VERY - IMPORTANT - Taxation Law Case Digests Hernando Bar 2023

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Taxation Law Case Digests Hernando Bar 2023
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SEPTEMBAR 2023
Chair's
Cases
Taxation 20
Law 23
Digest of cases penned by
Associate Justice Ramon #HernanDoIt
Paul Hernando #Hernandonuts
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SEPTEMBAR 2023
BAR OPERATIONS: HERNANDO

SIBLINGS EDITION
ACKNOWLEDGMENT
Special thanks to the following contributors:
CPALawyer2023
GN
Riversioson
Michie
Bsibsi
Lably
January
"Always remember, chance favors the #HernanDoIt

prepared one." - J.Hernando #Hernandonuts
All the best to all Bar 2023 takers.
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TABLE OF CONTENTS
Topics Page
I. General Principles
A. Doctrines in Taxation
2. Compromise and Tax Amnesty
● BUREAU OF INTERNAL REVENUE VS. SAMUEL B. CAGANG, 1

G.R No. 230104, March 16, 2022
● PEOPLE OF THE PHILIPPINES VS. GLORIA F. TUYAY, G.R. 3
No. 206579, December 01, 2021
● LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF 5
INTERNAL REVENUE, G.R. No. 202105, April 28, 2021
II. National Taxation

A. Value-Added Tax
2. Tax Refund or Tax Credit
● HEDCOR SIBULAN, INC. V. COMMISSIONER OF INTERNAL 9

REVENUE, G.R. No. 202093, September 15, 2021
● ENERGY DEVELOPMENT CORPORATION VS. 11
COMMISSIONER OF INTERNAL REVENUE, G.R No. 203367,
March 17, 2021
● COMMISSIONER OF INTERNAL REVENUE VS. PHILEX 14
MINING CORPORATION, G.R. No. 218057, January 18, 2021
B. Tax Remedies Under the National Internal Revenue

2. Assessment of Internal Revenue Taxes
c) Procedural Due Process in Tax Assessments
● COMMISSIONER OF INTERNAL REVENUE VS. UNIOIL 17

CORPORATION, G.R No. 204405, August 04, 2021
d) Prescriptive Period for Assessment

3. Taxpayer’s Remedies
c) Recovery of Tax Erroneously or Illegally Collected
● COMMISSIONER OF INTERNAL REVENUE VS. SAN 25

MIGUEL CORPORATION, GR No. 180740, November 11,
2019

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4. Government Remedies for Collection of Delinquent Taxes

● BUREAU OF INTERNAL REVENUE vs. TICO INSURANCE
COMPANY, INC., GLOWIDE ENTERPRISES INC., and PACIFIC 28
MILLS INC., GR No. 204226, April 18, 2022
IV. Judicial Remedies

A. Court of Tax Appeals
2. Exclusive Original and Appellate Jurisdiction Over Civil
Cases
B. Procedures
2. Civil Cases
c) Who May Appeal, Mode of Appeal, and Effect of
Appeal
3. Criminal Cases
c) Period to Appeal
● PEOPLE OF THE PHILIPPINES VS. BENEDICTA 37
MALLARI AND CHI WEI-NENG, G.R. No. 197164, December
04, 2019

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J. Hernando - Taxation Law
I.F.9. Compromise and Tax Amnesty
BUREAU OF INTERNAL REVENUE VS. SAMUEL B. CAGANG

G.R No. 230104, March 16, 2022
By: CPALawyer2023
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." Simply put, it partakes of an absolute
relinquishment by the government of its right to collect what is due it and to give tax
evaders who wish to relent a chance to start with a clean slate.
FACTS:
Samuel B. Cagang is a treasurer while Romulo M. Paredes is the president of CEDCO Inc. Said
company was assessed by the BIR for deficiency taxes by the BIR (a) income tax; (b)
Value-Added Tax (VAT); (c) expanded withholding tax; and (d) withholding tax on
compensation for taxable years 2000 and 2001. CEDCO, through Cagang, as Director for
Administration & Finance, went through the proper appeal process with the BIR. However, BIR
still issued a Final Decision on Disputed Assessment (FDDA) dated September 28, 2007, which
denied CEDCO's protest.
On November 28, 2007, CEDCO availed of the tax amnesty under Republic Act No. (RA) 9480.
The amnesty granted by the law covered "all national internal revenue taxes for the taxable year
2005 and prior years, with or without assessments duly issued therefor, and that have remained
unpaid as of December 31, 2005 x x x.". CEDCO properly filed its tax amnesty payment form
and paid the amnesty tax.
In a collection letter, The BIR directed CEDCO to pay its tax liabilities based on the FDDA. Due
to CEDCO's failure to settle its tax obligations, a complaint-affidavit dated August 14, 2009 was
filed against Cagang and Paredes for violation of Section 255 of the NIRC. In the said
complaint-affidavit, Cagang and Paredes, in their official capacities as CEDCO's treasurer and
president, respectively, were charged with the alleged willful failure to pay CEDCO's deficiency
taxes for taxable years 2000 and 2001
Taxation Law_HernandoBAR2023 Page 1 of 39

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ISSUE:
Whether CEDCO is entitled to avail of the tax amnesty under RA 9480
RULING:
Yes, CEDCO is entitled to tax amnesty on their income tax and VAT but not with respect to
its withholding tax liabilities.
In 2007, Congress enacted 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."49 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.
Pursuant to Section 6 of RA 9480, those who availed themselves of the benefits of the law
became "immune from the payment of taxes, as well as additions thereto, and the appurtenant
civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as
amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005
and prior years."
Section 8 of the said law enumerates those persons and cases that are not covered by the law,
viz.:
Section 8. Exceptions. -The tax amnesty provided in Section 5 hereof shall not
extend to the following persons or cases existing as of the effectivity of RA 9480:
a) Withholding agents with respect to their withholding tax

liabilities;
xxx
e) Those with pending criminal cases for tax evasion and other
criminal offenses under Chapter II of Title X of the National Internal
Revenue Code of 1997, as amended, and the felonies of frauds, illegal
exactions and transactions, and malversation of public funds and property
under Chapters III and IV of Title VII of the Revised Penal Code;

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Meanwhile, the Department of Finance's Department Order No. 29-07, which provides for the
Implementing Rules and Regulations of RA 9480, states that:
Section 5. Exceptions. - The tax amnesty shall not extend to the following persons
or cases existing as of the effectivity of this Act:
a) Withholding agents with respect to their withholding tax

liabilities;
xxx
e) Those with pending criminal cases filed in court or in the

Department of Justice for tax evasion and other criminal offenses under
Chapter II of Title X of the National Internal Revenue Coe of 1997, as
amended;
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, which the BIR does not dispute.
PEOPLE OF THE PHILIPPINES VS. GLORIA F. TUYAY

G.R. No. 206579, December 01, 2021
By: GN
DOCTRINE:
Under Section 8(e) of RA 9480, only those with pending criminal cases in court for tax
evasion and other criminal offenses under the NIRC, and the felonies of frauds, illegal
exactions and transactions, and malversation of public funds and property, under Chapters
III and IV of Title VII of the Revised Penal Code, are excluded from availing the tax
amnesty.

