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1.

RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator of


the Estate of the deceased JOSE P. FERNANDEZ, petitioner,
vs.
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE,
respondents.
G.R. No. 140944, April 30, 2008, NACHURA, J.

Facts:
Jose P. Fernandez (Jose) died in November 7, 1987. Thereafter, a petition for
the probate of his will was filedwith RTC of Manila. The probate court then appointed
retired Supreme Court Justice Arsenio P. Dizon (Justice Dizon) and Atty. Rafael
Arsenio P. Dizon (petitioner) as Special and Assistant Special Administrator,
respectively, of the Estate of Jose (Estate). An estate tax return was filed later on
which showed ZERO estate tax liability. BIR thereafter issued a deficiency estate tax
assessment, demanding payment of P66.97 million as deficiency estate tax. This
was subsequently reduced by CTA to P37.42 million. The CA affirmed the CTAs
ruling.
The petitioner claims that in as much as the valid claims of creditors against
the Estate are in excess of the gross estate, no estate tax was due. On the other
hand, respondents argue that since the claims of the Estates creditors have been
condoned, such claims may no longer be deducted from the gross estate of the
decedent.
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. Following the US Supreme Courts ruling in Ithaca Trust Co. v. United
States, the Court held that post-death developments are not material in determining
the amount of deduction. This is because estate tax is a tax imposed on the act of
transferring property by will or intestacy and, because the act on which the tax is
levied occurs at a discrete time, i.e., the instance of death, the net value of the

property transferred should be ascertained, as nearly as possible, as of the that


time. This is the date-of-death valuation rule.
The Court, in adopting the date-of-death valuation principle, explained that:
First. There is no law, nor do we discern any legislative intent in our tax laws, which
disregard the date-of-death valuation principle and particularly provide that postdeath developments must be considered in determining the net value of the estate.
It bears emphasis that tax burdens are not to be imposed or presumed to be
imposed, beyond what the statute expressly and clearly imports, tax statutes being
construed strictissimijuris against the government. Second. 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, or liability contracted by the deceased before
his death. Therefore, the claims existing at the time of death are significant
to, and should be made the basis of, the determination of allowable
deductions
2.
G.R. No. 209651
November 26, 2014
MARCELO INVESTMENT AND MANAGEMENT CORPORATION,Et. Al. vs. JOSE
T. MARCELO, JR.
FACTS:
Decedent Jose, Sr. died intestate. He was survived by his four compulsory heirs: (1)
Edward, (2) George, (3) Helen and (4) respondent Jose, Jr.petitioner Marcelo
Investment and Management Corporation (MIMCO) filed a Petition for the issuance
of Letters of Administration of the estate of Jose, Sr. At first, Helen, along with her
brother, Jose, Jr. separately opposed MIMCOs petition; the two prayed for their
respective appointment as administrator. Edward opposed Helens and Jose, Jr.s
respective petitions for issuance of Letters of Administration in their favor and
Edward himself prayed for his appointment as regular administrator.
Pending the issuance, Jose was appointed as special administrator. Eventually,
Edward was appointed as the regular administrator of the estate.
The RTC approved the project partition of the heirs. The court deferred the
distribution until the payment of the estate tax.
When Edward died Jose revived the intestate proceeding and moved for his
appointment as administrator.
RTC appointed Jose for the reason that there is still a necessity to appoint on since
taxes due to the government remained to be unpaid.
ISSUE:
Is the appoint of a new administrator still necessary?

HELD:
YES. No distribution shall be allowed until payment of the obligations above
mentioned has been made or provided for, unless the distributees, or any of them,
give a bond, in a sum tobe fixed by the court, conditioned for the payment of said
obligations.
All the parties are definitely aware, the RTC archived the intestate proceedings
pending the payment of estate taxes. It is apparent that the intestate proceedings
involving Jose, Sr.s estate still requires a regular administrator to finally settle the
estate and distribute remaining assets

#3 Marcos Heirs vs CA.


273 SCRA 47
GR No. 120880, June 5, 1997
FACTS:
Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals
to grant CIR's petition to levy the properties of the late Pres. Marcos to cover the
payment of his tax delinquencies during the period of his exile in the US. The
Marcos family was assessed by the BIR after it failed to file estate tax returns.
However the assessment were not protested administratively by Mrs. Marcos and
the heirs of the late president so that they became final and unappealable after the
period for filing of opposition has prescribed. Marcos contends that the properties
could not be levied to cover the tax dues because they are still pending probate
with the court, and settlement of tax deficiencies could not be had, unless there is
an order by the probate court or until the probate proceedings are terminated.
Petitioner also pointed out that applying Memorandum Circular No. 38-68, the
BIR's Notices of Levy on the Marcos properties were issued beyond the allowed
period,
and
are
therefore
null
and
void.
ISSUE:
Are the contentions of Bongbong Marcos correct?
HELD:
No. The deficiency income tax assessments and estate tax assessment are
already final and unappealable and the subsequent levy of real properties is a tax
remedy resorted to by the government, sanctioned by Section 213 and 218 of the
National Internal Revenue Code. This summary tax remedy is distinct and separate
from the other tax remedies (such as Judicial Civil actions and Criminal actions), and
is not affected or precluded by the pendency of any other tax remedies instituted by
the government.
The approval of the court, sitting in probate, or as a settlement tribunal over
the deceased's estate is not a mandatory requirement in the collection of estate
taxes. On the contrary, under Section 87 of the NIRC, it is the probate or settlement
court which is bidden not to authorize the executor or judicial administrator of the
decedent's estate to deliver any distributive share to any party interested in the
estate, unless it is shown a Certification by the Commissioner of Internal Revenue
that the estate taxes have been paid. This provision disproves the petitioner's
contention that it is the probate court which approves the assessment and
collection of the estate tax.

On the issue of prescription, the omission to file an estate tax return, and the
subsequent failure to contest or appeal the assessment made by the BIR is fatal to
the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a
return, the tax may be assessed at anytime within 10 years after the omission, and
any tax so assessed may be collected by levy upon real property within 3 years
(now 5 years) following the assessment of the tax. Since the estate tax assessment
had become final and unappealable by the petitioner's default as regards protesting
the validity of the said assessment, there is no reason why the BIR cannot continue
with the collection of the said tax.

4. G.R. No. 208293

December 10, 2014

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS,


ANGEL L. SANTOS, NONENG S. DIANCO, et. al.,
G.R. No. 208295 December 10, 2014
LINA B. AGUILAR vs. CARMELITA S. SANTOS, REYME L. SANTOS, ANGEL L.
SANTOS, BUENVENIDO L. SANTOS et. al.,
FACTS: This is a consolidated case.
Respondents filed before the RTC of Marikina City a complaint for sum of money and
damages against PNB and Lina Aguilar. They questioned the release of the deposit
amount to Manimbo who had no authority from them to withdraw their fathers
deposit and who failed to present to PNB all the requirements for such withdrawal.
PNB and Aguilar denied that Angel C. Santos had two separate accounts. They
alleged that Angels deposit account was originally a time deposit account that was
subsequently converted into a premium savings account. They also alleged that
Aguilar did not know about Angels death in 1991 because she only assumed office
in 1996.
The trial court found that Angel C. Santos had only one account with PNB, which
was originally a time deposit and converted into a premium savings account when it
was not renewed on maturity. It held that both PNB and Aguilar were negligent in
releasing the deposit to Manimbo.
On appeal to the CA, the latter sustained the trial courts decision. It also held that
PNB and Aguilar were negligent in handling the deposit. The deposit amount was
released to Manimbo who did not present all the requirements, particularly the BIR
certification that estate taxes had already been paid.
ISSUE: WON PNB and Aguilar were negligent in releasing the proceeds of the
savings deposit account to Manimbo
RULING: YES
PNB and Aguilars treatment of Santos account is inconsistent with the high
standard of diligence required of banks. They accepted Manimbos representations
despite knowledge of the existence of circumstances that should have raised doubts

on such representations. They have disregarded their own requirements for the
release of the deposit to persons claiming to be heirs of a deceased depositor. They
released the proceeds of the subject account without having presented the BIRissued certificate of payment of, or exception from, estate tax. Taxes are created
primarily to generate revenues for the maintenance of the government. However,
this particular tax may also serve as guard against the release of deposits to
persons who have no sufficient and valid claim over the deposits. Based on the
assumption that only those with sufficient and valid claim to the deposit will pay the
taxes for it, requiring the certificate from the BIR increases the chance that the
deposit will be released only to them.
In their compulsory counterclaim, petitioners PNB and Aguilar claimed that Manimbo
presented a certificate of payment of estate tax. During trial, however, it turned out
that this certificate was instead an authority to accept payment, which is not the
certificate required for the release of bank deposits. It appears that Manimbo was
not even required to submit the BIR certificate . He, thus, failed to present such
certificate. Petitioners PNB and Aguilar provided no satisfactory explanation why
Angel C. Santos deposit was released without it.

#5.1
THE ESTATE OF HILARIO M. RUIZ, EDMOND RUIZ, Executor vs. THE COURT
OF APPEALS (Former Special Sixth Division), MARIA PILAR RUIZ-MONTES,
MARIA CATHRYN RUIZ, CANDICE ALBERTINE RUIZ, MARIA ANGELINE RUIZ
and THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF PASIG,
BRANCH 156, [G.R. No. 118671. January 29, 1996] (Puno, J.)
FACTS: Hilario M. Ruiz executed a holographic will naming as his heirs his only son,
Edmond Ruiz, his adopted daughter, private respondent Maria Pilar Ruiz Montes,
and his three granddaughters, private respondents Maria Cathryn, Candice Albertine
and Maria Angeline, all children of Edmond Ruiz. Hilario Ruiz died. Edmond, the
named executor, did not take any action for the probate of his fathers will. It was
only four years after the testators death that private respondent Maria Pilar Ruiz
Montes filed for the probate of the testators will.
The Valle Verde property which was bequeathed by the testator to his
granddaughters was leased out by Edmond to third persons. The probate court then
ordered Edmond to deposit with the court the rental deposit and payments of the
said property. The probate court, upon motion, ordered the release of the rent
payments to the decedents three granddaughters and ordered the delivery of the
titles to and possession of the properties bequeathed to the three granddaughters
and respondent Montes. The CA affirmed.
ISSUE: Whether the probate court, after admitting the will to probate but before
payment of the estates debts and obligations, has the authority:
(1) to grant an allowance from the funds of the estate for the support of the
testators grandchildren;
(2) to order the release of the titles to certain heirs; and
(3) to grant possession of all properties of the estate to the executor of the will.
HELD:
(1) NO. Grandchildren are not entitled to provisional support from the funds of
the decedents estate. The law clearly limits the allowance to widow and
children and does not extend it to the deceaseds grandchildren, regardless
of their minority or incapacity.
(2) NO. In settlement of estate proceedings, the distribution of the estate
properties can only be made: (1) after all the debts, funeral charges,

expenses of administration, allowance to the widow, and estate tax have


been paid; or (2) before payment of said obligations only if the distributees or
any of them gives a bond in a sum fixed by the court conditioned upon the
payment of said obligations within such time as the court directs, or when
provision is made to meet those obligations.
In the case at bar, the probate court ordered the release of the titles to the Valle
Verde property and the Blue Ridge apartments to the private respondents after the
lapse of six months from the date of first publication of the notice to creditors. The
questioned order speaks of notice to creditors, not payment of debts and
obligations. Hilario Ruiz allegedly left no debts when he died but the taxes on his
estate had not hitherto been paid, much less ascertained. The estate tax is one of
those obligations that must be paid before distribution of the estate. If not yet paid,
the rule requires that the distributees post a bond or make such provisions as to
meet the said tax obligation in proportion to their respective shares in the
inheritance. Notably, at the time the order was issued the properties of the estate
had not yet been inventoried and appraised.
(3) NO. The right of an executor or administrator to the possession and
management of the real and personal properties of the deceased is not
absolute and can only be exercised so long as it is necessary for the payment
of the debts and expenses of administration. As executor, he is a mere
trustee of his fathers estate. The funds of the estate in his hands are trust
funds and he is held to the duties and responsibilities of a trustee of the
highest order. He cannot unilaterally assign to himself and possess all his
parents properties and the fruits thereof without first submitting an inventory
and appraisal of all real and personal properties of the deceased, rendering a
true account of his administration, the expenses of administration, the
amount of the obligations and estate tax, all of which are subject to a
determination by the court as to their veracity, propriety and justness.

