TAXATION LAW - Hernando CDD 2023

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CASE DIGESTS
General Principles
Doctrines in Taxation
Compromise and Tax Amnesty
BIR V. SAMUEL B. CAGANG 1
National Taxation
Tax Remedies Under the National Internal Revenue
Assessment of Internal Revenue Taxes
Prescriptive Period for Assessment
CIR V. UNIOIL CORPORATION 3
LA FLOR DELA ISABELA INC. V. CIR 6
Compromise Penalty
Local Taxation
Local Government Taxation
Scope of Taxing Power
MANILA ELECTRIC COMPANY V. CITY OF
MUNTINLUPA 11
Protest
Refund
Action before the Secretary of Justice
CIR V. SAN MIGUEL CORPORATION 14
CIR V. PHILEX MINING CORPORATION 18
HEDCOR SIBULAN, INC. V. CIR 21
CIR V. PHILIPPINE BANK OF COMMUNICATIONS 25
CASE DOCTRINES
General Principles
Doctrines in Taxation
Compromise and Tax Amnesty
National Taxation
Tax Remedies Under the National Internal Revenue
Assessment of Internal Revenue Taxes
Prescriptive Period for Assessment
CIR V. UNIOIL CORPORATION 29
LA FLOR DELA ISABELA INC. V. CIR 30
Compromise Penalty
Local Taxation
Local Government Taxation
Scope of Taxing Power
MANILA ELECTRIC COMPANY V. CITY OF
MUNTINLUPA 31
Protest
Refund
Action before the Secretary of Justice
CIR V. SAN MIGUEL CORPORATION 32
CIR V. PHILEX MINING CORPORATION 32
HEDCOR SIBULAN, INC. V. CIR 33
CIR V. PHILIPPINE BANK OF COMMUNICATIONS 34
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
caseS
TAXATION LAW
TAXATION LAW
GENERAL PRINCIPLES
DOCTRINES IN TAXATION
BUREAU OF INTERNAL REVENUE V. SAMUEL B. CAGANG
HERNANDO, J.
GR No. 230104 March 16, 2022
COMPROMISE AND TAX AMNESTY
DOCTRINE
Tax amnesty refers to the "absolute waiver by a sovereign of its right to collect
taxes and power to impose penalties on persons or entities guilty of violating a tax law.
Tax amnesty aims to grant a general reprieve to tax evaders who wish to come clean by
giving them an opportunity to straighten out their records. A tax amnesty, much like a tax
exemption, is never favored or presumed in law. The grant of a tax amnesty, like a tax
exemption, must be construed strictly against the taxpayer and liberally in favor of the
taxing authority.
FACTS
CIR in this case Samuel B. Cagang (Cagang) and Romulo M. Paredes (Paredes) are
the treasurer and the president of CEDCO, Inc. (CEDCO), allegedly both individuals
violated Section 255 of NIRC. BIR sent a letter of authority (LOA) for the examination to
cover taxable years 1997 to 2001. CEDCO sought the cancellation of the LOA, pointed out
that its records had been examined yearly by the BIR, emphasized that it had availed of
the Voluntary Assessment and Abatement Program for taxable years 2000 and 2001, and
that it had already paid all deficiency taxes against it. Further, CEDCO informed the BIR
that its records from 1997 to 2000 were no longer available for examination, as it had
already disposed of the same pursuant to Section 235 of the NIRC. However, the BIR
denied CEDCO's request. Thus, CEDCO had to submit all its available records to the BIR.
CEDCO received a Preliminary Assessment Notice (PAN), then CEDCO protested the
said assessment through its letters, despite such protests, the BIR still issued a Formal
Letter of Demand (FLD) demanding payment by CEDCO of the supposed deficiency taxes in
the amount of P126,564,315.98 covering taxable years 2000 and 2001. CEDCO appealed or
protested the FLD, however, BIR denied CEDCO’s protest. Subsequently, CEDCO availed of
the tax amnesty under R.A. No. 9480, and on the same day CEDCO filed its tax amnesty
payment form and then paid the amnesty tax the following day. A year later, in a
collection letter, BIR directed CEDCO to pay its tax liabilities, for CEDCO’s failure to settle
its tax obligations, thereafter, a complaint-affidavit was filed against Cagang and Paredes
for violation of section 255 of the NIRC, in their official capacities as CEDCO treasurer and
president.
1
Ruling of the Department of Justice-National Prosecution Service (NPS). The
DOJ-NPS Task Force on Revenue Cases, dismiss the complaint against Cagang and Paredes
for lack of probable cause. BIR then filed a motion for reconsideration, but the DOJ-NPS
denied the same for lack of merit.
Ruling of the Secretary of Justice. BIR filed before the Secretary of Justice a
petition for review the petition was denied, for lack of probable cause, then BIR moved
for another reconsideration, which was granted by then Secretary of Justice Leila M. De
Lima, explaining that the dismissal of the complaint was premised on an unfounded
interpretation of the implementing rule in question. Consequently, the Secretary of
Justice found probable cause for the filing of an information against Cagang and Paredes
for violation of Section 255 of the NIRC. Hence this petition.
ISSUE
Is CEDCO is entitled to avail of the tax amnesty under RA 9480?
HELD
Yes, only with respect to the deficiency taxes pertain to CEDCO’s Income tax and
VAT. Tax amnesty refers to the "absolute waiver by a sovereign of its right to collect taxes
and power to impose penalties on persons or entities guilty of violating a tax law. Tax
amnesty aims to grant a general reprieve to tax evaders who wish to come clean by giving
them an opportunity to straighten out their records. A tax amnesty, much like a tax
exemption, is never favored or presumed in law. The grant of a tax amnesty, like a tax
exemption, must be construed strictly against the taxpayer and liberally in favor of the
taxing authority. RA 9480, which granted a tax amnesty covering "all national internal
revenue taxes for the taxable year 2005 and prior years, with or without assessments duly
issued therefor, that have remained unpaid as of December 31, 2005." These national
internal revenue taxes include (a) income tax; (b) VAT; (c) estate tax; (d) excise tax; (e)
donor's tax; (f) documentary stamp tax; (g) capital gains tax; and (h) other percentage
taxes.
Here, the Court finds that the tax amnesty under RA 9480 does not extend to
CEDCO with respect to its existing withholding tax liabilities, as explicitly provided in the
said law. However, with respect to the deficiency taxes pertaining to CEDCO's income tax
and VAT for taxable years for 2000 and 2001, the Court finds that CEDCO is entitled or
qualified to avail of the tax amnesty considering that it had submitted the necessary
documents and complied with the requirements under RA 9480, 59 which the BIR does not
dispute.
2
NATIONAL TAXATION
TAX REMEDIES UNDER THE NATIONAL INTERNAL REVENUE
COMMISSIONER OF INTERNAL REVENUE V. UNIOIL CORPORATION
HERNANDO, J.
GR No. 204405 August 04, 2021
PRESCRIPTIVE PERIOD FOR ASSESSMENT
DOCTRINE
Tax collection must be preceded by a valid assessment to allow the taxpayer to
protest the assessment, present their case and adduce supporting evidence. Without
complying with the unequivocal mandate of first informing the taxpayer of the
government's claim, there can be no deprivation of property, because no effective protest
can be made.
Section 203 of the NIRC mandates the government to assess internal revenue taxes
within three years from the last day prescribed by law for the filing of the tax return or
the actual date of filing of such return, whichever comes later. An assessment notice
issued after the three-year prescriptive period is no longer valid and effective. Exceptions
to the period of limitation of assessment, however, are provided under Section 222 of the
same code, as in cases of (i) filing of a false or fraudulent return with intent to evade tax
or (ii) failure to file a return or (iii) a written agreement to waive and extend the period
within which to assess the taxpayer's liability.
FACTS
Unioil Corporation (Unioil) is a corporation duly organized and existing under
Philippine laws. On January 26, 2009, Unioil Corporation (Unioil) received a Formal Letter
of Demand (FLD) and Final Assessment Notice (FAN) finding it liable for deficiency
withholding tax on compensation and deficiency expanded withholding tax for the year
ending December 31, 2005. Unioil filed its protest to the FAN on February 25, 2009 and
submitted its supporting documents on April 24, 2009. Thereafter, Unioil filed the instant
Petition for Review on November 20, 2009, considering that the Commissioner of Internal
Revenue (CIR) failed to act on its protest and the one hundred eighty (180) day period had
already expired.
Unioil's procedural and substantive arguments, among others, are as follows: It

