Finals Personal Study Guide Tax2

Part III.
IN CASE OF DENIAL OF PROTEST OR the taxable quarter or quarters of the succeeding taxable
INACTION, APPEAL TO CTA year; or(d) When the excise tax due on exciseable articles
has not been paid; or(e) When the article locally
A. Scope and Jurisdiction of the CTA/ What is purchased or imported by an exempt person, such as,
Appealable to CTA but not limited to, vehicles, capital equipment,
Sec. 4 2nd Par. machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
The power to decide disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties The taxpayers shall be informed in writing of the law and
imposed in relation thereto, or other matters arising the facts on which the assessment is made; otherwise,
under this Code or other laws or portions thereof the assessment shall be void.
administered by the Bureau of Internal Revenue is Within a period to be prescribed by implementing rules
vested in the Commissioner, subject to the exclusive and regulations, the taxpayer shall be required to
appellate jurisdiction of the Court of Tax Appeals. respond to said notice.
NIRRC Sec. 228 If the taxpayer fails to respond, the Commissioner or his
SEC. 228. Protesting of Assessment. - When the duly authorized representative shall issue an assessment
Commissioner or his duly authorized representative based on his findings.
finds that proper taxes should be assessed, he shall first Such assessment may be protested administratively by
notify the taxpayer of his findings: Provided, however, filing a request for reconsideration or reinvestigation
That a preassessment notice shall not be required in the within thirty (30) days from receipt of the assessment in
following cases: such form and manner as may be prescribed by
(a) When the finding for any deficiency tax is the result implementing rules and regulations.
of mathematical error in the computation of the tax as Within sixty (60) days from filing of the protest, all
appearing on the face of the return; or(b) When a relevant supporting documents shall have been
discrepancy has been determined between the tax submitted; otherwise, the assessment shall become final.
withheld and the amount actually remitted by the
withholding agent; or(c) When a taxpayer who opted to
claim a refund or tax credit of excess creditable If the protest is denied in whole or in part, or is not acted
withholding tax for a taxable period was determined to upon within one hundred eighty (180) days from
have carried over and automatically applied the same submission of documents, the taxpayer adversely
amount claimed against the estimated tax liabilities for affected by the decision or inaction may appeal to the
1 |Solis Tax 2 Study Guide

Court of Tax Appeals within thirty (30) days from receipt A.M. No. 05-11-07-CTA
of the said decision, or from the lapse of one hundred
eighty (180)-day period; otherwise, the decision shall Rule 4
become final, executory and demandable. SEC. 3. Cases within the jurisdiction of the
Case: Court in Divisions. – The Court in Divisions shall
exercise:
COMMISSIONER OF INTERNAL REVENUE,
(a) Exclusive original or appellate jurisdiction to
vs.LEONARDO S. VILLA and THE COURT OF
review by appeal the following:
APPEALS
(2) Inaction by the Commissioner of Internal
Issue: WON the CTA has jurisdiction over the case. Revenue in cases involving disputed assessments,
Held: No. The word "decisions" in paragraph 1, Section 7 refunds of internal revenue taxes, fees or other charges,
of Republic Act 1125, quoted above, has been interpreted penalties in relation thereto, or other matters arising
to mean the decisions of the Commissioner of Internal under the National Internal Revenue Code or other laws
Revenue on the protest of the taxpayer against the administered by the Bureau of Internal Revenue, where
assessments. Definitely, said word does not signify the the National Internal Revenue Code or other applicable
assessment itself. law provides a specific period for action: Provided, that
in case of DISPUTED ASSESSMENTS, the inaction
Note that the law uses the word "decisions", not " of the Commissioner of Internal Revenue within the
assessments", further indicating the legislative one hundred eighty day-period under Section 228
intention to subject to judicial review the decision of the of the National Internal revenue Code shall be deemed
Commissioner on the protest against an assessment but a denial for purposes of allowing the taxpayer to appeal
not the assessment itself. 6 his case to the Court and does not necessarily constitute
a formal decision of the Commissioner of Internal
Since in the instant case the taxpayer appealed the Revenue on the tax case; Provided, further, that should
assessment of the Commissioner of Internal Revenue the taxpayer opt to await the final decision of the
without previously contesting the same, the appeal was Commissioner of Internal Revenue on the disputed
premature and the Court of Tax Appeals had no assessments beyond the one hundred eighty day-period
jurisdiction to entertain said appeal. abovementioned, the taxpayer may appeal such
final decision to the Court under Section 3(a), Rule 8
of these Rules; and Provided, still further, that in the
B. Application of the 180 day rule case of CLAIMS FOR REFUND OF TAXES

ERRONEOUSLY OR ILLEGALLY COLLECTED, Issue: Whether or not the assessment has become final,
the taxpayer must file a petition for review with executory and demandable because of the failure of
the Court prior to the expiration of the two-year Petitioner to appeal to this Court within thirty (30) days
period under Section 229 of the National Internal from the lapse of the one hundred eighty-day period
Revenue Code; mentioned in Section 228 of the Tax Reform Act of 1997.
Rule 8 Held: No. It is only the decision not appealed by

the taxpayer that becomes final, executory and
SEC. 3. Who may appeal; period to file petition. – (a) A demandable. Otherwise, the authors of the law could
party adversely affected by a decision, ruling or the have easily included the word assessment as also
inaction of the Commissioner of Internal Revenue on becoming final, executory and demandable should the
disputed assessments or claims for refund of internal BIR fail to act on the protest within 180 days.
revenue taxes, or by a decision or ruling of the
Commissioner of Customs, the Secretary of Finance, the Tax Code merely gave the taxpayer an option:
Secretary of Trade and Industry, the Secretary of first, he may appeal to the Court of Tax Appeals within
Agriculture, or a Regional Trial Court in the exercise of thirty (30) days from the lapse of the one hundred eighty
its original jurisdiction may appeal to the Court by ( 180) day period provided for under the said section, or
petition for review filed within thirty days after receipt of second, he may wait until the Commissioner decides on
a copy of such decision or ruling, or expiration of the his protest before he elevates his case. This Court
period fixed by law for the Commissioner of Internal believes that the taxpayer was given this option so that in
Revenue to act on the disputed assessments. In case of case his protest is not acted upon within the 180-day
inaction of the Commissioner of Internal revenue on period, he may be able to seek immediate relief and need
claims for refund of internal revenue taxes erroneously not wait for an indefinite period of time for the
or illegally collected, the taxpayer must file a petition for Commissioner to decide. But if he chooses to wait
review within the two-year period prescribed by law from for a positive action on the part of the
payment or collection of the taxes. (n) Commissioner, then the same could not result in the
assessment becoming final, executory and demandable.
Cases:
LASCONA LAND CO., INC., vs. COMMISSIONER

OF INTERNAL REVENUE and NORBERTO R. RIZAL COMMERCIAL BANKING
ODULIO CORPORATION, vs. COMMISSIONER OF
INTERNAL REVENUE
C.T.A. CASE NO. 5777

G.R. No. 168498 June 16, 2006
RCBC file protest July 20 2001, BIR no action. April 20, C. What Constitutes denial of protest / decision
2002 elevated case to CTA. Beyond the 30 day following on a contested Assessment
180 days within with to file petition for review with the
CTA. 1. General Rule – Actual denial of the protest by the
BIR.
Belatedly filed the action because of inaction.
NO formal denial on the protest.
In case the Commissioner failed to act on the
disputed assessment within the 180-day period Actions of the BIR that would constitute a denial
from date of submission of documents, a taxpayer can of the protest.
either: 1) file a Petition for Review with the Court of Tax 2. Issuance of Revised Assessment upon
Appeals within 30 days after the expiration of the reinvestigation
180-day period; or 2) await the final decision of the
Commissioner on the disputed assessments and appeal Ma’am: Request for reinvestigation and submitted
such final decision to the Court of Tax Appeals within 30 documents. After consideration the BIR will issue a
days after receipt of a copy of such decision. However, revised assessment. What is the effect?
these options are mutually exclusive, and resort to
one bars the application of the other. AVON PRODUCTS MFG., INC.,-versus- CIR
C.T.A. CASE NO. 5908
In the instant case, the Commissioner failed to act on the
disputed assessment within 180 days from date of
submission of documents. Thus, petitioner opted to file a *The response letter of the BIR to reinvestigation
Petition for Review before the Court of Tax Appeals. request is already the denial of the protest; decision of
Unfortunately, the Petition for Review was filed out of the BIR itself. It categorically states the reason for
time, i.e., it was filed more than 30 days after the lapse of the denial of the request for reinvestigation.
the 180-day period. Consequently, it was dismissed by
the Court of Tax Appeals for late filing. Petitioner did Held: The revised assessment contained in
not file a motion for reconsideration or make an respondent's letter dated June 3, 1999 is not a new
appeal; hence, the disputed assessment became assessment since it only resulted only from
final, demandable and executory. petitioner's request for reinvestigation. The
disallowed input tax pertains to petitioner's deficiency
VAT assessment that is covered by its request for
reinvestigation. As stated above, the respondent
reinvestigated petitioner's VAT transactions which assessment made by the petitioner, considering that the
necessarily includes both output and input VAT. Hence, said letter is in itself a reiteration of the demand by the
it cannot be said that there has been a new kind of tax Bureau of Internal Revenue for the settlement of the
that was assessed against the petitioner. assessment already made, and for the immediate
payment of the sum of P758, 687.04 in spite of the
3. Final Notice Before Seizure vehement protest of the respondent corporation on April
21, 1961. This certainly is a clear indication of the firm
COMMISSIONER OF INTERNAL REVENUE,
stand of petitioner against the reconsideration of the
Petitioner, vs.ISABELA CULTURAL disputed assessment in view of the continued refusal of
CORPORATION the respondent corporation to execute the waiver of the
period of limitation upon the assessment in question.
Held: The Notice should be deemed as petitioners last
act, since failure to comply with it would lead to the SURIGAO ELECTRIC CO., INC.,
distraint and levy of respondents properties, as indicated
vs. THE HONORABLE COURT OF TAX APPEALS
therein.
G.R. No. L-25289 June 28, 1974
The final notice before seizure is already a final decision
of the CIR perfectly and validly appealable to the CTA. The letter of demand issued by the Commissioner
on April 29, 1963 and received by the petitioner on May
A demand letter of the BIR reiterating the payment of
8, 1963 constitutes the definite determination of the
deficiency tax, amounts to a final decision on the
petitioner's deficiency franchise tax liability or the
protested assessment and may therefore be questioned
decision on the disputed assessment and, therefore, the
before the CTA.
decision appealable to the tax court.
*Remedy of the Tax payer
The letter of demand dated April 29, 1963
Appeal to the CTA within 30 days since it is already a unquestionably constitutes the final action taken by the
final decision of the CIR. Commissioner on the petitioner's several requests for
reconsideration and recomputation. In this letter, the
4. Final Demand Letter Commissioner not only in effect demanded that the
petitioner pay the amount of P11,533.53 but also gave
CIR vs. Ayala 70 SCRA 204 1976 warning that in the event it failed to pay, the said
The letter of February 18, 1963 in the view of the Court, Commissioner would be constrained to enforce the
is tantamount to a denial of the reconsideration collection thereof by means of the remedies provided by
or protest of the respondent corporation on the law. The tenor of the letter, specifically, the

statement regarding the resort to legal remedies, language whenever his action on an assessment
unmistakably indicates the final nature of the questioned by a taxpayer constitutes his final
determination made by the Commissioner of the determination on the disputed assessment.
petitioner's deficiency franchise tax liability.
Reason:
Without needless difficulty, the taxpayer would be able
5. Filing of Collection Suit to determine when his right to appeal to the tax court
accrues. To encourage his office to conduct a careful and
COMMISSIONER OF INTERNAL REVENUE, thorough study of every questioned assessment and
vs. UNION SHIPPING CORPORATION G.R. No. L render a correct and definite decision thereon in the first
-66160 May 21, 1990 instance. This would also deter the Commissioner from
unfairly making the taxpayer grope in the dark and
There appears to be no dispute that petitioner did not speculate as to which action constitutes the decision
rule on private respondent's motion for appealable to the tax court.
reconsideration but contrary to the above ruling of
this Court, left private respondent in the dark as to which
action of the Commissioner is the decision appealable to
the Court of Tax Appeals. 6. Referral to Solicitor General
Commissioner should always indicate to the taxpayer in

clear and unequivocal language what constitutes his final
7. Issuance of Warrant of Destraint and Levy
determination of the disputed assessment.
CENTRAL CEMENT CORPORATION. Petitioner,
Under the circumstances, the Commissioner of
Internal Revenue, not having clearly signified his - - versus - BIENVENIDO TAN,C.T.A. CASE NO.
final action on the disputed assessment, legally 4312
the period to appeal has not commenced to run. Thus, it
WON the issuance of the warrant of destraint is
was only when private respondent received the
tantamount to a denial.
summons on the civil suit for collection of
deficiency income on December 28, 1978 that the Issuance of warrant is not tantamount to a denial.
period to appeal commenced to run.
In the case at bar, the warrants of distraint, levy and
Commissioner of Internal Revenue should always garnishment were issued by respondent knowing fully
indicate to the taxpayer in clear and unequivocal well that the deficiency assessments were under protest
by petitioner. Even when the issuance of the warrants January 18, 1965, when it was filed, the reglementary
were objected to by petitioner for being in violation of period which started on the date the assessment was
the Tax Code, respondent did not lift said warrant. It i s received, viz., January 14, 1965. The period started
by respondent's own doing that administrative running again only on April 7, 1965, when the private
remedies available to petitioner were effectively respondent was definitely informed of the implied
shut-off thereby, leaving petitioner with no rejection of the said protest and the warrant was finally
recourse but to seek relief -from this Court. served on it. Hence, when the appeal was filed on April
23, 1965, only 20 days of the reglementary period had
been consumed.
CIR vs Algue G.R. No. L-28896 February 17, 1988
Is true that as a rule the warrant of distraint and levy is " ADVERTISING ASSOCIATES, INC.,
proof of the finality of the assessment" and renders
vs.COURT OF APPEALS and COMMISSIONER OF
hopeless a request for reconsideration," being "
tantamount to an outright denial thereof and makes the INTERNAL REVENUE G.R. No. L-59758 December
said request deemed rejected." But there is a special 26, 1984
circumstance in the case at bar that prevents We hold that the petition for review was filed on time.
application of this accepted doctrine. The reviewable decision is that contained in
The proven fact is that four days after the private Commissioner Plana's letter of May 23, 1979 and
respondent received the petitioner's notice of not the warrants of distraint.
assessment, it filed its letter of protest. This was The letter’s tenor shows, embodies the
apparently not taken into account before the Commissioner's final decision within the meaning
warrant of distraint and levy was issued; indeed, of section 7 of Republic Act No. 1125. The Commissioner
such protest could not be located in the office of the said so. He even directed the taxpayer to appeal it
petitioner. It was only after Atty. Guevara gave the BIR a to the Tax Court.
copy of the protest that it was, if at all, considered by the
tax authorities. During the intervening period, the
warrant was premature and could therefore not
be served. D. Period to Appeal/ Effect of Failure to Appeal
The protest filed by private respondent was not pro Sec.228 (2 last par. NIRC)
forma and was based on strong legal
considerations. It thus had the effect of suspending on
Such assessment may be protested (30) days from receipt of the assessment in such form
administratively by filing a request for and manner as may be prescribed by implementing rules
reconsideration or reinvestigation within thirty and regulations. Within sixty (60) days from filing
of the protest, all relevant supporting documents shall
have been submitted; otherwise, the assessment shall
become final.
If the protest is denied in whole or in part, or is not acted

upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the
Court of Tax Appeals within thirty (30) days
from receipt of the said decision, or from the lapse
of one hundred eighty (180)-day period; otherwise
, the decision shall become final, executory and
demandable.
Sec. 11 R.A 1125 as amended by R.A. 9282
SEC. 11. Who May Appeal; Mode of Appeal;

Effect of Appeal. - Any party adversely affected by a
decision, ruling or inaction of the Commissioner of
Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and
Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial
Courts may file an appeal with the CTA within thirty (30)
days after the receipt of such decision or ruling or after
the expiration of the period fixed by law for action as
referred to in Section 7(a)(2) herein (180 days; inaction
shall be deemed a denial).
"Appeal shall be made by filing a petition for provincial, city or municipal treasurer or the Secretary
review under a procedure analogous to that provided of Finance, the Secretary of Trade and Industry and
for under Rule 42 of the 1997 Rules of Civil Procedure Secretary of Agriculture, as the case may be shall
with the CTA within thirty (30) days from the suspend the payment, levy, distraint, and/or sale
receipt of the decision or ruling or in the case of of any property of the taxpayer for the satisfaction
inaction as herein provided, from the expiration of the of his tax liability as provided by existing law: Provided,
period fixed by law to act thereon. A Division of the
CTA shall hear the appeal: Provided, however, That
with respect to decisions or rulings of the Central Board
of Assessment Appeals and the Regional Trial Court in
the exercise of its appellate jurisdiction appeal shall be
made by filing a petition for review under a procedure
analogous to that provided for under rule 43 of the 1997
Rules of Civil Procedure with the CTA, which shall
hear the case en banc.
"All other cases involving rulings, orders or decisions

filed with the CTA as provided for in Section 7 shall be
raffled to its Divisions. A party adversely affected by a
ruling, order or decision of a Division of the CTA may file
a motion for reconsideration of new trial before
the same Division of the CTA within fifteens (15)
days from notice thereof: Provide, however, That in
criminal cases, the general rule applicable in regular
Courts on matters of prosecution and appeal shall
likewise apply.
"No appeal taken to the CTA from the decision of

the Commissioner of Internal Revenue or the
Commissioner of Customs or the Regional Trial Court,
however, That when in the opinion of the Court the from rentals and sales of real property upon which the
collection by the aforementioned government agencies creditable taxes were withheld were not included in the
may jeopardize the interest of the Government Bank’s gross income as reflected in its return.
and/or the taxpayer the Court any stage of the
proceeding may suspend the said collection and
require the taxpayer either to deposit the amount Since no income was reported, it follows that no
claimed or to file a surety bond for not more than double tax was withheld. It is incumbent upon the taxpayer to
the amount with the Court. reflect in his return the income upon which any
creditable tax is required to be withheld at the source.
"In criminal and collection cases covered respectively by
Section 7(b) and (c) of this Act, the Government may The Supreme Court added that the fact that the
directly file the said cases with the CTA covering Commissioner failed to present any evidence or
amounts within its exclusive and original jurisdiction." to refute the evidence presented by the Bank does
not automatically entitle the Bank to a tax refund
Case: Commissioner of the Internal Revenue vs.
Far East Bank G.R. No. 173854 . It is not the duty of the government to disprove a
taxpayer’s claim for refund. Rather, the burden of
Issues: establishing the factual basis of a claim for a
refund rests on the taxpayer. And while the
Whether the Bank was able to prove its entitlement to
petitioner has the power to make an examination of the
the refund.
returns and to assess the correct amount of tax, his
Whether the inaction of the Commissioner automatically failure to exercise such powers does not create a
entitles the Bank to a refund. presumption in favor of the correctness of the returns.
The taxpayer must still present substantial
Held: No to both. evidence to prove his claim for refund.
The Bank’s 1994 Annual Income Tax Return shows that
the gross income was derived solely from sales of
services. In fact, the phrase "NOT APPLICABLE" was Hence, the Court concluded, for failing to prove its
printed on the schedules pertaining to rent, sale of real entitlement to a tax refund, the Bank’s claim must be
property, and trust income. Thus, the income derived denied. Since tax refunds partake of the nature of

tax exemptions, which are construed strictissimi *Class Discussion: CTA case 8185
juris against the taxpayer, evidence in support of
Failure to submit relevant supporting documents within
a claim must likewise be strictissimi scrutinized
60 days from petition for reinvestigation will not render
and duly proven.
the assessment final and executory. The lack of
documentation will only matter when the BIR evaluates
the merits of the said protest but does not result in the
deficiency assessment being final.
In such a case the 180 days will no longer apply,

instead the taxpayer has to wait for the issuance
of FDDA then appeal with 30 days of receipt.
Case: St. Stephen’s Association vs. Collector of

Internal Revenue 104 Phil. 314
SYLLABUS
Facts:
On April 21, 1955, petitioners received a letter from the

Collector dated April 6, 1955, denying the request
embodied in their letter of November 13, 1954, and
insisting that the assessment in question be paid.
On July 25, 1955, petitioners received the letter of the

Collector dated July 11, 1955, again denying their request
that the assessment in question be cancelled and
withdrawn, and stating in its last paragraph that:

"This decision becomes final thirty days after Issue: When did the period of 30 days begin to run?
your receipt hereof unless an appeal is taken to the
Court of Tax Appeals within the same period, in
Held: The period for appeal to the respondent court in
this case must, therefore, be computed from the time
accordance with the provisions of Republic Act of 1125."
petitioners received the decision of the respondent
Collector of Internal Revenue on the disputed
assessment, and not from the time they received
said assessment. Where a taxpayer questions an
assessment and asks the Collector to reconsider or
cancel the same because he (the taxpayer) believes he is
not liable therefor, the assessment becomes a "disputed
assessment" that the Collector must decide, and the
taxpayer can appeal to the Court of Tax Appeals
only upon receipt of the decision of the Collector
on the disputed assessment, in accordance with
paragraph (1) of section 7, Republic Act No. 1125,
conferring appellate jurisdiction upon the Court of Tax
Appeals to review "decisions of the Collector of Internal
Revenue in cases involving disputed assessment . . ."
The statement appearing in his letter of July 11, 1955, it

is evident that the respondent Collector himself
considered said letter as his final decision in the
case, hence his warning that the same would become
final in thirty days unless petitioners appealed to the
Court of Tax Appeals within the same period. Prior to his
letter-decision of July 11, 1955, then, the Collector must
have held the matter under advisement and considered
his preceding rulings as merely tentative in character,
pending his final determination and resolution of the
merits of the arguments of fact and law submitted by Collector of Internal Revenue dated November 5, 1957
petitioners in support of their requests for the , denying the second request for reconsideration of the
cancellation and withdrawal of the assessment. assessment, was certainly reviewable by the Court of
Tax Appeals. Hence, the 30-day appeal period
should be counted from November 21, 1957,
Case: Roman Catholic Archbishop of Cebu vs when the taxpayer received copy of the Collector'
Collector 4 SCRA 279; G.R. No. L-16683 s ruling. The running of the period was not
Facts: The petitioner requested for the reconsideration

and cancellation of the assessments three times; all of
which were denied. The denial on January 20, 1958,
came with a demand 'for the last time ... to pay the total
sum of P4,318.00 plus delinquency penalties incident to
late payment immediately upon receipt hereof in order
that no drastic action may be taken by this office on the
matter"
Held: The dismissal of petitioner's appeal to be

substantially correct, for the reason that said appeal
was not taken within the thirty (30) day period
prescribed by section 11 of Republic Act No. 1125.
The petitioner has submitted not less than three (3)

motions of requests for the reconsideration of his Tax
Assessments. By these successive motions for
reconsideration, the petitioner managed to delay the
review of his case by the Tax Court for nearly two years.
Such delays are plainly inimical to the general interest,
ascertainment and collection of taxes being essential to
the maintenance of the State. The decision by the

interrupted by the filing of the third request for pending. This computation is nothing unusual: it is the
reconsideration, because the latter did not advance new ordinary way the timeliness of appeals is determined.
grounds not previously alleged, and was, therefore,
merely pro forma. Therefore, petitioner's petition for
review should have been lodged with the Tax Court not
later than December 21, 1957, but it was actually filed
only on February 1, 1958.
The dismissal of the petitioner's appeal by the Court of

Tax Appeals is hereby affirmed.
Case: Pantranco vs. Blaquera 107 Phil. 975
Issue:
Whether or not Pantranco's failed to file its request

within the thirty-day period prescribed by law.
Ruling:
Yes. The letter of September 16, 1954 is the

decision of the Collector which the taxpayer had
to contest within thirty days; otherwise, it would
have become final and unappealable to the Court
of Tax Appeals, or to any other court. It was a definite
determination of Pantranco's tax accountability.
Pantranco could ask for reconsideration, of course; if
successful, well and good. If unsuccessful, it must
appeal within thirty days, discounting the time
within which its petition to reconsider had been
As to the ten-day period "for consultation", we On December 23, 1976 Basa filed the instant special
discover no authority in support thereof. Counsel for civil action of certiorari wherein he assailed the trial
Pantranco had all the time from November 20, 1954 to court's decision.
June 1955 within which to seek advice. Indeed, it was
unnecessary to consult: an attorney is ipso facto
authorized to appeal for his client.
Case: Basa vs. Republic 138 SCRA 34
The taxpayer did not contest the assessments in the Tax

Court. The Commissioner's letter-decision on the case
was dated December 6, 1974. On the assumption that the
assessments had become final and incontestable, the
Commissioner on September 3, 1975 sued the taxpayer
in the Manila Court of First Instance for the collection of
said amount.
The trial court in a decision dated April 20, 1976

affirmed the assessments and ordered Basa to pay P16,
353.12 plus 5% surcharge and one percent monthly
interest from August 31, 1967 to August 31, 1970.
Instead of appealing to this Court directly under

Republic Act No. 5440, in relation to Rules 41 and 45 of
the Rules of Court, since no factual issues are involved,
Basa tried to appeal to the Court of Appeals. He did
not perfect his appeal within the reglementary period.
The trial court dismissed it in its order dated October 1,
1976.