#5.2
COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS, COURT OF
TAX APPEALS and JOSEFINA P. PAJONAR, as Administratrix of the Estate of
Pedro P. Pajonar (G.R. No. 123206, March 22, 2000) (GONZAGA-REYES, J.)
FACTS: Private respondent Josefina Pajonar was the guardian of the person of
decedent Pedro Pajonar. The property of the decedent was put by the RTC
Dumaguete, under the guardianship of the Philippine National Bank via special
proceeding, wherein P50, 000 was spent therein for payment of attorney's fees.
When the decedent died, instead of filing an estate tax return, PNB advised Josefina
to extra-judicially settle the estate of his brother. The decedent's estate was extrajudicially settled and the heirs paid an amount of P60, 753 for the notarization of
the deed of extra-judicial settlement of estate.
The private respondent paid the estate tax, however, they were subsequently
assessed of deficiency taxes because the amount paid in the special proceeding
(P50, 000) and the notarization fee (P60, 753) cannot be claimed as a deduction to
the decedent's estate. Private respondent paid the said taxes under protest. While
the case is under review by the BIR, she filed a claim for refund in the CTA which
was granted.
ISSUE: WON the notarial fee paid for the extrajudicial settlement and the attorney's
fees in the guardianship proceedings may be allowed as deductions from the gross
estate of decedent in order to arrive at the value of the net estate.
HELD: YES. The notarial fee for the extrajudicial settlement and the attorney's
fees in the guardianship proceedings are allowable deductions from the gross estate
of Pedro Pajonar.
Attorney's fees in order to be deductible from the gross estate must be essential to
the collection of assets, payment of debts or the distribution of the property to the
persons entitled to it. The services for which the fees are charged must relate to the
proper settlement of the estate. In this case, the guardianship proceeding was
necessary for the distribution of the property of the late Pedro Pajonar to his rightful
heirs.
In this case, it is clear that the extrajudicial settlement was for the purpose of
payment of taxes and the distribution of the estate to the heirs. The execution of
the extrajudicial settlement necessitated the notarization of the same. It follows
then that the notarial fee of P60, 753.00 was incurred primarily to settle the estate
of the deceased Pedro Pajonar. Said amount should then be considered an
administration expenses actually and necessarily incurred in the collection of the
assets of the estate, payment of debts and distribution of the remainder among
those entitled thereto. Thus, the notarial fee of P60, 753 incurred for the
Extrajudicial Settlement should be allowed as a deduction from the gross estate.

6.
G.R. No. 82027 March 29, 1990
ROMARICO G. VITUG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINOCORONA, respondents.
SARMIENTO, J.:
Petitioner Romerico Vitug, widower of the late Dolores Luchangco Vitug and the
special administrator of the latters estate, filed a motion to the probate court to
grant him the authority to sell shares of stock and real properties belonging to the
estate as reimbursement for his advances, which were spent for the payment of
estate tax. Vitug claimed that the said advances were from his personal funds in a
savings account which he acquired through a survivorship agreement executed with
his wife and Bank of America. Respondent Rowena Faustino-Corono opposed the
motion based on her allegation that there is no ground for reimbursement since the
said account is a conjugal partnership property and is therefore part of the estate.
The trial court upheld the validity of the agreement and granted Vitugs motion to
sell some properties for reimbursement of his alleged advances. The Court of
Appeals however, ruled in favor of Faustino-Corona and held that the survivorship
agreement constitutes as a conveyance mortis cause which did not comply with the
formalities of a valid will. It further held that, assuming that it is a mere donation
inter vivos, it is a prohibited donation
ISSUE: Whether or not the account is part of the estate of the late Dolores
Luchangco Vitug
HELD: No. The monies subject of the savings account were in the nature of conjugal
funds. There is no showing that the funds exclusively belonged to one party, and
hence it must be presumed to be conjugal, having been acquired during the
existence of the marital relations.
The spouses are not prohibited by law to invest conjugal property, say, by way of a
joint and several bank account, more commonly denominated in banking parlance
as an "and/or" account. In the case at bar, when the spouses Vitug opened the
savings account, they merely put what rightfully belonged to them in a moneymaking venture. They did not dispose of it in favor of the other, which would have
arguably been sanctionable as a prohibited donation. And since the funds were

conjugal, it cannot be said that one spouse could have pressured the other in
placing his or her deposits in the money pool.
The conveyance is not one of mortis causa. Neither is the survivorship agreement a
donation inter vivos, for obvious reasons, because it was to take effect after the
death of one party. Secondly, it is not a donation between the spouses because it
involved no conveyance of a spouse's own properties to the other.
Being the separate property of Romerico Vitug, it forms no more part of the estate
of the deceased.

7.
DELPHER TRADES CORPORATION, et al. v. INTERMEDIATE APPELLATE
COURT, et al.
G.R. No. L-69259, 26 January 1988, THIRD DIVISION, (Gutierrez, Jr., J.)
FACTS:
- Delfin and Pelagia Pacheco (the other petitioners), siblings and co-owners of the
Malinta estate, executed a deed of exchange in favor of Delpher Trades
Corporation (DTC), whereby the former conveyed to the latter some lands of the
estate for 2,500 shares of stock of DTC with the amount of P1.5 million.
-

Before the supposed transfer, one of the lots was leased by the Pachecos to
Construction Components International Inc. (CCII) with the proviso stating that
during the existence/after the term of this lease, the lessor, should he decide to
sell the property leased, shall first offer the same to the lessee and the latter has
the priority to buy under the same conditions. Later on, CCII assigned its rights
and obligations under the lease to Hydro Pipes Phils. Inc. (HPPI), the private
respondent, with the Pachecos consent. The lease and assignment were
annotated at the back of the title.

On the ground that it was not given the 1 st option to buy the leased property, as
stated in the contract, HPPI filed a complaint for the lots reconveyance in its
favor under similar conditions whereby DTC acquired the same from the siblings.
The Court of First Instance ruled in favor of HPPI, declaring its preferential
right/right of 1st refusal as regards the subject property. The Intermediate
Appellate Court affirmed. The Supreme Court initially denied DTCs petition but
upon the latters Motion for Reconsideration, gave it due course.

ISSUE: (on taxation)


Is the estate planning scheme between DTC and the Pachecos valid?

RULING: YES. The scheme is a form of tax avoidance and not tax evasion.
- DTC is a business conduit of the Pachecos. What they really did was to invest
their properties and change the nature of their ownership from
unincorporated to incorporated form by organizing DTC to take control of
their properties and at the same time save on inheritance taxes.
-

Section 35 of the National Internal Revenue Code, under par. C-sub-par. (2)
Exceptions, states that "No gain or loss shall also be recognized if a
person exchanges his property for stock in a corporation of which as a
result of such exchange said person alone or together with others not
exceeding four persons gains control of said corporation."

The benefits of the estate planning scheme of the Pachecos is that there
is flexibility in using no par value shares as the value is determined by the board
of directors in increasing capitalization. The board can fix the value of the shares
equivalent to the capital requirements of the corporation. In the point of view
of taxation, there is also flexibility since a corporation does not die as it
can continue to hold on to the property indefinitely for a period of at
least 50 years. On the other hand, if the property is held by the spouse,
the property will be tied up in succession proceedings and there would
be consequential payments of estate and inheritance taxes when an
owner dies. The advantage in this continuity, in relation to ownership by a
particular person of certain properties in respect to taxation, is that the
property is not subjected to taxes on succession as the corporation
does not die. This benefit is all about the inheritance tax.

The records do not point to anything wrong/objectionable about this "estate


planning" scheme resorted to by the Pachecos. "The legal right of a taxpayer
to decrease the amount of what otherwise could be his taxes/altogether
avoid them, by means which the law permits, cannot be doubted."

8. REV. FR. CASIMIRO LLADOC v. The COMMISSIONER OF INTERNAL


REVENUE and The COURT of TAX APPEALS
G.R. No. L-19201 June 16, 1965 PAREDES, J.
FACTS:
M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev. Fr. Crispin
Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein
petitioner, for the construction of a new Catholic Church in the locality. The total
amount was actually spent for the purpose intended. The donor M.B. Estate, Inc.,
filed the donor's gift tax return. CIR issued an assessment for donee's gift tax
against the Catholic Parish of Victorias, Negros Occidental, of which petitioner was
the priest.

Petitioner lodged a protest to the assessment and requested the withdrawal thereof.
The protest and the MR presented to the CIR were denied. The petitioner appealed
to the CTA and claimed that at the time of the donation, he was not the parish priest
in Victorias; that there is no legal entity or juridical person known as the "Catholic
Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift
tax. It was also asserted that the assessment of the gift tax, even against the
Roman Catholic Church, would not be valid, for such would be a clear violation of
the provisions of the Constitution.
CTA affirmed the decision of the CIR except with regard to the imposition of the
compromise penalty in the amount of P20.00; The above judgment is now before us
on appeal.
ISSUE:
WON petitioner should be liable for the assessed donee's gift tax on the P10,000.00
donated for the construction of the Victorias Parish Church.
RULING:
Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation
cemeteries, churches and parsonages or convents, appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious purposes. The
exemption is only from the payment of taxes assessed on such properties
enumerated, as property taxes, as contra distinguished from excise taxes. In the
present case, what the Collector assessed was a donee's gift tax; the assessment
was not on the properties themselves. It did not rest up on general ownership; it
was an excise upon the use made of the properties, upon the exercise of the
privilege of receiving the properties.
Manifestly, gift tax is not within the exempting provisions of the section just
mentioned. A gift tax is not a property tax, but an excise tax imposed on the
transfer of property by way of giftinter vivos, the imposition of which on property
used exclusively for religious purposes, does not constitute an impairment of the
Constitution. As well observed by the learned respondent Court, the phrase "exempt
from taxation," as employed in the Constitution should not be interpreted to mean
exemption from all kinds of taxes. And there being no clear, positive or express
grant of such privilege by law, in favor of petitioner, the exemption herein must be
denied.
In finding that a tax liability exists, is, who should be called upon to pay the gift tax?
Petitioner postulates that he should not be liable, because at the time of the
donation he was not the priest of Victorias. We note the merit of the above claim, it
appearing that the Head of such Diocese is the real party in interest. The
assessment at bar had been properly made and the imposition of the tax is not a
violation of the constitutional provision exempting churches, parsonages or

convents, etc., the Head of the Diocese, to which the parish Victorias Pertains, is
liable for the payment thereof.

9.

MARIA CARLA PIROVANO, etc., et al.,vs.THE COMMISSIONER OF INTERNAL


REVENUE
(This case is a sequel to the case of Pirovano vs. De la Rama Steamship Co., 96 Phil.
335.)

