REMEDIES

1. G.R. No. 205543 June 30, 2014

SAN ROQUE POWER CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

Petitioner entered into a Power Purchase Agreement (PPA) with the National Power Corporation (NPC)
to develop the hydro potential of the Lower Agno River, and to be able to generate additional power
and energy for the Luzon Power Grid, by developing and operating the San Roque Multipurpose Project.

The PPA provides that petitioner shall be responsible for the design, construction, installation,
completion and testing and commissioning of the Power Station and it shall operate and maintain the
same, subject to the instructions of the NPC. During the cooperation period of 25 years commencing
from the completion date of the Power Station, the NPC shall purchase all the electricity generated by
the Power Plant.

Because of the exclusive nature of the PPA between petitioner and the NPC, petitioner applied for and
was granted five Certificates of Zero Rate by the BIR. The zero-rated status of petitioner commenced
on 27 September 1998 and continued throughout the year 2002.

For the period January to December 2002, petitioner filed with the respondent its Monthly VAT
Declarations and Quarterly VAT Returns. Its Quarterly VAT Returns showed excess input VAT payments
on account of its importation and domestic purchases of goods and services.

Petitioner filed with the BIR four separate administrative claims for refund of Unutilized Input VAT paid
for the period January to March 2002, April to June 2002, July to September 2002, and October to
December 2002, respectively.

Respondent failed to act on the request for tax refund or credit of petitioner, which prompted the latter
to file with the CTA in Division, a Petition for Review before it could be barred by the two-year
prescriptive period within which to file its claim. Petitioner sought the refund of the amount
of P249,397,620.18 representing its unutilized excess VAT on its importation and local purchases of
various goods and services for the year 2002.

ISSUE:

Whether or not petitioner may claim a tax refund or credit for creditable input tax attributable
to zero-rated or effectively zero-rated sales pursuant to Section 112(A) of the NIRC or for input taxes
paid on capital goods as provided under Section 112(B) of the NIRC .
HELD:

The Court finds that petitioner’s claim for refund or credit is justified under Section 112(A) of the NIRC.

To claim refund or tax credit under Section 112(A), petitioner must comply with the following criteria:

(1) the taxpayer is VAT registered;

(2) the taxpayer is engaged in zero-rated or effectively zero-rated sales;

(3) the input taxes are due or paid;

(4) the input taxes are not transitional input taxes;

(5) the input taxes have not been applied against output taxes during and in the succeeding quarters;

(6) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales;

(7) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable
foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and
regulations;

(8) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the
input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be
proportionately allocated on the basis of sales volume; and

(9) the claim is filed within two years after the close of the taxable quarter when such sales were made.

Based on the evidence presented, petitioner complied with the abovementioned requirements.

Firstly, petitioner had adequately proved that it is a VAT registered taxpayer when it presented
Certificate of Registration No. OCN-98-006-007394

Secondly, it is unquestioned that petitioner is engaged in providing electricity for NPC, an activity which
is subject to zero rate, under Section 108(B)(3) of the NIRC.

Thirdly, petitioner offered as evidence suppliers’ VAT invoices or official receipts, as well as Import
Entries and Internal Revenue Declarations.

Fourthly, the input taxes claimed, which consisted of local purchases and importations made in 2002,
are not transitional input taxes, which Section 111 of the NIRC defines as input taxes allowed on the
beginning inventory of goods, materials and supplies.

Fifthly, the audit report of Aguilar affirms that the input VAT being claimed for tax refund or credit is net
of the input VAT that was already offset against output VAT amounting to P26,247.27 for the first
quarter of 2002 and P34,996.36 for the fourth quarter of 2002 as reflected in the Quarterly VAT Returns.
Sixth, In granting the tax benefit to VAT-registered zero-rated or effectively zero-rated taxpayers,
Section 112(A) of the NIRC does not limit the definition of “sale” to commercial transactions in the
normal course of business. Section 106(B) of the NIRC, which deals with the imposition of the VAT, does
not limit the term “sale” to commercial sales, rather it extends the term to transactions that are
“deemed” sale.

