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2. The CIR has 120 days from the date of submission of complete documents in support of
the administrative claim within which to decide whether to
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT TAXATION LAW
JURISPRUDENCE FOR THE 2018 BAR PIERRE MARTIN D. REYES
Page 3 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement,
2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this work may be
copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this supplement
provided the name of the author remains clearly associated with the work and no alterations in the form and content of this
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grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the
two-year period from the filing of the administrative claim if the claim is filed in the later part
of the two-year period. If the 120-day period expires without any decision from the CIR, then
the administrative claim may be considered to be denied by inaction.
3. A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s
decision denying the administrative claim or from the expiration of the 120-day period
without any action from the CIR.
4. All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its
issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010,
as an exception to the mandatory and jurisdictional 120+30 day periods. (Team Energy
Corporation v. Commissioner of Internal Revenue, G.R. No. 197663 & G.R. No.
197770, March 14, 2018; Team Sual Corporation v. Commissioner of Internal
Revenue, G.R. Nos. 201225-26, April 18, 2018; CE Luzon Geothermal v. Commissioner
of Internal Revenue, G.R. No. 197526, July 26, 2017; Aichi Forging Company v.
Commissioner of Internal Revenue, G.R. No. 193525, August 30, 2017; Procter &
Gamble Asia v. Commissioner of Internal Revenue, G.R. No. 205652, September 6,
2017; Mindanao I Geothermal Partnership v. Commissioner of Internal Revenue, G.R.
No. 197519, November 8, 2017; Commissioner of Internal Revenue, G.R. No. 209306,
September 27, 2017)
(1) Estoppel applies against a taxpayer who did not only raise at the earliest opportunity its
representative's lack of authority to execute two (2) waivers of defense of prescription, but
was also accorded, through these waivers, more time to comply with the audit requirements
of the Bureau of Internal Revenue.
Citing its previous ruling in Commissioner of Internal Revenue v. Next Mobile, Inc., G.R. No.
212825, December 7, 2015, a defective waiver will be upheld when both the taxpayer and
the BIR were in pari delicto. In this case, QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR PIERRE
MARTIN D. REYES
Page 6 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement,
2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this work may be
copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this supplement
provided the name of the author remains clearly associated with the work and no alterations in the form and content of this
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the Bureau of Internal Revenue was at fault when it accepted the waivers despite their non-
compliance with the requirements of RMO No. 20-90 and RDAO No. 05-01. The taxpayer’s
acts also show its implied admission of the validity of the waivers. First, the taxpayer never
raised the invalidity of the Waivers at the earliest opportunity, either in its Protest to the
PAN, Protest to the FAN, or Supplemental Protest to the FAN. It thereby impliedly
recognized these waivers' validity and its representatives' authority to execute them.
Second, the taxpayer benefitted from the waivers executed as it gave the taxpayer more
time to comply with the audit requirements of the BIR.
(2) Yes, the assessment is void because it was served beyond the extended period. The
FAN/FLD was mailed on December 4, 2008. Since the validity period of the second waiver
is only until November 30, 2008, prescription had already set in at the time the FAN and the
FLD were actually mailed on December 4, 2008. (Commissioner of Internal Revenue v.
Transitions Optical Philippines, G.R. No. 227544, November 22, 2017)
Q. What are the requisites for claiming a refund of excess creditable withholding
taxes?
The requisites for claiming a refund of excess creditable withholding taxes are:
1. The claim for refund was filed within the two-year prescriptive period;
2. The fact of withholding is established by a copy of a statement duly issued by the payor
(withholding agent) to the payee, showing the amount of tax withheld therefrom; and
3. The income upon which the taxes were withheld was included in the income tax return of
the recipient as part of the gross income. (Commissioner of Internal Revenue v. Cebu
Holding, G.R. No. 189792, June 29, 2018)
Q. Whether evidence not presented in the administrative claim for refund in the
Bureau of Internal Revenue can be presented in the Court of Tax Appeals?
Yes. The Court of Tax Appeals is not limited by the evidence presented in the administrative
claim in the Bureau of Internal Revenue. The claimant may present new and additional
evidence to the Court of Tax Appeals to support its case for tax refund. The power of the
Court of Tax Appeals to exercise its appellate jurisdiction does not preclude it from
considering evidence that was not presented in the administrative claim in the Bureau of
Internal Revenue.
