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1 Meralco Securities v. Savellano
2 Vera v. Cuevas
Asia International Auctioneers v.
3 Parayno
4 CIR v. Fortune Tobacco
Maniago submitted to CIR confidential denunciatio for tax evasion of Meralco Securities
alleged tax evasion of saying only paid 25% of the dividends it received from Meralco so shortchange for the
Meralco Securities; other 75%. CIR says no deficiency. Judge issud mandamus to compel CIR to impose
discretionary on the part of deficiency tax assessment. Wrong since CIR has discretionary power so mandamus will
CIR; mandamus will not lie not lie.
Petitioner milk manufacturers sought clarification of the provisions of the Old Tax Code.
Sec 141 - specific tax on skimmed milk; Sec 169 - required packaging contain declaration
that skimmed milk not suitable for infants less than a year old; Sec 177- penalized sale of
skimmed milk without payment of tax. Sec 141 and 177 were repealed, making the act of
selling skimmed milk without first payment of taxes not unlawful. The CIR argued that
skimmed milk; LEGEND the repeal did not deprive him of jurisdiction to give effect to the supervisory and police
that is is not for infants power granted by the Tax Code. The SC held that the BIR may claim police power only
less than 1 y/o; POLICE when necessary in the enforcement of collection of taxes, fees, forfeitures, penalties and
POWER by CIR fines.
CIR Parayno, Jr. issued Revenue Memorandum Circular (RMC) No. 31-2003 setting the
"Uniform Guidelines on the Taxation of Imported Motor Vehicles through the Subic Free
Port Zone and Other Freeport Zones that are Sold at Public Auction." The RMC, pursuant
to existing revenue issuances, provided for the uniform tax treatments that are to be
adopted on the different transactions involved in the importation of motor vehicles
through the SSEFZ and other legislated Freeport zones that are subsequently sold
through public auction.
Petitioners AIAI and Subic Bay Motors Corporation filed a complaint before the RTC
praying for the nullification of RMC No. 31-2003 for being unconstitutional and an ultra
vires act. The complaint was thereafter amended seeking then nullification of the other
RMCs and RRs. The Court held that the CIR rulings in this case are VALID. The assailed
revenue regulations and revenue memorandum circulars are actually rulings or opinions
of the CIR on the tax treatment of motor vehicles sold at public auction within the SSEZ
to implement Section 12 of R.A. No. 7227 which provides that "exportation or removal of
goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall
be subject to customs duties and taxes under the Customs and Tariff Code and other
Revenue Memorandum relevant tax laws of the Philippines." They were issued pursuant to the power of the CIR
Circular; tax treatment of under Section 4 of the National Internal Revenue Code. Petitioners failure to ask the CIR
motor vehicles sold at for a reconsideration of the assailed revenue regulations and RMCs is another reason why
public auction; CIR may the instant case should be dismissed. It is settled that the premature invocation of the
issue administrative rulings court's intervention is fatal to one's cause of action.
Revenue Regulation; RA 8240 provided for the shifting of ad valorem tax to a specific tax system. The tax code
cigarettes, not lower than procided that there would be an increase of 12% in excise taxes upon effectivity on Jan
prior to Jan 2000 2000, subject to the transitory provision that from 1997-Jan 2000, the rates would not be

5 Philamlife v. DOF and CIR
6 BDO v. RP
7 Ursal v. CTA
lower than taxes due as of October 1996. The SoF issued a revenue regulation in Jan
2000 listing the rates, adding that the tax should not be lower than what was paid for
prior to Jan 2000. Fortune claimed a refund, saying that the RR was beyond the CIR's
delegated rule making powe since the added condition created a separate classification.
The SC held that the admin issuance was invalid for failing to comply with the Tax Code.
