U.

P LAW BOC abon3298 TAXATION LAW

TAXATION LAW
CANONICAL DOCTRINES
TAXATION 1
CASE FACTS HELD DOCTRINE
CIR v. Bases Respondent BCDA was the SC ruled that the BCDA is Sec. 8 of RA 7227:
Conversion owner of four (4) real exempt from Creditable
and properties in Bonifacio Withholding Tax (CWT) on (1) commands that the sale
Development Global City, Taguig City the sale of its Global City proceeds are deemed
Authority collectively referred to as properties. appropriated by Congress
the "Expanded Big Delta to each of the aforenamed
G.R. No. Lots." It entered into a recipients and for the
217898 | contract to sell with the "Net respective purposes
January 15, Group," an unincorporated specified therein, thus,
2020 | J. joint venture composed of 4 these sale proceeds are
Lazaro-Javier corporations. The "Net not BCDA income but
Group" committed not to public funds subject to the
remit to the BIR the total distribution scheme and
amount of Php purposes provided in the
101,637,466.40 as law itself; and
Creditable Tax Withheld at
source (CWT) to give time (2) it expressly enjoins that
to respondent to present a the proceeds of the sale
certification of tax shall not be diminished by
exemption on or before any item or circumstance,
June 09, 2008. BCDA including all forms of taxes
sought from petitioner the and fees.
aforesaid certification but
petitioner CIR did not Sec. 8 of RA 7227
respond. specifically governs
BCDA's disposition of the
BCDA and the "Net Group" properties enumerated
executed the therein and their sale
corresponding Deeds of proceeds. It exempts these
Absolute Sale. In view of sale proceeds from all
respondent's failure to kinds of fees and taxes as
present a certification of tax the same law has already
exemption, the "Net Group" appropriated them for
deducted the amount of specific purposes and for
P101,637,466.40 as CWT designated beneficiaries.
and issued to respondent
the corresponding The standard procedural
certificates of creditable tax and documentary
withheld at source. BCDA requirements for tax refund
claimed that it was exempt applicable to GOCCs in
from all taxes and fees general do not apply to
arising from or in relation to BCDA vis-a-vis the
the sale, as provided under properties and the sale
its charter. proceeds specified under
Sec. 8 of RA 7227. There is
no income to speak of here;

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CTA En Banc ruled that only the sale proceeds of

while respondent is, specific properties which
indeed, not among the the legislature itself
exempt corporations listed exempts from all taxes and
under Sec. 27 (C) of the fees.
NIRC, nevertheless,
insofar as the sale of the
"Expanded Big Delta Lots"
is concerned, RA 7227
(Bases Conversion and
Development Act of 1992)
specifically exempts
respondent from taxes.

SC ruled that the BCDA is

exempt from Creditable
Withholding Tax (CWT) on
the sale of its Global City
properties.
CIR v. Co After a share swap with The SC granted the claim Requisites for the non-
Puregold, the Respondents for refund holding that, recognition of gain or loss
G.R. No. who previously owned 66% pursuant to the case of CIR are as follows:
241424 | of Puregold, increased their v. Filinvest (2011), Sec. 40 (a) the transferee is a
February 26, shareholdings to 76%. (C)(2) covers instances of corporation;
2020 | J. Respondents then paid further control, when, as a (b) the transferee
Caguoia CGT; however, they result of the exchange, the exchanges its shares
subsequently claimed for transferors collectively of stock for property/ies
refund arguing that the increase their control of the of the transferor;
Deed of Exchange was a transferee corporation, as (c) the transfer is made by
tax-exempt transaction in this case. a person, acting alone
pursuant to Sec. 40. (C)(2). or together with others,
Prior confirmatory BIR not exceeding four
The CIR disagreed, ruling is also not required. persons; and,
arguing that the transaction Rulings merely operate to (d) as a result of the
does not fall under the "confirm" the existence of exchange the
exemption because the the conditions for transferor, alone or
respondents already had exemption provided under together with others,
control of Puregold even the law; it is not a not exceeding four,
before the exchange; requirement in itself. Apart gains control of the
respondents should have from this, Moreover, there transferee.
also secured a prior is nothing in Section
confirmatory ruling that the 40(C)(2) which requires the As regards the element of
subject transaction taxpayer to first secure a control, it is not necessary
qualifies as a tax-free prior confirmatory ruling that, after the exchange,
exchange; certification or before the transaction may each of the transferors
ruling is important so as to be considered as a tax-free individually gains control of
confirm whether the exchange. The BIR should the transferee corporation.
transaction satisfies the not impose additional It also does not prohibit
conditions set by law, and requirements not provided instances when the
the authority to do such is by law, which would negate transferor gains further
vested upon the BIR. the availment of the tax control of the transferee
[Sec. 40 (C)(2) No gain or exemption. corporation. The element of
loss shall also be control is satisfied even if
recognized if property is one of the transferors is
transferred to a corporation already owning at least
by a person in exchange for 51% of the shares of the
stock or unit of participation transferee corporation, as

