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INTERNAL REVENUE TAX ADMINISTRATION

,
ENFORCEMENT AND REMEDIES
Extent of Congress‘ Power; Re: Tax Administration
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ABAKADA Guro Party List vs. Purisima___________________________10
British American Tobacco vs. Camacho__________________________12

BIR Issuances and the Rules Relevant Thereto (Section 246, NIRC)
3.
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CIR vs. Burroughs___________________________________________14
CIR vs. CA and Fortune______________________________________16
PB Comm. vs. CIR__________________________________________18

Cases that may be Decided by the CIR
6.

CIR vs. Leal________________________________________________19

Requirement of Issuance of a Letter of Authority
7.

CIR vs. Sony Philippines______________________________________21

Summon Persons, Take Testimony
8.

Fitness by Design vs. CIR_____________________________________23

Rule on Confidentiality of Tax Returns and the Exceptions Thereto (Sections 71 and
270, NIRC)
9.

BIR vs. Ombudsman_________________________________________25

Best Evidence Obtainable Rule
10.
11.

CIR vs. Hantex Trading______________________________________27
CIR vs. Embroidery and Garment Industries______________________30

Fixing of Real Property Values (Section 6E, NIRC)
12.

CIR vs. Aquafresh Seafoods, Inc.______________________________32

Non-Delegable Powers in Relation to Section 16, NIRC
13.

Republic vs. Hizon__________________________________________34

Authority to Abate and Compromise Tax Liabilities (Section 6F (2), 204 of NIRC, in
Relation to Rev. Regs. 30-2002 as amended by RR No. 8-2004)
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PNOC vs. CA_______________________________________________36
People vs. Tan_____________________________________________39

What Constitutes an Assessment?
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CIR vs. Hon. Gonzalez_______________________________________41
CIR vs. Enron Subic Power Corp.______________________________43
TaxCases_1

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CIR vs. BPI (G.R. No. 134062)________________________________45
CIR vs. Pascor Realty________________________________________47
CIR vs. Reyes______________________________________________49

Statute of Limitation on Assessment of Internal Revenue Taxes (Sections 203 and 222,
NIRC in Relation to RMO No. 20-90)
21.
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Philippine Journalists Inc. vs. CIR______________________________51
CIR vs. Kudos Metal Corp.____________________________________53
CIR vs. CA and Carnation____________________________________55
RCBC vs. CIR______________________________________________57

Instances Where the Running of the Prescriptive Period is Suspended (Section 223)
25.
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Republic vs. Hizon__________________________________________58
BPI vs. CIR (G.R. No. 139736)________________________________60
BPI vs. CIR (G.R. No. 174942)________________________________62

Computation of Prescriptive Period
28.

CIR vs. Primetown Property Group, Inc._________________________64

Procedure in the Process of Assessment (Section 228)
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Estate of Vda. De Gabriel vs. CIR______________________________65
CIR vs. Reyes______________________________________________67
PNOC vs. CA_______________________________________________69
CIR vs. Menguito___________________________________________71
CIR vs. Metro Star Suprema__________________________________73

Governing Principles Concerning Assessment
34.

CIR vs. Hon. Gonzalez_______________________________________75

Is assessment Necessary Before a Taxpayer Could be Prosecuted for Violation of the
NIRC?
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38.

Ungab vs. Cusi_____________________________________________77
CIR vs. CA________________________________________________79
CIR vs. Pascor Realty________________________________________81
CIR vs. Gonzalez___________________________________________82

Are the Procedures Outlined in Section 228 of the NIRC Retroactive?
39.

CIR vs. Reyes______________________________________________83

TAX REMEDIES PROPER
Doctrine of Exhaustion of Administrative in Taxation
40.

UP vs. Catungal____________________________________________84

TaxCases_2

Kinds of Protest
41.

CIR vs. Philippine Global Comm._______________________________86

Effect of Failure to File Protest
42.

CIR vs. Hon. Gonzalez_______________________________________88

What should be Protested?
43.
44.

Allied Banking Corp. vs. CIR (2010)____________________________90
Allied Banking Corp. vs. CIR (CTA EB 167, 2006)__________________91

Effect of a Protest on the Period to Collect Deficiency Taxes
45.
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CIR vs. Wyeth Suaco Laboratories_____________________________92
CIR vs. Atlas Consolidated Mining______________________________94

Failure of the BIR to Act within the 180-Day Period
47.
48.

Lascona vs. CIR____________________________________________96
RCBC vs. CIR______________________________________________98

Administrative Actions Taken During the 180-Day Period
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CIR
CIR
CIR
CIR

vs.
vs.
vs.
vs.

Union Shipping______________________________________99
Isabela Cultural Corp.________________________________101
Algue_____________________________________________103
Ayala Securities_____________________________________104

Effect of a Protest Filed out of Time
53.

Protector‘s Services vs. CA__________________________________106

Remedies of Taxpayer to Denial of Protest by the Commissioner
54.

Advertising Associates vs. CA________________________________107

Authority of the Chief of the Accounts Receivable and Billing Division of the BIR
55.

Oceanic Wireless vs. CIR____________________________________108

Appeal to the Court of Tax Appeals
56.

Fishwealth Canning Corp. vs. CIR_____________________________110

Appeal to the CTA En Banc Preceded by a Motion for Reconsideration
57.

Commissioner of Customs vs. Marina Sales, Inc._________________112

Waiver of Statue of Limitations
58.
59.

Sambrano vs. CTA_________________________________________113
Basilan Estate, Inc. vs. Commissioner__________________________115
TaxCases_3

Effect of Amendment Returns to the Prescription Rules
60.

Commissioner vs. Phoenix Assurance Co._______________________117

Refund
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62.
63.

Citibank, NA vs. CA________________________________________119
FEBTC vs. CIR____________________________________________121
CIR vs. Far East Bank______________________________________123

Nature of Refund
64.

CIR vs. Tokyo Shipping_____________________________________125

Grounds for Filing a Claim for Refund
65.

Engtek Phils. vs. CIR_______________________________________126

Procedure in Filing a Claim for Refund
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CIR vs. Acosta____________________________________________128

Period within which to File a Claim for Refund
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ACCRA Investment vs. CA___________________________________129
CIR vs. TMX______________________________________________131
CIR vs. PhilAm Life_________________________________________132
CIR vs. CA and BPI________________________________________133
CIR vs. PNB______________________________________________135
CIR vs. Primetown Property__________________________________137

In Case of Taxpayers Contemplating Dissolution
73.

BPI vs. CIR_______________________________________________138

Who has the Personality to File a Claim for Refund
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CIR vs. Procter and Gamble_________________________________140
CIR vs. CA_______________________________________________142
Silkair vs. CIR_____________________________________________144
CIR vs. Smart Comm.______________________________________146
Exxonmobil Petroleum vs. CIR________________________________147
Silkair (Singapore) Pte., Ltd. Vs. CIR___________________________148

Burden of Proof for Claim of Refund
80.
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United Airlines vs. CIR______________________________________149
Deutsche Bank vs. CIR_____________________________________150

Is Setting-Off of Taxes Pending Refund Allowed? (Doctrine of Equitable Recoupment)
82.

Philex Mining Corp. vs. CIR__________________________________152

TaxCases_4

Is Automatic Application of Excess Tax Credits Allowed?
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Calamba Steel vs. CIR______________________________________153
Systra Philippines vs. CIR___________________________________154
CIR vs. BPI (Irrevocability Rule)______________________________155
PhilAm Asset Management vs. CIR____________________________157
Asiaworld Properties vs. CIR_________________________________158
CIR vs. PhilAm Life and Gen. Ins. Co.__________________________160
CIR vs. McGeorge Food Industries____________________________161
CIR vs. Mirant (Phil.) Operationis Corp.________________________163
CIR vs. PL Management_____________________________________164

Effect of Existing Tax Liability on a Pending Claim for Refund
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CIR vs. CA and Citytrust (July 1994)___________________________166
CIR vs. Citytrust (August 2006)_______________________________168

Nature of a Tax Credit Certificate
94.

Pilipinas Shell Petroleum vs. CIR______________________________170

Period for Using Tax Credit Certificate
95.

Marubeni Phil. Corp. vs. CIR_________________________________172

Refund and Protest are Mutually Exclusive Remedies
96.

Vda. De San Agustin vs. CIR_________________________________173

Period within which the Government could Collect (Sections 203 and 222, NIRC)
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Republic vs. Hizon_________________________________________175
CIR vs. Javier Jr.__________________________________________176
PNOC vs CA______________________________________________177
BPI vs. CIR_______________________________________________179

Prescriptive Period within which to Collect Taxes
101.
102.

Hermanos vs. CIR_________________________________________180
Republic vs. Ker & Co.______________________________________181

Sections 204(C) and 229 of the NIRC
103.
104.

CIR vs. Mirant Pagbilao Corp.________________________________183
CIR vs. Aichi Forging Company_______________________________185

Determination of Prescription of Collection within CTA‘s Appellate Jurisdiction
105.

CIR vs. Hambrecht and Quist Phil.____________________________186

Tax Lien (Section 219, NIRC)
106.

CIR vs. NLRC_____________________________________________188

TaxCases_5

) vs. People vs.R.Judicial Remedies (Section 220. Republic vs. Phils. CIR_______________________________216 Metro Manila Shopping Mecca vs. Statutory Taxpayer. Fortune Tobacco2___________________________________222 Applied Food Ingredients vs. vs. CA_______________________________________________194 Marcos II vs. CIR vs. Exemption 118. CIR vs. 109. CIR_____________________________________________202 Jalandoni vs. vs. 110. Real Property Tax 121. Camp John Hay Development vs. BIR___________________________________208 Application of Solution Indebiti to the State 120. 128. CA______________________________________________192 Lim vs. NIRC) 107. Republic______________________________________203 No False or Fraudulent Return 117. CIR___________________________________205 Tax Treaties 119. CIR vs. Javier Jr. Hizon_________________________________________190 CIR vs. CIR_____________________________223 TaxCases_6 . 116. People_________________________________196 Fraud Penalty 113. Ayala Securities____________________________204 SURVEY OF TAXATION CASES NIRC. Deutsche Bank AG vs. Philippine Airlines vs. La Suerte Cigar_____________________________________191 PNOC vs. 111. CA___________________________________________195 Judy Anne Santos vs. Aznar vs.A. CIR________________________________219 J. 124._______________________________210 Tax Assessment Protest. 129. 125. Indirect Taxes. Toledo_______________________217 Philippine Airlines vs. 126. San Roque Power___________________________________214 Nippon Express (Phils. 112. Fraudulent Return 115. CBAA________________________212 Tax Refund or Credit 122. CIR___________________________________218 Bonifacio Water Corp. Fortune Tobacco Corp. CIR________________________________________221 CIR vs. 127. 108. Commissioner vs.__________________________________________198 Willful Blindness Doctrine 114. 123. Kintanar________________________________________200 False Return vs.

Ltd. Dash Engineering___________________________________226 Republic vs. 133. 131. CIR_________________________________229 CTA Jurisdiction..R.A. CIR vs. The City of Manila vs. 132. CIR_________________________________247 TaxCases_7 . CIR__________________________________225 CIR vs. vs. 143. Power to Issue Writ of Certiorari 134. Power to Tax of LGUs 141.130. vs. vs. San Roque Power___________________________________235 Applied Food Ingredients vs. J. Pelizloy Realty vs. 140. BIR_____________________________________________232 VAT Invoicing Requirements 136. CIR__________________________________239 CBK Power Co. Fort Bonifacio Development vs. vs. BIR_____________________________________________234 Excess Input VAT and Excessively Collected VAT 137.______________________________________227 CBK Power Co. CIR_________________________________241 Percentage Taxes. CIR___________________________245 Philacor Credit Corp. vs. 139. Ltd. 138. CIR_____________________________237 Luzon Hydro Corp. GST Phil. Luzon Hydro Corp. vs. Province of Benguet_________________________243 Documentary Stamp Tax 142. Cuerdo________________________________230 Tax Clearance 135. PDIC vs..

152. vs. 153. 147. Board of Tax Appeals_______________________258 Abello et. CIR vs. Lladoc vs. 151. Villanueva vs. Posadas_______________________________________252 Dizon vs. Fr. 154. Pineda____________________________________________251 Lorenzo vs. vs. Ferrer______________________________________257 Tang Ho.al. CIR________________________________________260 TaxCases_8 . CTA_____________________________________________253 Gabriel vs. 146.ESTATE TAXATION Judicial Expenses 144. CA___________________________________________250 CIR vs. CA_____________________________________________254 GIFT TAXATION Tax Treatment of Political Contributions 150. et. Marcos II vs.al. CIR and CTA______________________________256 Del Rosario vs. CA and Pajonar_____________________________________249 Safeguarding Interest of the Government in the Collection of Estate Tax 145. Spouses Branoco______________________________255 Rev. 148. 149.

J. No. GUILLERMO L. While the legislative function is deemed accomplished and completed upon the enactment and approval of the law. to be approved by a Joint Congressional Oversight Committee created for such purpose.: FACTS: RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). and HON. ED VINCENT S. They argue among others that the creation of a congressional oversight committee violates the doctrine of separation of powers. 2008 CORONA. ENFORCEMENT AND REMEDIES Extent of Congress’ Power. RENE B. JR. TaxCases_9 . the power of oversight embraces all activities undertaken by Congress to enhance its understanding of and influence over the implementation of legislation it has enacted.. vs. the creation of the congressional oversight committee permits legislative participation in the implementation and enforcement of the law. BIR. in his Capacity as Commissioner of Bureau of Customs. Petitioners. ALBANO. respondents. in his capacity as Secretary of Finance. ALCANTARA.INTERNAL REVENUE TAX ADMINISTRATION. ISSUE: Whether or not the creation of a congressional oversight committee will violate the doctrine of separation of powers? HELD: NO. petitioners. Re: Tax Administration ABAKADA GURO PARTY LIST (formerly AASJS) OFFICERS/MEMBERS SAMSON S. ALBERTO D. 166715 August 14. ROBISO. SANDOVAL.R. PARAYNO. The DOF. NEDA. DBM. ROMEO R. It covers all officials and employees of the BIR and the BOC with at least six months of service. PURISIMA. G. The law intends to encourage BIR and BOC officials and employees to exceed their revenue targets by providing a system of rewards and sanctions through the creation of Rewards and Incentives Fund and a Revenue Performance Evaluation Board. in his capacity as Commissioner of the Bureau of Internal Revenue. CESAR V. HON. BOC and the Civil Service Commission (CSC) were tasked to promulgate and issue the Implementing Rules and Regulations of RA 9335. invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335. Broadly defined. LINA. HON. regardless of employment status. tax reform legislation. GOROSPE and EDWIN R.

procedures" specified under the Constitution. finely wrought and exhaustively considered." the Constitution imposes two basic and related constraints on Congress. The power of oversight has been held to be intrinsic in the grant of legislative power itself and integral to the checks and balances inherent in a democratic system of government. In particular. oversight concerns post-enactment measures undertaken by Congress: (a) to monitor bureaucratic compliance with program objectives. meaning. it neither necessarily constitutes an encroachment on the executive power to implement laws nor undermines the constitutional separation of powers. (b) to determine whether agencies are properly administered. it must follow the "single. when it exercises its legislative power. Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. It may not vest itself. it is integral to the checks and balances inherent in a democratic system of government. (c) to eliminate executive waste and dishonesty. Thus. its power to ask heads of departments to appear before and be heard by either of its Houses on any matter pertaining to their departments and its power of confirmation and (2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation. However. congressional oversight must be confined to the following: (1) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings conducted in connection with it. TaxCases_10 . to forestall the danger of congressional encroachment "beyond the legislative sphere. including the procedure for enactment of laws and presentment. any of its committees or its members with either executive or judicial power. Rather. (d) to prevent executive usurpation of legislative authority. and (d) to assess executive conformity with the congressional perception of public interest. It may in fact even enhance the separation of powers as it prevents the overaccumulation of power in the executive branch.Clearly. It is clear that congressional oversight is not unconstitutional per se. any post-enactment congressional measure such as this should be limited to scrutiny and investigation. And.

on the one hand. thus. Petitioner deplores the fact that its Lucky Strike Filter. Inc. would increase (due to inflation. No. fortune tobacco. were found to have net retail prices of P11. since petitioner‘s cigarettes were newly introduced brands in the market. whether it be a brand under Annex "D" or a new brand classified after the effectivity of RA 8240 on January 1. on the other. which were permanently classified under Annex "D.44 per pack. respondents-inintervention. is the crux of petitioner‘s contention that the legislative classification freeze violates the equal protection and uniformity of taxation clauses of the Constitution.96 per pack. However. Philip Morris Philippines Manufacturing. in his capacity as Secretary of the Department of Finance and GUILLERMO L. This unequal tax treatment between Marlboro and Philip Morris.44 per pack. JR. Marlboro and Philip Morris were classified under the high-priced tax bracket and subjected to an excise tax rate of P8. Marlboro had net retail prices ranging from P6.84 while Philip Morris had net retail prices ranging from P7.. in his capacity as Commissioner of the Bureau of Internal Revenue. Thus. and Lucky Strike. G. due to the legislative classification freeze.. when a cigarette brand is introduced in the market. manufacturer‘s decision to increase its prices. with a higher excise tax rate of P13. J..) to a point that its net retail price pierces the tax bracket to which it was previously classified. Due to this legislative classification scheme. even if its present day net retail price would make it fall under a higher tax bracket.78 to P6." As of October 1. as amended by RA 9334. Lucky Strike Lights. and Lucky Strike Menthol Lights cigarettes.59 and P10. the classification is frozen and only Congress can thereafter reclassify the same. However.A. 2008 YNARES-SANTIAGO. TaxCases_11 .59. medium-priced. high-priced. MIGHTY CORPORATION. Petitioner then presented evidence showing that after the lapse of about seven years or sometime in 2004. and premium-priced tax brackets) in order to finally determine the corresponding excise tax rate on a per pack basis. 1997. they continued to be classified under the high-priced tax bracket with a lower excise tax rate. However. P11. vs.BRITISH AMERICAN TOBACCO. S.48.34. 1996. Marlboro‘s and Philip Morris‘ net retail prices per pack both increased to about P15. after a brand is classified based on its current net retail price. the current net retail price is determined and is then used to classify under which tax bracket the brand belongs (there were four brackets created: lowpriced.40 This meant that they would fall under the premium-priced tax bracket. had they been classified based on their 2004 net retail prices. respondents. JOSE ISIDRO N. corp. Petitioner claims that this is what happened in 2004 to the Marlboro and Philip Morris brands. CAMACHO. Consequently. pursuant to RA 8240. petitioner. increase of production costs.53. it is possible that over time the net retail price of a previously classified brand. the previously classified brand would continue to be subject to the excise tax rate under the lower tax bracket by virtue of the legislative classification freeze. introduced in the market sometime in 2001 and validated by a BIR survey in 2003.39 to P7. they were taxed based on their current net retail prices and. 163583 August 20.R. etc..: FACTS: Under RA 8240. fall under the premium-priced tax bracket with a higher excise tax rate of P13. which are lower than those of Marlboro and Philip Morris.42 respectively. PARAYNO. and JT InTERNATIONAL.

" RA 9334 did not alter this classification freeze provision of RA 8240. In the case at bar. this could be done when a resurvey and reclassification is forthcoming. Indeed. TaxCases_12 . the standard and analysis of equal protection challenges in the main have followed the ‗rational basis‘ test. This is in line with one of the avowed objectives of the assailed law "to simplify the tax administration and compliance with the tax laws that are about to unfold in order to minimize losses arising from inefficiencies and tax avoidance scheme. To our mind. prior to its amendment. simplify the whole tax system for sin products to remove these potential areas of abuse and corruption from both the side of the taxpayer and the government. As briefly touched upon in the Congressional deliberations. the tax implementers may use the power to periodically adjust the tax rate and reclassify the brands as a tool to unduly oppress the taxpayer in order for the government to achieve its revenue targets for a given year. Congress could have reasonably foreseen that the periodic reclassification of brands would tempt the cigarette manufacturers to manipulate their price levels or bribe the tax implementers in order to allow their brands to be classified at a lower tax bracket even if their net retail prices have already migrated to a higher tax bracket after the adjustment of the tax brackets to the increase in the consumer price index. the classification freeze provision was in the main the result of Congress‘s earnest efforts to improve the efficiency and effectivity of the tax administration over sin products while trying to balance the same with other state interests. Then again. We can thus reasonably conclude. Congress affirmed this freezing mechanism by clarifying the wording of the law. as the deliberations on RA 9334 readily show. if not outright tax evasion. the questioned provision addressed Congress‘s administrative concerns regarding delegating too much authority to the DOF and BIR as this will open the tax system to potential areas for abuse and corruption. the classification freeze provision was an integral part of this overall plan. these administrative concerns in the measurement and collection of excise taxes on sin products are readily apparent. Presumably. if not outright tax evasion.36. were merely continued by RA 9334. Congress sought to. administrative concerns may provide a legitimate. Under this test. this easily translates to P336. to survive an equal protection challenge. among others.ISSUE: Whether or not the aforementioned law violates the equal protection clause of the Constitution? HELD: NO. On the contrary. the difference of the excise tax rate between the medium-priced and the high-priced tax brackets under RA 8240.000. must be shown to rationally further a legitimate state interest. For a moderately popular brand which sells around 100 million packs per year.000. a legislative classification. would clearly be present. rational basis for legislative classification. was P3. Thus. Congress may have reasonably conceived that a tax system which would give the least amount of discretion to the tax implementers would address the problems of tax avoidance and tax evasion. which moved Congress to enact the classification freeze provision in RA 8240. that the administrative concerns in tax administration. To elaborate a little. In our jurisdiction. Without doubt. In particular. The incentive for tax avoidance.

Thus.30) and not on the amount before profit remittance tax (P7.: FACTS: Burroughs Limited is a foreign corporation authorized to engage in trade or business in the Philippines through a branch office located at De la Rosa corner Esteban Streets.00. Plana the aforequoted provision had been interpreted to mean that "the tax base upon which the 15% branch profit remittance tax shall be imposed is the profit actually remitted abroad and not on the total branch profits out of which the remittance is to be made. applied with the Central Bank for authority to remit to its parent company abroad.999. respondent court rendered an order granting a tax credit in favor of petitioner Burroughs Limited the amount of P 172. 1980.499. the claim of private respondent that it made an overpayment in the amount of P172. it paid the 15% branch profit remittance tax. Legaspi Village. 1979.647.058. on March 14. Efren I. 1983.89 is well-taken.‖ In a Bureau of Internal Revenue ruling dated January 21. a written claim for the refund or tax credit of the amount of P172.999. petitioner.70 and the remittance tax that should have been paid of P974. BURROUGHS LIMITED AND THE COURT OF TAX APPEALS. private respondent filed with respondent court. G.058. Applying. vs.058. private respondent filed on December 24. No. pursuant to Sec. J.058. Makati. 1980 by then Acting Commissioner of Internal Revenue Hon. a foreign corporation. Claiming that the 15% profit remittance tax should have been computed on the basis of the amount actually remitted (P6.BIR Issuances and the Rules Relevant Thereto (Section 246. petitioner filed the instant petition before the Supreme Court.147. L-66653 June 19. ISSUE: Whether or not the principle of non-retroactivity of BIR rulings is applicable in the foregoing case? HELD: YES. Any profit remitted abroad by a branch to its head office shall be subject to a tax of fifteen per cent (15 %). On February 24. On June 27.058.499. 24 (b) (2) (ii) and remitted to its head office the amount of P6.90.90 which is the difference between the remittance tax actually paid of Pl. TaxCases_13 . Section 24 (b) (2) (ii) of the National Revenue Code states that: ―Tax on branch profits remittances. branch profit amounting to P7. NIRC) COMMISSIONER OF INTERNAL REVENUE.058. a petition for review for the recovery of the above-mentioned amount of P172. 1981.90 representing alleged overpaid branch profit remittance tax.R. Sometime in March 1979. the branch office of Burroughs Limited.058. therefore.81. respondents.00).999.647. the aforequoted ruling. Unable to obtain a reconsideration from the aforesaid decision. Metro Manila.30. 1986 PARAS.

or reversal of any of the rules and regulations promulgated in accordance with the preceding section or any of the rulings or circulars promulgated by the Commissioner shag not be given retroactive application if the revocation. 8-82 dated March 17.Nevertheless. petitioner contends that respondent is no longer entitled to a refund because Memorandum Circular No. necessarily the tax base should be the amount actually applied for by the branch with the Central Bank of the Philippines as profit to be remitted abroad. 1979. The said memorandum circular states—Considering that the 15% branch profit remittance tax is imposed and collected at source. The prejudice that would result to private respondent Burroughs Limited by a retroactive application of Memorandum Circular No. 1982 had revoked and/or repealed the BIR ruling of January 21.058. TaxCases_14 . Burroughs Limited does not fall under any of them.90. 1980. 1982 cannot be given retroactive effect in the light of Section 327 of the National Internal Revenue Code which provides – Any revocation. modification. insofar as the enumerated exceptions are concerned. (b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based. 8-82 is beyond question for it would be deprived of the substantial amount of P172. admittedly. modification. or reversal will be prejudicial to the taxpayer except in the following cases: (a) where the taxpayer deliberately misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue. 8-82 dated March 17. And. Memorandum Circular No. 1980 because private respondent Burroughs Limited paid the branch profit remittance tax in question on March 14. What is applicable in the case at bar is still the Revenue Ruling of January 21. Petitioner's aforesaid contention is without merit. or (c) where the taxpayer acted in bad faith.

Jr. (2) On other locally manufactured cigarettes. Jr. On 02 July 1993. — There shall be levied. addressed to the appellate division of the BIR.00) per pack. petitioner. the Commissioner classified Hope. sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. COURT OF TAX APPEALS and FORTUNE TOBACCO CORPORATION. fifty-five (55%) provided that the minimum tax shall not be less than Five Pesos (P5. Deoferio. 37-93 ("RMC 37-93"). In a letter of then Commissioner of Internal Revenue Bienvenido A. 1996 VITUG. In a letter. J.: FACTS: On various dates. Fortune Tobacco requested for a review. However. Revenue Memorandum Circular No. ISSUE: Whether or not RMC 37-93 is a legislative rule which requires compliance with due process requirements before its enforcement? TaxCases_15 . vs." A bill. was enacted.' and 'More' as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign companies. Fortune Tobacco received. G. on 10 June 1993. 7654." "Hope. was issued by the BIR. In the said Revenue Memorandum. the CIR assessed Fortune Tobacco for ad valorem tax deficiency amounting to P9.COMMISSIONER OF INTERNAL REVENUE.R. which later became Republic Act No. assessed and collected on cigarettes packed by machine a tax at the rates prescribed below based on the constructive manufacturer's wholesale price or the actual manufacturer's wholesale price. to Deputy Minister Ramon Diaz of the Presidential Commission on Good Government. About a month after the enactment and two (2) days before the effectivity of RA 7654. Proof was also submitted to the BIR that 'Champion' was an original Fortune Tobacco Corporation register and therefore a local brand. a certified xerox copy of RMC 37-93. No. whichever is higher: (1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent (55%) or the exportation of which is not authorized by contract or otherwise..598." and "More" cigarettes. The following day.' thereby removing the said brands from the foreign brand category. Tan.. 119761 August 29.00) per pack. More and Champion as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.' 'Hope. HON. The request was denied on 29 July 1993. COURT OF APPEALS. "the initial position of the Commission was to classify 'Champion.respondents. BIR Deputy Commissioner Victor A. HON. On 15 July 1993. It amended Section 142(c)(1) of the National Internal Revenue Code to read. forty-five percent (45%) provided that the minimum tax shall not be less than Three Pesos (P3. dated 19 July 1993.00. by ordinary mail. as follows: (c) Cigarettes packed by machine.334. Fortune Tobacco changed the names of 'Hope' to 'Hope Luxury' and 'More' to 'Premium More. the Philippine Patent Office issued Fortune Tobacco Corporation separate certificates of trademark registration over "Champion. reconsideration and recall of RMC 37-93.

without RMC 37-93. particularly considering the circumstances under which it has been issued." "Premium More. the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or increases the burden of those governed. its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed. as amended." and "Champion" cigarettes were in the category of locally manufactured cigarettes not bearing foreign brand subject to 45% ad valorem tax. of hearing. the new law would have its amendatory provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so classified as bearing foreign brands. before that new issuance is given the force and effect of law. verily. On the other hand. would have had no new tax rate consequence on private respondent's products. a reading of RMC 37-93. interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing. Specifically. Prior to the issuance of the questioned circular. it is generally required that before a legislative rule is adopted there must be hearing. the now disputed RMC 3793 had to be issued. Evidently." and "Champion" cigarettes within the scope of the amendatory law and subject them to an increased tax rate. the enactment of RA 7654. When. TaxCases_16 . designed to implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit of public hearing. and of publication should not have been then ignored. it legislated under its quasi-legislative authority. "Hope Luxury. it behoves the agency to accord at least to those directly affected a chance to be heard. been made in order to place "Hope Luxury. A legislative rule is in the nature of subordinate legislation. and thereafter to be duly informed.HELD: YES. upon the other hand. The due observance of the requirements of notice. in fact and most importantly. Hence. It should be understandable that when an administrative rule is merely interpretative in nature. In this case. the BIR not simply interpreted the law. convinces us that the circular cannot be viewed simply as a corrective measure (revoking in the process the previous holdings of past Commissioners) or merely as construing Section 142(c)(1) of the NIRC. but has. in order to place "Hope Luxury. In so doing." "Premium More" and "Champion" within the classification of locally manufactured cigarettes bearing foreign brands and to thereby have them covered by RA 7654." "Premium More.

077.PHILIPPINE BANK OF COMMUNICATIONS.795. Hence. petitioner instituted a Petition for Review before the Court of Tax Appeals. But during these two years. COURT OF TAX APPEALS and COURT OF APPEALS. NIRC. the BIR issued Tax Debit Memo.00.129. On the other hand.00. Pending the investigation of the respondent Commissioner of Internal Revenue. COMMISSIONER OF INTERNAL REVENUE. TaxCases_17 . the petitioner likewise reported a net loss of P14. The taxes due were settled by applying PBCom's tax credit memos and accordingly. petitioner requested the Commissioner of Internal Revenue. 1987.: FACTS: Philippine Bank of Communications filed its quarterly income tax returns for the first and second quarters of 1985. The lessees withheld and remitted to the BIR withholding creditable taxes of P282. On August 7. The Memorandum Circular. this Petition. The CTA rendered a decision which denied the request of petitioner for a tax refund or credit.69. No. J. PBCom earned rental income from leased properties. Said decision was affirmed by the Court of Appeals. was issued by the Acting Commissioner of Internal Revenue. stating that the taxpayer should still file a claim for a refund or tax credit and corresponding petition for review within the two-year prescription period. cannot be given weight for to do so would in effect amend the statute. and that the lengthening of the period of limitation on refund from two to ten years would be adverse to public policy and run counter to the positive mandate of Sec. ruled that the RMC No. on July 25. Thereafter.602. the decision.795. and paid the total income tax of P5. reported profits. G. 1986. Subsequently. .954. among others. petitioner filed a claim for refund of creditable taxes withheld by their lessees from property rentals in 1985 for P282. hence.00 representing the overpayment of taxes in the first and second quarters of 1985.50 and in 1986 for P234. 230. for a tax credit of P5. and thus declared no tax payable for the year. petitioner. respondent.50 in 1985 and P234.69 in 1986. NIRC). ISSUE: Whether or not non-retroactivity of BIR rulings is applicable in the foregoing case? HELD: NO. 112024 January 28. Estoppel has no application in the case at bar because it was not the Commissioner of Internal Revenue who denied petitioner's claim of refund or tax credit.016. Rather. however. stating that a taxpayer may recover the excess income tax paid within 10 years from date of payment because this is an obligation created by law. 1988. PBCom suffered losses so that when it filed its Annual Income Tax Returns for the year-ended December 31.954. 1999 QUISUMBING.077. 230. vs.was the ruling and judicial interpretation of the Court of Tax Appeals. 7-85 issued by the Commissioner of Internal Revenue is an administrative interpretation which is out of harmony with or contrary to the express provision of a statute (specifically Sec. it was the Court of Tax Appeals who denied (albeit correctly) the claim and in effect.016.R.

Subsequently. Reyes. petitioner issued Revenue Memorandum Circular (RMC) No. respondent. Petitioner contends that the subject revenue orders were issued pursuant to his power "to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws. 113459 November 18. holding that the revenue orders are not assessments to implement a Tax Code provision. the case falls within the exclusive appellate jurisdiction of the Court of Tax Appeals. ISSUE: Whether or not the CTA exercises appellate jurisdiction over the foregoing case? HELD: YES. issued Revenue Memorandum Order (RMO) No. asked for a reconsideration of both RMO No. Lending investors shall pay a tax equivalent to five (5%) per cent of their gross income. through then Presiding Judge Andres B. herein respondent Josefina Leal. Rizal." and which only Congress is empowered to impose. (Tax Code). 15-91 was an offshoot of petitioner‘s evaluation that the nature of pawnshop business is akin to that of "lending investors". TaxCases_18 . 15-91 and RMC No. 1125. citing Section 7 (1) of Republic Act No. 2002 SANDOVAL-GUTIERREZ. 221-91. 15-91 imposing 5% lending investor‘s tax on pawnshops based on their gross income and requiring all investigating units of the Bureau of Internal Revenue (BIR) to investigate and assess the lending investor‘s tax due from them. Adversely affected by those revenue orders. Petitioner. The issuance of RMO No. but are "in effect new taxes (against pawnshops) which are not provided for under the Code. owner and operator of Josefina‘s Pawnshop in San Mateo. 4391 subjecting the pawn ticket to the documentary stamp tax as prescribed in Title VII of the Tax Code. petitioner. vs." Thus. G. 1158. lending investors. respondent filed with the Regional Trial Court a petition for prohibition seeking to prohibit petitioner from implementing the revenue orders. issued an order denying the motion to dismiss. The RTC. J.. JOSEFINA LEAL. – Dealers in securities shall pay a tax equivalent to six (6%) per centum of their gross income." The Commissioner of Internal Revenue. which provides: "Percentage tax on dealers in securities. filed a motion to dismiss the petition on the ground that the RTC has no jurisdiction to review the questioned revenue orders and to enjoin their implementation. Jr. through the Office of the Solicitor General. No.R.: FACTS: Pursuant to Section 116 of Presidential Decree No. 43-91 but the same was denied with finality by petitioner in its BIR Ruling No. Consequently.Cases that may be Decided by the CIR COMMISSIONER OF INTERNAL REVENUE petitioner.

or the Commissioner of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling." Here. Who may appeal. except as herein provided. 1125 (An Act Creating the Court of Tax Appeals). respondent Josefina Leal. Jurisdiction. x x x x x x x x x. x x x x x x x x x. association or corporation adversely affected by a decision or ruling of the Commissioner of Internal Revenue. 7. – Any person.(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments. not the RTC. as herein provided .The questioned RMO No. 43-91 are actually rulings or opinions of the Commissioner implementing the Tax Code on the taxability of pawnshops. as amended. TaxCases_19 . refunds of internal revenue taxes. the Court of Appeals erred in holding that the RTC order should have been challenged before this Court. as earlier mentioned. being a pawnshop owner. 11. fees or other charges. – No judicial proceedings against the Government involving matters arising under the National Internal Revenue Code. the Customs Law or the Assessment Law shall be maintained. or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue. until and unless an appeal has been previously filed with the Court of Tax Appeals and disposed of in accordance with the provisions of this Act. she should have filed her petition with the Court of Tax Appeals. Indeed. – The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. such rulings of the Commissioner of Internal Revenue are appealable to that court. 15-91 and RMC No. 18. penalties imposed in relation thereto. thus: "SEC. x x x. is assailing the revenue orders imposing 5% lending investor‘s tax on pawnshops issued by petitioner. Under Republic Act No. SEC. x x x x x x x x x. effect of appeal. SEC. Clearly then.

disallowed the EWT assessment on rental expense since it found that the total rental deposit of P10. acting on the protest. The CIR therefore elevated the case before the Supreme Court arguing among others that LOA 19734. the CIR issued final assessment notices.R. The very provision of the Tax Code that the CIR relies on is unequivocal with regard to its power to grant authority to examine and assess a taxpayer. No. That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. however. TaxCases_20 . Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement. 2010 MENDOZA.Requirement of Issuance of a Letter of Authority COMMISSIONER OF INTERNAL REVENUE. After trial. Respondent. a Letter of Authority or LOA is the authority given to the appropriate revenue officer assigned to perform assessment functions. the CIR issued Letter of Authority No. Petitioner. the formal letter of demand and the details of discrepancies. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax. vs. within 30 days after the lapse of 180 days from submission of the said supporting documents to the CIR.821. Based on Section 13 of the Tax Code." On December 6. On October 24.: FACTS: On November 24. Thereafter. Sony sought re-evaluation of the aforementioned assessment by filing a protest on February 2. 1998. ISSUE: Whether or not the Letter of Authority is valid for the years other than 1997? HELD: NO. Sony submitted relevant documents in support of its protest on the 16th of that same month. SONY PHILIPPINES. although it states "the period 1997 and unverified prior years. SEC. a preliminary assessment for 1997 deficiency taxes and penalties was issued by the CIR which Sony protested. J. 000019734 (LOA 19734) authorizing certain revenue officers to examine Sony‘s books of accounts and other accounting records regarding revenue taxes for "the period 1997 and unverified prior years. 1999. 1998. the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided.. – (A)Examination of Returns and Determination of tax Due. INC. G.99 was incurred from January to March 1998 which was beyond the coverage of LOA 19734. 6." should be understood to mean the fiscal year ending in March 31. the among others. 2000.523. – After a return has been filed as required under the provisions of this Code. Sony filed a petition for review before the CTA. 178697 November 17. 2000.

" For said reason.Clearly. Upon review. If the audit of a taxpayer shall include more than one taxable period. The practice of issuing L/As covering audit of "unverified prior years is hereby prohibited. 1998. As pointed out by the CTA-First Division in its April 28. the assessment or examination is a nullity. if CIR wanted or intended the investigation to include the year 1998. the CTA-EB even added that the coverage of LOA 19734. In the absence of such an authority. it should have done so by including it in the LOA or issuing another LOA. the pertinent portion of which reads: A Letter of Authority should cover a taxable period not exceeding one taxable year. As earlier stated. Equally important is that the revenue officer so authorized must not go beyond the authority given. TaxCases_21 . 1990. 2005 Resolution. there must be a grant of authority before any revenue officer can conduct an examination or assessment. the CIR knew which period should be covered by the investigation. LOA 19734 covered "the period 1997 and unverified prior years. the CIR acting through its revenue officers went beyond the scope of their authority because the deficiency VAT assessment they arrived at was based on records from January to March 1998 or using the fiscal year which ended in March 31. 43-90 dated September 20. particularly the phrase "and unverified prior years. Thus. the other periods or years shall be specifically indicated in the L/A." violated Section C of Revenue Memorandum Order No.

the CTA denied petitioner‘s Motion for Issuance of Subpoenas and disallowed the submission by petitioner of written interrogatories to Sablan. By Resolution of January 15. COMMISSIONER ON INTERNAL REVENUE. there was no basis to assume that it had already earned income for the tax year 1995.: FACTS: On March 17. Take Testimony FITNESS BY DESIGN. 2008 CARPIO MORALES. and official receipts and turned them over to the BIR. 2006. Petitioner thus requested for the issuance of another subpoena ad testificandum to Sablan for the hearing scheduled on October 23. for deficiency income taxes for the tax year 1995 in the total amount of P10.647. petitioner claimed that since it was incorporated only on May 30. respondent. Petitioner complied with the CTA order. documents. on respondent‘s counsel‘s manifestation that he was not furnished a copy of petitioner‘s motion for the issuance of subpoenaes. as implemented by Section 12 of Finance Department Order No. 2006. invoices. vs. On petitioner‘s request. except when the information is proven to be malicious or false. J. it finding that the testimony. Petitioner protested the assessment on the ground that it was issued beyond the three-year prescriptive period under Section 203 of the Tax Code. 177982 October 17. No. INC. and the revenue officers. On February 1.529. a preliminary hearing on the issue of prescription was conducted during which petitioner‘s former bookkeeper attested that a former colleague – certified public accountant Leonardo Sablan – illegally took custody of petitioner‘s accounting records. 2007. G.Summon Persons. who is not a party to the case. petitioner submitted written interrogatories addressed to Sablan and to Henry Sarmiento and Marinella German. the CTA ordered petitioner to file a motion for the issuance of subpoenas and to furnish respondent‘s counsel a copy thereof. 2004.69. In a related move. During the scheduled hearing of the case on October 23. 7160. Additionally. revenue officers of the National Investigation Division of the BIR. 2005. petitioner. Value Added Tax. Documentary Stamp Tax and Surcharges and Interests subject of this Petition) before the Court of Tax Appeals before which it reiterated its defense of prescription. 46-66.. proscribing the revelation of identities of informers of violations of internal revenue laws. 2338.R. and admissions sought are not relevant. 2006 but he failed to appear. Besides. the Commissioner on Internal Revenue assessed Fitness by Design. Petitioner‘s requests were granted. ISSUE: Whether or not the Resolution issued was tainted by arbitrariness? TaxCases_22 . Inc. drawing petitioner to file a Petition for Review (with Motion to Suspend Collection of Income Tax. a subpoena ad testificandum was issued to Sablan for the hearing before the CTA scheduled on September 4. and of subpoena duces tecum to the chief of the National Investigation Division of the BIR for the production of the Affidavit of the Informer bearing on the assessment in question. On motion of petitioner in CTA Case No. 1995. the CTA found that to require Sablan to testify would violate Section 2 of Republic Act No. respondent issued a warrant of distraint and/or levy against petitioner.

The Court finds that the issuance by the CTA of the questioned resolutions was not tainted by arbitrariness. or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax. The only issues. receipts or sales and gross incomes of taxpayers. government agencies and instrumentalities. 2338 as implemented by Section 12 of Finance Department Order No. The law thus allows the BIR access to all relevant or material records and data in the person of the taxpayer. associations. (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation. paper. Thus Section 5 of the Tax Code provides: In ascertaining the correctness of any return. the Commissioner is authorized: (A) To examine any book. Petitioner impugns the manner in which the documents in question reached the BIR. or from any office or officer of the national and local governments. documents. The fact that Sablan was not a party to the case aside. costs and volume of production. joint accounts. 46-66. Nor does the lack of consent preclude the BIR from assessing deficiency taxes on petitioner based on the documents.HELD: NO. which surfaced during the preliminary hearing before the CTA. or other data. Sablan having allegedly submitted them to the BIR without its (petitioner‘s) consent. invoices. but not limited to. custody. as the CTA held. records. and (E) To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax. (D) To take such testimony of the person concerned. and financial statements of corporations. joint ventures or consortia and registered partnerships and their members. the subpoenas and answers to the written interrogatories would violate Section 2 of Republic Act No. as may be relevant or material to such inquiry. and admissions sought by petitioner are not indeed relevant to the issue before the CTA. to appear before the Commissioner or his duly authorized representatives at a time and place specified in the summons and to produce such books. or in making a return when none has been made. or in collecting any such liability. To require the consent of the taxpayer would defeat the intent of the law to help the BIR assess and collect the correct amount of taxes. addresses. and all persons owning or having the care. or any officer or employee of such person. the testimonies. and to give testimony. For in requesting the issuance of the subpoenas and the submission of written interrogatories. and the names. and receipts which were the bases of the assessment against it were illegally obtained. TaxCases_23 . insurance companies. Petitioner‘s lack of consent does not. including the Bangko Sentral ng Pilipinas and governmentowned and –controlled corporations. mutual fund companies. any information such as. imply that the BIR obtained them illegally or that the information received is false or malicious. record or other data which may be relevant or material to such query. petitioner sought to establish that its accounting records and related documents. management or possession of any object with respect to which a tax is imposed. or in determining the liability of any person for any internal revenue tax. regional operating headquarters of multinational companies. however. under oath. papers. however. Besides. or any person having possession. (C) To summon the person liable for tax or required to file a return. were whether respondent‘s issuance of assessment against petitioner had prescribed and whether petitioner‘s tax return was false or fraudulent. or in evaluating tax compliance. or any other person. and the BIR can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed.

Soquilon recommended to then Ombudsman Conrado M. J. G. JR. Inc. On November 29. The BIR moved to vacate the subpoena duces tecum arguing among others that compliance with the subpoena duces tecum would violate Sec. Without resolving the issues raised by the BIR. The BIR.. Inc. 277 of the same Code on procuring unlawful divulgence of trade secrets. and the subpoena duces tecum were directed to the public officials who have the official custody of the said records. The BIR moved to reconsider the Order but the Ombudsman denied the motion for reconsideration and reiterated its directive to the BIR to produce the documents. the Ombudsman issued another subpoena duces tecum. Millard Mansequiao of the Legal Department of the Bureau of Internal Revenue ordering him to appear before the Ombudsman and to bring the complete original case dockets of the refunds granted to Limtuaco and La Tondeña. vs. 115103 April 11..Rule on Confidentiality of Tax Returns and the Exceptions Thereto (Sections 71 and 270. Vasquez that the "case" be docketed and subsequently assigned to him for investigation. represented by the COMMISSIONER OF INTERNAL REVENUE. 269 of the National Internal Revenue Code on unlawful divulgence of trade secrets. respondent. OFFICE OF THE OMBUDSMAN.R. Upon receipt of the information. 2002 DE LEON. addressed to BIR Commissioner Liwayway Vinzons-Chato ordering her to appear before the Ombudsman and to bring the complete original case dockets of the refunds granted to Limtuaco and La Tondeña. The documents sought to be produced were only the case dockets of the tax refunds granted to Limtuaco and La Tondeña which are public records. Soquilon of the Office of the Ombudsman received information from an "informer-for-reward" regarding allegedly anomalous grant of tax refunds to Distillera Limtuaco & Co. No. petitioner. NIRC) BUREAU OF INTERNAL REVENUE. and La Tondeña Distilleries.: FACTS: Graft Investigation Officer II Christopher S. 269 of the National Internal Revenue Code on unlawful divulgence of trade secrets and Sec. asked that it be excused from complying with the subpoena duces tecum. The Ombudsman denied the Motion to Vacate the Subpoena Duces Tecum. the Ombudsman issued a subpoena duces tecum addressed to Atty. 1993. TaxCases_24 . The records do not show how the production of the subpoenaed documents would necessarily contravene Sec. Maza. ISSUE: Whether or not the subpoena duces tecum issued violates Sec 269 (now 270) of the NIRC? HELD: NO. through Assistant Commissioner for Legal Service Jaime M.

tax evasion. were to be produced by the petitioner BIR to respondent Office of the Ombudsman. that the case dockets of the tax refunds which were granted to Limtuaco and La Tondeña contain trade secrets. as a consequence thereof. TaxCases_25 . Vasquez . no similar excuse can be made for a privilege resting on other consideration. the plaintiff cannot enforce his legal rights. would not justify their non-production before the Ombudsman. even if the subpoenaed documents are treated as presumptively privileged. Assuming. Consequently. EIIB's function is the gathering and evaluation of intelligence reports and information regarding "illegal activities affecting the national economy. for the sake of argument. this decision would only justify ordering their inspection in camera but not their nonproduction. Indeed. subject of the subpoena duces tecum. diplomatic and similar matters. As this Court has underscored in Almote v. such as. that fact.At common law a governmental privilege against disclosure is recognized with respect to state secrets bearing on military. This privilege is based upon public interest of such paramount importance as in and of itself transcending the individual interests of a private citizen. even though. however. dollar salting. there is no claim that military or diplomatic secrets will be disclosed by the production of records pertaining to the personnel of EIB. Above all.We find no valid reason why the trade secrets of Limtuaco and La Tondeña would be unnecessarily disclosed if such official records. but not limited to economic sabotage. while in cases which involve state secrets it may be sufficient to determine from the circumstances of the case that there is reasonable danger that compulsion of the evidence will expose military maters without compelling production. smuggling. In the case at bar.

submitted by the informer. Acting Chief of CounterIntelligence Division of the Economic Intelligence and Investigation Bureau (EIIB). Rolando Gatmaitan conducted an investigation. inclusive of the machine copies of the Consumption Entries. Lt. the EIIB found that for 1987.414.989. the machine copies of the Consumption Entries. as well as excerpts from the entries certified by Tomas and Danganan. G. Maza.599. SR. Lt. sent a Letter dated April 15. Chief of the Investigation Division. respondent. and Lt. Almonte.. is arbitrary. through Assistant Commissioner for Collection Jaime M.78. 136975 March 31. Sometime in October 1989. and its corresponding income tax liability was P41. contending that its books of accounts and records of importation of synthetic resin and calcium bicarbonate had been investigated repeatedly by the BIR on prior occasions. FAS-1-87-91-001654 and FAS-4-87-91-001655. inclusive of penalty charge and interests. Compared with the declared sales based on the Profit and Loss Statements filed with the SEC.00 (inclusive of advance sales tax). Vicente Amoto.716.903.937. the 1987 importations of the respondent were understated in its accounting records. ISSUE: Whether or not the tax deficiency assessment against the respondent based on the certified copies of the Profit and Loss Statement submitted by the respondent to the SEC in 1987 and 1988. issued Mission Order No. Based on the documents/records on hand.00 but only declared P45. it is required to file an Import Entry and Internal Revenue Declaration (Consumption Entry) with the Bureau of Customs under Section 1301 of the Tariff and Customs Code. the respondent had unreported sales in the amount of P63. 1991 to the respondent demanding payment of its deficiency income tax of P13.527. Vicente Amoto and Lt. received confidential information that the respondent had imported synthetic resin amounting to P115. Acting on the said report. it imports synthetic resin and other chemicals for the manufacture of its products.018.538. However. as well as certifications of Tomas and Danganan.032.40 and deficiency sales tax of P14. Petitioner. J. based on photocopies of 77 Consumption Entries furnished by another informer. inclusive of surcharge and interest. Leo Dionela.694. capricious and illegal? TaxCases_26 . the Commissioner of Internal Revenue.: FACTS: Respondent is engaged in the sale of plastic products. According to the informer.R. The petitioner. vs. Series of 1987.Best Evidence Obtainable Rule COMMISSION OF INTERNAL REVENUE.752. HANTEX TRADING CO.17. the respondent had importations totaling P105. 398-89 dated November 14.. For this purpose. Jose T. 2005 CALLEJO.57. the respondent‘s president and general manager refused to comply with the subpoena.916. No. then Commissioner of the EIIB.. Appended thereto were the Assessment Notices of Tax Deficiency Nos.25.226. INC. Bienvenido G. 1989 for the audit and investigation of the importations of Hantex for 1987. Flores. They relied on the certified copies of the respondent‘s Profit and Loss Statement for 1987 and 1988 on file with the SEC.

custody. to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books. record-keeping capabilities from BIR scrutiny. or other data. government agencies or its instrumentalities. paper. reports and other documents. Among such powers are those provided in paragraph (b) thereof: Failure to submit required returns. including their gross profit and net profit sales. (4) To take such testimony of the person concerned. Such evidence also includes data. Central to the second issue is Section 16 of the NIRC of 1977. record or other data which may be relevant or material to such inquiry. Such records include computer tapes of the said records prepared by the taxpayer in the course of business. the accounting records of other taxpayers engaged in the same line of business. there is no valid reason to immunize companies with computer-based. includes the corporate and accounting records of the taxpayer who is the subject of the assessment process. under oath. and record. The best evidence obtainable may consist of hearsay evidence. or any officer or employee of such person. or any person having possession. or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax. In this era of developing information-storage technology. The standard is not the form of the record but where it might shed light on the accuracy of the taxpayer‘s return. the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise. data. The law allows the BIR access to all relevant or material records and data in the person of the taxpayer. TaxCases_27 . such as the SEC. It places no limit or condition on the type or form of the medium by which the record subject to the order of the BIR is kept. papers. inadmissible in a regular proceeding in the regular courts. and to give testimony. which shall be prima facie correct and sufficient for all legal purposes. document and information secured from government offices or agencies. including the Central Bank of the Philippines and government owned or controlled corporations. as amended. records. paper. statements. record. The purpose of the law is to enable the BIR to get at the taxpayer‘s records in whatever form they may be kept. such as the testimony of third parties or accounts or other records of other taxpayers similarly circumstanced as the taxpayer subject of the investigation. the Central Bank of the Philippines. as amended which provides that the Commissioner of Internal Revenue has the power to make assessments and prescribe additional requirements for tax administration and enforcement. The "best evidence" envisaged in Section 16 of the 1977 NIRC.HELD: YES. (3) To summon the person liable for tax or required to file a return. incomplete or erroneous. and the Tariff and Customs Commission. or willfully or otherwise files a false or fraudulent return or other document. document or any evidence gathered by internal revenue officers from other taxpayers who had personal transactions or from whom the subject taxpayer received any income. The petitioner may avail herself of the best evidence or other information or testimony by exercising her power or authority under paragraphs (1) to (4) of Section 7 of the NIRC: (1) To examine any book. In case a person fails to file a required return or other document at the time prescribed by law. as may be relevant or material to such inquiry. the Commissioner shall assess the proper tax on the best evidence obtainable. the Bureau of Customs. hence. or any other person. – When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation or when there is reason to believe that any such report is false. (2) To obtain information from any office or officer of the national and local governments.

or even the amount of P110. the best evidence obtainable under Section 16 of the 1977 NIRC. the petitioner acted arbitrarily and capriciously in relying on and giving weight to the machine copies of the Consumption Entries in fixing the tax deficiency assessments against the respondent. it appears that the total cost of importations inclusive of advance sales tax is only P64. arbitrary and capricious. The petitioner is not required to compute such tax liabilities with mathematical exactness. The rule is that in the absence of the accounting records of a taxpayer.61 arrived at by Deputy Commissioner Deoferio.491. Even if the Court would concede to the petitioner‘s contention that the certification of Tomas and Danganan authenticated the machine copies of the Consumption Entries referred to in the certification. The petitioner cannot rely on the presumption that she and the other employees of the BIR had regularly performed their duties.00 – far from the amount of P105. only 36 of the entry numbers of such copies are included in the said certifications.716.953. the petitioner has no other evidence to prove that the respondent imported goods costing P105. The original copies of the Consumption Entries were of prime importance to the BIR.00 for 1987 have no factual basis. Comparing the certifications of Tomas and Danganan and the machine copies of the Consumption Entries.761. the computations of the EIIB and the BIR on the quantity and costs of the importations of the respondent in the amount of P105. The reason for this is that such copies are mere scraps of paper and are of no probative value as basis for any deficiency income or business taxes against a taxpayer.324. cannot anchor the said assessment on mere machine copies of records/documents. It can choose to give weight or disregard such evidence.761. in making a preliminary and final tax deficiency assessment against a taxpayer. Mere photocopies of the Consumption Entries have no probative weight if offered as proof of the contents thereof. Jr.00 arrived at by the EIIB and the BIR. The petitioner did not adduce any documentary evidence to prove otherwise. hence. However. In fine. his tax liability may be determined by estimation. and merely indicated therein the entry numbers of Consumption Entries and the dates when the Bureau of Customs released the same. The petitioner.527. does not include mere photocopies of records/documents.00 on the worthless machine copies of the Consumption Entries. then.527.079. the goods covered by the Consumption Entries were released by the Bureau of Customs.00. As gleaned from the certifications of Tomas and Danganan. the rule does not apply where the estimation is arrived at arbitrarily and capriciously. TaxCases_28 . the entry numbers of the rest of the machine copies of the Consumption Entries are not found therein.527. Approximation in the calculation of the taxes due is justified.527. To hold otherwise would be tantamount to holding that skillful concealment is an invincible barrier to proof. as amended. from which it can be presumed that the respondent must have paid the taxes due on the said importation. It can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. Aside from such copies. The petitioner cannot find solace on the certifications of Tomas and Danganan because they did not authenticate the machine copies of the Consumption Entries. Admissions in the said entries of the importers‘ documents are admissions against interest and presumptively correct. The certifications of Tomas and Danganan do not even contain the landed costs and the advance sales taxes paid by the importer. The petitioner based her finding that the 1987 importation of the respondent was underdeclared in the amount of P105. if any. This is so because such entries are under oath and are presumed to be true and correct under penalty of falsification or perjury. depending on its trustworthiness.761.Moreover. However. Thus. the general rule is that administrative agencies such as the BIR are not bound by the technical rules of evidence.

47. 1966.241. No.641. The issues raised are clearly factual and must be resolved on the basis of the evidence adduced before the tax court.44. petitioner required respondent to pay P3. On the other hand.756. J.1970.846. EMBROIDERY AND GARMENTS INDUSTRIES (PHIL.68. vs. inclusive of 75% surcharge and penalty as advance sales tax for the years 1959 to 1961 and.798.500. 1990.% for women's clothing materials and faked its invoices to reduce its costs of importation.COMMISSIONER OF INTERNAL REVENUE. 1999 PARDO. 1966. and is liable for 50% surcharge for fraud? HELD: NO. petitioner assessed respondent the sum of P436..R.). the Court of Tax Appeals held that the assessments were doubtful validity as they were based on the incompetent evidence consisting of an informant's report and the sworn statement of the disgruntled former general manager of respondent that in the years in question respondent sold all its dollar quotas to local Chinese textile traders at an overprice or premium on the dollar value of textile importation of 80% for suiting materials and 70. as advance sales tax and 75% surcharge corresponding to the same years. No. inclusive of 50% surcharge and 1/2% monthly interest as deficiency income tax for the years 1959 to 1961. In its decision. 1971 . assessed deficiency income tax in the sum of P4. 96262 March 22. reversed the BIR decision. the Court of Tax Appeals rendered decision finding respondent not liable for deficiency income tax and advance sales tax assessed against it. 3137). TaxCases_29 . or disputed presumptions. on March 23. On January 15. which dollar quota rights were allocated by the Central Bank of the Philippines to enable respondent to import tax-free textile raw materials to be manufactured into finished products for re-export pursuant to the provisions of the Embroidery Law (R. and accordingly. petitioner issued to respondent a revised assessment requiring the latter to pay the amount of P2. Respondent protested the assessments. not imposed based on unverified information supplied by an informant. A. respondent. On December 22.799. petitioner. G. inclusive of 50% surcharge and 1/2% monthly interest for the years 1960 and 1961. The tax court ruled that the assessments must be based on actual facts and proved by competent evidence.: FACTS: On January 4. On October 14. and on December 9. 1970. INC.95. ISSUE: Whether or not respondent is liable for deficiency income tax and advance sales tax in view of its failure to declare its income realized for the years 1959 to 1961 from the sales of its dollar quota to local Chinese textile dealers at a premium of 70% to 80% of the dollar value. respondent filed with the Court of Tax Appeals a petition for review of the disputed tax assessments. respondent adduced evidence consisting of official records of the Bureau of Customs that its tax-free importation's had been re-exported to their suppliers in accordance with the Embroidery Law and cleared by the Bureau of Customs.

it is a. with certain well recognized exceptions. (5) when the findings of fact are conflicting. and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. Findings of fact of the Court of Appeals and even of the tax court are final. (4) when the judgment is based on a misapprehension of facts. in making its findings. the star witness had died. (3) where there is grave abuse of discretion. In the meantime. (8) when the findings of fact are conclusions without citation of specific evidence on which they are based. would justify a different conclusion. (9) when the Court of Appeals overlooked certain relevant facts not disputed by the parties.The case tarried too long in the tax court. TaxCases_30 . This case does not come within any of the exceptions. which will not be reviewed or disturbed on appeal unless these findings are not supported by evidence. absurd or impossible. if properly considered. What is more. and the needed originals of documentary evidence could no longer be located. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. which must be distinctly set forth. binding or conclusive on the parties and upon this Court. (2) when the inference made is manifestly mistaken. such as (1) when the conclusion is grounded entirely on speculations surmises or conjectures. (6) when the Court of Appeals. fundamental rule that on appeal via certiorari from a decision of the Court of Appeals to the Supreme Court may raise only questions of law. (7) when the findings of the Court of Appeals are contrary to those of the trial courts. which.

respondent sent a letter protesting the assessments made by Director Sacamos. for the consideration of Three Million One Hundred Thousand Pesos (Php 3. 1999. Ruling in favor of respondent. however. NIRC) COMMISSION OF INTERNAL REVENUE. On October 1. Revenue District Officer Gil G. Petitioner. 2010 PERALTA.00. TaxCases_31 . On December 22. No. 000. Respondent then filed a Capital Gains Tax Return/Application for Certification Authorizing Registration and paid the amount of Php186. 170389 October 20. the CTA promulgated a Decision ruling in favor of respondent. Respondent. It is undisputed that at the time of the sale of the subject properties found in Barrio Banica. including improvements thereon.: FACTS: On June 7. Subsequently. two parcels of land. the same were classified as "RR. the law is clear that the same has to be done upon consultation with competent appraisers both from the public and private sectors. respondent Aquafresh Seafoods Inc.500. Tabanda issued Certificate Authorizing Registration No. the CTA opined that that the existing Revised Zonal Values in the City of Roxas should prevail for purposes of determining respondent's tax liabilities. vs. representing the Capital Gains Tax (CGT) and the amount of Php46. The Bureau of Internal Revenue. ISSUES: Whether or not the requirement of consultation with competent appraisers both from public and private sectors in determining the fair market value of the subject lots is applicable in the instant case? Whether or not the court of tax appeals EN BANC committed grave error in applying the fair market value based on the zonal valuation of a residential land as tax base in the computation of capital gains tax and documentary tax stamp tax deficiencies of respondent? HELD: YES. received a report that the lots sold were undervalued for taxation purposes. Inc.Fixing of Real Property Values (Section 6E. the SID concluded that the subject properties were commercial with a zonal value of Php2. 2004. After the investigation. AQUAFRESH SEAFOODS..00 per square meter. based on the 1995 Revised Zonal Value of Real Properties. located at Barrio Banica. 1071477. Roxas City. sold to Philips Seafoods. 2000.00.000.000. representing the Documentary Stamp Tax (DST) due from the said sale. G." or residential. Roxas City.R. While the CIR has the authority to prescribe real property values and divide the Philippines into zones.100.00). This prompted the Special Investigation Division (SID) of the BIR to conduct an occular inspection over the properties. J. INC.

In addition. are assessed on the basis of valuation. Again. the same must be followed for purposes of computing the CGT and DST. (3) Except in cases of correction or adjustment. where the subject lots are situated. petitioner's act of classifying the subject properties involves a re-classification and revision of the prescribed zonal values. Petitioner's act of re-classifying the subject properties from residential to commercial cannot be done without first complying with the procedures prescribed by law. the schedule takes effect (15) days after its publication in the Official Gazette or in any newspaper of general circulation. It must be noted that under the schedule of zonal values. Petitioner failed to prove that it had complied with Revenue Memorandum No. Thus. it has a prescribed zonal value of Php650. notwithstanding petitioner's disagreement to the classification of the subject properties. the TCRPV finalizes the schedule and submits the same to the Executive Committee on Real Property Valuation (ECRPV). Accordingly. It bears to stress that ALL the properties in Barrio Banica were classified as residential. As mentioned earlier. has a single classification only – that of a residential area.: (1) The submission or review by the Revenue District Offices Sub-Technical Committee of the schedule of recommended zonal values to the TCRPV. The Court need not belabor on the applicability of Section 2 (a). Thereafter. such as CGT and DST. viz. Thus. Even assuming arguendo that the subject properties were used for commercial purposes. (4) Upon approval of the schedule of zonal values by the ECRPV.00 per square meter. but the predominant use of other classification of properties located in the zone. under the 1995 Revised Zonal Values of Real Properties.00 per square meter. cannot unilaterally change the zonal valuation of such properties to "commercial" without first conducting a re-evaluation of the zonal values as mandated under Section 6(E) of the NIRC. TaxCases_32 . Barangay Banica. as the BIR itself has already ruled that the same shall apply only when the real property is located in an area or zone where the properties are not yet classified and their respective zonal valuation are not yet determined. the same remains to be residential for zonal value purposes.‘" Zonal value is determined for the purpose of establishing a more realistic basis for real property valuation. the same is embodied in a Department Order for implementation and signed by the Secretary of Finance. NO. Revenue Memorandum No. it is undisputed that the entire Barrio Banica has been classified as residential.Petitioner. the zonal valuation existing at the time of the sale should be taken into account. (2) The evaluation by TCRPV of the submitted schedule of recommended zonal values of real properties. The Court agrees with the observation of the CTA that "zonal valuation was established with the objective of having an ‗efficient tax administration by minimizing the use of discretion in the determination of the tax based on the part of the administrator on one hand and the taxpayer on the other hand. the subject properties were already part of the 1995 Revised Zonal Value of Real Properties which classified the same as residential with a zonal value of Php650. thus. Section 2 (a) clearly has no application. thus. Since internal revenue taxes. It appears that actual use is not considered for zonal valuation. 58-69 and that a revision of the 1995 Revised Zonal Values of Real Properties was made prior to the sale of the subject properties. 58-69 provides for the procedures on the establishment of the zonal values of real properties.