Petitioner Philamlife used to own Class A shares in PhilamCare. In a bid to divest itself of
its interests in the health maintenance organization industry, offered to sell its
shareholdings in PhilamCare through competitive bidding. Thus, petitioner's shares were
sold to STI Investments, Inc. After the sale was completed, Philamlife filed an application
for a certificate authorizing registration/tax clearance with the BIR. However, petitioner
was informed that it needed to secure a BIR ruling in connection with its application due
to potential donors tax liability. In compliance, petitioner requested a ruling to confirm
that the sale was not subject to donors tax but respondent Commissioner on Internal
Revenue denied Philamlifes request, alleging that the selling price of the shares sold was
lower than their book value based on the financial statements of PhilamCare and
therefore, donors tax became imposable on the price difference. Petitioner sought an
appeal with the Secretary of Finance, but to no avail as the said ruling was affirmed.
Petitioner elevated the case to the CA via petition for review under Rule 43 which was
denied by the CA for lack of jurisdiction. The SC held that admittedly, there is no
provision in law that expressly provides where exactly the ruling of the Secretary of
Finance under the adverted NIRC provision is appealable to. However, We find that Sec.
7(a)(1) of RA 1125, as amended, addresses the seeming gap in the law as it vests the
CTA, albeit impliedly, with jurisdiction over the CA petition as other matters arising
under the NIRC or other laws administered by the BIR. We imply from the purpose of RA
1125 and its amendatory laws that the CTA is the proper forum with which to institute
the appeal. This is not, and should not, in any way, be taken as a derogation of the
power of the Office of President but merely as recognition that matters calling for
technical knowledge should be handled by the agency or quasi-judicial body with
specialization over the controversy. As the specialized quasi-judicial agency mandated to
Philamlife; remedy of adjudicate tax, customs, and assessment cases, there can be no other court of appellate
taxpayer upon denial of jurisdiction that can decide the issues raised in the CA petition, which involves the tax
SoF or DoF treatment of the shares of stocks sold.
The CIR issued BIR ruling declaring the interest from PEACE bonds, which were zero-
coupon bonds issued by the government,as deposit substitutes to be subject to 20% final
withholding tax. The SC did not require for the exhaustion of administrative remedied
because it would be futile since it was because of the SoF that the BIR rulings were
issued. The Court however recognized the CTA's exclusive appellate jurisdiction to review
zero-coupon bonds; CIR the decisions of the CIR by Petition for Review. Also, it held that the 20% was not proper,
exclusive appellate juris and the BIR rulings were invalid. Note: The case has a pending MoR.
city assessor appeal to CTA Gerano Ursal (city assessor) in the exercise of the power to assess real propety, appealed

8 CIR v. Villa
9 CIR v. CA (Fortune)
10 CIR v. Lhuiller Pawnshop
the reduction of his assessment by the Cebu Board of Assessment Appeals with the CTA.
which was denied due to the lack of personality. The upheld the CTA decision stating that
the assessor had no personality since the rulings of the Cebu Board did not adversely
affect or damage him. RA 1125 does not grant a blanket authority for the CTA to decide
any and all tax disputes. The previous law that authorized the assessor to appeal was not
reenacted in RA 1125.
Dr. Villa and his wife filed joint ITRs. BIR assessed them for deficiency taxes. Instead of
filing a protest, Dr. Villa filed a petition for review with the CTA,which reversed the
decision of the BIR. The SC held that the taxpayer's appeal was premature because the
"decision" provided for in Sec 7 of RA 1125 conferring jurisdiction refers to the protest of
the taxpayer against the assessments. It only becomes a disputed assessment once the
taxpayer asks the Collector to reconsider. The taxpayer can appeal to the CTA only upon
appealed to CTA before receipt of the decision of the collector. Furthermore, Sec 11 on who may appeal provided
protest that it is a "decision or ruling" that may be appealed, not the assesment itself.
