INCOME TAXATION

Improperly Accumulated Earnings Tax (IAET)

Corporation liable: DC and closely-held corporations

Tax Rate: 10%
Tax Base: Improperly accumulated earnings

Improperly accumulated earnings refer to profits of a corporation that are permitted to

accumulate instead of being distributed to its shareholders for the purpose of avoiding the
income tax with respect to its shareholders or the shareholders of another corporation

Reason: if earnings and profits were distributed, shareholders would be liable to income tax
thereon, whereas if there is no distribution, they would incur no tax in respect to the
undistributed earnings and profits of the corporation. Thus, a tax is being imposed:

1. As penalty for the improper accumulation of its earnings (penalty tax); and
2. As a form of deterrent to the avoidance of tax upon shareholders who are supposed to
pay dividends tax on the earning distributed to them by the corporation.

Period for payment of Dividend or Payment of IAET

Dividends must be declared and paid or issued not later than one (1) year following the close of
the taxable year.

Otherwise, IAET (if any) should be paid within (15) days thereafter.

Note: If a taxable partnership does not declare dividends, it is not subject to IAET because
under Sec. 73(D) of the NIRC, the net share of a partner is deemed constructively received.
-------------------------------------------------------------------------------------------------------------------------------

Tax on Educational Institutions

Proprietary educational institution Any private school maintained and administered by private
individuals or groups with an issued permit to operate from the Department of Education, or
the Commission on Higher Education, or the Technical Education and Skills Development
Authority.

Tax Rate: Fixed rate of 10%

Tax Base: Net income except income subject to capital gains tax and passive income subject to
final tax within and without the Philippines.

Requisites for Applicability of 10% Rate: (SPUF)

1
 a. Stock and non-profit institution;
b. Private educational institution or hospital;
c. Gross income from unrelated trade, business, activity does not exceed fifty percent
(50%) of gross income from all sources (Predominance theory); and
d. For educational institutions, issued a permit to operate from DepEd, CHED, or TESDA
Unrelated Trade, Business or Other Activity
- Any trade, business or activity, the conduct of which is not substantially related to the
exercise or performance by such education institution or hospital of its primary purpose
or function.

Exceptions:
a. If gross income from unrelated trade, business or other activity exceeds fifty percent
(50%) of the total gross income derived from all sources tax rate is whichever is higher
between: thirty percent (30%) NCIT or two percent (2%) MCIT
b. If a non-stock non-profit educational institution- exempt

Note: Non-stock, non-profit corporations or associations which claim to be charitable or

social welfare but are not organized and operated exclusively for charitable or social
welfare purposes are not entitled to the income tax exemption under Section 30(E) and (G)
of the NIRC, as amended, and their taxable income shall be subject to ordinary 30%
corporate rate under section 27(A) if the NIRC, as amended.
-------------------------------------------------------------------------------------------------------------------------------

Capital Asset vs Ordinary Asset

Ordinary assets are those enumerated as exclusions from capital assets under Section 39(A)
of the NIRC. (SOUR)
1. Stocks in trade of the taxpayer or other properties of a kind which would properly be
included in the inventory of the taxpayer if on hand at the close of the taxable year
2. Property held by the taxpayer primarily for sale to customers in the Ordinary course of
business
3. Personal property used in trade or business subject to depreciation and
4. Real Property used in trade or business

Note: The above-mentioned list is exclusive.

Capital assets
All other properties not classified as ordinary asset.

Examples:
1. Accounts receivable
2. Investment in stocks; and
3. Goodwill.
-------------------------------------------------------------------------------------------------------------------------------

2
 Capital Gains Tax (CGT)

Sale of Shares of Stock Subject to CGT

Coverage: Sale of Shares of stock of a domestic corporation not listed and not traded in the
stock exchange by a non-dealer in securities

Note: What is controlling is whether or not the shares of stock are traded in the local stock
exchange and not where the actual sale happened.
Persons Liable:
1. Individuals- citizen or alien
2. Corporation domestic or foreign
3. Other taxpayers such as estate, trust, trust funds and pension, among others.

CGT Rate:
5% for the first P100,000.00 and 10% for the amount in excess of P100,000.00

Tax Base: Net capital gains (gross selling price or consideration less cost or adjusted basis) on a
per transaction basis.

Excluded from the coverage:

1. Sale of shares of stock in a foreign corporation the gain on which will be subject to
regular income tax rates;
2. Sale made by a dealer in securities - the gain on which will be subject to regular income
tax rates; and
3. Stock traded in the stock exchange other than the sale by a dealer in securities which
will be subject to stock transaction tax of of 1% on its gross selling price.

