BIR vs.

Lepanto Ceramics

Facts:
Lepanto Ceramics, Inc (LCI) filed a petition for corporate rehabilitation pursuant to Republic Act No. (RA)
10142, 5 otherwise known as the "Financial Rehabilitation and Insolvency Act (FRIA) of 2010”. It alleged
that due to the financial difficulties it has been experiencing dating back to the Asian financial crisis, it had
entered into a state of insolvency considering its inability to pay its obligations as they become due and
that its total liabilities amounting to ₱4,213 ,682, 715. 00 far exceed its total assets worth
₱1,112,723,941.00. Notably, LCI admitted in the annexes attached to the aforesaid Petition its tax
liabilities to the national government in the amount of at least ₱6,355,368.00.

the Rehabilitation Court issued a Commencement Order,7 which, inter alia: (a) declared LCI to be under
corporate rehabilitation; (b) suspended all actions or proceedings, in court or otherwise, for the
enforcement of claims against LCI; (c) prohibited LCI from making any payment of its liabilities outstanding
as of even date, except as may be provided under RA 10142; and (d) directed the BIR to file and serve on
LCI its comment or opposition to the petition, or its claims against LCI.

Despite the foregoing, Misajon, et al., acting as Assistant Commissioner, Group Supervisor, and Examiner,
respectively, of the BIR's Large Taxpayers Service, sent LCI a notice of informal conference dated May 27,
2013, informing the latter of its deficiency internal tax liabilities for the Fiscal Year ending June 30, 2010.
In response, LCI's court-appointed receiver, Roberto L. Mendoza, sent BIR a letter-reply, reminding the
latter of the pendency of LCI's corporate rehabilitation proceedings, as well as the issuance of a
Commencement Order in connection therewith. Because of this, LCI filed a petition for contempt against
Misajon, et al., since they defied the commencement order.

Issue:
WON they should be cited for contempt?

Ruling:
"[C]ase law has defined corporate rehabilitation as an attempt to conserve and administer the assets of
an insolvent corporation in the hope of its eventual return from financial stress to solvency. It
contemplates the continuance of corporate life and activities in an effort to restore and reinstate the
corporation to its former position of successful operation and liquidity."

Verily, the inherent purpose of rehabilitation is to find ways and means to minimize the expenses of the
distressed corporation during the rehabilitation period by providing the best possible framework for the
corporation to gradually regain or achieve a sustainable operating form. "[It] enable[s] the company to
gain a new lease in life and thereby allow creditors to be paid [t]heir claims from its earnings. Thus,
rehabilitation shall be undertaken when it is shown that the continued operation of the corporation is
economically more feasible and its creditors can recover, by way of the present value of payments
projected in the plan, more, if the corporation continues as a going concern than if it is immediately
liquidated.
In order to achieve such objectives, Section 16 of RA 10142 provides, inter alia, that upon the issuance of
a Commencement Order - which includes a Stay or Suspension Order - all actions or proceedings, in court
or otherwise, for the enforcement of "claims" against the distressed company shall be suspended.26
Under the same law, claim "shall refer to all claims or demands of whatever nature or character against
the debtor or its property, whether for money or otherwise, liquidated or unliquidated, fixed or
contingent, matured or unmatured, disputed or undisputed, including, but not limited to; (1) all claims of
the government, whether national or local, including taxes, tariffs and customs duties; and (2) claims
against directors and officers of the debtor arising from acts done in the discharge of their functions falling
within the scope of their authority: Provided, That, this inclusion does not prohibit the creditors or third
parties from filing cases against the directors and officers acting in their personal capacities

To clarify, however, creditors of the distressed corporation are not without remedy as they may still
submit their claims to the rehabilitation court for proper consideration so that they may participate in the
proceedings, keeping in mind the general policy of the law "to ensure or maintain certainty and
predictability in commercial affairs, preserve and maximize the value of the assets of these debtors,
recognize creditor rights and respect priority of claims, and ensure equitable treatment of creditors who
are similarly situated." In other words, the creditors must ventilate their claims before the rehabilitation
court, and any "[a]ttempts to seek legal or other resource against the distressed corporation shall be
sufficient to support a finding of indirect contempt of court."

In the case at bar, it is undisputed that LCI filed a petition for corporate rehabilitation. Finding the same
to be sufficient in form and substance, the Rehabilitation Court issued a Commencement Order dated
January 13, 2012 which, inter alia: (a) declared LCI to be under corporate rehabilitation; (b) suspended all
actions or proceedings, in court or otherwise, for the enforcement of claims against LCI; (c) prohibited LCI
from making any payment of its outstanding liabilities as of even date, except as may be provided under
RA 10142; and (d) directed the BIR to file and serve on LCI its comment or opposition to the petition, or
its claims against LCI. It is likewise undisputed that the BIR - personally and by publication - was notified
of the rehabilitation proceedings involving LCI and the issuance of the Commencement Order related
thereto. Despite the foregoing, the BIR, through Misajon, et al., still opted to send LCI: (a) a notice of
informal conference dated May 27, 2013, informing the latter of its deficiency internal tax liabilities for
the Fiscal Year ending June 30, 2010; and (b) a Formal Letter of Demand32 dated May 9, 2014, requiring
LCI to pay deficiency taxes in the amount of P567,5 l 9,348.39, notwithstanding the written reminder
coming from LCI's court-appointed receiver of the pendency of rehabilitation proceedings concerning LCI
and the issuance of a commencement order. Notably, the acts of sending a notice of informal conference
and a Formal Letter of Demand are part and parcel of the entire process for the assessment and collection
of deficiency taxes from a delinquent taxpayer, - an action or proceeding for the enforcement of a claim
which should have been suspended pursuant to the Commencement Order. Unmistakably, Misajon, et al.
's foregoing acts are in clear defiance of the Commencement Order.
 Blaquera vs. Honorable Rodriguez

Facts:
Hao Giok San was assessed by the Deputy Collector of Internal Revenue, Jose Arañas a short payment of
percentage tax in the total amount of P2,900 as well as the 25% surcharge for late payment. On November
21, 1955, respondent Hao Giok San, thru counsel, wrote the Deputy Collector that he had paid in full the
correct percentage taxes for the period referred to in the aforequoted letter, and denied any outstanding
liability or deficiency in the payment of said percentage taxes. On December 19, Deputy Collector Aranas
wrote back demanding payment of the deficiency taxes, to which respondent Hao Giok San answered
insisting that he has paid religiously all his taxes to the government starting from the date he engaged in
business up to the date of his letter, and reiterated his contention that he owes nothing to the
Government of the Philippines by way of taxes; and in order to prevent the herein petitioner from
collecting the disputed deficiency taxes and levying or distraining any property of the respondent Hao
Giok San in satisfaction of said taxes, the latter initiated the aforesaid Civil Case No. R-4514 in the Court
of First Instance of Cebu.

