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MONTERO // 3A TAX DIGESTS

AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

REFUNDS collection of the amount due.

All criminal violations may be compromised except: (a) those already


SEC. 72. Suit to Recover Tax Based on False or Fraudulent Returns. filed in court, or (b) those involving fraud.
When an assessment is made in case of any list, statement or return,
which in the opinion of the Commissioner was false or fraudulent or (C) Credit or refund taxes erroneously or illegally received or penalties
contained any understatement or undervaluation, no tax collected under imposed without authority, refund the value of internal revenue stamps
such assessment shall be recovered by any suit, unless it is proved that when they are returned in good condition by the purchaser, and, in his
the said list, statement or return was not false nor fraudulent and did not discretion, redeem or change unused stamps that have been rendered
contain any understatement or undervaluation; but this provision shall not unfit for use and refund their value upon proof of destruction. No credit or
apply to statements or returns made or to be made in good faith regarding refund of taxes or penalties shall be allowed unless the taxpayer files in
annual depreciation of oil or gas wells and mines. writing with the Commissioner a claim for credit or refund within two (2)
years after the payment of the tax or penalty: Provided, however, That a
REMEDIES IN GENERAL return filed showing an overpayment shall be considered as a written
SEC. 204. Authority of the Commissioner to Compromise, Abate and claim for credit or refund.
Refund or Credit Taxes. The Commissioner may
A Tax Credit Certificate validly issued under the provisions of this
(A) Compromise the payment of any internal revenue tax, when: Code may be applied against any internal revenue tax, excluding
(1) A reasonable doubt as to the validity of the claim against the withholding taxes, for which the taxpayer is directly liable. Any request for
taxpayer exists; or conversion into refund of unutilized tax credits may be allowed, subject to
(2) The financial position of the taxpayer demonstrates a clear inability the provisions of Section 230 of this Code: Provided, That the original
to pay the assessed tax. copy of the Tax Credit Certificate showing a creditable balance is
The compromise settlement of any tax liability shall be subject to the surrendered to the appropriate revenue officer for verification and
following minimum amounts: cancellation: Provided, further, That in no case shall a tax refund be given
For cases of financial incapacity, a minimum compromise rate resulting from availment of incentives granted pursuant to special laws for
equivalent to ten percent (10%) of the basic assessed tax; and which no actual payment was made.
For other cases, a minimum compromise rate equivalent to forty
percent (40%) of the basic assessed tax. The Commissioner shall submit to the Chairmen of the Committee on
Where the basic tax involved exceeds One million pesos (P1,000.000) Ways and Means of both the Senate and House of Representatives, every
or where the settlement offered is less than the prescribed minimum rates, six (6) months, a report on the exercise of his powers under this Section,
the compromise shall be subject to the approval of the Evaluation Board stating therein the following facts and information, among others: names
which shall be composed of the Commissioner and the four (4) Deputy and addresses of taxpayers whose cases have been the subject of
Commissioners. abatement or compromise; amount involved; amount compromised or
abated; and reasons for the exercise of power: Provided, That the said
(B) Abate or cancel a tax liability, when: report shall be presented to the Oversight Committee in Congress that
(1) The tax or any portion thereof appears to be unjustly or excessively shall be constituted to determine that said powers are reasonably
assessed; or exercised and that the Government is not unduly deprived of revenues.
(2) The administration and collection costs involved do not justify the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

PROTESTING AN ASSESSMENT, REFUND, ETC. creditable balance as of said date, shall be presented for revalidation with
SEC. 229. Recovery of Tax Erroneously or Illegally Collected. No the Commissioner or his duly authorized representative or on before June
suit or proceeding shall be maintained in any court for the recovery of any 30, 1998.
national internal revenue tax hereafter alleged to have been erroneously
or illegally assessed or collected, or of any penalty claimed to have been CIR v. MERALCO (Coloquio)
collected without authority, of any sum alleged to have been excessively [GR. No. 181459; June 9, 2014]
or in any manner wrongfully collected without authority, or of any sum Sayang MERALCO, late mo nalaman exempt pala si NORD/LB, nung huli
alleged to have been excessively or in any manner wrongfully collected, na ang lahat
until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or Recit-Ready:
not such tax, penalty, or sum has been paid under protest or duress. Facts: MERALCO obtained 2 loans from NORD/LB, aggregating to
$220,000,000. The arrangement was that MERALCO shall remit
In any case, no such suit or proceeding shall be filed after the to the BIR, the 10% final withholding tax on the interest payments
expiration of two (2) years from the date of payment of the tax or made to NORD/LB. So from 1999-2003, MERALCO remitted a
penalty regardless of any supervening cause that may arise after total of P264,120,181.44 as FWT to the BIR. Subsequently, it
payment: Provided, however, That the Commissioner may, even without a discovered that NORD/LB is owned and controlled by the
written claim therefor, refund or credit any tax, where on the face of the Government of Germany, thus it should be exempt from FWT.
return upon which payment was made, such payment appears clearly to The BIR confirmed this through a ruling issued.
have been erroneously paid.
MERALCO then filed for a refund/credit of the erroneously paid
SEC. 230. Forfeiture of Cash Refund and of Tax Credit. FWT, from 1999-2003. The CIR denied the refund, but upon
appeal, the CTA modified the decision. The CTA denied the claim
(A) Forfeiture of Refund. A refund check or warrant issued in for 1999-2002 on the ground of prescription, but it allowed the
accordance with the pertinent provisions of this Code, which shall remain claim for 2002-2003.
unclaimed or uncashed within five (5) years from the date the said warrant
or check was mailed or delivered, shall be forfeited in favor of the Issue/s:
Government and the amount thereof shall revert to the general fund. WON the CTA erred in allowing the refund only for the years 2002-
2003. - NO
(B) Forfeiture of Tax Credit. A tax credit certificate issued in accordance
with the pertinent provisions of this Code, which shall remain unutilized Held: The Court cited Sec. 229 of the NIRC, which states that a
after five (5) years from the date of issue, shall, unless revalidated, be taxpayer only has 2 years within which to file for a refund/ credit,
considered invalid, and shall not be allowed as payment for internal running from the date of the payment of the tax regardless of any
revenue tax liabilities of the taxpayer, and the amount covered by the supervening cause. The CTA therefore, was correct in denying
certificate shall revert to the general fund. the claim for 1999-2002, on the ground of prescription.

(C) Transitory Provision. For purposes of the preceding Subsection, a MERALCO cannot invoke the BIR ruling as confirming its right to
tax credit certificate issued by the Commissioner or his duly authorized a refund, for such only answers the questions of whether
representative prior to January 1, 1998, which remains unutilized or has a
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

NORD/LB is tax-exempt, and the period within which to file for a


refund/ credit. It is not the operative act determinative of whether
one is entitled to a refund/ credit or not. Held/Ratio: Petition DENIED. The resolution of the CTA is affirmed.

Facts: 1. YES. The Court ruled that MERALCO sufficiently established the
MERALCO obtained a loan from Norddeutsche Landesbank Girozentrale tax-exempt status of NORD/lB through a certification from the
(NORLD/LB) Singapore Branch, for $120,000,000. Subsequently, they Embassy of Germany.
executed another loan agreement for $100,000,000. The CIR argues that MERALCO is not entitled to a refund/credit, for it
In the arrangement, the income received by NORD/LB by way of failed to establish that NORD/LB is owned and controlled by the Federal
MERALCOs interest payments shall be paid in full, for MERALCO shall Republic of Germany.
bear the obligation of remitting the 10% final withholding tax to the BIR. The Court however found that MERALCO sufficiently established that
o MERALCO in turn remitted the FWT on the interest NORD/LB is controlled and owned by the government of Germany, for it
payments, aggregating to P264,120,181.44, for the years presented a certification of the Embassy of Germany. Such proves that
1999-2003. NORD/LB is a regional bank in Germany, offering support in the public
In 2001, MERALCO discovered that NORD/LB is a foreign government- sector financing.
owned financing institution of Germany. Thus, it requested for a BIR The Embassy of Germany is in the best position to confirm such
Ruling with regard to the tax exempt status of NORD/LB. information, for it is the representative of Germany here in the
o The BIR responded, saying that interest payments made to Philippines.
NORD/LB are exempt from FWT, since it is owned and The BIR also decided that NORD/LB is tax-exempt, through a ruling
controlled by the government of Germany. issued.
Pursuant to the ruling, MERALCO filed for a tax refund/ credit, for the
erroneously paid or overpaid FWT. 2. NO. The NIRC provides only 2 years within which to file a refund,
o CIR denied the refund, on the basis that it had already which runs from the date of the payment of the taxes.
prescribed under Sec. 204 of the NIRC, giving a taxpayer 2 The Court agreed with the CTA, that the claim pertaining to the years
years from the date of payment of tax to file for a refund. 1999-2002 has already prescribed.
An appeal was brought to the CTA, which ruled that the claim from 1999- o Sec. 229 of the NIRC states that a claim for a refund/credit may
2002 (P224,760,926.65) has already been barred by prescription, but only be filed within 2 years from the date of the payment of the
that for 2002-2003 (P39,359,254.79) may still be claimed. tax, regardless of any supervening cause that may arise after
o The motion for reconsideration was denied, thus this petition. payment.
o Such period does not run from the discovery by the taxpayer of
Issue/s: the erroneous or excessive payment of taxes.
1. WON the interest payments to NORD/LB is exempt from FWT. MERALCO argued that the BIR Ruling already established its right to a
- YES refund.
2. WON the CTA erred in allowing the refund only for the years o But the Court stated that the BIR Ruling declaring the tax-
2002-2003, denying that for 1999-2002 on the ground of exempt status of NORD/LB, is merely confirmatory in nature.
prescription. o The ruling is not the operative act from which an entitlement of
- NO refund is determined.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o The BIR is tasked only to confirm what is provided under the the credit had lapsed.
NIRC, on the matter of tax exemptions, and the period within
which to file a claim.
MERALCO is also misguided when it relied upon the 6-year prescriptive Facts:
period for initiating an action on the ground of a quasi-contract/ solution Leopoldo R. Aguinaldo and his wife received in 1952 cash dividends in
indebiti under Art. 1145 of the Civil Code. Such applies when: the sum of P10,000.00 from Aguinaldo Brothers, Inc. They did not declare
1. There is no binding relation between the payor, who has no duty to said dividends in their joint income tax return for 1952, but declared
pay and the person who received the payment. P5,000.00 thereof in their income tax return for 1953. On August 14,
2. The payment is made through mistake and not through liberality or 1954, they paid the tax due on their declared income for 1953.
some other cause. In 1955, the BIR re-examined the 1952 and 1953 joint income tax returns
o Here, there is a binding relation between CIR as the taxing and readjusted the returns, increasing the declared income for 1952 by
authority, and MERALCO, which is bound by law to act as a P10,000.00 and eliminating from the 1953 income tax return the reported
withholding agent for the FWT. dividends of P5,000.00. The result was a deficiency of P3,840.00 for
o Also, such provision shall not apply for the NIRC already 1952 and an overpayment of P1,600.00 for 1953.
provides for the period to claim for a refund. The CIR, by his letter dated October 28, 1957, assessed against
Leopoldo R. Aguinaldo the amount of P3,840.00 as deficiency income tax
VDA DE AGUINALDO v. CIR (Cualoping) for 1952, without crediting in his favor the overpayment in 1953.
[GR. No. L-19927; February 26, 1965] Aguinaldo's counsel, in a letter dated January 10, 1958, protested against
2 year requirement mandatory the assessment, and requested that the overpayment for 1953 be
credited in favor of the taxpayer.
Recit-Ready: The request was denied. The CIR informed him that the amount of
Facts: Aguinaldo and his wife received 10000 in cash dividends in 1952. P1,600.00 cannot be credited against the tax for 1952 inasmuch as the
However they did not declare anything for 1952 and declared claim for tax credit was filed beyond the two-year period provided for in
5000 for 1953. Upon examination the BIR found that there was a Section 309 of the National Internal Revenue Code.
deficiency of 3840 for 1952 and an overpayment of 1953. The
CIR made a demand for the deficiency but did not credit the Issue/s:
overpayment. Aguinaldo through his lawyer protested this and WON petitioner is entitled to tax credit for the year 1953? NO.
requests that the overpayment be applied.
Held/Ratio:
Issue/s:
WON petitioner is entitled to tax credit for the year 1953? NO. NO. Not entitled to tax credit.
SEC. 309. Authority of Collector to make compromises and refund
Held: Sec 309 clearly requires the filing by the taxpayer of a written taxes.The Collector of Internal Revenue may compromise any
claim for credit or refund within two years after payment of the civil or other cases arising under this Code
tax, before the CIR can exercise his authority to grant the credit xxx
or refund. The adjustment took place in 1955 but the claim for tax The authority of the Collector of Internal Revenue to credit or refund
credit was only made in 1958, therefore the 2 year period to claim taxes or penalties under this section can only be exercised if the claim
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

for credit or refund is made in writing and filed with him within two years surcharge, interest, and other penalties and requested the same
after the payment of the tax or penalty. to be waived. On Oct. 4, 1991, the CIR issued an assessment
The third paragraph of Section 309 clearly requires the filing by the notice reiterating the demand in the pre-assessment notice and
taxpayer of a written claim for credit or refund within two years after requesting payment on or before 30 days upon receipt. The CIR
payment of the tax, before the CIR can exercise his authority to grant the also stated that there is no legal justification for the waiver of the
credit or refund. Such requirement is therefore a condition precedent and interests, surcharge and compromise penalty. The executor paid
non-compliance therewith precludes the CIR from exercising the the basic deficiency tax and paid under protest the surcharge,
authority thereunder given. interest, and other penalties. The executor filed a petition for
As noted, the Aguinaldos paid the income tax for 1953 on August 14, review with the CTA with the prayer that the CIRs decision be
1954 although the adjustment took place on August 29, 1955. From both reversed and that a refund of the amount of P438,040.38 be
dates to January 13, 1958, when the claim for tax credit was filed, more ordered. The Commissioner opposed the said petition,
than two years have elapsed. alleging that the CTAs jurisdiction was not properly invoked
inasmuch as no written claim for a tax refund of the deficiency tax
FELISA VDA. DE SAN AGUSTIN v. CIR (De Luis) collected was filed with the Bureau of Internal Revenue before the
[GR. No. 138485; September 10, 2001] petition was filed, in violation of Sections 204 and 230 of the
Written claim for refund to the BIR, is not required when the taxpayer National Internal Revenue Code.
appeals the disputed assessment of the BIR to the CTA and the claim for
refund is only incidental to questioning the correctness of the assessment Issue/s:
1) WON a written claim for tax refund of the deficiency tax should be
Recit-Ready: filed with the BIR before filling a petition for review with the CTA
Facts: Atty. San Agustin died and left a holographic will, instituting his NO
2) WON the imposition of surcharge, interest and penalties on the
wife as sole heir and naming retired Justice Jose Feria as
deficiency estate tax is in accord with the law
executor. The probate proceedings were instituted and the
YES, surcharge
required notice of death and an estate tax return was sent to the
NO, compromise penalty
BIR. The executor also requested for extension for the payment
of the tax since the widow Felisa San Agustin did not personally
Held:
have sufficient funds, and that the payment would have to come
1) NO. As held in Roman Catholic Archbishop of Cebu v. CIR, to require
from the estate. The BIR only granted an extension of 6 months.
the taxpayer to file a written claim for refund to the BIR as a condition
The executor submitted to the probate court a motion for authority precedent to his right to appeal the assessment, would in effect
to withdraw funds for the payment of the estate tax. require of him to go through a useless and needless ceremony that
Consequently, the estate tax was paid within the 6-month would only delay the disposition of the case, for the CIR would
extension period. On Sept. 23, 1991, Felisa San Agustin received certainly disallow the claim for refund in the same way as he
a pre-assessment notice indicating a deficiency tax of P538, disallowed the protest against the assessment. The assessment in
509.50 including surcharge, interest and penalties. The executor this case as well as in the Archbishop of Cebu v. CIR is disputed.
Hence, the CTA has jurisdiction over the matter pursuant to R.A. 1125
wrote a letter to the CIR expressing his readiness to pay the basic
creating the CTA, which provides that the said court has jurisdiction
deficiency tax as soon as the RTC approves its withdrawal from over appeals from a decision of the CIR in cases involving disputed
the estate, in the same letter the executor questioned the assessments as distinguished from cases involving refunds of taxes,
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

fees, or other charges. The claim for refund in this case is only BIR, and that the estate tax due per return of P1,676,432.00 was already
incidental to questioning the correctness of the assessment. paid in due time within the extension period.
2) (Not relevant to Refunds, see held 2 below) On October 4, 1991, the CIR issued an Assessment Notice reiterating
the demand in the pre-assessment notice and requesting payment on or
Facts:
before thirty (30) days upon receipt thereof.
Atty. Jose San Agustin died on June 27, 1990 leaving his wife Dra.
In a letter, dated October 31, 1991, the executor requested the
Felisa L. San Agustin as sole heir. He left a holographic will executed on
Commissioner a reconsideration of the assessment of P976,549.00 and
April 21, 1980 giving all his estate to his widow, and naming retired
waiver of the surcharge, interest, etc.
Justice Jose Y. Feria as Executor.
On December 18, 1991, the CIR accepted payment of the basic
Probate proceedings were instituted on August 22, 1990, in the RTC of deficiency tax in the amount of P538,509.50. However, the request for
Makati. The required notice of decedents death was sent to the CIR on
reconsideration was not acted upon until January 21, 1993, when the
August 30, 1990.
executor received a letter signed by the Commissioner, stating that there
On September 3, 1990, an estate tax return reporting an estate tax due is no legal justification for the waiver of the interests, surcharge and
of P1,676,432.00 was filed on behalf of the estate, with a request for an compromise penalty in this case, and requiring full payment of
extension of two years for the payment of the tax, inasmuch as the P438,040.38 representing such charges within ten (10) days from receipt
decedents widow did not personally have sufficient funds, and that the thereof.
payment would have to come from the estate.
In view of the said letter, the estate paid the amount of P438,040.38
In his letter/answer, BIR Deputy Commissioner Victor A. Deoferio, Jr., under protest on January 25, 1993. And on February 18, 1993, the
granted the heirs an extension of only six (6) months, subject to the executor filed a Petition for Review with the CTA with the prayer that
imposition of penalties and interests under Sections 248 and 249 of the the CIRs letter/decision be reversed and that a refund of the
National Internal Revenue Code, as amended. amount of P438,040.38 be ordered.
The RTC allowed probate of the will and appointed Jose Feria as The Commissioner opposed the said petition, alleging that the
Executor of the estate. On December 5, 1990, the executor submitted to CTAs jurisdiction was not properly invoked inasmuch as no
the probate court an inventory of the estate with a motion for authority to written claim for a tax refund of the deficiency tax collected was
withdraw funds for the payment of the estate tax. Such authority was filed with the Bureau of Internal Revenue before the petition was
granted by the probate court on March 5, 1991. Within the 6 months filed, in violation of Sections 204 and 230 of the National Internal
extension period granted by the BIR, the executor paid the estate tax in Revenue Code. Moreover, there is no statutory basis for the refund of
the amount of P1,676,432. the deficiency surcharges, interests and penalties charged by the
On September 23, 1991, the widow of the deceased, Felisa L. San Commissioner upon the estate of the decedent.
Agustin, received a Pre-Assessment Notice from the BIR, dated August The CTA upheld its jurisdiction over the dispute, and it modified the
29, 1991, showing a deficiency estate tax of P538,509.50, which, CIRs assessment for surcharge, interests, and other penalties. It also
including surcharge, interest and penalties, amounted to P976,540.00. ordered the reimbursement to the estate of the balance of P423.577.64.
On October 1, 1991, the executor filed a letter with the CIR expressing
readiness to pay the basic deficiency estate tax of P538,509.50 as soon Issue/s:
as the RTC approves its withdrawal from the estate, but, requesting that 1) WON a written claim for tax refund of the deficiency tax should be
the surcharge, interest, and other penalties, amounting to P438,040.38 filed with the BIR before filling a petition for review with the CTA
be waived, considering that the assessed deficiency arose only on NO
account of the difference in zonal valuation used by the Estate and the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

2) WON the imposition of surcharge, interest and penalties on the days. Nonetheless, the deficiency estate tax was only paid on Dec.
deficiency estate tax is in accord with the law 19, 1991.
YES, surcharge o The basic deficiency tax in this case being P538,509.50, the
NO, compromise penalty 25% percent thereof amounts to P134,627.37. Section 249 of
the Tax Code states that any deficiency in the tax due would be
Held/Ratio: Petition GRANTED. The estate is ordered to pay deficiency subject to interest at the rate of twenty percent (20%) per
taxes and the Commissioner is ordered to refund to the estate the overpaid annum, which interest shall be assessed and collected from the
amount of P289, 950.38. date prescribed for its payment until full payment is made.
o The CTA correctly held that the compromise penalty of
1) NO. As held in Roman Catholic Archbishop of Cebu v. CIR, to hold P20,000.00 could not be imposed on petitioner, a compromise
that the taxpayer has now lost the right to appeal from the ruling on being, by its nature, mutual in essence. The payment made
the disputed assessment but must prosecute his appeal under under protest by petitioner could only signify that there was no
Section 306 of the Tax Code, which requires a taxpayer to file a agreement that had effectively been reached between the
claim for refund of the taxes paid as a condition precedent to his parties.
right to appeal, would in effect require of him to go through a
useless and needless ceremony that would only delay the
disposition of the case, for the CIR would certainly disallow the CIR VS. AICHI FORGING COMPANY OF ASIA (Diploma)
claim for refund in the same way as he disallowed the protest [G.R. No. 184823; October 6, 2010]
against the assessment. Stop being (pre)mature.
o The assessment in this case as well as in the Archbishop of Cebu v.
CIR case is disputed. Hence, the CTA has jurisdiction over the Recit-Ready:
matter pursuant to R.A. 1125 creating the CTA, which provides that Facts: Aichi Forging Company is engaged in the manufacturing,
the said court has jurisdiction over appeals from a decision of the producing and processing of steel and its by-products. Aichi filed
CIR in cases involving disputed assessments as distinguished from for a judicial and an administrative claim for refund/credit of
cases involving refunds of taxes, fees, or other charges. The claim input VAT on Sept. 30, 2004. CIR filed its Answer contended that
for refund is only incidental to questioning the correctness of the the claim for refund is subject to administrative investigation by
assessment. the BIR; and Aichi must prove that the claim was filed within 2
o The Court sees no cogent reason to require a useless formality that year period prescribed in Section 229. Also, since the year
can serve the interest of neither the government nor the taxpayer. 2004 was a leap year, the filing of the claim for tax refund/credit
on September 30, 2004 was beyond the 2-year period, which
2) YES for the surcharge. NO for the compromise penalty. The delay in expired on September 29, 2004.
the payment of the deficiency tax within the time prescribed for its
payment in the notice of assessment justifies the imposition of the Issue/s: WON Aichis judicial and administrative claims were filed
25% surcharge. In this case, the estate received a pre-assessment within the 2-year prescriptive period provided in Sections
notice indicating a deficiency tax as early as Sept. 23, 1991. A notice 112(A) and 229 of the NIRC YES. But the judicial claim is
of assessment was sent to the estate on Oct. 4, 1991, reiterating the prematurely filed.
deficiency and demanding for its payment before the lapse of 30
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Held: Yes. Sec. 112 will apply which states that unutilized input VAT CTA 2nd Division rendered a decision partially granting Aichis
must be claimed w/n 2 yrs after the close of the taxable quarter claim for refund/credit.
when the sales were made. Sec. 204(c) and Sec. 229 set a 2- CTA Pursuant to Section 112 of the NIRC, the following are the
year prescriptive period, reckoned from date of payment of the requisites to be entitled to input VAT refund/credit
tax or penalty, for the filing of a claim of refund/credit. However, o Taxpayer is engaged in sales which are zero-rated or effectively
both provisions apply ONLY to instances of erroneous zero-rated
payment or illegal collection of internal revenue taxes. The o Taxpayer is VAT-registered
administrative claim was timely filed since the Admin Code o Claim must be filed within 2 years after the close of the taxable
prevails which states that one year is equivalent to 12 months, quarter when such sales were made
hence, the deadline is Sept. 30 NOT Sept. 29. However, the o Creditable input tax due or paid must be attributable to such sales,
judicial claim was prematurely filed in violation of Sec 112(D), except the transitional input tax, to the extent that such input tax has
w/c states that CIR has, 120 days, within which to grant or deny not been applied against the output tax
the claim. In case of full or partial denial by the CIR, the CTA found that Aichi complied with the first 3 requisites but as to the 4th
taxpayers recourse is to file an appeal before the CTA within 30 requisite, CTA found that there are some documents and claims of Aichi
days from receipt of the decision of the CIR. If after the 120-day that are baseless and have not been satisfactorily substantiated.
period the CIR fails to act on the application for tax refund/credit, CTA Decision: Petition for Review partially granted, CIR is ordered to
the remedy of the taxpayer is to appeal the inaction of the CIR to refund or issue a tax credit certificate in favor of Aichi in the
CTA within 30 days. Aichi did NOT wait for the decision of the amount of P3,239,119.25
CIR or the lapse of the 20-day period. CIR filed a Motion for Partial Reconsideration arguing that it was filed
beyond the 2-year period
o Since the year 2004 was a leap year, the filing of the claim for tax
Facts: refund/credit on September 30, 2004 was beyond the 2-year period,
On September 30, 2004, Aichi filed a claim for refund/credit of input which expired on September 29, 2004.
VAT for the period July 1, 2002 to September 30, 2002 with CIR, through Article 13 of NCC states that when the law speaks
Dept. of Finance One-Stop Shop Inter-Agency Tax Credit and Duty of a year, it is equivalent to 365 days
Drawback Center. It also argued that the simultaneous filing of administrative and
On the same date, Aichi filed a Petition for Review with CTA for the judicial claim contravenes Sections 112 and 229
refund/credit of the same input VAT. o Prior filing of an administrative claim is a condition
Aichi alleged that for the period July - September 2002, it generated and precedent before a judicial claim can be filed
recorded zero-rated sales in the amount of about P131M, and it incurred o This is due to the doctrine of exhaustion of admin remedies
and paid input VAT amounting to about P3.9M from purchases and and also on the fact that the CTA is an appellate body
importation attributable to its zero-rated sales. which exercises the power of judicial review over admin
Aichi said that in its application for refund/credit with the CIR, it only actions of the BIR
claimed the amount of about P3.8M CTA En Banc: Affirmed the 2nd Divisions decision allowing the
CIR filed its Answer contended that the claim for refund is subject to partial tax refund
administrative investigation by the BIR; and Aichi must prove that the
claim was filed within 2 year period prescribed in Section 229
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

CTA EB held that the reckoning point for counting the 2-year period o The above provision clearly provides that unutilized input VAT
should start from the payment of tax subject claim for refund, payments not otherwise used for any internal revenue tax due
citing Section 229, NIRC. the taxpayer must be claimed within 2 years reckoned from
o In this case, Aichi filed its VAT Return for the taxable 3rd the close of the taxable quarter when the relevant sales
quarter of 2002 on October 20, 2002 hence, were made pertaining to the input VAT regardless of whether
administrative and judicial claims for refund filed on said tax was paid or not.
September 30, 2004 were filed on time because Aichi has
until October 20, 2004 within which to file its claim for As held in the case of Mirant:
refund. o To be sure, MPC cannot avail itself of the provisions of either
CTA EB also did NOT agree with CIRs contention that NIRC Sec. 204(C)2 or 2293 of the NIRC which, for the purpose of
requires the previous filing of an administrative claim for refund prior refund, prescribes a different starting point for the two-year
to judicial claim. prescriptive limit for the filing of a claim therefore.
CTA EB further said that such should not be the case as the law The 2 provisions also set a 2-year prescriptive period, reckoned from
does NOT prohibit the simultaneous filing of the administrative date of payment of the tax or penalty, for the filing of a claim of
and judicial claims for refund. What is controlling is that both refund/credit.
claims for refund must be filed within the 2-year prescriptive period. However, both provisions apply ONLY to instances of erroneous
CIR filed MR, CTA EB denied. CIR appealed to the SC. payment or illegal collection of internal revenue taxes.
Aichis claim for refund/credit was filed in violation of Sec. 112(D) w/c
Issue/s: Whether Aichi Forgings judicial and administrative claims provides that the CIR has 120 days, from the date of the submission of
were filed within the 2-year prescriptive period provided in Sections the complete documents in support of the application [for tax
112(A) and 229 of the NIRC YES. But the judicial claim is prematurely refund/credit], within which to grant or deny the claim. In case of full or
filed. partial denial by the CIR, the taxpayers recourse is to file an appeal

Held/Ratio: WHEREFORE, the Petition is hereby GRANTED. The assailed


apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid
July 30, 2008 Decision and the October 6, 2008 Resolution of the Court of
attributable to such sales, except transitional input tax, to the extent that such input tax has
Tax Appeals are hereby REVERSED and SET ASIDE. The Court of Tax not been applied against output ta
2
Appeals Second Division is DIRECTED to dismiss CTA Case No. 7065 for Credit or refund taxes erroneously or illegally received or penalties imposed without
having been prematurely filed. authority, refund the value of internal revenue stamps when they are returned in good
condition by the purchaser, and, in his discretion, redeem or change unused stamps that
have been rendered unfit for use and refund their value upon proof of destruction. No
The pivotal question of when to reckon the running of 2-year credit or refund of taxes or penalties shall be allowed unless the taxpayer files in
prescriptive period has already been resolved in CIR vs. Mirant writing with the Commissioner a claim for credit or refund within two (2) years after
Pagbilao Corp. the payment of the tax or penalty: Provided, however, That a return filed showing an
o In that case, SC ruled that Section 112(A)1 of the NIRC is the overpayment shall be considered as a written claim for credit or refund.
3
In any case, no such suit or proceeding shall be filed after the expiration of two (2)
applicable provision in determining the start of the 2-year period years from the date of payment of the tax or penalty regardless of any supervening
for claiming a refund/credit and NOT Sections 204(C) and 229 cause that may arise after payment: Provided, however, That the Commissioner may,
even without written claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly to have been erroneously
1
Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, paid.
within two (2) years after the close of the taxable quarter when the sales were made,
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

before the CTA within 30 days from receipt of the decision of the CIR. the ground of lack of jurisdiction. The CTA Second Division
However, if after the 120-day period the CIR fails to act on the granted the motion and dismissed the Petition for being filed out
application for tax refund/credit, the remedy of the taxpayer is to appeal of time. On appeal, the CTA en banc denied the Petition and
the inaction of the CIR to CTA within 30 days. ruled that the judicial claim had been filed out of time. It held that,
The second paragraph of Section 112(D) of the NIRC envisions two under Section 112(C) of the NIRC, the 120-day period for the BIR
scenarios: (1) when a decision is issued by the CIR before the lapse of to act on the claim should be reckoned from December 28, 2009 -
the 120-day period; and (2) when no decision is made after the 120-day the date of filing of Hedcor's administrative claim with the tax
period. In both instances, the taxpayer has 30 days within which to file agency.
an appeal with the CTA.
IN THIS CASE, the admin and the judicial claims were Issue/s:
simultaneously filed on Sept. 30, 2004. Aichi did NOT wait for the WON the 120-day period should be counted from the filing of the
decision of the CIR or the lapse of the 20-day period. administrative claim and not from the last submission of complete
documents in the administrative proceedings with the BIR. - YES
HEDCOR v. CIR (Rocillo)
[GR. No. 207575; July 15, 2015] Held: In ruling against Hedcor, the Court stated that in this case the 120
120 day period should be reckoned from the filing of the administrative day period should be reckoned from the filing of the
claim and not from the day of the submission of the complete documents if administrative claim on December 28 2009. The Transmittal
the latter is deemed not a substantial submission that would warrant a Letter which is contended as the last document submitted on
change in the reckoning date for the 120-day period September 20, 2010, is not a substantial submission that would
warrant a change in the reckoning date for the 120-day period for
Recit-Ready: the BIR to act on the claim for refund.
Facts: Hedcor, Inc. is a domestic corporation primarily engaged in the The Court said that to allow Hedcor's allegations to prevail would
operation of hydro-electric power plants and the generation of set a dangerous precedent, as the reckoning period for the 120
hydro-electric power. It was entitled to zero-percent (0%) VAT, as days would be at the mercy of taxpayers. They will then submit
the sales of electric power to National Power Corporation (NPC) complete supporting documents even after the two-year
qualified as zero-rated sales under the NIRC. In 2008, Hedcor still prescriptive period for filing an administrative claim has lapsed.
had an unused or excess input VAT of P4, 217,955.84. On Even if the Court considers Hedcors reliance on RMC No. 49-
December 28, 2009, it filed with the BIR an administrative claim 2003 which provides that for claims to be filed by claimants with
for the refund of excess and unused input VAT for Q2 of 2008. the respective investigating/processing office of the administrative
On March 23, 2010, it admittedly received from the BIR a Letter agency, the same shall be officially received only upon
of Authority or request for the presentation of records. Hedcor submission of complete documents, its administrative claim would
filed on July 6, 2010 a Petition for Review with the CTA. Hedcor only be considered as officially received on September 20, 2010,
then filed on October 29, 2010 a Motion for Leave to File when it allegedly filed its complete supporting documents. By that
Supplemental Petition for Review where it manifested that it had time, the period for filing an administrative application for a refund
submitted to the BIR on September 20, 2010 the last set of would have already prescribed on June 30, 2010, or two (2) years
supporting documents related to its administrative claim for a from the close of the taxable quarter when the relevant sales
refund. CIR filed a Motion to Dismiss on November 8, 2010 on were made (June 30, 2008).
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Facts: WON the 120-day period should be counted from the filing of the
Hedcor, Inc. is a domestic corporation primarily engaged in the operation administrative claim and not from the last submission of complete
of hydro-electric power plants and the generation of hydro-electric documents in the administrative proceedings with the BIR. - YES
power.
Since it generates renewable sources of energy through hydro power, it Held/Ratio: Petition is DENIED. In this case, the Court ruled that the 120
was entitled to zero-percent (0%) VAT, as the sales of electric power to day period must be reckoned from the filing of the administrative claim.
National Power Corporation (NPC) qualified as zero-rated sales
pursuant to Section 108(B) (7) of the National Internal Revenue Code The 120 day period must be counted from the filing of the administrative
(NIRC). claim and not form the last submission of the complete documents.
In 2008, its purchase of goods and services amounted to
P35,467,773.00 on which the corresponding input VAT was NIRC provides:
P4,256,132.80. However, after deductions from its output tax due
Hedcor still had an unused or excess input VAT of P4, 217,955.84. Sec. 112. Refunds or Tax Credits of Input Tax.-
On December 28, 2009, it filed with the BIR an administrative claim for xxxx
the refund of excess and unused input VAT for Q2 of 2008 (C) Period within which Refund or Tax Credit of Input Taxes shall be
On March 23, 2010, it admittedly received from the BIR a Letter of made. In proper cases, the Commissioner shall grant a refund
Authority or request for the presentation of records. or issue the tax credit certificate for creditable input taxes within
Nevertheless, Hedcor filed on July 6, 2010 a Petition for Review one hundred twenty (120) days from the date of submission of
docketed as CTA Case No. 8129 because of its apprehension that the complete documents in support of the application filed in
two (2) years provided by law to file a judicial claim would lapse on 21 accordance with Subsection (A) hereof. In case of full or partial
July 2010 in view of the Atlas case. denial of the claim for tax refund or tax credit, or the failure on the
part of the Commissioner to act on the application within the
Hedcor then filed on October 29, 2010 a Motion for Leave to File
period prescribed above, the taxpayer affected may, within thirty
Supplemental Petition for Review. In its motion, it manifested that it had
(30) days from the receipt of the decision denying the claim or
submitted to the BIR on September 20, 2010 the last set of supporting
after the expiration of the one hundred twenty day period, appeal
documents related to its administrative claim for a refund.
the decision or the unacted claim with the Court of Tax Appeals.
Meanwhile, CIR filed a Motion to Dismiss on November 8, 2010 on the
ground of lack of jurisdiction. The CTA Second Division granted the
Pursuant to Section 112(C) of the NIRC, CIR had 120 days from the
motion and dismissed the Petition for being filed out of time.
date of submission of complete documents in support of the application
On appeal, following the disposition in Aichi case, the CTA en banc
within which to decide on the administrative claim. Thereafter, the
denied the Petition and ruled that the judicial claim had been filed out of
taxpayer affected by the CIR's decision or inaction may appeal to the
time. It held that, under Section 112( C) of the NIRC, the 120-day period
CTA within 30 days from the receipt of the decision or from the
for the BIR to act on the claim should be reckoned from December 28,
expiration of the 120-day period.
2009 or the date of filing of Hedcor's administrative claim with the tax
o Compliance with both periods is jurisdictional, considering
agency.
that the 30-day period to appeal to the CTA is dependent
on the 120-day period.
Issue/s:
o Strict compliance with the 120+30 day period is necessary
for a claim for a refund or credit of input VAT to prosper. An
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

exception to that mandatory period was, however, For claims to be filed by claimants with the respective
recognized in San Roque case during the period between investigating/processing office of the administrative agency, the
December 10, 2003, when BIR Ruling No. DA-489-03 was same shall be officially received only upon submission of complete
issued, and October 6, 2010, when the Court promulgated documents.
Aichi ruling declaring the 120+ 30 day period mandatory If we follow the assumptions of Hedcor, its administrative claim would
and jurisdictional, thus reversing BIR Ruling No.DA-489-03. only be considered as officially received on September 20, 2010, when it
o Even if the case at bar falls within the period of exception, allegedly filed its complete supporting documents. By that time, the
this is a situation of late filing, and not late filing. Hence, the period for filing an administrative application for a refund would have
exception will technically, not apply. already prescribed on June 30, 2010, or two (2) years from the close of
The lapse of the 120-day period is, by express provision of law, "deemed the taxable quarter when the relevant sales were made (June 30, 2008).
a denial" as in the case of Philex.
Considering that the administrative claim was filed on December 28, PILIPINAS TOTAL GAS INC v. CIR
2009, Hedcor had only until May 27, 2010 (counting 120+30 days) to [GR. No. 207112; Dec. 8, 2015]
appeal to the CTA the decision or inaction of the BIR. However, Hedcor Total Gas since prior to June 11, 2014, count from SUBMISSION of docs
belatedly filed its judicial claim with the CTA on 6 July 2010.
Hedcor insists, though, that it filed on September 20, 2010 the complete Recit-Ready:
documents supporting its administrative claim; the 120-day period Facts: On May 15, 2008, Total filed an administrative claim for the
should then be counted from that date. To prove its assertion, it attached refund. On August 28, 2008, Total submitted to the BIR additional
to the Supplemental Petition for Review a Transmittal Letter. documents. On January 23, 2009, Total elevated the case to the
The Court finds that the Transmittal Letter is not a substantial CTA.
submission that would warrant a change in the reckoning date for the
120-day period for the BIR to act on the claim for refund. The letter does The CTA dismissed the case citing that the case was prematurely
not even bear any stamp marking that would show that it was filed as the neccesary documents were incomplete; that the 120
legitimately received by the BIR. The only proof of receipt was a day period allowed to the CIR to decide on the claim under
signature, which was not even identified by Hedcor. Section 112 of the NRC has not started to run.
To allow Hedcor's allegations to prevail would set a dangerous
precedent, as the reckoning period for the 120 days would be at the With the CTA en banc, the case was again dismissed reiterating
mercy of taxpayers. They will then submit complete supporting the decision of the Division. The en banc also stated that the
documents even after the two-year prescriptive period for filing an reckoning point of the 120 day period was on May 2008 thus the
administrative claim has lapsed. petition filed on January 2009 was considered belatedly filed.
Hedcor contends that pursuant to Revenue Memorandum Circular
(RMC) No. 49-2003, the 120 day period must be counted from receipt of Issue/s:
the complete documents. WON the claim has prescribed. NO
Granting arguendo that the 120-day period should commence to run only
upon receipt of the Transmittal Letter, Hedcor's judicial claim must still Held: This rule applies to Total: Prior to June 11, 2014, the rule is,
fail. RMC No. 49-2003 provides: from the date an administrative claim for excess unutilized VAT is
A-18 xxx filed, a taxpayer has 30 days to submit supporting documents,
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

unless granted further extension by the BIR. Upon filing by the The NIRC provides that the CIR has 120 days from the date of
taxpayer of his complete documents, or expiration of the period submission of complete documents to decide on the claim for tax credits.
given, the BIR has 120 days to decide the claim for tax refund. Upon inaction of the BIR after 120 days, the taxpayer may, within 30
days, appeal on the CTA.
Note: (Does not apply to Total, since prospective) However, RMC No. 54- The BIR did not give notice to Total with regard to the documents
2014 issued on June 11, 2014 now requires that the claimant has submitted on August 2008. Thus the counting of the 120 day period
to submit complete supporting documents upon filing of the should start from August 2008 or when Total made its submission of
administrative claim. Thus, the reckoning of the 120-day period complete documents to support its application. The BIR had until
has been removed. It is now required that at the time the December 2008 to decide. Because of the BIR's inaction, Total had until
taxpayer files his administrative claim, he has to complete his January 25, 2009 to file their judicial claim.
supporting documents and attest that he will no longer submit any Prior to June 11, 2014, the rule is, from the date an administrative claim
other documents to prove his claim. A decision shall be rendered for excess unutilized VAT is filed, a taxpayer has 30 days to submit
by the Commissioner based only on the documents submitted. supporting documents, unless granted further extension by the BIR.
The 120-day period should be counted from filing of the Upon filing by the taxpayer of his complete documents, or expiration of
administrative claim. the period given, the BIR has 120 days to decide the claim for tax
refund.
However, RMC No. 54-2014 issued on June 11, 2014 now requires that
Facts: the claimant has to submit complete supporting documents upon filing of
Total Gas filed its Amended Quarterly VAT Returns. Total claims that the administrative claim. Thus, the reckoning of the 120-day period has
they incurred unused input VAT credits. been removed. It is now required that at the time the taxpayer files his
On May 15, 2008, Total filed an administrative claim for the refund. On administrative claim, he has to complete his supporting documents and
August 28, 2008, Total submitted to the BIR additional documents. On attest that he will no longer submit any other documents to prove his
January 23, 2009, Total elevated the case to the CTA. claim. A decision shall be rendered by the Commissioner based only on
The CTA dismissed the case citing that the case was prematurely filed the documents submitted. The 120-day period should be counted from
as the neccesary documents were incomplete; that the 120 day period filing of the administrative claim.
allowed to the CIR to decide on the claim under Section 112 of the NRC
has not started to run. CIR v. AIR LIQUIDE PH (ALPI) (Tuazon)
With the CTA en banc, the case was again dismissed reiterating the [GR. No. 210646; July 29, 2015]
decision of the Division. The en banc also stated that the reckoning point From December 10, 2003 up to October 6, 2010 (Aichi), taxpayer can rely
of the 120 day period was on May 2008 thus the petition filed on January on BIR Ruling DA-489-03; No need to invoke ruling to benefit from it;
2009 was considered belatedly filed. General interpretative rule

Issue: WON the claim has prescried. NO Recit-Ready:


Facts: ALPI filed its judicial claim for VAT credit certificate on December
Held/Ratio: 29, 2009. It claims that there was no need for it to wait for the
lapse of 120 days prescribed in Section 112 (c) before it can seek
The SC held that Total timely filed its judicial claim on January 2009. a judicial relief with CTA, in line with the San Roque Ruling which
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

held that all taxpayers can rely on BIR Ruling DA-489-03 from the attributable to its transactions with PEZA-registered enterprises for the
time of its issuance on December 10, 2003 up to its reversal by 4th quarter of 2007.
this Court in Aichi on October 6, 2010, where it was held that the On December 29, 2009, or only six (6) days later, ALPI filed its petition
120+30-day periods are mandatory and jurisdictional. CIR for review with the CTA Division, without awaiting the resolution of its
asserted, however, that ALPI cannot invoke the exception from application for tax credit certificate or the expiration of the 120-day
the San Roque Ruling as it did not particularly allege said BIR period under Section 112(C) of the National Internal Revenue Code
Ruling in its petition before the CTA. (NIRC).
ALPI says: it falls under exception in San Roque Ruling which held that
Issue/s: all taxpayers can rely on BIR Ruling DA-489-03 from the time of its
WON there is a need for a taxpayer to specifically invoke BIR Ruling issuance on December 10, 2003 up to its reversal by this Court in Aichi
No. DA-489-03 to benefit from the same?. - NO on October 6, 2010, where it was held that the 120+30-day periods are
mandatory and jurisdictional
Held: Indeed, BIR Ruling No. DA-489-03 is a general interpretative law CIR says: ALPI cannot invoke the exception from the San Roque Ruling
and it applies to each and every taxpayer. To subscribe to the as it did not particularly allege said BIR Ruling in its petition before the
contention of the CIR would alter the Court's ruling in San Roque. CTA.
It will lead to an unreasonable classification of the beneficiaries of
BIR Ruling No. DA-489-03 and further complicate the doctrine. Issue: WON there is a need for a taxpayer to specifically invoke BIR
ALPI cannot be faulted for not specifically invoking BIR Ruling Ruling No. DA-489-03 to benefit from the same?. - NO
No. DA-489-03 as the rules for its application were not definite
until the San Roque case was promulgated. In the furtherance of Held/Ratio:
the doctrinal pronouncements in San Roque, the better approach
would be to apply BIR Ruling No. DA-489-03 to all taxpayers who To reiterate, San Roque, held that BIR Ruling No. DA-489-03 was a
filed their judicial claim for VAT refund within the period of general interpretative rule because it was a response to a query made,
exception from December 10, 2003 to October 6, 2010. Case not by a particular taxpayer, but by a government agency tasked with
remanded to CTA. processing tax refunds and credits. Thus, it applies to all taxpayers alike,
and not only to one particular taxpayer.
Facts: The Court agrees with ALPI in its survey of cases which shows that BIR
Respondent Air Liquide Philippines, Inc. (ALPI) is a domestic corporation Ruling No. DA-489-03 was applied even though the taxpayer did not
registered with the Bureau of Internal Revenue (BIR) as a Value-Added specifically invoke the same. As long as the judicial claim was filed
Tax (VAT) entity. It sells chemical products and renders certain related between December 10, 2003 and October 6, 2010, then the taxpayer
services to the Philippine Economic Zone Authority (PEZA) enterprises. would not be required to wait for the lapse of 120-day period. This
On January 22, 2008, ALPI filed with the BIR its Quarterly VAT Return doctrine has been consistently upheld in the recent decisions of the
for the 4th quarter of 2007. Court.
Subsequently, on December 23, 2009, ALPI filed with petitioner On the other hand, in Nippon Express v. CIR, Applied Food Ingredients
Commissioner of Internal Revenue (CIR), through BIR Revenue District v. CIR and Silicon Philippines v. CIR, the taxpayer did not benefit from
Office (RDO) No. 121, an application for issuance of a tax credit BIR Ruling No. DA-489-03 because they filed their precipitate judicial
certificate for its unutilized input VAT in the amount of P23,254,465.64 claim before December 10, 2003.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Indeed, BIR Ruling No. DA-489-03 is a general interpretative law and it 12,741,136.81 representing excess and unutilized input VAT for the
applies to each and every taxpayer. To subscribe to the contention of the year 2002 and 2003. NO, it is not
CIR would alter the Court's ruling in San Roque. It will lead to an
unreasonable classification of the beneficiaries of BIR Ruling No. DA- Held:
489-03 and further complicate the doctrine. ALPI cannot be faulted for (1) No it did not pursuant to Section 112 of the NIRC, Refunds or Tax
not specifically invoking BIR Ruling No. DA-489-03 as the rules for its Credits must be made within 120 days from the date of
application were not definite until the San Roque case was promulgated. submission of complete documents in support of the application
In the furtherance of the doctrinal pronouncements in San Roque, the filed in accordance with the rules (see ruling below-
better approach would be to apply BIR Ruling No. DA-489-03 to all comprehensive). In the case of San Roque the court ruled that:
taxpayers who filed their judicial claim for VAT refund within the period of One of the conditions for a judicial claim of refund or credit under
exception from December 10, 2003 to October 6, 2010. the VAT System is compliance with the 120+30-day mandatory
Consequently, this case must be remanded to the CTA Division for the and jurisdictional periods. Thus, strict compliance with the
proper determination of the refundable or creditable amount due to ALPI, 120+30 day periods is necessary for such a claim to prosper,
if any. whether before, during, or after the effectivity of the Atlas
doctrine.
Applying this doctrine only the TCC applied for during 2004 may
be taken to effect and not the 2003
MIRAMAR FISH COMPANY v. CIR (FajardoRK) (2) No, it did not comply with the requirements set under the law.
Well-settled is the rule that absence or non-printing of the word
[G.R. No. 185432; June 4, 2014]
zero-rated in petitioners invoices is fatal to its claim for the
120+30 day rule is mandatory for the filing of refund or tax credit claims
refund and/or tax credit representing its unutilized input VAT
attributable to its zero-rated sales.
Recit-Ready:
Facts: Petitioner Miramar is a corporation with a place of business in
Zamboanga. It is registered with the CIR as a VAT taxpayerin FACTS:
accordance with the NIRC. It filed for refund in the form of Tax Petitioner Miramar is a corporation organized under the law of the
Credit Claim for alleged unutilized input VAT with a total amount Philippines with their principal office at Zambaonga City. It is
of 12,741,136.81 PHP during 2003 and 2004. The CTA division registered with the CIR as a VAT taxpayer in accordance with the
denied due course to their claim stating that the sales invoices NIRC.
presented did not comply with the invoicing requirements under Petitioner was registered with the Board of Investment (BOI) as a
the NIRC and RR. The CTA en banc affirmed in toto the decision new export producer of canned tuna and canned pet food with non-
of the divison. pioneer status, having been issued BOI Cert. of Registration.
Petitioner filed its quarterly VAT returns for taxable year 2002 with
Issue/s: the BIR for 2002-2003.
(1) Whether or not the CTA properly acquired jurisdiction over The administrative claim for refund in the form of a TCC (Tax Credit
petitioners claim for taxable years 2002 and 2003. Only on the filing Claim) of petitioners alleged unutilized input VAT in the amount of
of claim during 2003 NOT 2002 6,751,751.65 for taxable year 2002 was filed on Feb 2003.
(2) Whether or not petitioner is entitled to a TCC in the amount of Petitioner also filed quarterly VAT returns for 2003. An
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

administrative claim for refund in the form of a TCC of unutilized Revenue in cases involving disputed assessments, refunds of internal
input VAT in the amount of 5,895,912.38 PHP for taxable year 2003 revenue taxes, fees, or other charger, penalties imposed in relation
was filed on 2004. thereto, or other matter arising under the NIRC or other law or part of
Another admin claim for refund or issuance of a TCC in the amount law administered by the BIR.
of 12,741,136.81 PHP was filed on 2004.
Consequently, no action has been taken by respondent on Relative thereto, is Section 11 which states those who may
petitioners various administrative claims, latter filed a review before appealAny person, association or corporationmay file an appeal in
the CTA on March 2004. the CTA within 30 days after the receipt of such decision or ruling.
The CTA division on October 22 2007 denied due course to their
claims one the ground that the sales invoices presented did not The timeliness in the administrative and judicial claims can be
comply with the invoicing requirements under Section 113 of the found in Section 112 of the NIRC of 1997:
NIRC and Section 4.108-1 of RR No. 7-95by not imprinting the SEC. 112. Refunds or Tax Credits of Input Tax. (A) Zero-rated or
word zero-rated on the subject invoices or receipts were fatal to its Effectively Zero-rated Sales.Any VAT-registered person, whose
claim. sales are zero-rated or effectively zero- rated may, within two (2)
On Feb 19, 2008 the CTA division denied petitioners MR. years after the close of the taxable quarter when the sales were
Aggrieved, the appealed to the CTA en banc under Sec. 18 R.A. made, apply for the issuance of a tax credit certificate or refund of
1125, amended by R.A. 9282, on April 2008. creditable input tax due or paid attributable to such sales, except
The CTA on November 18, 2008 dismissed their appeal since they transitional input tax, to the extent that such input tax has not been
are just mere reiteration of its arguments contained in the MR and applied against output tax:
affirmed the decision of the division.
xxx
Hence, petitioner filed this petition for review seeking the reversal of
the decision and constituting a departure from the accepted and
(D)Period within which Refund or Tax Credit of Input Taxes shall be
usual course of judicial proceedings as to call for an exercise of the
Made.In proper cases, the Com-missioner shall grant a refund or
power of supervision.
issue the tax credit certificate for creditable input taxes within one
hundred twenty (120) days from the date of submission of
ISSUE:
complete documents in support of the application filed in
(1) Whether or not the CTA properly acquired jurisdiction over
accordance with Subsections (A) hereof.
petitioners claim for taxable years 2002 and 2003. Only on the filing of
claim during 2003 NOT 2002
In case of full or partial denial of the claim for tax refund or tax credit, or
(2) Whether or not petitioner is entitled to a TCC in the amount of
the failure on the part of the Commissioner to act on the application
12,741,136.81 representing excess and unutilized input VAT for the year
within the period prescribed above, the taxpayer affected may, within
2002 and 2003. NO, it is not
thirty (30) days from the receipt of the decision denying the claim or
after the expiration of the one hundred twenty-day period, appeal the
HELD:
decision or the unacted claim with the Court of Tax Appeals.
Section 7 of RA No. 1125 amended by R.A. 9282 clearly defined
the appellate jurisdiction of the CTA. Section 7 defines the jurisdiction
The proper interpretation of the provision was settled in the San Roque
of the CTA that provides: (1) Decisions of the Collector of Internal
case:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