Sale or other disposition of real property subject to CGT

Coverage:
1. Sale, exchange or other disposition (including pacto de retro sales and other forms of
conditional sales) of:
a. Real property with respect to individual taxpayers, estate and trust; and
b. Land and buildings with respect to domestic corporations;

2. Located in the Philippines

3. By a non-dealer in real estate
4. In case of sale subject to right of redemption, such right must not have been exercised
upon the expiration of the period to redeem

Persons Liable:
1. Individual- citizen or alien
2. Corporation- domestic corporation

3
 3. Other taxpayers such as estate and trust

CGT rate and tax base:

General Rule: 6% on the gross selling price or zonal value or the FMV as shown in the schedule
of values of the provincial and city assessors, whichever is the highest

Exceptions:
1. In case of sale of principal residence, capital gains presumed to have been realized
therein shall be exempt from CGT, subject to certain conditions;
2. If the buyer of real property is the government or any of its political subdivisions or
agencies or GOCCS and the seller is an individual, the taxpayer has the option to subject
the capital gains to the regular income tax rates; and
3. In case of sale subject to right of redemption, the CGT shall be based on the bid price of
highest bidder

Note: Gain or loss is immaterial, there being a conclusive presumption of gain.

-------------------------------------------------------------------------------------------------------------------------------

Irrevocability Rule

SEC. 76. - Final Adjustment Return. - Every corporation liable to tax under Section 27 shall file a
final adjustment return covering the total taxable income for the preceding 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 that year, the corporation shall either:

(A) Pay the balance of tax still due; or

(B) Carry-over the excess credit; 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 return may be carried over
and credited against the estimated quarterly income tax liabilities for the taxable quarters of the
suceeding taxable years. Once the 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 shall be considered irrevocable for that taxable period and no application for
cash refund or issuance of a tax credit certificate shall be allowed therefor.

4
 G.R. No. 168118 August 28, 2006
THE MANILA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE

Ruling/Doctrine:

Respondent. The intent of Congress relative to the minimum corporate income tax is to grant a
four (4)-year suspension of tax payment to newly formed corporations. Corporations still
starting their business operations have to stabilize their venture in order to obtain a stronghold
in the industry. It does not come as a surprise then when many companies reported losses in
their initial years of operations. Thus, in order to allow new corporations to grow and develop
at the initial stages of their operations, the lawmaking body saw the need to provide a grace
period of four years from their registration before they pay their minimum corporate income
tax.
Significantly, on February 23, 1995, Congress enacted R.A. No. 7906, otherwise known as the
Thrift Banks Act of 1995. It took effect on March 18, 1995. This law provides for the regulation of
the organization and operations of thrift banks. Under Section 3, thrift banks include savings and
mortgage banks, private development banks, and stock savings and loans associations organized
under existing laws.

On June 15, 1999, the BIR issued Revenue Regulation No. 4-95 implementing certain provisions
of the said R.A. No. 7906. Section 6 provides:

Sec. 6. Period of exemption. All thrift banks created and organized under
the provisions of the Act shall be exempt from the payment of all taxes, fees, and
charges of whatever nature and description, except the corporate income
tax imposed under Title II of the NIRC and as specified in Section 2(A) of these
regulations, for a period of five (5) years from the date of commencement of
operations; while for thrift banks which are already existing and operating as of
the date of effectivity of the Act (March 18, 1995), the tax exemption shall be for
a period of five (5) years reckoned from the date of such effectivity.

For purposes of these regulations, date of commencement of operations

shall be understood to mean the date when the thrift bank was registered with
the Securities and Exchange Commission or the date when the Certificate of
Authority to Operate was issued by the Monetary Board of the Bangko Sentral ng
Pilipinas, whichever comes later.

It is clear from the above-quoted provision of Revenue Regulations No. 4-95 that the date
of commencement of operations of a thrift bank is the date it was registered with the SEC or
the date when the Certificate of Authority to Operate was issued to it by the Monetary Board of
the BSP, whichever comes later.

5
Let it be stressed that Revenue Regulations No. 9-98, implementing R.A. No. 8424 imposing the
minimum corporate income tax on corporations, provides that for purposes of this tax, the date
when business operations commence is the year in which the domestic corporation registered
with the BIR. However, under Revenue Regulations No. 4-95, the date of commencement of
operations of thrift banks, such as herein petitioner, is the date the particular thrift bank was
registered with the SEC or the date when the Certificate of Authority to Operate was issued to it
by the Monetary Board of the BSP, whichever comes later.

6
 NATIONAL INTERNAL REVENUE CODE
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power
to interpret the provisions of this Code and other tax laws shall be under the exclusive and
original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.

The power to decide disputed assessments, refunds of 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 appellate jurisdiction of the Court of Tax Appeals.

G.R. No. 207843 July 15, 2015

COMMISSION OF INTERNAL REVENUE vs. COURT OF TAX APPEALS (SECOND DIVISION) and
PETRON CORPORATION

Ruling/Doctrine:

Section 4 of the NIRC confers upon the CIR both: (a) the power to interpret tax laws in the exercise
of her quasi-legislative function; and (b) the power to decide tax cases in the exercise of her quasi-
judicial function. It also delineates the jurisdictional authority to review the validity of the CIR's
exercise of the said powers

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 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. These observations may be deduced from a reading of Section 7 of RA 1125,
as amended by RA 9282 (Jurisdiction of CTA)

xxx

As the CIR aptly pointed out, 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.27 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.

