(1) TEAM ENERGY CORP. (FORMERLY MIRANT PAGBILAO refund.
refund. It posits that Section 113, prior to its amendment, must be
CORP.) V. CIR,
G.R. No. 197663, March 14, 2018 (TEAM ENERGY CORP. V. CIR)
G.R. NO. 197770, March 14, 2018 (REPUBLIC REP. BY THE BIR V.
TEAM ENERGY CORP.)
Leonen, J.
FACTS:
Team Energy filed with the BIR an Application for Effective Zero-Rate
of its supply of electricity to the NPC, which was subsequently
approved. Then, on December 17, 2004, it filed a claim for refund of
unutilized input VAT for the first to fourth quarters of taxable year 2003
before the RDO of Lucena City. On April 22, 2005, Team Energy
appealed before the CTA its 2003 first quarter VAT claim and on July 22,
2005 for its second to fourth quarters of 2003. The CTA partially granted
the petition, contending primarily that the claim for refund for the
second to fourth quarters of 2003 was filed only on July 22, 2005 or
beyond the 30-day period prescribed under Section 112. Consequently,
the claim for these quarters must be denied for lack of jurisdiction.
RESPONDENT’S CONTENTION:
The Commissioner averred the following: 1) the amount claimed by
Team Energy was not properly substantiated; 2) that NPC's exemption
from taxes did not extend to its electricity supplier such as Team
Energy; 3) that it failed to prove that the claims were filed within the
prescriptive periods and that the input taxes being claimed had not
been applied against any output tax liability or were not carried over in
the succeeding quarters; and 4) that Team Energy is not entitled to any
tax refund or credit because it cannot qualify for VAT zero-rating under
the EPIRA Law for failure to submit its ERC Registration and Certificate
of Compliance.
PETITIONER’S CONTENTION
Team Energy contends that the denial of its duly proven refund claim
would constitute unjust enrichment on the part of the government. It
averred that at the time when the unutilized input VAT was incurred in
2003, the applicable NIRC provisions did not create a distinction
between an official receipt and an invoice in substantiating a claim for
judicial claim with the Court of Tax Appeals. Its failure to do so
rendered the Commissioner's "deemed a denial" decision as final
and inappealable.
applied to its input VAT incurred in 2003, and that the disallowed
amount of P258,874.55 supported by VAT invoice or official receipts
should be allowed. Team Energy submits that the disallowances
essentially result from the non-recognition by the CTA En Banc of the
interchangeability of VAT invoices and VAT official receipts in a claim
for refund of excess or unutilized input tax.
ISSUE:
Whether NPC's tax exemption privilege includes the indirect tax of VAT
to entitle Team Energy to 0% VAT rate - YES
(1) whether or not the CTA erred in disallowing Team Energy
Corporation's claim for tax refund of its unutilized input VAT on
the ground of lack of jurisdiction; - NO
(2) whether or not the CTA erred in failing to recognize the
interchangeability of VAT invoices and VAT official receipts to
comply with the substantiation requirements for refunds of
excess or unutilized input tax; and - NO
RULING:
(1) The law is clear that resort to an appeal with the CTA should be
made within 30 days either from receipt of the decision denying
the claim or the expiration of the 120-day period given to the
Commissioner to decide the claim.
Here, Team Energy's judicial claim was filed beyond the 30-day
period required in Section 112. The administrative claim for
refund was filed on December 17, 2004 and BIR had 120 days to
act on the claim, or until April 16, 2005. Team Energy, in turn,
had until May 16, 2005 to file a petition with the CTA but filed its
appeal only on July 22, 2005, or 67 days late. Thus, the Court of
Tax Appeals En Banc correctly denied its claim for refund due to
prescription.
Further, the Commissioner's inaction on Team Energy's claim
during the 120-day period is "deemed a denial." Team Energy
had 30 days from the expiration of the 120-day period to file its
The mere fact that Team Energy has proved its excess input
VAT does not entitle it as a matter of right to a tax refund or
 credit.
The 120+30-day periods in Section 112 is not a mere procedural
technicality that can be set aside if the claim is otherwise
meritorious. It is a mandatory and jurisdictional condition
imposed by law. Team Energy's failure to comply with the
prescriptive periods is, thus, fatal to its claim.

(2) Claimants of tax refunds have the burden to prove their

entitlement to the claim under substantive law and the factual
basis of their claim.69

Under the NIRC, creditable input tax must be evidenced by a

VAT invoice or official receipt. In this case, the CTA properly
disallowed Team Energy's input VAT which consisted of input
taxes claimed on local purchase of goods and services supported
by documents other than VAT invoices or official receipts.

Although it appears under Section 113 that there is no clear

distinction on the evidentiary value of an invoice or official
receipt, it is worthy to note that the said provision is a general
provision which covers all sales of a VAT-registered person,
whether sale of goods or services. It does not necessarily follow
that the legislature intended to use the same interchangeably.
The Court reiterates that to claim a refund of unutilized or excess
input VAT, purchase of goods or properties must be supported
by VAT invoices, while purchase of services must be supported
by VAT official receipts.

WHEREFORE, the Petitions are DENIED. The April 8, 2011 Decision

and July 7, 2011 Resolution of the Court of Tax Appeals En Banc in CTA
EB No. 603 are AFFIRMED.
(2) CIR V. COVANTA ENERGY PHIL HOLDING INC.
G.R. NO. 203160, January 24, 2018
Reyes, Jr., J.
FACTS:
CIR issued Formal Letters of Demand and Assessment Notices
against CEPHI for deficiency VAT, EWT, and MCIT for the taxable year
2001. CEPHI filed several protests against the assessments but it remained
unacted upon. Thus, CEPHI filed separate petitions before the CTA,
seeking the cancellation and withdrawal of the deficiency assessments.
CEPHI filed a Supplemental Petition informing the CTA that it
availed of the tax amnesty under R.A. No. 9480. It submitted a
Supplemental Formal Offer of Evidence, together with the
documents relevant to its tax amnesty.
CTA partially granted the petition ruling that since tax amnesty
does not extend to withholding agents with respect to their withholding
tax liabilities, CEPHI is liable to pay the deficiency EWT plus additional
deficiency and delinquency interest. CTA further ruled that without any
evidence that CEPHI's net worth was underdeclared by at least 30%,
there is a presumption of compliance with the requirements of the tax
amnesty law. For this reason, CEPHI may immediately enjoy the
privileges of the tax amnesty program

PETITIONER’S CONTENTION:
CIR was of the position that CEPHI is not entitled to the immunities and
privileges under R.A. No. 9480 because its documentary submissions failed
to comply with the requirements under the tax amnesty law.19
ISSUE:
Whether or not CEPHI may avail of the tax amnesty under RA No. 9480
RULING.
YES. It is provided under RA No. 9480 that upon the taxpayer's full
compliance with IRR of R.A. No. 9480, the taxpayer is immediately entitled
to the enjoyment of the immunities and privileges of the tax amnesty
program. But when: (a) the taxpayer fails to file a SALN and the Tax
Amnesty Return; or (b) the net worth of the taxpayer in the SALN as of
December 31, 2005 is proven to be understated to the extent of 30% or more,
the taxpayer shall cease to enjoy these immunities and privileges.
(3) CIR V. LANCASTER PHILS., INC.
G.R. NO. 183408, JULY 12, 2017
Martires, J.
FACTS:
BIR issued Letter of Authority (LOA) authorizing its revenue officers to
examine Lancaster's books of accounts and other accounting records for all
internal revenue taxes due from taxable year 1998 to an unspecified
date. Thereafter, the BIR issued a Preliminary Assessment Notice (PAN) which
The underdeclaration of a taxpayer's net worth is proven through: (a)
proceedings initiated by parties other than the BIR or its agents, within 1
year from the filing of the SALN and the Tax Amnesty Return; or (b)
findings or admissions in congressional hearings or proceedings in
administrative agencies, and in courts. Otherwise, the taxpayer's SALN is
presumed true and correct. The tax amnesty law thus places the burden of
overturning this presumption to the parties who claim that there was an
underdeclaration of the taxpayer's net worth.
It is evident from CEPHI's original and amended SALN that the
information statutorily mandated in R.A. No. 9480 were all reflected in its
submission to the BIR. While the columns for Reference and Basis for
Valuation were indeed left blank, CEPHI attached schedules to its SALN
(Schedules 1 to 7), both original and amended, which provide the
required information under R.A. No. 9480 and its implementing rules
and regulations.
More importantly, CEPHI's SALN is presumed true and correct, pursuant
to Section 4 of R.A. No. 9480. This presumption may be overturned if the
CIR is able to establish that CEPHI understated its net worth by the
required threshold of at least 30%. However, aside from the bare allegations
of the CIR, there is no evidence on record to prove that the amount of
CEPHI's net worth was understated.
Considering that CEPHI completed the requirements and paid the
corresponding amnesty tax, it is considered to have totally complied with
the tax amnesty program. As a matter of course, CEPHI is entitled to the
immediate enjoyment of the immunities and privileges of the tax amnesty
program.
WHEREFORE, premises considered, the petition is DENIED for lack of
merit. The Decision dated March 30, 2012 and Resolution dated August 16,
2012 of the CTA en banc in CTA EB Case No. 713 are AFFIRMED.
cited Lancaster for: 1) overstatement of its purchases for the fiscal year
April 1998 to March1999; and 2) noncompliance with the generally
accepted accounting principle of proper matching of cost and revenue.
BIR disallowed the purchases of tobacco from farmers covered by
Purchase Invoice Vouchers (PIVs) for the months of February and March
1998 as deductions against income for the fiscal year April 1998 to March
1999.
Lancaster disputed the PAN contending that for the past decades,
it has used an entire 'tobacco-cropping season' to determine its total
purchases covering a one-year period from 1 October up to 30 September of
the following year (as against its fiscal year which is from 1 April up to 31
March of the following year);that it has been adopting the 6-month timing
difference to conform to the matching concept (of cost and revenue); and that
this has long been installed as part of the company's system and consistently
applied in its accounting books.
Subsequently, Lancaster received from the BIR a final assessment
notice (FAN) which assessed Lancaster's deficiency income tax as a
consequence of the disallowance of purchases claimed for the taxable year
ending. Lancaster duly protested the FAN. There being no action taken by the
Commissioner on its protest, Lancaster filed on 21 August 2003 a petition for
review before the CTA Division.
PETITIONER’S CONTENTION:
CIR argues that the revenue officers did not exceed their authority when, upon
examination (of the Lancaster's books of accounts and other accounting
records), they verified that Lancaster made purchases for February and March
of 1998, which purchases were not declared in the latter's fiscal year from 1
April 1997 to 31 March 1998. BIR insists that the purchases in question should
have been reported in FY 1998 in order to conform to the generally accepted
accounting principle of proper matching of cost and revenue.
2) YES. CTA can resolve an issue which was not raised by the parties.
Under the Revised Rules of the Court of Tax Appeals, the CT A is
Additionally, the CIR posits that Lancaster did not raise the issue on the scope
of authority of the revenue examiners at any stage of the proceedings before the
CTA and, consequently, the CTA had no jurisdiction to rule on said issue.
RESPONDENT’S CONTENTION:
Lancaster argued that the February and March 1998 purchases should not have
been disallowed. It maintained that the situation of farmers engaged in
producing tobacco, like Lancaster, is unique in that the costs, i.e., purchases, are
taken as of a different period and posted in the year in which the gross income
from the crop is realized. Lancaster concluded that it correctly posted the
subject purchases in the fiscal year ending March 1999 as it was only in this
year that the gross income from the crop was realized. Maintaining that the
tobacco purchases in February and March 1998 are deductible in its fiscal year
ending 31 March 1999.
ISSUE:
1) Whether or not CTA En banc erred in holding that petitioner’s
revenue officers exceeded their authority to investigate the period
not covered by the LOA
2) Whether or not CTA can resolve an issue which was not raised by
the parties
3) Whether or not the order cancellation and withdrawal of the
deficiency assessment was proper
RULING:
1) NO. The CTA En Banc did not err when it ruled that the BIR
revenue officers had exceeded their authority.
The LOA authorized the BIR officers to examine the books of
account of Lancaster for the taxable year 1998 only. However, the
deficiency income tax assessment which the BIR eventually issued
against Lancaster was based on the disallowance of expenses
reported in FY 1999. The Court agrees with the conclusion of the
CTA that the revenue examiners had exceeded their authority when
they issued the assessment against Lancaster and, consequently,
declared such assessment to be without force and effect.
The taxable year covered by the assessment being outside of the
period specified in the LOA in this case, the assessment issued
against Lancaster is, therefore, void.
not bound by the issues specifically raised by the parties but
may also rule upon related issues necessary to achieve an
orderly disposition of the case. The CTA Division was,
therefore, well within its authority to consider in its decision the
 question on the scope of authority of the revenue officers who were many decades already. Considering that the crop year of Lancaster
named in the LOA even though the parties had not raised the same starts from October up to September of the following year, it
in their pleadings or memoranda. The CTA En Banc was likewise follows that all of its expenses in the crop production made within
correct in sustaining the CTA Division's view concerning such the crop year starting from October 1997 to September 1998,
matter. including the February and March 1998 purchases covered by
purchase invoice vouchers, are rightfully deductible for income tax
3) YES. The CTA En Banc correctly sustained the order cancelling and purposes in the year when the gross income from the crops are
withdrawing the deficiency tax assessment. realized. Records show that the February and March 1998 purchases
were recorded by Lancaster as advances and later taken up as
Section 43 of the NIRC authorizes the CIR to allow the use of a purchases by the close of the crop year in September 1998, or as
method of accounting that in its opinion would clearly reflect the stated very clearly above, within the fiscal year 1999.
income of the taxpayer. One method not expressly mentioned in the
NIRC, but duly approved by the CIR, is the 'crop method of WHEREFORE, the petition is DENIED. The assailed 30 April 2008 Decision
accounting' authorized under RAM No. 2-95, it states that Crop and 24 June 2008 Resolution of the Court of Tax Appeals En Banc
Year Basis is a method applicable only to farmers engaged in the
are AFFIRMED. No cost
production of crops which take more than a year from the time of
planting to the process of gathering and disposal. Expenses paid or
incurred are deductible in the year the gross income from the sale of
the crops are realized. The crop method recognizes that the
harvesting and selling of crops do not fall within the same year that
they are planted or grown. This method is especially relevant to
farmers, or those engaged in the business of producing crops who,
pursuant to RAM No. 2-95, would then be able to compute their
taxable income on the basis of their crop year. The rule enjoins the
recognition of the expense (or the deduction of the cost) of crop
production in the year that the crops are sold (when income is
realized).”

The Court ruled that it was justifiable for Lancaster, as a business

engaged in the production and marketing of tobacco, to adopt the
crop method of accounting. A taxpayer is authorized to employ
what it finds suitable for its purpose so long as it consistently does
so, and Lancaster does appear to have utilized the method
regularly for
(4) PROCTER & GAMBLE ASIA V. CIR
G.R. NO. 205652, September 6, 2017 On March 28, 2007, P&G filed its judicial claim for refund or
Caguioa, J. issuance of TCC representing input VAT paid on goods or services
attributable to its zero-rated sales for the first quarter of taxable year
FACTS: 2005. Thereafter, it filed its judicial claim for the second quarter on
On March 22, 2007 and May 2, 2007, P&G filed an administrative claim June 8, 2007.
for refund or issuance of tax credit certificates (TCCs) of its input VAT
attributable to its zero-rated sales covering the taxable periods of While P&G's claim was pending before the CTA, Aichi Forging case
January 2005 to March 2005, and April 2005 to June 2005. was promulgated by the Court. Citing said case which reiterated that
compliance with the 120-day period granted to the CIR was mandatory
and jurisdictional in filing an appeal with the CTA, it ruled that P&G
failed to observe the 120-day period granted to the CIR. Its judicial
claims were prematurely filed with the CTA on March 28, 2007 and June
8, 2007, or only 6 days and 37 days, respectively, from the filing of the
applications at the administrative level.
PETITIONER’S CONTENTION
P&G avers that its judicial claims for tax refund/credit was filed with
the CTA Division on March 28, 2007 and June 8, 2007, after the issuance
of BIR Ruling No. DA-489-03 on December 10, 2003, but before the
adoption of the Aichi doctrine on October 6, 2010. Accordingly, pursuant
to the Court's ruling in San Roque, its judicial claims with the CTA was
deemed timely filed.
P&G further contends that the CTA En Banc gravely erred in applying
the Aichi doctrine retroactively. According to P&G, the retroactive
application of Aichi amounts to a denial of its constitutional right to due
process and unjust enrichment of the CIR.
RESPONDENT’S CONTENTION:
CIR insists that the plain language of Section 112 of the NIRC, as
amended, demands mandatory compliance with the 120+30-day rule;
and P&G cannot claim reliance in good faith with BIR Ruling No. DA-
489-03 to shield the filing of its judicial claims from the vice of
prematurity.31
ISSUE:
Whether or not the CTA En Banc erred in dismissing P&G's judicial
claims for refund on the ground of prematurity
RULING:
YES. P&G’s claim false under the exception to the mandatory and
jurisdictional 120+30 day periods under Section 112 of the NIRC.
Section 112 of the NIRC, as amended, clearly gives the CIR 120 days
within which to grant or deny a claim for refund. Upon receipt of CIR's
decision or ruling denying the said claim, or upon the expiration of the
120-day period without action from the CIR, the taxpayer has 30 days
within which to file a petition for review with the CTA. In Aichi, the
Court ruled that compliance with the 120+30-day periods is mandatory
and jurisdictional and is fatal to the filing of a judicial claim with the
CTA.
However, in San Roque, while the Court reiterated the mandatory and
jurisdictional nature of the 120+30-day periods, it recognized as an
exception BIR Ruling No. DA-489-03, issued prior to the promulgation
of Aichi, where the BIR expressly allowed the filing of judicial claims
with the CTA even before the lapse of the 120-day period. The Court
held that BIR Ruling No. DA-489-03 furnishes a valid basis to hold the
CIR in estoppel because the CIR had misled taxpayers into filing judicial
claims with the CTA even before the lapse of the 120-day period.
In this case, records show that P&G filed its judicial claims for refund on
March 28, 2007 and June 8, 2007, respectively, or after the issuance of
BIR Ruling No. DA-489-03, but before the date when Aichi was
promulgated. Thus, even though P&G filed its judicial claim without
waiting for the expiration of the 120-day mandatory period, the CTA
may still take cognizance of the case because the claim was filed within
the excepted period stated in San Roque. In other words, P&G's judicial
claims were deemed timely filed and should not have been dismissed
by the CTA.

WHEREFORE, premises considered, the instant petition for review is

hereby GRANTED. The Decision dated September 21, 2012 and the
Resolution dated January 30, 2013 of the CTA En Banc in C.T.A. EB Case
No. 742 are hereby REVERSED AND SET ASIDE. Accordingly, CTA
Case Nos. 7581 and 7639 are REINSTATED and REMANDED to the
CTA Special Second Division for the proper determination of the
refundable amount due to petitioner Procter & Gamble Asia Pte Ltd., if
any.
(5) CIR V. PHIL. ALUMINUM WHEELS, INC. amnesty under RA 9480. The CIR asserts that the finality of its
G.R. NO. 216161, AUGUST 9, 2017 assessment, particularly its FDDA is equivalent to a final and
Carpio, J. executory judgment by the courts, falling within the exceptions to
the Tax Amnesty Program under Section 8(f) of RA 9480, to wit:
FACTS: “…..(f) Tax cases subject of final and executory judgment by the
BIR issued a Final Decision on Disputed Assessment (FDDA) against courts. “
Phil. Aluminum Wheels, Inc. and demanded full payment of the
deficiency tax assessment. ISSUE:
Whether respondent is entitled to the benefits of the Tax
In a letter, respondent informed the BIR that it already paid its tax Amnesty Program under RA 9480
deficiency on withholding tax and that it was also in the process of
availing of the Tax Amnesty Program under RA 9480 as implemented
by RMC No. 55-2007 to settle its deficiency tax assessment for the
taxable year 2001. On 21 September 2007, respondent complied with the
requirements of RA 9480 which include: the filing of a Notice of
Availment, Tax Amnesty Return and Payment Form, and remitting the
tax payment.

BIR denied respondent's request and reiterated that the FDDA had
become final and executory for the failure of the respondent to appeal
the FDDA with the CTA within the prescribed 30-day period. The BIR
demanded the full payment of the tax assessment and contended that
the respondent's availment of the tax amnesty under RA 9480 had no
effect on the assessment due to the finality of the FDDA prior to
respondent's tax amnesty availment.

