TAXATION LAW
QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT JURISPRUDENCE AND BIR
ISSUANCES FOR THE 2016 BAR
PIERRE MARTIN D. REYES
Preliminary Considerations
Pursuant to Bar Bulletin No. 13, May 31, 2015 is the
cut-off date for laws and jurisprudence covered by the
2016 Bar Examination. However, there is no cut-off
for principles of law.
In any case, this supplement covers the significant and
relevant Supreme Court jurisprudence on taxation law
and BIR issuances from April 1, 2015 to May 31, 2016.
For jurisprudence and BIR issuances for the period
March 31, 2014 to May 31, 2015, please refer to the
2015 Supplement.
Note further that on June 15, 2016, which is fifteen
days following its publication in Manila Bulletin, a
newspaper of general circulation, on June 1, 2015, the
Customs Modernization and Tariff Act (CMTA),
which replaces the Tariff and Customs Code of the
Philippines (TCCP) took effect. The changes are not
discussed here as it is beyond the 2016 bar coverage.
Income Taxation
Q. What is the taxability of non-stock savings
and loans associations (NSSLA) for income tax
purposes?
Pursuant to the Revised Non-Stock Savings and Loan
Association Act of 1997 (R.A. No. 8367), NSSLAs shall
be exempt from income tax with respect to the income
it receives, including interest on its deposits with any
bank. However, any income derived by it from any of
its properties, real or personal, or any activity
conducted for profit, regardless of the disposition
thereof, is subject to the applicable income tax and
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
other internal revenue taxes. (RMC 9-2016 dated
January 12, 2016)
Q. When is the payor/employer obliged to
deduct and withhold the related withholding
taxes on accrued bonuses?
The obligation of the payor/employer to deduct and
withhold the related withholding tax arises at the time
the income was paid or accrued or recorded as expense
in the payors/employers books, whichever comes
first.
In ING Bank v. Commissioner of Internal Revenue, G.R.
No. 167679, July 22, 2015, at issue is whether ING Bank
is liable for deficiency withholding tax on accrued
bonuses for the taxable years 1996 and 1997. The
accrued bonuses were recorded in ING Banks books
as expenses for taxable years 1996 and 1997, although
no withholding of tax was effected. ING Bank asserted
that the liability of the employer to withhold the tax
does not arise until such bonus is actually distributed.
Since the supposed bonuses were not distributed to the
officers and employees in 1996 and 1997 but were
distributed in the succeeding year when the amounts
of the bonuses were finally determined, ING Bank
asserts that its duty as employer to withhold the tax
during these taxable years did not arise.
The Supreme Court ruled that ING bank is liable for
the withholding tax on the bonuses since it claimed the
same as expenses in the year they were accrued. Three
provisions of the NIRC of 1997, as amended, were
reconciled:
1. Section 72 (now Section 79), which provides
that an employer is required to deduct and pay
the income tax on compensation paid to its
employees, either actually or constructively.
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QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

2. Section 39 (now Section 35), which provides exempt from donors

that deductions from gross income are taken tax.
for the taxable year in which paid or accrued
or paid or incurred is dependent upon the
Donations made by corporations in violation of the
method of accounting income and expenses
Section 36(9) of the Corporation Code are subject to
adopted by the taxpayer. If the taxpayer is on
donors tax. (RMC No. 30-2016 dated March 14, 2016)
cash basis, the expense is deductible in the year
it was paid, regardless of the year it was
Note: Section 36(9) of the Corporation Code prohibits
incurred. If he is on the accrual method, he can
deduct the expense upon accrual thereof. corporations, domestic or foreign, from giving
3. Section 29(j) (now Section 34(K)), which donations in aid of any political party or candidate or
provides that, as a condition for deductibility for purposes of partisan political activity
of an expense, the tax required to be withheld
on the amount paid or payable must be shown Value-Added Taxation
to have been remitted to the BIR by the
withholding agent. Q. What is the taxability of transport network
companies (TNCs), such as Uber, Grab Taxi,
Reconciling the above provisions, the Court held their partners/suppliers and similar
arrangements for VAT purposes?
that the obligation of the payor/employer to
deduct and withhold the related withholding tax 1. Payment is made to TNC and TNC pays its
arises at the time the income was paid or accrued partners
or recorded as an expense in the
payors/employers books, whichever comes first.