In Enrile v. Court of Appeals, the Court, applying the statutory construction principle of ejusdem
generis, explained the import of using the general clause "other matters arising under the

7
Customs Law or other law or part of law administered by the Bureau of Customs" in the
enumeration of cases subject to the exclusive appellate jurisdiction of the CTA, saying that: [T]he
'other matters' that may come under the general clause should be of the same nature as those
that have preceded them applying the rule of construction known as ejusdem generis.

Hence, as the CIR's interpretation of a tax provision involves an exercise of her quasi-legislative
functions, the proper recourse against the subject tax ruling expressed in CMC No. 164-2012 is
a review by the Secretary of Finance and ultimately the regular courts. In Commissioner of
Customs v. Hypermix Feeds Corporation, the Court has held that:

The determination of whether a specific rule or set of rules issued by an administrative

agency contravenes the law or the constitution is within the jurisdiction of the regular
courts. Indeed, the Constitution vests the power of judicial review or the power to
declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts.
This is within the scope of judicial power, which includes the authority of the courts to
determine in an appropriate action the validity of the acts of the political departments.
xxx.

-------------------------------------------------------------------------------------------------------------------------------

SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-
rated or effectively zero-rated 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 creditable
input tax due or paid attributable to such sales, except transitional input tax, to the extent that
such input tax has not been applied against output tax: Provided, however, That in the case of
zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1) and (2), the
acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided,
further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also
in taxable or exempt sale of goods of properties or services, and the amount of creditable input
tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall
be allocated proportionately on the basis of the volume of sales. Provided, finally, That for a
person making sales that are zero-rated under Section 108(B) (6), the input taxes shall be
allocated ratably between his zero-rated and non-zero-rated sales.

(B) Cancellation of VAT Registration. - A person whose registration has been cancelled due to
retirement from or cessation of business, or due to changes in or cessation of status under
Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for the
issuance of a tax credit certificate for any unused input tax which may be used in payment of his
other internal revenue taxes.

8
(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases,
the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of submission of complete documents in
support of the application filed in accordance with Subsections (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part
of the Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the claim or after
the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim
with the Court of Tax Appeals.

(D) Manner of Giving Refund. - Refunds shall be made upon warrants drawn by the
Commissioner or by his duly authorized representative without the necessity of being
countersigned by the Chairman, Commission on audit, the provisions of the Administrative Code
of 1987 to the contrary notwithstanding: Provided, That refunds under this paragraph shall be
subject to post audit by the Commission on Audit.

G.R. No. 205543 June 30, 2014

SAN ROQUE POWER CORPORATION vs COMMISSIONER OF INTERNAL REVENUE

Ruling/Doctrine:
Contrary to the assertion of San Roque, it was only in Aichi that the issue of the prescriptive
periods under Section 112 of the NIRC of 1997, as amended, was first squarely raised before and
addressed by the Court. The Court significantly ruled in Aichi that: (a) Section 112 of the NIRC of
1997, as amended, particularly governs claims for refund or tax credit of creditable input taxes,
which is distinct from Sections 204(C) and 229 of the same statute which concern erroneously or
illegally collected taxes; (b) The two- year prescriptive period under Section 112(A) of the NIRC
of 1997, as amended, pertains only to administrative claims for refund or tax credit of creditable
input taxes, and not to judicial claims for the same; (c) Following Commissioner of Internal
Revenue v. Mirant Pagbilao Corporation, the two-year prescriptive period under Section 112(A)
of the NIRC of 1997, as amended, is reckoned from the close of the taxable quarter when the
sales were made; (d) In determining the end of the two-year prescriptive period under Section
112(A) of the NIRC of 1997, as amended, the Administrative Code of 1987 prevails over the Civil
Code, so that a year is composed of 12 calendar months; and (e) The 120-day period, under what
is presently Section 112(C) of the NIRC of 1997, as amended, is crucial in filing an appeal with the
CTA, for whether the CIR issues a decision on the administrative claim before the lapse of the
120-day period or the CIR made no decision on the administrative claim after the 120-day period,
the taxpayer has 30 days within which to file an appeal with the CTA.

The Court en banc had the opportunity to further expound on the prescriptive periods under
Section 112 of the NIRC of 1997, as amended, in its Decision in the consolidated cases
of Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining
Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner

9
of Internal Revenue, promulgated in 2013 [San Roque (2013)].

According to the Court in San Roque (2013), the prescriptive periods under Section 112 of the
NIRC of 1997, as amended, shall be interpreted as follows:

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 any time
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).

As the CTA en banc held, Aichi was not applied retroactively to San Roque in the instant case. The
120+30 day periods have already been prescribed under Section 112(C) of the NIRC of 1997, as
amended, when San Roque filed its administrative and judicial claims for refund or tax credit of
its creditable input taxes for the four quarters of 2006. The Court highlights the pronouncement
in San Roque (2013) that strict compliance with the 120+30 day periods is necessary for the
judicial claim to prosper, except for the period from the issuance of BIR Ruling No. DA-489-03
on December 10, 2003 to October 6, 2010 when Aichi was promulgated, which again reinstated
the 120+30 day periods as mandatory and jurisdictional.

