TAXATION LAW REVIEW (CONCISE VERSION - PART II)

I. TRANSFER TAXES

A. Estate Tax
1. Basic principles, concepts and definition
a. Kinds of decedents / Situs rules - Secs. 85 and 104 of the NIRC – Sec. 4 of RR No.
12-2018.
b. Rules on Intangible Personal Property - Sec. 104 of the NIRC.
c. Rule on Reciprocity - Sec. 104 of the NIRC.
i. Collector vs. Fisher, GR Nos. L-11622 and L11668 dated January 28, 1961.
d. Inclusion Rules
i. Property Passing under a General Power of Appointment – Sec. 85(D) of the
NIRC correlate with Sec. 87(B) and (C) of the NIRC.
ii. Proceeds of Life Insurance – Sec. 85(E) of the NIRC.
2. Deductions
a. Allowed to a Citizen or a Resident – Sec. 86(A) of the NIRC – Sec. 6 of RR No. 12-
2018. (as amended by RA 10963)
b. Allowed to a Nonresident alien – Sec. 86(B) of the NIRC – Sec. 7 of RR No. 12-
2018. (as amended by RA 10963)
c. Date of death valuation principle
i. Dizon vs. CTA, GR No. 140944 dated April 30, 2008
3. Exclusions
a. Sec. 87 of the NIRC – correlate with Sec. 85(D) of the NIRC.
4. Filing of Estate Tax Return and Payment of Estate Tax
a. Secs. 90 and 91 of the NIRC - – Sec. 9 of RR No. 12-2018. (as amended by RA
10963)
b. Payment by Installment
i. Sec. 91(C) of the NIRC – Sec. 9 of RR No. 12-2018. (as amended by RA 10963)
5. Other TRAIN law amendments
i. Rule on withdrawal of bank deposit – Sec. 97 of the NIRC – Sec. 10 of RR No.
12-2018, RMC No. 62-2018. (as amended by RA 10963)

B. Donor’s Tax
1. Basic principles, concepts and definition
a. Kinds of donors / Situs rules – Sec. and 104 of the NIRC – Sec. 4 of RR No. 12-
2018.
b. Rules on Intangible Personal Property - Sec. 104 of the NIRC.
c. Rule on Reciprocity - Sec. 104 of the NIRC.
d. New Tax Rate as amended by the TRAIN law – Sec. 99 of the NIRC (as amended
by RA 10963)
e. Rule on Political Contributions
i. Sec. 99(C) of the NIRC.
ii. Secs. 13 and 14 of RA No. 7166.
iii. RR No. 7-2011 dated February 16, 2011.
iv. RMC No. 30-2016 dated March 14, 2016.
2. Requisites of a valid donation
a. Abello vs. CIR, GR No. 120721 dated February 23, 2005.
b. Capacity to Buy
i. Sps. Evono vs. DOF, CTA EB Case No. 705 dated June 4, 2012.
3. Transfers considered a donation
a. Condonation of debt
b. Transfers for insufficient consideration
i. Sec. 100 of the NIRC (as amended by RA 10963)
ii. Compare with old rule - Philamlife vs. SOF, GR No. 210987 dated November
24, 2014.
iii. RMC No. 30-2019.
 c. Renunciation of Conjugal or Community Property/Share in the Inheritance
i. Sec. 12 of RR No. 12-2018.
4. Exempt Gifts
a. Sec. 101 of the NIRC. (as amended by RA 10963)

II. VALUE-ADDED TAX

A. Concept and elements of VATable transactions

1. VAT as an indirect tax
a. Impact vs. incidence of tax.
b. Contex vs. CIR, GR No. 151135 dated July 2, 2004.
2. Persons Liable
a. VAT registration – Mandatory and Optional
i. Secs. 236(G) and 236(H) of the NIRC. (as amended by RA 10963)
ii. Sec. 109(2) of the NIRC.
iii. Q/As 6, 30 and 31 of RMC No. 46-2008.
iv. VAT vs. Percentage Tax – Sec. 109(BB) vs. Sec. 116 of the NIRC. (as amended
by RA 10963)
b. Meaning of the phrase “in the ordinary course of trade or business”
i. CIR vs. CA and Commonwealth Management Services, GR No. 125355 dated
March 30, 2000.
ii. CIR vs. Sony Phils, Inc., G.R. No. 178697 dated November 17, 2010.
iii. Mindanao II Geothermal Partnership vs. CIR, GR No. 193301 dated March 11,
2013.
iv. Power Sector Assets and Liabilities Management Corporation vs. CIR, GR No.
198146 dated August 8, 2017.

