1. Republic v. GST Philippines, Inc., G.R. No.

190872, 17 October 2013

[PERLAS-BERNABE, J.]
FACTS
Respondent GST is a VAT registered domestic corporation primarily engaged in steel and iron products. During taxable years
2004-2005, GST filed claimed for unutilized excess input VAT attributable to its zero rated sales.

Period

Date of Filing of Administrative Claim For Refund

1st Quarter of year 2004

June 9, 2004

2nd Quarter of year 2004

August 12, 2004

3rd Quarter of year 2004

February 18, 2005

4th Quarter of year 2004

February 18, 2005

1st Quarter of year 2005

May 11, 2005

2nd Quarter of year 2005

November 18, 2005

3rd Quarter of year 2005

November 18, 2005

For failure of CIR to act on its administrative claims, GST filed for a petition for review before the CTA. The CTA granted the
petition. CIR filed an MR but was denied. In a petition for review before the CTA En Banc, CIR raised that the appeal before the
CTA was filed beyond the reglementary period. GST asserts that under Section 112 (A) of the Tax Code, the prescriptive period is
complied with if both the administrative and judicial claims are filed within the two-year prescriptive period; and that compliance
with the 120-day and 30-day periods under Section 112 (D) of the Tax Code is not mandatory

ISSUE
Whether GSTs action for refund has complied with the prescriptive periods under the Tax Code.

HELD
NO, as to claims in 2004 and first quarter of 2005.
YES, as to second and third quarter of 2005.
The 120-day period is mandatory and jurisdictional.However, the Supreme Court categorically held that BIR Ruling No. DA489-03 dated December 10, 2003 provided a valid claim for equitable estoppel under Section 246 of the Tax Code. BIR Ruling
No. DA-489-03 expressly states that the taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek
judicial relief with the CTA by way of Petition for Review. As such, all taxpayers can rely on said ruling from the time of its
issuance on December 10, 2003 up to its reversal by the Supreme Court in Aichi on October 6, 2010, where it was held that the
120+30 day periods are mandatory and jurisdictional.
Therefore, GST can benefit from BIR Ruling No. DA-489-03 with respect to its claims for refund of unutilized excess input VAT
for the second and third quarters of taxable year 2005 which were filed before the CIR on November 18, 2005 but elevated to the
CTA on March 17, 2006 before the expiration of the 120-day period (March 18, 2006 being the 120th day). BIR Ruling No. DA489-03 effectively shielded the filing of GSTs judicial claim from the vice of prematurity.
2. Commissioner of Internal Revenue v. Dash Engineering Philippines, Inc. (DEPI), G.R. No. 184145, 11 December 2013

[MENDOZA, J.]

FACTS
Respondent DEPI filed its monthly and quarterly value-added tax (VAT) returns for the period from January 1, 2003 to June 30,
2003. On August 9, 2004, it filed a claim for tax credit or refund for the unutilized input VAT attributable to its zero-rated sales.
Because petitioner Commissioner of Internal Revenue (CIR) failed to act upon the said claim, respondent was compelled to file a
petition for review with the CTA on May 5, 2005. CTA ruled in favor of DEPI. CIR elevated the case to CTA En Banc averring
that the claim was filed out of time. DEPI asserts that its petition was seasonably filed before the CTA in keeping with the twoyear prescriptive period provided for in Sections 204(c) and 229 of the NIRC. CTA En Banc affirmed the CTA division ruling.

ISSUE
Whether respondent DEPIs judicial claim was filed within the prescriptive period under Sec. 112 of the Tax Code.
HELD
NO.
The two-year period inSec. 112 refers only to administrative claims. Sections 204 and 229 of the NIRC pertain to the refund of
erroneously or illegally collected taxes.Input VAT is not excessively collected as understood under Section 229 because at the
time the input VAT is collected the amount paid is correct and proper. Hence, respondent cannot advance its position by referring
to Section 229 because Section 112 is the more specific and appropriate provision of law for claims for excess input
VAT.Petitioner is entirely correct in its assertion that compliance with the periods provided for in the abovequoted provision is
indeed mandatory and jurisdictional, as affirmed in this Courts ruling in San Roque, where the CourtEn Banc settled the
controversy surrounding the application of the 120+30-day period provided for in Section 112 of the NIRC and reiterated the
Aichi doctrine that the 120+30-day period is mandatory and jurisdictional.
Therefore, in accordance with San Roque, respondents judicial claim for refund must be denied for having been filed late.
Although respondent filed its administrative claim with the BIR on August 9, 2004 before the expiration of the two-year period in
Section l 12(A), it undoubtedly failed to comply with the 120+ 30-day period in Section l l 2(D) (now subparagraph C) which
requires that upon the inaction of the CIR for 120 days after the submission of the documents in support of the claim, the
taxpayer has to file its judicial claim within 30 days after the lapse of the said period. The 120 days granted to the CIR to decide
the case ended on December 7, 2004. Thus, DEPI had 30 days therefrom, or until January 6, 2005, to file a petition for review
with the CTA. Unfortunately, DEPI only sought judicial relief on May 5, 2005 when it belatedly filed its petition to the CTA,
despite having had ample time to file the same, almost four months after the period allowed by law. As a consequence of DEPIs
late filing, the CTA did not properly acquire jurisdiction over the claim.
3. Commissioner of Internal Revenue v. Visayas Geothermal Power Co. Inc., G.R. No. 181276, 11 November 2013
[MENDOZA, J.]
FACTS
Respondent VGPCI incurred input value added tax of P20,213,044.50 on its domestic purchase of goods and services and
importation of goods used in its business for the third and fourth quarter of 2001 and for the entire year of 2002. Due to the
enactment of Republic Act (R.A.) No. 9136, which became effective on June 26, 2001, VGPCIs sales of generated power
became zero-rated and were no longer subject to VAT at 10%.
On June 26, 2003, VGPCI filed before the BIR a claim for refund of unutilized input VAT payment in the third quarter of 2001.
On December 18, 2003, another claim was filed for the last quarter of 2001 and the four quarters of 2002. For failure of the BIR
to act upon said claims, VGPCI filed separate petitions for review before the CTA on September 30, 2003 and December 19,
2003, praying for a refund on the issuance of a tax credit certificate covering the period from July to September 2001 andfor the
period from October 2001 to December 2002, CTA Case Nos. 6790 and 6838, respectively.
ISSUE

