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Taxation Law Case Digests

Atty. Michael Montero

REMEDIES
1.

Tax Administration

Sections 2-3, 9-20, 244-246, and 290, Tax Code


SEC. 2. Powers and duties of the Bureau of Internal Revenue. - The Bureau of
Internal Revenue shall be under the supervision and control of the Department of
Finance and its powers and duties shall comprehend the assessment and
collection of all national internal revenue taxes, fees, and charges, and the
enforcement of all forfeitures, penalties, and fines connected therewith, including
the execution of judgments in all cases decided in its favor by the Court of Tax
Appeals and the ordinary courts. The Bureau shall give effect to and administer the
supervisory and police powers conferred to it by this Code or other laws.
SEC. 3. Chief Officials of the Bureau of Internal Revenue. - The Bureau of
Internal Revenue shall have a chief to be known as Commissioner of Internal
Revenue, hereinafter referred to as the Commissioner and four (4) assistant chiefs
to be known as Deputy Commissioners.
SEC. 9. - Internal Revenue Districts. - With the approval of the Secretary of
Finance, the Commissioner shall divide the Philippines into such number of
revenue districts as may form time to time be required for administrative purposes.
Each of these districts shall be under the supervision of a Revenue District Officer.
SEC. 10. - Revenue Regional Director. - Under rules and regulations, policies
and standards formulated by the Commissioner, with the approval of the Secretary
of Finance, the Revenue Regional director shall, within the region and district
offices under his jurisdiction, among others:
(a) Implement laws, policies, plans, programs, rules and regulations of the
department or agencies in the regional area;
(b) Administer and enforce internal revenue laws, and rules and regulations,
including the assessment and collection of all internal revenue taxes, charges and
fees.
(c) Issue Letters of authority for the examination of taxpayers within the region;
(d) Provide economical, efficient and effective service to the people in the area;
(e) Coordinate with regional offices or other departments, bureaus and agencies in
the area;
(f) Coordinate with local government units in the area;
(g) Exercise control and supervision over the officers and employees within the
region; and
(h) Perform such other functions as may be provided by law and as may be
delegated by the Commissioner.
SEC. 11. Duties of Revenue District Officers and Other Internal Revenue
Officers. - It shall be the duty of every Revenue District Officer or other internal
revenue officers and employees to ensure that all laws, and rules and regulations
affecting national internal revenue are faithfully executed and complied with, and to
aid in the prevention, detection and punishment of frauds of delinquencies in

connection therewith.
It shall be the duty of every Revenue District Officer to examine the efficiency of all
officers and employees of the Bureau of Internal Revenue under his supervision,
and to report in writing to the Commissioner, through the Regional Director, any
neglect of duty, incompetency, delinquency, or malfeasance in office of any internal
revenue officer of which he may obtain knowledge, with a statement of all the facts
and any evidence sustaining each case.
SEC. 12. Agents and Deputies for Collection of National Internal Revenue
Taxes. - The following are hereby constituted agents of the Commissioner:
(a) The Commissioner of Customs and his subordinates with respect to the
collection of national internal revenue taxes on imported goods;
(b) The head of the appropriate government office and his subordinates with
respect to the collection of energy tax; and
(c) Banks duly accredited by the Commissioner with respect to receipt of payments
internal revenue taxes authorized to be made thru bank.
Any officer or employee of an authorized agent bank assigned to receive internal
revenue tax payments and transmit tax returns or documents to the Bureau of
Internal Revenue shall be subject to the same sanctions and penalties prescribed
in Sections 269 and 270 of this Code.
SEC. 13. - Authority of a Revenue Offices. - subject to the rules and regulations
to be prescribed by the Secretary of Finance, upon recommendation of the
Commissioner, a Revenue Officer assigned to perform assessment functions in
any district may, pursuant to a Letter of Authority issued by the Revenue Regional
Director, examine taxpayers within the jurisdiction of the district in order to collect
the correct amount of tax, or to recommend the assessment of any deficiency tax
due in the same manner that the said acts could have been performed by the
Revenue Regional Director himself.
SEC. 14. Authority of Officers to Administer Oaths and Take Testimony. - The
Commissioner, Deputy Commissioners, Service Chiefs, Assistant Service Chiefs,
Revenue Regional Directors, Assistant Revenue Regional Directors, Chiefs and
Assistant Chiefs of Divisions, Revenue District Officers, special deputies of the
Commissioner, internal revenue officers and any other employee of the Bureau
thereunto especially deputized by the Commissioner shall have the power to
administer oaths and to take testimony in any official matter or investigation
conducted by them regarding matters within the jurisdiction of the Bureau.
SEC. 15. Authority of Internal Revenue Officers to Make Arrests and Seizures.
- The Commissioner, the Deputy Commissioners, the Revenue Regional Directors,
the Revenue District Officers and other internal revenue officers shall have
authority to make arrests and seizures for the violation of any penal law, rule or
regulation administered by the Bureau of Internal Revenue. Any person so arrested
shall be forthwith brought before a court, there to be dealt with according to law.
SEC. 16. Assignment of Internal Revenue Officers Involved in Excise Tax
Functions to Establishments Where Articles subject to Excise Tax are
Produced or Kept. - The Commissioner shall employ, assign, or reassign internal

