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PHILIPPINE ASSOCIATION OF LAW SCHOOLS

BAR OPS PILIPINAS


2016

TAXATION
LAW
Recent Jurisprudence (April 1, 2014 March 31, 2016)

Prepared by: Dean Manuel P. Quibod and the students of


Ateneo De Davao University

GENERAL PRINCIPLES OF TAXATION


"Time and again, the Court has held that it is a necessary judicial practice that when a court has laid
down a principle of law as applicable to a certain facts, it will adhere to that principle and apply it to
all future cases in which the facts are substantially the same. Stare decisis et non quieta movere,
stand by the decisions and disturb not what is settled. Stare decisis simply means that for the sake
of certainty, a conclusion reached in one case should be applied to those that follow if the facts are
substantially the same, even though the parties may be different. It proceeds from the first principle
of justice that, absent any powerful countervailing considerations, like cases ought to be decided
alike. Thus, where the same questions relating to the same event have been put forward by the
parties similarly situated as in a previous case litigated and decided by a competent court, the rule
of stare decisis is a bar to any attempt to relitigate the same issue." 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." The
CTA observed that the factual circumstances obtaining in Sunlife and the present case are
substantially the same. Hence, the CTA based its assailed decision on the doctrine enunciated by the
Court in the said case. COMMISSIONER OF INTERNAL REVENUE vs. THE INSULAR LIFE
ASSURANCE CO. LTD., G.R. No. 197192, June 4, 2014, J. Reyes

For Double taxation to take place, 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.
Because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold
goods and services in the course of trade or business based on a certain percentage of his
gross sales or receipts in the preceding calendar year, while Section 15 and Section 17
likewise imposed the tax on a person who sold goods and services in the course of trade or
business but only identified such person with particularity, namely, the wholesaler,
distributor or dealer (Section 15), and the retailer (Section 17), all the taxes being
imposed on the privilege of doing business in the City of Manila in order to make the
taxpayers contribute to the citys revenues were imposed on the same subject matter and
for the same purpose. NURSERY CARE CORPORATION; SHOEMART, INC.; STAR
APPLIANCE CENTER, INC.; H&B, INC.; SUPPLIES STATION, INC.; and HARDWARE
WORKSHOP, INC. vs. ANTHONY ACEVEDO, in his capacity as THE TREASURER OF
MANILA; and THE CITY OF MANILA, G.R. No. 180651, July 30, 2014, J. Bersamin
The Court has consolidated these 3 petitions as they involve the same parties, similar facts and
common questions of law. This is not the first time that Fort Bonifacio Development Corporation
(FBDC) has come to this Court about these issues against the very same respondents (CIR), 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. FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF INTERNAL
REVENUE and REVENUE DISTRICT OFFICER, REVENUE DISTRICT NO. 44, TAGUIG and
PATEROS, BUREAU OF INTERNAL REVENUE, G.R. No. 175707, November 19, 2014, J.
Leonardo-De Castro

The claim of a taxpayer under a tax amnesty shall be allowed when the liability involves the
deficiency in payment of income tax. However, it must be disallowed when the taxpayer is
assessed on his capacity as a withholding tax agent because the person who earned the
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taxable income was another person other than the withholding agent. LG ELECTRONICS
PHILIPPINES, INC. vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 165451,
December 03, 2014, J. Leonen
The issues raised before the Panel of Voluntary Arbitrators are: (1) whether the cash
conversion of the gasoline allowance shall be subject to fringe benefit tax or the graduated
income tax rate on compensation; and (2) whether the company wrongfully withheld
income tax on the converted gas allowance.
The Voluntary Arbitrator has no competence to rule on the taxability of the gas allowance
and on the propriety of the withholding of tax. These issues are clearly tax matters, and do
not involve labor disputes. To be exact, they involve tax issues within a labor relations
setting as they pertain to questions of law on the application of Section 33 (A) of the NIRC.
They do not require the application of the Labor Code or the interpretation of the MOA
and/or company personnel policies. Furthermore, the company and the union cannot agree
or compromise on the taxability of the gas allowance. Taxation is the States inherent
power; its imposition cannot be subject to the will of the parties.
If the union disputes the withholding of tax and desires a refund of the withheld tax, it
should have filed an administrative claim for refund with the CIR. Paragraph 2, Section 4 of
the NIRC expressly vests the CIR original jurisdiction over refunds of internal revenue
taxes, fees or other charges, penalties imposed in relation thereto, or other tax matters.
HONDA CARS PHILIPPINES, INC. vs. HONDA CARS TECHNICAL SPECIALIST AND
SUPERVISORS UNION, G.R. No. 204142. November 19, 2014, J. BRION
Since the main purpose of Ordinance No. 18 is to regulate certain construction activities of
the identified special projects, which includes cell sites or telecommunications towers,
the fees imposed in Ordinance No. 18 are primarily regulatory in nature, and not primarily
revenue-raising. While the fees may contribute to the revenues of the Municipality, this
effect is merely incidental. Thus, the fees imposed in Ordinance No. 18 are not taxes.
SMART COMMUNICATIONS INC., vs. MUNICIPALITY OF MALVAR, BATANGAS, G.R. No.
204429, February 18, 2014, J. Carpio
An opportunity must be given the internal revenue branch of the government to investigate
and confirm the veracity of the claims of the taxpayer. The absolute freedom that petitioner
seeks to automatically credit tax payments against tax liabilities for a succeeding taxable
year, can easily give rise to confusion and abuse, depriving the government of authority and
control over the manner by which the taxpayers credit and offset their tax liabilities, not to
mention the resultant loss of revenue to the government under such a scheme. COCA-COLA
BOTTLERS PHILIPPINES, INC., vs. CITY OF MANILA; LIBERTY M. TOLEDO, in her
capacity as Officer-in-Charge (OIC), Treasurer of the City of Manila; JOSEPH
SANTIAGO, in his capacity as OIC, Chief License Division of the City of Manila;
REYNALDO MONTALBO, in his capacity as City Auditor of the City of Manila, G.R. No.
197561, April 7, 2014, J. Peralta
San Roque, held that BIR Ruling No. DA-489-03 was a general interpretative rule because it was a
response to a query made, not by a particular taxpayer, but by a government agency tasked with
processing tax refunds and credits. Thus, it applies to all taxpayers alike, and not only to one
particular taxpayer. (Commissioner of Internal Revenue vs. Air Liquide Philippines, Inc., G.R.
No. 210646. July 29, 2015)
It is settled that tax exemptions must be clear and unequivocal. A taxpayer claiming a tax
exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain
terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved
against the taxpayer. MERALCO has failed to present herein any express grant of exemption from

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real property tax of its transformers, electric posts, transmission lines, insulators, and electric
meters that is valid and binding even under the Local Government Code. (Manila Electric
Company vs. The City Assessor and City Treasurer of Lucena City G.R. No. 166102. August 5,
2015)
In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of
its agents for upon it depends the ability of the government to serve the people for whose benefit
taxes are collected. Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation
G.R. No. 212920. September 16, 2015

INCOME TAXATION
Section 1 of R.A. No. 9337, amending Section 27(c) of R.A. No. 8424, by excluding petitioner
from the enumeration of GOCCs exempted from corporate income tax, is valid and
constitutional. In addition, we hold that: 1)Petitioners tax privilege of paying five percent
(5%) franchise tax in lieu of all other taxes with respect to its income from gaming
operations, pursuant to P.D. 1869, as amended, is not repealed or amended by Section 1(c)
of R.A. No. 9337; 2)Petitioners income from gaming operations is subject to the five
percent (5%) franchise tax only; and 3)Petitioners income from other related services is
subject to corporate income tax only. PHILIPPINE AMUSEMENT AND GAMING
CORPORATION vs. THE BUREAU OF INTERNAL REVENUE, G.R. No. 215427, December
10, 2014, J. Peralta
DOCUMENTARY STAMP TAX/ CAPITAL GAINS TAX
HSBC issued SWIFT messages to its clients containing instructions about their accounts.
HSBC paid DST on the said messages. However, later on, HSBC filed for tax refund for the
DST it paid. CIR denied their claim. On review with the Supreme Court, it held that an
electronic message 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 transaction contemplated under Section 181 of the Tax Code. They are
also not bills of exchange due to their non-negotiability. Hence, they are not subject to DST.
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED-PHILIPPINE
BRANCHES vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 166018 & 167728,
June 4, 2014, J. Leonardo-De Castro
It should be noted that a DST is in the nature of an excise tax because it is imposed upon the
privilege, opportunity or facility offered at exchanges for the transaction of the business. DST is a
tax on documents, instruments, loan agreements, and papers evidencing the acceptance,
assignment, or transfer of an obligation, right or property incident thereto. DST is thus imposed on
the exercise of these privileges through the execution of specific instruments, independently of the
legal status of the transactions giving rise thereto.
The transfer of real properties from SPPC to PSPC is not subject to DST considering that the same
was not conveyed to or vested in PSPC by means of any specific deed, instrument or writing. There
was no deed of assignment and transfer separately executed by the parties for the conveyance of the
real properties. The conveyance of real properties not being embodied in a separate instrument but
is incorporated in the merger plan, thus, PSPC is not liable to pay DST.
Notably, R.A. No. 9243, entitled An Act Rationalizing the Provisions of the Documentary Stamp Tax
of the National Internal Revenue Code of 1997 was enacted and took effect on April 27, 2004,
which exempts the transfer of real property of a corporation, which is a party to the merger or
consolidation, to another corporation, which is also a party to the merger or consolidation, from the
payment of DST. COMMISSIONER OF INTERNAL REVENUE vs. PILIPINAS SHELL PETROLEUM
CORPORATION, G.R. No. 192398, September 29, 2014, J. Villarama, Jr.