Whether VGPCI failed to observe the proper prescriptive period required by law for the filing of an appeal before the CTA
because it filed its petition before the end of the 120-day period granted to the CIR to decide its claim for refund under Section
112(D) of the National Internal Revenue Code (NIRC).
HELD
YES, to CTA Case No. 6790.
NO, to CTA Case No. 6838.
The judicial claim filed on September 30, 2003 (CTA Case No. 6790) was prematurely filed and cannot be taken cognizance of
because respondent failed to wait for the requisite 120 days after the filing of its claim for refund with the BIR before elevating
the case to the CTA. However, the judicial claim filed on December 19, 2003 (CTA Case No. 6838), which was made after the
issuance of BIR Ruling DA-480-03, can be considered by the CTA despite its hasty filing only one day after the application for
refund was first lodged with the BIR.
4. Applied Food Ingredients Company, Inc. v. Commissioner of Internal Revenue, G.R. No. 184266, 11 November 2013
[SERENO, CJ.]
FACTS
Petitioner is a Value-Added Tax (VAT) taxpayer engaged in the importation and exportation business, as a pure buy-sell trader.
Petitioner alleged that from September 1998 to December 31, 2000, it paid an aggregate sum of input taxes for its importation of
food ingredients.Subsequently, these imported food ingredients were exported between the periods of April 1, 2000 to December
31, 2000, from which the petitioner was able to generate export sales amounting to P114,577,937.24. The aforestated export sales
which transpired from April 1, 2000 to December 31, 2000 were zero-rated sales, pursuant to Section 106(A (2)(a)(1) of the
NIRC of 1997.Petitioner alleged that the accumulated input taxes for the period of September 1, 1998 to December 31, 2000 have
not been applied against any output tax.
On March 26, 2002 and June 28, 2002, petitioner filed two separate applications for the issuance of tax credit certificates.On July
24, 2002, in view of respondents inaction, petitioner elevated the case before this Court by way of a Petition for Review,
docketed as C.T.A. Case No. 6513.Trial ensued and the CTA First Division rendered a Decision on 13 June 2007. It denied
petitioners claim for failure to comply with the invoicing requirements prescribed under Section 113 in relation to Section 237 of
the National Internal Revenue Code (NIRC) of 1997 and Section 4.108-1 of Revenue Regulations No. 7-95.On appeal, the CTA
En Banc likewise denied the claim of petitioner citing violation of the invoicing requirements.
ISSUE
Is the petitioner is entitled to the issuance of a tax certificate or refund representing creditable input taxes attributable to zerorated sales?
HELD
NO.
The Commissioner of Internal Revenue (CIR) had one hundred twenty (120) days from the date of submission of complete
documents in support of the application within which to decide on the administrative claim.Counting 120 days from 26 March
2002, the CIR had until 24 July 2002 within which to decide on the claim of petitioner for an input VAT refund attributable to the
its zero-rated sales for the period April to September 2000.On the other hand, the CIR had until 26 October 2002 within which to
decide on petitioners claim for refund filed on 28 June 2002, or for the period covering October to December 2000.
In this case, the judicial claim of petitioner was filed on 24 July 2002. Petitioner clearly failed to observe the mandatory 120-day
waiting period. Consequently, the premature filing of its claim for refund/credit of input VAT before the CTA warranted a
dismissal, inasmuch as no jurisdiction was acquired by the CTA. In accordance with the ruling in San Roque and considering that
petitioners judicial claim was filed on 24 July 2002, when the 120+30 day mandatory periods were already in the law and BIR
Ruling No. DA-489-03 had not yet been issued, petitioner does not have an excuse for not observing the 120+ 30 day period.
Failure of petitioner to observe the mandatory 120-day period is fatal to its claim and rendered the CT A devoid of jurisdiction
over the judicial claim.

5. Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, 06 October 2010
[DEL CASTILLO, J.]

FACTS
Respondent Aichi filed a claim for refund/credit of input VAT for the period July 1, 2002 to September 30, 2002, with the
petitioner Commissioner of Internal Revenue (CIR), through the Department of Finance (DOF) One-Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center.On even date, respondent filed a Petition for Review with the CTA for the refund/credit of the
same input VAT. The CTA partially granted the petition. In a Motion for Reconsideration, petitioner argued that the simultaneous
filing of the administrative and the judicial claims contravenes Sections 112 and 229 of the NIRC and a prior filing of an
administrative claim is a condition precedent before a judicial claim can be filed. The CTA En Banc affirmed the division
ruling.

ISSUE
Whether the respondents judicial and administrative claims for tax refund/credit were filed within the two-year prescriptive
period as provided in Sections 112(A) and 229 of the NIRC.