Non-Delegable Powers in Relation to Section 16, NIRC
REPUBLIC OF THE PHILIPPINES, represented by the Commissioner of the
Bureau of Internal Revenue (BIR), petitioner,
vs.
SALUD V. HIZON, respondent.
G.R. No. 130430

December 13, 1999

MENDOZA, J.:
FACTS:
On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency
income tax assessment of P1,113,359.68 covering the fiscal year 1981-1982.
Respondent not having contested the assessment, petitioner, on January 12, 1989,
served warrants of distraint and levy to collect the tax deficiency. However, for
reasons not known, it did not proceed to dispose of the attached properties.
Respondent moved to dismiss the case on two grounds: (1) that the complaint
was not filed upon authority of the BIR Commissioner as required by §221 2 of the
National Internal Revenue Code, and (2) that the action had already prescribed.
ISSUE:
Whether or not the institution of the civil case for collection of taxes was
without the approval of the commissioner in violation of section 221 of the NIRC?
HELD:
YES.
There is no question that the National Internal Revenue Code explicitly provides
that in the matter of filing cases in Court, civil or criminal, for the collection of taxes,
etc., the approval of the commissioner must first be secured. An action will not
prosper in the absence of the commissioner's approval.
Sec. 221 of the NIRC provides: Form and mode of proceeding in actions arising
under this Code. — Civil and criminal actions and proceedings instituted in behalf of
the Government under the authority of this Code or other law enforced by the Bureau
of Internal Revenue shall be brought in the name of the Government of the Philippines
and shall be conducted by the provincial or city fiscal, or the Solicitor General, or by
the legal officers of the Bureau of Internal Revenue deputized by the Secretary of
Justice, but no civil and criminal actions for the recovery of taxes or the enforcement
of any fine, penalty or forfeiture under this Code shall begin without the approval of
the Commissioner.
Revenue Administrative Order No. 10-95 specifically authorizes the Litigation
and Prosecution Section of the Legal Division of regional district offices to institute the
necessary civil and criminal actions for tax collection. As the complaint filed in this
case was signed by the BIR's Chief of Legal Division for Region 4 and verified by the
Regional Director, there was, therefore, compliance with the law. The rule is that as
long as administrative issuances relate solely to carrying into effect the provisions of
the law, they are valid and have the force of law.
As amended by R.A. No. 8424, the NIRC is now even more categorical. Sec. 7
of the present Code authorizes the BIR Commissioner to delegate the powers vested
in him under the pertinent provisions of the Code to any subordinate official with the
TaxCases_33

rank equivalent to a division chief or higher, except the following: (a) The power to
recommend the promulgation of rules and regulations by the Secretary of Finance; (b)
The power to issue rulings of first impression or to reverse, revoke or modify any
existing ruling of the Bureau; (c) The power to compromise or abate under §204 (A)
and (B) of this Code, any tax deficiency: Provided, however, that assessment issued
by the Regional Offices involving basic deficiency taxes of five hundred thousand
pesos (P500,000.00) or less, and minor criminal violations as may be determined by
rules and regulations to be promulgated by the Secretary of Finance, upon the
recommendation of the Commissioner, discovered by regional and district officials,
may be compromised by a regional evaluation board which shall be composed of the
Regional Director as Chairman, the Assistant Regional Director, heads of the Legal,
Assessment and Collection Divisions and the Revenue District Officer having
jurisdiction over the taxpayer, as members; and (d) The power to assign or reassign
internal revenue officers to establishments where articles subject to excise tax are
produced or kept.
None of the exceptions relates to the Commissioner's power to approve the filing
of tax collection cases.

TaxCases_34

Authority to Abate and Compromise Tax Liabilities (Section 6F(2), 204
of NIRC, in rel. to Rev. Regs. 30-2002 as amended by RR No. 8-2004
PHILIPPINE NATIONAL OIL COMPANY, Petitioner,
vs.
THE HON. COURT OF APPEALS, THE COMMISSIONER OF INTERNAL
REVENUE and TIRSO SAVELLANO, Respondents.
G.R. No. 109976
April 26, 2005
x--------------------x
PHILIPPINE NATIONAL BANK, Petitioner,
vs.
THE HON. COURT OF APPEALS, COURT OF TAX APPEALS, TIRSO B.
SAVELLANO and COMMISSIONER OF INTERNAL REVENUE, Respondents.
G.R. No. 112800

April 26, 2005

CHICO-NAZARIO, J.:
FACTS:
The Petitions originated from a sworn statement submitted by private
respondent Tirso B. Savellano to the BIR on 24 June 1986. Through his sworn
statement, private respondent Savellano informed the BIR that PNB had failed to
withhold the 15% final tax on interest earnings and/or yields from the money
placements of PNOC with the said bank, in violation of P.D. No. 1931. P.D. No. 1931,
which took effect on 11 June 1984, withdrew all tax exemptions of government-owned
and controlled corporations.
On 08 October 1986, the BIR sent a demand letter to PNB, as withholding
agent, for the payment of the final tax on the interest earnings and/or yields from
PNOC's money placements with the bank, from 15 October 1984 to 15 October 1986,
in the total amount of P376, 301,133.33. On the same date, the BIR also mailed a
letter to PNOC informing it of the demand letter sent to PNB.
On 09 June 1987, PNOC made an offer to the BIR to settle its tax liability. This
time, however, PNOC proposed a compromise by paying P91,003,129.89, representing
30% of the P303,343,766.29 basic tax, in accordance with the provisions of E.O. No.
44.
Then BIR Commissioner Bienvenido A. Tan, in a letter, dated 22 June 1987,
accepted the compromise. The BIR received a total tax payment on the interest
earnings and/or yields from PNOC's money placements with PNB in the amount of
P93,955,479.12.
Private respondent Savellano, through four installments, was paid the
informer's reward in the total amount of P14,093,321.89, representing 15% of the
P93,955,479.12 tax collected by the BIR from PNOC and PNB. He received the last
installment on 01 December 1987.
On 07 January 1988, private respondent Savellano, through his legal counsel,
wrote the BIR to demand payment of the balance of his informer's reward. BIR
Commissioner Tan replied through a letter, dated 08 March 1988, that private
respondent Savellano was already fully paid the informer's reward equivalent to 15%
of the amount of tax actually collected by the BIR pursuant to its compromise
agreement with PNOC.
BIR Commissioner Tan further explained that the compromise was in
accordance with the provisions of E.O. No. 44, RMO No. 39-86, and RMO No. 4-87.

TaxCases_35

ISSUE:
Whether or not PNOC could apply for a compromise under E.O. No. 44?
HELD:
NO.
PNOC could not apply for a compromise under E.O. No. 44 because its tax
liability was not a delinquent account or a disputed assessment as of 31 December
1985.
E.O. No. 44 granted the BIR Commissioner or his duly authorized
representatives the power to compromise any disputed assessment or delinquent
account pending as of 31 December 1985, upon the payment of an amount equal to
30% of the basic tax assessed; in which case, the corresponding interests and
penalties shall be condoned. E.O. No. 44 took effect on 04 September 1986 and
remained effective until 31 March 1987.
The disputed assessments or delinquent accounts that the BIR Commissioner
could compromise under E.O. No. 44 are defined under Revenue Regulation (RR) No.
17-86, as follows: a) Delinquent account – Refers to the amount of tax due on or
before December 31, 1985 from a taxpayer who failed to pay the same within the time
prescribed for its payment arising from (1) a self assessed tax, whether or not a tax
return was filed, or (2) a deficiency assessment issued by the BIR which has become
final and executory. Where no return was filed, the taxpayer shall be considered
delinquent as of the time the tax on such return was due, and in availing of the
compromise, a tax return shall be filed as a basis for computing the amount of
compromise to be paid. b) Disputed assessment – refers to a tax assessment
disputed or protested on or before December 31, 1985 under any of the following
categories: 1) if the same is administratively protested within thirty (30) days from the
date the taxpayer received the assessment, or 2) if the decision of the BIR on the
taxpayer's administrative protest is appealed by the taxpayer before an appropriate
court.
PNOC's tax liability could not be considered a delinquent account since (1) it
was not self-assessed, because the BIR conducted an investigation and assessment of
PNOC and PNB after obtaining information regarding the non-withholding of tax from
private respondent Savellano; and (2) the demand letter, issued against it on 08
August 1986, could not have been a deficiency assessment that became final and
executory by 31 December 1985.
It is not denied herein that the self-assessing system governs Philippine internal
revenue taxes. The dissenting opinion itself defines self-assessed tax as, "a tax that
the taxpayer himself assesses or computes and pays to the taxing authority." Clearly,
such a system imposes upon the taxpayer the obligation to conduct an assessment of
himself so he could determine and declare the amount to be used as tax basis, any
deductions therefrom, and finally, the tax due.
E.O. No. 44 covers self-assessed tax, whether or not a tax return was
filed. The phrase "whether or not a tax return was filed" only refers to the compliance
by the taxpayer with the obligation to file a return on the dates specified by law, but it
does not do away with the requisite that the tax must be self-assessed in order for the
taxpayer to avail of the compromise.
The second paragraph of Section 2(a) of RR No. 17-86 expressly commands,
and still imposes upon the taxpayer, who is availing of the compromise under E.O. No.
44, and who has not previously filed any return, the duty to conduct self-assessment
by filing a tax return that would be used as the basis for computing the amount of
compromise to be paid.
TaxCases_36

Neither PNOC nor PNB, the taxpayer and the withholding agent, respectively,
conducted self-assessment in this case. There is no showing that in the absence of
the tax assessment issued by the BIR against them, that PNOC and/or PNB would
have voluntarily admitted their tax liabilities, already amounting to P385,961,580.82,
as of 15 November 1986, and would have offered to compromise the same. In fact,
both PNOC and PNB were conspicuously silent about their tax liabilities until they were
assessed thereon. Any attempt by PNOC and PNB to assess and declare by themselves
their tax liabilities had already been overtaken by the BIR's conduct of its audit and
investigation and subsequent issuance of the assessments, dated 08 August 1986 and
08 October 1986, against PNOC and PNB, respectively. The said tax assessments,
uncontested and undisputed, presented the results of the BIR audit and investigation
and the computation of the total amount of tax liabilities of PNOC and PNB. They
should be controlling in this case, and should not be so easily and conveniently
ignored and set aside. It would be a contradiction to claim that the tax liabilities of
PNOC and PNB are self-assessed and, at the same time, BIR-assessed; when it is clear
and simple that it had been the BIR that conducted the assessment and determined
the tax liabilities of PNOC and PNB.
E.O. No. 44 and all BIR issuances to implement said statute should be
interpreted so that they are harmonized and consistent with each other. Accordingly,
this Court finds that the different types of assessments mentioned in RMO No. 39-86
would still have to qualify as delinquent accounts or disputed assessments as of 31
Dcember 1985, so that they could be compromised under E.O. No. 44. Such an
assessment, issued only on 08 August 1986, could not have been final and executory
as of 31 December 1985 so as to constitute a delinquent account. Neither was the
assessment against PNOC an assessment that could have been disputed or protested
on or before 31 December 1985, having been issued on a later date. Given that
PNOC's tax liability did not constitute a delinquent account or a disputed assessment
as of 31 December 1985, then it could not be compromised under E.O. No. 44.
E.O. No. 44 covers disputed or delinquency cases where the person assessed
was himself the taxpayer rather than a mere agent. RMO No. 39-86 expressly allows
a withholding agent, who failed to withhold the required tax because of neglect,
ignorance of the law, or his belief that he was not required by law to withhold tax, to
apply for a compromise settlement of his withholding tax liability under E.O. No. 44. A
withholding agent, in such a situation, may compromise the withholding tax
assessment against him precisely because he is being held directly accountable for the
tax.
Both situations, however, involve withholding agents. The right to compromise
under these provisions should have been claimed by PNB, the withholding agent for
PNOC. The BIR held PNB personally accountable for its failure to withhold the tax on
the interest earnings and/or yields from PNOC's money placements with PNB. The BIR
sent a demand letter, dated 08 October 1986, addressed directly to PNB, for payment
of the withholding tax assessed against it, but PNB failed to take any action on the
said demand letter. Yet, all the offers to compromise the withholding tax assessment
came from PNOC and PNOC did not claim that it made the offers to compromise on
behalf of PNB.
PNOC's offer to set-off was obviously made to avoid actual cash-out by the
company. The offer defeated the purpose of E.O. No. 44 because it would not only
delay collection, but more importantly, it would not guarantee collection. First of all,
BIR's collection was contingent on whether the claim for tax refund/credit of
NAPOCOR would be subsequently granted. Second, collection could not be made
immediately and would have to wait until the resolution of the claim for tax
refund/credit of NAPOCOR. Third, there is no proof, other than the bare allegation of
PNOC, that NAPOCOR's claim for tax refund/credit is an account receivable of
PNOC. A possible dispute between NAPOCOR and PNOC as to the proceeds of the tax
refund/credit would only delay collection by the BIR even further.
TaxCases_37

000. On October 27. TAN JR.88. 2) that the computation of the ad valorem tax deficiency was erroneous since the BIR examiners disallowed the deduction of the price differential (cost of freight from brewery to warehouse) and ad valorem tax. and later to P22. BIR in a Memorandum dated December 20. 1985 to March 31. 152532 August 16.985. SMC was informed that its offer to compromise was accepted.29. 1988. the BIR is hereby ordered to collect from SMC the amount of P292. the BIR sent a letter dated July 13. Clemeno.PEOPLE OF THE PHILIPPINES. As the Court finds the compromise agreement to have been entered into illegally. SMC.048.000.00 for the settlement of the assessment. 1988.: FACTS: Pursuant to Letter of Authority No. the letter was received by the SMC. ATD-035-STO dated January 2. Legal Service Division and thereafter different BIR officials also reviewed the case of SMC and rendered varying legal opinions on the issue. Gatdula. she recommended the reduction of SMC‘s tax liability. first to P21. 2005 PANGANIBAN.856. Assistant Commissioner. Assistant Revenue Service Chief. Balbino E.616. ISSUE: Whether or not the SB committed grave abuse its discretion when it upheld private respondent‘s acceptance of SMC‘s compromise offer of P10 million? HELD: NO. supported the demand for ad valorem tax deficiency from SMC. This was concurred in by Juanito Urbi. Assistant BIR Commissioner.951. Jr. thru a certain Avendano offered the amount of P10.93 representing its tax liabilities covering the period from January 1.217. No. On the basis of these findings.00 in compromise settlement be accepted. covering the period from January 1. In a letter dated August 31.. in a letter dated December 20.00. 1986. Chief. 1988. Legal Service. Legal Service. vs. and accordingly. Jaime Maza. Prosecutor Division. Chief. Apparently. 1987.217.616.000. 1987 to SMC demanding the payment of its deficiency tax in the amount of P342. Maza. 1986. TaxCases_38 . The result of the investigation showed that SMC has a deficiency on specific and ad valorem taxes totaling P342. SANDIGANBAYAN (Fourth Division) and BIENVENIDO A. Petitioners. The recommendation was approved by accused Bienvenido Tan. 1987 with the information: 1) that the alleged specific tax deficiency was already paid when the BIR approved SMC‘s request that its excess ad valorem payments be applied to its specific tax balance. 1985 to March 31.000. J.000. G. On the part of Alicia P.R. 1986 and Memorandum of Authority dated March 3.000.88. herein accused referred the matter to Jaime M. as it protested the assessment in its letter dated August 10. also gave his concurrence to the recommendation that the offer of SMC for P10. BIR. Respondent. an investigation was conducted by BIR examiners on the ad valorem and specific tax liabilities of San Miguel Corp. Legislative Ruling and Research Division. 1986..

that the price that should be used as the tax base for computing the ad valorem tax on fermented liquor is the price at the brewery. the first paragraph of its Section 147(B) provides for the levying. make void or invalid. it is abated or canceled. The latter tax is equivalent to a certain percentage of the brewer‘s gross selling price. for it would be contrary to what the law mandates — payment before removal. annul. if its assessment is excessive or erroneous. delete. SMC deducted from its brewer‘s gross selling price the specific tax. provides for the collection of a specific tax on each liter of the volume capacity of fermented liquor. petitioner did not prove the alleged bad faith attributed to private respondent. Moreover. assessment and collection of an ad valorem tax. no ad valorem tax can ever be paid before the removal of the fermented liquor from the place of production. In computing its ad valorem tax liabilities for the taxable period involved in the present case. Section 110 of the NIRC of 1977. ‖It does not matter to what use the article[s] subject to tax is put‖. We must therefore trace the NIRC‘s pertinent history to be able to rule properly on the validity of SMC‘s deduction of both the price differential and the ad valorem tax from the brewer‘s gross selling price. Hence. who simply relied upon his subordinates. The BIR allowed the deduction of the specific tax. excise taxes are taxes on property. revoke or recall. as amended by PD 1959 in 1984. net of the specific tax. thus increasing the tax base and consequently the ad valorem tax liabilities of SMC for the said period. as we have discussed earlier. explicitly provides that the excise taxes on domestic products shall be paid by the manufacturer or producer before the removal of those products from the place of production. After all. there was no finality in the assessment that could be settled. because an excessive or erroneous tax is not compromised.‖ it refers to ―the act of eliminating or nullifying. but not the deduction of the price differential and ad valorem tax. the gross selling price should be that which is charged at the brewery prior to the removal of the fermented liquor. Mere assertion will not suffice. not on the sale of the property. the matter at hand is actually an abatement or a cancellation. Section 147(A) of the NIRC. several changes were made in the NIRC of 1977. Although referred to in the pleadings as a compromise. In other words. TaxCases_39 . It follows that the tax base to be used should be net of the price differential. as amended in 1986 by PD 1994. of lessening or moderating. therefore. fraud should be the benchmark of liability. Only correct taxes should be paid. The intent of the law is reiterated in several implementing regulations. even though the articles are removed merely for storage in some other place and are not actually sold or consumed. Besides. not presumed. of the product to be removed from the brewery or other place of manufacture. Prior to and during the taxable period involved in the present case. In addition to the provision on the specific tax. particularly its provisions pertaining to fermented liquor. No mutual concessions need be made. This outcome cannot be countenanced. while to cancel is ―to obliterate. for such approval was inexistent at the time and was merely a product of RA 8424 as amended. inclusive of increments. Actual. destroy. Even reference to the approval by the Evaluation Board was misleading. and ―to strike out. Abatement is the ―diminution or decrease in the amount of tax imposed. the excise taxes are still due. price differential and ad valorem tax.‖ The BIR may therefore abate or cancel the whole or any unpaid portion of a tax liability. or invalidate‖. or if the administration costs involved do not justify the collection of the amount due. cross out. erase.‖ To abate is ―to nullify or reduce in value or amount‖. This means. The ad valorem tax shall be paid by the brewer at the same time as the specific tax.The SB did not gravely abuse its discretion when it upheld private respondent‘s acceptance of SMC‘s compromise offer of P10 million.

90 covering the said period. Revenue Regulations (RR) No. 2000 issued by then Commissioner of Internal Revenue (petitioner). Petitioner thus assessed the company of total deficiency taxes amounting to P430. LMCEC thus maintained that unless there is a prior determination of fraud supported by documents not yet incorporated in the docket of the case. 2001. 1998 and 1999. 177279 October 13. vs. CAMUS ENGINEERING CORPORATION (represented by LUIS M. MENDOZA). 2002 were sent to LMCEC through personal service on October 1. it was discovered that LMCEC filed fraudulent tax returns with substantial underdeclarations of taxable income for the years 1997. Respondents. J. after the routine examination. GONZALEZ. 12-99. said case was dismissed for lack of probable cause in a Resolution issued by the Investigating Prosecutor on May 2. The act of the revenue officers in finding justification under Section 6(B) of the NIRC (Best Evidence Obtainable) is misplaced and unavailing because they were not able to open the books of the company for the second time. BIR officers. TaxCases_40 . Based on data obtained from an "informer" and various clients of LMCEC. After preliminary investigation. 1998 and 1999. The audit and investigation against LMCEC was precipitated by the information provided by an "informer" that LMCEC had substantial underdeclared income for the said period. M. Since the company and its representatives refused to receive the said notices and demand letter. 2001. Petitioner. 2002. LMCEC argued that petitioner is now estopped from further taking any action against it and its corporate officers concerning the taxable years 1997 to 1999. 00009361 dated August 25. RAUL M. the element of fraud is negated the moment the Bureau accepts the offer of compromise or payment of taxes by the taxpayer. M. a criminal complaint was instituted by the BIR against LMCEC on January 19. No. which have a feature of a tax amnesty. The Preliminary Assessment Notice (PAN) was received by LMCEC on February 22.. G. petitioner cannot just issue LAs without first terminating those previously issued.: FACTS: Pursuant to Letter of Authority (LA) No. Camus Engineering Corporation (LMCEC) for the taxable years 1997. HON. 2010 VILLARAMA. In view of the above findings. and officers National Office. conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities of respondent L. the revenue officers resorted to constructive service in accordance with Section 3. 2001 for violation of Section 266 of the NIRC. For failure to comply with the subpoena duces tecum issued in connection with the tax fraud investigation. With the grant of immunity from audit from the company‘s availment of ERAP and VAP.005.What Constitutes an Assessment? COMMISSIONER OF INTERNAL REVENUE.958. Secretary of Justice.R. JR. L. It emphasized the fact that the BIR officers who filed and signed the Affidavit-Complaint in this case were the same ones who appeared as complainants in an earlier case filed against Camus for his alleged "failure to obey summons in violation of Section 5 punishable under Section 266 of the NIRC of 1997". assessment notices together with a formal letter of demand dated August 7. CAMUS and LINO D. issuance of termination letter and the availment of ERAP and VAP.

TaxCases_41 . neither did they appeal to the Court of Tax Appeals. The formal letter of demand calling for payment of the taxpayer‘s deficiency tax or taxes shall state the fact. which they allowed to lapse into finality. and that the report of investigation submitted by the Revenue Officer conducting the audit shall be given due course. Private respondents cannot belatedly assail the said assessment. Section 228 of the NIRC provides the remedy to dispute a tax assessment within a certain period of time. It states that an assessment may be protested by filing a request for reconsideration or reinvestigation within 30 days from receipt of the assessment by the taxpayer. the law. otherwise the formal letter of demand and the notice of assessment shall be void. Private respondents did not file a motion for reconsideration of the said assessment notice and formal demand. by raising issues as to its validity and correctness during the preliminary investigation after the BIR has referred the matter for prosecution under Sections 254 and 255 of the NIRC. Records bear out that the assessment notice and Formal Letter of Demand dated August 7. or whose reply to the PAN was found to be without merit. A notice of assessment is a declaration of deficiency taxes issued to a taxpayer who fails to respond to a Pre-Assessment Notice (PAN) within the prescribed period of time. No such administrative protest was filed by private respondents seeking reconsideration of the August 7. The Notice of Assessment shall inform the taxpayer of this fact. rules and regulations or jurisprudence on which the assessment is based. 2002 assessment notice and formal letter of demand. 2002.ISSUE: Whether or not the assessment notices were invalid for being unnumbered and the tax liabilities therein stated have already been settled and/or terminated? HELD: NO. 2002 were duly served on LMCEC on October 1.

rules and regulations or jurisprudence on which the assessment is based. Enron disputed the proposed deficiency assessment in its first protest letter.817. The CTA reasoned that the assessment notice sent to Enron failed to comply with the requirements of a valid written notice under Section 228 of the NIRC and RR No. rules and regulations. 1997.880. the Bureau of Internal Revenue.COMMISSIONER OF INTERNAL REVENUE. On May 26. Petitioners. It is clear from the foregoing that a taxpayer must be informed in writing of the legal and factual bases of the tax assessment made against him. informed it of a proposed assessment of an alleged P2. 2001. The CIR‘s motion for reconsideration of the CTA decision was denied in a resolution dated November 12. the law. otherwise. vs. TaxCases_42 . 12-99.684. Enron likewise questioned the substantive validity of the assessment. The formal letter of demand calling for payment of the taxpayer‘s deficiency tax or taxes shall state the fact.880. 166387 January 19.25 for the taxable year 1996. No. J. 2009 CORONA. The same shall be sent to the taxpayer only by registered mail or by personal delivery. The use of the word ―shall‖ in these legal provisions indicates the mandatory nature of the requirements laid down therein. or jurisprudence on which the assessment is based.817. 12-99 because they failed to show the applicability of the cited law to the facts of the assessment. a domestic corporation registered with the Subic Bay Metropolitan Authority as a freeport enterprise. 1999.25 deficiency income tax. Respondents.948. Enron protested this deficiency tax assessment. It indicated a net loss of P7. the assessment is void. the law. Enron filed a petition for review in the CTA.: FACTS: Enron. The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. 12-99? HELD: NO. Otherwise. Due to the non-resolution of its protest within the 180-day period. Subsequently. otherwise the formal letter of demand and the notice of assessment shall be void. Section 228 of the NIRC provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. the formal letter of demand and assessment notice shall be void. The CTA granted Enron‘s petition and ordered the cancellation of its deficiency tax assessment for the year 1996. The audit working papers did not substantially comply with Section 228 of the NIRC and RR No. filed its annual income tax return for the year 1996 on April 12. ENRON SUBIC POWERCORPORATION. ISSUE: Whether or not the audit working papers complied with Section 228 of the NIRC and RR No. The letter of demand calling for payment of the taxpayer‘s deficiency tax or taxes shall state the facts.R. through a preliminary five-day letter. G. Enron received from the CIR a formal assessment notice requiring it to pay the alleged deficiency income tax of P2.

The advice of tax deficiency. however. such cannot be presumed. not indicated. These steps were mere perfunctory discharges of the CIR‘s duties in correctly assessing a taxpayer. The alleged ―factual bases‖ in the advice. he failed to mention the specific provision of the Tax Code or rules and regulations which were not complied with by Enron. the CIR merely issued a formal assessment and indicated therein the supposed tax. surcharge. There was no going around the mandate of the law that the legal and factual bases of the assessment be stated in writing in the formal letter of demand accompanying the assessment notice. It also imposed the preferential rate of 5% on some items categorized by Enron as costs. Moreso. The CIR did not bother to explain how it arrived at such an assessment. Thus. The legal and factual bases were. TaxCases_43 . preliminary letter and ―audit working papers‖ did not suffice. 12-99 would be rendered nugatory. informing a taxpayer of the existence of a deficiency tax assessment is markedly different from the requirement of what such notice must contain. The Revenue Officers of the BIR in the issuance of the Final Assessment Notice did not provide Enron with the written bases of the law and facts on which the subject assessment is based. The law requires that the legal and factual bases of the assessment be stated in the formal letter of demand and assessment notice.In this case. Just because the CIR issued an advice. a preliminary letter during the pre-assessment stage and a final notice. interest and compromise penalty due thereon. the express provisions of Article 228 of the NIRC and RR No. Both the CTA and the CA concluded that the deficiency tax assessment merely itemized the deductions disallowed and included these in the gross income. as well as the preliminary five-day letter. does not necessarily mean that Enron was informed of the law and facts on which the deficiency tax assessment was made. given by the CIR to an employee of Enron. were not valid substitutes for the mandatory notice in writing of the legal and factual bases of the assessment. Otherwise. as the case may be. in the order required by law. The requirement for issuing a preliminary or final notice.

She was merely notified of the findings by the CIR. Petitioner. On July 6. 1991.: FACTS: In two notices dated October 28. vs. J. The taxpayer shall be informed in writing of the law and the facts on which the assessment is made. petitioner CIR assessed respondent Bank of the Philippine Islands‘ (BPI‘s) deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of P129. but also of the facts on which an assessment would be made. 134062 April 17. 1992. The old requirement of merely notifying the taxpayer of the CIR's findings was changed in 1998 to informing the taxpayer of not only the law. In merely notifying BPI of his findings.R.488. Reyes. otherwise. This was denied in a letter dated December 12.63. TaxCases_44 . it held that BPI filed the petition for review in the CTA on time.COMMISSIONER OF INTERNAL REVENUE. 1996. On February 18. 1991 letter. the assessment shall be void. the court held that: ―In the present case. It declared that the proper assessments were those contained in the May 8. 1988. RA 8424 has already amended the provision of Section 229 on protesting an assessment. BPI requested a reconsideration of the assessments stated in the CIR‘s May 8. 1991 letter which provided the reasons for the claimed deficiencies. 1988 notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases therefor.656. received by BPI on January 21. the assessment itself would be invalid. G.‖ First. Respondent. the CIR relied on the provisions of the former Section 270 prior to its amendment by RA 8424 (also known as the Tax Reform Act of 1997). The CTA ruled that BPI failed to protest on time under Section 270 of the NIRC of 1986 and Section 7 in relation to Section 11 of RA 1125. It denied reconsideration in a resolution dated May 27. On appeal. He merely notified BPI of his findings. 1988 notices were valid assessments? HELD: YES. the CA reversed the tax court‘s decision and resolution and remanded the case to the CTA for a decision on the merits. 1991. the CIR did not inform BPI in writing of the law and facts on which the assessments of the deficiency taxes were made. Admittedly. otherwise known as the Tax Reform Act of 1997. consisting only of the computation of the tax liabilities and a demand for payment thereof within 30 days after receipt. the CTA dismissed the case for lack of jurisdiction since the subject assessments had become final and unappealable. In a decision dated November 16. BANK OF THE PHILIPPINE ISLANDS. BPI filed a petition for review in the CTA. No. 1992. 2007 CORONA. who had simply relied upon the provisions of former Section 229 prior to its amendment by [RA] 8424. otherwise. ISSUE: Whether or not the October 28. In CIR v. Thus. Reyes was not informed in writing of the law and the facts on which the assessment of estate taxes had been made. 1995. It ruled that the October 28.

that a preliminary assessment notice was issued against the estate. Considering that the October 28. BPI never deemed this a protest since it did not even consider the October 28. 1988 notices were valid assessments. otherwise. the inserted sentence in the renumbered Section 228 was not an affirmation of what the law required under the former Section 270. Evidently. we shall inform you of the taxpayer‘s decision on whether to pay or protest the assessment. 1988 notices as valid or proper assessments. The December 10. There arose a presumption of correctness when BPI failed to protest the assessments: The rule of conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment — and. 1988 reply it sent to the CIR did not qualify as a protest since the letter itself stated that "as soon as this is explained and clarified in a proper letter of assessment. prior to the introduction of the amendment. 1998. Thus. On April 22. 1998. That would be judicial legislation. On the part of the CIR. The notice required under the old law was no longer sufficient under the new law. RA 8424 was already in effect. nothing less. when the assessments were made pursuant to the former Section 270. The sentence: the taxpayers shall be informed in writing of the law and the facts on which the assessment is made. was also issued. BPI did not regard this letter as a protest against the assessments. Contrary to the submission of BPI. from then on. as well as demand letter. Not only that. BPI should have protested the same within 30 days from receipt thereof. and orderliness in administrative action." Hence. This would also deter the CIR from unfairly making the taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax court. the legislature intended to insert a new provision regarding the form and substance of assessments issued by the CIR. the final estate tax assessment notice.It was on February 12. the CTA correctly dismissed BPI‘s appeal for lack of jurisdiction. Of greater import. by its own declaration. the only requirement was for the CIR to "notify" or inform the taxpayer of his "findings. this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance. regularity. The amendment introduced by RA 8424 was an innovation and could not be reasonably inferred from the old law. The inevitable conclusion is that BPI‘s failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable. the statute had an entirely different meaning." Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based. Clearly. The fact that the amendment was necessary showed that. During those dates. The Court cannot read into the law what obviously was not intended by Congress. Accordingly. consequently. As a matter of fact. barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits. TaxCases_45 . the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. the assessment shall be void was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997. the collection of the amount demanded as taxes — by repeated requests for recomputation and reconsideration. this rule of conduct would meet a pressing need for fair play. BPI was.

Section 203 of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return. vs. respondents. but also a demand for payment within a prescribed period. (PRDC) for the years ending 1986. respectively. G. which was attached to criminal revenue Complaint filed the Department of Justice. an affidavit. An assessment contains not only a computation of tax liabilities. TaxCases_46 . Dio. The said examination resulted in a recommendation for the issuance of an assessment in the amounts of P7. the period of limitation regarding its proper issuance and the period within which to protest it.R. DIO and VIRGINIA S. No. The issuance of an assessment is vital in determining. Savellano to examine the books of accounts and other accounting records of Pascor Realty and Development Corporation. Private respondents PRDC. Que. filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability. 1987 and 1988. specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to file a return.COMMISSIONER OF INTERNAL REVENUE. 128315 June 29. To consider the affidavit attached to the Complaint as a proper assessment is to subvert the nature of an assessment and to set a bad precedent that will prejudice innocent taxpayers. Section 222. which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint for tax evasion. PASCOR REALTY AND DEVELOPMENT CORPORATION. 1995. ROGELIO A. then BIR Commissioner Jose U. 001198. Sonia T. It also signals the time when penalties and protests begin to accrue against the taxpayer. However. petitioner.: FACTS: It appears that by virtue of Letter of Authority No.513. DIO. On March 1.434.65 and P3. Accordingly.015.498. ISSUE: Whether or not the revenue officers' Affidavit-Report. J. To enable the taxpayer to determine his remedies thereon. Also.35 for the years 1986 and 1987. Section 228 of the same law states that said assessment may be protested only within thirty days from receipt thereof. due process requires that it must be served on and received by the taxpayer. the Commissioner of Internal Revenue filed a criminal complaint before the Department of Justice against the PRDC. and its Treasurer Virginia S. its President Rogelio A. al. on the other hand. Ong authorized Revenue Officers Thomas T. cannot be deemed an assessment that can be questioned before the Court of Tax Appeals. alleging evasion of taxes in the total amount of P10. Neither the NIRC nor the regulations governing the protest of assessments provide a specific definition or form of an assessment. constituted an assessment that could be questioned before the Court of Tax Appeals? HELD: NO. et.671 . Estorco and Emmanuel M. Dio.00. 1999 PANGANIBAN. the NIRC defines the specific functions and effects of an assessment.236.

Indeed. Clearly. the criminal charge need not go through all these. If the commissioner is unsatisfied. The purpose of the Joint Affidavit was merely to support and substantiate the Criminal Complaint for tax evasion. It must be stressed that a criminal complaint is instituted not to demand payment. an assessment is deemed made only when the collector of internal revenue releases. It should also be stressed that the said document is a notice duly sent to the taxpayer. In the present case. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. mails or sends such notice to the taxpayer. the taxpayer is notified that a criminal case had been filed against him. Although the revenue officers recommended the issuance of an assessment. by practice. What private respondents received was a notice from the DOJ that a criminal case for tax evasion had been filed against them. Thereafter. Worse. an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. or whether interest and penalty may accrue thereon. not to the taxpayers. but to penalize the taxpayer for violation of the Tax Code. TaxCases_47 . The criminal charge is filed directly with the DOJ.Necessarily. there is. the commissioner opted instead to file a criminal case for tax evasion. confusion would arise regarding the period within which to make an assessment or to protest the same. not that the commissioner has issued an assessment. In contrast. the taxpayer must be certain that a specific document constitutes an assessment. the revenue officers' Affidavit merely contained a computation of respondents' tax liability. Before an assessment is issued. It did not state a demand or a period for payment. it was addressed to the justice secretary. not to issue an assessment. a pre-assessment notice sent to the taxpayer. The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint for tax evasion. not a notice that the Bureau of Internal Revenue had made an assessment. Otherwise. it was not meant to be a notice of the tax due and a demand to the private respondents for payment thereof. The issuance of an assessment must be distinguished from the filing of a complaint.

2000 that the subject property would be sold at public auction on August 8. TaxCases_48 . the Commissioner of Internal Revenue issued a preliminary collection letter to Reyes. On February 12. for the amount of P14. Maria C. Respondent. Reyes proposed to pay 50% of the basic tax due. the assessment shall be void. 2000.00. Bureau of Internal Revenue. leaving a 1. 2000. But without the required preliminary findings being submitted. Assessment Division. 8424.912. Reyes.67. 1998. issued a preliminary assessment notice against the estate in the amount of P14. Azucena T. It provides as follows: "The taxpayers shall be informed in writing of the law and the facts on which the assessment is made: otherwise.205.47. 1997 by a certain Raymond Abad. No. She reiterated the proposal in a letter dated May 18.COMMISSIONER OF INTERNAL REVENUE. 1999. 1998. it issued Letter of Authority No. Reyes was not informed in writing of the law and the facts on which the assessment of estate taxes had been made. inclusive of surcharge and interest. 2000 deadline. it issued a Return Verification Order. AZUCENA T. vs. RDO 50 conducted an investigation on the decedent‘s estate. 1999 by Notices of Levy on Real Property and Tax Lien against it. On May 10. who had simply relied upon the provisions of former Section 229 prior to its amendment by RA No." In the present case. 2000. Collection Enforcement Division. Petitioner. 159694 January 27.292 square-meter residential lot and an old house thereon located at Makati City.: FACTS: On July 8. 1997. notified Reyes on June 6. 1998. received the Letter of Authority on March 14. Tancinco died. ISSUE: Whether or not petitioner‘s assessment against the estate is valid? HELD: YES. On June 1. Sumbillo protested the assessment on behalf of the heirs on the ground that the subject property had already been sold by the decedent sometime in 1990. Reyes again wrote to the CIR. the Chief. 132963 for the regular investigation of the estate tax case. the Chief. 2006 PANGANIBAN. a certain Felix M. On the basis of a sworn information-for-reward filed on February 17.313. On January 5. a Warrant of Distraint and/or Levy was served upon the estate.R. 1998. one of the decedent‘s heirs.891. REYES. In a letter to dated January 27. 1998.618. followed by a Final Notice Before Seizure dated December 4. both dated April 22. followed on February 11.580. Subsequently. this time proposing to pay 100% of the basic tax due in the amount of P5. CJ. The second paragraph of Section 228 of the Tax Code is clear and mandatory. citing the heirs‘ inability to pay the tax assessment. As the estate failed to pay its tax liability within the April 15. 1993. G. 1998. She was merely notified of the findings by the CIR. Then subsequently on April 11. The CIR rejected both Reyes‘s offer. 2000. On November 12. otherwise known as the Tax Reform Act of 1997. BIR. the heirs of the decedent received a final estate tax assessment notice and a demand letter.

It was on February 12. as well as demand letter. Moreover. TaxCases_49 . On April 22.First. 1998. the Letter of Authority received by respondent on March 14. otherwise. the final estate tax assessment notice. that a preliminary assessment notice was issued against the estate. During those dates. The old requirement of merely notifying the taxpayer of the CIR‘s findings was changed in 1998 to informing the taxpayer of not only the law. The act cannot be taken to mean that Reyes already knew the law and the facts on which the assessment was based. 1998. To be simply informed in writing of the investigation being conducted and of the recommendation for the assessment of the estate taxes due is nothing but a perfunctory discharge of the tax function of correctly assessing a taxpayer. It does not at all conform to the compulsory requirement under Section 228. RA 8424 has already amended the provision of Section 229 on protesting an assessment. The notice required under the old law was no longer sufficient under the new law. RA 8424 was already in effect. was also issued. the assessment itself would be invalid. 1997 was for the sheer purpose of investigation and was not even the requisite notice under the law. but also of the facts on which an assessment would be made.

20-90) PHILIPPINE JOURNALISTS. G. the second copy of which is for the taxpayer. stating that the said grounds are merely formal in nature. 1995. In its decision dated August 5. petitioner was not furnished a copy of the waiver. On May 14. the petitioner was told that there were deficiency taxes. the CTA rendered its decision. Petitioner also contested that the assessment had no factual and legal basis. Secondly. Lorenza Tolentino. respondent. 2002. 1994. From the examination. petitioner‘s Comptroller. Petitioner filed a Petition for Review with the Court of Tax Appeals. interest and compromise penalty. The BIR received a follow-up letter from the petitioner asserting that its PJI records do not show receipt of Tax Assessment/Demand No. Again. COMMISSIONER OF INTERNAL REVENUE.Statute of Limitation on Assessment of Internal Revenue Taxes (Sections 203 and 222. stating that the Waiver of the Statute of Limitations is to be without any binding effect on the petitioner for the reasons that the waiver is an unlimited waiver. 1994 to December 31. until the completion of the investigation". ISSUE: Whether or not the Honorable Court of Appeals gravely erred when it ruled that failure to comply with the provisions of Revenue Memorandum Order (RMO) No. 2004 YNARES-SANTIAGO. On August 10. 20-90 is merely a formal defect that does not invalidate the waiver of the statute of limitations without stating the legal justification for such conclusion? TaxCases_50 . It is likewise required that the fact of receipt by the taxpayer of his/her file copy be indicated in the original copy. inclusive of surcharges. the waiver failed to state the date of acceptance by the Bureau which under the aforequoted RMO should likewise be indicated Finally. 33 of the BIR issued Letter of Authority to examine petitioner‘s books of account and other accounting records for internal revenue taxes for the period January 1. respondent failed to comply. having been made beyond the 3-year prescriptive period. 1994. petitioner. On March 28. 33-06-046 signed by Deputy Commissioner Romeo Panganiban for the BIR was received by the petitioner. 1997. vs. It is to be noted that under RMO No. J. is null and void.: FACTS: The case arose from the Annual Income Tax Return filed by petitioner for the calendar year ended December 31. the waiver must be executed in three (3) copies. Petitioner complains that the assessment.The document "waived the running of the prescriptive period provided by Sections 223 and 224 and other relevant provisions of the NIRC and consented to the assessment and collection of taxes which may be found due after the examination at any time after the lapse of the period of limitations fixed by said Sections 223 and 224 and other relevant provisions of the NIRC. No.. 162852 December 16. NIRC in Relation to RMO No. 33-1-00075794. INC. 2003. the Court of Appeals disagreed with the ruling of the CTA. Revenue District Office No. 2000. a Warrant of Distraint and/or Levy No.R. On September 22. executed a "Waiver of the Statute of Limitation Under the National Internal Revenue Code NIRC". 20-90.

The waiver is also defective from the government side because it was signed only by a revenue district officer. This case involves taxes amounting to more than One Million Pesos (P1. The waiver does not mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the document is equivocal. RMO No. is a derogation of the taxpayers‘ right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed.HELD: YES. 20-90 requires the Commissioner of Internal Revenue to sign for the BIR. provides for a statute of limitations on the assessment and collection of internal revenue taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. our tax law provides a statute of limitations in the collection of taxes. Thus. as mandated by the NIRC and RMO No. 20-90.000. A waiver of the statute of limitations under the NIRC. Without such a legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents. the law on prescription. 20-90 implements these provisions of the NIRC relating to the period of prescription for the assessment and collection of taxes. Unreasonable investigation contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time. to the Government because tax officers would be obliged to act promptly in the making of assessment. but to take advantage of every opportunity to molest peaceful. It stated that the reason copies are furnished is for a party to be notified of the existence of a document. The waiver is not a unilateral act by the taxpayer or the BIR. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. For the purpose of safeguarding taxpayers from any unreasonable examination.000. and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers. should be liberally construed in order to afford such protection. For this. the waiver must be executed in three copies with the second copy for the taxpayer. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficent purpose of affording protection to the taxpayer within the contemplation of the Commission which recommend the approval of the law. Finally. It is an agreement between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is extended to a date certain. The NIRC. the records show that petitioner was not furnished a copy of the waiver. to a certain extent. being a remedial measure. event or proceeding. Under RMO No. The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens. under Sections 203 and 222.00) and executed almost seven months before the expiration of the three-year prescription period. law-abiding citizens. The waiver of the statute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. 20-90. not to determine the latter‘s real liability. but is a bilateral agreement between two parties to extend the period to a date certain. TaxCases_51 . not the Commissioner. The Court of Appeals did not think this was important because the petitioner need not have a copy of the document it knowingly executed. RMO No. investigation or assessment.

On June 22. the BIR issued a Preliminary Assessment Notice for the taxable year 1998 against the respondent. A review and audit of respondent‘s records then ensued. 2004. respondent‘s accountant. 20-90. KUDOS METAL CORPORATION. respondent filed an "Urgent Motion for Preferential Resolution of the Issue on Prescription. On December 10. 2003. 2010 DEL CASTILLO. and accepted by the Assistant Commissioner of the Enforcement Service. J. requesting the immediate payment of its following tax. Pursuant to a Letter of Authority dated September 7. respondent filed on August 27. On August 25. Respondent challenged the assessments. 2003 and accepted by Assistant Commissioner Salazar. Nelia Pasco Pasco. On October 4. vs. 1999. TaxCases_52 . Respondent failed to comply with these notices. This was followed by a second Waiver of Defense of Prescription executed by Pasco on February 18. On April 11. the CTA Second Division issued a Resolution cancelling the assessment notices issued against respondent for having been issued beyond the prescriptive period. 2005. Petitioner in turn filed his Answer. 2003. Believing that the government‘s right to assess taxes had prescribed. received by the BIR Tax Fraud Division on February 28. Salazar. ISSUE: Whether or not the court erred in ruling that the government‘s right to assess unpaid taxes of respondent prescribed? HELD: NO. 2002. 2004 a Petition for Review with the CTA. 178087 May 5. 2001. dated September 26. 2003. No. On appeal. 2005. 2006. Section 203 of the National Internal Revenue Code of 1997 mandates the government to assess internal revenue taxes within three years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return. notarized on February 19. 2002 and by the BIR Tax Fraud Division on February 4. 2003. Petitioner. 1999. respondent filed its Annual ITR for the taxable year 1998. It found the first Waiver of the Statute of Limitations incomplete and defective for failure to comply with the provisions of Revenue Memorandum Order (RMO) No. This was followed by a Formal Letter of Demand with Assessment Notices for taxable year 1998. Percival T. hence. the Bureau of Internal Revenue BIR served upon respondent three Notices of Presentation of Records.R.COMMISSIONER OF INTERNAL REVENUE.: FACTS: On April 15. received by the BIR Enforcement Service on January 31. the BIR issued a Subpeona Duces Tecum dated September 21. 2002. which was notarized on January 22. whichever comes later. Respondent. 2003 which was received by respondent on November 12. the BIR rendered a final Decision on the matter. executed a Waiver of the Defense of Prescription. G. the CTA En Banc affirmed the cancellation of the assessment notices.

estoppel was applied as an exception to the statute of limitations on collection of taxes and not on the assessment of taxes. After inducing petitioner to delay collection as he in fact did. Because of such requests. lasted for several months. it was the one which asked for additional time to submit the required documents. for good reasons. the period to assess or collect taxes was not extended. as the record shows. Section 222 (b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the three-year period. The doctrine of estoppel prevented the taxpayer from raising the defense of prescription against the efforts of the government to collect the assessed tax. persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government. And when such situation comes to pass there are authorities that hold. Consequently. Exceptions however are provided under Section 222 of the NIRC. it is most unfair for respondent to now take advantage of such desistance to elude his deficiency income tax liability to the prejudice of the Government invoking the technical ground of prescription. While we may agree with the Court of Tax Appeals that a mere request for reexamination or reinvestigation may not have the effect of suspending the running of the period of limitation for in such case there is need of a written agreement to extend the period between the Collector and the taxpayer. there was a finding that the taxpayer made several requests or positive acts to convince the government to postpone the collection of taxes.Hence. several reinvestigations were made and a hearing was even held by the Conference Staff organized in the collection office to consider claims of such nature which. Estoppel does not apply in this case. as the BIR was able to make an assessment within the prescribed period. The waivers executed by respondent‘s accountant did not extend the period within which the assessment can be made. TaxCases_53 . More important. Due to the defects in the waivers. However. it must be stressed that in the said case. that such an attitude or behavior should not be countenanced if only to protect the interest of the Government. the assessments were issued by the BIR beyond the three-year period and are void. It is obvious that petitioner refrained from collecting the tax by distraint or levy or by proceeding in court within the 5-year period from the filing of the second amended final return due to the several requests of respondent for extension to which petitioner yielded to give it every opportunity to prove its claim regarding the correctness of the assessment. an assessment notice issued after the three-year prescriptive period is no longer valid and effective. We find no merit in petitioner‘s claim that respondent is now estopped from claiming prescription since by executing the waivers. based on weighty reasons. there are cases however where a taxpayer may be prevented from setting up the defense of prescription even if he has not previously waived it in writing as when by his repeated requests or positive acts the Government has been.

the law then applicable reads: Period of Limitations upon assessment and collection. On October 13. Lardizabal. established that subject assessments of July 29. In a basic protest dated August 17. 1987 were issued outside the statutory prescriptive period. Inc. 1981. 1999 PURISIMA. On September 30. petitioner. through its Senior Vice President Jaime O. 1987 asking the said corporation to pay P1. internal revenue taxes shall be assessed within five years after the return was filed. These protests were denied by the BIR Commissioner in a letter dated March 15. vs. The waivers were not signed by the BIR Commissioner or any of his agents. ISSUE: Whether or not the three waivers signed by the private respondent are valid and binding as to toll the running of the prescriptive period for assessment and not bar the Government from issuing subject deficiency tax assessments? HELD: NO. signed three separate waivers of the Statute of Limitations under the National Internal Revenue Code. Carnation. On January 26. and its Manufacturers/Producers Percentage Tax Return for the quarter ending September 30. 1981. Carnation received BIR's letter of demand dated July 29.683. 1987. 1981.913. all for the year 1981.442.COMMISSIONER OF INTERNAL REVENUE. a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided. G. Carnation. March 16. 1987.85 as deficiency sales tax and P3. Carnation filed its annual income tax and percentage tax returns for the fiscal year ending September 30. COURT OF TAX APPEALS and CARNATION PHILIPPINES. 1987 and May 18. 1988. 1982 and November 20. TaxCases_54 . 1982. On August 5.586.56 as deficiency income tax.). For the purpose of this section. The decision of the Court of Appeals affirming what the Court of Tax Appeals decided. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. Carnation filed a supplemental protest.03 as deficiency sales tax on undeclared sales. 115712 February 25. 318 (now Section 203) of the National Internal Revenue Code.: FACTS: On January 15. Carnation appealed to the CTA. INC.R. 1993. J. P14. respondent. Sec. 1987. (now merged with Nestle Phils. Whereupon. 1981 on January 15. respectively. COURT OF APPEALS. That this limitation shall not apply to cases already investigated prior to the approval of this Code. filed its Corporation Annual Income Tax Return for taxable year ending September 30.152. 1987. the CTA held the assessment to be null and void for having been issued beyond the five-year prescriptive period provided by law. Carnation disputed the assessments and requested a reconsideration and reinvestigation thereof. — Except as provided in the succeeding section. 1986.939. No.

Section 319 of the Tax code earlier quoted is clear and explicit that the waiver of the five-year prescriptive period must be in writing and signed by both the BIR Commissioner and the taxpayer. The period so agreed upon may be extended by subsequent agreement in writing made before the expiration of the period previously agreed upon. the three waivers signed by Carnation do not bear the written consent of the BIR Commissioner as required by law. We agree with the CTA in holding "these "waivers" to be invalid and without any binding effect on petitioner (Carnation) for the reason that there was no consent by the respondent (Commissioner of Internal Revenue). private respondent's 1981 income and sales taxes could have been validly assessed only until January 14. 1987 and November 19. to wit: Where before the expiration of the time prescribed in the preceding section for the assessment of the tax. 1986. Carnation's income and sales taxes were assessed only on July 29. Here. (b) the signature of the Commissioner is a mere formality and the lack of it does not vitiate binding effect of the waivers. beyond the five-year prescriptive period. Petitioner's submission is inaccurate. respectively. the tax may be assessed at any time prior to the expiration of the period agreed upon. observing thus: We cannot go along with the petitioner's theory. Petitioner BIR Commissioner contends that the waivers signed by Carnation were valid although not signed by the BIR Commissioner because (a) when the BIR agents/examiners extended the period to audit and investigate Carnation's tax returns. the BIR gave its implied consent to such waivers." TaxCases_55 . and (c) that a waiver is not a contract but a unilateral act of renouncing ones right to avail of the defense of prescription and remains binding in accordance with the terms and conditions set forth in the waiver. The Court of Appeals itself also passed upon the validity of the waivers executed by Carnation. The same tax code is clear on the matter. 1987. However.In accordance with the above-quoted provision of law. both the Commissioner of Internal Revenue and the taxpayer have consented in writing to its assessment after such time.

2000. Respondent.: FACTS: RCBC seasonably filed its Corporation Annual Income Tax Returns for Foreign Currency Deposit Unit for the calendar years 1994 and 1995. Had petitioner truly believed that the waivers were invalid and that the assessments were issued beyond the prescriptive period. The records show that on December 6. Subsequently.RIZAL COMMERCIAL BANKING CORPORATION. J. 1997. No. on January 27. and cannot be denied or disproved as against the person relying thereon. RCBC. RCBC received another Formal Letter of Demand with Assessment Notices dated October 20. by paying the other tax assessment covered by the waivers of the statute of limitations. 2000. RCBC received a Formal Letter of Demand together with Assessment Notices from the BIR for deficiency tax assessments. 2000." A party is precluded from denying his own acts. RCBC filed a protest on February 24. effectively extending the period of the BIR to assess up to December 31. refused to pay assessments for deficiency onshore tax and documentary stamp tax which remained to be the subjects of its petition for review. RCBC immediately made payment on the uncontested taxes. 170257 September 7. RCBC. through its partial payment of the revised assessments issued within the extended period as provided for in the questioned waivers. COMMISSIONER OF INTERNAL REVENUE. Thus. On the same day. Petitioner. On December 6. then it should not have paid the reduced amount of taxes in the revised assessment. the doctrine of estoppel is anchored on the rule that "an admission or representation is rendered conclusive upon the person making it. vs.R. RCBC is estopped from questioning the validity of the waivers. RCBC paid the following deficiency taxes as assessed by the BIR. To hold otherwise and allow a party to gainsay its own act or deny rights which it had previously recognized would run counter to the principle of equity which this institution holds dear. 2000 and later submitted the relevant documentary evidence to support it. 2011 MENDOZA. 2000. Estoppel is clearly applicable to the case at bench. admissions or representations to the prejudice of the other party in order to prevent fraud and falsehood. Disagreeing with the said deficiency tax assessment. is rendered estopped from questioning the validity of the said waivers with respect to the assessment of deficiency onshore tax? HELD: YES. RCBC‘s subsequent action effectively belies its insistence that the waivers are invalid. On January 23. TaxCases_56 . which drastically reduced the original amount of deficiency taxes. Under Article 1431 of the Civil Code. impliedly admitted the validity of those waivers. however. 2000. ISSUE: Whether or not petitioner. upon receipt of the revised assessment. following the reinvestigation it requested. G. RCBC executed two Waivers of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code covering the internal revenue taxes due for the years 1994 and 1995.

in a letter dated August 11. represented by the Commissioner of the Bureau of Internal Revenue (BIR). respondent. 1994. 1997. on January 12. when the taxpayer requests for a reinvestigation which is granted by the Commissioner. 130430 December 13. on August 28. and no property could be located. J. the running of the statute of limitations will not be suspended.113.Instances When the Running of the Prescriptive Period is Suspended REPUBLIC OF THE PHILIPPINES. that. petitioner. and when the taxpayer is out of the Philippines. vs. the trial court. Chief of the Legal Division. San Fernando.R. Over petitioner's objection. denied the request. provided. Respondent moved to dismiss the case on two grounds. 1986. it filed a case with the Regional Trial Court. 1999 MENDOZA. the BIR issued to respondent Salud V. SALUD V. granted the motion and dismissed the complaint. G. served warrants of distraint and levy to collect the tax deficiency. 1992. if the taxpayer informs the Commissioner of any change in address. Hizon a deficiency income tax assessment of P1. Branch 44.: FACTS: On July 18. when the warrant of distraint or levy is duly served upon the taxpayer. 1989. one of which is that the action had already prescribed. Pampanga to collect the tax deficiency. the Bureau's Regional Director in Pampanga. BIR Region 4. HIZON. The BIR. his authorized representative or a member of his household with sufficient discretion.359. Respondent not having contested the assessment. No. 1997.68 covering the fiscal year 1981-1982. On January 1. However. or on November 3. it did not proceed to dispose of the attached properties. Section 223(c) of the NIRC provides: Any internal revenue tax which has been assessed within the period of limitation above-prescribed may be collected by distraint or levy or by a proceeding in court within three years following the assessment of the tax. The running of the three-year prescriptive period is suspended — for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter. petitioner. when the taxpayer cannot be located in the address given by him in the return filed upon which the tax is being assessed or collected. and verified by Amancio Saga. for reasons not known. More than three years later. TaxCases_57 . respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. The complaint was signed by Norberto Salud. ISSUE: Whether or not the action for collection of taxes filed against respondent had already been barred by the statute of limitations? HELD: NO.

Even assuming that she first learned of the deficiency assessment on this date. 1997. She explained that she was constrained to ask for a reconsideration in order to avoid the harassment of BIR collectors.‖ TaxCases_58 . 223(c) was suspended when the BIR timely served the warrants of distraint and levy on respondent on January 12. in Advertising Associates. her request for reconsideration did not suspend the running of the prescriptive period provided under §223(c). respondent made her request for reconsideration thereof only on November 3.Sec. without stating when she received the notice of tax assessment. 1994. Thus. the BIR did not file any collection case but merely relied on the summary remedy of distraint and levy to collect the tax deficiency. otherwise the assessment becomes final. it was held: ―It should be noted that the Commissioner did not institute any judicial proceeding to collect the tax. He relied on the warrants of distraint and levy to interrupt the running of the statute of limitations. On the other hand.. Petitioner cites for this purpose our ruling in Advertising Associates Inc. her request for reconsideration was nonetheless filed late since she made it more than 30 days thereafter. demandable. 229 of the Code mandates that a request for reconsideration must be made within 30 days from the taxpayer's receipt of the tax deficiency assessment. 1986. 1989. it is contended that the running of the prescriptive period under Sec. as the BIR in fact did on January 1. unappealable and. Because of the suspension. Hence. extending even after the lapse of the statutory period for collection. therefore. she must have been referring to the distraint and levy of her properties by petitioner's agents which took place on January 12. v. Nonetheless. In those cases. 1992. Court of Appeals. Although the Commissioner acted on her request by eventually denying it on August 11. The importance of this fact was not lost on the Court. In all likelihood. 223(c) of filing a case in court for collection of the tax deficiency. it is argued that the BIR could still avail of the other remedy under Sec. It is the timely service of a warrant of distraint or levy suspends the running of the period to collect the tax deficiency in the sense that the disposition of the attached properties might well take time to accomplish. 1989. this is of no moment and does not detract from the fact that the assessment had long become demandable. The notice of assessment for respondent's tax deficiency was issued by petitioner on July 18.

It served the Warrant on petitioner BPI only on 23 October 1992. J. dated 13 August 1997.00 to the Central Bank of the Philippines.000. as amended. Upon receipt of the letter from the BIR. the Government had been. when its counsel received a letter.: FACTS: On two separate occasions. by his own repeated requests or positive acts. on 15 October 1992. in the amount of P27.720. No. G.00. 139736 October 17. petitioner BPI did not hear from the BIR until 11 September 1997. The statute of limitations on collection may only be interrupted or suspended by a valid waiver executed in accordance with paragraph (d) of Section 223 of the Tax Code of 1977. protested the Assessment in a letter dated 16 November 1989. COMMISSIONER OF INTERNAL REVENUE. the BIR issued Assessment Notoce finding petitioner BPI liable for deficiency DST on its afore-mentioned sales of foreign bills of exchange to the Central Bank. denying its "request for reconsideration. TaxCases_59 . for good reasons. vs. through its counsel. However. sold 500.000. BPI. On 10 October 1989. After due trial. particularly on 06 June 1985 and 14 June 1985." and addressing the points raised by petitioner BPI in its protest letter. the taxpayer may still be held in estoppel and be prevented from setting up the defense of prescription of the statute of limitations on collection when.00 (excluding the compromise penalty of P300. petitioner BPI proceeded to file a Petition for Review with the CTA on 10 October 1997. as laid down by this Court in the Suyoc case. the CTA rendered a Decision on 02 February 1999. which include a request for reinvestigation granted by the BIR Commissioner. Then again. Even when the request for reconsideration or reinvestigation is not accompanied by a valid waiver or there is no request for reinvestigation that had been granted by the BIR Commissioner.00). in which it held that the right of respondent BIR Commissioner to collect from petitioner BPI the alleged deficiency DST for taxable year 1985 had not yet prescribed. 2005 CHICO-NAZARIO. persuaded to postpone collection to make the taxpayer feel that the demand is not unreasonable or that no harassment or injustice is meant by the Government. Petitioner. and the existence of the circumstances enumerated in Section 224 of the same Code. Respondent.R. Petitioner BPI did not receive any immediate reply to its protest letter. signed by then BIR Commissioner Liwayway Vinzons-Chato. the BIR issued a Warrant of Distraint and/or Levy against petitioner BPI for the assessed deficiency DST for taxable year 1985.BANK OF THE PHILIPPINE ISLANDS. and filed with the BIR on 17 November 1989. Petitioner BPI.000. ISSUE: Whether or not the efforts of respondent Commissioner to collect on the Assessment were already barred by prescription? HELD: YES. for the total sales amount of US$1.

had already expired. Considering that the right of the respondent BIR Commissioner to collect from petitioner BPI the deficiency DST in Assessment No. then. the protest filed by petitioner BPI was a request for reconsideration. not a request for reinvestigation that was granted by respondent BIR Commissioner which could have suspended the prescriptive period for collection under Section 224 of the Tax Code of 1977. as amended. The statute on limitations imposed by the Tax Code precisely intends to protect the taxpayer from such prolonged and unreasonable assessment and investigation by the BIR. FAS-5-85-89-002054. as required in the Suyoc case. other than filing a request for reconsideration of Assessment No. and b) None of the conditions and requirements for exception from the statute of limitations on collection exists herein: Petitioner BPI did not execute any waiver of the prescriptive period on collection as mandated by paragraph (d) of Section 223 of the Tax Code of 1977. this Court finds that – (a) The statute of limitations for collection of the deficiency DST in Assessment No. TaxCases_60 . petitioner BPI. FAS-5-85-89-002054 had already prescribed. did not make repeated requests or performed positive acts that could have persuaded the respondent BIR Commissioner to delay collection.Applying the given rules to the present Petition. as amended. issued against petitioner BPI. They presented no reason or explanation as to why it took them almost eight years to address the protest of petitioner BPI. and that would have prevented or estopped petitioner BPI from setting up the defense of prescription against collection of the tax assessed. FAS-5-8589-002054. This is a simple case wherein respondent BIR Commissioner and other BIR officials failed to act promptly in resolving and denying the request for reconsideration filed by petitioner BPI and in enforcing collection on the assessment. there is no more need for this Court to make a determination on the validity and correctness of the said Assessment for the latter would only be unenforceable. and.

2008 TINGA. petitioner filed a protest on the demand/assessment notices. requested for the details of the amounts alleged as 1982-1986 deficiency taxes mentioned in the November 26. 2002. 1989. petitioner filed a Petition for Review before the Court. G. Thereafter. issued to the petitioner a pre-assessment notice (PAN) dated November 26. 1986. internal revenue taxes shall be assessed within five years after the return was filed.R. 1986 PAN. that this limitation shall not apply to cases already investigated prior to the approval of this Code. assessment/demand notices FAS-1-82 to 86/89-000 and FAS 5-82 to 86/89-000 for deficiency withholding tax at source (Swap Transactions) and DST involving the amounts of P190. 1994.860. 1993.82 and P24. On May 8. 2003.BANK OF THE PHILIPPINE ISLANDS (Formerly: Far East Bank and Trust Company). on January 24. COMMISSIONER OF INTERNAL REVENUE.752. Petitioner received a copy of the said decision on January 15.174.—Except as provided in the succeeding section.63 was reiterated and the petitioner was ordered to pay the said amount within thirty (30) days from receipt of such order. respondent. For the purposes of this section. vs. 174942 March 7. On April 7. ISSUE: Whether or not the collection of the deficiency DST is barred by prescription? HELD: YES. Petitioner.174. Section 318 of the Tax Code of 1977 provides: Period of limitation upon assessment and collection.Thus.63. a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided. 1986.587. Valdez. Petitioner executed several Waivers of the Statutes of Limitations. On August 9. respectively. in a letter dated November 29. 1989. 2003.587. 700. No.: FACTS: Respondent thru then Revenue Service Chief Cesar M. the CIR has three (3) years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment.752. the last of which was effective until December 31. On April 20. respondent issued to the petitioner. On the other hand. petitioner filed a supplemental protest. J. 1989. The statute of limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years to three (3) years by Batas Pambansa Blg. petitioner requested for an opportunity to present or submit additional documentation on the Swap Transactions with the then Central Bank. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. the deficiency DST assessment in the amount ofP24. petitioner. On March 12. respondent issued a final decision on petitioner‘s protest ordering the withdrawal and cancellation of the deficiency withholding tax assessment in the amount of P190.860.82 and considered the same as closed and terminated. for the years 1982 to 1986. TaxCases_61 .