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Capital gains is a tax on passive income, it is the seller, not the buyer, who generally would
shoulder the tax. As a general rule, therefore, any of the parties to a transaction shall be
liable for the full amount of the documentary stamp tax due, unless they agree among
themselves on who shall be liable for the same. In this case, with respect to the capital gains
tax, we find merit in petitioners posture that pursuant to Sections 24(D) and 56(A)(3) of
the 1997 National Internal Revenue Code (NIRC), capital gains tax due on the sale of real
property is a liability for the account of the seller. It has been held that since capital gains is
a tax on passive income, it is the seller, not the buyer, who generally would shoulder the
tax. Also, there is no agreement as to the party liable for the documentary stamp tax due on
the sale of the land to be expropriated. But while DPWH rejects any liability for the same,
this Court must take note of petitioners Citizens Charter, which functions as a guide for
the procedure to be taken by the DPWH in acquiring real property through expropriation
under RA 8974. The Citizens Charter, issued by DPWH itself on December 4, 2013,
explicitly provides that the documentary stamp tax, transfer tax, and registration fee due
on the transfer of the title of land in the name of the Republic shall be shouldered by the
implementing agency of the DPWH, while the capital gains tax shall be paid by the affected
property owner. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R. No.
211666, February 25, 2015, J. Peralta
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. (Commissioner of Internal Revenue vs. La Tondena Distillers,
Inc. (LTDI) [Now Ginebra San Miguel], G.R. No. 175188. July 15, 2015)
FRANCHISE TAX
A corporation that has been ordered to pay franchise tax delinquency but which facilities,
including its nationwide franchise, had been transferred to the National Transmission
Corporation (TRANSCO) by operation of law during the time of the alleged delinquency,
cannot be ordered to pay as it is not the proper party subject to the local franchise tax, the
transferee being the one liable. NATIONAL POWER CORPORATION vs. PROVINCIAL
GOVERNMENT OF BATAAN, SANGGUNIANG PANLALAWIGAN OF BATAAN, PASTOR B.
VICHUACO (IN HIS OFFICIAL CAPACITY AS PROVINCIAL TREASURER OF BATAAN) and
THE REGISTER OF DEEDS OF THE PROVINCE OF BATAAN, G.R. No. 180654, April 21,
2014, J. Abad
The amendment of the 1997 NIRC, in connection with Section 22 of R.A. 9337 abolished the
franchise tax on domestic airlines and subjected PAL and similar entities to corporate
income tax and value-added tax (VAT). PAL nevertheless remains exempt from taxes,
duties, royalties, registrations, licenses, and other fees and charges, provided it pays
corporate income tax as granted in its franchise agreement. Accordingly, PAL is left with no
other option but to pay its basic corporate income tax, the payment of which shall be in lieu
of all other taxes, except VAT, and subject to certain conditions provided in its charter. In
this case, the CTA found that PAL had paid basic corporate income tax for fiscal year ending
31 March 2006. Consequently, PAL may now claim exemption from taxes, duties, charges,
royalties, or fees due on all importations of its commissary and catering supplies, provided
it shows that 1) such articles or supplies or materials are imported for use in its transport
and non-transport operations and other activities incidental thereto; and 2) they are not
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locally available in reasonable quantity, quality, or price. (Republic of the Philippines,


rep. by the Commissioner of Customs vs. Philippine Airlines, Inc. (PAL) /
Commissioner of Internal Revenue vs. Philippine Airlines, Inc. (PAL), G.R. No.
209353-54/G.R. Nos. 211733-34. July 6, 2015)
EXCISE TAX
Petitioner filed the instant petition assailing the decision of the CTA finding PAL exempt
from payment of excise tax. Affirming the decision of the CTA the SC ruled that PD 1590 has
not been revoked by the NIRC of 1997, as amended. Or to be more precise, 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. Such being the case, PAL is indeed exempt from
payment of excise tax. COMMISSIONER OF INTERNAL REVENUE and COMMISSIONER OF
CUSTOMS vs. PHILIPPINE AIRLINES, INC., G.R. Nos. 212536-37, August 27, 2014, J.
Velasco, Jr.
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. Since the Tax
Code contained no definition of partially prepared tobacco, then the term should be
construed in its general, ordinary, and comprehensive sense. However, importation of
stemmed leaf tobacco is not included in the exemption under Section 137. 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. Finally, excise taxes are essentially taxes on
property because they are levied on certain specified goods or articles manufactured or
produced in the Philippines for domestic sale or consumption or for any other disposition,
and on goods imported. In this case, there is no double taxation in the prohibited sense
despite the fact that they are paying the specific tax on the raw material and on the finished
product in which the raw material was a part, because the specific tax is imposed by
explicit provisions of the Tax Code on two different articles or products: (1) on the
stemmed leaf tobacco; and (2) on cigar or cigarette. LA SUERTE CIGAR & CIGARETTE
FACTORY vs. COURT OF APPEALS AND COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 125346, G.R. Nos. 136328-29, G.R. No. 144942, G.R. No. 148605, G.R. No. 158197,
G.R. No. 165499, November 11, 2014, J. Leonen
Excise tax on petroleum products is essentially a tax on property, the direct liability for
which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any
excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities
or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt
from excise tax is deemed illegal or erroneous, and should be credited or refunded to the
payor pursuant to Section 204 of the NIRC. This is because the exemption granted under
Section 135 of the NIRC must be construed in favor of the property itself, that is, the
petroleum products. Chevron Philippines, Inc. vs. Commissioner of Internal Revenue
G.R. No. 210836. September 1, 2015
FINAL WITHHOLDING TAX
Should there have been a simultaneous sale to 20 or more lenders/investors, the Poverty
Eradication and Alleviation Certificates or the PEACe Bonds are deemed deposit substitutes within
the meaning of Sec. 22(Y) of the 1997 NIRC and RCBC Capital would have been obliged to pay the
20% FWT on the interest or discount from the PEACe Bonds. Further, the obligation to withhold the
20% final tax on the corresponding interest from the PEACe Bonds would likewise be required of

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any lender/investor had the latter turned around and sold said PEACe Bonds, whether in whole or
part, simultaneously to 20 or more lenders or investors.
The Court notes, however, that under Section 24 of the 1997 NIRC, interest income received by
individuals from long-term deposits or investments with a holding period of not less than five (5)
years is exempt from the final tax.
Thus, should the PEACe Bonds be found to be within the coverage of deposit substitutes, the proper
procedure was for the Bureau of Treasury to pay the face value of the PEACe Bonds to the
bondholders and for the BIR to collect the unpaid FWT directly from RCBC Capital, or any lender or
investor if such be the case, as the withholding agents. BANCO DE ORO, et al. vs. REPUBLIC OF
THE PHILIPPINES, et al., G.R. No. 198756, January 13, 2015, J. Leonen

