Dizon v CTA (Taxation

)

G.R. No. 209651, November 26, 2014

Dizon v CTA G.R. No. 140944 April 30, 2008

MARCELO INVESTMENT AND MANAGEMENT CORPORATION,
AND THE HEIRS OF EDWARD T. MARCELO, NAMELY,
KATHERINE J. MARCELO, ANNA MELINDA J. MARCELO
REVILLA, AND JOHN STEVEN J. MARCELO, Petitioners, v. JOSE
T. MARCELO, JR., Respondent.

FACTS:
On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a
petition for the probate of his will was filed with Branch 51 of the
Regional Trial Court (RTC) of Manila (probate court). The probate
court then appointed retired Supreme Court Justice Arsenio P. Dizon
(Justice Dizon) and petitioner, Atty. Rafael Arsenio P. Dizon
(petitioner) as Special and Assistant Special Administrator,
respectively, of the Estate of Jose (Estate). Petitioner alleged that
several requests for extension of the period to file the required estate
tax return were granted by the BIR since the assets of the estate, as
well as the claims against it, had yet to be collated, determined and
identified.
ISSUES:
1. Whether or not the CTA and the CA gravely erred in allowing the
admission of the pieces of evidence which were not formally offered
by the BIR; and
2. Whether the actual claims of the aforementioned 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
Or Whether or not the CA erred in affirming the CTA in the latter's
determination of the deficiency estate tax imposed against the
Estate.
RULING:
1. Yes. While the CTA is not governed strictly by technical rules of
evidence, as rules of procedure are not ends in themselves and are
primarily intended as tools in the administration of justice, the
presentation of the BIR's evidence is not a mere procedural
technicality which may be disregarded considering that it is the only
means by which the CTA may ascertain and verify the truth of BIR's
claims against the Estate. The BIR's failure to formally offer these
pieces of evidence, despite CTA's directives, is fatal to its cause

DECISION
PEREZ, J.:
The vesting of succession rights on the heirs upon the death of the
decedent gives occasion for the baring of sibling disaccords right at
the onset of the estate proceedings which is the determination of the
administrator of the decedent’s estate. In such instances, the
liquidation, partition and distribution of the decedent’s estate is
prolonged and the issue of administration becomes, contrary to its
very objective, itself the hindrance to the ultimate goal of settlement
of the decedent’s estate. We catch a glimpse of that in this case.
Before us is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the 24 May 2013 Decision of the Court of
Appeals in CA-G.R. CV No. 95219 1 which affirmed the Order2 of the
Regional Trial Court (RTC), Branch 76, Quezon City appointing
respondent Jose T. Marcelo, Jr. (Jose, Jr.) as the new regular
administrator of the intestate estate of decedent Jose T. Marcelo, Sr.
The facts herein occurred in two stages: (1) the first litigation
between two of Jose Marcelo, Sr.’s (Jose, Sr.) compulsory heirs, his
sons, Edward, (ascendant of herein petitioners, heirs of Edward T.
Marcelo, Katherine J. Marcelo, Anna Melinda J. Marcelo Revilla, and
John Steven J. Marcelo) and respondent Jose, Jr., for the
appointment of regular administrator of Jose, Sr.’s estate; and (2)
after Edward was appointed regular administrator of Jose, Sr.’s
estate and Edward’s death in 2009, respondent Jose, Jr.’s revival of
his pursuit to administer his father’s, Jose, Sr.’s, estate.
These details of these stages follow:chanroblesvirtuallawlibrary

2. Yes. The claims existing at the time of death are significant to, and
should be made the basis of, the determination of allowable
deductions. Also, as held in Propstra v. U.S., where a lien claimed
against the estate was certain and enforceable on the date of the
decedent's death, the fact that the claimant subsequently settled for
lesser amount did not preclude the estate from deducting the entire
amount of the claim for estate tax purposes. This is called the dateof-death valuation rule.

FIRST DIVISION

On 24 August 1987, decedent Jose, Sr. died intestate. He was
survived by his four compulsory heirs: (1) Edward, (2) George, (3)
Helen
and
(4)
respondent
Jose,
Jr.
Initially, petitioner Marcelo Investment and Management Corporation
(MIMCO) filed a Petition for the issuance of Letters of Administration
of the estate of Jose, Sr. before the RTC, Branch 76, Quezon City
docketed as S.P. Proc. No. Q-88-1448. At first, Helen, along with her
brother, Jose, Jr. separately opposed MIMCO’s petition; the two
prayed for their respective appointment as administrator. Edward
opposed Helen’s 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. Ultimately, MIMCO, George
and Edward banded together: (1) opposed Helen’s and Jose, Jr.’s
petitions, and (2) prayed for Edward’s appointment as regular
administrator
of
Jose,
Sr.’s
estate.
On 21 September 1989, pending issuance of letters of
administration, the RTC appointed Helen and Jose, Jr. as special
administrators.

In an Order dated 13 December 1991, the RTC appointed Edward as
regular administrator of Jose, Sr.’s estate:
WHEREFORE, PREMISES CONSIDERED, this Court resolves as it
hereby resolves to appoint Edward T. Marcelo as the Regular
Administrator of the estate of the late Jose P. Marcelo, Sr. upon the
posting of a bond amounting to THREE HUNDRED THOUSAND
PESOS (P300,000.00). The aforementioned appointment shall take
effect upon his oath as such and conditioned by a bond of
P300,000.00 which shall insure the fidelity of the said regular
administrator in the performance of his duties and obligations as
such.3
Taking issue with the RTC’s Order and questioning Edward’s
appointment, Jose, Jr. filed successive oppugnant motions: (1)
motion for reconsideration of the 13 December 1991 Order; and (2)
omnibus motion alleging the RTC Acting Presiding Judge Efren N.
Ambrosio’s (Judge Ambrocio) unusual interest and undue haste in
issuing letters of administration in favor of Edward.
In an Order dated 12 March 1992, the RTC, through Judge Ambrosio,
denied Jose, Jr.’s motion for reconsideration:
WHEREFORE, prescinding from the foregoing, and fortified by the
balm of clear judicial conscience, the herein motion is hereby denied.
The letters of administration under date of March 4, 1992 issued in
favor of Edward T. Marcelo is maintained with full force and effect.
The letters testamentary issued in favor of Special Administrator,
Jose T. Marcelo, Jr. under date of October 2, 1989 as well as the
bond posted by him are hereby ordered cancelled. Likewise, the
Special Administrator, Jose T. Marcelo, Jr. is hereby ordered to
forthwith deliver to the regular administrator the goods, chattels,
money and estate of the deceased in his hands.4
In the same vein of denial, the RTC ruled on the Omnibus Motion,
thus:
After a re-examination of the evidence adduced by the parties and a
consideration of the arguments raised in the aforecited pleadings,
this court arrived at a conclusion that no substantial error was
committed by then Acting Presiding Judge Edren N. Ambrosio which
would warrant a reversal of the questioned orders, namely, the order
dated December 13, 1991 and March 12, 1992.5
Adamant on his competence to better administer his father’s estate,
Jose, Jr. appealed Edward’s appointment as regular administrator to
the Court of Appeals in CA-G.R. CV No. 43674. However, the
appellate court affirmed in toto6 the Orders dated 1 October 1993, 13
December 1991 and 12 March 1992 of the intestate court.
The question of who between Edward and Jose, Jr. should
administer their father’s estate reached us in G.R. No. 123883 (Jose
Marcelo, Jr. v. Court of Appeals and Edward Marcelo): we did not find
reversible error in the appellate court’s decision in CA-G.R. CV No.
43674. We disposed of the case via a Minute Resolution dated 22
May 1996,7 ultimately affirming the RTC’s and the appellate court’s
separate rulings of Edward’s competence and better suited ability to
act as regular administrator of Jose, Sr.’s estate.
Thereafter, Jose, Jr. persistently opposed Edward’s actions as
administrator and his inventory of Jose, Sr.’s estate. He filed anew
serial motions which culminated in the following 23 June 2000 Order
of the RTC:
After a careful study of the arguments raised by the parties in
support of their respective claims, the Court finds that the
motion filed by oppositor [Jose, Jr.] is not well-taken.

Anent the submission of complete list of stockholders of all the
Marcelo group of companies together with the number and current
par value of their respective shareholding, suffice it to say that as
correctly pointed out by regular administrator [Edward], the shares of
stock of the decedent will be equally distributed to the heirs that there
is
no
necessity
therefor.
Considering oppositor’s insistence on the submission by regular
administrator of a true and updated list as well as current market
values of all real estate and personal properties of the decedent, the
[c]ourt hereby directs herein oppositor [Jose, Jr.] to inform the regular
administrator of such data to aid the regular administrator in the
preparation of a complete and accurate inventory of the real and
personal properties comprising the estate of Jose, Sr.
As regards oppositor [Jose, Jr.’s] prayer for the submission by regular
administrator of a true and complete accounting of the subject
corporations reckoned from the death of [Jose, Sr.] up to the present,
the [c]ourt likewise sees no need therefor as said corporations are
not parties to the case and have separate and distinct personalities
from
the
stockholders.
With respect to the project of partition, it appears that regular
administrator had already furnished oppositor [Jose, Jr.] with a copy
thereof. Considering however oppositor [Jose, Jr.’s] oral motion for
regular administrator to identify the heirs of the decedent and to
secure their conformity to the project of partition, oppositor [Jose, Jr.]
is given ten (10) days from receipt of the project of partition bearing
the conformity of the heirs within to (sic) to comment thereon.
Thereafter, the parties are directed to submit their project of partition
for approval and consideration of the [c]ourt.8(Emphasis supplied)
On 15 January 2001, Edward filed a Manifestation and Motion stating
that:
1. Oppositor [Jose, Jr.] now conforms to, and has accordingly signed,
the attached “Liquidation of the Inventory of the Estate of Jose P.
Marcelo, Sr. as of July 26, 2000” x x x.
2. Regular Administrator [Edward] respectfully prays that the
Liquidation, duly signed by all four (4) compulsory heirs, be approved
as the project of partition of the Estate of Jose P. Marcelo Sr. 9
and moved for the approval of the Liquidation of the Inventory of the
Estate of Jose, Sr. as the project of partition of the Estate of Jose, Sr.
The project of partition reads:
LIQUIDATION OF THE INVENTORY OF THE ESTATE OF JOSE P.
MARCELO,
SR.
AS OF JULY 26, 2000
I. Settlement of the claims against the estate (SCH IV)
Payables
1. Marcelo Chemical & Pigment
P 1,556,002.06
Corp.
2. Maria Cristina Fertilizer Corp. 797,487.00
3. Marcelo Rubber & Latex
542,932.74
Products, Inc.
4. Marcelo Investment & Mgnt.
532,066.35
Corp.
5. Marcelo Steel Corporation
1,108,252.19

6. H. Marcelo & Co., Inc.
TOTAL

2,356,684.99
P 6,893,425.33

Considering that the Estate as of June 3, 1999 has no sufficient cash
to pay-off the above claims of P6,893,425.33, I can work out an
offsetting arrangement since the Estate has also receivables from
these companies as shown below:chanroblesvirtuallawlibrary

1. MCPC
2. MCFC
3. MRLP
4. MIMCO
5. MSC
6. H. Marcelo
TOTAL

SCH. III-A
Shares of Stock
P337,018.00
300,000.00
1,288,580.00
0.00
11,370.00
881,040.00
P2,818,008.00

SCH. III-B
Receivables
P 0.00
0.00
3,595,500.00
0.00
532,419.04
802,521.15
P 4,930,440.19

Total
P 337,018.00
300,000.00
4,884,080.00
0.00
543,789.04
1,683,561.15
P7,748,448.19

If the above receivables and equity with total value of P7,748,448.19
will be offset against the claims of P6,893,425.33 the net will show
the following:chanroblesvirtuallawlibrary

Companies

SCH. III-A & B
Equity
&
Claims
Receivables
P 337,018.00 P1,556,002.06
300,000.00
797,487.00
4,884,080.00
542,932.74
532,066.35
543,789.04
1,108,252.19

SCH. IV
Net
Claims
(Receivables)
P1,218,984.06
497,487.00
(4,341,147.26)
532,066.35
564,463.15

1. MCPC
2. MCFC
3. MRLP
4. MIMCO
5. MSC
6. H. MARCELO
1,683,561.15
2,356,684.99
673,123.84
& CO., Inc.
TOTAL
P7,748,448.19 P6,893,425.33 P (855,022.86)

Based on the offsetting except for MRLP, which the Estate has net
receivables of P4,341,147.26 there will be net claims or payables of
P3,486,124.40 as follows:chanroblesvirtuallawlibrary
1. MCPC
2. MCFC
3. MIMCO
4. MSC
5. H. Marcelo & Co.
TOTAL

P1,218,984.06
497,487.00
532,066.35
564,463.15
673,123.84
P3,486,124.40

It is recommended that the net from MRLP of P4,341,147.26 be
deducted
to
the
above
claims
as
shown
below:chanroblesvirtuallawlibrary
Net Receivables from MRLP
Net Claim
Net Receivables from MRLP

P4,341,147.26
3,486,124.40
P 855,022.86

II. After the claims are settled based on the above recommendation,
the Estate will have the following assets for distribution to the four (4)
of us:chanroblesvirtuallawlibrary
1. PCIB (to be updated)
3,099.81
2. Shares of Stocks
No. Of Shares
a. MTRC
12,874
b. MRLP
85,502
c. Farmer Fertilizer Corp. 5,000
d. Republic Broadcasting
18,054
System
e. Seafront Resources
6,000,000
f. Industrial Finance
137
g. Astro Mineral
500,000
h. Sta. Mesa Market
42,105
i. Atlas Consolidated
122
Mining
j. Phil. Long Distance
180
Telephone
k. Jinico (Jabpract Minind) 2,500,000
l. Baguio Country Club
1
4. Receivables – Marcelo
Fiberglass
*

Based

at

3,099.81
Amount
P1,287,400.00
855,022.86
5,000.00
18,054.00
60,000.00
1,370.00
5,000.00
42,105.00
2,562.00
130,050.00
25,000.00
12,500.00
212,729.17
Par

Value

Above assets will be distributed equally by the four (4) of us
depending if these will be sold or not. It is very important to note that
equal distribution will be based on actual selling price minus taxes
and other deduction if any, on the above inventories of estate
properties.
Sgd.
EDWARD
Regular Administrator

T.

MARCELO

Conforme:chanroblesvirtuallawlibrary
Sgd.
_________________
GEORGE

T.

MARCELO
Sgd.

____________________
JOSE
T.

MARCELO,

JR.

Sgd.
________________
HELEN T. MARCELO10
On 16 February 2001, the RTC issued an Order approving the
partition of Jose, Sr.’s estate as proposed by Edward:
Regular administrator [Edward] manifests that oppositor Jose T.
Marcelo, Jr. had already expressed his conformity to the Liquidation
of the Inventory of the Estate of Jose P. Marcelo, Sr., as of July 26,
2000, as evidenced by his signature therein. He therefore prays that
the said document which bears the conformity of all four (4)

compulsory heirs of Jose P. Marcelo, Sr. be approved as the project
of partition of the estate of Jose P. Marcelo, Sr.
Finding said liquidation of the Inventory of the Estate of Jose P.
Marcelo, Sr. to bear the conformity of all the heirs of the decedent
and considering further that the period for filing of money claims
against the subject estate had already lapsed, the Court resolves to
approve said liquidation of Inventory as the project of partition of the
estate
of
Jose
P.
Marcelo,
Sr.
Nonetheless, let the distribution of the estate of Jose P. Marcelo, Sr.
among his compulsory heirs in accordance with the approved
Liquidation of the Inventory of the Estate of Jose P. Marcelo, Sr. be
deferred until herein regular administrator Edward T. Marcelo has
submitted to the Court proof of payment of estate taxes of the subject
estate.11
On 14 September 2001, the RTC archived the intestate proceedings,
S.P. Proc. No. Q-88-1448, pending Edward’s submission of proof of
payment of estate taxes as directed in the 16 February 2001
Order.12chanrobleslaw
On 3 July 2009, Edward died, 13 ushering in the antecedents to the
present
controversy.
Wasting no time, Jose, Jr. moved to revive the intestate proceedings
involving his father’s estate, S.P. Proc. No. Q-88-1448, and moved
for his appointment as new regular administrator thereof.
Petitioners MIMCO and heirs of Edward, joined by George, opposed
Jose, Jr.’s motion and nominated Atty. Henry Reyes as regular
administrator
in
Edward’s
stead.
On 6 January 2010, the RTC issued the assailed Order, now
appointing Jose, Jr. as regular administrator of Jose, Sr.’s estate:
Contrary to the assertion of petitioners, there is no showing that the
[c]ourt has previously declared oppositor-movant [Jose, Jr.] unfit to
be
appointed
as
an
administrator.
The estate is left with no one who will administer the estate, i.e., to
liquidate the estate and distribute the residue among the heirs. As
well-settled, to liquidate means to determine the assets of the estate
and to pay all debts and expenses. Records clearly show that the
estate taxes due to the government have not been paid. It is, in fact,
held that approval of the project of partition does not necessarily
terminate administration x x x. There is a necessity to appoint a new
regular administrator. Equally noteworthy is that the judicially
approved inventory was prepared way back on August 30, 2000. It is
but
imperative
that
the
same
be
updated.
In the sound judgment of the [c]ourt, oppositor-movant [Jose, Jr.], a
legitimate child of the decedent, appears to occupy higher interest
than Atty. Henry A. Reyes in administering the subject estate.

updated inventory of all goods, chattels, rights, credits, and estate of
the deceased which shall come to his possession or knowledge or to
the
possession
of
any
other
person
for
him;
b. To administer according to the Rules of Court rules, all goods,
chattels, rights, credits, and estate which shall at any time come to
his possession or to the possession of any other person for him, and
from the proceeds to pay and discharge all debts, legacies, and
charges on the same, or such dividends thereon as shall be decreed
by the court, not to mention the taxes due to the government;
c. To render a true and just account of his administration to the [c]ourt
within one (1) year; and at any other time when required by the
Court;
and
d. To perform all orders of the [c]ourt.14
Petitioners filed an Omnibus Motion for Reconsideration of the 6
January 2010 Order and now moved for the appointment instead of
George as administrator of Jose, Sr.’s estate. After Comment on the
Omnibus Motion, the RTC issued another Order dated 23 March
2010, denying the Omnibus Motion and affirming the appointment of
Jose,
Jr.
as
new
regular
administrator.
Petitioners appealed the RTC’s twin Orders dated 6 January 2010
and 23 March 2010 before the appellate court. This time around, the
Court of Appeals affirmed Jose, Jr.’s appointment as new regular
administrator. Ruling that the selection of administrator lies in the
sound discretion of the trial court, the Court of Appeals held
that:chanroblesvirtuallawlibrary
1. The prior Order dated 13 December 1991 of the RTC appointing
Edward as regular administrator instead of Jose, Jr., which
appointment was affirmed by this Court in G.R. No. 123883, did not
make a finding on Jose, Jr.’s fitness and suitableness to serve as
regular
administrator;
and
2. On the whole, Jose, Jr. is competent and “not wanting in
understanding and integrity,” to act as regular administrator of Jose,
Sr.’s
estate.
Hence, this appeal by certiorari ascribing grave error in the Court of
Appeals’ Decision, to wit:
A.
THERE WAS NO NEED TO APPOINT AN ADMINISTRATOR FOR
THE ESTATE OF JOSE P. MARCELO, SR. AS THERE WAS THEN
NO PENDING INCIDENTS IN THE ESTATE PROCEEDINGS TO
WARRANT THE APPOINTMENT OF AN ADMINISTRATOR.
B.

Before he enters upon the execution of his trust, and letters of
administration issue, he shall give a bond in the amount of
P200,000.00, conditioned as follows:chanroblesvirtuallawlibrary

THE COURT OF APPEALS ERRED IN APPOINTING JOSE, JR. AS
THE ADMINISTRATOR OF JOSE, SR.’S ESTATE CONSIDERING
THAT JOSE, JR. WAS FOUND, BY A FINAL, IMMUTABLE, AND
UNALTERABLE JUDGMENT, TO BE UNFIT TO ACT AS SUCH.
THUS, THE COURT OF APPEALS WAS CLEARLY MISTAKEN
WHEN IT DISREGARDED THE EARLIER PRONOUNCEMENT ON
THE UNFITNESS OF JOSE, JR. TO ACT AS AN ADMINISTRATOR
AS IT GOES AGAINST THE PRINCIPLE OF CONCLUSIVENESS
OF JUDGMENT.

a. To make and return to the [c]ourt, within three (3) months, an

C.

WHEREFORE, premises considered, oppositor Jose T. Marcelo, Jr.
is appointed as the new regular administrator of the estate of Jose T.
Marcelo,
Sr.