PETITIONER’S CONTENTION:
The CIR contends that respondent is disqualified to avail of the tax
RULING:
YES. A tax amnesty is a general pardon or intentional overlooking by the
State of its authority to impose penalties on persons otherwise guilty of
evasion or violation of a revenue or tax law. It partakes of an absolute
forgiveness or waiver by the government of its right to collect what is due
it and to give tax evaders who wish to relent a chance to start with a clean
slate. A tax amnesty, much like a tax exemption, is never favored nor
presumed in law. The grant of a tax amnesty, similar to a tax exemption,
must be construed strictly against the taxpayer and liberally in favor of the
taxing authority.
On 19 September 2007, respondent availed of the Tax Amnesty Program
under RA 9480, as implemented by DO 29-07. Respondent's completion of
the requirements of the Tax Amnesty Program under RA 9480 is sufficient
(6) NORTHERN MINDANAO POWER CORP. V. CIR
February 18, 2015
Sereno, C.J.
FACTS:
Petitioner filed an administrative claim for a refund on 20 June 2000
for the 3rd and the 4th quarters of taxable year 1999, and on 25 July 2001 for
taxable year 2000.
Thereafter, alleging inaction of respondent on these administrative
claims, petitioner filed a Petition6 with the CTA on 28 September 2001.
CTA denied the petition for failure of Petitioner to substantiate its
claim for a refund and to strictly comply with the invoicing requirements of
the law and tax regulations. The court ruled that for every sale of services,
VAT shall be computed on the basis of gross receipts indicated on the
official receipt. Official receipts are proofs of sale of services and cannot be
interchanged with sales invoices as the latter are used for the sale of goods.
Further, the requirement of issuing duly registered VAT official receipts
with the term “zero-rated” imprinted is mandatory under the law and
cannot be substituted, especially for input VAT refund purposes.
to extinguish its tax liability under the FDDA of the BIR.
Moreover, the Court ruled that Section 8(f) is clear: only persons with
"tax cases subject of final and executory judgment by the courts" are
disqualified to avail of the Tax Amnesty Program under RA 9480. There
must be a judgment promulgated by a court and the judgment must
have become final and executory. There is none in this case. The FDDA
issued by the BIR is not a tax, case "subject to a final and executory
judgment by the courts" as contemplated by Section 8(f) of RA 9480. ]
WHEREFORE, we DENY the petition. We AFFIRM the 19 May 2014
Decision and the 5 January 2015 Resolution of the Court of Tax
Appeals En Banc in CTA EB No. 994.
therefore sufficient to substantiate Petitioner’s claim for
refund
RULING:
(1) The Court has consistently held as fatal the failure to print
the word “zero-rated” on the VAT invoices or official receipts
in claims for a refund or credit of input VAT on zero-rated
sales, even if the claims were made prior to the effectivity of
R.A. 9337. Hence, the Court denied the petition.
(2) Section 113 of the NIRC of 1997 provides that a VAT
invoice is necessary for every sale, barter or exchange of
goods or

ISSUES:
1) Whether or not RR No. 7-95 which expanded the statutory
requirements for the issuance of official receipts and invoices
found in Section 113 of the Tax Code by providing for the
additional requirement of the imprinting of the terms “zero-
rated” is unconstitutional
2) Whether or not company invoices are sufficient to establish the
actual amount of sale of electric power services to the NPC and
 properties, while a VAT official receipt properly pertains to every
lease of goods or properties; as well as to every sale, barter or
exchange of services.
A VAT invoice is the seller’s best proof of the sale of goods or
services to the buyer, while a VAT receipt is the buyer’s best
evidence of the payment of goods or services received from the
seller. A VAT invoice and a VAT receipt should not be confused
and made to refer to one and the same thing. Certainly, neither
does the law intend the two to be used alternatively.
WHEREFORE, premises considered, the instant Petition is DENIED.
SO ORDERED.
***Section 112 of the National Internal Revenue Code (NIRC) of 1997 laid down the
manner in which the refund or credit of input tax may be made. For a VAT-registered
person whose sales are zero-rated or effectively zero-rated, Section 112(A) specifically
provides for a two-year prescriptive period after the close of the taxable quarter when the
(7) CHINA BANKING CORP. V. CIR
February 4, 2015
Sereno, C.J.
FACTS:
For the taxable years 1982 to 1986, CBC was engaged in
transactions involving sales of foreign exchange to the Central Bank of
the Philippines (now BSP), commonly known as SWAP transactions.
Petitioner did not file tax returns or pay tax on the SWAP transactions
for those taxable years.
BIR assessed CBC for deficiency DST on the sales of foreign bills
of exchange to the Central Bank. On 8 May 1989, petitioner CBC sent a
letter of protest to the BIR.
On 6 December 2001, more than 12 years after the filing of the
protest, the CIR rendered a decision reiterating the deficiency DST
assessment and ordered the payment thereof plus increments within 30
days from receipt of the Decision.
On 18 January 2002, CBC filed a Petition for Review with the
CTA. On 11 March 2002, the CIR filed an Answer with a demand for
CBC to pay the assessed DST.
CTA denied the petition of CBC and ruled that a SWAP
arrangement should be treated as a telegraphic transfer subject to
documentary stamp tax. CTA En Banc denied CBC’s subsequent
sales were made within which such taxpayer may apply for the issuance of a tax
credit certificate or refund of creditable input tax.
Pursuant to Section 112(D) of the NIRC of 1997, respondent 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. The burden of proving
entitlement to a tax refund is on the taxpayer. Absent any evidence to the contrary, it is
presumed that in order to discharge its burden, petitioner attached to its applications
complete supporting documents necessary to prove its entitlement to a refund. 12 Thus,
the 120-day period for the CIR to act on the administrative claim commenced on 20 June
2000 and 25 July 2001.
As laid down in San Roque, judicial claims filed from 1 January 1998 until the
present should strictly adhere to the 120+30-day period referred to in Section 112 of the
NIRC of 1997. The only exception is the period 10 December 2003 until 6 October 2010.
Within this period, BIR Ruling No. DA-489-03 is recognized as an equitable estoppel,
during which judicial claims may be filed even before the expiration of the 120-day
period granted to the CIR to decide on a claim for a refund.
The Court in San Roque has already settled that failure of the petitioner to
observe the mandatory 120-day period is fatal to its judicial claim and renders the CTA
devoid of jurisdiction over that claim. On 28 September 2001 – the date on which
petitioner filed its judicial claim for the period covering taxable year 2000 - the 120+30
day mandatory period was already in the law and BIR Ruling No. DA-489-03 had not
yet been issued. Considering this fact, petitioner did not have an excuse for not
observing the 120+30 day period.
petition and MR to them.
PETITIONER’S CONTENTION:
CBC raised the argument of prescription for the first time in its
Petition for Review under Rule 45 with the Court. Petitioner CBC
states that the government only has three years from 19 April 1989,
the date the former received the assessment of the CIR, to collect the
tax. Within that time frame, however, neither a warrant of distraint or
levy was issued, nor a collection case filed in court.
ISSUE:
Whether or not the right of the BIR to collect the assessed DST
from CBC is barred by prescription
RULING:
YES. The right of the BIR to collect the assessed DST is barred by the
statute of limitations.

The BIR issued the assessment for deficiency DST on 19 April 1989, when
the applicable rule was Section 319(c) of the NIRC of 1977, as amended. In
said provision, the time limit for the government to collect the assessed tax
is set at three years, to be reckoned from the date when the BIR
mails/releases/sends the assessment notice to the taxpayer.
Further, Section 319(c) states that the assessed tax must be collected by
distraint or levy and/or court proceeding within the three-year period.

In this case, the records do not show when the assessment notice was
mailed, released or sent to CBC. Nevertheless, the latest possible date
that the BIR could have released, mailed or sent the assessment notice
was on the same date that CBC received it, 19 April 1989. Assuming
therefore that 19 April 1989 is the reckoning date, the BIR had three
years to collect the assessed DST. However, the records of this case
show that there was neither a warrant of distraint or levy served on
CBC's properties nor a collection case filed in court by the BIR within
the 3-year period.

The attempt of the BIR to collect the tax through its Answer with a
demand for CBC to pay the assessed DST in the CTA on 11 March 2002
did not comply with Section 319(c) of the 1977 Tax Code, as amended.
The demand was made almost thirteen years from the date from which
the prescriptive period is to be reckoned. Thus, the attempt to collect the
tax was made way beyond the three-year prescriptive period.

In addition, the fact that the taxpayer in this case may have requested a
reinvestigation did not toll the running of the three-year prescriptive
period. A request for reinvestigation alone will not suspend the statute of
limitations. Two things must concur: there must be a request for
reinvestigation and the CIR must have granted it. In the present case, there
is no showing from the records that the CIR ever granted the request for
reinvestigation filed by CBC. That being the case, it cannot
be said that the running of the three-year prescriptive period was
effectively suspended.

Moreover, failure to raise prescription at the administrative level/lower

court as a defense is of no moment. When the pleadings or the evidence
on record show that the claim is barred by prescription, the court must
dismiss the claim even if prescription is not raised as a defense.
If the pleadings or the evidence on record show that the claim is
barred by prescription, the court is mandated to dismiss the claim
even if prescription is not raised as a defense.

WHEREFORE, the Petition is GRANTED. The Court of Tax Appeals En

Banc Decision dated 1 December 2005 and its Resolution dated 20 March
2006 in CTA EB Case No. 109 are hereby REVERSED and SET ASIDE.
A new ruling is entered DENYING respondent’s claim for deficiency
DST in the amount of P11,383,165.50.
(8) VISAYAS GEOTHERMAL CASE V. CIR
G.R. No. 197525, June 4, 2014
Mendoza, J.
FACTS:
VGPC filed with the BIR its Original Quarterly VAT Returns for the 1st
to 4th quarters of taxable year 2005 on April 25, 2005, July 25, 2005,
October 25, 2006, and January 20, 2006, respectively.
On December 6, 2006, it filed an administrative claim for refund with
the BIR District Office No. 89 of Ormoc City on the ground that it was
entitled to recover excess and unutilized input VAT payments for the
four quarters of taxable year 2005, pursuant to R.A. No. 9136, which
treated sales of generated power subject to VAT to a zero percent (0%)
rate starting June 26, 2001.
PETITIONER’S CONTENTION:
Petitioner VGPC argues that (1) the law and jurisprudence have long
established the rule regarding compliance with the two-year
prescriptive period under Section 112(D) in relation to Section 229 of
the 1997 Tax Code; (2) Aichi did not overturn the doctrine in Atlas,
which upheld the primacy of the two-year period under Section 229;
(3) respondent CIR is estopped from questioning the jurisdiction of
the CTA and Aichi cannot be indiscriminately applied to all VAT
refund cases; (4) applying Aichi invariably to all VAT refund cases
would effectively grant respondent CIR unbridled discretion to
deprive a taxpayer of the right to effectively seek judicial recourse,
which clearly violates the standards of fairness and equity; and (5) the
novel

One month later, while its administrative claim was pending, VGPC
filed its judicial claim via a petition for review with the CTA praying for
a refund or the issuance of a tax credit certificate covering the four
quarters of taxable year 2005.

CTA dismissed the petition and explained that although VGPC

seasonably filed its administrative claim within the two-year
prescriptive period, its judicial claim filed with the CTA Second
Division was prematurely filed under Section 112(D) of the NIRC.
interpretation of the law in Aichi should not be made to apply to the
present case for being contrary to existing jurisprudence at the time
VGPC filed its administrative and judicial claims for
refund. Aichi should be applied prospectively.
ISSUES:
(1) Whether or not CTA En Banc erred in finding that the 120-day
and 30-day periods prescribed under Section 112(D) of the 1997
Tax Code are jurisdictional and mandatory in the filing of the
judicial claim for refund
(2) Whether or not CTA En Banc erred in finding that Aichi prevails
over and/or overturned the doctrine in Atlas, which upheld the
primacy of the two-year period under Section 229 of the Tax Code
(3) Whether or not CTA En Banc erred in finding that Respondent
CIR is not estopped from questioning the jurisdiction of the CTA
RULING:
(1) YES. The Court held that the judicial claim was not premature.
prescriptive period from the date of payment of the output VAT
under Section 229, and has no relevance to the 120+30 day
period under Section 112. Thus, Atlas is only relevant in
determining when to file an administrative claim with the CIR
for refund or credit of unutilized creditable input VAT, and not
for determining when to file a judicial claim with the CTA.
Aichi not applied prospectively
Petitioner VGPC also argues that Aichi should be applied
prospectively and, therefore, should not be applied to the
present case. This position cannot be given consideration.
Considering that the nature of the 120+30 day period was first
settled in Aichi, the interpretation by the Court of its being
mandatory and jurisdictional in nature retroacts to the date the
NIRC was enacted. It cannot be applied prospectively as no old
doctrine was overturned.
(3) CIR not estopped
It is a well-settled rule that the government cannot be estopped
by the mistakes, errors or omissions of its agents.32 It has been
specifically held that estoppel does not apply to the government,
especially on matters of taxation. Taxes are the nation’s lifeblood
The general rule is that the 120+30 day period is mandatory and
jurisdictional from the effectivity of the 1997 NIRC on January 1,
1998, up to the present. As an exception, judicial claims filed
from December 10, 2003 to October 6, 201024need not wait for the
exhaustion of the 120-day period.
A review of the facts of the present case reveals that petitioner
VGPC timely filed its administrative claim with the CIR on
December 6, 2006, and later, its judicial claim with the CTA on
January 3, 2007. The judicial claim was clearly filed within the
period of exception and was, therefore, not premature and
should not have been dismissed by the CTA En Banc.
(2) Atlas doctrine has no relevance to the 120+30 day period for
filing judicial claim.
In this regard, it was thoroughly explained in San Roque that the
Atlas doctrine only pertains to the reckoning point of the 2-year
through which government agencies continue to operate and
with which the State discharges its functions for the welfare
of its constituents.33 Thus, the government cannot be estopped
from collecting taxes by the mistake, negligence, or omission
of its agents. Upon taxation depends the ability of the
government to serve the people for whose benefit taxes are
collected. To safeguard such interest, neglect or omission of
government officials entrusted with the collection of taxes
should not be allowed to bring harm or detriment to the
people.34
(4) For clarity and guidance, the Court deems it proper to outline
the rules laid down in San Roque with regard to claims for
refund or tax credit of unutilized creditable input VAT. They
are as follows:
1. When to file an administrative claim with the CIR:
 a. General rule – Section 112(A): Within 2 years from the (issuance of BIR Ruling No. DA-489-03) to October 6,
close of the taxable quarter when the sales were made. 2010 (promulgation of Aichi).
b. Exception – Atlas: Within 2 years from the date of
payment of the output VAT, if the administrative claim WHEREFORE, the petition is PARTIALLY GRANTED. The February
was filed from June 8, 2007 (promulgation of Atlas) to 7, 2011 Decision and the June 27, 2011 Resolution of the Court of Tax
September 12, 2008 (promulgation of Mirant). Appeals En Banc, in CTA EB Case Nos. 561 and 562 are REVERSED
and SET ASIDE. The April 17, 2009 Decision and the October 29, 2009
2. When to file a judicial claim with the CTA: Resolution of the CTA Former Second Division in CTA Case No. 7559
a. General rule – Section 112(D); not Section 229 are REINSTATED.
i. Within 30 days from the full or partial denial of
the administrative claim by the CIR; or Public respondent is hereby ORDERED TO REFUND or, in the
ii. Within 30 days from the expiration of the 120-day alternative, TO ISSUE A TAX CREDIT CERTIFICATE, in favor of the
petitioner the amount of SEVEN MILLION SIX HUNDRED NINETY
period provided to the CIR to decide on the claim.
NINE THOUSAND THREE HUNDRED SIXTY SIX PESOS AND 37/100
This is mandatory and jurisdictional beginning
(P7,699,366.37) representing unutilized input VAT paid on domestic
January 1, 1998 (effectivity of 1997 NIRC).
purchases of non-capital goods and services, services rendered by non-
b. Exception – BIR Ruling No. DA-489-03 residents, and importations of non-capital goods for the first to fourth
The judicial claim need not await the expiration of the quarters of taxable year 2005.
120-day period, if such was filed from December 10, 2003
(9) BIR, REPRESENTED BY CIR V. HON. ERNESTO D. ACOSTA, ET was a fatal defect that rendered its motion a mere scrap of paper. As such,
AL. AND CHEVRON PHILIPPINES, INC. it is not entitled to judicial cognizance and the filing of such defective
motion did not toll the reglementary period to appeal.
G.R. NO. 195320, April 23, 2018
Reyes, Jr., J. ISSUES:
1) Whether a Special Civil Action for Certiorari under Rule 65 of the
FACTS: Rules of Court is available as a remedy to the BIR; and
Chevron filed an administrative claim for refund or credit with the BIR 2) Whether the CTA-Special First Division gravely abused its
representing the alleged overpayment of excise taxes on imported finished discretion in declaring the motion for reconsideration filed by the
unleaded premium gasoline and diesel fuel withdrawn from its refinery the BIR on October 14, 2010 to be a pro forma motion, and in rendering
month of November 2003.5 the Decision promulgated on July 12, 2010 final and executory.26
The BIR, however, did not act on Chevron's claim. Thus, Chevron elevated the RULING:
the Court finds no grave abuse of discretion
case to the CTA-Special Firsto Division on October 28, 2005 via a petition for
O. CnTAth-Sepepcaiarl tFirosft DtivhiesioCnTdAi- (1) N
review. sp o s e d oaflthFe icrassetinDiitsveinstiiroenty a
S p e c i nd
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i n i s s u , the
CTA-SpecialaFirst
tossfuDivision
arithleerdpartly
rurlees granted
uoplonuthe
.tTipetition. The dispositive
hoenrse.fore
The BIR moved for the reconsideration of this Decision on August 3, 2010.10

PETITIONER’S CONTENTION:
BIR argues that the CTA-Special First Division in accordance with
jurisprudence should disregard technicalities and allowed the motion despite
the lack of notice of hearing in order to resolve the case meritoriously.

RESPONDENT’S CONTENTION:
Chevron asserted that non-compliance with the notice of hearing requirement
 appropriate remedy to challenge the Resolution dated December 3,
2010 is an ordinary appeal, not a petition for certiorari.
BIR had every opportunity to elevate the matter to the CTA En Banc but
chose not to avail itself of this remedy. Even on this ground alone, the
Court may already dismiss the present petition.
(2) NO. The Court finds that the CTA-Special First Division did not
gravely abuse its discretion.
BIR was unable to show that the resolutions of the CTA-Special First
Division were patent and gross to warrant striking them down through a
petition for certiorari. No argument was advanced to establish that the
CTA-Special First Division exercised its judgment capriciously,
whimsically, arbitrarily, or despotically by reason of passion and hostility.
It is not disputed that the BIR's MR dated August 3, 2010 failed to comply
with the provisions provided for by the Revised Rules of the CTA.
Specifically, the motion filed by the BIR did not include a notice for
(10) PROTECTOR’S SERVICES, INC. V. CIR
G.R. NO. 118176. April 12, 2000
Quisumbing, J.
FACTS:
Petitioner was assessed for deficiency percentage taxes including
surcharges, penalties and interests.
On December 7, 1987, respondent Commissioner sent by registered
mail, demand letters for payment of the aforesaid assessments.
Petitioner protested the assessment and claimed that its gross receipts
subject to percentage taxes should exclude the salaries of the security
guards as well as the corresponding employer's share of SSS, SIP and
Medicare contributions.
Without formally acting on the petitioner's protest, the BIR sent a
follow-up letter, ordering the settlement of taxes based on its
computation. On November 9, 1990, BIR Deputy Commissioner
Eufracio Santos sent a denied with finality the latter's protests against
the subject assessments.
CTA dismissed the petition contending that the assessments were made
within the prescriptive period. It further ruled that the protest filed by
hearing and necessarily, the BIR likewise failed to set the motion for
hearing. It is clear therefore that the CTA-Special First Division simply
applied the applicable rules which the BIR concededly failed to
observe. Accordingly, CTA-Special First Division's dismissal of the MR
was discretion duly exercised, not misused or abused.
On the basis of the foregoing, the Court finds no grave abuse of
discretion on the part of the CTA-Special First Division in issuing the
assailed resolutions. Neither can the BIR, having chosen not to avail
itself of the remedy of appeal, now substitute certiorari for an appeal as
both remedies are mutually exclusive, and not alternative or
successive.38
WHEREFORE, premises considered, the petition for certiorari is
hereby DISMISSED. The Resolutions dated September 24, 2010 and
December 3, 2010 of the Court of Tax Appeals-Special First Division in
CTA Case No. 7358 are AFFIRMED in toto.
SO ORDERED.
petitioner was filed out of time.
PETITIONER’S CONTENTION:
petitioner maintains that the assessments only became final on
November 9, 1990, when the CIR denied the request for
reconsideration.
petitioner argues that the government's right to assess and collect
the 1983, 1984 and 1985 taxes had already prescribed. Petitioner
insists that the reckoning period of prescription should start from
the date when the quarterly percentage taxes were paid and not
when the Final Annual Percentage Tax Return for the year was filed.
Moreover, he denies having received the 1985 tax assessment.
petitioner interposes the third issue claiming that since the CIR
failed, until now, to commence the collection of the 1983, 1984, and
1985
deficiency tax, the right to collect had, likewise, prescribed pursuant to
Section 219 of the NIRC.

petitioner contends that the assessments made by the respondent CIR

were erroneous because they included in the gross receipts subject to the
contractor's tax the salaries of the security guards and the employer's
share in the SSS, SIF and Medicare. Petitioner claims that it did not
benefit from those amounts earmarked for other persons or institutions,
hence, they must not be taxable.

ISSUES:
1) Whether or not CTA has jurisdiction to act on the petition for
review
2) Whether or not the assessment against the petitioner for
deficiency percentage tax for taxable years 1983 and 1984 were
made after the lapse of the prescriptive period
3) Whether or not the period for the collection of taxes for taxable
years 1983, 1984 and 1985 has already prescribed
4) Whether or not the assessments are correct

RULING:
(1) NO. An assessment maybe administratively protested within 30
days from receipt thereof; otherwise, the assessment shall become
final and unappealable. In this case, on December 10, 1987,
petitioner received the BIR's assessment notices. On January 12,
1988, or 33 days from receipt thereof, petitioner protested the 1983
and 1984 assessments and requested for a reinvestigation. Hence,
the petitioner may no longer dispute the correctness of the
assessments. The Court ruled that CTA correctly dismissed the
appeal for lack of jurisdiction.

(2) NO. B.P. 700 was approved on April 5, 1984. The 3-year
prescriptive period for assessment and collection of revenue taxes
applied to taxes paid beginning 1984. Clearly, the tax assessment
made on December 10, 1987, for the year 1983 was still covered by
the 5-year statutory prescriptive period. This rule was emphasized
in RMC No. 33-84, published on November 12, 1984.
 Further, in CIR V. CA (1999), the Court held that the 3-year
prescriptive period of tax assessment of contractors tax should
be computed at the time of the filing of the "final annual
percentage tax return," when it can be finally ascertained if the
taxpayer still has an unpaid tax, and not from the tentative
quarterly payments.
CIR has the power to "make judgments or opinions in connection with the
implementation of the provisions of the internal revenue code." As such, the
opinions and rulings of officials of the government called upon to execute
or implement administrative laws, command respect and weight.

(3) NO. Section 271 of the 1986 Tax Code provides for the
suspension of running of the statute of limitation of tax
collection.

In the instant case, PSI filed a petition before the CTA to prevent
the collection of the assessed deficiency tax. When the CTA
dismissed the case, petitioner elevated the case before the Court,
hoping for a review in its favor. The actions taken by the
petitioner before the CTA and now before the Court, suspended
the running of the statute of limitation.

(4) YES. Contractors tax on gross receipts imposed on business

agents including private detective watchman agencies, was a tax
on the sale of services or labor, imposed on the exercise of a
privilege. The term "gross receipts" means all amounts
received by the prime or principal contractor as the total price,
undiminished by the amount paid to the subcontractor under a
subcontract arrangement. Hence, gross receipts could not be
diminished by employer's SSS, SIF and Medicare contributions.
Furthermore, it has been consistently ruled by the BIR that the
salaries paid to security guards should form part of the gross
receipts, subject to tax.

WHEREFORE, the assailed decision of the Court of Appeals, in CA-

G.R. SP 31825, is AFFIRMED. Costs against petitioner.