Issue:
whether the respondent Judge, or more exactly, the Court of First Instance of Cebu, has jurisdiction to try
the aforesaid civil case where the matter involved is the collection of the deficiency percentage taxes from
respondent Hao Giok San and its enforcement by means of levy and distraint of respondent's properties
in accordance with the National Internal Revenue Code. Essentially, in said civil case, respondent Hao Giok
San sought to review the actuation of the herein petitioner of the aforesaid collection of taxes and, for
this reason, petitioner claims that the Court of First Instance of Cebu has no jurisdiction to take cognizance
of said civil case, contending that the question involved therein should be brought on appeal, not to the
Court of First Instance of Cebu, but to the Court of Tax Appeals in view of Section 7 of Republic Act No.
1125

Ruling:
Sec. 7. Jurisdiction.—The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided —
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or fees, or other
matter arising under the National Internal Revenue Code or other law or part of law administered by the
Bureau of Internal Revenue;
Upon careful examination of Appendix A of the petition, which is the complaint filed by Hao Giok San in
Civil Case No. R-4514, we clearly find that therein Hao Giok San seeks not only to contest the right of
petitioner to collect the deficiency percentage taxes, surcharges and compromise in question, but also
the legality or propriety of the levy by distraint on his properties, if same is resorted to, all of which should
really be brought on appeal to the Court Tax Appeals, in view of the aforequoted Section 7 of Republic Act
No. 1125.
It is our considered opinion that the determination of the correctness or incorrectness of a tax assessment
to which the taxpayer is not agreeable falls within the jurisdiction of the Court of Tax Appeals and not of
the Court of First Instance, for under the aforequoted Provision of law, the Court of Tax Appeals has
exclusive appellate jurisdiction to review on appeal any decision of the Collector of Internal Revenue in
cases involving disputed assessments and other matters arising under the National Internal Revenue Code
or other law or part of law administered by the Bureau of Internal Revenue.
 Bureau of Customs vs. Peter Shernan, et al.

Facts:
Mark Sensing Philippines, Inc. (MSPI) caused the importation of 255, 870,000 pieces of finished bet slips
and 205, 200 rolls of finished thermal papers from June 2005 to January 2007. MSPI facilitated the release
of the shipment from the Clark Special Economic Zone (CSEZ), where it was brought, to the Philippine
Charity Sweepstakes Office (PCSO) for its lotto operations in Luzon. MSPI did not pay duties or taxes,
however, prompting the Bureau of Customs (petitioner) to file, under its Run After The Smugglers (RATS)
Program, a criminal complaint before the Department of Justice against herein respondents MSPI
Chairman Peter Sherman, Managing Director Michael Whelan, Country Manager Atty. Ofelia B. Cajigal
and Finance Manager and Corporate Secretary Teodoro B. Lingan, along with Erick B. Ariarte and Ricardo
J. Ebuna and Eugenio Pasco, licensed customs broker who acted as agents of MSPI, for violation of Section
36011 vis-à-vis Sections 2530 (f) and (l) 52 and 101 (f)3 of the Tariff and Customs Code of the Philippines,
as amended and Republic Act No. 7916

State Prosecutor Rohaira Lao-Tamano, by Resolution of March 25, 2008,5 found probable cause against
respondents and accordingly recommended the filing of Information against them.

By Resolution of March 20, 2009,9 the Secretary of Justice reversed the State Prosecutor’s Resolution and
accordingly directed the withdrawal of the Information. Petitioner’s motion for reconsideration having
been denied by Resolution of April 29, 2009,10 it elevated the case by certiorari before the Court of
Appeals, docketed as CA GR SP No. 10-9431. In the meantime, Prosecutor Lao-Tamano filed before the
CTA a Motion to Withdraw Information with Leave of Court to which petitioner filed an Opposition.
Respondents, on their part, moved for the dismissal of the Information. The CTA, by the herein assailed
Resolution of September 3, 2009, granted the withdrawal of, and accordingly dismissed the Information.

Issue:
Did the CTA gravely abuse its discretion when it granted the withdrawal of the case?

Ruling:
It is well-settled that prosecution of crimes pertains to the executive department of the government
whose principal power and responsibility is to insure that laws are faithfully executed. Corollary to this
power is the right to prosecute violators.

All criminal actions commenced by complaint or information are prosecuted under the direction and
control of public prosecutors. In the prosecution of special laws, the exigencies of public service
sometimes require the designation of special prosecutors from different government agencies to assist
the public prosecutor. The designation does not, however, detract from the public prosecutor having
control and supervision over the case.

As stated in the above-quoted ratio of the October 14, 2009 Resolution of the CTA, it noted without action
petitioner’s motion for reconsideration, entry of judgment having been made as no Motion for Execution
was filed by the State Prosecutor.
By merely noting without action petitioner’s motion for reconsideration, the CTA did not gravely abuse its
discretion. For, as stated earlier, a public prosecutor has control and supervision over the cases. The
participation in the case of a private complainant, like petitioner, is limited to that of a witness, both in
the criminal and civil aspect of the case.

Parenthetically, petitioner is not represented by the Office of the Solicitor General (OSG) in instituting the
present petition, which contravenes established doctrine that "the OSG shall represent the Government
of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation,
proceeding, investigation, or matter requiring the services of lawyers."

IN FINE, as petitioner’s motion for reconsideration of the challenged CTA Resolution did not bear the
imprimatur of the public prosecutor to which the control of the prosecution of the case belongs, the
present petition fails.
 BPI vs. CIR (March 7, 2008)

Facts:
Respondent thru then Revenue Service Chief Cesar M. Valdez, issued to the petitioner a pre-assessment
notice (PAN). petitioner filed a protest on the demand/assessment notices. On March 12, 1993, petitioner
requested for an opportunity to present or submit additional documentation on the Swap Transactions
with the then Central Bank (page 240, BIR Records). Attached to the letter dated June 17, 1994, in
connection with the reinvestigation of the abovementioned assessment, petitioner submitted to the BIR,
Swap Contracts with the Central Bank.

Petitioner executed several Waivers of the Statutes of Limitations, the last of which was effective until
December 31, 1994.