contends that the FAN issued is null and void for being issued beyond the three-year
prescriptive period; that the FAN failed to appraise Unioil of the specific provision of law
or rules; and regulations upon which the assessments were based. Additionally, Unioil
contends that it did not receive a Preliminary Assessment Notice (PAN) prior to the
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issuance of the FAN, contrary to the procedures outlined in Revenue Regulation (RR) No.
12-99.
The CIR offered in evidence a draft Preliminary Assessment Notice and a PAN dated
November 27, 2008 to establish, among others, that a PAN was issued in compliance with
existing revenue issuances but the same failed to show that they were sent to Unioil,
either through personal delivery or mail. No other documentary or testimonial evidence
was submitted to disprove Unioil's alleged non-receipt of the PAN and failure to do so
leads to the conclusion that no PAN was really issued. While there are instances when the
non-issuance of a PAN prior to a FAN is allowed, the same are unavailing because the
instant case is not among those enumerated.
The Court of Tax Appeals Third Division ruled that the CIR's failure to strictly
comply with the notice requirements amounts to the denial of Unioil's right to due
process, effectively voiding the assessments issued. The CTA En Banc affirmed the ruling
of the CTA Third Division.
ISSUE
1) Was Unioil denied the right to due process based on the purported failure
to receive a PAN?
2) Is the period to provide an assessment already prescribed?
3) Was the FLD and FAN void due to failure to state the factual and legal bases
for the assessment?
HELD
1) Yes, Unioil was denied the right to due process based on the purported failure to
receive a PAN
The CIR's negligence in their power and duty to properly assess taxes is palpable in
this case. First, the CIR failed to establish the fact of their issuance of a PAN by not
keeping proper records of the tax audit and assessment of Unioil. During the trial, the CIR
even relied on Unioil's proffered evidence as proof of issuance. Second, the issue on the
ostensibly "missing" PAN arose because of the CIR's contention that the timely issuance
thereof sufficiently interrupted the three-year prescriptive period for the assessment of
taxes under Section 2033 of the NIRC. Last, the FAN accompanying the Formal Letter of
Demand did not comply with the obligatory provision on protesting a tax assessment
under Section 228 of the NIRC. Ultimately, void assessment bears no valid fruit.
Tax collection must be preceded by a valid assessment to allow the taxpayer to

protest the assessment, present their case and adduce supporting evidence. Without
complying with the unequivocal mandate of first informing the taxpayer of the
can be made.
The CIR's lack of adherence to due process in its failure to demonstrate issuance of
the PAN is the pith of the CTA's uniform rulings in this case.
4
2) Yes, the assessment already prescribed.
To forestall Unioil's argument that the assessment was made beyond the three-year
prescriptive period, the CIR cavalierly invokes Section 72 of the NIRC without explicitly
stating that Unioil had filed a false or fraudulent return.
In determining whether the return filed is false or fraudulent, jurisprudence has

consistently held that fraud is never imputed. The Court has refrained from sustaining
findings of fraud upon circumstances which, at most, create only suspicion. The mere
understatement of a tax is not itself proof of fraud for the purpose of tax evasion.
Here, apart from the CIR's bare allegation of falsity or fraudulency in Unioil's filed
returns, the CIR neither states nor points to any other detail establishing actual fraud
committed by Unioil. The CIR does not substantiate its allegation of fraud and appears to
make the argument only to evade the three-year prescriptive period to assess the tax.
3) Yes, the FLD and FAN are void due to failure to state the factual and legal bases
for the assessment.
Administrative due process is anchored on fairness and equity in procedure. It is

satisfied if the party is properly notified of the charge against it and is given a fair and
reasonable opportunity to explain or defend itself. Moreover, it demands that the party's
defenses be considered by the administrative body in making its conclusions, and that the
party be sufficiently informed of the reasons for its conclusions.
Moreover, Section 228 of the NIRC and its implementing rule and regulation,
Section 3 of RR No. 12-99, mandate the contents for an assessment: "[t]he taxpayer shall
be informed in writing of the law and the facts on which the assessment is made;
otherwise, the assessment shall be void.”
In the case before us, the CIR only perfunctorily assessed Unioil for deficiency
withholding tax on compensation and expanded withholding tax and went through just the
motions without due consideration. This is apparent from the haste in which the Formal
Letter of Demand and the FAN were issued on January 14, 2009 in order to ostensibly beat
the three-year prescriptive period which was set after January 15, 2009. The petition for
review on certiorari filed by the CIR was denied.
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LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF INTERNAL REVENUE
HERNANDO, J.
GR No. 202105 April 28, 2021
PRESCRIPTIVE PERIOD FOR ASSESSMENT; WAIVER
DOCTRINE
The BIR issued Revenue Memorandum Order (RMO) No. 20-90, which provides for
the guidelines in the proper execution of the waiver of statute of limitations under the
NIRC. It holds that a valid waiver of statute of limitations must be: (a) in writing; (b)
agreed to by both the Commissioner and the taxpayer; (c) before the expiration of the
ordinary prescriptive periods for assessment and collection; and (d) for a definite period
beyond ordinary prescriptive period for assessment and collection. The period agreed
upon can still be extended by subsequent written agreement, provided that it is executed
prior to the expiration of the first period agreed upon.
FACTS
On September 6, 2000, the Commissioner of Internal Revenue (CIR) issued a Letter
of Authority for the examination of La Flor Dela Isabela, Inc.'s (La Flor) books of account
for "all internal revenue taxes for the period January 1, 1999 to December 31, 1999. In
connection thereto, La Flor executed five (5) waivers of the statute of limitations to
extend the CIR's period to assess and collect the deficiency taxes.
On April 8, 2003, the company received a Preliminary Assessment Notice dated

