THE ANTI-GRAFT LEAGUE OF THE PHILIPPINES, INC. VS. HON.

REYNALDO SAN JUAN

GR NO. 97787; AUGUST 1, 9996

PONENTE: JUSTICE ROMERO

TOPIC:

FACTS:

 On March 20, 1975, then President Ferdinand E. Marcos issued Presidential Decree No. 674,
establishing the Technological Colleges of Rizal;
 Among other things, it directed the Board to provide funds for the purchase of a site and the construction
of the necessary structures thereon;
 Acting upon an authority granted by the Office of the President, the Province was able to negotiate with
respondent Ortigas & Co., Ltd. (Ortigas) for the acquisition of four parcels of land located in Ugong
Norte, Pasig;
 Acting upon an authority granted by the Office of the President, the Province was able to negotiate with
respondent Ortigas & Co., Ltd. (Ortigas) for the acquisition of four parcels of land located in Ugong
Norte, Pasig;
 The projected construction, however, never materialized because of the decimation of the Provinces
resources brought about by the creation of the Metro Manila Commission (MMC) in 1976;
 Twelve years later, with the property lying idle and the Province needing funds to propel its 5-year
Comprehensive Development Program, the then incumbent Board passed Resolution No. 87-205 dated
October 15, 1987 authorizing the Governor to sell the same;
 The property was sold to Valley View Realty Development Corporation for 700/sqm, with 30 million
given as downpayment;
 Ortigas then filed with the RTC of Pasig an action for rescission against the Province for alleged
violation of one of the terms of its contracts by selling the subject lots which were intended to be utilized
solely as a site for the construction of the Rizal Technological Colleges and the Rizal Provincial
Hospital;
 The herein respondents then adopted a resolution rescinding the sale between the Province and Valley
View;
 The contract between Vallley View was rescinded through a compromise agreement;
 However, Ortigas and the Province also entered a compromise agreement by which the Province agreed
to reconvey the 4 parcels of land to Ortigas;
 Petitioner then filed this petition for certiorari seeking nullification of the compromise agreement;

ISSUE: Is the present action a taxpayer’s suit?

RULING: NO.  To constitute a taxpayers suit, two requisites must be met, namely, that public funds are
disbursed by a political subdivision or instrumentality and in doing so, a law is violated or some irregularity is
committed, and that the petitioner is directly affected by the alleged ultra vires act.

 A closer examination of the facts of this case would readily demonstrate that petitioners standing should
not even be made an issue here, since standing is a concept in constitutional law and here no constitutional
question is actually involved.
 DEAN JOSE JOYA, CARMEN GUERRERO NAKPIL, ARMIDA SIGUION REYNA, PROF.
RICARTE M. PURUGANAN, IRMA POTENCIANO, ADRIAN CRISTOBAL, INGRID
SANTAMARIA, CORAZON FIEL, AMBASSADOR E. AGUILAR CRUZ, FLORENCIO R. JACELA,
JR., MAURO MALANG, FEDERICO AGUILAR ALCUAZ, LUCRECIA R. URTULA, SUSANO
GONZALES, STEVE SANTOS, EPHRAIM SAMSON, SOLER SANTOS, ANG KIU KOK, KERIMA
POLOTAN, LUCRECIA KASILAG, LIGAYA DAVID PEREZ, VIRGILIO ALMARIO, LIWAYWAY
A. ARCEO, CHARITO PLANAS, HELENA BENITEZ, ANNA MARIA L. HARPER, ROSALINDA
OROSA, SUSAN CALO MEDINA, PATRICIA RUIZ, BONNIE RUIZ, NELSON NAVARRO, MANDY
NAVASERO, ROMEO SALVADOR, JOSEPHINE DARANG, and PAZ VETO PLANAS, petitioners, 
vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), CATALINO MACARAIG,
JR., in his official capacity, and/or the Executive Secretary, and CHAIRMAN MATEO A.T. CAPARAS

GR NO. 96541; AUGUST 24, 1993

PONENTE: JUSTICE BELLOSILLO

FACTS:

 On 9 August 1990, Mateo A.T. Caparas, then Chairman of PCGG, wrote then President Corazon C.
Aquino, requesting her for authority to sign the proposed Consignment Agreement between the Republic
of the Philippines through PCGG and Christie, Manson and Woods International, Inc. (Christie's of New
York, or CHRISTIE'S) concerning the scheduled sale on 11 January 1991 of eighty-two (82) Old
Masters Paintings and antique silverware seized from Malacañang and the Metropolitan Museum of
Manila alleged to be part of the ill-gotten wealth of the late President Marcos, his relatives and cronies;
 On 14 August 1990, then President Aquino, through former Executive Secretary Catalino Macaraig, Jr.,
authorized Chairman Caparas to sign the Consignment Agreement allowing Christie's of New York to
auction off the subject art pieces for and in behalf of the Republic of the Philippines;
 On 15 August 1990, PCGG, through Chairman Caparas, representing the Government of the Republic of
the Philippines, signed the Consignment Agreement with Christie's of New York. According to the
agreement, PCGG shall consign to CHRISTIE'S for sale at public auction the eighty-two (82) Old
Masters Paintings then found at the Metropolitan Museum of Manila as well as the silverware contained
in seventy-one (71) cartons in the custody of the Central Bank of the Philippines, and such other
property as may subsequently be identified by PCGG and accepted by CHRISTIE'S to be subject to the
provisions of the agreement;
 On 26 October 1990, the Commission on Audit (COA) through then Chairman Eufemio C. Domingo
submitted to President Aquino the audit findings and observations of COA on the Consignment
Agreement of 15 August 1990 to the effect that: (a) the authority of former PCGG Chairman Caparas to
enter into the Consignment Agreement was of doubtful legality; (b) the contract was highly
disadvantageous to the government; (c) PCGG had a poor track record in asset disposal by auction in the
U.S.; and, (d) the assets subject of auction were historical relics and had cultural significance, hence,
their disposal was prohibited by law;
 On 15 November 1990, PCGG through its new Chairman David M. Castro, wrote President Aquino
defending the Consignment Agreement and refuting the allegations of COA Chairman Domingo.3 On
the same date, Director of National Museum Gabriel S. Casal issued a certification that the items subject
of the Consignment Agreement did not fall within the classification of protected cultural properties and
did not specifically qualify as part of the Filipino cultural heritage;
 Thereby petitioners filed this Special Civil Action for Prohibition and Mandamus with Preliminary
Injunction to enjoin the PCGG from proceeding with the auction sale;
 Petition was dismissed;
 Hence this petition for review;

ISSUE: WHETHER THE INSTANT PETITION COMPLIES WITH THE LEGAL REQUISITES FOR
THIS COURT TO EXERCISE ITS POWER OF JUDICIAL REVIEW OVER THIS CASE (It was
raised by proper party)
RULING: No. The Court will exercise its power of judicial review only if the case is brought before it by a
party who has the legal standing to raise the constitutional or legal question. However, there are certain
instances however when this Court has allowed exceptions to the rule on legal standing, as when a citizen
brings a case for mandamus to procure the enforcement of a public duty for the fulfillment of a public right
recognized by the Constitution,  and when a taxpayer questions the validity of a governmental act authorizing
the disbursement of public funds.

The Court finds that the ownership of the paintings subject of this petition legally belongs to the
foundation or corporation or the members thereof, although the public has been given the opportunity to view
and appreciate these paintings when they were placed on exhibit. The confiscation of these properties by the
Aquino administration however should not be understood to mean that the ownership of these paintings has
automatically passed on the government without complying with constitutional and statutory requirements of
due process and just compensation. If these properties were already acquired by the government, any
constitutional or statutory defect in their acquisition and their subsequent disposition must be raised only by the
proper parties — the true owners thereof — whose authority to recover emanates from their proprietary rights
which are protected by statutes and the Constitution. Having failed to show that they are the legal owners of the
artworks or that the valued pieces have become publicly owned, petitioners do not possess any clear legal right
whatsoever to question their alleged unauthorized disposition.

Further, although this action is also one of mandamus filed by concerned citizens, it does not fulfill the
criteria for a mandamus suit. this Court laid down the rule that a writ of mandamus may be issued to a citizen
only when the public right to be enforced and the concomitant duty of the state are unequivocably set forth in
the Constitution. In the case at bar, petitioners are not after the fulfillment of a positive duty required of
respondent officials under the 1987 Constitution. What they seek is the enjoining of an official act because it is
constitutionally infirmed. Moreover, petitioners' claim for the continued enjoyment and appreciation by the
public of the artworks is at most a privilege and is unenforceable as a constitutional right in this action for
mandamus.