The CIR himself contends that the waiver is void as it shows no date of acceptance in violation of RMO No. As applied to the present case. the records of this case do not disclose any effort on the part of the Bureau of Internal Revenue to collect the deficiency tax after the expiration of the waiver until eight (8) years thereafter when it finally issued a decision on the protest. it was only on 9 August 2002 that the CIR ordered BPI to pay the deficiency. his authorized representative. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected: Provided. when the taxpayer requests for a reinvestigation which is granted by the Commissioner. or a member of his household with sufficient discretion. In order to determine whether the prescriptive period for collecting the tax deficiency was effectively tolled by BPI‘s filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR. expressly or impliedly. shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter. The Court went on to declare that the burden of proof that the request for reinvestigation had been actually granted shall be on the CIR. that the CIR had granted the request for reinvestigation filed by BPI. there is no basis for the tax court‘s ruling that the filing of the request for reinvestigation tolled the running of the prescriptive period for collecting the tax deficiency. or court proceeding. TaxCases_62 . In order to suspend the running of the prescriptive periods for assessment and collection. The assessment of the tax is deemed made and the three (3)-year period for collection of the assessed tax begins to run on the date the assessment notice had been released. What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation. Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative in response to the request for reinvestigation. Neither did the waiver of the statute of limitations signed by BPI supposedly effective until 31 December 1994 suspend the prescriptive period. As differentiated from the Wyeth Suaco case. Hence.When it validly issues an assessment within the three (3)-year period. There is nothing in the records of this case which indicates. In BPI v. mailed or sent to the taxpayer. The above section is plainly worded. in respect of any deficiency. and when the taxpayer is out of the Philippines.—The running of the statute of limitations provided in Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection. it has another three (3) years within which to collect the tax due by distraint. the request for reinvestigation must be granted by the CIR. However. and no property could be located. levy. when the warrant of distraint and levy is duly served upon the taxpayer. which states: Suspension of running of statute. 20-90. however. That if the taxpayer informs the Commissioner of any change in address. there is no evidence in this case that the CIR actually conducted a reinvestigation upon the request of BPI or that the latter was made aware of the action taken on its request. we need to examine Section 320 of the Tax Code of 1977. as he considered BPI‘s letters of protest to be. Commissioner of Internal Revenue. the Court emphasized the rule that the CIR must first grant the request for reinvestigation as a requirement for the suspension of the statute of limitations. the running of the statute of limitations will not be suspended. the CIR had three (3) years from the time he issued assessment notices to BPI on 7 April 1989 or until 6 April 1992 within which to collect the deficiency DST. At any rate.

Computation of Prescriptive Period
COMMISSIONER OF INTERNAL REVENUE and ARTURO V. PARCERO in his
official capacity as Revenue District Officer of Revenue District No. 049
(Makati), Petitioners,
vs.
PRIMETOWN PROPERTY GROUP, INC., Respondent.
G.R. No. 162155

August 28, 2007

CORONA, J.:
FACTS:
On March 11, 1999, Gilbert Yap, vice chair of respondent Primetown Property
Group, Inc., applied for the refund or credit of income tax respondent paid in 1997. In
Yap's letter to petitioner, he explained that the increase in the cost of labor and
materials and difficulty in obtaining financing for projects and collecting receivables
caused the real estate industry to slowdown. As a consequence, while business was
good during the first quarter of 1997, respondent suffered losses that year.
According to Yap, because respondent suffered losses, it was not liable for
income taxes. Nevertheless, respondent paid its quarterly corporate income tax and
remitted creditable withholding tax from real estate sales to the BIR. Therefore,
respondent was entitled to tax refund or tax credit.
On May 13, 1999, the BIR required respondent to submit additional documents
to support its claim. Respondent complied but its claim was not acted upon. Thus, on
April 14, 2000, it filed a petition for review in the CTA.
On December 15, 2000, the CTA dismissed the petition as it was filed beyond
the two-year prescriptive period for filing a judicial claim for tax refund or tax credit.
ISSUE:
Whether or not the claim of respondent already prescribed?
HELD:
NO.
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the
Administrative Code of 1987 deal with the same subject matter — the computation of legal
periods. Under the Civil Code, a year is equivalent to 365 days whether it be a regular year or
a leap year. Under the Administrative Code of 1987, however, a year is composed of 12
calendar months. Needless to state, under the Administrative Code of 1987, the number of
days is irrelevant.

There obviously exists a manifest incompatibility in the manner of computing
legal periods under the Civil Code and the Administrative Code of 1987. For this
reason, we hold that Section 31, Chapter VIII, Book I of the Administrative Code of
1987, being the more recent law, governs the computation of legal periods. Lex
posteriori derogat priori.
Thus, respondent's petition (filed on April 14, 2000) was filed on the last day of
the 24th calendar month from the day respondent filed its final adjusted return.
Hence, it was filed within the reglementary period.

TaxCases_63

Procedure in the Process of Assessment (Sec. 228)
ESTATE OF THE LATE JULIANA DIEZ VDA. DE GABRIEL, petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 155541

January 27, 2004

YNARES-SANTIAGO, J.:
Facts::
During the lifetime of the decedent, Juliana Vda. De Gabriel, her business
affairs were managed by the Philippine Trust Company. The decedent died on April 3,
1979. Two days after her death, Philtrust, through its Trust Officer, Atty. Antonio M.
Nuyles, filed her Income Tax Return for 1978. The return did not indicate that the
decedent had died.
On January 26, 1981, the court a quo issued an Order relieving Mr. Diez of his
appointment, and appointed Antonio Lantin to take over as Special Administrator.
Subsequently, on July 30, 1981, Mr. Lantin was also relieved of his appointment, and
Atty. Vicente Onosa was appointed in his stead.
In the meantime, the BIR conducted an administrative investigation on the
decedent‘s tax liability and found a deficiency income tax for the year 1977 in the
amount of P318,233.93. Thus, on November 18, 1982, the BIR sent by registered mail
a demand letter and Assessment Notice addressed to the decedent "c/o Philippine
Trust Company, Sta. Cruz, Manila" which was the address stated in her 1978 Income
Tax Return. No response was made by Philtrust. The BIR was not informed that the
decedent had actually passed away.
On June 18, 1984, respondent Commissioner of Internal Revenue issued
warrants of distraint and levy to enforce collection of the decedent‘s deficiency income
tax liability, which were served upon her heir, Francisco Gabriel. On January 7, 1985,
Mr. Ambrosio filed a letter of protest with the Litigation Division of the BIR, which was
not acted upon because the assessment notice had allegedly become final, executory
and incontestable.
On May 16, 1985, petitioner, the Estate of the decedent, through Mr. Ambrosio,
filed a formal opposition to the BIR‘s Motion for Allowance of Claim based on the
ground that there was no proper service of the assessment and that the filing of the
aforesaid claim had already prescribed.
The BIR filed its Reply, contending that service to Philippine Trust Company
was sufficient service, and that the filing of the claim against the Estate on November
22, 1984 was within the five-year prescriptive period for assessment and collection of
taxes under Section 318 of the 1977 NIRC.
ISSUE:
Whether or not the Court of Appeals erred in holding that the service of
deficiency tax assessment against Juliana Diez Vda. de Gabriel through the Philippine
Trust Company was a valid service in order to bind the Estate?
HELD:
YES.

TaxCases_64

The first point to be considered is that the relationship between the decedent
and Philtrust was one of agency, which is a personal relationship between agent and
principal. Under Article 1919 (3) of the Civil Code, death of the agent or principal
automatically terminates the agency. In this instance, the death of the decedent on
April 3, 1979 automatically severed the legal relationship between her and Philtrust,
and such could not be revived by the mere fact that Philtrust continued to act as her
agent when, on April 5, 1979, it filed her Income Tax Return for the year 1978.
Since the relationship between Philtrust and the decedent was automatically
severed at the moment of the Taxpayer‘s death, none of Philtrust‘s acts or omissions
could bind the estate of the Taxpayer. Service on Philtrust of the demand letter and
Assessment Notice No. was improperly done.
It must be noted that Philtrust was never appointed as the administrator of the
Estate of the decedent, and, indeed, that the court a quo twice rejected Philtrust‘s
motion to be thus appointed. As of November 18, 1982, the date of the demand letter
and Assessment Notice, the legal relationship between the decedent and Philtrust had
already been non-existent for three years.
The chapter on Estate Tax pertains to "all cases of transfers subject to tax" or
where the "gross value of the estate exceeds three thousand pesos". It has absolutely
no applicability to a case for deficiency income tax, such as the case at bar. It further
lacks applicability since Philtrust was never the executor, administrator of the
decedent‘s estate, and, as such, never had the legal obligation, based on the above
provision, to inform respondent of her death.
Although the administrator of the estate may have been remiss in his legal
obligation to inform respondent of the decedent‘s death, the consequences thereof, as
provided in Section 119 of the National Internal Revenue Code of 1977, merely refer
to the imposition of certain penal sanctions on the administrator. These do not include
the indefinite tolling of the prescriptive period for making deficiency tax assessments,
or the waiver of the notice requirement for such assessments.
Thus, as of November 18, 1982, the date of the demand letter and Assessment
Notice, there was absolutely no legal obligation on the part of Philtrust to either (1)
respond to the demand letter and assessment notice, (2) inform respondent of the
decedent‘s death, or (3) inform petitioner that it had received said demand letter and
assessment notice. This lack of legal obligation was implicitly recognized by the Court
of Appeals, which, in fact, rendered its assailed decision on grounds of "equity".
Since there was never any valid notice of this assessment, it could not have
become final, executory and incontestable, and, for failure to make the assessment
within the five-year period provided in Section 318 of the National Internal Revenue
Code of 1977, respondent‘s claim against the petitioner Estate is barred.
When an estate is under administration, notice must be sent to the
administrator of the estate, since it is the said administrator, as representative of the
estate, who has the legal obligation to pay and discharge all debts of the estate and to
perform all orders of the court. In that case, legal notice of the assessment was sent
to two heirs, neither one of whom had any authority to represent the estate. The
notice was not sent to the taxpayer for the purpose of giving effect to the assessment,
and said notice could not produce any effect. This Court had occasion to state that
"the assessment is deemed made when the notice to this effect is released, mailed or
sent to the taxpayer for the purpose of giving effect to said assessment." It appearing
that the person liable for the payment of the tax did not receive the assessment, the
assessment could not become final and executory.
In this case, the assessment was served not even on an heir of the Estate, but
on a completely disinterested third party. This improper service was clearly not binding
on the petitioner.

TaxCases_65

COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
AZUCENA T. REYES, Respondent.
G.R. No. 159694
January 27, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- x
AZUCENA T. REYES, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
G.R. No. 163581

January 27, 2006

PANGANIBAN, CJ.:
FACTS:
On July 8, 1993, Maria C. Tancinco died, leaving a 1,292 square-meter
residential lot and an old house thereon located at 4931 Pasay Road, Dasmariñas
Village, Makati City. On February 12, 1998, the Chief, Assessment Division, Bureau of
Internal Revenue, issued a preliminary assessment notice against the estate of the
late Maria C. Tancinco. On May 10, 1998, the heirs of the decedent received a final
estate tax assessment notice and a demand letter, both dated April 22, 1998.
On November 12, 1998, the Commissioner of Internal Revenue issued a
preliminary collection letter to Reyes, followed by a Final Notice Before Seizure dated
December 4, 1998. On January 5, 1999, a Warrant of Distraint and/or Levy was
served upon the estate, followed on February 11, 1999 by Notices of Levy on Real
Property and Tax Lien against it.
On March 2, 1999, Reyes protested the notice of levy. However, on March 11,
1999, the heirs proposed a compromise settlement of P1,000,000.00.
In a letter to the CIR dated January 27, 2000, Reyes proposed to pay 50% of
the basic tax due, citing the heirs‘ inability to pay the tax assessment. On March 20,
2000, the CIR rejected Reyes‘s offer, pointing out that since the estate tax is a charge
on the estate and not on the heirs, the latter‘s financial incapacity is immaterial as, in
fact, the gross value of the estate amounting to P32,420,360.00 is more than
sufficient to settle the tax liability. Thus, the CIR demanded payment of the amount
of P18,034,382.13 on or before April 15, 2000; otherwise, the notice of sale of the
subject property would be published.
On April 11, 2000, Reyes again wrote to the CIR, this time proposing to pay
100% of the basic tax due in the amount of P5,313,891.00. She reiterated the
proposal in a letter dated May 18, 2000.
As the estate failed to pay its tax liability within the April 15, 2000 deadline, the
Chief, Collection Enforcement Division, BIR, notified Reyes on June 6, 2000 that the
subject property would be sold at public auction on August 8, 2000.
ISSUE:
Whether or not there valid assessment in lieu of a valid notice?
HELD:
NO.
Petitioner violated the cardinal rule in administrative law that the taxpayer be
accorded due process. Not only was the law here disregarded, but no valid notice was
sent, either. A void assessment bears no valid fruit.
TaxCases_66

The law imposes a substantive, not merely a formal, requirement. To proceed
heedlessly with tax collection without first establishing a valid assessment is evidently
violative of the cardinal principle in administrative investigations: that taxpayers should
be able to present their case and adduce supporting evidence. In the instant case,
respondent has not been informed of the basis of the estate tax liability. Without
complying with the unequivocal mandate of first informing the taxpayer of the
government‘s claim, there can be no deprivation of property, because no effective
protest can be made. The haphazard shot at slapping an assessment, supposedly
based on estate taxation‘s general provisions that are expected to be known by the
taxpayer, is utter chicanery.
Even a cursory review of the preliminary assessment notice, as well as the
demand letter sent, reveals the lack of basis for -- not to mention the insufficiency of - the gross figures and details of the itemized deductions indicated in the notice and
the letter. This Court cannot countenance an assessment based on estimates that
appear to have been arbitrarily or capriciously arrived at. Although taxes are the
lifeblood of the government, their assessment and collection "should be made in
accordance with law as any arbitrariness will negate the very reason for government
itself."
Neither Section 229 nor RR 12-85 can prevail over Section 228 of the Tax Code.
No doubt, Section 228 has replaced Section 229. The provision on protesting an
assessment has been amended. Furthermore, in case of discrepancy between the law
as amended and its implementing but old regulation, the former necessarily
prevails. Thus, between Section 228 of the Tax Code and the pertinent provisions of
RR 12-85, the latter cannot stand because it cannot go beyond the provision of the
law. The law must still be followed, even though the existing tax regulation at that
time provided for a different procedure. The regulation then simply provided that
notice be sent to the respondent in the form prescribed, and that no consequence
would ensue for failure to comply with that form.

TaxCases_67

enforceable correct? HELD: YES. The BIR issued on 08 October 1986 an assessment against PNB for its withholding tax liability on the interest earnings and/or yields from PNOC's money placements with the bank. PNB. dated 11 April 1991. The courts may therefore order the enforcement of this assessment. ISSUE: Whether or not the finding of the CTA that the deficiency withholding tax assessment against PNB had already become final and unappealable and. It submits that the BIR failed to comply with the notice requirements set forth in RR No.73. became final and unappealable.R. in the amount of P294. No. 109976 April 26. TIRSO B.R. and was protested by it through a letter. 12-85. 2005 CHICO-NAZARIO. it should have been raised in the court below. 12-85 is a new issue raised by PNB only before this Court. did not take any action as to the said assessment so that upon the lapse of the period to protest. as far as this case is concerned. TaxCases_68 . 112800 April 26. Such a question has not been ventilated before the lower courts. however. in another effort to block the collection of the deficiency withholding tax. The significant BIR assessment. the matter would have been seriously delved into by the CTA and the Court of Appeals. The BIR denied PNB's protest on the ground that it was filed out of time and. and could no longer be disputed.: FACTS: Then BIR Commissioner. should be the one issued by the BIR against PNB on 08 October 1986. No. SAVELLANO and COMMISSIONER OF INTERNAL REVENUE. dated 16 January 1991. Jose U. in a letter to PNB. COURT OF TAX APPEALS. thus.PHILIPPINE NATIONAL OIL COMPANY. thus. This BIR letter was received by PNB on 06 February 1991. COURT OF APPEALS. PNB. G. the assessment had already become final.958. 2005 x--------------------x PHILIPPINE NATIONAL BANK. It had 30 days from receipt to protest the BIR's assessment. vs. raises for the first time in the Supreme Court doubts as to the validity of the deficiency withholding tax assessment issued against it on 16 January 1991. THE HON. J. Petitioner. THE COMMISSIONER OF INTERNAL REVENUE and TIRSO SAVELLANO. If raised earlier. demanded that PNB pay deficiency withholding tax on the interest earnings and/or yields from PNOC's money placements. Ong. the withholding tax assessment against it. G. For an appellate tribunal to consider a legal question. Respondents. COURT OF APPEALS. Petitioner. THE HON.450. vs.Respondents. dated 8 October 1986. Whether or not the BIR complied with the notice requirements of RR No.

the demand letter. It only demanded from PNB the payment of the balance of the withholding tax assessed against it on 08 October 1986. At best. then the courts can order the BIR to enforce the assessment and collect the assessed tax. If the compromise agreement is valid. TaxCases_69 . on the other hand. that is in issue in the instant case. it would effectively bar the BIR from enforcing the assessment and collecting the assessed tax. constitute a useful reference for the courts in computing the balance of PNB's tax liability. The BIR demand letter. dated 16 January 1991. after applying as partial payment thereon the amount previously received by the BIR from PNOC pursuant to the compromise agreement. The same demand letter also has no substantial effect or impact on the resolution of the present case.It is the enforcement of this BIR assessment against PNB. is not a new assessment against PNB. dated 08 October 1986. if the compromise agreement is void. dated 16 January 1991.

555. TaxCases_70 . the same cannot detract from the fact that formal assessments were issued to and actually received by respondents in accordance with Section 228 of the National Internal Revenue Code which was in effect at the time of assessment. thereby signaling the time when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies therefor. 1997. 12-85. 1997 protest to the September 2. Due process requires that it must be served on and received by the taxpayer.: FACTS: BIR records show that on July 28." In their September 28. ISSUE: Whether or not the assessment notice validly given? HELD: YES. 1997. applies only to formal assessments prescribed under Section 228 of the National Internal Revenue Code. 1992 and 1993. but not to post-reporting notices or pre-assessment notices. informing the latter of their supposed underdeclaration of sales totaling P48." Respondent is therefore estopped from denying actual receipt of the September 2. The issuance of a valid formal assessment is a substantive prerequisite to tax collection. issued by BIR-Baguio for alleged deficiency income and percentage taxes for taxable years ending 31 December 1991. 1997. 2008 AUSTRIA-MARTINEZ.R. that said assessment notice have been served on the taxpayer. acknowledged that "they are in receipt of the assessment notice you have sent us. dated September 2. respondent received various assessment notices. In their Petition for Review with the CTA. Petitioner vs. 1997 assessment notices.96 and giving them 5 days to communicate any objection to the results of the investigation. G. either personally or in writing. a letter was issued by BIR Baguio to Spouses Menguito. all dated 02 September 1997. together with any evidence he may want to present. for it contains not only a computation of tax liabilities but also a demand for payment within a prescribed period.721. 167560 September 17. 1997 assessment notices. respondent expressly stated that "sometime in September 1997. DOMINADOR MENGUITO.193. While the lack of a post-reporting notice and pre-assessment notice is a deviation from the requirements under Section 1 and Section 2 of Revenue Regulation No. if receipt thereof is denied. respondent.COMMISSIONER OF INTERNAL REVENUE.041. through his spouses Jeanne Menguito. Respondent. It should be emphasized that the stringent requirement that an assessment notice be satisfactorily proven to have been issued and released or. informing respondent that the sum of P34. J. Said letter gave the respondent herein a period of ten (10) days to submit his objection to the proposed assessment. No. Records likewise reveal the issuance of a Preliminary Ten (10) Day Letter on August 11.55 is due from him as deficiency income and percentage tax.

In the case of respondent. Neither notice contains a declaration of the tax liability of the taxpayer or a demand for payment thereof. the lack of such notices inflicts no prejudice on the taxpayer for as long as the latter is properly served a formal assessment notice. he filed a protest with the BIR. Baguio City and eventually a petition with the CTA. The post-reporting notice and pre-assessment notice merely hint at the initial findings of the BIR against a taxpayer and invites the latter to an "informal" conference or clarificatory meeting. on the basis thereof. Hence. TaxCases_71 . and. a formal assessment notice was received by him as acknowledged in his Petition for Review and Joint Stipulation.A post-reporting notice and pre-assessment notice do not bear the gravity of a formal assessment notice.

It could have simply presented the registry receipt or the certification from the postmaster that it mailed the PAN. 2008 MENDOZA. 2003. 67 a Warrant of Distraint and/or Levy No. 2002. Indeed. Legazpi City. METRO STAR SUPERAMA. 67 sent a copy of the Final Notice of Seizure dated May 12.R. petitioner received a Formal Letter of Demand dated April 3. ISSUE: Was the petitioner denied due process in not having received a Preliminary Assessment Notice? HELD: YES. that he was willing to pay the tax as computed by the CIR. 2002. Revenue District Office No. 2002. TaxCases_72 . The failure of the respondent to prove receipt of the assessment by the Petitioner leads to the conclusion that no assessment was issued.COMMISSIONER OF INTERNAL REVENUE. Metro Star filed a petition for review with the CTA. J. On February 6. giving the latter last opportunity to settle its deficiency tax liabilities within ten (10) days from receipt thereof. Denying that it received a Preliminary Assessment Notice (PAN) and claiming that it was not accorded due process. that stated that he had received the FAN dated April 3. but not the PAN. which petitioner received on May 15. Neither did it offer any explanation on why it failed to comply with the requirement of service of the PAN. 2004. 67-0029-23 dated May 12. 2002 from Revenue District No. but failed. Subsequently. Consequently. 2003. petitioner received from Revenue District Office No. 185371 September 17.) for deficiency value-added and withholding taxes for the taxable year 1999. Respondent G. INC. 67. Petitioner vs. assessing petitioner the amount of Two Hundred Ninety Two Thousand Eight Hundred Seventy Four Pesos and Sixteen Centavos (P292.874. requirement. 2003 demanding payment of deficiency value-added tax and withholding tax payment in the amount of P292. 2002. It merely accepted the letter of Metro Star‘s chairman dated April 29.: FACTS: On April 11. otherwise respondent BIR shall be constrained to serve and execute the Warrants of Distraint and/or Levy and Garnishment to enforce collection.. The law imposes a substantive.874.16. and that he just wanted to clarify some matters with the hope of lessening its tax liability. not merely a formal. The Court agrees with the CTA that the CIR failed to discharge its duty and present any evidence to show that Metro Star indeed received the PAN dated January 16.16. He must be informed of the facts and the law upon which the assessment is made. the government‘s right to issue an assessment for the said period has already prescribed. Section 228 of the Tax Code clearly requires that the taxpayer must first be informed that he is liable for deficiency taxes through the sending of a PAN. No.

A.2 describes the mandatory nature of the service of a PAN.To proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the cardinal principle in administrative investigations . The use of the word ―shall‖ in subsection 3. 8424. the assessment made by the CIR is void. Thus.1.that taxpayers should be able to present their case and adduce supporting evidence. The persuasiveness of the right to due process reaches both substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down by law and its own rules is a denial of Metro Star‘s right to due process.‖ the absence of which renders nugatory any assessment made by the tax authorities. TaxCases_73 . for its failure to send the PAN stating the facts and the law on which the assessment was made as required by Section 228 of R. No. It is clear that the sending of a PAN to taxpayer to inform him of the assessment made is but part of the ―due process requirement in the issuance of a deficiency tax assessment.

CAMUS ENGINEERING. the law. Revenue Regulations (RR) No. petitioner explained that such is a mere office requirement in the Assessment Service for the purpose of internal control and monitoring. ISSUE: Whether or not lack of control number in the assessment notice fatal to the case? HELD: NO. No.Governing Principles Concerning Assessment COMMISSIONER OF INTERNAL REVENUE. the assessment is void. the formality of a control number in the assessment notice is not a requirement for its validity but rather the contents thereof which should inform the taxpayer of the declaration of deficiency tax against said taxpayer. 177279 October 13.: FACTS: Assessment notices together with a formal letter of demand dated August 7. Since the company and its representatives refused to receive the said notices and demand letter.. 2010 VILLARAMA. HON. the revenue officers resorted to constructive service in accordance with Section 3. 12-99. As it is. They assail as invalid the assessment notices which bear no serial numbers and should be shown to have been validly served by an Affidavit of Constructive Service executed and sworn to by the revenue officers who served the same. On the lack of control number in the assessment notice.M.. Both the formal letter of demand and the notice of assessment shall be void if the former failed to state the fact. RAUL M. Otherwise. Respondents G. 2002. J. JR. Petitioner vs. 2002 were sent to LMCEC through personal service on October 1. CORP. rules and regulations or jurisprudence on which the assessment is based. The Formal Letter of Demand dated August 7. the unnumbered assessment notices should not be interpreted as irregular or anomalous. 2002 contains not only a detailed computation of LMCEC‘s tax deficiencies but also details of the specified discrepancies. TaxCases_74 . Petitioner stressed that LMCEC already lost its right to file a protest letter after the lapse of the thirty (30)-day reglementary period. which is a mandatory requirement under Section 228 of the NIRC. explaining the legal and factual bases of the assessment. Camus and Mendoza filed a Joint Counter-Affidavit contending that LMCEC cannot be held liable whatsoever for the alleged tax deficiency which had become due and demandable.R. hence. Section 228 of the NIRC provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. GONZALEZ AND L.

23-2000 dated November 27.13 in 1999. 2000. TaxCases_75 .323. 1998 and 1999 of an amount exceeding 30% incomedeclared in its return is considered a substantial underdeclaration of income.069. as amended.773. Assistant Commissioner Percival T.It also reiterated that in the absence of accounting records and other documents necessary for the proper determination of the company‘s internal revenue tax liabilities. the investigating revenue officers resorted to the ―Best Evidence Obtainable‖ as provided in Section 6(B) of the NIRC (third party information) and in accordance with the procedure laid down in RMC No.84 in 1997. Salazar informed private respondents that the estimated tax liabilities arising from LMCEC‘s underdeclaration amounted to P186.111. These figures confirmed that the non-declaration by LMCEC for the taxable years 1997. which constituted prima facie evidence of false or fraudulent return under Section 248(B) of the NIRC. P150.81 in 1998 and P163.600.220. In the same letter.

HON. and JESUS N. there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code.81. if the evidence warrants. and is here rejected. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed. Upon receipt of the notice. J: FACTS: The BIR District Revenue Officer at Davao City sent a "Notice of Taxpayer" to the petitioner informing him that there is due from him (petitioner) the amount of P104. and finding probable cause. petitioner. G. filed six (6) informations against the petitioner with the Court of First Instance of Davao City The petitioner also claims that the filing of the informations was precipitate and premature since the Commissioner of Internal Revenue has not yet resolved his protests against the assessment of the Revenue District Officer. but a criminal prosecution for violations of the National Internal Revenue Code which is within the cognizance of courts of first instance. in his capacity as State Prosecutor. UNGAB. 16TH Judicial District. The crime is complete when the violator has. State Prosecutor Jesus Acebes who had been designated to assist all Provincial and City Fiscals throughout the Philippines in the investigation and prosecution.. as in this case.R. VICENTE N. ACEBES. Thereafter. of all violations of the National Internal Revenue Code conducted a preliminary investigation of the case. L-41919-24 May 30. The contention is made. THE COMMISSIONER OF INTERNAL REVENUE. respondents. vs. No. representing income. that an assessment of the deficiency tax due is necessary before the taxpayer can be prosecuted criminally for the charges preferred. as reported in his income tax returns for the said year. Davao City. in his capacity as Judge of the Court of First Instance.Is Assessment Necessary Before a Taxpayer Could be Prosecuted for Violation of the NIRC QUIRICO P. What is involved here is not the collection of taxes where the assessment of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals. JR. knowingly and willfully filed fraudulent returns with intent to evade and defeat a part or all of the tax. ISSUE: Whether or not the filing of the informations premature? HELD: NO. CUSI.980. business tax and forest charges for the year 1973 and inviting petitioner to an informal conference. claiming that he was only a dealer or agent on commission basis in the banana sapling business and that his income. the petitioner wrote the BIR District Revenue Officer protesting the assessment. TaxCases_76 . 1980 CONCEPCION JR.. was accurately stated. Branch 1.

An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax. the protest of the petitioner against the assessment of the District Revenue Officer cannot stop his prosecution for violation of the National Internal Revenue Code. Accordingly. TaxCases_77 . Besides. Obviously. but not the prescriptive period of a criminal action for violation of law. it has been ruled that a petition for reconsideration of an assessment may affect the suspension of the prescriptive period for the collection of taxes. the respondent Judge did not abuse his discretion in denying the motion to quash filed by the petitioner. A crime is complete when the violator has knowingly and willfuly filed a fraudulent return with intent to evade and defeat the tax. and the government's failure to discover the error and promptly to assess has no connections with the commission of the crime. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return.

J. On August 3. VISTA. on September 8. REGIONAL TRIAL COURT OF QUEZON CITY. LAGMAN. 119322 June 4. JUANITA LEE AND ANTONIO P. its corporate officers. No. 1993. SALVADOR MISON. THE HONORABLE COURT OF APPEALS. HARRY C." "More.66 representing deficiency income. ad valorem tax and value-added tax for the year 1992. In plain words. 1993. CITY PROSECUTOR CANDIDO V. FLORENCIO SANTOS. the fact that a tax is due must first be proved. 37-93 reclassifying best selling cigarettes bearing the brands "Hope. before one is prosecuted for willful attempt to evade or defeat any tax under Sections 253 and 255 of the Tax code. vs. BARAQUIA. respondents. BRANCH 88. SENIOR STATE PROSECUTOR HENRICK P. G. the Commissioner of Internal Revenue filed a complaint with the Department of Justice against respondent Fortune. the Commissioner of Internal Revenue issued a Revenue Memorandum Circular No. 1993. FERNANDEZ. the Court of Tax Appeals by resolution ruled that the reclassification made by the Commissioner "is of doubtful legality" and enjoined its enforcement. the Commissioner assessed against Fortune the total amount of P7. PRESIDING JUDGE.R. STATE PROSECUTOR ALFREDO AGCAOILI. ISSUE: Whether or not an assessment necessary before a taxpayer could be prosecuted for violation of the NIRC? HELD: YES. petitioners. 1993 which was received by Fortune on August 24. CARMEN KAO TAN.942. ABAYA. Before the tax liabilities of Fortune are first finally determined. it cannot be correctly asserted that private respondents have willfully attempted to evade or defeat the taxes sought to be collected from Fortune. PROSECUTING ATTORNEY EMMANUEL VELASCO. In a letter of August 13." and "Champion" as cigarettes of foreign brands subject to a higher rate of tax.: FACTS: On July 1. TAN. 1993. LUCIO TAN. On September 7. CHUNG POE KEE. SENIOR STATE PROSECUTOR BERNELITO R. ad valorem and value-added tax for the year 1992 with the request that the said amount be paid within thirty (30) days upon receipt thereof. respondent Fortune Tobacco Corporation questioned the validity of the reclassification of said brands of cigarettes as violative of its right to due process and equal protection of law. THE HONORABLE TIRSO D'C VELASCO.221. 1996 KAPUNAN. FORTUNE TOBACCO CORPORATION. Parenthetically. TaxCases_78 .COMMISSIONER ON INTERNAL REVENUE. AND ASSISTANT CITY PROSECUTOR LEOPOLDO E. nine (9) other corporations and their respective corporate officers for alleged fraudulent tax evasion for supposed non-payment by Fortune of the correct amount of income tax. MARIANO TANENGLIAN. 1993.685. ROJAS CHUA. GINGOYON. RIVERA. SENIOR STATE PROSECUTOR AURORA S. ROGELIO F.

the criminal complaints filed against private respondents will have no leg to stand on. approved by the BIR. and that while a precise computation and assessment is required for a civil action to collect tax deficiencies. that the lack of a final determination of Fortune's exact or correct tax liability is not a bar to criminal prosecution. TaxCases_79 . the Tax Code does not require such computation and assessment prior to criminal prosecution. There was a willful attempt to evade tax in Ungad because of the taxpayer's failure to declare in his income tax return "his income derived from banana saplings. then. for criminal prosecution to proceed before assessment. there must be a prima facie showing of a willful attempt to evade taxes." In the mind of the trial court and the Court of Appeals. In view of the foregoing reasons. the pronouncement therein that deficiency assessment is not necessary prior to prosecution is pointedly and deliberately qualified by the Court with following statement quoted from Guzik v." In plain words. U. Reading Ungad carefully. Herein lies a whale of difference between Ungad and the case at bar. Cusi. is presumed to be the actual wholesale price. not fraudulent and unless and until the BIR has made a final determination of what is supposed to be the correct taxes. therefore. we cannot subscribe to the petitioners' thesis citing Ungad v.S. Fortune's situation is quite apart factually since the registered wholesale price of the goods.: "The crime is complete when the violator has knowingly and willfully filed a fraudulent return with intent to evade and defeat apart or all of the tax. the taxpayer should not be placed in the crucible of criminal prosecution.Suppose the Commissioner eventually resolves Fortune's motion for reconsideration of the assessments by pronouncing that the taxpayer is not liable for any deficiency assessment.

not that the commissioner has issued an assessment. DIO and VIRGINIA S. said Section 222 states that an assessment is not necessary before a criminal charge can be filed. To reiterate. In contrast. the criminal charge need only be supported by a prima facie showing of failure to file a required return. G. Dio. Cusi. 1995. Before an assessment is issued. Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. vs. Private respondents PRDC. 128315 June 29. there is. the taxpayer is notified that a criminal case had been filed against him. 1999 PANGANIBAN. petitioner therein sought the dismissal of the criminal Complaints for being premature. its President Rogelio A. PASCOR REALTY AND DEVELOPMENT CORPORATION. Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. the Commissioner of Internal Revenue filed a criminal complaint before the Department of Justice against the PRDC. and its Treasurer Virginia S. et. J.: FACTS: On March 1. al.671. filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied. This is the general rule. ROGELIO A. alleging evasion of taxes in the total amount of P10. Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case. No. proceedings in court may be commenced without an assessment. Thereafter. the criminal charge need not go through all these. In Ungab v. a pre-assessment notice sent to the taxpayer.COMMISSIONER OF INTERNAL REVENUE. Private respondents failed to show that they are entitled to an exception. but to penalize the taxpayer for violation of the Tax Code. The criminal charge is filed directly with the DOJ. DIO. since his protest to the CTA had not yet been resolved. Moreover. It must be stressed that a criminal complaint is instituted not to demand payment. This fact need not be proven by an assessment. Furthermore. The issuance of an assessment must be distinguished from the filing of a complaint.00. petitioner. TaxCases_80 . Dio. respondents.R.513. ISSUE: Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted? HELD: NO. by practice.

Petitioner vs. 15-95. petitioner issued LA No. JR. J. there must be a prima facie showing of a willful attempt to evade taxes. 2002 were sent to LMCEC through personal service on October 1.. They assail as invalid the assessment notices which bear no serial numbers and should be shown to have been validly served by an Affidavit of Constructive Service executed and sworn to by the revenue officers who served the same. 12-99.: FACTS: Assessment notices together with a formal letter of demand dated August 7. the revenue officers conducted a preliminary investigation on the information and documents showing substantial understatement of LMCEC‘s tax liabilities which were provided by the Informer. Revenue Regulations (RR) No. No. GONZALEZ AND L. CORP. ISSUE: Whether or not the criminal prosecution proceed before assessment in the instant case? HELD: YES. Consequently. following the procedure under RMO No. is bereft of factual basis and contradicted by the evidence on record. Since the company and its representatives refused to receive the said notices and demand letter.M. CAMUS ENGINEERING. Respondents G.. Prior to the issuance of the preliminary and final notices of assessment. Based on the prima facie finding of the existence of fraud. Camus and Mendoza argue that there was no assessment that has already become final. the revenue officers resorted to constructive service in accordance with Section 3. Camus and Mendoza filed a Joint Counter-Affidavit contending that LMCEC cannot be held liable whatsoever for the alleged tax deficiency which had become due and demandable. 2002.COMMISSIONER OF INTERNAL REVENUE. the validity of its issuance and service has been put in issue being anomalous. 00009361 for the TFD to conduct a formal fraud investigation of LMCEC. respondent Secretary‘s ruling that the filing of criminal complaint for violation of Sections 254 and 255 of the NIRC cannot prosper because of lack of prior determination of the existence of fraud.R. 1998 and 1999 in amounts equivalent to more than 30% (the computation in the final assessment notice showed underdeclarations of almost 200%) constitutes prima facie evidence of fraudulent return under Section 248(B) of the NIRC. TaxCases_81 . It is contended that for criminal prosecution to proceed before assessment. 177279 October 13. The substantial underdeclared income in the returns filed by LMCEC for 1997. irregular and oppressive. 2010 VILLARAMA. HON. RAUL M.

1998. or that do not create new or take away vested rights. No. followed on February 11. 1998. 1998.R.-. However. 228 of the NIRC Retroactive? COMMISSIONER OF INTERNAL REVENUE. being procedural in nature.-. Petitioner.x AZUCENA T. the heirs proposed a compromise settlement of P1. the Chief. leaving a 1. which deals with remedies. vs.-. The general rule is that statutes are prospective. Bureau of Internal Revenue. However. Dasmariñas Village. statutes that are remedial. Assessment Division. AZUCENA T. Tancinco died. On February 12.-. G. ISSUE: Whether or not the procedure for protesting an assessment under the Tax Code is found in Chapter III of Title VIII. 1999.-.-. Moreover. 1998. Section 228 provides for the procedure in case an assessment is protested.000. On May 10. 2006 x -. 159694 January 27. do not fall under the general rule against the retroactive operation of statutes. 2006 PANGANIBAN. that pending actions are excepted from the operation of Section 228. or that applying it to pending proceedings would impair vested rights.R. Tancinco. G.-. vs. 1999. the heirs of the decedent received a final estate tax assessment notice and a demand letter.-. COMMISSIONER OF INTERNAL REVENUE. Petitioner.000. on March 11. Clearly. 1999 by Notices of Levy on Real Property and Tax Lien against it.-.-.-. both dated April 22. a Warrant of Distraint and/or Levy was served upon the estate. it can surely be applied retroactively. REYES. On November 12.00.: FACTS: On July 8. 1998. In both instances. Maria C. The provision does not create new or take away vested rights.292 square-meter residential lot and an old house thereon located at 4931 Pasay Road. Respondent. either expressly or by necessary implication. Reyes protested the notice of levy. CJ.Are the Procedure Outlined in Sec. issued a preliminary assessment notice against the estate of the late Maria C. can its provision then be applied retroactively? HELD: YES. REYES. followed by a Final Notice Before Seizure dated December 4. 163581 January 27. RA 8424 does not state. 1999. the Commissioner of Internal Revenue issued a preliminary collection letter to Reyes. Respondent. 1993. Makati City. TaxCases_82 . On March 2.-. On January 5. No.

the RTC of Quezon City. invoking the writ of preliminary injunction issued by the trial court. ISSUE: Whether or not Carlos exhausted all the administrative remedies available regarding the charges filed against him? TaxCases_83 . On 25 October 1995.. the Tribunal issued a notice of hearing of the administrative case for 30 October 1995. CECILIA FLORENCIO. LETICIA PENAÑO-HO.TAX REMEDIES PROPER Doctrine of Exhaustion of Administrative Remedies UNIVERSITY OF THE PHILIPPINES. With the cooperation of the UP Diliman police. CATUNGAL. Instead. 121863 May 5. OSCAR C. They alleged that on different occasions they were brought by a certain Rea to the residence of Carlos to have themselves photographed for publication in a magazine.R. and they were forced to have sex with him. The UP Administrative Disciplinary Tribunal found Carlos guilty of grave misconduct and recommended the penalty of dismissal. and PROF. In his comment. Amy Fallorina. Instead. Carlos threatened them with a gun and ordered them to strip naked. his reinstatement with back wages and all benefits due him. in his capacity as former acting Presiding Judge of Branch 85 of the Regional Trial Court of Quezon City. 1997 DAVIDE. the search warrant was immediately served upon Carlos on the same date at his residence in UP Campus. PEDRO M. Carlos asked for the dismissal of the petition. HON. The favorable action of the court was based on the testimonies and sworn statements of three complaining witnesses. ELPIDIO M. Nude photos of them were taken. VICE CHANCELLOR ROLANDO P.. G. The search. DAYCO. ARTURO BALBASTRO. J. and Ferline Alaan. Jessica Romblon. VICE CHANCELLOR MARTIN GREGORIO.: FACTS: On 5 October 1994. issued an Order granting the application filed by the Quezon City Central Police District Command for the issuance of a search warrant against Carlos. Quezon City. respondents. Victor Isunza. In its order of 30 October 1995. Carlos submitted his objection to the continuation of the said case. in his capacity as Present Presiding Judge of Branch 85 of the Regional Trial Court of Quezon City. PROF. JR. Branch 217. Neither Carlos nor his new counsel appeared despite due notice. The UP prosecutor and Carlos then filed their respective memoranda in administrative case. conducted in his presence and that of the barangay chairman. AREOLA. petitioners. the Tribunal ruled that Carlos had waived his right to present his evidence and considered the case submitted for decision. namely. and SALVADOR CARLOS. HON. (deceased). JR. PROF. CHANCELLOR ROGER POSADAS. vs. HERRERA. JR. the nullification of the order of suspension of the administrative proceeding. No. HON. and the continuance of the civil case.

TaxCases_84 . arbitrary or oppressive. which were available. The trial court should have considered the fact that Carlos did not exhaust administrative remedies. Having in fact participated at the preliminary conference. as he admitted. will decide the same correctly. Carlos and his counsel had themselves to blame for their unfair maneuvers. His claim that the rule on exhaustion of administrative remedies does not apply to his case is nothing more than a self-serving conclusion and is speculative. The underlying principle of the rule on exhaustion of administrative remedies rests on the presumption that the administrative agency. comity.HELD: NO. the courts — for reasons of law. if afforded a complete chance to pass upon the matter. Carlos' immediate recourse to the court was effectively barred by his failure to exhaust administrative remedies. and convenience — will not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given an opportunity to act and correct the errors committed in the administrative forum. Indisputably then. agreed to the matters therein taken up. The administrative process is intended to provide less expensive and more speedy solutions to disputes. Where the enabling statute indicates a procedure for administrative review and provides a system of administrative appeal or reconsideration. attended the hearings and cross-examined a witness. Carlos had waived any legal issue which he initially raised. If the Tribunal acted in the manner it did in proceeding with the hearings. In no way can the Tribunal's action be characterized as illegal. There are both legal and practical reasons for the principle. That Carlos was under preventive suspension and that his salary and Christmas bonus were withheld could not cause "irreparable" injury.

R. respondent requested for the cancellation of the tax assessment. filed its Annual Income Tax Return for taxable year 1990 on 15 April 1991. authorizing the appropriate BIR officials to examine the books of account and other accounting records of respondent. arising from deductions that were disallowed for failure to pay the withholding tax and interest expenses that were likewise disallowed. It bears repetition that a request for reconsideration. PHILIPPINE GLOBAL COMMUNICATION. vs. On 6 May 1994. On 16 October 2002. interest. On 13 April 1992. In both letters. INC. On the following day. 2006 CHICO-NAZARIO. respondent received a Formal Assessment Notice with Assessment Notice. If both types of protest can effectively interrupt the running of the statute of limitations. a corporation engaged in telecommunications. cannot suspend the statute of limitations on the collection of an assessed tax. the BIR sent a letter to respondent requesting the latter to present for examination certain records and documents. 22 April 1994. but respondent failed to present any document. The distinction between a request for reconsideration and a request for reinvestigation is significant.. ISSUE: Whether or not the prescriptive period was interrupted when respondent filed two letters of protest disputing in detail the deficiency assessment in question and requesting the cancellation of said assessment? HELD: YES. TaxCases_85 . respondent. 167146 October 31. G. No. petitioner. in connection with the investigation of respondent‘s 1990 income tax liability. filed a formal protest letter against Assessment Notice.: FACTS: Respondent. unlike a request for reinvestigation. If the taxpayer fails to file a protest. the Ponce Enrile Cayetano Reyes and Manalastas Law Offices received from the CIR a Final Decision dated 8 October 2002 denying the respondent‘s protest against Assessment Notice. and affirming the said assessment in toto. through another counsel Siguion Reyna Montecillo & Ongsiako Law Offices. inclusive of surcharge. 0002307.Kinds of Protest COMMISSIONER OF INTERNAL REVENUE. On 22 April 1992. more than eight years after the assessment was presumably issued. and compromise penalty. J. which they alleged was invalid for lack of factual and legal basis. then the erroneous assessment would become final and unappealable. through its counsel Ponce Enrile Cayetano Reyes and Manalastas Law Offices. the CIR issued Letter of Authority No. Respondent filed another protest letter on 23 May 1994. respondent received a Preliminary Assessment Notice dated 13 April 1994 for deficiency income tax. an erroneous assessment may never prescribe. respondent. On 21 April 1994.

The tax which is the subject of the Decision issued by the CIR on 8 October 2002 affirming the Formal Assessment issued on 14 April 1994 can no longer be the subject of any proceeding for its collection. protests wherein the taxpayer requests for a reinvestigation. This is the predicament that the law on the statute of limitations seeks to prevent. In providing for exceptions to such rule in Section 271. the right of the government to collect the alleged deficiency tax is barred by prescription. the taxpayers remain uncertain and are burdened with the costs of preserving their books and records. And for an unrestricted number of years. the running of statute of limitations cannot be interrupted. the three-year statute of limitations on the collection of an assessed tax provided under Section 269(c) of the Tax Code of 1977. TaxCases_86 . where the taxpayer merely filed two protest letters requesting for a reconsideration. if the taxpayer does file the protest on a patently erroneous assessment. Meanwhile the interest on the deficiencies and the surcharges continue to accumulate. a law enacted to protect the interests of the taxpayer. Consequently. must be given effect. the law strictly limits the suspension of the running of the prescription period to. the statute of limitations would automatically be suspended and the tax thereon may be collected long after it was assessed. among other instances. Thus.On the other hand. In this case. and where the BIR could not have conducted a reinvestigation because no new or additional evidence was submitted.

CAMUS ENGINEERING CORPORATION (REPRESENTED BY LUIS M. M. inclusive of increments. Camus and Lino D. executory and demandable pursuant to Section 228 of the Tax Code of 1997 for failure of private respondent to file a protest against the same? HELD: NO. referred to the Secretary of Justice for preliminary investigation its complaint against LMCEC. it was alleged that despite the receipt of the final assessment notice and formal demand letter on October 1. Jr. Based on data obtained from an "informer" and various clients of LMCEC. RAUL M. 2003. No. Mendoza. PETITIONER.R. Luis M. MENDOZA). L. 2002. SECRETARY OF JUSTICE. ISSUE: Whether or not the Honorable Court of Appeals erroneously sustained the findings of the Secretary of Justice who gravely abused his discretion by inquiring into the validity of a Final Assessment Notice which has become final. G. In the Joint Affidavit executed by the revenue officers who conducted the tax fraud investigation. it conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities of respondent L.S. HON. which had become final and executory as a result of the said taxpayer‘s failure to file a protest thereon within the thirty(30)-day reglementary period.. a criminal complaint was instituted by the Bureau of Internal Revenue (BIR) against LMCEC on January 19. it was discovered that LMCEC filed fraudulent tax returns with substantial underdeclarations of taxable income for the years 1997. JR. The case was docketed as I.: FACTS: Pursuant to a Letter of Authority (LA) dated August 25. RESPONDENTS. GONZALEZ. LMCEC failed and refused to pay the deficiency tax assessment. 177279 October 13. On May 21.Effect of Failure to File Protest COMMISSIONER OF INTERNAL REVENUE. VS.956 of the Office of the City Prosecutor of Quezon City).. 2000 issued by then Commissioner of Internal Revenue. M. J. No. through then Commissioner Guillermo L. petitioner. 2001 for violation of Section 266 of the NIRC (I. Parayno. 1998 and 1999.S. respectively. CAMUS AND LINO D. 00. the latter two were sued in their capacities as President and Comptroller. The audit and investigation against LMCEC was precipitated by the information provided by an "informer" that LMCEC had substantial underdeclared income for the said period. 2003-774. 1998 and 1999. No. For failure to comply with the subpoena duces tecum issued in connection with the tax fraud investigation. TaxCases_87 . Camus Engineering Corporation (LMCEC) for the taxable years 1997.2010 VILLARAMA.

Records bear out that the assessment notice and Formal Letter of Demand dated August 7. Private respondents did not file a motion for reconsideration of the said assessment notice and formal demand. 2002. Section 228 of the NIRC provides the remedy to dispute a tax assessment within a certain period of time. It states that an assessment may be protested by filing a request for reconsideration or reinvestigation within 30 days from receipt of the assessment by the taxpayer. thereby precluding it from interposing the defenses of legality or validity of the assessment and prescription of the Government‘s right to assess. and all presumptions are in favor of the correctness of a tax assessment unless proven otherwise. We have held that a taxpayer‘s failure to file a petition for review with the Court of Tax Appeals within the statutory period rendered the disputed assessment final. Indeed. TaxCases_88 . which they allowed to lapse into finality. any objection against the assessment should have been pursued following the avenue paved in Section 229 (now Section 228) of the NIRC on protests on assessments of internal revenue taxes. 2002 assessment notice and formal letter of demand. 2002 were duly served on LMCEC on October 1. executory and demandable. by raising issues as to its validity and correctness during the preliminary investigation after the BIR has referred the matter for prosecution under Sections 254 and 255 of the NIRC.Tax assessments by tax examiners are presumed correct and made in good faith. neither did they appeal to the Court of Tax Appeals. Private respondents cannot belatedly assail the said assessment. No such administrative protest was filed by private respondents seeking reconsideration of the August 7.

What should be Protested?
ALLIED BANKING CORPORATION, PETITIONER,
VS.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
G.R. No. 175097

February 5, 2010

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

TaxCases_89

ALLIED BANKING CORPORATION, PETITIONER,
VS.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
CTA EN BANC 167

August 23, 2006

FACTS:
On April 30, 2004, respondent issued a Preliminary Assessment Notice (PAN)
find ing petitioner liable for deficiency documentary stamp and gross receipt taxes on
industry issue for the taxable year 2001 . Petitioner received the PAN on May 18,
2004. Petitioner filed a protest against the PAN on May 27, 2004.
Thereafter, respondent released a Formal Letter of Demand with Assessment
Notices received by petitioner on August 30, 2004. In the said Formal Letter of
Demand, respondent ordered petitioner to pay the amounts covered by the
assessment notices immediately upon receipt thereof. The letter also stated that the
same is the final decision based on investigation and that, if petitioner disagrees, it
may appeal within thirty (30) days from receipt thereof.
Thus, on September 29, 2004, petitioner filed the Petition for Review with this
Court docketed as CTA Case No. 7062. On December 7, 2004, within the period
granted by the Court, respondent filed his Answer.
ISSUE:
Whether or not the Formal Letter of Demand was intended by the respondent
to be a final decision which is thus appealable?
HELD:
NO.
Thus, a preliminary assessment notice is issued merely to inform the taxpayer
of the findings of the BIR anent his tax liabilities. All that is required of a taxpayer
upon receipt of a preliminary assessment is to respond thereto if it wishes within
fifteen days from receipt. If after such response by the taxpayer, the BIR still finds
that correct taxes is yet to be paid, or if no response was sent by the taxpayer in the
first place, the BIR shall issue a formal assessment notice based on the investigation.
It is this assessment which should be administratively protested.
Otherwise stated, a taxpayer may or may not dispute or protest the preliminary
assessment against him. The BIR still has to issue a formal assessment notice since it
is this assessment which attains finality in the absence of a valid protest against it.
We are consistent in ruling that an assessment, whether valid or void, shall
become final and executory, when no administrative protest is filed within thirty (30)
days from receipt thereof, for the very reason that an administrative protest is an
integral part of the remedies given to the taxpayer in challenging the legality or
validity of an assessment. It is absolutely necessary for the taxpayer to file an
administrative protest in order for this Court to acquire jurisdiction.
Likewise, in another case, We even went further by saying that the taxpayer
is duty-bound to file an administrative protest even against a void assessment.
Precisely, one of the grounds that a taxpayer can raise in protesting an assessment is
the defense of prescription, which if found meritorious, provides legal justification for
the Commissioner of Internal Revenue to revoke an assailed assessment. Clearly, even
an assessment which is contrary to law can attain finality if the same is not protested.
Being not jurisdictional, it is a mere defense that must be invoked at the proper time ;
otherwise, it shall be considered waived .
TaxCases_90

Effect of Protest on the Period to Collect Deficiency Taxes
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
WYETH SUACO LABORATORIES, INC. and THE COURT OF TAX
APPEALS, respondents.
G.R. No. 76281

September 30, 1991
FERNAN, C.J.:

FACTS:
By virtue of a Letter of Authority dated June 17, 1974 issued by then CIR, it
conducted an investigation and examination of the books of accounts of Wyeth
Suaco. On October 15, 1974, a report was submitted containing the result of his
investigation. The report disclosed that Wyeth Suaco was paying royalties to its
foreign licensors as well as remuneration for technical services to Wyeth International
Laboratories of London. Wyeth Suaco was also found to have declared cash dividends
on September 27, 1973 and these were paid on October 31, 1973. However, it
allegedly failed to remit withholding tax at source for the fourth (4th) quarter of 1973
on accrued royalties, remuneration for technical services and cash dividends, resulting
in a deficiency withholding tax at source in the aggregate amount of P3,178,994.15.
Moreover, it was reported that during the periods from November 1, 1972 to
December 31, 1972 and January 1, 1973 to October 31, 1973, Wyeth Suaco deducted
the cost of non-deductible raw materials, resulting in its alleged failure to pay the
correct amount of advance sales tax.
There was reportedly also a short payment of advance sales tax in its
importation of "Mega Polymycin D" on October 3, 1972. All these resulted in a
deficiency sales tax in the amount of P60,855.21 and compromise penalty in the
amount of P300.00 or a total amount of P61,155.21.
Consequently, the Bureau of Internal Revenue assessed Wyeth Suaco on the
aforesaid tax liabilities in two (2) notices dated December 16, 1974 and December 17,
1974. These assessment notices were both received by Wyeth Suaco on December 19,
1974.
Thereafter, Wyeth Suaco through its tax consultant SGV &Co., sent the Bureau
of Intemal Revenue two (2) letters dated January 17, 1975 and February 8, 1975,
protesting the assessments and requesting their cancellation or withdrawal on the
ground that said assessments lacked factual or legal basis.
ISSUE:
Whether or not petitioner's right to collect deficiency withholding tax at source
and sales tax liabilities from private respondent is barred by prescription?
HELD:
NO.
Settled is the rule that the prescriptive period provided by law to make a
collection by distraint or levy or by a proceeding in court is interrupted once a
taxpayer requests for reinvestigation or reconsideration of the assessment.
TaxCases_91

In another case, this Court stated that the statutory period of limitation for
collection may be interrupted if by the taxpayer's repeated requests or positive acts
the Government has been, for good reasons, persuaded to postpone collection to
make him feel that the demand was not unreasonable or that no harassment or
injustice is meant by the Government.
After carefully examining the records of the case, we find that Wyeth Suaco
admitted that it was seeking reconsideration of the tax assessments as shown in a
letter of James A. Gump, its President and General Manager, dated April 28, 1975.
Although the protest letters prepared by SGV & Co. in behalf of private
respondent did not categorically state or use th words "reinvestigation" and
"reconsideration," the same are to be treated as letters of reinvestigation and
reconsideration. By virtue of these letters, the Bureau of Internal Revenue ordered its
Manufacturing Audit Division to review the assessment made. Furthermore, private
respondent's claim that it did not seek reinvestigation or reconsideration of the
assessments is belied by the subsequent correspondence or letters written by its
officers, as shown above.
These letters of Wyeth Suaco interrupted the running of the five-year
prescriptive period to collect the deficiency taxes. The Bureau of Internal Revenue,
after having reviewed the record of Wyeth Suaco, in accordance with its request for
reinvestigation, rendered a final assessment. This final assessment issue by then
Acting Commissioner Ruben B. Ancheta was date December 10, 1979 and received by
private respondent on January 2, 1980, fixed its tax liability at P1,973,112.86 as
deficiency withholding tax at source and P61,155.21 as deficiency sales tax. It was
only upon receipt by Wyeth Suaco of this final assessment that the five-year
prescriptive period started to run again.
Verily, the original assessments dated December 16 and 17, 1974 were both
received by Wyeth Suaco on December 19, 1974. However, when Wyeth Suaco
protested the assessments and sought its reconsideration in two (2) letters received
by the Bureau of Internal Revenue on January 20 and February 10, 1975, the
prescriptive period was interrupted. This period started to run again when the Bureau
of Internal Revenue served the final assessment to Wyeth Suaco on January 2, 1980.
Since the warrants of distraint and levy were served on Wyeth Suaco on March 12,
1980, then, only about four (4) months of the five-year prescriptive period was used.

TaxCases_92

COMMISSIONER OF INTERNAL REVENUE
vs.
CMS LOGGING, INC., et al.
G.R. No. 31230-32

February 14, 2000

THIRD DIVISION
FACTS:
Assailed in this petition for review is the decision of the CTA promulgated on
August 30, 1969 in CTA Cases Nos. 1569, 1674 and 1804 entitled "CMS Logging, Inc.
vs. Commissioner of Internal Revenue."
After a joint hearing, the Court of Tax Appeals rendered the assailed decision,
the dispositive portion of which provides - in view of the foregoing, the petitions for
review filed by petitioner in CTA Case No. 1569 is dismissed with regard to the 1st,
2nd, 3rd, 5th, and part of the 4th causes of action. Respondent is hereby ordered to
refund or grant a tax credit to petitioner [in] the sums of P3,893.44, corresponding to
the period from February 8 to June 30, 1963 in CTA Case No. 1569; P11,566.85 in
CTA Case No. 1674; and P6,135.25 in CTA Case No. 1804, representing 25% of the
specific taxes paid on manufactured oils and other fuels.
ISSUE:
Whether or not the 25% specific tax exemption granted by Section 5 of RA
1435 on manufactured oils and other fuels used by miners and forest concessionaires
in their operation is limited to a period of five (5) years from the effectivity of RA 1435
on June 14, 1956?
HELD:
NO.
The Commissioner denied the company's claim for refund on the ground that
the privileged of partial tax refund granted by Section 5 of RA 1435 to those using oil
in the operation of forest and mining concessions is limited to a period of five (5)
years from June 14, 1956, the date of effectivity of said law. Thus, oil used in such
concessions after June 14, 1961 are subject to the full tax prescribe in Section 142 of
the National Internal Revenue Code (NIRC). In passing upon this issue, the Court held
that - Based on the aforequoted provisions, it is very apparent that the partial refund
of specific tax paid for oils in agriculture and aviation is limited to five years while
there is no time limit for the partial refund of specific tax paid for oils used by miners
and forest concessionaires. We find no basis in applying the limitation of the operative
period provided for oils used in agriculture and aviation to the provisions on the refund
to miners and forest concessionaires. It should be noted that Section 5 makes
reference to subparagraphs 1 and 2 of Section 1 only for the purpose of prescribing
the procedure for refund.
This express reference cannot be expanded in scope to include the limitation to
include the limitation of the period of refund. If the limitations of the period of refund
of specific taxes on oils used in aviation and agriculture is intended to cover similar
taxes paid on oil use by miners and forest concessionaires, there would have been no
need of dealing with oil used in mining and forest concessions separately and Section
5 should very well have been included in Section 1 of Republic Act No. 1435,
notwithstanding the different rate of exemption.
TaxCases_93

Citing the congressional deliberations on RA 1435. TaxCases_94 . in a recent case we declared that mining and logging companies were entitled to the refund privilege granted by RA 1435 on specific taxes paid up to 1985. we explained that it would be unfair to subject miners and forest concessionaires to the increased rates and in effect make them subsidize the construction of highways from which they did not directly benefit since these companies seldom used the national highways because they have roads and compounds of their own.In fact. after which the Highway Special Fund was abolished.

the authors of the law could have easily included the word assessment as also becoming final. and the taxpayer can appeal to the Court of Tax Appeals only upon receipt of the decision 6f the Collector on the disputed assessment. 000004793. 1999. INC. Otherwise. they cannot give due course to its request to cancel or set aside the assessment notice since the case was not elevated to the Court of Tax Appeals as mandated by the provisions of the last paragraph of Section 228 of the Tax Reform Act of 1997. CASE NO. COMMISSIONER OF INTERNAL REVENUE and NORBERTO R. has been interpreted to mean the decisions of the Commissioner of Internal Revenue on the protest of the taxpayer against the assessments.266. C.407 against Petitioner for alleged deficiency income tax. Section 7 of Republic Act 1125. Petitioner received a copy of the said assessment on April 1.Failure of the BIR to Act Within the 180-Day Period ASCONA LAND CO.99. "The word 'decisions' in paragraph 1. resulting from the disallowance of certain items claimed by Petitioner as deductions from its gross income specifically taxes and licenses in the amount ofP323. ISSUE: Whether or not the argument of petitioner his failure to appeal to the Court of Tax Appeals within thirty (30) days from the lapse of the 180-day period did not make the assessment final and executory simply because Respondent did not act upon the protest within the 180-day period? HELD: YES. interest and compromise penalty for the year 1993 in the amount ofP753. BUREAU OF INTERNAL REVENUE.56. vs. 2000 FACTS: On March 27. Through a letter dated March 3. 5777 January 4. executory and demandable.600. The wordings of Section 228 of the Tax Code clearly provide that it is only the decision not appealed by the taxpayer that becomes final. 1998. Respondent.8. 1998. surcharge.. ODULIO.. TaxCases_95 . rendered the assessment notice final. Where a taxpayer questions an assessment and asks the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable therefor. said word does not signify the assessment itself. the assessment becomes a 'disputed assessment' that the Collector must decide. 1999 and received by Petitioner on March 12. Revenue Region No. executory and demandable should the BIR fail to act on the protest within 180 days. Respondent informed Petitioner that while they agree with the arguments advanced in the latter's letter of protest. quoted above. the Commissioner issued Assessment Notice No.525. Makati City. Regional Director.T. 1998 and protested the same on April 20. executor and demandable.A. Definitely. Petitioner.00 and interest expense in the amount of P618. This. according to Respondent.

