arean% a/ &%+n-a(!%n "en(er &%r ea e-+"a(!%n an- re$ear"1
ARELLANO
abrp BAR REVIEW PROGRAM
ANALYTICAL SURVEY OF 2006 SUPREME COURT DECISIONS IN TAXATION PROF. EDWIN R. ABELLA, CPA I. Genera Pr!n"!# Pr!n"!#e$ e$ %& % & Ta'a(!%n Ta'a (!%n.................................................. ................................... )
a. BICOLANDIA DRUG CORPORATION, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !"##$$, %&ne ##, #''() A*+&na, %.............................................................................................................. -. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. CENTRAL LUON DRUG CORPORATION, CORPORATION, responent responent G.R. No. !"/0!#, %&ne #(, #''(, A*+&na, %...................................................................................................." +. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. BICOLANDIA DRUG CORPORATION, responent. G.R. No. !"/'/, %&12 !, #''() Ve1as+o, %r. %........................................................................................................0 . COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. BENGUET CORPORATION, responent, G.R. No. !"000$, %&12 !", #''() Gar+ia, %........0 II. In"%*e Ta'a(! Ta'a(!%n %n..................................................... ...................................... ............................................. ............. ...... 6
e. T3E MANILA BAN4ING CORPORATION, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent, G.R. No. !(/!! /, A&5&st #/, #''() Sanova16G&tierre*, %..............................................................( 7. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. %ULIANE BAIER6NIC4EL, responent. G.R. No. !08$, A&5&st #$, #'(, 9nares6 Santia5o, %............................................................................................................8 5. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. P3ILIPPINE AIRLINES, INC. responent. G.R. No. !('0#/, O+to-er $, #''() Pan5ani-an, %............................................................................................................................8 :. CARMELINO F. PANSACOLA, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !0$$$!, Nove;-er !(, #''() <&is&;-in5, %....................................................................................................../ III. Va+e Va+eA--eA--e- Ta'............................................... .............................. ..................................... .............. .............. ........... ....
i. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. SE4ISUI %US3I P3ILIPPINES, INC., responent. G.R. No. !"$(8!, %&12 #!, #''() Pan5ani-an, %............................................................................................................................/ =. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. MAGSA9SA9 LINES, INC., BALI>AG NAVIGATION, INC., FIM LIMITED OF T3E MARDEN GROUP ?34@ AND NATIONAL DEVELOPMENT COMPAN9, responents. G.R. No. !"($/", %&12 #/, #''() Tin5a, %....................................../
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. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. P3ILIPPINE GLOBAL COMMUNICATIONS, INC., responent. G.R. no. !""($(, A&5&st !(, #''() Carpio, %...............................................................................................$ IV. O(1er B+$!ne B+$!ne$$ $$ Ta'e$ ...................................................... .............. ..................... .............. .............. ........... .... 30
1. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. TRUST>ORT39 PA>NS3OP, INC. responent. G.R. No. !"$/", Ma2 #, #''() Sanova1, %...............................................................................................!' ;. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. BAN4 OF P3ILIPPINE ISLANDS, responent. G.R. No. !"880, %&ne #(, #''() Tin5a, %..........................................................................................................................!! V. D%"+*en( D%"+*en(ar4 ar4 S(a*# S (a*# Ta' ........................................................ ......................... ................................ ......... ..33
n. MIC3EL %. L3UILLER PA>NS3OP, INC, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent, G.R. No. !((8/(, Ma2 , #''() Septe;-er !!, #''( ?Reso1&tion@) 9nares6Santia5o, %......................................!! o. BAN4 OF P3ILIPPINES ISLANDS, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent, G.R. No. !8''#, %&12 #8, #''() C:i+o6 Na*ario, %.................................................................... ....................... .............. ....... .........!# ..!# VI. Re*e-!e$ !n Ta'a(!%n T a'a(!%n .................................................. ........................................... .............................................3)