SO ORDERED.
(11) UNIVERSITY PHYSICIAN SERVICES, INC. – MANAGEMENT On 16 April 2007, petitioner filed its annual ITR for the year end
INC. V. CIR December 31, 2006. UPSI-MI chose the option, and marked the
G.R. NO. 205955, March 7, 2018 corresponding box, “To be issued a tax credit certificate” with respect
Martires, J. to the unutilized excess creditable taxes for the taxable year
ending 31 December 2006.
FACTS:
In 2007, UPSI-MI changed its taxable period from calendar year to fiscal
year ending on the last day of March. Thus, UPSI-MI filed on November
14, 2007 an annual ITR covering the short period from January 1, 2007 to
March 31, 2007. The annual ITR reflected an income tax overpayment of
₱5,159,341.00 as “Prior Year’s Excess Credit”. On the same day, UPSI-MI
amended the Annual ITR for the short period by excluding the sum of
₱2,927,834.00 under the line “Prior Year’s Excess Credits”.
On 10 October 2008, UPSI-MI filed with the office of the CIR a claim for
refund and/or issuance of a TCC representing the alleged excess and
unutilized creditable withholding taxes for taxable year 2006.
Due to respondent’s inaction, petitioner filed with a Petition for Review
on April l4, 2009 before the Court in Division.
PETITIONER’S CONTENTION:
UPSI-MI argued that the irrevocability rule under Section 76 of the
NIRC is not applicable for the reason that it did not carry over to the
succeeding taxable period the 2006 excess income tax credit.
RESPONDENT’s CONTENTION:
Respondent contends that UPSI-MI effectively exercised the carry-over
option under Section 76 of the NIRC. It argued that UPSI-MI's alleged
inadvertent inclusion of the 2006 excess tax credit in the 2007 original
ITR belies its own allegation that it did not carry over the said amount
to the succeeding taxable period; and that the amendment of the 2007
ITR cannot undo UPSI-MI's actual exercise of the carry-over option in
the original 2007 ITR, for to do so would be against the irrevocability
rule.
ISSUE:
Whether or not UPSI-MI may still be entitled to the refund of its 2006
excess tax credits when it thereafter filed its income tax return (for the
short period ending 31 March 2007) indicating the option of carry-over
OUR RULING
NO. The Court ruled that UPSI-MI is barred from recovering its excess
creditable tax through refund or TCC.
Sec. 76 of the NIRC provides:
xxx
In case the corporation is entitled to a tax credit or refund of the excess
estimated quarterly income taxes paid, the excess amount shown on its
final adjustment return may be carried over and credited against the
estimated quarterly income tax liabilities for the taxable quarters of the
succeeding taxable years. Once the option to carry-over and apply the
excess quarterly income tax against income tax due for the taxable
quarters of the succeeding taxable years has been made, such option
shall be considered irrevocable for that taxable period and no
application for cash refund or issuance of a tax credit certificate shall be
allowed therefor.
Under the law, there are two options available to the corporation
whenever it overpays its income tax for the taxable year: (1) to carry
over and apply the overpayment as tax credit against the estimated
quarterly income tax liabilities of the succeeding taxable years (also
known as automatic tax credit) until fully utilized (meaning, there is no
prescriptive period); and (2) to apply for a cash refund or issuance of
a tax credit certificate within the prescribed period.
The irrevocability rule is provided in the last sentence of Section 76. A
perfunctory reading of the law unmistakably discloses that the
irrevocable option referred to is the carry-over option only. The law
does not prevent a taxpayer who originally opted for a refund or tax
credit certificate from shifting to the carry-over of the excess creditable
taxes to the taxable quarters of the succeeding taxable years.

The CTA was correct in considering UPSI-MI to have constructively

chosen the option of carry-over, for which reason, the irrevocability rule
forbade it to revert to its initial choice. It does not matter that UPSI-Ml
had not actually benefited from the carry-over on the ground that it did
not have a tax due in its 2007 short period. Neither may it insist that the
insertion of the carry-over in the 2007 FAR was by mere mistake or
inadvertence. As previously laid down, the irrevocability rule admits of
no qualifications or conditions.

WHEREFORE, the petition is DENIED for lack of merit. The 8 February

2013 Decision of the Court of Tax Appeals in CTA-EB Case No. 828 is
hereby AFFIRMED. SO ORDERED.

(12) CIR V. CTA & AYALA LAND, INC.

G.R. NO. 190680, September 13, 2012
Reyes, J.
FACTS:
Private respondent ALI received petitioner CIR’s Final Assessment
Notice (2003 FAN) whereby it was assessed an alleged deficiency 10% VAT on
its alleged income from cinema operations for the taxable year 2003. ALI filed
with the CTA a petition for review to question the CIR’s assessment against it
for deficiency VAT.
CTA Second Division granted ALI’s petition for review. The
assessment against ALI for deficiency VAT was ordered cancelled and set
aside.
CTA en banc affirmed the decision of the CTA Second Division.
RESPONDENT’S CONTENTION
CTA En banc issued its Resolution denying the motion for being filed
beyond the 60-day period allowed by law. It reasoned that per its records,
the CIR and OSG had received on March 27, 2009 and March 30, 2009,
respectively, a copy of the resolution denying the motion for
reconsideration.6
ISSUE:
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.

PETITIONER’S CONTENTION:
The CIR claims that neither he nor his statutory counsel, the Office of the
Solicitor General (OSG), received a copy of the CTA en banc’s resolution
denying his motion for reconsideration. It then came as a surprise to him when
he received on June 17, 2009 a copy of the CTA en banc’s Resolution dated June
10, 2009 which provided that the CTA Decision dated February 12, 2009 had
become final and executory. The CIR then filed on July 2, 2009 a Manifestation
with the Motion to Reconsider Resolution Ordering Entry of
Judgment,4 questioning the CTA’s entry of judgment. The CIR claimed that he
knew of the Resolution dated March 25, 2009 only on August 3, 2009, when he
received a copy of the Resolution dated July 29, 2009. He then claimed that the
sixty (60)-day period for the filing of the petition for relief should be reckoned
from August 3, 2009, giving him until October 2, 2009 to file it.
RULING:
NO. The Court ruled that there was no grave abuse of discretion
because the CIR's petition for relief was indeed filed out of time. Thus, the
Court added that there was no cogent reason to grant petitioner's plea for the
issuance of a writ of certiorari.
At the outset, 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. The settled rule is that a motion for
reconsideration is a condition sine qua non for the filing of a petition for certiorari.
Even if procedural infirmity was set aside, the petition is dismissible. By
the CIR’s own evidence and admissions, it is evident that both the CIR and the
OSG had known of the CTA’s Resolution dated March 25, 2009 long before
August 3, 2009. The CIR’s claim that it was only on August 3, 2009 that he
learned of the CTA’s denial of his motion for reconsideration is belied by records
showing that as of June 22, 2009, he already knew of such fact. The information
was relayed by the CTA to the CIR, when the latter inquired from the court
about the status of the case and the court’s action on his motion for
reconsideration. It was precisely because of such knowledge that he filed on July
2, 2009 the manifestation and motion pertaining to the CTA’s order of entry of
judgment.
Even as we reckon the 60-day period under Section 3, Rule 38 from said
date, the petitioner only had until August 21, 2009 within which to file a petition
for relief. Since August 21, 2009, a Friday, was a non-working holiday, the
petitioner should have filed the petition at the latest on August 24, 2009.
The CIR’s filing with the CTA of the petition for relief on October 2, 2009 then
did not conform to the 60-day requirement.

WHEREFORE, premises considered, the petition is DISMISSED.

SO ORDERED.
(13) CIR V. BPI
G.R. NO. , Date
411 SCRA 456
Ponente
(14) CIR V. METRO STAR SUPREMA due course of mail. In the case at bar, the CIR merely alleged
G.R. NO. 185371, December 8, 2010 that Metro
Mendoza, J.

FACTS:
In January 2001, a revenue officer was authorized to examine the books
of accounts of Metro Star Superama, Inc. In April 2002, after the audit
review, the revenue district officer issued a formal assessment notice
against Metro Star advising the latter that it is liable to pay P292,874.16
in deficiency taxes. Metro Star assailed the issuance of the formal
assessment notice as it averred that due process was not observed when
it was not issued a pre-assessment notice. Nevertheless, the
Commissioner of Internal Revenue authorized the issuance of a Warrant
of Distraint and/or Levy against the properties of Metro Star.

PETITIONER’S CONTENTION:
The CIR insists that Metro Star received the PAN, dated January 16,
2002, and that due process was served nonetheless because the latter
received the Final Assessment Notice (FAN)

RESPONDENT’S CONTENTION:
Metro Star contends that it was not accorded due process, denying that
it did not receive a Preliminary Assessment Notice prior to the issuance
of the Final Assessment Notice.

ISSUE:
Whether or not due process was observed in the issuance of the formal
assessment notice against Metro Star

RULING:
NO. It is true that there is a presumption that the tax assessment was
duly issued. However, this presumption is disregarded if the taxpayer
denies ever having received a tax assessment from the Bureau of
Internal Revenue. In such cases, it is incumbent upon the BIR to prove
by competent evidence that such notice was indeed received by the
addressee-taxpayer. The onus probandi was shifted to the BIR to prove
by contrary evidence that the Metro Star received the assessment in the
Star received the pre-assessment notice in January 2002. The CIR could have
simply presented the registry receipt or the certification from the postmaster that
it mailed the pre-assessment notice, but failed. Neither did it offer any
explanation on why it failed to comply with the requirement of service of the pre-
assessment notice. The Supreme Court emphasized that the sending of a pre-
assessment notice is part of the due process requirement in the issuance of a
deficiency tax assessment,” the absence of which renders nugatory any
assessment made by the tax authorities. The use of the word “shall” under the
law describes the mandatory nature of the service of a PAN. The persuasiveness
of the right to due process reaches both substantial and procedural rights and the
failure of the CIR to strictly comply with the requirements laid down by law and
its own rules is a denial of Metro Stars right to due process.[15] Thus, for its
failure to send the PAN stating the facts and the law on which the assessment
was made as required by Section 228 of R.A. No. 8424, the assessment made by
(15) CIR V. HAMBRECHT & QUIST PHILS., INC.
G.R. NO. 169225, November 17, 2010
Leaonardo-De Castro, J.
FACTS:
Respondent received a letter from petitioner demanding for payment
of alleged deficiency income and expanded withholding taxes for the taxable
year 1989 amounting to P2,936,560.87. Prompting them to file a protest letter.
Nearly 8 years later, respondent received a letter from petitioner advising them
that CIR had rendered a final decision denying its protest on the ground that
the protest against the disputed tax assessment was allegedly filed beyond the
30-day reglementary period prescribed in then Section 229 of the NIRC.
CTA Original Division held that the subject assessment notice sent by
registered mail to respondents former place of business was valid and binding
since respondent only gave formal notice of its change of address after said
notice was give. Thus, the assessment had become final and unappealable for
failure of respondent to file a protest within the 30-day period provided by
law. However, the CTA (a) held that the CIR failed to collect the assessed taxes
within the prescriptive period; and (b) directed the cancellation and
withdrawal of assessment. CTA En banc denied CIR’s petitioner for review.
the CIR is void.
It is an elementary rule enshrined in the 1987 Constitution that no
person shall be deprived of property without due process of law.[19] In
balancing the scales between the power of the State to tax and its
inherent right to prosecute perceived transgressors of the law on one
side, and the constitutional rights of a citizen to due process of law and
the equal protection of the laws on the other, the scales must tilt in favor
of the individual, for a citizens right is amply protected by the Bill of
Rights under the Constitution. Thus, while taxes are the lifeblood of the
government, the power to tax has its limits, in spite of all its plenitude.
WHEREFORE, the petition is DENIED. SO ORDERED.
apparently resulted from an adjustment made to respondents taxable
income for the year 1989, on account of the disallowance of certain items of
expense, namely, professional fees paid, donations, repairs and
maintenance, salaries and wages, and management fees. The latter item of
expense, the management fees, made up the bulk of the disallowance, the
examiner alleging, among others, that petitioner failed to withhold the
appropriate tax thereon.
ISSUES:
1) Whether or not the CTA has jurisdiction to rule the government’s
rights to collect tax has prescribed
2) Whether or not the period to collect assessment has prescribed

PETITIONER’S CONTENTION:
CIR argues that the CTA had no jurisdiction over the case since the CTA itself
had ruled that the assessment had become final and unappealable.
Moreover, CIR insists that its right to collect the tax deficiency it assessed on
respondent is not barred by prescription since the prescriptive period thereof
was allegedly suspended by respondents request for reinvestigation.

RESPONDENT’S CONTENTION:
Respondent’s argue that the alleged deficiency income tax assessment
RULING:
(1) YES. The issue of prescription, being a matter provided for by the NIRC, is
well within the jurisdiction of the CTA to decide.
The assailed CTA En Banc Decision was correct in declaring that there was
nothing in the foregoing provision upon which petitioners theory with
regard to the parameters of the term other matters can be supported or
even deduced. What is rather clearly apparent, however, is that the term
other matters is limited only by the qualifying phrase that follows it. Thus,
on the strength of such observation, the Court have previously ruled that
the appellate jurisdiction of the CTA is not limited to cases which involve
decisions of the CIR on matters relating to assessments or refunds. The
second part of the law covers other cases that arise out of the NIRC or
related laws administered by the BIR.
(16) MACARIO LIM GAW V. CIR
G.R. NO. 222837, July 23, 2018
Tijam, J.
FACTS:
Petitioner bought 10 parcels of land on two separate occasions covered
by STL Facility from BDO. Subsequently, petitioner conveyed the 10
parcels of land to Eagle I Landholdings, Inc. (Eagle I).
Petitioner requested the BIR for the respective computations of the tax
liabilities due on the sale of the 10 parcels of land to Eagle I. Thereafter,
petitioner paid corresponding CGT and DST.
2 years later CIR opined that petitioner was not liable for the 6% CGT
but for the 32% regular IT and 12% VAT, on the theory that the
properties petitioner sold were ordinary assets and not capital assets.
Respondent found petitioner to have misdeclared his income,
misclassified the properties and used multiple tax identification
numbers to avoid being assessed the correct amount of taxes.
CIR filed before the DOJ a complaint for tax evasion against petitioner.
DOJ then filed two criminal information for tax evasion against
petitioner.
Subsequently, respondent issued a FDDA against petitioner, assessing
him of deficiency IT and VAT covering taxable years 2007 and 2008.
(2) YES. Two requisites must concur before the period to enforce collection
may be suspended: (a) that the taxpayer requests for reinvestigation,
and
(b) that petitioner grants such request.
The mere filing of a protest letter which is not granted does not operate
to suspend the running of the period to collect taxes. In the case at bar,
the records show that respondent filed a request for reinvestigation on
December 3, 1993, however, there is no indication that petitioner acted
upon respondents protest.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of
Tax Appeals (CTA) En Banc dated August 12, 2005 is AFFIRMED. No costs. SO
ORDERED
PETITIONER’S CONTENTION:
Petitioner claims that since the FDDA covering the year 2008 was
also the subject of the tax evasion cases, the civil action for the
recovery of civil liability for taxes and penalties was deemed
instituted in the consolidated criminal cases as a matter of law. Thus,
if the civil liability for recovery of taxes and penalties is deemed
instituted in the criminal case, it is the State, not the taxpayer that
files the Information and pays the filing fee. Petitioner claims that
there is no law or rule that requires petitioner to pay filing fees in
order for the CTA to rule on the civil aspect of the consolidated
criminal cases filed against him.
RESPONDENT’S CONTENTION:
Respondent, through the Office of the Solicitor General (OSG) argues that
the tax evasion cases filed against petitioner were instituted based on
Sections 254 and 255 of the NIRC, that in all criminal cases instituted
before the CTA, the civil aspect of said cases, which constitutes the
recovery by the government of the taxes and penalties relative to the
criminal action shall not be subject to reservation for a separate civil
action.

ISSUES:
1) Whether or not the civil action to question the FDDA is
deemed instituted with the criminal case for tax evasion
2) Whether or not the civil action for the recovery of civil
liability for taxes and penalties that is deemed instituted
with the criminal action is the Petition for Review Ad
Cautelam filed by petitioner
3) Whether or not the petition for review should be dismissed
for non-payment of docket fees

RULING:
(1) NO. It is well-settled that the taxpayer's obligation to pay
the tax is an obligation that is created by law and does not
arise from the offense of tax evasion, as such, the same is
not deemed instituted in the criminal case.

Civil liability to pay taxes arises from the fact, for instance, that
one has engaged himself in business, and not because of any
criminal act committed by him. Further, it should be borne in
mind that the tax and the obligation to pay the same are all
created by statute; so are its collection and payment governed by
statute. The payment of taxes is a duty which the law requires to
be paid. Said obligation is not a consequence of the felonious
acts charged in the criminal proceeding nor is it a mere civil
liability arising from crime that could be wiped out by the
judicial declaration of non-existence of the criminal acts
charged.
 (2) NO. The tax evasion case filed by the government against the
erring taxpayer has, for its purpose, the imposition of criminal
liability on the latter. While the Petition for Review filed by the
petitioner was aimed to question the FDDA and to prevent it
from becoming final. What is deemed instituted with the
criminal action is only the government's recovery of the taxes
and penalties relative to the criminal case. The remedy of the
taxpayer to appeal the disputed assessment is not deemed
instituted with the criminal case. To rule otherwise would be to
render nugatory the procedure in assailing the tax deficiency
assessment.

(3) NO. the mere failure to pay the docket fees at the time of the
filing of the complaint, or in this case the Petition for Review Ad
Cautelam, does not necessarily cause the dismissal of the case.
While the court acquires jurisdiction over any case only upon the
payment of the prescribed docket fees, its nonpayment at the
time of filing of the initiatory pleading does not automatically
cause its dismissal so long as the docket fees are paid within a
reasonable period; and that the party had no intention to
defraud the government.

WHEREFORE, the Petition is hereby PARTIALLY GRANTED. The

Decision dated December 22, 2014 and Resolution dated February 2,
2016 of the Court of Tax Appeals En Banc in CTA EB Criminal Case No.
026 are REVERSED and SET ASIDE. The case is REMANDED to the
Court of Tax Appeals First Division to conduct futher proceedings in
CTA Case No. 8503 and to ORDER the Clerk of Court to assess the
correct docket fees. Petitioner Mariano Lim Gaw, Jr., is
likewise ORDERED to pay the correct docket fees within ten (10) days
from the receipt of the correct assessment of the Clerk of Court. SO
ORDERED.
(17) PHILACOR CREDIT CORP. V. CIR transferee of the promissory notes, is not liable for the assignment or
G.R. NO. 169899, February 6, 2013 transfer of promissory notes as this transaction is not taxed under the
Brion, J. law.
review before the CTA. CTA held that petitioner Philacor, as an
FACTS: assignee of promissory notes, is liable for DST on (1) the issuance of
Philacor received a Pre-Assessment Notices (PANs) covering the promissory notes; and (2) the assignment of promissory notes for the
alleged deficiency income, percentage and DSTs, including increments. fiscal year ended 1993.
Philacor protested the PANs with a request for reconsideration
and reinvestigation. On September 30, 1998, Philacor filed a petition for PETITIONER’S CONTENTION:
 Philacor alleged that the assessed deficiency income tax was
erroneously computed. Similarly, the BIR failed to take into account the
reversing entries of repossessions, legal accounts, and write-offs when it
computed the percentage tax; thus, the total income reported, that the
BIR arrived at, was not equal to the actual receipts of payment from the
customers. As for the deficiency DST, Philacor claims that the
accredited appliance dealers were required by law to affix the
documentary stamps on all promissory notes purchased until the
enactment of Republic Act No. 7660. It further argued that the
assessments were void for failure to state the law and the facts on which
they were based.
RESPONDENT’S CONTENTION:
CIR contends that petitioner may be held liable for tax contending that
under Regulation No. 26, any person transferring or using a promissory
note can be held responsible for the payment of DST.
ISSUE:
Whether or not Philacor is liable for the DST on the issuance of the PN
RULING:
NO. The Court ruled that Philacor is not liable for the DST on
the issuance of the promissory notes. Philacor, as an assignee or
BIR issued RMC No. 58-2008 which clarified among others, the time within
which to reckon the redem(p1t8i)oCn
IRpeVri.oUd NoIfTEreDalCOesCtaOtNe
UmoTrPtgLaAgNesT.EIRtS BANK
readsG: .R. NO. 179063, October 23, 2009
For of reckoning the one-year
pAurbpaods,eJ
s.
redemption period in the case of individual mortgagors, or the three-
month redemption period for juridical persons/mortgagors, the same
shall FACTS:
be reRckeosnpeodndfernotm UtChePBdaftoerecolfostehde several real estate used
acmonofritrgmaagteiounpoonf
the a u ct i o n sa l e w hi c h i s t h e d a t e w h en th e
t o of
certificate sesale
c uis re a l oa n g r an te d t o it s b o rr o w ers fo r failure of
issued.
the latter to pay the loans. UCPB filed a petition for extrajudicial
foreclosure of the mortgaged properties, and they made the highest
winning bid for the whole lot.
On March 1, 2002 the executive judge finally signed the certificate of sale
Under Section 173 of the 1997 NIRC, the following are primarily
liable for the DST and those who would be secondarily liable: (1)
making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the
taxable documents, instruments or papers. Should these parties be
exempted from paying tax, the other party who is not exempt would
then be liable. Philacor is not a party to the issuance of the promissory
notes, but merely to their assignment. On the face of the documents, the
parties to the issuance of the promissory notes would be the buyer of
the appliance, as the maker, and the appliance dealer, as the payee.
Philacor did not make, sign, issue, accept or transfer the
promissory notes. The acts of making, signing, issuing and transferring
are unambiguous. The buyers of the appliances made, signed and
issued the documents subject to tax, while the appliance dealer
transferred these documents to Philacor which likewise indisputably
received or "accepted" them. "Acceptance," however, is an act that is not
even applicable to promissory notes, but only to bills of exchange.
WHEREFORE, premises considered, we GRANT the petition. The
September 23, 2005 Decision of the Court of Tax Appeals en banc in
C.T.A. E.B. No. 19 (C.T.A. Case No. 5674), ordering Philacor Credit
Corporation to pay a deficiency documentary stamp tax in connection
with the issuances and transfers or assignments of promissory notes for
the fiscal year ended July 31, 1993, is SET ASIDE. No costs. SO
ORDERED.
ISSUE:
Whether or not the 3-month redemption period for juridical persons
should be reckoned from the date of the auction sale
RULING:
NO. Under Revenue Memorandum Circular 58-2008, I]f the
and approved its issuance to UCPB as the highest bidder.[4]
On July 5, 2002 the bank paid CWT and DST in relation to the
extrajudicial foreclosure sale.
UCPB was assessed by the CIR for deficiencies in the payment of
CWT and DST due from the foreclosure of mortgaged properties. It then
filed a Petition for Review with CTA where it was ruled that the
redemption period lapsed 3 months after the executive judge approved
the certificate of sale. It said that foreclosure under the law referred to
the whole process of foreclosure which included the approval and
issuance of the certificate of sale.
PETITIONER’S CONTENTION:
CIR argues that the redemption period should be reckoned from the
date of the auction sale for, otherwise, the taxing authority would be left
at the mercy of the executive judge who may unnecessarily delay the
approval of the certificate of sale and thus prevent the early payment of
taxes. It argued that CWT must be paid within 10 days after the end of
each month, and the payment of DST within 5 days after the close of the
month when the taxable document was made, signed, accepted or
transferred.
RESPONDENT’S CONTENTION:
Redemption period should be reckoned from the approval of the
executive judge of manila of the issuance of the certificate of sale.
(19) SUPREME TRANSLINER INC. V. BPI FAMILY SAVINGS
BANK
February 25, 2011
G.R. NO. 165617 – SUPREME TRANSLINER, INC., MOISES ALVAREZ
& PAULITA ALVAREZ V. BPI FAMILY SAVINGS
G.R. NO. 165837 – BPI FAMILY SAVINGS V. SUPREME TRANSLINER,
INC. MOISES ALVAREZ & PAULITA ALVAREZ
Villarama, Jr., J.
FACTS:
On April 24, 1995, Supreme Transliner, Inc. obtained a loan from BPI
Family secured by a 714-square meter lot as collateral. For non-payment
of the loan, the mortgage was extrajudicially foreclosed and the
property was sold to the bank as the highest bidder in the public auction
conducted.
Before the expiration of the 1-year redemption period, the petitioner-
mortgagors notified the bank of their intention to redeem the property.
On May 21, 1997, the mortgagors redeemed the property by paying the
property is an ordinary asset of the mortgagor, the creditable expanded
withholding tax shall be due and paid within ten (10) days following the
end of the month in which the redemption period expires. x x x
Moreover, the payment of the documentary stamp tax and the filing of
the return thereof shall have to be made within five (5) days from the
end of the month when the redemption period expires.
UCPB had, therefore, until July 10, 2002 to pay the CWT and July 5, 2002
to pay the DST. Since it paid both taxes on July 5, 2002, it is not liable for
deficiencies.
WHEREFORE, the petition is DENIED.
SO ORDERED.
sum of P15,704,249.12. the mortgagors subsequently filed a
complaint with the RTC Branch 57 of Lucena against the bank to
recover the allegedly unlawful and excessive charges.
Trial court rendered its decision dismissing the complaint and the
banks counterclaims. The trial court held that plaintiffs-mortgagors
are bound by the terms of the mortgage loan documents which
clearly provided for the payment of interest, charges and expenses.
CA reversed the trial court and ruled in favor of mortgagors stating
that attorney’s fees and liquidated damages were already included
in the bid price.
PETITIONERS CONTENTION:
Petitioner-mortgagors contend that the amounts representing the
interests, attorneys fees and liquidated damages and other
charges/expenses were already included in the bid price. Moreover,
they pray for the return of all asset-acquired expenses consisting of
DST, CGT, foreclosure fee, registration and filing fee.
RESPONDENT’S CONTENTION:
The bank asserted that the redemption price reflecting the stipulated
interest, charges and/or expenses, is valid, legal and in accordance with
documents duly signed by the mortgagors. The bank further contended
that the claims are deemed waived and the mortgagors are already
estopped from questioning the terms and conditions of their contract.

