PAWNSHOPS ARE TREATED AS NON-BANK FINANCIAL INTERMEDIARIES FOR PURPOSES OF

TAXATION
H. Tambunting Pawnshop, Inc. v. Commissioner of Internal Revenue
G.R. No. 172394, October 13, 2010
Bersamin, J.

FACTS:
Petitioner H. Tambunting Pawnshop, Inc. (Tambunting) is a domestic corporation duly licensed to engage
in pawnshop business. In 2003, it received an assessment notice from the BIR, demanding the payment of
deficiency VAT and compromise penalty for taxable year 2000.

Tambunting protested the assessment with the respondent Commissioner of Internal Revenue (CIR),
arguing that a pawnshop business was not subject to VAT and compromise penalty. Due to the inaction of
the CIR on the protest, Tambunting filed its petition for review with the CTA Second Division, which later
on dismissed the petition but deleted the amount of compromise penalty.

Tambunting filed a motion for partial reconsideration. Subsequently, it submitted a written manifestation,
attaching a copy of documents evidencing its payment to the BIR of 25% of its VAT liability pursuant to a
settlement agreement.

Upon the denial of its motion for partial reconsideration, Tambunting appealed by petition for review to the
CTA En Banc which, however, affirmed in toto the Decision and Resolution of the CTA Second Division.
The CTA En Banc also denied Tambunting’s motion for reconsideration.

Hence, Tambunting filed a petition for review on certiorari with the SC. Tambunting’s main argument is that
pawnshops are not within the concept of all services and similar services as provided in Section 108 (A) of
the National Internal Revenue Code. Tambunting also argues that the enumeration under Section 108(A)
of the National Internal Revenue Code of services subject to VAT is exclusive.

ISSUE:
Are pawnshops liable for VAT for the taxable year 2000?

HELD:
NO, pawnshops are not liable for VAT for the taxable year 2000.

For purposes of determining their tax liability, pawnshops are treated as non-bank financial intermediaries.
The VAT on non-bank financial intermediaries was first levied under R.A. 7716, or the Extended Value
Added Tax Law (E-VAT Law), which set the effectivity of the VAT to January 1, 1996. However, the
effectivity of the imposition of VAT was deferred by subsequent laws. The last deferment was provided for
by R.A. 9010 which set the effectivity date to January 1, 2003.

Accordingly, the consecutive deferments of the effectivity date of the application of VAT on non-bank
financial intermediaries like pawnshops resulted in their non-liability for VAT during the affected taxable
years.

Therefore, Tambunting is not liable for the VAT deficiency assessment served by the BIR for taxable year
2000.
AVAILING THE OPTION TO CARRY-OVER THE EXCESS TAX PAID BARS A CLAIM FOR TAX
REFUND
Commissioner of Internal Revenue v. PL Management International Philippines, Inc.
G.R. No. 160949, April 4, 2011
Bersamin, J.

FACTS:
In 1997, respondent PL Management International Philippines, Inc. earned an income of P24,000,000.00
from its professional services rendered to UEM-MARA Philippines Corporation (UMPC), from which income
UMPC withheld P1,200,000.00 as the respondent’s withholding agent.

Respondent reported a net loss in its 1997 income tax return (ITR) but expressly signified that it had a
creditable withholding tax for taxable year 1997 to be claimed as tax credit in the succeeding taxable year.
However, in 1998 respondent declared a net loss and was unable to claim the tax credit.

In 2000, respondent filed with petitioner Commissioner of Internal Revenue (CIR) a written claim for refund
of the unutilized creditable withholding tax for taxable year 1997. However, the petitioner did not act on the
claim. Thus, respondent commenced a judicial action in the CTA, but the CTA denied the claim on the
ground of prescription.

On appeal, the CA reversed the CTA’s denial of claim for reasons of equity and directed the CIR to refund
the respondent’s unutilized creditable withholding tax. The CA rejected petitioner’s motion for
reconsideration. Hence, petitioner filed a petition for review on certiorari with the SC arguing that
respondent’s claim for tax refund was barred by prescription as it was filed belatedly.

ISSUE:
May a corporation who previously opted to carry over its creditable withholding tax be allowed to
subsequently refund the same?

HELD:
NO, a corporation who previously opted to carry over its creditable withholding tax may not be allowed to
subsequently refund the same because the two options are alternative and the choice of one precludes the
other.

Under Section 76 of the NIRC of 1997, once the option to carry-over and apply the excess quarterly income
tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such
option shall be considered irrevocable for that taxable period and no application for tax refund or issuance
of a tax credit certificate shall be allowed therefor. Unlike the option for refund of excess income tax, there
is no prescriptive period for the carrying over of the same.

Since the respondent already opted to carry over its unutilized creditable withholding tax to taxable year
1998, the carry-over could no longer be converted into a claim for tax refund because of the irrevocability
rule. However, it may still apply that amount as tax credit in succeeding taxable years until fully exhausted
considering that there was no prescriptive period for the carrying over of the tax credit.