Neither can this petition be allowed as a taxpayer's suit. Not every action filed by a taxpayer can qualify
to challenge the legality of official acts done by the government. A taxpayer's suit can prosper only if the
governmental acts being questioned involve disbursement of public funds upon the theory that the expenditure
of public funds by an officer of the state for the purpose of administering an unconstitutional act constitutes a
misapplication of such funds, which may be enjoined at the request of a taxpayer. Obviously, petitioners are not
challenging any expenditure involving public funds but the disposition of what they allege to be public
properties. It is worthy to note that petitioners admit that the paintings and antique silverware were acquired
from private sources and not with public money.

JOSE MARI EULALIO LOZADA AND ROMEO IGOT VS. COMELEC

GR NO. L-59068; JANUARY 27, 1983

PONENTE: JUSTICE DE CASTRO

FACTS:

 Petitioner Lozada claims that he is a taxpayer and a bonafide elector of Cebu City and a transient voter
of Quezon City, Metro Manila, who desires to run for the position in the Batasan Pambansa; while
petitioner Romeo B. Igot alleges that, as a taxpayer, he has standing to petition by mandamus the calling
of a special election as mandated by the 1973 Constitution;
 Petitioners prayed to COMELEC to call for a special election to fill existing vacancies in the Interim
Batasan Pambansa;

ISSUE: WHETHER OR NOT PETITIONERS HAVE STANDING TO FILE THE INSTANT

PETITION

RULING: NO. As taxpayers, petitioners may not file the instant petition, for nowhere therein is it alleged that
tax money is being illegally spent.  The act complained of is the inaction of the COMELEC to call a special
election, as is allegedly its ministerial duty under the constitutional provision above cited, and therefore,
involves no expenditure of public funds. It is only when an act complained of, which may include a legislative
enactment or statute, involves the illegal expenditure of public money that the so-called taxpayer suit may be
allowed.

It is obvious that the holding of special elections in several regional districts where vacancies exist, would entail
huge expenditure of money. Only the Batasan Pambansa can make the necessary appropriation for the purpose,
and this power of the Batasan Pambansa may neither be subject to mandamus by the courts much less may
COMELEC compel the Batasan to exercise its power of appropriation. From the role Batasan Pambansa has to
play in the holding of special elections, which is to appropriate the funds for the expenses thereof, it would
seem that the initiative on the matter must come from said body, not the COMELEC, even when the vacancies
would occur in the regular not interim Batasan Pambansa. The power to appropriate is the sole and exclusive
prerogative of the legislative body, the exercise of which may not be compelled through a petition for
mandamus. What is more, the provision of Section 5(2), Article VIII of the Constitution was intended to apply
to vacancies in the regular National Assembly, now Batasan Pambansa, not to the Interim Batasan Pambansa, as
will presently be shown.

ST. STEPHEN’S ASSOCIATION AND ST. STEPHEN’S CHINESE GIRLS SCHOOL VS. THE
COLLECTOR OF INTERNAL REVENUE

GR NO. L-11238; AUGUST 21, 1958

PONENTE: JUSTICE J.B.L. REYES

FACTS:

 St. Stephen's Association is a non-stock corporation organized under the laws of the Philippines for the
purpose of supporting and maintaining school or schools wherein the arts, sciences, and other studies are
taught to children of Chinese parentage and descent;
 St. Stephen's Chinese Girls School, is a school maintained and supported by funds received from its co-
petitioners, the St. Stephen's Association;
 On January 21, 1950, the petitioner St. Stephen's Association turned over the amount of P9,252.48 to the
St. Stephen's Chinese Girls School, and the transfer of funds was entered in the ledger and cash book of
the School as a "donation" from the Association;
 Having come across the book entry in a routine inspection of the books of the School, an examiner of
the Bureau of Internal Revenue reported the donation to the Collector and thereafter, the Collector of
Internal Revenue sent petitioners his Assessment Notice on October 15, 1954, demanding the payment
of the amounts of P98.70 and P699.07 as donor's and donee's gift taxes on the donation in question,
including surcharges and interests;
 On November 13, 1954, petitioner wrote the collector requesting the cancellation and withdrawal of the
assessment notice on the ground that the amount was erroneously entered by the bookkeeper;
 Respondent denied such letter request;
 Petitioner filed a petition for review with the CTA;
 However, CTA dismissed the petition as it was filed out of time, the period for petitioners' appeal started
to run from their receipt of the assessment notice in question; that said period was interrupted by the
filing of petitioners' two requests for the cancellation of the assessment, but started to run again when
said requests were denied; and that from November 12, 1954, when petitioners received the assessment
notice, to August 13, 1955, when they filed their petition for review, deducting the time when their two
requests for cancellation were pending with the respondent Collector, 37 days had elapsed, and did not
confer jurisdiction upon the respondent court

ISSUE: WHEN TO START COUNTING THE 30 DAYS PRESCRIBED BY SECTION 11 OF RA 1125

RULING: The period for appeal to the respondent court in this case must, therefore, be computed from the time
petitioners received the decision of the respondent Collector of Internal Revenue on the disputed assessment,
and not from the time they received said assessment.