To repeat, a claim for tax refund or credit, like a claim for tax refund exception to the mandatory and jurisdictional 120+30 day
exemption, is construed strictly against the taxpayer. One of the conditions periods.
for a judicial claim of refund or credit under the VAT System is compliance
with the 120+30-day mandatory and jurisdictional periods. Thus, strict A taxpayer-claimant only had a limited period of 30 days from the
compliance with the 120+30 day periods is necessary for such a claim expiration of the 120-day period of inaction of the CIR to file its judicial claim
to prosper, whether before, during, or after the effectivity of the Atlas with the CTA, with the exception of claims made during the effectivity of the
doctrine, except for the period from the issuance of BIR Ruling No. BIR Ruling No. DA-489-03.
DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi Failure to do so, the judicial claim shall prescribe or be considered as
doctrine was adopted, which again reinstated the 120+30 day periods filed out of time.
as mandatory and jurisdictional. Applying the doctrine, petitioner complied with the required two-year
period within which to file a refund/tax credit claim with the BIR by filing on
The said doctrine was reiterated in the case of Mindanao II Feb 24, 2003 and March 25, 2004.
Geothermal Partnership v. CIR, We summarize the rules on the However, their judicial claim insofar as to the 4 quarters of
determination of the prescriptive period for filing a tax refund or credit of taxable year 2002 was filed beyond the 30-day period.
unutilized input VAT as provided in Section 112 of the 1997 Tax Code, Section 112(D) states that in case of failure on the part of
as follows: respondent to act on the application within the 120-day
period prescribed by law, petitioner only has 30 days after
(1) An administrative claim must be filed with the CIR within two the expiration of the 120-day period to appeal the uncaught
years after the close of the taxable quarter when the zero-rated or claim with the CTA.
effectively zero-rated sales were made. Since petitioners claim for 2002 was filed before the CTA only on March
30, 2004, which was beyond the mandatory 120+30 days to seek judicial
(2) The CIR has 120 days from the date of submission of complete recourse, such noncompliance is fatal to its refund claim on the ground
documents in support of the administrative claim within which to prescription.
decide whether to grant a refund or issue a tax credit certificate. The Petitioner tried to justify the timeliness of its claim for taxable year 2002,
120-day period may extend beyond the two-year period from the petitioner made it appear in its letter dated March 2004 that there has been
filing of the administrative claim if the claim is filed in the later part of an amendment on its administrative claim covering year 2002.
the two-year period. If the 120-day period expires without any However, we are not persuaded by such allegation considering that
decision from the CIR, then the administrative claim may be there was supposed difference in the amounts being claimed for refund in
considered to be denied by inaction. the Letter of Request for VAT claim dated Feb 24, 2003 and letter dated
March 2004, a scrutiny of the subject letter reveals that both rely on the
(3) A judicial claim must be filed with the CTA within 30 days figures reflected in the VAT returns filed for 2002.
from the receipt of the CIRs decision denying the The transmittal receipts attached to the letter visibly shows that it has
administrative claim or from the expiration of the 120-day submitted various documents in support of its 2002 claim including a copy of
period without any action from the CIR. the VAT return for 2002.
The court cannot consider the subsequent letter on March 2004 to have
(4) All taxpayers, however, can rely on BIR Ruling No. DA-489- amended the previous one covering its refund claim for taxable year 2002.
03 from the time of its issuance on 10 December 2003 up to its Thus, petitioner failed to observe the 30-day period under Section 112 of
reversal by this Court in Aichi on 6 October 2010, as an the NIRC of 1997 through its belated filing of the petitioner for review before
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

the CTA and warrants a dismissal with prejudice for lack of jurisdiction. immediate denial of the claim.
However, this court allowed the amendment of petitioners refund claim
covering taxable year 2003 contained in the March 25, 2004 letter since
GIBBS v. CIR (GO)
there was a statement that there were amended quarterly VAT returns filed
[GR. No. L-13453; February 29, 1960]
on March 12, 2004.
30 days lang binigay sayo, gusto mo 10 months, pwede pa rin???
Even if it is shown that petitioner did not strictly comply with the
mandatory 12-+30 day prescriptive periods under Section 112 of the NIRC,
Recit-Ready:
its administrative claim covering taxable year 2003 falls within the effectivity
Facts: Petitioners paid an assessment under protest and filed a claim for
of BIR Ruling No. DA-489-03, being an exception. Hence, there is no more
refund with the CIR, which was later denied. Ten months after
need for petitioner to wait for the 120-day period to expire before it can file its
the denial, they filed a petition for review with the CTA. The CIR
appropriate judicial claim before the CTA. Accordingly, the CTA indeed
filed a motion to dismiss, stating that it was filed beyond the 30-
acquired jurisdiction over petitioners refund claim for taxable year 2003.
day period provided for in Sec. 11 of R.A. 1125. The petitioners
counter the motion to dismiss, arguing that according to Sec. 306
(2) Section 4.108-1 of RR No. 7-95 states that:
of the NIRC, they have two years to file the appeal.
Invoicing Requirements.All VAT--registered persons shall, for
Issue:
every sale or lease of goods or properties or services, issue duly
WON the petition for review was filed out of time (YES)
registered receipts or sales or commercial invoices which must show:
(1) The name, TIN and address of seller
Held: In ruling for the CIR, the Court noted that both laws must be
(2) Date of Transaction
construed together. A taxpayer who has paid the tax and who is
(3) Quantity, unit cost and description of merchandise or nature of
claiming a refund must file a claim for refund with the CIR within 2
service;
years from the date of his payment of the tax, and appeal to the
(4) The name, TIN, business style, if any, and address of the VAT-
CTA within 30 days from receipt of the CIR's decision. If,
registered purchaser, customer or client;
however, the CIR takes time in deciding the claim, and the period
(5) The word zero-rate imprinted on the invoice covering zero-rated
of two years is about to end, the suit or proceeding must be
sales;
started in the CTA before the end of the two-year period without
(6) The invoice value or consideration
awaiting the decision of the Collector.
Well-settled is the rule that absence or non-printing of the word zero-
rated in petitioners invoices is fatal to its claim for the refund and/or tax Basically, a taxpayer has 2 years to file the administrative
credit representing its unutilized input VAT attributable to its zero-rated sales claim with the CIR. If the CIR decides, then he has 30 days to
(Panasonic Communications Imaging Corporation v. CIR). appeal from that decision or inaction with the CTA. In this
case, since the CIR already denied the request, then the
Equally essential, Section 113 of the NIRC that categorically provides that petitioners only had 30 days to appeal that decision.
a VAT_registered entity, like petitioner, shall issue a duly registered VAT
invoice or official receipt, which must contain a statement that the seller is a Facts:
VAT-registered person. Therefore, invoking requirement is mandatory which On March 14, 1956, petitioners protested the deficiency income tax
petitioner failed to do. Absence, compliance the unavoidable result is assessment in the amount of P12,284, exclusive of surcharge and
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

interest, for the year 1950, issued against them by the CIR, on the ground It is not disputed that petitioners received on Nov. 14, 1956, the
that said deficiency assessment was based on a disallowance of bad notice of the CIRs decision denying their request for a refund of
debts and losses claimed in their income tax return for 1950. the deficiency assessment paid by them.
On Aug. 28, 1956, the CIR rejected the protest and reiterated his Pursuant to Sec. 11, they had 30 days from said date within
demand. which to file their appeal. However, they filed said appeal only
On Oct. 3, 1956, petitioners sent a check in the amount of P12,284 as on Sept. 27, 1957, or more than 10 months thereafter, much
payment of the deficiency tax, at the same time demanding the beyond the 30-day period within which to file the same.
immediate refund of the amount paid. Petitioners reliance on Sec. 306 of the NIRC 5 is misplaced.
On Oct. 26, 1956, the CIR denied the request for refund. The petitioners It has been held in Johnston Lumber Co. vs. CTA that Sec. 11
received the notice of denial on Nov. 14, 1956. of R.A. 1125 was intended to cope with a situation where the
Petitioners then filed with the CTA a petition for review and refund on taxpayer, elects to appeal to the CTA instead of paying the tax.
Sept. 27, 1957 (10 months after receiving the notice of denial of refund). For this reason, Sec. 11, provides that no such appeal would
The CIR filed a motion to dismiss on the ground of filing out of time suspend the payment of the tax demanded by the Government,
beyond the 30-day period provided in R.A. 1125. unless for special reasons, the CTA would deem it fit to restrain
The petitioners contend that according the Sec. 306 of the NIRC, judicial said collection. On the other hand, Sec. 306 of the NIRC
proceedings may be instituted for recovery of taxes paid, within two years contemplates of a case wherein the taxpayer paid the tax,
from payment. whether under protest or not, and later on decides to go to court
for its recovery. Where payment has already been made and
Issue: the taxpayer is merely asking for its refund, he must first
WON the petition for review was filed out of time file with the Collector a claim for refund before taking the
YES matter to the Court, and that appeals from decisions or
rulings of the Collector of Internal Revenue to the Court of
Held/Ratio: Tax Appeals must always be perfected within 30 days from
YES. According to Sec. 11 of R.A. 1125 4, appeals may be filed with the receipt.
CTA within 30 days after the receipt of the decision or ruling being The SC has held that these two laws must be construed
questioned. together. A taxpayer who has paid the tax, whether under
protest or not, and who is claiming a refund, must comply with
the requirements of both sections, that is, he must file a
4
Section 11. Who may appeal; effect of appeal. - Any person association or corporation
adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector claim for refund with the CIR within 2 years from the date of
of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the his payment of the tax, as required by Sec. 306 of the NIRC,
Court of Tax Appeals within thirty days after the receipt of such decision or ruling.

No appeal taken by the Court of Appeals from the decision of the Collector of Internal
5
SEC. 306. Recovery of tax erroneously or illegally collected.- No suit or proceeding
Revenue or the Collector of Customs shall suspend the payment, levy, distraint, and or sale shall be maintained in any court for the recovery of any national internal-revenue tax
of any property of the taxpayer for the satisfaction of his tax liability as provided by existing hereafter alleged to have been erroneously or illegally assessed or collected, or of any
law; Provided, however, That when in the opinion of the Court the collection by the Bureau penalty claimed to have been collected without authority, or of any sum alleged to have
of Internal Revenue or the Commissioner of Customs may jeopardize the interest of the been excessive or in any manner wrongfully collected, until a claim for refund or credit has
Government and/or the taxpayer the Court at any stage of the proceeding may suspend the been duly filed with the Collector of Internal Revenue; but such suit or proceeding may be
said collection and require the taxpayer either to deposit the amount claimed or to file a maintained, whether or not such tax penalty, or sum has been paid under protest or duress.
surety bond for not more than double the amount with the Court It any case, no such suit or proceeding shall be begun after the expiration of two years from
the date of payment of the tax or penalty.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

and appeal to the CTA within 30 days from receipt of the entitled to a refund. BIR denied his claim for refund and
CIR's decision. subsequently considered the transfer of 12,500 shares of stock
If, however, the CIR takes time in deciding the claim, and the of La Tondea Inc. to be a transfer in contemplation of death
and assessed against him the sum of P191,591.62 as estate
period of two years is about to end, the suit or proceeding
and inheritance taxes on the transfer of said 12,500 shares of
must be started in the CTA before the end of the two-year stock. Palanca paid the amount of P60,581.80 as interest. He
period without awaiting the decision of the CIR. This is so once more filed an amended income tax return claiming, in
because of the positive requirement of Sec. 306 and the addition to the interest deduction of P9,076.45 appearing in his
doctrine that delay of the Collector in rendering decisions does original return, a deduction in the amount of P60,581.80,
not extend the peremptory period fixed by the statute. representing interest on the estate and inheritance taxes on the
12,500 shares of stock. He requested the refund of P20,624.01.
In the case of a taxpayer who has not yet paid the tax and who
The CIR claims that a tax is not an indebtedness and therefore it
is protesting the assessment made by the CIR, he must file his cannot be deducted. It further alleged that Palancas claim has
appeal with the CTA within 30 days from his receipt of the already prescribed.
CIR's assessment, as required by Sec. 11 of R.A. 1125.
Otherwise, his failure to comply with said statutory requirement Issue/s:
would bar his appeal and deprive the CTA of its jurisdiction to 1) WON the taxes paid are considered as indebtedness - YES
entertain or determine the same. 2) WON Palancas claim is barred by prescription - NO

CIR v PALANCA (Guzman) Held:


[GR. No. L-16626; October 29, 1966] 1) Yes. While "taxes" and "debts" are distinguishable legal concepts, in
computation of the two-year prescriptive period for a claim for refund should certain cases as in the suit at bar, on account of their nature, the
be from the date of the last installment distinction becomes inconsequential. The term "debt" is properly used
in a comprehensive sense as embracing not merely money due by
Recit-Ready: contract, but whatever one is bound to render to another, either for
contract or the requirements of the law. Where statutes impose a
Facts: Palanca received through a donation from his father, Palanca, personal liability for a tax, the tax becomes at least in a broad sense,
Sr., shares of stock in La Tondea, Inc. amounting to 12,500 a debt. Although taxes already due have not, strictly speaking, the
shares. For failure to file a return on the donation within the same concept as debts, they are, however obligations that may be
statutory period, Palanca was assessed the sums of considered as such.
P97,691.23, P24,442.81 and P47,868.70 as gift tax, 25% 2) Palanca paid the last installment on his 1955 income tax account on
surcharge and interest, respectively, which were duly paid.
August 14, 1956. His claim for refund of the alleged overpayment on it
March 1, 1956, Palanca filed with the BIR his income tax return
for the calendar year 1955. Subsequently, on November 10, was filed with the court on August 13, 1958. It was, therefore, still
1956, he filed an amended return claiming a deduction in the timely instituted as the law provides a 2-year prescriptive period after
amount of P47,868.70 representing interest paid on the donee's the date of last installment.
gift tax. The claim for deduction was based on the provisions of
Section 30(b) (1) of the Tax Code, which authorizes the Facts:
deduction from gross income of interest paid within the taxable
Palanca received through a donation from his father, Palanca, Sr., shares
year on indebtedness. Under his claim for deduction, he alleges
that he had incurred overpayment of taxes; therefore, he is of stock in La Tondea, Inc. amounting to 12,500 shares. For failure to
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

file a return on the donation within the statutory period, Palanca was No. 677395 dated May 11, 1956 may no longer be refunded since the
assessed the sums of P97,691.23, P24,442.81 and P47,868.70 as gift claim therefor was filed in court only on August 13, 1958, or beyond two
tax, 25% surcharge and interest, respectively, which were duly paid. years of their payment
Subsequently, on November 10, 1956, the petitioner filed an amended
return for the calendar year 1955, claiming therein an additional Issue/s:
deduction in the amount of P47,868.70 representing interest paid on the 1) WON the taxes paid are considered as indebtedness - YES
donee's gift tax, thereby reporting a taxable net income of P18,113.42 2) WON Palancas claim is barred by prescription - NO
and a tax due thereon in the sum of P3,167.00.
A claim for the refund of alleged overpaid income taxes for the year 1955
amounting to P17,885.01, which is the difference between the amount of Held/Ratio:
P21,052.01 he paid as income taxes under his original return and of 1) While "taxes" and "debts" are distinguishable legal concepts in certain
P3,167.00, was filed together with this amended return. In a cases as in the suit at bar, on account of their nature, the distinction
communication dated June 20, 1957, the respondent (BIR) denied the becomes inconsequential. The term "debt" is properly used in a
claim for refund. comprehensive sense as embracing not merely money due by contract,
BIR denied his claim for refund and subsequently considered the transfer but whatever one is bound to render to another, either for contract or the
of 12,500 shares of stock of La Tondea Inc. to be a transfer in requirements of the law. Where statutes impose a personal liability for a
contemplation of death and assessed against him the sum of tax, the tax becomes at least in a broad sense, a debt. Although taxes
P191,591.62 as estate and inheritance taxes on the transfer of said already due have not, strictly speaking, the same concept as debts, they
12,500 shares of stock are, however obligations that may be considered as such. The interests
The amount of P17,002.74 paid on June 22, 1955 by the petitioner as gift on taxes should be considered as interests on indebtedness within the
tax, including interest and surcharge was applied to his estate and meaning of Section 30(b) (1) of the Tax Code. The interpretation we
inheritance tax liability. On the tax liability of P191,591.62, the petitioner have placed upon the said section was predicated on the congressional
paid the amount of P60,581.80 as interest for delinquency. intent, not on the nature of the tax for which the interest was paid.
On August 12, 1958, the petitioner once more filed an amended income
tax return for the calendar year 1955, claiming, in addition to the interest 2) The claim at bar refers to the alleged overpayment by respondent
deduction of P9,076.45 appearing in his original return, a deduction in the Palanca of his 1955 income tax. Inasmuch as the said account was paid
amount of P60,581.80, representing interest on the estate and by him by installment, then the computation of the two-year prescriptive
inheritance taxes on the 12,500 shares of stock, thereby reporting a net period, under Section 306 of the National Internal Revenue Code, should
taxable income for 1955 in the amount of P5,400.32 and an income tax be from the date of the last installment. Palanca paid the last installment
due thereon in the sum of P428.00. Attached to this amended return was on his 1955 income tax account on August 14, 1956. His claim for refund
a letter of the petitioner, dated August 11, 1958, wherein he requested of the alleged overpayment on it was filed with the court on August 13,
the refund of P20,624.01 which is the difference between the amounts of 1958. It was, therefore, still timely instituted.
P21,052.01 he paid as income tax under his original return and of
P428.00. GIBBS v. CIR (Layno)
The CIR claims that a tax is not an indebtedness and therefore it cannot [GR. No. L-17406; Nov. 29, 1965]
be deducted. It also invokes prescription, at least with respect to the sum The period to claim for refund has expired. You shouldve filed a claim for
of P17,112.21, paid by Palanca under his withheld tax and under Receipt refund within two years from payment of tax AND appealed to the CTA
30days from receipt of ruling denying your claim.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

fixed by the statute


Recit-Ready:
Facts: Herein petitioners contest the denial of the claim for refund of the
CIR regarding their deficiency income tax. CIR first sent a letter to Facts:
Allison Gibbs telling her to pay the deficiency income tax of her On February 6, 1965, the respondent CIR issued against the petitioners,
and that of his brothers in the States. To this she sent a response "Finley J. Gibbs and Diane P. Gibbs, c/o Francisco Collantes, Rm. 301,
saying she will and that she attached a check with it to answer Cepoc Bldg., Dasmarias, Manila" a deficiency Income Tax Assessment
the payment. However, also in that same letter she said that she for P16,873.00 for the tax year 1950 with the demand that the said
is demanding a refund for reasons heretofore given to you. She amount should be paid on or before March 15, 1956. On March 14, 1956,
sent this letter on the thinking that the letter sent by CIR was Allison J. Gibbs, signing as attorney-in-fact for Finley J. Gibbs, his
already a final demand. However, eventually she denied receiving brother, acknowledged receipt of the above assessment notice and
this. The claim for refund was denied by CIR saying that there notified the respondent Commissioner that Finley J. Gibbs was then living
was no justifiable basis for it. She filed a petition for review in the in Atherton, California, with office at 200 Bush Street, San Francisco and
CTA which ruled in favor of CIR. that the latter was notified by him of the said deficiency assessment. In
the same letter, Allison J. Gibbs questioned the disallowance of the items
Issue/s: which gave rise to the deficiency assessment and requested for a
1) WON respondent court erred in saying that Gibbs can no longer correction of it. On August 26, 1956, however, the respondent
claim for refund? Commissioner denied the request.
A letter was sent to Gibbs which states in part, In view of the foregoing,
Held: 1) No it did not. Gibbs was not able to file the claim on time. As you are hereby requested for the last time to pay the said amount of
held by the Court in a previous case, Section 306 of the National P12,284.00 exclusive of surcharge and interest, to the City Treasurer,
Internal Revenue Code should be construed together with Manila, within ten (10) days from your receipt hereof in order that this
Section 11 of Republic Act No. 1125. In fine, a taxpayer who has case may be closed (this one is for Allisons own income tax). You are
paid the tax, whether under protest or not, and who is claiming a further requested to urge your brother to pay the abovementioned amount
refund of the same, must comply with the requirement of both immediately upon your receipt hereof in order that his case may also be
sections, that is, he must file a claim for refund with the Collector closed.
of Internal Revenue within 2 years from the date of his payment Allison deemed the reply of CIR as a final decision, hence she wrote back
of the tax, as required by Sec. 306 of the NIRC, AND appeal to saying that it was contrary to law and that just so she can show good faith
the Court of Tax Appeals within 30 days from receipt of the on her part, she attached a check drawn on the Chartered Bank of India,
Collector's decision or ruling denying his claim for refund, as Australia & China as full payment for the deficiency assessment.
required by Section 11 of Republic Act No. 1125. If, however, However (I dunno how) at the same time, she demanded refund of the
the Collector takes time in deciding the claim, and the period same payment for reasons heretofore given to you. She also demanded
of two years is about to end, the suit or proceeding must be that she should receive it on or before the fourth of October otherwise she
started in the Court of Tax Appeals before the end of the will file a Petition for Review with the CTA and charge CIR with damages.
two-year period without awaiting the decision of the Commissioner denied the refund for both tax liabilities (Allisonss and
Collector. This is so because of the positive requirement of her brothers) because theres no justifiable basis for it.
Section 306 and the doctrine that delay of the Collector in On September 29, 1958, Allison J. Gibbs, signing as counsel for Finley J.
rendering decision does not extend the peremptory period Gibbs, wrote another letter addressed to the respondent Commissioner to
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

"reiterate our client's demand for refund of the P16,873.00 he paid on 1) No. Anent the insistence of the petitioners that they never received a copy
October 3, 1956 and for certain tax credits. of the letter of October 26, 1956 denying their claim for refund, suffice it to
Petitioners filed with the respondent court a "Petition for Review and say that while they themselves personally might not have received a copy of
Refund of Income Tax with Motion for Suspension of Collection of it, Allison J. Gibbs, as their attorney-in-fact and actually as their counsel,
Additional Taxes," alleging, in the main, its claims for refund and tax received a copy of the same. That Allison J. Gibbs was not merely the agent
credit discussed above. To this petition, the respondent Commissioner of the petitioners in the matter under litigation is proved by her
filed an Answer saying that 1) CTA had no jurisdiction to take judicial acknowledging of the petitioners receipt of the deficiency income tax
cognizance of the petition for review on the ground that it was filed assessment, formally protested the same in writing, paid the assessment and
beyond thirty days from the date of receipt of respondent's decision likewise formally demanded in writing its refund.
denying the claim for refund; and 2) no jurisdiction over the cause of 2) Yes. Petitioners' claim that the letter of October 26, 1956 was not a denial
action with respect to the credit of the amounts stated in the petition for of their claim for refund is patently unmeritorious. The letter in question
review for the reason that the request for credit and the petition for review clearly stated that "for reasons stated in our letter dated August 28, 1956,
praying for the credit of said amounts have been filed beyond two (2) this Office finds no justifiable basis to grant your said request." Considering
years from the dates of payment of the amounts sought to be credited in that even Allison J. Gibbs deemed the August 28, 1956 correspondence as
the petition for review. the Commissioner's "final decision" on the controversy, it is difficult to see
The respondent court, after due hearing and reception of evidence, how the petitioners can now argue that the said letter of October 26, 1956,
sustained the above objection to its jurisdiction and upheld the was not a denial of their claim for refund. Parenthetically, it may be observed
respondent Commissioner's claim that the two causes of action asserted that respondent court had no jurisdiction over the petition for review because
by the petitioner were barred by prescription. it was filed beyond the 30-day period.
The petitioners contend that the respondent court erred in ruling that their 3) The petitioners' thesis is to the effect that income tax assessments against
petition for review was filed outside the 30-day period prescribed by which claims for refund have been lodged and which are covered by taxes
Section 8 of Republic Act No. 1125 because (a) there is neither evidence withheld at the source shall be considered paid, not at the time such tax
nor record that the petitioners received a copy of the letter of October 26, obligations fall due, but, only when the claims for refund against the
1956 denying their claim for refund, and (b) the aforesaid letter of October assessments are finally resolved by the authorities.
26, 1956 is not a denial of their claim for refund. Payment is a mode of extinguishing obligations (Art. 1231, Civil Code)
Issue/s: and it means not only the delivery of money but also the performance,
3) WON Petitioner Finley Gibbs (the brother) was not able to receive a in any other manner, of an obligation (id., Art. 1231). A taxpayer,
copy of the denial of refund? resident or non-resident, who contributes to the withholding tax system,
NO does so not really to deposit an amount to the Commissioner of Internal
2) WON petitioners knew that the letter that was received is a denial of Revenue, but, in truth, to perform and extinguish his tax obligation for
their claim? the year concerned. In other words, he is paying his tax liabilities for
-YES that year. Consequently, a taxpayer whose income is withheld at the
3) WON CTA erred in ruling that the period to claim for refund has source will be deemed to have paid his tax liability when the same falls
already prescribed? due at the end of the tax year. It is from this latter date then, or when
-NO the tax liability falls due, that the two-year prescriptive period under
Section 306 of the Revenue Code starts to run with respect to payments
Held/Ratio: WHEREFORE, the instant petition for review is hereby effected through the withholding tax system. It is of no consequence
dismissed, with costs against the petitioners. whatever that a claim for refund or credit against the amount
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

withheld at the source may have been presented and may have petitioner could file a separate petition for review, to which it
remained unresolved since, as this Court has previously explained followed and filed on October 9, 1995. While the CTA noted that
in the case of Gibbs vs. Collector of Internal Revenue: the income from employees trust funds were exempt from
Section 306 of the National Internal Revenue Code should be income taxes, the claims for refund which covered the 1st-3rd
construed together with Section 11 of Republic Act No. 1125. In fine, quarters of 1993 and October 1-8, 1993 had already prescribed.
a taxpayer who has paid the tax, whether under protest or not, and As to the claim for refund covering the period 9 October 1993 up
who is claiming a refund of the same, must comply with the to 31 December 1993, the CTA ruled that the evidence being
requirement of both sections, that is, he must file a claim for refund insufficient to establish the fact that the money or assets of the
with the Collector of Internal Revenue within 2 years from the date of funds were indeed used and invested. The CTA and CA denied
his payment of the tax, as required by Sec. 306 of the NIRC, AND all subsequent MRs and petition for review. Hence this case.
appeal to the Court of Tax Appeals within 30 days from receipt of
the Collector's decision or ruling denying his claim for refund, as Issue/s:
required by Section 11 of Republic Act No. 1125. If, however, the 1) WON the 2-year prescriptive period for refund is tolled by the
Collector takes time in deciding the claim, and the period of two filing of the Supplemental Petition? --NO.
years is about to end, the suit or proceeding must be started in 2) Assuming it was tolled, WON the refund would prosper? --NO.
the Court of Tax Appeals before the end of the two-year period
without awaiting the decision of the Collector. This is so Held:
because of the positive requirement of Section 306 and the 1) NO. The filing of a Supplemental petition does not toll the prescriptive
doctrine that delay of the Collector in rendering decision does period for refund. The admission of such petition is discretionary for
not extend the peremptory period fixed by the statute. the courts. If denied, it is deemed not filed and cannot toll the
prescriptive period.
FAR EAST BANK AND TRUST COMPANY vs 2) NO. Even if it did toll the prescriptive period, it would still not be
COMMISSIONER OF INTERNAL REVENUE (Lim, J.) subject for refund. The CTA evinced palpable discomfort over the
sufficiency of the evidence presented by petitioner to establish its
[G.R. No. 138919; May 2, 2006]
claim for refund. Tax refunds partake the nature of tax exemptions
Refund. Refund. Refund. LOL .
and are construed strictly against the one claiming it. The burden in
proving the claim for refund necessarily falls on the taxpayer, and
Recit-Ready:
petitioner in this case failed to discharge the necessary burden of
proof.
Facts: FEBTC is the trustee of various retirement plans established by
several companies for its employees. As the trustee, FEBTC
Facts:
utilized these retirement funds in various instruments and
necessarily earned interest income. FEBTC's claim for refund Petitioner is the trustee of various retirement plans established by several
centers on the tax withheld and paid to the CIR for 1993. By this companies for its employees.
o As the trustee, petitioner was authorized to hold, manage, invest
time, there was a pending petition in CTA, involving the same
and reinvest the assets of these plans.
legal issue but a previous taxable period. FEBTC filed a Motion to
Admit Supplemental Petition seeking to include in that case the o Petitioner utilized such authority to invest these retirement funds in
tax refund claimed for 1993, which was denied. CTA advised that various instruments and necessarily earned interest income.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o Petitioner's claim for refund centers on the tax withheld by the insufficient to establish the fact that the money or assets of the funds
various withholding agents, and paid to the CIR for the 4 quarters of were indeed used and invested.
1993, on the aforementioned interest income. It is alleged that the o The CTA noted that petitioner merely submitted as its evidence
total final withholding tax on interest income paid for that year copies of documents.
amounted to P6M. The CTA faulted petitioner for failing to submit such necessary
On four dates, 12 May 1993, 16 August 1993, 31 January 1994, and 29 documentary proof of transactions, such as confirmation receipts and
April 1994, petitioner filed its written claim for refund with the BIR for all purchase orders that would ordinarily show the fact of purchase of
quarters of 1993, respectively. treasury bills or money market placements by the various funds, together
o Petitioner cited CIR v. CA, holding that employees trusts are with their individual bank account numbers.
exempted by specific mandate of law from income taxation. The CTA and CA denied all subsequent MRs and petition for review.
o Nonetheless, the claims for refund were denied. Hence this case.
By this time, petitioner already had a pending petition before the CTA and
apparently involving the same legal issue but a previous taxable period. Issue/s:
Hoping to comply with the 2-year period for refund, petitioner filed a 4) WON it was dismissed due to a mere technicality? -NO.
Motion to Admit Supplemental Petition on 28 April 1995, seeking to 5) WON the 2-year prescriptive period for refund is tolled by the filing
include in that case the tax refund claimed for the year 1993. of the Supplemental Petition? --NO.
o However, the CTA denied the admission of the Supplemental 6) Assuming it was tolled, WON the refund would prosper? NO.
Petition.
o The CTA reasoned then that CTA case had already been pending Held/Ratio:
for more than 2.5 years, and the admission of the supplemental 3) NO. It is only after a prima facie finding that the CTA had committed
petition, with a substantial enlargement of petitioners original claim errors of fact or law that would warrant reversal, that the case record
for refund, would further delay the proceedings, causing as it would, would be transmitted from the court of origin to the CA.
an effective change in the cause of action. Clearly, upon the filing of the petition, the appellate court would have
o Nonetheless, the CTA advised that petitioner could instead file a no documentary basis to discern whether the required prima facie
separate petition for review. standard has been met except the petition itself and the documents
Petitioner decided to follow the CTA's advice. that accompany it.
o On 9 October 1995, it filed another petition for review with the CTA, While the submissions in the petition may refer to other documents
concerning its claim for refund for the year 1993. in the record, or may even quote at length from those documents,
o On 1998, CTA denied the claim for refund for the year 1993. the CA would have no way to ascertain the veracity of the
o The claims for refund had already prescribed insofar as they submissions unless the certified true copies of these documents are
covered the first, second and third quarters of 1993, as well as attached to the petition itself.
from the period of 1 October to 8 October 1993. Thus, the requirement that certified true copies of documents be
o The CTA ruled considering that the petition before it was filed only attached is not a mere technicality that can be overlooked with ease,
on 9 October 1995, and thus, only those claims that arose after but an essential requisite for the determination of prima facie basis
9 October 1993 could be considered in light of 2-year for giving due course to the petition.
prescriptive period from the date of payment of the tax.
o As to the claim for refund covering the period 9 October 1993 up to 4) NO. In this case, the claim for refund for the taxes paid in 1993 was
31 December 1993, the CTA ruled that the evidence being through a supplemental petition and not through an original action.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

The admission of supplemental pleadings and complaints is in the o There is particular need for them to segregate such taxes
sound discretion of the court. withheld from the interest income of employees trusts, and
It is only upon the admission by the court of the supplemental those withheld from other sources for them to hold value.
complaint that it may be deem to augment the original complaint. The Court agrees with the CIR that petitioner should have instead
Until such time, the court acquires no jurisdiction over such new submitted documentary proof of transactions, such as confirmation
claims as may be raised in the supplemental complaint. receipts and purchase orders, as the best evidence on the
Assuming that the CTA erred in refusing to admit the Supplemental participation of the funds from these employees trusts.
Petition, such action is now beyond the review of this Court, the o These documents are vital to establish the extent of the
order denying the same having long lapsed into finality, and it investments made by petitioner from the employees trusts,
appearing that petitioner did not attempt to elevate such denial as distinguished from those made from other account
for judicial review with the proper appellate court. sources, and correspondingly, the amount of taxes withheld
Thus, the Court cannot treat the Supplemental Petition as having from the interest income derived from these employees
any judicial effect. trusts alone.
It cannot even be deemed as having been filed, the CTA refusing to The Court has no desire to impose unnecessarily pernickety
admit the same. documentary requirements in obtaining a valid tax refund.
o Yet it cannot be escaped that the taxpayer needs to
5) NO. Assuming that the filing of the Supplemental Petition could have establish not only that the refund is justified under the law,
tolled the two (2)-year prescriptive period insofar as the 1993 taxes but also the correct amount that should be refunded.
paid after 28 April 1993 were concerned, the Court would still not o If the latter requisite cannot be ascertained with
grant refund sought for. particularity, there is cause to deny the refund, or allow it
The CTA evinced palpable discomfort over the sufficiency of the only to the extent of the sum that is actually proven as due.
evidence presented by petitioner to establish its claim for refund. o Tax refunds partake the nature of tax exemptions and are
The tax exemption enjoyed by employees trusts was absolute, thus construed strictly against the one claiming it.
irrespective of the nature of the tax. o The burden in proving the claim for refund necessarily falls
What has to be established though, as a matter of evidence, is that on the taxpayer, and petitioner in this case failed to
the amount sought to be refunded to petitioner actually corresponds discharge the necessary burden of proof.
to the tax withheld on the interest income earned from the exempt
employees trusts. CIR v. SWEENEY (Lim, Q.)
It clearly bothered the CTA that the submitted certifications from [No. L-12178; August 21, 1959]
Citibank, the BSP, and attest only to the total amount of final Taxpayers need not wait for the action of the CIR on the request for refund
withholding taxes remitted to the BIR. before taking the matter to Court.
o Evidently, the sum includes not only such taxes withheld
from the interest income of the exempt employees trusts, Recit-Ready:
but also from other transactions between petitioner and Facts: International Club of Iloilo, Inc., is a non-profit, nonstock
the BSP or Citibank which are not similarly exempt corporation that aims to promote athletic and social relations
from taxation. among its members, and to that end, to establish and maintain
one or more clubhouses. It maintained and operated a clubhouse
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

with a bar, wherein liquor and light refreshments were sold interest. Even if the Court held that club is not required to pay for
exclusively to its members and their guests with a slight overprice percentage tax, this does not entitle Sweeney to obtain interest from the
to cover operational expenses. The Club was operated with funds award given because there is no statutory provision stating that the
derived from membership fees, monthly dues and the income of Government is required to pay interest.
its bar. Collector of Internal Revenue addressed and demanded
from the Club payment of the sum of P1,987.01 as fixed and
percentage tax and surcharge as operator of the bar. It protested Facts:
these amounts and ask that these be withdrawn. CIR urged the The International Club of Iloilo, Inc., is a non-profit, nonstock corporation
City Fiscal of Iloilo to prosecute criminally the past presidents of organized under Philippine laws sometime in January 1949, in order to
the Club. Sweeney requested for the reconsideration of their promote athletic and social relations among its members, and to that end,
cases. In view of the instructions of respondent, the City Fiscal to establish and maintain one or more club houses having a library,
conducted a preliminary investigation of the case. However the reading room and such other athletic and social appurtenances and
projected information against Sweeney were withdrawn on belongings as are usual in social clubs and clubhouses.
August 3, 1955 as they paid under protest to the City Treasurer of In consonance with this avowed purpose, the club from its incorporation
Iloilo their alleged tax liabilities. Sweeney thru counsel filed their in 1949 to its dissolution, maintained and operated a clubhouse with a
written claim for refund with the CIR of the aforesaid amounts bar, wherein liquor and light refreshments were sold exclusively to its
paid by them under protest. Not having received any reply from members and their guests with a slight overprice to cover operational
the CIR regarding said claim for refund, Sweeney thru counsel expenses. The Club was operated with funds derived from membership
sent their petition for review. Sweeney then contends that the fees, monthly dues and the income of its bar.
Court of Tax Appeals has no jurisdiction to order the refund of the During its brief existence, the Club had four (4) presidents. Respondents,
taxes involved because the CIR has not yet ruled upon their Sweeney and Burgas, were among these four.
request for refund. It is admitted that the Club never paid fixed or percentage taxes as
operator of a bar during its brief lifespan.
Issue/s: On November 11, 1950, Collector of Internal Revenue addressed and
1) WON the CTA has jurisdiction to order the refund of the amounts demanded from the Club payment of the sum of P1,987.01 as fixed and
paid.--YES percentage tax and surcharge as operator of the bar for the period
2) WON the government is required to pay interest for the amount covering August 1949 to September 1950, plus P50.00 as penalty in
refunded.--NO extrajudicial settlement of violations of sections 182, 183 and 191 of the
Tax Code.
Held:
Although CIR threatened to enforce summary collection of the alleged tax
1) NO. Taxpayers need not wait for the action of the CIR on the
deficiency, no positive step was taken to effect the same.
request for refund before taking the matter to Court. It cited two
On March 12, 1951, J. N. Sweeney, then president of the Club, wrote the
cases previously decided on by the court to support its claim. (See
City Treasurer of Iloilo protesting the aforementioned assessment against
Ratio)
the Club and asking that it be withdrawn for the reason that the Club was
a private one, not organized for profit, which like the Manila Polo Club
2) NO. In the absence of a statutory provision clearly or expressly
should not be held liable for the taxes sought to be collected.
directing or authorizing such payment, and none has been cited by
This protest remained unanswered for about ten months..
respondent, the National Government cannot be required to pay
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

On January 15, 1952 Collector denied Sweeney's request for withdrawal


of the assessment against the Club and this time demanded from the 1) YES. Taxpayers need not wait for the action of the CIR on the
latter payment of the sum of P3,526.55, representing fixed and request for refund before taking the matter to Court.
percentage taxes and surcharge, as operator of a bar for the period As to the propriety of taking the case to the Court of Tax Appeals
covering August 1949 to August 1951. before Sweeney received any advice as to the action taken, if any,
Although no payment was made, CIR did not take positive steps to on their petition for refund, this question has already been previously
enforce collection of the alleged tax deficiency. ruled upon by the Court.
However, on August 15, 1953 and October 15, 1953, CIR urged the City Taxpayers need not wait for the action of the Collector of
Fiscal of Iloilo to prosecute criminally the past presidents of the Club for Internal Revenue on the request for refund before taking the
violation of Sections 182, 183 and 191 of the Tax Code. matter to court.
Meanwhile, Sweeney requested for the reconsideration of their cases. In In the case of P. J. Kiener Co. vs. David, 92 Phil., 945, we said:
view of the instructions of respondent, the City Fiscal conducted a o Nowhere and in no wise does the law imply that the
preliminary investigation of the case. Collector of Internal Revenue must act upon the claim
However, the projected information against Sweeney were withdrawn on or that the taxpayer shall not go to court before he is
August 3, 1955 as they paid under protest to the City Treasurer of Iloilo notified of the Collector's action. Having filed his claim
their alleged tax liabilities. and the Collector of Internal Revenue having had ample
On the same date, August 3, 1955, Sweeney thru counsel filed their time to study it, the claimant may, indeed should, within the
written claim for refund with the CIR of the aforesaid amounts paid by statutory period of two years proceed with his suit without
them under protest. waiting for the Collector's decision.
Not having received any reply from the CIR regarding said claim for And in the case of College of Oral & Dental Surgery vs. Court of Tax
refund, Sweeney thru counsel sent their petition for review. Appeals and Collector of Internal Revenue, we ruled:
Sweeney contends that the Court of Tax Appeals has no jurisdiction to o "This Court, construing the aforequoted provisions of law
order the refund of the taxes involved: (referring to Section 306 of the National Internal Revenue
o First, because said amounts had been paid in extrajudicial Code) in an identical case, made the pronouncement that
settlement of the case against them, and although the filing of the claim with the Collector of Internal
o Second, because the CIR has not yet ruled upon their Revenue is intended as a notice to said official that unless
request for refund. the tax or penalty alleged to have been erroneously or
illegally collected is refunded court action will follow, this
Issue/s: does not imply that the taxpayer must wait for the
1) WON the CTA has jurisdiction to order the refund of the amounts action of the Collector before bringing the matter to
paid.--YES court. Indeed, it must be observed that under said
2) WON the government is required to pay interest for the amount provisions, the taxpayer's failure to comply with the
refunded.--NO requirement regarding the institution of the action or
proceeding in court within 2 years after the payment of the
Held/Ratio: In view of the foregoing and with the modification already stated taxes bars him from the recovery of the same, irrespective
as to the non-payment of interest, the appealed decision is hereby affirmed. of whether a claim for the refund of such taxes filed
No costs. with the Collector of Internal Revenue is still pending
action of the latter."
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

per the increased rates provided in Sections 142 and 145 (which
2) NO. In the absence of a statutory provision clearly or expressly became Sections 153 and 156) of the NIRC.
directing or authorizing such payment, and none has been cited by
respondent, the National Government cannot be required to pay Issue/s:
interest. Whether CA erred in basing the tax refund on the 20% specific taxes
Even if the Court held that club is not required to pay for percentage deemed paid under RA 1435 (taxes deemed paid) instead of the
tax, this does not entitle Sweeney to obtain interest from the award increased rates imposed by Sec 142 and 145 (taxes actually paid). NO
given because there is no statutory provision stating that the
Government is required to pay interest. Held:
The court held in Collector of Internal Revenue vs. St. Paul's This Court, in a string of decisions, repeatedly held that the tax refund
Hospital of Iloilo that: under R.A. 1435 is computed on the basis of the specific tax deemed paid
We agree, however, with the Solicitor General that the Court of Tax under Sections 1 and 2, and not on the increased rates actually paid
Appeals erred in ordering the payment of interest on the amount to under the 1977 NIRC.
be refunded to respondent herein. In the absence of a statutory
provision clearly or expressly directing or authorizing such payment, The subsequent codification of tax laws under the 1977 NIRC, Sections
and none has been cited by respondent, the National Government 153 and 156, mandated the increased rates of specific taxes levied on
cannot be required to pay interest. manufactured oils, other fuels and diesel fuel oils. Although Philex Mining
Corporation paid the taxes on their oil and fuel purchases based on the
Philex Mining Corporation vs. CIR (LUNA) increased rates, the latter law did not specifically provide for a refund
based on the increased rates. Since the grant of refund privileges must be
[GR. No. 120324; April 21, 1999]
strictly construed against the taxpayer, the basis for the refund remains to
The base of the tax refund shall be based on the law that provided for
be the amounts deemed paid under Sections 1 and 2 of R.A. 1435.
refunds on the specific taxes. The tax refund cannot be based on the
subsequent amendments of the rates not providing for a same refund. Furthermore, the claims for refund which were not filed with the CIR and
those that prescribed must be deemed excluded, for being outside the
ambit of the legislative enactment.
Recit-Ready:
Facts: From July 1, 1980 to December 31, 1981, Philex Mining Corp.
purchased from several oil companies, refined and manufactured Facts:
minerals, motor fuels, and diesel fuel oils. Specific taxes were Philam entered into a Mining License Agreement w/ Ministry of Nat
paid. On October 22, 1982, the company availed of the provisions Resources (now DENR).
of RA 1435 granting refund of 25% of the specific tax paid. From the period July 1, 1980 to December 31, 1981, Philam purchased
Pending such claim for refund (P623,169.30 representing the from several oil companies, refined and manufactured mineral oils, motor
25% of actual specific taxes paid) with the CIR, the company filed fuels, and diesel fuel oils.
another claim for refund with the same amount plus 20% interest The specific taxes passed on to the petitioner amounted to
thereon with the CTA on November 16, 1982. The CTA granted P2,492,677.22.
the refund but only P16,747.36 which was based on the amount On October 1982, pursuant to R.A. 1435, petitioner filed a claim for
deemed paid under Sections 1 & 2 of RA 1435. Philex contends refund with the CIR for P623,169.30, representing the 25% of the specific
the refund should be based on the actual specific taxes paid as
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