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in such a corporation of long as after the exchange,

which as a result of such the transferors, not more
exchange said person, than five, collectively
alone or together with increase their equity in the
others, not exceeding four transferee corporation by
(4) persons, gains control 51% or more.
of said corporation]
The primary purpose of a
BIR Ruling is simply to
determine whether a
certain transaction, under
the law, is taxable or not
based on the
circumstances provided by
the taxpayer. Rulings
merely operate to "confirm"
the existence of the
conditions for exemption
provided under the law. If
all the requirements for
exemption set forth under
the law are complied with,
the transaction is
considered exempt,
whether or not a prior BIR
ruling was secured by the
taxpayer.
CIR v. Federation of Golf Clubs of SC held that Revenue For as long as these
Fedgolf the Philippines, Inc. Memorandum Circular No. membership fees,
(FEDGOLF) questions the 35-2012 is invalid insofar assessment dues, and the
G.R. No. validity of RMC No. 35- as it subjected membership like are treated as
226449 | July 2012 issued by the CIR dues, assessment fees, collections by recreational
28, 2020 | J. which clarified the taxability and those of similar nature clubs from their members
Reyes J. Jr. of clubs which are collected by clubs which as inherent consequence
organized and operated are organized and of their membership, and
exclusively for pleasure, operated exclusively for are, by nature, intended for
recreation, and other non- pleasure, recreation, and the maintenance,
profit purposes other non-profit purposes preservation, and upkeep
(recreational clubs). Said to income tax and VAT. of the clubs' general
RMC subjects the income operations and facilities,
of recreational clubs from As to income tax, the Court then these fees cannot be
whatever source, to income declared that the classified as "the income of
tax; and the gross receipts interpretation contained in recreational clubs from
of such clubs to value- RMC No. 35-2012 was whatever source" that are
added tax (VAT). erroneous inasmuch as it "subject to income tax."
effectively eradicated the Instead, they only form part
The CIR asserted that a distinction between of capital from which no
recreational club is not "income" and "capital" income tax may be
among the tax-exempt when it classified collected or imposed.
organizations under Sec. membership dues,
30 of the 1997 NIRC. RTC assessment fees, and the
declared the same invalid like as "income" and
as the CIR exceeded its therefore subject to income
authority when it effectively tax.
imposed tax upon
petitioner — a matter within Income is defined as "an
amount of money coming

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the sole prerogative of the to a person or corporation

Legislature. within a specified time,
whether as payment for
services, interest or profit
from investment" while
capital is the "fund" or
"wealth." The Court
considered membership
fees and the like as
"capital," as they are
intended for the upkeep of
the facilities and operations
of the recreational clubs,
and not to generate
revenue. Thus, it is only the
recreational club's income
which should be subject to
taxation, as "the State
cannot impose tax on
capital as it constitutes an
unconstitutional
confiscation of property."
Thus, membership fees,
assessment dues, and
other fees of similar nature
are not subject to income
tax.

As to VAT, the Court

interpreted that RMC No.
35-2012 erroneously
included the gross receipts
of recreational clubs on
membership fees,
assessment dues, and the
like as subject to VAT
because Sec. 105 of the
1997 NIRC specified the
taxability of only those
which deal with the "sale,
barter or exchange of good
or properties, or sale of
service." In collecting such
fees from their members,
recreational clubs are not
selling any kind of service,
in the same way that the
members are not procuring
service from them. Thus,
"there could be no sale,
barter or exchange of
goods or properties, or sale
of a service to speak of,
which would then be
subject to VAT under the
1997 NIRC."

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Kepco v. CIR KEPCO was assessed with The Supreme Court ruled On compromise
deficiency taxes and that the compromise agreements:
G.R. Nos. entered into a compromise settlement between Kepco The CIR may compromise
225750-51 | agreement with the CIR on and the CIR is valid. As an assessment when a
July 28, 2020 its tax assessments for such, there is nothing left reasonable doubt as to the
| J. Lopez taxable years 2006, 2007, for us to do but to declare validity of the claim against
2009. It paid a total of P the case closed and the taxpayer exists, or the
134, 193,534.12 and terminated. financial position of the
attached the Certificate of taxpayer demonstrates a
Availment issued by the There exists a valid ground clear inability to pay the tax.
CIR certifying that the for compromise here
National Evaluation Board because there is A compromise agreement
(NEB) approved Kepco's reasonable doubt as to the has the force of law
application for compromise validity of the claim against between the parties and no
settlement. The OSG avers KEPCO. Specifically, the party may discard
that the compromise assessment became final unilaterally the compromise
agreement is not valid as Kepco failed to appeal agreement. Under Section
because: 1) it failed to the inaction or "deemed 8.1 of RMO No. 39-86,
allege and prove any of the denial" of the CIR to the upon payment of the
grounds for a valid CTA within 30 days after compromise amount, the
compromise under Section the expiration of the 180- tax "case is already
3 of RR No. 30-2002; 2) day period and there is closed."
CTA did not yet issue any reason to believe that the
adverse Decision against assessment is lacking in On balancing the
Kepco, hence, there is no legal and/or factual basis. government’s power to
"doubtful validity" to speak tax and the constitutional
of as a ground for a valid Moreover, contrary to the right of taxpayers:
compromise pursuant to OSG's claim that Kepco did A tax compromise cannot
Section 2 28 of RR No. 8- not pay the full amount be invalidated except in
2004; 3) Kepco did not pay offered for compromise case of mistake, fraud,
in full the compromise upon filing of its application, violence, undue influence,
amount upon filing of the records show that Kepco or falsity of documents. As
application in violation of paid the minimum emphasized by the Court, a
Section 2 30 of RR No. 9- compromise amount under new BIR Commissioner
2013. Section 204 (A) 50 of the cannot just annul the
1997 NIRC and Section 4 legitimate compromise
51 of RR No. 30-2002 agreements made by his
which is 40% of the basic predecessors in the
tax assessed. performance of their
regular duties where the
parties entered into the
compromise agreements in
good faith and had already
fully implemented the
compromise agreements.

