CIR v. RAUL M. GONZALEZ, GR No.

177279, 2010-10-13
Facts:
conducted a fraud investigation for all internal revenue taxes to ascertain/determine the tax
liabilities of respondent L. M. Camus Engineering Corporation (LMCEC) for the... taxable
years 1997, 1998 and 1999.
a criminal complaint was instituted by the Bureau of Internal Revenue (BIR) against LMCEC
on January 19, 2001
Based on data obtained from an "informer" and various clients of LMCEC... it was
discovered that LMCEC filed fraudulent tax returns with substantial underdeclarations of
taxable income for the years 1997, 1998 and 1999.
Petitioner thus assessed the... company of total deficiency taxes
The Preliminary Assessment Notice (PAN) was received by LMCEC on February 22, 2001.
In view of the above findings, assessment notices together with a formal letter of demand
dated August 7, 2002 were sent to LMCEC through personal service on October 1, 2002
On May 21, 2003, petitioner,... referred to the Secretary of Justice for preliminary
investigation its complaint against LMCEC... it was alleged that despite the receipt of the
final assessment notice and formal demand letter on
October 1, 2002, LMCEC failed and refused to pay the deficiency tax assessment... which
had become final and executory as a result of the said taxpayer's failure to file a protest
thereon within the thirty (30)-day... reglementary period... contending that LMCEC cannot
be held liable whatsoever for the alleged tax deficiency which had become due and
demandable
They also assail as invalid the assessment notices which bear no serial numbers...
petitioner disagreed with the contention of LMCEC that the complaint filed is not criminal in
nature, pointing out that LMCEC and its officers Camus and Mendoza were being charged
for the criminal offenses... defined and penalized under Sections 254 (Attempt to Evade or
Defeat Tax) and 255 (Willful Failure to Pay Tax) of the NIRC.
On the lack of control number in the assessment notice, petitioner explained that such is a
mere office requirement in the Assessment Service for the purpose of internal control and
monitoring; hence, the unnumbered assessment notices should not be interpreted as
irregular or... anomalous
On September 22, 2003, the Chief State Prosecutor issued a Resolution[27] finding no
sufficient evidence to establish probable cause against respondents LMCEC, Camus and
Mendoza.
On... the required prior determination of fraud... ruled that (1) there was no prior
determination of fraud
Petitioner appealed to respondent Secretary of Justice but the latter denied its petition for
review
On the allegation of fraud, respondent Secretary ruled that petitioner failed to establish the
existence of the following circumstances indicating fraud in the settlement of LMCEC's tax
liabilities: (1) there must be intentional and substantial understatement of tax liability by...
the taxpayer; (2) there must be intentional and substantial overstatement of deductions or
exemptions; and (3) recurrence of the foregoing circumstances.
second, the claim... that the tax fraud investigation was precipitated by an alleged
"informant" has not been corroborated nor was it clearly established, hence there is no
other conclusion but that the Bureau engaged in a "fishing expedition"
Petitioner filed the criminal complaint against the private respondents for violation of the
following provisions of the NIRC,... Respondent Secretary concurred with the Chief State
Prosecutor's conclusion that there is insufficient evidence to establish probable cause to
charge private respondents... the assessment notices... are unnumbered, hence irregular
and suspect
Issues:
whether LMCEC and its corporate officers may be prosecuted for violation of Sections 254
(Attempt to Evade or Defeat Tax) and 255 (Willful Failure to Supply Correct and Accurate
Information and Pay Tax).
Ruling:
a preliminary investigation should first be conducted to determine if a... prima facie case for
tax fraud exists
[t]he crime is complete when the [taxpayer] has x x x knowingly and willfully filed [a]
fraudulent [return] with intent to evade and defeat x x x the tax." Thus, respondent
Secretary erred in holding that petitioner committed forum shopping when it filed the...
present criminal complaint during the pendency of its appeal from the City Prosecutor's
dismissal of I.S. No. 00-956 involving the act of disobedience to the summons in the course
of the... preliminary investigation on LMCEC's correct tax liabilities for taxable years 1997,
1998 and 1999.
Respondent Secretary, however, fully concurred with private respondents' contention that
the assessment notices were invalid for being unnumbered and the tax liabilities therein
stated have already been settled and/or terminated.
As it is, the formality of a control number in the assessment notice is not a requirement for
its validity but rather the contents thereof which should inform the taxpayer of the
declaration of deficiency tax against said taxpayer. Both the formal letter of demand and the
notice... of assessment shall be void if the former failed to state the fact, the law, rules and
regulations or jurisprudence on which the assessment is based, which is a mandatory
requirement under Section 228 of the NIRC.
Principles:
The rationale for dismissing the complaint on the ground of lack of control number in the
assessment... notice likewise betrays a lack of awareness of tax laws and jurisprudence,
such circumstance not being an element of the offense.
Silicon