taxes paid on their use of refined and manufactured mineral oils, motor o The SC, in a string of decisions repeatedly held that tax refund
fuels and diesel fuel oils. under R.A. 1435 is computed on the basis of the specific tax
Pending CIR action, on November 1982, the petitioner filed a case for tax deemed paid under Sections 1 and 2, and NOT on the
refund with the CTA. increased rates actually paid under 1977 NIRC.
The petitioner sought judgment ordering the CIR to pay as refund the o Later, PD 1672 amended sec. 153 and 156 and, subsequently,
amount of P623,169.30, with 20% interest per annum, plus the costs of by EO 672, increasing the tax rates for certain oil and fuel
suit. products. When the highway special fund was abolished in
On August 4, 1994, the CTA rendered its decision, granting the tax 1985, the reason for the refund ceased to exist.
refund, but only to the extent of P16,747.36 (based on the specific taxes Since the partial refund authorized under Section 5, R.A. 1435, is in the
deemed paid under R.A. 1435). nature of a tax exemption, it must be construed strictissimi juris against
Petitioner seeks a higher tax base (specific taxes actually paid) for the the grantee.
refund it seeks. The subsequent codification of tax laws under the NIRC Sec 153 and
156 mandated increase rates of specific taxes on oils, fuels, etc.
Issue/s: Although PHILEX paid the taxes on their oil and fuel based on the
Whether respondent court erred in basing the tax refund under increased rates, the latter law did NOT specifically provide for a refund
Sections 1 and 2 of R.A. 1435, instead of the increased rates imposed based on the increased rates.
by Sections 142 and 145 (which became Sections 153 and 156) of the o Since the grant of refund privileges must be strictly construed
National Internal Revenue Code, as amended. NO against the taxpayer, the basis for the refund remains to be the
amounts deemed paid under Sections 1 and 2 of R.A. 1435.
Held/Ratio: Petition DENIED, and the assailed decision of the Court of
Appeals is hereby AFFIRMED. As to the 20% interest per annum prayed for by the petitioner,
o The rule is that no interest on refund of tax can be awarded
NO, court's decision was proper. unless authorized by law or the collection of the tax was
attended by arbitrariness. An action is not arbitrary when
Right to refund under R.A. 1435 exercised honestly and upon due consideration where there is
o In 1977, PD 1158 codified all existing internal revenue laws. room for two opinions, however much it may be believed that an
Sections 142 and 145 of the Tax Code, as amended by erroneous conclusion was reached. Arbitrariness presupposes
Sections 1 and 2 of RA 1435 (An Act to Provide Means for inexcusable or obstinate disregard of legal provisions. None of
Increasing the Highway Special Fund) were re-numbered to the exceptions are present in the case at bar. Respondents
Sections 153 and 156. decision denying petitioners claim for refund was based on an
o RA 1435 explained that mining and lumber companies seldom honest interpretation of law.
use national highways. Since the gasoline and fuel purchased
by mining and lumber companies are used within their own
compounds and roads, and they do not benefit directly from the
CIR v. Tokyo Shipping Co., Ltd. (Pascual)
[GR. No. 68252; May 26, 1995]
Fund, the government granted to these companies a 25%
Su-gaaaaar! Re-ceeeeeipts! Would you refund the tax paid erroneously?
partial refund of specific taxes paid on purchases of
manufactured diesel and fuel oils.
Recit-Ready:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Facts: Tokyo Shipping, a resident foreign international carrier, had one respondents agent mutually agreed to have the vessel sail
of its vessels chartered by NASUTRA to load 16,500 metric tons for Japan without any cargo.
of raw sugar in the Philippines to be shipping to Japan. Pursuant No cargo meant that no receipts were realized.
to the charter agreement, Tokyo Shipping paid in advance the Claiming the pre-payment of income and common carriers taxes as
appropriate income and common carriers taxes based on its erroneous since no receipt was realized from the charter agreement,
expected gross receipts. Upon arrival at the port, the vessel found private respondent instituted a claim for tax credit or refund but the CIR
no sugar for loading and so it was forced to sail to Japan without failed to act promptly on the claim.
realizing any receipts. Thus, Tokyo Shipping filed a claim for tax o Note: Under the NIRC, a resident foreign corporation
refund but the CIR. The CIR failed to act promptly and so Tokyo engaged in the transport of cargo is liable for taxes
Shipping filed a Petition for Review with the CTA. The CIR depending on the amount of income it derives from sources
opposed the petition, arguing that Tokyo Shipping had the burden within the Philippines.
of proof to support its claim for tax refund. The CTA ruled in favor o International cariers pay a tax of 2.5% on their Gross
of Tokyo Shipping Philippine Billings.
Tokyo Shipping then filed a Petition for Review before the Court of Tax
Issue/s: Appeals and the latter ruled in their favor.
WON Tokyo Shipping is entitled to a refund or tax credit for amounts Thus, the case before the SC where the CIR argue that:
representing pre-payment of income and common carriers taxes o Tokyo Shipping has the burden of proof to support its claim
under the NIRC as amended? of refund;
YES o That it had failed to prove that it did not realize any receipts
from its charter agreement;
Held: YES. Although the CIR is correct in arguing that a claim for o That Tokyo Shipping had suppressed evidence when it did
refund is in the nature of a claim for exemption and should be not present its charter agreement.
construed strictissimi juris against the taxpayer and that the burden Issue/s:
of proof to establish the factual basis of the claim is on the taxpayer, WON Tokyo Shipping is entitled to a refund or tax credit for amounts
such burden had been satisfied in this case. representing pre-payment of income and common carriers taxes under
the NIRC as amended?
YES
Facts:
Respondent is a foreign corporation represented in the Philippines by Held/Ratio:
Soriamont Steamship Agencies.
In December of 1980, one of its vessels was chartered by NASUTRA to YES. Although the CIR is correct in arguing that a claim for refund is in
load 16,500 metric tons of raw sugar in the Philippines. the nature of a claim for exemption and should be construed
o Pursuant to such, the required income and common strictissimi juris against the taxpayer and that the burden of proof to
carriers taxes, amounting to P107, 142.75 were paid, establish the factual basis of the claim is on the taxpayer, such burden
based on the expected gross receipts of the vessel. had been satisfied in this case.
o Upon arriving at the port, however, the vessel found no In this case, the CTA held that Tokyo Shipping had adduced
sugar for loading and so NASUTRA and private sufficient evidence in proving that it had derived no receipt from its
charter agreement with NASUTRA.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o Documents issued by officials of the Bureau of Customs petition for review before the CTA on November 18, 1988. The
attested to the fact of there being no sugar shipments and latter denied said claim on the basis that the petitioner failed to
the CIR did not contest these documents. file such claim within the reglementary period (i.e., 2 years)
Also, in the course of proceedings before the CTA, the CIR was provided by law. The petitioner argued that it relied on RMC No.
inconsistent in its stance. 7-85 which provides allows claims to be made within 10 years
o At certain points, the CIR had manifested that the BIR based on the Civil Code.
examiner had actually recommended the claim for refund
and that the government would withdraw the opposition to Issue: WON the dismissal by the CA erred in denying the plea for tax
the petition for tax refund after final approval. refund or tax credits on the ground of prescription, despite petitioners
o That being said, they never did and so the case dragged reliance on RMC No. 7-85
on.
The SC also held that the CIRs argument that Tokyo Shipping had Held: NO. The Court held that the relaxation of revenue regulations by
been suppressing evidence by not presenting its charter agreement RMC No. 7-85 is not warranted as it disregards the two-year
with NASUTRA could not stand because it presupposed without any prescriptive period set by law. The Court held that the Acting
basis that the charter agreement was prejudicial evidence against Commissioner legislated guidelines contrary to the statute passed
Tokyo Shipping. by the Congress. Section 230 of 1977 NIRC states that the
o Besides, the CIR itself could have presented the charter taxpayer may file a claim for refund or credit with the Commissioner
agreement through the proper use of a subpoena duces of Internal Revenue, within two (2) years after payment of tax,
tecum but it never did. before any suit in CTA is commenced. The two-year prescriptive
Fair deal is expected by the taxpayers from the BIR and duty period provided, should be computed from the time of filing the
demands that BIR should refund without any unreasonable delay Adjustment Return and final payment of the tax for the year.
what it has erroneously collected.
o In this case, the tax was paid way back in 1980 and despite
the clear showing that it was erroneously paid, the Facts:
government succeeded in delaying its refund for 15 years. Petitioner, a commercial banking corporation, filed its quarterly income
Thus, the decision of the CTA was affirmed. tax returns for the first and second quarters of 1985, reported profits and
paid the total income tax of P5,016,954.00 for the said quarters.
PHILIPPINE BANK OF COMMUNICATIONS v. CIR However, when it filed its annual income tax return for the same year, it
declared a net loss of P25,317,288.00, thereby showing no income tax
(Ocampo)
liability. It also incurred loss of P14,129,602.00 for the succeeding taxable
[G.R. No. 112024; January 28, 1999]
year 1986.
The prescriptive period is 2 years (not 10 years) from the time of filing the
On August 7, 1987, petitioner requested the CIR for a tax credit of
final adjusted return and final payment of the tax for the year.
P5,016,954.00 representing overpayment for the first two quarters of
1985. Petitioner also filed on July 25, 1988 a claim for refund of creditable
Recit-Ready:
taxes of P282,795.50 for 1985 and P234,077.69 for 1986 arising from its
Facts: The petitioner filed a claim for tax credit or refund before the CIR
rental income.
on its overpaid income tax for taxable years 1985 and 1986 on
Pending investigation of the CIR, petitioner instituted a Petition for
August 7, 1987. Pending its investigation, the petitioner filed a
Review before the CTA on November 18, 1988. The latter denied the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

request for a tax refund or credit on the ground that it was filed beyond simply interpret the law but it legislated guidelines contrary to the
the two-year reglementary period provided for by law. Such ruling was statute passed by Congress.
affirmed by the Court of Appeals. Moreover, the non-retroactivity of rulings by the CIR is not applicable
Petitioner argues that its claim for refund and tax credits are not yet in this case because the nullity of RMC No. 7-85 was declared by
barred by prescription relying on RMC No. 7-85 which states that respondent courts and not by the CIR.
overpaid income taxes are not covered by the two-year prescriptive
period under the Tax Code. Instead, it is covered by Article 1144 of the CIR v. CA and BPI (Ong)
Civil Code providing 10 years. [GR. No. 117254; January 21, 1999]
The period of prescription to claim a refund should be counted from the date
Issue: of the ACTUAL FILING of the Annual Income Tax Return.
WON the dismissal by the CA erred in denying the plea for tax refund or
tax credits on the ground of prescription, despite petitioners reliance Recit-Ready:
on RMC No. 7-85 NO Facts: BPI acted as the liquidator of Paramount Acceptance Corporation
after its dissolution. On April 2, 1986, Paramount filed its
Held/Ratio: Wherefore, the petition is DENIED. Corporate Annual Income Tax return for the year 1985. The tax
payable (P1.15M) is less than the total amount of quarterly
No. The Court held that the relaxation of revenue regulations by RMC income tax already paid by paramount (P1.2M). The difference is
No. 7-85 is not warranted as it disregards the two-year prescriptive P65k. Thus, Paramount marked the to be refunded option in the
period set by law. ITR amounting to P65k. BPI reiterated the claim for refund on
The Court held that it is of utmost importance that the modes adopted April 14, 1988 and the next day, it filed a petition with the CTA to
to enforce the collection of taxes levied should be summary and toll the running of the prescriptive period. The CTA granted the
interfered with as little as possible. From the same perspective, claims refund and opined that the prescriptive period commenced on
for refund or tax credit should be exercised within the time fixed by law April 15, 1986, the last day of the filing of the corporate income
because the BIR being an administrative body enforced to collect tax return. Petitioner argued that it should be computed from
taxes, its functions should not be unduly delayed or hampered by April 2, 1984, when the final adjustment return was actually filed.
incidental matters.
Section 230 of 1977 NIRC states that the taxpayer may file a claim for Issue/s:
refund or credit with the Commissioner of Internal Revenue, within two WON the 2-year prescriptive period should be computed from the
(2) years after payment of tax, before any suit in CTA is commenced. time the final adjustment return was actually filed. YES
The two-year prescriptive period provided, should be computed from
the time of filing the Adjustment Return and final payment of the tax for
the year. Held: YES. The period of prescription should be counted from the
The Court held that when the Acting Commissioner of Internal date of payment of the time of filing the Adjustment Return or
Revenue issued RMC No. 7-85, changing the prescriptive period of Annual Income Tax Return and final payment of income tax.
two years to ten years on claims of excess quarterly income tax
payments, such circular created a clear inconsistency with the Section 230 of the NIRC, provides for a two-year period of
provision of Sec. 230 of 1977 NIRC. In so doing, the BIR did not prescription counted from the date of payment of the tax for
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

actions for refund of corporate income tax, the two-year period WON the 2-year prescriptive period should be computed from the time
should be computed from the time of actual filing of the the final adjustment return was ACTUALLY filed.
Adjustment Return or Annual Income Tax Return. This is so YES
because at that point, it can already be determined whether there
has been an overpayment by the taxpayer. Moreover, under 49(a) Held/Ratio: The period of prescription should be counted from the date
of the NIRC, payment is made at the time the return is filed. of payment of the time of filing the Adjustment Return or Annual
In this case, Paramount filed its corporate annual income tax return Income Tax Return and final payment of income tax.
on April 2, 1986. However, private respondent BPI, as liquidator of
Paramount, filed a written claim for refund only on April 14, 1988 YES.
and a petition for refund only on April 15, 1988. Both claim and Clearly, there is the need to file a return first before a claim for refund
action for refund were thus barred by prescription. can prosper inasmuch as the respondent Commissioner by his own
rules and regulations mandates that the corporate taxpayer opting to
ask for a refund must show in its final adjustment return the income it
Facts: received from all sources.
BPI acted as the liquidator of Paramount Acceptance Corporation after its
dissolution. Sec. 49(a) of the NIRC provides that
On April 2, 1986, Paramount filed its Corporate Annual Income Tax 49. Payment and assessment of income tax for individuals and
return for calendar year ending December 31, 1985, declaring a net corporations.
income of P3.3M where the income tax due is P1.15M. However, (a) Payment of tax(1) In general.The total amount of tax imposed
Paramount already paid its quarterly income tax amounting to P1.2M. by this Title shall be paid by the person subject thereto at the
o After deducting this, the return showed a refundable amount time the return is filed. . . .
of P65k.
o The appropriate box in the return was marked with a cross On the other hand, 70(b) of the same Code provides that
indicating to be refunded the amount of P65k. 70 (b) Time of filing the income returnThe corporate quarterly
BPI as liquidator, reiterated the claim for refund on April 14, 1988. The declaration shall be filed within sixty (60) days following the close of
next day, BPI filed a petition with the CTA to toll the running of the each of the first three quarters of the taxable year. The final
prescriptive period for filing a claim for refund. adjustment return shall be filed on or before the 15th day of the 4th
The CTA considered the 2-year period to have commenced to run from month following the close of the fiscal year, as the case may be.
April 15, 1986, the last day of the filing of the corporate income tax return,
and since the claim for refund was filed on April 14, 1988, the action It can be deduced from the foregoing that, in the context of 230,
brought on April 15, 1988 has not prescribed. Thus, it granted the refund. which provides for a two-year period of prescription counted from the
Petitioner: date of payment of the tax for actions for refund of corporate
o The 2-year prescriptive period should be computed from income tax, the two-year period should be computed from the time of
April 2, 1984 when the final adjustment return was actually actual filing of the Adjustment Return or Annual Income Tax
filed, because that is the time of payment of the tax. Return. This is so because at that point, it can already be determined
whether there has been an overpayment by the taxpayer. Moreover,
Issue/s: under 49(a) of the NIRC, payment is made at the time the return is
filed.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

In this case, Paramount filed its corporate annual income tax return on paid in the preceding quarters are merely partial taxes due from a
April 2, 1986. However, private respondent BPI, as liquidator of corporation. Neither amount can serve as the final figure to
Paramount, filed a written claim for refund only on April 14, 1988 and quantify what is due the government nor what should be refunded
a petition for refund only on April 15, 1988. Both claim and action to the corporation. This interpretation may be gleaned from the
for refund were thus barred by prescription. last paragraph of Section 69 of the Tax Code which provides that
the refundable amount, in case a refund is due a corporation, is
CIR v. PHILIPPINE AMERICAN INSURANCE CO. (Reyes) that amount which is shown on its final adjustment return and not
[GR. No. 105208; May 29, 1995] on its quarterly returns. Clearly, the prescriptive period of two
The 2 year prescriptive period begins to run from the filing of the Final years should commence to run only from the time that the refund
Adjustment Return, NOT from the payment/remittance for any taxable is ascertained, which can only be determined after a final
quarter in a given year adjustment return is accomplished. In this case, both the claim for
refund and the petition for review are within the two-year
(Sorry the digest is a little long. I had to copy-paste the relevant laws. That reglementary period.
said, please read the long digest to make sense of the recit-ready)
Recit-Ready:
Facts: Phil. American Insurance was claiming for a refund from the CIR Facts:
but the latter denied such claim on the ground that it was already On May 30, 1983, Philamlife paid to the Bureau of Internal Revenue (BIR)
made beyond the two-year prescriptive period. The CIR poses its first quarterly corporate income tax for the year 1983 amounting to
that when a taxpayer pays/remits taxes wittheld for the first P3,246,141.00.
taxable quarter in a given year but whose business operations On August 29, 1983, it paid P396,874.00 for the Second Quarter of 1983.
actually resulted in a loss for that, as reflected in the Corporate For the Third Quarter of 1983, private respondent declared a net taxable
Final Adjustment Return subsequently filed with the BIR, the income of P2.5M and a tax due of P708K. After crediting the amount of
running of the prescriptive period should commence from the P3.8M, it declared a refundable amount of P3.1M.
remittance/payment at the end of the first quarter instead of from For its Fourth and final quarter ending December 31, private respondent
the filing of the Final Adjustment Return. suffered a loss and thereby had no income tax liability. In the return for
that quarter, it declared a refund of P3.9M representing the first and
Issue/s: second quarterly payments: P215,742.00 as withholding taxes on rental
WON the claim for refund has already prescribed income for 1983 and P133,084.00 representing 1982 income tax refund
NO applied as 1983 tax credit.
In 1984, private respondent again suffered a loss and declared no income
Held: In ruling for Phil. American Insurance, the Court noted that tax liability. However, it applied as tax credit for 1984, the amount of
Section 292 should be read with other particular provisions of the P3.9M representing its 1982 and 1983 overpaid income taxes and the
Tax Code. From these other provisions, it may be observed that amount of P250,867.00 as withholding tax on rental income for 1984.
although quarterly taxes due are required to be paid within sixty On September 26, 1984, private respondent filed a claim for its 1982
days from the close of each quarter, the fact that the amount shall income tax refund of P133,084.00. On November 22, 1984, it filed a
be deducted from the tax due for the succeeding quarter shows petition for review with the Court of Tax Appeals with respect to its 1982
that until a final adjustment return shall have been filed, the taxes claim for refund of P133,084.00.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

On December 16, 1985, it filed another claim for refund with petitioners
appellate division in the aggregate amount of P4.1M. Issue/s:
On January 2, 1986, private respondent filed a petition for review with the WON the claim for refund has already prescribed.
CTA regarding its 1983 and 1984 claims for refund in the above-stated NO
amount.
Later, it amended its petition by limiting its claim for refund to only P3.8M. Held/Ratio: Petition DISMISSED.
The issues in this case is the reckoning date of the two-year prescriptive
period provided in Section 230 of the NIRC: NO. The claim for refund and the petition for review by Phil. American
XXX were both filed within the two-year prescriptive period.
In any case, no such suit or proceeding shall be begun after the expiration of The CIR used Pacific Procon Ltd. v. CTA to support his argument that
two years from the date of payment of the tax or penalty regardless of any Section 230 of the NIRC is mandatory and not subject to any
supervening cause that may arise after payment:Provided, however, That the qualification, hence the prescriptive period applies regardless of the
Commissioner may, even without a written claim therefor, refund or credit conditions under which payment may have been made.
any tax, where on the face of the return upon which payment was made, The SC ruled that the Procon case was already overturned in the case of
such payment appears clearly to have been erroneously paid. CIR v. TMX Sales Incorporated and the CTA:
The CIR poses the following question: In a case such as this, where a o The SC, in that case, ruled that in reading Section 230, the other
corporate taxpayer remits/pays to the BIR tax withheld on income for the provisions of the Tax Code should also be considered,
first quarter but whose business operations actually resulted in a loss for particularly Sections 68, 69, 70, and 232. All these provisions
that year, as reflected in the Corporate Final Adjustment Return should be harmonized with each other.
subsequently filed with the BIR, should not the running of the prescriptive Sec. 68 Declaration of Quarterly Income Tax. Every
period commence from the remittance/payment at the end of the first corporation shall file in duplicate a quarterly summary declaration
quarter of the tax withheldinstead of from the filing of the Final Adjustment of its gross income and deductions on a cumulative basis for the
Return? preceding quarter or quarters upon which the income tax, as
o The CIR states that the phrase "regardless of supervening provided in Title II of this Code shall be levied, collected and
cause that may arise after payment" is an amendatory paid. The Tax so computed shall be decreased by the amount of
phrase under the said Section 292 which did not appear in tax previously paid or assessed during the preceding quarters
Section 306 of the old Tax Code before it was amended by and shall be paid not later than sixty (60) days from the close of
Presidential Decree No. 69, which became effective each of the first three (3) quarters of the taxable year.
January 1, 1973.
o The CIR also argues that the incorporation of the said Sec. 69. Final Adjustment Return. Every corporation
phrase did away with any other interpretation and, liable to tax under Section 24 shall file a final adjustment return
therefore, the reckoning period of prescription under covering the total net income for the preceding calendar or fiscal
Section 292 (now section 230) is from the date of payment year. If the sum of the quarterly tax payments made during the
of tax regardless of financial loss (the "supervening cause"). said taxable year is not equal to the total tax due on the entire
Thus, the claim for refund of the amounts of P3,246,141.00 taxable net income of that year the corporation shall either:
and P396,874.00 paid on May 30, 1983 and August 29, (a) Pay the excess still due; or
1983, respectively, has prescribed. (b) Be refunded the excess amount paid, as the case may be.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

In case the corporation is entitled to a refund of the excess tax payment for its 1991 operations and was remitted in response
estimated quarterly income taxes paid, the refundable amount to then President Corazon C. Aquinos call to generate more
shown on its final adjustment return may be credited against the revenues for national development. PNB incurred losses for four
estimated quarterly income tax liabilities for the taxable quarters years (from 1992 to 1996), hence it cannot apply as a tax credit
of the succeeding taxable year. its unutilized creditable taxes which involves an amount of
It may be observed that although quarterly taxes due are required to overpayment covered by the P180 million advance payment it
be paid within sixty days from the close of each quarter, the fact that the made. PNB then applied for a claim for TCC in order to be able to
amount shall be deducted from the tax due for the succeeding quarter refund the said unutilized credits. BIR denied its claim primarily
shows that until a final adjustment return shall have been filed, the taxes due to it being allegedly filed beyond the 2 year prescriptive
paid in the preceding quarters are merely partial taxes due from a period. PNB contends that the rule admits of certain exception
corporation. Neither amount can serve as the final figure to quantify what such as the special circumstance present in the case at bar.
is due the government nor what should be refunded to the corporation.
This interpretation may be gleaned from the last paragraph of Section 69 Issue/s:
of the Tax Code which provides that the refundable amount, in case a 1) WON PNBs claim for tax credit is barred by prescription?
refund is due a corporation, is that amount which is shown on its final No. The 2 year prescriptive period may be suspended by reason
adjustment return and not on its quarterly returns. of equity and special circumstances.
2) WON the equitable principle of estoppel bar the BIR
Therefore, when private respondent paid P3,246,141.00 on May 30, petitioner from collecting taxes due? Yes. BIR is estopped
1983, it would not have been able to ascertain on that date, that the said from denying the claim for refund and collecting the tax due.
amount was refundable. The same applies with cogency to the payment
of P396,874.00 on August 29, 1983. Held:
Clearly, the prescriptive period of two years should commence to run only
from the time that the refund is ascertained, which can only be 1) NO. The Court agreed with PNBs contention that its claim for tax
determined after a final adjustment return is accomplished. In the present credit did not arise from overpayment resulting from erroneous,
case, this date is April 16, 1984, and two years from this date would be illegal or wrongful collection of tax. It stressed that its P180 Million
April 16, 1986. The record shows that the claim for refund was filed on advance income tax payment for 1991 partakes of the nature of a
December 10, 1985 and the petition for review was brought before the deposit made in anticipation of taxes not yet due or levied.
CTA on January 2, 1986. Both dates are within the two-year reglementary PNB remitted the P180 Million in question as a measure of
period. goodwill and patriotism, a gesture noblesse oblige, to help the
cash-strapped national government. Hence, there is a presence
CIR v. PHILIPPINE NATIONAL BANK (Rocillo) of a special circumstance which would warrant a suspension for
[GR. No. 161997; October 25,2005] the running of the 2 year prescriptive period. Principle of equity
The 2 year prescriptive period may be suspended for reasons of equity and will also set in since it would be unfair to leave PNB to suffer
special circumstances losing millions of pesos advanced by it for future tax liabilities.
2) YES. The BIRs very own conduct led PNB to believe all along
Recit-Ready: that its original intention to apply the advance payment to its
Facts: In April 1991, PNB issued to the BIR Cashiers Check No. 109435 future income tax obligations will be respected by the BIR. Thus,
for P180,000,000.00 which represented PNBs advance income upon posting a net income in 1997 and regaining a profitable
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

business operation, respondent bank promptly sought the In a letter dated July 26, 2000, PNB sought reconsideration of the
issuance of a TCC for the reason that its credit balance of P73, decision of Deputy Commissioner Hefti not to take cognizance of the
298,892.60 remained unutilized. Hence, BIR can be considered banks claim for tax credit certificate on the ground that the
as estopped from collecting the taxes due. jurisdiction of the Appellate Division is limited to claims for tax refund
and credit involving erroneous or illegal collection of taxes whenever
Facts: there are questions of law and/or facts and does not include claims
In April 1991, PNB issued to the BIR Cashiers Check No. 109435 for refund of advance payment, pursuant to Revenue Administrative
for P180,000,000.00 which represented PNBs advance income tax Order [RAO] No. 7-95 dated October 10, 1995.
payment for its 1991 operations and was remitted in response to On August 14, 2001, PNB again wrote the BIR requesting that it be
then President Corazon C. Aquinos call to generate more revenues allowed to apply its unutilized advance tax payment
for national development. of P73,298,892.60 to the banks future gross receipts tax liability.
BIR acknowledged receipt of the amount by issuing Payment Order The BIR Commissioner denied PNBs claim for tax credit for the
No. C-10151465 and BIR Confirmation Receipt No. 22063553, both several reasons, relevant of which is based on a finding that PNBs
dated April 15, 1991. claim has already prescribed on the ground that it was filed beyond
Through letters sent to CIR Ong April 19 and 29, 1991 and May 14, the two (2) year prescriptive period as provided for under Section
1991, PNB requested the issuance of a tax credit certificate (TCC) 204 of NIRC.
to be utilized against future tax obligations of the bank. On June 20, 2002, PNB appealed the denial action of the BIR to the
For the Q1 and Q2 of 1991, PNB also paid additional taxes CTA. CIR filed a motion to dismiss on the ground of prescription to
amounting to P6,096,150.00 and P26,854,505.80, as shown in its which PNB filed an opposition.
quarterly ITR filed on May 30, 1991. Inclusive of the P180 Million In its Resolution of October 10, 2002, the CTA granted the
aforementioned, PNB paid and BIR received in 1991 the amount of Commissioners motion to dismiss and, accordingly, denied PNBs
P212, 950,656.79. This final figure, if tacked to PNBs prior years petition for review, reiterating the claim for refund should be filed
excess tax credit (P1,385,198.30) and the creditable tax withheld for within the 2 year prescriptive period and such rule admits of no
1991 (P3,216,267.29), adds up to P217,552,122.38. exception.
By the end of 1991, PNBs annual income tax liability, per its 1992 In time, PNB filed a petition for review with the CA arguing that the
annual income tax return, amounted to P144,253,229.78, which, applicability of the two (2)-year prescriptive period is not
when compared to its claimed total credits and tax payments of jurisdictional and that said rule admits of certain exceptions.
P217,552,122.38, resulted to a credit balance in its favor in the - The CA granted the petition on the main premise that there is
amount of P73,298,892.60. This credit balance was carried-over to a presence of a special circumstance since the tax credit that
cover tax liability for the years 1992 to 1996, but, as PNB alleged, PNB has been seeking is to be sourced not from any tax
was never applied since the bank incurred losses during the 4-year erroneously or illegally collected but from advance income tax
period. payment voluntarily made in response to then President
On July 28, 1997, PNB wrote CIR Liwayway Vinzons-Chato, to Aquinos call to generate more revenues for the government, in
inform her about the aforementioned and to reiterate its request for no way can the amount
the issuance of a TCC, this time for the unutilized balance of its - The BIR is deemed to have waived the two (2)-year
advance payment made in 1991 amounting to P73,298,892.60. prescriptive period when its officials led the PNB to believe that
its request for tax credit had not yet prescribed since the matter
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

was not being treated as an ordinary claim for tax refund/credit appears clearly to have been erroneously paid. (Underscoring
or a simple case of excess payment. added.)
- Commissioner of Internal Revenue vs. Philippine American
Life Insurance Co. instructs that even if the two (2)-year Section 230 of the Tax Code, particularly its statute of limitations
prescriptive period under the Tax Code had already lapsed, the component, is intended to apply to suits for the recovery of internal
same is not jurisdictional, and may be suspended for reasons of revenue taxes or sums erroneously, excessively, illegally or wrongfully
equity and other special circumstances. collected.

Issues: Black defines the term erroneous or illegal tax as one levied without
1) WON PNBs claim for tax credit is barred by prescription? No. statutory authority. In the strict legal viewpoint, PNBs claim for tax credit
The 2 year prescriptive period may be suspended by reason of did not proceed from, or is a consequence of overpayment of tax
equity and special circumstances. erroneously or illegally collected.
2) WON the equitable principle of estoppel bar the BIR petitioner
from collecting taxes due? Yes. BIR is estopped from denying the The Court agreed with PNBs contention that its claim for tax credit did
claim for refund and collecting the tax due. not arise from overpayment resulting from erroneous, illegal or wrongful
collection of tax. It stressed that its P180 Million advance income tax
Held/Ratio: payment for 1991 partakes of the nature of a deposit made in
1) The core issue in this case pivots on the applicability hereto of the two anticipation of taxes not yet due or levied. Accordingly, the P180 Million
(2)-year prescriptive period under in Section 230 (now Sec. 229) of the was strictly not a payment of a valid and existing tax liability, let alone an
NIRC, reading: erroneous payment, the refund of which is governed by Section 230 of
the NIRC.
SEC. 230. Recovery of tax erroneously or illegally collected.
No suit or proceeding shall be maintained in any court for the PNB also states that, even assuming, in gratia argumenti that the two
recovery of any national internal revenue tax hereafter alleged to (2)-year limitation in Section 230 of the NIRC is of governing application,
have been erroneously or illegally assessed or collected , . . , or of still the prescriptive period set forth therein is not jurisdictional. The
any sum, alleged to have been excessive or in any manner suspension of the statutory limitation in this case, PNB adds, is justified
wrongfully collected, until a claim for refund or credit has been duly under exceptional circumstance, as what is present in the case at bar.
filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid It bears stressing that PNB remitted the P180 Million in question as a
under protest or duress. measure of goodwill and patriotism, a gesture noblesse oblige, to help
the cash-strapped national government. It would, be unfair to leave PNB
In any case, no such suit or proceeding shall be begun after to suffer losing millions of pesos advanced by it for future tax liabilities.
the expiration of two [(2)] years from the date of payment of the tax
or penalty regardless of any supervening cause that may arise after 2) The suspension of the two (2)-year prescriptive period is warranted not
payment: Provided, however, That the Commissioner may, even solely by the objective or purpose pursuant to which respondent PNB
without a written claim therefor, refund or credit any tax, where on made the advance income tax payment in 1991. Records show that the
the face of the return upon which payment was made, such payment BIRs very own conduct led PNB to believe all along that its original
intention to apply the advance payment to its future income tax
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

obligations will be respected by the BIR. Thus, upon posting a net either a refund or a credit of income tax paid, a corporation must
income in 1997 and regaining a profitable business operation, signify its intention by marking the corresponding option box on
respondent bank promptly sought the issuance of a TCC for the reason its annual corporate adjustment return. The CA further held in the
that its credit balance of P73, 298,892.60 remained unutilized. Hence, 1997 claim, the failure to present the 1998 ITR was fatal to the
BIR can be considered as estopped from collecting the taxes due. claim for a refund, because there was no way to verify if the tax
credit for 1997 could not have been applied against the 1998 tax
PHILAM ASSET MANAGEMENT INC. v. CIR (Trias) liabilities of petitioner.
[G.R. Nos. 156637/162004; December 14, 2005]
If you choose to carry-over (even if you did not explicitly choose but your Issue: WON petitioner is entitled to tax refund for 1997 and 1998 for
actions indicate such choice), that option is irrevocable for the taxable its creditable taxes withheld? YES to 1997 claims, NO to
period. 1998 claims

Recit-Ready: Held: For 1997 (1st case), the CA erred in requiring petitioners to
Facts: Petitioner is a domestic corporation duly organized and existing present its 1998 ITR as no law requires such. The established
under the laws of the Republic of the Philippines. It acts as the procedure is that a taxpayer that wants a cash refund shall make
investment manager of both Philippine Fund, Inc. (PFI) and a written request for it, and the ITR showing the excess expanded
Philam Bond Fund, Inc. (PBFI), which are open-end investment withholding tax credits shall then be examined by the BIR. For the
companies in the sale of their shares of stocks and in the grant of refund, RRs 12-94 and 6-85 state that all pertinent
investment of the proceeds of these sales into a diversified accounting records should be submitted by the taxpayer. These
portfolio of debt and equity securities. On April 3, 1998, petitioner records, however, actually refer only to (1) the withholding tax
filed its annual corporate income tax return for the taxable year statements; (2) the ITR of the present quarter to which the excess
1997 representing a net loss of P2,689,242.00. Consequently, it withholding tax credits are being applied; and (3) the ITR of the
failed to utilize the creditable tax withheld in the amount of quarter for the previous taxable year in which the excess credits
P522,092.00 representing tax withheld by petitioners withholding arose. To stress, these regulations implementing the law do not
agents, PFI and PBFI, on professional fees. On April 13, 1999, require the proffer of the FAR for the taxable year following the
petitioner filed its Annual Income Tax Return with the BIR for the period to which the tax credits are being applied. Despite the
taxable year 1998 declaring a net loss of P1,504,951.00. Thus, failure of petitioner to make the appropriate marking in the BIR
there was no tax due against petitioner for the taxable year 1998. form, the filing of its written claim effectively serves as an
Likewise, petitioner had an unapplied creditable withholding tax in expression of its choice to request a tax refund, instead of a tax
the amount of P459,756.07. In both years (1997 and 1998), credit. To assert that any future claim for a tax refund will be
petitioner filed a claim for refund for unutilized excess tax credits instantly hindered by a failure to signify ones intention in the FAR
for those years but both were denied. is to render nugatory the clear provision that allows for a two-year
prescriptive period. In the present case, although petitioner did
The CA ruled that The appellate court pointed out that, in the not mark the refund box in its 1997 FAR, neither did it perform
respective ITRs for both years, petitioner did not indicate its any act indicating that it chose a tax credit. On the contrary, it
option to have the amounts either refunded or carried over and filed on September 11, 1998, an administrative claim for the
applied to the succeeding year. It was held that to request for refund of its excess taxes withheld in 1997. In none of its
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

quarterly returns for 1998 did it apply the excess creditable taxes. Petitioner is, likewise, PFIs and PBFIs principal distributor which takes
Under these circumstances, petitioner is entitled to a tax refund of charge of the sales of said companies shares to prospective investors.
its 1997 excess tax credits in the amount of P522,092 Pursuant to the separate management and distribution agreements
between the petitioner and PFI and PBFI, both PFI and PBFI agree to
For 1998 (2nd case), according to petitioner, it neither chose nor pay the petitioner, by way of compensation for the latters services and
marked the carry-over option box in its 1998 FAR. As this option facilities, a monthly management fee from which PFI and PBFI withhold
was not chosen, it seems that there is nothing that can be the amount equivalent to five percent (5%) creditable tax pursuant to the
considered irrevocable. In other words, petitioner argues that it is Expanded Withholding Tax Regulations.
still entitled to a refund of its 1998 excess income tax payments.
This argument does not hold water. The subsequent acts of For the first case: GR 156637
petitioner reveal that it has effectively chosen the carry-over On April 3, 1998, petitioner filed its annual corporate income tax return for
option. The fact that it filled out the portion Prior Years Excess the taxable year 1997 representing a net loss of P2,689,242.00.
Credits in its 1999 FAR means that it categorically availed itself of Consequently, it failed to utilize the creditable tax withheld in the amount
the carry-over option. In fact, the line that precedes that phrase in of P522,092.00 representing tax withheld by petitioners withholding
the BIR form clearly states Less: Tax Credits/Payments. The agents, PFI and PBFI,on professional fees.
contention that it merely filled out that portion because it was a Petitioner filed an administrative claim for refund with the BIR in the
requirement -- and that to have done otherwise would have been amount of P522,092.00 representing unutilized excess tax credits for
tantamount to falsifying the FAR -- is a long shot. If an application calendar year 1997.
for a tax refund has been -- or will be -- filed, then that portion of Respondent did not act on petitioners claim for refund; hence, a Petition
the BIR form should necessarily be blank, even if the FAR of the for Review was filed with this Court to toll the running of the two-year
previous taxable year already shows an overpayment in taxes. prescriptive period
Tax refunds are construed strictly against the taxpayer. Once the On October 9, 2001, the CTA rendered a Decision denying petitioners
carry-over option is taken, actually or constructively, it becomes Petition for Review.
irrevocable. Petitioner has chosen that option for its 1998
creditable withholding taxes. Thus, it is no longer entitled to a tax For the second case: GR No. 162004
refund of P459,756.07, which corresponds to its 1998 excess tax
On April 13, 1999, petitioner filed its Annual Income Tax Return with the
credit.
BIR for the taxable year 1998 declaring a net loss of P1,504,951.00.
Thus, there was no tax due against petitioner for the taxable year 1998.
Facts:
Likewise, petitioner had an unapplied creditable withholding tax in the
This is a consolidation of 2 petitions. amount of P459,756.07.
Petitioner is a domestic corporation duly organized and existing under the In the 1999, petitioner had a tax due in the amount of P80,042.00, and a
laws of the Republic of the Philippines. It acts as the investment manager creditable withholding tax in the amount of P915,995.00. Petitioner
of both Philippine Fund, Inc. (PFI) and Philam Bond Fund, Inc. (PBFI), likewise declared in its 1999 tax return the amount of P459,756.07, which
which are open-end investment companies in the sale of their shares of represents its prior excess credit for taxable year 1998.
stocks and in the investment of the proceeds of these sales into a
In 2000, petitioner filed with the RDO a written administrative claim for
diversified portfolio of debt and equity securities.
refund with respect to the unapplied creditable withholding tax of
Being an investment manager, petitioner provides management and P459,756.07. According to petitioner, the amount of P80,042.00,
technical services to PFI and PBFI.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

representing the tax due for the taxable year 1999 has been credited from Issue/s:
its P915,995.00 creditable withholding tax for taxable year 1999, thus WON petitioner is entitled to a refund of its creditable taxes withheld for
leaving its 1998 creditable withholding tax in the amount of P459,756.07 taxable years 1997 and 1998. - The Petition in GR No. 156637 is
still unapplied. meritorious, but that in GR No. 162004 is not.
The claim for refund yielded no action on the part of the BIR.
Petitioner asserting that it is entitled to the refund of P459,756.07 since Held/Ratio: Petition PARTIALLY GRANTED.
said amount has not been applied against its tax liabilities in the taxable
year 1998. Section 76. Final Adjustment Return. -- Every corporation liable to tax
On May 2, 2002, the CTA rendered [a] x x x decision denying [petitioners] under Section 24 shall file a final adjustment return covering the total net
Petition for Review income for the preceding calendar or fiscal year. If the sum of the quarterly
Both cases by petitioner for a claim for refund (1997 and 1998) were tax payments made during the said taxable year is not equal to the total tax
denied by CTA so the CA decided the case together. due on the entire taxable net income of that year the corporation shall either:
The CA denied the claim of petitioner for a refund of the latters excess
creditable taxes withheld for the years 1997 and 1998, despite (a) Pay the excess tax still due; or
compliance with the basic requirements of Revenue Regulations (RR) (b) Be refunded the excess amount paid, as the case may be.
No. 12-94.
The appellate court pointed out that, in the respective Income Tax In case the corporation is entitled to a refund of the excess estimated
Returns (ITRs) for both years, petitioner did not indicate its option to have quarterly income taxes paid, the refundable amount shown on its final
the amounts either refunded or carried over and applied to the adjustment return may be credited against the estimated quarterly income
succeeding year. tax liabilities for the taxable quarters of the succeeding taxable year.
It was held that to request for either a refund or a credit of income tax
paid, a corporation must signify its intention by marking the corresponding Section 76 offers two options to a taxable corporation whose total
option box on its annual corporate adjustment return. quarterly income tax payments in a given taxable year exceeds its
The CA further held in GR No. 156637 that the failure to present the 1998 total income tax due. These options are (1) filing for a tax refund or
ITR was fatal to the claim for a refund, because there was no way to (2) availing of a tax credit.
verify if the tax credit for 1997 could not have been applied against the The first option is relatively simple. Any tax on income that is
1998 tax liabilities of petitioner. paid in excess of the amount due the government may be
In GR No. 162004, however, the subsequent acts of petitioner refunded, provided that a taxpayer properly applies for the
demonstrated its option to carry over its tax credit for 1998, even if it refund.
again failed to tick the appropriate box for that option in its 1998 ITR. The second option works by applying the refundable amount,
Under RR 12-94, its failure to indicate that option resulted in the as shown on the FAR of a given taxable year, against the
automatic carry-over of any excess tax credit for the prior year. The estimated quarterly income tax liabilities of the succeeding
appellate court said that the government would not be unjustly enriched taxable year.
by denying a refund, because there would be no forfeiture of the amount These two options under Section 76 are alternative in nature.
in its favor. The amount claimed as a refund would remain in the account The choice of one precludes the other.
of the taxpayer until utilized in succeeding taxable years. Indeed, in Philippine Bank of Communications v. Commissioner of
Internal Revenue, the Court ruled that a corporation must signify its
intention -- whether to request a tax refund or claim a tax credit -- by
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

marking the corresponding option box provided in the FAR. While a a copy of the withholding tax statement, duly issued by the payor to
taxpayer is required to mark its choice in the form provided by the the payee, showing the amount paid and the income tax withheld
BIR, this requirement is only for the purpose of facilitating tax from that amount.
collection. The established procedure is that a taxpayer that wants a cash
One cannot get a tax refund and a tax credit at the same time for the refund shall make a written request for it, and the ITR showing the
same excess income taxes paid. Failure to signify ones intention in excess expanded withholding tax credits shall then be examined by
the FAR does not mean outright barring of a valid request for a the BIR. For the grant of refund, RRs 12-94 and 6-85 state that all
refund, should one still choose this option later on. A tax credit pertinent accounting records should be submitted by the taxpayer.
should be construed merely as an alternative remedy to a tax refund These records, however, actually refer only to (1) the withholding tax
under Section 76, subject to prior verification and approval by statements; (2) the ITR of the present quarter to which the excess
respondent. withholding tax credits are being applied; and (3) the ITR of the
The reason for requiring that a choice be made in the FAR upon its quarter for the previous taxable year in which the excess credits
filing is to ease tax administration particularly the self-assessment arose. To stress, these regulations implementing the law do not
and collection aspects. A taxpayer that makes a choice expresses require the proffer of the FAR for the taxable year following the
certainty or preference and thus demonstrates clear diligence. period to which the tax credits are being applied.
Conversely, a taxpayer that makes no choice expresses uncertainty The BIR ought to have on file its own copies of petitioners FAR for
or lack of preference and hence shows simple negligence or plain the succeeding year, on the basis of which it could rebut the
oversight. assertion that there was a subsequent credit of the excess income
tax payments for the previous year. Its failure to present this vital
For the first case: GR 156637 document to support its contention against the grant of a tax refund
Respondent denied the claim of petitioner for a refund of excess to petitioner is certainly fatal.
taxes withheld in 1997, because the latter (1) had not indicated in The TA should have taken judicial notice of the fact of filing and the
its ITR for that year whether it was opting for a credit or a refund; pendency of petitioners subsequent claim for a refund of excess
and (2) had not submitted as evidence its 1998 ITR, which could creditable taxes withheld for 1998. The existence of the claim ought
have been the basis for determining whether its claimed 1997 tax to be known by reason of its judicial functions. Furthermore, it is
credit had not been applied against its 1998 tax liabilities. decisive to and will easily resolve the material issue in this case. If
Requiring that the ITR or the FAR of the succeeding year be only judicial notice were taken earlier, the fact that there was no
presented to the BIR in requesting a tax refund has no basis in law carry-over of the excess creditable taxes withheld for 1997 would
and jurisprudence. have already been crystal clear.
Section 76 of the Tax Code does not mandate it. The law merely Despite the failure of petitioner to make the appropriate marking in
requires the filing of the FAR for the preceding -- not the succeeding the BIR form, the filing of its written claim effectively serves as an
-- taxable year. expression of its choice to request a tax refund, instead of a tax
Section 5 of RR 12-94 merely provides that claims for the refund of credit. To assert that any future claim for a tax refund will be
income taxes deducted and withheld from income payments shall be instantly hindered by a failure to signify ones intention in the FAR is
given due course only (1) when it is shown on the ITR that the to render nugatory the clear provision that allows for a two-year
income payment received is being declared part of the taxpayers prescriptive period.
gross income; and (2) when the fact of withholding is established by
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

In the present case, although petitioner did not mark the refund box The resulting redundancy in the claim of petitioner for a refund of its
in its 1997 FAR, neither did it perform any act indicating that it chose 1998 excess tax credits on November 14, 2000 cannot be
a tax credit. On the contrary, it filed on September 11, 1998, an countenanced. It cannot be allowed to avail itself of a tax refund and
administrative claim for the refund of its excess taxes withheld in a tax credit at the same time for the same excess income taxes
1997. In none of its quarterly returns for 1998 did it apply the excess paid. Besides, disallowing it from getting a tax refund of those
creditable taxes. Under these circumstances, petitioner is entitled to excess tax credits will not enervate the two-year prescriptive period
a tax refund of its 1997 excess tax credits in the amount of under the Tax Code. That period will apply if the carry-over option
P522,092. has not been chosen.
Tax refunds are construed strictly against the taxpayer. Petitioner
For the second case: GR No. 162004 has failed to meet the burden of proof required in order to establish
The carry-over option under Section 76 is permissive. A corporation the factual basis of its claim for a tax refund.
that is entitled to a tax refund or a tax credit for excess payment of The first-in first-out (FIFO) principle enunciated by the CTA does not
quarterly income taxes may carry over and credit the excess income apply. Money is fungible property. The amount to be applied against
taxes paid in a given taxable year against the estimated income tax the P80,042 income tax due in the 1998 FAR of petitioner may be
liabilities of the succeeding quarters. Once chosen, the carry-over taken from its excess credits in 1997 or from those withheld in 1998
option shall be considered irrevocable for that taxable period, and no or from both. Whichever of these the amount will be taken from will
application for a tax refund or issuance of a tax credit certificate shall not make a difference. In fact, the FAR is cumulative in nature.
then be allowed. Following a natural sequence, the prior years excess tax credits will
According to petitioner, it neither chose nor marked the carry-over have to be reduced first to answer for any current tax liabilities
option box in its 1998 FAR. As this option was not chosen, it seems before the current years withheld amounts can be applied.
that there is nothing that can be considered irrevocable. In other Otherwise, there will be no sense in requiring a taxpayer to fill out
words, petitioner argues that it is still entitled to a refund of its 1998 the line items in the FAR to segregate its sources of tax credits.
excess income tax payments. This argument does not hold water. Once the carry-over option is taken, actually or constructively, it
The subsequent acts of petitioner reveal that it has effectively becomes irrevocable. Petitioner has chosen that option for its 1998
chosen the carry-over option. creditable withholding taxes. Thus, it is no longer entitled to a tax
The fact that it filled out the portion Prior Years Excess Credits in its refund of P459,756.07, which corresponds to its 1998 excess tax
1999 FAR means that it categorically availed itself of the carry-over credit. Nonetheless, the amount will not be forfeited in the
option. In fact, the line that precedes that phrase in the BIR form governments favor, because it may be claimed by petitioner as tax
clearly states Less: Tax Credits/Payments. The contention that it credits in the succeeding taxable years.
merely filled out that portion because it was a requirement -- and
that to have done otherwise would have been tantamount to ASIAWORLD PROPERTIES vs. CIR (Tuazon)
falsifying the FAR -- is a long shot. [GR. No. 171766; July 29, 2010]
If an application for a tax refund has been -- or will be -- filed, then Irrevocability; Exercise of the option to carry-over the excess income tax
that portion of the BIR form should necessarily be blank, even if the credit prohibits a claim for refund in the subsequent taxable years for the
FAR of the previous taxable year already shows an overpayment in unused portion of the excess tax credits carried over
taxes.
Recit-Ready:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Facts: Basically, Petitioner is arguing that: the option to carry-over and indicated in its 2001 ITR its option to carry-over as tax credit next
apply the excess quarterly income tax against the income tax due year/quarter the overpayment. Petitioner filed with the RDO a
in the succeeding taxable years is irrevocable only for the next request for refund allegedly representing partial excess creditable
taxable period when the excess payment was carried over. Thus, tax withheld. Petitioner claimed that it is entitled to the refund of its
petitioner posits that the option to carry-over its 1999 excess unapplied creditable withholding taxes. CTA denied the petition. CA
income tax payment is irrevocable only for the succeeding affirmed.
taxable year 2000 and that for the taxable year 2001, petitioner is
not barred from seeking a refund of the unused tax credits carried Basically, Petitioner is arguing that: the option to carry-over and
over from year 1999. apply the excess quarterly income tax against the income tax due in
the succeeding taxable years is irrevocable only for the next taxable
Issue: WON the exercise of the option to carry-over the excess income period when the excess payment was carried over. Thus, petitioner
tax credit, which shall be applied against the tax due in the succeeding posits that the option to carry-over its 1999 excess income tax
taxable years, prohibits a claim for refund in the subsequent taxable payment is irrevocable only for the succeeding taxable year 2000
years for the unused portion of the excess tax credits carried over. and that for the taxable year 2001, petitioner is not barred from
seeking a refund of the unused tax credits carried over from year
Held: In the old Code provision, the option to carry-over the excess or 1999.
overpaid income tax for a given taxable year is limited to the
immediately succeeding taxable year only. Under the current Issue/s: WON petitioner is prohibited from claiming refund?YES
provision (SEC 76), the application of the option to carry-over the
excess creditable tax is not limited only to the immediately Held/Ratio:
following tax year but extends to the next succeeding taxable
years. Thus, once the taxpayer opts to carry-over the excess Section 76 of the NIRC of 1997 clearly states: Once the option to
income tax against the taxes due for the succeeding taxable carry-over and apply the excess quarterly income tax against
years, such option is irrevocable for the whole amount of the income tax due for the taxable quarters of the succeeding taxable
excess income tax, thus, prohibiting the taxpayer from applying years has been made, such option shall be considered irrevocable
for a refund for that same excess income tax in the next for that taxable period and no application for cash refund or
succeeding taxable years. The unutilized excess tax credits will issuance of a tax credit certificate shall be allowed therefore. Section
remain in the taxpayers account and will be carried over and 76 expressly states that the option shall be considered irrevocable
applied against the taxpayers income tax liabilities until fully for that taxable period referring to the period comprising
utilized. the succeeding taxable years. Section 76 further states that no
application for cash refund or issuance of a tax credit certificate shall
Facts: be allowed therefore referring to that taxable period comprising the
Petitioner Asiaworld filed its annual ITR for 2001. Petitioner declared succeeding taxable years.
a minimum corporate income tax (MCIT) due in the amount In the old Code provision, the option to carry-over the excess or
of P1,222,066.00, but with a refundable income tax payment. In its overpaid income tax for a given taxable year is limited to the
2001 ITR, petitioner stated an amount representing Prior Years immediately succeeding taxable year only. Under the current
Excess Credits was net of year 1999 excess creditable withholding provision (SEC 76), the application of the option to carry-over the
tax to be refunded in the amount of P18,477,144.00. Petitioner also excess creditable tax is not limited only to the immediately following
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

tax year but extends to the next succeeding taxable years. Thus, real property were included in FEBTCs gross income. The phrase Not
once the taxpayer opts to carry-over the excess income tax against Applicable was printed on the space provided for rent, sale of real
the taxes due for the succeeding taxable years, such option is property and trust income. FEBTCs explanation that its income derived
irrevocable for the whole amount of the excess income tax, thus, from rentals and sales of real properties were included in the gross
prohibiting the taxpayer from applying for a refund for that same income as Other Earnings attached to the return is not supported by the
excess income tax in the next succeeding taxable years. The evidence. FEBTC failed to produce documentary or testimonial evidence
unutilized excess tax credits will remain in the taxpayers account to prove this. Finally, FEBTC failed to present ALL the Certificates of
and will be carried over and applied against the taxpayers income Creditable Tax Withheld at Source. The burden is on the taxpayer to prove
tax liabilities until fully utilized. its entitlement to refund.