Parties are expected to litigate and prove every aspect of their case anew and formally offer
all their evidence. No value is given to documentary evidence submitted in the Bureau of
Internal Revenue unless it is formally offered in the Court of Tax Appeals. Thus, the review
of the Court of Tax Appeals is not limited to whether or not the Commissioner committed
gross abuse of discretion, fraud, or error of law, as contended by the Commissioner. As
evidence is considered and evaluated again, the scope of the Court of Tax Appeals' review
covers factual findings. (Philippine Airlines v. Commissioner of Internal Revenue, G.R.
No. 206079-80 & 206309, January 17, 2018)
Note: The case involved a claim for refund pursuant to Section 229 of the Tax Code.
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT TAXATION LAW
JURISPRUDENCE FOR THE 2018 BAR PIERRE MARTIN D. REYES
Page 7 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement,
2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this work may be
copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this supplement
provided the name of the author remains clearly associated with the work and no alterations in the form and content of this
supplement are made. No stamping is allowed.
LOCAL GOVERNMENT TAXATION
Q. On 26 December 1992, the Sangguniang Bayan of the Municipality of Pasig
enacted Ordinance No. 25 which imposed a franchise tax on all business venture
operations carried out through a franchise within the municipality. On 25 January
1995, the Municipality of Pasig was converted into a highly urbanized city now known
as the City of Pasig. The City Treasurer assessed the Manila Electric Company for
deficiency franchise taxes for the period 1996 to 1999 pursuant to Municipal
Ordinance No. 25. Does the City of Pasig have valid basis for its imposition of
franchise tax for the period 1996 to 1999?
No. The power to impose franchise tax belongs to the province by virtue of Section 137 of
the Local Government Code. On the other hand, Section 142 of the Code provides that the
municipalities are prohibited from levying the taxes specifically provided to provinces.
Section 151 empowers the cities to levy taxes, fees and charges allowed to both provinces
and municipalities. Unlike a city, a municipality is bereft of authority to levy franchise tax,
thus, the ordinance enacted for that purpose is void.
The ordinance in question was enacted in 1992 when the local government of Pasig was
still a municipality and, as such, had no authority to levy franchise tax. The conversion of
the municipality into a city does not lend validity to the void ordinance. The ordinance is void
for being in direct contravention with Section 142 of the Local Government Code. Being
void, it cannot be given any legal effect. An assessment and collection pursuant to the said
ordinance is legally infirm. (City of Pasig v. Manila Electric Company, G.R. No. 181710,
March 7, 2018)
Q. The City of Manila assessed ABC local business taxes for the taxable year 2007
using the gross sales for the calendar year 2005. ABC argues that the computation of
the business tax should be on the basis of its gross sales in 2006 which amount was
lower than the gross sales in 2005. Is ABC correct?
Yes. Section 14 of the Revenue Code of Manila, which is derived from Section 143(a) of the
Local Government Code, provides that an assessment for business tax should be computed
based on the taxpayer’s gross sales or receipts of the preceding calendar year. (City of
Manila v. Cosmos Bottling Corporation, G.R. No. 196681, June 27, 2018)
Q. The City of Manila assessed ABC local business taxes. ABC protested the
assessment arguing that it constitutes as double taxation. ABC tendered payment of
what they believe to be the correct computation of their local business tax. The
payment was refused by the City Treasurer. ABC also received a letter from the City
Treasurer denying their protest. ABC then paid the assessment and filed a claim for
refund with the Office of the City Treasurer raising the same grounds in their protest.
ABC then filed its refund with the RTC of Manila. The City of Manila argues that the
assessment against ABC became final and executory when the latter effectively
abandoned its protest and instead sued in court for the refund of the assessed taxes.
Is the City of Manila correct?
No. A taxpayer who had protested and paid an assessment is not precluded from later on
instituting an action for refund or credit.
While Section 196 does not expressly mention an assessment made by the local treasurer,
this simply means that its applicability does not depend upon the existence of an
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT TAXATION LAW
JURISPRUDENCE FOR THE 2018 BAR PIERRE MARTIN D. REYES
Page 8 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement,
2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this work may be
copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this supplement
provided the name of the author remains clearly associated with the work and no alterations in the form and content of this
supplement are made. No stamping is allowed.
assessment notice. By consequence, a taxpayer may proceed to the remedy of refund of
taxes even without a prior protest against an assessment that was not issued in the first
place. This is not to say that an application for refund can never be precipitated by a
previously issued assessment, for it is entirely possible that the taxpayer, who had received
a notice of assessment, paid the assessed tax, fee or charge believing it to be erroneous or
illegal. Thus, under such circumstance, the taxpayer may subsequently direct his claim
pursuant to Section 196 of the LGC.