Facts: De la Rama Steamship Co. insured the life of Enrico Pirovano, its President
and General Manager, and the father of the herein petitioners-appellants. The
company designated itself as the beneficiary of the policies but after Pirovanos
death during the Japanese occupation, it renounced all its rights, title and interest
therein, in favor of Pirovanos heirs.
The CIR subjected the donation to gift tax, to which Pirovanos heirs contested and
also made a claim for refund of the donor's gift tax so collected.
The CTA ordered the payment of donees' gift taxes as assessed by respondent as
well as the imposition of surcharge and interest on the amount of donees' gift
taxes.Petitioners stated that the grant was not subject to such donees tax because
it was not a simple donation, as it was made for a full and adequate compensation
for the valuable services by the late Priovano, thus it was remuneratory.
Issue: WON the donation is remuneratory and therefore not subject to donees tax,
but rather taxable as part of gross income.
Ruling: No. There is nothing on record to show that when the late Enrico Pirovano
rendered services as President and General Manager of the De la Rama Steamship
Co. he was not fully compensated for such services, or that, because they were
"largely responsible for the rapid and very successful development of the activities
of the company." Pirovano expected or was promised further compensation over
and in addition to his regular emoluments as President and General Manager. The
fact that his services contributed in a large measure to the success of the company
did not give rise to a recoverable debt, and the conveyances made by the company
to his heirs remain a gift or donation. That the tax court regarded the conveyance
as a simple donation, instead of a remuneratory one as it was declared to be in our

previous decision, is but an innocuous error; whether remuneratory or simple, the


conveyance remained a gift, taxable under the Internal Revenue Code.

10.
De luna vs. judge abrigo
FACTS:
De Luna donated a portion of a 75 sq. m. lot to the Luzonian University Foundation.
The donation was embodied in a Deed of Donation Intervivos and was subject to
certain terms and conditions. In case of violation or non-compliance, the property
would automatically revert to the donor. When the Foundation failed to comply with
the conditions, de Luna revived the said donation by executing a Revival of
Donation Intervivos with the following terms and conditions:
1) The Donee shall construct on the land and at its expense a Chapel, Nursery, and
Kindergarten School to be named after St. Veronica
2) Construction shall start immediately and must be at least 70% completed three
years from the date of the Deed unless the Donor grants extensions
3) Automatic reversion in case of violation
The Foundation accepted and the donation was registered and annotated in the TCT.
By a Deed of Segregation, the foundation was issued a TCT for area the lot donated
while the remaining area was retained by the De Luna.
The children and only heirs of the late De Luna (died after the donation) filed a
complaint with the RTC for the cancellation of the donation on the ground that the
terms were violated. The Foundation defended itself by saying that it had partially
and substantially complied with the conditions and that the donor granted it an
indefinite extension of time to complete construction.
The RTC dismissed the petition on the ground of prescription (for being filed after 4
years). The heirs did not file an MR and went straight to the SC.
ISSUE:
Whether the action prescribes in 4 years (based on art. 764 NCC-judicial decree of
revocation of the donation) or in 10 years (based on art. 1144 enforcement of a
written contract)
RULING: 10 years
The donation subject of this case is one with an onerous cause.
The same rules apply under the New Civil Code as provided in Article 733 thereof
which provides:
Donations with an onerous cause shall be governed by the rules on contracts, and
remuneratory donations by the provisions of the present Title as regards that
portion which exceeds the value of the burden imposed.

It is true that under Article 764 of the New Civil Code, actions for the revocation of a
donation must be brought within four (4) years from the non-compliance of the
conditions of the donation. However, said article does not apply to onerous
donations in view of the specific provision of Article 733 providing that onerous
donations are governed by the rules on contracts. The rules on prescription and not
the rules on donation applies in the case at bar.
11.
SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, petitioners, vs.
COURT OF APPEALS and MERCEDES DANLAG y PILAPIL, respondents.
G.R. No. 111904
October 5, 2000

Facts:
Spouses Diego and Catalina Danlag were the owners of six parcels of unregistered
lands. They executed three deeds of donation mortis causa, in favor of private
respondent Mercedes Danlag-Pilapil with conditions that they reserve the right to
amend, cancel or revoke the donation during their lifetime and to sell, mortgage, or
encumber the properties donated during the donors' lifetime, if deemed necessary.
Subsequently, the spouses again executed a deed of donation covering the said
parcels of land plus two other parcels in favor of Mercedes with some conditions
contained therein that the Danlag spouses shall continue to enjoy the fruits of the
land during their lifetime and the donee cannot sell or dispose of the land during the
lifetime of the said spouses, without their prior consent and approval. Mercedes
caused the transfer of the parcels' tax declaration to her name and paid
the taxes on them.

Thereafter, Diego and Catalina Danlag sold parcels 3 and 4 to petitioners, Mr. and
Mrs.
AgripinoGestopa
and
subsequently
they
executed
a
deed
of
revocationrecovering the six parcels of land subject of the aforecited deed of
donation inter vivos.

Mercedes filed with RTC a petition against the Gestopas and Danlags for quieting of
title over the parcels of land contending that Diego Danlag persuaded her husband
to buy the 2 of the six parcels of land covered by the donation inter vivos with
compliance with the conditions imposed on it and that Diego had no legal basis
inrevoking the subject donation and then in selling the two parcels of land to the

Gestopas. The RTC ordered the cancellation of the tax declarations in the name of
Mercedes Danlag-Pilapil.

The CA reversed the ruling of the RTC. Hence, this petition.

ISSUE: Whether or not the tax declarations made by Mercedes can be considered
as evidence of the intent of the donors to transfer ownership.

RULING: YES
The granting clause shows that Diego donated the properties out of love and
affection for the donee. This is a mark of a donation inter vivos. Second, the
reservation of lifetime usufruct indicates that the donor intended to transfer the
naked ownership over the properties. Third, the donor reserved sufficient properties
for his maintenance in accordance with his standing in society, indicating that the
donor intended to part with the six parcels of land.Lastly, the donee accepted the
donation. In the case ofAlejandro vs. Geraldez, 78 SCRA 245 (1977), we said that an
acceptance clause is a mark that the donation isinter vivos. Acceptance is a
requirement for donations inter vivos. Donations mortis causa, being in the form of
a will, are not required to be accepted by the donees during the donors' lifetime.
Here, the donation that was made was a donation inter vivos.

Petitioners aver that Mercedes' tax declarations in her name cannot be a


basis in determining the donor's intent. They claim that it is easy to get
tax declarations from the government offices such that tax declarations
are not considered proofs of ownership. However, unless proven
otherwise, there is a presumption of regularity in the performance of
official duties.We find that petitioners did not overcome this presumption
of regularity in the issuance of the tax declarations. We also note that the
Court of Appeals did not refer to the tax declarations as proofs of
ownership but only as evidence of the intent by the donor to transfer
ownership.

12.

COMMISSIONER OF INTERNAL REVENUE, petitioner,


vs.
B.F. GOODRICH PHILS., INC. (now SIME DARBY INTERNATIONAL TIRE CO.,
INC.) and THE COURT OF APPEALS, respondents.
FACTS:
CIR appealed from the decision of CA reversing the decision of the CTA upholding
the BIRs assessment beyond the five year statute of limitation.
In 1980, CIR assessed Goodrich Phils. For deficiency in donors tax for the alleged
sale for insufficient consideration of Goodrichs land to Siltown Realty Philippines,
Inc. in 1974. In a letter dated November 24, 1980, Goodrich contested this
assessment. On April 9, 1981, it received another assessment dated March 16,
1981, which increased to P 1,092,949 the amount demanded for the alleged
deficiency donor's tax, surcharge, interest and compromise penalty.
Goodrich appealed the correctness and the legality of these last two assessments to
the CTA which in turn upheld with modification the questioned assessment. On
appeal to the CA1, the latter reversed the decision of CTA.
ISSUE:
1) Whether or not petitioner's right to assess herein deficiency donor's tax has
indeed prescribed as ruled by public respondent Court of Appeals;
2) Whether or not the herein deficiency donor's tax assessment for 1974 is valid
and in accordance with law.

RULING:
1) YES.
Applying this provision of law2 to the facts at hand, it is clear that the October 16,
1980 and the March 1981 assessments were issued by the BIR beyond the five-year
statute of limitations.As succinctly pronounced by the Court of Appeals:
The subsequent assessment made by the respondent Commissioner on
October 40, 1980, modified by that of March 16, 1981, violates the law.
1What is involved here is not a first assessment; nor is it one within the 5-year period stated in Section 331 above.
Since what is involved in this case is a multiple assessment beyond the five-year period, the assessment must be
based on the grounds provided in Section 337, and not on Section 15 of the 1974 Tax Code. Section 337 utilizes the
very specific terms "fraud, irregularity, and mistake". "Falsity does not appear to be included in this enumeration.
Falsity suffices for an assessment, which is afirst assessment made within the five-year period. When it is a
subsequent assessment made beyond the five-year period, then, it may be validly justified only by "fraud,
irregularity and mistake" on the part of the
taxpayer.

Involved in this petition is the income of the petitioner for the year
1974, the returns for which were required to be filed on or before April
15 of the succeeding year. The returns for the year 1974 were duly
filed by the petitioner, and assessment of taxes due for such year
including that on the transfer of properties on June 21, 1974 was
made on April 13, 1975 and acknowledged by Letter of Confirmation
No. 101155 terminating the examination on this subject. The
subsequent assessment of October 10, 1980 modified, by that of
March 16, 1981, was made beyond the period expressly set in Section
331 of the National Internal Revenue Code . . . .

2) NO.
The fact that private respondent sold its real property for a price less than its
declared fair market value did not by itself justify a finding of false return. Indeed,
private respondent declared the sale in its 1974 return submitted to the BIR. Within
the five-year prescriptive period, the BIR could have issued the questioned
assessment, because the declared fair market value of said property was of public
record. This it did not do, however, during all those five years. Moreover, the BIR
failed to prove that respondent's 1974 return had been filed fraudulently. Equally
significant was its failure to prove respondent's intent to evade the payment of the
correct amount of tax.

Moreover, even though a donor's tax, which is defined as "a tax on the privilege of
transmitting one's property or property rights to another or others without adequate
and full valuable consideration," 16 is different from capital gains tax, a tax on the
gain from the sale of the taxpayer's property forming part of capital assets, 17 the
tax return filed by private respondent to report its income for the year 1974 was
sufficient compliance with the legal requirement to file a return. In other words, the
fact that the sale transaction may have partly resulted in a donation does not
change the fact that private respondent already reported its income for 1974 by
filing an income tax return.

2
Sec. 331(NIRC).Period of limitation upon assessment and collection. Except as provided in the succeeding
section, internal-revenue taxes shall be assessed within five years after the return was filed, and no proceeding in
court without assessment for the collection of such taxes shall be begun after expiration of such period. For the
purposes of this section, a return filed before the last day prescribed by law for the filing thereof shall be considered
as filed on such last day: Provided, That this limitation shall not apply to cases already investigated prior to the
approval of this Code.

WHEREFORE, the Petition for Review is DENIED and the assailed Decision of the
Court of Appeals is AFFIRMED.

13.
COMMISSIONER OF INTERNAL REVENUE vs. PASCOR REALTY AND
DEVELOPMENT CORPORATION
G.R. No. 128315. June 29, 1999, PANGANIBAN, J.

An assessment contains not only a computation of tax liabilities, but also a


demand for payment within a prescribed period. It also signals the time when
penalties and interests begin to accrue against the taxpayer. To enable the taxpayer
to determine his remedies thereon, due process requires that it must be served on
and received by the taxpayer. Accordingly, an affidavit, which was executed by
revenue officers stating the tax liabilities of a taxpayer and attached to a criminal
complaint for tax evasion, cannot be deemed an assessment that can be
questioned before the Court of Tax Appeals.

Facts:
It appears that by virtue of Letter of Authority No. 001198, then BIR
Commissioner Ong authorized Revenue Officers Que, Estorco and Savellano to
examine the books of accounts and other accounting records of Pascor Realty and
Development Corporation. (PRDC) for the years ending 1986, 1987 and 1988. The
said examination resulted in a recommendation for the issuance of an assessment
in the amounts of P7,498,434.65 and P3,015,236.35 for the years 1986 and 1987,
respectively.