The seventh requirement regarding foreign currency exchange proceeds is inapplicable where
petitioner’s zero-rated sale of electricity to NPC did not involve foreign exchange and consisted only of a
single transaction wherein NPC paid petitioner P42,500,000.00 in exchange for the electricity
transferred to it by petitioner.

Eighth requirement is inapplicable to this case, where the only sale transaction consisted of an
effectively zero-rated sale and there are no exempt or taxable sales that transpired, which will require
the proportionate allocation of the creditable input tax paid.

The last requirement determines that the claim should be filed within two years after the close of the
taxable quarter when such sales were made.

G.R. No. 205925, June 20, 2018

2. BASES CONVERSION AND DEVELOPMENT AUTHORITY, Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE, Respondent.

FACTS:

On October 8, 2010, BCDA filed a petition for review with the CTA in order to preserve its right to pursue
its claim for refund of the Creditable Withholding Tax (CWT) in the amount of Php122,079,442.53, which
was paid under protest from March 19, 2008 to October 8, 2008. The CWT which BCDA paid under
protest was in connection with its sale of the BCDA-allocated units as its share in the Serendra Project
pursuant to the Joint Development Agreement with Ayala Land, Inc.

The petition for review was filed with a Request for Exemption from the Payment of Filing Fees in the
amount of Php1,209,457.90.5

On October 20, 2010, the CTA First Division denied BCDA's Request for Exemption and ordered it to pay
the filing fees within five days from notice.6

BCDA filed a petition for review with the CTA En Banc, which petition was returned and not deemed
filed without the payment of the correct legal fees. BCDA once again emphasized its position that it is
exempt from the payment of such fees.

The petition before the CTA First Division was dismissed. BCDA attempted to tile its Motion for
Reconsideration, however, the Officer-In-Charge of the First Division refused to receive the checks for
the payment of the filing fees, and the Motion for Reconsideration.

BCDA fails to raise any new and substantial arguments, and no cogent reason exists to warrant a
consideration of the Court's Resolution dated March 28, 2011 dismissing its Petition for Review.
It must be emphasized that payment in full of docket fees within the prescribed period is mandatory. It
is an essential requirement without which the decision appealed from would become final and
executory as if no appeal had been filed. To repeat, in both original and appellate cases, the court
acquires jurisdiction over the case only upon the payment of the prescribed docket fees.

In this case, due to BCDA's non-payment of the prescribed legal fees within the prescribed period, this
Court has not acquired jurisdiction over the case. Consequently, it is as if no appeal was ever filed with
this Court.14

ISSUE: THE CTA EN BANC ERRED IN AFFIRMING THE CTA FIRST DIVISION'S RULING THAT BCDA IS NOT A
GOVERNMENT INSTRUMENTALITY, HENCE, NOT EXEMPT FROM PAYMENT OF LEGAL FEES.

HELD:

YES.

BCDA is a government instrumentality vested with corporate powers. As such, it is exempt from the
payment of docket fees required under Section 21, Rule 141 of the Rules or Court.

a government instrumentality may be endowed with corporate powers and at the same time retain its
classification as a government "instrumentality" for all other purposes. Many government instrumentalities
are vested with corporate powers but they do not become stock or non-stock corporations, which is a
necessary condition before an agency or instrumentality is deemed a [GOCC].

3. G.R. No. 205955

UNIVERSITY PHYSICIANS SERVICES INC. - MANAGEMENT, INC., Petitioner

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent

FACTS:

On 6 April 2007, University Physicians Services, Inc. – Management, Inc. (UPSI-MI) filed its Annual
Income Tax Return (ITR) for the year ended 31 December 2006. UPSI-MI chose the option, and marked
the corresponding box, “To be issued a tax credit certificate” with respect to the unutilized excess
creditable taxes for the taxable year ending 31 December 2006 amounting to ₱2,927,834.00..