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revenue officers involved in excise tax functions, as often as the exigencies of the
revenue service may require, to establishments or places where articles subject to
excise tax are produced or kept: Provided, That an internal revenue officer
assigned to any such establishment shall in no case stay in his assignment for
more than two (2) years, subject to rules and regulations to be prescribed by the
Secretary of Finance, upon recommendation of the Commissioner.
SEC. 17. Assignment of Internal Revenue Officers and Other Employees to
Other Duties. - The Commissioner may, subject to the provisions of Section 16
and the laws on civil service, as well as the rules and regulations to be prescribed
by the Secretary of Finance upon the recommendation of the Commissioner,
assign or reassign internal revenue officers and employees of the Bureau of
Internal Revenue, without change in their official rank and salary, to other or special
duties connected with the enforcement or administration of the revenue laws as the
exigencies of the service may require: Provided, That internal revenue officers
assigned to perform assessment or collection function shall not remain in the same
assignment for more than three (3) years; Provided, further, That assignment of
internal revenue officers and employees of the Bureau to special duties shall not
exceed one (1) year.
SEC. 18. Reports of violation of Laws. - When an internal revenue officer
discovers evidence of a violation of this Code or of any law, rule or regulations
administered by the Bureau of Internal Revenue of such character as to warrant
the institution of criminal proceedings, he shall immediately report the facts to the
Commissioner through his immediate superior, giving the name and address of the
offender and the names of the witnesses if possible: Provided, That in urgent
cases, the Revenue Regional director or Revenue District Officer, as the case may
be, may send the report to the corresponding prosecuting officer in the latter case,
a copy of his report shall be sent to the Commissioner.
SEC. 19. Contents of Commissioner's Annual Report. - The annual Report of
the Commissioner shall contain detailed statements of the collections of the Bureau
with specifications of the sources of revenue by type of tax, by manner of payment,
by revenue region and by industry group and its disbursements by classes of
expenditures.
In case the actual collection exceeds or falls short of target as set in the annual
national budget by fifteen percent (15%) or more, the Commissioner shall explain
the reason for such excess or shortfall.
SEC. 20. Submission of Report and Pertinent Information by the
Commissioner.
(A) Submission of Pertinent Information to Congress. - The provision of Section
270 of this Code to the contrary notwithstanding, the Commissioner shall, upon
request of Congress and in aid of legislation, furnish its appropriate Committee
pertinent information including but not limited to: industry audits, collection
performance data, status reports in criminal actions initiated against persons and
taxpayer's returns: Provided, however, That any return or return information which
can be associated with, or otherwise identify, directly or indirectly, a particular
taxpayer shall be furnished the appropriate Committee of Congress only when

Atty. Michael Montero

sitting in Executive Session Unless such taxpayer otherwise consents in writing to


such disclosure.
(B) Report to Oversight Committee. - The Commissioner shall, with reference to
Section 204 of this Code, submit to the Oversight Committee referred to in Section
290 hereof, through the Chairmen of the Committee on Ways and Means of the
Senate and House of Representatives, a report on the exercise of his powers
pursuant to the said section, every six (6) months of each calendar year.
SEC. 244. Authority of Secretary of Finance to Promulgate Rules and
Regulations. - The Secretary of Finance, upon recommendation of the
Commissioner, shall promulgate all needful rules and regulations for the effective
enforcement of the provisions of this Code.
SEC. 245. Specific Provisions to be Contained in Rules and Regulations. The rules and regulations of the Bureau of Internal Revenue shall, among other
thins, contain provisions specifying, prescribing or defining:
(a) The time and manner in which Revenue Regional Director shall canvass their
respective Revenue Regions for the purpose of discovering persons and
property liable to national internal revenue taxes, and the manner in which
their lists and records of taxable persons and taxable objects shall be
made and kept; (b) The forms of labels, brands or marks to be required on
goods subject to an excise tax, and the manner in which the labelling,
branding or marking shall be effected; (c) The conditions under which and
the manner in which goods intended for export, which if not exported
would be subject to an excise tax, shall be labelled, branded or marked;
(d) The conditions to be observed by revenue officers respecting the
institutions and conduct of legal actions and proceedings; (e) The
conditions under which goods intended for storage in bonded warehouses
shall be conveyed thither, their manner of storage and the method of
keeping the entries and records in connection therewith, also the books to
be kept by Revenue Inspectors and the reports to be made by them in
connection with their supervision of such houses; (f) The conditions under
which denatured alcohol may be removed and dealt in, the character and
quantity of the denaturing material to be used, the manner in which the
process of denaturing shall be effected, so as to render the alcohol
suitably denatured and unfit for oral intake, the bonds to be given, the
books and records to be kept, the entries to be made therein, the reports
to be made to the Commissioner, and the signs to be displayed in the
business ort by the person for whom such denaturing is done or by whom,
such alcohol is dealt in; (g) The manner in which revenue shall be
collected and paid, the instrument, document or object to which revenue
stamps shall be affixed, the mode of cancellation of the same, the manner
in which the proper books, records, invoices and other papers shall be
kept and entries therein made by the person subject to the tax, as well as
the manner in which licenses and stamps shall be gathered up and
returned after serving their purposes; (h) The conditions to be observed
by revenue officers respecting the enforcement of Title III imposing a tax
on estate of a decedent, and other transfers mortis causa, as well as on

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Taxation Law Case Digests

gifts and such other rules and regulations which the Commissioner may
consider suitable for the enforcement of the said Title III; (i) The manner
in which tax returns, information and reports shall be prepared and
reported and the tax collected and paid, as well as the conditions under
which evidence of payment shall be furnished the taxpayer, and the
preparation and publication of tax statistics; (j) The manner in which
internal revenue taxes, such as income tax, including withholding tax,
estate and donor's taxes, value-added tax, other percentage taxes, excise
taxes and documentary stamp taxes shall be paid through the collection
officers of the Bureau of Internal Revenue or through duly authorized
agent banks which are hereby deputized to receive payments of such
taxes and the returns, papers and statements that may be filed by the
taxpayers in connection with the payment of the tax: Provided, however,
That notwithstanding the other provisions of this Code prescribing the
place of filing of returns and payment of taxes, the Commissioner may, by
rules and regulations, require that the tax returns, papers and statements
that may be filed by the taxpayers in connection with the payment of the
tax. Provided, however, That notwithstanding the other provisions of this
Code prescribing the place of filing of returns and payment of taxes, the
Commissioner may, by rules and regulations require that the tax returns,
papers and statements and taxes of large taxpayers be filed and paid,
respectively, through collection officers or through duly authorized agent
banks: Provided, further, That the Commissioner can exercise this power
within six (6) years from the approval of Republic Act No. 7646 or the
completion of its comprehensive computerization program, whichever
comes earlier: Provided, finally, That separate venues for the Luzon,
Visayas and Mindanao areas may be designated for the filing of tax
returns and payment of taxes by said large taxpayers.
For the purpose of this Section, 'large taxpayer' means a taxpayer who satisfies
any of the following criteria;
(1) Value-Added Tax (VAT) - Business establishment with VAT paid or payable of
at least One hundred thousand pesos (P100,000) for any quarter of the preceding
taxable year;
(2) Excise tax - Business establishment with excise tax paid or payable of at least
One million pesos (P1,000,000) for the preceding taxable year;
(3) Corporate Income Tax - Business establishment with annual income tax paid
or payable of at least One million pesos (P1,000,000) for the preceding taxable
year; and
(4) Withholding tax - Business establishment with withholding tax payment or
remittance of at least One million pesos (P1,000,000) for the preceding taxable
year.
Provided, however, That the Secretary of Finance, upon recommendation of the
Commissioner, may modify or add to the above criteria for determining a large
taxpayer after considering such factors as inflation, volume of business, wage and
employment levels, and similar economic factors.
The penalties prescribed under Section 248 of this Code shall be imposed on any
violation of the rules and regulations issued by the Secretary of Finance, upon
recommendation of the Commissioner, prescribing the place of filing of returns and
payments of taxes by large taxpayers.