We hold that the petition is devoid of merit. The The letter of demand of the Acting Commissioner of
trial court acted within its jurisdiction in rendering its Internal Revenue dated August 29, 1958 was the basis
decision and dismissing Basa's appeal. He should of respondent's complaint filed in this case and not the
have appealed to this Court. His failure to do so demand letter of the Bureau of Forestry dated January
rendered the decision final and executory. He has 15, 1949. This must be so because forest charges are
no cause of action for certiorari.
The decision is correct. If he wanted to contest the

assessments, he should have appealed to the Tax
Court. Not having done so, he could not contest
the same in the Court of First Instance.
The issue of prescription raised by him is baseless. The

assessments were predicated on the fact that his income
tax returns, if not fraudulent, were false because he
under-declared his income. In such a case, the
deficiency assessments may be made within ten
years after the discovery of the falsity or
omission. The court action should be instituted within
five years after the assessment but this period is
suspended during the time that the Commission is
prohibited from instituting a court action.**
As explained in the Solicitor General's memorandum,

Basa's requests for reinvestigation tolled the prescriptive
period of five years within which court action may be
brought.
Case: Mambulao Lumber vs CIR 132 SCRA 1(1984)

internal revenue taxes and the sole power and E. Mode of Appeal and Effect of Appeal
duty to collect the same is lodged with the
1. Appeal to a Division of CTA
Bureau of Internal Revenue and not with the
Bureau of Forestry. The computation and/or Sec. 11 R.A 1125 as amended by R.A. 9282
assessment of forest charges made by the Bureau of
Forestry may or may not be adopted by the
Commissioner of Internal Revenue and such
computation made by the Bureau of Forestry is
not appealable to the Court of Tax Appeals.
Therefore, for the purpose of computing the five-year
period within which to file a complaint for collection,
the demand or even the assessment made by the Bureau
of Forestry is immaterial.
In the case at bar, the commencement of the five-

year period should be counted from August 29,
1958, the date of the letter of demand of the
Acting Commissioner of Internal Revenue to
petitioner Mambulao Lumber Company. It is this
demand or assessment that is appealable to the Court
of Tax Appeals. The complaint for collection was
filed in the Court of First Instance of Manila on August
25, 1961, very much within the five-year period
prescribed by Section 332 (c) of the Tax Code.
Consequently, the right of the Commissioner of Internal
Revenue to collect the forest charges and surcharges in
the amount of P15,443.55 has not prescribed.

SEC. 11. Who May Appeal; Mode of Appeal; "All other cases involving rulings, orders or decisions
Effect of Appeal. - Any party adversely affected by a filed with the CTA as provided for in Section 7 shall be
decision, ruling or inaction of the Commissioner of raffled to its Divisions. A party adversely affected by a
Internal Revenue, the Commissioner of Customs, the ruling, order or decision of a Division of the CTA may file
Secretary of Finance, the Secretary of Trade and a motion for reconsideration of new trial before
Courts may file an appeal with the CTA within thirty (30)
days after the receipt of such decision or ruling or after
referred to in Section 7(a)(2) herein (180 days; inaction
shall be deemed a denial).
"Appeal shall be made by filing a petition for

review under a procedure analogous to that provided
for under Rule 42 of the 1997 Rules of Civil Procedure
with the CTA within thirty (30) days from the
receipt of the decision or ruling or in the case of
inaction as herein provided, from the expiration of the
period fixed by law to act thereon. A Division of the
CTA shall hear the appeal: Provided, however, That
with respect to decisions or rulings of the Central Board
of Assessment Appeals and the Regional Trial Court in
the exercise of its appellate jurisdiction appeal shall be
made by filing a petition for review under a procedure
analogous to that provided for under rule 43 of the 1997
Rules of Civil Procedure with the CTA, which shall
hear the case en banc.

the same Division of the CTA within fifteens (15) a.m.05-11-07
days from notice thereof: Provide, however, That in
RULE 7
criminal cases, the general rule applicable in regular
Courts on matters of prosecution and appeal shall
PROCEDURE IN THE COURT OF TAX APPEALS
likewise apply.
SECTION 1. Applicability of the Rules of the
"No appeal taken to the CTA from the decision of Court of Appeals, exception. – The procedure in the
the Commissioner of Internal Revenue or the Court en banc or in Divisions in original and in appealed
Commissioner of Customs or the Regional Trial Court, cases shall be the same as those in petitions for review
provincial, city or municipal treasurer or the Secretary and appeals before the Court of Appeals pursuant to the
of Finance, the Secretary of Trade and Industry and applicable provisions of Rules 42, 43, 44 and 46 of the
Secretary of Agriculture, as the case may be shall Rules of Court, except as otherwise provided for in these
suspend the payment, levy, distraint, and/or sale Rules. (n)
of any property of the taxpayer for the satisfaction
of his tax liability as provided by existing law: Provided,
however, That when in the opinion of the Court the RULE 15
collection by the aforementioned government agencies MOTION FOR RECONSIDERATION OR NEW
may jeopardize the interest of the Government TRIAL
and/or the taxpayer the Court any stage of the
proceeding may suspend the said collection and SECTION 1. Who may and when to file motion. –
require the taxpayer either to deposit the amount Any aggrieved party may seek a reconsideration or new
claimed or to file a surety bond for not more than double trial of any decision, resolution or order of the Court. He
the amount with the Court. shall file a motion for reconsideration or new trial
within fifteen days from the date he received
notice of the decision, resolution or order of the
Section 7(b) and (c) of this Act, the Government may
Court in question. (RCTA, Rule 13, sec. 1a)
directly file the said cases with the CTA covering
amounts within its exclusive and original jurisdiction." SEC. 4. Effect of filing the motion. – The filing of a
motion for reconsideration or new trial shall suspend
the running of the period within which an appeal
may be perfected. (RCTA, Rule 13, sec. 4a) (a) Fraud, accident, mistake or excusable negligence
which ordinary prudence could not have guarded against
SEC. 5. Grounds of motion for new trial. – A and by reason of which such aggrieved party has
motion for new trial may be based on one or more of the
probably been impaired in his rights; or
following causes materially affecting the substantial
rights of the movant: (b) Newly discovered evidence, which he could not, with
reasonable diligence, have discovered and produced at
the trial and, which, if presented, would probably alter
the result.
A motion for new trial shall include all grounds then

available and those not included shall be deemed waived.
(Rules of Court, Rule 37, sec. 1a)
SEC. 6. Contents of motion for reconsideration or new

trial and notice. – The motion shall be in writing stating
its grounds, a written notice of which shall be served by
the movant on the adverse party.
A motion for new trial shall be proved in the manner

provided for proof of motions. A motion for the cause
mentioned in subparagraph (a) of the preceding section
shall be supported by affidavits of merits which may be
rebutted by counter-affidavits. A motion for the cause
mentioned in subparagraph (b) of the preceding section
shall be supported by affidavits of the witnesses by whom
such evidence is expected to be given, or by duly
authenticated documents which are proposed to be
introduced in evidence.

A motion for reconsideration or new trial that does not (Rules of Court, Rule 37, sec. 2a)
comply with the foregoing provisions shall be deemed
pro forma, which shall not toll the reglementary period
SEC. 7. No second motion for reconsideration or
for new trial. – No party shall be allowed to file a
for appeal.
second motion for reconsideration of a decision, final
resolution or order; or for new trial. (Rules of Court, Rule
52, sec. 2a)
SEC. 8. Ruling. – The Court shall resolve the

motion for reconsideration or new trial within three
months from the time it is deemed submitted for
resolution. (Rules of Court, Rule 52, sec. 3a)
RULE 16
APPEAL
SECTION 1. Appeal to Supreme Court by

petition for review on certiorari. – A party
adversely affected by a decision or ruling of the Court en
banc may appeal therefrom by filing with the Supreme
Court a verified petition for review on certiorari within
fifteen days from receipt of a copy of the decision
or resolution, as provided in Rule 45 of the Rules of
Court. If such party has filed a motion for
reconsideration or for new trial, the period herein fixed
shall run from the party’s receipt of a copy of the
resolution denying the motion for reconsideration or for
new trial. (n)
SEC. 2. Effect of appeal. – The motion for

reconsideration or for new trial filed before the
Court shall be deemed abandoned if, during its of Civil Procedure.
pendency, the movant shall appeal to the Supreme
Court pursuant to Section 1 of this Rule. (2002 Internal
Rules of the Court of Appeals, Rule VI, sec. 15a) V.REFUND AND/OR TAX CREDIT OF
2. Appeal to CTA en Banc
ERROUNEOUSLY PAID TAXES
A. What Constitutes an Erroneous Payment
SEC. 18. R.A 1125 as amended by R.A. 9282
There is erroneous payment of taxes when a tax payer
Appeal to the Court of Tax Appeals En Banc. - No
pays under a mistake of fact, as where he was not
civil proceeding involving matter arising under the
aware of an existing exemption in his favor at a time
National Internal Revenue Code, the Tariff and Customs
payment was made.
Code or the Local Government Code shall be maintained,
except as herein provided, until and unless an Erroneous or illegal tax – one levied without statutory
appeal has been previously filed with the CTA and authority or upon property not subject to taxation or by
disposed of in accordance with the provisions of this Act. some person having no authority to levy the tax, or one
which in some similar respect is illegal.
"A party adversely affected by a resolution of a Division
of the CTA on a motion for reconsideration or new Penalty is collected without authority
trial, may file a petition for review with the CTA
en banc." - one day upon receipt of decision Sum collected is excessive or in any manner
wrongfully collected.
Why pay erroneous taxes?

IV. APPEAL TO THE SUPREME COURT
Excise tax for spirits, because the goods will not be
SEC. 19. R.A 1125 as amended by R.A. 9282 allowed to leave the premises for delivery.
Review by Certiorari. - A party adversely affected by a Case: CIR vs Central Azucarera Don Pedro 49
decision or ruling of the CTA en banc may file with the SCRA 474
Supreme Court a verified petition for review on
certiorari pursuant to Rule 45 of the 1997 Rules Facts: Central applied for tax exemption privileges
under Rep. Act No. 3127 in connection with its
importations of machineries, spare parts and other CIR disallowed the sum of P48,302.00 on the ground
equipment to be used in its central. On November 3, that the claim for tax credit with respect thereto was filed
1965 the Central informed the Commissioner of Internal only on July 22, 1965, or more than two (2) years after it
Revenue of the approval of its application for tax was paid, and therefore under Sec. 309 of the Tax Code
exemption and claimed a tax credit for the entire amount the right to recover the same had already prescribed.
of P294,705.00.
Within thirty (30) days from receipt of the
Commissioner's ruling, it was elevated for review by the
Court of Tax Appeals, which thereafter rendered a
judgment of reversal.
Issue: Whether the statutory period of prescription

fixed in Sections 306 and 309 of the Internal Revenue
Code applies in this case.
Held:
SEC. 306. Recovery of tax erroneously or

illegally collected. — No suit or proceeding shall be
maintained in any court for the recovery of any national
internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected or of any
penalty claimed to have been collected without authority,
or of any sum alleged to have been excessive or in any
manner wrongfully collected, until a claim for refund or
credit has been duly filed with the Commissioner of
Internal Revenue, but such suit or proceeding may be
maintained, whether or not such tax penalty, or sum has
been paid under protest of duress. In any case, no such

suit or proceeding shall be begun after the expiration of SEC. 309. Authority of Commissioner to make
two years from the date of payment of the tax or penalty. compromises and to refund taxes. — The
Commissioner of Internal Revenue may compromise any
civil or other case arising under this Code or other law or
part of law administered by the Bureau of Internal
Revenue, may credit or refund taxes erroneously or
illegally received, or penalties imposed without authority,
and may remit before payment any tax that appears to be
unjustly assessed or excessive.
xxx xxx xxx
The authority of the Commissioner of Internal Revenue

to credit or refund taxes or penalties under this section
can only be exercised if the claim for credit or refund is
made to writing and filed with him within two years after
the payment of the tax or penalty.
Both shall not apply, since they refer to taxes

erroneously or illegally or in any manner wrongfully
collected, or penalties collected without authority.
That the period within which a claim for credit or

refund should be filed with the Commissioner of
Internal Revenue, or a suit or proceeding commenced in
court for the same purpose, should start from the
date of payment of the tax is logical in the cases
covered by the said provisions, inasmuch as the
collection is tainted with illegality or error from
the beginning and therefore it is from that
moment that the basis for the claim or the cause
of action in the suit may be said to have arisen. Board of Industries under Rep. Act No. 3127. Before
the application for such exemption was
The claim for tax credit filed by the respondent Central,
approved there was absolutely no basis for the
the basis thereof is the tax exemption granted by the
Central to file a claim with the Commissioner or
to commence a suit in court.
Under Rep. Act No. 3127, Sec. 7, the granting of a tax
exemption to an applicant engaged in a basic
industry retroacts to the date of the filing of
application for exemption…. "since in those cases the
tax sought to be refunded was collected legally, the
running of the two-year prescriptive period
provided for in Section 306 should commence, not
from the date the tax was paid, but from the
happening of the supervening cause which entitled
the tax payer to a tax refund. "In fine, when the tax
sought to be refunded is illegally or erroneously
collected, the period of prescription starts from the
date the tax was paid; but when the tax is legally
collected, the prescriptive period commences to run
from the date of occurrence of the supervening cause
which gave rise to the right of refund.
in the present case the supervening cause from which

the right to the tax credit applied for arose was the
issuance of the certificate of tax exemption by
the Board of Industries on October 5, 1965 and the
Central filed its claim for tax credit with the
Commissioner of Internal Revenue on the following
November 3, or well within the two-year period, it is
clear that the said claim had not yet prescribed.

B. Requirement of Filing Administrative Claim returned in good condition by the purchaser, and, in his
discretion, redeem or change unused stamps that have
Sec. 229 NIRC
been rendered unfit for use and refund their value upon
SEC. 229. Recovery of Tax Erroneously or proof of destruction. No credit or refund of taxes or
Illegally Collected. - no suit or proceeding shall be penalties shall be allowed unless the taxpayer files in
maintained in any court for the recovery of any national writing with the Commissioner a claim for credit or
internal revenue tax hereafter alleged to have been
refund within two (2) years after the payment of the tax
erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, or penalty: Provided, however, That a return filed showing
of any sum alleged to have been excessively or in any an overpayment shall be considered as a written claim
manner wrongfully collected without authority, or of any for credit or refund.
sum alleged to have been excessively or in any manner
A Tax Credit Certificate validly issued under the
wrongfully collected, until a claim for refund or credit
has been duly filed with the Commissioner; but such suit provisions of this Code may be applied against any
or proceeding may be maintained, whether or not such internal revenue tax, excluding withholding taxes, for
tax, penalty, or sum has been paid under protest or which the taxpayer is directly liable. Any request for
duress. conversion into refund of unutilized tax credits may be
In any case, no such suit or proceeding shall be filed after allowed, subject to the provisions of Section 230 of this
the expiration of two (2) years from the date of payment Code: Provided, That the original copy of the Tax Credit
of the tax or penalty regardless of any supervening cause Certificate showing a creditable balance is surrendered
that may arise after payment: Provided, however, That
to the appropriate revenue officer for verification and
the Commissioner may, even without a written claim
therefor, refund or credit any tax, where on the face of cancellation: Provided, further, That in no case shall a tax
the return upon which payment was made, such refund be given resulting from availment of incentives
payment appears clearly to have been erroneously paid. granted pursuant to special laws for which no actual
Sec. 204(C) NIRC payment was made.
The Commissioner shall submit to the Chairmen of the
(C) Credit or refund taxes erroneously or illegally
Committee on Ways and Means of both the Senate and
received or penalties imposed without authority, refund
House of Representatives, every six (6) months, a report
the value of internal revenue stamps when they are
on the exercise of his powers under this Section, stating
therein the following facts and information, among
others: names and addresses of taxpayers whose cases reasons for the exercise of power: Provided, That the
have been the subject of abatement or compromise; said report shall be presented to the Oversight
amount involved; amount compromised or abated; and Committee in Congress that shall be constituted to
determine that said powers are reasonably exercised
and that the Government is not unduly deprived of
revenues.
Case: Bermejo vs. Collector, 87 Phil. 96 (1950)
The law clearly stipulates that after paying the tax, the
citizen must submit a claim for refund before
resorting to the courts. The idea probably is, first, to
afford the collector an opportunity to correct the action
of subordinate officers; and second, to notify the
Government that such taxes have been questioned, and
the notice should then be borne in mind in estimating
the revenue available for expenditure. Previous
objections to the tax may not take place of that
claim for refund, because there may be reason to
believe that, in paying, the tax payer has finally come to
realize the validity of assessment. Anyway, strict
compliance with the conditions imposed for the
return of revenue collected is a doctrine
consistently applied here and in the United States.
Case: Andrea Vda. De Aguinaldo vs CIR 13 SCRA

269 (1965)

Facts: The Collector of Internal Revenue, however, by deficiency income tax for 1952, without crediting in his
his letter dated October 28, 1957, assessed against favor the overpayment in 1953.
Leopoldo R. Aguinaldo the amount of P3,840.00 as
Issue: WON petitioner is entitled to tax credit for the
year 1953 pursuant to Section 309 of the Tax Code.
Held: The third paragraph of Section 309, National

Internal Revenue Code, clearly requires the filing by
the taxpayer of a written claim for credit or
refund within two years after payment of the tax,
before the Commissioner of Internal Revenue can
exercise his authority to grant the credit or refund. Such
requirement is therefore a condition precedent
and noncompliance therewith precludes the
Commissioner of Internal Revenue from
exercising the authority thereunder given.
Case: Chemical Industries of the Phil. Inc. vs. CIR,

CTA Case 5887 August 8 200
- Cannot find in the CTA site
Petitioner alleged that a letter-claim for refund was filed

with the BIR. However, it is glaringly obvious that said
document is not a letter-claim for refund but a
letter requesting for a ruling for the refund of the
tax allegedly paid by the Petitioner. Moreover, the same
was addressed to the Deputy Commissioner
contrary to the mandate of the law which led US to
believe that the petitioner really intended to request the
ruling form the deputy commissioner. In short the letter based on the ruling.
alluded to as the request for claim of refund is not the
written claim required by law before a judicial
Issue: Did MERALCO’s claim for refund prescribe for
being filed out of time?
claim may be had before the CTA.
C. Exception to Requirement of Filing

Administrative Claim
Sec.229 NIRC proviso (Last Paragraph)

Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax,
where on the face of the return upon which payment was
made, such payment appears clearly to have been
erroneously paid.
Sec.204 (c) NIRC – see above

D. Effect of Supervening Event
Sec.229 NIRC – see above
Case: MERALCO vs. CIR CTA 7107 October 16, 2006
Facts: MERALCO filed for a request to declare

Nordeusche Bank as tax exempt. Two years later BIR
issued a ruling exempting NB from the final withholding
tax on interest payments. MERALCO filed a refund

Held: Yes. BIR ruling is not an operative act from clear that the said claim had not yet prescribed.
which an entitlement to refund is determined.
There is no requirement in law that the petitioner
must request first for a ruling from the BIR for Case: Consolidated Cases of CIR vs. San Roque
exemption before it can file a claim for refund. It Power Corp. G.R. No. 187485 ; Taganito Mining Corp.
is the NIRC which provides for such exemptions as well G.R. No. 196113 and Philex Mining Corp.
as the period to file not the BIR ruling.
ISSUE: Whether or not the judicial claims for tax
The 2 year period found in Sec. 204 and 229 of NIRC refund or credit were filed within the mandatory
shall prevail over the principle of solution indebitii. It is period prescribed by law?
well settled that special law shall prevail over a general
law. HELD: Records show that a mere 13 days after it filed
its amended administrative claim with the
Commissioner on 28 March 2003, San Roque filed a
Case: CIR vs Central Azucarera Don Pedro 49 Petition for Review with the CTA docketed as CTA Case
SCRA 474 No. 6647.
"In fine, when the tax sought to be refunded is Clearly, San Roque failed to comply with the 120-
illegally or erroneously collected, the period of day waiting period, the time expressly given by
prescription starts from the date the tax was paid; but law to the Commissioner to decide whether to
when the tax is legally collected, the prescriptive grant or deny San Roque's application for tax refund
period commences to run from the date of occurrence of or credit. It is indisputable that compliance with the
the supervening cause which gave rise to the right of 120-day waiting period is mandatory and
refund.
jurisdictional. The waiting period, originally fixed at
in the present case the supervening cause from which 60 days only, was part of the provisions of the first VAT
the right to the tax credit applied for arose was the law, Executive Order No. 273, which took effect on 1
issuance of the certificate of tax exemption by January 1988. The waiting period was extended to 120
the Board of Industries on October 5, 1965 and the days effective 1 January 1998 under RA 8424 or the Tax
Central filed its claim for tax credit with the
Reform Act of 1997.
Commissioner of Internal Revenue on the following
November 3, or well within the two-year period, it is
Failure to comply with the 120-day waiting period the CTA does not acquire jurisdiction over the taxpayers
violates a mandatory provision of law. It violates the petition.
doctrine of exhaustion of administrative
San Roque's failure to comply with the 120-day
remedies and renders the petition premature and
mandatory period renders its petition for review with the
thus without a cause of action, with the effect that
CTA void. San Roque's void petition for review cannot be
legitimized by the CTA or this Court because Article 5 of
the Civil Code states that such void petition cannot
be legitimized except when the law itself
authorizes its validity. There is no law authorizing
the petitions validity.
The taxpayer cannot simply file a petition with the CTA

without waiting for the Commissioners decision within
the 120-day mandatory and jurisdictional period. The
CTA will have no jurisdiction because there will be no
decision or deemed a denial decision of the
Commissioner for the CTA to review.
Section 112(C) also expressly grants the taxpayer a 30-

day period to appeal to the CTA the decision or inaction
of the Commissioner. As this law states, the taxpayer
may, if he wishes, appeal the decision of the
Commissioner to the CTA within 30 days from receipt of
the Commissioners decision, or if the Commissioner
does not act on the taxpayers claim within the 120-day
period, the taxpayer may appeal to the CTA within 30
days from the expiration of the 120-day period.