“For the 1st quarter of 1999, Silicon seasonably filed its Quarterly VAT Return on April 22, 1999
reflecting, among others, output VAT in the amount of P145,316.96; input VAT on domestic purchases in
the amount of P20,041,888.41; input VAT on importation of goods in the amount of P44,560,949.00;
and zero–rated export sales in the sum of P929,186,493.91

“On August 6, 1999, Silicon filed with the CIR, through its One–Stop– Shop Inter–Agency Tax Credit and
Duty Drawback Center of the Department of Finance (DOF), a claim for tax credit or refund of
P64,457,520.45 representing VAT input taxes on its domestic purchases of goods and services and
importation of goods and capital equipment which are attributable to zero–rated sales for the period
January 1, 1999 to March 31, 1999.

“Due to the inaction of the CIR, Silicon filed a Petition for Review with the CTA on March 30, 2001, to toll
the running of the two–year prescriptive period. The petition was docketed as CTA Case No. 6263

“The CIR filed its Answer dated June 1, 2001 raising, among others, the following special and affirmative
defenses: (1) that Silicon failed to

show compliance with the substantiation requirements under the provisions of Section 16(c)(3) of
Revenue Regulations No. 5–87, as amended by Revenue Regulations No. 3–88; and (2) that Silicon has
not shown proof that the alleged domestic purchases of goods and services and importation of
goods/capital equipment on which the VAT input taxes were paid are attributable to its export sales or
have not yet been applied to the output tax for the period covered in its claim or any succeeding period
and that the alleged total foreign exchange proceeds have been accounted for in accordance with the
rules and regulations of the Bangko Sentral ng Pilipinas.”

Issue: “The issues raised in the three petitions boil down to (1) whether the CTA En Banc correctly
denied Silicon’s claim for refund or issuance of a tax credit certificate for its input VAT for its domestic
purchases of goods and services and importation of goods/capital equipment attributable to zero–rated
sales for the period January 1, 1999 to March 31, 1999; and (2) whether the CTA En Banc correctly
ordered the CIR to refund or issue a tax credit certificate in favor of Silicon for the reduced amount of
P2,139,431.00 representing Silicon’s unutilized input VAT attributable to its zero–rated sales for the
period April 1, 2000 to June 30, 2000.”

“Notwithstanding the above issues, we emphasize that when a case is on appeal, this Court has the
authority to review matters not specifically raised or assigned as error

if their consideration is necessary in reaching a just conclusion of the case. “In the present case, while
the parties never raised as an issue the timeliness of Silicon’s judicial claims, we deem it proper to look
into whether the petitions for review filed by Silicon before the CTA were filed within the prescribed
period provided under the Tax Code in order to determine whether the CTA validly acquired jurisdiction
over the petitions filed by Silicon.”
“After a careful perusal of the records in the instant case, we find that Silicon’s judicial claims were filed
late and way beyond the prescriptive period. Silicon’s claims do not fall under the exception mentioned
above. Silicon filed its Quarterly VAT Return for the 1st quarter of 1999 on April 22, 1999 and
subsequently filed on August 6, 1999 a claim for tax credit or refund of its input VAT taxes for the same
period. From August 6, 1999, the CIR had until December 4, 1999, the last day of the 120–day period, to
decide Silicon’s claim for tax refund. But since the CIR did not act on Silicon’s claim on or before the said
date, Silicon had until January 3, 2000, the last day of the 30–day period to file its judicial claim.
However, Silicon failed to file an appeal within 30 days from the lapse of the 120–day period, and it only
filed its petition for review with the CTA on March 30, 2001 which was 451 days late. Thus, in
consonance with our ruling in Philex in the San Roque ponencia, Silicon’s judicial claim for tax credit or
refund should have been dismissed for having been filed late. The CTA did not acquire jurisdiction over
the petition for review filed by Silicon

Similarly, Silicon’s claim for tax refund for the second quarter of 2000 should have been dismissed for
having been filed out of time. Records show that Silicon filed its claim for tax credit or refund on August
10, 2000. The CIR then had 120 days or until December 8, 2000 to grant or deny the claim. With the
inaction of the CIR to decide on the claim which was deemed a denial of the claim for tax credit or
refund, Silicon had until January 7, 2001 or 30 days from December 8, 2000 to file its petition for review
with the CTA. However, Silicon again failed to comply with the 120+30 day period provided under
Section 112(C) since it filed its judicial claim only on June 28, 2002 or 536 days late. Thus, the petition for
review, which was belatedly filed, should have been dismissed by the CTA which acquired no jurisdiction
to act on the petition

