TAXATION LAW

Module 2: General Principles of Taxation

Reading Materials:

(1) Any Taxation Book discussing the listed topics (2)

Relevant Bar Examination Questions
(3) Relevant Jurisprudence (listed per topic)
I. General Principles

A. Power of Taxation as Distinguished from Police Power

and Eminent Domain
Power of Taxation is one of the inherent powers of the
government, together with the police power and power of
eminent domain. However, they are distinct as to each
other. They play completely different functions in the
government.
Police power is the authority of the state to enact
legislation to interfere with the liberty and property of its
people for the general welfare. The power of eminent
domain is the right of the government to appropriate or
acquire private properties for public use. The power of
taxation is the power by which the law makers raises
revenue to defray government expenses. (Capuno; p. 5-6)

Manila Memorial Park v. Secretary of DSWD, G.R. No.

175356, December 3, 2013
Issue: Whether the legally mandated 20% senior citizen
discount is an exercise of police power or eminent domain.

Facts:
RA 7432 was passed into law (amended by RA 9257), granting
senior citizens 20% discount on certain establishments.
Petitioners posit that the tax deduction scheme contravenes
Article III, Section 9 of the Constitution, which provides that:
"private property shall not be taken for public use without just
compensation."

Ruling:
The 20% senior citizen discount is an exercise of police power.
Nonetheless, to the degree material to the resolution of this case,
the 20% discount may be properly viewed as belonging to the
category of price regulatory measures which affect the
profitability of establishments subjected thereto.
The subject regulation differs there from in that (1) the discount
 does not prevent the establishments from adjusting the level of
prices of their goods and services, and (2) the discount does not
apply to all customers of a given establishment but only to the
class of senior citizens.

Ferrer v. Bautista, G.R. No. 210551, June 30, 2015

Issue: Whether or not the SHT violate equal protection, considering
that those who occupy land illegally or informally do not pay while
legitimate owners of land are made to pay.

Facts:
The LGU of QC enacted two ordinances. One imposes socialized
housing tax (SHT) based on the assessed value of realty, to be paid
by landowners. The other imposes a garbage fee (GF) to be paid by
landowners based on the floor area or land area of their property.

Ruling:
No, equal protection admits of exception. As long as there is real
and substantial distinction, which is germane to the purpose of the
law, it does not violate. The difference between informal settlers
and property owners is very clear and unmistakable. Again, the
foundation is police power, that power which allows the State to
regulate life, liberty and property in order to promote the welfare of
the people.

B. Inherent and Constitutional Limitations of Taxation

(Constitutional Limitations already discussed in
Module 1)

C. Requisites of a Valid Tax

Although taxes are the lifeblood of the government and hence,
should not be delayed, it should not be a permit for arbitrariness.
The Following are the requisites for a valid tax:
1. it should be for public purpose;
2. should be uniform;
3. the property or person taxed should be within the jurisdiction of
the taxing authority;
4. there should be due process in the collection and assessment;
5. should not infringe to the constitutional limitations of the power
to tax.
(Capuno; p. 58)
D. Taxes Distinguished from Other Forms of
Exactions
1. Tax vs. License Fee
The source of tax is the taxing power of the State,
while the source a license fee is the police power of the
State. The purpose of tax is to raise revenue while the
purpose of a license fee is for regulation only.

2. Tax vs. Penalty

Penalty is any sanction imposed as a punishment for
violation of law or acts deemed injurious. It is designed
to regulate conduct and may be imposed by the
government or private individuals or entities. It can be
a subject of set off or compensation.

3. Tax vs. Debt

Debt is generally based on contract, express or implied
and is assignable, It may be paid in kind. It can be a
subject of set-off or compensation. It can be imposed
by private individual.

4. Tax vs. Toll

5. Tax vs. Tariff

E. Kinds of Taxes
1. As to object
- Personal, capitation, poll tax
- Property tax
- Excise tax - a tax on the production, sale or
consumption of a commodity in a country. A tax
charged upon the performance of an act, enjoyment of
privilege, or the engagement in an occupation (Capuno)
2. As to graduation
- Progressive
- Regressive
- Proportionate - levies the same percentage tax to
everyone regardless of income.
3. As to tax rates
- Specific tax – computation of tax or tax rate is already
provided for by law – an excise tax (Capuno)
- Ad valorem – tax upon the value of the thing subject
to taxation. – an excise tax
- Mixed
4. As to burden
- Direct tax
- Indirect tax
5. As to purpose
- General or fiscal
- Special, regulatory, sumptuary
6. As to scope or authority to impose
- National tax
- Local tax
(Capuno; p. 58-59)

La Suerte Cigar & Cigarette Factory v. CA, G.R. No. 125346,

November 11, 2014
Issues:
Is stemmed leaf tobacco subject to excise (specific) tax?

