Sources of Tax Laws Page 8
Sources of Tax Laws Page 8
I.
ii.
Local Book II, 1991 Local Government Code
THE LOCAL GOVERNMENT CODE OF THE PHILIPPINES
BOOK II LOCAL TAXATION AND FISCAL MATTERS
TITLE ONE. - LOCAL GOVERNMENT TAXATION
CHAPTER 1 - GENERAL PROVISIONS
SEC. 128. Scope.- The provisions herein shall govern the exercise by provinces,
cities, municipalities, and barangays of their taxing and other revenue-raising
powers.
SEC. 129. Power to Create Sources of Revenue. - Each local government unit shall
exercise its power to create its own sources of revenue and to levy taxes, fees, and
charges subject to the provisions herein, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively to the local
government units.
SEC. 130. Fundamental Principles. - The following fundamental principles shall
govern the exercise of the taxing and other revenue-raising powers of local
government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall: (1) be equitable and
based as far as practicable on the taxpayer's ability to pay; (2) be levied and
collected only for public purposes; (3) not be unjust, excessive, oppressive, or
confiscatory; (4) not be contrary to law, public policy, national economic policy, or in
restraint of trade;
(c) The collection of local taxes, fees, charges and other impositions shall in
no case be let to any private person;
(d) The revenue collected pursuant to the provisions of this Code shall inure
solely to the benefit of, and be subject to disposition by, the local government unit
levying the tax, fee, charge or other imposition unless otherwise specifically
provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a
progressive system of taxation.
iii.
iv.
BCDA Law
REPUBLIC ACT NO. 7227 REPUBLIC ACT NO. 7227
AN ACT ACCELERATING THE CONVERSION OF MILITARY RESERVATIONS
INTO OTHER PRODUCTIVE USES, CREATING THE BASES CONVERSION AND
DEVELOPMENT AUTHORITY FOR THE PURPOSE, PROVIDING FUNDS
THEREFORE AND FOR OTHER PURPOSES
Section 1. Short Title. This Act shall be known as the "Bases Conversion and
Development Act of 1992."
Sec. 2. Declaration of Policies. It is hereby declared the policy of the Government
to accelerate the sound and balanced conversion into alternative productive uses of
the Clark and Subic military reservations and their extensions (John Hay Station,
Wallace Air Station, O'Donnell Transmitter Station, San Miguel Naval
Communications Station and Capas Relay Station), to raise funds by the sale of
portions of Metro Manila military camps, and to apply said funds as provided herein
for the development and conversion to productive civilian use of the lands covered
under the 1947 Military Bases Agreement between the Philippines and the United
States of America, as amended.
Provisions under Sec 12 of BCDA Law related to Tax Laws:
(b) The Subic Special Economic Zone shall be operated and managed as a
separate customs territory ensuring free flow or movement of goods and
capital within, into and exported out of the Subic Special Economic Zone, as
well as provide incentives such as tax and duty-free importations of raw
materials, capital and equipment. However, exportation or removal of goods
from the territory of the Subic Special Economic Zone to the other parts of
the Philippine territory shall be subject to customs duties and taxes under the
Customs and Tariff Code and other relevant tax laws of the Philippines;
(c) The provisions of existing laws, rules and regulations to the contrary
notwithstanding, no taxes, local and national, shall be imposed within the
Subic Special Economic Zone. In lieu of paying taxes, three percent (3%) of
the gross income earned by all businesses and enterprises within the Subic
Special Economic Zone shall be remitted to the National Government, one
percent (1%) each to the local government units affected by the declaration
of the zone in proportion to their population area, and other factors. In
addition, there is hereby established a development fund of one percent (1%)
of the gross income earned by all businesses and enterprises within the Subic
Special Economic Zone to be utilized for the development of municipalities
outside the City of Olongapo and the Municipality of Subic, and other
municipalities contiguous to be base areas. In case of conflict between
national and local laws with respect to tax exemption privileges in the Subic
Special Economic Zone, the same shall be resolved in favor of the latter;
v.
PEZA Law
REPUBLIC ACT NO. 7916
(b)
One percent (1%) to the local government units affected
by the declaration of the ECOZONE in proportion to their population,
land area, and equal sharing factors; and
(c)
One percent (1%) for the establishment of a development
fund to be utilized for the development of municipalities outside
(2)
(3)
d. http://www.lawphil.net/judjuris/juri1969/sep1969/gr_l19337_1969.html
Asturias Sugar Central v. Commissioner of Customs and CTA
G.R. No. L-19337 September 30, 1969
Justice Castro
Facts:
Asturias Sugar Central, Inc. is engaged in the production and milling of
centrifugal sugar, the sugar so produced being placed in containers known as jute
bags. In 1957, it made two importations of jute bags, free from customs duties and
special import tax upon the Petitioners filing of re-exportation and special import
tax bond, conditioned upon the exportation of the jute bags within one year from
the date of importation.