Estate and Donors Taxation If the TNC is not a If the TNC is a

holder of a valid and holder of a valid and
Q. What is the taxability of campaign
contributions for donors tax purposes? current Certificate current CPC
of Public
Convenience (CPC)
Campaign Period set Before or after the
by COMELEC campaign period set The TNC shall issue a The TNC shall issue a
by COMELEC VAT OR to its non-VAT OR to the
passenger/customer passenger/customer
and as a land and, shall be subject to
The donations/ The donations/ transportation service the 3% common
contributions that contributions that contractor, shall be carriers tax.
have been utilized and have been utilized and subject to 12% VAT.
spent during the spent before or after
campaign period as set the campaign period 2. Payment is made to Partner and Partner pays
by the COMELEC are are subject to donors TNC
tax.

Page 2 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

mandatory vessel retirement program of

MARINA.
If the Partner is not If the Partner is a
a holder of a valid holder of a valid and 3. Importation of fuel, goods, and supplies by
persons engaged in international shipping or
and current CPC current CPC
air transport operations. Provided, that the
said fuel, goods, and supplies shall be used
exclusively or shall pertain to the transport of
The Partner is a land The Partner shall issue
goods and/or passenger from a port in the
transportation service a non-VAT OR to the
Philippines directly to a foreign port, or vice
contractor, and should passenger/customers
versa, without docking or stopping at any
issue either a VAT and shall be liable for
other Philippine port unless the docking or
OR, when it is a VAT the 3% common
stopping at any other Philippine port is for the
registered taxpayer or carriers tax.
purpose of unloading passengers and/or
a non-VAT OR if it
cargoes that originated from abroad, or to load
has not exceeded the (RMC No. 70-2015
passengers and/or cargoes bound for abroad.
threshold of dated October 29, 2015)
P1,919,500.00 and has Note: Pursuant to RR 15-2015, Section 4.109-
not opted for VAT 1(B)(1)(t) and (u) relating to importation of life-saving
Registration. equipment and capital equipment and machinery for
construction and repair of vessel for domestic trade,
respectively, have been deleted. (RR No. 15-2015 dated
Q. What are the VAT-exempt transactions
December 28, 2015)
relative to the sale, importation, or lease of
passenger or cargo vessels and aircraft,
including engine, equipment, and spare parts Q. What are the rules on the determination of
thereof for domestic or international transport the prescriptive period for filing a tax refund or
operations? credit of unutilized input VAT as provided in
Section 112 of the NIRC of 1997, as amended?
The following transactions are exempt from VAT:
The following are the rules on prescriptive periods
1. The transport of passengers and cargo by involving VAT:
international carriers doing business in the
Philippines. 1. An administrative claim must be filed with the
CIR within two years after the close of the
2. Sale, importation, or lease of passenger or
taxable quarter when the zero-rated or
cargo vessels and aircraft, including engine,
effectively zero-rated sales were made.
equipment, and spare parts thereof for
domestic or international transport 2. The CIR has 120 days from the date of
operations. Provided, however, the that the submission of complete documents in support of
exemption from VAT on importation and the administrative claim within which to decide
local purchase of passenger and/or cargo whether to grant a refund or issue a tax credit
vessels shall be subject to the requirements on certificate. The 120-day period may extend
restriction on vessel importation and beyond the two-year period from the filing of
the administrative claim if the claim is filed in

Page 3 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

the later part of the two-year period. If the 120- 1. The CIR has 120 days 1. As it now stands,
day period expires without any decision from from the date of RMC 54-2014
the CIR, then the administrative claim may be submission of complete dated June 11, 2014
considered to be denied by inaction. documents to decide a mandates that the
claim for tax credit or application for
3. A judicial claim must be filed with the Court of refund. Pursuant to VAT refund/tax
Tax Appeals (CTA) within 30 days from the RMC No. 49-2003, from credit must be
receipt of the CIRs decision denying the
the date an accompanied by
administrative claim or from the expiration of
administrative claim for complete
the 120-day period without any action from the excess unutilized VAT is supporting
CIR. filed, a taxpayer has 30 documents.
4. All taxpayers, however, can rely on BIR Ruling days within which to
No. DA-489- 03 from the time of its issuance on submit the documentary 2. Under the current
requirements sufficient rule, the reckoning
10 December 2003 up to its reversal by this
to support his claim. of the 120-day
Court in Aichi on 6 October 2010, as an period has been
exception to the mandatory and jurisdictional 2. If in the course of the withdrawn from
120+30 day periods. (Cargill Philippines, Inc. v. investigation and the taxpayer by
CIR, G.R. No. 203774, March 11, 2015;
processing of the claim, RMC 54-2014,
Commissioner of Internal Revenue v. Air Liquide,
additional documents since it requires
G.R. No. 210646, July 29, 2015; Commissioner of
Internal Revenue v. Toledo Power Company, G.R. are required for the him at the time he
No. 195175 & 199645, August 10, 2015; proper determination of files his claim to
Commissioner of Internal Revenue v. Toledo the legitimacy of the complete his
Power Company, G.R. No. 196415 & 196451, claim, the taxpayer- supporting
December 2, 2015; Commissioner of Internal claimants shall submit documents and
Revenue v. Mirant Pagbilao Corporation, G.R. No. such documents within attest that he will
180434, January 20, 2016; Silicon Philippines v. thirty (30) days from no longer submit
Commissioner of Internal Revenue, G.R. No.
request of the any other
182737, March 2, 2016)
investigating/processing document to prove
office. Notice, by way of his claim. Further,
Q. When does the 120-day period begin to run?
a request from the tax the taxpayer is
A distinction must be made between claims filed collection authority to barred from
before June 14, 2014 and claims filed on June 14, 2014 produce the complete submitting
to present. documents in these additional
cases, is essential. documents after he
has filed his
Claims filed prior to Claims filed on June 3. Then, upon filing by the administrative
June 14, 2014 (RMC 49- 14, 2014 to present taxpayer of his complete claim. Thus, the
documents to support 120-day has to be
2003 prevailing rule) (RMC 54-2014
his application, or counted from the
prevailing rule) expiration of the period filing of the
given, the BIR has 120 administrative
days within which to