Taganito can invoke BIR Ruling No. DA-489-03 CTA by way of Petition for Review. Thus, Taganito is
dated 10 December 2003, which expressly ruled that the deemed to have filed its judicial claim with the CTA on
taxpayer-claimant need not wait for the lapse of the 120- time.
day period before it could seek judicial relief with the
There are three compelling reasons why the 30-
day period need not necessarily fall within the
two-year prescriptive period, as long as the
administrative claim is filed within the two-year
prescriptive period.
First, Section 112(A) clearly, plainly, and unequivocally

provides that the taxpayer may, within two (2) years
after the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or
refund of the creditable input tax due or paid to such
sales.
In short, the law states that the taxpayer may apply with
the Commissioner for a refund or credit within two (2)
years, which means at anytime within two years. Thus,
the application for refund or credit may be filed by the
taxpayer with the Commissioner on the last day
of the two-year prescriptive period and it will still
strictly comply with the law. The two-year prescriptive
period is a grace period in favor of the taxpayer and he
can avail of the full period before his right to apply for a
tax refund or credit is barred by prescription.
Second, Section 112(C) provides that the Commissioner

shall decide the application for refund or credit within
one hundred twenty (120) days from the date of
submission of complete documents in support of the documents in support of the application filed in
application filed in accordance with Subsection (A). The accordance with Subsection A means that the application
reference in Section 112(C) of the submission of in Section 112(A) is the administrative claim that the
Commissioner must decide within the 120-day period.
Thus, the two-year prescriptive period does not
refer to the filing of the judicial claim with the CTA but
to the filing of the administrative claim with the
Commissioner.
Third, if the 30-day period, or any part of it, is required

to fall within the two-year prescriptive period (equivalent
to 730 days), then the taxpayer must file his
administrative claim for refund or credit within
the first 610 days of the two-year prescriptive
period. Otherwise, the filing of the administrative claim
beyond the first 610 days will result in the appeal to the
CTA being filed beyond the two-year prescriptive period.
Thus, section 112(A) and (C) must be interpreted

according to its clear, plain, and unequivocal language.
The taxpayer can file his administrative claim for
refund or credit at anytime within the two-year
prescriptive period. If he files his claim on the last
day of the two-year prescriptive period, his claim is still
filed on time. The Commissioner will have 120 days
from such filing to decide the claim. If the
Commissioner decides the claim on the 120th day, or
does not decide it on that day, the taxpayer still has
30 days to file his judicial claim with the CTA.
This is not only the plain meaning but also the only
logical interpretation of Section 112(A) and (C). Under Section 229, the prescriptive period for filing a
judicial claim for REFUND is two years reckoned
--------------------------------------------------------------- from the date the person liable for the tax pays
the tax. Thus, if the input VAT is in fact excessively
collected, that is, the person liable for the tax actually
pays more than what is legally due, the taxpayer must file
a judicial claim for refund within two years from his date
of payment. Only the person legally liable to pay
the tax can file the judicial claim for refund. The
person to whom the tax is passed on as part of the
purchase price has no personality to file the judicial
claim under Section 229.
Under Section 110(B) and Section 112(A), the

prescriptive period for filing a judicial claim for
EXCESS INPUT VAT is two years from the close
of the taxable quarter when the sale was made by the
person legally liable to pay the output VAT. This
prescriptive period has no relation to the date of
payment of the excess input VAT. The excess input VAT
may have been paid for more than two years but this
does not bar the filing of a judicial claim for excess VAT
under Section 112(A), which has a different reckoning
period from Section 229. Moreover, the person
claiming the refund or credit of the input VAT is
not the person who legally paid the input VAT. Such
person seeking the VAT refund or credit does not claim
that the input VAT was excessively collected from him, or
that he paid an input VAT that is more than what is
legally due. He is not the taxpayer who legally paid the
input VAT. Under Section 110(B), a taxpayer can apply his
input VAT only against his output VAT. The only
------------------------------------------------------------------ EXCEPTION is when the taxpayer is expressly zero
-rated or effectively zero-rated under the law, like
companies generating power through renewable sources
of energy. Thus, a non zerorated VAT-registered
taxpayer who has no output VAT because he has no sales
cannot claim a tax refund or credit of his unused input
VAT under the VAT System. Even if the taxpayer has
sales but his input VAT exceeds his output VAT, he
cannot seek a tax refund or credit of his excess
input VAT under the VAT System. He can only carry-
over and apply his excess input VAT against his
future output VAT. If such excess input VAT is an
excessively collected tax, the taxpayer should be able to
seek a refund or credit for such excess input VAT
whether or not he has output VAT.
E. Offsetting Against Deficiency Tax Assessments
Case: CIR vs. Cebu Portland Cement 156 SCRA 535,

541 (1987)
The sales tax was properly imposed upon the private

respondent for the reason that cement has always been
considered a manufactured product and not a mineral
product.

*The argument that the assessment cannot as yet be validity, the machinery of the state would grind to
enforced because it is still being contested loses sight of a halt and all government functions would be
the urgency of the need to collect taxes as "the paralyzed. That is the reason why, save for the
lifeblood of the government." If the payment of exception already noted, the Tax Code provides:
taxes could be postponed by simply questioning their
Sec. 291. Injunction not available to restrain
collection of tax. — No court shall have authority to
grant an injunction to restrain the collection of any
national internal revenue tax, fee or charge imposed by
this Code.
This injunction is available when the challenge to the

assessment is still-and only-on the administrative level.
There is all the more reason to apply the rule here
because it appears that even after crediting of the refund
against the tax deficiency, a balance of more than P 4
million is still due from the private respondent.
To require the petitioner to actually refund to the

private respondent the amount of the judgment
debt, which he will later have the right to distrain
for payment of its sales tax liability is in our view
an Idle ritual. We hold that the respondent Court of
Tax Appeals erred in ordering such a charade.
Case: BPI Securities Corp. vs CIR CTA Case No.

6089 Aug.22 2002

Section 69. Final Adjustment Return- Every the preceding calendar or fiscal year. If the sum of the
corporation liable to tax under Section 24 shall file a quarterly tax payments made during the said taxable
final adjustment return covering the total net income for year is not equal to the total tax due on the entire taxable
net income of that year the corporation shall either:
a. Pay the excess tax due; or
b. Be refunded the excess amount paid, as

the case may be.
In case the corporation is entitled to a refund

of the excess estimated quarterly income taxes paid, the
refundable amount shown on its final adjustment
return may be credited against the estimated
quarterly income tax liabilities for the taxable
quarters of the succeeding taxable year.
Petitioner is entitled to the refund. Petitioner filed its

1997 Annual Income Tax Return on April 15, 1998.
Consequently, the allowable period to file its claim for
refund is until April 14, 2000. Thus, when it filed its
claim for refund with the BIR on April 13, 2000 and
this Petition for Review on April 14, 2000, petitioner is
not yet barred by prescription.
CIR’s claim that the petitioner has some deficiencies in

tax payments will not be an obstacle to the grant of the
instant claim for refund because petitioner's alleged tax
deficiencies for the taxable year 1997 is not the issue
presented before the SC. The principle that *taxes are
not subject to set-off or legal compensation must the government cannot automatically set-off an
govern, especially in this case where the taxes and alleged deficiency tax against a claim for tax
the taxpayer's claim are not fully liquidated, due credit. What is sauce for the goose is also sauce for the
and demandable gander.
Case: FNCB Finance vs. CIR, CTA Case No. 3717 May
10, 1993
Facts: They found due from petitioner alleged

deficiency income tax which respondent automatically
set-off against the amount claimed as excess creditable
income tax. The result was that petitioner has no longer
any excess Creditable income tax but a deficiency tax due
.
Held: The act of respondent smacks of whim or caprice.
There was arbitrary disallowance of deductible expenses
to create a deficiency tax. No chance was even accorded
to petitioner to rebut the findings. The element of
substantial and procedural due process was sorely
lacking.
An assessment fixes and determines the liability of a tax

payer. Accordingly, CIR cannot be allowed to apply
the tax credit claimed against the alleged
deficiency tax when no assessment has been made.
In like manner that a tax payer cannot refuse to pay a

tax on the ground that the government owes him an
amount equal to or greater than the tax being collected,
In CLAIMS FOR REFUND/TAX CREDIT of excess An action is not arbitrary when exercised honestly and
withholding taxes, petitioner-taxpayer needs only the upon due consideration where there is room for two
following: opinions, however much of it may be believed that an
erroneous conclusion was reached. Arbitrariness
(1) that it filed a claim for refund within the two
year period as described under the Sec 230 of the
NIRC ;
(2) that the income upon which the taxes were
withheld were included in the return of the
recipient; and
(3) the fact of withholding is established by a copy

of statement (BIR Form 17431) duly issued by the
payor (withholding agent) to the payee, showing
the amount paid and the amount withheld
therefrom.
However, the petitioner failed to show enough evidence

to support its claim for refund and as such its claim must
be defeated.
F. Whether the Government is Liable for Interest

, Attorney’s Fees, etc.
Case: Philex Mining Corp. vs CIR 306 SCRA 126
“The rule is that no interest on refund of tax can be

awarded unless authorized by law or the
collection of the tax was attended by arbitrariness.

presupposes inexcusable or obstinate disregard of legal that is allowed to be set-off under the statutes of
provisions. None of the exceptions are presents in this set-off, which are construed uniformly, in the light of
case. Respondent’s decision was based on an honest public policy, to exclude the remedy in an action or any
interpretation of the law. We see no reason why there
should be payment of interest.”
G. Taxes Not Subject to Set Off
Case: Francia vs. IAC 162 SCRA 753
ISSUE: Whether or not the tax owed by Francia should

be set-off by the “debt” owed him by the government.
HELD: No. As a rule, set-off of taxes is not allowed.

There is no legal basis for the contention. By legal
compensation, obligations of persons, who in their
own right are reciprocally debtors and creditors
of each other, are extinguished (Art. 1278, Civil
Code). This is not applicable in taxes. There can be
no off-setting of taxes against the claims that the
taxpayer may have against the government. A person
cannot refuse to pay a tax on the ground that the
government owes him an amount equal to or greater
than the tax being collected. The collection of a tax
cannot await the results of a lawsuit against the
government.
The Supreme Court emphasized: A claim for taxes is

not such a debt, demand, contract or judgment
indebtedness of the state or municipality to one who is to existing rules and regulations. Accordingly, until
liable to the state or municipality for taxes. Neither are after the amount claimed as input taxes attributable to
they a proper subject of recoupment since they goods exported, or on sales which are zero-rated or
do not arise out of the contract or transaction effectively zero-rated or input tax paid on capital goods
sued on.
BIR Ruling 415-93 October 15 1993

CLAIM FOR TAX CREDIT/REFUND FOR ALLEGED
EXCESS INPUT TAX BY VAT-REGISTERED FIRM
DENIED
The Honorable
Undersecretary Tomas I. Alcantara
Department of Trade and Industry
385 Sen. Gil Puyat Avenue
Makati, Metro Manila
This refers to your request for confirmation and/or

issuance of guidelines for the automatic offsetting of
claims for VAT input tax by mining companies against
their excise tax liabilities.
I reply, I regret to inform you that the same cannot be

granted for lack of legal basis. Any claim for tax
credit or refund of alleged excess input tax by a
VAT registered taxpayer pursuant to Sections 104 and
106 both of the Tax Code, as amended by E.O. 273, shall
be subject to verification by this Office pursuant

imported or locally purchased, to the extent that such appellate jurisdiction of the Court of Tax Appeals.
input taxes have not been applied against output taxes,
have been finally determined to be legally due to the
Sec. 7 a(1)(2) of RA 1125 as amended by RA 9282
taxpayer, and a tax credit certificate issued therefor, no Sec. 7. Jurisdiction. - The CTA shall exercise:
automatic offsetting of the amount claimed as
input tax against the tax liability of the taxpayer
can be allowed.
However, a Tax Credit Certificate duly issued by this

Office shall, upon proper application, be allowed to be
used in payment of excise and other tax liabilities of
taxpayers, like the mining companies.
LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue
VI. APPEAL IN CASE OF DENIAL OF REFUND/

TAX CREDIT CLAIM
A. CTA (Division and En Banc)
Sec. 4 Par. 2 NIRC

internal revenue taxes, fees or other charges, penalties
imposed in relation thereto, or other matters arising
under this Code or other laws or portions thereof
administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive

"a. Exclusive appellate jurisdiction to review by Courts may file an appeal with the CTA within thirty (30)
appeal, as herein provided: days after the receipt of such decision or ruling or after
"1. Decisions of the Commissioner of Internal Revenue in
referred to in Section 7(a)(2) herein.
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National
Internal Revenue or other laws administered by the
Bureau of Internal Revenue;
"2. Inaction by the Commissioner of Internal Revenue in

cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the
National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue, where
the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be
deemed a denial;
Sec. 11 of RA 1125 as amended by RA 9282
SEC. 11. Who May Appeal; Mode of Appeal;

Effect of Appeal. - Any party adversely affected by a
decision, ruling or inaction of the Commissioner of
Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and

"Appeal shall be made by filing a petition for review Secretary of Trade and Industry and Secretary of
under a procedure analogous to that provided for under Agriculture, as the case may be shall suspend the
Rule 42 of the 1997 Rules of Civil Procedure with the payment, levy, distraint, and/or sale of any property of
CTA within thirty (30) days from the receipt of the the taxpayer for the satisfaction of his tax liability as
decision or ruling or in the case of inaction as herein
provided, from the expiration of the period fixed by law
to act thereon. A Division of the CTA shall hear the
appeal: Provided, however, That with respect to
decisions or rulings of the Central Board of Assessment
Appeals and the Regional Trial Court in the exercise of
its appellate jurisdiction appeal shall be made by filing a
petition for review under a procedure analogous to that
provided for under rule 43 of the 1997 Rules of Civil
Procedure with the CTA, which shall hear the case en
banc.
"All other cases involving rulings, orders or decisions

filed with the CTA as provided for in Section 7 shall be
raffled to its Divisions. A party adversely affected by a
ruling, order or decision of a Division of the CTA may file
a motion for reconsideration of new trial before the same
Division of the CTA within fifteens (15) days from notice
thereof: Provide, however, That in criminal cases, the
general rule applicable in regular Courts on matters of
prosecution and appeal shall likewise apply.
"No appeal taken to the CTA from the decision of the

Commissioner of Internal Revenue or the Commissioner
of Customs or the Regional Trial Court, provincial, city
or municipal treasurer or the Secretary of Finance, the

provided by existing law: Provided, however, That when
in the opinion of the Court the collection by the Sec. 19 supra
aforementioned government agencies may jeopardize the
"SEC. 19. Review by Certiorari. - A party adversely
interest of the Government and/or the taxpayer the
affected by a decision or ruling of the CTA en banc may
Court any stage of the proceeding may suspend the said
file with the Supreme Court a verified petition for review
collection and require the taxpayer either to deposit the
on certiorari pursuant to Rule 45 of the 1997 Rules of
amount claimed or to file a surety bond for not more
Civil Procedure."
than double the amount with the Court.

Section 7(b) and (c) of this Act, the Government may VII. STATUTE OF LIMITATIONS
directly file the said cases with the CTA covering
amounts within its exclusive and original jurisdiction." A. Period to Assess
Sec. 203, 222, 223 NIRC
Sec.18 supra SEC. 203. Period of Limitation Upon

Assessment and Collection. - Except as provided in
SEC. 18. Appeal to the Court of Tax Appeals En Section 222, internal revenue taxes shall be assessed
Banc. - No civil proceeding involving matter arising within three (3) years after the last day prescribed by
under the National Internal Revenue Code, the Tariff law for the filing of the return, and no proceeding in
and Customs Code or the Local Government Code shall court without assessment for the collection of such taxes
be maintained, except as herein provided, until and shall be begun after the expiration of such period:
unless an appeal has been previously filed with the CTA Provided, That in a case where a return is filed beyond
and disposed of in accordance with the provisions of this the period prescribed by law, the three (3)-year period
Act. shall be counted from the day the return was filed.
"A party adversely affected by a resolution of a Division

For purposes of this Section, a return filed before the
of the CTA on a motion for reconsideration or new trial,
last day prescribed by law for the filing thereof shall be
may file a petition for review with the CTA en banc."
considered as filed on such last day.
B. Supreme Court
SEC. 222. Exceptions as to Period of (a) In the case of a false or fraudulent return with
Limitation of Assessment and Collection intent to evade tax or of failure to file a return, the
of Taxes. – tax may be assessed, or a proceeding in court for
the collection of such tax may be filed without
assessment, at any time within ten (10) years after
the discovery of the falsity, fraud or omission:
Provided, That in a fraud assessment which has
become final and executory, the fact of fraud shall
be judicially taken cognizance of in the civil or
criminal action for the collection thereof.
(b) If before the expiration of the time prescribed

in Section 203 for the assessment of the tax, both
the Commissioner and the taxpayer have agreed in
writing to its assessment after such time, the tax
may be assessed within the period agreed upon.
The period so agreed upon may be extended by

subsequent written agreement made before the
expiration of the period previously agreed upon.
(c) Any internal revenue tax which has been

assessed within the period of limitation as
prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a proceeding in
court within five (5) years following the
assessment of the tax.

(d) Any internal revenue tax, which has been court within the period agreed upon in writing
assessed within the period agreed upon as before the expiration of the five (5) -year period.
provided in paragraph (b) hereinabove, may be The period so agreed upon may be extended by
collected by distraint or levy or by a proceeding in subsequent written agreements made before the
(e) Provided, however, That nothing in the

immediately preceding and paragraph (a) hereof
shall be construed to authorize the examination
and investigation or inquiry into any tax return
filed in accordance with the provisions of any tax
amnesty law or decree.
SEC. 223. Suspension of Running of

Statute of Limitations. –
The running of the Statute of Limitations provided

in Sections 203 and 222 on the making of
assessment and the beginning of distraint or levy a
proceeding in court for collection, in respect of any
deficiency, shall be suspended for the period
during which the Commissioner is prohibited from
making the assessment or beginning distraint or
levy or a proceeding in court and for sixty (60)
days thereafter; when the taxpayer requests for a
reinvestigation which is granted by the
Commissioner; when the taxpayer cannot be
located in the address given by him in the return
filed upon which a tax is being assessed or

collected: Provided, that, if the taxpayer informs duly served upon the taxpayer, his authorized
the Commissioner of any change in address, the representative, or a member of his household with
running of the Statute of Limitations will not be sufficient discretion, and no property could be
suspended; when the warrant of distraint or levy is located; and when the taxpayer is out of the
Philippines.
[note: these are old cases the 5 year prescriptive

period is no longer applicable; we now use the 3
YEAR PRESCRIPTIVE PERIOD]
1. When is an Assessment deemed made?
BASILAN ESTATES vs. CIR 21 SCRA 17

Petitioner claims that it never received notice of such
assessment or if it did, it received the notice beyond the five-
year prescriptive period.
Ma’am: They mailed the notice of assessment and so

there was a presumption that it was received by the
taxpayer.
Held: Even if the notice of assessment was not received

by the taxpayer since they filed a petition for
reinvestigation it shows that the notice was
constructively received.
The circumstances pointing to official performance of

duty must necessarily prevail over petitioner's contrary

interpretation. Besides, even granting that notice had taxpayer and it is not required that the notice be
been received by the petitioner late, the assessment is received by the taxpayer within the aforementioned five-
deemed made when notice to this effect is year period.
released, mailed or sent by the Collector to the
2. Effect of Filing an Amended Return
CIR vs. PHOENIX ASSURANCE Co. LTD. L-19127

Issue: Should the running of the prescriptive period
commence from the filing of the original or amended
return?
Held: From the filing of the amended return.

