ALL DECIDED CASES ON TAXATION

LAW
(JANUARY 2013 – MARCH 2018)

SUBMITTED BY:

RAMON JACINTO R. GARCIA

SUBMITTED TO:

ATTY. EFREN VINCENT DIZON

 Fort Bonifacio Development Corporation v. CIR

G.R. No. 173425

January 22, 2013

FACTS: This case involves a Motion for Reconsideration filed by petitioner. Petitioner is a duly
registered domestic corporation engaged in the development and sale of real property. The Bases
Conversion Development Authority,a wholly owned government corporation created under R.A. No.
7227, owns 45% of petitioner’s issued and outstanding capital stock; while the Bonifacio Land
Corporation, a consortium of private domestic corporations, owns the remaining 55%. On February 8,
1995, petitioner purchased from the national government a portion of the Fort Bonifacio reservation, now
known as the Fort Bonifacio Global City. On September 19, 1996, petitioner submitted to the Bureau of
Internal Revenue (BIR) Revenue District No. 44, Taguig and Pateros, an inventory of all its real
properties, the book value of which aggregated ₱ 71,227,503,200. Based on this value, petitioner claimed
that it is entitled to a transitional input tax credit of ₱ 5,698,200,256, pursuant to Section 105 of the old
NIRC. Petitioner started selling Global City lots to interested buyers. Realizing that its transitional input
tax credit was not applied in computing its output VAT for the first quarter of 1997, petitioner on
November 17, 1998 filed with the BIR a claim for refund of the amount of ₱ 359,652,009.47 erroneously
paid as output VAT for the said period. Due to the inaction of the respondent CIR, petitioner elevated the
matter to the CTA. The CTA denied petitioner’s claim for refund. According to the CTA, "the benefit of
transitional input tax credit comes with the condition that business taxes should have been paid first." On
appeal, the CA affirmed the CTA’s decision. The CA opined that transitional input tax credit is allowed
only when business taxes have been paid and passed-on as part of the purchase price.

ISSUE: WON the petitioner is entitled to a tax refund.

HELD: No. Section 105 of the old NIRC clearly provides that for a taxpayer to avail of the 8%
transitional input tax credit, all that is required from the taxpayer is to file a beginning inventory with the
BIR. It was never mentioned in Section 105 that prior payment of taxes is a requirement. Since the law
does not provide for prior payment of taxes, to require it now would be tantamount to judicial legislation
which, to state the obvious, is not allowed. A transitional input tax credit is not a tax refund per se but a
tax credit. Logically, prior payment of taxes is not required before a taxpayer could avail of transitional
input tax credit. Tax credit is not synonymous to tax refund. Tax refund is defined as the money that a
taxpayer overpaid and is thus returned by the taxing authority. Tax credit, on the other hand, is an amount
subtracted directly from one’s total tax liability. It is any amount given to a taxpayer as a subsidy, a
refund, or an incentive to encourage investment. Moreover, in Commissioner of Internal Revenue v.
Central Luzon Drug Corp., the Court had already declared that prior payment of taxes is not required in
order to avail of a tax credit. The Tax Code does not allow any cash refund of input VAT, only a tax
credit; and even for zero-rated or effectively zero-rated VAT-registered taxpayers, the Tax Code does not
allow any cash refund or credit of transitional input tax.
 Philacor Credit Corporation v. CIR

G.R. No. 169899

February 6, 2013

FACTS: Philacor is a domestic engaged in the business of retail financing. After Philacor conducts a
credit investigation and approves the buyer’s application, the buyer executes a unilateral promissory note
in favor of the appliance dealer. The same promissory note is subsequently assigned by the appliance
dealer to Philacor. Revenue Officer Celestino Mejia examined Philacor’s books of accounts and other
accounting records for the fiscal year August 1, 1992 to July 31, 1993. Philacor received tentative
computations of deficiency taxes for this year. Philacor’s Finance Manager, Leticia Pangan, contested the
tentative computations of deficiency taxes totaling P20,037,013.83. Philacor received Pre-Assessment
Notices covering the alleged deficiency income, percentage and DSTs, including increments. On
February 3, 1998, Philacor received demand letters and the corresponding assessment notices. Philacor
protested the PANs, with a request for reconsideration and reinvestigation. It alleged that the
assessed deficiency income tax was erroneously computed when it failed to take into account the
reversing entries of the revenue accounts and income adjustments. Similarly, the BIR failed to take into
account the reversing entries of repossessions, legal accounts, and write-offs when it computed
the percentage tax; thus, the total income reported, that the BIR arrived at, was not equal to the actual
receipts of payment from the customers. As for the deficiency DST, Philacor claims that the accredited
appliance dealers were required by law to affix the documentary stamps on all promissory notes
purchased until the enactment of R.A. No. 7660. After examining the documents submitted by the
parties, the CTA concluded that Philacor failed to declare part of its income, making it liable for
deficiency income tax and percentage tax. However, it also found that the CIR erred in his analysis of the
entries in Philacor’s books thereby considerably reducing Philacor’s liability to a deficiency income tax of
P1,757,262.47 and a deficiency percentage tax of P613,987.86. The CTA also ruled that Philacor is liable
for the DST on the issuance of the promissory notes and their subsequent transfer or assignment. Both
parties filed their motions for reconsideration. The CTA partially granted Philacor’s motion wherein it
cancelled the assessment for deficiency income tax and deficiency percentage tax. The CTA en
banc affirmed the resolution of April 6, 2004 of the CTA Division. It reiterated that Philacor is liable for
the DST due on two transactions – the issuance of promissory notes and their subsequent assignment in
favor of Philacor.

ISSUE: WON petitioner is liable for documentary stamp tax.

HELD: No. Section 173 of the 1997 NIRC names those who are primarily liable for the DST and those
who would be secondarily liable. The persons primarily liable for the payment of the DST are the person
(1) making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the taxable documents, instruments
or papers. Should these parties be exempted from paying tax, the other party who is not exempt would
then be liable. Philacor did not make, sign, issue, accept or transfer the promissory notes. The acts of
making, signing, issuing and transferring are unambiguous. The buyers of the appliances made, signed
and issued the documents subject to tax, while the appliance dealer transferred these documents to
Philacor which likewise indisputably received or "accepted" them. "Acceptance," however, is an act that
is not even applicable to promissory notes, but only to bills of exchange.
 CIR v. San Roque Power Corporation

G.R. No. 187485

February 12, 2013

FACTS: These are three consolidated cases. In G.R. No. 187485, San Roque entered into a Power
Purchase Agreement with NAPOCOR to develop hydro-potential of the Lower Agno River and generate
additional power and energy for the Luzon Power Grid, by building the San Roque Multi-Purpose Project
located in San Manuel, Pangasinan. On the construction and development of the Project, San Roque
allegedly incurred, excess input VAT in the amount of ₱559,709,337.54 for taxable year 2001 which it
declared in its Quarterly VAT Returns filed for the same year. San Roque duly filed with the BIR separate
claims for refund. San Roque filed amended Quarterly VAT Returns for the year 2001 since it increased
its unutilized input VAT to the amount of ₱560,200,283.14. Consequently, It filed with the BIR separate
amended claims for refund. CIR’s inaction on the subject claims led to the filing by San Roque of the
Petition for Review with the CTA. The CTA Second Division required San Roque to show that it
complied with the following requirements of Section 112(B) of R.A. No. 8424 to be entitled to a tax
refund or credit of input VAT attributable to capital goods imported or locally purchased: (1) it is a VAT-
registered entity; (2) its input taxes claimed were paid on capital goods duly supported by VAT invoices
and/or official receipts; (3) it did not offset or apply the claimed input VAT payments on capital goods
against any output VAT liability; and (4) its claim for refund was filed within the two-year prescriptive
period both in the administrative and judicial levels. The CTA Second Division found that San Roque
complied with the first, third, and fourth requirements. San Roque filed a Motion for New Trial and/or
Reconsideration, which was granted. The CTA EB dismissed the CIR’s petition for review and affirmed
the challenged decision and resolution. In G.R. No. 196113, Taganito reported zero-rated sales amounting
to P1,446,854,034.68; input VAT on its domestic purchases and importations of goods and services
amounting to P2,314,730.43; and input VAT on its domestic purchases and importations of capital goods
amounting to P6,050,933.95. Taganito filed with the CIR a claim for tax credit/refund of its supposed
input VAT amounting to ₱8,365,664.38 for the period covering January 1, 2004 to December 31, 2004.
As the statutory period within which to file a claim for refund for said input VAT is about to lapse
without action on the part of the CIR, Taganito filed the instant Petition for Review on February 17, 2007.
The CTA Second Division partially granted Taganito’s claim. It found that Taganito complied with the
requirements of Section 112(A) of R.A. No. 8424. The CTA Second Division denied the CIR’s motion.
The CTA EB granted the CIR’s petition for review and reversed and set aside the challenged decision and
resolution. The CTA EB declared that Section 112(A) and (B) of the 1997 Tax Code both set forth the
reckoning of the two-year prescriptive period for filing a claim for tax refund or credit over input VAT to
be the close of the taxable quarter when the sales were made. In G.R. No. 197156, Philex filed its Original
VAT Return for the third quarter of taxable year 2005 and Amended VAT Return for the same quarter on
December 1, 2005. On March 20, 2006, Philex filed its claim for refund/tax credit of the amount of
₱23,956,732.44 with the One Stop Shop Center. However, due to the CIR’s failure to act on such claim,
Philex filed a Petition for Review. The CTA Second Division denied Philex’s claim due to prescription.
The CTA Second Division ruled that the two-year prescriptive period specified in Section 112(A) of RA
8424, as amended, applies not only to the filing of the administrative claim with the BIR, but also to the
filing of the judicial claim with the CTA. The CTA EB denied Philex’s petition.

ISSUE: WON said claims/actions were filed within the statutory period.
HELD: In the first case, no. On 10 April 2003, a mere 13 days after it filed its amended administrative
claim with the Commissioner on 28 March 2003, San Roque filed a Petition for Review with the CTA.
Clearly, San Roque failed to comply with the 120-day waiting period, the time expressly given by law to
the Commissioner to decide whether to grant or deny San Roque’s application for tax refund or credit. It
is indisputable that compliance with the 120-day waiting period is mandatory and jurisdictional. Failure to
comply with the 120-day waiting period violates a mandatory provision of law. It violates the doctrine of
exhaustion of administrative remedies and renders the petition premature and thus without a cause of
action, with the effect that the CTA does not acquire jurisdiction over the taxpayer’s petition.

In the second case, no. Like San Roque, Taganito also filed its petition for review with the CTA without
waiting for the 120-day period to lapse. Also, like San Roque, Taganito filed its judicial claim before the
promulgation of the Atlas doctrine. Taganito filed a Petition for Review on 14 February 2007 with the
CTA. This is almost four months before the adoption of the Atlas doctrine on 8 June 2007. Taganito is
similarly situated as San Roque - both cannot claim being misled, misguided, or confused by
the Atlas doctrine.

In the third case, no. Philex timely filed its administrative claim on 20 March 2006, within the two-year
prescriptive period. Even if the two-year prescriptive period is computed from the date of payment of the
output VAT under Section 229, Philex still filed its administrative claim on time. Thus, the Atlas doctrine
is immaterial in this case. The Commissioner had until 17 July 2006, the last day of the 120-day period, to
decide Philex’s claim. Since the Commissioner did not act on Philex’s claim on or before 17 July 2006,
Philex had until 17 August 2006, the last day of the 30-day period, to file its judicial claim. The CTA EB
held that 17 August 2006 was indeed the last day for Philex to file its judicial claim. However, Philex
filed its Petition for Review with the CTA only on 17 October 2007, or 426 days after the last day of
filing. In short, Philex was late by one year and 61 days in filing its judicial claim.
 Fort Bonifacio Development Corporation v. CIR

G.R. No. 164155 & 175543

February 25, 2013

FACTS: As part of the scheme that would enable BCDA to raise funds through FBDC, on February 7,
1995, the Republic of the Philippines transferred by land grant to FBDC in Fort Bonifacio. FBDC in turn
executed a Promissory Note for ₱71.2 billion plus in favor of the Republic. The Republic for its part
assigned the promissory note to BCDA which assigned it back to FBDC as full and complete payment of
BCDA’s subscription to FBDC’s authorized capital stock. More than three years later or on September
15, 1998 respondent issued a Letter of Authority, providing for the examination of FBDC’s books and
other accounting records covering all its internal revenue liabilities for the 1995 taxable year, the year it
came into being. On December 10, 1999 the Commissioner issued a Final Assessment Notice to FBDC
for deficiency documentary stamp tax of ₱1,068,412,560.00 based on the Republic’s 1995 sale to it of the
Fort Bonifacio land. FBDC protested the assessment. On January 6, 2000 it wrote respondent
Commissioner a letter, invoking R.A. 7917, which exempted the proceeds of the sale of the Fort
Bonifacio land from all forms of taxes. When respondent Commissioner failed to act on FBDC’s request
for tax exemption despite the lapse of the 180-day period, FBDC filed a petition for review before the
CTA. The CTA rendered a decision denying FBDC’s petition. The CA first affirmed the March 5, 2003
CTA decision. Subsequently, it also affirmed the August 14, 2003 CTA resolution. The CA held that
FBDC was not exempt from the payment of DST in connection with the execution of the deed of sale
covering the Fort Bonifacio land. The CA, in the subsequent decision also held that the CTA properly
imposed the 20% delinquency interest.

ISSUE: WON petitioner is exempt from the said taxes.

HELD: Yes. On February 7, 1995 the Republic through the President, issued Special Patent 3596 to
FBDC pursuant to an Act of Congress or R.A. 7227. That legislative act removed the public character of
the Fort Bonifacio land and allowed the President to cede ownership of the same to FBDC, then a wholly-
owned government corporation under the BCDA, for the price of ₱71.2 billion plus, covered by a
negotiable promissory note. The Republic could not just spend or use the money it received from the sale
without authority from Congress. In this case, the basis for appropriation is found also in R.A. 7227
which earmarked the proceeds of the sale of the Fort Bonifacio land for use in capitalizing the BCDA. At
the time the sale subject of this case was entered into, FBDC was a wholly-owned subsidiary of the
BCDA pursuant to Section 16 of R.A. 7227. Notably, the Republic sold the Fort Bonifacio land to FBDC
and the latter paid for it with a promissory note. When the Republic in turn assigned that promissory note
to BCDA, not only did it comply with its obligation under the above provision to capitalize BCDA from
the proceeds of the sales of its land assets but it also enabled the latter to fully and completely pay for its
subscription to FBDC’s authorized capital stock. Consequently, to tax the proceeds of that sale would be
to tax an appropriation made by law, a power that the Commissioner of Internal Revenue does not have.
The Republic’s subsequent execution of a Deed of Absolute Sale cannot be regarded as a separate
transaction subject to the payment of DST. The Republic’s sale of the land to FBDC under the Special
Patent was a complete and valid sale that conveyed ownership of the land to the buyer. Notably, FBDC
paid for the land with a negotiable promissory note. Indeed, paragraph 4 of the Deed of Absolute Sale
acknowledges the absolute and irrevocable nature of the sale made under the special patent.
 China Banking Corporation v. CIR

G.R. No. 175108

February 27, 2013

FACTS: For the four quarters of 1996, petitioner paid Il93,119,433.50 as gross receipts tax. In computing
its taxable gross receipts, petitioner included the 20% final withholding tax on its passive interest income.
The CTA rendered a Decision entitled Asian Bank Corporation v. Commissioner of Internal Revenue,
wherein it ruled that the 20% final withholding tax on a bank’s passive interest income should not form
part of its taxable gross receipts. Petitioner filed with respondent a claim for refund on April 20, 1998, of
the alleged overpaid GRT for the four quarters of 1996 in the aggregate amount of ₱6,646,829.67.
Petitioner filed its Petition for Review with the CTA. The CTA dismissed petitioner’s claim for its failure
to prove that the 20% final withholding tax forms part of its 1996 taxable gross receipts. The CA denied
petitioner’s appeal.

ISSUE: WON the 20% final tax withheld on a bank’s passive income should be included in the gross
receipt tax.

HELD: Yes. In China Banking Corporation v. Court of Appeals, we ruled that the amount of interest
income withheld, in payment of the 20% final withholding tax, forms part of the bank’s gross receipts in
computing the GRT on banks. Further, in Commissioner of Internal Revenue v. Solidbank Corporation,
this Court held that "gross receipts" refer to the total, as opposed to the net, income. These are, therefore,
the total receipts before any deduction for the expenses of management. In Commissioner of Internal
Revenue v. Bank of Commerce, we again adhered to the ruling that the term "gross receipts" must be
understood in its plain and ordinary meaning. In this case, we ruled that gross receipts should be
interpreted as the whole amount received as interest, without deductions; otherwise, if deductions were to
be made from gross receipts, it would be considered as "net receipts." As commonly understood, the term
"gross receipts" means the entire receipts without any deduction. Deducting any amount from the gross
receipts changes the result, and the meaning, to net receipts.
 Republic of the Philippines v. Ng

G.R. No. 182449

March 6, 2013

FACTS: On 7 January 1997, respondent filed an application for the original registration of title over Lot
Nos. 9663, 9666, 9668, 9690 and 9691, CAD 545-D situated at Cansaga, Consolacion, Cebu. He claimed
ownership of these five parcels of land. His claim was based on his purchase thereof from the vendors,
who had possessed the realties for more than thirty years. After the presentation of evidence, the MTC
rendered its Decision confirming respondent’s title to the subject lots and ordering the registration of the
title in his name. Petitioner, as represented by the OSG, appealed to the CA. In a lone assignment of error,
it averred that the trial court erred in granting Ng’s application, since respondent had failed to comply
with the requirements for the original registration of title. Petitioner contended that respondent had failed
to substantiate his alleged possession and occupation. It attacked Fat’s testimony as full of motherhood
statements, which could not be given weight by the courts. In addition, it asserted that the Tax
Declarations attached to the application merely provided an indicia of possession, and not a conclusive
proof of ownership. The CA affirmed the factual findings of the MTC.

ISSUE: WON the tax declarations are sufficient evidence of possession.

HELD: Yes. As we have ruled in Republic v. Sta. Ana-Burgos, while tax declarations and realty tax
payments on property are not conclusive evidence of ownership, they are nevertheless good indicia of
possession in the concept of owner, for no one in the right frame of mind would be paying taxes for a
property that is not in one’s actual or at least constructive possession. The voluntary declaration of a piece
of property for taxation purposes is an announcement of one’s claim against the State and all other
interested parties. In fact, these documents already constitute prima facie evidence of possession.
Moreover, if the holders of the land present a deed of conveyance in their favor from its former owner to
support their claim of ownership, the declaration of ownership and tax receipts relative to the property
may be used to prove their good faith in occupying and possessing it. Additionally, when considered with
actual possession of the property, tax receipts constitute evidence of great value in support of the claim of
title of ownership by prescription.
 Mindanao II Geothermal Partnership v. CIR

G.R. No. 193301

March 11, 2013

FACTS: On March 11, 1997, Mindanao II allegedly entered into a BOT contract with the PNOC-EDC for
finance, engineering, supply, installation, testing, commissioning, operation, and maintenance of a 48.25
megawatt geothermal power plant, provided that PNOC-EDC shall supply and deliver steam to Mindanao
II at no cost. In turn, Mindanao II shall convert the steam into electric capacity and energy for PNOC-
EDC and shall deliver the same to NAPOCOR for and in behalf of PNOC-EDC. Mindanao II alleges that
its sale of generated power and delivery of electric capacity and energy of Mindanao II to NPC for and in
behalf of PNOC-EDC is its only revenue-generating activity which is in the ambit of VAT zero-rated
sales under the EPIRA Law. Pursuant to the provisions of the National Internal Revenue Code (NIRC),
Mindanao II alleges that it can use its accumulated input tax credits to offset its output tax liability.
Considering, however that its only revenue-generating activity is VAT zero-rated under RA No. 9136,
Mindanao II’s input tax credits remain unutilized. Mindanao II filed an application for refund and/or
issuance of tax credit certificate with the BIR’s Revenue District Office at Kidapawan City on April 13,
2005 for the four quarters of 2003. The application for refund by Mindanao II remains unacted upon by
the CIR. Hence, these three petitions were filed on April 22, 2005. The CTA First Division found that
Mindanao II satisfied the twin requirements for VAT zero rating under EPIRA: (1) it is a generation
company, and (2) it derived sales from power generation. The CTA First Division found that Mindanao II
is entitled to a refund in the modified amount of ₱7,703,957.79. The Petition for Review was partially
granted. Both parties filed a partial motion for reconsideration. The CIR argued that the judicial claims for
the first and second quarters of 2003 were filed beyond the period allowed by law, as stated in Section
112(A) of the 1997 Tax Code. The CTA First Division denied Mindanao II’s motion for partial
reconsideration, found the CIR’s motion for partial reconsideration partly meritorious, which was
affirmed by the CTA en banc.

ISSUE: WON the claims for refund were filed within the statutory period.

HELD: No. When Mindanao II and Mindanao I filed their respective administrative and judicial claims in
2005, neither Atlas nor Mirant has been promulgated. It is hornbook doctrine that a person committing a
void act contrary to a mandatory provision of law cannot claim or acquire any right from his void act. The
administrative claims of Mindanao I and Mindanao II for 2003 have prescribed. An administrative claim
must be 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. 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. 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. 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.
 Nippon Express Corporation v. CIR

G.R. No. 196907

March 13, 2013

FACTS: Petitioner is a corporation duly organized and registered with the SEC. It is also a VAT-
registered entity with the Large Taxpayer District of the BIR. For the year 2001, it regularly filed its
amended quarterly VAT returns. On April 24, 2003, it filed an administrative claim for refund of
₱20,345,824.29 representing excess input tax attributable to its effectively zero-rated sales in 2001.
Pending review by the BIR, on April 25, 2003, petitioner filed a petition for review with the CTA,
requesting for the issuance of a tax credit certificate. The First Division of the CTA denied the petition for
insufficiency of evidence. Upon motion for reconsideration, however, the CTA First Division
promulgated its Amended Decision, ordering the respondent CIR to issue a tax credit certificate. The CIR
elevated the case to the CTA En Banc which, on June 11, 2010, reversed and set aside the March 24, 2009
Amended Decision and the June 16, 2009 Resolution of the CTA First Division. The CTA En Banc later
changed its position on September 22, 2010 when it issued its Amended Decision granting petitioner’s
motion for reconsideration. In another reversal of opinion, the CTA En Banc set aside the March 24, 2009
Amended Decision and the June 16, 2009 Resolution of the CTA First Division and dismissed the petition
for review for lack of jurisdiction. The CTA En Banc held that the 120-day period under Section 112(D)
of the NIRC, which granted the CIR the opportunity to act on the claim for refund, was jurisdictional in
nature such that petitioner’s failure to observe the said period before resorting to judicial action warranted
the dismissal of its petition for review for having been prematurely filed, in accordance with the ruling in
Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. Pursuant to the ruling of the Court in San Roque, the 120+30-day period is mandatory and
jurisdictional from the time of the effectivity of Republic Act (R.A.) No. 8424 or the Tax Reform Act of
1997. The Court, however, took into consideration the issuance by the BIR of Ruling No. DA-489-03,
which expressly stated that the taxpayer need not wait for the lapse of the 120-day period before seeking
judicial relief. Because taxpayers cannot be faulted for relying on this declaration by the BIR, the Court
deemed it reasonable to allow taxpayers to file its judicial claim even before the expiration of the 120-day
period. This exception is to be observed from the issuance of the said ruling on December 10, 2003 up
until its reversal by Aichi on October 6, 2010. In the landmark case of Aichi, this Court made a definitive
statement that the failure of a taxpayer to wait for the decision of the CIR or the lapse of the 120-day
period will render the tiling of the judicial claim with the CTA premature. As laid down in San Roque,
judicial claims filed from January 1, 1998 until the present should strictly adhere to the 120+ 30-day
period referred to in Section 112 of the NIRC. The only exception is the period from December 10, 2003
until October 6, 2010, during which, judicial claims may be tiled even before the expiration of the 120-
day period granted to the CIR to decide on the claim for refund. Based on the foregoing discussion and
the ruling in San Roque, the petition must fail because the judicial claim of petitioner was filed on April
25, 2003, only one day after it submitted its administrative claim to the CIR.
 First Lepanto Taisho Insurance v. CIR

G.R. No. 197117

April 10, 2013

FACTS: After submitting its corporate income tax return for taxable year ending December 31, 1997,
petitioner received a Letter of Authority from respondent to allow it to examine their books of account
and other accounting records for 1997 and other unverified prior years. The CIR issued internal revenue
tax assessments for deficiency income, withholding, expanded withholding, final withholding, value-
added, and documentary stamp taxes for taxable year 1997. On February 24, 2000, petitioner protested
the said tax assessments. During the pendency of the case, particularly on February 15, 2008, petitioner
filed its Motion for Partial Withdrawal of Petition for Review of Assessment in view of the tax amnesty
program it had availed. The CTA Second Division granted the said motion. The CTA Second Division
partially granted the petition. It directed petitioner to pay CIR a reduced tax liability of ₱1,994,390.86.
Petitioner’s Motion for Partial Reconsideration was likewise denied by the CTA Second Division. On
March 1, 2011, the CTA En Banc affirmed the decision of the CTA Second Division. Petitioner moved
for partial reconsideration, but the CTA En Banc denied the same.

ISSUE: WON petitioner is exempt from said taxes.

HELD: No. For taxation purposes, a director is considered an employee under Section 5 of Revenue
Regulation No. 12-86, an individual, performing services for a corporation, whether as an officer and
director or merely as a director whose duties are confined to attendance at and participation in the
meetings of the Board of Directors, is an employee. The non-inclusion of the names of some of
petitioner’s directors in the company’s Alpha List does not ipso facto create a presumption that they are
not employees of the corporation, because the imposition of withholding tax on compensation hinges
upon the nature of work performed by such individuals in the company. As to the deficiency withholding
tax assessment on transportation, subsistence and lodging, and representation expense, commission
expense, direct loss expense, occupancy cost, service/contractor and purchases, the Court finds no cogent
reason to deviate from the findings of the CTA En Banc. As correctly observed by the CTA Second
Division and the CTA En Banc, petitioner was not able to sufficiently establish that the transportation
expenses reflected in their books were reimbursement from actual transportation expenses incurred by its
employees in connection with their duties as the only document presented was a Schedule of
Transportation Expenses without pertinent supporting documents. Without said documents, such as but
not limited to, receipts, transportation-related vouchers and/or invoices, there is no way of ascertaining
whether the amounts reflected in the schedule of expenses were disbursed for transportation. With regard
to commission expense, no additional documentary evidence, like the reinsurance agreements contracts,
was presented to support petitioner’s allegation that the expenditure originated from reinsurance activities
that gave rise to reinsurance commissions, not subject to withholding tax. As to occupancy costs, records
reveal that petitioner failed to compute the correct total occupancy cost that should be subjected to
withholding tax, hence, petitioner is liable for the deficiency.
 Pelizloy Realty Corporation v. Province of Benguet

G.R. No. 183137

April 10, 2013

FACTS: Petitioner owns Palm Grove Resort, which is designed for recreation and which has facilities
like swimming pools, a spa and function halls. It is located at Tuba, Province of Benguet. On December
8, 2005, the Provincial Board of the Province of Benguet approved the Benguet Revenue Code of 2005.
Section 59, Article X of the Tax Ordinance levied a ten percent amusement tax on gross receipts from
admissions to "resorts, swimming pools, bath houses, hot springs and tourist spots." It was Pelizloy's
position that the Tax Ordinance's imposition of a 10% amusement tax is an ultra vires act on the part of
the Province of Benguet. Thus, it filed an appeal/petition before the Secretary of Justice on January 27,
2006. Under Section 187 of the LGC, the Secretary of Justice has sixty days from receipt of the appeal to
render a decision. After the lapse of which, the aggrieved party may file appropriate proceedings with a
court of competent jurisdiction. Treating the Secretary of Justice's failure to decide on its appeal/petition
within the period provided by Section 187 of the LGC as an implied denial of such appeal/petition,
Pelizloy filed a Petition for Declaratory Relief and Injunction before the RTC of La Trinidad, Benguet.
On the validity of Section 59, Article X of the Tax Ordinance, the RTC noted that, while Section 59,
Article X imposes a percentage tax, Section 133 (i) of the LGC itself allowed for exceptions. It noted that
what the LGC prohibits is not the imposition by LGUs of percentage taxes in general but the "imposition
and levy of percentage tax on sales, barters, etc., on goods and services only." The RTC denied Pelizloy’s
Motion for Reconsideration.

ISSUE: WON said provision of the tax ordinance is invalid.

HELD: Yes. The Supreme Court defined percentage tax as a "tax measured by a certain percentage of the
gross selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or
earnings derived by any person engaged in the sale of services." Thus, applying the definition in CIR v.
Citytrust and drawing from the treatment of amusement taxes by the NIRC, amusement taxes are
percentage taxes as correctly argued by Pelizloy. However, provinces are not barred from levying
amusement taxes even if amusement taxes are a form of percentage taxes. Section 133 (i) of the LGC
prohibits the levy of percentage taxes "except as otherwise provided" by the LGC. Evidently, Section 140
of the LGC carves a clear exception to the general rule in Section 133 (i). Section 140 expressly allows
for the imposition by provinces of amusement taxes on "the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement." Under the principle of
ejusdem generis, "where a general word or phrase follows an enumeration of particular and specific
words of the same class or where the latter follow the former, the general word or phrase is to be
construed to include, or to be restricted to persons, things or cases akin to, resembling, or of the same kind
or class as those specifically mentioned." In determining the meaning of the phrase 'other places of
amusement', one must refer to the prior enumeration of theaters, cinematographs, concert halls and
circuses with artistic expression as their common characteristic. In this case, the definition of' amusement
places' in Section 131 (c) of the LGC is a clear basis for determining what constitutes the 'other places of
amusement' which may properly be subject to amusement tax impositions by provinces. There is no
reason for going beyond such basis. To do otherwise would be to countenance an arbitrary
interpretation/application of a tax law and to inflict an injustice on unassuming taxpayers.
 Metro Manila Shopping Mecca Corp. v. Toledo

G.R. No. 190818

June 5, 2013

FACTS: Sometime in October 2001, respondent Liberty M. Toledo, as Treasurer of respondent City of
Manila, assessed petitioners for their fourth quarter local business taxes pursuant to Section 21 of City
Ordinance No. 7794. Petitioners paid the total assessed amount of ₱5,104,281.26 under protest.
Petitioners informed the Office of the City Treasurer of Manila of the nature of the foregoing payment,
assailing as well the unconstitutionality of Section 21 of the Manila Revenue Code. Petitioners’ protest
was however denied. On October 20, 2003, petitioners filed a case with the RTC against respondents,
reiterating their claim that Section 21 of the Manila Revenue Code is null and void. Accordingly, they
sought the refund of the amount of local business taxes they previously paid to the City, plus interest. The
RTC held that respondents’ assessment of local business tax under Section 21 of the Manila Revenue
Code is null and void thereby, warranting the issuance of a tax refund, or tax credit in the alternative.
Respondents filed a Motion for Reconsideration, which was denied. The CTA Division reversed and set
aside the RTC’s ruling. It held that petitioners failed to contest the denial of their protest before a court of
competent jurisdiction within the period provided for under Section 195 of the LGC. Petitioners moved
for reconsideration, averring that respondents failed to file their Petition for Review within the
reglementary period thus, making the RTC decision already final and executory. It was, however, denied.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. A perusal of Section 196 of the LGC reveals that in order to be entitled to a refund/credit of
local taxes, the following procedural requirements must concur: first, the taxpayer concerned must file a
written claim for refund/credit with the local treasurer; and second, the case or proceeding for refund has
to be filed within two (2) years from the date of the payment of the tax, fee, or charge or from the date the
taxpayer is entitled to a refund or credit. Records disclose that while the case or proceeding for refund
was filed by petitioners within two (2) years from the time of payment, they, however, failed to prove that
they have filed a written claim for refund with the local treasurer considering that such fact, although
subject of their Request for Admission which respondents did not reply to, had already been controverted
by the latter in their Motion to Dismiss and Answer. Once a party serves a request for admission
regarding the truth of any material and relevant matter of fact, the party to whom such request is served is
given a period of fifteen (15) days within which to file a sworn statement answering the same. Should the
latter fail to file and serve such answer, each of the matters of which admission is requested shall be
deemed admitted. Records show that petitioners filed their Request for Admission with the RTC and also
served the same on respondents, requesting that the fact that they filed a written claim for refund with the
City Treasurer of Manila be admitted. Respondents, however, did not, and in fact, need not, reply to the
same considering that they have already stated in their Motion to Dismiss and Answer that petitioners
failed to file any written claim for tax refund or credit. In this regard, respondents are not deemed to have
admitted the truth and veracity of petitioners’ requested fact.
 Philippine Deposit Insurance Corporation v. BIR

G.R. No. 172892

June 13, 2013

FACTS: The Monetary Board of the BSP prohibited the Rural Bank of Tuba, Inc. or RBTI from doing
business in the Philippines, placed it under receivership in accordance with Section 30 of R.A. No. 7653
and designated the petitioner PDIC as receiver. PDIC conducted an evaluation of RBTI’s financial
condition and determined that RBTI remained insolvent. Thus, the Monetary Board issued Resolution No.
675, directing PDIC to proceed with the liquidation of RBTI. Accordingly and pursuant to Section 30 of
the New Central Bank Act, PDIC filed in the RTC of La Trinidad, Benguet a petition for assistance in the
liquidation of RBTI. As an incident of the proceedings, the BIR intervened as one of the creditors of
RBTI. The BIR prayed that the proceedings be suspended until PDIC has secured a tax clearance required
under Section 52(C) of R.A. No. 8424. The trial court found merit in the BIR’s motion and granted it.
PDIC moved for partial reconsideration of the Order with respect to the directive for it to secure a tax
clearance. It argued that Section 52(C) of the Tax Code of 1997 does not cover closed banking institutions
as the liquidation of closed banks is governed by Section 30 of the New Central Bank Act. The motion
was, however, denied. PDIC filed a petition for certiorari under Rule 65 with the CA, which was
dismissed thereafter. PDIC sought reconsideration but it was denied.

ISSUE: WON the Section 52(C) of the Tax Code of 1997 is applicable to banks ordered placed under
liquidation by the Monetary Board of the BSP.

HELD: No. In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod, Inc., Philippine
Deposit Insurance Corporation v. Bureau of Internal Revenue ruled that Section 52(C) of the Tax Code of
1997 is not applicable to banks ordered placed under liquidation by the Monetary Board, and a tax
clearance is not a prerequisite to the approval of the project of distribution of the assets of a bank under
liquidation by the PDIC. Section 52(C) of the Tax Code of 1997 pertains only to a regulation of the
relationship between the SEC and the BIR with respect to corporations contemplating dissolution or
reorganization. On the other hand, banks under liquidation by the PDIC as ordered by the Monetary
Board constitute a special case governed by the special rules and procedures provided under Section 30 of
the New Central Bank Act, which does not require that a tax clearance be secured from the BIR. Only a
final tax return is required to satisfy the interest of the BIR in the liquidation of a closed bank, which is
the determination of the tax liabilities of a bank under liquidation by the PDIC. In view of the timeline of
the liquidation proceedings under Section 30 of the New Central Bank Act, it is unreasonable for the
liquidation court to require that a tax clearance be first secured as a condition for the approval of project
of distribution of a bank under liquidation. What the BIR should have requested from the RTC, and what
was within the discretion of the RTC to grant, is not an order for PDIC, as liquidator of RBBI, to secure a
tax clearance; but, rather, for it to submit the final return of RBBI.
 Philippine Airlines, Inc. v. CIR

G.R. No. 198759

July 1, 2013

FACTS: For the period July 24 to 28, 2004, Caltex sold 804,370 liters of imported Jet A-1 fuel to PAL for
the latter’s domestic operations. Caltex electronically filed with the BIR its Excise Tax Returns for
Petroleum Products. On August 3, 2004, PAL received from Caltex an Aviation Billing Invoice for the
purchased aviation fuel in the amount of US$313,949.54, reflecting the amount of US$52,669.33 as the
related excise taxes on the transaction. This was confirmed by Caltex in a Certification. On October 29,
2004, PAL addressed to respondent CIR, sought a refund of the excise taxes passed on to it by Caltex. It
hinged its tax refund claim on its operating franchise. Due to the CIR’s inaction, PAL filed a Petition for
Review with the CTA. In its Answer, the CIR averred that since the excise taxes were paid by Caltex,
PAL had no cause of action. The CTA Second Division denied PAL’s petition on the ground that only a
statutory taxpayer may seek a refund of the excise taxes it paid. The CTA En Banc affirmed the ruling of
the CTA Second Division, reiterating that it was Caltex, the statutory taxpayer, which had the personality
to file the subject refund claim. It explained that the payment of the subject excise taxes, being in the
nature of indirect taxes, remained to be the direct liability of Caltex.

ISSUE: WON PAL has legal personality to file a claim for refund of excise tax.

HELD: Yes. Under Section 129 of the NIRC, excise taxes are imposed on two kinds of goods, namely:
(a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other
disposition; and (b) things imported. With respect to the first kind of goods, Section 130 of the NIRC
states that, unless otherwise specifically allowed, the taxpayer obligated to file the return and pay the
excise taxes due thereon is the manufacturer/producer. On the other hand, with respect to the second kind
of goods, Section 131 of the NIRC states that the taxpayer obligated to file the return and pay the excise
taxes due thereon is the owner or importer, unless the imported articles are exempt from excise taxes and
the person found to be in possession of the same is other than those legally entitled to such tax exemption.
Jurisprudence states that indirect taxes are those which are demanded in the first instance from one person
with the expectation and intention that he can shift the economic burden to someone else. However, the
abovementioned rule should not apply to instances where the law clearly grants the party to which the
economic burden of the tax is shifted an exemption from both direct and indirect taxes.1âwphi1 In which
case, the latter must be allowed to claim a tax refund even if it is not considered as the statutory taxpayer
under the law. Precisely, this is the peculiar circumstance which differentiates the Maceda case from
Silkair. In view of PAL’s payment of either the basic corporate income tax or franchise tax, whichever is
lower, PAL is exempt from paying: (a) taxes directly due from or imposable upon it as the purchaser of
the subject petroleum products; and (b) the cost of the taxes billed or passed on to it by the seller,
producer, manufacturer, or importer of the said products either as part of the purchase price or by mutual
agreement or other arrangement. Therefore, given the foregoing direct and indirect tax exemptions under
its franchise, and applying the principles as above-discussed, PAL is endowed with the legal standing to
file the subject tax refund claim, notwithstanding the fact that it is not the statutory taxpayer as
contemplated by law.
 Swedish Match Philippines, Inc. v. Treasurer of the City of Manila

G.R. No. 181277

July 3, 2013

FACTS: This is a Petition for Refund of Taxes with the RTC of Manila in accordance with Section 196 of
the LGC. The petitioner says that it had been religiously paying its taxes based on Section 14 of the
Manila Revenue Code. However, it was still taxed based on Section 21 of the same Code. RTC denied the
petition because of the failure of the petitioner to plead the latter‟s capacity to sue and to state the
authority of Ms. Beleno, who had executed the Verification and Certification of Non-Forum Shopping. It
also denied it on the ground that Section 14 and 21 pertained to taxes of a different nature and, thus the
elements of double taxation were wanting in this case. CTA affirmed the decision. Petitioner points out
that Section 21 is not in itself invalid, but the enforcement of this provision would constitute double
taxation if business taxes have already been paid under Section 14 of the same revenue code. Petitioner
further argues that since Ordinance Nos. 7988 and 8011 have already been declared null and void in
Coca-Cola Bottlers Philippines, Inc. v. City of Manila, all taxes collected and paid on the basis of these
ordinances should be refunded. The respondent also argues that Sections 14 and 21 pertain to two
different objects of tax; thus, they are not of the same kind and character so as to constitute double
taxation. “Section 14 is a tax on manufacturers, assemblers and other processors, while Section 21 applies
to business subject to excise, value-added, or percentage tax. Respondent posits that under Section 21,
petitioner is merely a withholding tax agent of the City of Manila.”

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: Yes. The Court used the holding in The City of Manila v. Coca-Cola Bottlers Philippines, Inc., to
justify that taxation under Sections 14 and 21 would result to double taxation. Here, it was elaborated that
“Section 143(a) of the LGC: said municipality or city may no longer subject the same manufacturers, etc,
to a business tax under Section 143(h) of the same Code. SECTION 143(h) may be imposed only on
businesses that are subject to excise tax, VAT or percentage tax under the NIRC, and that are „not
otherwise specified in preceding paragraphs.” In the same way, businesses such as respondent‟s, already
subject to a local business Tax under Section 14 of Tax Ordinance No. 7794 [which is based on Section
143(a) of the LGC], can no longer be made liable for local business tax under Section 21 of the same Tax
Ordinance [which is based on Section 143(h) of the LGC.]” Thus, since petitioner has already been
paying under Section 14, it should not be subjected to the payment of taxes under Section 21. Further, the
Court agreed with petitioner that Ordinance Nos. 7988 and 8011 cannot be the basis for the collection of
business taxes because Coca-Cola already ruled that these ordinances were null and void. Hence,
payments made under Section 21 must be refunded in favor of petitioner.
 Bonifacio Water Corporation v. CIR

G.R. No. 175142

July 22, 2013

FACTS: Bonifacio Water Corporation filed its quarterly VAT returns from 4th quarter of 1999 to 4th
quarter of 2000. For said period, BWC alleges that its input VAT included, among others, input VAT paid
on purchases of capital goods amounting to P65,642,814.65. These purchases supposedly pertain to
payment of contractors in connection with the construction of their Sewage Treatment Plant, Water and
Waste System, and Water Treatment Plant. On January 22, 2002, BWC filed with RDO No. 44- Pateros
and Taguig, an administrative claim for refund or issuance of a tax credit certificate for the periods (4th
quarter of 1999 to 4th quarter of 2000) paid. The CTA 2nd division originally only granted a refund of
P40,875,208.64 but adjusted the same to P45,446,280.55 upon reconsideration. Examination of the
various official receipts presented by BWC to support its purchases for capital goods, show that some of
its purchases, such as rental, management fees and direct overhead, cannot be considered as capital goods.

Official receipts under the name of Bonifacio GDE Water Corporation were disallowed on the ground
that the use of the said business name was never approved by SEC. CTA En banc affirmed the decision

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: No. Pursuant to Sec. 4.104-5 and 4.108-1 of RR No. 7-95 in relations to Sections 113 and 237 of
the Tax Code, The change of name to Bonifacio GDE Corporation being unauthorized and without
approval from the SEC, BWC cannot now seek for a refund of input taxes which are supported by
receipts under that name. The requisite that the receipt be issued showing the name, business style, if any,
and address of the purchaser, customer or client is precise so that when the books of accounts are
subjected to a tax credit examination, all entries therein could be shown as adequately supported and
proven as legitimate business transactions. The absence of official receipts issue in the taxpayer’s name is
tantamount to non-compliance with the substantiation requirements provided by law.
 Tambunting Pawnshop, Inc. v. CIR

G.R. No. 173373

July 29, 2013

FACTS: Petitioner was issued an assessment for deficiency VAT for the taxable year of 1999. Petitioner,
after his protest with the CIR merited no response, it filed a Petition for Review with the CTA raising that
pawnshops are not subject to VAT under the NIRC and that pawn tickers are not subject to documentary
stamp tax. The CTA ruled that petitioner is liable for the deficiency VAT and the documentary stamp tax.
The petitioner argues that a pawnshop is not enumerated as one of those engaged in sale or exchange of
services in Section 108 of the National Internal Revenue Code and citing the case of Commissioner of
Internal Revenue v. Michel J. Lhuillier Pawnshops, Inc. as basis.

ISSUE: WON petitioner is liable to pay the said taxes.

HELD: Yes, partly. The Court cited the case of First Planters Pawnshop, Inc. v. Commissioner of Internal
Revenue. In the foregoing case, since the imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, petitioner is not liable for VAT for the tax
year 1999. Sections 195 of the NIRC provides that on the pledge of personal property, there shall be
collected a documentary stamp tax. The Court held in Michel J. Lhuillier Pawnshop, Inc. v.
Commissioner of Internal Revenue that the documentary stamp tax is an excise tax on the exercise of a
right or privilege and that pledge is among the privileges, the exercise of which is subject to documentary
stamp taxes. For purposes of taxation, pawn tickets are proof of an exercise of a taxable privilege of
concluding a contract of pledge.
 Deutsche Bank AG Manila Branch v. CIR

G.R. No. 188550

August 19, 2013

FACTS: In accordance with Section 28(A)(5) of the NIRC of 1997, petitioner withheld and remitted to
respondent on 21 October 2003 the amount of P67,688,553.51, which represented the 15% branch profit
remittance tax on its regular banking unit net income remitted to Deutsche Bank Germany for 2002 and
prior taxable years. Petitioner filed with the BIR Large Taxpayers Assessment and Investigation Division
an administrative claim for refund or issuance of its tax credit certificate in the total amount of PHP
22,562,851.17. On the same date, petitioner requested from the International Tax Affairs Division a
confirmation of its entitlement to the preferential tax rate of 10% under the RP-Germany Tax Treaty.
Alleging the inaction of the BIR on its administrative claim, petitioner filed a Petition for Review with the
CTA. The claim of petitioner for a refund was denied on the ground that the application for a tax treaty
relief was not filed with ITAD prior to the payment by the former of its BPRT and actual remittance of its
branch profits to DB Germany, or prior to its availment of the preferential rate of 10% under the RP-
Germany Tax Treaty provision. The CTA En Banc affirmed the CTA Second Division’s Decision. Citing
the Mirant case, the CTA En Banc held that a ruling from the ITAD of the BIR must be secured prior to
the availment of a preferential tax rate under a tax treaty. The court likewise ruled that the 15-day rule for
tax treaty relief application under RMO No. 1-2000 cannot be relaxed for petitioner.

ISSUE: WON there should be a strict implementation of RMO No. 1-2000.

HELD: No. Simply put, tax treaties are entered into to minimize, if not eliminate the harshness of
international juridical double taxation, which is why they are also known as double tax treaty or double
tax agreements. Likewise, it must be stressed that there is nothing in RMO No. 1-2000 which would
indicate a deprivation of entitlement to a tax treaty relief for failure to comply with the 15-day period. We
recognize the clear intention of the BIR in implementing RMO No. 1-2000, but the CTA’s outright denial
of a tax treaty relief for failure to strictly comply with the prescribed period is not in harmony with the
objectives of the contracting state to ensure that the benefits granted under tax treaties are enjoyed by duly
entitled persons or corporations. Bearing in mind the rationale of tax treaties, the period of application for
the availment of tax treaty relief as required by RMO No. 1-2000 should not operate to divest entitlement
to the relief as it would constitute a violation of the duty required by good faith in complying with a tax
treaty. At most, the application for a tax treaty relief from the BIR should merely operate to confirm the
entitlement of the taxpayer to the relief. The underlying principle of prior application with the BIR
becomes moot in refund cases, such as the present case, where the very basis of the claim is erroneous or
there is excessive payment arising from non-availment of a tax treaty relief at the first instance. In this
case, petitioner should not be faulted for not complying with RMO No. 1-2000 prior to the transaction. It
could not have applied for a tax treaty relief within the period prescribed, or 15 days prior to the payment
of its BPRT, precisely because it erroneously paid the BPRT not on the basis of the preferential tax rate
under the RP-Germany Tax Treaty, but on the regular rate as prescribed by the NIRC. Hence, the prior
application requirement becomes illogical. Therefore, the fact that petitioner invoked the provisions of the
RP-Germany Tax Treaty when it requested for a confirmation from the ITAD before filing an
administrative claim for a refund should be deemed substantial compliance with RMO No. 1-2000.
 J.R.A. Philippines, Inc. v. CIR

G.R. 171307

August 28, 2013

FACTS: Petitioner is a VAT and PEZA registered corporation engaged in the manufacture and export of
ready-to-wear items.4 It claimed to have paid the aggregate sum of P7,786,614.04 as excess input VAT
for the calendar year 1999, which amount it purportedly used to purchase domestic goods and services
directly attributable to its zero-rated export sales. Alleging that its input VAT remained unutilized as it
has not engaged in any business activity or transaction for which it may be liable for output VAT,
petitioner filed four separate applications for tax refund with the One-Stop Shop Inter-Agency Tax Credit
and Duty Drawback Center of the Department of Finance. When the same was not acted upon by
respondent CIR , and in order to toll the two-year prescriptive period under Section 2297 R.A. 8424,
petitioner filed a petition for review before the CTA. The CIR contended that since petitioner is
registered with the PEZA, its business was not subject to VAT as provided under Section 24 of RA
7916,otherwise known as “The Special Economic Zone Act of 1995,” in relation to Section 109(q)13 of
the NIRC. Hence, it is not entitled to credit its input VAT under Section 4.103-1 of RR -95.14 Besides,
petitioner’s alleged unutilized input VAT for 1999 was not properly documented. The CTA denied the
claim for tax refund.

