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Global System:
The Global system of income taxation is a system employed where the tax
system views indifferently the tax base and generally treats in common all categories of
taxable income of the individual.
A system which taxes all categories of income except certain passive
incomes and capital gains. It prescribes a unitary but progressive rate for the taxable
aggregate incomes and flat rates for certain passive incomes derived by individuals.
The apparent intent of current amendatory laws to the income tax is to
maintain by and large, the global treatment on taxable corporation.
Schedular System:
The Schedular system of income taxation is a system employed where the
A ´tax sparing creditµ is a credit granted by the resident country for foreign
taxes that for some reasons were not actually paid to the source country but that would
have been paid under the country·s normal tax rules. The usual reason for the tax not being
paid is that the source country has provided a tax holiday or other tax incentive to foreign
investors as an encouragement to invest or conduct business in the country.
A final withholding tax at the rate of 15% is imposed on the amount of cash
and/or property dividends received by a non-resident foreign corporation from a domestic
corporation, subject to the condition that the country in which the non-resident foreign
corporation is domiciled shall allow a credit against the tax due from the non-resident
foreign corporation taxes deemed to have been paid in the Philippines equivalent to 17% for
2000 onwards [Section 28(B)(5)(b)].
income tax treatment varies and is made to depend on the kind or category of taxable income
 
of the taxpayer.
A system which itemizes the different incomes and provides for varied
percentages of taxes, to be applied thereto.
It is the apparent intention of current amendatory laws to the income tax law
to increasingly shift the income tax system toward the schedular approach in the income
taxation of individual taxpayers.
£ ? Ô 
Income, gain or profit is subject to income tax, when the following requisites are
present:
a.? There is income, gain or profit;
b.? The income, gain or profit is received, realized, or accrued during the taxable year; and
c.? The income, gain or profit is not exempt from income tax.

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 a.? Capital is a fund, while income is a flow;
Tax avoidance is the use of legally permissible means to reduce the tax while
tax evasion is the use of illegal means to escape payment of taxes.
The differences between the two are the following:
a.? Tax avoidance is legal while tax evasion is illegal.
b.? The objective of tax avoidance in most instances is merely to reduce the
tax that is due while the object of tax evasion is to entirely escape the
payment of taxes.

b.? A fund of property existing at an instant of time is called capital, while a flow of services
rendered by that capital by the payment of money from it or any other benefit rendered
by a fund of capital in relation to such fund through a period of time is called income;
c.? Capital is wealth, while income is the service of wealth;
d.? Capital is the tree, while income is the fruit; labor is a tree, income the fruit; property is
a tree, income the fruit. (Madrigal vs. Rafferty, 38 Phil. 414)
e.? Return of capital is not subject to income tax, while income is subject to tax.

 ?


 
 
  
 
a.? Tax amnesty is an immunity from all criminal, civil and administrative liabilities arising 
from non-payment of taxes while a tax exemption is an immunity from civil liability only. 
It is an immunity or privilege, a freedom from a charge or burden to which others are 
subjected. 
b.? Tax amnesty applies only to past tax periods, hence of retroactive application while tax 
exemption has prospective application. 

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a.? Income tax is a ´direct taxµ because the tax burden is borne by the income recipient
upon whom the tax is imposed. It is a tax demanded from the very person who, it is
intended or desired, should pay it, while ¶indirect taxµ is a tax demanded in the first
instance from one person in the expectation and intention that he can shift the burden
to someone else. (Commissioner vs. Tours Specialists, 183 SCRA 402)
b.? Income tax is a progressive tax, since the tax base increases as the tax rate increases.
It is founded on the ability to pay principle and is consistent with the Constitutional
provision that the ´Congress shall evolve a progressive system of taxationµ. (Sec.
28(1), Art. III, 1987 Constitution)
c.? The Philippines has adopted the most comprehensive system of imposing by adopting
the citizenship principle, the residence principle, and the source principle. Any one of
Advertising is generally of two kinds: (1) advertising to stimulate the current
sale of merchandise or use of services and (2) advertising designed to stimulate the future
sale of merchandise or use of services. The second type involves expenditures incurred, in
whole or in part, to create or maintain some form of goodwill for the taxpayer's trade or
business or for the industry or profession of which the taxpayer is a member. If the
expenditures are for the advertising of the first kind, then, except as to the question of the
reasonableness of amount, there is no doubt such expenditures are deductible as business
expenses. If, however, the expenditures are for advertising of the second kind, then normally
they should be spread out over a reasonable period of time. (Commissioner vs. General
Foods, GR No. 143762, April 24, 2003)
 