Considering that the deficiency assessment was based on the
amended return which, as aforestated, is substantially
different from the original return, the period of limitation
of the right to issue the same should be counted from
the filing of the amended income tax return. From
August 30, 1955, when the amended return was filed, to July
24, 1958, when the deficiency assessment was issued, less
than five years elapsed. The right of the Commissioner to
assess the deficiency tax on such amended return has not
prescribed.
To hold otherwise, we would be paving the way for taxpayers

to evade the payment of taxes by simply reporting in their
original return heavy losses and amending the same more
than five years later when the Commissioner of Internal
Revenue has lost his authority to assess the proper tax
thereunder. The object of the Tax Code is to impose taxes for

the needs of the Government, not to enhance tax avoidance to 3. Effect of Filing Wrong Return
its prejudice.
BUTUAN SAWMILL vs. CTA L-20601
Ma’am:
Issue: When does the prescriptive period commence to
run when a taxpayer failed to file a return?
Held: Within 10 years from and after the

discovery of the omission file the return. There
was an omission not fraud so the period is 10 years.
The taxpayer must file a return for the particular tax

required by law in order to avail himself of the benefits
of Section 331 of the Tax Code; otherwise, if he does not
file a return, an assessment may be made within the time
stated in Section 332(a) of the same Code.
4. How Prescriptive Period is Counted

CIR vs. PRIMETOWM PROP. GROUP G.R. No.
162155
Issue: Which between the CC and the AC shall prevail in
computing the legal periods?
Held: Under the Civil Code, a year is equivalent to

365 days whether it be a regular year or a leap year.
Under the Administrative Code of 1987, however, a
year is composed of 12 calendar months. The
Administrative Code of 1987, being the more recent
law, governs the computation of legal periods.
The respondent's petition (filed on April 14, 2000) was SEC. 222. Exceptions as to Period of Limitation of
filed on the last day of the 24th calendar month from the Assessment and Collection of Taxes. -
day respondent filed its final adjusted return. Hence, it
(a) In the case of a false or fraudulent return with intent
was filed within the reglementary period.
to evade tax or of failure to file a return, the tax may be
5. Ordinary Prescription assessed, or a proceeding in court for the collection of
Sec. 203 NIRC

SEC. 203. Period of Limitation Upon Assessment and
Collection.
- Except as provided in Section 222, internal revenue

taxes shall be assessed within three (3) years after the
last day prescribed by law for the filing of the return, and
no proceeding in court without assessment for the
collection of such taxes shall be begun after the
expiration of such period: Provided, That in a case where
a return is filed beyond the period prescribed by law, the
three (3)-year period shall be counted from the day the
return was filed.
For purposes of this Section, a return filed before the last

day prescribed by law for the filing thereof shall be
considered as filed on such last day.
6. Extraordinary Prescription
a. False/Fraudulent Return or no Return

Sec. 222 (a) NIRC

such tax may be filed without assessment, at any time c. Waiver – whatever the period agreed between the
within ten (10) years after the discovery of the falsity, taxpayer and the BIR will be the prescriptive
fraud or omission: Provided, That in a fraud assessment period. There are conditions as to what will qualify
which has become final and executory, the fact of fraud as a valid waiver.
shall be judicially taken cognizance of in the civil or d.
criminal action for the collection thereof.
TALIGAMAN LUMBER CO. vs. CIR 4SCRA 842

Issue: WON the government’s right to collect sales tax
for the years 1948-49 has already prescribed.
Held: No. Since prescription is one of the affirmative

defenses set up by petitioner herein, it was incumbent
upon the latter, if it wanted to avail itself of the benefits
of section 331, to prove that it had submitted said returns
, and that, having failed to do so, the conclusion must be
that no such returns had been filed and that the
Government had ten (10) years within which to make the
corresponding assessments, as it did in this case.
Ma’am: Ordinary period of prescription – 3 years [

Sec. 202]; BIR should make an assessment within this
period
Exception (extraordinary prescription) – 10 years;

to assess the taxpayer
a. Failure to file return

b. Filing of false/ fraudulent return

Internal revenue tax has been assessed within the due to false returns, fraudulent return intended to
period prescribed in paragraph A. BIR can still evade payment of tax, or failure to file returns, the
proceed by destraint or levy or by proceeding in period of ten years from the time of the discovery of
court within 5 years within the assessment of the the falsity, fraud or omission even seems to be
tax.
AZNAR vs. CTA 58 SCRA 519

The right of the CIR to assess deficiency income taxes of
the late Aznar for the years 1946, 1947, and 1948 had
already prescribed at the time the assessment was made
on November 28, 1952; there being a five year limitation
upon assessment and collection from the filing of the
returns. There is proof that they filed several false
returns.
Issue: Whether or not the deceased Aznar filed false or

fraudulent income tax returns and subsequently,
whether the action has not prescribed.
Held: No, prescription. The respondent CTA concluded

that the very "substantial under declarations of
income for six consecutive years eloquently
demonstrate the falsity or fraudulence of the income tax
returns with an intent to evade the payment of tax." The
ordinary period of prescription of 5 years within which to
assess tax liabilities under Sec. 331 of the NIRC should be
applicable to normal circumstances, but whenever the
government is placed at a disadvantage so as to prevent
its lawful agents from proper assessment of tax liabilities
inadequate. There being undoubtedly false tax returns in being a remedial measure, should be liberally
this case, We affirm the conclusion of the respondent construed in order to afford such protection. As a
Court of Tax Appeals that Sec. 332 (a) of the NIRC should corollary, the exceptions to the law on prescription
apply and that the period of ten years within which to should perforce be strictly construed.
assess petitioner's tax liability had not expired at the time
said assessment was made.
CIR vs. AYALA HOTELS CA-GR SP No. 70025

CIR vs. BF GOODRICH PHIL INC. 303 SCRA 546 Ma’am: Ayala hotel failed to report in its income tax
returns the rental income from improvements
The 5 year period has already lapsed but the BIR still
introduced by its lease. Which prescriptive period should
assessed the taxpayer after the taxes were paid.
apply? 10 or 3 years. False, fraudulent or failure – 10
BF sold a parcel of land and they were assessed years
according to the FMV but the property was sold at a
What is the difference between a false and
lesser value. – SC: This fact alone did not constitute
fraudulent return?
a false return which contains wrong information due
to mistake, carelessness or ignorance. False – implies a deviation from the truth whether
intentional or not
Issue: Whether or not petitioner's right to assess herein
deficiency donor's tax has indeed prescribed. Fraudulent – implies intentional or deceitful with the
intent to evade taxes
Held: Yes. Having made its initial assessment in the
manner prescribed, the commissioner could not have How can you prove false or fraudulent? intent?
been authorized to issue, beyond the five-year
prescriptive period, the second and the third What constitute false return to warrant the 10 year
assessments under consideration before us. prescriptive period?
For the purpose of safeguarding taxpayers from any - Statutory construction was applied
unreasonable examination, investigation or assessment, - The qualifying words used were “with intent to
our tax law provides a statute of limitations in the evade tax” would apply to both fraudulent
collection of taxes. Thus, the law on prescription, and false returns since both words were not
separated by a comma. Issue: WON the right of the BIR to assess has
- They should have been written separately if the prescribed.
framers intent to qualify only one word.
Held: Yes. 3 year period shall apply. BIR failed to show
proof of fraud or intent to evade taxes.
No intent to evade taxes. There was an

understatement of income. (this will not constitute
as false or fraudulent filing because it only pertains to 1
taxable year contrary to Aznar in which there was a
consecutive filing of false return - intentional)
The burden of proving fraud is with the BIR.
b. Waiver of Prescriptive Period (3 years)
Ma’am: The law prescribes certain requirements

for waiver to be valid. If it does not comply with the
requirements it is invalid and ineffective to extend the
prescriptive period to assess taxes.
RMO 14-2016
a) The Waiver of the Statute of Limitations under Section
222 (b) and (d) shall be executed before the
expiration of the period to assess or to collect
taxes. The date of execution shall be specifically
indicated in the waiver.

[Before the expiration of the 3 year period; when the law to be collected or day the return was filed (
will you count the 3 year period? 3 year return was filed beyond the prescriptive period)]
period should start on the last day prescribed by
b) The waiver shall be signed by the taxpayer
himself or his duly authorized representative. ln
the case of a corporation, the waiver must be signed by
any of its responsible officials;
CFO signed the waiver – is he authorized?
The taxpayer has the burden to make sure

that the waiver was validly executed or duly
signed by its authorized representative. The
waiver cannot be later on invalidated on the
ground that the representative was not authorized.
c) The expiry date of the period agreed upon to

assess/collect the tax after the regular three-year
period of prescription should be indicated;
* need not specify the taxes to be assessed nor the

amount except in cases of waiver for collection of taxes
- need not be notarized; optional
- the waiver should be accepted by the Commissioner or

his authorized representative
authorized representative – revenue district officer or

supervisor designated in the letter of authority for the
audit
To be valid only two dates that need to appear in date of execution of the waiver by the
the waiver: taxpayer or its authorized representative; and
2. the expiry date of the period the taxpayer
1.
waives the statute of limitations.
CIRvs. NEXTMOBILE GR No. 212825 – a taxpayer

who is in bad faith cannot impugn the validity of a waiver.
This case as an exception to this rule and find the Waivers

valid for the following reasons:
First, the parties in this case are in pari delicto or "in equal
fault.
Second, the Court has repeatedly pronounced that parties

must come to court with clean hands. The respondent should
not be allowed to benefit from the flaws in its own Waivers
and successfully insist on their invalidity in order to evade its
responsibility to pay taxes.
Third, respondent is estopped from questioning the validity

of its Waivers. Respondent executed five Waivers and
delivered them to petitioner, one after the other. It allowed
petitioner to rely on them and did not raise any objection
against their validity until petitioner assessed taxes and
penalties against it.
The BIR's right to assess and collect taxes should not be

jeopardized merely because of the mistakes and lapses of its
officers, especially in cases like this where the taxpayer is
obviously in bad faith.

Sec. 222 (b) NIRC Commissioner and the taxpayer have agreed in
writing to its assessment after such time, the tax may
(b) If before the expiration of the time prescribed
be assessed within the period agreed upon.
in Section 203 for the assessment of the tax, both the
The period so agreed upon may be extended by
subsequent written agreement made before the
REPUBLIC vs. ACEBEDO 22 SCRA 1356

Issue: 1) WON the Government’s right to collect taxes
has already prescribed.
2) WON the waiver was valid.
Held: 1) No. The mere filing of a request for

reconsideration or reinvestigation of an
assessment does not automatically suspend the
running of the prescription period when such
request was not considered or acted upon.
2) Not valid. Sec. 332 of the NIRC provides that the

waiver must be executed prior to the expiration
of the original 5 year limitation period. The waiver
signed by Acebedo was not valid because it was signed
beyond the original 5-year limitation period.
CIR vs. CA 303 SCRA 614

Issue: WON the waiver was valid even when it was unsigned Held: Invalid. Section 319 of the Tax code earlier quoted is
by the BIR Commissioner or any of his agents.. clear and explicit that the waiver of the five-year prescriptive
period must be in writing and signed by both the BIR
Commissioner and the taxpayer.
The "waivers" to be invalid and without any binding

effect on petitioner (Carnation) for the reason that there was
no consent by the respondent (Commissioner of Internal
Revenue)."
PHILIPPINE JOURNALIST INC. vs. CIR 447

SCRA 214
Issue: WON the requirements and procedures laid
down in the RMO are only formal in nature and did not
invalidate the waiver that was signed even if the
requirements were not strictly observed.
Held: The waiver document is incomplete and

defective and thus the three-year prescriptive
period was not tolled or extended and continued to
run until April 17, 1998.
The waiver is an unlimited waiver. It does not contain

a definite expiration date. Under RMO No. 20-90 (
now RMO 14-2016), the phrase indicating the expiry date
of the period agreed upon to assess/collect the tax after
the regular three-year period of prescription should be
filled up.

Secondly, the waiver failed to state the date of Finally, petitioner was not furnished a copy of the
acceptance by the Bureau which under the RMO waiver. It is to be noted that under RMO No. 20-90, the
should likewise be indicated… waiver must be executed in three (3) copies, the second
copy of which is for the taxpayer. It is likewise required
that the fact of receipt by the taxpayer of his/her file
copy be indicated in the original copy.
PFIZER INC. vs. CIR CTA CASE No. 6135

Issue: WON the waiver complied with the requisites
under RMO 20-90. (now RMO 14-2016)
Held: NO. The said RMO even provides that the

procedures stated therein should be strictly followed,
under pain of being administratively dealt with should
noncompliance result to prescription of the right to
assess/collect. The officer who signed the waiver ought to
have known the procedures to follow in executing a
waiver, for it is the only way to extend the BIR's right to
assess/collect.
The waivers did not state the kind of tax and the amount
of the tax due which is required in the prescribed form.
The waivers failed to state the date of the acceptance by
the Bureau of Internal Revenue. The first waiver was still
unsigned. The petitioner was not furnished copies of the
accomplished waivers.

c. Suspension of Prescriptive Period SEC. 223. Suspension of Running of Statute of
Limitations.
Sec. 223 NIRC
- The running of the Statute of Limitations provided in
Sections 203 and 222 on the making of assessment and
the beginning of distraint or levy a proceeding in court
for collection, in respect of any deficiency, shall be
suspended for the period during which the
Commissioner is prohibited from making the
assessment or beginning distraint or levy or a
proceeding in court and for sixty (60) days
thereafter; when the taxpayer requests for a
reinvestigation which is granted by the
Commissioner; when the taxpayer cannot be
located in the address given by him in the return filed
upon which a tax is being assessed or collected: Provided
, that, if the taxpayer informs the Commissioner of any
change in address, the running of the Statute of
Limitations will not be suspended; when the warrant
of distraint or levy is duly served upon the
taxpayer, his authorized representative, or a member of
his household with sufficient discretion, and no property
could be located; and when the taxpayer is out of the
Philippines.
CONTINENTAL MICRONESIA vs. CIR CTA CASE

No. 6191
Issue: WON the prescriptive period had already set in.
Held: Partially.
before the expiration of the five (5) -year period.
The period so agreed upon may be extended by subsequent
B. Period to Collect written agreements made before the expiration of the period
Secs. 203, 222, 223 NIRC – see above for other previously agreed upon.
provisions (e) Provided, however, That nothing in the immediately preceding
and paragraph (a) hereof shall be construed to authorize the
examination and investigation or inquiry into any tax return filed
SEC. 222. Exceptions as to Period of Limitation of Assessment
in accordance with the provisions of any tax amnesty law or decree
and Collection of Taxes. –
.
(a) In the case of a false or fraudulent return with intent to
evade tax or of failure to file a return, the tax may be
assessed, or a proceeding in court for the collection of such tax
may be filed without assessment, at any time within ten (10)
years after the discovery of the falsity, fraud or omission:
Provided, That in a fraud assessment which has become final and
executory, the fact of fraud shall be judicially taken cognizance of
in the civil or criminal action for the collection thereof.
(b) If before the expiration of the time prescribed in Section 203
for the assessment of the tax, both the Commissioner and the
taxpayer have agreed in writing to its assessment after
such time, the tax may be assessed within the period agreed
upon.
The period so agreed upon may be extended by subsequent
written agreement made before the expiration of the period
previously agreed upon.
(c) Any internal revenue tax which has been assessed
within the period of limitation as prescribed in paragraph (a)
hereof may be collected by distraint or levy or by a proceeding in
court within five (5) years following the assessment of the tax.
(d) Any internal revenue tax, which has been assessed
within the period agreed upon as provided in paragraph (b)
hereinabove, may be collected by distraint or levy or by a
proceeding in court within the period agreed upon in writing

REPUBLIC vs. ABLAZA 108 Phil 1105 therefore, the said letter may not be interpreted to
authorize or justify the continuance of the suspension of
Issue: The question in the case at bar boils down to the
the period of limitations.
interpretation of letter.
If said letter be interpreted as a request for further PALANCA vs. CIR 4 SCRA 263
investigation or a new investigation, different and
distinct from the investigation demanded or prayed for Issue:
in Ablaza’s first letter, Exhibit "L", then the period of
Held:
prescription would continue to be suspended thereby.
But if the letter in question does not ask for another Under the law, it is not essential that the warrant of
investigation, the result would be just the opposite. distraint and levy be fully executed in order that it
may have the effect of suspending the running of the
Held:
statute of limitation upon collection of the tax. It is
In our opinion the letter in question, Exhibit "P", does enough that the proceeding be validly begun or
not ask for another investigation. Its first commenced and that its execution has not been
paragraph quoted above shows that the reinvestigation suspended by reason of the voluntary desistance
then being conducted was by virtue of its request of of the Respondent.
October 16, 1951. All that the letter asks is that the
The warrant was not actually executed or carried
taxpayer be furnished a copy of the computation. The
out with the seizure and sale of any property of the
request may be explained in this manner: As the
deceased, not because of any voluntary desistance on the
reinvestigation was allowed on October 1, 1951 and on
part of respondent, but because of the many
October 16, 1951, the taxpayer supposed or expected that
requests for postponement, reinvestigation,
at that time, March, 1954 the reinvestigation was about
revaluation, or other matters which had the effect
to be finished and he wanted a copy of the re-assessment
of delaying or postponing the execution of said warrant.
in order to be prepared to admit or contest it.
Indeed, if by acceding to the request for postponement
Nowhere does the letter imply a demand or
of a taxpayer the period of prescription would be allowed
request for a different or new and distinct
to run even if there is no voluntary desistance on the part
reinvestigation from that already requested and,
of the tax collector, we would not only countenance the
commission of an injustice but would place the collection Issue: Did the pendency of the taxpayer's appeal in the
of the tax at the mercy or caprice of the taxpayer to the Court of Tax Appeals and in the Supreme Court have the
prejudice of the Government. Such a theory certainly effect of legally preventing the Commissioner of Internal
cannot be entertained. Revenue from instituting an action in the Court of First
Instance for the collection of the tax?
REPUBLIC vs. KER AND Co. Ltd. 18 SCRA 208 Held: Yes.
From March 1, 1956 when Ker & Co., Ltd. filed a
petition for review in the Court of Tax Appeals
contesting the legality of the assessments in question,
until the termination of its appeal in the Supreme
Court, the Commissioner of Internal Revenue was
prevented from filing an ordinary action in the
Court of First Instance to collect the tax. Besides,
to do so would be to violate the judicial policy of avoiding
multiplicity of suits and the rule on lis pendens.
The filing of a petition for review had an effect of

suspending the running of the prescriptive period. The
running of the prescriptive period to collect the
tax shall be suspended for the period during
which the Commissioner of Internal Revenue is
prohibited from beginning a distraint and levy or
instituting a proceeding in court, and for sixty
days thereafter.
REPUBLIC vs. HIZON 320 SCRA 574
Issue: WON the right to collect has already prescribed.

Held: Yes. Sec. 229 of the Code mandates that a assessment, otherwise the assessment becomes
request for reconsideration must be made within 30 days final, unappealable and, therefore, demandable.
from the taxpayers receipt of the tax deficiency
CIR vs. WYETH SUACO LAB. And CTA 202

SCRA 125
It was not clear in WYETH’s letter whether they were

requesting for reconsideration or a re-evaluation.
Issue: WON wyeth did not seek reinvestigation or

reconsideration.
Held: Yes they did. The letters are to be treated as

letters of reinvestigation and reconsideration. By
virtue of these letters, the Bureau of Internal Revenue
ordered its Manufacturing Audit Division to review the
assessment made. Furthermore, private respondent's
claim that it did not seek reinvestigation or
reconsideration of the assessments is belied by the
subsequent correspondence or letters written by its
officers, as shown above.
These letters of Wyeth Suaco interrupted the

running of the five-year prescriptive period to
collect the deficiency taxes. The Bureau of Internal
Revenue, after having reviewed the record of Wyeth
Suaco, in accordance with its request for reinvestigation,
rendered a final assessment. This final assessment issue
by then Acting Commissioner Ruben B. Ancheta was
date December 10, 1979 and received by private and P61,155.21 as deficiency sales tax. It was only upon
respondent on January 2, 1980, fixed its tax liability at P1 receipt by Wyeth Suaco of this final assessment that the
,973,112.86 as deficiency withholding tax at source five-year prescriptive period started to run again.
BPI vs. CIR GR No. 139736

Issue: Did the right to collect taxes already prescribed?
Held: Yes.
(a) Request for reconsideration. – refers to a plea
for a re-evaluation of an assessment on the basis of
existing records without need of additional evidence. It
may involve both a question of fact or of law or both.
(b) Request for reinvestigation. – refers to a plea
for re-evaluation of an assessment on the basis of newly
-discovered or additional evidence that a taxpayer
intends to present in the reinvestigation. It may also
involve a question of fact or law or both.
It bears to emphasize that under Section 224 of the Tax

Code of 1977, as amended, the running of the
prescriptive period for collection of taxes can only be
suspended by a request for reinvestigation, not a
request for reconsideration. Undoubtedly, a
reinvestigation, which entails the reception and
evaluation of additional evidence, will take more time

than a reconsideration of a tax assessment, which statute of limitations on collection of the assessed tax,
will be limited to the evidence already at hand; this while the latter cannot.
justifies why the former can suspend the running of the
CIR vs. HAMBRECHT AND QUIST CTA EB No. 73

CTA CASE No. 6362
Issue: What is the effect of filing for request
reinvestigation?
Held: It will not automatically suspend the

running of the prescriptive period. The
commissioner must grant the request first.
If denied, it will not suspend the running of the period to

collect.
C. Period to File Protest
Sec. 228 NIRC

SEC. 228. Protesting of Assessment.
- When the Commissioner or his duly authorized
representative finds that proper taxes should be assessed
, he shall first notify the taxpayer of his findings:
Provided, however, That a pre-assessment notice shall
not be required in the following cases:
(a) When the finding for any deficiency tax is the result
of mathematical error in the computation of the tax as
appearing on the face of the return; or(b) When a withholding agent; or(c) When a taxpayer who opted to
discrepancy has been determined between the tax claim a refund or tax credit of excess creditable
withheld and the amount actually remitted by the withholding tax for a taxable period was determined to
have carried over and automatically applied the same
amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable
year; or(d) When the excise tax due on exciseable articles
has not been paid; or(e) When the article locally
purchased or imported by an exempt person, such as,
but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and

the facts on which the assessment is made; otherwise,
the assessment shall be void.
Within a period to be prescribed by implementing rules

and regulations, the taxpayer shall be required to
respond to said notice.
If the taxpayer fails to respond, the Commissioner or his

duly authorized representative shall issue an assessment
based on his findings.
Such assessment may be protested administratively by

filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in
such form and manner as may be prescribed by
implementing rules and regulations.