VALUE- ADDED TAX


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. VISAYAS GEOTHERMAL POWER COMPANY vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 197525, June 4, 2014, J. Mendoza
A claim for tax refund or credit, like a claim for tax refund exemption, is construed strictly
against the taxpayer. 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.
Thus, strict compliance with the 120+30 day periods is necessary for such a claim to
prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the
period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October
2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods
as mandatory and jurisdictional. MIRAMAR FISH COMPANY, INC., vs. COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 185432, June 4, 2014, J. Perez
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. This is not only the plain meaning but also the only logical interpretation of
Section 112(A) and (C). SAN ROQUE POWER CORPORATION vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 205543, June 30, 2014, J. Leonardo-De Castro
CE Luzon filed an action for refund of the VAT. The court ruled that While both claims for
refund were filed within the two (2)-year prescriptive period, CE Luzon failed to comply
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
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its judicial claim before the expiration of the 120-day period. COMMISSIONER OF
INTERNAL REVENUE vs. CE LUZON GEOTHERMAL POWER COMPANY, INC., G.R. No.
190198, September 17, 2014, J. Perlas- Bernabe
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. 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. TAGANITO MINING CORPORATION
vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 201195, November 26, 2014, J.
Mendoza
Section 112(C) 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. ROHM APOLLO SEMICONDUCTOR PHILIPPINES vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 168950, January 14, 2015, CJ Sereno
This Court has consistently held as fatal the failure to print the word zero-rated on the
VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated
sales, even if the claims were made prior to the effectivity of R.A. 9337. As to the sufficiency
of a Northern Mindanaos company invoice to prove the sales of services to NPC, the Court
finds that this claim is without sufficient legal basis. A VAT invoice is the sellers best proof
of the sale of goods or services to the buyer, while a VAT receipt is the buyers best
evidence of the payment of goods or services received from the seller. The requirement of
imprinting the word zero-rated proceeds from the rule-making authority granted to the
Secretary of Finance by the NIRC for the efficient enforcement of the same Tax Code and its
amendments. A VAT-registered person whose sales are zero-rated or effectively zero-rated,
Section 112(A) specifically provides for a two-year prescriptive period after the close of the
taxable quarter when the sales were made within which such taxpayer may apply for the
issuance of a tax credit certificate or refund of creditable input tax. NORTHERN
MINDANAO POWER CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 185115, February 18, 2015, CJ. Sereno
Cargill filed two claims for refund. However, the court ruled that 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. CARGILL PHILIPPINES, INC vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 203774, March 11, 2015, J. Perlas- Bernabe
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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. The Court has
consistently ruled on the denial of a claim for refund or tax credit whenever the word
zero-rated has been omitted on the invoices or sale receipts of the taxpayer-claimant.
Furthermore, the CTA is a highly specialized court dedicated exclusively to the study and
consideration of revenue-related problems, in which it has necessarily developed an
expertise. Hence, its factual findings, when supported by substantial evidence, will not be
disturbed on appeal. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 183531, March 25, 2015, J. Reyes
LOCAL TAXATION
The Citys yearly imposition of the 25% surcharge, which was sustained by the trial court
and the Court of Appeals, resulted in an aggregate penalty that is way higher than
NAPOCORs basic tax liabilities. 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.
NATIONAL CORPORATION POWER vs. CITY OF CABANATUAN represented by its CITY
MAYOR, HON. HONORATO PEREZ, G.R. No. 177332, October 01, 2014, J. Leonen
It is already well-settled that although the power to tax is inherent in the State, the same is
not true for the LGUs to whom the power must be delegated by Congress and must be
exercised within the guidelines and limitations that Congress may provide. 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. 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. City of Manila, Hon. Alfredo S. Lim, as Mayor of the City of
Manila, et al. vs. Hon. Angel Valera Colet, as Presiding Judge, Regional Trial Court of
Manila (Br. 43), et al., G.R. No. 120051, December 10, 2014, J. Leonardo-De Castro
Setting the rate of the additional levy for the special education fund at less than 1% is
within the taxing power of local government units. It is consistent with the guiding
constitutional principle of local autonomy. It was well within the power of the Sangguniang
Panlalawigan of Palawan to enact an ordinance providing for additional levy on real
property tax for the special education fund at the rate of 0.5% rather than at 1%. LUCENA
D. DEMAALA vs. COMMISSION ON AUDIT, REPRESENTED BY ITS CHAIRPERSON
COMMISSIONER MA. GRACIA M. PULIDO TAN, G.R. No. 199752, February 17, 2015, J.
Leonen
In this case the Supreme Court applied to MCIAA the findings and conclusions of the Court
in the 2006 MIAA case, ruling: 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. (Mactan Cebu International Airport Authority (MCIAA) Vs. City of
Lapu-Lapu, et al., G.R. No. 181756, June 15, 2015)
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In the case at bar, through the application and enforcement of Sec. 14 of R.A. 9167 which
earmarks the income on amusement taxes imposed by LGUs in favor of FDCP and the
producers of graded films, the income from the amusement taxes levied by the covered
LGUs did not and will under no circumstance accrue to them, not even partially, despite
being the taxing authority therefor. Congress therefore, clearly overstepped its plenary
legislative power, the amendment being violative of the fundamental laws guarantee on
local autonomy as echoed in Sec. 130(d) of the LGC which provide that revenue collected
pursuant to the said code shall inure to the benefit of the local government. (Film
Development Council of the Philippines vs. Colon Heritage Realty Corporation,
Operator of Oriente, Operator of Oriente Group Theaters, represented by Isidro A.
Canizares/Film Development Council of the Philippines Vs. City of Cebu and SM
Prime Holdings, Inc., G.R. No. 203754/G.R. No. 204418., June 16, 2015)
The collections made accrue to its socialized housing programs and projects. The
(socialized housing) tax is not a pure exercise of taxing power or merely to raise revenue; it
is levied with a regulatory purpose. The levy is primarily in the exercise of the police power
for the general welfare of the entire city. As with the State, LGUs may be considered as
having properly exercised their police power only if there is a lawful subject and a lawful
method or, to be precise, if the following requisites are met: (1) the interests of the public
generally, as distinguished from those of a particular class, require its exercise and (2) the
means employed are reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals. (Jose J. Ferrer, Jr. vs. City Mayor Herbert Bautista,
City Council of Quezon City, City Treasurer of Quezon City and City Assessor of
Quezon City, G.R. No. 210551. June 30, 2015)
The garbage fee is not valid imposition being violative of the equal protection as the rates
charged under the ordinance is unjust and equitable. A resident of a condominium unit or
socialized housing pay twice the amount of a resident of a lot similar in size There is no
substantial distinction between an occupant of a lot and an occupant of a condominium
unit, socialized housing project or apartment as the garbage output produced by these
types of occupants is uniform and does not vary to a large degree. A similar schedule of fee
would have been just and equitable. The classification is not germane to the purpose of
promoting shared responsibility. There is discrimination between occupant of a lot and
occupant of a condo unit or socialized housing prject. (Jose J. Ferrer, Jr. vs. City Mayor
Herbert Bautista, City Council of Quezon City, City Treasurer of Quezon City and City
Assessor of Quezon City, G.R. No. 210551. June 30, 2015)
Indisputably, the power of LGUs to impose business taxes derives from Section 143 of the
LGC. However, the same is subject to the explicit statutory impediment provided for under
Section 133(h) of the same Code which prohibits LGUs from imposing taxes, fees or
charges on petroleum products. It can, therefore, be deduced that although petroleum
products are subject to excise tax, the same is specifically excluded from the broad power
granted to LGUs under Section 143(h) of the LGC to impose business taxes. (Batangas City,
Maria Teresa Geron, In her capacity as City Treasurer of Batangas City, et al. vs.
Pilipinas Shell Petroleum Corporation, G.R. No. 187631. July 8, 2015)
REAL PROPERTY TAX
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 PEZAs predecessor, the EPZA, was declared non-profit in character with all its
revenues devoted for its development, improvement, and maintenance. Consistent with
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this non-profit character, the EPZA was explicitly declared exempt from real property taxes
under its charter. Even the PEZAs 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. CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC
ZONE AUTHORITY; PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T.
GARCIA, JR., AND EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL
TREASURER OF BATAAN vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R. No.
184203, G.R. NO. 187583, November 26, 2014, J. Leonen
Here, petitioner Genato was found delinquent in the payment of his real property taxes.
However, as he duly pointed out, a simple mathematical application would show that if the
assessed values in the 2nd and 3rd tax declarations were added, P4,866,350.00 and
P3,831,520.00, the same would amount to P8,697,870.00, the assessed value of the
property as indicated in the original tax declaration. Therefore, if all the tax declarations
issued by respondent Pulmano refer to one and the same property of petitioner, and the
latter fully paid all its realty taxes due on the same, then it would follow that the finding of
delinquency did not have any basis. GENATO INVESTMENTS, INC. vs. HON. JUDGE
OSCAR P. BARRIENTOS, in his capacity as the Presiding Judge of the Regional Trial
Court, of Caloocan City, Branch 123, EMILY P. DIZON, in her capacity as the Branch
Clerk of Court of the Regional Trial Court of Caloocan City, Branch 123, JIMMY T.
SORO, Court Process Server of the Regional Trial Court of . Caloocan, Branch 123,
EVELINA M. GARMA, City Treasurer of Caloocan City, PHILLIP L. YAM, Officer-inCharge, Real Property Tax Division of the Caloocan City Treasurer's Office, ANTHONY
B. PULMANO, Officer-in-Charge, City Assessor of Caloocan City, and LAVERNE REALTY
& DEVELOPMENT CORPORATION, G.R No. 207443, July 23, 2014. Perez
The transformers, electric posts, transmission lines, insulators, and electric meters of
MERALCO may qualify as machinery under the Local Government Code subject to real
property tax. MERALCO is a public utility engaged in electric distribution, and its
transformers, electric posts, transmission lines, insulators, and electric meters constitute
the physical facilities through which MERALCO delivers electricity to its consumers. Each
may be considered as one or more of the following: a machine, equipment,
contrivance, instrument, appliance, apparatus, or installation.
The Court highlights that under Section 199(o) of the Local Government Code, machinery,
to be deemed real property subject to real property tax, need no longer be annexed to the
land or building as these may or may not be attached, permanently or temporarily to the
real property, and in fact, such machinery may even be mobile. The same provision
though requires that to be machinery subject to real property tax, the physical facilities for
production, installations, and appurtenant service facilities, those which are mobile, selfpowered or self-propelled, or not permanently attached to the real property (a) must be
actually, directly, and exclusively used to meet the needs of the particular industry,
business, or activity; and (2) by their very nature and purpose, are designed for, or
necessary for manufacturing, mining, logging, commercial, industrial, or agricultural
purposes. (Manila Electric Company vs. The City Assessor and City Treasurer of
Lucena City G.R. No. 166102. August 5, 2015)
TARIFF AND CUSTOMS CODE

NFSC japan based company who sells raw sugar. However, NFSC was charged by violation of the
Joint Order by the Commissioner Customs. The court ruled that NFSC did not violate the order and
such was in good faith. The Court ruled that the onus probandi to establish the existence of fraud is

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lodged with the Bureau of Customs which ordered the forfeiture of the imported goods. Fraud is
never presumed. It must be proved. Failure of proof of fraud is a bar to forfeiture. The reason is that
forfeitures are not favored in law and equity. The fraud contemplated by law must be intentional
fraud, consisting of deception willfully and deliberately done or resorted to in order to induce
another to give up some right. Absent fraud, the Bureau of Customs cannot forfeit the shipment in
its favor. THE COMMISSIONER OF CUSTOMS & THE DISTRICT COLLECTOR OF CUSTOMS FOR
THE PORT OF ILOILO vs. NEW FRONTIER SUGAR CORPORATION, G.R. No. 163055, June 11,
2014, J. Perez
The penalty of forfeiture could be imposed on any vessel engaged in smuggling, provided that the
following conditions were present, to wit: (1) The vessel is "used unlawfully in the importation or
exportation of articles into or from" the Philippines; (2) The articles are imported to or exported
from "any Philippine port or place, except a port of entry"; or (3) If the vessel has a capacity of less
than 30 tons and is "used in the importation of articles into any Philippine port or place other than
a port of the Sulu Sea, where importation in such vessel may be authorized by the Commissioner,
with the approval of the department head." With the absence of the first and second conditions, the
M/V Don Martin must be released. (M/V "Don Martin" Voy 047 and Cargoes of 6500 Sacks of
Imported Rice, et al. vs. Hon. Secretary of Finance, Bureau of Customs, and The District
Collector of Cagayan De Oro City, G.R. No. 160206. July 15, 2015)
In unlawful importation, also known as outright smuggling, goods and articles of commerce are
brought into the country without the required importation documents, or are disposed of in the
local market without having been cleared by the BOC or other authorized government agencies, to
evade the payment of correct taxes, duties and other charges. Such goods and articles do not
undergo the processing and clearing procedures at the BOC, and are not declared through
submission of import documents, such as the import entry and internal revenue declaration.
In various fraudulent practices against customs revenue, also known as technical smuggling, on the
other hand, the goods and articles are brought into the country through fraudulent, falsified or
erroneous declarations, to substantially reduce, if not totally avoid, the payment of correct taxes,
duties and other charges. Such goods and articles pass through the BOC, but the processing and
clearing procedures are attended by fraudulent acts in order to evade the payment of correct taxes,
duties, and other charges. Often committed by means of misclassification of the nature, quality or
value of goods and articles, undervaluation in terms of their price, quality or weight, and
misdeclaration of their kind, such form of smuggling is made possible through the involvement of
the importers, the brokers and even some customs officials and personnel. (Bureau of Customs vs.
The Honorable Agnes VST Devanadera, et al. G.R. No. 193253. September 8, 2015)
With the cancellation of the TCCs, the tax liabilities of PSPC under the original assessments were
considered unpaid, hence BOCs 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 PSPCs tax liabilities. (Republic of the Philippines, represented by the Bureau of
Customs Vs. Pilipinas Shell Petroleum Corporation, G.R. No. 209324. December 9, 2015)

