated; and non-resident aliens covering only properties in the Philippines provided, that, with respect to intangible personal property, its inclusion in the gross estate is subject to the rule on reciprocity. Q. What is gross estate?

A. Decedent’s interest at the time of his death, transfer in contemplation of death, property transfers subject to revocation, property passing under a general power of appointment, proceeds of life insurance; and property transfers for insufficient consideration Q. What may be deducted from the estate? A. The following may be deducted from the estate: 1. Expenses, losses, indebtedness and taxes (funeral expenses, judicial expenses, claims against the estate, claims against insolvent persons, unpaid mortgages, taxes and casualty losses); and 2. Property previously taxed (transfers for public use, family home, standard deduction, medical expenses and amounts received by heirs under R.A. 4917 on Retirement Benefits of Private Employee). Please review the concept of vanishing deduction and the corresponding holding period and the tax rate based on the value of the property under Section 86(A) (2) of the NIRC. Q. Who are considered strangers for purposes of donor’s tax? A. Read on definition, transactions covered and schedule of payment based on brackets as to the value of the donation (Section 16 of the NIRC); for the “stranger”, a flat rate of 30% is imposed; the following are NOT “strangers”- brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendant; and relative by consanguinity in the collateral line within the fourth civil degree of relationship. Q. What items are not subject to donor’s tax? A. Dowries or gifts made on account of marriage, gifts made or for use of the national government or entity created by any of its agencies which is not conducted for profit, or to any political subdivision of said government; and gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non- governmental organization, trust or philanthropic organization or research institution or organization. Q. What are the rules on protest and refund for income tax? A. A taxpayer may protest any assessment administratively; taxes may be paid under protest. General Rule: Refund may be requested by the taxpayer within two years from payment. Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation), G.R. No. 179260 (2014: There are three essential conditions for the grant of a claim for refund of creditable withholding income tax, to wit: (1) The claim is filed with the Commissioner of Internal Revenue within the two-year period from the date of payment of the tax; (2) It is shown on the return of the recipient that the income payment received was declared as part of the gross income; and (3) The fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld therefrom. Q. What may the government resort to in case of tax payer delinquency? A. Distraint of personal property, levy of real property; civil action and criminal action.

Tax Remedies under the NIRC Q. What are the steps in the assessment process? A. Letter of authority issued for tax audit, notice of informal conference (terminated if taxpayer presents satisfactory proof); release of preliminary assessment in case of unsatisfactory explanation and if taxpayer disagrees, he has 15 days to request for reconsideration; service of formal letter of demand/ notice of assessment if basis for reconsideration is not meritorious; taxpayer may file a protest within the 30-day period of the formal demand and must submit supporting documents within 60 days (if not, the protest is deemed waived); if the Commissioner does not decide the matter within 180 days or decides with finality that the taxpayer is liable for the assessment ; taxpayer has 30 days from the lapse of the 180 day period for the Commissioner to decide or notice of final decision of the Commissioner of the Internal Revenue ( even beyond 180 days) to file an appeal with the Court of Tax Appeals (Lascona Land v Commissioner of Internal Revenue, 2012); case is heard initially by a division of the CTA and an appeal can further be made with the CTA en banc ( within 15 days under Section 4 (A) RULE, 8 in relation to Rule 43 of the Rules of Civil Procedure) and final arbiter is the Supreme Court. Through the enactment of Republic Act No. 9282, the jurisdiction of the CTA has been

expanded to include not only civil tax cases but also cases that are criminal in nature, as well as local tax cases, property taxes and final collection of taxes. Q. What cases are within the jurisdiction of the Court of Tax Appeals? A. Pursuant to the provisions of Republic Act No. 1125 and other laws prior to R.A. 9282, the Court of Tax Appeals retains exclusive appellate jurisdiction to review by appeal, the following: 1

Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;

2

Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs [Rep. Act. No. 1125, (1954), Sec. 7];

3

In automatic review cases where such decisions of the Commission of Customs favorable to the taxpayer is elevated to the Secretary of Finance (Sec. 2315, TCC); and

4

Decisions of the Secretary of Trade and Industry, in the case of non-agricultural product, commodity or article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article, in connection with the imposition of the Anti-Dumping Duty, Countervailing and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and (p), and Republic Act 8800].