The CIR filed a criminal complaint before the DOJ against the PRDC, its
President Rogelio A. Dio, and its Treasurer Virginia S. Dio, alleging evasion of taxes
in the total amount of P10,513,671.00. Private respondents PRDC, et. al. filed an
Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment
and tax liability but was denied on the ground that no formal assessment has as yet
been issued by the Commissioner. Eventually, private respondents received a
subpoena from the DOJ in connection with the criminal complaint filed by the
Commissioner of Internal Revenue (BIR) against them.

Private respondents then elevated the Decision of the CIR dated May 17, 1995 to
the Court of Tax Appeals on a petition for review. The CIR filed a Motion to Dismiss
the petition on the ground that the CTA has no jurisdiction over the subject matter
of the petition, as there was no formal assessment issued against the
petitioners. The CTA denied the said motion to dismiss and ordered the CIR to file an
answer within thirty (30) days from receipt of said resolution. The CIR received the
resolution on January 31, 1996 but did not file an answer nor did she move to
reconsider the resolution. Instead, the CIR filed this petition, alleging as grounds
that: Respondent Court of Tax Appeals acted with grave abuse of discretion and
without jurisdiction in considering the affidavit/report of the revenue officer and the
indorsement of said report to the secretary of justice as assessment which may be
appealed to the Court of Tax Appeals and in considering the denial by petitioner of
private respondents Motion for Reconsideration as [a] final decision which may be
appealed to the Court of Tax Appeals.

The Court of Appeals held that the tax court committed no grave abuse of
discretion in ruling that the Criminal Complaint for tax evasion filed by the
Commissioner of Internal Revenue with the Department of Justice constituted an
assessment of the tax due, and that the said assessment could be the subject of a
protest. By definition, an assessment is simply the statement of the details and the
amount of tax due from a taxpayer. Based on this definition, the details of the tax
contained in the BIR examiners Joint Affidavit, which was attached to the criminal
Complaint, constituted an assessment. Since the assailed Order of the CTA was
merely interlocutory and devoid of grave abuse of discretion, a petition
for certiorari did not lie.

Issue:
Whether or not the criminal complaint for tax evasion can be construed as an
assessment.

Contentions:
Petitioner argues that the filing of the criminal complaint with the Department of
Justice cannot in any way be construed as a formal assessment of private
respondents tax liabilities. This position is based on Section 205 of the National

Internal Revenue Code(NIRC), which provides that remedies for the collection of
deficient taxes may be by either civil or criminal action. Likewise, petitioner cites
Section 223(a) of the same Code, which states that in case of failure to file a return,
the tax may be assessed or a proceeding in court may be begun without
assessment.

Respondents, on the other hand, maintain that an assessment is not an action


or proceeding for the collection of taxes, but merely a notice that the amount stated
therein is due as tax and that the taxpayer is required to pay the same. Thus,
qualifying as an assessment was the BIR examiners Joint Affidavit, which contained
the details of the supposed taxes due from respondent for taxable years ending
1987 and 1988, and which was attached to the tax evasion Complaint filed with the
DOJ. Consequently, the denial by the BIR of private respondents request for
reinvestigation of the disputed assessment is properly appealable to the CTA.

Ruling:
We agree with petitioner. Neither the NIRC nor the revenue regulations
governing the protest of assessments provide a specific definition or form of an
assessment. However, the NIRC defines the specific functions and effects of an
assessment. 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.

An assessment must be sent to and received by a taxpayer, and must demand


payment of the taxes described therein within a specific period. Thus, the NIRC
imposes a 25 percent penalty, in addition to the tax due, in case the taxpayer fails
to pay the deficiency tax within the time prescribed for its payment in the notice of
assessment. Likewise, an interest of 20 percent per annum, or such higher rate as
may be prescribed by rules and regulations, is to be collected from the date
prescribed for its payment until the full payment.
The issuance of an assessment is vital in determining the period of limitation
regarding its proper issuance and the period within which to protest it. 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. Section 222, on the other
hand, 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. Also, Section 228 of the same law

states that said assessment may be protested only within thirty days from receipt
thereof. Necessarily, the taxpayer must be certain that a specific document
constitutes an assessment. Otherwise, confusion would arise regarding the period
within which to make an assessment or to protest the same, or whether interest and
penalty may accrue thereon. It should also be stressed that the said document is a
notice duly sent to the taxpayer. Indeed, an assessment is deemed made only when
the collector of internal revenue releases, mails or sends such notice to the
taxpayer.

In the present case, the revenue officers Affidavit merely contained a


computation of respondents tax liability. It did not state a demand or a period for
payment. Worse, it was addressed to the justice secretary, not to the taxpayers.

The BIR examiners Joint Affidavit attached to the Criminal Complaint contained
some details of the tax liabilities of private respondents does not ipso facto make it
an assessment. The purpose of the Joint Affidavit was merely to support and
substantiate the Criminal Complaint for tax evasion. Clearly, it was not meant to be
a notice of the tax due and a demand to the private respondents for payment
thereof. 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 to issue an
assessment. Although the revenue officers recommended the issuance of an
assessment, the commissioner opted instead to file a criminal case for tax
evasion. What private respondents received was a notice from the DOJ that a
criminal case for tax evasion had been filed against them, not a notice that the
Bureau of Internal Revenue had made an assessment.

(Addl. Info) Also, Assessment Not Necessary Before Filing of Criminal Complaint.
The issuance of an assessment must be distinguished from the filing of a
complaint. Before an assessment is issued, there is, by practice, a pre-assessment
notice sent to the taxpayer. 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, 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. In contrast, the criminal charge need not go through all
these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is
notified that a criminal case had been filed against him, not that the commissioner

has issued an assessment. It must be stressed that a criminal complaint is instituted


not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

14.
QUIRICO P. UNGAB, petitioner,vs.HON. VICENTE N. CUSI, JR., in his capacity as Judge
of the Court of First Instance, Branch 1, 16THJudicial District, Davao City, THE
COMMISSIONER OF INTERNAL REVENUE, and JESUS N. ACEBES, in hiscapacity as
State Prosecutor, respondents.
Facts:
In July 1974, Quirico Ungab filed his income tax return. He was subjected to a
tax audit and the tax examiner was convinced that Ungab filed a fraudulent return.
He was issued an assessment demanding payment of P104k in taxes. At the same
time, the tax examiner recommended the filing of criminal cases of tax evasion
against Ungab. Meanwhile, Ungab filed a protest with the Commissioner
of Internal Revenue (CIR).
Acting on the recommendation of the tax examiner, a state prosecutor filed 6
informations against Ungab for various violations of the National Internal Revenue
Code. The informations were filed with Court of First Instance of Davao presided by
Judge Vicente Cusi, Jr. Ungab filed a motion to quash the informations on the ground
that his pending protest with the CIR has not yet been acted upon hence the
assessment is not yet final and executory and therefore the trial court has no
jurisdiction yet over the criminal cases
Isuue:
WON Ungab may be charged for tax evasion even when there is a pending protest
with the BIR
Ruling: yes.
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, but a criminal prosecution for violations of the National Internal Revenue
Code which is within the cognizance of courts of first instance. While there can be
no civil action to enforce collection before the assessment procedures provided in
the Code have been followed, there is no requirement for the precise computation
and assessment of the tax before there can be a criminal prosecution under the
Code. The crime is complete when the violator has, as in this case, knowingly and
willfully filed fraudulent returns with intent to evade and defeat a part or all of the
tax
An assessment of a deficiency is not necessary to a criminal prosecution for
willful attempt to defeat and evade the income tax. A crime is complete when the

violator has knowingly and willfuly filed a fraudulent return with intent to evade and
defeat the tax. The perpetration of the crime is grounded upon knowledge on the
part of the taxpayer that he has made an inaccurate return, and the government's
failure to discover the error and promptly to assess has no connections with the
commission of the crime
15
16
17.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs.TEAM [PHILIPPINES]
OPERATIONS CORPORATION [formerly MIRANT (PHILS) OPERATIONS
CORPORATION], Respondent.
Facts: Respondent entered into Operating and Management Agreements with Mirant
Pagbilao Corporation (MPC) and Mirant Sual Corporation (MSC). Payments received
by respondent from MPC and MSC relative to the said agreements were allegedly
subjected to creditable withholding tax.
On April 15, 2002, respondent filed its 2001 income tax return with the BIR,
reporting an income tax overpayment in the amount of P69,562,412.00 arising from
unutilized creditable taxes withheld during the year. Respondent marked the
appropriate box manifesting its intent to have theoverpayment refunded.
The CTA division reasoned that respondent has indeed established its entitlement to
a refund/tax credit of its excess creditable withholding taxes in compliance with the
following basic requirements:(1) the claim is filed with the Commissioner of Internal
Revenue within the two-year period from the date of payment of the tax; (2) it is
shown on the return of the recipient that the income payment received was
declared as part of the gross income; and (3) the fact of withholding is 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 therefrom. Petitioner CIR appealed but CTA
En Banc affirmed.
Issue: Whether or not respondent has established its entitlement for the refund or
issuance of a tax credit certificate in its favor the entire amount of P69,562,412.00
representing its unutilized tax credits for taxable year ended 31 December 2001.
Ruling: In order to be entitled to a refund claim or issuance of a tax credit certificate
representing any excess or unutilized creditable withholding tax, it must be shown
that the claimant has complied with the essential basic conditions set forth under
pertinent provisions of law and existing jurisprudential declarations. (refer to the
basic requirements stated above). First condition is pursuant to Sections 204(C) and
229 of the NIRC of 1997,The second and third conditions are anchored on Section
2.58.3(B) of Revenue Regulations No. 2-98.
Here, it is undisputed that the claim for refund was filed within the two-year
prescriptive period prescribed under Section 229 of the NIRC of 1997, as amended.
Respondent filed its income tax return for taxable year 2001 on 15 April 2002.
Counting from said date, it indeed had until 14 April 2004within which to file its

claim for refund or issuance of tax credit certificate in its favor both administratively
and judicially. Thus, petitioners administrative claim and petition for review filed on
19 March 2003 and 27 March 2003, respectively, fell within the prescriptive period.
Likewise, respondent was able to present various certificates of creditable tax
withheld at source from its payors, MPC and MSC, for taxable year 2001, showing
creditable withholding taxes in the aggregate amount of P70,805,771.42 (although
the refund claim was only P69,562,412.00).Moreover, as determined by the CTA in
Division, respondent declared the income related to the claimed creditable
withholding taxes of P69,562,412.00 on its return.
Lastly, in compliance with Section 76 of the NIRC of 1997, as amended, respondent
opted to be refunded of its unutilized tax credit (as evidenced by the "x" mark in the
appropriate box of its 2001 income tax return), and the same was not carried over
in its 2002 income tax return; therefore, the entire amount of P69,562,412.00 may
be a proper subject of a claim for refund/tax credit certificate.
It is apt to restate here the hornbook doctrine that the findings and conclusions of
the CTA are accorded the highest respect and will not be lightly set aside. The Court
finds no abusive or improvident exercise of authority on the part of the CT A in
Division. Since there is no showing of gross error or abuse on the part of the CT A in
Division, and its findings are supported by substantial evidence which were
thoroughly considered during the trial, there is no cogent reason to disturb its
findings and conclusions. Petition denied.
18.
Commissioner of Internal Revenue vs McGeorge Food Industries, Inc.
G.R. No. 174157, October 20, 2010
CARPIO, J.:
FACTS:
Respondent McGeorge Food Industries, Inc. filed with the Bureau of Internal
Revenue (BIR) its final adjustment income tax return for the calendar year ending
31 December 1997. The return indicated a tax liability of P5,393,988 against a total
payment of P10,130,176 for the first three quarters, resulting in a net overpayment
of P4,736,188. Respondent chose to carry it over to the succeeding year as tax
credit, indicating in its 1997 final return that it wished the amount to be applied as
credit to next year. Respondent then filed its final adjustment return for the calendar
year ending 31 December 1998, indicating a tax liability of P5,799,056. Instead of
applying to this amount its unused tax credit carried over from 1997 (P4,736,188),
as it was supposed to do, respondent merely deducted from its tax liability the taxes
withheld at source for 1998 (P217,179) and paid the balance of P5,581,877.
Respondent simultaneously filed with the BIR and the Court of Tax Appeals (CTA) a
claim for refund of its overpayment in 1997 of P4,736,188. Petitioner Commissioner
of Internal Revenue (petitioner) opposed the suit at the CTA. The CTA ruled for
respondent and ordered petitioner to refund the reduced amount of P4,598,716.98
to account for two tax payments allegedly withheld at source which respondent
failed to substantiate. The Court of Appeals affirmed the CTA and uphold the
applicability of Section 69 of the 1977 NIRC. Hence, this petition.