In 2007, University Physicians Services, Inc. – Management, Inc. (UPSI-MI) changed its taxable period
from calendar year to fiscal year ending on the last day of March. Thus, UPSI-MI filed on 14 November
2007 an Annual Income Tax Return (ITR) covering the short period from 01 January 2007 to 31 March
2007. The Annual ITR reflected an income tax overpayment of ₱5,159,341.00 as “Prior Year’s Excess
Credit” consisting of the following items:

Taxable Year 2005 – ₱2,231,507.00

Taxable Year 2006 – ₱2,927,834.00

On the same day, UPSI-MI amended the Annual ITR for the short period by excluding the sum of
₱2,927,834.00 under the line “Prior Year’s Excess Credits”.
On 10 October 2008, UPSI-MI filed with the office of the Commissioner of Internal Revenue (CIR) a claim
for refund and/or issuance of a Tax Credit Certificate (TCC) in the amount of ₱2,927,834.00,
representing the alleged excess and unutilized creditable withholding taxes for taxable year 2006.

For failure of the CIR to act on the claim for refund/tax credit, UPSI-MI filed a Petition for Review before
the Court of Tax Appeals on 14 April 2009.

The CTA Division denied the petition for review for lack of merit. The CTA Division ruled that UPSI-MI’s
alleged inadvertent inclusion of the 2006 excess tax credit in the 2007 original ITR belies its own
allegation that it did not carry over the said amount to the succeeding taxable period. The amendment
of the 2007 ITR cannot undo UPSI-MI’s actual exercise of the carry over option in the original 2007 ITR,
for to do so would be against the irrevocability rule.

The CTA En Banc ruled that UPI-MI is barred by Section 76 of the NIRC from claiming a refund of its
excess tax credits for the taxable 2006.

UPSI-MI appealed to the Supreme Court contending, in part, that the irrevocability rule applies not only
to the carry-over option but also to the option of refund or tax credit. Thus, considering that it originally
opted to be issued a tax credit certificate, its inadvertent inclusion of the subject excess tax credit in its
short period ITR has no effect.

ISSUE:
Whether UPSI-MI is entitled to the refund of its 2006 excess tax credits, for which it originally chose
the option of refund/tax credit in its 2006 ITR, when it thereafter indicated the option of carry-over in
its ITR for the short period ending 31 March 2007

HELD:

NO!

The law is very clear. The irrevocability rule is limited only to the option of carry-over such that a
taxpayer is still free to change its choice after electing a refund of its excess tax credit. The law does not
prevent a taxpayer who originally opted for a refund or tax credit certificate from shifting to the carry-
over of the excess creditable taxes to the taxable quarters of the succeeding taxable years.

Once the taxpayer opts to carry over such excess creditable tax, after electing refund or issuance of tax
credit certificate, the carry-over option becomes irrevocable. Accordingly, the previous choice of a claim
for refund, even if subsequently pursued, may no longer be granted.

Despite its initial option to refund its 2006 excess creditable tax, UPSI-MI subsequently indicated in its
2007 short period FAR that it carried over the excess creditable tax and applied the same against its
2007 income tax due. By doing so, UPSI-MI constructively chose the option of carry-over, for which
reason, the irrevocability rule forbade it to revert to its initial choice. It does not matter that UPSI-MI
had not actually benefited from the carry over on the ground that it did not have a tax due in the 2007
short period. Neither may it insist that the insertion of the carry-over in the 2007 FAR was by mere
mistake or inadvertence. The irrevocability rule admits of no qualifications or conditions.
 4. G.R. No. 206019

PHILIPPINE NATIONAL BANK, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:

Gotesco entered into a loan agreement with PNB on April 7, 1995. The loan was secured by a real estate
mortgage of a six-hectare property known as Ever Ortigas Commercial Complex. Gotesco subsequently
defaulted on its loan obligations and PNB foreclosed the mortgaged. On October 20, 2000, Gotesco filed
a civil case against PNB before the RTC of Pasig, Branch 168 for the annulment of the foreclosure
proceedings, specific performance and damages with prayer for temporary restraining order (TRO)
and/or preliminary injunction.

As PNB prepared to consolidate its ownership over the foreclosed property, PNB withheld and remitted
to the BIR withholding taxes amounting to P74,400,028.49, or 6% of the bid price.