Facts:
CIR vs. FEBTC (Vanslembrouck)
FEBTC filed with the BIR a Tax Return on April 1995.
[GR. No. 173854; March 15, 2010]
o The return reflected a refundable income tax of
Failure to show that income included in gross income = refund denied
P12,682,864.00.
o The amount of P12,682,864.00 was carried over and
Recit-Ready:
applied against FEBTC income tax liability for the taxable
Facts: Far East Bank & Trust Company (FEBTC) filed a claim for a tax
year ending December 1995.
refund (for refundable income tax). Due to the failure of the BIR to
act on the claim for refund, FEBTC brought it to the CTA. The On April 1996, FEBTC filed its 1995 Annual Income Tax Return,
CTA denied the claim on the ground that FEBTC failed to show which showed a total overpaid income tax in the amount of
that the income derived from rentals and sale of real property P17,443,133.00.
from which the taxes were withheld were reflected in its Income o Out of the P17,433,133.00 refundable income tax, only
Tax Return. FEBTC appealed to the CA which reversed the CTA. P13,645,109.00 was sought to be refunded by FEBTC.
The CA gave credence to FEBTCs contention that its income o As to the remaining P3,798,024.00, FEBTC opted to carry it
derived from rentals and sales of real properties were included in over to the next taxable year.
the gross income but were classified as Other Earnings in its On May 1996, FEBTC filed a claim for refund of the amount of
Schedule of Income attached to the return. P13,645,109.00 with the BIR.
Due to the failure of petitioner Commissioner of Internal Revenue
Issue/s: WON FEBTC is entitled to a refund? (CIR) to act on the claim for refund, FEBTC was compelled to bring
the matter to the CTA on April 1997.
Held: NO. To claim a refund one has to (1) File the claim within 2 years To prove its entitlement to a refund, FEBTC presented the following
from paying the tax, (2) the income received was declared as part of the documents:
gross income, (3) The fact of withholding must be established by a copy of o Corporate Annual Income Tax Return for the year 1994
a statement showing the amount paid and the amount of tax withheld. and 1995
Although FEBTC was able to comply with the first, it failed to comply with o Certificates of Creditable Withholding Tax and Monthly
the second and the third. Remittance Returns of Income Taxes Withheld issued by
various withholding agents for the year ended December
FEBTC failed to show that the income derived from rentals and sales of 31, 1994
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o Letter claim for refund Schedule of Income attached to the return is not supported
BIR did not present any evidence. by the evidence.
o There is nothing in the Schedule of Income to show that the
Issue/s: WON FEBTC is entitled to a refund? NO income under the heading Other Earnings includes income
from rentals and sales of real property.
Held/Ratio: o No documentary or testimonial evidence was presented by
respondent to prove this.
NO, FEBTC is not entitled to a refund for (1) failure to declare the o In fact, respondent, upon realizing its omission, filed a
income received as part of the gross income and (2) failure to present motion for new trial on the ground of excusable negligence
ALL the Certificates of Creditable Tax Withheld at Source. with the CTA.
o Respondent knew that it had to present additional evidence
A taxpayer claiming for a tax credit or refund of creditable showing the breakdown of the Other Earnings reported in
withholding tax must comply with the following requisites: its Schedule of Income attached to the return to prove that
1) The claim must be filed with the CIR within the two-year the income from rentals and sales of real property were
period from the date of payment of the tax; actually included under the heading Other Earnings.
2) It must be shown on the return that the income received Third Requisite: To establish the fact of withholding, respondent
was declared as part of the gross income; and submitted Certificates of Creditable Tax Withheld at Source and
3) The fact of withholding must be established by a copy of a Monthly Remittance Returns of Income Taxes Withheld, which
statement duly issued by the payor to the payee showing pertain to rentals and sales of real property, respectively.
the amount paid and the amount of the tax withheld. o The Certificates of Creditable Tax Withheld at Source
First Requisite: FEBTC timely filed its claim for refund. submitted by FEBTC pertain to rentals of real property while
o There is no dispute that FEBTC complied with the first the Monthly Remittance Returns of Income Taxes Withheld
requirement. refer to sales of real property.
o The filing of FEBTC administrative claim for refund on May o However, a perusal of respondents 1994 Annual Income
17, 1996 and judicial claim for refund on April 8, 1997 were Tax Return shows that the gross income was derived
well within the two-year period from the date of the filing of solely from sales of services.
the return on April 10, 1995. o In fact, the phrase NOT APPLICABLE was printed on the
Second Requisite: Respondent failed to prove that the income schedules pertaining to rent, sale of real property, and trust
derived from rentals and sale of real property were included in the income.
gross income as reflected in its return. o Thus, based on the entries in the return, the income derived
o The income derived from rentals and sales of real property from rentals and sales of real property upon which the
were not included in respondents gross income. creditable taxes were withheld were not included in
o In respondents 1994 Annual Income Tax Return, the phrase respondents gross income as reflected in its return.
NOT APPLICABLE was printed on the space provided for o Since no income was reported, it follows that no tax was
rent, sale of real property and trust income. withheld.
o Respondents explanation that its income derived from o As to the certifications issued by FEBTC the same cannot
rentals and sales of real properties were included in the be considered in the absence of SEVERAL requisite
gross income but were classified as Other Earnings in its Certificates of Creditable Tax Withheld at Source.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o To reiterate, it is incumbent upon the taxpayer to reflect in agreements, Prism was to provide programming and consultancy
his return the income upon which any creditable tax is services for the installation of the Service Download Manager
required to be withheld at the source. (SDM) and the Channel Manager (CM), and for the installation
Based on the foregoing, FEBTC has failed to comply with two and implementation of Smart Money and Mobile Banking Service
essential requirements for a valid claim for refund. SIM Applications (SIM Applications) and Private Text Platform
Consequently, the same cannot be given due course. (SIM Application).
The burden is on the taxpayer to prove its entitlement to the refund.
o Moreover, the fact that the petitioner failed to present any Prism billed respondent in the amount of US$547,822.45.
evidence or to refute the evidence presented by respondent Thinking that these payments constitute royalties, respondent
does not ipso facto entitle the respondent to a tax refund. It withheld the amount of US$136,955.61 or P7,008,840.43,
is not the duty of the government to disprove a taxpayers representing the 25% royalty tax under the RP-Malaysia Tax
claim for refund. Rather, the burden of establishing the Treaty.
factual basis of a claim for a refund rests on the taxpayer.
o And while the petitioner has the power to make an Within the two-year period to claim a refund, respondent filed with
examination of the returns and to assess the correct the BIR, through the International Tax Affairs Division (ITAD), an
amount of tax, his failure to exercise such powers does not administrative claim for refund of the amount of P7,008,840.43
create a presumption in favor of the correctness of the
returns. Issue/s:
o The taxpayer must still present substantial evidence to 3) WON respondent has the right to file the claim for refund
prove his claim for refund. As we have said, there is no 4) WON payments made to Prism constitute business profits or royalties
automatic grant of a tax refund.
Hence, for failing to prove its entitlement to a tax refund, Held:
respondents claim must be denied. Since tax refunds partake of the 3) YES. Although being related parties is a factor that increases the
nature of tax exemptions, which are construed strictissimi juris latters legal interest to file a claim for refund, there is nothing in
against the taxpayer, evidence in support of a claim must likewise Philippine Guaranty to suggest that such relationship is required or
be strictissimi scrutinized and duly proven. that the lack of such relation deprives the withholding agent of the right
to file a claim for refund. Rather, what is clear in the decision is that a
CIR v. SMART COMMUNICATION, INC. (Villarin, L.) withholding agent has a legal right to file a claim for refund for two
reasons.
[GR. No. 179045-46; August 25, 2010]
4) NO. The provisions in the agreements are clear. Prism has intellectual
The right of a withholding agent to claim a refund of erroneously or illegally
property right over the SDM program, but not over the CM and SIM
withheld taxes comes with the responsibility to return the same to the
Application programs as the proprietary rights of these programs
principal taxpayer.
belong to respondent.
Recit-Ready:
Facts:
Facts: SMART entered into three Agreements for Programming and
Consultancy Services with Prism, a non-resident corporation duly On May 25, 2001, SMART entered into three Agreements for
organized and existing under the laws of Malaysia. Under the Programming and Consultancy Services with Prism Transactive (M) Sdn.
Bhd. (Prism), a non-resident corporation duly organized and existing
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

under the laws of Malaysia. Under the agreements, Prism was to provide proper party, there is no showing that the payments made to Prism
programming and consultancy services for the installation of the Service constitute business profits.
Download Manager (SDM) and the Channel Manager (CM), and for the The Second Division of the CTA upheld respondents right, as a
installation and implementation of Smart Money and Mobile Banking withholding agent, to file the claim for refund citing several cases.
Service SIM Applications (SIM Applications) and Private Text Platform However, as to the claim for refund, it found respondent entitled only to a
(SIM Application). partial refund. Although it agreed with respondent that the payments for
On June 25, 2001, Prism billed respondent in the amount of the CM and SIM Application Agreements are business profits, and
US$547,822.45, broken down as follows: therefore, not subject to tax under the RP-Malaysia Tax Treaty, the
SDM Agreement US$236,000.00 payment for the SDM Agreement a royalty subject to withholding tax.
CM Agreement 296,000.00 Accordingly, respondent was granted refund in the amount of
SIM Application Agreement 15,822.45 P3,989,456.43, computed as follows:
Total US$547,822.45

Thinking that these payments constitute royalties, respondent withheld Particulars Amount (in US$)
the amount of US$136,955.61 or P7,008,840.43, representing the 25% 1. CM 296,000.00
royalty tax under the RP-Malaysia Tax Treaty. 2. SIM Application 15,822.45
Total US$311,822.45
On September 25, 2001, respondent filed its Monthly Remittance Return
of Final Income Taxes Withheld for the month of August 2001. Particulars Amount
Within the two-year period to claim a refund, respondent filed with the Tax Base US$311,822.45
BIR, through the International Tax Affairs Division (ITAD), an Multiply by: Withholding Tax Rate 25%
Final Withholding Tax US$ 77,955.61
administrative claim for refund of the amount of P7,008,840.43. Multiply by: Prevailing Exchange
Due to the failure of the petitioner CI to act on the claim for refund, Rate 51.176
respondent filed a Petition for Review with the CTA which was raffled to Tax Refund Due P3,989,456.43
its Second Division.
Both parties moved for partial reconsideration but the CTA Second
In its Petition for Review, respondent claimed that it is entitled to a refund
Division denied the motions. Both parties appealed to the CTA En Banc
because the payments made to Prism are not royalties but business
by filing their respective Petitions for Review, which were consolidated.
profits, pursuant to the definition of royalties under the RP-Malaysia Tax
Treaty, and in view of the pertinent Commentaries of the Organization for On June 28, 2007, the CTA En Banc affirmed the partial refund granted
Economic Cooperation and Development (OECD) Committee on Fiscal to respondent. In sustaining respondents right to file the claim for refund,
Affairs through the Technical Advisory Group on Treaty Characterization the CTA En Banc said that although respondent and Prism are unrelated
of Electronic Commerce Payments. Respondent further averred that entities, such circumstance does not affect the status of respondent as a
since under Article 7 of the RP-Malaysia Tax Treaty, business profits are party-in-interest as its legal interest is based on its direct and independent
taxable in the Philippines only if attributable to a permanent establishment liability under the withholding tax system. The CTA En Banc also
in the Philippines, the payments made to Prism, a Malaysian company concurred with the Second Divisions characterization of the payments
with no permanent establishment in the Philippines, should not be taxed. made to Prism, specifically that the payments for the CM and SIM
Application Agreements constitute business profits, while the payment for
On December 1, 2003, petitioner filed his Answer arguing that
the SDM Agreement is a royalty.
respondent, as withholding agent, is not a party-in-interest to file the claim
for refund, and that assuming for the sake of argument that it is the Only petitioner sought reconsideration of the Decision but it was denied.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Issue/s: alleged to have been excessively or in any manner wrongfully


1) WON respondent has the right to file the claim for refund YES collected, until a claim for refund or credit has been duly filed with
2) WON payments made to Prism constitute business profits or the Commissioner; but such suit or proceeding may be maintained,
royalties whether or not such tax, penalty, or sum has been paid under protest
SDM program, ROYALTY subject to 25% tax or duress.
CM & SIM Applications, BUSINESS PROFITS not subject to tax In any case, no such suit or proceeding shall be filed after the
expiration of two (2) years from the date of payment of the tax or
Held/Ratio: Petition is bereft of merit. penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even
1) YES. Although being related parties is a factor that increases the without a written claim therefor, refund or credit any tax, where on the
latters legal interest to file a claim for refund, there is nothing in face of the return upon which payment was made, such payment
Philippine Guaranty to suggest that such relationship is required appears clearly to have been erroneously paid. (Emphasis supplied)
or that the lack of such relation deprives the withholding agent of Pursuant to the foregoing, the person entitled to claim a tax refund is
the right to file a claim for refund. Rather, what is clear in the the taxpayer. However, in case the taxpayer does not file a claim for
decision is that a withholding agent has a legal right to file a claim refund, the withholding agent may file the claim.
for refund for two reasons. In Commissioner of Internal Revenue v. Procter & Gamble
Sections 204(c) and 229 of the National Internal Revenue Code Philippine Manufacturing Corporation, a withholding agent was
(NIRC) provide: considered a proper party to file a claim for refund of the withheld
taxes of its foreign parent company. Pertinent portions of the
Sec. 204. Authority of the Commissioner to Compromise, Abate, and Decision read:
Refund or Credit Taxes. The Commissioner may A person liable for tax has been held to be a person subject
xxxx to tax and properly considered a taxpayer. The terms liable
(C) Credit or refund taxes erroneously or illegally received or penalties for tax and subject to tax both connote legal obligation or duty
imposed without authority, refund the value of internal revenue stamps to pay a tax. It is very difficult, indeed conceptually
when they are returned in good condition by the purchaser, and, in his impossible, to consider a person who is statutorily made
discretion, redeem or change unused stamps that have been rendered liable for tax as not subject to tax. By any reasonable
unfit for use and refund their value upon proof of destruction. No credit standard, such a person should be regarded as a party in
or refund of taxes or penalties shall be allowed unless the taxpayer interest, or as a person having sufficient legal interest, to
files in writing with the Commissioner a claim for credit or refund bring a suit for refund of taxes he believes were illegally
within two (2) years after the payment of the tax or penalty: collected from him.
Provided, however, That a return filed showing an overpayment shall In Philippine Guaranty Company, Inc. v. CIR, this Court
be considered as a written claim for credit or refund. x x x x pointed out that a withholding agent is in fact the agent both
of the government and of the taxpayer, and that the
Sec. 229. Recovery of Tax Erroneously or Illegally Collected. No suit withholding agent is not an ordinary government agent:
or proceeding shall be maintained in any court for the recovery of any o The law sets no condition for the personal liability of
national internal revenue tax hereafter alleged to have been the withholding agent to attach. The reason is to
erroneously or illegally assessed or collected, or of any penalty compel the withholding agent to withhold the tax
claimed to have been collected without authority, or of any sum under all circumstances. In effect, the responsibility
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

for the collection of the tax as well as the payment what is clear in the decision is that a withholding agent has a legal
thereof is concentrated upon the person over whom right to file a claim for refund for two reasons. First, he is considered a
the Government has jurisdiction. Thus, the taxpayer under the NIRC as he is personally liable for the withholding
withholding agent is constituted the agent of both the tax as well as for deficiency assessments, surcharges, and penalties,
Government and the taxpayer. With respect to the should the amount of the tax withheld be finally found to be less than
collection and/or withholding of the tax, he is the the amount that should have been withheld under law. Second, as an
Governments agent. In regard to the filing of the agent of the taxpayer, his authority to file the necessary income tax
necessary income tax return and the payment of the return and to remit the tax withheld to the government impliedly
tax to the Government, he is the agent of the includes the authority to file a claim for refund and to bring an action
taxpayer. The withholding agent, therefore, is no for recovery of such claim.
ordinary government agent especially because under In this connection, it is however significant to add that while the
Section 53 (c) he is held personally liable for the tax withholding agent has the right to recover the taxes erroneously or
he is duty bound to withhold; whereas the illegally collected, he nevertheless has the obligation to remit the same
Commissioner and his deputies are not made liable to the principal taxpayer.
by law. As to Silkair (Singapore) Pte, Ltd. v. CIR cited by the petitioner, we
If, as pointed out in Philippine Guaranty, the withholding find the same inapplicable as it involves excise taxes, not withholding
agent is also an agent of the beneficial owner of the taxes. In that case, it was ruled that the proper party to question, or
dividends with respect to the filing of the necessary seek a refund of, an indirect tax is the statutory taxpayer, the person
income tax return and with respect to actual payment of on whom the tax is imposed by law and who paid the same even if he
the tax to the government, such authority may shifts the burden thereof to another.
reasonably be held to include the authority to file a claim
for refund and to bring an action for recovery of such 2) NO. The provisions in the agreements are clear. Prism has
claim. This implied authority is especially warranted where, intellectual property right over the SDM program, but not over the
as in the instant case, the withholding agent is the wholly CM and SIM Application programs as the proprietary rights of these
owned subsidiary of the parent-stockholder and therefore, at programs belong to respondent.
all times, under the effective control of such parent- Under the RP-Malaysia Tax Treaty, the term royalties is defined as
stockholder. In the circumstances of this case, it seems payments of any kind received as consideration for: (i) the use of, or
particularly unreal to deny the implied authority of P&G-Phil. the right to use, any patent, trade mark, design or model, plan, secret
to claim a refund and to commence an action for such refund. formula or process, any copyright of literary, artistic or scientific work,
x x x x (Emphasis supplied.) or for the use of, or the right to use, industrial, commercial, or scientific
Petitioner, however, submits that this ruling applies only when the equipment, or for information concerning industrial, commercial or
withholding agent and the taxpayer are related parties, i.e., where the scientific experience; (ii) the use of, or the right to use, cinematograph
withholding agent is a wholly owned subsidiary of the taxpayer. films, or tapes for radio or television broadcasting. These are taxed at
We do not agree. Although such relation between the taxpayer and the the rate of 25% of the gross amount.
withholding agent is a factor that increases the latters legal interest to Under the same Treaty, the business profits of an enterprise of a
file a claim for refund, there is nothing in the decision to suggest that Contracting State is taxable only in that State, unless the enterprise
such relationship is required or that the lack of such relation deprives carries on business in the other Contracting State through a
the withholding agent of the right to file a claim for refund. Rather, permanent establishment. The term permanent establishment is
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

defined as a fixed place of business where the enterprise is wholly or conducted by the DOF, it was found out that the TCCs issued to
partly carried on. However, even if there is no fixed place of business, the TCC transferors were fraudulently obtained and fraudulently
an enterprise of a Contracting State is deemed to have a permanent transferred to Petron. Thus, the TCCs and TDMs issued to Petron
establishment in the other Contracting State if it carries on supervisory were cancelled by the DOF.
activities in that other State for more than six months in connection Now, the CIR issued an assessment against Petron for deficiency
with a construction, installation or assembly project which is being excise taxes for the taxable years 1995-1998, inclusive of
undertaken in that other State. surcharges and interests, on the ground that the TCCs which
In the instant case, it was established during the trial that Prism does Petron used to pay its taxes were cancelled and therefore has the
not have a permanent establishment in the Philippines. Hence, effect of nonpayment of taxes. The CIR also alleged that Petron
business profits derived from Prisms dealings with respondent are not has the intent to evade its taxes, thus making the returns it filed
taxable. The question is whether the payments made to Prism under fraudulent.
the SDM, CM, and SIM Application agreements are business profits In the stipulation of facts between the parties, one of the judicial
and not royalties. admissions was that Petron never participated in the procurement
The provisions in the agreements are clear. Prism has intellectual and issuance of the TCCs to its transferors. Also, before the CTA
property right over the SDM program, but not over the CM and SIM En Banc, it was held that Petron was an innocent purchaser in
Application programs as the proprietary rights of these programs good faith and for value.
belong to respondent. In other words, out of the payments made to
Prism, only the payment for the SDM program is a royalty subject to a Issue/s:
25% withholding tax. A refund of the erroneously withheld royalty 1) Whether Petron was involved in the perpetration of fraud in the
taxes for the payments pertaining to the CM and SIM Application transfer and use of the TCCs.
Agreements is therefore in order. 2) Whether Petron can validly claim the right of innocent transferee
Indeed, the government has no right to retain what does not belong to for value.
it. No one, not even the State, should enrich oneself at the expense of 3) Whether government is stopped from connecting taxes due.
another. 4) Whether respondent is liable for 25% surcharge and 20% interest
per annum pursuant to 248 and 249 of NIRC.WON Queeny Lim
acts like a cartoon character.
CIR v PETRON CORP. (VILLARIN P)
[GR. No. 185568; March 21, 2012]
Held:
Recit-Ready:
1) NO. Petron has not been shown or proven to have participated in the
Facts: For the taxable years of 1995-1998, Petron Corp paid its tax
alleged fraudulent acts involved in the transfer and utilization of the
liabilities with the Tax Credit Certificates (TCC) it received from
subject TCCs.
different BOI-registered companies as consideration for the
Petron had the right to rely on the joint stipulation that absolved it from
delivery of petroleum products to these companies. Petrons
any participation in the alleged fraud pertaining to the issuance and
acceptance and use of the TCCs has been continuously
procurement of the subject TCCs.
approved by the Department of Finance as well as the BIR
The joint stipulation made by the parties consequently obviated the
Collection Program Division through its surrender and
opportunity of the CIR to present evidence on this matter, as no proof
subsequent issuance of Tax Debit Memos (TDMs). In a post-audit
is required for an admission made by a party in the course of the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

proceedings. Thus, the CIR cannot now be allowed to change its registered companies as consideration for the delivery of petroleum
stand and renege on that admission. products to these companies. Petrons acceptance and use of the TCCs
2) YES. has been continuously approved by the Department of Finance as well as
It is a well-settled rule in jurisprudence that TCCs are valid and the BIR Collection Program Division through its surrender and
effective from their issuance and are not subject to a post-audit as a subsequent issuance of Tax Debit Memos (TDMs). In a post-audit
suspensive condition for their validity. Thus, Petron has the right to conducted by the DOF, it was found out that the TCCs issued to the TCC
rely on the validity and effectivity of the TCCs that were assigned to it. transferors were fraudulently obtained and fraudulently transferred to
In finally determining their effectivity in the settlement of Petrons Petron. Thus, the TCCs and TDMs issued to Petron were cancelled by
excise tax liabilities, the validity of those TCCs should not depend on the DOF.
the results of the DOFs post-audit findings. Now, the CIR issued an assessment against Petron for deficiency excise
As an exception, the transferee/assignee may be held liable if proven taxes for the taxable years 1995-1998 in the amount of 739,003,036.32,
to have been a party to the fraud or to have had knowledge of the inclusive of surcharges and interests, on the ground that the TCCs which
fraudulent issuance of the subject TCCs. But here, the parties entered Petron used to pay its taxes were cancelled by the DOF for having been
into a joint stipulation of facts stating that Petron did not participate in fraudulently issued and transferred and therefore has the effect of
the procurement or issuance of those TCCs. Thus, the exception to nonpayment of taxes. The CIR also alleged that Petron has the intent to
the rule is not applicable as Petron was an innocent transferee for evade its taxes, thus making the returns it filed fraudulent.
value of the TCCs. Instead of submitting the documents required by the respondent
3) YES The Court recognizes that estoppel does not apply to the petitioner filed its protest letter to the Assessment.
government, especially on matters of taxation. Taxes are the nations Thereafter, CIR served a Warrant of Distraint and/or Levy on petitioner to
lifeblood through which government agencies continue to operate and enforce payment of the 739,003,036.32 tax deficiencies. CIR allegedly
with which the State discharges its functions for the welfare of its served the Warrant of Distraint and/or Levy against petitioner without first
constituents. As an exception, however, this general rule cannot be acting on its letter-protest. Thus, construing the Warrant of Distraint
applied if it would work injustice against an innocent party. and/or Levy as the final adverse decision of the BIR on its protest of the
Petron, in this case, was not proven to have had any participation in or assessment, Petron filed the instant petition before the CTA in Division.
knowledge of the CIRs allegation of the fraudulent transfer and Denying the petition, the CTA held Petron liable for deficiency excise
utilization of the subject TCCs. Respondents status as a transferee in taxes on the ground that the cancellation by the DOF of the TCCs
good faith and for value of these TCCs has been established and even previously issued to and utilized by respondent to settle its tax liabilities
stipulated upon by petitioner. had the effect of nonpayment of the latters excise taxes. These taxes
4) NO. Petron is an innocent transferee for value of the subject TCCs. corresponded to the value of the TCCs Petron used for payment.
Consequently, the Tax Returns it filed for the years 1995 to 1998 are It further ruled that Petrons acceptance of the TCCs was considered a
not considered fraudulent. Hence, the CIR had no legal basis to assess contract entered into by respondent with the CIR and subject to post-
the excise taxes or any penalty surcharge or interest thereon, as audit, which was considered a suspensive condition.
respondent had already paid the appropriate excise taxes using the Moreover, the CTA, finding that the circumstances pertaining to the
subject TCCs. issuance of the subject TCCs and their transfer to Petron brim with fraud.
Hence, the said court concluded that since the TCCs used by Petron
Facts: were found to be spurious, respondent was deemed to have not paid its
For the taxable years of 1995-1998, Petron Corp paid its tax liabilities excise taxes and ought to be liable to the CIR.
with the Tax Credit Certificates (TCC) it received from different BOI-
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Aggrieved, Petron appealed the Decision to the CTA EB. not fraudulently filed its excise tax returns. Consequently, the assessment
CTA EB absolved Petron from any deficiency excise tax liability for issued by the CIR against it had no legal basis.
taxable years 1995 to 1998. Its ruling in favor of Petron was anchored on Issue: W/N the post-audit report has the effect of a suspensive condition
this Courts pronouncements in Pilipinas Shell Petroleum Corp. v. that would determine the validity of the TCCs
Commissioner of Internal Revenue, which found that the factual No. It is a well-settled rule in jurisprudence that TCCs are valid and
background and legal issues therein were similar to those in the present effective from their issuance and are not subject to a post-audit as a
case. suspensive condition for their validity. Thus, Petron has the right to rely
In resolving the issues, the CTA EB adopted the main points in Shell, on the validity and effectivity of the TCCs that were assigned to it. In
which it quoted at length as basis for deciding the appeal in favor of finally determining their effectivity in the settlement of Petrons excise tax
Petron. The gist of the main points of Shell cited by the said court is as liabilities, the validity of those TCCs should not depend on the results of
follows: the DOFs post-audit findings.
o The issued TCCs are immediately valid and effective and are not As an exception, the transferee/assignee may be held liable if proven to
subject to a post-audit as a suspensive condition have been a party to the fraud or to have had knowledge of the fraudulent
o A TCC is subject only to the following conditions: issuance of the subject TCCs. But here, the parties entered into a joint
Post-audit in the event of a computational discrepancy stipulation of facts stating that Petron did not participate in the
A reduction for any outstanding account with the BIR and/or procurement or issuance of those TCCs. Thus, the exception to the rule
BOC is not applicable as Petron was an innocent transferee for value of the
A revalidation of the TCC if not utilized within one year from TCCs.
issuance or date of utilization Issue 2: W/N the doctrine of non-applicability of estoppel to the
o A transferee of a TCC should only be a BOI-registered firm under government apply in this case
the IRR of EO No. 226. No. As a general rule, the principle of estoppel does not apply to the
o The liability clause in the TCCs provides only for the solidary liability government, especially on matters of taxation. Taxes are the nations
of the transferee relative to its transfer in the event it is a party to the lifeblood through which government agencies continue to operate and
fraud. with which the State discharges its functions for the welfare of its
o A transferee can rely on the Centers approval of the TCCs transfer constituents. The exception however is that this rule cannot be applied it
and subsequent acceptance as payment of the transferees excise if it would work injustice against an innocent party.
tax liability. Petron has not been proven to have had any participation in or
o A TCC cannot be cancelled by the Center, as it was already knowledge of the CIRs allegation of fraudulent transfer and utilization of
cancelled after the transferee had applied it as payment for the the TCCs. Petrons status as an innocent purchaser for value has been
latters excise tax liabilities. established and even stipulated upon by the CIR. Petron was thereby
The CTA EB also found that Petron had no participation in or knowledge amply protected from the adverse findings subsequently made by the
of the fraudulent issuance and transfer of the subject TCCs. DOF agency
Finally, the CTA EB ruled that Petron was considered an innocent
transferee of the subject TCCs and may not be prejudiced by a re- Issue/s:
assessment of excise tax liabilities that respondent has already settled, 1) Whether Petron was involved in the perpetration of fraud in the
when due, with the use of the TCCs. Petron is thus considered to have transfer and use of the TCCs. NO
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

2) Whether Petron can validly claim the right of innocent transferee for export sales declared to the Center and made the basis for the
value.YES issuance of the TCCs assigned to Petron.
3) Whether government is estopped from collecting taxes due.YES Thus, the CIR believes respondent was a transferee in good faith
4) Whether respondent is liable for 25% surcharge and 20% interest per and for value of the subject TCCs. Not finding merit in the CIRs
annum pursuant to 248 and 249 of NIRC.NO contention, we affirm the ruling of the CTA En Banc finding that
Petron is a transferee in good faith and for value of the subject
Held/Ratio: WHEREFORE, the CIRs Petition is DENIED for lack of merit. TCCs. From the records, we observe that the CIR had no allegation
The CTA En Banc Decision dated 03 December 2008 in CTA EB No. 311 is that there was a deviation from the process for the approval of the
hereby AFFIRMED in toto. No pronouncement as to costs. TCCs, which Petron used as payment to settle its excise tax
liabilities for the years 1995 to 1998.
1) NO. However, any merit in the position of petitioner on this issue is
Under RR 5-2000, a TCC may be used by the grantee or its negated by the Joint Stipulation it entered into with Petron in the
assignee in the payment of its direct internal revenue tax liability. It proceedings before the said Division. This stipulation of fact by the
may be transferred in favor of an assignee subject to the following CIR amounts to an admission and, having been made by the parties
conditions: 1) the TCC transfer must be with prior approval of the in a stipulation of facts at pretrial, is treated as a judicial admission.
Commissioner or the duly authorized representative; 2) the transfer Petron has not been shown or proven to have participated in the
of a TCC should be limited to one transfer only; and 3) the alleged fraudulent acts involved in the transfer and utilization of the
transferee shall strictly use the TCC for the payment of the subject TCCs.
assignees direct internal revenue tax liability and shall not be Petron had the right to rely on the joint stipulation that absolved it
convertible to cash. from any participation in the alleged fraud pertaining to the issuance
A TCC is valid only for 10 years subject to the following rules: (1) it and procurement of the subject TCCs.
must be utilized within five (5) years from the date of issue; and (2) it The joint stipulation made by the parties consequently obviated the
must be revalidated thereafter or be otherwise considered invalid opportunity of the CIR to present evidence on this matter, as no
A TCC undergoes a stringent process of verification by various proof is required for an admission made by a party in the course of
specialized government agencies before it is accepted as payment the proceedings. Thus, the CIR cannot now be allowed to change its
of an assignees tax liability. stand and renege on that admission.
In the case at bar, CIR believes that there was substantial evidence Moreover, a close examination of the arguments proffered by the
to support its allegation of a fraudulent transfer of the TCCs to CIR in their Petition calls for a reevaluation of the sufficiency of
Petron. It further contends that respondent was not a qualified evidence in the case. A recalibration of the sufficiency of evidence
transferee of the TCCs, because the latter did not supply petroleum presented by the CIR is needed for a different conclusion to be
products to the companies that were the assignors of the subject reached. It is basic that where it is the sufficiency of evidence that is
TCCs. being questioned, there is a question of fact. It is not the function of
The CIR bases its contentions on the DOFs post-audit findings this Court to analyze or weigh the evidence all over again, unless
stating that, for the periods covering 1995 to 1998, Petron did not there is a showing that the findings of the lower court are totally
deliver fuel and other petroleum products to the companies (the devoid of support or are glaringly erroneous as to constitute
transferor companies) that had assigned the subject TCCs to palpable error or grave abuse of discretion. Such an exception does
respondent. Petitioner further alleges that the findings indicate that not obtain in the circumstances of this case.
the transferor companies could not have had such a high volume of
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

prescriptive period within which to lawfully assess Petron for its tax
2) YES. liabilities has not prescribed under Section 222 (a) of the Tax Code.
It is a well-settled rule in jurisprudence that TCCs are valid and The CIR explains that respondents assessment on 30 January 2002
effective from their issuance and are not subject to a post-audit as a of respondents deficiency excise tax for the years 1995 to 1998 was
suspensive condition for their validity. Thus, Petron has the right to well within the ten-year prescription period.
rely on the validity and effectivity of the TCCs that were assigned to As explained in the main ruling (issue #1), Petron is an innocent
it. In finally determining their effectivity in the settlement of Petrons transferee for value of the subject TCCs. Consequently, the Tax
excise tax liabilities, the validity of those TCCs should not depend on Returns it filed for the years 1995 to 1998 are not considered
the results of the DOFs post-audit findings. fraudulent. Hence, the CIR had no legal basis to assess the excise
As an exception, the transferee/assignee may be held liable if taxes or any penalty surcharge or interest thereon, as respondent
proven to have been a party to the fraud or to have had knowledge had already paid the appropriate excise taxes using the subject
of the fraudulent issuance of the subject TCCs. But here, the parties TCCs.
entered into a joint stipulation of facts stating that Petron did not
participate in the procurement or issuance of those TCCs. Thus, the UNITED AIRLINES, INC. v. CIR (Villarivera)
exception to the rule is not applicable as Petron was an innocent [GR. No. 178788; September 29, 2010]
transferee for value of the TCCs. Gusto ng CIR to annul the sheriffs sale of 4 barges ni Maritime OR bigay sa
3) YES kanila (BIR) ang proceeds pambayad sa tax due ni Maritime Co.
The Court recognizes that estoppel does not apply to the
government, especially on matters of taxation. Taxes are the nations Recit-Ready:
lifeblood through which government agencies continue to operate United was a foreign corporation, engaged in international airline
and with which the State discharges its functions for the welfare of business. It ceased operating passenger flights from the
its constituents. As an exception, however, this general rule cannot Philippines beginning 1998. It erroneously paid passenger Gross
be applied if it would work injustice against an innocent party. Philippine Billings (GPB) in 1999 so it sought a refund. The CTA
Petron, in this case, was not proven to have had any participation in found that United erroneously deducted items from its cargo GPB
or knowledge of the CIRs allegation of the fraudulent transfer and so United underpaid its cargo revenue taxes by P31.43 million,
utilization of the subject TCCs. Respondents status as a transferee which amount was way higher than the P5.03 million in
in good faith and for value of these TCCs has been established and Passenger GPBs tax it asked to be refunded.
even stipulated upon by petitioner. Given the circumstances, the
CIRs invocation of the non-applicability of estoppel in this case is CTA denied refund and the MR. This was affirmed by CTA EB.
misplaced. Hence present petition.

4) NO United argues that to deny refund on the basis of its larger cargo
CIR contends that a 25% surcharge and a 20% interest per annum liability amounts to setting off which is contrary to the well-
must be imposed upon Petron for respondents excise tax liabilities entrenched rule that taxes cannot be off set.
as mandated under Sections 248 and 249 of the National Internal
Revenue Code (NIRC). Petitioner considers the tax returns filed by The SC held that:
respondent for the years 1995 to 1998 as fraudulent on the basis of (1) Subject of claim for tax refund is the tax paid on passenger
the post-audit finding that the TCCs were void. It argues that the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

revenue for taxable year 1999 at the time when petitioner was still o United continued operating cargo flights until January 31,
operating cargo flights originating from the Philippines. The CTA 2001.
found that petitioner had underpaid its GPB tax for 1999 because United filed with the CIR on April 12, 2002 a claim for income tax
petitioner had made deductions from its gross cargo revenues in refund pursuant to Section 28(A)(3)(a)6 of the NIRC in relation to
the income tax return it filed for the taxable year 1999, the Article 4(7)7 of the RP-US Tax Treaty
amount of underpayment even greater than the refund sought for o It sought to refund a total amount of P15,916,680.69
erroneously paid GPB tax on passenger revenues for the same pertaining to gross passenger and cargo revenues for years
taxable period. Hence, the CTA ruled petitioner is not entitled to a 1999 to 2001
tax refund. Petitioners arguments regarding the propriety of such o P5,028,813.23 (the relevant amount in this case) pertained
determination by the CTA are misplaced. Under Section 72 of the allegedly to income taxes paid in 1999 on passenger
NIRC, the CTA can make a valid finding that petitioner made revenue tickets sold in the Philippines the uplifts of which
erroneous deductions on its gross cargo revenue; that because of did not originate in the Philippines
the erroneous deductions, petitioner reported a lower cargo Since it no longer operated passenger flights,
revenue and paid a lower income tax thereon; and that United argued that its passenger income from 1999
petitioners underpayment of the income tax on cargo revenue is to 2001 is not income from sources within the
even higher than the income tax it paid on passenger revenue Philippines
subject of the claim for refund, such that the refund cannot be As such, it should be subject to Article 98 of the RP-
granted. US Treaty.
United filed with the CTA a petition for review on April 15, 2002 there
(2) Also, while as a general rule, taxes cannot be offset, there are being no resolution on its claim and in view of the 2 year prescriptive
exceptions. Citing the case of Citytrust (CIR v. CTA), the SC held period (from the time of filing of Final Adjustment Return for taxable
that in order to avoid multiplicity of suits and pursuant to the then year 1999).
Sec. 82 of the NIRC, refund may be denied when the returns o United asserts that under the new definition of Gross
accuracy is challenged and the deficiency assessment is made in Philippine Billings, the Philippines has jurisdiction to tax only
the same case. Here, the return filed by United for 1999 (its basis
of the claim for refund) is challenged when it was ruled that the
passenger sales should be subject to the Sec. 28(A)(1) instead of 6
SEC. 28. Rates of Income Tax on Foreign Corporations. -
Sec. 28(A)(3)(a) and the CTA made the proper assessment of the (a) International Air Carrier - "Gross Philippine Billings" refers to the amount of gross
deficiency when the case was elevated to them from the CIR. revenue derived from carriage of persons, excess baggage, cargo and mail originating from
the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or
Lastly, tax refunds are construed against the taxpayer. issue and the place of payment of the ticket or passage document: xxx.
7
Source of Income
(7) Gross revenues from the operation of ships in international traffic shall be treated as
Facts:
from sources within a Contracting State to the extent they are derived from international
United Airlines, Inc. (United) operated passenger and cargo flights traffic originating in that State.
in and out of the Philippines.
8
Article 9
Shipping and Air Transport
o In February 21, 1998, it ceased operating passenger flights 2) Nothing in the Convention shall affect the right of a Contracting State to tax, in
and appointed Aerotel Ltd. Corp.an independent general accordance with its domestic laws, profits derived by a resident of the other Contracting
sales agentas its sales agent. State from sources within the first-mentioned Contracting State from the operation of
aircraft in international traffic.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

the gross revenue derived by US air and shipping carriers


from outgoing traffic in the Philippines. 1. Basically, United argues that the claim for cannot be denied on the
o Hence BIR erroneously imposed and collected income tax basis of its underpaid taxes is higher than the amount claimed for
in 1999 (P5,028,813.23) based on Uniteds gross refund. This, United claims, amounts to an offsetting of taxes which
passenger revenue as United no longer flew passenger contravenes the well-entrenched rule that taxes cannot be the
flights in 1998. subject of set-off or compensation.
CTA ruled that no excess or erroneously paid tax may be
refunded to United because the income tax on Gross Philippine 2. Preliminarily, United is not subject to the Gross Philippine Billings
Billings applies as well to gross revenue from carriage of pertaining to passengers
cargoes from the Philippines. a. South African Airways v. CIR - if an international air carrier
o CTA agreed that United cannot be taxed for its 1999 maintains flights to and from the Philippines, it shall be
passenger revenue. taxed at the rate of 2% (Sec. 28(A)(3)(a)) of its GPB,
o However, upon investigation, CTA found that United while international air carriers that do not have flights to and
erroneously deducted two items (commission and other from the Philippines but nonetheless earn income from
incentives) from its cargo gross revenue before applying the other activities in the country will be taxed at the rate of
tax rate. 32% (Sec. 28(A)(1)) of such income.
CTA notes that this was wrong. GROSS nga eh. b. Even if it is not subject to this, it was still subject to Cargo
Thus, Uniteds Gross Philippine Billings tax on Gross Philippine Billings.
Cargo in 1999 was P42.54 million but it only paid
P11.1 million. 3. Under Section 72 of NIRC, CTA may make a valid finding that
So, United underpaid its cargo revenue taxes by United made erroneous deductions on its gross cargo revenue; that
P31.43 million, which amount was much much because of the erroneous deductions, petitioner reported a lower
much higher than the P5.03 million in Passenger cargo revenue and paid a lower income tax thereon; and that
Gross Philippine Billings tax it asked to be petitioner's underpayment of the income tax on cargo revenue is
refunded; the amount of underpayment is higher even higher than the income tax it paid on passenger revenue
that amount of refund. subject of the claim for refund, such that the refund cannot be
o The MR was denied. granted.
CTA EB affirmed in toto.
4. Petitioner is also correct that under civil code, there can be no off-
Issues: set; however, there is an exception
Whether United is entitled to refund of P5,028,813.23 it paid as a. GR (NO SET-OFF): taxes cannot be subject to
income tax on passenger revenues in 1999. - NO compensation for the simple reason that the government
and the taxpayer are not creditors and debtors of each
Held: WHEREFORE, we DENY the petition for lack of merit other. Debts are due to the Government in its corporate
and AFFIRM the Decision dated July 5, 2007 of the Court of Tax Appeals En capacity, while taxes are due to the Government in its
Banc in C.T.A. EB No. 227. sovereign capacity
b. EXCEPTION:
Ratio:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

i. In CIR v. CTAto award tax refund despite 1. Thus, a return


deficiency tax assessment is an absurdity. whose accuracy
1. SC granted offsetting of tax refund with tax is challenged
deficiency on the basis of Section 82 cannot be the
(NOW Section 72) of the Code. basis of the
a. Section 83 (Now 72) provides that grant of refund
(w)hen an assessment is made b. Moreover, to grant the refund
in case of any list, statement, or without determination of the
return, which in the opinion of the proper assessment and the tax
Commissioner of Internal due would inevitably result in
Revenue was false or fraudulent multiplicity of proceedings or
or contained any understatement suits.
or undervaluation, no tax i. If later on the deficiency
collected under such assessment assessment is upheld,
shall be recovered by any suits the government would
unless it is proved that the said have to collect the taxes
list, statement, or return was not it refunded.
false nor fraudulent and did not c. Thus, to avoid multiplicity of suits
contain any understatement or and unnecessary difficulties or
undervaluation; but this provision expenses, it is both logically
shall not apply to statements or necessary and legally appropriate
returns made or to be made in that the issue of the deficiency tax
good faith regarding annual assessment against Citytrust
depreciation of oil or gas wells (petitioner in case cited) be
and mines." resolved jointly with its claim for
i. The grant of refund is tax refund, to determine once and
found on the assumption for all in a single proceeding the
that the tax return is true and correct amount of tax
valid, the facts stated due or refundable.
therein are true and
correct. 2. HERE, petitioners similar tax refund claim
ii. However, a deficiency assumes that the tax return that it filed
assessment, although not was correct. Given, however, the finding of
yet final, creates a doubt the CTA that petitioner, although not liable
as to and constitutes a under Sec. 28(A)(3)(a) of the 1997 NIRC,
challenge against the is liable under Sec. 28(A)(1), the
truth and accuracy of the correctness of the return filed by petitioner
facts stated in the return.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

is now put in doubt. As such, we cannot REVENUE REGULATION 14-2011


grant the prayer for a refund
a. On the assumption that petitioner
filed a correct return, it had the REVENUE REGULATION 14-2011
right to file a claim for refund of
GPB tax on passenger revenues SUBJECT: Amending Certain Provision of Revenue Regulation No.
it paid in 1999 5-2000 as amended, Prescribing the Regulations Governing the
b. However, upon examination by Manner of the Issuance of Tax Credit Certificates, and the Conditions
the CTA, petitioners return was for their Use, Revalidation and Transfer.
found erroneous as it understated
its gross cargo revenue for the TO: All Revenue Officials, Employees and Others Concerned
same taxable year due to
deductions of two (2) items SECTION 1. SCOPE Pursuant to provision of Sec 244 and 245 of the
c. Having underpaid the GPB tax National Internal Revenue Code of 1997 (Tax Code), as amended, in
due on its cargo revenues for relation to Sections 76, 112, 130, 135, 204 and 230 all of the same Tax
1999, petitioner is not entitled to a Code, these Regulations are hereby promulgated to amend certain
refund of its GPB tax on its provision of Revenue Regulations (RR) No. 5-2000, as amended.
passenger revenue, the amount
of the former being even much SECTION 2. ASSIGNMENT OR TRANSFERS Section 4 of RR No. 5-
higher (P31.43 million) than the 2000, as amended is hereby modified to read as follows:
tax refund sought (P5.2 million)
d. The CTA therefore correctly SEC. 4 ASSIGNMENT OR TRANSFER
denied the claim for tax refund
after determining the proper All Tax Credit Certificates (TCCs) issued by the BIR shall
assessment and the tax due not be allowed to be transferred or assigned to any person.
5. We must emphasize that tax refunds, like tax exemptions, are
construed strictly against the taxpayer and liberally in favor of the SECTION 3. REPEALING CLAUSE The provisions of RR 5-2000 and
taxing authority. In any event, petitioner has not discharged its all other issuances or portions thereof which are inconsistent with the
burden of proof in establishing the factual basis for its claim for a provisions of these regulations are hereby repealed, amended or modified
refund and we find no reason to disturb the ruling of the CTA. It has accordingly.
been a long-standing policy and practice of the Court to respect the
conclusions of quasi-judicial agencies such as the CTA, a highly SECTION 4. EFFECTIVITY This regulations shall take effect after fifteen
specialized body specifically created for the purpose of reviewing tax (15) days following its publication in any newspaper of general circulations
cases. or in the Official Gazette.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

