Questions and Answers On Significant Supreme Court Taxation Law Jurisprudence For The 2018 Bar

QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
This supplement covers significant and Q. The City of Manila imposed against ABC
relevant Supreme Court jurisprudence on a tax on manufacturers under Section 14 of
taxation law from July 1, 2017 to June 30, the Revenue Code of Manila and at the same
2018. time a tax on other businesses under Section
21 of the same Code. ABC argues that the
For jurisprudence and BIR issuances for the collection of taxes under both Sections 14
period prior to July 1, 2017, please refer to the and 21 of the Code constitutes double
previous supplements. taxation. Is ABC correct?
GENERAL PRINCIPLES Yes. While the City of Manila could impose

against ABC a manufacturer's tax under
Q. What is a tax amnesty? Section 14 of the Revenue Code of Manila, it
cannot at the same time impose the tax under
A tax amnesty is a general pardon or Section 21 of the same code; otherwise, an
intentional overlooking by the State of its obnoxious double taxation would set in.
authority to impose penalties on persons
otherwise guilty of evasion or violation of a Citing its previous ruling in The City of Manila
revenue or tax law. It partakes of an absolute v. Coca-cola Bottlers, Inc., G.R. No. 181845,
forgiveness or waiver by the government of its August 4, 2009, there is indeed double
right to collect what is due it and to give tax taxation if the taxpayer is subjected to the
evaders who wish to relent a chance to start taxes under both Sections 14 and 21 of Tax
with a clean slate. A tax amnesty, much like a Ordinance No. 7794, since these are being
tax exemption, is never favored nor presumed imposed: (1) on the same subject matter – the
in law. The grant of a tax amnesty, similar to privilege of doing business in the City of
a tax exemption, must be construed strictly Manila; (2) for the same purpose - to make
against the taxpayer and liberally in favor of persons conducting business within the City
the taxing authority. (Commissioner of of Manila contribute to city revenues; (3) by
Internal Revenue v. Philippine Aluminum the same taxing authority-petitioner City of
Wheels, G.R. No. 216161, August 9, 2017) Manila; (4) within the same taxing jurisdiction
- within the territorial jurisdiction of the City of
Q. When will a taxpayer be entitled to the Manila; (5) for the same taxing periods – per
immunities and privileges of a tax amnesty calendar year; and (6) of the same kind or
program? character - a local business tax imposed on
gross sales or receipts of the business (City of
Amnesty taxpayers may immediately enjoy Manila v. Cosmos Bottling Corporation, G.R.
the privileges and immunities under a Tax No. 196681, June 27, 2018)
Amnesty Law, provided they fulfill the
suspensive conditions imposed therein.
(Commissioner of Internal Revenue v.
Covanta Energy Philippine Holdings, G.R.
No. 203160, January 24, 2018)
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This material supplements the author’s 2013 Bar Reviewer and its supplements. 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.
INCOME TAX Internal Revenue, G.R. No. 205955, 7 March