It is very important to note that equal distribution will be based on actual selling price minus taxes and other deduction if any. Sr. Sr.15 The appeal is impressed with merit. Rule 90 of the Rules of Court provides for the Distribution and Partition of the Estate.425. Jr. Jose. affecting the value of the estate’s .893. Although the Marcelo family. In fact. regarding the completion of the proposed liquidation and partition of the estate. We are not convinced. in a sum to be fixed by the court. WITHOUT EVEN BOTHERING TO EXPLAIN WHY JOSE.86. While we agree with the lower courts that the appointment of a regular administrator is still necessary. amounting to P4. the liquidation and proposed partition had long been approved by the probate court. Petitioners contend that the appointment of a regular administrator is unnecessary where there remains no pending matter in the settlement of Jose. The same document listed payables and receivables of the estate dependent on a number of factors and contingencies:chanroblesvirtuallawlibrary 1. AND NOT GEORGE.’s estate. as all parties are definitely aware. Offsetting of the receivables from Marcelo Rubber & Latex Products. the decedent. Sr.cralawred x x x x SEC.448. the court may issue an execution in the name of the executor or administrator against the party not paying for the sum assessed. 18chanrobleslaw More importantly.’s estate states that the valuation amount of the shares of stock as listed therein is based on par value. on the above inventories of estate properties. Sr. The rule provides in pertinent part: SECTION 1. these corporations are different juridical persons with separate and distinct personalities from the Marcelo patriarch.022. give a bond.748.425. Sr. Further on that. Payables to various companies where the Marcelo family had equity amounting to P6. An offsetting of the payables and receivables to be arranged by the then regular administrator.448. 19chanrobleslaw Significantly. considering that the corporations are family owned by the Marcelos’. we observe that the Liquidation of the Inventory of the Estate. The same document delivers a very important notation that the equal distribution of the listed assets of the estate will depend on the actual selling price of these assets less taxes and other deductions: Above assets will be distributed equally by the four (4) [compulsory heirs] depending if these will be sold or not. Sr.20 To date.’s estate requiring attention and administration.’s estate. We further note that there has been no manifestation forthcoming from any of the heirs. we refer to the Liquidation of the Inventory of the Estate. If the above receivables and equity with total value of P7. and (2) After Settlement of the Claims. – x x x No distribution shall be allowed until payment of the obligations above mentioned has been made or provided for. Specifically. – If at the time of the distribution the executor or administrator has retained sufficient effects in his hands which may lawfully be applied for the expenses of partition of the properties distributed. Sr. Sr. Receivables from the same companies amounting to P7. where each heir separately holds his share in the estate as that which already belongs to him. We first dispose of the issue of whether the appointment of a regular administrator is still necessary at this liquidation. and Jose..893. remains intangible and the ultimate distribution to the heirs still held in abeyance pending payment of estate taxes.’s estate. Considering that the Estate as of June 3.THE COURT OF APPEALS VIOLATED THE PETITIONERS’ RIGHT TO DUE PROCESS. Inc.19 will be offset against the claims of P6.40 resulting in net receivables of the estate in the amount of P855. By whom expenses of partition paid.893. In this case. partition and distribution stage. Sr. thus.147. is not yet in effect and complete. 1999 has no sufficient cash to pay-off the above claims of P6. the RTC archived the intestate proceedings pending the payment of estate taxes. There has been no showing from either of the parties that the receivables of. and 4. partition and distribution stage. The settlement of Jose. approved by the RTC in its Order dated 16 February 2001.425. 3. WHEN IT AFFIRMED THE RTC ORDERS.33. and claims against. if any person interested in the partition does not pay his proportion or share. on the other. even the Liquidation of the Inventory of Jose. which may have varied given the passage of time. such expenses of partition may be paid by such executor or administrator when it appears equitable to the court and not inconsistent with the intention of the testator. they shall be paid by the parties in proportion to their respective shares or interest in the premises. [Edward] can work out an offsetting arrangement since the Estate has also receivables or equity from these companies as shown below: 16chanrobleslaw xxxx 2. partition and distribution stage of the intestate proceedings involving Jose. hold equity in the corporations mentioned in the inventory.341.26 against the net claims against the estate amounting to P3. JR. SHOULD BE APPOINTED AS ADMINISTRATOR OF JOSE. When order for distribution of residue made. unless the distributees.486. the actual partition of the estate. or any of them. Sr. For clarity. we disagree with the appointment of Jose. in particular the compulsory heirs of Jose. if an offsetting occurred with the companies listed in the inventory on one hand.19.’S ESTATE. conditioned for the payment of said obligations within such time as the court directs. Jose. petitioners point out that there is no existing or unliquidated debt against the estate of Jose.33. as new regular administrator of Jose. otherwise. the settlement thereof being already at the liquidation. the liquidation scheme appears yet to be effected.748. much less. SR. and the apportionment shall be settled and allowed by the court.’s estate is not yet through and complete albeit it is at the liquidation.124. Edward. distribution of the remaining assets of the estate to the four (4) compulsory heirs. or the parties in this case. which was divided into two (2) parts: (1) Settlement of the Claims against the Estate.’s estate has been actually liquidated.33 the net will show the following:17chanrobleslaw xxxx 3. and. more than a decade has passed since the intestate proceedings were archived.

Jose. Further. Jr. Jose. Stated differently. Marcelo. Jr. oversee. other than the bare allegations of the applicants that they were all qualified to act as such. We now come to the issue of whether Jose. the petition filed by MIMCO was based on the Financial Statements prepared by an independent auditor. after subjecting the evidence. the appellate court. 21 (Citations omitted) Notably.. Jr. and Edward. It is thus quite evident that Edward was really the most trusted child of the deceased. However. as the individual who supposedly prepared the document was never identified and the sources of information not disclosed. This is bolstered by the fact that the family corporations and his own personal corporation are presently of sound financial condition. Moreover. 1989 whereas the records were “borrowed” as early as October 21. It is this [c]ourt’s observation that the continuous internal wranglings between the heirs would achieve nothing. he simultaneously prayed for his appointment as regular administrator of their father’s estate. is dragged further into the quagmire of dissipation and loss. Polaris Marketing Corporation. the decision of the trial court appointing Edward as the Administrator of the Estate of Jose. Jose. Sr. Sr. Jr. Further. as there was in fact. 1989. Jr. Ibay and the subsequent filing of Edward T. Marcelo. this [c]ourt now resolves as it hereby resolves to appoint Edward T. this [c]ourt can determine the probable value and nature of the estate of the deceased Jose P. the estate of the late Jose. Marcelo as regular administrator of the estate of the late Jose. Sr. Be that as it may. Essentially. In its 13 December 1991 Order. it can be deduced that among the four (4) children of Jose. 123883. 1988.’s assertion is the fact that the records of the corporation which were allegedly “borrowed/taken” do not form part of the estate of Jose. The deceased valued the opinion of Edward on decisions that had to be made and he would have Edward around in his meetings to discuss matter relating to the corporations which he managed. Edward and Jose. In short. the RTC categorically ruled on who between Edward and Jose. The records of the case will bear out. what belies Jose. Jr. Sr. Marcelo. the [c]ourt believes can be attributed to the management skills and the sound management policies Edward has adopted throughout the years.. 1998. Jr. took evidencing liabilities of the deceased and other pertinent records and up to the present has not returned them. the latter was better suited to act as regular administrator of their father’s estate. nowhere in the provisions of the Revised Rules of Court is such a nomination of a party other than a compulsory heir prohibited. is now limited to Edward and Jose. While it may be true that initially the petition for the issuance of letters testamentary was filed by Marcelo Investment and Management Corporation (MIMCO for brevity) and by Danilo O. Sr. the [c]ourt never touched on the issue of the qualifications of the applicants. Jr. Sr.. F. treats the corporate properties of the Marcelo Group of Companies. that as between Jose. Evidence shows that sometime October 21. From all of the foregoing. may be appointed as regular administrator despite the previous Order of the RTC on 13 December 1991. was not merely a comparison of the qualifications of Edward and Jose. Ibay as nominee of Edward and George Marcelo. it is apparent that the intestate proceedings involving Jose. There is no argument that both Edward and Jose. was weighed and found wanting by the RTC. Marcelo. Pablo and Associates. purporting to show that the deceased had other assets other than those enumerated in the original petition filed by MIMCO and which should have been included in the estate cannot be accorded any weight or credence by this [c]ourt. A close scrutiny of the records reveals that in all of Jose. Jr. Upon the other hand..’s estate still requires a regular administrator to finally settle the estate and distribute remaining assets to the heirs of the decedent. no evidence presented on the matter. are willing to serve as regular administrator but undoubtedly.’s previous nonappointment as regular administrator of Jose. Marcelo. Jose. This can be gleaned from the withdrawal of the nomination of Danilo O. that the appointment of a Special Administrator was premised on the need to have someone. Jr. This success. Willingness to act and/or serve as regular administrator is no longer in issue here as both applicants are undoubtedly willing to serve as such. cannot justify the taking of the records/or borrowing of the same by asserting that he is now keeping them in his capacity as Special Administrator as he was appointed Special Administrator only on September 21. have considerably increased since the filing of their respective petitions. Jr. framing the issue in this wise: The [c]ourt’s choice as to who among the [compulsory heirs] will be appointed regular administrator of the estate of Jose. On the basis of the information provided by MIMCO in the original petition. was fit to administer the estate of Jose. it should be noted that the appointment of Jose. as there was the danger of the estate being dissipated. whether Jose. the same did not constitute a waiver on the part of Edward T. Sr. manage and preserve the estate of Jose. it was Edward Marcelo who was appointed as trustee to vote the deceased’s share in a Marcelo Corporation. Upon the other hand. this court looks with deep concern the manner by which Jose. Jr. Jr. As aptly cited by petitioner. as one of the Special Administrators does not necessarily make him more qualified to be appointed as regular administrator. but the [c]ourt on the basis of their qualifications will have to decide whom to appoint as regular administrator.. Jr. Sr. Jr. Jr. No. he proffered his competence and qualification to be appointed as regular administrator as a legal issue for resolution of the courts. Jr.R. A. Sr. Likewise. both testimonial and documentary to careful judicial study.’s pleadings opposing Edward’s appointment as regular administrator. it was Edward whom he trusted the most. Jr. It was also Edward who was made cosignatory when the deceased deposited money in the bank to be given to the children of Jose. Edward T.assets.. in view of the withdrawal of Helen T. Jr. which decision had the imprimatur of a final resolution by this Court. Sr. Likewise. The documents presented by Jose. as can be gleaned from the evidence presented by Jose. there can be no adverse conclusion that may be inferred from the withdrawal of a petition or nomination. but to the corporation from where they were taken. It would not be amiss to state that the animosity among the interested [petitioners therein]. Edward appears to be more responsible and competent that his younger brother. Marcelo of his petition for the appointment as legal administrator on September 14. and this Court. In the meantime. but a .’s estate bars his present appointment as such even in lieu of Edward who is now dead. Sr. affirmed by the appellate court and this Court in G.

or by reason of conviction of an offense involving moral turpitude. and by the Supreme Court. closed its eyes on the facts detailed by the RTC in the first order. by virtue of Edward’s death. it may be granted to one or more of the principal creditors. if competent and willing to serve. in the sound judgment of the court exercising the power of appointment and said judgment is not to be interfered with on appeal unless the said court is clearly in error. or lack thereof. and it was within the jurisdiction of the RTC. the appellate court dwelt largely on the considerable latitude allowed a probate court in the determination of a person’s suitability for the office of judicial administrator. Sr. that [respondent] Jose. Jr. Still and all. they were. or the person selected by them. as the new administrator. requests to have appointed. the RTC in its Order dated 13 December 1991. Jr. the Court of Appeals like the RTC in its second order. The trust reposed by the decedent on Edward who voted on Jose. 3. Jr.’s estate.’s suitableness and fitness. Jr. unfit to execute the duties of the trust by reason of drunkenness. on the other hand. or if the surviving spouse. as the new regular administrator of Jose.. as new regular administrator only had two (2) sentences to essentially reverse the previous findings. or next of kin.— No person is competent to serve as executor or administrator who:chanroblesvirtuallawlibrary (a) Is a minor. there is no showing that the [c]ourt has previously declared [Jose. 1. In affirming the issuance of letters of administration to Jose. Sr. (b) Is not a resident of the Philippines. Because Edward and Jose. As against this Order of the RTC. we put into proper perspective the 13 December 1991 Order of the RTC appointing Edward over Jose. refuse the trust. Jr. Nowhere was there any categorical ruling. Sr. and by the Supreme Court in the Resolution dated 22 May 1996. or the executor or executors are incompetent. did not declare [respondent] Jose.finding of the competence of Edward compared to the unfitness of Jose. found Edward competent to serve as regular administrator. Reyes in administering the subject estate. or by reason of conviction of an offense involving moral turpitude. neglects for thirty (30) days after the death of the person to apply for the administration or to request that administration be granted to some other person.].cralawred x x x x In the sound judgment of the [c]ourt. its subsequent opposite Order dated 6 January 2010 appointing Jose. and affirmed by this [c]ourt. to a great extent. Sr.’s estate. 6. Sr. or a definite finding. the office of the regular administrator of Jose. the courts also delved into the question of their suitableness and fitness to serve as administrator. Thus. 2. appears to occupy a higher interest than Atty. and the denial of [respondent] Jose. or want of understanding or integrity. even though his previous prayer for appointment was denied. Edward being made a co-signatory for money deposited for Jose.] unfit to be appointed as an administrator. to appoint a new administrator. When and to whom letters of administration granted.R. which Order was upheld by us in G. more competent than Jose. Jr. for the office of administrator. (c) If there is no such creditor competent and willing to serve. Jr. in the discretion of the court. Edward has kept the Marcelo family corporations and his own in good financial condition. it may be granted to such other person as the court may select.. as probate court. Jr. or fail to give bond. or a person dies intestate. or both. manifesting none of the disqualifications set by law. be incompetent or unwilling. preferring one over the other.. What was ruled upon by the RTC.’s behalf in a Marcelo corporation. [Jose. Sr. Henry A. Necessarily. as regular administrator of their father’s estate.’s own children. The second sentence does not amount to a finding of a qualification superior to that of the rest of the children of Jose. or want of (c) understanding or integrity.22 The first sentence contained in the Order of 6 January 2010 is disproven by the definite finding of “deep concern” in the original Order. as affirmed by this [c]ourt in Decision dated 30 March 1995. Jr. Jr. (b) If such surviving spouse. improvidence. improvidence.’s estate. Section 1. Considering the two (2) sets of conflicting rulings of the RTC and the Plainly. and The RTC did not err in appointing Jose. Who are incompetent to serve as executors or administrators.23 Evidently. Jr. albeit in comparison with Edward and not with the rest of Jose.— If no executor is named in the will. Sr. Jose. was . or to such person as such surviving spouse. and precluded the RTC from appointing [respondent] Jose. equally preferred to administer Jose.’s estate was vacated. or next of kin.. Contrary to the assertion of petitioners. The Court of Appeals only briefly delved into Jose. the same Order likewise judged Jose. The determination of a person’s suitability for the office of judicial administrator rests.’s estate which were all denied previously by the same probate court: The RTC Order dated 13 December 1991. if competent and willing to serve. there is no merit in [petitioners’] contention that the finding on the unfitness of [respondent] Jose.’s children. Court of Appeals in the two stages of this litigation. Notably. a legitimate child of the decedent. became binding. Jr. Sr. are both compulsory heirs of Jose. administration shall be granted:chanroblesvirtuallawlibrary (a) To the surviving spouse. was the appointment of Edward as the administrator of Jose. was. and Is in the opinion of the court unfit to execute the duties of the trust by reason of drunkenness. unfit to serve as administrator. Jr. at the time the issue of administration first cropped. Jr. Sr. Section 6 of the same rule.’s numerous attempts to be appointed regular administrator of Jose. preferred despite equal status in the Order of Preference. or next of kin. Rule 78 of the Rules of Court provides for the general disqualification of those who wish to serve as administrator: SECTION 1. No. Jr. 123883. framing it as Edward being more fit and suited to be administrator: Jurisprudence has long held that the selection of an administrator lies in the sound discretion of the trial court.’s opposition to Edward’s appointment. or next of kin. Jr. Jr. Jr. lists an order of preference in instances when there is a contest of who should be appointed administrator: SEC.

.25 Given the factual considerations that led to the prior findings on the unfitness of Jose.” Jose.] 27 we thus issue Letters of Administration to George to facilitate and close the settlement of Jose. xxx.” is devoid of merit. CA 273 SCRA 47 1997 Facts: Ferdinand R. 0001-0034 and 0141. Quezon City in S. Jose T. Sr. Petitioner further argues that "the numerous pending court cases questioning the late president's ownership or interests in several properties (both real and personal) make the total value of his estate.’s estate. Jose T. his good name and integrity in accordance with the evidence. No. the Affidavit of Helen26 preferring George as administrator. we emphasize that such is already at the liquidation and distribution stage which project of partition had long been conformed to by the parties. as administrator. the court in the exercise of its sound discretion after a consideration of the evidence adduced by both parties. The Decision of the Court of Appeals in CA-G. Proc. chargeable to the estate in accordance with law.’s fitness to serve as such: It is Jose T. Quezon City. and to support the appointment of George and herself as joint administrators. x x x This did not however confer on Jose Marcelo. Marcelo. Jr. Bersamin. to perform the functions of an administrator.’s competence. Sr. However. conditioned for the payment of said obligations within such time as the court directs. there has been a declaration that Jose. Then too. respondents' assessment of the estate tax and their issuance of the Notices of Levy and sale are premature and oppressive. and the consequent estate tax due.not what Edward was. Sr. the RTC noted that such cannot be justified as the records and other pertinent documents taken “do not form part of the estate of Jose P. Marcos II vs. Marcelo as regular administrator. above all else is the main thrust of this second motion for reconsideration. and Villarama.P. xxx. The inheritance tax is an obligation of the estate. 28chanrobleslaw WHEREFORE.] “that both trial judges erred in not appointing Special Administrator Jose T. CV No. On the other hand. Leonardo-De Castro.’s own children is a telling commentary against Jose.* JJ. omits to allege whether the properties levied upon by the BIR in the collection of estate taxes upon the decedent's estate were among those involved in the said cases pending in the Sandiganbayan. ruled otherwise and instead appointed Edward T. the RTC in the original order made a specific finding. Branch 76. SO x x x ORDERED. Quezon City is likewise directed to complete the settlement of the decedent’s. the court is at a loss as to how these cases are relevant to the matter at issue. The fact however. Jr. Q-88-1448 are REVERSED and SET ASIDE.”ChanRoblesVirtualawlibrary Contrary to the recent rulings of the RTC and the Court of Appeals appointing Jose. Sr. Marcelo. a copy of which was given to the [Court of Appeals. “[viewing it] with deep concern. To obviate further delay in the settlement of Jose. Jr. been chosen by the rest of the heirs of Jose. not only is George the eldest son of Jose. Jr.24 Undoubtedly. in a sum to be fixed by the Sereno. 95219 and the Order dated 6 January 2010 of the Regional Trial Court. estate with dispatch starting from an Order setting a deadline for the parties to pay the estate taxes and to inform this Court when such has been paid.cralawlawlibrary x The third assigned error raised by [Jose. Sr. or any of them. and. Jr. Letters of Administration shall issue to George T. When order for distribution of residue made. Sr. indirectly the heirs: SECTION 1. that Edward was made cosignatory for money deposited for Jose. to act as regular administrator. if any. Indeed. and the conformity on record of the rest of Jose. It euphemistically called taking of the records evidencing liabilities of the decedent as “borrowed/taken. concur.R. Rule 78 of the Rules of Court. consistent with Section 6. Thus. unless the distributees. Jr. is unfit and unsuitable to administer his father’s estate.cralawred court. Marcos II assailed the decision of the Court of Appeals declaring the deficiency income tax assessments and estate tax assessments upon the estate and properties of his late father despite the pendency of the probate proceedings of the will of the late President. Jr. Branch 76. We note that this case has been unnecessarily prolonged and resulted in added litigation by the non-payment of estate taxes which is the ultimate responsibility of the heirs having inchoate right in the estate. qualified and suitable for the position of regular administrator. Branch 76." He points out the pendency of Sandiganbayan Civil Case Nos. Jr.’s estate. have been paid. The findings of the lower court in this regard deserve full consideration x x x.’s heirs to George’s administration as reflected in petitioners’ Appellants’ Brief before the Court of Appeals: More importantly. give a bond.cralawred x x x True. – When the debts. Chief Justice (Chairperson). Marcelo upon payment of a bond to be set by the Regional Trial Court. as Regular Administrator considering his tested probity and competence as special administrator. in addition to George and the heirs of Edward. moreover. was initially appointed as Special Administrator of the estate of their deceased father but the same was without the benefit of a hearing on the qualifications of the parties concerned. Sr. the petition is GRANTED. Jr. Helen executed an Affidavit to manifest her opposition to Jose. Jr. as already discussed earlier.” However. but to the corporation from where they were taken. should there be assets remaining. Marcelo’s position that he is more competent. Jr.’s handling of the records of the Marcelo Group of Companies. Marcelo. x x x. The mere fact that the decedent has pending cases involving ill-gotten wealth . The Regional Trial Court. and inheritance tax. Jr. incapable of exact pecuniary determination at this time. therefore. No distribution shall be allowed until payment of the obligations above mentioned has been made or provided for. This. which were filed by the government to question the ownership and interests of the late President in real and personal properties located within and outside the Philippines. his most immediate kin. as Special Administrator a better right to the office of regular administrator. to be partitioned and distributed. if not integrity. Jr.. he has. Petitioner. however. there is a previous and categorical ruling on Jose. the BIR argued that the State’s authority to collect internal revenue taxes is paramount. In this regard.’s. Marcelo.

