TAXATION LAW: LATEST JURISPRUDENCE (SC and CTA Cases 2013 2015)

1. The Court also held that where the employer has accrued or recorded bonuses as
deductible in its books, its obligation to withhold the related withholding tax on such
accrued bonuses arose at the time of accrual and not at the time of actual payment.
The obligation of the payor/employer to deduct and withhold the related
withholding tax arises at the time the income was paid or accrued or recorded as
an expense in the payors/employers books, whichever comes first. (ING Bank
N.V. Engaged in Banking Operations in the Philippines as ING Bank N.V. Manila
Branch v. Commissioner of Internal Revenue, G.R. No. 167679, July 22, 2015.)
2. The CTA En Banc has exclusive jurisdiction over appeals from the decisions of its
divisions.
Taxpayer was issued by the BIR several assessment notices for deficiency income
tax and VAT covering the taxable year 1999 to 2002. Taxpayer filed its protest
letters, but were eventually denied by the BIR. Taxpayer then filed a petition for
review with the CTA, questioning the assessments. The CTA First Division denied
the petition. The CTA Division likewise denied the motion for reconsideration.
Taxpayer then appealed directly to the Supreme Court under Rule 45 of the 1997
Rules of Civil Procedure , assailing the decision and resolution of the CTA Division.
The Supreme Court ruled that it is without jurisdiction to review decisions rendered
by a division of the CTA, exclusive appellate jurisdiction of which is vested in the
CTA en banc. (Duty Free Philippines vs. Bureau of Internal Revenue, G.R. No
197228, October 8, 2014)

3. Sending the Formal Assessment Notice to the taxpayers old address does not
suspend the running of the prescriptive period if the BIR is aware of the taxpayers
new address. (Commissioner of Internal revenue vs. BASF Coating + Inks
Philippines, Inc. G.R. No. 198677, November 26, 2014)
4. The Supreme Court ruled that there are exceptions to the 3- year prescriptive
period, such as, but not limited to a case of a false or fraudulent return with intent
to evade tax or of failure to file a return, in which 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.
In this case, the taxpayers substantial under-declaration of withholding taxes
which constituted the falsity in the subject returns giving the BIR the benefit of
the period under Section 222 of the NIRC of 1997 to assess the correct amount of
tax at any time within ten (10) years after the discovery of the falsity, fraud or

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omission. (Samar-I Electric Cooperative vs. Commissioner of Internal Revenue,