Realizing that it made a mistake, PNB filed an administrative claim for refund of excess withholding taxes
on October 27, 2005. The next day, PNB filed its petition for review for the claim for refund before the
tax court.

PNB claimed that it inadvertently applied the 6% creditable withholding tax rate on the sale, when it
should have applied the 5% creditable withholding tax rate on the sale of ordinary asset under Section
2.57.2(J)(B) of RR No. 2-98, as amended by RR No. 6-01. PNB claimed that it erroneously withheld and
remitted an excess P12,400,004.71.

The Court of Tax Appeals First Division denied PNB’s claim for the refund of excess creditable
withholding tax for insufficiency of evidence. The CTA division agreed that the applicable rate is 5% and
not 6% but it held that PNB failed to produce evidence that Gotesco did not utilize or credit the withheld
taxes from its tax liabilities. PNB filed an MR with the division attaching Gotesco’s 2003 Income Tax
Return and the schedule of prepaid taxes.

The CTA Division, however, denied the MR because PNB should have presented the Certificates of
Creditable Tax Withheld at Source (BIR Form No. 2307) issued to Gotesco as supporting documents to
breakdown the creditable taxes withheld in Gotesco’s 2003 income tax return. The CTA division stated
that BIR Forms No. 2307 will confirm whether or not that the amount being claimed by PNB was indeed
not utilized by Gotesco to offset its taxes.

PNB appealed the decision through a petition for review before the CTA En Banc which was also denied.

Issue:

Whether or not PNB is entitled to the refund of creditable withholding taxes erroneously paid to the BIR.
Subsumed in this main issue is the evidentiary value under the premises of BIR Form No. 2307.

Ruling:
The Supreme Court held that although PNB was not able to submit Gotesco’s BIR Form No. 2307, PNB
submitted evidence sufficiently showing Gotesco’s non-utilization of the taxes withheld subject of the
refund.

Gotesco had continued to assert ownership over the Ever Ortigas Commercial Complex as evidenced by
the following: (1) it challenged the validity of the foreclosure sale which was the transaction subject to
the creditable withholding tax; (2) its 2003 Audited Financial Statements declared the property as still
owned by Gotesco.

The SC held that Gotesco’s relentless refusal to recognize PNB’s ownership over the property constitutes
proof that Gotesco will not do any act inconsistent with its claim of ownership over the property,
including claiming the creditable tax imposed on the sale.

Other pieces of evidence also supported Gotesco’s non-utilization of the claimed creditable withholding
tax. The detailed breakdown of the withholding taxes claimed by Gotesco in its 2003 income tax return
amounting to P6,014,433 showed that the creditable taxes came from rental payments of Gotesco’s
tenants and not from the foreclosure sale. Also, Gotesco’s former accountant testified that the tax
credits claimed for 2003 did not include any portion of the amount claimed by PNB for refund.

All in all, the evidence presented by PNB sufficiently proved its entitlement to the claimed refund. There
is no need for PNB to present Gotesco’s BIR Form No. 2307 because the information contained in the
said form may be very well gathered from other documents already presented by PNB, such as BIR Form
1606.

BIR Form 2307 is basically a statement showing the amount paid for the subject transaction and the
amount of tax withheld. The probative value of BIR Form 2307 is to establish only the fact of withholding
of the claimed creditable withholding tax. There is nothing in BIR Form No. 2307 which would establish
either utilization or non-utilization, as the case may be, of the creditable withholding tax.

While perhaps it may be necessary to prove that the taxpayer did not use the claimed creditable
withholding tax to pay for his/its tax liabilities, there is no basis in law or jurisprudence to say that BIR
Form No. 2307 is the only evidence that may be adduced to prove such non-use.

In sum, PNB was able to establish that Gotesco did not use the claimed creditable withholding taxes, to
reiterate: (1) Gotesco’s 2003 Audited Financial Statements proved that Gotesco did not recognize the
foreclosure sale and the payment of PNB of the creditable withholding taxes; (2) Gotesco’s 2003 ITRs
show that the withholding tax claimed for refund was not used by Gotesco; (3) the testimony of
Gotesco’s former accountant proving that Gotesco did not use the creditable withholding taxes claimed
by PNB; and (4) The Withholding Tax Remittance Returns (BIR Form 1606) proving that the amount was
withhenld and paid by PNB.