ISSUE:
Whether or not respondent is entitled to a tax refund for overpayment in
1997 after it opted, but failed, to credit such to its tax liability in 1998
CONTENTIONS:
CIR: Respondent is precluded from seeking a refund for its overpayment in 1997
after respondent opted to carry-over and apply it to its future tax liability, following
Section 76 of the 1997 NIRC. Section 76 applies to respondent because by the time
respondent filed its final adjustment return for 1997 on 15 April 1998, the 1997
NIRC was already in force, having taken effect on 1 January 1998.
Taxpayer:The refund was proper because respondent complied with the
requirements of timely filing of the claim and its substantiation.
RULING:
The respondent is not entitled to a refund under Section 76 of the 1997 NIRC, 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. In lieu of refund,
respondents overpayment should be applied to its tax liability for the taxable years
following 1998 until it is fully credited. Once the taxpayer opts to carry-over the
excess income tax against the taxes due for the succeeding taxable years, such
option is irrevocable for the whole amount of the excess income tax, thus,
prohibiting the taxpayer from applying for a refund for that same excess income tax
in the next succeeding taxable years. The unutilized excess tax credits will remain
in the taxpayers account and will be carried over and applied against the
taxpayers income tax liabilities in the succeeding taxable years until fully
utilized.As respondent opted to carry-over and credit its overpayment in 1997 to its
tax liability in 1998, Section 76 makes respondents exercise of such option
irrevocable, barring it from later switching options to "[apply] for cash refund."
Instead, respondents overpayment in 1997 will be carried over to the succeeding
taxable years until it has been fully applied to respondents tax liabilities. Hence,
under Section 76 of the 1997 NIRC, respondents claim for refund is unavailing.
However, respondent is entitled to apply its unused creditable overpayment in 1997
to its tax liability arising after 1998 until such has been fully applied.
19.
Lascona Land Company, Inc. v. Commissioner of Internal Revenue
G.R. No. 171251; March 5, 2012: Justice Diosdado Peralta
Statement of Facts:
On March 27, 1998, the Commissioner on Internal Revenue (CIR) issued
Assessment Notice against Lascona Land Company, Inc. (Lascona) informing the
latter of its alleged deficiency income tax for the year 1993 in the amount of Php
753,266.56. Lascona initially appealed for the cancellation and setting aside of the
Assessment Notice issued. However, the Officer-in-Charge of the BIR Office in Makati
denied its request considering that the case was not elevated to the Court of Tax
Appeals (CTA) as mandated by Section 228 of the National Internal Revenue Code.
(NIRC).
Statement of the Case:

On April 12, 1999, Lascona appealed the decision before the CTA. On January
4, 2000, the CTA nullified the subject assessment. The CIR filed a motion for
reconsideration, however, the same was denied for lack of merit. Dissatisfied, the
CIR filed an appeal before the Court of Appeals (CA). In the disputed Decision, the
CA granted the CIRs petition and set aside the Decision of the CTA. Lascona moved
for reconsideration but was denied for lack of merit.
Issues:
(1) For the Taxpayer: WON petitioner can still appeal the assessment made by
the CIR regarding its alleged deficiency income tax for the year 1993.
(2) For the Government: WON the subject assessment has become final,
executory and demandable due to the failure of the petitioner to file an
appeal.
Ruling:
The petition is meritorious.
(1) Yes. Section 228 of the NIRC is instructional as to the remedies of a taxpayer
in case of the inaction of the CIR on the protested assessment. The Supreme
Court held that in case the CIR failed to act on the disputed assessment
within the 180-day period from the date of submission of documents, a
taxpayer can either: (a) file a petition for review with the CTA within 30 days
after the expiration of the 180-day period; or (b) await the final decision of
the CIR on the disputed assessments and appeal such final decision to the
CTA within 30 days after receipt of a copy of such decision.
(2) No. The subject assessment has not yet become final, executory and
demandable. The CIR failed to inform Lascona of its decision when the latter
moved for the cancellation or setting aside of the assessment notice. The
Supreme Court held that taxpayers could not be left in quandary by its
inaction on the protested assessment. It is imperative that taxpayers are
informed of its action in order that the taxpayer should then at least be able
to take recourse to the tax court at the opportune time.
20.
G.R. No. L-36181

October 23, 1982

TEEHANKEE, J.:

MERALCO SECURITIES CORPORATION (now FIRST PHILIPPINE HOLDINGS


CORPORATION),petitioner,
vs.HON. VICTORINO SAVELLANO and ASUNCION BARON VDA. DE MANIAGO,
et al., as heirs of the late Juan G. Maniago, respondents.

FACTS:
The late Juan G. Maniago submitted to Commissioner of Internal Revenue
confidential denunciation against the Meralco Securities Corporation for tax evasion
for having paid income tax only on 25 % of the dividends it received from the Manila

Electric Co. for the years 1962-1966, thereby allegedly shortchanging the
government of income tax due from 75% of the said dividends.
Commissioner of Internal Revenue caused the investigation and ruled that no
deficiency corporate income tax was due since under the prevailing law (Sec24(a),
NIRC) "in the case of dividends received by a domestic or foreign resident
corporation liable to (corporate income) tax under this Chapter . . . .only twenty-five
per centum thereof shall be returnable for the purposes of the tax imposed under
this section.". He rejected Maniago's contention that Meralco is "not a domestic
corporation liable to tax under this Chapter.", and his claim for informer's reward on
a non-existent deficiency. This action was sustained by the Secretary of Finance.

Maniago filed a Petition for Mandamus before CFI Manila against Commissioner and
Meralco to compel the former to impose the alleged deficiency tax assessment and
award him the informers award under R.A. 2238.

Commisioner filed Motion to Dismiss, arguing that since in matters of issuance and
non-issuance of assessments, he is clothed under the NIRC and existing rules and
regulations with discretionary power in evaluating the facts of a case and since
mandamus will not lie to compel the performance of a discretionary power, he
cannot be compelled to impose the alleged tax deficiency assessment against the
Meralco Securities Corporation. He further argued that mandamus may not lie
against him for that would be tantamount to a usurpation of executive powers,
since the Office of the Commissioner of Internal Revenue is undeniably under the
control of the executive department.

Meralco Securities Corporation filed its answer, arguing that the petition states no
cause of action, that the action is premature, that mandamus will not lie to compel
the Commissioner of Internal Revenue to make an assessment and/or effect the
collection of taxes upon a taxpayer, that since no taxes have actually been
recovered and/or collected, Maniago has no right to recover the reward prayed for,
that the action of petitioner had already prescribed and that respondent court has
no jurisdiction over the subject matter as set forth in the petition, the same being
cognizable only by the Court of Tax Appeals

Judge Savellano granted the petition filed by Maniago and denied all motions for
reconsideration filed therafter by petitioners.

ISSUES:
Commissioner of Internal Revenue: CFI Manila Judge Savellano has no jurisdiction
over the subject matter and that the issuance of a deficiency assessment is his
prerogative which is not reviewable by Mandamus.

Meralco: Mandamus cannot compel the Commissioner and thet Maniagos right to
recover has already prescribed.

Maniago: He should be awarded an Informers reward as compelled by the


Mandamus granted by CFI Judge Savellano.

HELD: PETITION GRANTED MANDAMUS WILL NOT LIE AND SAVELLANO HAS NO
JURISIDCTION

Judge Savellano has no jurisdiction to take cognizance of the case because the
subject matter clearly falls within the scope of cases now exclusively within the
jurisdiction of the Court of Tax Appeals. Section 7 of Republic Act No. 1125, enacted
June 16, 1954, granted to the Court of Tax Appeals exclusive appellate
jurisdiction to review by appeal, among others, decisions of the Commissioner of
Internal Revenue in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other
matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue. The question of whether or not to
impose a deficiency tax assessment on Meralco Securities Corporation undoubtedly
comes within the purview of the words "disputed assessments" or of "other matters
arising under the National Internal Revenue Code. The determination of the
correctness or incorrectness of a tax assessment to which the taxpayer is not
agreeable, but falls within the jurisdiction of the Court of Tax Appeals.
Mandamus is an improper remedy. It only lies to enforce the performance of a
ministerial act or duty and not to control the performance of a discretionary power.

Purely administrative and discretionary functions may not be interfered with by the
courts.
Commissioner of Internal Revenue is charged with the administration of revenue
laws, which is the primary responsibility of the executive branch of the government,
mandamus may not be issued against the Commissioner to compel him to impose
a tax assessment not found by him to be due or proper for that would be
tantamount to a usurpation of executive functions
Maniago should have appealed to the Court of Tax Appeals the ruling of
Commissioner of Internal Revenue within thirty (30) days from receipt thereof
pursuant to Section 11 of Republic Act No. 1125. He failed to take such an appeal to
the tax court. The ruling is clearly final and no longer subject to review by the
courts.
Since no taxes are to be collected, no informer's reward is due to private
respondents as the informer's heirs. Informer's reward is contingent upon the
payment and collection of unpaid or deficiency taxes. An informer is entitled by way
of reward only to a percentage of the taxes actually assessed and collected. Since
no assessment, much less any collection, has been made in the instant case,
respondent judge's writ for the Commissioner to pay respondents 25% informer's
reward is gross error and without factual nor legal basis.
21.
CREBA, Inc. v. Hon. Sec. Romulo
G.R. No. 160756 | March 9, 2010
Facts:
Petitioner Chamber of Real Estate and Builders Associations, Inc. (CREBA, Inc.) is
questioning the constitutionality of Section 27 (E) of RA 8424and the revenue
regulations (RRs) issued by the BIR to implement said provision and those involving
creditable withholding taxes.Petitioner also assailed the validity of the imposition of
minimum corporate income tax (MCIT) on corporations and creditable withholding
tax (CWT) on sales of real properties classified as ordinary assets.Petitioner argues
that the MCIT violates the due process clause because it levies income tax even if
there is no realized gain.
Petitioner also seeks to nullifySections 2.57.2(J) (as amended by RR 6-2001) and
2.58.2 of RR 2-98, and Section 4(a)(ii) and (c)(ii) of RR 7-2003, all of which prescribe
the collection of CWT on the sale of real properties categorized as ordinary assets.
Petitioner contends that these revenue regulations are contrary to law because: (a)
they ignore the different treatment by RA 8424 of ordinary assets and capital assets
and (b) respondent Secretary of Finance has no authority to collect CWT and to base
the CWT on the gross selling price or fair market value of the real properties
classified as ordinary assets.Petitioner also asserted that the enumerated provisions
of the subject revenue regulations violate the due process clause because, like the
MCIT, the government collects income tax even when the net income has not yet
been determined. They contravene the equal protection clause as well because the
CWT is being levied upon real estate enterprises but not on other business
enterprises, more particularly those in the manufacturing sector.