2018)
Q. The taxpayer initially opted to be
refunded of its excess creditable tax for Q. The BIR assessed ABC with deficiency
2006 through the issuance of a tax credit final withholding taxes (FWT) on interest
certificate. The taxpayer subsequently payments on loan agreements with XYZ for
indicated in its 2007 ITR that it carried over the taxable year 2000. The CTA found that
the 2006 excess creditable tax and applied ABC was not liable for the said deficiency
the same against income tax due for 2007. FWT since its liability for interest payment
The taxpayer filed with the BIR a claim for became due and demandable only on June 1,
refund and/or issuance of a TCC for the 2002. The BIR contends that ABC was liable
alleged excess credit for 2006. This was later to pay the interest from the date of the
elevated to the Court of Tax Appeals (CTA). execution of the contract on January 5, 2000,
Both CTA Division and CTA En Banc ruled not from the date of first payment on June 1,
that the taxpayer effectively exercised the 2002. Is the BIR correct?
carry-over option when it included the
excess tax credit for 2006 in the original ITR No. Under Section 2.57.4 of RR No. 2-98, the
for 2007. The taxpayer, on the other hand, obligation of ABC to deduct or withhold tax
contended that the option to be refunded arises at the time an income is paid or
through the issuance of a TCC is irrevocable. payable, whichever comes first. Further, the
Thus, when it indicated in its annual ITR for same Section provides that the term
2006 the option “To be issued a Tax Credit “payable” refers to the date the obligation
Certificate,” such choice precluded the other becomes due, demandable or legally
option to carry over. Is the taxpayer correct? enforceable. (Edison (Bataan) Cogeneration
Corporation v. Commissioner of Internal
No. The irrevocability rule is limited only to the Revenue, G.R. No. 201665, August 30, 2017)
option of carry-over. There is nothing in the
law which prevents the taxpayer who VALUE-ADDED TAX
originally opted for a refund or TCC to shift to
the carry-over of the excess creditable taxes Q. What are the rules on the determination
to the taxable quarters of the succeeding of the prescriptive period for filing a tax
taxable years. However, if the taxpayer refund or credit of unutilized input VAT?
decides to shift its option to carry-over, it may
no longer revert to its original choice due to The rules are as follows:
the irrevocability rule. Here, the taxpayer is
barred from recovering its excess creditable 1. An administrative claim must be filed
tax for 2006 through refund or TCC since it with the CIR within two years after the
constructively chose the option of carry-over close of the taxable quarter when the
when, despite its initial option to refund, it zero-rated or effectively zero-rated
subsequently indicated in its 2007 ITR that it sales were made.
carried over the 2006 excess creditable tax
and applied the same against income tax due 2. The CIR has 120 days from the date of
for 2007. (University Physicians Services, submission of complete documents in
Inc. – Management, Inc. v. Commissioner of support of the administrative claim
within which to decide whether to
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This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar
Supplement, 2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax
Remedies. 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 the work and no alterations in the form and content of this supplement
are made. No stamping is allowed.
grant a refund or issue a tax credit Q. In a refund of unutilized input taxes, is the
certificate. The 120-day period may inaction of the Commissioner “deemed a
extend beyond the two-year period denial” or a decision denying the claim?
from the filing of the administrative
claim if the claim is filed in the later part The Commissioner's inaction on the
of the two-year period. If the 120-day taxpayer’s claim during the 120-day period is
period expires without any decision "deemed a denial," pursuant to Section 7(a)(2)
from the CIR, then the administrative of Republic Act No. 1125, as amended by
claim may be considered to be denied Section 7 of Republic Act No. 9282. The
by inaction. taxpayer has 30 days from the expiration of
the 120-day period to file
3. A judicial claim must be filed with the its judicial claim with the Court of Tax
CTA within 30 days from the receipt of Appeals. Its failure to do so shall render
the CIR’s decision denying the the Commissioner's "deemed a denial"
administrative claim or from the decision as final and unappealable. (Team
expiration of the 120-day period Energy Corporation v. Commissioner of
without any action from the CIR. Internal Revenue, G.R. No. 197663 & G.R. No.
197770, March 14, 2018)
4. All taxpayers, however, can rely on BIR
Ruling No. DA-489-03 from the time of Q. What is the distinction between an
its issuance on 10 December 2003 up ‘excess input VAT” and an “excessively
to its reversal by this Court in Aichi on 6 collected” tax?
October 2010, as an exception to the
mandatory and jurisdictional 120+30 The input VAT is not “excessively” collected as