However, out of the 44,800 jute bags imported first, only 8,647 were
exported and only 25,000 were exported out of the 75,200 jute bags imported on
the second shipment. In other words, of the total number of imported jute bags only
33,647 bags were exported within one year after their importation. The remaining
86,353 bags were exported after the expiration of the one-year period but within
three years from their importation.
Petitioner requested the Commissioner of Customs for a week's extension of
Re-exportation and Special Import Tax Bond no. 6 which was to expire the following
day, citing reasons for its failure to export the remaining jute bags within the period
of one year. However, this request was denied by the Commissioner.
Due to the petitioner's failure to show proof of the exportation of the balance
of 86,353 jute bags within one year from their importation, the petitioner was
required to pay the amount of Php 28,629.42 representing the customs duties and
special import tax due thereon, which the petitioner paid under protest and later on
demanded the refund of the amount it had paid.
Issues:
a) Whether the Commissioner of Customs is vested with discretion to extend
the period of one year provided for in Section 23 of the Philippine Tariff Act of 1909.
b) Whether the interpretation or construction of an ambiguous or uncertain
statute by the Executive Department or other Administrative Agencies be given
consideration. In this case, the Bureau of Customs.
Held:
a.) Section 23 of the Philippine Tariff Act Of 1909 and the superseding sec.
105(x) of the Tariff and Customs Code, while fixing at one year the period within
which the containers therein mentioned must be exported, are silent as to whether
the said period may be extended. By reason of this silence, the Bureau of Customs
Issued Administrative Orders 389 and 66 to eliminate confusion and provide a guide
as to how it shall apply the law, and, more specifically, to make officially known its
policy to consider the one-year period mentioned in the law as non-extendible.
b.) Considering that the statutory provisions in question (Section 23 of the
Philippine Tariff Act of 1909 and Sec. 105(x) of the Tariff and Customs Code) have
not been the subject of previous judicial interpretation, then the application of the
doctrine of "judicial respect for administrative construction (in the case at bar the
Bureau of Customs issued Administrative Orders 389 and 66 to eliminate confusion
and provide a guide as to how it shall apply the law, and, more specifically, to make
officially known its policy to consider the one-year period mentioned in the law as
non-extendible., " would, initially, be in order. Only where the court of last resort has
not previously interpreted the statute is the rule applicable that courts will give
consideration to construction by administrative or executive departments of the
state. The formal or informal interpretation or practical construction of an
ambiguous or uncertain statute or law by the executive department or other agency
charged with its administration or enforcement is entitled to consideration and the
highest respect from the courts, and must be accorded appropriate weight in
determining the meaning of the law, especially when the construction or
interpretation is long continued and uniform or is contemporaneous with the first
workings of the statute, or when the enactment of the statute was suggested by
such agency.
Considering that the Bureau of Customs is the office charged with
implementing and enforcing the provisions of our Tariff and Customs Code, the
construction placed by it thereon should be given controlling weight.
In applying the doctrine or principle of respect for administrative or practical
construction, the courts often refer to several factors which may be regarded as
bases of the principle, as factors leading the courts to give the principle controlling
weight in particular instances, or as independent rules in themselves. These factors
are the respect due the governmental agencies charged with administration, their
competence, expertness, experience, and informed judgment and the fact that they
frequently are the drafters of the law they interpret; that the agency is the one on
which the legislature must rely to advise it as to the practical working out of the
statute, and practical application of the statute presents the agency with unique
opportunity and experiences for discovering deficiencies, inaccuracies, or
improvements in the statute.
ACCORDINGLY, the judgment of the Court of Tax Appeals of November 20,
1961 is affirmed
e. http://www.lawphil.net/judjuris/juri2003/nov2003/gr_127624_2003.h
tml
BPI Leasing Corp (BLC) v. CA and CIR
G.R. No. 127624
November 18, 2003
Justice Azcuna
Facts:
BLC is a corporation engaged in the business of leasing properties. For the
calendar year 1986, BLC paid the Commissioner of Internal Revenue (CIR) a total of
P1,139,041.49 representing 4% "contractors percentage tax" then imposed by
Section 205 of the National Internal Revenue Code (NIRC), based on its gross rentals
from equipment leasing for the said year amounting to P27,783,725.42.