Therefore, respondent cannot refund the P1,200,000.00 unutilized creditable withholding tax.
A TAXPAYER MUST COMPETENTLY ESTABLISH THE FACTUAL AND DOCUMENTARY BASES OF
ITS CLAIM FOR TAX DEDUCTION
H. Tambunting Pawnshop, Inc. v. Commissioner of Internal Revenue
G.R. No. 173373, July 29, 2013
Bersamin, J.

FACTS:
Petitioner H. Tambunting Pawnshop, Inc. (Tambunting) is a domestic corporation duly licensed to engage
in pawnshop business. In 2000, the BIR issued assessment notices and demand letters for deficiency
percentage tax, income tax and compromise penalties for taxable year 1997. Tambunting instituted an
administrative protest.

Due to the inaction of the Commissioner of Internal Revenue (CIR) on the protest, Tambunting brought a
petition for review in the CTA First Division, which then ordered Tambunting to pay the deficiency income
tax plus delinquency interest. Tambunting filed a motion for reconsideration with the CTA First Division but
the same was denied.

The CTA En Banc denied Tambunting’s petition for review and also the latter’s subsequent motion for
reconsideration. Hence, Tambuting filed a petition for review on certiorari to the SC.

Tambunting argued that it proved its entitlement to the deductions through all the documentary and
testimonial evidence presented in court. To prove the losses on auction sale claimed as deduction,
petitioner submitted in evidence its "Rematado" and "Subasta" books and the "Schedule of Losses on
Auction Sale". Tambunting also submitted cash vouchers to prove its management and professional fees.
As to losses due to fire and theft, Tambunting submitted certifications from the Bureau of Fire Protection
and Police Station in Malolos, accounting entry for the losses, and the list of properties lost.

ISSUE:
Is the petitioner entitled to its claim for deductions?

HELD:
No, the petitioner is not entitled to its claim for deductions.

Tax deductions, being in the nature of tax exemptions, are to be construed in strictissimi juris against the
taxpayer. When a taxpayer claims a deduction, he must point to some specific provision of the statute in
which that deduction is authorized and must be able to prove that he is entitled to the deduction which the
law allows. A mere averment that the taxpayer has incurred a loss does not automatically warrant a
deduction from its gross income.

Tambunting did not discharge its burden of substantiating its claim for deductions due to the inadequacy of
its documentary support of its claim. Tambunting did not properly prove that it had incurred losses. The
contents in the "Rematado" and "Subasta" books do not reflect the true amounts of the total capital and the
auction sale, respectively. The management and professional fees were supported merely by cash
vouchers. The proper substantiation requirement for an expense is the official receipt or invoice. As to
losses due to fire and theft, Tambunting failed to submit the sworn declaration of loss as mandated by
R.R.12-77.

Therefore, Tambunting did not properly prove that it is entitled to its claim for tax deductions.
DOUBLE TAXATION
Nursery Care Corporation, et al. vs. Anthony Acevedo and City of Manila
G.R. No. 180651, July 30, 2014
Bersamin, J.

FACTS:
The City of Manila assessed and collected taxes from petitioners pursuant to Section 15 (Tax on
Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code of Manila. It
also imposed additional taxes pursuant to Section 21 (Tax on Business Subject to the Excise, Value-Added
or Percentage Taxes) of the same law as a condition for renewal of their business licenses.

Petitioners paid under protest the tax assessed under Section 21. The City Treasurer denied petitioners’
request for tax credit or refund of the local business taxes paid under protest as well as their motion for
reconsideration.

Thereafter, petitioners filed their respective petitions for certiorari in the RTC. They argued that the
enforcement of Section 21 of the Revenue Code of Manila constitutes double taxation in view of the local
business taxes imposed under Sections 15 and 17. The RTC ruled that there is no double taxation as the
taxes are levied against different tax objects or subject matters.

The CA denied the petitioners’ appeal for lack of jurisdiction. The petitioners moved for reconsideration but
the CA denied their motion. Hence, petitioners appealed to the SC by petition for review on certiorari. They
reiterated their argument in the RTC. The respondents countered that that there is no double taxation since
the taxes imposed pursuant to Section 21 were in the concept of indirect taxes.

ISSUE:
Does the imposition of taxes pursuant to Section 21 of the Revenue Code of Manila constituted double
taxation?

HELD:
Yes, the imposition of the taxes pursuant to Section 21 of the Revenue Code of Manila constituted double
taxation.

There is double taxation when the same taxpayer is taxed twice when he should be taxed only once for the
same purpose by the same taxing authority within the same jurisdiction during the same taxing period, and
the taxes are of the same kind or character.

Here, all the elements of double taxation concurred. Section 21 imposed the tax on a person who sold
goods and services in the course of trade or business based on a certain percentage of his gross sales or
receipts, while Section 15 and Section 17 imposed the tax on a person who sold goods and services in the
course of trade or business but only identified such person with particularity. Thus, all the taxes on the
privilege of doing business in the City of Manila were imposed on the same subject matter and for the same
purpose. Moreover, the taxes were imposed by the same taxing authority (the City of Manila) and within
the same jurisdiction in the same taxing period (i.e., per calendar year). Lastly, the taxes were all in the
nature of local business taxes.