G.R. No. 193100 December 10, 2014)
5. Although the FAN and demand letter issued to petitioner were not accompanied
by a written explanation of the legal and factual bases of the deficiency taxes
assessed against the petitioner, the records showed that respondent in its letter
dated April 10, 2003 responded to petitioners October 14, 2002 letter-protest,
explaining at length the factual and legal bases of the deficiency tax assessments
and denying the protest.
Considering the foregoing exchange of correspondence and documents between
the parties, we find that the requirement of Section 228 was substantially complied
with. Respondent had fully informed petitioner in writing of the factual and legal
bases of the deficiency taxes assessment, which enabled the latter to file an
effective protest, much unlike the taxpayers situation in Enron. Petitioners right
to due process was thus not violated. (Samar-I Electric Cooperative vs.
Commissioner of Internal Revenue, G.R. No. 193100 December 10, 2014)
6. The Supreme Court held that the Documentary Stamp Tax (DST) is only imposed
on all conveyances, deeds, instruments or writing where realty sold shall be
conveyed to a purchaser or purchasers for a consideration under Section 196 of
Tax Code of 1997 Tax Code. Section 196 of the 1997 Tax Code does not apply to
all kinds of transfers and conveyances of real property for valuable consideration.
It is imposed on the transfer of realty by way of sale and does not apply to all
conveyances of real property. In a merger, the real properties are not deemed
sold to the surviving corporation and the latter could not be considered as
purchaser of realty since the real properties subject of the merger were merely
absorbed by the surviving corporation by operation of law and these properties are
deemed automatically transferred to and vested in the surviving corporation
without further act or deed. Therefore, this is not subject to DST. (Commissioner
of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 192398,
September 29, 2014)
7. The Supreme Court ruled that our Constitution provides for adherence to the
general principles of international law as part of the law of the land. The timehonored international principle of pacta sunt servanda demands performance in
good faith of treaty obligation on the part of the states that enter into the agreement.
Prior application for tax treaty relief is not required for the availment of tax treaty
provisions. (Deutsche Bank AG Manila Branch vs. Commissioner of Internal
Revenue, G.R. No. 188550, August 19, 2014)
8. No writ is necessary to enforce a decision granting a refund or credit of excessively
paid local business tax since the implementation of the tax refund will effectively
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be a return of funds by the City of Manila in favor of the taxpayer while a tax credit
will merely serve as a deduction of taxpayers tax liability in the future. The
issuance of a writ of execution is superfluous because the judgment can neither
be considered a judgment for a specific sum of money susceptible of execution by
levy or garnishment under Section 9, Rule 39 of the Rules of Court nor a specific
judgment under Section 11, Rule 39 thereof. (Coca-Cola Bottlers Philippines, Inc.
vs. City of Manila, G.R. No. 197561, April 7, 2014)
9. If the assessment is barred by prescription, the Court is mandated to dismiss the
same even if prescription is not raised as a defense. (Bank of the Philippine Islands
vs. Commissioner of Internal Revenue, G.R. No. 181836, July 9, 2014)
10. An exception to the 120+30 day periods provided in Section 112 of the NIRC is the
period from December 10, 2003 to October 10, 2010, where a petition for review
in a claim for refund of input taxes related to zero-rated sales may be filed with the
CTA without waiting for the lapse of 120 day. The Court, however, cited also the
case of Commissioner of Internal Revenue vs. San Roque Power Corporation,
where it was clarified that the mandatory and jurisdictional nature of the 120-30day rule does not apply on claims for refund that were prematurely filed during the
interim period from the issuance of BIR Ruling No. DA-489-03 on December 10,
2003 to October 6, 2010 when the Aichi Case was promulgated. (Team Energy
Corporation vs. Commissioner of Internal Revenue, G.R. No. 197760, January 13,
2014)
11. The Supreme Court ruled that a taxpayer can file his administrative claim for refund
or credit at any time within the 2-year prescriptive period. What is only required of
him is to file his judicial claim within 30 days after denial of his claim or after the
expiration of the 120-day period within which the BIR can decide on its claim. The
two-year prescriptive period as provided in Section 112 of the Tax Code applies
only to administrative claim, not to the judicial claim. (Team Energy Corporation vs.
Commissioner of Internal Revenue, G.R. No. 190928, January 13, 2014)
12. Summary of Rules on the Prescriptive Period for Claiming Refund or Credit of Input
VAT

a) Two-year prescriptive period

1. It is only the administrative claim that must be filed within the 2-year
prescriptive period. (Aichi Case)
2. The proper reckoning date for the 2-year prescriptive period is the close of
the taxable quarter when the relevant sales were made. (San Roque Case)
3. The only other rule is the Atlas ruling, which applied only from 8 June 2007
to 12 September 2008. Atlas states that the 2-year prescriptive period for
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filing a claim for tax refund or credit of unutilized input VAT payments should
be counted from the date of filing of the VAT return and payment of the tax.
(San Roque)

1.

2.
3.
4.

5.

b) 120+30 day rule

The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within
thirty days after the Commissioner denies the claim within the 120-day period, or
(2) file the judicial claim within thirty days from the expiration of the 120-day period
if the Commissioner does not act within the 120-day period.
The 30-day period always applies, whether there is denial or inaction on the part
of the BIR.
As a general rule, the 30-day period to appeal is both mandatory and jurisdictional.
(Aichi and San Roque Cases)
As an exception to the general rule, the premature filing is allowed only if filed
between December 10, 2003 and October 5, 2010, when BIR Ruling No. DA-48903 was still in force. (San Roque)
Late filing is absolutely prohibited, even during the time when BIR Ruling No. DA489-03 was in force. (San Roque) (Commissioner of Internal Revenue vs.
Mindanao II Geothermal Partnership, G.R. No. 191498, January 15, 2014)