While taxes are the

lifeblood of the
government, the power of
taxation should be
exercised fairly, equally
and uniformly, with caution
to minimize the proprietary
rights of a taxpayer. After
all, "in balancing the scales
between the power of the
State to tax and its inherent

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right to prosecute
perceived transgressors of
the law on one side, and
the constitutional rights of a
citizen to due process of
law and the equal
protection of the laws on
the other, the scales must
tilt in favor of the individual,
for a citizen's right is amply
protected by the Bill of
Rights under the
Constitution."
CIR v. Respondent Interpublic SC affirmed the CTA Sec. 28 (B) (1) of the Tax
Interpublic Group of Companies, Inc. holding that the IGC is Code. imposes a tax equal
Group of (IGC) is a NRFC duly entitled to a tax refund or to thirty-five percent
Companies organized and existing tax credit certificate for the (35%) to dividend
under and by virtue of the alleged overpaid final remittances to non-resident
G.R. No. laws of the State of withholding tax on its cash corporate stockholders of a
207039 | Delaware, USA. It owns dividends. Philippine corporation, not
August 14, 30% of the total Under the Philippines-US engaged in trade trade of
2019 | J. outstanding and voting Convention "With Respect business in the Philippines.
Reyes, Jr. capital stock of McCann to Taxes on Income," the This rate goes down to 15%
Worldgroup Philippines, US allowed a "deemed if the country of domicile of
Inc. (McCann), a domestic paid" tax credit to US the foreign stockholder
corporation engaged in the corporations on dividends corporation "shall allow"
general advertising received from foreign such foreign corporation a
business. McCann withheld corporation. For this tax credit for "taxes
a Final Withholding Tax reason, it was established deemed paid in the
(FWT) at the rate of 35% on on the part of the Philippines," applicable
IGC's cash dividends and Philippines a deliberate against the tax payable to
remitted the payment of the undertaking to reduce the the domiciliary country by
FWT to petitioner CIR. The regular dividend tax rate of the foreign stockholder
IGC established a Regional 35%. The IGC, being a corporation.
Headquarters (RHQ) in the non-resident US
Philippines which was corporation is qualified to
eventually converted into avail of the aforesaid 15%
its Regional Operating preferential tax rate on the
Headquarters (ROHQ). dividends it earned from
The IGC filed an the Philippines.
administrative claim for
refund or issuance of tax
credit certificate (TCC)
representing the alleged
overpaid FWT on dividends
paid by McCann to IGC. It
averred that as a non-
resident foreign
corporation, it may avail of
the preferential FWT rate of
15% on dividends received
from a domestic
corporation under Sec. 28
(B) (5) (b) of the Tax Code.
CTA granted the IGC's
petition for review.
Accordingly, the CIR was

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ordered to refund or to
issue a TCC in favor of IGC
the overpaid FWT on cash
dividends for taxable year
2006.

TAXATION 2
CASE FACTS HELD DOCTRINE
LRTA v. Pursuant to EO 603, the SC ruled that LRTA is not a A government
Quezon City Light Rail Transit GOCC. It is a government instrumentality though
Authority (LRTA) was instrumentality vested with vested with corporate
G.R. No. created primarily to corporate powers which is powers are exempt from
221626 | construct, operate, exempt from local taxes real property tax, but the
October 9, maintain, and/or lease the exemption shall not extend
2019 | J. light rail transit system of to taxable private entities
Lazaro-Javier the country. For this to whom the beneficial use
purpose, the LRTA of the government
acquired real properties instrumentality's properties
and commenced its has been vested. The
operations in 1984. taxable private entities are
subject to real property tax,
On October 12, 2000, but not the government
LRTA v. Central Board instrumentality they have
of Assessment Appeals dealt with, much less, the
was promulgated. The properties of the
Court ruled that the government
LRTA's properties had instrumentality subject of
already been classified by such beneficial use.
law as patrimonial
property subject to tax.

The LRTA received

several Statements of
Delinquency and Final
Notices of Tax
Delinquency from
respondent Quezon City.
The LRTA argued that
pursuant to the
subsequent case of MIAA
v. Court of Appeals, the
LRTA is a government
instrumentality, thus,
exempt from real property
tax.

For its part, Quezon City

countered that the LRTA
is not a government
instrumentality but a
government-owned and
controlled corporation
(GOCC).