ISSUE:
Whether or not the foreclosing mortgagee should pay CGT upon execution
of the certificate of sale and before the expiry of the redemption period

RULING:
NO. There is no legal basis for the inclusion of the payment of the CGT in
the redemption price. Considering that petitioners-mortgagors exercised
their right of redemption before the expiration of the statutory 1-year
period, petitioner bank is not liable to pay the capital gains tax due on the
extrajudicial foreclosure sale. There was no actual transfer of title from the
owners-mortgagors to the foreclosing bank. Hence, the inclusion of the said
charge in the total redemption price was unwarranted and the
corresponding amount paid by the petitioners- mortgagors should be
returned to them.

In foreclosure sale, there is no actual transfer of the mortgaged real

property until after the expiration of the one-year redemption period as
provided in Act No. 3135 and title thereto is consolidated in the name of
the mortgagee in case of non-redemption. In the interim, the mortgagor is
given the option whether or not to redeem the real property. The issuance
of the Certificate of Sale does not by itself transfer ownership.

WHEREFORE, premises considered, both petitions are PARTLY

GRANTED.

In G.R. No. 165617, BPI Family Savings Bank, Inc. is hereby ordered
to RETURN the amounts representing capital gains and documentary
stamp taxes as reflected in the Statement of Account To Redeem as of April
7, 1997, to petitioners Supreme Transliner, Inc.,
Moises C. Alvarez and Paulita Alvarez, and to retain only the sum
provided in RR No. 4-99 as documentary stamps tax due on the
foreclosure sale.

In G.R. No. 165837, petitioner BPI Family Savings Bank, Inc. is hereby
declared entitled to the attorneys fees and liquidated damages included
in the total redemption price paid by Supreme Transliner, Inc., Moises
C. Alvarez and Paulita Alvarez. The sums awarded as moral and
exemplary damages, attorneys fees and costs in favor of Supreme
Transliner, Inc., Moises C. Alvarez and Paulita Alvarez are DELETED.

The Decision dated April 6, 2004 of the Court of Appeals in CA-G.R. CV

No. 74761 is accordingly MODIFIED.

SO ORDERED.
(20) CHINA BANKING CORP. V. CA
G.R. NO. ,,
336 SCRA178
Ponente
(21) WESTERN MINDANAO POWER CORP. Further, since there was no statutory requirement for imprinting the
G.R. NO. 181136, June 13, 2012 phrase zero-rated
672 SCRA 350
Sereno, J.

FACTS:
WMPC filed with the CIR applications for a TCC of its input VAT
covering the taxable 3rd and 4th quarters of 1999 and all the taxable
quarters of 2000.

Due to CIR’s inaction, WMPC, on September 28, 2001, filed with the
CTA in Division a Petition for Review seeking refund/TCCs for the
total amount of ₱9,324,283.30.

CTA dismissed the petition on the ground that petitioners VAT Invoices
and Official Receipts did not contain on their face the phrase zero-rated,
contrary to Section 4.108-1 of RR 7-95. It held that the receipts and
evidence presented by petitioner failed to fully substantiate the
existence of the latter’s effectively zero-rated sales to NPC. It further
noted that petitioners Official Receipts and VAT Invoices did not have
the word zero-rated imprinted/stamped thereon, contrary to the clear
mandate of Section 4.108-1 of RR 7-95.

PETITIONER’S CONTENTION:
WMPC countered that the invoicing and accounting requirements laid
down in RR 7-95 were merely compliance requirements, which were not
indispensable to establish the claim for refund of excess and unutilized
input VAT. Also, Section 113 of the NIRC prevailing at the time the sales
transactions were made did not expressly state that failure to comply
with all the invoicing requirements would result in the disallowance of
a tax credit refund. The express requirement that the term zero-rated
sale shall be written or printed prominently on the VAT invoice or
official receipt for sales subject to 0% VAT appeared in Section 113 of the
NIRC only after it was amended by Section 11 of R.A. 9337. This
amendment cannot be applied retroactively, considering that it took
effect only on 1 July 2005, or long after petitioner filed its claim for a tax
refund, and considering further that the RR 7-95 is punitive in nature.
on official receipts prior to 1 July 2005, the RR 7-95 constituted undue
expansion of the scope of the legislation it sought to implement.

RESPONDENT’S CONTENTION:
CIR filed its Comment on the CTA Petition, arguing that WMPC was not
entitled to the latter’s claim for a tax refund in view of its failure to comply
with the invoicing requirements under Section 113 of the NIRC.

ISSUE:
Whether or not the CTA En Banc seriously erred in dismissing the claim of
petitioner for a refund or tax credit on input tax on the ground that the
latter’s Official Receipts do not contain the phrase zero-rated

RULING:
NO. The Court has consistently held as fatal the failure to print the word
zero-rated on the VAT invoices or official receipts in claims for a refund or
credit of input VAT on zero-rated sales, even if the claims were made prior
to the effectivity of R.A. 9337.

Under the NIRC, a creditable input tax should be evidenced by a VAT

invoice or official receipt, which may only be considered as such when it
complies with the requirements of RR 7-95, particularly Section 4.108-1.
This section requires, among others, that if the sale is subject to zero
percent (0%) value-added tax, the term zero-rated sale shall be written or
printed prominently on the invoice or receipt.

Thus, a taxpayer engaged in zero-rated or effectively zero-rated sale may

apply for the issuance of a tax credit certificate, or refund of creditable
input tax due or paid, attributable to the sale. In a claim for tax refund or
tax credit, the applicant must prove not only entitlement to the grant of the
claim under substantive law. It must also show satisfaction of all the
documentary and evidentiary requirements for an administrative claim for
a refund or tax credit.[15] Hence, the mere fact that petitioners application
for zero-rating has been approved by the CIR does not, by itself, justify the
grant of a refund or tax credit. The taxpayer claiming the refund must
further comply with the invoicing and accounting requirements mandated
by the NIRC, as well as by revenue regulations implementing them.
 WHEREFORE, premises considered, we DENY the Petition
and AFFIRM the Decision dated 15 November 2007 and Resolution
dated 9 January 2008 of the Court of Tax Appeals En Banc in CTA EB
No. 272.
SO ORDERED.

***CTA Presiding Justice Ernesto Acosta filed a Concurring and

Dissenting Opinion. Justice Acosta disagreed with the majority's view
regarding the supposed mandatory requirement of imprinting the term
zero-rated on official receipts or invoices. He opined that Section 113 in
relation to Section 237[12]of the NIRC does not require the imprinting of
the phrase zero-rated on an invoice or official receipt for the document
to be considered valid for the purpose of claiming a refund or an
issuance of a tax credit certificate. Hence, the absence of the term zero-
rated in an invoice or official receipt does not affect its admissibility or
competency as evidence in support of a refund claim. Also, assuming
that stamping the term zero-rated on an invoice or official receipt is a
requirement of the current NIRC, the denial of a refund claim is not the
imposable penalty for failure to comply with that requirement.
(22) ST. LUKE’S MEDICAL CENTER, INC. V. CIR
G.R. NO. 195909 – CIR V. ST. LUKE’S MEDICAL CENTER, INC. PETITIONER’S CONTENTION:
G.R. NO. 195960 – ST. LUKE’S MEDICAL CENTER, INC. V. CIR St. Luke's claims tax exemption under Section 30(E) and (G) of the
September 26, 2012 NIRC. It contends that it is a charitable institution and an
Carpio, J. organization promoting social welfare. The arguments of St. Luke's
focus on the wording of Section 30(E) exempting from income tax
FACTS: non-stock, non- profit charitable institutions. 34 St. Luke's asserts
On 16 December 2002, the BIR assessed St. Luke's deficiency taxes that the legislative intent of introducing Section 27(B) was only to
comprised of deficiency IT, VAT, withholding tax on compensation and remove the exemption for "proprietary non-profit" hospitals.
expanded withholding tax.
St. Luke's maintained that it is a non-stock and non-profit institution
St. Luke's filed an administrative protest with the BIR against the for charitable and social welfare purposes under Section 30(E) and
deficiency tax assessments. The BIR did not act on the protest within the (G) of the NIRC. It argued that the making of profit per se does not
180-day period under Section 228 of the NIRC. Thus, St. Luke's destroy its income tax exemption.
appealed to the CTA.
RESPONDENT’S CONTENTION:
CTA ruled that St. Luke's is a non-stock and non-profit charitable The BIR claimed that St. Luke's was actually operating for profit in
institution covered by Section 30(E) and (G) of the NIRC. This ruling 1998 because only 13% of its revenues came from charitable
would exempt all income derived by St. Luke's from services to its purposes.
patients, whether paying or non-paying.
Moreover, the hospital's board of trustees, officers and employees directly
benefit from its profits and assets. St. Luke's had total revenues of
₱1,730,367,965 or approximately ₱1.73 billion from patient services in
1998.

ISSUE:
Whether or not St. Luke's is liable for deficiency income tax in 1998
under Section 27(B) of the NIRC, which imposes a preferential tax rate
of 10% on the income of proprietary non-profit hospitals

RULING:
The Court finds that St. Luke's is a corporation that is not "operated
exclusively" for charitable or social welfare purposes insofar as its
revenues from paying patients are concerned. This ruling is based not
only on a strict interpretation of a provision granting tax exemption, but
also on the clear and plain text of Section 30(E) and (G). Section 30(E) and
(G) of the NIRC requires that an institution be "operated exclusively" for
charitable or social welfare purposes to be completely exempt from
income tax. An institution under Section 30(E) or (G) does not lose its tax
exemption if it earns income from its for-profit activities. Such income
from for-profit activities, under the last paragraph of Section 30, is merely
subject to income tax, previously at the ordinary corporate rate but now at
the preferential 10% rate pursuant to Section 27(B).

A tax exemption is effectively a social subsidy granted by the State

because an exempt institution is spared from sharing in the expenses of
government and yet benefits from them. Tax exemptions for charitable
institutions should therefore be limited to institutions beneficial to the
public and those which improve social welfare. A profit-making entity
should not be allowed to exploit this subsidy to the detriment of the
government and other taxpayers.

St. Luke's fails to meet the requirements under Section 30(E) and (G) of
the NIRC to be completely tax exempt from all its income. However, it
remains a proprietary non-profit hospital under Section 27(B) of the
NIRC as long as it does not distribute any of its profits to its members
and such profits are reinvested pursuant to its corporate purposes. St.
Luke's, as a proprietary non-profit hospital, is entitled to the preferential
tax rate of 10% on its net income from its for-profit activities.
St. Luke's is therefore liable for deficiency income tax in 1998 under
Section 27(B) of the NIRC. However, St. Luke's has good reasons to rely
on the letter dated 6 June 1990 by the BIR, which opined that St. Luke's
is "a corporation for purely charitable and social welfare purposes"59
and thus exempt from income tax. 60 In Michael J. Lhuillier, Inc. v.
Commissioner of Internal Revenue, 61 the Court said that "good faith
and honest belief that one is not subject to tax on the basis of previous
interpretation of government agencies tasked to implement the tax law,
are sufficient justification to delete the imposition of surcharges and
interest."

WHEREFORE, the petition of the Commissioner of Internal Revenue in

G.R. No. 195909 is PARTLY GRANTED. The Decision of the Court of
Tax Appeals En Banc dated 19 November 2010 and its Resolution dated
1 March 2011 in CTA Case No. 6746 are MODIFIED. St. Luke's Medical
Center, Inc. is ORDERED TO PAY the deficiency income tax in 1998
based on the 10% preferential income tax rate under Section 27(B) of the
National Internal Revenue Code. However, it is not liable for surcharges
and interest on such deficiency income tax under Sections 248 and 249
of the National Internal Revenue Code. All other parts of the Decision
and Resolution of the Court of Tax Appeals are AFFIRMED.
The petition of St. Luke's Medical Center, Inc. in G.R. No. 195960 is
DENIED for violating Section 1, Rule 45 of the Rules of Court.

SO ORDERED.
(23) PILIPINAS TOTAL GAS, INC. V. CIR
G.R. NO. 207112, December 8, 2015 Due to the inaction of CIR, Total Gas elevated their claim to the CTA.
Mendoza, J.
CTA dismissed the petition for being prematurely filed, saying that
FACTS: Total Gas failed to complete necessary documents to substantiate a
Total Gas is engaged in the business of selling, transporting and claim for refund. Motion for reconsideration was denied too by the
distributing industrial gas, sale of gas equipment and other related CTA. CTA En Banc also denied the petition to review. It ruled that
business. For this purpose, Total Gas registered itself with BIR as VAT CTA division had no jurisdiction over the case because Total Gas
taxpayer. failed to seasonably file its petition.

For the 1st and 2nd quarters of 2007, Total Gas claimed VAT credits PETITIONER’S CONTENTION:
from its domestic purchases of non capital goods and services. Later, Total Gas argues that its judicial claim was filed within the
they filed an administrative claim for refund of the unutilized VAT for prescriptive period for claiming excess unutilized input VAT refund
the 1st two quarters of 2007. as provided under Section 112 of the NIRC. It points out that on the
one hand, the CTA En Banc ruled that it filed the judicial claim
belatedly as it was way beyond the 120+30 day period. Yet, it also
affirmed the findings of its division that its petition for review was
prematurely filed since the 120- day period did not even commence to
run for lack of complete supporting documents.
RESPONDENT’S CONTENTION:
CIR contends that Total Gas filed its petition out of time. She countered
that the 120-day period could not be counted from the time Total Gas
submitted its additional documents on August 28, 2008 because such an
the claim if the taxpayer fails to submit the additional
documents requested.
interpretation of Section 112(D) would indefinitely extend the
prescriptive period as provided in favor of the taxpayer.
ISSUES:
1) Whether or not the judicial claim for refund was belatedly filed;
and
2) Whether or not the submission of incomplete documents at the
adminstrative level (BIR) renders the judicial claim premature
and dismissible for lack of jurisdiction.19
RULING:
(1) NO. The Court ruled that the judicial claim was timely filed.
CIR has 120 days from the date of submission of complete
documents to decide a claim for tax credit or refund of creditable
input taxes. The taxpayer may, within 30 days from receipt of
the denial of the claim or after the expiration of the 120-day
period, which is considered a "denial due to inaction," appeal the
decision or unacted claim to the CTA.
The BIR did not give notice to Total with regard to the
documents submitted on August 2008. Thus the counting of the
120 day period should start from August 2008 or when Total
made its submission of complete documents to support its
application. The BIR had until December 2008 to decide. Because
of the BIR's inaction, Total had until January 25, 2009 to file their
judicial claim.
(2) Judicial claim not prematurely filed. The alleged failure of Total
Gas to submit the complete documents at the administrative
level did not render its petition for review with the CTA
dismissible for lack of jurisdiction. First, the 120-day period had
commenced to run and the 120+30 day period was, in fact,
complied with. As already discussed, it is the taxpayer who
determines when complete documents have been submitted for
the purpose of the running of the 120-day period. It must again
be pointed out that this in no way precludes the CIR from requiring
additional documents necessary to decide the claim, or even denying
Second, the CIR sent no written notice informing Total Gas
that the documents were incomplete or required it to submit
additional documents. As stated above, such notice by way
 of a written request is required by the CIR to be sent to Total Court of Tax Appeals En Banc, in CTA EB No. 776
Gas. are REVERSED and SET ASIDE.
Neither was there any decision made denying the administrative
claim of Total Gas on the ground that it had failed to submit all The case is REMANDED to the CTA Third Division for trial
the required documents. It was precisely the inaction of the BIR de novo.
which prompted Total Gas to file the judicial claim. Thus, by
failing to inform Total Gas of the need to submit any additional SO ORDERED.ch
document, the BIR cannot now argue that the judicial claim
should be dismissed because it failed to submit complete
documents.

Finally, it should be mentioned that the appeal made by Total

Gas to the CTA cannot be said to be premature on the ground
that it did not observe the otherwise mandatory and juridictional
120+30 day period. When Total Gas filed its appeal with the
CTA on January 23, 2009, it simply relied on BIR Ruling No. DA-
489-03, which, at that time, was not yet struck down by the
Court's ruling in Aichi.

In the present case, however, Total Gas filed its judicial claim
due to the inaction of the BIR. Considering that the
administrative claim was never acted upon; there was no
decision for the CTA to review on appeal per se. Consequently,
the CTA may give credence to all evidence presented by Total
Gas, including those that may not have been submitted to the
CIR as the case is being essentially decided in the first instance.
The Total Gas must prove every minute aspect of its case by
presenting and formally offering its evidence to the CTA, which
must necessarily include whatever is required for the successful
prosecution of an administrative claim.40

WHEREFORE, the petition is PARTIALLY GRANTED. The

October 11, 2012 Decision and the May 8, 2013 Resolution of the
(24) NIPPON EXPRESS (PHILS.) CORPS. V. CIR By reason of the inaction by the BIR, Nippon Express filed a Petition
G.R. NO. 191495, July 23, 2018 for Review before the CTA on 31 March 2006. In its Answer,
Martires, J. respondent CIR interposed the defense that Nippon Express' excess
input VAT paid for its domestic purchases of goods and services
FACTS: attributable to zero- rated sales for the four quarters of taxable year
On March 30, 2005, Nippon Express filed with the LTDO an application 2004 was not fully substantiated by proper documents.3
for tax credit of its excess/unused input taxes attributable to zero-rated
sales for the taxable year 2004. CTA Division denied Nippon’s claim after finding that the
latter’s evidentiary proof of its zero-rated sale of services
consisted of documents other than official receipts. It held that
there must be submission of VAT official receipts as proof of
zero-rated sales of service. CTA En Banc affirmed the decision of
the CTA Division
PETITIONER’S CONTNETION:
Nippon Express alleged that it had fully complied with the invoicing
requirements when it submitted sales invoices to support its claim of
zero-rated sales. Nippon argued that there is nothing in the tax laws
and regulations that requires the sale of goods or properties to be
supported only by sales invoices, or the sale of services by official
receipts only.
RESPONDENT’S CONTENTION:
CIR argues that the evidence of the sale of service is none other than an
official receipt. In contrast, the sales invoice is the evidence of a sale of
goods. Since the petitioner's transactions involve sales of services, they
should have been properly supported by official receipts and not merely
by sales invoices.
ISSUE:
1) Whether or not Nippon express is entitled to claim for tax credit
2) Whether or not the sales invoices and documents other than
official receipts are proper in substantiating zero-rated sales
of services in connection with a claim for refund under Section
112 of the NIRC
3) Whether or not Nippon Express may still be allowed to submit
official receipts, in addition to those already produced during
trial, to prove the existence of its zero-rated sales.
RULING:
(1) NO. The judicial claim of Nippon Express was belatedly filed.
The 30-day period of appeal is mandatory and jurisdictional,
hence, the CTA did not acquire jurisdiction over Nippon
Express' judicial claim.
Nippon Express timely filed its administrative claim on 30
March 2005, or within the 2-year prescriptive period. Counted
from such date of submission of the claim with supporting
documents, the CIR had 120 days, or until 28 July 2005, the last
day of the 120-day period, to decide the claim. As the records
reveal, the CIR did not act on the application of Nippon Express.
Thus, Nippon Express, had thirty days from such inaction
"deemed a denial," or until 27 August 2005, the last day of the
30-day period, within which to appeal to the CTA.
However, Nippon Express filed its petition for review with the
CTA only on 31 March 2006, or 246 days from the inaction by the
CIR. In other words, the petition of Nippon Express was
belatedly filed with the CTA and, following the doctrine above,
the court ought to have dismissed it for lack of jurisdiction.
(2) NO. In order to seek a refund of a taxpayer’s excess or
unutilized creditable input VAT pursuant to Section 112 of the
NIRC, the following must be present: (1) prove payment of input
VAT to suppliers; and (2) prove zero-rated sales to purchasers.
Additionally, the taxpayer claimant has to show that the VAT
payment made, called input VAT, is attributable to his zero-
rated sales.
 In this case, the documentary proofs presented by Nippon
Express to substantiate its zero-rated sales of services consisted
of sales invoices and other secondary evidence like transfer slips,
credit memos, cargo manifests, and credit notes. It is very clear
that these are inadequate to support the petitioner's sales of
services. Consequently, the CTA, albeit without jurisdiction,
correctly ruled that Nippon Express is not entitled to its claim.

WHEREFORE, for lack of jurisdiction, the 5 December 2008 Decision

and 5 May 2009 Resolution of the Court of Tax Appeals Second Division
in CTA Case No. 7429, and the 15 December 2009 Decision of the Court
of Tax Appeals En Banc in CTA-EB Case No. 492, are
hereby VACATED and SET ASIDE.

SO ORDERED.
(25) CIR V. MCGEORGE FOOD IND. respondent because by the time respondent filed its final adjustment
G.R. NO. 174157, October 20, 2010 return for 1997 on 15 April 1998, the 1997 NIRC was already in
Carpio, J. force, having taken effect on 1 January 1998.