On August 9, 2002, respondent issued a final decision on petitioner's protest ordering the withdrawal and
cancellation of the deficiency withholding tax assessment in the amount of P190,752,860.82 and
considered the same as closed and terminated. On the other hand, the deficiency DST assessment in the
amount of P24,587,174.63 was reiterated and the petitioner was ordered to pay the said amount within
thirty (30) days from receipt of such order. Petitioner received a copy of the said decision on January 15,
2003. Thereafter, on January 24, 2003, petitioner filed a Petition for Review before the Court.

the tax court, applying the case of Commissioner of Internal Revenue v. Wyeth Suaco Laboratories, Inc.,4
(Wyeth Suaco case), ruled that BPI's protest and supplemental protest should be considered requests for
reinvestigation which tolled the prescriptive period provided by law to collect a tax deficiency by distraint,
levy, or court proceeding. It further held, as regards the second issue, that BPI's cabled instructions to its
foreign correspondent bank to remit a specific sum in dollars to the Federal Reserve Bank, the same to be
credited to the account of the Central Bank, are in the nature of a telegraphic transfer subject to DST
under Section 195 of the Tax Code.
In its Petition for Review5 dated 24 November 2006, BPI argues that the government's right to collect the
DST had already prescribed because the Commissioner of Internal Revenue (CIR) failed to issue any reply
granting BPI's request for reinvestigation manifested in the protest letters dated 20 April and 8 May 1989.
It was only through the 9 August 2002 Decision ordering BPI to pay deficiency DST, or after the lapse of
more than thirteen (13) years, that the CIR acted on the request for reinvestigation, warranting the
conclusion that prescription had already set in. It further claims that the CIR was not precluded from
collecting the deficiency within three (3) years from the time the notice of assessment was issued on 7
April 1989, or even until the expiration on 31 December 1994 of the last waiver of the statute of limitations
signed by BPI.

The Office of the Solicitor General (OSG) filed a Comment6 dated 1 June 2007, on behalf of the CIR,
asserting that the prescriptive period was tolled by the protest letters filed by BPI which were granted and
acted upon by the CIR. Such action was allegedly communicated to BPI as, in fact, the latter submitted
additional documents pertaining to its SWAP transactions in support of its request for reinvestigation.
Thus, it was only upon BPI's receipt on 13 January 2003 of the 9 August 2002 Decision that the period to
collect commenced to run again.
The OSG cites the case of Collector of Internal Revenue v. Suyoc Consolidated Mining Company, et al.7
(Suyoc case) in support of its argument that BPI is already estopped from raising the defense of
prescription in view of its repeated requests for reinvestigation which allegedly induced the CIR to delay
the collection of the assessed tax.

In its Reply8 dated 30 August 2007, BPI argues against the application of the Suyoc case on two points:
first, it never induced the CIR to postpone tax collection; second, its request for reinvestigation was not
categorically acted upon by the CIR within the three-year collection period after assessment. BPI
maintains that it did not receive any communication from the CIR in reply to its protest letters.

Issue: whether the collection of the deficiency DST is barred by prescription and whether BPI is liable for
DST on its SWAP loan transactions.

Ruling:

The statute of limitations on assessment and collection of national internal revenue taxes was shortened
from five (5) years to three (3) years by Batas Pambansa Blg. 700. Thus, the CIR has three (3) years from
the date of actual filing of the tax return to assess a national internal revenue tax or to commence court
proceedings for the collection thereof without an assessment.

When it validly issues an assessment within the three (3)-year period, it has another three (3) years within
which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax is deemed
made and the three (3)-year period for collection of the assessed tax begins to run on the date the
assessment notice had been released, mailed or sent to the taxpayer.

As applied to the present case, the CIR had three (3) years from the time he issued assessment notices to
BPI on 7 April 1989 or until 6 April 1992 within which to collect the deficiency DST. However, it was only
on 9 August 2002 that the CIR ordered BPI to pay the deficiency.

In order to determine whether the prescriptive period for collecting the tax deficiency was effectively
tolled by BPI's filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR, we need
to examine Section 32012 of the Tax Code of 1977, which states:

Sec. 320. Suspension of running of statute.' The running of the statute of limitations provided in Sections
318 or 319 on the making of assessment and the beginning of distraint or levy or a proceeding in court for
collection, in respect of any deficiency, shall be suspended for the period during which the Commissioner
is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for
sixty days thereafter; when the taxpayer requests for a re-investigation which is granted by the
Commissioner; when the taxpayer cannot be located in the address given by him in the return filed upon
which a tax is being assessed or collected: Provided, That if the taxpayer informs the Commissioner of any
change in address, the running of the statute of limitations will not be suspended; when the warrant of
distraint and levy is duly served upon the taxpayer, his authorized representative, or a member of his
household with sufficient discretion, and no property could be located; and when the taxpayer is out of the
Philippines. (Emphasis supplied)

The above section is plainly worded. In order to suspend the running of the prescriptive periods for
assessment and collection, the request for reinvestigation must be granted by the CIR.

In BPI v. Commissioner of Internal Revenue, the Court emphasized the rule that the CIR must first grant
the request for reinvestigation as a requirement for the suspension of the statute of limitations. The act
of requesting a reinvestigation alone does not suspend the period. The request should first be granted,
in order to effect suspension.

The Court went on to declare that the burden of proof that the request for reinvestigation had been
actually granted shall be on the CIR. Such grant may be expressed in its communications with the taxpayer
or implied from the action of the CIR or his authorized representative in response to the request for
reinvestigation.

There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had
granted the request for reinvestigation filed by BPI.

Wyeth Suaco case:

In the Wyeth Suaco case, private respondent Wyeth Suaco Laboratories, Inc. sent letters seeking the
reinvestigation or reconsideration of the deficiency tax assessments issued by the BIR. The records of the
case showed that as a result of these protest letters, the BIR Manufacturing Audit Division conducted a
review and reinvestigation of the assessments. The records further showed that the company, thru its
finance manager, communicated its inability to settle the tax deficiency assessment and admitted that it
knew of the ongoing review and consideration of its protest.

As differentiated from the Wyeth Suaco case, however, there is no evidence in this case that the CIR
actually conducted a reinvestigation upon the request of BPI or that the latter was made aware of the
action taken on its request. Hence, there is no basis for the tax court's ruling that the filing of the request
for reinvestigation tolled the running of the prescriptive period for collecting the tax deficiency.
 BPI vs. CIR (October 17, 2005)

Facts:
The BPI, on two separate occasions, particularly on 06 June 1985 and 14 June 1985, it sold United States
(US) $500,000.00 to the Central Bank of the Philippines (Central Bank), for the total sales amount of
US$1,000,000.00.

On 10 October 1989, the Bureau of Internal Revenue (BIR) issued Assessment No. FAS-5-85-89-002054,
[3] finding petitioner BPI liable for deficiency DST on its afore-mentioned sales of foreign bills of exchange
to the Central Bank.