It is still necessary for the Court to explain herein how BIR Ruling No. DA-489-03 is an exception
to the strict observance of the 120+30 day periods for judicial claims. BIR Ruling No. DA-489-03
affected only the 120-day period as the BIR held therein that a 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. Neither is it required that the Commissioner should first act on the claim of
a particular taxpayer before the CTA may acquire jurisdiction, particularly if the claim is about to
prescribe. Consequently, BIR Ruling No. DA-489-03 may only be invoked by taxpayers who relied
on the same and prematurely filed their judicial claims before the expiration of the 120-day
period for the CIR to act on their administrative claims, provided that the taxpayers filed such
judicial claims from December 10, 2003 to October 6, 2010. BIR Ruling No. DA-489-03 did not
touch upon the 30-day prescriptive period for filing an appeal with the CTA and cannot be cited
by taxpayers, such as San Roque, who belatedly filed their judicial claims more than 30 days after
receipt of the adverse decision of the CIR on their administrative claims or the lapse of 120 days
without the CIR acting on their administrative claims.

-------------------------------------------------------------------------------------------------------------------------------

10
SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. -

The Commissioner may -

(A) Compromise the payment of any internal revenue tax, when:

(1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or

(2) The financial position of the taxpayer demonstrates a clear inability to pay the
assessed tax.

The compromise settlement of any tax liability shall be subject to the following minimum
amounts:

For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%) of
the basic assessed tax; and

For other cases, a minimum compromise rate equivalent to forty percent (40%) of the basic
assessed tax.

Where the basic tax involved exceeds One million pesos (P1,000.000) or where the settlement
offered is less than the prescribed minimum rates, the compromise shall be subject to the
approval of the Evaluation Board which shall be composed of the Commissioner and the four (4)
Deputy Commissioners.

(B) Abate or cancel a tax liability, when:

(1) The tax or any portion thereof appears to be unjustly or excessively assessed; or

(2) The administration and collection costs involved do not justify the collection of the
amount due.

All criminal violations may be compromised except: (a) those already filed in court, or (b) those
involving fraud.

(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 or refund.

11
A Tax Credit Certificate validly issued under the provisions of 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. 222. Exceptions as to Period of Limitation of Assessment 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 before the expiration of the five (5) -year period. The
period so agreed upon may be extended by subsequent written agreements made before the
expiration of the period previously agreed upon.

12
(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. 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 discrepancy has been determined between the tax 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 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 excisable 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 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.

13
SEC. 229. 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, 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.

-------------------------------------------------------------------------------------------------------------------------------

G.R. No. 210836 September 1, 2015

CHEVRON PHILIPPINES INC., vs. COMMISSIONER OF INTERNAL REVENUE

Ruling/Doctrine:

Pilipinas Shell concerns the manufacturers entitlement to refund or credit of the excise taxes
paid on the petroleum products sold to international carriers exempt from excise taxes under
Section 135(a) of the NIRC.

However, the issue raised here is whether the importer (i.e., Chevron) was entitled to the refund
or credit of the excise taxes it paid on petroleum products sold to CDC, a tax-exempt entity under
Section 135(c) of the NIRC.

Accordingly, the excise taxes that Chevron paid on its importation of petroleum products
subsequently sold to CDC were illegal and erroneous, and should be credited or refunded to
Chevron in accordance with Section 204 of the NIRC.

Under Section 129 of the NIRC, as amended, excise taxes are imposed on two kinds of goods,
namely: (a) goods manufactured or produced in the Philippines for domestic sales or
consumption or for any other disposition; and (b) things imported. Undoubtedly, the excise tax
imposed under Section 129 of the NIRC is a tax on property.

With respect to imported things, Section 131 of the NIRC declares that excise taxes on imported
things shall be paid by the owner or importer to the Customs officers, conformably with the
regulations of the Department of Finance and before the release of such articles from the
customs house, unless the imported things are exempt from excise taxes and the person found

14
to be in possession of the same is other than those legally entitled to such tax exemption. For
this purpose, the statutory taxpayer is the importer of the things subject to excise tax.

Chevron, being the statutory taxpayer, paid the excise taxes on its importation of the petroleum
products.

Section 135 of the NIRC states:

SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies.
Petroleum products sold to the following are exempt from excise tax:

(a) International carriers of Philippine or foreign registry on their use or consumption

outside the Philippines: Provided, That the petroleum products sold to these international
carriers shall be stored in a bonded storage tank and may be disposed of only in
accordance with the rules and regulations to be prescribed by the Secretary of Finance,
upon recommendation of the Commissioner;

(b) Exempt entities or agencies covered by tax treaties, conventions and other
international agreement for their use or consumption: Provided, however, That the
country of said foreign international carrier or exempt entities or agencies exempts from
similar taxes petroleum products sold to Philippine carriers, entities or agencies; and

(c) Entities which are by law exempt from direct and indirect taxes. (Emphasis supplied.)

Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law exempt
from direct and indirect taxes are exempt from excise tax. The phrase which are by law exempt
from direct and indirect taxes describes the entities to whom the petroleum products must be
sold in order to render the exemption operative. Section 135(c) should thus be construed as an
exemption in favor of the petroleum products on which the excise tax was levied in the first place.
The exemption cannot be granted to the buyers that is, the entities that are by law exempt
from direct and indirect taxes because they are not under any legal duty to pay the excise tax.

CDC was created to be the implementing and operating arm of the Bases Conversion and
Development Authority to manage the Clark Special Economic Zone (CSEZ). As a duly-registered
enterprise in the CSEZ, CDC has been exempt from paying direct and indirect taxes pursuant to
Section 24 of Republic Act No. 7916 (The Special Economic Zone Act of 1995), in relation to
Section 15 of Republic Act No. 9400 (Amending Republic Act No. 7227, otherwise known as the
Bases Conversion Development Act of 1992).

Inasmuch as its liability for the payment of the excise taxes accrued immediately upon
importation and prior to the removal of the petroleum products from the customs house,
Chevron was bound to pay, and actually paid such taxes. But the status of the petroleum products
as exempt from the excise taxes would be confirmed only upon their sale to CDC in 2007 (or, for
that matter, to any of the other entities or agencies listed in Section 135 of the NIRC). Before

15
then, Chevron did not have any legal basis to claim the tax refund or the tax credit as to the
petroleum products.

Consequently, the payment of the excise taxes by Chevron upon its importation of petroleum
products was deemed illegal and erroneous upon the sale of the petroleum products to CDC.
Section 204 of the NIRC explicitly allowed Chevron as the statutory taxpayer to claim the refund
or the credit of the excise taxes thereby paid, viz.:

SEC 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. The
Commissioner may

xxx

(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 payment of the tax or penalty: Provided,
however, That a return filed showing an overpayment shall be considered as a written claim for
credit or refund.

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.

The general rule applies here because Chevron did not pass on to CDC the excise taxes paid on
the importation of the petroleum products, the latter being exempt from indirect taxes by virtue
of Section 24 of Republic

Act No. 7916, in relation to Section 15 of Republic Act No. 9400, not because Section 135(c) of
the NIRC exempted CDC from the payment of excise tax.

16
Accordingly, conformably with Section 204(C) of the NIRC, and pertinent jurisprudence, Chevron
was entitled to the refund or credit of the excise taxes erroneously paid on the importation of
the petroleum products sold to CDC.

-------------------------------------------------------------------------------------------------------------------------------

G.R. No. 147629 July 28, 2010

JAKA INVESTMENTS CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE

Ruling/Doctrine:
In claims for refund, the burden of proof is on the taxpayer to prove entitlement to such refund.
It was thus incumbent upon petitioner to show clearly its basis for claiming that it is entitled to a
tax refund. This, to our mind, the petitioner failed to do.
We find nothing ambiguous nor obscure in the language of Section 173, taken in relation to
Section 175 of the 1994 Tax Code xxx insofar as the same is brought to bear upon the
circumstances in the instant case. These provisions furnish the best means of their own...
exposition that a documentary stamp tax (DST) is due and payable on documents, instruments,
loan agreements and papers, acceptances, assignments, sales and transfers which evidenced the
transaction agreed upon by the parties and should be paid by the person making, signing, issuing,
accepting or transferring the property, right or obligation.
Understood to mean what it plainly expressed, the DST imposition is essentially addressed and
directly brought to bear upon the DOCUMENT evidencing the transaction of the parties which
establishes its rights and obligations.
In the case at bar, the rights and obligations between petitioner JAKA Investments Corporation
and JAKA Equities Corporation are established and enforceable at the time the "Amended
Subscription Agreement and Deed of Assignment of Property in Payment of Subscription" were
signed... by the parties and their witness, so is the right of the state to tax the aforestated
document evidencing the transaction. DST is a tax on the document itself and therefore the rate
of tax must be determined on the basis of what is written or indicated on the instrument... itself
independent of any adjustment which the parties may agree on in the future
Petitioner alleges, though, that considering that the assessment of payment of documentary
stamp tax was made payable only to the aforesaid issuances of certificates of [stock] exclusive of
that of FEBTC shares of stock which were paid in cash, and that it has paid a total of
Php1,003,895.65 inclusive of surcharges for late payment, the petitioner is entitled to a refund
of Php410,367.00. This argument does not hold water. As discussed earlier, a documentary
stamp is levied upon the privilege, the opportunity and the facility... offered at exchanges for the
transaction of the business. This being the case, and as correctly found by the tax court, the
documentary stamp tax imposition is essentially addressed and directly brought to bear upon the
document evidencing the transaction of the parties... which establishes its rights and obligations,