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FACTS:
Respondent Tuyay is the Registered owner of Glo Herbal Trading and Manufacturing engaged in
the business of manufacturing, selling, and distributing the herbal concoction, Glo-herbal.
BIR issued a letter of Authority (LOA) authorizing the BIR officers to examine the books of
accounts of Glo Herbal Trading and Manufacturing for taxable years 2000-2002 as it allegedly
sold millions of its product during the said years. However, Tuyay failed to submit the book of
account required by the BIR. Thus, the revenue officers had to use the expenditure method to
reconstruct the undeclared income and deficiency taxes.
Later, the BIR issued assessment notices against Tuyay for deficiency income tax and VAT for
the taxable years. The BIR filed with the DOJ a criminal complaint for violation of Sections 254
and 255 of the NIRC. Thus, the Information against Tuyay were filed with the CTA.
Tuyay moved to dismiss the case against her on the ground that she was immune from criminal
liability in view of her availment of the tax amnesty under RA No. 9480.
Petitioner opposed the motion contending that Tuyay was disqualified to avail of the tax amnesty
because under the IRR of 9480, the tax amnesty does not extend to those with pending criminal
cases.
ISSUE:
Whether or not Tuyay was disqualified to avail of the tax amnesty
RULING:
No, Tuyay was not disqualified to avail of the tax amnesty.
Having availed of the tax amnesty and having fully complied with all its requirements and
conditions is entitled to the immunities and privileges conferred by RA 9480, which includes the
immunity from criminal liability under the NIRC.
Here, there is no dispute that Tuyay availed of the tax amnesty under RA 9480 and complied
with all the requirements. In fact, during the pre-trial hearing, petitioner admitted that Tuyay’s
application for tax amnesty was approved and that her payment of taxes was accepted by the
BIR.
The Court finds that Tuyay was not disqualified to avail of the tax amnesty because at the time
she availed of it on there was no pending criminal case against her before any court as it was
only in October 2009 that the criminal cases were filed against her with the CTA.

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And even though there was already a pending criminal case complaint against her before the
DOJ on June 3, 2005, such fact cannot disqualify her from availing of the tax amnesty because
this is not included in the list of exceptions under Section 8 of RA 9480.
LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 202105, April 28, 2021
By: riversioson
DOCTRINE:
In Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc., we ruled that

only persons with "tax cases subject of final and executory judgment by the courts" are
disqualified to avail of the Tax Amnesty Program under RA 9480, which means that there
must be a final and executory judgment promulgated by a court.
FACTS:
On September 6, 2000, the CIR issued a Letter of Authority for the examination of La Flor's
books of account for "all internal revenue taxes for CY 1999.
In connection with this, La Flor executed five statutes of limitations waivers to extend the CIR's
time 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) for deficiency income
tax, value-added tax (VAT), withholding tax (WT) on compensation; and for compromise
penalty.
The company submitted its protest against the FLD on March 30, 2005, and a Supplemental
Protest Letter on April 12, 2005.
Following that, on July 9, 2007, it received the CIR's Final Decision on Disputed Assessments
(FDDA) dated June 1, 2007.
On October 8, 2007, La Flor claimed a tax amnesty under Republic Act No. (RA) 9480, as well
as a compromise on October 18, 2007, under Section 204 of the National Internal Revenue Code
(NIRC).
The CIR issued an undated Warrant of Distraint and/or Levy (WDL) to the company on
November 23, 2007. On November 29, 2007, the petitioner filed a Petition for Review with the
CTA, challenging the CIR's issuance of WDL.

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The CTA (Second Division) dismissed La Flor's petition because it was filed too late. It held that
La Flor had thirty (30) days from July 9, 2007, to appeal the CIR's FDDA under Section 228 of
the NIRC, as amended, or to elevate its complaint to the Commissioner under Section 3.1.5 of
Revenue Regulations No. 12-99. However, instead of appealing the FDDA or raising its protest
to the Commissioner, La Flor took advantage of the tax amnesty under RA 9480 for its assessed
IT and VAT deficiencies and filed an application for compromise for its assessed WT
deficiencies on October 8, 2007, and October 18, 2007, respectively. Hence, its Petition for
Review, filed on November 29, 2007, or three months after July 9, 2007, with the CTA in
Division, clearly exceeded the 30-day reglementary period. The FDDA dated June 1, 2007, had
thus become final, executory, and demandable.
La Flor filed a Motion for Reconsideration, which was denied by the CTA Division in its
Resolution of August 4, 2010. Afterward, on September 7, 2010, La Flor filed a Petition for
Review with the CTA En Banc.
La Flor's petition was dismissed by the CTA En Banc for lack of merit. It decided that if the CIR
does not act on a protest within 180 days of the filing of supporting documents, the taxpayer may
file an appeal with the CTA within 30 days of the expiration of the 180-day term. The petitioner
timely submitted its protest on March 30, 2005, when the CIR published its FLD dated March
21, 2005. On April 12, 2005, it filed a Supplemental Protest Letter in order to submit additional
documentation.
However, because the CIR did not act on La Flor's objection within 180 days of receiving its
Supplemental Protest Letter on April 12, 2005, the petitioner had 30 days from October 9, 2005,
or until November 8, 2005, to submit a Petition for Review with the CTA. The petitioner, on the
other hand, slept on its right and sought relief only on November 29, 2007, more than two years
after the reglementary period had expired. Despite the fact that the 30-day period to appeal began
to run only on July 9, 2007, when La Flor received the CIR's FDDA dated June 1, 2007, La
Flor's petition filed on November 29, 2007 was beyond the 30-day reglementary period.
Furthermore, the CTA En Banc determined that all waivers executed by La Flor were genuine.
The tax court noted that, prior to the expiration of the last waiver, the CIR issued FLD dated
March 14, 2005, which the petitioner received on March 21, 2005. As a result, because all
waivers were validly executed, the CIR's subsequent issuance of the WDL for the purpose of
collecting the assessed tax due was necessarily valid.
ISSUE:
Whether La Flor is entitled to tax amnesty
RULING:
Yes, La Flor is entitled to a tax amnesty.

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On May 24, 2007, RA 9480 was enacted into law. It granted a tax amnesty to 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 with the following exceptions.
On October 8, 2007, petitioner La Flor filed an application for tax amnesty under RA 9480.
Section 6 of DOF DO No. 29-07 provides for the method of availing a tax amnesty under RA
9480, to wit:
Petitioner La Flor presented as evidence the following documents to support its availment of the
Tax Amnesty under R.A. No. 9480: (a) Tax Amnesty Return dated October 8, 2007;51 (b) Tax
Amnesty Payment Form dated October 8, 2007;52 (c) Tax Payment Deposit Slip dated October
8, 2007;53 (d) Notice of Availment of Tax Amnesty dated October 4, 2007;54 and (e) Statement
of Assets and Liabilities (SALN) as of December 31, 2005.
Section 7 of DOF DO No. 29-07 provides that "qualified taxpayers are required to pay an
amnesty tax equivalent to five percent (5%) of their total declared net worth as of December 31,
2005, as declared in the SALN as of the said period, or resulting increase in networth by
amending such previously filed statements for purposes of this tax amnesty, thereby including
still undeclared assets and/or liabilities, as the case may be, as of December 31, 2005, or the
absolute minimum amnesty payment, whichever is higher."
Verily, petitioner La Flor complied with all the requirements under RA 9480 as implemented by
DOF DO No. 29-07 and paid the corresponding amnesty tax. Thus, having fully complied with
the conditions under RA 9480 and DOF DO No. 29-07, La Flor is entitled to the following
immunities and privileges:
Petitioner La Flor's compliance with the requirements under RA 9480 as implemented by DOF
DO No. 20-97 extinguished its tax liabilities, additions, and all appurtenant civil, criminal, or
administrative penalties under the NIRC. Specifically, petitioner La Flor is already immune from
the payment of deficiency taxes assessed for taxable year 1999 as per FLD dated March 14, 2005
and FDDA dated July 9, 2007, namely, IT, VAT, and compromise penalty, except the EWT and
WTC, which are not covered by RA 9480.
Further, La Flor's immunity from paying taxes under RA 9480 is effective despite the fact that
the CIR already issued the FDDA dated July 9, 2007 prior to its application for tax amnesty and
subsequent payment thereof. The FDDA dated July 9, 2007 issued by the BIR is not a tax case
subject of final and executory judgment by the court as contemplated under Section 8(f) of RA
9480. Hence, even with the issuance of the subject FDDA dated July 9, 2007, petitioner La Flor
is not disqualified to avail of the immunities and privileges under RA 9480.
In addition, the alleged compromise agreement for EWT and WTC filed by petitioner is not
considered as an abandonment of its availment of the tax amnesty under RA 9480. This is
especially when the Tax Amnesty Program does not include its assessed EWT and WTC
deficiencies for taxable year 1999 as per FDDA dated July 9, 2007.