unless the distributees. is not a mandatory requirement in the collection of estate taxes. in a sum to be fixed by the court. Vitug. Vitug filed a motion asking for authority from the probate court to sell certain shares of stock and real properties belonging to the estate to cover allegedly his advances to the estate. (2) to order the release of the titles to certain heirs. The law clearly limits the allowance to “widow and children” and does not extend it to the deceased’s grandchildren. 1992. 1. Indeed. an assessment will not be disturbed. No. Pasig. The burden of proof is upon the complaining party to show clearly that the assessment is erroneous. or any of them. But mere rhetoric cannot supply the basis for the charge of impropriety of the assessments made. 118671. sitting in probate or as a settlement tribunal over the deceased’s estate. naming private respondent Rowena Faustino-Corona executrix. No. Failure to present proof of error in the assessment will justify the judicial affirmance of said assessment. it was private respondent Maria Pilar Ruiz Montes who filed before the Regional Trial Court. four years after the testator’s death. As found by the CA . and his three granddaughters. the expenses of administration. all of which are subject to a determination by the court as to their veracity. after admitting the will to probate but before payment of the estate’s debts and obligations. propriety and justness. whether the probate court. Edmond Ruiz. No. such collection should be made in accordance with law as any arbitrariness will negate the existence of government itself. his adopted daughter. Be that as it may. Even an assessment based on estimates is prima facie valid and lawful where it does not appear to have been arrived at arbitrarily or capriciously. pending probate. Taxes are the lifeblood of government and should be collected without unnecessary hindrance. plus interests. 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. On April 12. January 29. VITUG vs CA Case Digest VITUG vs CA 188 SCRA 755 PNB VS SANTOS FACTS: This case is a chapter in an earlier suit decided by this Court Estate of Hilario Ruiz v CA G. However. rendering a true account of his administration. which he claimed were personal funds. a petition for the probate and approval of Hilario Ruiz’s will and for the issuance of letters testamentary to Edmond Ruiz ISSUE: involving the probate of the two wills of the late Dolores Luchangco Vitug. and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes. No distribution shall be allowed until the payment of the obligations above-mentioned has been made or provided for. Vitug’s) widower. S. It is not the Department of Justice which is the government agency tasked to determine the amount of taxes due upon the subject estate. Ruiz executed a holographic will naming as his heirs his only son. The approval of the court. In said decision. give a bond. Issue: Is the contention of Marcos correct? Held: No. which bears a trace of falsity. The taxpayer has the duty of proving otherwise. On June 29. has the authority: (1) to grant an allowance from the funds of the estate for the support of the testator’s grandchildren.does not affect the enforcement of tax assessments over the properties indubitably included in his estate. RULING: There is nothing in the Tax Code. grandchildren are not entitled to provisional support from the funds of the decedent’s estate. and (3) to grant possession of all properties of the estate to the executor of the will. No. 2. 3. the petitioner's attack on the assessment bears mainly on the alleged improbable and unconscionable amount of the taxes charged. regardless of their minority or incapacity. Romarico G.A. Vitug’s estate with her (Mrs. 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. who died in New York.R. Branch 156. In this instance. petitioner has not pointed out one single provision in the Memorandum of the Special Audit Team which gave rise to the questioned assessment. the court upheld the appointment of Nenita Alonte as co-special administrator of Mrs. 1996 FACTS: Hilario M. before the same can be enforced and collected. In the absence of proof of any irregularities in the performance of official duties. 1988. The enforcement of tax laws and the collection of taxes are of paramount importance for the sustenance of government. conditioned for the payment of said obligations within such time as the court directs. Hilario Ruiz died. U. petitioner Romarico G. the amount of the obligations and estate tax. but the Bureau of Internal Revenue whose determinations and assessments are presumed correct and made in good faith. private respondent Maria Pilar Ruiz Montes.

and “increment thereto. solemn. The conveyance in question is not. they merely The trial courts upheld the validity of such agreement. they leased to Construction Components International Inc. the latter has acquired upon her death a vested right over the amounts under savings account No.500 shares of stock of defendant corporation with a total value of P1. Construction Components International. Being the separate property of petitioner. 1988 defined as “a personal.the alleged advances were spent for the payment of estate tax. Inc. when the his late wife and the bank. as held by the Court of Appeals. Secondly. . Vitug having predeceased her husband.5M. ISSUE: W/N the survivorship agreement between the spouses Vitug constitutes a donation? put what rightfully belonged to them in a money-making venture. it is a prohibited donation under the provisions of Article 133 of the Civil Code. DELPHER TRADES CORPORATION vs. by way of a joint Vitug insists that the said funds are his exclusive property having and several bank account. Certainly. Inc. Vitug. say. the bequest or device must pertain to the testator.R. The conclusion is accordingly unavoidable that Mrs. it forms no more part of the estate of the deceased. assigned its rights and obligations under the contract of lease in favor of Hydro Pipes Philippines. Facts: Delfin Pacheco and sister Pelagia were the owners of a parcel of land in Polo (now Valenzuela). one of mortis causa.. it is not a donation between the spouses because it Rowena Corona opposed the motion to sell on the ground that the involved no conveyance of a spouse’s own properties to the other.” In other words. sums in question for inventory and for “concealment of funds by “mere stipulation” and that it is no “cloak” to circumvent the law belonging to the estate. assuming that it is a mere donation inter vivos. the CA held that the survivorship agreement constitutes a conveyance mortis causa which “did not comply with the formalities of a valid will as prescribed by Article 805 of the Civil Code. a deed of exchange was executed between lessors Delfin and Pelagia Pacheco and defendant Delpher Trades Corporation whereby the Pachecos conveyed to the latter the leased property together with another parcel of land also located in Malinta Estate. same funds withdrawn were conjugal partnership properties and part of the estate. On April 3.” obvious reasons. there was allegedly no ground for It is also our opinion that the agreement involves no modification reimbursement. Neither is the survivorship agreement a donation inter vivos. for deficiency estate tax. the monies subject of savings account No. which should be embodied in a will. we hold that the court was in error. having been acquired during the existence of the marital relations. but simply. In 1976. the property and providing for a right of first refusal should it decide to buy the said property. first of all. In this case. 1974. Rivera v. which would have arguably been sanctionable as a prohibited donation. and hence it must be presumed to be conjugal. Insofar as the respondent court ordered their inclusion in the inventory of assets left by Mrs. People’s Bank and Trust Co. She also sought his ouster for failure to include the petition of the conjugal partnership. Valenzuela for 2. In the case at bar. 35342-038 of the Bank of America. with the signed conformity and consent of Delfin and Pelagia. their joint holdings. No. 35342-038 were in the nature of conjugal funds In the case relied on. On the other hand. 35342-038. more commonly denominated in banking acquired the same through a survivorship agreement executed with parlance as an “and/or” account. we rejected claims that a survivorship agreement purports to deliver one party’s separate properties in favor of the other. and hence. They did not dispose of it in favor of the other. because it was to take effect after the death of one party. revocable and free act by which a capacitated person disposes of his property and rights and declares or complies with duties to take effect after his death. L-69259 January 26. There is no showing that the funds exclusively belonged to one party. A will has been G. the spouses are not prohibited by law to invest conjugal property. IAC HELD: NO.” and secondly. spouses Vitug opened savings account No.” on conjugal property relations.

Issue: Whether or not the imposition of gift tax is valid despite the fact that the Constitution provides an exemptions and that Fr. Instead. What they really did was to invest their properties and change the nature of their ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation to take control of their properties and at the same time save on inheritance taxes. As well observed by the learned respondent Court.. Crispin Ruiz. Held: Yes. the Delpher Trades Corporation is a business conduit of the Pachecos. in effect. bequests and devises are excluded from gross income liable to tax. if anything. as it was made for a full and adequate compensation for the valuable services by the late Priovano (i. The "Deed of Exchange" of property between the Pachecos and Delpher Trades Corporation cannot be considered a contract of sale. Negros Occidental. who also belong to the same family group. the donation is considered taxable income. CIR (14 SCRA 292) A gift tax is not a property tax. Hence. whether constituting a demandable debt or not (such as remuneratory donations under Civil Law). There was no transfer of actual ownership interests by the Pachecos to a third party. if the amount is received on account of services rendered. he was not fully compensated for such services. but rather taxable as part of gross income. and was “largely responsible for the rapid and very successful development of the activities of the company". the phrase "exempt from taxation.On the ground that it was not given the first option to buy the leased property pursuant to the proviso in the lease agreement. The imposition of the gift tax on the property used for religious purpose is not a violation of the Constitution. managed by the sons and daughters of Delfin and Pelagia. CIR (14 SCRA 232) Sec. the parish priest of Victorias. Pirovano v. The company’s gratitude was the true consideration for the donation. the imposition of which on property used exclusively for religious purposes. that it was remuneratory). 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 there being no clear. Issue: WON the donation is remuneratory and therefore not subject to donee’s tax. 1960. A gift tax is not a property by way of gift inter vivos. Held: No. donated 10. Facts: Sometime in 1957.000. respondent Hydro Pipes Philippines. after Pirovano’s death. for the construction of a new Catholic church in the locality.e. Estate Inc. Their equity capital is 55% as against 45% of the other stockholders. in favor of Pirovano’s heirs. The Pacheco family merely changed their ownership from one form to another. Trivia lang: Delpher Trades Corp is owned by the Pacheco Family. and not the services themselves.B. Inc. the private respondent has no basis for its claim of a light of first refusal under the lease contract. filed an amended complaint for reconveyance of the lot. However. such donations are subject to estate or gift taxes. The transfer of ownership. 32[B] of the NIRC provides that Gifts. The company initially designated itself as the beneficiary of the policies but. positive or express grant of such privilege by law." as employed in the Constitution (supra) should not be interpreted to mean exemption from all kinds of taxes. title and interest therein. prejudiced the Hydro Phil's right of first refusal over the leased property included in the "deed of exchange"? NO Held: By their ownership of the 2. Under date of April 29. Estate filed the donor's gift tax return. the Pachecos have control of the corporation. insured the life of Enrico Pirovano who was then its President and General Manager. but an excise tax imposed on the transfer of property by way of gift inter vivos..00 pesos in cash to Fr. Lladoc was not the Parish priest at the time of donation. Section 22(3) Article VI of the Constitution contemplates exemption only from payment of taxes assessed on such properties as Property taxes contra distinguished from Excise taxes. Lladoc. The CIR subjected the donation to gift tax. 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. in favor of petitioner. the donation is not remuneratory. Their primary defense is that there is no transfer of ownership because the Pachecos remained in control of the original co-owners. On March 3. LLadoc v. it renounced all its rights. the imposition of the gift tax was valid. of Bacolod City. 1958. Pirovano’s heirs contended that the grant was not subject to such donee’s tax because it was not a simple donation. M. was merely in form but not in substance. Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic Parish of Victorias of which petitioner was the parish priest. In effect. Issue: WON the Deed of Exchange of the properties executed by the Pachecos and the Delpher Trades Corporation on the other was meant to be a contract of sale which.B.500 no par shares of stock. and predecessor of Fr. The ownership remained in the same hands. The donated amount was spent for such purpose. the donor M. De Luna v Abrigo FACTS: . the exemption herein must be denied. does not constitute an impairment of the Constitution. and the conveyances made by the company to his heirs remain a gift or a donation. Facts: De la Rama Steamship Co.

Diego p six parcels covered by the deed of donation. Even assuming it was validly death of the donor. 1979 . intimidation and undue influence. it was held that the general rules on prescription apply. 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. a This contained two conditions. with the consent of his wife. that she had not been guilty of any act of ingratitude. When the Foundation failed to comply with the conditions.  Through machination.R. two of which are da private respondent Mercedes Danlag-Pilapil: a The first deed pertained to parcels 1 & 2. Deeds of sale – valid and enforceable. 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 NOTES/F G.owner of the 6 parcels of land. FACTS: 1 Spouses Diego and Catalina Danlag were the owners of six parcels of unre 2 They executed three deeds of donation mortis causa. the RTC found . or encumber the properties donated during 3 Jan 16. On the matter of prescription of actions for the revocation of onerous donation. acco them. Donations declared revoked.  She accepted the donation in the same instrument. 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.Diego and Catalina Danlag sold parcels 5 Sept 29 . d All deeds contained the reservation of the rights of the donors (1 (2) to sell. respondents. the property would automatically revert to the donor. Diego Danlag.  Said donation inter vivos was coupled with conditions and. openly and and caused the transfer of the tax declarations to her name. The rules on prescription and not the rules on donation applies in the case at bar. Under the old Civil Code. The heirs did not file an MR and went straight to the SC. the donation was void for it left the donor. 1983 .  She alleged that she was an illegitimate daughter of Diego Danla  that she lived and rendered incalculable beneficial services to Die  In recognition of the services she rendered. 764 NCCjudicial decree of revocation of the donation) or in 10 years (based on art. 1) The Donee shall construct on the land and at its expense a Chapel. mortgage. Further. ISSUE: Whether the action prescribes in 4 years (based on art.De Luna donated a portion of a 75 sq. petitioners. Diego executed a parcels of land. Nursery. 1144 –enforcement of a written contract) RULING: 10 years The donation subject of this case is one with an onerous cause. No.Diego Danlag. the foundation was issued a TCT for area the lot donated while the remaining area was retained by the De Luna. Veronica 003 SPS.the Danlags executed a deed of revocation recovering the six par 6 March 1.decision in favor of the defendants and against the plaintiff. J. Mercedes caused the transfer of the parcels' tax d 4 June 28. However. de Luna “revived” the said donation by executing a Revival of Donation Intervivos with the following terms and conditions: It is true that under Article 764 of the New Civil Code. m.Mercedes Pilapil (private respondent) filed with the RTC title over the above parcels of land. 111904. In case of violation or non-compliance. vs. 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.that the deed of donation dated Janua through machinations and undue influence. lot to the Luzonian University Foundation. By a Deed of Segregation. Ordering all tax declaration issued in the name of Mercedes Danlag Y 9 In rendering the above decision. The RTC dismissed the petition on the ground of prescription (for being filed after 4 years). it is a settled rule that donations with an onerous cause are governed not by the law on donations but by the rules on contract. and  that respondent Diego had no legal basis in revoking the subject 7 Gestopas and the Danlags averred . 1979 and Aug 21. that: (1) the Danlag spouses shall continue to enjoy the fruits of th (2) the donee can not sell or dispose of the land during approval. 2000 QUISUMBING. October 5. The donation was embodied in a Deed of Donation Intervivos and was subject to certain terms and conditions. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA. Catalina Danlag plus two other parcels again in favor of private respondent Mercedes. c The last deed pertained to parcel 4. 1973 . COURT OF APPEALS and MERCEDES DANLAG y PILAPIL. b The second deed pertained to parcel 3. Diego 8 RTC . actions for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation. 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. 3) Automatic reversion in case of violation The Foundation accepted and the donation was registered and annotated in the TCT. and Kindergarten School to be named after St. and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

what was the need for such reservation if the donor and his spouse remained the owners of the properties? 6 Third. becomes irrevocable. make the properties conjugal to her own disadvantage. the Mercedes said donation was a donation that Mercedes failed to rebut the allegations of ingratitude she committed against Diego Danlag. private respondent bought from posed by the Court of Appeals. implied that the donor still had control and ownership over the donated properties. the Danlag spouses wereincluding aware ofthe theright difference between thetheir two real donations. there is a presumption of regularity in the performance of official duties. the above-described properties will be machination in preparing all the deeds of donation without explaining to Diego Danlag their contents. in the first place. 1973. January 25. had HELD: NO. but also prohibited the donee from selling or disposing the land without the consent and approval of the Danlag spouses. 2009 Posted by Coffeeholic Writes successors. the supposed revocation on September 29. 104171. We also note that the the Court of Appeals did not refer would to the lease tax declarations as to proofs of ownership but only as evidence of the intent by the donor to transfer ownership.. are not required to be accepted by the donees during the donors' lifetime. under the Public Land Act and theParity Amendment to the acceptance clause is a mark that the donation is inter vivos. this could hardly be consid donated to her. was an That for the same purpose as hereinbefore stated.F. 9 As correctly observed by the Court of Appeals. 7 Consequently. the instant petition for review is DENIED. Siltown the property private regularity in the issuance of the tax declarations. INC. they would not again donate the four lots already donated uponintention expiration of theisParity Amendment. That the Donee hereby accepts the donation and expresses her thanks andthe gratitude for the of kindness generosity of the Donor. 1999 "That for and in consideration of the love and affection which the Donor inspires in the Donee and as an act of liberality and generosity. As aptly noted by the CA. to give consent was merely intended to protect his usufructuary interests. That the purchase is against her self-interest. inthat prohibiting the donorthechanged donor to gather co his intention by donating inter vivos properties already donated mortis causais nothing on record. Acceptance1961 is a requirement for donations being in the form of a will. the Court of Appeals did not err in concluding that the right to dispose of the properties belonged to the donee. the above-described parcels of land. Under otherwise. Consequently. would be lost intend to donate inter vivos. that in case of our death. 1979. 12 As a rule. 3 In ascertaining the intention of the donor.ofindicating that the donorBasilan. respondent was required by the Central Bank to develop a rubber donation inter vivos. Petitioners cannot use the deed of revocation to show the spouses' intent because its validity is one of the issues in this case. the spouses changed their withon theJuly deed3. Labels: Case Digests.. said intention is clearly shown in paragraph 3 of said donation to 10 CA . a finding of fact by the CA. ET AL GR No. Realty Inc. petitioners allege that the appellate court overlooked the fact that the donor did not only reserve the right to enjoy the fruits of the properties.. however. The d revocation. weighs strongly in her favor and gives Private respondent books of accounts were examined by BIR for credence to her claim that her husband was manipulated and unduly influenced to make the purchase. 1 Before us. once accepted. assigns and Sunday. private respondent sold its Basilan land holding to Siltown 10 Petitioners aver that Mercedes' tax declarations in her name can not be a basis in determining the donor's intent. except on account of officiousness. the Donor further states that he has reserved for himself sufficient properties in full 3. As a condition for ownership or in usufruct enough for his maintenance of a decent American livelihood incorporation consonanceprior with to his July standing in society. Hence." approving manufacture tires andand other rubber products. not only disingeniousThus. and there developed a rubber plantation. August 2. V B. favor of Mercedes contained the following: February 24. DISPOSITIVE: WHEREFORE. private respondent. intended the government certain inparcels land in Tumajubong in to part with the six parcels of land. respondent for 25 years with an extension of 25 years at the option of 11 Petitioners assert that since private respondent purchased two of the six parcels of land from the donor. GOODRICH PHIL. all of the deed's provisions mustCIR be read together. imposed in the donation. On the alleged purchase by her husband of two parcels. not considered proofs of ownership. (Siltown) for P500. while and that committed fraud andInter Vivos. Article cover respondent's filing of the petition for quieting of title. In compliancetherewith. The RATIO: AFFIRMED. that the right to sell belonged to the donee. Prior to the execution of donation ownership rights of Americans over Public agricultural lands. theintent Justice rendered that 8 The attending circumstances in the execution of the subject donation alsoOn demonstrated the real of Secretary the donor to transferan theopinion ownership over the subject properties upon its execution. private 4 Note first that the granting clause shows that Diego donated the properties out of love and affection for the donee. dispose of the lands without the prior consent and approval by the Donor and her spouse during their lifetime. she herself did not believe the donation was inter vivos. donatedtoduring our life-time. the donation was 2 Crucial in resolving whether the donation was inter vivos or mortis causa ownership over the properties upon the execution of the deed. 13 Was the revocation valid? A valid donation. the Donor hereby gives. the records do not show that the donor-spouses instituted any acti ISSUE: WON the donation was revoked. or ingratitude. however.reversed the trial court. 1974. Taxation That it is the condition of this donation that the Donor shall continue to enjoy all the fruits of the land during his lifetime and that of his spouse and that the donee cannot sell or otherwise. Lastly. especially when it is supported by evidence on record. donations mortis causa. the donee accepted the donation. the donor reserved sufficient properties for his maintenance in accordance with his standing society. failure by the donee to . The deed merely stated: that the purchase by Mercedes of the two parcels of land covered by the Deed of Donation "WHEREAS. the reservation of lifetime usufruct indicates that the donor intended to transfer the naked ownership over the properties. We find that petitioners did not overcome this presumption of terms of the sale. to dispose or sell estate. where she 15 Finally.that the reservation clause in all the deeds of donation indicated that Diegocomply Danlag with did not themake charges any donation. 1974. get tax declarations from the government offices such that tax declarations are Phil. Code. donors' lifetime implied that ownership had passed to the donees and donation was already effective during the donors' lifetime. plantation. xxx Facts: Private respondent BF Goodrich Philippines Inc. is binding on us.of 1974 revocation. it was private respondent's husband who purchased the two parcels of land. but also fallacious.000 on January 21. proposition was erroneous because six years after. her heirs. showing that private respondent prohibited pertaining to the donated properties implied that the donation was inter vivos prevented the donor from gathering coconuts. it is reasonable to infer that the purchase was without private respondent's consent. and thatover we are one enjoying all 11 CA held that the reservation by the donor of lifetime usufruct indicated that he transferred Mercedes the ownership thethe donated properties. donates. 5 Second. and the donor's right 14 referred Petitioners to that cited of Mercedes' merely giving vehemence consent. 1935 constitution. transfer and conveys by way of donation unto the herein Donee.