the three principles is enough to justify the imposition of income tax of a resident „ ?
      
  


citizen and domestic corporation that are taxed on worldwide income.    
  
d.? The Philippines follows the semi-schedular or semi-global system of taxation, although 
certain passive investment incomes, and capital gains from sale of capital assets are a.? Concept: oet capital loss carry over means the deduction from net capital gains of a
subject to final taxes at preferential tax rates. succeeding year the net capital loss suffered during the prior year. oet operating loss
 carry over is the deduction from gross income for the next three (3) consecutive
 ?       
 
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V  taxable years following the year of such loss, the excess of allowable deduction over the
  "#      
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         gross income.

   
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    b.? Distinction:
 ù? Source: The source of net capital loss carry over are capital losses only while the
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   source of net operating loss carry over are from the ordinary trade and business
Xes. The term ´gross receiptsµ means the entire receipts without any of the taxpayer.
deduction. The concept of a withholding tax on income obviously and necessarily implies that ù? Ô
may enj
y t e carry
er: Only taxpayers
 er  an c
p
ai
s may e
y
the amount of the tax withheld comes from the income earned by the taxpayer. Since the e capial l
ss cay
e w ile
ly c
p
ai
s may e
y  e e
peaig
amount of the tax withheld constitutes income earned by the taxpayer, then that amount l
ss cay
e.
manifestly forms part of the taxpayer·s gross receipts. c.? Ay axpaye,
 e  a a c
p
ai
 (idiiduals iludig uss ad esaes), w

susais i ay axable yea a e apial l
ss f
 apial asai
s i
lig apial
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  % #  asses (
 e  a eal p
pey
 s aes
f s
k 
 lised
 aded i  e s
k

  ex age), is all
wed 
ea duig  e sueedig yea su e apial l
ss as a l
ss
oo. The gross receipts tax is a business tax under Title V of the Tax Code, f
  e sale
 ex age
f a apial asse (
 e  a a eal p
pey
 s aes
f
while the final withholding tax is an income tax under Title II of the Code. There is no double s
k 
 lised ad aded i  e s
k ex age), eld f
 
e  a wele 
 s.
taxation if the law imposes two different taxes on the same income, business or property. [Se. 39(D), 1997 NIRC]
(China Banking Corp. vs. Court of Appeals, GR oos. 147938 & 146749, June 10, 2003)

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A MCIT of 2% of the Gross Income (GI) as of the end of the taxable year is oo. The is 
 o o oeee befoe a pope o
 of  v l ad
imposed upon any domestic corporation and resident foreign corporation beginning on the   al a os ad poeed gs a s g
de he Tax Refo A wh h shall be od
ed
4th taxable year immediately following the year in which such corporation commence its by legal off es of he BIR s o  d sp
e. A appeal fo s
h o
, howeve, s o a
business. ae of  gh. I s s ll he Sol  o Geeal who has he p ay espos b l y o appea
a.? It is imposed only where 2% of the GI is more than the normal income tax rates fo he govee  appellae poeed gs. (Co ss oe vs. La S
ee C ga ad
b.? Any excess of the minimum corporate income tax over the normal income shall be C gaee Faoy, GR oo. 144942, J
ly 4, 2002)
carried forward and credited against the normal income tax for the three
immediately succeeding taxable years. „G ? Ô    