17
which in the case at bar, was established and enforceable upon the execution of the Amended
Subscription Agreement and Deed of Assignment of Property in Payment of Subscription.
A documentary stamp tax is in the nature of an excise tax. It is not imposed upon the business
transacted but is an excise upon the privilege, opportunity or facility offered at exchanges for the
transaction of the business. It is an excise upon the facilities used in the... transaction of the
business separate and apart from the business itself. Documentary stamp taxes are levied on the
exercise by persons of certain privileges conferred by law for the creation, revision, or
termination of specific legal relationships through the execution of... specific instruments.
Thus, we have held that documentary stamp taxes are levied independently of the legal status of
the transactions giving rise thereto. The documentary stamp taxes must be paid upon the
issuance of the said instruments, without regard to whether the contracts... which gave rise to
them are rescissible, void, voidable, or unenforceable.
Petitioner claims overpayment of the documentary stamp tax but its basis for such is not clear at
all. While insisting that the documentary stamp tax it had paid for was not based on the original
issuance of JEC shares as provided in Section 175 of the 1994 Tax Code, ... petitioner failed in
showing, even though a mere basic computation of the tax base and the tax rate, that the
documentary stamp tax was based on the transfer of shares under Section 176 either. It would
have been helpful for petitioner's cause had it submitted proof of ... the par value of the shares
of stock involved, to show the actual basis for the documentary stamp tax computation. For
comparison, the original Subscription Agreement ought to have been submitted as well.
The fact that it was petitioner and not JEC that paid for the documentary stamp tax on the original
issuance of shares is of no moment, as Section 173 of the 1994 Tax Code states that the
documentary stamp tax shall be paid by the person making, signing, issuing, accepting or...
transferring the property, right or obligation.
-------------------------------------------------------------------------------------------------------------------------------

G.R. No. 109289 October 3, 1994

RUFINO R. TAN vs. RAMON R. DEL ROSARIO, JR., as SECRETARY OF FINANCE & JOSE U. ONG,
as COMMISSIONER OF INTERNAL REVENUE

RULING/Doctrine:

There is violation of due process only when the inherent or constitutional limitations in the
exercise of the power to tax is transgressed.

Uniformity of taxation merely requires that all subjects or objects of taxation, similarly situated,
are to be treated alive both in privileges and liabilities.

Uniformity does not violate classification as long as:

(1) the standards that are used therefor are substantial and not arbitrary;

18
 (2) the categorization is germane to achieve the legislative purpose;
(3) the law applies, all things being equal, to both present and future conditions; and
(4) the classification applies equally well to all those belonging to the same class.

What may instead be perceived to be apparent from the amendatory law is the legislative intent
to increasingly shift the income tax system towards the scheduler approach in the income
taxation of individual taxpayers and to maintain, by and large, the present global treatment on
taxable corporations. We certainly do not view this classification to be arbitrary and
inappropriate.

Global treatment is a system where the tax treatment views indifferently the tax base and
generally treats in common all categories of taxable income of the taxpayer. Schedular approach
is a system employed where the income tax treatment varies and made to depend on the kind
or category of taxable income of the taxpayer.

It is the legislature who has the discretion to determine the nature (kind), object (purpose),
extent (rate), coverage (subjects) and situs (place) of taxation. This court cannot freely delve into
those matters which, by constitutional fiat, rightly rest on legislative judgment. Of course, where
a tax measure becomes so unconscionable and unjust as to amount to confiscation of property,
courts will not hesitate to strike it down, for, despite all its plenitude, the power to tax cannot
override constitutional proscriptions.

19
 COURT OF TAX APPEALS
G.R. No. 210987 November 24, 2014

THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY vs.

THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE

Ruling/Doctrine:

Reviews by the Secretary of Finance pursuant to Sec. 4 of the NIRC are appealable to the CTA

Admittedly, there is no provision in law that expressly provides where exactly the ruling of the
Secretary of Finance under the adverted NIRC provision is appealable to. However, We find that
Sec. 7(a)(1) of RA 1125, as amended, addresses the seeming gap in the law as it vests the CTA,
albeit impliedly, with jurisdiction over the CA petition as "other matters" arising under the NIRC
or other laws administered by the BIR. As stated:

Sec. 7. Jurisdiction. - The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in 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. (emphasis supplied)

Even though the provision suggests that it only covers rulings of the Commissioner, We hold that
it is, nonetheless, sufficient enough to include appeals from the Secretarys review under Sec. 4
of the NIRC.

It is axiomatic that laws should be given a reasonable interpretation which does not defeat the
very purpose for which they were passed.17 Courts should not follow the letter of a statute when
to do so would depart from the true intent of the legislature or would otherwise yield conclusions
inconsistent with the purpose of the act.18 This Court has, in many cases involving the
construction of statutes, cautioned against narrowly interpreting a statute as to defeat the
purpose of the legislator, and rejected the literal interpretation of statutes if to do so would lead
to unjust or absurd results.