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: No. The CTA committed no reversible error in denying petitioner’s refund claim. the applicant
must prove not only entitlement to the claim but also compliance with all the documentary and
evidentiary requirements therefor. In this case, records show that all of the export sales invoices
presented by petitioner not only lack the word “zero-rated” but also failed to reflect its BIR Permit to
Print as well as its TIN-V. Thus, it cannot be gainsaid that it failed to comply with the above-stated
invoicing requirements, thereby rendering improper its claim for tax refund. Clearly, compliance with all
the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero-
rated sales. As held in Microsoft Philippines, Inc. v. CIR: The invoicing requirements for a VAT-
registered taxpayer as provided in the NIRC and revenue regulations are clear. A VAT-registered
taxpayer is required to comply with all the VAT invoicing requirements to be able to file for a claim for
input taxes on domestic purchases for goods or services attributable to zero-rated sales. A “VAT invoice”
is an invoice that meets the requirements of Section 4.108-1 of RR 7-95. Contrary to Microsoft’s claim,
RR-7-95 expressly states that “All purchases covered by invoice other than a VAT invoice shall not give
rise to any input tax. Microsoft’s invoice, lacking the word “zero-rated,” is not a “VAT invoice,” and thus
cannot give rise to any input tax.
 CIR v. Fortune Tobacco Corporation

G.R. No. 167274-75

September 11, 2013

FACTS: Fortune has discharged its burden of establishing its entitlement to the tax refund in the total
amount indicated in its underlying petitions for refund filed with the CTA. The successive favorable
rulings of the tax court, the appellate court and finally this Court in G.R. Nos. 167274-75 say as much.
Accordingly, the Court, in the higher interest of justice and orderly proceedings should make the
corresponding clarification on the fallo of its July 21, 2008 Decision in G.R. Case Nos.162274-75. It is an
established rule that when the dispositive portion of a judgment, which has meanwhile become final and
executory, contains a clerical error or an ambiguity arising from an inadvertent omission, such error or
ambiguity may be clarified by reference to the body of the decision itself.

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: No. In Commissioner of Internal Revenue v. Reyes, respondent was not informed in writing of
the law and the facts on which the assessment of estate taxes was made pursuant to Section 228 of the
1997 Tax Code. She was merely notified of the findings by the Commissioner, who had simply relied
upon the old provisions of the law and RR No. 12-85 which was based on the old provision of the law.
The Court held that in case of discrepancy between the law as amended and the implementing regulation
based on the old law, the former necessarily prevails. The law must still be followed, even though the
existing tax regulation at that time provided for a different procedure. Moreover, the CTA cannot, as the
Commissioner argues, be faulted for denying petitioner FTC’s Motion for Additional Writ of Execution
filed in CTA Case Nos. 6365, 6383 and 6612 and for denying petitioner’s Motion for Reconsideration for
it has no power nor authority to deviate from the wording of the dispositive portion of Our July 21, 2008
Decision in G.R. Nos. 167274-75. To reiterate, the CTA simply followed the all too familiar doctrine that
"when there is a conflict between the dispositive portion of the decision and the body thereof, the
dispositive portion controls irrespective what appears in the body of the decision." Veering away from the
fallo might even be viewed as irregular and may give rise to a charge of breach of the Code of Judicial
Conduct. Nevertheless, it behooves this Court for reasons articulated earlier to grant relief to petitioner
FTC by way of clarifying Our July 21, 2008 Decision. This corrective step constitutes, in the final
analysis, a continuation of the proceedings in G.R. Case Nos. 167274-75. And it is the right thing to do
under the premises. If the BIR, or other government taxing agencies for that matter, expects taxpayers to
observe fairness, honesty, transparency and accountability in paying their taxes, it must, to borrow from
BPI Family Savings Bank, Inc. v Court of Appeals hold itself against the same standard in refunding
excess payments or illegal exactions. As a necessary corollary, when the taxpayer’s entitlement to are
fund stands undisputed, the State should not misuse technicalities and legalisms, however exalted, to keep
money not belonging to it. As we stressed in G.R. Nos. 167274-75, the government is not exempt from
the application of solutio indebiti, a basic postulate proscribing one, including the State, from enriching
himself or herself at the expense of another. So it must be here.
 CIR v. Philippine Airlines, Inc.

G.R. No. 179259

September 25, 2013

FACTS: For the fiscal year that ended 31 March 2000, respondent filed on 17July 2000 its Tentative
Corporate Income Tax Return, reflecting a creditable tax withheld for the fourth quarter amounting to
₱524,957.00, and a zero taxable income for said year. Hence, respondent filed on 16 July 2001 a written
claim for refund before the petitioner. Revenue officers then examined respondent’s books of accounts
and other accounting records for the purpose of evaluating respondent’s claim for refund. Respondent
received from the same revenue officers a computation of their initial deficiency MCIT assessment in the
amount of ₱537,477,867.64. Consequently, respondent received on 20 October 2003 a Preliminary
Assessment Notice and Details of Assessment assessing respondent deficiency MCIT including interest,
in the aggregate amount of ₱315,566,368.68. A written protest to said preliminary assessment was filed
by respondent. Respondent received a Formal Letter of Demand and Details of Assessment from the
Large Taxpayers Service demanding the payment of the total amount of ₱326,778,723.35. Respondent
filed its formal written protest reiterating that it is exempt from, or is not subject to, the 2% MCIT by
virtue of its charter and that the three-year period allowed by law for the BIR to assess deficiency internal
revenue taxes for the taxable year ending 31 March 2000 had already lapsed on 15July 2003. Since no
final action has been taken by petitioner on respondent’s formal written protest, respondent filed a
Petition for Review before the Second Division of the CTA. The CTA Second Division granted
respondent’s petition. The CTA En Banc affirmed both the aforesaid Decision and Resolution rendered
by the CTA Second Division.

ISSUE: WON the basic corporate income tax of PAL also includes the MCIT.

HELD: No. Section 13(a) of PD 1590 refers to "basic corporate income tax." Section 13(a) requires that
the basic corporate income tax be computed in accordance with the NIRC. This means that PAL shall
compute its basic corporate income tax using the rate and basis prescribed by the NIRC of 1997 for the
said tax. There is nothing in Section 13(a) to support the contention of the CIR that PAL is subject to the
entire Title II of the NIRC of 1997, entitled "Tax on Income." Section 13(a) further provides that the basic
corporate income tax of PAL shall be based on its annual net taxable income. Pursuant to the NIRC of
1997, the taxable income of a domestic corporation may be arrived at by subtracting from gross income
deductions authorized, not just by the NIRC of 1997, but also by special laws. In comparison, the 2%
MCIT under Section 27 (E) of the NIRC of 1997 shall be based on the gross income of the domestic
corporation. The Court notes that gross income, as the basis for MCIT, is given a special definition under
Section 27(E) (4) of the NIRC of 1997, different from the general one under Section 34 of the same Code.
There is an apparent distinction under the NIRC of 1997 between taxable income, which is the basis for
basic corporate income tax under Section 27(A); and gross income, which is the basis for the MCIT under
Section 27(E). The two terms have their respective technical meanings, and cannot be used
interchangeably. The same reasons prevent this Court from declaring that the basic corporate income tax,
for which PAL is liable under Section 13(a) of [PD] 1590, also covers MCIT under Section 27(E) of the
NIRC of 1997, since the basis for the first is the annual net taxable income, while the basis for the second
is gross income.
 Camp John Hay Development Corporation v. Central Board of Assessment Appeals

G.R. No. 169234

October 2, 2013

FACTS: On 21 March 2002, City Assessor of Baguio City notified petitioner about the issuance against it
of thirty-six Owner’s Copy of Assessment of Real Property covering various buildings of petitioner and
two parcels of land owned by the BCDA in the John Hay Special Economic Zone, Baguio City, which
were leased out to the petitioner. Petitioner questioned the assessments in a letter for lack of legal basis
due to the City Assessor’s failure to identify the specific properties and its corresponding assessed values.
The City Assessor replied in a letter that the subject ARPs, with an additional ARP on another building
bringing the total number of ARPs to thirty-seven against the buildings of petitioner located within the
JHSEZ were issued on the basis of the approved building permits obtained from the City Engineer’s
Office of Baguio City and pursuant to Sections 201 to 206 of the LGC of 1991. On 23 May 2002,
petitioner filed with the Board of Tax Assessment Appeals of Baguio City an appeal under Section 226 of
the LGC of 1991 challenging the validity and propriety of the issuances of the City Assessor. Petitioner
claimed that there was no legal basis for the issuance of the assessments because it was allegedly
exempted from paying taxes, national and local, including real property taxes, pursuant to RA No. 7227.
The CBAA denied petitioner’s appeal and set aside the BTAA’s order of deferment of hearing, and
remanded the case to the LBAA of Baguio City for further proceedings subject to a full and up-to-date
payment of the realty taxes on subject properties as assessed by the respondent City Assessor of Baguio
City, either in cash or in bond. The CBAA denied petitioner’s Motion for Reconsideration for lack of
merit. The CTA En Banc found that petitioner has indeed failed to comply with Section 252 of RA No.
7160.

ISSUE: WON petitioner is liable for the said taxes.

HELD: Yes. In order for a complete determination of petitioner’s alleged exemption from payment of real
property tax under RA No. 7160 or the LGC of 1991, there are factual issues needed to be confirmed.
Hence, being a question of fact, petitioner cannot do without first resorting to the proper administrative
remedies, or as previously discussed, by paying under protest the tax assessed in compliance with Section
252 thereof. Accordingly, the CBAA and the CTA En Banc correctly ruled that real property taxes should
first be paid before any protest thereon may be considered. It is without a doubt that such requirement of
"payment under protest" is a condition sine qua non before an appeal may be entertained. Thus,
remanding the case to the LBAA for further proceedings subject to a full and up-to-date payment, either
in cash or surety, of realty tax on the subject properties was proper. To reiterate, the restriction upon the
power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is
consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be
curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit,
shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled. The
right of local government units to collect taxes due must always be upheld to avoid severe erosion. This
consideration is consistent with the State policy to guarantee the autonomy of local governments and the
objective of RA No. 7160 or the LGC of 1991 that they enjoy genuine and meaningful local autonomy to
empower them to achieve their fullest development as self-reliant communities and make them effective
partners in the attainment of national goals.
 CIR v. San Roque Power Corporation

G.R. No. 187485

October 8, 2013

FACTS: On October 11, 1997, San Roque entered into a Power Purchase Agreement with NAPOCOR by
building the San Roque Multi-Purpose Project in San Manuel, Pangasinan. The San Roque Multi-Purpose
Project allegedly incurred, excess input VAT in the amount of P559,709,337.54 for taxable year 2001
which it declared in its Quarterly VAT Returns filed for the same year. San Roque duly filed with the BIR
separate claims for refund, amounting to P559,709,337.54, representing unutilized input taxes as declared
in its VAT returns for taxable year 2001. However, on March 28, 2003, San Roque filed amended
Quarterly VAT Returns for the year 2001 since it increased its unutilized input VAT To the amount of
P560,200,283.14. San Roque filed with the BIR on the same date, separate amended claims for refund in
the aggregate amount of P560,200,283.14. On April 10, 2003, a mere 13 days after it filed its amended
administrative claim with the CIR on March 28, 2003, San Roque filed a Petition for Review with the
CTA. CIR alleged that the claim by San Roque was prematurely filed with the CTA.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. San Roque is not entitled to a tax refund because it failed to comply with the mandatory and
jurisdictional requirement of waiting 120 days before filing its judicial claim. On April 10, 2003, a mere
13 days after it filed its amended administrative claim with the CIR on March 28, 2003, San Roque filed a
Petition for Review with the CTA, which showed that San Roque did not wait for the 120-day period to
lapse before filing its judicial claim. Compliance with the 120-day waiting period is mandatory and
jurisdictional, under RA 8424 or the Tax Reform Act of 1997. Failure to comply renders the petition void.
It violates the doctrine of exhaustion of administrative remedies and renders the petition premature and
without a cause of action, with the effect that the CTA does not acquire jurisdiction over the taxpayer’s
petition. Whether the Atlas doctrine or the Mirant doctrine is applied to San Roque is immaterial because
what is at issue in the present case is San Roque’s non-compliance with the 120-day mandatory and
jurisdictional period, which is counted from the date it filed its administrative claim with the CIR. The
120-day period may extend beyond the two-year prescriptive period, as long as the administrative claim is
filed within the two-year prescriptive period. However, San Roque’s fatal mistake is that it did not wait
for the CIR to decide within the 120-day period, a mandatory period whether the Atlas or the Mirant
doctrine is applied. Section 112(D) of the 1997 Tax Code is clear, unequivocal, and categorical that the
CIR has 120 days to act on an administrative claim. The taxpayer can file the judicial claim (1) Only
within 30 days after the CIR partially or fully denies the claim within the 120- day period, or (2) only
within 30 days from the expiration of the 120- day period if the CIR does not act within the 120-day
period.
 CIR v. Team Operations Corporation

G.R. No. 18528

October 16, 2013

FACTS: On appeal under Rule 45 is the August 27, 2008 Decision of the CTA En Banc, which affirmed
the August 29, 2007 Decision of the CTA First Division in CTA Case No. 6970 ordering petitioner CIR
to refund, or in the alternative, issue a tax credit certificate, in favor of respondent Team (Philippines)
Operations Corporation the amount of ₱23,053,919.22 representing excess/unutilized creditable
withholding taxes for the taxable year 2002. Petitioner likewise assails the November 28, 2008 Resolution
of the CTA En Banc denying its motion for reconsideration from the assailed decision.

ISSUE: WON respondent is entitled to a tax refund/tax credit.

HELD: Yes. Respondent complied with the substantiation requirements for refund of creditable
withholding tax. Here, respondent was able to establish the fact of withholding by submitting a copy of
the withholding tax certificates duly issued by MPAGC and MSC, as the withholding agent, indicating
the name of the payor and showing the income payment basis of the tax withheld and the amount of the
tax withheld. Contrary to petitioner’s assertion, it is not necessary for the person who executed and
prepared the Certificates of Creditable Tax Withheld at Source to be presented and to testify personally as
to the authenticity of the certificates. The copies of the Certificates of Creditable Tax Withheld at Source
when found by the duly commissioned ICPA to be faithful reproductions of the original copies would
suffice to establish the fact of withholding. A taxpayer claiming for a tax credit or refund of creditable
withholding tax must comply with the following requisites: (1) The claim must be filed with the
Commissioner of Internal Revenue within the two-year period from the date of payment of the tax; (2) It
must be shown on the return of the recipient that the income received was declared as part of the gross
income; and (3) The fact of withholding is established by a copy of a statement duly issued by the payor
to the payee showing the amount paid and the amount of tax withheld. The first requirement is based on
section 229 of the National Internal Revenue Code of 1997 which provides that ―no such suit or
proceeding shall be filed after the expiration of two years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment. The second and third requirements are
based on Section 10 of Revenue Regulation No. 6-85 which provides that a claim will prosper only
―when it is shown on the return that the income payment received has been declared as part of the gross
income and the fact of withholding is established by a copy of the Withholding Tax Statement duly issued
by the payor to the payee showing the amount paid and the amount of tax withheld therefrom.
 Republic of the Philippines v. GST Philippines, Inc.

G.R. No. 190872

October 17, 2013

FACTS: During the taxable years 2004 and 2005, GST filed Quarterly VAT Returns showing its zero-
rated sales. Claiming unutilized excess input VAT in the total amount of ₱32,722,109.68 attributable to
the foregoing zero-rated sales, GST filed before the BIR separate claims for refund. For failure of the CIR
to act on its administrative claims, GST filed a petition for review before the CTA on March 17, 2006.
After due proceedings, the CTA First Division rendered a Decision granting GST’s claims for refund but
at the reduced amount of ₱27,369,114.36. The CIR was also ordered to issue the corresponding tax credit
certificate. The CIR moved for reconsideration, which was denied. The case was elevated by the CIR to
the CTA en banc via petition for review. The CIR raised therein the failure of GST to substantiate its
entitlement to a refund, and argued that the judicial appeal to the CTA was filed beyond the reglementary
periods prescribed in Section 112 of RA 8424. The CTA En Banc affirmed the Decision of the CTA First
Division finding GST’s administrative and judicial claims for refund to have been filed well within the
prescribed periods.

ISSUE: WON GST has complied with the prescriptive periods under the Tax Code.

HELD: No. There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA
does not acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period.
There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a
specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such
specific ruling is applicable only to such particular taxpayer. The second exception is where the
Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all
taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot
be allowed to later on question the CTA's assumption of jurisdiction over such claim since equitable
estoppel has set in as expressly authorized under Section 246 of the Tax Code. GST's claims, however,
for the four quarters of taxable year 2004 and the first quarter of taxable year 2005 should be denied for
late filing of the petition for review before the CTA. GST filed its VAT Return for the first quarter of
2004 on April 16, 2004. For the second quarter of taxable year 2004, GST filed its administrative claim
on August 12, 2004. The 120-day period from the filing of such claim ended on December 10, 2004, and
the 30th day within which to file a judicial claim fell on January 9, 2005. For the third and fourth quarters
of taxable year 2004, GST filed its administrative claims on February 18, 2005. The 120th day, or June
18, 2005, lapsed without any action from the CIR. Thus, GST had 30 days therefrom, or until July 18,
2005, to file its judicial claim, but it did so only on March 17, 2006. Finally, for the first quarter of
taxable year 2005, GST filed its administrative claim on May 11, 2005.1 The 120-day period ended on
September 8, 2005, again with no action from the CIR. Nonetheless, GST failed to elevate its claim to the
CTA within 30 days, or until October 8, 2005. The petition for review filed by GST on March 17, 2006,
or 160 days after the last day of filing was, therefore, late.
 CIR v. Visayas Geothermal Power Company, Inc.

G.R. No. 181276

November 11, 2013

FACTS: On June 26, 2003, VGPCI filed before the BIR Revenue District No. 89 of Ormoc City a claim
for refund of unutilized input VAT payment in the amount of ₱1,142,666.32 for the third quarter of 2001.
On December 18, 2003, another claim was filed in the amount of ₱19,070,378.18 for the last quarter of
2001 and the four quarters of 2002. For failure of the BIR to act upon said claims, VGPCI filed separate
petitions for review before the CTA on September 30, 2003 and December 19, 2003, praying for a refund
on the issuance of a tax credit certificate in the amount of ₱1,142,666.32 covering the period from July to
September 2001 and ₱19,070,378.18 for the period from October 2001 to December 2002. The First
Division of the CTA partially granted the consolidated petitions for review and ordered the CIR to refund
or to issue a tax credit certificate. The CTA En Banc dismissed the CIR’s petition. The CIR subsequently
filed its Motion for Reconsideration but the same was denied by the CTA En Banc.

ISSUE: WON respondent complied with the statutory requirement.

HELD: No. Judicial claim was prematurely filed; 120+30 day period is mandatory and jurisdictional. The
Court in Aichi further made a significant pronouncement on the importance of the 120-day period granted
to the CIR to act on applications for tax refunds or tax credits under Section 112(D): Section 112(D) of
the NIRC clearly provides that the CIR has "120 days, from the date of the submission of the complete
documents in support of the application [for tax refund/credit]," within which to grant or deny the claim.
In case of full or partial denial by the CIR, the taxpayer’s recourse is to file an appeal before the CTA
within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails
to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the
CIR to CTA within 30 days. In this case, the administrative and the judicial claims were simultaneously
filed on September 30, 2004. Obviously, respondent did not wait for the decision of the CIR or the lapse
of the 120-day period. For this reason, we find the filing of the judicial claim with the CTA premature.
Respondent’s assertion that the non-observance of the 120-day period is not fatal to the filing of a judicial
claim as long as both the administrative and the judicial claims are filed within the two- year prescriptive
period has no legal basis.
 Applied Food Ingredients Company, Inc. v. CIR

G.R. No. 184266

November 11, 2013

FACTS: Petitioner alleged that from September 1998 to December 31, 2000, it paid an aggregate sum of
input taxes of ₱9,528,565.85 for its importation of food ingredients, as reported in its Quarterly Vat
Return. Subsequently, these imported food ingredients were exported between the periods of April 1,
2000 to December 31, 2000, from which the petitioner was able to generate export sales amounting to
₱114,577,937.24. The proceeds thereof were inwardly remitted to petitioner's dollar accounts with
Equitable Bank Corporation and with Australia New Zealand Bank-Philippine Branch. Petitioner alleged
that the accumulated input taxes of ₱9,528,565.85 for the period of September 1, 1998 to December 31,
2000 have not been applied against any output tax. On March 26, 2002 and June 28, 2002, petitioner filed
two separate applications for the issuance of tax credit certificates in the amounts of ₱5,385, 208.32 and
₱4,143,357.53, respectively. On July 24, 2002, in view of respondent's inaction, petitioner elevated the
case before this Court by way of a Petition for Review. The CTA First Division denied petitioner’s claim
for failure to comply with the invoicing requirements. On appeal, the CTA En Banc likewise denied the
claim of petitioner on the same ground and ruled that the latter’s sales for the subject period could not
qualify for VAT zero-rating, as the export sales invoices did not bear the following: 1) the imprinted word
"zero-rated;" 2) "TIN-VAT;" and 3) BIR’s permit number, all in violation of the invoicing requirements.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: No. To begin with, Section 112(A) provides for a two-year prescriptive period after the close of
the taxable quarter when the sales were made, within which a VAT-registered person whose sales are
zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate or refund of
creditable input tax. Applying Section 112(A), petitioner had until 30 June 2002, 30 September 2002 and
31 December 2002 − or the close of the taxable quarter when the zero-rated sales were made − within
which to file its administrative claim for refund. Thus, we find sufficient compliance with the two-year
prescriptive period when petitioner filed its claim on 26 March 2002 and 28 June 2002 covering its zero-
rated sales for the period April to September 2000 and October to December 2000, respectively. The CIR
had one hundred twenty (120) days from the date of submission of complete documents in support of the
application within which to decide on the administrative claim. Counting 120 days from 26 March 2002,
the CIR had until 24 July 2002 within which to decide on the claim of petitioner for an input VAT refund
attributable to the its zero-rated sales for the period April to September 2000. On the other hand, the CIR
had until 26 October 2002 within which to decide on petitioner’s claim for refund filed on 28 June 2002,
or for the period covering October to December 2000. Records, however, show that the judicial claim of
petitioner was filed on 24 July 2002. Petitioner clearly failed to observe the mandatory 120-day waiting
period. Consequently, the premature filing of its claim for refund/credit of input VAT before the CTA
warranted a dismissal, inasmuch as no jurisdiction was acquired by the CTA.
 CIR v. Bank of Commerce

G.R. No. 180529

November 13, 2013

FACTS: On November 9, 2001, Bank of Commerce or BOC and Traders Royal Bank or TRB executed a
Purchase and Sale Agreement whereby it stipulated the TRB’s desire to sell and the BOC’s desire to
purchase identified recorded assets of TRB in consideration of BOC assuming identified recorded
liabilities. Under the Purchase and Sale Agreement, BOC and TRB shall continue to exist as separate
corporations with distinct corporate personalities. On September 27, 2002, BOC received copies of the
Formal Letter of Demand and Assessment Notice addressed to TRB, issued by the CIR demanding
payment of the amount of ₱41,467,887.51, as deficiency documentary stamp taxes on Special Savings
Deposit account of TRB for taxable year 1999. TRB filed its protest letter. BOC received the Decision
denying the protest filed by TRB. BOC filed a Petition for Review. BOC called the attention of the CTA
2nd Division to the fact that as stated in Article III of the Purchase and Sale Agreement, it and TRB
continued to exist as separate corporations with distinct corporate personalities. The CTA 2nd Division
dismissed the petition for lack of merit. It held that the Special Savings Deposit account in issue is subject
to DST because its nature and substance are akin to that of a certificate of deposit bearing interest, which
under the then Section 180 of the NIRC, is subject to DST. The CTA 2nd Division said that since the
issue of non-merger between BOC and TRB was not raised in the administrative level, it could not be
raised for the first time on appeal. The CTA En Banc affirmed the CTA 2nd Division’s Decision and
Resolution. BOC filed before the CTA En Banc a Motion for Reconsideration. The CTA En Banc, in its
Amended Decision, reversed itself and ruled that BOC could not be held liable for the deficiency DST of
TRB on its SSD accounts.

ISSUE: WON respondent is liable for the tax deficiency.

HELD: No. The Purchase and Sale Agreement does not contain any provision that the BOC acquired the
identified assets of [TRB] solely in exchange for the latter’s stocks. The term "merger" or "consolidation",
when used in this Section, shall be understood to mean: (i) the ordinary merger or consolidation, or (ii)
the acquisition by one corporation of all or substantially all the properties of another corporation solely
for stock: Provided, [t]hat for a transaction to be regarded as a merger or consolidation within the purview
of this Section, it must be undertaken for a bona fide business purpose and not solely for the purpose of
escaping the burden of taxation. Since the purchase and sale of identified assets between the two
companies does not constitute a merger under the foregoing definition, the Bank of Commerce is
considered an entity separate from petitioner. Thus, it cannot be held liable for the payment of the
deficiency DST assessed against petitioner. One distinctive characteristic for a merger to exist under the
second part of Section 40(C)(b) of the 1997 NIRC is that, it is not enough for a corporation to acquire all
or substantially all the properties of another corporation but it is also necessary that such acquisition is
solely for stock of the absorbing corporation. After a careful perusal of the facts presented as well as the
details of the instant case, it is observed by this Office that the transaction was purely concerning
acquisition and assumption by BOC of the recorded liabilities of TRB. The Purchase and Sale Agreement
did not mention with respect to the issuance of shares of stock of BOC in favor of the stockholders of
TRB. Such transaction is absent of the requisite of a stock transfer and same belies the existence of a
merger.
 Luzon Hydro Corporation v. CIR

G.R. No. 188260

November 13, 2013

FACTS: Pursuant to the Power Purchase Agreement entered into with the NAPOCOR, the electricity
produced by the petitioner from its operation of the Bakun Hydroelectric Power Plant was to be sold
exclusively to NAPOCOR. The petitioner was granted by the BIR a certificate for Zero Rate for VAT
purposes in the periods from January 1, 2000 to December 31, 2000; February 1, 2000 to December 31,
2000; and from January 2, 2001 to December 31, 2001. The petitioner alleged herein that it had incurred
input VAT in the amount of ₱9,795,427.89 on its domestic purchases of goods and services used in its
generation and sales of electricity to NPC in the four quarters of 2001, and that it had declared the input
VAT of ₱9,795,427.89 in its amended VAT returns for the four quarters on 2001. On November 26,
2001, petitioner filed a written claim for refund or tax credit. Revenue Examiner Mangabat of Revenue
District Office No. 2 in Vigan City, concluded an investigation, and made a recommendation in its report
favorable to the petitioner’s claim for the period from January 1, 2001 to December 31, 2001. The CIR
did not ultimately act on the petitioner’s claim despite the favorable recommendation. Hence, on April 14,
2003, the petitioner filed its petition for review in the CTA, praying for the refund or tax credit certificate
(TCC) corresponding to the unutilized input VAT paid for the four quarters of 2001 totalling
₱9,795,427.88. The CIR denied the claim. While the case was pending hearing, the Commissioner,
through the Assistant Commissioner for Assessment Services, informed the petitioner that its claim had
been granted in the amount of ₱6,874,762.72. Petitioner filed a Motion for Leave of Court to Amend
Petition for Review, which was granted. The CTA in Division promulgated its decision in favor of the
respondent. It ruled that without zero-rated sales for the four quarters of 2001, the input VAT payments of
Ph₱9,795,427.88 allegedly attributable thereto cannot be refunded. The CTA en banc affirmed the said
decision.

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: No. A claim for refund or tax credit for unutilized input VAT may be allowed only if the
following requisites concur, namely: (a) the taxpayer is VAT-registered; (b) the taxpayer is engaged in
zero-rated or effectively zero-rated sales; (c) the input taxes are due or paid; (d) the input taxes are not
transitional input taxes; (e) the input taxes have not been applied against output taxes during and in the
succeeding quarters; (f) the input taxes claimed are attributable to zero-rated or effectively zero-rated
sales; (g) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the
acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules
and regulations of the Bangko Sentral ng Pilipinas; (h) where there are both zero-rated or effectively zero-
rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to
any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (i)
the claim is filed within two years after the close of the taxable quarter when such sales were made. The
petitioner did not competently establish its claim for refund or tax credit. As the CTA En Banc precisely
found, the petitioner did not reflect any zero-rated sales from its power generation in its four quarterly
VAT returns, which indicated that it had not made any sale of electricity.
 CIR v. Dash Engineering Philippines, Inc.

G.R. No. 184145

December 11, 2013

FACTS: Respondent filed its monthly and quarterly VAT returns for the period from January 1, 2003 to
June 30, 2003. On August 9, 2004, it filed a claim for tax credit or refund in the amount of P 2,149,684.88
representing unutilized input VAT attributable to its zero-rated sales. Because the CIR failed to act upon
the said claim, respondent was compelled to file a petition for review with the CTA. On October 4, 2007,
the Second Division of the CTA rendered its Decision partially granting respondent’s claim for refund or
issuance of a tax credit certificate in the reduced amount of P 1,147,683.78. On the matter of the
timeliness of the filing of the judicial claim, the Tax Court found that respondent’s claims for refund for
the first and second quarters of 2003 were filed within the two-year prescriptive period which is counted
from the date of filing of the return and payment of the tax due. Because respondent filed its amended
quarterly VAT returns for the first and second quarters of 2003 on July 24, 2004, it had until July 24,
2006 to file its judicial claim. As such, its filing of a petition for review with the CTA on April 26, 2005
was within the prescriptive period. Petitioner elevated the case to the CTA en banc, where it argued that
respondent failed to show that (1) its purchases of goods and services were made in the course of its trade
and business, (2) the said purchases were properly supported by VAT invoices and/or official receipts and
other documents, and (3) that the claimed input VAT payments were directly attributable to its zero-rated
sales. Petitioner also averred that the petition for review was filed out of time. The CTA en banc upheld
the said decision.

ISSUE: WON respondent complied with the statutory requirements for tax refund.

HELD: Yes. 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 Subsections (A) and (B) 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. Petitioner is entirely correct in its assertion that compliance with the periods provided for in the
abovequoted provision is indeed mandatory and jurisdictional. The case at bench, however, does not
involve the issue of premature filing of the petition for review with the CTA. Rather, this petition seeks
the denial of DEPI’s claim for refund for having been filed late or after the expiration of the 30-day
period from the denial by the CIR or failure of the CIR to make a decision within 120 days from the
submission of the documents in support of respondent’s administrative claim. The Court has held time
and again that taxes are the lifeblood of the government and, consequently, tax laws must be faithfully
and strictly implemented as they are not intended to be liberally construed. Hence, We are left with no
other recourse but to deny respondent's judicial claim for refund for non-compliance with the provisions
of Section 112 of the NIRC.
 Team Energy Corporation v. CIR

G.R. No. 197760

January 13, 2014

FACTS: On December 17, 2004, petitioner filed with the BIR Audit Information, Tax Exemption and
Incentives Division an Application for VAT Zero-Rate for the supply of electricity to the NPC from
January 1, 2005 to December 31, 2005, which was subsequently approved. Petitioner filed with the BIR
its Quarterly VAT Returns for the first three quarters of 2005 on April 25, 2005, July 26, 2005, and
October 25, 2005, respectively. Likewise, petitioner filed its Monthly VAT Declaration for the month of
October 2005 on November 21, 2005. On December 20, 2006, petitioner filed an administrative claim for
cash refund or issuance of tax credit certificate corresponding to the input VAT reported in its Quarterly
VAT Returns for the first three quarters of 2005 and Monthly VAT Declaration for October 2005 in the
amount of ₱80,136,251.60. During trial, petitioner presented documentary and testimonial evidence.
Respondent, on the other hand, waived his right to present evidence. The CTA Special First Division
partially granted petitioner’s claim for refund or issuance of tax credit certificate. The CTA Special First
Division rendered an Amended Decision granting respondent’s Motion for Reconsideration. Petitioner
then filed a Petition for Review with the CTA En Banc arguing that the requirement to exhaust the 120-
day period for respondent to act on its administrative claim for input VAT refund/credit under Section
112 (C) of the NIRC is merely a species of the doctrine of exhaustion of administrative remedies and is,
therefore, not jurisdictional. The CTA En Banc denied the petition for lack of merit. Petitioner filed a
Motion for Reconsideration. However, the same was denied.

ISSUE: WON the CTA has jurisdiction to take cognizance of the case.

HELD: Yes. It is clear that a VAT-registered taxpayer claiming for refund or tax credit of their excess and
unutilized input VAT must file their administrative claim within two years from the close of the taxable
quarter when the sales were made. After that, the taxpayer must await the decision or ruling of denial of
its claim, whether full or partial, or the expiration of the 120-day period from the submission of complete
documents in support of such claim. Once the taxpayer receives the decision or ruling of denial or
expiration of the 120-day period, it may file its petition for review with the CTA within thirty (30) days.
In the Aichi case, this Court ruled that the 120-30-day period in Section 112 (C) of the NIRC is
mandatory and its non-observance is fatal to the filing of a judicial claim with the CTA. BIR Ruling No.
DA-489-03 is a general interpretative rule because it is a response to a query made, not by a particular
taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One
Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. Clearly, 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 120-130 day periods are mandatory and jurisdictional. In
the present case, petitioner filed its judicial claim on April 18, 2007 or after the issuance of BIR Ruling
No. DA-489-03 on December 10, 2003 but before October 6, 2010, the date when the Aichi case was
promulgated. Thus, even though petitioner’s judicial claim was prematurely filed without waiting for the
expiration of the 120-day mandatory period, the CTA may still take cognizance of the instant case as it
was filed within the period exempted from the 120-30-day mandatory period.
 Team Energy Corporation v. CIR

G.R. No. 190928

January 13, 2014

FACTS: Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court for G.R. No.
197760, which seeks to reverse and set aside the Decision and Resolution of the Court of Tax Appeals En
Banc in CTA EB No. 422 which modified the Decision and Resolution of the CT A First Division insofar
as it reduced the amount of refund granted from ₱69 618 971.19 to ₱51 134 951.40.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: Yes, partially. It is clear that the two-year prescriptive period provided in Section 112 (A) of the
NIRC of 1997, as amended, should be counted not from the payment of the tax, but from the close of the
taxable quarter when the sales were made. Record shows that respondent filed its administrative claim for
refund or issuance of a TCC on December 22, 2003, while the judicial claim for refund was filed on April
22, 2004. Since respondent filed its judicial claim for refund for the four quarters of 2002, only on April
22, 2004, twenty-two (22) days from March 31, 2004, the last day prescribed by the Mirant Case,
respondent is barred from claiming refund of its unutilized input taxes for the first quarter of 2002.
Therefore, the claim for refund granted by the First Division of this Court in the amount of
₱69,618,971.19 should be reduced by deducting the portion of the claim corresponding to the first quarter
that had already prescribed. Section 112 (A) and (C) must be interpreted according to its clear, plain and
unequivocal language. The taxpayer can file his administrative claim for refund or credit at any time
within the two-year prescriptive period. If he files his claim on the last day of the two-year prescriptive
period, his claim is still filed on time. The Commissioner will have 120 days from such filing to decide
the claim. If the Commissioner decides the claim on the 120th day, or does not decide it on that day, the
taxpayer still has 30 days to file his judicial claim with the CTA. This is not only the plain meaning but
also the only logical interpretation of Section 112 (A) and (C). Based on the aforequoted discussions, we
therefore disagree with the CTA En Banc’s finding that petitioner’s judicial claim for the first quarter of
2002 was not timely filed.
 CBK Power Company, Ltd. v. CIR

G.R. 198729-30

January 15, 2014

FACTS: On 29 December 2004, petitioner filed an Application for VAT Zero-Rate with the BIR in
accordance with Section 108(B)(3) of the NIRC of 1997, as amended. The application was duly approved
by the BIR. Thus, petitioner’s sale of electricity to the NPC from 1 January 2005 to 31 October 2005 was
declared to be entitled to the benefit of effectively zero-rated VAT. Petitioner filed its administrative
claims for the issuance of tax credit certificates for its alleged unutilized input taxes on its purchase of
capital goods and alleged unutilized input taxes on its local purchases and/or importation of goods and
services, other than capital goods with BIR Revenue District Office No. 55 of Laguna. Alleging inaction
of the CIR, petitioner filed a Petition for Review with the CTA on 18 April 2007. The CTA Special
Second Division applied the Mirant principle. Accordingly, petitioner timely filed its administrative
claims for the three quarters of 2005. However, considering that the judicial claim was filed on 18 April
2007, the CTA Division denied the claim for the first quarter of 2005 for having been filed out of time.
After an evaluation of petitioner’s claim for the second and third quarters of 2005, the court a quo partly
granted the claim and ordered the issuance of a tax credit certificate in favor of petitioner in the reduced
amount of ₱27,170,123.36. The parties filed their respective Motions for Partial Reconsideration, which
were both denied by the CTA Division. On appeal, relying on the Aichi case, the CTA En Banc ruled that
petitioner’s judicial claim for the first, second, and third quarters of 2005 were belatedly filed.

ISSUE: WON the claim for tax refund/tax credit was filed within the statutory period.

HELD: No. As aptly ruled by the CTA Special Second Division, petitioner’s sales to NPC are effectively
subject to zero percent (0%) VAT. We agree with petitioner that Mirant was not yet in existence when
their administrative claim was filed in 2005; thus, it should not retroactively be applied to the instant case.
Section 112(A) is clear that for VAT-registered persons whose sales are zero-rated or effectively zero-
rated, a claim for the refund or credit of creditable input tax that is due or paid, and that is attributable to
zero-rated or effectively zero-rated sales, must be filed within two years after the close of the taxable
quarter when such sales were made. The reckoning frame would always be the end of the quarter when
the pertinent sale or transactions were made, regardless of when the input VAT was paid. Pursuant to
Section 112(A), petitioner’s administrative claims were filed well within the two-year period from the
close of the taxable quarter when the effectively zero-rated sales were made. Thereafter, the taxpayer
affected by the CIR’s decision or inaction may appeal to the CTA within 30 days from the receipt of the
decision or from the expiration of the 120-day period within which the claim has not been acted upon.
Considering further that the 30-day period to appeal to the CTA is dependent on the 120-day period,
compliance with both periods is jurisdictional. The period of 120 days is a prerequisite for the
commencement of the 30-day period to appeal to the CTA. Likewise, while petitioner filed its
administrative and judicial claims during the period of applicability of BIR Ruling No. DA-489-03, it
cannot claim the benefit of the exception period as it did not file its judicial claim prematurely, but did so
long after the lapse of the 30-day period following the expiration of the 120-day period. Again, BIR
Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means non-exhaustion of the
120-day period for the Commissioner to act on an administrative claim, but not its late filing.
 CIR v. Mindanao II Geothermal Partnership

G.R. 191498

January 15, 2014

FACTS: Mindanao II filed its Quarterly VAT Returns for the second, third and fourth quarters of taxable
year 2004. On 6 October 2005, Mindanao II filed with the Bureau of Internal Revenue (BIR) an
application for the refund or credit of accumulated unutilized creditable input taxes. In support of the
administrative claim for refund or credit, Mindanao II alleged, among others, that it is registered with the
BIR as a value-added taxpayer and all its sales are zero-rated under the EPIRA law. Mindanao II could
treat the inaction of the CIR as a denial of its claim, in which case, the former would have 30 days to file
an appeal to the CTA, that is, on 5 March 2006. Mindanao II, however, did not file an appeal within the
30-day period. On 8 June 2007, while the application for refund or credit of unutilized input VAT of
Mindanao II was pending before the CTA Second Division, this Court promulgated Atlas v. CIR. Atlas
held that the two-year prescriptive period for the filing of a claim for an input VAT refund or credit is to
be reckoned from the date of filing of the corresponding quarterly VAT return and payment of the tax.
The CTA Second Division rendered a Decision ordering the CIR to grant a refund or a tax credit
certificate, but only in the reduced amount of ₱6,791,845.24. In support of its ruling, the CTA Second
Division held that Mindanao II complied with the twin requisites for VAT zero-rating under the EPIRA
law. As to the second requisite, however, the input tax claim to the extent of ₱375,160.60 corresponding
to purchases of services from Mitsubishi Corporation was disallowed, since it was not substantiated by
official receipts. The CIR filed a Motion for Partial Reconsideration, pointing out that prescription had
already set in, since the appeal to the CTA was filed only on 21 July 2006, which was way beyond the last
day to appeal. The CTA Second Division denied the CIR’s Motion for Partial Reconsideration. The CTA
En Banc rendered its Decision denying the CIR’s Petition for Review. The CIR filed a Motion for Partial
Reconsideration but it was denied for lack of merit.

ISSUE: WON the respondent’s claim for tax refund was filed within the prescriptive period.

HELD: No. Under Section 229, the prescriptive period for filing a judicial claim for refund is two years
from the date of payment of the tax excessively or in any manner wrongfully collected. The prescriptive
period is reckoned from the date the person liable for the tax pays the tax. In this case, Mindanao II filed
its administrative claims for refund or credit for the second, third and fourth quarters of 2004 on 6
October 2005. In other words, it is covered by the rule prior to the advent of either Atlas or Mirant.
Accordingly, the proper reckoning date in this case, as provided by Section 112(A) of the 1997 Tax Code,
is the close of the taxable quarter when the relevant sales were made. Notwithstanding the timely filing of
the administrative claims, we find that the CTA En Banc erred in holding that Mindanao II’s judicial
claims were timely filed. The 30-day period applies not only to instances of actual denial by the CIR of
the claim for refund or tax credit, but to cases of inaction by the CIR as well. Mindanao II filed its
administrative claim for refund or credit for the second, third, and fourth quarters of 2004 on 6 October
2005. The CIR, therefore, had a period of 120 days, or until 3 February 2006, to act on the claim. The
CIR, however, failed to do so. Mindanao II then could treat the inaction as a denial and appeal it to the
CTA within 30 days from 3 February 2006, or until 5 March 2006. Mindanao II, however, filed a Petition
for Review only on 21 July 2006, 138 days after the lapse of the 30-day period on 5 March 2006. The
judicial claim was therefore filed late.
 CIR v. Toledo Power, Inc.

G.R. No. 183880

January 20, 2014

FACTS: On June 20, 2002, petitioner filed an application with the ERC for the issuance of a Certificate
of Compliance pursuant to the IRR of R.A. 9136 or EPIRA. On October 25, 2001, petitioner filed with
the BIR Revenue District Office No. 83 at Toledo City its Quarterly VAT Return for the third quarter of
2001. However, an amended Quarterly VAT Return for the same quarter of 2001 was filed on November
22, 2001. The amended return shows unutilized input VAT credits of ₱5,909,588.96 arising from
petitioner’s taxable purchases for the third quarter of 2001. Thus, for the third quarter of 2001, petitioner
allegedly has unutilized input VAT in the total amount of ₱5,909,588.96 on its domestic purchase of
taxable goods and services and importation of goods, which purchases and importations are all
attributable to its zero-rated sale of power generation services to NPC, CEBECO, Atlas Consolidated
Mining and Development Corporation, Atlas Fertilizer Corporation and Cebu Industrial Park
Development. For the third and fourth quarters of 2001, petitioner incurred and accumulated input VAT
from its domestic purchase of goods and services. Petitioner filed with the BIR RDO No. 83, an
administrative claim for refund or unutilized input VAT for the third and fourth quarter of 2001 in the
amounts of ₱5,909,588.96 and ₱3,219,781.31, respectively, or the aggregate amount of ₱9,129,370.27.
The CIR has not ruled upon petitioner’s administrative claim and in order to preserve its right to file a
judicial claim for the refund or issuance of a tax credit certificate of its unutilized input VAT, petitioner
filed a Petition for Review to suspend the running of the two-year prescriptive period. On October 24,
2003, petitioner filed a Petition for Review for the refund or issuance of a tax credit certificate in the
amount of ₱5,909,588.96 for the third quarter of 2001. On January 22, 2004, filed another Petition for
Review for the refund or issuance of tax credit certificate in the amount of ₱3,219,781.31 for the fourth
quarter of 2001. The CTA First Division issued a Decision partially granting Toledo Power, Inc.’s refund
claim or issuance of tax credit certificate. On appeal to the CTA En Banc, the CIR argued that TPI failed
to comply with the invoicing requirements to prove entitlement to the refund or issuance of tax credit
certificate. The CTA En Banc affirmed with modification the First Division’s assailed decision.

ISSUE: WON respondent is entitled to a tax refund.

HELD: No. When Section 112 (C) states that "the taxpayer affected may, within thirty (30) days from
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 law does not make the
120+30 day periods optional just because the law uses the word "may." The word "may" simply means
that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of
the decision, or within 30 days from the expiration of the 120-day period. Certainly by no stretch of the
imagination can the word "may" be construed as making the 120+30 day periods optional, allowing the
taxpayer to file a judicial claim one day after filing the administrative claim with the Commissioner. One
of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the
120+30 day mandatory and jurisdictional periods. In the present case, however, it appears that TPI’s
judicial claims for refund of its unutilized input VAT covering the third and fourth quarters of 2001 were
prematurely filed on October 24, 2003 and January 22, 2004, respectively.
 CIR v. Team Sual Corporation

G.R. No. 194105

February 5, 2014

FACTS: On November 26, 1999, the CIR granted TSC's application for zero-rating arising from its sale
of power generation services to NPC for the taxable year 2000. As a VAT-registered entity, TSC filed its
VAT returns for the first, second, third, and fourth quarters of taxable year 2000 on April 24, 2000, July
25, 2000, October 25, 2000, and January 25, 2001, respectively. On March 11, 2002, TSC filed with the
BIR an administrative claim for refund, claiming that it is entitled to the unutilized input VAT in the
amount of ₱179,314,926.56. Without awaiting the CIR's resolution of its administrative claim for
refund/tax credit, TSC filed a petition for review with the CTA seeking the refund or the issuance of a tax
credit certificate. The CIR claimed that TSC's claim for refund/tax credit should be denied, asserting that
TSC failed to comply with the conditions precedent for claiming refund/tax credit of unutilized input
VAT. The CTA First Division granted TSC's claim. Nevertheless, the CTA First Division found that,
from the total unutilized input VAT of ₱179,314,926.56 that it claimed, TSC was only able to substantiate
the amount of ₱173,265,261.30. The CIR’s motion for reconsideration was denied. The CTA en banc
affirmed the assailed Decision.