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Clearly, La Flor validly applied for a compromise agreement even after filing its application for
tax amnesty under RA 9480.
Considering petitioner La Flor's compliance with the requirements under RA 9480 as

implemented by DOF DO No. 20-97, it is now deemed absolved of its obligations and is already
immune from the payment of the said taxes as well as additions, civil, criminal and
administrative penalties.

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II.C.9. Tax Refund or Tax Credit
HEDCOR SIBULAN, INC. V. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 202093, September 15, 2021
By: michie
DOCTRINE:
Waiting for the lapse of the 120-day period before filing of a judicial claim under section
112 (c) of the NIRC, as amended, is mandatory and jurisdictional, hence, failure to observe
shall be considered as a proper ground for the dismissal of a judicial claim for a tax refund
or tax credits of unutilized input vat.
To further summarize, the following is the timeline and rules on the prescriptive period for
filing a tax refund or credit of unutilized input VAT under Section 112 of the Tax Code:
(1) Administrative Claim must be filed with CIR within 2 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. If the 120-day period expires without any
decision from the CIR, then the administrative claim may be considered to be
denied by inaction. XPN: 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.
(3) Judicial claim must be 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.
FACTS:
Petitioner Hedcor Sibulan, Inc. (Petitioner), a duly registered domestic corporation engaged in
the business of hydroelectric power generation and subsequent sale of power generation to
Davao Light and Power Company, Inc. (DLPCI), filed its Original Quarterly VAT Return for the
2nd Quarter of 2008 with BIR. Two years later, it filed an amended Quarterly VAT Return for the
same period.

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After two days, on June 25, 2010, petitioner also filed a written application for the refund or
issuance of a tax credit certificate (TCC) and an administrative claim for tax credit/ refund as to
the unutilized input VAT on purchases of goods and services attributable to zero-rated sales for
the 2nd quarter of 2008.
After just four days or on June 29, 2010, pending resolution of such administrative claim,
petitioner filed a petition for review before the CTA Third Division (judicial claim) seeking the
refund or the issuance of a TCC in its favor for the unutilized input VAT for purposes of
suspending the running of the 2-year prescriptive period for the filing of claims for refunds.
Respondent Commissioner of Internal Revenue sought the dismissal of the petition for
(1) being prematurely filed considering that only 4 days had lapsed from the filing of the
administrative claim allegedly disregarding the prescribed period of 120 days for the CIR
to rule on the claim under the National Internal Revenue Code and Revenue Regulations
No. 16-2005, as amended, and
(2) failure of petitioner to exhaust administrative remedies.
ISSUE:
Whether or not the judicial claim was prematurely filed?
RULING:
No, petitioner’s judicial claim was not prematurely filed.
Material to this case is Section 112 (C) of the NIRC which states that,
SEC. 112. Refunds or Tax Credits of Input Tax. —
(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 in support of the
application filed in accordance with Subsection (A) hereof.
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. (Emphasis Supplied.)

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The Supreme Court clarified that under this provision, the CIR has 120 days from date of
submission of complete documents to rule on an administrative claim of a taxpayer and ONLY
upon the expiration of such period or upon denial of the administrative claim should the taxpayer
file a judicial claim by filing an appeal before the CTA within 30 days from receipt of decision or
such expiration. This 120-day period is considered as mandatory and jurisdictional, hence,
should be strictly observed in order for the judicial claim to prosper and not be dismissed
EXCEPT when (1) the CIR, through a specific ruling, misleads a particular taxpayer to
prematurely file a judicial claim with the CTA, or (2) the CIR issued a general interpretative rule
in accordance with Section 4 of the Tax Code, which misleads ALL taxpayers into prematurely
filing judicial claims with the CTA. When any of these two exceptions exist, the CIR is no longer
allowed to question the CTA’s assumption of jurisdiction over the claim due to the setting in of
equitable estopped expressly authorized under Section 246 of the Tax Code.
For the resolution of the case at bar, it must be considered that there exists BIR Ruling No.
DA-489-03 issued on December 10, 2003, which 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. Such BIR Ruling was only invalidated on October 6, 2010, through the ruling in the
case of Commissioner of Internal Revenue v. Aichi Forging Co. of Asia, Inc. wherein the
mandatory nature of the 120-day period was emphasized by the Supreme Court. Since the
administrative claim was filed on June 25, 2010, and the judicial claim was filed on June 29,
2010, it is clear that the judicial claim is still under the effect of the said BIR Ruling, hence,
falling under the second exception. Therefore, Petitioner’s judicial claim was not prematurely
filed.
ENERGY DEVELOPMENT CORPORATION VS. COMMISSIONER OF INTERNAL

REVENUE
G.R No. 203367, March 17, 2021
By: CPALawyer2023
DOCTRINES:
Atlas and Mirant dealt with the two-year prescriptive period for filing a tax refund or
credit provided in both Section 230 (now Section 229 of the NIRC) and Section 112 (A).
Specifically, the cases ruled on the two-year prescriptive period for the filing of
administrative claims reckoned from either:
1. the close of the taxable quarter when the zero-rated sales were made according to
the specific provision of law in Section 112 (A) as ruled in Mirant; and
2. the date of filing of the quarterly VAT return as ruled in Atlas drawing an analogy
to the then Section 230 of the 1977 Tax Code (now Section 229 of the NIRC) as an
erroneously or illegally collected tax.

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The ruling in Atlas was abandoned in Mirant which was subsequently affirmed in Aichi
where the 120+30 day jurisdictional periods was first raised.
The expiration of the 120-day period is mandatory and jurisdictional before a judicial
claim can be filed.
There are, however, two exceptions to this rule.

1. The first exception is if the Commissioner, through a specific ruling, misleads a
particular taxpayer to prematurely file a judicial claim with the CTA. Such specific
ruling is applicable only to such particular taxpayer.
2. The second exception is where the Commissioner, through a general interpretative
rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing
prematurely judicial claims with the CTA.
BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on
BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its
reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30
day periods are mandatory and jurisdictional.
However, BIR Ruling No. DA-489-03 cannot be given retroactive effect for four reasons:
1. it is admittedly an erroneous interpretation of the law;
2. prior to its issuance, the BIR held that the 120-day period was mandatory and
jurisdictional, which is the correct interpretation of the law;
3. prior to its issuance, no taxpayer can claim that it was misled by the BIR into filing
a judicial claim prematurely; and
4. a claim for tax refund or credit, like a claim for tax exemption, is strictly construed
against the taxpayer.
FACTS:
On March 30, 2009, EDC filed an administrative claim with the BIR for tax credit or refund of
its unutilized input VAT on its zero-rated sales for taxable year 2007.
On April 24, 2009, EDC filed an appeal/Petition for Review with the CTA.
The dates of EDC's filings of its 2007 Quarterly VAT Returns and administrative and judicial
claims for input VAT tax credit or refund are as follows:

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On June 18, 2009, CIR opposed the claim of EDC, arguing that EDC failed to substantiate its
claim for input VAT tax credit or refund by the submission of proper documents.
While, trial is ongoing, the Supreme Court promulgated its Decision in CIR vs. Aichi which
essentially ruled on the compliance with the 30-day or 120+30 day rule prior to the filing of a
judicial claim for refund.
On March 25, 2011, the CIR filed a Motion to Dismiss EDC’s Petition for Review citing EDC's
failure to comply with the prescriptive periods under Section 112 (C), of the NIRC. The CIR
alleged that EDC did not wait for: (a) the CIR's action on its administrative claim for input VAT
tax credit or refund before appealing to the CTA within 30 days, and (b) in the alternative of the
CIR's inaction, reckon the 30-day period to appeal from the expiration of 120 days from the date
of the submission of complete documents to support the administrative claim under Section 112
(A).
EDC opposed the CIR's motion to dismiss arguing that Aichi cannot be applied retroactively to
cases where the claim for input VAT tax credit or refund arose before Aichi's promulgation and
especially since the period relied upon for availment of remedies was based on prevailing
jurisprudence. EDC further argued that our ruling in Atlas Consolidated Mining and
Development Corporation v. Commissioner of Internal Revenue (Atlas) is apropos where we
ruled that the two-year prescriptive period under Section 22917 of the NIRC applies to claims for
refund or tax credit of unutilized input VAT.
CTA Division granted the Motion to Dismiss which was affirmed by CTA En Banc both
applying the Aichi Case where it rules that EDC prematurely filed its judicial claim or the appeal
to the CTA when it did not comply with the indispensable requirement for the taxpayer to await
the action or inaction of the CIR within the 120-day period as prescribed in Section 112 (C)
ISSUE:
Whether EDC timely filed its judicial claim or its petition for review before the CTA, for
unutilized input VAT tax credit or refund under Section 112, (A) and (D) of the NIRC

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RULING:
No, EDC did not comply with Section 112 (C) of the NIRC relative to the filing of its
judicial claim before the CTA.
However, applying the exception molded in San Roque, i.e., that "all taxpayers can rely on BIR
Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by
this Court in Aichi on 6 October 2010," EDC's petition for review before the CTA should be
reinstated since the filing of its administrative and judicial claims fell within the stated period.
COMMISSIONER OF INTERNAL REVENUE VS. PHILEX MINING CORPORATION

G.R. No. 218057, January 18, 2021
By: bsibsi
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.
After all, he may have already completed the necessary documents the moment he filed his
administrative claim, in which case, the 120-day period is reckoned from the date of filing.
The taxpayer may have also filed the complete documents on the 30th day from filing of his
application, pursuant to RMC No. 49-2003. He may very well have filed his supporting
documents on the first day he was notified by the BIR of the lack of necessary documents.
In such cases, the120-day period is computed from the date the taxpayer is able to submit
the complete documents in support of his application.
Under RMC No. 49-2003, if in the course of the investigation and processing of the claim,
additional documents are required for the proper determination of the legitimacy of the
claim, the taxpayer-claimants shall submit such documents within thirty (30) days from
request of the investigating/processing office.

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FACTS:
On January 21, 2010, Philex filed its original Quarterly VAT Return for the fourth quarter of
2009. Subsequently, on September 13, 2011, it filed an amended Quarterly VAT Return for its
total zero-rated sales, importation of goods with input tax, and purchase services with input tax.
Pursuant to Sec. 4.112-1 of RR No. 16-2005, Philex filed its claim for refund/tax credit with the
One Stop Shop Center of the Department of Finance on September 28, 2011.
The CIR failed to act on Philex’s administrative claim for refund which prompted Philex to file a
Petition for Review with the CTA on January 27, 2012.
The CTA Second Division partially granted Philex’s petition and ordered the CIR to refund the
amount representing its unutilized and excess input VAT attributable to its zero-rated sales for the
fourth quarter of 2009.
The CTA En Banc denied the CIR’s petition for review.
ISSUE:
Whether the CTA En Banc erred in affirming the CTA Second Division’s Decision ruling that
Philex is entitled to a tax refund.
RULING:
No, CTA En Banc did not err in affirming the CTA Second Division’s Decision ruling that
Philex is entitled to a tax refund.
Section 112(c) of the National Internal Revenue Code (NIRC) provides:
SEC. 112. Refunds or Tax Credits of Input Tax. -
xxxx
(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 in support of the application filed in
accordance with Subsection (A) hereof.

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xxxx
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 foregoing provision is clear. 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.
Records show that Philex filed its application for tax refund, attaching therewith the necessary
documents, on September 28, 2011. Pursuant to our pronouncement in Pilipinas Total Gas, Inc.,
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. There is thus no merit in the CIR's contention that Philex's judicial
claim was premature or that its supporting documents were incomplete.

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II.D.1.a. Procedural Due Process in Tax Assessment
COMMISSIONER OF INTERNAL REVENUE VS. UNIOIL CORPORATION

G.R No. 204405, August 04, 2021
By: CPALawyer2023
DOCTRINES:
1. 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
2. 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. Hence, 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:
a. filing of a false or fraudulent return with intent to evade tax or
b. failure to file a return or
c. a written agreement to waive and extend the period within which to assess
the taxpayer's liability.
The assessment contemplated in Sections 203 and 222 of the NIRC refers to the
service of the FAN upon the taxpayer.
A PAN merely informs the taxpayer of the initial findings of the Bureau of Internal
Revenue. It contains the proposed assessment, and the facts, law, rules, and
regulations or jurisprudence on which the proposed assessment is based. It does not
contain a demand for payment but usually requires the taxpayer to reply within 15
days from receipt. Otherwise, the Commissioner of Internal Revenue will finalize an
assessment and issue a FAN. The PAN is a part of due process. It gives both the
taxpayer and the Commissioner of Internal Revenue the opportunity to settle the
case at the earliest possible time without the need for the issuance of a FAN.

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A FAN contains not only a computation of tax liabilities but also a demand for
payment within a prescribed period. As soon as it is served, an obligation arises on
the part of the taxpayer concerned to pay the amount assessed and demanded. It
also signals the time when penalties and interests begin to accrue against the
taxpayer.
FACTS:
On January 26, 2009, Uniol 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.
On February 25, 2009 [Unioil] filed its protest to the FAN and subsequently submitted its
supporting documents on April 24, 2009.
On November 22, 2009 [Unioil] filed the instant Petition for Review due to inaction of the CIR,
180-day period had already expired.
CTA 3rd Division ruled that the CIR did not give Unioil due process when it failed to notify the
latter of the assessments for deficiency withholding taxes, specifically the CIR's issuance of the
Preliminary Assessment Notice (PAN) and Unioil's due receipt thereof in accordance with
Section 228 of the National Internal Revenue Code. CIR’s failure to strictly comply with the
notice requirements as laid down in Section 228 of the NIRC of 1997, as amended, and RR No.
12-99 amounts to the denial of [Unioil]'s right to due process, effectively voiding the
assessments issued.
CTA En Banc affirmed the decision.
CIR filed this petition for review on certiorari and submitted for the first time proof of its
issuance of a PAN and Unioil's actual receipt thereof. Thus, CIR reiterated that it complied with
the notice requirements for assessment under Section 228 of the NIRC and RR No. 12-99; Unioil
was not denied its right to due process. The CIR is adamant that it did issue a PAN which had
been duly acknowledged and received by Unioil.
ISSUES:
1. Whether the assessment is void
RULING:
Yes, the Formal Letter of Demand and F43-128 are void; they did not state the factual and
legal bases for the assessment.
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.

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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 set after
January 15, 2009.
2. Whether the three-year assessment period has prescribed
RULING:
Yes, the CIR's assessment of Unioil for deficiency withholding taxes has prescribed.
The CIR cavalierly invokes Section 72 of the NIRC without explicitly stating that Unioil had
filed a false or fraudulent return. Moreover, in the "Details of Discrepancy" stated in the FAN
and Formal Letter of Demand, the CIR consistently cited that "the corresponding tax due was
computed in accordance with Section 72 (e) of the Tax Code.
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.
There is no prima facie evidence, much less any sort of evidence, that Unioil filed false and
fraudulent returns on the ground of substantial under declaration of income in Unioil's Annual
Income Tax Return for taxable year ending December 31, 2005.
We observe that the assessment notices, from the Post Reporting Notice to the Formal Letter of
Demand, erroneously cited Section 72 (e) of the NIRC. As pointed out by Unioil in its separate
Protests to the PAN and the FAN, and all its pleadings before the tax court and this Court,
Section 72 of the NIRC has no subsection (e).
If the CIR indeed substantiated their vaguely drawn imputation that Unioil had filed a fraudulent
return, there was no reason for the speed with which they issued the Formal Letter of Demand.
Plainly, the Formal Letter of Demand was hastily issued and did not take into consideration the
arguments of Uni oil in its Protest to the PAN. The Formal Letter of Demand and the FAN were
ostensible automated assessments merely echoing the PAN.
From the date of the Formal Letter of Demand and the FAN which were simultaneously issued
on January 14, 2009 and only received by Unioil on January 26, 2009, the three-year prescriptive
period reckoned from the deadline set by law for the filing of the return, assessment of the
January to November 2005 monthly remittance returns has palpably prescribed.