Ergo, the evidence on record sufficiently proves that the claimed creditable withholding tax was
withheld and remitted to the BIR, that such withholding and remittance was erroneous, and that the
claimed creditable withholding tax was not used by Gotesco to settle its tax liabilities.

5. G.R. No. 206362, August 01, 2018

RHOMBUS ENERGY, INC., Petitioner, v. COMMISSIONER OF INTERNAL
REVENUE, Respondent.
FACTS:

From October 1998 to July 2007, respondent was registered with and was under the jurisdiction of
Revenue Region No. 8, Revenue District Office ("RDO") No. 50 (South Makati) of the BIR. However, due
to respondent's change of address respondent filed an application for change of home RDO.

Thus, on July 18, 2007, respondent was transferred to the jurisdiction of RDO No. 47.

In the meantime, on April 17, 2006, respondent filed its Annual Income Tax Return ("ITR") for taxable
year 2005, In said Annual ITR for taxable year 2005, respondent indicated that its excess creditable
withholding tax ("CWT") for the year 2005 was "To be refunded".

Petitioner opted to carry-over its unutilized creditable withholding tax of P1,500,653.00 for taxable year
2005 to the first, second and third quarters of taxable year 2006 when it had actually carried-over said
excess creditable withholding tax to the first, second and third quarters in its Quarterly Income Tax
Returns for taxable year 2006

On December 7, 2007, pending petitioner's action on respondent's claim for refund or issuance of a tax
credit certificate of its excess/unutilized CWT for the year 2005 and before the lapse of the period for
filing an appeal, respondent filed the instant Petition for Review.

CTA En Banc said that the option to carryover becomes irrevocable. Petitioner's act of reporting in its
Annual Income Tax Return for taxable year 2006 of prior year's excess credits other than MCIT as 0.00,
will not change the fact that petitioner had already opted the carry-over option in its first, second and
third quarters Quarterly Income Tax Returns for taxable year 2006, and said choice is irrevocable. As
previously mentioned, whether or not petitioner actually gets to apply said excess tax credit is irrelevant
and would not change the carry-over option already made.

Thus, the present petition praying for refund or issuance of a TCC of its unutilized creditable withholding
tax for taxable year 2005 in the amount of P1,500,653.00 must perforce be denied in view of the
irrevocability rule on carry-over option of unutilized creditable withholding tax.

ISSUE:

whether or not the taxpayer is barred by the irrevocability rule in claiming for the refund of its excess
and/or unutilized creditable withholding tax.

HELD:
No.

The last sentence of Section 76 of the NIRC of 1997 reads: "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." The phrase
"for that taxable period" merely identifies the excess income tax, subject of the option, by referring to
the taxable period when it was acquired by the taxpayer.
Based on the records, it is clear that respondent marked the box "To be refunded" in its Annual
Income Tax Return. It is also clear that the 2005 excess CWT were included in the prior year's excess
credits reported in the 2006 Quarter ITRs. The 2006 Annual ITR did not reflect the 2005 excess CWT in
the prior year's excess credits.10(Emphasis supplied)

The CTA En Banc thereby misappreciated the fact that Rhombus had already exercised the option for its
unutilized creditable withholding tax for the year 2005 to be refunded when it filed its annual ITR for the
taxable year ending December 31, 2005. Based on the disquisition in Republic v. Team (Phils.) Energy
Corporation, supra, the irrevocability rule took effect when the option was exercised. In the case of
Rhombus, therefore, its marking of the box "To be refunded" in its 2005 annual ITR constituted its
exercise of the option, and from then onwards Rhombus became precluded from carrying-over the
excess creditable withholding tax. The fact that the prior year's excess credits were reported in its 2006
quarterly ITRs did not reverse the option to be refunded exercised in its 2005 annual ITR. As such, the
CTA En Banc erred in applying the irrevocability rule against Rhombus.