When it received the assessment, it protested with the BIR. Petitioner BPI did not receive any immediate
reply to its protest letter. However, on 15 October 1992, the BIR issued a Warrant of Distraint and/or Levy
against petitioner BPI for the assessed deficiency DST for taxable year 1985, in the amount of P27,720.00
(excluding the compromise penalty of P300.00). It served the Warrant on petitioner BPI only on 23
October 1992. Then again, petitioner BPI did not hear from the BIR until 11 September 1997, when its
counsel received a letter, dated 13 August 1997, signed by then BIR Commissioner Liwayway Vinzons-
Chato, denying its' 'request for reconsideration, and addressing the points raised by petitioner BPI in its
protest letter, dated 16 November 1989.

CTA ruling:
In the case of Commissioner of Internal Revenue vs. Wyeth Suaco Laboratories, Inc., G.R. No. 76281,
September 30, 1991, 202 SCRA 125, the Supreme Court laid to rest the first issue. It categorically ruled
that a 'protest is to be treated as request for reinvestigation or reconsideration and a mere request for
reexamination or reinvestigation tolls the prescriptive period of the Commissioner to collect on an
assessment. . .

In the case at bar, there being no dispute that petitioner filed its protest on the subject assessment on
November 17, 1989, there can be no conclusion other than that said protest stopped the running of the
prescriptive period of the Commissioner to collect.

Section 320 (now 223) of the Tax Code, clearly states that a request for reinvestigation which is granted
by the Commissioner, shall suspend the prescriptive period to collect. The underscored portion above
does not mean that the Commissioner will cancel the subject assessment but should be construed as
when the same was entertained by the Commissioner by not issuing any warrant of distraint or levy on
the properties of the taxpayer or any action prejudicial to the latter unless and until the request for
reinvestigation is finally given due course. Taking into consideration this provision of law and the
aforementioned ruling of the Supreme Court in Wyeth Suaco which specifically and categorically states
that a protest could be considered as a request for reinvestigation, We rule that prescription has not set
in against the government.

the Court of Appeals sustained the finding of the CTA on the first issue, that the running of the prescriptive
period for collection on Assessment No. FAS-5-85-89-002054 was suspended when herein petitioner BPI
filed a protest on 17 November 1989 and, therefore, the prescriptive period for collection on the
Assessment had not yet lapsed.

Issue: Whether or not the right of respondent BIR Commissioner to collect from petitioner BPI the alleged
deficiency DST for taxable year 1985 had prescribed

Ruling:
Anent the question of prescription, this Court disagrees in the Decisions of the CTA and the Court of
Appeals, and herein determines the statute of limitations on collection of the deficiency DST in
Assessment No. FAS-5-85-89-002054 had already prescribed.

The period for the BIR to assess and collect an internal revenue tax is limited to three years by Section 203
of the Tax Code of 1977, as amended, which provides that '

SEC. 203. Period of limitation upon assessment and collection. ' Except as provided in the succeeding
section, internal revenue taxes shall be assessed within three years after the last day prescribed by law for
the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall
be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the
period prescribed by law, the three-year period shall be counted from the day the return was filed. For the
purposes of this section, a return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.

The three-year period of limitations on the assessment and collection of national internal revenue taxes
set by Section 203 of the Tax Code of 1977, as amended, can be affected, adjusted, or suspended, in
accordance with the following provisions of the same Code (Sec. 223-224)

As enunciated in these statutory provisions, the BIR has three years, counted from the date of actual filing
of the return or from the last date prescribed by law for the filing of such return, whichever comes later,
to assess a national internal revenue tax or to begin a court proceeding for the collection thereof without
an assessment. In case of a false or fraudulent return with intent to evade tax or the failure to file any
return at all, the prescriptive period for assessment of the tax due shall be 10 years from discovery by the
BIR of the falsity, fraud, or omission. When the BIR validly issues an assessment, within either the three-
year or ten-year period, whichever is appropriate, then the BIR has another three years after the
assessment within which to collect the national internal revenue tax due thereon by distraint, levy, and/or
court proceeding. The assessment of the tax is deemed made and the three-year period for collection of
the assessed tax begins to run on the date the assessment notice had been released, mailed or sent by
the BIR to the taxpayer.

While Assessment No. FAS-5-85-89-002054 and its corresponding Assessment Notice were both dated 10
October 1989 and were received by petitioner BPI on 20 October 1989, there was no showing as to when
the said Assessment and Assessment Notice were released, mailed or sent by the BIR. Still, it can be
granted that the latest date the BIR could have released, mailed or sent the Assessment and Assessment
Notice to petitioner BPI was on the same date they were received by the latter, on 20 October 1989.
Counting the three-year prescriptive period, for a total of 1,095 days, from 20 October 1989, then the BIR
only had until 19 October 1992 within which to collect the assessed deficiency DST.

The earliest attempt of the BIR to collect on Assessment No. FAS-5-85-89-002054 was its issuance and
service of a Warrant of Distraint and/or Levy on petitioner BPI. Although the Warrant was issued on 15
October 1992, previous to the expiration of the period for collection on 19 October 1992, the same was
served on petitioner BPI only on 23 October 1992.

Under Section 223(c) of the Tax Code of 1977, as amended, it is not essential that the Warrant of Distraint
and/or Levy be fully executed so that it can suspend the running of the statute of limitations on the
collection of the tax. It is enough that the proceedings have validly began or commenced and that their
execution has not been suspended by reason of the voluntary desistance of the respondent BIR
Commissioner. Existing jurisprudence establishes that distraint and levy proceedings are validly begun or
commenced by the issuance of the Warrant and service thereof on the taxpayer. It is only logical to require
that the Warrant of Distraint and/or Levy be, at the very least, served upon the taxpayer in order to
suspend the running of the prescriptive period for collection of an assessed tax, because it may only be
upon the service of the Warrant that the taxpayer is informed of the denial by the BIR of any pending
protest of the said taxpayer, and the resolute intention of the BIR to collect the tax assessed.

If the service of the Warrant of Distraint and/or Levy on petitioner BPI on 23 October 1992 was already
beyond the prescriptive period for collection of the deficiency DST, which had expired on 19 October 1992,
then what more the letter of respondent BIR Commissioner, dated 13 August 1997 and received by the
counsel of the petitioner BPI only on 11 September 1997, denying the protest of petitioner BPI and
requesting payment of the deficiency DST? Even later and more unequivocally barred by prescription on
collection was the demand made by respondent BIR Commissioner for payment of the deficiency DST in
her Answer to the Petition for Review of petitioner BPI before the CTA, filed on 08 December 1997.
 BPI vs. CIR (August 28, 2001)

Facts:

Upon its dissolution in 1985, FBTC had a refundable of P2,320,138.34, representing that year's tax credit
of P174,065.77 and the previous year's excess credit of P2,146,072.57.