Issue/s:
(1) Whether or not the imposition of the MCIT on domestic corporations is
unconstitutional
(2) Whether or not the imposition of CWT on income from sales of real properties
classified as ordinary assets under RRs 2-98, 6-2001 and 7-2003, is
unconstitutional.
Held:
(1) NO. The SC held that MCIT is not violative of due process. Therefore, the
imposition of such is not unconstitutional.
The MCIT is not a tax on capital.The MCIT is imposed on gross income which is
arrived at by deducting the capital spent by a corporation in the sale of its
goods, i.e., the cost of goods and other direct expenses from gross sales. Clearly,
the capital is not being taxed.Furthermore, the MCIT is not an additional tax
imposition. It is imposed in lieu of the normal net income tax, and only if the normal
income tax is suspiciously low. The MCIT merely approximates the amount of net
income tax due from a corporation, pegging the rate at a very much reduced 2%
and uses as the base the corporations gross income.
(2) NO.
The CWT is creditable against the tax due from the seller of the property at the end
of the taxable year. The seller will be able to claim a tax refund if its net income is
less than the taxes withheld. Nothing is taken that is not due so there is no
confiscation of property repugnant to the constitutional guarantee of due process.
More importantly, the due process requirement applies to the power to tax.The CWT
does not impose new taxes nor does it increase taxes. It relates entirely to the
method and time of payment.
The taxing power has the authority to make reasonable classifications for purposes
of taxation. Inequalities which result from a singling out of one particular class for
taxation, or exemption, infringe no constitutional limitation.The real estate industry
is, by itself, a class and can be validly treated differently from other business
enterprises.

Petitioner, in insisting that its industry should be treated similarly as manufacturing


enterprises, fails to realize that what distinguishes the real estate business from
other manufacturing enterprises, for purposes of the imposition of the CWT, is not
their production processes but the prices of their goods sold and the number of
transactions involved. The income from the sale of a real property is bigger and its
frequency of transaction limited, making it less cumbersome for the parties to
comply with the withholding tax scheme.

22.
PHILIPPINE AMUSEMENT AND GAMING
BUREAU OF INTERNAL REVENUE (BIR)

CORPORATION

(PAGCOR)

vs.

FACTS:
PAGCOR was created pursuant to Presidential Decree (P.D.) No. 1067-A on January 1,
1977. Simultaneous to its creation, P.D. No. 1067-B (supplementing P.D. No. 1067-A)
was issued exempting PAGCOR from the payment of any type of tax, except a
franchise tax of five percent (5%) of the gross revenue.

On January 1, 1998, R.A. No. 8424, otherwise known as the National Internal
Revenue Code of 1997, took effect. Section 27 (c) of R.A. No. 8424 provides that
government-owned and controlled corporations (GOCCs) shall pay corporate income
tax, except petitioner PAGCOR, the Government Service and Insurance Corporation,
the Social Security System, the Philippine Health Insurance Corporation, and the
Philippine Charity Sweepstakes Office.

With the enactment of R.A. No. 9337 on May 24, 2005, certain sections of the
National Internal Revenue Code of 1997 were amended. Section 1 of R.A. No. 9337,
which amended Section 27 (c) of the National Internal Revenue Code of 1997
excluded PAGCOR from the enumeration of GOCCs that are exempt from payment of
corporate income tax.

On September 1, 2005, respondent BIR issued Revenue Regulations (RR) No. 16-2005, specifically identifying PAGCOR as one of the franchisees subject to 10% VAT
imposed under Section 108 of the National Internal Revenue Code of 1997, as
amended by R.A. No. 9337. Hence, the present petition for certiorari.

ISSUE
Whether or not PAGCOR is still exempt from corporate income tax and VAT with the
enactment of R.A. No. 9337.

HELD

In this case, PAGCOR failed to prove that it is still exempt from the payment of
corporate income tax, considering that Section 1 of R.A. No. 9337 amended Section
27 (c) of the National Internal Revenue Code of 1997 by omitting PAGCOR from the
exemption. The legislative intent, as shown by the discussions in the Bicameral
Conference Meeting, is to require PAGCOR to pay corporate income tax; hence,
the omission or removal of PAGCOR from exemption from the payment of corporate
income tax. It is a basic precept of statutory construction that the express mention
of one person, thing, act, or consequence excludes all others as expressed in the
familiar maxim expressio unius est exclusio alterius. Thus, the express mention of
the GOCCs exempted from payment of corporate income tax excludes all others.
Not being excepted, petitioner PAGCOR must be regarded as coming within the
purview of the general rule that GOCCs shall pay corporate income tax,
expressed in the maxim: exceptio firmat regulam in casibus non exceptis.
Petitioner's exemption from VAT under Section 108 (B) (3) of R.A. No. 8424 has been
thoroughly and extensively discussed in Commissioner of Internal Revenue
v. Acesite (Philippines) Hotel Corporation. The Court ruled that PAGCOR and Acesite
were both exempt from paying VAT, thus:
PAGCOR is exempt from payment of indirect taxes. Under the above provision
[Section 13 (2) (b) of P.D. 1869], the term "Corporation" or operator refers to
PAGCOR. Although the law does not specifically mention PAGCOR's exemption from
indirect taxes, PAGCOR is undoubtedly exempt from such taxes because the law
exempts from taxes persons or entities contracting with PAGCOR in casino
operations. Although, differently worded, the provision clearly exempts PAGCOR
from indirect taxes. In fact, it goes one step further by granting tax exempt status to
persons dealing with PAGCOR in casino operations.

Indeed, by extending the exemption to entities or individuals dealing with PAGCOR,


the legislature clearly granted exemption also from indirect taxes. It must be noted
that the indirect tax of VAT, as in the instant case, can be shifted or passed to the
buyer, transferee, or lessee of the goods, properties, or services subject to VAT.
Thus, by extending the tax exemption to entities or individuals dealing with PAGCOR
in casino operations, it is exempting PAGCOR from being liable to indirect taxes.

23.
TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC. VS. CIR
FACTS:
Toshiba, a PEZA registered enterprise,filed a Petition for Review with the CTA
and prayed for the issuance of a Tax Credit Certificate for the amount representing

unutilized input taxes paid on its purchase of taxable goods and services for the 1st
and 2nd quarters of 1997. The CIR opposed. Upon advise from the CTA, Toshiba
and the CIR stipulated, among others, that Toshiba is a duly registered VAT entity
subject to zero percent (0%) VAT on its export sales.
The CTA ruled in favor of Toshiba. The CIR belatedly raised in its MR that
being a part of PEZA, Toshiba is not subject to VAT (i.e. VAT-exempt), and its
transaction is VAT-exempt. The MR was denied. The CA later reversed the ruling of
the CTA.
ISSUE:
Whether or not Toshiba isentitled to the credit/refund of its unutilized input VAT
payments.
RULING:
Yes. Toshiba is entitled to the credit/ refund of its unutilized input VAT payments.
A VATexempt transactioninvolves goods or services which, by their nature,
are specifically listed in and expressly exempted from the VAT under the Tax Code,
without regard to the tax status VAT-exempt or not of the party to the
transaction.
A VAT exempt party, on the other hand, is a person or entity granted VAT
exemption under the Tax Code, a special law or an international agreement to which
the Philippines is a signatory, and by virtue of which its taxable transactions
become exempt from VAT.
At present,PEZA-registered enterprises (located within ECOZONES) are VATexempt entities(Sec. 8, RA 7916, as amended)because of the fiction that
ECOZONES are foreign territory. The Cross Border Doctrine also states that no
VAT shall be imposed to form part of the cost of goods destined for consumption
outside of the territorial border of the taxing authority.
However, the rule which considers any sale by a supplier from the Customs
Territory to a PEZA-registered enterprise as export sale, which should not be
burdened by output VAT, was only clearly established on October 15, 1999, upon
the issuance by the BIR of RMC No. 74-99. Prior to said date, the old rule, whether a
PEZA-registered enterprise was exempt or subject to VAT depended on the type of
fiscal incentives availed of.
This old rule clearly did not take into consideration the Cross Border Doctrine
essential to the VAT system or the fiction of the ECOZONE as a foreign territory. x
xxSuch distinction was abolished by RMC No. 74-99 thus, affirming the nature of a
PEZA-registered or an ECOZONE enterprise as a VAT-exempt entity.
Likewise, PEZA enterprises are not covered by VAT-exempt transactions under
Sec. 103 (q) of the old Tax code because although the said section recognizes that
transactions covered by special laws may be exempt from VAT, the very same

section provides that those falling under Presidential Decree No. 66 (precursor of
PEZA) are not.
Hence, Toshiba may rightfully exercise its option under the old rule since it is
claiming refunds for its export sales for the 1 st and 2nd quarters of 1997 (before
October 15, 1999). Consequently, a VAT-registered seller of goods and/or services
who made zero-rated sales can claim tax credit or refund of the input VAT paid on
its purchases of goods, properties, or services relative to such zero-rated sales, in
accordance with Section 4.102-2 of Revenue Regulations No. 7-95.
Other issues: (Civpro)
The CIR did not timely raise before the CTA the issues on the VAT-exemptions of
Toshiba and its export sales.
Rule 9, Sec. 1 of the Rules of Court provides: SECTION 1. Defenses and
objections not pleaded. Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. x xx
The CIR did not point out in his Answer, Pre-Trial Brief, or evidences (he even
waived the submission of a memorandum) that Toshiba had no right to the
credit/refund of its input VAT payments because the latter was VAT-exempt and its
export sales were VAT-exempt transactions.
The CIR judicially admitted that Toshiba was VAT-registered and its export sales
were subject to VAT at zero percent (0%) rate.
Rule 18, Sec. 2 of the Rules of Court provides: SECTION 2. Nature and
purpose. The pre-trial is mandatory. The court shall consider: x xx (d) The
possibility of obtaining stipulations or admissions of facts and of documents to avoid
unnecessary proof; x xx
The arguments of the CIR that Toshiba was VAT-exempt and the latters
export sales were VAT-exempt transactions are inconsistent with the explicit
admissions of the CIR in the Joint Stipulation of Facts to the contrary. Pre-trial is an
answer to the clarion call for the speedy disposition of cases. The admission having
been made in a stipulation of facts at pre-trial by the parties, it must be treated as a
judicial admission and requires no proof.
The CIR cannot escape the binding effect of his judicial admissions.
There was no allegation (or proof in support), either in the MR of the CTA nor
in the Petition for Review before the CA that the Revenue Attorney committed a
mistake (much less a palpable mistake) in signing the Joint Stipulation. There is
presumption of regularity in the performance of duties of the Revenue Attorney.
24.
COMMISSIONER OF INTERNAL REVENUE vs.
MINDANAO II GEOTHERMAL PARTNERSHIP
G.R. No. 191498, 15 January 2014; Sereno, CJ

FACTS:
Mindanao II, a partnership engaged in the business of power generation and sale
of electricity to NAPOCOR, filed its Quarterly VAT Returns for the second, third
and fourth quarters of taxable year 2004 on the following dates respectively 26
July 2004, 22 October 2004 and 25 January 2005. On 6 October 2005, Mindanao
II filed with BIR an application for the refund or credit of accumulated unutilized
creditable input taxes.

Mindanao II believed that a judicial claim must be filed within the two-year
prescriptive period provided under Section 112(A) and that such time frame was
to be reckoned from the filing of its Quarterly VAT Returns for the second, third,
and fourth quarters of taxable year 2004. Thus, on 21 July 2006, Mindanao II,
claiming inaction on the part of the CIR and that the two-year prescriptive period
was about to expire, filed a Petition for Review with the CTA.

CIR contends that pursuant to Section 112(D) of the 1997 Tax Code, the
Commissioner of Internal Revenue (CIR) had a period of 120 days, or until 3
February 2006, to act on the claim. The administrative claim, however, remained
unresolved on 3 February 2006. Hence, the inaction of the CIR was a denial of its
claim, in which case, the former would have 30 days to file an appeal to the CTA,
that is, on 5 March 2006. Mindanao II, however, did not file an appeal within the
30-day period.