Page 4 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

decide the claim for tax claim. (Pilipinas Commissioner of Internal Revenue, G.R. No. 207112,
credit or refund. Total Gas v. December 8, 2015)
Commissioner of
4. Should the taxpayer, on Internal Revenue, Q. Who determines when the completeness of
the date of filing, G.R. No. 207112, documents submitted in a claim for refund or
manifest that he no December 8, 2015) tax credit of unutilized input taxes?
longer wishes to submit
It is the taxpayer who ultimately determines when
any other additional
complete documents have been submitted for the
documents to complete
purpose of commencing and continuing the running
his administrative claim,
of the 120-day period. To allow the CIR to determine
the 120-day period
the completeness of the documents submitted and,
allowed to the BIR
thus, dictate the running of the 120-day period, would
begins to run from the
undermine these objectives, as it would provide the
date of filing.
CIR the unbridled power to indefinitely delay the
5. In all cases, whatever administrative claim, which would ultimately prevent
documents a taxpayer the filing of a judicial claim with the CTA. Whether
intends to file to support these documents are actually complete as required by
his claim must be law is for the CIR and the courts to determine.
completed within the 2- (Pilipinas Total Gas v. Commissioner of Internal
year period under Revenue, G.R. No. 207112, December 8, 2015)
Section 112(A) of the
Q. ABC filed its administrative claim for the
NIRC. refund of excess and unused input VAT for the
2nd quarter of taxable year 2008 on 28
Thus, for claims filed prior to June 14, 2014, the 120-
December 2009. Counting 120+30 days, the
day period begins to run from the date of submission taxpayer should have elevated the same to the
of complete documents supporting the administrative CTA on 27 May 2010. The judicial claim was
claim. If there is no evidence showing that the taxpayer belatedly filed on 6 July 2010. ABC now argues
was required to submit or actually submitted that it filed its complete documents on 20
additional documents after the filing of the September 2010 and thus the 120-day period
should be counted from said date. Is ABC
administrative claim, it is presumed that the complete
correct?
documents accompanied the claim when it was filed.
(Silicon Philippines v. Commissioner of Internal No. To allow the taxpayers position to prevail would
Revenue, G.R. No. 182737, March 2, 2016) set a dangerous precedent, as the reckoning period for
the 120 days would be at the mercy of taxpayers. They
Failure of the taxpayer to submit all relevant
will then submit complete supporting documents even
documents is not fatal to its claim for refund or tax after the two-year prescriptive period for filing an
credit of unutilized input VAT. If the taxpayer indeed administrative claim has lapsed. This is obviously not
failed to submit the complete documents in support of the intention of the law. The burden of proving
its application, the CIR could have informed the entitlement to a tax refund is on the taxpayer. It is
taxpayer of its failure. (Commissioner of Internal
logical to assume that in order to discharge this
Revenue v. Toledo Power Company, G.R. No. 196415 &
burden, the law intends the filing of an application for
196451, December 2, 2015; Pilipinas Total Gas v.
a refund to necessarily include the filing of complete