HELD
NO.
The two-year period to file a claim for tax refund/credit for the period July 1, 2002 to September 30, 2002 expired on September
30, 2004. Hence, respondents administrative claim was timely filed.The filing of the judicial claim was premature. However,
notwithstanding the timely filing of the administrative claim, [the Supreme Court is] constrained to deny respondents claim for
tax refund/credit for having been filed in violation of Section 112(D). Section 112(D) of the NIRC clearly provides that the CIR
has 120 days, from the date of the submission of the complete documents in support of the application [for tax refund/credit],
within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayers recourse is to file an appeal
before the CTA within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act
on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days.
In this case, the administrative and the judicial claims were simultaneously filed on September 30, 2004. Obviously, respondent
did not wait for the decision of the CIR or the lapse of the 120-day period. For this reason, we find the filing of the judicial claim
with the CTA premature. The premature filing of respondents claim for refund/credit of input VAT before the CTA warrants a
dismissal inasmuch as no jurisdiction was acquired by the CTA.
6. Lascona Land Co. Inc. v. Commissioner of Internal Revenue, G.R. No. 171251, 05 March 2012
[PERALTA, J.]
FACTS
The Commissioner of Internal Revenue (CIR) issued an assessment against Lascona Land Co., Inc. (Lascona) informing the latter
of its alleged deficiency income tax for the year 1993 in the amount of P753,266.56. Consequently, on April 20, 1998, Lascona
filed a letter protest, but was denied by Norberto R. Odulio, Officer-in-Charge (OIC), Regional Director, Bureau of Internal
Revenue, Revenue Region No. 8, Makati City. On April 12, 1999, Lascona appealed the decision before the CTA. Lascona
alleged that the Regional Director erred in ruling that the failure to appeal to the CTA within thirty (30) days from the lapse of the
180-day period rendered the assessment final and executory. The CIR, however, maintained that Lasconas failure to timely file
an appeal with the CTA after the lapse of the 180-day reglementary period provided under Section 228 of the National Internal
Revenue Code (NIRC) resulted to the finality of the assessment.

ISSUE
Whether the subject assessment has become final, executory and demandable due to the failure of petitioner to file an appeal
before the CTA within thirty (30) days from the lapse of the One Hundred Eighty (180)-day period pursuant to Section 228 of the
NIRC.
HELD
NO.
[T]he Court has held that in case the Commissioner failed to act on the disputed assessment within the 180-day period from date
of submission of documents, a taxpayer can either: (1) file a petition for review with the Court of Tax Appeals within 30 days
after the expiration of the 180-day period; or (2) await the final decision of the Commissioner on the disputed assessments and
appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. These options are
mutually exclusive and resort to one bars the application of the other.
Therefore, as in Section 228, when the law provided for the remedy to appeal the inaction of the CIR, it did not intend to limit it
to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period. Precisely, when a taxpayer protested an
assessment, he naturally expects the CIR to decide either positively or negatively. A taxpayer cannot be prejudiced if he chooses
to wait for the final decision of the CIR on the protested assessment. More so, because the law and jurisprudence have always
contemplated a scenario where the CIR will decide on the protested assessment.

7. Philippine Journalists, Inc. v. Commissioner of Internal Revenue, G.R. No. 162852, 16 December 2004
[YNARES-SANTIAGO, J.]

FACTS
The Revenue District Office of the Bureau of Internal Revenue (BIR) issued Letter of Authority for Revenue Officer Federico de
Vera, Jr. and Group Supervisor Vivencio Gapasin to examine petitioners books of account and other accounting records for
internal revenue taxes. Revenue District Officer Jaime Concepcion invited petitioner to send a representative to an informal
conference for an opportunity to object and present documentary evidence relative to the proposed assessment. Petitioners
Comptroller, LorenzaTolentino, executed a Waiver of the Statute of Limitation Under the National Internal Revenue Code
(NIRC). Records show that, it did not bear the date of acceptance, that petitioner was not furnished a copy of the waiver, and the
waiver was signed only by the Revenue District Officer. The tax liability exceeds One Million Pesos (P1,000,000.00).

ISSUE
Whether the waiver is in accordance with RMO No. 20-90 to validly extend the three-year prescriptive period under the NIRC.

HELD
NO.
The waiver document is incomplete and defective and thus the three-year prescriptive period was not tolled or extended and
continued to run. Consequently, the Assessment/Demand was invalid because it was issued beyond the three (3) year period. In
the same manner, Warrant of Distraint and/or Levy which petitioner received thereafter is also null and void for having been
issued pursuant to an invalid assessment.
The NIRC, under Sections 203 and 222, provides for a statute of limitations on the assessment and collection of internal revenue
taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. Unreasonable investigation

contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that
it will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time.
A waiver of the statute of limitations under the NIRC, to a certain extent, is a derogation of the taxpayers right to security against
prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. xxx Thus, the law on
prescription, being a remedial measure, should be liberally construed in order to afford such protection.
The waiver is also defective from the government side because it was signed only by a revenue district officer, not the
Commissioner, as mandated by the NIRC and RMO No. 20-90. The waiver is not a unilateral act by the taxpayer or the BIR, but
is a bilateral agreement between two parties to extend the period to a date certain. The conformity of the BIR must be made by
either the Commissioner or the Revenue District Officer. This case involves taxes amounting to more than One Million Pesos
(P1,000,000.00) and executed almost seven months before the expiration of the three-year prescription period. For this, RMO No.
20-90 requires the Commissioner of Internal Revenue to sign for the BIR.
8. Commissioner of Internal Revenue v. Kudos Metal Corporation, G.R. 178087, 05 May 2010
[DEL CASTILLO, J.]

FACTS
The CTA En Banc ruled for canceling the assessment notices issued against respondent for having been issued beyond the
prescriptive period. It found the first Waiver of the Statute of Limitations incomplete and defective for failure to comply with the
provisions of Revenue Memorandum Order (RMO) No. 20-90. Thus: the waiver failed to indicate the date of acceptance. Such
date of acceptance is necessary to determine whether the acceptance was made within the prescriptive period; And, the fact of
receipt by the taxpayer of his file copy was not indicated on the original copy. The requirement to furnish the taxpayer with a
copy of the waiver is not only to give notice of the existence of the document but also of the acceptance by the BIR and the
perfection of the agreement. The subject waiver is therefore incomplete and defective. As such, the three-year prescriptive period
was not tolled or extended and continued to run.
Petitioner argues that the governments right to assess taxes is not barred by prescription as the two waivers executed by
respondent, through its accountant, effectively tolled or extended the period within which the assessment can be made. In
disputing the conclusion of the CTA that the waivers are invalid, petitioner claims that respondent is estopped from adopting a
position contrary to what it has previously taken. Petitioner insists that by acquiescing to the audit during the period specified in
the waivers, respondent led the government to believe that the delay in the process would not be utilized against it. Thus,
respondent may no longer repudiate the validity of the waivers and raise the issue of prescription.Respondent maintains that
prescription had set in due to the invalidity of the waivers executed by Pasco, who executed the same without any written
authority from it, in clear violation of RDAO No. 5-01.
ISSUE
Whether the belated assessment of the CIR is still valid and effective on the ground that respondent is already in estoppel.
HELD
NO.
Section 203 of the National Internal Revenue Code of 1997 (NIRC) mandates the government to assess internal revenue taxes
within three years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return,
whichever comes later. Hence, an assessment notice issued after the three-year prescriptive period is no longer valid and
effective. Exceptions however are provided under Section 222 of the NIRC.
Section 222 (b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement
between the CIR and the taxpayer executed before the expiration of the three-year period. RMO 20-90 issued on April 4, 1990
and RDAO 05-01 issued on August 2, 2001 lay down the procedure for the proper execution of the waiver
Due to the defects in the waivers, the period to assess or collect taxes was not extended. Consequently, the assessments were
issued by the BIR beyond the three-year period and are void.