Therefore, the imposition of taxes pursuant to Section 21 of the Revenue Code of Manila constituted double
taxation.
THE BUREAU OF CUSTOMS HAS EXLUSIVE JURISDICTION OVER SEIZURE CASES ALTHOUGH
THE ARTICLES ARE WITHIN THE FREEPORT ZONE.
Agriex Co., Ltd. v. Hon. Titus B. Villanueva, et. al.
G.R. No. 158150; September 10, 2014
Bersamin, J.:

FACTS:
Petitioner Agriex Co., Ltd., a foreign corporation, entered into a contract of sale with PT. Gloria Mitra of
Indonesia and R&C Agro Trade of Cebu City for 180,000 and 20,000 bags of Thai white rice, respectively.
A vessel was chartered to transport the cargo to the Subic Bay Freeport (SBF) for transhipment to Fiji
Islands and Indonesia, and Cebu City.

The vessel arrived at the SBF. Despite clearance from the Bureau of Customs, the vessel did not set sail
to its foreign port destination. Thereafter, the Collector of Customs issued a Warrant of Seizure and
Detention (WSD) directed against the rice shipments and the vessel on the ground that the consignees of
the 180,000 bags of rice were non-existent and the consignee in the Fiji Islands denied being involved in
the importation of rice.

Upon petitioner’s motion to quash, the WSD issued against the 20,000 bags of rice and the vessel were
lifted. However, with respect to the 180,000 bags of rice, the Collector of Customs, as approved by the
Commissioner of Customs, ordered their forfeiture in favor of the Government.

Petitioner filed a petition for certiorari and prohibition in the CA alleging grave abuse of discretion on the
part of the respondents on the ground that they had no jurisdiction over the 180,000 bags of rice. The CA
denied the petition and subsequently, petitioner’s motion for reconsideration.

Hence, petitioner filed a petition for review on certiorari contending, among others, that the WSD and the
seizure proceedings is null and void for lack of jurisdiction of the Bureau of Customs over petitioner’s rice
shipment which had entered the SBF only for transhipment to other countries.

ISSUE:
Does the Bureau of Customs has the exclusive original jurisdiction over seizure and forfeiture cases
involving articles within the Freeport Zone?

HELD:
Yes, the Bureau of Customs has exclusive original jurisdiction over seizure and forfeiture cases involving
articles within the Freeport Zone.

The treatment of the Subic Bay Freeport as a separate customs territory cannot completely divest the
Government of its right to intervene in the operations and management of the Subic Bay Freeport,
especially when patent violations of the customs and tax laws are discovered. The Court has already
recognized the exclusive jurisdiction of the Bureau of Customs and its officials over seizure cases although
the articles were within the Freeport zone.

Therefore, the Bureau of Customs has exclusive jurisdiction over the seizure proceedings although the
articles were within the Freeport Zone.
EXCISE TAXES ARE CONSIDERED AS A KIND OF INDIRECT TAX, THE LIABILITY FOR THE
PAYMENT OF WHICH MAY FALL ON A PERSON OTHER THAN WHOEVER ACTUALLY BEARS THE
BURDEN OF THE TAX
Chevron Philippines Inc. v. Commissioner of Internal Revenue
G.R. No. 210836; September 1, 2105
Bersamin, J.:

FACTS:
Petitioner Chevron Philippines, Inc. sold and delivered petroleum products to Clark Development
Corporation (CDC), an entity exempt from direct and indirect taxes. Chevron did not pass on to CDC the
excise taxes on the importation of petroleum products.

Hence, Chevron filed an administrative claim for tax refund or the issuance of a tax credit certificate with
the Commissioner of Internal Revenue (CIR). The CIR did not act on the administrative claim causing
Chevron to file a judicial claim to the CTA by petition for review.

The CTA in Division denied the petition and later on also denied Chevron’s Motion for Reconsideration.
Chevron appealed to the CTA En Banc which ruled that petitioner is not entitled to any refund or issuance
of tax credit certificate on excise taxes paid on its importation of petroleum products sold to CDC. The CTA
En Banc denied Chevron’s motion for reconsideration.

The SC denied Chevron’s petition for review on certiorari. Hence, Chevron filed a Motion for
Reconsideration, submitting that it was entitled to the tax refund or tax credit because, the ruling in Pilipinas
Shell, on which the CTA En Banc had based its denial of the claim of Chevron, was reconsidered by the
Court’s First Division.

ISSUE:
Whether or not Chevron Philippines is entitled to the tax refund or tax credit for the excise taxes paid on
the importation of petroleum products sold to CDC.

HELD:
Yes, Chevron is entitled to tax refund or tax credit for the excise taxes on the importation of petroleum
products sold to CDC, an entity exempt from direct and indirect taxes.