“Courts are bound by prior decisions. Thus, once a case has been decided one way, courts have no
choice but to resolve subsequent cases involving the same issue in the same manner. “As this Court has
repeatedly emphasized, a tax credit or refund, like tax exemption, is strictly construed against the
taxpayer. The taxpayer claiming the tax credit or refund has the burden of proving that he is entitled to
the refund by showing that he has strictly complied with the conditions for the grant of the tax

refund or credit. Strict compliance with the mandatory and jurisdictional conditions prescribed by law to
claim such tax refund or credit is essential and necessary for such claim to prosper. Noncompliance with
the mandatory periods, nonobservance of the prescriptive periods, and non adherence to exhaustion of
administrative remedies bar a taxpayer’s claim for tax refund or credit, whether or not the CIR questions
the numerical correctness of the claim of the taxpayer. For failure of Silicon to comply with the
provisions of Section 112(C) of the NIRC, its judicial claims for tax refund or credit should have been
dismissed by the CTA for lack of jurisdiction.” Hence, for being filed out of time, Silicon’s judicial claims
for refund were dismissed.
Commissioner of Internal Revenue (CIR), Petitioner vs. Toledo Power Inc., Respondent (G.R. No. 183880,
January 20, 2014)

Toledo Power, Inc. (TPI) seeks, from the Bureau of Internal Revenue (BIR), a refund or issuance of a tax
credit certificate (TCC) for unutilized input value-added tax (VAT) attributable to its zero-rated sales of
power generation services to several entities.

The BIR has not ruled upon said claim, hence TPI went to the Court of Tax Appeals (CTA). The latter
ordered the BIR to refund TPI the amount of P8,088,151.07 only for the 3 rd and 4th quarters of 2001

Issue: 1. Whether TPI complied with the 120+30 day rule; and 2. Whether TPI complied with the
invoicing requirements

Held: The Supreme Court (SC) decided that: In a nutshell, 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 Tax Code, are as follows:

(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. (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. The 120-day period may extend
beyond the twoyear period from the filing of the administrative claim if the claim is filed in the later part
of the two-year period. If the 120-day period expires without any decision from the CIR, then the
administrative claim may be considered to be denied by inaction. (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. (4) All taxpayers, however, can
rely on BIR Ruling No. 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, as an exception to the mandatory and

jurisdictional 120+30 day periods. The SC added: “Clearly, therefore, TPI’s refund claim of unutilized
input VAT for the third quarter of 2001 was denied for being prematurely filed with the CTA, while its
refund claim of unutilized input VAT for the fourth quarter of 2001 may be entertained since it falls
within the exception provided in the Court’s most recent rulings.” As to the invoicing requirements, the
SC ruled that the words “zerorated” appeared on the VAT invoices/ official receipts presented by TPI in
support of its claim for refund. The BIR was ordered to refund or issue tax credit certificate in favor of
TPI only for the fourth quarter of 2001
DIVISION
CIR v. Aichi Forging Company (2010)
G.R. No. 184823 October 6, 2010
DEL CASTILLO, J.

Lessons Applicable: Legal Period: 1 year = 12 months, Exhaust Administrative Claim Before Judicial
Claim, Lex Posterioni Derogati Priori

Laws Applicable:

FACTS:

 Aichi forging, a VAT entity filed a claim for refund of input VAT for its zero-rated sales with the
Dept. of Finance One-Stop Inter-Agency Tax Credit and Duty Drawback Center on Sept 30,
2004.
 On the same date, it filed a Petition for Review with the CTA.
 CTA partially granted the refund by reducing the leaseless claims.
 CIR filed a Motion for Reconsideration insisting that they were filed beyond the prescriptive
period in accordance to Art. 13 that: 1 year = 365 days and that filing an administrative claim is a
condition precedent before a judicial claim can be filed with the CTA.
 CTA and CTA En Banc denied petition.
ISSUE:
1. W/N the claim was filed with the prescriptive period of 2 year provided under Sec. 112 (A) NIRC
2. W/N filing an administrative claim is a condition precedent to a judicial claim for refund.

HELD:
1. Yes. Sec. 204 (c) and 229 are applied only in instances of erroneous payment and illegal
collection. Sec. 112 (A) of NIRC applies here. Sec. 31 Chapter VIII Book I of the Administrative
Code of 1987 being the more recent law governing legal period applies making 1 year = 12
months. The principle of Lex Posterioni Derogati Priori applies. Thus, since it is filed on exactly
Sept. 30, 2004 filing is timely.

2. Yes. Sec. 112 (D) of the NIRC clearly provides that the CIR has 120 days from date of the
submission of the complete documents in support of the application within which to grant or deny the
claim. In case of full or partial denial by the CIR, the recourse is to appeal before the CTA within 30
days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act
on the application for tax refund, the remedy is to appeal the inaction of the CIR to the CTA within 30
days.