 

  
c.? This is applied on annual basis and not to be used in the quarterly corporate 
returns. a.? Definition: A compromise penalty is an amount of money paid by a taxpayer to
d.? The Sec. of Finance is authorized to suspend this MCIT on account of ² compromise a tax violation that he has committed, which may be the subject of criminal
(1)? Prolonged labor dispute prosecution, while a compromise is an amount of money paid by the taxpayer to settle
(2)? Force majeure his civil liability for tax assessed by the government.
(3)? Legitimate business reverses b.? Basis of amount paid: In compromise, the basis of the amount paid is the basic tax
assessed; in compromise penalty, the basis is the gross sales or receipts during the
„V ? & '
 (   )   year or the tax due.
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  c.? Minimum amount prescribed: In compromise, the law sets a limit as to the amount that
 -    
           may be accepted by the government, depending on the legal grounds used by the
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 taxpayer; in compromise penalty, the amount set depends on the nature of the tax
&  !( ,   violation and the minimum amount is generally not less than P1,000.
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a.? Xes, because a non-resident alien is exempt only from the payment of   

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donor·s taxes if his gifts are made to or for the use of the oational Government or any     
 

  
entity created by any of its agencies which is not conducted for profit, or to any political
subdivision of the said government.
He is subject to tax because the gift was not made in favor of an
educational and/or charitable, religious, cultural or social welfare corporation,
institution, foundation, trust or philanthropic organization, or research institution or
corporation which does not use more than 30% of the donation for administration
purposes.
If Mr. Grante was a non-resident Filipino, the answer would still be the
same.
b.? oone. The amount should not be considered as part of her income as
the same is one of the exclusions. oeither is there any donor·s tax due from her
because the tax is to be paid by the donor and not the recipient.

oo. An assessment must be sent to and received by a taxpayer, and must
demand payment of the taxes described therein within a specified period. It is deemed made
only when the collector of internal revenue releases, mails or sends such notice to the
taxpayer.
That the BIR examiners· Joint Affidavit contained some details of the tax
liabilities of the taxpayer does not ipso facto make it an assessment. The purpose of the Joint
Affidavit was merely to support and substantiate the Criminal Complaint for tax evasion. It
merely contained a computation of the taxpayer·s liability. It did not state a demand or a
period for payment. Worse, it was addressed to the Justice Secretary, not to the taxpayer.
(CIR vs. Pascor Realty & Development Corp., June 29, 1999)



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   h.? Suspension of business operations in violation of VAT
  i.? Enforcement of Administrative Fine

oo. Section 222 of the oIRC specifically states that in cases where a false or „* ? Ô  
     1"#
fraudulent return with intent to evade tax is submitted or in cases of failure to file a return, 
proceedings in court may be commenced without an assessment. Furthermore, Section 205 a.? Administrative
of the same Code clearly mandates that the civil and criminal aspects of the case may be ù? [efore payment
pursued simultaneously. (CIR vs. Pascor Realty & Development Corp., June 29, 1999) (1)? Filing a protest within 30 days from receipt of assessment, or
A crime is complete when the violator has knowingly and willfully filed a (2)? Entering into a compromise
fraudulent return with intent to evade and defeat the tax. The perpetration of the crime is ù? After payment
grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return, Filing of claim for refund or tax credit within 2 years from date of payment
and the government·s failure to discover the error and promptly to assess has no regardless of any supervening cause
connections with the commission of the crime. (Ungab vs. Cusi, May 30, 1980) b.? Judicial
 ù? Civil Action
„ÿ ?  %        (1)? Appeal to the CTA within 30 days from receipt of decision or from the lapse of
 180 days due to inaction of the Commissioner
oo. Section 218 of the 1997 oIRC provides that ´no court shall have the (2)? Action to contest forfeiture
authority to grant injunction to restrain the collection of any national internal revenue tax, (3)? Action for damages against revenue officer
fee or charge imposed by said Code.µ This is because it is upon taxation that the Government ù? Criminal Action
chiefly relies to obtain the means to carry on its operations and it is of the utmost (1)? Filing of criminal complaint against erring [IR officials
importance that the means adopted to enforce the collection of taxes levied should be (2)? Injunction
summary and interfered with as little as possible.
The rule against injunction however admits of one exception: the CTA is V ? Ô 
  % 