PRINCIPLES

A. G.R. No. 197526

CE LUZON GEOTHERMAL POWER COMPANY, INC., Petitioner
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent

FACTS:

CE Luzon is a VAT-registered domestic corporation engaged in the energy industry. It owns and operates
the CE Luzon Geothermal Power Plant, which generates power for sale to the Philippine National Oil
Company-Energy Development Corporation by virtue of an energy conversion agreement. The sale of
generated power by generation companies is a zero-rated transaction under Section 6 of RA No. 9136 or
the Electric Power Industry Reform Act.

In the course of its operations, CE Luzon incurred unutilized creditable input tax amounting to
P26,574,388.99 for taxable year 2003. CE Luzon filed before the Bureau of Internal Revenue (BIR) an
administrative claim for refund for the four quarters of the taxable year 2003. Without waiting for the
Commissioner of Internal Revenue (CIR) to act on its claim, or for the expiration of 120 days, CE Luzon
instituted before the Court of Tax Appeals (CTA) a judicial claim for refund of its first quarter unutilized
creditable input tax on March 30, 2005. On June 24, 2005, CE Luzon received the CIR’s decision denying
its claim for refund of creditable input tax for the second quarter of 2003. On June 30, 2005, CE Luzon
filed before the CTA a judicial claim for refund of unutilized creditable input tax for the second to fourth
quarters of taxable year 2003.

The CTA Second Division partially granted CE Luzon’s claim for unutilized creditable input tax. The case
elevated by CE Luzon and the CIR to the CTA En Banc. Initially, the CTA En Banc partially granted CE
Luzon’s petition and ordered the issuance of a tax credit certificate in its favor. But, on motion for
reconsideration, the CTA En Banc set aside its previous decision on the ground that CE Luzon failed to
observe the 120-day period under Section 112(C) of the NIRC. Later, the CTA En Banc issued an
amended decision partially granting CE Luzon's claim for unutilized creditable input tax but only for the
second quarter of taxable year 2003 and only up to the extent ofP3,764,386.47.
Hence, the present consolidated petitions by both CE Luzon and the CIR.

ISSUE:

Whether or not CE Luzon filed its judicial claims for refund of input VAT for taxable year 2003 within
the prescriptive period.

HELD:

Yes. The Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. [2010] doctrine was
reiterated by this Court in Commissioner of Internal Revenue v. San Roque Power Corp. [2013] which
held that the 120-day and 30-day periods in Section 112(C) of the National Internal Revenue Code are
both mandatory and jurisdictional.

In the present case, only CE Luzon's second quarter claim was filed on time. Its claims for refund of
creditable input tax for the first, third, and fourth quarters of taxable year 2003 were filed
prematurely. It did not wait for the Commissioner of Internal Revenue to render a decision or for
the120-day period to lapse before elevating its judicial claim with the Court of Tax Appeals. However,
despite its non-compliance with Section 112(C) of the National Internal Revenue Code, CE Luzon's
judicial claims are shielded from the vice of prematurity. It relied on the Bureau of Internal Revenue
Ruling DA-489-03, which expressly states that “a taxpayer-claimant need not wait for the lapse of the
120-day period before it could seek judicial relief with the [Court of Tax Appeals] by way of a Petition
for Review.” San Roque exempted taxpayers who had relied on the Bureau of Internal Revenue Ruling
DA-489-03 from the strict application of Section 112(C) of the National Internal Revenue Code.

Taxpayers who have relied on the Bureau of Internal Revenue Ruling DA-489-03, from its issuance on
December 10, 2003 until its reversal on October 6, 2010 by the Court in Aichi, are, therefore, shielded
from the vice of prematurity. CE Luzon may claim the benefit of the Bureau of Internal Revenue Ruling
DA-489-03. Its judicial claims for refund of creditable input tax for the first, third, and fourth quarters
of 2003 should be considered as timely filed. However, the case should be remanded to the Court of
Tax Appeals for the proper computation of creditable input tax to which CE Luzon is entitled.