March 19, 2003. On March 14, 2005, La Flor received a Formal Letter of Demand (FLD) The
company filed its protest on March 30, 2005 against the FLD and a Supplemental Protest
Letter on April 12, 2005. Thereafter, on July 9, 2007, it received the CIR's Final Decision
on Disputed Assessments (FDDA) dated June 1, 2007, with a total assessment of deficiency
taxes.
On October 8, 2007, La Flor applied for a tax amnesty under Republic Act No. (RA)
9480,15 as well as for a compromise on October 18, 2007 pursuant to Section 204 of the
National Internal Revenue Code (NIRC). On November 23, 2007, the company received an
undated Warrant of Distraint and/or Levy (WDL)16 issued by the CIR. This prompted La
Flor to file a Petition for Review with the CTA on November 29, 2007, assailing the CIR's
issuance of WDL.
In its Decision, the CTA's Former Second Division dismissed La Flor's petition on the
ground that it was filed out of time. The CTA En Banc denied La Flor's petition for lack of
merit. It held that if a protest is not acted upon by the CIR within 180 days from
submission of supporting documents, the taxpayer may appeal to the CTA within 30 days
from the lapse of the 180-day period.
6
Hence, La Flor filed for a petition to the Supreme Court. La Flor contends that the
first waiver and second waiver was null and void as it was executed beyond the three-year
prescriptive period. As regards the third waiver, La Flor avers that no date of acceptance
was provided by the CIR, hence, it was null and void for being incomplete and defective.
The fourth waiver was not accepted by the CIR or any duly authorized representative.
Also, the fourth waiver was executed only on January 6, 2004 or six days after the
expiration of the third waiver. Lastly, the fifth waiver was necessarily null and void
considering the nullity of the previous four waivers.
ISSUE
Is the assessment void because the assessment was void as it was clearly issued
beyond the prescriptive period?
HELD
Yes, the assessment void because it was clearly issued beyond the prescriptive
period.
Section 222(b) of the NIRC provides that any internal revenue tax which has been
assessed within the period of limitation may be collected by distraint or levy or by a
proceeding in court within five years from the assessment. For a collection to be valid,
the assessment must be within the period of limitation. When the assessment is issued
beyond the prescriptive period, the government's right to collect deficiency taxes also
prescribes. Hence, there is no more basis for its collection save for certain exceptions.
The BIR issued Revenue Memorandum Order (RMO) No. 20-90, which provides for
the guidelines in the proper execution of the waiver of statute of limitations under the
NIRC. It holds that a valid waiver of statute of limitations must be: (a) in writing; (b)
agreed to by both the Commissioner and the taxpayer; (c) before the expiration of the
ordinary prescriptive periods for assessment and collection; and (d) for a definite period
beyond ordinary prescriptive period for assessment and collection. The period agreed
upon can still be extended by subsequent written agreement, provided that it is executed
prior to the expiration of the first period agreed upon.
Although Revenue Delegation Authority Order (RDAO) No. 05-01 dated August 2,
2001 authorized subordinate officials to sign the waivers and introduced a new waiver
form, This Court had invalidated waivers which did not strictly comply with the provisions
of RMO No. 20-90 and RDAO No. 05-01, such as, but not limited to: (a) failure to state the
specific date within which the BIR may assess and collect revenue taxes; (b) failure to
sign by the CIR as mandated by law or by his duly authorized representative; (c) failure to
indicate the date of acceptance to determine whether the waiver was validly accepted
before the expiration of the original three-year period; (d) failure to furnish the taxpayer
of a copy of the waiver; (e) failure to indicate on the original copies of the waivers the
date of receipt by the taxpayer of their file copy; (f) execution of the waivers without the
written authority of the taxpayer's representative to sign the waiver on their behalf; (g)
absence of any proof that the taxpayer was furnished a copy of the waiver; (h) a waiver
signed by the Assistant Commissioner-Large Taxpayers Service and not by the CIR; (i)
7
failure to specify the kind and amount of tax due; and (j) a waiver which refers to a
request for extension of time within which to present additional documents and not for
reinvestigation and/or reconsideration of the pending internal revenue case.
Applying Section 222 (b) in relation with Section 203 of the NIRC, as well as RMO
20-90 and RDAO 05-01, and the relevant jurisprudence, the Supreme Court ruled that the
waivers subject of this case failed to strictly comply with the requirements under the law.
Hence, the assessment void because it was clearly issued beyond the prescriptive period.
8
BUREAU OF INTERNAL REVENUE VS. SAMUEL B. CAGANG
HERNANDO, J.
GR No. 230104 March 16, 2022
COMPROMISE PENALTY
DOCTRINE
SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax,
Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation - Any person
required under this Code or by rules and regulations promulgated thereunder to pay any
tax, make a return, keep any record, or supply correct and accurate information, who
willfully fails to pay such tax, make such return, keep such record, or supply such correct
and accurate information, or withhold or remit taxes withheld, or refund excess taxes
withheld on compensation at the time or times required by law or rules and regulations
shall, in addition to other penalties provided by law, upon conviction thereof, be punished
by a fine of not less than Ten thousand pesos (P10,000.00) and suffer imprisonment of not
less than one (1) year but not more than ten (10) years.
FACTS
CIR in this case Samuel B. Cagang (Cagang) and Romulo M. Paredes (Paredes) are
the treasurer and the president of CEDCO, Inc. (CEDCO), allegedly both individual violated
Section 255 of NIRC. BIR sent a letter of authority (LOA) for the examination to cover
taxable years 1997 to 2001. CEDCO sought the cancellation of the LOA, pointed out that
its records had been examined yearly by the BIR, emphasized that it had availed of the
Voluntary Assessment and Abatement Program for taxable years 2000 and 2001, and that
it had already paid all deficiency taxes against it. Further, CEDCO informed the BIR that
its records from 1997 to 2000 were no longer available for examination, as it had already
disposed of the same pursuant to Section 235 of the NIRC. However, the BIR denied
CEDCO's request. Thus, CEDCO had to submit all its available records to the BIR.
CEDCO received a Preliminary Assessment Notice (PAN), then CEDCO protested the
said assessment through its letters, despite such protests, the BIR still issued a Formal
Letter of Demand (FLD) demanding payment by CEDCO of the supposed deficiency taxes in
the amount of P126,564,315.98 covering taxable years 2000 and 2001. CEDCO appealed or
protested the FLD, however, BIR denied CEDCO’s protest. Subsequently, CEDCO availed of
the tax amnesty under R.A. No. 9480, and on the same day CEDCO filed its tax amnesty
payment form and then paid the amnesty tax the following day. A year later, in a
collection letter, BIR directed CEDCO to pay its tax liabilities, for CEDCO’s failure to settle
its tax obligations, thereafter, a complaint-affidavit was filed against Cagang and Paredes
for violation of section 255 of the NIRC, in their official capacities as CEDCO treasurer and
president.
Ruling of the Department of Justice-National Prosecution Service (NPS). the

DOJ-NPS Task Force on Revenue Cases, dismiss the complaint against Cagang and Paredes
9
for lack of probable cause. BIR then filed a motion for reconsideration, but the DOJ-NPS
denied the same for lack of merit.
Ruling of the Secretary of Justice. BIR filed before the Secretary of Justice a
petition for review the petition was denied, for lack of probable cause, then BIR moved
for another reconsideration, which was granted by then Secretary of Justice Leila M. De
Lima, explaining that the dismissal of the complaint was premised on an unfounded
interpretation of the implementing rule in question. Consequently, the Secretary of
Justice found probable cause for the filing of an information against Cagang and Paredes
for violation of Section 255 of the NIRC. Hence this petition.
ISSUE
Is there probable cause to charge Cagang with the violation of Sec. 255 of the
NIRC?
HELD
Yes, the Court ruled in the affirmative. The Court reiterated SEC. 255. Failure to
File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax
and Refund Excess Taxes Withheld on Compensation, it provides that any person required
under this Code or by rules and regulations promulgated thereunder to pay any tax, make
a return, keep any record, or supply correct and accurate information, who willfully fails
to pay such tax, make such return, keep such record, or supply such correct and accurate
information, or withhold or remit taxes withheld, or refund excess taxes withheld on
compensation at the time or times required by law or rules and regulations shall, in
addition to other penalties provided by law, upon conviction thereof, be punished by a
fine of not less than Ten thousand pesos (P10,000.00) and suffer imprisonment of not less
than one (1) year but not more than ten (10) years.
Cagang was charged with the alleged willful failure to pay CEDCO's deficiency
taxes under Section 255 of the NIRC as the purported treasurer of CEDCO. However,
Cagang contends that he cannot be held liable because he was never appointed as the
company's treasurer. He claimed he held the positions of Corporate Secretary and Director
of Finance, which are not included under the enumeration of corporate officers under
Section 253 of the NIRC. However, based on the foregoing facts he was albeit for short
period, the treasurer for CEDCO.
Furthermore, finding of probable cause does not require an inquiry into whether
there is sufficient evidence to procure a conviction. It is enough that it is believed that
the act or omission complained of constitutes the offense charged. Precisely, there is a
trial for the reception of evidence of the prosecution in support of the charge.
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LOCAL TAXATION
LOCAL GOVERNMENT TAXATION
MANILA ELECTRIC COMPANY VS. CITY OF MUNTINLUPA
HERNANDO, J.
GR No. 198529 February 9, 2021
LOCAL TAXATION - SCOPE OF TAXING POWERS
DOCTRINE
Municipalities may only levy taxes not otherwise levied by the provinces. Since
provinces have been vested with the power to levy a franchise tax, it follows that
municipalities, pursuant to Section 142 of RA 7160, could no longer levy it.
An ordinance which is incompatible with any existing law or statute is ultra vires,
hence, null and void. A void ordinance cannot legally exist, it cannot have binding force
and effect. A transitory provisions in a Charter that converts a Municipality into a Highly
Urbanized City City contemplates only those ordinances that are valid and legally existing
at the time of its enactment.
FACTS
HBI Manila Electric Company (Meralco) is a public utility corporation duly
organized and existing under Philippine laws.
Municipal Ordinance (MO) 93-35 or the Revenue Code of the Municipality of

Muntinlupa took effect. It imposed a franchise tax on private persons or corporations
operating public utilities within its territorial jurisdiction.
Subsequently, RA 7926 was enacted which converted the Municipality of