9. Fels Energy, Inc. v. The Province of Batangas and the Office of the Provincial Assessor of Batangas, G.R. No. 168557, 16
February 2007
[CALLEJO, SR., J.]
FACTS
NPC entered into a lease contract with Polar Energy, Inc. (POLAR) over diesel engine power barges moored at Balayan Bay in
Calaca, Batangas. The contract contained a provision that POLAR may be or become subject to real estate taxes and assessments,
rates and other charges in respect of the power barges.Subsequently, POLAR assigned its rights under the Agreement to Fels
Energy, Inc. (FELS). Later, FELS received an assessment of real property taxes on the power barges from Provincial Assessor,
that the owner or person having legal interest may appeal the matter within 60 days from receipt to the Board of Assessment
Appeals of the province. FELS referred the matter to NPC, which sought reconsideration of the Provincial Assessors decision to
assess real property taxes on the power barges. However, the motion was denied and the Provincial Assessor advised NPC to pay
the assessment. After sixty (60) days from receipt of assessment from, the NPC filed a petition with the Local Board of
Assessment Appeals (LBAA) for the setting aside of the assessment and the declaration of the barges as non-taxable items; it also
prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to make the necessary corrections.
ISSUE
WhetherNPCs appeal to LBAA may prosper considering that the timely filing of MR with the Provincial Assessor tolled the
running of reglementay period.
HELD
NO.
Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides:SECTION 226. Local Board
of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the action of the
provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in
the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in
support of the appeal. Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file a
motion for reconsideration of the Provincial Assessors decision, a remedy not sanctioned by law.
[Citing] the case of Callanta v. Office of the Ombudsman, where [the Supreme Court] ruled that under Section 226 of R.A. No
7160, the last action of the local assessor on a particular assessment shall be the notice of assessment; it is this last action which
gives the owner of the property the right to appeal to the LBAA. The procedure likewise does not permit the property owner the
remedy of filing a motion for reconsideration before the local assessor. It follows ineluctably that the 60-day period for making
the appeal to the LBAA runs without interruption.

10. The Provincial Assessor of Marinduque v. Court of Appeals and Marcopper Mining, G.R. No. 170532, 30 April 2009
[CALLEJO, SR., J.]
FACTS
Petitioner issued against respondent an Assessment Notice, dated March 28, 1994, for real property taxes due on the latters real
properties, including its Siltation Dam and Decant System which was damaged by typhoon sometime in 1993. Respondent paid
the tax demanded, but appealed the assessment before the Local Board of Assessment Appeals (LBAA) on the ground that the
subject property is exempt from real property taxation under Section 234(e) of Republic Act (R.A.) No. 7160 or the Local
Government Code of 1991, which provides for exemptions from Real Property Tax for Machinery and equipment used for
pollution control and environmental protection. The LBAA as well as the Central Board of Assessment Appeals (CBAA) on

appeal ruled against tax exemption. The Court of Appeals reversed the rulings of LBAA and CBAA and held that the subject
property was exempt from real property taxation under Section 91 of R.A. No. 7942 or the Philippine Mining Act of 1995.
ISSUE
Whether the Siltation Dam and Decant System of Marcopper Mining Corporation is exempt from real property tax.
HELD
NO.
The disputed assessment notice having taken effect on January 1, 1995, (by virtue of Sec. 221 of R.A. No. 7160) its validity is
determined by the provisions of R.A. No. 7160, effective January 1, 1992. R.A. No. 7942 has no bearing on the matter, for this
law came into effect only on April 14, 1995. Hence, reference to R.A. No. 7942 by the CA and the respondent are all out of
place.Title II of R.A. No. 7160 governs the administration, appraisal, assessment, levy and collection of real property tax. Section
234 thereof grants exemption from real property taxation based on ownership, character or usage.
As held in Mactan Cebu International Airport Authority v. Marcos, the exemption granted under Sec. 234(e) of R.A. No. 7160 to
[m]achinery and equipment used for pollution control and environmental protection is based on usage. The term usage means
direct, immediate and actual application of the property itself to the exempting purpose. Section 199 of R.A. No. 7160 defines
actual use as the purpose for which the property is principally or predominantly utilized by the person in possession thereof. It
contemplates concrete, as distinguished from mere potential, use. Thus, a claim for exemption under Sec. 234(e) of R.A. No.
7160 should be supported by evidence that the property sought to be exempt is actually, directly and exclusively used for
pollution control and environmental protection.
The records yield no allegation or evidence by respondent that the subject property was actually, directly and exclusively used for
pollution control and environmental protection during the period covered by the assessment notice under protest. Rather, the
finding of the CBAA that said property apparently out of commission and not apt to its function as would control pollution and
protect the environment stands undisputed; [and] that the siltation dam was damaged in 1993 when a typhoon hit Marinduque.