6. Petition for certiorari seeking the nullification of an interlocutory order of an RTC

judge involving a claim for tax refund is vested with the CTA, not with the CA. (The
City of Manila vs. Hon. Caridad H. Grecia-Cuerdo, G.R. No. 175723, February 2,
2014)
7. The three elements for the imposition of income tax are: (1) there must be gain or
profit, (2) such gain or profit is realized or received, actually or constructively, and
(3) it is not exempted by law or treaty from income tax. Income tax is assessed on
income received from any property, activity or service. Such being the case, the
imposition or assessment of income tax does not happen when there is an
undeclared purchase, but only when there was an income, and such income was
received or realized by the taxpayer.
Furthermore, it must be emphasized that for income tax purposes, a taxpayer is
free to deduct from its gross income a lesser amount, or not claim any deduction
at all. What the income tax law prohibits is the claiming of deduction beyond the
amount authorized therein. Hence, even granting that there is an undeclared
purchase, the same is not prohibited by law. A taxpayer can exercise its discretion
on whether or not it will declare a lesser amount of deductions or none at all.
In the same vein, no deficiency value-added tax (VAT) assessment should arise
from underdeclared purchase. Note that VAT is imposed on the seller of the goods,
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pursuant to Section 105 of the 19997 Tax Code. VAT is assessed on the gross
selling price or gross value in money of the goods or properties sold and is to be
paid by the seller or transferor Thus, what is critical to be shown in the imposition
or assessment of VAT in the sale of goods or properties is that the taxpayer is paid
or ought to be paid in an amount of money or its equivalent, in consideration of
such sale, and not when said taxpayer purchases or disburses an amount of
money to purchase goods or properties. Simply put, the VAT is imposed when one
sells, not when one purchases. (Commissioner of Internal Revenue v. Agrinulture
Inc., CTA EB No. 1054, January 13, 2015)
8. On November 9, 2001, the Bank of Commerce (BOC) and Traders Royal Bank
(TRB) executed a Purchase and Sale Agreement whereby it stipulated TRBs
desire to sell and BOCs desire to purchase identified assets of TRB in
consideration for BOC assuming identified liabilities. Under the Agreement, BOC
and TRB shall continue to exist as separate corporations with distinct corporate
personalities. On September 27, 2002, BOC received assessment demanding
payment of deficiency DST of TRB for the year 1999. After its unsuccessful protest,
BOC filed a petition for review before the CTA raising, among others, the issue as
to whether BOC can be held liable for TRBs alleged deficiency DST liability.
The CTA En Banc was affirmed by the Supreme Court in ruling that the BOC
cannot be held liable for the alleged DST liability of TRB, in the absence of a
merger, and the DST liability was not among the liabilities assumed by BOC under
the Purchase and Sale Agreement. A taxpayer is not liable for the tax liability of
another taxpayer in the absence of a merger. (Commissioner of Internal Revenue
vs. Bank of Commerce, G.R. No. 180529, November 13, 2013)
9. Section 204(c) of the NIRC states that it is the statutory taxpayer which has the
legal personality to file a claim for refund. Accordingly, in cases involving excise
tax exemptions on petroleum products under Section 135 of the NIRC, it is the
statutory taxpayer who is entitled to claim a tax refund and not the party who merely
bears its economic burden. However, this rule does not apply to instances where
the law clearly grants the party to which the economic burden of tax is shifted an
exemption from both direct and indirect taxes. In which case, the latter must be
allowed to claim a tax refund even if it is not considered as the statutory taxpayer.
if the law confers an exemption from both direct and indirect tax, a claimant is
entitled to a refund even if it only bears the economic burden of the applicable tax.
on the other hand, if the exemption conferred by law applies to direct taxes, then
the statutory taxpayer is regarded as the proper party to file the refund claim.
(Philippine Airlines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 198759,
July 01, 2013)