SERENO, C.J.:
This is a Petition for Review on Certiorari[1] under Rule 45 of the 1997
Rules of Civil Procedure filed by the Commissioner of Internal Revenue,
(petitioner). The Petition assails the Decision[2] dated 30 April 2008 and
Resolution[3] dated 12 June 2008 issued by the Court of Tax Appeals En
Banc (CTA En Banc) in C.T.A. EB No. 324.

THE FACTS

Aichi Forging Company of Asia, Inc. (respondent) is engaged in the

business of manufacturing, producing, and processing all kinds of steel and
steel by-products, such as closed impression die steel forging, and all
automotive steel parts.

On 29 March 2005, respondent filed with the Bureau of Internal Revenue

(BIR), Revenue District Office (RDO) No. 057, an application for tax
credit/refund amounting to P5,057,120.95 representing the former's paid
input value-added taxes (VAT) for the first quarter of taxable year 2003.
Respondent claimed that it was entitled to a refund/credit of the input VAT
paid on its purchases of goods, services, capital goods, and on its
importation of goods other than capital goods that were attributable to
zero-rated sales in the total amount of P149,174,477.94.

On 31 March 2005, respondent filed a Petition with the CTA docketed as

C.T.A. Case No. 7187.

After trial, the CTA First Division rendered a Decision on 13 August 2007.
It partly granted the Petition and ordered the refund to respondent of the
reduced amount of P4,138,397.57.

On appeal, the CTA En Banc affirmed the CTA First Division after finding
no reversible error. Respondent was found to have complied with all the
requisites for claiming a refund under Section 112 (A) of the National
Internal Revenue Code (NIRC) of 1997.

THE ISSUES

Petitioner's appeal is anchored on the following grounds:

 1. The Court of Tax Appeals sitting En Bane erred in holding that
respondent is entitled to a refund considering that respondent failed
to comply with the requirements of a valid application for a tax
refund. Hence, the judicial claim made before the Court of Tax
Appeals deserve outright dismissal for being premature.

THE COURT'S RULING

Section 112 of the NIRC of 1997 laid down the manner in which the refund
or credit of input tax may be made, to wit:

At the outset, petitioner raises the issue of the timeliness of respondent's

judicial claim before the CTA. Petitioner contends that the Petition of
respondent was prematurely filed with the CTA, considering that it was
filed barely two days after respondent had filed the administrative claim
with the BIR. Allegedly, petitioner was not given the chance to properly
address the administrative claim. The CTA, however, held that the judicial
claim clearly fell within the two-year prescriptive period for filing claims for
a refund of input VAT.

This Court will clarify.

Section 112(A) provides for a two-year prescriptive period after the close of
the taxable quarter when the sales were made, within which a VAT-
registered person whose sales are zero-rated or effectively zero-rated may
apply for the issuance of a tax credit certificate or refund of creditable input
tax. the Court clarified that the two-year period refers to the filing of an
administrative claim with the BIR.

In this case, respondent's sales to PEZA-registered entities amounted to

P149,075,454.37 for the period 1 January 2003 to 31 March 2003.
Accordingly, respondent was not liable to pay any output VAT thereon, and
the unutilized input VAT incurred by and attributable to it may be the
proper subject of a claim for a refund. Therefore, considering that
respondent was claiming the refund of input VAT incurred for the first
quarter of 2003, it had until 31 March 2005 - or the close of the taxable
quarter when the zero-rated sales were made - within which to file its
administrative claim for a refund. On this note, we find that petitioners had
complied with the two-year prescriptive period when it filed its claim on 29
March 2005.

In accordance with Section 112(D) of the NIRC of 1997, petitioner had one
hundred twenty (120) days from the date of submission of complete
documents in support of the application within which to decide on the
administrative claim. Considering that the burden to prove entitlement to a
tax refund is on the taxpayer, and absent any evidence to the contrary, it is
presumed that in order to discharge its burden, respondent attached to its
application[6] filed on 29 March 2005 complete supporting documents
necessary to prove its entitlement to a refund. Thus, the 120-day period for
the CIR to act on the administrative claim commenced on that date.

We agree with petitioner that the judicial claim was prematurely filed on 31
March 2005, since respondent failed to observe the mandatory 120-day
waiting period to give the CIR an opportunity to act on the administrative
claim. However, the Court ruled in San Roque that BIR Ruling No. DA-
489-03 allowed the premature filing of a judicial claim, which means non-
exhaustion of the 120-day period for the Commissioner to act on an
administrative claim:[7]

The old rule that the taxpayer may file the judicial claim, without waiting
for the Commissioner's decision if the two-year prescriptive period is about
to expire, cannot apply because that rule was adopted before the enactment
of the 30-day period. The 30-day period was adopted precisely to do away
with the old rule, so that under the VAT System the taxpayer will always
have 30 days to file the judicial claim even if the Commissioner acts only on
the 120th day, or does not act at all during the 120-day period. With the 30-
day period always available to the taxpayer, the taxpayer can no longer file
a judicial claim for refund or credit of input VAT without waiting for the
Commissioner to decide until the expiration of the 120-day period.