Fortune Tobacco Corporation was issued separate certificates of trademark registration
for their products CHAMPION, HOPE and MORE. CIR Commissioner classified these
cigarettes as foreign brands having been listed in the World Tobacco Directory as
belonging to foreign companies. Fortune Tobacco removed them from the foreign brands
category by changing the names to HOPE Luxury and Premium MORE . Proof was
submitted that CHAMPION was their original product and therefore a local brand. Ad
valorem taxes were imposed on Hope Luxury More Premium and Champion International
at 40% to 45% and Champion Kings and Lights at 15% to 20%. A bill (later RA 7654)
which became effective on July 3, 1993 amended Sec 142(c)(1) of the National Internal
Revenue Code. Two days before it became effective, RMC 37-93 was issued by the BIR
stipulating that since HOPE, MORE and CHAMPION are considered locally manufactured
cigarettes bearing a foreign brand, they are subject to 55% Ad Valorem tax on cigarettes.
ISSUE: W/N RMC was interpretative HELD: No. BIR Legislated. It was a legislative rule in
the nature of subordinate legislation designed to implement a primary legislation by
providing details thereof. Being a promulgated legislative rule, it must be published. BIR
in its move to reclassify the three cigarette brands and in raising their ad valorem taxes
legislated under a quasi legislative authority did not simply interpret RA 7654. Without
Fortune; Interpretative; RMC 37-93, the enactment of RA 7654 would have no new tax rate consequence on the
RMC products of the private respondent.
Pursuant to an RMO and RMC, the CIR issued an assessment for deficiency percentage
tax against Lhuillier, Lhuillier protested saying that 1) neither the VAT Law or Tac Code
imposes 5% percentage tax on pawnshops 2) pawnshops are not lending investors,
which are subject to the 5% tax 3) RMO is a new tax measure 4) RMO amends tha tax
RMO and RMC for investors Code 5) RMO is a class legislation on pawnships. The SC upheld Lhuillier's contentions
tax on pawnshops; tax no saying that these issuances were legislative rules where notice, hearing and publication
basis in the law. should have been observed. Also, Sec 116 of the NIRC which gave life to the RMC
 andRMO has been repealed, hence these issuances have no leg to stand on.

In 1987, PBCOM requested the CIR for a tax credit of P5 M representing

the overpayment of taxes in the first and second quarters of 1985. In 1998,
PBCOM filed a claim for refund of creditable taxes withheld by their
lessees from property rentals in 1985 and 1986. It argued that its claims
have not yet prescribed relying on the applicability of RMC 7-85, which
states that overpaid income taxes are not covered by the two-year
prescriptive period under the tax Code and that taxpayers may claim
prescriptive period for filing
refund or tax credits for the excess quarterly income tax with the BIR within
for tax refund/credit; BIR 10 years. Court did not agree. RMC 7-85 disregards the two-year
RMC; rulings of first prescriptive period set by law (the NIRC). The RMC contravened a statute
11 PBCOM v. CIR impression of Congress.
FDC and FAI, who had shares in FLI, and entered into various transactions was issued an
assessment for deficiency income tax and DST. The SC held that the instructional letters
and journal and cash vouchers evidencing advances FDC extended to its affiliates
qualified as loan agreements where DST was to be imposed. The CA erred in utilizing a
BIR ruling issued on July 30 1998, to say that the advances were not subject to DST
because it may be invoked only by ASB Development Corporation, the taxpayer who
DST, BIR ruling not apply sought the ruling. The effect of every BIR ruling is valid only if the facts claimed by the
12 BIR v. Filinvest to the case taxpayers are correct.
ABSCBN was engaged in the business of telecasting local as well as foreign films acquired
from foreign corporations not engaged in trade or business within the Philippines. For
this, ABS-CBN paid rentals after withholding income tax of 30% of one-half of the film
rentals. To implement Section 4(b) of the Tax Code, CIR issued General Circular V-334.