Pursuant to Section 135 (c) of the NIRC, petroleum products sold to entities that are exempt from direct
and indirect taxes are exempt from excise tax. Excise taxes are considered as a kind of indirect tax, the
liability for the payment of which may fall on a person other than whoever actually bears the burden of the
tax. In cases involving excise tax exemptions on petroleum products, it is the statutory taxpayer, not the
party who only bears the economic burden, who is entitled to claim the tax refund or tax credit. However,
such rule does not apply where the law grants the party to whom the economic burden of the tax is shifted
by virtue of an exemption from both direct and indirect taxes. In which case, such party must be allowed to
claim the tax refund or tax credit.

Chevron’s liability for the payment of excise tax, as the statutory taxpayer, accrued immediately upon its
importation of the petroleum products. Hence, the general rule applies here, since Chevron did not pass on
to CDC the excise taxes paid on the importation of the petroleum products.

Therefore, Chevron is entitled to the refund or credit of the excise taxes erroneously paid on the importation
of the petroleum products sold to CDC.
INTENTIONAL OR DELIBERATE PARTICIPATION IN ANY MISDECLARATION OR
UNDERDECLARATION CANNOT BE PRESUMED
Alvin Mercado v. People of the Philippines
G.R. No. 167510; July 8, 2015
Bersamin, J.:

FACTS:
A shipment from Bangkok, Thailand which was declared to be consisting of 162 packages of assorted
men’s and ladies’ wearing apparel, textile and accessories, and tagged as personal effects of no
commercial value was found, upon examination, to contain a general merchandise in commercial quantities.
The description was based on the declaration made in the Permit to Deliver and in the Informal Import
Declaration and Entry (IIDE) which were filed by Consular Cargo Services as broker of the petitioner. The
shipment was consigned to Al-Mer Cargo Management, an entity owned by Alvin Mercado.

Due to the false declaration, the RTC found petitioner guilty of violating Section 3602 in relation to Section
2503 of the Tariff and Customs Code of the Philippines (TCCP).

In his defense, petitioner contended that it was Consular Cargo Services, and not him, which prepared and
made the IIDE as a broker and that he relied in good faith on the entry made by the broker since it was in
accordance with the shipping documents made by the supplier from the country of export.

On appeal, the CA affirmed the petitioner’s conviction.

ISSUE:
Whether or not petitioner’s guilt for violation of the TCCP was proved beyond reasonable doubt.

HELD:
No, petitioner’s guilt for violation of the TCCP was not proved beyond reasonable doubt.

Section 3602 of the TCCP provides the following elements in order to convict the petitioner of making an
entry by means of false and fraudulent invoice and declaration:
a. there must be an entry of imported or exported articles;
b. the entry was made by means of any false or fraudulent invoice, declaration, affidavit, letter, or paper;
and
c. there must be intent to avoid payment of taxes.

The import documents and the imported goods passed through the customs authorities, thereby satisfying
the first element. However, the last two elements were not established beyond reasonable doubt and stood
unrebutted by the prosecution. The petitioner’s assertion that he had relied in good faith on the declarations
made by his broker, who had based them on the information provided in the shipping documents by the
foreign exporter, stood unrebutted by the Prosecution. If that was so, his intentional or deliberate
participation in any misdeclaration or underdeclaration could not be properly presumed. Even assuming
that the petitioner was involved in the preparation of the import documents, a clear showing of his intent to
falsify the same in order to avoid the payment of duties and taxes would still be wanting.

Therefore, petitioner’s guilt for violation of the TCCP was not proved beyond reasonable doubt.
REQUIREMENTS FOR ENTITLEMENT OF A CORPORATE TAXPAYER FOR A REFUND OR THE
ISSUANCE OF TAX CREDIT CERTIFICATE INVOLVING EXCESS WITHHOLDING TAXES
Republic of the Philippines v. Team (Phils.) Energy Corporation
G.R. No. 188016; January 14, 2015
Bersamin, J.:

FACTS:
Respondent, formerly Mirant (Philippines) Energy Corporation, is a domestic corporation engaged in the
business of supplying and delivering electricity. Its Annual Income Tax Return (ITR) for the calendar years
2002 and 2003 showed that there were excess creditable withholding taxes. Respondent indicated therein
its option to refund the tax overpayments.

In 2005, the respondent filed an administrative claim for refund or the issuance of tax credit certificate with
the BIR. Due to the inaction of the BIR, the respondent filed a petition for review with the CTA. The CTA in
Division granted the petition and ordered the BIR to refund the excess taxes paid by the respondent.

The petitioner filed a petition for review before the CTA En Banc on the ground that there was violation on
the part of the respondent to comply with the requirements of Sec. 76 of the NIRC. The CTA En Banc
affirmed the decision of the CTA in Division. The CTA En Banc ruled that petitioner belatedly raised the
issue of non-compliance with Sec.76 of the NIRC and that respondent proved its entitlement to the refund.

Aggrieved, the petitioner filed an appeal by petition for review on certiorari with the SC. The petitioner
asserts the necessity of submission of the quarterly return of the respondent to prove its entitlement to the
refund. The respondent however, countered that the annual ITR properly established that the excess tax
credits were not carried over to the succeeding years.

