QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
This supplement covers significant and Q. The City of Manila imposed against ABC
relevant Supreme Court jurisprudence on a tax on manufacturers under Section 14 of
taxation law from July 1, 2017 to June 30, the Revenue Code of Manila and at the same
2018. time a tax on other businesses under Section
21 of the same Code. ABC argues that the
For jurisprudence and BIR issuances for the collection of taxes under both Sections 14
period prior to July 1, 2017, please refer to the and 21 of the Code constitutes double
previous supplements. taxation. Is ABC correct?
GENERAL PRINCIPLES Yes. While the City of Manila could impose
against ABC a manufacturer's tax under
Q. What is a tax amnesty? Section 14 of the Revenue Code of Manila, it
cannot at the same time impose the tax under
A tax amnesty is a general pardon or Section 21 of the same code; otherwise, an
intentional overlooking by the State of its obnoxious double taxation would set in.
authority to impose penalties on persons
otherwise guilty of evasion or violation of a Citing its previous ruling in The City of Manila
revenue or tax law. It partakes of an absolute v. Coca-cola Bottlers, Inc., G.R. No. 181845,
forgiveness or waiver by the government of its August 4, 2009, there is indeed double
right to collect what is due it and to give tax taxation if the taxpayer is subjected to the
evaders who wish to relent a chance to start taxes under both Sections 14 and 21 of Tax
with a clean slate. A tax amnesty, much like a Ordinance No. 7794, since these are being
tax exemption, is never favored nor presumed imposed: (1) on the same subject matter – the
in law. The grant of a tax amnesty, similar to privilege of doing business in the City of
a tax exemption, must be construed strictly Manila; (2) for the same purpose - to make
against the taxpayer and liberally in favor of persons conducting business within the City
the taxing authority. (Commissioner of of Manila contribute to city revenues; (3) by
Internal Revenue v. Philippine Aluminum the same taxing authority-petitioner City of
Wheels, G.R. No. 216161, August 9, 2017) Manila; (4) within the same taxing jurisdiction
- within the territorial jurisdiction of the City of
Q. When will a taxpayer be entitled to the Manila; (5) for the same taxing periods – per
immunities and privileges of a tax amnesty calendar year; and (6) of the same kind or
program? character - a local business tax imposed on
gross sales or receipts of the business (City of
Amnesty taxpayers may immediately enjoy Manila v. Cosmos Bottling Corporation, G.R.
the privileges and immunities under a Tax No. 196681, June 27, 2018)
Amnesty Law, provided they fulfill the
suspensive conditions imposed therein.
(Commissioner of Internal Revenue v.
Covanta Energy Philippine Holdings, G.R.
No. 203160, January 24, 2018)
Page 1 of 12
, QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
INCOME TAX Internal Revenue, G.R. No. 205955, 7 March
2018)
Q. The taxpayer initially opted to be
refunded of its excess creditable tax for Q. The BIR assessed ABC with deficiency
2006 through the issuance of a tax credit final withholding taxes (FWT) on interest
certificate. The taxpayer subsequently payments on loan agreements with XYZ for
indicated in its 2007 ITR that it carried over the taxable year 2000. The CTA found that
the 2006 excess creditable tax and applied ABC was not liable for the said deficiency
the same against income tax due for 2007. FWT since its liability for interest payment
The taxpayer filed with the BIR a claim for became due and demandable only on June 1,
refund and/or issuance of a TCC for the 2002. The BIR contends that ABC was liable
alleged excess credit for 2006. This was later to pay the interest from the date of the
elevated to the Court of Tax Appeals (CTA). execution of the contract on January 5, 2000,
Both CTA Division and CTA En Banc ruled not from the date of first payment on June 1,
that the taxpayer effectively exercised the 2002. Is the BIR correct?
carry-over option when it included the
excess tax credit for 2006 in the original ITR No. Under Section 2.57.4 of RR No. 2-98, the
for 2007. The taxpayer, on the other hand, obligation of ABC to deduct or withhold tax
contended that the option to be refunded arises at the time an income is paid or
through the issuance of a TCC is irrevocable. payable, whichever comes first. Further, the
Thus, when it indicated in its annual ITR for same Section provides that the term
2006 the option To be issued a Tax Credit pa a le refers to the date the obligation
Certificate, su h hoi e pre luded the other becomes due, demandable or legally
option to carry over. Is the taxpayer correct? enforceable. (Edison (Bataan) Cogeneration
Corporation v. Commissioner of Internal
No. The irrevocability rule is limited only to the Revenue, G.R. No. 201665, August 30, 2017)
option of carry-over. There is nothing in the
law which prevents the taxpayer who VALUE-ADDED TAX
originally opted for a refund or TCC to shift to
the carry-over of the excess creditable taxes Q. What are the rules on the determination
to the taxable quarters of the succeeding of the prescriptive period for filing a tax
taxable years. However, if the taxpayer refund or credit of unutilized input VAT?
decides to shift its option to carry-over, it may
no longer revert to its original choice due to The rules are as follows:
the irrevocability rule. Here, the taxpayer is
barred from recovering its excess creditable 1. An administrative claim must be filed
tax for 2006 through refund or TCC since it with the CIR within two years after the
constructively chose the option of carry-over close of the taxable quarter when the
when, despite its initial option to refund, it zero-rated or effectively zero-rated
subsequently indicated in its 2007 ITR that it sales were made.
carried over the 2006 excess creditable tax
and applied the same against income tax due 2. The CIR has 120 days from the date of
for 2007. (University Physicians Services, submission of complete documents in
Inc. – Management, Inc. v. Commissioner of support of the administrative claim
within which to decide whether to
Page 2 of 12
NOTICE
This material supplements the author’s Bar Re ie er, Bar Supplement, Bar
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
This supplement covers significant and Q. The City of Manila imposed against ABC
relevant Supreme Court jurisprudence on a tax on manufacturers under Section 14 of
taxation law from July 1, 2017 to June 30, the Revenue Code of Manila and at the same
2018. time a tax on other businesses under Section
21 of the same Code. ABC argues that the
For jurisprudence and BIR issuances for the collection of taxes under both Sections 14
period prior to July 1, 2017, please refer to the and 21 of the Code constitutes double
previous supplements. taxation. Is ABC correct?