June 29. The court thoroughly studied the records of this case and found no basis to disregard the 5-year period of prescription. NIRC (now Sec. Private respondents filed immediately an urgent request for reconsideration on reinvestigation disputing the tax assessment and tax liability. The fact that the complaint was sent to the DOJ. Siltown’s books of accounts were also examined.434. Commissioner filed a petition with the CA alleging grave abuse of discretion and lack of jurisdiction on the part of CTA for considering the affidavit/report of the revenue officers and the endorsement of said report as assessment which may be appealed to the CTA. CTA upheld the assessment. discretion on whether to issue an assessment. the law or prescription. A criminal charge need not only be supported by a prima facie showing of failure to file a required return. increasing the amount demanded for the alleged deficiency donor’s tax. investigation or assessment. An assessment must be sent to and received by the taxpayer. It was addressed to the Secretary of Justice not to the taxpayer. being a remedial measure.015. 331. 1997 NIRC which provides a 3-year prescriptive period for making assessments). respectively. It did not state a demand or period for payment. or to file a criminal caseagainst the taxpayer. al. An assessment is not necessary before criminal charges can be filed." FACTS: The BIR filed six criminal charges against Quirico Ungab. 331 of the Tax Code. for allegedly evading payment of taxes . Issues: (1) Whether or not the criminal complaint for tax evasion can be construed as an assessment. 1980.65 and P3. 1980 and March 16.850 in relation to said sale of the Basilan landholdings. Held: Applying then Sec. For the purpose of safeguarding taxpayers from any unreasonable examination. This examination resulted in the April 23. the Collector of Internal Revenueassessed deficiency donor’s tax of P1. As a corollary. The revenue officer’s affidavit merely contained a computation of respondent’s tax liability. it is clean that the October 16. The Commissioner’s motionto dismiss on the ground of the CTA’s lack of jurisdiction denied by CTA and ordered the Commissioner to file an answer. The Commissioner filed acriminal complaint for tax evasion against PRDC. 1980 "An assessment of a deficiency is not necessary to a criminal prosecution for wilful attempt to defeat and evade the income tax.236. interest and compromise penalty and was received by private respondent on April 9. Another assessment dated March 16. On review.498. and on the basis thereof. expressly set under Sec. 1981 assessments were issued by the BIR beyond the 5-year statute of limitations. Private respondent contested this assessment on November 24. 1975 assessment of private respondent for deficiency income tax which it duly paid. (PRDC) for 1986. CUSI 97 SCRA 877 GR No. not to issue an assessment.purposes of determining its tax liability for 1974. or to do both. CA reversed the decision of the court finding that the assessment was made beyond the 5-year prescriptive period in Section 331 of the Tax Code. should be liberally construed in order to afford such protection. The Commissioner denied private respondent’s request for reconsideration/reinvestigation on the ground that no formal assessment has been issued which the latter elevated to the CTA on a petition for review. 1980. (2) Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted. They joint affidavit was meant to support the criminal complaint for tax evasion. 1987 and 1988. and not to private respondent. The examination resulted in recommendation for the issuance of an assessment of P7. the law then in force. on October 10. The CIR had.35 for 1986 and 1987. Instead of complying with the order of CTA. it was not meant to be a notice of tax due and a demand to private respondents for the payment thereof. Issue: Whether or not petitioner’s right to assess has prescribed. a banana saplings producer. Held: The filing of the criminal complaint with the DOJ cannot be construed as a formal assessment. our tax law provides a Facts: The CIR authorized certain BIR officers to examine the books of accounts and otheraccounting records of Pascor Realty and Development Corp. 1981. statute of limitations in the collection of taxes. and must demand payment of the taxes described therein within a specific period. 203. Neither the Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or form of an assessment. in such tax evasion cases. GR No. surcharge. the exceptions to the law on prescription should perforce be strictly construed. shows that commissioner intended to file a criminal complaint for tax evasion. On appeal.020. 1981. 128315. its president and treasurer before the DOJ. CIR V PASCOR REALTY & DEV’T CORP et. Thus. 1999 UNGAB vs. The CA sustained the CTA decision and dismissed the petition. L-41919-24 May 30. CUSI UNGAB vs.

Subsequently. These two (2) interests are different in nature. subsequently filed a motion to quash on the ground that (1) the information are null and void for want of authority on the part of the State Prosecutor to initiate and prosecute the said cases. and thereafter filed a protest letter. and also submitted its formal protest. 1998. but a criminal prosecution for violations of the National Internal Revenue Code which is within the cognizance of courts of first instance. whereas delinquency is defined as the failure of the taxpayer to pay the tax due on the date fixed by law or indicated in the assessment notice or letter of demand. April 10. 197117. expanded withholding. The trial court denied the motion prompting the petitioner to file a petition for certiorari and prohibition with preliminary injunction and restraining order to annul and set aside the information filed. petitioner protested the said tax assessments. CIR [GR No. there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code. from respondent Commissioner of Internal Revenue (CIR) to allow it to examine their books of account and other accounting records for 1997 and other unverified prior years. and paid the corresponding taxes based on its own formula. petitioner received a Letter of Authority. Petitioner appealed to the CTA EB. petitioner cannot assail double imposition of interests as the law itself allows the simultaneous imposition of these two kinds of interests. having different nature for their existence. There is no double imposition of interests as the law clearly differentiates deficiency interest from delinquency interest. The contention is without merit. CIR WON petitioner should be liable to pay both the 20% deficiency interest and 20% delinquency interests. 1997. and the government's failure to discover the error and promptly to assess has no connections with the commission of the crime.and other violations of the NIRC. 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. 20) Takenaka Corporation v. Petitioner availed of the tax amnesty under RA No. final withholding. On 29 December 1999. . value-added and documentary stamp taxes for taxable year 1997. First Lepanto Taisho Insurance Corporation vs. A crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat the tax. RULING: Yes. and (2)that the trial court has no jurisdiction to take cognizance of the case in view of his pending protest against the assessment made by the BIR examiner. 2016 Posted by Schizophrenic Mind January 07. dated October 30. Petitioner filed a Motion for Partial Reconsideration on the separate interests imposed on its alleged deficiency tax. petitioner is liable to pay both interests. petitioner received the FLD/AN. CIR issued internal revenue tax assessments for deficiency income. withholding. Taxation at Thursday. Due to BIR’s inaction. while delinquency interest is imposed for the delay in payment of taxes. Ungab. Deficiency is defined as the amount still due and collectible from a taxpayer upon audit or investigation. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return. The Motion for Partial Reconsideration was denied. Hence. 2013] Post under case digests. On 24 February 2000. 9480. ISSUE: Is the contention that the criminal prosecution is premature since the CIR has not yet resolved the protest against the tax assessment tenable? HELD: No. ISSUE: year ending December 31. FACTS: After submitting its corporate income tax return for taxable FACTS: Petitioner received a PAN from the BIR. which ordered petitioner to pay the deficiency tax plus 20% deficiency interest and 20% delinquency interest on the unpaid amount. An assessment of a deficiency is not necessary to a criminal prosecution for wilful attempt to defeat and evade the income tax. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed. petitioner filed a petition for review with the CTA. Deficiency interest is imposed for the shortage of taxes paid.

precluded from seeking a refund for its overpayment in 1997 after respondent opted to carry-over and apply it to its future tax liability. because taxes are the lifeblood of our nation so its collection should Petitioner sought reconsideration. applicable to the case at bar is Section 69 of the old Tax Code. August 11. contending that respondent is be actively pursued without unnecessary impediment. 2010 Carpio. Section 76 of the 1997 NIRC controls.056. ruling that the right to claim for refund or tax credit must be governed by the law in effect at the Doctrine: time the excess credits were earned. MIRANTO CHECK BATAS NATIN following Section 76 of the 1997 NIRC. holding that the 1997 NIRC only CIR v. 2015 at 10:10 am (2010) (Case Digest.736. respondent simultaneously filed with the BIR and the Court of Tax Appeals (CTA) a claim for refund of its overpayment withheld.R.736. stipulations cannot defeat the right of the State respondent complied with the requirements of timely filing of the to collect correct taxes due on an individual or juridical person claim and its substantiation. Petitioner claimed that CD: Commissioner of Internal Revenue v.799.877. Thus. petitioner contends that both parties already stipulated that it correctly withheld the taxes due. Section 76 applies to respondent because by the time respondent filed its final adjustment return for 1997 on 15 April 1998.188. G. Mc. As correctly ruled by the CTA Second Division and in 1997 of P4. MC.” ISSUE: Whether a stipulation between contending parties as to correct withholding of taxes is sufficient evidence for deductibility of On 15 April 1999. indicating prospective application of laws such that they operate to govern the .George Food Industries. On 14 April 2000. Instead of applying to this amount its unused tax credit carried over from 1997 (P4. however. Issue: Whether or not the 1997 NIRC is the governing law Facts: On 15 April 1998.736. petitioner is of the belief that it is no longer required to present evidence to prove the correct payment of taxes from its tax liability the taxes withheld at source for 1998 and paid the balance of P5.GEORGE No.in its 1997 final return that it wished the amount “to be applied as credit to next year. CIR VS. the 1997 NIRC was already in force. respondent chose the latter. Thus. The CTA held that refund was proper because En Banc. Taxation) The CTA denied reconsideration. the pertinent law Pursuant to the general rule on the prospective application of laws. Exercising its option to either seek a refund of this amount or carry it over to the Section 76 should be applied following the general rule on the succeeding year as tax credit. having taken effect on 1 January 1998.188). respondent filed with the BIR its final adjustment Held: income tax return for the calendar year ending 31 December 1997. indicating a tax liability of P5.188. Yes. The Court of Appeals affirmed the CTA. respondent merely deducted RULING: As to service/contractors and purchases. J. covers transactions done after 1 January 1998. Inc. 174157 FOOD INDUSTRIES. respondent filed its final adjustment return for the expense calendar year ending 31 December 1998. October 20. The return indicated a net overpayment of P4. the 1997 NIRC operates to govern the conduct of corporate taxpayers the moment it took effect on 1 January 1998. INC.581.

None of respondent’s corporate transactions in 1997 is disputed here.266. 171251.conduct of corporate taxpayers the moment the 1997 NIRC took effect on 1 January 1998. or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. but was denied by Norberto R. he naturally expects the CIR to decide either positively or negatively. 1998. when a taxpayer protested an assessment. G. A keener appreciation of the nature and purpose of the varied provisions of the 1997 NIRC cautions against sanctioning this reasoning. it did not intend to limit it to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period.. The CIR. Precisely. maintained that Lascona’s failure to timely file an appeal with the CTA after the lapse of the 180-day reglementary period provided under Section 228 of the National Internal Revenue Code (NIRC) resulted to the finality of the assessment.] FACTS The Commissioner of Internal Revenue (CIR) issued an assessment against Lascona Land Co. HELD NO. Makati City. as in Section 228. Lascona alleged that the Regional Director erred in ruling that the failure to appeal to the CTA within thirty (30) days from the lapse of the 180-day period rendered the assessment final and executory. Revenue Region No. J.56. Inc. No. v. To sustain the rulings below is to subscribe to the untenable proposition that. (Lascona) informing the latter of its alleged deficiency income tax for the year 1993 in the amount of P753. Lascona appealed the decision before the CTA. taxpayers filing returns after 15 March 1998 can excuse their tardiness by invoking the 1977 NIRC because the transactions subject of the returns took place before 1 January 1998. Nor can it be argued that Section 76 determines the taxability of corporate transactions. however. on April 20. A taxpayer cannot be prejudiced if he chooses to wait for the final decision of the CIR on the protested assessment. Bureau of Internal Revenue. On April 12. Commissioner caused the investigation of the denunciation after which he found and held that no deficiency corporate income tax was due from the Meralco Securities Corporation since under the law then prevailing (in the case of dividends received by a domestic or . Meralco Securities v Savellano Facts: The late Juan G. Maniago (substituted in these proceedings by his wife and children) submitted to petitioner 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. [T]he Court has held that in case the Commissioner failed to act on the disputed assessment within the 180-day period from date of submission of documents. Lascona Land Co. Therefore. The lower courts grounded their contrary conclusion on the fact that respondent’s overpayment in 1997 was based on transactions ISSUE Whether the subject assessment has become final. Inc. These options are mutually exclusive and resort to one bars the application of the other. when the law provided for the remedy to appeal the inaction of the CIR.R. Odulio. because the law and jurisprudence have always contemplated a scenario where the CIR will decide on the protested assessment. Commissioner of Internal Revenue. This analysis suffers from the twin defects of missing the gist of the present controversy and misconceiving the nature and purpose of Section 76. thereby allegedly shortchanging the government of income tax due from 75% of the said dividends. Regional Director. More so. had Congress in the 1997 NIRC moved the deadline for the filing of final adjustment returns from 15 April to 15 March of each year. 8. executory and demandable due to the failure of petitioner to file an appeal before the CTA within thirty (30) days from the lapse of the One Hundred Eighty (180)-day period pursuant to Section 228 of the NIRC. Consequently. 05 March 2012 24NOV [PERALTA. a taxpayer can either: (1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period. Lascona filed a letter protest. 1999. Officer-inCharge (OIC). occurring before 1 January 1998.

The Commissioner filed a motion to dismiss. respondent judge's writ for the Commissioner to pay respondents 25% informer's reward is gross error and without factual nor legal basis. Mandamus may not be resorted to so as to interfere with the manner in which the discretion shall be exercised or to influence or coerce a particular determination In a letter. . falls within the jurisdiction of the Court of Tax Appeals and not of the Court of First Instance.foreign resident corporation liable to corporate income tax only 25% shall be returnable for the purposes of the tax. which is the primary responsibility of the executive branch of the government. It is furthermore a well-recognized rule that mandamus only lies to enforce the performance of a ministerial act or duty and not to control the performance of a discretionary power. *Respondent judge has no jurisdiction to take cognizance of the case because the subject matter thereof clearly falls within the scope of cases now exclusively within the jurisdiction of the Court of Tax Appeals.A. he is clothed under the National Internal Revenue Code and existing rules and regulations with discretionary power in evaluating the facts of a case and since mandamus win not lie to compel the performance of a discretionary power. In the case.00 as deficiency corporate income tax plus interests and surcharges due thereon and to pay 25% to Maniago as informer's reward. not controlled by the judgment or conscience of others. much less any collection. no informer's reward is due to private respondents as the informer's heirs.840. Issue: Whether or not mandamus is proper in this case Held: No. Notes: Informer's reward is contingent upon the payment and collection of unpaid or deficiency taxes. such decision or ruling is a valid exercise of discretion in the performance of official duty and cannot be controlled much less reversed by mandamus. Since no taxes are to be collected. he cannot be compelled to impose the alleged tax deficiency assessment. This action of the Commissioner was sustained by the Secretary of Finance. since the office of the Commissioner of Internal Revenue is charged with the administration of revenue laws. 2338. Since no assessment. and his decision is sustained by the Secretary. after the Commissioner who is specifically charged by law with the task of enforcing and implementing the tax laws and the collection of taxes had after a mature and thorough study rendered his decision or ruling that no tax is due or collectible. The Commissioner rejected Maniago's contention that the Meralco from whom the dividends were received is not a domestic corporation liable to tax. Discretion means the power or right conferred upon the office by law of acting officially under certain circumstances according to the dictates of his own judgment and conscience and *The determination of the correctness or incorrectness of a tax assessment to which the taxpayer is not agreeable. the Commissioner denied Maniago's claim for informer's reward on a non-existent deficiency.612. informer is entitled by way of reward only to a percentage of the taxes actually assessed and collected. the Meralco Securities Corporation averred that since no taxes have actually been recovered and/or collected. Maniago has no right to recover the reward prayed for The respondent judge rendered a decision granting the writ prayed for and ordering the Commissioner to assess and collect from the Meralco Securities Corporation the sum of P51. Moreover. mandamus may not be 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. arguing that since in matters of issuance and non-issuance of assessments. No deficiency taxes may therefore be assessed and collected against the said corporation. On the other hand. Purely administrative and discretionary functions may not be interfered with by the courts. Maniago filed a petition for mandamus to compel the Commissioner to impose the alleged deficiency tax assessment on the Meralco Securities Corporation and to award to him the corresponding informer's reward under the provisions of R. has been made in the instant case.

However. the MCIT is PAGCOR V. v. (2) Yes. Also.R. which is subject to income tax. an association of real estate developers and builders in the Philippines. the tax due is less than the tax withheld. by itself. The withholding agent-buyer’s act of collecting the tax at the time of the transaction. 2011 FACTS: . On the alleged violation of the equal protection clause. 160756. On the other hand. as amended. is not realized gain. The taxes withheld are in the nature of advance tax payments by a taxpayer in order to cancel its possible future tax obligation. The real estate industry is. i.. questioned the validity of Section 27(E) of the Tax Code which imposes the minimum corporate income tax (MCIT) on corporations. gain is never assured by mere receipt of the selling price. the capital is not being taxed. which prescribe the rules and procedures for the collection of CWT on sales of real properties classified as ordinary assets. An income tax is arbitrary and confiscatory if it taxes capital. making it less cumbersome for the parties to comply with the withholding tax scheme. What distinguishes the real estate business from other manufacturing enterprises. MCIT is imposed on gross income which is computed by deducting from gross sales the capital spent by a corporation in the sale of its goods. that the use of gross income as MCIT base amounts to a confiscation of capital because gross income. The use of the GSP or FMV as basis to determine the CWT is for purposes of practicality and convenience.. which do business similar to that of a real estate enterprise. If. the income tax base for sales of real property classified as ordinary assets remains as the entity’s net taxable income as provided in the Tax Code.. Inc. a class and can be validly treated differently from other business enterprises. Various safeguards were incorporated into the law imposing MCIT. is not contrary to the Tax Code which calls for the payment of the net income at the end of the taxable period. (CREBA).  Mandate the collection of income tax on a per transaction basis. No. They are installments on the annual tax which may be due at the end of the taxable year. the law authorizes the Secretary of Finance to suspend the imposition of MCIT if a corporation suffers losses due to prolonged labor dispute. March 9. the taxing power has the authority to make reasonable classifications for purposes of taxation. gross income less allowable costs and deductions. Hence. instead of the entity’s net taxable income as provided for under the Tax Code. and not capital. more particularly. otherwise known as the Consolidated Withholding Tax Regulations. Inequalities which result from singling out a particular class for taxation. BIR GR NO. those in the manufacturing sector. infringe no constitutional limitation. Inc. then the taxpayer shall pay the difference. recognizing the birth pangs of businesses and the reality of the need to recoup initial major capital expenditures. the corporation does not pay the MCIT. each manufacturing enterprise may have tens of thousands of transactions with several thousand customers every month involving both minimal and substantial amounts. The Hon. the law allows the carry-forward of any excess of the MCIT paid over the normal income tax which shall be credited against the normal income tax for the three immediately succeeding years.e. The knowledge of the withholding agent-buyer is limited to the particular transaction in which he is a party. Secondly. Under the Tax Code. for purposes of the imposition of the CWT. his basis can only be the GSP or FMV which figures are reasonably known to him. i. beginning on the 4th taxable year immediately following the year in which it commenced its business operations. is the very essence of the withholding tax method of tax collection. the cost of goods and other direct expenses from gross sales. the collection of income tax via the CWT on a per transaction basis. Issues: (1) Is the imposition of MCIT constitutional? (2) Is the imposition of CWT on income from sales of real properties classified as ordinary assets constitutional? Held: (1) Yes.  Go against the due process clause because the government collects income tax even when the net income has not yet been determined. Chamber of Real Estate and Builders’ Associations. CREBA also sought to invalidate the provisions of RR No.e. the taxpayer will be entitled to a refund or tax credit. but not on other business enterprises. or exemption. If the tax due is greater than the tax withheld. contrary to the Tax Code provision which imposes income tax on net income at the end of the taxable period. on the grounds that these regulations:  Use gross selling price (GSP) or fair market value (FMV) as basis for determining the income tax on the sale of real estate classified as ordinary assets. If the regular income tax is higher than the MCIT. 172087 MARCH 15. on the other hand. Clearly. et al G. a corporation can become subject to the MCIT at the rate of 2% of gross income. Firstly. CREBA argued. Despite the imposition of CWT on GSP or FMV. unlike net income.e. 2-98. since certain businesses may be incurring genuine repeated losses. Thirdly. among others.imposed only on the 4th taxable year immediately following the year in which the corporation commenced its operations. i. The imposition of the MCIT is constitutional. because it is income. The seller shall file its income tax return and credit the taxes withheld by the withholding agent-buyer against its tax due. force majeure and legitimate business reverses. The income from the sale of a real property is bigger and its frequency of transaction limited. 2010 Facts: Petitioner Chamber of Real Estate and Builders’ Associations. upon consummation of the sale. is not their production processes but the prices of their goods sold and the number of transactions involved. and  Contravene the equal protection clause because the CWT is being charged upon real estate enterprises.. when such MCIT is greater than the normal corporate income tax. Executive Secretary Alberto Romulo. by withholding the tax due from the income payable.