B. VAT on Goods
1. Sec. 106 of the NIRC.
2. Sale of Real Property – Tax base for goods vs. Tax base for real property. – Sec.
4.106-4 of RR No. 16-2005.
a. Exempt Real Property – Sec. 109(p) of the NIRC. (as amended by RA 10963)
i. Clarification of VAT exempt thresholds – Sec. 4.109-1 p of RR No. 13-2018.
3. Transactions deemed sale – Sec. 106(B) of the NIRC - Sec. 4.106-7 of RR No. 16-2005
as amended by RR No. 4-2007.

C. VAT on Services
1. Sec. 108 of the NIRC.
2. Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017.
3. CIR vs. SM Prime Holdings, Inc. GR No. 183505 dated February 26, 2010.
4. Diaz vs. The Secretary of Finance and CIR, GR No. 193007 dated July 19, 2011.

D. Zero-rated Sales and Exempt Sales

1. Zero-Rated Sales
a. Sec. 106(A)(2) and Sec. 108(B) of the NIRC. (as amended by RA 10963)
b. Provisions vetoed by the President.
2. Exempt Sales
a. Sec. 109(1) of the NIRC. (as amended by RA 10963)
b. Percentage Tax – Sec. 116. (as amended by RA 10963)
c. Sec. 4.109-1 of RR No. 13-2018.
d. CIR vs. United Cadiz Sugar Farmers Association Multi Purpose Cooperative, GR
No. 209776 dated December 7, 2016.
3. Destination Principle and Cross-Border Doctrine
a. Coral Bay Nickel Corporation vs. CIR, GR No. 190506 dated June 13, 2016.
4. Exempt Person vs. Exempt Transaction / Effectively Zero-Rated vs. Automatic Zero-
Rating
a. CIR vs. Seagate Technology (Phils.), GR No. 153866 dated February 11, 2005.
 E. Input Tax
1. Substantiation Requirements
a. Sec. 110(A) in relation to Sec. 113 of the NIRC.
b. Sec. 4.110-8 of RR No. 16-2005.
2. Rule on Capital Goods – Sec. 110(A) (as amended by RA 10963)
a. Sec. 4.110-3 of RR No. 13-2018.
3. CIR vs. Sony Phils, Inc., G.R. No. 178697 dated November 17, 2010.
4. Transitional Input Tax
b. Sec. 111(A) of the NIRC.
c. Fort Bonifacio Development vs. CIR GR No. 173425 dated September 4, 2012.

F. VAT Refund
1. Sec. 112 of the NIRC. (as amended by RA 10963)
2. RMC No. 17-2018 and Sec. 112-1 of RR No. 13-2018. (new rules on input VAT refund)
3. Contex vs. CIR, GR No. 151135 dated July 2, 2004.
4. Atlas Consolidated Mining vs. CIR, GR Nos. 141104 and 148763 dated June 8, 2007.
5. CIR vs. San Roque Power, GR No. 187485 dated February 12, 2013. – old rule.
6. Microsoft Phils., Inc. vs. CIR, GR No. 180173 dated April 6, 2011.
7. Coca-Cola Bottlers Philippines, Inc. vs. CIR, GR No. 222428 dated February 19, 2018.

III. REMEDIES UNDER THE NIRC

A. Letter of Authority / Audit Notice

1. Sec. 6(A) of the NIRC and Sec. 13 of the NIRC.
2. Revenue Memorandum Order No. 43-90. (as cited in the SC Cases)
3. CIR vs. Sony Phils, Inc., G.R. No. 178697, November 17, 2010
4. CIR vs. De La Salle, GR No. 198841 dated November 9, 2016
5. Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017
6. Number of times a taxpayer may be audited
a. Sec. 235 of the NIRC

B. Tax Assessment
1. CIR vs. Pascor Realty, GR No. 128315 dated June 29, 1999.
2. SMI-ED Technology Corporation, Inc. vs. CIR, GR No. 175410 dated November 12,
2014.
3. CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016.