TAX REMEDIES
The parties agreed to amicably settle all cases between them involving claims for tax
refund/credit, including the instant case. A review of the whereas clauses of the Universal
Compromise Agreement reveals the various court cases filed by petitioners, including this
case, for the refund and/or issuance of tax credit covering the local business taxes
payments they paid to respondent City of Manila pursuant to Section 21 of the latters
Revenue Code.
In this relation, it is observed that the present case would have been rendered moot and
academic had the parties informed the Court of the UCAs supervening execution. Be that as
it may, and considering that: (a) the UCA appears to have been executed in accordance with
the requirements of a valid compromise agreement; (b) the UCA was executed more than a
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year prior to the promulgation of the subject Decision; and (c) the result of both the UCA
and the subject Decision are practically identical, i.e., that petitioners are not entitled to any
tax refund/credit, the Court herein resolves to approve and adopt the pertinent terms and
conditions of the UCA insofar as they govern the settlement of the present dispute.
(METRO MANILA SHOPPING MECCA CORP., SHOEMART, INC., SM PRIME HOLDINGS,
INC., STAR APPLIANCES CENTER, SUPER VALUE, INC., ACE HARDWARE PHILIPPINES,
INC., HEAL TH AND BEAUTY, INC., JOLLIMART PHILS. CORP.,
and SURPLUS MARKETING CORPORATION vs. MS. LIBERTY M. TOLEDO, in her official
capacity as the City Treasurer of Manila, and THE CITY OF MANILA, G.R. No. 190818.
November 10, 2014, J. PERLAS-BERNABE
Unlike the power to compromise or abate a taxpayers liability under Section 204 of the
1997 National Internal Revenue Code that is within the discretion of respondent
Commissioner of Internal Revenue, its authority under Republic Act No. 9480 is limited to
determining whether (a) the taxpayer is qualified to avail oneself of the tax amnesty; (b) all
the requirements for availment under the law were complied with; and (c) the correct
amount of amnesty tax was paid within the period prescribed by law. There is nothing in
Republic Act No. 9480 which can be construed as authority for respondent Commissioner
of Internal Revenue to introduce exceptions and/or conditions to the coverage of the law
nor to disregard its provisions and substitute his own personal judgment. (ING Bank N.V.
vs. Commissioner of Internal Revenue, G.R. No. 167679. July 22, 2015)
ASSESSMENT
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. In this case, the Court 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 not required 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. BUREAU OF INTERNAL REVENUE,
as represented by the COMMISSIONER OF INTERNAL REVENUE vs. COURT OF
APPEALS, SPOUSES ANTONIO VILLAN MANLY, and RUBY ONG MANLY, G.R. No.
197590, November 24, 2014, J. Del Castillo
The notice requirement under Section 228 of the NIRC is substantially complied with
whenever the taxpayer had been fully informed in writing of the factual and legal bases of
the deficiency taxes assessment, which enabled the latter to file an effective protest.
SAMAR-I ELECTRIC COOPERATIVE vs. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 193100, December 10, 2014, J. Villarama, Jr.
Nevertheless, the appraisal and assessment of the transformers, electric posts,
transmission lines, insulators, and electric meters of MERALCO as machinery under Tax
Declaration Nos. 019-6500 and 019-7394 were not in accordance with the Local
Government Code and in violation of the right to due process of MERALCO and, therefore,
null and void.
It appears that the City Assessor of Lucena simply lumped together all the transformers,
electric posts, transmission lines, insulators, and electric meters of MERALCO located in
Lucena City under Tax Declaration Nos. 019-6500 and 019-7394, contrary to the specificity
demanded under Sections 224 and 225 of the Local Government Code for appraisal and
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assessment of machinery. It is apparent from these two provisions that every machinery
must be individually appraised and assessed depending on its acquisition cost, remaining
economic life, estimated economic life, replacement or reproduction cost, and depreciation.
The City Assessor and the City Treasurer of Lucena did not even provide the most basic
information such as the number of transformers, electric posts, insulators, and electric
meters or the length of the transmission lines appraised and assessed under Tax
Declaration Nos. 019-6500 and 019-7394. There is utter lack of factual basis for the
assessment of the transformers, electric posts, transmission lines, insulators, and electric
meters of MERALCO.
It is true that tax assessments by tax examiners are presumed correct and made in good
faith, with the taxpayer having the burden of proving otherwise. In this case, MERALCO was
able to overcome the presumption. (Manila Electric Company vs. The City Assessor and
City Treasurer of Lucena City G.R. No. 166102. August 5, 2015)
PRESCRIPTIVE PERIOD OF ASSESSMENT
It is clear that the assailed deficiency tax assessment for the EWT in 1994 disregarded the
provisions of Section 228 of the [NIRC], as amended, as well as Section 3.1.4 of the Revenue
Regulations No. 12-99 by not providing the legal and factual bases of the assessment. Hence, the
formal letter of demand and the notice of assessment issued relative thereto are void.
The statute of limitations on assessment and collection of national internal taxes was shortened
from five (5) years to three (3) years by virtue of Batas Pambansa Blg. 700. Thus, [Petitioner CIR]
has three (3) years from the date of actual filing of the tax return to assess a national internal
revenue tax or to commence court proceedings for the collection thereof without an assessment.
However, when it validly issues an assessment within the three (3) year period, it has another three
(3) years within which to collect the tax due by distraint, levy, or court proceeding.
COMMISSIONER OF INTERNAL REVENUE vs. UNITED SALVAGE AND TOWAGE (PHILS.), INC.,
G.R. No. 197515, July 2, 2014, J. Peralta

Section 203 of the NIRC sets the three-year prescriptive period to assess. However the
exceptions are provided under Section 222 of the NIRC of 1997. In the case at bar, it was
petitioners substantial under declaration of withholding taxes in the amount of
P2,690,850.91 which constituted the falsity in the subject returns giving respondent the
benefit of the period under Section 222 of the NIRC of 1997 to assess the correct amount of
tax at any time within ten (10) years after the discovery of the falsity, fraud or omission.
SAMAR-I ELECTRIC COOPERATIVE VS. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 193100. December 10, 2014, J. VILLARAMA JR.
The assessment of the tax is deemed made and the three-year period for collection of the
assessed tax begins to run on the date the assessment notice had been released, mailed or
sent by the BIR to the taxpayer. Thus, failure of the BIR to file a warrant of distraint or
serve a levy on taxpayer's properties nor file collection case within the three-year period is
fatal. Also, the attempt of the BIR to collect the tax through its Answer with a demand for
the taxpayer to pay the assessed DST in the CTA is not deemed compliance with the Tax
Code. CHINA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 172509, February 04, 2015, C.J. Sereno
A waiver is not automatically a renunciation of the right to invoke the defense of
prescription. A waiver of the Statute of Limitations is nothing more than an agreement
between the taxpayer and the Bureau of Internal Revenue (BIR) that the period to issue an
assessment and collect the taxes due is extended to a date certain. It is a bilateral
agreement, thus necessitating the very signatures of both the CIR and the taxpayer to give
birth to a valid agreement. Furthermore, indicating in the waiver the date of acceptance by
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the BIR is necessary in order to determine whether the parties (the taxpayer and the
government) had entered into a waiver before the expiration of the time prescribed in
Section 203 (the three-year prescriptive period) for the assessment of the tax. When the
period of prescription has expired, there will be no more need to execute a waiver as there
will be nothing more to extend. Hence, no implied consent can be presumed, nor can it be
contended that the concurrence to such waiver is a mere formality. (Commssioner of
Internal Revenue vs. Standard Chartered Bank, G.R. No. 192173. July 29, 2015)
The general rule is that when a waiver does not comply with the requisites for its validity
specified under RMO No. 20-90 and RDAO 01-05, it is invalid and ineffective to extend the
prescriptive period to assess taxes. However, due to its peculiar circumstances, we shall
treat this case as an exception to this rule and find the Waivers valid for the reasons
discussed below. First, the parties in this case are in pari delicto or in equal fault. As
between the parties, it would be more equitable if petitioners lapses were allowed to
pass and consequently uphold the Waivers in order to support this principle and public
policy. Second, the Court has repeatedly pronounced that parties must come to court with
clean hands. Following the foregoing principle, respondent should not be allowed to benefit
from the flaws in its own Waivers and successfully insist on their invalidity in order to
evade its responsibility to pay taxes. Finally, the Court cannot tolerate this highly
suspicious situation. In this case, the taxpayer, on the one hand, after voluntarily executing
waivers, insisted on their invalidity by raising the very same defects it caused.
(Commissioner of Internal Revenue vs. Next Mobile, Inc., G.R. No. 212825. December
7, 2015)
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. If the taxpayer
denies having received an assessment from the BIR, it then becomes incumbent upon the
latter to prove by competent evidence that such notice was indeed received by the
addressee. Here, the onus probandi has shifted to the BIR to show by contrary evidence
that GJM indeed received the assessment in the clue course of mail. It has been settled that
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. To prove the fact of mailing, it is essential to present the registry receipt issued
by the Bureau of Posts or the Registry return card which would have been signed by the
taxpayer or its authorized representative. (Commissioner of Internal Revenue vs. GJM
Philippines Manufacturing, Inc., G.R. No. 202695. February 29, 2016)
ASSESSMENT PROCESS
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 respondents new address despite respondents failure to
give petitioner a formal written notice of its change of address. The SC ruled that despite
the absence of a formal written notice of respondent's change of address, the fact remains
that petitioner became aware of respondent's new address as shown by the documents
replete in its records. As a consequence, the running of the three-year period to assess
respondent was not suspended and has already prescribed. COMMISSIONER OF
INTERNAL REVENUE vs. BASF COATING + INKS PHILS., INC., G.R. No. 198677,
November 26, 2014, J. Peralta

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In this case the issue was whether or not the Trust Indenture Agreements entered into by
Traders Royal Bank and its clients constituted deposits or trusts. If it was a deposit then it
will be subject to documentary stamp tax. The Supreme Court held that the only way to
determine the relationship between the parties is to examine the terms and conditions
provided under the actual indenture agreement. However TRB failed to produce the actual
agreement. In contrast, the BIR examiners conducted a thorough audit and investigation of
the books of account of TRB. The audit and investigation resulted in the issuance of
Assessment Notices against TRB for DST tax liabilities for 1996 and 1997, which were duly
received by TRB. The tax assessments by tax examiners are presumed correct and made in
good faith. The taxpayer has the duty to prove otherwise. Therefore the agreements were
considered as deposits subject to DST. COMMISSIONER OF INTERNAL REVENUE VS,
TRADERS ROYAL BANK, G.R. No. 167134. March 18, 2015, J. LEONARDO-DE CASTRO
COMMISSIONERS ACTION EQUIVALENT TO DENIAL OF PROTEST
Under Section 112(C) of the NIRC, in case of failure on the part of the CIR to act on the
application, the taxpayer affected may, within 30 days after the expiration of the 120-day
period, appeal the unacted claim with the CTA. If the Commissioner fails to decide within a
specific period required by law, such inaction shall be deemed a denial of the application
for tax refund or credit. In this case, when TSC filed its administrative claim on 21
December 2005, the CIR had a period of 120 days, or until 20 April 2006, to act on the
claim. However, the CIR failed to act on TSCs claim within this 120-day period. Thus, TSC
filed its petition for review with the CTA on 24 April 2006 or within 30 days after the
expiration of the 120-day period. Hence, the judicial claim was not prematurely filed.
COMMISSIONER OF INTERNAL REVENUE vs. TEAM SUAL CORPORATION, G.R. No.
205055, July 18, 2014, J. Carpio
COLLECTION
PRESCRIPTIVE PERIOD
There is a distinction between a request for reconsideration and a request for
reinvestigation. A reinvestigation which entails the reception and evaluation of additional
evidence will take more time than a reconsideration of a tax assessment, which will be
limited to the evidence already at hand; this justifies why the reinvestigation can suspend
the running of the statute of limitations on collection of the assessed tax, while the
reconsideration cannot.
Hence, the period for BIR to collect the deficiency DST already prescribed as the protest
letter of BPI was a request for reconsideration, which did not suspend the running of the
prescriptive period to collect. BANK OF THE PHILIPPINE ISLANDS vs. COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 181836, July 9, 2014, J. CARPIO
TAX REFUND/CREDIT
There are three essential conditions for the grant of a claim for refund of creditable withholding
income tax, to wit: (1) the claim is filed with the Commissioner of Internal Revenue within the twoyear period from the date of payment of the tax (2) it is shown on the return of the recipient that
the income payment 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 the tax withheld therefrom. COMMISSIONER OF INTERNAL
REVENUE vs. TEAM [PHILIPPINES] OPERATIONS CORPORATION [formerly MIRANT (PHILS)
OPERATIONS CORPORATION], G.R. No. 179260, April 2, 2014, J. Perez