day periods. (Team Energy understood under Section 229 because at the
Corporation v. Commissioner of time the input VAT is collected the amount
Internal Revenue, G.R. No. 197663 & paid is correct and proper. The input VAT is a
G.R. No. 197770, March 14, 2018; tax liability of, and legally paid by, a VAT-
Team Sual Corporation v. registered seller of goods, properties or
Commissioner of Internal Revenue, services used as input by another VAT-
G.R. Nos. 201225-26, April 18, 2018; registered person in the sale of his own goods,
CE Luzon Geothermal v. properties, or services. This tax liability is true
Commissioner of Internal Revenue, even if the seller passes on the input VAT to
G.R. No. 197526, July 26, 2017; Aichi the buyer as part of the purchase price. The
Forging Company v. Commissioner of second VAT- registered person, who is not
Internal Revenue, G.R. No. 193525, legally liable for the input VAT, is the one who
August 30, 2017; Procter & Gamble applies the input VAT as credit for his own
Asia v. Commissioner of Internal output VAT.
Revenue, G.R. No. 205652, September
6, 2017; Mindanao I Geothermal In a claim for refund or credit of “excess” input
Partnership v. Commissioner of VAT under Section 110(B) and Section 112(A),
Internal Revenue, G.R. No. 197519, the input VAT is not “excessively” collected as
November 8, 2017; Commissioner of understood under Section 229. At the time of
Internal Revenue, G.R. No. 209306, payment of the input VAT the amount paid is
September 27, 2017) the correct and proper amount. Under the VAT
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System, there is no claim or issue that the Q. What is the distinction between a ‘receipt’
input VAT is “excessively” collected, that is, and an ‘invoice’ as evidence in a claim for
that the input VAT paid is more than what is refund or tax credit of unutilized input VAT?
legally due. The person legally liable for the
input VAT cannot claim that he overpaid the To claim a refund of unutilized or excess
input VAT by the mere existence of an input VAT, purchase of goods or properties
“excess” input VAT. The term “excess” input must be supported by VAT invoices, while
VAT simply means that the input VAT purchase of services must be supported by
available as credit exceeds the output VAT, VAT official receipts. (Team Energy
not that the input VAT is excessively collected Corporation v. Commissioner of Internal
because it is more than what is legally due. Revenue, G.R. No. 197663 & G.R. No. 197770,
Thus, the taxpayer who legally paid the input March 14, 2018)
VAT cannot claim for refund or credit of the
input VAT as “excessively” collected under TAX REMEDIES UNDER THE NIRC
Section 229.
Q. A Letter of Authority (LOA) was issued
Any suggestion that the “excess” input VAT authorizing the BIR officers to examine the
under the VAT System is an “excessively” books of account of the taxpayer for the
collected tax under Section 229 may lead taxable year 1998 only or, since the taxpayer
taxpayers to file a claim for refund or credit for adopted a fiscal year, for the period April 1,
such “excess” input VAT under Section 229 as 1997 to March 31, 1998. The deficiency tax
an ordinary tax refund or credit outside of the assessment which the BIR eventually issued
VAT System. against the taxpayer was based on
disallowance of expenses reported in fiscal
From the plain text of Section 229, it is clear year 1999, or for the period April 1, 1998 to
that what can be refunded or credited is a tax March 31, 1999. Is the assessment valid?
that is “erroneously, x x x illegally, x x x
excessively or in any manner wrongfully No. The LOA gives notice to the taxpayer that
collected.” In short, there must be a wrongful it is under investigation for possible deficiency
payment because what is paid, or part of it, is tax assessment; at the same time it authorizes
not legally due. As the Court held in Mirant, or empowers a designated revenue officer to
Section 229 should “apply only to instances of examine, verify, and scrutinize a taxpayer's
erroneous payment or illegal collection of books and records, in relation to internal
internal revenue taxes.” Erroneous or revenue
wrongful payment includes excessive
payment because they all refer to payment of tax liabilities for a particular period. In this
taxes not legally due. Under the VAT System, case, the LOA shows that the period of
there is no claim or issue that the “excess” examination is the taxable year 1998. A valid
input VAT is “excessively or in any manner LOA does not necessarily clothe validity to an
wrongfully collected.” (Coca-Cola Philippines assessment issued on it, as when the revenue
v. Commissioner of Internal Revenue, G.R. officers designated in the LOA act in excess or
No. 222428, February 19, 2018; CE Luzon outside of the authority granted them under
Geothermal v. Commissioner of Internal said LOA. The taxable year covered by the
Revenue, G.R. No. 197526, July 26, 2017) assessment being outside of the period
specified in the LOA, the assessment issued
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against the taxpayer is void. (Commissioner BUT NOTE:

of Internal Revenue v. Lancaster, G.R. No.
183408, July 12, 2017) Q. ABC received a Letter of Authority for the
examination of its books of accounts for
Q. What is the effect of failure of the waiver internal revenue purposes for the taxable
to strictly conform to the requirements of a year 2004. On October 9, 2007, the parties
waiver of the statute of limitations under executed a Waiver to extend the prescriptive
RMO 20-90? period for the year 2004 to June 20, 2008. On
the part of ABC, this was signed by its
The requirements are mandatory and must Finance Manager. The waiver was followed
strictly be followed. Defective and invalid by another waiver extending the
waivers of Statute of Limitations do not prescriptive period to November 30, 2008.
extend the CIR's period to issue assessments. Thereafter, the BIR issued a PAN. ABC filed
Thus, the right of the government to assess or a protest against the PAN arguing that it not
collect the alleged deficiency taxes is already liable for the deficiency taxes. It did not raise
barred by prescription. Assessments issued as an issue the invalidity of the waiver and
by the BIR beyond the three-year prescriptive, the prescription of the BIR’s right to assess.
are considered void and of no legal effect. In its protest against the FAN, ABC argued
(Commissioner of Internal Revenue v. that the year being audited in the FAN has
Systems Technology Institute, G.R. No. already prescribed at the time such FAN was
220835, July 26, 2017) mailed on December 4, 2008. ABC received
the FAN on December 5, 2008 which is 5
Q. If the taxpayer actively participated in the days after the waiver it issued had
administrative investigation by filing a prescribed. In the CTA, ABC further argued
request for reinvestigation, which resulted in that the signatories in the waivers were not
a reduced assessment, does that fact duly sanctioned to act on its behalf.
amount to estoppel that prescription can no
longer be invoked? (1) Are the two waivers valid?
(2) Is the assessment barred already by
No. The doctrine of estoppel cannot be prescription?
applied as an exception to the statute of
limitations on the assessment of taxes (1) Estoppel applies against a taxpayer who
considering that there is a detailed did not only raise at the earliest opportunity its
procedure for the proper execution of the representative's lack of authority to execute
waiver, which the BIR must strictly follow. The two (2) waivers of defense of prescription, but
BIR cannot hide behind the doctrine of was also accorded, through these waivers,
estoppel to cover its failure to comply with more time to comply with the audit
RMO 20-90 and RDAO 05-01, which the BIR requirements of the Bureau of Internal
itself had issued. Having caused the defects in Revenue.
the waivers, the BIR must bear the
consequence. It cannot simply shift the blame Citing its previous ruling in Commissioner of
to the taxpayer. (Commissioner of Internal Internal Revenue v. Next Mobile, Inc., G.R. No.
Revenue v. Systems Technology Institute, 212825, December 7, 2015, a defective
G.R. No. 220835, July 26, 2017) waiver will be upheld when both the taxpayer
and the BIR were in pari delicto. In this case,
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the Bureau of Internal Revenue was at fault 3. The income upon which the taxes
when it accepted the waivers despite their were withheld was included in the
non-compliance with the requirements of income tax return of the recipient as
RMO No. 20-90 and RDAO No. 05-01. The part of the gross income.
taxpayer’s acts also show its implied (Commissioner of Internal Revenue v.
admission of the validity of the waivers. First, Cebu Holding, G.R. No. 189792, June
the taxpayer never raised the invalidity of the 29, 2018)
Waivers at the earliest opportunity, either in
its Protest to the PAN, Protest to Q. Whether evidence not presented in the
the FAN, or Supplemental Protest to the FAN. administrative claim for refund in the Bureau
It thereby impliedly recognized these waivers' of Internal Revenue can be presented in the
validity and its representatives' authority to Court of Tax Appeals?
execute them. Second, the taxpayer
benefitted from the waivers executed as it Yes. The Court of Tax Appeals is not limited by
gave the taxpayer more time to comply with the evidence presented in the administrative
the audit requirements of the BIR. claim in the Bureau of Internal Revenue. The
claimant may present new and additional
(2) Yes, the assessment is void because it was evidence to the Court of Tax Appeals to
served beyond the extended period. The support its case for tax refund. The power of
FAN/FLD was mailed on December 4, 2008. the Court of Tax Appeals to exercise its
Since the validity period of the second waiver appellate jurisdiction does not preclude it from
is only until November 30, 2008, prescription considering evidence that was not presented
had already set in at the time the FAN and the in the administrative claim in the Bureau of
FLD were actually mailed on December 4, Internal Revenue.
2008. (Commissioner of Internal Revenue v.
Transitions Optical Philippines, G.R. No. Parties are expected to litigate and prove
227544, November 22, 2017) every aspect of their case anew and formally
offer all their evidence. No value is given to
Q. What are the requisites for claiming a documentary evidence submitted in the
refund of excess creditable withholding Bureau of Internal Revenue unless it is
taxes? formally offered in the Court of Tax Appeals.
Thus, the review of the Court of Tax Appeals
The requisites for claiming a refund of excess is not limited to whether or not the
creditable withholding taxes are: Commissioner committed gross abuse of
discretion, fraud, or error of law, as contended
1. The claim for refund was filed within by the Commissioner. As evidence is
the two-year prescriptive period; considered and evaluated again, the scope of
the Court of Tax Appeals' review covers
2. The fact of withholding is established factual findings. (Philippine Airlines v.
by a copy of a statement Commissioner of Internal Revenue, G.R. No.
duly issued by the payor (withholding 206079-80 & 206309, January 17, 2018)
agent) to the payee, showing the
amount of tax withheld therefrom; and Note: The case involved a claim for refund
pursuant to Section 229 of the Tax Code.
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LOCAL GOVERNMENT TAXATION Q. The City of Manila assessed ABC local