Under Republic Act Number 9282, the CTA's original appellate jurisdiction was expanded to include the following: 1

Criminal cases involving violations of the National Internal Revenue Code and the Tariff and Customs Code;

2

Decisions of the Regional Trial Courts (RTC) in local tax cases;

3

Decisions of the Central Board of Assessment Appeals (CBAA) in cases involving the assessment and taxation of real property; and

4

Collection of internal revenue taxes and customs duties the assessment of which have already become final.

Q. Will a case for tax evasion fail without a deficiency tax assessment? A. No. BUREAU OF INTERNAL REVENUE, as represented by the COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS, SPOUSES ANTONIO VILLAN MANLY, and RUBY ONG MANLY, G.R No. 197590, November 24, 2014: The Court ruled that tax evasion is deemed complete when the violator has knowingly and willfully field a fraudulent return with intent to evade and defeat a part of all of the tax. Corollarily, an assessment of the tax deficiency is not required in a criminal prosecution for tax evasion. However, in Commissioner of Internal Revenue v. Court of Appeals, the Court clarified that although a deficiency assessment is not necessary, the fact that a tax is due must first be proved before one can be prosecuted for tax evasion. SAMAR-I ELECTRIC COOPERATIVE vs. COMMISSIONER OF INTERNAL REVENUE, G.R No. 193100, December 10, 2014: The Court held that the notice requirement under section 228 of the NIRC is substantially complied with whenever the taxpayer had been fully informed in writing of the factual and legal bases of the deficiency taxes assessment, which enabled the latter to file an effective protest.

Q. When is a tax assessment deemed made? A. CHINA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 172509, February 04, 2015. The assessment of the tax is deemed made and the three-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to the taxpayer. Thus, failure of the BIR to file a warrant of distraint or serve a levy on taxpayer’s properties nor file collection case within the three-year period is fatal. Also, the attempt of the BIR to collect the tax through its Answer with a demand for the taxpayer to pay the assessed DST in the CTA is not deemed compliance with the Tax Code.

Q. What constitutes proof of taxes withheld? A.COMMISSIONER OF INTERNAL REVENUE vs. PHILIPPINE NATIONAL BANK, G.R. No. 180290 September 29, 2014: The Court held that the certificate of creditable tax withheld at source is the competent proof of establish the fact that taxes are withheld. It is not necessary for the person who executed and prepared the certificate of creditable tax withheld source to be presented and to testify personally to prove the authenticity of the certificates.

Q. Is a deficiency VAT assessment tantamount to an assessment for withholding tax liabilities such that the taxpayer cannot avail of a tax amnesty program? A. No. Indirect taxes, like VAT and excise tax, are different from withholding taxes. To distinguish, in indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. On the other hand, in case of withholding taxes, the incidence and burden of taxation fall on the same entity, the statutory taxpayer. The burden of taxation is not shifted to the withholding agent who merely collects, by withholding, the tax due from income payments to entities arising from certain transactions and remits the same to the government. Q. What are the requirements for entitlement of a corporate taxpayer for a refund or the issuance of tax credit certificate involving excess withholding taxes? A. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER OF INTERNAL REVENUE vs. TEAM (PHILS.) ENERGY CORPORATION (FORMERLY MIRANT PHILS ENERGY CORPORATION), G.R. No. 188016, January 14, 2015: The Court held that the following requisites must be complied with to sustain the claim for refund: 1) That the claim for refund was filed within the two-year reglementary period pursuant to Sec. 229 of the NIRC; 2) When it is shown on the ITR that the income payment received is being declared part of the tax payer’s gross income; and 3) When the fact of withholding is established by a copy of the withholding tax statement, duly issued by the payor to the payee, showing the amount paid and income tax withheld from that account Q. Is the CTA prohibited from determining whether taxes should have been paid because it is an assessment? A. No. SMI-ED PHILIPPINES TECHNOLOGY, INC. vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 175410, November 12, 2014: The Supreme Court ruled that in an action for the refund of taxes allegedly erroneously paid, the Court of Tax Appeals may determine whether there are taxes that should have been paid is not assessment. It is incidental to determining whether there should be a refund. THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY vs. SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, G.R No. 210987, November 24, 2014: The Court ruled that, the CTA 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.

CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R. No. 184203, G.R No. 187583, November 26, 2014: The Court held thatin 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. NIPPON EXPRESS (PHILIPPINES) CORP vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 185666, February 04, 2015:The Court held the BIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. In case of failure on the part of the BIR to act on the application within the 120-day period prescribed by law, the taxpayer has only has 30 days after the expiration of the 120-day period to appeal the unacted claim with the CTA. Q. What is the principle of exhaustion of administrative remedies in tax cases before a judicial action may be instituted? A.Commissioner of Internal Revenue vs. Team Sual Corporation (Formerly Mirant Sual Corporation), G.R. No. 194105. February 5, 2014: Taxpayer submits that the requirement to exhaust the 120-day period under Section 112 (c) of the National Internal Revenue Code prior to filing the judicial claim with the Court of Tax Appeals (CTA) is a doctrine of “exhaustion of administrative remedies.” The non-observance of the same merely results in lack of cause of action which may be waived for failure to timely invoke the same. Commissioner of Internal Revenue v. Team (Philippines) Operations Corporation (formerly Mirant Phils., Operation Corporation),G.R. No. 179260, April 2, 2014. The findings and conclusions of the Court of Tax Appeals (CTA) are accorded the highest respect and will not be lightly set aside. In the absence of any clear and convincing proof to the contrary, the Court must presume that the CTA rendered a decision which is valid in every respect. The City of Manila, etc. et al. v. Hon. Caridad H. Grecia-Cuerdo etc., et al, G.R. No. 175723. February 4, 2014. Petitioners availed of the wrong remedy when they filed the special civil action for certiorari under Rule 65 of the Rules of Court with the Court in assailing the resolutions of the Court of Appeals (CA) which dismissed their petition filed with the said court and their motion for reconsideration of such dismissal. Hence, in the instant case, petitioner should have filed a petition for review on certiorari under Rule 45, which is a continuation of the appellate process over the original case. III. Local Taxation Q. What taxes may local government unit collect? A. Under Section 5 of Article X of the Constitution, local government units are allowed to collect tolls, feesand charges. (TFC). New cases: Camp John Hay Development Corporation v. Central Board of Assessment Appeals, G.R. No. 169234. October 2, 2013.Section 252 and Section 222 of the Local Government Code sets out the administrative remedies available to a taxpayer or real property owner who does not agree with the assessment of the real property tax sought to be collected. Two conditions must be met: the taxpayer/real property owner questioning the assessment should first pay the tax due before his protest can be entertained. Secondly, within the period prescribed by law, any owner or person having legal interest in the property not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may file an appeal with the Local Board of Assessment Appeals (LBAA) of the province or city concerned. Thereafter, within thirty days from receipt, he may elevate, by filing a notice of appeal, the adverse decision of the LBAA with the Central Board of Assessment Appeals Camp John Hay Development Corporation v. Central Board of Assessment Appeals, G.R. No. 169234. October 2, 2013. A claim for exemption from payment of real property taxes does not actually question

the assessor’s authority to assess and collect such taxes, but pertains to the reasonableness or correctness of the assessment by the local assessor Smart Communications, Inc. v. Municipality of Malvar, Batangas, G.R. No. 20442. February 18, 2014. Section 5, Article X of the 1987 Constitution provides that “[e]ach local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. The LGC defines the term “charges” as referring to pecuniary liability, as rents or fees against persons or property, while the term “fee” means “a charge fixed by law or ordinance for the regulation or inspection of a business or activity. The effect is merely incidental. Thus, the fees imposed in Ordinance No. 18 are not taxes. Considering that the fees in Ordinance No. 18 are not in the nature of local taxes, and petitioner is questioning the constitutionality of the same, the CTA correctly dismissed the petition for lack of jurisdiction. City of Manila, Hon. Alfredo S. Lim, as Mayor of the City of Manila, et al. vs. Hon. Angel Valera Colet, as Presiding judge, Regional Trial Court of Manila (Br.43), et al. G.R No. 120051, December 10, 2014: The power to tax of local government units is a delegated power and must be exercised within the guidelines and limitations that Congress may provide. taxing power of local government units. V. Tariff and Customs Code of 1978, as amended A. IMPORT DUTIES Q. What are ordinary import duties? A. Tariff duties are levied on imported goods either as a revenue generating measure or a protective scheme to artificially or temporarily inflate prices to protect a country’s domestic output and its industries from their foreign counterparts. With the exception of certain articles which can be imported duty-free, upon compliance with certain prescribed conditions or formalities, goods are levied ordinary import duties under the Most Favored Nation (MFN) treatment,ranging from Free/Zero to 30% except in cases of sensitive agricultural products which are accorded a certain degree of protection via higher tariff rates reaching to as high as 65%. On the other hand, under the Common Effective Preferential Tariff (CEPT) Scheme, goods are levied ordinary import duties ranging from 0% to 5%, except also in cases of sensitive agricultural products which are subject to as high as 40% tariff duties.