C. Prescriptive period to assess and collect

1. Period for Assessment – General Rule/Ordinary Prescription - Sec. 203 of the NIRC.
2. Period for Collection – General Rule Sec. 222(C) of the NIRC.
3. False Return, Fraudulent Return, Omission to File a Return/Extraordinary
Prescription
a. Sec. 222(A) of the NIRC. Correlate with Sec. 248(B) of the NIRC.
b. Aznar vs. CTA, GR No. L-20569 dated August 23, 1974.
c. CIR vs. Asalus Corporation, GR No. 22150 dated February 22, 2017.
d. CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016.
4. Suspension of the prescriptive period
a. Secs. 223 and 91(B) of the NIRC
b. CIR vs. United Salvage and Towage (Phils.), Inc., GR No. 197515 dated July 2,
2014.
c. BPI vs. CIR, GR No. 139736 dated October 17, 2005.
d. CIR vs. BASF Coating + Inks Phils., Inc., GR No. 198677 dated November 26, 2014.
5. Waiver of the Statute of Limitations
a. New Requirements under RMO No. 14-2016 dated April 4, 2016.
b. Phil. Journalists, Inc. vs. CIR, GR No. 162852 dated December 16, 2004.
c. CIR vs. Kudos Metal, GR No. 178087 dated May 5, 2010 – take note of old rule.
d. RCBC vs. CIR, GR No. 170257 dated September 7, 2011.
e. CIR vs. Next Mobile, Inc., GR No. 212825 dated December 29, 2015.
 f. Asian Transmission Corporation vs. CIR, GR No. 230861 dated September 19,
2018.

D. Procedure in issuing an assessment / Requisites of a valid assessment / Due Process

1. Sec. 228 of the NIRC.
2. RR No. 12-1999 dated September 6, 1999, as amended by RR No. 18-2013 dated
November 28, 2013, further amended by RR No. 7-2018.
3. CIR vs. Metro Star Superama, Inc., G.R. No. 185371 dated December 8, 2010.
4. CIR vs. Asalus Corporation, GR No. 22150 dated February 22, 2017.
5. CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9, 2016.
6. Samar-I Electric Cooperative vs. CIR, GR No. 193100 dated December 10, 2014.

E. Protesting an assessment
1. Reinvestigation vs. Reconsideration
a. RR No. 18-2013 dated November 28, 2013.
b. BPI vs. CIR, GR No. 139736 dated October 17, 2005.
2. Submission of relevant documents / 60-day period
a. RR No. 18-2013 dated November 28, 2013.
b. CIR vs. First Express Pawnshop, GR Nos. 172045-06 dated June 16, 2009.

F. Decision / Inaction on the Pending Protest / Appeal to the Court of Tax Appeals
1. The 180-day period to Decide
a. Sec. 228 of the NIRC.
b. RR No. 18-2013 dated November 28, 2013.
2. Final Decision on a Disputed Assessment (“FDDA”)
a. RR No. 18-2013 dated November 28, 2013.
b. CIR vs. Liquigaz Philippines Corporation, GR No. 215534 dated April 18, 2016.
3. Inaction during the 180-day period / Appeal to the Court of Tax Appeals
a. Sec. 228 of the NIRC.
b. RR No. 18-2013 dated November 28, 2013.
c. Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008.
d. Lascona Land vs. CIR, GR No. 171251 dated March 5, 2012.
e. RCBC vs. CIR, GR No. 168498 dated April 24, 2007.
f. PAGCOR vs. BIR, GR No. 208731 dated January 27, 2016.
g. Fishwealth Canning Corp. vs. CIR, GR No. 179343 dated January 21, 2010.
h. Allied Banking Corporation vs. CIR, GR No. 175097 dated February 5, 2010.
4. Administrative Appeal with the CIR
a. RR No. 18-2013 dated November 28, 2013.