ADVERTISING ASSOCIATES, INC. VS. CA AND CIR

GR NO. L-59758; DECEMBER 26, 1984

PONENTE: JUSTICE AQUINO

FACTS:
  Advertising Associates alleged that it sold in 1949 its advertising agency business to Philippine
Advertising Counsellors, that its business is limited to the making, construction and installation
of billboards and electric signs and making and printing of posters, signs, handbills, etc. It
contends that it is a media company, not an advertising company;
 Bir Commissioner required petitioner to pay P297,927.06 and P84,773.10 as contractor's tax for
1967-1971 and 1972, respectively, including 25% surcharge (the latter amount includes interest)
on its income from billboards and neon signs;
 BIR based their assessment on petitioner’s AOI which provides that its primary purpose is to
engage in general advertising business; Its income tax returns indicate that its business was
advertising;
 Petitioner requested the cancellation of the assessments in its letters of September 13 and
November 21, 1974; however, there was no movement in the case for 4 years;
 On March 31, 1978, Commissioner resorted to the summary remedy of issuing 2 warrants of
distraint, directing the collection enforcement division to levy on the taxpayer’s personal
properties as would be sufficient to satisfy the deficiency taxes;
 The warrants were served upon the AAI on April 18 and May 25, 1978;
 On May 23, 1979, Acting Commissioner Plana answered the request for cancellation and
withdrawal of the warrants of distraint and justified the assessments thereby requiring petitioner
to pat the deficiency taxes within 10 days from the receipt of the demand;
 AAI filed a petition for review to the CTA; CTA dismissed the case for being filed out of time;
 Hence this petition

ISSUE:

1. WHETHER OR NOT CTA IS CORRECT IN RULING THAT THE WARRANTS OF

DISTRAINT WERE THE COMMISSIONER’S APPEALABLE DECISIONS;
2. WHETHER OR NOT PETITIONER IS AN ADVERTISING COMPANY CONTEMPLATED IN
SECTIONS 191 AND 194 OF NIRC;

RULING: z
1. NO. The reviewable decision is that contained in Commissioner Plana's letter of May 23, 1979
and not the warrants of distraint.

No amount of quibbling or sophistry can blink the fact that said letter, as its tenor shows,
embodies the Commissioner's final decision within the meaning of section 7 of Republic Act No. 1125.
The Commissioner said so. He even directed the taxpayer to appeal it to the Tax Court.

2. YES. Petitioner leases its neon signs and billboards which is designed for advertising as
opposed to petitioners contention that they are merely a contractor of neon-tube signs, hence its
rental income from billboards and electric signs must be subjected to 3% contractor’s tax.

WHEREFORE, the judgment of the Tax Court is reversed and set aside. The Commissioner's
deficiency assessments are modified by requiring the petitioner to pay the tax proper and eliminating
the 25% surcharge, interest and penalty. In case of non-payment, the warrants of distrant should be
implemented.
COMMISSIONER OF INTERNAL REVENUE VS ISABELA CULTURAL CORPORATION

GR NO. 135210; JULY 1, 2001

PONENTE: JUSTICE PANGANIBAN

FACTS:

 On February 23, 1990, ICC received from CIR an assessment letter, dated February 9, 1990, demanding
payment of the amounts of P333,196.86 and P4,897.79 as deficiency income tax and expanded
withholding tax inclusive of surcharge and interest, respectively, for the taxable period from January 1,
1986 to December 31, 1986;
 In March 22, 1990 petitioner requested a reconsideration of the subject assessment;
  On February 9, 1995 ICC received a Final Notice Before Seizure from CIR dated December 22, 1994
wherein the latter demanded payment of the subject assessment within 10 days from receipt thereof;
 ICC considered said final notice of seizure as final decision; thereby assailing such final decision with
the CTA:
 CTA dismissed the petition arguing that CIR’s issuance of the Final Notice Before Seizure constitutes
decision on ICC’s request for reinvestigation, which may be appealed to the CTA;
 CA however reversed the CTA’s decision reasoning that the Final Notice Before Seizure had effectively
denied petitioners request for a reconsideration of the commissioners assessment relying on the long-
settled tax jurisprudence that a demand letter reiterating payment of delinquent taxes amount to a
decision on a disputed assessment;
 Hence, this Petition

ISSUE: WON FINAL NOTICE BEFORE SEIZURE AGAINST ICC CONSTITUTES THE FINAL
DECISION OF THE CIR APPEALABLE TO THE CTA;

RULING: YES.