The RTC dismissed

LRTA’s petition. It held,

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among others, that the

LRTA properties are
taxable based on the
Local Government Code
and the Constitution. It
further ruled that the
taxability of the LRTA
properties was already
settled in LRTA v. CBOA.
Commissioner Filminera and PGPRC, a The Supreme Court agreed Sales made to a BOI-
of Internal domestic corporation with CIR and held that registered buyer are export
Revenue v. registered with the Board Filminera is not entitled to a sales subject to the zero
Filminera of Investments (BOI), refund or issuance of TCC percent rate if the following
Resources entered into an Ore Sales because there was no BOI conditions are met: (1) the
Corp. and Purchase certification stating that buyer is a BOI-registered
Agreement. It filed its PGPRC actually exported manufacturer/producer; (2)
G.R. No. amended quarterly VAT its entire product from the buyer's products are
236325 | returns and then filed January 1 to December 31, 100% exported; and (3)
September 16, administrative claims for 2010. the BOI certified that the
2020 | J. Lopez issuance of tax credit buyer exported 100% of its
certificate (TCC) or refund It emphasized that the tax products.
of its unutilized input VAT treatment of export sales is
attributable to its zero- based on the Cross Border Proof of actual exportation
rated sales for the third Doctrine and Destination of goods sold by a Value-
and fourth quarters of Principle of the Philippine Added Tax (VAT)
Fiscal Year ending June VAT system. Under the registered taxpayer to a
30, 2010. Filminera Destination Principle, Board of Investments
submitted a certified true goods and services are (BOI)-registered enterprise
copy of BOI Certification taxed only in the country is vital for the transaction to
dated January 27, 2010 to where these are consumed. be considered as zero-
establish that PGPRC Meanwhile, under the rated export sales.
was a BOI-registered Cross Border Doctrine, no
enterprise that exported VAT shall be imposed to
its total sales volume from form part of the cost of
July 1, 2009 to June 30, goods destined for
2010. consumption outside the
territorial border of the
CIR filed this case, taxing authority.
claiming that CTA En
Banc erred in ruling in In RMO No. 09-00 47, the
favor of Filminera BIR applied the cross-
because the BOI border doctrine to sales
Certification does not made by VAT-registered
prove that PGPRC suppliers to BOI-registered
exported 100% of its enterprises whose products
products during the period are 100% exported.
subject of the claims. Accordingly, sales made to
a BOI-registered buyer are
export sales subject to the
zero percent rate if the
following conditions are
met: (1) the buyer is a BOI-
registered
manufacturer/producer; (2)
the buyer's products are
100% exported; and (3) the
BOI certified that the buyer

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exported 100% of its

products. For this purpose,
the BOI Certification is vital
for the seller-taxpayer to
avail of the benefits of zero-
rating as this is an evidence
that the buyer exported its
entire products and shall
serve as authority for the
seller to claim for refund or
tax credit.

In this case, there is nothing

in the BOI Certification
dated January 27, 2010 to
show that PGPRC actually
exported its entire products
for the third and fourth
quarters of FY 2010 (from
January 1 to June 30, 2010)
as the plain reading of the
certification shows that
PGPRC exported 100% of
its total sales volume/value
from January 1 to
December 31, 2009.
Sze v. BIR On March 25, 2003, the The period to file a criminal An offense under the tax
BIR issued a Letter of case for tax evasion has code is considered
G.R. No. Authority (LOA) for the prescribed which makes the discovered only after the
210238 | examination of Supreme Court petition manner of commission and
January 6, accounting books and moot and academic. the nature and extent of
2020 | J. records of Chiat Corp. for Petition is dismissed. fraud has been definitely
Reyes, Jr. all internal revenue taxes The FLD and the FAN for ascertained. This occurs
for 1999 and 2000. Chiat taxable years 1999 and when the BIR renders its
Corp.'s Master Payroll, 2000 were served on Chiat final decision and requires
Beth Tugade (Tugade) Corp. on February 7, 2005. the taxpayer to pay the
received the LOA, but the Chiat Corp. did not file a deficiency tax.
required documents were protest, resulting in the
not presented. On May 5, finality, demandability, and
2003, Tugade received executory nature of the
the BIR's second notice assessment for deficiency
and final notice, and still taxes. The violations were
the records were not considered discovered on
presented. Thereafter, the March 9, 2005. The BIR's
BIR issued a Notice of revenue officers filed their
Informal Conference joint affidavit in the DOJ for
(NIC), Preliminary preliminary investigation on
Assessment Notice May 26, 2005. However, the
(PAN), Formal Letter of original Information was
Demand (FLD), and Final only filed in court on April
Assessment Notice 23, 2014, which exceeded
(FAN). Despite these the five-year prescriptive
notices, Chiat Corp. failed period. Therefore, the
to interpose any protest; action had prescribed.
thus, the BIR's
assessment for deficiency
taxes for 1999 and 2000

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became final, executory

and demandable.

On May 19, 2005, the BIR

charged the officers of
Chiat Corp., petitioners
Imelda T. Sze (Sze), Sze
Kou For (For), and
Teresita A. Ng (Ng), with
tax evasion and/or tax
fraud.
BIR v. First E- RMC No. 65-2012 was The Supreme Court ruled The value-added tax is a
Bank Tower issued by the BIR which that RMC No. 65-2012 is burden on transactions
Condominium provides that the gross invalid for ordaining that imposed at every stage of
Corp. receipts of condominium "gross receipts of the distribution process on
corporations including condominium corporations the sale, barter, exchange
G.R. Nos. association dues, including association dues, of goods or property, and
215801 and membership fees, and membership, fees, and on the performance of
218924 | other assessments/ other assessments/ services, even in the
January 15, charges are subject to charges are subject to VAT, absence of profit
2020 | J. value-added tax (VAT), income tax and income attributable thereto.
Lazaro-Javier income tax and income payments made to it are
payments made to it are subject to applicable A value-added tax is
subject to applicable withholding taxes." It ruled imposed on the sale of
withholding taxes under that since a condominium goods and properties and
existing regulations. corporation is not engaged on transactions such as
Respondent First E-Bank in trade or business, the transfer of goods,
Tower Condominium association dues, properties, profits, or
Corp. sought to declare membership fees, and inventories.
as invalid RMC No. 65- other assessments/charges 'Goods' or 'properties' shall
2012 for burdening the collected by a condominium mean all tangible and
owners of the corporations are are not intangible objects which
condominium units with subject to income tax, are capable of pecuniary
income tax and VAT on value-added tax and estimation. These include
their own money which withholding tax. real property, intellectual
they exclusively used for property, equipment, and
the maintenance and rights over motion picture
preservation of the films.
building and its premises.
A value-added tax is also
imposed on sale of
services and use or lease
of properties.
"Sale or exchange of
services'' refers to the
“performance of all kinds of
services in the Philippines
for others for a fee,
remuneration or
consideration x x x”. The
term shall also include the
use of intellectual property,
use of certain types of
equipment, supplying
certain types of knowledge
or information, lease of
motion picture films, and