Muntinlupa into a highly urbanized city, now the City of Muntinlupa. Section 56 adopted
all existing municipal ordinances of the Municipality of Muntinlupa, and provided that all
shall continue to take effect within the City of Muntinlupa unless its sangguniang
panlungsod enacts an ordinance providing otherwise.
The City Treasurer of Muntinlupa sent demand letters to Meralco for payment of
the franchise tax it owed to Muntinlupa City. Meralco ignored the demands on the premise
that the City of Muntinlupa, then a municipality, did not have the power and authority to
impose and collect a franchise tax. Pursuant the Local Government Code of 1991 (RA
7160), the power and authority to impose and collect a franchise tax lies with the
provinces and cities.
11
The City of Muntinlupa mainly argued that Section 137 of RA 7160 and Articles 227
and 237 of its Implementing Rules and Regulations (IRR) allow the imposition of a
franchise tax by a local government unit.
The RTC struck down MO 93-35 for being ultra vires because it was enacted when
Muntinlupa was still a municipality which, as such, had no power to levy taxes, fees or
charges already conferred to the provinces. The trial court declared that Article 236 (b)
of the IRR cannot contravene or go beyond Section 142 of RA 7160 which it seeks to
implement. Also, Section 56 of the Charter of Muntinlupa City adopting Section 25 of MO
93-35 did not cure its infirmity.
The CA concurred with the trial court that municipalities have no authority to levy
and collect a franchise tax due to the ultra vires nature of Section 25 of MO 93-35.
However, it declared that MO 93-35 was cured of its legal infirmities when the
Municipality of Muntinlupa was converted into a highly urbanized city by virtue of its
Charter.
ISSUE
Is MO 93-35 null and void for being ultra vires?
HELD
YES, MO 93-35 is null and void for being ultra vires.
Legaspi v. City of Cebu explains the two tests in determining the validity of an
ordinance, i.e., the Formal Test and the Substantive Test. The Formal Test requires the
determination of whether the ordinance was enacted within the corporate powers of the
LGU, and whether the same was passed pursuant to the procedure laid down by law.
Meanwhile, the Substantive Test primarily assesses the reasonableness and fairness of the
ordinance and significantly its compliance with the Constitution and existing statutes.
As correctly ruled by the RTC and the CA, Section 25 of MO 93-35 has failed to
meet the requirements of a valid ordinance. Applying the Formal Test, the passage of the
subject ordinance was beyond the corporate powers of the then Municipality of
Muntinlupa, hence, ultra vires. Based on the Substantive Test, the same was evidently
passed beyond the powers of a municipality in clear contravention of RA 7160.
MO 93-35 was passed by the Sangguniang Bayan of the Municipality of Muntinlupa.

This is plainly ultra vires considering the clear and categorical provisions of Section 142 in
relation to Sections 134, 137 and 151 of RA 7160 vesting to the provinces and cities the
power to impose, levy, and collect a franchise tax. These provisions clearly set out that
municipalities may only levy taxes not otherwise levied by the provinces. Since provinces
have been vested with the power to levy a franchise tax, it follows that municipalities
could no longer levy it. Therefore, Section 25 of MO 93-35 which was enacted when
Muntinlupa was still a municipality and which imposed a franchise tax on public utility
corporations within its territorial jurisdiction, is ultra vires for being violative of Section
142 of RA 7160.
12
Moreover, the Charter of Muntinlupa City cannot breathe life into the invalid
Section 25 of MO 93-35. Section 56 of the Charter of Muntinlupa City contemplates only
those ordinances that are valid and legally existing at the time of its enactment.
Consequently, Section 56 did not cure the infirmity of Section 25 of MO 93-35 since an
ultra vires ordinance is null and void and produces no legal effect from its inception.
Section 25 of Municipal Ordinance No. 93-35 is declared void.
13
Taxpayer’s Remedies
PROTEST; REFUND; ACTION BEFORE THE SECRETARY
OF JUSTICE
COMMISSIONER OF INTERNAL REVENUE VS. SAN MIGUEL CORPORATION
HERNANDO, J.
GR No. 180740 November 11, 2019
RECOVERY OF TAX ERRONEOUSLY OR ILLEGALLY COLLECTED
DOCTRINE
Within two (2) years from the date of payment of tax, the claimant for tax
refund/credit must first file an administrative claim with the CIR before filing its judicial
claim with the courts of law. Both claims must be filed within a two (2)-year reglementary
period. Timeliness of the filing of the claim is mandatory and jurisdictional, and thus the
Court cannot take cognizance of a judicial claim for refund filed either prematurely or out
of time.
The two (2)-year prescriptive period under the Tax Reform Act of 1997 which is
mandatory regardless of any supervening cause that may arise after payment and
categorically declared that solutio indebiti and the six (6)-year prescriptive period for
claims based on quasi-contract was inapplicable.
FACTS
San Miguel Corporation (SMC) is a domestic corporation engaged in the
manufacture of "fermented liquors for sale in the domestic and export markets. One of its
products is the beer brand 'Red Horse'.”
On January 1, 1997, RA 8240 took effect, adopting a specific tax system instead of
the ad valorem tax system imposed on, among others, fermented liquor. As a result,
fermented liquors were specifically subjected to excise taxes in accordance with the
schedules stated in Section 140 of RA 8240 (which was later renumbered as Section 143
under RA 8424, the Tax Reform Act of 1997). It provides that the excise tax from any
brand of fermented liquor within the next three (3) years from its effectivity shall not be
lower than the tax which was due from each brand on October 1, 1996.
On December 16, 1999, the Secretary of Finance issued Revenue Regulations (RR)
No. 17-99 to implement the 12% increase on excise tax on, among others, fermented
liquors by January 1, 2000.
Contending that RR No. 17-99 did not conform to the letter and intent of RA 8240,
SMC filed a claim tax refund or credit of the alleged excess excise taxes it paid on its Red
Horse beer product from January 2001 to December 2002. It claimed that it was entitled
14
to the difference between the rate of P7.07 per liter (the rate of specific tax SMC was
paying beginning January 1, 1997, which was equal to the rate of ad valorem tax rate it
had been paying prior to the effectivity of RA 8240 on January 1, 1997), and P6.89 per
liter (the new specific tax rate imposed under Section 145 of RA 8424, otherwise known as
the Tax Reform Act of 1997, which took effect on January 1, 2000). SMC challenged
Section 1 of RR No. 17-99, which provided that "the new specific tax rate for any x x x
fermented liquors shall not be lower than the excise tax that is actually being paid prior
to January 1, 2000." According to SMC, Section 1 of RR No. 17-99 extended without basis
the three (3)-year transitory period under RA 8240.
The CTA First Division rendered its decision emphasising that it had already
declared RR No. 17-99 invalid in Fortune Tobacco Corporation v. Commissioner of Internal
Revenue, which ruling was subsequently affirmed by the Court of Appeals.
The CTA First Division noted that SMC paid excess excise taxes. However, it
disallowed the claim of SMC for P6M because it was already barred by prescription. The
CTA First Division explained that based on the Tax Reform Act of 1997, the reckoning point
for computing the two (2)-year prescriptive period for the refund of erroneously paid
taxes shall be from the date of payment of the tax or prior to the removal of the subject
products from the place of production; and since the Petition for Review was filed on
February 24, 2003, the two-year prescriptive period started to run on February 24, 2001
and any claim for tax refund or credit of excise tax payment made before February 24,
2001 had already prescribe.
The CIR and SMC both filed Motion for Reconsideration. The CTA First Division
denied the motions for reconsideration of both parties.
The CTA En Banc denied the Petitions of both the CIR and SMC. The CTA En Banc
affirmed the ruling of the CTA First Division that the claim of SMC for overpayment made
on January 11 to 31, 2001 and February 1 to 23, 2001 was already barred by prescription.
Moreover, the CTA En Banc affirmed the ruling of the CTA First Division that RR No. 17-99
is invalid as Section 1 thereof increases the tax rate fixed by RA 8240, which is already
beyond the authority of the BIR to issue interpretative rules; and that SMC is entitled to a
refund of the overpaid excise taxes which have not yet prescribed.
ISSUE
1) Is Section 1 of RR No. 17-99 invalid for being violative of the provisions of
the Tax Reform Act of 1997?
2) Is the claim for return/credit of excess excise tax payments of SMC from
January 11 to February 28, 2001 barred by prescription?
a) Does the principle of solutio indebiti as well as the six (6)-year
prescriptive period for claims based on quasi-contract apply?
HELD
1) YES, Section 1 of RR No. 17-99 was invalid for being violative of the provisions
of the Tax Reform Act of 1997.
15
The Court, in Commissioner of Internal Revenue v. Fortune Tobacco Corporation,
declared such qualification in Section 1 of RR No. 17-99 as "unauthorized administrative
legislation”.
As stated in the case of Fortune Tobacco, Section 145 states that during the
transition period, i.e., within the next three (3) years from the effectivity of the Tax
Code, the excise tax from any brand of cigarettes shall not be lower than the tax due
from each brand on 1 October 1996. This qualification, however, is conspicuously absent
as regards the 12% increase which is to be applied on cigars and cigarettes packed by
machine, among others, effective on 1 January 2000. Clearly and unmistakably, Section
145 mandates a new rate of excise tax for cigarettes packed by machine due to the 12%
increase effective on 1 January 2000 without regard to whether the revenue collection
starting from this period may turn out to be lower than that collected prior to this date.
By adding the qualification that the tax due after the 12% increase becomes
effective shall not be lower than the tax actually paid prior to 1 January 2000, Revenue
Regulations No. 17-99 effectively imposes a tax which is the higher amount between the
ad valorem tax being paid at the end of the three (3)-year transition period and the
specific tax, as increased by 12% — a situation not supported by the plain wording of
Section 145 of the Tax Code.
2) YES, the claim for return/credit of excess excise tax payments of SMC from
January 11 to February 28, 2001 was barred by prescription.
Section 204 of the Tax Reform Act provides:

(C) xx xx No credit or refund of taxes or penalties shall be
allowed unless the taxpayer files in writing with the Commissioner a
claim for credit or refund within two (2) years after the payment of
the tax or penalty.
Section 229 provides:

xxx In any case,no such suit or proceeding shall be filed after
the expiration of two (2) years from the date of payment of the tax or
penalty regardless of any supervening cause that may arise after
payment.
The aforequoted provisions are clear: within two (2) years from the date of
payment of tax, the claimant must first file an administrative claim with the CIR before
filing its judicial claim with the courts of law. Both claims must be filed within a two
(2)-year reglementary period. Timeliness of the filing of the claim is mandatory and
jurisdictional, and thus the Court cannot take cognizance of a judicial claim for refund
filed either prematurely or out of time.
16
SMC filed its administrative claim on January 10, 2003 through a letter to the BIR,
and its judicial claim through a Petition for Review filed with the CTA First Division on
February 24, 2003. Counting back from February 24, 2003, the CTA First Division
determined that the reckoning date for the two (2)-year prescriptive period for this
particular judicial claim of SMC was February 24,2001 and accordingly declared that the
claim of SMC for excess excise tax paid prior to said date had already prescribed.
a.) NO, the principle of solutio indebiti does not apply.
In Commissioner of Internal Revenue v. Manila Electric Co., the Court therein

applied the two (2)-year prescriptive period under the Tax Reform Act of 1997 which is
categorically declared that solutio indebiti was inapplicable. The first element of solutio
indebiti (that the payment is made when there exists no binding relation between the
payor, who has no duty to pay, and the person who received the payment) is lacking.
Moreover, such legal precept is inapplicable to the present case since the Tax Code, a
special law, explicitly provides for a mandatory period for claiming a refund for taxes
erroneously paid.
Petitions are denied.
17
COMMISSIONER OF INTERNAL REVENUE VS. PHILEX MINING CORPORATION
HERNANDO, J.
GR No. 218057 January 18, 2021
DOCTRINE
The running of the 120-day period for the CIR to decide the claim for refund
commences from the time of the submission of complete documents in support of the tax
refund application. For purposes of determining when the supporting documents have
been completed -it is the taxpayer who ultimately determines when complete documents
have been submitted for the purpose of commencing and continuing the running of the
120-day period.
FACTS
Philex Mining Corporation (Philex) is a domestic corporation engaged in the mining
business, including the exploration and operation of mine properties and the commercial
production and marketing of mine products. On January 21, 2010, Philex filed its original
Quarterly Value-Added Tax (VAT) Return for the fourth quarter of 2009. Subsequently, on
September 13, 2011, it filed an amended Quarterly VAT Return.
Pursuant to Section 4.112-1 of RR No. 16-2005, Philex filed its claim for refund/tax
credit. The Commissioner of Internal Revenue (CIR) failed to act on Philex's administrative
claim for refund which prompted Philex to file a Petition for Review with the CTA.
The CTA Second Division ordered the CIR to refund in favor of Philex the amount
representing its unutilized and excess input VAT attributable to its zero-rated sales for the
fourth quarter of 2009.
The CIR elevated the case to the CTA En Banc which denied the CIR’s petition for
review.
ISSUE
1) Is Philex entitled to a tax refund?
2) Is the submission of the subsidiary sales journal and subsidiary purchase
journal indispensable to support Philex's claim for refund?
HELD
1) YES, Philex is entitled to a refund of the amount representing its unutilized and
excess input VAT attributable to its zero-rated sales for the fourth quarter of 2009.
Philex's appeal before the CTA Second Division was seasonably filed. Section 112
(C) of the National Internal Revenue Code (NIRC) provides:
18
“(C) Period within which refund or tax credit of input taxes
shall be made. — In proper cases, the Commissioner shall grant a
refund or issue the tax credit certificate for creditable input taxes
within one hundred twenty (120) days from the date of submission of
complete documents xx xx.
In case of full or partial denial of the claim for tax refund or tax
credit, or the failure on the part of the Commissioner to act on the
application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying
the claim or after the expiration of the one hundred twenty-day
period, appeal the decision or the unacted claim with the Court of Tax
Appeals.”
The running of the 120-day period for the CIR to decide the claim for refund
commences from the time of the submission of complete documents in support of the tax
refund application. For purposes of determining when the supporting documents have
been completed -it is the taxpayer who ultimately determines when complete documents
have been submitted for the purpose of commencing and continuing the running of the
120-day period as provided in RMC No. 49-2003 and as discussed in the case of Pilipinas
Total Gas, Inc. v. Commissioner of Internal Revenue
Records show that Philex filed its application for tax refund, attaching therewith
the necessary documents, on September 28, 2011. It is Philex that determines the
completeness of the documents submitted for purposes of counting the 120- day period.
Within the period of 120 days from September 28, 2011, the CIR could have
notified Philex, by way of a request, to submit additional documents which he/she deems
necessary. Considering that no notice was given by the CIR or no other action was taken
within the said 120 days, Philex had 30 days from January 26, 2012, the expiration of the
120-day period, or until February 26, 2012, to appeal to the CTA. Again, records show that
Philex properly and timely filed its judicial claim on February 3, 2012.
Thus, there is no merit in the CIR's contention that Philex's judicial claim was
premature or that its supporting documents were incomplete.
2) NO, the Court agrees with the tax tribunal that the submission of the subsidiary
sales journal and subsidiary purchase journal is not indispensable to support Philex's claim
for refund.
Section 112(A) of the NIRC, which enumerates the requisites for a taxpayer to be
entitled to a tax refund or credit, does not require subsidiary journals as part of the
substantiation requirements, to wit:
(A) Zero-rated or Effectively Zero-rated Sales. - Any