all contain (3) Dividend Income.A. P. 13. charges. No. – (a) Franchise Holder:  tax of any kind or form. which amended Section 27 (c) of NIRC by Franchise. or  Sec. except a franchise tax of 5% of the gross revenue. SSS. income or otherwise. which imposes a 10% VAT on sale of services and use or lease of properties. existing arrangements in connection with or related to the operations of the casino(s). No.  To consolidate the laws pertaining to the franchise and powers of PAGCOR. except a Franchise Tax of  With the enactment of R. 18696 (b) Government bonds. shall inure to the benefit of and extend to corporation(s). 1977. 1931. or individual(s) with whom the Corporation or operator has any contractual 1. Section 4. 8424 provides that GOCCs shall pay nature corporate income tax. which imposes a 10% Value Added Tax (VAT) on sale of goods and properties. No. invested within 6 months from the date the dividend income is received in the following:  Simultaneous to its creation.D. association(s). PAGCOR was created pursuant to PD No. relationship in connection with the operations of the casino(s)… Section 5.  PAGCOR's tax exemption was removed through P. but it was later restored by Letter (2) Income and other taxes. except petitioner PAGCOR. excluding PAGCOR from the enumeration of GOCCs that are exempt from payment of corporate (b) Others:  earnings derived from the operations conducted under the franchise  charges. securities. 1067-B3 was issued exempting PAGCOR from the payment o operation of the casino(s) or investments in any affiliate activity that will ultimately redound to of any type of tax.A. 1430  R. 1067-A2 on January 1. Exemptions.A. — x x x (c) BOI-registered or export-oriented corporation(s). income tax  Different groups came to this SC via petitions for certiorari and prohibition assailing the validity and constitutionality of R. the benefit of the Corporation. No.A. and PCSO  tax or charge attach in any way to the earnings of the Corporation. 1399 was later issued expanding the scope of PAGCOR's exemption.7 (1) Customs Duties. in particular: agency(ies). P. 9337.D. No. No. No. . fees or levies.A. No.D. 8424 took effect. or of Instruction No. which imposes a 10% VAT on importation of goods. The particular amendment 5%of the gross revenue or earnings derived by the Corporation from its operation under this that is at issue in this case is Section 1 of R. GSIS. as well as fees. a uniform proviso authorizing the President.D. 9337.  provided that such dividend income shall be totally exempted from income or other form of taxes if to raise the VAT rate to 12%. No. PHIC. or levies of whatever treasury notes. and  The fee or remuneration of foreign entertainers contracted by the Corporation or operator in pursuance of this provision Section 6. or any other corporation with whom the Corporation has any  P. upon the recommendation of the Secretary of Finance. taxes and other imposts on importations. government debentures. certain sections of the NIRC were amended. Section 27 (c) of R.

petitioner is no longer Constitution. as well as of Section 26 (2). No. It must apply equally to all members of the class. it must conform to the following requirements: 1. reads: enactment of R. the 2. The classification must. as amended by R.  Court dismissed all the petitions and upheld the constitutionality of R. 9337. 16-2005 insofar as it subjects PAGCOR to 10% VAT is null and void for being contrary to the Bicameral Conference Meeting dated April 18. 3555. 1997. 8424. 9337. law may operate only on some and not all of the people without violating the equal protection clause. Section 27 whether or not PAGCOR is still exempt from corporate income tax and VAT with the (c) of which. 9337.A. Article III of the Constitution. which section vests in Congress the exclusive authority to fix the rate of taxes. 8424. Sections 8 and 12 were alleged to be violative of Section 1. PAGCOR argues that such omission is unconstitutional. PAGCOR has been excluded corporations exempted from corporate income tax is valid and constitutional.A. but the exemption was  Section 1 of Republic Act No. exempt from corporate income tax as it has been effectively omitted from the list of GOCCs that are and of Section 1. 1950 and House Bill No. No. of the Committee on the Disagreeing Provisions of NIRC. No. 8424. To be valid. 16-2005. 9337. classification showing substantial distinctions which make for real differences. which section provides for the "no amendment rule" upon the last reading protection of the laws under Section 1. as an indispensable requisite. 9337.A. Senate Bill No. questioning the manner it was passed. It must not be limited to existing conditions only. 2. amending Section 27 (c) of the National Internal Revenue Code of granted upon the request of PAGCOR that it be exempt from the payment of corporate income tax. 9337. 4. No. The records of the  while RR No. amending R. No. not be arbitrary. the exemption of PAGCOR from paying corporate income tax was not based on a RULING  petition is PARTLY GRANTED. No. and Section 28 (1).18  It is not contested that before the enactment of R.13 specifically identifying PAGCOR as one of the franchisees subject to 10% VAT imposed under Section 108 of the National Internal Revenue Code of 1997.A. No.A. It must be based on substantial distinctions.A.  Legislative bodies are allowed to classify the subjects of legislation. and 3. amending Section 27 (c) of the NIRC of 1977. petitioner was one of the five ISSUE GOCCs exempted from payment of corporate income tax as shown in R. 9337. show that it is the legislative intent that PAGCOR be subject .The said provisions were alleged to be violative of Section 28 (2). Article VI of the Constitution. No.A.A. It must be germane to the purposes of the law.12  BIR issued RR No. Article III of the Constitution on due process.  under R. 2005. 3. Article exempt from it. or the guarantee of equal protection of the laws. from the enumeration of GOCCs that are exempt from paying corporate income tax. Article III of the Constitution: of a bill. No. Article VI of the  Under Section 1 of R. as it is violative of its right to equal VI of the Constitution.A. 9337. If the classification is reasonable. other technical aspects of the passage of the law. by excluding petitioner PAGCOR from the enumeration of government-owned and controlled  With the subsequent enactment of R. as amended by Republic Act No.

 In this case. hence. beyond the terms and provisions of the basic law. alteration.A.  Petitioner contends that the tax exemption under NIRC refers only to PAGCOR's direct tax liability and not to indirect taxes. because the said rule or regulation cannot go or repeal by the Congress when the common good so requires. 9337 is clear only as to the removal of petitioner's exemption from the payment of corporate income tax. considering that Section 1 of R. No. No. PAGCOR is also exempt from indirect taxes. gaming pools. PAGCOR’s franchise is subject to amendment. of the general rule that GOCCs shall pay corporate income tax. therefore. 9337.  PAGCOR failed to prove that it is still exempt from the payment of corporate income tax. No.A. like the VAT. like firmat regulam in casibus non exceptis. 8424 by withdrawing the FACTS . sports. Since PAGCOR is and other recreation or amusement places.  the express mention of the GOCCs exempted from payment of corporate income tax excludes all others. Article XII of the Constitution31 provides that no franchise or  It is settled rule that in case of discrepancy between the basic law and a rule or regulation issued right shall be granted except under the condition that it shall be subject to amendment. the Court holds that the provision subjecting PAGCOR to 10% VAT is invalid for being contrary to R. No. is not violative of the nonimpairment clause of the Constitution. No.A.A. 16-2005. No. 16-2005. 9337. No. 9337. No. which was already addressed above by this Court. exempt from VAT under R. as shown by the discussions in the Bicameral Conference Meeting. Section 11.A. expressed in the maxim: exceptio  no distinction on whether the taxes are direct or indirect. petitioner PAGCOR must be regarded as coming within the purview exemption of PAGCOR from corporate income tax.A.  The legislative intent. 9337 is it provided that petitioner can be subjected to VAT.  As regards franchises. cannot go beyond the provisions of R. 10% VAT under RR No. 9377. 9337 amended Section 27 (c) of the National Internal Revenue Code of 1997 by omitting PAGCOR from the exemption. which may affect any benefits to PAGCOR’s transactions with private parties. No.28 VAT. PAGCOR was granted a franchise to operate and maintain gambling casinos. the provision in TOSHIBA VS.  Under Section 11.A. 16-2005. Not being excepted. 9337 is null and void ab initio for violating the non-  The manner of charging VAT does not make PAGCOR liable to said tax. 9337. basketball.to the payment of corporate income tax. i. Hence. as follows:  Petitioner further contends that Section 1 (c) of R. Nowhere in R. the said regulatory provision is hereby nullified. to implement said law. R. is to require PAGCOR to pay corporate income tax.e.A. alteration or repeal by Congress such as the amendment under Section 1 of R. the omission or removal of PAGCOR from exemption from the payment of corporate income tax.A. CIR Section 1 of R..A. amending Section 27 (c) of R. football. the basic law prevails.  Anent the validity of RR No. the BIR exceeded its authority in subjecting PAGCOR to lotteries. No. hence. Article XII of the Constitution. clubs  RR No. SC disagree. etc….

the 30day period is not a mandatory requirement. 2006. 26. While the application for refund was pending with the CTA.A. 5. but in cases of CIR inaction. 21. invoking Section 112(D) of the NIRC. Mindanao II Geothermal Partnership The CTA EB also held that the 30-day period only applies when the CIR actually denies the claim. WON Mindanao II is entitled to the claim for refund/credit. it was not only possible. 6. but even acceptable. in relation to Section 39 of the Omnibus Investments Code of 1987. The CTA EB denied the CIR’s petition. when the old rule on the VAT treatment of PEZA-registered enterprises still applied. Mirant was a new doctrine and. fixing the reckoning date of the two-year prescriptive period at the close of the taxable quarter when the relevant sales were made. The CIR invoked the recently promulgated Mirant to support this theory. RULING: No. The CIR failed to act on the request within a period of 120 days. the CTA ruled that Toshiba is entitled to the credit/refund of the input VAT paid on its purchases of goods and services relative to such zero-rated export sales. to be subject to VAT. It reasoned that Atlas remained to be the controlling doctrine. 7916. or on Mar. 2006. standing by the Atlas doctrine. holding that the CTA Division correctly applied the Atlas ruling. or on Feb. 2006. either at ten percent [10%] or zero percent [0%]) Meanwhile. Mindanao II filed with the BIR an application for the refund or credit of accumulated unutilized creditable input taxes. The Court of Appeals reversed the decision of the CTA in the petition for review stating that Toshiba is a tax exempt entity under R. Under this old rule. Mindanao II is not entitled to the claim for refund or credit because its judicial claims were filed out of time. the Petition for Review of Mindanao II was filed out of time on Jul. Mindanao II did not file an appeal within the 30-day period. 2006. as stated in Section 112(A). The CTA Division partially granted the claim for refund. ISSUE Is Toshiba entitled to VAT refund? HELD YES. On appeal. The CIR filed a Motion for Partial Reconsideration pointing out that prescription had already set in. availing itself of the income tax holiday option under Section 23 of Republic Act No. 3. The CTA Division denied the CIR’s Motion for Partial Reconsideration. The CIR elevated the matter to the CTA EB via a Petition for Review. the Mirant case was promulgated. holding that the two-year prescriptive period for the filing a claim is to be reckoned from the date of filing of the corresponding quarterly VAT return and payment of the tax.Toshiba is a domestic corporation registered with the Philippine Economic Zone Authority (PEZA) as an Economic Zone (ECOZONE) export enterprise. . FACTS: ISSUE: On Oct. No. The judicial claim is seasonably filed as long as it is filed after the lapse of the 120-day waiting period but within two years from the date of filing of the return. As the two-year prescriptive period ended on Jun. 2004. as such. 21.It filed two separate applications for tax credit/refund of its unutilized input VAT payments. 2006. The CIR denied the application. 1999. for Toshiba. and that Mindanao II erroneously fixed Jul. the latter should not apply retroactively to Mindanao II who had relied on the old doctrine of Atlas and had acted on the faith thereof. but was denied for lack of merit. but filed a petition for review with the CTA on Jul. 30. 2006. CIR v. since the appeal to the CTA was filed beyond the last day to appeal. even if its application for refund was filed on time. both indirectly (as purchaser to whom the seller shifts the VAT burden) and directly (as seller whose sales were subject to VAT. contending that the judicial claim of Mindanao II was filed beyond the 30-day period. as the date from which to reckon the two-year prescriptive period for filing an application for refund or credit of unutilized input VAT. The CIR filed a Motion for Partial Reconsideration. 7916 thus not entitled to refund the VAT payments made in the domestic purchase of goods and services. the date when the return for the second quarter was filed. the Atlas case was promulgated.Such export sales took place before October 15.

As a general rule. the Court is called upon to interpret the provisions of a law designed to benefit investors with tax exemptions. SUMMARY OF RULES: Two-Year Prescriptive Period 1. 10. 2008. PHILIPPINE PHOSPHATE FERTILIZER CORP (UNDIGESTED) The financial planners of the State are often confounded by the precarious balance between the need to provide a conducive investment climate and the need to enhance revenue collections. 2003. Tax exemptions are generally construed strictly against the taxpayer. 21. The proper reckoning date for the two-year prescriptive period is the close of the taxable quarter when the relevant sales were made." As mentioned above. Its base of operations is in the Leyte Industrial Development Estate. The only other rule is the Atlas ruling. 5. applied from Jun. as provided by Section 112(A) of the NIRC. Petron Corporation (Petron). 2006. In the present Petition for Review. [2] The manufacture of fertilizers required Philphos to purchase fuel and petroleum products for its machineries. now known as the Philippine Export Zone Authority (PEZA). The San Roque case pronounced that the taxpayer can file the appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period. in this case. 3. 2006. Mindanao II filed its judicial claim after the issuance of BIR Ruling No. These fuel supplies are considered indispensable by Philphos. 8. the judicial claim need not fall within the two-year prescriptive period. DA-489-03 dated Dec. 2010. while Mindanao II’s situation is one of late filing. 2. Accordingly. while the BIR ruling was in effect when Mindanao II filed its judicial claim. 5. DA-489-03 was in force. which declares that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review. the 30-day period to appeal is both mandatory and jurisdictional. The reckoning date of the two-year period follows the rule prior to the advent of either Atlas or Mirant. as they are used to run the machines and equipment and in the transformation of raw materials into fertilizer. The San Roque case declared that the 30-day period to appeal is both mandatory and jurisdictional. or (2) 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. 10. an export processing zone. The 30-day period always applies. (San Roque) 3. 2007 – Sept. even during the time when BIR Ruling No. Mindanao II filed its judicial claim on Jul. Respondent Philippine Phosphate Fertilizer Corporation (Philphos) is a domestic corporation engaged in the manufacture and production of fertilizers for domestic and international distribution. (Aichi) 2. (Aichi and San Roque) 4. It is only the administrative claim that must be filed within the twoyear prescriptive period. (San Roque) 5. which imports the same and pays the corresponding customs duties to the Bureau .[1] It is also registered with the Export Processing Zone Authority (EPZA). when the purported ambiguities in the law are more imagined than real. is the close of the taxable quarter when the relevant sales were made.[3] The fuel supplies are secured domestically from local distributors. The factual backdrop of the case is uncomplicated.The application for refund was filed on time Aichi case: It is only the administrative claim that must be filed within the two-year prescriptive period. yet. DA-489-03. 5. 12. the rule cannot be properly invoked since the BIR ruling contemplates premature filing. 138 days after the lapse of the 30-day period on Mar. Late filing is absolutely prohibited. However. whether there is a denial or inaction on the part of the CIR. DA-489-03 was still in force. premature filing is allowed only if filed between Dec. but before its reversal on Oct. but provided an exception: BIR Ruling No. The judicial claims were filed out of time The 30-day period also applies to appeals from inaction. there should be no hesitation to rule for the taxpayer. The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day period. the proper reckoning date. As an exception to the general rule. 2010. (San Roque) 120+30 Day Period 1. or (2) 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. Atlas states that the two-year prescriptive period for filing a claim for tax refund or credit of unutilized input VAT payments should be counted from the date of filing of the VAT return and payment of the tax. when BIR Ruling No. (San Roque) COMMISSIONER OF CUSTOMSvs. 2003 – Oct.

the provisions of the EPZA Law are applicable in the present petition. since the Court itself is not a trier of facts it will respect primarily the findings of the ultimate trier of facts. Moreover. There is no need to inquire into the factual basis for the amount sought to be refunded.supplies. These benefits may. sorted. if upheld. When the fuel and petroleum products are delivered at Philphos’s manufacturing plant inside the Leyte Industrial Development Estate.[6] In a letter to the Bureau of Customs.[13] As noted by the CTA. the Commissioner argues that since the importation of the subject products. nor to local tax ordinances. The supplies are not subject to customs and internal revenue laws and regulations. and. had already been finally terminated. The EPZA Law. The incentives offered to enterprises duly registered with the PEZA consist. strengthening our export trade and foreign exchange position.[8] Hence. assembled. reducing domestic unemployment. and the export products leaving.77). the following provisions of law to the contrary notwithstanding.149.[7] It pointed out that Philphos. directly or indirectly. 66 (EPZA Law). the ad valorem and specific taxes to the Bureau of Internal Revenue. Consequently. all future claims for refund are thus barred. referring specifically to Section 17 thereof which exempts from customs and internal revenue laws. It likewise insists that controlling in this case is Section 18(i) of the EPZA Law. machineries. any duly registered enterprise sought to be held liable for the controverted custom’s duty because the importer had shifted the duty to the buyer would forever be precluded from challenging . namely: the CA. except those prohibited by law. graded. The CTA ruled for Philphos in a Decision[9] dated 5 October 1995. as they had been in this case. assailing the denial of the refund. thus creating more employment opportunities and infusing more dynamism to the vibrant interplay of market forces. 7916. installed. of tax exemptions.473. the arguments of the Commissioner invoking the provisions of the Tariff and Customs Code must fail. mixed with foreign or domestic merchandise or used whether directly or indirectly in such activity. repacked. Philphos indirectly paid as customs duties. Philphos made several purchases from Petron of fuels and other petroleum products used directly or indirectly in the manufacture of fertilizers for the period of October 1991 until June 1992. (emphasis supplied) The cited provision certainly covers petroleum supplies used. however. supplies brought into the export processing zone. In this case. spare parts and wares of every description. It states: SEC. articles. manufactured. the Philippine territory within the context of customs and revenue regulations. and January to June. Before this Court. hastening industrialization. by Philphos to facilitate its production of fertilizers. The matter was elevated by the Commissioner of Customs (Commissioner) to the Court of Appeals (CA). made by the seller Petron. the expectation is that the tax breaks ultimately redound to the benefit of the national economy. since the claim for exemption covers the years 1991 and 1992. but only the legal basis for the exemption. there is coalescence in the findings of the two courts below. Following the Commissioner’s interpretation.[11] Petitioner does not dispute the amount. 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. foreign and domestic merchandise. industrial and investment area. The Bureau of Customs denied the claim for refund in a letter dated 4 January 1993. Finally. or before the enactment of Republic Act No. the cited provisions of the Tariff and Customs Code if related to Section 17(1) of the EPZA Law would significantly render the argument strained and.77) in favor of Philphos. which eventually affirmed the CTA’s Decision in toto. the grant thereof must be explicit. Section 17 of the EPZA Law particularizes the tax benefits accorded to duly registered enterprises. It is the presence of tangible tax benefits attached to these zones which make them viable as investment locations. stored. Effectively thus. These zones are scattered throughout the country in remote areas and have the patent benefit of creating employment opportunities within their localities. is entitled to tax incentives under Presidential Decree No. cleaned. under which claims for refunds similar to Philphos’s are precluded. the basic policy in establishing export processing zones is to attract enterprises. 17. or otherwise processed.[4] Under this arrangement. and that the termination consequently barred any future claim for refund under Section 1603[16] of the same law is misplaced and inconsequential. at first blush. being an enterprise registered with the export processing zone. Still. – (1) Except as otherwise provided in this Decree. the amount of Twenty Million One Hundred Forty Nine Thousand Four Hundred Seventy Three Pesos and Seventy Seven Centavos (P20. has since been superseded by Republic Act No. Consideration of the general philosophy and thrust of the EPZA Law cannot be evaded. among others. especially foreign investors. [12] The enunciated policy of the EPZA Law is to encourage and promote foreign commerce as a means of making the Philippines a center of international trade. by establishing export processing zones in strategic locations in the Philippines.149. dated 18 September 1992.” However. the Commissioner posits that since a refund on tax credit partakes the nature of an exemption. Since Section 17(1) treats these supplies for tax purposes as beyond the ambit of customs laws and regulations. Philphos sought the refund of customs duties it had paid for the period covering the months of October to December 1991. Philphos is billed by Petron the corresponding customs duties imposed on these products. The export processing zone is intended to be a viable commercial. manipulated. obviate many of the benefits granted by Section 17(1). raw materials. and accelerating the development of the country. his point that the importation of the petroleum products by Petron was deemed terminated under Section 1202[15] of the Tariff and Customs Code. Philphos argued that the customs duties billed by Petron on Philphos should be refunded. equipment. place the government at a disadvantage as they preclude the collection of revenue. enticing as they do more enterprises to invest and do business within the zones. promulgated in 1972. shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances. 1992. ordering the issuance of a Tax Credit Certificate in the amount of Twenty Million One Hundred Forty Nine Thousand Four Hundred Seventy Three Pesos and Seventy Seven Centavos (P20. brought into the Zone to be sold.473.[5] During the period in question. 7916.[10] Both the CTA and the CA relied upon Section 17(1) of the EPZA Law to justify the conclusion that Philphos is entitled to the refund. Particularly. export processing zones are not intended to solely benefit investors. [14] From a macroperspective though. Tax Treatment of Merchandize in the Zone. It is clear that Section 17(1) considers such supplies exempt even if they are used indirectly.of Customs. Moreover. areas which ordinarily would be overlooked. or “The Special Economic Zone Act of 1995. a Petition for Review was filed with the Court of Tax Appeals (CTA). who will be manufacturing products primarily for export and be able to do so without their supplies and raw materials entering. subject to the minimal requirement that these supplies are brought into the zone. for the provision does not limit the tax exemption only to direct taxes. broken up.