ISSUE:
Whether or not the respondent has proved its entitlement to the refund of excess withholding tax

HELD:
Yes, the respondent has proved its entitlement to the refund of excess withholding tax.

The requirements for entitlement of a corporate taxpayer for a refund or the issuance of tax credit certificate
involving excess withholding taxes are as follows: a.That the claim for refund was filed within the two-year
reglementary period pursuant to Sec. 229 of the NIRC; b. When it is shown on the ITR that the income
payment received is being declared part of the taxpayer’s gross income; and c. When the fact of withholding
is established by a copy of the withholding tax statement, duly issued by the payor to the payee, showing
the amount paid and income tax withheld from that amount.

Here, the respondent satisfied the said requirements. Furthermore, the assertion of petitioner that the
respondent should have submitted its quarterly returns to show that it did not carry-over the excess
withholding tax to the succeeding quarter is untenable. When the respondent was able to establish prima
facie its right to the refund by testimonial and object evidence, the petitioner should have presented rebuttal
evidence to shift the burden of evidence back to the respondent.
Indeed, the petitioner ought to have its own copies of the respondent’s quarterly returns on file, on the basis
of which it could rebut the respondent’s claim that it did not carry over its unutilized and excess creditable
withholding taxes for the immediately succeeding quarters.

Therefore, respondent is entitled to a refund of its excess withholding taxes.

NO VAT SHALL BE IMPOSED TO FORM PART OF THE COST OF GOODS DESTINED FOR
CONSUMPTION OUTSIDE OF THE TERRITORIAL BORDER OF THE TAXING AUTHORITY
Coral Bay Nickel v. Commissioner of Internal Revenue
G.R. No. 190506, June 13, 2006
Bersamin, J.

FACTS:
Petitioner, a VAT registered entity, is a domestic corporation engaged in the manufacture of nickel and/or
cobalt mixed sulphide. It is duly registered with the Philippine Economic Zone Authority (PEZA) as an
Ecozone Export Enterprise. Petitioner filed its Amended VAT Return declaring unutilized input tax from its
domestic purchases for the third and fourth quarters of 2002.

In 2004, petitioner filed with the BIR its Application for Tax Credits/Refund together with supporting
documents. Due to the alleged inaction of the respondent Commissioner of Internal Revenue (CIR),
petitioner elevated its claim to the CTA by petition for review.

The CTA in Division denied the petitioner's claim for refund on the ground that the petitioner was not entitled
to the refund of alleged unutilized input VAT following Sec 106(A)(2)(a)(5) of the 1997 NIRC, as amended,
in relation to Art 77(2) of the Omnibus Investment Code and conformably with the Cross Border Doctrine.

After the CTA in Division denied its Motion for Reconsideration, the petitioner elevated the matter to the
CTA En Banc which also denied the petition. The CTA En Banc also denied the petitioner's Motion for
Reconsideration.

Hence, this appeal by petition for review on certiorari with the SC whereby the petitioner contends that it is
entitled to refund because the unutilized input VAT subject of its claim was incurred during the period when
it was not yet registered with the PEZA.

ISSUE:
Was the petitioner, an entity located within an ECOZONE, entitled to the refund of its unutilized input taxes
incurred before it became a PEZA registered entity?

HELD:
No, petitioner is not entitled to the refund of its unutilized input taxes.

An ECOZONE is a foreign territory separate and distinct from the customs territory. Accordingly, the sales
made by suppliers from a customs territory to a purchaser located within an ECOZONE will be considered
as exportations. Following the Philippine VAT system's adherence to the Cross Border Doctrine and
Destination Principle, the VAT implications are that "no VAT shall be imposed to form part of the cost of
goods destined for consumption outside of the territorial border of the taxing authority"

Petitioner's plant site was specifically located inside the Rio Tuba Export Processing Zone, an ECOZONE.
As such, the purchases of goods and services by the petitioner that were destined for consumption within
the ECOZONE should be free of VAT. Verily, if the petitioner had paid the input VAT, the petitioner's proper
recourse was not against the Government but against the seller who had shifted to it the output VAT.

Therefore, petitioner is not entitled to the refund of its unutilized input taxes
A VAT INVOICE IS THE SELLER'S BEST PROOF OF THE SALE OF GOODS OR SERVICES TO THE
BUYER, WHILE A VAT RECEIPT IS THE BUYER'S BEST EVIDENCE OF THE PAYMENT OF GOODS
OR SERVICES RECEIVED FROM THE SELLER.
Takenaka Corporation v. Commissioner of Internal Revenue
G.R. No. 193321, October 19, 2016
Bersamin, J.

FACTS:
Petitioner Takenaka, as a subcontractor, entered into an On-Shore Construction Contract with the
Philippine Air Terminal Co., Inc. (PIATCO), a corporation duly registered with the Philippine Economic Zone
Authority (PEZA) as an Ecozone Developer/Operator, for the purpose of constructing the Ninoy Aquino
Terminal III.