Both the CTA Second Division and CTA En Banc ruled in favour of Mindanao II.
Hence, CIR filed a petition under Rule 45.

ISSUE(S):
1. Whether Mindanao IIs application for refund was within the two-year
prescriptive period.
2. Whether the 120 + 30 day period is applicable.
RULING:
1. YES. It is only the administrative claim (filing of the refund to the CIR)
that must be filed within the two-year prescriptive period. The proper
reckoning date for the two-year prescriptive period is the close of the
taxable quarter when the relevant sales were made.
The returns were filed on 26 July 2004, 22 October 2004 and 25 January 2005
with respective two-year reckoning periods on 30 June 2004, 30 September
2004 and 31 December 2004.
2. YES. The taxpayer can file an appeal in one of two ways: (a) file the
judicial claim within thirty days after the Commissioner denies the claim
within the 120-day period, or (b) file the judicial claim within thirty days
from the expiration of the 120-day period if the Commissioner does not act
within the 120-day period. The 30-day period always applies, whether
there is a denial or inaction on the part of the CIR. And, as a general rule,
the 30-day period to appeal is both mandatory and jurisdictional.

Mindanao IIs judicial claim (filling of petition to the CTA) was filed on 21 July
2006 long after 5 March 2006, the last day of the 30-day period for appeal.
In fact, it filed its judicial claim 138 days after the lapse of the 30-day period.
The three administrative claims for the refund or credit of unutilized input VAT
were all timely filed, while the corresponding judicial claims were belatedly
filed. Hence, CTA lost jurisdiction over Mindanao Ils claims for refund or
credit. It erred in granting the claims.

DISPOSITION:
WHEREFORE, we GRANT the Petition. The assailed Court of Tax Appeals En Banc
Decision dated 11 November 2009 and Resolution dated 3 March 2010 of the in CTA
EB Case No. 448 (CTA Case No. 7507) are hereby REVERSED and SET ASIDE. A new
ruling is entered DENYING respondent s claim for a tax refund or credit
ofP6,791,845.24. SO ORDERED.
25.
COMMISSIONER OF CUSTOMS, petitioner, vs. PHILIPPINE PHOSPHATE
FERTILIZER CORPORATION, respondent.
FACTS
Philphos is a domestic corporation registed with Philippine Export Zone Authority
(PEZA) with its base of operation in an export processing zone. It buys petroleum
from Petron. Philphos reimburses Petron for the customs duties on the purchased
fuels and petroleum products which are passed on by the Petron as part of the
selling price. Philphos pointed that it being an enterprise registered with the export
processing zone, it is entitled to tax incentives which exempts from customs and
internal revenue laws, supplies brought into the export processing zone.
ISSUE
Whether or not Phiphos can claim for a refund for the tax which was passed on to it
by Petron?
RULING
Yes. The incentives offered to enterprises duly registered with the PEZA consist,
among others, of tax exemptions. These benefits may, at first blush, place the
government at a disadvantage as they preclude the collection of revenue. Still, the
expectation is that the tax breaks ultimately redound to the benefit of the national
economy, enticing as they do more enterprises to invest and do business within the
zones; thus creating more employment opportunities and infusing more dynamism
to the vibrant interplay of market forces.

Section 17 of the EPZA Law particularizes the tax benefits accorded to duly
registered enterprises. It states:

SEC. 17. Tax Treatment of Merchandize in the Zone. (1) Except as otherwise
provided
in
this
Decree,
foreign
and
domestic
merchandise,
raw
materials, supplies, articles, equipment, machineries, spare parts and
wares of every description, except those prohibited by law, brought into the
Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned,
graded, or otherwise processed, manipulated, manufactured, mixed with foreign or
domestic merchandise or used whether directly or indirectly in such activity,
shall not be subject to customs and internal revenue laws and regulations
nor to local tax ordinances, the following provisions of law to the contrary
notwithstanding.

The cited provision certainly covers petroleum supplies used, directly or


indirectly, by Philphos to facilitate its production of fertilizers, subject to the
minimal requirement that these supplies are brought into the zone. The supplies are
not subject to customs and internal revenue laws and regulations, nor to local tax
ordinances. It is clear that Section 17(1) considers such supplies exempt even if
they are used indirectly, as they had been in this case.
26.
MICROSOFT PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

FACTS
Microsoft Philippines, Inc. (Microsoft) is a value-added tax (VAT) taxpayer. Microsoft
renders marketing services to affiliated non-resident foreign corporations. The
services are paid for in acceptable foreign currency and qualify as zero-rated sales
for VAT purposes. Microsoft filed an administrative claim for tax credit of VAT input
taxes. Its claim for tax credit was denied on the ground that Microsoft's official
receipts do not bear the imprinted word zero-rated on its face, thus, the official
receipts cannot be considered as valid evidence to prove zero-rated sales for VAT
purposes.
ISSUE
Whether or not Microsoft is entitled to a claim for a tax credit or refund of VAT input
taxes?
RULING
No. The invoicing requirements for a VAT-registered taxpayer as provided in the
NIRC and revenue regulations are clear. A VAT-registered taxpayer is required to
comply with all the VAT invoicing requirements to be able to file a claim for input

taxes on domestic purchases for goods or services attributable to zero-rated


sales. All purchases covered by invoices other than a VAT invoice shall not
give rise to any input tax. Microsoft's invoice, lacking the word zero-rated, is not
a VAT invoice, and thus cannot give rise to any input tax.
27.
COMMISSIONER OF INTERNAL REVENUE v. AICHI FORGING COMPANY OF ASIA,
INC.
FACTS
On September 30, 2004 Aichi Forging Company filed a claim for refund/credit of input
VAT for the period July 1, 2002 for its zero-rated sales with the CIR. On the same date, it
filed a Petition for Review with the CTA for the refund/credit of the same input VAT.
The CIR claims that the administrative and the judicial claims were filed beyond the twoyear period to claim a tax refund/credit. It reasoned that since the year 2004 was a leap
year, the filing of the claim for tax refund/credit on September 30, 2004 was beyond the
two-year period, which expired on September 29, 2004. It likewise puts in issue the fact
that the administrative claim with the BIR and the judicial claim with the CTA were filed
on the same day. He opines that the simultaneous filing of the administrative and the
judicial claims contravenes Section 229 of the NIRC, which requires the prior filing of an
administrative claim. He insists that such procedural requirement is based on the
doctrine of exhaustion of administrative remedies and the fact that the CTA is an
appellate body exercising judicial review over administrative actions of the CIR.
Aichi Forging 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. If,
however, the CIR takes time in deciding the claim, and the period of two years is about
to end, the suit or proceeding must be started in the CTA before the end of the two-year
period without awaiting the decision of the CIR.
ISSUE
1. Whether or not the claim for refund/credit has already prescribed?
2. Whether or not the immediate filing of the Petition for review with the CA is fatal?
RULING
1. No. The reckoning period for the start of the counting of the prescriptive period is
within two (2) years after the close of the taxable quarter when the sales
were made. Between the Civil Code, which provides that a year is equivalent to 365
days, and the Administrative Code of 1987, which states that a year is composed of 12
calendar months, it is the latter that must prevail following the legal maxim, Lex posteriori
derogat priori. Thus:
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.
2. Yes. It did not wait for the decision of the CIR or the lapse of the 120-day period. For
this reason, we find the filing of the judicial claim with the CTA premature. The CIR has
120 days from the submission of complete documents in support of the application.
The NIRC, which already provides for a specific period within which a taxpayer should
appeal the decision or inaction of the CIR. The NIRC envisions two scenarios: (1) when a
decision is issued by the CIR before the lapse of the 120-day period; and (2) when no
decision is made after the 120-day period. In both instances, the taxpayer has 30 days
within which to file an appeal with the CTA. As we see it then, the 120-day period is
crucial in filing an appeal with the CTA. the premature filing of respondents claim for
refund/credit of input VAT before the CTA warrants a dismissal inasmuch as no
jurisdiction was acquired by the CTA.
28.
Commissioner of Internal Revenue v. Silicon Philippines Inc.
FACTS
On 6 May 1999, Silicon Philippine filed an application for Tax Credit/Refund of
input VAT paid attributable to zero-rated sales for the second quarter of 1998.
since no final action has been taken by the CIR on respondents administrative
claim for refund, respondent filed a Petition for Review before the CTA on 30 June
2000.
The issue of jurisdiction was not raised by any party but was discussed by the SC
motu proprio.
ISSUE
Whether or not the CTA has acquired jurisdiction over the claim for refund?
RULING
No. The pertinent provisions of law provide:
The Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the application filed.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure
on the part of the Commissioner to act on the application within the period
prescribed above, the taxpayer affected may, within thirty (30) days from the
receipt of the decision denying the claim or after the expiration of the one hundred
twenty-day period, appeal the decision or the unacted claim with the Court of Tax
Appeals.

Failure of respondent to observe the 30-day period through its belated filing of the
Petition for Review before the CTA warrants a dismissal with prejudice for lack of
jurisdiction
29.
NIPPON EXPRESS (PHILIPPINES) CORPORATION v. COMMISSIONER OF
INTERNAL REVENUE
FACTS
Nippon Express on April 24, 2003, it filed an administrative claim for refund
representing excess input tax attributable to its effectively zero-rated sales in 2001.
Pending review by the BIR, on April 25, 2003, petitioner filed a petition for review
with the CTA, requesting for the issuance of a tax credit certificate. The CIR failed to
immediately express its objection to the premature filing of the petition for review
before the CTA.
In its the CTA En Banc held that the 120 day period under Section 112(D) of the
NIRC, which granted the CIR the opportunity to act on the claim for refund, was
jurisdictional in nature such that petitioners failure to observe the said period
before resorting to judicial action warranted the dismissal of its petition for review
for having been prematurely filed.
ISSUE
Whether or not the CTA acquired jurisdiction of the Petition for Review?
RULING
No. The provision of law reveals that the taxpayer may appeal the denial or the
inaction of the CIR only within thirty (30) days from receipt of the decision denying
the claim or the expiration of the 120day period given to the CIR to decide the
claim. Because the law is categorical in its language, there is no need for further
interpretation by the courts and noncompliance with the provision cannot be
justified.
The 120+30day period is indeed mandatory and jurisdictional. Thus, failure to
observe the said period before filing a judicial claim with the CTA would not only
make such petition premature, but would also result in the non acquisition by the
CTA of jurisdiction to hear the said case.