  

empowered to suspend the collection of internal revenue taxes and customs duties only when 
there was a - a.? Delinquent accounts
a.? the collection of tax may jeopardize the interest of the Government b.? Cases under administrative protests
and/or the taxpayer, c.? Civil tax cases being disputed before the courts
b.? deposit of the amount claimed or file a surety bond for not more than d.? Collection cases filed in courts
double the amount of tax with the court when required; and e.? Criminal violations, other than those already filed in court or those involving criminal
c.? showing by taxpayer that appeal is not frivolous or dilatory. tax fraud; and,
 f.Cases covered by pre-assessment notices but taxpayer is not agreeable to the findings of
„ ? Ô  
    
     ,
 the audit office as confirmed by the review office. (Sec.2, Rev. Reg. 7-2001)


a.? Compromise
b.? Distraint (Actual and Constructive)
c.? Levy
d.? Tax Lien
e.? Civil action
f.? Criminal action
g.? Forfeiture of Property

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a.? Withholding tax cases; The following are the requirements for the validity of a taxpayer·s protest:
b.? Criminal tax fraud cases; a.? It must be filed within the reglementary period of thirty (30 days from
c.? Criminal violations already filed in court; receipt of the notice of assessment.
d.? Delinquent accounts with duly approved schedule of installment payments; b.? The taxpayer must show the errors of the [IR as well as the correct
e.? Cases where final reports of reinvestigation or reconsideration have been issued computation through:
resulting to reduction in the original assessment and the taxpayer is agreeable to such (1 ? A statement of facts, the applicable law, rules and regulations, or
decision. jurisprudence on which the taxpayer·s protest is based, otherwise, his
f.? Cases which become final and executory after final judgment of a court. (Sec.2, Rev. protest shall be considered void and without force and effect;
Reg. 7-2001) (2 ? If there are several issues involved in the disputed assessment and the
taxpayer fails to state the facts, the applicable law, rules and
VV ? Ô 
 

 

      regulations, or jurisprudence in support of his protest against some of
 the several issues on which the assessment is based, the same shall be
The Commissioner may compromise any internal revenue tax when ² considered undisputed issue or issues, in which case, the taxpayer shall
(a)? a reasonable doubt as to the validity of the claim against the taxpayer be required to pay the corresponding deficiency tax or taxes
exists; or attributable thereto. (Sec. 3.1.5, Rev. Regs. 12-99
(b)? the financial position of the taxpayer demonstrates a clear inability to c.? Within sixty (60 days from filing of the protest, the taxpayer shall submit all
pay the assessed tax. relevant supporting documents. [Sec. 228(e , 1997 oIRC]
The compromise settlement of any tax liability based on financial incapacity 
to pay shall be subject to the minimum compromise rate equivalent to the 10% of the basic
assessed tax. In this case, the taxpayer·s offer to compromise shall not be considered
unless and until he WAIVES Io WRITIoG his privilege under R.A. 1405 or under other general or
special laws, and such waiver shall constitute the authority of the Commissioner to inquire
into his bank deposits. For other cases, a minimum compromise rate equivalent to 40% of
the basic tax assessed shall be imposed.
V· ? Ô        
Tax refund takes place when there is actually a reimbursement of the tax. As
to a tax credit, the Government issues a tax credit certificate or tax credit memo covering
the amount determined to be reimbursable, which can be applied after proper verification
against any sum that may be due and collectible from the taxpayer.

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 Vÿ ? Ô   .
 

 
All criminal violations under the Tax Code may be compromised EXCEPT: a.? A written claim for refund or tax credit must be filed by the taxpayer with the
a.? Those already filed in court Commissioner;
b.? Those involving fraud. b.? The claim for refund must be a categorical demand for reimbursement; and
c.? The claim for refund or tax credit must be filed, or the suit or proceeding therefor must
VG ? )  
   

              be commenced in court within two years from date of payment of the tax or penalty
  regardless of any supervening cause.