Petitioner filed its claim for tax refund covering the taxable year of 2002 on the basis of VAT Ruling 011-03
issued by the BIR, which states that the sales of goods and services rendered by Takenaka to PIATCO are
subject to zero percent (0%) VAT and requires no prior approval for zero rating.

For failure of the BIR to act on its claim, petitioner filed a Petition for Review with the CTA. The CTA in
Division rendered a decision partly granting the Petition for Review. Not satisfied, petitioner filed a "Motion
for Reconsideration". The CTA in Division granted petitioner’s motion.

Respondent Commissioner of Internal Revenue (CIR) filed a petition for review with the CTA En Banc which
granted the said petition. The CTA En Banc also denied the petitioner's motion for reconsideration.

Hence, this petition for review on certiorari. Petitioner avers that the sales invoices it presented were
sufficient evidence to prove its zero-rated sale of services to PIATCO.

ISSUE:
Whether or not petitioner is entitled to claim the refund of its excess input VAT

HELD:
No, petitioner is not entitled to claim the refund of its excess input VAT.

Section 113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter or exchange
of goods or properties, while a VAT official receipt properly pertains to every lease of goods or properties;
as well as to every sale, barter or exchange of services. As evidence of an administrative claim for tax
refund or tax credit, there is a certain distinction between a receipt and an invoice. A VAT invoice is the
seller's best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer's best
evidence of the payment of goods or services received from the seller. A VAT invoice and a VAT receipt
should not be confused and made to refer to one and the same thing. Certainly, neither does the law intend
the two to be used alternatively. A VAT invoice is the seller’s best proof of the sale of goods or services to
the buyer while a VAT receipt is the buyer’s best evidence of the payment of goods or services received
from the seller.

INVOICE IS THE SELLER'S BEST PROOF OF THE SALE OF GOODS OR SERVICES TO THE BUYER,
WHILE A VAT RECEIPT IS THE BUYER'S BEST EVIDENCE OF THE PAYMENT OF GOODS OR
SERVICES RECEIVED FROM THE SELLER.

The sales invoices presented by Takenaka were insufficient as evidence to prove its zero-rated sale of
services to PIATCO. The petitioner's claim for refund must be denied for its failure to comply with the
substantiation requirements for administrative claims for tax refund or tax credit.

Therefore, petitioner is not entitled to claim the refund of its excess input VAT.
INTERBANK CALL LOANS, ALTHOUGH NOT CONSIDERED AS DEPOSIT SUBSTITUTES ARE NOT
SUBJECT TO DOCUMENTARY STAMP TAXES
COMMISSIONER OF INTERNAL REVENUE vs. PHILIPPINE NATIONAL BANK
G.R. No. 195147, July 11, 2016
BERSAMIN, J.

FACTS:
Respondent Philippine National Bank (PNB) received a preliminary assessment notice from the BIR which
indicated that PNB had deficiency payments of documentary stamp taxes (DST) arising from PNB's
interbank call loans and special savings account, withholding taxes on compensation, and expanded
withholding taxes for taxable year 1997.

The petitioner Commissioner of Internal Revenue (CIR) issued a formal assessment notice and a formal
letter of demand requiring PNB to pay the said deficiency taxes. PNB filed a protest for the assessment of
deficiency DST but it was denied by petitioner.

PNB then filed a petition for review in the CTA. The CTA First Division cancelled the assessment for
deficiency DST on PNB’s Interbank Call Loans but affirmed the deficiency on petitioner's Special Savings
Account. Both parties moved for partial reconsideration. The CTA in Division denied the petitioner's motion
for partial reconsideration.

The petitioner then appealed to the CTA En Banc which affirmed the cancellation of the assessment for
DST on PNB's Interbank Call Loans. The petitioner sought reconsideration, but the CTA En Banc denied
the motion. Hence, petitioner filed an appeal by petition for review on certiorari with the SC.

The petitioner claims that while interbank call loans were not considered as deposit substitute debt
instruments, PNB's interbank call loans were included in the concept of loan agreements; hence, the
interbank call loans were subject to DST.

ISSUE:
Whether or not interbank call loans are subject to DST

HELD:
No, interbank call loans are not subject to DST.

For taxation purposes interbank call loans are not considered as deposit substitutes by express provision
of Section 20(y) of the 1977 NIRC. Further, interbank call loans, although not considered as deposit
substitutes, are not expressly included among the taxable instruments listed in Section 180; hence, they
may not be held as taxable.

The maturity of PNB's interbank call loans was irrelevant in determining its DST liability for taxable year
1997. The five-day maturity of interbank call loans came to be introduced only by Section 22(y) of the NIRC
of 1997 which became effective on January 1, 1998. The provisions of the 1997 NIRC cannot be given
retrospective effect to the prejudice of PNB. This is because tax laws are prospective in application, unless
their retroactive application is expressly provided. Moreover, PNB's interbank call loans does not fall under
the definition of a loan agreement. Even if it does, the DST liability under Section 180 of 1977 NIRC will
only attach if the loan agreement was signed abroad but the object of the contract is located or used in the
Philippines, which was not the case in regard to PNB's interbank call loans.