Page 5 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

supporting documents to prove entitlement for the The judicial claim
refund. Otherwise, the mere filing of an application before the CTA would
without any supporting document would be as good as be dismissible, not for
filing a mere scrap of paper. lack of jurisdiction, but
for the taxpayers
Peculiar to this case is that prior to the alleged failure to substantiate
completion of its supporting documents, the taxpayer the claim at the
had already filed its judicial claim with the CTA.
administrative level.
Assuming arguendo that the 120-day period should
commence to run only upon receipt of the complete In case of claims
documents or from 20 September 2010, the judicial dismissed at the
claim will still fail. By that time, the period for filing an administrative level
administrative application for a refund would have due to the failure of
already on 30 June 2010 or two (2) years from the close the taxpayer to submit
of the taxable quarter when the relevant sales were supporting
made. (Hedcor, Inc. v. Commissioner of Internal documents, it is, thus,
Revenue, G.R. No. 207575, July 15, 2015) crucial for a taxpayer
in a judicial claim for
refund or tax credit to
show that its
Q. If the taxpayer fails to submit a document at administrative claim
the administrative level, can the taxpayer cure should have been
such failure by filing the said document in its granted in the first
judicial claim before the CTA? place.
The CTA may give
credence to all
evidence presented by
the taxpayer, including
those that may not
have been submitted
to the CIR as the case
is being essentially
decided in the first
instance. The taxpayer
must prove every
minute aspect of its
case by presenting and
formally offering its
evidence to the CTA,
which must
necessarily include
whatever is required
for the administrative
claim. (Pilipinas Total
Gas v. Commissioner of
Internal Revenue, G.R.
No. 207112, December 8,
2015)

A distinction must, thus, be made between an

A taxpayer cannot
administrative claimed appealed due to inaction and
cure its failure to
those dismissed at the administrative level due to the
submit a document
failure of the taxpayer to submit supporting
requested by the BIR
documents.
at the administrative
level by filing the said
Administrative If the judicial claim document before the
CTA.
claim dismissed by is an appeal due to
the BIR due to the inaction of the BIR
taxpayers failure to Q. What is the effect of the absence and non-
printing of the word zero-rated in the
submit complete
taxpayers invoices to the claim for refund or
documents despite tax credit of unutilized input VAT?
notice/request An applicant for a claim for tax refund or tax credit
must not only prove entitlement to the claim but also
compliance with all the documentary and evidentiary

Page 6 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

requirements. A claim for the refund of creditable a. The Waiver of

input taxes must be evidenced by a VAT invoice or the Statute of
official receipt in accordance with the invoicing Limitations under
requirements. The failure to indicate the words zero- Section 222 (b)
rated on the invoices and receipts issued by a taxpayer and (d) shall be
would result in the denial of the claim for refund or tax executed before
credit. (Eastern Telecommunications Philippines v. the expiration of
Commissioner of Internal Revenue, G.R. No. 183531, the period to
March 25, 2015) assess or to collect
taxes. The date of
Tax Remedies execution shall be
specifically
Q. What are the new guidelines and
indicated in the
requirements for the execution of waivers of
the defense of prescription under Section 222 waiver.
of the NIRC of 1997, as amended?
b. The waiver shall
be signed by the
Previous Rules New Rules taxpayer himself
or his duly
authorized
(RMO No. 14-2016)
(RMO No. 20-90, representative. ln
RDAO No. 05-01, the case of a
corporation, the
Supreme Court and
waiver must be
Court of Tax signed by any of
Appeals its responsible
officials;
Jurisprudence)
c. The expiry date of
the period agreed
The waiver must be in The waiver may be, but upon to
the prescribed form (as not necessarily, in the assess/collect the
revised by RDAO 05- form prescribed by tax after the
01). There should be RMO No. 20-90 or regular three-year
no deviation from this RDAO No. 05-01. The period of
form. taxpayer's failure to
prescription
follow the aforesaid
should be
forms does not
invalidate the executed indicated;
waiver, for as long as
The waiver must specify Except for waiver of
the following are the type of tax and the collection of taxes
complied with: amount of tax due. The which shall indicate
purpose of stating the the particular taxes

Page 7 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

specific kind of tax and assessed, the waiver and official unless duly be thereafter contested
the amount of tax due need not specify the notarized. to invalidate the waiver.
is for the taxpayer to particular taxes to be
pinpoint which among assessed nor the amount
the proposed tax thereof, and it may
assessments may simply state "all
subsequently be issued internal revenue
without the taxpayer taxes" considering that
invoking the defense during the assessment
of prescription. RMO stage, the
No. 20-90 requires Commissioner of
specific information lnternal Revenue or
(Dole Philippines, Inc. v. her duly authorized
Commissioner of representative is still
Internal Revenue, CTA in the process of
Case No. 5705, July 1, examining and
2003, and reiterated in determining the tax
various CTA Decisions) liability of the
taxpayer.