COURT OF TAX APPEALS incapacitated to discharge the duties of their office, unless sooner
removed for the same causes and in the same manner provided by law for
members of the judiciary of equivalent rank."
Republic Act No. 9282 as amended by Republic Act No. 9504 Section 2. Section 2 of the same Act is hereby amended to read as
AN ACT ENLARGING THE ORGANIZATIONAL STRUCTURE OF follows:
THE COURT OF TAX APPEALS, AMENDING FOR THE
PURPOSE CERTAIN SECTIONS OF THE LAW CREATING THE "SEC. 2. Sitting En Banc or Division; Quorum; Proceedings. - The
COURT OF TAX APPEALS, AND FOR OTHER PURPOSES CTA may sit en banc or in three (3) Divisions, each Division
"SECTION 1. Court; Justices, Qualifications; Salary; Tenure. - There is consisting of three (3) Justices.
hereby created a Court of Tax Appeals (CTA) which shall be of the
same level as the Court of Appeals, possessing all the inherent powers "Five (5) Justices shall constitute a quorum for sessions en
of a Court of Justice, and shall consist of a Presiding Justice and eight (8) banc and two (2) Justices for sessions of a Division.
Associate Justices. The incumbent Presiding Judge and Associate Judges Provided, That when the required quorum cannot be constituted
shall continue in office and bear the new titles of Presiding Justice and due to any vacancy, disqualification, inhibition, disability, or any
Associate Justices. The Presiding Justices and the two (2) most Senior other lawful cause, the Presiding Justice shall designate any
Associate Justices, all of whom are incumbent, shall serve as chairmen Justice of other Divisions of the Court to sit temporarily therein.
of the three (3) Divisions. The other three (3) incumbent Associate
Justices and the three (3) additional Associate Justices shall serve as "The affirmative votes of five (5) members of the Court en
members of the Divisions. The additional three (3) Justices as provided banc shall be necessary to reverse a decision of a Division
herein and the succeeding members of the Court shall be appointed by but a simple majority of the Justices present necessary to
the President upon nomination by the Judicial and Bar Council. The promulgate a resolution or decision in all other cases or two (2)
Presiding Justice shall be so designated in his appointment, and the members of a Division, as the case may be, shall be necessary
Associate Justices shall have precedence according to the date of their for the rendition of a decision or resolution in the Division Level."
respective appointment or when the appointments of two (2) or more of
them shall bear the same date, according to the order in which their
appointments were issued by the President. They shall have the same Section 3. Section 3 of the same Act is hereby amended to read as
qualifications, rank, category, salary, emoluments and other follows:
privileges, be subject to the same inhibitions and disqualifications, "SEC. 3. Clerk of Court; Division Clerks of Court; Appointment;
and enjoy the same retirement and other benefits as those provided Qualification; Compensation. - The CTA shall have a Clerk of
for under existing laws for the Presiding Justice and Associate Court and three (3) Division Clerks of Court who shall be
Justices of the Court of Appeals. appointed by the Supreme Court. No person shall be appointed
"Whenever the salaries of the Presiding Justice and the Associate Clerk of Court or Division Clerk of Court unless he is duly
Justices of the Court of Appeals are increased, such increases in authorized to practice law in the Philippines. The Clerk of Court
salaries shall be deemed correspondingly extended to and enjoyed by the and Division Clerks of Court shall exercise the same powers
Presiding Justice and Associate Justices of the CTA. and perform the same duties in regard to all matters within
"The Presiding Justice and Associate Justices shall hold office during the Court's jurisdiction, as are exercised and performed by
good behavior, until they reach the age of seventy (70), or become the Clerk of Court and Division Clerks of Court of the Court
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

of Appeals, in so far as the same may be applicable or "1. Decisions of the Commissioner of Internal
analogous; and in the exercise of those powers and the Revenue in cases involving disputed
performance of those duties they shall be under the direction of assessments, refunds of internal revenue taxes,
the Court. The Clerk of Court and the Division Clerks of Court fees or other charges, penalties in relation
shall have the same rank, privileges, salary, emoluments, thereto, or other matters arising under the
retirement and other benefits as those provided for the Clerk of National Internal Revenue or other laws
Court and Division Clerks of Court of the Court of Appeals, administered by the Bureau of Internal Revenue;
respectively.' "2. Inaction by the Commissioner of Internal
Section 4. Section 4 of the same Act is hereby amended to read as Revenue in cases involving disputed
follows: assessments, refunds of internal revenue taxes,
"SEC. 4. Other Subordinate Employees. - The Supreme Court fees or other charges, penalties in relations
shall appoint all officials and employees of the CTA, in thereto, or other matters arising under the
accordance with the Civil Service Law. The Supreme Court National Internal Revenue Code or other laws
shall fix their salaries and prescribe their duties." administered by the Bureau of Internal Revenue,
Section 5. Section 5 of the same Act is hereby amended to read as where the National Internal Revenue Code
follows: provides a specific period of action, in which
"SEC. 5. Disqualifications. - No Justice or other officer or case the inaction shall be deemed a denial;
employee of the CTA shall intervene, directly or indirectly, in the "3. Decisions, orders or resolutions of the
management or control of any private enterprise which in any Regional Trial Courts in local tax cases
way may be affected by the functions of the Court. Justices of originally decided or resolved by them in the
the Court shall be disqualified from sitting in any case on the exercise of their original or appellate jurisdiction;
same grounds provided under Rule one hundred thirty-seven of "4. Decisions of the Commissioner of
the Rules of Court for the disqualification of judicial officers. No Customs in cases involving liability for customs
person who has once served in the Court in a permanent duties, fees or other money charges, seizure,
capacity, either as Presiding Justice or as Associate Justice detention or release of property affected, fines,
thereof, shall be qualified to practice as counsel before the forfeitures or other penalties in relation thereto,
Court for a period of one (1) year from his retirement or or other matters arising under the Customs Law
resignation." or other laws administered by the Bureau of
Section 6. Section 6 of the same Act is hereby amended to read as Customs;
follows: "5. Decisions of the Central Board of
"SEC. 6. Place of Office. - The CTA shall have its principal office Assessment Appeals in the exercise of its
in Metro Manila and shall hold hearings at such time and place as appellate jurisdiction over cases involving the
it may, by order in writing, designate." assessment and taxation of real property
Section 7. Section 7 of the same Act is hereby amended to read as originally decided by the provincial or city board
follows: of assessment appeals;
"Sec. 7. Jurisdiction. - The CTA shall exercise: "6. Decisions of the Secretary of Finance on
"a. Exclusive appellate jurisdiction to review by appeal, customs cases elevated to him automatically
as herein provided: for review from decisions of the Commissioner
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

of Customs which are adverse to the Municipal Trial Courts and Municipal Circuit Trial Courts in their respective
Government under Section 2315 of the Tariff jurisdiction.
and Customs Code; "c. Jurisdiction over tax collection cases as herein provided:
"7. Decisions of the Secretary of Trade and "1. Exclusive original jurisdiction in tax collection cases involving
Industry, in the case of nonagricultural product, final and executory assessments for taxes, fees, charges and
commodity or article, and the Secretary of penalties: Provided, however, That collection cases where the principal
Agriculture in the case of agricultural product, amount of taxes and fees, exclusive of charges and penalties, claimed is
commodity or article, involving dumping and less than One million pesos (P1,000,000.00) shall be tried by the proper
countervailing duties under Section 301 and Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.
302, respectively, of the Tariff and Customs "2. Exclusive appellate jurisdiction in tax collection cases:
Code, and safeguard measures under Republic "a. Over appeals from the judgments, resolutions or orders of the
Act No. 8800, where either party may appeal the Regional Trial Courts in tax collection cases originally decided by
decision to impose or not to impose said duties. them, in their respective territorial jurisdiction.
"b. Jurisdiction over cases involving criminal offenses as "b. Over petitions for review of the judgments, resolutions or orders
herein provided: of the Regional Trial Courts in the Exercise of their appellate
"1. Exclusive original jurisdiction over all criminal offenses arising jurisdiction over tax collection cases originally decided by the
from violations of the National Internal Revenue Code or Tariff and Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Customs Code and other laws administered by the Bureau of Internal Courts, in their respective jurisdiction."
Revenue or the Bureau of Customs: Provided, however, That offenses or Section 8. Section 10 of the same Act is hereby amended to read as
felonies mentioned in this paragraph where the principal amount o taxes follows:
and fees, exclusive of charges and penalties, claimed is less than One "SEC. 10. Power to Administer Oaths; Issue Subpoena; Punish
million pesos (P1,000,000.00) or where there is no specified amount for Contempt. - The Court shall have the power to administer
claimed shall be tried by the regular Courts and the jurisdiction of the CTA oaths, receive evidence, summon witnesses by subpoena
shall be appellate. Any provision of law or the Rules of Court to the duces tecum, subject in all respects to the same restrictions and
contrary notwithstanding, the criminal action and the corresponding civil qualifications as applied in judicial proceedings of a similar
action for the recovery of civil liability for taxes and penalties shall at all nature. The Court shall, in accordance with Rule seventy-one of
times be simultaneously instituted with, and jointly determined in the same the Rules of Court, have the power to punish for contempt for the
proceeding by the CTA, the filing of the criminal action being deemed to same causes, under the same procedure and with the same
necessarily carry with it the filing of the civil action, and no right to reserve penalties provided therein."
the filling of such civil action separately from the criminal action will be Section 9. Section 11 of the same Act is hereby amended to read as
recognized. follows:
"2. Exclusive appellate jurisdiction in criminal offenses: "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. -
"a. Over appeals from the judgments, resolutions or orders of the Any party adversely affected by a decision, ruling or inaction of
Regional Trial Courts in tax cases originally decided by them, in their the Commissioner of Internal Revenue, the Commissioner of
respected territorial jurisdiction. Customs, the Secretary of Finance, the Secretary of Trade and
"b. Over petitions for review of the judgments, resolutions or orders Industry or the Secretary of Agriculture or the Central Board of
of the Regional Trial Courts in the exercise of their appellate jurisdiction Assessment Appeals or the Regional Trial Courts may file an
over tax cases originally decided by the Metropolitan Trial Courts, appeal with the CTA within thirty (30) days after the receipt of
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

such decision or ruling or after the expiration of the period fixed cases with the CTA covering amounts within its exclusive and
by law for action as referred to in Section 7(a)(2) herein. original jurisdiction."
"Appeal shall be made by filing a petition for review under a Section 10. Section 13 of the same Act is hereby amended to read as
procedure analogous to that provided for under Rule 42 of the follows:
1997 Rules of Civil Procedure with the CTA within thirty (30) days "SEC. 13. Decision, Maximum Period for Termination of Cases. -
from the receipt of the decision or ruling or in the case of inaction Cases brought before the Court shall be decided in accordance
as herein provided, from the expiration of the period fixed by law with Section 15, paragraph (1), Article VIII (Judicial Department)
to act thereon. A Division of the CTA shall hear the appeal: of the 1987 Constitution. Decisions of the Court shall be in
Provided, however, That with respect to decisions or rulings of writing, stating clearly and distinctly the facts and the law on
the Central Board of Assessment Appeals and the Regional Trial which they are based, and signed by the Justices concurring
Court in the exercise of its appellate jurisdiction appeal shall be therein. The Court shall provide for the publication of its decision
made by filing a petition for review under a procedure analogous in the Official Gazette in such form and manner as may best be
to that provided for under rule 43 of the 1997 Rules of Civil adopted for public information and use.
Procedure with the CTA, which shall hear the case en banc. "The Justices of the Court shall each certify on their applications
"All other cases involving rulings, orders or decisions filed with the for leave, and upon salary vouchers presented by them for
CTA as provided for in Section 7 shall be raffled to its Divisions. A payment, or upon the payrolls under which their salaries are paid,
party adversely affected by a ruling, order or decision of a that all proceedings, petitions and motions which have been
Division of the CTA may file a motion for reconsideration of new submitted to the Court for determination or decision for a period
trial before the same Division of the CTA within fifteens (15) days required by the law or the Constitution, as the case may be, have
from notice thereof: Provide, however, That in criminal cases, the been determined or decided by the Court on or before the date of
general rule applicable in regular Courts on matters of making the certificate, and no leave shall be granted and no
prosecution and appeal shall likewise apply. salary shall be paid without such certificate."
"No appeal taken to the CTA from the decision of the Section 11. Section 18 of the same Act is hereby amended as follows:
Commissioner of Internal Revenue or the Commissioner of "SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil
Customs or the Regional Trial Court, provincial, city or municipal proceeding involving matter arising under the National Internal
treasurer or the Secretary of Finance, the Secretary of Trade and Revenue Code, the Tariff and Customs Code or the Local
Industry and Secretary of Agriculture, as the case may be shall Government Code shall be maintained, except as herein
suspend the payment, levy, distraint, and/or sale of any property provided, until and unless an appeal has been previously filed
of the taxpayer for the satisfaction of his tax liability as provided with the CTA and disposed of in accordance with the provisions
by existing law: Provided, however, That when in the opinion of of this Act.
the Court the collection by the aforementioned government "A party adversely affected by a resolution of a Division of the
agencies may jeopardize the interest of the Government and/or CTA on a motion for reconsideration or new trial, may file a
the taxpayer the Court any stage of the proceeding may suspend petition for review with the CTA en banc."
the said collection and require the taxpayer either to deposit the "SEC. 19. Review by Certiorari. - A party adversely affected by a
amount claimed or to file a surety bond for not more than double decision or ruling of the CTA en banc may file with the Supreme
the amount with the Court. Court a verified petition for review on certiorari pursuant to Rule
"In criminal and collection cases covered respectively by Section 45 of the 1997 Rules of Civil Procedure."
7(b) and (c) of this Act, the Government may directly file the said Section 13. Distraint of Personal Property and/or Levy on Real Property. -
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Upon the issuance of any ruling, order or decision by the CTA favorable to [GR. No. 135210; July 11, 2001]
the national government, the CTA shall issue an order authorizing the FINAL NOTICE BEFORE SEIZURE = demand to pay + statement of failure
Bureau of Internal Revenue, through the Commissioner to seize and to do so would constrain CIR to enforce collection through summary
distraint any goods, chattels, or effects, and the personal property, remedies = FINAL DECISION OF CIR which is APPEALABLE TO CTA
including stocks and other securities, debts, credits, bank accounts,
and interests in and rights to personal property and/or levy the real Recit-Ready:
property of such persons in sufficient quantity to satisfy the tax or Facts: Isabela Cultural Corp was initially assessed of a total tax
charge together with any increment thereto incident to delinquency. deficiency of about P9.9M, later on reduced to around P325K
This remedy shall not be exclusive and shall not preclude the Court from after protest. CIR subsequently demanded an amount more than
availing of other means under the Rules of Court. this assessed value (around P338K) so Isabela filed for a
Section 14. Retention of Personnel; Security of Tenure; Upgrading of reconsideration of such assessment. The CIR did not really
Positions and Salaries. - All existing permanent personnel of the CTA shall respond to this. Instead, it filed a FINAL NOTICE BEFORE
not be adversely affected by this Act. They shall continue in office and SEIZURE which demanded payment of the assessment AND a
shall not be removed or separated from the service except for cause as statement that failure to do such would constrain the CIR to
provided for by existing laws. Further, the present positions and salaries of collect the subject assessment through summary remedies.
personnel shall be upgraded to the level of their counterparts in the Court Isabela then filed a Petition for Review with the CTA, claiming
of Appeals. that the Final Notice was a final decision of the CIR appealable to
Section 15. Transitory Provisions. - In consonance with the above the CTA. The CIR maintained that the Final Notice was a mere
provision, the incumbent Presiding Judge and Associate Judges shall demand, not to be mistaken as a final decision appealable to the
comprise a Division pending the constitution of the entire Court. CTA.
Section 16. Appropriations. - The amount of Twenty million pesos
(20,000,000.00) necessary to carry out the provisions of this Act shall be Issue/s: WON the FINAL NOTICE BEFORE SEIZURE constitutes the
appropriated immediately to be generated from whatever source that are final decision of the CIR appealable to the CTA YES.
available in the National Treasury, based on a special supplemental
budget to be submitted to the Department of Budget and Management Held: In ruling for Isabela Cultural Corp, the Court held that such final
(DBM) which shall not exceed the herein appropriation. notice constituted the final decision of the CIR appealable to the
Section 17. Repealing Clause. - All laws, executive orders, executive CTA. The FINAL NOTICEs content and tenor supported the
issuances or letter of instructions, or any part thereof, inconsistent with or theory that it was the CIRs final act regarding the request for
contrary to the provisions of this Act are hereby deemed repealed, reconsideration. The very title expressly indicated that it was a
amended or modified accordingly. FINAL NOTICE prior to seizure of property; stating that Isabela
Section 18. Separability Clause. - If for any reason, any section or was being given this LAST OPPORTUNITY to pay.
provision of this Act shall be declared unconstitutional or invalid, the other
parts thereof not affected thereby shall remain valid. Likewise, jurisprudence dictates that a final demand letter for
Section 19. Effectivity Clause - This Act shall take effect after fifteen (15) payment of delinquent taxes may be considered as a decision
days following its publication in at least (2) newspapers of general on a disputed/protested assessment, similar to this case,
circulation. where a final letter of demand was made indicating the demand
to pay + statement that failure to pay would constrain the CIR
CIR v. ISABELA CULTURAL CORP (Arcaina) to enforce collection through summary remedies.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Held/Ratio: WHEREFORE, the Petition is hereby DENIED and the


Facts: assailed Decision AFFIRMED.
In an investigation conducted on the 1986 books of account of Isabela
Cultural Corporation, it was preliminary found by the CIR that Isabela had YES. The Final Notice Before constitutes the final decision of the CIR
incurred a total income tax deficiency of P9,985,391.15. appealable to the CTA.
Upon protest by Isabelas counsel, the said preliminary assessment was The Final Notice cannot BUT be considered as the commissioners
reduced to just around P325,869.44. decision disposing of the request for reconsideration filed by
o Later on, CIR sent an assessment letter demanding P333,196.86 and [Isabela], who received no other response to its request.
P4897.79 as deficiency income tax and EWHT inclusive of Not only was the Notice the only response received, its content and
surcharge. tenor supported the theory that it was the CIRs final act
o So, Isabela filed a reconsideration of this assessment. It also regarding the request for reconsideration. The very title
attached certain documents supportive of its protest, as well as a expressly indicated that it was a FINAL NOTICE prior to seizure of
Waiver of Statute of Limitation. property; stating that Isabela was being given this LAST
In Feb 9, 1995, Isabela received from CIR a FINAL NOTICE BEFORE OPPORTUNITY to pay. How then could it have been made to
SEIZURE. It demanded payment of the subject assessment within 10 believe that its request for reconsideration was still pending
days from receipt thereof. Otherwise, failure on its part would constrain determination, despite the actual threat of seizure of its properties?
CIR to collect the subject assessment through summary remedies. Section 228 of the NIRC states that a delinquent taxpayer may
The FINAL NOTICE BEFORE SEIZURE read: nevertheless directly appeal a disputed assessment, if its
o On Feb. 9, 1990, [this] Office sent you a letter requesting you to request for reconsideration remains unacted upon 180 days
settle the abovecaptioned assessment. To date, however, despite after submission.
the lapse of a considerable length of time, we have not been o In this case, the said period of 180 days had already lapsed
honored with a reply from you. In this connection, we are giving you when Isabela filed its reconsideration, without any action on the
this LAST OPPORTUNITY to settle the adverted assessment within part of the CIR.
ten (10) days after receipt hereof. Should you again fail, and refuse Jurisprudence dictates that a final demand letter for payment of
to pay, this Office will be constrained to enforce its collection by delinquent taxes may be considered as a decision on a
summary remedies of Warrant of Levy of Road Property, Distraint of disputed/protested assessment.
Personal Property or Warrant of Garnishment, and/or simultaneous o CIR v Ayala Securities: The Court considered a letter which
court action. Please give this matter your preferential attention. reiterated the demand of the BIR for the settlement of the
Isabela considered this Notice as CIRs final decision so it filed a Petition assessment + immediate payment of such, a denial of the
for Review with the CTA. reconsideration made by Ayala. Such was considered as a
o CIR maintains that the Final Notice was a mere reiteration of the clear indication of the BIRs stand against the reconsideration of
delinquent taxpayers obligation to pay the taxes due. It was the disputed assessment. This amounted to a decision on a
supposedly a mere demand that should not have been mistaken for disputed/protested assessment. So the CTA did not err in taking
a decision on a protested assessment. cognizance of the case.
o Surigao Electric v CTA and CIR v Union Shipping: the letter
Issue/s: WON the Final Notice Before Seizure constitutes the final of demand by the CIR unquestionably constituted the final
decision of the CIR appealable to the CTA action by the CIR on the corporations several requests for
reconsideration and recomputation. The CIR in his letter, did not
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

only demand the taxpayers to pay the tax due, but said that the dismissed the appeal on October 1, 1965 on the ground that
CIR would be constrained to enforce the collection by the appeal was filed beyond the thirty-day period of appeal
means of remedies provided by law. The tenor of the letter, provided by section 11 of Republic Act 1125
specifically that regarding the resort to legal remedies,
unmistakably indicated the final nature of the determination Issue/s:
made by the CIR. Whether or not the petitioner's appeal to the Court of Tax Appeals
o IN THIS CASE: CIR failed to rule on the MR filed by Isabela and was time-barred YES
simply continued to demand payment of the delinquency. Thus,
the Court reiterated the dictum that the BIR should always Held: YES. Petitioner is already barred by prescription to appeal
indicate in clear and unequivocal language what constitutes final (prescription: May 8 -June 7, 1963)
action on a disputed assessment. Further, the second notice
received by Isabela verily indicated its nature that it was The revised assessment embodied in the Commissioner's
final. Hence, it was tantamount to a rejection of the request letter dated April 29, 1963 being, in legal contemplation, the
for reconsideration. Further, CIR does not deny receipt of final ruling reviewable by the tax court, the thirty-day appeal
Isabelas protest letter. Having admitted this fact, CIR could period should be counted from May 8, 1963 (the day the
have passed upon it prior to the issuance of the Final Notice petitioner received a copy of the said letter).
Before Seizure
The June 6, 1963 request for further recomputation,
SURIGAO ELECTRIC CO., INC. v. CTA and CIR (Austria) partaking of a motion for reconsideration, tolled the running
[GR. No. L-25289; June 28, 1974] of the thirty day period from June 7, 1963 (the day the
sure na ikaw sa liability ni Surigao? from receipt of final determination mo petitioner sent its letter by registered mail) to July 16, 1963
lang tatakbo ang 30-day period to appeal, mga tol[l]! (the day the petitioner received the letter of the
Commissioner dated June 28, 1963 turning down its
Recit-Ready: request). The prescriptive period commenced to run again on
Facts: Petitioner Surigao Electric Co., Inc., grantee of a legislative July 16, 1963 [NOTE: prescription started May 8 then tolled from
electric franchise, received a warrant of distraint and levy to June 7 to July 16] The petitioner filed its petition for review with
enforce the collection from "Mainit Electric" of a deficiency the tax court on August 1, 1963after the lapse of an
franchise tax plus surcharge in the total amount of P718.59. additional sixteen days. The petition for review having been
The petitioner contested this warrant, stating that it did not filed beyond the thirty-day period, we rule that the Court of
have a franchise in Mainit, Surigao. A revised assessment was Tax Appeals correctly dismissed the same.
received by the petitioner on May 8, 1963 in the amount of P1
1,533.53,. The petitioner then requested a recomputation on Facts:
June 6, 1963. The Commissioner, however, in a letter dated On November 1961 the petitioner Surigao Electric Co., Inc., grantee of a
June 28, 1963 (received by the petitioner on July 16, 1963), legislative electric franchise, received a warrant of distraint and levy to
denied the request for recomputation. enforce the collection from "Mainit Electric" of a deficiency
franchise tax plus surcharge in the total amount of P718.59
Petitioner appealed to the Court of Tax Appeals. The tax court
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

In a letter to the Commissioner of Internal Revenue, the petitioner registered mail) to July 16, 1963 (the day the petitioner received
contested this warrant, stating that it did not have a franchise in the letter of the Commissioner dated June 28, 1963 turning down
Mainit, Surigao. its request). [i..e 1 days left] The prescriptive period commenced to
o petitioner asked for reconsideration of the assessment, run again on July 16, 1963. The petitioner filed its petition for review
admitting liability only for the 2% franchise tax in with the tax court on August 1, 1963after the lapse of an
accordance with its legislative franchise and not at the additional sixteen days. The petition for review having been filed
higher rate of 5% imposed by section 259 of the National beyond the thirty-day period, we rule that the Court of Tax
Internal Revenue Code, as amended, which latter rate the Appeals correctly dismissed the same.
Auditor General used as basis in computing the petitioner's o the letter of demand issued by the Commissioner on April 29, 1963
deficiency franchise tax. and received by the petitioner on May 8, 1963 constitutes the definite
a revised assessment dated April 29, 1963 was received by the determination of the petitioner's deficiency franchise tax liability or the
petitioner on May 8, 1963 in the amount of P1 1,533.53, representing decision on the disputed assessment and, therefore, the decision
the petitioner's deficiency franchise tax and surcharges thereon for the appealable to the tax court
period from April 1, 1956 to June 30, 1959. o in response to the communications of the petitioner, particularly the
The petitioner then requested a recomputation. letter of August 2, 1962 wherein it assailed the 4th Indorsement's data
The Commissioner, however, in a letter dated June 28, 1963 (received and findings on its deficiency franchise tax liability computed
by the petitioner on July 16, 1963), denied the request for o Moreover, the letter of demand dated April 29, 1963
recomputation. unquestionably constitutes the final action taken by the
On August 1, 1963 the petitioner appealed to the Court of Tax Appeals. Commissioner on the petitioner's several requests for
o The tax court dismissed the appeal on October 1, 1965 reconsideration and recomputation
on the ground that the appeal was filed beyond the Commissioner not only in effect demanded that the
thirty-day period of appeal provided by section 11 of petitioner pay the amount of P11,533.53 but also gave
Republic Act 1125. warning that in the event it failed to pay, the said
The parties disagree on which letter of the Commissioner embodies the Commissioner would be constrained to enforce the
decision or ruling appealable to the tax court. collection thereof by means of the remedies provided by
law.
Issue/s: The tenor of the letter, specifically the statement"
Whether or not the petitioner's appeal to the Court of Tax Appeals was regarding the resort to legal remedies, unmistakably
time-barred YES indicates the final nature of the determination made by
the Commissioner of the petitioner's deficiency franchise
Held/Ratio: ACCORDINGLY, the decision of the Court of Tax Appeals dated tax liability.
October 1, 1965 is affirmed, at petitioner's cost o this Court has considered the following communications sent by the
Commissioner to taxpayers as embodying rulings appealable to the
YES. Petitioner is already barred by prescription to appeal. tax court:
o The June 6, 1963 request for further recomputation, partaking of (a) a letter which stated the result of the reinvestigation requested
a motion for reconsideration, tolled the running of the thirty day by the taxpayer and the consequent modification of the assessment
period from June 7, 1963 (the day the petitioner sent its letter by
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

(b) a letter which denied the request of the taxpayer for the as contemplated by sections 7 and 11 of Republic Act 1125, as
reconsideration, cancellation, or withdrawal of the original amended.
assessment
(c) a letter which contained a demand on the taxpayer for the ADVERTISING ASSOCIATES, INC v. COURT OF APPEALS
payment of the revised or reduced assessment and and COMMISSIONER OF INTERNAL REVENUE (BAADERA)
(d) a letter which notified the taxpayer of a revision of previous [GR. No. L-59758; December 26, 1984]
assessments. Commissioner should always indicate to the taxpayer in clear and
o the petitioner's contention is that the Commissioner's letter of June unequivocal language what constitutes his final determination of the disputed
28, 1963 denying its request for further amendment of the revised assessment
assessment constitutes the ruling appealable to the tax court
thus the thirty-day period should, therefore, be counted from Recit-Ready:
July 16, 1963, the day it received the June 28, 1963 letter, Facts: After unsuccessfully contesting its assessments, Advertising
this would, in effect, leave solely to the petitioner's will the
Associates Inc. was issued two warrants of distraints for its non-
determination of the commencement of the statutory thirty- payment of its 1967-1971 and 1972 contractors tax. After a year
day period, and place the petitionerand for that matter, from such warrants being issued or on May 23, 1979, another
any taxpayerin a position to delay at will and on letter was sent to petitioner requesting it to pay its liabilities and
convenience the finality of a tax assessment
advising that it may file an appeal to the Court of Tax Appeals 30
Interpretation espoused by the petitioner would result in days from receipt of the said letter. Nineteen days after, petitioner
grave detriment to the interests of the Government, filed and had the warrants of distraint enjoined. However, the
considering that taxes constitute its lifeblood and their court did not rule on the merits given that the petition for review
prompt and certain availability is an imperative need. was filed out of time.
o The revised assessment embodied in the Commissioner's letter
dated April 29, 1963 being, in legal contemplation, the final
Issue:
ruling reviewable by the tax court, the thirty-day appeal period
WON the petition for review was filed out of time?
should be counted from May 8, 1963 (the day the petitioner
received a copy of the said letter).
Held: NO. The reviewable decision is that contained in Commissioner
o The thirty-day period prescribed by section 11 of Republic Act 1125,
Plana's letter of May 23, 1979 and not the warrants of distraint earlier
as amended, within which a taxpayer adversely affected by a
issued. Therefore May 23, 1979 is the period that should be considered
decision of the Commissioner of Internal Revenue should file his
for the petition for review.
appeal with the tax court, is a jurisdictional requirement, and the
failure of a taxpayer to lodge his appeal within the prescribed period
Facts:
bars his appeal and renders the questioned decision final and
Advertising Associates, lnc. is engaged in the business of leasing neon
executory
signs and billboards. Advertising Associates alleged that it sold in 1949 its
o Prescinding from all the foregoing, we deem it appropriate to state
advertising agency business to Philippine Advertising Counsellors, that its
that the Commissioner of Internal Revenue should always
business is limited to the making, construction and installation of
indicate to the taxpayer in clear and unequivocal language
billboards and electric signs and making and printing of posters, signs,
whenever his action on an assessment questioned by a taxpayer
constitutes his final determination on the disputed assessment,
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

handbills, etc. It contends that it is a media company, not an advertising Held/Ratio: WHEREFORE, the judgment of the Tax Court is reversed and
company therefore it is not liable to pay contractors tax. set aside. The Commissioner's deficiency assessments are modified by
The Commissioner required Advertising Associates to pay contractor's requiring the petitioner to pay the tax proper and eliminating the 25%
tax for 1967-1971 and 1972, including 25% surcharge on its income from surcharge, interest and penalty. In case of non-payment, the warrants of
billboards and neon signs. distrant should be implemented. The preliminary injunction issued by the Tax
Despite Advertising Associates contesting the assessments, the Court on August 28, 1979 restraining the enforcement of said warrants is
Commissioner still reiterated the assessments in his letters. lifted. No costs.
The taxpayer then requested the cancellation of the assessments in its
letters of September 13 and November 21, 1974. Inexplicably, for about NO. The reviewable decision is that contained in Commissioner Plana's
four years there was no movement in the case. letter of May 23, 1979 and not the warrants of distraint. Therefore May
Then, on March 31, 1978, the Commissioner resorted to the summary 23, 1979 is the period that should be considered for the petition for
remedy of issuing two warrants of distraint, directing the collection review.
enforcement division to levy on the taxpayer's personal properties as We hold that the petition for review was filed on time. The reviewable
would be sufficient to satisfy the deficiency taxes decision is that contained in Commissioner Plana's letter of May 23, 1979
More than a year later, Acting Commissioner Efren I. Plana wrote a and not the warrants of distraint.
letter dated May 23, 1979 in answer to the requests of the taxpayer for No amount of quibbling or sophistry can blink the fact that said
the cancellation of the assessments and the withdrawal of the warrants of letter, as its tenor shows, embodies the Commissioner's final
distraint. He requested the taxpayer to pay the deficiency taxes decision within the meaning of section 7 of Republic Act No. 1125.
within ten days from receipt of the demand; otherwise, the Bureau The Commissioner said so. He even directed the taxpayer to appeal
would enforce the warrants of distraint. He closed his demand letter with it to the Tax Court. The directive is in consonance with this Court's
this paragraph: dictum that the Commissioner should always indicate to the
o This constitutes our final decision on the matter. If you taxpayer in clear and unequivocal language what constitutes his
are not agreeable, you may appeal to the Court of Tax final determination of the disputed assessment. That procedure is
Appeals within 30 days from receipt of this letter. demanded by the pressing need for fair play, regularity and
Nineteen days later or on July 7, Advertising Associates filed its petition orderliness in administrative action.
for review.
In its resolution, the Tax Court enjoined the enforcement of the warrants CIR v. UNION SHIPPING CORPORATION and the COURT OF
of distraint. The Tax Court however did not resolve the case on the TAX APPEALS (Banta)
merits. It ruled that the warrants of distraint were the [GR. No. L-66160; May 21, 1990]
Commissioner's appealable decisions. Since Advertising Associates CIRs filling of collection case is deemed a denial of Union Shippings
appealed from the decision of May 23, 1979, the petition for review was request for reinvestigation therefore, it was only upon the companys receipt
filed out of time. It was dismissed. The taxpayer appealed to this Court. of the summons did the appeal period commence to run.

Issue: Recit-Ready:
WON the petition for review was filed out of time? Facts: On December 27, 1974, petitioner Commission on Internal
NO Revenue (CIR) assessed against Yee Fong Hong, Ltd. and/or
private respondent Union Shipping Corporation, the total sum
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

of P583,155.22 as deficiency income taxes for the years 1971- Held:


1972. 1) YES. The CIR, not having clearly signified his final action on the
disputed assessment, legally the period to appeal has not commenced
The following exchanges then occurred: to run. It was only when private respondent received the summons
Letter dated January 10, 1975: Union Shipping protested on the civil suit for collection of deficiency income on
the assessment (received by CIR on January 13, 1975) DECEMBER 28, 1978 that the period to appeal commenced to run.
Without ruling on the protest, CIR issued a Warrant of The request for reinvestigation and reconsideration was in effect
Distraint and Levy, which was served on Union considered denied by petitioner when the latter filed a civil suit for
Shippings counsel, Clemente Celso, on NOVEMBER collection of deficiency income. Hence, on January 10, 1979, when
25, 1976. private respondent filed the appeal with the Court of Tax Appeals, it
Letter dated November 27, 1976: Union Shipping consumed a total of only thirteen (13) days well within the thirty-
reiterated its request for reinvestigation of the day period to appeal pursuant to Section 11 of R.A. 1125.
assessment and for the reconsideration of the summary
collection thru the Warrant of Distraint and Levy 2) NO. It was fully substantiated by the CTA that respondent Union
(received by CIR on December 29, 1976) Shipping was the husbanding agent of Yee Fong Hong. Even CIR
Again, without acting on the request for reinvestigation Vera, on a query of respondents counsel, opined that respondent
and reconsideration of the Warrant, CIR filled a collection corporation being merely a husbanding agent is not liable for the
suit before Branch 21 of the then CFI of Manila payment of the income taxes due from the foreign ship owners loading
(docketed as Civil Case No. 120459) against Union cargoes in the Philippines. Neither can private respondent be liable for
Shipping. withholding tax under Section 53 of the Internal Revenue Code since it
SUMMONS in the collection case was issued to Union is not in possession, custody or control of the funds received by and
Shipping on DECEMBER 28, 1978. remitted to Yee Fong Hong, Ltd., a non-resident taxpayer.
January 10, 1979: respondent Union Shipping filed with
the Court of Tax Appeals its Petition for Review of the
petitioners assessment of its deficiency income taxes
(docketed as CTA Case No. 2989). Facts:
Letter dated December 27, 1974: Petitioner Commission on Internal
Respondent CTA ruled in favor of respondent Union Shipping. Revenue (CIR) assessed against Yee Fong Hong, Ltd. and/or private
respondent Union Shipping Corporation, the total sum of P583,155.22
Issue/s: as deficiency income taxes for the years 1971-1972.
7) WON the CTA has jurisdiction over this case o Letter was received on January 4, 1975
YES Letter dated January 10, 1975: Union Shipping protested the assessment
8) WON Union Shipping Corporation, acting as a mere husbanding o Letter was received by CIR on January 13, 1975
agent of Yee Fong Hong, Ltd. is liable for payment of taxes on Without ruling on the protest, CIR issued a Warrant of Distraint and
the gross receipts of earnings of Yee Fong Hong Levy, which was served on Union Shippings counsel, Clemente Celso,
YES on November 25, 1976.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Letter dated November 27, 1976: Union Shipping reiterated its request for was only when private respondent received the summons on the
reinvestigation of the assessment and for the reconsideration of the civil suit for collection of deficiency income on DECEMBER 28, 1978
summary collection thru the Warrant of Distraint and Levy that the period to appeal commenced to run. The request for
o Letter was received by CIR on November 29, 1976 reinvestigation and reconsideration was in effect considered denied by
Again, without acting on the request for reinvestigation and petitioner when the latter filed a civil suit for collection of deficiency
reconsideration of the Warrant, CIR filled a collection suit before Branch income. Hence, on January 10, 1979, when private respondent filed the
21 of the then CFI of Manila (docketed as Civil Case No. 120459) against appeal with the Court of Tax Appeals, it consumed a total of only
Union Shipping. thirteen (13) days well within the thirty-day period to appeal
o Summons in the collection case was issued to Union Shipping on pursuant to Section 11 of R.A. 1125.
December 28, 1978. o Petitioner contends that:
January 10, 1979: respondent Union Shipping filed with the Court of Tax The warrant of distraint and levy was issued after respondent
Appeals its Petition for Review of the petitioners assessment of its corporation filed a request for reconsideration of subject
deficiency income taxes (docketed as CTA Case No. 2989) assessment, thus constituting petitioner CIRs final decision in
o Union Shipping prays that judgment be rendered holding that it is the disputed assessments;
not liable for the payment of the income tax herein involved, or The period to appeal to the CTA commenced to run from
which may be due from foreign shipowner Yee Fong Hong. receipt of said warrant on November 25, 1976, so that on
Respondent CTA ruled in favor of respondent Union Shipping: January 10, 1979 when respondent corporation sought
o WHEREFORE, the decision of the Commissioner of Internal redress from the Tax Court, petitioner's decision has long
Revenue appealed from, assessing against and demanding from become final and executory.
petitioner the payment of deficiency income tax, inclusive of 50% o The Court has long settled that the Commissioner should always
surcharge, interest and compromise penalties, in the amounts of indicate to the taxpayer in clear and unequivocal language what
P73,958.76 and P583,155.22 for the years 1971 and 1972, constitutes his final determination of the disputed assessment.
respectively, is reversed. o In this case, petitioner CIR did not rule on private respondent's motion
Hence, the instant petition. for reconsideration but contrary to the above ruling of this Court, left
private respondent in the dark as to which action of the Commissioner
Issue/s: is the decision appealable to the Court of Tax Appeals.
9) WON the CTA has jurisdiction over this case Had he categorically stated that he denies private
YES respondent's motion for reconsideration and that his action
10) WON Union Shipping Corporation, acting as a mere husbanding constitutes his final determination on the disputed
agent of Yee Fong Hong, Ltd. is liable for payment of taxes on the assessment, private respondent without needless difficulty
gross receipts of earnings of Yee Fong Hong would have been able to determine when his right to appeal
YES accrues and the resulting confusion would have been
avoided.
Held/Ratio: The instant petition is hereby DISMISSED and the decision of
7) NO.
the CTA is AFFIRMED.
o It was fully substantiated by the CTA that respondent Union
Shipping was the husbanding agent of Yee Fong Hong because:
6) YES. The CIR, not having clearly signified his final action on the disputed
assessment, legally the period to appeal has not commenced to run. It
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

a. It neither performed nor transacted any shipping It is well-settled that in passing upon petitions for review
business, for and in representation, of Yee Fong Hong, of the decisions of the Court of Tax Appeals, this Court
Ltd. or its vessels or otherwise negotiated or procured is generally confined to questions of law.
cargo to be loaded in the vessels of Yee Fong Hong, The findings of fact of said Court are not to be disturbed
Ltd.; unless clearly shown to be unsupported by substantial
b. It never solicited or procured cargo or freight in the evidence.
Philippines or elsewhere for loading in said vessels of
Yee Fong Hong, Ltd.;
c. It had not collected any freight income or receipts for the OCEANIC WIRELESS NETOWORK v. CIR (Bello)
said Yee Fong Hong, Ltd.; [GR. No. 148380; December 9, 2005]
d. It never had possession or control, actual or A demand letter for payment of delinquent taxes may be considered a
constructive, over the funds representing payment by decision on a disputed or protested assessment. The determination on
Philippine shippers for cargo loaded on said vessels; whether or not a demand letter is final is conditioned upon the language used
e. Petitioner never remitted to Yee Fong Hong, Ltd. any or the tenor of the letter being sent to the taxpayer.
sum of money representing freight incomes of Yee Fong
Hong, Ltd.; and Recit-Ready:
f. The freight payments made for cargo loaded in the Facts: OWN received from the (BIR) deficiency tax assessments.
Philippines for foreign destination were actually paid Petitioner filed its protest against the tax assessments and requested a
directly by the shippers to the said Yee Fong Hong, Ltd. reconsideration or cancellation of the same in a letter to the BIR
upon arrival of the goods in the foreign ports Commissioner.
o CIR Vera, on a query of respondents counsel, opined that
respondent corporation being merely a husbanding agent is not Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts
liable for the payment of the income taxes due from the foreign Receivable and Billing Division, Mr. Severino B. Buot, reiterated the tax
ship owners loading cargoes in the Philippines. assessments while denying petitioners request for reinvestigation. +
o Neither can private respondent be liable for withholding tax under requested OWN to pay within 10 days from receipt thereof, otherwise
Section 53 of the Internal Revenue Code since it is not in there will an issuance of a warrant of distraint and levy without further
possession, custody or control of the funds received by and notice.
remitted to Yee Fong Hong, Ltd., a non-resident taxpayer.
As correctly ruled by the Court of Tax Appeals, if an OWN failed to pay the tax assessments with the prescribed period, the
individual or corporation like the petitioner in this case, is Assistant Commissioner for Collection, acting for the Commissioner of
not in the actual possession, custody, or control of the Internal Revenue, issued the corresponding warrants of distraint and/or
funds, it can neither be physically nor legally liable or levy and garnishment.
obligated to pay the so-called withholding tax on income
claimed by Yee Fong Hong, Ltd.. OWN filed a Petition for Review with the Court of Tax Appeals (CTA) to
o Finally, it must be stated that factual findings of the Court of Tax contest the issuance of the warrants to enforce the collection of the tax
Appeals are binding on this Court. assessments. The CTA dismissed the petition for lack of jurisdiction.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

OWN filed a Motion for Reconsideration arguing that the demand letter request for reconsideration had been denied for lack of supporting
cannot be considered as the final decision of the Commissioner of documents. The demand letter received by petitioner verily signified a
Internal Revenue on its protest because the same was signed by a character of finality. Therefore, it was tantamount to a rejection of the
mere subordinate and not by the Commissioner himself. request for reconsideration.

With the denial of its motion for reconsideration, petitioner consequently 2) YES! The general rule is that the Commissioner of Internal
filed a Petition for Review with the Court of Appeals contending that there Revenue may delegate any power vested upon him by law to
was no final decision to speak of because the Commissioner had yet to Division Chiefs or to officials of higher rank, except the following
make a personal determination as regards the merits of petitioners case. 4 instances

The Court of Appeals denied the petition. It is clear from the above provision that the act of issuance of the demand
letter by the Chief of the Accounts Receivable and Billing Division does
Issue/s: not fall under any of the exceptions that have been mentioned as non-
1) WON the final demand letter issued by the BIR reiterating the delegable.
demand for immediate payment considered a final decision
appealable to the CTA? YES! Thus, the authority to make tax assessments may be delegated to
2) WON said demand letter indeed attained finality despite the fact subordinate officers. Said assessment has the same force and effect.
that it was issued and signed by the Chief of the Accounts
Receivable and Billing Division instead of the BIR Commissioner. Facts:
- Yes Oceanic Wireless Network (OWN/Petitioner) received from the Bureau of
Internal Revenue (BIR) deficiency tax assessments for the taxable year
Held: In ruling for CIR. The Petition is accordingly denied for Lack of 1984 in the total amount of P8,644,998.7.
Merit. OWN filed its protest against the tax assessments and requested a
reconsideration or cancellation of the same in a letter to the BIR
1) YES. A demand letter for payment of delinquent taxes may be Commissioner dated April 12, 1988.
considered a decision on a disputed or protested assessment.
The determination on whether or not a demand letter is final is BIR:
conditioned upon the language used or the tenor of the letter being Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts
sent to the taxpayer. Receivable and Billing Division, Mr. Severino B. Buot, reiterated the tax
assessments while denying petitioners request for reinvestigation in a
In this case, the letter of demand, unquestionably constitutes the final letter dated January 24, 1991, thus:
action taken by the Bureau of Internal Revenue on petitioners request for o Note: Your request for re-investigation has been denied for
reconsideration when it reiterated the tax deficiency assessments due failure to submit the necessary supporting papers as per
from petitioner, and requested its payment. Failure to do so would result in endorsement letter from the office of the Special Operation
the issuance of a warrant of distraint and levy to enforce its collection Service dated 12-12-90.
without further notice. Said letter likewise requested petitioner to pay the total amount
of P8,644,998.71 within ten (10) days from receipt thereof, otherwise
In addition, the letter contained a notation indicating that petitioners the case shall be referred to the Collection Enforcement Division of the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

BIR National Office for the issuance of a warrant of distraint and levy OWN filed a Motion for Reconsideration arguing that the demand letter
without further notice. of January 24, 1991 cannot be considered as the final decision of
Upon OWN failure to pay the subject tax assessments within the the Commissioner of Internal Revenue on its protest because the
prescribed period, the Assistant Commissioner for Collection, acting for same was signed by a mere subordinate and not by the
the Commissioner of Internal Revenue, issued the corresponding Commissioner himself. Denied
warrants of distraint and/or levy and garnishment. These were served on C.A:
petitioner on October 10, 1991 and October 17, 1991, respectively With the denial of its motion for reconsideration, petitioner consequently
filed a Petition for Review with the Court of Appeals contending that there
CTA: was no final decision to speak of because the Commissioner had yet to
On November 8, 1991, OWN filed a Petition for Review with the Court of make a personal determination as regards the merits of petitioners case.
Tax Appeals (CTA) to contest the issuance of the warrants to enforce Denied
the collection of the tax assessments. This was docketed as CTA Case
No. 4668. Issue/s:
The CTA dismissed the petition for lack of jurisdiction in a decision 1) WON the final demand letter issued by the BIR reiterating the
dated September 16, 1994, declaring that said petition was filed beyond demand for immediate payment considered a final decision
the thirty (30)-day period reckoned from the time when the demand appealable to the CTA? YES!
letter of January 24, 1991 by the Chief of the BIR Accounts 2) WON said demand letter indeed attained finality despite the fact
Receivable and Billing Division was presumably received by that it was issued and signed by the Chief of the Accounts
petitioner, i.e., within a reasonable time from said date in the regular Receivable and Billing Division instead of the BIR Commissioner. -
course of mail pursuant to Section 2(v) of Rule 131 of the Rules of Court. Yes
The court a quo likewise stated that the finality of the denial of the protest
by petitioner against the tax deficiency assessments was bolstered by the
subsequent issuance of the warrants of distraint and/or levy and Held/Ratio: Petition DENIED. In applying the doctrine of animation, Court
garnishment to enforce the collection of the deficiency taxes. rules for the Respondent.
The issuance was not barred by prescription because the mere filing of
the letter of protest by petitioner which was given due course by the 8) YES A demand letter for payment of delinquent taxes may be
Bureau of Internal Revenue suspended the running of the prescription considered a decision on a disputed or protested assessment. The
period as expressly provided under the then Section 2249 of the Tax determination on whether or not a demand letter is final is
Code. conditioned upon the language used or the tenor of the letter being
sent to the taxpayer.
o In this case, the letter of demand dated January 24, 1991,
9
SEC. 224. Suspension of Running of the Statute of Limitations. The running of the unquestionably constitutes the final action taken by the Bureau of
Statute of Limitations provided in Section 203 and 223 on the making of assessment and
the beginning of distraint or levy or a proceeding in court for collection, in respect of any Internal Revenue on petitioners request for reconsideration when
deficiency, shall be suspended for the period during which the Commissioner is prohibited
from making the assessment or beginning distraint or levy or a proceeding in court and for
sixty (60) days thereafter; when the taxpayer requests for a reinvestigation which is
granted by the Commissioner; when the taxpayer cannot be located in the address given upon the taxpayer, his authorized representative, or a member of his household with
by him in the return files upon which a tax is being assessed or collected: Provided, That if sufficient discretion, and no property could located; and when the taxpayer is out of the
the taxpayer inform the Commissioner of any change of address, the running of the statute Philippines.
of limitations will not be suspended; when the warrant of distraint and levy is duly served
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

it reiterated the tax deficiency assessments due from petitioner, o Commissioner of Internal Revenue v. Ayala Securities Corporation,
and requested its payment. where we held:
Failure to do so would result in the issuance of a warrant of The letter of February 18, 1963 (Exh. G), in the view of the
distraint and levy to enforce its collection without further Court, is tantamount to a denial of the reconsideration
notice. In addition, the letter contained a notation indicating or [respondent corporations]protest o[f] the assessment made
that petitioners request for reconsideration had been denied by the petitioner, considering that the said letter [was] in itself
for lack of supporting documents. a reiteration of the demand by the Bureau of Internal
o We laid down the rule that the Commissioner of Internal Revenue Revenue for the settlement of the assessment already made,
should always indicate to the taxpayer in clear and unequivocal and for the immediate payment of the sum of P758,687.04 in
language what constitutes his final determination of the disputed spite of the vehement protest of the respondent corporation
assessment. on April 21, 1961. This certainly is a clear indication of the
firm stand of petitioner against the reconsideration of the
xxx we deem it appropriate to state that the Commissioner of disputed assessment. This being so, the said letter amounted
Internal Revenue should always indicate to the taxpayer in to a decision on a disputed or protested assessment, and,
clear and unequivocal language whenever his action on an there, the court a quo did not err in taking cognizance of this
assessment questioned by a taxpayer constitutes his final case.
determination on the disputed assessment, as contemplated
by Sections 7 and 11 of Republic Act No. 1125, as amended. o Surigao Electric Co., Inc v. Court of Tax Appeals and in CIR v. Union
On the basis of his statement indubitably showing that the Shipping Corporation we held:
Commissioners communicated action is his final decision on In this letter, the commissioner not only in effect demanded
the contested assessment, the aggrieved taxpayer would that the petitioner pay the amount of P11,533.53 but also
then be able to take recourse to the tax court at the gave warning that in the event it failed to pay, the said
opportune time. Without needless difficulty, the taxpayer commissioner would be constrained to enforce the collection
would be able to determine when his right to appeal to the tax thereof by means of the remedies provided by law. The tenor
court accrues. xxx of the letter, specifically the statement regarding the resort to
o In this case, the letter of demand dated January 24, 1991, legal remedies, unmistakably indicate[d] the final nature of
unquestionably constitutes the final action taken by the Bureau of the determination made by the commissioner of the
Internal Revenue on petitioners request for reconsideration when petitioners deficiency franchise tax liability.
it reiterated the tax deficiency assessments due from petitioner, o The demand letter received by petitioner verily signified a
and requested its payment. character of finality. Therefore, it was tantamount to a rejection of
Failure to do so would result in the issuance of a warrant of the request for reconsideration. As correctly held by the Court of Tax
distraint and levy to enforce its collection without further Appeals, while the denial of the protest was in the form of a demand
notice. In addition, the letter contained a notation indicating letter, the notation in the said letter making reference to the protest
that petitioners request for reconsideration had been denied filed by petitioner clearly shows the intention of the respondent to
for lack of supporting documents. make it as his final decision.