ABS-CBN withheld and turned over to the BIR 30% of of the film rentals paid by it to
foreign corporations not engaged in trade in the Philippines. The last year that the
company withheld taxes pursuant to the Circular was in 1968. Later, RA 5431 amended
the Tax Code increasing 30% to 35% and revising the tax basis from such amount
referring to rents, etc. to gross income. On February 8, 1971, the CIR issued Revenue
Memorandum Circular No. 4-71, revoking General Circular No. V-334, and holding that
the latter was "erroneous for lack of legal basis," because "the tax therein prescribed
should be based on gross income without deduction whatever. Based on this, CIR issued
against ABSCBN a letter of assessment and demand requiring them to pay deficiency
withholding income tax on the remitted film rentals for the years 1965 through 1968 and
film royalty as of the end of 1968. ISSUE: Circular retroactive? HELD: Circular has no
retroactive effect if prejudicial to taxpayers. Circular issued only in 1971, or three years
ABSCBN, retroactivity, after 1968, the last year that petitioner had withheld taxes under General Circular No. V-
13 ABSCBN v. CTA circular, prejudicial 334. Petitioner was no longer in a position to withhold taxes due from foreign
 corporations because it had already remitted all film rentals and no longer had any
control over them when the new Circular was issued. Hence, RMC No. 4-71 should not
be given retroactive application.
Burroughs paid the 15% branch profit remittance tax based on the amount of profits
before tax on March 14 1979. Relying on a 1980 BIR ruling, Burroughs claimed a refund
alleging that the tax should be based on profit actually remitted not on total branch
profits. The CIR said it was not entitled to a refund by virtue of a Memo Circular which
repealed the ruling basing the tac on the amount actually applied for by the branch with
branch profit remittance the Central bank. The SC held that the Memo circular issued in 1982 cannot be given
14 CIR v. Burroughs Limited tax; not retroactive retroactive effect as it prejudices the taxpayer.
Alhambra was engaged in the sale of cigarette products.There were 2 conflicting BIR
rulings on the taxable base on which the excise tax was to apply: 1) 1988 Ruling
Alhambra; 2 incongruous excluded VAT from computing 15% excise tax 2) 1991 ruling included it. The SC held that
BIR rulings; VAT not rules and regulations would not have a retroactive effect if it would prejudice the
15 CIR v. CA (Alhambra) included in tax base taxpayer. Alhambra here is in good faith.
Respondent Benguet Corporation is a domestic corporation engaged in mining business,
specifically the exploration, development and operation of mining properties for purposes
of commercial production and the marketing of mine products. Respondent filed an
application for zero-rating of its sales of mine products, which application was duly
approved by the petitioner Commissioner of Internal Revenue.Then Deputy Commissioner
of Internal Revenue Eufracio Santos issued VAT Ruling No. 378-88 and Revenue
Memorandum Circular (RMC) No. 59-88 which declared that the sale of gold to the
Central Bank is considered an export sale and therefore subject to VAT at 0% rate. As a
corollary, and in reliance, of the foregoing issuances, respondent sold gold to the Central
Bank subject to the 0% VAT. During the same period, respondent thus incurred input
taxes attributable to said sales to the Central Bank. Consequently, respondent filed with
the Commissioner of Internal Revenue applications for the issuance of Tax Credit
Certificates for input VAT Credits attributable to its export sales. Subsequently,
Commissioner Jose Ong issued VAT Ruling No. 008-92 declaring and holding that the
sales of gold to the Central Bank are considered domestic sales subject to 10% VAT
instead of 0% VAT as previously held in BIR Issuances from 1998 to 1990. Respondent
was not refunded the said amounts of tax credit claimed. Thus, respondent instituted
consolidated Petitions for Review with the Court of Tax Appeals, praying for the issuance
of "Tax Credit Certificates" for the following input VAT credits attributable to export sales
transacted during the taxable quarters or periods in question. The SC held that there is
no retroactive application and that well-entrenched is the rule that rulings and circulars,
rules and regulations, promulgated by the Commissioner of Internal Revenue, would have
no retroactive application if to so apply them would be prejudicial to the taxpayers. There
CIR rulings and circulars; is no question, therefore, as to the prohibition against the retroactive application of the
16 CIR v. Benguet Corporation Retroactive application revocation, modification or reversal, as the case maybe, of previously established Bureau

VAT Ruling issued by BIR
says PHPI is vat exempt;
subsequently new law was
passed; PHPI was assessed
17 CIR v. Phil Health Care Providers for deficiency taxes
Capital gains tax, revenue
Supreme Transliner v. BPI Family regulation, retroactive
18 Savings Bank application
After Cory Aquino gained
presidency; Tax amnesty;
Issuance by BIR saying
that defendant is liable for
19 CIR v. CA (ROH Auto Products) taxes
20 PBCOM v. CIR same as 11
Revenue measures must
not exceed parameters of
21 Sec of Finance v. La Suerte Cigar Tax Code
on Internal Revenue (BIR) Rulings when the taxpayers interest would be prejudiced
thereby. But even if prejudicial to a taxpayer, retroactive application is still allowed
where: (a) a taxpayer deliberately misstates or omits material facts from his return or any
document required by the BIR; (b) where subsequent facts gathered by the BIR are
materially different from which the ruling is based; and (c) where the taxpayer acted in
bad faith.