G. Collection / Remedies of the Government

1. Prescriptive period to collect
a. Secs. 222(C) and 222(A) of the NIRC.
2. Administrative remedies / Summary Remedies / Judicial Collection
a. Secs. 205 and 220 of the NIRC.
b. Republic vs. Hizon, GR No. 130430 dated December 13, 1997.
c. CIR vs. Hambrecht & Quist Philippines, Inc., GR No. 169225 dated November 17,
2010.
3. No injunction to restrain collection of taxes
a. Sec. 218 of the NIRC.
b. Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22,
2005, as amended on September 16, 2008.
c. Spouses Pacquiao vs. the CTA, GR No. 213394 dated April 6, 2016.
d. Tridharma Marketing Corporation vs. CTA, GR No. 215950 dated June 20, 2016.

H. Claims for refund and credit of taxes

1. Taxpayer / Withholding Agent / Proper Party to file the claim for refund
a. CIR vs. Smart Communications, Inc., GR Nos. 179045-46 dated August 25, 2010.
 b. Honda Cars Philippines, Inc. vs. Honda Cars Technical Specialist and Supervisors
Union, GR No. 204142 dated November 19, 2014.
c. Diageo Philippines, Inc. vs. CIR, GR No. 183553. (Perlas-Bernabe)
d. PAL vs. CIR, GR No. 198759 dated July 1, 2013. (Perlas-Bernabe)
2. Requisites for a valid claim for refund / Creditable Withholding Tax Cases
a. CIR vs. Meralco, GR No. 181459 dated June 9, 2014.
b. CIR vs. Far East Bank, GR No. 173854 March 15, 2010.
c. Metrobank vs. CIR, GR No. 182582 dated April 17, 2017. (Perlas-Bernabe)
3. Refunds where written claim is not needed
a. Secs. 204(C) and 229 of the NIRC.
4. Refunds of Corporate taxpayers / Irrevocability Rule
a. Sec. 76 of the NIRC.
b. CIR vs. TMX Sales, Inc., GR No. 83736 dated January 15, 1992.
c. Systra Phils. Inc. vs. CIR, GR No. 176290 dated September 21, 2007.
d. Winbrenner & Inigo Insurance Brokers, Inc., GR No. 206526 dated January 28,
2015.
e. University Physicians Services, Inc. – Management vs. CIR, GR No. 205955 dated
March 7, 2018.
f. Rhombus Energy, Inc. CIR, GR No. 206362 dated August 1, 2018.

I. The Court of Tax Appeals

a. RA No. 9282, as amended by RA No. 9503.
b. Jurisdiction in civil and criminal cases.
c. Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005, as
amended on September 16, 2008.
d. CIR vs. CTA and Petron Corporation, GR No. 207843 dated July 15, 2015. (Perlas-
Bernabe)
e. Banco De Oro vs. Republic, GR No. 198756 dated January 13, 2015 and
resolution on the Motion for reconsideration, GR No. 198756 dated August 16,
2016. – compare with the Petron case.
f. City of Manila vs. Grecia-Cuerdo, GR No. 175723 dated February 4, 2014.
g. Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017.
h. Power Sector Assets and Liabilities Management Corporation vs. CIR, GR No.
198146 dated August 8, 2017.

J. Abatement of Tax / Tax Compromise

a. Secs. 7 and 204 of the NIRC.

K. Civil Penalties
1. Surcharge
a. Sec. 248 of the NIRC.
2. New Rule on Interest
a. Sec. 249 of the NIRC. (as amended by RA 10963)
b. RR No. 21-2018.

IV. LOCAL AND REAL PROPERTY TAXATION

A. General Principles in Local Taxation

1. Local Government Units’ Power to Tax
a. Sec. 5 Art. X of the 1987 Constitution.
b. Sec. 129 of the Local Government Code (“LGC”).
c. Film Development Council of the Philippines vs. Colon Heritage Realty, GR No.
203754 dated June 16, 2015
2. Repeal of Tax Exemptions
a. Sec. 193 of the LGC.
b. PLDT vs. City of Davao GR No. 143867, August 22, 2001.
3. Procedure for approval and effectivity of tax ordinance
a. Secs. 132, 187 and 188 of the LGC.
B. Common Limitations on Local Government Units’ Power to Tax
1. Sec. 133 of the LGC.
2. Petron Corp. vs. Tiangco, GR No. 158881 dated April 16, 2008.
3. Batangas City vs. Pilipinas Shell Petroleum Corporation, GR No. 187631 dated July 8,
2015.
4. City of Manila vs. Colet, GR No. 120051 dated December 10, 2014.
5. Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416 dated
October 5, 2016.
6. MIAA vs. CA, GR No. 155650 dated July 20, 2006.