B. G.R. No. 197590 November 24, 2014

BUREAU OF INTERNAL REVENUE, as represented by the COMMISSIONER OF INTERNAL
REVENUE,Petitioner,
vs.
COURT OF APPEALS, SPOUSES ANTONIO VILLAN MANLY, and RUBY ONG
MANLY, Respondents.

FACTS:

Antonio Manly is stockholder and EVP of Standard Realty corp, a family owned corporation while at the
same time engaged in rental business. His wife, herein co accused is a housewife.

On April 27, 2005, the BIR issued LOA No. 2001 00012387 authorizing its revenue officers to investigate
respondent spouses for internal revenue tax liabilities for the year 2003 and prior years.
On June 6, 2005, BIR issued a letter to respondents requiring them to submit documentary eveidence.

The Spouses failed to comply, thus on June 23, 2005, the revenue officers executed a joint affidavit
purporting to the declared annual income of the spouses for the years 1998-2003. In the said affidavit, it
was alleged that despite the modest income declared, the spouses were able to acquire valuable
properties such as the log house in Tagaytay City, a Toyota Rav 4 and a Toyota Prado.

The revenue officers recommended the filing of criminal cases against the respondents, for failing to
supply the correct and accurate information in their ITRs for the years 2000, 2001 and 2003, punishable
under Sec. 254 and 255, in relation to Sec. 248 (B) of R.A. 8424 (Tax Reform Act of 1997).

The State Prosecutor recommended for the filing of criminal charges against respondents: 3 counts of
violation of Sec. 254 (attempt to evade or defeat tax), 3 counts of violation of Sec. 255 (failure to supply
correct and accurate information), and 3 counts of violation of Sec. 255 (failure to pay).

On July 27, 2009, Justice Secretary Agnes Devanadera reversed the resolution of the State Prosecutor.
She found no willful failure to pay or attempt to evade or defeat the tax on the part of the respondent
spouses. She also pointed to the BIR’s failure to issue a deficiency tax assessment against respondents is
a prerequisite to the filing of criminal case for tax evasion.

BIR filed a petition for certiorari before the CA, however, the petition was dismissed.

ISSUE:
WON the issuance of a deficiency tax assessment is a prerequisite to the filing of criminal case for tax
evasion?

HELD:
Petition of BIR granted.
Tax evasion is deemed complete when the violator has knowingly and willfully filed fraudulent return
with intent to evade and defeat a part or all of the tax. An assessment of the tax deficiency is not
required in a criminal prosecution for tax evasion. However, the fact that a tax is due must be proved
before one can be prosecuted for tax evasion.

Since the underdeclaration of the income is more than 30% (133.24%), it constitutes prima facie
evidence of false or fraudulent return.
The amount of tax due was specifically alleged in the complaint.

C. CIR vs. St. Luke's Medical Center, Inc.

FACTS:
St. Luke's is a non-stock non-profit hospital. The BIR assessed St. Luke's based on the argument that
Section 27(B) of the Tax Code should apply to it and hence all of St. Luke's income should be subject to
the 10% tax therein as it is a more specific provision and should prevail over Section 30 which is a
general provision. St. Luke's countered by saying that its free services to patients was 65% of its
operating income and that no part of its income inures to the benefit of any individual.

ISSUE:
Does Section 27(B) have the effect of taking proprietary non-profit hospitals out of the income tax
exemption under Section 30 of the Tax Code and should instead be subject to a preferential rate of 10%
on its entire income?

HELD:
No. The enactment of Section 27(B) does not remove the possible income tax exemption of proprietary
non-profit hospitals. The only thing that Section 27(B) captures (at 10% tax) in the case of qualified
hospitals is in the instance where the income realized by the hospital falls under the last paragraph of
Section 30 such as when the entity conducts any activity for profit. The revenues derived by St. Luke's
from pay patients are clearly income from activities conducted for profit.