Under Section 204([ , in relation to Sections 7(c and 290 of the Tax Code, 
the CIR has the authority to abate or cancel internal revenue tax liabilities of certain 
taxpayers based on any of the following grounds: 
a.? The tax or any portion thereof appears to be unjustly or excessively assessed; or 
b.? The administration and collection costs involved do not justify the collection of the 
amount due.

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    three years from the date of filing of the original return, statement or declaration, and (b no

     .   „**„   3            notice of audit or investigation of such return, statement or declaration has, in the

          
              meantime, been actually served upon the taxpayer. (Sec. 6A, 1997 oIRC
%
  .   "# /„£„**V Ô   The prescriptive period for assessment starts to run from the filing of the
V,    
  original return, if the same is sufficiently complete to enable the Commissioner to
 intelligently determine the proper amount of tax to be assessed. However, where the
The prescriptive period starts to run on April 16, 1992. The Tax Code provides amended return is substantially different from the original return, the right of the [IR to
that the refundable amount, in case a refund is due a corporation, is that amount which is assess the tax is counted from the filing of the amended return.
shown on its final adjustment return, not only on its quarterly returns. When the taxpayer 
paid the quarterly income tax on May 20, 1992, it would not have been able to ascertain on V ? / 
 4 „
0VV
that date, that the said amount was refundable. Clearly, the prescriptive period of two years ,
-
 " 
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should commence to run only from the time that the refund is ascertained.   ,
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A taxpayer whose income is withheld at the source will be deemed to have
paid his liability when the same falls due at the end of the tax year. A taxpayer, resident or
non-resident, who contributes to the withholding tax system, does so not really to deposit an
amount to the Commissioner of Internal Revenue, but in truth, to perform and extinguish his
tax obligation for the year concerned. In other words, he is paying his tax liabilities for that
year. It is of no consequence whatever that a claim for refund or credit against the amount
withheld at the source may have been presented and may have remained unresolved since
Xes, because what is exempt from filing are those individuals who have total
compensation income not exceeding P60, 000 with the taxes correctly withheld only by one
employer. In this case, even if his aggregate compensation income and that total withholding
taxes were correctly withheld by his employers, the fact that he derives compensation
income concurrently form two employers at anytime during the taxable year, does not
exempt him from filing his income tax return.

the delay of the Collector in rendering decision does not extend the peremptory period fixed  ?  "#     
 
 
by the statute (Gibbs vs. CIR, November 29, 1965).    „**„*** / , 
   
     
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a.? When the CIR is prohibited from making the assessment or beginning the distraint or 6    (             
levy or a proceeding in court, and for sixty (60 days thereafter; 
            
   
b.? When the taxpayer requests for a reconsideration which is granted by the CIR;
c.? When the taxpayer cannot be located in the address given by him in the return, unless
he informs the CIR of any change in his address.
d.? When the warrant of distraint or levy is duly served, and no property is located; and
e.? When the taxpayer is out of the Philippines (Sec. 223, 1997 NIRC .
#  

Gener·s dispute is bereft of merit. Since Gener did not file his income tax
returns, which reports are required by law as a basis for assessment, then, the [IR
Commissioner shall assess the tax on the best evidence available. The [IR Commissioner is
authorized to secure records from public or private entities to assist him in the assessment.
„ ? Ô   

   Furthermore, the [IR may use such methods as in the opinion of the Commissioner clearly
 reflects the income and the net worth method is one of these reasonable methods.
The taxpayer is granted the right to file an amended return, statement or 
declaration, subject to the following conditions: (a the amendment shall be made within 

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lnder the final withholding tax system the amount of income tax withheld by -     "#-
 - #  1
 
the withholding agent is constituted as a full and final payment of the income due from the „„*    /    /    .   „*£  
payee on the said income. [Sec. 2.57 (A , Rev. Regs. 2-98]    ,  
 
„*·
The liability for payment of the tax rests primarily on the payor or the     
  -    
withholding agent. Thus, in case of his failure to withhold the tax or in case of under   
         „*£             
withholding, the deficiency tax shall be collected from the payor withholding agent. The payee #   &