FACTS: RESPONDENT’S CONTENTION

On 15 April 1998, more than three months after Republic Act No. 8424
or the Tax Reform Act of 1997 (1997 NIRC) took effect, McGeorge Food
Industries, Inc. (respondent) filed its final adjustment income tax return
for the year 1997. The return indicated a tax liability of P5,393,988
against a total payment of P10,130,176,3 resulting in a net overpayment
of P4,736,188. Exercising its option to either seek a refund of this amount
or carry it over to the succeeding year as tax credit, respondent chose to
apply said amount as credit. Another overpayment was made for its tax
liabilities for the year 1998. However, on April 14, 2000, respondent
sought for the refund of its overpayment in 1997.
Respondent contends that the subject claim for refund pertains to
the unutilized creditable withheld taxes for the year 1997 and the
transactions which gave rise to the claim for refund occurred in
taxable year 1997. Such being the case, the right to claim for refund
or tax credit of these taxes must be governed by the law in effect at
the time the excess credits were earned, which was Section 69 of the
old Tax Code. Hence, respondent corporation aside from opting to
carry-over the

PETITIONER’S CONTENTION
Petitioner contends that respondent is precluded from seeking a refund
for its overpayment in 1997 after respondent opted to carry-over and
apply it to its future tax liability, following Section 76 of the 1997 NIRC
which provides that "[o]nce the option to carry-over and apply the
excess quarterly income tax against income tax due for the taxable
quarters of the succeeding taxable years has been made, such option
shall be considered irrevocable for that taxable period and no
application for cash refund or issuance of a tax credit certificate shall be
allowed therefor." Petitioner claimed that Section 76 applies to
excess tax to the next succeeding quarter, may likewise avail of the
remedy of refund, because the old Tax Code does not preclude the
exercise of one to the exclusion of the other.

ISSUE:
Whether or not respondent is entitled to a tax refund for overpayment in
1997 after it opted, but failed, to credit such to its tax liability in 1998

RULING:
NO. The Court held that the respondent is not entitled to a refund under
Section 76 of the 1997 NIRC, the law in effect at the time respondent
made known to the BIR its preference to carry over and apply its
overpayment in 1997 to its tax liability in 1998. In lieu of refund,
respondent’s overpayment should be applied to its tax liability for the
taxable years following 1998 until it is fully credited.

Thus treated, Section 76 and its companion provisions in Title II, Chapter
XII should be applied following the general rule on the prospective
application of laws12 such that they operate to govern the conduct of
corporate taxpayers the moment the 1997 NIRC took effect on 1 January
1998. There is no quarrel that at the time respondent filed its final
adjustment return for 1997 on 15 April 1998, the deadline under Section 77
(B) of the 1997 NIRC (formerly Section 70(b) of the 1977 NIRC), the 1997
NIRC was already in force, having gone into effect a few months earlier on
1 January 1998. Accordingly, Section 76 is controlling.

Section 76 of the 1997 NIRC wrought two changes to its predecessor,

Section 69 of the 1977 NIRC: first, it mandates that the taxpayer’s
exercise of its option to either seek refund or crediting is irrevocable;
and second, the taxpayer’s decision to carry-over and apply its current
overpayment to future tax liability continues until the overpayment has
been fully applied, no matter how many tax cycles it takes.
Thus, once the taxpayer opts to carry-over the excess income tax against
the taxes due for the succeeding taxable years, such option is irrevocable
for the whole amount of the excess income tax, thus, prohibiting the
taxpayer from applying for a refund for that same excess income tax in
the next succeeding taxable years. The unutilized excess tax credits will
remain in the taxpayer’s account and will be carried over and applied
against the taxpayer’s income tax liabilities in the succeeding taxable
years until fully utilized.

WHEREFORE, we GRANT the petition. We REVERSE the Decision

dated 31 January 2006 and the Resolution dated 21 July 2006 of the
Court of Appeals.

SO ORDERED.
(26) CIR V. STANLEY WORKS SALES (PHILS.) INC.
G.R. NO. 187589, December 3, 2014 PETITIONER’S CONTENTION:
Sereno, CJ. CIR mainly argues that in view of respondent’s execution of the
Waiver of the statute of limitations, the period to collect the assessed
FACTS: deficiency income taxes has not yet prescribed.
On April 16, 1990, respondent filed with the BIR its Annual Income Tax
Return for taxable year 1989.

On March 19, 1993, pursuant to Letter of Authority, the BIR issued

against respondent a Pre-Assessment Notice (PAN) for 1989 deficiency
income tax. Respondent filed a protest letter and requested
reconsideration and cancellation of the assessment.

On November 16, 1993, a certain Mr. John Ang, on behalf of respondent,

executed a "Waiver of the Defense of Prescription Under the Statute of
Limitations of the NIRC" (Waiver). Under the terms of the Waiver,
respondent waived its right to raise the defense of prescription insofar
as the assessment and collection of any deficiency taxes for the year
ended December 31, 1989, but not after June 30, 1994. On March 22,
2004, petitioner rendered a Decision ordering respondent to pay the
deficiency income tax plus interest that may have accrued.

CTA First Division found that although the assessment was made
within the prescribed period, the period within which petitioner may
collect deficiency income taxes had already lapsed. It ruled that there
was no valid waiver of the statute of limitations since there was no
conformity, either by respondent or his duly authorized representative
and there was no date of acceptance to show that both parties had
agreed on the Waiver before the expiration of the prescriptive period.
However, petitioner argues that the actual approval of the Waiver is
apparent from the proceedings that were additionally conducted in
determining the propriety of the subject assessment
RESPONDENT’S CONTENTION:
Petitioner’s right to collect the alleged deficiency income tax has
prescribed.

ISSUE:
Whether or not petitioner’s right to collect the deficiency income tax of
respondent for taxable year 1989 has prescribed

RULING:
YES. The statute of limitations on the right to assess and collect a tax
means that once the period established by law for the assessment and
collection of taxes has lapsed, the government’s corresponding right to
enforce that action is barred by provision of law.

The period to assess and collect deficiency taxes may be extended only
upon a written agreement between the CIR and the taxpayer prior to the
expiration of the 3-year prescribed period in accordance with Section 222
(b) of the NIRC.

The waiver was not a unilateral act of the taxpayer; hence, the BIR must act
on it, either by conforming to or by disagreeing with the extension. A
waiver of the statute of limitations, whether on assessment or collection,
should not be construed as a waiver of the right to invoke the defense of
prescription but, rather, an agreement between the taxpayer and the BIR to
extend the period to a date certain, within which the latter could still assess
or collect taxes due. The waiver does not imply that the taxpayer
relinquishes the right to invoke prescription unequivocally.

Even assuming arguendo that the Waiver executed by respondent on 16

November 1993 is valid, the right of petitioner to collect the deficiency
income tax for the year 1989 would have already prescribed by 2001 when
the latter first acted upon the protest, more so in 2004 when it finally
denied the reconsideration. Records show that the Waiver extends only for
the period ending 30 June 1994, and that there were no further extensions
or waivers executed by respondent. Again, a waiver is not a unilateral act
of the taxpayer or the BIR, but is a bilateral agreement between two parties
to extend the period to a date certain.20
Since the Waiver in this case is defective and therefore invalid, it
produces no effect; thus, the prescriptive period for collecting deficiency
income tax for taxable year 1989 was never suspended or tolled.
Consequently, the right to enforce collection based on Assessment
Notice No. 002523-89-6014 has already prescribed.

WHEREFORE, premises considered, the Petition is DENIED. SO

ORDERED.

(27) CIR V. PILIPINAS SHELL PETROLEUM CORP. Whether or not the respondent is exempt from tax
G.R. NO. 188497, February 19, 2014
Villarama, Jr., J. RULING:
YES. Under Section 129 of the NIRC, excise taxes are those applied to
FACTS: goods manufactured or produced in the Philippines for domestic sale
Respondent in this case sold aviation fuel to international carriers and or consumption or for any other disposition and to things imported.
paid the excise tax thereon. Shell now seeks a refund of the same relying Excise
on Section 135 of the Tax Code.

PETITIONER’S CONTENTION:
Solicitor General underscores the statutory basis of this Court’s ruling
that the exemption under Section 135 does not attach to the products.
Solicitor General points out that there was no pronouncement in cases
decided by the Supreme Court that petroleum manufacturers selling
petroleum products to international carriers are exempt from paying
excise taxes.

RESPONDENT’S CONTENTION:
Pilipinas Shell argues that a plain reading of Section 135 of the NIRC
reveals that it is the petroleum products sold to international carriers
which are exempt from excise tax for which reason no excise taxes are
deemed to have been due in the first place. It points out that excise tax
being an indirect tax, Section 135 in relation to Section 148 should be
interpreted as referring to a tax exemption from the point of production
and removal from the place of production considering that it is only at
that point that an excise tax is imposed. Respondent also contends that
our ruling that Section 135 only prohibits local petroleum manufacturers
like respondent from shifting the burden of excise tax to international
carriers has adverse economic impact as it severely curtails the domestic
oil industry.

ISSUE:
taxes as used in our Tax Code fall under two types – (1) specific tax which
is based on weight or volume capacity and other physical unit of
measurement, and (2) ad valorem tax which is based on selling price or
other specified value of the goods. Aviation fuel is subject to specific tax
under Section 148 (g) which attaches to said product "as soon as they are in
existence as such."A tax is not excise where it does not subject directly the
produce or goods to tax but indirectly as an incident to, or in connection
with, the business to be taxed.

On the basis of Philippine Acetylene, we held that a tax exemption being

enjoyed by the buyer cannot be the basis of a claim for tax exemption by
the manufacturer or seller of the goods for any tax due to it as the
manufacturer or seller. The excise tax imposed on petroleum products
under Section 148 is the direct liability of the manufacturer who cannot
thus invoke the excise tax exemption granted to its buyers who are
international carriers. And following our pronouncement in Maceda v.
Macarig, Jr. we further ruled that Section 135(a) should be construed as
prohibiting the shifting of the burden of the excise tax to the international
carriers who buy petroleum products from the local manufacturers. Said
international carriers are thus allowed to purchase the petroleum products
without the excise tax component which otherwise would have been
added to the cost or price fixed by the local manufacturers or
distributors/sellers.

WHEREFORE, the Court hereby resolves to:

(1) GRANT the original and supplemental motions for
reconsideration filed by respondent Pilipinas Shell Petroleum
Corporation; and
(2) AFFIRM the Decision dated March 25, 2009 and Resolution
dated June 24, 2009 of the Court of Tax Appeals En Banc in CT A
EB No. 415; and DIRECT petitioner Commissioner of Internal
Revenue to refund or to issue a tax credit certificate to Pilipinas
Shell Petroleum Corporation in the amount of J195,014,283.00
representing the excise taxes it paid on petroleum products sold to
international carriers from October 2001 to June 2002.

SO ORDERED
 (28) KEPCO ILIJAN CORP. V. CIR (COMMISIONER OF INTERNAL
PROMULGATED: REVENUE)
G.R. NO. 205185, September 26 ,2018
Bersamin, J.
FACTS:
Petitioner filed its quarterly VAT returns for the four quarters of taxable
year 2002, thereby showing the incurred expenses representing the
importation and domestic purchases of goods and services, including
the input VAT thereon. On April 13, 2004, it brought its administrative
claim for refund with RDO of the BIR, claiming excess input VAT
amounting to P74,658,481.68 for taxable year 2002.
On April 22, 2004, 9 days after filing the administrative claim, the
petitioner filed its petition for review.
CTA Second Division partly granted the petition for review, and
ordered the respondent toUrletfiumnadtoerlyto issue a TCC for the
petitioner's unutilized excess input VAT attributable to its zero-rated
sales to NPC
for the second, third and fourth quarters of taxable year 2002, but
denying the petitioner's input VAT claim for the first quarter of taxable
year 2002 on the ground of prescription, and the other input VAT claims
for lack of the required documentary evidence. On MR of petitioner,
CTA amended its decision and denied the entire claim on the ground of
prematurity. It opined that it did not acquire jurisdiction over the
petition for review because of the petitioner's non-observance of the
periods provided under the NIRC
PETITIONER’S CONTENTION:
Petitioner submits that the CTA acquired jurisdiction over the case and
that the two-year period for filing the claim for refund of unutilized
input taxes was to be reckoned from the filing of the return and the
payment of the tax due.
RESPONDENT’S CONTENTION:
Petitioner not liable for tax refund or tax credit.
ISSUE:
Whether or not CTA did not acquire jurisdiction over the judicial claim
for being filed prematurely
RULING:
The petitioner brought its judicial claim in the CTA on April 22, 2004 or
nine days after filing the administrative claim in the BIR. It did not
await the lapse of the 120-day period provided under the NIRC, leading
the CTA En Banc to declare that the petitioner had prematurely brought
its appeal. Indeed, under Section 112 (c) of the NIRC, the respondent
had 120 days from the submission of the complete documents in
support of the application of the respondent for the tax refund or tax
credit within which to decide whether or not to grant or deny the claim.
In case of the denial of the claim, or in case of the failure of the
respondent to act on the application within the period prescribed, the
taxpayer has 30 days from the receipt of the decision or from the
expiration of the 120-day period within which to file the petition for
review in the CTA.
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 One
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
a sIsunmtphtiiosncoafsjuuch
e,riclaim
tshdeicsince equitable estoppel has
e tion over s
s t in as expressly authorized under Section 246 of the Tax Code.23
The petitioner filed its administrative and judicial claims for refund on
April 13, 2004 and April 22, 2004, respectively. Both claims were filed
after BIR Ruling No. DA-589-03 was issued on December 10, 2003, but
before the promulgation of the Aichi pronouncement on October 06,
2010. Thus, notwithstanding the petitioner's having filed its judicial
claim without waiting for the decision of the respondent or for the
expiration of the 120-day mandatory period, the CTA could still take
cognizance of the claims because they were filed within the period
exempted from the mandatory and jurisdictional 120-30 period rule.

As a result, the case has to be remanded to the CTA in Division for

further proceedings on the claim for refund of the petitioner's input
VAT for the second, third and fourth quarters of taxable year 2002.

WHEREFORE, the Court PARTLY GRANTS the petition for review

on certiorari; REVERSES and SETS ASIDE the decision promulgated on
September 6, 2012 by the Court of Tax Appeals En Banc in CTA EB Case
No. 733; and ORDERS the remand of the case to the Court of Tax
Appeals in Division for further proceedings on the petitioner's claim for
refund of its unutilized excess input Value-Added Tax for the second,
third and fourth quarters of taxable year 2002.

No pronouncement on costs of suit.

SO ORDERED.
(29) TEAM SUAL CORP. V. CIR On March 31, 2003, without waiting for the resolution of its
CTA Division partially granted TSC's claim by allowing the refund of administrative claim for refund or tax credit, TSC filed with the CTA
unutilized input VAT for the first, third, and fourth quarters of taxable Division a petition for review. It prayed for the refund or issuance of
year 2001, but disallowed the refund for the second quarter. CTA a tax credit certificate for its alleged unutilized input VAT for the first
Division ruled that the claim for the second quarter did not fall within quarter of taxable year 2001. On July 23, 2003, TSC filed another
the two-year prescriptive period. CTA En Banc likewise granted petition for review seeking the refund or issuance of a tax credit
petitioner's claim for refund of input VAT for the second, third, and certificate for its alleged unutilized input VAT for the second, third,
fourth quarters of taxable year 2001, but in addition ruled that the CTA and fourth quarters of taxable year 200.
did not acquire jurisdiction over it as it had been filed prematurely.
G.R. NO. 201225-26 (from CTA-EB Nos. 649 & 651) – TEAM SUAL
PETITIONER’S CONTENTION:
CORP. (FORMERLY MIRANT SUAL CORP.) V. CIR
TSC insists that the judicial claim for refund over the first quarter
G.R. NO. 201132 (from CTA-EB No. 651) – CIR V. TEAM SUAL CORP. of 2001 was not prematurely filed and that the CTA Division did
(FORMERLY MIRANT SUAL CORP.)
in fact have jurisdiction to act on it.
G.R. NO. 201133 (from CTA-EB No. 649) – CIR V. TEAM SUAL CORP.
(FORMERLY MIRANT SUAL CORP.)
April 18, 2018
Reyes, Jr.,J.

FACTS:
On December 6, 2000, TSC filed with the BIR RDO an application for
zero-rating arising from its sale of power generation services to NPC for
the taxable year 2001.
RESPONDENT’S CONTENTION:
CIR argued that TSC has not sufficiently proven its entitlement to refund
and that the CTA had no jurisdiction to act on the judicial claim for
refund because the same was prematurely filed.

ISSUE:
Whether or not the CTA has jurisdiction to act on TSC's two judicial
claims for refund.

RULING:
In order for the CTA to acquire jurisdiction over a judicial claim for
refund or tax credit arising from unutilized input VAT, the said claim
must first comply with the mandatory 120+30-day waiting period. Any
judicial claim for refund or tax credit filed in contravention of said period
is rendered premature, depriving the CTA of jurisdiction to act on it.

Any taxpayer seeking a refund or tax credit arising from unutilized input
VAT from zero-rated or effectively zero-rated sales should first file an
initial administrative claim with the BIR. This claim for refund or tax
credit must be filed within two years after the close of the taxable quarter
when the sales were made. The CIR is then given a period of 120-days
from the submission of complete documents in support of the application
to either grant or deny the claim. If the claim is denied by the CIR or the
latter has not acted on it within the 120-day period, the taxpayer-claimant
is then given a period of 30 days to file a judicial claim via petition for
review with the CTA.

As such, the law provides for two scenarios before a judicial claim for
refund may be filed with the CTA: (1) the full or partial denial of the
claim within the 120-day period, or (2) the lapse of the 120-day period
without the CIR having acted on the claim. It is only from the happening
of either one may a taxpayer-claimant file its judicial claim for refund or
tax credit for unutilized input VAT. Consequently, failure to observe the
said period renders the judicial claim premature, divesting the CTA of
jurisdiction to act on it.
Given the fact that TSC's administrative claim was filed on March 20,
2003, the CIR had 120 days or until July 18, 2003 to act on it. Thus, the
first judicial claim was premature because TSC filed it a mere 11 days
after filing its administrative claim.

On the other hand, the second judicial claim filed by TSC was filed on
time because it was filed on July 23, 2003 or five days after the lapse of
the 120-day period.40 Accordingly, it is clear that the second judicial
claim complied with the mandatory waiting period of 120 days and was
filed within the prescriptive period of 30 days from the CIR's action or
inaction. Therefore, the CTA division only acquired jurisdiction over
TSC's second judicial claim for refund covering its second, third, and
fourth quarters of taxable year 2001.

Being a mere scrap of paper, TSC's judicial claim for refund filed on
March 31, 2003 covering the first quarter of taxable year 2001 cannot be
the source of any rights.

Thus, considering the foregoing, the Court agrees with the ruling of the
CTA En Banc which held that between the March 31 and the July 23
petitions for review filed by TSC, the CTA Division only acquired
jurisdiction over the latter.
WHEREFORE, premises considered, the instant petitions are DENIED.
The Consolidated Decision dated September 15, 2011 and the Resolution
dated March 21, 2012 of the Court of Tax Appeals En Banc in CTA EB
No. 649 and CTA EB No. 651 are hereby AFFIRMED in toto.

SO ORDERED.

(30) CBK POWER CO. LTD. V. CIR
G.R. NO. 198729-30, January 15, 2014
Sereno, Cj.
FACTS:
Petitioner filed its administrative claims for the issuance of tax credit
certificates for its alleged unutilized input taxes on its purchase of
capital goods and alleged unutilized input taxes on its local purchases
and/or importation of goods and services, other than capital goods,
pursuant to Sections 112(A) and (B) of the NIRC of 1997, as amended,
with BIR Revenue District Office (RDO) No. 55 of Laguna
Alleging inaction of the CIR, petitioner filed a Petition for Review
with the CTA on 18 April 2007.
CTA Second Division denied the claim for the first quarter of 2005
for having been filed out of time. For the second and third quarters
of 2005, the court a quo partly granted the claim and ordered the
issuance of a tax credit certificate in favor of petitioner. CTA En Banc
ruled that petitioner’s judicial claim for the first, second, and third
quarters of 2005 were belatedly filed.
ISSUE:
Whether or not petitioner is barred from claiming for
refund of unutilized input VAT for the first to third quarters of observe the 30-day prescriptive period to appeal to the CTA counted
2005 from the lapse of the 120-day period.

RULING: WHEREFORE, premises considered, the instant Petition is DENIED.

YES. For failure of petitioner to comply with the 120+30 day mandatory
and jurisdictional period, petitioner lost its right to claim a refund or SO ORDERED.
credit of its alleged excess input VAT.

Pursuant to Section 112(A), petitioner’s administrative claims were filed

well within the two-year period from the close of the taxable quarter
when the effectively zero-rated sales were made.