As FBTC's successor-in-interest, petitioner BPI claimed this amount as tax refund, but respondent
Commissioner of Internal Revenue refunded only the amount of P2,146,072.57, leaving a balance of
P174,065.77. Accordingly, petitioner filed a petition for review in the Court of Tax Appeals on December
29, 1987, seeking the refund of the aforesaid amount.2 However, in its decision rendered on July 19, 1994,
the Court of Tax Appeals dismissed petitioner's petition for review and denied its claim for refund on the
ground that the claim had already prescribed.3 In its resolution, dated August 4, 1995, the Court of Tax
Appeals denied petitioner's motion for reconsideration.

Issue:
The sole issue in this case is whether petitioner's claim is barred by prescription. The resolution of this
question requires determination of when the two-year period of prescription under §292 of the Tax Code
started to run.

Ruling:
Section 292 of the Tax Code provides:
Recovery of tax erroneously or illegally collected. – No suit or proceedings shall be maintained in any court
for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or
illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of
any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or
credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether
or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of
payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided,
however, That the Commissioner may, even without a written claim therefor, refund or credit any tax,
where on the face of the return upon which payment was made, such payment appears clearly to have
been erroneously paid.

There is no dispute that FBTC ceased operations on June 30, 1985 upon its merger with petitioner BPI.
The merger was approved by the Securities and Exchange Commission on July 1, 1985.

Petitioner contention --> its claim for refund has yet prescribed because the two-year prescriptive period
commenced to run only after it had filed FBTC's Final Adjustment Return on April 15 1986, pursuant to
§46(a) of the National Internal Revenue Code of 1977 (the law applicable at the time of this transaction)

CTA Ruling --> the prescriptive period should be counted from July 31, 1985, 30 days after the approval
by the SEC of the plan of dissolution in view of §78 of the Code which provided that –
Every corporation shall, within thirty days after the adoption by the corporation of a resolution or plan for
the dissolution of the corporation or for the liquidation of the whole or any part of its capital stock,
including corporations which have been notified of the possible involuntary dissolution by the Securities
and Exchange Commission, render a correct return to the Commission of Internal Revenue, verified under
oath, setting forth the terms of such resolution or plan and such other information as the Minister of
Finance shall, by regulations, prescribe. The dissolving corporation prior to the issuance of the Certificate
of Dissolution by the Securities and Exchange Commission shall secure a certificate of tax clearance from
the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange
Commission.

Failure to render the return and secure the certificate of tax clearance as above-mentioned shall subject
the officer (s) of the corporation required by law to file the return under Section 46(a) of this Code, to a
fine of not less than Five Thousand Pesos or imprisonment of not less than two years and shall make them
liable for all outstanding or unpaid tax liabilities of the dissolving corporation.

After due consideration of the parties' arguments, we are of the opinion that, in case of the dissolution
of a corporation, the period of prescription should be reckoned from the date of filing of the return
required by §78 of the Tax Code. Accordingly, we hold that petitioner's claim for refund is barred by
prescription.

Generally speaking, it is the Final Adjustment Return, in which amounts of the gross receipts and
deductions have been audited and adjusted, which is reflective of the results of the operations of a
business enterprise. It is only when the return, covering the whole year, is filed that the taxpayer will be
able to ascertain whether a tax is still due or a refund can be claimed based on the adjusted and audited
figures. Hence, this Court has ruled that at the earliest, the two-year prescriptive period for claiming a
refund commences to run on the date of filing of the adjusted final tax return.

As the FBTC did not file its quarterly income tax returns for the year 1985, there was no need for it to file
a Final adjustment Return because there was nothing for it to adjust or to audit. After it ceased operations
on June 30, 1985, its taxable year was shortened to six months, from January 1, 1985 to June 30, 1985 The
situation of FBTC is precisely what was contemplated under §78 of the Tax Code. It thus became necessary
for FBTC to file its income tax return within 30 days after approval by the SEC of its plan or resolution of
dissolution. Indeed, it would be absurd for FBTC to wait until the fifteenth day of April, or almost 10
months after it ceased its operations, before filing its income tax return.

Thus, §46(a) of the Tax Code applies only to instances in which the corporation remains subsisting and its
business operations are continuing. In instances in which the corporation is contemplating dissolution,
§78 of the Tax Code applies. It is a rule of statutory construction that "[w]here there is in the same statute
a particular enactment and also a general one which in its most comprehensive sense would include what
is embraced in the former, the particular enactment must be operative, and the general enactment must
be taken to affect only such cases within its general language as are not within the provisions of the
particular enactment.
as required by §244 of Revenue Regulation No. 2, any corporation contemplating dissolution must submit
tax return on the income earned by it from the beginning of the year up to the date of its dissolution or
retirement and pay the corresponding tax due upon demand by the Commissioner of Internal Revenue.
Nothing in §78 of the Tax Code limited the return to be filed by the corporation concerned to a mere
information return.
It is noteworthy that §78 of the Tax Code was substantially reproduced first in §45 (c), of the amendments
to the same tax Code, and later in §52 (C) of the National Internal Revenue Code of 1997. Through all the
re-enactments of the law, there has been no change in the authority granted to the Secretary (formerly
Minister) of Finance to require corporations to submit such other information as he may prescribe.
Indeed, Revenue Regulation No. 2 had been in existence prior to these amendments. Had Congress
intended only information returns, it would have expressly provided so.

Considering that §78 of the Tax Code, in relation to §244 of Revenue Regulation No. 2 applies to FBTC, the
two-year prescriptive period should be counted from July 30, 1985, i.e., 30 days after the approval by the
SEC of its plan for dissolution. In accordance with §292 of the Tax Code, July 30, 1985 should be considered
the date of payment by FBTC of the taxes withheld on the earned income. Consequently, the two-year
period of prescription ended on July 30, 1987. As petitioner's claim for tax refund before the Court of Tax
Appeals was filed only on December 29, 1987, it is clear that the claim is barred by prescription.
 BPI vs. CA, CTA and CIR (April 12, 2000)

Facts:
1989 Income Tax Return that petitioner had a total refundable amount of P297,492 inclusive of the
P112,491.00 being claimed as tax refund in the present case. However, petitioner declared in the same
1989 Income Tax Return that the said total refundable amount of P297,492.00 will be applied as tax credit
to the succeeding taxable year.

On October 11, 1990, petitioner filed a written claim for refund in the amount of P112,491.00 with the
respondent Commissioner of Internal Revenue alleging that it did not apply the 1989 refundable amount
of P297,492.00 (including P112,491.00) to its 1990 Annual Income Tax Return or other tax liabilities due
to the alleged business losses it incurred for the same year.

Without waiting for respondent Commissioner of Internal Revenue to act on the claim for refund,
petitioner filed a petition for review with respondent Court of Tax Appeals, seeking the refund of the
amount of P112,491.00.