Supreme Transliner obtained a loan from BPI with a lot as collateral. For non-payment of
the loan, the mortgage was extrajudicially foreclosed and the property was sold to the
bank as the highest bidder in the public auction. Before the expiration of the one-year
redemption period, the mortgagors notified the bank of their intention to redeem the
property. ISSUE: W/N the foreclosing mortgagee should pay capital gains tax upon
execution of the certificate of sale, and if paid by the mortgagee, and whether the same
should be shouldered by the redemptioner. HELD: NO. RR No. 13-85 (December 12,
1985) provided that every sale or exchange or other disposition of real property classified
as capital asset shall be subject to the final capital gains tax. RMO No. 29-86 (as
amended by RMO No. 16-88 and as further amended by RMO Nos. 27-89 and 6-92)
states that these conditional sales necessarily include mortgage foreclosure sales. RR No.
4-99 (March 16, 1999) further amends RMO No. 6-92 and provides that "in case the
mortgagor exercises his right of redemption within one year from the issuance of the
certificate of sale, no capital gains tax shall be imposed because no capital gains has been
derived by the mortgagor and no sale or transfer of real property was realized." Although
the subject foreclosure sale and redemption took place before the effectivity of RR No. 4-
99, its provisions may be given retroactive effect in this case. The retroactive application
of RR No. 4-99 is more consistent with the policy of aiding the exercise of the right of
redemption.
BIR issued the assailed Revenue Regulations No. 9-2003, Section 2 of which amended
Revenue Regulations No. 1-97, by providing for a periodic review every two years or
earlier of the current net retail prices of new brands of cigars and cigarettes and their
 variants to establish and update their tax classification. Respondents filed a case for
injunction with the trial court assailing the validity of Revenue Regulations No. 9-2003 and
praying for the issuance of a temporary restraining order and/or writ of preliminary
injunction to enjoin the implementation of said regulation insofar as it authorizes the BIR
to update the tax classification of cigarettes registered after January 1, 1997. The
complaint was later amended to include Revenue Regulations No. 22-2003 (implementing
the the revised tax classification). Respondents asserted that Section 145 of the NIRC
does not give the BIR the power to reclassify cigarettes introduced into the market after
January 1, 1997, hence, the reclassification thereof by the BIR constitutes usurpation of
legislative powers. Petitioners, on the other hand, maintained that the assailed revenue
regulations constitute a valid exercise of subordinate legislation having been issued
pursuant to the powers of the Commissioner of Internal Revenue and the Secretary of
Finance. The SC held that the BIR does not have the power to periodically review or re-
determine the current net retail prices of new brands for the purpose of updating their tax
classification pursuant to Revenue Regulations Nos. 9-2003 and 22-2003. This issue has
been settled in the recent case of British American Tobacco v. Camacho where the Court
held, among others, that Revenue Regulations Nos. 9-2003, 22-2003, and Revenue
Memorandum Order No. 6-2003, as pertinent to cigarettes packed by machine, are invalid
insofar as they grant the BIR the power to reclassify or update the classification of new
brands every two years or earlier. Consequently, the upward reclassification of Astro and
Memphis in Annex "A" of Revenue Regulations No. 22-2003 is invalid.