On the other hand. the modality by which the exemption takes form. Instead. particularly fertilizer. They include allowance of net-operating loss carry-over. Inc. Philphos specifically requested the refund of Twenty Million One Hundred Forty Nine Thousand Four Hundred Seventy Three Pesos and Seventy Seven Centavos (P20. It is apparent that the petroleum supplies in question. (emphasis supplied) [23] Indubitably. The holding of the CTA on this point is illuminating: Contrary to the allegation of the Respondent that Section 17(1) does not provide for duty and tax exemption privilege. exemption from export tax. the general benefits accorded under Section 17. Philphos prayed for the issuance of “corresponding tax credits” in the same amount. an option not proximately available if the taxpayer chooses instead to receive a tax credit. x x x. [21] Solutio indebiti is a quasi-contract. A zone registered enterprise shall also enjoy the following incentives: xxx (i)Tax credit. For Section 17(1) is determinative of the fundamental question whether there is legal basis for the claim of exemption. There is an apparent distinction between this provision and Section 17(1) which exempts from taxation supplies used indirectly by the registered enterprise.[25] Section 18 does not serve the purpose of qualifying the benefits provided under Section 17. by specific mandate of Section 17(1) of the EPZA Law. deductions for labor training services. foreign exchange assistance. and deductions for organizational and pre-operating expenses. [18] to the effect that the claim for refund of customs duties in protestable cases may be foreclosed by the failure to file a written protest. That phrase shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances. a tax refund requires a physical return of the sum erroneously paid by the taxpayer.149. the phrase will also include exemption from other rules and regulations which are normally followed in the discharge of importation such as the filing of import entries. Additional Incentives. – Every registered zone enterprise shall enjoy a tax credit equivalent to the sales. thus the claim for refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the New Civil Code. 18. in addition to. exemptions for local taxes and licenses. Still. The Civil Code is not a customs and internal revenue law. This is indicated by the use of the words “additional” and “shall also” in the first paragraph of Section 18. the relief sought for erroneously paid taxes would be a return to the taxpayer of the amount paid to the government. processing or production of its export products and forming part thereof. It should be noted that in its initial letter to the Commissioner dated 18 September 1992. Formally. and precludes Philphos’s claim for refund. Section 18(i) does not impose limitations on the exemptions granted in the preceding provisions. it enumerates another class of incentives also available to registered enterprises.[19] This leads to another question well-worth resolving — what is the prescriptive period which a duly registered enterprise should observe in applying for a refund to which it is entitled under the EPZA Law? The EPZA Law itself is silent on the matter. the phrase cannot be interpreted to exclude these impositions. These “additional incentives” under Section 18 are to be enjoyed in conjunction with the incentives under Section 17. and that the provision clearly states that such supplies must form part of the export products. examinations and other requirements attendant to the importation of goods into the country. are exempt from taxation under Section 17(1). accelerated depreciation. which physically do not form part of the exportable fertilizers.77). while a tax credit involves the application of the reimbursable amount against any sum that may be due and collectible from the taxpayer. among others. Obviously. There can be no doubt that the additional incentives under Section 18 are separate and distinct from those under the preceding section. The incentive given under Section 17(1) is broader than a mere tax exemption. as it does not affect the key disposition. and apart from. if at all. However. and the prescriptive periods under the Tariff and Customs Code and other revenue laws are inapplicable. [27] Yet. the taxpayer to whom the tax is refunded would have the option. financial assistance. Still. A plain reading of Section 18(i) unmistakably indicates that the tax credit as an additional incentive avails only if the supplies actually form part of the export products. there is no vehement insistence on the part of Philphos that the return of the amount paid should come in the form of a refund or a credit.[17] Even our recent ruling in Nestle Philippines. Hand in hand with its patent noxiousness to the spirit of the EPZA Law.[29] . but would only affect. to invest for profit the returned sum. More so.[28] On the practical side.the duty. Still. there are unmistakable formal and practical differences between the two modes. this acknowledged distinction is not a cause for abject reversal of the assailed decisions. [26] It may be that there is no essential difference between a tax refund and a tax credit since both are modes of recovering taxes erroneously or illegally paid to the government. The Court has in the past sanctioned the application of the provisions on solutio indebiti in cases when taxes were collected thru error or mistake. Even the Commissioner admits the distinct character of Section 18. Still. The Tax Reform Act of 1997 authorizes either a refund or credit as a means of recovery of tax erroneously or illegally collected. the approach calls for the unwarranted application of the Tariff and Customs Code to investors and players in the zones. The phrase is so broad to include not only the exemption from customs duties and taxes but everything required in the enforcement of the customs and internal revenue laws save on the exceptions and conditions specified in the EPZA law itself. as well as regulations. compensating and specific taxes and duties on supplies. This does not mean though that prescription will not lie. the provisions of law to the contrary notwithstanding cannot be interpreted in any other manner than to mean that merchandise or supplies brought into the zone are exempt from customs duties and taxes. raw materials and semi-manufactured products used in the manufacture. as the Civil Code provisions on solutio indebiti[20] may find application. Philphos’s right to refund has not yet prescribed. v.[22] Clearly then. Court of Appeals. but no tax credit could be claimed on them under Section 18(i).473. Considering that the customs and internal revenue laws are primarily enacted to impose duties and taxes. which under the EPZA Law are beyond the reach of domestic customs and tax laws. the Commissioner argues that Section 18(i) of the EPZA Law specifically controls the issuance of a tax credit equivalent to duties on supplies purchased. which it is not in the first place obliged to pay under the law. The provision reads: SEC. this Court disagrees. in its Petition for Review before the CTA. is not apropos in the case at bar because petitioner therein was not a duly registered enterprise under the EPZA Law and thus not entitled to the exemptions therein.[24] The divergent natures of the benefits under Sections 17 and 18 become readily apparent upon examination of the additional incentives enumerated under Section 18. Section 18 does not exclude or otherwise limit the broad grant of benefits accorded by Section 17. the Commissioner insists that it is Section 18(i) of the EPZA Law that is applicable. Neither would the prescriptive periods or procedural requirements provided under the Tariff and Customs Code serve as a bar for the claim for refund.

The disposition arises not out of a blind solicitude towards the concerns of business.149. The MPR was denied. The assailed Decisions of the Court of Appeals dated 4 August 2000 and of the Court of Tax Appeals dated 5 October 1995 are AFFIRMED.473. the 2-year period should be reckoned from the close of the taxable quarter when the sales were made. the Petition for Review is DENIED. the revenue collectors of the government should be cautious before attempting to gut away at concessions the State itself has deemed worthy of award to deserving investors. No costs. and (2) when no decision is made after the 120-day period. There is neither logic nor need to cast a speck of uncertainly on a doubt-free situation to resolve the resulting forced question in favor of the government. as affirmed by the CA. petitioner argued that the simultaneous filing of the administrative and the judicial claims Applying the two-year period to judicial claims would render nugatory Section 112(D) of the NIRC. In addition. respondent is not entitled to the refund/credit for having been filed in violation of Section 112(D) of the NIRC. Respondent also filed a petition for review with the CTA. It is unsound practice and uncouth behaviour to invite over guests to dinner at home. Hence. Reckoning point for the two-year prescriptive period for claiming input VAT refund Section 112(A) of the NIRC is the applicable provision which provides that the unutilized input VAT must be claimed within 2 years after the close of the taxable quarter when the sales were made. The CTA division partially granted the claim of respondent.BATASnatin Prescriptive period applies only to the administrative claims CIR v. which expired on September 29. WHEREFORE. However. then charge them for the use of the silverware before allowing them to dine. who affirmed the partial tax refund/credit. The second paragraph of Section 112(D) of the NIRC envisions two scenarios: (1) when a decision is issued by the CIR before the lapse of the 120-day period. RULING: No. FACTS: Respondent filed a claim for refund/credit of input VAT with the BIR through the DOF One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center. a refund of the same amount is warranted under the circumstances. with modification that in lieu of the issuance of a Tax Credit Certificate.77) be refunded to respondent Philippine Phosphate Fertilizer Corporation. ISSUE: WON respondent is entitled to the refund/credit. the taxpayer has 30 days within which to file an appeal with the CTA. 2004. a prior filing of an administrative claim is a "condition precedent" before a judicial claim can be filed. Therefore.The CTA. No elaboration was made as to why the relief granted was a tax credit and not a refund. CIR. In both instances. . the taxpayer’s recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. MICROSOFT PHILIPPINES VS. He reasoned that since the year 2004 was a leap year. According to the petitioner. Section 112(D) of the NIRC clearly provides that the CIR has 120 days from the date of the submission of the complete documents in support of the application for tax refund/credit within which to grant or deny the claim. Indeed. and not erroneously/illegally collected taxes. contravenes Sections 112 and 229 of the NIRC. However. Petitioner filed a Motion for Partial Reconsideration insisting that the administrative and the judicial claims were filed beyond the two-year period to claim a tax refund/credit provided for under Sections 112(A) and 229 of the NIRC. The grant of exemption under Section 17(1) is clear and unambiguous.VAT Zero Rating . the filing of the claim for tax refund/credit on September 30. but from the duty to affirm and enforce a crystal-clear legislative policy and initiative intent. the amount of Twenty Million One Hundred Forty Nine Thousand Four Hundred Seventy Three Pesos and Seventy Seven Centavos (P20. ordered the issuance of a Tax Credit Certificate in favor of Philphos. if after the 120-day period the CIR fails to act on the application for tax refund/credit. the 120-day period is crucial in filing an appeal with the CTA. In case of full or partial denial by the CIR. SO ORDERED. but we can deduce that such was the relief afforded as it was the relief prayed for by Philphos in its Petition before the tax court. the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. which already provides for a specific period within which a taxpayer should appeal the decision or inaction of the CIR. a slight modification of the award is necessary so as not to render nugatory the proscription under Section 18(i) that a tax credit avails only if the supplies form part of the export product. 2004 was beyond the two-year period. Petitioner elevated the case to the CTA EB. Aichi Forging Company Aichi doctrine only applies to claims for refund or credit of excess input VAT. Instead of awarding a Tax Credit Certificate to Philphos.

7–95. The Ruling of the CTA In a Decision dated 26 May 2003. the dispositive portion of which are quoted hereunder as follows:chanRoblesvirtualLawlibrary SECOND DIVISION G.910.338. INC. [Petitioner] is hereby ORDERED to ISSUE A TAX CREDIT CERTIFICATE to [respondent] in the amount of P8. The Facts The factual antecedents of follows:chanRoblesvirtualLawlibrary the case are as Petitioner is the duly appointed Commissioner of Internal Revenue empowered to perform the duties of said office including. the CTA likewise made a factual finding that both the administrative and judicial claims of respondent were timely filed within the two–year prescriptive period required by the NIRC of 1997. or on 27 July 1998. 26 July 2000. respondent filed with the One–Stop Shop Inter– Agency Tax Credit and Duty Drawback Center of the Department of Finance (DOF) an application for Tax Credit/Refund of VAT paid for the second quarter of 1998 in the aggregate amount of P29.050. 1 As a corollary thereto. respondent filed a Petition for Review before the Court of Tax Appeals (CTA) on 30 June 2000 docketed as CTA Case No.. v. Thereafter.10 .: To obviate the possibility that its decision may be rendered void. 9 Relevant thereto.44.2 Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside the 16 September 2005 Decision 3 of the Court of Appeals (CA) in CA–G.049. among others. 6129. is a corporation duly organized and existing under and by virtue of the laws of the Philippines.44 for the period covering 1 April 1998 to 30 June 1998. as amended. Petitioner.179. No. to inquire into the existence of jurisdiction over the subject matter is the primary concern of a court. showing the actual payment of VAT on the importation of capital goods as required by Section 4. as amended. official receipts.00 representing input VAT on importation of capital goods. 4 the CTA partially granted respondent’s Petition and ordered petitioner to issue a tax credit certificate in favor of the former in the reduced amount of P8. the power to decide.00 representing input VAT on importation of capital goods. the CTA looked into respondent’s compliance with the requirements set forth in the case of Air Liquid Philippines v. Thus. and Section 4. Commissioner of Internal Revenue and Commissioner of Customs. Inc. INC.049. reckoned from the date of filing the original quarterly VAT Return for the second quarter of taxable year 1998. and exporting advance and large–scale integrated circuits components (ICs). petitioner’s (respondent’s) claim for refund of input VAT in the sum of P21. CTA Case No. March 12. (FORMERLY INTEL PHILIPPINES MANUFACTURING.R. the instant petition is PARTIALLY GRANTED. 8 As to respondent’s claim for refund of input VAT on capital goods. 5652.049. Respondent Silicon Philippines. by its own initiative. WHEREFORE. and held that said claim be partially denied considering that only the amount of P8.179.338. On 6 May 1999. import remittances and airway bills. SP No. In other words. 2004. Obviously.5 The CTA denied respondent’s claim for refund of input VAT on domestic purchases of goods and services attributable to zero–rated sales on the ground that the export sales invoices presented in support thereto do not have Bureau of Internal Revenue (BIR) permit to print. since no final action has been taken by petitioner on respondent’s administrative claim for refund.179. J. respondent did not wait for the decision of the CIR or the lapse of the 120-day period before filing the judicial claim with the CTA.” all in violation of Sections 1136 and 2387 of the National Internal Revenue Code (NIRC) of 1997. SILICON PHILIPPINES. developing.104–5(b) of RR No. the administrative and the judicial claims were simultaneously filed on September 30. Respondent. import declarations.910. However. approve and grant refunds or tax credits of erroneously or excessively paid taxes. DECISION PEREZ. 2014 COMMISSIONER OF INTERNAL REVENUE. 169778.Mandatory nature of the 120-30 day rule The observance of the 120-30 day rule is mandatory and jurisdictional. manufacturing. the Court can. engaged primarily in the business of designing. 80886 granting respondent’s claim for refund of input Value Added Tax (VAT) on domestic purchases of goods and services attributable to zero–rated sales in the amount of P21. while the sales invoices do not show that the sale was “zero– rated.R. rule on the question of jurisdiction.108–1 of Revenue Regulations (RR) No.44 attributable to zero–rated sales is hereby DENIED for lack of merit. representing its alleged unutilized input tax.559. although not raised by the parties. In this case. on the other hand. for thereon would depend the validity of its entire proceedings. the taxpayer may appeal to the CTA within 30 days only in case there is a full or partial denial by the CIR of the application for refund before the lapse of the 120-day period or in case the period lapses without the action on the part of the CIR. the Court ruled that the respondent’s filing of the judicial claim with the CTA was premature as no jurisdiction was acquired by the CTA. 7–95.).00 have been validly supported by documentary evidence such as suppliers’ invoices.

or its findings are contrary to the admissions of both the appellant and the appellee.910. although truly helpful in facilitating the determination of whether the sales are subject to the normal rate of ten percent (10%) tax or the preferential rate at zero percent. the same finding was affirmed and adopted by the CA in the assailed 16 September 2005 decision20 by expressing that respondent “filed the application for tax refund or credit within the prescribed period of two (2) years after the close of the taxable quarter when the sales were made” 21 in accordance with Section 112(A) of the NIRC of 1997. upon its findings of compliance with Section 112(A) of the NIRC of 1997.On 4 November 2003.19 Likewise. applicable provisions of the NIRC of 1997. being jurisdictional in nature. which. would definitely result in a different conclusion. this Court finds it apropos to determine whether or not the CTA indeed properly acquired jurisdiction over respondent’s instant claim taking into consideration the timeliness of the filing of its judicial claim as provided under Section 112 of the NIRC of 1997. (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent.44 representing its unutilized creditable input taxes for the period covering 1 April 1998 to 30 June 1998 (second quarter). does not necessarily mean that the sales are not in fact “zero–rated.910. However. it was the CA’s ruling that the omission to reflect the word “zero–rated” in its invoices is not fatal to respondent’s case considering that the absence of the word “zero–rated” in the invoices. since the BIR permit to print is not among those required to be stated in the sales invoices or receipts to be issued by a taxpayer pursuant to Sections 113 and 237 of the NIRC of 1997. as amended. the omission to indicate the said BIR authority or permit to print does not totally militate against the evidentiary weight of respondent’s export sales invoices as to defeat its claim for refund.338. as amended.R.910. . it can only take cognizance of such matters as are clearly within its jurisdiction. the CTA denied respondent’s Partial Motion for Reconsideration (on the denial of its claim for tax credit or refund of input VAT paid in the sum of P21. and (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties. Simply put. (2) when the inference made is manifestly mistaken. and granted respondent’s claim for tax refund/credit in the total amount of P21. (3) when there is grave abuse of discretion. as amended. if properly considered.22 In view thereof. it bears emphasis that the determination of the issue presented in this case requires a review of the factual findings of the CTA. as amended. as amended. the factual and legal allegations contained in the pleadings filed by both parties and found by the court a quo.” Sections 113 and 237 of the NIRC of 1997.13 The Issue The core issue for the Court’s resolution is whether or not respondent is entitled to its claim for refund or issuance of a tax credit certificate in its favor in the amount of P21. although the parties have not raised the issue of jurisdiction. upon an assiduous review of the said factual findings. only questions of law may be raised. this Petition for Review wherein petitioner seeks the reversal of the aforementioned decision on the sole ground that the CA gravely erred on a question of law when it ordered a refund of respondent’s VAT Input taxes on the basis of unauthorized and illegally printed receipts in violation of the provisions of the NIRC of 1997.44) for lack of merit. the Court had recognized several exceptions to this rule. Our Ruling At the outset. surmises or conjectures.12 Consequently. Accordingly. Clearly. It should be recalled that the CTA is a court of special jurisdiction. which merely stated that the securement of the BIR authority to print by all persons engaged in business is necessary before a printer can print receipts or sales or commercial invoices issued in the course of one’s business.338. It is well settled that in a petition for review on certiorari under Rule 45 of the Rules of Court. Thus.17 Records of this case reveal that the CTA made a factual finding that both the administrative and judicial claims of respondent were timely filed within the two–year prescriptive period required by the NIRC of 1997. nevertheless. and rendered its judgment on 26 May 2003. once properly considered. (6) when in making its findings the CA went beyond the issues of the case. pursuant to the applicable provisions of the NIRC of 1997. as amended. or on 27 July 1998. and existing jurisprudential pronouncements. to wit: (1) when the findings are grounded entirely on speculation.44 in its Decision dated 16 September 2005. respondent appealed to the CA by filing a Petition for Review under Rule 43 of the Rules of Court on 10 December 2003. (8) when the findings are conclusions without citation of specific evidence on which they are based. are silent on the requisite of printing the word “zero–rated” in the invoices. this Court may motu proprio determine whether or not the CTA has jurisdiction over respondent’s judicial claim for refund taking into consideration. and of the CA. docketed as CA–G.338. the CA reversed and set–aside the CTA decision dated 26 May 2003. a negative finding as to the timeliness of respondent’s judicial claim. 80886. (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. 14 The Court is not a trier of facts and does not normally undertake the re– examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court 15 – and they carry even more weight when the CA affirms the factual findings of the trial court. (4) when the judgment is based on a misapprehension of facts.18 This was the CTA’s legal basis why it took cognizance of the appeal. would justify a different conclusion. (7) when the findings are contrary to the trial court. In addition. it does not state that the same must be shown in the receipts or invoices. reckoned from the date of filing the original quarterly VAT Return for the second quarter of taxable year 1998. Moreover.16 However. (5) when the findings of facts are conflicting. as amended. tried the case on the merits. The Ruling of the CA The CA found that respondent’s failure to secure a BIR authority or permit to print invoices or receipts does not completely destroy the integrity of its export sales invoices in support of its claim for refund. As such. as amended. as amended. SP No. 11 Aggrieved. absurd or impossible. the BIR permit to print was only mentioned under Section 238 of the same code.