" Verily. indicating the legislative intention to subject to judicial review the decision of the Commissioner on the protest against an assessment but not the assessment itself. he may wait until the Commissioner decides on his protest before he elevates his case. executory and demandable." Note that the law uses the word 'decisions'. But if he chooses to wait for a positive action on the part of the Commissioner. in cases of inaction. not 'assessments'. This is especially true in the instant case when despite the fact that Respondent found Petitioner's arguments to be in order. the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling. TaxCases_96 . or second. effect of appeal.Any person. which states: "Section 11. the assessment will become final. then the same could not result in the assessment becoming final. We agree with Petitioner that to adopt the interpretation of Respondent will not only sanction inefficiency.The same interpretation finds support in Section 11 of Republic Act 1125. executory and demandable for Petitioner's failure to appeal before Us within the thirty (30) day period. Who may appeal. Section 228 of the Tax Code merely gave the taxpayer an option: first. . This Court believes that the taxpayer was given this option so that in case his protest is not acted upon within the 180-day period. he may appeal to the Court of Tax Appeals within thirty (30) days from the lapse of the one hundred eighty (180) day period provided for under the said section. association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue. but will likewise condone the Bureau's inaction. he may be able to seek immediate relief and need not wait for an indefinite period of time for the Commissioner to decide.

it was filed more than 30 days after the lapse of the 180-day period.. that it can still await the final decision of the Commissioner and thereafter appeal the same to the Court of Tax Appeals.e.: FACTS: For resolution is petitioner‘s Motion for Reconsideration of our Decision dated June 16. 50. 2005 in C. denying petitioner‘s Petition for Relief from Judgment and Motion for Reconsideration. However. Petitioner. petitioner timely filed its Petition for Review before the Court of Tax Appeals. 2004 in C.e. Unfortunately.T. i. Respondent. awaiting the final decision of the Commissioner and appealing the same to the Court of Tax Appeals. thus.A. petitioner cannot now claim that the disputed assessment is not yet final as it remained unacted upon by the Commissioner. these options are mutually exclusive. Based on the foregoing. This legal maneuver cannot be countenanced. Petitioner did not file a motion for reconsideration or make an appeal. as well as the 2005 Revised Rules of the Court of Tax Appeals. No. the Commissioner failed to act on the disputed assessment within 180 days from date of submission of documents. i.. 2007 YNARES-SANTIAGO. the disputed assessment became final.A. or 2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. Thus. the petition for review was filed out of time. a taxpayer can either: 1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period. petitioner opted to file a petition for review before the Court of Tax Appeals. COMMISSIONER OF INTERNAL REVENUE. J. After availing the first option. the Court of Tax Appeals had jurisdiction over the case? HELD: NO. filing a petition for review which was however filed out of time.RIZAL COMMERCIAL BANKING CORPORATION. 2006 affirming the Decision of the Court of Tax Appeals En Banc dated June 7. Case No. Petitioner reiterates its claim that its former counsel‘s failure to file petition for review with the Court of Tax Appeals within the period set by Section 228 of the National Internal Revenue Code of 1997 (NIRC) was excusable. EB No. it was dismissed by the Court of Tax Appeals for late filing. and following the Lascona Decision. hence. 2004 and November 5. which affirmed the Resolutions of the Court of Tax Appeals Second Division dated May 3. i.e. on the pretext that there is yet no final decision on the disputed assessment because of the Commissioner‘s inaction. In the instant case. and resort to one bars the application of the other.. vs. In case the Commissioner failed to act on the disputed assessment within the 180-day period from date of submission of documents.T. G. TaxCases_97 . 168498 April 24. ISSUE: Whether or not contrary to this Honorable Court‘s decision. Consequently.R. 6475. petitioner cannot successfully resort to the second option. demandable and executory. respectively.

1974 of Commissioner of Internal Revenue assessed against Yee Fong Hong. vs.22 as deficiency income taxes due for the years 1971 and 1972. TaxCases_98 . without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and Levy. received by petitioner on January 13. J. 1974. 1975. No. or which may be due from foreign shipowner Yee Fong Hong. Ltd. private respondent protested the assessment.: FACTS: In a letter dated December 27. 1979. In a letter dated November 27. the total sum of P583. 1990 PARAS.155. wherein it prays that after hearing. the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. filed a collection suit before Branch XXI of the then Court of First Instance of Manila against private respondent. as amended. 1976. On the basis of this statement indubitably showing that the Commissioner's communicated action is his final decision on the contested assessment. Petitioner. Ltd. which was served on private respondent's counsel. judgment be rendered holding that it is not liable for the payment of the income tax herein involved. 1976. and in a letter dated January 10.R. G. Summons in the said collection case was issued to private respondent on December 28. again. respondents. ISSUE: Whether or not the Court of Tax Appeals has jurisdiction over this case? HELD: YES. Clemente Celso. issued a Warrant of Distraint and Levy. received by petitioner on November 29. petitioner. On January 10. 1978. the taxpayer would be able to determine when his right to appeal to the tax court accrues. private respondent filed with respondent court its Petition for Review of the petitioner's assessment of its deficiency income taxes in a letter dated December 27. on November 25. Without needless difficulty. 1975. and/or Union Shipping Corporation. 1976 private respondent reiterated its request for reinvestigation of the assessment and for the reconsideration of the summary collection thru the Warrant of Distraint and Levy.Administrative Actions Taken During the 180-Day Period COMMISSIONER OF INTERNAL REVENUE. We deem it appropriate to state that the Commissioner of Internal Revenue should always indicate to the taxpayer in clear and unequivocal language whenever his action on an assessment questioned by a taxpayer constitutes his final determination on the disputed assessment. as contemplated by sections 7 and 11 of Republic Act 1125. without ruling on the protest. L-66160 May 21. Petitioner. UNION SHIPPING CORPORATION and THE COURT OF TAX APPEALS. 1975. Said letter was received on January 4.

Had he categorically stated that he denies private respondent's motion for reconsideration and that his action constitutes his final determination on the disputed assessment. that the reviewable decision of the Bureau of Internal Revenue is that contained in the letter of its Commissioner. Of greater import. left private respondent in the dark as to which action of the Commissioner is the decision appealable to the Court of Tax Appeals. The request for reinvestigation and reconsideration was in effect considered denied by petitioner when the latter filed a civil suit for collection of deficiency income.A. So that on January 10. Thus. consequently. this Court reiterated the above-mentioned dictum in a ruling applicable on all fours to the issue in the case at bar. Under the circumstances. regularity and orderliness in administrative action. legally the period to appeal has not commenced to run. private respondent without needless difficulty would have been able to determine when his right to appeal accrues and the resulting confusion would have been avoided. 1978 that the period to appeal commenced to run. On the part of the Commissioner. 1125. it was only when private respondent received the summons on the civil suit for collection of deficiency income on December 28. not having clearly signified his final action on the disputed assessment. 1979 when private respondent filed the appeal with the Court of Tax Appeals. this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance. that such constitutes the final decision on the matter which may be appealed to the Court of Tax Appeals and not the warrants of distraint. Much later. this rule of conduct would meet a pressing need for fair play.This rule of conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment — and. the Commissioner of Internal Revenue. There appears to be no dispute that petitioner did not rule on private respondent's motion for reconsideration but contrary to the above ruling of this Court. TaxCases_99 . and orderliness in administrative action. the collection of the amount demanded as taxes — by repeated requests for recomputation and reconsideration. It was likewise stressed that the procedure enunciated is demanded by the pressing need for fair play. regularity. This would also deter the Commissioner from unfairly making the taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax court. it consumed a total of only thirteen (13) days well within the thirty day period to appeal pursuant to Section 11 of R.

the revenue district officer sends the taxpayer a notice of delinquent taxes. 1991 within which to asses and collect the taxes that may be found due from respondent after the reinvestigation. In said letter.79 as deficiency income tax and expanded withholding tax inclusive of surcharge and interest. since failure to comply with it would lead to the distraint and levy of respondent's properties. Supplemental to its protest was a letter. dated April 2.897. 2001 PANGANIBAN. the said preliminary assessment was reduced to the amount of P325. filed with the petitioner's office on March 23.196. 135210 July 11. respondent received from [petitioner] a Final Notice before Seizure. On February 9. stating the reasons therefor. Hence. failure on its part would constrain petitioner to collect the subject assessment through summary remedies. J. In the normal course.: FACTS: In an investigation conducted on the 1986 books of account of respondent ICC. On February 23. 1994. petitioner had the preliminary finding that respondent incurred a total income tax deficiency of P9. 1990. respondent requested a reconsideration of the subject assessment.392. vs. 1990. 1986 to December 31. 1990. ISSUE: Whether or not the Final Notice Before Seizure dated February 9. Respondent considered said final notice of seizure as petitioner's final decision. Otherwise.44. demanding payment of the amounts of P333. where it was indicated that petitioner would only have until April 5. respectively. G. PETITIONER. 1990. ISABELA CULTURAL CORPORATION. dated April 17. and submitting such proof as may be necessary. indicating the period covered. 1986. it sends a letter to the BIR indicating its protest. for the taxable period from January 1. and the amount due including interest.COMMISSIONER OF INTERNAL REVENUE. the instant petition for review filed with this Court on March 9.R. TaxCases_100 .985. inclusive of increments.15. RESPONDENT. The Notice should be deemed as petitioner's last act. dated February 9. and the reason for the delinquency. In a letter. filed with the petitioner's office on April 18. 1990. If the taxpayer disagrees with or wishes to protest the assessment. 1995 signed by Acting Chief Revenue Collection Officer Milagros Acevedo against ICC constitutes the final decision of the CIR appealable to the CTA? HELD: NO. 1995.869. 1995. as indicated therein. dated December 22. No. Upon protest by respondent's counsel. [respondent] received from petitioner an assessment letter.86 and P4. 1990. The Final Notice before Seizure should be considered as a denial of its request for reconsideration of the disputed assessment. petitioner demanded payment of the subject assessment within ten (10) days from receipt thereof. dated March 22. to which were attached certain documents supportive of its protest. 1990. as well as a Waiver of Statute of Limitation.

Unequivocably. After the request is filed and received by the BIR. The former may ask clarificatory questions or require the latter to submit additional evidence. In this case. Prior to the decision on a disputed assessment. It is this decision that is properly appealable to the CTA for review. 1994. 1990. respondent received an assessment letter dated February 9. The next communication respondent received was already the Final Notice before Seizure dated November 10. it sent to the CIR additional documents on April 18. In the light of the above facts. Furthermore. therefore. who received no other response to its request.That letter is considered as the taxpayer's request for reconsideration of the delinquent assessment. the CIR's position regarding the disputed assessment must be indicated in the final decision. jurisprudence dictates that a final demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. the assessment becomes a disputed assessment on which it must render a decision. That decision is appealable to the Court of Tax Appeals for review. 1990. the second notice received by private respondent verily indicated its nature – that it was final. the said period of 180 days had already lapsed when respondent filed its request for reconsideration on March 23. stating that it had delinquent taxes due. it was tantamount to a rejection of the request for reconsideration. Indisputably. TaxCases_101 . In the instant case. the Final Notice before Seizure cannot but be considered as the commissioner's decision disposing of the request for reconsideration filed by respondent. Section 228 of the National Internal Revenue Code states that a delinquent taxpayer may nevertheless directly appeal a disputed assessment. and it subsequently filed its motion for reconsideration on March 23. its properties would be subjected to distraint and levy. Lastly. there may still be exchanges between the CIR and the taxpayer. The letter itself clearly stated that respondent was being given "this LAST OPPORTUNITY" to pay. In support of its request for reconsideration. 1990. its content and tenor supported the theory that it was the CIR's final act regarding the request for reconsideration. if its request for reconsideration remains unacted upon 180 days after submission thereof. Not only was the Notice the only response received. The very title expressly indicated that it was a final notice prior to seizure of property. However. otherwise. 1990. without any action on the part of the CIR.

on April 23." But there is a special circumstance in the case at bar that prevents application of this accepted doctrine. which letter was stamp received on the same day in the office of the petitioner. Jr. A search of the protest in the dockets of the case proved fruitless. During the intervening period. vs. Algue flied a letter of protest or request for reconsideration. 1965. indeed. 1965. The period started running again only on April 7. On March 12." the protest filed by private respondent was not pro forma and was based on strong legal considerations. It was only after Atty. petitioner. TaxCases_102 . viz. 1965.COMMISSIONER OF INTERNAL REVENUE. January 14. According to Rep. such protest could not be located in the office of the petitioner. No. Guevara produced his file copy and gave a Photostat to BIR agent Ramon Reyes. 1965. As the Court of Tax Appeals correctly noted. Alberto Guevara. G. Act No. ALGUE.R. 1965. a domestic corporation engaged in engineering. 1125. The proven fact is that four days after the private respondent received the petitioner's notice of assessment. construction and other allied activities. who refused to receive it on the ground of the pending protest. 1965. the private respondent. 1965.: FACTS: On January 14. Sixteen days later. J. L-28896 February 17.85 as delinquency income taxes for the years 1958 and 1959. considered by the tax authorities. who deferred service of the warrant. if at all.. ISSUE: Whether or not Algue seasonably filed his Petition before the CTA? HELD: YES. Atty. On January 18. Guevara gave the BIR a copy of the protest that it was. only 20 days of the reglementary period had been consumed.183. Hence.. 1965. On April 7. when the appeal was filed on April 23. Atty. Guevara was finally informed that the BIR was not taking any action on the protest and it was only then that he accepted the warrant of distraint and levy earlier sought to be served. through its counsel. 1965. the reglementary period which started on the date the assessment was received.. Algue filed a petition for review of the decision of the Commissioner of Internal Revenue with the Court of Tax Appeals. and THE COURT OF TAX APPEALS." being "tantamount to an outright denial thereof and makes the said request deemed rejected. received a letter from the petitioner assessing it in the total amount of P83. 7 It is true that as a rule the warrant of distraint and levy is "proof of the finality of the assessment" and renders hopeless a request for reconsideration. when it was filed. 1988 CRUZ. It thus had the effect of suspending on January 18. when the private respondent was definitely informed of the implied rejection of the said protest and the warrant was finally served on it. The above chronology shows that the petition was filed seasonably. This was apparently not taken into account before the warrant of distraint and levy was issued. respondents. a warrant of distraint and levy was presented to the private respondent. it filed its letter of protest. the warrant was premature and could therefore not be served. Atty. INC. the appeal may be made within thirty days after receipt of the decision or ruling challenged.

04 on its accumulated surplus reflected on its income tax return for the fiscal year which ended September 30. 1955. On February 21. 1961. L-29485 March 31. petitioner advised the respondent corporation of the assessment of P758. a domestic corporation organized and existing under the laws of the Philippines. The respondent corporation. 1963. J. respondent Ayala Securities Corporation. petitioner. 1955. calling the attention of the respondent corporation to its outstanding and unpaid tax in the amount of P708.: FACTS: On November 29. 1955. However. The income tax due on the return of the respondent corporation was duly paid for within the time prescribed by law. respondent corporation received a letter dated February 18. the herein respondent corporation filed with the Court of Tax Appeals a Petition for Review of the assessment. considering its claim that the assessment in question had already prescribed. refunds of internal revenue taxes. G. from the Chief. Manila Examiners.R. however. vs. petitioner wrote respondent corporation's auditing and accounting firm with the "advise that your request for reconsideration will be the subject matter of further reinvestigation and a thorough analysis of the issues involved conditioned. No. in a letter dated April 19. R.04 and thereby requesting for the payment of the said amount within five (5) days from receipt of the said letter. AYALA SECURITIES CORPORATION and THE HONORABLE COURT OF TAX APPEALS.687. TaxCases_103 . penalties imposed in relation thereto. 1125. Thus under Section 7 (1). Believing the aforesaid letter to be a denial of its protest. ISSUE: Whether or not the instant case falls within the jurisdiction of the respondent Court of Tax Appeals? HELD: YES. the Court of Tax Appeals exercises exclusive appellate jurisdiction to review by appeal "decisions of the Collector of Internal Revenue in cases involving disputed assessments. 1976 ESGUERRA. respondent corporation did not execute the requested waiver of the statute of limitations. upon the execution of your client of the enclosed form for waiver of the defense of prescription". No. A. 1125. of the Office of the herein petitioner. A. fees or other charges. 1963. 1961. On May 30. filed its income tax returns with the office of the petitioner for its fiscal year which ended on September 30. protested against the assessment on its retained and accumulated surplus pertaining to the taxable year 1955 and sought reconsideration thereof. In a letter dated February 21. 1961.687. or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue". respondents. on the other hand. It is to be noted that the respondent Court of Tax Appeals is a court of special appellate jurisdiction created under R.COMMISSIONER OF INTERNAL REVENUE.

687. the said letter amounts to a decision on a disputed or protested assessment and.The letter of February 18. This certainly is a clear indication of the firm stand of petitioner against the reconsideration of the disputed assessment in view of the continued refusal of the respondent corporation to execute the waiver of the period of limitation upon the assessment in question. therefore. TaxCases_104 .04 in spite of the vehement protest of the respondent corporation on April 21. the courta quo did not err in taking cognizance of this case. is tantamount to a denial of the reconsideration or protest of the respondent corporation on the assessment made by the petitioner. 1963. considering that the said letter is in itself a reiteration of the demand by the Bureau of Internal Revenue for the settlement of the assessment already made. 1961. in the view of the Court. and for the immediate payment of the sum of P758. This being so.

. petitioner alleged that on December 10. association or corporation adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision. 1987 to January 12.: FACTS: Petitioner Protector's Services. G. ISSUE: Whether or not the protest was filed out of time? HELD: YES. 1988. Within a period to be prescribed by implementing regulations. It denied receiving any notice of deficiency percentage tax for the year 1985. However. the assessment shall become final. On December 7. From December 10. respectively. Inc. COURT OF APPEALS AND COMMISSIONER OF INTERNAL REVENUE. No. We note that indeed on December 10. TaxCases_105 . and unappealable. The pertinent provision of the National Internal Revenue Code of 1977. 1987. 18-452-83B-87-B2 and 18-451-84B-87-B2 for the years 1983 and 1984. On January 12. 1988. concerning the period within which to file a protest before the CIR. 1988. petitioner was assessed for deficiency percentage taxes including surcharges. Thereafter petitioner may no longer dispute the correctness of the assessments. the CTA correctly dismissed the appeal for lack of jurisdiction. demand letters for payment of the aforesaid assessments. penalties and interests thereon. 2000 QUISUMBING.R. he shall first notify the taxpayer of his findings. 1987. it only received Demand Letter Nos. 1987. RESPONDENTS. Hence. If the protest is denied in whole or in part. reads: When the Commissioner of Internal Revenue or his duly authorized representative finds that proper taxes should be assessed. respondent Commissioner sent by registered mail. INC. Petitioner sent a protest letter dated January 12. (PSI) is a contractor engaged in recruiting security guards for clients.Effect of a Protest Filed Out of Time PROTECTOR'S SERVICES. the decision shall become final. If the taxpayer fails to respond. the taxpayer shall be required to respond to said notice. J. executory and demandable. vs. the Commissioner shall issue an assessment based on his findings. otherwise. the individual.three days had lapsed. 118176 April 12. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by the implementing regulations within thirty (30) days from receipt of the assessment. in our view. After an audit investigation conducted by the Bureau of Internal Revenue (BIR). to the BIR regarding the 1983 and 1984 assessments. petitioner protested the 1983 and 1984 assessments and requested for a reinvestigation. PETITIONER. thirty. petitioner received the BIR's assessment notices. otherwise.

directing the collection enforcement division to levy on the taxpayer's personal properties as would be sufficient to satisfy the deficiency taxes. That procedure is demanded by the pressing need for fair play. 1972. ISSUE: Whether or not the Petition of Advertising Associates. 1974. L-59758 December 26.927. vs. 1973 (for the 1967-71 deficiency taxes) and March 7. respectively. 1974 (for the 1972 deficiency). it may be noted that Presidential Decree No. The Commissioner required Advertising Associates to pay P297. The Commissioner said so. added paragraph 17 to section 191 by taxing lessors of personal property. 1612 and 6110) on business agents and independent contractors. The Commissioner reiterated the assessments in his letters of July 12 and September 16. for P382. as its tenor shows. Parenthetically.700. No. 1979 and not the warrants of distraint.16 as 3% contractor's percentage tax on its rental income from the lease of neon signs and billboards imposed by section 191 of the Tax Code (as amended by Republic Acts Nos.06 and P84. TaxCases_106 . J.R. Its income tax returns indicate that its business was advertising. petitioner. regularity and orderliness in administrative action. G. for about four years there was no movement in the case. The directive is in consonance with this Court's dictum that the Commissioner should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment. 1978. embodies the Commissioner's final decision within the meaning of section 7 of Republic Act No. 1125. Then. effective November 24. No amount of quibbling or sophistry can blink the fact that said letter. respondents. Inexplicably. COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE.: FACTS: This case is about the liability of Advertising Associates.. including 25% surcharge (the latter amount includes interest) on its income from billboards and neon signs. 1974. We hold that the petition for review was filed on time.773. on March 31. The basis of the assessment is the fact that the taxpayer's articles of incorporation provide that its primary purpose is to engage in general advertising business. Inc.10 as contractor's tax for 1967-1971 and 1972.Remedies of Taxpayer to Denial of Protest by the Commissioner ADVERTISING ASSOCIATES. The taxpayer requested the cancellation of the assessments in its letters of September 13 and November 21. 69. Advertising Associates contested the assessments in its 'letters of June 25. 1984 AQUINO. the Commissioner resorted to the summary remedy of issuing two warrants of distraint. lnc. was filed on time? HELD: YES. He even directed the taxpayer to appeal it to the Tax Court. The reviewable decision is that contained in Commissioner Plana's letter of May 23. INC.

Petitioner. 1988. Petitioner filed its protest against the tax assessments and requested a reconsideration or cancellation of the same in a letter to the BIR Commissioner. and THE COURT OF APPEALS. reiterated the tax assessments while denying petitioner‘s request for reinvestigation.644. the letter of demand. Buot. otherwise the case shall be referred to the Collection Enforcement Division of the BIR National Office for the issuance of a warrant of distraint and levy without further notice. ISSUE: Whether or not the demand letter for tax deficiency issued and signed by a subordinate officer who was acting in behalf of the CIR is deemed final and executor and subject to an appeal to the CTA? HELD: YES.Authority of the Chief of the Accounts Receivable and Billing Division of the BIR OCEANIC WIRELESS NETWORK. THE COURT OF TAX APPEALS. Said letter likewise requested petitioner to pay within 10 days from receipt thereof. INC. Severino B.‖ TaxCases_107 . Upon petitioner‘s failure to pay the subject tax assessments within the prescribed period.: FACTS: On March 17. Respondents. COMMISSIONER OF INTERNAL REVENUE.998. Acting in behalf of the BIR Commissioner. The CTA dismissed the petition for lack of jurisdiction. and requested its payment. vs. J. issued the corresponding warrants of distraint and/or levy and garnishment. In this case.71. then Chief of the BIR Accounts Receivable and Billing Division. petitioner received from the BIR deficiency tax assessments for the taxable year 1984 in the total amount of P8. 148380 December 9. GR NO. Petitioner filed a Motion for Reconsideration arguing that the demand letter cannot be considered as the final decision of the Commissioner of Internal Revenue on its protest because the same was signed by a mere subordinate and not by the Commissioner himself. Mr. Failure to do so would result in the ―issuance of a warrant of distraint and levy to enforce its collection without further notice. unquestionably constitutes the final action taken by the Bureau of Internal Revenue on petitioner‘s request for reconsideration when it reiterated the tax deficiency assessments due from petitioner. the Assistant Commissioner for Collection. Petitioner filed a Petition for Review with the CTA to contest the issuance of the warrants to enforce the collection of the tax assessments. 2005 AZCUNA. A demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. acting for the Commissioner of Internal Revenue. The determination on whether or not a demand letter is final is conditioned upon the language used or the tenor of the letter being sent to the taxpayer..

The demand letter received by petitioner verily signified a character of finality. that assessments issued by the Regional Offices involving basic deficiency taxes of five hundred thousand pesos (P500. As amended by Republic Act No. heads of the Legal. and minor criminal violations as may be determined by rules and regulations to be promulgated by the Secretary of Finance. as members. He cannot. it was tantamount to a rejection of the request for reconsideration. This now brings us to the crux of the matter as to whether said demand letter indeed attained finality despite the fact that it was issued and signed by the Chief of the Accounts Receivable and Billing Division instead of the BIR Commissioner. the Assistant Regional Director. however. Thus. Said assessment has the same force and effect. upon the recommendation of the Commissioner. (c)The power to compromise or abate under Section 204(A) and (B) of this Code. any tax deficiency: Provided. Section 7 of the Code authorizes the BIR Commissioner to delegate the powers vested in him under the pertinent provisions of the Code to any subordinate official with the rank equivalent to a division chief or higher.In addition. revoke or modify any existing ruling of the Bureau. TaxCases_108 . the authority to make tax assessments may be delegated to subordinate officers. The general rule is that the Commissioner of Internal Revenue may delegate any power vested upon him by law to Division Chiefs or to officials of higher rank. 8424. Therefore.000) or less. It is clear from the above provision that the act of issuance of the demand letter by the Chief of the Accounts Receivable and Billing Division does not fall under any of the exceptions that have been mentioned as non-delegable. however. discovered by regional and district officials. and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept. may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman. except the following: (a)The power to recommend the promulgation of rules and regulations by the Secretary of Finance. (b)The power to issue rulings of first impression or to reverse. delegate the four powers granted to him under the National Internal Revenue enumerated. the letter contained a notation indicating that petitioner‘s request for reconsideration had been denied for lack of supporting documents. Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer.

otherwise our said deficiency income and value-added taxes assessments shall become final. petitioner filed a petition for review before the CTA En Banc which. Petitioner. held that the petition before the First Division. respondent demanded payment of petitioner‘s tax liabilities. 2000. ISSUE: Whether or not the CTA En Banc erred in holding that the petition it filed before the CTA First Division as well as that filed before it (CTA En Banc) was filed out of time? HELD: YES. the present petition. by Decision of July 5. drawing petitioner to file on October 20. 2005. "inclusive of penalties incident to delinquency.R. and demandable. by Letter of Authority dated May 16. which petitioner received on August 4. respondent argued. petitioner arguing that the CTA En Banc erred in holding that the petition it filed before the CTA First Division as well as that filed before it (CTA En Banc) was filed out of time. which assessment petitioner contested by letter of September 23. among other things. ordered the examination of the internal revenue taxes for the taxable year 1999 of Fishwealth Canning Corp." Respondent added that if petitioner disagreed. The investigation disclosed that petitioner was liable for tax deficiencies. was filed out of time. vs. 2005. on August 6. The Resolution denying its motion for reconsideration was received by petitioner on October 31. COMMISSIONER OF INTERNAL REVENUE. 2006. 2005. petitioner a Final Assessment Notice of income tax and VAT deficiencies for the taxable year 1999. on September 1. J.: FACTS: The CIR. In his Answer.Appeal to the Court of Tax Appeals FISHWEALTH CANNING CORPORATION. 2005 a Petition for Review before the CTA. Petitioner eventually settled these obligations on August 30. executory. petitioner filed. TaxCases_109 . as well as that before it. 2010 CARPIO MORALES. Respondent thereafter issued a Final Decision on Disputed Assessment dated August 2. a Letter of Reconsideration dated August 31. that the petition was filed out of time which argument the First Division of the CTA upheld and accordingly dismissed the petition. On November 21. apprising it of its income tax and VAT liabilities for the taxable year 1999. No. Respondent sent. 2005. 2003. 2007. 2003. Hence. 179343 January 21. 2000. denying its letter of protest. it may appeal to the CTA "within thirty (30) days from date of receipt hereof. 2006. and requesting the immediate payment thereof. Respondent. G. 2005. Petitioner filed a Motion for Reconsideration which was denied. By a Preliminary Collection Letter dated September 6." Instead of appealing to the CTA.

Section 228 of the 1997 Tax Code provides that an assessment may be
protested administratively by filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. Within sixty (60) days from
filing of the protest, all relevant supporting documents shall have been submitted;
otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within one
hundred eighty (180) days from submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the Court of Tax Appeals within
thirty (30) days from receipt of the said decision, or from the lapse of the one hundred
eighty (180)-day period; otherwise, the decision shall become final, executory and
demandable.
In the case at bar, petitioner‘s administrative protest was denied by Final
Decision on Disputed Assessment dated August 2, 2005 issued by respondent and
which petitioner received on August 4, 2005. Under the above-quoted Section 228 of
the 1997 Tax Code, petitioner had 30 days to appeal respondent‘s denial of its protest
to the CTA.
Since petitioner received the denial of its administrative protest on August 4,
2005, it had until September 3, 2005 to file a petition for review before the CTA
Division. It filed one, however, on October 20, 2005, hence, it was filed out of time.
For a motion for reconsideration of the denial of the administrative protest does not
toll the 30-day period to appeal to the CTA.
On petitioner‘s final contention that it has a meritorious case in view of the
dismissal of the above-mentioned criminal case filed against it for violation of the 1997
Internal Revenue Code, the same fails. For the criminal complaint was instituted not to
demand payment, but to penalize the taxpayer for violation of the Tax Code.

TaxCases_110

Appeal to the CTA En Banc Preceded by a Motion for Reconsideration
COMMISSIONER OF CUSTOMS, Petitioner,
vs.
MARINA SALES, INC., Respondent.
G.R. No. 183868

November 22, 2010

MENDOZA, J.:
FACTS:
Marina computed and paid the duties under Tariff Harmonized System Heading
H.S. 2106.90 10 at 1% import duty rate. However, the BOC examiners contested the
tariff classification of Marina‘s Import Entry. The BOC examiners recommended to the
Collector of Customs, acting as Chairman of the Valuation and Classification Review
Committee (VCRC) of the BOC, to reclassify Marina‘s importation with a corresponding
7% import duty rate.
On July 17, 2003, Marina submitted its explanation dated July 17, 2003
together with samples in support of its claim that the imported goods should not be
reclassified. On October 7, 2003, Marina appealed before the Commissioner
challenging VCRC‘s reclassification. Apparently not in conformity, Marina interposed a
petition for review before the CTA on February 3, 2004. On October 31, 2007, the CTA
Second Division ruled in favor of Marina holding that its classification was the most
appropriate and descriptive of the disputed importations. It opined that Marina‘s
importations were raw materials used for the manufacture of its Sunquick products,
not ready-to-drink juice concentrates as argued by the Commissioner.
The Commissioner disagreed and elevated the case to the CTA-En Banc via a
petition for review. In its Resolution of April 11, 2008, the CTA En Banc dismissed the
petition. The Commissioner sought reconsideration of the disputed decision, but the
CTA En Banc issued a denial in its July 14, 2008 Resolution.
ISSUE:
Whether or not the CTA En Banc has jurisdiction over the case at bar?
HELD:
NO.
The Court agrees with the CTA En Banc that the Commissioner failed to comply
with the mandatory provisions of Rule 8, Section 1 of the Revised Rules of the Court
of Tax Appeals requiring that "the petition for review of a decision or resolution of the
Court in Division must be preceded by the filing of a timely motion for reconsideration
or new trial with the Division." The word "must" clearly indicates the mandatory -- not
merely directory -- nature of a requirement."
The rules are clear. Before the CTA En Banc could take cognizance of the
petition for review concerning a case falling under its exclusive appellate jurisdiction,
the litigant must sufficiently show that it sought prior reconsideration or moved for a
new trial with the concerned CTA division. Procedural rules are not to be trifled with or
be excused simply because their non-compliance may have resulted in prejudicing a
party‘s substantive rights. Rules are meant to be followed. They may be relaxed only
for very exigent and persuasive reasons to relieve a litigant of an injustice not
commensurate to his careless non-observance of the prescribed rules.
TaxCases_111

Waiver of Statute of Limitations
SANTIAGO SAMBRANO, petitioner,
vs.
COURT OF TAX APPEALS and COLLECTOR OF INTERNAL
REVENUE, respondents.
G.R. No. L-8652

March 30, 1957

FELIX, J.:
FACTS:
On February 23, 1950, Santiago Sambrano, the owner and operator of a fleet
of passenger and freight trucks with lines between Manila and the northern provinces
of Luzon, received from the Collector of Internal Revenue a demand for the payment
of his income tax liabilities. This was followed by another letter dated January 6, 1951,
assessing Sambrano's tax deficiencies (which was later reduced to P184,241.07 on
April 28, 1951).
As early as January 29, 1951, petitioner already signified his intention to file a
surety bond to guarantee the payment of his tax liability and May 3, 1951, executed a
chattel mortgage on 67 of his TPU buses in favor of the Government. Said mortgage
was duly approved by the Public Service Commission as required by law and
registered with the Register of Deeds of Manila on November 7, 1951. Petitioner
likewise undertook to settle his tax obligations in 24 monthly instalments, payable
within the first 10 days of the month, starting from August, 1951. In virtue of said
mortgage, a corresponding notice of tax lien upon the property and property rights of
the taxpayer was sent by the Collector of Internal Revenue to the Register of Deeds of
Ilocos Sur on December 27, 1951, for registration.
On account of petitioner's failure to comply with the terms and conditions of the
mortgage, the respondent Collector of Internal Revenue issued on September 27,
1952, warrants of distraint and levy covering the taxpayer's properties.
ISSUE:
Whether or not there is an effect of the mortgages executed by petitioner and
the offer to compromise made by him on his tax obligations taking into consideration
petitioner's defense of prescription?
HELD:
YES.
Petitioner claims to have raised the question of prescription of the Court of Tax
Appeals which was not passed upon by said Court in its resolution subject of the
present action. It is to be noted, however, that petitioner's tax liabilities were
reassessed only on April 28, 1951 and the assessment of taxes accrued from 19391941 was clearly beyond the 5-year prescriptive period provided for by said section
331 of the Tax Code.
By virtue of the mortgage, petitioner in fact acknowledged the existence of the
tax liabilities itemized in the assessment of April 28, 1951, and assumed the obligation
to settle the same. Although the percentage taxes for the years 1939-1941 and 1945
may have been extinguished by prescription on account of the mandate of sections
331 and 332, yet in the case at bar, petitioner's obligation to pay the percentage taxes
TaxCases_112

for the years 1939-1941 and 1945, assessed on January 6, 1951 and re-assessed on
April 28, 1951 as well as other tax deficiencies, was acknowledge by means of the
chattel mortgage of May 3, 1951, an act which amounts to a renewal (renovation) of
the obligation or a waiver of the benefit granted by law to the petitioner who is
stopped from raising the question of prescription after having waived such defense by
the execution by the said mortgage.
It may also be advanced that the 5-year prescriptive period set by section 331
of the Tax Code is a limitation of action established by law and, therefore, should be
given strict adherence.
In the case at bar, although petitioner could have been benefited by the
aforementioned provision of section 331 of the Tax Code, his subsequent
acknowledgment of the obligation amounted to a waiver and prescription, in the same
manner as any other right is waivable.
Although the respondent had no right to use the summary methods of distraint
and levy in collecting income tax deficiencies for having made beyond the 3-year
period, and therefore the warrants issued therein were null and void, yet We have to
take cognizance of the fact that petitioner executed a chattel mortgage in favor of the
government guarantee the settlement of the tax obligation, and the records show that
upon petitioner's failure to comply with its term, the vehicles covered by said
mortgage were regularly distrained and sold at public auction. The respondent under
the law had the remedy of foreclosing the mortgage to realize collection the entire tax
liabilities. The sale of the vehicles in so far as those covered by the mortgage is
concerned, was practically similar to the sale on foreclosure proceeding and petitioner
could not claim have suffered damages by the sale of the mortgage vehicles.
However, as regards the sale of the rest of the vehicles seized and of the other
properties of petitioner disposed of at the public auction by virtue of the warrants of
distraint and levy, same was not sanctioned by law.
The respondent Court of Tax Appeals arrived at the conclusion that petitioner's
failure to pay the taxes after the date of notice of assessment was serve on him,
showed utter lack of good faith on his part in settling his tax case, and probably
because of such conclusion, the Court a quo denied Santiago Sambrano's petition to
enjoin the Collector of Internal Revenue from proceeding with the sale of the former's
properties at public auction notwithstanding the fact that the first warrant of distraint
and levy was issued on September 27, 1952, or after 3 years 6 months and 26 days
from the date the income tax return for 1948 should have been submitted (March 1,
1949), and beyond the 5 year period provided in section 331 of the Tax Code
prescribing that "no proceeding in court without assessment for the collection of such
(internal revenue) taxes shall begun after the expiration of such period". And it maybe
said in this connection that the records hereof fail to show the alleged lack of good
faith on the part of the petitioner in settling his tax case. On the contrary, immediately
upon being required to pay his deficiency taxes, petitioner mortgage 67 of his
passenger and freight trucks in favor of the government and was willing to execute, as
he did execute, another mortgage on his properties which unfortunately was not
approved by the Public Service Commission. Certainly, petitioner cannot be blamed if
after the terms of said mortgage were violated, the Collector of Internal Revenue did
not take any step to foreclose the same.
The records also fail to show what the other unmortgaged properties of
petitioner that were sold at public auction by reason of the warrants of distraint and
levy issue by the respondent Collector of Internal Revenue. We do not know either
that what were the proceeds of the sale of the same, nor the amount of the damage
suffered by said petitioner, if any, by reason of their undue and extra-judicial sale.

TaxCases_113

BASILAN ESTATES, INC., petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX
APPEALS, respondents.
G.R. No. L-22492

September 5, 1967

BENGZON, J.P., J.:
FACTS:
A Philippine corporation engaged in the coconut industry, Basilan Estates, Inc.,
with principal offices in Basilan City, filed on March 24, 1954 its income tax returns for
1953 and paid an income tax of P8,028. On February 26, 1959, the Commissioner of
Internal Revenue, per examiners' report of February 19, 1959, assessed Basilan
Estates, Inc., a deficiency income tax of P3,912 for 1953 and P86,876.85 as 25%
surtax on unreasonably accumulated profits as of 1953 pursuant to Section 25 of the
Tax Code. On non-payment of the assessed amount, a warrant of distraint and levy
was issued but the same was not executed because Basilan Estates, Inc. succeeded in
getting the Deputy Commissioner of Internal Revenue to order the Director of the
district in Zamboanga City to hold execution and maintain constructive embargo
instead. Because of its refusal to waive the period of prescription, the corporation's
request for reinvestigation was not given due course, and on December 2, 1960,
notice was served the corporation that the warrant of distraint and levy would be
executed.
On December 20, 1960, Basilan Estates, Inc. filed before the Court of Tax
Appeals a petition for review of the Commissioner's assessment, alleging prescription
of the period for assessment and collection; error in disallowing claimed depreciations,
travelling and miscellaneous expenses; and error in finding the existence of
unreasonably accumulated profits and the imposition of 25% surtax thereon. On
October 31, 1963, the Court of Tax Appeals found that there was no prescription and
affirmed the deficiency assessment in toto.
ISSUE:
Whether or not petitioner liable for the tax imposed?
HELD:
YES.
There is no dispute that the assessment of the deficiency tax was made on
February 26, 1959; but the petitioner claims that it never received notice of such
assessment or if it did, it received the notice beyond the five-year prescriptive period.
To show prescription, the annotation on the notice "No accompanying letter 11/25/" is
advanced as indicative of the fact that receipt of the notice was after March 24, 1959,
the last date of the five-year period within which to assess deficiency tax, since the
original returns were filed on March 24, 1954.
Although the evidence is not clear on this point, We cannot accept this
interpretation of the petitioner, considering the presence of circumstances that lead Us
to presume regularity in the performance of official functions. The notice of
assessment shows the assessment to have been made on February 26, 1959, well
within the five-year period. On the right side of the notice is also stamped "Feb. 26,
1959" — denoting the date of release, according to Bureau of Internal Revenue
practice.
TaxCases_114

There it was alleged that notice was already sent to petitioner on February 26. mailed or sent by the Collector to the taxpayer and it is not required that the notice be received by the taxpayer within the aforementioned five-year period. the assessment is deemed made when notice to this effect is released.The Commissioner himself in his letter answering petitioner's request to lift. the warrant of distraint and levy. notice of assessment was said to have been sent to petitioner. In the letter of the Regional Director forwarding the case to the Chief of the Investigation Division which the latter received on March 10. These circumstances pointing to official performance of duty must necessarily prevail over petitioner's contrary interpretation. Besides. 1959. the Chief of the Investigation Division indorsed on March 18. Subsequently. under Section 331 of the Tax Code requiring five years within which to assess deficiency taxes. TaxCases_115 . even granting that notice had been received by the petitioner late. as alleged. 1959 the case to the Chief of the Law Division. asserts that notice had been sent to petitioner. 1959.

912. No. 1955 reporting a tax liability of P2. the Commissioner of Internal Revenue assessed deficiency income tax in the sum of P5. On July 24.526.. the mere disallowance of part of the head office expenses could not probably result in said loss being completely wiped out and Phoenix being liable to deficiency tax. declaring therein a deduction from gross income of P35.93.667. after examination of the amended return.00. ISSUE: Whether or not the prescriptive period will start to run after the amendment of the return? HELD: NO. TaxCases_116 . 1955 it amended its income tax return for 1952 by excluding from its gross income the amount of P316. 1955. PHOENIX ASSURANCE CO.: FACTS: On April 1. LTD.P. 1965 BENGZON..75 representing reinsurance premiums ceded to foreign reinsurers and further eliminating deductions corresponding to the coded premiums. J. 1958. the date when the amended return was filed. filed its income tax return for 1952 on April 1. for considering that the declared loss amounted to P199. computed at 5% on its gross Philippine income.. Ltd. 1953. L-19727 May 20. On August 30. On the other hand.Effect of Amendment Returns to the Prescription Rules THE COMMISSIONER OF INTERNAL REVENUE.R. 1953. or assessed.502. The Court of Tax Appeals found the right of the Commissioner of Internal Revenue barred by prescription. Not until the amended return was filed on August 30. counting the running of the period from August 30. the Commissioner of Internal Revenue insists that his right to issue the assessment has not prescribed inasmuch as the same was availed of before the 5-year period provided for in Section 331 of the Tax Code expired.25 as part of the head office expenses incurred for its Philippine business. respondent. petitioner.00 on July 24. The amended return showed an income tax due in the amount of P2.R.. L-19903 May 20. Ltd. vs.583. 1965 ----------------------------G. The deficiency income tax in question could not possibly be determined.00. 1955 could the Commissioner assess the deficiency income tax in question. 1958. filed its Philippine income tax return for 1952. on the basis of the original return filed on April 1. J.93. No.583. The Commissioner of Internal Revenue disallowed P15. 1953 showing a loss of P199. Phoenix Assurance Co. It amended said return on August 30. the same having been exercised more than five years from the date the original return was filed. G..667.826.35 of the claimed deduction for head office expenses and assessed a deficiency tax of P5. Phoenix Assurance Co.00.502.

the Commissioner could not have possibly determined a deficiency tax thereunder because Phoenix Assurance Co. less than five years elapsed. we believe that to hold otherwise. Ltd. when the deficiency assessment was issued. he would wish to press for the counting of the prescriptive period from the filing of the amended return. is substantially different from the original return. the period of limitation of the right to issue the same should be counted from the filing of the amended income tax return.Accordingly.'s London head office. 1955. 1958. reinsurance premiums ceded to foreign reinsurers not doing business in the Philippines and various items of deduction attributable to such excluded reinsurance premiums thereby substantially modifying the original return. To strengthen our opinion. as aforestated. not to enhance tax avoidance to its prejudice. although the deduction for head office expenses allocable to Philippine business.583. was claimed also in the original return.826. whose disallowance gave rise to the deficiency tax. declared a loss of P199. The right of the Commissioner to assess the deficiency tax on such amended return has not prescribed. TaxCases_117 . Considering that the deficiency assessment was based on the amended return which. we would be paving the way for taxpayers to evade the payment of taxes by simply reporting in their original return heavy losses and amending the same more than five years later when the Commissioner of Internal Revenue has lost his authority to assess the proper tax thereunder. Furthermore. Ltd. The object of the Tax Code is to impose taxes for the needs of the Government. to July 24. when the amended return was filed...93 therein which would have more than offset such disallowance of P15. From August 30.35. The changes and alterations embodied in the amended income tax return consisted of the exclusion of reinsurance premiums received from domestic insurance companies by Phoenix Assurance Co. To our mind. the Commissioner's view should be sustained.

Citibank filed its corporate income tax returns for the year ended December 31. We stress that what was required under Rev. No. Its available tax credit (refundable) at the end of 1980 amounting to P11. the commissioner may inspect the books of the taxpayer and reassess a taxpayer for deficiency tax payments under Sections 7.R. petitioner. Citibank submitted its claim for refund of the aforesaid amounts of P270. 12-94. Citibank's corporate income tax returns. J.790. The said available tax credits did not include the amounts withheld by Citibank's tenants from rental payments in 1980 but the rental payments for that year were declared as part of its gross income included in its annual income tax returns. vs. respectively.00 was not utilized or applied. for 1979 and 1980. the BIR received something when "there [was] no right to demand it. 1997 PANGANIBAN. Worth emphasizing are these uncontested facts: (1) the amounts withheld were actually remitted to the BIR and (2) the final adjusted returns — which the BIR did not question — showed that. 1981 filed a petition for review with the Court of Tax Appeals concerning subject claim for tax refund.56 and P298. respondents. Reg.829. not even the state. 1980.00 for income tax purposes.532. showed a net loss of P77.Refund CITIBANK. 1979. the requisites for a refund were: (1) the income tax return for the previous year must show that income payment (rental in this case) was reported as part of the gross income. even without this regulation. it rejected Respondent Commissioner's argument that the claim was not seasonably filed. Reg.: FACTS: On April 15. TaxCases_118 . Prior to Rev.85. and on October 12. Hence. under the principle of solutio indebiti provided in Art. NICR. 12-94 was only a submission of records but the verification of the tax return remained the function of the commissioner. ISSUE: Whether or not the petitioner may claim for a tax refund? HELD: YES.989. For the year ended December 31." and thus "the obligation to return arises. G.071. COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE. 1980.. 2154. shall enrich oneself at the expense of another.A. 1981.160. Civil Code. 1981. The Court of Tax Appeals. Indeed." Heavily militating against Respondent Commissioner is the ancient principle that no one. or a total of P568. and (2) the withholding tax statement of the withholding tax agent must show that payment of the creditable withholding tax was made. However. N. no income taxes from petitioner were due. 107434 October 10. On October 31. in its decision granting a refund to petitioner.855. filed on April 15. simple justice requires the speedy refund of the wrongly held taxes.

like tax exemptions. 8. there is no disagreement that a claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. duly issued by the payor to the payee (BIR Form No. The mechanics of a tax refunds provided in Rev. Claims for tax credit or refund. 1743-A) showing the amount paid and the amount of tax withheld therefrom. are construed strictly against the taxpayer. — Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement. That function is lodged in the commissioner of internal revenue by the NIRC which requires the commissioner to assess internal revenue taxes within three years after the last day prescribed by law for the filing of the return. 21 Tax refunds. However. TaxCases_119 .A refund claimant is required to prove the inclusion of the income payments which were the basis of the withholding taxes and the fact of withholding. detailed proof of the truthfulness of each and every item in the income tax return is not required. In general. 13-78: Sec. No. Reg.

promulgated on 23 March 1992. third and fourth quarters of 1993. ISSUE: Whether or not petitioner‘s entitlement to claim refund prescribed? HELD: YES. the claims for refund were denied. G. Nonetheless. 12 May 1993. The steps undertaken by petitioner to seek the refund were woefully error-laden. But in the end. and 29 April 1994. No. no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided. respectively. 31 January 1994. deposit substitute instruments and government securities made by petitioner as the trustee of various retirement funds. a petition for review filed by petitioner questioning a Decision of the Court of Tax Appeals dated 11 September 1998. arising from investments derived from money market placements.R. COMMISSIONER OF INTERNAL REVENUE and THE COURT OF APPEALS. assailing the Resolutions of the Court of Appeals Fifth Division dated 12 January 1999 and 3 June 1999. 2006 TINGA. Petitioner did pay the income tax it was not liable for when it withheld such tax on interest income for the year 1993. vs. Such taxes were erroneously assessed or collected. On four dates.: FACTS: The present petition evokes some degree of natural sympathy for the petitioner. 16 August 1993.FAR EAST BANK AND TRUST COMPANY as Trustee of Various Retirement Funds. it stems from a claim for refund lodged by petitioner against the Commissioner of Internal Revenue (CIR) on taxes on interest income withheld and paid to the CIR for the four (4) quarters of 1993. While the petition before us primarily seeks the review of the procedural grounds on which the petition before the Court of Appeals was denied. Impulses may suggest that we reverse and grant. and the claim for refund not sufficiently proven. on procedural grounds. bank deposits. TaxCases_120 . Section 230 of the National Internal Revenue Code then in effect comes into full application. Before us is a Petition for Review on Certiorari filed by petitioner Far East Bank & Trust Company. and thus. Court of Appeals. second. Petitioner cited this Court‘s "precedent setting" decision in Commissioner of Internal Revenue v. Petitioner. Respondents. as it seeks the refund of taxes wrongfully paid on the income earned by several retirement funds of private employees held by petitioner in their behalf. in any case. yet their claims still received due solicitation from this Court. but logic and the law dictate that the Court affirm the assailed rulings of the Court of Appeals and the Court of Tax Appeals. petitioner filed its written claim for refund with the Bureau of Internal Revenue (BIR) for the first. said case holding that employees‘ trusts are exempted by specific mandate of law from income taxation. However. The Resolution of 12 January 1999 dismissed outright. J. 138919 May 2. the errors committed are just too multiple as well as consequential.

The CTA noted that since the petition for review was only filed on 9 October 1995. refund or credit any tax. not from the filing of its new petition for review after the Supplemental Petition was denied. where on the face of the return upon which payment was made. In this case. but in the end. even without a written claim therefor. That the Commissioner may. Many of the so-called procedural hurdles could have been overlooked." TaxCases_121 . Petitioner submits that the two (2)-year prescriptive period should be reckoned from the date of its filing of the Supplemental Petition on 28 April 1995. petitioner could no longer claim the refund of such tax withheld for the period of January to 8 October 1995. the claim for tax refund was simply not proven with the particularity demanded of an action seeking to siphon off the nation‘s "lifeblood. the two (2)-year prescriptive period having elapsed. However. such argument would still preclude the refund of taxes wrongfully paid from January to 27 April 1993. such payment appears clearly to have been erroneously paid.however. the damage was sustained due to multiple levels of incompetence on the part of the petitioner which this Court cannot simply give sanction to. It is tragic that the ultimate loss to be borne by the tardy claim for the refund would be not by the petitioner-bank. and not through an original action. but the hundreds of private employees whose retirement funds were reposed in petitioner‘s trust. even by this Court. But it should be borne in mind that petitioner initially sought to bring its claim for refund for the taxes paid in 1993 through a supplemental petition in another case pending before the CTA. there is no doubt that the CTA has jurisdiction over actions seeking the refund of income taxes erroneously paid. the two (2)-year prescriptive period for those taxes paid then having already become operative. Even granting that this should be the case.

024.645. On May 17.00 refundable income tax.645. 1995. which showed a total overpaid income tax in the amount ofP17.682. which reflected a refundable income tax of P12. 1995.00. respondent opted to carry it over to the next taxable year.: FACTS: On April 10.109.00. It noted that in respondent‘s 1994 Annual Income Tax Return.864. one for its Corporate Banking Unit (CBU) and another for its Foreign Currency Deposit Unit (FCDU). respondent was compelled to bring the matter to the CTA on April 8. respondent filed a claim for refund of the amount of P13. RESPONDENT.00. the phrase "NOT APPLICABLE" was printed on the space provided for rent. respondent filed its 1995 Annual Income Tax Return. 2010 DEL CASTILLO. Respondent failed to prove that the income derived from rentals and sale of real property were included in the gross income as reflected in its return. The filing of respondent‘s administrative claim for refund on May 17. G. As to the remainingP3. The return for the CBU consolidated the respondent‘s overall income tax liability for 1994. The CTA also declared that the certifications issued by respondent cannot be considered in the absence of the Certificates of Creditable Tax Withheld at Source. Out of the P17. the amount of P12.864. Pursuant to Section 69 of the old NIRC.798. Due to the failure of petitioner CIR to act on the claim for refund. for the taxable year ending December 31. and 3)The fact of withholding must be established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld. 173854 March 15. FAR EAST BANK & TRUST COMPANY (NOW BANK OF THE PHILIPPINE ISLANDS). 1997 were well within the two-year period from the date of the filing of the return on April 10. 1995.133.443. 1996. respondent filed with the Bureau of Internal Revenue (BIR) two Corporate Annual Income Tax Returns.109. J.00 with the BIR.R. 5487. There is no dispute that respondent complied with the first requirement.433. 2)It must be shown on the return that the income received was declared as part of the gross income.682. only P13. 1996. No. The CTA ruled that the income derived from rentals and sales of real property were not included in respondent‘s gross income.00 was carried over and applied against respondent‘s income tax liability for the taxable year ending December 31. vs. On April 15. ISSUE: Whether respondent has proven its entitlement to the refund? HELD: NO. TaxCases_122 .COMMISSIONER OF INTERNAL REVENUE. A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the following requisites: 1)The claim must be filed with the CIR within the two-year period from the date of payment of the tax. 1994. sale of real property and trust income.00 was sought to be refunded by respondent. 1996 and judicial claim for refund on April 8.133. 1997 via a Petition for Review docketed as CTA Case No.

based on the entries in the return. which pertain to rentals and sales of real property. a perusal of respondent‘s 1994 Annual Income Tax Return shows that the gross income was derived solely from sales of services. the phrase "NOT APPLICABLE" was printed on the schedules pertaining to rent. which are construed strictissimi juris against the taxpayer. respondent submitted Certificates of Creditable Tax Withheld at Source and Monthly Remittance Returns of Income Taxes Withheld. sale of real property. respectively. TaxCases_123 . However. it is incumbent upon the taxpayer to reflect in his return the income upon which any creditable tax is required to be withheld at the source.To establish the fact of withholding. it follows that no tax was withheld. and trust income. To reiterate. evidence in support of a claim must likewise be strictissimi scrutinized and duly proven. the income derived from rentals and sales of real property upon which the creditable taxes were withheld were not included in respondent‘s gross income as reflected in its return. Hence. In fact. for failing to prove its entitlement to a tax refund. Thus. Since no income was reported. Since tax refunds partake of the nature of tax exemptions. respondent‘s claim must be denied.

No. 1995 PUNO. Petitioner failed to act promptly on the claim .: FACTS: Tokyo Shipping a foreign corporation represented in the Philippines by Soriamont Steamship Agencies and owns and operate M/V Gardenia. represented by SORIAMONT STEAMSHIP AGENCIES INC. Claiming the pre-payment of income and common carrier's taxes as erroneous since noreceipt was realized from the charter agr eement. Tokyoinstituted a claim for tax credit or refund of the sumP107. is entitled to a refund or tax credit – whether it was able to prove that it derived no receipts from its charter agreement.142. And Tokyo has the burden of proof to establish the factual basis of its claim for tax refund. NASUTRA and Soriamont mutually agreed to have the vessel sail for Japan without any cargo. Upon arriving.R. and hence is entitled to are fund of the taxes it pre-paid to the government? HELD: YES.75).Nature of Refund COMMISSIONER OF INTERNAL REVENUE vs. a claim for refund is in the nature of a claim for exemption and should be construed in strictissimi juris against the taxpayer. and COURT OF TAX APPEALS G. CTA decided for Tokyo and denied MR of CIR.. the vessel found no sugar for loading. Pursuant to Section 24 (b) (2) of the National Internal Revenue Code which at that time. paid the required income and common carrier‘s taxes with a total amount of P107. hence Tokyo filed a petition for review before Court of Tax Appeals. L-68252 May 26. at Guimaras Port of Iloilo. Soriamont Agency. Thus. LTD.142. Ltd. a resident foreign corporation engaged in the transport of cargo is liable for taxes depending on the amount of income it derives from sources within the Philippines. ISSUE: Whether or not Tokyo Shipping Co. Indeed. 1981 but found no raw sugar to load and returned to Japan without any cargo laden on board. however. J.75 from CIR.M/V "Gardenia" arrived in Iloilo on January 10. TaxCases_124 . TOKYO SHIPPING CO... But sufficient evidence has already been adduced by Tokyo proving that it derived no receipt from its charter agreement with NASUTRA . before such a tax liability can been forced the taxpayer must be shown to have earned income sourced from the Philippines.500 metric tons of raw sugar in the Philippines. NASUTRA chartered M/V Gardenia to load 16.

2001. To be entitled to a refund of the final withholding tax..T. a corporation duly registered and existing under the laws of Malaysia. Laguna. 89 (C. vs.. 2001. is engaged in the manufacturing and marketing of electronics and mechanical machinery products.RDO No.000. 2002 on the ground that taxes paid could not be offset with future liabilities.000. 2001 for reasons pertaining to the financial structure of the Eng Tek Group of Companies to which the petitioner belongs. COMMISSIONER OF INTERNAL REVENUE.Grounds for Filing a Claim for Refund ENGTEK PHILIPPINES. 56 of Calamba. J. it filed a Petition for Review with the Court of Tax Appeals praying for the refund/tax credit of the P7. 2003. It is 99.000. 2000. Petitioner failed in this task.000 as cash dividends. for the offsetting the final withholding tax of P7. On October 8. Laguna. EB No. 56 Calamba.A.00 representing income tax erroneously paid on April 10. ISSUE: Whether or not the Second Division of this Honorable Court erred in ruling that petitioner has failed to discharge the burden of proof to entitle it to a refund? HELD: NO. intended to be made sometime in March 2002. On April 10. INC. the board of directors of petitioner resolved to reverse the cash dividend declaration. Case No.00 with Revenue District No.000.00 with taxes that may become due on future declaration of cash dividends. it resolved to reverse said cash dividend TaxCases_125 . "petitioner's argument that for reasons pertaining to the financial structure of the Eng Tek Group of Companies (to which petitioner belongs). On April 8. JR.T. Respondent.500. 2001. petitioner declared P50. petitioner filed an administrative claim for tax credit/refund. petitioner withheld the income tax due on the dividends amounting to P7. 1914.A. Petitioner.500. This claim for refund is anchored on the proposition that petitioner resolved to reverse said cash dividend declaration on October 8.500.000 and remitted the same to the BIR. petitioner's administrative claim not having been resolved by the respondent. June 14 2006 C. a domestic corporation duly registered and organized under Philippine laws. The BIR denied the request in a letter dated January 16. in the amount of P7.99% owned by Eng Teknologi Holdings Bhd. 2001. 2002. 6644) CASTANEDA. As found by the Second Division of the Court of Tax Appeals. On October 15.: FACTS: Petitioner. Laguna. On September 17.500. petitioner requested Revenue District No. On December 20. parts and accessories. Calamba. using BIR Form No. 56. petitioner has to prove through the presentation of substantial evidence that the reversal of the cash dividends was legitimate and that such reversal is not intended to defeat the collection of an income tax that is legally due from a completed transaction.

no other document was presented by the petitioner to prove the financial structure of Eng Tek Group of Companies. 2001 to prove that on said date the Board approved the resolution reversing the declaration of cash dividend. is flawed. Likewise. TaxCases_126 . Also. it being the reason given by the petitioner for the reversal of the cash dividend declaration. Petitioner also failed to present the accounting records such as its journals. ledgers. Other than the Corporate Secretary's Certificate dated March 31. the reversal of the declaration of cash dividends were duly recorded in its books. 2003. to prove the financial aspects of the corporate reorganization or restructuring on the petitioner's capital requirements.declaration. and without factual and legal basis." Petitioner did not offer in evidence its accounting records such as its audited financial statements for the year 2000 to prove its financial position at the time the cash dividends were declared. to which the petitioner allegedly belongs. and other books that would prove that indeed. not even a draft proposal of its corporate reorganization was presented to the Court to show that there really was a corporate restructuring. The reversal of the cash dividend declaration and its effects on the stockholder's equity should have been reflected in petitioner's books of accounts. showing the resolution of the Board of Directors on October 8. it did not present its financial statements for the year 2001 and thereafter. We therefore concur with the ruling of the Court in Division denying petitioner's claim for refund for insufficiency of evidence for its failure to present in evidence the financial documents or records that could prove that the reversal of the cash dividends really transpired and was duly recorded in its financial records. The foregoing documents could prove that there was an actual reversal of the cash dividend duly recorded in petitioner's books.

Finally. No. respondent. During that period Intel withheld the taxes due and remitted them to BIR. At the time respondent filed her amended return. CTA likewise stressed that even the date of filing of the Final Adjustment return was omitted. ROSEMARIE ACOSTA. Respondent claimed overpayment of taxes and filed petition for review with CTA. hence respondent had no reason to think that the filing of an amended return would constitute the written claim required by law. ISSUE: Whether or not CTA has jurisdiction to take cognizance of respondent‘s petition for review? HELD: YES.: FACTS: Acosta is an employee of Intel and was assigned in a foreign country. NIRC was not yet in effect. Revenue laws are not intended to be liberally constructed. CTA dismissed the petition for failure to file a written claim for refund with the CIR a condition precedent to the filing of a petition for review with the CTA. by respondent in her petition for review. for it deprived the CTA of its jurisdiction over the subject matter of the case. TaxCases_127 .R. A party seeking an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief but also to pursue it to its appropriate conclusion before seeking judicial intervention in order to give administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to court action. petitioner. vs. the 1997. 154068 August 3. J. as represented by Virgilio A. 2007 QUISUMBING.Procedure in Filing a Claim for Refund COMMISSIONER OF INTERNAL REVENUE. CA reversed the decision reasoning that Acosta‘s filing of an amended return indicating an overpayment was sufficient compliance with the requirement of a written claim. G. This is fatal to respondent‘s claim. inadvertently or otherwise. revenue statutes are substantive laws and in no sense must with that of remedial laws. Abogado.

ACCRAIN declared as creditable all taxes withheld at source by various withholding agents which withholding agents aforestated paid and remitted the above amounts representing taxes on rental. ACCRAIN is not claiming a refund of overpaid withholding taxes.. commission and consultancy income of the petitioner corporation to the Bureau of Internal Revenue.‖ The aforequoted ruling presents two alternative reckoning dates. 1991 GUTIERREZ. ACCRAIN filed a claim for refund. THE HONORABLE COURT OF APPEALS. the petitioner corporation. The CA affirmed decision of the CTA. per se. G.R. A correct application of the Gibbs case according to the court is that ―a taxpayer whose income is withheld at source will be deemed to have paid his tax liability at the end of the tax year. In the instant case. Crucial in the resolution of the instant case is the interpretation of the phraseology "from the date of payment of the tax" in the context of Section 230 on Recovery of tax erroneously or illegally collected. ACCRAIN filed with the Bureau of Internal Revenue its annual corporate income tax return for the calendar year reporting a net loss of P2. Pending action of the respondent Commissioner on its claim for refund.00 on April 15. J. TaxCases_128 . and (2) when the tax liability falls due. 1982. or when the two-year prescriptive period under Section 306 of the Revenue Code starts to run with respect to payments effected through the withholding tax system. 96322 December 20. 1984. COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS.: FACTS: ACCRA INVESTMENTS (ACCRAIN) is a domestic corporation engaged in the business of real estate investment and management consultancy. petitioner.957. The CTA dismissed the case for being filed out of time and the MR was likewise denied.Period within which to File a Claim for Refund ACCRA INVESTMENTS CORPORATION. It is asking for the recovery the refundable or creditable amount determined upon the petitioner corporation's filing of the final adjustment tax return on or before 15 April 1982 when its tax liability for the year 1981 fell due. on April 13. vs. A petition for review was submitted to the SC and the SC referred the case to the CA. it is undisputed that the petitioner corporation's withholding agents had paid the corresponding taxes withheld at source to the Bureau of Internal Revenue from February to December 1981. filed a petition for review with the respondent Court of Tax Appeals. It is from when the same falls due at the latter date then. JR. (1) the end of the tax year. No. ISSUE: Whether or not the claim for refund was filed on time? HELD: YES. respondents.142.

with respect to the 1981 taxable year. Anent claims for refund.The petitioner corporation's taxable year is on a calendar year basis. if any. 13-78 issued by the Bureau of Internal Revenue requires that: Claims for tax credit or refund — Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement. hence. ACCRAIN had until 15 April 1982 within which to file its final adjustment return. fell due upon its filing of its final adjustment return on April 15. TaxCases_129 . The petitioner corporation duly complied with this requirement. in ACCRAIN's case was when its tax liability. 1743-A) showing the amount paid and the amount of tax withheld therefrom. The term "return" in the case of domestic corporations like ACCRAIN refers to the final adjustment return. It bears emphasis at this point that the rationale in computing the two-year prescriptive period with respect to the petitioner corporation's claim for refund from the time it filed its final adjustment return is the fact that it was only then that ACCRAIN could ascertain whether it made profits or incurred losses in its business operations. duly issued by the payor to the payee (BIR Form No. therefore. section 8 of Revenue Regulation No. The "date of payment". 1982.