The authorized revenue Since the taxpayer is The waiver should be The waiver may be
official shall ensure that the applicant and the duly notarized. notarized. However, it
the waiver is duly executor of the is sufficient that the
accomplished and signed extension of the waiver is in writing as
by the taxpayer or his
period of limitation specifically provided
authorized
for its benefit in order by the NIRC, as
representative before
to submit the required amended.
affixing his signature
documents and
to signify acceptance A waiver is an Considering that the
accounting records,
of the same. In case the agreement between the waiver is a voluntary
the taxpayer is charged
authority is delegated taxpayer and the
with the burden of act of the taxpayer, the
by the taxpayer to a Commissioner, and not a
ensuring that the waiver shall take legal
representative, the unilateral act of either
waivers of statute of effect and be binding on
party. (Philippine
concerned revenue limitation are validly the taxpayer upon its
Journalist v. execution thereof.
official shall see to it executed by its
Commissioner of
that such delegation is authorized
Internal Revenue, G.R.
in writing and duly representative. The
No. 162852, December 16,
authority of the
notarized. The "WAI 2004)
taxpayer's
VER" should not be
representative who
accepted by the The taxpayer must be
participated in the
concerned BIR office conduct of audit or furnished a copy of the
investigation shall not waiver as accepted by

Page 8 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

the BIR. The fact of circumstances. In Commissioner of Internal Revenue v.