Facts:
These cases involve the taxability of stemmed leaf tobacco
imported and locally purchased by cigarette manufacturers for
use as raw material in the manufacture of their cigarettes.
La Suerte was assessed by the BIR for excise tax deficiency
amounting to more than 34 million pesos. La Suerte protested
invoking the Tax Code which allows the sale of stemmed leaf
tobacco as raw material by one manufacturer directly to another
without payment of the excise tax. However, the CIR insisted
that stemmed leaf tobacco is subject to excise tax “unless there is
an express grant of exemption from [the] payment of tax.”

Ruling:
Yes, excise taxes on domestic products shall be paid by the
manufacturer or producer before[the] removal [of those products]
from the place of production.” “It does not matter to what use the
article[s] subject to tax is put; the excise taxes are still due, even
though the articles are removed merely for storage in some other
place and are not actually sold or consumed.

F. Doctrines in Taxation

Capuno; p. 11

CIR v. Standard Insurance Co. Inc., G.R. No. 219340, April

28, 2021
Doctrine:
Section 218 of the NIRC expressly provides that "[n]o court
shall have the authority to grant an injunction to restrain the
collection of any national internal revenue tax, fee or charge
imposed by the NIRC." An action for declaratory relief is
governed by Section 1, Rule 63 of the Rules of Court. It is
predicated on the attendance of several requisites, specifically:
(1) the subject matter of the controversy must be a deed, will,
contract or other written instrument, statute, executive order or
regulation, or ordinance; (2) the terms of said documents and
the validity thereof are doubtful and require judicial
construction; (3) there must have been no breach of the
documents in question; (4) there must be an actual justiciable
controversy or the "ripening seeds" of one between persons
whose interests are adverse; (5) the issue must be ripe for
judicial determination; and(6) adequate relief is not available
through other means or other forms of action or proceeding.
The violation of Section 184 of the NIRC occurred upon the
taxpayer's failure or refusal to pay the correct DST due at the
time of issuing the non-life insurance policies.

Facts:
Standard received from the Bureau of Internal Revenue (BIR) a
Preliminary Assessment Notice (PAN) regarding its liability
amounting to P377,038,679.55 arising from a deficiency in the
payment of documentary stamp taxes (DST) for taxable year
2011.
Standard commenced Civil Case No. 14-1330 in the RTC (with
prayer for issuance of a temporary restraining order (TRO) or of
a writ of preliminary injunction) for the judicial determination
of the constitutionality of Section 108 and Section 184 of the
NIRC with respect to the taxes to be paid by non-life insurance
companies.
RTC rendered the assailed judgment, opining that although
taxes were self-assessing, the tax system merely created
liability on the part of the taxpayers who still retained the right
to contest the particular application of the tax laws; and holding
that the exercise of such right to contest was not considered a
breach of the provision itself as to deter the action for
declaratory relief. Thus, the RTC permanently enjoined the CIR
from proceeding with the enforcement of Sections 108 and 184
of the National Internal Revenue Code against Standard until
the Congress shall have enacted and passed into law House Bill
No. 3235.
China Banking Corporation v. Commissioner of Internal
Revenue, G.R. No. 172509, February 4, 2015
Issue: whether the right of the BIR to collect the assessed DST
from CBC is barred by prescription.

Facts:
The taxpayer now comes to this Court with a Rule 45 Petition,
reiterating the arguments it raised at the CTA level and invoking
for the first time the argument of prescription. Petitioner CBC
states that the government has three years from 19 April 1989, the
date the former... received the assessment of the CIR, to collect the
tax. Within that time frame, however, neither a warrant of distraint
or levy was issued, nor a collection case filed in court.