1 ÿ,£ /„„*£   
is not required to file an income tax return for the particular income.       
            , 
lnder the creditable withholding tax system, taxes withheld on certain         

 
income payments are intended to equal or at least approximate the tax due from the payee     . 
 "#  „
  
on the said income. The income recipient is still required to file an income tax return and/or / „„GG  
 
pay the difference between the tax withheld and the tax due on the income. [Sec. 2.57([ , 
Rev. Regs. 2-98] The relaxation of revenue regulations by RMC 7-85 is not warranted as it
 disregards the two-year prescriptive period. The rule states that the taxpayer may file a
£ ? / 
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  claim for refund or credit with the Commissioner of Internal Revenue, within two (2 years
  „**G   " )  „**ÿ & „**  & „** /      after payment of tax, before any suit in CTA is commenced. The two-year prescriptive period
(            
         5   provided, should be computed from the time of filing the adjustment Return and final payment
2
  1"# 6        "#

  of the tax for the year. (See Sec. 229, NIRC
   When the Acting Commissioner of Internal Revenue issued RMC 7-85,
 changing the prescriptive period of two years to ten years on claims of excess quarterly
"„*** "#   

  
 income tax payments, such circular created a clear inconsistency with the provision of Sec.
                        230 of 1977 NIRC (now Sec. 229 NIRC . In so doing, the [IR did not simply interpret the law;

      „**G   /        
   .    rather it legislated guidelines contrary to the statute passed by Congress.
      "#

      /     It bears repeating that Revenue memorandum-circulars are considered
 /     
  administrative rulings (in the sense of more specific and less general interpretations of tax
 laws which are issued from time to time by the Commissioner of Internal Revenue. It is
The [IR·s authority to assess has already prescribed. The three (3 waivers widely accepted that the interpretation placed upon a statute by the executive officers,
did not suspend the running of the prescriptive period. whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such
The only agreement that could suspend the running of the prescriptive period interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus,
for the collection of the tax in question is a written agreement between A[C Corp.and the [IR courts will not countenance administrative issuances that override, instead of remaining
entered into before the expiration of the three (3 year prescriptive period, extending the consistent and in harmony with, the law they seek to apply and implement. (Philippine [ank
said period. of Communications vs. Commissioner, et al., GR No. 112024, January 28, 1999
Since what is required is the signatures of both the Commissioner and the 
taxpayer, a unilateral waiver on the part of the taxpayer does not suspend the prescriptive 
period. 
 
· ? -
  . 
    
. „*£ 3  -
       / 
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      all circumstances. In effect, the responsibility for the collection of the tax as well as the
Section 246 of the 1997 oIRC provides: ´Any revocation, modification or
reversal of any of the rules and regulations promulgated in accordance with the preceding
Sections or any of the rulings or circulars promulgated by the Commissioner shall not be
given retroactive application if the revocation, modification, or reversal will be prejudicial to
the taxpayers, except in the following cases:
(1 ? Where the taxpayer deliberately misstates or omits material facts from
his return or any document required of him by the [ureau of Internal
Revenue;
(2 ? Where the facts subsequently gathered by the [ureau of Internal
Revenue are materially different from the facts on which the ruling is
payment thereof is concentrated upon the person over whom the Government has
jurisdiction.
Thus, the withholding agent is the constituted agent both of the government
and the taxpayer. With respect to the collection and/or withholding of the tax, he is the
Government·s agent. In regard to the filing of the necessary income tax return and the
payment to the government, he is the agent of the taxpayer. The withholding agent,
therefore, is no ordinary government agent especially because under the Tax Code he is
personally liable for the tax he is duty bound to withhold; whereas, the Commissioner of
Internal Revenue and his deputies are not made liable under the law. (Filipinas Synthetic
Corp. vs. Court of Appeals, GR Nos. 118498 & 124377, October 12, 1999)

based; or G ? Ô  

(3 ? Where the taxpayer acted in bad faith.µ 
 Preemption in taxation refers to an instance wherein the oational
 ?  