However, the Court emphasizes that the is not a case of premature filing
of a judicial claim. Although petitioner did not file its judicial claim with
the CTA prior to the expiration of the 120-day waiting period, it failed
to

(31) CIR (BIR) V. HON. RAUL GONZALES, SECRETARY OF PETITIONER’S ARGUMENT

JUSTICE & L.M. CAMUS ENGINEERING CORP. Petitioner alleged that despite the receipt of the final
G.R. NO. 177279, October 13, 2010 assessment notice and formal demand letter, LMCEC failed and
633 SCRA 139 refused to pay the deficiency tax which had become final and
Villarama, Jr., J. executory. Petitioner argues that with the finality of the assessment
due to failure of the private respondents to challenge the same in
FACTS: accordance with Section 228 of the NIRC, respondent Secretary has
Pursuant to Letter of Authority (LA), BIR conducted a fraud no jurisdiction and authority to inquire into its validity.
investigation for all internal revenue taxes to ascertain/determine the
tax liabilities of respondent LMCEC for the taxable years 1997, 1998 and RESPONDENT’S ARGUMENT
1999. The audit and investigation against LMCEC was precipitated by Respondent contended that there is insufficient evidence to
the information provided by an "informer" that LMCEC had substantial establish probable cause to charge private respondents.
underdeclared income for the said period.
For failure to comply with the subpoena duces tecum issued in
connection with the tax fraud investigation, a criminal complaint was
instituted by the BIR against LMCEC for violation of Section 266 of the
NIRC. 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.
On May 21, 2003, petitioner referred to the SOJ for preliminary
investigation its complaint against LMCEC, Luis M. Camus and Lino D.
Mendoza, the latter two were sued in their capacities as President and
Comptroller, respectively.
ISSUE:
Whether or not 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:
YES. A preliminary investigation should first be conducted to
determine if a prima facie case for tax fraud exists – “the crime is complete
when the taxpayer has knowingly and willfully filed a fraudulent return
with intent to evade and defeat 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
(32) CIR V. PL MGMT. INT’L. PHILS., INC.
G.R. NO. 160949, April 4, 2011
647 SCRA 72
Bersamin, J.
FACTS:
On April 12, 2000, the respondent filed with the petitioner a
written claim for the refund of the P1,200,000.00 unutilized creditable
withholding tax for taxable year 1997. [4] However, the petitioner did not
act on the claim.
The inaction of petitioner CIR on the respondents written claim
for tax refund or tax credit impelled the latter to commence judicial
action for that purpose in the CTA. However, the CTA denied the claim
on December 10, 2001 for being brought beyond two years from the
accrual of the claim.
On appeal, the CA reversed the CTAs denial, and directed the
petitioner to refund the unutilized creditable withholding tax to the
respondent.
PETITIONER’S ARGUMENT
The petitioner argues that the decision of the CA suspending the
running of the two-year period set by Section 229 of the NIRC on
ground of equity was erroneous and had no legal basis; that the
respondents 2-year prescriptive period under Section 229 of the NIRC
commenced to run on April 13, 1998, the date it filed its ITR for taxable
year 1997; that by reckoning the period from April 13, 1998, the
respondent had only until April 12, 2000 within which to commence its
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.
judicial action for refund with the CTA, the year 2000 being a leap
year.
RESPONDENT’S ARGUMENT
Respondent counters that it filed its judicial action for refund within
the statutory two-year period; that the two-year prescriptive period
was also not jurisdictional and might be relaxed on equitable
reasons.
ISSUES:
Whether or not respondent is entitled to a tax refund of the
unutilized creditable withholding tax
RULING: irrevocability rule provided in Section 76 of the NIRC of 1997. Thereby,
NO. The Court reversed and set aside the decision of the CA to the extent the respondent became barred from claiming the refund.
that it orders the petitioner to refund to the respondent the
P1,200,000.00 representing the unutilized creditable withholding tax in However, in view of it irrevocable choice, the respondent remained
taxable year 1997, but permit the respondent to apply that amount as tax entitled to utilize that amount of P1,200,000.00 as tax credit in
credit in succeeding taxable years until fully exhausted. succeeding taxable years until fully exhausted. In this regard,
prescription did not bar it from applying the amount as tax credit
Inasmuch as the respondent already opted to carry over its unutilized considering that there was no prescriptive period for the carrying over
creditable withholding tax of P1,200,000.00 to taxable year 1998, the carry- of the amount as tax credit in subsequent taxable years.[14]
over could no longer be converted into a claim for tax refund because of the
(33) MICROSOFT PHILS., INC. V. BIR Microsoft failed to comply with the invoicing requirements of
G.R. NO. 180173, April 6, 2011 Sections 113 and 237 of the NIRC as well as Section 4.108-1 of RR 7-
647 SCRA 398 95.
Carpio, J.
ISSUE:
FACTS: Whether or not Microsoft is entitled to a claim for a tax credit or
On 27 December 2002, Microsoft filed an administrative claim refund of VAT input taxes on domestic purchases of goods or
for tax credit of VAT input taxes with the BIR. The administrative claim services even if the word zero-rated is not imprinted on Microsoft's
for tax credit was filed within two years from the close of the taxable official receipts
quarters when the zero-rated sales were made. On 23 April 2003, due to
the BIR's inaction, Microsoft filed a petition for review with the CTA.
Microsoft claimed to be entitled to a refund of unutilized input VAT
attributable to its zero-rated sales and prayed that judgment be
rendered directing the claim for tax credit or refund of VAT input taxes
for taxable year 2001.
CTA Second Division denied the claim for tax credit of VAT
input taxes. The CTA explained that Microsoft failed to comply with the
invoicing requirements as their official receipts do not bear the
imprinted word zero-rated on its face, thus, the official receipts cannot
be considered as valid evidence to prove zero-rated sales for VAT
purposes. CTA En Banc affirmed in toto the decision of the CTA Second
Division.

PETITIONER’S ARGUMENT
Microsoft insists that Sections 113 and 237 of the NIRC and
Section 4.108-1 of RR 7-95 do not provide that failure to indicate the
word zero-rated in the invoices or receipts would result in the outright
invalidation of these invoices or receipts and the disallowance of a claim
for tax credit or refund.

RESPONDENT’S ARGUMENT
RULING:
NO. The Court ruled that the printing of the word zero-rated is
required to be placed on VAT invoices or receipts covering zero-rated sales
in order to be entitled to claim for tax credit or refund.
As correctly held by both the CTA Second Division and CTA En
Banc found, Microsoft's receipts did not indicate the word zero-rated on its
official receipts. Indisputably, Microsoft failed to comply with the invoicing
requirements of the NIRC and its implementing revenue regulation to
claim a tax credit or refund of VAT input tax for taxable year 2001.
The invoicing requirements for a VAT-registered taxpayer as
(34) RCBC V. CIR
G.R. NO. 170257, September 7, 2011
657 SCRA 70
Mendoza, J.
provided in the NIRC and revenue regulations are clear. A VAT-
registered taxpayer is required to comply with all the VAT invoicing
requirements to be able to file a claim for input taxes on domestic
purchases for goods or services attributable to zero-rated sales. A VAT
invoice is an invoice that meets the requirements of Section 4.108-1 of
RR 7-95. Contrary to Microsoft's claim, RR 7-95 expressly states that
[A]ll purchases covered by invoices other than a VAT invoice shall not
give rise to any input tax. Microsoft's invoice, lacking the word zero-
rated, is not a VAT invoice, and thus cannot give rise to any input tax.
ISSUE:

FACTS:
Petitioner Rizal Commercial Banking Corporation (RCBC) is a
corporation engaged in general banking operations. It received Letter of
Authority issued by then Commissioner of Internal Revenue (CIR)
Liwayway Vinzons-Chato, authorizing a special audit team to examine
the books of accounts and other accounting records for all internal
revenue taxes from January 1, 1994 to December 31, 1995.4
On January 23, 1997, RCBC executed two Waivers of the Defense
of Prescription Under the Statute of Limitations of the National Internal
Revenue Code covering the internal revenue taxes due for the years
1994 and 1995, effectively extending the period of the Bureau of Internal
Revenue (BIR) to assess up to December 31, 2000.

PETITIONER’S ARGUMENT
RCBC argued that the waivers of the Statute of Limitations
which it executed on January 23, 1997 were not valid because the same
were not signed or conformed to by the respondent CIR as required
under Section 222(b) of the Tax Code.

RESPONDENT’S ARGUMENT
By receiving, accepting and paying portions of the
reduced assessment, RCBC bound itself to the new assessment,
implying that it recognized the validity of the waivers. RCBC
could not assail the validity of the waivers after it had received
and accepted certain benefits as a result of the execution of the
said waivers.
RULING: assessment. RCBCs subsequent action effectively belies its insistence
YES. Petitioner is estopped from questioning the validity of the that the waivers are invalid. The records show that on December 6, 2000,
waivers. RCBC, through its partial payment of the revised assessments upon receipt of the revised assessment, RCBC immediately made
issued within the extended period as provided for in the questioned payment on the uncontested taxes. Thus, RCBC is estopped from
waivers, impliedly admitted the validity of those waivers. Had petitioner questioning the validity of the waivers. To hold otherwise and allow a
truly believed that the waivers were invalid and that the assessments party to gainsay its own act or deny rights which it had previously
were issued beyond the prescriptive period, then it should not have paid recognized would run counter to the principle of equity.
the reduced amount of taxes in the revised
Whether petitioner is estopped from questioning the
validity of the said waivers with respect to the assessment of
deficiency onshore tax
(35) CIR V. FILINVEST DEV’T. CORP.
G.R. NO. 163653, July 19, 2011 RESPONDENT’S ARGUMENT
Perez, J. Filinvest disputed this by saying that the CIR lacks the
authority to impute theoretical interest and that the rule is that
FACTS: interests cannot be demanded in the absence of a stipulation to the
Respondent Filinvest Development Corporation extended effect. FDC claimed that the cash advances it extended to its affiliates
advances in favor of its affiliates and supported the same with were interest-free in the absence of the express stipulation on interest
instructional letters and cash and journal vouchers. required under Article 1956
On 3 January 2000, FDC received from the BIR a Formal Notice
of Demand to pay deficiency income and documentary stamp taxes,
plus interests and compromise penalties. The BIR assessed Filinvest for
deficiency income tax by imputing an “arm’s length” interest rate on its
advances to affiliates. FAI similarly received from the BIR a Formal
Letter of Demand for deficiency income taxes on the taxable gain
purportedly realized by FAI from the Deed of Exchange it executed
with FDC and FLI. CTA enunciated that the CIR was justified in
assessing undeclared interests on the same cash advances pursuant to
his authority
under Section 43 of the NIRC in order to forestall tax evasion.

PETITIONER’S ARGUMENT
CIR claimed that the transfer of property in question should not
be considered tax free since, with the resultant diminution of its shares
in FLI, FDC did not gain further control of said corporation. Likewise
calling attention to the fact that the cash advances FDC extended to its
affiliates were interest free despite the interest bearing loans it obtained
from banking institutions, the CIR invoked Section 43 of the old NIRC
which, as implemented by RR No. 2, Section 179 (b) and (c), gave him
"the power to allocate, distribute or apportion income or deductions
between or among such organizations, trades or business in order to
prevent evasion of taxes."
of the Civil Code, FDC questioned the imposition of an arm's-length interest
rate thereon.
ISSUE:
Whether or not CIR can impute theoretical interest on the advances
made by Filinvest to its affiliates
RULING:
NO. Despite the seemingly broad power of the CIR to distribute,
apportion and allocate gross income under Section 50 of the Tax Code, the
same does not include the power to impute theoretical interests even with
regard to controlled taxpayers’ transactions. This is true even if the CIR is
able to prove that interest expense (on its own loans) was in fact claimed by
the lending entity. The term in the definition of gross income that even
those income “from whatever source derived” is covered still requires
that there must be actual or at least probable receipt or realization of the
item of gross income sought to be apportioned, distributed, or allocated.
Finally, the rule under the Civil Code that “no interest shall be due
unless expressly stipulated in writing” was also applied in this case.
In this case, there is no evidence of actual or possible showing
that the advances taxpayer extended to its affiliates had resulted to
interests subsequently assessed by the CIR. Even if the Court were to
accord credulity to the CIR’s assertion that taxpayer had deducted
substantial interest expense from its gross income, there would still be
no factual basis for the imputation of theoretical interests on the subject
advances and assess deficiency income taxes thereon.

(36) SILICON PHILS. V. CIR

G.R. NO. 184360, February 19, 2014 ISSUE:
Villarama, J. Whether or the Silicon’s judicial claims were filed within
the prescribed period provided under the Tax Code
FACTS:
On August 6, 1999, Silicon filed with the CIR, through its One- RULING:
Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center of the NO. The Court, after a careful perusal of the records in the
DOF, a claim for tax credit or refund representing VAT input taxes on instant case, find that Silicon’s judicial claims were filed late and way
its domestic purchases of goods and services and importation of goods beyond the prescriptive period. Silicon’s claims do not fall under any
and capital equipment which are attributable to zero-rated sales for the of the exceptions.
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 2-year prescriptive period.
CTA in Division denied Silicon’s claim for refund or issuance of
tax credit certificate for failure to comply with the substantiation
requirements. CTA en banc partially granted the petition for review and
ordered the CIR to refund or issue a tax credit certificate in favor of
Silicon Philippines.

PETITIONER’S ARGUMENT
Silicon claimed that it was entitled to a refund/credit as it
complied with all the requirements provided for under the law.

RESPONDENT’S ARGUMENT
CIR asserted that Silicon’s claim for refund/tax credit was not
duly substantiated and that said claim for refund is not subject to zero-
percent (0%) rate of VAT. Further, the claim for refund has already
prescribed pursuant to Section 112(A) and (B)18 of the NIRC.
 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, 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
(37) CIR V. TOLEDO POWER, INC.
G.R. NO. 183880, January 20,2014
Peralta, J.
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.
I. Whether or not TPI complied with the 120+30 day rule
II. Whether or not TPI sufficiently complied with
the invoicing requirements under the Tax Code.

FACTS:
On June 20, 2002, respondent filed an application with the ERC
for the issuance of a Certificate of Compliance pursuant to the IRR of the
EPIRA law.
On September 30, 2003, respondent filed with the BIR RDO No.
83, an administrative claim for refund or unutilized input VAT for the
aggregate amount of ₱9,129,370.27. Due to CIR’s inaction on their claim,
TPI filed a Petition for Review on October 24, 2003 and January 22, 2004
for the third and fourth quarter of 2001, respectively, for the refund or
issuance of a TCC for its unutilized input VAT paid by petitioner on its
domestic purchases of goods and services and importation of goods
attributable to zero-rated sales.
Acting on the petition, the CTA First Division issued a Decision
dated May 17, 2007 partially granted TPI’s refund claim or issuance of
tax credit certificate. CTA en banc affirmed with modification.

PETITIONER’S ARGUMENT
CIR argues that TPI failed to comply with the invoicing
requirements to prove entitlement to the refund or issuance of tax credit
certificate. In addition, he challenged the jurisdiction of the CTA First
Division to entertain respondent’s petition for review for failure on its
part to comply with the provisions of Section 112 (C) of the Tax Code.

RESPONDENT’S ARGUMENT
TPI claims that they are entitled to a refund/tax credit after
complying with the requirements provided for by law.

ISSUES:
RULING:
I. TPI’s refund claim of unutilized input VAT for the third
quarter of 2001 is 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 held in the San Roque case, strict compliance with the 120+30
day mandatory and jurisdictional periods is not necessary when the
judicial claims are filed between December 10, 2003 (issuance of BIR
Ruling No. DA-489-03 which states that the taxpayer need not wait
for the 120-day period to expire before it could seek judicial relief)
(38) CIR vs. MIRANT PAGBILAO CORPORATION
G.R. NO. 172129, September 12, 2008
Velasco, Jr., J.
to October 6, 2010 (promulgation of the Aichi doctrine).
II. The Court agreed with the CTA’s findings that the words
"zero-rated" appeared on the VAT invoices/official receipts
presented by the TPI in support of its refund claim. Although the
same was merely stamped and not pre-printed, the same is
sufficient compliance with the law, since the imprinting of the
word "zero-rated" was required merely to distinguish sales
subject to 10% VAT, those that are subject to 0% VAT (zero-
rated) and exempt sales, to enable the BIR to properly implement
and enforce the other VAT provisions of the Tax Code.
RESPONDENT’S ARGUMENT
MPC claimed that they are entitled to a refund/tax credit for
its unutilized input VAT.

ordered the BIR to refund or issue a TCC in favor of petitioner ISSUE:

MPC in the amount representing its unutilized input VAT for the Whether or not MPC is entitled to the refund of its input VAT
second quarter of 1998. payments made from 1993 to 1996 amounting to PhP 146,760,509.48

FACTS:
In the light of the NPCs tax exempt status, MPC, on the belief
that its sale of power generation services to NPC is zero-rated for VAT
purposes, filed on December 1, 1997 an Application for Effective Zero
Rating. Not getting any response from the BIR , MPC refiled its
application in the form of a request for ruling with the VAT Review
Committee at the BIR.
MPC filed on December 20, 1999 an administrative claim for
refund of unutilized input VAT in the amount of PhP 148,003,047.62.
Since the BIR Commissioner failed to act on its claim for refund, MPC
went to the CTA via a petition for review.
CTA granted MPCs claim for input VAT refund or credit, but
only for the amount of PhP 10,766,939.48. CA rendered its assailed
decision modifying that of the CTA decision by granting most of MPC’s
claims for tax refund or credit, amounting to PhP 135,993,570.

PETITIONER’S ARGUMENT
BIR Commissioner asserted that MPC’s claim for refund cannot
be granted on the ground that MPCs sale of electricity to NPC is not
zero- rated for its failure to secure an approved application for zero-
rating.
RULING:
NO. The Court ordered the CIR to refund or issue a TCC in favor
of MPC for its unutilized input VAT payments directly attributable to its
effectively zero-rated sales for the second quarter only in the total amount
of PhP 10,766,939.48.
Records show that there was belated payment by MPC of its
obligation for creditable input VAT. MPC did not, for the VATable MPC-
Mitsubishi 1993 to 1996 transactions adverted to, immediately pay the
corresponding input VAT. OR No. 0189 issued on April 14, 1998 clearly
reflects the belated payment of input VAT corresponding to the payment
of the progress billings from Mitsubishi for the period covering April 7,
1993 to September 6, 1996. Moreover, the claim for refund/tax credit for
the creditable input VAT payment made by MPC embodied in OR No.
0189 was filed beyond the period provided by law for such claim. In
addition, MPC cannot avail itself of the provisions of either Sec. 204(C)
or 229 of the NIRC which, for the purpose of refund, prescribes a
different starting point for the two-year prescriptive limit for the filing
of a claim therefor as both provisions apply only to instances of
erroneous payment or illegal collection of internal revenue taxes. In this
case, MPC’s creditable input VAT was not erroneously paid.

(39) CIR V. AICHI FORGING COMPANY OF ASIA prescribed period

G.R. NO. 184823, October 6, 2010 2) Whether or not the simultaneous filing of the administrative
Del Castillo, J. and the judicial claims contravenes Section 229 of the NIRC

FACTS:
Respondent Aichi Forging, is engaged in the manufacturing,
producing, and processing of steel and its by-products.3 It is registered
with the BIR) as a VAT entity4 and its products are registered with the
BOI as a pioneer status.
On September 30, 2004, respondent filed a claim for
refund/credit of input VAT in the total amount of P3,891,123.82 with
the petitioner CIR, through the DOF One-Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center.6

PETITIONER’S CONTENTION
Petitioner agued that the administrative and the judicial claims
were filed beyond the two-year period to claim a tax refund/credit. He
reasoned that since the year 2004 was a leap year, the filing of the claim
for tax refund/credit on September 30, 2004 was beyond the two-year
period, which expired on September 29, 2004. In addition, petitioner
argued that the simultaneous filing of the administrative and the
judicial claims contravenes Sections 112 and 229 of the NIRC.

RESPONDENT’S CONTENTION
Respondent contended that the non-observance of the 120-day
period given to the CIR to act on the claim for tax refund/credit in
Section 112(D) is not fatal because what is important is that both claims
are filed within the 2-year prescriptive period.

ISSUES:
1) Whether or not the claim for refund was filed within the
RULING:
(1) YES. As ruled in the case of CIR v. MPC, the 2-year period should
be reckoned from the close of the taxable quarter when the sales
were made. In CIR v. Primetown Property Group, Inc, the Court
said that as between the Civil Code, which provides that a year is
equivalent to 365 days, and the Administrative Code of 1987,
which states that a year is composed of 12 calendar months, it is
the latter that must prevail being the more recent law.
Thus, applying this to the present case, the two-year period to
file a claim for tax refund/credit for the period July 1, 2002 to
September 30, 2002 expired on September 30, 2004. Hence,
respondent’s administrative claim was timely filed.
(40)CIR V. AICHI FORGING COMPANY OF ASIA
G.R. NO. 183421, October 22, 2014
Sereno, CJ.
FACTS:
On 29 March 2005, respondent filed with the BIR RDO No. 057
an application for tax credit/refund.
On 31 March 2005, respondent filed a Petition with the CTA.
After trial, the CTA First Division partly granted the Petition and
ordered the refund to respondent of the reduced. CTA En Banc
affirmed. Respondent was found to have complied with all the
requisites for claiming a refund under Section 112 (A) of the NIRC.
PETITIONER’S ARGUMENT
CIR claimed that respondent failed to comply with the
requirements of a valid application for a tax refund. Hence, the judicial
claim made before the CTA deserve outright dismissal for being
premature.
RESPONDENT’S ARGUMENT
Respondent asserted that they are entitled to a refund/tax credit
for complying with all the requisites for claiming a refund under the
NIRC.
ISSUE:
Whether or not respondent’s petition was prematurely filed with the
CTA
(2) YES. We find the filing of the judicial claim with the CTA
premature. Subsection (A) of Section 112 of the NIRC states that
“any VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two years after the close of the
taxable quarter when the sales were made, apply for the issuance
of a tax credit certificate or refund of creditable input tax due or
paid attributable to such sales.” The phrase “within two (2) years
x x x apply for the issuance of a tax credit certificate or refund”
refers to applications for refund/credit filed with the CIR and
not to appeals made to the CTA. The premature filing of
respondent’s claim for refund/credit of input VAT before the
CTA warrants a dismissal inasmuch as no jurisdiction was
acquired by the CTA.
RULING:
The Court agreed 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. BIR Ruling No. DA- 489-03 is a general interpretative rule.
Thus, all taxpayers 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, where No. DA-489-03.
this Court held that the 120+30 day periods are mandatory and
jurisdictional. WHEREFORE, premises considered, the instant Petition is DENIED.
Therefore, respondent's filing of the judicial claim barely two SO ORDERED.
days after the administrative claim is acceptable, as it fell within the
period during which the Court recognized the validity of BIR Ruling
(41)AICHI FORGING V. CIR action.
G.R. NO. 193625, August 30, 2017
Martires, J.

FACTS:
On 26 September 2002, AICHI filed with the BIR 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.
As respondent CIR failed to act on the refund claim, AICHI filed, on 30
September 2002, a Petition for Review before the CTA Division.
CTA Division partially granted the refund claim of AICHI. CTA
En Banc affirmed on the ground that the law does not prohibit the
simultaneous filing of the administrative and judicial claims for refund.

PETITIONER’S ARGUMENT
Citing the Revised CTA Rules, AICHI claimed that it has 15 days
from receipt of the decision of the CTA En Banc within which to file an
MR. Considering that it received the 18 February 2010 Decision of the
CTA En Banc on 25 February 2010, and that it filed the MR on 12 March
2010, AICHI asserts that the filing of the said motion was made within
the prescriptive period provided in the law.

RESPONDENT’S ARGUMENT
CIR claimed that the court did not acquire jurisdiction over the
refund claim in view of AICHI's failure to observe the 30-day period to
claim refund/tax credit as specified in Sec. 112 of the Tax Code.