Atty. Michael Montero

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 reversal will be prejudicial to the taxpayers, except in the following
cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his
return or any document required of him by the Bureau of Internal
Revenue; (b) Where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on which the ruling
is based; or (c) Where the taxpayer acted in bad faith.
SEC. 290. Congressional Oversight Committee. A Congressional Oversight Committee, hereinafter referred to as the Committee, is
hereby constituted in accordance with the provisions of this Code. The Committee
shall be composed of the Chairmen of the Committee on Ways and Means of the
Senate and House Representatives and four (4) additional members from each
house, to be designated by the Speaker of the House of Representatives and the
Senate President, respectively.
The Committee shall, among others, in aid of legislation:
(1) Monitor and ensure the proper implementation of Republic Act No. 8240; (2)
Determine that the power of the Commissioner to compromise and abate
is reasonably exercised; (3) Review the collection performance of the
Bureau of Internal Revenue; and (4) Review the implementation of the
programs of the Bureau of Internal Revenue.
In furtherance of the hereinabove cited objectives, the Committee is empowered to
require of the Bureau of Internal Revenue, submission of all pertinent information,
including but not limited to: industry audits; collection performance data; status
report on criminal actions initiated against persons; and submission of taxpayer
returns: Provided, however, That any return or return information which can be
associated with, or otherwise identify, directly or indirectly, a particular taxpayer
shall be furnished the Committee only when sitting in Executive Session unless
such taxpayer otherwise consents in writing to such disclosure.
DOF Order No. 007-02 (May 7, 2002)
Providing for the Implementing Rules of the First Paragraph of Section 4 of the
1997 NIRC, repealing for this purpose DO No. 005-99 amd Revenue Admin Order
No. 1-99
SUMMARY (This is all you need to know right here!): A ruling by the CIR shall be
presumed valid until overturned or modified by the Finance Secretary. The decision
of the CIR may be reviewed by the Finance Sec in 2 ways!
1. Through a REQUEST FOR REVIEW submitted by the taxpayer within 30
days from the receipt of such ruling, accompanied with a duplicate copy of
the BIR records, authenticated and certified by the BIR. The Request for

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Review must conform to certain requisites (see Section 3) and failure to


follow the requisites may lead to the dismissal of the Finance Sec to
dismiss the requisite with prejudish.
2. Through a MOTU PROPRIO REVIEW by the Finance Sec, in which case,
he shall order the BIR to transmit the records within 15 days.
Finance Sec may affirm, reverse or modify the CIR ruling. In case of affirmation,
Finance Sec may rely wholly on the reasons of CIR. In case of reversal or
modification, the CIR ruling shall be deemed ineffective as of the date of receipt of
written notice of such reversal or modification (a) by the taxpayer; or (b) by the BIR,
WHICHEVER IS EARLIER.
Certification fees only apply to REQUESTS FOR REVIEW, not to motu proprio
review by the Finance Sec.
Facts: joke lang, walang facts
WHEREAS, Section 4 of the National Internal Revenue Code of 1997 vests with
the Commissioner of Internal Revenue exclusive and original jurisdiction to
interpret its provisions and other tax laws, subject to review by the Secretary of
Finance;
WHEREAS, DO 005-99, dated January 26, 1999 and Revenue Administrative
Order No. 1-99, dated February 5, 1999, implements the power of the Secretary of
Finance to review rulings of the Commissioner of Internal Revenue;
WHEREAS, there is need to further provide for the implementing rules of the first
paragraph of Section 4 of the NIRC.
NOW THEREFORE, I, JOSE ISIDRO N. CAMACHO, Secretary of Finance, by
virtue of the powers of supervision and control over the BIR granted to me by
Section 2 of the NIRC and Book IV, Title II, Chapter 4, Section 18 of the
Administrative Code of 1987, do hereby order:
SECTION 1. Scope of This Order. This Department Order shall apply to all
rulings of the BIR that implement the provisions of the NIRC and other tax laws.
SECTION 2. Validity of Rulings. A ruling by the CIR shall be presumed valid until
overturned or modified by the Secretary of Finance.
SECTION 3. Rulings Adverse to the Taxpayer. A taxpayer who receives an
adverse ruling from the CIR may, within 30 days from the date of receipt of such
ruling, seek its review by the Secretary of Finance. The request for review shall be
in writing and under oath, and must:

Atty. Michael Montero

a)

be addressed to the Secretary of Finance and be filed with the Legal


Office, Department of Finance, DOF Building, BSP Complex, Roxas
Boulevard corner Pablo Ocampo St., City of Manila;
b) contain the heading "Request for review of BIR Ruling No.______
c) allege and show that the request was filed within the reglementary period;
d) indicate the Tax Identification Number of the taxpayer;
e) allege the material facts upon which the ruling was requested;
f) state that exactly the same facts were presented to the BIR;
g) g) define the issues sought to be resolved; TCADEc
h) contain the facts and the law relied upon to dispute the ruling of the
Commissioner;
i) be signed by or on behalf of the taxpayer filing the appeal; provided that,
only lawyers engaged by the taxpayer and/or tax agents accredited by the
BIR may sign on behalf of the taxpayer;
j) be accompanied by a copy of the Commissioner's challenged ruling; and
k) contain a stamp of the Office of the Commissioner of Internal Revenue,
indicating that a copy of the request to review the ruling was received by
the Commissioner; and
l) specifically state that the taxpayer does not have a pending assessment
or case in an court of justice where the same issues are being considered.
Furthermore, the taxpayer must, at the time of filing of the request for review,
submit a duplicate copy of the records on file with the BIR pertaining to his request,
which set of records must be authenticated and certified by the BIR.
The Secretary of Finance may dismiss with prejudice a request for review that
fails to comply with these requirements.
SECTION 4. Motu proprio review by the Secretary of Finance. The Secretary of
Finance may, of his own accord, review a ruling issued by the CIR. In such a case,
the Secretary of Finance shall order the CIR to transmit a duplicate copy of the BIR
records. The CIR shall transmit such records within 15 days from receipt of notice
of the request for transmittal.
SECTION 5. Affirmation, reversal or modification by the Secretary of Finance.
The Secretary of Finance may affirm, reverse or modify a ruling of the
Commissioner of Internal Revenue. In the case of an affirmation, the Secretary of
Finance may rely wholly on the reasons stated in the ruling of the Commissioner of
Internal Revenue.
Subject to Section 246 of the Republic Act No. 8424, a reversal or
modification of the ruling shall terminate its effectivity upon the earlier date of the
receipt of written notice of such reversal or modification by the taxpayer or by the
BIR.