The CIR averred that TMX is already barred for claiming the refund since more than 2 years has elapsed between the payment (May 15. respondents.R. is entitled to a refund considering that two years gas already elapsed since the payment of the tax? HELD: YES. Hence. On July 9. no such suit or proceeding shall be begun after the expiration of two years from the date of the payment of the tax or penalty regardless of any supervening cause that may arise after payment. where it can finally be ascertained if the tax payer has still to pay additional income tax or if he is entitled to a refund of overpaid income tax. 292. vs. 1984. TMX filed with the Appellate Division of BIR for refund in the amount of P247. it is within the 2-year prescriptive period starting from April 15. TMX SALES. during the subsequent quarters. However. this appeal of CIR. 1992 GUTIERREZ. 2 of the National Internal Revenue Code stated that ―in any case. J. The Court of Tax Appeals rendered a decision granting the petition of TMX Sales and ordered CIR to refund the amount mentioned. filed its quarterly income tax for the 1st quarter of 1981. 1982.31 and paying an income tax of P247. No.‖ This should be interpreted in relation to the other provisions of the Tax Code. par. G.525. INC. 1981. TMX Sales filed a petition for review before the Court of Tax Appeals against CIR. 83736 January 15. 1984).. His claim was not acted upon by the Commissioner of Internal Revenue. and THE COURT OF TAX APPEALS.156. On May 14. JR.010 representing overpaid income tax. 1981) and the filing of the claim in court (March 14. 1982 when they filed their Annual Income Tax Return. 1982.COMMISSIONER OF INTERNAL REVENUE. On April 15. Since TMX filed the suit on March 14. TaxCases_130 . 1981. The most reasonable and logical application of the law would be to compute the 2-year prescriptive period at the time of the filing of the Final Adjustment Return or the Annual Income Tax Return. Sec.010. when TMX filed its Annual Income Tax Return for the year ended in December 31.174. ISSUE: Whether or not TMX Sales Inc. It declared P571.: FACTS: TMX Sales Inc. praying that the CIR be ordered to refund to TMX the amount of P247.019 on May 13. petitioner. it declared a net loss of P6. 1984. TMX suffered losses.

In 1983.R. determined that it actually had no income at the end of the year hence it is not liable for income tax.COMMISSIONER OF INTERNAL REVENUE. vs. c) Quarter 3 – no payment as it was entitled to a tax credit. It is true that the counting of the two-year prescriptive period shall begin to run from the date of payment. 1995 ROMERO. at the time it paid the quarterly taxes is not expected to ascertain if a tax refund is feasible. and d) Quarter 4 – no payment as it incurred losses. b) Quarter 2 (August 29. 1983) – P396k. 105208 May 29. It could not have known in May and August 1983 that at the end of the year it will be incurring losses. the final adjustment return is deemed accomplished on April 16. Hence. The rationale behind this is that. G. THE PHILIPPINE AMERICAN LIFE INSURANCE CO. it paid the following: a) Quarter 1 (May 30. there is a qualification to be made. Hence. But in the case of corporations which are paying quarterly taxes.. The Commissioner of Internal Revenue (CIR) denied the claim on the ground that it has been filed beyond the twoyear prescriptive period to file such refund claim. respondents. respectively. The CIR contends that the 2-year prescriptive period should be reckoned from the date of the quarterly payment. due to its losses in said year. It then filed for a tax refund but it only filed the same in December 1985. ISSUE: Whether or not the CIR‘s argument is correct? HELD: NO. Philamlife.2 million. TaxCases_131 . 1985 is well within the two year prescriptive period. the refund claim filed in December 10. In the case at bar. 1983) – P3. (Philamlife) as a corporation has been paying quarterly income taxes.: FACTS: The Philippine American Life Insurance Co. J. Philamlife‘s refund claim for the quarterly payments it paid in 1983 had prescribed in May 1985 and August 1985. like Philamlife. The prescriptive period for taxpayers paying quarterly shall commence from the time the refund is ascertained or from the time a final adjustment return has been accomplished. 1984 – this is the date upon which the prescriptive period shall commence running. THE COURT OF TAX APPEALS and THE COURT OF APPEALS. petitioner. a taxpayer paying quarterly. No.

TaxCases_132 . No. is the 15th day of the fourth month (April 15th) following the close of the fiscal year. following the close of the preceding taxable year. 117254 January 21. at the earliest. petitioner BPI. 205 SCRA 184). as liquidator of Paramount. G.00. No. TMX Sales Inc. BPI filed the instant petition with this Court in order to toll the running of the prescriptive period for filing a claim for refund of overpaid income taxes. The two-year prescriptive period within which to claim a refund commences to run. the final adjustment return could still be filed without incurring any penalty? HELD: NO. respondent. vs.940. The appropriate box in the return was marked with a cross (x) indicating "To be refunded" he amount of P65. The following day or on April 15. BPI is a bank and trust corporation duly organized and existing under Philippine laws. On April 14.29. is such "date of payment" (ACCRA Investments Corp. the return showed a refundable amount of P65..681. The "date of payment" from which to reckon the two-year period.00 from its income tax of P1. through counsel filed a letter dated April 12.00. 1986. The Supreme Court has laid down the rule regarding the computation of the prescriptive period that the two-year period should be computed from the time of filing of the Adjustment Returns or Annual Income Tax Return and final payment of income tax: it is only when the Adjustment Return covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be claimed based on the adjusted and audited figures (Commissioner of Internal Revenue vs.. 85956). Asia Australia Express Ltd. ISSUE: Whether or not the two-year period of prescription for filing a claim for refund. 1988 reiterating its claim for refund of P65. 204 SCRA 957). as provided in §230 of the National Internal Revenue Code. for calendar year ending December 31. The income tax due thereon is P1.COMMISSIONER OF INTERNAL REVENUE. on the date of the filing of the adjusted final tax return (Commissioner of Internal Revenue vs.R.00. 1986. 1986 when the corporate income tax return was actually filed and not from April l5. 1986 when. petitioner.153.802. J. declaring a Net Income of P3. It acts as the liquidator of Paramount Acceptance Corporation after its dissolution on March 31. 1985. is to be counted from April 2.00.259.324. Court of Appeals. After deducting Paramount's total quarterly income tax payments of P1.259. COURT OF TAX APPEALS and BANK OF THE PHILIPPINE ISLANDS as LIQUIDATOR OF PARAMOUNT ACCEPTANCE CORPORATION.R. according to §70(b) of the NIRC. COURT OF APPEALS. 1988. and the filing of the final adjustment return on April 15th.00. G. 1988. vs.218. in the case of a corporation whose taxable year is on a calendar basis. On April 2. 1999 MENDOZA. Paramount Acceptance Corporation filed its Corporate Annual Income Tax Return.: FACTS: Petitioner.00 as overpaid income tax for the calendar year 1985.681.153.

which provides for a two-year period of prescription counted "from the date of payment of the tax" for actions for refund of corporate income tax. As correctly put by BPI. BPI filed its final adjustment return on April 2. under §49(a) of the NIRC. the two-year period should be computed from the time of actual filing of the Adjustment Return or Annual Income Tax Return. 1986. 1986. 1986. without penalty.In this case. 1988. Accordingly the administrative claim and court proceeding for tax refund were timely filed. Thus the final payment of income tax should be deemed to be on April 15. Both claim and action for refund were thus barred by prescription. TaxCases_133 . it can already be determined whether there has been an overpayment by the taxpayer. it can be deduced from the foregoing that. as liquidator of Paramount. in the contest of §230.00. 1988 and a petition for refund only on April 15. filed a written claim for refund only on April 14. In the case at bar. until April 15. No taxes were paid then because the returns showed that the quarterly taxes already paid exceeded the income tax due by P65. private respondent BPI. it is only on April 15 that the previous year's income tax becomes due and payable and the taxpayer is still free to make amendments or adjustments on its return. Thus.259. when the previous year's income tax became due and payable and when the quarterly corporate income taxes may be considered paid. payment is made at the time the return is filed. 1985. However. Paramount filed its corporate annual income tax return on April 2. This is so because at that point. Moreover.

however. On July 28. the BIR Commissioner denied PNB‘s claim for tax credit.. 2001. the existence of material facts to establish your entitlement to refund. PNB wrote then BIR Commissioner Liwayway Vinzons-Chato. PHILIPPINE NATIONAL BANK. In a letter dated July 26.298.e. 1991 to then BIR Commissioner Jose C. 161997 October 25. 1991.000. confirm and/or pass judgment upon the findings of the unit under it. 2000. 22063553. Aquino‘s call to generate more revenues for national development.000. both dated April 15. to inform her about the above developments and to reiterate its request for the issuance of a TCC.298. The BIR acknowledged receipt of the amount by issuing Payment Order No.: FACTS: In early April 1991. 2005 GARCIA. please be advised that upon review of your case. It is therefore right and proper for the Operations Group to review. 109435 for P180." On August 14. Via separate letters dated April 19 and 29. you will find that the same has been duly acted upon. This request was forwarded for review and further processing to the Office of the Deputy Commissioner for Legal and Inspection Group. Attention: Appellate Division. this Office finds that the same presents no legal question for resolution.R. Petitioner.00 as PNB‘s advance income tax payment for the bank‘s 1991 operations and was remitted in response to then President Corazon C. 1991 and May 14. 1995. PNB sought reconsideration of the decision of Deputy Commissioner Hefti not to take cognizance of the bank‘s claim for tax credit certificate on the ground that the jurisdiction of the Appellate Division is limited to claims for tax refund and credit "involving erroneous or illegal collection of taxes whenever there are questions of law and/or facts and does not include claims for refund of advance payment. Hefti.60 to the bank‘s future gross receipts tax liability. to allay your concern about delayed processing of your claim. TaxCases_134 . i. the undersigned has made representations with the Operations Group about your case and if you would check the status of your case again. J. and then to the BIR‘s Large Taxpayers Service. Allow us. There might be a little delay in the transition of cases but expect the new procedures to be well-established in no time. At any rate. Rather. Respondent. respondent Philippine National Bank (PNB) issued to the Bureau of Internal Revenue (BIR) PNB Cashier‘s Check No. Replying. vs. this time for the "unutilized balance of its advance payment made in 1991 amounting to P73. PNB requested the issuance of a tax credit certificate (TCC) to be utilized against future tax obligations of the bank. Operations Group of this Bureau. PNB again wrote the BIR requesting that it be allowed to apply its unutilized advance tax payment of P73.892. C-10151465 and BIR Confirmation Receipt No. Lilian B. In fact. G. sound management practices demand that issues as crucial as refund cases be subjected to complete staff work. Such facts were initially verified through the proper audit of your refund case by the investigating unit under the functional control and supervision of the Deputy Commissioner. what is involved is the verification of factual matters.60"." In reply. Ong. 795 dated October 10.COMMISSIONER OF INTERNAL REVENUE. No. pursuant to Revenue Administrative Order [RAO] No.892. 1997.

or (b) may be credited against the estimated quarterly income tax liabilities for the quarters of the succeeding taxable year. but rather for the application of the balance of advance income tax payment for subsequent taxable years after failure or impossibility to make such application or carry over the preceding four (4)-year period when no tax liability was incurred by petitioner due to losses in its operations. as was the original intention of [respondent] when it tendered the advance payment in 1991. Ironically. It is truly inequitable to strictly impose the two (2)-year prescriptive period as to legally bar any request for such tax credit certificate considering the special circumstances under which the advance income tax payment was made and the unexpected event (four years of business losses) which prevented such application or carry over. TaxCases_135 . The corporation must signify in its annual corporate adjustment return its intention whether to request for the refund of the overpaid income or claim for automatic tax credit to be applied against its income tax liabilities for the quarters of the succeeding taxable year by filling the appropriate box on the corporate tax return. Neither can such payment be considered as illegal having been made in response to a call of patriotic duty to help the national government. both the [petitioner] and CTA would fault the [respondent] for electing to credit or carry over the excess amount of tax payment advanced instead of choosing to refund any such excess amount. illegally or wrongfully paid as to be automatically covered by the two (2)-year limitation under Sec. no tax had been assessed or due. 29 and May 14. Thus. holding that such decision on the part of petitioner caused the two (2)-year period to lapse without the petitioner filing such a request for the issuance of a tax credit certificate. 230 for the right to its recovery. They emphasized that the advance tax payment was made with the understanding that any excess amount will be either carried over to the next taxable year or refunded. It appears then that the request for issuance of a tax credit certificate was arbitrarily interpreted by respondent as a simple claim for refund instead of a request for application of the balance (excess amount) to tax liability for the succeeding taxable years.ISSUE: Whether or not PNB‘s letter dated April 19. or actually imposed and collected by the BIR. Any excess of the total quarterly payments over the actual income tax computed and shown in the adjustment or final corporate income tax return shall either (a) be refunded to the corporation. When the P180 million advance income tax payment was tendered by [respondent]. in no sense can the subject amount of advance income tax voluntarily remitted to the BIR by the [respondent]. 1991 can be legally interpreted as claims for refund or tax credit as required by the NIRC? HELD: YES. We therefore hold that the tax credit sought by [respondent] is not simply a case of excess payment. not as a consequence of prior tax assessment or computation by the taxpayer based on business income. be treated as similar to those national revenue taxes erroneously.

Lex posteriori derogat priori. 2000. 1998 to April 14. Petitioners. PARCERO in his official capacity as Revenue District Officer of Revenue District No.: FACTS: Gilbert Yap. the CA reversed and set aside the decision of the CTA. J. 1999 and April 15. INC. Counting of 2-year period for filing claim for refund is no longer in accordance with Art 13 of the Civil Code but under Sec 31 of EO 227 . 1999 to April 14. PRIMETOWN PROPERTY GROUP. the periods covered by April 15. 1998 to May 14. No. TaxCases_136 . It ruled that Article 13 of the Civil Code did not distinguish between a regular year and a leap year. Hence. it was filed within the reglementary period. the two-yearprescriptive period under Section 229 of the NIRC for the filing of judicial claims was equivalent to 730 days. 049 (Makati). 1998. there are 24 calendar months in 2 years. it is the latter that must prevail being the more recent law. A statute which is clear and explicit shall be neither interpreted nor construed. G. The procedure is 1st month -Apr 15. its right to claim a refund or credit commenced on that date.year period should start to run from filing of the final adjusted return. the counting should start from Apr 15. Tecson. which states that a year is composed of 12 calendar months. which was filed 731 days after respondent filed its final adjusted return. ISSUE: Whether or not the counting of the 2-yearprescriptive period for filing claim of refund is governed by the Civil Code? HELD: NO. vice chair of respondent Primetown Property Group. Thus. 162155 August 28. Inc. even if the year 2000 was a leap year. Respondent. 1998 and end on Apr 14. was filed beyond the reglementary period. The CTA found that respondent filed its final adjusted return on April 14. following the legal maxim. applied for the refund or credit of income tax respondent‘s paid in 1997.Mar 15. and the Administrative Code of 1987. According to the CTA. As between the Civil Code. 24th month . We therefore hold that respondent's petition (filed on April 14.. 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. 2000 should still be counted as 365 days each or a total of 730 days. National Marketing v. respondent's petition.R.The Administrative Code of 1987. 2007 CORONA. 1998.. 139 Phil 584 (1969) is no longer controlling. Because the year 2000 was a leap year. For a Final Corporate ITR filed on Apr 14. According to the CA. which provides that a year is equivalent to 365 days. On appeal. 2000 to Apr 14. 2000. The 2. In the case at bar. vs. 1998.COMMISSIONER OF INTERNAL REVENUE and ARTURO V.

065.065.146. petitioner BPI claimed this amount as tax refund. 1987. FBTC had a refundable of P2. The Family Bank and Trust Co. 1985 The situation of FBTC is precisely what was contemplated under §78 of the Tax Code.456.57. As FBTC's successor-in-interest. from which the treasury notes were purchased by FBTC. No.072. 1995. ISSUE: Whether or not the claim of petitioner is barred by prescription? HELD: YES. After it ceased operations on June 30. there was no need for it to file a Final adjustment Return because there was nothing for it to adjust or to audit.065. the Court of Tax Appeals denied petitioner's motion for reconsideration. petitioner filed a petition for review in the Court of Tax Appeals on December 29.072. 1985. Creditable withholding taxes in the total amount of P174. but respondent Commissioner of Internal Revenue refunded only the amount of P2.609. in its decision rendered on July 19.138. but. 2001 MENDOZA. representing that year's tax credit of P174. while the Central Bank.77.17. in the amount of P118. seeking the refund of the aforesaid amount. However. leaving a balance of P174. the appeals court affirmed the decision of the CTA. 1994. 144653 August 28. In its resolution. its taxable year was shortened to six months. however. petitioner.R.000. The appeals court subsequently denied petitioner's motion for reconsideration.57. 1985 to June 30.In Case of Taxpayers Contemplating Dissolution BANK OF THE PHILIPPINE ISLANDS.146.60 from the interest earned thereon. As the FBTC did not file its quarterly income tax returns for the year 1985. (FBTC) earned income consisting of rentals from its leased properties and interest from its treasury notes for the period January 1 to June 30.77 and the previous year's excess credit of P2. G. Thus. It thus became necessary for FBTC to file its income tax return within 30 days after approval by the SEC of its plan or resolution of dissolution. J. 1985. vs.77 were remitted to respondent Commissioner of Internal Revenue. dated August 4. TaxCases_137 . Petitioner appealed to the Court of Appeals. respondents. upon its dissolution in 1985. the lessees of FBTC withheld 5 percent of the rental income. suffered a new loss of about P64.000. 2000.072. the Court of Tax Appeals dismissed petitioner's petition for review and denied its claim for refund on the ground that the claim had already prescribed.00 during the period in question.57 from the previous year. Hence this petition.34. in its decision rendered on April 14. COMMISSIONER OF INTERNAL REVENUE. withheld P55. FBTC. from January 1. As required by the Expanded Withholding Tax Regulation. Accordingly.: FACTS: Prior to its merger with petitioner Bank of the Philippine Islands (BPI) on July 1985.320.146. It also had an excess credit of P2.

i. In accordance with §292 of the Tax Code. or almost 10 months after it ceased its operations. TaxCases_138 . 1985. 30 days after the approval by the SEC of its plan for dissolution.Indeed. the two-year prescriptive period should be counted from July 30. in relation to §244 of Revenue Regulation No.e. it would be absurd for FBTC to wait until the fifteenth day of April. the two-year period of prescription ended on July 30. Considering that §78 of the Tax Code. 1987. As petitioner's claim for tax refund before the Court of Tax Appeals was filed only on December 29.. July 30. before filing its income tax return. Consequently. 2 applies to FBTC. it is clear that the claim is barred by prescription. 1987. 1985 should be considered the date of payment by FBTC of the taxes withheld on the earned income.

petitioner. L-66838 December 2. reduced the regular rate of dividend tax to a maximum of 20% of the gross amount of dividends paid to US parent corporations. respondents. G. by treaty commitment. claiming that pursuant to Section 24(b) (1) of the National Internal Revenue Code. and established a treaty obligation on the part of the United States that it shall allow´ to a US parent corporation receiving dividends from its Philippine subsidiary a [tax] credit for the appropriate amount of taxes paid or accrued to the Philippines by the Philippine subsidiary. the applicable rate of withholding tax on the dividends remitted was only 15%. PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION and THE COURT OF TAX APPEALS. it is a provision which specifies when a particular (reduced) tax rate is legally applicable.3M It subsequently filed a claim with the Commissioner of Internal Revenue for a refund or tax credit. The NIRC does not require that the US tax law deem the parent corporation to have paid the 20 percentage points of dividend tax waived by the Philippines. TaxCases_139 . the Philippines.Who has the Personality to File a Claim for Refund COMMISSIONER OF INTERNAL REVENUE. P&G Phil paid a 35% dividend withholding tax to the BIR which amounted to Php 8. 1991 FELICIANO.R.1M. as a minimum. it allows a tax credit of both (i) the Philippine dividend tax actually withheld. With Respect to Taxes on Income. reach an amount equivalent to 20 percentage points which represents the difference between the regular 35% dividend tax rate and the preferred 15% tax rate. Such tax credit for taxes deemed paid in the Philippines must. Section 24(b) (1) does not create a tax exemption nor does it provide a tax credit. 369. Since the US Congress desires to avoid or reduce double taxation of the same income stream. and (ii) the tax credit for the Philippine corporate income tax actually paid by P&G Philippines but deemed paid by P&G USA. ISSUE: Whether or not P&G Philippines is entitled to the refund or tax credit? HELD: YES. No. It only requires that the US shall allow P&G-USA a deemed paid tax credit in an amount equivalent to the 20 percentage points waived by the Philippines. applicable against the tax payable to the domiciliary country by the foreign stockholder corporation. vs. as amended by Presidential Decree No. J. The ordinary 35% tax rate applicable to dividend remittances to non-resident corporate stockholders of a Philippine corporation goes down to 15% if the country of domicile of the foreign stockholder corporation shall allow such foreign corporation a tax credit for taxes deemed paid in the Philippines. Such dividends amounted to Php 24. P&G USA.: FACTS: Procter and Gamble Philippines declared dividends payable to its parent company and sole stockholder.

An interpretation of a tax statute that produces a revenue flow for the government is not. however. in the assumption that a positive incentive effect would thereby be felt by the investor. would not benefit from the reduction of the Philippine dividend tax rate unless its home country gives it some relief from double taxation by allowing the investor additional tax credits which would be applicable against the tax payable to such home country. TaxCases_140 . necessarily the correct reading of the statute. Section 24(b)(1) of the NIRC seeks to promote the in-flow of foreign equity investment in the Philippines by reducing the tax cost of earning profits here and thereby increasing the net dividends remittable to the investor. Accordingly Section 24(b)(1) of the NIRC requires the home or domiciliary country to give the investor corporation a ³deemed paid´ tax credit at least equal in amount to the 20percentage points of dividend tax foregone by the Philippines. The foreign investor. for that reason alone.

who are all nonresident aliens. Don Andres subscribed to 4. pursuant to a Board Resolution.00 capitalization divided into 10. one-half of that shareholdings or 92. Hence. pursuant to Sections 53 and 54 of the 1939 Revenue Code for the year 1968 and the second quarter of 1969 based on the transactions of exchange and redemption of stocks. As of that date. ANSCOR's business purpose for both redemptions of stocks is to partially retire said stocks as treasury shares in order to reduce the company's foreign exchange remittances in case cash dividends are declared. after examining ANSCOR's books of account and records.COMMISSIONER OF INTERNAL REVENUE. A day after Don Andres died. A month later. Don Andres transferred 1.000. ISSUE: Whether or not a withholding agent. On June 30. 1964 Don Andres died.867 and 138. In 1973. Both sons are foreigners. predecessor of ANSCOR.864 common shares each. with a P1. formed the corporation "A.963 shares of the 5. Revenue examiners issued a report proposing that ANSCOR be assessed for deficiency withholding tax-at-source. Doña Carmen Soriano. ANSCOR redeemed 28.00 divided into 25. ANSCOR's authorized capital stock was increased to P2.290 and 46. COURT OF TAX APPEALS and A.000 common shares from the Don Andres' estate. petitioner. be deemed a taxpayer for it to avail of the amnesty? HELD: NO. Stock dividends worth 46. increasing their accumulated shareholdings to 138.154 shares.250 shares each to his two sons. From 1947-1963.000. By November 1968. In 1937. G. in such capacity. ANSCOR declared stock dividends. On December 30. a citizen and resident of the United States. In 1945. Correspondingly. No. as her conjugal share.000 common shares from the Don Andres' estate.: FACTS: Don Andres Soriano. as their initial investments in ANSCOR.577 shares were transferred to his wife. the records revealed that he has a total shareholdings of 185. Jose and Andres.000 shares originally issued.500. ANSCOR increased its capital stock to P20M and in 1966 further increased it to P30M.R.. the Board further increased ANSCOR's capital stock to P75M. Don Andres' increased his subscription to 14. SORIANO CORP. respondents.287 shares were respectively received by the Don Andres estate and Doña Carmen from ANSCOR.000 common shares at a par value of P100/share.. ANSCOR again redeemed 80. TaxCases_141 . Jr. 1968.000 common shares with the same par value. As stated in the Board Resolutions. ANSCOR is wholly owned and controlled by the family of Don Andres. vs. THE COURT OF APPEALS. The other half formed part of his estate. 1999 MARTINEZ. 108576 January 20. Soriano Y Cia". About a year later.000.963 common shares. J.

to wit: The following cases are not covered by the amnesty subject of these regulations: (2) Tax liabilities with or without assessments. So that. it is not covered by the amnesty. ANSCOR's claim of amnesty cannot prosper. as amended. In addition. a separate entity acting no more than an agent of the government for the collection of the tax in order to ensure its payments. the term of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority.D. any doubt in the application of an amnesty law/decree should be resolved in favor of the taxing authority. The taxpayer should not answer for the non-performance by the withholding agent of its legal duty to withhold unless there is collusion or bad faith. a withholding agent. by specific provision of law. Codal provisions on withholding tax are mandatory and must be complied with by the withholding agent.D. and the payee is the taxing authority. Furthermore. is never favored nor presumed in law and if granted by a statute. Thus. to curtail tax evasion and give tax evaders a chance to reform. Thus. a "tax amnesty. The rule on strictissimi juris equally applies. 23 is very explicit. on withholding tax at source provided under Section 53 and 54 of the National Internal Revenue Code. The former could not be deemed to have evaded the tax had the withholding agent performed its duty. The implementing rules of P. much like a tax exemption. the withholding agent is the payor. TaxCases_142 . Not being a taxpayer. like ANSCOR in this transaction is not protected by the amnesty under the decree. it was deemed administratively feasible to grant tax amnesty in certain instances. 370 which expanded amnesty on previously untaxed income under P. This could be the situation for which the amnesty decree was intended. the payer is the taxpayer — he is the person subject to tax impose by law.In the operation of the withholding tax system. ANSCOR was assessed under Sections 53 and 54 of the 1939 Tax Code.

not Silkair. on the other hand.-CTA denied Silkair‘s petition on the ground that as the excise tax was imposed on Petron Corporation as the manufacturer of petroleum products. vs. Petroleum Products sold to International Carriers and Exempt Entities of Agencies. may only claim from Petron Corporation the reimbursement of the tax burden shifted to the former by the latter. The excise tax partakes the nature of an indirect tax is clearly the liability of the manufacturer or seller who has the option whether or not to shift the burden of the tax to the purchaser. Silkair filed with the BIR a written application for the refund of P4. On December 19.567. J. The proper party to question.SILKAIR (SINGAPORE) PTE. an indirect tax is the statutory taxpayer. Section 130 (A) (2) of the NIRC provides that unless otherwise specifically allowed. respondent. Respondent.79 excise taxes it claimed to have paid on its purchases of jet fuel from Petron Corporation from January to June 2000. 2008 CARPIO. 135. petitioner. is the statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC of 1997 and Article4(2) of the Air Transport Agreement between RP and Singapore. Thus.. The liability for excise tax on petroleum products that are being removed from its refinery is imposed on the manufacturer/producer (Section 130 of the NIRC of 1997). Singapore-Davao-Cebu-Singapore. 171383 & 172379 November 14. Silkair bases its claim for refund or tax credit on Section 135 (b) of the NIRC of 1997 which reads Sec. The right to claim for the refund of excise taxes paid on petroleum products lies with Petron Corporation who paid and remitted the excise tax to the BIR. Petron Corporation.: FACTS: Petitioner is a corporation organized under the laws of Singapore which has a Philippine representative office. COMMISSIONER OF INTERNAL REVENUE. Where the burden of the tax is shifted to the [purchaser]. and where the burden of tax is shifted to the purchaser.R. or seek a refund of. 2001. is an online international air carrier operating the Singapore-Cebu-Davao-Singapore.450. the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production. – Petroleum products sold to the following are exempt from excise tax:(b) Exempt entities or TaxCases_143 . the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another. G. Nos. ISSUE: Whether or not the petitioner is the proper party to claim for refund or tax credit? HELD: NO. the amount passed on to it is no longer a tax but becomes an added cost on the goods purchased which constitutes a part of the purchase price. and SingaporeCebu-Singapore routes. any claim for refund should be filed by the latter. LTD. the amount passed on toit is no longer a tax but becomes an added cost of the goods purchased.

That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers. it must not be enlarged by construction. entities or agencies. be construed as including indirect taxes. and other international agreements for their use and consumption: Provided. however. and Article 4(2) of the Air Transport Agreement between the Government of the Republic of the Philippines and the Government of the Republic of Singapore (Air Transport Agreement between RP and Singapore) The exemption granted under Section 135 (b) of the NIRC of 1997and Article 4(2) of the Air Transport Agreement between RP and Singapore cannot. Statutes granting tax exemptions must be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.agencies covered by tax treaties. TaxCases_144 . conventions. and if an exemption is found to exist. without a clear showing of legislative intent.

⃰ Respondent.: FACTS: Smart entered into an Agreement with Prism. The Court reiterated the ruling in Procter & Gamble stating that a person ―liable for tax‖ has sufficient legal interest to bring a suit for refund of taxes he believes were illegally collected from him. The Silkair case was held inapplicable as it involved excise taxes and not withholding taxes. Since the withholding agent is an agent of the beneficial owner of the payments (i.. Petitioner. the authority as agent is held to include the filing of a claim for refund. Smart was granted a refund given that only a portion of its payments represented royalties since it is only that portion over which Prism maintained intellectual property rights and the rest involved full transfer of proprietary rights to Smart and were thus treated as business profits of Prism.COMMISSIONER OF INTERNAL REVENUE. Thinking that the payments to Prism were royalties. ISSUE: Whether or not Smart have the right to file the claim for refund? HELD: YES. INC.e. G. a nonresident foreign corporation domiciled in Malaysia. Smart then filed a refund with the BIR alleging that the payments were not subject to Philippine withholding taxes given that they constituted business profits paid to an entity without a permanent establishment in the Philippines. whereby Prism will provide programming and consultancy services to Smart. SMART COMMUNICATION. nonresident).. Nos. vs. 179045-46 August 25. Smart withheld 25% under the RP-Malaysia Tax Treaty. 2010 DEL CASTILLO. TaxCases_145 . J.R.

ISSUE: Whether or not Exxonmobil entitled to file the claim for the refund of the excise taxes passed-on by Caltex and Petron? HELD: NO. the amount added or shifted becomes part of the price. one person to someone else. the excise taxes on which were remitted by the said suppliers but the amount of which were. No.R. It purchased petroleum products from local suppliers (Caltex and Petron). however. It then filed a claim for refund of excise taxes paid on its purchase of petroleum products from its suppliers. in the first instance. The proper party to seek a refund of an indirect tax is the statutory taxpayer. Thus. the person on whom the tax is imposed by law and who paid the same even if he shifts the burden to another. passed-on to Exxonmobil.EXXONMOBIL PETROLEUM AND CHEMICAL HOLDINGS. G. COMMISSIONER OF INTERNAL REVENUE. TaxCases_146 . J.: FACTS: Exxonmobil was a US corporation engaged in selling petroleum products to domestic and international carriers. 2011 MENDOZA. from. or are paid by. Indirect taxes were defined as those that are demanded. Respondent. INC. When the seller passes on the tax to the buyer he in effect shifts only the tax burden and not the liability to pay for it. 180909 January 19. .PHILIPPINE BRANCH. the purchaser does not really pay the tax per se but only the price of the commodity. vs. Petitioner. Although the burden of an indirect tax can be shifted to the purchaser.

On October 20. 166482 JANUARY 25. The payment was advanced by Singapore Airlines. G.39 representing excise taxes on the purchase of jet fuel from Petron. the Court‘s pronouncement in the second Silkair case. paying the excise taxes thereon in the sum of P5.‖ Petitioner is neither a ―person liable for tax‖ nor ―a person subject to tax. Petron. Excise taxes. the person on whom the tax is imposed by law and who paid the same even when he shifts the burden thereof to another.R. relative to the contractual undertaking of petitioner to submit a valid exemption certificate for the purpose. petitioner filed an administrative claim for refund in the amount of P5. which it alleged to have been erroneously paid.39. which apply to articles manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported into the Philippines. the Court ruled that for indirect taxes (such as valued-added tax or VAT). the tax. The excise tax is due from the manufacturers of the petroleum products and is paid upon removal of the products from their refineries. J. the proper party to question or seek a refund of the tax is the statutory taxpayer. sold.: FACTS: Petitioner Silkair (Singapore) Pte. is actually passed on to the end consumer as part of the transfer value or selling price of the goods. The claim is based on Section 135 (a) and (b) of the 1997 Tax Code and Article 4(2) of the Air Transport Agreement between the Government of the Republic of the Philippines and the Government of the Republic of Singapore. 1998 to December 31.‖ There is also no legal duty on the part of petitioner to pay the excise tax. While the tax is directly levied upon the manufacturer/importer upon removal of the taxable goods from its place of production or from the customs custody. hence. bartered or exchanged. Even before the aviation jet fuel is purchased from Petron. respondent. TaxCases_147 . is basically an indirect tax. LTD.007. in reality. the excise tax is already paid by Petron. Moreover. which paid the excise tax upon removal of the products from its Bataan refinery. is relevant.007. is a foreign corporation duly licensed by the Securities and Exchange Commission (SEC) to do business in the Philippines as an on-line international carrier operating the Cebu-Singapore-Cebu and DavaoSingapore. Petitioner‘s contention that the CTA and CA rulings would put to naught the exemption granted under Section 135 (b) of the 1997 Tax Code and Article 4 of the Air Transport Agreement is not welltaken.SILKAIR (SINGAPORE) PTE.. NO. Ltd.‖ In this case.043. is the ―person liable for tax.. being the manufacturer. In early cases. is the ―person subject to tax. In the course of its international flight operations. JR. Petron. 2012 VILLARAMA. petitioner vs. 1999.043. Since the supplier herein involved is also Petron. petitioner cannot be considered the taxpayer. 1998. COMMISSIONER OF INTERNAL REVENUE. on behalf of petitioner. Ltd.Davao routes. petitioner purchased aviation fuel from Petron Corporation (Petron) from July 1. ISSUE: Whether or not petitioner has the legal personality to file a claim for refund? HELD: NO.

178788 September 29.23 on passenger revenue from tickets sold in the Philippines. by itself and without unquestionable evidence. the correctness of the return filed by petitioner is now put in doubt. 1998. ―Petitioner‘s (similar) tax refund claim assumes that the tax return that it filed was correct. Petitioner was correct in averring that his claim to a refund cannot be subject to offsetting or. TaxCases_148 . is liable under Sec.43 million) than the tax refund sought (P5. JR. The deficiency assessment. Having underpaid the GPB tax due on its cargo revenues for 1999. that is. Petitioner sought to be refunded the erroneously collected income tax from in the amount of P5. Given. as it claimed the offsetting to be.028.43 million.R. vs. 28(A)(3)(a).: FACTS: International airline. The airlines ceased operation originating from the Philippines since February 21. the amount of the former being even much higher (P31. 28(A)(3)(a) of the 1997 NIRC. Respondent. the court cannot grant the prayer for a refund. the uplifts of which did not originate in the Philippines. Court of Tax appeals ruled the petitioner is not entitled to a refund because under the NIRC. the facts stated therein are true and correct. COMMISSIONER OF INTERNAL REVENUE. And upon assessment by the CTA.Burden of Proof for Claim of Refund UNITED AIRLINES. which is obviously higher than the amount the petitioner prayed to be refunded. G.2 million). J. filed a claim for income tax refund. petitioner United Airlines.813. The grant of a refund is founded on the assumption that the tax return is valid. Petitioner argued that the petitioner‘s supposed underpayment cannot offset his claim to a refund as established by well-settled jurisprudence. cannot be the basis for the grant of the refund. 2010 VILLARAMA. Petitioner. No.. although not liable under Sec. created a doubt as to and constitutes a challenge against the truth and accuracy of the facts stated in said return which.. As such. the finding of the CTA that petitioner. although not yet final. it was found out that petitioner deducted items from its cargo revenues which should have entitled the government to an amount of P 31. 28(A)(1). ISSUE: Whether or not petitioner is entitled to a refund? HELD: NO. INC. income tax on GPB also includes gross revenue from carriage of cargoes from the Philippines. a legal compensation under Sec.‖ The court held that the petitioner is not entitled to a refund. however.

1-2000 will deprive persons or corporations of the benefit of a tax treaty? HELD: NO. any other case involving exactly the same point at issue should be decided in the same manner. ISSUE: Whether the failure to strictly comply with RMO No. Tax treaties are entered into to minimize. While it issued a ruling to CBK Power Company Limited after the payment of withholding taxes. 188550 August 19. the ITAD did not issue any ruling to petitioner even if it filed a request for confirmation on 4 October 2005 that the remittance of branch profits to DB Germany is subject to a preferential tax rate of 10% pursuant to Article 10 of the RPGermany Tax Treaty. petitioner filed with the BIR Large Taxpayers Assessment and Investigation Division on 4 October 2005 an administrative claim for refund or issuance of its tax credit certificate in the total amount of PHP 22. the CTA En Banc held that a ruling from the ITAD of the BIR must be secured prior to the availment of a preferential tax rate under a tax treaty.851. The CTA En Banc affirmed the CTA Second Division‘s Decision dated 29 August 2008 and Resolution dated 14 January 2009.553. petitioner requested from the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty." TaxCases_149 . No. On the same date. vs. The CTA En Banc ruled that once a case has been decided in one way. G. which is why they are also known as double tax treaty or double tax agreements.51. unlike in CBK Power Company Limited v.562. RESPONDENT.DEUTSCHE BANK AG MANILA BRANCH.17. Citing Mirant. CJ. petitioner withheld and remitted to respondent on 21 October 2003 the amount of PHP 67.2000 cannot be relaxed for petitioner. No.R. "A state that has contracted valid international obligations is bound to make in its legislations those modifications that may be necessary to ensure the fulfillment of the obligations undertaken. The court likewise ruled that the 15-day rule for tax treaty relief application under RMO No. 1.: FACTS: In accordance with Section 28(A)(5) of the National Internal Revenue Code (NIRC) of 1997.688. the rule was relaxed and the claim for refund of excess final withholding taxes was partially granted. which represented the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking unit (RBU) net income remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable years. In that case. if not eliminate the harshness of international juridical double taxation. Applying the principle of stare decisis et non quieta movere. COMMISSIONER OF INTERNAL REVENUE. PETITIONER. 2013 SERENO. Believing that it made an overpayment of the BPRT. 168531 filed by Mirant for failure to sufficiently show any reversible error in the assailed judgment. the CTA En Banc took into consideration that this Court had denied the Petition in G.R. Commissioner of Internal Revenue.

when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the benefits under said agreement. the fact that petitioner invoked the provisions of the RP-Germany Tax Treaty when it requested for a confirmation from the ITAD before filing an administrative claim for a refund should be deemed substantial compliance with RMO No. More so. would defeat the purpose of Section 229. laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto.1-2000. Therefore. or 15 days prior to the payment of its BPRT.day period. 1-2000. it must be stressed that there is nothing in RMO No. where the very basis of the claim is erroneous or there is excessive payment arising from non-availment of a tax treaty relief at the first instance. but the CTA‘s outright denial of a tax treaty relief for failure to strictly comply with the prescribed period is not in harmony with the objectives of the contracting state to ensure that the benefits granted under tax treaties are enjoyed by duly entitled persons or corporations. Section 229 of the NIRC provides the taxpayer a remedy for tax recovery when there has been an erroneous payment of tax. It could not have applied for a tax treaty relief within the period prescribed. petitioner should not be faulted for not complying with RMO No. 1-2000 prior to the transaction. on the sole ground of failure to apply for a tax treaty relief prior to the payment of the BPRT. Corollary thereto. The underlying principle of prior application with the BIR becomes moot in refund cases. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. the prior application requirement becomes illogical. We recognize the clear intention of the BIR in implementing RMO No. but on the regular rate as prescribed by the NIRC. such as the present case. In this case. Hence.Thus. 1-2000 which would indicate a deprivation of entitlement to a tax treaty relief for failure to comply with the 15. precisely because it erroneously paid the BPRT not on the basis of the preferential tax rate under the RP-Germany Tax Treaty. TaxCases_150 . The outright denial of petitioner‘s claim for a refund. Likewise.

Debts are due to the Government in its corporate capacity. The collection of a tax cannot await the results of a lawsuit against the government. To be sure. Too simplistic. assails the decision of the Court of Appeals affirming the Court of Tax Appeals decision ordering it to pay the amount of P110. Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. 1998 ROMERO. it finds no support in law or in jurisprudence.: FACTS: Petitioner Philex Mining Corp. Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P120 M plus interest.respondents. Philex's claim is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. 125704 August 28. Philex cannot be allowed to refuse the payment of its tax liabilities on the ground that it has a pending tax claim for refund or credit against the government which has not yet been granted. while taxes are due to the Government in its sovereign capacity.R. ISSUE: Whether or not there be an off-setting between the tax liabilities vis-a-vis claims of tax refund of the petitioner? HELD: NO. vs. No. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax which is being collected.7 M as excise tax liability for the period from the 2nd quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. to countenance Philex's whimsical reason would render ineffective our tax collection system. petitioner.Is Setting-Off of Taxes Pending Refund Allowed? (Doctrine of Equitable Recoupment) PHILEX MINING CORPORATION. Therefore these claims for tax credit/refund should be applied against the tax liabilities. There can be no off-setting of taxes against the claims that the taxpayer may have against the government. COMMISSIONER OF INTERNAL REVENUE. Evidently. G. There is a material distinction between a tax and debt. COURT OF APPEALS. J. TaxCases_151 . and THE COURT OF TAX APPEALS.

: FACTS: Petitioner is a domestic corporation engaged in the manufacture of steel blanks for use by manufacturers of automotive.461.00.00. COMMISSIONER OF INTERNAL REVENUE. electronics in industrial and household appliances. were not utilised in 1996 since due to its income/loss positions for the three quarters of 1996.00.082. Such withheld tax. by the withholding agents.26 and P1. 1996 it declared a net taxable income of P9.328. the only limitation as regards the claiming of tax refunds is that such must be made within two years. ISSUE: Whether or not a tax refund may be claimed even beyond the taxable year following that in which the tax credit arises? HELD: YES.R. that it is entitled to a refund.108. tax credits of P6. the court further said that Judicial notice could have been taken by the CA and the CTA of the 1996 final adjustment return made by petitioner in another case then pending with the CTA. Tax refunds being in the nature of tax exemptions such must be construed strictissimi juris against the taxpayer-claimant. TaxCases_152 .Is Automatic Application of Excess Tax Credits Allowed? CALAMBA STEEL CENTER. as regards evidence.747. respectively.597. 151857 April 28.00and tax due in the amount of P3. As regards the procedure taken by counsel of Calamba Steel in submitting the final adjustment returns (1996) after trial has been conducted.246. electrical. Respondents.311. vs. as per petitioners 1997 return. In its amended Corporate Annual Income Tax Return on June 4. INC. and remitted in its behalf. The refund was purportedly due to income taxes withheld from it. Petitioners. No. It is still incumbent upon the claimant to prove that it is entitled to such refund. Under the NIRC. J. The claim for refund made by Calamba Steel was well within the 2 year period. G. It is the contention of the petitioner in this case filed in 1997.471.559. It also reported quarterly payments for the second and third quarters of 1995 in the amounts of P2. the Court said that although the ordinary rules of procedure from upon this jurisprudence mandates that the proceedings before the tax court's shall not be governed by strictly technical rules of evidence. 2005 PANGANIBAN. (formerly JS STEEL CORPORATION). Moreover.

Due to BIR‘s inaction.‖ Section 76 of the present Tax Code formulates an irrevocability rule which stresses and fortifies the nature of the remedies or options as alternative. Petitioner. it indicated that creditable withholding taxes will also be carried over to next year‘s tax as credit.. ISSUE: Whether or not the exercise of the option to carry-over excess income tax credits bars a taxpayer from claiming the excess tax credits for refund? HELD: YES. It also provides that the excess tax credits ―may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years until fully utilized. the option to carry over becomes irrevocable.: FACTS: This is a case where a second motion for reconsideration was filed by petitioner. However. the amount will not be forfeited in favor of the government but will remain in the taxpayer‘s account. COMMISSIONER OF INTERNAL REVENUE. Systra likewise questioned the substantive aspect of CTA decisions. 176290 September 21. Once it was made for a particular taxable period. Petitioner had creditable taxes which they opted to carry over to the succeeding year 2001. not cumulative.‖ TaxCases_153 . It was in the year 2000 that petitioner derived excess tax credits and exercised the irrevocable option to carry them over as tax credits for the next taxable year. Respondent. petitioner instituted a claim for refund of its unutilized creditable withholding taxes. vs. CTA partially granted the petition but denied claim for refund because petitioner was precluded from claiming a refund. on August 9. INC. J. No. Nevertheless. petitioner filed a petition for review. 2001. G. The excess credits will only be applied ―against income tax due for the taxable quarters of the succeeding taxable years.SYSTRA PHILIPPINES. In 2001 ITR. 2007 CORONA.R.

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. Petitioner. No. However. BPI filed with the CIR an administrative claim for refund.: FACTS: In filing its Corporate Income Tax Return for the Calendar Year 2000. Respondent. BPI carried over the excess tax credits from the previous years of 1997. its option shall be irrevocable for that taxable period and no application for tax refund or issuance of a tax credit shall be allowed for the same. The CTA relied on the irrevocability rule laid down in Section 76 of the NIRC of 1997. vs. ISSUES: Whether or not the period is captured by the irrevocability rule? Whether or not the taxpayer‘s failure to mark the option chosen is fatal to whatever claim? HELD: YES. the irrevocability of the option of BPI to carry over its excess tax credit from 1998 also expired. whom denied the claim. given that BPI suffered a net loss in 1999. Hence. when the 1999 taxable period expired.‖ The phrase ―for that taxable period‖ merely identifies the excess income tax. 1998 and 1999. 2009 CHICO-NAZARIO.R. 178490 July 7. J. subject of the option. the irrevocability rule would still not bar BPI from seeking a tax refund of its 1998 excess tax credit despite previously opting to carry over the same. The Court of Appeals reversed the CTA decision stating that there was no actual carrying over of the excess tax credit. The Court of Appeals further stated that even if Section 76 was to be construed strictly and literally. The option of BPI to carry over its 1998 excess income tax credit is irrevocable. BPI filed a Petition for Review before the CTA. 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. against which the 1998 excess tax credit could have been applied. BPI failed to indicate in its ITR its choice of whether to carry over its excess tax credits or to claim the refund of or issuance of a tax credit certificate. and was not liable for any income tax for said taxable period. by referring to the taxable period when it was acquired by the taxpayer. TaxCases_154 . was acquired by the said bank during the taxable year 1998. such that. In the present case. which BPI opted to carry over. The CIR failed to act on the claim for tax refund of BPI. G. which states that once the taxpayer opts to carry over and apply its excess income tax to succeeding taxable years. it cannot later on opt to apply for a refund of the very same 1998 excess income tax credit.COMMISSIONER OF INTERNAL REVENUE. BANK OF THE PHILIPPINE ISLANDS. the excess income tax credit. The phrase ―for that taxable period‖ qualified the irrevocability of the option of BIR to carry over its 1998 excess tax credit to only the 1999 taxable period.

Inc. but when indubitable circumstances clearly show that another choice – a tax refund – is in order. CIR G. however exalted. Failure to signify one‘s intention in the FAR does not mean outright barring of a valid request for a refund. should not be misused by the government to keep money not belonging to it and thereby enrich itself at the expense of its law-abiding citizens. it should be respected.R. When circumstances show that a choice has been made by the taxpayer to carry over the excess income tax as credit. as to which option the taxpayer chose is generally a matter of evidence. 162004. it should be granted. 14 December 2005). The reason for requiring that a choice be made in the FAR upon its filing is to ease tax administration (Philam Asset Management. No. Therefore. 156637 and No.NO.‖ TaxCases_155 . should one still choose this option later on. ―Technicalities and legalisms. v.

Respondent. On April 3. ISSUE: Whether or not petitioner is entitled to a refund of its creditable taxes? HELD: NO.: FACTS: Petitioner acts as investment manager of PFI &PBFI. 2005 PANGANIBAN. Nos. J. INC. TaxCases_156 . Petitioner filed for refund from BIR but was unanswered .PHILAM ASSET MANAGEMENT. 1998. COMMISSIONER OF INTERNAL REVENUE. The Tax Code likewise allows the refund of taxes to taxpayer that claims it in writing within 2 years after payment of the taxes. It provides management &technical services and thus respectively paid for its services.. PFI & PBFI withhold the amount of equivalent to 5% creditable tax regulation. CTA denied the petition for review. vs. provided that a taxpayer properly applies for the refund. and thereby enriched itself at the expense of its law-abiding citizens. Any tax income that is paid in excess of its amount due to the government may be refunded. Petitioner. Failure to signify one‘s intention in Final Assessment Return (FAR) does not mean outright barring of a valid request for a refund. Requiring that the ITR on the FAR of the succeeding year be presented to the BIR in requesting a tax refund has no basis in law and jurisprudence. CA held that to request for either a refund or credit of income tax paid. One cannot get a tax refund and a tax credit at the same time for the same excess to income taxes paid. filed ITR with a net loss thus incurred withholding tax. G. a corporation must signify its intention by marking the corresponding box on its annual corporate adjustment return.R. 156637/162004 December 14. Technicalities and legalism should not be misused by the government to keep money not belonging to it.

petitioner filed its Annual Income Tax Return (ITR) on 5 April 2002.00.R.959.00. prohibits a claim for refund in the subsequent taxable years for the unused portion of the excess tax credits carried over? HELD: YES.00.066. On 9 April 2002. Petitioner declared a minimum corporate income tax (MCIT) due in the amount of P1. Section 76 of the NIRC of 1997 clearly states: "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.477.144. petitioner filed with the Revenue District Office No. 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. G. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid. a request for refund in the amount of P18." TaxCases_157 . such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefore.ASIAWORLD PROPERTIES PHILIPPINE CORPORATION. ISSUE: Whether the exercise of the option to carry-over the excess income tax credit. but with a refundable income tax payment in the sum of P6. Petitioner also indicated in its 2001 ITR its option to carry-over as tax credit next year/quarter the overpayment of P6. 2010 CARPIO. J. BIR Region VIII. Petitioner. vs.468.144.061. COMMISSIONER OF INTERNAL REVENUE. 171766 July 29. the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years.00. 52.222.473. No. The confusion lies in the interpretation of the last sentence of the provision which imposes the irrevocability rule.959.: FACTS: For the calendar year ending 31 December 2001. petitioner filed a Petition for Review with the Court of Tax Appeals to toll the running of the two-year prescriptive period provided under Section 229 of the NIRC of 1997. Petitioner claimed that it is entitled to the refund of its unapplied creditable withholding taxes.477.00. On 12 April 2002. allegedly representing partial excess creditable tax withheld for the year 2001. which shall be applied against the tax due in the succeeding taxable years. such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefore. In its 2001 ITR. before the BIR Revenue District Office could act on petitioner‘s claim for refund. Respondent.00 representing Prior Year‘s Excess Credits was net of year 1999 excess creditable withholding tax to be refunded in the amount of P18. petitioner stated that the amount of P7.473.

thus.Section 76 expressly states that "the option shall be considered irrevocable for that taxable period" – referring to the period comprising the "succeeding taxable years. In this case." In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid. but should apply to the succeeding taxable years until the whole amount of the 1999 creditable withholding tax would be fully utilized. The unutilized excess tax credits will remain in the taxpayer‘s account and will be carried over and applied against the taxpayer‘s income tax liabilities in the succeeding taxable years until fully utilized. petitioner opted to carry-over its 1999 excess income tax as tax credit for the succeeding taxable years." Section 76 further states that "no application for cash refund or issuance of a tax credit certificate shall be allowed therefore" – referring to "that taxable period" comprising the "succeeding taxable years. As correctly held by the Court of Appeals. such option is irrevocable for the whole amount of the excess income tax. TaxCases_158 . prohibiting the taxpayer from applying for a refund for that same excess income tax in the next succeeding taxable years. Thus. the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year. once the taxpayer opts to carry-over the excess income tax against the taxes due for the succeeding taxable years. such option to carry-over is not limited to the following taxable year 2000.

979. THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY.508. declaring a net loss of P165. Under this old provision. The clear intent in the amendment under Section 76 is to make the option. Commissioner of Internal Revenue. which the CTA denied in its Resolution dated 2 October 2002.: FACTS: The respondent filed with the BIR its Annual Income Tax Return (ITR) for the taxable year 1997. vs. Respondent.35. once exercised. J.R. On 16 December 1999. respondent filed with the BIR-Appellate Division a claim for refund in the amount ofP9.701. which allegedly represented a portion of its overpaid and unapplied creditable taxes for the calendar year 1997. In contrast.35. The amount of P9. ISSUE: Whether or not respondent is entitled to a refund of its excess income tax credit in the taxable year 1997 even if it had already opted to carry-over the excess income tax credit against the tax due in the succeeding taxable years? HELD: NO. In its Decision dated 4 June 2002.326. G.35 allegedly represents the creditable taxes withheld and remitted to the BIR by respondent‘s withholding agents from rentals and real property and dividend income during the calendar year 1997. representing a portion of its accumulated creditable withholding tax.979. the application of the option to carry-over the excess creditable tax is not limited only to the immediately following taxable year but extends to the next succeeding taxable years. the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable year.326. In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid. the CTA denied respondent‘s claim for refund for lack of merit due to respondent‘s failure to present its 1998 ITR. the option to carry-over the excess or overpaid income tax for a given taxable year is limited to the immediately succeeding taxable year only. The issue presented in this case is identical to the issue already resolved by the Court in the recent case of Asiaworld Properties Philippine Corporation v. When the BIR-Appellate Division failed to act on respondent‘s claim.979. under Section 76 of the NIRC of 1997.COMMISSIONER OF INTERNAL REVENUE. Respondent sought a refund in the amount of P9. 2010 CARPIO." TaxCases_159 . respondent filed with the CTA a petition for review on 23 December 1999. Petitioner. 175124 September 29. Respondent attached its 1998 ITR to its Memorandum dated 7 January 2002. Respondent filed a motion for reconsideration.326. irrevocable for the "succeeding taxable years. No.

Inc.COMMISSIONER OF INTERNAL REVENUE.188. to credit such to its tax liability in 1998? HELD: NO. namely. Chapter XII of the 1997 NIRC. Section 69 of the 1977 NIRC is a tax administration measure crafted to ease tax collection.056.581. the law in effect at the time respondent made known to the BIR its preference to carry over and apply its overpayment in 1997 to its tax liability in 1998. INC. On 14 April 2000. in case of overpayment. TaxCases_160 . respondent chose the latter. 2010 CARPIO. the provision aims to properly manage claims for refund or tax credit. McGEORGE FOOD INDUSTRIES. at any rate.736. indicating a tax liability of P5. Instead of applying to this amount its unused tax credit carried over from 1997 (P4. Petitioner CIR opposed the suit at the CTA. but failed. and Section 77 on the place and time of filing and payment of quarterly corporate income tax – they are all tools designed to promote rational and efficient functioning of the tax system. Administratively speaking. Section 75 on the declaration of quarterly corporate income tax.736. Exercising its option to either seek a refund of this amount or carry it over to the succeeding year as tax credit. alleging that the action preempted his own resolution of respondent‘s parallel claim for refund. resulting in a net overpayment of P4.: FACTS: On 15 April 1998. Section 74 on the declaration of income tax by individuals. Petitioner.736. as it was supposed to do. Respondent. more than three months after Republic Act No.130.877.. respondent‘s overpayment should be applied to its tax liability for the taxable years following 1998 until it is fully credited. Respondent is not entitled to a refund under Section 76 of the 1997 NIRC. and.188. filed with the BIR its final adjustment income tax return for the calendar year ending 31 December 1997. No. Section 76 serves the same purpose as its companion provisions in Title II.188). respondent simultaneously filed with the BIR and the CTA a claim for refund of its overpayment in 1997 of P4. ISSUE: Whether or not respondent is entitled to a tax refund for overpayment in 1997 after it opted.799. respondent merely deducted from its tax liability the taxes withheld at source for 1998 (P217.176 for the first three quarters. 8424 (1997 NIRC) took effect on 1 January 1998. By requiring corporate taxpayers to indicate in their final adjustment return whether. indicating in its 1997 final return that it wished the amount "to be applied as credit to next year.179) and paid the balance of P5." On 15 April 1999. respondent has to prove its entitlement to refund. they wish to have the excess amount refunded or carried-over and applied to their future tax liability. respondent filed its final adjustment return for the calendar year ending 31 December 1998. J. vs. In lieu of refund.393. respondent McGeorge Food Industries. The return indicated a tax liability of P5. G. 174157 October 20.988 against a total payment of P10.R.

having gone into effect a few months earlier on 1 January 1998. In two other cases where the applicability of Section 76 of the 1997 NIRC was also squarely raised. the taxpayer‘s decision to carry-over and apply its current overpayment to future tax liability continues until the overpayment has been fully applied. In the present case. Thus treated. the issue of the applicability of the 1997 NIRC was never raised in that case. Chapter XII should be applied following the general rule on the prospective application of laws such that they operate to govern the conduct of corporate taxpayers the moment the 1997 NIRC took effect on 1 January 1998. it mandates that the taxpayer‘s exercise of its option to either seek refund or crediting is irrevocable. claims for refund without prejudice to the application of the overpayments to the taxpayers‘ liability in the succeeding tax cycles. Section 76 and its companion provisions in Title II. the 1997 NIRC was already in force. However. Section 76 is controlling. the deadline under Section 77 (B) of the 1997 NIRC (formerly Section 70(b) of the 1977 NIRC). as here. no matter how many tax cycles it takes. TaxCases_161 . Section 69 of the 1977 NIRC: first. There is no quarrel that at the time respondent filed its final adjustment return for 1997 on 15 April 1998. Accordingly. relating to the question on the intrinsic taxability of corporate transactions. Chapter IV (Tax on Corporations) and Chapter VII (Allowable Deductions). We are not unaware of our ruling in another case allowing refund for excess tax payment in 1997 despite the taxpayer‘s selection of the carry-over and credit option. the Court applied the irrevocability of the option clause under Section 76 to deny. Section 76 of the 1997 NIRC wrought two changes to its predecessor.These provisions should be distinguished from the provisions in Title II. following Section 69 of the 1977 NIRC. the applicability of Section 76 of the 1997 NIRC over Section 69 of the 1977 NIRC was squarely raised as the core issue. among others. and second.

that since the tax credit in this case was acquired in 1999.-x MIRANT (PHILIPPINES) OPERATIONS CORPORATION (formerly: Southern Energy Asia-Pacific Operations (Phils.). vs.R... 176165 MENDOZA. The Court ruled that this interpretation effectively renders nugatory the irrevocability rule. leaving Respondent free to again take another option as regards its 1999 excess income tax credit. Petitioner... It is a mistake to understand the phrase "for that taxable period" as a prescriptive period for the irrevocability rule – i...COMMISSIONER OF INTERNAL REVENUE. vs. Mirant then filed a claim for refund of its excess creditable income tax for 1999.). ISSUE: Whether or not Mirant can claim for refund its excess credits from 1999? HELD: NO.. Inc... and Respondent opted to carry it over to 2000. x .e. Respondent.. G. 171742 June 15..: FACTS: Mirant filed its final adjusted Annual Income Tax Return for fiscal year ending 1999 declaring a net loss. TaxCases_162 . No.. then the irrevocability of the option to carry over expired by the end of 2000. regardless of whether it was able to actually apply the said amount to a tax liability. No. Respondent. Petitioner. COMMISSIONER OF INTERNAL REVENUE.. Mirant‘s choice to carry over its 1999 excess income tax credit to succeeding taxable years is irrevocable... 2011 G.. CORPORATION. This excess tax credit was unutilized in 2000 as Mirant still reported a net loss. It then amended the said return this time reflecting an increased net loss and showing that it opted to carry over as tax credit its overpayment to the succeeding taxable year...... MIRANT (PHILIPPINES) OPERATIONS..R. J.

000.R. Indeed. Consequently. the respondent submitted its ITR for taxable year 1998. The second option works by applying the refundable amount. Respondent. against the estimated quarterly income tax liabilities of the succeeding taxable year. the respondent. vs. On April 12. the question of whether or not it actually gets to apply said tax credit is irrelevant.00 from its professional services rendered to UEM-MARA Philippines Corporation (UMPC).043.000. J. On April 13.037. in which it declared a net loss ofP2.: FACTS: In 1997.000. it could no longer make another one.000. in Philippine Bank of Communications v. as shown on the FAR of a given taxable year.200. These two options under Section 76 are alternative in nature.000. Due to its net-loss position. the petitioner did not act on the claim. 1999. 160949 April 4.. 2000. ISSUE: Whether or not petitioner may claim for refund of the unutilized creditable withholding tax? HELD: NO. the Court ruled that a corporation must signify its intention whether to request a tax refund or claim a tax credit . Any tax on income that is paid in excess of the amount due the government may be refunded. G.00.200. TaxCases_163 . a Philippine corporation.00 for taxable year 1997 to be claimed as tax credit in taxable year 1998. INC. One cannot get a tax refund and a tax credit at the same time for the same excess income taxes paid.00. However.00 as tax credit. earned an income of P24. the respondent filed with the petitioner a written claim for the refund of the P1. PL MANAGEMENT INTERNATIONAL PHILIPPINES.200. 1998. No. the respondent reported a net loss of P983. the controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option.772. 2011 BERSAMIN. Hence. Commissioner of Internal Revenue. The first option is relatively simple.200. this requirement is only for the purpose of facilitating tax collection. the respondent was unable to claim the P1.00 unutilized creditable withholding tax for taxable year 1997. from which income UMPC withheldP1. and once it had already done so. In its 1997 income tax return (ITR) filed on April 13.COMMISSIONER OF INTERNAL REVENUE Petitioner.000.by marking the corresponding option box provided in the FAR. While a taxpayer is required to mark its choice in the form provided by the BIR. provided that a taxpayer properly applies for the refund. but expressly signified that it had a creditable withholding tax of P1. after the taxpayer opts to carry-over its excess tax credit to the following taxable period. The choice of one precludes the other.00 as the respondent's withholding agent.

The option of BPI to carry over its 1998 excess income tax credit is irrevocable. the respondent became barred from claiming the refund. the respondent remained entitled to utilize that amount of P1. TaxCases_164 . which BPI opted to carry over.Section 76 of the NIRC of 1997 is explicit in stating that once the option to carry over has been made. subject of the option. In this regard. 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. In the present case.000.00 to taxable year 1998. the carry-over could no longer be converted into a claim for tax refund because of the irrevocability rule provided in Section 76 of the NIRC of 1997.200." 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.00 as tax credit in succeeding taxable years until fully exhausted. Thereby.000. in view of it irrevocable choice. the excess income tax credit. "no application for tax refund or issuance of a tax credit certificate shall be allowed therefor. by referring to the taxable period when it was acquired by the taxpayer. However. was acquired by the said bank during the taxable year 1998.200. prescription did not bar it from applying the amount as tax credit considering that there was no prescriptive period for the carrying over of the amount as tax credit in subsequent taxable years. Inasmuch as the respondent already opted to carry over its unutilized creditable withholding tax of P1. it cannot later on opt to apply for a refund of the very same 1998 excess income tax credit." The phrase "for that taxable period" merely identifies the excess income tax.

The case was submitted for decision based solely on the pleadings and evidence submitted by herein private respondent Citytrust because the petitioner failed to present evidence due to the failure of Tax Credit/Refund Division of the BIR to transmit the records of the case. CITYTRUST BANKING CORPORATION and COURT OF TAX APPEALS.R. The case was decided and the Tax court ruled in ordering BIR to refund the overpaid tax for the year 1984 and 1985 only. Both parties filed a motion for reconsideration which was denied by the CA and the court affirmed the decision of CTA. as well as the investigation report thereon. 1994 REGALADO. Citytrust filed a petition with the Court of Tax Appeals. 1985. as amended. 106611 July 21. COURT OF APPEALS. 1984. J.00 representing the alleged overpayment of income tax as computed in its final income tax return for the calendar year ending December 31. ISSUE: Whether or not Citytrust is entitled to refund considering that it is being assessed for its tax liability? HELD: NO. Petitioner filed a motion for reconsideration contending that Citytrust has an outstanding tax liability amounting to P56M in 1984.971. Hence this petition.: FACTS: Citytrust filed a claim for refund with BIR in the amount of P19. claiming the refund of its income tax overpayments for the years 1983. No. respondents. It is also worth noting that the Court of Tax Appeals erred in denying petitioner's supplemental motion for reconsideration alleging bringing to said court's attention the existence of the deficiency income and business tax assessment against Citytrust. to the Solicitor General. Herein private respondent cannot be entitled to refund and at the same time be liable for a tax deficiency assessment for the same year. The OSG in their answer contended that the claim of Citytrust from 1983 was not properly documented and that even if they are entitled for such claim the right to claim the same has prescribed with respect to income tax payments prior to August 28.Effect of Existing Tax Liability on a Pending Claim for Refund COMMISSIONER OF INTERNAL REVENUE. G. To interrupt the prescriptive period. 1984 and 1985. To award such refund despite the existence of that deficiency assessment is an absurdity and a polarity in conceptual effects. pursuant to Sections 292 and 295 of the National Internal Revenue Code of 1977. since the petition was filed only on August 28.745. vs. The fact of such deficiency assessment is intimately related to and inextricably intertwined with the right of respondent bank to claim for a tax refund for the same year. The petitioner filed a motion to suspend the proceedings but the same was denied. 1986. TaxCases_165 . petitioner.