ISSUE: WON the respondent complied with the statutory period for filing claims for tax refund.

HELD: No. Section 112(C) of the NIRC clearly provides that the CIR has "120 days, from the date of the
submission of the complete documents in support of the application [for tax refund/credit]," within which
to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to file an
appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after the 120-
day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to
appeal the inaction of the CIR to CTA within 30 days. In this case, the administrative and the judicial
claims were simultaneously filed on September 30, 2004. Obviously, respondent did not wait for the
decision of the CIR or the lapse of the 120-day period. For this reason, we find the filing of the judicial
claim with the CTA premature. Even if TSC was able to substantiate, through the documents it submitted,
that it is indeed entitled to a refund/tax credit of its unutilized input VAT for the taxable year 2000, its
claim would still have to be denied. "Tax refunds are in the nature of tax exemptions, and are to be
construed strictissimi Juris against the entity claiming the same." TSC, in prematurely filing a petition for
review with the CTA, failed to comply with the 120-day mandatory period under Section 112(C) of the
NIRC. Thus, TSC's claim for refund/tax credit of its unutilized input VAT should be denied.
 CIR v. Pilipinas Shell Petroleum Corporation

G.R. No. 188497

February 19, 2014

FACTS: For resolution are the Motion for Reconsideration dated May 22, 2012 and Supplemental Motion
for Reconsideration dated December 12, 2012 filed by respondent. Respondent argues that a plain reading
of Section 135 of the NIRC reveals that it is the petroleum products sold to international carriers which
are exempt from excise tax for which reason no excise taxes are deemed to have been due in the first
place. It points out that excise tax being an indirect tax, Section 135 in relation to Section 148 should be
interpreted as referring to a tax exemption from the point of production and removal from the place of
production considering that it is only at that point that an excise tax is imposed. Respondent also contends
that our ruling that Section 135 only prohibits local petroleum manufacturers like respondent from
shifting the burden of excise tax to international carriers has adverse economic impact as it severely
curtails the domestic oil industry. Respondent asserts that the imposition by the Philippine Government of
excise tax on petroleum products sold to international carriers is in violation of the Chicago Convention
on International Aviation to which it is a signatory, as well as other international agreements. In his
Comment, the Solicitor General underscores the statutory basis of this Court’s ruling that the exemption
under Section 135 does not attach to the products.

ISSUE: WON the tax exemption applies to petroleum products at the point of production.

HELD: No. Under Section 129 of the NIRC, excise taxes are those applied to goods manufactured or
produced in the Philippines for domestic sale or consumption or for any other disposition and to things
imported. Excise taxes as used in our Tax Code fall under two types – (1) specific tax which is based on
weight or volume capacity and other physical unit of measurement, and (2) ad valorem tax which is based
on selling price or other specified value of the goods. Aviation fuel is subject to specific tax under Section
148 (g) which attaches to said product "as soon as they are in existence as such." That excise tax as
presently understood is a tax on property has no bearing at all on the issue of respondent’s entitlement to
refund. Nor does the nature of excise tax as an indirect tax supports respondent’s postulation that the tax
exemption provided in Sec. 135 attaches to the petroleum products themselves and consequently the
domestic petroleum manufacturer is not liable for the payment of excise tax at the point of production. On
the basis of Philippine Acetylene, we held that a tax exemption being enjoyed by the buyer cannot be the
basis of a claim for tax exemption by the manufacturer or seller of the goods for any tax due to it as the
manufacturer or seller. The excise tax imposed on petroleum products under Section 148 is the direct
liability of the manufacturer who cannot thus invoke the excise tax exemption granted to its buyers who
are international carriers. Excise tax on aviation fuel used for international flights is practically nil as most
countries are signatories to the 1944 Chicago Convention. The Chicago Convention, which established
the legal framework for international civil aviation, did not deal comprehensively with tax matters. Article
24 (a) of the Convention simply provides that fuel and lubricating oils on board an aircraft of a
Contracting State, on arrival in the territory of another Contracting State and retained on board on leaving
the territory of that State, shall be exempt from customs duty, inspection fees or similar national or local
duties and charges. Subsequently, the exemption of airlines from national taxes and customs duties on
spare parts and fuel has become a standard element of bilateral air service agreements (ASAs) between
individual countries.
 Silicon Philippines, Inc. v. CIR

G.R. Nos. 184360, 184361 & 184384

February 19, 2014

FACTS: For the 1st quarter of 1999, Silicon seasonably filed its Quarterly VAT Return on April 22, 1999
reflecting, among others, output VAT in the amount of ₱145,316.96; input VAT on domestic purchases in
the amount of ₱20,041,888.41; input VAT on importation of goods in the amount of ₱44,560,949.00; and
zero-rated export sales in the sum of ₱929,186,493.91. On August 6, 1999, Silicon filed with the CIR,
through its One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center, a claim for tax credit or
refund of ₱64,457,520.45 representing VAT input taxes on its domestic purchases of goods and services
and importation of goods and capital equipment which are attributable to zero-rated sales for the period
January 1, 1999 to March 31, 1999. Due to the inaction of the CIR, Silicon filed a Petition for Review
with the CTA on March 30, 2001, to toll the running of the two-year prescriptive period. CIR contends
that that Silicon failed to show compliance with the substantiation requirements and that it has not shown
proof that the alleged domestic purchases of goods and services and importation of goods/capital
equipment are attributable to its export sales or have not yet been applied to the output tax for the period
covered in its claim. The CTA Second Division denied Silicon’s claim for refund. It held that the export
sales invoices have no probative value in establishing its zero-rated sales for VAT purposes as the same
were not duly registered with the BIR. Silicon filed a motion for reconsideration, but the motion was
denied. The CTA En Banc rendered the herein first assailed Decision partially granting the petition for
review and ordering the CIR to refund or issue a tax credit certificate in favor of Silicon Philippines in the
reduced amount of ₱2,139,431.00 representing its unutilized input VAT attributable to its zero-rated sales
for the period April 1, 2000 to June 30, 2000.

ISSUE: WON the CTA en banc correctly denied Silicon’s claim for tax refund.

HELD: Yes. When Section 112(C) states that "the taxpayer affected may, within thirty (30) days from
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 law does not make the
120+30 day periods optional just because the law uses the word "may." The word "may" simply means
that the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of
the decision, or within 30 days from the expiration of the 120-day period. After a careful perusal of the
records in the instant case, we find that Silicon’s judicial claims were filed late and way beyond the
prescriptive period. Silicon filed its Quarterly VAT Return for the 1st quarter of 1999 on April 22, 1999
and subsequently filed on August 6, 1999 a claim for tax credit or refund of its input VAT taxes for the
same period. From August 6, 1999, the CIR had until December 4, 1999, the last day of the 120-day
period, to decide Silicon’s claim for tax refund. But since the CIR did not act on Silicon’s claim on or
before the said date, Silicon had until January 3, 2000, the last day of the 30-day period to file its judicial
claim. However, Silicon failed to file an appeal within 30 days from the lapse of the 120-day period, and
it only filed its petition for review with the CTA on March 30, 2001 which was 451 days late. Similarly,
Silicon’s claim for tax refund for the second quarter of 2000 should have been dismissed for having been
filed out of time. With the inaction of the CIR to decide on the claim which was deemed a denial of the
claim for tax credit or refund, Silicon had until January 7, 2001 or 30 days from December 8, 2000 to file
its petition for review with the CTA.
 Proctor & Gamble Asia PTE, Ltd. v. CIR

G.R. No. 202071

February 19, 2014

FACTS: On 26 September and 13 December 2006, petitioner filed administrative claims with the BIR for
the refund or credit of the input VAT attributable to the former’s zero-rated sales covering the periods 1
July-30 September 2004 and 1 October-31 December 2004, respectively. On 2 October and 29 December
2006, petitioner filed judicial claims, respectively, for the aforementioned refund or credit of its input
VAT. On 17 January 2011, the CTA First Division dismissed the judicial claims for having been
prematurely filed. It ruled that petitioner had failed to observe the mandatory 120-day waiting period to
allow the CIR to decide on the administrative claim. Petitioner’s Motion for Reconsideration was denied.
Petitioner thereafter filed a Petition for Review before the CTA En Banc. The latter, however, issued the
assailed Decision affirming the ruling of the CTA First Division. Petitioner filed the present petition
arguing mainly that the 120-day waiting period, reckoned from the filing of the administrative claim for
the refund or credit of unutilized input VAT before the filing of the judicial claim, is not jurisdictional.
According to petitioner, the premature filing of its judicial claims was a mere failure to exhaust
administrative remedies, amounting to a lack of cause of action. When respondent did not file a motion to
dismiss based on this ground and opted to participate in the trial before the CTA, it was deemed to have
waived such defense.

ISSUE: WON petitioner complied with the statutory period.

HELD: Yes. Respondent counters that the 120-day period to file judicial claims for a refund or tax credit
is mandatory and jurisdictional. Failure to comply with the waiting period violates the doctrine of
exhaustion of administrative remedies, rendering the judicial claim premature. Thus, the CTA does not
acquire jurisdiction over the judicial claim. Respondent is correct on this score. However, it fails to
mention that San Roque also recognized the validity of BIR Ruling No. DA-489-03. The ruling expressly
states that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek
judicial relief with the CTA by way of Petition for Review." The Court, in San Roque, ruled that equitable
estoppel had set in when respondent issued BIR Ruling No. DA-489-03. This was a general interpretative
rule, which effectively misled all taxpayers into filing premature judicial claims with the CTA. Thus,
taxpayers could rely on the ruling from its issuance on 10 December 2003 up to its reversal on 6 October
2010, when CIR v. Aichi Forging Company of Asia, lnc. was promulgated. The judicial claims in the
instant petition were filed on 2 October and 29 December 2006, well within the ruling's period of
validity.
 CIR v. Silicon Philippines, Inc.

G.R. No. 169778

March 12, 2014

FACTS: On 6 May 1999, respondent filed with the One-Stop Shop Inter- Agency Tax Credit and Duty
Drawback Center an application for Tax Credit/Refund of VAT paid for the second quarter of 1998 in the
aggregate amount of P29,559,050.44, representing its alleged unutilized input tax. Since no final action
has been taken by petitioner on respondent’s administrative claim for refund, respondent filed a Petition
for Review before the CTA on 30 June 2000. The CTA partially granted respondent’s Petition and
ordered petitioner to issue a tax credit certificate in favor of the former in the reduced amount of
P8,179,049.00. The CTA denied respondent’s claim for refund of input VAT on domestic purchases of
goods and services attributable to zero-rated sales on the ground that the export sales invoices presented
in support thereto do not have BIR permit to print, while the sales invoices do not show that the sale was
"zero-rated," all in violation of Sections 113 and 238 of the NIRC. The CTA denied respondent’s Partial
Motion for Reconsideration. The CA found that respondent’s failure to secure a BIR authority or permit
to print invoices or receipts does not completely destroy the integrity of its export sales invoices in
support of its claim for refund, since the BIR permit to print is not among those required to be stated in
the sales invoices or receipts to be issued by a taxpayer. Moreover, it was the CA’s ruling that the
omission to reflect the word "zero-rated" in its invoices is not fatal to respondent’s case considering that
the absence of the word "zero-rated" in the invoices.

ISSUE: WON the respondent is entitled to a tax refund/tax credit.

HELD: No. We summarize the rules on the determination of the prescriptive period for filing a tax refund
or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code, as follows: (1)An
administrative claim must be 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. This Court is
mindful that when respondent filed its administrative claim on 6 May 1999, and its corresponding judicial
claim on 30 June 2000, the NIRC of 1997 was already in effect. Clearly therefore, the strict observance in
applying the provisions of Section 112 of the NIRC of 1997 is proper. Hence, failure of respondent to
observe the 30-day period under said Section through its belated filing of the Petition for Review before
the CTA warrants a dismissal with prejudice for lack of jurisdiction.
 CS Garment, Inc. v. CIR

G.R. No. 182399

March 12, 2014

FACTS: Petitioner is registered with the PEZA. It is engaged in the business of manufacturing garments
for sale abroad. On November 24, 1999, petitioner received from respondent CIR a Letter of Authority,
authorizing the examination of petitioner’s books of accounts and other accounting records for all internal
revenue taxes covering the period January 1, 1998 to December 31, 1998. Petitioner received five formal
demand letters with accompanying Assessment Notices from respondent, through the Office of the
Revenue Director of San Pablo City, requiring it to pay the alleged deficiency VAT, Income, DST and
withholding tax assessments for taxable year 1998 in the aggregate amount of ₱2,046,580. On November
20, 2001, or within the 30-day period prescribed under Section 228 of the Tax Code, petitioner filed a
formal written protest with the respondent. Respondent failed to act with finality on the protest filed by
petitioner within the period of one hundred eighty days. The Second Division cancelled respondent’s
assessment against CS Garments for deficiency expanded withholding taxes for CY 1998 amounting to
₱47,880.00, and partially cancelled the deficiency DST assessment amounting to ₱1,963.00. However,
the Second Division upheld the validity of the deficiency income tax assessments by subjecting the
disallowed expenses in the amount of ₱14,851,478.83 and a portion of the undeclared local sales
₱1,541,936.60 (amounting to ₱1,500,000.00) to income tax at the special rate of 5%. The CTA en banc
affirmed the Decision and Resolution of the CTA Second Division. The CTA ruled that Section 2, Rule
XX of the PEZA Rules, which enumerates the specific deductions for ECOZONE Export Enterprises,
does not mention certain claims of petitioner as allowable deductions. CS Garment filed the present
Petition for Review assailing the Decision of the CTA en banc.

ISSUE: WON petitioner is immune from paying the deficiency taxes.

HELD: No. Neither the law nor the implementing rules state that a court ruling that has not attained
finality would preclude the availment of the benefits of the Tax Amnesty Law. Both R.A. 9480 and DOF
Order No. 29-07 are quite precise in declaring that tax cases subject of final and executory judgment by
the courts" are the ones excepted from the benefits of the law. The BIR’s inclusion of "issues and cases
which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of
the taxpayer" as one of the exceptions in RMC 19-2008 is misplaced. RA 9480 is specifically clear that
the exceptions to the tax amnesty program include "tax cases subject of final and executory judgment by
the courts." While tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer
and liberally in favor of the taxing authority, it is also a well-settled doctrine that the rule-making power
of administrative agencies cannot be extended to amend or expand statutory requirements or to embrace
matters not originally encompassed by the law. Considering the completion of the aforementioned
requirements, we find that petitioner has successfully availed itself of the tax amnesty benefits granted
under the Tax Amnesty Law. Therefore, we no longer see any need to further discuss the issue of the
deficiency tax assessments. CS Garment is now deemed to have been absolved of its obligations and is
already immune from the payment of taxes, including the assessed deficiency in the payment of VAT,
DST, and income tax as affirmed by the CTA en banc, as well as of the additions thereto.
 CIR v Team Philippines Operations Corporation

G.R. No. 179260

April 2, 2014

FACTS: On 30 April 2001, respondent secured from the SEC its Certificate of Filing of Amended
Articles of Incorporation, reflecting its change of name from Southern Energy Asia-Pacific Operations
(Phils.), Inc. to Mirant Operations Corporation. Prior to its use of the name Southern Energy Asia-Pacific
Operations (Phils.), Inc., respondent operated under the corporate names CEPA Operations. In line with
its primary purpose, respondent entered into Operating and Management Agreements with Mirant
Pagbilao Corporation or MPC and Mirant Sual Corporation or MSC to provide MPC and MSC with
operation and maintenance services in connection with the operation, construction and commissioning of
the coal-fired thermal power stations situated in Pagbilao, Quezon and Sual, Pangasinan, respectively.
Payments received by respondent from MPC and MSC relative to the said agreements were allegedly
subjected to creditable withholding taxes. On 15 April 2002, respondent filed its 2001 income tax return
with the BIR, reporting an income tax overpayment in the amount of ₱69,562,412.00 arising from
unutilized creditable taxes withheld during the year. On 19 March 2003, respondent filed with the BIR, a
letter requesting for the refund or issuance of a tax credit certificate corresponding to its reported
unutilized creditable withholding taxes for taxable year 2001. Respondent filed a Petition for Review
before the CTA, in order to toll the running of the two-year prescriptive period. The CTA in Division
granted respondent’s Petition and ordered petitioner to refund or issue a tax credit certificate in favor of
the former the entire amount of ₱69,562,412.00. The CTA En Banc affirmed in toto both the aforesaid
Decision and Resolution rendered by the CTA in Division.

ISSUE: WON respondent is entitled to a tax refund/tax credit.

HELD: Yes. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly
income taxes paid, the excess amount shown on its final adjustment return may be carried over and
credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding
taxable years. Once the option to carry-over and apply the excess quarterly income tax against income tax
due for the taxable quarters of the succeeding taxable years has been made, such option shall be
considered irrevocable for that taxable period and no application for cash refund or issuance of a tax
credit certificate shall be allowed therefor. Here, it is undisputed that the claim for refund was filed within
the two-year prescriptive period prescribed. Respondent filed its income tax return for taxable year 2001
on 15 April 2002. Counting from said date, it indeed had until 14 April 2004 within which to file its claim
for refund or issuance of tax credit certificate in its favor both administratively and judicially. Thus,
petitioner’s administrative claim and petition for review filed on 19 March 2003 and 27 March 2003,
respectively, fell within the abovementioned prescriptive period. Likewise, respondent was able to present
various certificates of creditable tax withheld at source from its payors, MPC and MSC, for taxable year
2001, showing creditable withholding taxes. Lastly, in compliance with Section 76 of the NIRC of 1997,
as amended, respondent opted to be refunded of its unutilized tax credit, and the same was not carried
over in its 2002 income tax return; therefore, the entire amount of ₱69,562,412.00 may be a proper
subject of a claim for refund/tax credit certificate.
 Coca Cola Bottlers Philippines, Inc. v. City of Manila

G.R. No. 197561

April 7, 2014

FACTS: This case springs from the Decision rendered by the RTC-Manila in a previous case, granting
petitioner’s request for tax refund or credit assessed under Section 21 of the Revenue Code of Manila
upon finding that there was double taxation in the imposition of local business taxes. Aggrieved by the
foregoing, respondents herein appealed to the CA. The CA issued a Resolution dismissing respondents’
appeal on the ground that the same was improperly brought to the said Court. This Court promulgated a
Resolution denying the Petition for Review filed by the respondents. On June 3, 2010, petitioner filed
with the RTC-Manila a Motion for Execution for the enforcement of the Decision dated September 28,
2001 and the issuance of the corresponding writ of execution, which was granted. Respondents filed a
Motion to Quash Writ of Execution. In response, petitioner filed its Opposition thereto. The RTC granted
the Motion to Quash. Herein petitioner filed a Motion for Reconsideration, but the same was denied by
the RTC-Manila reasoning that both tax refund and tax credit involve public funds.

ISSUE: WON petitioner is entitled to a tax refund/tax credit.

HELD: Yes. Instead of moving for the issuance of a writ of execution relative to the aforesaid Decision,
petitioner should have merely requested for the approval of the City of Manila in implementing the tax
refund or tax credit, whichever is appropriate. In other words, no writ was necessary to cause the
execution thereof, since the implementation of the tax refund will effectively be a return of funds by the
City of Manila in favor of petitioner while a tax credit will merely serve as a deduction of petitioner’s tax
liabilities in the future. In fact, Section 252 (c) of the Local Government Code of the Philippines is very
clear that "[i]n the event that the protest is finally decided in favor of the taxpayer, the amount or portion
of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or
future tax liability." The tax credit granted a taxpayer shall not be refundable in cash but shall only be
applied to future tax obligations of the same taxpayer for the same business. If a taxpayer has paid in full
the tax due for the entire year and he shall have no other tax obligation payable to the LGU concerned
during the year, his tax credits, if any, shall be applied in full during the first quarter of the next calendar
year on the tax due from him for the same business of said calendar year. Any unapplied balance of the
tax credit shall be refunded in cash in the event that he terminates operation of the business involved
within the locality.
 HSBC Philippines v CIR

G.R. No. 166018

June 4, 2014

FACTS: Pursuant to the electronic messages of its investor-clients, HSBC purchased and paid
Documentary Stamp Tax (DST) from September to December 1997 and also from January to December
1998 amounting to ₱19,572,992.10 and ₱32,904,437.30, respectively. On August 23, 1999, the BIR, thru
its Commissioner, issued BIR Ruling No. 132-99 to the effect that instructions or advises from abroad on
the management of funds located in the Philippines which do not involve transfer of funds from abroad
are not subject to DST. HSBC filed on October 8, 1999 an administrative claim for the refund of the
amount of ₱19,572,992.10 allegedly representing erroneously paid DST to the BIR for the period
covering September to December 1997. On January 31, 2000, HSBC filed another administrative claim
for the refund of the amount of ₱32,904,437.30 allegedly representing erroneously paid DST to the BIR
for the period covering January to December 1998. As its claims for refund were not acted upon by the
BIR, HSBC subsequently brought the matter to the CTA. The CTA decided in favor of HSBC.
Respondent CIR was ordered to refund or issue a tax credit certificate in favor of HSBC in the reduced
amounts of ₱30,360,570.75. However, the CA reversed both decisions of the CTA and ruled that the
electronic messages of HSBC’s investor-clients are subject to DST.

ISSUE: WON HSBC is liable to pay DST.

HELD: No. The Court agrees with the CTA that the DST under Section 181 of the Tax Code is levied on
the acceptance or payment of "a bill of exchange purporting to be drawn in a foreign country but payable
in the Philippines" and that "a bill of exchange is an unconditional order in writing addressed by one
person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on
demand or at a fixed or determinable future time a sum certain in money to order or to bearer." A bill of
exchange is one of two general forms of negotiable instruments under the Negotiable Instruments Law.
The Court further agrees with the CTA that the electronic messages of HSBC’s investor-clients
containing instructions to debit their respective local or foreign currency accounts in the Philippines and
pay a certain named recipient also residing in the Philippines is not the transaction contemplated under
Section 181 of the Tax Code as such instructions are "parallel to an automatic bank transfer of local funds
from a savings account to a checking account maintained by a depositor in one bank." The Court
favorably adopts the finding of the CTA that the electronic messages "cannot be considered negotiable
instruments as they lack the feature of negotiability, which, is the ability to be transferred" and that the
said electronic messages are "mere memoranda" of the transaction consisting of the "actual debiting of the
investor-client-payor’s local or foreign currency account in the Philippines" and "entered as such in the
books of account of the local bank," HSBC. DST is an excise tax on the exercise of a right or privilege to
transfer obligations, rights or properties incident thereto. U nder Section 173 of the 1997 Tax Code, the
persons primarily liable for the payment of the DST are those (1) making, (2) signing, (3) issuing, (4)
accepting, or (5) transferring the taxable documents, instruments or papers. In general, DST is levied on
the exercise by persons of certain privileges conferred by law for the creation, revision, or termination of
specific legal relationships through the execution of specific instruments.
 CIR v. Insular Life Assurance Co. Ltd.

G.R. No. 197192

June 4, 2014

FACTS: On October 7, 2004, respondent received an Assessment Notice with Formal Letter of Demand
both dated July 29, 2004, assessing respondent for deficiency DST on its premiums on direct
business/sums assured for calendar year 2002. Respondent filed its Protest Letter on November 4, 2004,
which was subsequently denied by petitioner in a Final Decision, on Disputed Assessment dated April 15,
2005 for lack of factual and legal bases. Apparently, respondent received the aforesaid Final Decision on
Disputed Assessment only on June 23, 2005. The former Second Division of the CTA rendered a
Decision in favor of respondent, thus, granting the Petition for Review and held, among others, that
respondent sufficiently established that it is a cooperative company and therefore, it is exempt from the
DST on the insurance policies it grants to its members. Petitioner filed a Motion for Reconsideration.
Petitioner filed a Petition for Review before the CTA en banc, which was denied.

ISSUE: WON respondent is exempt from payment of DST.

HELD: Yes. The Court has pronounced in Republic of the Philippines v. Sunlife Assurance Company of
Canada that "under the Tax Code although respondent is a cooperative, registration with the CDA is not
necessary in order for it to be exempt from the payment of both percentage taxes on insurance premiums,
under Section 121; and documentary stamp taxes on policies of insurance or annuities it grants, under
Section 199.” A perusal of Section 3(e) of R.A. No. 6939 evidently shows that it is merely a statement of
one of the powers exercised by CDA. Neither Section 3(e) of R.A. No. 6939 nor any other provision in
the aforementioned statute imposes registration with the CDA as a condition precedent to claiming DST
exemption. The NIRC of 1997 defined a cooperative company or association as "conducted by the
members thereof with the money collected from among themselves and solely for their own protection
and not for profit." Consequently, as long as these requisites are satisfied, a company or association is
deemed a cooperative insofar as taxation is concerned. In this case, the respondent has sufficiently
established that it conforms with the elements of a cooperative as defined in the NIRC of 1997 in that it is
managed by members, operated with money collected from the members and has for its main purpose the
mutual protection of members for profit.
 Visayas Geothermal Power Co. v. CIR

G.R. No. 197525

June 4, 2014

FACTS: Petitioner filed with the BIR its Original Quarterly VAT Returns for the first to fourth quarters
of taxable year 2005 on April 25, 2005, July 25, 2005, October 25, 2006, and January 20, 2006,
respectively. On December 6, 2006, it filed an administrative claim for refund for the amount of
14,160,807.95 with the BIR District Office of Ormoc City on the ground that it was entitled to recover
excess and unutilized input VAT payments for the four quarters of taxable year 2005, pursuant to R.A.
No. 9136, which treated sales of generated power subject to VAT to a zero percent rate starting June 26,
2001. While its administrative claim was pending, petitioner filed its judicial claim via a petition for
review with the CTA praying for a refund or the issuance of a tax credit certificate in the amount of
14,160,807.95, covering the four quarters of taxable year 2005. The CTA Second Division partially
granted the petition. The CTA Second Division found that only the amount of 7,699,366.37 was duly
substantiated by the required evidence. As to the timeliness of the filing of the judicial claim, the Court
ruled that following the case of CIR v. Mirant, both the administrative and judicial claims were filed
within the two-year prescriptive period provided in Section 112(A) of the NIRC, the reckoning point of
the period being the close of the taxable quarter when the sales were made. the CTA Second Division
denied the separate motions for partial reconsideration filed by both parties. The CTA En Banc reversed
and set aside the decision and resolution of the CTA Second Division, and dismissed the original petition
for review for having been filed prematurely.

ISSUE: WON the judicial claim was prematurely filed.

HELD: No. Thus, under Section 112(A), the taxpayer may, within 2 years after the close of the taxable
quarter when the sales were made, via an administrative claim with the CIR, apply for the issuance of a
tax credit certificate or refund of creditable input tax due or paid attributable to such sales. Under Section
112(D), the CIR must then act on the claim within 120 days from the submission of the taxpayer’s
complete documents. In case of (a) a full or partial denial by the CIR of the claim, or (b) the CIR’s failure
to act on the claim within 120 days, the taxpayer may file a judicial claim via an appeal with the CTA of
the CIR decision or unacted claim, within 30 days (a) from receipt of the decision; or (b) after the
expiration of the 120-day period. The 2-year period under Section 229 does not apply to appeals before
the CTA in relation to claims for a refund or tax credit for unutilized creditable input VAT.Section 229
pertains to the recovery of taxes erroneously, illegally, or excessively collected. San Roque stressed that
"input VAT is not ‘excessively’ collected as understood under Section 229 because, at the time the input
VAT is collected, the amount paid is correct and proper." It is, therefore, Section 112 which applies
specifically with regard to claiming a refund or tax credit for unutilized creditable input VAT.
Accordingly, the general rule is that the 120+30 day period is mandatory and jurisdictional from the
effectivity of the 1997 NIRC on January 1, 1998, up to the present. As an exception, judicial claims filed
from December 10, 2003 to October 6, 2010 need not wait for the exhaustion of the 120-day period. A
review of the facts of the present case reveals that petitioner VGPC timely filed its administrative claim
with the CIR on December 6, 2006, and later, its judicial claim with the CTA on January 3, 2007. The
judicial claim was clearly filed within the period of exception and was, therefore, not premature and
should not have been dismissed by the CTA En Banc.
 Miramar Fish Company, Inc. V. CIR

G.R. No. 185432

June 4, 2014

FACTS: On 4 June 2002, petitioner was registered with the BOI as a new export producer of canned tuna
and canned pet food with non-pioneer status. The administrative claim for refund in the form of a TCC of
petitioner’s alleged unutilized input VAT in the amount of ₱6,751,751.65 for taxable year 2002 was filed
with the BIR on 24 February 2003. Its administrative claim for refund in the form of a TCC of the alleged
unutilized input VAT in the amount of ₱5,895,912.38 for taxable year 2003 was thereafter filed on 15
March 2004. Subsequently, an administrative claim for the refund or issuance of a TCC in the aggregate
amount of ₱12,741,136.81 allegedly representing unutilized or unapplied VAT input taxes attributable to
petitioner’s zero rated transactions or its export sales for taxable years 2002 and 2003, was filed on 25
March 2004. Since no final action has been taken by respondent on petitioner’s various administrative
claims, the latter filed a Petition for Review before the CTA on 30 March 2004. The CTA in Division
denied due course and dismissed petitioner’s claim for the issuance of a TCC on the sole ground that the
sales invoices presented in support thereof did not comply with the invoicing requirements. Aggrieved,
respondent appealed to the CTA En Banc by filing a Petition for Review. The CTA en banc dismissed the
petition and affirmed in its entirety the subject Decision and Resolution of the CTA in Division.

ISSUE: WON petitioner is entitled to a tax credit.

HELD: No. Section 112(D) specifically states that in case of failure on the part of the respondent to act on
the application within the 120-day period prescribed by law, petitioner only has thirty (30) days after the
expiration of the 120-day period to appeal the unacted claim with the CTA. Since petitioner’s judicial
claim for the aforementioned quarters for taxable year 2002 was filed before the CTA only on 30 March
2004, which was way beyond the mandatory 120+30 days to seek judicial recourse, such non-compliance
with the mandatory period of thirty (30) days is fatal to its refund claim on the ground of prescription.
Distinctly, in its attempt to justify the timeliness of its judicial claim covering taxable year 2002,
petitioner made it appear in its Letter dated 25 March 2004 that there has been an amendment on its
administrative claim covering taxable year 2002. By way of reiteration, the CTA has no jurisdiction over
petitioner's judicial appeal covering its refund claim for taxable year 2002 on the ground of prescription,
consistent with the ruling in the San Roque case. While as to its refund claim for taxable year 2003, the
same shall likewise be denied for failure of petitioner to comply with the mandatory invoicing
requirements.
 CIR v. MERALCO

G.R. No. 181459

June 9, 2014

FACTS: MERALCO obtained a loan from Norddeutsche Landesbank Girozentrale Singapore Branch in
the amount of USD120,000,000.00 with ING as the Arranger. Under the foregoing loan agreements, the
income received by NORD/LB, by way of respondent MERALCO’s interest payments, shall be paid in
full without deductions, as respondent MERALCO shall bear the obligation of paying/remitting to the
BIR the corresponding 10% final withholding tax. However, sometime in 2001, respondent MERALCO
discovered that NORD/LB Singapore Branch is a foreign government-owned financing institution of
Germany. On December 20, 2001, MERALCO filed a request for a BIR Ruling with petitioner CIR with
regard to the tax exempt status of NORD/LB Singapore Branch. The BIR issued Ruling No. DA-342-
2003 declaring that the interest payments made to NORD/LB Singapore Branch are exempt from the 10%
final withholding tax. On July 13, 2004, relying on the aforesaid BIR Ruling, respondent MERALCO
filed with petitioner a claim for tax refund or issuance of tax credit certificate in the aggregate amount of
₱264,120,181.44. However, it was denied. MERALCO filed a Petition for Review with the CTA, which
was partially granted. Both parties moved for reconsideration, which was denied. The CTA En Banc
denied both petitions.

ISSUE: WON respondent is entitled to a tax refund/tax credit.

HELD: Yes. Given that the same was issued by the Embassy of the Federal Republic of Germany in the
regular performance of their official functions, and the due execution and authenticity thereof was not
disputed when it was presented in trial, the same may be admitted as proof of the facts stated therein.
Further, it is worthy to note that the Embassy of the Federal Republic of Germany was in the best position
to confirm such information, being the representative of the Federal Republic of Germany here in the
Philippines. To bolster this, respondent MERALCO presented as witness its Vice-President and Head of
Tax and Tariff, German F. Martinez, Jr., who testified on and identified the existence of such
certification. The foregoing documentary and testimonial evidence were given probative value as the First
Division ruled that there was no strong evidence to disprove the truthfulness of the said pieces of
evidence, considering that the CIR did not present any rebuttal evidence to prove otherwise. The
prescriptive period provided is mandatory regardless of any supervening cause that may arise after
payment. It should be pointed out further that while the prescriptive period of two (2) years commences to
run from the time that the refund is ascertained, the propriety thereof is determined by law (in this case,
from the date of payment of tax), and not upon the discovery by the taxpayer of the erroneous or
excessive payment of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt status of
NORD/LB, if at all, is merely confirmatory in nature.
 Taganito Mining Corporation v. CIR

G.R. No. 197591

June 18, 2014

FACTS: In a previous case, the CTA Division partially granted Taganito’s claim for refund, ordering
respondent, the CIR, to refund to Taganito the amount of 537,645.43 representing its unutilized input
VAT for the period January 1, 2004 to March 9, 2004. It found that Taganito’s export sales qualified as
VAT zero-rated sales. However, of the 1,885,140.22 claimed refund for excess input VAT, the CTA
Division disallowed 10,263.37 for being based on non-VAT official receipts. Moreover, it observed that
the BOI issued a certification in Taganito’s favor, stating that it is a BOI-registered entity with 100%
exports. In effect, for the period March 10, 2004 to December 31, 2004, Taganito’s local suppliers may
avail of zero-rating benefits on their sales to Taganito, and, thus, no output VAT should be shifted from
the former to the latter. Considering the absence of sufficient proof that said suppliers did not avail of
such benefits, Taganito cannot therefore claim input VAT on its domestic purchases for the aforesaid
period. Lastly, the CTA Division found that Taganito’s refund claims were filed within the two-year
prescriptive period and the 120-day period, considering that its administrative claim was filed on
December 28, 2005, and its judicial claim was filed on March 31, 2006. The CIR filed a motion for
reconsideration praying for the reversal of the partial refund granted in Taganito’s favor, which was,
however, denied. The CTA En Banc reversed and set aside the Decision of the CTA Division, and
ordered that Taganito’s claim of refund be denied in its entire amount. It found that Taganito filed its
judicial claim for refund on March 31, 2006,or a mere 93 days after it filed its administrative claim on
December 28, 2005.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: Yes. There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA
does not acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period.
There are, however, two exceptions to this rule. The first exception is if the Commissioner, through a
specific ruling, misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such
specific ruling is applicable only to such particular taxpayer. The second exception is where the
Commissioner, through a general interpretative rule issued under Section 4 of the Tax Code, misleads all
taxpayers into filing prematurely judicial claims with the CTA. In these cases, the Commissioner cannot
be allowed to later on question the CTA’s assumption of jurisdiction over such claim since equitable
estoppel has set in as expressly authorized under Section 246 of the Tax Code. Reconciling the
pronouncements in the Aichi and San Roque cases, the rule must therefore be that during the period
December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October 6, 2010 (when the Aichi
case was promulgated), taxpayers-claimants need not observe the 120-day period before it could file a
judicial claim for refund of excess input VAT before the CTA. Before and after the aforementioned
period (i.e., December 10, 2003 to October 6, 2010), the observance of the 120-day period is mandatory
and jurisdictional to the filing of such claim. In this case, records disclose that Taganito filed its
administrative and judicial claims for refund on December 28, 2005 and March 31, 2006, respectively, or
during the period when BIR Ruling No. DA-489-03 was in place. As such, it need not have waited for the
expiration of the 120-day period before filing its judicial claim for refund before the CTA. In view of the
foregoing, the CTA En Banc, thus, erred in dismissing Taganito's claim on the ground of prematurity.
 CIR v. Mindanao Geothermal Partnership

G.R. No. 189440

June 18, 2014

FACTS: Respondent filed with the BIR its Quarterly VAT Returns for the four quarters of taxable year
2002. The respondent declared zero-rated sales in the amount of ₱769,384,702.23 and input VAT of
₱7,427,965.37 on domestic purchases of goods and services. On May 30, 2003, the respondent filed with
the BIR Revenue District No. 108 a claim for refund or issuance of a TCC of its unutilized input VAT
attributable to its zero-rated sales for the taxable year 2002 in the amount of ₱7,427,965.37. However, the
petitioner failed to act on the claim. Thus, on March 31, 2004, the respondent filed a Petition for Review
with the CTA First Division. Pending the resolution of CTA, petitioner issued to respondent a TCC in the
amount of ₱6,251,065.74. The issuance of this TCC belatedly and partially granted the claim of the
respondent. For this reason, the respondent filed a Motion for Leave of Court to File Attached
Supplemental Petition for Review which was granted by the CTA First Division. On June 4, 2008, the
CTA First Division rendered the assailed decision partially granting respondent’s claim in the amount of
₱6,940,379.11. Since the petitioner already issued the aforementioned TCC in favor of the respondent, the
CTA First Division ordered the fulfillment of only the balance of the respondent’s claim. Petitioner filed a
Motion for Partial Reconsideration, which was denied. Petitioner filed a Petition for Review with the
CTA En Banc which however dismissed the petition for lack of merit. Petitioner filed a Motion for
Reconsideration with the CTA En Banc raising the issue of prescription of the respondent’s judicial
claim, which was denied.

ISSUE: WON prescription can be raised for the first time with the CTA en banc.

HELD: Yes. Notwithstanding the timely filing of the respondent’s administrative claim, we are
constrained to order the dismissal of the respondent’s judicial claim for tax refund or tax credit for having
been filed beyond the mandatory and jurisdictional periods provided in Section 112(C) of the NIRC.
Section 112(C) expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or
inaction of the CIR. In this case, the administrative and the judicial claims were simultaneously filed on
September 30, 2004. Obviously, respondent did not wait for the decision of the CIR or the lapse of the
120-day period. For this reason, we find the filing of the judicial claim with the CTA premature.
Respondent’s assertion that the non-observance of the 120-day period is not fatal to the filing of a judicial
claim as long as both the administrative and the judicial claims are filed within the two-year prescriptive
period has no legal basis.
 San Roque Power Corporation v. CIR

G.R. No. 205543

June 30, 2014

FACTS: San Roque alleged that in 2006, it incurred creditable input taxes from its purchase of capital
goods, importation of goods other than capital goods, and payment for the services of non-residents. San
Roque subsequently filed with the BIR separate claims for refund or tax credit of its creditable input taxes
for all four quarters of 2006. San Roque averred that it did not have any output taxes to which it could
have applied said creditable input taxes. When the CIR failed to take action on its administrative claims,
San Roque filed two separate Petitions for Review. The CTA Division ruled that the Petitions for Review
on March 28, 2008 for the first, third and fourth quarters claims and on June 27, 2008 for the second
quarter claim, were filed beyond the 30-day period set by law and therefore, the Court has no jurisdiction
to entertain the subject matter of the case considering that the 30-day appeal period. With respect to the
amended application for refund of input tax for the first and second quarters of 2006 on March 10, 2008,
the CIR has one hundred twenty days or until July 8, 2008 within which to make a decision. After the
lapse of the said 120-day period, San Roque had thirty days or until August 7, 2008 within which to
appeal to this Court. San Roque, however, appealed via Petitions for Review on March 28, 2008 for its
first quarter claim and on June 27, 2008 for its second quarter claim, which are clearly before the lapse of
the 120-day period. This violates the rule on exhaustion of administrative remedies. San Roque filed a
Motion for Reconsideration but it was denied by the CTA First Division. The CTA en banc upheld the
application of Aichiand explained that there was no retroactive application of the same. The CTA en banc
applied the 120+30 day periods and found, same as the CTA First Division.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal
language. The taxpayer can file his administrative claim for refund or credit at anytime within the two-
year prescriptive period. If he files his claim on the last day of the two-year prescriptive period, his claim
is still filed on time. The Commissioner will have 120 days from such filing to decide the claim. If the
Commissioner decides the claim on the 120th day, or does not decide it on that day, the taxpayer still has
30 days to file his judicial claim with the CTA. For the Court, there is no morepoint in considering the
amended administrative claims for the first and second quarters of 2006. The amended administrative
claims were filed on March 10, 2008 after the 120+30 day periods for filing the judicialclaims, counting
from the date of filing of the original administrative claims for the first and second quarters of 2006, had
already expired on September 8, 2007and December 7, 2007, respectively. Taking cognizance of the
amended administrative claims in such a situation would result in the revival of judicial claims that had
already prescribed.
 Commissioner of Customs v. Oilink International Corporation

G.R. No. 161759

July 2, 2014

FACTS: On January 11, 1996, Oilink was incorporated for the primary purpose of manufacturing,
importing, exporting, buying, selling or dealing in oil and gas, and their refinements and by-products at
wholesale and retail of petroleum. URC and Oilink had interlocking directors when Oilink started its
business. On March 4, 1998, Oscar Brillo, the District Collector of the Port of Manila, formally demanded
that URC pay the taxes and duties on its oil imports that had arrived between January 6, 1991 and
November 7, 1995 at the Port of Lucanin in Mariveles, Bataan. Brillo made another demand letter to URC
for the payment of the reduced sum of ₱289,287,486.60 for the VAT, special duties and excisetaxes for
the years 1991-1995. Commissioner Mendoza wrote again to require URC to pay deficiency taxes but in
the reduced sum of ₱99,216,580.10. Magleo, in behalf of URC, replied by letter to Commissioner Tan’s
affirmance by denying liability, insisting instead that only ₱28,933,079.20 should be paid by way of
compromise. Commissioner Tan responded by rejecting Magleo’s proposal. Manuel Co, URC’s
President, conveyed to Commissioner Tan URC’s willingness to pay only ₱94,216,580.10, of which the
initial amount of ₱28,264,974.00 would be taken from the collectibles of Oilink from the NAPOCOR,
and the balance to be paid in monthly installments over a period ofthree years to be secured with
corresponding post-dated checks and its future available tax credits. Commissioner Tan made a final
demand for the total liability. Oilink formally protested the assessment on the ground that it was not the
party liable for the assessed deficiency taxes. Commissioner Tan communicated in writing the detailed
computation of the tax liability, stressing that the Bureau of Customs would not issue any clearance to
Oilink unless the amount of ₱138,060,200.49 demanded as Oilink’s tax liability befirst paid. Oilink
appealed to the CTA. The CTA rendered its decision declaring as null and void the assessment. The
Commissioner of Customs seasonably filed a motion for reconsideration, but was denied. Aggrieved, the
Commissioner of Customs brought a petition for review in the CA, which was denied.

ISSUE: WON the CTA had jurisdiction over the case.

HELD: Yes. We rule against the Commissioner of Customs. The CTA correctly ruled that the reckoning
date for Oilink’s appeal was July 12, 1999, not July 2, 1999, because it was on the former date that the
Commissioner of Customs denied the protest of Oilink.Clearly, the filing of the petition on July 30, 1999
by Oilink was well within its reglementary period to appeal. The insistence by the Commissioner of
Customs on reckoning the reglementary period to appeal from November 25, 1998, the date when URC
received the final demand letter, is unwarranted. We note that the November 25, 1998 final demand letter
of the BoC was addressed to URC, not to Oilink. As such, the final demand sentto URC did not bind
Oilink unless the separate identities of the corporations were disregarded in order to consider them as one.
Indeed, the doctrine of piercing the corporate veil has no application here because the Commissioner of
Customs did not establish that Oilink had been set up to avoid the payment of taxes or duties, or for
purposes that would defeat public convenience, justify wrong, protect fraud, defend crime, confuse
legitimate legal or judicial issues, perpetrate deception or otherwise circumvent the law. It is also
noteworthy that from the outset the Commissioner of Customs sought to collect the deficiency taxes and
duties from URC, and that it was only on July 2, 1999 when the Commissioner of Customs sent the
demand letter to both URC and Oilink.
 BPI v. CIR

G.R. No. 181836

July 9, 2014

FACTS: On 23 June 1989, BPI, through itscounsel, filed a protest letter requesting for the reinvestigation
and/or reconsideration of the assessment for lack of legal and factual bases. The BPI alleged that it should
not be liable for the assessed DST because: (1) based on recognized business practice incorporated in the
BAP Foreign Exchange Trading Center Rule 2(e), DST was for the account of the buyer; (2) BIR Ruling
No. 135-87 stated that neither the tax-exempt entity nor the other party shall be liable for the payment of
DST before the effectivity of P.D. 1994 on 1 January 1986; (3) since the then law left the tax to be paid
indifferently by either party and the party liable was exempt, the document was exempt from DST; and
(4) the assessed DST was the same assessment made by the BIR for DST swap transaction covering
taxable years 1982-1986. Then CIR Rualo denied the request for reconsideration. BPI filed a petition for
review before the CTA. The CTA ordered the cancellation of the assessed DST on BPI. The CTA ruled
that neither BPI nor Central Bank, which was tax-exempt, could be liable for the payment of the assessed
DST. The CTA reasoned out that before PD 1994 took effect in 1986, there was no law that shifted the
liability to the other party, in case the party liable to pay the DST was tax exempt. The CIR appealed to
the CA. The CA reversed the CTA decision. The CA denied the motion for reconsideration filed by BPI.

ISSUE: WON the BIR can collect DST from BPI.

HELD: No. Under the then applicable Section 319(c) [now, 222(c)] of the NIRC, any internal revenue tax
which has been assessed within the period of limitation may be collected by distraint or levy, and/or court
proceeding within three years following the assessment of the tax. The assessment of the tax is deemed
made and the three-year period for collection of the assessed tax begins torun on the date the assessment
notice had been released, mailed or sent by the BIR to the taxpayer. In the present case, although there
was no allegation as to when the assessment notice had been released, mailed or sent to BPI, still, the
latest date that the BIR could have released, mailed or sent the assessment notice was on the date BPI
received the same on 16 June 1989. Counting the threeyear prescriptive period from 16 June1989, the
BIR had until 15 June 1992 to collect the assessed DST. But despite the lapse of 15 June 1992, the
evidence established that there was no warrant of distraint or levy served on BPI’s properties, or any
judicial proceedings initiated by the BIR. The earliest attempt of the BIR to collect the tax was when it
filed its answer in the CTA on 23 February 1999, which was several years beyond the three-year
prescriptive period. However, the BIR’s answer in the CTA was not the collection case contemplated by
the law. Before 2004 or the year R.A. No. 9282 took effect, the judicial action to collect internal revenue
taxes fell under the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set
in to bar the collection of the assessed DST.
 CIR v. Team Sual Corporation

G.R. No. 205055

July 18, 2014

FACTS: Respondent TSC is principally engaged in the business of electric power generation and the sale
of electric power to NAPOCOR under a BOT Scheme. On 19 December 2003, TSC applied for the VAT
zero-rating of its sale of electric power to NPC for the taxable year 2004. TSC’s application was
subsequently approved by the BIR. On 21 December 2005, TSC filed an administrative claim for refund
of its input VAT, which it incurred for the four quarters of 2004. On 24 April 2006, due to the BIR’s
inaction, TSC filed a petition for review with the CTA. TSC prayed for the refund or issuance of tax
credit certificate. The CTA Special First Division ruled that TSC’s sale of electric power toNPC was
effectively zero-rated. The CTA Special First Division found that TSC complied with the five
requirements to be entitled to a refund orissuance of tax credit certificate on its input VAT. The CTA
Special First Division granted the motion for partial new trial filed by TSC and allowed it to present in
evidence the correct official receipts supporting the ₱2,430,229,567.30 zero-rated sales made to NPC. The
CTA EB found that TSC submitted the relevant documents applicable to its claim. According to the CTA
EB, the submitted documents constituted compliance with the requirements of RMO 53-98. Thus, the
CTA EB ruled that the judicial claim was not prematurely filed. The CTA EB denied the motion for
reconsideration filed by the CIR for lack of merit.