receipt by the taxpayer Next Mobile, G.R. No. 212825, December 7, 2015, five (5)
of his copy must be waivers were executed by the taxpayer and the BIR.
indicated in the The CTA found the following defects: (1) they were
original copy to show executed without a notarized board authority; (2) the
that the taxpayer was dates of acceptance by the BIR were not indicated
notified of the therein; and (3) the fact of receipt by respondent of its
acceptance of the BIR and copy of the Second Waiver was not indicated on the
the perfection of the face of the original Second Waiver.
agreement.
The Court ruled that, due to peculiar circumstances
Both the date of Note that there shall and as exception to the general rule, the supposedly
execution by the only be two (2) material invalid waivers may be considered valid for the
taxpayer and the date dates that need to be following reasons:
of acceptance by the present on the waiver:
BIR. 1. If the parties are in pari delicto or in equal fault
a. The date of and thus they shall have no action against each
The taxpayer must be execution of the other. Taxpayer violated RMO No. 20-90
furnished a copy of the waiver by the which states that in case of a corporate
taxpayer or its taxpayer, the waiver must be signed by its
waiver as accepted by
authorized
the BIR. The fact of responsible officials and RDAO 01-05 which
representative;
receipt by the taxpayer requires the presentation of a written and
and
of his copy must be notarized authority to the BIR. Similarly, BIR
indicated in the b. The expiry date violates its own rules when it did not ensure
original copy to show of the period the that the waiver is duly signed by an authorized
that the taxpayer was taxpayer waives representative and by not ensuring that the
notified of the the statute of delegation of authority is in writing and duly
acceptance of the BIR limitations notarized.
and the perfection of
2. Parties who do not come to Court with clean
the agreement.
hands cannot be allowed to benefit from their
Note: These guidelines and requirements should apply own wrongdoing. Taxpayer should not be
allowed to benefit from the flaws in its own
to waivers executed after April 18, 1016.
waivers and successfully insist on their
invalidity in order to evade its responsibility to
pay taxes.
Q. Can a waiver of the statute of limitations
which does not comply with the requirements 3. Taxpayer is estopped from questioning the
specified under RMO No. 20-90 and RDAO No.
validity of its waivers. The taxpayer executed 5
01-05 become valid?
waivers and delivered them to the BIR and did
Yes. Generally, a waiver of the statute of limitations not raise any objection against their validity
that does not comply with the requisites for its validity until the BIR assessed taxes against it. In its
specified under RMO No. 20-90 and RDAO 01-05 is Letter Protest to the BIR, respondent did not
invalid, but may still be valid due to peculiar
Page 9 of 14
NOTICE
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Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR
even question the validity of the Waivers or
call attention to their alleged defects.
4. The Court cannot tolerate a highly suspicious
situation. In this case, after the taxpayer
voluntarily executing the waivers, insisted on
their invalidity by raising the very same defects
it caused. On the other hand, the BIR
miserably failed to exact from the taxpayer
compliance with its rules. The BIRs
negligence in the compliance of its duties was
so gross such that it seemed that it consented
to the mistakes in the waivers. Such a situation
is dangerous and open to abuse by
unscrupulous taxpayers who intend to escape
their responsibility to pay taxes by mere
expedient of hiding behind technicalities.
Further, the Court said that while the BIR was also
at fault here because it was careless in complying
with the requirements of RMO No. 20-90 and
RDAO 01-05, such negligence may be addressed
by enforcing the provisions imposing
administrative liabilities upon the officers
responsible for these errors. The BIR's right to
assess and collect taxes should not be jeopardized
merely because of the mistakes and lapses of its
officers, especially in cases like this where the
taxpayer is obviously in bad faith. (Commissioner of
Internal Revenue v. Next Mobile, G.R. No. 212825,
December 7, 2015)
Q. What is the effect of a denial of an
application for compromise settlement,
abatement, or cancellation of international
revenue tax liabilities by the Regional
Evaluation Board (REB), or by the Large
Taxpayers Service (LTS) Technical Working
Committee (TWC) or the LTS Evaluation Board
(LTSEB)?
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
PIERRE MARTIN D. REYES
The denial of the application shall be considered final
and the outstanding tax liabilities and/or penalties
shall be immediately collected from the taxpayer.
(RMO No. 4-2016 dated January 25, 2016)
Q. In claims for excess and unutilized
creditable withholding tax, is the presentation
of the Certificates of Creditable Withholding
Tax Withheld at Source (BIR Form No. 2307)
required to prove that the taxpayer did not use
the claimed creditable withholding tax to pay
for his/its tax liabilities?
In claims for excess and unutilized creditable
withholding tax, the probative value of BIR Form
2307, which is basically a statement showing the
amount paid for the subject transaction and the
amount of tax withheld therefrom, is to establish only
the fact of withholding of the claimed creditable
withholding tax. There is nothing in BIR Form No.
2307 which would establish either utilization or non-
utilization, as the case may be, of the creditable
withholding tax. There is no basis in law or
jurisprudence to say that the BIR Form No. 2307 is the
only evidence to prove that the taxpayer did not use
the claimed creditable withholding tax to pay for
his/its tax liabilities. (Philippine National Bank v.
Commissioner of Internal Revenue, G.R. No. 206019,
March 18, 2015)
Local Government Taxation
Q. Do LGUs have the power to impose taxes on
persons or entities engaged in the business of
manufacturing and distribution of petroleum
products?
No. Among the common limitations on the taxing
powers of LGUs provided under Section 133 of the
LGC are excise taxes on articles enumerated under the
National Internal Revenue Code, as amended, and
taxes, fees or charges on petroleum products. The
prohibition with respect to petroleum products
extends not only to excise taxes thereon, but all taxes,
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 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR
fees or charges. (Batangas City v. Pilipinas Shell, G.R.
No. 187631, July 8, 2015)
Q. On January 15, 2007, ABC protested, thru a
letter, the imposition of business tax under
Section 21 of the Manila Revenue Code on the
ground that it constitutes double taxation. The
City Treasurer acknowledged receipt of the
letter but said that she will await the formal
protest. On March 27, 2007, ABC wrote a letter-
reply reiterating that ABC already protested. On
April 17, 2007, ABC filed a Petition for Review
with the Regional Trial Court (RTC). On
appeal, the CTA ruled that ABC belatedly filed
its petition with RTC by 1 day. ABC countered it
timely filed now claiming that reckoning point
should be from March 27, 2007. Was the
petition timely filed?
No. Section 195 of the Local Government Code states
that the taxpayer shall have thirty (30) days from the
receipt of the denial of the protest or from the lapse of
the sixty (60)-day period prescribed herein within
which to appeal with the court of competent
jurisdiction otherwise the assessment becomes
conclusive and unappealable.
In the instant case, the period within which the City
Treasurer must act on the protest, and the consequent
period to appeal a denial due to inaction, should be
reckoned from January 15, 2007, the date the taxpayer
filed its protest, and not March 27, 2007. (China
Banking Corporation v. City Treasurer of Manila, G.R.
No. 204117, July 1, 2015)
Note: The Court likewise stated that, at any rate, the
RTC has no jurisdiction. Following R.A. No. 9282, the
authority to exercise either original or appellate
jurisdiction over local tax cases depended on the
amount of the claim. In cases where the amount
sought to be refunded is below the jurisdictional
amount of the RTC, the Metropolitan, Municipal, and
Municipal Circuit Trial Courts (MTC) have
jurisdiction. RTC has jurisdiction if amount exceeds
exceed P300,000 outside Metro Manila (P400,000 in
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
PIERRE MARTIN D. REYES
Metro Manila); MTC if amount does not exceed
P300,000 outside Metro Manila (P400,000 in Metro
Manila).
Real Property Taxation
Q. The Provincial Treasurer assessed ABC for
real property taxes on its submarine cables.
Thereafter, ABC received a Warrant of Levy and
a Notice of Auction Sale. ABC filed a Petition
for Prohibition and Declaration of Nullity of
Warrant of Levy, Notice of Auction Sale and/or
Auction Sale with the RTC. ABC argues that the
submarines cables are not subject to tax.
Further, ABC argues that such issue involves
purely questions of law and, thus, exhaustion of
administrative remedies is not required. Is
ABCs remedy proper?
No. In disputes involving real property taxation, the
general rule is to require the taxpayer to first avail of
administrative remedies and pay the tax under protest
before allowing any resort to a judicial action, except
when the assessment itself is alleged to be illegal or is
made without legal authority. The instant case,
however, is one replete with questions of fact instead
of pure questions of law, which renders its filing in a
judicial forum improper because it is instead
cognizable by local administrative bodies like the
Board of Assessment Appeals, which are the proper
venues for trying these factual issues such as the extent
and status of the taxpayers ownership of the system,
the actual length of the cable/s that lie in Philippine
territory, and the corresponding assessment and taxes
due on the same. (Capitol Wireless v. Provincial
Treasurer of Batangas, G.R. No. 180110, May 30, 2016)
Q. May submarine communications cables be
classified as taxable real property by the local
governments?
Yes. Submarine or undersea communications cables
are akin to electric transmission lines which the Court
has previously declared as machinery subject to real
property tax under the Local Government Code to the
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 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