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Under the first option, any tax on income that is paid in excess of the amount due the
government may be refunded, provided that a taxpayer properly applies for the refund. On
the other hand, the second option works by applying the refundable amount against the tax
liabilities of the petitioner in the succeeding taxable years. Hence, 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 petitioners tax liabilities in the future. Accordingly, while we find merit in
petitioners contention that there are two (2) ways by which respondents may satisfy the
judgment of the RTC-Manila: (1) to pay the petitioner the amount of Php3,036,887.33 as
tax refund; or (2) to issue a tax credit certificate in the same amount which may be credited
by petitioner from its future tax liabilities due to the respondent City of Manila, the
issuance of the Writ of Execution relative thereto was superfluous, because the judgment of
the RTC-Manila can neither be considered a judgment for a specific sum of money
susceptible of execution by levy or garnishment under Section 9,Rule 39 of the Rules of
Court nor a special judgment under Section 11, Rule 39 thereof. COCA-COLA BOTTLERS
PHILIPPINES, INC. vs. CITY OF MANILA, ET AL., G.R. No. 197561, April 7, 2014, J.
Peralta
Tax refunds are based on the general premise that taxes have either been 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 non-observance of the prescriptive
periods within which to file the administrative and the judicial claims would result in the
denial of his claim." In the case at bar, MERALCO had ample opportunity to verify on the
tax-exempt status of NORD/LB for purposes of claiming tax refund. Nevertheless, it only
filed its claim for tax refund ten (10) months from the issuance of the aforesaid Ruling.
COMMISSIONER OF INTERNAL REVENUE vs. MANILA ELECTRIC COMPANY
(MERALCO), G.R. No. 181459, June 9, 2014, J. Peralta
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 prepared
the certificate of creditable tax withheld at source to be presented and to testify personally
to prove the authenticity of the certificates. In Banco Filipino Savings and Mortgage Bank v.
Court of Appeals, this court declared that a certificate is complete in the relevant details
that would aid the courts in the evaluation of any claim for refund of excess creditable
withholding taxes. 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
of the tax withheld, the amount of the tax withheld and the nature of the tax paid.
COMMISSIONER OF INTERNAL REVENUE vs. PHILIPPINE NATIONAL BANK, G.R. No.
180290 September 29, 2014, J. Leonen
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 Sec. 229 of the NIRC; 2) When it is shown on
the ITR that the income payment received is being declared part of the taxpayers 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 paid and income tax withheld from that
amount.

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PALS BAR OPS PILIPINAS 2016

Relevant to the instant case is requirements numbers 2 and 3, which were duly proved by TPEC, as
found by the courts a quo.
With regard to the second requirement, it is fundamental that the findings of fact by the CTA in
Division are not to be disturbed without any showing of grave abuse of discretion considering that
the members of the Division are in the best position to analyze the documents presented by the
parties. Consequently, the Court adopts the findings of the CTA in Division, which the CTA En Banc
concurred with. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER OF
INTERNAL REVENUE vs. TEAM (PHILS.) ENERGY CORPORATION (FORMERLY MIRANT PHILS
ENERGY CORPORATION), G.R. No. 188016, January 14, 2015, J. Bersamin

Those who claim for refund must not only prove its entitlement to the excess credits, but
likewise must prove that no carry-over has been made in cases where refund is sought.
However, proving that no carry-over has been made does not absolutely require the
presentation of the quarterly ITRs. With Winebrenner & Inigo Insurance Brokers, Inc.
having complied with the requirements for refund, and without the CIR showing contrary
evidence other than its bare assertion of the absence of the quarterly ITRs, copies of which
are easily verifiable by its very own records, the burden of proof of establishing the
propriety of the claim for refund has been sufficiently discharged. Hence, the grant of
refund is proper. WINEBRENNER & IIGO INSURANCE BROKERS, INC.
vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 206526, January 28, 2015, J.
Mendoza
A tax credit or refund is strictly construed against the taxpayer. Strict compliance with the
mandatory and jurisdictional conditions prescribed by law to claim such tax refund or
credit is essential and necessary for such claim to prosper. Noncompliance with the
mandatory periods, nonobservance of the prescriptive periods, and nonadherence to
exhaustion of administrative remedies bar a taxpayers claim for tax refund or credit,
whether or not the CIR questions the numerical correctness of the claim of the taxpayer.
SILICON PHILIPPINES, INC., (formerly INTEL PHILIPPINES MANUFACTURING INC.), vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 184360 & 184361/COMMISSIONER
OF INTERNAL REVENUE vs. SILICON PHILIPPINES, INC., (formerly INTEL PHILIPPINES
MANUFACTURING, INC.) G.R. No. 184384, February 19, 2014, J. Villarama, Jr.
Pilipinas Shell, 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. COMMISSIONER OF INTERNAL
REVENUE vs. PILIPINAS SHELL PETROLEUM CORPORATION, G.R. No. 188497,
February 19, 2014, J. Villarama Jr.
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. 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 rulemaking power of administrative agencies cannot be extended to amend or expand
statutory requirements or to embrace matters not originally encompassed by the law.
Administrative regulations should always be in accord with the provisions of the statute
they seek to carry into effect, and any resulting inconsistency shall be resolved in favor of
the basic law. CS GARMENT, INC., vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No.
182399, March 12, 2014, CJ. Sereno
In Banco Filipino Savings and Mortgage Bank v. Court of Appeals, the Supreme Court laid
down the three essential conditions for the grant of a claim for refund of creditable
withholding income tax, namely: (1) the claim is filed with the Commissioner of Internal
Revenue within the two-year period from the date of payment of the tax; (2) it is shown on
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PALS BAR OPS PILIPINAS 2016

the return of the recipient that the income payment 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 the tax
withheld therefrom. COMMISSIONER OF INTERNAL REVENUE, vs.
TEAM [PHILIPPINES] OPERATIONS CORPORATION [formerly MIRANT (PHILS)
OPERATIONS CORPORATION], G.R. No. 179260, April 2, 2014, J. Perez
In this case, Duty Free Philippines claimed that it was exempted from the expanded
withholding tax under Revenue Regulation (R.R.) No. 6-94. The CTA Division ruled that
Duty Free was not a tax-exempt entity in the absence of an express grant of tax exemption.
Duty Free then directly appealed to the Supreme Court under Rule 45.
The Supreme Court said that Duty Frees direct appeal to this Court is fatal to its claim.
Under RA 9282 Section 18, 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. Clearly, the Supreme Court is without jurisdiction to review decisions
rendered by a division of the CTA, exclusive appellate jurisdiction over which is vested in
the CTA en banc. DUTY FREE PHILIPPINES vs. BUREAU OF INTERNAL REVENUE,
represented by Hon. Anselmo G. Adriano, Acting Regional Director, Revenue Region
No. 8, Makati City, G.R No. 197228, October 8, 2014. Sereno.
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. (Fortune Tobacco Corporation vs. Commissioner of
Internal Revenue, G.R. No. 192024. July 1, 2015)
The burden of proving entitlement to a tax refund is on the taxpayer. It is logical to assume
that in order to discharge this burden, the law intends the filing of an application for a
refund to necessarily include the filing of complete supporting documents to prove
entitlement for the refund. Otherwise, the mere filing of an application without any
supporting document would be as good as filing a mere scrap of paper. Besides, the
taxpayer was already given two (2) years to determine its refundable taxes and complete
the documents necessary to prove its claim. The alleged completion of supporting
documents after the filing of an application for an administrative claim and worse, after
the filing of a judicial claim is tantamount to legal maneuvering. (Hedcor, Inc. vs.
Commissioner of Internal Revenue, G.R. No. 207575. July 15, 2015)
Pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997 the
requisites for claiming unutilized/excess input VAT, except transitional input VAT, are as
follows: 1)The taxpayer-claimant is VAT registered; 2)The taxpayer-claimant is engaged in
zero-rated or effectively zero-rated sales; 3)There are creditable input taxes due or paid
attributable to the zero-rated or effectively zero-rated sales; 4)This input tax has not been
applied against the output tax; and 5)The application and the claim for a refund have been
filed within the prescribed period. (Commissioner of Internal Revenue vs. Toledo
Power Company G.R. Nos. 195175 & 199645. August 10, 2015)
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In both C.T.A. Case Nos. 7233 and 7294, the administrative claim for the refund of
unutilized input VAT attributable to the zero-rated or effectively zero-rated sales was
timely filed on 23 December 2004, which was within two years from the close of the first
and the second quarters of 2003 when the sales were made. Similarly, this case also falls
within the exception period by virtue of BIR Ruling No. DA-489-03 as recognized in San
Roque.
In C.T.A. Case No. 7233, TPC filed its judicial claim on 22 April 2005. In theory, the CTA
does not have jurisdiction over the Petition, since it was filed on the last day of the 120-day
period for the CIR, or without waiting for the expiration of the aforesaid period. However,
BIR Ruling No. DA-489-03 allows this premature filing. TPC may claim the benefits of that
ruling in its Petition in C.T.A. Case No. 7233 for the refund of the unutilized input VAT
attributable to zero-rated or effectively zero-rated sales for the first quarter of 2003.
(Commissioner of Internal Revenue vs. Toledo Power Company G.R. Nos. 195175 &
199645. August 10, 2015)
We therefore hold that 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.
(Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R.
No. 180402. February 10, 2016)
STATUTORY BASIS FOR TAX REFUND UNDER THE TAX CODE

Prescriptive Period for Recovery of Tax


As a general rule, compliance with the 120-day period stated in Section 112(D) of NIRC is
mandatory. However, a VAT-registered taxpayer claiming refund for input VAT may not wait for the
lapse of the 120-day period when the claim is filed between December 10, 2003 (the time of
promulgation of BIR Ruling No. DA-489-03) to October 6, 2010 (the time of promulgation of the
Aichi case). TAGANITO MINING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 197591, June 18, 2014, J. Perlas-Bernabe