business taxes for the taxable year 2007
Q. On 26 December 1992, the Sangguniang using the gross sales for the calendar year
Bayan of the Municipality of Pasig enacted 2005. ABC argues that the computation of
Ordinance No. 25 which imposed a franchise the business tax should be on the basis of its
tax on all business venture operations gross sales in 2006 which amount was lower
carried out through a franchise within the than the gross sales in 2005. Is ABC correct?
municipality. On 25 January 1995, the
Municipality of Pasig was converted into a Yes. Section 14 of the Revenue Code of
highly urbanized city now known as the City Manila, which is derived from Section 143(a)
of Pasig. The City Treasurer assessed the of the Local Government Code, provides that
Manila Electric Company for deficiency an assessment for business tax should be
franchise taxes for the period 1996 to 1999 computed based on the taxpayer’s gross
pursuant to Municipal Ordinance No. 25. sales or receipts of the preceding calendar
Does the City of Pasig have valid basis for its year. (City of Manila v. Cosmos Bottling
imposition of franchise tax for the period Corporation, G.R. No. 196681, June 27, 2018)
1996 to 1999?
Q. The City of Manila assessed ABC local
No. The power to impose franchise tax business taxes. ABC protested the
belongs to the province by virtue of Section assessment arguing that it constitutes as
137 of the Local Government Code. On the double taxation. ABC tendered payment of
other hand, Section 142 of the Code provides what they believe to be the correct
that the municipalities are prohibited from computation of their local business tax. The
levying the taxes specifically provided to payment was refused by the City Treasurer.
provinces. Section 151 empowers the cities to ABC also received a letter from the City
levy taxes, fees and charges allowed to both Treasurer denying their protest. ABC then
provinces and municipalities. Unlike a city, a paid the assessment and filed a claim for
municipality is bereft of authority to levy refund with the Office of the City Treasurer
franchise tax, thus, the ordinance enacted for raising the same grounds in their protest.
that purpose is void. ABC then filed its refund with the RTC of
Manila. The City of Manila argues that the
The ordinance in question was enacted in assessment against ABC became final and
1992 when the local government of Pasig was executory when the latter effectively
still a municipality and, as such, had no abandoned its protest and instead sued in
authority to levy franchise tax. The conversion court for the refund of the assessed taxes. Is
of the municipality into a city does not lend the City of Manila correct?
validity to the void ordinance. The ordinance is
void for being in direct contravention with No. A taxpayer who had protested and paid
Section 142 of the Local Government Code. an assessment is not precluded from later on
Being void, it cannot be given any legal effect. instituting an action for refund or credit.
An assessment and collection pursuant to the
said ordinance is legally infirm. (City of Pasig While Section 196 does not expressly mention
v. Manila Electric Company, G.R. No. 181710, an assessment made by the local treasurer,
March 7, 2018) this simply means that its applicability does
not depend upon the existence of an
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assessment notice. By consequence, a assessed tax, fee or charge. Whether there is