extent that the equipment's location is determinable to undergo the
be within the taxing authority's jurisdiction. Both processing and
electric lines and communications cables, in the clearing procedures at
strictest sense, are not directly adhered to the soil but the BOC, and are not
pass through posts, relays or landing stations, but both declared through
may be classified under the term "machinery" as real submission of import
property under Article 415(5) of the Civil Code for the documents, such as the
simple reason that such pieces of equipment serve the import entry and
owner's business or tend to meet the needs of his internal revenue
industry or works that are on real estate. (Capitol declaration.
Wireless v. Provincial Treasurer of Batangas, G.R. No.
180110, May 30, 2016)
Tariff and Customs Duties
order to evade the
payment of correct
taxes, duties, and other
charges. Often
committed by means
of misclassification of
the nature, quality or
value of goods and
articles,
undervaluation in
terms of their price,
quality or weight, and
misdeclaration of their
kind.

Q. Distinguish unlawful importation under

Section 3601 of the TCCP from various (Bureau of Customs v. Hon. Devanadera, G.R. No. 193253,
fraudulent practices against customs revenue September 8, 2015)
under Section 3602 of the TCCP?

Unlawful Appellate Jurisdiction and

Fraudulent Practices
Importation
Procedure in the Court of Tax
(Technical smuggling)
Appeals
(Outright smuggling)

Q. What is the proper remedy to assail a

Revenue Regulation?
Goods and articles of Goods and articles are
commerce are brought brought into the The proper remedy to assail a Revenue Regulation is a
into the country country through special civil action for declaratory relief under Rule 63
without the required fraudulent, falsified or of the Rules of Court filed with the Regional Trial
importation erroneous Court, not a special civil action for certiorari under
documents, or are declarations, to Rule 65.
disposed of in the local substantially reduce, if
market without not totally avoid, the A petition for certiorari under Rule 65 of the 1997
having been cleared by payment of correct Rules of Civil Procedure, as amended, is a special civil
the BOC or other taxes, duties and other action that may be invoked only against a tribunal,
authorized charges. Such goods board, or officer exercising judicial or quasi-judicial
government agencies, and articles pass functions. A revenue regulation is issued in the
to evade the payment through the BOC, but exercise of the quasi-legislative or rule-making powers
of correct taxes, duties the processing and of the Secretary of Finance, and not judicial or quasi-
and other charges. clearing procedures judicial functions. Being quasi-legislative in nature, a
Such goods and are attended by revenue regulation is outside the scope of a Petition
articles do not fraudulent acts in for Certiorari. The proper remedy is one for