Within sixty (60) days from filing of the protest, all If the protest is denied in whole or in part, or is not acted
relevant supporting documents shall have been upon within one hundred eighty (180) days from
submitted; otherwise, the assessment shall become final. submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the
Court of Tax Appeals within thirty (30) days from receipt
of the said decision, or from the lapse of one hundred
eighty (180)-day period; otherwise, the decision shall
become final, executory and demandable.
D. Period to Appeal Decision on Disputed

Assessment to CTA
See IIID above
E. Period to File Refund or Tax Credit Claim
Sec. 204 (c) NIRC
(C) Credit or refund taxes erroneously or illegally received or

penalties imposed without authority, refund the value of
internal revenue stamps when they are returned in good
condition by the purchaser, and, in his discretion, redeem or
change unused stamps that have been rendered unfit for use
and refund their value upon proof of destruction.
No credit or refund of taxes or penalties shall be allowed

unless the taxpayer files in writing with the
Commissioner a claim for credit or refund within
two (2) years after the payment of the tax or penalty:
Provided, however, That a return filed showing an
overpayment shall be considered as a written claim for credit A Tax Credit Certificate validly issued under the provisions of
or refund. this Code may be applied against any internal revenue tax,
excluding withholding taxes, for which the taxpayer is
directly liable.
Any request for conversion into refund of unutilized tax

credits may be allowed, subject to the provisions of Section
230 of this Code: Provided, That the original copy of the Tax
Credit Certificate showing a creditable balance is surrendered
to the appropriate revenue officer for verification and
cancellation: Provided, further, That in no case shall a tax
refund be given resulting from availment of incentives
granted pursuant to special laws for which no actual payment
was made.
The Commissioner shall submit to the Chairmen of the

Committee on Ways and Means of both the Senate and House
of Representatives, every six (6) months, a report on the
exercise of his powers under this Section, stating therein the
following facts and information, among others: names and
addresses of taxpayers whose cases have been the subject of
abatement or compromise; amount involved; amount
compromised or abated; and reasons for the exercise of
power: Provided, That the said report shall be presented to
the Oversight Committee in Congress that shall be constituted
to determine that said powers are reasonably exercised and
that the government is not unduly deprived of revenues.

Sec. 229 NIRC Held: The taxpayer's failure to comply with the
requirement regarding the institution of the action or
SEC. 229. Recovery of Tax Erroneously or Illegally
proceeding in court within 2 years after the payment of
Collected.
the taxes bars him from the recovery of the same,
- no suit or proceeding shall be maintained in any court for
the recovery of any national internal revenue tax hereafter
alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected
without authority, of any sum alleged to have been
excessively or in any manner wrongfully collected without
authority, or of any sum alleged to have been excessively or in
any manner wrongfully collected, until a claim for refund or
credit has been duly filed with the Commissioner; but such
suit or proceeding may be maintained, whether or not such
tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed

after the expiration of two (2) years from the date of
payment of the tax or penalty regardless of any
supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax,
where on the face of the return upon which payment was
made, such payment appears clearly to have been erroneously
paid.
COLLECTOR vs. SWEENEY 109 Phil. 59
Issue:
irrespective of whether a claim for the refund of such
taxes filed with the Collector or Internal Revenue is still
ACCRA INVESTMENT CORP. vs. CA GR No. 96322
pending action of the latter.
Issue: When does the 2 year period commence?
GIBBS vs. CIR 107 Phil. 232 Held: From the date of the payment of the tax or
penalty.
Issue: WON
There is the need to file a return first before a claim for
Held: refund can prosper inasmuch as the respondent
Commissioner by his own rules and regulations mandates
Authority of the deputy collector of internal revenue to
that the corporate taxpayer opting to ask for a refund
deal on refund case. — Law vest exclusively in the
must show in its final adjustment return the income it
Collector of Internal Revenue the authority to
received from all sources and the amount of withholding
compromise, or to credit or refund taxes
taxes remitted by its withholding agents to the Bureau of
erroneously or illegally received, that is, when the
Internal Revenue.
action, in a manner of speaking, is against the
Government. The purpose is to assure that no improper The rationale in computing the two-year prescriptive
compromise, credit, or refund is made to the prejudice of period with respect to the petitioner corporation's claim for
the Government.
refund from the time it filed its final adjustment
But where the action to be taken is to deny the return is the fact that it was only then that ACCRAIN could
request for refund and demand the payment of ascertain whether it made profits or incurred losses in its
the deficiency tax from the taxpayer, the same is well business operations.
within the authority of the Deputy Collector and
is final and binding unless revoked by the Collector.
CIR vs. TMX SALE Inc. GR No. 83736
CIR vs. CA 301 SCRA 435 Issue:

Held:
Sec. 281 NIRC
F. Period to Prosecute Violations of any Provisions SEC. 281. Prescription for Violations of any Provision of
of NRIC this Code.
- All violations of any provision of this Code shall

prescribe after Five (5) years.
Prescription shall begin to run from the day of the

commission of the violation of the law, and if the same
be not known at the time, from the discovery thereof and
the institution of judicial proceedings for its investigation and
punishment.
The prescription shall be interrupted when proceedings are

instituted against the guilty persons and shall begin to run
again if the proceedings are dismissed for reasons not
constituting jeopardy.
The term of prescription shall not run when the offender is

absent from the Philippines.
Ma’am: What if you already filed a case for the violation of

the NIRC. Will the prescription be interrupted?
Yes. It will commenced again if the accused is found not

guilty for reasons not constitution double jeopardy.
Filed a case but offender is not in the Philippine?
The term of prescription shall not run when the offender is

absent from the Philippines.
VIII. APPEAL OF RULINGS TO DOF, NON-
RETROACTIVITY
LIM vs. CA 190 SCRA 616
A. Power of Review DOF over Rulings
Issue: WON the 5 years be rekoned from the
Held: The final notice and demand for payment of the Sec. 4 (1) NIRC [Distinguish from appeal of “other
deficiency taxes was served on petitioners on July 3, matters” to CTA under 2nd paragraph]
1968, it was only then that the cause of action on
the part of the BIR accrued. This is so because SEC. 4. Power of the Commissioner to Interpret
prior to the receipt of the letter-assessment, no violation Tax Laws and to Decide Tax Cases –
has yet been committed by the taxpayers. The offense
The power to interpret the provisions of this Code and
was committed only after receipt was coupled
other tax laws shall be under the exclusive and original
with the wilful refusal to pay the taxes due within
the alloted period. The two criminal informations, jurisdiction of the Commissioner, subject to review by
having been filed on June 23, 1970, are well-within the the Secretary of Finance.
five-year prescriptive period and are not time-barred.
The crime of filing false returns can be considered " internal revenue taxes, fees or other charges, penalties
discovered" only after the manner of commission, and imposed in relation thereto, or other matters arising
the nature and extent of the fraud have been definitely
under this Code or other laws or portions thereof
ascertained. It was only on October 10, 1967 when the
administered by the Bureau of Internal Revenue is
BIR rendered its final decision holding that there
was no ground for the reversal of the assessment and vested in the Commissioner, subject to the exclusive
therefore required the petitioners to pay P1,237,190.55 in appellate jurisdiction of the Court of Tax Appeals.
deficiency taxes that the tax infractions were discovered.
Ma’am: When do you go to the DOF to appeal an
unfavourable ruling to the tax payer?

- Appeal to the DOF after unfavourable ruling by the SEC. 4. Power of the Commissioner to Interpret Tax
Commissioner Laws and to Decide Tax Cases
What is the basis?
CIR vs. LEAL 392 SCRA 9
The counting of the period commences at the filing of the

final assessment return.
B. Non-retroactivity of Revocation of Rulings

or Regulations
Sec. 246 NIRC
SEC. 246. Non-Retroactivity of Rulings.
- Any revocation, modification or reversal of any

of the rules and regulations promulgated in
accordance with the preceding Sections or any of the
rulings or circulars promulgated by the Commissioner
shall not be given retroactive application if the
revocation, modification or reversal will be prejudicial
to the taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits

material facts from his return or any document required
of him by the Bureau of Internal Revenue;(b) Where the

facts subsequently gathered by the Bureau of Internal which is not in harmony with Sec. 230 of 1977 NIRC. for
Revenue are materially different from the facts on which being contrary to the express provision of a statute.
the ruling is based; or(c) Where the taxpayer acted in Hence, his interpretation could not be given
bad faith. weight for to do so would, in effect, amend the
statute.
CIR vs. BURROUGHS Ltd. GR No. 66653
The prejudice that would result to private

respondent Burroughs Limited by a retroactive
application of Memorandum Circular No. 8-82 is beyond
question for it would be deprived of the substantial
amount of P172,058.90. And, insofar as the enumerated
exceptions are concerned, admittedly, Burroughs
Limited does not fall under any of them.
The general rule should be invoked since the respondent

does not fall under the exceptions.
PBCOM vs. CIR 302 SCRA 241
The State cannot be put in estoppel by the

mistakes or errors of its officials or agents. As
pointed out by the respondent courts, the nullification of
RMC No. 7-85 issued by the Acting Commissioner of
Internal Revenue is an administrative interpretation

Moreover, the non-retroactivity of rulings by the local autonomy. Such taxes, fees, and charges shall accrue
Commissioner of Internal Revenue is not applicable in exclusively to the local governments.
this case because the nullity of RMC No. 7-85 was Sec. 129, Local Government Code of 1991 (“LGC”)
declared by respondent courts and not by the Section 129. Power to Create Sources of Revenue. -
Each local government unit shall exercise its power to create
Commissioner of Internal Revenue. Lastly, it must be
its own sources of revenue and to levy taxes, fees, and charges
noted that, as repeatedly held by this Court, a claim for subject to the provisions herein, consistent with the basic
refund is in the nature of a claim for exemption and policy of local autonomy. Such taxes, fees, and charges shall
should be construed in strictissimi juris against the accrue exclusively to the local government units.
taxpayer. Case: Mactan Cebu International Airport Authority,
vs. Hon. Ferdinand J. Marcos G.R. No. 120082 September
11, 1996
Is MCIAA exempt from realty taxation?
ABS-CBN vs. CTA 108 SCRA 142
No, MCIAA is not exempt from realty tax by the City of
Issue: Cebu. First, its tax exemption under its charter has
already been withdrawn. Second, while it is true that
Held:
LGUs cannot levy tax on property of the Republic of the
Philippines or the National Government (outside Metro
Manila), the beneficial use of property should not be
LOCAL GOVERNMENT CODE
given to a taxable person. Here, MCIAA is already the
owner of the parcels of land in question. Hence, even the
I. GENERAL PRINCIPLES exemption under the LGC cannot apply.
A. Local Autonomy
Taxation Maybe Exercised by the Local Legislative
What is the basis of the Government to impose taxes?
Bodies. — The power to tax is primarily vested in the
Section 5, Article X of the Constitution. Congress; however, in our jurisdictions, it may be
Section 5. Each local government unit shall have the power exercised by local legislative bodies, no longer merely
to create its own sources of revenues and to levy taxes, fees by virtue of a valid delegation as before, but pursuant to
and charges subject to such guidelines and limitations as the
direct authority conferred by Section 5, Article X of
Congress may provide, consistent with the basic policy of
the Constitution. Under the latter the exercise of the power Manila International Airport Authority, vs. Court Of
may be subject to such guidelines and limitations as the Appeals, City Of Parañaque, G.R. No. 155650 July
Congress may provide which, however, must be consistent 20, 2006 (SC En Banc)
with the basic policy of local autonomy. The LGC, enacted
pursuant to Section 3, Article X of the Constitution, provides
for the exercise by local government units of their power to
tax, the scope thereof or its limitations, and the exemptions
from taxation. Section 133 of the LGC prescribes the
common limitations on the taxing powers of local
government units.
Exception From Payment Of Tax Maybe Withdrawn

At The Pleasure Of The Taxing Authority; Exception.
— There can be no question that under Section 14 of R.A. No.
6958 the petitioner is exempt from the payment of realty
taxes imposed by the National Government or any of its
political subdivisions, agencies, and instrumentalities.
Nevertheless, since taxation is the rule and exemption
therefrom the exception, the exemption may thus be
withdrawn at the pleasure of the taxing authority.
The only EXCEPTION TO THIS RULE is where the
exemption was granted to private parties based on
material consideration of a mutual nature, which then
becomes contractual and is thus covered by the non-
impairment claim of the Constitution.

Issue: WON the Airport Lands and Buildings of MIAA are MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY
exempt from real estate tax under existing laws. (MCIAA), vs. CITY OF LAPU-LAPU G.R. No. 181756
Ruling: June 15, 2015
We rule that MIAA's Airport Lands and Buildings are exempt Ma’am’s Note: This reversed the 1999 decision. 2006 ruling
from real estate tax imposed by local governments. should be followed.
First, MIAA is not a government-owned or controlled MCIAA is vested with corporate powers but is a non-stock
corporation (not exempt from real estate tax) but an corporation which is a necessary condition for a government
instrumentality of the National Government and thus exempt agency or instrumentality to be considered as a GOCC. Unlike
from local taxation. Second, the real properties of MIAA are GOCC’s the government has no reason to tax national
owned by the Republic of the Philippines and thus... exempt instrumentalities that render essential public services.
from real estate tax.
Under Section 2(10) and (13) of the Introductory
There must be express language in the law Provisions of the Administrative Code, MIAA is a
empowering local governments to tax national government instrumentality and not a government-
government instrumentalities (render essential public owned or controlled corporation. Under Section 133(o) of
services). Any doubt whether such power exists is resolved the Local Government Code, MIAA as a government
against local... governments. instrumentality is not a taxable person because it is not
subject to "[t]axes, fees or charges of any kind" by local
The rule is that a tax is never presumed and there governments. The only exception is when MIAA leases
must be clear language in the law imposing the tax. its real property to a "taxable person" as provided in
Another rule is that a tax exemption is strictly construed Section 234(a) of the Local Government Code, in which case
against the taxpayer claiming the exemption. However, when the specific real property leased becomes subject to
Congress grants an exemption to a national government real estate tax. Thus, only portions of the Airport
instrumentality from local taxation, such exemption is Lands and Buildings leased to taxable persons like
construed liberally in favor of the national... government private parties are subject to real estate tax by the City
instrumentality. of Parañaque.
Sec. 133 LGC unless otherwise stated in the Code the LGU As properties of public dominion owned by the Republic,
cannot tax a national government instrumentalities. there is no doubt whatsoever that the Airport Lands and
Buildings are expressly exempt from real estate tax under
Section 234(a) of the Local Government Code.
The Local Government Code specifically provides for the
withdrawal of such exemptions, privileges," and that "upon
Case: Manila Electric Co. v. Prov. of Laguna, G.R. No. the effectivity of the Local Government Code all
131359, May 5, 1999 exemptions except only as provided therein can no longer
be invoked by MERALCO to disclaim liability for the
Issue: WON the imposition of the franchise tax violates the
local tax."
non-impairment clause of the Constitution.
Ruling: Article XII, Section 11, of the 1987

Constitution, is explicit that no franchise for the B. Fundamental Principles
operation of a public utility shall be granted except
under the condition that such privilege shall be subject to
amendment, alteration or repeal by Congress as and Sec. 130, LGC
when the common good so requires.
Section 130. Fundamental Principles. - The following
While the Court has, not too infrequently, referred to tax fundamental principles shall govern the exercise of the taxing
exemptions contained in special franchises as being in and other revenue-raising powers of local government units:
the nature of contracts and a part of the inducement for
(a) Taxation shall be uniform in each local government unit;
carrying on the franchise, these exemptions, nevertheless,
are far from being strictly contractual in nature. (b) Taxes, fees, charges and other impositions shall:
Contractual tax exemptions, in the real sense of the term
and where the non-impairment clause of the Constitution can (1) be equitable and based as far as practicable on the
rightly be invoked, are those agreed to by the taxing taxpayer's ability to pay;
authority in contracts, such as those contained in
(2) be levied and collected only for public purposes;
government bonds or debentures, lawfully entered into
by them under enabling laws in which the government, (3) not be unjust, excessive, oppressive, or
acting in its private capacity, sheds its cloak of authority and confiscatory;
waives its governmental immunity.
(4) not be contrary to law, public policy, national
These contractual tax exemptions, however, are not to be economic policy, or in the restraint of trade;
confused with tax exemptions granted under franchises. A
franchise partakes the nature of a grant which is beyond the (c) The collection of local taxes, fees, charges and other
purview of the non-impairment clause of the Constitution. impositions shall in no case be let to any private person;

(d) The revenue collected pursuant to the provisions of this 1959, when the Local Autonomy Act was enacted, the sphere
Code shall inure solely to the benefit of, and be subject of autonomy of a chartered city in the enactment of taxing
to the disposition by, the local government unit measures has been considerably enlarged. The grant of the
power to tax to chartered cities under Section 2 of Local
levying the tax, fee, charge or other imposition unless
Autonomy Act is sufficiently plenary to cover "everything,
otherwise specifically provided herein; and, excepting those which are mentioned therein, subject only to
the LIMITATION that the tax so levied is for public
(e) Each local government unit shall, as far as practicable,
purposes, just and uniform.
evolve a progressive system of taxation.
Constitutional Law; Municipal Corporations; Taxation, Power

Of; Local Autonomy Act Construed. — In the absence of
Case: Pepsi Cola Bottling Co. of the Phils., Inc. v. Mun. a clear and specific showing that there was a transgression of
of Tanauan, L-31156, Feb. 27, 1976 a constitutional provision or repugnancy to a controlling
statute, a generalized objection thereto cannot be
sustained. Considering the indubitable policy expressly set
forth in the Local Autonomy Act, the invocation of such a
Under the New Constitution, local governments are granted
talismanic formula (lol!) as "restraint of trade" without more
no longer suffices, assuming it ever did, to nullify a taxing
the autonomous authority to create their own sources of
ordinance, otherwise valid.
revenue and to levy taxes.
Section 5, Article X of the Constitution provides, "Each local

government unit shall have the power to create its sources of Asiatic Integrated Corporation v. Alikpala, 72 SCRA
revenue and to levy taxes, subject to such limitations as may 285
be provided by law." Management and operation of public markets: RA 6039
Thus, municipalities may be permitted to tax subjects which allows the local government to formulate policies to lease
for reasons of public policy the State has not deemed wise to public markets to generate revenue.
tax for more general purposes.
WON the ordinance created for the management of public
Case: Ormoc Sugar Co., Inc. v. Mun. Board of Ormoc market is valid: Yes, because it is not contrary to law,
City, L-24322, July 21, 1967 public policy, national economic policy, or in the
restraint of trade.
Municipal Corporations; Taxation, Power Of; Local
Autonomy Act Construed. — From and after June 19,

WON the contract granted to Asiatic left the collection of before the effectivity of the LGC which makes its provisions
taxes to private persons in violation of the fundamental valid even though a latter law prohibits the same. Law shall
principles of local taxation.: No. The contract was executed not be applied retroactively unless it expressly provides for a
retroactive application.
WON the contract with Asiatic was disadvantageous to the
city: No. Municipal corporations have both governmental and
corporate or business functions, and to the latter belongs the
construction and maintenance of markets. Section 2318 of the
Revised Administrative Code expressly authorizes that
markets be "let for a stipulated return to private parties.
(In this connection, We reiterate it would indeed seem
immaterial, from the legal point of view, that as a
consequence of leasing a market, the government employees
and workers therein are retained or laid-off. And so, that the
contract at issue provides specifically for their continuation,
including their respective civil service status and their
existing conditions of work subject to no control at all by
Asiatic, including as to their salaries and benefits, which are
reserved for determination by the city authorities, is certainly
not prejudicial to said employees, much less a valid ground
for annulling the same.- just to provide context to the last
issue.)
Matalin Coconut Co. v. Mun. Council of Malabang,

143 SCRA 404
Issue: WON Ordinance No. 45-66 enacted by respondent
Municipal Council of Malabang, Lanao del Sur, is valid.
Matalin contends that it is unreasonable and confiscatory.
Held: Invalid. The Court has construed the grant of power to
tax as sufficiently plenary to cover "everything, excepting
those which are mentioned" therein, subject only to the
limitation that the tax so levied is for public purposes,
just and uniform. The so-called "police inspection fee"
levied by the ordinance is "unjust and unreasonable. The
policemen of said municipality are not competent to (e) Taxes, fees, and charges and other impositions upon goods
determine if the cassava flour starch are fit for human carried into or out of, or passing through, the territorial
consumption. The inspection fee of P0.30 per bag, imposed jurisdictions of local government units in the guise of charges
by the ordinance in question is excessive and
for wharfage, tolls for bridges or otherwise, or other taxes,
confiscatory. It has been shown by the petitioner, Matalin
Coconut Company, Inc., that it is merely realizing a marginal fees, or charges in any form whatsoever upon such goods or
average profit of P0.40, per bag, of cassava flour starch merchandise;
shipped.
(f) Taxes, fees or charges on agricultural and aquatic
products when sold by marginal farmers or fishermen;
C. Common Limitations on Taxing Powers of LGUs
(g) Taxes on business enterprises certified to by the Board of
Ma’am: Will not ask the enumeration…
Investments as pioneer or non-pioneer for a period of six (6)
and four (4) years, respectively from the date of registration;
Sec. 133, LGC
Section 133. Common Limitations on the Taxing Powers (h) Excise taxes on articles enumerated under the
of Local Government Units. - Unless otherwise provided national Internal Revenue Code, as amended, and taxes,
herein, the exercise of the taxing powers of provinces, fees or charges on petroleum products;
cities, municipalities, and barangays shall not extend to (i) Percentage or value-added tax (VAT) on sales, barters or
the levy of the following: exchanges or similar transactions on goods or services except
(a) Income tax, except when levied on banks and other as otherwise provided herein;
financial institutions; (j) Taxes on the gross receipts of transportation contractors
(b) Documentary stamp tax; and persons engaged in the transportation of passengers or
freight by hire and common carriers by air, land or water,
(c) Taxes on estates, inheritance, gifts, legacies and other except as provided in this Code;
acquisitions mortis causa, except as otherwise provided
herein; (k) Taxes on premiums paid by way or reinsurance or
retrocession;
(d) Customs duties, registration fees of vessel and
wharfage on wharves, tonnage dues, and all other kinds of (l) Taxes, fees or charges for the registration of motor vehicles
customs fees, charges and dues except wharfage on wharves and for the issuance of all kinds of licenses or permits for the
constructed and maintained by the local government unit driving thereof, except tricycles;
concerned;
(m) Taxes, fees, or other charges on Philippine products (2) Indirect Duplicate Taxation – not legally objectionable. The
absence of one or more of the abovementioned elements makes the double
actually exported, except as otherwise provided herein;
taxation indirect.
(3) Domestic- this arises when the taxes are imposed by the local or
(n) Taxes, fees, or charges, on Countryside and Barangay national government (within the same state)
Business Enterprises and cooperatives duly registered under (4) International- refers to the imposition of comparable taxes in two
or more states on the same taxpayer in respect of the same subject matter
R.A. No. 6810 and Republic Act Numbered Sixty-nine
and for identical periods.
hundred thirty-eight (R.A. No. 6938) otherwise known as the
"Cooperative Code of the Philippines" respectively; and
Case: Prov. of Bulacan v. CA, G.R. No. 126232, Nov. 27,
(o) Taxes, fees or charges of any kind on the National 1998
Government, its agencies and instrumentalities, and local
government units.
Ma’am: Under the NIRC all quarry products regardless of
Ma’am: Yes. Double taxation is allowed as long imposed by the source is subject to excise tax. The LGC expressly provides
that it LGUs can impose taxes on quarry products extracted
different taxing authority. If the basis of taxation is the same
from public lands but not on private lands.
is it still illegal?
IS DOUBLE TAXATION PROHIBITED IN THE PHILIPPINES? Issues: Can the LGU impose taxes on certain transactions
No. There is no constitutional prohibition against double taxation. It is
not favored but permissible. (Pepsi Cola Bottling Co. v. City of Butuan, which the National government already has imposed a tax on
1968). ?
KINDS OF DOUBLE TAXATION Held: NIRC levies a tax on all quarry resources, regardless of
(1) Direct Duplicate Taxation / Obnoxious – double taxation in the origin, whether extracted from public or private land. Thus, a
objectionable or prohibited sense. This constitutes a violation of province may not ordinarily impose taxes on stones,
substantive due process.
sand, gravel, earth and other quarry resources, as the same
Elements: are already taxed under the NIRC.
a. the same property or subject matter is taxed twice when it should be
taxed only once. The province can, however, impose a tax on stones, sand,
b. both taxes are levied for the same purpose gravel, earth and other quarry resources extracted from
c. imposed by the same taxing authority
d. within the same jurisdiction public land because it is expressly empowered to do so
e. during the same taxing period under the Local Government Code. As to stones, sand,
f. covering the same kind or character of tax. (Villanueva vs. City of
gravel, earth and other quarry resources extracted from
Iloilo)
private land, however, it may not do so, because of the