Therefore, the interbank call loans are not subject to DST.

THE POWER TO TAX IS NOT THE POWER TO DESTROY
TRIDHARMA MARKETING CORPORATION vs COURT OF TAX APPEALS
G.R. No. 215950, June 20, 2016
BERSAMIN, J.

FACTS:
Petitioner Tridharma Marketing Corporation received a Preliminary Assessment Notice (PAN) from BIR
assessing it with various deficiency taxes. Petitioner received a Final Decision on Disputed Assessment. It
filed with the Commissioner of Internal Revenue (CIR) a protest through a Request for
Reconsideration. However, the CIR denied the petitioner’s request for reconsideration.

Meanwhile, petitioner paid the assessments corresponding to the WTC, DST and EWT deficiency
assessments and offered to compromise the alleged deficiency assessments on IT and VAT. The petitioner
appealed the CIR's decision to the CTA via a Petition for Review with Motion to Suspend Collection of Tax.

The CTA in Division granted the petitioner’s motion taking into consideration the petitioner's Financial
Statements. However, the assailed resolution granting the petitioner’s motion required the petitioner to give
a surety bond equivalent to 150% of the assessment. The petitioner filed a motion for reconsideration for
the reduction of the bond. The CTA in Division reduced the surety bond to an amount equivalent of the
BIR's deficiency assessment for IT and VAT.

Hence, petitioner filed a special civil action for certiorari contending that the required surety bond greatly
exceeds its net worth and makes it legally impossible to procure the bond from bonding companies that are
limited in their risk assumptions.

ISSUE:
Did the CTA in Division commit grave abuse of discretion?

HELD:
Yes, the CTA in Division gravely abused its discretion.

Under Section 11 of R.A. No. 1125, the CTA may order the suspension of the collection of taxes provided
that the taxpayer either: (1) deposits the amount claimed; or (2) files a surety bond for not more than double
the amount.

The surety bond imposed by the CTA was within the parameters delineated in Section 11 of R.A. 1125, as
amended. However, the CTA in Division gravely abused its discretion under Section 11 because it fixed
the amount of the bond at nearly five times the net worth of the petitioner without conducting a preliminary
hearing to ascertain whether there were grounds to suspend the collection of the deficiency assessment
on the ground that such collection would jeopardize the interests of the taxpayer. Simply prescribing such
high amount of the bond like the initial 150% of the deficiency assessment or later on even reducing the
amount of the bond to equal the deficiency assessment would practically deny to the petitioner the
meaningful opportunity to contest the validity of the assessments, and would likely even impoverish it as to
force it out of business. At this juncture, it becomes imperative to reiterate the principle that the power to
tax is not the power to destroy.

Therefore, the CTA in Division gravely abused its discretion.

PD 1869 GRANTS PAGCOR EXEMPTION FROM THE PAYMENT OF TAXES EXCEPT FRANCHISE
TAX; PAGCOR'S LIABILITY AS A WITHHOLDING AGENT IS NOT COVERED BY THE TAX
EXEMPTIONS UNDER ITS CHARTER
Commissioner of Internal Revenue v. Secretary of Justice, et. al
G.R. No. 177387, November 09, 2016
BERSAMIN, J.:

FACTS:
Respondent Philippine Amusement and Gaming Corporation (PAGCOR) has operated under a legislative
franchise granted by PD No. 1869. Section 13(2) of the said law provides that, no tax of any kind or form,
as well as fees, charges or levies of whatever nature, whether national or local, shall be assessed and
collected from PAGCOR, except a 5% Franchise Tax of the gross revenue or earnings derived by the
PAGCOR from its operation.

The BIR issued several assessments against PAGCOR for alleged deficiency VAT, final withholding tax on
fringe benefits, and expanded withholding tax. PAGCOR filed several letter-protest with the BIR against
several assessments made by the latter. However, the CIR did not act upon said letter-protest. Hence,
PAGCOR file an appeal with the Secretary of Justice.

The Secretary of Justice declared PAGCOR exempt from the payment of all taxes except the 5% franchise
tax. The Secretary of Justice also denied the CIR’s motion for reconsideration.

Hence, this special civil action for certiorari. The CIR insists that R.A. No. 7716 (E-VAT Law) has expressly
repealed, amended, or withdrawn the 5% franchise tax provision in PAGCOR's Charter; hence, PAGCOR
was liable for the 10% VAT. Further, the CIR contends that PAGCOR as withholding agent is liable to
withhold and remit fringe benefits tax, final withholding tax and expanded withholding tax.

ISSUES:
(1) Whether or not PAGCOR is liable for the payment of VAT? and
(2) Whether or not PAGCOR is liable for the payment of final withholding tax on fringe benefits?