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Atty. Michael Montero

SECTION 6. Certification Fee to be Imposed by the BIR. Except for review of


rulings under Section 4 the BIR may impose appropriate certification fees to carry
out the provisions of this Order.

Section 3. Repealing Clause. All existing rules and regulations or parts thereof
which are inconsistent with the provisions of these Regulations are hereby
amended, repealed or revoked accordingly.

SECTION 7. Repealing Clause. .Department Order No. 005-99 and Revenue


Administrative Order No. 1-99, as well as all other existing Department Orders and
issuances of the Commissioner of Internal Revenue that are inconsistent with this
Order are hereby repealed.

Section 4. Effectivity Clause. These Regulations shall take effect immediately.

SECTION 8. Effectivity. This Department Order shall take effect immediately.


Done in the City of Manila this 7th of May 2002.
(SGD.) JOSE ISIDRO N. CAMACHO
Secretary of Finance
Revenue Regulations 5-2012 (April 2, 2012)
Subject: Binding effect of rulings issued prior to Tax Reform Act of 1997
Date: April 2, 2012
Sec. of Finance: Cesar Purisima
CIR: Kim Jacinto-Henares
Summary: This RR establishes the policy on the binding effect of rulings issued
prior to the effectivity of the Tax Reform Act of 1997. All ruling issued prior to Jan.
1, 1998 shall no longer have any binding effect. Consequently, these rulings cannot
be invoked as basis for any current transaction/s. Neither can these ruling be used
as basis for securing legal tax opinions/rulings.
Section 1. Background - Republic Act No. 8424, or The Tax Reform Act of 1997
(hereinafter referred to as the Tax Code of 1997), which was approved on
December 11, 1997 has put in place the last phase of the comprehensive reform
package on tax laws which took effect on January 1, 1998. Pursuant to Section
244, in relation to Section 4 of the Tax Code of 1997, these Regulations are being
promulgated to establish the policy on the binding effect of rulings issued prior to
the effectivity of the Tax Code of 1997 on January 1, 1998.
Section 2. Coverage. All rulings issued prior to January 1, 1998 will no longer
have any binding effect. Consequently, these rulings cannot be invoked as basis
for any current business transaction/s. Neither can these rulings be used as basis
for securing legal tax opinions/rulings.

Revenue Regulations 14-2008 (November 26, 2008)


Summary: increased the coverage of withholding tax agents who are required to
withhold 1% from regular suppliers of goods and 2% from regular supplier of
services from the top 10,000 private corporations to the top 20,000 private
corporations.
Income payments made by the top 20,000 to local/resident suppliers and nonresident aliens engaged in trade or business in the Philippines, shall be withheld a
creditable income tax as follows:
Supplier of goods= 1%
Supplier of services= 2%
SECTION 1. Scope. Pursuant to the provisions of Section 244 of the Tax Code
of 1997, as amended, in relation to Section 57 (B) thereof, these Regulations are
hereby promulgated to further amend Section 2.57.2 (M) of Revenue Regulations
No. 2-98, as amended, increasing the coverage of withholding tax agents who are
required to withhold 1% from the regular suppliers of goods and 2% from the
regular suppliers of services from the top ten thousand (10,000) private
corporations to top twenty (20,000) private corporations.
SECTION 2. Amendment. Section 2.57.2 (M) of Revenue Regulations 2-98, as
amended, is hereby further amended to read as follows:
"Sec. 2.57.
Withholding of Tax at Source.
"Sec. 2.57.2.
Income payment subject to creditable withholding tax
and rates prescribed thereon. Except as herein otherwise provided, there shall
be withheld a creditable income tax at the rates herein specified for each class of
payee from the following items of income payments to persons residing in the
Philippines.
"xxx
xxx
xxx
"(M) Income payments made by the top twenty thousand (20,000) private
corporations to their local/resident supplier of goods and local/resident supplier of
services other than those covered by other rates of withholding tax. Income
payments made by any of the top twenty thousand (20,000) private corporations,
as determined by the Commissioner, to their local/resident supplier of goods and
local/resident supplier of services, including non-resident alien engaged in trade or
business in the Philippines

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Supplier of goods One percent (1%)


Supplier of services Two percent (2%)
"Top twenty thousand (20,000) private corporations shall include a
corporate taxpayer who has been determined and notified by the Bureau of Internal
Revenue (BIR) as having satisfied any of the following criteria:
(a) Classified and duly notified by the Commissioner as a large taxpayer
under Revenue Regulations No. 1-98, as amended, or belonging to the
top five thousand (5,000) private corporations under RR 12-94, or to the
top ten thousand (10,000) private corporations under RR 17-2003, unless
previously de-classified as such or had already ceased business
operations (automatic inclusion);
(b) Any taxpayer with net VAT paid or payable for the preceding year of at
least P100,000;
(c) Any taxpayer with annual income tax paid or payable for the preceding
year of at least P200,000;
(d) Any taxpayer with percentage taxes for the preceding year of at least
P100,000;
(e) Any taxpayer whose gross sales for the preceding year is over
P10,000,000;
(f)Any taxpayer whose gross purchases for the preceding year is over
P5,000,000.
"The term "goods" pertains to tangible personal property. It does not
include intangible personal property, as well as real property.
"The term "local/resident suppliers of goods" pertains to a supplier from
whom any of the top twenty thousand (20,000) private corporations, as determined
by the Commissioner, regularly makes its purchases of goods. As a general rule,
this term does not include a casual purchase of goods, that is, purchase made from
a non-regular supplier and oftentimes involving a single purchase. However, a
single purchase which involves Ten thousand pesos (P10,000.00) or more shall be
subject to a withholding tax. The term "regular suppliers" refers to suppliers who
are engaged in business or exercise of profession/calling with whom the taxpayerbuyer has transacted at least six (6) transactions, regardless of amount per
transaction, either in the previous year or current year. The same rules apply to
local/resident supplier of services other than those covered by separate rates of
withholding tax. ECTAHc
"A corporation shall not be considered a withholding agent for purposes of
this Section, unless such corporation has been determined and duly notified in
writing by the Commissioner that it has been selected as one of the top twenty
thousand (20,000) private corporations.
"Any corporation which has been duly classified and notified as large
taxpayer by the Commissioner pursuant to RR 1-98, as amended, shall be