When a taxpayer seeking refund or tax credit under VAT files a judicial claim beyond the
30-day period provided by the law, the same shall be dismissed for lack of jurisdiction. A
taxpayer seeking refund or tax credit under VAT must strictly follow the 120+30 rule to
be entitled thereof, otherwise, the claim shall be barred. In the present case, the
respondent filed its administrative claim on May 30, 2003. The petitioner CIR therefore had
only until September 27, 2003 to decide the claim, and following the petitioners inaction,
the respondent had until October 27, 2003, the last day of the 30-day period to file its
judicial claim. However, the respondent filed its judicial claim with the CTA only on March
31, 2004 or 155 days late. Clearly, the respondent's judicial claim has prescribed and the
CTA did not acquire jurisdiction over the claim. COMMISSIONER OF INTERNAL REVENUE
vs. MINDANAO II GEOTHERMAL PARTNERSHIP, G.R. No. 189440, June 18, 2014, J.
Villarama, Jr.
The Atlas doctrine, which held that claims for refund or credit of input VAT must comply
with the two-year prescriptive period under Sec. 229, should be effective only from its
promulgation on June 8, 2007 until its abandonment on [September 12, 2008] in Mirant.
The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from
the date of payment of the output VAT. The Mirant ruling, which abandoned the Atlas
doctrine, adopted the verba legis rule, thus applying Sec. 112(A) in computing the two-year
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PALS BAR OPS PILIPINAS 2016

prescriptive period in claiming refund or credit of input VAT. Since July 23, 2008 falls
within the window of effectivity of Atlas, CBKs administrative claim for the second quarter
of 2006 was filed on time considering that it filed the original VAT return for the second
quarter on July 25, 2006. CBK POWER COMPANY LIMITED vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 202066 (consolidated), September 30, 2014, J. Leonen
Section 112 (D) (now renumbered as Section 112[C]) of RA 8424, which is explicit on
the mandatory and jurisdictional nature of the 120+30-day period, was already effective on
January 1, 1998. 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 therefore was filed beyond the 120+30day period, and, hence - as earlier stated - deemed to be filed out of time. As the records
would show, the CIR had 120 days from the filing of the administrative claim on July 21,
1999, or until November 18, 1999, to decide on respondent's application. Since the CIR did
not act at all, respondent had until December 18, 1999, the last day of the 30-day period, to
file its judicial claim. Respondent filed its petition for review with the CTA only on January
9, 2001 and, thus, was one (1) year and 22 days late. COMMISSIONER OF INTERNAL
REVENUE vs. BURMEISTER AND WAIN SCANDINAVIAN CONTRACTOR MINDANAO,
INC., G.R. No. 190021, October 22, 2014, J. Perlas-Bernabe
Aichi filed an application for tax credit/refund with the BIR on March 29, 2005. On 31 March 2005,
respondent filed judicial claim before the CTA. BIR contends that Aichi failed to observe the 120day reglementary period provided by NIRC for the CIR to act on the claim. In this issue the Supreme
court ruled that the Court agree with petitioner that the judicial claim was prematurely filed on 31
March 2005, since respondent failed to observe the mandatory 120day waiting period to give the
CIR an opportunity to act on the administrative claim. However, the Court ruled in San Roque that
BIR Ruling No. DA-489-03 allowed the premature filing of a judicial claim, which means nonexhaustion of the 120-day period for the Commissioner to act on an administrative claim. All
taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003
up to its reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30
day periods are mandatory and jurisdictional. Therefore, respondent's filing of the judicial claim
barely two days after the administrative claim is acceptable, as it fell within the period during
which the Court recognized the validity of BIR Ruling No. DA-489-03. COMMISSIONER OF
INTERNAL REVENUE vs. AICHI FORGING COMPANY OF ASIA, INC., G.R. No. 183421, October
22, 2014, CJ Sereno

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. DA489-03, 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. TAGANITO MINING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 198076, November 19, 2014, J. Mendoza
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
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PALS BAR OPS PILIPINAS 2016

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. AT&T COMMUNICATIONS
SERVICES PHILIPPINES, INC. vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No.
185969, November 19, 2014, J. Perez
In 1993, the BIR issued against respondent assessment notice for deficiency income tax for
1989. A waiver of the defense of prescription was executed but it was not signed by the
Commissioner or any of his authorized representatives and did not state the date of
acceptance. The Court held that the Commissioners right to collect has prescribed. 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. The BIR cannot claim the benefits of extending the period
when it was the BIRs inaction which is the proximate cause of the defects of the waiver.
COMMISSIONER OF INTERNAL REVENUE vs. THE STANLEY WORKS SALES (PHILS.),
INCORPORATED, G.R. No. 187589, December 03, 2014, CJ. Sereno
CBK Power filed its judicial claim for refund/credit just 20 days after it filed its
administrative claim. CTA En Banc dismissed the case for lack of jurisdiction as it failed to
observe the mandatory and jurisdictional 120-day period provided under Section 112 (D)
of the National Internal Revenue Code. The Court found that the CTA En Banc was
incorrect. The Court recognized an exception in which the existing BIR Ruling applicable to
this case in which it held that taxpayer-claimant need not wait for the lapse of the 120-day
period before it could seek judicial relief. CBK POWER COMPANY LIMITED vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 198928, December 03, 2014, J.
Perlas-Bernabe
In 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), taxpayersclaimants 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. PANAY POWER CORPORATION
(Formerly Avon River Power Holdings Corp.) vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 203351, January 21, 2015, J. Perlas-Bernabe
Gotescos relentless refusal to transfer registered ownership of the Ever Ortigas
Commercial Complex to PNB constitutes proof enough that Gotesco will not do any act
inconsistent with its claim of ownership over the foreclosed asset, including claiming the
creditable tax imposed on the foreclosure sale as tax credit and utilizing such amount to
offset its tax liabilities. To do such would run roughshod over Gotescos firm stance that
PNBs foreclosure on the mortgage was invalid and that it remained the owner of the
subject property. While perhaps it may be necessary to prove that the taxpayer did not use
the claimed creditable withholding tax to pay for his/its tax liabilities, there is no basis in
law or jurisprudence to say that BIR Form No. 2307 is the only evidence that may be
adduced to prove such non-use. PHILIPPINE NATIONAL BANK vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 206019, March 18, 2015, J. Velasco Jr.
For failure of Silicon to comply with the provisions of Section 112(C) of the NIRC, its judicial claims
for tax refund or credit should have been dismissed by the CTA for lack of jurisdiction. The Court
stresses that the 120/30-day prescriptive periods are mandatory and jurisdictional, and are not
mere technical requirements. SILICON PHILIPPINES, INC. (FORMERLY INTEL PHILIPPINES

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PALS BAR OPS PILIPINAS 2016

MANUFACTURING, INC.) vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 173241, March
25, 2015, J. Leonardo-De Castro

In this case, petitioner filed its judicial claim for refund 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.
BIR Ruling No. DA-489-03 which is a general interpretative rule, was issued in 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. BIR ruling held that the taxpayer did not
wait for the lapse of the 120-day period to file for a judicial claim for refund.
In the Aichi case, the 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. In
this case, the Court explained that if after the 120-day mandatory period, the Commissioner
of Internal Revenue (CIR) fails to act on the application for tax refund or credit, the remedy
of the taxpayer is to appeal the inaction of the CIR to the CTA within thirty (30) days. The
judicial claim, therefore, need not be filed within the two-year prescriptive period but has
to be filed within the required 30-day period after the expiration of the 120 days.
Thus, even though petitioners 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 (formerly MIRANT PAGBILAO CORP.) vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 190928 January 13, 2014, J.
PERALTA
What is important, as far as the present cases are concerned, is that the mere filing by a
taxpayer of a judicial claim with the CTA before the expiration of the 120-day period cannot
operate to divest the Commissioner of his jurisdiction to decide an administrative claim
within the 120-day mandatory period, unless the Commissioner has clearly given cause for
equitable estoppel to apply as expressly recognized in Section 246 of the Tax Code.
COMMISSIONER OF INTERNAL REVENUE vs. TEAM SUAL CORPORATION (formerly
MIRANT SUAL CORPORATION, G.R. No. 194105 February 5, 2014, J. REYES
The taxpayer can file the appeal in one of two ways: (1) file the judicial claim within thirty
days after the Commissioner denies the claim within the 120-day period, or (2) file the
judicial claim within thirty days from the expiration of the 120-day period if the
Commissioner does not act within the 120-day period. 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. The
CTA therefore lost jurisdiction over Mindanao Ils claims for refund or credit.
COMMISSIONER OF INTERNAL REVENUE vs. MINDANAO II GEOTHERMAL
PARTNERSHIP G.R. No. 1914498 January 15, 2014, CJ. SERENO
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. DA489-03 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.
For failure of petitioner to comply with the 120+30 day mandatory and jurisdictional
period, petitioner lost its right to claim a refund or credit of its alleged excess input VAT.
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PALS BAR OPS PILIPINAS 2016

CBK POWER COMPANY LIMITED vs. COMMISSIONER OF INTERNAL REVENUE, G.R.