ISSUE: WON respondent is entitled to a tax refund.

HELD: Yes. Under Section 112(C) of the NIRC,the CIR has 120 days to decide the taxpayer’s claim from
the date of submission of complete documents in support of the application filed in accordance with
Section 112(A) of the NIRC. In Intel Technology v. Commissioner of Internal Revenue, we ruled that
once the taxpayer has established by sufficient evidence that it is entitled to a refund or issuance of a tax
credit certificate, in accordance with the requirements of Section 112(A) of the NIRC, its claim should be
granted. The CIR’s reliance on RMO 53-98 is misplaced. There is nothing in Section 112 of the NIRC,
RR 3-88 or RMO 53-98 itself that requires submission of the complete documents enumerated in RMO
53-98 for a grant of a refund or credit of input VAT. The subject of RMO 53-98 states that it is a
"Checklist of Documents to be Submitted by a Taxpayer upon Auditof his Tax Liabilities x x x." In this
case, TSC was applying for a grant of refund or credit of its input tax. There was no allegation of an audit
being conducted by the CIR. Even assuming that RMO 53-98 applies, it specifically states that some
documents are required to be submitted by the taxpayer "if applicable."
 Airlift Asia Customs Brokerage, Inc. v. CA

G.R. No. 183664

July 28, 2014

FACTS: CAO 3-2006 was issued by the then BOC Commissioner Morales, with the approval of then
Secretary of Finance Teves, on March 2, 2006, that covers the Rules and Regulations Governing the
Accreditation of the Customs Brokers Transacting with the BOC and essentially requires the accreditation
by the BOC of customs brokers who intend to practice before the BOC. The petitioners assailed the
validityof CAO 3-2006 through an action for declaratory relief before the RTC, which the latter approved.
On appeal, the CA reversed the RTC rulingfinding its construction of CAO 3-2006 rigid and crippling on
the BOC’s efforts to ensure efficient customs administration and collection of taxes and duties. Although
the accreditation requirement was an added burden to customs brokers, it nevertheless bore a reasonable
connection to the BOC’s aim to ensure accountability and integrity in the transactions involving customs
duties and tariff laws.

ISSUE: WON CAO 3-2006 is invalid.

HELD: Yes. A large part of a custom brokers’ work involves practice before theBOC, and CAO 3-2006
practically compels all customs brokers – already certified by the PRC – to comply with the accreditation
requirement for them to practice their profession. This is contrary to the terms of Section 19 of RA 9280,
which provides that a customs broker "shall be allowed to practice the profession in any collection district
without the need of securing another license from the [BOC]." We are unconvinced by the BOC
Commissioner’s claim that CAO 3-2006’s accreditation requirement is not a form of license. A license is
a "permission to do a particular thing, toexercise a certain privilege or to carry on a particular business or
to pursue a certain occupation." Since it is only by complying with CAO 3-2006 that a customs broker
can practice his profession before the BOC, the accreditation takes the form of a licensing requirement
proscribed by the law. It amounts to an additional burden on PRC-certified customs brokers and curtails
their right to practice their profession. Under RA 9280,a successful examinee of the customs brokers
examinations acquires a Certificate of Registration, which entitles him to practice the profession as a
customs broker with all the benefits and privileges appurtenant thereto. Moreover, a reading of CAO 3-
2006 does not appear to be restricted only to "practice before the BOC." Pars. 1 and 2, Part IV of CAO 3-
2006 requires custom brokers to maintain complete records covering their professional practice. Par. 11,
Part IV of the same issuance governs the custom broker's role in advising clients. Although it may be
argued that these duties/activities have reasonable connection with practice before the BOC as to be
within the scope of CAO 3-2006, this reasoning only reinforces the position that the practice by the
customs broker of his profession is mainly tied with practice before the BOC.
 Nursery Care Corporation v. Acevedo

G.R. No. 180651

July 30, 2014

FACTS: The City of Manila assessed and collected taxes from the individual petitioners pursuant to
Section 15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the
Revenue Code of Manila. At the same time, the City of Manila imposed additional taxes upon the
petitioners pursuant to Section 21 ofthe Revenue Code of Manila, as a condition for the renewal of their
respective business licenses for the year 1999. Petitioners formally requested the Office of the City
Treasurer for the tax credit or refund of the local business taxes paid under protest. City Treasurer
Acevedo denied the request. Their motion for reconsideration was also denied. The RTC perceives of no
instance of the constitutionally proscribed double taxation. It opined that taxes imposed under Section 15
and 17 is a tax on the business of wholesalers, distributors, dealers and retailers. On the other hand, the
tax imposed upon herein petitioners under Section 21 is not a tax against the business of the petitioners
(as wholesalers, distributors, dealers or retailers) but is rather a tax against consumers or end-users of the
articles sold by petitioners. On appeal, the CA denied it.

ISSUE: WON petitioners are entitled to a tax refund.

HELD: Yes. Double taxation means taxing the same property twice when it should be taxed only once;
that is, "taxing the same person twice by the same jurisdictionfor the same thing." It is obnoxious when
the taxpayer is taxed twice, when it should be but once. Otherwise described as "direct duplicate
taxation," the two taxes must be imposed on the same subject matter, for the same purpose, by the same
taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the
same kind or character. Using the aforementioned test, the Court finds that there is indeed double taxation
if respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794, since
these are being imposed: (1) on the same subject matter – the privilege of doing business in the City of
Manila; (2) for the same purpose – to make persons conducting business within the City of Manila
contribute tocity revenues; (3) by the same taxing authority – petitioner Cityof Manila; (4) within the
same taxing jurisdiction – within the territorial jurisdiction of the City of Manila; (5) for the same taxing
periods – per calendar year; and (6) of the same kind or character – a local business tax imposed on gross
sales or receipts of the business.
 CIR v. PAL

G.R. No. 212536-37

August 27, 2014

FACTS: PAL was assessed excise taxes on its February and March 2007 importation of cigarettes and
alcoholic drinks for its commissary supplies used in its international flights. In due time, PAL paid the
corresponding amounts. PAL, thereafter, filed separate administrative claims for refund before the BIR
for the alleged excise taxes it erroneously paid on said dates. Asthere was no appropriate action on the
part of the then CIR and obviously to forestall the running of the two-year prescriptive period for
claiming tax refunds, PAL filed before the CTA a petition for review. The CTA Second Division ordered
the CIR and BOC Commissioner ordered to pay PAL by way of refund the amount of PhP 4,550,858.85.
The amount represented the excise taxes paid in February and March 2007, covering PAL’s importation
of commissary supplies. Therefrom, the CIR and the COC interposed separate motions for
reconsideration, both of which were, however, denied. The CTA en banc dismissed the CIR and COC’s
petitions, thereby effectively affirming the judgment of the CTA Second Division.

ISSUE: WON PAL is entitled to the said tax refund.

HELD: Yes. The tax privilege of PAL provided in Sec. 13 of PD 1590 has not been revoked by Sec. 131
of the NIRC of 1997, as amended by Sec. 6 of RA 9334. While it is true that Sec. 6 of RA 9334 as
previously quoted states that "the provisions of any special orgeneral law to the contrary
notwithstanding,"such phrase left alone cannot be considered as an express repeal of the exemptions
granted under PAL’s franchise because it fails to specifically identify PD 1590 as one of the acts intended
to be repealed. In this case, PAL’s franchise grants it an exemption from both direct and indirect taxes on
its purchase of petroleum products. In view of PAL’s payment of either the basic corporate income tax or
franchise tax, whichever is lower, PAL is exempt from paying: (a) taxes directly due from or imposable
upon it as the purchaser of the subjectpetroleum products; and (b) the cost of the taxes billed or passed on
to it by the seller, producer, manufacturer, or importer of the said products either as part of the purchase
price or by mutual agreement or other arrangement. Therefore, given the foregoing direct and indirect tax
exemptionsunder its franchise, and applying the principles as above-discussed, PAL is endowed with the
legal standing to file the subject tax refund claim, notwithstanding the fact that it is not the statutory
taxpayer as contemplated by law.
 CIR v. CE Luzon Geothermal Power Company

G.R. No. 190198

September 17, 2014

FACTS: On October 25, 2001, CE Luzon timely filed its VAT return for the third quarter of 2001, in
which it declared unutilized input VAT in the amount of 2,921,085.31. On January10, 2002, April 10,
2002, May 15, 2003, May 15, 2003, and April 1, 2003, respectively, it likewise filed its VAT returns for
the fourth quarter of2001 and all quarters of 2002. On September 26, 2003, CE Luzon filed an
administrative claim for refund of unutilized input VAT for the third quarter of 2001 before the BIR.
Alleging inaction on the part of the CIR, it filed a judicial claim for refund before the CTA on September
30, 2003. Thereafter, on December 18, 2003, CE Luzon likewise filed an administrative claim for refund
of unutilized input VAT for the fourth quarter of 2001 and all quarters of 2002 before the BIR. It then
filed a judicial claim for such refund before the CTA on December 19, 2003. The CTA Division partially
granted CE Luzon’s claims for refund, ordering the CIR to refund or issue a tax credit certificate in favor
of CE Luzon in the amount of ₱13,926,697.51, representing the unutilized input VAT attributable to its
zero-rated sales for the third and fourth quarters of 2001 and all quarters of 2002. Both parties moved for
partial reconsideration, which were, however, denied. The CTA En Bancdenied the CIR’s appeal, and
accordingly affirmed the CTA Division’s Ruling.

ISSUE: WON CE Luzon has complied with the stautory period.

HELD: Yes, partly. Reconciling the pronouncements in the Aichi and San Roque cases, the rule must
therefore be that during the period December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to
October 6, 2010(when the Aichi case was promulgated), taxpayers-claimants need not observe the 120-
day periodbefore it could file a judicial claim for refund of excess input VAT before the CTA. Before and
after the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the observance of the 120-
day period is mandatory and jurisdictional tothe filing of such claim. While both claims for refund were
filed within the two (2)-year prescriptive period, CE Luzon failed tocomply with the 120-day period as it
filed its judicial claim in C.T.A. Case No. 6792 four (4) days after the filing of the administrative claim,
while in C.T.A. Case No. 6837, the judicial claim was filed a day after the filing of the administrative
claim. Proceeding from the aforementioned jurisprudence, only C.T.A. Case No. 6792 should be
dismissed on the ground of lack of jurisdiction for being prematurely filed. In contrast, CE Luzon filed its
administrative and judicial claims for refund in C.T.A. Case No. 6837 during the period, i.e., from
December 10, 2003 to October 6, 2010, when BIR Ruling No. DA-489-03 was in place. As such, the
aforementioned rule on equitable estoppel operates in its favor, thereby shielding it from any supposed
jurisdictional defect which would have attended the filing of its judicial claim before the expiration of the
120-day period.
 CIR v. PNB

G.R. No. 180290

September 29, 2014

FACTS: The assailed decision denied petitioner's appeal and affirmed the January 30, 2007 decision and
May 30, 2007 resolution of the First Division of the CTA, granting respondent a tax refund or credit in
the amount of ₱23,762,347.83, representing unutilized excess creditable withholding taxes for taxable
year 2000. Petitioner’s motion for reconsideration was subsequently denied for lack of merit in the First
Division’s resolution. On appeal, the CTA En Banc sustained the First Division’s ruling. It held that the
fact of withholding and the amount of taxes withheld from the income payments received by respondent
were sufficiently established by the creditable withholding tax certificates, and there was no need to
present the testimonies of the various payors or withholding agents who issued the certificates and
madethe entries therein. It also held that respondent need not prove actual remittance of the withheld
taxes to the BIR because the functions of withholding and remittance of income taxes are vested in the
payors who are considered the agents of petitioner. It also denied petitioner’s motion for Reconsideration.

ISSUE: WON respondent is entitled to a tax refund.

HELD: Yes. The certificate of creditable tax withheld at source is the competent proof to establish the
fact that taxes are withheld. It is not necessary for the person who executed and preparedthe certificate of
creditable tax withheld at source to be presented and to testify personally to prove the authenticity of the
certificates. In fine, the document which may be accepted as evidence of the third condition, that is, the
fact of withholding, must emanate from the payor itself, and not merely from the payee, and must indicate
the name of the payor, the income payment basis ofthe tax withheld, the amount of the tax withheld and
the nature of the tax paid. Petitioner’s allegation that the submission of the certificates of withholding
taxes before the Court of Tax Appeals was late is untenable. The samples of the withholding tax
certificates attached to respondent’s comment bore the receiving stamp of the Bureau of Internal
Revenue’s Large Taxpayers Document Processing and Quality Assurance Division.
 CIR v. Pilipinas Shell Petroleum Corporation

G.R. No. 192398

September 29, 2014

FACTS: On April 27, 1999, respondent entered into a Plan of Merger with its affiliate, Shell Philippine
Petroleum Corporation, a corporation organized and existing under the laws ofthe Philippines. In the Plan
of Merger, it was provided that the entire assets and liabilities of SPPC will be transferred to, and
absorbed by, respondent as the surviving entity. The SEC approved the merger on July 1, 1999. On
August 10, 1999, respondent paid to the BIR documentary stamp taxes amounting to ₱524,316.00 on the
original issuance of shares of stock of respondent issued in exchange for the surrendered SPPC shares.
Confirming the tax-free nature of the merger between respondent and SPPC, the BIR, ruled that no gain
or loss shall be recognized, if, in pursuance to a planof merger or consolidation, a shareholder exchanges
stock in a corporation which is a party to the merger or consolidation solely for the stock ofanother
corporation which is also a party to the merger or consolidation. However, it ruled that the issuance by
PSPC of its own shares of stock to the shareholders of SPPC in exchange for the surrendered certificates
of stock of SPPC shall be subject to the DST. Respondent paid to the BIR the amount of ₱22,101,407.64
representing DST on the transfer of real property from SPPC to respondent. Believing that it erroneously
paid DST on its absorption of real property owned by SPPC, respondent filed with petitioner on
September 18, 2000, a formal claim for refund or tax credit. There being no action by petitioner,
respondent filed on May 8, 2002, a petition for review with the CTA. The CTA ruled that the tax-deferred
exchange of properties of a corporation, which is a party to a merger or consolidation, solely for shares of
stock in a corporation, which is also a party to the merger or consolidation, is subject to the documentary
stamp tax under Section 176 if the properties to be transferred are shares of stock or even certificates of
obligations, and also to the documentary stamp tax under Section 196, if the properties to be transferred
are real properties. The CTA, however, granted respondent’s prayer for tax refund or credit. Petitioner
filed a petition for review with the CA. It held that the transfer of the properties of SPPC to respondent
was not in exchange for the latter’s shares of stock but is a legal consequence of the merger. The CA
ruled that the actual transfer of SPPC’s real properties to respondent was not effected by or dependent
upon any voluntary deed, conveyance or assignment but occurred by operation of law.

ISSUE: WON the said transfer is subject to DST.

HELD: No. We do not find merit in petitioner’s contention that Section 196 covers all transfers and
conveyancesof real property for a valuable consideration. A perusal of the subject provision would clearly
show it pertains only to sale transactions where real property is conveyed to a purchaser for a
consideration. The phrase "granted, assigned, transferred or otherwise conveyed" is qualified by the word
"sold" which means that documentary stamp tax under Section 196 is imposed on the transfer of realty by
way of sale and does not apply to all conveyances of real property. Indeed, as correctly noted by the
respondent, the fact that Section 196 refers to words "sold", "purchaser" and "consideration" undoubtedly
leads to the conclusion that only sales of real property are contemplated therein. It should be emphasized
that in the instant case, the transfer of SPPC’s real property to respondent was pursuant to their approved
plan of merger. In a merger of two existing corporations, one of the corporations survives and continues
the business, while the other is dissolved, and all its rights, properties, and liabilities are acquired by the
surviving corporation.
 Duty Free Philippines v. BIR

G.R. No. 197228

October 8, 2014

FACTS: Petitioner sought a clarification of its exemption from the expanded withholding tax under R.R.
No. 6-94. It alleged that this request for clarification was a reiteration of its letter dated 19 October 1994.
It argued that as a tax-exempt establishment under E.O. No. 46, it should not be subjected to the 1.1/2%
expanded withholding taxes on certain income payments that were withheld by credit card companies in
compliance with R.R. No. 6-94. In relation thereto, petitioner also inquired on the procedure for the
refund of accumulated taxes withheld by credit card companies amounting to ₱1.8 million as of 31
December 1994. Respondent issued BIR Ruling No. 136-95 on 6 September 1995. Respondent opined
that E.O. No. 93 dated 17 December 1986 withdrew all the tax and duty incentives granted to government
and public entities, including petitioner. Hence, respondent denied the request of petitioner for a refund.
Petitioner to file an appeal with the DOF, which was denied. Subsequent requests for reconsideration
were likewise denied by the DOF. The CTA Division likewise found that petitioner was not a tax-exempt
entity in the absence of an express grant of tax exemption. As to the issue of the assessed tax deficiencies,
the tax court found petitioner liable to pay the aggregate amount of 1,036,956,477.90 representing income
tax and VAT deficiencies. Petitioner and intervenor DOT filed their respective Motions for
Reconsideration, which was denied.

ISSUE: WON the petition may correctly proceed.

HELD: No. If any ruling, order or decision ofthe Court of Tax Appeals be adverse to the Government, the
Collector of Internal Revenue, the Commissioner of Customs, or the provincial or city Board of
Assessment Appeals concerned may likewise file anappeal therefrom to the Supreme Court in the manner
and within the same period as above prescribed for private parties. Any proceeding directly affecting any
ruling, order or decision of the Court of Tax Appeals shall have preference over all other civil
proceedings except habeas corpus, workmen's compensation and election cases. The enactment of R.A.
No. 9282, which took effect on 23 April 2004, elevated the rank of the CTA to the level of a collegiate
court, making it a co-equal body of the Court of Appeals. The appeal of a CTA decision under Section 18
of R.A. No. 1125 was also amended by R.A. No. 9282. A party adversely affected by a resolution of a
Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the
CTA en banc. Furthermore, Section 2, Rule 4 of the Revised Rules of the CTA reiterates the exclusive
appellate jurisdiction of the CTA en banc relative to the review of the court divisions’ decisions or
resolutions on motion for reconsideration or new trial in cases arising from administrative agencies such
as the BIR. In this case, petitioner filed with this Court on 29 July 2011 the instant Petition from the
denial of its Motion for Reconsideration by the Special First Division of the CTA. At thattime, R.A. 9282
was already in effect, and it evidently provides that the CTA en banc shall have exclusive jurisdiction
over appeals from the decision of its divisions.
 NAPOCOR v. City of Cabanatuan

G.R. No. 177332

October 1, 2014

FACTS: The City assessed NAPOCOR a franchise tax, which the latter refused to pay, arguing that it is
exempt from paying the same. The City filed a complained before the RTC of Cabanatuan, demanding
payment of the tax plus surcharge and interest, and costs of suit. RTC declared that the City could not
impose a franchise tax on NAPOCOR and dismissed the complaint. In an appeal to CA, the appellate
court reversed the decision and found NAPOCOR liable. The SC affirmed the CA decision and
resolution. The SC also denied NAPOCOR’s Motion for Reconsideration. After the decision, the City
filed with the RTC a motion for execution, but NAPOCOR prayed for suspension pending resolution of
its protest letter with the City Treasurer on the computation of the surcharge. The City filed a
supplemental motion for execution, claiming that the gross receipts upon which NAPOCOR’s franchise
tax liabilities are to be determined should include transactions within the coverage area to be determined
should include transactions within the coverage area of Nueva Ecija Electric Cooperative III and sales
from different municipalities of different provinces. The City alleged that the transactions were transacted
and consummated in Cabanatuan. NAPOCOR emphasized that the CA decision limits the franchise tax
payable based on gross receipts from sales to Cabanatuan’s electric cooperative. RTC agreed with
NAPOCOR on the limitation of franchise tax but sustained the City’s computation of surcharge. Upon
petition to CA, the court dismissed NAPOCOR’s petition and held that the non-imposition of surcharge
on a cumulative basis would encourage rather than discourage non-payment of taxes.

ISSUE: WON petitioner is liable to pay said tax.

HELD: Yes, partly. The RTC’s computation of the surcharge varies the terms of the judgment sought to
be executed and contravenes Sec. 168 of the Local Government Code. When the taxpayer does not pay its
tax due for a particular year, a surcharge is applied on the full amount of the tax due. However, when the
taxpayer makes a partial payment of the tax due, the surcharge is applied only on the balance or the part
of the tax due that remains unpaid. A surcharge regardless of how it is computed is already a deterrent.
While it is true that imposing a higher amount may be a more effective deterrent, it cannot be done in
violation of law and in such a way as to make it confiscatory. The yearly accrual of the 25% surcharge is
unconscionable. the law provides that the total interest on the unpaid amount or portion thereof should not
exceed thirty-six (36) months or three (3) years. In other words, respondent cannot collect a total interest
on the unpaid tax including surcharge that is effectively higher than 72%. Here, respondent applied the
25% cumulative surcharge for more than three years. Its computation undoubtedly exceeded the 72%
ceiling imposed under Sec. 168 of the Local Government Code. Hence, respondent’s computation of the
surcharge is oppressive and unconscionable. To a certain extent, a reasonable surcharge will provide
incentive to pay; an unreasonable one delays payment and engages government in unnecessary litigation
and expense.
 CIR v. Burmeister & Wainscandinavian

G.R. No. 190021

October 22, 2014

FACTS: Respondent subcontracted from a consortium of non-resident foreign corporations the actual
operation and maintenance of two 100-megawatt power barges owned by the NAPOCOR, which services
are subject to zero percent VAT, pursuant to BIR Ruling No. 023-95 issued on February 14, 1995.
On January 21, 1999, respondent filed its Quarterly VAT Return for the fourth quarter of taxable year
1998 indicating zero-rated sales of P68,761,361.50 and input VAT of PI,834,388.55 paid on its domestic
purchases of goods and services for the same period. On July 21, 1999, respondent filed an Application
for Tax Credit/Refund of VAT Paid for the period July to December 1998 in the amount of
P4,154,969.51, which was not acted upon by herein petitioner. On January 9, 2001, respondent filed a
petition for review before the CTA, praying for the refund or the issuance of a tax credit certificate. The
CTA First Division ordered the CIR to refund or issue a tax credit certificate in favor of respondent in
the reduced amount of P1,556,913.68 representing the latter's valid claim. The CIR moved for the
reconsideration of the aforesaid CTA First Division Decision, but was denied. The CTA en banc
dismissed the petition holding that the CIR could not raise for the first time on appeal the issue of
prescription in the filing of respondent's judicial claim for refund.

ISSUE: WON the issue of prescription was belatedly raised.

HELD: No. In fine, the taxpayer can file its administrative claim for refund or credit at any time within
the two-year prescriptive period. If it files its claim on the last day of said period, it is still filed on time.
The CIR will have 120 days from such filing to decide the claim. If the CIR decides the claim on the 120th
day, or does not decide it on that day, the taxpayer still has 30 days to file its judicial claim with the CTA;
otherwise, the judicial claim would be, properly speaking, dismissed for being filed out of time and not,
as the CTA En Banc puts it, prescribed. It bears emphasis that Section 112 (D), which is explicit on
the mandatory and jurisdictional nature of the 120+30-day period, was already effective on January 1,
1998. Hence, it is of no consequence that the Aichi and San Roque rulings were not yet in existence when
respondent's administrative claim was filed in 1999, so as to rid itself of the said section's mandatory and
jurisdictional application. That being said, and notwithstanding the fact that respondent's administrative
claim had been timely filed, the Court is nonetheless constrained to deny the averred tax refund or credit,
as its judicial claim therefor was filed beyond the 120+30-day period, and, hence, deemed to be filed out
of time.
 La Suerte Cigar & Cigarette Factory v. CA

G.R. No. 125346

November 11, 2014

FACTS: Petitioners are domestic corporations engaged in the production and manufacture of cigars and
cigarettes, importing from foreign sources and purchase locally produced leaf tobacco to be used in such
processes. The BIR sent several assessment letters on different dates to these cigar and cigarette producers
and manufacturers for the importation and local purchase of stemmed leaf tobacco, which the companies
assail. The companies claim that stemmed leaf tobacco cannot be considered prepared or partially
prepared tobacco because it does not fall within the definition of processed tobacco. They also argue that
since locally manufactured stemmed leaf tobaccos are not subject to specific tax, it follows that imported
stemmed leaf tobaccos are also not subject to specific tax. BIR argues that partially manufactured tobacco
includes stemmed leaf tobacco, hence subject to specific tax.

ISSUE: WON petitioner’s products are subject to said tax.

HELD: Yes. Excise tax is a tax on the production, sale, or consumption of a specific commodity in a
country. It does not matter to what use the articles subject to tax is put; the excise taxes are still due, even
though the articles are removed merely for storage in some other place and are not actually sold or
consumed. Stemmed leaf tobacco is subject to the specific tax under Section 141(b). It is a partially
prepared tobacco. The removal of the stem or midrib from the leaf tobacco makes the resulting stemmed
leaf tobacco a prepared or partially prepared tobacco. Stemmed leaf tobacco transferred in bulk between
cigarette manufacturers are exempt from excise tax under Section 137 of the 1986 Tax Code in
conjunction with RR No. V-39 and RR No. 17-67. The transaction contemplated in Section 137 does not
include importation of stemmed leaf tobacco for the reason that the law uses the word "sold" to describe
the transaction of transferring the raw materials from one manufacturer to another. The contention that the
cigarette manufacturers are doubly taxed because they are paying the specific tax on the raw material and
on the finished product in which the raw material was a part is also devoid of merit. There is no validity to
the assertion that the delegated authority can be declared unconstitutional on the theory of double
taxation. It must be observed that the delegating authority specifies the limitations and enumerates the
taxes over which local taxation may not be exercised. The reason is that the State has exclusively reserved
the same for its own prerogative.
 SMI-ED Philippine Technology, Inc. v. CIR

G.R. No. 175410

November 12, 2014

FACTS: Petitioner, a PEZA-registered corporation authorized to engage in the business of manufacturing

ultra-high-density microprocessor unit package. When it failed to commence operations, its factory was
temporarily closed and was subsequently dissolved. It then filed an administrative claim for refund with
the BIR. BIR did not act on the claim, prompting petitioner to file a petition for review with CTA. CTA
denied the petition. Although the claim was filed within the period, fiscal incentives given to PEZA-
registered enterprises may only be availed by PEZA-registered enterprises that had already commenced
operations. On appeal, CTA En Banc dismissed the same. On the CA appeal, petitioners allege that the
CTA has no jurisdiction to make an assessment in cases of an administrative claim for tax refunds.

ISSUE: WON CTA en banc has jurisdiction to make the assessment.

HELD: No. The Court of Tax Appeals may not make such determination before the BIR makes its
assessment and before a dispute involving such assessment is brought to the Court of Tax Appeals on
appeal. The Supreme Court ruled that in an action for the refund of taxes allegedly erroneously paid, the
Court of Tax Appeals may determine whether there are taxes that should have been paid in lieu of the
taxes paid. Determining the proper category of tax that should have been paid is not an assessment. It is
incidental to determining whether there should be a refund.
 Taganito Mining Corporation v. CIR

November 19, 2014

G.R. No. 198076

FACTS: Taganito, a domestic corporation primarily engaged in the business of exploring, producing and
exporting beneficiated nickel silicate ores and chromite ores, filed for refund of excess input VAT paid on
its domestic purchases of taxable goods and services and importation of goods. CIR did not act on the
request, prompting Taganito to file a petition with the CTA. CIR said that the claim was still under
investigation/ CTA partially granted Taganito’s petition and ordered CIR to refund. CIR moved for
reconsideration, averring prematurity. CIR filed an appeal with the En Banc, which granted the same and
ordered the dismissal of the case for prematurity.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. As an exception to the mandatory and jurisdictional nature of the 120+ 30 day period, judicial
claims filed between December 10, 2003 or from the issuance of BIR Ruling No. DA-489-03, up to
October 6, 2010 or the reversal of the ruling in Aichi, need not wait for the lapse of the 120+ 30 day
period in consonance with the principle of equitable estoppel. In the present case, Taganito filed its
judicial claim with the CTA on February 19, 2004, clearly within the period of exception of December I
0, 2003 to October 6, 20 I 0. Its judicial claim was, therefore, not prematurely filed and should not have
been dismissed by the CTA En Banc.
 AT&T Communications Services Phils., Inc. v. CIR

G.R. No. 185969

November 19, 2014

FACTS: AT&T, a domestic corporation principally engaged in the business of rendering information,
promotional, supportive and liaison service, entered into a Service Agreement with AT&T
Communications Services International, Inc., a non-resident foreign corporation. Petitioner has an
Assignment Agreement with AT&T Solutions, Inc. where the latter assigned to petitioner the
performance of services AT&T-SI was supposed to provide Mastercard International, Inc. under a Virtual
Private Network Service Agreement. Likewise, the compensation for such services is paid in US Dollars
to be inwardly remitted to the Philippines by AT&T-SI, which acts as the collecting agent of petitioner.
Thereafter, a second Assignment Agreement was executed and entered into by petitioner with AT&T-SI
for the purpose of performing the latter’s obligation to Lexmark International, Inc. by providing services
to its affiliates in the Philippines, namely: Lexmark Research and Development Corporation and Lexmark
International (Philippines), Inc. (both Philippine Economic Zone Authority [PEZA]-registered
enterprises). Payment of petitioner’s aforesaid services is as well paid in US Dollars through telegraphic
transfer. Petitioner filed for refund of unutilized VAT input taxes but the same remained unacted upon by
the BIR, prompting them to file an action with the CTA. CTA dismissed the claim because they failed to
show proof of compliance with the requirements, which means valid official receipts and not mere sales
invoices should have been presented and submitted in evidence in support thereof. Without proper VAT
official receipts, the foreign currency payment received by petitioner from services rendered for the four
quarters of taxable year 2003 cannot qualify for zero-rating for VAT purposes. The En Banc affirmed the
decision and resolution of its division.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: No. As a general rule, a taxpayer-claimant needs to wait for the expiration of the one hundred
twenty (120)-day period before it may be considered as "inaction" on the part of the Commissioner of
Internal Revenue (CIR). Thereafter, the taxpayer-claimant is given only a limited period of thirty (30)
days from said expiration to file its corresponding judicial claim with the CTA. However, with the
exception of claims made during the effectivity of BIR Ruling No. DA-489-03 (from 10 December 2003
to 5 October 2010), AT&T Communications has indeed properly and timely filed its judicial claim
covering the Second, Third, and Fourth Quarters of taxable year 2003, within the bounds of the law and
existing jurisprudence. The VAT invoice is the seller's best proof of the sale of the goods or services to
the buyer while the VAT receipt is the buyer's best evidence of the payment of goods or services received
from the seller. Thus, the High Court concluded that VAT invoice and VAT receipt should not be
confused as referring to one and the same thing. Certainly, neither does the law intend the two to be used
interchangeably.

Fort Bonifacio Development Corporation v. CIR

 G.R. No. 175707, 180035 & 181092

November 19, 2014

FACTS: The Court has consolidated these 3 petitions as they involve the same parties, similar facts and
common questions of law. Petitioner claims that "the 10% value-added tax is based on the gross selling
price or gross value in money of the ‘goods’ sold, bartered or exchanged." Petitioner likewise claims that
by definition, the term "goods" was limited to "movable, tangible objects which is appropriable or
transferable" and that said term did not originally include "real property. Petitioner’s claims for refund
were consistently denied in the three cases now before SC.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: No. This is not the first time that Fort Bonifacio Development Corporation has come to this Court
about these issues against the very same respondents, and the Court En Banc has resolved them in two
separate, recent cases that are applicable here. It is of course axiomatic that a rule or regulation must bear
upon, and be consistent with, the provisions of the enabling statute if such rule or regulation is to be valid.
In case of conflict between a statute and an administrative order, the former must prevail. To be valid, an
administrative rule or regulation must conform, not contradict, the provisions of the enabling law. An
implementing rule or regulation cannot modify, expand, or subtract from the law it is intended to
implement. Any rule that is not consistent with the statute itself is null and void. To recapitulate, RR 7-95,
insofar as it restricts the definition of "goods" as basis of transitional input tax credit under Section 105 is
a nullity.
 Philamlife v. Secretary of Finance

G.R. No. 210987

November 24, 2014

FACTS: Petitioner used to own 498,590 Class A shares in PhilamCare, representing 49.89% of the latter's
outstanding capital stock. In 2009, petitioner, in a bid to divest itself of its interests in the health
maintenance organization industry, offered to sell its shareholdings in PhilamCare through competitive
bidding. Thus, on September 24, 2009, petitioner's Class A shares were sold for USD 2,190,000, or PhP
104,259,330 based on the prevailing exchange rate at the time of the sale, to STI Investments, Inc., who
emerged as the highest bidder. After the sale was completed and the necessary documentary stamp and
capital gains taxes were paid, Philamlife filed an application for a certificate authorizing registration/tax
clearance with the BIR Large Taxpayers Service Division to facilitate the transfer of the shares. Months
later, petitioner was informed that it needed to secure a BIR ruling in connection with its application due
to potential donor’s tax liability. On January 4, 2012, however, respondent Commissioner on Internal
Revenue (Commissioner) denied Philamlife’s request through BIR Ruling No. 015-12. As determined by
the Commissioner, the selling price of the shares thus sold was lower than their book value based on the
financial statements of PhilamCare as of the end of 2008. As such, the Commisioner held, donor’s tax
became imposable on the price difference pursuant to Sec. 100 of the NIRC. he outright dismissal, so the
CA held, is predicated on the postulate that BIR Ruling No. 015-12 was issued in the exercise of the
Commissioner’s power to interpret the NIRC and other tax laws. Consequently, requesting for its review
can be categorized as "other matters arising under the NIRC or other laws administered by the BIR,"
which is under the jurisdiction of the CTA, not the CA. Philamlife eventually sought reconsideration but
was denied.

ISSUE: WON petitioner is entitled to a tax refund.

HELD: Yes. The price difference is subject to donor's tax. he absence of donative intent, if that be the
case, does not exempt the sales of stock transaction from donor's tax since Sec. 100 of the NIRC
categorically states that the amount by which the fair market value of the property exceeded the value of
the consideration shall be deemed a gift. Thus, even if there is no actual donation, the difference in price
is considered a donation by fiction of law. Moreover, Sec. 7(c.2.2) of RR 06-08 does not alter Sec. 100 of
the NIRC but merely sets the parameters for determining the "fair market value" of a sale of stocks. Such
issuance was made pursuant to the Commissioner's power to interpret tax laws and to promulgate rules
and regulations for their implementation. Lastly, petitioner is mistaken in stating that RMC 25-11, having
been issued after the sale, was being applied retroactively in contravention to Sec. 246 of the NIRC.
Instead, it merely called for the strict application of Sec. 100, which was already in force the moment the
NIRC was enacted.
 BIR v. CA

G.R. No. 197590

November 24, 2014

FACTS: Spouses Manly were charged with tax evasion due to their under declaration of income in their
ITR. The investigation of the revenue officers shows that the under declaration exceeded 30% of the
declared income of the spouses. The Spouses Manly opposed the said complaint due to the lack of
deficiency tax assessment. State Prosecutor. Montera-Barot recommended the filing of criminal charges.
Respondent spouses moved for reconsideration, but was denied. On appeal to the Secretary of Justice via
a Petition for Review, Acting Justice Secretary Devanadera reversed the Resolution of the State
Prosecutor. Petitioner filed a Petition for Certiorari with the CA, which was denied.

ISSUE: WON private respondents are liable for tax evasion.

HELD: Yes. In Ungab v. Judge Cusi, Jr., we ruled that tax evasion is deemed complete when the violator
has knowingly and willfully filed a fraudulent return with intent to evade and defeat a part or all of the
tax. Corollarily, an assessment of the tax deficiency is notrequired in a criminal prosecution for tax
evasion. However, in Commissioner of Internal Revenue v. Court of Appeals, we clarified that although a
deficiency assessment is not necessary, the fact that a tax is due must first be proved before one can be
prosecuted for tax evasion. In the case of income, for it to be taxable, there must be a gain realized or
received by the taxpayer, which is not excluded by law or treaty from taxation. By just looking at the
tables presented by petitioner, there is a manifest showing that respondent spouses had under declared
their income. The huge disparity between respondent Antonio’s reported or declared annual income for
the past several years and respondent spouses’ cash acquisitions for the years 2000, 2001, and 2003
cannot be ignored. Infact, it makes uswonder how they were able to purchase the properties in cash given
respondent Antonio’s meager income. In view of the foregoing,we are convinced that there is probable
cause to indict respondent spouses for tax evasion as petitioner was able to show that a tax is due from
them.
 CIR v. BASF Coating & Inks Philippines, Inc.

G.R. No. 198677

November 26, 2014

FACTS: Petitioner questions the decision of the CTA holding that its right to assess respondent of its tax
deficiencies for the taxable year 1999 has already prescribed for its failure to send the Formal Assessment
Notice to respondent’s new address despite respondent’s failure to give petitioner a formal written notice
of its change of address. On January 10, 2005, after 180 dayshad lapsed without action on the part of
petitioner on respondent's protest, the latter filed a Petition for Review with the CTA, which was granted.
The CTA En Banc promulgated its assailed Decision denying petitioner's Petition for Review for lack of
merit. The CTA En Banc held that petitioner's right to assess respondent for deficiency taxes for the
taxable year 1999 has already prescribed and that the FAN issued to respondent never attained finality
because respondent did not receive it.

ISSUE: WON the assessment has already prescribed.

HELD: Yes. It is true that, under Section 223 of the Tax Reform Act of 1997, the running of the Statute
of Limitations provided under the provisions of Sections 203 and 222 of the same Act shall be suspended
when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is
being assessed or collected. In addition, Section 11 of Revenue Regulation No. 12-85 states that, in case
of change of address, the taxpayer is required to give a written notice thereof to the Revenue District
Officer or the district having jurisdiction over his former legal residence and/or place of business.
However, this Court agrees with both the CTA Special First Division and the CTA En Banc in their ruling
that the above mentioned provisions on the suspension of the three-year period to assess apply only if the
BIR Commissioner is not aware of the whereabouts of the taxpayer. In the present case, petitioner, by all
indications, is well aware that respondent had moved to its new address in Calamba, Laguna. Prescription
in the assessment and in the collection of taxes is provided by the Legislature for the benefit of both the
Government and the taxpayer; for the Government for the purpose of expediting the collection of taxes,
so that the agency charged with the assessment and collection may not tarry too long or indefinitely tothe
prejudice of the interests of the Government, which needs taxes to run it; and for the taxpayer so that
within a reasonable time after filing his return, he may know the amount of the assessment he is required
to pay, whether or not such assessment is well founded and reasonable so that he may either pay the
amount of the assessment or contest its validity in court.
 Taganito Mining Corporation v. CIR

G.R. No. 201195

November 26, 2014

FACTS: Taganito, a domestic corporation primarily engaged in the business of exploring, producing and
exporting beneficiated nickel silicate ores and chromite ores, filed for refund of excess input VAT paid on
its domestic purchases of taxable goods and services and importation of goods. CIR did not act on the
request, prompting Taganito to file a petition with the CTA. CIR said that the claim was still under
investigation/ CTA partially granted Taganito’s petition and ordered CIR to refund. CIR moved for
reconsideration, averring prematurity. CIR filed an appeal with the En Banc, which granted the same and
ordered the dismissal of the case for prematurity. Its petition for review having been denied by the CTA
for being prematurely filed, petitioner filed the instant petition arguing that since it filed its judicial claim
after the issuance of BIR Ruling No. DA-489-03, but before the adoption of the Aichi doctrine, it can
invoke the said BIR Ruling.

ISSUE: WON petitioner has complied with the statutory period.

HELD: No. The SC ruled that the jurisdiction of the CTA over decisions or inaction of the CIR is only
appellate in nature and, thus, necessarily requires the prior filing of an administrative case before the CIR
under Section 112. A petition filed prior to the lapse of the 120-day period prescribed under said Section
would be premature for violating the doctrine on the exhaustion of administrative remedies. There is,
however, an exception to the mandatory and jurisdictional nature of the 120+30-day period. The Court in
San Roque noted that BIR Ruling No. DA-489-03, dated December 10, 2003, expressly stated that the
"taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief
with the CTA by way of Petition for Review." Hence, taxpayers can rely on BIR Ruling No. DA-489-03
from the time of its issuance on December 10, 2003 up to its reversal by this Court in Aichi on October 6,
2010, where it was held that the 120+30 day period was mandatory and jurisdictional.
 City of Lapu-Lapu v. PEZA

G.R. No. 184203

November 26, 2014

FACTS: In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export
Processing Zone. Certain parcels of land of the public domain located in the City of Lapu-Lapu in
Mactan, Cebu were reserved to serve as site of the Mactan Export Processing Zone. In 1995, the PEZA
was created by virtue of R.A. No. 7916 or “the Special Economic Zone Act of 1995.” By virtue of the
law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone and the Mactan
Export Processing Zone the Mactan Economic Zone. As for the EPZA, the law required it to “evolve into
the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for [the]
purpose.” On October 30, 1995, President Ramos issued E.O. No. 282, directing the PEZA to assume and
exercise all of the EPZA’s powers, functions, and responsibilities “as provided in P.D. No. 66 insofar as
they are not inconsistent with the powers, functions, and responsibilities of the PEZA, as mandated under
the Special Economic Zone Act of 1995.” All of EPZA’s properties, equipment, and assets, among others,
were ordered transferred to the PEZA. These are consolidated petitions for review on certiorari the City of
Lapu-Lapu and the Province of Bataan separately filed against the PEZA.

ISSUE: WON PEZA is exempt from payment of real property tax.

HELD: Yes. The PEZA is an instrumentality of the national government. It is not integrated within the
department framework but is an agency attached to the Department of Trade and Industry. Being an
instrumentality of the national government, the PEZA cannot be taxed by local government units.
Although a body corporate vested with some corporate powers, the PEZA is not a government-owned or
controlled corporation taxable for real property taxes. The test of economic viability does not apply to
government entities vested with corporate powers and performing essential public services. The State is
obligated to render essential public services regardless of the economic viability of providing such
service. The non-economic viability of rendering such essential public service does not excuse the State
from withholding such essential services from the public. The PEZA, therefore, need not be economically
viable. It is not a government-owned or controlled corporation liable for real property taxes. Under
Section 234(a) of the Local Government Code, real properties owned by the Republic of the Philippines
are exempt from real property taxes. Even the PEZA’s lands and buildings whose beneficial use have
been granted to other persons may not be taxed with real property taxes. The PEZA may only lease its
lands and buildings to PEZA registered economic zone enterprises and entities. These PEZA-registered
enterprises and entities, which operate within economic zones, are not subject to real property taxes.
Under Section 24 of the Special Economic Zone Act of 1995, no taxes, whether local or national, shall be
imposed on all business establishments operating within the economic zones.
 CIR v. Stanley Works Sales

G.R. No. 187589

December 3, 2014

FACTS: Stanley Works Sales is a domestic corporation, and Stanley Works Agencies Limited, Singapore
entered into a Representation Agreement. Under such agreement, Stanley-Singapore appointed Stanley
Works Sales as its sole agent for the selling of its products within the Philippines on an indent basis. On
April 16, 1990, Stanley Works Sales filed with the BIR its Annual Income Tax Return for taxable year
1989. On March 19, 1993, the BIR issued against Stanley Works Sales a Pre-Assessment Notice for 1989
deficiency income tax. On March 29, 1993, it received its copy of the PAN. The Commissioner issued to
Stanley Works Sales assessment for deficiency income tax for taxable year 1989. Stanley Works Sales
filed a protest letter and requested reconsideration and cancellation of the assessment. A certain Mr. John
Ang, on behalf of Stanley Works Sales, executed a “Waiver of the Defense of Prescription Under the
Statute of Limitations of the National Internal Revenue Code.” Under the terms of the Waiver, Stanley
Works Sales waived its right to raise the defense of prescription under Section 223 of the NIRC of 1977
insofar as the assessment and collection of any deficiency taxes for the year ended December 31, 1989,
but not after June 30, 1994. This was not signed by the Commissioner or any of his authorized
representatives and did not state the date of acceptance. Stanley Works Sales did not execute any other
Waiver or similar document. The Commissioner denied the request for reconsideration. The CTA found
that although the assessment was made within the prescribed period, the period within which the
Commissioner may collect deficiency income taxes had already lapsed. The CTA ruled that the request
for reconsideration did not suspend the running of the prescriptive period to collect deficiency income tax.
CTA En Banc affirmed this ruling.

ISSUE: WON the right to collect has already prescribed.

HELD: Yes. The period to assess and collect deficiency taxes may be extended only upon a written
agreement between the Commissioner and the taxpayer prior to the expiration of the three-year prescribed
period in accordance with Section 222 (b) of the NIRC. In relation to the implementation of this
provision, the CIR issued Revenue Memorandum Order (RMO) No. 20-9010 on 4 April 1990 to provide
guidelines on the proper execution of the Waiver of the Statute of Limitations. A Waiver must strictly
conform to RMO No. 20-90. The mandatory nature of the requirements set forth in RMO No. 20-90 was
recognized by the BIR itself in the latter’s subsequent issuances, namely, Revenue Memorandum Circular
(RMC) Nos. 6-200513 and 29-2012. Thus, the BIR cannot claim the benefits of extending the period to
collect the deficiency tax as a consequence of the Waiver when, in truth it was the BIR’s inaction which is
the proximate cause of the defects of the Waiver. The BIR has the burden of ensuring compliance with
the requirements of RMO No. 20-90, as they have the burden of securing the right of the government to
assess and collect tax deficiencies. This right would prescribe absent any showing of a valid extension of
the period set by the law. The Waiver was not a unilateral act of the taxpayer. The BIR must act on it,
either by conforming to or by disagreeing with the extension. A waiver of the statute of limitations,
whether on assessment or collection, should not be construed as a waiver of the right to invoke the
defense of prescription but, rather, an agreement between the taxpayer and the BIR to extend the period to
a date certain, within which the latter could still assess or collect the taxes due.
 CBK Power Company, Ltd. v. CIR

G.R. No. 198928

December 3, 2014

FACTS: CBK Power, a partnership, is registered as a VAT entity since 2000 and in 2003 its application
for a VAT zero-rate status was approved. CBK Power submitted its quarterly VAT returns for the period
covering January 1, 2003 to December 31, 2003. Subsequently, CBK Power amended its April 24, 2003,
July 25, 2003, October 24, 2003, and January 26, 2004 VAT returns. CBK Power filed before the BIR an
administrative claim for the issuance of a tax credit certificate for a total amount of 295,994,518.00.
Thereafter, CBK Power filed its judicial claim for tax refund/credit before the CTA. The CIR claimed that
the amount being claimed by CBK Power as alleged unutilized input VAT must be denied for not being
properly documented. The CTA Second Division ruled in favor of CBK Power and accordingly awarded
it a tax credit certificate in the reduced amount of P215,998,263.13. The CTA En Banc reversed and set
aside the CTA Second Division’s ruling and denied CBK Power’s claim for refund in its entirety. It found
that CBK Power filed its judicial claim for refund/credit just 20 days after it filed its administrative claim.