Ruling:
In this case, the records do not show when the assessment notice
was mailed, released or sent to CBC. Nevertheless, the latest
possible date that the BIR could have released, mailed or sent the
assessment notice was on the same date that CBC received it, 19
April 1989. Assuming... therefore that 19 April 1989 is the
reckoning date, the BIR had three years to collect the assessed
DST. However, the records of this case show that there was
neither a warrant of distraint or levy served on CBC's properties
nor a collection case filed in court by the BIR within... the three-
year period.

The court is imbued with sufficient discretion to review matters,

not otherwise assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a... complete and just
resolution of the case. More so, when the provisions on
prescription were enacted to benefit and protect taxpayers from
investigation after a reasonable period of time.

CIR v. Toledo Power, G.R. No. 196415, December 2, 2015

Issue:
Whether x x x the [CTA] En Banc committed reversible error in
holding that TPC is entitled to a refund or tax credit certificate in
the reduced amount of P7,598,279.29, representing alleged
unutilized input tax.

Facts:
TPC filed with the Bureau of Internal Revenue (BIR) Regional
District Office (RDO) No. 83 an administrative claim for refund
or credit of its unutilized input Value Added Tax (VAT) for the
taxable year 2002 in the total amount of P14,254,013.27 under
Republic Act No. 9136 or the Electric Power Industry Reform
Act of 2001 (EPIRA) and the National Internal Revenue Code of
1997 (NIRC).

Ruling:
Now, as to the validity of TPC's claim, there is no question that
TPC is entitled to a refund or credit of its unutilized input VAT
attributable to its zero-rated sales of electricity to NPC for the
taxable year 2002 pursuant to Section 108 (B) (3)49 of the
NIRC, as amended, in relation to Section 1350 of the Revised
Charter of the NPC, as amended.

UNIVERSITY OF THE PHILIPPINES v. CITY

TREASURER OF QUEZON CITY, G.R. NO. 214044,
JUNE 19, 2019
Held:
UP is exempt from real property tax on its property (a parcel of
land where Ayala Technohub is located). However, Ayala (ALI)
is taxable on the improvements made thereon.

Doctrine:
UP is a chartered academic institution with specific legislated tax
exemptions. These tax exemptions come from the Local
Government Code, as well as from its legislative charter,
Republic Act No. 9500.

The contract of lease between UP and Ayala states that UP will

shoulder the real property taxes imposable on such property. For
this one, SC compared the case with NPC vs. Province of
Quezon.

4.a. SC declared in the NPC case that it is “essentially wrong

to allow the NPC to assume in its BOT contracts the liability
of the other contracting party for taxes that the government
can impose on that other party, and at the same time allow
NPC to turn around and say that no taxes should be collected
because the NPC is tax-exempt as a government-owned and
controlled corporation.”
4.b. This was the situation set up by UP with ALI in 2008,
before the passage of Republic Act No. 9500. Before the
passage of Republic Act No. 9500, it was essentially wrong
for UP to assume in its lease contract with ALI the liability of
ALI for real property taxes based on its beneficial use of the
land, and then turn around and tell the City Treasurer that UP
is exempt from paying taxes on the land because it is a
government instrumentality.

1. Construction and Interpretation of Tax Laws, Rules,

and Regulations
Capuno; p. 28-29

Nature of Tax Law

- Tax laws are civil and not penal in nature, although
there are penalties provided for their violation.
However, the purpose of such penalty is for a timely
payment of taxes and a punishment for evasion. Penal
laws impose punishments for offenses committed
against the state.

Tax Laws
- Tax laws should be interpreted liberally in favor of
the tax payer and strictly against the government,
except in tax exemptions, in which case, it is reversed
(Collector of Internal Revenue vs. Suyoc
Consolidated Mining GR no. L-11527). This is
because burdens are not to be imposed, nor presumed
to be imposed, beyond what the statutes expressly and
clearly import (Manila Railroad vs. Collector of
Customs 52 Phil. 952)

Tax Exemption and Exclusion

- Exemption in taxation is not favored and never
presumed. He who claims exemption must be able to
justify his claim. An exemption to a common burden
cannot be permitted upon vague implications.
- Laws granting exemptions are construed against the
 taxpayer and in favor of the government.
- Taxation is the rule, and exemption is the exception.

Conflict between Tax Laws and General Laws

- Special law prevails over general law, regardless of
the date of passage.
- The special is considered as the exception to the
general.
- Internal Revenue Code prevails over the Civil Code,
being a special law.