ISSUE:
Whether or not AICHI sufficiently proved its entitlement to the refund
or tax credit

RULING:
NO. The Court denied AICHI’S claim for refund. The CTA had
no jurisdiction over the judicial claim.
AICHI's judicial claim was filed prematurely and, thus, without cause of
credit of input taxes covering the six separate taxable periods was made on In addition, petitioner adopted the wrong remedy in assailing
26 September 2002. Both the CTA Division and CTA En Banc correctly the decision of the CTA En Banc. What the petitioner should have done
ruled that it fell within the two-year statute of limitations. However, its to question the decision of the CTA En Banc was to file before this Court
judicial claim was filed a mere four days later on 30 September 2002, or a petition for review under Rule 45 of the same Rules of Court. This is in
before the window period when the taxpayers need not observe the 120- conformity with Section 11 of R.A. No. 9282
day mandatory and jurisdictional period. Consequently, the general rule
applies.
AICHI had timely filed its administrative claim for refund or tax
credit before the BIR. The records show that the claim for refund/tax
(42)TAGANITO MINING CORP. V. CIR I. Whether or not Taganito’s judicial claim for refund of excess
G.R. NO. 201195, November 26, 2014 input VAT should be allowed
Mendoza, J. II. Whether or not Taganito should be entitled to its entire claim
for refund
FACTS:
On March 26, 2008, Taganito filed with CIR a claim for credit/refund of
input VAT paid on its domestic purchases of taxable goods and services and
importation of goods.
On April 17, 2008, as respondent CIR had not yet issued a final decision
on the administrative claim, Taganito filed a judicial claim before the CTA
Division to judicially claim a tax credit/refund under Section 229 of the NIRC.
On May 26, 2009, in accordance with the order of the CTA, Taganito
filed a supplemental petition for review limiting the issue of the case to the
remaining amount of ₱4,611,123.00, representing alleged excess input VAT paid
on the importation of capital goods from January 1, 2006 to December 31, 2006.
CTA Division denied Taganito’s petition for review holding that it
failed to prove that it complied with the substantiation requirements.
Moreover, considering that Taganito filed its judicial claim before the
expiration of the 120- day period, the CTA En Banc ruled that the judicial claim
was prematurely filed and, it had no jurisdiction to entertain the case.

PETITIONER’S ARGUMENT
Taganito argued that prior to Aichi, a taxpayer need not wait for the
decision of the CIR on its administrative claim for refund before filing its
judicial claim, in accordance with the period provided in Section 229 of the
NIRC. Moreover, it insisted that the official receipts issued by the authorized
agent banks acting as collection agents of the respondent, constituted more
than sufficient proof of payment of the VAT.

RESPONDENT’S ARGUMENT
CIR countered that Aichi is a sound decision and that pursuant thereto,
the petitioner’s judicial claim for refund was prematurely filed. The CIR further
argues that Taganito failed to comply with the necessary substantiation
requirements to prove actual payment of the claimed input VAT.

ISSUE:
RULING:
I. YES. The Court ruled that the judicial claim timely filed. The Court agreed
with petitioner that the prevailing doctrine pertinent to the issue at hand is
CIR v. San Roque. The general rule is that the 120+30 day period is
mandatory and jurisdictional from the effectivity of the 1997 NIRC on
January 1, 1998, up to the present. As an exception, judicial claims filed
from December 10, 2003 to October 6, 2010 need not wait for the
exhaustion of the 120-day period.
In the present case, Taganito filed its judicial claim with the CTA on April
17, 2008, clearly within the period of exception of December 10, 2003 to
October 6, 2010. Its judicial claim was, therefore, not prematurely filed.
II. NO. The Court ruled that petitioner failed to comply with
substantiation requirements. The Court agreed with the finding of the
CTA Division that petitioner failed to duly substantiate its claim. As
noted by the CTA, there was no year indicated in OR No. 0028847, in
support of the claim of ₱1,131,431.00. It is plain that this claim cannot
be deemed to have been properly substantiated. Moreover, under the
law, any input tax that is subject of a claim for refund must be
evidenced by a VAT invoice or official receipt. An IEIRD is required to
properly substantiate the payment of the duties and taxes on imported
goods. Considering that the petitioner failed to submit the import
entries relevant to its claim, the CTA did not err in ruling that the
petitioner’s claim was not sufficiently proven.

(43)PASCUAL V. CIR CIR asserted that petitioners formed an unregistered

G.R. NO. 78133, October 18, 1988, partnership or joint venture which subjected them to corporate
166 SCRA 569 income tax
Gancayco, J.
ISSUE:
FACTS: Whether or not the petitioners formed an unregistered partnership
On June 22, 1965, petitioners bought parcels of land in total. subject to corporate income tax
Subsequently, they sold said parcel of lands to different buyers in
different occasions/transactions. As such, petitioners realized a net
profit in the sale made in 1968 in the amount of P165,224.70, while they
realized a net profit of P60,000.00 in the sale made in 1970. The
corresponding capital gains taxes were paid by petitioners in 1973 and
1974 by availing of the tax amnesties granted in the said years.
However, on March 31, 1979, CIR assessed petitioners assessed
and required them to pay a total amount of P107,101.70 as alleged
deficiency corporate income taxes for the years 1968 and 1970.
Petitioners protested asserting that they had availed of tax
amnesties way back in 1974.
CIR informed petitioners that in the years 1968 and 1970,
petitioners as co-owners in the real estate transactions formed an
unregistered partnership or joint venture taxable as a corporation and
its income was subject to the taxes prescribed under the NIRC. Hence,
the petitioners were required to pay the deficiency income tax assessed.
CTA affirmed the decision and action taken by respondent CIR.

PETITIONER’s ARGUMENT
Petitioners argued that they did not form an unregistered
partnership solely on the basis of an isolated sale transactions.

RESPONDENT’S ARGUMENT

RULING:
NO. The Court ruled that there is no evidence that petitioners
entered into an agreement to contribute money, property or industry to a
common fund, and that they intended to divide the profits among
themselves. Respondent commissioner and/ or his representative just
assumed these conditions to be present on the basis of the fact that
petitioners purchased certain parcels of land and became co-owners
thereof. The transactions conducted by the petitioners were isolated. The
character of habituality peculiar to business transactions for the purpose of
gain was not present.
(44)OBILLOS V. CIR
G.R. NO. L-68118 October 29, 1985
139 SCRA 436
Aquino, J.
There was merely a co-ownership between the petitioners. There
is no adequate basis to support the proposition that they thereby formed
an unregistered partnership. The two isolated transactions whereby
they purchased properties and sold the same a few years thereafter did
not thereby make them partners. They shared in the gross profits as co-
owners and paid their capital gains taxes on their net profits and availed
of the tax amnesty thereby. Under the circumstances, they cannot be
considered to have formed an unregistered partnership which is thereby
liable for corporate income tax, as the respondent commissioner
proposes.
ISSUE:
Whether or not the petitioners had indeed formed a partnership or
joint venture and thus liable for corporate tax

FACTS: RULING:
In 1973, Jose Obillos completed payment on two lots located in NO. To regard the petitioners as having formed a taxable
Greenhills, San Juan. Thereafter, he transferred his rights to his four unregistered partnership would result in oppressive taxation and
children for them to build their own residences. The Torrens title would confirm the dictum that the power to tax involves the power to
show that they were co-owners of the two lots. However, the petitioners destroy. That eventuality
resold them to Walled City Securities Corporation and Olga Cruz
Canda. They treated the profit as capital gains and paid an income tax
thereon.
The CIR requested the petitioners to pay the corporate income
tax of their shares, as this entire assessment is based on the alleged
partnership since they contributed each to buy the lots, resold them and
divided the profits among them. Thus, the petitioners are being held
liable for deficiency income taxes and penalties on their profit, in
addition to the tax on capital gains already paid by them.

PETITIONER’S ARGUMENT
Obillos testified that they have no intention to form the
partnership and that it was merely incidental since they sold the said
lots due to high demand of construction. Naturally, when they sell them
as co-partners, it will result to the share of profits. Further, their
intention was to divide the lots for residential purposes.

RESPONDENT’S ARGUMENT
CIR acted on the theory that the four petitioners had formed an
unregistered partnership or joint venture.
should be obviated. They were co-owners pure and simple. To consider
them as partners would obliterate the distinction between a co-ownership
and a partnership. The petitioners were not engaged in any joint venture
by reason of that isolated transaction. The division of the profit was merely
(45)CIR V. MAGSAYSAY LINES, INC.
G.R. NO. 146984, July 28, 2006
Tinga, J.
incidental to the dissolution of the co-ownership which was in the
nature of things a temporary state. It had to be terminated sooner or
later.
emphasized that the normal VAT-registered activity of NDC is
leasing personal property. Any

FACTS:
Because of a government program of privatization, NDC
decided to sell its NMC shares and five of its ships. In a VAT Ruling,
BIR held that the sale was subject to VAT since NDC was a VAT-
registered enterprise and the transaction is incident to its normal VAT-
registered activity of leasing out personal property.
CTA and CA ruled that the sale is not subject to VAT.

PETITIONER’S ARGUMENT
CIR also squarely defended the VAT rulings holding the sale of
the vessels liable for VAT. The CIR argued that the sale of the vessels
were among those transactions "deemed sale," as enumerated in
Section 4 of
R.R. No. 5-87. CIR particularly emphasized Section 4(E)(i) of the
Regulation, which classified "change of ownership of business" as a
circumstance that gave rise to a transaction "deemed sale."

RESPONDENT’S ARGUMENT
Private respondents argued that what occurred was an isolated
transaction not subject to VAT.

ISSUE:
Whether or not the sale by the NDC of its vessels to the private
respondents is subject to VAT

RULING:
NO. The Court ruled that the sale of the vessels is not subject to VAT
since it was not in the ordinary course of trade or business of NDC.
“Course of business” is what is usually done in the management of
trade or business. It connotes regularity. In the case at bar, 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
sale, barter, or exchange of goods or services not in the course of trade or
business is not subject to tax.
(46) MINDANAO II GEOTHERMAL PARTNERSHIP V. CIR
MINDANAO II GEOTHERMAL PARTNERSHIP, vs. COMMISSIONER OF INTERNAL
REVENUE
G.R. No. 193301
MINDANAO I GEOTHERMAL PARTNERSHIP, vs. COMMISSIONER OF INTERNAL
REVENUE
G.R. No. 194637
March 11, 2013
Carpio, J.
FACTS:
Mindanao I and II (Mindanao) are value-added taxpayers, and Block
Power Production Facilities accredited by the Department of Energy. They had
a Build-Operate-Transfer contract with PNOC-EDC, whereby Mindanao
converts steam supplied to it by PNOC-EDC into electricity, and then delivers
the electricity to the NPC in behalf of PNOC-EDC.
The EPIRA Law amended the Tax Reform Act of 1997 when it decreed
that sales of power by generation companies shall be subjected to a zero-rate of
VAT. Pursuant to EPIRA, Mindanao I and II filed their claims for the issuance
of tax credit certificates on unutilized or excess input taxes from their sales of
generated power and delivery of electric capacity and energy to NPC.
CTA En Banc denied Mindanao II’s claims for refund tax credit for the
first and second quarters of 2003, and Mindanao I’s claims for refund/tax credit
for the first, second, third, and fourth quarters of 2003, for being filed out of
time
PETITIONER’S ARGUMENT
Mindanao II argued that the sale of the fully depreciated Nissan Patrol
is a one-time transaction and is not incidental to its VAT zero-rated operations.
Moreover, the disallowed input taxes substantially complied with the
requirements for refund or tax credit.
Mindanao I claimed that the CTA Second Division should not have
allocated proportionately Mindanao I’s unutilized creditable input taxes for the
taxable year 2003 because the proportionate allocation of the amount of
creditable taxes in Section 112(A) applies only when the creditable input taxes
due cannot be directly and entirely attributed to any of the zero-rated or
effectively zero-rated sales.
CIR claimed that Mindanao I failed to exhaust administrative remedies
before it filed its petition for review.
ISSUE:
Whether or not Mindanao I and II are entitled to its claims for tax refund or tax
credit
RULING:
The claims of Mindanao II Geothermal Partnership for the first quarter
of 2003 is DENIED while its claims for the second, third, and fourth quarters of
2003 are GRANTED.
The claims of Mindanao I Geothermal Partnership for the first, third,
and fourth quarters of 2003 are DENIED while its claim for the second quarter
of 2003 is GRANTED.
The Court cannot disregard mandatory and jurisdictional conditions
mandated by law simply because the Commissioner chose not to contest the
numerical correctness of the claim for tax refund or credit of the taxpayer. Non-
compliance with mandatory periods, non-observance of prescriptive periods,
and non-adherence to exhaustion of administrative remedies bar a taxpayer’s
claim for tax refund or credit, whether or not the Commissioner questions the
numerical correctness of the claim of the taxpayer. The Court should not
establish the precedent that non-compliance with mandatory and jurisdictional
conditions can be excused if the claim is otherwise meritorious, particularly in
claims for tax refunds or credit. Such precedent will render meaningless
compliance with mandatory and jurisdictional requirements, for then every tax
refund case will have to be decided on the numerical correctness of the
amounts claimed, regardless of non-compliance with mandatory and
jurisdictional conditions.

RESPONDENT’S ARGUMENT
CIR argued that Mindanao II’s judicial claims were filed beyond the
period allowed by law, as stated in Section 112(A) of the 1997 Tax Code. The
CIR further stated that Section 229 is a general provision, and governs cases not
covered by Section 112(A).
(47) PNB V. CARMELITA SANTOS, ET AL. PNB vs. CARMELITA S. SANTOS, ET AL.
G.R. NO. 208293
LINA B. AGUILAR vs. CARMELITA S. SANTOS, ET AL., Respondents.
G.R. No. 208295
December 10, 2014
Leonen, J.
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 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 RTC of Marikina
City a complaint for sum of money and damages against PNB, Lina B.
Aguilar, and a John Doe.
RTC held that PNB and Aguilar were jointly and severally liable
to pay respondents. CA sustained RTC’s decision.
PETITIONER’S ARGUMENT
PNB and Aguilar denied that Angel C. Santos had two separate
accounts (premium deposit account and time deposit account with
PNB.15 They alleged that Manimbo was able to submit an affidavit of
self- adjudication and the required surety bond, that he also submitted a
certificate of payment of estate tax. All documents he submitted
appeared to be regular.
RESPONDENT’S ARGUMENT
Angel C. Santos had only one account with PNB. 31 The account
was originally a time deposit, which was converted into a premium
savings account when it was not renewed on maturity.
ISSUE:
(48)MARCELO INVESTMENT & MANAGEMENT CORP. V.
MARCELO, JR.
G.R. NO. 209651, NOVEMBER 26, 2014
Perez, J.
FACTS:
Whether Philippine National Bank was negligent in releasing the deposit
to Bernardito Manimbo
RULING:
YES. The Court held that Tthe trial court and the CA correctly
found that petitioners PNB and Aguilar were negligent in handling the
deposit of Angel C. Santos.
Petitioners PNB and Aguilar’s treatment of Angel C. Santos’
account is inconsistent with the high standard of diligence required of
banks. They accepted Manimbo’s representations despite knowledge of
the existence of circumstances that should have raised doubts on such
representations. As a result, Angel C. Santos’ deposit was given to a
person stranger to him. Petitioners PNB and Aguilar released Angel C.
Santos’ deposit to Manimbo without having been presented the BIR-
issued certificate of payment of, or exception from, estate tax. This is a
legal requirement before the deposit of a decedent is released.
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.
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 MIMCO filed a
Petition for the issuance of Letters of Administration of the estate of
Jose, Sr. before the RTC. Pending issuance of letters of
administration, the RTC appointed Helen and Jose, Jr. as special
administrators. Thereafter, RTC appointed Edward as regular
administrator of Jose, Sr.’s estate.
A project partition was submitted, Edward manifested 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. He therefore prays that
the said document which bears the conformity of all 4 compulsory heirs
be approved.
RTC approved the proposed partition. However, the distribution
was deferred pending submission of proof of payment of estate taxes.
At this state, Edward died. Wasting no time, Jose, Jr. moved to revive
for his appointment as new regular administrator, which the RTC
approved.
PETTIONER’S ARGUMENT
The appointment of a regular administrator is unnecessary
where there remains no pending matter in the settlement of Jose, Sr.’s
estate requiring attention and administration. There is no existing or
unliquidated debt against the estate of Jose, Sr, the settlement thereof
being already at the liquidation, partition and distribution stage. Further
on that, the liquidation and proposed partition had long been approved
by the probate court.
RESPONDENT’S ARGUMENT
The appointment of a regular administrator is necessary because 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.
(49)DIZON V. CTA
G.R. NO. 140944, April 30, 2008
Nachura, J.
FACTS:
Jose P. Fernandez died in November 7, 1987. Thereafter, a
petition for the probate of his will was filed. The probate court
appointed Atty. Rafael Arsenio P. Dizon as administrator of the Estate
of Jose Fernandez. Petitioner requested the probate court's authority to
sell several properties forming part of the Estate, for the purpose of
paying its creditors. Petitioner manifested that Manila Bank, a major
creditor of the Estate was not included, as it did not file a claim with
the probate court since it had security over several real estate properties
forming part of the Estate. An estate tax return was filed later on which
showed zero estate tax liability. BIR thereafter issued Estate Tax
Assessment Notice,
ISSUE:
Whether or not the appointment of a regular administrator is still
necessary at this liquidation, partition and distribution stage of the
intestate proceedings involving Jose, Sr.’s estate
RULING:
YES. The settlement of Jose, Sr.’s estate is not yet through and
complete albeit it is at the liquidation, partition and distribution stage.
The Court observed that the Liquidation of the Inventory of the
Estate, approved by the RTC, is not yet in effect and complete. The
Court further note that there has been no manifestation forthcoming
from any of the heirs, or the parties in this case, regarding the
completion of the proposed liquidation and partition of the estate. In
fact, as all parties are definitely aware, the RTC archived the intestate
proceedings pending the payment of estate taxes. The liquidation
scheme appears yet to be effected, the actual partition of the estate,
where each heir separately holds his share in the estate as that which
already belongs to him, remains intangible and the ultimate distribution
to the heirs still held in abeyance pending payment of estate taxes.
demanding the payment of P66,973,985.40 as deficiency estate tax.
This was subsequently reduced by CTA to P37,419,493.71 .
The CA affirmed the CTA’s ruling.
PETITIONER’S ARGUMENT
The petitioner claimed that in as much as the valid claims of
creditors against the Estate are in excess of the gross estate, no estate
tax was due.
RESPONDENT’S ARGUMENT
Respondents argued that since the claims of the Estate’s
creditors have been condoned, such claims may no longer be
deducted from the gross estate of the decedent.
ISSUE:
 Following the US Supreme Court’s ruling in Ithaca Trust Co.v. because the act on which the tax is levied occurs at a discrete time, i.e.,
United States, the Court held that post-death developments are not the instance of death, the net value of the property transferred should be
material in determining the amount of deduction. This is because estate tax ascertained, as nearly as possible, as of the that time.
is a tax imposed on the act of transferring property by will or intestacy and,
Whether the actual claims of creditors may be fully allowed as
deductions from the gross estate of Jose despite the fact that the said
claims were reduced or condoned through compromise agreements
entered into by the Estate with its creditors

RULING.
YES. The date-of-death valuation rule shall apply in this case.
(50)PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE than their book value based on the financial statements of Philam
COMPANY (PHILAMLIFE) V. SECRETARY OF FINANCE & CIR Care as of the end of 2008. CIR held donor’s tax became imposable
G.R. NO. 210987, NOVEMBER 24, 2014 on the price difference pursuant to Sec. 100 of the NIRC.
Velasco, Jr., J.
ISSUES:
FACTS: I. Whether or not the CA erred in dismissing the CA Petition
Philamlife sold its shares in Philam Care Health Systems to STI for lack of jurisdiction; and
Investments Inc., the highest bidder, for PhP 104,259,330. After the sale
was completed and the necessary documentary stamp and capital gains
taxes were paid, Philamlife filed an application for a certificate
authorizing registration/tax clearance with the BIR to facilitate the
transfer of the shares. It was informed by BIR that there is a need to
secure a BIR ruling in connection with its application due to potential
donor’s tax liability.
Respondent SOF affirmed CIR’s ruling on the assessment. CA
dismissed Philamlife’s petition reasoning that it is CTA which has
jurisdiction.

PETITIONER’S ARGUMENT
The transaction cannot attract donor’s tax liability since there
was no donative intent and, ergo, no taxable donation; 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.

RESPONDENT’S ARGUMENT
CIR argued that the selling price of the shares sold was lower
 II. Whether or not the price difference in petitioner’s adverted sale of
shares in PhilamCare attracts donor’s tax
RULING:
I. NO. Reviews by the Secretary of Finance pursuant to Sec. 4 of the
NIRC are appealable to the CTA.
rule on the validity of a particular administrative rule or
regulation so long as it is within its appellate jurisdiction. Hence,
it can now rule not only on the propriety of an assessment or tax
treatment of a certain transaction, but also on the validity of the
revenue regulation or revenue memorandum circular on which
the said assessment is based.

Admittedly, there is no provision in law that expressly provides
where exactly the ruling of the Secretary of Finance under the
adverted NIRC provision is appealable to. However, Sec. 7(a)(1) of
RA 1125, as amended, addresses the seeming gap in the law as it
vests the CTA, albeit impliedly, with jurisdiction over the CA
petition as "other matters" arising under the NIRC or other laws
administered by the BIR. CTA, through its power of certiorari, to
II. YES. The price difference is subject to donor’s tax. 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.

(51)BIR V. CA AND SPOUSES ANTONIO VILLAN MANLY & CA dismissed the petitioner’s petition for certiorari and
RUBY ONG MANLY denied its subsequent MR.
G.R. NO. 197590, November 14, 2014
Del Castillo, J. PETITIONER’S ARGUMENT
In filing a criminal case for tax evasion, a prior computation
There is grave abuse of discretion when the determination of probable or assessment of tax is not required because the crime is complete
cause is exercised in an arbitrary or despotic manner, due to passion or when the violator knowingly and willfully filed a fraudulent return
personal hostility, so patent and gross as to amount to an evasion of a with intent to evade a part or all of the tax. Since the spouses failed to
positive duty or a virtual refusal to perform a duty enjoined by law.1 explain the alleged unreported or undeclared income, petitioner
asserts that criminal charges for tax evasion should be filed against
FACTS: them.
BIR issued a Letter of Authority authorizing the investigation of
respondent spouses’ IR tax liabilities for taxable year 2003 and prior
years. They were required to submit documentary evidence to
substantiate the source of their cash purchase of a 256-square-meter log
cabin in Tagaytay worth P17,511,010. However, respondents failed to
comply.
The revenue officers found that the modest income declared in
his ITRs, he was still able to purchase in cash several properties and
thus concluded that Antonio’s ITRs for taxable years 2000, 2001, and
2003 were underdeclared. And since the underdeclaration exceeded 30%
of the declared income, it was considered prima facie evidence of fraud
with intent to evade payment of proper taxes due.
The State Prosecutor recommended the filing of criminal charges
against the spouses. The latter moved for reconsideration but it was
denied. On appeal, the SOJ reversed the Resolution of the State
Prosecutor.
RESPONDENT’S ARGUMENT respondent spouses for tax evasion as petitioner was able to show that a
Petitioner failed to prove that a tax is actually due. Neither was it tax is due from them. the underdeclaration of the respondent spouses is
able to show the source of the alleged unreported or undeclared income as more than 30%of their reported or declared income, which under
required in RM No. 15-95. Section 248(B) of the NIRC constitutes as prima facie evidence of false or
fraudulent return. As such, petitioner recommended the filing of
ISSUE: criminal cases against respondent spouses under Sections 254 and 255,
Whether or not there is probable cause to hold respondent spouses in relation to Section 248(B) of the NIRC is proper.
liable for tax evasion In completely disregarding the evidence presented and in
affirming the ruling of the Acting Justice Secretary Devanadera that no
RULING: probable cause exists, the CA committed grave abuse of discretion
YES. The Court is convinced that there is probable cause to indict amounting to lack or excess of jurisdiction.