What is so distressing. the liberal view we have here taken pro hac vice. that is. Hence. although not yet final. aside from the financial losses to the Government. The Court cannot end this adjudication without observing that what caused the Government to lose its case in the tax court may hopefully be ascribed merely to the ennui or ineptitude of officialdom. TaxCases_166 . by itself and without unquestionable evidence. created a doubt as to and constitutes a challenge against the truth and accuracy of the facts stated in said return which. and impedes or delays the collection of much-needed revenue for governmental operations. 23 This would necessarily require and entail additional efforts and expenses on the part of the Government impose a burden on and a drain of government funds. is the erosion of trust in a vital institution wherein the reputations of so many honest and dedicated workers are besmirched by the acts or omissions of a few. If the deficiency assessment should subsequently be upheld. which may give some degree of assurance that this Court will unhesitatingly react to any bane in the government service. The evidential cul-de-sac in which the Solicitor General found himself once again gives substance to the public perception and suspicion that it is another proverbial tip in the iceberg of venality in a government bureau which is pejoratively rated over the years. the Government will be forced to institute anew a proceeding for the recovery of erroneously refunded taxes which recourse must be filed within the prescriptive period of ten years after discovery of the falsity. and not to syndicated intent or corruption. with a replication of such response being likewise expected by the people from the executive authorities. The deficiency assessment. the facts stated therein are true and correct. cannot be the basis for the grant of the refund. to grant the refund without determination of the proper assessment and the tax due would inevitably result in multiplicity of proceedings or suits.The grant of a refund is founded on the assumption that the tax return is valid. fraud or omission in the false or fraudulent return involved. Moreover.

specially in cases involving taxes.71 for 1984. TaxCases_167 . the case was remanded to the CTA for further reception of evidence. Again.509. These assessments are contained in a Delinquency Verification Slip. Hence. It alleged that there are still deficiency income. dated June 5. respondent‘s position violates the order of the Supreme Court in directing the CTA to conduct further proceedings for the reception of petitioner‘s evidence. Although the Supreme Court did not specifically mention what kind of petitioner‘s evidence should be entertained.14 on several grounds. On petition for review on certiorari to this Court. thus. CITYTRUST BANKING CORPORATION. Respondent. the CIR alleged an additional ground: that Citytrust had outstanding deficiency income and business tax liabilities of P4.314. The CTA sets aside respondent‘s objection and grants to petitioner the refund of the amount of P13. 2006 CORONA.314.COMMISSIONER OF INTERNAL REVENUE. No. for respondent. business and withholding taxes proposed against petitioner for 1985. 150812 August 22. ISSUE: Whether or not Citytrust is entitled to refund? HELD: YES. G. 1991. vs. the claim for refund was not in order. The tax court denied both motions. we ruled that there was an apparent contradiction between the claim for refund and the deficiency assessments against Citytrust. respondent insisted that petitioner is not entitled to any tax refund.293. J. The case was elevated to the CA but the appellate court affirmed the CTA‘s ruling. First. evidence related to said assessments should not be allowed as this will lead to endless litigation. Petitioner. The assessments of respondent were never raised on appeal to the higher courts. the BIR interposed objection to the grant of such refund.506.14 representing Citytrust‘s overpaid income taxes for 1984 and 1985. and that the government could not be held in estoppel due to the negligence of its officials or employees.506. FACTS: The CIR assails the decision of the CA and its resolution upholding the decision of the CTA in CTA Case No. The CIR filed a motion for reconsideration (MR) on the ground that the Certificate of Tax Withheld was inconclusive evidence of payment and remittance of tax to the BIR. however. For that reason. and the disposition of the present case. In its supplemental MR. 1990. the CTA ordered the CIR to grant Citytrust a refund in the amount of P13.R. On May 28. 4099 which ordered a refund to respondent Citytrust as its alleged overpaid income taxes for the years 1984 and 1985. Due to these deficiency assessments. the CTAis of the opinion that the evidence should pertain only to the 1984 assessments which were the only assessments raised as a defense on appeal to the Court of Appeals and the Supreme Court.

unless there has been an abuse or improvident exercise of authority. by the very nature of its function. the CTA cannot hear in the same case an assessment dispute even if the parties involved are the same parties. With due respect to the Supreme Court‘s decision.Second. its findings are not ordinarily subject to review specially where there is no showing of grave error or abuse on its part. But the CIR considered this payment as an admission of a tax liability which was inconsistent with Citytrust‘s claim for refund. There is indeed a contradiction between a claim for refund and the assessment of deficiency tax. Instead. to present the appropriate evidence to oppose respondent‘s claim. The CA pointed out that the case was remanded to the CTA for the reception of additional evidence precisely to resolve the apparent contradiction. the CTA has no jurisdiction to try an assessment case which was never appealed to it. Citytrust paid the assessed deficiencies to remove all administrative impediments to its claim for refund. Because of the CTA‘s recognized expertise in taxation. 4099. In the earlier case. it is the CTA‘s firm stand that in hearing a refund case. the order of this Court addressed the apparent failure of the Bureau of Internal Revenue. is dedicated exclusively to the consideration of tax problems and has necessarily developed an expertise on the subject. This Court will not set aside lightly the conclusion reached by the Court of Tax Appeals which. Records show that this Court made no previous direct ruling on Citytrust‘s alleged failure to substantiate its claim for refund. TaxCases_168 . The CTA complied with the Court‘s order to conduct further proceedings for the reception of the CIR‘s evidence in CTA Case No. by reason of the mistake or negligence of its officials and employees. In the course thereof. we directed the joint resolution of the issues of tax deficiency assessment and refund due to its particular circumstances.

the BIR alleged that PSPC is not a qualified transferee of the TCCs it acquired from other BOI-registered companies. On the issue of the fraudulent procurement of the TCCs. PSPC acquired for value various Center-issued TCCs which were correspondingly transferred to it by other BOI-registered companies through Center-approved Deeds of Assignments.Nature of a Tax Credit Certificate PILIPINAS SHELL PETROLEUM CORPORATION. and the corresponding Authorities to Accept Payment for Excise Taxes (ATAPETs). G. when PSPC signified its intent to use the TCCs to pay part of its excise tax liabilities. TaxCases_169 . These alleged excise tax deficiencies covered by the collection letter were already paid by PSPC with TCCs acquired through. inclusive of delinquency surcharges and interest.705. and the BIR likewise accepted as payments the TCCs by issuing its own TDM covering said TCCs.. with the latter also issuing the corresponding ATAPETs. vs. the subject TCCs have been duly utilized by transferee PSPC which is a transferee in good faith and for value. and issued and duly authorized by the Center. No. PSPC paid part of its excise tax liabilities with Tax Credit Certificates (TCCs) which it acquired through the Department of Finance One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center from other Board of Investment-registered companies.R. COMMISSIONER OF INTERNAL REVENUE.06 for the taxable years 1992 and 1994 to 1997. Subsequently. Through the Center. We see no need to rule on this issue in view of our finding that the real issue in this petition does not dwell on the validity of the TCCs procured by the transferor from the Center but on whether fraud or breach of law attended the transfer of said TCCs by the transferor to the transferee. Petitioner. and duly covered by TDMs of both the Center and BIR.008. it has been asseverated that fraud was committed by the TCC claimants who were the transferors of the subject TCCs. However. As basis for the collection letter. The subject TCCs after being fully utilized in the settlement of PSPC‘s excise tax liabilities have been canceled. and thus cannot be canceled anymore. JR. For being immediately effective and valid when issued. 172598 December 21. said payments were duly approved by the Center through the issuance of Tax Debit Memoranda (TDM). the BIR sent a collection letter to PSPC for alleged deficiency excise tax liabilities of PhP 1. 2007 VELASCO. on April 22. Respondent. J.: FACTS: From 1988 to 1997. ISSUE: Whether or not the Court of Tax Appeals gravely erred in issuing the questioned decision dated 28 April 2006 upholding the cancellation of the Tax Credit Certificates utilized by petitioner PSPC in paying its excise tax liabilities? HELD: YES. 1998.028.

we agree with respondent that the Center has concurrent authority with the BIR and BOC to cancel the TCCs it issued. TaxCases_170 . A scrutiny of said executive issuances clearly shows that the Center was granted the authority to issue TCCs pursuant to its mandate under AO 266. (AO) 266 in relation to EO 226. But even assuming that fraud attended the procurement of the subject TCCs. nor is it shown that PSPC committed fraud in the transfer and utilization of the subject TCCs. irrelevant and immaterial to the instant petition. making these hearsay evidence. AO 266 however is silent on whether or not the Center has authority to cancel a TCC it itself issued. The Center was created under Administrative Order No. it cannot prejudice PSPC‘s rights as earlier explained since PSPC has not been shown or proven to have participated in the perpetration of the fraudulent acts. On the issue of the authority to cancel duly issued TCCs. On the other hand. We leave the matter to the anti-graft court especially considering the failure of the affiants to the affidavits to appear. it is undisputed that the BIR under the NIRC and related statutes has the authority to both issue and cancel TCCs it has issued and even those issued by the Center. Moreover.The finding of the CTA En Banc that there was fraud in the procurement of the subject TCCs is. there are pending criminal cases arising from the alleged fraud. therefore. either upon full utilization in the settlement of internal revenue tax liabilities or upon conversion into a tax refund of unutilized TCCs in specific cases under the conditions provided.

petitioner. Finally. ajudicial claim was simultaneously filed with the CTA.89M). on March 27. Marubeni filed a written claim for a refund/TCC for its unutilized input VAT credits. 2002. CTA-EB Case No. MPC‘s administrative claim had not been acted upon by the CIR. ISSUE: Whether or not Marubeni‘s administrative for its unutilized input VAT were filed within the 2-year prescriptive period? HELD: YES. 2000. As of date of CTA decision. COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS. On April 25.). Filing of Marubeni‘s claim for unutilized input VAT refund/credit before the CTA was premature since there was no CIR decision for the CTA to review. Heeding the mandatory period of 120 and 30 days is crucial in filing an appeal with the CTA. Further. nor was there inaction on the CIR‘s part after the lapse of the 120-day period. 2000.Period for Using Tax Credit Certificate MARUBENI CORPORATION (formerly Marubeni — Iida. 2002. 2011 FACTS: On April 25. on April 25. Co. it filed an amended claim for refund/TCC with the BIR (VAT claim was reduced from P3..91M to P3. And that the 30-day period within which to file an appeal is jurisdictional and mandatory. 31. 2002. Its administrative claim was filed on time but the judicial claim was premature. TaxCases_171 . vs. respondents. failure to comply will bar an appeal. Marubeni filed its Quarterly VAT Return for the 1st qtr ending Mar. Thereafter. the case for its judicial claim was dismissed for lack of jurisdiction. Ltd. 557 March 23.

1991. Jose San Agustin of 2904 Kakarong St.38 representing such charges within ten (10) days from receipt thereof. interests and compromise penalty imposed on the basic deficiency estate tax of P538. On October 4. the executor requested the Commissioner a reconsideration of the assessment of P976. In his letter/answer. 1992. surcharge and compromise penalty in this case. in his capacity as Executor of the Estate of JOSE SAN AGUSTIN. inasmuch as the decedent‗s widow (did) not personally have sufficient funds. On September 3.. etc.38 under protest on January 25. and naming retired Justice Jose Y.549.040.040. No. petitioner. stating that there is no legal justification for the waiver of the interests. On December 18. G.. and other penalties.509.509.64 as alleged overpaid surcharge. He left a holographic will executed on April 21. requesting that the surcharge. VDA. and that the estate tax due per return of P1. and requiring full payment of P438. 138485 September 10.676. COMMISSIONER OF INTERNAL REVENUE. dated October 31. DE SAN AGUSTIN.00 was filed on behalf of the estate. signed by the Commissioner. 1980 giving all his estate to his widow. San Agustin as sole heir. 1991.50 as soon as the Regional Trial Court approves withdrawal thereof. dated September 21. the Commissioner issued an Assessment Notice reiterating the demand in the pre-assessment notice and requesting payment on or before thirty (30) days upon receipt thereof. BIR granted the heirs an extension of only six (6) months. FELISA L.38 be waived.509. respondent. ISSUES: Whether or not respondent Tax Court was correct in ordering the refund to the Estate of Jose San Agustin the reduced amount of P423.676.432. the executor filed a letter with the petitioner Commissioner expressing readiness to pay the basic deficiency estate tax ofP538. 1993. Makati died on June 27. 1990.577. 1993. considering that the assessed deficiency arose only on account of the difference in zonal valuation used by the Estate and the BIR. subject to the imposition of penalties and interests under Sections 248 and 249 of the National Internal Revenue Code. in substitution of JOSE Y. Feria as Executor thereof.50 through its Receivable Accounts Billing Division. amounting to P438.50 due on the transmission of the said Estate to the sole heir in 1990? TaxCases_172 . an estate tax return reporting an estate tax due of P1. 1990. On October 1. FERIA. as amended. 1990 leaving his wife Dra. In view thereof. with a request for an extension of two years for the payment of the tax. interest. within the ten-day period given in the pre-assessment notice. 2001 VITUG.00 and waiver of the surcharge. Felisa L. and that the payment (would) have to come from the estate.432. The request for reconsideration was not acted upon until January 21. vs. when the executor received a letter.040. but. J.R.Refund and Protest are Mutually Exclusive Remedies DR. dated September 4.: FACTS: Atty.00 was already paid in due time within the extension period. the respondent estate paid the amount of P438. In a letter. 1991. Olympia. the Commissioner accepted payment of the basic deficiency tax in the amount ofP538. 1991. interest.

fees or other charges. 1957. for the Collector (now Commissioner) would cer1ainly disallow the claim for refund in the same way as he disallowed the protest against the assessment. the disputed assessment but must prosecute his appeal under section 306 of the Tax Code. which requires a taxpayer to file a claim for refund of the taxes paid as a condition precedent to his right to appeal. TaxCases_173 . or other matters arising under the National Internal Revenue Code or other law or part of the law administered by the Bureau of Internal Revenue . To hold that the taxpayer has now lost the right to appeal from the ruling on.allows an appeal from a decision of the Collector in cases involving' disputed assessments' as distinguished from cases involving refunds of internal revenue taxes.1125. because from the time petitioner received assessments Nos. questioning the correctness and legality of such assessments. The tax court has aptly acted in taking cognizance of the taxpayer's appeal to it. and that the petitioner paid the disputed assessments under protest before filing his petition for review with the Court a quo. creating the Court of Tax Appeals. penalties imposed in relation thereto. The Court sees no cogent reason to abandon the above dictum and to require a useless formality that can serve the interest of neither the government nor the taxpayer. that the present action involves a disputed assessment.(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments. in providing for appeals from .HELD: YES. only to forestall the sale of his properties that had been placed under distraint by the respondent Collector since December 4. fees or other charges. he already protested and refused to pay the same. refunds of internal revenue taxes. The law should not be interpreted as to result in absurdities. 17EC-00301-55 and 17-AC-600107-56 disallowing certain deductions claimed by him in his income tax returns for the years 1955 and 1956. would in effect require of him to go through a useless and needless ceremony that would only delay the disposition of the case. Section 7 of Republic Act No.

The notice of assessment for respondent's tax deficiency was issued by petitioner on July 18. this is of no moment and does not detract from the fact that the assessment had long become demandable. G. demandable. on January 12. BIR Region 4. the BIR issued to respondent Salud V. respondent made her request for reconsideration thereof only on November 3. 1986.68 covering the fiscal year 1981-1982. NIRC) REPUBLIC OF THE PHILIPPINES. without stating when she received the notice of tax assessment. SALUD V. Pampanga to collect the tax deficiency. In all likelihood. her request for reconsideration was nonetheless filed late since she made it more than 30 days thereafter.: On July 18. No. Hence. Even assuming that she first learned of the deficiency assessment on this date. TaxCases_174 . 1999 MENDOZA. is without prejudice to the disposition of the properties covered by the warrants of distraint and levy which petitioner served on respondent. However. she must have been referring to the distraint and levy of her properties by petitioner's agents which took place on January 12. The complaint was signed by Norberto Salud. respondent. Sec. as such would be a mere continuation of the summary remedy it had timely begun. her request for reconsideration did not suspend the running of the prescriptive period provided under §223(c). More than three years later. 1992. On January 1.Period within which the Government could Collect (Sections 203 and 222. 1997. served warrants of distraint and levy to collect the tax deficiency. represented by the Commissioner of the Bureau of Internal Revenue (BIR). Chief of the Legal Division. and verified by Amancio Saga. otherwise the assessment becomes final. Although the Commissioner acted on her request by eventually denying it on August 11. 130430 FACTS: December 13. petitioner. ISSUE: Whether or not the BIR may still collect the deficiency tax assessment? HELD: YES. not having contested the assessment. On the other hand. J. for reasons not known. 229 of the Code mandates that a request for reconsideration must be made within 30 days from the taxpayer's receipt of the tax deficiency assessment. The court held however. 1992. or on November 3. petitioner. 1994. the Bureau's Regional Director in Pampanga. it filed a case with the Regional Trial Court.R. denied the request. 1994. 1986. respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. HIZON. it did not proceed to dispose of the attached properties.359. vs. in a letter dated August 11. therefore. The BIR. She explained that she was constrained to ask for a reconsideration in order to avoid the harassment of BIR collectors.113. Respondent. Hizon a deficiency income tax assessment of P1. unappealable and. San Fernando. 1989. Branch 44. 1989. Respondent moved to dismiss the case on the ground that the action had already prescribed.

053. N.R. 1980 letter-protest that "the amount of Mellon Bank's erroneous remittance which you were able to dispose. the Javier filed his Income Tax Return for the taxable year 1977 showing a gross income of P53. and converted to their own personal use and benefit the amount of US$999.38 and a net income of P48. Javier. alleging that they misappropriated. N. That on or about November 5. Unfortunately. his wife and other defendants. That on March 15.000. respondents. is definitely taxable.: FACTS: That on or about June 3." That on December 15. JAVIER. vs." As ruled by respondent Court of Tax Appeals.00 only.973. JR. Dolores Ventosa. filed a complaint with the Court of First Instance of Rizal. the wife of the Melchor Javier.00 was a clerical error and should have been US$1. 1981 stating in reply to his December 15. the City Fiscal of Pasay City filed an Information with the then Circuit Criminal Court charging Javier and his wife with the crime of estafa.A. the Javier wrote the Bureau of Internal Revenue that he was paying the deficiency income assessment for the year 1976 but denying that he had any undeclared income for the year 1977. misapplied. claiming that its remittance of US$1.000. That on November 11. ISSUE: Whether or not the BIR may collect fraud penalty? HELD: NO. 1978.053. petitioner.00 be returned on the ground that the defendants are trustees of an implied trust for the benefit of Mellon Bank. Mellon Bank. Javier may be guilty of swindling charges. J. through some banks in the United States. TaxCases_175 . Victoria L. 1977. No. but the records lack a clear showing of fraud committed because he did not conceal the fact that he had received an amount of money although it was a "subject of litigation.00 which they received under an implied trust for the benefit of Mellon Bank and as a result of the mistake in the remittance by the latter. 1991 SARMIENTO. MELCHOR J.88 and stating in the footnote of the return that "Taxpayer was recipient of some money received from abroad which he presumed to be a gift but turned out to be an error and is now subject of litigation. against the Javier. perhaps even for greed by spending most of the money he received. the imposition of the fraud penalty in this case is not justified by the extant facts.000. 1977." The Commissioner also imposed a 50% fraud penalty against Javier. the 50% surcharge imposed as fraud penalty by the petitioner against the private respondent in the deficiency assessment should be deleted. among which is Mellon Bank. 1980.000. 1977. received from the Prudential Bank and Trust Company in Pasay City the amount of US$999. 1981. and praying that the excess amount of US$999. That on or about June 29.000. 78953 July 31. The petitioner's zealousness to collect taxes from the unearned windfall to Javier is highly commendable. and THE COURT OF TAX APPEALS.70 remitted by her sister. G.COMMISSIONER OF INTERNAL REVENUE. Mrs. the Javier received from Acting Commissioner of Internal Revenue Romulo Villa a letter dated October 8.A.

private respondent Savellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and/or yields from the money placements of PNOC with the said bank.33. THE COMMISSIONER OF INTERNAL REVENUE and TIRSO SAVELLANO. J.133.D. THE HON. 109976 April 26. representing 15% of the P93. vs. COURT OF APPEALS. The BIR received a total tax payment on the interest earnings and/or yields from PNOC's money placements with PNB in the amount of P93.D.: FACTS: The Petitions originated from a sworn statement submitted by private respondent Tirso B. 2005 x--------------------x PHILIPPINE NATIONAL BANK. 2005 CHICO-NAZARIO. withdrew all tax exemptions of government-owned and controlled corporations. On 07 January 1988.321. in accordance with the provisions of E. 44.89. 44. was paid the informer's reward in the total amount of P14. that private respondent Savellano was already fully paid the informer's reward equivalent to 15% of the amount of tax actually collected by the BIR pursuant to its compromise agreement with PNOC. Respondents. Through his sworn statement.R.129. COURT OF TAX APPEALS. On 08 October 1986. This time. On the same date. No. 301.955. BIR Commissioner Tan replied through a letter. No. as withholding agent.O. 1931. in the total amount of P376. private respondent Savellano.12. for the payment of the final tax on the interest earnings and/or yields from PNOC's money placements with the bank.PHILIPPINE NATIONAL OIL COMPANY. THE HON.R. Savellano to the BIR on 24 June 1986. SAVELLANO and COMMISSIONER OF INTERNAL REVENUE. 1931. the BIR also mailed a letter to PNOC informing it of the demand letter sent to PNB. however. BIR Commissioner Tan further explained that the compromise was in accordance with the provisions of E. in violation of P. No. 39-86. No. TIRSO B. Then BIR Commissioner Bienvenido A. PNOC made an offer to the BIR to settle its tax liability. Petitioner. wrote the BIR to demand payment of the balance of his informer's reward. RMO No. Private respondent Savellano. ISSUE: Whether or not the period to collect has prescribed? TaxCases_176 .955. P. Petitioner. He received the last installment on 01 December 1987.003. On 09 June 1987. the BIR sent a demand letter to PNB. 112800 April 26. G.479. through four installments. which took effect on 11 June 1984.29 basic tax. G. No. COURT OF APPEALS.89. dated 22 June 1987. dated 08 March 1988. Tan. accepted the compromise. No.12 tax collected by the BIR from PNOC and PNB.343.O. in a letter. 4-87. vs. from 15 October 1984 to 15 October 1986. and RMO No.766. through his legal counsel.093.479. representing 30% of the P303. Respondents. PNOC proposed a compromise by paying P91.

particularly for taxable year 1985. The issue of prescription. TaxCases_177 . which begins to run after the last day prescribed for filing of the return. and should be considered waived. as amended. Section 268 of the NIRC of 1977. based on Section 268 of the NIRC of 1977. The dissenting opinion points out that more than four years have elapsed from 25 January 1986 (the last day prescribed by law for PNB to file its withholding tax return for the fourth quarter of 1985) to 16 January 1991 (the date when the alleged final assessment of PNB's tax liability was issued). The dissenting opinion takes the position that the right of the BIR to assess and collect income tax on the interest earnings and/or yields from PNOC's money placements with PNB. however. was brought up only in the dissenting opinion and was never raised by PNOC and PNB in the proceedings before the BIR nor in any of their pleadings submitted to the CTA and the Court of Appeals. had already prescribed. provides a three-year period of limitation for the assessment and collection of internal revenue taxes.HELD: NO. The defense of prescription was never raised by petitioners PNOC and PNB. as amended.

the deficiency DST assessment in the amount ofP24. On April 20. On August 9.587. It further held. G.174. respondent issued a final decision on petitioner‘s protest ordering the withdrawal and cancellation of the deficiency withholding tax assessment in the amount of P190.174. respectively. 2008 TINGA.63 was reiterated and the petitioner was ordered to pay the said amount within thirty (30) days from receipt of such order. respondent. No.R. petitioner. 2003.BANK OF THE PHILIPPINE ISLANDS (Formerly: Far East Bank and Trust Company).63.860. Petitioner received a copy of the said decision on January 15. for the years 1982 to 1986. it was only on 9 August 2002 that the CIR ordered BPI to pay the deficiency. 1989. TaxCases_178 . respondent issued to the petitioner. on January 24.752. vs. However. Thereafter. petitioner filed a protest on the demand/assessment notices. petitioner filed a supplemental protest. assessment/demand notices for deficiency withholding tax at source (Swap Transactions) and DST involving the amounts of P190.: FACTS: On April 7. 1989.587.82 and considered the same as closed and terminated. The CIR had three (3) years from the time he issued assessment notices to BPI on 7 April 1989 or until 6 April 1992 within which to collect the deficiency DST. levy. On the other hand. 1989. J.860. The Court ruled that BPI‘s protest and supplemental protest should be considered requests for reinvestigation which tolled the prescriptive period provided by law to collect a tax deficiency by distraint. are in the nature of a telegraphic transfer subject to DST under Section 195 of the Tax Code. that BPI‘s cabled instructions to its foreign correspondent bank to remit a specific sum in dollars to the Federal Reserve Bank. 2003. ISSUE: Whether the period to collect prescribed? HELD: YES. 2002. petitioner filed a Petition for Review before the Court. the same to be credited to the account of the Central Bank.82 and P24.752. 174942 March 7. or court proceeding. COMMISSIONER OF INTERNAL REVENUE. On May 8.

613. P119. Fernandez Hermanos. is a domestic corporation organized for the principal purpose of engaging in business as an "investment company" with main office at Manila.451. petitioner." This is but logical for where the taxpayer avails of the right to appeal the tax assessment to the Court of Tax Appeals.. by filing an answer to the taxpayer's petition for review wherein payment of the tax is prayed for. No. This Court has consistently held that "a judicial action for the collection of a tax is begun by the filing of a complaint with the proper court of first instance. L-24972 G. 1960.00 and P14.: FACTS: The taxpayer. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS.00.. regardless of whether the assessments were made on February 24 and 27.00. as claimed by the Commissioner.414. the Commissioner of Internal Revenue assessed against the taxpayer the sums of P13. or where the assessment is appealed to the Court of Tax Appeals. 1960 his Answer with a prayer for payment of the taxes due. respectively. L-21557 G. P6. L-24978 ----------------------------September 30.R. 1951. Upon verification of the taxpayer's income tax returns for the period in question. INC. Inc.887. J.00 as alleged deficiency income taxes for the years 1950. L-21551 G. The taxpayer's contention that the Commissioner's action to recover its tax liability should be deemed to have prescribed for failure on the part of the Commissioner to file a complaint for collection against it in an appropriate civil action.R. No. as contradistinguished from the answer filed by the Commissioner to its petition for review of the questioned assessments in the case a quo has long been rejected by this Court. P11.R. or on December 27. Said assessments were the result of alleged discrepancies found upon the examination and verification of the taxpayer's income tax returns for the said years. ISSUE: Whether or not the government's right to collect the deficiency income taxes in question has already prescribed? HELD: NO. respondents. 1956. 1969 TEEHANKEE. as the taxpayer's appeal or petition for review was filed with the Tax Court on May 4. In the present case. vs. No.698.00. 1953 and 1954.R. 1952. TaxCases_179 . 1955 as claimed by the taxpayer. long before the expiration of the five-year period to effect collection by judicial action counted from the date of assessment.Prescriptive Period within which to Collect Taxes FERNANDEZ HERMANOS. with the Commissioner filing on May 20. the government's right to collect the taxes due has clearly not prescribed. G. No. the said Court is vested with the authority to pronounce judgment as to the taxpayer's liability to the exclusion of any other court.

No. defendant-appellant. the Republic of the Philippines filed on March 27. Ltd.: FACTS: Ker & Co. LTD.. The court a quo. 1953 after a lapse of five years. J. Subsequently. 1962 it set up the defense of prescription of the Commissioner's right to collect the tax. KER & COMPANY. Said court resolved the issue without touching upon fraudulence of the return. 1956 Ker & Co. TaxCases_180 .. Ltd. three months and thirteen days from the date (April 12.. 1948) it filed its income tax return. Ltd. The reason is that the complaint alleged no fraud. 1948. G.R. L-21609 September 29. vs. the Bureau of Internal Revenue demanded payment of the aforesaid assessments together with a surcharge of 5% for late payment and interest at the rate of 1% monthly.REPUBLIC OF THE PHILIPPINES. On March 1. On the other hand. the Republic of the Philippines insists that the taxpayer's income tax return was fraudulent. 1951 pursuant to Section 322(a) of the Tax Code.. ISSUE: Whether or not the right of the Commissioner of Internal Revenue to assess deficiency income tax for the year 1947 prescribe? HELD: NO. nor did the plaintiff present evidence to prove fraud. Ker & Co.. filed with the Court of Tax Appeals a petition for review with preliminary injunction. refused to pay. 1962 and April 10.P. 1966 BENGZON. The assessments for 1948 and 1950 carried the surcharge of 50% authorized under Section 72 of the Tax Code for the filing of fraudulent returns. 1962.. the amounts were reduced by the BIR. Ltd. Ker & Co. confining itself to determining whether or not the assessment of the tax for 1947 was issued within the five-year period provided for in Section 331 of the Tax Code.. for said court dismissed the appeal for having been instituted beyond the 30-day period provided for in Section 11 of Republic Act 1125.. 1949 and 1950 and subsequently amended the same. Ltd. 1948. 1949 and 1950. ruled that the right of the Commissioner of Internal Revenue to assess the tax has prescribed. filed its income tax returns for the years 1947. plaintiff-appellant. In 1953 the Bureau of Internal Revenue examined and audited Ker & Co. instead in its letters dated March 28. therefore the Commissioner of Internal Revenue may assess the tax within ten years from discovery of the fraud on October 31. J. 1962 a complaint with the Court of First Instance of Manila seeking collection of the aforesaid deficiency income tax for the years 1947. a domestic corporation.'s returns and books of accounts and subsequently issued assessments for deficiency income tax. The stand of the Republic of the Philippines hinges on whether or not taxpayer's income tax return for 1947 was fraudulent. contends that under Section 331 of the Tax Code the right of the Commissioner of Internal Revenue to assess against it a deficiency income tax for the year 1947 has prescribed because the assessment was issued on July 25. No preliminary injunction was issued. On March 15. Basically.

Ltd. to be sustained. may not anymore raise defenses which go into the merits of the assessment.. Ker & Co. Ltd. the finding of the Commissioner of Internal Revenue as to the existence of the fraud has also become final and need not be proved.e. prescription of the Commissioner's right to assess the tax. Accordingly. litigated on it and submitted the issue for resolution of the court. raised the defense of prescription in the proceedings below and the Republic of the Philippines. instead of questioning the right of the defendant to raise such defense. It would be worth mentioning that since the assessment for deficiency income tax for 1947 has become final and executory. TaxCases_181 . This contention suffers from a flaw in that it fails to consider the well-settled principle that fraud is a question of fact6 which must be alleged and proved... fraud should have been alleged and proved in the lower court. it must be supported by clear and convincing proof. By its actuation. the Republic of the Philippines maintains in its brief that Ker & Co. filed a false return and since the fraud penalty of 50% surcharge was imposed in the deficiency income tax assessment.In reply to the lower court's conclusion. the Republic of the Philippines should be considered to have waived its right to object to the setting up of such defense. Ker & Co. i. Ltd.. Fraud is a serious charge and. Such was our ruling in previous cases. which has become final and executory. In this case however.

MIRANT PAGBILAO CORPORATION (formerly SOUTHERN ENERGY QUEZON. which requires the prior filing of an administrative claim.Sections 204(C) and 229 of the NIRC COMMISSIONER OF INTERNAL REVENUE. 2004. In Commissioner of Internal Revenue v. 2006 CHICO-NAZARIO. and violates the doctrine of exhaustion of administrative remedies? HELD: YES. petitioner argued that the simultaneous filing of the administrative and the judicial claims contravenes Sections 112 and 229 of the NIRC. insisting that the administrative and the judicial claims were filed beyond the two-year period to claim a tax refund/credit provided for under Sections 112(A) and 229 of the NIRC. Primetown Property Group. The decision was affirmed. The CTA denied the MPR thus the case was elevated to the CTA En Banc for review. ISSUES: Whether or not the claim for refund was filed within the prescribed period? Whether or not the simultaneous filing of the administrative and the judicial claims contravenes Section 229 of the NIRC. Inc (G. the filing of the claim for tax refund/credit on September 30. INC. No. Petitioner filed a Motion for Partial Reconsideration.R. vs. The two-year period should be reckoned from the close of the taxable quarter when the sales were made. August 28. He reasoned that since the year 2004 was a leap year.). which provides that a year is equivalent to 365 days. which states that a year is composed of 12 calendar months. 531 SCRA 436). and the Administrative Code of 1987. In addition. Thus the case was elevated to the Supreme Court. 2002. which expired on September 29.: FACTS: Petitioner filed a claim of refund/credit of input vat in relation to its zero-rated sales from July 1. No. a prior filing of an administrative claim is a ―condition precedent‖ before a judicial claim can be filed. The CTA 2nd Division partially granted respondent‘s claim for refund/credit. 159593 October 12. we said that as between the Civil Code. 2004 was beyond the two-year period. following the legal maxim. 162155. it is equivalent to 365 days. it is the latter that must prevail being the more recent law. TaxCases_182 . which provides that when the law speaks of a year. petitioner. 2007. Lex posteriori derogat priori. J.R. Respondent contends that the non-observance of the 120-day period given to the CIR to act on the claim for tax refund/credit in Section 112(D) is not fatal because what is important is that both claims are filed within the two-year prescriptive period. G. respondent. 2002 to September 30. He cited as basis Article 13 of the Civil Code. According to the petitioner.

from the date of the submission of the complete documents in support of the application [for tax refund/credit]. the taxpayer‘s recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. now Section 229 of the NIRC. However. Section 112(D) of the NIRC clearly provides that the CIR has ―120 days. TaxCases_183 . In case of full or partial denial by the CIR.Thus. Subsection (A) of Section 112 of the NIRC states that ―any VAT-registered person. if after the 120-day period the CIR fails to act on the application for tax refund/credit. within two years after the close of the taxable quarter when the sales were made. apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. whose sales are zero-rated or effectively zero-rated may. The premature filing of respondent‘s claim for refund/credit of input VAT before the CTA warrants a dismissal inasmuch as no jurisdiction was acquired by the CTA. Hence. the two-year period to file a claim for tax refund/credit for the period July 1. 2004. respondent‘s administrative claim was timely filed. is inapplicable as the tax provision involved in that case is Section 306. We find the filing of the judicial claim with the CTA premature. applying this to the present case. 2002 to September 30. YES. Inc. the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. Co.‖ The phrase ―within two (2) years x x x apply for the issuance of a tax credit certificate or refund‖ refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA. The case of Commissioner of Internal Revenue v. Victorias Milling..‖ within which to grant or deny the claim. Section 229 does not apply to refunds/credits of input VAT. 2002 expired on September 30.

: FACTS: On September 30. the claim was filed on time even if 2004 was a leap year since the sanctioned method of counting is the number of months. AICHI FORGING COMPANY OF ASIA.R. 2010 DEL CASTILLO.i. The CIR also raised issues related to the reckoning of the 2-year period and the simultaneous filing of the administrative and judicial claims. 184823 October 6. Thus. J. Aichi Forging filed a claim for refund/credit of input VAT attributable to its zero-rated sales for the period July 1. (a) within 30 days after a decision within the 120-day period and (b) upon expiry of the 120-day without a decision. G. Section 112 (A) was interpreted to refer only to claims filed with the CIR and not appeals to the CTA given that the word used is ―application‖.. YES. The BIR disputed the claim and alleged that the same was filed beyond the two-year period given that 2004 was a leap year and thus the claim should have been filed on September 29. The Court added that the rules under Sections 204 (C) and 229 as cross-referred to Section 114 do not apply as they only cover erroneous payments or illegal collections of taxes which is not the case for refund of unutilized input VAT. TaxCases_184 . 2002 with the CIR through the DOF One-Stop Shop. 2002 to September 30. The right to claim the refund must be reckoned from the ―close of the taxable quarter when the sales were made‖ – in this case September 30. ISSUES: Whether or not the Petitioner‘s administrative claim was filed out of time? Whether or not the filing of the judicial claim was premature? HELD: NO. Petitioner. 2004. the Court said that applying the 2-year period even to judicial claims would render nugatory Section 112 (D) which already provides for a specific period to appeal to the CTA --. Failure to observe this rule is fatal to a claim.e. Section 112 mandates that the taxpayer filing the refund must either wait for the decision of the CIR or the lapse of the 120-day period provided therein before filing its judicial claim. Respondent. vs. Aichi Forging filed a Petition for Review with the CTA for the same action. Thus. No. On the same day. INC. 2004. 2004.COMMISSIONER OF INTERNAL REVENUE.. Finally.

INC. namely. 2010 CORONA. 1993. G.R. The alleged deficiency income tax assessment apparently resulted from an adjustment made to respondent‘s taxable income for the year 1989. 1993.. Revenue Regulations No. 169225 November 27. it provides: Suspension of running of statute. FACTS: On December 3. – The running of the statute of limitations provided in Sections 203 and 223 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection.. the protest having been dismissed on the ground that the assessment has become final and executory. petitioner did not hear anything from the respondent nor received any communication from the respondent relative to its protest. shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or TaxCases_185 . professional fees paid. vs. and management fees. 2001. There is nothing in the record that would show what action was taken in connection with the protest of the petitioner. the management fees. that petitioner failed to withhold the appropriate tax thereon. on account of the disallowance of certain items of expense. in respect of any deficiency. nearly eight (8) years later. In other words. among others. made up the bulk of the disallowance. This is also the same basis for the imposition of the deficiency withholding tax assessment on the management fees. respondent‘s external auditors received a letter from herein petitioner Commissioner of Internal Revenue dated October 27. C.J. The letter advised the respondent that petitioner had rendered a final decision denying its protest on the ground that the protest against the disputed tax assessment was allegedly filed beyond the 30-day reglementary period prescribed in then Section 229 of the National Internal Revenue Code. In fact. its protest letter against the alleged deficiency tax assessments for 1989 as indicated in the said tracer letter dated October 11. HAMBRECHT & QUIST PHILIPPINES. The latter item of expense. ISSUE: Whether or not the period to collect the assessment has prescribed? HELD: YES. through its external auditors. No. the examiner alleging. salaries and wages. Respondent. repairs and maintenance. On November 7. not until eight years later when the final decision of the Commissioner was issued. Petitioner. respondent. Under Section 224. filed with the same Accounts Receivable/Billing Division of the BIR‘s National Office. donations. 6-85 (EWT Regulations) does not impose or prescribe EWT on management fees paid to a non-resident. the request for reinvestigation was not granted. 2001.Determination of Prescription of Collection within CTA’s Appellate Jurisdiction COMMISSIONER OF INTERN AL REVENUE. It is evident that the respondent did not conduct a reinvestigation.

the statute will not be suspended. TaxCases_186 . That. or a member of his household with sufficient discretion. when the taxpayer requests for a re-investigation which is granted by the Commissioner. his authorized representative. when the warrant of distraint and levy is duly served upon the taxpayer.levy or a proceeding in court and for sixty days thereafter. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected: Provided. and when the taxpayer is out of the Philippines. if the taxpayer informs the Commissioner of any change in address. and no property could be located.

1985. Petitioner later explained that the individuals who had possession of the barges had refused to sign the receipt. Tuliaoand Tulmar Trading Corporation. among other things. 1985 on Yoly T. J. NATIONAL LABOR RELATIONS COMMISSION.: FACTS: On January 12. income tax and withholding taxes in the total amount of P17. DANIEL C. On September 4. NIRC) COMMISSIONER OF INTERNAL REVENUE. the question in this case is the validity of the warrant of distraint served by the Revenue Seizure Officer against the writ of execution subsequently levied upon the same property by the deputy sheriff of Manila to satisfy the claims of employees in the NLRC Case. This circumstance has given rise to the question in this case as it appears that four of the barges placed under constructive distraint were levied upon execution by respondent deputy sheriff of Manila on July 20. Labor Arbiter Ceferina Diosana denied the motion on the ground that petitioner Commissioner of Internal Revenue failed to show that the barges which were levied upon in execution and sold at public auction had been validly placed under constructive distraint. G. In an order dated September 30. respondents. 1994 MENDOZA. DOMINGO C. The highest bidder. 1984 the Commissioner of the Internal Revenue sent two letters 3 of demand to the respondent Maritime Company of the Philippines for deficiency common carrier's tax. Daniel C. and Things Seized 5 under Authority of the National Internal Revenue Code" was executed. documentary stamp tax. 1985.3. The assessment became final and executory as private respondent did not contest it. On April 16. CACHERO.2. The receipt was prepared by the BIR for the signature of a representative of respondent Maritime Company of the Philippines. This receipt is required by § 303 (now § 206) of the NIRC as proof of the constructive distraint of property. TULIAO and TULMAR TRADING CORPORATION. The four barges were sold by respondent deputy sheriff at a public auction on August 12. private respondent's accountant. 1985 to satisfy a judgment for unpaid wages and other benefits of employees of respondent Maritime Company of the Philippines. the Commissioner of Internal Revenue issued warrants of distraint of personal property and levy of real property of private respondent. Articles. 1985. 6%Commercial Broker's tax. DEPUTY CITY SHERIFF CARMELO V. petitioner. Sabino. Petrache. six barges identified as MCP-1. No.45.Tax Lien (Section 219.R. subsequently sold them to private respondents Fernando S. 1985. More specifically. 74965 November 9.4. vs.882. MARITIME COMPANY OF THE PHILIPPINES.284. fixed tax. covering. It is an undertaking by the taxpayer or person in possession of the property covered that he will preserve the property and deliver it upon order of the court or the Internal Revenue Commissioner. Copies of the warrants. SABINO. in the alternative. were served on January 28. but it was not in fact signed. 1985 a "Receipt for Goods. petitioner asked the Labor Arbiter to annul the sale and to enjoin the sheriff from disposing of the proceeds of the sale or. both dated January 23.5 and 6. NIANGAR. But as private respondent did not pay its tax liability either. TaxCases_187 . to remit them to the Bureau of Internal Revenue so that the amount could be applied to the payment of private respondent Maritime Company's tax liabilities. FERNANDO S.

TaxCases_188 . long before the writ of execution was issued by the RTC.ISSUE: Whether or not the government may impose lien on the claims of the employees in the NLRC Case? HELD: YES. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. 110 of the Labour Code do not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. The power of the court in execution of judgments extends only to the properties unquestionably belonging to the judgment debtor. through the Commissioner. the 2 barges were no longer properties of the Maritime Company of the Philippines. There is no question then that at the time the writ of execution was issued. Besides. It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. Art. the distraint on the subject properties of Maritime Company of the Philippines as well as the notice of their seizure were made by CIR. Claims for unpaid wages do not fall at all time within the category of specially preferred claims.

may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman. 7 of the present Code authorizes the BIR Commissioner to delegate the powers vested in him under the pertinent provisions of the Code to any subordinate official with the rank equivalent to a division chief or higher. however. and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept. J. it filed a case with the Regional Trial Court. or on November 3. petitioner. 1994. in a letter dated August 11. the Assistant Regional Director. Chief of the Legal Division. that assessment issued by the Regional Offices involving basic deficiency taxes of five hundred thousand pesos (P500. heads of the Legal. and minor criminal violations as may be determined by rules and regulations to be promulgated by the Secretary of Finance. Branch 44. revoke or modify any existing ruling of the Bureau. As amended by R. the BIR issued to respondent Salud V. as members. respondent.113. upon the recommendation of the Commissioner. Pampanga to collect the tax deficiency. discovered by regional and district officials. represented by the Commissioner of the Bureau of Internal Revenue (BIR).00) or less. However. San Fernando. it did not proceed to dispose of the attached properties. On January 1. 1986. BIR Region 4. 1989. More than three years later. except the following: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance. (c) The power to compromise or abate under §204 (A) and (B) of this Code. 8424. denied the request.Judicial Remedies (Section 220. 1999 MENDOZA. the NIRC is now even more categorical.R. SALUD V.A. and verified by Amancio Saga. The complaint was signed by Norberto Salud. petitioner.000. TaxCases_189 . None of the exceptions relates to the Commissioner's power to approve the filing of tax collection cases. for reasons not known. on January 12.: On July 18.359. the Bureau's Regional Director in Pampanga. (b) The power to issue rulings of first impression or to reverse. Hizon a deficiency income tax assessment of P1. any tax deficiency: Provided. served warrants of distraint and levy to collect the tax deficiency. respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. ISSUE: Whether or not the institution of the civil case for collection of taxes was without the approval of the Commissioner in violation of Section 221 of the NIRC? HELD: YES. 1997. No.68 covering the fiscal year 1981-1982. HIZON. vs. 1992. Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer. G. NIRC) REPUBLIC OF THE PHILIPPINES. No. Sec. The BIR. 130430 FACTS: December 13. Respondent not having contested the assessment.

Verification is mainly intended to ensure that the allegations in the pleading are true and correct and not mere speculations. after all. Ordered to comment. petitioner vs. respondent. this Court denied the Petition for Review on Certiorari submitted by the Commissioner of Internal Revenue for noncompliance with the procedural requirement of verification explicit in Section 4. that allow the legal officers of the BIR to institute and conduct judicial action in behalf of the Government under Section 220 of the Tax Reform Act of 1997. is the basic aim for the rules of procedure. Aware that the dismissal of the petition could have lasting effect on government tax revenues. Section 220 of the Tax Reform Act must not be understood as overturning the long established procedure before this Court in requiring the Solicitor General to represent the interest of the Republic. LA SUERTE CIGAR AND CIGARETTE FACTORY. seeking clarification on the issue of legal representation that it has labored and acted in good faith. this Court has held in a number of instances that such a deficiency can be excused or dispensed with in meritorious cases. the lifeblood of the state. This Court continues to maintain that it is the Solicitor General who has the primary responsibility to appear for the government in appellate proceedings. the defect being neither jurisdictional nor always fatal. ISSUE: Whether or not the Solicitor General should enter their appearance for petitioner? HELD: YES. however. if the attending circumstances are such that strict compliance would not fully serve substantial justice which. It does appear from the statements of the Commissioner of Internal Revenue. is not a matter of right. The Court may thus order the correction of the pleading or act on an unverified pleading. furthermore. The institution or commencement before a proper court of civil and criminal actions and proceedings arising under the Tax Reform Act which "shall be conducted by legal officers of the Bureau of Internal Revenue" is not in dispute. dated 15 November 2000. the Court heeds the plea of petitioner for a chance to prosecute its case.COMMISSIONER OF INTERNAL REVENUE. such that it is no longer necessary for BIR legal officers to be deputized by the Office of the Solicitor General or the Secretary of Justice before they can commence any action under the 1997 Tax Code. When the motion for reconsideration filed by petitioner was likewise denied. on the one hand. the Office of the Solicitor General expressed the view that under the aforequoted Section 220 of the Tax Reform Act. petitioner filed the instant motion seeking an elucidation on the supposed discrepancy between the pronouncement of this Court. 144942 July 4. because the appeal was not pursued by the Solicitor General. of the 1997 Rules of Civil Procedure and. ―the primary responsibility to conduct civil and criminal actions lies with the legal officers of the Bureau of Internal Revenue. An appeal from such court. that would require the participation of the Office of the Solicitor General and pertinent provisions of the Tax Code. TaxCases_190 . amending Section 221 of the 1993 Tax Code.R. G. 2002 FACTS: In its resolution. Rule 7. on the other hand. No. Relative to the lack of verification required of petitions.

133. He received the last installment on 01 December 1987. On the same date. No. which took effect on 11 June 1984. private respondent Savellano. THE HON.O. in a letter. from 15 October 1984 to 15 October 1986.PHILIPPINE NATIONAL OIL COMPANY. Petitioner. that private respondent Savellano was already fully paid the informer's reward equivalent to 15% of the amount of tax actually collected by the BIR pursuant to its compromise agreement with PNOC. No. RMO No. Respondents. COURT OF APPEALS. BIR Commissioner Tan replied through a letter.479. On 09 June 1987.89. Through his sworn statement. as withholding agent. in violation of P. COURT OF APPEALS. Respondents. 112800 April 26.R. 2005 x--------------------x PHILIPPINE NATIONAL BANK. wrote the BIR to demand payment of the balance of his informer's reward. for the payment of the final tax on the interest earnings and/or yields from PNOC's money placements with the bank. 2005 CHICO-NAZARIO. Private respondent Savellano. the BIR also mailed a letter to PNOC informing it of the demand letter sent to PNB. Then BIR Commissioner Bienvenido A. G. private respondent Savellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings and/or yields from the money placements of PNOC with the said bank.D. in accordance with the provisions of E. representing 30% of the P303. accepted the compromise. SAVELLANO and COMMISSIONER OF INTERNAL REVENUE. THE HON.321. No.955. dated 08 March 1988. 1931. COURT OF TAX APPEALS. 109976 April 26.129. Tan. Petitioner. dated 22 June 1987.343. through four installments. 39-86. On 07 January 1988.R.093.12 tax collected by the BIR from PNOC and PNB. ISSUE: Whether or not the compromise was valid? TaxCases_191 . vs. The BIR received a total tax payment on the interest earnings and/or yields from PNOC's money placements with PNB in the amount of P93. This time.D. however. the BIR sent a demand letter to PNB. P. TIRSO B. was paid the informer's reward in the total amount of P14.12. in the total amount of P376. J. 301. No. representing 15% of the P93. through his legal counsel.479. On 08 October 1986. 1931.33. 4-87. No.O.003. PNOC made an offer to the BIR to settle its tax liability. 44. THE COMMISSIONER OF INTERNAL REVENUE and TIRSO SAVELLANO. No.29 basic tax. withdrew all tax exemptions of government-owned and controlled corporations. vs. Savellano to the BIR on 24 June 1986. G. 44.766. PNOC proposed a compromise by paying P91.89.: FACTS: The Petitions originated from a sworn statement submitted by private respondent Tirso B. and RMO No. BIR Commissioner Tan further explained that the compromise was in accordance with the provisions of E.955.

44 are defined under Revenue Regulation (RR) No. such a system imposes upon the taxpayer the obligation to conduct an assessment of himself so he could determine and declare the amount to be used as tax basis. 44 because its tax liability was not a delinquent account or a disputed assessment as of 31 December 1985. 17-86. 1985 from a taxpayer who failed to pay the same within the time prescribed for its payment arising from (1) a self-assessed tax.O. the duty to conduct self-assessment by filing a tax return that would be used as the basis for computing the amount of compromise to be paid. whether or not a tax return was filed. TaxCases_192 . Where no return was filed. b) Disputed assessment – refers to a tax assessment disputed or protested on or before December 31. No. who is availing of the compromise under E.O. "a tax that the taxpayer himself assesses or computes and pays to the taxing authority. but it does not do away with the requisite that the tax must be self-assessed in order for the taxpayer to avail of the compromise.O. upon the payment of an amount equal to 30% of the basic tax assessed. No. the tax due. or 2) if the decision of the BIR on the taxpayer's administrative protest is appealed by the taxpayer before an appropriate court. 44. No. The second paragraph of Section 2(a) of RR No.O. the corresponding interests and penalties shall be condoned. 44 granted the BIR Commissioner or his duly authorized representatives the power to compromise any disputed assessment or delinquent account pending as of 31 December 1985.HELD: NO. No. The disputed assessments or delinquent accounts that the BIR Commissioner could compromise under E. and (2) the demand letter. and who has not previously filed any return.O. It is not denied herein that the self-assessing system governs Philippine internal revenue taxes. the taxpayer shall be considered delinquent as of the time the tax on such return was due. The dissenting opinion itself defines self-assessed tax as. The phrase "whether or not a tax return was filed" only refers to the compliance by the taxpayer with the obligation to file a return on the dates specified by law. issued against it on 08 August 1986. 44 took effect on 04 September 1986 and remained effective until 31 March 1987. No. E. because the BIR conducted an investigation and assessment of PNOC and PNB after obtaining information regarding the non-withholding of tax from private respondent Savellano. and still imposes upon the taxpayer. PNOC's tax liability could not be considered a delinquent account since (1) it was not self-assessed. No. or (2) a deficiency assessment issued by the BIR which has become final and executory. 1985 under any of the following categories: 1) if the same is administratively protested within thirty (30) days from the date the taxpayer received the assessment. and in availing of the compromise. in which case. E. whether or not a tax return was filed. could not have been a deficiency assessment that became final and executory by 31 December 1985. PNOC could not apply for a compromise under E. 17-86 expressly commands. 44 covers self-assessed tax. any deductions therefrom.O. and finally. as follows: a) Delinquent account – Refers to the amount of tax due on or before December 31. a tax return shall be filed as a basis for computing the amount of compromise to be paid." Clearly. E.

C. having been filed on June 23. and Antonia Sun Lim. with business address at No. petitioners. 1969. 1959.237. 1968. 336 Nueva Street. giving them until May 7. Inasmuch as the final notice and demand for payment of the deficiency taxes was served on petitioners on July 3. Accordingly on September 1. were engaged in the dealership of various household appliances They filed income tax returns for the years 1958 and 1959. 1968. no violation has yet been committed by the taxpayers. are well-within the five-year prescriptive period and are not time-barred. Nos. on April 7. 1965.04 as deficiency income taxes for 1958 and 1959. Daet recommended that an assessment of P835. On September 30. Seized from the Lim couple were business and accounting records which served as bases for an investigation undertaken by the Bureau of Internal Revenue (BIR). Daet submitted a memorandum with the findings that the income tax returns filed by petitioners for the years 1958 and 1959 were false or fraudulent. Lim. The final notice and demand for payment was served on petitioners through their daughter-in-law on July 3. Accordingly. it was only then that the cause of action on the part of the BIR accrued. 1965 to pay the amount. SR.00 be made against the petitioners.R. On October 10. Cornejo of the City Court of Manila. respondents. a raid was conducted at their business address by the National Bureau of Investigation by virtue of a search warrant issued by Judge Wenceslao L.55 inclusive of interest. L-48134-37 October 18.190. 1967.913. LIM. no payment was forthcoming from the delinquent taxpayers. Benjamin M. vs. 1970. On October 5. G. surcharges and compromise penalty for late payment. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES.J. Tabios informed petitioners that there was due from them the amount of P922. and ANTONIA SUN LIM. the matter was referred by the BIR to the Manila Fiscal's Office for investigation and prosecution. The two criminal informations. 1990 FERNAN. TaxCases_193 . refused to comply with the above conditions and reiterated his request for another investigation.: FACTS: Petitioner spouses Emilio E. the BIR rendered a final decision holding that there was no cause for reversal of the assessment against the Lim couple. then Acting Commissioner of the BIR. This is so because prior to the receipt of the letterassessment.127. Lim.EMILIO E. Still. Sr. Manila. Petitioners were required to pay deficiency income taxes for 1958 and 1959 amounting to P1. Petitioner Emilio E. A similar raid was made on petitioners' premises at 111 12th Street. ISSUE: Whether or not the criminal action already prescribed? HELD: NO. Sr. The offense was committed only after receipt was coupled with the willful refusal to pay the taxes due within the allotted period. 1964 Senior Revenue Examiner Raphael S. Quezon City.

the former President of the Republic of the Philippines. MARCOS II. need not be submitted to the committee on claims in the ordinary course of administration. DE GUZMAN. G. Taxes assessed against the estate of a deceased person. the court may direct the payment of such taxes upon motion showing that the taxes have been assessed against the estate. the matter of the settlement of his estate. petitioner. after administration is opened. Claims for taxes. can be collected from the heirs even after the distribution of the properties of the decedent.: FACTS: More than seven years since the demise of the late Ferdinand E. ISSUE: Whether or not the tax remedies resorted to by the government be precluded by the pendency of the probate proceedings? HELD: NO. despite the pendency of the proceedings on probate of the will of the late president. J. Specifically. According to the respondent. whether assessed before or after the death of the deceased. These can and should be paid immediately. The probate court is not the government agency to decide whether an estate is liable for payment of estate of income taxes. 120880 June 5. in proportion to their share in the inheritance. even after distribution of the estate's properties. and its dues to the government in estate taxes. claims for payment of estate and income taxes due and assessed after the death of the decedent need not be presented in the form of a claim against the estate.. respondents. Marcos II.FERDINAND R. THE COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE and HERMINIA D. the eldest son of the decedent. petitioner Ferdinand R.R. Such liberal treatment of internal revenue taxes in the probate proceedings extends so far. are still unresolved. Thus. The heirs shall be liable therefor. In the exercise of its control over the administrator. The state's authority to collect internal revenue taxes is paramount. questions the actuations of the respondent Commissioner of Internal Revenue in assessing. No. Petitioner had filed with the respondent Court of Appeals a Petition for Certiorari and Prohibition with an application for writ of preliminary injunction and/or temporary restraining order. JR. COURT OF APPEALS. through summary remedies. Well-settled is the rule that the probate court is a court with special and limited jurisdiction. vs. 1997 TORRES. of estate taxes over the same. estate and income tax delinquencies upon the estate and properties of his father. the pendency of probate proceedings over the estate of the deceased does not preclude the assessment and collection. the latter issue being now before this Court for resolution. and collecting through the summary remedy of Levy on Real Properties. Marcos. even to allowing the enforcement of tax obligations against the heirs of the decedent. TaxCases_194 . They are exempted from the application of the statute of non-claims.

then Bureau of Internal Revenue (BIR) Commissioner Guillermo L. and the affirmative votes of four members of the Court en banc are necessary for the rendition of a decision or resolution. however. The CTA is now allowed to sit en banc or in two Divisions with each Division consisting of three Justices. 9282 to Republic Act No. TaxCases_195 . PEOPLE OF THE PHILIPPINES and BUREAU OF INTERNAL REVENUE.70. the non-declaration by petitioner of an amount equivalent to at least 84.718. and petitioner‘s failure to account as part of her income the professional fees she received from sources other than ABS-CBN and her underdeclaration of the income she received from ABS-CBN amounted to manifest violations of Sections 254 and 255.: FACTS: On 19 May 2005. 2008 YNARES-SANTIAGO. The amendments introduced by Republic Act No. with the same rank as the Court of Appeals. J. G.18% of the income declared in her return was considered a substantial underdeclaration of income.796. as amended. including incremental penalties. Petitioner. not only from ABS-CBN. The petition for review under Section 18 of Republic Act No.R. 1125 elevated the rank of the CTA to a collegiate court.52.234. in her Annual Income Tax Return for taxable year 2002 filed with the BIR. Respondents. as amended.70 derived from her talent fees solely from ABS-CBN. 1125.JUDY ANNE L. ISSUE: Whether a resolution of a CTA division denying a motion to quash is a proper subject of an appeal to the CTA En Banc? HELD: NO. as amended.925. as well as Section 248(B) of the NIRC. confirmed that petitioner received in 2002 income in the amount of at least P14. such as movies and product endorsements. declared an income of P8. but also from other sources. may be new to the CTA. In said letter. initial documents gathered from the BIR offices and those given by petitioner‘s accountant and third parties. BIR Commissioner Parayno summarized the findings of the investigating BIR officers that petitioner. Gonzales a letter regarding the possible filing of criminal charges against petitioner. Parayno.332. the estimated tax liability arising from petitioner‘s underdeclaration amounted to P1. Four Justices shall constitute a quorum for sessions en banc. Jr. but it is actually a mode of appeal long available in courts of general jurisdiction. No. which constituted prima facie evidence of false or fraudulent return under Section 248(B) of the NIRC. vs. wrote to the Department of Justice (DOJ) Secretary Raul M. 173176 August 26. while two Justices shall constitute a quorum for sessions of a Division and the affirmative votes of two members of the Division shall be necessary for the rendition of a decision or resolution.033. and increased the number of its members to one Presiding Justice and five Associate Justices. SANTOS.

As pointed out by the CTA First Division in its 11 May 2006 Resolution. given the dismissal of similar charges against Velasquez. The same cannot be said herein.First. he may terminate the proceedings and resolve the case. The Information against petitioner appears valid on its face. Its sole purpose is to determine whether a crime has been committed and whether the respondent therein is probably guilty of the crime. was to appeal the Resolution dated 21 October 2005 of the Office of the State Prosecutor recommending the filing of an information against her with the DOJ Secretary. It is not a trial of the case on the merits. if the investigating prosecutor is already satisfied that he can reasonably determine the existence of probable cause based on the parties‘ evidence thus presented. Second. the more appropriate recourse petitioner should have taken. It is not the occasion for the full and exhaustive display of the parties‘ evidence. Hence. TaxCases_196 . and that it was filed in violation of her constitutional rights to due process and equal protection of the laws is not evident on the face thereof. a motion to quash should be based on a defect in the information which is evident on its face. In addition. petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits and other pleadings and submit evidence before the DOJ during the preliminary investigation of her case and before the Information was filed against her. preliminary investigation conducted by the DOJ is merely inquisitorial. Due process is merely an opportunity to be heard.

his wife and other defendants.) charging the petitioner (private respondent herein) and his wife with the crime of estafa. JAVIER. and continuing duty to return the said amount from the moment it was received. 1977.R. 1977.88 and stating in the footnote of the return that "Taxpayer was recipient of some money received from abroad which he presumed to be a gift but turned out to be an error and is now subject of litigation.00 which they received under an implied trust for the benefit of Mellon. That on or about June 29.70 remitted by her sister.: FACTS: On or about June 3.A. MELCHOR J.38 and a net income of P48. TaxCases_197 .000. misapplied. but a merely "false return" may not be. the City Fiscal of Pasay City filed an Information with the then Circuit Criminal Court (docketed asCCC-VII-3369P.00 be returned on the ground that the defendants are trustees of an implied trust for the benefit of Mellon Bank with the clear. A "fraudulent return" is always an attempt to evade a tax. N.00 was a clerical error and should have been US$1. 26899). immediate." ISSUE: Whether or not a taxpayer who merely states as a footnote in his income tax return that a sum of money that he erroneously received and already spent is the subject of a pending litigation and there did not declare it as income is liable to pay the 50% penalty for filing a fraudulent return? HELD: NO. and praying that the excess amount of US$999. Mellon Bank. JR. That on March 15.00 only. Mrs. J. Under the then Section 72 of the Tax Code (now Section 248 of the 1988 National Internal Revenue Code). N. 1978.C. through some banks in the United States.000. filed a complaint with the Court of First Instance of Rizal (now Regional Trial Court). respondents. and converted to their own personal use and benefit the amount of US$999. a taxpayer who files a false return is liable to pay the fraud penalty of 50% of the tax due from him or of the deficiency tax in case payment has been made on the basis of the return filed before the discovery of the falsity or fraud. Javier. claiming that its remittance of US$1. the wife of the petitioner (private respondent herein).000. against the petitioner (private respondent herein). 1991 SARMIENTO. the petitioner (private respondent herein) filed his Income Tax Return for the taxable year 1977 showing a gross income of P53. Dolores Ventosa. (docketed as Civil Case No. That on or about November 5.053.Fraud Penalty COMMISSIONER OF INTERNAL REVENUE. 1977.000.973. No. received from the Prudential Bank and Trust Company in Pasay City the amount of US$999.A.053. alleging that they misappropriated. Victoria L. vs. 78953 July 31. among which is Mellon Bank. and THE COURT OF TAX APPEALS. G. petitioner.000.

but the records lack a clear showing of fraud committed because he did not conceal the fact that he had received an amount of money although it was a "subject of litigation. at most. respectively. it would be unfair to treat the mistakes of the petitioner as tainted with fraud and those of the respondent as made in good faith. It must be intentional fraud. whether slight or gross. consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some legal right." As ruled by respondent Court of Tax Appeals. It must amount to intentional wrong-doing with the sole object of avoiding the tax. headed by the herein petitioner. and if both petitioner and respondent Commissioner of Internal Revenue committed mistakes in making entries in the returns and in the assessment.The fraud contemplated by law is actual and not constructive. It necessarily follows that a mere mistake cannot be considered as fraudulent intent. The government was not induced to give up some legal right and place itself at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities because Javier did not conceal anything. the imposition of the fraud penalty in this case is not justified by the extant facts. under the inventory method of determining tax liability. Javier may be guilty of swindling charges. the 50% surcharge imposed as fraud penalty by the petitioner against the private respondent in the deficiency assessment should be deleted. Negligence. Unfortunately. there was no actual and intentional fraud through willful and deliberate misleading of the government agency concerned. TaxCases_198 . perhaps even for greed by spending most of the money he received. Fraud is never imputed and the courts never sustain findings of fraud upon circumstances which. the Bureau of Internal Revenue. create only suspicion and the mere understatement of a tax is not itself proof of fraud for the purpose of tax evasion. Error or mistake of law is not fraud. In the case at bar. The petitioner's zealousness to collect taxes from the unearned windfall to Javier is highly commendable. is not equivalent to the fraud with intent to evade the tax contemplated by law.