Refunds or Tax Credits of Input Tax. The exercise of such statutory privilege requires strict compliance with the conditions attached by the statute for its exercise. Jurisdiction. as herein provided. Philex’s judicial claim was indisputably filed late. Taganito Mining Corporation v. except transitional input tax. In the consolidated cases of Commissioner of Internal Revenue v. effect of appeal. fees or other charges. The right to appeal to the CTA from a decision or “deemed a denial” decision of the Commissioner is merely a statutory privilege. the taxpayer only has 30 days within which to appeal said adverse decision or unacted claim before the CTA. or from the close of the taxable quarter when the sales attributable to the input VAT were made following the Mirant and Aichi doctrines. was already the applicable law at the time that respondent filed its administrative and judicial claims. Failure to do so. the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling. – In proper cases. from submission of complete documents in support of the administrative claim within which to act on claims for refund/applications for issuance of the tax credit certificate. San Roque Power Corporation. Commissioner of Internal Revenue. reads:chanRoblesvirtualLawlibrary Section 7. association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue. penalties imposed in relation thereto. x x x x26 (Emphasis and underscoring supplied) Pertinent to the instant case. prior to seeking judicial recourse before the CTA.28 the Court En Banc finally settled the issue on the proper interpretation of Section 112 of the NIRC of 1997. “deemed a denial” of Philex’s claim. as amended. within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty–day period. Upon denial of the claim or application. Philex’s failure to do so rendered the “deemed a denial” decision of the Commissioner final and unappealable. Philex’s judicial claim will have to be rejected because of late filing.23 which was thereafter amended by RA No. refunds of internal revenue taxes. The Atlas doctrine cannot save Philex from the late filing of its judicial claim. Additionally. during. Philex had 30 days from the expiration of the 120–day period to file its judicial claim with the CTA. within two (2) years after the close of the taxable quarter when the sales were made. – (A) Zero–rated or Effectively Zero–rated Sales. in part. In case of full or partial denial of the claim for tax refund or tax credit. or upon expiration of the 120–day period. to the extent that such input tax has not been applied against output tax: x x x x x x x (D)27 Period within which Refund or Tax Credit of Input Taxes shall be Made. or after the Atlas case. the taxpayer affected may. not a constitutional right. Commissioner of Internal Revenue (San Roque). as amended. by express provision of law. pertaining to the proper observance of the prescriptive periods provided therein. further reading of the provisions of Section 112 shows that under paragraph (D) thereof. apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. In any event. – Any VAT–registered person. which categorically provides as follows:chanRoblesvirtualLawlibrary Section 112. 1125. The said provision. Philex’s case is not one of premature filing but of late filing. Section 11 of the same law prescribes how the said appeal should be taken. whether governed by jurisprudence before. a VAT–registered person may apply for the issuance of a tax credit certificate or refund of creditable input tax attributable to zero–rated or effectively zero–rated sales within two (2) years after the close of taxable quarter when the sales or purchases were made. whose sales are zero–rated or effectively zero–rated may. that a taxpayer–claimant only had a limited period of thirty (30) days from the expiration of the 120–day period of inaction of the Commissioner of Internal Revenue to file its judicial claim with this Court. Philex did not also file any petition with the CTA within 30 days after the expiration of the 120–day period. as amended. The relevant portion of the discussions pertinent to the focal issue in the present case are quoted hereunder as follows:chanRoblesvirtualLawlibrary Unlike San Roque and Taganito. Philex failed to comply with the statutory conditions and must thus bear the consequences. Philex filed its judicial claim long after the expiration of the 120–day period. and Philex Mining Corporation v. – Any person.29(Emphasis and italics supplied) Undoubtedly. x x x x25 (Emphasis supplied) Furthermore. Whether the two–year prescriptive period is counted from the date of payment of the output VAT following the Atlas doctrine. x x x x (Emphasis and underscoring supplied) Based on the foregoing provisions. 9282. it becomes apparent from the foregoing jurisprudential pronouncements and the applicable provisions of Section 112 of the NIRC of 1997. or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue. Philex did not file any petition with the CTA within the 120–day period. The inaction of the Commissioner on Philex’s claim during the 120–day period is. or the failure on the part of the Commissioner to act on the application within the period prescribed above. the judicial claim shall . to wit:chanRoblesvirtualLawlibrary Section 11.24 defines the appellate jurisdiction of the CTA.Section 7 of Republic Act (RA) No. Who may appeal. it is worth mentioning that Section 112 of the NIRC of 1997. – The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. appeal the decision or the unacted claim with the Court of Tax Appeals. in fact 426 days after the lapse of the 120–day period. (1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments. the Commissioner of Internal Revenue is given a 120–day period. 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 accordance with Subsections (A) hereof.

2005. in Panasonic Communications Imaging Corporation of the Philippines v. This conversion from regulation to law did not diminish the binding force of such regulation with respect to acts committed prior to the enactment of that law. the mandatory rule is that a judicial claim must be filed with the CTA within thirty (30) days from the receipt of the Commissioner’s decision denying the administrative claim or from the expiration of the 120–day period without any action from the Commissioner. Section 112(D) specifically states that in case of failure on the part of the Commissioner of Internal Revenue to act on the application within the 120–day period prescribed by law. Hence. pursuant to Section 4. the rule that applied was Section 4. Since respondent’s judicial claim for the aforementioned quarter was filed before the CTA only on 30 June 2000. then the administrative claim may be considered to be denied by inaction. it is worth mentioning that the High Court already ruled on the significance of imprinting the word “zero–rated” for zero–rated sales covered by its receipts or invoices. the NIRC of 1997. It already required the printing of the word “zero–rated” on the invoices covering zero–rated sales. as follows:chanRoblesvirtualLawlibrary (1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero–rated or effectively zero–rated sales were made. (4) All taxpayers. or even by express consent of the parties. 36 As regards the prints on the supporting receipts or invoices. If the 120–day period expires without any decision from the CIR. When R. The 120–day period may extend beyond the two–year period from the filing of the administrative claim if the claim is filed in the later part of the two–year period. and its corresponding judicial claim on 30 June 2000. (3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120–day period without any action from the CIR. the strict observance in applying the provisions of Section 112 of the NIRC of 1997 is proper. otherwise. however. in applying therein the ruling in the San Roque case.. . and Mindanao I Geothermal Partnership v. respondent only has thirty (30) days after the expiration of the 120–day period to appeal the unacted claim with the CTA. In the more recent consolidated cases of Mindanao II Geothermal Partnership v.31 which was way beyond the mandatory 120+30 days to seek judicial recourse.108–1 of RR 7–95. detailed hereunder as follows:chanRoblesvirtualLawlibrary Taxable year 1998 Last day of the 120–day period under Section Filing date of 112(C) from the the date of filing of administrative the claim administrative claim in case of inaction 2nd Quarter (1 April 6 May 1999 1998 to 30 June 1998) Last day of the 30– day period to judicially appeal said inaction 3 3 September October 199930 1999 Filing date of the Petition for Review 30 June 2000 Notably. was already in effect.A. Applying the foregoing discussion in the case at bench. it must be emphasized that jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy. 9337 amended the 1997 NIRC on November 1. Clearly therefore. failure of respondent to observe the 30–day period under said Section through its belated filing of the Petition for Review before the CTA warrants a dismissal with prejudice for lack of jurisdiction. i.38 the Second Division of this Court enunciated:chanRoblesvirtualLawlibrary But when petitioner Panasonic made the export sales subject of this case. its only jurisdiction is to dismiss the case. would have no jurisdiction over the subject matter or nature of an action. Commissioner of Internal Revenue. it appears however. 7–95. as amended. that respondent’s corresponding judicial claim filed with the CTA on 30 June 2000 was filed beyond the 30–day period. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence. said judicial claim shall be considered as filed out of time.34 and is conferred only by law and not by the consent or waiver upon a court which. to wit:chanRoblesvirtualLawlibrary We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code. provided a Summary of Rules on Prescriptive Periods Involving VAT as a guide for all parties concerned. The court could not decide the case on the merits.33(Emphasis supplied) To recapitulate. can rely on BIR Ruling No. 32the Second Division of this Court. Otherwise. Parenthetically. from April 1998 to March 1999. This Court is mindful that when respondent filed its administrative claim on 6 May 1999. as an exception to the mandatory and jurisdictional 120+30 day periods. although respondent has indeed complied with the required two–year period within which to file a refund/tax credit claim with the BIR by filing its administrative claim on 6 May 1999 (within the period from the close of the subject second quarter of taxable year 1998 when the relevant sales or purchases were made). DA–489–03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010.35 If the court has no jurisdiction over the nature of an action. Commissioner of Internal Revenue. which the Secretary of Finance issued on 9 December 1995 and took effect on 1 January 1996. it made this particular revenue regulation a part of the tax code. Commissioner of Internal Revenue. 37 Thus.e. acquiescence.108–1 of Revenue Regulations No. otherwise known as the Consolidated Value–Added Tax Regulations. (2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. such non–compliance with the said mandatory period of thirty (30) days is fatal to its refund claim on the ground of prescription.prescribe or be considered as filed out of time.

a successful claim for input VAT is made. Further. v. Consequently. Commissioner of Internal Revenue). 2001. JJ. WHEREFORE. Unable to submit the proper invoices. 185666 February 4. On the other hand. SO ORDERED. It stressed “that while entities engaged in business are required to secure from the BIR an authority to print receipts or invoices and to issue duly registered receipts or invoices. v. (Chairperson). Having no resolution from the OSSAC-DOF. barter or exchange of services. 2002. Commissioner of Internal Revenue. and every sale. The Supreme Court stated that strict compliance with the prescriptive periods in claiming for refund of creditable input tax due or paid attributable to any zero-rated or effectively zero-rates sales (Commissioner of Internal Revenue v. the BIR erred in denying the claim for refund.” In Intel Technology Philippines. The CTA denied the calim for tax credit/refund for petitioner’s failure to comply with the receipt and invoicing requirements provided by the Tax Code for refund based on zero-rated transactions. Inc. Here. it is not required that the BIR authority to print be reflected or indicated therein. Petitioner corporation filed the administrative claim with the with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance (OSSAC-DOF) on September 24. the appearance of the word “zero–rated” on the face of invoices covering zero–rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. COMMISSIONER OF INTERNAL REVENUE G.667. thus petitioner should have filed its petition for review thirty days thereafter or on or before April 24. however. as amended. San Roque Power Corporation.”41 NIPPON EXPRESS (PHILIPPINES) CORP. and Philex Mining Corporation v.61 representing the value of input VAT paid by the corporation in relation to sales which are attributable to zero-rated sales. If.. Facts: x x x x This Court held that. in filing its petition for review. which is mandatory and jurisdictional. the BIR correctly denied Panasonic’s claim for tax refund. respondent’s instant claim for refund must be denied.R. No. the foregoing pronouncement affirms that absence or non– printing of the word “zero–rated” in respondent’s invoices is fatal to its claim for the refund and/or tax credit representing its unutilized input VAT attributable to its zero–rated sales. the government would be refunding money it did not collect. As aptly explained by the CTA’s First Division. the same does not apply to the phrase “BIR authority to print. Issues: 1 2 Ruling: 1 All told. the petition is GRANTED. . concur. The Petition for Review filed before the Court of Tax Appeals docketed as CTA Case No. Del Castillo. barter or exchange of goods or properties while a VAT official receipt properly pertains to every lease of goods or properties. 2002.R. Commissioner of Internal Revenue. absent such word. Did the CTA acquire jurisdiction over the controversy? Is there a difference between ainvoicing requirements and receipt requirements in zero-rated transactions? 2 No. while this Court considers the importance of imprinting the word “zero–rated” in said invoices. 6129 is DISMISSED for lack of jurisdiction. A VAT invoice is necessary for every sale. and Perlas–Bernabe. the CTA did not acquire jurisdiction over the controversy. Taganito Mining Corporation v. Petitioner Corporation has failed to comply with the 120+30 day period..39 (Emphasis supplied) Clearly. the CTA has no jurisdiction over respondent’s judicial appeal considering that its Petition for Review was filed beyond the mandatory 30–day period pursuant to Section 112(D) of the NIRC of 1997. the 16 September 2005 Decision of the Court of Appeals in CA–G. 2001. Accordingly. SP No. since the “BIR authority to print” is not one of the items required to be indicated on the invoices or receipts. 40 the Court ruled that there is no law or BIR rule or regulation requiring the taxpayer–claimant’s authority from the BIR to print its sales invoices (BIR authority to print) to be reflected or indicated therein. petitioner corporation filed a petition for review with the CTA on April 24. the ground for denial of petitioner Panasonic’s claim for tax refund—the absence of the word “zero–rated” on its invoices—is one which is specifically and precisely included in the above enumeration. Consequently. petitioner Panasonic has been unable to substantiate its claim for refund. 2015 Petitioner Corporation applied for a tax credit/refund based on section 112 of the Tax Code in the amount of P24. Carpio. The 120 day period for the administrative office to act ended on September 22.Section 4. No costs. The requirement is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. Brion. the printing of the word “zero–rated” on the invoice helps segregate sales that are subject to 10% (now 12%) VAT from those sales that are zero–rated.826. 80886 is hereby REVERSED and SET ASIDE.108–1 of RR 7–95 proceeds from the rule–making authority granted to the Secretary of Finance under Section 245 of the 1977 NIRC (Presidential Decree 1158) for the efficient enforcement of the tax code and of course its amendments.

series of 2003. or marketing operations of telecommunications entities. Malvar’s arguments: Said Ordinance is not a tax ordinance but a regulatory fee imposed to regulate the “placing. and that . the Municipality passed Ordinance No. Progressive Development Corporation v. Due to the alleged arrears in the payment of the assessment. CTA en banc likewise denied. On 9 September 2004. Victorias Milling Co. Quezon City: if the generating of revenue is the primary purpose and regulation is merely incidental. stringing. 3. 18. 18 are primarily regulatory in nature. The construction of the tower was for the purpose of receiving and transmitting cellular communications within the covered area. Smart alleges that the regulation of telecommunications entities and all aspects of its operations is specifically lodged by law on the NTC. the imposition is a tax. The fees are not imposed to regulate the administrative. MR denied. Digest by Clark Uytico SUMMARY The Municipality of Malvar imposed an ordinance where it aims to regulate the establishment of special projects. and provide for the correction. 2003. On 24 August 2004. attaching. Inc. 18. WON CTA should have take cognizance of the case. meters and other apparatus. WON the fees are taxes. Smart Communications. Smart cites Section 5(g) of Republic Act No. Smart received from the Permit and Licensing Division of the Office of the Mayor of the Municipality an assessment letter with a schedule of payment for the total amount of P389. Thus. condemnation or removal of the same when found to be dangerous. to regulate the installation and maintenance of physical structures – Smart’s cell sites or telecommunications tower.00 for Smart’s telecommunications tower. Thus.950. conduits. in the exercise of its regulatory powers. the fact that incidentally revenue is also obtained does not make the imposition a tax. Smart contends that the same is a tax. J. and not primarily revenue-raising.00 for the telecommunications tower that the latter constructed in Malvar. Dispositive: WHEREFORE." ISSUE 1. Smart filed a protest. the Municipality also caused the posting of a closure notice on the telecommunications tower. CTA dismissed the case for lack of jurisdiction because the same is NOT a tax. Inc. Municipality of Malvar February 18. revenue-raising. 18 on which the assessment was based. 18 is to regulate certain construction activities of the identified special projects. 2. shall impose such fees and charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of the operations of telecommunications entities. It assessed Smart an amount of 389. the fees imposed in Ordinance No. FACTS Smart constructed a telecommunications tower within the territorial jurisdiction of the Municipality. repair and construction of all gas mains. technical. Smart challenged the validity of Ordinance No. RATIO Issue #1 Since the main purpose of Ordinance No.In other words. the Municipality imposed fees on various structures. In the same protest. 7925 which provides that the NTC.950. the Municipality denied Smart’s protest. SMART’s arguments: CTA erred in refusing to take cognizance of the case and for dismissing the case for lack of jurisdiction considering the “unique” factual circumstances involved. and null and void insofar as the assessment made from 2001 to 2003. the VAT invoice is the seller’s best proof of the sale of the goods or services to the buyer while the VAT receipt is the buyer’s best evidence of the payment of goods or services received from the seller. v. which included telecommunications towers. financial. RTC partially granted Smart’s petition. HELD 1. 18 are not taxes. which included "cell sites" or telecommunications towers. rather. NO. WON the fees are unjust and unreasonable. CTA en banc denied. It was also envisioned to address the foreseen "environmental depredation" to be brought about by these "special projects" to the Municipality. claiming lack of due process in the issuance of the assessment and closure notice. While the fees may contribute to the revenues of the Municipality. CTA MR also denied. and held that LGUs have the power to impose fees Municipality is encroaching on the regulatory powers of the National Telecommunications Commission (NTC). NO. defective or otherwise hazardous to the welfare of the inhabitant. and is unduly oppressive and ultra vires. 2. On 30 July 2003. but did not rule on the legality of Ordinance No. the Court DENIES the petition. 18 are actually taxes since they are not regulatory but rather. It declared that Smart is only liable for fees starting October 1. Municipality of Victorias: the purpose and effect of the imposition determine whether it is a tax or a fee. this effect is merely incidental. electric. CTA denied. such as Smart’s. installing.. In a letter dated 28 September 2004. vs. CTA correctly refused to take cognizance of the case. SO ORDERED. The fees imposed in Ordinance No. 2014 Carpio. The fees are NOT taxes. but if regulation is the primary purpose. the fees imposed in Ordinance No. telegraph and telephone wires. Pursuant to these objectives. entitled "An Ordinance Regulating the Establishment of Special Projects. Court agreed with CTA.

18 expressly provides for the standards which Smart must satisfy prior to the issuance of the specified permits. 1999 to April 14. and other concerned national agencies f) Conversion order from DAR is located within agricultural zone. and its petition for review with the CTA on Apr. even if the year 2000 was a leap year. 1998 to April 14. invoking Section 229 of the NIRC. These requirements are as follows: SECTION 5. respondent's petition. power plant. COURT OF TAX APPEALS and AYALA LAND. Primetown Property FACTS: Respondent applied for the refund or credit of income tax paid in 1997. Book I of the Administrative Code of 1987. we hold that Section 31. Lex posteriori derogat priori. In other words. ruling that Article 13 of the Civil Code did not distinguish between a regular year and a leap year. Hence. 1999 and April 15. Respondent filed its adjusted return on Apr. RESOLUTION . Both Article 13 of the Civil Code and Section 31. h) Written consent from subdivision association or the residence of the area concerned if the special projects is located within the residential zone. Chapter VIII. According to the CTA. The CTA dismissed the petition for being filed beyond the two-year prescriptive period for filing a judicial claim. 14. the number of days is irrelevant. being the more recent law. a year is equivalent to 365 days whether it be a regular year or a leap year. ERB in case of gasoline station. Respondents. under the Administrative Code of 1987. We therefore hold that respondent's petition (filed on April 14.the lack of any standards for such imposition gives the presumption that the same is a tax. vs. clearly indicating that the fees are regulatory in nature. The following documents shall be submitted to the SB Secretary in triplicate: a) zoning clearance b) Vicinity Map c) Site Plan d) Evidence of ownership e) Certificate true copy of NTC Provisional Authority in case of Cellsites. The claim was not acted upon. 1998.. Under the Civil Code. Republic SUPREME Manila of the Philippines COURT FIRST DIVISION G. 14. was filed beyond the reglementary period. Respondent appealed to the CA. filed 731 days after respondent filed its final adjusted return. Because the year 2000 was a leap year. 2000. 2012 COMMISSIONER OF INTERNAL REVENUE. prompting respondent to file a petition for review with the CTA. however. SECTION 6. which reversed the CTA decision. For this reason. INC. Requirement for Final Development Permit – Upon the expiration of 180 days and the proponents of special projects shall apply for final [development permit] and they are require[d] to submit the following: a) evaluation from the committee where the Vice Mayor refers the special project b) Certification that all local fees have been paid. Requirements and Procedures in Securing Preliminary Development Permit. alleging that their business suffered losses and was not liable to pay income tax. i) Barangay Council Resolution endorsing the special projects. ISSUE: WON the petition for refund/credit was filed within the reglementary period. Needless to state. No. the petition was filed on time. Chapter VIII. RULING: Yes. the two-year prescriptive period was equivalent to 730 days. 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. a year is composed of 12 calendar months. 2000 should still be counted as 365 days each or a total of 730 days. telephone or telegraph line. g) Radiation Protection Evaluation. the periods covered by April 15. CIR v. Ordinance No. governs the computation of legal periods. Under the Administrative Code of 1987. 190680 September 13. it was filed within the reglementary period. Petitioner. Book I of the Administrative Code of 1987 deal with the same subject matter — the computation of legal periods.R. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987.