SUPPORTING JURISPRUDENCE
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

9) YES general rule is that the Commissioner of Internal The tax or any deficiency tax so assessed shall be paid
Revenue may delegate any power vested upon him by law to upon notice and demand from the Commissioner or
Division Chiefs or to officials of higher rank. from his duly authorized representative. . . .
o Thus, the authority to make tax assessments may be delegated to
o As amended by Republic Act No. 8424, Section 7 of the Code subordinate officers. Said assessment has the same force and
authorizes the BIR Commissioner to delegate the powers vested in effect as that issued by the Commissioner himself, if not reviewed or
him under the pertinent provisions of the Code to any subordinate revised by the latter such as in this case.
official with the rank equivalent to a division chief or higher, except the A request for reconsideration must be made within thirty
following: (30) days from the taxpayers receipt of the tax
deficiency assessment, otherwise, the decision
a. The power to recommend the promulgation of rules and becomes final, unappealable and therefore,
regulations by the Secretary of Finance; demandable. A tax assessment that has become final,
b. The power to issue rulings of first impression or to reverse, executory and enforceable for failure of the taxpayer to
revoke or modify any existing ruling of the Bureau; assail the same as provided in Section 228 11 can no
c. The power to compromise or abate under Section 204(A) longer be contested.
and (B) of this Code, any tax deficiency: Provided, o If the protest is denied in whole or in part, or is not acted upon
however, that assessments issued by the Regional Offices within one hundred (180) days from submission of documents,
involving basic deficiency taxes of five hundred thousand the taxpayer adversely affected by the decision or inaction may
pesos (P500,000) or less, and minor criminal violations as appeal to the Court of Tax Appeals within thirty (30) days from receipt
may be determined by rules and regulations to be of the said decision, or from the lapse of the one hundred eighty (180)
promulgated by the Secretary of Finance, upon the - day period; otherwise, the decision shall become final, executory and
recommendation of the Commissioner, discovered by demandable.
regional and district officials, may be compromised by a o Here, petitioner failed to avail of its right to bring the matter before
regional evaluation board which shall be composed of the the Court of Tax Appeals within the reglementary period upon the
Regional Director as Chairman, the Assistant Regional receipt of the demand letter reiterating the assessed delinquent taxes
Director, heads of the Legal, Assessment and Collection
Divisions and the Revenue District Officer having
jurisdiction over the taxpayer, as members; and (A) Examination of Returns and Determination of Tax Due. - After a return
d. The power to assign or reassign internal revenue officers to has been filed as required under the provisions of this Code, the Commissioner or his
duly authorized representative may authorize the examination of any taxpayer and the
establishments where articles subject to excise tax are assessment of the correct amount of tax; Provided, however, That failure to file a return
produced or kept. shall not prevent the Commissioner from authorizing the examination of any taxpayer.
o It is clear from the above provision that the act of issuance of the 11
SEC. 228. Protesting of Assessment. When the Commissioner or his duly authorized
demand letter by the Chief of the Accounts Receivable and representative finds that proper taxes should be assessed, he shall first notify the taxpayer
Billing Division does not fall under any of the exceptions that of his findingsSuch assessment may be protested administratively by filing a request for
reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in
have been mentioned as non-delegable. Section 610 of the tax code.
such form and manner as may be prescribed by implementing rules and regulations. Within
sixty (60) days from filing of the protest, all relevant supporting documents shall have been
submitted; otherwise, the assessment shall become final.
10
SEC. 6. Power of the Commissioner to Make Assessments and Prescribe
Additional Requirements for Tax Administration and Enforcement.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

and denying its request for reconsideration which constituted the final several extensions. The BIR later stated that the assessments
determination by the Bureau of Internal Revenue on petitioners were already final and executory. Nonetheless, Makati requested
protest. Being a final disposition by said agency, the same would have for another reinvestigation. Makati offered to pay P100 million as
been a proper subject for appeal to the Court of Tax Appeals. compromise, which the Revenue officer and deputy
o The rule is that for the Court of Tax Appeals to acquire jurisdiction, an Commissioner granted. However, the new Regional Director
assessment must first be disputed by the taxpayer and ruled upon by informed Makati that such compromise is denied, and therefore
the Commissioner of Internal Revenue to warrant a decision from demanded that the balance of the assessed deficiency taxes for
which a petition for review may be taken to the Court of Tax Appeals. 1999-2001 in the amount of P581,468,164.58 and the proposed
Where an adverse ruling has been rendered by the assessment of P322,952,109.25 for 2002-2004 be paid.
Commissioner of Internal Revenue with reference to a
disputed assessment or a claim for refund or credit, the
taxpayer may appeal the same within thirty (30) days Issue: Whether or not the reinvestigation of the case reversed the finality
after receipt thereof. of the assessments.
o We agree with the factual findings of the Court of Tax Appeals that
the demand letter may be presumed to have been duly directed,
mailed and was received by petitioner in the regular course of Held: No. Only the Commissioner of Internal Revenue has the power to
the mail in the absence of evidence to the contrary. reverse, revoke or modify any existing ruling of the Bureau of Internal
This is in accordance with Section 2(v), Rule 131 of the Revenue (BIR), which power cannot be delegated. In assessment cases,
Rules of Court, and in this case, since the period to a reopening/reinvestigation after a final decision on disputed assessment
appeal has commenced to run from the time the letter of (FDDA) has been issued must be initiated by the commissioner.
demand was presumably received by petitioner within a Otherwise, the reopening / reinvestigation is without authority and failure
reasonable time after January 24, 1991, the period of to appeal the FDDA to CTA would render the assessment final and
thirty (30) days to appeal the adverse decision on the executory. Here, the reinvestigation was merely granted by a revenue
request for reconsideration had already lapsed when the officer and a deputy commissioner.
petition was filed with the Court of Tax Appeals only on
November 8, 1991. Hence, the Court of Tax Appeals
properly dismissed the petition as the tax delinquency
assessment had long become final and executory. Facts:
City of Makati is a local government unit existing under its Charter by
CITY OF MAKATI vs. CIR (Bugay) virtue of RA 7854.
[C.T.A. EB Case No. 641; September 16, 2011] On September 20, 2002, Regional Director Antonio Ortega of Revenue
A reopening/reinvestigation after a final decision on disputed assessment Region No. 8, Makati City issued a Preliminary Assessment Notice (PAN)
(FDDA) has been issued must be initiated by the commissioner to petitioner in the amount of P1,320,980, 395.63.
o City of Makati (Makati) filed a letter dated 4 October 2022
Recit-Ready: discussing the inaccuracies of the findings of the RDO on
Facts: The City of Makati received assessment notices its deficiency income tax, VAT and withholding tax on
imposing deficiency taxes. Makati protested and requested for compensation for taxable year 1999-2002.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

On October 15, 2002, Makati received assessment notices imposing Guillermo Parayno, with then Deputy Commissioner Jose
deficiency taxes in the amount of P1,331,615,125,30 for taxable Mario Buag signing on his behalf.
year 1999.2002. On August 4, 2005, RD Adriano sent a letter to Makati informing it of
o Makati, through its Vice Mayor, requested for a the newly revised assessment for the taxable years 1999-2001 in
reinvestigation of the said assessments, stating that it the amount of P520,829,896.92 and demanded payment on or
needed time to reconcile its records with the BIR. before August 31, 2005.
On January 29, 2003, Makati filed its protest dared 26 December On September 1, 2005, a meeting was held at the Office of the
2002, citing discrepancies in the assessment for deficiency VAT, Mayor of Makati to reconcile the records and positions of Makati and
expanded withholding tax and withholding tax on compensation. the BIR.
o Regional Director (RD) Anselmo Adriano denied Makatis o Pursuant to the directive of Finance Secretary Teves to
protest and stated that the amount still due is settle the case fairly and reasonably, Makati offered to pay
P1,316,424,402.15 on April 30, 2003. P100 million in full settlement of the tax deficiency and
On June 30, 2003, Makati filed a letter reiterating its protest against tendered P20 million as initial payment.
the subject assessments. On September 3, 2003, it requested an o Payment was officially accepted by RD Adriano
extension of sixty (60) days within which to submit the documents On October 21, 2005, Makati made another offer to compromise in
supporting its protest letter. the amount of P100 million this time to settle its assessed deficiency
On October 16, 2003, RD Adriano issued Amended Assessment taxes for taxable years 2002-2004.
Notices to Makati in the amount of P1,146,883,843.08 for the o This offer was made pursuant to the directive of Secretary
taxable years 1999-2001. Teves upon the parties to conclude the reconciliation of
On October 24, 2003, Makati, through the City Treasurer, requested their records.
a recomputation of the deficiency tax assessments and submitted o On the same date, RD Adriano accepted Makatis offer on
documents to support its claim that the computation made was the condition that 30% of the proposed amount be paid on
excessive. Makati then requested an additional extension of thirty or before October 31, 2005.
(30) days to submit additional supporting documents. Makati paid on October 28, 2005.
In a letter dated August 18, 2004, RD Adriano informed Makati that On February 22, 2006, Makati made two payments:
the assessment against it were already final and executory. o P80 million representing the balance of the compromise for
On August 27, 2004, Makati, through its Vice Mayor, advised RD the taxable years 1999-2001; and
Adriano of its position that the subject assessments had not become o P70 million representing the balance of the compromise for
final and executory as these were baseless and arbitrary. Hence the taxable years 2002-2004.
void and of no effect. o As of this date, Makati had already paid P200 million pesos
Makati, in a letter dated 11 March 2005, requested for the reopening to the BIR, in full settlement of the compromise amount for
and reinvestigation of the case, citing an agreement on the re- the said taxable years.
examination of Makatis financial records allegedly reached between However, the new RD Aspe informed Makati that the offer of
petitioner and Revenue Officer Martinez. compromise settlement was not accepted and demanded that the
o RD Adriano in 29 April 2005 informed Makati that its balance of the assessed deficiency taxes for 1999-2001 in the
request for re-opening of investigation for its tax deficiency amount of P581,468,164.58 and the proposed assessment of
assessments was approved by then Commissioner P322,952,109.25 for 2002-2004 be paid.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

On May 2, 2007, a Warrant of Garnishment was issued by Roberto Assailed Decision and Assailed Resolution that the said
A. Baquiran based on a letter of demand and formal assessment assessment is likewise valid for having factual and legal
notices dated April 17, 2007 issued by RD Aspe. bases.
(2) NO. The FDDA dated 16 October 2003 is the Decision that is
Issues: Appealable to the CTA.
(1) Whether or not the 2nd Division of the CTA erred when it ruled that a. The subsequent reopening/reinvestigation of petitioners
there was a valid assessment made by the BIR, particularly the assessment did not in any way reverse the finality of
assessment letter date 16 October 2003 for taxable year 1999-2001 respondents decision dated 16 October 2003. As correctly
and for taxable years 2002-2004. pointed out in the Assailed Decision and Resolution of the
(2) Whether or not the 2nd Division of the CTA erred when it held that Former Second Division, it is the Commissioner of the
the assessment dated 16 October 2003 was the final assessment BIR who has the power to reverse, revoke or modify
contemplated under the law, which could be the subject of a petition any existing ruling of the Bureau, and such power
for review with the CTA given the subsequent actions of the BIR and cannot be delegated.
the Secretary of Finance. b. In the case at bench, the reopening/reinvestigation was
Held/Ratio: initiated by a mere Revenue Officer and approved by a
(1) No. The Final Decision on Disputed Assessment dated 16 mere Deputy Commissioner. As the aforementioned actions
October 2003 issued against Makati has factual and legal bases were clearly done without the necessary authority,
and is therefore valid. respondent cannot be bound by the same. It is a settled rule
a. A careful study of the FDDA, together with the Amended that the government cannot be estopped from collecting
Assessment Notice, both dated 16 October 2003, reveal taxes by mistake, negligence or omission of its agents.
that both complied with the requirements set forth in Section c. It is therefore undeniable that the FDDA dated 16 October
228 of the 1997 NIRC and its implementing rules, 2003 has become final and executory, hence the decision is
particularly Section 3.1.6 of the Revenue Regulations 12- appealable to the CTA.
99. The subject assessment contains the facts and the
applicable law, rules and regulations on which the tax FESTO HOLDINGS, INC. v. CIR (Caraan)
deficiency imposed upon the petitioner were based. [CTA Case No. 8226; September 2, 2011]
b. The FDDA and the Amended Assessment Notice both Letters issued by a revenue officer who is unauthorized cannot be
likewise show that the subject assessment is the result of considered as a final decision = not appealable to the CTA
the reinvestigation of the Formal Assessment Notice issued
on October 14, 2002, taking into account the explanation Recit-Ready:
and the documents in support thereof submitted by Makati Facts: Festo Holdings, Inc. filed a petition for review of a disputed
as well as the evidence on record. The considerable assessment with the CTA. CIR filed motion to dismiss on the
changes resulting from the reinvestigation proves that the ground that the letter (assessment) from which Festo bases its
subject assessment has factual and legal bases, and petition cannot be considered the final decision of the CIR; thus,
therefore complied with the mandatory requirements under the petition was premature.
the law.
c. As regards the assessment for tax deficiencies for the CIR said that the officer who issued it (RDO Wilfredo Narnola)
taxable years 2002-2004, we reiterate the ruling in the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

cannot be deemed the alter ego of the CIR and did not have became the basis of the instant petition by Festo, cannot be
delegated authority to do so. As such, they said that there was deemed an alter ego of the CIR for purposes of issuing a
yet no final decision or inaction of the CIR from which to appeal. final decision on petitioner's protest under a delegated
authority.
Issue/s: o As such, the subject letter dated December 17, 2010 is not
WON the letter by the revenue officer was a final decision from which the CIR's final decision on petitioner's protest; thus, the 30-
Festo can appeal from day period to file an appeal was yet to commence,
rendering the instant petition premature.
Held: NO. The taxpayer must wait for the final decision or inaction of
the CIR before filing a petition for review with the CTA. Granted Issue/s:
that the letter was issued by a revenue officer; still, it must be WON the letter by the revenue officer was a final decision from which
ascertained whether such officer was CIRs duly authorized Festo can appeal from
representative. NO

Absent any proof that the CIR authorized the revenue officer to Held/Ratio: WHEREFORE, premises considered, respondent's Motion to
act in his / her behalf, such acts from the revenue officer cannot Dismiss is hereby GRANTED. Accordingly, the instant Petition for Review [by
be considered as final decision. Granted that such are not Festo] is hereby DISMISSED for lack of jurisdiction.
considered as a final decision, such are not appealable to the
CTA. NO. The taxpayer must wait for the final decision or inaction of the CIR
before filing a petition for review with the CTA. (Sec. 7 and 11, RA 1125;
Facts: Sec. 3(a) Rule 8, Revised Rules of the CTA; Sec. 228 NIRC and RR 12-99)
Festo Holdings filed a petition for review of a disputed assessment with o It must also be ascertained if the Revenue District Officer who issued
the CTA. the Final Decision on Disputed Assessment dated December 17, 2010
Respondent CIR filed a Motion to Dismiss on the ground that said judicial is the CIR's duly authorized representative.
appeal was premature. o The NIRC allows the CIR to delegate her vested powers, subject to
o (Sections 7 and 11, RA 1125; Rule 8 of the Revised Rules exceptions, to any subordinate official, with the rank equivalent to a
of CTA) An aggrieved taxpayer must file a petition for division chief or higher.
review with the CTA within 30 days from the receipt of the Be that as it may, the decision of the Revenue District Officer
adverse decision of the CIR cannot be considered as the CIR's decision appealable to this
o There must be a decision, ruling or inaction on the part of Court, in the absence of any proof that the former was
the CIR within the allotted period before a taxpayer can authorized to decide and act in behalf of the latter on the
seek court intervention. protest of a taxpayer.
CIR further contends that the authority to make a tax assessment may be Nowhere is it provided for in Sec. 11 and 13 of the NIRC
delegated by the CIR to his / her subordinate officers and the said that a Revenue District Officer can issue decisions that
assessment has the same force and effect as that issued by him / her, if are appealable to this Court.
not reviewed or revised by him / her.
o CIR said that Revenue District Officer Wilfredo Z. Narnola, ALLIED BANKING CORP v. CIR (Coloquio)
who signed the letter dated December 17, 2010 and which [GR. No. 175097; February 5, 2010]
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

CIR, klaruhin mo gusto mo sabihin. Para di tayo nacoconfuse. o Timeline:


May 18, 2004 ABC received the PAN.
Recit-Ready: May 27, 2004 ABC filed a protest against it.
Facts: The BIR issued a PAN to petitioner ABC, for deficiency DST and July 16, 2004 BIR wrote a Formal Letter of Demand with
GRT for the taxable year 2001. ABC timely filed a protest against Assessment Notices (FAN) to ABC.
the PAN, but the BIR disregarded the protest and sent a FAN to August 30, 2004 ABC received the FAN.
the former. Instead of filing an administrative protest on the FAN, The FAN sent by the BIR stated that This is our FINAL decision based
which is the procedure stated in the NIRC, ABC directly filed a on the investigation. If you disagree, you may appeal within 30 days from
petition for review with the CTA. The CTA dismissed the petition receipt thereof, otherwise the assessment shall become final and
stating that ABC should have exhausted the administrative executory, and demandable. (take note of the words used: this is our FINAL
remedies first. It further ruled that it has no jurisdiction on the decision. you may appeal kasi dun nagpakatanga si BIR.)
assessment since it was not disputed since again, ABC failed to On September 24, 2004, ABC filed a petition for review with the CTA.
file an administrative protest. The CIR filed a motion to dismiss, stating that ABC filed to file an
administrative protest on the FAN first, before resorting to filing with the
Issue/s: CTA.
WON the FAN can be construed as a final decision of the CIR, o The CTA granted the motion to dismiss. It explained that it is
appealable to the CTA under RA 9282. - YES neither the assessment nor the FAN itself which is appealable to
the CTA. It is the decision of the CIR on the disputed
Held: The Court explained that the proper procedure would be to file an assessment which can be appealed to it.
administrative protest on a FAN, and if it is denied, only then may o It was added, that a disputed assessment is one wherein the
the taxpayer bring it to the CTA through a petition for review. taxpayer filed an administrative protest against the FAN within
However, this case is an exception to the exhaustion of 30 days from the receipt thereof. Here, ABC failed to file an
administrative remedies. The Court considered the language administrative protest, hence the assessments did not become
used in the FAN which stated that this is our final decision. If disputed subject to CTAs review.
you disagree, you may appeal this within 30 days from the ABCs motion for reconsideration and petition for review with the CTA En
receipt thereof.. The use of the word final has led ABC to Banc were also denied, thus this petition.
believe that filing an administrative protest would be futile, since it
is already the final decision of the CIR. The use of the word Issue/s:
appeal also added to the confusion, since such word pertains to WON the FAN can be construed as a final decision of the CIR,
the filing with a court. The CIR should have instead used the appealable to the CTA under RA 9282.
words: protest, reinvestigation or reconsideration. YES
In this case then estoppel operates on the part of the CIR for
causing confusion due to the choice of words stated in the FAN.
Held/Ratio: Petition GRANTED.
Facts:
In April 30, 2004, the BIR issued a PAN to petitioner Allied Banking YES. The Court stated that the language used in the FAN led ABC to
Corporation (ABC), for deficiency DST (P12,050,595.60) and Gross believe that an administrative protest would be futile since the
Receipts Tax (P38,995,296.76), for the taxable year 2001. assessment is already FINAL.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

The Court stated that the CTA, being a court of special jurisdiction, can o Therefore, we cannot blame ABC for not filing a protest, since
take cognizance only of matters that are clearly within its jurisdiction. As the language used and the tenor of the demand letter indicated
stated in RA 9282, the CTA exercises exclusive appellate jurisdiction to that the FAN is already the final decision of the CIR.
review by appeal, decisions of the CIR in cases involving disputed The Court also reminded the CIR, to indicate in a clear and unequivocal
assessments. language whether his action on a disputed assessment constitutes his
o The word decisions has been interpreted to mean the final determination thereof, to prevent confusion on the part of the
decisions on the protest. taxpayer.
o The proper procedure, based on Sec. 228 of the NIRC is: Also, the FAN stated the word appeal instead of protest/ reinvestigation/
1. CIR sends a PAN. reconsideration. Since the word appeal pertains to the filing of a petition
2. The taxpayer may file a protest on the PAN, within the for review with the CTA, that added more to the confusion.
period prescribed by the IRR. Any doubt in the interpretation of the FAN must be resolved in favor of
3. The CIR then sends a FAN. the taxpayer, and not the CIR who cause the confusion.
4. Then the taxpayer may file an administrative protest, by The Court made it clear that this decision is not a departure from the
filing a request for reconsideration or reinvestigation within strict rules of procedure (30 days to file an administrative protest and if
30 days from receipt of the FAN. He may submit all denied, only then may you file with the CTA). This case is just an
supporting documents within 60 days from the filing of the exception considering the confusion brought about by the language used
protest. in the FAN.
5. If the protest is denied in whole or in part, or is not acted
upon within 180 days from the submission of the FISHWEALTH CANNING CORP. v. CIR (Cualoping)
documents, only then may the taxpayer appeal to the CTA [GR. No. 179343; January 21, 2010]
within 30 days from the receipt of the decision or from the MR does not toll the 30 day period to appeal denial of protest of FAN
lapse of the 180-day period. If this is not done, the decision
of the CIR shall become final and executory. Recit-Ready:
In this case, ABC filed a timely protest after receiving the PAN. In Facts:
response thereto, the BIR issued the FAN. However, instead of filing an CIR examined the books of FCC and found them to have tax deficiencies,
administrative protest within 30 days, it directly filed a petition for review and these were eventually settled. Later the CIR conducted a
with the CTA. reinvestigation over the same period and demanded payment for more
o If the rules are strictly applied, the CTAs dismissal of the deficiencies. CIR issued a Final Assessment Notice and also denied
petition was proper. FCCs letter of protest on August 4, 2000. Instead of appealing to the
However, the Court stated that this case is an exception to the rule on CTA, FCC filed a letter of reconsideration. The CIR eventually sent a
exhaustion of administrative remedies. collection letter to demand payment, and on October 20, 2005 FCC filed
o Going back to the FAN, it stated that this is our FINAL decision a petition in the CTA as a response.
based on our investigation. If you disagree, you may appeal this
FINAL decision within 30 days from receipt thereof. Such Issue/s:
statement has led ABC to conclude that only a final judicial WON the petition before the court of tax appeals was filed out of time?
ruling from the CTA would be accepted by the CIR. Meaning, an
administrative protest would be futile (kasi nakalagay na final na Held: YES
nga). In this case, estoppel operates against the CIR.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Section 228 of the tax code explicitly states that that if a protest is denied, WON the petition before the court of tax appeals was filed out of time?
there is a 30 day period to appeal it with the CTA. A motion for
reconsideration of the denial of the administrative protest does not toll the Held/Ratio: YES.
30-day period to appeal to the CTA. In this case, FCC should have filed o Section 228 of the 1997 Tax Code provides that an assessment:
their petition in the CTA before September 3, 2005 (30 days after denial of x x x may be protested administratively by filing a request for
their letter of protest). reconsideration or reinvestigation within thirty (30) days from
receipt of the assessment in such form and manner as may be
prescribed by implementing rules and regulations. Within sixty
Facts: (60) days from filing of the protest, all relevant supporting
CIR ordered the examination of the internal revenue taxes for the taxable documents shall have been submitted; otherwise, the
year 1999 of Fishwealth Canning Corp. (FCC). The investigation assessment shall become final.
disclosed that FCC was liable in the amount of P2,395,826.88, and these If the protest is denied in whole or in part, or is not acted upon
were eventually settled on August 30, 2000. within one hundred eighty (180) days from submission of
On August 25, 2000, CIR reinvestigated FCCs books of accounts documents, the taxpayer adversely affected by the decision or
covering the same period for the purpose of which it issued a subpoena inaction may appeal to the Court of Tax Appeals within thirty (30)
duces tecum. days from receipt of the said decision, or from the lapse of the
CIR sent, on August 6, 2003, a Final Assessment Notice of income one hundred eighty (180)-day period; otherwise, the decision
tax and VAT deficiencies totaling P67,597,336.75 for the taxable year shall become final, executory and demandable. (underscoring
1999, which was contested by FCC. supplied)1avvphi1
CIR thereafter issued a Final Decision on Disputed Assessment dated o FCCs administrative protest was denied by Final Decision on Disputed
August 2, 2005, which FCC received on August 4, 2005, denying its letter Assessment dated August 2, 2005 issued by respondent and
of protest, apprising it of its income tax and VAT liabilities in the which petitioner received on August 4, 2005. Under the above-quoted
amounts of "P15,396,905.24 and P63,688,434.40 [sic], respectively, for Section 228 of the 1997 Tax Code, petitioner had 30 days to appeal
the taxable year 1999," and requesting the immediate payment thereof, respondents denial of its protest to the CTA.
"inclusive of penalties incident to delinquency." o Since FCC received the denial of its administrative protest on August 4,
o CIR added that if FCC disagreed, it may appeal to the Court 2005, it had until September 3, 2005 to file a petition for review before
of Tax Appeals (CTA) "within thirty (30) days from date of the CTA Division. It filed one, however, on October 20, 2005, hence, it
receipt hereof, otherwise our said deficiency income and was filed out of time.
value-added taxes assessments shall become final, o A motion for reconsideration of the denial of the administrative
executory, and demandable." protest does not toll the 30-day period to appeal to the CTA.
Instead of appealing to the CTA, FCC filed, on September 1, 2005, a
Letter of Reconsideration dated August 31, 2005. JUDY ANNE SANTOS v. PEOPLE OF THE PHILIPPINES and
CIR eventually sent a collection letter to demand payment, and FCC BIR (De Luis)
responded by filing on October 20, 2005 a Petition for Review before [GR. No. 173176; August 26, 2008]
the CTA. The denial of a motion to quash is an interlocutory order and, thus,
unappealable.
Issue/s:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Recit-Ready: in jurisprudence by this Court as regards petitions for review and appeals
Facts: BIR Commissioner Parayno wrote to DOJ Secretary Raul in courts of general jurisdiction should likewise bind the CTA, and it cannot
Gonzales regarding the possible filing of criminal charges against Judy depart therefrom. It is a general rule in the rules of procedure that the
Anne Santos for tax evasion. The BIR Commissioner summarized denial of motion to quash is an interlocutory order, which is not the proper
Santoss ITR and concluded that she substantially underdeclared her subject of an appeal or a petition for certiorari.
income in different taxable years, this constituted a prima facie evidence Even if her Petition for Review is to be treated as a petition for certiorari, it
of false or fraudulent return under the NIRC. Accordingly, Prosecutor is dismissible for lack of merit, because the Prosecuting Attorney
Torrevillas issued a Resolution finding probable cause and recommending Torrevillas (Prosecutor appointed by the DOJ) has the authority to file the
the filing of criminal information against Santos. Pursuant to this, an information by virtue of the approval of the BIR Commissioner through his
Information for violation of Section 255 in relation to Sections 254 and letter to the DOJ Secretary. Also, the filing of the said information was not
248(b) of the NIRC was filed with the CTA First Division on Nov. 3, 2005. in violation of petitioners constitutional rights to due process and equal
Petitioner filed a motion to quash the information, which was denied by the protection of laws.
CTA First Division. Consequently, petitioner filed a motion with the CTA en
banc a Motion for Extension of Time to File Petition for Review. She filed Facts:
her Petition for Review with the CTA en banc on June 16, 2006. However, On May 19, 2005, BIR Commissioner Guillermo Parayno wrote to the
the CTA en banc denied petitioners Motion for Extension of Time to File DOJ Secretay Raul Gonzales regarding the possible filing of criminal
Petition for Review because a ruling denying a motion to quash is only an
charges against Judy Anne Santos.
interlocutory order, as such, it cannot be made the subject of an appeal.
Juday appealed to the Supreme Court alleging that the resolution of the In said letter, BIR Commissioner Parayno summarized the findings of the
CTA Divison denying a motion to quash is a proper subject of an appeal to investigating BIR officers that petitioner, in her Annual Income Tax Return
the CTA en banc under Section 18 of R.A. 1125, because the law does for taxable year 2002 filed with the BIR, declared an income
not say that only a resolution that constitutes a final disposition of a case of P8,033,332.70 derived from her talent fees solely from ABS-
may be appealed to the CTA en banc. CBN; initial documents gathered from the BIR offices and those given by
petitioners accountant and third parties, however, confirmed that
Issue/s: petitioner received in 2002 income in the amount of at
WON a resolution of the CTA Division denying a motion to quash is a least P14,796,234.70, not only from ABS-CBN, but also from other
proper subject of an appeal to the CTA en banc under Section 11 of sources, such as movies and product endorsements; the estimated tax
R.A. 9282 (CTA Law) liability arising from petitioners underdeclaration amounted
NO to P1,718,925.52, including incremental penalties; the non-declaration by
petitioner of an amount equivalent to at least 84.18% of the income
declared in her return was considered a substantial underdeclaration of
income, which constituted prima facie evidence of false or fraudulent
Held: return under Section 248(B) of the NIRC, as amended; and petitioners
Petitioner cannot file a Petition for Review with the CTA en banc to appeal failure to account as part of her income the professional fees she
the Resolution of the CTA First Division denying her Motion to Quash. The received from sources other than ABS-CBN and her underdeclaration of
Resolution is interlocutory and, thus, unappealable. The petition for review the income she received from ABS-CBN amounted to manifest violations
under Section 18 of Republic Act No. 1125, as amended, may be new to of Sections 254 and 255, as well as Section 248(B) of the NIRC, as
the CTA, but it is actually a mode of appeal long available in courts of amended.
general jurisdiction. The CTA merely adopts the procedure for petitions for
review and appeals long established and practiced in other Philippine Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution dated
courts. Accordingly, doctrines, principles, rules, and precedents laid down Oct. 21, 2005, finding probable cause and recommending the filing of
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

criminal information against Santos. Chief State Prosecutor Jovencito R. her Petition for Review is to be treated as a petition for certiorari, it is
Puno approved the Resolution. Pursuant to this, an information for dismissible for lack of merit.
violation of Section 255 in relation to Sections 254 and 248(b) of the The petition for review under Section 18 of Republic Act No. 1125, as
amended, may be new to the CTA, but it is actually a mode of appeal
NIRC was filed with the CTA on Nov. 3, 2005.
long available in courts of general jurisdiction. Hence, the Revised CTA
The CTA First Division then issued a warrant for the arrest of petitioner. Rules no longer elaborated on it but merely referred to existing rules of
The tax court lifted and recalled the warrant of arrest on 21 December procedure on petitions for review and appeals. The CTA merely adopts
2005 after petitioner voluntarily appeared and submitted herself to its the procedure for petitions for review and appeals long established and
jurisdiction and filed the required bail bond in the amount ofP20,000.00. practiced in other Philippine courts. Accordingly, doctrines, principles,
On Jan. 10, 2006, petitioner filed with the CTA First Division a Motion to rules, and precedents laid down in jurisprudence by this Court as
Quash the information on the following grounds: 1) the facts alleged do regards petitions for review and appeals in courts of general jurisdiction
not constitute an offense; 2) the officer who filed the information had no should likewise bind the CTA, and it cannot depart therefrom.
authority to do so; 3) the Honorable CTA has no jurisdiction over the It is a general rule in the rules of procedure that the denial of motion
subject matter of the case; and 4) the information is void ab initio, for to quash is an interlocutory order which is not the proper subject of an
being violative of due process, and the equal protection of laws. appeal or a petition for certiorari.
The CTA First Division denied the petitioners Motion to Quash and According to Section 1, Rule 41 of the Revised Rules of Court,
accordingly scheduled her arraignment on March 2, 1006. Petitioner filed governing appeals from the Regional Trial Courts (RTCs) to the
a Motion for Reconsideration and/or Reinvestigation, which was again Court of Appeals, an appeal may be taken only from a judgment
denied by the CTA First Division or final order that completely disposes of the case or of a matter
On June 1, 2006, petitioner filed with the CTA en banc a Motion for therein when declared by the Rules to be appealable. Said
Extension of Time to File Petition for Review. She filed her Petition for provision, thus, explicitly states that no appeal may be taken
Review with the CTA en banc on June 16, 2006. However, the CTA en from an interlocutory order.
banc denied petitioners Motion for Extension of Time to File Petition for After a final order or judgment, the court should have nothing
Review because a ruling denying a motion to quash is only an more to do in respect of the relative rights of the parties to the
interlocutory order, as such, it cannot be made the subject of an appeal. case. Conversely, "an order that does not finally dispose of the
Juday appealed to the Supreme Court alleging that the resolution of the case and does not end the Court's task of adjudicating the
CTA Divison denying a motion to quash is a proper subject of an appeal parties' contentions in determining their rights and liabilities as
to the CTA en banc under Section 18 of R.A. 1125, because the law does regards each other, but obviously indicates that other things
not say that only a resolution that constitutes a final disposition of a case remain to be done by the Court, is interlocutory.
may be appealed to the CTA en banc. Another recognized reason of the law in permitting appeal only
from a final order or judgment, and not from an interlocutory or
Issue/s: incidental one, is to avoid multiplicity of appeals in a single
WON a resolution of the CTA Division denying a motion to quash is a action, which must necessarily suspend the hearing and
proper subject of an appeal to the CTA en banc under Section 11 of decision on the merits of the case during the pendency of the
appeal.
R.A. 9282 (CTA Law)
o The remedy of an accused from the denial of his or her motion to quash
NO is an appeal from the judgment after trial on the merits. The accused,
after the denial of his motion to quash, should have proceeded with the
Held/Ratio: Petition DENIED. The CTA en banc did not err in denying trial of the case in the court below, and if final judgment is rendered
petitioners Motion for Extension of Time to File Petition for Review. against him, he could then appeal, and, upon such appeal, present the
NO. Petitioner cannot file a Petition for Review with the CTA en banc to questions which he sought to be decided by the appellate court in a
appeal the Resolution of the CTA First Division denying her Motion to petition for certiorari.
Quash. The Resolution is interlocutory and, thus, unappealable. Even if
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o While the general rule proscribes the appeal of an interlocutory order, gave his prior approval to the filing of an information in court
there are also recognized exceptions to the same. Where special should the DOJ, based on the evidence submitted, find probable
circumstances clearly demonstrate the inadequacy of an appeal, then cause against petitioner during the preliminary investigation.
the special civil action of certiorari or prohibition (Rule 65) may Section 220 of the NIRC, as amended, simply requires that the
exceptionally be allowed. BIR Commissioner approve the institution of civil or criminal
This Court recognizes that under certain situations, recourse to action against a tax law violator, but it does not describe in what
extraordinary legal remedies, such as a petition for certiorari, is form such approval must be given.
considered proper to question the denial of a motion to quash Petitioner asserts that it is the City Prosecutor under the
(or any other interlocutory order) in the interest of a "more Quezon City Charter, who has the authority to investigate and
enlightened and substantial justice or to promote public welfare prosecute offenses allegedly committed within the jurisdiction of
and public policy; or when the cases "have attracted nationwide Quezon City. This argument is untenable because the charge
attention, making it essential to proceed with dispatch in the against petitioner is already within the exclusive original
consideration thereof"; or when the order was rendered with jurisdiction of the CTA. The City Prosecutor does not have the
grave abuse of discretion. authority to appear before the CTA, which is now the same rank
Certiorari is an appropriate remedy to assail an interlocutory as the Court of Appeals. The proper prosecutor in this case is
order (1) when the tribunal issued such order without or in the Chief State Prosecutor, who exercises control and
excess of jurisdiction or with grave abuse of discretion; and (2) supervision over City Prosecutors.
when the assailed interlocutory order is patently erroneous, and Petitioner alleges that she has been denied due process and
the remedy of appeal would not afford adequate and equal protection of the laws when similar charges for violation of
expeditious relief. the NIRC, against Regina Encarnacion A. Velasquez
o As to whether the CTA en banc, under its expanded jurisdiction in (Velasquez) were dismissed by the DOJ the reason that
Republic Act No. 9282, has been granted jurisdiction over special civil Velasquezs tax liability was not yet fully determined when the
actions for certiorari is not raised as an issue in the Petition at bar, thus, charges were filed.
precluding the Court from making a definitive pronouncement thereon. This contention lacks merit. First, a motion to quash
However, even if such an issue is answered in the negative, it would not should be based on a defect in the information, which is
substantially affect the ruling of this Court herein, for a party whose evident on its face. The Information against petitioner
motion to quash had been denied may still seek recourse, under appears valid on its face; and that it was filed in
exceptional and meritorious circumstances, via a special civil action violation of her constitutional rights to due process and
for certiorari with this Court, refuting petitioners assertion of a procedural equal protection of the laws is not evident on the face
void. thereof. As pointed out by the CTA First Division, the
more appropriate recourse petitioner should have
o Assuming that the CTA en banc, as an exception to the general taken, given the dismissal of similar charges against
rule, allowed and treated petitioners Petition for Review in C.T.A. Velasquez, was to appeal with the DOJ Secretary the
EB. CRIM. No. 001 as a special civil action for certiorari, it would Resolution of the Office of the State Prosecutor
still be dismissible for lack of merit. recommending the filing of an information against her.
Petitioner argues that the information was filed without the Second, petitioner cannot claim denial of due process
approval of the BIR Commissioner in violation of Section 220 of when she was given the opportunity to file her affidavits
the NIRC. This argument must fail in light of BIR Commissioner and other pleadings and submit evidence before the
Paraynos letter dated 19 May 2005 to DOJ Secretary Gonzales DOJ during the preliminary investigation of her case
referring "for preliminary investigation and filing of an and before the Information was filed against her.
information in court if evidence so warrants," the findings of Third, petitioner was not able to duly establish to the
the BIR officers recommending the criminal prosecution of satisfaction of this Court that she and Velasquez were
petitioner. In said letter, BIR Commissioner Parayno already indeed similarly situated, i.e., that they committed
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

identical acts for which they were charged with the The BIR issued its Final Decision on Disputed Assessment (FDDA),
violation of the same provisions of the NIRC; and that addressed to Pacquiao only, informing him that the CIR found
they presented similar arguments and evidence in their him liable for deficiency income tax and VAT for taxable years
defense - yet, they were treated differently. In the case
2008 and 2009 which, inclusive of interests and surcharges,
at bar, no evidence of a clear and intentional
discrimination against petitioner was shown, whether amounted to a total of P2,261,217,439.92.
by Prosecution Attorney Torrevillas in recommending Aggrieved, the petitioners filed the subject Urgent Motion for the CTA to lift
the filing of Information against petitioner or by the CTA the warrants of distraint, levy and garnishments issued by the CIR
First Division in denying petitioners Motion to Quash. against their assets and to enjoin the CIR from collecting the
The only basis for petitioners claim of denial of equal assessed deficiency taxes pending the resolution of their appeal.
protection of the laws was the dismissal of the charges The CTA issued the first assailed resolution granting the petitioners
against Velasquez while those against her were not.
Urgent Motion, ordering the CIR to desist from collecting on the
deficiency tax assessments against the petitioners. In its
SPOUSES EMMANUEL D. PACQUIAO AND JINKEE J.
resolution, the CTA noted that the amount sought to be collected
PACQUIAO vs. CTA AND CIR (Villarin, L.) was way beyond the petitioners net worth, which, based on
[GR. No. 213394; April 6, 2016] Pacquiaos Statement of Assets, Liabilities and Net Worth
type buzzwords here for easy-recall of the case, e.g. Chinese Golden Cat (SALN), only amounted to P1,185,984,697.00.
Considering that the petitioners still needed to cover the costs of their daily
Recit-Ready: subsistence, the CTA opined that the collection of the total
Facts: In compliance with his duty to his home country, Pacquiao filed amount of P3,298,514,894.35 from the petitioners would be
his 2008 income tax return on April 15, 2009 reporting his highly prejudicial to their interests and should, thus, be
Philippine-sourced income. It was subsequently amended to suspended pursuant to Section 11 of R.A. No. 1125, as
include his US-sourced income. amended.
The controversy began on March 25, 2010, when Pacquiao received a The petitioners sought partial reconsideration of the April 22, 2014 CTA
Letter of Authority from the Regional District Office No. 43 of the resolution, praying for the reduction of the amount of the bond
Bureau of Internal Revenue for the examination of his books of required or an extension of 30 days to file the same. On July 11,
accounts and other accounting records for the period covering 2014, the CTA issued the second assailed resolution denying the
January 1, 2008 to December 31, 2008. petitioners motion to reduce the required cash deposit or bond,
On April 15, 2010, Pacquiao filed his 2009 income tax return, which but allowed them an extension of thirty (30) days within which to
although reflecting his Philippines-sourced income, failed to file the same.
include his income derived from his earnings in the US. He also
failed to file his Value Added Tax (VAT) returns for the years Issue/s:
2008 and 2009. WON CTA acted with GADALEJ NO
The petitioners filed their protest against the Preliminary Assessment
Notice (PAN). Held: It is clear that the authority of the courts to issue injunctive writs
After denying the protest, the BIR issued its Formal Letter Demand, to restrain the collection of tax and to dispense with the deposit of
finding the petitioners liable for deficiency income tax and VAT the amount claimed or the filing of the required bond is not simply
amounting to P766,899,530.62 for taxable years 2008 and confined to cases where prescription has set in. As explained by
P1,433,421,214.61 for 2009. the Court in those cases, whenever it is determined by the courts
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

that the method employed by the Collector of Internal Revenue in The controversy began on March 25, 2010, when Pacquiao received a
the collection of tax is not sanctioned by law, the bond Letter of Authority from the Regional District Office No. 43 of the Bureau
requirement under Section 11 of R.A. No. 1125 should be of Internal Revenue for the examination of his books of accounts and
dispensed with. The purpose of the rule is not only to prevent other accounting records for the period covering January 1, 2008 to
jeopardizing the interest of the taxpayer, but more importantly, to December 31, 2008.
prevent the absurd situation wherein the court would declare that On April 15, 2010, Pacquiao filed his 2009 income tax return, which
the collection by the summary methods of distraint and levy was although reflecting his Philippines-sourced income, failed to include his
violative of law, and then, in the same breath require the income derived from his earnings in the US. He also failed to file his
petitioner to deposit or file a bond as a prerequisite for the Value Added Tax (VAT) returns for the years 2008 and 2009.
issuance of a writ of injunction. Commissioner on Internal Revenue issued another Letter of Authority,
As the CTA is in a better position to make such a preliminary authorizing the BIRs National Investigation Division (NID) to examine the
determination, a remand to the CTA is in order. To resolve the books of accounts and other accounting records of both Pacquiao and
issue of whether the petitioners should be required to post the Jinkee for the last 15 years, from 1995 to 2009.
security bond under Section 11 of R.A. No. 1125, and, if so, in The petitioners, through counsel, wrote a letter questioning the propriety
what amount, the CTA must take into account, among others, the of the CIR investigation. According to the petitioners, they were already
following: subjected to an earlier investigation by the BIR for the years prior to 2007,
1. Whether the requirement of a Notice of Informal and no fraud was ever found to have been committed. They added that
Conference was complied with; pursuant to the March LA issued by the RDO, they were already being
2. Whether the 15-year period subject of the CIRs investigated for the year 2008.
investigation is arbitrary and excessive; The NID informed the counsel of the petitioners that the July LA issued by
3. Whether fraud was duly established; the CIR had effectively cancelled and superseded the March LA issued
4. Whether the FLD issued against the petitioners was by its RDO.
irregular; On January 5 and 21, 2011, the petitioners submitted various income tax
5. Whether the FDDA, the PCL, the FNBS, and the related documents for the years 2007-2009. As for the years 1995 to
Warrants of Distraint and/or Levy were validly issued. 2006, the petitioners explained that they could not furnish the bureau with
the books of accounts and other tax related documents as they had
Facts: already been disposed in accordance with Section 235 of the Tax Code.
Due to his success, Pacquiao was able to amass income from both the They added that even if they wanted to, they could no longer find copies
Philippines and the United States of America. His income from the US of the documents because during those years, their accounting records
came primarily from the purses he received for the boxing matches he were then managed by previous counsels, who had since passed away.
took part under Top Rank, Inc. On the other hand, his income from the Finally, the petitioners pointed out that their tax liabilities for the said
Philippines consisted of talent fees received from various Philippine years had already been fully settled with then CIR Jose Mario Buag,
corporations for product endorsements, advertising commercials and who after a review, found no fraud against them.
television appearances. After conducting its own investigation, the CIR made its initial assessment
In compliance with his duty to his home country, Pacquiao filed his 2008 finding that the petitioners were unable to fully settle their tax liabilities.
income tax return on April 15, 2009 reporting his Philippine-sourced Thus, the CIR issued its Notice of Initial Assessment-Informal Conference
income. It was subsequently amended to include his US-sourced income. (NIC), dated January 31, 2012, directly addressed to the petitioners,
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

informing them that based on the best evidence obtainable, they were Considering that the petitioners still needed to cover the costs of their
liable for deficiency income taxes in the amount of P714,061,116.30 for daily subsistence, the CTA opined that the collection of the total amount
2008 and P1,446,245,864.33 for 2009, inclusive of interests and of P3,298,514,894.35 from the petitioners would be highly prejudicial to
surcharges. their interests and should, thus, be suspended pursuant to Section 11 of
The petitioners filed their protest against the Preliminary Assessment R.A. No. 1125, as amended.
Notice (PAN). The petitioners sought partial reconsideration of the April 22, 2014 CTA
After denying the protest, the BIR issued its Formal Letter Demand, resolution, praying for the reduction of the amount of the bond required or
finding the petitioners liable for deficiency income tax and VAT amounting an extension of 30 days to file the same. On July 11, 2014, the CTA
to P766,899,530.62 for taxable years 2008 and P1,433,421,214.61 for issued the second assailed resolution denying the petitioners motion to
2009. reduce the required cash deposit or bond, but allowed them an extension
The BIR issued its Final Decision on Disputed Assessment (FDDA), of thirty (30) days within which to file the same.
addressed to Pacquiao only, informing him that the CIR found him liable
for deficiency income tax and VAT for taxable years 2008 and 2009 Issue/s:
which, inclusive of interests and surcharges, amounted to a total of WON CTA acted with GADALEJ
P2,261,217,439.92. NO
Aggrieved that they were being made liable for deficiency income taxes
for the years 2008 and 2009, the petitioners sought redress and filed a Held/Ratio: Petition is PARTIALLY GRANTED. Accordingly, the case is
petition for review with the CTA. hereby REMANDED to the Court of Tax Appeals, First Division, which is
Meanwhile, in a letter, dated October 14, 2013, the BIR-ARMD informed ordered to conduct a preliminary hearing to determine whether the
the petitioners that they were denying their request to defer the collection dispensation or reduction of the required cash deposit or bond provided
enforcement action for lack of legal basis. The same letter also informed under Section 11, Republic Act No. 1125 is proper to restrain the collection
the petitioners that despite their initial payment, the amount to be of deficiency taxes assessed against the petitioners. After the posting of the
collected from both of them still amounted to P3,259,643,792.24, for required bond, or if the Court of Tax Appeals, First Division, determines that
deficiency income tax for taxable years 2008 and 2009, and no bond is necessary, shall proceed to hear and resolve the petition for
P46,920,235.74 for deficiency VAT for the same period. A warrant of review pending before it.
distraint and/or levy against Pacquiao and Jinkee was included in the
letter. NO.
Aggrieved, the petitioners filed the subject Urgent Motion for the CTA to Section 11 of R.A. No. 1125, as amended by R.A. No. 9282, embodies
lift the warrants of distraint, levy and garnishments issued by the CIR the rule that an appeal to the CTA from the decision of the CIR will not
against their assets and to enjoin the CIR from collecting the assessed suspend the payment, levy, distraint, and/or sale of any property of the
deficiency taxes pending the resolution of their appeal. taxpayer for the satisfaction of his tax liability as provided by existing
The CTA issued the first assailed resolution granting the petitioners law. When, in the view of the CTA, the collection may jeopardize the
Urgent Motion, ordering the CIR to desist from collecting on the interest of the Government and/or the taxpayer, it may suspend the said
deficiency tax assessments against the petitioners. In its resolution, the collection and require the taxpayer either to deposit the amount claimed
CTA noted that the amount sought to be collected was way beyond the or to file a surety bond.
petitioners net worth, which, based on Pacquiaos Statement of Assets, Essentially, the petitioners ascribe grave abuse of discretion on them
Liabilities and Net Worth (SALN), only amounted to P1,185,984,697.00. part of the CTA when it issued the subject resolutions requiring them to
deposit the amount of P3,298,514,894.35 or post a bond in the amount
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

of P4,947,772,341.53 as a condition for its order enjoining the CIR from rendering PJI liable for tax deficiencies. In 1998, PJI was
collecting the taxes from them. thereafter issued a warrant for distraint/levy, yielding the same
It is clear that the authority of the courts to issue injunctive writs to result. The Court of Appeals ruled that only decisions of the BIR
restrain the collection of tax and to dispense with the deposit of the denying a request for reconsideration or reinvestigation may be
amount claimed or the filing of the required bond is not simply confined appealed to the CTA. Since PJI did not file a request for
to cases where prescription has set in. As explained by the Court in reinvestigation or reconsideration within thirty (30) days, the
those cases, whenever it is determined by the courts that the method assessment notices became final and unappealable. CIR
employed by the Collector of Internal Revenue in the collection of tax is argues that the case was brought to the CTA because the
not sanctioned by law, the bond requirement under Section 11 of R.A. warrant of distraint or levy was illegally issued and that no
No. 1125 should be dispensed with. The purpose of the rule is not only assessment was issued because it was based on an invalid
to prevent jeopardizing the interest of the taxpayer, but more importantly, waiver of the statutes of limitations.
to prevent the absurd situation wherein the court would declare that the
collection by the summary methods of distraint and levy was violative of Issue: WON CTA has jurisdiction YES
law, and then, in the same breath require the petitioner to deposit or file
a bond as a prerequisite for the issuance of a writ of injunction. Held: SC held that the CTA had jurisdiction over the case, as the law
As the CTA is in a better position to make such a preliminary gave the CTA the jurisdiction to determine if the warrant of
determination, a remand to the CTA is in order. To resolve the issue of distraint/levy issued by the BIR is valid and to rule if the Waiver of
whether the petitioners should be required to post the security bond Statute of Limitations was validly effected. Based on Section 7 of
under Section 11 of R.A. No. 1125, and, if so, in what amount, the CTA the Act Creating the CTA, the appellate jurisdiction of the CTA
must take into account, among others, the following: is not limited to cases which involve decisions of the CIR on
1. Whether the requirement of a Notice of Informal Conference matters relating to assessments or refunds.
was complied with;
2. Whether the 15-year period subject of the CIRs investigation is
arbitrary and excessive; Facts:
3. Whether fraud was duly established; In April 1995, the Philippine Journalists, Inc. (PJI) filed its ITR for the
4. Whether the FLD issued against the petitioners was irregular; year 1994.
5. Whether the FDDA, the PCL, the FNBS, and the Warrants of In 1995, a tax audit was conducted by the BIR, where it was found that
Distraint and/or Levy were validly issued. PJI was liable for a tax deficiency.
In September 1997, PJI asked that it be allowed to present its evidence
PHILIPPINE JOURNALISTS v. CIR (Diploma) to dispute the finding.
[GR 162582; Dec. 16, 2004] In the same month, the Comptroller of PJI (Lorenza Tolentino) executed
The limit (of CTA jurisdiction in decisions of the CIR on matters only relating a waiver of the statute of limitations, whereby PJI agreed to waive the
to assessments or refunds) does not exist Cady, Mean Girls running of the prescriptive period of the governments right to make an
assessment.
Recit-Ready: o Said right was set to expire on April 17, 1998 but due to the
Facts: PJI was assessed deficiency tax. In 1995. A additional evidence that PJI sought to present, the
reinvestigation took place which yielded the same result government needed more time.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

A reinvestigation took place which yielded the same result rendering PJI Held/Ratio: WHEREFORE, premises considered, the instant petition for
liable for tax deficiencies. review is GRANTED. The Decision of the Court of Appeals dated August 5,
In December 1998, a formal assessment notice (FAN) was sent via 2003 and its Resolution dated March 31, 2004 are REVERSED and SET
registered mail to PJI. Subsequently, a warrant for distraint/levy was ASIDE. The Decision of the Court of Tax Appeals in CTA Case No. 6108
issued against the assets of PJI. dated May 14, 2002, declaring Warrant of Distraint and/or Levy No. 33-06-
o PJI filed a protest which eventually reached the Court of 046 null and void, is REINSTATED.
Tax Appeals. PJI averred that the waiver executed by
Tolentino was incomplete; Section 7 of the RA 1125 [An Act Creating the CTA] provides:
o that no acceptance date was indicated to show that the o SEC. 7. Jurisdiction. The Court of Tax Appeals shall
waiver was accepted by BIR; exercise exclusive appellate jurisdiction to review by
o that no copy was furnished PJI; that the waiver was an appeal: Decisions of the Commissioner of Internal Revenue
unlimited waiver because it did not indicate as to how long in cases involving disputed assessments, refunds of internal
the extension of the prescriptive period should last. revenue taxes, fees or other charges, penalties imposed in
o As such, there was no valid waiver of the statute of relation thereto, or other matters arising under the
limitations which in turn make the FAN issued in December National Internal Revenue Code or other laws or part of
1998 void. law administered by the Bureau of Internal Revenue.
CIR argued that the placing of the acceptance date is merely a formal Thus, the appellate jurisdiction of the CTA is not limited to cases
requirement and not vital to the validity of the waiver. which involve decisions of the CIR on matters relating to
It also contended that there is no need to furnish PJI a copy of the assessments or refunds.
waiver because in the first place, it was PJI, through its representative, The second part of the provision covers other cases that arise out of the
who was making the waiver so it should know about it NIRC or related laws administered by the Bureau of Internal Revenue.
Further, there is no need to place a specific date as to how long the The law gave the CTA the jurisdiction to determine if the warrant of
prescriptive period should be extended because PJI was waiving the distraint/levy issued by the BIR is valid and to rule if the Waiver of
prescriptive period and was not asking to extend it. Statute of Limitations was validly effected.
The Court of Appeals ruled that only decisions of the BIR denying a This is not the first case where the CTA validly ruled on issues that did
request for reconsideration or reinvestigation may be appealed to the not relate directly to a disputed assessment or a claim for refund.
CTA. o In Pantoja v. David, we upheld the jurisdiction of the CTA to act on
o Since PJI did not file a request for reinvestigation or a petition to invalidate and annul the distraint orders of the
reconsideration within thirty (30) days, the assessment notices Commissioner of Internal Revenue.
became final and unappealable. o In Commissioner of Internal Revenue v. Court of Appeals, the
CIR argues that the case was brought to the CTA because decision of the CTA declaring several waivers executed by the
the warrant of distraint or levy was illegally issued and that taxpayer as null and void, thus invalidating the assessments issued
no assessment was issued because it was based on an by the BIR, was upheld by this Court.
invalid waiver of the statutes of limitations.