11. National Power Corporation v. Central Board of Assessment Appeals et al., G.R. No. 171470, 30 January 2009
FACTS
First Private Power Corporation (FPPC) entered into a Build-Operate-Transfer (BOT) agreement with NAPOCOR for the
construction of Bauang Diesel Power Plant and creation of Bauang Power Plant Corporation (BPPC). The pertinent provisions of
the BOT agreement, include among others:2.03 NAPOCORxxx shall be responsible for the payment of all real estate taxes and
assessments, rates, and other charges in respect of the Site and the buildings and improvements thereon. The Municipal Assessor
of Bauang issued a Notice of Assessment and Tax Bill to BPPC. NAPOCOR sought tax exemption on the basis if Sec. 234(c) of
R.A. No. 7160.

ISSUE
Under the terms of the BOT, can the GOCC be deemed the actual, direct, and exclusive user of machineries and equipment for
tax exemption purposes? If not, can it pass on its tax-exempt status to its BOT partner, a private corporation, through the BOT
agreement?
HELD
NO. Neither can NAPOCOR pass its taxexempt status to its BOT partner.
NAPOCORs basis for its claimed exemption Section 234(c) of the LGC is clear and not at all ambiguous in its terms.
Exempt from real property taxation are: (a) all machineries and equipment; (b) [that are] actually, directly, and exclusively used
by; (c) [local water districts and] government-owned or controlled corporations engaged in the [supply and distribution of water
and/or] generation and transmission of electric power.

By [BOTs] express terms, BPPC has complete ownership both legal and beneficial of the project, including the machineries
and equipment used, subject only to the transfer of these properties without cost to NAPOCOR after the lapse of the period
agreed upon. As agreed upon, BPPC provided the funds for the construction of the power plant, including the machineries and
equipment needed for power generation; thereafter, it actually operated and still operates the power plant, uses its machineries
and equipment, and receives payment for these activities and the electricity generated under a defined compensation scheme.
Notably, BPPC as owner-user is responsible for any defect in the machineries and equipment.
Consistent with the BOT concept and as implemented, BPPC the owner-manager-operator of the project is the actual user of
its machineries and equipment. BPPCs ownership and use of the machineries and equipment are actual, direct, and immediate,
while NAPOCORs is contingent and, at this stage of the BOT Agreement, not sufficient to support its claim for tax exemption.

12. Allied Banking Corporation vs Commissioner of Internal Revenue

Taxation Exception to the Rules of Procedure Regarding Protest and Appeal
In April 2004, the Bureau of Internal Revenue (BIR) issued a preliminary assessment notice (PAN) to Allied Banking
Corporation (ABC) demanding payment of P50 million in taxes. ABC then filed a protest in May 2004. In July 2004, the BIR
issued a formal assessment notice (FAN). The FAN included a formal demand as well as this phrase:
xxx
This is our final decision based on investigation. If you disagree, you may appeal this final decision within thirty (30) days from
receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable.
ABC then appealed the FAN with the Court of Tax Appeals (CTA). The Commissioner of Internal Revenue (CIR) then filed a
motion to dismiss on the ground that ABC did not exhaust all administrative remedies for failing to file a protest against the FAN.
ISSUE: Whether or not the CIR is correct.
HELD: No. It is true that a FAN is not appealable with the CTA. However, this case holds an exception. The wordings of the
FAN issued by the CIR made it appear that the FAN is actually the CIRs final decision. It even advised ABC to file an appeal
instead of filing a protest. ABC cannot therefore be faulted for filing an appeal with the CTA instead of filing a protest with the
CIR. The CIR as well as his duly authorized representative must indicate clearly and unequivocally to the taxpayer whether an
action constitutes a final determination on a disputed assessment. Words must be carefully chosen in order to avoid any confusion
that could adversely affect the rights and interest of the taxpayer.

13. Bank of the Philippine Islands vs. Commissioner of Internal Revenue, G.R. No. 174942, March 7, 2008
IN ORDER TO SUSPEND THE RUNNING OF THE PRESCRIPTIVE PERIODS FOR ASSESSMENT AND COLLECTION,
THE TAXPAYERS REQUEST FOR REINVESTIGATION MUST BE GRANTED BY THE CIR. THE CIR HAS THE
BURDEN OF PROVING THAT THE REQUEST FOR REINVESTIGATION HAS BEEN GRANTED.
Facts: B Bank was issued a pre-assessment notice dated November 26, 1986 for deficiency withholding tax and DST for the
years 1982 to 1986. On April 7, 1989, the CIR issued assessment/demand notices. B Bank filed a protest on April 20, 1989, and a
supplemental protest on May 8, 1989. B Bank also executed several Waivers of the Statute of Limitations, the last of which was
effective until December 31, 1994. On August 9, 2002, the CIR issued a final decision on B Banks protest which, while ordering
the withdrawal and cancellation of the deficiency withholding tax assessment, nonetheless reiterated the deficiency DST
assessment. B Bank received a copy of the said decision on January 15, 2003.
Held: The CIR has 3 years from the date of actual filing of the tax return or the last date prescribed by law for filing of the tax
return, whichever comes later, to make an assessment or to commence court proceedings for collection without an assessment.
When it validly issues an assessment within the said 3-year period, it has another 3 years within which to collect the tax due by
distraint, levy, or court proceeding, which period begins to run on the date the assessment notice had been released, mailed or sent
to the taxpayer. In this case, the CIR had 3 years from April 7, 1989, or until April 6, 1992, within which to collect the deficiency
DST. The 3-year prescriptive period for collection was not tolled by the filing of protest letters by B Bank. The act of requesting a

reinvestigation alone does not suspend the period of prescription. The request should first be granted in order to effect
suspension. The burden of proof that the request for reinvestigation had been actually granted shall be on the CIR. There is
nothing in this case which indicates, expressly or impliedly, that the CIR had granted the request for reinvestigation filed by B
Bank. The inordinate delay of the CIR in acting upon and resolving the request for reinvestigation filed by B Bank in collecting
the DST allegedly due from the latter had resulted in the prescription of the governments right to collect the deficiency.