When a taxpayer is assessed a deficiency local tax, fee or charge, he may protest it under
Section 195 even without making payment of such assessed tax, fee or. charge. This is
because the law on local government taxation, save in the case of real property tax, does
not expressly require ''payment under protest" as a procedure prior to instituting the
appropriate proceeding in court. This implies that the success of a judicial action
questioning the validity or correctness of the assessment is not necessarily hinged on the
previous payment of the tax under protest. Needless to say, there is nothing to prevent the
taxpayer from paying the tax under protest or simultaneous to a protest.
Thus, a taxpayer facing an assessment may protest it and alternatively: (1) appeal the
assessment in court, or (2) pay the tax and thereafter seek a refund. (City of Manila v.
Cosmos Bottling Corporation, G.R. No. 196681, June 27, 2018)
Q. What are the remedies of the taxpayer in case of an assessment for deficiency
local taxes?
Where an assessment is to be protested or disputed, the taxpayer may proceed (a) without
payment, or (b) with payment of the assessed tax, fee or charge. Whether there is payment
of the assessed tax or not, the protest in writing must be made within sixty (60) days from
receipt of the notice of assessment; otherwise, the assessment shall become final and
conclusive. Additionally, the subsequent court action must be initiated within thirty (30) days
from denial or inaction by the local treasurer; otherwise, the assessment becomes
conclusive and unappealable.
a. Where no payment is made, the taxpayer's procedural remedy is governed strictly by
Section 195. That is, in case of whole or partial denial of the protest, or inaction by the local
treasurer, the taxpayer's only recourse is to appeal the assessment with the court of
competent jurisdiction. The appeal before the court does not seek a refund but only
questions the validity or correctness of the assessment.
b. Where payment was made, the taxpayer may thereafter maintain an action in court
questioning the validity and correctness of the assessment (Section 195) and at the same
time seeking a refund of the taxes. It would be illogical for the taxpayer to only seek a
reversal of the assessment without praying for the refund of taxes. Once the assessment is
set aside by the court, it follows as a matter of course that all taxes paid under the
erroneous or invalid assessment are refunded to the taxpayer. The same implication should
ensue even if the taxpayer were to style his suit in court as an action for refund or recovery
of erroneously paid or illegally collected tax as pursued under Section 196 of the LGC. In
such a suit for refund, the taxpayer cannot successfully prosecute his theory of
QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME COURT TAXATION LAW
JURISPRUDENCE FOR THE 2018 BAR PIERRE MARTIN D. REYES
Page 9 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar Supplement,
2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this work may be
copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this supplement
provided the name of the author remains clearly associated with the work and no alterations in the form and content of this
supplement are made. No stamping is allowed.
erroneous payment or illegal collection of taxes without necessarily assailing the validity or
correctness of the assessment he had administratively protested.
Note that where an assessment is issued, the taxpayer cannot choose to pay the
assessment and thereafter seek a refund at any time within the full period of two years from
the date of payment as Section 196 may suggest. If refund is pursued, the taxpayer must
administratively question the validity or correctness of the assessment in the 'letter claim for
refund' within 60 days from receipt of the notice of assessment, and thereafter bring suit in
court within 30 days from either decision or inaction by the local treasurer. (City of Manila
v. Cosmos Bottling Corporation, G.R. No. 196681, June 27, 2018)
JUDICIAL REMEDIES
Q. The Philippine Ports Authority (PPA) received a letter from the City Assessor for
the assessment and collection of real property taxes against its administered
properties. It appealed the assessment to the Local Board of Assessment Appeals
(LBAA) through the Office of the City Treasurer. While the case was pending, the City
of Davao posted a notice of sale of delinquent real properties including the
properties of the PPA. The LBAA dismissed the appeal. The PPA appealed before the
Central Board of Assessment Appeals (CBAA) and was denied. Thus, it filed an
appeal with the CTA. The PPA claimed it did not receive any warrant of levy and thus
it filed a Petition for Certiorari with the Court of Appeals (CA). The CTA ruled in favor
of the PPA declaring the properties as exempt from real property tax and declaring
void the assessments issued. The CA, on the other hand, dismissed the petition
ruling that the CTA has exclusive jurisdiction and said that the PPA should have
applied for issuance of a writ of injunction or prohibition. PPA filed a Motion for
Reconsideration with the CA and was denied. Hence, the PPA filed a Petition for
Review with the Supreme Court. Does the CA have jurisdiction to issue the injunctive
relief prayed for by PPA?