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use of transmission or air

time.
City of Davao CIIF under PD 682, is a The Supreme Court upheld In order to be considered
v. AP fund from part of the levy the decision of the CTA en as an NBFI under the
Holdings, Inc. imposed on the initial sale banc, ruling that APHI NIRC, banking laws, LGC,
by coconut farmers of cannot be considered as an and pertinent regulations,
G.R. No. copra and other coconut NBFI since its investment the following must concur:
245887 | products. It established and placement of funds are
January 22, APHI as one of its holding not done in a regular or 1. The person or entity is
2020 | J. companies, which over recurring manner for the authorized by the BSP to
Lazaro-Javier time received cash and purpose of earning profit. perform quasi--banking
stock dividends from the As such it is not liable to pay functions;
shares previously bought local business taxes on the
by CIIF. Later on, City of dividends earned from its 2. The principal
Davao demanded SMC preferred shares as functions of said person
payment of business tax the same shares are or entity include the
from APHI pursuant to its government assets owned lending, investing or
Revenue Tax Code. APHI by the national government. placement of funds or
questioned this by filing a TA en banc, ruling that evidences of
case with the RTC, which APHI cannot be indebtedness or equity
ruled that the imposition considered as a non-bank deposited to them,
was proper since APHI financial intermediary acquired by them, or
can be considered as a since its investment and otherwise coursed through
non-banking financial placement of funds are them, either for their own
institution (NBFI). Upon not done in a regular or account or for the account
appeal, CTA en banc recurring manner for the of others; and
reversed the RTC purpose of earning profit. 3. The person or entity
decision, ruling that APHI As such it is not liable to must perform any of the
cannot be considered an pay local business taxes following functions on a
NBFI. on the dividends earned regular and recurring,
from its SMC preferred not on an isolated basis, to
shares as the same wit:
shares are government (a) Receive funds from
assets owned by the one (1) group of
national government. persons, irrespective
of number, through
traditional deposits, or
issuance of debt or
equity securities; and
make available/lend
these funds to another
person or entity, and in
the process acquire
debt or equity
securities;
(b) Use principally the
funds received for
acquiring various
types of debt or
equity securities;
(c) Borrow against, or
lend on, or buy or sell
debt or equity
securities.
CIR v. Chevron filed with the BIR The Supreme Court ruled RMO No. 53-98 is
Chevron an Application for Tax that the CTA sufficiently addressed to internal
Holdings Credits/Refunds (BIR complied with the revenue officers and

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Form No. 1914) of its procedural and substantive employees, for purposes
G.R. No. excess and unutilized requirement under the of equity and uniformity, to
233301 | input VAT credits for the NIRC for awarding a tax guide them as to what
February 17, four taxable quarters of refund. documents they may
2020 | J. J.C. 2009. The CIR, however, require taxpayers to
Reyes failed to act on the refund Chevron submitted all present upon audit of their
claim prompting Chevron documents it deemed tax liabilities. Nothing
to file a Petition for necessary for the grant of stated in the issuance
Review before the CTA. its refund claim. It even would show that it was
The case was dismissed. authorized the examination intended to be a
An MR was filed and the of the voluminous benchmark in determining
case was transferred to supporting documents kept whether the documents
another Division. In its in its office and grant submitted by a taxpayer
Decision dated August revenue officers access are actually complete to
14, 2013, the CTA thereto. This is to ensure support a claim for tax
Division partially granted that it has adequate credit or refund of excess
Chevron's petition and documentary evidence to unutilized excess VAT.
ordered the CIR "to refund substantiate its request. There is nothing in Section
or to issue a tax credit 112 of the NIRC, RR 3-88
certificate in the reduced or RMO 53-98 itself that
amount of P4,623,001.60 requires submission of the
to Chevron, representing complete documents
its excess and unutilized enumerated in RMO 53-98
input VAT for the four for a grant of a refund or
taxable quarters of 2009 credit of input VAT.
attributable to its zero-
rated sales for the same
period. CTA Division did
not treat all of Chevron's
alleged zero-rated sales
as transactions subject to
0% VAT for failure to
prove that the entities to
whom it rendered
services are all non-
resident foreign
corporations doing
business outside the
Philippines. The CTA
Division partially granted
Chevron's Motion for
Partial Reconsideration.
The CTA Division
accepted the printed
screenshots of the official
websites of other foreign
government's registry of
companies as sufficient
proof, in lieu of the
Certificates/Articles of
Foreign Incorporation/
Association and found
Chevron to have an
additional valid zero-rated
sales amounting to
P186,438,134.34.