CASE NO. JJ. 2006. 2010 CASANOVA.: FACTS: Accused Benjamin G. did. by failing to make a reasonable inquiry about suspected wrongdoing despite being aware that it is highly probable. In the instant case. Philippines. Willful Blindness is defined by Black‗s Law Dictionary as―deliberate avoidance of knowledge of a crime.320. the above-named accused. as a reasonable and prudent taxpayer. then and there. a Filipino citizen residing in the Philippines. and within the jurisdiction of this Honorable Court. which do not refer to the correct venue for purposes of filing his ITR. Kintanar is charged with the crime of wilful failure to file his income tax return in violation of Section 255 of Republic Act No. who is engaged in business and earning income as distributor of Forever Living Products Philippines. A perusal of these documents readily reveals that it does not bear the official dry seal of the BIR. and conducting verification and investigation of the said ITR. and which reads as follows: ― That on or about the 16th day of April. It creates an inference ofknowledge of the crime in question. as amended. his deliberate refusal or avoidance to verify the contents of these documents and inquire on the authenticity thereof under the circumstances obtaining in this case constitutes―willful blindness on his part.96. O-030 AUGUST 11. exclusive of penalties. 8424. The purported ITR and undated Certification for the taxable year 1999reflects two (2) different addresses. surcharges and interest. to the damage and prejudice of the Government in the estimated amount of P2.Willful Blindness Doctrine PEOPLE OF THE PHILIPPINES. in an Information filed on September 22. ISSUE: Whether or not the acts of his accountant bound Kintanar? HELD: YES.. Even assuming arguendo that accused merely relied on the representations made by his alleged accountant that the subject ITR was duly filed and the foregoing Certifications were executed by the authorized Revenue District Officers of the BIR. vs. Plaintiff. with obligation under the law to file his Income Tax Return (ITR) for the taxable year 1999 on or before the 15th day of April 2000. unlawfully and feloniously fail to file his income tax return with the Bureau of Internal Revenue for the year 1999. wilfully.183. CTA CRIM. KINTANAR. Inc. esp. in Parañaque City. which do not refer to the actual residence of accused. and two (2) different Revenue Districts. accused would naturally suspect some wrongdoing or irregularity in the preparation and filing of his ITR by a mere reading of the documents furnished by his alleged accountant. otherwise known as the ―Tax Reform Act of 1997. BENJAMIN G. TaxCases_199 . and MINDARO-GRULLA. Accused. 2000.

TaxCases_200 . accused knowledge that Ms. Further. as amended. Mendoza was a BIR employee at the time he allegedly availed of her services as his accountant. no BIR receipts were presented to show that the subject ITR was indeed filed.Moreover. and his very own admission that he merely browsed the contents of the subject ITR before signing it. aggravate his act of indifference in the faithful observance of the provisions of the NIRC of1997.

The respondent CTA concluded that the very "substantial under declarations of income for six consecutive years eloquently demonstrate the falsity or fraudulence of the income tax returns with an intent to evade the payment of tax. L-20569 August 23. The findings clearly indicated that the taxpayer did not declare correctly the income reported in his income tax returns for the aforesaid years. G. 332 of the NIRC which provides that: "(a) In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return. Matias H. which increases in net worth was very much more than the income reported during said years. the period of ten years from the time of the discovery of the falsity. respondents. 332 (a) of the NIRC should apply and that the period of ten years within which to assess petitioner's tax liability had not expired at the time said assessment was made. or a proceeding in court for the collection of such tax may be begun without assessment. as administrator of the estate of the deceased. seeks a review and nullification of the decision of the Court of Tax Appeals ordering the petitioner to pay the government deficiency income taxes for the years 1946 to 1951. but whenever the government is placed at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities due to false returns. at any time within ten years after the discovery of the falsity.False Return vs. AZNAR. Fraudulent Return JOSE B. COURT OF TAX APPEALS and COLLECTOR OF INTERNAL REVENUE. Aznar. No. the right of the CIR to assess deficiency income taxes of the late Aznar for the years 1946. fraud or omission".R. and 1948 had already prescribed at the time the assessment was made on November 28. or failure to file returns. fraudulent return intended to evade payment of tax. ISSUE: Whether or not the deceased Aznar filed false or fraudulent income tax returns and subsequently? HELD: YES. 1947. in his capacity as Administrator of the Estate of the deceased. vs. Matias H. Petitioner avers that according to the NIRC. An investigation by the CIR ascertained the assets and liabilities of the taxpayer and it was discovered that from 1946 to 1951. Meanwhile. There being undoubtedly false tax returns in this case. respondents believe that the prescription period in the case at bar that is applicable is under Sec.: FACTS: Petitioner. his net worth had increased every year. fraud or omission even seems to be inadequate. petitioner. Aznar. 1952. TaxCases_201 . the Court affirm the conclusion of the respondent Court of Tax Appeals that Sec. there being a five year limitation upon assessment and collection from the filing of the returns. the tax may be assessed. 1974 ESGUERRA. J." The ordinary period of prescription of 5 years within which to assess tax liabilities under Sec. 331 of the NIRC should be applicable to normal circumstances.

ISSUE: Whether or not there was fraud w/c would make the assessment valid and the prescriptive period 10 years? HELD: NO. 1948. Moreover.: FACTS: Isabel Ledesma died intestate leaving real properties and personal properties consisting of shares of stock in various domestic corporations. The fact that the value given in the returns did not tally with the book value appearing in the corporate books is not in itself indicative of fraud especially when we take into consideration the circumstance that said book valueonly became known several months after the death of the deceased. plaintiff-appellee. No. L-18384 September 20. 1953 by BIR showing that there was due from the estate deficiency estate and inheritance taxes. vs. Certainly if there is any mistake in the valuation made by Jalandoni the same can only be considered as honest mistake. The deficiency assessment.200.00. She left as heirs her husband and 3 children. HEIRS OF CESAR JALANDONI. A second assessment was made on January 27. 1965 BAUTISTA ANGELO. There was no fraud and the assessment was filed BEYOND the prescriptive period. he being not an expert in appraising real estate. one of the children. On November 19." These sums were paid by Cesar Jalandoni. and experience shows that such an intervening period is sufficiently long to warrant an increase in value of real estate which is precisely what was found by the CIR with regard to the lands in question. stating that the assessment were "to be considered partial pending investigation of the return. Of the 7 lots. filed an estate and inheritance tax return. BIR made an assessment calling for payment of estate and inheritance taxes. It is certainly an error to impute fraud based on an honest difference of opinion.R. On the basis of this return. for which reason a demand was made on Bernardino Jalandoni stating therein that the same was still "to be considered partial pending further investigation of the return. was made by the CIR more than five years from the filing of the return. (2) that seven sugar lands in Talisay-Silay were omitted from the return thesame having a market value of P100. or one based on excusable inadvertence. BIR then conducted another investigation and this time it found (1) that the market value of the lands reported in the return filed by Cesar Jalandoni was underdeclared. G.. The 3 lots were the most valuable with total value of 86k. Total value of 7 lots was 90k. There was reason therefore to believe that the omission was due merely to inadvertence. respectively. TaxCases_202 . defendants-appellants. it is a known fact that stock securities frequently fluctuate in value and a mere difference of opinion in relation thereto cannot serve as proper basis for assessing an intention to defraud the government.REPUBLIC OF THE PHILIPPINES. ET AL. 3 were actually included in the return. J. Cesar Jalandoni. moreover.‖ These amounts were paid by Bernardino Jalandoni.

R. 1976 ESGUERRA. The underlying purpose of the surtax is to avoid a situation where the corporation unduly retains its surplus earnings instead of declaring and paying dividends to its shareholders. Ayala invokes the defense of prescription against the right of the Commissioner to assess the surtax. AYALA SECURITIES CORPORATION and THE HONORABLE COURT OF TAX APPEALS. ISSUE: Whether or not the right to assess and collect the 25% surtax has prescribed after five years? HELD: NO. petitioner. Hence.No False or Fraudulent Return COMMISSIONER OF INTERNAL REVENUE. TaxCases_203 . The CTA (Court of Tax Appeals) reversed the Commissioner‘s decision and held that the assessment made against Ayala was beyond the 5-yr prescriptive period as provided in section 331 of the National Internal Revenue Code. vs. J. G. Commissioner now files a motion for reconsideration of this decision. the collection of surtax is imprescriptible. There is no such time limit on the right of the Commissioner to assess the 25% surtax since there is no express statutory provision limiting such right or providing for its prescription. respondents. No. SC reverses the ruling of the CTA.: FACTS: Ayala Securities Corp. L-29485 March 31. (Ayala) failed to file returns of their accumulated surplus so Ayala was charged with 25% surtax by the Commissioner of internal Revenue.

i.037. INC. J. On August 3. 28 and 29.e. 2006. PAL filed a Petition for Review with the CTA on July 25.952.904.90 and P433.422. P623.949.10. 27. which conferred upon it certain tax exemption privileges on its purchase and/or importation of aviation gas.P686. the CIR averred that since the excise taxes were paid by Caltex. 2004. Further.80. 2013 PERLAS-BERNABE. 1590 issued on June 11. declaring the amounts of P1.. Caltex sold 804. Presidential Decree No. 1978 (PAL‘s franchise). sought a refund of the excise taxes passed on to it by Caltex. and (c) it did not file any claim for the refund of the said excise tax with the BIR. Consequently.798.10. the peso equivalent of the abovementioned dollar amount. including those which are passed on to it by the seller and/or importer thereof. Exemption PHILIPPINE AIRLINES. Indirect Taxes.892. PETITIONER.: FACTS: For the period July 24 to 28. 2004 addressed to respondent Commissioner of Internal Revenue (CIR). respectively. This was confirmed by Caltex in a Certification dated August 20. It hinged its tax refund claim on its operating franchise. fuel and oil. through a letter-request dated October 15.R. 2004. 2004. RESPONDENT. i. On October 29. ISSUES: Whether or not PAL has the legal personality to file a claim for refund of the passed on excise taxes? Whether or not the sale of imported aviation fuel by Caltex to PAL is covered by LOI 1483 which withdrew the tax exemption privileges of PAL on its purchases of domestic petroleum products for use in its domestic operations? Whether or not PAL has sufficiently proved its entitlement to refund? TaxCases_204 . or a total amount of P2. 2004 where it indicated that: (a) the excise taxes it paid on the imported petroleum products amounted to P2. reflecting the amount of US$52.767.54. PAL received from Caltex an Aviation Billing Invoice for the purchased aviation fuel in the amount of US$313. PAL. In its Answer. Statutory Taxpayer.975. PAL asserted that it had the legal personality to file the aforesaid tax refund claim..90. (b) the foregoing excise tax payment was passed on by it to PAL. as excise taxes due thereon. No.370 liters of imported Jet A1 fuel to PAL for the latter‘s domestic operations. G.669. vs. Caltex electronically filed with the Bureau of Internal Revenue (BIR) its Excise Tax Returns for Petroleum Products.33 as the related excise taxes on the transaction.232. 2004. 198759 July 1. COMMISSIONER OF INTERNAL REVENUE.e. on July 26.. PAL had no cause of action.SURVEY OF TAXATION CASES NIRC.90. Due to the CIR‘s inaction.

YES. Notably. the Court may resolve the case on the merits instead of remanding them in the interest of expediency and to better serve the ends of justice. the Court finds that the evidence on record shows that PAL was able to sufficiently prove its entitlement to the subject tax refund. PAL‘s claims for refund were filed on time in accordance with the 2-year prescriptive period. To this end. PAL reported no net taxable income for the period resulting in zero basic corporate income tax. which would necessarily be lower than any franchise tax due from PAL for the same period. even if the burden to pay such was shifted to another. In this regard. PAL filed its administrative claim for refund on October 29. he only pays the seller more for the goods because of the latter‘s obligation to the government as the statutory taxpayer. In its income tax return for FY 2004-2005. Applying these principles. Accordingly. TaxCases_205 . in cases involving excise tax exemptions on petroleum products under Section 135 of the NIRC. even if the purchaser effectively pays the value of the tax. rather. the manufacturer/producer (in case of goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition) or the owner or importer (in case of imported goods) are still regarded as the statutory taxpayers under the law. While the NIRC mandates the foregoing persons to pay the applicable excise taxes directly to the government." is largely a contractual affair between the parties. PAL timely filed its claim for refund. shift the economic burden of such payments to someone else – usually the purchaser of the goods – since excise taxes are considered as a kind of indirect tax. First. The Court agrees with PAL. however.YES. it relies on the Silkair ruling which enunciates that the proper party to question. In this regard. when the trial court had already received all the evidence of the parties. 2004 and its judicial claim with the CTA on July 25. Section 204(c) of the NIRC states that it is the statutory taxpayer which has the legal personality to file a claim for refund. the purchaser does not really pay the tax. It is hornbook principle that the Court is not a trier of facts and often. otherwise known as "passing on. PAL counters that the doctrine laid down in Silkair is inapplicable. PAL paid the lower of the basic corporate income tax or the franchise tax as provided for in the afore-quoted Section 13 of its franchise. 2006. this shifting process. they may. asserting that it has the legal personality to file the subject tax refund claim on account of its tax exemption privileges under its legislative franchise which covers both direct and indirect taxes. is the statutory taxpayer. Jurisprudence states that indirect taxes are those which are demanded in the first instance from one person with the expectation and intention that he can shift the economic burden to someone else. YES. In this relation. The CIR argues that PAL has no personality to file the subject tax refund claim because it is not the statutory taxpayer. Second. or to seek a refund of an indirect tax. the statutory taxpayer can transfer to its customers the value of the excise taxes it paid or would be liable to pay to the government by treating it as part of the cost of the goods and tacking it on to the selling price. Meaning. or the person on whom the tax is imposed by law and who paid the same. remands cases to the lower courts for the determination of questions of such character. the Court has consistently held that it is the statutory taxpayer who is entitled to claim a tax refund based thereon and not the party who merely bears its economic burden. As basis. However.

952. the Court hereby grants its petition and consequently.Third.855.975. annuls the assailed CTA resolutions. an examination of the records shows a sufficient explanation for the difference.90 declared in the said returns and the amount of P2.037.90 sought to be refunded).892. TaxCases_206 . Thus. finding that PAL has sufficiently proved its entitlement to a tax refund of the excise taxes subject of this case.00 between the amount of P2. the subject excise taxes were duly declared and remitted to the BIR. Contrary to the findings of the CTA that the excise taxes sought to be refunded were not the very same taxes that were declared in the Excise Tax Returns filed by Caltex (the discrepancy of P23.

1. 188550 August 19. Applying the principle of stare decisis et non quieta movere.562.851. the rule was relaxed and the claim for refund of excess final withholding taxes was partially granted. The CTA En Banc affirmed the CTA Second Division‘s Decision dated 29 August 2008 and Resolution dated 14 January 2009. No. Commissioner of Internal Revenue. petitioner requested from the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty. ISSUE: Whether the failure to strictly comply with RMO No.688.553. 168531 filed by Mirant for failure to sufficiently show any reversible error in the assailed judgment. if not eliminate the harshness of international juridical double taxation. the CTA En Banc took into consideration that this Court had denied the Petition in G. petitioner withheld and remitted to respondent on 21 October 2003 the amount of PHP 67. any other case involving exactly the same point at issue should be decided in the same manner. RESPONDENT. On the same date.17.: FACTS: In accordance with Section 28(A)(5) of the National Internal Revenue Code (NIRC) of 1997. COMMISSIONER OF INTERNAL REVENUE. the ITAD did not issue any ruling to petitioner even if it filed a request for confirmation on 4 October 2005 that the remittance of branch profits to DB Germany is subject to a preferential tax rate of 10% pursuant to Article 10 of the RPGermany Tax Treaty.R. While it issued a ruling to CBK Power Company Limited after the payment of withholding taxes. the CTA En Banc held that a ruling from the ITAD of the BIR must be secured prior to the availment of a preferential tax rate under a tax treaty. 2013 SERENO.51. In that case. 1-2000 will deprive persons or corporations of the benefit of a tax treaty? HELD: NO. No. The court likewise ruled that the 15-day rule for tax treaty relief application under RMO No. vs. G. unlike in CBK Power Company Limited v. Tax treaties are entered into to minimize. which is why they are also known as double tax treaty or double tax agreements. Citing Mirant.Tax Treaties DEUTSCHE BANK AG MANILA BRANCH. TaxCases_207 . CJ. petitioner filed with the BIR Large Taxpayers Assessment and Investigation Division on 4 October 2005 an administrative claim for refund or issuance of its tax credit certificate in the total amount of PHP 22. PETITIONER. The CTA En Banc ruled that once a case has been decided in one way. which represented the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking unit (RBU) net income remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable years. Believing that it made an overpayment of the BPRT.R.2000 cannot be relaxed for petitioner.

petitioner should not be faulted for not complying with RMO No. when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the benefits under said agreement. We recognize the clear intention of the BIR in implementing RMO No. 1-2000 prior to the transaction. or 15 days prior to the payment of its BPRT. the prior application requirement becomes illogical. but the CTA‘s outright denial of a tax treaty relief for failure to strictly comply with the prescribed period is not in harmony with the objectives of the contracting state to ensure that the benefits granted under tax treaties are enjoyed by duly entitled persons or corporations. 1-2000 which would indicate a deprivation of entitlement to a tax treaty relief for failure to comply with the 15. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. such as the present case.Thus. Hence. 1-2000. but on the regular rate as prescribed by the NIRC.day period. More so. laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto. the fact that petitioner invoked the provisions of the RP-Germany Tax Treaty when it requested for a confirmation from the ITAD before filing an administrative claim for a refund should be deemed substantial compliance with RMO No. Therefore. It could not have applied for a tax treaty relief within the period prescribed. TaxCases_208 . The underlying principle of prior application with the BIR becomes moot in refund cases. precisely because it erroneously paid the BPRT not on the basis of the preferential tax rate under the RP-Germany Tax Treaty.1-2000. where the very basis of the claim is erroneous or there is excessive payment arising from non-availment of a tax treaty relief at the first instance. it must be stressed that there is nothing in RMO No. Likewise. In this case.

‖ In effect. 167274-75 July 21. G. R. A claim for tax refund may be based on statutes granting tax exemption or tax refund. it provided that the 12% tax increase must be based on the excise tax actually being paid prior to January 1. 145 thereof now subjects the cigarette brands to specific tax and also provides that: (1) the excise tax from any brand of cigarettes within the next three (3) years from the effectivity of R. the rule of strict interpretation against the taxpayer is applicable as the claim for refund partakes of the nature of an exemption.A. RR No.A.: FACTS: Respondent FTC is a domestic corporation that manufactures cigarettes packed by machine under several brands. On January 1. 2008 TINGA. Tax exemption is a result of legislative grace. 2000 and not on their actual net retail price. 8240 took effect. Section 142 of the 1977 Tax Code subjected said cigarette brands to ad valorem tax. 1996. No. 8240 shall not be lower than the tax. 2000. a legislative grace.Application of Solution Indebiti to the State COMMISSIONER OF INTERNAL REVENUE. No. vs. Sec. 4280 prescribed the cigarette brands‘ tax classification rates based on their net retail price. ISSUE: Whether or not the government is exempt to be bound by the principle on Solution Indebiti? HELD: NO. The rule is that tax exemptions must be strictly construed such that the exemption will not be held to be conferred unless the terms under which it is granted clearly and distinctly show that such was the intention. Nos. FORTUNE TOBACCO CORPORATION. 2000. In such case. Petitioner. TaxCases_209 . 1997.A. And he who claims an exemption from the burden of taxation must justify his claim by showing that the legislature intended to exempt him by words too plain to be mistaken. (2) the rates of excise tax on cigarettes enumerated therein shall be increased by 12% on January 1. 17-99 added the qualification that ―the new specific tax rate xxx shall not be lower than the excise tax that is actually being paid prior to January 1. The Secretary of Finance issued RR No. which is due from each brand on October 1. 17-99 to implement the provision for the 12% excise tax increase. The taxpayer must show that the legislature intended to exempt him from the tax by words too plain to be mistaken.R. which cannot be allowed unless granted in the most explicit and categorical language. J. 1996. and (3) the classification of each brand of cigarettes based on its average retail price as of October 1. No. Annex D of R. 1997. as set forth in Annex D shall remain in force until revised by Congress. Respondent. Prior to January 1.

The dynamic of erroneous payment of tax fits to a tee the prototypic quasi-contract. It should not unjustly enrich itself at the expense of taxpayers. If the State expects its taxpayers to observe fairness and honesty in paying their taxes. Indeed. are not founded principally on legislative grace but on the legal principle which underlies all quasi-contracts abhorring a person‘s unjust enrichment at the expense of another. solutio indebiti.Tax refunds (or tax credits). TaxCases_210 . And so. on the other hand. and the latter has the duty to refund without any unreasonable delay what it has erroneously collected. which covers not only mistake in fact but also mistake in law. it must hold itself against the same standard in refunding excess (or erroneous) payments of such taxes. the taxpayer expects fair dealing from the Government. The Government is not exempt from the application of solutio indebiti. a claim for tax refund necessitates only preponderance of evidence for its approbation like in any other ordinary civil case. given its essence.

national and local. CESAR S. petitioner questioned the assessments in a letter dated 3April 2002 for lack of legal basis due to the City Assessor‘s failure to identify the specific properties and its corresponding assessed values. pursuant to RA No. No. G. CENTRAL BOARD OF ASSESSMENT APPEALS. petitioner is liable for the payment of the real property taxes subject of this petition? HELD: YES. which were leased out to petitioner. 7227. 2013 PEREZ. IN HER CAPACITY AS THE CITY ASSESSOR OF THE CITY OF BAGUIO. Real Property Tax CAMP JOHN HAY DEVELOPMENT CORPORATION. GUTIERREZ. Respondents. TANO. TABANGIN. TaxCases_211 .Tax Assessment Protest. 2002-003. ISSUE: Whether or not Section 252) of RA No. otherwise known as the Bases Conversion and Development Act of 1992. petitioner filed with the Board of Tax Assessment Appeals (BTAA) of Baguio City an appeal under Section 226 of the LGC of 1991 challenging the validity and propriety of the issuances of the City Assessor. 7160 or the LGC of 1991. The appeal was docketed as Tax Appeal Case No. AND HON. Petitioner claimed that there was no legal basis for the issuance of the assessments because it was allegedly exempted from paying taxes. respondent City Assessor of Baguio City notified petitioner Camp John Hay Development Corporation about the issuance against it of thirty-six (36) Owner‘s Copy of Assessment of Real Property (ARP). 169234 October 2. Consequently. J. The City Assessor replied in a letter dated 11 April 2002 that the subject ARPs (with an additional ARP on another building bringing the total number of ARPs to thirty-seven [37]) against the buildings of petitioner located within the JHSEZ were issued on the basis of the approved building permits obtained from the City Engineer‘s Office of Baguio City and pursuant to Sections 201 to 206 of RA No.: FACTS: In a letter dated 21 March 2002. including real property taxes. 7160 or the LGC of 1991 does apply when the person assessed is a tax-exempt entity? Whether or not under the doctrine of operative fact. Section 252 emphatically directs that the taxpayer/real property owner questioning the assessment should first pay the tax due before his protest can be entertained. In response. Petitioner. REPRESENTED BY ITS CHAIRMAN HON. Baguio City. ESTRELLA B. with ARP Nos. To begin with.R. 01-07040-008887 to 01-07040-008922covering various buildings of petitioner and two (2) parcels of land owned by the Bases Conversion Development Authority (BCDA) in the John Hay Special Economic Zone (JHSEZ). on 23 May 2002. vs. ADELINA A. IN HER CAPACITY AS CHAIRMAN OF THE BOARD OF TAX (ASSESSMENT) APPEALS OF BAGUIO CITY.

it is clear that the requirement of "payment under protest" is a condition sine qua non before a protest or an appeal questioning the correctness of an assessment of real property tax may be entertained. the words "paid under protest" shall be annotated on the tax receipts. a claim for exemption from payment of real property taxes does not actually question the assessor‘s authority to assess and collect such taxes. the same shall be dropped from the assessment roll. Secondly. as provided in Section 226 of RA No. YES. However. he may elevate. 7160 or the LGC of 1991. Thereafter. by the LBAA. an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. and resolutions of the Local Boards involving contested assessments of real properties. or municipal assessor in the assessment of his property may file an appeal with the LBAA of the province or city concerned. who shall decide the protest within sixty (60)days from its receipt. within thirty (30) days from receipt. within the period prescribed by law. by providing that real property not declared and proved as taxexempt shall be included in the assessment roll. the property shall be listed as taxable in the assessment roll.As a matter of fact. Moreover. which exercises exclusive jurisdiction to hear and decide all appeals from the decisions. taxes must be paid under protest if the exemption from taxation is insisted upon. In other words. If the required evidence is not submitted within the period herein prescribed. Even assuming that the assessor‘s authority is indeed an issue. by filing a notice of appeal. it must be pointed out that in order for the court a quo to resolve the petition. Under the doctrine of primacy of administrative remedies. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal. city. a question of fact which should be resolved. if the property shall be proven to be tax exempt. Therefore. and any subsequent claim for exemption shall be allowed only when sufficient proof has been adduced supporting the claim. TaxCases_212 . Consequently. the adverse decision of the LBAA with the CBAA. From the foregoing jurisprudential pronouncements. if the property being taxed has not been dropped from the assessment roll. only after such payment has been made by the taxpayer may he file a protest in writing (within thirty (30) days from said payment of tax) to the provincial. the above-quoted provision implies that the local assessor has the authority to assess the property for realty taxes. at the very first instance. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid. city. or municipal treasurer. the issues of the correctness of the tax assessment and collection must also necessarily be dealt with. any owner or person having legal interest in the property not satisfied with the action of the provincial. claims for tax refund and/or tax credits. or overpayments of taxes. but pertains to the reasonableness or correctness of the assessment by the local assessor. orders.

construction. vs. Pangasinan. subject to NPC instructions. G. 187485 October 8. erect. x-----------------------x TAGANITO MINING CORPORATION. completion. erection. 2003. commission. 2013 G. 196113 G. J. 197156 CARPIO. excess input VAT which it declared in its Quarterly VAT Returns filed for the same year. [San Roque] filed with the BIR a separate amended claim for refund. SAN ROQUE POWER CORPORATION. commission and operate power-generating plants and related facilities pursuant to and under contract with the Phil. the case was submitted for decision ISSUE: Whether or not the petitioner is entitled for tax refund? HELD: YES. Respondent. [San Roque] allegedly in curred. It is also registered with the Board of Investments ("BOI") on a preferred pioneer status. own.Trial of the case ensued and on July 20. Respondent.: FACTS: San Rogue is a domestic corporation with a principal office at Barangay San Rogue. During the cooperation period of twenty-five (25) years commencing from the completion date of the Power Station. construction. assembly. as well as to own. representing unutilized input taxes as declared in its VAT returns for taxable year 2001. [San Rogue] entered into a Power Purchase Agreement ("PPA") with NPC. NPC will take and pay for all electricity available from the Power Station. vs.R. COMMISSIONER OF INTERNAL REVENUE. COMMISSIONER OF INTERNAL REVENUE. [San Roque] filed amended Quarterly VAT Returns for the year 2001 since it increased its unutilized input VAT. and operate electric power-generating plants and related activities. It was incorporated to design. In 1997.On March 28. [San Roque] duly filed with the BIR separate claims for refund. No. assemble. Consequently.R.Tax Refund or Credit COMMISSIONER OF INTERNAL REVENUE. No. testing and commissioning of the Power Station and shall operate and maintain the same. 2005. The PPA provides that [San Roque] shall be responsible for the design.R. vs. x-----------------------x PHILEX MINING CORPORATION. San Rogue is VAT Registered as a seller of services. CIR‘s inaction on the subject claims led to the filing of the Petition for Review with the CTA-Division on April 10. Petitioner. SanManuel. No. Respondent. On the construction and development of the San Roque MultiPurpose. TaxCases_213 . Petitioner. Government. construct. to engage in the design. installation. Petitioner. 2003.

It is disheartening enough to a taxpayer to keep him waiting for an indefinite period of time for a ruling or decision of the Collector (now Commissioner) of Internal Revenue on his claim for refund. If the said period is about to expire but the BIR has not yet acted on the application for refund. what the petitioner failed to consider is Section 112(A) of the same provision. The Honorable Court of Tax Appeals and Planters Products. in the case of Commissioner of Customs and Commissioner of Internal Revenue vs. At stake are claims for refund and unlike disputed assessments. that the CIR knows that claims for VAT refund or tax credit filed with the Court of Tax Appeals can proceed simultaneously with the ones filed with the BIR and that taxpayers need not wait for the lapse of the subject 120-day period.It is true that Section 112(D) of the provision applies to the present case. the Supreme Court held that the taxpayer need not wait indefinitely for a decision or ruling which may or may not be forthcoming and which he has no legal right to expect. Lastly. 49-03 dated August 18. Commissioner of Internal Revenue that the two-year prescriptive period for filing a claim for input tax is reckoned from the date of the filing of the quarterly VAT return and payment of the tax due. Furthermore. the Supreme Court held in the case of Atlas Consolidated Mining and Development Corporation vs. 2003. the taxpayer may interpose a petition for review with this Court within the two year period. no decision of respondent (herein petitioner) is required before one can go to this Court. given his go signal. the Court has already acquired jurisdiction over the claims and the Court is not bound to wait indefinitely for no reason for whatever action respondent (herein petitioner) may take. would have. Inc. This Court ruled in several cases that once the petition is filed. TaxCases_214 . However. at his personal convenience. The respondent is also covered by the two (2) year prescriptive period. Accordingly. It would make matters more exasperating for the taxpayer if we were to close the doors of the courts of justice for such a relief until after the Collector (Commissioner) of Internal Revenue. it is apparent from the following provisions of Revenue Memorandum Circular No. We have repeatedly held that the claim for refund with the BIR and the subsequent appeal to the Court of Tax Appeals must be filed within the two-year period..

GR No. Respondent.824. Moreover. 6967. TaxCases_215 . the CTA First Division promulgated its Amended Decision. 2003.607. 2009. 196907 March 13 2013 MENDOZA. the taxpayer affected may. however. the CTA First Division ruled that while the administrative application for refund was made within the two-year prescriptive period. Commissioner of Internal Revenue (CIR) to issue a tax credit certificate in favor of petitioner in the amount of P10. Pending review by the BIR. 2009.A. vs. ordering the respondent. the 120+30-day period is indeed mandatory and jurisdictional. 2003. ISSUE: Whether or not the petitioner is entitled to tax refund? HELD: NO. Section 112. contrary to petitioner‘s position. The CTA First Division took judicial notice of the records of C. It is also a value-added tax (VAT)-registered entity with the Large Taxpayer District of the Bureau of Internal Revenue (BIR). Upon motion for reconsideration. on April 25. within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period… Because the law is categorical in its language.824.4. the First Division of the CTA denied the petition for insufficiency of evidence.For the year 2001.345.: FACTS: Petitioner Nippon Express (Philippines) Corporation (petitioner) is a corporation duly organized and registered with the Securities and Exchange Commission. petitioner‘s immediate recourse to the court.6 dated March 24.T.31 representing excess or unutilized input tax for the second. petitioner filed a petition for review with the CTA. or the failure on the part of the Commissioner to act on the application within the period prescribed above.NIPPON EXPRESS (PHILIPPINES) CORPORATION.29 representing excess input tax attributable to its effectively zero-rated sales in 2001. of the NIRC: Refunds or Tax Credits of Input Tax. As to the timeliness of the filing of petitioner‘s administrative and judicial claims.928. Case No. it filed an administrative claim for refund of ₱20. Thus the failure to observe the said period before filing a judicial claim with the CTA would not only make such petitioner premature but would also result to nonacquisition by the CTA of the jurisdiction to hear the case.345. On January 26. On April 24. Petitioner.29. In case of full or partial denial of the claim for tax refund or tax credit. J. there is no need for further interpretation by the courts and non-compliance with the provision cannot be justified. third and fourth quarters of 2001. COMMISSIONER OF INTERNAL REVENUE. requesting for the issuance of a tax credit certificate in the amount of P20. it regularly filed its amended quarterly VAT returns.

MS. petitioners could no longer contest the validity of such assessment when they filed their Complaint and Amended Complaint on October 20. CORP. and thus. making the RTC decision already final and executor. 2001 to respondents was a mere protest letter and as such. STAR APPLIANCES CENTER. INC. LIBERTY M.. could not be treated as a written claim for refund.. 2003 (Answer). J. Accordingly. respondents filed their Answer12 on December 16. the assessment became conclusive and unappealable. and SURPLUS MARKETING CORPORATION.281. Consequently.26 under protest. 2003 and November 14. 2013 PERLAS-BERNABE.. and THE CITY OF MANILA. Toledo. 2003 (Motion to Dismiss). SUPER VALUE. petitioners informed the Office of the City Treasurer of Manila of the nature of the foregoing payment.Respondents. in her official capacity as the City Treasurer of Manila. SHOEMART. 190818 June 5. Consequently. For their part. On November 19. vs. and 8011. HEALTH AND BEAUTY. In an Order11 dated December 10 2003. it is hornbook principle that a claim for a tax refund/credit is in the nature of a claim for an exemption and the law is construed in strictissimi juris against the one claiming it and in favor of the taxing authority. as Treasurer of respondent City of Manila (City). Petitioners. INC. the RTC did not address the arguments raised in the aforesaid Motion to Dismiss but merely admitted petitioners‘ amended complaint. ISSUE: Whether or not the petitioner is entitled for tax credit? HELD: NO. assessed petitioners for their fourth quarter local business taxes pursuant to Section 21 of City Ordinance No. respondents filed a Motion to Dismiss10 dated November 6. SM PRIME HOLDINGS. In a letter dated October 19. reprised their previous claims. assailing as well the unconstitutionality of Section 21 of the Manila Revenue Code. 7794. 2003.It likewise ruled that petitioners failed to comply with Section 19628 of the LGC. otherwise known as the ―Local Government Code of 1991‖ (LGC). Indeed..: FACTS: Sometime in October 2001. on October 20. petitioners moved for reconsideration. averring that respondents failed to file their Petition for Review within the reglementary period thus. otherwise known as the ―Revenue Code of the City of Manila‖ (Manila Revenue Code). INC. It held that petitioners failed to contest the denial of their protest before a court of competent jurisdiction within the period provided for under Section 19526 of Republic Act No. 2008. respectively.. ACE HARDWARE PHILIPPINES.. In this regard. 2001.104. TOLEDO. petitioners filed an Amended Complaint which in essence.METRO MANILA SHOPPING MECCA CORP.. 7160. JOLLIMART PHILS. respondent Liberty M. petitioners paid the total assessed amount of P5. 2001. 7988. as amended by City Ordinance Nos. considering that their letter dated October 19. TaxCases_216 . reiterating their claim that Section 21 of the Manila Revenue Code is null and void. INC. Petitioner filed a case with the Regional Trial Court of Manila (RTC) against respondents. GR No. 7807. INC.

Therefore. and (c) it did not file any claim for the refund of the said excise tax with the BIR. 28 and 29.669. 2004. and (b) the cost of the taxes billed or passed on to it by the seller. duties. shall be in lieu of all other taxes. whichever is lower. royalties. through a letter-request dated October 15. on July 26. If the law confers an exemption from both direct or indirect taxes. and applying the principles PAL is endowed with the legal standing to file the subject tax refund claim. PAL‘s franchise grants it an exemption from both direct and indirect taxes on its purchase of petroleum products. J. INC. 27. a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. PETITIONER. sought a refund of the excise taxes passed on to it by Caltex. 2004 addressed to respondent Commissioner of Internal Revenue (CIR).‖36 In other words. RESPONDENT. or importer of the said products either as part of the purchase price or by mutual agreement or other arrangement.33 as the related excise taxes on the transaction. manufacturer. COMMISSIONER OF INTERNAL REVENUE. and other fees and charges. if the exemption conferred only applies to direct taxes. On the other hand. reflecting the amount of US$52. registration. producer. except only real property tax. On October 29. license.. Consequently. given the foregoing direct and indirect tax exemptions under its franchise. PAL is exempt from paying: (a) taxes directly due from or imposable upon it as the purchaser of the subject petroleum products. then the statutory taxpayer is regarded as the proper party to file the refund claim.949.On August 3.54. Section 13 thereof PAL‘s payment of either the basic corporate income tax or franchise tax. producer. 2004.370 liters of imported Jet A1 fuel to PAL for the latter's domestic operations. TaxCases_217 . manufacturer. This was confirmed by Caltex in a Certification dated August 20. Caltex sold 804. 2004. PAL. where it indicated that: (a) the excise taxes it paid on the imported petroleum products. 2004. 2013 PERLAS-BERNABE.: FACTS: For the period July 24 to 28. The phrase ―in lieu of all other taxes‖ includes but is not limited to taxes that are ―directly due from or imposable upon the purchaser or the seller. ISSUE: Whether or not the petitioner is entitled for tax refund? HELD: YES. or importer of said petroleum products but are billed or passed on the grantee either as part of the price or cost thereof or by mutual agreement or other arrangement. GR. vs.No.(b) the foregoing excise tax payment was passed on by it to PAL. In this case. 2004. 198759 July 1. in view of PAL‘s payment of either the basic corporate income tax or franchise tax. notwithstanding the fact that it is not the statutory taxpayer as contemplated by law. It may be observed that the propriety of a tax refund claim is hinged on the kind of exemption which forms its basis. Caltex electronically filed with the Bureau of Internal Revenue (BIR) its Excise Tax Returns for Petroleum Products. whichever is lower. PAL received from Caltex an Aviation Billing Invoice for the purchased aviation fuel in the amount of US$313.PHILIPPINE AIRLINES.

The absence of official receipts issued in its name is tantamount to non compliance with the substantiation requirements provided by law.65 representing unutilized input VAT on capital goods purchased for the period beginning the 4th quarter of 1999 up to the 4thquarter of 2000. It is registered with the Bureau of Internal Revenue (BIR) as a value-added tax (VAT) taxpayer. shows that some of its purchases. Revenue Region No. CTA Second Division held that an examination of the various official receipts presented by petitioner.875. such as rental. Further. The CTA Second Division rendered a Decision partially granting petitioner‘s claim for refund in the reduced amount of P40. to support its purchases for capital goods. the taxpayer claiming the refund must comply with the invoicing and accounting requirements mandated by the Tax Code. and Water Treatment Plant. It is clear that petitioner must show satisfaction of all the documentary and evidentiary requirements before an administrative claim for refund or tax credit will be granted. 3rd quarter of 2000.814. 8 of the BIR. Petitioner. vs. purification and distribution of water. Respondent.‖ being unauthorized and without approval of the SEC. input VAT paid on purchases of capital goods amounting to P65. and the issuance of official receipts under that name which were presented to support petitioner‘s claim for tax refund.BONIFACIO WATER CORPORATION (formerly BONIFACIO VIVENDI WATER CORPORATION). J. an administrative claim for refund or issuance of a tax credit certificate in the amount of P65. with VAT Registration/Taxpayer Identification No. THE COMMISSIONER OF INTERNAL REVENUE. petitioner alleges that its input VAT included. the change of petitioner‘s name to ―Bonifacio GDE Water Corporation. cannot be used to allow the grant of tax refund or issuance of a tax credit certificate in petitioner‘s favor. GR. TaxCases_218 .642. 2nd quarter of 2000. it ruled that the official receipts under the name ―Bonifacio GDE Water Corporation‖ were disallowed on the ground that the use of said business name by petitioner was never approved by the Securities and Exchange Commission (SEC).65. 201-403-657-000.814. ISSUE: Whether or not the petitioner is entitled for tax refund? HELD: NO. among others. 1st quarter of 2000. No. Petitioner filed with Revenue District Office No. 175142 July 22 2013 PERALTA. Thus.642. management fees and direct overhead. Perforce.64. 44–Pateros and Taguig. These purchases supposedly pertain to payment to contractors in connection with the construction of petitioner‘s Sewage Treatment Plant. Petitioner duly filed with the BIR its quarterly VAT returns for the 4thquarter of 1999.: FACTS: Petitioner is a domestic corporation engaged in the collection. Water and Waste System.208. and 4th quarter of 2000 For said period. cannot be considered as capital goods.

Moreover.Petitioner cannot raise the argument that. strict compliance with technical rules of evidence is not required. as amended. ―non-compliance with the invoicing requirements under the 1997 NIRC. as amended.‖ in addition to its first ground in the instant petition. does not automatically result in the denial of a claim for refund or tax credit when the same is supported by substantial evidence‖ and that. and its implementing rules and regulations TaxCases_219 . Taxpayers claiming for a refund or tax credit certificate must comply with the strict and mandatory invoicing and accounting requirements provided under the 1997 NIRC. ―In civil cases. such as claims for refund. a mere preponderance of evidence will suffice to justify the grant of a claim.

7-95. In that case. Petitioner.. COMMISSIONER OF INTERNAL REVENUE. On April 16.: FACTS: Petitioner J. After trial. TaxCases_220 .6454 and raffled to the Second Division of the CTA. he denial of petitioner‘s claim for tax credit/refund is justified because it failed to comply with the invoicing requirements under Section 4. Trece Martires City. GR. ISSUE: Whether or not the petitioner is entitled for tax refund? HELD: NO. 2002. On separate dates. A. Emphasizing that tax refunds are in the nature of tax exemptions which are strictly construed against the claimant.R. ladies‘ wear. overalls. No. applications for tax credit/refund of unutilized input VAT on its zerorated sales for the taxable quarters of 2000. INC. petitioner filed a Petition for Review with the CTA for the refund/credit of the same input VAT which was docketed as CTA Case No. dresses and other wearing apparel.. 171307 August 28. 7-95. Inc. Philippines. respondent seeks the affirmance of the assailed Decision and Resolution of the CTA En Banc. R. petitioner filed with the Revenue District Office (RDO) No. Commissioner of Internal Revenue. a domestic corporation.108-1 of Revenue Regulations No. J. shirts. is engaged in the manufacture and wholesale export of jackets.J. It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and as an Ecozone Export Enterprise with the Philippine Economic Zone Authority (PEZA). pants.A. 54 of the BIR. which requires the word ―zero rated‖ to be printed on the invoices/receipts covering zero-rated sales. 2013 DEL CASTILLO. This has been squarely resolved in Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) v. trousers.108-1of Revenue Regulations No. vs. we sustained the denial of petitioner‘s claim for tax credit/refund for non-compliance with Section 4. Respondent. the Second Division of the CTA rendered a Decision denying petitioner‘s claim for refund/credit of input VAT attributable to its zero-rated sales due to the failure of petitioner to indicate its Taxpayer‘s Identification Number-VAT (TIN-V) and the word ―zero-rated‖ on its invoices. PHILIPPINES. polo shirts.

COMMISSIONER OF INTERNAL REVENUE. Petitioner.: FACTS: FTC (herein petitioner Fortune Tobacco Corporation) is engaged in manufacturing or producing cigarette brands with tax rate classification based on net retail price Prior to January 1. vs. The contention that the increase of 12% starting on 1 January 2000 does not apply to the brands of cigarettes listed under Annex ―D‖ is likewise unmeritorious. FORTUNE TOBACCO CORPORATION. as set forth in Annex ‗D‘. as amended. as increased by 12%—a situation not supported by the plain wording of Section 145 of the Tax Code. Paragraph 8. among others. Section 145 of the Tax Code simply states that. 17-99 dated December 16. sub-paragraph (1)-(4).. RR No.R. FTC paid excise taxes on all its cigarettes manufacture FTC subsequently sought administrative redress for refund before the Commissioner. hence the case. the aforesaid cigarette brands were subject to advalorem tax under Section 142 of the 1977 Tax Code. 17-99 provides that the new specific tax rate for any existing brand of cigars.167274-75 September 11 2013 G. 1997.‖ TaxCases_221 .COMMISSIONER OF INTERNAL REVENUE. absurd even. ISSUE: Whether or not the respondent can claim tax refund? HELD: YES. 1996. 1997. cigars and cigarettes packed by machines by January 1. x-----------------------x FORTUNE TOBACCO CORPORATION.) No. J. Respondent. issued Revenue Regulations (RR) No. Respondent. By adding the qualification that the tax due after the 12% increase becomes effective shall not be lower than the tax actually paid prior to 1 January 2000. 1999 for the purpose of implementing the provision for a 12% increase of excise tax on. JR. No.A. No. 17-99 effectively imposes a tax which is the higher amount between the ad valorem tax being paid at the end of the three (3)-year transition period and the specific tax under paragraph C. a shift from ad valorem tax system to the specific tax system was adopted imposing excise taxes on cigarette brands under Section 142 thereof. the Secretary of Finance. This is not the first time that national revenue officials had ventured in the area of unauthorized administrative legislation. 2000. Petitioner. vs. GR. 192576 VELASCO. ―the classification of each brand of cigarettes based on its average net retail price as of October 1. [RR] No. However. 8240 on January 1. shall remain in force until revised by Congress. Section 145 mandates a new rate of excise tax for cigarettes packed by machine due to the 12% increase effective on 1 January 2000 without regard to whether the revenue collection starting from this period may turn out to be lower than that collected prior to this date. upon the effectivity of Republic Act (R.

On March 26.528.No. Petitioner alleged that the accumulated input taxes of ₱9. within which a VAT-registered person whose sales are zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate or refund of creditable input tax. petitioner had until 30 June 2002. Thus.528. GR. Counting 120 days from 26 March 2002.APPLIED FOOD INGREDIENTS COMPANY. 30 September 2002 and 31 December 2002 − or the close of the taxable quarter when the zero-rated sales were made−within which to file its administrative claim for refund. COMMISSIONER OF INTERNAL REVENUE. 43 of the BIR in Pasig City (BIR-Pasig) as. Subsequently.24. the CIR had until 24 July 2002 within which to decide on the claim of petitioner for an input VAT refund attributable to the its zero-rated sales for the period April to September 2000. Section 112(A) provides for a two-year prescriptive period after the close of the taxable quarter when the sales were made.85 for its importation of food ingredients. The proceeds thereof were inwardly remitted to petitioner's dollar accounts with Equitable Bank Corporation and with Australia New Zealand Bank-Philippine Branch.565. among others.565. 2000 have not been applied against any output tax. 2000 to December 31. as a pure buy-sell trader. The Commissioner of Internal Revenue (CIR) had one hundred twenty (120) days from the date of submission of complete documents in support of the application within which to decide on the administrative claim. Applying Section 112(A). as reported in its Quarterly Vat Return. these imported food ingredients were exported between the periods of April 1. 2000. Petitioner further claimed that the aforestated export sales which transpired from April 1. Thus the CTA denied such tax refund.. TaxCases_222 . hence the petition.577. a Value-Added Tax (VAT) taxpayer engaged in the importation and exportation business. we find sufficient compliance with the two-year prescriptive period when petitioner filed its claim on 26 March 2002and 28 June 2002covering its zero-rated sales for the period April to September 2000 and October to December 2000. vs. 2000 to December 31. J: FACTS: Petitioner is registered with the Regional District Office (RDO) No. 2002 and June 28. 2000 were ―zero-rated‖ sales. respectively. INC. 2000. 2013 Sereno. 1998 to December 31. In this case. it paid an aggregate sum of input taxes of ₱9. Respondent. 2002. ISSUE: Whether or not the petitioner can claim tax refund? HELD: NO. 184266 November 11. Petitioner. pursuant to Section 106(A (2)(a)(1) of the N1RC of 1997. from which the petitioner was able to generate export sales amounting to ₱114.937.85 for the period of September 1. Petitioner alleged that fromSeptember 1998 to December 31. petitioner filed two separate applications for the issuance of tax credit certificates. petitioner claims that from April 2000 to December 2000 it had zero-rated sales to which it attributed the accumulated input taxes it had incurred from September 1998 to December 2000.

On the other hand. or for the period covering October to December 2000. show that the judicial claim of petitioner was filed on 24 July 2002. TaxCases_223 . In San Roque.Petitioner clearly failed to observe the mandatory 120-day waiting period. the Court held: ―Failure to comply with the 120-day waiting period violates a mandatory provision of law. the CIR had until 26 October 2002 within which to decide on petitioner‘s claim for refund filed on 28 June 2002. therefore the petition is denied. Consequently. the premature filing of its claim for refund/credit of input VAT before the CTA warranted a dismissal. inasmuch as no jurisdiction was acquired by the CTA. Records. however. It violates the doctrine of exhaustion of administrative remedies and renders the petition premature and thus without a cause of action.

the petitioner filed a written claim for refund or tax credit relative to its unutilized input VAT for the period from October 1999 to October 2001 it amended the claim for refund or tax credit to cover the period from October 1999 to May 2002 which was later denied. 106(B). the petitioner did not reflect any zerorated sales from its power generation in its four quarterly VAT returns. a corporation duly organized under the laws of the Philippines. 2013 BERSAMIN. vs. Z-162-2000).On November 26. Ever Electrical Manufacturing. Respondent.: FACTS: The petitioner. The petitioner alleged herein that it had incurred input VAT . Claim for refund or tax credit for unutilized input VAT may be allowed only if the following requisites concur. 2001 to December 31. ISSUE: Whether or not the petitioner is entitled to tax refund? HELD: NO. namely: (a) the taxpayer is VAT-registered. 2001-269). Inc. Aboitiz Equity Ventures. 2000 to December 31. COMMISSIONER OF INTERNAL REVENUE. the petitioner was granted by the BIR a certificate for Zero Rate for VAT purposes in the periods from January 1. Inc. hence the case. No. and (i) the claim is filed within two years after the close of the taxable quarter when such sales were made. (f) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. Petitioner. has been registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer under Taxpayer Identification No. the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas. and from January 2. Pursuant to the Power Purchase Agreement entered into with the National Power Corporation (NPC). GR. the electricity produced by the petitioner from its operation of the Bakun Hydroelectric Power Plant was to be sold exclusively to NPC. the input taxes shall be proportionately allocated on the basis of sales volume. February 1. (g) for zero-rated sales under Section 106(A)(2)(1) and (2). It was formed as a consortium of several corporations. TaxCases_224 . 2000 (Certificate No. and the input taxes cannot be directly and entirely attributable to any of these sales.Relative to its sale to NPC. 2000 to December 31. namely: Northern Mini Hydro Corporation. (b) the taxpayer is engaged in zero-rated or effectively zero-rated sales. 2001 (Certificate No. As the CTA En Banc precisely found.. (h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales. and Pacific Hydro Limited. 004-266-526.LUZON HYDRO CORPORATION.J. We agree with the CTA En Banc that the petitioner did not produce evidence showing that it had zero-rated sales for the four quarters of taxable year 2001. 2001. The petitioner did not competently establish its claim for refund or tax credit. which indicated that it had not made any sale of electricity. 188260 November 13. and 108(B)(1) and (2). 2000.

2004. the taxpayer has to file its judicial claim within 30 days after the lapse of the said period.COMMISSIONER OF INTERNAL REVENUE. it filed a claim for tax credit or refund in the amount of P2. 2004 before the expiration of the two-year period in Section l 12(A). the 30-day period given to the taxpayer to file a judicial claim with the CTA need not fall in the same two-year period. 2003. 2003 to June 30.Because petitioner Commissioner of Internal Revenue (CIR)failed to act upon the said claim. ISSUE: Whether or not the respondent can claim tax refund? HELD: NO. Although respondent filed its administrative claim with the BIR on August 9. GR. (DEPJ) is a corporation duly registered with the Securities and Exchange Commission.149. In other words. As a consequence of DEPI's late filing. Thus. vs. What is being questioned in this case is DEPI‘s failure to observe the requisite 120+30-day period as mandated by Section 112(C) of the NIRC. The 120 days granted to the CIR to decide the case ended on December 7. 2004. the two-year prescriptive period referred to in Section 112(A) applies only to the filing of administrative claims with the CIR and not to the filing of judicial claims with the CTA. DEPI only sought judicial relief on May 5. Respondentfiled its monthly and quarterly value-added tax (VAT)returns for the periodfrom January 1. authorized to do business in the Philippines and listed with the Philippine. the CTA did not properly acquire jurisdiction over the claim. Unfortunately. hence the petition. Therefore. It is also a VAT-registered entity engaged in the export sales of computeraided engineering and design. 184145 December 11.88 representing unutilized input VAT attributable to its zero-rated sales. 2005. to file a petition for review with the CTA. respondent was compelled to file a petition for review with the CTA on May 5. DEPI had 30 days there from.No. J: FACTS: Engineering Philippines. in accordance with San Roque. 2005. for as long as the administrative claim is filed with the CIR within the two-year prescriptive period. The CTA partially granted the tax refund.On August 9. Economic Zone Authority as an ecozone IT export enterprise. Inc. As explained in San Roque. DASH ENGINEERING PHILIPPINES. 2013 Mendoza. respondent's judicial claim for refund must be denied for having been filed late. Respondent. or until January 6. INC. however.. TaxCases_225 .684. almost four months after the period allowed by law. despite having had ample time to file the same. Petitioner. 2005 when it belatedly filed its petition to the CT A. it undoubtedly failed to comply with the 120+ 30-dayperiod in Section l l 2(D) (now subparagraph C) which requires that upon the in action of the CIR for 120 days after the submission of the documents in support of the claim.

GST was late by one year and 131 days in filing its judicial claim. or until October 7. Petitioner. Since the Commissioner did not act on the claim within the said period.No. 2004 was well within the required two-year prescriptive period from the close of the taxable quarter. and primarily engaged in the business of manufacturing.722.. (EO) 226.whose manufactured products are 100% exported to foreign countries.During the taxable years 2004 and 2005. or until November 6. 2004. the taxpayer can no longer fa judicial claim for refund or tax credit of unutilized excess input VAT without waiting for the Commissioner to decide until the expiration of the 120-day period. The court partially granted the petition of the respondent that the two-year prescriptive period applies only to administrative claims and not to judicial claims. 2004. was found to be premature. the administrative claim filed on June 9. 2006. ISSUE: Whether or not the respondent is filed within the prescriptive period and entitled for tax refund? HELD: PARTIALLY GRANTED. Morever. it was ruled that the 120-day and 30-day periods are not merely directory but mandatory. 2006. The taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day. vs. the last day of filing being March 31. The tax refund is denied reaching the Supreme Court. In short. GR. to decide the claim. processing.109. to file its judicial claim. however. GST had 30 days fromOctober 7. 2004.which deals with companies registered with (1) the Board of Investments (BOI) pursuant to Executive Order No. TaxCases_226 . which was simultaneously filed with its administrative claim. Sales made by a VAT-registered person to a PEZA-registered entity are considered exports to a foreign country subject to a zero rate. 190872 October 17.68attributable to the foregoing zero-rated sales.. 2013 Perlas-Bernabe. Claiming unutilized excess input VAT in the total amount of 32.REPUBLIC OF THE PHILIPPINES represented by the Commissioner of Internal Revenue. and (2) the Philippine Economic Zone Authority (PEZA). It is a duly registered VAT enterprise with taxpayer identification number 000-155-645-000.GST filed before the Bureau of Internal Revenue (BIR) separate claims for refund. 2004. Reckoned from the close of the first taxable quarter of 2004 on March 31. GST filed its petition for review before the CTA only on March 17. GST PHILIPPINES. selling. 2004. or does not act at all during the 120-day period. GST filed Quarterly VAT Returns showing its zero-rated sales. for the four quarters of taxable year 2004 and the first quarter of taxable year 2005 should be denied for late filing of the petition for review before the CTA. GST filed its VAT Return for the first quarter of 2004 on April 16. Respondent. However. GST's claims.J: FACTS: GST is a corporation duly organized and existing under the laws of the Philippines. or 496 days after the last day of filing. and dealing in all kinds of iron. The CIR then had 120 days from June 9. With the 30-day period always available to the taxpayer. steel or other metals. Accordingly. 2004. the judicial claim of Aichi. INC.

late. TaxCases_227 . Case No. to file its judicial claim. GST was late by 242 days in filing its judicial claim. WHEREFORE. for refund or tax credit for unutilized excess input VAT for the four quarters of taxable year 2004. 2005.T. 2009 of the CTA First Division in C. or 242 days after the last day of filing. 2006. but it did so only on March 17. while the claims for refund for the second and third quarters of taxable year 2005 are GRANTED. 2004. GST had 30 days therefrom.A. 2005.7419. GST filed its administrative claims on February 18. therefore. or until October 8. GST failed to elevate its claim to the CTA within 30 days. Nonetheless. 2005.For the second quarter of taxable year 2004. inally. as well as the first quarter of taxable year 2005 are hereby DENIED for being filed beyond the prescriptive period. 2004. affirming the Decision dated January 27. For the third and fourth quarters of taxable year 2004. GST filed its petition for review before the CTA only on March 17. for the first quarter of taxable year 2005. 2006. EB No. or until July 18. 2005. Inc. again with no action from the CIR. The 120-day period ended on September 8. 2005. or 432days afterthe last day of filing. The 120th day. The Decision dated October 30.A. 2005. or June 18. is AFFIRMED with MODIFICATION. and the 30th day within which to file a judicial claim fell on January 9. However. 2009 of the Court of Tax Appeals En Banc in C. The claims of respondent GST Philippines. GST filed its administrative claim on August 12. Thus. the petition is PARTLY GRANTED. 484. GST filed its administrative claim on May 11. 2006.T. lapsed without any action from the CIR. 2005. The petition for review filed by GST on March 17. or 160 days after the last day of filing was. The 120-day period from the filing of such claim ended on December 10. GST was late by one year and 67 days in filing its judicial claim.

For failure of petitioner to comply with the 120+30 day mandatory and jurisdictional period. as amended. BIR Ruling No. 2014 Sereno. Thus petition is denied by the Commissioner. GR. petitioner‘s sale of electricity to the NPC January 2005 to 31 October2005 was declared to be entitled to the benefit of effectively zero-rated value added tax (VAT)Petitioner filed its administrative claims for the issuance of tax credit certificates for its alleged unutilized input taxes on its purchase of capital goods and alleged unutilized input taxes on its local purchases and/or importation of goods and services. DA-489-03. ISSUE: Whether or not the petitioner filed within the prescriptive period and therefore entitled for tax refund? HELD: NO. No. while petitioner filed its administrative and judicial claims during the period of applicability of BIR Ruling No. Botocan. among others. COMMISSIONER OF INTERNAL REVENUE. 198729-30 January 15. petitioner filed an Application for VAT Zero-Rate with the Bureau of Internal Revenue (BIR)in accordance with Section 108(B)(3)of the National Internal Revenue Code (NIRC) of 1997. pursuant to Sections 112(A) and (B) of the NIRC of 1997. TaxCases_228 . Respondent.and the Kalayaan I hydroelectric power plants and their related facilities locatedin the Province of Laguna. other than capital goods. Thus.CBK POWER COMPANY LIMITED.but not its late filing. The application was duly approved by the BIR. which means nonexhaustion of the 120-day period for the Commissioner to act on an administrative claim . the new Caliraya Spillway. as amended. but did so long after the lapse of the 30-day period following the expiration of the 120-day period. It must be emphasized that this is not a case of premature filing of a judicial claim. Although petitioner did not file its judicial claim with the CTA prior to the expiration of the 120-day waiting period.and management of the Kalayaan II pumped-storagehydroelectric power plant. it cannot claim the benefit of the exception period as it did not file its judicial claim prematurely. Again. with BIR Revenue District Office(RDO) No.CJ: FACTS: Petitioner is engaged. On 29 December 2004. vs. maintenance. petitioner lost its right to claim a refund or credit of its alleged excess input VAT. Likewise. it failed to observe the 30-day prescriptive period to appeal to the CTA counted from the lapse of the 120-day period. 55 of Laguna. DA-489-03 allowed premature filing of a judicial claim.. Petitioner. in the operation. Caliraya.

. INC. Private respondents alleged that. GRECIA-CUERDO. Inc.458.. in her capacity as Presiding Judge of the Regional Trial Court. 7160 [Local Government Code] on double taxation. which was filed with the RTC. The RTC granted private respondents' application for a writ of preliminary injunction. 16. In addition to the taxes purportedly due from private respondents pursuant to Section 14.. SM MART. 2014 PERALTA. Supervalue. SUPERVALUE. Sections 14. The CA dismissed petitioners' petition for certiorari holding that it has no jurisdiction over the said petition. in relation to Section 21 thereof. Inc. SM PRIME HOLDINGS. Surplus Marketing Corp. and Signature Lines. Branch 112. INC. JOLLIMART PHILS. in her capacity as the City Treasurer of Manila. said assessment covered the local business taxes petitioners were authorized to collect under Section 21 of the same Code... CARIDAD H. but the CA denied it. INC. Petitioners then filed a special civil action for certiorari with the CA assailing the Orders of the RTC.Petitioners filed a Motion for Reconsideration. J. PHILS. They further averred that petitioner city's Ordinance No.R.. CORP. ATIENZA. Star Appliances Center. On January 24. Because payment of the taxes assessed was a precondition for the issuance of their business permits.. SM Prime Holdings. Petitioners. The CA ruled that since appellate jurisdiction over private respondents' complaint for tax refund.. INC. 2004.: FACTS: The City of Manila. Petitioners filed a Motion for Reconsideration but the RTC denied it. Inc. 8011 which amended pertinent portions of the RRCM had already been declared to be illegal and unconstitutional by the Department of Justice. Watsons Personal Care Stores Phils. ACE HARDWARE PHILIPPINES.CTA Jurisdiction. 17. represented by MAYOR JOSE L.. 15. LIBERTY M. SURPLUS MARKETING CORPORATION and SIGNATURE LINES.. 175723 February 4. G. be filed with the CTA. JR. Ace Hardware Philippines.. TaxCases_229 .. HON. Jollimart Philippines Corp. assessed taxes for the taxable period from January to December 2002 against private respondents SM Mart.. Pasay City. vs. 9282 (RA 9282). pursuant to its expanded jurisdiction under Republic Act No. No. Respondents.77 assessment under protest. 15. TOLEDO. INC. is vested in the Court of Tax Appeals (CTA). No. 18.316. it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should. Power to Issue Writ of Certiorari THE CITY OF MANILA. Inc.. Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction" which was docketed before public respondent's sala. private respondents were constrained to pay the P19. private respondents filed with the Regional Trial Court of Pasay City the complaint denominated as one for "Refund or Recovery of Illegally and/or Erroneously-Collected Local Business Tax. 16. through its treasurer.. likewise. 19 and 20 of the RRCM were violative of the limitations and guidelines under Section 143 (h) of Republic Act. Inc. STAR APPLIANCES CENTER. 17 of the Revised Revenue Code of Manila (RRCM). and MS.. WATSON PERSONAL CARE STORES.

TaxCases_230 . Sandiganbayan. and other ancillary writs and processes in aid of its appellate jurisdiction. which provides that the CTA has jurisdiction over petitions for certiorari assailing interlocutory orders issued by the RTC in local tax cases filed before it. that judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law and that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable. COMELEC. Sandiganbayan. prohibition and mandamus. these rulings pertain not to regular courts but to tribunals exercising quasi-judicial powers. to issue writs of certiorari. De Jesus. The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction. however. Section 5 (1). there is no categorical statement under RA 1125 as well as the amendatory RA 9282. in the exercise of its original jurisdiction. orders or resolutions of the RTCs in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. Veloria v. this Court has ruled against the jurisdiction of courts or tribunals over petitions for certiorari on the ground that there is no law which expressly gives these tribunals such power. It must be observed. COMELEC. Lubrica. The foregoing notwithstanding. a writ of certiorari. Thus. in the exercise of their original jurisdiction. Article VIII of the 1987 Constitution provides.On the strength of the above constitutional provisions. habeas corpus. prohibition. and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. It. certiorari. Garcia v. among others. it can be fairly interpreted that the power of the CTA includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. with respect to the CTA. nonetheless.In the same manner. in the cases of Pimentel v. While it is clearly stated that the CTA has exclusive appellate jurisdiction over decisions. follows that the CTA. is provided under Section 21 of BP 129. injunctions. the power to issue a writ of certiorari. 8249 now provides that the special criminal court has exclusive original jurisdiction over petitions for the issuance of the writs of mandamus. while there is no express grant of such power.ISSUE: Whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case? HELD: YES. As to Regional Trial Courts. also in the exercise of its original jurisdiction. With respect to the Court of Appeals. With respect to the Sandiganbayan. Department of Agrarian Reform Adjudication Board v. that with the exception of Garcia v. by constitutional mandate. Section 1. 129 (BP 129) gives the appellate court. Article VIII of the 1987 Constitution grants power to the Supreme Court. the power to issue.whether or not in aid of its appellate jurisdiction. thus. and Garcia v. Section 9 (1) of Batas Pambansa Blg. Republic Act No. is vested with jurisdiction to issue writs of certiorari in these cases.