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is
construed strictly against the taxpayer. One of the conditions for a judicial
claim of refund or credit under the VAT System is with the 120 30 day
mandatory and jurisdictional periods. Thus, strict compliance with the
120+30 day periods is necessary for such a claim to prosper,
whether before, during, or after the effectivity of
the Atlas doctrine, except for the period from the issuance of
BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October
2010 when the Aichi doctrine was adopted, which again
reinstated the 120+30 day periods as mandatory and
jurisdictional.[8] (Emphasis supplied)

Therefore, respondent's filing of the judicial claim barely two days after the
administrative claim is acceptable, as it fell within the period during which
the Court recognized the validity of BIR Ruling No. DA-489-03.
AICHI FORGING COMPANY OF ASIA v. CTA - EN BANC, GR No. 193625, 2017-08-30
Facts:
On 26 September 2002, AICHI filed with the BIR District Office in San Pedro, Laguna, a
written claim for refund and/or tax credit of its unutilized input VAT credits for the third and
fourth quarters of 2000 and the four taxable quarters of 2001. AICHI sought the tax
refund/credit of input VAT for the said taxable quarters in the total sum of P18,030,547.77[6]
representing VAT payments on importation of capital goods and domestic purchases of
goods and services.[7]As respondent CIR failed to act on the refund claim, and in order to
toll the running of the prescriptive period provided under Sections 229 and 112 (D) of the
National Internal Revenue Code (Tax Code), AICHI filed, on 30 September 2002, a Petition
for Review before the CTA Division.
Issues:
Issue No. 1... whether AICHI availed of the correct remedy;

Issue No. 2... whether AICHI can still question the CTA Division ruling

Issue No. 3... whether AICHI sufficiently proved its entitlement to the refund or tax credit.

Ruling:
We deny the petition.
On the first issue.

The CTA had no jurisdiction over the judicial claim.AICHI's judicial claim was filed
prematurely and, thus, without cause of action.
Generally, the 120-day waiting period is both mandatory and jurisdictional.In a long line of
cases,[38] the Court had interpreted the 120-day period as both mandatory and
jurisdictional such that the taxpayer is forced to await the expiration of the period before
initiating an appeal before the CTA. This must be so because prior to the expiration of the
period, the CIR still has the statutory authority to render a decision. If there is no decision
and the period has not yet expired, there is no reason to complain of in the meantime.
Otherwise stated, there is no cause of action yet as would justify a resort to the court.
The first test case regarding the mandatory and jurisdictional nature of the 120+30-day
waiting periods[39] provided in Section 112 (D)[40] of the 1997 Tax Code is CIR v. Aichi
Forging Company of Asia, Inc. (Aichi), G.R. No. 184823, 6 October 2010.[41] In that
landmark case, the Court rejected as without legal basis the assertion of the respondent
taxpayer that the non observance of the 120-day period is not fatal to the filing of a judicial
claim as long as both the administrative and the judicial claims are filed within the two-year
prescriptive period. The Court explained that Section 112 (D) contemplated two scenarios:
(1) a decision is made before the expiration of the 120-day period; and (2) no decision after
such 120-day period. In either instance, the appeal with the CTA can only be made within
30 days after the decision or inaction. Emphatically, Aichi announced that the 120-day
period is crucial in filing an appeal with the CTA.The exception: Judicial claims filed from 10
December 2003 up to 6 October 2010
Here, it is not disputed that AICHI had timely filed its administrative claim for refund or tax
credit before the BIR. The records show that the claim for refund/tax credit of input taxes
covering the six separate taxable periods from the 3rd Quarter of 2000 up to the 4th Quarter
of 2001 was made on 26 September 2002. Both the CTA Division and CTA En Banc
correctly ruled that it fell within the two-year statute of limitations. However, its judicial claim
was filed a mere four days later on 30 September 2002, or before the window period when
the taxpayers need not observe the 120-day mandatory and jurisdictional period.
Consequently, the general rule applies.
On the second issue

The petitioner adopted the wrong remedy in assailing the decision of the CTA En Banc.
What the petitioner should have done to question the decision of the CTA En Banc was to
file before this Court a petition for review under Rule 45 of the same Rules of Court. This is
in conformity with Section 11 of R.A. No. 9282
On the third issue.