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II.D.1.d. Prescriptive Period for Assessment

G.R. No. 202105, April 28, 2021
By: riversioson
DOCTRINE:
Under BIR 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 the ordinary prescriptive period for assessment and
collection.
The period agreed upon can still be extended by a subsequent written agreement, provided
that it is executed prior to the expiration of the first period agreed upon.
Parenthetically, 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. failure to specify the kind and amount of tax due; and

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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.
FACTS:
books of account for "all internal revenue taxes for CY 1999. In connection with this, La Flor
executed five statutes of limitations waivers to extend the CIR's time to assess and collect the
deficiency taxes.
penalty.
(NIRC).
deficiencies on October 8, 2007, and October 18, 2007, respectively. Hence, its Petition for
Review, filed on November 29, 2007, or three months after July 9, 2007, with the CTA in
Division, clearly exceeded the 30-day reglementary period. The FDDA dated June 1, 2007, had
thus become final, executory, and demandable.

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documentation.
ISSUES:
1. Whether the waivers executed by La Flor are valid.
RULING:
No, the waivers executed by La Flor are not valid.
Section 203 of the NIRC provides for a period of three years for the BIR to assess and collect
internal revenue taxes, counted from the last day prescribed by law for the filing of the return or
from the day the return was filed, whichever comes later. Consequently, any assessment issued
after the expiration of such period is no longer valid and effective.
On the other hand, Section 222 of the NIRC provides for the period to collect taxes by WDL.
In this case, the Court is confronted with the issue of whether the CIR validly issued the WDL to
collect the alleged deficiency taxes of La Flor. Verily, the validity of the WDL hinges on the
validity of the FLD issued by the CIR, which must be within the prescriptive period of three
years or the period agreed upon in the waiver/s of statute of limitations. Hence, it is important to
determine at this point whether the waivers executed by La Flor were valid.
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.

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The law is clear that for a collection to be valid, the assessment must be within the period of
limitation. Essentially, 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.
Applying Section 222 (b) in relation to Section 203 of the NIRC, as well as the applicable BIR
issuances, namely, RMO 20-90 and RDAO 05-01, and the relevant jurisprudence, We find that
the waivers subject of this case failed to strictly comply with the requirements under the law.
First, the first and fourth waivers executed on May 28, 2002, and January 6, 2004, respectively,
failed to specify the date of acceptance by the CIR or his duly authorized representative for the
purpose of determining whether the said waivers were validly accepted before the expiration of
the original three year period and the period agreed upon in case of subsequent agreement.
Second, all five waivers were signed by Cesar C. Maranan (Maranan), the Accounting Manager
of petitioner La Flor. Section 25 of Batas Pambansa Blg. 68, also known as The Corporation
Code of the Philippines, states that the corporate officers of a stock corporation are the president,
secretary, treasurer, or any other officers as may be provided for in the by-laws. No notarized
written authority was attached to the waivers authorizing Maranan to sign the waivers for and on
behalf of La Flor. Neither was there any evidence showing that Maranan was among the
responsible officials of petitioner La Flor authorized by its by-laws to execute a waiver.
Third, even assuming that the first three waivers were validly executed and that Maranan had
authority to sign the waivers on behalf of petitioner, the fourth Waiver was executed and
notarized only on January 6, 2004, clearly beyond the expiry of the third waiver on December
31, 2003. The fourth waiver did not also indicate the date of acceptance by the CIR or his duly
authorized representative. It bears noting that both the execution and the acceptance of the
subsequent waiver should be made before the expiration of the period of prescription or before
the lapse of the period agreed upon in the prior or preceding waiver. Patently, the fourth Waiver
was executed and accepted on January 6, 2004, or beyond the period agreed upon by La Flor and
the CIR in the third Waiver, i.e. until December 31, 2003.
Consequently, with the nullity of the fourth waiver, the execution and acceptance of the fifth
waiver on November 4, 2004 were not valid since there was no more period to extend for which
the CIR could assess La Flor's internal revenue taxes for taxable year 1999. Section 222(b) of the
NIRC is explicit that the period agreed upon may be extended by subsequent written agreement
made before the expiration of the period previously agreed upon.
Considering the foregoing defects in the waivers executed by the parties, the periods for the CIR
to assess or collect the alleged Withholding Tax on Compensation (WTC) and Expanded
Withholding Tax (EWT) deficiencies were not extended. The period within which the CIR could
assess the internal revenue taxes of La Flor had already been prescribed. In fine, the assessments
issued by the BIR are therefore considered void and of no legal effect. Without a valid waiver,
the statute of limitations on assessment and consequently on a collection of the deficiency taxes
could not have been suspended.

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We thus hold that La Flor's assessed EWT and WTC deficiencies under FDDA dated July 9,
2007, had already been prescribed on the ground that the subject waivers failed to strictly comply
with the requirements under the law. Hence, the CIR's issuance of the FLD dated March 14,
2005, was null and void as it was issued beyond the period agreed upon in the third Waiver or
until December 31, 2003. In turn, the issuance of the WDL to collect the deficiency taxes under
FLD dated March 14, 2005, was therefore null and void as it was clearly issued beyond the
prescriptive period. Thus, the CTA erred when it denied La Flor's petition for the cancellation of
the undated WDL on the ground of prescription.
Thus, assuming that La Flor indeed failed to timely file an appeal within 30 days (a) from the
lapse of the 180-day period from April 12, 2005; or (b) from receipt of the denial of its protest on
July 9, 2007, its failure to file an appeal with the CTA on the disputed assessment is immaterial
in view of the invalidity of the assessments.
2. Whether the doctrine of estoppel can be applied as an exception to the statute of

limitations on the assessment of taxes.
RULING:
Yes, the doctrine of estoppel cannot be applied as an exception to the statute of limitations
on the assessment of taxes considering that the BIR provides a detailed procedure for the
proper execution of waiver which must be strictly followed.
The BIR cannot simply invoke the doctrine of estoppel to conceal its failure to comply with its
own issuances, namely, RMO No. 20-90 and RDAO No. 05-01. It cannot just collect taxes based
on an already prescribed assessment, even when taxes are considered the lifeblood of
government. A waiver of the statute of limitations is a derogation of a taxpayer's right to security
against prolonged and unscrupulous investigations. Thus, it must be carefully and strictly
construed. Hence, both the assessment and collection "should be made in accordance with the
law as any arbitrariness will negate the very reason for the government itself.

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II.D.2.c. Recovery of Tax Erroneously or Illegally Collected
COMMISSIONER OF INTERNAL REVENUE v. SAN MIGUEL CORPORATION

GR No. 180740, November 11, 2019
By: lably
DOCTRINES:
1. 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.It is worthy to stress that as for the judicial claim, tax law even explicitly
provides that it be filed within two (2) years from payment of the tax "regardless of
any supervening cause that may arise after payment."
For excise tax on domestic products in general, the return is filed and the excise tax
is paid by the manufacturer or producer before removal of the products from the
place of production. Hence, the date of payment of excise tax on domestic products
depends on the date of actual removal of the taxable domestic products from the
place of production.
2. The Government is not exempt from the application of solutio indebiti. Indeed, the
taxpayer expects fair dealing from the Government, and the latter has the duty to
refund without any unreasonable delay what it has erroneously collected. If the
State expects its taxpayers to observe fairness and honesty in paying their taxes, it
must hold itself against the same standard in refunding excess (or erroneous)
payments of such taxes. It should not unjustly enrich itself at the expense of
taxpayers. And so, given its essence, a claim for tax refund necessitates only
preponderance of evidence for its approbation like in any other ordinary civil case.
Under the Tax Code itself, apparently in recognition of the pervasive quasi-contract
principle, a claim for tax refund may be based on the following: (a) erroneously or
illegally assessed or collected internal revenue taxes; (b) penalties imposed without
authority; and (c) any sum alleged to have been excessive or in any manner
wrongfully collected.
FACTS:
On January 1, 1997, Republic Act (RA) No. 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.