J. the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) prohibited the Rural Bank of Tuba (Benguet). 172892 LEONARDO-DE CASTRO. In an Order dated September 4. PDIC moved for partial reconsideration of the Order with respect to the directive for it to secure a tax clearance. 8424. In its petition. 675 dated June 6. under liquidation by the Monetary Board. PDIC thereafter brought the matter to the Court of Appeals by way of a petition for Certiorari under Rule 65 of the Rules of Court. petitioner vs.Tax Clearance PHILIPPINE DEPOSIT INSURANCE CORPORATION. BUREAU OF INTERNAL REVENUE. otherwise known as the ―Tax Reform Act of 1997‖ or the ―Tax Code of 1997. Benguet a petition for assistance in the liquidation of RBTI. 1994. It argued that Section 52(C) of the Tax Code of 1997 does not cover closed banking institutions as the liquidation of closed banks is governed by Section 30 of the New Central Bank Act. Accordingly and pursuant to Section 30 of the New Central Bank Act. respondent. 1997. ISSUE: Whether or not PDIC‘s contention that Section 52(C) of the Tax Code of 1997 is not applicable to banks ordered placed under liquidation by the Monetary Board of the BSP has merit? HELD: YES. PDIC conducted an evaluation of RBTI‘s financial condition and determined that RBTI remained insolvent. Thus. JUNE 13 2013. otherwise known as the "New Central Bank Act. The Court of Appeals affirmed the decisions of the trial court dismissed PDIC‘s petition. placed under receivership and. the Bureau of Internal Revenue (BIR) intervened as one of the creditors of RBTI.‖ The trial court found merit in the BIR‘s motion and granted it. The motion was denied. TaxCases_231 . As an incident of the proceedings. PDIC asserted that the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in applying Section 52(C) of the Tax Code of 1997 to a bank ordered closed. The BIR prayed that the proceedings be suspended until PDIC has secured a tax clearance required under Section 52(C) of Republic Act No. the Monetary Board issued Resolution No. 1056 dated October 26. 7653. subsequently. PDIC sought reconsideration but it was denied. Petitioner PDIC was directed to secure the necessary tax clearance. G." and designated the Philippine Deposit Insurance Corporation (PDIC) as receiver. Inc. 1997 directing PDIC to proceed with the liquidation of RBTI. No. placed it under receivership in accordance with Section 30 of Republic Act No.: FACTS: In Resolution No. (RBTI) from doing business in the Philippines. the trial court gave the petition due course and approved it.R. PDIC filed in the Regional Trial Court (RTC) of La Trinidad. Subsequently.

which does not require that a tax clearance be secured from the BIR. as regulator of the banks. which is the determination of the tax liabilities of a bank under liquidation by the PDIC. it is unreasonable for the liquidation court to require that a tax clearance be first secured as a condition for the approval of project of distribution of a bank under liquidation. TaxCases_232 . as liquidator of a bank ordered closed by the Monetary Board. as tax collector of the National Government. There is another reason. banks under liquidation by the PDIC as ordered by the Monetary Board constitute a special case governed by the special rules and procedures provided under Section 30 of the New Central Bank Act. to first secure a tax clearance from the appropriate BIR Regional Office. it is not for this Court to fill in any gap.This Court has already resolved the issue of whether Section 52(C) of the Tax Code of 1997 applies to banks ordered placed under liquidation by the Monetary Board. The position of the BIR. is contrary to both the letter and intent of the law on liquidation of banks by the PDIC. and to the executive to provide the regulations for its implementation.. that is. and the PDIC. and holding in abeyance the approval of the project of distribution of the assets of the closed bank by virtue thereof. Second. Inc. whether perceived or evident. insisting on prior compliance with the tax clearance requirement as a condition for the approval of the project of distribution of the assets of a bank under liquidation. acting as liquidation court under Section 30 of the New Central Bank Act. On the other hand. the BSP. only a final tax return is required to satisfy the interest of the BIR in the liquidation of a closed bank. whether a bank placed under liquidation has to secure a tax clearance from the BIR before the project of distribution of the assets of the bank can be approved by the liquidation court. In view of the timeline of the liquidation proceedings under Section 30 of the New Central Bank Act. Thus. It is up to the legislature to address the matter through appropriate legislation. In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet). First. Three reasons have been given. in current statutes and regulations as to the relations among the BIR. commits grave abuse of discretion in ordering the PDIC.16 and a tax clearance is not a prerequisite to the approval of the project of distribution of the assets of a bank under liquidation by the PDIC. Philippine Deposit Insurance Corporation v. as the receiver and liquidator of banks ordered closed by the BSP. This Court has held that the RTC. Third. Bureau of Internal Revenue ruled that Section 52(C) of the Tax Code of 1997 is not applicable to banks ordered placed under liquidation by the Monetary Board. Section 52(C) of the Tax Code of 1997 pertains only to a regulation of the relationship between the SEC and the BIR with respect to corporations contemplating dissolution or reorganization.

Presiding Justice Acosta maintained his dissent. trousers. INC.. petitioner vs. Petitioner filed a Petition for Review with the CTA for the refund/credit of the same input VAT. dresses and other wearing apparel.R. COMMISSIONER OF INTERNAL REVENUE. 177127 October 11. Petitioner sought reconsideration of the Decision but the CTA En Banc denied the same. however. to the outright denial of petitioner‘s claim since there are other pieces of evidence proving petitioner‘s transactions and VAT status. The claim for credit/refund. petitioner filed a Motion for Reconsideration. the CTA stood firm on its Decision and denied petitioner‘s Motion for lack of merit. however. Philippines. remained unacted by the respondent. shirts. Aggrieved by the Decision. J. The CTA En Banc denied the petition. Acosta (Presiding Justice Acosta) concurred with the findings of the majority that there was failure on the part of petitioner to comply with the invoicing requirements. overalls. pants. Commissioner of Internal Revenue.108-1 of Revenue Regulations No.: FACTS: Petitioner J. It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and as an Ecozone Export Enterprise with the Philippine Economic Zone Authority (PEZA). however. he dissented.VAT Invoicing Requirements J. Hence. This prompted petitioner to elevate the matter to the CTA En Banc. ISSUE: Whether the failure to print the word ―zero-rated‖ on the invoices/receipts is fatal to a claim for credit/ refund of input VAT on zero-rated sales? HELD: The absence of the word ―zero-rated‖ on the invoices/receipts is fatal to a claim for credit/refund of input VAT. a domestic corporation. TaxCases_233 . This has been squarely resolved in Panasonic Communications Imaging Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) v. G.R. is engaged in the manufacture and wholesale export of jackets. respondent. we sustained the denial of petitioner‘s claim for tax credit/refund for non-compliance with Section 4. The question of whether the absence of the word ―zero-rated‖ on the invoices/receipts is fatal to a claim for credit/refund of input VAT is not novel. polo shirts.. petitioner was constrained to file a petition before the CTA. PHILIPPINES.A. In that case. 2010 DEL CASTILLO. 7-95. ladies‘ wear.A. Inc.R. The CTA rendered a Decision denying petitioner‘s claim for refund/credit of input VAT attributable to its zero-rated sales due to the failure of petitioner to indicate its Taxpayer‘s Identification Number-VAT (TIN-V) and the word ―zero-rated‖ on its invoices. which requires the word ―zero rated‖ to be printed on the invoices/receipts covering zero-rated sales. NO. reiterating that failure to comply with invoicing requirements results in the denial of a claim for refund. Presiding Justice Ernesto D.

283. Petitioner. However. 2003. As a seller of services. 005-017-501. and (4) its claim for refund was filed within the two-year prescriptive period both in the administrative and judicial levels. On the construction and development of the San Roque MultiPurpose Project which comprises of the dam. The CTA Second Division initially denied San Roque‘s claim on the following grounds: lack of recorded zero-rated or effectively zero-rated sales. 8424 (RA 8424) to be entitled to a tax refund or credit of input VAT attributable to capital goods imported or locally purchased: (1) it is a VAT-registered entity. third. representing unutilized input taxes as declared in its VAT returns for taxable year 2001. San Roque allegedly incurred. San Roque duly filed with the BIR separate claims for refund. vs. The CTA Second Division required San Roque to show that it complied with the following requirements of Section 112(B) of Republic Act No. J.200. excess input VAT in the amount of ₱559. (2) its input taxes claimed were paid on capital goods duly supported by VAT invoices and/or official receipts.54. Plant and Equipment account.R.SAN ROQUE POWER CORPORATION.: FACTS: San Roque is a domestic corporation duly organized and existing under and by virtue of the laws of the Philippines. It was incorporated in October 1997 to design. separate amended claims for refund in the aggregate amount of ₱560. erect.14. assemble. No. ISSUE: Whether or not the Court of Tax Appeals En Banc erred in holding that San Roque‘s claim for refund was not prematurely filed? TaxCases_234 . instrumentality or agency thereof.337.337. or other entity engaged in the development. Respondent.709. San Roque is duly registered with the BIR with TIN/VAT No. 2013 CARPIO. and failure to prove that the related construction costs were capitalized in its books of account and subjected to depreciation.283. [San Roque] filed with the BIR on even date.Excess Input VAT and Excessively Collected VAT COMMISSIONER OF INTERNAL REVENUE. spillway and power plant. failure to submit documents specifically identifying the purchased goods/services related to the claimed input VAT which were included in its Property. and fourth requirements. on March 28.14. 187485 February 12. CIR‘s inaction on the subject claims led to the filing by San Roque of the Petition for Review with the Court [of Tax Appeals] in Division on April 10. or distribution of energy.200. (3) it did not offset or apply the claimed input VAT payments on capital goods against any output VAT liability.709. Consequently. own. in the total amount of ₱559. The CTA Second Division found that San Roque complied with the first. supply. San Roque filed amended Quarterly VAT Returns for the year 2001 since it increased its unutilized input VAT to the amount of ₱560. or any subdivision. G. construct. or any government-owned or controlled corporation. 2003.54 for taxable year 2001 which it declared in its Quarterly VAT Returns filed for the same year. commission and operate power-generating plants and related facilities pursuant to and under contract with the Government of the Republic of the Philippines.

San Roque filed its judicial claim more than four (4) years before the Atlas doctrine. San Roque did not wait for the 120-day period to lapse before filing its judicial claim. "Acts executed against provisions of mandatory or prohibitory laws shall be void. which was promulgated by the Court on 8 June 2007.HELD: NO. there is no "decision" of the Commissioner to review and thus the CTA as a court of special jurisdiction has no jurisdiction over the appeal. Article 5 of the Civil Code provides. On 10 April 2003. "No vested or acquired right can arise from acts or omissions which are against the law or which infringe upon the rights of others. Thus. the Atlas doctrine merely stated that the two-year prescriptive period should be counted from the date of payment of the output VAT." There is no law authorizing the petition‘s validity. expressly or impliedly." that the taxpayer can take to the CTA for review. A right cannot spring in favor of a person from his own void or illegal act. which states." San Roque‘s void petition for review cannot be legitimized by the CTA or this Court because Article 5 of the Civil Code states that such void petition cannot be legitimized "except when the law itself authorizes its validity.day period. not from the close of the taxable quarter when the sales involving the input VAT were made. The charter of the CTA expressly provides that its jurisdiction is to review on appeal "decisions of the Commissioner of Internal Revenue in cases involving x x x refunds of internal revenue taxes. San Roque cannot invoke the Atlas doctrine as an excuse for its failure to wait for the 120-day period to lapse." When a taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without waiting for the decision of the Commissioner. the time expressly given by law to the Commissioner to decide whether to grant or deny San Roque‘s application for tax refund or credit. misguided or confused by the Atlas doctrine because San Roque filed its petition for review with the CTA more than four years before Atlas was promulgated. San Roque filed a Petition for Review with the CTA. In any event. San Roque cannot also claim being misled. It is hornbook doctrine that a person committing a void act contrary to a mandatory provision of law cannot claim or acquire any right from his void act. second. It is the Commissioner‘s decision. San Roque cannot claim any right arising from such void petition. Without a decision or an "inaction deemed a denial" of the Commissioner. Clearly. It is indisputable that compliance with the 120-day waiting period is mandatory and jurisdictional. This doctrine is repeated in Article 2254 of the Civil Code. It violates the doctrine of exhaustion of administrative remedies and renders the petition premature and thus without a cause of action. with the effect that the CTA does not acquire jurisdiction over the taxpayer‘s petition. or inaction "deemed a denial. except when the law itself authorizes their validity. The Atlasdoctrine did not exist at the time San Roque failed to comply with the 120. San Roque failed to comply with the 120-day waiting period." For violating a mandatory provision of law in filing its petition with the CTA. Thus. The Atlas doctrine does not interpret. San Roque‘s failure to comply with the 120-day mandatory period renders its petition for review with the CTA void. TaxCases_235 . From this we gather two crucial facts: first. the 120+30 day periods. Failure to comply with the 120day waiting period violates a mandatory provision of law. such "inaction shall be deemed a denial" of the application for tax refund or credit. the CTA has no jurisdiction over a petition for review. a mere 13 days after it filed its amended administrative claim with the Commissioner on 28 March 2003. San Roque‘s petition with the CTA is a mere scrap of paper. The charter of the CTA also expressly provides that if the Commissioner fails to decide within "a specific period" required by law.

937. petitioner must prove that it has complied with the governing rules with reference to tax recovery or refund. On appeal. 2013 SERENO.565.108-1 of Revenue Regulations No. 43 of the BIR in Pasig City (BIR-Pasig) as. petitioner elevated the case before the CTA. INC. ISSUES: Whether or not the petitioner is entitled to the issuance of a tax credit certificate? HELD: NO. petitioner filed two separate applications for the issuance of tax credit certificates in the amounts of P5.528. 208. a Value-Added Tax (VAT) taxpayer engaged in the importation and exportation business.565. these imported food ingredients were exported between the periods of April 1. 2000 to December 31. Subsequently. Petitioner alleged that from September 1998 to December 31.32 and P4. 2002.53. TaxCases_236 . as amended.85 for the period of September 1. from which the petitioner was able to generate export sales amounting to P114. 2000 to December 31. the CTA En Banc likewise denied the claim of petitioner on the same ground and ruled that the latter‘s sales for the subject period could not qualify for VAT zero-rating.85 for its importation of food ingredients. 2000. 2002. as the export sales invoices did not bear the following: 1) the imprinted word "zero-rated. 7-95. respectively. which are found in Sections 204(C) and 229 of the Tax Code.R. respondent alleged by way of special and affirmative defenses that the request for tax credit certificate is still under examination by respondent's examiners. 2000 were "zero-rated" sales. among others. as reported in its Quarterly Vat Return. The CTA First Division denied petitioner‘s claim for failure to comply with the invoicing requirements prescribed under Section 113 in relation to Section 237 of the National Internal Revenue Code (NIRC) of 1997 and Section 4. 184266 November 11. hence not refundable. all in violation of the invoicing requirements. pursuant to Section 106(A (2)(a)(1) of the N1RC of 1997. that taxes paid and collected are presumed to have been made in accordance with law and regulations. On July 24.24. 2000. Petitioner alleged that the accumulated input taxes of P9. petitioner's allegation that it erroneously and excessively paid the tax during the year under review does not ipso facto warrant the refund/credit or the issuance of a certificate thereto." and 3) BIR‘s permit number. On March 26.143. in view of respondent's inaction. CJ: FACTS: Petitioner is registered with the Regional District Office (RDO) No.577.APPLIED FOOD INGREDIENTS COMPANY.. No.357. it paid an aggregate sum of input taxes ofP9.385." 2) "TIN-VAT. 1998 to December 31. as a pure buy-sell trader. Petitioner further claimed that the aforestated export sales which transpired from April 1. In his Answer. COMMISSIONER OF INTERNAL REVENUE G.528. The proceeds thereof were inwardly remitted to petitioner's dollar accounts with Equitable Bank Corporation and with Australia New Zealand Bank-Philippine Branch. vs. 2000 have not been applied against any output tax. 2002 and June 28.

TaxCases_237 . Under the VAT method of taxation. Commissioner of Internal Revenue. be raised by the parties or considered by the Court motu proprio. In Panasonic Communications Imaging Corporation of the Philippines v. and Philex Mining Corporation v. inputs and imports. we are constrained to apply the dispositions therein to similar facts as those in the present case. which is invoice-based. Therefore." For zero-rated or effectively zero-rated sales. an indirect tax that the provider of goods or services may pass on to his customers. Commissioner of Internal Revenue. with the advent. Although the ponente in this case expressed a different view on the mandatory application of the 120+30 day period as prescribed in the above provision.The Petition has no merit. at any time. Taganito Mining Corporation v. San Roque Power Corporation. At the outset. they can claim a refund of the VAT that their suppliers charged them. although the sellers in these transactions charge no output tax. Our VAT Law provides for a mechanism that would allow VAT-registered persons to recover the excess input taxes over the output taxes they had paid in relation to their sales. Well-settled is the rule that the issue of jurisdiction over the subject matter may. the jurisdiction of the CTA over petitioner‘s appeal may still be considered and determined by this Court. however.Section 112 of the NIRC of 1997 laid down the manner in which the refund or credit of input tax may be made. Commissioner of Internal Revenue (hereby collectively referred as San Roque). this Court explained that "the VAT is a tax on consumption. an entity can subtract from the VAT charged on its sales or outputs the VAT it paid on its purchases. the latter have the burden to prove strict compliance with the conditions for the grant of the tax refund or credit. bearing in mind that tax refunds or credits − just like tax exemptions − are strictly construed against taxpayers. of this Court‘s pronouncement on the consolidated tax cases of Commissioner of Internal Revenue v.

February 1. 2003. 2013 BERSAMIN. through the Assistant Commissioner for Assessment Services. and that it had declared the input VAT of P9. No. 2001 (Certificate No. G. through Revenue Examiner Felicidad Mangabat of Revenue District Office No.047.920. TaxCases_238 . praying for the refund or tax credit certificate (TCC) corresponding to the unutilized input VAT paid for the four quarters of 2001 totalling P9. on April 14. net of disallowances of P2. Accompanying the letter was the TCC for P6. 2002. and from January 2. On November 26. a corporation duly organized under the laws of the Philippines.920. 2001 to December 31.16. On May 3. the petitioner filed a Motion for Leave of Court to Amend Petition for Review in consideration of the partial grant of the claim through TCC No. the Commissioner.004. and made a recommendation in its report dated August 19. Subsequently.72.427.427. the petitioner filed a written claim for refund or tax credit relative to its unutilized input VAT for the period from October 1999 to October 2001 aggregating P14.89 on its domestic purchases of goods and services used in its generation and sales of electricity to NPC in the four quarters of 2001.762. The CTA in Division granted the motion on May 11. the electricity produced by the petitioner from its operation of the Bakun Hydroelectric Power Plant was to be sold exclusively to NPC.874. 2000.795. The BIR.38.665. Thereafter.16. 2 in Vigan City. Pursuant to the Power Purchase Agreement entered into with the National Power Corporation (NPC).88.795. 2000 to December 31. 2001. the Commissioner submitted the case for decision based on the pleadings. Relative to its sale to NPC.557.762. 2000 to December 31. 2001 to December 31.56. The CTA in Division also directed the respondent to file a supplemental answer within ten days from notice. COMMISSIONER OF INTERNAL REVENUE. 2005. the petitioner presented testimonial and documentary evidence to support its claim. has been registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer under Taxpayer Identification No. Respondent. 2007. on July 24. the petitioner filed its petition for review in the CTA. concluded an investigation.609. 2001. 2001-269). On the other hand. Petitioner. 188260 November 13. vs.89 in its amended VAT returns for the four quarters on 200.874. and admitted the Amended Petition for Review. While the case was pending hearing. J.72.R.427.LUZON HYDRO CORPORATION. The petitioner alleged herein that it had incurred input VAT in the amount of P9. the case was submitted for decision without the memorandum of the Commissioner. On May 2. it amended the claim for refund or tax credit to cover the period from October 1999 to May 2002 forP20. 004-266-526. 2003 as the Commissioner‘s answer to the Amended Petition for Review. 00002618. Hence. 2005. whereby the petitioner sought the refund or tax credit in the reduced amount of P2. 2000 (Certificate No.: FACTS: The petitioner. Respondent Commissioner of Internal Revenue (Commissioner) did not ultimately act on the petitioner‘s claim despite the favorable recommendation. the petitioner was granted by the BIR a certificate for Zero Rate for VAT purposes in the periods from January 1. 2002 favorable to the petitioner‘s claim for the period from January 1. informed the petitioner by the letter dated March 3. 2005 that its claim had been granted in the amount of P6. Z-162-2000).795. the CTA in Division treated the answer filed on May 16. When no supplemental answer was filed within the period thus allowed.665.

We agree with the CTA En Banc that the petitioner did not produce evidence showing that it had zero-rated sales for the four quarters of taxable year 2001. the Court has emphasized in Atlas Consolidated Mining and Development Corporation v. TaxCases_239 . or in the de novo litigation before the CTA in Division. and to do so the taxpayer should prove every minute aspect of its case by presenting. the taxpayer has to convince the CTA that the quasi-judicial agency a quo should not have denied the claim. it would have reported them in the returns. the CTA En Banc properly disregarded the letter opinion as irrelevant to the present claim of the petitioner. hence. We further find to be lacking in substance and bereft of merit the petitioner‘s insistence that the CTA En Banc should not have disregarded the letter opinion by BIR Regional Director Rene Q. which did not happen here. including whatever was required for the successful prosecution of the administrative claim as the means of demonstrating to the CTA that its administrative claim should have been granted in the first place. Although the petitioner has correctly contended here that the sale of electricity by a power generation company like it should be subject to zero-rated VAT under Republic Act No. Commissioner of Internal Revenue that a judicial claim for tax refund or tax credit brought to the CTA is by no means an original action but an appeal by way of a petition for review of the taxpayer‘s unsuccessful administrative claim. Aguas to the effect that its financial statements and its return were sufficient to establish that it had generated zero-rated sale of electricity. firstly. 9136. HELD: NO. the return and the letter opinion had related to taxable year 2001. The propriety of remanding the case for the purpose of enabling the CTA to receive newly discovered evidence would undo the decision already on appeal and require the examination of the pieces of newly discovered evidence. the petitioner did not reflect any zero-rated sales from its power generation in its four quarterly VAT returns. As the CTA En Banc precisely found. an act that the Court could not do by virtue of its not being a trier of facts. which indicated that it had not made any sale of electricity. formally offering and submitting its evidence to the CTA. and. The absence of a specific rule on newly discovered evidence at this late stage of the proceedings is not without reason. its assertion that it need not prove its having actually made zero-rated sales of electricity by presenting the VAT official receipts and VAT returns cannot be upheld. they still could not be taken at face value for the purpose of approving the claim for refund or tax credit due to the need to produce the supporting documents proving the existence of the zerorated sales. In that respect. Indeed. The petitioner did not competently establish its claim for refund or tax credit. Verily. To recall. secondly. the CTA En Banc rejected the insistence because.ISSUE: Whether or not petitioner‘s contentions are correct. even assuming for the sake of argument that the financial statements. Had there been zero-rated sales. the letter opinion referred to taxable year 2000 but this case related to taxable year 2001. It ought to be reminded that it could not be permitted to substitute such vital and material documents with secondary evidence like financial statements. it carried the burden not only that it was entitled under the substantive law to the allowance of its claim for refund or tax credit but also that it met all the requirements for evidentiary substantiation of its claim before the administrative official concerned.

ISSUE: Whether or not Petitioner‘s assigned errors boil down to the principal issue of the applicable prescriptive period on its claim for refund of unutilized input VAT for the first to third quarters of 2005? HELD: YES. 7621 was dismissed. The CTA Special Second Division Decision and Resolution were reversed and set aside. and the Kalayaan I hydroelectric power plants and their related facilities located in the Province of Laguna. Inc. the court a quo partly granted the claim and ordered the issuance of a tax credit certificate in favor of petitioner in the reduced amount ofP27. with BIR Revenue District Office (RDO) No. Caliraya. However. relying on Commissioner of Internal Revenue v. After trial on the merits. and the Petition for Review filed in CTA Case No. and management of the Kalayaan II pumped-storage hydroelectric power plant. Thus. the CTA Special Second Division rendered a Decision on 3 March 2010. Alleging inaction of the Commissioner of Internal Revenue (CIR). maintenance. Respondent. in the operation.36. TaxCases_240 . the new Caliraya Spillway. CJ: FACTS: Petitioner is engaged. On 29 December 2004. and third quarters of 2005 were belatedly filed. The application was duly approved by the BIR. Petitioner‘s Motion for Reconsideration was likewise denied for lack of merit. petitioner filed an Application for VAT Zero-Rate with the Bureau of Internal Revenue (BIR) in accordance with Section 108(B)(3) of the National Internal Revenue Code (NIRC) of 1997. 55 of Laguna.170. After an evaluation of petitioner‘s claim for the second and third quarters of 2005. Petitioner. among others.123. (Aichi).CBK POWER COMPANY LIMITED. Nos. petitioner filed a Petition for Review with the CTA on 18 April 2007. G. Aichi Forging Company of Asia. which were both denied by the CTA Division. Botocan.R. as amended. petitioner‘s sale of electricity to the NPC from 1 January 2005 to 31 October 2005 was declared to be entitled to the benefit of effectively zero-rated value added tax (VAT). other than capital goods. Petitioner filed its administrative claims for the issuance of tax credit certificates for its alleged unutilized input taxes on its purchase of capital goods and alleged unutilized input taxes on its local purchases and/or importation of goods and services. On appeal. petitioner timely filed its administrative claims for the three quarters of 2005. COMMISSIONER OF INTERNAL REVENUE. 198729-30 January 15. The parties filed their respective Motions for Partial Reconsideration. the CTA Division denied the claim for the first quarter of 2005 for having been filed out of time. vs. considering that the judicial claim was filed on 18 April 2007. pursuant to Sections 112(A) and (B) of the NIRC of 1997. Accordingly. second. as amended. 2014 SERENO. the CTA En Banc ruled that petitioner‘s judicial claim for the first.

Should the input taxes result from zero-rated or effectively zero-rated transactions or from the acquisition of capital goods. As a consequence. however. if at the end of a taxable quarter the seller charges output taxes equal to the input taxes that his suppliers passed on to him. specifically for the refund or credit of that tax only. the taxpayer affected by the CIR‘s decision or inaction may appeal to the CTA within 30 days from the receipt of the decision or from the expiration of the 120-day period within which the claim has not been acted upon. it should not retroactively be applied to the instant case. Section 112 is the governing law. including VAT. were not applicable. the law under Section 112 (A) provides for a different reckoning point for the two-year prescriptive period. We agree with petitioner that Mirant was not yet in existence when their administrative claim was filed in 2005. Section 112(A) provides that after the close of the taxable quarter when the sales were made. there is a two-year prescriptive period within which a VAT-registered person whose sales are zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate or refund of creditable input tax. It is when his output taxes exceed his input taxes that he has to pay the excess to the BIR. whether direct or indirect. Bearing in mind that the burden to prove entitlement to a tax refund is on the taxpayer. services rendered to NPC by a VAT-registered entity are effectively zero-rated. For failure of petitioner to comply with the 120+30 day mandatory and jurisdictional period. which categorically exempts it from the payment of any tax. the BIR itself approved the application for zero-rating on 29 December 2004. Considering further that the 30-day period to appeal to the CTA is dependent on the 120-day period. Thus. it is presumed that in order to discharge its burden. petitioner‘s sales to NPC are effectively subject to zero percent (0%) VAT. It must be emphasized that the Court merely clarified in Mirant that Sections 204 and 229. the excess payment shall be carried over to the succeeding quarter or quarters. thus. In fact. The NPC is an entity with a special charter. TaxCases_241 . Input tax is neither an erroneously paid nor an illegally collected internal revenue tax. The crux of the controversy arose from the proper application of the prescriptive periods set forth in Section 112 of the NIRC of 1997. and the interpretation of the applicable jurisprudence. the fact remains that Section 112 is the controlling provision for the refund or credit of input tax during the time that petitioner filed its claim with which they ought to comply. absent any evidence to the contrary. It must be emphasized that this is not a case of premature filing of a judicial claim. petitioner had attached complete supporting documents necessary to prove its entitlement to a refund in its application. no payment is required of him. compliance with both periods is jurisdictional. which prescribed a different starting point for the two-year prescriptive limit for filing a claim for a refund or credit of excess input tax.As aptly ruled by the CTA Special Second Division. petitioner claims for the refund of the alleged excess input tax attributable to its effectively zero-rated sales to NPC. any excess over the output taxes shall instead be refunded to the taxpayer. Our VAT Law provides for a mechanism that would allow VAT-registered persons to recover the excess input taxes over the output taxes they had paid in relation to their sales. Although petitioner did not file its judicial claim with the CTA prior to the expiration of the 120-day waiting period. filed by petitioner for its sales to NPC covering January to October 2005. petitioner lost its right to claim a refund or credit of its alleged excess input VAT. Given the distinctive nature of creditable input tax. Under the 1997 NIRC. For the refund or credit of excess or unutilized input tax. The period of 120 days is a prerequisite for the commencement of the 30-day period to appeal to the CTA. as amended. If the input taxes exceed the output taxes. it failed to observe the 30-day prescriptive period to appeal to the CTA counted from the lapse of the 120-day period. Thereafter. However.

Benguet.: FACTS: Petitioner Pelizloy Realty Corporation (―Pelizloy‖) owns Palm GroveResort. is not true for provinces. No. the Provincial Board of the Province of Benguet approved Provincial Tax Ordinance No. swimming pools. a spa and function halls. It is located at Asin. they are mere ―territorial and political subdivisions of the Republic of the Philippines‖.‖ and as such. hot springs and tourist spots. Article X of Provincial Tax Ordinance No. bath houses. Pelizloy argued that Section 59. Inferences. April 10. THE PROVINCE OF BENGUET. Such. 05-107. otherwise known as the Benguet Revenue Code of 2005. cities. it filed an appeal/petition before the Secretary of Justice on January 27. Treating the Secretary of Justice's failure to decide on its appeal/petition within the sixty (60) days provided by Section 187 of the LGC as an implied denial of such appeal/petition. 2013 G. GREGORY K. Thus. Section 59.Municipality of Tuba. municipalities and barangays as they are not the sovereign. deductions – all these – have no place in the interpretation of the taxingpower of a municipal corporation. Pelizloy filed a Petition for Declaratory Relief and Injunction before the Regional Trial Court of La Trinidad.Percentage Taxes. It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. however. petitioner. implications.‖ It was Pelizloy's position that the Tax Ordinance's imposition of a 10% amusement tax on gross receipts from admission fees for resorts. 2005. cannot assume it. and tourist spots is an ultra vires act on the part of the Province of Benguet. The power to tax ―is an attribute of sovereignty.Article X of the Tax Ordinance levied a ten percent (10%) amusement tax on gross receipts from admissions to ―resorts. And the power when granted is to be construed in strictissimi juris. On December 8. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality. Province of Benguet. representedherein by its President. Angalisan. The charter or statute must plainly show an intent to confer that power or the municipality. ISSUES: Whether or not Section 59. otherwise known as the Benguet Revenue Code of 2005 (―Tax Ordinance‖). rather. hot springs. respondent. bath houses. Vs. 183137 LEONEN. levies a percentage tax? HELD: YES. LOY. 05-107. swimming pools. TaxCases_242 .R. 2006. which is designed for recreation and which has facilities like swimming pools. inheres in the State. Power to Tax of LGUs PELIZLOY REALTY CORPORATION. Article X of the Tax Ordinance imposed a percentage tax in violation of the limitation on the taxing powers of local government units (LGUs) under Section 133 (i) of the LGC. J.

dancing halls. Article X of the Tax Ordinance must be sustained with respect to admission fees from boxing stadia. swimming pools. cockpits. Title V. hot springs and tourist spots. dancing schools. Section 59. bartered or imported. the issues raised by Pelizloy are pertinent only with respect to the second paragraph of Section 59. The previous pronouncements notwithstanding. deductions – all these – have no place in the interpretation of the taxing power of a province.16 lists amusement taxes as among the (other) percentage taxes which are levied regardless of whether or not a taxpayer is already liable to pay value-added tax (VAT). Republic Act No. TaxCases_243 .‖ Also. Article X of the Tax Ordinance. night or day clubs. The power to tax when granted to a province is to be construed in strictissimi juris. As Section 140 of the LGC allows for the imposition of amusement taxes on gross receipts from admission fees to boxing stadia. hot springs. There is no reason for going beyond such basis. Thus. Moreover. and tourist spots". there is no reason to invalidate the first paragraph of Section 59. The first paragraph of Section 59. Article X of the Tax Ordinance which imposes amusement taxes on "resorts. hot springs. In this case. cinemas. swimming pools. otherwise known as the National Internal Revenue Code (NIRC). the second paragraph of Section 59.Percentage tax is a ―tax measured by a certain percentage of the gross selling price or gross value in money of goods sold. Any declaration as to the Province of Benguet's lack of authority to levy amusement taxes must be limited to admission fees to resorts. Article X of the Tax Ordinanc. bath houses. Article X of the Tax Ordinance is not limited to resorts. bath houses. concert halls. swimming pools. or of the gross receipts or earnings derived by any person engaged in the sale of services. it will be noted that it is only the second paragraph of Section 59. and tourist spots but also covers admission fees for boxing.e. in Section 125. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the province. Article X of the Tax Ordinance refers to "theaters. cir-cuses. and other places of amusement". 8424. In any case. To do otherwise would be to countenance an arbitrary interpretation/application of a tax law and to inflict an injustice on unassuming taxpayers. implications. bath houses. the definition of' amusement places' in Section 131 (c) of the LGC is a clear basis for determining what constitutes the 'other places of amusement' which may properly be subject to amusement tax impositions by provinces. Inferences.

due to the inaction of the respondent Commissioner of Internal Revenue (CIR).652.698.685. 7227. petitioner purchased from the national government a portion of the Fort Bonifacio reservation. 1996. petitioner generated a total amount of P 3. No. Petitioner paid the output VAT by making cash payments to the BIR totalling P 359. "the benefit of transitional input tax credit comes with the condition that business taxes should have been paid first.200. On February 8.200. J. On September 19. the book value of which aggregated P71. Realizing that its transitional input tax credit was not applied in computing its output VAT for the first quarter of 1997.R. Petitioner.227. 1999.256. pursuant to Section 105 of the old NIRC. dated December 8. Respondents. Taguig and Pateros. petitioner started selling Global City lots to interested buyers. ISSUE: Whether or not petitioner‘s contentions have merit? TaxCases_244 .539. REVENUE DISTRICT NO. an inventory of all its real properties. the CTA denied petitioner‘s claim for refund. petitioner elevated the matter to the Court of Tax Appeals (CTA) via a Petition for Review. RA 7716 restructured the Value-Added Tax (VAT) system by amending certain provisions of the old National Internal Revenue Code (NIRC). vs. 40. now known as the Fort Bonifacio Global City (Global City). Based on this value. a wholly owned government corporation created under Republic Act (RA) No. On October 12. For the first quarter of 1997.47 erroneously paid as output VAT for the said period. COMMISSIONER OF INTERNAL REVENUE and REVENUE DISTRICT OFFICER. since petitioner acquired the Global City property under a VAT-free sale transaction. The Bases Conversion Development Authority (BCDA).503.48. a consortium of private domestic corporations.47 and crediting its unutilized input tax credit on purchases of goods and services of P 8. G. petitioner claimed that it is entitled to a transitional input tax credit of P5.009. 173425 September 4. 1995.883. petitioner on November 17. 1996. owns 45% of petitioner‘s issued and outstanding capital stock.: FACTS: Petitioner Fort Bonifacio Development Corporation (FBDC) is a duly registered domestic corporation engaged in the development and sale of real property. while the Bonifacio Land Corporation. 2012 DEL CASTILLO. 44. owns the remaining 55%. it cannot avail of the transitional input tax credit. 44.652.009. On January 1. On February 24. RA 7716 extended the coverage of VAT to real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business.50 from its sales and lease of lots. on which the output VAT payable was P 368.653. In October 1996. 1992.95.356.535.644. According to the CTA. 2000. 1998 filed with the BIR a claim for refund of the amount of P 359. petitioner submitted to the Bureau of Internal Revenue (BIR) Revenue District No. by virtue of RA 7227 and Executive Order No." In this case. BUREAU OF INTERNAL REVENUE. TAGUIG and PATEROS.Documentary Stamp Tax FORT BONIFACIO DEVELOPMENT CORPORATION.

materials. TaxCases_245 . unlike a tax refund. and supplies where no taxes were paid. there is nothing in the abovequoted provision to indicate that prior payment of taxes is necessary for the availment of the 8% transitional input tax credit. As correctly argued by petitioner. contrary to the view of Justice Carpio. whichever is higher" because the actual VAT (now 12%) paid on the goods. would be an appropriation authorized by law. materials. Thus. In fact. petitioner is simply applying its transitional input tax credit against the output VAT it has paid. Contrary to the view of the CTA and the CA. or an incentive to encourage investment. Moreover. specifically Section 105 of the old NIRC. materials. It is any amount given to a taxpayer as a subsidy. prior payment of taxes is not a prerequisite to avail of a tax credit. which would be paid out of the general fund of the government. when petitioner realized that its transitional input tax credit was not applied in computing its output VAT for the 1st quarter of 1997. it is merely availing of the tax credit incentive given by law to first time VAT taxpayers. Obviously. we declared that prior payment of taxes is not required in order to avail of a tax credit. To require prior payment of taxes is not only tantamount to judicial legislation but would also render nugatory the provision in Section 105 of the old NIRC that the transitional input tax credit shall be "8% of the value of [the beginning] inventory or the actual [VAT] paid on such goods. prior payment of taxes is not required for a taxpayer to avail of the 8% transitional input tax credit. it filed a claim for refund to recover the output VAT it erroneously or excessively paid for the 1st quarter of 1997. In filing a claim for tax refund. and supplies. Otherwise. materials. on the other hand. Central Luzon Drug Corp. In this case. is an amount subtracted directly from one‘s total tax liability. and supplies where no taxes were paid. a refund. limiting the value of the beginning inventory only to goods. and supplies would always be higher than the 8% (now 2%) of the beginning inventory which would have to exclude all goods. As we have said in the earlier case of Fort Bonifacio. was not the intention of the law.HELD: YES. prior payment of taxes is not required to avail of the transitional input tax credit because it is not a tax refund per se but a tax credit. the granting of a transitional input tax credit in favor of petitioner. the provision on transitional input tax credit was enacted to benefit first time VAT taxpayers by mitigating the impact of VAT on the taxpayer. Hence. Tax credit is not synonymous to tax refund. in Commissioner of Internal Revenue v.. it would have specifically stated that the beginning inventory excludes goods. Clearly. Tax credit. all that is required is for the taxpayer to file a beginning inventory with the BIR. where prior taxes were paid. Tax refund is defined as the money that a taxpayer overpaid and is thus returned by the taxing authority. materials and supplies. Thus.

Respondent. Revenue Officer Celestino Mejia examined Philacor‘s books of accounts and other accounting records for the fiscal year August 1. issue. the buyer executes a unilateral promissory note in favor of the appliance dealer. The acts of making. signed and issued the documents subject to tax. while the appliance dealer transferred these documents to Philacor which likewise indisputably received or "accepted" them. COMMISSIONER OF INTERNAL REVENUE. (3) issuing. The buyers of the appliances made. 1995. No. accept or transfer the promissory notes." however. TaxCases_246 . However Sections 176. the other party who is not exempt would then be liable. 17107 dated July 6. J. signing. 2013 BRION.013. (2) signing. is an act that is not even applicable to promissory notes. a prospective buyer of a home appliance – with neither cash nor any credit card – may purchase appliances on installment basis from an appliance dealer. and 198 are subject to DST? HELD: YES. sign. G. 1974. After Philacor conducts a credit investigation and approves the buyer‘s application.PHILACOR CREDIT CORPORATION. the "assignment" or "transferring" of promissory notes is subject to DST. but only to bills of exchange. 1993. Philacor did not make. Neither party questions that the issuances of promissory notes are transactions which are taxable under the DST. the act of acceptance refers solely to bills of exchange.037. The persons primarily liable for the payment of the DST are the person (1) making. Philacor is not liable for the DST on the issuance of the promissory notes. 1992 to July 31. and 198 of title vii of the Tax Code expressly imposes DST on the transfer/assignment of certain documents which reveals the legislative intent that only the assignment/transfer of certain documents in sections 176. Through retail financing. Pursuant to Letter of Authority No. Leticia Pangan. contested the tentative computations of deficiency taxes (totaling P20. 169899 February 06. 178.R. "Acceptance. Under Section 132 of the Negotiable Instruments Law (which provides for how acceptance should be made). ISSUE: Whether or not the CTA En Banc decision extended the words "assignment" and "transferring" in section 173 to the promissory notes. The same promissory note is subsequently assigned by the appliance dealer to Philacor. or (5) transferring the taxable documents. Its object is to bind the drawee of a bill and make him an actual and bound party to the instrument. Philacor‘s Finance Manager.83) through a letter dated April 17. Philacor received tentative computations of deficiency taxes for this year. 178. (4) accepting. Should these parties be exempted from paying tax. Petitioner.: FACTS: Philacor is a domestic corporation organized under Philippine laws and is engaged in the business of retail financing. instruments or papers. issuing and transferring are unambiguous. vs. such that.

Philacor is not liable for the DST on the assignment of promissory notes. In this regard. as an assignee or transferee of the promissory notes. Philacor cannot be made primarily liable for the DST on the issuance of the subject promissory notes. Section 173 of the 1997 NIRC assumes materiality as it determines liability should the parties who are primarily liable turn out to be exempted from paying tax. in a ruling adopted by the BIR as early as 1955. the other party to the transaction then becomes liable. The fact that the transportation contractor issuing the freight receipts shifts the burden of the tax to the shipper does not make the latter primarily liable to the payment of the tax. the documentary stamp tax on freight receipts is due at the time the receipts are issued and from the transportation company issuing the same. to our mind. or the privilege to enter into a transaction. TaxCases_247 . just because it had "accepted" the promissory notes in the plain and ordinary meaning. is not liable for the assignment or transfer of promissory notes as this transaction is not taxed under the law. The CIR argues that the DST is levied on the exercise of privileges through the execution of specific instruments. further clarifies that a party to a taxable transaction who "accepts" any documents or instruments in the plain and ordinary meaning of the act (such as the shipper in the cited case) does not become primarily liable for the tax. There is nothing in Section 180 of the 1986 Tax Code that supports this argument. not the common usage of the word "accepting" as in receiving: The word "accepting" appearing in Section 210 of the National Internal Revenue Code has reference to incoming foreign bills of exchange which are accepted in the Philippines by the drawees thereof. the DST should be imposed on every exercise of the privilege to enter into a transaction. (underscore ours) This ruling. Therefore. the argument is even contradicted by the way the provisions on DST were drafted. Accordingly. Philacor. In the same way.Further. acceptance has already been given a narrow definition with respect to incoming foreign bills of exchange.

123206 March 22. his heirs executed an extrajudicial settlement and paid the estate tax.R. The notarial fee paid for the extrajudicial settlement is a deductible expense since such settlement effected a distribution of Pedro‘s estate to his lawful heirs. while his sister Josefina became the guardian over his person. His property was placed under the guardianship of PNB. respondents. 2000 GONZAGA-REYES. No.ESTATE TAXATION Judicial Expenses COMMISSIONER OF INTERNAL REVENUE. which in turn allowed P60.753 representing the notarial fee for the Extrajudicial Settlement and P50. ISSUE: Whether or not the notarial fee and attorney's fees allowed as deductions from the gross estate? HELD: YES. and eventually the administratrix of his estate when he died. The estate paid under protest and filed a case with the CTA. as Administratrix of the Estate of Pedro P. BIR assessed the estate of Pedro deficiency taxes. This is because PNB provided a detailed accounting of decedent's property and gave advice as to the proper settlement of the latter's estate. After his death.: FACTS: By reason of the Bataan Death March during World War II. COURT OF TAX APPEALS and JOSEFINA P. Thereafter. Similarly. TaxCases_248 . G. J. Pajonar. attorney's fees paid to PNB for acting as the guardian of Pedro‘s property during his lifetime should also be considered as a deductible administration expense. PAJONAR. vs. acts which contributed towards the collection of decedent's assets and the subsequent settlement of the estate. COURT OF APPEALS.000 attorney's fees for guardianship proceedings as among the allowed deductions from the gross estate. Pedro Pajonar became insane. petitioner.

which bears a trace of falsity. Even an assessment based on estimates is prima facie valid and lawful where it does not appear to have been arrived at arbitrarily or capriciously. JR. petitioner has not pointed out one single provision in the Memorandum of the Special Audit Team which gave rise to the questioned assessment. Indeed. However. 1997 TORRES. J. is not a mandatory requirement in the collection of estate taxes. THE COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE and HERMINIA D. vs. Failure to present proof of error in the assessment will justify the judicial affirmance of said assessment. In the absence of proof of any irregularities in the performance of official duties. respondents. Marcos II assailed the decision of the Court of Appeals declaring the deficiency income tax assessments and estate tax assessments upon the estate and properties of his late father despite the pendency of the probate proceedings of the will of the late President. COURT OF APPEALS. The taxpayer has the duty of proving otherwise. The approval of the court. In this instance. DE GUZMAN. ISSUE: Whether or not the approval of the court mandatory requirement in the collection of taxes? HELD: NO.: FACTS: Ferdinand R. before the same can be enforced and collected. TaxCases_249 . The burden of proof is upon the complaining party to show clearly that the assessment is erroneous. No. The enforcement of tax laws and the collection of taxes are of paramount importance for the sustenance of government. G. the BIR argued that the State‘s authority to collect internal revenue taxes is paramount. It is not the Department of Justice which is the government agency tasked to determine the amount of taxes due upon the subject estate. petitioner. the petitioner's attack on the assessment bears mainly on the alleged improbable and unconscionable amount of the taxes charged. such collection should be made in accordance with law as any arbitrariness will negate the existence of government itself.Safeguarding Interest of Government in the Collection of Estate Tax FERDINAND R.. There is nothing in the Tax Code. But mere rhetoric cannot supply the basis for the charge of impropriety of the assessments made.R. an assessment will not be disturbed. but the Bureau of Internal Revenue whose determinations and assessments are presumed correct and made in good faith. 120880 June 5. Taxes are the lifeblood of government and should be collected without unnecessary hindrance. and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes. sitting in probate or as a settlement tribunal over the deceased‘s estate. On the other hand. MARCOS II.

liable for the payment corresponding to his share of the estate. Pineda is liable for the tax up to the amount of the property in his possession. No. Pineda liable for the payment of all the taxes found by the Tax Court to be due from the estate instead of only for the amount of taxes corresponding to his share in the estate. PINEDA G. After the estate proceedings were closed. L-22734. Pineda. the P2. 1967 BENGZON.: FACTS: Estate proceedings were had to settle the estate of Atanasio Pineda. September 15.R.. the eldest son of the deceased. The reason is that the Government has a lien on what he received from the estate as his share in the inheritance for unpaid income taxes for which said estate is liable. The Court of Tax Appeals rendered judgment holding Manuel B. adjustment of the shares of each heir in the distributed estate as lessened by the tax Another remedy is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due. Pineda will have a right of contribution from his co-heirs.P. By virtue of such lien. and second. by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received.28. The Government has two ways of collecting the tax in question. J. Pineda is liable for the assessment as an heir and as a holder-transferee of property belonging to the estate/taxpayer. After such payment. the BIR found out that the income tax liability of the estate during the pendency of the estate proceedings were not paid.00.500. ISSUE: Whether or not the Government can require Pineda to pay the full amount of the taxes assessed? HELD: YES. MANUEL B. J. This second remedy is the very avenue the Government took in this case to collect the tax. payment of the tax. One. i. the Government has the right to subject the property in Pineda's possession. to satisfy the income tax assessment in the sum of P760.e. to achieve an adjustment of the proper share of each heir in the distributable estate. As a holder of property belonging to the estate..COMMISSIONER OF INTERNAL REVENUE vs. The Commissioner of Internal Revenue has appealed to SC and has proposed to hold Manuel B. TaxCases_250 . The reason why a case suit is filed against all the heirs for the tax due from the estate is to achieve thereby two results: first.

For this reason. L-43082 June 18.PABLO LORENZO.R. The only benefit on which the taxpayer is entitled is that derived from the enjoyment of the privileges of living in an organized society established and safeguarded by the devotion of taxes to the public purpose. TaxCases_251 . Lorenzo. but upon the necessity of money fort the support of the estate. Taxes are essential for the existence of the government. JUAN POSADAS. The obligation to pay taxes rest not upon the privileges enjoyed by or the protection afforded to the citizen by the government. J. ISSUE: Whether or not the contention of petitioner meritorious? HELD: NO..: FACTS: Thomas Hanley died in Zamboanga. as trustee of the estate of Thomas Hanley. vs. leaving a will which provided among others that the property given to Matthew Henley will belong to him only after 10 years after Thomas death. G. JR. He contended that the inheritance tax should have been after 10 years. Consequently. no one is allowed to object or resist payment of taxes solely because no personal benefit to him can be pointed out as arising from the tax. the trustee of the estate paid the assessments on protest. deceased. Collector of Internal Revenue. defendant-appellant. 1937 LAUREL. The government promised nothing to the person taxed beyond what maybe anticipated from administration of the laws for the general good. plaintiff-appellant. the CIR assessed inheritance tax against the estate. No.

Such construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims" required to be presented against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime. vs. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE. the claims existing at the time of death are significant to.e. in his capacity as the Judicial Administrator of the Estate of the deceased JOSE P. or liability contracted by the deceased before his death. Fernandez died in November 7. 2008 NACHURA. a petition for the probate of his will was filed. as of the that time. explained that: First. Thereafter. respondents. no estate tax was due. beyond what the statute expressly and clearly imports. No..: FACTS: Jose P. 140944 April 30. The petitioner claims that in as much as the valid claims of creditors against the Estate are in excess of the gross estate. hence. Second. and should be made the basis of. the Court held that post-death developments are not material in determining the amount of deduction. the net value of the property transferred should be ascertained. FERNANDEZ. BIR thereafter issued a deficiency estate tax assessment. which disregard the date-of-death valuation principle and particularly provide that post-death developments must be considered in determining the net value of the estate. i. Dizon as administrator of the Estate of Jose Fernandez. the determination of allowable deductions. United States. Following the US Supreme Court‘s ruling in Ithaca Trust Co. respondents argue that since the claims of the Estate‘s creditors have been condoned. The CA affirmed the CTA‘s ruling. 1987.97 million as deficiency estate tax. the instant petition. tax statutes being construed strictissimi juris against the government. because the act on which the tax is levied occurs at a discrete time. ISSUE: Whether or not the actual claims of creditors may be fully allowed as deductions from the gross estate of Jose despite the fact that the said claims were reduced or condoned through compromise agreements entered into by the Estate with its creditors? HELD: YES. the instance of death. as nearly as possible. An estate tax return was filed later on which showed ZERO estate tax liability. G.R.RAFAEL ARSENIO S. It bears emphasis that tax burdens are not to be imposed or presumed to be imposed. This is the date-of-death valuation rule. such claims may no longer be deducted from the gross estate of the decedent. The probate court appointed Atty. in adopting the date-of-death valuation principle. v. This was subsequently reduced by CTA to Php 37. petitioner. J. Rafael Arsenio P. On the other hand. DIZON. TaxCases_252 . nor do we discern any legislative intent in our tax laws. Therefore. There is no law.42 million. The Court. This is because estate tax is a tax imposed on the act of transferring property by will or intestacy and. demanding payment of Php 66.

Prohibition and Mandamus with Preliminary Injunction and Prayer for Temporary Restraining Order in the CA assailing the orders of the probate court. The probate court issued an Order fixing the amount of compensation of Atty. CRISPIN JR. Atty. GENARO III. sold three parcels of land Due to certain disagreements between Atty. The said sum included the compensation of Atty. CORAZON and RAMONA. with prior approval of the probate court. the court's insistence to hear respondents' allegation of non-payment of taxes resulting from the sale of the properties. who was designated as the sole executor of the last will and testament of the deceased Ronquillo whose will was probated. EMMA. respondents are the heirs of the testator Ronquillo. Allegedly. Gabriel. Gabriel. to prevent the release of the compensation. On the other hand. all surnamed RONQUILLO. J. Gabriel. No. While still acting as executor. respondents.R. MARIA LUISA. 2007 NACHURA. a portion of the was deposited with the probate court. respondents filed a notice with the probate court that there was a pending tax investigation with the Bureau of Internal Revenue concerning unpaid taxes of the estate from the sale of the land. HON. vs. ISSUE: Whether or not the probate court can take cognizance of the tax controversies? HELD: YES. G. if the estate is found liable. all surnamed GABRIEL. 149909 October 11. Gabriel and the respondents. Petitioners filed a Petition for Certiorari. petitioners. TaxCases_253 . VINCENT and RASCHEL.. the probate court has the discretion to order the payment of the said taxes.TERESA. The Supreme Court ruled that the probate court can rightfully take cognizance of the unpaid taxes of the estate of the deceased. MARIA CHRISTINA. COURT OF APPEALS.: FACTS: Petitioners are the heirs of the late Atty.

SPOUSES FROILAN and LEONILA BRANOCO.the contract between Rodrigo and Rodrigues is one of inter vivos donation.: FACTS: Petitioner Villanueva. who.‖ signaling the irrevocability of the passage of title to Rodriguez‘s estate. Consequently.R. what Rodrigo reserved for herself was only the beneficial title to the Property. in turn. evident from Rodriguez‘s undertaking to ―give one half of the produce of the land to Apoy Alve during her lifetime‖. It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos. Further. Respondents entered the Property in 1983 and paid taxes afterwards. bought the Property from Rodrigo in August 1970. the existence of consideration other than the donor‘s death. Therefore. respondents similarly claimed ownership over the Property through purchase in July 1983 from Rodriguez to whom Rodrigo donated the Property in May 1965. represented by his heirs. represented by his heirs sued respondents. TaxCases_254 . was a donation inter vivos which is subject to Donor‘s Tax? HELD: YES. vs.492 square-meter parcel of land and collect damages. ISSUE: Whether or not the contract between the parties‘ predecessors-in-interest. Petitioner declared the Property in his name for tax purposes soon after acquiring it. No. In their Answer. Petitioner claimed ownership over the Property through purchase in July 1971 from Vere. such as the donor‘s love and affection to the donee and the services the latter rendered. but will be inherited by the heirs of Rodriguez.GIFT TAXATION Tax Treatment of Political Contributions GONZALO VILLANUEVA. Rodrigo and Rodriguez. Petitioner. J. 2011 CARPIO. Rodrigo stipulated that ―if the herein Donee predeceases me. spouses Branoco in the Regional Trial Court to recover a 3. Furthermore. nevertheless ―corroborates the express irrevocability of inter vivos transfers. the Property will not be reverted to the Donor. 172804 January 24. while also true of devises. G. waiving Rodrigo‘s right to reclaim title. Respondents. the subsequent sale to the defendants is void.

The exemption is only from the payment of taxes assessed on such properties enumerated. No.: FACTS: Sometime in 1957. and improvements used exclusively for religious purposes. Under date of April 29.B. TaxCases_255 . L-19201 June 16. as property taxes. Section 22(3).B. Lladoc. as contra-distinguished from excise taxes. Negros Occidental. Art. 1965 PAREDES. and predecessor of Fr." as employed in the Constitution supra should not be interpreted to mean exemption from all kinds of taxes. respondents. The imposition of such excise tax on property used for religious purposes do not constitute an impairment of the Constitution.Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic Parish of Victorias of which petitioner was the parish priest. vs. Estate Inc. It does not rest upon general ownership. Estate filed the donor's gift tax return. The donated amount was spent for such purpose. 1960.. buildings. appurtenant thereto. VI of the Constitution of the Philippines. donated 10.R. the donor M.00 pesos in cash to Fr.000. A donee‘s gift tax is not a property tax but an excise tax imposed on the transfer of property by way of gift inter vivos. J . CASIMIRO LLADOC. M. The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS. of Bacolod City. but an excise upon the use made of the properties. exempts from taxation cemeteries. upon the exercise of the privilege of receiving the properties. churches and personages or convents. The phrase "exempt from taxation. petitioner.Crispin Ruiz. and all lands. G. for the construction of a new Catholic church in the locality. Lladoc was not the Parish priest at the time of donation is valid? HELD: YES. On March 3. ISSUE: Whether or not the imposition of gift tax despite the fact the Fr. Its assessment was not on the property themselves.REV. FR. 1958. the parish priest of Victorias.

Leopoldo‘s assignment of his rights and interests in the property to Asuncion is void. 187056 September 20.JARABINI G. He died in June 1972. the latter rendered a decision reversing that of the RTC. Few months after the death of Guadalupe. collaterally attack Leopoldo‘s deed of assignment in Asuncion‘s favor. and MIGUELA FERRER ALTEZA. JR. vs. On Asuncion‘s appeal to the CA. 2010 ABAD. and Jarabini was a donation mortis causa. ASUNCION G. substituted by her heirs. It was a donation inter vivos. TaxCases_256 . invoking his father Leopoldo‘s assignment of his rights and interests in the property to her. the RTC rendered a decision finding that the donation was in fact one made inter vivos. FELIXBERTO. In the present case. ANGELITO. J. FERRER. Leopoldo. ISSUE: Whether or not the spouses Leopoldo and Guadalupe‘s donation to Asuncion. Asuncion opposed the petition. FERRER. through her petition for the probate of the deed of donation mortis causa. Respondents. After trial. Court of Appeals. Jarabini filed a petiotion for the probate of the deed of donation mortis causa.R. PILAR. It held that Jarabini cannot. Emiliano. all surnamed G.. Thus.: FACTS: Spouses Leopoldo and Guadalupe Gonzales executed a document entitled Mortis Cause "in favor of their two children. and their granddaughter. the donors plainly said that it is" our will that this Donation Mortis Causa shall be irrevocable and shall be respected by the surviving spouse. the donor husband. The fact that the document in question was denominated asa donation mortis causa is not controlling if a donation by its terms is inter vivos. where "revocability‖ is precisely the essence of the act. executed a deed of assignment of his rights and interests in subject property to their daughter Asuncion. given that the donation was indeed inter vivos. as it was denominated? HELD: NO. No. VICENTE. In Austria-Magat v." The intent to make the donation irrevocable becomes even clearer by the provision that a surviving donor shall respect the irrevocability of the donation. Asuncion and Emiliano. Jarabini del Rosario covering the spouses‘ 126-square meter lot and the house on it in equal shares. Petitioner. the Court held that "irrevocability" is a quality absolutely incompatible with the idea of conveyances mortis causa. In 1998. G. DEL ROSARIO.

ANTHONY LEE.505 to each of the thirteen children from each parent. they requested the CIR for a revision of their tax assessments.R. including penalties. and submitted donor's and donee's gift taxreturns showing that the children received gifts inter vivos and proper nuptias. deceased. in shares issued to them by their father Li Seng Giap. JULIA LEE KAW. MARY LEE. as supported by the following circumstances: None of the transferees appeared to possess adequate independent means to buy the shares.: FACTS: Li Seng Giap. The Collector refused to revise his original assessments.B. The heirs paid the sum of P53. and the heirs appealed to the then Board of Tax Appeals. vs. they are be considered as donations by BOTH spouses.. and PETER LEE. SOFIA LEE TEEHANKEE. respondents. HENRI LEE. WILLIAM LEE. VALERIANA LEE YU. The heirs admit that these gifts were not reported. and compromise fee dueto the delayed payment of the taxes.195. J. they constituted individual donations by each of the spouses Li Seng Giap and Tang Ho of one half of the amount received by the donees in each instance. his wife Tang Ho. G.50.00. one for each spouse. VICTOR LEE. L-5949 November 19. J. The CIR regarded these transfers as undeclared gifts and assessed against Li Seng Giap and his children donor's and donee's taxes in the total amount of P76. THOMAS LEE. No. for which two separate TAX exemptions may be claimed in each instance. THE BOARD OF TAX APPEALS and THE COLLECTOR OF INTERNAL REVENUE. but contend that as the cash donated came from the conjugal funds. for themselves and as heirs of LI SENG GIAP. 1955 REYES. They further alleged that the children's stockholding in the two family corporations were purchased by them with savings from the aforesaid cash donations received from their parents.TANG HO. up to a total of P31. interests. Tang Ho‘s argued that since the cash donated came from the conjugal funds. surcharges. and put up a surety bond to guarantee payment of the balance demanded.434. SILVINO LEE. The total of the alleged cash donations to each child is practically identical to the value of the shares supposedly purchased by each donee.31. JOHN LEE. The stock transfers from Li Seng Giap to his children were donations.L.995. TaxCases_257 . representing the amount of the basic taxes. BIR made an examination of the books of the two corporation and found that each of Li Seng Giap's 13 children had atotal investment therein of approximately P63. The Board of Tax Appeals upheld the decision of the CIR ISSUE: Whether or not the donations made by Li Seng Giap to his children from the conjugal property should be taxed against the husband alone? HELD: NO. Thereafter. and their thirteen children appear to be the stockholder of two close family corporations. petitioners. CHARLES LEE.

Li Seng Giap. as claimed by the heirs. appellants failed to file for ten successive years. for all intents and purposes. A donation of property belonging to the conjugal partnership. alone does not become in law a donation by both spouses merely because it involves property of the conjugal partnership. and their children. to be a donation by both spouses. a written notice to the Collector of each donation of P10. taxable to both. TaxCases_258 . Under the Civil Code of 1889. to support their contention that the shares were acquired by purchase. even if the husband should appear as the sole donor.000 marriage gifts to each married child. The filing of the gift tax returns only after assessments and part payment of the taxes demanded by the Collector. amply justify the Tax Board's distrust of the veracity of the appellants' belated tax returns. under the old Civil Code.000 to each child. On their own admission. Her participation therein cannot be implied. Appellants herein are therefore in error when they contend that it is enough that the property donated should belong to the conjugal partnership in order that the donation be considered and taxed as a donation of both husband and wife. is taxable to him exclusively as sole donor. describes himself as "the undersigned donor" without in any way mentioning his wife as a coparticipant in the donation. 114). made during its existence by the husband alone in favor of the common children. the wife must expressly join the husband in making the gift. There is no blinking the fact that.For the parent to donate cash to enable the donee to buy from him shares of equivalent value is. the corresponding returns for the alleged yearly gifts of P4.There is no evidence other than the belated sworn gift tax returns of the spouses Li Seng Giap and Ang TangHo. must be given within thirty daysafter the donation. Furthermore.000 or more. in this case. a donation by the husband. and likewise failed to give the notices for theP20. and not two. Sec. ONLY ONE exemption or deduction can be claimed for every such gift. filed with the CIR. In the original claim for tax refund. a donation of such shares to the purchaser donee. appellants herein. Hence.

then running for the Senate. contributed P882. JOSE C.: FACTS: During the 1987 national elections.MANUEL G. 120721 February 23. TaxCases_259 . TEODORO D.R. They claimed that political or electoral contributions are not considered gifts under the National Internal Revenue Code (NIRC).661. providing in Section 13 thereof that political/electoral contributions. 7166 on November 25. who are partners in the ACCRA law firm. G. respondents. the Bureau of Internal Revenue (BIR) assessed each of the petitionersP263. they are not liable for donor‘s tax. AVELINO V.66 for their contributions. are not subject to the payment of any gift tax. On August 2. In letters dated April 21. vs. 1988. petitioners questioned the assessment through a letter to the BIR. CONCEPCION. petitioners were not spared from paying the same since they were not covered by the exempting legislation because the donation was made prior to the enactment of the said law and the same law does not provide for a retroactive effect. and that.31 each to the campaign funds of Senator Edgardo Angara. Despite the above law which exempts political or electoral contributions from being subjected to Gift Tax.032. Congress approved Republic Act No. CRUZ. REGALA. petitioners. The claim for exemption was denied by the Commissioner ISSUE: Whether or not petitioner‘s political or electoral contributions are subject to Gift Tax? HELD: YES. 1991. petitioners. duly reported to the Commission on Elections. The Court takes note of the fact that subsequent to the donations involved in this case. J. 1988. No. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS. ABELLO. therefore. 2005 AZCUNA.