GENERAL PRINCIPLES Yes. While the City of Manila could impose
against ABC a manufacturer's tax under
Q. What is a tax amnesty? Section 14 of the Revenue Code of Manila, it
cannot at the same time impose the tax under
A tax amnesty is a general pardon or Section 21 of the same code; otherwise, an
intentional overlooking by the State of its obnoxious double taxation would set in.
authority to impose penalties on persons
otherwise guilty of evasion or violation of a Citing its previous ruling in The City of Manila
revenue or tax law. It partakes of an absolute v. Coca-cola Bottlers, Inc., G.R. No. 181845,
forgiveness or waiver by the government of its August 4, 2009, there is indeed double
right to collect what is due it and to give tax taxation if the taxpayer is subjected to the
evaders who wish to relent a chance to start taxes under both Sections 14 and 21 of Tax
with a clean slate. A tax amnesty, much like a Ordinance No. 7794, since these are being
tax exemption, is never favored nor presumed imposed: (1) on the same subject matter – the
in law. The grant of a tax amnesty, similar to privilege of doing business in the City of
a tax exemption, must be construed strictly Manila; (2) for the same purpose - to make
against the taxpayer and liberally in favor of persons conducting business within the City
the taxing authority. (Commissioner of of Manila contribute to city revenues; (3) by
Internal Revenue v. Philippine Aluminum the same taxing authority-petitioner City of
Wheels, G.R. No. 216161, August 9, 2017) Manila; (4) within the same taxing jurisdiction
- within the territorial jurisdiction of the City of
Q. When will a taxpayer be entitled to the Manila; (5) for the same taxing periods – per
immunities and privileges of a tax amnesty calendar year; and (6) of the same kind or
program? character - a local business tax imposed on
gross sales or receipts of the business (City of
Amnesty taxpayers may immediately enjoy Manila v. Cosmos Bottling Corporation, G.R.
the privileges and immunities under a Tax No. 196681, June 27, 2018)
Amnesty Law, provided they fulfill the
suspensive conditions imposed therein.
(Commissioner of Internal Revenue v.
Covanta Energy Philippine Holdings, G.R.
No. 203160, January 24, 2018)
Page 1 of 12
, QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
INCOME TAX Internal Revenue, G.R. No. 205955, 7 March
2018)
Q. The taxpayer initially opted to be
refunded of its excess creditable tax for Q. The BIR assessed ABC with deficiency
2006 through the issuance of a tax credit final withholding taxes (FWT) on interest
certificate. The taxpayer subsequently payments on loan agreements with XYZ for
indicated in its 2007 ITR that it carried over the taxable year 2000. The CTA found that
the 2006 excess creditable tax and applied ABC was not liable for the said deficiency
the same against income tax due for 2007. FWT since its liability for interest payment
The taxpayer filed with the BIR a claim for became due and demandable only on June 1,
refund and/or issuance of a TCC for the 2002. The BIR contends that ABC was liable
alleged excess credit for 2006. This was later to pay the interest from the date of the
elevated to the Court of Tax Appeals (CTA). execution of the contract on January 5, 2000,
Both CTA Division and CTA En Banc ruled not from the date of first payment on June 1,
that the taxpayer effectively exercised the 2002. Is the BIR correct?
carry-over option when it included the
excess tax credit for 2006 in the original ITR No. Under Section 2.57.4 of RR No. 2-98, the
for 2007. The taxpayer, on the other hand, obligation of ABC to deduct or withhold tax
contended that the option to be refunded arises at the time an income is paid or
through the issuance of a TCC is irrevocable. payable, whichever comes first. Further, the
Thus, when it indicated in its annual ITR for same Section provides that the term
2006 the option To be issued a Tax Credit pa a le refers to the date the obligation
Certificate, su h hoi e pre luded the other becomes due, demandable or legally
option to carry over. Is the taxpayer correct? enforceable. (Edison (Bataan) Cogeneration
Corporation v. Commissioner of Internal
No. The irrevocability rule is limited only to the Revenue, G.R. No. 201665, August 30, 2017)
option of carry-over. There is nothing in the
law which prevents the taxpayer who VALUE-ADDED TAX
originally opted for a refund or TCC to shift to
the carry-over of the excess creditable taxes Q. What are the rules on the determination
to the taxable quarters of the succeeding of the prescriptive period for filing a tax
taxable years. However, if the taxpayer refund or credit of unutilized input VAT?
decides to shift its option to carry-over, it may
no longer revert to its original choice due to The rules are as follows:
the irrevocability rule. Here, the taxpayer is
barred from recovering its excess creditable 1. An administrative claim must be filed
tax for 2006 through refund or TCC since it with the CIR within two years after the
constructively chose the option of carry-over close of the taxable quarter when the
when, despite its initial option to refund, it zero-rated or effectively zero-rated
subsequently indicated in its 2007 ITR that it sales were made.
carried over the 2006 excess creditable tax
and applied the same against income tax due 2. The CIR has 120 days from the date of
for 2007. (University Physicians Services, submission of complete documents in
Inc. – Management, Inc. v. Commissioner of support of the administrative claim
within which to decide whether to
Page 2 of 12
NOTICE
This material supplements the author’s Bar Re ie er, Bar Supplement, Bar