Page 12 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR
declaratory relief over which the Supreme Court has
only appellate, not original jurisdiction. Under Rule 63
of the Rules of Court, the special civil action of
declaratory relief falls under the exclusive jurisdiction
of the Regional Trial Courts. (Clark Investors and
Locators Association v. Secretary of Finance, G.R. No.
200670, July 6, 2015)
Q. Does the CTA have jurisdiction to determine
the validity of a ruling issued by the CIR or the
COC in the exercise of their quasi-legislative
powers to interpret tax laws?
No. The CTA has no jurisdiction to determine the
validity of a ruling issued by the CIR or the COC in the
exercise of their quasi-legislative powers to interpret
tax laws. The phrase "other matters arising under this
Code," as stated in the second paragraph of Section 4
of the NIRC, should be understood as pertaining to
those matters directly related to the preceding phrase
"disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in
relation thereto" and must therefore not be taken in
isolation to invoke the jurisdiction of the CTA. In
other words, the subject phrase should be used only in
reference to cases that are, to begin with, subject to the
exclusive appellate jurisdiction of the CTA, i.e., those
controversies over which the CIR had exercised her
quasi-judicial functions or her power to decide
disputed assessments, refunds or internal revenue
taxes, fees or other charges, penalties imposed in
relation thereto, not to those that involved the CIR's
exercise of quasi-legislative powers. (Commissioner of
Internal Revenue v. Court of Tax Appeals and Petron
Corporation, G.R. No. 207843, July 15, 2015)
Q. Does the CTA have jurisdiction to review by
appeal decisions of the Customs Collector?
No. Under Section 7 of RA 1125, as amended by RA
9282, what is appealable to the CTA is the decision of
the COC over a customs collector's adverse ruling on
a taxpayer's protest.
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.
PIERRE MARTIN D. REYES
A party adversely affected by a ruling or decision of the
customs collector may protest such ruling or decision
upon payment of the amount due and, if aggrieved by
the action of the customs collector on the matter under
protest, may have the same reviewed by the COC. It is
only after the COC shall have made an adverse ruling
on the matter may the aggrieved party file an appeal to
the CTA. (Commissioner of Internal Revenue v. Court
of Tax Appeals and Petron Corporation, G.R. No. 207843,
July 15, 2015)
Q. Does the CTA en banc have jurisdiction over
interlocutory orders issued by the CTA
Division?
No. The CTA en banc has jurisdiction over final
orders or judgments but not over interlocutory orders
issued by the CTA in division. An interlocutory order
may not be questioned on appeal. (Commissioner of
Internal Revenue v. Court of Tax Appeals and CBK
Power, G.R. No. 203054-55, July 29, 2015)
Q. Does the CTA have jurisdiction over a
petition for certiorari assailing a Department of
Justice (DOJ) resolution in a preliminary
investigation involving tax and tariff offenses?
Jurisdiction over a petition for certiorari assailing a
DOJ resolution in a preliminary investigation
involving tax and tariff offenses is now with the CTA,
not the Court of Appeals (CA).
In Bureau of Customs v. Hon. Devanadera, G.R. No.
193253, September 8, 2015, the Supreme Court said that
the elementary rule is that the Court of Appeals has
jurisdiction to review the resolution of the DOJ
through a petition for certiorari under Rule 65 of the
Rules of Court on the ground that the Secretary of
Justice committed grave abuse of his discretion
amounting to excess or lack of jurisdiction. However,
with the enactment of Republic Act (RA) No. 9282
expanding the CTAs jurisdiction, it is no longer clear
which between the CA and the CTA has jurisdiction
to review through a petition for certiorari the DOJ
resolution in preliminary investigations involving tax
Page 13 of 14
 QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT PIERRE MARTIN D. REYES
JURISPRUDENCE AND BIR ISSUANCES FOR THE 2016 BAR

and tariff offenses. The Supreme Court then declared

that the CAs original jurisdiction over a petition for
certiorari assailing the DOJ resolution in a preliminary
investigation involving tax and tariff offenses was
necessarily transferred to the CTA pursuant to Section
7 of RA No. 9282, amending R.A. No. 1125

Q. May the Courts determine, in a claim for

refund or credit of unutilized input taxes under
Section 112 of the NIRC of 1997, as amended,
whether there are taxes that should have been
paid in lieu of the taxes paid?

No. First and foremost, the courts have no assessment

powers, and therefore, cannot issue assessments
against taxpayers. In SMI-ED Philippines v.
Commissioner of Internal Revenue, G.R. No. 175410,
November 12, 2014, the Supreme Court an action for the
refund of taxes allegedly erroneously paid, the CTA
may determine whether there are taxes that should
have been paid in lieu of the taxes paid. Determining
the proper category of tax that should have been paid
is not an assessment. It is an incidental matter
necessary for the resolution of the principal issue,
which is whether the taxpayer is entitled to the refund.

In the instant case, however, the taxpayer filed a claim

for tax refund or credit under Section 112 of the NIRC,
where the issue to be resolved is whether the taxpayer
is entitled to a refund or credit of its unutilized input
VAT. And since it is not a claim for refund under
Section 229 of the NIRC, the correctness of the VAT
returns is not an issue. Thus, there is no need for the
Court to determine whether the taxpayer is liable for
deficiency VAT. (Commissioner of Internal Revenue v.
Toledo Power Company, G.R. No. 196415 & 196451,
December 2, 2015)

Page 14 of 14
NOTICE
This material supplements the authors 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement, and Tax Audit
Primer. No portion of this work may be copied or reproduced without the written permission of the author. Possessors
may reproduce and distribute this supplement provided the name of the author remains clearly associated with my work
and no alterations in the form and content of this supplement are made. No stamping is allowed.