Q. What are special duties under the Tariff Code? A. These are levied in addition to the ordinary import duties, taxes and charges imposed by law on the imported product under the following circumstances:

Q. Define the following terms: a. Anti-Dumping Duty: The anti-dumping duty is a special duty imposed in the event that a specific kind or class of foreign article, is being imported into, sold or is likely to be sold in the Philippines, at an export price less than its normal value in the ordinary course of trade for a like product, commodity or article destined for consumption in the exporting country which is causing or threatening to cause material injury to a domestic industry, or materially retarding the establishment of a domestic industry producing similar product. b. Countervailing Duty: The countervailing duty is a special duty charged whenever any product, commodity or article of commerce is granted directly or indirectly by the government in the country of origin or exportation, any kind or form of specific subsidy upon the production, manufacture or exportation of such product, commodity or article, and the importation of such subsidized product, commodity or article has caused or threatens to cause material injury to a domestic industry or has materially retarded the growth or prevents the establishment of a domestic industry. c. Marking Duty: The marking of articles (or its containers) is a prerequisite for every article or container

imported into the Philippines in accordance with Section 303 of the TCCP. In case of failure to mark an article or its container at the time of importation, there shall be levied upon such article a marking duty of 5% ad valorem. d. Discriminatory Duty: The discriminatory duty is imposed by the President by proclamation upon articles of a foreign country which discriminate against Philippine commerce or against goods coming from the Philippines as stipulated under Section 304 of the TCCP. The amount of additional duty to be levied shall not exceed 100% ad valorem based on the dutiable value of imported articles. e. General Safeguard Measure: The general safeguard measure is applied by the Secretary of Trade and Industry, in the case of non-agricultural products, or the Secretary of Agriculture, in the case of agricultural products, upon positive final determination of the Tariff Commission that a product is being imported into the country in increased quantities, whether absolute or relative to domestic production, as to cause or threaten to cause serious injury to the domestic industry. In the case of non-agricultural products, however, the Secretary of Trade and Industry shall first establish that the application of such safeguard measures will be in the course of public interest. The general safeguard measure shall be limited to the extent of redressing or preventing the injury and to facilitate adjustments by the domestic industry from the adverse effects directly attributed to the increased imports. f.Special Safeguard Duty: An additional special safeguard duty is imposed on an agricultural product whenever the cumulative import volume in a given year exceeds its trigger volume and when the actual c.i.f. (Cost, Insurance and Freight) import price falls below its trigger price. The safeguard duty is imposed by the Commissioner of Customs through the Secretary of Finance upon request by the Secretary of Agriculture. B. EXPORT DUTIES Q. What domestic items remain subject to export duties? A. Logs are the only remaining products subject to the duty under Section 514 of the TCCP, as amended. The export duty imposed on logs is 20% of the gross Free on Board (FOB) value at the time of shipment based on the prevailing rate of exchange. However, only planted trees are subject to the export duty, since all naturally grown trees are banned from being exported under Ministry of Environment and Natural Resources Memorandum Order No. 8 (issued June 20, 1986). C. Remedies 1. The Commissioner of Customs has jurisdiction in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs [Rep. Act. No. 1125, (1954), Sec. 7]. 2. Decisions of the Commission of Customs favorable to the taxpayer are elevated to the Secretary of Finance (Sec. 2315, TCC); and 3. The Secretary of Trade and Industry has jurisdiction in the case of non-agricultural product, commodity or article, while the Secretary of Agriculture, in the case of agricultural product, commodity or article, in connection with the imposition of the Anti-Dumping Duty, Countervailing and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and (p), and Republic Act 8800]. 4. Decisions/ Resolutions of the DTI and DA Secretaries may be elevated to the Tariff Commission. 5. Decisions of the Tariff Commission are appealable to the CTA. 6. CTA decisions are appealable to the Supreme Court.