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10. It is noteworthy that excise taxes are considered as a kind of indirect tax, the
liability for the payment of which may fall on a person other than whoever actually
bears the burden of the tax. Simply put, the statutory taxpayer may shift the
economic burden of the excise tax payment to another - usually the buyer.
In cases involving excise tax exemptions on petroleum products under Section 135
of the NIRC, the Court has consistently held that it is the statutory taxpayer, not
the party who only bears the economic burden, who is entitled to claim the tax
refund or tax credit. But the Court has also made clear that this rule does not apply
where the law grants the party to whom the economic burden of the tax is shifted
by virtue of an exemption from both direct and indirect taxes. In which case, such
party must be allowed to claim the tax refund or tax credit even if it is not
considered as the statutory taxpayer under the law. (Chevron vs CIR, G.R. 210836,
September 1, 2015)
11. The following must be present for the Court of Tax Appeals to have jurisdiction
over a case involving the BIRs decisions or inactions:
a) A case involving any of the following:
Disputed assessments;
Refunds of internal revenue taxes, fees, or other charges,
penalties in relation thereto; and
Other matters arising under the National Internal Revenue
Code of 1997.
b) Commissioner of Internal Revenues decision or inaction in a case
submitted to him or her
Thus, the BIR first has to make an assessment of the taxpayers liabilities. When
the BIR makes the assessment, the taxpayer is allowed to dispute that assessment
before the BIR. If the BIR issues a decision that is unfavorable to the taxpayer or
if the BIR fails to act on a dispute brought by the taxpayer, the BIRs decision or
inaction may be brought on appeal to the Court of Tax Appeals. The Court of Tax
Appeals then acquires jurisdiction over the case.
The determination of the proper category of tax that petitioner should have paid is
an incidental matter necessary for the resolution of the principal issue, which is
whether petitioner was entitled to a refund.
The elevation of the refund claim with the Court of Tax Appeals was not a bar
against the BIRs exercise of its assessment powers.
(SMI-ED PHILIPPINES TECHNOLOGY, INC., Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE, Respondent, G.R. No. 175410, November 12, 2014)
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12. Taxpayers business is to convert steam supplied to it by PNOC-EDC into