limitation provided by Section 133 (h) of the Code in unilaterally withdraw such an expression of a policy thru the
relation to Section 151 of the National Internal Revenue Code. enactment of a tax."
The tax imposed by the Province of Bulacan is an

excise tax, being a tax upon the performance, carrying on,
San Miguel Corp. v. Mun. Council of Mandaue, L-
30761, July 11, 1973
or exercise of an activity.
In other words, the municipal corporation should not
Section 133 of the Local Government Code provides: “ the transcend the limitations imposed by the statute on the basis
taxing powers of provinces, cities, municipalities, and of which the power to tax is sought to be exercised. Thus, We
barangays shall not extend to the levy of… held in the Marinduque case, that an ordinance providing
for a graduated tax based on either "gross output or
(h) Excise taxes on articles enumerated under the
sales" violates the prohibition on municipalities against
national Internal Revenue Code, as amended, and taxes,
imposing any percentage tax on sales, or other taxes in any
fees or charges on petroleum products;”
form based thereon, as the only standard provided for
A province may not, therefore, levy excise taxes on measuring the gross output is its peso value, as determined
articles already taxed by the National Internal from true copies of receipts and/or invoices that the taxpayer
Revenue Code. Unfortunately for petitioners, the Sec. 151 is required to submit to the municipal treasurer.
of the NIRC already imposes excise tax on quarry
resources which includes any common stone or other There is a set ratio between the amount of the tax and the
common mineral substances. volume of sales. It is therefore evident that the challenged
ordinance was a transparent attempt on the part of the
municipality to impose a tax based on sales.
Case: Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. We therefore hold that the questioned ordinance imposed
90776 June 3, 1991 tax based on sales and therefore beyond the authority
of the municipality to enact.
Issue: WON they are still liable to pay business tax and
permit when petroleum products are already taxed by the
NIRC. II. SCOPE OF TAXING POWERS OF LGUS
Held: Yes. Taxes on manufactured articles are distinct from
taxes on business. Mayor cannot waive the payment on
license "since the power to tax includes the power to exempt
thereof which is essentially a legislative prerogative, it follows A. Province
that a municipal mayor who is an executive officer may not Secs. 135-141, LGC
transferring ownership or title to any real property within
Ma’am’s Note: thirty (30) days from the date of notarization.
Scope: Includes local taxation such as fees, deficiencies and

real property taxation.
Nature of this power:
1. Not inherent; it is based on the direct grant of power to
the LGU by the Constitution.
2. It is limited, not absolute. It can be limited by an act
from Congress through an issuance of guidelines, etc.
3. It is legislative. It can only be exercised by the local
legislature.
4. Territorial. It can only be exercised within the
territorial jurisdiction of the LGU.
Section 135. Tax on Transfer of Real Property Ownership.
(a) The province may impose a tax on the sale , donation,
barter, or on any other mode of transferring ownership or
title of real property at the rate of not more than fifty
percent (50%) of the one percent (1%) of the total
consideration involved in the acquisition of the property or
of the fair market value in case the monetary consideration
involved in the transfer is not substantial, whichever is
higher. The sale, transfer or other disposition of real
property pursuant to R.A. No. 6657 shall be exempt from
this tax.
(b) For this purpose, the Register of Deeds of the province
concerned shall, before registering any deed, require the
presentation of the evidence of payment of this tax. The
provincial assessor shall likewise make the same
requirement before cancelling an old tax declaration and
issuing a new one in place thereof, Notaries public shall
furnish the provincial treasurer with a copy of any deed

It shall be the duty of the seller, donor, transferor, executor or Section 138. Tax on Sand, Gravel and Other Quarry
administrator to pay the tax herein imposed within sixty (60) days Resources. - The province may levy and collect not more than ten
from the date of the execution of the deed or from the date of the percent (10%) of fair market value in the locality per cubic meter of
decedent's death. ordinary stones, sand, gravel, earth, and other quarry resources, as
Section 136. Tax on Business of Printing and Publication. - The defined under the National Internal Revenue Code, as amended,
province may impose a tax on the business of persons engaged in extracted from public lands or from the beds of seas, lakes, rivers,
the printing and/or publication of books, cards, posters, leaflets, streams, creeks, and other public waters within its territorial
handbills, certificates, receipts, pamphlets, and others of similar jurisdiction.
nature, at a rate not exceeding fifty percent (50%) of one percent ( The permit to extract sand, gravel and other quarry resources shall
1%) of the gross annual receipts for the preceding calendar year. be issued exclusively by the provincial governor, pursuant to the
In the case of a newly started business, the tax shall not exceed one- ordinance of the sangguniang panlalawigan.
twentieth (1/20) of one percent (1%) of the capital investment. In The proceeds of the tax on sand, gravel and other quarry resources
the succeeding calendar year, regardless of when the business shall be distributed as follows:
started to operate, the tax shall be based on the gross receipts for (1) Province - Thirty percent (30%);
the preceding calendar year, or any fraction thereof, as provided
herein. (2) Component City or Municipality where the sand, gravel,
and other quarry resources are extracted - Thirty percent (
The receipts from the printing and/or publishing of books or other 30%); and
reading materials prescribed by the Department of Education,
Culture and Sports as school texts or references shall be exempt (3) Barangay where the sand, gravel, and other quarry
from the tax herein imposed. resources are extracted - Forty percent (40%).
Section 137. Franchise Tax. - Notwithstanding any exemption Section 139. Professional Tax. -

granted by any law or other special law, the province may impose a (a) The province may levy an annual professional tax on
tax on businesses enjoying a franchise, at the rate not exceeding each person engaged in the exercise or practice of his
fifty percent (50%) of one percent (1%) of the gross annual receipts profession requiring government examination at such
for the preceding calendar year based on the incoming receipt, or amount and reasonable classification as the sangguniang
realized, within its territorial jurisdiction. panlalawigan may determine but shall in no case exceed
In the case of a newly started business, the tax shall not exceed one- Three hundred pesos (P300.00).
twentieth (1/20) of one percent (1%) of the capital investment. In (b) Every person legally authorized to practice his
the succeeding calendar year, regardless of when the business profession shall pay the professional tax to the province
started to operate, the tax shall be based on the gross receipts for where he practices his profession or where he maintains his
the preceding calendar year, or any fraction thereon, as provided principal office in case he practices his profession in several
herein.

places: Provided, however, That such person who has paid films.
the corresponding professional tax shall be entitled to (c) The holding of operas, concerts, dramas, recitals,
practice his profession in any part of the Philippines painting and art exhibitions, flower shows, musical
without being subjected to any other national or local tax, programs, literary and oratorical presentations, except pop,
license, or fee for the practice of such profession. rock, or similar concerts shall be exempt from the payment
(c) Any individual or corporation employing a person of the tax hereon imposed.
subject to professional tax shall require payment by that (d) The sangguniang panlalawigan may prescribe the time,
person of the tax on his profession before employment and manner, terms and conditions for the payment of tax. In
annually thereafter. case of fraud or failure to pay the tax, the sangguniang
(d) The professional tax shall be payable annually, on or panlalawigan may impose such surcharges, interest and
before the thirty-first (31st) day of January. Any person first penalties as it may deem appropriate.
beginning to practice a profession after the month of (e) The proceeds from the amusement tax shall be shared
January must, however, pay the full tax before engaging equally by the province and the municipality where such
therein. A line of profession does not become exempt even amusement places are located.
if conducted with some other profession for which the tax
has been paid. Professionals exclusively employed in the Section 141. Annual Fixed Tax For Every Delivery Truck or
government shall be exempt from the payment of this tax. Van of Manufacturers or Producers, Wholesalers of,
Dealers, or Retailers in, Certain Products. -
(e) Any person subject to the professional tax shall write in
deeds, receipts, prescriptions, reports, books of account, (a) The province may levy an annual fixed tax for every
plans and designs, surveys and maps, as the case may be, truck, van or any vehicle used by manufacturers, producers,
the number of the official receipt issued to him. wholesalers, dealers or retailers in the delivery or
distribution of distilled spirits, fermented liquors, soft
Section 140. Amusement Tax. - drinks, cigars and cigarettes, and other products as may be
(a) The province may levy an amusement tax to be collected determined by the sangguniang panlalawigan, to sales
from the proprietors, lessees, or operators of theaters, outlets, or consumers, whether directly or indirectly, within
cinemas, concert halls, circuses, boxing stadia, and other the province in an amount not exceeding Five hundred
places of amusement at a rate of not more than thirty pesos (P500.00).
percent (30%) of the gross receipts from admission fees. (b) The manufacturers, producers, wholesalers, dealers and
(b) In the case of theaters or cinemas, the tax shall first be retailers referred to in the immediately foregoing paragraph
deducted and withheld by their proprietors, lessees, or shall be exempt from the tax on peddlers prescribed
operators and paid to the provincial treasurer before the elsewhere in this Code.
gross receipts are divided between said proprietors, lessees,
or operators and the distributors of the cinematographic
Section 142. Scope of Taxing Powers. - Except as otherwise
B. Municipality provided in this Code, municipalities may levy taxes, fees, and
charges not otherwise levied by provinces.
Secs 142-143, LGC Section 143. Tax on Business. - The municipality may impose
taxes on the following businesses:
(a) On manufacturers, assemblers, repackers, processors,
brewers, distillers, rectifiers, and compounders of liquors, distilled
spirits, and wines or manufacturers of any article of commerce of
whatever kind or nature…
(b) On wholesalers, distributors, or dealers in any article of
commerce of whatever kind or nature…
(c) On exporters, and on manufacturers , millers, producers,
wholesalers, distributors, dealers or retailers of essential
commodities enumerated hereunder at a rate not exceeding
one-half (½) of the rates prescribed under subsection (a), (
b) and (d) of this Section:
(1) Rice and corn;
(2) Wheat or cassava flour, meat, dairy products,
locally manufactured, processed or preserved food,
sugar, salt and other agricultural, marine, and fresh
water products, whether in their original state or not
;
(3) Cooking oil and cooking gas;
(4) Laundry soap, detergents, and medicine;
(5) Agricultural implements. equipment and post-
harvest facilities, fertilizers, pesticides, insecticides,
herbicides and other farm inputs;
(6) Poultry feeds and other animal feeds;
(7) School supplies; and

(8) Cement. fifty percent (50%) except the rates of professional and amusement
taxes.
(d) On retailers.
(e) On contractors and other independent contractors…
(f) On banks and other financial institutions, at a rate not
exceeding fifty percent (50%) of one percent (1%) on the gross
receipts of the preceding calendar year derived from interest,
commissions and discounts from lending activities, income from
financial leasing, dividends, rentals on property and profit from
exchange or sale of property, insurance premium.
(g) On peddlers engaged in the sale of any merchandise or article of
commerce, at a rate not exceeding Fifty pesos (P50.00) per peddler
annually.
(h) On any business, not otherwise specified in the preceding
paragraphs, which the sanggunian concerned may deem proper to
tax: Provided, That on any business subject to the excise, value-
added or percentage tax under the National Internal Revenue Code,
as amended, the rate of tax shall not exceed two percent (2%) of
gross sales or receipts of the preceding calendar year.
The sanggunian concerned may prescribe a schedule of graduated

tax rates but in no case to exceed the rates prescribed herein.
C. City
Sec. 151, LGC
Section 151. Scope of Taxing Powers. - Except as otherwise
provided in this Code, the city, may levy the taxes, fees, and charges
which the province or municipality may impose: Provided, however
, That the taxes, fees and charges levied and collected by highly
urbanized and independent component cities shall accrue to them
and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum
rates allowed for the province or municipality by not more than

business or activity is located or conducted. For such
Art. 237, IRR clearance, the sangguniang barangay may impose a
ARTICLE 237. Scope of Taxing and Other Revenue- reasonable fee. The application for clearance shall be acted
Raising Powers of Cities. — The city may: (a) Levy and collect upon within seven (7) working days from the filing thereof.
any of the taxes, fees, charges and other impositions that the In the event that the clearance is not issued within the said
province and the municipality may impose. The rates of taxes that
period, the city or municipality may issue the said license or
the city may levy may exceed the maximum rates allowed for the
permit.
province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes; and (b) Levy (d) Other fees and Charges. - The barangay may levy
and collect a percentage tax on any business not otherwise reasonable fees and charges:
specified under paragraphs (a) to (g), Article 233 of this Rule, at
rates not exceeding three percent (3%) of the gross sales or receipts (1) On commercial breeding of fighting cocks,
of the preceding calendar year. cockfights and cockpits;
(2) On places of recreation which charge admission
fees; and
D. Barangay (3) On billboards, signboards, neon signs, and
Sec. 152, LGC outdoor advertisements.
Section 152. Scope of Taxing Powers. - The barangays may
levy taxes, fees, and charges, as provided in this Article, which shall
exclusively accrue to them: III. COMMUNITY TAX CERTIFICATE (CTC)
(a) Taxes - On stores or retailers with fixed business
establishments with gross sales of receipts of the preceding
calendar year of Fifty thousand pesos (P50,000.00) or less, A. Who are liable
in the case of cities and Thirty thousand pesos (P30,000.00 Secs. 157-159, LGC Art. 246, IRR
) or less, in the case of municipalities, at a rate not
exceeding one percent (1%) on such gross sales or receipts. Section 157. Individuals Liable to Community Tax. - Every
(b) Service Fees or Charges. - Barangays may collect inhabitant of the Philippines eighteen (18) years of age or over who
reasonable fees or charges for services rendered in has been regularly employed on a wage or salary basis for at
connection with the regulations or the use of barangay- least thirty (30) consecutive working days during any calendar year,
owned properties or service facilities such as palay, copra, or who is engaged in business or occupation, or who owns real
or tobacco dryers. property with an aggregate assessed value of One thousand pesos (
P1,000.00) or more, or who is required by law to file an income tax
(c) Barangay Clearance. - No city or municipality may issue
return shall pay an annual additional tax of Five pesos (P5.00)
any license or permit for any business or activity unless a
and an annual additional tax of One peso (P1.00) for every
clearance is first obtained from the barangay where such
One thousand pesos (P1,000.00) of income regardless of (2) Transient visitors when their stay in the Philippines
whether from business, exercise of profession or from property does not exceed three (3) months.
which in no case shall exceed Five thousand pesos (P5,000.00).
ARTICLE 246. Levy or Imposition. (IRR LGC) — The levy or
In the case of husband and wife, the additional tax herein imposition of community tax by a city or municipality shall be
imposed shall be based upon the total property owned by them and governed by the following rules and guidelines:
the total gross receipts or earnings derived by them. (a) Individuals liable to the payment of community tax —
Section 158. Juridical Persons Liable to Community Tax. (1) Every inhabitant of the Philippines eighteen (18) years
- Every corporation no matter how created or organized, whether of age or over who has been regularly employed on a wage
or salary basis for at least thirty (30) consecutive working
domestic or resident foreign, engaged in or doing business in the
days during any calendar years;
Philippines shall pay an annual community tax of Five hundred
pesos (P500.00) and an annual additional tax, which, in no case, (2) An individual who is engaged in business or occupation;
shall exceed Ten thousand pesos (P10,000.00) in accordance with (3) An individual who owns real property with an aggregate
the following schedule: assessed value of One Thousand Pesos (P1,000.00) or more;
(4) An individual who is required by law to file an income
(1) For every Five thousand pesos (P5,000.00) worth of real
tax return.
property in the Philippines owned by it during the
preceding year based on the valuation used for the payment (b) Rate of community tax payable by individuals —
of real property tax under existing laws, found in the (1) The rate of community tax that may be levied and
assessment rolls of the city or municipality where the real collected from said individuals shall be Five Pesos (P5.00)
plus an additional tax of One Peso (P1.00) for every One
property is situated - Two pesos (P2.00); and
Thousand Pesos (P1,000.00) of income regardless of
(2) For every Five thousand pesos (P5,000.00) of gross whether from business, exercise of profession, or from
receipts or earnings derived by it from its business in the property but which in no case shall exceed Five Thousand
Philippines during the preceding year - Two pesos (P2.00). Pesos (P5,000.00).
(2) In case of husband and wife, each of them shall be liable
The dividends received by a corporation from another
to pay the basic tax of Five Pesos (P5.00), but the additional
corporation however shall, for the purpose of the additional tax imposable on the husband and wife shall be One Peso (
tax, be considered as part of the gross receipts or earnings P1.00) for every One Thousand Pesos (P1,000.00) of
of said corporation.
Section 159. Exemptions. - The following are exempt from the
community tax:
(1) Diplomatic and consular representatives; and

income from the total property owned by them and/or the city or municipality where the principal office of the
total gross receipts or earnings derived by them. juridical entity is located.
(c) Juridical persons liable to the payment of community (2) It shall be unlawful for any city or municipal treasurer
tax — Every corporation, no matter how created or organized, to collect community tax outside the territorial
whether domestic or resident foreign, engaged in or doing business jurisdiction of the city or the municipality.
in the Philippines shall pay community tax of Five Hundred Pesos ( (3) In case of branch, sales office or warehouse where
P500.00) and an additional tax, which, in no case, shall exceed Ten sales are made and recorded, corresponding community tax
Thousand Pesos (P10,000.00) in accordance with the following shall be paid to the LGU where such branch, sales office or
schedule: warehouse is located.
(1) For every Five Thousand Pesos (P5,000.00) worth of (4) Any person, natural or juridical, who pays community
real property in the Philippines owned by the juridical tax to a city or municipality other than the city or
entity during the preceding year, based on the assessed municipality where his residence, or principal office in the
value used for the payment of the real property tax under case of juridical persons, is located shall remain liable to
existing laws — Two pesos (P2.00); and pay such tax to the city or municipality concerned.
(2) For every Five Thousand Pesos (P5,000.00) of gross (f) Time for Payment —
receipts or earnings derived from the business in the
Philippines during the preceding year — Two pesos (P2.00). (1) Community tax shall accrue on the first (1st) day of
The dividends received by a corporation from another January of each year and shall be paid not later than the last
corporation shall, for the purpose of the additional tax, be day of February of each year.
considered as part of the gross receipts or earnings of said (2) If a person reaches the age of eighteen (18) years or
corporation. otherwise loses the benefit of exemption on or before the
(d) Exemptions — The following are exempt from the payment of last day of June, he shall be liable for the payment of
community tax: community tax on the day he reaches such age or upon the
day the exemption on or before the last day of March, he
(1) Diplomatic and consular representatives; and shall have twenty (20) days within which to pay the
(2) Transient visitors when their stay in the Philippines community tax without becoming delinquent.
does not exceed three (3) months. (3) Persons who come to reside in the Philippines or reach
(e) Place of Payment* — the age of eighteen (18) years on or after the first (1st) day
(1) Community tax shall be paid in the city or municipality of July of any year, or who cease to belong to an exempt
where the residence of the individual is located, or in the class on or after the same date, shall not be subject to
community tax for that year.