Petitioner AICHI came to this court expecting a reversal of the partial denial of its claim for
refund/credit so that it could recover more in addition to what it had been allowed by the
CTA. Regrettably, AICHI comes out empty-handed in our judgment. We could not rule on
the jurisdiction of the CTA any other way. The law and jurisprudence speak loud and clear.
Our solemn duty is to obey it.All told, the CTA has no jurisdiction over AICHI's judicial claim
considering that its Petition for Review was filed prematurely, or without cause of action for
failure to exhaust the administrative remedies provided under Section 112 (D) of the Tax
Code, as amended. In addition, AICHI availed of the wrong remedy. Likewise, we find no
need to pass upon the issue on whether petitioner AICHI had substantiated its claim for
refund or tax credit. Indisputably, we must deny AICHI's claim for refund.
Principles:
The Commissioner of Internal Revenue (CIR) is given 120 days to decide[1] an
administrative claim for refund/credit of unutilized or unapplied input Value Added Tax
(VAT) attributable to zero-rated sales. In case of a decision rendered or inaction after the
120-day period, the taxpayer may institute a judicial claim by filing an appeal before the
Court of Tax Appeals (CTA) within 30 days from the decision or inaction.[2] Both 120- and
30-day periods are mandatory and jurisdictional.[3] An appeal taken prior to the expiration
of the 120-day period without a decision or action of the Commissioner is premature and,
thus, without a cause of action. Accordingly, the appeal must be dismissed for lack of
jurisdiction.
2. Taganito Mining Corporation, Petitioner vs. Commissioner of Internal Revenue (CIR) Respondent (G.R.
No. 197591, June 18, 2014)

Facts: “On December 28, 2005, Taganito filed before the Bureau of Internal Revenue (BIR) an
administrative claim for the refund of input VAT paid on its domestic purchases of taxable goods and
services and importation of goods in the amount of ₱1,885,140.22 covering the period January 1, 2004
to December 31, 2004, in accordance with Section 112, subsections (A) and (B) of the National Internal
Revenue

Code (NIRC). Thereafter, or on March 31, 2006, fearing that the period for filing a judicial claim for
refund was about to expire, Taganito proceeded to file a petition for review before the CTA Division,
docketed as C.T.A. Case No. 7428.” The CTA Division found that Taganito’s claim was filed within the
periods provided in the Tax Code. It partially granted petitioner’s prayer for refund.

The CTA En Banc reversed and set aside the Decision of the CTA Division. The entire amount of refund of
Taganito was denied. “Explaining that the observance of the 120-day period provided under Section
112(D) of the NIRC is mandatory and jurisdictional to the filing of a judicial claim for refund pursuant to
the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi), it held that Taganito’s filing of a judicial
claim was premature, and, thus, the CTA Division had yet to acquire jurisdiction over the same.

Issue: “The issues for the Court’s resolution are as follows: (a) whether or not the CTA En Banc correctly
dismissed Taganito’s judicial claim for refund of excess input VAT; and (b) whether or not Taganito
should be entitled to its claim for refund in the total amount of P1,885,140.22.”

Held: The SC said the action is partly meritorious. The Court pointed out: “The first provision that
allowed the refund or credit of unutilized excess input VAT is found in Executive Order No. 273, series of
1987, the original VAT Law. Since then, this provision was amended numerous times, by Republic Act
No. (RA) 7716, RA 8424, and, lastly, by RA 9337 which took effect on July 1, 2005. Since Taganito’s claim
for refund covered periods before the effectivity of RA 9337, Section 112 of the NIRC, as amended by RA
8424, should apply.”

“As correctly pointed out by the CTA En Banc, the Court, in the 2010 Aichi case, ruled that the
observance of the 120-day period is a mandatory and jurisdictional requisite to the filing of a judicial
claim for refund before the CTA. Consequently, non-observance thereof would lead to the dismissal of
the judicial claim due to the CTA’s lack of jurisdiction. The Court, in the same case, also clarified that the
two (2)-year prescriptive period applies only to administrative claims and not to judicial claims.”