VAT-registered person, whose sales are zero-rated or effectively
19
zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax
credit certificate or refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the extent
that such input tax has not been applied against output tax: Provided,
however, That in the case of zero-rated sales under Section 106
(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1) and (2) the acceptable
foreign currency exchange proceeds thereof had been duly accounted
for in accordance with the rules and regulations of the Bangko Sentral
ng Pilipinas (BSP): Provided, further, That where the taxpayer is
engaged in zero-rated or effectively zero-rated sale and also in taxable
or exempt sale of goods of properties or services, and the amount of
creditable input tax due or paid cannot be directly and entirely
attributed to any one of the transactions, it shall be allocated
proportionately on the basis of the volume of sales. Provided, finally,
That for a person making sales that are zero-rated under Section 108
(B)(6), the input taxes shall be allocated ratably between his
zero-rated and non-zero-rated sales.
The CTA En Banc thus correctly held that "there is nothing in the afore quoted
provision of the NIRC of 1997 which require[s] the presentation of the subsidiary sales
journal and subsidiary purchase journal in order [for] a taxpayer [to] be entitled to
refund, or issuance of a tax credit certificate, of its claimed input tax attributable to
zero-rated sales." The subsidiary journals are not required, but they may be utilized by
the CIR as vital sources of information for other purposes such as making assessments
Petition for review is denied.
20
HEDCOR SIBULAN, INC. VS. COMMISSIONER OF INTERNAL REVENUE
HERNANDO, J.
GR No. 202093 September 15, 2021
DOCTRINE
Under section 112(C) of the NIRC, the CIR has 120 days from the date of submission
of complete documents to rule on an administrative claim of a taxpayer. In case of denial
of the claim for tax refund or tax credit, either in whole or in part, or if the CIR failed to
act on an application within the prescribed period, the taxpayer shall file a judicial claim
by filing an appeal before the CTA within 30 days from the receipt of the decision denying
the claim or after the expiration the 120-day period. The 120-day period is mandatory and
jurisdictional. It should therefore be strictly observed in order for a claim for tax credit
refund to prosper. Otherwise, non-observance of the period would warrant the dismissal
of a petition filed before the CTA as it would not acquire jurisdiction over the claim.
Rules on the determination of prescriptive period for filing a tax refund or credit
of unutilized input VAT under Section 112 of the Tax Code:
1) An administrative claim must he filed with the CIR within two years after
the close of the taxable quarter when the zero-rated or effectively
zero-rated sales were made.
2) The CIR has 120 days from the date of submission of complete documents in
support of the administrative claim within which to decide whether to
grant a refund or issue a tax credit certificate. The 120-day period may
extend beyond the two-year period from the filing of the administrative
claim if the claim is filed in the later part of the two-year period. If the
120-day period expires without any decision from the CIR, then the
administrative claim may be considered to be denied by inaction.
3) A judicial claim must be filed, with the CTA within 30 days from the receipt
of the CIR's decision denying the administrative claim or from the
expiration of the 120-day period without any action from the CIR.
4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time
of its issuance on 10 December 2003 up to its reversal by this Court in Aichi
on 6 October 2010, as an exception to the mandatory and jurisdictional
120+30 day periods
There are two recognized exceptions to the mandatory and jurisdictional nature of
the 120-day period. First, if the CIR, through a specific ruling, misleads a particular
taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is
21
applicable only to the particular taxpayer. Second, if the CIR issued a general
interpretative rule in accordance with Section 4 of the Tax Code which misled all the
taxpayers into prematurely filing judicial claims with the CTA. The CIR, in such a case, is
not allowed to later on question the CTA's assumption of jurisdiction over such claim since
equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code.
FACTS
Hector Sibulan, Inc. (HBI) is a domestic corporation engaged in the business of
hydroelectric power generation and subsequent sale of power generation to Davao Light
and Power Company, Inc. (DLPCI). It is duly registered with the Bureau of Internal
Revenue (BIR) as a Value-Added Tax (VAT) entity.
On July 21, 2008, HBI filed its Original Quarterly VAT Return for the 2nd quarter of
2008 with the Revenue District Office (RDO) No. 115 of the BIR. Two years later or on June
23, 2010, it filed an Amended Quarterly VAT Return for the same period. Afterwards, on
June 25, 2010, HBI filed with the BIR a written application for the refund or issuance of a
tax credit certificate (TCC), and an administrative claim in the amount of P29,299,077.37
for tax credit/refund as to unutilized input VAT on purchases of goods and services
attributable to zero-rated sales for the 2nd quarter of 2008.
On June 29, 2010, pending resolution of its administrative claim, HBI filed a
petition for review before the CTA Division. HBI sought the refund, or in the alternative,
the issuance of a TCC in its favor for the unutilized input VAT. It further averred that it
was constrained to file the petition in order to suspend the running of the two-year
prescriptive period for filing of claims for refunds as prescribed under the National
Internal Revenue Code (Tax Code) and Revenue Regulation No. 16-2005, as amended.
In its answer, CIR, Commissioner of Internal Revenue (CIR) sought the dismissal of
the petition on the ground of prematurity since only four days had lapsed from the time
HBI filed its administrative claim. Hence, HBI did not observe the prescribed period of 120
days for the CIR to rule on its claim. CIR further argued that not only did HBI prematurely
file its petition, it also, in effect, did not exhaust the administrative remedies.
The CTA Division treated respondent's affirmative defense as a motion to dismiss.

HBI filed its motion for reconsideration but it was denied. Hence, HBI filed a Petition for
Review before the CTA En Banc.The CTA En Banc rendered the assailed Decision affirming
the dismissal of the petition for having been prematurely filed.
ISSUE
Is the judicial claim filed by HBI premature?
HELD
No. The Supreme Court ruled that the petition for review for judicial claim filed
by petitioner before the CTA was not prematurely filed.
22
There are two recognized exceptions to the mandatory and jurisdictional nature of
the 120-day period. First, if the CIR, through a specific ruling, misleads a particular
taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is
applicable only to the particular taxpayer. Second, if the CIR issued a general
interpretative rule in accordance with Section 4 of the Tax Code which misled all the
taxpayers into prematurely filing judicial claims with the CTA. The CIR, in such a case, is
not allowed to later on question the CTA's assumption of jurisdiction over such claim since
equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code.
BIR Ruling No. DA-489-03 falls under the second exception. BIR Ruling No.
DA-A89-03 expressly provides that a taxpayer-claimant may seek judicial relief with the
CTA by filing a petition for review without waiting for the 120-day period to lapse. The
Court, in Commissioner of Internal Revenue v. San Roque Power Corp. (San Roque)
recognized BIR Ruling No. DA-489-03 as an equitable estoppel in favor of taxpayers and
whose date of issuance on December 10, 2003 up to October 6, 2010 (when Aichi case was
adopted).
In the case, the administrative claim was filed on June 25, 2010. Four days later,
or on June 29, 2010, petitioner filed its judicial claim.It is evident that the judicial claim
was filed well within the issuance of BIR Ruling No. DA-489-03 before it was invalidated by
Aichi. Thus, petitioner's immediate filing of its petition for review before the CTA without
waiting for the prescribed period of 120 days to lapse is thus permissible.
On a final note, for the guidance of the Bench and the Bar, We reiterate the rules
on the determination of the prescriptive period for filing a tax refund or credit of
unutilized input VAT under Section 112 of the Tax Code as summarized in Mindanao II
Geothermal Partnership v. Commissioner of Internal Revenue:
1) An administrative claim must be filed with the CIR within two years after
23
expiration of the 120-day period without any action from the CIR.
4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time
of its issuance on 10 December 2003 up to its reversal by this Court in Aichi
on 6 October 2010, as an exception to the mandatory and jurisdictional
120+30 day periods.
24
COMMISSIONER OF INTERNAL REVENUE VS. PHILIPPINE BANK OF COMMUNICATIONS
HERNANDO, J.
G.R. No. 211348 February 23, 2022
DOCTRINE
The independence of the judicial claim for a tax credit/refund Credit Withholding
Tax from its administrative counterpart is implied in the National Internal Revenue Code
(NIRC), which allows the filing of both claims contemporaneously within the two-year
prescriptive period.
The requisites for claiming a tax credit or a refund of Credit Withholding Tax are as
follows:
1) The claim must be filed within the two (2)-year period from the date of
payment of the tax;
2) It must be shown on the return that the income received was declared as
part of the gross income; and
3) The fact of withholding must be established by a copy of a statement duly
issued by the payor to the payee showing the amount paid and the amount
of the tax withheld.
FACTS
Philippine Bank of Communications (PBCOM) filed with the BIR its Annual Income
Tax Return for the year 2006. Subsequently, PBCOM filed an Amended Annual Income Tax
Return for the same year, reflecting a huge net loss, and a creditable tax withheld for the
fourth quarter of 2006 in the amount of P24,716,655.00. PBCOM also indicated in the said
income tax return its intention to apply for the issuance of a Tax Credit Certificate (TCC)
for its excess/unutilized Creditable Withholding Tax (CWT) for the year 2006 in the
amount of P24,716,655.00.
After almost two years, PBCOM filed with the BIR its letter requesting for the
issuance of a TCC for the excess CWT covering the year 2006 in the amount of
P24,716,655.00. due to the inaction of the CIR on the former claims for a TCC, PBCOM
filed a petition for review with the Court of Tax Appeal Third Division.
The CIR in its defense, argued that PBCOM’s claim for the issuance of TCC is a
refund and is subject to administrative examination by the BIR, and that PBCOM failed to
fully comply with the requirements provided in its claim.
Rulings of the CTA Third Division: The CTA third division, partially granted PBCOM’s
petition ordering the CIR to issue a TCC in the amount of P4,624,554.63, representing the
excess/unutilized CWT of PBCOM for the taxable year of 2006. In its ratio, PBCOM timely
25
filed the claim for refund within the two-year prescriptive period, but the amount of
P4,624,554.63 was the only amount that satisfied the said requirements.
Dissatisfied, both parties field their respective partial motions for reconsideration,
but were promptly denied by the CTA, then CIR filed a petition for review with the CTA en
banc, challenging the decision of the CTA third division, praying that judgement be
rendered denying the PBCOM’s claim in its entirety.
Ruling of the CTA En Banc: In the CTA en banc, the petition of CIR was denied due
to lack of merit and affirming the CTA third division decision. Hence, this petition.
ISSUE
1) Did PBCOM’s noncompliance with the requirements of the administrative
claim for a TCC would render its judicial claim premature?
2) Is PBCOM entitled to a tax credit/refund?
HELD
1) No, the Court agrees with the CTA en banc’s ruling, that the failure of PBCOM to
comply with the requirements of its administrative claim for CWT refund/credit
does not preclude its judicial claim.
The independence of the judicial claim for a tax credit/refund CWT from its
administrative counterpart is implied in the National Internal Revenue Code (NIRC), which
allows the filing of both claims contemporaneously within the two-year prescriptive
period and can be found on Sections 204 (C) and 229 of the NIRC. The said provisions
require both administrative and judicial claims to be filed within the same two-year
prescriptive period. With reference to Section 229 of the NIRC, the only requirement for a
judicial claim of tax credit/refund to be maintained is that a claim of refund or credit has
been filed before the CIR, there is no mention in the law that the claim before the CIR
should be acted upon first before a judicial claim may be filed.
The legislative intent is to treat the judicial claim as independent and separate
action from the administrative claim provided that the latter must be filed for the former
to be maintained. While the CIR should be given opportunity to act on PBCOM's claim,
PBCOM should not be faulted for lawfully filing a judicial claim before the expiration of
the two-year prescriptive period, notwithstanding the alleged defects in its administrative
claim. This is considering that, unlike administrative claims for Input Tax refund/credit
before the CIR which have a required specific period of action, there is no such period of
action required in administrative claims for CWT refund/credit before the CIR. Hence, the
CIR's arguments regarding the prematurity of the judicial claims are untenable.
2) Yes, PBCOM is entitled to a tax credit/refund of its CWT. The Court States that the
requisites for claiming a tax credit or a refund of Credit Withholding Tax are as
follows:
26
1. The claim must be filed within the two (2)-year period from the date of
payment of the tax;
2. It must be shown on the return that the income received was declared as
3. The fact of withholding must be established by a copy of a statement duly