Issue: WON CTA has jurisdiction YES


MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

CIR v. LEAL (FajardoRK) Pursuant to Sec. 116 of the Tax Code which imposes percentage tax on
[GR. No. 113459; November 18, 2002] dealers in securities and lending investors, the CIR issued Memorandum
Order (RMO) No. 15-91
Recit-Ready: o It imposes 5% lending investors tax on pawnshops based
Facts: The CIR issued an RMO No. 15-91 which imposes 5% lending on their gross income and requiring all investigating units of
investors tax on pawnshops based on their gross income and the Bureau to investigate and assess the lending investors
requiring all investigating units of the Bureau to investigate and tax due from them.
assess the lending investors tax. This was an offshoot of The issuance of RMO No. 15-91 was an offshoot of petitioners
petitioners evaluation that the nature of pawnshop business is evaluation that the nature of pawnshop business is similar to that of
similar to that of lending investors. CIR then issued RMO lending investors.
subjecting the pawn ticket to the DST under the tax code. Subsequently, petitioner issued RMO Circular No. 43-91, subjecting the
Respondent were adversely affected by the revenue orders and pawn ticket to the DST under the tax code.
asked for reconsideration of both RMO No. 15-91 and RMC No. The respondent was adversely affected by the revenue orders and asked
43-91 filed with the RTC a petition for prohibition to implement for reconsideration of both RMO No. 15-91 and RMC No. 43-91 filed with
such revenue orders. the RTC a petition for prohibition to implement such revenue orders.
The CIR, through the OSG, filed a motion to dismiss on the ground that
Issue/s: the RTC has no jurisdiction to review the questioned revenue orders.
(1) Whether or not the CTA has jurisdiction to review the ruling of the Their MTD was denied holding that the revenue orders are not
CIRYes the CTA has JD assessments to implement a Tax Code provision, but are in effect new
Held: The jurisdiction to review rulings of the Commissioner pertains to taxes which are not provided under the Code.
the CTA and NOT the RTC. The CA affirmed the order issued by the RTC
The questioned RMO and RMC are actually rulings or opinions of
the Commissioner implementing the Tax Code on the taxability of Issue/s:
Pawnshops. Under RA 1125, Section 7 (The JD of the CTA)it Whether or not the Court of Tax Appeals has jurisdiction to review
shall exercise exclusive appellate jurisdiction to review by appeal, ruling of the CIRYes, the CTA has JD
the decisions of the CIR in cases involving disputed
assessments, refunds, fees, or other charges, penalties imposed Held/Ratio:
in relation thereto or other matters arising under the NIRC or Yes the CTA has jurisdiction. The jurisdiction to review rulings of the
other laws or part of law administered by the BIR. Clearly then, Commissioner pertains to the CTA and NOT the RTC.
she should have filed her petition with the CTA, not the RTC. The questioned RMO and RMC are actually rulings or opinions of
Indeed, the CA erred in holding that the RTC order should have the Commissioner implementing the Tax Code on the taxability of
been challenged before SC. Pawnshops. This is clear from petitioners RMO No. 15-91 which
reads:
A restudy of P.D. 114 (the Pawnshop Regulation Act) shows that the
principal activity of pawnshops is lending money at interest and
Facts: incidentally accepting a pawn of personal property delivered by the
pawner to the pawnee as security for the loan (Sec. 3, ibid.). Clearly,
this makes pawnshop business akin to lending investors business
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

activity which is broad enough to encompass the business of lending Clearly then, she should have filed her petition with the CTA, not the
money at interest by any person whether natural or juridical. Such RTC. Indeed, the CA erred in holding that the RTC order should
being the case, pawnshops shall be subject to the 5% lending have been challenged before SC.
investors tax based on their gross income pursuant to Section 116 of
the Tax Code, as amended.
ASIA INTERNATIONAL AUCTIONEERS, INC. v. PARAYNO, JR.
Such revenue orders were issued pursuant to petitioners powers (Go)
under Section 245 of the Tax Code regarding the authority of the [GR. No. 163445; December 18, 2007]
Secretary of Finance to determine articles similar or analogous to An RMC is a ruling or opinion of the CIR, thus the CTA will have jurisdiction
those subject to a rate of sales tax under certain category in cases which question RMCs
enumerated in Sections 163 and 165 of this Code shall be without
prejudice to the power of the Commissioner of Internal Revenue to Recit-Ready:
make rulings or opinions in connection with the implementation Facts: The CIR issued RMC 31-2003 which sets the guidelines for the
ruling on the classification of articles of sales and similar purpose. taxation of imported motor vehicles in the Subic Free Port Zone
Under RA 1125 (An Act Creating the CTA), Sec 7. JurisdictionThe and other free port zones that are sold at public auction. Asia
Court of Tax Appeals shall exercise exclusive appellate jurisdiction International Auctioneers is engaged in the importation of second
to review by appeal, the decisions of the CIR in cases involving hand cars which they sell to the public through public auction.
disputed assessments, refunds, fees or other charges, penalties
imposed in relation thereto or other matters arising under the NIRC The petitioners filed before the RTC a complaint stating that the
or other laws or part of law administered by the BIR. RMC is unconstitutional and is an ultra vires act. The CIR filed a
motion to dismiss stating that the RTC has no jurisdiction over the
SEC. 11. Who may appeal; effect of appeal.Any person, association or case. In the meantime, the BIR District Officer sent a PAN to the
corporation adversely affected by a decision or ruling of the Commissioner petitioner for unpaid VAT on auction sales.
of Internal Revenue, or the Commissioner of Customs or any provincial or
city Board of Assessment Appeals may file an appeal in the Court of Tax Issue:
Appeals within thirty days after the receipt of such decision or ruling. WON the RTC has jurisdiction over the case. (NO)
x x x x x x x x. (emphasis added)
SEC. 18. x x x.No judicial proceedings against the Government involving
matters arising under the National Internal Revenue Code, the Customs Law
Held: In ruling for the CIR, the SC noted that Sec. 7 of R.A. 1125 vests
or the Assessment Law shall be maintained, except as herein provided, until with the CTA the exclusive appellate jurisdiction to review
and unless an appeal has been previously filed with the Court of Tax decisions of the CIR in cases involving disputed assessments,
Appeals and disposed of in accordance with the provisions of this Act. refunds of internal revenue taxes, fees, or other charges,
x x x x x x x x x. (emphasis added) penalties imposed in relation thereto, or other matters arising
under the NIRC or other laws or part of law administered by
Respondent Josefina Leal, being a pawnshop owner is assailing the the BIR. An RMC is considered as an administrative ruling, which
revenue orders imposing 5% lending investors tax on pawnshops is issued from time to time by the CIR.
issued by petitioner.
In the case at bar, the assailed RMC is a ruling of the CIR on the
tax treatment of motor vehicles sold at public auction within the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

SSEZ pursuant to R.A. 7227. This RMC was issued in WON the RTC has jurisdiction over the case
accordance with the power of the CIR to interpret tax laws. NO
Thus, the petitioners should have filed their case with the CTA
and not the RTC. Held/Ratio: Petition DENIED.

Facts: NO. The case at bar properly falls within the jurisdiction of the CTA.
Congress enacted R.A. 7227 creating the Subic Special Economic Zone o Sec. 7 of R.A. 1125 states that the Court of Tax Appeals shall
(SSEZ), which extended a number of economic or tax incentives therein. exercise exclusive appellate jurisdiction to review by appeal:
On June 3, 2003, CIR Parayno issued RMC 31-2003 setting the Uniform o Decisions of the Commissioner of Internal Revenue
Guidelines on the Taxation of Imported Motor Vehicles through the Subic in cases involving disputed assessments, refunds of
Free Port Zone and Other Freeport Zones that are Sold at Public internal revenue taxes, fees or other charges, penalties
Auction. imposed in relation thereto, or other matters arising
The petitioner, Asia International Auctioneers, is a corporation organized under the National Internal Revenue Code or other
under Philippine laws with principal place of business within the SSEZ. It laws or part of law administered by the Bureau of
is engaged in the importation of mainly secondhand or used motor Internal Revenue.
vehicles and heavy transportation or construction equipment which it sells o The SC has held that RMCs are considered administrative rulings,
to the public through auction. which are issued from time to time by the CIR.
The petitioner filed a case with the RTC of Olongapo, praying for the o In the case at bar, the assailed RMC is a ruling or opinion of the CIR
nullification of RMC 31-2003 stating that it is unconstitutional and is an on the tax treatment of motor vehicles sold at public auction within the
ultra vires act. SSEZ to implement R.A. 7227 which provides that the exportation or
The CIR filed a motion to dismiss alleging: (1) the RTC has no jurisdiction removal of goods from the territory of the SSEZ to the other parts of
over the case; and (2) non-exhaustion of administrative remedies. the Philippine territory shall be subject to customs duties and taxes
o In the meantime, BIR Revenue District Officer Tambis sent under the Customs and Tariff Code and other relevant tax laws of the
a 10-day Preliminary Notice (PAN) to the president of Asia Philippines.
International for unpaid VAT on auction sales conducted on o RMC 31-2003 was issued pursuant to the power of the CIR under
June 6-8, 2003. Sec. 4 of the NIRC.
o Section 4. Power of the Commissioner to Interpret Tax
Petitioners arguments against the Motion to Dismiss:
Laws and to Decide Tax Cases. -- The power to
o The jurisdiction over the case properly pertains to the
interpret the provisions of this Code and other tax
regular courts since it is an action to declare as
laws shall be under the exclusive and original
unconstitutional, void and against the provisions of RA
jurisdiction of the Commissioner, subject to review
7227 the RMC issued by the CIR.
by the Secretary of Finance.
o It does not challenge the rate, structure or figures of
imposed taxes, rather, it challenges the authority of the CIR
The power to decide disputed assessments, refunds of
to impose and collect said taxes.
internal revenue taxes, fees or other charges, penalties
o The challenge on the authority of the CIR to issue the RMC
imposed in relation thereto, or other matters arising
does not fall within the jurisdiction of the CTA.
under this Code or other laws or portions thereof
Issue:
administered by the Bureau of Internal Revenue is
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

vested in the Commissioner, subject to the proper forum with which to institute the appeal. As the specialized quasi-
exclusive appellate jurisdiction of the Court of Tax judicial agency mandated to adjudicate tax, customs, and assessment
Appeals. cases, there can be no other court of appellate jurisdiction that can decide
o With the foregoing, it is the CTA which has jurisdiction over the case the issues raised, which involves the tax treatment of the shares of stocks
at bar, and not the RTC. sold.

PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE Facts:


COMPANY v SECRETARY OF FINANCE (Guzman) Philamlife owned 498,590 Class A shares in PhilamCare,
[GR. No. 210987; November 24, 2014] representing 49.89% of the latter's outstanding capital stock. In
Decisions of the Secretary of Finance are appealable to the CTA 2009, Philamlife, offered to sell its shareholdings in PhilamCare
through competitive bidding.
Recit-Ready: On September 24, 2009, Philamlife's shares were sold for PhP
104,259,330 based on the prevailing exchange rate at the time of
Facts: Philamlife owned 498,590 Class A shares in PhilamCare, the sale, to STI Investments, Inc.
representing 49.89% of the latter's outstanding capital stock. In 2009, After the sale was completed and the necessary documentary stamp
Philamlife, offered to sell its shareholdings in PhilamCare through and capital gains taxes were paid, Philamlife filed an application for
competitive bidding. On September 24, 2009, Philamlife's shares were a certificate authorizing registration/tax clearance with the BIR Large
sold for PhP 104,259,330 based on the prevailing exchange rate at the Taxpayers Service Division to facilitate the transfer of the shares.
time of the sale, to STI Investments, Inc., who emerged as the highest Months later, petitioner was informed that it needed to secure a BIR
bidder. Thereafter, petitioner was informed that it needed to secure a ruling in connection with its application due to potential donors tax
BIR ruling in connection with its application due to potential donors tax liability
liability. In compliance, petitioner, on January 4, 2012, requested a ruling In compliance, petitioner, on January 4, 2012, requested a ruling to
to confirm that the sale was not subject to donors tax. CIR denied confirm that the sale was not subject to donors tax. CIR denied
Philamlifes request. It determined that the selling price of the shares Philamlifes request. It determined that the selling price of the shares
was lower than their book value. As such, donors tax became imposable was lower than their book value. As such, donors tax became
on the price difference pursuant to Sec. 100 of the National Internal imposable on the price difference pursuant to Sec. 100 of the
Revenue Code (NIRC). Petitioner requested Secretary of Finance to National Internal Revenue Code (NIRC).
review BIR Ruling but to no avail. Thereafter, Petitioner elevated the Petitioner requested Secretary of Finance to review BIR Ruling but
case via Petition for Review under Rule 43. with the Court or Appeals. to no avail. Thereafter, Petitioner elevated the case via Petition for
The CA denied the case for lack of jurisdiction. Review under Rule 43. with the Court or Appeals. The CA denied
the case for lack of jurisdiction.
Issue/s: Petitioner postulates that there is a need to differentiate the rulings
WON the CA has jurisdiction over the case NO promulgated by the respondent Commissioner relating to those
rendered under the first paragraph of Sec. 4 of the NIRC, which are
Held: appealable to the Secretary of Finance, from those rendered under
No. Reviews by the Secretary of Finance pursuant its powers to interpret the second paragraph of Sec. 4 of the NIRC, which are subject to
laws and decide tax cases are appealable to the CTA. The CTA is the review on appeal with the CTA to wit:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

SECTION 4. Power of the Commissioner to Interpret assessment cases, there can be no other court of appellate jurisdiction that
Tax Laws and to Decide Tax Cases. The power to interpret the can decide the issues raised, which involves the tax treatment of the shares
provisions of this Code and other tax laws shall be under the of stocks sold.
exclusive and original jurisdiction of the Commissioner, subject to NOTE (in case sir asks): The Court also ruled that the CTA may issue writs
review by the Secretary of Finance. of certiorari notwithstanding the fact that there is no express grant of such
The power to decide disputed assessments, refunds of internal power, Section 1, Article VIII of the 1987 Constitution provides, nonetheless,
revenue taxes, fees or other charges, penalties imposed in relation that judicial power shall be vested in one Supreme Court and in such lower
thereto, or other matters arising under this Code or other laws or courts as may be established by law and that judicial power includes the duty
portions thereof administered by the Bureau of Internal Revenue is of the courts of justice to settle actual controversies involving rights which are
vested in the Commissioner, subject to the exclusive appellate legally demandable and enforceable, and to determine whether or not there
jurisdiction of the Court of Tax Appeals. has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.
Petitioner asserts that appeals questioning the decisions of the Secretary On the strength of the above constitutional provisions, it can be fairly
of Finance in the exercise of its power of review under Sec. 4 of the NIRC interpreted that the power of the CTA includes that of determining whether or
are not within the CTAs limited special jurisdiction and, according to not there has been grave abuse of discretion amounting to lack or excess of
petitioner, are appealable to the CA via a Rule 43 petition for review. jurisdiction on the part of the RTC in issuing an interlocutory order in cases
falling within the exclusive appellate jurisdiction of the tax court. It, thus,
Issue/s: follows that the CTA, by constitutional mandate, is vested with jurisdiction to
WON the CA has jurisdiction over the case NO issue writs of certiorari in these cases. Indeed, in order for any appellate
court to effectively exercise its appellate jurisdiction, it must have the
Held/Ratio: authority to issue, among others, a writ of certiorari
Admittedly, there is no provision in law that expressly provides where exactly On the issue of donors tax liability: The absence of donative intent does
the ruling of the Secretary of Finance under the adverted NIRC provision is not exempt the sales of stock transaction from donor's tax since Sec. 100 of
appealable to. However, We find that Sec. 7(a)(1) of RA 1125, as amended, the NIRC categorically states that the amount by which the fair market value
addresses the seeming gap in the law as it vests the CTA, albeit impliedly, of the property exceeded the value of the consideration shall be deemed a
with jurisdiction over the CA petition as "other matters" arising under the gift. Thus, even if there is no actual donation, the difference in price is
NIRC or other laws administered by the BIR. As stated: considered a donation by fiction of law. Philamlife is liable for donors tax.
Sec. 7. Jurisdiction.- The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided: CITY OF MANILA v. GRECIA-CUERDO (Layno)
1. Decisions of the Commissioner of Internal Revenue in cases involving [GR. No. 175723; FEB. 4, 2014]
disputed assessments, refunds of internal revenue taxes, fees or other If appellate jurisdiction if vested with CTA, it follows that a petition for
charges, penalties in relation thereto, or other matters arising under the certiorari seeking nullification of an interlocutory order issued in the same
National Internal Revenue or other laws administered by the Bureau of case should likewise be filed in the said Court (even if the RAs creating CTA
Internal Revenue. (emphasis supplied) did not explicitly say so.)
Even though the provision suggests that it only covers rulings of the
Commissioner, We hold that it is, nonetheless, sufficient enough to include Recit-Ready:
appeals from the Secretarys review under Sec. 4 of the NIRC. As the Facts: Petitioner City of Manila assessed taxes against stores owned by
specialized quasi-judicial agency mandated to adjudicate tax, customs, and
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

SM like Ace Hardware, Watsons, and Surplus, etc. SM was constrained to pay the P19,316,458.77 assessment under protest.
constrained to pay P19M for the assessment under protest. They
thereafter filed with RTC Pasay a complaint for the recovery of Private respondents then filed in the RTC of Pasay the complaint
what they paid. RTC granted their Writ of Preliminary Injunction to denominated as one for "Refund or Recovery of Illegally and/or
which the City of Manila assailed by filing a Rule 65 to the CA. CA Erroneously-Collected Local Business Tax, Prohibition with Prayer to
dismissed their petition for not having jurisdiction over it. Issue TRO and Writ of Preliminary Injunction" before the public
respondents sala. The RTC granted the writ of preliminary injunction.
Issue/s: To this granting of injunction (Injunction Order) petitioners filed an MR
2) WON CA erred in dismissing petitioners case for lack of which was denied hence they filed a Rule 65 to CA.
jurisdiction?
CA dismissed petitioners' petition for certiorari holding that it has no
Held: 1) No it did not. The jurisdiction for such a scenario is lodged with jurisdiction over the said petition. The CA ruled that since appellate
the CTA because as the law expressly confers on the CTA, the jurisdiction over private respondents' complaint for tax refund, which
tribunal with the specialized competence over tax and tariff was filed with the RTC, is vested in the Court of Tax Appeals. It follows
matters, the role of judicial review over local tax cases without that a petition for certiorari seeking nullification of an interlocutory order
mention of any other court that may exercise such power. Thus, issued in the said case should, likewise, be filed with the CTA.
the Court agrees with the ruling of the CA that since appellate
jurisdiction over private respondents' complaint for tax refund is Issue/s:
vested in the CTA, it follows that a petition for certiorari seeking WON CA erred in dismissing the case for lack of jurisdiction?
nullification of an interlocutory order issued in the said case -NO
should, likewise, be filed with the same court. To rule otherwise
would lead to an absurd situation where one court decides an Held/Ratio: WHEREFORE, the petition is DENIED.
appeal in the main case while another court rules on an incident
in the very same case. Without first resolving the above issues, this Court finds that the instant
petition should be denied for being moot and academic. Upon perusal of the
original records of the instant case, this Court discovered that a Decision in
Facts: the main case had already been rendered by the RTC granting the tax
The record shows that petitioner City of Manila, through its treasurer, refunds and that the public respondents were enjoined from collecting taxes
petitioner Liberty Toledo, assessed taxes for the taxable period from pursuant to Sec. 21 of their Revenue Code of Manila.
January to December 2002 against private respondents SM Mart, Inc.,
SM Prime Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace The basic question posed before this Court is whether or not the CTA
Hardware Philippines, Inc., Watsons Personal Care Stores Phils., Inc., has jurisdiction over a special civil action for certiorari assailing an
Jollimart Philippines Corp., Surplus Marketing Corp. and Signature interlocutory order issued by the RTC in a local tax case to which the
Lines. In addition to the taxes purportedly due from private respondents Court rules in the affirmative. As culled from RA 1125, the law that
pursuant to the Revised Revenue Code of Manila, said assessment created the CTA, and RA 9282 expanding the jurisdiction of the CTA,
covered the local business taxes petitioners were authorized to collect. while it is clearly stated that the it has exclusive appellate jurisdiction
Because payment of the taxes assessed was a precondition for the over decisions, orders or resolutions of the RTCs in local tax cases
issuance of their business permits, private respondents were originally decided or resolved by them in the exercise of their original or
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

appellate jurisdiction, there is no categorical statement under RA 1125 case should, likewise, be filed with the same court. To rule otherwise
as well as the amendatory RA 9282, which provides that the CTA has would lead to an absurd situation where one court decides an appeal in
jurisdiction over petitions for certiorari assailing interlocutory orders the main case while another court rules on an incident in the very same
issued by the RTC in local tax cases filed before it. case.

Section 1, Article VIII of the 1987 Constitution provides, nonetheless, Stated differently, it would be somewhat incongruent with the
that judicial power shall be vested in one Supreme Court and in such pronounced judicial abhorrence to split jurisdiction to conclude that the
lower courts as may be established by law and that judicial power intention of the law is to divide the authority over a local tax case filed
includes the duty of the courts of justice to settle actual controversies with the RTC by giving to the CA or this Court jurisdiction to issue a writ
involving rights which are legally demandable and enforceable, and to of certiorari against interlocutory orders of the RTC but giving to the
determine whether or not there has been a grave abuse of discretion CTA the jurisdiction over the appeal from the decision of the trial court
amounting to lack or excess of jurisdiction on the part of any branch or in the same case. It is more in consonance with logic and legal
instrumentality of the Government. soundness to conclude that the grant of appellate jurisdiction to the CTA
over tax cases filed in and decided by the RTC carries with it the power
On the strength of the above constitutional provision, it can be fairly to issue a writ of certiorari when necessary in aid of such appellate
interpreted that the power of the CTA includes that of determining jurisdiction. The supervisory power or jurisdiction of the CTA to issue a
whether or not there has been grave abuse of discretion amounting to writ of certiorari in aid of its appellate jurisdiction should co-exist with,
lack or excess of jurisdiction on the part of the RTC in issuing an and be a complement to, its appellate jurisdiction to review, by appeal,
interlocutory order in cases falling within the exclusive appellate the final orders and decisions of the RTC, in order to have complete
jurisdiction of the tax court. It, thus, follows that the CTA, by supervision over the acts of the latter.
constitutional mandate, is vested with jurisdiction to issue writs of
certiorari in these cases. CLARK INVESTORS AND LOCATORS ASSOCIATION vs
SECRETARY OF FINANCE (Lim, J.)
Now, if the SC were to sustain petitioners' contention that jurisdiction [G.R. No. 200670; July 6, 2006]
over their certiorari petition lies with the CA, this Court would be Magreklamo ka sa taong may paki.
confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter precisely the split- Recit-Ready:
jurisdiction situation which is anathema to the orderly administration ofFacts: Congress enacted RA No. 7227 which provides for the creation of the Subic
justice. Special Economic Zone and was given an in-lieu of all taxes provision.
Congress also enacted RA No. 9400 which extended the benefits under
The Court cannot accept that such was the legislative motive, especially RA No. 7227 to the Clark Freeport Zone. On February 17, 2012, the
considering that the law expressly confers on the CTA, the tribunal with DOFissued RR 2-2012 which imposed VAT and excise tax on the
the specialized competence over tax and tariff matters, the role of importation of petroleum and petroleum products from abroad and into the
judicial review over local tax cases without mention of any other court Freeport or Economic Zones. Petitioner, which represents the businesses
that may exercise such power. Thus, the Court agrees with the ruling of and enterprises within the Clark Freeport Zone, filed a petition for certiorari
the CA that since appellate jurisdiction over private respondents' alleging that respondents acted with grave abuse of discretion in issuing
complaint for tax refund is vested in the CTA, it follows that a petition for RR 2-2012. It argues that by imposing the VAT and excise tax on the
certiorari seeking nullification of an interlocutory order issued in the said
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

importation of petroleum and petroleum products from abroad and into the Thus, the businesses and enterprises within the CFZ are similarly exempt
Freeport or Economic Zones, RR 2-2012 unilaterally revoked the tax from the payment of all taxes and duties on the importation of raw
exemption granted by RA No. 7227 and RA No. 9400 to the businesses materials, capital and equipment.
and enterprises operating within the Subic Special Economic Zone and On February 2012, the DOF, upon recommendation of the BIR, issued
Clark Freeport Zone. RR 2-2012 which imposed VAT and excise tax on the importation of
petroleum and petroleum products from abroad and into the Freeport or
Issue/s: Economic Zones.-
WON SC has jurisdiction over the petition filed? NO. On March 2012, petitioner, which represents the businesses and
enterprises within the CFZ, filed the instant petition alleging that
Held: In ruling for respondents, the court held it was an improper respondents acted with grave abuse of discretion in issuing RR 2-2012.
remedy. First, the BIR did not act in any judicial or quasi-judicial o It argues that by imposing the VAT and excise tax on the importation
capacity. RR2-2012 was issued based on its rule-making powers. of petroleum and petroleum products from abroad and into the
Second, though it was a petition for certiorari, it was actually a Freeport or Economic Zones, RR 2-2012 unilaterally revoked the tax
petition for declaratory relief which is the exclusive jurisdiction of exemption granted by RA No. 7227 and RA No. 9400 to the
RTC. Lastly, though the SC, CA and RTC has concurrent businesses and enterprises operating within the SSEZ and CFZ.
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo Respondents, through the OSG, contend that the petition must be denied
warranto, habeas corpus and injunction, such concurrence does outright because the petition for certiorari cannot be used to assail RR 2-
not give the petitioner unrestricted freedom of choice of court 2012 which was issued by the respondents in the exercise of their quasi-
forum. The Court shall not entertain a direct resort to this Court legislative or rule-making powers.
unless the remedy cannot be obtained in the appropriate courts, o The OSG invokes the doctrine of hierarchy of courts.
and exceptional and compelling circumstances justify the o Finally, the OSG points out that RR2-2012 allows the businesses
availment of the extraordinary remedy of writ of certiorari. and enterprises operating within the SSEZ and CFZ to claim for a
tax refund upon submission of competent proof that they used the
imported fuel exclusively within the SSEZ and CFZ.
Facts: o Thus, the OSG claimed that RR 2-2012 is consistent with RA No.
On March 1992, Congress enacted RA No. 7227 which mandated the 7227 and RA No. 9400.
accelerated conversion of the Clark and Subic military reservations into Issue/s:
special economic zones. WON the SC has jurisdiction over the petition filed? -- NO.
Section 12 thereof provides for the creation of the Subic Special
Economic Zone (SSEZ). Held/Ratio:
Based on Section 12 (c), in lieu of national and local taxes, all businesses NO. The Court denies the petition for being an improper remedy.
and enterprises operating within the SSEZ shall pay a preferential gross o For a special civil action for certiorari to prosper, the following
income tax rate of five percent (5%). requisites must concur:
Meanwhile, Congress enacted RA No. 9400 which extended the (1) it must be directed against a tribunal, board, or officer
aforementioned tax and fiscal incentives under RA No. 7227 to the Clark exercising judicial or quasi-judicial functions;
Freeport Zone (CFZ). (2) the tribunal, board, or officer must have acted without or in
excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

(3) there is no appeal or any plain, speedy, and adequate (2) it would cause an inevitable and resultant delay, intended
remedy in the ordinary course of law. or otherwise, in the adjudication of cases, which in some
instances had to be remanded or referred to the lower court as
o Firstly, BIR did not act in any judicial or quasi-judicial capacity. the proper forum under the rules of procedure, or as better
BIR issued RR 2-2012 in the exercise of their quasi-legislative or equipped to resolve the issues because this Court is not a trier
rule-making powers, and not judicial or quasi-judicial functions. of facts.
Respondents did not adjudicate or determine the rights of the The Court shall not entertain a direct resort to this Court
parties. unless the remedy cannot be obtained in the appropriate
To determine whether a Revenue Regulation is quasi-legislative courts, and exceptional and compelling circumstances
in nature, we must examine the legal basis of the Secretary of justify the availment of the extraordinary remedy of writ of
Finance in the issuance thereof. certiorari.
In BPI Leasing Corporation v. CA, the Court ruled that RR 19-86 In Chamber of Real Estate and Builders Association, Inc.
was quasi-legislative in nature because it was issued by the (CREBA) v. Secretary of Agrarian Reform, the Court provided
Secretary of Finance in the exercise of his rule-making powers examples of such exceptional and compelling circumstances:
under Section 244 of the NIRC (a) Chavez v. Romulo, on citizens' right to bear anus;
In the same way, RR 2-2012 is based on Section 244, and is (b) Government of [the] United States of America v. Hon.
therefore quasi-legislative in nature which is outside the scope of Purganan, on bail in extradition proceedings;
a petition for certiorari. (c) Commission on Elections v. Judge Quijano-Padilla, on
government contract involving modernization and
o Secondly, though it is a petition for certiorari, it actually seeks the computerization of voters' registration list;
declaration of the unconstitutionality and illegality of the questioned (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora, on status
rule. and existence of a public office; and
In reality, it is of one for declaratory relief over which this Court (e) Hon. Fortich v. Hon. Corona, on the so-called "Win-Win
has only appellate, not original, jurisdiction. Resolution" of the Office of the President which modified the
This Court does not have original jurisdiction over a petition for approval of the conversion to agro-industrial area.
declaratory relief even if only questions of law are involved. In the case at bar, petitioner failed to allege such exceptional
The special civil action of declaratory relief falls under the and compelling circumstances which justify a direct resort to this
exclusive jurisdiction of the RTC. Court.
The Rules of Court is explicit that such action shall be brought In view of the serious procedural and technical defects of the
before the appropriate Regional Trial Court. petition, there is no need for this Court to resolve the other
issues raised by the petitioner.
o Lastly, although this Court, the CA and the RTC have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo CIR v. CBK POWER COMPANY LIMITED (Lim, Q.)
warranto, habeas corpus and injunction, such concurrence does not [GR. No. 203054-55 ; July 29, 2015]
give the petitioner unrestricted freedom of choice of court forum. CTA En Banc has jurisdiction over final order or judgment but not over
The rationale for this rule is two-fold: interlocutory orders issued by the CTA in division.
(1) it would be an imposition upon the precious time of this
Court; and
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Recit-Ready: The CTA en banc has clear jurisdiction over final orders or
Facts: Private respondent, CBK Power Company Limited (CBK), is a judgments but not over interlocutory orders issued by the
special purpose entity. Petitioner is the duly appointed CTA in division. As no appeal can be taken from the questioned
Commissioner of Internal Revenue. CBK filed with the CTA a order to declare in default, Petitioners filing of the instant petition
judicial claim for the issuance of a tax credit certificate. After for certiorari with the Supreme Court is in conformity with the
various procedural aspects, the CTA issued the first assailed rules.
Resolution, allowing the petitioner to present its evidence ex (*As a general rule, decisions of the CTA in division are still only
parte. Respondent was ordered to file its comment on the motion appealable to the CTA en banc and not to the Supreme
to lift order of default but failed to do so. Petitioner filed a motion Court.)
for reconsideration on April 27, 2012. The CTA directed private
respondent to file its Comment thereto but failed to do so. CTA Facts:
issued the second assailed Resolution denying the motion to lift Private respondent, CBK Power Company Limited (CBK), is a special
order of default stating Section 5 of Rule 18 of the Revised Rules purpose entity engaged in all aspects of
of Court. Petitioner filed a motion for reconsideration, which the (1) design, financing, construction, testing, commissioning,
respondent denied. CBK claims that petitioner chose an operation, maintenance, management, and ownership of Kalayaan II
erroneous remedy when it filed a petition for certiorari with pumped storage hydroelectric power plant, the new Caliraya
the Supreme Court since the proper remedy on any adverse Spillway in Laguna; and
resolution of any division of the CTA is an appeal by way of a (2) the rehabilitation, expansion, commissioning, operation,
petition for review with the CTA En Banc. maintenance and management of the Caliraya, Botocan, and
Kalayaan I hydroelectric power plants and their related facilities in
Issue/s: Laguna.
Petitioner is the duly appointed Commissioner of Internal Revenue vested
WON an interlocutory order (Order of Default) issued by a division with authority to act as such, inter alia, the power to decide, approve and
of the CTA be brought directly on certiorari to the Supreme Court grant refunds or tax credit of erroneously or illegally collected internal
even without appealing the same to the CTA en banc? revenue taxes as provided by law.
YES On March 30, 2011, CBK filed with the CTA a judicial claim for the
issuance of a tax credit certificate in the amount of P17,784,968.91,
Held: YES. It is clear that the CTA En Banc has jurisdiction over representing unutilized input taxes on its local purchases and
final order or judgment but not over interlocutory orders importations of goods other than capital goods, local purchases of
issued by the CTA in division. Given the differences between a services, payment of services rendered by nonresidents, including
final judgment and an interlocutory order, there is no doubt that unutilized amortized input taxes on capital goods exceeding one million
the CTA Order dated December 23, 2011 granting private for the period of January 1, 2009 to March 31, 2009, all attributable to
respondents motion to declare petitioner as in default and zero-rated sales for the same period.
allowing respondent to present its evidence ex parte, is an o The case was docketed as CTA Case No. 8246.
interlocutory order as it did not finally dispose of the case on On May 30, 2011, petitioner received summons requiring it to answer.
the merits but will proceed for the reception of the formers Petitioner complied and filed the Answer.
evidence to determine its entitlement to its judicial claim for
tax credit certificates.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Petitioner then received a notice of pretrial conference set on July 21, On April 19, 2012, the CTA issued the second assailed Resolution
2011. Petitioner filed its pretrial brief. denying the motion to lift order of default stating Section 5 of Rule
Earlier, CBK filed another judicial claim for the issuance of a tax credit 18 of the Revised Rules of Court.12
certificate in the amount of P31,680,290.87. Petitioner filed a motion for reconsideration on April 27, 2012. The
o The case was docketed as CTA Case No. 8302. CTA directed private respondent to file its Comment thereto but failed to
Subsequently, CBK filed a motion for consolidation and do so.
postponement of the pretrial conference scheduled for CTA Case No. In a Resolution dated June 13, 2012, the CTA denied the motion for
8246. reconsideration.
On July 19, 2011 petitioner received summons requiring it to answer the CBK claims that petitioner chose an erroneous remedy when it filed
petition for review. Petitioners lawyer, filed his Answer. a petition for certiorari with the Supreme Court since the proper
The pretrial conference for CTA Case No. 8302 was set on September remedy on any adverse resolution of any division of the CTA is an
29, 2011. Thus, private respondent filed a motion for consolidation and appeal by way of a petition for review with the CTA En Banc.
postponement of the pretrial conference for CTA Case No. 8302. It claims that it is what is provided under Section 2(a)(1) of Rule 4 of the
In a Resolution dated October 14, 2011, the CTA granted the motion for Revised Rules of the Court of Tax Appeals (RRCTA) that the Court En
consolidation and set the pretrial conference on November 3, 2011. Banc shall exercise exclusive appellate jurisdiction to review by appeal
Atty. Mauricio failed to appear at the scheduled pretrial conference as he the decision or resolutions on motions for reconsideration or new trial of
was on leave for health reasons from October to December 2011. the Court in division in the exercise of its exclusive appellate jurisdiction
The pretrial was reset to December 1, 2011. Petitioners counsel, Atty. over cases arising from administrative agencies such as the Bureau of
Sandico, who was then assigned to handle the consolidated cases, filed Internal Revenue.
his consolidated pretrial brief on November 15, 2011. However, on the
December 1, 2011 pretrial conference, Atty. Sandico failed to appear, Issue/s:
thus private respondent moved that petitioner be declared in default. WON an interlocutory order (Order of Default) issued by a division of
On December 23, 2011, the CTA issued the first assailed Resolution, the CTA be brought directly on certiorari to the Supreme Court even
allowing the petitioner to present its evidence ex parte. without appealing the same to the CTA en banc?
On January 6, 2012, petitioner filed a Motion to Lift Order of Default YES
alleging that the failure to attend the pretrial conference on November 3,
2011 was due to confusion in office procedure in relation to the Held/Ratio: WHEREFORE, the petition for certiorari is GRANTED.
consolidation of CTA Case No. 8246 with CTA Case No. 8302 since the
latter was being handled by a different lawyer; that when the pretrial YES. It is clear that the CTA En Banc has jurisdiction over final order or
conference was reset to December 1, 2011, petitioners counsel, Atty. judgment but not over interlocutory orders issued by the CTA in
Sandico, had to attend the hearing of another case in the CTAs First division.
Division also at 9:00 a.m., hence, he unintentionally missed the pretrial
conference of the consolidated cases.
Respondent was ordered to file its comment on the motion to lift 12
Sec. 5. Effect of failure to appear.The failure of the plaintiff to appear when so required
order of default but failed to do so. pursuant to the next preceding section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on
the part of the defendant shall be cause to allow the plaintiff to present his evidence ex
parte and the court to render judgment on the basis thereof.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o Although the filing of a petition for review with the CTA En Banc from granting private respondents motion to declare petitioner as in default
a decision, resolution, or order of the CTA Division, was newly made and allowing respondent to present its evidence ex parte, is an
available to the CTA, such mode of appeal has long been available in interlocutory order as it did not finally dispose of the case on the
Philippine courts of general jurisdiction. Hence, the Revised CTA merits but will proceed for the reception of the formers evidence
Rules no longer elaborated on it but merely referred to existing rules to determine its entitlement to its judicial claim for tax credit
of procedure on petitions for review and appeals certificates.
o According to the Rules of Court,13 the petition for review to be filed o Even the CTAs subsequent orders denying petitioners motion to lift
with the CTA En Banc as the mode for appealing a decision, order of default and denying reconsideration thereof are all
resolution, or order of the CTA Division, under Section 18 of Republic interlocutory orders since they pertain to the order of default.
Act No. 1125, as amended, is not a totally new remedy. o Since the CTA Orders are merely interlocutory, no appeal can be
o To the contrary, the CTA merely adopts the procedure for petitions for taken therefrom. Hence, petitioners filing of the instant petition
review and appeals long established and practiced in other Philippine for certiorari assailing the interlocutory orders issued by the CTA
courts. Accordingly, doctrines, principles, rules, and precedents laid is in conformity with the above quoted provision.
down in jurisprudence by this Court as regards petitions for review
and appeals in courts of general jurisdiction should likewise bind the SMART COMMUNICATIONS, INC. VS. MUNICIPALITY OF
CTA, and it cannot depart therefrom. MALVAR (LUNA)
o Given the differences between a final judgment and an interlocutory [GR. No. 204429; February 18, 2014]
order, there is no doubt that the CTA Order dated December 23, 2011 CTA has no jurisdiction over a decision of the RTC involving regulatory
fees.
13
RULE 7 PROCEDURE IN THE COURT OF TAX APPEALS
SEC. 1. Applicability of the Rules of the Court of Appeals. The procedure in the Court En Recit-Ready:
Banc or in Divisions in original and in appealed cases shall be the same as those in Facts: Petitioner received a closure order from the Respondent for the
petitions for review and appeals before the Court of Appeals pursuant to the applicable
provisions of Rules 42, 43, 44 and 46 of the Rules of Court, except as otherwise provided non-payment of dues arising out of an ordinance regulating the
for in these Rules. establishment of special projects, which included Petitioners
telecommunications tower. Petitioner protested and upon denial
RULE 8 PROCEDURE IN CIVIL CASES
SEC. 4. Where to appeal; mode of appeal. of the protest appealed the same to the Regional Trial Court of
(b) An appeal from a decision or resolution of the Court in Division on a motion for Tanauan questioning as well the validity of the ordinance.
reconsideration or new trial shall be taken to the Court by petition for review as provided in
Thereafter, Petitioner appealed the RTCs decision to the CTA
Rule 43 of the Rules of Court. The Court En Banc shall act on the appeal.
which dismissed the same for lack of jurisdiction claiming that it
RULE 9 PROCEDURE IN CRIMINAL CASES cannot resolve cases where the constitutionality of a law or rule is
SEC. 1. Review of cases in the Court.The review of criminal cases in the Court En Banc
or in Division shall be governed by the applicable provisions of Rule 124 of the Rules of
challenged.
Court.
Issue/s:
SEC. 9. Appeal; period to appeal.
(b) An appeal to the Court En Banc in criminal cases decided by the Court in Division shall
Does the CTA have jurisdiction over a decision of the RTC on a purported
be taken by filing a petition for review as provided in Rule 43 of the Rules of Court within tax case?
fifteen days from receipt of a copy of the decision or resolution appealed from. The Court
may, for good cause, extend the time for filing of the petition for review for an additional
period not exceeding fifteen days. Held:
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

NO. The primary reason for the CTAs lack of jurisdiction is that what was o Municipality is encroaching on the regulatory powers of the National
imposed under the questioned ordinance are not taxes but are instead Telecommunications Commission (NTC). Smart cites Section 5(g) of
regulatory fees, specifically to address the environmental depredation of Republic Act No. 7925 which provides that the NTC, in the exercise
the said special projects. As such, the case that originated from the RTC of its regulatory powers, shall impose such fees and charges as may
is not considered a local tax case over which the CTA has jurisdiction. be necessary to cover reasonable costs and expenses for the
regulation and supervision of the operations of telecommunications
Facts: entities. Thus, Smart alleges that the regulation of
Smart constructed a telecommunications tower within the territorial telecommunications entities and all aspects of its operations is
jurisdiction of the Municipality. The construction of the tower was for the specifically lodged by law on the NTC.
purpose of receiving and transmitting cellular communications within the Malvars arguments:
covered area. o Said Ordinance is not a tax ordinance but a regulatory fee imposed
On 30 July 2003, the Municipality passed Ordinance No. 18, series of to regulate the placing, stringing, attaching, installing, repair and
2003, entitled "An Ordinance Regulating the Establishment of Special construction of all gas mains, electric, telegraph and telephone
Projects." wires, conduits, meters and other apparatus, and provide for the
On 24 August 2004, Smart received from the Permit and Licensing correction, condemnation or removal of the same when found to be
Division of the Office of the Mayor of the Municipality an assessment dangerous, defective or otherwise hazardous to the welfare of the
letter with a schedule of payment for the total amount of P389,950.00 for inhabitant.
Smarts telecommunications tower. Due to the alleged arrears in the o It was also envisioned to address the foreseen "environmental
payment of the assessment, the Municipality also caused the posting of a depredation" to be brought about by these "special projects" to the
closure notice on the telecommunications tower. Municipality. Pursuant to these objectives, the Municipality imposed
On 9 September 2004, Smart filed a protest, claiming lack of due process fees on various structures, which included telecommunications
in the issuance of the assessment and closure notice. In the same towers.
protest, Smart challenged the validity of Ordinance No. 18 on which the o The fees are not imposed to regulate the administrative, technical,
assessment was based. financial, or marketing operations of telecommunications entities,
In a letter dated 28 September 2004, the Municipality denied Smarts such as Smarts; rather, to regulate the installation and maintenance
protest. of physical structures Smarts cell sites or telecommunications
RTC partially granted Smarts petition, but did not rule on the legality of tower.
Ordinance No. 18. It declared that Smart is only liable for fees starting
October 1, 2003, and null and void insofar as the assessment made from Issue/s:
2001 to 2003. MR denied. CTA denied. CTA MR also denied. CTA en 11) WON the fees are taxes
banc denied. CTA en banc likewise denied. NO
12) WON CTA should have take cognizance of the case.
SMARTs arguments:
-- NO
o CTA erred in refusing to take cognizance of the case and for
13) WON the fees are unjust and unreasonable.
dismissing the case for lack of jurisdiction considering the unique
NO
factual circumstances involved.
o The fees imposed in Ordinance No. 18 are actually taxes since they
Held/Ratio: Petition DENIED.
are not regulatory but rather, revenue-raising.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

1) NO. The fees are NOT taxes. SECTION 6. Requirement for Final Development Permit Upon
o Since the main purpose of Ordinance No. 18 is to regulate certain the expiration of 180 days and the proponents of special projects
construction activities of the identified special projects, which included shall apply for final [development permit] and they are require[d]
"cell sites" or telecommunications towers, the fees imposed in to submit the following:
Ordinance No. 18 are primarily regulatory in nature, and not primarily a) evaluation from the committee where the Vice Mayor refers
revenue-raising. While the fees may contribute to the revenues of the the special project
Municipality, this effect is merely incidental. Thus, the fees imposed in b) Certification that all local fees have been paid.
Ordinance No. 18 are not taxes.
o Progressive Development Corporation v. Quezon City: if the o Even if the fees do not appear in Section 143 or any other provision in
generating of revenue is the primary purpose and regulation is merely the LGC, the Municipality is empowered to impose taxes, fees and
incidental, the imposition is a tax; but if regulation is the primary charges, not specifically enumerated in the LGC or taxed under the
purpose, the fact that incidentally revenue is also obtained does not Tax Code or other applicable law according to Section 186 of the
make the imposition a tax. LGC. Thus they dont encroach on NTCs powers.
o Victorias Milling Co., Inc. v. Municipality of Victorias: the purpose and
effect of the imposition determine whether it is a tax or a fee, and that
the lack of any standards for such imposition gives the presumption 2) NO. CTA correctly refused to take cognizance of the case.
that the same is a tax. o Considering that the fees in Ordinance No. 18 are not in the nature of
o Ordinance No. 18 expressly provides for the standards which Smart local taxes, and Smart is questioning the constitutionality of the
must satisfy prior to the issuance of the specified permits, clearly ordinance, the CTA correctly dismissed the petition for lack of
indicating that the fees are regulatory in nature. These requirements jurisdiction. Likewise, Section 187 of the LGC, which outlines the
are as follows: procedure for questioning the constitutionality of a tax ordinance, is
SECTION 5. Requirements and Procedures in Securing inapplicable, rendering unnecessary the resolution of the issue on
Preliminary Development Permit. non-exhaustion of administrative remedies.
The following documents shall be submitted to the SB Secretary
in triplicate: 3) NO.
a) zoning clearance o An ordinance carries with it the presumption of validity. The question
b) Vicinity Map of reasonableness though is open to judicial inquiry. Much should be
c) Site Plan left thus to the discretion of municipal authorities. Courts will go slow
d) Evidence of ownership in writing off an ordinance as unreasonable unless the amount is so
e) Certificate true copy of NTC Provisional Authority in case of excessive as to be prohibitive, arbitrary, unreasonable, oppressive, or
Cellsites, telephone or telegraph line, ERB in case of gasoline confiscatory. A rule which has gained acceptance is that factors
station, power plant, and other concerned national agencies relevant to such an inquiry are the municipal conditions as a whole
f) Conversion order from DAR is located within agricultural zone. and the nature of the business made subject to imposition.
g) Radiation Protection Evaluation. o To justify the nullification of the law or its implementation, there must
h) Written consent from subdivision association or the residence be a clear and unequivocal, not a doubtful, breach of the
of the area concerned if the special projects is located within the Constitution. In case of doubt in the sufficiency of proof establishing
residential zone. unconstitutionality, the Court must sustain legislation because "to
i) Barangay Council Resolution endorsing the special projects. invalidate [a law] based on xx x baseless supposition is an affront to
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

the wisdom not only of the legislature that passed it but also of the
executive which approved it." This presumption of constitutionality Held: NO. The CA erred in referring the records of the collection case to
can be overcome only by the clearest showing that there was indeed the CTA for proper disposition of the appeal taken by CIR. When
an infraction of the Constitution, and only when such a conclusion is a court has no jurisdiction over the subject matter, the only power
reached by the required majority may the Court pronounce, in the it has is to dismiss the action. CA has no jurisdiction over CIRs
discharge of the duty it cannot escape, that the challenged act must appeal; hence, it cannot perform any action on the same except
be struck down. to order its dismissal pursuant to Section 2, Rule 5039 of the
Rules of Court. Therefore, the act of the CA in referring CIRs
MITSUBISHI MOTORS PHIL v. CIR (Villarin P) wrongful appeal before it to the CTA under the guise of furthering
[GR. No. 209830; June 17, 2015] the interests of substantial justice is blatantly erroneous, and
No jurisdiction? You can only deny. thus, stands to be corrected. In view of CIRs availment of a
wrong mode of appeal the Court is constrained to deem the
Recit-Ready: RTCs dismissal of CIRs collection case against Mitsubishi final
Facts: Mitsubishi used TCCs it secured from various transportation companies to and executory.
pay for various customs duties and taxes in the aggregate amount of
P46.8 Million. When it was revealed that the TCCs were fraudulently
secured with the use of fake commercial and bank documents, the CIR Facts:
deemed that Mitsubishi never settled its taxes and customs duties. CIR alleged that from 1997 to 1998, Mitsubishi was able to secure TCCs
Thereafter, CIR demanded that Mitsubishi pay its unsettled tax and from various transportation companies; after which, it made several
customs duties, but to no avail. Hence, it was constrained to file the importations and utilized said TCCs for the payment of various customs
instant complaint. After CIRs presentation of evidence, Mitsubishi filed a duties and taxes in the aggregate amount of P46.8 Million.
Demurrer on the ground of insufficiency of evidence. The RTC granted the Believing the authenticity of the TCCs, CIR allowed Mitsubishi to use the
Demurrer. CIR appealed to the CA and the CA referred the records of the same for the settlement of such customs duties and taxes.
case to the CTA for proper disposition. While the CA admitted that it had However, a post-audit investigation of the DOF revealed that the TCCs
no jurisdiction to take cognizance of CIRs appeal, as jurisdiction is were fraudulently secured with the use of fake commercial and bank
properly lodged with the CTA, it nevertheless opted to relax procedural documents, and thus, CIR deemed that Mitsubishi never settled its taxes
rules in not dismissing the appeal outright. Instead, the CA deemed it and customs duties pertaining to the aforesaid importations.
appropriate to simply refer the matter to the CTA, considering that the Thereafter, CIR demanded that Mitsubishi pay its unsettled tax and
government stands to lose the amount of P46.8 Million in taxes and customs duties, but to no avail. Hence, it was constrained to file the
customs duties which can then be used for various public works and instant complaint.
projects. Mitsubishi filed a MR arguing that since the CA does not have In its defense, Mitsubishi maintained that it acquired the TCCs from their
jurisdiction over CIRs appeal, it cannot perform any action on it except to original holders in good faith and that they were authentic, and thus, their
order its dismissal. But the MR was denied, hence, this appeal. remittance to CIR should be considered as proper settlement of the taxes
. and customs duties it incurred in connection with the aforementioned
Issue/s: importations.
WON the CA correctly referred the records of the collection case to the
CTA for proper disposition of the appeal taken by CIR.NO
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

After CIRs presentation of evidence, Mitsubishi filed a Demurrer to NO. The CA erred in referring the records of the collection case to the
Plaintiffs Evidence contending that CIR failed to prove by clear and CTA for proper disposition of the appeal taken by CIR.
convincing evidence that the TCCs were fraudulently procured. Jurisdiction is defined as the power and authority of a court to hear, try,
The RTC granted Mitsubishis Demurrer to Plaintiffs Evidence, and and decide a case. In order for the court or an adjudicative body to have
accordingly, dismissed CIRs collection case on the ground of authority to dispose of the case on the merits, it must acquire, among
insufficiency of evidence. others, jurisdiction over the subject matter. It is axiomatic that jurisdiction
It found that CIR had not shown any proof or substantial evidence of over the subject matter is the power to hear and determine the general
fraud or conspiracy on the part of Mitsubishi in the procurement of the class to which the proceedings in question belong; it is conferred by law
TCCs. In this connection, the RTC opined that fraud is never presumed and not by the consent or acquiescence of any or all of the parties or by
and must be established by clear and convincing evidence, which erroneous belief of the court that it exists. Thus, when a court has no
Mitsubishi failed to do, thus, necessitating the dismissal of the complaint. jurisdiction over the subject matter, the only power it has is to
CIR moved for reconsideration, which was, however, denied. Dissatisfied, dismiss the action.
it appealed to the CA. Section 7 of RA 1125, as amended by RA 9282, reads:
The CA referred the records of the collection case to the CTA for proper o Sec. 7. Jurisdiction. The CTA shall exercise:
disposition of the appeal taken by CIR. While the CA admitted that it had xxxx
no jurisdiction to take cognizance of CIRs appeal, as jurisdiction is c. Jurisdiction over tax collection cases as herein provided
properly lodged with the CTA, it nevertheless opted to relax procedural xxxx
rules in not dismissing the appeal outright. Instead, the CA deemed it 2. Exclusive appellate jurisdiction in tax collection cases:
appropriate to simply refer the matter to the CTA, considering that the a. Over appeals from the judgments, resolutions or
government stands to lose the amount of P46.8 Million in taxes and orders of the Regional Trial Courts in tax
customs duties which can then be used for various public works and collection cases originally decided by them in
projects. their respective territorial jurisdiction.
Aggrieved, Mitsubishi filed a MR arguing that since the CA does not have xxxx
jurisdiction over CIRs appeal, it cannot perform any action on it except to Similarly, Section 3, Rule 4 of the Revised Rules of the Court of Tax
order its dismissal. The said motion was, however, denied. Hence, this Appeals, as amended,38 states:
petition. o Sec. 3. Cases within the jurisdiction of the Court in Divisions.
The Court in Divisions shall exercise:
Issue/s: xxxx
WON the CA correctly referred the records of the collection case to the c. Exclusive jurisdiction over tax collections cases, to wit:
CTA for proper disposition of the appeal taken by CIR.NO xxxx
2. Appellate jurisdiction over appeals from the
Held/Ratio: WHEREFORE, the petition is GRANTED. Accordingly, the judgments, resolutions or orders of the Regional
Resolutions dated June 7, 2013 and November 4, 2013 of the Court of Trial Courts in tax collection cases originally
Appeals (CA) in CA-G.R. CV No. 99594 are hereby REVERSED and SET decided by them within their respective territorial
ASIDE. Accordingly, a new one is entered DISMISSING the appeal of CIR jurisdiction.
Bureau of Customs to the Court of Appeals. The foregoing provisions explicitly provide that the CTA has exclusive
appellate jurisdiction over tax collection cases originally decided by the
RTC.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