ISSUE: WON petitioner complied with the statutory period.

HELD: Yes. 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 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 Court held that the observance of the 120-day period is a mandatory and jurisdictional
requisite to the filing of a judicial claim for refund before the CTA. Consequently, its non-observance
would lead to the dismissal of the judicial claim on the ground of lack of jurisdiction. It was also clarified
that the two-year prescriptive period applies only to administrative claims and not to judicial claims. The
Court recognized an exception to the mandatory and jurisdictional nature of the 120-day period. It ruled
that BIR Ruling No. DA- 489-03 provided a valid claim for equitable estoppel under Section 246 of the
NIRC. In essence, the BIR Ruling stated that “taxpayer-claimant need not wait for the lapse of the 120-
day period before it could seek judicial relief with the CTA by way of Petition for Review.” Records
disclose that CBK Power filed its administrative and judicial claims for issuance of tax credits on March
29, 2005 and April 18, 2005, respectively or during the period when BIR Ruling No. DA-489-03 was in
place (December 10, 2003 to October 6, 2010). As such, it need not wait for the expiration of the 120-day
period before filing its judicial claim before the CTA, which was timely filed.
 L.G. Electronic Philippines v. CIR

G.R. No. 165451

December 3, 2014

FACTS: On March 21, 1998, LG received a formal assessment notice and demand letter from the BIR.
LG was assessed deficiency income tax of P267,365,067.41 for the taxable year of 1994. LG, through its
external auditor, SGV & Company filed an administrative protest with the BIR against the tax
assessment. Without waiting for the Commissioner of Internal Revenue’s resolution of the protest, LG
filed a petition for review before the CTA on January 11, 1999. The CIR argued before the CTA that the
assessment issued was in accordance with law since the interest expenses claimed by LG were
unsupported by sufficient proof. LG had undeclared income. Brokerage fees and other charges were not
subjected to expanded withholding tax. Moreover, the details in the assessment notice substantially
complied with the provisions of Section 228 of the Tax Code, the taxpayer having been informed in
writing of the law and the facts on which the assessment was based. On May 11, 2004, the CTA ruled that
LG was liable for the payment of P27,181,887.82, representing deficiency income tax for taxable year
1994, including 20% delinquency interest computed from March 18, 1998. On November 18, 2004, LG
filed the present petition for review on Certiorari. On January 29, 2008, LG stated that it availed itself of
the tax amnesty provided under R.A. No. 9480 by paying the total amount of P8,647,565.50. In addition,
the BIR, through Assistant Commissioner Roldan, issued a ruling on January 25, 2008, which held that
LG complied with the provisions of R.A. No. 9480. LG was, thus, entitled to the immunities and
privileges provided for under the law including “civil, criminal or administrative penalties under the
NIRC. According to CIR, LG cannot claim the tax amnesty.

ISSUE: WON petitioner is entitled to tax amnesty.

HELD: Yes. Taxpayers who availed themselves of the tax amnesty program are entitled to the immunities
and privileges under Section 6 of the law. All these immunities and privileges shall not apply where the
person failed to file a SALN and the Tax Amnesty Return, or where the amount of net worth as of
December 31, 2005 is proven to be understated to the extent of thirty percent or more, in accordance with
the provisions of Section 3 hereof. The court has already ruled on the Bureau of Internal Revenue’s
unjustified expansion of cases not covered under the tax amnesty program. Furthermore, contrary to
respondent’s argument, the case does not involve withholding taxes. This is readily seen in Republic Act
No. 9480 and BIR Revenue Memorandum Circular No. 55-2007. Income tax is different from
withholding tax, with both operating in distinct systems. In the seminal case of Fisher v. Trinidad,
Supreme Court defined income tax as “a tax on the yearly profits arising from property, professions,
trades, and offices.” Otherwise stated, income tax is the “tax on all yearly profits arising from property,
professions, trades or offices, or as a tax on a person’s income, emoluments, profits and the like.” In this
case, LG Electronics was assessed for its deficiency income taxes due to the disallowance of several items
for deduction. LG Electronics was not assessed for its liability as withholding agent. The two liabilities
are distinct from and must not be confused with each other. The main reason for the disallowance of the
deductions was that LG was not able to fully substantiate its claim of remittance through receipts or
relevant documents.
 Mindanao II Geothermal Partnership v. CIR

G.R. No. 204795

December 8, 2014

FACTS: On April 24, 2008, July 25, 2008, October 24, 2008, and January 2, 2009,Mindanao II filed its
quarterly VAT returns for the four quarters of 2008 reflecting the amount of P6,149,256.25 as
unutilized/excess input VAT. On December 28, 2009, Mindanao II filed before the BIR an administrative
claim for refund/credit of its unapplied and unutilized input VAT for the year 2008 in the aforesaid
amount. Thereafter, or on March 30, 2010, Mindanao II filed its judicial claim for refund/credit of its
unutilized/excess input VAT for the first quarter of 2008 in the amount of P1,624,603.33 before the CTA.
About two months later, or on May 27, 2010, petitioner filed its judicial claim for refund/credit of its
unutilized/excess input VAT for the second to fourth quarters of 2008 in the amount of P4,524,652.92.
The CIR moved to dismiss the case arguing that it was filed prematurely in violation of Section 112(D) of
the NIRC. The CTA granted the motion of the CIR which was affirmed by the CTA En Banc citing the
cases of Aichi Forging and San Roque.

ISSUE: WON petitioner has complied with the statutory period.

HELD: Yes. In the Aichi case cited by both the CTA Division and the CTA En Banc, the Court held that
the observance of the 120-day period is a mandatory and jurisdictional requisite to the filing of a judicial
claim for refund/credit of input VAT before the CTA. Aichi also clarified that the two (2)-year
prescriptive period applies only to administrative claims and not to judicial claims. Succinctly put, once
the administrative claim is filed within the two (2)-year prescriptive period, the claimant must wait for the
120-day period to end and, thereafter, he is given a 30-day period to file his judicial claim before the
CTA, even if said 120-day and 30-day periods would exceed the aforementioned two (2)-year prescriptive
period. However, in CIR v. San Roque Power Corporation, the Court recognized an exception to the
mandatory and jurisdictional nature of the 120-day period. It ruled that BIR Ruling No. DA-489-03 dated
December 10, 2003 provided a valid claim for equitable estoppel under Section 246 of the NIRC. In
essence, the aforesaid BIR Ruling stated that the “taxpayer-claimant need not wait for the lapse of the
120-day period before it could seek judicial relief with the CTA by way of Petition for Review.” In this
case, records disclose that petitioner filed its administrative and judicial claims for refund/credit of its
input VAT in CTA Case No. 8082 on December 28, 2009 and March 30, 2010, respectively, or during the
period when BIR Ruling No. DA-489-03 was in place, i.e., from December 10, 2003 to October 6, 2010.
As such, it need not wait for the expiration of the 120-day period before filing its judicial claim before the
CTA, and hence, is deemed timely filed. In view of the foregoing, both the CTA Division and the CTA
En Banc erred in dismissing outright petitioner’s claim on the ground of prematurity.
 Samar I Electric Cooperative v. CIR

G.R. No. 193100

December 10, 2014

FACTS: Samar-I Electric Cooperative, Inc. is an electric cooperative, with principal office at Barangay
Carayman, Calbayog City. On July 13, 1999 and April 17, 2000, SAMELCO-I filed its 1998 and 1999
income tax returns, respectively. SAMELCO-I filed its 1997, 1998, and 1999 Annual Information Return
of Income Tax Withheld on Compensation, Expanded and Final Withholding Taxes on February 17,
1998, February 1, 1999, and February 4, 2000, in that order. It cooperated in the audit and investigation
conducted by the Special Investigation Division of the BIR by submitting the required documents on
December 5, 2000. On October 19, 2001, BIR sent a Notice for Informal Conference which was received
by SAMELCO-I in November 2001; indicating the allegedly income and withholding tax liabilities of the
latter for 1997 to 1999. On February 27, 2002, a letter was sent by SAMELCO-I to the BIR requesting a
detailed computation of the alleged 1997, 1998 and 1999 deficiency withholding tax on compensation. On
February 28, 2002, BIR issued a Preliminary Assessment Notice .The PAN was received by SAMELCO-I
on April 9, 2002, which was protested on April 18, 2002. However, on July 8, 2002, BIR dismissed
SAMELCO-I’s protest and recommended the issuance of a Final Assessment Notice.

ISSUE: WON the issuance of the FAN-FLD was proper and valid.

HELD: Yes. SAMELCO-I was sufficiently apprised of the nature, factual and legal bases, as well as how
the deficiency taxes being assessed against it were computed. Records reveal that on October 19, 2001,
prior to the conduct of an informal conference, SAMELCO-I was already informed of the results and
findings of the investigations made by the BIR, and was duly furnished with a copy of the summary of the
report submitted by Revenue Officer Elisa G. Ponferrada-Rapatan of the Special Investigation Division.
Said summary report contained an explanation of Findings of Investigation stating the legal and factual
bases for the deficiency assessment. SAMELCO-I was given the opportunity to protest the PAN by
questioning BIR’s interpretation of the laws cited as legal basis for the computation of the deficiency
withholding taxes and assessment of minimum corporate income tax. Although the FAN and demand
letter issued to SAMELCO-I were not accompanied by a written explanation of the legal and factual bases
of the deficiency taxes assessed against the it, the records showed that respondent in its letter dated April
10, 2003 responded to petitioner’s October 14, 2002 letter-protest, explaining at length the factual and
legal bases of the deficiency tax assessments and denying the protest. Hence, SAMELCO-I’s right to due
process was not violated.
 PACCOR v. BIR

G.R. No. 215427

December 10, 2014

FACTS: PAGCOR filed before this Court a Petition for Review on Certiorari and Prohibition seeking the
declaration of nullity of Section 1 of R.A. No. 9337 insofar as it amends Section 27(C) of R.A. No. 8424,
by excluding PAGCOR from the enumeration of government-owned or controlled corporations exempted
from liability for corporate income tax. This Court upheld that Section 1 of R.A. No. 9337, amending
Section 27(c) of the NIRC of 1997, by excluding petitioner from the enumeration of government-owned
and controlled corporations exempted from corporate income tax is valid and constitutional, while BIR
Revenue Regulations No. 16-2005 insofar as it subjects PAGCOR to 10% VAT is null and void for being
contrary to the NIRCof 1997, as amended by R.A. No. 9337. PAGCOR wrote the BIR Commissioner
requesting for reconsideration of the tax treatment of its income from gaming operations and other related
operations under RMC No. 33-2013. The request was, however, denied by the BIR Commissioner. The
Decision dated March 15, 2011 became final. Consequently, PAGCOR filed a Motion for Clarification
alleging that RMC No. 33-2013 is an erroneous interpretation and application of the aforesaid Decision,
and seeking clarification as to the following: a) whether PAGCOR’s tax privilege of paying 5% franchise
tax in lieu of all other taxes with respect to its gaming income, pursuant to its Charter – P.D. 1869, as
amended by R.A. 9487, is deemed repealed or amended by Section 1 (c) of R.A. 9337; b) If it is deemed
repealed or amended, whether PAGCOR’s gaming income is subject to both 5% franchise tax and income
tax; c) whether PAGCOR’s income from operation of related services is subject to both income tax and
5% franchise tax.

ISSUE: WON the income is subject to both 5% franchise tax and income tax.

HELD: No. It is worthy to note that under P.D. 1869, as amended, PAGCOR’s income is classified into
two: (1) income from its operations conducted under its Franchise, pursuant to Section 13(2) (b) thereof
(income from gaming operations); and (2) income from its operation of necessary and related services
under Section 14(5) thereof (income from other related services). In RMC No. 33-2013, respondent
further classified the aforesaid income as follows: a) PAGCOR’s income from its operations and licensing
of gambling casinos, gaming clubs and other similar recreation or amusement places, gaming pools; b)
Income from “other related operations”. After a thorough study of the arguments and points raised by the
parties, and in accordance with our Decision dated March 15, 2011, we sustain PAGCOR’s contention
that its income from gaming operations is subject only to five percent (5%) franchise tax under P.D. 1869,
as amended, while its income from other related services is subject to corporate income tax pursuant to
P.D. 1869, as amended, as well as R.A. No. 9337. This is demonstrable. First, under P.D. 1869, as
amended, PAGCOR is subject to income tax only with respect to its operation of related services.
Accordingly, the income tax exemption ordained under Section 27(c) of R.A. No. 8424 clearly pertains
only to PAGCOR’s income from operation of related services. Such income tax exemption could not have
been applicable to PAGCOR’s income from gaming operations as it is already exempt therefrom under
P.D. 1869. Second, every effort must be exerted to avoid a conflict between statutes; so that if reasonable
construction is possible, the laws must be reconciled in that manner. As we see it, there is no conflict
between P.D. 1869, as amended, and R.A. No. 9337.
 City of Manila v. Hon. Angel Colet

G.R. No. 120051

December 10, 2014

FACTS: The Manila Revenue Code was enacted on June 22, 1993 by the City Council of Manila and
approved on June 29, 1993 by then Manila Mayor Lim. Shortly thereafter, Ordinance No. 7807 was
enacted by the City Council of Manila on September 27, 1993 and approved by Mayor Lim on September
29, 1993, already amending several provisions of the Manila Revenue Code. Section 21 of the Manila
Revenue Code, as amended, imposed a lower tax rate on the businesses that fell under it. The City of
Manila, through its City Treasurer, began imposing and collecting the business tax under Section 21(B) of
the Manila Revenue Code, as amended, beginning January 1994. Thereafter, several corporations affected
by the imposition of said tax, impugned the constitutionality of Section 21(B) of Ordinance No. 7794 of
the City of Manila.

ISSUE: WON said provision of law is valid and constitutional.

HELD: No. Section 21(B) of the Manila Revenue Code, as amended, is null and void for being beyond
the power of the City of Manila and its public officials to enact, approve, and implement under the LGC.
Among the common limitations on the taxing power of LGUs is Section 133(j) of the LGC, which states
that “unless otherwise provided herein,” the taxing power of LGUs shall not extend to “taxes on the gross
receipts of transportation contractors and persons engaged in the transportation of passengers or freight by
hire and common carriers by air, land or water, except as provided in this Code.” Section 133(j) of the
LGC clearly and unambiguously proscribes LGUs from imposing any tax on the gross receipts of
transportation contractors, persons engaged in the transportation of passengers or freight by hire, and
common carriers by air, land, or water. Yet, confusion arose from the phrase “unless otherwise provided
herein,” found at the beginning of the said provision. The City of Manila and its public officials insisted
that said clause recognized the power of the municipality or city, under Section 143(h) of the LGC, to
impose tax “on any business subject to the excise, value added or percentage tax under the National
Internal Revenue Code, as amended.” And it was pursuant to Section 143(h) of the LGC that the City of
Manila and its public officials enacted, approved, and implemented Section 21(B) of the Manila Revenue
Code, as amended. In the case at bar, the Sanggunian of the municipality or city cannot enact an
ordinance imposing business tax on the gross receipts of transportation contractors, persons engaged in
the transportation of passengers or freight by hire, and common carriers by air, land, or water, when said
sanggunian was already specifically prohibited from doing so. Any exception to the express prohibition
under Section 133(j) of the LGC should be just as specific and unambiguous.
 BDO et al. vs. Republic

G.R. No. 198756

January 13, 2015

FACTS: This case involves P35 billion worth of 10-year zero-coupon treasury bonds issued by the
Bureau of Treasury (BTr) denominated as the Poverty Eradication and Alleviation Certificates or the
PEACe Bonds. These PEACe Bonds would initially be purchased by a special purpose vehicle on behalf
of Caucus of Development NGO Networks (CODE-NGO), repackaged and sold at a premium to
investors. The net proceeds from the sale will be used to endow a permanent fund to finance meritorious
activities and projects of accredited non-government organizations (NGOs) throughout the country. In
relation to this, CODE-NGO wrote a letter to the Bureau of Internal Revenue (BIR) to inquire as to
whether the PEACe Bonds will be subject to withholding tax of 20%. The BIR issued several rulings
beginning with BIR Ruling No.020-2001 (issued on May 31, 2001) and was subsequently reiterated its
points in BIR Ruling No. 035-200119 dated August 16, 2001 and BIR Ruling No. DA-175-0120. The
rulings basically say that in determining whether financial assets such as a debt instrument are deposit
substitute, the “20 or more individual or corporate lenders rule” should apply. Likewise, the “at any one
time” stated in the rules should be construed as “at the time of the original issuance.”

With this BTr made a public offering of the PEACe Bonds to the Government Securities Eligible Dealers
(GSED) wherby RCBC won as the highest bidder for approximately 10.17 billion, resulting in a discount
of approximately 24.83 billion. RCBC Capital Capital entered into an underwriting agreement with
CODE-NGO, whereby RCBC Capital was appointed as the Issue Manager and Lead Underwriter for the
offering of the PEACe Bonds.

In October 7, 2011, BIR issued BIR RULING NO. 370-2011 in response to the query of the Secretary of
Finance as to the proper tax treatment of the discounts and interest derived from Government Bonds. It
cited three other rulings issued in 2004 and 2005. The above ruling states that the all treasury bonds
(including PEACe Bonds), regardless of the number of purchasers/lenders at the time of
origination/issuance are considered deposit substitutes. In the case of zero-coupon bonds, the discount
(i.e. difference between face value and purchase price/discounted value of the bond) is treated as interest
income of the purchaser/holder.

ISSUE: WON the BIR rulings is defective.

HELD: Yes. The Supreme Court finds that the BIR Rulings issued in 2001 and the assailed BIR Rulings
are defective taking into consideration the above discussions on deposit substitutes and its tax treatment.
As for the BIR Rulings issued in 2001, the SC finds that the interpretation of the phrase “at any one
time”, is “…to mean at the point of origination alone is unduly restrictive….” On the other hand, the 2011
BIR Ruling which relied on the 2004 and 2005 BIR Rulings is void for creating a distinction between
government bonds and those issued by private corporations, when there is none in the law. Further, it
completely disregarding the 20-lender rule under the NIRC since it says, ““all treasury bonds . . .
regardless of the number of purchasers/lenders at the time of origination/issuance are considered deposit
substitutes…”
 CBK Power Company vs. CIR

G.R. No. 193383-84

January 14, 2015

FACTS: These cases are consolidated petitions for certiorari assailing the CTA First Division’s decision
in granting CBK Power Company Limited (CBK Power) a refund of its excess final withholding tax for
the taxable years 2001 to 2003. CBK Power is a limited partnership duly organized and existing under the
laws of the Philippines, and primarily engaged in the development and operation of hydro electric power
generating plants in Laguna. In February 2001, CBK Power borrowed money from Industrial Bank of
Japan, Fortis-Netherlands, Raiffesen Bank, Fortis-Belgium, and Mizuho Bank for which it remitted
interest payments from May 2001 to May 2003. It allegedly withheld final taxes from said payments
based on the following rates: (a) fifteen percent (15%) for Fortis-Belgium, Fortis-Netherlands, and
Raiffesen Bank; and (b) twenty percent (20%) for Industrial Bank of Japan and Mizuho Bank. However,
according to CBK Power, under the relevant tax treaties between the Philippines and the respective
countries in which each of the banks is a resident, the interest income derived by the aforementioned
banks are subject only to a preferential tax rate of 10%. Accordingly, on April 14, 2003, CBK Power filed
a claim for refund of its excess final withholding taxes allegedly erroneously withheld and collected. Due
to CIR’s inaction, CBK Power appealed to CTA Division. The latter partially granted the refund. One of
the refunds was disallowed because of failure on the part of CBK Power to obtain an ITAD ruling with
respect to its transactions with Fortis-Netherlands. CTA En Banc affirmed said decision.

ISSUE: WON the BIR may add a requirement of prior application for an ITAD.

HELD: No. The Court held that the obligation to comply with a tax treaty must take precedence over the
objective of RMO No. 1-2000. Bearing in mind the rationale of tax treaties, the period of application for
the availment of tax treaty relief as required by RMO No. 1-2000 should not operate to divest entitlement
to the relief as it would constitute a violation of the duty required by good faith in complying with a tax
treaty. The denial of the availment of tax relief for the failure of a taxpayer to apply within the prescribed
period under the administrative issuance would impair the value of the tax treaty. At most, the application
for a tax treaty relief from the BIR should merely operate to confirm the entitlement of the taxpayer to the
relief. Logically, noncompliance with tax treaties has negative implications on international relations, and
unduly discourages foreign investors. While the consequences sought to be prevented by RMO No. 1-
2000 involve an administrative procedure, these may be remedied through other system management
processes, e.g., the imposition of a fine or penalty. But we cannot totally deprive those who are entitled to
the benefit of a treaty for failure to strictly comply with an administrative issuance requiring prior
application for tax treaty relief.
 ROHM Apollo Semiconductor Philippines vs. CIR

G.R. No. 168950

January 14, 2015

FACTS: Petitioner Rohm Apollo is a domestic corporation registered with the Securities and Exchange
Commission. It is also registered with the Philippine Economic Zone Authority as an Ecozone Export
Enterprise. Sometime in June 2000, prior to the commencement of its operations on 1 September 2001,
Rohm Apollo engaged the services of Shimizu Philippine Contractors, Inc. (Shimizu) for the construction
of a factory.For services rendered by Shimizu, petitioner made initial payments of P198,551,884.28 on 7
July 2000 and P132,367,923.58 on 3 August 2000. Petitioner treated the payments as capital goods
purchases and thus filed with the BIR an administrative claim for the refund or credit of accumulated
unutilized creditable input taxes on 11 December 2000. The waiting period for the claim lapsed without
any action by the CIR on the claim. Instead of filing a judicial claim within 30 days from the lapse of the
120-day period on 10 April, or until 10 May 2001, Rohm Apollo filed a Petition for Review with the CTA
docketed as CTA Case No. 6534 on 11 September 2002. It was under the belief that a judicial claim had
to be filed within the two-year prescriptive period ending on 30 September 2002. On 27 May 2004, the
CTA First Division rendered a Decision denying the judicial claim for a refund or tax credit. On 14 July
2004, petitioner Rohm Apollo filed a Motion for Reconsideration, but the tax court stood by its Decision.
On 18 January 2005, the taxpayer elevated the case to the CTA En Banc via a Petition for Re-
view.hanRoblesvirtualLawlibrary On 22 June 2005, the CTA En Banc rendered its Decision denying
Rohm Apollo’s Petition for Re-view.The appellate tax court held that the failure to present the VAT
returns for the subsequent taxable year proved to be fatal to the claim for a refund/tax credit, considering
that it could not be determined whether the claimed amount to be refunded remained unutilized.

ISSUE: WON the judicial claim was belatedly filed.

HELD: Yes. Section 112(D) of the 1997 Tax Code states the time requirements for filing a judicial claim
for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120
days, which serves as a waiting period to give time for the CIR to act on the administrative claim for a
refund or credit; and the period of 30 days, which refers to the period for filing a judicial claim with the
CTA. It is the 30-day period that is at issue in this case. On 11 December 2000, petitioner filed with the
BIR an application for the refund or credit of accumulated unutilized creditable input taxes. Thus, the CIR
had a period of 120 days from 11 December 2000, or until 10 April 2001, to act on the claim. It failed to
do so, however. Rohm Apollo should then have treated the CIR’s inaction as a denial of its claim.
Petitioner would then have had 30 days, or until 10 May 2001, to file a judicial claim with the CTA. But
Rohm Apollo filed a Petition for Review with the CTA only on 11 September 2002. The judicial claim
was thus filed late.
 CIR vs. Team Energy Corporation

G.R. No. 188016

January 14, 2015

FACTS: This is an appeal made by the CIR on the decision by the CTA in granting a tax credit certificate
in favor of Team Energy Corporation. The respondent filed its annual income tax return (ITR) for
calendar years 2002 and 2003 , reflecting overpaid income taxes or excess creditable withholding taxes in
the amounts of P6,232,003.00 and P10,134,410.00 for taxable years 2002 and 2003. Respondent then
filed an administrative claim for refund or issuance of tax credit certificate with the Bureau of Internal
Revenue (BIR) in the total amount of P16,366,413.00, representing the overpaid income tax or the excess
creditable withholding tax of the respondent for calendar years 2002 and 2003. Due to the inaction of the
BIR, the respondent filed a petition for review in the Court of Tax Appeals (CTA) on April 14, 2005. On
May 15, 2008, the CTA in Division rendered its decision in favor of the respondent. The petitioner then
filed a motion for reconsideration, but the CTA in Division denied the motion on September 5, 2008. The
petitioner brought a petition for review before the CTA En Banc. On April 15, 2009, the CTA En Banc
rendered a decision dismissing the Petition for Review.

ISSUE: WON Team Energy is entitled to refund.

HELD: Yes. The requirements for entitlement of a corporate taxpayer for a refund or the issuance of tax
credit certificate involving excess withholding taxes are as follows:

1. That the claim for refund was filed within the two-year reglementary period pursuant to Section 22918
of the NIRC;

2. When it is shown on the ITR that the income payment received is being declared part of the taxpayer’s
gross income; and

3. When the fact of withholding is established by a copy of the withholding tax statement, duly issued by
the payor to the payee, showing the amount paidand income tax withheld from that amount.

We do not expound anymore on the first requirement because even the petitioner does not contest that the
respondent filed its administrative and judicial claim for refund within the statutory period. With regard to
the second requirement, Such is supported by the testimonies of Ms. Imelda Dela Cruz Tagama,
petitioner’s Accounting Manager and Mr. Ruben R. Rubio, the Independent Certified Public Accountant
(ICPA) duly commissioned by the Court, proving that the total amount of Creditable Withholding Tax per
petitioner's Annual ITRs for calendar years ended December 31, 2002 and December 31, 2003 agrees
with the total amount of Creditable Withholding Tax presented on petitioner’s Schedule of Creditable
Withholding Tax Certificates for the calendar years ended December 31, 2002 and December 31, 2003.
Moreover, the total amount of gross sales/revenue reported in the Annual ITRs for calendar years 2002
and 2003 is equal to the amounts recorded in the General Ledger Listing of the Creditable Withholding
Tax on the Transfer of Real Property and Sale of Electricity, 2002 Reconciliation of Revenue per ITR and
per General Ledger. With respect to the third requirement, the respondent proved that it had met the
requirement by presenting the 10 certificates of creditable taxes withheld at source. The petitioner did not
challenge the respondent’s compliance with the requirement.
 Panay Power Corporation vs. CIR

G.R. No. 203351

January 21, 2015

FACTS: This is a petition for review on certiorari made by Panay Power in the CTA’s decision of
dismissing its claim for refund/credit of excess input VAT. Panay Power filed its quarterly VAT return
for the fourth quarter of 2003. Subsequently, petitioner filed two (2) amendments to its quarterly VAT
return for the said period on January 28, 2005 and January 19, 2006, respectively, with the latter
amendment reflecting a total unutilized input VAT amounting to P14,122,347.21.9 According to
petitioner, the aforesaid amount pertains to the input VAT. On December 29, 2005, petitioner filed an
administrative claim for refund/credit of its unutilized input VAT in the amount of P14,122,347.21 before
the Revenue District Office No. 51 of the Bureau of Internal Revenue (BIR). Thereafter, on January 20,
2006, petitioner filed a judicial claim for tax refund/credit by way of a petition for review before the CTA,
docketed as CTA Case No. 7402. The CTA Division denied Panay Power’s claim for tax refund/credit for
lack of merit. On a motion for reconsideration, CTA Division denied such on the ground that Panay
Power filed its judicial claim prematurely. The CTA En Banc affirmed the decision of the CTA Division.

ISSUE: WON Panay Power timely filed its tax refund/credit.

HELD: Yes. In this case, records disclose that petitioner filed its administrative and judicial claims for
refund/credit of its input VAT on December 29, 2005 and January 20, 2006, respectively, or during the
period when BIR Ruling No. DA-489-03 was in place, i.e., from December 10, 2003 to October 6, 2010.
As such, it need not wait for the expiration of the 120-day period before filing its judicial claim before the
CTA, and hence, is deemed timely filed. In view of the foregoing, the CTA En Banc erred in dismissing
outright petitioner’s claim on the ground of prematurity. Be that as it may, the Court is not inclined to
grant outright petitioner’s claim of tax refund/credit in the amount of p14,122,347.21 representing
unutilized input VAT for the fourth quarter of 2003. This is because the determination of petitioner’s
entitlement to such claim would necessarily involve questions of fact, which are not reviewable and
cannot be passed upon by the Court in the exercise of its power to review under Rule 45 of the Rules of
Court. Hence, the Court deems it prudent to remand the case to the CTA Division for resolution of the
instant case on the merits.
 Winebrenner & Inigo Insurance Brokers vs. CIR

G.R. No. 206526

January 28, 2015

FACTS: On April 7, 2006, petitioner applied for an administrative taxcredit/refund claiming entitlement
to the refund of its excess or unutilized CWT for CY 2003. The CTA initially granted the claim for
refund. The CIR moved for reconsideration, praying for the denial of the entire amount of refund because
petitioner failed to present the quarterly Income Tax Returns (ITRs) for CY 2004. The CTA then denied
the entire claim of petitioner. It reasoned out that petitioner should have presented as evidence its first,
second and third quarterly ITRs for the year 2004 to prove that the unutilized CWT being claimed had not
been carried over to the succeeding quarters.It stated that before a cash refund or an issuance of tax credit
certificate forunutilized excess tax credits could be granted, it was essential for petitioner to establishand
prove, by presenting the quarterly ITRs of the succeeding years, that the excess CWT was not carried
over to the succeeding taxable quarters considering that the option tocarry over in the succeeding taxable
quarters could not be modified in the final adjustmentreturns (FAR).

ISSUE: WON the submission and presentation of the quarterly ITRs of the succeeding quarters of a
taxable year is indispensable in a claim for refund.

HELD: No. The logic in not requiring quarterly ITRs of the succeeding taxable years to be presented
remains true to this day. What Section 76 requires, just like in all civil cases, is to prove the prima facie
entitlement to a claim, including the fact of not having carried over the excess credits to the subsequent
quarters or taxable year. It does not say that to prove such a fact, succeeding quarterly ITRs are absolutely
needed. This simply underscores the rule that any document, other than quarterly ITRs may be used to
establish that indeed the non-carry over clause has been complied with, provided that such is competent,
relevant and part of the records. It goes without saying that the annual ITR (including any other proof
that may be sufficient to the Court)can sufficiently reveal whether carry over has been made in
subsequent quarters even if the petitioner has chosen the option of tax credit or refund inthe immediately
2003 annual ITR. It must be remembered that taxes computed in the quarterly returnsare mere estimates.
It is the annual ITR which shows the aggregate amounts of income,deductions, and credits for all quarters
of the taxable year. It is the final adjustment returnwhich shows whether a corporation incurred a loss or
gained a profit during the taxablequarter.Thus, the presentation of the annual ITR would suffice in
proving that prioryear's excess credits were not utilized for the taxable year in order to make a
finaldetermination of the total tax due. The absence of any amount written in the Prior Year excess Credit
— Tax Withheldportion of petitioner's 2004 annual ITR clearly shows that no prior excess credits
werecarried over in the first four quarters of 2004 . And since petitioner was able to sufficientlyprove that
excess tax credits in 2003 were not carried over to taxable year 2004 by leavingthe item "Prior Year's
Excess Credits" as blank in its 2004 annual ITR, then petitioner is entitled to a refund. It must be
emphasized that once the requirements laid down by the NIRC have been met, a claimant should be
considered successful in discharging its burden of proving its right to refund. Thereafter, the burden of
going forward with the evidence, as distinct from the general burden of proof, shifts to the opposing party
that is, the CIR. It is then the turn of the CIR to disprove the claim by presenting contrary evidence which
could include the pertinent ITRs easily obtainable from its own files.
 Nippon Express Philippines vs. CIR

G.R. No. 185666

February 4, 2015

FACTS: For the calendar year 2000, Nippon’s gross receipts were primarily derived from rendering its
services to PEZA-registered clients. Likewise, it incurred total sales of P1,063,357,608.74, which as
shown in petitioner’s Amended Quarterly VAT Return. Also, for the same year, petitioner paid input
taxes amounting to P31,846,253.57 and apportioning this amount with its total sales in accordance with
Section 112 of the 1997 Tax Code, as amended; the amount of total sales attributable to zero-rated sales
would be P24,826,667.61. Under the belief that it is entitled to a refund of the amount of P24,826,667.61,
petitioner filed four separate applications for tax credit/refund with the One-Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center of the Department of Finance (OSSAC-DOF) on September 24, 2001.
Receiving no resolution from OSSAC-DOF, petitioner filed the instant petition for review on April 24,
2002. The trial ensued having both parties submitted various documentary and testimonial evidence
during the proceedings, as well as rebuttal and sur-rebuttal evidence, in order to establish their respective
claim. The CTA Division denied Nippon’s petition on the ground that it failed to comply with the
substantation requirements. The CTA En Banc affirmed the Division’s decision in toto.

ISSUE: WON Nippon is entitled to a TCC.

HELD: No. It is evident from the foregoing jurisprudential pronouncements that a taxpayer-claimant only
had a limited period of thirty (30) days from the expiration of the one hundred twenty (120)-day period of
inaction of the Commissioner of Internal Revenue (CIR) to file its judicial claim with the CTA, with the
exception of claims made during the effectivity of Bureau of Internal Revenue (BIR) Ruling No. DA-489-
03 (from 10 December 2003 to 5 October 2010).30 Failure to do so, the judicial claim shall prescribe or
be considered as filed out of time. Applying the foregoing discussion to the present case, although it
appears that petitioner has indeed complied with the required two-year period within which to file a
refund/tax credit claim with the BIR (OSSAC-DOF in this case) by filing all its administrative claims on
24 September 2001 (within the period from the close of the taxable quarters for the year 2000, when the
sales were made), this Court finds that petitioner’s corresponding judicial claim was filed beyond the 30-
day period.
 China Bank vs. CIR

G.R. No. 172509

February 4, 2015

FACTS: This is a Rule 45 appeal made by China Bank assailing the decision of the CTA in making an
assessment against it. China Banking Corporation (“CBC”) is a universal bank duly organized under the
laws of the Philippines. It is engaged in transactions involving sales of foreign exchange to the Central
Bank of the Philippines, commonly known as SWAP Transactions. CBC did not pay tax on the SWAP
transactions for the years 1982-1986. On 19 April 1989, CBC was assessed by the BIR for deficiency
DST on the sales of foreign bills of exchange to the Central Bank amounting to P 11,383, 165.50. CBC
protested asserting five defenses: double taxation, absence of liability, due process violation, validity of
assessment and tax exemption. On 6 December 2001, more than 12 years after the filing of the protest,
the Commissioner of Internal Revenue (CIR) rendered a decision reiterating the deficiency DST
assessment and ordered the payment thereof plus increments within 30 days from receipt of the Decision.
The CIR replied to the CBC’s protest only on 06 December 2001 in which it ordered CBC to pay its tax
deficiency. Thereafter, CBC filed a Petition for Review with the CTA. The CTA denied CBC’s petition
ruling that the SWAP transaction is a telegraphic transfer subject to DST; thus, CBC is liable to pay the
alleged deficiency. On appeal, CBC raised for the first time the issue of prescription. The BIR did not
address the issue of prescription in its Comment.

ISSUE: WON the BIR’s right to collect is barred by prescription.

HELD: Yes. Following Sec. 319(c) of the 1977 NIRC (the Tax Code applicable at the time of
assessment), assessed tax must be collected by distraint or levy and/or court proceeding within three years
from the date when the BIR mails/releases/sends the assessment notice to the taxpayer. In this case, the
records do not show when the assessment notice was mailed, released or sent to CBC. Nevertheless, the
latest possible date that the BIR could have released, mailed or sent the assessment notice was on the
same date that CBC received it, 19 April 1989. Assuming therefore that 19 April 1989 is the reckoning
date, the BIR had three years to collect the assessed DST. However, the records of this case show that
there was neither a warrant of distraint or levy served on CBC's properties nor a collection case filed in
court by the BIR within the three-year period. The attempt of the BIR to collect the tax through its
Answer with a demand for CBC to pay the assessed DST in the CTA on 11 March 2002 did not comply
with Section 319(c) of the 1977 Tax Code, as amended. The demand was made almost thirteen years from
the date from which the prescriptive period is to be reckoned. Thus, the attempt to collect the tax was
made way beyond the three-year prescriptive period. The Court also stated that although CBC raised the
issue of prescription for the first time only during appeal, this does not negate the applicability of
prescription. Citing Sec. 1 of Rule 9 of the Rules of Court, the Court ruled that if the pleadings or
evidence on record shows that the claim is barred by prescription; the court is mandated to dismiss the
claim even if prescription was not raised as a defense. The principle of estoppel likewise applies.
 North Mindanao Power Corporation vs. CIR

G.R. No. 185115

February 18, 2015

FACTS: This is a Rule 45 petition assailing the CTA En Banc’s decision. Petitioner filed an
administrative claim for a refund on 20 June 2000 for the 3rd and the 4th quarters of taxable year 1999,
and on 25 July 2001 for taxable year 2000. Thereafter, alleging inaction of respondent on these
administrative claims, petitioner filed a Petition with the CTA on 28 September 2001. The CTA First
Division denied the Petition and the subsequent Motion for Reconsideration for lack of merit. The Court
in Division found that the term “zero-rated” was not imprinted on the receipts or invoices presented by
petitioner in violation of Section 4.108-1 of Revenue Regulations No. 7-95. Petitioner failed to
substantiate its claim for a refund and to strictly comply with the invoicing requirements of the law and
tax regulations. On appeal to the CTA En Banc, the Petition was likewise denied. The court ruled that for
every sale of services, VAT shall be computed on the basis of gross receipts indicated on the official
receipt. Official receipts are proofs of sale of services and cannot be interchanged with sales invoices as
the latter are used for the sale of goods. Further, the requirement of issuing duly registered VAT official
receipts with the term “zero-rated” imprinted is mandatory under the law and cannot be substituted,
especially for input VAT refund purposes. Then Presiding Justice Acosta maintained his dissent.

ISSUE: WON the CTA has acquired jurisdiction over the claim for refund.

HELD: No. Although the question of jurisdiction was never raised as an issue by the parties, it is well-
settled rule that the issue of jurisdiction over the subject matter may, at any time, be raised by the parties
or considered by the Court motu proprio. Counting 120 days from 20 June 2000, the CIR had until 18
October 2000 within which to decide on the claim for an input VAT refund for the 3rd and the 4th
quarters of taxable year 1999. If after the expiration of that period, there is inaction, petitioner could
elevate the matter to the court within 30 days or until 17 November 2000. Therefore, NMPC belatedly
filed its judicial claim with the CTA on September 28, 2001. With regard the claim for refund for taxable
year 2000, petitioner did not wait for the expiration of the 120-day period since barely 64 days had lapses
when the judicial claim was filed with the CTA. Thus, the judicial claim was prematurely filed.
 Cargill Philippines vs. CIR

G.R. No. 203774

March 11, 2015

FACTS: This is a petition for review on certiorari assailing the CTA’s decision in dismissing Cargill’s
claims for refund of unutilized input VAT. Cargill, a VAT-registered domestic corporation, filed two
petitions in the Court of Tax Appeals for the refund of unutilized input taxes attributable to zero-rated
sales. On June 27, 2003, Cargill filed an administrative claim for refund of unutilized input taxes with the
BIR. Three days after, on June 30, 2003, Cargill filed the first petition with the Court of Tax Appeals. The
second petition was filed on May 31, 2005, which was the same date when Cargill filed an administrative
claim with the BIR.

ISSUE: WON Cargill’s petitions for refund of unutilized input VAT before the CTA should be dismissed
on the ground of prematurity.

HELD: As to the first petition, Yes. As to the second petition, NO. The first petition was filed
prematurely while the second petition was properly filed because it was exempted from the mandatory
120-day period. Sec. 112(A) of RA 8424 provides that claims for tax credit or tax refund of unutilized
input taxes attributable to zero-rated sales can be claimed within two years after the close of the taxable
quarter when the sales were made. Sec. 112(D) of RA 8424 also provides that the Commissioner shall
grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty days
from the date of submission of complete documents. Within thirty (30) days from receipt of the
Commissioner’s decision or after the expiration of the 120-day period, the taxpayer may appeal the
decision or the unacted claim with the CTA. In the landmark case of Aichi Forging vs. CIR, it was held
that the observance of the 120-day period is a mandatory and jurisdictional requisite to the filing of a
judicial claim for refund before the CTA. As such, its non-observance would warrant the dismissal of the
dismissal of the judicial claim for lack of jurisdiction. In Aichi, it was held that the two-year period only
applies to administrative claims, and not judicial claims. Once the administrative claim is filed within the
2-year period, the taxpayer must wait for the lapse of the 120-day period before filing a judicial claim for
refund, even if the 120-day period is beyond the original 2-year period abovementioned. However, the
Supreme Court held in CIR v. San Roque that a valid claim for equitable estoppel by the taxpayer because
of reliance of an earlier ruling issued by the BIR is an exception to the mandatory nature of the 120-day
period. BIR Ruling No. DA-489-03 stated that the taxpayer-claimant need not wait for the lapse of the
120-day period before seeking judicial relief. Taxpayers did not need to observe the stringent 120-day
period for the period December 10, 2003 to October 6, 2010 because the BIR Ruling (DA-489-03) was
still effective at that time. However, for the periods BEFORE and AFTER the abovementioned period
(December 10, 2003 to October 6, 2010) the 120-day period was mandatory and jurisdictional. Hence, in
this case, the first petition, which was filed on June 30, 2003, was prematurely filed because Cargill did
not wait for the lapse of the 120-day period before seeking relief with the CTA. The first petition is not
covered by the exception based on estoppel because it was filed before the BIR issued Ruling No. DA-
489-03. The CTA did not have jurisdiction over the first petition. The second petition, however, fell
within the exemption from the 120-day period because it was filed within the effectivity of BIR Ruling
No. DA-489-03 (within Dec. 10, 2003 to Oct. 6, 2010). Since the second petition was timely filed, it was
reinstated and remanded to the CTA for its resolution on the merits.
 PNB vs. CIR

G.R. No. 206019

March 18, 2015

FACTS: As PNB prepared to consolidate its ownership over a foreclosed property in a loan it granted to
Gotesco, PNB withheld and remitted to the BIR withholding taxes amounting to P74,400,028.49, or 6%
of the bid price. Realizing that it made a mistake, PNB filed an administrative claim for refund of excess
withholding taxes on October 27, 2005. The next day, PNB filed its petition for review for the claim for
refund before the tax court. PNB claimed that it inadvertently applied the 6% creditable withholding tax
rate on the sale, when it should have applied the 5% creditable withholding tax rate on the sale of ordinary
asset under Section 2.57.2(J)(B) of RR No. 2-98, as amended by RR No. 6-01. PNB claimed that it
erroneously withheld and remitted an excess P12,400,004.71. The Court of Tax Appeals First Division
denied PNB’s claim for the refund of excess creditable withholding tax for insufficiency of evidence. The
CTA division agreed that the applicable rate is 5% and not 6% but it held that PNB failed to produce
evidence that Gotesco did not utilize or credit the withheld taxes from its tax liabilities. PNB filed an MR
with the division attaching Gotesco’s 2003 Income Tax Return and the schedule of prepaid taxes. The
CTA Division, however, denied the MR because PNB should have presented the Certificates of
Creditable Tax Withheld at Source (BIR Form No. 2307) issued to Gotesco as supporting documents to
breakdown the creditable taxes withheld in Gotesco’s 2003 income tax return. The CTA division stated
that BIR Forms No. 2307 will confirm whether or not that the amount being claimed by PNB was indeed
not utilized by Gotesco to offset its taxes. PNB appealed the decision through a petition for review before
the CTA En Banc which was also denied.

ISSUE: WON PNB is entitled to the refund of creditable withholding taxes erroneously paid to the BIR.

HELD: Yes. Although PNB was not able to submit Gotesco’s BIR Form No. 2307, PNB submitted
evidence sufficiently showing Gotesco’s non-utilization of the taxes withheld subject of the refund.
Gotesco had continued to assert ownership over the Ever Ortigas Commercial Complex as evidenced by
the following: (1) it challenged the validity of the foreclosure sale which was the transaction subject to the
creditable withholding tax; (2) its 2003 Audited Financial Statements declared the property as still owned
by Gotesco. The SC held that Gotesco’s relentless refusal to recognize PNB’s ownership over the
property constitutes proof that Gotesco will not do any act inconsistent with its claim of ownership over
the property, including claiming the creditable tax imposed on the sale. Other pieces of evidence also
supported Gotesco’s non-utilization of the claimed creditable withholding tax. The detailed breakdown of
the withholding taxes claimed by Gotesco in its 2003 income tax return amounting to P6,014,433 showed
that the creditable taxes came from rental payments of Gotesco’s tenants and not from the foreclosure
sale. Also, Gotesco’s former accountant testified that the tax credits claimed for 2003 did not include any
portion of the amount claimed by PNB for refund. All in all, the evidence presented by PNB sufficiently
proved its entitlement to the claimed refund. There is no need for PNB to present Gotesco’s BIR Form
No. 2307 because the information contained in the said form may be very well gathered from other
documents already presented by PNB, such as BIR Form 1606.
 Eastern Telecomm Phils. vs CIR

G.R. No. 183531

March 25, 2015

FACTS: ETPI seasonably filed its Quarterly VAT Returns for the year 1998 which were, however,
simultane-ously amended on February 22, 2001 to correct its input VAT on domestic purchases of goods
and services and on importation of goods and to reflect its zero-rated and exempt sales for said year. On
January 25, 2000, ETPI filed an administrative claim with the BIR for the refund of the amount of
P9,265,913.42 representing excess input tax attributable to its effectively zero-rated sales in 1998
pursuant to Section 112 of the Republic Act (R.A.) No. 8424, also known as the National Internal
Revenue Code of 1997 (NIRC), as implemented by Revenue Regulations (RR) No. 5-87 and as amended
by RR No. 7-95. Pending review by the BIR, ETPI filed a Petition for Review before the CTA on
February 21, 2000 in order to toll the two-year reglementary period under Section 229 of the NIRC. The
case was docketed as C.T.A. Case No. 6019. The BIR Commissioner opposed the petition and averred
that no judicial action can be instituted by a taxpayer unless a claim has been duly filed before it.
Considering the importance of such procedural requirement, the BIR stressed that ETPI did not file a
formal/written claim for refund but merely submitted a quarterly VAT return for the 4th quarter of 1998
contrary to what Section 229 of the NIRC prescribes. The CTA denied the petition because the VAT
official receipts presented by ETPI to support its claim failed to imprint the word “zero-rated” on its face
in violation of the invoicing requirements under Section 4.108-1 of RR No. 7-95. The CTA further
mentioned that even if ETPI is entitled to a refund, it still failed to present sales invoices covering its
VATable and exempt sales for purposes of allocating its input taxes. ETPI moved for the CTA’s
reconsideration but it was denied in the Resolution dated March 19, 2004. On April 30, 2008, the CTA
en banc rendered a Decision which affirmed the decision of the old CTA. ETPI filed a motion for
reconsideration which was denied in the Resolution dated July 2, 2008. Hence, this petition.

ISSUE: WON ETPI is entitled to a claim for refund.