D. G.R. No. 203249, July 23, 2018SAN ROQUE POWER

CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS:
San Roque Power Corporation is a VAT-registered taxpayer which was granted by the BIR a zero-rating
on its sales of electricity to National Power Corporation (NPC) effective 14 January 2004, up to 31
December 2004.5

On 22 December 2005 and 27 February 2006, the petitioner filed two separate administrative claims for
refund of its alleged unutilized input tax for the period 1 January 2004 up to 31 March 2004, and 1 April
2004 up to 31 December 2004, respectively.6

Due to the inaction of respondent CIR, the petitioner filed petitions for review before the CTA (raffled to
the Second Division): (1) on 30 March 2006, for its unutilized input VAT for the period 1 January 2004 to
31 March 2004, amounting to P17,017,648.31, docketed as CTA Case No. 7424; and (2) on 20 June
2006, for the unutilized input VAT for the period 1 April 2004 to 31 December 2004, amounting to
P14,959,061.57, docketed as CTA Case No. 7492.

CTA Division partially granted the refund claim of the petitioner in the total amount of P29,931,505.18.

Among other issues, the CIR questioned the claimant's judicial recourse to the CTA as inconsistent with
the procedure prescribed in Section 112 (D) of the NIRC. The CIR asserted that the petitions for review
filed with the CTA were premature, and thus, should be dismissed.

The CTA En Banc sided with the CIR in ruling that the judicial claims of the petitioner were prematurely
filed in violation of the 120-day and 30-day periods prescribed in Section 112 (D) of the NIRC. The court
held that by reason of prematurity of its petitions for review, San Roque Power Corporation failed to
exhaust administrative remedies which is fatal to its invocation of the court's power of review.

ISSUE:
BIR Ruling No. DA-489-03
constitutes an exception to
the mandatory and
jurisdictional nature of the
120+30-day period.

HELD:
In the consolidated cases of San Roque , the Court en banc recognized an exception to the mandatory
and jurisdictional nature of the 120+30-day period. It was noted that BIR Ruling No. DA-489-03, which
expressly stated –

[A] taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial
relief with the CTA by way of Petition for Review.

– is a general interpretative rule issued by the CIR pursuant to its power under Section 4 of the NIRC,
hence, applicable to all taxpayers. Thus, taxpayers can rely on this ruling from the time of its issuance on
10 December 2003. The conclusion is impelled by the principle of equitable estoppel enshrined in
Section 24615 of the NIRC which decrees that a BIR regulation or ruling cannot adversely prejudice a
taxpayer who in good faith relied on the BIR regulation or ruling prior to its reversal.

Then, in Taganito Mining Corporation v. CIR,16 the Court further clarified the doctrines in Aichi and San
Roque explaining that during the window period from 10 December 2003, upon the issuance of BIR
Ruling No. DA-489-03 up to 6 October 2010, or date of promulgation of Aichi, taxpayers need not
observe the stringent 120-day period.17

In other words, the 120+30-day period is generally mandatory and jurisdictional from the effectivity of
the 1997 NIRC on 1 January 1998, up to the present. By way of an exception, judicial claims filed during
the window period from 10 December 2003 to 6 October 2010, need not wait for the exhaustion of the
120-day period. The exception in San Roque has been applied consistently in numerous decisions of this
Court.

In this case, the two judicial claims filed by the petitioner fell within the window period, thus, the CTA
can take cognizance over them.

The petitioner is similarly situated as Taganito Mining Corporation (Taganito) in the consolidated cases
of San Roque. In that case, Taganito prematurely filed on 14 February 2007 its petition for review with
the CTA, or within the window period from 10 December 2003, with the issuance of BIR Ruling DA-489-
03 and 6 October 2010, when Aichi was promulgated. The Court considered Taganito to have filed its
administrative claim on time. Similarly, the judicial claims in this case were filed on 30 March 2006 and
20 June 2006, or within the said window period. Consequently, the exception to the mandatory and
jurisdictional character of the 120-day and 30-day periods is applicable.

What this means is that the CTA can validly take cognizance over the two judicial claims filed in this case.
The CTA Division, in fact, did this, which eventually led to the partial grant of the refund claims in favor
of the petitioner. In reversing the CTA Division for lack of jurisdiction, the CTA En Banc failed to consider
BIR Ruling No. DA-489-03.