The respondent Court of Tax Appeals dismissed petitioner's petition on the ground that petitioner failed
to present as evidence its corporate Annual Income Tax Return for 1990 to establish the fact that
petitioner had not yet credited the amount of P297,492.00 (inclusive of the amount P112,491.00 which is
the subject of the present controversy) to its 1990 income tax liability.

Petitioner filed a motion for reconsideration, however, the same was denied by respondent court in its
Resolution dated May 6, 1994.

The CA affirmed the CTA.

Issue: Whether or not petitioner is entitled to the refund of P112,491.90, representing excess creditable
withholding tax paid for the taxable year 1989.

Ruling:
It is undisputed that petitioner had excess withholding taxes for the year 1989 and was thus entitled to a
refund amounting to P112,491. Pursuant to Section 69 10 of the 1986 Tax Code which states that a
corporation entitled to a refund may opt either (1) to obtain such refund or (2) to credit said amount for
the succeeding taxable year, petitioner indicated in its 1989 Income Tax Return that it would apply the
said amount as a tax credit for the succeeding taxable year, 1990. Subsequently, petitioner informed the
Bureau of Internal Revenue (BIR) that it would claim the amount as a tax refund, instead of applying it as
a tax credit. When no action from the BIR was forthcoming, petitioner filed its claim with the Court of Tax
Appeals.

The CTA and the CA, however, denied the claim for tax refund. Since petitioner declared in its 1989 Income
Tax Return that it would apply the excess withholding tax as a tax credit for the following year, the Tax
Court held that petitioner was presumed to have done so. The CTA and the CA ruled that petitioner failed
to overcome this presumption because it did not present its 1990 Return, which would have shown that
the amount in dispute was not applied as a tax credit. Hence, the CA concluded that petitioner was not
entitled to a tax refund.

We disagree with the Court of Appeals. As a rule, the factual findings of the appellate court are binding
on this Court. This rule, however, does not apply where, inter alia, the judgment is premised on a
misapprehension of facts, or when the appellate court failed to notice certain relevant facts which if
considered would justify a different conclusion. This case is one such exception.

Finally, respondents argue that tax refunds are in the nature of tax exemptions and are to be construed
strictissimi juris against the claimant. Under the facts of this case, we hold that petitioner has
established its claim. Petitioner may have failed to strictly comply with the rules of procedure; it may
have even been negligent. These circumstances, however, should not compel the Court to disregard
this cold, undisputed fact: that petitioner suffered a net loss in 1990, and that it could not have applied
the amount claimed as tax credits.

Substantial justice, equity and fair play are on the side of petitioner. Technicalities and legalisms,
however exalted, should not be misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens. If the State expects its taxpayers to
observe fairness and honesty in paying their taxes, so must it apply the same standard against itself in
refunding excess payments of such taxes. Indeed, the State must lead by its own example of honor,
dignity and uprightness.
Castro vs. Collector (1962)

Facts:
Maria Castro was held liable under the War Profits Tax Law, Republic Act No. 55, and ordering her to pay
a deficiency war profits tax (including surcharges and interest) in the amount of P1,360,514.66, and costs.

The nineteen alleged errors committed by the Court of Tax Appeals and discussed by appellant in her
printed brief actually revolve around four main defenses: (a) that the War Profits Tax Law (R.A. No. 55) is
unconstitutional and void; (b) that said law was improperly applied to the case of the appellant; (c) that
even if appellant were subject to the tax liability declared by the court below, such liability was totally
extinguished by the levy and forfeiture of certain properties of hers; and (d) that appellant's acquittal in
the criminal case instituted against her for violation of the War Profits Tax Law is a bar to the collection of
the taxes assessed, and specially of the 50% surcharge. (a) Petitioner's attack on the constitutionality of
Republic Act No. 55, commonly known as the War Profits Tax Law, on account of its retrospective
operation (Errors XVIII), is now foreclosed by our decision in Republic vs.Oasan Vda. de Fernandez, G.R.
No. L-9141, September 25, 1956, wherein thisCourt upheld the validity of the statute; and no reasons are
alleged that would justify a departure from the ruling made in that case..

Issues and ruling:

1.) Petitioner Castro complains (Errors I and VI) that the Tax Court had declared subject to the war profits
tax her cash transactions from June, 1945to December 31, 1946, when Republic Act No. 55 levies that tax
only on the value of the taxpayer's assets (including real and personal property and/orcash in banks) as of
February 26, 1945, minus his liabilities

--> This argument misconceives the process whereby the Tax Court (and the Pedrosa Committee) arrived
at the petitioner's net worth as of February 26,1945. Because of the difficulty in determining the
taxpayer's cash on hand on said date (since her books and records did not show her invested capital in
1945), said tax authorities adopted the method of starting from her reported cash on hand on December
31, 1946, and working backwards to February,1945, by adding to the reported cash the disbursements
made by Castro during1945 and 1946, and then deducting her receipts from the same period. We see
nothing fundamentally erroneous in this method for, as pointed out in the appealed decision, "if cash on
hand at the beginning of the period, plus receipts during the period minus disbursements during the
period, equals cash on hand at the end of the period, the converse must necessarily be true.".

Such method is in effect but an application (in reverse) of the inventory or networth system that, contrary
to appellants contention (Error XIII), has been approved by this Court in Perez vs. Collector of Internal
Revenue, G.R. No. L-10507, May 30, 1958; Collector vs. A. P. Reyes, L-11534, November 25, 1958; and
Commissioner of Internal Revenue vs. Avelino, L-14847, September 19, 1961.

The analysis of petitioner's transactions for 1945 and 1946 merely laid the basis for determining the
undisclosed cash funds in her possession as of February 26, 1945 (amounting to P1,807,444.61), and it is
this cash thatwas found subject to the war profits tax.
It is urged, however, that even if this finding were correct, still, under Republic Act No. 55, only "cash in
banks" is expressly mentioned as taxable, and appellant infers that cash on hand not so deposited was
not intended to be subject to war profits tax. This thesis appears unmeritorious: cash heldby the taxpayer
on February 26, 1945 clearly falls under the description of "assets, including real and personal property"
that section 2 of the Act expressly order included in determining the taxable net worth. If "cash in banks"
is expressly mentioned by the Act, it is not because cash on hand was intended to be excluded, but
because "cash in banks" is not, strictly, speaking, part of the assets of the taxpayer, but assets of the banks
where the cash is deposited. It is well established that a so-called "bank deposit" is in reality a loan to the
bank, the latter acquiring title to the amount "deposited", subject to its withdrawal (or recall of the loan)
on the dates specified. Taxpayer's "assets", therefore, would not per se include cash deposited in banks
by the taxpayer; and its inclusion had to be expressly prescribed by the statute in order to remove all
doubt as to its taxability.