Section 228 of the National Internal Revenue Code states that a delinquent taxpayer may nevertheless
directly appeal a disputed assessment, if its request for reconsideration remains unacted upon 180 days after
submission thereof. We quote:

Sec. 228. Protesting an Assessment. x x x Within a period to be prescribed by implementing rules and
regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the
Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such
assessment may be protested administratively by filing a request for reconsideration or reinvestigation within
thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing
rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall
have become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty
(180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may
appeal to the Court of Tax Appeals within (30) days from receipt of the said decision, or from the lapse of the
one hundred eighty (180)-day period; otherwise the decision shall become final, executory and demandable.

In this case, the said period of 180 days had already lapsed when respondent filed its request for
reconsideration on March 23, 1990, without any action on the part of the CIR. Lastly, jurisprudence dictates that
a final demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested
assessment.

Having admitted as a fact private respondents request for reconsideration, petitioner must
have passed upon it prior to the issuance of the Final Notice Before Seizure.

SURIGAO ELECTRIC, CO., INC. AND ARTURO LUMANLAN, SR. VS MUNICIPALITY OF

SURIGAO AND HON. PUBLIC SERVICE COMMISSION

GR NO. L-22766; AUGUST 30, 1968

PONENTE: JUSTICE FERNANDO

FACTS:

 Petitioner Surigao Electric Co., Inc., a legislative franchise holder, and petitioner Arturo Lumanlan to
whom, on February 16, 1962, the rights and privileges of the former as well as its plant and facilities
 were transferred, challenge the validity of the order of respondent Public Service Commission, dated
July 11, 1963, wherein it held that it had "no other alternative but to approve as [it did approve] the
tentative schedule of rates submitted by the applicant," the other respondent herein, the Municipality of
Surigao

ISSUE: WHETHER OR NOT A MUNICIPAL GOVERNMENT CAN DIRECTLY MAINTAIN AND

OPERATE AN ELECTRIC PLANT WITHOUT OBTAINING A SPECIFIC FRANCHISE FOR THE
PURPOSE AND WITHOUT A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
DULY ISSUED BY THE PUBLIC SERVICE COMMISSION

RULING: A municipal government or a municipal corporation such as the Municipality of Surigao is a

government entity recognized, supported and utilized by the National Government as a part of its government
machinery and functions; a municipal government actually functions as an extension of the national government
and, therefore, it is an instrumentality of the latter; and by express provisions of Section 14(e) of Act 2677, an
instrumentality of the national government is exempted from the jurisdiction of the PSC except with respect to
the fixing of rates.

ELPIDIO YABES AND SEVERINO YABES VS. THE HON. NAPOLEON FLOJO

GR NO. L-46954; JULY 20, 1982

PONENTE: JUSTICE CONCEPCION, JR

FACTS:

(1) Doroteo Yabes of Calamaniugan Cagayan, who was for sometime an exclusive dealer of products of the
International Harvester Macleod, Inc., received on or about May 1, 1962, a letter from the Commissioner of
Internal Revenue dated March 27, 1962, demanding payment of the amount of P15,976.81, as commercial
broker's fixed and percentage taxes plus surcharges and the sum of P2,530 as compromise penalty alledgely due
from Yabes for the years 1956-1960; 

(2) On May 11, 1962, Doroteo Yabes, through his counsel, filed with the Commissioner's Office his letter dated
May 10, 1962, protesting the assessment of commercial broker's fixed and percentage taxes plus penalties
against him on the ground that his agreements with the International Harvester Macleod, Inc. were of purchase
and sale, and not of agency, hence he claimed he was not able to pay such kind of taxes; 

