ESCOBEDO-PAHULAYAN, JOSEPHINE N. FINALS (3/25/13) TAXATION REVIEW ATTY. SAN JUAN (PROFESSOR) PART 1: 1.

a) RA 8292 which took effect on April 23, 2004 expanded the jurisdiction of the CTA to include among others, the power to review by appeal decisions, orders or resolutions of the RTC on locat tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. Considering that Ras already in effect when the RTC rendered its decision, TELECO should have filed its appeal, not with the CA but with the CTA Division in accordance with the applicable laws and the rules of the CTA. Resort to the CA was therefore, improper, rendering its decision null and voud for want of jurisdiction over the subject matter. The Honorable Supreme Court in the case of NPC v. City of Cabanutan declared that a franchise tax is a tax on the privilege of transacting business in the state and exercising the corporate franchise granted by the State. It is not levied on the corporation simply for existing as a corporation upon its property or its income, but on its exercise of the rights or privileges granted to it by the government. Thus, to be liable for franchise tax, the following requisites must concur: 1. that one has a frnachise in the sense of a secondary or special franchise. 2. and that, it is exercising its rights or privileges under this frnachise witthin the territory of the pertinent local government unit. By virtue of PD 269, NEA granted TELECO a franchise to operate an electirc light and power service for a period of 50 years from date of its incorporation and it is thus undisputed that TELECO operate within the city of Teresa and municipalities of Rizal. It is thereofre, liable to pay franchise tax notwithstanding it non-pfit nature. b) It should be stressed that what the petitioner (city of Teresa) seeks to collect from TELECO is a franchise tax, which as definded is a tax on the exercise of the privilege. As Section 137 of the LGC provides, franchise tax shall be based on gross receipts precisely because it is a tax on business, rather than on persons or property. Since it partakes of the nature of an excise tax, situs of the taxation is the place where the privilege is exercise, in this case is the City of Teresa where TELECO has its principal office and from where it operates, regardless of the place where its services or products are delivered. Hence, franchise tax covers all gross receipts from the City of Teresa and the municipalities of Rizal. 2. TJCs availment of the worng mode of appeal and direct resort to the this Suprement Court instead of the CTA both warrant the dismissal of the petition at bench. The rule is settled that the perfection of an appeal in the manner and within the period fixed by law is not only mandatory but jurisdiction and non-compliance with these legal requirements is fatal to a partys cause. A taxpayer dissatisfied with a local treasurers denial or inaction on his protest over an seessement has 30 days within which to appeal to the court of competent jurisdiction. Under the law, said period is to be reckoned from the taxpayers receipt of the denied of his prtest or the lapse of 60 day period within which the local treasurer is required to decide the protest, from the moment of its filing. This is much clear from Sec 195 of the LGC. In the instant case, it is clear that TJC

erroneously availed of the wrong remedy in filing Rule 65 petition for certiorari to question Dazas inaction on its letter-protest. Consequently, Tjcs availment of the wrong mode of appeal from the RTCs assailed order has moreover, clearly rendered the same final and executory. 3. a) Yes. Recipient of services must be doing business outside of the Philipplines for the transactions to qualify as zero-rated. The reliance of herein petition Koothrapali Inc. that Section 102 (B) of the 1997 Tax code and not Section 108 (B) of the 1997 Tax Code, which was the law effective when the subject transactions were entered into and a refund was applied for is totally misplaced and untenable. The Court in the case of Burmeister harmonzied both Sections 102 (b) 1 and 102 (b) 2 of the 1997 Tax Code, as amended, pertaining to zero rated transactions. A parallel approach should be accorded to the renumbered provisions of section 108 (b) 2 and 108 (b) 1 of the 1997 NIRC. In said case, the Courts pronouncement requiring that the recip[ent of the services must be doing business outside the Philippines as mandated by law likewise governs the case at bar. Moreover, the Court upholds the position of the CTA en banc, that because section 108 (b) of the 1997 Tax Code is a verbatim copy of the section 102 (b) of the 1997 Tax Code, any interpretation of the latter holds true for the former. b) The documents presented by Koothrapali Inc. merely substantiate the existence of sales, receipts of foreign currency payments and inward remittance of the proceeds of sales duly accounted for in accordance with BSP rules. Koothrapali Inc. however, failed to present evidence whatsoever that ehir client were doing business outside the Philippines. A taxpayer claiming a tax credit or refund has the burden of proof to establish the factual basis of that claim. Tax refunds, like tax exemptions, are construed stirctly against the traxpayer. 4. A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties or persons otherwise guilty of violating a tax law. It partakes of an absolute waiver by the State of its right to collect what is due it and to give the tax evaders who wish to relent a cnance to start with a clean slate. In the instant case, the CIR did not assess AMY INC. as a withholding agent that failed to withhold or remit the deficiency VAT and excise tax to the BIR under relevant provisions of the Tax Code. Hence, the argument that AMY INC. deemed a withholding agent for these deficiency taxes is fallacious. The burden of taxation is not shifted to the withholding agent who merely collects by withholding the tax due from income payments to entities arising from ceratin transactions and remits the same to the government. Due to this difference, the deficiency tax and excise tax cannot be deemed as withholding taxes merely because they constitute indirect taxes. 5. Section 112 (D) of the 1997 Tax Code is clear, unequivocal, and categorical that the Commissioner has 120 days to act on as administrative claim. The taxpayer can file the judicial claim (1) only within 30 days after the Commisssioner partially or fully denies the claim within 120-day period, or (2) only within 30 days from the expiration of the 120 day period if the Commissioner does not act within the 120 day period. There can be no dispute that upon the effectivity of the 1997 Tax Code on 1 January 1998, or more that 13 years before RPC filed its administrative claim on 29 June 2012, the law has been