Atty. Michael Montero

automatically considered one of the top twenty thousand (20,000) private


corporations, provided, however, that its authority as a withholding agent shall be
effective only upon receipt of written notice from the Commissioner that it has been
classified as a large taxpayer, as well as one of the top twenty thousand (20,000)
private corporations, for purposes of these regulations.
"Any corporation shall remain a withholding agent for purposes of these
regulations, unless the Commissioner notifies it in writing that it shall cease to be
one. The following, however, are some of the reasons that a taxpayer shall
automatically cease to be a withholding agent, and therefore no prior written notice,
for purposes of these regulations, is required, to wit:
(a) closure/cessation of business/dissolution (for taxpayer with notice of
dissolution given to the BIR);
(b) merger/consolidation (for dissolved or absorbed corporation);
(c) any other form of business combination wherein by operation of law a
corporate taxpayer loses its juridical personality.
"The withholding agent shall submit on a semestral basis a list of its
regular suppliers of goods and/or services to the Large Taxpayers Assistance
Division/Large Taxpayers District Office in the case of large taxpayers duly notified
as such pursuant to RR 1-98, as amended, or Revenue District Office (RDO)
having jurisdiction over the withholding agent's principal place of business on or
before July 31 and January 31 of each year.
"A government-owned or -controlled corporation previously classified as
one of the top five thousand (5,000) corporations under RR 12-94, as amended,
shall cease to be a withholding agent or included in the top twenty thousand
(20,000) private corporations for purposes of these regulations but rather shall be
treated as one under the succeeding sub-section (N) since it is already withholding
1% or 2% of the amount paid for the purchase of goods/services from local/resident
suppliers.
"The Commissioner of Internal Revenue may recommend to the Secretary
of Finance the amendment/modification to any or all of the criteria in the
determination and selection of taxpayers forming part of the top twenty thousand
(20,000) private corporations after considering such factors as inflation, volume of
business, and similar factors. Provided, however, that the Commissioner is
empowered to conduct periodic review as to the number of taxpayers who ceased
to qualify under the category of top twenty thousand (20,000) private corporations
for purposes of delisting them or excluding them from the list and to identify
taxpayers to be added to the list of top twenty (20,000) private corporations.
"All taxpayers previously included in the list of top 5,000 private
corporations under RR 12-94, as amended, and those who qualified as top ten
thousand (10,000) private corporations under RR 17-2003 shall continue to
withhold one percent (1%) for supplier of goods and 2% for supplier of services
upon the effectivity of these Regulations, unless any of the following situations

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Taxation Law Case Digests

occur: (a) the Commissioner communicates in writing that they have ceased to
qualify as taxpayers includible in the list of top twenty thousand (20,000) private
corporations, or (b) those officially identified to have ceased business operations,
or undergone any of the business combinations wherein by operation of law the
juridical personality of said taxpayers ceased."
SECTION 3. Repealing Clause. All existing rules and regulations or parts
thereof which are inconsistent with the provisions of these regulations are hereby
modified, amended, revoked or repealed accordingly.
SECTION 4. Effectivity. These regulations shall take effect fifteen (15) days
following publication in a newspaper of general circulation.
Revenue Regulations 16-2002 (October 11, 2002)
SUMMARY

All internal revenue taxes collected through AABs shall be credited to the
demand deposit accounts opened and maintained by the Bureau of Treasury
(BTr) for BIR in the head offices of AABs.
In filing a tax declaration and making payment to an AAB, the taxpayer must
accomplish and submit a BIR-prescribed deposit slip, which the bank teller
shall machine validate as evidence that the BIR tax payment has been
received and deposited to the account of the BTr.
Aside from the electronic payment system currently being used by some
taxpayers in paying their internal revenue taxes, the rest shall pay their tax
liabilities through any of the following modes:
1) over-the-counter cash payments (for each tax payment not exceeding P
10,000.00); 2) bank debit system; and
3) check payment system.
The following checks, however, are not acceptable as check payments for
internal revenue taxes: 1) accommodation checks; 2) second endorsed
checks; 3) stale checks; 4) postdated checks; 5) unsigned checks; and 6)
checks with alterations/erasures. Second indorsement of checks which are
payable to the Bureau of Internal Revenue or Commissioner of Internal
Revenue is absolutely prohibited. Each check should cover one tax type for
one return period only.
AABs are mandated to accept tax returns/payment forms partly paid through
any of the aforementioned modes of payment and partly through Tax Debit
Memos (TDM) duly and validly issued by the BIR. TDMs, however, are not
acceptable as payments for Withholding Taxes, Fringe Benefit Tax, and taxes,
fees and charges collected under special schemes/procedures/ programs of
the government/BIR.
Taxpayers are not required to enroll with any AAB where they intend to file
tax returns/payment forms and/or pay internal revenue taxes.
Any diversion, non-remittance or under-remittance of the taxes collected by
AABs through fault or negligence of the bank accepting such payment as well

Atty. Michael Montero

as the diversion of any payment for BIR taxes using the facilities of the bank
through fault or negligence of any of the banks personnel shall subject the
bank to civil and criminal liabilities.
SUBJECT : Modes of and Procedure for the Payment of Internal Revenue Taxes
Through Authorized Agent Banks Amending Revenue Regulations No. 4-97, as
amended by Revenue Regulations No. 6-98
SECTION 1.
Scope. Pursuant to Section 244 of the National Internal
Revenue Code of 1997 (CODE) in relation to Sections 8, 12, 56, 58, 81, 103, 114,
128, 130, 200 and 245, all of the same Code, these Regulations are hereby
promulgated to amend Revenue Regulations No. 4-97, as amended by Revenue
Regulations No. 6-98, on the provisions relative to acceptable modes of
payment of internal revenue taxes coursed through authorized agent banks
(AABs), the recording of such payments and issuance of validated BIRprescribed deposit slips which likewise serve as acknowledgment receipts
for payments of taxes deposited by taxpayers for BTR-BIR account, and the
control mechanisms to deter and detect the diversion of tax payments.
SECTION 2.