Because the 120+30 day period is jurisdictional, the issue of whether petitioner
complied with the said time frame may be broached at any stage, even on appeal.
Well settled is the rule that the question of jurisdiction over the subject matter can
be raised at any time during the proceedings. Jurisdiction cannot be waived because
it is conferred by law and is not dependent on the consent or objection or the acts
or omissions of the parties or any one of them. Consequently, the fact that the CIR
failed to immediately express its objection to the premature filing of the petition for
review before the CTA is of no moment.
30.
SMART COMMUNICATIONS, INC. v. MUNICIPALITY OF MALVAR, BATANGAS
FACTS
Smart constructed a telecommunications tower within the territorial jurisdiction of
the Municipality. The Municipality passed an Ordinance entitled "An Ordinance
Regulating the Establishment of Special Projects." The Municipality sent an
assessment letter to Smart. Smart filed with Regional Trial Court an action assailing
the validity of the Ordinance. The trial court confined its resolution of the case to
the validity of the assessment, and did not rule on the legality of Ordinance.
Smart filed a petition for review with the CTA . The CTA En Banc declared that it is a
court of special jurisdiction and as such, it can take cognizance only of such matters
as are clearly within its jurisdiction. Citing Section 7(a), paragraph 3, of Republic Act
No. 9282, the CTA En Banc held that the CTA has exclusive appellate jurisdiction to
review on appeal, decisions, orders or resolutions of the Regional Trial Courts in local
tax cases originally resolved by them in the exercise of their original or appellate
jurisdiction.
The question now is whether the trial court resolved a local tax case in order to fall
within the ambit of the CTAs appellate jurisdiction This question, in turn, depends
ultimately on whether the fees imposed under the Ordinance are in fact taxes.
Smart argues that the "fees" in the Ordinance are actually taxes since they are not
regulatory, but revenue raising.
ISSUE
Whether or not the CTA has jurisdiction to decide over the case?
RULING
No. The primary purpose of the Ordinance is to regulate the "placing, stringing,
attaching, installing, repair and construction of all gas mains, electric, telegraph and
telephone wires, conduits, meters and other apparatus" listed therein, which
included Smarts telecommunications tower. Clearly, the purpose of the assailed
Ordinance is to regulate the enumerated activities particularly related to the
construction and maintenance of various structures.
Since the main purpose of the Ordinance is to regulate certain construction
activities of the identified special projects, which included "cell sites" or

telecommunications towers, the fees imposed in the Ordinance are primarily


regulatory in nature, and not primarily revenue raising. While the fees may
contribute to the revenues of the Municipality, this effect is merely incidental. Thus,
the fees imposed in the Ordinance are not taxes.
31.
COMMISSIONER OF INTERNAL REVENUE v. PRIMETOWN PROPERTY
FACTS
Primetown Property applied for the refund or credit of income tax respondent paid in
1997. It 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. 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. A revenue officer 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.
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. The CTA found that
respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a
refund or credit commenced on that date.
The tax court applied Article 13 of the Civil Code which states:
Art. 13. When the law speaks of years, months, days or nights, it shall be
understood that years are of three hundred sixty five days each
Thus, according to the CTA, the two year prescriptive period under Section 229 of
the NIRC for the filing of judicial claims was equivalent to 730 days. Because the
year 2000 was a leap year, respondent's petition, which was filed 731 days after
respondent filed its final adjusted return, was filed beyond the reglementary period.
ISSUE
Whether or not the claim for refund has already prescribed?
RULING
No. the Administrative Code of 1987 was enacted. Section 31, Chapter VIII, Book I
thereof provides:
Sec. 31. Legal Periods. Year shall be understood to be twelve calendar months
month of thirty days, unless it refers to a specific calendar month in which case it
shall be computed according to the number of days the specific month contains
day. A calendar month is a month designated in the calendar without regard to the
number of days it may contain.
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.
Applying Section 31, Chapter VIII, Book I of the Administrative Code of 1987 to this
case, the two year prescriptive period (reckoned from the time respondent filed its
final adjusted return on April 14, 1998) consisted of 24 calendar months
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.
32.
COMMISSIONER OF INTERNAL REVENUE v. COURT OF TAX APPEALS and
AYALA LAND, INC.
FACTS
Ayala Land Inc. (ALI) received the CIR's Final Assessment Notice whereby it was
assessing ALI for alleged deficiency value added tax (VAT) on its alleged income
from cinema operations for the taxable year 2003. ALI filed its protest but was
denied by the CIR which led it to file a Petition for Review with the CTA. The CTA
Second Division rendered its Decision granting ALIs petition for review. The
assessment against ALI for deficiency VAT for the calendar year 2003 was ordered
cancelled and set aside. The CIRs motion for reconsideration was denied,
prompting him to file an appeal to the CTA en banc. The CTA en banc rendered its
Decision affirming the decision of the CTA Second Division. Feeling aggrieved, the
CIR filed a motion for reconsideration, but this was denied by the CTA en banc in its
Resolution dated March 25, 2009.

The CIR claims that neither he nor his statutory counsel, the Office of the Solicitor
General (OSG), received a copy of the CTA en bancs resolution denying his motion
for reconsideration. It then came as a surprise to him when he received a copy of
the CTA en bancs Resolution 2009 which provided that the CTA Decision had
become final and executory. The CIR then filed a Manifestation with the Motion to
Reconsider Resolution Ordering Entry of Judgment, questioning the CTAs entry of
judgment.

The CIR then filed on October 2, 2009 with the CTA en banc a petition for
relief asking that the entry of judgment in the case be recalled. The CTA en banc
dismissed the petition for relief for having been filed out time

Without filing a motion for reconsideration with the CTA en banc, the CIR filed a
petition for certiorari.

ISSUE
Whether or not the CTA committed grave abuse of discretion?

RULING
No. At the outset, a dismissal of the petition is warranted in view of the petitioners
failure to file before the CTA en banc a motion for reconsideration of the assailed
resolution. The settled rule is that a motion for reconsideration is a condition sine
qua non for the filing of a petition for certiorari. While the rule is not absolute and
admits of settled exceptions, none of the exceptions attend the present petition.

Section 3, Rule 38 of the Rules of Court provides:


Sec. 3. Time for filing petition; contents and verification. A petition provided for in
either of the preceding sections of this Rule must be verified, filed within sixty (60)
days after the petitioner learns of the judgment, final order, or other proceeding to
be set aside, and not more than six (6) months after such judgment or final order
was entered, or such proceeding was taken; and must be accompanied with
affidavits showing the fraud, accident, mistake, or excusable negligence relied upon,
and the facts constituting the petitioners good and substantial cause of action or
defense, as the case may be.

By the CIRs own evidence and admissions, particularly in the narration of facts in
the petition for relief, the OSGs letter and the affidavit of merit attached thereto, it
is evident that both the CIR and the OSG had known of the CTAs Resolution dated
March 25, 2009 long before August 3, 2009.

33.
COMMISSIONER OF INTERNAL REVENUE v. METRO STAR SUPERAMA, INC.
FACTS
The CIR assessed Metro Star for deficiency value-added tax and withholding tax for
the taxable year 1999. Metro Star denied ever having received the Preliminary
Assessment Notice (PAN), thus it was denied due process but the CIR argues that
Metro Star, nonetheless received the Final Assessment Notice (FAN) which complied
with due process.
ISSUE
Whether or not the receipt of only the FAN complied with due process?
RULING
No. CIR failed to discharge its duty and present any evidence to show that Metro
Star indeed received the PAN.
When the Commissioner or his duly authorized representative finds that proper
taxes should be assessed, he shall first notify the taxpayer of his findings. The
taxpayers shall be informed in writing of the law and the facts on which the
assessment is made; otherwise, the assessment shall be void.
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.
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, the absence of which renders nugatory any assessment made by the
tax authorities. The use of the word shall in describes the mandatory nature of the
service of a PAN. 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 Stars right
to due process. Thus, 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.A. No. 8424, the
assessment made by the CIR is void.
34.
COMMISSIONER OF INTERNAL REVENUE v. PHILIPPINE GLOBAL
COMMUNICATION, INC.
FACTS
Respondent filed its Annual Income Tax Return for taxable year 1990 on 15 April
1991. On 22 April 1992, the BIR sent a letter to respondent requesting the latter to
present for examination certain records and documents, but respondent failed to

present any document. On 21 April 1994, respondent received a Preliminary


Assessment Notice dated 13 April 1994 for deficiency income tax. On the following
day, 22 April 1994, respondent received a Formal Assessment Notice dated 14 April
1994, for deficiency income tax.

On 6 May 1994, respondent filed a formal protest letter against the Assessment
Notice. Respondent filed another protest letter on 23 May 1994. In both letters,
respondent requested for the cancellation of the tax assessment, which they
alleged was invalid for lack of factual and legal basis.

On 16 October 2002, more than eight years after the assessment was presumably
issued, respondent received from the CIR a Final Decision dated 8 October 2002
denying the respondents protest against Assessment Notice, and affirming the said
assessment in toto.

The CIR contends that the 2 letters of protest are by nature request for
reinvestigation and thus tolled the running of the 3 year prescriptive period.

ISSUE
Whether or not the 2 letters of protest are to be considered as a request for
reinvestigation?
RULING
No. The taxpayer may protest administratively an assessment by filing a written
request for reconsideration or reinvestigation specifying the following particulars:
For the purpose of protest herein

(a) Request for reconsideration-- refers to a plea for a re-evaluation of an


assessment on the basis of existing records without need of additional evidence. It
may involve both a question of fact or of law or both.
(b) Request for reinvestigationrefers to a plea for re-evaluation of an assessment
on the basis of newly-discovered evidence or additional evidence that a taxpayer

intends to present in the investigation. It may also involve a question of fact or law
or both.

The main difference between these two types of protests lies in the records or
evidence to be examined by internal revenue officers, whether these are existing
records or newly discovered or additional evidence. A re-evaluation of existing
records which results from a request for reconsideration does not toll the running of
the prescription period for the collection of an assessed tax.

The CIRs allegation that there was a request for reinvestigation is inconceivable
since respondent consistently and categorically refused to submit new evidence and
cooperate in any reinvestigation proceedings.
NOTE
The law prescribed a period of three years from the date the return was actually
filed or from the last date prescribed by law for the filing of such return, whichever
came later, within which the BIR may assess a national internal revenue
tax. However, the law increased the prescriptive period to assess or to begin a court
proceeding for the collection without an assessment to ten years when a false or
fraudulent return was filed with the intent of evading the tax or when no return was
filed at all. In such cases, the ten-year period began to run only from the date of
discovery by the BIR of the falsity, fraud or omission.
If the BIR issued this assessment within the three-year period or the ten-year period,
whichever was applicable, the law provided another three years after the
assessment for the collection of the tax due thereon through the administrative
process of distraint and/or levy or through judicial proceedings. The three-year
period for collection of the assessed tax began to run on the date the assessment
notice had been released, mailed or sent by the BIR.
The running of the statute of limitation on the making of assessments and the
beginning of distraint or levy or a proceeding in court for collection in respect of any
deficiency, shall be suspended for the period during which the Commissioner is
prohibited from making the assessment or beginning distraint or levy or a
proceeding in court and for sixty days thereafter; when the taxpayer requests
for a reinvestigation which is granted by the Commissioner; when the
taxpayer cannot be located in the address given by him in the return filed upon
which a tax is being assessed or collected
35.
COLLECTOR OF INTERNAL REVENUE v. J.C. YUSECO and The COURT OF TAX
APPEALS
FACTS

JC Yuseco did not file income tax returns for the calendar years 1945 and 1946. The
CIR assessed JC Yuseco and demanded alleged income taxes and corresponding
surcharges. For failure to pay upon demand, the CIR issued a warrant of distraint
and levy upon JC Yuseco's properties. JC Yuseco filed a petition for prohibition with
the CTA which was granted by the respondent court.
The CIR contends that JC Yuseco cannot bring to the CTA an independent special
civil action for prohibition without taking to said Court an appeal from the decision
or ruling of the Collector of Internal Revenue.
ISSUE
Whether or not the CTA has jurisdiction to issue the said writ of prohibition?
RULING
No. Nowhere does the law expressly vest in the Court of Tax Appeals original
jurisdiction to issue writs of prohibition and injunction independently of, and apart
from, an appealed case. The writ of prohibition or injunction that it may issue under
the provisions of section 11, Republic Act No. 1125, to suspend the collection of
taxes, is merely ancillary to and in furtherance of its appellate jurisdiction in the
cases mentioned in section 7 of the Act. The power to issue the writ exists only in
cases appealed to it.
The intention of Congress was to vest the Court of Tax Appeals with jurisdiction to
issue writs of prohibition and injunction only in aid of its appellate jurisdiction in
cases appealed to it and not to clothe it with original jurisdiction to issue them.
Taxes being the chief source of revenue for the Government to keep it running must
be paid immediately and without delay. A taxpayer who feels aggrieved by the
decision or ruling handed down by a revenue officer and appeals from his decision
or ruling to the Court of Tax Appeals must pay the tax assessed, except that, if in
the opinion of the Court the collection would jeopardize the interest of the
Government and/or the taxpayer, it could suspend the collection and require the
taxpayer either to deposit the amount claimed or to file a surety bond for not more
than double the amount of the tax assessed.

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