The appellate power of the CTA includes certiorari

In the recent case of City of Manila v. Grecia-Cuerdo, the Court en banc has ruled that the CTA
now has the power of certiorari in cases within its appellate jurisdiction. To elucidate:

20
The prevailing doctrine is that the authority to issue writs of certiorari involves the
exercise of original jurisdiction which must be expressly conferred by the Constitution or
by law and cannot be implied from the mere existence of appellate jurisdiction. Thus, this
Court has ruled against the jurisdiction of courts or tribunals over petitions for certiorari
on the ground that there is no law which expressly gives these tribunals such power. It
must be observed, however, that xxx these rulings pertain not to regular courts but to
tribunals exercising quasi-judicial powers. With respect to the Sandiganbayan, Republic
Act No. 8249 now provides that the special criminal court has exclusive original
jurisdiction over petitions for the issuance of the writs of mandamus, prohibition,
certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its
appellate jurisdiction.

In the same manner, Section 5 (1), Article VIII of the 1987 Constitution grants power to
the Supreme Court, in the exercise of its original jurisdiction, to issue writs of certiorari,
prohibition and mandamus. With respect to the Court of Appeals, Section 9 (1) of Batas
Pambansa Blg. 129 (BP 129) gives the appellate court, also in the exercise of its original
jurisdiction, the power to issue, among others, a writ of certiorari, whether or not in aid
of its appellate jurisdiction. As to Regional Trial Courts, the power to issue a writ of
certiorari, in the exercise of their original jurisdiction, is provided under Section 21 of BP
129.

The foregoing notwithstanding, while there is no express grant of such power, with
respect to the CTA, Section 1, Article VIII of the 1987 Constitution provides, nonetheless,
that judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law and that judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally demandable and enforceable,
and to determine whether or not there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.

On the strength of the above constitutional provisions, it can be fairly interpreted that
the power of the CTA includes that of determining whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in
issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of
the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with
jurisdiction to issue writs of certiorari in these cases.

Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it
must have the authority to issue, among others, a writ of certiorari. In transferring
exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed
that the law intended to transfer also such power as is deemed necessary, if not
indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why
the transfer should only be considered as partial, not total. (emphasis added)

21
 LOCAL GOVERNMENT CODE
Sec. 175. Distraint of Personal Property. The remedy by distraint shall proceed as follows:
(a) Seizure Upon failure of the person owing any local tax, fee, or charge to pay the same at
the time required, the local treasurer or his deputy may, upon written notice, seize or
confiscate any personal property belonging to that person or any personal property
subject to the lien in sufficient quantity to satisfy the tax, fee, or charge in question,
together with any increment thereto incident to delinquency and the expenses of seizure.
In such case, the local treasurer or his deputy shall issue a duly authenticated certificate
based upon the records of his office showing the fact of delinquency and the amounts of
the tax, fee, or charge and penalty due. Such certificate shall serve as sufficient warrant
for the distraint of personal property aforementioned, subject to the taxpayers right to
claim exemption under the provisions of existing laws. Distrained personal property shall
be sold at public auction in the manner herein provided for.

(b) Accounting of distrained goods The officer executing the distraint shall make or
cause to be made an account of the goods, chattels or effects distrained, a copy of which
signed by himself shall be left either with the owner or person from whose possession of
the goods, chattels or effects are taken, or at the dwelling or place of business of that
person and with someone of suitable age and discretion, to which list shall be added a
statement of the sum demanded and a note of the time and place of sale.

(c) Publication The officer shall forthwith cause a notification to be exhibited in not less than
three (3) public and conspicuous places in the territory of the local government unit where
the distraint is made, specifying the time and place of sale, and the articles distrained. The
time of sale shall not be less than twenty (20) days after notice to the owner or possessor
of the property as above specified and the publication or posting of the notice. One place
for the posting of the notice shall be at the office of the chief executive of the local
government unit in which the property is distrained.

(d) Release of distrained property upon payment prior to sale If at any time prior to the
consummation of the sale, all the proper charges are paid to the officer conducting the
sale, the goods or effects distrained shall be restored to the owner.

(e) Procedure of sale At the time and place fixed in the notice, the officer conducting the
sale shall sell the goods or effects so distrained at public auction to the highest bidder for
cash. Within five (5) days after the sale, the local treasurer shall make a report of the
proceedings in writing to the local chief executive concerned. Should the property
distrained be not disposed of within one hundred and twenty (120) days from the date of
distraint, the same shall be considered as sold to the local government unit concerned for
the amount of the assessment made thereon by the Committee on Appraisal and to the
extent of the same amount, the tax delinquencies shall be cancelled. Said Committee on

22
 Appraisal shall be composed of the city or municipal treasurer as chairman, with a
representative of the Commission on Audit and the city or municipal assessor as members.

(f) Disposition of proceeds The proceeds of the sale shall be applied to satisfy the tax,
including the surcharges, interest, and other penalties incident to delinquency, and the
expenses of the distraint and sale. The balance over and above what is required to pay the
entire claim shall be returned to the owner of the property sold. The expenses chargeable
upon the seizure and sale shall embrace only the actual expenses of seizure and
preservation of the property pending the sale, and no charge shall be imposed for the
services of the local officer or his deputy. Where the proceeds of the sale are insufficient
to satisfy the claim, other property may, in like manner, be distrained until the full amount
due, including all expenses, is collected.