HELD: No. An applicant for a claim for tax refund or tax credit must not only prove entitlement to the
claim but also compliance with all the documentary and evidentiary requirements. Consequently, the old
CTA, as affirmed by the CTA en banc, correctly ruled that a claim for the refund of creditable input taxes
must be evidenced by a VAT invoice or official receipt in accordance with Section 110(A)(1) of the
NIRC. Sections 237 and 238 of the same Code as well as Section 4.108-1 of RR No. 7-95 provide for the
invoicing requirements that all VAT-registered taxpayers should observe, such as: (a) the BIR Permit to
Print; (b) the Tax Identification Number of the VAT-registered purchaser; and (c) the word “zero-rated”
imprinted thereon. Thus, the failure to indicate the words “zero-rated” on the invoices and receipts issued
by a taxpayer would result in the denial of the claim for refund or tax credit. ETPI failed to discharge its
burden to prove its claim. Tax refunds, being in the nature of tax exemptions, are construed in strictissimi
juris against the taxpayer and liberally in favor of the government. Accordingly, it is a claimant’s burden
to prove the factual basis of a claim for refund or tax credit. Considering that ETPI is engaged in mixed
transactions that cover its zero-rated sales, taxable and exempt sales, it is only appropriate and reasonable
for it to present competent evidence to validate all entries in its returns in order to properly determine
which transactions are zero-rated and which are taxable. Clearly, compliance with all the VAT invoicing
requirements provided by tax laws and regulations is mandatory.
 Silicon Philippines vs CIR

G.R. No. 173241

March 25, 2015

FACTS: Petitioner is registered with the BIR as a VAT taxpayer and with the Board of Investments (BOI)
as a preferred pioneer enterprise.On May 21, 1999, petitioner filed with the respondent CIR an
application for credit/refund of unutilized input VAT for the period October 1, 1998 to December 31,
1998 in the amount of P31,902,507.50. On December 27, 2000, due to the inaction of the respondent,
petitioner filed a Petition for Review with the CTA Division. Petitioner alleged that for the 4th quarter of
1998, it generated and recorded zero-rated export sales in the amount of P3,027,880,818.42, paid to
petitioner in acceptable foreign currency and accounted for in accordance with the rules and regulations
of the BSP; and that for the said period, petitioner paid input VAT in the total amount of P31,902,507.50,
which have not been applied to any output VAT. On November 18, 2003, the CTA Division rendered a
Decision partially granting petitioners claim for refund of unutilized input VAT on capital goods. Only
P9,898,867.00 was allowed to be refunded because training materials, office supplies, posters, banners, T-
shirts, books, and other similar items purchased by petitioner were not considered capital goods under
Section 4.106-1(b) of RR No. 7-95. With regard to petitioners claim for credit/refund of input VAT
attributable to its zero-rated export sales, the CTA Division denied the same because petitioner failed to
present an Authority to Print (ATP) from the BIR; neither did it print on its export sales invoices the ATP
and the word zero-rated. Petitioner moved for reconsideration claiming that it is not required to secure an
ATP since it has a Permit to Adopt Computerized Accounting Documents such as Sales Invoice and
Official Receipts from the BIR. Petitioner further argued that because all its finished products are
exported to its mother company, Intel Corporation, a non-resident corporation and a non-VAT registered
entity, the printing of the word zero-rated on its export sales invoices is not necessary. Upon review, the
CTA En Banc issued the assailed Decision denying the petition for lack of merit.

ISSUE: WON the CTA erred in its ruling.

HELD: No. To claim a refund of input VAT on capital goods, Section 112 (B) of the NIRC requires that:

1. the claimant must be a VAT registered person;

2. the input taxes claimed must have been paid on capital goods;

3. the input taxes must not have been applied against any output tax liability; and

4. the administrative claim for refund must have been filed within two (2) years after the close of the
taxable quarter when the importation or purchase was made.

Corollarily, Section 4.106-1 (b) of RR No. 7-95 defines capital goods as follows:Capital goods or
properties refer to goods or properties with estimated useful life greater that one year and which are
treated as depreciable assets under Section 29 (f), used directly or indirectly in the production or sale of
taxable goods or services. Based on the foregoing definition, we find no reason to deviate from the
findings of the CTA that training materials, office supplies, posters, banners, T-shirts, books, and the
other similar items reflected in petitioners Summary of Importation of Goods are not capital goods.
 MCIAA vs. City of Lapu-Lapu

G.R. No. 181756

June 15, 2015

FACTS: The City issued to petitioner a Statement of Real Estate Tax assessing the lots comprising the
Mactan International Airport which included the airfield, runway, taxi way and the lots on which these are
built. Petitioner contends that these lots, and the lots to which they are built, are utilized solely and
exclusively for public purposes and are exempt from real property tax. Petitioner based its claim for
exemption on DOJ Opinion No. 50. Respondent issued notices of levy on 18 sets of real properties of
petitioners. Petitioner filed a petition for Prohibition, TRO, and a writ of preliminary injunction with
RTC Lapulapu which sought to enjoin respondent City from issuing the warrant of levy against
petitioner’s properties from selling them at public auction for delinquency in realty tax obligations.
Petitioner claimed before the RTC that it had discovered that respondent City did not pass any ordinance
authorizing the collection of real property tax, a tax for the special education fund (SEF), and a penalty
interest for its nonpayment. Petitioner argued that without the corresponding tax ordinances, respondent
City could not impose and collect real property tax, an additional tax for the SEF, and penalty interest
from petitioner. The RTC granted the which was later on lifted upon motion by the respondents The
Court of Appeals held that petitioner’s airport terminal building, airfield, runway, taxiway, and the lots on
which they are situated are not exempt from real estate tax reasoning as follows: Under the Local
Government Code (LGC for brevity), enacted pursuant to the constitutional mandate of local autonomy,
all natural and juridical persons, including government-owned or controlled corporations (GOCCs),
instrumentalities and agencies, are no longer exempt from local taxes even if previously granted an
exemption. The only exemptions from local taxes are those specifically provided under the Code itself, or
those enacted through subsequent legislation.

ISSUE: WON MCIAA is exempted from local taxation.

HELD: Yes. MIAA is not a government-owned or controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock
corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article
XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA
is a government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government
instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the
Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity under the Local Government Code. Such exception applies only if
the beneficial use of real property owned by the Republic is given to a taxable entity. Finally, the Airport
Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public
dominion. Properties of public dominion are owned by the State or the Republic. As properties of public
dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are
expressly exempt from real estate tax under Section 234(a) of the Local Government Code. This Court
has also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure
sale.
 Mitsubishi Motors vs. Bureau of Customs

G.R. No. 209830

June 17, 2015

FACTS: Respondent alleged that from 1997 to 1998, petitioner was able to secure tax credit certificates
(TCCs) from various transportation companies; after which, it made several importations and utilized said
TCCs for the payment of various customs duties and taxes in the aggregate amount of P46,844,385.00.
Believing the authenticity of the TCCs, respondent allowed petitioner to use the same for the settlement
of such customs duties and taxes. However, a post-audit investigation of the Department of Finance
revealed that the TCCs were fraudulently secured with the use of fake commercial and bank documents,
and thus, respondent deemed that petitioner never settled its taxes and customs duties pertaining to the
aforesaid importations. Thereafter, respondent demanded that petitioner pay its unsettled tax and customs
duties, but to no avail. Hence, it was constrained to file the instant complaint.

ISSUE: WON the CA correctly referred the records of the collection case to the CTA for proper
disposition of the appeal taken by respondent.

HELD: No. In the instant case, the CA has no jurisdiction over respondent’s appeal; hence, it cannot
perform any action on the same except to order its dismissal pursuant to Section 2, Rule 50 of the Rules
of Court. Therefore, the act of the CA in referring respondent’s wrongful appeal before it to the CTA
under the guise of furthering the interests of substantial justice is blatantly erroneous, and thus, stands to
be corrected. In Anderson v. Ho, the Court held that the invocation of substantial justice is not a magic
wand that would readily dispel the application of procedural rules,viz.:

x x x procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are
enjoined to abide strictly by the rules. While in certain instances, we allow a relaxation in the application
of the rules, we never intend to forge a weapon for erring litigants to violate the rules with impunity. The
liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under
justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party litigants and their counsels are well advised to abide
by rather than flaunt, procedural rules for these rules illumine the path of the law and rationalize the
pursuit of justice.

Finally, in view of respondent’s availment of a wrong mode of appeal via notice of appeal stating that it
was elevating the case to the CA – instead of appealing by way of a petition for review to the CTA within
thirty (30) days from receipt of a copy of the RTC’s August 3, 2012 Order, as required by Section 11 of
RA 1125, as amended by Section 9 of RA 928243 – the Court is constrained to deem the RTC’s dismissal
of respondent’s collection case against petitioner final and executory. It is settled that the perfection of an
appeal in the manner and within the period set by law is not only mandatory, but jurisdictional as well,
and that failure to perfect an appeal within the period fixed by law renders the judgment appealed from
final and executory.
 CIR vs. Puregold Duty Free

G.R. No. 202789

June 22, 2015

FACTS: Puregold is engaged in the sale of various consumer goods exclusively within the Clark Special
Economic Zone (CSEZ), and operates its store under the authority and jurisdiction of Clark
Development" Corporation (CDC) and CSEZ. Notably, Sec. 12 of RA 7227 provides duty-free
importations and exemptions of businesses within the SSEZ from local and national taxes. Thus, in
accordance with the tax exemption certificates granted to respondent Puregold, it filed its Annual Income
Tax Returns and paid the five percent (5%) preferential tax, in lieu of all other national and local taxes for
the period of January 1998 to May 2004. On July 25, 2005, in Coconut Oil Refiners v. Torre, however,
this Court annulled the adverted Sec. 5 of EO 80, in effect withdrawing the preferential tax treatment
heretofore enjoyed by all businesses located in the CSEZ. On November 7, 2005, then Deputy
Commissioner for Special Concerns/OIC-Large Taxpayers Service of the Bureau of Internal Revenue
(BIR) Kim Jacinto-Henares issued a Preliminary Assessment Notice regarding unpaid VAT and excise
tax on wines, liquors and tobacco products imported by Puregold from January 1998 to May 2004. In due
time, Puregold protested the assessment. Pending the resolution of Puregold's protest, Congress enacted
RA 9399, specifically to grant a tax amnesty to business enterprises affected by this Court's rulings in
John Hay People's Coalition v. Limand Coconut Oil Refiners. Under RA 9399, availment of the tax
amnesty relieves the qualified taxpayers of any civil, criminal and/or administrative liabilities arising
from, or incident to, nonpayment of taxes, duties and other charges. On July 27, 2007, Puregold availed
itself of the tax amnesty under RA 9399, filing for the purpose the necessary requirements and paying the
amnesty tax. Nonetheless, on October 26, 2007, Puregold received a formal letter of demand from the
BIR for the payment of Two Billion Seven Hundred Eighty Million Six Hundred Ten Thousand One
Hundred Seventy-Four Pesos and Fifty-One Centavos (P2,780,610,174.51), supposedly representing
deficiency VAT and excise taxes on its importations of alcohol and tobacco products from January 1998
to May 2004. In its response-letter, Puregold, thru counsel, requested the cancellation of the assessment
on the ground that it has already availed of the tax amnesty under RA 9399. This notwithstanding, the
BIR issued on June 23, 2008 a Final Decision on Disputed Assessment stating that the availment of the
tax amnesty under RA 9399 did not relieve Puregold of its liability for deficiency VAT, excise taxes, and
inspection fees under Sec. 13l(A) of the 1997 National Internal Revenue Code (1997 NIRC)

ISSUE: WON the SC Ruling in the Coconut oil case can be retroactively applied to obliterate the effect of
Sec 5 EO 80

HELD: No. It cannot be applied retroactively. This Court is duty-bound to protect the basic expectations
taken into account by businesses under relevant laws, such as RA 9399. For this reason, this Court
subscribes to the doctrine of operative fact, which recognizes that a judicial declaration of invalidity may
not necessarily obliterate all the effects and consequences of a void act prior to such declaration.
 China Bank vs. City Treasurer or Manila

G.R. No. 204117

July 1, 2015

FACTS: On January 2007, on the basis of the reported income of respondent CBC's Sto. Cristo Branch,
Binondo, Manila, amounting to ₱34,310,777.34 for the year ending December 31, 2006, respondent CBC
was assessed the amount of ₱267,128.70 by petitioner City Treasurer of Manila, consisting of local
business tax, business permits, and other fees for taxable year 2007. On January 15, 2007, respondent
CBC paid the amount of ₱267,128.70 and protested, thru a Letter dated January 12, 2007, the imposition
of business tax under Section 21 of the Manila Revenue Code in the amount of ₱154,398.50, on the
ground that it is not liable of said additional business tax and the same constitutes double taxation. On
April 17, 2007, respondent CBC filed a Petition for Review with the RTC of Manila raising the sole issue
of whether or not respondent is subject to the local business tax imposed under Section 21 of the Manila
Revenue Code. On August 28, 2008, the Regional Trial Court, Branch 173, Manila (RTC),rendered its
decision granting the petition filed by CBC and ordered the City Treasurer to refund the amount of
₱154,398.50, representing the assessment paid by it under Section 21 of Manila Ordinance No. 7988, as
amended by Tax Ordinance No. 8011. The RTC found that the City Treasurer had no basis to collect the
amount of ₱154,398.50 because the Department of Justice (DOJ) was of the opinion that Ordinance Nos.
7988 and 8011 were unconstitutional. The CTA Division reversed the decision of the RTC, effectively
dismissing CBC’s protest against the disputed assessment. Although the CTA Division dismissed the City
Treasurer’s contention that CBC’s petition for review should have been filed with the Metropolitan Trial
Court (MeTC),nevertheless it found that the RTC did not have jurisdiction over the said petition for
because it was filed out of time.

ISSUE: WON the RTC had jurisdiction over the case.

HELD: No. Clearly, with the passage of R.A. No. 9282, the authority to exercise either original or
appellate jurisdiction over local tax cases depended on the amount of the claim. In cases where the RTC
exercises appellate jurisdiction, it necessarily follows that there must be a court capable of exercising
original jurisdiction – otherwise there would be no appeal over which the RTC would exercise appellate
jurisdiction. The Court cannot consider the City Treasurer as the entity that exercises original jurisdiction
not only because it is not a "court" within the context of Batas Pambansa (B.P.)Blg. 129, but also because,
as explained above, "B.P. 129 expressly delineates the appellate jurisdiction of the Regional Trial Courts,
confining as it does said appellate jurisdiction to cases decided by Metropolitan, Municipal, and
Municipal Circuit Trial Courts." Verily, unlike in the case of the CA, B.P. 129 does not confer appellate
jurisdiction on the RTC over rulings made by non-judicial entities. The RTC exercises appellate
jurisdiction only from cases decided by the Metropolitan, Municipal, and Municipal Circuit Trial Courts
in the proper cases. The nature of the jurisdiction exercised by these courts is original, considering it will
be the first time that a court will take judicial cognizance of a case instituted for judicial action. Indeed, in
cases where the amount sought to be refunded is below the jurisdictional amount of the RTC, the
Metropolitan, Municipal, and Municipal Circuit Trial Courts are clothed with ample authority to rule on
such claims.
 Fortune Tobacco vs. CIR

G.R. No. 192024

July 1, 2015

FACTS: This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Fortune
Tobacco Corporation (petitioner), assailing the March 12, 2010 Decision of the Court of Tax Appeals En
Banc (CTA En Banc) and its April 26, 2010 Resolution in CTA EB Case No. 53, which affirmed in toto
the April 30, 2009 Decision3 and the August 18, 2009 Resolution of the Former First Division of the
Court of Tax Appeals (CTA Division) in CTA Case No. 7367. The facts of this case are akin to those
obtaining in G.R. Nos. 167274-275 and G.R. No. 180006. In G.R. No. 167274-275, the Court eventually
sustained petitioner’s claim for refund of overpaid excise taxes for the period covering January 1, 2002 to
December 31, 2002. In G.R. No. 180006, the Court likewise sustained petitioner’s claim for refund of
overpaid excise tax paid during in 2003 and the period covering January 1 to May 31, 2004. The subject
claim for refund involves the amount of excise taxes allegedly overpaid during the period beginning June
1, 2004 up to December 31, 2004.

ISSUE: WON there is sufficient evidence to warrant the grant of petitioner’s claim for tax refund.

HELD: No. even if the Court would consider petitioner’s otherwise excluded evidence, the same would
still fail to sufficiently prove the petitioner’s entitlement to its claim for refund. The disquisition of the
CTA Division, as quoted in the CTA En Banc decision, is hereby reiterated with approval:

xxx, the documentary exhibits are not sufficient to prove the amounts being claimed by petitioner as
refund. Looking at Exhibit ‘G,’ the same is a mere summary of excise taxes paid by petitioner for ALL of
its cigarette brands. This Court cannot verify the amounts of excise taxes paid for the brands in issue
which are Champion M-100s, Camel Filter Kings, Winston Filter Kings, and Winston Lights.

This Court cannot likewise rely solely on petitioner's Excise Tax Refund Computation Summary. The
figures therein must be verified through other documentary evidence which this Court must look into and
which petitioner failed to properly provide. Clearly, it is petitioner’s burden to prove the allegations made
in its claim for refund. For a claim for refund to be granted, the manner in proving it must be in
accordance with the prescribed rules of evidence. It would have been erroneous had the CTA En Banc
relied on petitioner's own Excise Tax Refund Computation Summary or the unsatisfactory explanation of
its lone witness to justify its claim for tax refund. As it has been said, time and again, that claims for tax
refunds are in the nature of tax exemptions which result in loss of revenue for the government. Upon the
person claiming an exemption from tax payments rests the burden of justifying the exemption by words
too plain to be mistaken and too categorical to be misinterpreted; it is never presumed nor be allowed
solely on the ground of equity. In addition, one who claims that he is entitled to a tax refund must not
only claim that the transaction subject of tax is clearly and unequivocally not subject to tax - the amount
of the claim must still be proven in the normal course, in accordance with the prescribed rules on
evidence. After all, taxes are the lifeblood of the nation.
 CIR vs. Standard Chartered Bank

G.R. No. 192173

July 29, 2015

FACTS: Respondent Standard Chartered Bank received a Formal Letter of Demand for its alleged
deficiency income tax, final income tax- FCDU, Expanded Withholding Tax (EWT) and increments
covering the taxable year 1998. Respondent protested said assessment stating that the bases of the
assessment and requested it be withdrawn and cancelled. Petitioner CIR has not rendered a decision on
said protest. In view thereof, respondent filed a petition for review. It attached a supplemental petition in
view of the alleged payments it made through the BIR's Electronic Filing and Payment System as regards
its deficiency WTC and FWT assessments. Finding merit, the same was granted. The CTA in Division
granted respondent’s petition for the cancellation and setting aside of the subject Formal Letter of
Demand and Assessment Notices dated 24 June 2004 on the ground that petitioner’s right to assess
respondent for the deficiency income tax, final income tax – FCDU, and EWT covering taxable year 1998
was already barred by prescription for having been issued beyond the three-year prescriptive period
provided for in Section 203 of the National Internal Revenue Code (NIRC) of 1997, as amended. It also
denied petitioner's Motion for Reconsideration. Aggrieved, CIR appealed to CTA En Banc. The latter
however affirmed in toto both the aforesaid Decision and Resolution rendered by the CTA in Division
pronouncing that there was no cogent justification to disturb the findings and conclusion spelled out
therein, since what petitioner merely prayed was for the appellate court to view and appreciate the
arguments/discussions raised by petitioner in her own perspective of things, which unfortunately had
already been considered and passed upon.

ISSUE: WON CIR's right to assess respondent for deficiency income tax, final income tax- FCDU, and
EWT has already prescribed.

HELD: Yes. At the outset, the period for petitioner to assess and collect an internal revenue tax is limited
only to three years by Section 203 of the NIRC of 1997, as amended. This mandate governs the question
of prescription of the government’s right to assess internal revenue taxes primarily to safeguard the
interests of taxpayers from unreasonable investigation by not indefinite extending the period of
assessment and depriving the taxpayer of the assurance that it will no longer be subjected to further
investigation for taxes after the expiration of reasonable period of time. Thus, in the present case,
petitioner only had three years, counted from the date of actual filing of the return or from the last date
prescribed by law for the filing of such return, whichever comes later, to assess a national internal
revenue tax or to begin a court proceeding for the collection thereof without an assessment. However, one
of the exceptions to the three-year prescriptive period on the assessment of taxes is that provided for
under Section 222(b) of the NIRC of 1997, as amended. The provision authorizes the extension of the
original three-year prescriptive period by the execution of a valid waiver, where the taxpayer and the
Commissioner of Internal Revenue (CIR) may stipulate to extend the period of assessment by a written
agreement executed prior to the lapse of the period prescribed by law, and by subsequent written
agreements before the expiration of the period previously agreed upon. Applying the rules and rulings, the
waivers in question were defective and did not validly extend the original three-year prescriptive period.
 CIR vs. Toledo Power Company

G.R. No. 195175

August 10, 2015

FACTS: In CTA EB No. 589, Toledo Power Company (TPC) filed a claim for refund with the BIR for
alleged unutilized input VAT for the four quarters of 2004. Its claim was elevated to the CTA where CTA
First Division partly granted the petition and ordered the refund. In CTA EB No. 708, TPC filed an
administrative claim for the refund of alleged unutilized input VAT for the four quarters of 2003. The
CIR filed a Petition before this Court assailing the Decision of the CTA En Banc in C.T.A. EB No. 589,
docketed as G.R. No. 195175. The CIR mainly points out that the law requires the submission of
complete supporting documents to the BIR before the 120-day audit period shall apply, and before the
taxpayer can avail itself of the judicial remedies provided for by law. In this case, TPC failed to submit
complete documents in support of its application for a tax refund. To the CIR, such disregard of a
mandatory requirement warranted the denial of TPC’s claim for a refund. On the other hand, TPC
appealed the denial of its claim in C.T.A. EB No. 708, which was docketed as G.R. No. 199645. TPC
alleged that Section 229 of the NIRC of 1997, which gives taxpayers two years within which to claim a
refund, should be applied to this case, considering that the prevailing rule at the time the Petitions were
filed was that the 120+30- day period was neither mandatory nor compulsory. Also, TPC posits that Aichi
should not be applied retroactively, and that there are differences between the factual milieu of this case
and that of Aichi.

ISSUE: WON respondent TPC is entitled to the refund of its alleged unutilized input VAT.

HELD: No. TPC lost its right to claim a refund or credit of its alleged excess input VAT attributable to
zero-rated or effectively zero-rated sales for taxable year 2004 by virtue of its own failure to observe the
prescriptive periods. Records would show that TPC will have the same fate as Philex in San Roque. It is
not disputed that the administrative claim for a refund of unutilized input VAT for all quarters of taxable
year 2004 was filed on 23 December 2004. Claiming that TPC made zero-rated or effectively zero-rated
sales within the four quarters of 2004, the administrative claim for the refund of unutilized input VAT
attributable to the sales in those periods was timely filed on 23 December 2004. That date was clearly
within two years from the close of the taxable quarters when the sales were made. In this case, however,
since the filing of the administrative claim was done within the period where BIR Ruling No. DA-489-03
was recognized valid, TPC is not compelled to observe the 120-day waiting period. Nevertheless, it
should have filed the Petition within 30 days after the expiration of the 120-day period. San Roque
recognized BIR Ruling No. DA-489-03 which allowed the premature filing of a judicial claim as an
exception to the mandatory observance of the 120-day period. By virtue of the doctrines laid down in San
Roque, TPC should have filed its judicial claim from 23 December 2004 until 22 May 2005; however, it
filed its Petition to the CTA only on 24 April 2006. Just like Philex, TPC’s situation is not a case of
premature filing of a judicial claim, but of late filing. With regard to TPC’s argument that Aichi should
not be applied retroactively, we reiterate that even without that ruling, the law is explicit on the
mandatory and jurisdictional nature of the 120+30 day period.
 Chevron Philippines, Inc. vs. CIR

G.R. No. 210836

September 1, 2015

FACTS: Chevron sold and delivered petroleum products to CDC in the period from August 2007 to
December 2007. Chevron did not pass on to CDC the excise taxes paid on the importation of the
petroleum products sold to CDC in taxable year 2007; hence, on June 26, 2009, it filed an administrative
claim for tax refund or issuance of tax credit certificate. Considering that respondent Commissioner of
Internal Revenue (CIR) did not act on the administrative claim for tax refund or tax credit, Chevron
elevated its claim to the CTA by petition for review on June 29, 2009. The CTA First Division denied
Chevron’s judicial claim for tax refund or tax credit and later on also denied Chevron’s Motion for
Reconsideration. In due course, Chevron appealed to the CTA En Banc which affirmed the ruling of the
CTA Division stating that there was nothing in Section 135(c) of the NIRC that explicitly exempted
Chevron as the seller of the imported petroleum products from the payment of the excise taxes; and
holding that because it did not fall under any of the categories exempted from paying excise tax, Chevron
was not entitled to the tax refund or tax credit. Chevron sought reconsideration, but the CTA En Banc
denied its motion for that purpose in the resolution. Chevron appealed to the Court, but the Court (Second
Division) denied the petition for review on certiorari through the resolution promulgated on March 19,
2014 for failure to show any reversible error on the part of the CTA En Banc. Hence, Chevron has filed
the Motion for Reconsideration, submitting that it was entitled to the tax refund or tax credit because
ruling promulgated on April 25, 2012 in Pilipinas Shell, on which the CTA En Banc had based its denial
of the claim of Chevron, was meanwhile reconsidered by the Court’s First Division on February 19, 2014.

ISSUE: WON petitioner was entitled to the tax refund or the tax credit for the excise taxes paid on the
importation of petroleum products that it has sold to CDC.

HELD: Yes. Pilipinas Shell concerns the manufacturer’s entitlement to refund or credit of the excise taxes
paid on the petroleum products sold to international carriers exempt from excise taxes under Section
135(a) of the NIRC. However, the issue raised here is whether the importer (i.e., Chevron) was entitled to
the refund or credit of the excise taxes it paid on petroleum products sold to CDC, a tax-exempt entity
under Section 135(c) of the NIRC. Notwithstanding that the claims for refund or credit of excise taxes
were premised on different subsections of Section 135 of the NIRC, the basic tax principle applicable was
the same in both cases – that excise tax is a tax on property; hence, the exemption from the excise tax
expressly granted under Section 135 of the NIRC must be construed in favor of the petroleum products on
which the excise tax was initially imposed. Accordingly, the excise taxes that Chevron paid on its
importation of petroleum products subsequently sold to CDC were illegal and erroneous, and should be
credited or refunded to Chevron in accordance with Section 204 of the NIRC. Inasmuch as its liability for
the payment of the excise taxes accrued immediately upon importation and prior to the removal of the
petroleum products from the customs house, Chevron was bound to pay, and actually paid such taxes. But
the status of the petroleum products as exempt from the excise taxes would be confirmed only upon their
sale to CDC in 2007 (or, for that matter, to any of the other entities or agencies listed in Section 135 of the
NIRC). Before then, Chevron did not have any legal basis to claim the tax refund or the tax credit as to
the petroleum products.
 Bureau of Customs vs. Hon. Agnes VST Devanadera, et. al.

G.R. No. 193253

September 8, 2015

FACTS: On January 30, 2007, Commissioner Morales of petitioner Bureau of Customs (BOC) issued
Audit Notification Letter (ANL) No. 0701246, informing the President of OILINK that the Post Entry
Audit Group (PEAG) of the BOC will be conducting a compliance audit, including the examination,
inspection, verification and/or investigation of all pertinent records of OILINK's import transactions for
the past three (3)-year period counted from the said date. On December 14, 2007, the Legal Service of the
BOC rendered a Decision finding that OILINK violated Section IV.A.2(c) and (e) of CAO 4- 20047 when
it refused to furnish the Audit Team copies of the required documents, despite repeated demands.
Commissioner Morales directed the President of OILINK to pay the BOC the administrative fine for
violation of CAO No. 4-2004. In a Resolution23 dated May 29, 2009, public respondent Arman A. De
Andres, State Prosecutor of the Department of Justice (DOJ), recommended the dismissal of the
complaint-affidavit for lack of probable cause. Dissatisfied, the BOC filed a motion for reconsideration
which was denied by the public respondent, the Acting Secretary of Justice Agnes VST Devanadera. The
CA denied the private respondents' motion for reconsideration. The CA stressed that procedural rules are
not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a
party's substantive rights.

ISSUE: WON the CA erred when it denied petitioner's motion for reconsideration.

HELD: Yes. Given that the petition for certiorari should have been filed with the CTA, the mistake
committed by the BOC in filing such petition before the CA may be excused. In this regard, Court takes
note that nothing in R.A. No. 1125, as amended by R.A. No. 9282, indicates that a petition for certiorari
under Rule 65 may be filed with the CTA. Despite the enactment of R.A. No. 9282 on March 30, 2004, it
was only about ten (10) years later in the case of City of Manila v. Hon. Grecia-Cuerdo44 that the Court
ruled that the authority of the CTA to take cognizance of such petitions is included in the powers granted
by the Constitution, as well as inherent in the exercise of its appellate jurisdiction. While the rule on
perfection of appeals cannot be classified as a difficult question of law, mistake in the construction or
application of a doubtful question of law, as in this case, may be considered is a mistake of fact, excusing
the BOC from the consequences of the erroneous filing of its petition with the CA. As the CA dismissed
the petition for certiorari solely due to a procedural defect without resolving the issue of whether or not
the Acting Secretary of Justice gravely abused her discretion in affirming the dismissal of the BOC's
complaint-affidavit for lack of probable cause, the Court ought to reinstate the petition and refer it to the
CTA for proper disposition. For one, as a highly specialized court specifically created for the purpose of
reviewing tax and customs cases, the CTA is dedicated exclusively to the study and consideration of
revenue-related problems, and has necessarily developed an expertise on the subject. For another, the
referral of the petition to the CTA is in line with the policy of hierarchy of courts in order to prevent
inordinate demands upon the Court's time and attention which are better devoted to those matters within
its exclusive jurisdiction, and to prevent further overcrowding of its docket.
 Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation

G.R. No. 212920

September 16, 2015

FACTS: On April 22, 2004, Nippon filed an administrative claim for refund of its unutilized input VAT
in the amount of P24,644,506.86 for the year 2002 before the BIR. A day later, or on April 23, 2004, it
filed a judicial claim for tax refund, by way of petition for review, before the CTA, docketed as CTA
Case No. 6967. For its part, petitioner the CIR asserted, inter alia, that the amounts being claimed by
Nippon as unutilized input VAT were not properly documented, hence, should be denied. The CTA
Division partially granted Nippon's claim for tax refund, and thereby ordered the CIR to issue a tax credit
certificate in the reduced amount of P2,614,296.84, representing its unutilized input VAT which was
attributable to its zero-rated sales. It found that while Nippon timely filed its administrative and judicial
claims within the two (2)-year prescriptive period, it, however, failed to show that the recipients of its
services - which, in this case, were mostly Philippine Economic Zone Authority registered enterprises -
were non-residents "doing business outside the Philippines." Accordingly, it concluded that Nippon's
purported sales therefrom could not qualify as zero-rated sales, hence, the reduction in the amount of tax
credit certificate claimed. The CTA Division granted Nippon's motion to withdraw and, thus, considered
the case closed and terminated. It found that pursuant to RMC No. 49-03. Aggrieved, the CIR elevated its
case to the CTA En Banc. However, the latter affirmed the resolution of the division.

ISSUE: WON it was proper for the CTA to grant Nippon's motion to withdraw.

HELD: YES. A perusal of the Revised Rules of the Court of Tax Appeals reveals the lack of provisions
governing the procedure for the withdrawal of pending appeals before the CT A. Hence, pursuant to
Section 3, Rule 1 of the RRCTA, the Rules of Court shall suppletorily apply. While it is true that the CT
A Division has the prerogative to grant a motion to withdraw under the authority of the foregoing legal
provisions, the attendant circumstances in this case should have incited it to act otherwise. First, it should
be pointed out that the August 10, 2011 Decision was rendered by the CT A Division after a full-blown
hearing in which the parties had already ventilated their claims. Thus, the findings contained therein were
the results of an exhaustive study of the pleadings and a judicious evaluation of the evidence submitted by
the parties, as well as the report of the commissioned certified public accountant. The primary reason,
however, that militates against the granting of the motion to withdraw is the fact that the CT A Division,
in its August 10, 2011 Decision, had already determined that Nippon was only entitled to refund the
reduced amount of P2,614,296.84 since it failed to prove that the recipients of its services were non-
residents "doing business outside the Philippines"; hence, Nippon's purported sales therefrom could not
qualify as zero-rated sales, necessitating the reduction in the amount of refund claimed.
 Pilipinas Total Gas, Inc. vs. CIR

G.R. No. 207112

December 8, 2015

FACTS: Petitioner Pilipinas Total Gas, Inc. is engaged in the business of selling, transporting and
distributing industrial gas. It is also engaged in the sale of gas equipment and other related businesses. For
this purpose, Total Gas registered itself with the BIR as a VAT taxpayer. Petitioner filed its Original
Quarterly VAT Returns for the First and Second quarters of 2007, respectively with the BIR. It also filed
its Amended Quarterly VAT Returns for the first two quarters of 2007 reflecting its sales subject to VAT,
zero-rated sales, and domestic purchases of non-capital goods and services. For the First and Second
quarters of 2007, Total Gas claimed it incurred unutilized input VAT credits from its domestic purchases
of noncapital goods and services. Of this total accumulated input VAT, Total Gas claimed that it had
₱7,898,433.98 excess unutilized input VAT. Total Gas filed an administrative claim for refund of
unutilized input VAT for the first two quarters of taxable year 2007, inclusive of supporting documents.
On August 28, 2008, Total Gas submitted additional supporting documents to the BIR. It elevated the
matter to the CTA in view of the inaction of the CIR. The CTA Division dismissed the petition for being
prematurely filed. It explained that Total Gas failed to complete the necessary documents to substantiate a
claim for refund of unutilized input VAT on purchases of goods and services enumerated under RMO No.
53-98. Believing that Total Gas failed to complete the necessary documents to substantiate its claim for
refund, the CTA Division was of the view that the 120-day period allowed to the CIR to decide its claim
under Section 112 (C) of the NIRC, had not even started to run.

ISSUE: WON the judicial claim for refund was belatedly filed or way beyond the 30-day period to appeal
as provided in Section 112(c) of the Tax Code, as amended.

HELD: Yes. Based on Section 112(C) of the NIRC, the CIR has 120 days from the date of submission of
complete documents to decide a claim for tax credit or refund of creditable input taxes. The taxpayer may,
within 30 days from receipt of the denial of the claim or after the expiration of the 120-day period, which
is considered a “denial due to inaction,” appeal the decision or unacted claim to the CTA. To be clear,
Section 112(C) categorically provides that the 120-day period is counted “from the date of submission of
complete documents in support of the application.” Contrary to this mandate, the CTA En Banc counted
the running of the period from the date the application for refund was filed or May 15, 2008, and, thus,
ruled that the judicial claim was belatedly filed. Indeed, the 120-day period granted to the CIR to decide
the administrative claim under the Section 112 is primarily intended to benefit the taxpayer, to ensure that
his claim is decided judiciously and expeditiously. After all, the sooner the taxpayer successfully
processes his refund, the sooner can such resources be further reinvested to the business translating to
greater efficiencies and productivities that would ultimately uplift the general welfare. To allow the CIR
to determine the completeness of the documents submitted and, thus, dictate the running of the 120-day
period, would undermine these objectives, as it would provide the CIR the unbridled power to indefinitely
delay the administrative claim, which would ultimately prevent the filing of a judicial claim with the
CTA.
 Republic of the Philippines vs. Pilipinas Shell Petroleum Corporation

G.R. No. 209324

December 9, 2015

FACTS: On April 3, 2002, the Republic of the Philippines represented by the BOC filed the present
collection suit in the RTC for the payment of P10,088,912.00 still owed by PSPC after the invalidation of
the subject TCCs. Meanwhile, PSPC filed with the CTA a petition for review questioning the factual and
legal bases of BOC’s collection efforts. Subsequently, PSPC moved to dismiss Civil Case No. 02-103191
on the ground that the RTC had no jurisdiction over the subject matter and that the complaint for
collection was prematurely filed in view of its pending petition for review in the CTA. The RTC denied
the motion to dismiss and PSPC eventually filed its answer questioning the RTC’s jurisdiction. When the
RTC issued a notice of pre-trial, PSPC moved for reconsideration of the order denying its motion to
dismiss. The RTC denied the motion for reconsideration, prompting PSPC to elevate the matter to the CA
via a petition for certiorari. On October 23, 2003, the CA rendered decision denying PSPC’s petition.
With the denial of its motion for reconsideration, PSPC sought recourse from this Court in a petition for
review on certiorari. As to CTA Case No. 6484, the CTA denied BOC’s motion to dismiss on the ground
of prescription. When the CTA denied the BOC’s motion for reconsideration, the BOC appealed to the
CA, which reversed the questioned CTA resolutions. PSPC again sought recourse from this Court via a
petition for review on certiorari. According to the CA, BOC adopted a wrong mode of appeal because
whether the RTC erred in rendering summary judgment is purely a legal issue, jurisdiction over which is
vested only in this Court. Even assuming that the CA can entertain BOC’s appeal, the CA said it found no
genuine issues raised by the parties’ pleadings and arguments that necessitate a fullblown trial. The CA
further held that the rule on stare decisis applies in the present case considering that the legal and factual
issues have been previously discussed and resolved by this Court in Pilipinas Shell Petroleum
Corporation v. CIR.

ISSUE: WON petitioner's claim is barred by prescription.

HELD: No. As already mentioned, BOC’s collection suit is not based on any new or revised assessment
because the original assessments which had long become final and uncontestable, were already settled by
PSPC with the use of the subject TCCs. With the cancellation of the TCCs, the tax liabilities of PSPC
under the original assessments were considered unpaid, hence BOC’s demand letters and the action for
collection in the RTC. To repeat, these assessed customs duties and taxes were previously assessed and
paid by the taxpayer, only that the TCCs turned out to be spurious and hence worthless certificates that
did not extinguish PSPC’s tax liabilities. The applicable provision is Section 1204 of the Tariff and
Customs Code. The CA erred in affirming the RTC orders granting summary judgment in favor of PSPC
considering that there exists a genuine issue of fact and that stare decisis finds no application in this case.
 CIR v. Mirant Pagbilao Corporation

G.R. No. 180434

January 20, 2016

FACTS: Mirant Pagbilao Corporation is a duly-registered Philippine corporation located at Pagbilao

Grande Island in Pagbilao, Quezon, and primarily engaged in the generation and distribution of electricity
to the NAPOCOR, a VAT exempt taxpayer, under a Build, Operate, Transfer Scheme. It is registered
with the BIR as a VAT taxpayer. On November 26, 1999, the BIR approved MPC’s application for
Effective Zero-Rating for the construction and operation of its power plant. For taxable year 2000, the
quarterly VAT returns filed by MPC on April 25, 2000, July 25, 2000, October 24, 2000, and August 27,
2001 showed an excess input VAT paid of ₱127,140,331.85.8 On March 11, 2002, MPC filed before the
BIR an administrative claim for refund of its input VAT covering the taxable year of 2000, in accordance
with Section 112 of the Tax Code. Thereafter, or on March 26, 2002, 15 days later, MPC proceeded to file
a petition for review before the CTA, docketed as CTA Case No. 6417,9 without waiting for the CIR’s
action on the administrative claim.

ISSUE: WON the CTA had jurisdiction to entertain MPC’s judicial claim

HELD: No. Contrary to the specified periods, specifically those that are provided in the second paragraph
of Section 112(D), MPC filed its petition for review with the CTA on March 26, 2002, or a mere 15 days
after it filed an administrative claim for refund with the CIR on March 11, 2002. It then did not wait for
the lapse of the 120-day period expressly provided for by law within which the CIR shall grant or deny
the application for refund. It is indisputable that compliance with the 120-day waiting period is mandatory
and jurisdictional. MPC's failure to observe the mandatory 120-day period under the law was fatal to its
immediate filing of a judicial claim before the CTA. It rendered the filing of the CTA petition premature,
and barred the tax court from acquiring jurisdiction over the same.
 CIR v. Pilipinas Shell Petroleum Corporation

G.R. No. 180402

February 10, 2016

FACTS: The petitioner assails the decision of the CTA granting the claim for/credit of the excise taxes
paid by respondent Pilipinas Shell Petroleum Corporation on the ground that excise taxes are levied on
the manufacturer/producer prior to sale and delivery to international carriers and, regardless of its
purchaser, said taxes must be shouldered by the manufacturer/producer or in this case, Pilipinas Shell; the
excise taxes paid by Pilipinas Shell do not constitute taxes erroneously paid as they are rightfully due
from Pilipinas Shell as manufacturer/producer of the petroleum products sold to international carriers; the
intent of Section 135 of the NIRC is to exempt the international carriers from paying the excise taxes but
not the manufacturer/producer; and that BIR Ruling No. 051-99, Revenue Regulations No. 5-2000 and
other BIR issuances allowing tax refund/credit of excise taxes paid on petroleum products sold to tax-
exempt entities or agencies should be nullified for being contrary to Sections 129, 130 and 148 of the
NIRC. Respondent, on the other hand, argues that the excise tax exemption on petroleum products sold to
international carriers is based on principles of international comity and to insist on its payment under the
circumstances and suggest that it be recovered by the manufacturer as part of its selling price would be to
render meaningless its purpose.

ISSUE: WON Pilipinas Shell is exempted from paying excise tax under Sec. 135(a) of the NIRC.

HELD: Yes. Respondent, as the statutory taxpayer who is directly liable to pay the excise tax on its
petroleum products, is entitled to a refund or credit of the excise taxes it paid for petroleum products sold
to international carriers, the latter having been granted exemption from the payment of said excise tax
under Sec. 135(a) of the NIRC. Under the doctrine of stare decisis, the Court must adhere to the principle
of law laid down in Pilipinas Shell and apply the same in the present case, especially since the facts,
issues, and even the parties involved are exactly identical. Thus, the Court hereby holds that Pilipinas
Shell’s claim for refund/tax credit must be granted pursuant to Pilipinas Shell, as its petroleum products
sold to international carriers for the period of November 2000 to March 2001 are exempt from excise tax,
these international carriers being exempt from payment of excise tax under Section 135(a) of the NIRC.
The Court further notes that during the pendency of this case, the Court, sitting en banc, rendered a
decision in Chevron Philippines, Inc. v. Commissioner of Internal Revenue,⁠ which likewise involved the
refund of excise taxes paid on the importation of petroleum products. Applying the principle enunciated
in Pilipinas Shell, the Court granted therein petitioner Chevron Philippines, Inc.’s motion for
reconsideration and directed therein respondent CIR to refund the excise taxes paid on the petroleum
products sold to Clark Development Corporation in the period from August 2007 to December 2007, or to
issue a tax credit certificate. The Court stated that while the claims in Pilipinas Shell and Chevron were
premised on different subsections of Section 135 of the NIRC, “the basic tax principle applicable was the
same in both cases — that excise tax is a tax on property; hence, the exemption from the excise tax
expressly granted under Section 135 of the NIRC must be construed in favor of the petroleum products on
which the excise tax was initially imposed.”⁠
 CIR v. GJM Philippines Manufacturing, Inc.

G.R. No. 202695

February 29, 2016

FACTS: On April 12, 2000, GJM filed its Annual Income Tax Return for the year 1999. CIR found out
that GJM had tax deficiencies due to disallowances/understatements, therefore, CIR had the right to
assess GJM within the 3 year prescriptive period under Sec. 203 of the NIRC or until April 15, 2003. On
February 17, 2003, CIR delivered the Preliminary Assessment Notice to GJM. Subsequently, on April 14,
2003, the Formal Assessment Notice were delivered by the CIR. GJM denied having received any
assessment from the BIR, thus, such right of assessment by the latter has prescribed.

ISSUE: WON the denial of GJM having received the FAN made such right of assessment by the CIR
prescribe

HELD: Yes. Section 203 of the 1997 NIRC provides that the CIR has three years from the date of the
actual filing of the return or from the last day prescribed by law for the filing of the return, whichever is
later, to assess internal revenue taxes. Here, GJM filed its Annual Income Tax Return for the taxable year
1999 on April 12, 2000. The three-year prescriptive period, therefore, was only until April 15, 2003. The
records reveal that the BIR sent the FAN through registered mail on April 14, 2003, well-within the
required period. The Court has held that when an assessment is made within the prescriptive period, as in
the case at bar, receipt by the taxpayer may or may not be within said period. But it must be clarified that
the rule does not dispense with the requirement that the taxpayer should actually receive the assessment
notice, even beyond the prescriptive period. GJM, however, denies ever having received any FAN. While
a mailed letter is deemed received by the addressee in the course of mail, this is merely a disputable
presumption subject to controversion, the direct denial of which shifts the burden to the sender to prove
that the mailed letter was, in fact, received by the addressee. In the case at bar, CIR was not able to prove
that GJM has received the FAN sent by them ergo their right to assess has prescribed.
 Silicon Philippines, Inc. v. CIR

G.R. No. 182737

March 2, 2016

FACTS: Silicon Philippines, Inc., a Philippine corporation engaged in the business of designing,
developing, manufacturing and exporting advance and large-scale integrated circuit components or
"IC’s.", is registered with the BIR as a VAT taxpayer. Petitioner filed with the respondent CIR an
application for credit/refund of unutilized input VAT for 1998 in the amount of P31,902,507.50. The CIR
denied this application. On appeal to the CTA Division, petitioner’s claim for refund of unutilized input
VAT on capital goods was granted. However, the CTA Division reduced the amount which petitioner
claimed from P15,170,082.00 to P9,898,867.00 .With regard to petitioner’s claim for credit/refund of
input VAT attributable to its zero-rated export sales, the CTA Division denied the same. Upon denial of
its motion for reconsideration, petitioner elevated the case to the CTA En Banc. The CTA En Banc denied
petitioner’s claim for credit/ refund of input VAT attributable to its zero-rated sales due to its failure to
show that it secured an Authorization-to-Print invoices from the BIR and to indicate the same in its export
sales invoices; and failure to print the word "zero-rated" in its export sales invoices. It also ruled that the
items being claimed as capital goods (training materials, office supplies, posters, banners, t-shirts, books
and the like) purchased by petitioner were not duly proven to have been used, directly or indirectly in the
production or sale of taxable goods or services. As such, they cannot be considered as capital goods, and
so the reduction decided by the CTA Division was upheld.

ISSUE: WON petitioner can claim credit/refund of input VAT attributable to its zero-rated sales.