C. Specific Taxes
1. Local Transfer Tax
a. Sec. 135 of the LGC.
2. Franchise Tax
a. Sec. 137 of the LGC.
b. Smart Communications vs. City of Davao, GR No. 155491 dated September 16,
2008.
c. City of Iriga vs. Camarines Sur III Electric Cooperative, Inc., GR No. 192945 dated
September 5, 2012. (Perlas-Bernabe)
3. Professional Tax
a. Sec. 139 of the LGC.
4. Amusement Tax
a. Sec. 140 of the LGC. (as amended by RA 9640)
b. Sec. 131(c) of the LGC.
c. Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137 dated April 10,
2013. (compare with old case of PBA vs. CA GR No. 119122, August 8, 2000)
d. Alta Vista Golf and Country Club vs. The City of Cebu, GR No. 180235 dated
January 20, 2016.
5. Business Tax
a. Sec. 143 of the LGC.
b. Nursery Care Corporation vs. Acevedo, GR No. 180651 dated July 30, 2014.

D. Remedies on Local Taxation

1. Constitutionality of Tax Ordinance
a. Sec. 187 of the LGC.
b. Smart Communications, Inc. vs. Municipality of Malvar, GR No. 204429, GR No.
204429 dated February 18, 2014.
2. Protest
a. Sec. 195 of the LGC.
b. San Juan vs. Castro, GR No. 174617 dated December 27, 2007.
3. Refund
a. Sec. 196 of the LGC.
4. Is Injunction Available?
a. Angeles City vs. Angeles Electric Corporation, GR No. 166134 dated June 29,
2010.

E. General Principles on Real Property Taxation

1. Machineries and Improvements
a. Secs. 199 (m) and (o) of the LGC.
b. Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena
City, GR No. 166102 dated August 5, 2015.
c. Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416
dated October 5, 2016.
d. Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas, GR No. 180110 dated
May 30, 2016.
2. Notification of New or Revised Assessment
 a. Sec. 223 of the LGC.
b. Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena
City, GR No. 166102 dated August 5, 2015.

F. Exemption from Real Property Taxation

1. Sec. 234 of the LGC.
2. Sec. 28, Art. VI of the 1987 Constitution.
3. Sec. 4(3), Art. XIV of the 1987 Constitution.
4. MIAA vs. CA, GR No. 155650 dated July 20, 2006.
5. GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242December 23, 2009.
6. City of Pasig vs. Republic, GR No. 185023 dated August 24, 2011.
7. Lung Center of the Philippines vs. Quezon City, GR No. 144104 dated June 29, 2004.
8. NPC vs. Province of Quezon, GR No. 171586 dated July 15, 2009.
9. NPC vs. Province of Quezon, GR No. 171586 dated January 25, 2010. (Resolution)
10. Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416 dated
October 5, 2016.

G. Remedies on Real Property Taxation

1. Secs. 226, 229, 252 and 267 of the LGC.
2. Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena City,
GR No. 166102 dated August 5, 2015.
3. NPC vs. Province of Quezon, GR No. 171586 dated July 15, 2009.
4. NPC vs. Province of Quezon, GR No. 171586 dated January 25, 2010. (Resolution)
5. Camp John Hay Development Corp. vs. CBAA, GR No. 169234 dated October 2, 2013.
(include concurring opinion of Justice Carpio)
6. NPC vs. Municipal Government of Navotas, GR No. 192300 dated November 24,
2014.
7. City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014.
8. CE Casecnan Water and Energy Company, Inc. vs. The Province of Nueva Ecija, GR
No. 196278 dated June 17, 2015.
9. NPC vs. Provincial Treasurer of Benguet, GR No. 209303 dated November 14, 2016.
10. Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas, GR No. 180110 dated May
30, 2016.