electricity and to deliver the electricity to NPC. In the course of its business,
taxpayer bought and eventually sold Nissan Patrol. According to the Court, the
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 VAT liability. Section 105 of the 1997 Tax Code includes transactions incidental
thereto. 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 to VAT.
(Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue, G.R.
No. 193301, March 11, 2013)
13. General Rule, the jurisdiction to review the rulings of the Commissioner of Internal
Revenue pertains to the Court of Tax Appeals.
In exceptional cases, however, Supreme Court entertained direct recourse to it
when dictated by public welfare and the advancement of public policy, or
demanded by the broader interest of justice, or the orders complained of were
found to be patent nullities, or the appeal was considered as clearly an
inappropriate remedy.
Here, the nature and importance of the issues raised to the investment and
banking industry with regard to a definitive declaration of whether government debt
instruments are deposit substitutes under existing laws, and the novelty thereof,
constitute exceptional and compelling circumstances to justify resort to this court
in the first instance. (BDO vs. Replublic, G.R. No. 198756, January 13, 2015)
14. The SC ruled that the review by the DOF of a BIR ruling is appealable to the CTA
pursuant to its jurisdiction over other matters arising under the NIRC. (Philam Life
vs. Secretary of Finance, GR 210987, November 24, 2014)
15. Certiorari can only be used against a public officer exercising judicial or quasijudicial powers. Secretary of Finance and CIR do not fall within the ambit of a
tribunal, board, or officer exercising judicial or quasi-judicial functions. They issued
RR 2-2012 in the exercise of their quasi-legislative or rule-making powers, and not
judicial or quasi-judicial functions. Verily, respondents did not adjudicate or
determine the rights of the parties. Proper remedy to contest the legality of RR 22012 is by way of the special civil action of declaratory relief falls under the
exclusive jurisdiction of the Regional Trial Courts. ( Clark Investors and Locators,
Assoc. vs. Sec of Finance, GR 200670, July 6, 2015)
16. The CTA is a court of special jurisdiction, with power to review by appeal decisions
involving tax disputes rendered by either the CIR or the COC. Conversely, it has
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no jurisdiction to determine the validity of a ruling issued by the CIR or the COC in
the exercise of their quasi-legislative powers to interpret tax laws.
The phrase "other matters arising under this Code," as stated in the second
paragraph of Section 4 of the NIRC, should be understood as pertaining to those
matters directly related to the preceding phrase "disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties imposed in relation
thereto" and must therefore not be taken in isolation to invoke the jurisdiction of
the CTA.
In other words, the subject phrase should be used only in reference to cases that
are, to begin with, subject to the exclusive appellate jurisdiction of the CTA, i.e.,
those controversies over which the CIR had exercised her quasi-judicial functions
or her power to decide disputed assessments, refunds or internal revenue taxes,
fees or other charges, penalties imposed in relation thereto, not to those that
involved the CIR's exercise of quasi-legislative powers. (CIR vs. Petron
Corporation, G.R. No. 207843, July 15, 2015)
17. It is, therefore, clear that the CTA en banc has jurisdiction over final order or
judgment but not over interlocutory orders issued by the CTA in division. The
petition for certiorari should be filed directly with the Supreme Court
(COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. COURT OF TAX
APPEALS AND CBK POWER COMPANY LIMITED, Respondents., G.R. Nos.
203054-55, July 29, 2015)
18. CTA has original jurisdiction over a petition for certiorari assailing the DOJ
resolution in a preliminary investigation involving tax and tariff offenses. (Bureau
of Customs Vs. The Honorable Agnes Vst Devanadera, et al., G.R. No. 193253.
Septebmer 8, 2015)
19. In the present case, the BIR considered the tax assessment final, executory and
demandable because of the taxpayers failure to submit the required documents
for assessment within 60 days from filing its protest.
The CTA ruled against this defense stating that the petitioners submission of
protest without supporting documents does not invalidate the filing of the protest.
The lack of documentation will only matter when the BIR evaluates the merits of
the said protests, but should not automatically result in the deficiency assessment
becoming final and executory. (Phil Foods Properties, Inc. v. CIR, CTA Case No.
8185, Third Division, December 3, 2014)
20. Sections 226 to 231 of the Local Government Code (LGC) specify the
administrative remedies available to a real property owner who is not satisfied with
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the action of the provincial, city or municipal assessor in the assessment of his
property. Under said provision, the taxpayer must first pay the RPT assessment
before filing a written protest with the treasurer concerned. The protest must then
be filed within 30 days from payment of the RPT. From the receipt of the protest,
the treasurer has 60 days to decide the same. Upon denial of the protest or the
lapse of the 60-day period, the taxpayer is afforded the remedy of filing an appeal
with the Local Board of Assessment Appeals (LBAA). If the taxpayer is not satisfied
with the decision of the LBAA, he can appeal the decision to the Central Board of
Assessment Appeals (CBAA) within 30 days after the receipt of the decision.
In the present case, the taxpayer filed an appeal directly with the Regional Trial
Court (RTC) for the denial of cancellation of RPT assessment, invoking Section
195 of the LGC. The Municipal Assessor and Treasurer contested the appeal
stating that it is under the jurisdiction of LBAA (not the RTC) and as provided under
Section 226 to 231, the RPT under protest should have been paid as a condition
precedent to its appeal.
Considering that the LBAA has jurisdiction to rule on the correctness of the subject
assessment, the RTC cannot decide on the case. Likewise, since the taxpayer
failed to pay the RPT under protest and appeal before the LBAA within the
mandated period, the RPT assessments have become final and collectible.
(Lepanto Consolidated Mining Company v. Municipal Treasurer of the Municipality
of Mankayan, Benguet, CTA EB, Case No. 1092, December 16, 2014)
21. Appeals from RPT assessments should be made to the LBAA within 60 days (Bay
Resources Development Corporation v. LBAA and Local Treasurer of Paranaque,
CTA EB Case No. 1036, December 16, 2014)
22. Taxes cannot be subject to set-off or compensation for the simple reason that the
government and the taxpayer are not creditors and debtors of each other. There
is a material distinction between tax and debt. Debts are due to the government in
its corporate capacity, while taxes are due to the government in its sovereign
capacity.
A person cannot refuse to pay 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. (Bay Resources
Development Corporation v. LBAA and Local Treasurer of Paranaque, CTA EB
Case No. 1036, December 16, 2014)
23. The City Treasurer of Makati may not levy local business tax on dividend income
received by a holding company. Section 3A.02(p), in relation to 3A.02(h), both of
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the Revised Makati Revenue Code (RMRC) is an ultra vires exercise of local taxing
power.
Section 3A.02(h), RMRC imposes a local business tax on the dividend income of
certain taxable entities. Section 3A.02(p), RMRC makes holding companies liable
for this business tax. However, Section 133(a), Local Government Code (LGC)
provides that the taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of income tax, except when levied on banks and other
financial institutions. Thus, Section 3A.02(p) in relation to 3A.02(h), both of the
RMRC, in imposing local business tax on the dividend income received by a
holding company, which is neither a bank nor financial institution, violates Section
133(a), LGC. These sections of the RMRC likewise violate Section 27(D)(4),
National Internal Revenue Code (Tax Code), which provides that dividends
received by a domestic corporation from another domestic corporation shall not be
subject to tax, i.e., corporate income tax. Dividends are instead subject to a final
tax at the rate of twenty percent (20%) under Section 27(D)(1), Tax Code.
(Michigan Holdings, Inc. vs. The City Treasurer of Makati, Nelia A. Barlis, CTA EB
No. 1093, June 17, 2015)