Nos.198729-30 January 15, 2014, CJ. SERENO
TPI filed its third and fourth quarterly VAT returns for 2001 on October 25, 2001 and
January 25, 2002, respectively. It then filed an administrative claim for refund of its
unutilized input VAT for the third and fourth quarters of 2001 on September 30, 2003.
Thus, the CIR had 120 days or until January 28, 2004, after the submission of TPIs
administrative claim and complete documents in support of its application, within which to
decide on its claim. Then, it is only after the expiration of the 120-day period, if there is
inaction on the part of the CIR, where TPI may elevate its claim with the CTA within 30
days.
In the present case, however, it appears that TPIs 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. However, although TPIs judicial
claim for the fourth quarter of 2001 has been filed prematurely, the most recent
pronouncements of the Court provide for a window wherein the same may be entertained.
As held in the San Roque ponencia, strict compliance with the 120+30 day mandatory and
jurisdictional periods is not necessary when the judicial claims are filed between December
10, 2003 (issuance of BIR Ruling No. DA-489-03 which states that the taxpayer need not
wait for the 120-day period to expire before it could seek judicial relief) to October 6, 2010
(promulgation of the Aichi doctrine).
Clearly, therefore, TPIs refund claim of unutilized input VAT for the third quarter of 2001
was denied for being prematurely filed with the CTA, while its refund claim of unutilized
input VAT for the fourth quarter of 2001 may be entertained since it falls within the
exception provided in the Courts most recent rulings. COMMISSIONER OF INTERNAL
REVENUE vs. TOLEDO POWER, INC, G.R. No. 183880 January 20, 2014, J. PERALTA
Under Section 112(C)of the NIRC, a taxpayer-claimant may only file a petition for review
with the CTA within 30 days from either: (1) the receipt of the decision of the CIR denying,
in full or in part, the claim for refund/tax credit;or (2) the lapse of the 120-day period given
to the CIR to decide the claim for refund/tax credit. The 120-day mandatory period may
extend beyond the two-year prescriptive period for filing a claim for refund/tax credit
under Section 112(A) of the NIRC. Consequently, the30-day period given to the taxpayerclaimant likewise need not fall under the two-year prescriptive period. What matters is
that the administrative claim for refund/tax credit of unutilized input VAT is filed with the
BIR within the two-year prescriptive period. COMMISSIONER OF INTERNAL REVENUE vs.
TEAM SUAL CORPORATION (formerly MIRANT SUAL CORPORATION), G.R. No.
194105, February 5, 2014, J. Reyes
The mandatory rule is that a judicial claim must be filed with the CTA within thirty (30)
days from the receipt of the Commissioners decision denying the administrative claim or
from the expiration of the 120day period without any action from the Commissioner.
Otherwise, said judicial claim shall be considered as filed out of time. COMMISSIONER OF
INTERNAL REVENUE, vs. SILICON PHILIPPINES, INC. (FORMERLY INTEL PHILIPPINES
MANUFACTURING, INC.), G.R. No. 169778, March 12, 2014, J. PEREZ
Pursuant to Section 112(C) of the NIRC, respondent had 120 days from the date of
submission of complete documents in support of the application within which to decide on
the administrative claim. Thereafter, the taxpayer affected by the CIRs 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.
Compliance with both periods is jurisdictional,
considering that the 30-day period to appeal to the CTA is dependent on the 120-day
period. The period of 120 days is a prerequisite for the commencement of the 30-day
period to appeal. Strict compliance with the 120+30 day period is necessary for a claim for
a refund or credit of input VAT to prosper. An exception to that mandatory period was,
however, recognized in San Roque during the period between 10 December 2003, when
BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when the Court promulgated
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Aichi declaring the 120+30 day period mandatory and jurisdictional, thus reversing BIR
Ruling No. DA-489-03. (Hedcor, Inc. vs. Commissioner of Internal Revenue, G.R. No.
207575. July 15, 2015)
In this case, 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 120day 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. 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.
(Commissioner of Internal Revenue vs. Toledo Power Company G.R. Nos. 195175 &
199645. August 10, 2015)
The records show that CE Luzons administrative and judicial claims were filed on
November 30, 2006 and January 3, 2007, respectively, or during the period of effectivity of
BIR Ruling No. DA-489-03 and, thus, fell within the window period stated in San Roque, i.e.,
when taxpayer-claimants need not wait for the expiration of the 120-day period before
seeking judicial relief. Verily, the CTA En Banc erred when it outrightly dismissed CE
Luzons petition on the ground of prematurity. (Ce Luzon Geothermal Power Company,
Inc. vs. Commissioner of Internal Revenue G.R. No. 200841-42. August 26, 2015)
The Court has observed that based on the records, Nippon's administrative claim for the
first taxable quarter of 2002 which closed on March 31, 2002 was already time-barred for
being filed on April 22, 2004, or beyond the two (2)-year prescriptive period pursuant to
Section 112(A) of the National Internal Revenue Code of 1997. Although prescription was
not raised as an issue, it is well-settled that if the pleadings or the evidence on record show
that the claim is barred by prescription, the Court may motu proprio order its dismissal on
said ground. (Commissioner of Internal Revenue
vs. Nippon Express (Phils.)
Corporation G.R. No. 212920. September 16, 2015)
The rule is that from the date an administrative claim for excess unutilized VAT is filed, a
taxpayer has thirty (30) days within which to submit the documentary requirements
sufficient to support his claim, unless given further extension by the CIR. Then, upon
filing by the taxpayer of his complete documents to support his application, or expiration of
the period given, the CIR has 120 days within which to decide the claim for tax credit or
refund. Should the taxpayer, on the date of his filing, manifest that he no longer wishes to
submit any other addition documents to complete his administrative claim, the 120 day
period allowed to the CIR begins to run from the date of filing. (Pilipinas Total Gas, Inc.
vs. Commissioner of Internal Revenue, G.R. No. 207112. December 8, 2015)
Pursuant to Section 112 (A)(4)2 and (D)(4)3 of the NIRC, a taxpayer has two (2) years from
the close of the taxable quarter when the zero-rated sales were made within which to file
with the CIR an administrative claim for refund or credit of unutilized input VAT
attributable to such sales. The CIR, on the other hand, has 120 days from receipt of the
complete documents within which to act on the administrative claim. Upon receipt of the
decision, a taxpayer has 30 days within which to appeal the decision to the CTA. However,
if the 120-day period expires without any decision from the CIR, the taxpayer may appeal
the inaction to the CTA within 30 days from the expiration of the 120-day period.
(Commissioner of Internal Revenue Vs. Toledo Power Company/Toledo Power

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Company vs. Commissioner of Internal Revenue, G.R. No. 196415. December 2,


2015)
With the 30-day period always available to the taxpayer, the taxpayer can no longer file a
judicial claim for refund or credit of input VAT without waiting for the Commissioner to
decide until the expiration of the 120-day period. Clearly, 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. Thus, the dismissal of the petition is in
order. (Commisioner of Internal Revenue vs. Mirant Pagbilao Corporation, G.R. No.
180434. January 20, 2016)
Upon the filing of an administrative claim, respondent is given a period of 120 days within
which to (1) grant a refund or issue the tax credit certificate for creditable input taxes; or
(2) make a full or partial denial of the claim for a tax refund or tax credit. Failure on the
part of respondent to act on the application within the 120-day period shall be deemed a
denial. Note that the 120-day period begins to run from the date of submission of complete
documents supporting the administrative claim. If there is no evidence showing that the
taxpayer was required to submit -or actually submitted -additional documents after the
filing of the administrative claim, it is presumed that the complete documents accompanied
the claim when it was filed. Whether respondent rules in favor of or against the taxpayer or does not act at all on the administrative claim -within the period of 120 days from the
submission of complete documents, the taxpayer may resort to a judicial claim before the
CT A. Section (Silicon Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No.
182737. March 2, 2016)
GOVERNMENT REMEDIES
ADMINISTRATIVE REMEDIES
Agriex Co. foreign corporation alleges that the Bureau of Customs exclusive original jurisdiction
over actual and physical possession of foreign shipments and thus RTC has no jurisdiction over
such. The court ruled that it is well settled that the Collector of Customs has exclusive jurisdiction
over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise
thereof or stifle or put it at naught. The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure
and forfeiture of dutiable goods. Regional trial courts are devoid of any competence to pass upon
the validity or regularity of seizure and forfeiture proceedings conducted by the BOC and to enjoin
or otherwise interfere with these proceedings. Regional trial courts are precluded from assuming
cognizance over such matters even through petitions for certiorari, prohibition or mandamus.
AGRIEX CO., LTD, vs. HON. TITUS B. VILLANUEVA, Commissioner, Bureau of Customs (now
replaced by HON. ANTONIO M. BERNARDO), and HON. BILLY C. BIBIT, Collector of Customs,
Port of Subic (now replaced by HON. EMELITO VILLARUZ), G.R. No. 158150, September 10,
2014, J. Bersamin
There could be no presumption of the regularity of any administrative action which resulted in
depriving a taxpayer of his property through a tax sale. This is an exception to the rule that
administrative proceedings are presumed to be regular. This jurisprudential tenor clearly
demonstrates that the burden to prove compliance with the validity of the proceedings leading up
to the tax delinquency sale is incumbent upon the buyer or the winning bidder, which, in this case,
is Agojo. This is premised on the rule that a sale of land for tax delinquency is in derogation of
property and due process rights of the registered owner. In order to be valid, the steps required by
law must be strictly followed. Agojo must be reminded that the requirements for a tax delinquency
sale under the LGC are mandatory. Strict adherence to the statutes governing tax sales is imperative
not only for the protection of the taxpayers, but also to allay any possible suspicion of collusion
between the buyer and the public officials called upon to enforce the laws. CORPORATE

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STRATEGIES DEVELOPMENT CORP. and RAFAEL R. PRIETO vs. NORMAN A. AGOJO, G.R. No.
208740, November 19, 2014, J. Mendoza

CBK Power raised the lone issue of whether or not an ITAD ruling is required before it can
avail of the preferential tax rate. On the other hand, the Commissioner claimed that CBK
Power failed to exhaust administrative remedies when it filed its petitions before the CTA
First Division, and that said petitions were not filed within the two-year prescriptive period
for initiating judicial claims for refund. The Court categorically held that the BIR should not
impose additional requirements that would negate the availment of the reliefs provided for
under international agreements, especially since said tax treaties do not provide for any
prerequisite at all for the availment of the benefits under said agreements. Nowhere and in
no wise does the law imply that the Collector of Internal Revenue must act upon the claim,
or that the taxpayer shall not go to court before he is notified of the Collectors action. CBK
POWER COMPANY LIMITED vs. COMMISSIONER INTERNAL REVENUE, G.R. Nos.
193383-84, January 14, 2015, J. Perlas-Bernabe
JUDICIAL REMEDIES
The CIR categorically admitted that it failed to formally offer the Preliminary Assessment Notices as
evidence. Worse, it advanced no justifiable reason for such fatal omission. Instead, it merely alleged
that the existence and due execution of the Preliminary Assessment Notices were duly tackled by
CIRs witnesses. We hold that such is not sufficient to seek exception from the general rule requiring
a formal offer of evidence, since no evidence of positive identification of such Preliminary
Assessment Notices by petitioners witnesses was presented. COMMISSIONER OF INTERNAL
REVENUE vs. UNITED SALVAGE AND TOWAGE (PHILS.), INC., G.R. No. 197515, July 2, 2014, J.
Peralta

The Commissioner of Customs contends that the CTA should not take cognizance of the
case because of the lapse of the 30-day period within which to appeal, arguing that on
November 25, 1998 URC had already received the BoCs final assessment demanding
payment of the amount due within 10 days, but filed the petition only on July 30, 1999. The
Court ruled against the Commissioner of Customs. The reckoning date was on date that the
Commissioner of Customs denied the protest of Oilink, July 12, 1999.
The Commissioner of Customs posits that only when the ensuing decision of the Collector
and then the adverse decision of the Commissioner of Customs would it be proper for
Oilink to seek judicial relief from the CTA. The Court ruled that the principle of nonexhaustion of administrative remedies was not an iron-clad rule because there were
instances in which the immediate resort to judicial action was proper. As the records
indicate, the Commissioner of Customs already decided to deny the protest by Oilink and
stressed then that the demand to pay was final. In that instance, the exhaustion of
administrative remedies would have been an exercise in futility because it was already the
Commissioner of Customs demanding the payment of the deficiency taxes and duties.
COMMISSIONER OF CUSTOMS vs. OILINK INTERNATIONAL CORPORATION, G.R. No.
161759, July 2, 2014, J. Bersamin
The respondents allege that the Court of Tax Appeals has no jurisdiction to make an
assessment in cases of an administrative claim for tax refunds. 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. SMI-ED PHILIPPINES
TECHNOLOGY, INC. vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 175410,
November 12, 2014, J. Leonen