2. Prospectivity of Tax Laws

Tax laws do not operate retroactively, since laws have no
retroactive effect. Thus, taxes must only be imposed
prospectively.
RMC 97-2021 Taxation of Social Media
Influencers
- Section 23 of the NIRC, as amended, provides
that a citizen of the Philippines residing therein
and domestic corporations shall be taxable on all
income derived from sources within and without
the Philippines, while a non-resident citizen,
resident, non-resident alien, and resident foreign
corporations shall be taxable on income derived
from sources within the Philippines. Social
media influencers, other than corporations and
partnerships, are classified for tax purposes as
self-employed individuals or persons engaged in
trade or business as sole proprietors, and
therefore, their income is generally considered
as business income.
- This Circular is therefore issued to clarify the tax
obligations of all social media influencers,
individual or corporation, with the end goal of
raising revenues from their undeclared income
and at the same time, reminding them of their
obligations under the law and of the possible
consequences of their failure to pay taxes.

3. Imprescriptibility of Taxes
Taxes are imprescriptible, except if provided otherwise by
law. Different tax laws, such as NIRC, Tariff and Customs
Code, and Local Government Code provide for different rules
with respect to prescription of assessment and collection of
taxes.
The provision on prescription if for the purpose of
safeguarding taxpayers from unreasonable examinations,
investigations, or assessments.

Under the Tax Code –

SEC. 203. Period of Limitation Upon Assessment and
Collection. - Except as provided in Section 222, internal
revenue taxes shall be assessed within three (3) years after the
last day prescribed by law for the filing of the return, and no
proceeding in court without assessment for the collection of
such taxes shall be begun after the expiration of such period:
Provided, That in a case where a return is filed beyond the
period prescribed by law, the three (3)-year period shall be
counted from the day the return was filed. For purposes of
this Section, a return filed before the last day prescribed by
law for the filing thereof shall be considered as filed on such
last day.

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.

(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.

4. Double Taxation
Taxing the same property twice when it should only be taxed
once. Taxing the same person twice by the same jurisdiction
for the same thing and for the same purpose during the same
taxing period.

Nursery Care Corporation v. Acevedo, G.R. No. 180651,

July 30, 2014
There is double taxation when the same taxpayer is taxed
twice when he should be taxed only for once for the same
purpose by the same taxing authority within the same
jurisdiction during the same taxing period, and the taxes are
of the same kind or character. Double taxation is abnoxious
(extremely unpleasant).

Facts:
The Court perceives of no instance of the constitutionally
proscribed double taxation, in the strict, narrow or obnoxious
sense, imposed upon the petitioners under Section 15 and 17,
on the one hand, and under Section 21, on the other, of the
questioned Ordinance.

The tax under Section 15 is imposed upon wholesalers,

distributors or dealers, while that under Section 17 is imposed
upon retailers. In... short, ta... xes imposed under Section 15
and 17 is a tax on the business of wholesalers, distributors,
dealers and retailers. On the other hand, the tax imposed upon
herein petitioners under Section 21 is not a tax against the
business of the petitioners (as wholesalers,... distributors,
dealers or retailers) but is rather a tax against consumers or
end-users of the articles sold by petitioners.

Ruling:
Petition was dismissed.

Light Rail Manila Corporation v. City of Caloocan, CTA

AC No. 224 promulgated on September 2, 2020, CTA EB
No. 2446 (June 30, 2022)
Facts:
Light Rail Transit Line 1 (LRTI) was originally under the
management of the LRTA, an entity created by Executive
Order (EO) No. 6o3.
Subsequently, LRTA decided to cede the operation of LRT1
to a private corporation and conducted a public bidding
where petitioner participated and eventually won for the
Manila LRT1 Extension, Operations and Maintenance
Project
Thereafter, respondents began to assess petitioner for
business
taxes on the gross receipts for its transportation services,
pursuant to their authority to impose the same under RA
716o or the Local Government Code of 1991 (LGC) and
Section 311 of the Caloocan Updated Revenue Code.

Ruling:
Simply put, local ordinances are subordinate to national law.
LGUs as creatures of legislative fiat derive their power to
enact ordinances from those delegated to them by Congress.
Therefore, to act in a way exceeding such authority granted
to them makes the act abhorrent to state law and thus, ultra
vires.

Petition Granted.