(4) Corporations established and organized on or before the or upon the day the exemption ends. However, if a person
last day of June shall be liable for the payment of reaches the age of eighteen (18) years or loses the benefit of
community tax for that year. Corporations established and exemption on or before the last day of March, he shall have
organized on or before the last day of March shall have
twenty (20) days to pay the community tax without
twenty (20) days within which to pay the community tax
without becoming delinquent. Corporations established and becoming delinquent.
organized on or after the first day of July shall not be Persons who come to reside in the Philippines or reach the
subject to community tax for that year.
age of eighteen (18) years on or after the first (1st) day of
(g) Penalties for the payment — If the tax is not paid within the July of any year, or who cease to belong to an exempt class
prescribed period, there shall be added to the unpaid amount an or after the same date, shall not be subject to the
interest of twenty-four percent (24%) per annum from the due date
community tax for that year.
until it is paid.
(b) Corporations established and organized on or before the
last day of June shall be liable for the community tax for
that year. But corporations established and organized on or
B. Exemptions
before the last day of March shall have twenty (20) days
Sec. 159, LGC – see above
within which to pay the community tax without becoming
delinquent. Corporations established and organized on or
after the first day of July shall not be subject to the
C. Place and time of payment of tax* community tax for that year.
Secs. 160-161, LGC
If the tax is not paid within the time prescribed above, there shall
be added to the unpaid amount an interest of twenty-four percent (
Section 160. Place of Payment. - The community tax shall be 24%) per annum from the due date until it is paid.
paid in the place of residence of the individual, or in the
place where the principal office of the juridical entity is
located.
IV. TIME, MANNER AND PLACE OF PAYMENT OF
LOCAL BUSINESS TAX
Section 161. Time for Payment; Penalties for Delinquency
. -
(a) The community tax shall accrue on the first (1st) day of
A. Time of payment
January of each year which shall be paid not later than the
last day of February of each year. If a person reaches the age
of eighteen (18) years or otherwise loses the benefit of
exemption on or before the last day of June, he shall be 1. General rule
liable for the community tax on the day he reaches such age Secs. 165-167, LGC

Section 165. Tax Period and Manner of Payment. - Unless Section 166. Accrual of Tax. - Unless otherwise provided in
otherwise provided in this Code, the tax period of all local taxes, this Code, all local taxes, fees, and charges shall accrue on the first (
fees and charges shall be the calendar year. Such taxes, fees and 1st) day of January of each year. However, new taxes, fees or
charges may be paid in quarterly installments. charges, or changes in the rates thereof, shall accrue on the first (
1st) day of the quarter next following the effectivity of the
ordinance imposing such new levies or rates.
Section 167. Time of Payment. - Unless otherwise provided in
this Code, all local taxes, fees, and charges shall be paid within the
first twenty (20) days of January or of each subsequent quarter, as
the case may be. The sanggunian concerned may, for a justifiable
reason or cause, extend the time for payment of such taxes, fees, or
charges without surcharges or penalties, but only for a period not
exceeding six (6) months.
2. In case of new ordinance levying new tax or

increasing rates
Sec. 166, LGC
… However, new taxes, fees or charges, or changes in the rates
thereof, shall accrue on the first (1st) day of the quarter next
following the effectivity of the ordinance imposing such new levies
or rates.
3. In case of retirement of business

Sec. 145, LGC Art. 241, IRR
Section 145. Retirement of Business. - A business

subject to tax pursuant to the preceding sections shall, upon
termination thereof, submit a sworn statement of its gross
sales or receipts for the current year. If the tax paid during
the year be less than the tax due on said gross sales or receipts (2) In the case of a new owner to whom the business
of the current year, the difference shall be paid before the was transferred by sale or other form of conveyance,
business is considered officially retired. said new owner shall be liable to pay the tax or fee for
the transfer of the business to him if there is an
existing ordinance prescribing such transfer tax.
ARTICLE 241. Retirement of Business. —
(b) If it is found that the retirement or termination of the

(a) Any person natural or juridical, subject to the tax on business is legitimate, and the tax due therefrom be less than
businesses under Article 233 of this Rule shall, upon the tax due for the current year based on the gross sales or
termination of the business, submit a sworn statement of the receipts, the difference in the amount of the tax shall be paid
gross sales or receipts for the calendar year. For purposes before the business is considered officially retired or
hereof, termination shall mean that business operations are terminated.
stopped completely. Any change in ownership, management
and/or name of the business shall not constitute termination (c) The permit issued to a business retiring or terminating its
as contemplated in this Article. Unless stated otherwise, operations shall be surrendered to the local treasurer who
assumption of the business by any new owner or manager or shall forthwith cancel the same and record such cancellation
registration of the same business under a new name will only in his books.
be considered by the LGU concerned for record purposes in
the course of the renewal of the permit or license to operate
B. Manner of payment
the business. The local treasurer concerned shall see to it that
the payment of taxes of a business is not avoided by Sec. 146, LGC Art. 242, IRR
simulating the termination or retirement thereof. For this
purpose, the following procedural guidelines shall be strictly
*Section 146. Payment of Business Taxes. -
observed:
(a) The taxes imposed under Section 143 shall be payable for
(1) The local treasurer shall assign every application
every separate or distinct establishment or place where
for the termination or retirement of business to an
business subject to the tax is conducted and one line of
inspector in his office who shall go to the address of
business does not become exempt by being conducted
the business on record to verify if it is really no longer
with some other business for which such tax has been paid.
operating. If the inspector finds that the business is
The tax on a business must be paid by the person conducting
simply placed under a new name, manager and/or new
the same.
owner, the local treasurer shall recommend to the
mayor the disapproval of the application for the (b) In cases where a person conducts or operates two (2)
termination or retirement of said business. or more of the businesses mentioned in Section 143 of
Accordingly, the business continues to become liable this Code which are subject to the same rate of tax, the
for the payment of all taxes, fees, and charges imposed tax shall be computed on the combined total gross sales or
thereon under existing local tax ordinances; and receipts of the said two (2) or more related businesses.
(c) In cases where a person conducts or operates two (2) When the manufacture of tin cans as in the present case is
or more businesses mentioned in Section 143 of this conducted not as an independent business, and for
Code which are subject to different rates of tax, the gross profit but merely as an incident to or part of its main
sales or receipts of each business shall be separately reported
business, then it may not be considered as an occupation or
for the purpose of computing the tax due from each business.
business which may be taxed separately. The tin cans in
question were not manufactured by the appellant company "
ARTICLE 242. Related or Combined Businesses. — for sale to the public, but for the purpose of distributing its
(a) The conduct or operation of two or more related products which are in liquid form.
businesses provided in Article 233 of this Rule by any one
person, natural or juridical, shall require the issuance of a
separate permit or license to each business.
Ali Nam v. City of Manila, 109 Phil. 808
(b) If a person conducts or operates two (2) or more
Not a dealer of 2nd hand goods. "A dealer in the popular, and
related businesses which are subject to the same rate
therefore in the statutory sense of the word is not one who
of imposition, the tax shall be computed on the basis of the
buys to keep or makes to sell, but one who buys to sell again."
combined total gross sales or receipts of the said two (2) or
more related businesses. It has not been shown that the plaintiff has been engaged in
the business of buying and selling of empty flour bags for it is
(c) If, however, the businesses operated by one person
admitted that the empty flour bags sold by him are limited to
are governed by separate tax schedules or the rates
those which contained the flour used by him in his bakery
of the taxes are different, the taxable gross sales or
business. Consequently, the sale of empty flour bags was
receipts of each business shall be reported independently and
merely incidental to the business of bakery in which the
the tax thereon shall be computed on the basis of the
plaintiff is principally engaged. . . . .
appropriate schedule.
He cannot also be obliged to pay the permit and license fees
required under Ordinance No. 3000 because of exact same
reason.
Case: Standard Vacuum Oil Co. v. Antigua, 96 Phil.
909
C. Place of payment*
Occupation Tax To Be Imposed On Main Business Only.
— When a person or company is already taxed on its
main business, it may not be further taxed for doing 1. Location of branch or sales outlet
something or engaging in an activity or work which is merely Sec. 150(a), LGC Art. 243, IRR
part of, incidental to and is necessary to its main business.
Section 150. Situs of the Tax. -
(a) For purposes of collection of the taxes under percent (70%) mentioned in subparagraph (b) of subsection (
Section 143 of this Code, manufacturers, 2) above shall be divided as follows:
assemblers, repackers, brewers, distillers, rectifiers (1) Sixty percent (60%) to the city or municipality
and compounders of liquor, distilled spirits and where the factory is located; and
wines, millers, producers, exporters, wholesalers,
distributors, dealers, contractors, banks and other (2) Forty percent (40%) to the city or
financial institutions, and other businesses, municipality where the plantation is located.
maintaining or operating branch or sales outlet
elsewhere shall record the sale in the branch or (d) In cases where a manufacturer, assembler, producer,
sales outlet making the sale or transaction, and the exporter or contractor has two (2) or more factories,
tax thereon shall accrue and shall be paid to the project offices, plants, or plantations located in
municipality where such branch or sales different localities, the seventy percent (70%) sales
outlet is located. In cases where there is no such allocation mentioned in subparagraph (b) of subsection (2)
branch or sales outlet in the city or municipality above shall be prorated among the localities where the
where the sale or transaction is made, the sale shall factories, project offices, plants, and plantations are located in
be duly recorded in the principal office and the proportion to their respective volumes of production during
taxes due shall accrue and shall be paid to such the period for which the tax is due.
city or municipality.
(e) The foregoing sales allocation shall be applied irrespective
of whether or not sales are made in the locality where the
(b) The following sales allocation shall apply to factory, project office, plant, or plantation is located.
manufacturers, assemblers, contractors, producers, and
exporters with factories, project offices, plants, and
plantations in the pursuit of their business: ARTICLE 243. Situs of the Tax. —
(A) DEFINITION OF TERMS —
(1) Thirty percent (30%) of all sales recorded in the
principal office shall be taxable by the city or (1) Principal Office — the head or main office of the business
municipality where the principal office is located; appearing in the pertinent documents submitted to the Securities
and Exchange Commission, or the Department of Trade and
and
Industry, or other appropriate agencies, as the case may be. The
(2) Seventy percent (70%) of all sales recorded in the city or municipality specifically mentioned in the articles of
principal office shall be taxable by the city or incorporation of official registration papers as being the official
municipality where the factory, project office, address of said principal office shall be considered as the situs
plant, or plantation is located. thereof. In case there is a transfer or relocation of the principal
office to another city or municipality, it shall be the duty of the
owner, operator or manager of the business to give due notice of
(c) In case of a plantation located at a place other than such transfer or relocation to the local chief executives of the cities
the place where the factory is located, said seventy

or municipalities concerned within fifteen (15) days after such or warehouse and the tax shall be payable to the city or
transfer or relocation is effected. municipality where the same is located.
(2) Branch or Sales Office — a fixed place in a locality which (2) In cases where there is no such branch, sales office, or
conducts operations of the business as an extension of the principal warehouse in the locality where the sale is made, the sale shall be
office. Offices used only as display areas of the products where no recorded in the principal office along with the sales made by said
stocks or items are stored for sale, although orders for the products principal office and the tax shall accrue to the city or municipality
may be received thereat, are not branch or sales offices as herein where said principal office is located.
contemplated. A warehouse which accepts orders and/or issues (3) In cases where there is a factory, project office, plant or
sales invoices independent of a branch with sales office shall be plantation in pursuit of business, thirty percent (30%) of all sales
considered as a sales office. recorded in the principal office shall be taxable by the city or
(3) Warehouse — a building utilized for the storage of products municipality where the principal office is located and seventy
for sale and from which goods or merchandise are withdrawn for percent (70%) of all sales recorded in the principal office shall be
delivery to customers or dealers, or by persons acting in behalf of taxable by the city or municipality where the factory, project office,
the business. A warehouse that does not accept orders and/or issue plant or plantation is located. LGUs where only experimental farms
sales invoices as aforementioned shall not be considered a branch are located shall not entitled to the sales allocation provided in this
or sales office. subparagraph.
(4) Plantation — a tract of agricultural land planted to trees or (4) In case of a plantation located in a locality other than that
seedlings whether fruit bearing or not, uniformly spaced or seeded where the factory is located, the seventy percent (70%) sales
by broadcast methods or normally arranged to allow highest allocation shall be divided as follows:
production. For purposes of this Article, inland fishing ground shall (i) Sixty percent (60%) to the city or municipality where the
be considered as plantation. factory is located; and
(5) Experimental Farms — agricultural land utilized by a (ii) Forty percent (40%) to the city or municipality where
business or corporation to conduct studies, tests, researches or the plantation is located.
experiments involving agricultural, agribusiness, marine, or
aquatic, livestock, poultry, dairy and other similar products for the (5) In cases where there are two (2) or more factories, project
purpose of improving the quality and quantity of goods or products. offices, plants or plantations located in different localities, the
seventy percent (70%) sales allocation shall be prorated among the
On-site sales of commercial quantity made in experimental farms localities where such factories, project offices, plants, and
shall be similarly imposed the corresponding tax under Article 233 plantations are located in proportion to their respective volumes of
and allocated in paragraph (b) of this Article. production during the period for which the tax is due. In the case of
project offices of service and other independent contractors, the
(B) SALES ALLOCATION — term production shall refer to the cost of projects actually
undertaken during the tax period.
(6) The sales allocation in paragraph (b) hereof shall be applied
(1) All sales made in a locality where there is a branch or sales office irrespective of whether or not sales are made in the locality where
or warehouse shall be recorded in said branch or sales office the factory, project office, plant or plantation is located. In case of
sales made by the factory, project office, plant or plantation, the
sale shall be covered by subparagraphs (1) or (2) above.
(7) In case of manufacturers or producers which engage the (3) Based on subparagraphs (1) and (2) above, LGUs where route
services of an independent contractor to produce or manufacture trucks deliver merchandise cannot impose any tax on said trucks
some of their products, these rules on situs of taxation shall apply except the annual fixed tax authorized to be imposed by the
except that the factory or plant and warehouse of the contractor province in Article 231 of this Rule on every delivery truck or van or
utilized for the production and storage of the manufacturers' any motor vehicle used by manufacturers, producers, wholesalers,
products shall be considered as the factory or plant and warehouse dealers, or retailers, in the delivery or distribution of distilled
of the manufacturer. spirits, fermented liquors, soft drinks, cigars and cigarettes, and
other products as may be determined by the sangguniang
panlalawigan, and by the city, pursuant to Article 223 of this Rule.
(C) PORT OF LOADING — The city or municipality where the
port of loading is located shall not levy and collect the tax (4) In addition to this annual fixed tax, cities may also collect from
imposable in Article 233 of this Rule unless the exporter maintains same manufacturers, producers, wholesalers, retailers, and dealers
in said city or municipality its principal office, a branch, sales office using route trucks a mayor's permit fee which shall be imposed in a
or warehouse, factory, plant, or plantation in which case, the rule local tax ordinance pursuant to Article 234 in relation to Article 223
on the matter shall apply accordingly. of this Rule.
2. Allocation to 2 or more LGUs V. ENACTMENT OF TAX ORDINANCES AND OTHER

Sec. 150(b) to (e), LGC Art. 243, IRR REVENUE MEASURES
- SEE ABOVE
A. Public hearing
3. Sales by route trucks or vans Sec. 186, last proviso, LGC Sec. 187, LGC Art. 275,
Art. 243(d), IRR IRR
(D) SALES MADE BY ROUTE TRUCKS, VANS, OR
VEHICLES — Section 186. Power To Levy Other Taxes, Fees or Charges.
(1) For route sales made in a locality where a manufacturer, - Local government units may exercise the power to levy taxes
producer, wholesaler, retailer or dealer has a branch or sales office
or warehouse, the sale are recorded in the branch, sales office or
, fees or charges on any base or subject not otherwise
warehouse and the tax due thereon is paid to the LGU where such specifically enumerated herein or taxed under the provisions
branch, sales office or warehouse is located. of the National Internal Revenue Code, as amended, or other
(2) For route sales made in a locality where a manufacturer, applicable laws: Provided, That the taxes, fees, or charges
producer, wholesaler, retailer or dealer has no branch, sales office shall not be unjust, excessive, oppressive, confiscatory or
or warehouse the sales are recorded in the branch, sales office or
contrary to declared national policy: Provided, further,
warehouse from where the route trucks withdraw their products for
sale, and the tax due on such sales is paid to the LGU where such That the ordinance levying such taxes, fees or charges
branch, sales office or warehouse is located. shall not be enacted without any prior public hearing
conducted for the purpose. who shall render a decision within sixty (60) days from the
date of receipt of the appeal provided furthermore that such
*Section 187. Procedure for Approval and Effectivity of appeal shall not have the effect of suspending the effectivity
Tax, Ordinances and Revenue Measures; Mandatory Public of the ordinance and the accrual and payment of the tax, fee,
Hearings. - The procedure for approval of local tax or charge levied therein and provided finally that within
ordinances and revenue measures shall be in accordance with thirty (30) days after receipt of the decision or the lapse of the
the provisions of this Code: Provided, That public hearings sixtyday period without the Secretary of Justice acting upon
shall be conducted for the purpose prior to the enactment the appeal, the aggrieved party may file appropriate
proceedings with a court of competent jurisdiction.
thereof: Provided, further, That any question on the
constitutionality or legality of tax ordinances or revenue All tax ordinances or revenue measures shall be numbered
consecutively throughout the calendar year and continuously
measures may be raised on appeal within thirty (30)
from year to year, using the last two (2) digits of the calendar
days from the effectivity thereof to the Secretary of year in which it is enacted, followed by denominated number.
Justice who shall render a decision within sixty (60) days For example, an ordinance is passed in January, 1992, and it
from the date of receipt of the appeal: Provided, however, is the first ordinance for that year. The ordinance shall be
That such appeal shall not have the effect of denominated and numbered as Tax Ordinance No. 92-001.
suspending the effectivity of the ordinance and the The next shall be Tax Ordinance No. 92-002, Tax Ordinance
accrual and payment of the tax, fee, or charge levied No. 92-003, and so forth.
therein: Provided, finally, That within thirty (30) days
after receipt of the decision or the lapse of the sixty- Case: Figueras v. CA, G.R. No. 119172, March 25, 1999
day period without the Secretary of Justice acting upon the
Both parties failed to show evidence that a public hearing was
appeal, the aggrieved party may file appropriate proceedings
conducted or not conducted. In accordance with the
with a court of competent jurisdiction.*
presumption of validity in favor of an ordinance, their
constitutionality or legality should be upheld in the
ARTICLE 275. Procedure for Approval and Effectivity of absence of evidence showing that the procedure prescribed by
Tax Ordinances and Revenue Measures. — law was not observed in their enactment.
The procedure for approval of local tax ordinances and
revenue measures shall be in accordance with the provisions
of this Rule provided that public hearings shall be
conducted for the purpose prior to the enactment thereof Tuzon v. CA, 212 SCRA 739, 745 (1992)
provided further that any question on the
constitutionality or legality of tax ordinances or
revenue measures may be raised on appeal within thirty (30)
days from the effectivity thereof to the Secretary of Justice
Enactment Of Tax Ordinance Where Tax Base Or on the other hand, it is to be considered a tax ordinance, then
Subject Not Similar Or Comparable To Any Of Those it must be shown in view of the challenge raised by the private
Enumerated In Local Tax Code; Requirements. — If, respondents to have been enacted in accordance with the
requirements of the Local Tax Code. These would include the
holding of a public hearing on the measure and its
subsequent approval by the Secretary of Finance, in addition
to the usual requisites for publication of ordinances in
general.
Not Personally Liable For Injuries Occasioned By

Performance Of Official Duty Within Scope Of Official
Authority; Erroneous Interpretation Of Ordinance
Does Not Constitute Bad Faith; Case At Bar. — The
Court is convinced that the petitioners acted within the scope
of their authority and in consonance with their honest
interpretation of the resolution in question. As executive
officials of the municipality, they had the duty to enforce it as
long as it had not been repealed by the Sangguniang Bayan or
annulled by the courts. . . . As a rule, a public officer, whether
judicial, quasi-judicial or executive, is not personally liable to
one injured in consequence of an act performed within the
scope of his official authority, and in line of his official duty. . .
. It has been held that an erroneous interpretation of an
ordinance does not constitute nor does it amount to bad faith
that would entitle an aggrieved party to an award for damages
. (Philippine Match Co. Ltd. v. City of Cebu, 81 SCRA 99).
B. Publication
Sec. 188, LGC Art. 276, IRR

Section 188. Publication of Tax Ordinances and Revenue (1) Within ten (10) days from filing of any proposed tax
Measures. - Within ten (10) days after their approval, ordinance or revenue measure, the same shall first be
certified true copies of all provincial, city, and municipal tax published for three (3) consecutive days in a newspaper of
ordinances or revenue measures shall be published in full local circulation or shall be posted simultaneously in at least
for three (3) consecutive days in a newspaper of local four (4) conspicuous public places within the territorial
jurisdiction of the LGU concerned.
circulation: Provided, however, That in provinces, cities and
municipalities where there are no newspapers of local (2) In addition to the requirement for publication or posting
circulation, the same may be posted in at least two (2) , the sanggunian concerned shall cause the sending of
conspicuous and publicly accessible places. written notices of the proposed ordinance, enclosing a copy
thereof, to the interested or affected parties operating or
doing business within the territorial jurisdiction of the LGU
ARTICLE 276. Publication of Tax Ordinances and Revenue concerned.
Measures. — (3) The notice or notices shall specify the date or dates and
(a) Within ten (10) days after their approval, certified true copies of venue of the public hearing or hearing. The initial public
all provincial, city, and municipal tax ordinances or revenue hearing shall be held not earlier than ten (10) days from the
measures shall be published in full for three (3) consecutive days in sending out of notice or notices, or the last day of
a newspaper of local circulation provided that in provinces, cities, publication, or date of posting thereof, whichever is later.
and municipalities where there are no newspapers of local (4) At the public hearing or hearings, all affected or
circulation, the same may be posted in at least two (2) conspicuous interested parties shall be accorded an opportunity to
and publicly accessible places. appear and present or express their views, comments and
If the tax ordinance or revenue measure contains penal provisions recommendations, and such public hearing or hearings
as authorized in Article 280 of this Rule, the gist of such tax shall continue until all issues have been presented and fully
ordinance or revenue measure shall be published in a newspaper of deliberated upon and/or consensus is obtained, whether for
general circulation within the province where the sanggunian or against the enactment of the proposed tax ordinance or
concerned belongs. revenue measure.
In the absence of any newspaper of general circulation within the (5) The secretary of the sanggunian concerned shall prepare
province, posting of such ordinance or measure shall be made in the minutes of such public hearing and shall attach to the
accessible and conspicuous public places in all municipalities and minutes the position papers, memoranda, and other
cities of the province to which the sanggunian enacting the documents submitted by those who participated.
ordinance or revenue measure belongs. In case the effectivity of
any tax ordinance or revenue measure falls on any date other than
(c) No tax ordinance or revenue measure shall be enacted or
the beginning of the quarter, the same shall be considered as falling
approved in the absence of a public hearing duly conducted in the
at the beginning of the next ensuing quarter and the taxes, fees, or
manner provided in this Article.
charges due shall begin to accrue therefrom.
(b) The conduct of public hearings shall be governed by the

Case: Figueras v. CA, et. al., supra
following procedure:

reason the courts construct these provisions of statutes as
mandatory.
C. Appeal to Secretary of Justice
Sec. 187, LGC
Drilon v. Lim, G.R. No. 112497, Aug. 4, 1994
… That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal
within thirty (30) days from the effectivity thereof to Section 2 of the Local Autonomy Act allowed the Secretary of
the Secretary of Justice who shall render a decision within Finance to suspend the effectivity of a tax ordinance if, in his
sixty (60) days from the date of receipt of the appeal: opinion, the tax or fee levied was unjust, excessive,
Provided, however, That such appeal shall not have the effect oppressive or confiscatory. Determination of these flaws
of suspending the effectivity of the ordinance and the accrual would involve the exercise of judgment or discretion and not
and payment of the tax, fee, or charge levied therein:
merely an examination of whether or not the requirements or
Provided, finally, That within thirty (30) days after receipt of
the decision or the lapse of the sixty-day period without the limitations of the law had been observed; hence, it would
Secretary of Justice acting upon the appeal, the smack of control rather than mere supervision.
aggrieved party may file appropriate proceedings with a court
of competent jurisdiction. That power was never questioned before this Court but, at
any rate, the Secretary of Justice is not given the same
latitude under Section 187. All he is permitted to do is
ascertain the constitutionality or legality of the tax measure,
Case: Reyes, et. al. v. CA, G.R. No. 118233, Dec. 10,
without the right to declare that, in his opinion, it is
1999
unjust, excessive, oppressive or confiscatory. He has
no discretion on this matter. In fact, Secretary Drilon set
Clearly, the law requires that the dissatisfied taxpayer who
aside the Manila Revenue Code only on two grounds, to with,
questions the validity or legality of a tax ordinance must file
his appeal to the Secretary of Justice, within 30 days from the inclusion therein of certain ultra vires provisions and non
effectivity thereof. In case the Secretary decides the appeals, -compliance with the prescribed procedure in its enactment.
a period also of 30 days is allowed for an aggrieved party to go These grounds affected the legality, not the wisdom or
to court. But if the Secretary does not act thereon, after the reasonableness, of the tax measure.
lapse of 60 days, a party could already proceed to seek relief
in court. These three separate periods are clearly The supervisor or superintendent merely sees to it that
given for compliance as a prerequisite before the rules are followed, but he himself does not lay down such
seeking redress in a competent court. Such statutory rules, nor does he have the discretion to modify or replace
periods are set to prevent delays as well as enhance the
orderly and speedy discharge of judicial functions. For this
them. If the rules are not observed, he may order the work The funds for the operation of its agencies and provision of
done or re-done but only to conform to the prescribed rules. basic services to its inhabitants are largely derived from its
He may not prescribe his own manner for the doing of the act. revenues and collections. Thus, it is
He has no judgment on this matter except to see to it that the
rules are followed. In the opinion of the Court, Secretary
Drilon did precisely this, and no more nor less than this, and
so performed an act not of control but of mere supervision.
Hagonoy Market Vendor Assoc. v. Mun. of Hagonoy,

