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1. National Internal Revenue Code; Revenue Regulations No.

12-86; withholding taxes;


imposition thereof dependent upon the nature of work performed. For taxation purposes, a
director is considered an employee under Section 5 of Revenue Regulations No. 12-86. An
individual performing services for a corporation, whether as an officer and director or merely
as a director whose duties are confined to attendance at and participation in the meetings of
the Board of Directors, is an employee. The non-inclusion of the names of some of
petitioners directors in the companys Alpha List does not ipso facto create a presumption
that they are not employees of the corporation, because the imposition of withholding tax on
compensation hinges upon the nature of work performed by such individuals in the company.
Revenue Regulations No. 2-98 does not apply to this case as the latter is a later regulation
while the accounting books examined were for taxable years 1997. First Lepanto Taisho
Insurance Corporation vs. Commissioner of Internal Revenue, G.R. No. 197117. April 10,
2013.
2. Local Government Code; taxing power of local government units. The power to tax is an attribute of
sovereignty, and as such, inheres in the State. Such, however, is not true for provinces, cities, municipalities and
barangays as they are not the sovereign; rather, they are mere territorial and political subdivisions of the Republic of
the Philippines. The power of a province to tax is limited to the extent that such power is delegated to it either by the
Constitution or by statute. Book II of the Local Government Code establishes the parameters of the taxing powers of
local government units. Pelizloy Realty Corporation vs. The Province of Benguet, G.R. No. 183137. April 10, 2013.
Local Government Code; limitations on taxing power of local government units; percentage tax.Section
133 (i) of the Local Government Code (LGC) prohibits the levy by local government units (LGUs) of percentage tax
except as otherwise provided by the LGC. Percentage Tax is a tax measured by a certain percentage of the gross
selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or earnings derived
by any person engaged in the sale of services. Since amusement taxes are fixed at a certain percentage of the gross
receipts incurred by certain specified establishments, they are actually percentage taxes. However, provinces are not
barred from levying amusement taxes even if amusement taxes are a form of percentage taxes. Section 140 of the
LGC carves a clear exception to the general rule in Section 133 (i). Pelizloy Realty Corporation vs. The Province of
Benguet. G.R. No. 183137. April 10, 2013.
Local Government Code; limitations on taxing power of local government units; amusement tax.Section
140 of the Local Government Code (LGC) expressly allows for the imposition by provinces of amusement taxes on
the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of
amusement. Pelizloy Realty Corporation vs. The Province of Benguet. G.R. No. 183137. April 10, 2013.
Theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common typifying characteristic in that
they are all venues primarily for the staging of spectacles or the holding of public shows, exhibitions, performances,
and other events meant to be viewed by an audience. Accordingly, other places of amusement must be interpreted
in light of the typifying characteristic of being venues where one seeks admission to entertain oneself by seeing or
viewing the show or performances or being venues primarily used to stage spectacles or hold public shows,

exhibitions, performances, and other events meant to be viewed by an audience. Considering that resorts, swimming
pools, bath houses, hot springs and tourist spots do not belong to the same category or class as theaters, cinemas,
concert halls, circuses, and boxing stadia, it follows that they cannot be considered as among the other places of
amusement contemplated by Section 140 of the LGC and which may properly be subject to amusement
taxes. Pelizloy Realty Corporation vs. The Province of Benguet. G.R. No. 183137. April 10, 2013.

3. National Internal Revenue Code; value-added tax; period to appeal decision or inaction of the Commissioner of
Internal Revenue in claims for tax refund or credit of input value-added tax. The taxpayer may appeal the denial or the
inaction of the Commissioner of Internal Revenue (CIR) only within thirty (30) days from receipt of the decision
denying the claim or the expiration of the 120-day period given to the CIR to decide the claim. Because the law is
categorical in its language, there is no need for further interpretation by the courts and non-compliance with the
provision cannot be justified. Nippon Express (Philippines) Corporation vs. Commissioner of Internal Revenue. G.R.
No.

4.National Internal Revenue Code; value added tax; prescriptive period for filing a tax refund or credit
of input value-added tax. The rules on the determination of the prescriptive period for filing a tax refund or credit of
unutilized input value-added tax (VAT), as provided in Section 112 of the 1997 Tax Code, are as follows:
(1) An administrative claim must be filed with the Commissioner of Internal Revenue (CIR) within two years
after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in support of the
administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day
period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later
part of the two-year period. If the 120-day period expires without any decision from the CIR, then the administrative
claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the Court of Tax Appeals (CTA) within 30 days from the receipt of the
CIRs decision denying the administrative claim or from the expiration of the 120-day period without any action from
the CIR.
(4) All taxpayers, however, can rely on Bureau of Internal Revenue Ruling No. DA-489-03, which expressly
states that the taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief
with the CTA by way of Petition for Review, from the time of its issuance on 10 December 2003 up to its reversal by
the Court in CIR vs. Aichi Forging Company of Asia on 6 October 2010, as an exception to the mandatory and
jurisdictional

120+30

day

periods. Mindanao

II

Geothermal

Partnership

vs. Commissioner

of

Internal

Revenue/Mindanao I Geothermal Partnership vs. Commissioner of Internal Revenue.


National Internal Revenue Code; value-added tax; isolated transactions. Taxpayers sale of the Nissan Patrol is said to
be an isolated transaction. However, it does not follow that an isolated transaction cannot be an incidental transaction

for purposes of value-added tax (VAT) liability. Section 105 of the National Internal Revenue Code of 1997 would
show that a transaction in the course of trade or business includes transactions incidental thereto. Taxpayers
business is to convert the steam supplied to it by PNOC-EDC into electricity and to deliver the electricity to National
Power Corporation. In the course of its business, taxpayer bought and eventually sold a Nissan Patrol. Prior to the
sale, the Nissan Patrol was part of taxpayers property, plant, and equipment. Therefore, the sale of the Nissan Patrol
is an incidental transaction made in the course of taxpayers business which should be liable for VAT. Mindanao II
Geothermal

Partnership

vs. Commissioner

of

Internal

Revenue/Mindanao

Geothermal

Commissioner of Internal Revenue. G.R. No. 193301 & G.R. No. 194637. March 11, 2013.

Partnership

vs.