(3) Thereafter, there ensued an exchange of correspondence between the lawyers of Doroteo Yabes and the
Commissioner; the Commissioner in a letter dated August 3, 1962, informed Doroteo Yabes that he acted as a
commercial broker "in accordance with the ruling of this Office in the case of Cirilo D. Constantino;"  in turn,
Doroteo Yabes, in a letter dated August 22, 1962, requested for the reinvestigation, or review of the case by the
appellate division of the Bureau of Internal Revenue in accordance with standing rules, regulations or practice
on the matter;  Yabes also wrote the Commissioner on August 24, 1962, requesting that the appeal be held in
abeyance pending final decision of the Case of Cirilo D. Constantino; in reply, the Commissioner informed
Doroteo Yabes in a letter dated September 18, 1962, that the latter's request for reinvestigation was denied on
the ground that he has "not submitted any evidence to offset the findings of this Office as to warrant a
reinvestigation thereof";  but eight days later or on September 26, 1962, the Commissioner wrote a letter
advising Doroteo Yabes that "the administrative appeal ... will be held in abeyance pending the resolution of the
issues in a similar case (obviously referring to the aforesaid Constantino case)";

(4) To give time for the Commissioner to study the case and several other cases similar thereto, the lawyers of
Doroteo Yabes agreed to file, and their client, Doroteo Yabes did file a tax waiver on October 20, 1962,
extending the period of prescription to December 31, 1967; 

(5) Doroteo Yabes died on March 13, 1963 and no estate proceedings were instituted for the settlement of his
estate; his widow also died during the pendency of the case; the petitioners are the children of the deceased
taxpayer; 

(6) On March 14, 1966, the Court of Tax Appeals decided the Constantino "test" case. The Court of Tax
Appeals ruled that agreements entered into by Constantino with the International Harvester Macleod, Inc. were
of purchase and sale, and not of agency, hence no commercial broker's fixed and percentage fees could be
collected from the said taxpayer; however this Court on February 27, 1970, in G.R. No. L-25926 reversed the
Court of Tax Appeals and ruled in favor of the Commissioner of Internal Revenue; 

(7) After a lapse of about five years, the heirs of the deceased Doroteo Yabes, through their lawyers, received
on August 4, 1967, a letter from the Commissioner dated July 27, 1967, requesting that they "waive anew the
Statute of Limitations" and further confirming the previous understanding that the final resolution of the protest
of the deceased Doroteo Yabes was "being held in abeyance until the Supreme Court renders its decision on a
similar case involving the same factual and legal issues brought to it on appeal" (referring to the Constantino
"test" case);  conformably with the request of the Commissioner, the heirs of Doroteo Yabes filed a revised
waiver further extending the period of prescription to December 31, 1970; 

(8) Thereafter, no word was received by the petitioners or their lawyers during the interim of more than three
(3) years, but on January 20, 1971, petitioners as heirs of the deceased Doroteo Yabes received the summons
and a copy of the complaint filed by the Commissioner on December 4, 1970 with the Court of First Instance of
Cagayan which seeks to collect from the petitioners the sum of P 15,976.82, as deficiency commercial broker's
fixed and percentage taxes, including surcharges and interest thereon, due from their predecessor-in-interest,
Doroteo Yabes, by reason of the latter's income derived from transactions as dealer of the products of the
International Harvester Macleod, Inc.;

(9) Taking the complaint as the final decision of the Commissioner on the disputed assessment against the
deceased taxpayer Doroteo Yabes, petitioners filed on February 12, 1971, a petition for review of said disputed
assessment with the Court of Tax Appeals;  later on the same day, February 12, 1971, petitioners filed their
answer to the complaint of the Commissioner before the Court of First Instance of Cagayan;  and alleged
therein, by way of special defense, that the Court of Tax Appeals has exclusive jurisdiction of the action and
that there is another action of the same nature between the parties relating to the same assessment pending
before the Court of Tax Appeals;

(10) On the other hand, the Commissioner filed a motion to dismiss dated March 24, 1971, with the Court of
Tax Appeals in CTA Case No. 2216, and subsequently filed a memorandum in support of said motion to
dismiss, on the ground that the assessment against Doroteo Yabes had already become final, executory and
incontestable, and the Court of Tax Appeals had no jurisdiction over the case;

(11) On March 25, 1971, petitioners filed a formal motion to dismiss Civil Case No. II-7 with the Court of First
Instance of Cagayan on the grounds that said Court has no jurisdiction over the case and that there is another
action pending between the same parties for the same cause before a competent court; 

(12) On June 22, 1971, the respondent Court of First Instance of Cagayan, through its former presiding judge
issued the questioned order in Civil Case No. II-7, which is the main subject of the instant petition, denying the
petitioners' motion to dismiss on the ground that the petitioners "have already made a previous answer wherein
they categorically admitted the jurisdiction of the court over the subject matter and the Court believes that,
granting for the sake of argument, there is a pending action between the same parties for the same cause yet the
judgment which may be rendered in the first cited case does not necessarily bar the present action"; 

(13) On September 1, 1972, the respondent Court of First Instance of Cagayan issued an order holding the trial
of Civil Case No. I I-7, in abeyance upon the joint motion of the parties; 

(14) On September 29, 1974, the Court of Tax Appeals denied the Commissioner's motion to dismiss CTA Case
No. 2216.  Accordingly, on October 30, 1975, the Commissioner filed his Answer to the petition for review. 