Note: Section 133 of the LGC

Common Limitations on the Taxing Powers of Local
Government Units. - Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities,
 municipalities, and barangays shall NOT extend to the levy
of the following:
(j) Taxes on the gross receipts of transportation contractors
and persons engaged in the transportation of
passengers or freight by hire and common carriers by air,
land or water, except as provided in this Code;

Differentiate between double taxation in the strict sense and

in a broad sense and give an example of each.

Double taxation, in the strict sense, refers to direct double

taxation. This occurs when the same property is taxed twice
where it should be taxed but once; both taxes must be
imposed on the same property or subject matter, for the same
purpose, by the same state or government or taxing authority,
within the same jurisdiction or taxing district, during the
same taxing period, and they must be of the same kind or
character of tax.

Double taxation in the broad sense pertains to indirect double

taxation. This extends to all cases in which there is a burden
of two or more impositions. It is the double taxation other
than those covered by direct double taxation.

5. Escape from Taxation

a) Shifting of Tax Burden
Tax shift is a kind of economic phenomenon in which
the taxpayer transfers the tax burden to the purchaser or
supplier by increasing the sales price or depressing the
purchase price during the process of commodity
exchange. Tax shift is the redistribution of tax burden.

b) Tax Avoidance
Tax-saving device within the means sanctioned by law.
Used in good-faith. (e.g. tax credit claims, maximize
deductions)

c) Tax Evasion
Scheme used outside the lawful means, which would
result into civil or criminal liabilities. (e.g. Deliberately
under-reporting or omitting income, Keeping two sets of
 books and making false entries in books and records,
Claiming false or overstated deductions on a return,
Claiming personal expenses as business expenses)

6. Exemption from Taxation

It is an immunity or privilege. It is freedom from a charge or
burden to which others are subjected. A waiver on the part of
the government of its right to collect what is due to it.

7. Equitable Recoupment
Doctrine of Equitable Recoupment. Refers to a case where a
taxpayer has a claim for refund but was not able to file a
written claim due to lapse of prescription period. Under the
doctrine, the tax payer is allowed to credit such refund to his
existing liability. Not allowed in the Philippine. In the
Philippines, failure to file claims or refunds within a period of
2 years is a bar to any future claim.

8. Prohibition on Compensation and Set-Off

Compensation is a civil law concept which takes place when
two persons are creditors and debtors of each other.
Compensation is a mode of extinguishing an obligation.

9. Compromise and Tax Amnesty

The parties, by making reciprocal concessions, to avoid a
litigation or to put an end to one already commenced.
The Commissioner is authorized to enter into compromise of
taxes. Unless prohibited under Article 2034 and 2035 of the
Civil Code (Pursuant to Article 2035 of the Civil Code, no
compromise (and by implication, waivers) upon the following
shall be valid: the civil status of persons, the validity of a
marriage or a legal separation, any ground for legal
separation, future support, the jurisdiction of courts, and
future legitime; Article 2034. There may be a compromise
upon the civil liability arising from an offense; but such
compromise shall not extinguish the public action for the
imposition of the legal penalty.)

Tax amnesty operates as a general pardon or intentional

overlooking by the state of its authority to impose penalties
on persons otherwise guilty of evasion or violation of a
revenue or tax law. Never favored nor presumed by law. An
absolute forgiveness or waiver by the government of its right
to collect what is due to it.
LG Electronics v. CIR, G.R. No. 165451, December 3,
2014
Issue:
Whether or not petitioner LG Electronics Philippines, Inc. is
entitled to the immunities and privileges granted under Tax
Amnesty Act of 1997.

Facts:
On March 21, 1998 petitioner LG Electronics Philippines,
Inc. (LG) was assessed deficiency income tax for the taxable
year of 1994. It filed administrative protest with the Bureau
of Internal Revenue against the tax assessment claiming that
the assessment did not have factual and legal bases.

LG filed a Petition for Review before the Court of Tax

Appeals then raised the issue to the Supreme Court.
Meanwhile, LG availed itself of the tax amnesty provided
under Republic Act No. 9480.

Ruling:
Yes. LG has properly availed itself of the tax amnesty under
RA No. 9840 by paying the correct amount and submitting
the required documents. LG’s completion of the
requirements and compliance with the procedure laid down
in the law and the implementing rules entitled it to the
privileges and immunities under the tax amnesty program.
Moreover, tax assessments that are disputed administratively
or judicially are still covered by the tax amnesty law except
those cases excluded from the coverage of the law like tax
cases subject of final and executory judgments by the courts.
The present case has not become final and executory when
LG availed of the tax amnesty program.