On November 10, 1986, the CIR issued Revenue Regulation 19-86. Section
6.2 thereof provided that finance and leasing companies registered under Republic
Act 5980 shall be subject to gross receipt tax of 5%-3%-1% on actual income
earned. This means that companies registered under Republic Act 5980, such as
BLC, are not liable for "contractors percentage tax" under Section 205 but are,
instead, subject to "gross receipts tax" under Section 260 (now Section 122) of the
NIRC. Since BLC had earlier paid the aforementioned "contractors percentage tax,"
it re-computed its tax liabilities under the "gross receipts tax" and arrived at the
amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount
of P777,117.05, representing the difference between the P1,139,041.49 it had paid
as "contractors percentage tax" and P361,924.44 it should have paid for "gross
receipts tax." The CTA dismissed the petition and denied BLCs claim of refund. The
CTA held that Revenue Regulation 19-86, as amended, may only be applied
prospectively such that it only covers all leases written on or after January 1, 1987.
On appeal, the CA affirmed the CTAs decision.
Issues:
a) Whether Revenue Regulation 19-86 is legislative or interpretative in nature.
b) Whether Revenue Regulation 19-86s application should be prospective or
retroactive.
Held:
a)
The Court finds the questioned revenue regulation to be legislative in
nature. Administrative issuances may be distinguished according to their
nature and substance: legislative and interpretative. A legislative rule is in
the matter of subordinate legislation, designed to implement a primary
legislation by providing the details thereof. An interpretative rule, on the
other hand, is designed to provide guidelines to the law which the
administrative agency is in charge of enforcing.
Section 1 of Revenue Regulation 19-86 plainly states that it was
promulgated pursuant to Section 277 of the NIRC. Section 277 (now Section
244) is an express grant of authority to the Secretary of Finance to
promulgate all needful rules and regulations for the effective enforcement of
the provisions of the NIRC. In Paper Industries Corporation of the Philippines
v. Court of Appeals, the Court recognized that the application of Section 277
calls for none other than the exercise of quasi-legislative or rule-making
authority. Verily, it cannot be disputed that Revenue Regulation 19-86 was
issued pursuant to the rule-making power of the Secretary of Finance, thus
making it legislative, and not interpretative as alleged by BLC.
b)
The principle is well entrenched that statutes, including administrative
rules and regulations, operate prospectively only, unless the legislative intent
to the contrary is manifest by express terms or by necessary implication. In
the present case, there is no indication that the revenue regulation may
operate retroactively. Furthermore, there is an express provision stating that
it "shall take effect on January 1, 1987," and that it "shall be applicable to all
leases written on or after the said date." Being clear on its prospective
application, it must be given its literal meaning and applied without further
interpretation. Thus, BLC is not in a position to invoke the provisions of
Revenue Regulation 19-86 for lease rentals it received prior to January 1,
1987.
WHEREFORE, the petition for review is hereby DENIED, and the assailed
decision and resolution of the Court of Appeals are AFFIRMED
3. BIR Issuances BIR Revenue Administrative Order (RAO) No. 2-2001
issued January 18, 2001 defines and delineates the functions and
processes of the National Office Management Information System (NOMIS)Management Reporting through Executive Information System (EIS) Capability
(Release 4).
The following officials will have access on the NOMIS (Release 4): 1)
Commissioner; 2) Deputy Commissioners; 3) concerned Assistant Commissioners; 4)
concerned Head Revenue Executive Assistants; 5) Regional Directors; 6) Asst.
Regional Directors of Metro Manila and Cebu City; and 7) selected Division Chiefs
and Section Chiefs.
a. BIR Rulings
i. Rulings of first impression
These refer to the rulings, opinions and interpretations of the
Commissioner of Internal Revenue with respect to the provisions of
the Tax Code and other tax laws without established precedent, and
which are issued in response to a specific request for ruling filed by
a taxpayer with the Bureau of Internal Revenue. Provided, however,
that the term shall include reversal, modification or revocation of
any existing ruling.
ii. Rulings with established precedents
These refer to mere reiteration of previous rulings, opinions and
interpretations of the Commissioner, as delegated to duly
authorized internal revenue officers (i.e., Deputy Commissioner,
Legal and Inspection Group; Assistant Commissioner, Legal Service;
Regional Directors) that are issued in response to a specific request
for ruling filed by a taxpayer with the Bureau of Internal Revenue.
iii. Power of CIR to interpret Tax Laws
The NIRC provides:
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.
iv. Non-retroactivity of Rulings
The NIRC provides:
SEC. 246. Non- Retroactivity of Rulings. - Any revocation,
modification or reversal of any of the rules and regulations
promulgated in accordance with the preceding Sections or any of
the rulings or circulars promulgated by the Commissioner shall not
be given retroactive application if the revocation, modification or
PBCOM v. CIR
Facts:
Philippine Bank of Communications (PBCom) filed its quarterly income tax
returns for the first and second quarters of 1985, reported profits, and paid the total
income tax of more than P5M.The taxes due were settled by applying PBCom's tax
credit memos and accordingly, the BIR issued Tax Debit Memo for P3M+ and P1M+,
respectively.