In the instant case, PBCOM filed the present claim within the two (2)-year
prescriptive period, satisfying the first requirement, PBCOM filed its administrative claim
and its judicial claim before the CTA, both were within the two-year prescriptive period.
Furthermore, two requirements as to the amount of P4,624,554.63 which is the amount
both verified by the CTA to have been included in the former's General Ledger and Annual
Income Tax Return for taxable year 2006, and supported by the required Certificates of
Creditable Tax Withheld at Source (BIR Form No. 2307).
Hence, the amount of P4,624,554.63 is the only amount of CWT claimed by PBCOM
that complied with all the requirements under the law. Therefore, Court is constrained to
deny the instant petition, and affirm the Decision and Resolution of the CTA en banc.
27
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
TAXATION LAW
doctrines
TAXATION LAW
TAXATION LAW
General Principles
BUREAU OF INTERNAL REVENUE VS. SAMUEL B.
CAGANG
G.R. NO. 230104| MARCH 16, 2022
TAX AMNESTY
SUMMARY & DOCTRINE

CEDCO, sought the cancellation of the Letter of Authority, BIR denies, CEDCO
sought for tax amnesty, but BIR directed CEDCO to pay for its failure to settle its tax
obligations, thereafter, a complaint-affidavit was filed against Cagang and Paredes for
violation of section 255 of the NIRC, in their official capacities as CEDCO treasurer and
president.
DOCTRINE: Tax amnesty refers to the "absolute waiver by a sovereign of its right
to collect taxes and power to impose penalties on persons or entities guilty of violating a
tax law. Tax amnesty aims to grant a general reprieve to tax evaders who wish to come
clean by giving them an opportunity to straighten out their records. A tax amnesty, much
like a tax exemption, is never favored or presumed in law. The grant of a tax amnesty,
like a tax exemption, must be construed strictly against the taxpayer and liberally in
favor of the taxing authority.
National Taxation
COMMISSIONER OF INTERNAL REVENUE VS. UNIOIL
CORPORATION
G.R. NO. 204405| AUGUST 04, 2021
PROCEDURAL DUE PROCESS IN TAX ASSESSMENTS; PRESCRIPTIVE PERIOD FOR ASSESSMENT
SUMMARY & DOCTRINE

Unioil Corporation (Unioil) received a Formal Letter of Demand (FLD) and Final
Assessment Notice (FAN) finding it liable for deficiency withholding tax on compensation
and deficiency expanded withholding tax. However, it contends that the FAN issued is null
and void for being issued beyond the three-year prescriptive period and it did not receive
a Preliminary Assessment Notice (PAN) prior to the issuance of the FAN.
DOCTRINE: Tax collection must be preceded by a valid assessment to allow the

taxpayer to protest the assessment, present their case and adduce supporting evidence.
Without complying with the unequivocal mandate of first informing the taxpayer of the
can be made.
29
LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF

INTERNAL REVENUE
G.R. NO. 202105| APRIL 28, 2021
PRESCRIPTIVE PERIOD FOR ASSESSMENT; WAIVER
SUMMARY & DOCTRINE

The Commissioner of Internal Revenue (CIR) issued a Preliminary Assessment
Notice against the La Flor Dela Isabela, Inc. La Flor challenged the validity of the
assessment as it was clearly issued beyond the prescriptive period. According to the
Petitioner, the waiver of the prescriptive period was null and void.
DOCTRINE: The BIR issued Revenue Memorandum Order (RMO) No. 20-90, which
provides for the guidelines in the proper execution of the waiver of statute of limitations
under the NIRC. It holds that a valid waiver of statute of limitations must be: (a) in
writing; (b) agreed to by both the Commissioner and the taxpayer; (c) before the
expiration of the ordinary prescriptive periods for assessment and collection; and (d) for a
definite period beyond ordinary prescriptive period for assessment and collection. The
period agreed upon can still be extended by subsequent written agreement, provided that
it is executed prior to the expiration of the first period agreed upon.
BUREAU OF INTERNAL REVENUE VS. SAMUEL B.

CAGANG
G.R. NO. 230104| MARCH 16, 2022
COMPROMISE PENALTY
SUMMARY & DOCTRINE

CEDCO, sought the cancellation of the Letter of Authority, BIR denies, CEDCO
sought for tax amnesty, but BIR directed CEDCO to pay for its failure to settle its tax
obligations, thereafter, a complaint-affidavit was filed against Cagang and Paredes for
30
violation of section 255 of the NIRC, in their official capacities as CEDCO treasurer and
president.
DOCTRINE: SEC. 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on
Compensation - Any person required under this Code or by rules and regulations
promulgated thereunder to pay any tax, make a return, keep any record, or supply
correct and accurate information, who willfully fails to pay such tax, make such return,
keep such record, or supply such correct and accurate information, or withhold or remit
taxes withheld, or refund excess taxes withheld on compensation at the time or times
required by law or rules and regulations shall, in addition to other penalties provided by
law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos
(P10,000.00) and suffer imprisonment of not less than one (1) year but not more than ten
(10) years.
Local Taxation
MANILA ELECTRIC COMPANY VS. CITY OF MUNTINLUPA
G.R. NO. 198529|FEBRUARY 09, 2021
LOCAL TAXATION - SCOPE OF TAXING POWERS
SUMMARY & DOCTRINE