CS Garment, Inc. v. CIR, G.R. No. 182399, March 12,

2014
Issue:
Whether or not CS Garment is already immune from paying
the deficiency taxes stated in the 1998 tax assessments of
the CIR

Facts:
Petitioner [CS Garment] received from respondent [CIR]
Letter of Authority No. 00012641 dated November 10,
1999, authorizing the examination of petitioner's books of
accounts and other accounting records for all internal
revenue taxes.
Petitioner received five (5) formal demand letters with
accompanying Assessment Notices.
Petitioner filed a formal written protest with the respondent.
while the instant case was pending before this Court,
petitioner filed a Manifestation and Motion stating that it
had availed itself of... the government's tax amnesty
program under the 2007 Tax Amnesty Law. It thus prays
that we take note of its availment of the tax amnesty and
confirm that it is entitled to all the immunities and privileges
under the law.

Ruling:
Tax amnesty refers to the articulation of the absolute waiver
by a sovereign of its right to collect taxes and power to
impose penalties on persons or entities guilty of violating a
tax law.
The OSG has already confirmed to this Court that CS
Garment has complied with all of the documentary
requirements of the law. Consequently, and contrary to the
assertion of the OSG, no further assessment by the BIR is
necessary. CS Garment is now... entitled to invoke the
immunities and privileges under Section 6 of the law.

CIR v. Philippine-Aluminum Wheels, Inc., G.R. No.

216161, August 9, 2017
Issue:
Whether respondent is not entitled to the benefits of the
TAX Amnesty Program under RA 9480

Facts:
BIR issued a Preliminary Assessment Notice (PAN) against
respondent covering deficiency taxes for the taxable year
2001. On March 28, 2004, the BIR issued a Final
Assessment Notice (FAN) against respondent and later on
issued a Final Decision on Disputed Assessment (FDDA)
and demanded full payment of the deficiency tax
assessment.
Respondents contends that due to their availment of tax
amnesty and compliance with requirements of the same, it
is fully entitled to the immunities and privileges granted
under RA 9480. Availment of such tax amnesty also
immunes the respondent from civil, criminal, or
administrative penalties under the NIRC of 1997.

Ruling:
Respondent is entitled to the benefits of the Tax Amnesty
Program.
It is held that the taxpayer's completion of the requirements
under RA 9480, as implemented by DO 29-07, will
extinguish the taxpayers tax liability, additions and all
appurtenant civil, criminal, or administrative penalties
under the NIRC.

CIR v. Covanta Energy, G.R. No. 203160, January 24,

2018
Issue:
Whether CEPHI is entitled to the immunities and privileges
of the tax amnesty program.

Facts:
CIR issued Formal Letters of Demand and Assessment
Notices against CEPHI for deficiency value-added tax
(VAT) and expanded withholding tax (EWT). CEPHI
protested the assessments by filing two (2) separate Letters
of Protest.
After the parties’ respective submission of their formal
offer of evidence, CEPHI filed a Supplemental Petition on
October 7, 2008, informing the CTA that it availed of the
tax amnesty under R.A. No. 9480. CEPHI afterwards
submitted a Supplemental Formal Offer of Evidence,
together with the documents relevant to its tax amnesty.

Ruling:
Yes, CEPHI is entitled to the immunities and privileges of
the tax amnesty program upon full compliance with the
requirements of R.A. No. 9480. R.A. No. 9480 governs the
tax amnesty program for national internal revenue taxes for
the taxable year 2005 and prior years. Subject to certain
exceptions, a taxpayer may avail of this program by
complying with the documentary submissions to the Bureau
of Internal Revenue (BIR) and thereafter, paying the
applicable amnesty tax.
Upon the taxpayer’s full compliance with these
requirements, the taxpayer is immediately entitled to the
enjoyment of the immunities and privileges of the tax
amnesty program. But when: (a) the taxpayer fails to file a
SALN and the Tax Amnesty Return; or (b) the net worth of
the taxpayer in the SALN as of December 31, 2005 is
proven to be understated to the extent of 30% or more, the
taxpayer shall cease to enjoy these immunities and
privileges.