Subsequently, however, PBCom suffered losses so that when it filed its
Annual Income Tax Returns for the year-ended December 31, 1986, it reported a net
loss of more than P14M and thus declared no tax payable for the year.
But during these two years (1985 and 1986), PBCom earned rental income
from leased properties. The lessees withheld and remitted to the BIR withholding
creditable taxes for both 1986 and 1986 (about P200k+ for each of those years).
PBCom then requested the CIR, among others, for a tax credit of P5M+
representing the overpayment of taxes in the first and second quarters of 1985.
Three years later, PBCom filed a claim for refund of creditable taxes withheld by
their lessees from property rentals in 1985 and 1986 (the P200k+ each)
Pending CIRs investigation, PBCom instituted a Petition for Review before the
CTA. CTA denied the request for a tax refund or credit (P5M+) given that it was filed
beyond the 2-year reglementary period provided for by law. The petitioner's claim
for refund in 1986 was likewise denied on the assumption that it was automatically
credited by PBCom against its tax payment in the succeeding year.
PBCom argued that its claims for refund and tax credits are not yet barred by
prescription relying on the applicability of Revenue Memorandum Circular No. 7-85
issued on April 1, 1985.
The RM Circular states that overpaid income taxes are NOT covered by the
two-year prescriptive period under the Tax Code and that taxpayers may claim
refund or tax credits for the excess quarterly income tax with the BIR within ten 10
years under Article 1144 of the Civil Code.
Issue:
Whether the tax refund should be denied on the ground of prescription,
despite PBComs reliance on RMC No. 7-85, changing the prescriptive period of 2
years to 10 years.
Held:
No. The relaxation of revenue regulations by RMC 7-85 is not warranted as it
disregards the two-year prescriptive period set by law.
The NIRC states that the taxpayer may file a claim for refund or credit with
the CIR w/in 2 years after payment of tax, before any suit in CTA is commenced.
The 2-year prescriptive period should be computed from the time of filing the
Adjustment Return and final payment of the tax for the year.
Clearly, the prescriptive period of 2 years should commence to run only from
the time that the refund is ascertained, which can only be determined after a final
adjustment return is accomplished.
When the Acting CIR issued RMC 7-85, changing the prescriptive period of 2
years to 10 years on claims of excess quarterly income tax payments, such circular
created a clear inconsistency with the provision of the NIRC.
In so doing, the BIR did not simply interpret the law; rather it legislated
guidelines contrary to the statute passed by Congress. Rules and regulations issued
by administrative officials to implement a law cannot go beyond the terms and
provisions of the latter.
Art. 8 of the Civil Code recognize judicial decisions, applying or interpreting
statutes as part of the legal system of the country.
But administrative decisions do not enjoy that level of recognition.
A memorandum-circular of a bureau head could not operate to vest a
taxpayer with shield against judicial action. For there are no vested rights to speak
of respecting a wrong construction of the law by the administrative officials and
such wrong interpretation could not place the Government in estoppel to correct or
overrule the same.
Moreover, the non-retroactivity of rulings by the CIR is not
applicable in this case because the nullity of RMC No. 7-85 was declared
by respondent courts and not by the CIR.
Lastly, a claim for refund is in the nature of a claim for exemption and should
be construed in strictissimi juris against the taxpayer.
b. Revenue Memorandum Rulings (RMR)
These refer to the rulings, opinions and interpretations of the
Commissioner of Internal Revenue with respect to the provisions of
the Tax Code and other tax laws, as applied to a specific set of
facts, with or without established precedents, and which the
Commissioner may issue from time to time for the purpose of
providing taxpayers guidance on the tax consequences in specific
situations.
c. Revenue Travel Assignment Orders (RTAO)
These orders assign revenue personnel to specific functions in
specific units. Travel assignment orders specifically mention the
names of revenue personnel concerned.
d. Revenue Special Orders (RSO)
Instructions or directives for the accomplishment of special
assignments or missions of significance which are temporary in
nature or for a definite period of time. These issuances specifically
mention the personnel or units of organization concerned.
e. Revenue Memorandum Circulars (RMC)
These issuances shall disseminate and embody pertinent and
applicable portions, as well as amplifications of the rules,
5. Legislative Materials
These refer to legislative history documents and materials where
taxation laws can be obtained. The origin of the laws can be
ascertained through legislative materials.
6. Court Decision
In the Philippines, Supreme Court decisions form part of the law of the
land. As such, decisions by the Supreme Court in the exercise of its
power to review, revise, reverse, modify or affirm on appeal or
certiorari, as the law or the Rules of Court may provide, final judgments
and orders of lower courts cases involving the legality of any tax,
impost, assessment, or toll or any penalty imposed in relation thereto
are adhered to and recognized as binding interpretations of Philippine
tax law. Court of Appeals and Court of Tax Appeals decisions which
have become final and executory are also recognized interpretations of
Philippine tax law.