(52)WINEBRENNER & INIGO INSURANCE BROKER, INC. V. CIR excess CWT for the 4 quarters of CY 2003 to the succeeding 4
G.R. NO. 206526, January 28, 2015 quarters of CY 2004 was made. In the absence of said ITRs, no refund
Mendoza, J. could be granted

FACTS: In case the corporation is entitled to a tax credit or refund of the

About 2 years after filing its annual ITR, or on April 7, 2006, excess estimated quarterly income taxes paid, the excess amount
petitioner applied for the administrative tax credit/refund claiming shown on its final adjustment return may be carried over and
entitlement to the refund of its excess or unutilized CWT for CY 2003 credited against the estimated quarterly income tax liabilities for the
with the BIR. There being no action taken on the said claim, a petition taxable quarters of the
for review was filed by petitioner before the CTA on April 11, 2006.
CTA Division partially granted petitioner’s claim for refund of
excess and unutilized CWT for CY 2003. However, CTA Division
reversed itself, denying the entire claim on the ground that petitioner
should have presented as evidence its first, second and third quarterly
ITRs for the year 2004 to prove that the unutilized CWT being claimed
had not been carried over to the succeeding quarters. CTA En Banc
affirmed.

PETITIONER’S ARGUMENT
The submission of quarterly income tax returns for the
subsequent taxable period was unnecessary. It further submits that
despite the non-presentation of the quarterly ITRs, it has sufficiently
shown that the excess CWT for CY 2003 was not carried over or applied
to its income tax liabilities forCY 2004, as shown in the Annual ITR for
2004 it submitted.

RESPONDENT’S ARGUMENT
Petitioner failed to present the quarterly ITRs for CY 2004 which
is indispensable in proving petitioner’s entitlement to the claimed
amount because it would prove that no carry-over of unutilized and
succeeding taxable years. Once the option to carry-over and apply the
excess quarterly income tax against income tax due for the taxable quarters
of the succeeding taxable years has been made, such option shall be
considered irrevocable for that taxable period and no application for cash
refund or issuance of a tax credit certificate shall be allowed therefor.
ISSUE:
Whether or not the submission and presentation of the quarterly ITRs of
the succeeding quarters of a taxable year is indispensable in a claim for
refund
RULING:
NO. Proving that no carry-over has been made does not
absolutely require the presentation of the quarterly ITRs.
What Section 76 requires is to prove the prima facie entitlement to
a claim, including the fact of not having carried over the excess credits
to the subsequent quarters or taxable year. As such, any document,
other than quarterly ITRs may be used to establish that indeed the non-
carry over clause has been complied with, provided that such is
competent, relevant and part of the records.

(53)MITSUBISHI MOTORS PHILS. CORP. V. BUREAU OF secured.

CUSTOMS
G.R. NO. 209830, June 17, 2015 ISSUE:
Perlas-Bernabe, J. Whether or not the CA correctly referred the records of the collection
case to the CTA for proper disposition
FACTS:
The instant case arose from a collection suit for unpaid taxes and
customs duties in the aggregate amount of ₱46,844,385.00 filed by
respondent against petitioner Mitsubishi Motors before RTC Branch 17.
Respondent alleged that the petitioner fraudulently secured
TCCs from various transportation companies with the use of fake
commercial and bank documents, and thus, petitioner never settled its
taxes and customs duties pertaining to the aforesaid importations.
Thereafter, respondent demanded that petitioner pay its unsettled tax
and customs duties, but to no avail.
RTC granted petitioner’s Demurrer to Plaintiff’s Evidence, and
accordingly, dismissed respondent’s collection case on the ground of
insufficiency of evidence. It found that respondent had not shown any
proof or substantial evidence of fraud or conspiracy on the part of
petitioner in the procurement of the TCCs. CA referred the records of
the collection case to the CTA for proper disposition of the appeal taken
by respondent.

PETITIONER’S ARGUMENT
Petitioner argued that since the CA does not have jurisdiction
over respondent’s appeal, it cannot perform any action on it except to
order its dismissal.

RESPONDENT’S ARGUMENT
Respondent maintained that petitioner’s TCCs were fraudulently
RULING: on the same except to order its dismissal pursuant to Section 2, Rule 50
NO. The Court finds that the CA erred in referring the records of the of the Rules of Court. Therefore, the act of the CA in referring
collection case to the CTA for proper disposition of the appeal taken by respondent’s wrongful appeal before it to the CTA under the guise of
respondent. CTA has exclusive appellate jurisdiction over tax collection furthering the interests of substantial justice is blatantly erroneous, and
cases originally decided by the RTC. In the instant case, the CA has no thus, stands to be corrected.
jurisdiction over respondent’s appeal; hence, it cannot perform any action
(54)CIR V. CTA SECOND DIVISION & PETRON CORP.
G.R. NO. 207843, July 15, 2015 RULING:
Perlas-Bernabe, J. NO. Petron's tax liability was premised on the COC's
issuance of CMC No. 164-2012, which gave effect to the CIR's June
FACTS: 29, 2012 Letter
In June 2012, Petron imported alkylate and paid VAT. Based on
the Final Computation, said importation was subjected to excise taxes,
and consequently, to an additional VAT of 12% on the imposed excise
tax. The imposition of the excise tax was supposedly premised on CMC
No. 164-2012 dated July 18, 2012, implementing the Letter issued by the
CIR, which states that: Alkylate which is a product of distillation similar
to that of naphta, is subject to excise tax under Section 148(e) of the
NIRC of 1997. 9
In view of the CIR's assessment, Petron filed before the CTA a
petition for review raising the issue of whether its importation of
alkylate as a blending component is subject to excise tax. CTA
eventually denied the CIR's MR. In effect, the CTA gave due course to
Petron's petition

PETITIONER’s ARGUMENT
CIR alleged that the CTA committed grave abuse of discretion
when it assumed authority to take cognizance of the case despite its lack
of jurisdiction to do so.

RESPONDENT’S ARGUMENT
CTA explained that Petron's petition filed before it simply puts
in question the propriety of the CIR's interpretation and application of
Section 148 (e); thus, the CTA posits that the case should be regarded as
"other matters arising under the NIRC" therefore falling within the
CTA's jurisdiction

ISSUE:
Whether or not the CTA properly assumed jurisdiction over the petition
assailing the imposition of excise tax on Petron's importation of alkylate
based on Section 148 (e) of the NIRC
interpreting Section 148 (e) of the NIRC as to include alkyl ate among the
articles subject to customs duties, hence, Petron's petition before the CTA
ultimately challenging the legality and constitutionality of the CIR's
aforesaid interpretation of a tax provision. In line with the foregoing
discussion, the CIR correctly argues that the CTA had no jurisdiction to
take cognizance of the petition as its resolution would necessarily involve a
declaration of the validity or constitutionality of the CIR's interpretation of
Section 148 (e) of the NIRC, which is subject to the exclusive review by the
Secretary of Finance and ultimately by the regular courts.
As the CIR's interpretation of a tax provision involves an exercise of
her quasi-legislative functions, the proper recourse against the subject tax
(55)THE CITY OF MANILA V. HON. CARUDAD GRECIA-
CUERDO
G.R. NO. 175723, February 4, 2014
Peralta, J.
ruling expressed in CMC No. 164-2012 is a review by the Secretary of
Finance and ultimately the regular courts. As the CIR aptly pointed out,
the phrase "other matters arising under this Code," the subject phrase
should be used only in reference to cases that are, to begin with, subject
to the exclusive appellate jurisdiction of the CTA, i.e., those
controversies over which the CIR had exercised her quasi-judicial
functions or her power to decide disputed assessments, refunds or
internal revenue taxes, fees or other charges, penalties imposed in
relation thereto, not to those that involved the CIR's exercise of quasi-
legislative powers.
No. 8011 which amended pertinent portions of the RRCM had
already been declared to be illegal and unconstitutional by the DOJ.

FACTS:
Petitioner, through its treasurer, assessed taxes for the taxable
period from January to December 2002 against private respondents. In
addition to the taxes purportedly due from private respondents, said
assessment covered the local business taxes petitioners were authorized
to collect under Section 21 of the same Code. Because payment of the
taxes assessed was a precondition for the issuance of their business
permits, private respondents were constrained to pay the assessment
under protest.
On January 24, 2004, private respondents filed with the RTC of
Pasay City a complaint for "Refund or Recovery of Illegally and/or
Erroneously-Collected Local Business Tax, Prohibition with Prayer to
Issue TRO and Writ of Preliminary Injunction"
RTC granted private respondents' application for a writ of
preliminary injunction. CA dismissed petitioners' petition for certiorari
holding that it has no jurisdiction over the said petition. The CA ruled
that since appellate jurisdiction over private respondents' complaint for
tax refund, which was filed with the RTC, is vested in the CTA.

PETITIONER’S ARGUMENT
Petitioners maintained that the assessment covering the local
business taxes petitioners were authorized to collect under Section 21 of
the NIRC.

RESPONDENT’S ARGUMENT
Private respondents averred the that petitioner city’s Ordinance
RULING:
YES. The Court agreed with the ruling of the CA that since
appellate jurisdiction over private respondents’ complaint for tax refund is
vested in the CTA, it follows that a petition for certiorari seeking
nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an
absurd situation where one court decides an appeal in the main case while
another court rules on an incident in the very same case.
Therefore, it can be reasonably concluded that the authority of
the CTA to take cognizance of petitions for certiorari questioning
interlocutory orders issued by the RTC in a local tax case is included in
the powers granted by the Constitution as well as inherent in the
exercise of its appellate jurisdiction.

ISSUE:
Whether or not CTA has jurisdiction over a special civil action for
certiorari assailing an interlocutory order issued by the RTC in a local tax
case
(56)PAGCOR V. CA & ANGELINE V. PAEZ PAGCOR argued that the gross negligence of its former handling
G.R. NO. 230084, August 20, 2018 lawyer should not bind it as it would be tantamount to a deprivation
Gesmundo, J. of its right to due process and to be rightfully heard on the merits of
the case.
FACTS:
In a random drug testing conducted by PAGCOR to all its RESPONDENT’S ARGUMENT
employees, respondent allegedly tested positive for methamphetamine. Respondent alleged that PAGCOR failed to demonstrate a
Thus, in its March 30, 2006 Letter, respondent was informed that highly meritorious ground for the relaxation of the rules of
she was dismissed from the service for gross misconduct and violation procedure in its favor.
of company rules and regulations.
On May 19, 2006, respondent appealed her dismissal with the
CSC. The CSC ultimately granted respondent’s appeal and reinstated
respondent into service. The CSC exonerated respondent from the
administrative charges on account of PAGCOR's failure to comply with
the requirements of Section 38 of RA No. 9165. Thus, it exonerated her
of the administrative charges.
On August 17, 2012, PAGCOR filed a petition for review before
the CA. However, the copies of all resolutions of the CA furnished to
counsel for respondent, were returned unserved. CA dismissed the
petition on the ground of PAGCOR's failure to provide the exact
addresses of respondent and her counsel resulting to the failure to
acquire jurisdiction over respondent as provided for under Section 4,
Rule 46 of the ROC.

PETITIONER’S ARGUMENT
CA committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it dismissed the petition. PAGCOR argued
that its failure to comply with the CA's resolution was unintentional.
ISSUE:
Whether the CA erred in dismissing the petition for review of PAGCOR
RULING:
NO. PAGCOR's disregard for technical procedure is made manifest
by the fact that the instant petition is a substitute for a lost appeal.
PAGCOR received the January 3, 2017 resolution of the CA denying its
motion for reconsideration on January 11, 2017. Hence, PAGCOR had 15
days, or until January 26, 2017, to file its appeal. It let this period lapse and,
instead, filed herein petition for certiorari on March 13, 2017. Evidently,
the present petition is a substitute for the lost remedy of appeal.
Since PAGCOR filed the instant special civil action for certiorari
instead of the lost remedy of appeal by certiorari , the petition should be
dismissed.
The petition necessarily fails even if the Court were to consider it as a
petition for certiorari . It is settled that the negligence of counsel binds
the client. Consequently, the mistake or negligence of counsel may
result in the rendition of an unfavorable judgment against the client.

(57)HERARC REALTY CORP. V. PROVINCIAL TREASURER OF ISSUE:

BATANGAS I. Whether or not Herarc availed of the proper remedy
G.R. NO. 210736, September 5, 2018 II. Whether or not petitioner is liable to pay for unpaid RPT on
Peralta, J. the subject property

FACTS:
Upon acquisition via execution sale, 13 parcels of land are
registered, since 2006, in the name of petitioners Herarc Realty. From 2
March 2006 up to 12 August 2009, private respondents have been in
possession of the subject properties in their capacities as assignees in an
involuntary insolvency proceeding. It was only on August 13, 2009 that
petitioner was able to take full possession and control of the subject
property by virtue of an Order granting the issuance of a writ of
execution.
Public respondent Provincial Treasurer of Batangas sent
petitioner a Statement of RPT Liabilities, which included the unpaid
RPT on the subject property for 2007, 2008, and January to August 2009.
The assessment was paid under protest on 20 November 2012.
Less than a month later, petitioner filed a petition for prohibition
and mandamus against respondents. RTC denied the petition ruling
that petitioner is liable to pay the RPT for the covered period. When
petitioner’s MR was denied, it directly filed before the SC a petition via
Rule 45.

PETITIONER’S ARGUMENT
The RPT assessment is illegal and erroneous, because the subject
property was not in its possession during the covered period.

RESPONDENT’S ARGUMENT
Petitioner, as registered owner of the property, is liable to pay
the RPT thereon.
RULING:
I. NO. Petitioner's direct recourse to the RTC is warranted since the
issue of the legality or validity of the assessment is a question of
law. However, as a taxpayer not satisfied with the RTC decision, it
should have filed a petition for review before the CTA. The
decision, ruling or resolution of the CTA, sitting as Division, may
further be reviewed by the CTA En Banc. It is only after this
procedure has been exhausted that the case may be elevated to this
Court.
II. YES. Petitioner, an entity that is not tax exempt under the law, is the
registered owner of the real property. Therefore, it is personally
liable for the RPT at the time is accrued.
In real estate taxation, the unpaid tax attaches to the property.
The personal liability for the tax delinquency is generally on
whoever is the owner of the real property at the time the tax
accrues. This is a necessary consequence that proceeds from the
fact of ownership.
The tax exemption of real property owned by the Republic, its
political subdivisions, agencies or instrumentalities carries,
however, ceases if the beneficial use of the real property has been
granted, for a consideration or otherwise, to a taxable person. In
such case, the corresponding liability for the payment of the RPT
devolves on the taxable beneficial user.

(58)INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. petitioner’s causes of action in the RTC and CTA Second Division
V. CITY OF MANILA were different from each other.
G.R. NO. 185622, October 17, 2018
Leonen, J PETITIONER’S ARGUMENT
It argued that it raised the issue of the refund at the earliest
possible instance at the administrative level, and later, before the
FACTS: RTC, and not only on appeal. It demanded a refund and expressly
International Container was assessed for 2 business taxes: one cited Section 196 of the LGC. Petitioner argued that it complied with
for which it was already paying, and another for which it was newly the requirements of Section 196.
assessed. It was already paying a local annual business tax for
contractors pursuant to Section 18 of Manila Ordinance No. 7794. The
newly assessed business tax was computed pursuant to Section 21 (A) of
said ordinance. It paid the additional assessment under protest.
When the City Treasurer failed to decide petitioner’s protest
within 60 days therefrom, the latter filed before the RTC of Manila its
Petition for Certiorari and Prohibition against respondent.
While the Petition for Certiorari and Prohibition was pending,
the City of Manila continued to impose the business tax under Section
21 (A), in addition to the business tax under Section 18, petitioner paid
so that it would be issued business permits.
RTC dismissed the Amended and Supplemental Petition finding
that petitioner failed to comply with the requirements of Section 195 of
the LGC.
Petitioner filed a Petition for Review before the CTA praying
that they order the City of Manila to refund the business taxes assessed,
demanded, and collected.
CTA Second Division set aside RTC decision. CTA En Banc
issued dismissed the petition for lack of merit, finding that that
RESPONDENT’S ARGUMENT
It found that petitioner raised the applicability of Section 196 of the
LGC for the first time on appeal. Respondents argue that petitioner invoked
said provision when it filed its original action, and only belatedly
introduced its cause of action before the CTA. Moreover, even if it may
validly invoke Section 196, it failed to comply with the requirement since it
already filed the case for refund even before it paid the taxes owed to
respondents beginning the fourth quarter of 1999.
ISSUE:
Whether or not petitioner complied with the requirements that would
entitle it to the refund it claims
RULING:
YES. Petitioner complied with the procedural requirements under
(59)CITY OF MANILA & THE CITY TREASURER V. COSMOS
G.R. NO. 196681, June 27, 2018
Martires, J
FACTS:
For the first quarter of 2007, the City of Manila assessed Cosmos
local business taxes and regulatory fees.
Cosmos protested the assessment arguing that Tax Ordinance
Nos. 7988 and 8011, amending the RCM, have been declared null and
void. Cosmos also argued that the collection of local business tax under
Section 21 of the RCM in addition to Section 14 of the same code
constitutes double taxation.
City Treasurer denied their protest. Cosmos was thus
constrained to pay the assessment of P1,226,78,1.05. On March 1, 2007,
Cosmos filed a claim for refund of P1,094,786.82 with the Office of the
City Treasurer raising the same grounds as discussed in their protest.
On March 8, 2007, Cosmos filed its complaint with the RTC of
Manila praying for the refund or issuance of a TCC.
RTC ruled in favor of [Cosmos] but denied the claim for refund.
CTA Division essentially ruled that the collection by the City Treasurer
of Manila of local business tax under both Section 21 and Section 14 of
the Revenue Code of Manila constituted double taxation.
PETITIONER’S ARGUMENT
Petitioner’s claimed that Cosmos' remedy was one of protest
against assessment. Being so, Cosmos' adopted remedy should be
Sec 196.
Records show that written claims for refund were made by
petitioner. As for the taxes paid thereafter and were not covered by
these letters, petitioner readily admits that it did not make separate
written claims for refund, citing that "there was no further necessity" to
make these claims. It argues that to file further claims before respondent
City Treasurer would have been "another exercise in futility" as it would
have merely raised the same grounds that it already raised.
Similarly, petitioner complied with the requirement under Section
196 of the LGC that it must file its judicial action for refund within 2
years from the date of payment, or the date that the taxpayer is entitled to
the refund or credit. Among the reliefs it sought in its Amended and
Supplemental Petition before the Regional Trial Court is the refund of
any and all subsequent payments of taxes under Section 21 (A) from the
time of the filing of its Petition until the finality of the case.
governed by Section 195 of the LGC.
RESPONDENT’S ARGUMENT
Cosmos argued that the rules should not be lightly
disregarded by harping on substantial justice and the policy of liberal
construction. It also insists that it is not Section 195 of the LGC that is
applicable to it but Section 196 of the same code.
ISSUE:
Whether a taxpayer who had initially protested and paid the
assessment may shift its remedy to one of refund
RULING: There is nothing to prevent the taxpayer from paying the tax
YES. A taxpayer who had protested and paid an assessment may under protest or simultaneous to a protest. There are compelling reasons
later on institute an action for refund. Cosmos was fully justified in asking why a taxpayer would prefer to pay while maintaining a protest against
for the refund of the assailed taxes after protesting the same before the local the assessment For instance, a taxpayer who is engaged in business
treasurer. Moreover, Cosmos may resort to, as it actually did, the would be hard-pressed to secure a business permit unless he pays an
alternative procedure of seeking a refund after timely protesting assessment for business tax and/or regulatory fees.
and paying the assessment. Considering that Cosmos initiated the judicial Thus, Cosmos, after it had protested and paid the assessed tax, is
claim for refund within 30 days from receipt of the denial of its protest, it permitted by law to seek a refund having fully satisfied the twin
stands to reason that the assessment which was validly protested had not conditions for prosecuting an action for refund before the court.
yet attained finality.
(60)CIR V. NEGROS CONSOLIDATED FARMERS MULTI- RESPONDENT’S ARGUMENT
PURPOSE COOPERATIVE COFA countered that the instant case involves advance VAT
G.R. NO. 212735, December 5, 2018 assessed on its withdrawal of sugar from the refinery/mill, and not
Tijam, J. on its sale of sugar to members or non-members. Thus, COFA
argued that the payment in advance of VAT for the withdrawal of
FACTS: sugar from the refinery/mill was without basis.
COFA's farmer-members deliver the sugarcane to be milled and
processed in COFA's name with the sugar mill. Before the refined sugar
is released by the sugar mill an authorization allowing the release from
the BIR is required from COFA.
For several instances upon COFA's application, the BIR issued
the AARRS without requiring COFA to pay advance VAT pursuant to
COFA's tax exemption under the law. However, beginning 2009 the BIR
required as a condition for the issuance of the AARRS the payment of
"advance VAT' on the premise that COFA, as an agricultural
cooperative does not fall under the term "producer."
COFA was thus, constrained to pay advance VAT under protest.
The BIR held that only the sales of sugar produce by COFA to its
members and non-members are exempt from VAT. Thereafter, COFA
lodged with CIR an administrative claim for refund for the advance
VAT it paid however because of the CIR's inaction, COFA filed a
petition for review before the CTA Division.
CTA Division found COFA to be exempt from VAT and thus,
ordered the refund of the advance VAT it erroneously paid. CTA En
Banc affirmed.

PETITIONER’S ARGUMENT
CIR maintained that COFA failed to present evidence to prove
that the refined sugar withdrawn from the sugar mills were actually
produced by COFA through its registered members as required under
RA 8424, as amended.
ISSUE:
Whether or not COFA, at the time of the subject transactions, is VAT-
exempt and therefore entitled to a tax refund for the advance VAT it
paid

RULING:
YES. COFA is a VAT-exempt agricultural cooperative.
Exemption from the payment of VAT on sales made by the agricultural
cooperatives to members or to non-members necessarily includes
exemption from the payment of "advance VAT" upon the withdrawal of
the refined sugar from the sugar mill.
As correctly established by the CTA that COFA is a cooperative in
good standing and duly registered with the CDA and is the-producer of
the sugar, its sale then of refined sugar whether sold to members or non-
members, following the express provisions of Section 109(L) of RA 8424,
as amended, is exempt from VAT. As a logical and necessary consequence
then of its established VAT exemption, COFA is likewise exempted from
the payment of advance VAT required under RR No. 13- 2008.
Lastly, COFA's entitlement to tax exemption cannot be made
dependent upon the submission of the monthly VAT declarations and
quarterly VAT returns, as the CIR suggests. It was established that COFA
satisfied the requirements under Section 109(L) of RA 8424, as amended,
to enjoy the exemption from VAT on its sale of refined sugar; its
exemption from the payment of advance VAT for the withdrawal it made
from May 12, 2009 to July 22, 2009 follows, as a matter of course.