HELD:
(1) No, PAGCOR is exempt from payment of VAT

P.D. 1869, the charter creating PAGCOR, grants the latter an exemption from the payment of taxes. A
close scrutiny of the Section 13 of the said law clearly gives PAGCOR a blanket exemption to taxes with
no distinction on whether the taxes are direct or indirect. Moreover, R.A. No. 7716 does not specifically
exclude PAGCOR's exemption under P.D. No. 1869 from the grant of exemptions from VAT.

Therefore, PAGCOR is exempt from payment of VAT

(2) Yes, PAGCOR is liable for the payment of final withholding tax on fringe benefits

FBT is treated as a final income tax on the employee that shall be withheld and paid by the employer on a
calendar quarterly basis. As such, PAGCOR is a mere withholding agent inasmuch as the FBT is imposed
on PAGCOR's employees who receive the fringe benefit. PAGCOR's liability as a withholding agent is not
covered by the tax exemptions under its Charter.

In the present case, the car plan extended by PAGCOR to its qualified officers is evidently considered a
fringe benefit. To avoid the imposition of the FBT on the benefit received by the employee, and,
consequently, to avoid the withholding of the payment thereof by the employer, PAGCOR must sufficiently
establish that the fringe benefit is required by the nature of, or is necessary to the trade, business or
profession of the employer, or when the fringe benefit is for the convenience or advantage of the employer.
The records are lacking in proof as to whether such benefit granted to PAGCOR's officers were, in fact,
necessary for PAGCOR's business or for its convenience and advantage. Accordingly, PAGCOR should
have withheld the FBT from the officers who have availed themselves of the benefits of the car plan and
remitted the same to the BIR.

Therefore, PAGCOR is liable for the payment of final withholding tax on fringe benefits.
THE TAXPAYER SHOULD ADMINISTRATIVELY PROTEST THE ASSESSMENT TO THE CIR BEFORE
GOING TO THE COURT

Demetrio R. Alcantara v. Republic of the Philippines

G.R. No. 192536, March 15, 2017
BERSAMIN, J:

FACTS:
Petitioner Demetrio R. Alcantara filed his income tax returns for the years 1982 and 1983. On 1987, the
Assistant Regional Director wrote appellant informing him that there was a deficiency due to him, however,
there was no response. In 1988, the BIR issued two (2) demand letters to appellant but still there was no
response.

In 1991, petitioner’s real property was levied to satisfy his deficiency taxes, including surcharge and interest.
The subject property was declared forfeited to the Government of the Republic of the Philippines. Petitioner
failed to redeem the property during the redemption period. Hence, a new title was issued in the name of
the Republic of the Philippines. Subsequently, the subject property was sold to Maximo Lagahit.

Petitioner instituted a complaint praying for the reconveyance of the subject property to him. He assails the
validity of the seizure and forfeiture of the subject property. The RTC dismissed the complaint, holding that
the respondents could not be faulted for Alcantara’s failure to receive the assessment.

The CA dismissed the appeal on the ground that the Tax Code mandated that the taxpayer should
administratively protest the assessment with the Commissioner of Internal Revenue before going to court,
but he did not do so. The CA observed that even assuming that the RTC had jurisdiction over the complaint,
the CA did not have jurisdiction over the appeal because it was the Court of Tax Appeals (CTA) that had
the authority to entertain the same as provided for by Republic Act 1125.

Petitioner insists on the competence of the RTC to take cognizance of his complaint. He insists that his
complaint is one for the declaration of the nullity of TCTs issued in favor of the Republic and Lagahit and
for the reconveyance of the property. Hence, the CTA had no jurisdiction over the appeal. Further, he
argues that resort to administrative remedies was futile because he could not have sought reconsideration
or filed a claim for refund due to his being then out of the country.

ISSUE:
Whether or not the RTC had jurisdiction to try and decide petitioner’s complaint?; and

HELD:

No, RTC had no jurisdiction to try and decide petitioner’s complaint.

Section 229 of Presidential Decree (P.D.) No. 1158, the law in effect at the time of the disputed assessment,
states, that prior resort to the administrative remedies was necessary; otherwise, the assessment would
attain finality. Section 230 of the same law allowed the taxpayer to file his claim for refund for the
erroneously or illegally paid taxes. In this regard, such claim for refund was also a prerequisite before any
resort to the courts could be made to recover the erroneously or illegally paid taxes

Based on the allegations in the complaint, despite assailing the supposedly illegal confiscation of
petitioner’s property, petitioner was really challenging the assessment and collection of the taxes made
against him. As such, the complaint concerned the validity of the assessment and the eventual collection
of taxes by the BIR. Hence, the remedies available to petitioner were those in Section 229 and 230 of
PD.1158.

However, petitioner immediately invoked the authority of the courts to protect his rights instead of first going
to the Commissioner of Internal Revenue for redress of his concerns about the assessment and collection
of taxes. His judicial recourse thus suffered from fatal prematurity because his doing so rendered the
assessment final. Even assuming that he had not received the assessment, there was greater reason for
him to have first resorted to the CIR for the reconsideration of the assessment before it attained finality.

Therefore, the RTC had no jurisdiction to try and decide petitioner’s complaint.