In the recent case of CIR v. San Roque Power Corporation (San Roque), the Court, however, recognized
an exception to the mandatory and jurisdictional treatment of the 120-day period as pronounced in
Aichi. In San Roque, the Court ruled that BIR Ruling No. DA-489-03 dated December 10, 2003 – wherein
the BIR stated 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” – provided taxpayers-claimants the
opportunity to raise a valid claim for equitable estoppel under Section 246 of the NIRC, viz.: “There is no
dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not acquire
jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There are,
however, two exceptions to this rule. The first exception is if the Commissioner, through a specific
ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific
ruling is applicable only to such particular taxpayer. The second exception is where the Commissioner,
through a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into
filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot be allowed to
later on question the CTA’s assumption of jurisdiction over such claim since equitable estoppel has set in
as expressly authorized under Section 246 of the Tax Code.”
CIR v. MAGSAYSAY LINES, GR NO. 146984, 2006-07-28
Facts:
The Court of Tax Appeals (CTA) and the Court of Appeals commonly ruled that the sale is
not subject to VAT.
Pursuant to a government program of privatization, NDC decided to sell to private
enterprise all of its shares
P... ursuant to a government program of privatization, NDC decided to sell to private
enterprise all of its shares in... the National Marine Corporation (NMC).
The NDC decided to sell in one lot its NMC shares and five (5) of its ships, which are 3,700
DWT
Tween-Decker, "Kloeckner" type vessels
The NMC shares and the vessels were offered for public bidding. Among the stipulated
terms and conditions for the public auction was that the winning bidder was to pay "a value
added tax of 10% on the value of the vessels."... private... respondent Magsaysay Lines,
Inc. (Magsaysay Lines) offered to buy the shares and the vessels for P168,000,000.00.
The bid was approved by the Committee on Privatization, and a Notice of Award dated 1
July 1988 was issued to Magsaysay Lines.
VAT Ruling No. 568-88 dated 14 December 1988 from the BIR, holding that the sale of the
vessels was subject to the 10% VAT.
At this point, NDC drew on the Letter of Credit to pay for the VAT, and the amount of
P15,120,000.00 in taxes was paid... private respondents filed an Appeal and Petition for
Refund with the CTA... refund of the VAT payment made... amounting to P15,120,000.00
CIR) opposed the petition
The CTA ruled that the sale of a vessel was an "isolated transaction," not done in the
ordinary course of NDC's business, and was thus not subject to VAT,... which under Section
99 of the Tax Code, was applied only to sales in the course of trade or business.
Issues:
whether the sale by the National Development Company (NDC) of five (5) of its vessels to
the private respondents is subject to value-added tax (VAT) under the National Internal
Revenue Code of 1986 (Tax Code) then... prevailing at the time of the sale.
Ruling:
The fact that the sale was not in the... course of the trade or business of NDC is sufficient in
itself to declare the sale as outside the coverage of VAT.
the tax is... levied only on the sale, barter or exchange of goods or services by persons who
engage in such activities, in the course of trade or business.
based on the aforecited jurisprudence, is that "course of business" or "doing business"
connotes regularity of activity. In the instant case, the sale was an isolated transaction. The
sale which was involuntary and made pursuant to the declared policy of
Government for privatization could no longer be repeated or carried on with regularity. It
should be emphasized that the normal VAT-registered activity of NDC is leasing personal
property
Principles:
VAT
The conclusion that the sale was not in the course of trade or business, which the CIR does
not dispute before this Court,[24] should have definitively settled the matter. Any sale, barter
or exchange of goods or services not in the course of trade or... business is not subject to
VAT.
Mindanao II Geothermal Partnership vs.
CIR G.R. 193301, 11 March 2013

Facts:

Mindanao II Geothermal Partnership sold its fully depreciated Nissan Patrol, CIR said t
hat the sale is subject to VAT. Mindanao, in its defense, asserted that the sale is not incid
ental transaction in the course of its business, hence, an isolated transaction that should
not have been subject to VAT.

Issue:

Whether or not an isolated transaction can be an incidental transaction for purposes of

VAT liability.

Ruling:

Yes, just because a transaction is said to be an isolated one, it does not follow that it can
not be an incidental transaction.