The Municipality of Muntinlupa enacted an ordinance imposing franchise taxes. It
was later converted into a Highly Urbanized City. Meralco, a public utility corporation,
refused to pay franchise taxes to Muntinlupa on the premise that a municipality did not
have the power and authority to impose and collect a franchise tax under the Local
Government Code.
DOCTRINE: Municipalities may only levy taxes not otherwise levied by the
provinces. Since provinces have been vested with the power to levy a franchise tax, it
follows that municipalities, pursuant to Section 142 of RA 7160, could no longer levy it.
An ordinance which is incompatible with any existing law or statute is ultra vires,
hence, null and void. A void ordinance cannot legally exist, it cannot have binding force
and effect. A transitory provisions in a Charter that converts a Municipality into a Highly
Urbanized City City contemplates only those ordinances that are valid and legally existing
at the time of its enactment.
31
COMMISSIONER OF INTERNAL REVENUE VS. SAN
MIGUEL CORPORATION
G.R. NO. 180740| NOVEMBER 11, 2019
TAXPAYER’S REMEDY - RECOVERY OF TAX ERRONEOUSLY OR ILLEGALLY COLLECTED
SUMMARY & DOCTRINE

A domestic corporation filed a claim for tax refund or credit for the alleged excise
taxes it paid based on the Revenue Regulation which was declared by the Supreme Court
as "unauthorized administrative legislation". However, such a claim was filed after the two
(2)-year prescriptive period for the refund of erroneously paid taxes.
DOCTRINE: Within two (2) years from the date of payment of tax, the claimant for
tax refund/claim must first file an administrative claim with the CIR before filing its
judicial claim with the courts of law. Both claims must be filed within a two (2)-year
reglementary period. Timeliness of the filing of the claim is mandatory and jurisdictional,
and thus the Court cannot take cognizance of a judicial claim for refund filed either
prematurely or out of time.
The two (2)-year prescriptive period under the Tax Reform Act of 1997 which is
categorically declared that solutio indebiti and the six (6)-year prescriptive period for
claims based on quasi-contract was inapplicable.
NOTE
Commissioner of Internal Revenue v. Fortune Tobacco Corporation already
addressed and settled the issue of the validity of RR No. 17-99, where the Court declared
that such qualification in Section 1 of RR No. 17-99 as "unauthorized administrative
legislation."
COMMISSIONER OF INTERNAL REVENUE VS. PHILEX

MINING CORPORATION
G.R. NO. 218057| JANUARY 18, 2021
SUMMARY & DOCTRINE

Philex Mining, a domestic corporation, filed a claim for refund/credit but the CIR
failed to act on the claim for refund within the 120-day period to decide claims for
refund. Upon its claim with the CTA, the court ordered the CIR to refund the amount
representing Philex’s unutilized and excess input VAT attributable to its zero-rated sales
for the fourth quarter of 2009.
32
DOCTRINE: The running of the 120-day period for the CIR to decide the claim for
refund commences from the time of the submission of complete documents in support of
the tax refund application. For purposes of determining when the supporting documents
have been completed -it is the taxpayer who ultimately determines when complete
documents have been submitted for the purpose of commencing and continuing the
running of the 120-day period.
HEDCOR SIBULAN, INC. VS. COMMISSIONER OF

INTERNAL REVENUE
G.R. NO. 202093| SEPTEMBER 15, 2021
SUMMARY & DOCTRINE

HBI filed with the BIR a written application for the refund or issuance of a tax
credit certificate (TCC), and an administrative claim. Four days had lapsed from the time
HBI filed its administrative claim, HBI filed a petition for review before the CTA Division.
DOCTRINE: There are two recognized exceptions to the mandatory and

jurisdictional nature of the 120-day period. First, if the CIR, through a specific ruling,
misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such
specific ruling is applicable only to the particular taxpayer. Second, if the CIR issued a
general interpretative rule in accordance with Section 4 of the Tax Code which misled all
the taxpayers into prematurely filing judicial claims with the CTA. The CIR, in such a case,
is not allowed to later on question the CTA's assumption of jurisdiction over such claim
since equitable estoppel has set in, as expressly authorized under Section 246 of the Tax
Code.
NOTE
BIR Ruling No. DA-A89-03 expressly provides that a taxpayer-claimant may seek
judicial relief with the CTA by filing a petition for review without waiting for the 120-day
period to lapse. The Court, in Commissioner of Internal Revenue v. San Roque Power Corp.
(San Roque) recognized BIR Ruling No. DA-489-03 as an equitable estoppel in favor of
taxpayers and whose date of issuance on December 10, 2003 up to October 6, 2010 (when
Aichi case was adopted).
33
Rules on the determination of prescriptive period for filing a tax refund or credit
of unutilized input VAT under Section 112 of the Tax Code:
1) An administrative claim must be filed with the CIR within two years after
expiration of the 120-day period without any action from the CIR. (4) All
taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of
its issuance on 10 December 2003 up to its reversal by this Court in Aichi on
6 October 2010, as an exception to the mandatory and jurisdictional 120+30
day periods
COMMISSIONER OF INTERNAL REVENUE VS. PHILIPPINE

BANK OF COMMUNICATIONS
G.R. NO. 211348 | FEBRUARY 23, 2022
SUMMARY & DOCTRINE

Two years after PBCOM filed an income tax return, PBCOM filed with the BIR its
letter requesting for the issuance of a TCC for the excess CWT covering the year 2006,
due to the inaction of the CIR on the former claims for a TCC, PBCOM filed a petition for
review with the Court of Tax Appeal Third Division, praying for the issuance of a TCC.
DOCTRINE: The independence of the judicial claim for a tax credit/refund Credit
withholding Tax from its administrative counterpart is implied in the National Internal
Revenue Code (NIRC), which allows the filing of both claims contemporaneously within the
two-year prescriptive period.
The requisites for claiming a tax credit or a refund of Credit Withholding Tax are as
follows:
34
1) The claim must be filed within the two (2)-year period from the date of
payment of the tax;
2) It must be shown on the return that the income received was declared as
3) The fact of withholding must be established by a copy of a statement duly
35

TAXATION LAW - Hernando CDD 2023

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TAXATION LAW - Hernando CDD 2023

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#HernanDoItBar2023 #ParaSaBARyan

THAT IN ALL THINGS, GOD MAY BE GLORIFIED

Publication, reproduction, dissemination, and distribution, or

Material includes both cases penned by Justice Hernando and recent

Unioil's procedural and substantive arguments, among others, are as follows: It

Tax collection must be preceded by a valid assessment to allow the taxpayer to

In determining whether the return filed is false or fraudulent, jurisprudence has

Administrative due process is anchored on fairness and equity in procedure. It is

On April 8, 2003, the company received a Preliminary Assessment Notice dated

Ruling of the Department of Justice-National Prosecution Service (NPS). the

Municipal Ordinance (MO) 93-35 or the Revenue Code of the Municipality of

Subsequently, RA 7926 was enacted which converted the Municipality of

MO 93-35 was passed by the Sangguniang Bayan of the Municipality of Muntinlupa.

Section 25 of Municipal Ordinance No. 93-35 is declared void.

Section 204 of the Tax Reform Act provides:

Section 229 provides:

a.) NO, the principle of solutio indebiti does not apply.

In Commissioner of Internal Revenue v. Manila Electric Co., the Court therein

Petitions are denied.

(A) Zero-rated or Effectively Zero-rated Sales. - Any

Petition for review is denied.

The CTA Division treated respondent's affirmative defense as a motion to dismiss.

3. The fact of withholding must be established by a copy of a statement duly

SUMMARY & DOCTRINE

SUMMARY & DOCTRINE

DOCTRINE: Tax collection must be preceded by a valid assessment to allow the

LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF

SUMMARY & DOCTRINE

BUREAU OF INTERNAL REVENUE VS. SAMUEL B.

SUMMARY & DOCTRINE

SUMMARY & DOCTRINE

SUMMARY & DOCTRINE

COMMISSIONER OF INTERNAL REVENUE VS. PHILEX

SUMMARY & DOCTRINE

HEDCOR SIBULAN, INC. VS. COMMISSIONER OF

SUMMARY & DOCTRINE

DOCTRINE: There are two recognized exceptions to the mandatory and

COMMISSIONER OF INTERNAL REVENUE VS. PHILIPPINE

SUMMARY & DOCTRINE

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