Petitioner endeavored to show (Errors VII to XI) that part of the amount of cash thus arrived at actually
originated in receipts from transactions made by her after February 26, 1945 but which were not disclosed
in the books and accounts. Aside from the fact that this claim in her behalf contradicted her admission to
the Pedrosa Committee that all her 1946 receipts were recorded in her books (v. Respondent's Exhibit 6-
A), it lay within the exclusive discretion of the Tax Court to believe or not to believe her evidence and
statements, and those of her witnesses regarding the source of the cash in question; and the rule is well
settled that in cases of this kind, only errors of law, and not rulings on the weight of evidence, are
reviewable by this Court. The same principle precludes us from interfering with the Tax Court's refusal to
credit the other deductions claimed by petitioner as amounts obtained from loans from various
individuals. The Court of Tax Appeals found those items unproved, except the P76,000.00 payable to Lao
Kang Suy, which is accepted, although it had been rejected by the Pedrosa Committee.

2.) The acquittal of petitioner in case No. 4976 of the Court of First Instance of Manila, wherein she was
criminally prosecuted for failure to render a true and accurate return of the war profits tax due from her,
with intent to evade payment of the tax. She contends (Assignments of Error II to IV) that the acquittal
should operate as a bar to the imposition of the tax and specially the 50% surcharge provided by section
6 of the War Profits law (R.A. No. 55), invoking the ruling in Coffey v. U.S., 29 L. Ed. 436.

--> the acquittal in the criminal case could not operate to discharge petitioner from the duty to pay the
tax, since that duty is imposed by statute prior to and independently of any attempts on the part of the
taxpayer to evade payment. The obligation to pay the tax is not a mere consequence of the felonious
acts charged in the information, nor is it a mere civil liability derived from crime that would be wiped
out by the judicial declaration that the criminal acts charged did not exist.

As to the 50% surcharge, the very United States Supreme Court that rendered the Coffey decision has
subsequently pointed out that additions of this kind to the main tax are not penalties but civil
administrative sanctions, provided primarily as a safeguard for the protection of the state revenue and to
reimburse the government for the heavy expense of investigation and the loss resulting from the
taxpayer's fraud (Helvering vs. Mitchell, 303 U.S. 390, 82 L. Ed. 917; Spies vs. U.S. 317 U.S. 492). This is
made plain by the fact that such surcharges are enforceable, like the primary tax itself, by distraint or civil
suit, and that they are provided in a section of R.A. No. 55 (section 5) that is separate and distinct from
that providing for criminal prosecution (section 7). We conclude that the defense of jeopardy and estoppel
by reason of the petitioner's acquittal is untenable and without merit. Whether or not there was fraud
committed by the taxpayer justifying the imposition of the surcharge is an issue of fact to be inferred from
the evidence and surrounding circumstances; and the finding of its existence by the Tax Court is conclusive
upon us. (Gutierrez v. Collector, G.R. No. L-9771, May 31, 1951 ; Perez vs. Collector, supra).

3.) The fourth main ground adduced on behalf of the petitioner (Errors II and XlV) is that the sale and
forfeiture to the government (due to lack of bidders) of the properties of petitioner in Manila, Balintawak,
Pasay, Makati, Tarlac, Tagaytay and Caloocan which had been levied upon by the respondent Collector of
Internal Revenue and advertised for sale in 1950 and 1954, constitutes a full discharge of petitioner's tax
liabilities.

--> appellant contends that in the provision to the effect that in the absence of bidders, the property is to
be "forfeited to the Government in satisfaction of the claim in question", the term "satisfaction" signifies
nothing but full discharge of the taxes, penalties, and costs claimed by the state. Carried to its logical
conclusion, this theory would permit a clever taxpayer, who is able to conceal most or the more valuable
part of his property from the revenue officers, to escape payment of his tax liability by sacrificing an
insignificant portion of his holdings; and we can not agree that in providing that the forfeiture of the
taxpayer's distrained or levied property, for lack of adequate bids, should operate in satisfaction of the
total tax claims even beyond the value of the property forfeited. That the satisfaction prescribed in section
328 of the Revenue Code was intended to mean only a discharge pro tanto is confirmed by the provisions
of section 330 of the Revenue Code to the effect that "remedy by distraint of personal property and levy
on realty may be repeated if necessary until the full amount due including all expenses, is collected". This
section makes no distinction between forfeitures to the Government and sales to third persons, and we
are satisfied that no distinction was intended and that none is warranted.
Nor do we see that the petitioner has any ground for complaining that the properties forfeited were
undervalued (Error XV). The relation between assessed value and market price being variable, it is not a
matter of notice. However, the Court of Tax Appeals appraised the forfeited properties at double their
assessed evaluation, and thereby credited her with a part payment on account of her tax liability in the
amount of P1,716,880.00. There is no adequate evidence that they were worth more, petitioner's own
estimates of value being obviously unreliable, due to her direct interest in the matter under investigation.
Since the burden of proof lay evidently on the taxpayer, she is not in a position to complain in this regard.
Chevron PH vs. CIR (Sept. 1, 2015)

Facts:
Chevron sold and delivered petroleum products to CDC in the period from August 2007 to December
2007.5 Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum products
sold to CDC in taxable year 2007;6 hence, on June 26, 2009, it filed an administrative claim for tax refund
or issuance of tax credit certificate in the amount of P6,542,400.00.7Considering that respondent
Commissioner of Internal Revenue (CIR) did not act on the administrative claim for tax refund or tax credit,
Chevron elevated its claim to the CTA by petition for review on June 29, 2009. The case, docketed as CTA
Case No. 7939, was raffled to the CTA’s First Division.

The CTA First Division denied Chevron’s judicial claim for tax refund or tax credit through its decision dated
July 31, 2012, and later on also denied Chevron’s Motion for Reconsideration on November 20, 2012.

In due course, Chevron appealed to the CTA En Banc (CTA EB No. 964), which, in the decision dated
September 30, 2013, affirmed the ruling of the CTA First Division, stating that there was nothing in Section
135(c) of the NIRC that explicitly exempted Chevron as the seller of the imported petroleum products
from the payment of the excise taxes; and holding that because it did not fall under any of the categories
exempted from paying excise tax, Chevron was not entitled to the tax refund or tax credit.

CTA En Banc --> Accordingly, petitioner is not entitled to any refund or issuance of tax credit certificate on
excise taxes paid on its importation of petroleum products sold to CDC pursuant to the doctrine laid down
by the Supreme Court in the Shell case “The Supreme Court held that the exemption from excise tax
payment on petroleum products under Section 135(a) of the NIRC of 1997, as amended, is conferred on
international carriers who purchased the same for their use or consumption outside the Philippines. The
oil companies which sold such petroleum products to international carriers are not entitled to a refund of
excise taxes previously paid on the petroleum products sold.”