taxpayer may proceed to the remedy of refund payment of the assessed tax or not, the
of taxes even without a prior protest against protest in writing must be made within sixty
an assessment that was not issued in the first (60) days from receipt of the notice of
place. This is not to say that an application for assessment; otherwise, the assessment shall
refund can never be precipitated by a become final and conclusive. Additionally, the
previously issued assessment, for it is entirely subsequent court action must be initiated
possible that the taxpayer, who had received within thirty (30) days from denial or inaction
a notice of assessment, paid the assessed tax, by the local treasurer; otherwise, the
fee or charge believing it to be erroneous or assessment becomes conclusive and
illegal. Thus, under such circumstance, the unappealable.
taxpayer may subsequently direct his claim
pursuant to Section 196 of the LGC. a. Where no payment is made, the
taxpayer's procedural remedy is
When a taxpayer is assessed a deficiency governed strictly by Section 195. That
local tax, fee or charge, he may protest it is, in case of whole or partial denial of
under Section 195 even without making the protest, or inaction by the local
payment of such assessed tax, fee or. charge. treasurer, the taxpayer's only recourse
This is because the law on local government is to appeal the assessment with the
taxation, save in the case of real property tax, court of competent jurisdiction. The
does not expressly require ''payment under appeal before the court does not seek a
protest" as a procedure prior to instituting the refund but only questions the validity or
appropriate proceeding in court. This implies correctness of the assessment.
that the success of a judicial action
questioning the validity or correctness of the b. Where payment was made, the
assessment is not necessarily hinged on the taxpayer may thereafter maintain an
previous payment of the tax under protest. action in court questioning the validity
Needless to say, there is nothing to prevent and correctness of the assessment
the taxpayer from paying the tax under (Section 195) and at the same time
protest or simultaneous to a protest. seeking a refund of the taxes. It would
be illogical for the taxpayer to only seek
Thus, a taxpayer facing an assessment may a reversal of the assessment without
protest it and alternatively: (1) appeal the praying for the refund of taxes. Once
assessment in court, or (2) pay the the assessment is set aside by the
tax and thereafter seek a refund. (City of court, it follows as a matter of course
Manila v. Cosmos Bottling Corporation, G.R. that all taxes paid under the erroneous
No. 196681, June 27, 2018) or invalid assessment are refunded to
the taxpayer. The same implication
Q. What are the remedies of the taxpayer in should ensue even if the taxpayer were
case of an assessment for deficiency local to style his suit in court as an action for
taxes? refund or recovery of erroneously paid
or illegally collected tax as pursued
Where an assessment is to be protested or under Section 196 of the LGC. In such a
disputed, the taxpayer may proceed (a) suit for refund, the taxpayer cannot
without payment, or (b) with payment of the successfully prosecute his theory of
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erroneous payment or illegal collection CTA has exclusive jurisdiction and said that
of taxes without necessarily assailing the PPA should have applied for issuance of
the validity or correctness of the a writ of injunction or prohibition. PPA filed
assessment he had administratively a Motion for Reconsideration with the CA
protested. and was denied. Hence, the PPA filed a
Petition for Review with the Supreme Court.
Note that where an assessment is issued, the Does the CA have jurisdiction to issue the
taxpayer cannot choose to pay the injunctive relief prayed for by PPA?
assessment and thereafter seek a refund at
any time within the full period of two years No. When a tax case is pending on appeal
from the date of payment as Section 196 may with the CTA, the CTA has exclusive
suggest. If refund is pursued, the taxpayer jurisdiction to enjoin the levy of taxes and
must administratively question the validity or auction of the taxpayer’s properties in
correctness of the assessment in the 'letter relation to that case. Section 7(a)(5) of RA
claim for refund' within 60 days from receipt No. 1125, as amended by RA No. 9282
of the notice of assessment, and thereafter provides that the CTA has exclusive
bring suit in court within 30 days from either appellate jurisdiction over decisions of the
decision or inaction by the local treasurer. CBAA in the exercise of its appellate
(City of Manila v. Cosmos Bottling jurisdiction over cases involving the
Corporation, G.R. No. 196681, June 27, 2018) assessment and taxation of real property
originally decided by the provincial or city