14. SANTOS vs. PEOPLE PF THE PHILIPPINES, G.R. 173176, August 26, 2008
FACTS: On 19 May 2005, then Bureau of Internal Revenue Commissioner Guillermo L. Parayno, Jr. wrote to the Department of
Justice Secretary Raul M. Gonzales a letter regarding the possible filing of criminal charges against petitioner. Allegedly
petitioner, in her Annual Income Tax Return for taxable year 2002 filed with the BIR, declared an income of P8,033,332.70
derived from her talent fees solely from ABS-CBN. Initial documents gathered from the BIR offices and those given by
petitioner's accountant and third parties, however, confirmed that petitioner received in 2002 income in the amount of at least
P14,796,234.70, not only from ABS-CBN, but also from other sources, such as movies and product endorsements. The estimated
tax liability arising from petitioner's under declaration amounted to P1,718,925.52, including incremental penalties; the nondeclaration by petitioner of an amount equivalent to at least 84.18% of the income declared in her return was considered a
substantial under declaration of income, which constituted prima facie evidence of false or fraudulent return under Section
248(B) of the NIRC, as amended.
ISSUE: Whether a resolution of a CTA division denying a motion to quash is a proper subject of an appeal to the CTA EN BANC
under sec. 11 of RA 9282 amending sec 18 of RA 1125?
RULING: The court ruled in the negative.
Section 18 of Republic Act No. 1125, as amended by Republic Act No. 9282, provides; No civil proceedings involving matters
arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be
maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in
accordance with the provisions of this Act.
A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a
petition for review with the CTA en banc.
The provision speaks of resolutions that constitutes final disposition of the case. As a General rule, the denial of a motion to
quash is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari. There is no dispute that a
court order denying a motion to quash is interlocutory. The denial of the motion to quash means that the criminal information
remains pending with the court, which must proceed with the trial to determine whether the accused is guilty of the crime charged
therein. Equally settled is the rule that an order denying a motion to quash, being interlocutory is not immediately appealable, nor
can it be the subject of a petition for certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from
the judgment after trial.

15. Commissioner of Internal Revenue vs. Next Mobile, Inc., G.R. No. 212825, December 07, 2015
FACTS: CTA First Division held that the Waivers executed by Sarmiento did not validly extend the three-year prescriptive period
to assess respondent for deficiency income tax, FWT, EWT, for the Waivers were not properly executed according to the
procedure in Revenue Memorandum Order No. 20-90 (RMO 20-90) and Revenue Delegation Authority Order No. 05-01 (RDAO
05-01).
ISSUE: whether or not the CIRs right to assess respondents deficiency taxes had already prescribed.
RULING: The general rule is that when a waiver does not comply with the requisites for its validity specified under RMO No.
20-90 and RDAO 01-05, it is invalid and ineffective to extend the prescriptive period to assess taxes. However, due to its peculiar
circumstances, We shall treat this case as an exception to this rule.
First, the parties in this case are in pari delicto or in equal fault.

Second, the Court has repeatedly pronounced that parties must come to court with clean hands. Parties who do not come to court
with clean hands cannot be allowed to benefit from their own wrongdoing.
Third, respondent is estopped from questioning the validity of its Waivers. While it is true that the Court has repeatedly held that
the doctrine of estoppel must be sparingly applied as an exception to the statute of limitations for assessment of taxes, the Court
finds that the application of the doctrine is justified in this case. Verily, the application of estoppel in this case would promote the
administration of the law, prevent injustice and avert the accomplishment of a wrong and undue advantage. Respondent executed
five Waivers and delivered them to petitioner, one after the other. It allowed petitioner to rely on them and did not raise any
objection against their validity until petitioner assessed taxes and penalties against it. Moreover, the application of estoppel is
necessary to prevent the undue injury that the government would suffer because of the cancellation of petitioners assessment of
respondents tax liabilities.

16. ERICSSON TELECOMMUNICATIONS, INC., vs. CITY OF PASIG, represented by its City Mayor, Hon. Vicente P.
Eusebio, et al , G.R. No. 176667, November 22, 2007
Facts: Ericsson Telecommunications, Inc. is a corporation engaged in the design, engineering, and marketing of
telecommunication facilities/system with principal address at Pasig City. It was assessed by the City Treasurer of Pasig City of
business tax deficiency for the years 1998 and 1999 and also for 2000 and 2001 based on its gross revenues. Petitioner filed a
Protest arguing that that the local business tax on contractors should be based on gross receipts and not gross revenue.
Issue: What should be the basis of the local business tax? gross receipts or gross revenue?
Held: The basis should be gross receipts
Paragraph e, Section 143 of the Local Government Code provides that The municipality may impose taxes on the following
businesses: (e) On contractors and other independent contractors, in accordance with the following schedule:
With gross receipts for the preceding calendar year in the amount of:

Amount of Tax Per Annum

The above provision specifically refers to gross receipts.

Section 131 of the Local Government Code defines gross sales or receipts as follows:
"Gross Sales or Receipts" - include the total amount of money or its equivalent representing the contract price, compensation or
service fee, including the amount charged or materials supplied with the services and the deposits or advance payments actually
or constructively received during the taxable quarter for the services performed or to be performed for another person excluding
discounts if determinable at the time of sales, sales return, excise tax, and value-added tax (VAT);
The law is clear. Gross receipts include money or its equivalent actually or constructively received in consideration of services
rendered or articles sold, exchanged or leased, whether actual or constructive.
Gross Revenue - covers money or its equivalent actually or constructively received, including the value of services rendered or
articles sold, exchanged or leased, the payment of which is yet to be received. This is in consonance with the International
Financial Reporting Standards, which defines revenue as the gross inflow of economic benefits (cash, receivables, and other
assets) arising from the ordinary operating activities of an enterprise (such as sales of goods, sales of services, interest, royalties,
and dividends), which is measured at the fair value of the consideration received or receivable
In petitioner's case, its audited financial statements reflect income or revenue which accrued to it during the taxable period
although not yet actually or constructively received or paid. This is because petitioner uses the accrual method of accounting,
where income is reportable when all the events have occurred that fix the taxpayer's right to receive the income, and the amount
can be determined with reasonable accuracy; the right to receive income, and not the actual receipt, determines when to include
the amount in gross income.
The imposition of local business tax based on petitioner's gross revenue will inevitably result in the constitutionally proscribed
double taxation taxing of the same person twice by the same jurisdiction for the same thing inasmuch as petitioner's revenue

or income for a taxable year will definitely include its gross receipts already reported during the previous year and for which
local business tax has already been paid.