 " #   (         Government elects to tax a particular area, impliedly withholding from the local government
        
                 the delegated power to tax the same field. The rule withholds from the taxing power of local
    .      Ô  governments the authority to impose various taxes and charges which are levied under the
   

      oational Internal Revenue Code, Tariff and Customs Code and other special laws.

a.? power to Recommend the promulgation of rules and regulations by the G„ ?     &      
     
  
Sec. of Finance    
   %  # Ô      
b.? power to Issue rulings of first impression or to Reverse, revoke modify   &„V„ )0 VV   
any existing rule of the [IR  
    # Ô
   
c.? power to Compromise or Abate any tax liability  
EXCEPT, the regional evaluation board may compromise:
(1 ? assessments issued by regional offices involving deficiency Xes. lnlike the refund or credit of internal revenue taxes, the 2 year period
taxes of P500,000 or less and for filing claims for refund or credit of local taxes is counted not necessarily from the date
(2 ? minor criminal violations as may be determined by the rules of payment but from the date the taxpayer is entitled to refund or credit. This would mean
and regulations that in local taxation, the supervening clause applies.
d.? power to Assign or reassign internal revenue officers to establishments
where articles subject to excise tax are kept.

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  #     

DEF Corp. as the withholding agent is explicitly made personally liable under
the Tax Code for the payment of the tax required to be withheld.
The law sets no conditions for the personal liability of the withholding agent
to attach. This is in order to compel the withholding agent to withhold the tax under any and

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GV ?  &   
    c.? åachineries and equipment that are      by local
         2 (               water utilities and GOCC·s engaged in the supply and distribution of water and/or
  #  &
 
 
  electric power;
 
  
    2 ( 
    .     d.? üeal property   by duly registered cooperatives as provided for in üA 6938; and
      
             e.? åachinery and equipment   for pollution control and environmental protection.
    %     #   
  %     

  G£ ? &  
            
      
 
 2


„* -
1 ££„  *   & 
The case should be dismissed. Section 187 of RA oo. 7160 provides, that the  V     
     5     
taxpayer may question the constitutionality or legality of tax ordinance on appeal within 
    
   
 
thirty (30 days from the effectivity thereof, to the Secretary of Justice. The petitioner after       
    
  
 
finding that his assessment is unjust, confiscatory, or excessive, must have brought the case
           6  -    2
before the Secretary of Justice for questions of legality or constitutionality of the city  
   2
   

 
ordinance. £„ 
    %
  ( 
lnder Section 226 of RA 7160, an owner of real property who is not satisfied 
     
          
    
with the assessment of the property may, within sixty (60 days from notice of assessment,
appeal to the [oard of Assessment Appeals.
Should the taxpayer question the excessiveness of the amount of tax, he must
first pay the amount due, in accordance with Section 252 of RA 7160. Then, he must first
request the annotation of the phrase ´paid under protestµ and accordingly appeal to the
[oard of Assessment Appeals by filing a petition under oath together with copies of the tax
declarations and affidavits or documents to support his appeal. (Lopez vs. City of Manila, GR
oo. 127139, February 19, 1999
   #    

The tax ordinance is valid. lnder the now prevailing Constitution, where
there is neither a grant nor a prohibition by statute, the tax power must be deemed to exist
although Congress may provide statutory limitations and guidelines. The basic rationale for
the current rule is to safeguard the viability and self-sufficiency of local government units by
directly granting them general and broad tax powers. oevertheless, the fundamental law did
not intend the delegation to be absolute and unconditional; the constitutional objective
obviously is to ensure that, while the local government units are being strengthened and
G ? Ô  
 
 
   made more autonomous, the legislature must still see to it that (a the taxpayer will not be
 overburdened or saddled with multiple and unreasonable impositions; (b each local
a.? Real property shall be appraised at its current and fair market value; government will have its fair share of available resources; (c the resources of the national
b.? Real property shall be classified for assessment purposes on the basis of actual use. government will not be unduly disturbed; and (d local taxation will be fair, uniform and just.
c.? Real property shall be assessed on the basis of uniform classification within each LGl Indicative of the legislative intent to carry out the constitutional mandate of
d.? The appraisal, assessment, levy and collection of RP Tax shall not be let to any private vesting broad tax powers to local government units, the Local Government Code has
person effectively withdrawn, under Section 193 thereof, tax exemptions or incentives theretofore
e.? The appraisal and assessment of real property shall be equitable. enjoyed by certain entities.