Issue:
The lone issue for resolution is whether Chevron was entitled to the tax refund or the tax credit for the
excise taxes paid on the importation of petroleum products that it had sold to CDC in 2007.
Or whether the importer (i.e., Chevron) was entitled to the refund or credit of the excise taxes it paid on
petroleum products sold to CDC, a tax-exempt entity under Section 135(c) of the NIRC.

Ruling:
Under Section 12917 of the NIRC, as amended, excise taxes are imposed on two kinds of goods, namely:
(a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other
disposition; and (b) things imported. Undoubtedly, the excise tax imposed under Section 129 of the NIRC
is a tax on property.

With respect to imported things, Section 131 of the NIRC declares that excise taxes on imported things
shall be paid by the owner or importer to the Customs officers, conformably with the regulations of the
Department of Finance and before the release of such articles from the customs house, unless the
imported things are exempt from excise taxes and the person found to be in possession of the same is
other than those legally entitled to such tax exemption. For this purpose, the statutory taxpayer is the
importer of the things subject to excise tax. Chevron, being the statutory taxpayer, paid the excise taxes
on its importation of the petroleum products.

Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law exempt from direct
and indirect taxes are exempt from excise tax. The phrase which are by law exempt from direct and
indirect taxes describes the entities to whom the petroleum products must be sold in order to render the
exemption operative. Section 135(c) should thus be construed as an exemption in favor of the petroleum
products on which the excise tax was levied in the first place. The exemption cannot be granted to the
buyers – that is, the entities that are by law exempt from direct and indirect taxes – because they are not
under any legal duty to pay the excise tax.

CDC was created to be the implementing and operating arm of the Bases Conversion and Development
Authority to manage the Clark Special Economic Zone (CSEZ). As a duly-registered enterprise in the CSEZ,
CDC has been exempt from paying direct and indirect taxes pursuant to Section 2421 of Republic Act No.
7916 (The Special Economic Zone Act of 1995), in relation to Section 15 of Republic Act No. 9400
(Amending Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of 1992).

Inasmuch as its liability for the payment of the excise taxes accrued immediately upon importation and
prior to the removal of the petroleum products from the customshouse, Chevron was bound to pay, and
actually paid such taxes. But the status of the petroleum products as exempt from the excise taxes would
be confirmed only upon their sale to CDC in 2007 (or, for that matter, to any of the other entities or
agencies listed in Section 135 of the NIRC). Before then, Chevron did not have any legal basis to claim the
tax refund or the tax credit as to the petroleum products.
Consequently, the payment of the excise taxes by Chevron upon its importation of petroleum products
was deemed illegal and erroneous upon the sale of the petroleum products to CDC. Section 204 of the
NIRC explicitly allowed Chevron as the statutory taxpayer to claim the refund or the credit of the excise
taxes thereby paid

It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for the payment of
which may fall on a person other than whoever actually bears the burden of the tax.23 Simply put, the
statutory taxpayer may shift the economic burden of the excise tax payment to another – usually the
buyer.

In cases involving excise tax exemptions on petroleum products under Section 135 of the NIRC, the Court
has consistently held that it is the statutory taxpayer, not the party who only bears the economic burden,
who is entitled to claim the tax refund or tax credit.24 But the Court has also made clear that this rule
does not apply where the law grants the party to whom the economic burden of the tax is shifted by virtue
of an exemption from both direct and indirect taxes. In which case, such party must be allowed to claim
the tax refund or tax credit even if it is not considered as the statutory taxpayer under the law.

The general rule applies here because Chevron did not pass on to CDC the excise taxes paid on the
importation of the petroleum products, the latter being exempt from indirect taxes by virtue of Section
24 of Republic
Act No. 7916, in relation to Section 15 of Republic Act No. 9400, not because Section 135(c) of the NIRC
exempted CDC from the payment of excise tax.

Accordingly, conformably with Section 204(C) of the NIRC, supra, and pertinent jurisprudence, Chevron
was entitled to the refund or credit of the excise taxes erroneously paid on the importation of the
petroleum products sold to CDC.
China Baking Corporation vs. CIR

Facts:
China Banking Corporation (“CBC”) is a universal bank duly organized under the laws of the Philippines. It
is engaged in transactions involving sales of foreign exchange to the Central Bank of the Philippines,
commonly known as SWAP Transactions. CBC did not pay tax on the SWAP transactions for the years
1982-1986.
On 19 April 1989, CBC was assessed by the BIR for deficiency DST on the sales of foreign bills of exchange
to the Central Bank amounting to P 11,383, 165.50. CBC protested asserting five defenses: double
taxation, absence of liability, due process violation, validity of assessment and tax exemption.
On 6 December 2001, more than 12 years after the filing of the protest, the Commissioner of Internal
Revenue (CIR) rendered a decision reiterating the deficiency DST assessment and ordered the payment
thereof plus increments within 30 days from receipt of the Decision.
The CIR replied to the CBC’s protest only on 06 December 2001 in which it ordered CBC to pay its tax
deficiency. Thereafter, CBC filed a Petition for Review with the CTA.
The CTA denied CBC’s petition ruling that the SWAP transaction is a telegraphic transfer subject to DST;
thus, CBC is liable to pay the alleged deficiency.
On appeal, CBC raised for the first time the issue of prescription. The BIR did not address the issue of
prescription in its Comment.

Issue: Whether the right of the BIR to collect the assessed DST from CBC is barred by prescription.

Held:

Yes, the BIR’s claim is barred by prescription. Following Sec. 319(c) of the 1977 NIRC (the Tax Code
applicable at the time of assessment), assessed tax must be collected by distraint or levy and/or court
proceeding within three years from the date when the BIR mails/releases/sends the assessment notice to
the taxpayer.
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 three-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.
The Court also stated that although CBC raised the issue of prescription for the first time only during
appeal, this does not negate the applicability of prescription. Citing Sec. 1 of Rule 9 of the Rules of Court,
the Court ruled that if the pleadings or evidence on record shows that the claim is barred by prescription;
the court is mandated to dismiss the claim even if prescription was not raised as a defense.
The principle of estoppel likewise applies. As a general rule, the principle of estoppel and waiver does not
prevent the government from collecting taxes as the BIR is not bound by the mistake or negligence of its
agents. Nonetheless, the Supreme Court enunciated that the principle is not absolute.
Relying on Republic v. Ker & Co. Ltd., the Court ruled that estoppel cannot apply in this case as the CIR
failed to raise the issue of prescription in its Comment. The 12-year delay in collecting the assessed tax
further convinced the Court that estoppel could not apply in this case.