No. When a tax case is pending on appeal with the CTA, the CTA has exclusive
jurisdiction to enjoin the levy of taxes and auction of the taxpayer’s properties in
relation to that case. Section 7(a)(5) of RA No. 1125, as amended by RA No. 9282
provides that the CTA has exclusive appellate jurisdiction over decisions of the
CBAA in the exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the provincial or city
board of assessment appeals.
The CTA has the power to determine whether or not there has been grave abuse of
discretion in cases falling within its exclusive appellate jurisdiction and its power to issue
writs of certiorari.
The Court of Tax Appeals had jurisdiction over PPA’s appeal to resolve the question of
whether or not it was liable for real property tax. The real property tax liability was the very
reason for the acts which petitioner wanted to have enjoined. It was, thus, the Court of Tax
Appeals, and not the Court of Appeals, that had the power to preserve the subject of the
appeal, to give effect to its final determination, and, when necessary, to control auxiliary and
incidental matters and to prohibit or restrain acts which might interfere with its exercise of
jurisdiction over petitioner's appeal. QUESTIONS AND ANSWERS ON SIGNIFICANT
SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR PIERRE
MARTIN D. REYES
Page 10 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar
Supplement, 2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this
work may be copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this
supplement provided the name of the author remains clearly associated with the work and no alterations in the form and content of
this supplement are made. No stamping is allowed.
Even if the law had vested the Court of Appeals with jurisdiction to issue injunctive relief in
real property tax cases such as this, the Court of Appeals was still correct in dismissing the
petition before it. Once a court acquires jurisdiction over a case, it also has the power to
issue all auxiliary writs necessary to maintain and exercise its jurisdiction, to the exclusion
of all other courts. Thus, once the Court of Tax Appeals acquired jurisdiction over
petitioner's appeal, the Court of Appeals would have been precluded from taking
cognizance of the case. (Philippine Ports Authority v. The City of Davao, G.R. No.
190324, June 6, 2018)
Q. Does the CTA have exclusive jurisdiction to determine the constitutionality or
validity of tax laws, rules and regulations, and other administrative issuances of the
CIR?
Yes. The CTA has exclusive jurisdiction to determine the constitutionality or validity of tax
laws, rules and regulations, and other administrative issuances of the Commissioner of
Internal Revenue.
The CTA has not only jurisdiction to pass upon the constitutionality or validity of a tax law or
regulation when raised by the taxpayer as a defense in disputing or contesting an
assessment or claiming a refund, but also jurisdiction to take cognizance of cases directly
challenging the constitutionality or validity of a tax law or regulation or administrative
issuance (revenue orders, revenue memorandum circulars, rulings).
The law intends the CTA to have exclusive jurisdiction to resolve all tax problems. Petitions
for writs of certiorari against the acts and omissions of the said quasi-judicial agencies
should, thus, be filed before the CTA. Except for local tax cases, actions directly challenging
the constitutionality or validity of a tax law or regulation or administrative issuance may be
filed directly before the CTA.
With respect to administrative issuances (revenue orders, revenue memorandum circulars,
or rulings), these are issued by the Commissioner under its power to make rulings or
opinions in connection with the implementation of the provisions of internal revenue laws.
Tax rulings, on the other hand, are official positions of the Bureau on inquiries of taxpayers
who request clarification on certain provisions of the National Internal Revenue Code, other
tax laws, or their implementing regulations. Hence, the determination of the validity of these
issuances clearly falls within the exclusive appellate jurisdiction of the CTA, subject to prior
review by the Secretary of Finance. (Steel Corporation v. Bureau of Customs & Bureau
of Internal Revenue, G.R. No. 220502, February 12, 2018)
Q. Does the CTA have jurisdiction over cases asking for the cancellation and
withdrawal of a warrant of distraint and/or levy?
Yes. Section 7 of RA No. 9282 provides that the CTA has jurisdiction over other matters
arising under the National Internal Revenue Code or other laws administered by the Bureau
of Internal Revenue. (Commissioner of Internal Revenue v. Bank of the Philippine
Islands, G.R. No. 224327, June 11, 2018)
Q. Does the Secretary of Justice have jurisdiction to review disputed assessments
involving government owned and controlled corporations?