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The excise tax from any brand of fermented liquor within the next three (3) years from the
effectivity of Republic Act No. 8240 shall not be lower than the tax which was due from each
brand on October 1, 1996. The rates of excise tax on fermented liquor shall be increased by
twelve percent (12%) on January 1, 2000.
On December 16, 1999, the Secretary of Finance, upon recommendation of the Commissioner of
Internal Revenue, issued Revenue Regulations No. 17-99 to implement the 12% increase on
excise tax on, among others, fermented liquors by January 1, 2000. It also provided: “Provided,
however, that the new specific tax rate for any existing brand of cigars, cigarettes packed by
machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that
is actually being paid prior to January 1, 2000.
Contending that Revenue Regulation (RR) No. 17-99 did not conform to the letter and intent of
Republic Act (RA) No. 8240, SMC filed on January 10, 2003 a letter with the Bureau of Internal
Revenue (BIR) to claim tax refund or credit of the alleged excess excise taxes it paid on its Red
Horse beer product from January 11, 2001 to December 31, 2002.
Without waiting for the CIR to act on its administrative claim for tax refund or credit, SMC filed
a Petition for Review on February 24, 2003 before the CTA and raffled to its First Division.
The CTA First Division rendered its Decision on March 15, 2006, emphasizing that the CTA
First Division had already declared RR No. 17-99 invalid thus San Miguel is entitled to its claim
for refund or issuance of a tax credit certificate for the erroneously paid excise taxes covering the
period of January 11, 2001 to December 31, 2002.
However, the CTA First Division disallowed some of the claims of SMC since it was already
barred by prescription. The CTA First Division explained that based on Section 229, in relation
to Section 130(A)(2), of 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 "[s]ince 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 prescribed.
SMC filed a Motion for Partial Reconsideration questioning the denial of its claim for tax refund
or credit of excess excise tax payment from January 11 to February 28, 2001. SMC posits that
the principle of solutio indebiti applies to the Government and that under Article 1145 of the
Civil Code, actions upon a quasi-contract must be filed within six (6) years.
ISSUES:
1. Whether or not the excess excise tax payments of SMC from January 11 to February 28,
2001 is properly disallowed on the grounds of prescription

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RULING:
YES, the claim for refund/credit of excess excise tax payments of SMC from January 11 to
February 28, 2001 is disallowed on the grounds of prescription
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. This conclusion of the CTA First Division, as affirmed
by the CTA En Banc, is in full accord with the provisions of the Tax Reform Act of 1997 and so
the Court will not disturb the same.
2. Whether the principle of solutio indebiti applies to the Government and thus under
Article 1145 of the Civil Code, actions upon a quasi-contract must be filed within six (6)
years.
RULING:
No, 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 was inapplicable, ratiocinating as follows:
In this regard, petitioner is misguided when it relied upon the six (6)-year prescriptive period for
initiating an action on the ground of quasi-contract or solutio indebiti under Article 1145 of the
New Civil Code. There is solutio indebiti where: (1) 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; and (2) the payment is made through mistake, and not through liberality or some other
cause. Here, there is a binding relation between petitioner as the taxing authority in this
jurisdiction and respondent MERALCO which is bound under the law to act as a withholding
agent of NORD/LB Singapore Branch, the taxpayer. Hence, the first element of solutio indebiti
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.
There is no need to refer to the Civil Code provisions on quasi-contract. As already pointed out
by the Court in Meralco, the Tax Reform Act of 1997 is a special law, and it is a basic tenet in
statutory construction that between a general law and a special law, the special law prevails.
Generalia specialibus non derogant

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II.D.3. Government Remedies for Collection of Delinquent Taxes
BUREAU OF INTERNAL REVENUE vs. TICO INSURANCE COMPANY, INC.,

GLOWIDE ENTERPRISES INC., and PACIFIC MILLS INC.
GR no. 204226, April 18, 2022
By: January
DOCTRINE:
The Tax Code provides that a tax lien is enforceable against all property and rights to
property belonging to the taxpayer, and retroacts to the time when the tax assessment was
made. However, the tax lien shall not be valid against any judgment creditor until notice of
such lien is filed with the Register of Deeds of the city, or province, where the taxpayer's
properties are located. The proviso in Section 219 of the Tax Code precludes any effect of
the tax lien against any judgment creditor prior to the annotation of the tax lien on the title
of the property concerned. In other words, it is only after the notice of tax lien is annotated
on the pertinent title that a judgment creditor's rights can be affected and the tax lien may
be considered to retroact to the date of assessment.
FACTS:
Respondent TICO Insurance Company, Inc. (TICO) is engaged in the sale of life insurance until
it was placed under liquidation by the Insurance Commission in 2002. Respondents Glowide and
PMI are clients of TICO that took out a fire insurance policy over several properties in 1997.
On August 7, 2006, respondent TICO filed a Complaint for interpleader with the RTC Makati to
determine who between respondents Glowide and PMI, on one hand, and petitioner BIR on the
other, has a superior right over Units 7A and 7B of the Trafalgar Plaza Condominium covered by
CCTs and registered under TICO's name. TICO alleged that Glowide and PMI had attached the
condominium units to cover their claim for the balance of their insurance proceeds after they had
obtained a judgment in their favor, while the BIR issued a warrant of distraint and/or levy on the
real and personal properties of TICO, and a notice of tax lien covering the condominium units, to
answer for TICO's tax liabilities.

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Glowide and PMI's Claims:
While Glowide and PMI' s fire insurance policy with TICO over certain properties was in effect,
a fire broke out that destroyed the said properties. Due to TICO's failure to pay the full amount of
the insurance proceeds despite demand, Glowide and PMI filed a Complaint for sum of money
and damages, with prayer for a writ of preliminary attachment against TICO before the RTC of
Quezon City. RTC ruled in favor of Glowide.
On April 22, 2002, the Insurance Commission placed TICO under liquidation. Tico filed an MR
but the RTC QC ruled that Glowide and PMI's claims are preferred over the BIR's claims since
tax assessments are not preferred credits in reference to specific immovable property.
Glowide and PMI questioned the propriety of the interpleader case. They contended that they
had acquired all rights and interests of TICO over the condominium units on June 3, 2002, at
which date the notices of levy on execution were annotated on the CCTs of the condominium
units, after the one-year period of redemption expired without TICO having redeemed the same.
GLOWIDE and PMI maintain that they have valid and superior rights to the condominium units,
since BIR' s tax lien was annotated on the titles of the condominium units when the properties
had already been purchased by GLOWIDE and PMI in an auction sale. Moreover, since the
auction or execution sale retroacts to the date oflevy of the lien on attachment, GLOWIDE and
PMI acquired all rights, title, and claim over the condominium units on December 22, 2000,
before the same was burdened with any registered claim of the BIR
The BIR's Claims:
The BIR alleged that on January 31, 2000, it served on TICO several final assessment notices for
its alleged deficiency in internal revenue taxes for the calendar years 1996 and 1997 to which
TICO protested but was denied for lack of merit.
The BIR averred that TICO's tax liabilities remained unpaid. Thus, it resorted to the issuance and
service to TICO, and the Register of Deeds of Makati City, of a warrant of distraint and/or levy
on the real and personal properties of TICO, and a notice of tax lien covering the CCTs and was
soon annotated. BIR posited that it has a superior claim over the condominium units, considering
its claim for unpaid revenue taxes enjoys absolute preference under Articles 2241(1), 2242 (1),
and 2246-2249 of the New Civil Code, and a tax lien over TICO's properties had already
attached at the time the assessments were made.
The BIR avers that its annotation of the notice of tax lien before the Register of Deeds on
February 15, 2005, retroacts to the date when the BIR assessed TICO of tax liabilities, i.e.,
January 31, 2000, which is earlier than the notice of levy annotated by GLOWIDE and PMI on
December 22, 2000