Bulacan, 376 SCRA 376
The aforecited law requires that an appeal of a tax

ordinance or revenue measure should be made to the
Secretary of Justice within thirty (30) days from
effectivity of the ordinance and even during its
pendency, the effectivity of the assailed ordinance
shall not be suspended. In the case at bar, Municipal
Ordinance No. 28 took effect in October 1996. Petitioner
filed its appeal only in December 1997, more than a
year after the effectivity of the ordinance in 1996.
Clearly, the Secretary of Justice correctly dismissed
it for being time-barred. At this point, it is apropos to
state that the timeframe fixed by law for parties to avail of
their legal remedies before competent courts is not a "mere
technicality" that can be easily brushed aside. The periods
stated in Section 187 of the Local Government Code
are mandatory. Ordinance No. 28 is a revenue measure
adopted by the municipality of Hagonoy to fix and collect
public market stall rentals. Being its lifeblood, collection of
revenues by the government is of paramount importance.

essential that the validity of revenue measures is not Fundamental Principles (Sec 198 LGC)
left uncertain for a considerable length of time. Hence
, the law provided a time limit for an aggrieved party to assail ► Real property shall be appraised at its current and fair
the legality of revenue measures and tax ordinances. market value;
► Real property shall be classified for assessment

The Ordinance was posted during the period from purposes on the basis of its actual use;
November 4 - 25, 1996 in three (3) public places, viz:
in front of the municipal building, at the bulletin board of the ► Real property shall be assessed on the basis of a
Sta. Ana Parish Church and on the front door of the Office of uniform classification within each local government
the Market Master in the public market. Posting was unit;
validly made in lieu of publication as there was no
► The appraisal, assessment, levy and collection of real
newspaper of local circulation in the municipality of
Hagonoy. This fact was known to and admitted by property tax shall not be let to any private person; and
petitioner.
► The appraisal and assessment of real property shall be
equitable.
D. Appeal to court of competent jurisdiction
Id. Reyes v. Almanzor, 196 SCRA 322 (1991)
Ruling: The taxing power has the authority to make a

E. Effect of appeal reasonable and natural classification for purposes of taxation
but the government's act must not be prompted by a spirit of
Id. hostility, or at the very least discrimination that finds no
support in reason. Petitioners who are burdened by the
government by its Rental Freezing Laws (then R.A. No. 6359 and P.
REAL PROPERTY TAXATION D. 20) under the principle of social justice should not now be
penalized by the same government by the imposition of excessive
Real Property Taxes
taxes petitioners can ill afford and eventually result in the forfeiture
Direct taxes imposed on the privilege to use real property of their properties.
such as land, building, machinery and other improvements,
unless specifically exempted (Prov. of Nueva Ecija v. Nature of Real Property Tax
Imperial Mining Co., Inc.,118 SCRA 632 (1982))

► Direct Tax – burden cannot be shifted Ad valorem Tax – based on the assessed value
of the property
► Indivisible single obligation
► Local Tax
►
► Use and not ownership is basis of imposition
► Progressive/proportionate in character
Real property consists of the following (for taxation purposes)

:
1. Immovable properties under Article 415 of the Civil
Code
2. Definition of machinery under Section 199(o) of the

LGC clarified by DOF Local Finance Circular 001-2002
DOF Local Finance Circular 001-2002
Summary of the rules
1. Machinery that is permanently attached to land and

buildings is subject to the real property tax, even
though this is actually, directly and exclusively used for
religious, charitable or educational purposes.
2. Machinery that is not permanently attached
a. Subject to the real property tax if it is an

essential and principal element of an industry,
work or activity without which such industry, work
or activity cannot function; and
b.

Not subject to the real property tax if it is not Article 415[l] and [3] provides that real property may
an essential and principal element of an consist of constructions of all kinds adhered to the soil and
industry, work or activity. everything attached to an immovable in a fixed manner, in
such a way that it cannot be separated therefrom without
Notwithstanding rules 1 and 2, machinery of non-stock,
non-profit educational institutions used actually, breaking the material or deterioration of the object. The
directly, and exclusively for educational purposes is not pipeline system in question is indubitably a construction
subject to real property tax. adhering to the soil. It is attached to the land in such a way
that it cannot be separated therefrom without dismantling the
steel pipes which were welded to form the pipeline.
Machinery
Caltex Phils. Inc. v. CBAA, 114 SCRA 296
1. Realty by Destination
Ruling: The said equipment and machinery, as appurtenances
Requisites to be classified as real property to the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures are
a. actually, directly, and exclusively used to meet the
necessary to the operation of the gas station, for without them
needs of the particular industry, business or activity
the gas station would be useless, and which have been
and which
attached or affixed permanently to the gas station site or
b. by their very nature and purpose are designed for, or embedded therein, are taxable improvements and
necessary to its manufacturing, mining, logging, machinery within the meaning of the Assessment Law and
commercial, industrial or agricultural purposes (LGC the Real Property Tax Code.
Sec 199 (o))
Benguet Corp. v. CBAA, 218 SCRA 271 (1993)
2. Realty by Incorporation – machinery is permanently
Ruling: The subject dam falls within the definition of an "
attached
improvement" because it is permanent in character and it
Meralco v. Central Board of Assessment Appeals ( enhances the value and utility of petitioner's mine. Moreover,
CBAA), 114 SCRA 260 (1982) the immovable nature of the dam defines its character as real
property under Article 415 of the Civil Code and thus makes it
Ruling: It is incontestable that the pipeline of Meralco taxable under Section 38 of the Real Property Tax Code.
Securities does not fall within any of the classes of exempt
real property enumerated in section 3 of the Assessment Law
and section 40 of the Real Property Tax Code.
SUMMARY OF RUES ON MACHINERY:
1. If permanently attached – subject to RPT 1. Special Education Fund. - one percent (1%) on the
assessed value of real property
2. If not permanently attached: 2. Additional Ad Valorem Tax on Idle Lands. - not
a. Essential and principal element of an industry without exceeding five percent (5%) of the assessed value of the
property
which such industry, work or activity cannot function –
subject to RPT
Lands considered idle:
a. Agricultural lands more than one (1) hectare in area, one-
b. Not an essential and principal element of an industry,
half (1/2) of which remain uncultivated or unimproved by
work or activity -not subject to RPT
the owner of the property or person having legal interest
RPT MAY BE LEVIED BY THE FOLLOWING LGUS: therein.
1. Province b. Non-Agricultural Lands,- more than one thousand (1,000)

square meters in area, one-half (1/2) of which remain
2. City and
unutilized or unimproved by the owner of the property or
3. Municipality within Metro Manila (LGC. Sec 232) person having legal interest therein.
c. Residential lots in subdivision duly approved by proper

authorities regardless of the area.
A. BASIC REAL PROPERTY TAX (LGC SEC. 233)
3. Special Assessments or Special Levy - on the lands
specially benefited by public works projects or improvements
funded by the local government unit shall not exceed sixty
percent (60%) of the actual cost of such projects and
Assessed Value/Taxable Value – FMV of the real property improvements, including the costs of acquiring land and such
multiplied by the assessment level (LGC Sec 199(h) other real property in connection therewith
FMV – price at which the property may be sold by a seller
who is not compelled to sell to a buyer who is not compelled Exception: Does not apply to
to buy (LGC Sec 199(l)
a. Lands exempt from basic real property tax and
B. SPECIAL LEVIES

b. Remainder of the land portions of which have been exclusively used for religious, charitable or educational
donated to the local government unit concerned for the purposes;
construction of such projects or improvements.
(c) All machineries and equipment that are actually,
4. Imposed by other laws (Socialized Housing Tax) directly and exclusively used by local water districts
–RA7279 additional one half percent of the assessed value of and government owned or controlled corporations engaged
all lands in urban areas in excess of P50,000 except those in the supply and distribution of water and/or generation
exempted under RA 7279 and transmission of electric power;
EXEMPTIONS FROM REAL PROPERTY TAX (Sec. (d) All real property owned by duly registered
234, LGC) cooperatives as provided for under R.A. No. 6938; and
(a) Real property owned by the Republic of the (e) Machinery and equipment used for pollution
Philippines or any of its political subdivisions except control and environmental protection.
when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person; Except as provided herein, any exemption from payment of
real property tax previously granted to, or presently enjoyed
Exception: Where the beneficial use thereof has been by, all persons, whether natural or juridical, including all
granted for consideration to a taxable person government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.
Case: Light Rail Transit Authority v. CBAA, 342 SCRA 692 (
2000) PAYMENT OF REAL PROPERTY TAX AND SPECIAL
Even granting that the national government indeed owns the LEVIES
carriageways and terminal stations, the exemption would not
apply because their beneficial use has been granted to A. Date of Accrual – January 1st of every year and such
petitioner, a taxable entity. will constitute as a lien superior to any other lien, mortgage
or encumbrance (LGC Sec 246)
(b) Charitable institutions, churches, parsonages
or convents appurtenant thereto, mosques, non- B. Time and Manner of Payment
profit or religious cemeteries and all lands,
buildings, and improvements actually, directly, and

1. Basic Real property Tax and additional tax for SEF –in four a. Declaration by Owner or Administrator – sworn
equal installments (March 31/June 30/September 30/ statement once every 3 years during the period from
December 31) January 1 to June 30
2. Other special levies – governed by ordinance b. Notification of Transfer of Real Property Ownership.
- Any person who shall transfer real property
C. Discount for advance payment – not exceeding 20% ownership to another shall notify the provincial, city or
municipal assessor concerned within sixty (60) days
from the date of such transfer. The notification shall
APPRAISAL AND ASSESSMENT OF REAL
include the mode of transfer, the description of the
PROPERTY
property alienated, the name and address of the
APPRAISAL transferee.
Real property - whether taxable or exempt, shall be 2. Involuntary - Declaration of Real Property by the
appraised at the current and fair market value prevailing in Assessor
the locality where the property is situated
When any person, natural or juridical, by whom real property
Machinery is required to be declared under Section 202 hereof, refuses
or fails for any reason to make such declaration within the
(a) The fair market value of a brand-new machinery shall be time prescribed, the provincial, city or municipal
the acquisition cost. In all other cases, the fair market value assessor shall himself declare the property in the
shall be determined by dividing the remaining economic life name of the defaulting owner
of the machinery by its estimated economic life and
multiplied by the replacement or reproduction cost. Authority of Assessor to Take Evidence. - For the
purpose of obtaining information on which to base the
(b) If the machinery is imported, the acquisition cost includes market value of any real property, the assessor of the province
freight, insurance, bank and other charges, brokerage, , city or municipality or his deputy may summon the owners
arrastre and handling, duties and taxes, plus charges at the of the properties to be affected or persons having legal
present site. The cost in foreign currency of imported interest therein and witnesses, administer oaths, and take
machinery shall be converted to peso cost on the basis of deposition concerning the property, its ownership, amount,
foreign currency exchange rates as fixed by the Central Bank. nature, and value.
1.Voluntary Assessment

1. Classifying real property REMEDIES OF LOCAL GOVERNMENT
Basis of Assessment: Actual Use – purpose for which the A. Posting of notice of delinquency
property is principally or predominantly utilized
B. Imposition of interest
Exception: Mixed use – predominance rule is applied
C. Administrative remedies
2. Assessment levels
1. Lien
2. Levy
3. Distraint of Personal property
D. Judicial action (collection) – 5 years from the date

they become due or 10 years from discovery of fraud or intent
to evade payment -instituted in the regular courts
* Unpaid tax constitutes a lien
REMEDIES OF TAXPAYER
3. General revision - every 3 years
I. Administrative
4. Reassessment
A. Protest by:
Rule: All assessments or reassessments made after the first (
1st) day of January of any year shall take effect on the first ( 1. Any owner or person having legal interest in the property
1st) day of January of the succeeding year: who is not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property (Sec 226
Exception: Reassessment shall take effect at the beginning LGC)
of the quarter next following the reassessment if made due to
: partial or total destruction, or to a major change in its 2. Any owner of real property affected by a special levy or any
person having a legal interest therein (Sec 244 LGC)
actual use, or to any great and sudden inflation or deflation of
real property values, or to the gross illegality of the
assessment when made or to any other abnormal cause. Sec 252 of the LGC requires that the taxpayer first pays the
tax - Payment under protest
Protest may only be filed within 30 days from payment of the or adjustment. The provincial or city treasurer shall decide
tax with the Local Treasurer (LT). the claim for tax refund or credit within sixty (60) days from
receipt thereof. In case the claim for tax refund or credit is
The protest contemplated under Sec. 252 of R.A. 7160 is denied, the taxpayer may avail of the remedies as provided in
needed where there is a question as to the
Chapter 3, Title II, Book II of this Code.
reasonableness of the amount assessed, not where the
question raised is the very authority and power of the C. Redemption of Real Property
assessor, acting solely and independently, to impose the
assessment and of the treasurer to collect the tax. II. JUDICIAL
- If protest is denied or no action by LT after A. Question the legality of the Ordinance

lapse of 60 days, file an appeal to the Local Board
B. Court Action
of Assessment Appeals (LBAA). LBAA shall decide
within 120 days from date of receipt of appeal A. Appeal to CTA En Banc within 30 days the
adverse decision of the CBAA
- If LBAA rejects protest, owner may appeal to
Central board of Assessment Appeals (CBAA) within B. Appeal by certiorari with the SC within 15 days
30 days from receipt of notice in case of adverse decision by CTA
-if CBAA rejects protest, owner may appeal to CTA C. Suit assailing the validity of the Tax Sale
En Banc within 30 days from receipt of decision
- If CTA En Banc denies protest, appeal to SC

within 15 days under Rule 43 REMEDIES OF LOCAL GOVERNMENT UNITS
B. Claim for refund of credit • Civil Remedies
SEC. 253. Repayment of Excessive Collections. - A. Local Government’s Lien – can only be extinguished
When an assessment of basic real property tax, or any other by payment of the delinquent local taxes
tax levied under this Title, is found to be illegal or erroneous
and the tax is accordingly reduced or adjusted, the taxpayer B. Civil Remedies
may file a written claim for refund or credit for taxes and
1. Administrative action
interests with the provincial or city treasurer within two (2)
years from the date the taxpayer is entitled to such reduction

a. Distraint of Personal Property - At any time
prior to the consummation of the sale, the taxpayer
may pay the proper charges REMEDIES OF TAXPAYER – LOCAL TAXATION
- If property distrained is not disposed within 120 I. Administrative

days, considered as sold to LGU A. Before Assessment
b. Levy of Real Property - At any time before the 1. Question the constitutionality or legality of tax ordinances
date fixed for sale, taxpayer may stay the proceedings or revenue measures on appeal
by paying the proper charges
-within 30 days from effectivity thereof to the
- LGU may purchase real property advertised for sale Secretary of Justice (SOJ)
if there is no bidder or highest bid is insufficient to pay - decision by SOJ must be rendered within 60 days from
for the taxes, surcharges, interests or penalties receipt
2. Judicial action - taxpayer must file an appropriate action with court of

competent jurisdiction within 30 days from receipt of
- collection of sum of money depending on decision of SOJ or lapse of 60-day period to decide
jurisdictional amount
* SOJ can only review the constitutionality or legality of
- within 5 years from the date taxes, fees or charges the ordinance; he cannot replace the ordinance with his own
version or declare it as unjust, excessive, oppressive or
become due
confiscatory
3. Compromise * Court of competent jurisdiction is the RTC
- Sanggunian concerned may authorize the city or 2. Declaratory Relief whenever applicable
municipal treasurer to settle an offense not involving
commission of fraud before a case is filed in court or
upon payment of compromise penalty B. After Assessment
1. Protest
*Remedies 1 and 2 are not exclusive; may be pursued - within 60 days from receipt of the notice of assessment
concurrently or simultaneously the LGU concerned
- payment under protest is not necessary

- if no protest is filed, assessment becomes final and 3. Refund cases
executory
- if no action is taken by the treasurer and the 2 year period
2. Claim for refund or tax credit is about to lapse
- file a written claim for refund with the local treasurer
B. Action for Declaratory Relief
within 2 years from date of payment of the tax or charge
or from the date the taxpayer is entitled to a refund or C. Injunction
credit
The LGC does not specifically prohibit an injunction
* Supervening causes are allowed as reckoning points for
prescriptive period purposes; not considered in national taxe enjoining the collection of local taxes
3. Right of Redemption (real property) As to national taxes, NIRC explicitly prohibits courts from
enjoining collection of taxes, with the sole exception of the
- 1 year from date of sale or from the date of forfeiture CTA
- owner shall not be deprived of rentals or other income until
the expiration of the period for redemption
PRESCRIPTIVE PERIODS FOR THE ASSESSMENT
AND COLLECTION OF LOCAL TAXES
II. JUDICIAL REMEDIES
• Assessments
A. Court action
-5 years from the date they became due
1. Taxpayer questions the constitutionality or legality of the
ordinance -10 years from discovery of the fraud or intent to evade
payment of taxes – when there is fraud or intent to evade
- within 30 days after receipt of the decision or lapse of 60 payment
days in case of SOJ’s inaction
• Collection
2. Taxpayer files a protest
- within 5 years from date of assessment by administrative
- within 30 days from receipt when the protest of
or judicial action
assessment is denied or lapse of 60 days in case of local
treasurers inaction Grounds for the suspension of the running of
prescriptive period
1. Treasurer is legally prevented from the assessment or six (6) and four (4) years, respectively, from the date of
collection of taxes registration;
2. Taxpayer requests for a reinvestigation and executes a (e) Business entity, association, or cooperatives registered
waiver in writing before the expiration of the period to under RA 6810; and
assess or collect
(f) Printer and/or publisher of books or other reading
3. Taxpayer is out of the country or cannot be located materials prescribed by DECS as school texts or references,
insofar as receipts from the printing and/or publishing
AUTHORITY OF LGUS TO GRANT TAX EXEMPTION thereof are concerned.
PRIVILEGES
Unless otherwise repealed by law, business and economic
• Local government units may, through ordinances duly enterprises operating within export processing zones
approved, grant tax exemptions, incentives or reliefs under administered by the Export Processing Zone Authority shall
such terms and conditions as they may deem necessary. continue to enjoy the tax exemption privileges and tax
incentives granted in PD 66, as amended.
•Withdrawal of Tax Exemption Privileges or
Incentives. — Unless otherwise provided in this Rule,
beginning January 1, 1992, all local tax exemption privileges
or incentives granted to and presently enjoyed by any person,
whether natural or juridical, including GOCCs, are considered
withdrawn, except the following:
(a) Local water districts;
(b) Cooperatives duly registered under RA 6938, otherwise

known as the Cooperative Code of the Philippines;
(c) Non-stock and non-profit hospitals and educational

institutions;
(d) Business enterprises certified by the Board of

Investments (BOI) as pioneer or non-pioneer for a period of

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Part III.

1 |Solis Tax 2 Study Guide

2 |Solis Tax 2 Study Guide

Rule 8 Held: No. It is only the decision not appealed by

LASCONA LAND CO., INC., vs. COMMISSIONER

3 |Solis Tax 2 Study Guide

5 |Solis Tax 2 Study Guide

Commissioner should always indicate to the taxpayer in

If the protest is denied in whole or in part, or is not acted

Sec. 11 R.A 1125 as amended by R.A. 9282

SEC. 11. Who May Appeal; Mode of Appeal;

"All other cases involving rulings, orders or decisions

"No appeal taken to the CTA from the decision of

10 |Solis Tax 2 Study Guide

In such a case the 180 days will no longer apply,

Case: St. Stephen’s Association vs. Collector of

On April 21, 1955, petitioners received a letter from the

On July 25, 1955, petitioners received the letter of the

11 |Solis Tax 2 Study Guide

The statement appearing in his letter of July 11, 1955, it

Facts: The petitioner requested for the reconsideration

Held: The dismissal of petitioner's appeal to be

The petitioner has submitted not less than three (3)

13 |Solis Tax 2 Study Guide

The dismissal of the petitioner's appeal by the Court of

Case: Pantranco vs. Blaquera 107 Phil. 975

Whether or not Pantranco's failed to file its request

Yes. The letter of September 16, 1954 is the

Case: Basa vs. Republic 138 SCRA 34

The taxpayer did not contest the assessments in the Tax

The trial court in a decision dated April 20, 1976

Instead of appealing to this Court directly under

15 |Solis Tax 2 Study Guide

The decision is correct. If he wanted to contest the

The issue of prescription raised by him is baseless. The

As explained in the Solicitor General's memorandum,

Case: Mambulao Lumber vs CIR 132 SCRA 1(1984)

16 |Solis Tax 2 Study Guide

In the case at bar, the commencement of the five-

17 |Solis Tax 2 Study Guide

"Appeal shall be made by filing a petition for

18 |Solis Tax 2 Study Guide

A motion for new trial shall include all grounds then

(Rules of Court, Rule 37, sec. 1a)

SEC. 6. Contents of motion for reconsideration or new

A motion for new trial shall be proved in the manner

20 |Solis Tax 2 Study Guide

SEC. 8. Ruling. – The Court shall resolve the

SECTION 1. Appeal to Supreme Court by

SEC. 2. Effect of appeal. – The motion for

Why pay erroneous taxes?

Issue: Whether the statutory period of prescription

SEC. 306. Recovery of tax erroneously or

23 |Solis Tax 2 Study Guide

xxx xxx xxx

The authority of the Commissioner of Internal Revenue

Both shall not apply, since they refer to taxes

That the period within which a claim for credit or

in the present case the supervening cause from which