In the instant case, the CA has no jurisdiction over CIRs appeal; hence, it
cannot perform any action on the same except to order its dismissal Issue:
pursuant to Section 2, Rule 5039 of the Rules of Court. Therefore, the act 1. W/N the protest was valid. Yes no formal requirements so long
of the CA in referring CIRs wrongful appeal before it to the CTA under as objections and reasons therefor are stated.
the guise of furthering the interests of substantial justice is blatantly
erroneous, and thus, stands to be corrected.
2. W/N the petition is meritorious. NO filed out of time. Appeal is a
Finally, in view of CIRs availment of a wrong mode of appeal via notice
statutory right, so you must comply with all requirements of law.
of appeal stating that it was elevating the case to the CA instead of Failure to do so, court no jurisdiction.
appealing by way of a petition for review to the CTA within thirty (30) days
from receipt of a copy of the RTCs Order, as required by Section 11 of
RA 1125, as amended by Section 9 of RA 928243 the Court is Held/Ratio:
constrained to deem the RTCs dismissal of CIRs collection case against 1. No formal requirement, so long as objections and reasons
Mitsubishi final and executory. therefor were stated in the protest.
It is settled that the perfection of an appeal in the manner and within the o In this case, CBC was unequivocal in its objection.
period set by law is not only mandatory, but jurisdictional as well, and that o Arguments were stated. That it was not liable to pay the
failure to perfect an appeal within the period fixed by law renders the additional tax imposed under the subject ordinance.
judgment appealed from final and executory. o That the imposition "constitute[d] double taxation" and, for
said reason, invalid.
Despite its objection, it remitted the total amount of
China Banking Corporation vs. Treasurer of Manila P267,128.70 under protest "to avoid penalties/surcharges
(Villarivera) and any threat of closure.
[GR. No. 204117; July 1, 2015]
No formal requirement to protest an assessment. So long as 2. NO. Pet was filed out of Time. Sec. 195 LGC.
objections and reasons therefor are stated.
Re: Reckoning of Prescriptive Period
Reckoning period must be from Jan. 15 (60 days from Jan. 15 to
Recit-Ready:
appeal to the court of competent jurisdiction) OR 30 days after the
Facts: lapse of 60 days (inaction).
In Jan. 2007, China Banking (CBC) was assessed by the Treasurer of
Manila for deficiency tax for P267k ++.
This case: INACTION, so from Jan.15:
Jan. 15 - CBC paid but protested, alleging double taxation of P154k ++
60d + 30d = Apr. 16. (CBC filed Apr. 17 Tsk!)
pertaining to its local business tax.
Feb. 8 Treasurer acknowledged payment and said she will wait for the
formal protest by the CBC. Re: Jurisdiction of RTC. (ONLY JUST IN CASE SIR ASKS)
Mar. 27 CBC said its letter of Jan. 15 is already its formal protest. SC said even assuming filed on time, RTC had no jurisdiction
because the claim was P154k++, below the jurisdiction of RTC.
===INACTION==
Should be with MTC.
Apr. 17 filed a Pet for Review before the RTC.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

This case: P154,398.50, so appeal to MTC not RTC. In this case, CBC was unequivocal in its objection.
It argued that it was not liable to pay the additional tax imposed under the
Facts: subject ordinance.
In January 2007, CBC was assessed P267,128.70 by petitioner City That the imposition "constitute[d] double taxation" and, for said reason,
Treasurer of Manila, consisting of local business tax, business permits, and invalid.
other fees for taxable year 2007. Despite its objection, it remitted the total amount of P267,128.70 under
o Jan. 15, 2007 - CBC paid the amount and filed a protest (letter was protest "to avoid penalties/surcharges and any threat of closure.
dated Jan. 12, 2007) alleging double taxation.
Feb. 8 Treasurer acknowledged receipt of payment and informed CBC that
Re: Reckoning of Prescriptive Period
she will wait for CBCs formal protest letter.
o On March 27, CBC wrote a letter-reply reiterating that it already Period within which the City Treasurer must act on the protest, and the
protested in its Letter dated January 12, 2007. consequent period to appeal a "denial due to inaction," should be reckoned
from January 15, 2007, the date CBC filed its protest, and not March 27,
o in the letter, CBC averred that pursuant to Sec. 195 LGC, Treasurer
2007 (when CBC reiterated that it had already protested).
had until March 16, 2007 within which to decide the protest,
Consequently, CBC had lost its right to challenge the City Treasurers "denial
o considering that Treasurer received the Letter dated February 8,
due to inaction." On this matter, Section 195 of the LGC is clear.14
2007, four days after the deadline to decide and petitioner did not
even resolve the protest,
o CBC already formally demanded the refund of the amount of 14 SECTION 195. Protest of Assessment. -When the local treasurer
P154,398.50, representing the business tax collected under Section
or his duly authorized representative finds that correct taxes, fees,
21 of the Manila Revenue Code.
April 17, respondent CBC filed a Petition for Review with the RTC of Manila,
or charges have not been paid, he shall issue a notice of
raising the issue of its liability to pay the local business tax (or if assessment stating the nature of the tax, fee or charge, the
there was double taxation). amount of deficiency, the surcharges, interests and penalties.
RTC- ifo of CBC. The ordinance upon which the tax was imposed was Within sixty (60) days from the receipt of the notice of
unconstitutional (decided upon in another case) assessment, the taxpayer may file a written protest with the
MR-denied. local treasurer contesting the assessment; otherwise, the
CTA and CTA En-Banc Reversed the RTC. (so ifo Taxation) because the
assessment shall become final and executory. The local treasurer
Pet for Review was filed out of time.
shall decide the protest within sixty (60) days from the time of its
Issue/s: filing. If the local treasurer finds the protest to be wholly or partly
W/N CBC validly protested its assessment. YES. No formal requirement meritorious, he shall issue a notice canceling wholly or partially
specified in law. Valid so long as it states the taxpayers objection to the the assessment. However, if the local treasurer finds the
assessment and the reasons therefor. assessment to be wholly or partly correct, he shall deny the
protest wholly or partly with notice to the taxpayer. The taxpayer
Held:
No formal requirement, so long as objections and reasons therefor were shall have thirty (30) days from the receipt of the denial of the
stated in the protest. protest or from the lapse of the sixty (60)-day period prescribed
herein within which to appeal with the court of competent
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Perfection of an appeal in the manner and within the period laid down by law CTA, wag ka assuming kung wala ka namang jurisdiction
is not only mandatory but also jurisdictional. The failure to perfect an appeal
precludes the appellate court from acquiring jurisdiction over the case. Recit-Ready:
At the risk of being repetitious, the Court declares that the right to appeal is Facts: Petron imported alkylate as a component for its gasoline. It was
not a natural right nor a part of due process. It is merely a statutory privilege, assessed excise tax by the customs collector. Petron brought a
and may be exercised only in the manner and in accordance with the Petition for Review with the CTA assailing the collection of the
provisions of the law.
tax.

Assuming filed on time: RTC has no jurisdiction. Issue/s: WON the CTA correctly assumed jurisdiction over the case?
Section 195 of the Local Government Code which states that the remedy of
the taxpayer whose protest is denied by the local treasurer is "to appeal Held: NO. The Collector of Customs issued the Customs Memorandum
with the court of competent jurisdiction." Circular based on an interpretation (letter) by the CIR of the Tax
Code (an exercise of her quasi-legislative function). The
R.A. No. 9282, the authority to exercise either original or appellate interpretation of tax laws is an exercise by the CIR of her quasi-
jurisdiction over local tax cases depended on the amount of the claim. legislative function which is subject to review by the Secretary of
Finance, not the CTA. Thus, this is NOT appealable to the CTA
(as only those in the exercise of her quasi-judicial function are
appealable to the CTA). Furthermore, Petron should have first
appealed the ruling of the customs collector to the Commissioner
B.P. 129, as amended provides: of Customs. Thus, in this case, Petron failed to exhaust
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and administrative remedies.
Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: Facts:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, Petron is engaged in the manufacture of petroleum products. It imports
testate and intestate, including the grant of provisional remedies in proper alkylate as a blending component for the manufacture of gasoline.
cases, where the value of the personal property, estate, or amount of the
It imported alkylate (22 separate importations) for which the CIR said
demand does not exceed One hundred thousand pesos (P100,000.00) or, in
Metro Manila where such personal property, estate, or amount of the that the importation was exempt from excise tax as it was not among
demand does not exceed Two hundred thousand pesos (P200,000.00) x x x those enumerated in the NIRC as subject to excise tax.
x o This was however, without prejudice to the final resolution of the
BIR whether the item was subject to excise tax.
This case: P154,398.50, so appeal to MTC not RTC Subsequently, in June 2012, Petron imported alkylate. It was however
subjected to excise taxes of P4.35/liter by the customs collector as
CIR vs. CTA & Petron (Vanslembrouck) evidenced by the Import Entry and Internal Revenue Declaration
[GR. No. 207843; July 15, 2015] (IEIRD).
o It was supposedly premised on a certain Customs
Memorandum Circular (CMC No. 164-2012) issued by the
jurisdiction otherwise the assessment becomes conclusive and Commissioner of Customs (COC) which implemented a Letter
unappealable.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

issued by the CIR saying that: "Alkylate is subject to excise tax within the administrative level in accordance with the Tariff and
under Section 148(e) of the NIRC." Customs Code (TCC).
In view of the assessment, Petron filed before the CTA a petition for
review, on WON its importation of alkylate was subject to excise tax.
o The CIR filed a MTD on grounds of lack of jurisdiction and Issue/s: WON the CTA properly assumed jurisdiction over the petition
prematurity. assailing the imposition of excise tax on Petron's importation of
o Initially, the CTA granted the CIR's motion and dismissed the alkylate based on Section 148 (e) of the NIRC?
case. NO
However, on Petron's Motion for Reconsideration, the CTA gave due
course to Petron's petition and found that: Held/Ratio: Petition GRANTED. The CIR's position is well-grounded.
a) the controversy was not essentially for the determination of the
constitutionality, legality or validity of a law, rule or regulation but Section 4 of the NIRC. Power of the Commissioner to Interpret
a question on the propriety or soundness of the CIR's Tax Laws and to Decide Tax Cases confers upon the CIR both:
interpretation of Section 148 (e) of the NIRC which falls within o (a) the power to interpret tax laws in the exercise of her
the exclusive jurisdiction of the CTA under Section 4 thereof, quasi-legislative function;
particularly under the phrase "other matters arising under [the subject to review by the Secretary of Finance.
NIRC]"; and o (b) the power to decide tax cases in the exercise of her
b) there are attending circumstances that exempt the case from quasi-judicial function.
the rule on non-exhaustion of administrative remedies, such as subject to the exclusive appellate jurisdiction of the
the great irreparable damage that may be suffered by Petron Court of Tax Appeals.
from the CIR's final assessment of excise tax on its importation. The CTA is a court of special jurisdiction, with power to review by
Aggrieved, the CIR sought immediate recourse to the Court, through the appeal decisions involving tax disputes rendered by either the CIR
instant petition, alleging that the CTA committed grave abuse of or the COC.
discretion when it assumed authority to take cognizance of the case Conversely, it has no jurisdiction to determine the validity of a ruling
despite its lack of jurisdiction to do so issued by the CIR or the COC in the exercise of their quasi-
The CIR asserts that: legislative powers to interpret tax laws.
o The interpretation of the subject tax provision, (i.e., Section 148 These observations may be deduced from a reading of Section 7 of
(e) of the NIRC, embodied in CMC No. 164-2012), is an RA 1125 entitled "An Act Creating the Court of Tax Appeals,"
exercise of her quasi-legislative function which is reviewable enumerating the cases over which the CTA may exercise its
by the Secretary of Finance, whose decision, in turn, is jurisdiction.
appealable to the Office of the President and, ultimately, to the Sec. 7. Jurisdiction. - The CTA shall exercise:
regular courts. o Exclusive appellate jurisdiction to review by appeal, as
o Only her quasi- judicial functions or the authority to decide herein provided:
disputed assessments, refunds, penalties and the like are Decisions of the Commissioner of Internal
subject to the exclusive appellate jurisdiction of the CTA. Revenue in cases involving disputed
o She likewise contends that the petition suffers from prematurity assessments, refunds of internal revenue taxes,
due to Petron's failure to exhaust all available remedies fees or other charges, penalties in relation thereto,
or other matters arising under the National Internal
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Revenue or other laws administered by the Bureau In Enrile v. Court of Appeals, the Court, applying the statutory
of Internal Revenue; construction principle of ejusdem generis, explained the import of
Petron's petition before the CTA ultimately challenged the legality using the general clause "other matters arising under the Customs
and constitutionality of the CIR's interpretation of a tax provision. Law or other law or part of law administered by the Bureau of
The CIR correctly argues that the CTA had no jurisdiction to take Customs" in the enumeration of cases subject to the exclusive
cognizance of the petition as its resolution would necessarily involve appellate jurisdiction of the CTA, saying that:
a declaration of the validity or constitutionality of the CIR's o The 'other matters' that may come under the general clause
interpretation of Section 148 (e) of the NIRC, which is subject to the should be of the same nature as those that have
exclusive review by the Secretary of Finance and ultimately by preceded them applying the rule of construction known as
the regular courts. ejusdem generis.
In British American Tobacco v. Camacho, the Court ruled that the Hence, as the CIR's interpretation of a tax provision involves an
CTA's jurisdiction to resolve tax disputes EXCLUDES the power exercise of her quasi-legislative functions, the proper recourse
to rule on the constitutionality or validity of a law, rule or against the subject tax ruling expressed in CMC No. 164-2012 is a
regulation, to wit: review by the Secretary of Finance and ultimately the regular
o While the above statute confers on the CTA jurisdiction to courts.
resolve tax disputes in general, this does not include cases Besides, Petron prematurely invoked the jurisdiction of the CTA.
where the constitutionality of a law or rule is challenged. Under Section 7 of RA 1125, what is appealable to the CTA is the
o Where what is assailed is the validity or constitutionality of a decision of the COC over a customs collector's adverse ruling
law, or a rule or regulation issued by the administrative on a taxpayer's protest:
agency in the performance of its quasi- legislative function, o SEC. 7. Jurisdiction. - The CTA shall exercise exclusive
the regular courts have jurisdiction to pass upon the same. appellate jurisdiction to review by appeal, as herein
As the CIR aptly pointed out, the phrase "other matters arising under provided:
this Code," as stated in the second paragraph of Section 4 of the Decisions of the Commissioner of Internal
NIRC, should be understood as pertaining to those matters directly Revenue in cases involving disputed assessments,
related to the preceding phrase "disputed assessments, refunds of refunds of internal revenue taxes, fees or other
internal revenue taxes, fees or other charges, penalties imposed in charges, penalties in relation thereto, or other
relation thereto" and must therefore not be taken in isolation to matters arising under the National Internal
invoke the jurisdiction of the CTA. Revenue or other laws administered by the Bureau
In other words, the subject phrase should be used only in reference of Internal Revenue;
to cases that are, to begin with, subject to the exclusive Decisions of the Commissioner of Customs in
appellate jurisdiction of the CTA, i.e., those controversies over cases involving liability for customs duties, fees or
which the CIR had exercised her quasi-judicial functions or her other money charges, seizure, detention or release
power to decide disputed assessments, refunds or internal revenue of property affected, fines, forfeitures or other
taxes, fees or other charges, penalties imposed in relation thereto, penalties in relation thereto, or other matters
NOT to those that involved the CIR's exercise of quasi- arising under the Customs Law or other laws
legislative powers. administered by the Bureau of Customs;
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Section 11 of RA 1125 is no less categorical in stating that what may o While there are exceptions to the principle of exhaustion of
be the subject of an appeal to the CTA is a decision, ruling or administrative remedies, it has not been sufficiently shown
inaction of the CIR or the COC, among others. that the present case falls under any of the exceptions.
In this case, there was even no tax assessment to speak of. While BUREAU OF CUSTOMS v. DEVANADERA (Agatep)
the customs collector himself admittedd that the computation he had [G.R. No. 193253; September 8, 2015]
written at the back page of the IEIRD served as the final assessment CTA has jurisdiction for Rule 65 cases involving taxes and tariffs.
imposing excise tax on Petron's importation of alkylate, the Court
concurs with the CIR's stance that the subject IEIRD was not yet the Recit-Ready:
customs collector's final assessment that could be the proper Facts: UNIOIL is engaged in marketing, distribution, and sale of
subject of review. petroleum, oil and other products, while its co-respondent OILINK
o And even if it were, the same should have been brought International, Inc. is engaged in manufacturing, importing,
first for review before the COC and not directly to the CTA. exporting, buying, selling, or otherwise dealing in at wholesale
o It should be stressed that the CTA has no jurisdiction to and retails of petroleum products.
review by appeal, decisions of the customs collector.
o The TCC prescribes that a party adversely affected by a BOC Audit Team requested several documents from OILLINK but
ruling or decision of the customs collector may protest such the latter failed to comply. As a consequence, OILLINK was fined
ruling or decision upon payment of the amount due and, if administratively with amount of P2.7 billion. Further, a hold order
aggrieved by the action of the customs collector on the was issued against all shipments of OILLINK.
matter under protest, may have the same reviewed by the
COC. OILINK and UNIOIL entered to a Terminalling Agreement were
o It is only after the COC shall have made an adverse ruling UNIOLs products were stored at OILLINKs depot.
on the matter may the aggrieved party file an appeal to the
CTA. A Warrant of Seizure and Detention was issued directing the BOC
Notably, Petron admitted to not having filed a protest of the officials to seal and padlock the oil tanks/depots of OILINK
assessment before the customs collector and elevating a possible located in Bataan including the UNIOIL products. UNIOIL
adverse ruling therein to the COC, reasoning that such a procedure requested for the release of its products which was granted.
would be costly and impractical, and would unjustly delay the
resolution of the issues which, being purely legal in nature anyway, Subsequently, a complaint-affidavit was filed in the DOJ against
were also beyond the authority of the customs collector to resolve the officials UNIOIL for illegal importation/ oil smuggling. DOJ
with finality. dismissed the case for lack of probable cause. MR denied. BOC
o This admission is at once decisive of the issue of the CTA's filed a petition for certiorari to the CA which the CA denied for
jurisdiction over the petition. procedural defects. MR denied.
o There being no protest ruling by the customs collector that
was appealed to the COC, the filing of the petition before Issue/s:
the CTA was premature as there was nothing yet to review. 1. WON the CTA has certiorari jurisdiction?
Verily, the fact that there is no decision by the COC to appeal from Yes
highlights Petron's failure to exhaust administrative remedies
prescribed by law.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

2. WON the CA erred in dismissing the petition for certiorari on the


sole ground of lack of verification and certification against forum Facts:
shopping? UNIOIL Petroleum Philippines, Inc. is engaged in marketing, distribution,
Yes and sale of petroleum, oil and other products, while its co-respondent
OILINK International, Inc. is engaged in manufacturing, importing,
3. WON the DOJ gravely abused discretion in affirming the dismissal exporting, buying, selling, or otherwise dealing in at wholesale and retails
of the BOC's complaint-affidavit for lack of probable cause? of petroleum products.
Yes
On April 20, 2007, BOC Audit Team requested OILINK to submit the
Held: 1. Indeed, in order for any appellate court to effectively exercise documents. OILINK expressed its willingness to comply with the request
its appellate jurisdiction, it must have the authority to issue, for the production. On June 4, 2007, OILINK sent a letter stating that the
among others, a writ of certiorari. In transferring exclusive documents, which the Audit Team previously requested, were available
jurisdiction over appealed tax cases to the CTA, it can reasonably with the Special Committee of the BOC, and that it could not open in the
be assumed that the law intended to transfer also such power as meantime its Bureau of Internal Revenue (BIR) registered books of
is deemed necessary, if not indispensable, in aid of such accounts for validation and review purposes.
appellate jurisdiction. There is no perceivable reason why the
transfer should only be considered as partial, not total. The Audit Team informed OILINK of the adverse effects of its request for
the postponement of the exit conference and its continuous refusal to
2. Despite the BOC's failed attempt to comply with the furnish it the required documents. It advised OILINK that such acts
requirement of verification and certification against forum constitute as waiver on its part to be informed of the audit findings and an
shopping, the Court cannot simply ignore the CA's perfunctory administrative case would be filed against it, without prejudice to the filing
dismissal of the petition on such sole procedural ground of a criminal action.
considering the paramount public interest in the subject matter
and the substantial amount involved. On July 24, 2007, BOC filed an administrative case against OILINK for
failure to comply with the requirements. The Legal Service of the BOC
3. The Court holds that private respondents cannot be charged rendered a Decision finding that OILINK violated Section IV.A.2(c) and (e)
with unlawful importation because there is no allegation in the of CAO 4- 20047 when it refused to furnish the Audit Team copies of the
BOC's complaint-affidavit to the effect that they committed any of required documents, despite repeated demands.
the following acts: (1) fraudulently imported or brought into the
Philippines the subject petroleum products, contrary to law; (2) On December 14, 2007, the Legal Service of the BOC rendered a
assisted in so doing; or (3) received, concealed, bought, sold or in Decision finding that OILINK is guilty of administrative violation. BOC
any manner facilitated the transportation, concealment or sale of directed OILINK to pay the BOC the administrative fine of P2.7 billion. A
such goods after importation, knowing the same to have been final demand letter was sent. A Hold Order was issued against all
imported contrary to law. Indeed, except for complainant's shipments of OILINK for failure to settle its outstanding account.
sweeping allegation, no clear and convincing proof was presented
to show that the subject petroleum products withdrawn by Unioil
from the oil depot/terminal of Oilink were imported.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

On May 2, 2008, the Corporate Administrative Supervisor of UNIOIL, With the enactment 9282, expanding the jurisdiction of the CTA, it is no
citing the existing Terminalling Agreement with OILINK for the Storage of longer clear which between the CA and the CTA has jurisdiction to review
UNIOIL's base oils. The request was subject to the following conditions: through a petition for certiorari the DOJ resolution in preliminary
1. Only Unioil products shall be withdrawn subject to proper inventory by the investigations involving tax and tariff offenses.
BIR and BOC.
2. Appropriate duties and taxes due on the products to be withdrawn are fully It can be fairly interpreted though that the power of the CTA includes that
paid or settled. of determining whether or not there has been GADALEJ on the part of the
3. The company should allow the operation/withdrawal to be closely RTC in issuing an interlocutory order in cases falling within the exclusive
monitored and continuously underguarded by assigned Customs personnel. appellate jurisdiction of the tax court. It, thus, follows that the CTA, by
constitutional mandate, is vested with jurisdiction to issue writs of
On May 9, 2008, a Warrant of Seizure and Detention was issued directing certiorari in these cases.
the BOC officials to seal and padlock the oil tanks/depots of OILINK
located in Bataan including the UNIOIL products and was unable to utilize Indeed, in order for any appellate court to effectively exercise its appellate
the products therein. jurisdiction, it must have the authority to issue, among others, a writ of
certiorari. In transferring exclusive jurisdiction over appealed tax cases to
UNIOIL made a request for the release of its products, which was granted the CTA, it can reasonably be assumed that the law intended to transfer
believing in good faith that all the conditions were met and the products also such power as is deemed necessary, if not indispensable, in aid of
were withdrawn. such appellate jurisdiction. There is no perceivable reason why the
transfer should only be considered as partial, not total.
A complaint was filed for Oil smuggling to the Prosecutors Office for
preliminary investigation. The case was dismissed for lack of probable SECOND ISSUE
cause. The public respondent, the Acting Secretary of Justice Agnes VST Faced with the issue of whether or not there is a need to relax the strict
Devanadera, denied MR. A Rule 65 petition was filed in the CA but the compliance with procedural rules in order that the ends of justice may be
CA dismissed the case due to procedural defects. MR was also denied. served thereby and whether "special circumstances or compelling
reasons" are present to warrant a liberal interpretation of such rules, the
Issue/s: Court rules, after a careful review of the merits of the case, in the
WON the CTA has certiorari jurisdiction? affirmative.
Yes
WON the CA erred in dismissing the petition for certiorari on the sole Despite the BOC's failed attempt to comply with the requirement of
ground of lack of verification and certification against forum shopping? verification and certification against forum shopping, the Court cannot
Yes simply ignore the CA's perfunctory dismissal of the petition on such sole
WON the DOJ gravely abused discretion in affirming the dismissal of procedural ground considering the paramount public interest in the
the BOC's complaint-affidavit for lack of probable cause? subject matter and the substantial amount involved.
Yes
THIRD ISSUE
Held/Ratio: Petition is DENIED. The determination of probable cause for purposes of filing of information
FIRST ISSUE in court is essentially an executive function that is lodged with the public
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

prosecutor and, ultimately, to the Secretary of Justice. The prosecutor impairment of contracts. Respondents question the alleged non
and the Secretary of Justice have wide latitude of discretion in the exhaustive administrative approach committed by petitioners.
conduct of preliminary investigation; and their findings with respect to the
existence or non-existence of probable cause are generally not subject to Issue/s:
review by the Court. (Non-interference doctrine). 14) WON the PEACe Bonds are subject to final withholding tax of
20%
Nevertheless, this policy of non-interference is not without exception. The YES
court may intervene in the executive determination of probable cause, 15) WON Petitioner should have first have challenged first the
review the findings and conclusions, and ultimately resolve the existence 2011 BIR rulings before the Secretary of Finance, consistent
or non-existence of probable cause where there is grave abuse of with the doctrine of exhaustion of remedies- No, this case
discretion by examining the records of the preliminary investigation when consists of exceptional grounds.
necessary for the orderly administration of justice.

The Court holds that private respondents cannot be charged with Held:
unlawful importation because there is no allegation in the BOC's 1. YES- the interpretation of the phrase 20 individuals or less for
complaint-affidavit to the effect that they committed any of the following the deposit substitutes to not be public and subject to 20% final
acts: (1) fraudulently imported or brought into the Philippines the subject withholding tax, should mean at any point in time of the bond and
petroleum products, contrary to law; (2) assisted in so doing; or (3) not just merely upon its issuance.
received, concealed, bought, sold or in any manner facilitated the
transportation, concealment or sale of such goods after importation, 2 .We agree that the interpretative rulings of the BIR are reviewable
knowing the same to have been imported contrary to law. Indeed, except by the Secretary of Finance under Section 4 of the NIRC but because
for complainant's sweeping allegation, no clear and convincing proof was of the special circumstances availing in this case there was no need
presented to show that the subject petroleum products withdrawn by for petitioner to exhaust all administrative remedies before seeking
Unioil from the oil depot/terminal of Oilink were imported. judicial relief.
a. Exceptions present in this case:
BDO v. CIR (Alarcon) i. Question involved is purely legal
[GR. No. 198756; J 16, 2009] ii. Urgency of the judicial intervention given the
No need to exhaust remedies for PEACe Bonds impending maturity of the PEACe Bonds
iii. Futility of an appeal to the Secretary of
Recit-Ready: Financeas the latter have appeared to have
Facts: This case involves the PEACe Bonds issued by CODE-NGO adopted the challenged BIR rulings
which was at first held not to be subject to 20% final withholding tax but
barely 11 days after the public auction held by BoT whein BDO won, was
subsequently held to be subject to 20% final withholding tax by BIR Facts:
Rulings. Petitioners here obtained a TRO for a prohibition against the On October 12, 2001 the Bureau of Treasury released a memoon
implementation of the BIR Ruling against PEACe Bonds. Petitioners the formula for the Zero-Coupon Bond. In determining the purchase
allege that the BIR Rulings were violative of due process and non price and settlement amount, is only applicable to the zeroes that
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

are not subject to the 20% final withholding due to the 19 Petitioner alleges that respondents actions in this case are violative
buyer/lender limit. of due process and the constitutional doctrine of non impairment of
One day before the auction date, Bureau of Treasury issued the contracts.
Auction Guidelines for the 10-year Zero-Coupon Treasury Bond to Respondent questions petitioners direct resort to this court. They
be issued on October 16, 2001. It reiterated that bonds will not be argue that petitioner should have challenged first the 2011 Bureau of
subject to 20% final withholding tax as the issue will be limited to a Internal Revenue rulings before the Secretary of Finance, consistent
maximum of 19 lenders in the primary market. with the doctrine of exhaustion of administrative remedies.
RCBC participated and won the bid. On October 18, 2001, the ISSUES
Bureau of Treasury issued P35 Billion worth of Bonds at yield-to- 1. WON the PEACe Bonds are subject to final withholding tax
maturity of 12.75% to RCBC for approximately P10.17 billion of 20%
resulting in a discount of approximately P24.83 billion. YES
RCBC Capital sold and distributed the Government Bonds for an 2. WON the government is estopped from collecting this if
issue price of P11, 995,513,716.51. BDO purchased the PEACe they are subject to 20% final withholding tax-NO
Bonds on different dates. 3. WON Petitioner should have challenged first the 2011 BIR
On Oct 7, 2011, barely 11 days before the maturity of the PEACe rulings before the Secretary of Finance, consistent with the
Bonds, the Commissioner of the CIR issued BIR Ruling No. 370- doctrine of exhaustion of remedies- No, this case consists
2011 declaring that PEACe Bonds being deposit substitutes, of exceptional grounds.
were subject to 20% final withholding tax. In this ruling, the
Secretary of Finance directed the BoT to withhold a 20% final tax HELD: Respondent Bureau of Treasury is hereby ORDERED to immediately
from the face value of the PEACe Bon upon their payment at release and pay the bondholders the amount of P4,966,207,796.41,
maturity on October 18, 2011. representing the 20% final withholding tax on the PEACe Bonds, with legal
On Oct 17, 2011 replying on an urgent inquiry from the BoT, the BIR interest of 6% per annum from October 19, 2011 until full payment.
issued BOR Ruling No. DA 378-2011 clarifying that the final
withholding tax due on the discount or interest earned on the PEACe 1. YES- the interpretation of the phrase 20 individuals or less for the
Bonds should be imposed and withheld not only on RCBC/CODE deposit substitutes to not be public and subject to 20% final
NGO but also [on] all subsequent holders of the Bonds. withholding tax, should mean at any point in time of the bond and not
On October 17, 2011, petitioners filed a petition for certiorari, just merely upon its issuance.
prohibition, and/or mandamus (with urgent application for a
temporary restraining order and/or writ of preliminary 2.We agree that the interpretative rulings of the BIR are reviewable by
injunction) before this court. the Secretary of Finance under Section 4 of the NIRC but because of
On October 18, 2011, this court issued a temporary restraining the special circumstances availing in this case there was no need for
petitioner to exhaust all administrative remedies before seeking judicial
order (TRO) enjoining the implementation of BIR Ruling No.
relief.
370-2011 against the [PEACe Bonds,] . . . subject to the condition
b. Exceptions present in this case:
that the 20% final withholding tax on interest income therefrom shall
i. Question involved is purely legal
be withheld by the petitioner banks and placed in escrow pending
ii. Urgency of the judicial intervention given the
resolution of [the] petition.
impending maturity of the PEACe Bonds
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

iii. Futility of an appeal to the Secretary of Financeas pursued to its appropriate conclusion before the courts judicial power can be
the latter have appeared to have adopted the sought.
challenged BIR rulings Nonetheless, jurisprudence allows certain exceptions to the rule on
CIR v Leal, Commissioner issued RMO 15-91 imposing 5% exhaustion of administrative remedies:
lending investors tax on pawnshops and RMC 43-91 subjecting SEC. 245. Authority of the Secretary of Finance to promulgate rules and
pawn shop tickets to DST. Leal asked for a reconsideration but as regulations. The Secretary of Finance, upon recommendation of the
denied by Commissioner in BOR ruling 221-91. Leal filed before Commissioner, shall promulgate all needful rules and regulations for the
RTC a petition for prohibition. This court held that Leal should have effective enforcement of the provisions of this Code.
filed her petition for prohibition in the Court of Tax Appeals not he The authority of the Secretary of Finance to determine articles similar
RTC. or analogous to those subject to a rate of sales tax under certain
Asia Intl Auctioneers v Parayno the court upheld the jurisdiction category enumerated in Section 163 and 165 of this Code shall be
of the CTA over the RTC on the issue of validity of revenue without prejudice to the power of the Commissioner of Internal
memorandum circulars. It was held that the taxpayers invocation of Revenue to make rulings or opinions in connection with the implementation
this courts intervention was premature for its failure to first ask the of the provisions of internal revenue laws, including ruling on the
CIR for reconsideration of the assailed revenue regulations and classification of articles of sales and
revenue memorandum circulars. In exceptional cases, however, this court entertained direct recourse to it
British American Tobacco v Camacho pointed out that although when dictated by public welfare and the advancement of public policy, or
Sec 7 of RA 1125 confers on the CTA jurisdiction of the resolve tax demanded by the broader interest of justice, or the orders complained of
disputes in general, this does not include constitutionality of the law were found to be patent nullities, or
or rule is challenged. Here, the nature and importance of the issues raised to the investment and
In regard, Section 1 of RA 9282 states that the CTA shall be of the banking industry with regard to a definitive declaration of whether
same level of the LTC. government debt instruments are deposit substitutes under existing laws,
Republic Act No. 9282 was enacted. It expanded the jurisdiction of and the novelty thereof, constitute exceptional and compelling circumstances
the Court of Tax Appeals and elevated its rank to the level of a to justify resort to this court in the first instance.
collegiate court with special jurisdiction. Section 1 specifically Finally, non-compliance with the rules on exhaustion of administrative
provides that the Court of Tax Appeals is of the same level as the remedies and hierarchy of courts had been rendered moot by this courts
Court of Appeals and possesses "all the inherent powers ofa Court issuance of the temporary restraining order enjoining the implementation of
of Justice." remedies proper the 2011 BIR Ruling. The temporary restraining order effectively recognized
Under Section 4 of the 1997 National Internal Revenue Code, the urgency and necessity of direct resort to this court.
interpretative rulings are reviewable by the Secretary of Finance. Section 4
provides that the The power to interpret the provisions of this Code and
other tax laws shall be under the exclusive and original jurisdiction of
the Commissioner, subject to review by the Secretary of Finance.
Thus, it was held that [i]f superior administrative officers [can] grant the relief
prayed for, [then] special civil actions are generally not entertained. The
remedy within the administrative machinery must be resorted to first and
CITY OF MANILA V. COCA-COLA BOTTLERS PHILIPPINES,
INC. (Pascual)
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

[GR. No. 181845; August 4, 2009] was legally nothing to cure.


To appeal an adverse decision or ruling of the RTC to the CTA, the 4. YES. The enforcement would have amounted to double taxation.
taxpayer must file a Petition for Review with the CTA within 30 days of said
adverse decision, extendable by another 15 days as suppletorily provided by Facts:
the Rules of Court Prior to 25 February 2000, Coca-cole had been paying the City of Manila
local business taxes only under Sec 14 of Tax Ordinance 7794 as it was
Recit-Ready: expressly exempted from the business tax.
Facts: The City of Manila assessed Coca-Cola deficiency taxes on the On 25 February 2000, however, the City of Manila approved Tax
basis of local tax ordinances. However, in a separate case, these Ordinance 7988later amended by Tax Ordinance 8011which
ordinances were declared null and void by the Supreme Court. amended certain sections of Tax Ordinance 7794, particularly by deleting
Coca-Cola filed an action with the RTC of Manila, seeking the the proviso found therein, which stated that all registred businesses in
cancellation of the assessment and an adverse decision was the City of Manila that are already paying the aforementioned (business)
rendered against the City of Manila. The City of Manila attempted tax shall be exempted from payment thereof.
to file a Pettion for Review with the CTA, but the same was o The ordinances, however, were later declated null and void
dismissed for allegedly being filed beyond the reglementary by the Supreme Court in another case. (Coca-cola v. City of
period. Manila)
o There, it was found that Tax Ordinance 7988 was enacted
Issue/s: in contravention of the provisions of the Local Government
1. WON petitioners substantially complied with the reglementary Code and [2] Tax Ordinance 8011 could not cure the
period to timely appeal the case for review before the CTA? defects of 7988, which was null and void.
(Main Issue)YES for the period but they still messed up Before the Court rendered the abovementioned decision, though,
procedurally by not submitting all the required attachments. petitioner assessed respondent on the basis of the ordinances for
2. WON the ruling of the SC in the earlier Coca-Cola Case is deficiency local business taxes, penalties, and interest, in the total
doctrinal and controlling in the instant case?--YES amount of P18, 583, 932.04.
3. WON petitioner can still assess taxes under the tax o Respondent filed a protest on the ground that the
ordinances?--NO assessment amounted to double taxation.
4. WON the enforcement of the tax ordinance amounted to double When petitioner did not respond to the protest, they filed an action with
taxation?--YES the RTC of Manila an action for the cancellation of the assessment.
o Initially, the RTC dismissed the case, finding that there was
Held: no double taxation, but later granted the motion for
1. YES. When the petitioners filed their Petition for Review on 30 reconsideration.
May 2007, it was still within the reglementary period as it was o The latter ruling of the RTC was in conformity with the ruling
within the 15-days extendable period from the original 30-day of the SC in the other Coca-Cola case.
period within which such a Petition could be filed.
Take Note of these dates:
2. YES. The Coca-Cola case is applicable to the instant case.
o 20 April 2007petitioners received a copy of the adverse
3. NO. The tax ordinances were declared null and void and cannot
order of the RTC
have any legal effect. The amendments to the tax ordinances,
likewise, could not be said to have cured the defects as there
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o 4 May 2007petitioners filed a Motion for Extension, Only for the most compelling reasons,
grounded on the belief that the reglementary period for filing another extended period not to exceed 15
their Petition was to expire on 5 May 2007 days from the lapse of the first extended
o 18 May 2007petitioners filed a Motion for Extention of period.
time, prior to the lapse of the 30-day period Following the abovementioned rules, the 30-day original period for
The CTA, dismissed the Petition for Review on procedural grounds, filing a petition for review with the CTA may be extended for a period
deciding that the same was filed beyond the reglementary period. of 15 days and no further extension shall be allowed thereafter,
Issue/s: except only for the most compelling reasons, in which case the
1. WON petitioners substantially complied with the reglementary extended period shall not exceed 15 days.
period to timely appeal the case for review before the CTA? (Main In this case, then, the CTA did err in finding that petitioners
Issue)YES for the period but they still messed up procedurally by not failed to file their Petition for Review within the reglementary
submitting all the required attachments. period.
2. WON the ruling of the SC in the earlier Coca-Cola Case is doctrinal o Quick Recap of the Timeline of Events:
and controlling in the instant case? 20 April 2007petitioners received a copy of the
3. WON petitioner can still assess taxes under the tax ordinances? adverse order of the RTC; thus petitioners had 30
4. WON the enforcement of the tax ordinance amounted to double days (until 20 May 2007) within which to file their
taxation? Petition for Review.
4 May 2007petitioners filed a Motion for
Held/Ratio: Petition for Review is hereby DENIED. Extension, grounded on the belief that the
reglementary period for filing their Petition was to
1. YES. When the petitioners filed their Petition for Review on 30 May expire on 5 May 2007 (15 days after receipt of the
2007, it was still within the reglementary period as it was within the adverse decision)This motion was superfluous
15-days extendable period from the original 30-day period within and unnecessary as it was still within the
which such a Petition could be filed. original 30 day period.
Under RA 9282, to appeal an adverse decision or ruling of the RTC 18 May 2007petitioners filed a Motion for
to the CTA, the taxpayer must file a Petition for Review with the Extention of time, prior to the lapse of the 30-day
CTA within 30 days of said adverse decision or ruling. periodShould have been granted by the CTA
o Though the same provision is silent as to whether such 30- as, in reality, this was only their first Motion for
day period can be extended or not, the law does provide Extension of Time.
that the Petition for Review shall be filed with the CTA o Thus, when the petitioners filed their Petition for
following the procedure analogous to Rule 42 of the Review with the CTA on 30 May 2007, they were able to
Revised Rules of Civil Procedure. comply with the reglementary period for filing such a
This rule provides that the Petition for Review must petition.
be filed with the Court of Appeals within: Original 30-day period: Ends on May 20, 2007.
The original 15-dau period from receipt of Motion for Extension of Time was filed on May 18,
the judgment or final order to be appealed; 2007. (Still within the 30-day period and SHOULD
An extended period of 15 days from the have been granted by the CTA)
lapse of the original period; and
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

Date when Petition for Review was filed: 30 May o Tax Ordinance 8011, which amended Tax Ordinance 7988,
2007. (30-Day Period + 10-Day Extension = Pasok did not cure the effects of the latter as, since it was null and
sa reglementary period yay) void, there was legally nothing to cureit did not exist.
However, there were other procedural reasons for which the CTA o As such, respondent cannot be taxed under any of these
dismissed the Petition for Review. ordinances.
o The Revised Rules of the CTA requires that: Petitioners tried to make an argument that they could still tax the
The parties shall file 11 signed copies of every respondents under the original tax ordinance but under the original
paper for cases before the Court en banc and 6 ordinance, the respondents were expressly exempted from the
signed copies for cases before a Division of the payment of the local business taxes imposed by the ordinance.
Court in addition to the signed original copy; Furthermore, if they were to be taxed under the original tax
A clearly legible duplicate original or certified true ordinance, as it was worded before all the amendments, such would
copy of the decision appealed from shall be indeed amount to double taxation.
attached to the petition. o Recall: For double taxation to be present, the two taxes
o The Revised Rules of the CTA do not provide for the must be imposed on the same subject matter,f or the same
consequences of non-compliance but the Rules of Court, purpose, by the same taxing authority, within the same
again, apply suppletorily. jurisdiction, during the same taxing period, and the taxes
Effect of Failure to comply with requirementsthe must be of the same kind or character.
failure of the petitioner to comply with any of the o In this case and under the abovementioned test, the taxes
foregoing requirementsshall be sufficient ground that were sought to be imposed would have constituted
for the dismissal thereof. double taxation.
o In this case, the Petition for Review consisted only of 1 copy
and all the attachments thereto were merely machine
COMMISSIONER OF CUSTOMS v. MARINA SALES, INC.
copies.
Thus the SC sustained the CTAs dismissal in this
(Ocampo)
[G.R. No. 183868; November 22, 2010]
regard.
CTA En Banc: MagMR ka muna sa Division bago ka pumunta sakin.
2. YES. The Coca-Cola case is applicable to the instant case. (Putting
the discussions for 2-4 under here because the SC only discussed
these issues briefly after getting through the procedural matters.) Recit-Ready:
Facts: The BOC examiners recommended to the VCRC the
Petitioners argument that the other Coca-Cola case cannot apply to
reclassification of the importations of respondent Marina from
the instant case simply cannot stand as the pivotal issue in that case
being subject to 1% import duty rate to 7%. VCRC adopted such
was whether the Tax Ordinances were null and void, which the
recommendation. Respondent filed a petition for review before
Court resolved that they were.
the CTA. Its Second Division ruled in favor of respondent. The
o Thus, said Tax Ordinances could not have any legal effect.
petitioner appealed the same to the CTA En Banc without filing a
o The City of Manila never appealed from that decision and
prior MR before said Division. Thus, it dismissed the petition on
so the same attained finality after the lapse of the period for
such ground in accordance with the Revised Rules of CTA.
appeal of the same.

Issue: WON the dismissal by the CTA En Banc on mere technicality will
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

result in injustice and unfairness to the petitioner


Held/Ratio: Wherefore, the petition is DENIED.
Held: NO. Before the CTA En Banc could take cognizance of the petition
for review concerning a case falling under its exclusive appellate No. Before the CTA En Banc could take cognizance of the petition for
jurisdiction, the litigant must sufficiently show that it sought prior review concerning a case falling under its exclusive appellate
reconsideration or moved for a new trial with the concerned CTA jurisdiction, the litigant must sufficiently show that it sought prior
division. reconsideration or moved for a new trial with the concerned CTA
division.
Facts: o The Court agreed with the CTA En Banc that the Commissioner failed
Respondent Marina Sales, Inc. is engaged in the manufacture of to comply with the mandatory provisions of Rule 8, Section 1 of the
Sunquick juice concentrates and usually imports raw materials into the Revised Rules of the Court of Tax Appeals requiring that the petition
country. In the past the Bureau of Customs (BOC) assessed said type of for review of a decision or resolution of the Court in Division must be
importations under Tariff Heading H.S. 2106.90 10 with a 1% import duty preceded by the filing of a timely motion for reconsideration or new
rate. trial with the Division. The word "must" clearly indicates the
However, on March 6, 2003, the BOC examiners contested the tariff mandatory, not merely directory, nature of a requirement.
classification made by the respondent and recommended to the Collector o The Court also held that procedural rules are not to be trifled with or
of Customs to reclassify respondents importation with a corresponding be excused simply because their non-compliance may have resulted
7% import duty rate. in prejudicing a partys substantive rights. Rules are meant to be
Respondent executed an undertaking that it will pay when the followed. They may be relaxed only for very exigent and persuasive
reclassification (i.e., from 1% to 7% import duty rate) is finally determined reasons to relieve a litigant of an injustice not commensurate to his
as correct in order to prevent the withholding of its importations. careless non-observance of the prescribed rules.
The Valuation and Classification Review Committee (VCRC) reclassified
the subject importations of respondent at 7% import duty rate. PHILIPPINE BRITISH ASSURANCE COMPANY INC. v.
Respondent interposed a petition for review before the CTA. CTA Second REPUBLIC OF THE PHILIPPINES (Ong)
Division ruled in favor of respondent holding that its classification with 1% [GR. No. 185588; February 2, 2010]
import duty rate was the most appropriate and descriptive of the disputed It is the CA which has appellate jurisdiction over an action to collect on a
importations. bond used to secure the payment of taxes as is not a tax collection case but
Petitioner disagreed with said decision and elevated the case to the CTA rather, a simple case for enforcement of a contractual liability.
En Banc via a petition for review. However, the latter dismissed the
petition for failure to file the required Motion for Reconsideration before Recit-Ready:
the CTA Second Division prior to elevating the case to CTA En Banc in Facts: Philippine British Assurance Company is an insurance company
accordance with Section 1, Rule 8 of the Revised Rules of the Court of that issues customs bonds to its clients in favor of the BOC.
Tax Appeals. These bonds secure the release of imported goods in order that
the goods may be released without prior payment of the customs
Issue: duties and taxes. Under these bonds, petitioner and its clients
WON the dismissal by the CTA En Banc on mere technicality will result jointly and severally bind themselves to pay the BOC the face
in injustice and unfairness to the petitioner NO value of the bonds in the event that they expire without either the
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

imported goods being re-exported or the proper duties and taxes On Dec. 9, 2003, the Republic, represented by the BOC, filed a complaint
being paid. The BOC filed a complaint against petitioner for against petitioner for collection of money with damages before the RTC
collection of money with damages before the RTC for outstanding for outstanding unliquidated customs bonds with the BOC.
unliquidated customs bonds with the BOC. The RTC ruled in its The RTC ruled in favor of the BOC. MR was denied.
favor. Petitioner appealed to the CA which dismissed the case for Petitioner appealed to the CA.
lack of jurisdiction. According to the CA, it should have been filed o The CA dismissed the case for lack of jurisdiction. It ruled
with the CTA since it is a tax collection case. that the instant case is a tax collection case and should be
filed with the CTA.
Issue/s: Petitioner:
WON the CTA has jurisdiction over the case. o In as much as Respondents right was initially based on its
right to collect duties and taxes, the same was converted to
Held: No. An action to collect on a bond used to secure the payment a right arising out of a contract, the bond being a contract
of taxes is not a tax collection case but rather, a simple case between Respondent and Petitioner.
for enforcement of a contractual liability.
Issue/s:
The original complaint filed with the RTC was in the nature of a WON the CTA has jurisdiction over the case.
collection case, purportedly to collect on the obligation of petitioner NO
by virtue of the bonds executed by it in favor of respondent,
essentially a contractual obligation. Held/Ratio: An action to collect a bond used to secure the payment of
taxes is not a tax collection case but rather, a simple case for
The BOC did not consider the case as one for tax collection. It enforcement of a contractual liability.
instituted a complaint for collection of money and not a tax
collection case. It also did not follow the proper prosecution of a tax NO.
collection case. The instant case is not a tax collection case, hence, o The original complaint filed with the RTC was in the nature of a
the CA has jurisdiction over the case. collection case, purportedly to collect on the obligation of petitioner by
virtue of the bonds executed by it in favor of respondent, essentially a
Facts: contractual obligation.
Philippine British Assurance Company Inc. is an insurance company o In the Mambulao Lumber Company case, the court ruled that the
existing under and by virtue of the laws of the Philippines. NIRCs provisions on prescription are inapplicable to the case since
Petitioner issues customs bonds to its clients in favor of the BOC. These the action is based upon a surety bond and it cannot be considered a
bonds secure the release of imported goods in order that the goods may tax collection case, rather, it is an action based on a contract.
be released from the BOC without prior payment of the customs duties o The instant case is not a tax collection case, hence, the CA has
and taxes. jurisdiction over the case.
o Under these bonds, petitioner and its clients jointly and o The BOC did not consider the case as one for tax collection. It
severally bind themselves to pay the BOC the face value of instituted a complaint for collection of money and not a tax collection
the bonds, in the event that the bonds expire without either case. It also did not follow the proper prosecution of a tax collection
the imported goods being re-exported or the proper duties case.
and taxes being paid.
MONTERO // 3A TAX DIGESTS
AGATEP ALARCON ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO GUZMAN
LAYNO LIM, J. LIM, Q. LUNA OCAMPO ONG PASCUAL REYES ROCILLO TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

o Certainly, the administrative agencies tasked with the prosecution of


cases within their specific area of concern should know the nature of
the action to be filed and the proper procedure by which they can
collect on liabilities to it. Here, the BOCs actions reveal its position
that indeed the case was not a tax collection case but an action for the
enforcement of a contractual obligation. Hence, appellate jurisdiction
over the petition properly lies with the CA and not the Court of Tax
Appeals.