To show the timeliness of the petition for relief. the CIR and OSG had received on March 27. respectively. Further. 2009. Inc. It reasoned that per its records. Petitioner received on 23 November 2004. a check with his records reveals that there is no Resolution which has been issued by the Honorable Court denying his Motion for Reconsideration. for the CTA to serve a copy thereof upon the CIR and his counsel. To double check. Respondent was informed that there was none. he filed a Motion for Reconsideration of the Honorable Court’s Decision dated 12 February 2009. it appears that it already was. received a copy of the CTA en banc’s resolution denying his motion for reconsideration. The factual antecedents that led to the filing of this petition are as follows: In 2005. (ALI) filed with the CTA a petition for review2 to question the CIR’s assessment against it for deficiency value-added tax (VAT) for the calendar year 2003. the CTA Second Division rendered its Decision granting ALI’s petition for review. the CIR and ALI filed their Joint Stipulation of Facts and Issues. The CIR’s motion for reconsideration was denied.40 for the calendar year 2003 was ordered cancelled and set aside.3 However. with a notation that the same constitutes respondent’s Final Decision on the matter. Villar.: Subject of this petition for certiorari under Rule 65 of the Rules of Court is the Resolution1 dated October 30.4 questioning the CTA’s entry of judgment and seeking the following reliefs: (1) for the CTA to withdraw its resolution ordering the issuance of entry of judgment. Before the tax court. which dismissed herein petitioner Commissioner of Internal Revenue's (CIR) petition for relief from judgment under Rule 38 of the Rules of Court. prompting him to file an appeal to the CTA en banc. 2009 which provided that the CTA Decision dated February 12. 2009. Such petition would have barred the Decision dated 12 February 2009 from attaining finality and eventual entry in the Book of Judgements. 2009 had become final and executory. while petitioner and his counsel were of the mind that the Motion for Reconsideration still had to be resolved. private respondent Ayala Land. likewise owns and operates theatres or cinemas. on three (3) occasions he has inquired from his counsel the Office of the Solicitor General. such failure has prevented petitioner from filing the necessary Petition for Review before the Honorable Supreme Court. the Honorable Court’s Decision dated 12 February 2009 has become final and executory.346. the CIR filed a motion for reconsideration. the Honorable Court ordered the issuance of an Entry of Judgment in this case. which was cited in the present petition to read in part: Petitioner (herein private respondent) is primarily engaged in the sale and/or lease of real properties and. 2009. 2009 and March 30. he checked with the Honorable Court and was informed that there is a Resolution dated 25 March 2009. the Office of the Solicitor General (OSG). (2) for the CTA to resolve the CIR’s motion for reconsideration filed on March 4. Finally. on whether he has received any Resolution on the Motion for Reconsideration. On July 29. 2009. 2009 a Manifestation with the Motion to Reconsider Resolution Ordering Entry of Judgment. On February 12. 2009 of the Court of Tax Appeals (CTA) en bane in CTA EB No. petitioner filed its protest with the office of respondent contesting the factual and legal bases of the VAT assessment. The CIR then filed on July 2. 2009. 2009 with the CTA en banc a petition for relief7 asking that the entry of judgment in the case be recalled. It then came as a . the CTA en banc rendered its Decision affirming the decision of the CTA Second Division. Petitioner received respondent’s (herein petitioner) Final Assessment Notice (hereinafter referred to as the 2003 FAN) dated 29 October 2004 whereby respondent was assessing petitioner alleged deficiency 10% value added tax (VAT) on its alleged income from cinema operations for the taxable year 2003 in the aggregate amount of One Hundred Three Million Three Hundred Forty-Six Thousand Six Hundred Ninety-One and 40/100 Pesos (P 103. In order to protect its right. 402. 2009 a copy of the CTA en banc’s Resolution dated June 10. petitioner filed the Petition for Review pursuant to Section 228 of the Tax Code. On April 11. 2009 on August 3. Feeling aggrieved.5 (Emphasis ours) Proceedings ensued. and (3) should there be an existing resolution of the motion for reconsideration. 0002949 for the examination of ALL INTERNAL REVENUE TAXES of petitioner from 1 January 2003 to 31 December 2003. On 28 April 2005. In short. 2008. 2009 only on August 3. 6 The CIR received its copy of said Resolution dated July 29. J. and for the CIR and OSG to be served with copies of the Resolution dated March 25. particularly State Solicitor Bernardo C. among others. when he received a copy of the Resolution dated July 29. a copy of the resolution denying the motion for reconsideration. the same decision which the Honorable Court has now deemed to be final and executory. the CIR claimed that he knew of the Resolution dated March 25. 2009. it is respectfully manifested that petitioner and his counsel have not received the said Resolution and thus. petitioner received respondent’s 25 April 2005 Decision denying petitioner’s protest.691.691. but this was denied by the CTA en banc in its Resolution dated March 25. Respondent respectfully manifests that on 4 March 2009. 2009. The assessment against ALI for deficiency VAT in the amount of P 103.40) inclusive of 20% interest. 2009. surprise to him when he received on June 17. The CIR then filed on October 2. respondent’s 19 November 2004 Letter of Authority No. the CTA en banc issued its Resolution denying the motion.REYES. The petitioner explained in his manifestation: On 17 June 2009. He then claimed that the sixty (60)-day period for the filing of the petition for relief should be The CIR claims that neither he nor his statutory counsel.346. On 10 December 2004. 2009. he received Resolution dated 10 June 2009 holding that in the absence of an appeal. Thus.

2009. 11 The issue then for this Court’s resolution is: Whether or not the CTA committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that the petition for relief of the CIR was filed beyond the 60-day reglementary period under Rule 38. 2009 will still be filed beyond the 60-day period.10 (Emphasis ours) Without filing a motion for reconsideration with the CTA en banc. 2009.12 While the rule is not absolute and admits of settled exceptions. with the 60th day falling on August 30. Velasco III (Atty. 2009. or such proceeding was taken. the 60 days should be counted from June 17. this Court holds that a dismissal of the petition is warranted in view of the petitioner’s failure to file before the CTA en banc a motion for reconsideration of the assailed resolution. Records show that petitioner learned of the Resolution dated March 25. CIR’s counsel Atty. 2009. 2009. order or proceeding must. when he received a copy of the Resolution dated July 29. none of the exceptions attend the present petition.9 On October 30. as stated by the Honorable CTA in its 29 July 2009 Resolution. as the case may be. (Emphasis ours) By the CIR’s own evidence and admissions.reckoned from August 3. Hence. 2009. The "plain speedy. and second. he already knew of such fact. Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case. 2009 which was a Sunday. if given the chance to correct its mistake or error. the petition is dismissible. 2009. and not more than six (6) months after such judgment or final order was entered. x x x: . 2009 by his receipt on June 17. The CIR’s claim that it was only on August 3. It was precisely because of such knowledge that he filed on July 2. 2009. the petition for relief filed on October 2. filed within sixty (60) days after the petitioner learns of the judgment. the last day for the filing of the petition for relief was on August 17. the only logical explanation is that the front notice page was indeed correct and stamped by both offices but the received enclosed order of the Honorable Court probably contained a different one. as Section 3. The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for certiorari. at some definite time. the CIR’s petition for relief was still filed out of time. 2009 and claimed to have first learned about the Resolution dated March 25. 2009 ordering the Entry of Judgment. At the outset. contents and verification. Rule 38 of the Rules of Court provides: Sec. 2009 long before August 3. Granting that we give credence to the CIR’s argument that he could not have known of the Resolution dated March 25. by alleging in his Affidavit of Merit8 attached to the petition for relief that: 14. and must be accompanied with affidavits showing the fraud. the CIR filed the present petition for certiorari. and the facts constituting the petitioner’s good and substantial cause of action or defense. within a fixed period of six (6) months from entry of such judgment. Hence. 2009. 3. or other proceeding to be set aside. which remedy cannot be allowed to erode any further the fundamental principle that a judgment. accident. order or other proceeding to be set aside. 2009. it is evident that both the CIR and the OSG had known of the CTA’s Resolution dated March 25. final order. it is crucial to determine the date when the petitioner learned of the CTA en banc’s Resolution dated March 25. This error has happened to petitioner in other cases but these were subsequently and timely noticed and no detrimental effects occurred. the Resolution of the Court En Banc dated June 10. 2009 denying his motion for reconsideration. But given the fact that both petitioner and the OSG did not have copies of this Resolution. the OSG’s letter and the affidavit of merit attached thereto. In resolving the substantive issue. 2009 and the 60th day fell on August 16. Even if the 60-day period is counted from petitioner’s receipt of the Entry of Judgment on July 1. 2009 the manifestation and motion pertaining to the CTA’s order of entry of judgment. the petition must be filed within sixty (60) days from knowledge of the judgment. 2009 to file it. Even if we set aside this procedural infirmity. petitioner seeks relief from judgment of the Court En Banc’s Resolution dated March 25. when the latter inquired from the court about the status of the case and the court’s action on his motion for reconsideration. Rule 65 of the Rules of Court is a motion for reconsideration of the questioned order or resolution. 2009. attain finality in order to put at last an end to litigation. the CTA en banc dismissed the petition for relief for having been filed out time. order or other proceeding. and adequate remedy" referred to in Section 1. 2009 that he learned of the CTA’s denial of his motion for reconsideration is belied by records showing that as of June 22. he received a Resolution of the Honorable Court dated 10 June 2009 ordering the issuance of the Entry of Judgment in the present case. mistake. or excusable negligence relied upon. 2009. first. 2009 of the Resolution dated June 10. Further. 2009 when he received on June 17. The rationale of the rule rests upon the presumption that the court or administrative body which issued the assailed order or resolution may amend the same. giving him until October 2. I noted that. there were rubber stamps of both petitioner and the OSG signifying receipt of the resolution. 2009." xxxx In this case. The CIR argues that his 60-day period under Rule 38 should have been counted from August 3. This was in fact stated in petitioner’s "Manifestation with Motion to Reconsider Resolution Ordering Entry of Judgment" which petitioner filed on July 2. 2009. The information was relayed by the CTA to the CIR. Time for filing petition. via the assailed resolution which reads in part: The Supreme Court has ruled that "a party filing a petition for relief from judgment must strictly comply with two reglementary periods. particularly in the narration of facts in the petition for relief. Pertinent portions of his petition for relief read: On 17 June 2009. notwithstanding the CTA’s records showing the contrary. Velasco) tried to explain the CIR’s and OSG’s alleged failure to receive the CTA’s Resolution dated March 25. Strict compliance with these periods is required because a petition for relief from judgment is a final act of liberality on the part of the State. Felix Paul R. – A petition provided for in either of the preceding sections of this Rule must be verified.

20 There was no such grave abuse of discretion in this case because the CIR's petition for relief was indeed filed out of time. The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a vi1iual refusal to perform a duty enjoined by law or to act at all in contemplation of law. 2009. JR. SO ORDERED.19 (Emphasis ours) Given the foregoing. the petition is DISMISSED. thus: This pertains to the CTA Notice of Resolution dated June 10. REYES WE CONCUR: MARIA Chief Chairperson LOURDES P. A. you pointed out that CTA records tend to show that there had been such a resolution and that BIR was already notified of the same sometime in March 2009. A. Article VIII of the Constitution. Attached to the petitioner’s Compliance16 with this Court’s Resolution17 dated May 30. 2009. the petitioner only had until August 21.xxxx Petitioner’s handling counsel was surprised that the above emphasized decision dated 12 February 2009 had become final considering that he had filed a timely Motion for Reconsideration on 4 March 2009. 2009. and had so advised the CIR. Petitioner then tried to confirm the same from petitioner’s official counsel. 2009 attached to the petition for relief as Annex "A". BERSAMIN DE CASTRO Associate Justice Associate Justice MARTIN Associate Justice S. and further to our telephone discussion on Monday. WHEREFORE. same as handling counsel. Since August 21. was a nonworking holiday. did not receive any copy of any resolution for that matter. However. you filed a "Manifestation and Motion to Reconsider Resolution Ordering Entry of Judgment" dated July 1. he called the Honorable Court and was informed that his Motion for Reconsideration filed by registered mail on 4 March 2009 was received by the Honorable Court on 11 March 2009. MARIA Chief Justice LOURDES P. which is equivalent to lack of jurisdiction. 2009. Villar. VILLARAMA. Rule 38 from said date. x x x. a Friday. Please note that from your receipt on June 17. Rule 38 within which to file the edition for relief continued to run and has expired already. Bernardo C. there is doubt in the propriety of filing a petition for relief at this time. the latter was also waiting for the resolution of the Motion for Reconsideration filed on 4 March 2009 and likewise.13 (Emphasis ours) In the letter14 dated June 24. Significantly. 2009. The OSG then formalized this information through a letter dated 24 June 2009. State Solicitor Bernardo C. premises considered. addressed to the BIR and which reads: We regret to inform you that we cannot be of help to you in filing a petition for relief since you are the ones on record representing the BIR before the Court of Tax Appeals. Even as we reckon the 60-day period under Section 3. 2009. 2009 on June 22. the OSG has not previously received any resolution on the motion for reconsideration which you filed with the CTA. Atty. An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same is performed in a capricious or whimsical exercise of judgment. 2009 of the entry of judgment. He was then informed that. June 22. He then searched his records and found no such Resolution. SERENO Justice TERESITA J. a copy of which was received by the OSG on June 17. C E RT I F I CAT I O N Pursuant to Section 13. 2009 within which to file a petition for relief. Velasco had discussed the CTA’s prior issuance of a resolution denying their motion for reconsideration. BIENVENIDO Associate Justice L. He was also informed that the last document on file there was a Resolution dated 25 March 2009. 2009 (directing entry of judgment). as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility. 2009 instead of a petition for relief. this Court finds no cogent reason to grant petitioner's plea for the issuance of a writ of certiorari. The CIR’s filing with the CTA of the petition for relief on October 2. the 60 days period (from actual knowledge) under Section 3. This is precisely what we meant in our previous letters as the kind of assistance that we can provide you. Investigating further. the Office of the Solicitor General (OSG) through the assigned Solicitor. 2009. the OSG also opined. Furthermore. that the petition for relief was indeed filed out of time. I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. the petitioner should have filed the petition at the latest on August 24. SERENO . 2011 is the OSG’s letter18 dated September 22. As you well know. In the meantime. LEONARDOLUCAS P. As we have discussed. he and Atty.15 (Emphasis ours) The CIR then can no longer validly dispute that he had known of the CTA’s Resolution dated March 25. as far as we are concerned. Villar mentioned that on June 22. our participation in these matters are limited to filing an appeal with the Supreme Court in due time. 2009 then did not conform to the 60day requirement.

000688-80-7333. Philippine Global Communication Inc. Court has also clarified that the statute of limitations on the collection of taxes should benefit both the Government and the taxpayers further illustrated the harmful effects that the delay in the assessment and collection of taxes inflicts upon taxpayers. is the instance when the taxpayer requests for a reinvestigation which is granted by the Commissioner. More than eight years after the assessment was presumably issued. for deficiency income tax. If the BIR issued this assessment within the three-year period or the ten-year period. as there was no Warrant of Distraint and/or Levy served on the respondents nor any judicial proceedings initiated by the BIR. BIR sent a letter to respondent requesting the latter to present for examination certain records and documents. and for the taxpayer so that within a reasonable time after filing his return. mailed or sent by the BIR. which was several years beyond the three-year prescriptive period. 22 April 1994. since more than three years had lapsed from the time Assessment Notice No. 000688-80-7333 was issued. Issues: (1) Whether or not CIR’s right to collect respondent’s alleged deficiency income tax is barred by prescription under Section 269(c) of the Tax Code of 1977 Revenue Regulations No. even in the absence of a waiver. as amended. Thus. Thus. However. 6568 on 9 January 2003. issued on 27 November 1985. he may know the amount of the assessment he is required to pay. 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. It decided that the protest letters filed by the respondent cannot constitute a request for reinvestigation. 167146 October 31. they cannot toll the running of the prescriptive period to collect the assessed deficiency income tax. in both letters. arising from deductions that were disallowed for failure to pay the withholding tax and interest expenses that were likewise disallowed. the Commissioner of Internal Revenue (CIR) issued Letter of Authority No.CIR vs. which needs taxes to run it. On 13 April 1992.R. in this case. In such cases. authorizing the appropriate Bureau of Internal Revenue (BIR) officials to examine the books of account and other accounting records of respondent. . and compromise penalty. was presumably issued on 14 April 1994 since the respondent did not dispute the CIR’s claim. the request for reconsideration and the request for reinvestigation. 12-85.The taxpayer may protest administratively an assessment by filing a written request for reconsideration or reinvestigation specifying the following particulars: xxxx For the purpose of protest herein— (a) Request for reconsideration-. (2) Whether or not the prescription on assessment was suspended by virtue of the alleged request of reinvestigation by Phil Global Held: Petition was denied. 0002307.refers to a plea for a re-evaluation of an assessment on the basis of existing records without need of additional evidence. However. 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.Pre-Assessment Notice CIR vs. (b) Request for reinvestigation—refers to a plea for re-evaluation of an assessment on the basis of newly-discovered evidence or . that is for the purpose of expediting the collection of taxes.. The three-year period for collection of the assessed tax began to run on the date the assessment notice had been released. 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. The assessment. However. filed its Annual Income Tax Return for taxable year 1990 on 15 April 1991. 000688-80-7333. Section 6. whether or not such assessment is well founded and reasonable so that he may either pay the amount of the assessment or contest its validity in court. Therefore. and invoked by the CIR as a ground for this petition. but respondent failed to present any document. so that the agency charged with the assessment and collection may not tarry too long or indefinitely to the prejudice of the interests of the Government. 2006] Facts: Philippine Global (respondent) is a corporation engaged in telecommunications. METRO STAR SUPERAMA. the Procedure Governing Administrative Protests of Assessment of the Bureau of Internal Revenue. respondent requested for the cancellation of the tax assessment. [G. the CIR is now prescribed from collecting the assessed tax. the CIR’s right to collect the same has prescribed in conformity with Section 269 of the National Internal Revenue Code of 1977. It may involve both a question of fact or of law or both. whichever was applicable. in connection with the investigation of respondent’s 1990 income tax liability. Phil Global filed two letters of protests. whichever came later. INC. the ten-year period began to run only from the date of discovery by the BIR of the falsity. fraud or omission. the BIR had until 13 April 1997. On the following day. Respondent received a Preliminary Assessment Notice dated 13 April 1994 for deficiency income tax inclusive of surcharge. No. defines the two types of protest. respondent received from the CIR a Final Decision dated 8 October 2002 denying the respondent’s protest against Assessment Notice No. Protest. provides instances when the running of the statute of limitations on the assessment and collection of national internal revenue taxes could be suspended. the earliest attempt of the BIR to collect the tax due based on this assessment was when it filed its Answer in CTA Case No. The Tax Code of 1977. this exception does not apply to this case since the respondent never requested for a reinvestigation. and affirming the said assessment in toto. dated 14 April 1994. hence. within which the BIR may assess a national internal revenue tax. Among the exceptions. interest. CTA rendered a Decision in favor of respondent on 9 June 2004. respondent received a Formal Assessment Notice with Assessment Notice No.

And for an unrestricted number of years. It bears repetition that a request for reconsideration. the separate letters of protest dated 6 May 1994 and 23 May 1994 are requests for reconsideration. an appealed case. In the present case. Yuseco then filed a petition for prohibition with the CTA. The CIR’s 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. if the taxpayer does file the protest on a patently erroneous assessment. On the other hand. is merely ancillary to and in furtherance of its appellate jurisdiction in the cases mentioned in section 7 of the Act. an erroneous assessment may never prescribe. 1125. to suspend the collection of taxes. The power to issue the writ exists only in cases appealed to it. whether these are existing records or newly discovered or additional evidence. Meanwhile the interest on the deficiencies and the surcharges continue to accumulate.additional evidence that a taxpayer intends to present in the investigation. then the erroneous assessment would become final and unappealable. This prompted BIR to ask still for payment. the taxpayers remain uncertain and are burdened with the costs of preserving their books and records. If both types of protest can effectively interrupt the running of the statute of limitations. He asked for reconsideration which was also denied. This is the predicament that the law on the statute of limitations seeks to prevent. YUSECO 3 SCRA 313 FACTS: It was found out that for two years. unlike a request for reinvestigation. It may also involve a question of fact or law or both. cannot suspend the statute of limitations on the collection of an assessed tax. Yuseco asked for a report on how the amount was derived but this request was denied. and apart from. 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. If the taxpayer fails to file a protest. Yuseco failed to file his income tax returns. which the latter granted and now is being questioned by the Commissioner. The main difference between these two types of protests lies in the records or evidence to be examined by internal revenue officers. This prompted the tax authorities to assess and hold Yuseco liable for the deficiency in payment. The distinction between a request for reconsideration and a request for reinvestigation is significant. HELD: Nowhere does the law expressly vest in the Court of Tax Appeals original jurisdiction to issue writs of prohibition and injunction independently of. COMMISSIONER OF INTERNAL REVENUE V. the statute of limitations would automatically be suspended and the tax thereon may be collected long after it was assessed. . Section 271 distinctly limits the suspension of the running of the statute of limitations to instances when reinvestigation is requested by a taxpayer and is granted by the CIR. Republic Act No. The writ of prohibition or injunction that it may issue under the provisions of section 11.