HELD: No. Under Section 112(A) of the NIRC, a claimant must be engaged in sales which are zero-rated
or effectively zero-rated. To prove this, duly registered invoices or receipts evidencing zero-rated sales
must be presented. However, since the ATP is not indicated in the invoices or receipts, the only way to
verify whether the invoices or receipts are duly registered is by requiring the claimant to present its ATP
from the BIR. Without this proof, the invoices or receipts would have no probative value for the purpose
of refund. In the case of Intel, it was emphasized that “It is not specifically required that the BIR authority
to print be reflected or indicated therein. Indeed, what is important with respect to the BIR authority to
print is that it has been secured or obtained by the taxpayer, and that invoices or receipts are duly
registered.” The non-presentation of the ATP and the failure to indicate the word "zero-rated" in the
invoices or receipts are fatal to a claim for credit/refund of input VAT on zero-rated sales. The failure to
indicate the ATP in the sales invoices or receipts, on the other hand, is not. In this case, petitioner failed to
present its ATP and to print the word "zero-rated" on its export sales invoices. Thus, the CTA ruled
correctly.
 Spouses Pacquiao v. CTA First Division & CIR

G.R. No. 213394

April 6, 2016

FACTS: Manny Pacquiao received a Letter of Authority from the RDO of the BIR for the examination of
his books of accounts and other accounting records for the period covering January 1, 2008 to December
31, 2008. It was found that Pacquiao failed to file his VAT returns for the years 2008 and 2009.
Furthermore, he also failed to state his US sourced income for the year 2009. The CIR issued another
Letter of Authority authorizing the BIR’s NID to examine the books of accounts and other accounting
records of both Pacquiao and Jinkee from 1995 to 2009. The spouses countered that they were already
subjected to an investigation for the years prior to 2007 and no fraud has been found. Moreover, they
cannot produce the necessary documents pertaining to those years since it was has already been disposed
of and the previous counsels that handled their cases and documents were already dead. The CIR resorted
to the best evidence available like third party information sources. Consequently, the CIR issued an NIC
informing them that based on the best evidence obtainable, they were liable for deficiency income taxes
in. Subsequently, a PAN was issued for deficiency income taxes, but also for their non-payment of their
VAT liabilities. This process continued until the FDDA was issued addressed to Manny only, informing
him that the CIR found him liable for deficiency income tax and VAT for taxable years 2008 and 2009.
The CIR proceeded to effect Warrants of Distraint and Levy and Garnishment on the properties of the
petitioners, who in turn, questioned such collection process in the CTA. The CTA Second Division issued
a decision ordering the CIR to desist from collecting on the deficiency tax assessments against the
petitioners noting that the amount sought to be collected was way beyond the petitioners’ net worth,
which, based on Pacquiao’s SALN, only amounted to P1,185,984,697.00. Considering that the petitioners
still needed to cover the costs of their daily subsistence, the CTA opined that the collection of the total
amount of P3,298,514,894.35 from the petitioners would be highly prejudicial to their interests and
should, thus, be suspended pursuant to Section 11 of R.A. No. 1125, as amended. However, it also
ordered petitioners to deposit the amount of P3,298,514,894.35 or post a bond in the amount of
P4,947,772,341.53, an amount which is clearly beyond Pacquiao’s net worth.

ISSUE: WON the CTA may dispense with the bond requirement.

HELD: No.There is no sufficient basis in the records for the Court to determine whether the dispensation
of the required cash deposit or bond provided under Section 11, R.A No. 1125 is appropriate. It should
first be highlighted that in rendering the assailed resolution, the CTA, without stating the facts and law,
made a determination that the illegality of the methods employed by the CIR to effect the collection of tax
was not patent. Though it may be true that it would have been premature for the CTA to immediately
determine whether the assessment made against the petitioners was valid or whether the warrants were
properly issued and served, still, it behooved upon the CTA to properly determine, at least preliminarily,
whether the CIR, in its assessment of the tax liability of the petitioners, and its effort of collecting the
same, complied with the law and the pertinent issuances of the BIR itself. The CTA should have
conducted a preliminary hearing and received evidence so it could have properly determined whether the
requirement of providing the required security under Section 11, R.A. No. 1125 could be reduced or
dispensed with pendente lite.
 CIR v. Liquigaz Philippines Corporation

G.R. Nos. 215534 and 215557

April 18, 2016

FACTS: Liquigaz Philippine Corp received a copy of Letter of Authority issued by the CIR authorizing
investigation of all internal revenue taxes for 2005. It also received a copy of the PAN on May 20, 2008
and was assessed 23,931,708.72 PHP as deficiency tax. On June 25, 2008, it received a Formal
Assessment Notice together with its attached details of discrepancies for December 31, 2005. Liquigaz
filed a protest on July 25, 2008 and submitted documents on September 23, 2008. It received the copy of
FDDA on July 1, 2010 and still liable for 22,380,025.19 PHP. Liquigaz filed a petition for review to the
CTA division, which partially granted Liquigaz’s petition to cancel EWT and FBT assessments. The CTA
en banc affirmed the CTA division, holding that it is a requirement that the taxpayer should be informed
in writing of the law and the facts on which the assessment was made applied to the FDDA—otherwise
the assessment shall be void.

ISSUE: WON the assessment made by the CIR is valid.

HELD: No. Under Section 228 of the NIRC, a taxpayer shall be informed in writing of the law and the
facts on which the assessment is made, otherwise it shall be void. Again, Section 3.1.4 of RR No. 12-99
requires that the FLD must state the facts and law on which is it is based. Section 228 of the NIRC should
not be read restrictively as to limit the written notice only to the assessment itself. The written notice
requirement for both the FLD and the FAN is in observance of due process However, a void FDDA does
not ipso facto render the assessment void. A decision differs from an assessment. An assessment becomes
a disputed assessment after a taxpayer has filed its protest to the assessment. The CIR either issues a
decision on the disputed assessment or fails to act on it and is considered denied. The taxpayer may then
appeal the decision on the disputed assessment or the inaction of the CIR. As such, the FDDA is not the
only means that the final tax liability of a taxpayer is fixed, which may then be appealed by the taxpayer.
A decision of the CIR on a disputed assessment differs from the assessment itself. The invalidity of one
does not necessarily result in the invalidity of the other. However the FFDA issued reveals that it merely
contained a table of Liquigaz’s supposed tax liabilities, without providing any details. The FDDA must
state the facts and law on which it is based to provide the taxpayer the opportunity to file an intelligent
appeal. As established, an FDDA that does not inform the taxpayer in writing of the facts and law on
which it is based renders the decision void. Therefore, it is as if there was no decision rendered by the
CIR. It is tantamount to a denial by inaction by the CIR, which may still be appealed before the CTA and
the assessment evaluated on the basis of the available evidence and documents. The merits of the EWT
and FBT assessment should have been discussed and not merely brushed aside on account of the void
FDDA. The FDDA substantially informed Liquigaz of its tax liabilities with regard to its WTC
assessment. Substantial compliance with the requirement under Section 228 of the NIRC is permissible
provided that the tax payer would be eventually apprised in writing of the factual and legal bases of the
assessment to allow him to file an effective protest against. It is imperative that the FDDA contain details
of the discrepancy.
 Commissioner of Customs v. Pilipinas Shell Petroleum Corporation et al

G.R. No. 205002

April 20, 2016

FACTS: Pilipinas Shell Petroleum Corporation was assessed and issued a demand letter by the District
Collector of Customs in the Port of Batangas for deficiency excise and VAT payments plus penalties on
its importation of catalytic cracked gasoline for the years 2006-2008 in the amount of
Php21,419,603,310.00. Another demand letter was issued reiterating the demand for payment of the
assessed tax and penalties due. Shell appealed the same before the Commissioner of Customs who
ordered the District Collector to observe the status quo. The Commissioner later denied Shell’s appeal and
ordered the latter to settle the unpaid taxes so that the Bureau would not exercise its power to seize all
imported articles by Shell and to sell the same in order to apply the proceeds to the Shell’s outstanding
balance with the Bureau.. Shell moved for the reconsideration of the Commissioner’s decision but the
same was denied so Shell filed a Petition for Review with the CTA. Shell also filed with the CTA a
Verified Motion for issuance of a Suspension Order to enjoin the collection of taxes with issuance of a
TRO. The CTA First Division issued a resolution granting Shell a 60-day TRO. However, after due
hearing on the Verified Motion for issuance of a Suspension Order, the same was denied. Thus, the
District Collector of the Port of Batangas issued a Memorandum ordering the personnel of the BOC Port
of Batangas to hold the delivery of all import shipment of Shell to satisfy its excise tax liability. Shell
filed with the RTC of Batangas a complaint for Injunction with prayer for issuance of a 72-hour TRO to
enjoin the implementation of the Memorandum. In said complaint, it was disclosed that there is a pending
appealed case with the CTA involving Shell and the Bureau of Customs. The 72-hour TRO was granted
so the Bureau of Customs filed cases against Shell’s officers for Direct Contempt for engaging in forum-
shopping and for Perjury. The CTA denied the motion to cite Shell’s officers in contempt so the Bureau
of Customs elevated the same to the Supreme Court.

ISSUE: WON the Petition for Review case filed with the CTA and the case for Injunction against the
implementation of the District Collector’s Memorandum filed with the RTC involve the same issues.

HELD: No. The subject matter in the CTA case is the alleged unpaid taxes for the years 2006-2008 which
is sought to be collected by the Bureau of Customs while the subject matter of the Batangas injunction is
the 13 importations/shipments of Shell which is being threatened to be seized by the Bureau of Customs
by virtue of the District Collector’s Memorandum. The cause of action in the CTA case is based on the
Letter-Decisions of the Commissioner of Customs denying Shell’s protest while the cause of action in the
RTC Batangas injunction case is the Memorandum dated Feb. 9, 2010, ordering the personnel of BOC in
the Port of Batangas to hold the delivery of all import shipments of Shell. The issues are not the same.
The Batangas injunction case is grounded upon the fact that the Bureau of Customs no longer have
jurisdiction over the importations as the same have been discharged and placed in Shell’s Batangas
refinery since 90% of the import duties have already been paid. This is on the theory that for Section 1508
to apply, the BOC must have physical custody of the goods sought to be held which is not present in the
case. Since the subject matter, cause of action and issue raised and the reliefs prayed for are not the same,
Respondents are not guilty of forum-shopping. Accordingly the CTA did not err in denying the Motion to
Cite respondents in Direct Contempt of Court.
 Capitol Wireless, Inc. v. Provincial Treasurer of Batangas

G.R. No. 180110

May 30, 2016

FACTS: Petitioner, Capitol Wireless, Inc., is a Philippine corporation in the business of providing
international telecommunication services. It has signed agreements with other local and foreign
telecommunications companies covering an international network of submarine cable systems such as: the
Asia Pacific Cable Network System, the Brunei-Malaysia-Philippines Cable Network System, the
Philippines-Italy, and the Guam Philippines systems. The agreements provide for co-ownership and other
rights among the parties over the network. Petitioner claims that it is co-owner only of the so called “Wet
Segment” of the APCN, while the landing stations or terminals and Segment E of APCN located in
Nasugbu, Batangas are allegedly owned by PLDT. Moreover, it alleges that the Wet Segment is laid in
international, and not Philippine waters. For loan restructuring purposes, petitioner engaged an appraiser
to assess the market value of the international submarine cable system and the cost to CapWire. It then
submitted a Sworn Statement of True Value of Real Properties at the Provincial Treasurer’s Office in
Batangas City, for the Wet Segment of the system. Respondent Provincial Assessor of Batangas had
determined that the submarine cable systems described in CapWire’s Sworn Statement are taxable real
property. Petitioner contested this by reasoning that the cable system lies outside of Philippine territory
i.e. international waters. Petitioner received a Warrant of Levy and a Notice of Auction Sale from
respondent. Petitioner filed a Petition for Prohibition and Declaration of Nullity of Warrant of Levy,
Notice of Auction Sale and/or Auction Sale with the RTC of Batangas City. RTC issued an order
dismissing the petition: (1) for failure to follow the requisite of payment under protest; as well as (2)
failure to appeal to the Local Board of Assessment Appeals (LBAA), as provided for in Sections 206 and
226 of R.A. 7160 or the Local Government Code. The Court of Appeals sustained the ruling of the RTC –
for petitioner failed to avail of remedies before administrative bodies like the LBAA and the Central
Board of Assessment Appeals (CBAA). Petitioner claims that its petition raises purely legal questions,
but the C.A. noted that the case raises questions of fact, such as the extent to which parts of the submarine
cable system lie within the territorial jurisdiction of the taxing authorities, the public respondents.

ISSUE: WON the submarine communications cable can be classified as taxable real property by LGUs.

HELD: Yes. Submarine or undersea communication cables are akin to electric transmission lines which
this Court has recently declared in MERALCO vs City Assessor and City Treasurer of Lucena City, as no
longer exempted from real property tax and may qualify as “machinery” subject to real property tax under
the Local Government Code. The Court sees no reason to distinguish between submarine cables used for
communication and aerial or underground wires or lines used for electric transmission, so that both pieces
of property do not merit a different treatment in the aspect of real property taxation. Both electric lines
and communication cables are not directly adhered to the soil but pass through posts, relays or landing
stations, but both may be classified as “machinery” under Article 415 (5), NCC for the simple reason that
such pieces of equipment serve the owner’s business or tend to meet the needs of his industry or works
that are on real estate. Petitioner also failed to prove that it is exempted from payment of real property tax.
 CIR v. PNB

G.R. No. 195147

June 11, 2016

FACTS: On 23 March 2000, the books and other accounting records of PNB in relation to its internal
revenue taxes were examined. It indicated that the PNB had deficiency payments of documentary stamp
taxes, withholding taxes on compensation, and expanded withholding taxes for taxable year 1997. The
petitioner issued a formal assessment notice, directing the PNB to pay their deficiencies, to which the
PNB paid under protest. The CIR denied the PNB’s protest. Upon denial, the PNB filed a petition for
review on the Court of Tax Appeals. The CTA partially grants the petition and reduced the amount of the
payment of the PNB of the documentary stamp tax on PNB’s interbank call loans from P41, 724, 935.75
to P14, 688 , 463.15. Dissatisfied, both the CIR and PNB filed a motion for reconsideration. The CIR
wanted the previous amount, while the PNB wanted to cancel the payment altogether, but the decision
was affirmed.

ISSUE: WON the PNB’s interbank call loans for taxable year 1997 are subject to documentary stamp tax.

HELD: No. The CIR contends that the PNB’s interbank call loans were included in the concept of loan
agreements, hence, the interbank call loans were subject to DST under Sec 3(b) of Revenue Regulations
No. 9-94, but the CTA held that this argument lacks merit. The maturity of PNB’s interbank loans was
irrelevant in determining its DST liability for taxable year 1997. The applicable law was the National
Internal Revenue Code of 1997, as amended by P.D. 1959 and RA No. 7660. It states that”xxx debt
instruments issued for interbank call loans with maturity of not more than five (5) days to cover
deficiency in reserves against deposit liabilities, including those between or among banks and quasi-
banks, shall not be considered as deposit substitute debt instruments.” The provisions of the NIRC cannot
be given retroactive effect to the prejudice of PNB. This is because tax laws are prospective in
application, it means from the moment they are in effect, it cannot apply to past occurrences. The CTA
further held that an interbank call loan is considered as a deposit substitute transaction by a bank
performing quasi-banking functions to cover reserve deficiencies. It does not fall under the definition of a
loan agreement, contrary to the contention of CIR. Even if it does, the DST liability of PNB will only
attach if the loan agreement was signed abroad but the object of the contract is located or used in the
Philippines, which was not the case in regard to PNB’s interbank call loans. Interbank call loans are not
expressly included among the taxable instruments listed in Section 180, which is the applicable law,
hence they may not be held taxable. What the law does not include, it automatically excludes. The
principle of law is that a tax cannot be imposed without clear and express words.
 Philippine Bank Communications v. CIR

G.R. No. 194065

June 20, 2016

FACTS: PBComm was authorized to use a Documentary Stamp metering machine. It paid for
Documentary Stamps and loaded the same to the DS Metering machine. In the course of its dealings with
the BSP, it used the DS metering machine to affix the stamps on the necessary documents. Upon learning
that its transactions with the BSP were tax exempt, PBComm filed for a refund. The CTA Division grated
the same, but reduced the refund by prescribed claims. The CTA ruled that the prescriptive period ran
from the date the stamped transactions occurred. However, upon appeal to the CTA En Banc, the amount
was further reduced as the Court En Banc ruled that the reckoning period was actually the date when the
stamps were paid for and loaded into the the DS metering machine.

ISSUE: WON the prescriptive period for refund of DST is reckoned from the date of transaction.

HELD: Yes. The Supreme Court ruled that DST is actually a tax on transactions more than a tax on
documents. The taxable event is when the taxable transaction occurs. For DS metering machine users, the
payment of the DST upon loading/reloading is merely an advance payment for future application. The
liability for the payment of the DST falls due only upon the occurrence of a taxable transaction.
Therefore, it is only then that payment may be considered for the purpose of filing a claim for a refund or
tax credit.
 Tridharma Marketing Corporation v. CTA

G.R. No. 215950

June 20, 2016

FACTS: Petitioner was assessed by the BIR and incurred various deficiency taxes - income tax, VAT,
withholding tax on compensation, expanded withholding tax and DST. The petitioner filed with the CIR
a protest through a Request for Reconsideration. However, the CIR rendered a decision denying the
request for reconsideration. Prior to the CIR's decision, the petitioner paid the assessments corresponding
to the WTC, DST and EWT deficiency assessments, inclusive of interest. It likewise reiterated its offer to
compromise the alleged deficiency assessments on IT and VAT. The petitioner appealed the CIR's
decision to the CTA via its so-called Petition for Review with Motion to Suspend Collection of Tax in the
amount of P4, 467,391,881.76 allegedly representing its deficiency Income Tax and Value Added Tax for
taxable year 2010. The Petition was granted provided that the petitioner deposits with this Court an
acceptable surety bond equivalent to 150% of the assessment or in the amount of P6, 701,087,822.64. The
petitioner filed its Motion for Partial Reconsideration praying for the reduction of the bond to an amount
it could obtain. The CTA in Division issued its second assailed resolution reducing the amount of the
petitioner's surety bond to P4, 467,391,881.76, which was the equivalent of the BIR's deficiency
assessment for IT and VAT.

ISSUE: WON the CTA in Division committed grave abuse of discretion in requiring the petitioner to file
a surety bond

HELD: Yes. The CTA in Division committed grave abuse of discretion in requiring the petitioner to file
a surety bond despite the supposedly patent illegality of the assessment that was beyond the petitioner's
net worth but equivalent to the deficiency assessment for IT and VAT. In the case at bar, the surety bond
amounting to P4, 467,391,881.76 imposed by the CTA was within the parameters delineated in Section
11 of R.A. 1125, as amended. The Court holds, however, that the CTA in Division gravely abused its
discretion under Section 11 because it fixed the amount of the bond at nearly five times the net worth of
the petitioner without conducting a preliminary hearing to ascertain whether there were grounds to
suspend the collection of the deficiency assessment on the ground that such collection would jeopardize
the interests of the taxpayer. Although the amount of P4, 467,391,881.76 was itself the amount of the
assessment, it behooved the CTA in Division to consider other factors recognized by the law itself
towards suspending the collection of the assessment, like whether or not the assessment would jeopardize
the interest of the taxpayer, or whether the means adopted by the CIR in determining the liability of the
taxpayer was legal and valid. Simply prescribing such high amount of the bond like the initial 150% of
the deficiency assessment of P4, 467,391,881.76 (or P6, 701,087,822.64), or later on even reducing the
amount of the bond to equal the deficiency assessment would practically deny to the petitioner the
meaningful opportunity to contest the validity of the assessments, and would likely even impoverish it as
to force it out of business.
 CIR v. Kepco Corporation

G.R. No. 199422

June 21, 2016

FACTS: Kepco Iljan Corporation filed with the Bureau of Internal Revenue (BIR) its claim for refund for
input tax incurred for the first and second quarters of the calendar year 2000 from its importation and
domestic purchases of capital goods and services preparatory to its production and sales of electricity to
the National Power Corporation. For failure of petitioner BIR to act upon respondent’s claim for refund or
issuance of tax credit certificate, respondent filed a Petition for Review. Thereafter, respondent filed its
Memorandum, but petitioner failed to file its Memorandum despite notice, thus, the case was submitted
for decision. Subsequently, Court of Tax Appeals (CTA) First Division rendered a Decision, holding that
respondent is entitled to a refund for its unutilized input VAT paid. There being no motion for
reconsideration filed by the petitioner, the said decision became final and executory. Aggrieved, petitioner
filed a petition for annulment of judgment with the CTA en banc but the same was dismissed, and its
motion for reconsideration was likewise denied. Petitioner elevated the case to the Supreme Court via
petition for review.

ISSUE: WON Court of Tax Appeals en banc has jurisdiction to take cognizance of the Petition for
Annulment of Judgment filed by petitioner.

HELD: No. The Revised Rules of the CTA and even the Rules of Court which apply suppletorily thereto
provide for no instance in which the en banc may reverse, annul or void a final decision of a division.
Verily, the Revised Rules of the CTA provide(s) for no instance of an annulment of judgment at all. On
the other hand, the Rules of Court, through Rule 47, provides, with certain conditions, for annulment of
judgment done by a superior court, like the Court of Appeals, against the final judgment, decision or
ruling of an inferior court, which is the Regional Trial Court, based on the grounds of extrinsic fraud and
lack of jurisdiction. The Regional Trial Court, in turn, also is empowered to, upon a similar action, annul
a judgment or ruling of the Metropolitan or Municipal Trial Courts within its territorial jurisdiction. But,
again, the said Rules are silent as to whether a collegial court sitting en banc may annul a final judgment
of its own division. As earlier explained, the silence of the Rules may be attributed to the need to preserve
the principles that there can be no hierarchy within a collegial court between its divisions and the en banc,
and that a court’s judgment, once final, is immutable. A direct petition for annulment of a judgment of the
CTA to the Supreme Court, meanwhile, is likewise unavailing, for the same reason that there is no
identical remedy with the High Court to annul a final and executory judgment of the Court of Appeals.
RA No. 9282, Section 1 puts the CTA on the same level as the Court of Appeals, so that if the latter’s
final judgments may not be annulled before the Supreme Court, then the CTA’s own decisions similarly
may not be so annulled. And more importantly, it has been previously discussed that annulment of
judgment is an original action, yet, it is not among the cases enumerated in the Constitution, Article VIII,
Section 5, over which the Supreme Court exercises original jurisdiction. Annulment of judgment also
often requires an adjudication of facts, a task that the Court loathes to perform, as it is not a trier of facts.
Instead, what remained as a remedy for the petitioner was to file a petition for certiorari under Rule 65,
which could have been filed as an original action before this Court and not before the CTA en banc.
 CIR v. Goodyear Philippines, Inc.

G.R. No. 216130

August 3, 2016

FACTS: Respondent is a domestic corporation duly organized and existing under the laws of the
Philippines, and registered with the BIR as a large taxpayer. On August 19, 2003, the authorized capital
stock of respondent was increased from P400,000,000.00 divided into 4,000,000 shares with a par value
of P100.00 each, to P1,731,863,000.00 divided into 4,000,000 common shares and 13,318,630 preferred
shares with a par value of P100.00 each. Consequently, all the preferred shares were solely and
exclusively subscribed by Goodyear Tire and Rubber Company, which was a foreign company organized
and existing under the laws of the State of Ohio, and is unregistered in the Philippines. On May 30, 2008,
the Board of Directors of respondent authorized the redemption of GTRC's 3,729,216 preferred shares on
October 15, 2008 at the redemption price of P470,653,914.00. On October 15, 2008, respondent filed an
application for relief from double taxation before the International Tax Affairs Division of the BIR to
confirm that the redemption was not subject to Philippine income tax, pursuant to the Republic of the
Philippines (RP) - US Tax Treaty. This notwithstanding, respondent still took the conservative approach,
and thus, withheld and remitted the sum of P14,659,847.10 to the BIR on November 3, 2008, representing
fifteen percent FWT, computed based on the difference of the redemption price and aggregate par value
of the shares. On October 21, 2010, respondent filed an administrative claim for refund or issuance of
TCC, representing 15% FWT in the sum of P14,659,847.10 before the BIR. Thereafter, or on November
3, 2010, it filed a judicial claim, by way of petition for review, before the CTA. For her part, petitioner
maintained that respondent's claim must be denied, considering that: (a) it failed to exhaust administrative
remedies by prematurely filing its petition before the CTA; and (b) it failed to submit complete supporting
documents before the BIR.

ISSUE: WON the judicial claim of respondent should be dismissed for non-exhaustion of administrative
remedies.

HELD: Yes. Section 229 of the Tax Code states that judicial claims for refund must be filed within two
(2) years from the date of payment of the tax or penalty, providing further that the same may not be
maintained until a claim for refund or credit has been duly filed with the CIR. In the case at bar, records
show that both the administrative and judicial claims for refund of respondent for its erroneous
withholding and remittance of FWT were indubitably filed within the two-year prescriptive period.
Notably, Section 229 of the Tax Code, as worded, only required that an administrative claim should first
be filed. It bears stressing that respondent could not be faulted for resorting to court action, considering
that the prescriptive period stated therein was about to expire. Had respondent awaited the action of
petitioner knowing fully well that the prescriptive period was about to lapse, it would have resultantly
forfeited its right to seek a judicial review of its claim, thereby suffering irreparable damage. Thus, in
view of the aforesaid circumstances, respondent correctly and timely sought judicial redress,
notwithstanding that its administrative and judicial claims were filed only 13 days apart.
 Bloomberry Resorts and Hotels, Inc. v. BIR

G.R. No. 212530

August 30, 2016

FACTS: PAGCOR granted to petitioner a provisional license to operate a resort-casino complex at the
Entertainment City project site of PAGCOR. Pursuant to such license and to PAGCOR’s Charter,
Petitioner only paid license fees in lieu of taxes. PAGCOR’s charter provided for exemptions in favour of
entities contracting with it. RA 9337 amended Sec. 27(c) of the NIRC, which excluded PAGCOR from
the GOCCs exempt from paying corporate income tax. In the case of PAGCOR v. BIR, PAGCOR
assailed the constitutionality of the amendment, but the Court upheld its validity. Hence, PAGCOR’s
exemption was removed. BIR then issued Revenue Memo Circular (RMC) No. 33-2013 to implement RA
9337, which provided that in addition to the 5% franchise tax on its gross revenue, PAGCOR will now
have to pay corporate income tax. The said law also provides that PAGCOR’s contractees and licensees,
including entities involving gambling/recreation, are also subject to income tax. Petitioner assailed the
RMC direct to the Supreme Court alleging that the PAGCOR Charter, as amended by RA 9487, is a
valid existing law, expressly exempting PAGCOR’s contractees and licensees from all taxes except the
5% franchise tax; that such was not repealed by the deletion of PAGCOR from the list of tax-exempt
entities; that BIR acted with grave abuse of discretion in issuing the RMC as it, in effect,
repealed/amended the Charter; and that the RMC will adversely affect an industry seeking to promote
tourism and generate jobs.

ISSUE: WON petitioner is liable for corporate income tax

HELD: No. The Charter provides for the exemption of PAGCOR and its contractees and licensees from
payment of all other taxes aside from the franchise fee. This includes corporate income tax. The said
provision in the Charter was not amended or repealed, and is thus, still in effect. Hence, the contractees
and licensees are exempt from payment of corporate income tax. As the charter states in clear terms that
the exemptions shall inure to the benefit of and extend to the corporations, associations, agencies, or
individuals with whom PAGCOR has any contractual relationship in connection with the operations of
casinos authorized to be conducted under the franchise, so it must be that all contractees and licensees of
PAGCOR, upon payment of the franchise fee, shall likewise be exempted from payment of all kinds of
taxes, including corporate income tax, from the operation of casinos. They shall be liable for corporate
income tax for income derived from other related services, similar to how PAGCOR is liable for such.
 Provincial Assessor of Agusan Del Sur v. Filipinas Palm Plantation, Inc.

G.R. No. 183416

October 5, 2016

FACTS: Filipinas is a private organization engaged in palm oil plantation with a total land area of more
than 7,000 hectares of National Development Company lands in Agusan del Sur. Harvested fruits from oil
palm trees are converted into oil through Filipinas' milling plant in the middle of the plantation area.
Within the plantation, there are also three plantation roads and a number of residential homes constructed
by Filipinas for its employees. NDC lands were transferred to Comprehensive Agrarian Reform Law
beneficiaries who formed themselves as the merged NDC-Guthrie Plantations, Inc. - NDC-Guthrie
Estates, Inc. (NGPI-NGEI) Cooperatives. Filipinas entered into a lease contract agreement with NGPI-
NGEI. Provincial Assessor assessed Filipinas' properties found within the plantation area

ISSUE: WON the exemption privilege of NGPI-NGEI from payment of real property tax extends to
Filipinas Palm Oil Plantation Inc. as lessee of the parcel of land owned by cooperatives.

HELD: .No. Under Section 133(n) of the Local Government Code, the taxing power of local government
units shall not extend to the levy of taxes, fees, or charges on duly registered cooperatives under the
Cooperative Code. Section 234(d) of the Local Government Code specifically provides for real property
tax exemption to cooperatives. NGPI-NGEI, as the owner of the land being leased by respondent, falls
within the purview of the law. Section 234 of the Local Government Code exempts all real property
owned by cooperatives without distinction. Nothing in the law suggests that the real property tax
exemption only applies when the property is used by the cooperative itself. Similarly, the instance that the
real property is leased to either an individual or corporation is not a ground for withdrawal of tax
exemption
 Tekenaka Corporation v. CIR

G.R. No. 193321

October 19, 2016

FACTS: Respondent Takenaka, as a subcontractor, entered into an On-Shore Construction Contract with
PIATCO for the purpose of constructing the Ninoy Aquino Terminal III (NAIA-IPT3). PIATCO is a
corporation duly organized and existing under the laws of the Philippines and was duly registered with the
PEZA, as an Ecozone Developer/Operator under RA 7916. Respondent Takenaka filed its Quarterly VAT
Returns for the four quarters of taxable year 2002 on April 24, 2002, July 22, 2002, October 22, 2002 and
January 22, 2003, respectively. Subsequently, respondent Takenaka amended its quarterly VAT returns
several times. On January 13, 2003, the BIR issued VAT Ruling No. 011-03 which states that the sales of
goods and services rendered by respondent Takenaka to PIATCO are subject to zero-percent VAT and
requires no prior approval for zero rating based on Revenue Memorandum Circular 74-99. On April 11,
2003, respondent Takenaka filed its claim for tax refund covering the aforesaid period before the BIR
Revenue District Office No. 51, Pasay City Branch. For failure of the BIR to act on its claim, respondent
Takenaka filed a Petition for Review with the Supreme Court. After trial on the merits, on November 4,
2008, the Former First Division rendered a Decision partly granting the Petition for Review and ordering
herein petitioner CIR to refund to respondent Takenaka the reduced amount of P53,374,366.52, with a
Concurring and Dissenting Opinion from Presiding Justice Acosta. Not satisfied, on November 26, 2008,
respondent Takenaka filed a "Motion for Reconsideration". During the deliberation of respondent
Takenaka's "Motion for Reconsideration", Associate Justice Caesar A. Casanova changed his stand and
concurred with Presiding Justice Ernesto D. Acosta, while the original Ponente, Associate Justice Lovell
R. Bautista, maintained his stand. Thus, respondent Takenaka's "Motion for Reconsideration" was granted
by the Former First Division in its Amended Decision dated March 16, 2009, with a Dissenting Opinion
from Associate Justice Lovell R. Bautista. On April 7, 2009, petitioner CIR filed a "Motion for
Reconsideration" of the Amended Decision, which the Former First Division denied in a Resolution dated
June 29, 2009, with Associate Justice Bautista reiterating his Dissenting Opinion.

ISSUE: WON the sales invoices presented by the petitioner were sufficient as evidence to prove its zero-
rated sale of services to PIATCO.

HELD: No. The petitioner submitted sales invoices, not official receipts, to support its claim for refund.
In light of the aforestated distinction between a receipt and an invoice, the submissions were inadequate
for the purpose thereby intended. The Court concurs with the conclusion of the CTA En Banc, therefore,
that "without proper VAT official receipts issued to its clients, the payments received by respondent
Takenaka for providing services to PEZA-registered entities cannot qualify for VAT zero-rating. Hence,
it cannot claim such sales as zero-rated VAT not subject to output tax." Under VAT Ruling No. 011-03,
the sales of goods and services rendered by the petitioner to PIATCO were subject to zero-percent (0%)
VAT, and required no prior approval for zero rating based on Revenue Memorandum Circular 74-99.13
This notwithstanding, the petitioner's claim for refund must still be denied for its failure as the taxpayer to
comply with the substantiation requirements for administrative claims for tax refund or tax credit.
 NAPOCOR v. Provincial Treasurer of Benguet

G.R. No. 209303

November 14, 2016

FACTS: Petitioner is a government-owned and controlled corporation created to undertake the

development of power generation and production from hydroelectric or other sources, and may undertake
the construction, operation and maintenance of power plants, dams, reservoirs, and other works. It
operates and maintains the Binga Hydro-Electric Power Plant. Respondents Provincial Treasurer,
Provincial Assessor, Municipal Treasurer and Municipal Assessor of Itogon are representatives of the
province of Benguet, a local government unit. Respondent issued the subject assessment in their official
capacities. Municipal Assessor of Benguet assessed the NPC the amount of ₱62,645,668.80 real property
tax. NPC challenged before the LBAA)the legality of the assessment and the authority of the respondents
to assess and collect real property taxes from it when its properties are exempt pursuant to Section 234 (b)
and (c) of Local Government Code. Respondents alleged that NPC’s properties were not exempt from tax
since the properties were classified in their tax declarations as “industrial,” “for industrial use,” or
“machineries” and “equipment.” There was no evidence that the properties were being used for
generation and transmission of electric power. LBAA deferred the proceedings upon NPC’s payment
under protest of the assessed amount, or upon filing of a surety bond to cover the disputed amount of tax.
NPC filed a petition for review before the CBAA claiming that payment under protest was not required
before it could challenge the authority of respondents to assess tax on tax exempt properties before the
LBAA. CBAA dismissed the appeal for being filed out of time. The CBAA, in an Order denied the
NPC’s motion for reconsideration. It ruled that it is incumbent upon the NPC to pay under protest before
the LBAA could entertain its appeal as provided under LGC. NPC appealed to CTA En Banc by filing a
Petition for Review. The CTA En Banc denied the same for lack of merit.

ISSUE: WON NPC need to pay the assessed amount under protest in claiming for an exception from the
payment of real property tax.

HELD: Yes. Settled is the rule that should the taxpayer/real property owner question the excessiveness or
reasonableness of the assessment, LGC directs that the taxpayer should first pay the tax due before his
protest can be entertained. A claim for exemption from the payment of real property taxes does not
actually question the assessor’s authority to assess and collect such taxes, but pertains to the
reasonableness or correctness of the assessment by the local assessor. Every person who shall claim
exemption from payment of real property taxes imposed upon said property shall file with the provincial,
city or municipal assessor sufficient documentary evidence in support for such claim. The burden of
proving is upon whom the subject real property is declared. If the property being taxed has not been
dropped from the assessment roll, taxes must be paid under protest if the exemption from taxation is
insisted upon. NPC’s failure to comply with the mandatory requirement of payment under protest in
accordance with Section 252 of the LGC was fatal to its appeal.
 Deutsche Knowledge Services Pte. Ltd. v. CIR

G.R. No. 197980

December 1, 2016

FACTS: On March 31, 2009, petitioner filed an application for Tax Credit/Refund of its allegedly excess
and unutilized input VAT for the 1st quarter of the calendar year 2007 in the amount of P12,549,446.30
with respondent. Citing inaction on the part of respondent, petitioner on April 17, 2009 filed a Petition for
Review or 17 days after petitioner filed an application for tax credit/refund with respondent based on
Section 112 and 229 of the National Internal Revenue Code of 1997, as amended. However, on June 8,
2009, instead of an Answer respondent filed a Motion to Dismiss on ground of prescription. Citing the
case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, respondent alleged that the
Petition for Review was filed out of time on the ground of having been filed beyond the two-year
prescriptive period. A day after or on June 9, 2009, respondent filed an Answer again citing the same
grounds in the Motion to Dismiss in her Special and Affirmative defenses. CTA Second Division
resolved to grant said motion on October 28, 2009. Petitioner filed a motion for reconsideration thereon
on November 16, 2009. The Court promulgated a Resolution which denied petitioner's Motion for
Reconsideration. Petitioner then filed a petition for review with the CTA En Banc. However, the said
tribunal merely affirmed with modification the assailed resolutions and dismissed petitioner's suit for
having been prematurely filed prior to the expiration of the 120-day period granted to respondent to
resolve the tax claim. Hence, petitioner resorted to the present appeal, by way of a petition for review
under Rule 45.

ISSUE: WON the filing of petitioner's claim for refund/credit of input VAT before the CTA warrants a
dismissal as premature for non-compliance with the 120+30 day period.

HELD: Yes. Section 112(D) of the NIRC clearly provides that the CIR has "120 days, from the date of
the submission of the complete documents in support of the application [for tax refund/credit]," within
which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to
file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after
the 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer
is to appeal the inaction of the CIR to CTA within 30 days. In the present case, the records indicate that
petitioner filed its administrative claim for tax credit/refund of its allegedly excess and unutilized input
VAT for the 1st quarter of the calendar year 2007 in the amount of with respondent on March 31, 2009.
Subsequently, petitioner filed its judicial claim on the same matter through a petition for review with the
CTA on April 17, 2009. It is undisputed that the aforementioned date of filing falls within the period
following the issuance of BIR Ruling No. DA-489-03 on December 10, 2003 but before the promulgation
of the Aichi case on October 6, 2010. In accordance with the doctrine laid down in San Roque, we rule
that petitioner's judicial claim had been timely filed and should be given due course and consideration by
the CTA.
 Pilipinas Shell Petroleum Corporation v. Commissioner of Customs

G.R. No. 195876

December 5, 2016

FACTS: On 16 April 1996, R.A. No. 8180 took effect providing, among others, for the reduction of the
tariff duty on imported crude oil from 10% to 3% Prior to its effectivity, petitioner's importation of
1,979,674.85 U.S. barrels of Arab Light Crude Oil, thru the Ex MT Lanistels, arrived 9 days earlier than
the effectivity of the liberalization provision. Within a period of 3 days thereafter, said shipment was
unloaded from the carrying vessels docked at a wharf owned and operated by petitioner, to its oil tanks
located at Batangas City. Subsequently, petitioner filed the Import Entry and Internal Revenue
Declaration and paid the import duty of said shipment in the amount of P11,231,081.00 on 23 May 1996.
On 1 August 2000, petitioner received a demand letter from the BOC, through the District Collector of
Batangas, assessing it to pay the deficiency customs duties in the amount of P120,162,991.00 due from
the aforementioned crude oil importation, representing the difference between the amount allegedly due
and the actual amount of duties paid by petitioner. Petitioner protested the assessment to which the
District Collector of the BOC. Five years after petitioner paid the allegedly deficient import duty' it
received by telefax from the respondent a demand letter for the payment of the amount of
P936,899,885.90, representing the dutiable value of its 1996 crude oil importation which had been
allegedly abandoned in favor of the government by operation of law. Respondent stated that Import Entry
No. 683-96 covering the subject importation had been irregularly filed and accepted beyond the 30 period
prescribed by law. Petitioner protested the aforesaid demand letter for lack of factual and legal basis, and
on the ground of prescription. Seeking clarification as to what course of action the BOC is taking, and
reiterating its position that the respondent's demand letters dated 29 October 2001 and 27 July 2000 have
no legal basis, petitioner sent a letter to the Director of Legal Service of the BOC on 3 December 2001 for
said purpose. On 28 December 2001, BOC Deputy Commissioner. Valera sent petitioner a letter which
stated that the latter had not responded to the respondent's 29 October 2001 demand letter and demanded
payment of the amount of P936,899,885.90, under threat to hold delivery of petitioner's subsequent
shipments, pursuant to Section 150812 of the Tariff and Customs Code of the Philippines, and to file a
civil complaint against petitioner.

ISSUE: WON there was an implied abandonment of importation in favor of the government.

HELD: Yes Since it is undisputed that the Import Entry and Internal Revenue Declaration was belatedly
filed by petitioner on 23 May 1996, or more than 30 days from the last day of discharge of its importation
counted from 10 April 1996, the importation may be considered impliedly abandoned in favor of the
government. the requirement of due notice contemplated under Section 1801(b) of the TCCP, as
amended, refers to the notice to the owner, importer, consignee or interested party of the arrival of its
shipment and details thereof. The legislative intent was clear in emphasizing the importance of said notice
of arrival, which is intended solely to persons not considered as knowledgeable importers, or those who
are not familiar with the governing rules and procedures in the release of importations. We as much as
said that the due notice requirement under Section 1801(b), do not apply to knowledgeable importers, for
having been considered as one of the regular, large-scale and multinational importers of oil and oil
products, familiar with said rules and procedures and fully aware of the arrival of its shipment on its
privately owned pier or wharf in the Port of Batangas.
 CIR v. United Cadiz Sugar Farmers Association Multi-Purpose Cooperative

G.R. No. 209776

December 7, 2016

FACTS: Respondent is a multi-purpose cooperative with a Certificate of Registration issued by the

Cooperative Development Authority. In accordance with RR No. 20-2001, the BIR issued the "Certificate
of Tax Exemption" in favor of UCSFA-MPC. In November 2007, BIR Regional Director Galanto
required UCSFA-MPC to pay in advance the VAT before her office could issue the Authorization
Allowing Release of Refined Sugar from the sugar refinery/mill. This was the first instance that the
Cooperative was required to do so. This prompted the cooperative to confirm with the BIR whether it is
exempt from the payment of VAT pursuant to Section 109(1) of the NIRC. The BIR responded favorably
to UCSFA-MPC's query. As a result, Regional Director Galanto no longer required the advance payment
of VAT from UCSFA-MPC and began issuing AARRS in its favor, thereby allowing the cooperative to
withdraw its refined sugar from the refinery. But, in November 2008, the administrative legal opinion
notwithstanding, Regional Director Galanto, again demanded the payment of advance VAT from
UCSFA-MPC. Unable to withdraw its refined sugar from the refinery/mill for its operations, UCSFA-
MPC was forced to pay advance VAT under protest. On November 11, 2009, UCSFA-MPC filed an
administrative claim for refund with the BIR, asserting that it had been granted tax exemption under
Article 61 of the Cooperative Code of the Philippines, and Section 109(1) of the NIRC. On November 16,
2009, it likewise filed a judicial claim for refund before the CTA division. The CTA division ruled in
UCSFA-MPC's favor

ISSUE: WON UCSFA-MPC 's sale of refined sugar is VAT-exempt.

HELD: Yes. As a general rule under the NIRC, a seller shall be liable for VAT on the sale of goods or
properties based on the gross selling price or gross value in money of the thing sold. However, certain
transactions are exempted from the imposition of VAT. One exempted transaction is the sale of
agricultural food products in their original state. Agricultural food products that have undergone simple
processes of preparation or preservation for the market are nevertheless considered to be in their original
state. Sugar is an agricultural food product. Notably, tax regulations differentiate between raw sugar and
refined sugar. For internal revenue purposes, the sale of raw cane sugar is exempt from VAT because it is
considered to be in its original state. On the other hand, refined sugar is an agricultural product that can
no longer be considered to be in its original state because it has undergone the refining process; its sale is
thus subject to VAT. Although the sale of refined sugar is generally subject to VAT, such transaction may
nevertheless qualify as a VAT-exempt transaction if the sale is made by a cooperative. Under Section
109(1) of the NIRC, sales by agricultural cooperatives are exempt from VAT provided the following
conditions concur: First, the seller must be an agricultural cooperative duly registered with the CDA.
Second, the cooperative must sell either: 1) exclusively to its members; or 2) to both members and non-
members, its produce, whether in its original state or processed form. The BIR itself acknowledged and
confirmed that UCSFA-MPC is the producer of the refined sugar it sells. Under the principle of equitable
estoppel, the petitioner is now precluded from unilaterally revoking its own pronouncement and unduly
depriving the cooperative of an exemption clearly granted by law.
 Aala v. Uy

G.R. No. 202781

January 10, 2017

FACTS: On July 12, 2011, the Sangguniang Panlungsod of Tagum City's Committee on Finance
conducted a public hearing for the approval of a proposed ordinance. The proposed ordinance sought to
adopt a new schedule of market values and assessment levels of real properties in Tagum City, which was
later on approved. As a result of the amendments introduced to City Ordinance No. 516, s-2011, on
March 19, 2012, the Sangguniang Panlungsod of Tagum City passed City Ordinance No. 558, s-2012. 10
The new ordinance was approved by Mayor Uy on April 10, 2012. On the same day, it was transmitted
for review to the Sangguniang Panlalawigan of Davao del Norte. The Sangguniang Panlalawigan of
Davao del Norte received the proposed ordinance on April 12, 2012. On April 30, 2012, Engineer Aala
and Colonel Ferido, both residents of Tagum City, filed before the Sangguniang Panlalawigan of Davao
del Norte an Opposition/Objection to City Ordinance No. 558, s-2012. The opposition was referred to the
Committee on Ways and Means/Games and Amusement. The Committee conducted a hearing to tackle
the matters raised in the Opposition.

ISSUE: WON the said Opposition is valid.

HELD: No. In Reyes v. Court of Appeals, this Court declared the mandatory nature of Section 187 of the
Local Government Code of 1991: The law requires that the dissatisfied taxpayer who questions the
validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from
effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an
aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party
could already proceed to seek relief in court. These three separate periods are clearly given for
compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to
prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason
the courts construe these provisions of statutes as mandatory.
 Soriano v. Sec. of Finance

G.R. No. 184450

January 24, 2017

FACTS: Petitioners assail Rev. Regs. 10-2008 as an unauthorized departure from RA 9504, as it (1)
restricts the implementation of the MWEs’ income tax exemption only to the period starting from 6 July
2008, instead of applying the exemption to the entire year 2008; (2) applied a pro-rated application of the
new set of personal and additional exemptions for taxable year 2008; and (3) imposed additional
conditions for the availment by MWEs of the exemption as it provides that if MWEs received other
benefits in excess of P30,000, they can no longer avail of the exemption.

ISSUE: WON said Regulations are valid.

HELD: No. The rule of full taxable year treatment for the availment of personal and additional
exemptions was established, not by the amendments introduced by RA 9504 but by the Tax Code itself.
Section 35(C) of the Tax Code does not allow the prorating of the personal and additional exemptions
even in case a status-changing event occurs during the taxable year, e.g. taxpayer marries or should have
additional dependents. As such, there is no reason why the application of RA 9504, which merely
increased the amount of personal and additional exemptions, should be differently. Thus, the respondent
went beyond enforcement of the law, given the absence of a provision in RA 9504 mandating the prorated
application of the new amounts of personal and additional exemptions for 2008. Similar to the case of
adjusted personal and additional exemptions, the MWE exemption should apply to the entire taxable year
2008, and not only from 6 July 2008 onwards. As mentioned, RA 9504 is undoubtedly a piece of social
legislation; as such, Umali Case is applicable. Rev. Regs. 102008 cannot declare the income earned by
MWEs from 1 January 2008 to 5 July 2008 to be taxable and those earned by him for the rest of that year
to be tax-exempt. To do so would contradict the Tax Code and jurisprudence, as taxable income would
then cease to be determined on a yearly basis. Thus, Rev. Regs. 10-2008, insofar as it allows the
availment of the MWE’s tax exemption only on 6 July 2008 is in contravention of RA 9504.
 CIR v. San Miguel Corporation

G.R. No. 205045

January 25, 2017

FACTS: In October, 1999 SMC VP for Finance wrote BIR Excise Tax Services Asst. Commissioner
requesting for registration and authority to manufacture "San Mig Light" to be taxed at P12.15 per liter
pursuant to Sec. 143 of the 1997 NIRC schedule for excise tax of fermented liquor which was granted.
On November 1999, SMC advised Asst. Commissioner that San Mig Light would be sold at a net retail
price of P21.15 per liter and would be taxed at P9.15 following the schedule of Sec . 143. On January,
2002 SMC VP and Manager of Group Tax Services wrote BIR requesting information on tax rate and
classification of San Mig Light and got a reply on February 2002 confirming that based on submitted
documents SMC is allowed to register, manufacture, and sell "San Mig Light" as a new brand and that the
tax classification and rate of as a new brand were in order. However on May 2002, BIR issued a notice of
discrepancy to SMC stating that San Mig Light is a variant of its existing beer and should be taxed under
the highest classification of the variant of that brand which is P12.15 per liter per Sec. 143 and the 12%
increase should be based on such amount. SMC wrote a letter requesting withdrawal of Notice stating
that San Mig Light is not a variant of its beer product because of "the distinctive shape, color scheme, and
general appearance"; and the "different alcohol content and innovative low calorie formulation."
Commissioner Parayno wrote SMC on January 2004 to validate its finding that San Mig Light is a variant
subject to excise tax of P12.15 per liter and starting 2000 at P13.61 per liter. Preliminary Assessment
Notice was served followed by a Final Assessment Notice covering from November 1999 to January 29,
2004. SMC filed protest/request for reconsideration for the FAN which was denied by BIR. Thus, filing
petition for review at CTA assailing the denial. On December 2005, SMC filed at BIR refund claim
covering period from February 2004 to November and due to inaction of BIR filed a petition for review at
CTA, which was granted in their favor. BIR filed a motion for reconsideration with Motion for
production of documents by SMC of October 1999 to December 2000 Kaunlaran Publication and 1999
Annual Report but was denied.