Recording of BIR Tax Payments by the AABs.

A)

All internal revenue taxes collected through authorized agent banks


(AABs) shall be credited to the demand deposit accounts opened and
maintained by the Bureau of Treasury (BIR) for BIR in the head offices of
AABs;
B) Head offices of AABs shall assign and maintain a separate general ledger
account for said BTr demand deposit accounts;
C) Using the online tellering system, the bank tellers shall immediately post
the BIR tax payments they collect by crediting the BTr demand deposit
accounts in the head offices of the AABs, instead of recording them as
mere payables to BTr at the end of each banking day in the AABs
backrooms.
D) In filing a tax declaration and making payment to an AAB, a taxpayer must
accomplish and submit a BIRprescribed deposit slip which AABs must
design, print and make available in all participating branches. The deposit
slip must in addition to those needed by the bank, provide for the following
information:

Transaction Date

Name of Taxpayer

TIN

BTR-BIR Account Number

Account Name which must be BTRBIR

Name of Drawee Bank

Check Number

Bank Debit Advice Number (for debit system payments)

Amount

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Taxation Law Case Digests

E)

The bank teller shall machine validate the BIRprescribed deposit slip
accomplished by the taxpayer as evidence that the BIR tax payment was
deposited to the account of the BTr. Said deposit slip shall be
accomplished and issued in triplicate copies, distributed as follows:
original (taxpayers copy), duplicate (AABs copy) and triplicate (to be
attached to the tax return. Additionally, the AAB receiving the tax
return/payment form shall also machine validate and stamp mark the word
"Received" on the return/payment form as proof of filing the
return/payment form and payment of the tax by the taxpayer. The
machine validation on the return/payment form shall reflect the date of
payment, amount paid and transaction code, the name of the bank,
branch code, tellers code and tellers initials.
F) Before 12:00 NN of the following banking day, the head offices of the
AABs shall provide to BTR/BIR the daily total amount of BIR taxes they
collected.
G) After receipt of payment but not later than 24 hours thereafter, the AAB
branch shall encode into the LBDE System and transmit to the concerned
BIR Data Center, the below data and copy furnish the AAB head office.
1. Date of the transaction;
2. Name of the taxpayer;
3. Taxpayer Identification Number (TIN) of the taxpayer;
4. Tax type which is being paid for;
5. Return period for the tax type being paid for;
6. Amount of tax paid;
7. Name of the drawee bank and check number, for tax payments
through checks;

SECTION 3.
Modes of Payment to AABs. Aside from the electronic
payment system currently used by some taxpayers in paying their BIR taxes, the
rest shall pay their tax liabilities through any of the following modes: a) over
thecounter cash payments; b) bank debit system; or c) check payment system.
a)

b)

c)

Atty. Michael Montero

In the issuance and accomplishment of checks for the payment of internal


revenue taxes, as illustrated below, the taxpayer shall indicate in the space
provided for "PAY TO THE ORDER OF" the following data:
(1) presenting/collecting bank or the bank where the payment is to be coursed
and
(2) FAO (For the Account Of) Bureau of Internal Revenue as payee; and under
the "ACCOUNT NAME" the taxpayer identification number (TIN).
(Below is a sample of a tax check payment where the drawee bank and presenting
bank are different from each other.)

(Below is sample of a check tax payment drawn from and presented to the same
bank.)

"Overthecounter cash payment" - payment of tax liabilities to authorized


agent bank in the currencies (paper bills or coins) that are legal tender in the
Philippines. The maximum amount allowed per tax payment shall not exceed
ten thousand pesos (P10,000.00)
"Bank debit system" - system whereby a taxpayer, through a bank debit
memo/advice, authorizes withdrawals from his/its existing bank accounts for
payment of tax liabilities.
The bank debit system mode is allowed only if the taxpayer has a bank
account with the AAB branch where he/it intends to file and pay his/its tax
return/form/declaration, provided said AAB branch is within the jurisdiction of
the BIR Revenue District Office (RDO)/Large Taxpayers District Office (LTDO)
where the tax payment is due and payable.
"Checks" - bill of exchange or Order Instrument drawn on a bank payable on
demand.
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Taxation Law Case Digests

The following checks are not acceptable as check payments for internal revenue
taxes:
1.
2.
3.
4.
5.
6.

Accommodation checks checks issued or drawn by a party other than


the taxpayer making the payment;
Second endorsed checks checks issued to the taxpayer as payee who
indorses the same as payment for taxes;
Stale checks checks dated more than six (6) months prior to
presentation to the authorized agent bank;
Postdated checks checks dated a day or several days after the date of
presentation to the authorized agent bank;
Unsigned checks checks with no signature of the drawer;
Checks with alterations/erasures.

AABs accepting checks for the payment of BIR taxes and other charges must
see to it that the check covers one tax type for one return period only.
Moreover, AABs must strictly comply with the systems and procedures for the
reception, processing, clearing and accounting of the checks to be prescribed
under a separate regulation.
Second indorsement of checks which are payable to the Bureau of Internal
Revenue or Commissioner of Internal Revenue is absolutely prohibited.
SECTION 4.
Tax Returns Partly Paid Thru Tax Debit Memos (TDMs).
AABs are mandated to accept tax returns/payment forms partly paid thru any
of the modes of payment mentioned in Section 3 hereof and partly thru TDMs
duly and validly issued by the BIR. Before accepting the BIR tax return/payment
form partly paid thru tax debit memo, the AAB shall insure that the number of the
TDM is indicated in the BIR tax return/payment form in the same manner that the
check number/drawee bank and bank debit advice number are indicated in the tax
return/payment form paid thru check or bank debit system, respectively. A
photocopy of the tax credit certificate (TCC), front and back page, which was the
source of the TDM, together with a copy of the TDM, must be required from the
taxpayer and attached to the BIR tax return/payment form.
TDMs are, however, not acceptable as payments for withholding taxes, including
Fringe Benefit Tax (clarified and implemented under RR No. 2-98, as amended,
and RR No. 3-98), and for taxes, fees and charges collected under special
schemes/procedures/programs of the Government / BIR as discussed and
elucidated in a separate revenue regulation. AABs shall see to it that this restriction
is strictly observed in the BIR tax returns/payment forms they receive.
SECTION 5.
Enrollment of Taxpayers with Authorized Agent Bank Not
Required. Taxpayers are not required to enroll with any AAB where they