(15) On December 17, 1976, however, the Court of First Instance of Cagayan, this time presided by the
respondent Judge Napoleon Flojo, upon motion of counsel for the plaintiff therein, set Civil Case No. II-7 for
trial on January 27 and 28, 1977. 

(16) On February 9, 1977, the respondent Judge Flojo denied the petitioners' motion to suspend further
proceedings and set the trial of the case for March 5, 1977. 

(17) On May 3, 1977, the herein petitioners filed a motion for the reconsideration of the order issued on June
22, 1971 and for a ruling on their affirmative defense that the Court of First Instance of Cagayan has no
jurisdiction over the case. 

(18) On June 7, 1977, the respondent Judge denied the aforementioned motion for reconsideration for lack of
merit, and set the trial of the case for June 23, 1977. 

(19) On July 8, 1977, the petitioners filed a motion seeking leave to file a second motion for reconsideration of
the order issued on June 7, 1977,  attaching thereto a copy of their motion for reconsideration.  The motions
were denied on July 21, 1977, and trial was set for August 18, and 19, 1977  which was postponed to September
23, 1977.

ISSUE: Whether or not the assessment made by the Commissioner of Internal Revenue against the deceased
taxpayer Doroteo Yabes, as contained in the letter dated March 27, 1962, has become final, executory and
incontestable, after Doroteo Yabes had received the Commissioner's letter dated August 3, 1962, denying the
latter's protest against the said assessment on September 18, 1962 and his failure to appeal therefrom within the
30-day period contemplated under Section 11, of Republic Act 1125

RULING: The respondent Court of First Instance of Cagayan can only acquire jurisdiction over this case filed
against the heirs of the taxpayer if the assessment made by the Commissioner of Internal Revenue had become
final and incontestable. If the contrary is established, as this Court holds it to be, considering the
aforementioned conclusion of the Court of Tax Appeals on the finality and incontestability of the assessment
made by the Commissioner is correct, then the Court of Tax Appeals has exclusive jurisdiction over this case.
Petitioners received the summons in Civil Case No. II-7 of the respondent Court of First Instance of Cagayan on
January 20, 1971, and petitioners filed their appeal with the Court of Tax Appeals in CTA Case No. 2216, on
February 12, 1971, well within the thirty-day prescriptive period under Section 11 of Republic Act No. 1125.
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.
 COMMISSIONER OF INTERNAL REVENUE VS. ALGUE, INC. AND THE CTA

GR NO. L-28896; FEBRUARY 17, 1988

PONENTE: JUSTICE CRUZ

FACTS:
  On January 14, 1965, the private respondent, a domestic corporation engaged in engineering,
construction and other allied activities, received a letter from the petitioner assessing it in the total
amount of P83,183.85 as delinquency income taxes for the years 1958 and 1959;
 On January 18, 1965, Algue flied a letter of protest or request for reconsideration, which letter was
stamp received on the same day in the office of the petitioner;
 On March 12, 1965, a warrant of distraint and levy was presented to the private respondent, through its
counsel, Atty. Alberto Guevara, Jr., who refused to receive it on the ground of the pending protest;
 On April 7, 1965, Atty. Guevara was finally informed that the BIR was not taking any action on the
protest and it was only then that he accepted the warrant of distraint and levy earlier sought to be served;
 Sixteen days later, on April 23, 1965, Algue filed a petition for review of the decision of the
Commissioner of Internal Revenue with the Court of Tax Appeals;
 On the other hand, the petitioner contends that the claimed deduction of P75,000.00 was properly
disallowed because it was not an ordinary reasonable or necessary business expense;

ISSUE:

1. Whether or not the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction
claimed by private respondent Algue as legitimate business expenses in its income tax returns;

2. WHETHER OR NOT THE APPEAL OF THE PRIVATE RESPONDENT FROM THE

DECISION OF THE CIR WAS MADE ON TIME AND IN ACCORDANCE WITH LAW;

RULING:

 1. No. SC agrees with the CTA on finding that the said amount had been legitimately paid by the
private respondent for actual services rendered. The payment was in the form of promotional fees. The
burden is on the taxpayer to prove the validity of the claimed deduction. In the present case, however,
we find that the onus has been discharged satisfactorily. The private respondent has proved that the
payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in
inducing investors and prominent businessmen to venture in an experimental enterprise and involve
themselves in a new business requiring millions of pesos. This was no mean feat and should be, as it
was, sufficiently recompensed.
 2. CTA ruled in favor of private respondent noting that the protest filed by private respondent was
not pro forma and was based on strong legal considerations. It thus had the effect of suspending on
January 18, 1965, when it was filed, the reglementary period which started on the date the assessment
was received, viz., January 14, 1965. The period started running again only on April 7, 1965, when the
private respondent was definitely informed of the implied rejection of the said protest and the warrant
was finally served on it. Hence, when the appeal was filed on April 23, 1965, only 20 days of the
reglementary period had been consumed;

COMMISSIONER OF INTERNAL REVENUE VS. UNION SHIPPING CORPORATION AND THE

COURT OF TAX APPEALS

GR NO. L-66160; MAY 21, 1990

PONENTE: JUSTIE PARAS

FACTS:

 In a letter dated December 27, 1974 herein petitioner Commissioner of Internal Revenue assessed
against Yee Fong Hong, Ltd. and/or herein private respondent Union Shipping Corporation, the total
sum of P583,155.22 as deficiency income taxes due for the years 1971 and 1972;
 Said letter was received on January 4, 1975, and in a letter dated January 10, 1975, received by
petitioner on January 13, 1975, private respondent protested the assessment;
 Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy, which was served on
private respondent's counsel, Clemente Celso, on November 25, 1976;
 In a letter dated November 27, 1976 received by petitioner on November 29, 1976 private respondent
reiterated its request for reinvestigation of the assessment and for the reconsideration of the summary
collection thru the Warrant of Distraint and Levy;
 Petitioner, again, without acting on the request for reinvestigation and reconsideration of the Warrant of
Distraint and Levy, filed a collection suit before Branch XXI of the then Court of First Instance of
Manila;
 Private respondent filed a petition for review in the CTA invoking that they should not be liable for the
payment of the income tax involved which may be due from foreign shipowner;
 CTA rendered judgment in favor of private respondent;

ISSUE:

1. WHETHER OR NOT UNION SHIPPING CORPORATION ACTING AS A MERE

"HUSBANDING AGENT" OF YEE FONG HONG LTD. IS LIABLE FOR PAYMENT OF
TAXES ON THE GROSS RECEIPTS OR EARNINGS OF THE LATTER.

2. WHETHER OR NOT THE ISSUANCE OF A WARRANT OF DISTRAINT AND LEVY IS

PROOF OF THE FINALITY OF AN ASSESSMENT, THEREBY PERIOD TO APPEAL TO
CTA STARTS FROM THE RECEIPT OF SUCH WARRANT;

RULING:

1. NO. If an individual or corporation like the petitioner in this case, is not in the actual possession,
custody, or control of the funds, it can neither be physically nor legally liable or obligated to pay the so-
called withholding tax on income claimed by Yee Fong Hong, Ltd.

2. NO. The Commissioner should always indicate to the taxpayer in clear and unequivocal language what
constitutes his final determination of the disputed assessment.

There appears to be no dispute that petitioner did not rule on private respondent's motion for
reconsideration but contrary to the above ruling of this Court, left private respondent in the dark as to
which action of the Commissioner is the decision appealable to the Court of Tax Appeals. Had he
categorically stated that he denies private respondent's motion for reconsideration and that his action
constitutes his final determination on the disputed assessment, private respondent without needless
difficulty would have been able to determine when his right to appeal accrues and the resulting
confusion would have been avoided.

Under the circumstances, the Commissioner of Internal Revenue, not having clearly signified his
final action on the disputed assessment, legally the period to appeal has not commenced to run. Thus, it
was only when private respondent received the summons on the civil suit for collection of deficiency
income on December 28, 1978 that the period to appeal commenced to run.

The request for reinvestigation and reconsideration was in effect considered denied by petitioner
when the latter filed a civil suit for collection of deficiency income. So. that on January 10, 1979 when
private respondent filed the appeal with the Court of Tax Appeals, it consumed a total of only thirteen
(13) days well within the thirty day period to appeal pursuant to Section 11 of R.A. 1125.