24. Section 146 of the LGC states that "the tax on a business must be paid by the
person conducting the same." This is a statutory limitation on the taxing authority
of a local government unit, such as a city.
It is indeed basic that a business tax on gross sales or receipts must be levied
upon the person who receives the said gross sales or receipts. In a corporation,
the stockholders are not the recipients of the gross sales or receipts, but the
corporation itself. In a corporation, the stockholders as owners of shares of stocks
are not necessarily the ones conducting the business, particularly if such
stockholders are not at the same time directors, officers or employees of the
corporation; it is the corporation itself, as a juridical entity distinct from its
stockholders, that conducts the business. A corporation may, however, also
engage another entity to operate the business, or a segment thereof, on its behalf.
(Cityland, Inc. v. City of Makati CTA AC-125, July 2, 2015)

25. The Post Report Notice (PRN) is not akin to PAN, which is required to be issued
pursuant to Section 228 of the Tax Code and its implementing RR 12-99, as
amended, as part of the due process requirement in the issuance of tax
assessment. The CTA cited the case of Commissioner of Internal Revenue v.
Enron Subic Power Corporation (GR 166387, January 19, 2009) where the
Supreme Court held that the factual bases in the advice, preliminary letter, and
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audit working papers are not sufficient to meet the requirement laid down in
Section 228 of the Tax Code.
According to the CTA, PAN is an indispensable element of due process, and
considering that the PRN issued to the taxpayer cannot take the place of PAN, the
assessment issued against the taxpayer was cancelled due to the failure of the
BIR to prove that the PAN was issued and received by the taxpayer. (Direct
Container Line Philippines, Inc. v. Commissioner of Internal Revenue, CTA EB No.
1019 re: CTA Case No. 7616, August 4, 2014)
26. The CTA held that the issuance of the FAN before the lapse of the 15- day period
for the taxpayer to file its protest to the PAN inflicts no prejudice on the taxpayer
for as long as the taxpayer is properly served a FAN and it was able to intelligently
contest the FAN by filing a protest letter within the prescribed period provided by
law. (Medtex Corporation v. Commissioner of Internal Revenue, CTA Case No.
8508, September 1, 2014)
27. As a withholding agent, an employer is entitled to claim a refund of withholding
taxes on employees separation pay that were erroneously subjected to
withholding tax. The separation paid by the employer was the result of the
involuntary termination from service (i.e., cessation of business), which is exempt
from income tax and consequently from withholding tax pursuant to Section
32(B)(6)(b) of the Tax Code, as amended
In the case of Commissioner of Internal Revenue v. SMART Communications, Inc.
(GR 179045-46, August 25, 2010), the Supreme Court held that the withholding
agent has the right to recover the taxes erroneously or illegally collected for two
reasons: First, he is considered a taxpayer under the Tax Code as he is
personally liable for the withholding tax as well as for deficiency assessments,
surcharges, and penalties, should the amount of the tax withheld be finally found
to be less than the amount that should have been withheld under the law.
Second, as an agent of the taxpayer, his authority to file the necessary income tax
return and to remit the tax withheld to the government impliedly includes the
authority to file a claim for refund and to bring an action for recovery of such claim.
(Ong Ben Gui v. Commissioner of Internal Revenue, CTA Case No. 8410,
September 8, 2014)
28. The imposition of both a city or business tax and a franchise tax does not result in
double taxation, even if both are based on the gross receipts and sales of
petitioners business.
A franchise tax is a tax on the privilege of transacting business in the state and
exercising corporate franchises granted by the state, and is imposed only on
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franchise holders. On the other hand, a city or business tax is a percentage tax
based on a given ration between the gross sales or receipts and the burden
imposed upon the taxpayer. It is imposed on any person engaged in the sale of
services or goods. Thus, they are not of the same kind or character. (Sky Cable
Corporation v. Quezon City and the Office of the City Treasurer of Quezon City,
CTA AC No. 102 dated February 10, 2014)
29. The absence of donative intent, if that be the case, does not exempt the sales of
stock transaction from donors tax since Sec. 100 of the NIRC categorically states
that the amount by which the fair market value of the property exceeded the value
of the consideration shall be deemed a gift. Thus, even if there is no actual
donation, the difference in price is considered a donation by fiction of law. (Philam
Life vs. Secretary of Finance, GR 210987, November 24, 2014)

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