Mindanao II’s business is to convert the steam supplied to it by PNOC-

EDC into electricity and to deliver the electricity to NPC. In the course of business, Mind
anao II bought and eventually sold a Nissan Patrol. Prior to the sale, the Nissan Patrol w
as part of Mindanao II’s property, plant and equipment. Therefore, the sale of the Nissa
n Patrol is an incidental transaction made in the course of business which should be liab
le for VAT.
PHILIPPINE NATIONAL BANK v. CARMELITA S. SANTOS, GR No. 208293, 2014-12-10
Facts:
Sometime in May 1996, respondents discovered that their father maintained a premium
savings account with Philippine National Bank (PNB), Sta. Elena-Marikina City Branch.
Respondents went to PNB to withdraw their father's deposit.
However, Aguilar informed them that the deposit had already "been released to a certain
Bernardito Manimbo (Manimbo)... on April 1, 1997.
However, Aguilar informed them that the deposit had already "been released to a certain
Bernardito Manimbo (Manimbo)... on April 1, 1997."
On May 20, 1998, respondents filed before the Regional Trial Court of Marikina City a
complaint for sum of money and damages against PNB, Lina B. Aguilar, and a John Doe.
On May 20, 1998, respondents filed before the Regional Trial Court of Marikina City a
complaint for sum of money and damages against PNB, Lina B. Aguilar, and a John Doe.[
Issues:
We resolve the following issues:
Whether Philippine National Bank was negligent in releasing the deposit to Bernardito
Manimbo;
Ruling:
The default standard of diligence in the performance of obligations is "diligence of a good
father of a family.
Other industries, because of their nature, are bound by law to observe higher standards of
diligence. Common carriers, for example, must observe "extraordinary diligence in the
vigilance over the goods and for the safety of [their] passengers"[84] because... it is
considered a business affected with public interest. "Extraordinary diligence" with respect to
passenger safety is further qualified as "carrying the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with... a
due regard for all the circumstances.
Similar to common carriers, banking is a business that is impressed with public interest. It
affects economies and plays a significant role in businesses and commerce.[86] The public
reposes its faith and confidence upon banks, such that "even the humble... wage-earner
has not hesitated to entrust his life's savings to the bank of his choice, knowing that they will
be safe in its custody and will even earn some interest for him."[87] This is why we have
recognized the fiduciary nature of the banks' functions,... and attached a special standard of
diligence for the exercise of their functions.
petitioners PNB and Aguilar either have no fixed standards for the release of their deceased
clients' deposits or they have standards that they disregard for convenience, favor, or upon
exercise of discretion. Both are inconsistent with the required... diligence of banks. These
threaten the safety of the depositors' accounts as they provide avenues for fraudulent
practices by third persons or by bank officers themselves.
Petitioner Aguilar was aware that there were other claimants to Angel C. Santos' deposit.
Respondents had already communicated with petitioner Aguilar regarding Angel C. Santos'
account before Manimbo appeared. Petitioner Aguilar even gave respondents the updated
passbook of
Angel C. Santos' account.[107] Yet, petitioners PNB and Aguilar did not think twice before
they released the deposit to Manimbo. They did not doubt why no original death certificate
could be submitted. They did not doubt why Reyme L. Santos would execute an... affidavit
of self-adjudication when he, together with others, had previously asked for the release of
Angel C. Santos' deposit. They also relied on the certificate of time deposit and on
Manimbo's representation that the passbook was lost when the passbook had just been...
previously presented to Aguilar for updating
Principles:
Petitioner PNB and its manager, petitioner Aguilar, failed to meet even the standard of
diligence of a good father of a family. Their actions and inactions... constitute gross
negligence.
PhilAm LIFE vs. Secretary of Finance, G.R. No. 210987, Case Digest
Philam Life sold its shares in Philam Care Health Systems to STI Investments Inc., the highest bidder. After
the sale was completed, Philam life applied for a tax clearance and was informed by BIR that there is a need to
secure a BIR Ruling due to a potential donor’s tax liability on the sold shares.

ISSUE on DONOR’S TAX:

W/N the sales of shares sold for less than an adequate consideration be subject to donor’s tax?

PETITIONER’S CONTENTION:

The transaction cannot attract donor’s tax liability since there was no donative intent and, ergo, no taxable
donation, citing BIR Ruling [DA-(DT-065) 715-09] dated November 27, 2009; that the shares were sold at
their actual fair market value and at arm’s length; that as long as the transaction conducted is at arm’s length–
–such that a bonafide business arrangement of the dealings is done in the ordinary course of business––a sale
for less than an adequate consideration is not subject to donor’s tax; and that donor’s tax does not apply to
sale of shares sold in an open bidding process.

CIR DENYING THE REQUEST:

Through BIR Ruling No. 015-12. As determined by the Commissioner, the selling price of the shares thus sold
was lower than their book value based on the financial statements of Philam Care as of the end of 2008. The
Commissioner held donor’s tax became imposable on the price difference pursuant to Sec. 100 of the National
Internal Revenue Code (NIRC):

SEC. 100. Transfer for Less Than Adequate and full Consideration. - Where property, other than real
property referred to in Section 24(D), is transferred for less than an adequate and full consideration in money
or money’s worth, then the amount by which the fair market value of the property exceeded the value of the
consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift, and shall be included
in computing the amount of gifts made during the calendar year.
RULING:

The price difference is subject to donor’s tax.

Petitioner’s substantive arguments are unavailing. The absence of donative intent, if that be the case, does not
exempt the sales of stock transaction from donor’s tax since Sec. 100 of the NIRC categorically states that the
amount by which the fair market value of the property exceeded the value of the consideration shall be
deemed a gift. Thus, even if there is no actual donation, the difference in price is considered a donation by
fiction of law.

Moreover, Sec. 7(c.2.2) of RR 06-08 does not alter Sec. 100 of the NIRC but merely sets the parameters for
determining the “fair market value” of a sale of stocks. Such issuance was made pursuant to the
Commissioner’s power to interpret tax laws and to promulgate rules and regulations for their
implementation.

Lastly, petitioner is mistaken in stating that RMC 25-11, having been issued after the sale, was being applied
retroactively in contravention to Sec. 246 of the NIRC.26 Instead, it merely called for the strict application of
Sec. 100, which was already in force the moment the NIRC was enacted.