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Philippine Petitioner Philippine Heart In determining whether Local governments cannot

Heart Center Center filed a Petition for Petitioner is a government tax the national
v. Local Review on Certiorari instrumentality, the Court government, which
Government assailing the Decision and ruled that the Petitioner historically merely
of Quezon Resolution of Respondent bears the essential delegated to local
City Local Government of characteristics of a governments the power to
Quezon City. Petitioner government instrumentality tax. While the 1987
G.R. No. claimed for exemption vested with corporate Constitution now includes
225409 | March from RPT pursuant to powers, thus, exempt from taxation as one of the
11, 2020 | J. Presidential Decree 673 RPT. Likewise, the powers of local
Lazaro-Javier and Letter of Instruction properties of Petitioner are governments, local
1455. It also argued that properties of public governments may only
charitable institutions are dominion devoted to public exercise such power
exempt from paying RPT use and welfare and, “subject to such guidelines
on its properties which are therefore, exempt from RPT and limitations as the
actually, directly and and levy, without prejudice Congress may provide.”
exclusively being used for to the liability of taxable When local governments
charitable purposes. The persons to whom the invoke the power to tax on
Quezon City government, beneficial use of any of national government
on the other hand, argued these properties has been instrumentalities, such
that Philippine Heart granted. power is construed strictly
Center remained liable for against local governments.
real property taxes since Moreover, Section 234(a)
a major portion of its of RA 7160 exempts real
properties were being property owned by the
leased to private Republic from real
individuals property taxes except
when the beneficial use
thereof has been granted,
for consideration or
otherwise, to a taxable
person.
City of Makati Luzon Hydro Corporation The Supreme Court The rules on tax allocation
v. Municipality operates a hydroelectric affirmed the BLGF’s opinion in relation to tax situs
of Bakun and power plant. The major and denied the petition. under Sec. 150 of R.A. No.
Luzon Hydro components of its facility, 7160 comes into play
Corp. such as the power station On the situs of tax, Sec. when a business subject to
and switch yard are 5(a)(3) of DOF-Local it does not operate a
G.R. No. situated in Alilem, Ilocos Finance Circular No. 3- branch or sales office
225226 | July Sur. Other structures, 9528 defines a project outside of its principal
7, 2020 | J. such as the conveyance office as "equivalent to the office where all sales are
Reyes, Jr. tunnel, penstock, weir, factory of a manufacturer." recorded, but has a
intakes, and desander are The relevance is that if the factory, project office,
located in Bakun, Makati office is a project plant, or plantation situated
Benguet. Finally, it office, it will be entitled to an in different localities,
maintained an office in equal portion as that of whether or not sales are
Makati City. In 2004, LHC Alilem and Bakun. In the made in these localities.
began paying local present case, LHC's sales,
business taxes to Alilem, transactions and operations
Bakun, and Makati. For did not take place at the
three years since 2004, Makati office thus it could
the 70% portion of the not be viewed as equivalent
local business tax was to a factory or a project
equally apportioned office.
among Alilem, Bakun,
and Makati, such that
each LGU received

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23.33%. Bakun
questioned the sharing
scheme and claimed the
entire 70% portion of the
local business tax. The
Bureau of Local
Government and Finance
opined that only Bakun
and Alilem should share
in the 70% portion of
LHC's local business tax
because LHC's Makati
office was a mere
"administrative office."

The RTC of Makati City

found that LHC's Makati
office was a "project
office," which entitled
Makati to an equal share
with LHC's power plant
sites from the 70% portion
of LHC's business tax. In
the CTA, it found this time
that LHC's Makati office
was merely an
"administrative office"
where none of LHC's
sales were recorded or
undertaken.
CIR v. DKS, the Philippine The Court upheld the CTA Zero-rated sales are
Deutsche branch of a multinational En Banc’s findings that the subject to VAT, only that
Knowledge company organized and SEC Certification of Non- the rate imposed upon
Services existing under and by Registration of Company them is 0%. Sales of "other
virtue of the laws of and Authenticated Articles services," such as those
G.R. No. Singapore, is a VAT- of Association and/or qualifying services
234445 | July registered enterprise. Certificates of rendered by DKS to its
15, 2020 | J. DKS rendered qualifying Registration/Good foreign affiliates-clients,
Inting services to its foreign Standing/Incorporation shall be zero-rated
affiliates-clients, from sufficiently established the pursuant to Sec. 108 (B)(2)
which it generated service NRFC status of only 11 of of the Tax Code if the
revenues. In 2011, DKS DKS' affiliates clients. following conditions are
filed an administrative met:
claim with the BIR, (1) The seller is VAT-
applying for Tax registered.
Refund/Credit, supported (2) The services are
by relevant documents. rendered "to a
person engaged in
DKS declared that its business conducted
sales of services to 34 outside the
foreign affiliate-clients are Philippines or to a
zero-rated sales for VAT non-resident person
purposes. CIR refuted the not engaged in
claim on the ground that business who is
DKS failed to prove that outside the
its clients are foreign Philippines when the
corporations doing

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business outside the services are

Philippines. The CTA performed.
ruled that the status as (3) The services are "paid
NRFC of only 11 of the 34 for in acceptable
foreign affiliate clients foreign currency and
were substantially proven, accounted for in
thus reducing DKS claim accordance with BSP
for refund/credit. rules and regulations.