GG ? Ô    

    G· ? Ô

    
 
 
a.? Real property   by the government exept when     thereof has Customs duties is the name given to taxes on the importation and exportation
been granted to a taxable person; of commodities, the tariff or tax assessed upon merchandise imported from, or exported to,
b.? Charitable institutions, churches, personages or convents appurtenant thereto, a foreign country.
mosques, non-profit or religious cemeteries and all lands, buildings and improvements 
        for religious, charitable or educational 
purposes (Art. VI, Sec. 28, Constitution); 

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Spe al d
 es are hose wh h are mposed and olleed n add  on o he Automatic review is intended to protect the interest of the Government in the
ord nary 
soms d
 es
s
ally o proe loal nd
sr es aga ns fore gn ompe  on. collection of taxes and customs duties in seizure and protest cases. Without such automatic
There are fo
r k nds: review, neither the Commissioner of Customs nor the Secretary of Finance would know about
a.? D
mp ng d
y, or he d
y lev ed on mpored goods where  appears ha a spe f  the decision laid down by the Collector of Customs favoring the taxpayer. The power to
k nd or ass of fore gn ar e s be ng mpored no or so or s  key o be so n he decide seizure and protest cases may be abused if no checks are instituted. Automatic
Ph  nes a a r e ess han s fa r va
e; review is necessary because nobody is expected to appeal the decision of the Collector of
b.? Co
nerva  ng 
y, or he 
y m ose
on fore gn goos enjoy ng s
bs y grane Customs which is favorable to the taxpayer and adverse to the Government. This is the
by he fore gn o
nry wh h aows he sae of goos a ower r es o he er men reason why whenever the decision of the Collector of Customs is adverse to the Government,
of s m ar goos oay ro
e; the said decision is affirmed by the Commissioner of Customs. The same shall be
.? åark ng 
y, or he 
y m ose, on an a vaorem bas s,
on goos no ro ery automatically elevated to and finally reviewed by the Secretary of Finance. (Xaokasin vs.
marke as o he r ae of or g n; an Commissioner of Customs, 180 SCRA 591 [1989])
.? D sr m naory 
y, or he 
y m ose
on goos om ng from o
nr es wh h
 sr m nae aga ns he ommere of he Ph  nes. 
Ô  
   

G ? Ô 7  #/„„ (1)? Decision of the Collector favorable to the taxpayer;
 (2 ? Decision of the Commissioner of Customs favorable to the taxpayer
It is the invoice value of the goods plus freight, insurance, costs, expenses and which is automatically elevated to the Secretary of Finance;
other necessary expenses which is used as basis for the determination of dutiable value. This (3 ? Decision of the Secretary of Finance if adverse to the taxpayer is
replaces the Home Consumption Value which is based on the value declared in the consular, appealable to the Court of Tax Appeals.
commercial, trade, or sales invoice. The change to transaction value was a consequence of
the Philippine·s participation in the lruguay üound of the GATT. 

G* ?
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oo. The üTCs are devoid of any competence to pass upon the validity or
regularity of seizure and forfeiture proceedings. The question of whether probable cause
exist is not for the üTC to determine. The Customs authorities do not have to prove to the
satisfaction of the court that articles on a vessel are imported from abroad before they may
exercise the power to effect customs searches or arrests as provided by law.
   The Collector of Customs sitting in the seizure and forfeiture proceedings,
has exclusive jurisdiction to hear and determine all questions touching on the seizure and c



forfeiture of dutiable goods. (Jao vs. Court of Appeals, 249 SCü 35) x

  










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