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NAPOCOR filed a petition for declaratory relief based on the assessments of real property
taxes the Municipality of Navotas imposed. It then questioned the legality of the tax
imposition. On appeal, the CTA En Banc ruled that the RTC has jurisdiction over the case
even though administrative remedies were not exhausted. The Court clarified that although
there are instances were resort to judicial action is allowed, it is not so in the case at hand.
The fact that a separate chapter is devoted to the treatment of real property taxes, and a
distinct appeal procedure is provided therefor does not justify an inference that Section
7(a)(3) of R.A. 9282 pertains only to local taxes other than real property taxes. Rather, the
term "local taxes" in the aforementioned provision should be considered in its general and
comprehensive sense, which embraces real property tax assessments, in line with the
precept Generalia verba sunt generaliter inteligenciawhat is generally spoken shall be
generally understood. Based on the foregoing, the general meaning of "local taxes" should
be adopted in relation to Paragraph (a)(3) of Section 7 of R.A. 9282, which necessarily
includes real property taxes.
In fine, if a taxpayer is not satisfied with the decision of the CBAA or the RTC, as the case
may be, the taxpayer may file, within thirty (30) days from receipt of the assailed decision,
a petition for review with the CTA pursuant to Section 7(a) of R.A. 9282. In cases where the
question involves the amount of the tax or the correctness thereof, the appeal will be
pursuant to Section 7(a)(5) of R.A. 9282. When the appeal comes from a judicial remedy
which questions the authority of the local government to impose the tax, Section 7(a)(3) of
R.A. 9282 applies. Thereafter, such decision, ruling or resolution may be further reviewed
by the CT A En Banc pursuant to Section 2, Rule 4 of the Revised Rules of the CTA.
NATIONAL POWER CORPORATION vs. MUNICIPAL GOVERNMENT OF NAVOTAS,
SANGGUNIANG BAYAN OF NAVOTAS AND MANUEL T. ENRIQUEZ, in his capacity as
Municipal Treasurer of Navotas, G.R. No. 192300, November 24, 2014, J. Peralta
Philamlife sold its shares through a public bidding. However, the selling price was below
the book value of the shares. Hence, the BIR imposed donors tax on the price difference.
Philamlife appealed to the Secretary of Finance. Due to the adverse ruling, Philamlife
appealed with the CA. CA alleged that it does not have jurisdiction for jurisdiction lies with
the CTA. The Court ruled that, the CTA can now rule not only on the propriety of an
assessment or tax treatment of a certain transaction, but also on the validity of the revenue
regulation or revenue memorandum circular on which the said assessment is based. THE
PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY vs. SECRETARY OF
FINANCE and COMMISSIONER OF INTERNAL REVENUE, G.R. No. 210987, November
24, 2014, J. Velasco Jr.
In case of an illegal assessment where the assessment was issued without authority,
exhaustion of administrative remedies is not necessary and the taxpayer may directly
resort to judicial action. The taxpayer shall file a complaint for injunction before the
Regional Trial Court to enjoin the local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a
petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax case
decided by the Regional Trial Court. The appeal shall be filed within fifteen (15) days from
notice of the trial courts decision. In this case, the petition for injunction filed before the
Regional Trial Court of Pasay was a local tax case originally decided by the trial court in its
original jurisdiction. Since the PEZA assailed a judgment, not an interlocutory order, of the
Regional Trial Court, the PEZAs proper remedy was an appeal to the Court of Tax Appeals.
CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY; PROVINCE OF
BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S.
TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN

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vs. PHILIPPINE ECONOMIC ZONE AUTHORITY, G.R. No. 184203, G.R. NO. 187583,
November 26, 2014, J. Leonen
A VAT-registered taxpayer need not wait for the lapse of the 120-day period to file a
judicial claim for unutilized VAT inputs before the CTA when the claim was filed on
December 10, 2003 up to October 6, 2010. If the claim is filed within those dates, the same
shall not be considered prematurely filed. 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 petitioners claim on the ground
of prematurity. MINDANAO II GEOTHERMAL PARTNERSHIP vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No. 204745, December 08, 2014, J. Perlas-Bernabe
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. In case of failure on the part of the CIR to act on the application within the 120day period prescribed by law, the taxpayer has only has 30 days after the expiration of the
120-day period to appeal the unacted claim with the CTA. Since petitioners judicial claim
was filed before the CTA only way beyond the mandatory 120+30 days to seek judicial
recourse, such non-compliance with the mandatory period of 30 days is fatal to its refund
claim on the ground of prescription. Consequently, the CTA has no jurisdiction over its
judicial appeal considering that its Petition for Review was filed out of time. Consequently,
the claim for refund must be denied. NIPPON EXPRESS (PHILIPPINES) CORP. vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 185666, February 04, 2015, J. Perez
In praying to restrain the collection of RPT, petitioner also implicitly questions the
propriety of the assessment of such RPT. This is because in ruling as to whether to restrain
the collection, the RTC must first necessarily rule on the propriety of the assessment. A
certiorari petition questioning an interlocutory order issued in a local tax case falls under
the jurisdiction of the CTA. (CE Casecnan Water and Energy Company Inc. vs. The
Province of Nueva Ecija, et al., G.R. No. 196278. June 17, 2015)
Section 7 of R.A. No. 1125 as amended by RA 9as well as Section 3, Rule 4 of the Revised
Rules of the Court of Tax Appeals explicitly provide that the CTA has exclusive appellate
jurisdiction over tax collection cases decided by the RTC. (Mitsubishi Motors Philippines
Corporation vs. Bureau of Customs, G.R. No. 209830, June 17, 2015)
Conformably with our ruling in BPI Leasing Corporation that the application of Section 244
of the NIRC is an exercise of quasi-legislative or rule-making powers of the Secretary of
Finance, and since RR 2-2012 was issued by the Secretary of Finance based on Section 244
of the NIRC, such administrative issuance is therefore quasi-legislative in nature which is
outside the scope of a petition for certiorari. (Clark Investors and Locators Association,
Inc. vs. Secretary of Finance and Commissioner of Internal Revenue, G.R. No. 200670.
July 6, 2015)
Petron admitted to not having filed a protest of the assessment before the customs
collector and elevating a possible adverse ruling therein to the COC, reasoning that such a
procedure would be costly and impractical, and would unjustly delay the resolution of the
issues which, being purely legal in nature anyway, were also beyond the authority of the
customs collector to resolve with finality. This admission is at once decisive of the issue of
the CTA's jurisdiction over the petition. There being no protest ruling by the customs
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collector that was appealed to the COC, the filing of the petition before the CTA was
premature as there was nothing yet to review. (Commissioner of Internal Revenue vs.
Court of Tax Appeals (Second Division) and Petron Corporation, G.R. No. 207843. July
15, 2015)
It is within the CTA's sound judicial discretion to give party-litigants every opportunity to
properly present their conflicting claims on the merits of the controversy without resorting
to technicalities.15 It should always be predicated on the consideration that more than the
mere convenience of the courts or of the parties of the case, the ends of justice and fairness
would be served thereby. Courts should be liberal in setting aside orders of default, for
default judgments are frowned upon, and unless it clearly appears that the reopening of the
case is intended for delay, it is best that trial courts give both parties every chance to fight
their case fairly and in the open, without resort to technicality. (Commissioner of Internal
Revenue vs. Court of Tax Appeals and CBK Power Company Limited, G.R. Nos.
203054-55. July 29, 2015)
CE Luzon claims that the CIR filed a second motion for reconsideration of the CTA
Divisions January 19, 2010 Amended Decision. Considering that a second motion for
reconsideration is a prohibited pleading and, thus, did not toll the period to file an appeal,
CE Luzon maintained that the June 24, 2009 Decision had long become final and executory.
Under Section 3, Rule 14 of the Revised Rules of the Court of Tax Appeals, an amended
decision is issued when there is any action modifying or reversing a decision of the CTA En
Banc or in Division. Pursuant to these parameters, it is clear that the CIRs motions for
partial reconsideration i.e., (a) motion for partial reconsideration of the June 24, 2009
Decision; and (b) motion for partial reconsideration of the January 19, 2010 Amended
Decision assailed separate and distinct decisions that were rendered by the CTA Division.
Notably, its amended decision modified and increased CE Luzons entitlement to a refund
or tax credit certificate in the amount of -17,277,938.47. Essentially, it was therefore a
different decision and, hence, the proper subject of a motion for reconsideration anew on
the part of the CIR. Thus, CE Luzons procedural objection must fail. (Ce Luzon
Geothermal Power Company, Inc. vs. Commissioner of Internal Revenue G.R. No.
200841-42. August 26, 2015)
Court and such lower courts as may be established by law, to determine whether or not
there has been a grave abuse of discretion on the part of any branch or instrumentality of
the Government, in relation to Section 5(5), Article VIII thereof, vesting upon it the power
to promulgate rules concerning practice and procedure in all courts, the Court thus
declares that the CA's original jurisdiction over a petition for certiorari assailing the DOJ
resolution in a preliminary investigation involving tax and tariff offenses was necessarily
transferred to the CTA pursuant to Section 7 of R.A. No. 9282, and that such petition shall
be governed by Rule 65 of the Rules of Court, as amended. Accordingly, it is the CTA, not
the CA, which has jurisdiction over the petition for certiorari assailing the DOJ resolution of
dismissal of the BOC's complaint-affidavit against private respondents for violation of the
TCCP. (Bureau of Customs vs. The Honorable Agnes VST Devanadera, et al. G.R. No.
193253. September 8, 2015)
While it is true that the CTA 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.
The primary reason, however, that militates against the granting of the motion to withdraw
is the fact that the CTA 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
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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. Markedly different from
this is the BIR' s determination that Nippon should receive P21,675,128.91 as per the July
27, 2011 Tax Credit Certificate, which is, in all, P19,060,832.07 larger than the amount
found due by the CTA Division. Therefore, as aptly pointed out by Associate Justice Teresita
J. Leonardo-De Castro during the deliberations on this case, the massive discrepancy alone
between the administrative and judicial determinations of the amount to be refunded to
Nippon should have already raised a red flag to the CTA Division. Clearly, the interest of the
government, and, more significantly, the public, will be greatly prejudiced by the erroneous
grant of refund -at a substantial amount at that -in favor of Nippon. Hence, under these
circumstances, the CTA Division should not have granted the motion to withdraw.
(Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation G.R. No.
212920. September 16, 2015)
Concededly, there is no clear statement under R.A. No. 1125, the amendatory R.A. No. 9282,
let alone in the Constitution, that the CTA has original jurisdiction over a petition for
certiorari. By virtue of Section 1, Article VIII of the 1987 Constitution, vesting judicial
power in the Supreme
A petition before the CTA may only be made after a whole or partial denial of the protest by
the CIR or the CIR's authorized representative. When PAGCOR filed its petition before the
CTA on 11 March 2009, there was still no denial of PAGCOR's protest by either the RD or
the CIR. PAGCOR has clearly failed to comply with the requisites in disputing an assessment
as provided by Section 228 and Section 3.1.5. (Philippine Amusement and Gaming
Corporation vs. Bureau of Internal Revenue, et al., G.R. No. 208731. January 27, 2016)

UPDATED BY PALS & ATENEO DE DAVAO UNIVERSITY


FOR THE 2016 BAR OPERATIONS

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