Atty. Michael Montero

intend to file tax returns/payment forms and/or pay internal revenue taxes.
Taxpayers may file tax returns/payment forms and pay internal revenue taxes with
any AAB of the appropriate BIR office (Revenue District Office (RDO), Large
Taxpayers District Office (LTDO), or Large Taxpayers Service, etc., whichever is
applicable) where they are required to file the particular return/payment form.
SECTION 6.
Responsibility and Privilege of Taxpayers. Taxpayers shall
see to it that their tax returns/payment forms with payment are filed with and
internal revenue taxes paid to legitimate AABs of the BIR. Nonetheless, they
may confirm their tax payments with their home RDO/LTDO or LTDO/RDO where
they are required to file tax returns/payment form and pay internal revenue taxes.
SECTION 7.
Additional Liabilities/Responsibilities of Authorized Agent
Banks (AABs).
(a) Any diversion, non-remittance or under-remittance of the taxes collected
by AABs through fault or negligence of the bank accepting such payment as
well as the diversion of any payment for BIR taxes using the facilities of
the bank through fault or negligence of any of the banks personnel shall
subject the bank to civil and criminal liabilities provided for under
Sections 248 and 275 of the Tax Code, as amended, and other existing
laws, rules and regulations. AABs shall be liable to the BIR for double the
amount of taxes diverted and unremitted, plus the increments and
penalties prescribed by the Tax Code, as amended, but the total penalties
imposed may be reduced on meritorious grounds subject to the approval of the
majority of the members of the Management Committee (MANCOM) of the
BIR, composed of the Commissioner of Internal Revenue and the four (4)
Deputy Commissioners, where the Commissioner of Internal Revenue votes
for such reduction.
(b) The reports of AABs to be submitted to BTr/BIR (under Sec. 2) of all the tax
payments collected shall be in accordance with the forms prescribed by BIR.
(c) The requirements prescribed in these regulations shall be included in the
accreditation criteria to be mentioned in the Memorandum of Agreement to be
signed by and among the BTR, BIR and the AAB for compliance by all AABs.
Revenue Memorandum Circular 22-2012 (May 7, 2012)

Subject: Clarification on the implementation of Revenue Regulations No. 5 2012


Summary: BIR Rulings issued prior to Jan 1, 1998 remains valid only to the
taxpayer who was issued the ruling and covering the transactions subject of the
same ruling. These cannot be used as precedents by other taxpayers and lawyers.
This Circular is issued to clarify the implementation and proper interpretation of
Revenue Regulations No. 5 2012, to wit:

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Taxation Law Case Digests

1.

2.
3.

4.

All BIR Rulings issued prior to Jan 1, 1998 are not to be used as
precedent by any taxpayer as a basis to secure rulings for themselves for
current business transaction/s or in support of their position against any
assessment.
All BIR Rulings issued prior to Jan 1, 1998 are not to be used by any BIR
action lawyer in issuing new rulings for request for rulings involving current
business transaction/s.
However, BIR Rulings issued prior to Jan 1, 1998 remains to be valid
but only:
a. To the taxpayer who was issued the ruling; and
b. Covering the specific transaction/s which is the subject of
the same ruling
BIR Rulings issued prior to Jan 1, 1998, shall remain valid as mentioned
above, unless expressly notified of its revocation or unless the legal basis
in law for such issuance has already been repealed/amended in the
current Tax Code.

5.
All concerned revenue officials and employees are hereby enjoined to give this
Circular as wide a publicity as possible.
Kim S. Jacinto-Henares
BIR Ruling No. 370-2011 (October 7, 2011)
(Just lifted this off from last sem. Dont worry I checked if mei kulang.)
Summary:
The case is about the PEACe bonds, and the tax to be imposed on the interest
income. In the 2001 BIR Rulings, they said that the bonds were exempt from the
20% Final tax. The 2001 Rulings interpreted the law incorrectly by saying that
since it was sold to any one entity it is not to be considered as deposited
substitutes and thus not to be charged a 20% Final Tax. This however was found
to be inaccurate as the law was found out to provide that these bonds are covered.
The interpretation of the phrase at ANY one time means the entire term of the
bond not just the original issuance. The 2001 Rulings were declared null and void
for adding an exemption that is not found in the law hence this ruling was given
retroactive effect. As a result, CODE-NGO must pay the present value of the
discount P4.86 B, because it did not pay upfront when it should have been
withheld upfront and paid at the time of issuance, they would have paid only P1.4
B. They cannot rely on the 2001 Rulings because they were in excess of what the
TAX CODE provides.
FACTS:

Hon. Cesar v. Purisima, Secretary of Finance, sent a letter dated September


2011 requesting for the proper tax treatment of the discount or interest income

Atty. Michael Montero


1

arising from the P34 billion worth of 10-year zero coupon treasury bonds
issued by the Bureau of Treasury (BTr) on October 18, 2001 Poverty
Eradication and Alleviation Certificates (PEACe Bonds)
Why the PEACe Bonds were issued

Stemmed from the proposal of the Caucus of Development NGO Networks


(CODE-NGO) sometime in March 2001 for the Dept of Finance (DOF) to issue
P15 billion worth of 10-year zero coupon treasury notes.

CODE-NGO will purchase the notes and sell them to investors.

The net proceeds from the sale estimated to be at P1.45 billion will be used by
CODE-NGO to establish a fund that will finance anti-poverty projects of NGOs
nationwide.

The original plan did not happen because BTr questioned the propriety of
issuing the bonds directly to CODE-NGO, not being a Government Securities
Eligible Dealer (GSED). They wanted an auction and they wanted that CODENGO get a GSED to join.

BTr sold the PEACe Bonds via auction to eligible GSEDs.


Taxation of the Interest Income

BTr provided in the Public Offering of Treasury Bonds the tax treatment of the
PEACe Bonds WILL NOT BE SUBJECT TO 20% FINAL WITHHOLDING
TAX.