Claimant must establish

with sufficient proof of
BOTH the two
components of a client’s
NRFC status:
(1) That their client was
established under the
laws of a country not
the Philippines or,
simply, is not a
domestic
corporation; and
(2) That it is not engaged
in trade or business
in the Philippines.
Provincial This is a case regarding The Supreme Court LIABILITY FOR TAX
Government the petition for injunction affirmed the rulings of the DELINQUENCY ON RPT
of Cavite v. filed by CQM lower courts. Liability for taxes generally
CQM Management against the rests on the owner of the
Management Provincial Government of It ruled that CQM was real property at the time
Cavite and the Provincial neither the owner nor the the tax accrues as a
G.R. No. Treasurer of Cavite entity with the actual or necessary repercussion of
248033 | July (collectively, petitioners), beneficial use or exclusive dominion.
15, 2020 | J. Maxon Systems possession of the pieces of However, personal liability
Inting Philippines (Maxon), and real property for which for RPT may also
Ultimate Electronic RPTs for the taxable years expressly rest on the entity
Components, Inc. 2000-2013 (Maxon with the beneficial use of
(Ultimate) in connection property) and 1997-2013 the real property. In either
with Maxon’s and (Ultimate property) were case, the unpaid tax
Ultimate’s unpaid real sought by petitioner, hence attaches to the property,
property taxes and the they cannot impose the and is chargeable against
impending tax legal obligation upon CQM the taxable person who
delinquency sale of their to pay the accrued realty had actual or beneficial
properties. PI One taxes. use and possession of it
foreclosed the mortgage regardless of whether or
on Maxon and Ultimate's not he is the owner.
properties. At the
foreclosure sale, PI One TAX EXEMPTION under
and CQM were the PEZA
highest bidders for the Pursuant to Sec. 24 of RA
two properties. 7916, there is nothing
Subsequently, PI One which requires prior
sold all of its rights to concurrence from the LGU
CQM. Upon consolidation before respondent can
of the tax declarations avail itself of the
over the two properties, exemption. The only
CQM could not obtain the requirement to avail of the
necessary tax clearance exemption is to register

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as it found that there with PEZA as satisfied by

exists unpaid real the respondent through its
property taxes over both Registration and Lease
properties. Petitioners Agreements with PEZA.
issued a tax assessment PEZA-registered
and warrant of levy economic zone enterprises
against Maxon and availing of the tax incentive
Ultimate. are exempted from
payment of all national and
RTC ruled in favor of local taxes, except RPT on
CQM, holding that CQM is land owned by developers.
not liable for RPT as it is
exempt under Sec. 24 of
RA 7916, as amended by
RA 8748 (properties
located in a special
economic zone), as well
as equity considerations
arising from laches and
estoppel. The CA affirmed
RTCs decision saying that
CQM was neither the
owner nor the entity who
benefited from the
property for which RPT
was sought by petitioner.
Zuelling- Petitioner Zuellig-PH is a The Supreme Court The date an administrative
Pharma Asia regional operating reversed the decision of the claim for excess unutilized
Pacific v. CIR headquarters of Zuellig- CTA stating that the 120- VAT is filed, a taxpayer has
HK, a foreign corporation. day period runs from the thirty (30) days within
G.R. No. Zuellig-PH filed an date of submission of which to submit the
244154 | July administrative claim for complete documents. documentary requirements
15, 2020 | J. refund but received a sufficient to support his
Perlas-Bernabe Letter of Authority from Records show that Zuellig- claim, unless given further
the BIR nonetheless. BIR PH duly complied with the extension by the CIR.
requested Zuellig-PH to BIR officials' written and Then, upon filing by the
submit documents and verbal requests for taxpayer of his complete
evidence in relation to its additional documents documents to support his
refund to which Zuellig- through its letters dated July application, or expiration of
PH complied. BIR made 5, 2011, May 8, 2012, July the period given, the CIR
additional verbal requests 25, 2012, December 6, has 120 days within which
for documents and was 2012, September 11, 2013, to decide the claim for tax
again, received by the and April 29, 2014, with the credit or refund. Should the
BIR. Zuellig-PH sent a last letter indicating that it taxpayer, on the date of his
letter to the CIR had already submitted the filing, manifest that he no
requesting resolution of complete documents in longer wishes to submit
the refund at the soonest support of its application for any other additional
possible time to which the refund of excess and documents to complete his
Deputy Commissioner unutilized input VAT. administrative claim, the
replied assuring petitioner Notably, all of these verbal 120-day period allowed to
that BIR shall exert all requests for additional the CIR begins to run from
necessary efforts to documents and Zuellig- the date of filing.
comply with the 120-day PH's corresponding
period under the Tax submissions in response
Code. thereto were well-
documented and all
confirmed by the BIR;

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A request for the re- hence, there is no danger of

submission of documents losing track of when to
was made to Zuellig-PH. reckon the 120-day period.
A letter was used as
evidence stating that The 120-day period should
Zuellig had already therefore be reckoned from
submitted the documents the April 29, 2014 letter of
in support of its Zuellig-PH wherein it stated
application for refund. that it had already
Zuellig-PH then filed a submitted the complete
petition with the CTA for documents in support of its
failure of the BIR to act refund claim. In turn, the
within the 120-day period. BIR had 120 days from
BIR alleges that claim such time (or until August
was belatedly filed stating 27, 2014) to act on Zuellig-
that when the RDO failed PH's administrative claim
to act on the claim, it for refund. Since it was
should have already filed established that the BIR
a judicial claim with the failed to act within such
CTA within 30 days. CTA period, Zuellig--PH had
denied Zuellig's petition. thirty (30) days, or until
September 26, 2014, to file
its judicial claim. Thus, its
Petition for Review was
timely filed on September
25, 2014.
Allied Banking Elizabeth Sia maintained The Supreme Court For the authority under
Corporation v. two bank accounts with reversed the ruling of the Sec. 97 to take effect, the
Sia Orient Bank, one of which lower courts, holding that bank needs only two
was a joint "and/or'' Allied Bank can legally things:
G.R. No. account with her father. withhold any transaction (1) A person is
195341 | After Orient Bank's from a deceased depositor, maintaining a bank
August 28, closure, Allied Bank, with pursuant to Secs. 85 and 97 deposit account; and
2019 | J. the assistance of the of the Tax Reform Act. (2) The bank has
Reyes, Jr. PDIC, assumed its knowledge of the said
obligations, including In this case, the RTC and person's death.
those pertaining to the the CA both found that the
two aforesaid bank funds in SA No. The authority applies with
accounts. The settlement 0570231382 came from the equal force to joint
of the uninsured deposits settlement for Elizabeth and accounts even to a joint
in the two Orient Bank See's Orient Bank Account "and/or" account as the law
accounts was effected by Nos. 023190001020 and did not make any
crediting a single Allied 023190001031. distinction. It is the
Bank savings account in This could also be shown by knowledge of the death of
the name of Elizabeth. SA the Deed of Assignment a co-depositor which gives
No. 0570231382 was executed by Elizabeth and the bank the license to
opened for the purpose of Allied Bank which indicates withhold any withdrawal
receiving the settlement that SA No. 0570231382 from the bank account.
payments for the two was opened precisely to The authority is not
Orient Bank accounts. receive the said payments. dependent on whether the
See died. Allied Bank Allied Bank could not be surviving co-depositor
received a letter from faulted for considering See could previously withdraw
Elizabeth's siblings, as one of the depositors of from the joint deposit even
through their counsel, SA No. 0570231382. Allied without the knowledge or
informing the Bank of Bank was actually legally consent of the other.
See's death and of the bound to temporarily
heirs' request for Allied withhold any withdrawal