JUDICIAL REMEDIES board of assessment appeals.
Q. The Philippine Ports Authority (PPA) The CTA has the power to determine whether
received a letter from the City Assessor for or not there has been grave abuse of
the assessment and collection of real discretion in cases falling within its exclusive
property taxes against its administered appellate jurisdiction and its power to issue
properties. It appealed the assessment to writs of certiorari.
the Local Board of Assessment Appeals
(LBAA) through the Office of the City The Court of Tax Appeals had jurisdiction over
Treasurer. While the case was pending, the PPA’s appeal to resolve the question of
City of Davao posted a notice of sale of whether or not it was liable for
delinquent real properties including the real property tax. The real property tax liability
properties of the PPA. The LBAA dismissed was the very reason for the acts which
the appeal. The PPA appealed before the petitioner wanted to have enjoined. It was,
Central Board of Assessment Appeals thus, the Court of Tax Appeals, and not the
(CBAA) and was denied. Thus, it filed an Court of Appeals, that had the power to
appeal with the CTA. The PPA claimed it did preserve the subject of the appeal, to give
not receive any warrant of levy and thus it effect to its final determination, and, when
filed a Petition for Certiorari with the Court necessary, to control auxiliary and incidental
of Appeals (CA). The CTA ruled in favor of matters and to prohibit or restrain acts which
the PPA declaring the properties as exempt might interfere with its exercise of jurisdiction
from real property tax and declaring void the over petitioner's appeal.
assessments issued. The CA, on the other
hand, dismissed the petition ruling that the
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Even if the law had vested the Court of a tax law or regulation or administrative
Appeals with jurisdiction to issue injunctive issuance may be filed directly before the CTA.
relief in real property tax cases such as this,
the Court of Appeals was still correct in With respect to administrative issuances
dismissing the petition before it. Once a court (revenue orders, revenue memorandum
acquires jurisdiction over a case, it also has circulars, or rulings), these are issued by the
the power to issue all auxiliary writs Commissioner under its power to make rulings
necessary to maintain and exercise its or opinions in connection with the
jurisdiction, to the exclusion of all other courts. implementation of the provisions of internal
Thus, once the Court of Tax Appeals acquired revenue laws. Tax rulings, on the other hand,
jurisdiction over petitioner's appeal, the Court are official positions of the Bureau on inquiries
of Appeals would have been precluded from of taxpayers who request clarification on
taking cognizance of the case. (Philippine certain provisions of the National Internal
Ports Authority v. The City of Davao, G.R. No. Revenue Code, other tax laws, or their
190324, June 6, 2018) implementing regulations. Hence, the
determination of the validity of these
Q. Does the CTA have exclusive jurisdiction issuances clearly falls within the exclusive
to determine the constitutionality or validity appellate jurisdiction of the CTA, subject to
of tax laws, rules and regulations, and other prior review by the Secretary of Finance.
administrative issuances of the CIR? (Steel Corporation v. Bureau of Customs &
Bureau of Internal Revenue, G.R. No.
Yes. The CTA has exclusive jurisdiction to 220502, February 12, 2018)
determine the constitutionality or validity of
tax laws, rules and regulations, and other Q. Does the CTA have jurisdiction over cases
administrative issuances of the Commissioner asking for the cancellation and withdrawal
of Internal Revenue. of a warrant of distraint and/or levy?
The CTA has not only jurisdiction to pass upon Yes. Section 7 of RA No. 9282 provides that
the constitutionality or validity of a tax law or the CTA has jurisdiction over other matters
regulation when raised by the taxpayer as a arising under the National Internal Revenue
defense in disputing or contesting an Code or other laws administered by the
assessment or claiming a refund, but also Bureau of Internal Revenue. (Commissioner
jurisdiction to take cognizance of cases of Internal Revenue v. Bank of the Philippine
directly challenging the constitutionality or Islands, G.R. No. 224327, June 11, 2018)
validity of a tax law or regulation or
administrative issuance (revenue orders, Q. Does the Secretary of Justice have
revenue memorandum circulars, rulings). jurisdiction to review disputed assessments
involving government owned and controlled
The law intends the CTA to have exclusive corporations?
jurisdiction to resolve all tax problems.
Petitions for writs of certiorari against the acts Yes. Under Presidential Decree No. 242 (PD