The tax treatment was based on 3 BIR rulings (2001 Rulings) issued before
the auction.
o May 31 supposedly the Bonds were to be issued to a single entity,
CODE-NGO, the Bonds were NOT considered to be public borrowing,
2
they were NOT considered deposit subsitutes as defined by the Tax
Code so not subject to the 20% final withholding tax.
o August 16 They are not deposit substitutes because of the fact of their
original issuance to a single entity. Construction of the phrase, at any one
time to mean the original issuance.
o September 29 confirmed the 2 above
Auction

Treasury bond as explained to me. The Bureau of Treasury will sell the bonds to an entity like a bank
for example and the bank will then sell the bonds to whoever may be interested, natural or juridical
persons can buy, for example si Corporation A. the bonds will earn interest and thats how it attracts
buyers. So to illustrate:
BTr issues P1 billion worth ng treasury bonds issues them to Bank X who pays a discounted amount say
like P750 million Bank X will now be able to issue these to Corporation A, Investor B, etc.
Corporation A and Investor B will earn money as the bonds earn interest. (Sana im making sense)
In addition, these are described as risk-free kapag galing sa government since all they have to do is to print
money.
2
Deposit substitutes the borrowing of fund must be obtained from 20 or more individuals or corporate
lenders at any one time.

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Taxation Law Case Digests

RCBC was declared as the winning bidder lowest bid interest rate of 12.75%
for a total face value of P35 billion.
RCBC paid BTr P10.7 Billion for P 35 billion worth of treasury bonds, discount
of P24.3 billion.
RCBC sold the PEACe bonds to CODE-NGO. CODE-NGO sold it to RCBC
Capital for P12.1 billion = gain of P1.4 billion

2004 BIR Ruling no. 007-2004

Issued in response to request for confirmation of the BTr on the tax


consequences of its regular and special issuance of treasury bills and bonds
REVERSING THE 2001 Rulings.

The mere issuance of government debt instruments and securities is deemed


as falling within the coverage of deposit substitutes irrespective of the
number of lenders at the time of origination. Accordingly, since government
debt instrument and securities are not exempt from taxes, interest income
derived therefrom shall be subject to the following:
(c) 20% final tax imposed under sections 27 (D) (1) and 28 (A) (7) (a),
of the Tax Code, for domestic and resident foreign corporations
respectively;

The phrase at any one time is deemed to refer to the floatation of the debt
instrument or security.

In other words, since the actual number of bond holders or investors maybe at
maturity date of the financial instrument, more than 20 individuals or
corporation, the said direct lenders and indirect investors are deemed to be
what constitute public.

In light of such ruling, BIR issued Revenue Regulations No. 17-84:


o Deposit substitutes shall mean

In the case of other non-financial companies, including the national


or local government and its instrumentalities, all borrowings
through the issuance of debt instruments denoted as treasury
bonds, treasury bills, treasury notes, and similar instruments.

BIR also declared in another BIR Ruling that the tax due should be withheld
upfront.
ISSUES: Purisima raises the ff issues
1. W/N the interest income arising from PEACe Bonds shall be subject to the
20% Final Tax or, in the alternative, to Ordinary Income Tax 20% Final
Tax
2. How much is the tax due P4.86 billion (MAIN)
3. Who shall be liable to pay the tax due CODE-NGO
4. How will the tax be collected Withhold upfront
RATIO:
ISSUE 1: Subject to 20% Final Tax

The P24.3 billion discount on the issuance of the PEACe Bonds should be
subject to the 20% Final Tax on interest income from deposit substitutes.

Atty. Michael Montero

It is now settled that all treasury bond regardless of the number of


purchasers/lenders at the time of origination/issuance are considered deposit
substitutes.
In the case of zero coupon bonds, the discount (face value purchase price) is
treated as interest income of the purchaser
Section 27 (D) (1) of the 1997 Tax Code:
o Interest from Deposits and Yield or any other Monetary Benefit from
Deposit Substitutes and from Trust Funds and Similar Arrangements,
and Royalties. - A final tax at the rate of twenty percent (20%) is hereby
imposed upon the amount of interest on currency bank deposit and yield
or any other monetary benefit from deposit substitutes and from trust
funds and similar arrangements received by domestic corporations, and
royalties, derived from sources within the Philippines: Provided, however,
That interest income derived by a domestic corporation from a depository
bank under the expanded foreign currency deposit system shall be subject
to a final income tax at the rate of seven and one-half percent (7 1/2%) of
such interest income.

ISSUE 2: Amount of Tax Due

Manner of payment DOF Department Order No. 141-95 this should have
been followed.
o Treasury Bonds, the 20% final income tax shall be withheld on
discounts valued at present value on every original sale. Periodic
coupon payments on Treasury Bonds shall be subject to the 20% final
income tax to be withheld at the time the coupon payments are made.
o PRESENT VALUED BY THE NET YIELD ON THE SECURITY TO
ENSURE THE INTEREST TAXED AT 20% TO BE PAID UPFRONT

However, at the time of the issuance of the PEACe Bonds in 2001, the BTr
was not able to collect the final tax on the discount realized by RCBC as a
result of the 2001 Rulings.

Subsequently, the issuance of the 2004 Ruling modified and superseded the
2001 Rulings by stating that the TAX CODE is clear that the term public
means borrowing from 20 or more lenders at ANY one time.
o The word ANY indicates that the period contemplated is the entire term
of the bond and not merely the point of origination issuance.
o The Tax Code provision is clear and there is no need for statutory
construction.

Thus, by taking the PEACe Bonds out of the ambit of deposits substitutes and
exempting it from the 20% Final Tax, an exemption in favour of the PEACe
Bonds was created when no such exemption is found in the law.

THE 2001 rulings are null and void and cannot be given any legal effect
for being contrary to law.
o It is basic principle of administrative law that the interpretation given
by an administrative agency cannot run contrary to the law which it
seeks to implement.
o Administrative rules and regulations are intended to carry out,
neither to supplant nor to modify, the law.

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Taxation Law Case Digests

Atty. Michael Montero

RCBC should have paid upon issuance and it would have paid only P1.4B,
20% of the value as of October 18, 2001.
o Since they did not pay they will have to pay now the present value of the
original discount P4.86B. (So basically, this ruling was given
retroactive effect)

ISSUE 3: Who shall be liable

RCBC merely acted as an agent or conduit of CODE-NGO by virtue of the


requirement by BTr that it is not a GSED.

CODE-NGO should pay because it is the beneficial owner of the PEACe


Bonds.
ISSUE 4: How will the tax be collected

BTr shall withhold the FINAL TAX due on the interest income derived from the
PEACe Bonds prior to its payment on the date of maturity.

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