Sec. 195. Protest of Assessment. - When the local treasurer or his duly authorized representative
finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment
stating the nature of the tax, fee or charge, the amount of deficiency, the surcharges, interests
and penalties. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer
may file a written protest with the local treasurer contesting the assessment; otherwise, the
assessment shall become final and executor. The local treasurer shall decide the protest within
sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or
partly meritorious, he shall issue a notice cancelling wholly or partly with notice to the taxpayer.
The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the
lapse of the sixty (60) day period prescribed herein within which to appeal with the court of
competent jurisdiction otherwise the assessment becomes conclusive and unappealable.

Sec. 196. Claim for Refund of Tax Credit. - No case or proceeding shall be maintained in any court
for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim
for refund or credit has been filed with the local treasurer. No case or proceeding shall be
entertained in any court after the expiration of two (2) years from the date of the payment of
such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or credit.

Sec. 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the
property who is not satisfied with the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the date of receipt of the written
notice of assessment. Appeal to the Board of Assessment appeals of the province or city by filing
a petition under oath in the form prescribed for the purpose, together with copies of the tax
declarations and such affidavits or documents submitted in support of the appeal.

Sec. 229. Action by the Local Board of Assessment appeals.

(a) The Board shall decide the appeal within one hundred twenty (12) days from the date
of receipt of such appeal. The Board, after hearing, shall render its decision based on

23
 substantial evidence or such relevant evidence on record as a reasonable mind might
accept as adequate to support the conclusion.

(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue
subpoena and subpoena duces tecum. The proceeding of the Board shall be
conducted solely fo the purpose of ascertaining the facts without necessarily adhering
to technical rules applicable in judicial proceedings.

(c) The secretary of the Board shall furnish the owner of the property or the person
having legal interest therein and the provincial or city assessor with a copy of the
decision of the Board. In case the provincial or city assessor concurs in the revision or
the assessment, it shall be his duty to notify the owner of the property or the person
having legal interest therein of such fact using the form prescribed for the purpose.
The owner of the property or the person having legal interest therein or the assessor
who is not satisfied with the decision of the Board, may, within thirty (30) days after
receipt of the decision of said Board, appeal to the Central Board of Assessment
appeals, as herein provided. The decision of the Central Board shall be final and
executory.

Sec. 230. Central Board of Assessment Appeals. - The Central Board of Assessment Appeals shall
be composed of a chairman and two (2) members to be appointed by the President, who shall
serve for a term of seven (7) years, without reappointment. Of those first appointed, the
chairman shall hold office for seven (7) years, one member for five (5) years, and the other
member for three (3) years. Appointment to any vacancy shall be only for the unexpired portion
of the term of the predecessor. In no case shall any member be appointed or designated in a
temporary or acting capacity. The chairman and the members of the Board shall be Filipino
citizens, at least forty (40) years old at the time of their appointment, and members of the Bar or
Certified Public Accountants for at least ten (10) years immediately preceding their appointment.
The chairman of the Board of Assessment Appeals shall have the salary grade equivalent to the
rank of Director III under the Salary Standardization Law exclusive of allowances and other
emoluments. The members of the Board shall have the salary grade equivalent to the rank of
Director II under the Salary Standardization Law exclusive of allowances and other emoluments.
The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board
of Assessment Appeals.
There shall Hearing Officers to be appointed by the Central Board of Assessment Appeals
pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao,
who shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall
serve for a term of six (6) years, without reappointment until their successors have been
appointed and qualified. The Hearing Officers shall have the same qualifications as that of the
Judges of the Municipal Trial Courts.
The Hearing Officers shall each have the salary grade equivalent to the rank of Director I under
the Salary Standardization Law exclusive of allowances and other emoluments. The Hearing

24
Officers shall try and receive evidences on the appealed assessment cases as may be directed by
the Board.
The Central Board Assessment Appeals, in the performance of its powers and duties, may
establish and organize staffs, offices, units, prescribe the titles, functions and duties of their
members and adopt its own rules and regulations. Unless other provided by law, the annual
appropriation for the Central Board of Assessment appeals shall be included in the annual budget
of the Department of Finance in the corresponding General Appropriations Act.

Sec. 252. Payment Under Protest.

(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be
annotated on the tax receipts the words paid under protest. The protest in writing
must be filed within thirty (30) days from payment of the tax to the provincial, city
treasurer or municipal treasurer, in the case of a municipality within Metropolitan
Manila Area, who shall decide the protest within sixty (60) days from receipt.

(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer
concerned.

(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or
portion of the tax protested shall be refunded to the protestant, or applied as tax
credit against his existing or future tax liability.

(d) In the event that the protest or upon the lapse of the sixty-day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter
3, Title II, Book II of this Code.

25