17. Manila North Tollways Corporation vs. The Municipality of Guiguinto Bulacan, CTA AC No. 82, December 03, 2012
The operator of the North Expressway falls within the classification of a contractor subject to local business tax based on its
gross receipts.
The taxpayer was granted by the government the concession to finance, design, rehabilitate, operate and maintain the North
Luzon Expressway (NLEX). For maintaining and operating the NLEX, taxpayer charges toll fees on its users. The Municipality
of Guiguinto, Bulacan assessed the taxpayer for local business tax on its toll plazas located in Tabang and Santa Rita and the
district office in Santa Rita. The basis of the assessment is the gross revenue. The Court agreed that the toll plazas in Tabang and
Santa Rita and the district office are considered branches liable to local business taxes. However, the Court cancelled the
assessment on the ground that the basis is erroneous. According to the Court, since the business of the taxpayer is to maintain and
operate NLEX for a fee, it falls within the classification of a contractor defined under Section 131(h) of the Local Government
Code (LGC). As such, its liability as a contractor should be computed on the basis of Section 143(e) of the LGC, which
imposes tax based on gross receipts. Accordingly, the Court cancelled the assessment which was based on gross revenue for lack
of legal mooring.
18. Drilon v. Lim, G.R. No. 112497, August 4, 1994
FACTS:
Pursuant to Section 187 of the Local Government Code, the Secretary of Justice had, on appeal to him of four oil companies and
a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with
the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public
policy. In a petition for certiorari filed by the City of Manila, the RTC declared Section 187 of the Local Government Code as
unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation of
the policy of local autonomy mandated in the Constitution and of the specific provision therein conferring on the President of the
Philippines only the power of supervision over local governments. In this case, Judge Rodolfo C. Palattao declared Section 187
unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances. He cited the familiar distinction
between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer
had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the
power of a superior officer to see to it that lower officers perform their functions in accordance with law.
ISSUE:
Whether or not Section 187 of the Local Government Code is constitutional and whether or not the Secretary of Justice can
exercise control, rather than supervision, over the local government
HELD:
Yes. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if
warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also
permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did
set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. What he found
only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their
functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of
powers to the city government under the Local Government Code. As the court sees it, that was an act not of control but of mere
supervision. Secretary Drilon set aside the Manila Revenue Code only on two grounds, to wit, the inclusion therein of certain
ultra vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds affected the legality, not
the wisdom or reasonableness, of the tax measure.
As regards the issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code, the Court
has carefully examined every one of the exhibits and agree with the trial court that the procedural requirements have indeed been
observed. Notices of the public hearings were sent to interested parties. The minutes of the hearings are found in the exhibits and
such show that the proposed ordinances were published.

19. HAGONOY MARKET VENDOR ASSOCIATION vs. MUNICIPALITY OF HAGONOY, G.R. 137621, 2/6/2002
FACTS: On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan, enacted an ordinance, Kautusan Blg. 28, which
increased the stall rentals of the market vendors in Hagonoy. Article 3 provided that it shall take effect upon approval. The
subject ordinance was posted from November 4-25, 1996. In the last week of November, 1997, the petitioners members were
personally given copies of the approved Ordinance and were informed that it shall be enforced in January, 1998. On December 8,
1997, the petitioners President filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance.
Petitioner claimed it was unaware of the posting of the ordinance.
Respondent opposed the appeal. It contended that the ordinance took effect on October 6, 1996 and that the ordinance, as
approved, was posted as required by law. Hence, it was pointed out that petitioners appeal, made over a year later, was already
time-barred. The Secretary of Justice dismissed the appeal on the ground that it was filed out of time, i.e., beyond thirty (30) days
from the effectivity of the Ordinance on October 1, 1996, as prescribed under Section 187 of the 1991 Local Government Code.
Citing the case of Taada vs. Tuvera, the Secretary of Justice held that the date of effectivity of the subject ordinance retroacted to
the date of its approval in October 1996, after the required publication or posting has been complied with, pursuant to Section 3
of said ordinance.
ISSUE: Was the appeal by the petitioner with the Secretary of Justice time-barred?
RULING: YES. Section 187 of the Local Govt Code requires that an appeal of a tax ordinance or revenue measure should be
made to the Secretary of Justice within thirty (30) days from effectivity of the ordinance and even during its pendency, the
effectivity of the assailed ordinance shall not be suspended. In the case at bar, Municipal Ordinance No. 28 took effect in
October 1996. Petitioner filed its appeal only in December 1997, more than a year after the effectivity of the ordinance in 1996.
Clearly, the Secretary of Justice correctly dismissed it for being time-barred. At this point, it is apropos to state that the
timeframe fixed by law for parties to avail of their legal remedies before competent courts is not a mere technicality that can be
easily brushed aside. The periods stated in Section 187 of the Local Government Code are mandatory. Ordinance No. 28 is a
revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals. Being its lifeblood,
collection of revenues by the government is of paramount importance. The funds for the operation of its agencies and provision
of basic services to its inhabitants are largely derived from its revenues and collections. Thus, it is essential that the validity of
revenue measures is not left uncertain for a considerable length of time. Hence, the law provided a time limit for an aggrieved
party to assail the legality of revenue measures and tax ordinances.
20. Reyes vs Court of Appeals, GR No. 118233, December 10, 1999, 320 SCRA 486
Facts: The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances 87, 91, 95, 100 and 101. On
May 21, 1993, petitioners filed an appeal with the Department of Justice assailing the constitutionality of these tax ordinances
allegedly because they were promulgated without previous public hearings thereby constituting deprivation of property without
due process of law. However the same was dismissed.
Issue: Whether or not the assailed ordinances are valid.
Held: Yes. A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective
way or instrument to raise needed revenues to finance and support the myriad activities of the local government units for delivery
of basic services essential to the promotion of general welfare and enhancement of peace, progress and prosperity of the people.
Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protest
over tax ordinance are required to be done within certain time frames. In the instant case, it is our view that the failure of
petitioners to appeal to the secretary of justice within 30 days as required by section 187 of Republic Act No. 7160 is fatal to their
cause.
Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan failed to conduct the required public
hearings before the enactment of Ordinances 87, 95, 91, 100, and 101. Although the Sanggunian had the control of records or
better means of proof regarding the facts alleged, petitioners are not relieved from the burden of proving their averments. Proof
that public hearings were not held falls on the petitioners shoulders. For failing to discharge that burden, their petition was
properly dismissed.
For the purpose of securing certainty where doubt would be intolerable, it is a general rule that the regularity of the enactment of
an officially promulgated statute or ordinance may not be impeached by parol evidence or oral testimony either of individual