and omissions of the said quasi-judicial 242), all disputes and claims solely between
agencies should, thus, be filed before the CTA. government agencies and offices, including
Except for local tax cases, actions directly government-owned or controlled
challenging the constitutionality or validity of corporations, shall be administratively settled
Page 10 of 12
NOTICE
or adjudicated by the Secretary of Justice, the the terms of the 1997 NIRC with regard solely
Solicitor General, or the Government to intragovernmental disputes. PD 242 is a
Corporate Counsel, depending on the issues special law while the 1997 NIRC is a general
and government agencies involved. The use of law, insofar as disputes solely between or
the word "shall" in PD 242 means that among government agencies are concerned.
administrative settlement or adjudication of (Power Sector Assets and Liabilities
disputes and claims between government Management Corporation v. Commissioner
agencies and offices, including government of Internal Revenue, G.R. No. 198146,
owned or controlled corporations, is not August 8, 2017)
merely permissive but mandatory and
imperative. Q. What is the effect of filing a Petition for
Review with the CTA En Banc without filing
The second paragraph of Section 4 of the a prior motion for reconsideration or new
1997 NIRC, providing for the exclusive trial before the CTA Division?
appellate jurisdiction of the CTA as regards
the CIR's decisions on matters involving The filing of a motion for reconsideration or
disputed assessments, refunds in internal new trial before the CTA Division is an
revenue taxes, fees or other charges, penalties indispensable requirement for filing an appeal
imposed in relation thereto, or before the CTA En Banc. Failure to file such
other matters arising under NIRC, is in conflict motion for reconsideration or new trial is
with PD 242. To harmonize Section 4 of the cause for dismissal of the appeal before the
1997 NIRC with PD 242, the following CTA En Banc. (City of Manila v. Cosmos
interpretation should be adopted: Bottling Corporation, G.R. No. 196681, June
27, 2018)
1. As regards private entities and the
BIR, the power to decide disputed Q. Within sixty days from receipt of the
assessments, refunds of internal resolution of the CTA En Banc on the Motion
revenue taxes, fees or other charges, for Reconsideration of the CTA En Banc
penalties in relation thereto, or other Decision, the taxpayer filed a Petition for
matters arising under the NIRC or other Certiorari with the Supreme Court alleging
laws administered by the. BIR is vested grave abuse of discretion amounting to lack
in the CIR subject to the exclusive or excess of jurisdiction on the part of the
appellate jurisdiction of the CTA, in CTA En Banc when it issued the assailed
accordance with Section 4 of the NIRC; decision and resolution. Did the taxpayer
and avail of the proper remedy?
2. Where the disputing parties No. The taxpayer adopted the wrong remedy
are all public entities (covers disputes in assailing the resolution of the CTA En Banc.
between the BIR and other What the petitioner should have done to
government entities), the case shall be question the decision of the CTA En Banc was
governed by PD 242. to file before the Supreme Court a petition for
review under Rule 45 of the same Rules of
Even if the 1997 NIRC, a general statute, is a Court in conformity with Section 11 of R.A. No.
later act, PD 242, which is a special law, will 9282. A petition for certiorari under Rule 65 of
still prevail and is treated as an exception to the Rules of Court is a special civil action that
Page 11 of 12
NOTICE
may be resorted to only in the absence of

appeal or any plain, speedy and adequate
remedy in the ordinary course of law.54 In this
case, there is a plain, speedy and adequate
remedy that is available - appeal by certiorari
under Rule 45. (Aichi Forging Company v.
Commissioner of Internal Revenue, G.R. No.
193625, August 30, 2017; Bureau of Internal
Revenue v. Hon. Ernesto Acosta, G.R. No.
195320, April 23, 2018)
***Nothing else follows***
Page 12 of 12
NOTICE

Questions and Answers On Significant Supreme Court Taxation Law Jurisprudence For The 2018 Bar

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Questions and Answers On Significant Supreme Court Taxation Law Jurisprudence For The 2018 Bar

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QUESTIONS AND ANSWERS ON SIGNIFICANT

SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR

PIERRE MARTIN D. REYES

GENERAL PRINCIPLES Yes. While the City of Manila could impose

INCOME TAX Internal Revenue, G.R. No. 205955, 7 March

against the taxpayer is void. (Commissioner BUT NOTE:

LOCAL GOVERNMENT TAXATION Q. The City of Manila assessed ABC local

assessment notice. By consequence, a assessed tax, fee or charge. Whether there is

may be resorted to only in the absence of

Nothing else follows

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