Yes. Under Presidential Decree No. 242 (PD 242), all disputes and claims solely between
government agencies and offices, including government-owned or controlled corporations,
shall be administratively settled QUESTIONS AND ANSWERS ON SIGNIFICANT SUPREME
COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR PIERRE MARTIN D.
REYES
Page 11 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar
Supplement, 2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this
work may be copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this
supplement provided the name of the author remains clearly associated with the work and no alterations in the form and content of
this supplement are made. No stamping is allowed.
or adjudicated by the Secretary of Justice, the Solicitor General, or the Government
Corporate Counsel, depending on the issues and government agencies involved. The use
of the word "shall" in PD 242 means that administrative settlement or adjudication of
disputes and claims between government agencies and offices, including government
owned or controlled corporations, is not merely permissive but mandatory and imperative.
The second paragraph of Section 4 of the 1997 NIRC, providing for the exclusive appellate
jurisdiction of the CTA as regards the CIR's decisions on matters involving disputed
assessments, refunds in internal revenue taxes, fees or other charges, penalties imposed in
relation thereto, or other matters arising under NIRC, is in conflict with PD 242. To
harmonize Section 4 of the 1997 NIRC with PD 242, the following interpretation should be
adopted:
1. As regards private entities and the BIR, the power to decide disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or
other matters arising under the NIRC or other laws administered by the. BIR is vested in the
CIR subject to the exclusive appellate jurisdiction of the CTA, in accordance with Section 4
of the NIRC; and
2. Where the disputing parties are all public entities (covers disputes between the BIR and
other government entities), the case shall be governed by PD 242.
Even if the 1997 NIRC, a general statute, is a later act, PD 242, which is a special law, will
still prevail and is treated as an exception to the terms of the 1997 NIRC with regard solely
to intragovernmental disputes. PD 242 is a special law while the 1997 NIRC is a general
law, insofar as disputes solely between or among government agencies are concerned.
(Power Sector Assets and Liabilities Management Corporation v. Commissioner of
Internal Revenue, G.R. No. 198146, August 8, 2017)
Q. What is the effect of filing a Petition for Review with the CTA En Banc without
filing a prior motion for reconsideration or new trial before the CTA Division?
The filing of a motion for reconsideration or new trial before the CTA Division is an
indispensable requirement for filing an appeal before the CTA En Banc. Failure to file such
motion for reconsideration or new trial is cause for dismissal of the appeal before the CTA
En Banc. (City of Manila v. Cosmos Bottling Corporation, G.R. No. 196681, June 27,
2018)
Q. Within sixty days from receipt of the resolution of the CTA En Banc on the Motion
for Reconsideration of the CTA En Banc Decision, the taxpayer filed a Petition for
Certiorari with the Supreme Court alleging grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the CTA En Banc when it issued the
assailed decision and resolution. Did the taxpayer avail of the proper remedy?
No. The taxpayer adopted the wrong remedy in assailing the resolution of the CTA En
Banc. What the petitioner should have done to question the decision of the CTA En Banc
was to file before the Supreme Court a petition for review under Rule 45 of the same Rules
of Court in conformity with Section 11 of R.A. No. 9282. A petition for certiorari under Rule
65 of the Rules of Court is a special civil action that QUESTIONS AND ANSWERS ON
SIGNIFICANT SUPREME COURT TAXATION LAW JURISPRUDENCE FOR THE 2018 BAR
PIERRE MARTIN D. REYES
Page 12 of 12 NOTICE This material supplements the author’s 2013 Bar Reviewer, 2014 Bar Supplement, 2015 Bar
Supplement, 2016 Bar Supplement, 2017 Bar Supplement, Tax Audit Primer, and Flowchart of Tax Remedies. No portion of this
work may be copied or reproduced without the written permission of the author. Possessors may reproduce and distribute this
supplement provided the name of the author remains clearly associated with the work and no alterations in the form and content of
this supplement are made. No stamping is allowed.
may be resorted to only in the absence of appeal or any plain, speedy and adequate
remedy in the ordinary course of law.54 In this case, there is a plain, speedy and adequate
remedy that is available - appeal by certiorari under Rule 45. (Aichi Forging Company v.
Commissioner of Internal Revenue, G.R. No. 193625, August 30, 2017; Bureau of
Internal Revenue v. Hon. Ernesto Acosta, G.R. No. 195320, April 23, 2018)
***Nothing else follows***