officers and members, or of strangers who may be interested in nullifying legislative action. This rules supplements the
presumption in favor of the regularity of official conduct which we have upheld repeatedly, absent a clear showing to the
contrary.

21. Lopez v. City of Manila, GR No. 127139, Feb. 19, 1999

FACTS: Section 219 of Republic Act 7160 (R.A. 7160) or the Local Government Code of 1991 requires the conduct of the
general revision of real property.
The revision of real property assessments prescribed therein was not yet enforced in the City of Manila. Upon receipt of
Memorandum Circular No. 04-95 from the Bureau of Local Government Finance relating to the failure of most of the cities and
municipalities of Metropolitan Manila, including the City of Manila, to conduct the general revision of real property and after
obtaining the necessary funds from the City Council, the City Assessor began the process of general revision based on the
updated fair market values of the real properties.
The City Assessors Office submitted the proposed schedule of fair market values to the City Council for its appropriate action.
The council then enacted Manila Ordinance No. 7894 which was approved. With the implementation of the ordinance, the tax on
the land owned by the petitioner was increase hence he filed a special proceeding for the declaration of nullity of the City of
Manila Ordinance No. 7894 for being unjust, excessive, oppressive or confiscatory.
Manila Ordinance No. 7905 took effect thereafter, reducing by fifty percent (50%) the assessment levels (depending on the use of
property, e.g., residential, commercial) for the computation of tax due. The new ordinance amended the assessment levels
provided by Section 74, paragraph (A) of Manila Ordinance No. 7794..
Despite the amendment brought about by Manila Ordinance No. 7905, the controversy proceeded.
The trial court dismissed the case for failure of the petitioner to exhaust administrative remedies.
ISSUE: W/N the doctrine of exhaustion of administrative remedies may be dispensed with in the instant case
HELD: NO. As a general rule, where the law provides for the remedies against the action of an administrative board, body, or
officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests upon the presumption that the
administrative body, if given the chance to correct its mistake or error, may amend its decision on a given matter and decide it
properly. Therefore, where a remedy is available within the administrative machinery, this should be resorted to before resort can
be made to the courts, not only to give the administrative agency the opportunity to decide the matter by itself correctly, but also
to prevent unnecessary and premature resort to courts.
One of the reasons for the doctrine of exhaustion is the separation of powers which enjoins upon the judiciary a becoming policy
of non-interference with matters coming primarily within the competence of other department. x x x
There are however a number of instances when the doctrine may be dispensed with and judicial action validly resorted to
immediately. Among these exceptional cases are: (1) when the question raised is purely legal, (2) when the administrative body
is in estoppel; (3) when the act complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when
the claim involved is small; (6) when irreparable damage will be suffered; (7) when there is no other plain, speedy and adequate
remedy; (8) when strong public interest is involved; (9) when the subject of controversy is private land; and (10) in quo-warranto
proceeding (citation omitted).
In the courts opinion, however, the instant petition does not fall within any of the exceptions above-mentioned.

23. City of Makati and The Office Of The City Treasurer of Makati City vs. Nippon Express Philippines Corporation,
CTA AC Case No. 76, February 17, 2012
Revenues of branches or sales outlet elsewhere should not be part of the tax base for the determination of the local business tax
to be paid in the City where the principal office is located.

SALES NOT PROPERLY TAXED IN A BRANCH OFFICE CAN ONLY BE SUBJECT TO DEFICIENCY BUSINESS TAXES
PAYABLE WHERE THE BRANCH IS LOCATED AND SHOULD NOT BE INCLUDED IN THE COMPUTATION OF BUSINESS
TAXES IN THE HOME OFFICE.
Taxpayer has its principal office and also a branch in the City of Makati. At the same time, it has branches in the cities of
Paranaque and Cebu. The City Treasurer of Makati assessed the taxpayer for deficiency local business tax for sales of the
Paranaque branch allegedly not declared in the City of Paranaque. The City of Makati maintained that it had the authority to
assess business taxes on revenues not properly taxed in Paranaque City and Cebu City.
Citing the rules on the situs of taxation as provided in the Makati Revenue Code and the Local Government Code of 1991, the
Court ruled that the law is clear that for purposes of collection of local taxes, businesses maintaining or operating branch or sales
outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction, and the tax thereon shall accrue
and shall be paid to the municipality where such branch or sales outlet is located. Thus, the revenues of the branches outside
Makati should not be part of the tax base for the determination of the local business tax to be paid in the City of Makati. And
even assuming that there was under-declaration or misdeclaration of the total taxable earnings in its Paranaque City branch, the
tax properly belongs to the City of Paranaque. The action of the City Treasurer of Makati is impermissible, because to do so
would be sanctioning or encroaching upon the prerogatives of another co-equal and autonomous local government.