ISSUE: WON the deficiency excise tax assessments issued by the BIR against SMC are valid.

HELD: No. Deficiency tax assessment changing classification of San Mig Light from new brand to
variant is not valid. The classification of "San Mig Light" as a new brand may not be revised except by
an act of Congress as laid down by RA No. 8240; and CTA did not err in granting its claim for refund or
issuance of tax credit certificate. SC upheld CTA ruling that San Mig Light is a new brand. A 'variant of
a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the
brand. 'New brand' shall mean a brand registered after the date of affectivity of R.A. No. 8240 on January
1, 1997. Thus, it is clear that when the product "San Mig Light" was introduced in 1999, it was
considered as an entirely new product and a new brand, there being no root name of "San Miguel" or "San
Mig" in its existing brand names
 CIR v. Apo Cement Corporation

G.R. No. 193381

February 8, 2017

FACTS: Respondent was assessed of alleged deficiency documentary stamp taxes for the year 1999 based
on the alleged assignment of several parcels of land with mineral deposits to a wholly-owned subsidiary,
as well as land acquisitions during said year. On 2008, respondent availed of the tax amnesty under
Republic Act No. 9480, particularly affecting the 1999 deficiency documentary stamp taxes. On 2009, the
respondent filed a Motion to Cancel Tax Assessment on the ground of its availment of the tax amnesty.
Petitioner opposed the Motion to Cancel on the ground that, in its availment of the tax amnesty,
respondent under-declared its assets in the SAL-N.

ISSUE: WON respondent may avail of tax amnesty.

HELD: Yes. The documentary requirements and payments of the amnesty tax operate as a suspensive
condition, such that completion of these requirements entitles the taxpayer-applicant to immediately enjoy
the immunities and privileges under RA 9480. However, Section 6 of RA 9480 also contains a resolutory
condition. Immunities and privileges will cease to apply to taxpayers who, in their SALN, were proven to
have understated their net worth by 30% or more. Pursuant to Section 10 of RA 9480, amnesty taxpayers
who willfully understate their net worth shall not only be liable for perjury under the Revised Penal Code,
but, upon conviction, also subject to immediate tax fraud investigation in order to collect all taxes due and
to criminally prosecute for tax evasion. In this case, respondent filed its Tax Amnesty documents on 25
January 2008. Since then, and up to the time of the filing of respondent’s Motion to Cancel Tax
Assessment on 17 April 2009, there had been no proceeding initiated to question its declared amount of
net worth. Thus, the lapse of the one (1)-year period effectively closed the window to question
respondent’s 2005 SALN.
 Sitel Philippines Corporation v. CIR

G.R. No. 201326

February 8, 2017

FACTS: On 28 March 2006, petitioner filed its administrative claim for refund of its unutilized input
VAT arising from domestic purchases of goods and services attributed to zero-rated transactions and
purchases/importations of capital goods for the year 2004. After two (2) days from the filing of the
administrative claim and without waiting for the one hundred twenty (120) day period for the CIR to act
on the administrative claim for refund, petitioner filed its judicial claim for refund or tax credit with the
CTA.

ISSUE: WON petitioner complied with the statutory period.

HELD: Yes. Citing the Supreme Court’s decision in Commissioner of Internal Revenue v. San Roque
Power Corporation (“San Roque Case”), the Supreme Court reiterated that (1) the 120-day period for the
CIR to act on an administrative claim for refund or tax credit of unutilized input VAT is mandatory and
jurisdictional for the filing of the judicial claim; (2) however, as an exception, the judicial claim need not
await the expiration of the 120-day period if such was filed from 10 December 2003 (issuance of BIR
Ruling No. 489-03 wherein the BIR held that taxpayers need not await the lapse of the 120-day period in
filing the judicial claim for refund) until 06 October 2010 (when the Supreme Court held in
Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.6 [“Aichi Case”]) that the
120-day period is mandatory and jurisdictional. In this case, petitioner filed its administrative claim for
refund on 28 March 2006 and 30 March 2006, respectively, or after the issuance of BIR Ruling No. DA-
489-03 but before the date when Aichi Case was promulgated. Clearly, petitioner’s judicial claim for
refund was timely filed. However, petitioner failed to strictly comply with the invoicing requirements for
VAT refund, as required in Section 110(A)(1) of the Tax Code.
 CIR v. St. Luke’s Medical Center

G.R. No. 203514

February 13, 2017

FACTS: On December 14, 2007, respondent received from the Large Taxpayers Service-Documents
Processing and Quality Assurance Division of the BIR Audit Results/Assessment Notices, assessing
respondent SLMC deficiency income tax under Section 27(B)7 of the 1997 NIRC, for taxable year 2005
in the amount of ₱78,617,434.54 and for taxable year 2006 in the amount of ₱57,119,867.33. On January
14, 2008, SLMC filed with petitioner an administrative protest assailing the assessments. SLMC claimed
that as a non-stock, non-profit charitable and social welfare organization under Section 30(E) and (G)9 of
the 1997 NIRC, as amended, it is exempt from paying income tax. On April 25, 2008, SLMC received
petitioner CIR's Final Decision on the Disputed Assessment10 dated April 9, 2008 increasing the
deficiency income for the taxable year 2005 tax to ₱82,419,522.21 and for the taxable year 2006 to
₱60,259,885.94. Aggrieved, SLMC elevated the matter to the CTA via a Petition for Review, which was
granted.

ISSUE: WON respondent is exempt from payment of said tax.

HELD: No. The last paragraph of Section 30 provides that if a tax exempt charitable institution conducts
'any' activity for profit, such activity is not tax exempt even as its not-for-profit activities remain tax
exempt. This paragraph qualifies the requirements in Section 30(E) that the '[n]on-stock corporation or
association [must be] organized and operated exclusively for charitable purposes ' It likewise qualifies the
requirement in Section 30(G) that the civic organization must be 'operated exclusively' for the promotion
of social welfare. Thus, even if the charitable institution must be 'organized and operated exclusively' for
charitable purposes, it is nevertheless allowed to engage in 'activities conducted for profit' without losing
its tax exempt status for its not-for-profit activities. The only consequence is that the 'income of whatever
kind and character' of a charitable institution 'from any of its activities conducted for profit, regardless of
the disposition made of such income, shall be subject to tax.' Prior to the introduction of Section 27(B),
the tax rate on such income from for-profit activities was the ordinary corporate rate under Section 27(A).
With the introduction of Section 27(B), the tax rate is now 10%.
 CIR & Collector of Customs v. PAL

G.R. No. 215705-07

February 22, 2017

FACTS: Respondent imported alcoholic and tobacco products for its use as commissary supplies in its
international flights. These products were subjected to excise tax by the Commissioner of Customs on the
ground that Section 6 of RA 93341 withdrew the exemption of respondent from excise tax on its
importations of alcohol and tobacco products for its commissary supplies. Respondent paid the excise
taxes under protest and sought for refund of the excise taxes on the ground that its franchise, Section 13 of
PD No. 1590, exempts respondent’s importation of alcohol and tobacco products for commissary supplies
from excise tax.

ISSUE: the tax privilege of respondent PAL has been revoked by Section 131 of the Tax Code.

HELD: No. A later law, general in terms and not expressly repealing or amending a prior special law, will
not ordinarily affect the special provisions of such earlier statute. The provision of “any special or general
law to the contrary notwithstanding” cannot be considered as an express repeal of the exemptions granted
under PAL’s franchise because it fails to specifically identify PD 1590 as one of the acts intended to be
repealed. As such, Section 13 of PD 1590 cannot be considered revoked by Section 131 of the Tax Code,
as amended by Section 6 of RA 9334.
 CIR v. Asalus Corporation

G.R. No. 221590

February 22, 2017

FACTS: On December 16, 2010, respondent Asalus Corporation received a Notice of Informal
Conference from Revenue District Office No. 47 of the BIR. It was in connection with the investigation
conducted by Revenue Officer Bañares II on the VAT transactions of Asalus for the taxable year 2007.
Asalus filed its Letter-Reply, dated December 29, 2010, questioning the basis of Bañares' computation for
its VAT liability. On January 10, 2011, petitioner CIR issued the Preliminary Assessment Notice finding
Asalus liable for deficiency VAT for 2007 in the aggregate amount of P413,378,058.11. Asalus received
the Formal Assessment Notice stating that it was liable for deficiency VAT for 2007 in the total amount
of P95,681,988.64, inclusive of surcharge and interest. Consequently, it filed its protest against the FAN,
dated September 6, 2011. On October 16, 2012, Asalus received the Final Decision on Disputed
Assessment showing VAT deficiency for 2007 in the aggregate amount of P106,761,025.17, inclusive of
surcharge and interest and P25,000.00 as compromise penalty. As a result, it filed a petition for review
before the CTA Division. In its April 2, 2014 Decision, the CTA Division ruled that the VAT assessment
issued on August 26, 2011 had prescribed and consequently deemed invalid.

ISSUE: WON the assessment had already prescribed.

HELD: No. The statement given by the CTA were correct in a way, and it was given due respect for they
found it partly correct but, after a review of the records and applicable laws and jurisprudence, the Court
finds that the CTA erred in concluding that the assessment against Asalus had prescribed. Internal
revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the
return, or where the return is filed beyond the period, from the day the return was actually filed. Section
222 of the NIRC, however, provides for exceptions to the general rule. It states that in the case of a false
or fraudulent return with intent to evade tax or of failure to file a return, the assessment may be made
within ten years from the discovery of the falsity, fraud or omission.
 Henares v. St. Paul College Makati

G.R. No. 215383

March 8, 2017

FACTS: On 22 July 2013, petitioner CIR , issued RMO No. 20-2013, "Prescribing the Policies and
Guidelines in the Issuance of Tax Exemption Rulings to Qualified Non-Stock, Non-Profit Corporations
and Associations under Section 30 of the NIRC. On 29 November 2013, respondent filed a Civil Action
to Declare Unconstitutional RMO No. 20-2013 with Prayer for Issuance of Temporary Restraining Order
and Writ of Preliminary Injunction before the RTC. SPCM alleged that "RMO No. 20-2013 imposes as a
prerequisite to the enjoyment by non-stock, non-profit educational institutions of the privilege of tax
exemption under Sec. 4(3) of Article XIV of the Constitution both a registration and approval
requirement, i.e., that they submit an application for tax exemption to the BIR subject to approval by CIR
in the form of a Tax[]Exemption Ruling (TER) which is valid for a period of [three] years and subject to
renewal." According to SPCM, RMO No. 20-2013 adds a prerequisite to the requirement under
Department of Finance Order No. 137-87, and makes failure to file an annual information return a ground
for a non-stock, nonprofit educational institution to "automatically lose its income tax-exempt status."
The RTC issued a temporary restraining order against the implementation of RMO No. 20- 2013. It found
that failure of SPCM to comply with RMO No. 20-2013 would necessarily result to losing its tax-exempt
status and cause irreparable injury. the RTC granted the writ of preliminary injunction after finding that
RMO No. 20-2013 appears to divest non-stock, non-profit educational institutions of their tax exemption
privilege. Thereafter, the RTC denied the CIR's motion for reconsideration.

ISSUE: WON the tax exemption may be revoked.

HELD: Yes. The Tax Exemption Ruling shall be subject to revocation if there are material changes in the
character, purpose or method of operation of the corporation which are inconsistent with the basis for its
income tax exemption. With the issuance of RMO No. 44-2016, a supervening event has transpired that
rendered this petition moot and academic, and subject to denial. The CIR, in her petition, assails the RTC
Decision finding RMO No. 20-2013 unconstitutional because it violated the non-stock, non-profit
educational institutions' tax exemption privilege under the Constitution. However, subsequently, RMO
No. 44-2016 clarified that non-stock, nonprofit educational institutions are excluded from the coverage of
RMO No. 20-2013. Consequently, the RTC Decision no longer stands, and there is no longer any
practical value in resolving the issues raised in this petition.
 Alcantara v. Republic of the Philippines

G.R. No. 192536

March 15, 2017

FACTS: Appellant was the owner of a parcel of land, situated at Panorama Homes, Buhangin, Davao
City. On April 15, 1983 and April 16, 1984, appellant filed his income tax returns for, respectively, the
years 1982 and 1983. On December 14, 1987, Crispin Vallejo, Jr., Assistant Regional Director of the
Revenue Region No. 11-B of the BIR, Davao City, wrote appellant informing him that ₱32,076.52 was
still due from him representing deficiency income tax and fixed tax, surcharge, interest and compromise
penalty for late payment, and inviting him to call at "the Chief: Assessment Branch Room 107 Milagros
Building Ilustre Street, this City for an informal conference to enable" appellant "to go over our findings
and present objections thereto. On March 10, 1999, the RTC, Branch 11, upon being apprised of the fact
that the present controversy involved tax matters under the Internal Revenue Code, ordered the transfer of
the case to the "designated special courts to take cognizance of tax matters and all matters relating to
Internal Revenue Code". The case was reassigned to Branch 16, one of the two branches of the RTC of
Davao City so designated.

ISSUE: WON the RTC had jurisdiction to try the case.

HELD: No. It is clear from the foregoing allegations that despite assailing the supposedly illegal
confiscation of his property in order to satisfy his tax liabilities, Alcantara was really challenging the
assessment and collection of taxes made against him for being in violation of his right to due process. As
such, the complaint concerned the validity of the assessment and eventual collection of the taxes by the
BIR. The declaration of nullity of the sale and reconveyance was founded on the validity of the
assessment and eventual collection by the BIR. That the main relief sought by his complaint was "to
declare the assessments conducted by the BIR on the Income Tax Returns of [Alcantara] for 1982 and
1983 as null and void ab initio" as well as to declare all notices and deeds in relation to collection of the
assessed taxed liabilities as null and void bolsters this conclusion. The remedies available to a taxpayer
like Alcantara were laid down by law. Section 229 of Presidential Decree (P.D.) No. 1158, the law in
effect at the time of the disputed assessment, stated that prior resort to the administrative remedies was
necessary; otherwise, the assessment would attain finality. Yet, Alcantara immediately invoked the
authority of the courts to protect his rights instead of first going to the Commissioner of Internal Revenue
for redress of his concerns about the assessment and collection of taxes. His judicial recourse thus
suffered from fatal prematurity because his doing so rendered the assessment final.
 CIR v. Philippine Daily Inquirer

G.R. No. 213943

March 22, 2017

FACTS: On 10 August 2006, PDI received a letter dated 30 June 2006 from Region 020 Large Taxpayers'
Service of BIR under LN No. 116-AS-04-00- 00038. BIR alleged that based on the computerized
matching it conducted on the information and data provided by third party sources against PDI's
declaration on its VAT Returns for taxable year 2004, there was an underdeclaration of domestic
purchases from its suppliers amounting to P317,705,610.52. The BIR invited PDI to reconcile the
deficiencies with BIR's Large Taxpayers Audit & Investigation Division I (BIR-LTAID). In response,
PDI submitted reconciliation reports, attached to its letters dated 22 August 2006 and 19 December 2006,
to BIR-LTAID. On 21 March 2007, PDI executed a Waiver of the Statute of Limitation (First Waiver)
consenting to the assessment and/or collection of taxes for the year 2004 which may be found due after
the investigation, at any time before or after the lapse of the period of limitations fixed by Sections 203
and 222 of the National Internal Revenue Code (NIRC) but not later than 30 June 2007. The First Waiver
was received on 23 March 2007 by Nestor Valeroso (Valeroso), OIC-ACTR of the Large Taxpayer
Service. In a letter dated 7 May 2007, PDI submitted additional partial reconciliation and explanations on
the discrepancies found by the BIR. On 30 May 2007, PDI received a letter dated 28 May 2007 from Mr.
Gerardo Florendo, Chief of the BIR-LTAID, informing it that the results of the evaluation relative to the
matching of sales of its suppliers against its purchases for the taxable year 2004 had been submitted by
Revenue Officer Narciso Laguerta under Group Supervisor Fe Caling. In the same letter, BIR invited PDI
to an informal conference to present any objections that it might have on the BIR's findings. On 5 June
2007, PDI executed a Waiver of the Statute of Limitation (Second Waiver), which Valeroso accepted on 8
June 2007. In a Preliminary Assessment Notice (PAN) dated 15 October 2007 issued by the BIR-LTAID,
PDI was assessed for alleged deficiency income tax and VAT for taxable year 2004 on the basis of LN
No. 116-AS-04-00- 00038. On 16 May 2008, PDI filed its protest. On 12 December 2008, PDI filed a
Petition for Review against the CIR alleging that the 180-day period within which the BIR should act on
its protest had already lapsed.

ISSUE: WON Sec. 203 applies in the case.

HELD: Yes. Indeed, the Waivers executed by the BIR and PDI were meant to extend the three-year
prescriptive period, and would have extended such period were it not for the defects found by the CTA.
This further shows that at the outset, the BIR did not find any ground that would make the assessment fall
under the exceptions. In Commissioner of Internal Revenue v. Kudos Metal Corporation, the Court ruled:

Section 222(b) of the NIRC provides that the period to assess and collect taxes may only be extended
upon a written agreement between the CIR and the taxpayer executed before the expiration of the three-
year period. RMO 20-90 issued on April 4, 1990 and RDAO 05-01 issued on August 2, 2001 lay down
the procedure for the proper execution of the waiver. In this case, the CTA found that contrary to PDI's
allegntions, the First and Second Waivers were executed in three copies.1âwphi1 However, the CTA also
found that the CIR failed to provide the office accepting the First and Second Waivers with their
respective third copies, as the CTA found them still attached to the docket of the case.
 Medicard Philippines v. CIR
GR No. 222743
April 5, 2017

FACTS Upon finding some discrepancies between petitioner’s Income Tax Return and VAT Return, the
CIR informed petitioner and issued a Letter Notice. According to the CIR, the taxable base of HMOs for
VAT purposes is its gross receipts without any deduction. Petitioner argued that: the services it render is
not limited merely to arranging for the provision of medical and/or hospital services by hospitals and/or
clinics but include actual and direct rendition of medical laboratory services. Petitioner proceeded to file
a petition for review before the CTA.

ISSUE: WON the amounts that Medicard earmarked and eventually paid to the medical service providers
should still form part of its gross receipts for VAT purposes

HELD: No. Since an HMO like Medicard is primarily engaged in arranging for coverage or designated
managed care services that are needed by plan holders/members for fixed paid membership fees and for a
specified period of time, then Medicard is principally engaged in the sale of services. Its VAT base and
corresponding liability is, thus, determined under Section 108(A) of the Tax Code, as amended by RA
9337.The entire amount of membership fees should form part of Medicard’s gross receipts because the
exclusions to the gross receipts under RR No. 4-2007 does not apply to Medicard. For this Court to
subject the entire amount of Medicard’s gross receipts without exclusion, the authority should have been
reasonably founded from the language of the statute. That language is wanting in this case.
 Secretary of Finance Purisima v. CIR
GR No. 210251
April 17, 2017

FACTS: On December 20, 2012, President Benigno Aquino II signed RA 10351 (Sin Tax Reform Law)
which restructured the excise tax on alcohol and tobacco products. Section 5 thereof increased the excise
tax rate of cigars and cigarettes packed by machine to be packed in other packaging combinations of not
more than 20. On December 21, 2012, the Secretary of Finance imposes an excise tax on individual
cigarette pouces of 5’s and 10’s even if they are bundled or packed in packaging combinations not
exceeding 20 cigarettes. PMFTC, a member of Philippine Tobacco Institute, paid excise taxes required in
order to withdraw cigarettes from its manufacturing facilities. PTI sought to have declared null and void
the revenue regulations issued for allegedly violating the Constitution and imposing taxes not authorized
by RA 10351. PTI stated that the excise tax rate of either Php12 or Php 25 should be imposed only on
cigarettes packed by machine in packs of 20’s or packaging combinations of 20’s and should not be
imposed on cigarette pouches of 5’s and 10’s.

ISSUE: WON the RTC erred in nullifying Section R11 of RR17-2012 in imposing excise tax to
packaging combinations of 5’s, 10’s, etc. not exceeding 20 cigarette sticks packed by machine

HELD: No. Section 11 of RR17-2012 and Annex “D-1” on Cigarettes Packed by Machine of RMC 90-
2012 clearly contravened the provisions of RA 10351. It is a well-settled principle that a revenue
regulation cannot amend the law it seeked to implement. It has been held that a mere administrative
issuance, like a BIR regulation, cannot amend the law; the former cannot purport to do any more that
implement the latter. The courts will not countenance an administrative regulation that overrides the
statute it seeks to implement. In the present case, area ding of Section 11 of RR17-2012 and Annex “D-1”
on Cigarettes Packed by Machine of RMC 90-2012 are null and void. Excise tax on cigarettes packed by
machine shall be imposed on the packaging combination of 20 cigarette sticks as a whole and not to
individual packaing combinations or pouches of 5’s, 10’s, etc.
 Asiatrust Development Bank, Inc. v. CIR
GR No. 201530
April 19, 2017

FACTS:Petitioner received from CIR Formal Letters of Demand with Assessment Notices for deficiency
internal revenue taxes. Petitioner timely protested the assessment notices. Due to inaction of the CIR on
the protest, petitioner filed before the CTA a petition for review praying for the cancellation of the tax
assessments for deficiency income tax, documentary stamp tax, final withholding tax, expanded
withholding tax and fringe benefits tax issued by the CIR.

ISSUE: WON the order of the CTA En Banc for petitioner to pay again withholding tax would amount to
double taxation

HELD: No. Since no termination letter has been issued by the BIR, there is no reason for the Court to
consider as closed and terminated the tax assessment on Asiatrust’s final withholding tax for fiscal year
ending June 30, 1998. AsiaTrust’s application for tax abatement will be deemed approved only upon the
issuance of a termination letter, and only then will the deficiency tax assessment be considered closed and
terminated. However, in case Asiatrust’s application for tax abatement is denied, any payment made by it
would be applied to its outstanding tax liability. For this reason, Asiatrust’s allegation of double taxation
must also fail.
 Metropolitan Bank & Trust Company v. CIR
GR No. 182582
April 17, 2017

FACTS: Petitioner entered into an agreement with Luzon Hydro Corporation extending to the latter a
foreign currency denominated loan in the principal amount of US$ 123,780,000. LHC withheld and
eventually paid to the BIR the 10% final tax on the interest. According to petitioner, it mistakenly
remitted the aforesaid amounts to the BIR as well when they were inadvertently included in its own
Monthly Remittance Returns of Final Income Taxes Withheld for the months of March and October 2001.
Thus, it filed a letter to the BIR requesting for the refund thereof. Due to inaction of the CIR, petitioner
filed its judicial claim for refund via a petition for review filed before the CTA.

The CTA Division denied petitioner’s claim for refund for March 2001 by reason that it has already
prescribed. The October 2001 claim for refund was also denied for insufficiency of evidence. The CTA
En Banc affirmed the ruling. Hence, this petition.

ISSUE: WONthe CTA En Banc correctly held that Metrobank’s claim for refund relative to its March
2001 final tax had already prescribed.

HELD: Yes. Petitioner is misguided when it relied upon the six-year prescriptive period for initiatin an
action on the ground of quasi contract or solution indebiti under the Civil Code. Such legal precept is
inapplicable to the present case since the Tax Code, a pecial law, explicitly provides for a mandatory
period for claiming a refund for taxes erroneously paid. Tax refunds are based on the general premise that
taxes have been either erroneously or excessively paid. Though the Tax Code recognizes the right of
taxpayers to request the return of such excess/erroneous payments from the government, they must do so
within a prescribed period. Further “a taxpayer must prove not only his entitlement to a refund, but also
his compliance with the procedural due process as nonobservance of the prescriptive periods within which
to file te administrative and the judicial claims would result in the denial of his claim.
 Visayas Geothermal v. CIR
GR No. 205279
April 26, 2017

FACTS: Petitioner filed with the BIR an administrative claim for refund of unutilized input VAT
covering the taxable year 2007 in the amount of Php 11,902,576.07. It proceeded to immediately file a
petition for review with the CTA when the BIR failed to act upon the claim for refund. Petitioner cited
Section 6 of RA 9136, which provides that pursuant to the objective of lowering electricity rate to end
users, sales of generated power by generation companies shall be VAT zero-rated. Also, RA 9337, which
imposes a zero percent VAT rate on sale of power generated through renewable sources of energy. The
CTA denied the petition for being prematurely filed.

ISSUE: WON the CIR should grant the refund or tax credit certificate being applied for

HELD: Yes. The Court has underscored the need to strictly comply with the 120+30-day periods
provided in Section 112 of the 1997 NIRC. The current rule that gives a taxpayer 30 days to file the
judicial claim even if the CIR fails to act within the 120-day period, the remedy of a judicial claim for
refund or credit is always available to a taxpayer. As the petitioner correctly pointed out, this general rule
that calls for a strict compliance with the 120+30-day mandatory period admits of an exception. The BIR
ruling No. DA-489-03 referred to in the exception was recognized by the court to be a general
interpretative rule applicable to all taxpayers. Given the Court’s ruling that the CTA should have taken
cognizance of the petitioner’s claim, the Court finds it necessary to remand the case to the CTA, which
shall determine and rule on the entitlement of the petitioner to the claimed tax refund. Even the CTA en
bance affirmed the dismissal on the same sole ground.
 CIR v. Lancaster Philippines, Inc.
GR No. 183408
July 12, 2017

FACTS: Petitioner CIR is authorized by law to investigate or examine and issue assessments for
deficiency taxes. It issued Letter of Authority authorizing its revenue officers to examine respondent’s
books of accounts and other accounting records. After which, it issued the Preliminary Assessment
Notice with regard to the overstatement of its purchases. Respondent protested, and there being no action
by the BIR, respondent filed a petition for review before the CTA. The CTA granted the petition.

ISSUE: WON the CTA erred in ordering petitioner to cancel and withdraw the deficiency assessment
issued against respondent

HELD: No. The CIR posits that Lancaster should not have recognized in 1999 the purchases for February
and March 1998. Apparent from the reasoning of the CIR is that such expenses ought to have been
deducted in 1998, when they were supposed to be paid or incurred by respondent. The CIR is of the view
that the subject purchases match with the revenue in 1998, not in 1999. A reading of RAM No. 9-25,
however, clearly evinces that it conforms with the expenses paid or incurred be deducted in the year in
which gross income from the sale of the crops is realized. It is a clear-cut on the rule on when to
recognize deductions for taxpayers using the crop method of accounting. The rule prevails over any
GAAP, including the matching concept as applied in financial or business accounting.
 CE Luzon Geothermal Power Company Inc. v. CIR
GR No. 197526
July 26, 2017

FACTS: Petitioner incurred unutilized creditable input tax amounting to Php 26,574,388.99 for taxable
year 2003. Without waiting for the CIR to act on its claim, or for the expiration of 120 days, CE Luzon
instituted before the CTA a judicial claim for refund. The CIR denied the claim for refund. Petitioner
filed a judicial claim for refund.

ISSUE: WON petitioner’s judicial claims for refund of input Vat were timely filed

HELD: Only petitioner’s second quarter claim was filed on time. Its claims for refund of creditable input
tax for the first, third and fourth quarters of taxable year 2003 were filed prematurely. It did not wait for
the CIR to render a decision for the 120-day period to lapse before elevating the judicial claim with the
CTA.
 CIR v. Systems Technology Institute, Inc.
GR No. 220835
July 26, 2017

FACTS: The CTA found the waivers executed by respondent defective for failing to strictly comply with
the requirements provided by Revenue Memorandum Order No. 20-90. The CTA ruled that the periods
for the CIR to assess or collect internal revenue taxes were never extended; and the subject assessment for
deficiency income tax, Vat and EWT against respondent was already barred by prescription.

ISSUE: WON prescription had set in against the assessments for deficiency income tax, VAT and EWT

HELD: Yes. Considering the defects in the waivers executed by respondent, the periods for the CIR to
assess or collect the alleged deficiency income tax, deficiency EWT and deficiency VAT were not
extended. The assessments subject of this case, which were issued by the BIR beyond the three-year
prescriptive period, are therefore considered void and of no legal defect. Hence, the CTA committed no
reversible error in cancelling and setting aside the subject assessments on the ground of prescription.
 Power Sector Assets and Liabilities v. CIR
GR No. 198146
August 8, 2017

FACTS: Petitioner conducted public biddings for the privatization of the Pantabangan-Masiway
Hydroelectric Power Plant and Magat Hydroelectric Power Plant. NPC received a letter from the BIR
demanding immediate payment of deficiency VAT for the sale of the Pantabangan-Masiway Plant and
Magat Plant. Petitioner remitted under protest the total basic VAT due. Petitioner filed with the DOJ a
petition for adjudication of the dispute with the BIR.

ISSUE: WON the sale of the power plants should be subject to VAT

HELD: No.Under its charter, NPC is mandated to “undertake the development of hydroelectric generation
of power and production of electricity from nuclear, geothermal and other resources, as well as
transmission of electric power on a nationwide basis. Even id petitioner is deemed a successor-in-interest
of NPC, still the sale of the power plants is not in the course of trade or business as contemplated under
Section 105 of the NIRC, and thus, not subject to VAT. The sale of the power plants is not in pursuit of a
commercial or economic activity but a governmental function mandated by law to privatize NPC
generation assets.
 Confederation of Coconut Farmers v. Aquino
GR No. 217965
August 8, 2017

FACTS: Then President Benigno Aquino III issued EO 179 and 180. EO 179 calls for the inventory and
privatization of all coco levy assets. EO 180, on the other hand, mandates the reconveyance and
utilization of these assets for the benefit of coconut farmers and the development of the coconut industry.
Believing that the twin executive orders are invalid, petitioner proceeded with the subject petition.

ISSUE: WON coco levy funds are raised through the State’s police and taxing powers

Ruling: Yes. Coconut levy funds partake of the nature of taxes which, in general, are enforced
proportional contributions from persons and properties, exacted by the State by virtue of its sovereignty
for the support of government and for all public needs. Court takes judicial notice of the fact that the
coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts
occupy a leading position among the country’s export products; that it gives employment to thousands of
Filipinos; that it is a great source of the State’s wealth; and that it is one of the important sources of
foreign exchange needed by our country and, thus pivotal in the plans of a government committed to a
policy of currency stability. Taxation is done not merely to raise revenues to support the government, but
also to provide means for the rehabilitation and the stabilization of a threatened industry, which is so
affected with public interest as to be within the police power of the State. Even if the money is allocated
for a special purpose and raised by special means, it is still public in character. In this case, funds were
even used to organize and finance State offices.
 CIR v. Philippine Aluminum Wheels
GR No. 216161
August 9, 2017

FACTS: Respondent filed with the BIR an application for the abatement of its tax liabilities under
Revenue Regulations No. 13-2001 for the taxable year 2001. The BIR denied the application on the
ground that the FDDA was already issued by the BIR and had become final and executor due to the
failure of the respondent to appeal with the CTA. The CTA ruled in favor of respondent by granting its
petition for review and setting aside the assessment in view of respondent’s availment of a tax amnesty
under RA 9480.

ISSUE: WON respondent is entitled to the benefits of the Tax Amnesty Program under RA 9480

HELD: Yes. The Court denies the petition in view of the respondent’s availment of the Tax Amnesty
Program under RA 9480. A tax amnesty is a general pardon or intentional overlooking by the State of its
authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law.
The FDDA issued by the BIR is not a tax case subject to a final and executor judgment by the courts as
contemplated by Section 8 of RA 9480.
 Edison Cogeneration Corporation v. CIR
GR No. 201665
August 30, 2017

FACTS: Petitioner received from the CIR a Formal Letter of Demand and Final Assessment Notice
assessing deficiency income tax, VAT, withholding tax on compensation, EWT and FWT for taxable year
2000. Petitioner filed a letter-protest. Due to inaction of BIR the matter was elevated to the CTA via a
petition for review. While the case was pending, petitioner availed itself of the Tax Amnesty Program
under RA 9840. Thus, the CTA deemed the petition partially withdrawn.

ISSUE: WON petitioner is liable for deficiency final withholding tax for the year 2000

HELD: Yes. Considering that EBCC filed the Petition for Review before the CTA to question the
deficiency tax assessment issued by the CIR, it was incumbent upon petitioner to prove that the efficiency
tax assessment had no legal or factual basis or that it had already paid or remitted the deficiency tax
assessment as it is the taxpayer that has the burden of proof to impugn the validity and correctness of the
disputed deficiency tax assessment. In addition, it is a basic rule in evidence that the person who alleges
payment has the burden of proving that payment has indeed been made. More so, in cases filed before the
CTA, which are litigated denova, party-litigants must prove every minute aspect of their cases. Petitioner
was liable to pay the interest from the date of the execution of the contract, not from the date of the first
payment.
 Mindanao Geothermal v. CIR
GR No. 197519
November 8, 2017

FACTS: M1 entered into a BOT contract with PNOC-EDC for the finance, design, construction, testing,
commissioning, operation, maintenance and repair of a 47-megawatt geothermal power plant. M1 filed a
letter-request for the issuance of TCC with the BIR arising from its excess and unutilized creditable input
taxes. M1 filed its petition for review praying for the issuance of TCC in an amount of Php 6,199,278.90
instead of the amount of Php 9,470,500.39.

ISSUE: WON the CTA En Banc erred when it dismissed MI’s judicial claim for being filed out of time

HELD: No. Specifically, the Court in San Roque, held that BIR Ruling No. DA-489-03, which states that
the taxpayer-claimant need not wait for the lapse of the 120-day period before seeking judicial relief with
the CTA by way of petition for review serves as a valid claim for equitable estoppels recognized under
Section 246. While the BIR Ruling No. DA-489-03 was in effect at the time M1 file its judicial claim,
said ruling constitutes a valid claim for equitable estoppels with respect to premature judicial claims, and
not those filed beyond the 120+30-day periods under Section 112.
 CIR v. Transitions Optical
GR No. 227544
November 22, 2017

FACTS: Petitioner received a Letter of Authority from the BIR. The CIR issued a PAN assessing
petitioner for its deficiency taxes for taxable year 2004. Petitioner filed a petition for review. The CIR
interposed that the claim of prescription was inappropriate because the executed Waiver extended the
assessment period.

ISSUE: WON the assessment of deficiency taxes against respondent for taxable year 2004 had prescribed

HELD: No. As a general rule, petitioner has three years to assess taxpayers from the filing of the return.
Exception to the rule is found in Section 222 (b) and (d) on this Code. The period to assess and collect
taxes may be extended upon the Commissioner of Internal Revenue and the taxpayer’s written agreement,
executed before the expiration of the three-year period.
 PAGCOR v. CIR
GR No. 210689-90
November 22, 2017

FACTS: Petitioner was included among the government-owned or controlled corporation exempt from
the payment of income tax. On July 1, 2005, RA 9337 amended Section 27 of the NIRC of 1997 by
removing petitioner corporation from the list of the GOCCs exempt from payment of income tax.

ISSUE: WON the CTA erred in failing to consider that PAGCOR is liable only for the 5% franchise tax
in lieu of all kinds of taxes.

HELD: Yes. PAGCOR is liable for corporate income tax only on its income derived from other related
services. Assessments for deficiency income tax covers both PAGCOR’s income derived from gaming
operations and other related services. Considering that the Court En Banc has already ruled that
PAGCOR, under its Charter, remains to be exempt from income tax on its gaming operations, then
PAGCOR should only be held liable to pay for deficiency income tax on its income derived from other
related services for taxable years 2005 and 2006.
 Mindanao Shopping Destination Corporation v. Hon. Rodrigo R. Duterte

G.R. No. 211093

June 6, 2017

FACTS: Respondent Sangguniang Panglungsod of Davao City, after due notice and hearing, enacted the
assailed Davao City Ordinance No. 158-05, Series of 2005, otherwise known as “An Ordinance
Approving the 2005 Revenue Code of the City of Davao, as Amended.” Petitioners' particular concern is
Section 69 (d) of the questioned Ordinance. The DOJ-Sec dismissed the appeal and denied petitioner’s
motion for reconsideration. Meanwhile, Davao City Ordinance No. 0253, Series of 2006 (Amended
Ordinance), amended Section 69 (d) of the questioned ordinance. In it, tax rate on retailers with gross
receipts in excess of P400,000.00 was reduced from one and one-half percent (1 1/2%) to one and one-
fourth percent (1 1/4%); Section 69 (d). From the dismissal of the appeal and the denial of their motion
for reconsideration, petitioners filed an appeal before the Office of the President (OP). The OP, finding no
merit on petitioners' appeal, dismissed the latter. Petitioners moved for reconsideration, but the same was
denied. The appellate court dismissed the petition and affirmed the OP. Petitioners moved for
reconsideration of the appellate court’s decision, but the same was denied.

ISSUE:WON the CA erred in upholding the validity of the assailed ordinance.

HELD: No. Section 191 of the LGC presupposes that the following requirements are present for it to
apply, to wit: (i) there is a tax ordinance that already imposes a tax in accordance with the provisions of
the LGC; and (ii) there is a second tax ordinance that made adjustment on the tax rate fixed by the first
tax ordinance. In the instant case, both elements are not present. As to the first requirement, it cannot be
said that the old tax ordinance (first ordinance) was imposed in accordance with the provisions of the
LGC. As to the second requirement, the new tax ordinance (second ordinance) imposed the new tax base
and the new tax rate as provided by the LGC for retailers. Section 191 of the LGC will not apply because
with the assailed tax ordinance, there is no outright or unilateral increase of tax to speak of. The resulting
increase in the tax rate for retailers was merely incidental. When Davao City enacted the assailed
ordinance, it merely intended to rectify the glaring error in the classification of wholesaler and retailer in
the old ordinance. Petitioners are retailers as contemplated by the LGC. Petitioners never disputed their
classification as retailers. Thus, being retailers, they are subject to the tax rate provided under Section 69
(d) and not under Section 69 (b) of the assailed ordinance. In effect, under the assailed ordinance as
amended, petitioners as retailers are now assessed at the tax rate of one and one-fourth (11;4%) percent on
their gross sales and not the fifty-five (55%) percent of one (1 %) percent on their gross sales since the
latter tax rate is only applicable to wholesalers, distributors, or dealers.
 CIR v. Semirara Mining Corporation

June 19, 2017,

G.R. No. 202922

FACTS: SMC has been selling coal to NPC for years without paying VAT pursuant to the exemption
granted under Section 16 of PD No. 972. However, after Republic Act (RA) No. 9337, which amended
certain provisions of the National Internal Revenue Code (NIRC) of 1997, as amended, took effect on
July 1, 2005, NPC started to withhold a tax of five percent (5%) representing the final withholding VAT
on SMC's coal billings pursuant to Section 114(C) of the same law, on the belief that the sale of coal by
SMC was no longer exempt from VAT I.n view thereof, SMC requested for a BIR pronouncement
sustaining its position that its sale of coal to NPC was still exempt from VAT notwithstanding RA No.
9337, which the BIR granted through BIR Ruling No. 006-2007. Consequently, on May 21, 2007,
January 21, 2008, and January 29, 2008, SMC filed with the BIR Large Taxpayers Division, Revenue
District Office No. 121-Quexon City, letters with supporting documents requesting for a refund or
issuance of a tax credit certificate (TCC) in the total amount of ₱77,253,245.39, representing the final
withholding VAT withheld by NPC on its coal billing for the period of July 1, 2006 to December 31,
2006. Due to the CIR's inaction, SMC filed on August 8 and November 10, 2008 its petitions for review
with the CT A Division, docketed as CTA Case No. 7822 and 7849. In a Resolution dated January 27,
2009, the CTA Division consolidated CTA Case Nos. 7822 and 7849.

ISSUE: WON the CTA erred in holding that SMC is entitled to a tax credit/refund despite the latter's
failure to submit requisite documents to the BIR.

HELD: No. The CTA found that SMC submitted various documents in support of its claim for VAT
refund and a scrutiny thereof proved that NPC indeed erroneously withheld and remitted to the BIR a
final withholding VAT, in the amount of ₱77,253,245.39, on its gross payments for coal purchases from
SMC for the third and fourth quarters of 2006. Settled is the rule that the Court will not lightly set aside
the factual conclusions reached by the CTA which, by the very nature of its function of being dedicated
exclusively to the resolution of tax problems, has accordingly developed an expertise on the subject,
unless there has been an abuse or improvident exercise of authority. In Barcelon, Roxas Securities, Inc. v.
Commissioner of Internal Revenue, this Court ruled that: Jurisprudence has consistently shown that this
Court accords the findings of fact by the CT A with the highest respect. x x x this Court recognizes that
the Court of Tax Appeals, which by the very nature of its function is dedicated exclusively to the
consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions
will not be overturned unless there has been an abuse or improvident exercise of authority. Such findings
can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of
gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the
contrary, this Court must presume that the CTA rendered a decision which is valid in every
respect. There is no reason for this Court to depart from this well-entrenched principle, since the CTA did
not abuse its authority or committed gross error in granting SMC's refund claim.
 Ramiscal, Jr. v. COA

G.R. No. 213716,

October 10, 2017

FACTS: During the 11th Congress, the Senate's Committees on Accountability of Public Officers and
Investigations (Blue Ribbon) and National Defense and Security held hearings to investigate the alleged
anomalous acquisitions of land by the Armed Forces of the Philippines Retirement and Separation
Benefits System. Prompted by a series of resolutions by the Senate, the Deputy Ombudsman for the
Military and other Law Enforcement Offices sent to the COA a request for the conduct of audit on past
and present transactions of the AFP-RSBS. Thus, the COA constituted a special audit team (SAT) to
conduct the special audit/investigation. The SAT concluded that the deed of sale filed before the Registry
of Deeds was the true deed of sale, considering that it was signed by both parties. It followed then that the
true purchase price was P91,024,800 and as such, the government lost P250,318,200 when it allegedly
paid Concord Resources, Inc. P341,343,000. The SAT then issued Notice of Disallowance and Notice of
Charge directing the petitioner to immediately settle the amount of P250,318,200 representing excess
payment for the Calamba properties. Petitioner argues that the ND and NC have already prescribed
pursuant to Articles 1149 and 1153 of the Civil Code which provides that all other actions whose periods
are not fixed in the Civil Code or in other laws must be brought within five (5) years from the time the
right of action accrues..

Issue: WON the Notice of Disallowance and Notice of Charge has already prescribed.

HELD: No. Article 1108 (4) of the Civil Code expressly provides that prescription does not run against
the State and its subdivisions. This rule has been consistently adhered to in a long line of cases involving
reversion of public lands, where it is often repeated that when the government is the real party in interest,
and it is proceeding mainly to assert its own right to recover its own property, thee can, as a rule, be no
defense grounded on laches or prescription. This Court find that this rule applies, regardless of the nature
of the government property. Article 1108 (4) does not distinguish between real or personal properties of
the State. There is also no reason why the logic behind the rule's application to reversion cases should not
equally apply to the recovery of any form of government property. In fact, in an early case involving a
collection suit for unpaid loans between the Republic and a private party, the Court, citing Article 1108
(4) of the Civil Code, held that the case was brought by the Republic in the exercise of its sovereign
functions to protect the interests of the State over a public property.
 PAL vs. CIR
G.R No. 206079-80
January 17, 2018

FACTS: PAL asserts that it is entitled to a refund of the withheld taxes because it is exempted from
paying the tax on interest income under its franchise, PD 1590. However, the commissioner refused to
grant the claim arguing that PAL failed to prove the remittance of the withheld taxes to the BIR.

ISSUE: WON PAL is required to prove the remittance to the BIR of the final withholding tax on its
interest from currency bank deposits to be entitled to tax refund.

HELD: No. PAL is entitled to a refund because it is not responsible for the remittance of tax to the BIR.
The taxes on interest income from bank deposits are in the nature of a withholding tax. Thus, the party
liable for remitting the amounts withheld is the withholding agent of the BIR. When a particular income is
subject to a final withholding tax, it means that a withholding agent will withhold the tax due from the
income earned to remit it to BIR. Thus, the liability for remitting the tax is on the withhold agent. Should
the BIR find the taxes were not properly remitted, its action is against the withholding agent and not
against the taxpayer.
 CIR v. Covanta Energy Philippine Holdings, Inc.
GR No. 203160
January 24, 2018

FACTS: The CIR issued formal letters of demand and assessment notices against respondent for
deficiency Value Added tax and Expanded Withholding Tax. Respondent protested the assessment by
filing two separate letters of protest. The CIR issued another letter of demand and notice of assessment
for deficiency minimum corporate income tax. Respondent likewise issued protest thereto. The protests
remained unacted upon. Thus respondent filed separate petitions before the CTA, seeking the withdrawal
and cancellation of the deficiency assessments. The CTA second division partially granted the petitions of
respondent with respect to the deficiency VAT and MCIT assessments. The CTA ruled that respondent is
liable to pay the amount for the deficiency EWT assessment plus additional deficiency and delinquency
interest. The CTA en banc upheld the ruling that, without any evidence that respondent’s net worth was
undeclared by at least 30%, there is a presumption of compliance with the requirements of the tax
amnesty law. For this reason, respondent may immediately enjoy the privileges of the tax amnesty
program.

ISSUE: WON the respondent’s failure to provide complete information in its SALN is sufficient to
disqualify respondent from the tax amnesty program.

HELD: No. R.A. No. 9840 governs the tax amnesty program for national internal revenue taxes for the
taxable year 2005 and prior years. Subject to certain exceptions, a taxpayer may avail of this program by
complying with the documentary submissions to the BIR and thereafter, paying the applicable amnesty
tax. Upon full compliance with these requirements, the taxpayer is immediately entitled to the enjoyment
of the immunities and privileges of the tax amnesty program. But when: (a) a taxpayer fails to file a
SALN and the Tax Amnesty return; or (b) the net worth of the taxpayer in the SALN as of December 31,
2005 is proven to be understated to the extent of 30% or more, the taxpayer shall cease to enjoy these
immunities and privileges. Aside from the allegations of the CIR, there is no evidence on record to prove
that the amount of respondent’s net worth was understated. Parties other than the BIR or its agents did
not initiate proceedings within one year from the filing of the SALN or Tax Amnesty Return, in order to
challenge the net worth of respondent. Neither was the CIR able to establish that there were findings or
admissions in a congressional, administrative, or court proceedings that respondent indeed understated its
net worth by 30%. While tax amnesty is in the nature of a tax exemption, which is strictly construed
against the taxpayer, the Court cannot disregard the plain text of R.A. No. 9840.