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ISSUE:
Which between the BIR, on the one hand, and Glowide and PMI, on the other, is entitled to
ownership of the condominium units.
RULING:
GLOWIDE and PMl's rights over the condominium units are superior to the BIR's claim,
and are thus entitled to possession. and conveyance of the condominium units.
The BIR's tax lien could only have been enforceable against Glowide and PMI when it annotated
its tax lien on February 15, 2005, which was already after the annotation of their levy on
attachment and sale of the condominium units in Glowide and PMI's favor.
At this point, Glowide and PMI already had rights over the condominium units, subject only to
TICO's right of redemption. Moreover, considering GLOWIDE and PMI's rights over the
condominium units retroact to December 22, 2000, the condominium unjts may no longer be
considered TICO's property when the BIR annotated its tax lien in 2005. Glowide and PMI could
no longer be bound by the BIR's tax lien, which only became valid against judgment creditors
after Glowide and PMI had already taken effective rights, control, and possession over the
property in question.

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Case Digests
IV.A.1. Exclusive Original and Appellate Jurisdiction Over Civil Cases

G.R. No. 202105, April 28, 2021
By: riversioson
FACTS:
books of account for "all internal revenue taxes for CY 1999. In connection with this, La Flor
executed five statutes of limitations waivers to extend the CIR's time to assess and collect the
deficiency taxes.
penalty.
(NIRC).
deficiencies on October 8, 2007, and October 18, 2007, respectively.

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Case Digests
Hence, its Petition for Review, filed on November 29, 2007, or three months after July 9, 2007,
with the CTA in Division, clearly exceeded the 30-day reglementary period. The FDDA dated
June 1, 2007, had thus become final, executory, and demandable.
documentation.
ISSUES:
Whether the CTA has jurisdiction to determine the validity of the WDL issued by the BIR, the
five waivers of the statute of limitations, and La Flor’s application for tax amnesty under R.A.
9480.
RULING:
Yes, the CTA has jurisdiction to determine the validity of the WDL issued by the BIR, the
five waivers of the statute of limitations, and La Flor’s application for tax amnesty under
R.A. 9480.

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Case Digests
Section 7 of RA 9282 provides for the exclusive appellate jurisdiction of the CTA on matters
arising under the NIRC or other law administered by the Bureau of Internal Revenue (BIR), to
wit:
Sec. 7. Jurisdiction. — The CTA shall exercise:
x x x 2. Inaction by the Commissioner of Internal Revenue in cases involving

disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties in relation thereto, or other matters arising under the National Internal
Revenue Code or other laws administered by the Bureau of Internal Revenue,
where the National Internal Revenue Code provides a specific period of action, in
which case the inaction shall be deemed a denial.
In Philippine Journalists, we ruled that the CTA's appellate jurisdiction is not limited to cases
involving decisions of the CIR on matters relating to assessments or refunds. Section 7 (a)(2) of
RA 9282 also covers "other matter arising under the National Internal Revenue Code or other
laws administered by the Bureau of Internal Revenue." Clearly, the CTA has jurisdiction to
determine whether the WDL issued by the BIR is valid and rules on the validity of the five
waivers of the statute of limitations and La Flor's application for tax amnesty under RA 9480.

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Case Digests
IV.B.2.a. Who May Appeal, Mode of Appeal, and Effect of Appeal

G.R. No. 202105, April 28, 2021
By: riversioson
FACTS:
books of account for "all internal revenue taxes for the period January 1, 1999, to December 31,
1999." In connection with this, La Flor executed five statutes of limitations waivers to extend the
CIR's time to assess and collect the deficiency taxes.
penalty.
(NIRC).
deficiencies on October 8, 2007, and October 18, 2007, respectively.

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Case Digests
Hence, its Petition for Review, filed on November 29, 2007, or three months after July 9, 2007,
with the CTA in Division, clearly exceeded the 30-day reglementary period. The FDDA dated
June 1, 2007, had thus become final, executory, and demandable.
documentation.
ISSUE:
Whether La Flor timely filed an appeal with the CTA assailing the WDL's validity following its
use of the tax amnesty for its assessed IT and VAT deficiencies under R.A 9480.
RULING:
Yes, La Flor did timely file an appeal with the CTA assailing the WDL's validity following
its use of the tax amnesty for its assessed IT and VAT deficiencies under R.A 9480.
It's subsequent filing of the application and the payment of the corresponding amnesty tax under
RA 9480 operate as suspensive and resolutory conditions which vested La Flor with immunities
and privileges under RA 9480 and finally settled La Flor's IT and VAT deficiencies for taxable
year 1999, respectively. Evidently, the CTA had jurisdiction over the petition for review filed by
petitioner La Flor questioning the validity of the undated WDL issued by the BIR after its
availment of the Tax Amnesty Program under RA 9480.

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Case Digests
It bears stressing that petitioner applied for tax amnesty under RA 9480 after the CIR's issuance
of FLD dated March 14, 2005 and FDDA dated July 9, 2007. In Commissioner of Internal
Revenue v. Transfield Philippines, Inc. We upheld the subsequent application and completion of
the tax amnesty of the taxpayer under RA 9480 even after the issuance by the BIR of the Final
Notice before Seizure dated December 20, 2007, to wit:
As regards the issue of the propriety and timeliness of the petition for review, suffice it to say
that in this case, the reckoning point of the 30-day period to appeal the assessments is immaterial
because the assessments have already been extinguished by respondent's compliance with the
requirements for tax amnesty under R.A. No. 9480. To sustain petitioner's contention that
respondent should have elevated an appeal to the CTA when it received the Final Notice before
Seizure, or at most, when it received the July 10, 2008 Letter of the BIR, would lead to an absurd
and unjust situation wherein the taxpayer avails of the benefits of a tax amnesty law, yet the BIR
still issues a WDAL simply because the taxpayer did not appeal the assessment to the CTA. The
requirement of filing an appeal with the CTA even after the taxpayer has already complied with
the requirements of the tax amnesty law negates the amnesty granted to the taxpayer and creates
a condition which is not found in the law. It is worthy to note that respondent filed a protest to
the assessments, but because of the passage of R.A. No. 9480, it no longer pursued its legal
remedies against the assessments. Thus, respondent cannot be faulted for filing a petition for
review with the CTA only upon receipt of the WDAL for it rightfully relied on the provision of
R.A. No. 9480 that "those who availed themselves of the tax amnesty x x x, and have fully
complied with all its conditions x x x shall be immune from the payment of taxes .