clear, the 120 day period is mandatory and jurisdictional. RPCs claim having been filed adminstratively on 29 June 2012 is governed by the 1997 Tax Code. Since it filed its judicial claim before the expiration of the 120 day mandatory and juridictional period, RPCs claim cannot prosper. 6. Section 76 of the NIRC of 1997 states every corporation liable to tax under Aection 27 shall file a final adjustment return covering the total taxable income for the preceding taxable year (calendar or fiscal year). If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of the year, the corporation shall either: a) pay the balance of the tax still due; or b) carry-over the excess credits; or c) be credited or refunded with the excess amount paid, as the case may be. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment retun may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarter of the succeeding years. Once option to carry over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option is irrevocable for that taxable period and no application for cash refund or issuance of a tax credit shall be allowed therefor Having chosen to carry over the excess quarterly income tax, Bazingga cannot thereafter chose to apply fo a cash refund or for the issuance of a tax credit for the amount representing such overpayment. 7. It is well settled that prosecution of crimes pertains to the executive department of the government whose princiapl power and resposibility is to insure that laws are faithfully executed. Corollaru to this power is the right to prosecute violators. All criminal actions commenced by complaint or information are prosecuted under the direction and control of the public prosecutors. In the prosecution of special laws, the exigencies of public service sometimes require the designation of special prosecutors form different government agencies to assist the public prosecutors. By merely noting without action petitioners motion for reconsideration the CTA did not gravely abused its discretion.. Foar as stated earler, a public porsecutor has control and supervision over the cases. The participation in the case of a private complainant. Like the petitioner BOC, is limited to that of a witness, both in the criminal and civil aspect of the case. Parenthetically, petitioner is not represented by the OSG in instituting the present petition, which contravenes established doctrines that the OSG shall represent the government of the Philippines, its agencies and instrumentalitires and its officials and agents in any litigation, proceeding, investigatrion or matter requiring the services of lawyers. BOC cannot, indeed, on tis own prosecute the instant case.

8. The petition is without merit. Excise taxes partake of the nature of indirect taxes. The right to claim a refund or be credited with the excise taxes belongs to its supplier. In Sikair (PTE) v. CIR, the Court has categorically declared that the proper party to question or seek a refund of, an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another.

9. a) The Court of Appeals has jurisdition to determine the validity of the Custom Adm. Order No. 7-92 issued by the BOC by virtue of its rule making power under Section 108 of the TCCP. Ruling that it could take cognizance of the BARs appeal, the CA held that BAR could not be faulted for not filing a case before the CTA because the Office of the President admitted that it preempted any action before the CTA. Deputy Executive Secretary of the OP treated the letter of BAR as an appeal and required it to pay appeal fee and to submit an appeal memorandum. The CA further ruled that what the OP treated as a decision of the Department of Finance was merely a decision from which an appeal could be taken and then rule that its was not perfected on time would deprive BAR of its right to due process. The Court of Appeals further ruled that it has the power to resolve the constitutional issue raised against CAO 7-92. The CA ruled that Sec 8 of Art IX-B of the Constitution prohibits appointive public officer or employee from receiving additional, double or indirect compensation, unless, specifically, authorized by law. b) In the case of Smart Communications v. NTC, the Court ruled the determination of whether a specific rule or set of ruled issued by an administrative agency contravenes the law or the Constitutions is within the juridiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, or executive agreement, presidential decree, order, instruction, ordinance or regulation in the courts, including the RTC. This is within the scope of the judicial power which includes authority of the courts to determine in an appropriate action the validity of the acts of the political departments.

Part II. 1. F 2. F 3. T 4. T 5. F 6. T 7. F 8. F 9. T 10. F 11. T 12. F 13. T 14. T 15. F Part III. 1. D 2. C 3. A 4. A 5. A 6. D 7. A 8. B 9. C

10. D 11. B 12. C 13. B 14. C 15. C 16. C 17. D 18. B 19. B 20. C 21. B 22. B 23. C 24. B 25. D 26. D 27. D 28. A 29. C 30. B 31. A 32. D 33. C 34. B 35. B 36. A 37. A 38. A 39. C 40. C .