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Bank to withhold any from SA No. 0570231382

transaction relating to after it was informed of
See's account with the See's death. As such, no
bank pending settlement breach of contract could be
of his estate. Allied Bank attributed to it.
acceded to this request by
temporarily freezing SA
No. 0570231382, which in
turn prevented Elizabeth
from withdrawing any
amount from the said
account. The RTC and
the CA ruled in favor of
Elizabeth Sia.
City of Davao Randy Allied Ventures, The Supreme Court, upon LBT are taxes imposed by
v. Randy Inc. (RAVI) is one of the the petition of City of Davao, LGUs on the privilege of
Allied Coconut Industry affirmed the CTA ruling, doing business within their
Ventures, Inc. Investment Fund (CIIF) holding that RAVI is not an jurisdictions. The phrase
holding companies NBFI and cannot be held "doing business" means
G.R. No. established to own and liable for LBT. some "trade or commercial
241697 | July hold the shares of stock of activity regularly engaged
29, 2019 | J. San Miguel Corporation RAVI's act of placing the in as a means of livelihood
Perlas-Bernabe (SMC). One of the dividends from the SMC or with a view to profit."
decided cases of the preferred shares in a trust Particularly, the LBT
Supreme Court account, which incidentally imposed pursuant to Sec.
(Philippine Coconut earns interest, does not 143 (f) of the LGC is
Producers v. COCOFED) convert it into an active premised on the fact that
held that CIIF companies, investor or dealer in the persons made liable for
including RAVI, and the securities. Being restricted such tax are banks or other
CIIF block of SMC shares to managing the dividends financial institutions by
are "public funds of the SMC preferred virtue of their being
necessarily owned by the shares on behalf of the engaged in the business
Government.” RAVI filed government, RAVI cannot as such. This is why the
for a refund or credit of be said to be "doing LBT are imposed on their
erroneously and illegally business" as a bank or gross receipts from
collected local business other financial institution, "interest, commissions and
taxes (LBT) for the i.e., an NBFI. discounts from lending
taxable year 2010, activities, income from
collected by the City of financial leasing,
Davao under the dividends, rentals on
assumption that it was a property and profit from
non-bank financial exchange or sale of
intermediary (NBFI). City property, insurance
of Davao maintained that premium."
RAVI's activities in
owning shares and
receiving dividends and
interest income constitute
investing or doing
business as an NBFI.
RTC denied the claim but
the CTA reversed the
decision and granted
RAVI’s petition.
City Treasurer City Treasurer of Manila The Supreme Court denied There are two conditions
of Manila v. (CTM) issued a the petition and held that a that must be satisfied in
Philippine Statement of Account taxpayer who protested an order to successfully

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Beverage (SOA) representing assessment may later on prosecute an action for

Partners, Inc. business taxes and institute a judicial action for refund in case the taxpayer
regulatory fees for the first refund and that deficiency had received an
G.R. No. quarter of 2007 in the total taxes may not be used to assessment. One, pay the
233556 | amount of P2,930,239.82 offset a claim for refund. tax and administratively
September 11, to Philippine Beverage assail within 60 days the
2019 | J. Partners, Inc. (PBP). assessment before the
Reyes, Jr. PBP received the local treasurer, whether in
decision of CTM denying a letter-protest or in a claim
its protest for the for refund. Two, bring an
assessment, arguing that action in court within thirty
Tax Ordinance Nos. 7988 (30) days from decision or
and 8011, amending the inaction by the local
Revenue Code of Manila treasurer, whether such
(RCM), should be action is denominated as
declared null and void an appeal from
since the collection of assessment and/or claim
local business tax under for refund of erroneously or
Section 21 (tax on other illegally collected tax.
business) of the RCM and
Section 14 (tax on
manufacturers) of the
same code constitutes
double taxation. PBP paid
in full the amount stated in
the SOA but subsequently
filed a written claim for
refund of
erroneously/illegally
collected tax with
petitioner. PBP also filed
a Complaint for the
Revision of SOA and for
Refund or Credit of LBT
Erroneously/Illegally
Collected with the RTC.
The RTC, and CTA 2nd
Division, CTA En Banc all
ruled in favor of PBP.

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