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Case Digests
IV.B.3.c. Period to Appeal
PEOPLE OF THE PHILIPPINES VS. BENEDICTA MALLARI AND CHI WEI-NENG

G.R. No. 197164, December 04, 2019
By: bsibsi
DOCTRINE:
Section 1, Rule 15 of A.M. No. 05-11-07-CTA, otherwise known as the Revised Rules of the
CTA, states that an aggrieved party shall file a motion for reconsideration within 15 days
from the date he/she received notice of the assailed decision, resolution or order of the court
in question.
FACTS:
BIR filed a criminal complaint against Benedicta Mallari and Chi Wei-Neng, President and
General Manager, respectively, of Topsun Int’l., Inc. for violation of Section 255 in relation to
Sections 253 and 256 of the NIRC before the OCP of Manila. due to outstanding VAT deficiency
for the months of January to June 2000 which Topsun failed and refused to pay its outstanding
obligations despite several demands and the service of the Warrant of Distraint and/or Levy.
An Information was soon filed for violation of Section 255 in relation to Sections 253 and 256 of
the NIRC was filed before the CTA First Division.
In its Resolution dated October 7, 2009, the CTA First Division observed that in the DOJ
Resolution dated August 7, 2009, Mallari and Wei-Neng were charged with failure to pay
overdue “deficiency VAT” in the amount of ₱3,827,564.64 and “compromise penalty” of
₱25,000.00. However, the Information stated that they failed to pay “deficiency income tax” in
the said amounts. Further, the CTA First Division noted that the recommendation for the criminal
prosecution or the filing of the information for violation of the Tax Code was without the written
approval of the Commissioner of Internal Revenue. This approval should have been secured
pursuant to Sections 220 and 221 of the NIRC, as amended, in relation to Section 2, Rule 9 of the
Revised Rules of the CTA. Lastly, the motion to adopt the allegations contained in the
Counter-Affidavit of Mallari, and the Reply to the Counter-Affidavit and its Annexes were not
attached to the Information. Thus, the CTA ordered ACP Mendoza to make the necessary formal
corrections in the Information ang to submit the necessary documents that are lacking.
By way of compliance, ACP Mendoza submitted the following: (a) the Amended Information;
(b) a certified true copy of RDAO No. 2-2007 dated March 1, 2007 of Commissioner Jose Mario
C. Bunag of the BIR in lieu of the written approval of the CIR with respect to the filing of the
present information; (c) the “Motion to Adopt Allegations Contained in Counter-Affidavit of
[Benedicta] Mallari”; and (d) the “Reply to Counter-Affidavit” and its annexes.

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Case Digests
The CTA First Division issued another Resolution noting that ACP Mendoza still failed to attach
the CIR’s recommendation for criminal prosecution of Mallari and Wei-Neng, among others. As
such, it ordered the submission of the required recommendation in accordance with the NIRC.
However, ACP Mendoza, in his Compliance with Manifestation, maintained that the authority of
Regional Director Misajon is already sufficient pursuant to RDAO No. 2-2007 which authorizes
Regional Directors to approve and sign approval and referral letters to authorize the institution of
criminal actions for the National Office of the BIR as required by Section 220 of the NIRC
including the filing of information before the courts.
In its Resolution dated December 14, 2009, the CTA First Division dismissed the criminal
complaint for failure of ACP Mendoza to obey a lawful order of the court, i.e., to submit a
certified true copy of the Memorandum of the CIR authorizing Regional Director Misajon to
prosecute and conduct proceedings.
ACP Mendoza received the said CTA First Division Resolution on January 13, 2010. Hence, on
January 18, 2010, the special counsels/prosecutors of the BIR Manila filed their Entry of
Appearance with Leave to Admit Attached Motion for Reconsideration.
In its Resolution dated March 17, 2010, however, the CTA Special First Division denied the MR
due to late filing. It observed that based on the records, the BIR received its December 14, 2009
Resolution on December 17, 2009, while the Office of the City Prosecutor received the same on
December 21, 2009; hence, the prosecution had until January 4, 2010 and January 5, 2010,
respectively, to file the Motion for Reconsideration. Regrettably, the prosecution filed its Motion
for Reconsideration only on January 18, 2010 or 14 days late beyond the prescribed 15-day
period for filing the same.
ISSUE:
Whether the Resolution dated December 14, 2009 has already become final.
RULING:
Yes, the Resolution dated December 14, 2009 has already become final.
A perusal of the records shows that the BIR Main Office and the Office of the City Prosecutor
received the Notice of the December 14, 2009 Resolution of the CTA First Division on
December 17, 2009 and December 21, 2009, respectively. From the date of receipt, petitioner
only had until January 4, 2010 and January 5, 2010, respectively, to file its Motion for
Reconsideration. Petitioner, however, filed its motion only on January 18, 2010 or 14 days
beyond the prescribed period. Thus, we find no cogent reason to depart from the findings of the
CTA Special First Division, which was affirmed by the CTA En Banc, that petitioner filed its
Motion for Reconsideration beyond the 15-day reglementary period.

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Consequently, petitioner's failure to duly file on time a Motion for Reconsideration of the CTA
First Division’s December 14, 2009 Resolution resulted in losing its right to assail the CTA First
Division’s judgment before this Court. This is in accordance with the basic rule that a party who
fails to question an adverse decision by not filing the proper remedy within the period prescribed
by law for the purpose loses the right to do so. As laid down in Barrio Fiesta Restaurant v.
Beronia: For purposes of determining its timeliness, a motion for reconsideration may properly
be treated as an appeal. As a step to allow an inferior court to correct itself before review by a
higher court, a motion for reconsideration must necessarily be filed within the period to appeal.
When filed beyond such period, the motion for reconsideration ipso facto forecloses the right to
appeal.

VERY - IMPORTANT - Taxation Law Case Digests Hernando Bar 2023

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Taxation Law Case Digests Hernando Bar 2023

Law (San Beda University)

Studocu is not sponsored or endorsed by any college or university

BAR OPERATIONS: HERNANDO

"Always remember, chance favors the #HernanDoIt

● BUREAU OF INTERNAL REVENUE VS. SAMUEL B. CAGANG, 1

II. National Taxation

● HEDCOR SIBULAN, INC. V. COMMISSIONER OF INTERNAL 9

B. Tax Remedies Under the National Internal Revenue

● COMMISSIONER OF INTERNAL REVENUE VS. UNIOIL 17

d) Prescriptive Period for Assessment

● COMMISSIONER OF INTERNAL REVENUE VS. SAN 25

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4. Government Remedies for Collection of Delinquent Taxes

IV. Judicial Remedies

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I.F.9. Compromise and Tax Amnesty

BUREAU OF INTERNAL REVENUE VS. SAMUEL B. CAGANG

Taxation Law_HernandoBAR2023 Page 1 of 39

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Whether CEDCO is entitled to avail of the tax amnesty under RA 9480

a) Withholding agents with respect to their withholding tax

Taxation Law_HernandoBAR2023 Page 2 of 39

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a) Withholding agents with respect to their withholding tax

e) Those with pending criminal cases filed in court or in the

PEOPLE OF THE PHILIPPINES VS. GLORIA F. TUYAY

Taxation Law_HernandoBAR2023 Page 3 of 39

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Whether or not Tuyay was disqualified to avail of the tax amnesty

No, Tuyay was not disqualified to avail of the tax amnesty.

Taxation Law_HernandoBAR2023 Page 4 of 39

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LA FLOR DELA ISABELA, INC. VS. COMMISSIONER OF INTERNAL REVENUE

In Commissioner of Internal Revenue v. Philippine Aluminum Wheels, Inc., we ruled that

Taxation Law_HernandoBAR2023 Page 5 of 39

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Whether La Flor is entitled to tax amnesty

Yes, La Flor is entitled to a tax amnesty.

Taxation Law_HernandoBAR2023 Page 6 of 39

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Taxation Law_HernandoBAR2023 Page 7 of 39

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Considering petitioner La Flor's compliance with the requirements under RA 9480 as

Taxation Law_HernandoBAR2023 Page 8 of 39

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II.C.9. Tax Refund or Tax Credit

HEDCOR SIBULAN, INC. V. COMMISSIONER OF INTERNAL REVENUE

Taxation Law_HernandoBAR2023 Page 9 of 39

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(2) failure of petitioner to exhaust administrative remedies.

Whether or not the judicial claim was prematurely filed?

No, petitioner’s judicial claim was not prematurely filed.

SEC. 112. Refunds or Tax Credits of Input Tax. —

Taxation Law_HernandoBAR2023 Page 10 of 39

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ENERGY DEVELOPMENT CORPORATION VS. COMMISSIONER OF INTERNAL

Taxation Law_HernandoBAR2023 Page 11 of 39

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There are, however, two exceptions to this rule.

Taxation Law_HernandoBAR2023 Page 12 of 39

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