p. COMMISSIONER OF INTERNAL REVENUE,, petitioner vs. AUCENA T. RE9ES, responent G.R. No. !0$($", %an&ar2 #8, #''()............... #''()...................... .............. .........! ..! . AUCENA T. RE9ES, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent G.R. No. !(0/!, %an&ar2 #8, #''(, Pan5ani-an, C.%. ...........................................................................................................................! r. RIAL COMMERCIAL BAN4ING CORPORATION, petitioner vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !(/"$ /, %&ne !(, #''() 9nares6Santia5o, %.....................................................................! s. COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MIRANT PAGBILAO CORPORATION, responent. G.R. No. !0$0$, O+to-er !#, #''() C:i+o6Na*ario, %......................................................................................!" t. BENGUET CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !"!#!#, %&ne ##,#''() Corona %..........................................................................................................................!0 &. FAR EAST BAN4 AND TRUST COMPAN9 AS TRUSTEE OF VARIOUS RETIREMENT FUNDS, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE AND T3E COURT OF APPEALS, responents. G.R. No. !/$!$, Ma2 #, #''() Tin5a, %. ......................................................................................!( v. SAN PABLO MANUFACTURING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !"88" $, %&ne ##, #''() Corona, %. ..................................................................................!( . BARCELON, ROAS SECURITIES, INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, responent. G.R. No. !08'(", A&5&st 8, #''() C:i+o6Na*ario, %. ..............................................................................................!8 . COMMISSIONER OF INTERNAL REVENUE, petitioner vs. P3ILIPPINE GLOBAL COMMUNICATION, INC. responent. G.R. No. !(8!"(, O+to-er !, #''() C:i+o6N*ario, %..................................................................................!8
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2. COMMISSIONER OF INTERNAL REVENUE, petitioner vs. CIT9TRUST BAN4ING CORPORATION, responent, G.R. No. !0'/!#, A&5&st ##, #''() Corona, %............................................................................................................!/
I. GENERAL PRINCIPLES OF TAXATION How are the discounts given to senior citizens treated for income tax purpose? What are the distinctions between a tax credit and a tax deduction? If a tax privilege is given to the taxpayer, can it not opt to claim it as a refund?
a. BICOLANDIA DRUG CORPORATION , petitioner vs. COMMISSIONER OF INTERNAL REVENUE, respondent. G.R. No. 142299, June 22, 2!" A#$una, J. Petitioner claimed the 20% discount granted to senior citizens as a deduction from its gross income thereby giving it a tax relief equivalent to 35% (corporate income tax rate of the deduction! "ater if filed a claim for refund of overpaid income tax due to the error in computation of its tax liability maintaining the position that the discounts should have been treated pursuant to #!$! o! &'32! he )$ ordered the refund but on lesser amount! he )$ made a recomputation of the income tax liability of the petitioner by allo*ing as tax credit the +cost of the discount, only *hich is computed by getting the percentage of cost of sales to total sales and multiplying it *ith total discounts granted! his ruling *as affirmed by the )$! Issues: -hat is the amount allo*ed as tax credit. b )an the discount be claimed by the taxpayer as a tax refund. $! #eading of the provisions of /ection '(a of #!$! o! &'32 is as follo*s1 +/ec! '! Privilege for the /enior )itizens he senior citizens shall be entitled to the follo*ing1 a he grant of t*enty percent (20% discount from all establishments relative to utilization of transportation services hotels and similar lodging establishments restaurants and recreations centers and purchase of medicines any*here in the country1 Provided hat private establishments may claim the cost as tax credit!,
he term +cost, *hen applied to the discounts granted is susceptible to various interpretations! he 4# by virtue of ## o! 26' interpreted it to mean the tax cost *hich is the very reason *hy it *as treated as a deduction from gross income! he economic effect of this treatment is the same as allo*ing 35% (tax cost of the discount as tax credit! he )$ on the other hand interpreted it to be the cost of the goods sold corresponding to the discounts to the extent that they could have increased the sales if no discounts *ere granted! /aid in another *ay *ere it not for the discounts there could have been additional sales in the same amount as the discounts so the cost is the cost of goods sold corresponding to these additional sales *ere it not for the discount! he )$ in determining the amount allo*ed as a tax credit came out *ith this formula viz1 otal )ost of 7oods /old otal /ales
x
otal discounts granted
8 )ost of 9iscount
he /) is not convinced *ith either of the t*o interpretations advances! he /) ruled that the entity granting the discount is entitled to claim the entire amount of discount! he +cost, referred to in
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/ection '(a of #!$! o! &'32 refers to the amount of the 20% discount extended to senior citizens in their purchase of medicines! his amount shall be applied as a tax credit and may be deducted from the tax liability of the entity concerned! 4f there is no current tax due of the establishment reports a net loss for the period the credit may be carried over to the succeeding taxable year! (CIR vs. Central Drug Corp. April 15, 2005, 456 SCRA 414) $nent the second issue the /) ruled that the remedy of refund is not available! he la* expressly provides that the discount given to senior citizens may be claimed as a tax credit and not a refund! hus *here the *ords of a statute are clear plain and free from ambiguity it must be given its literal meaning and applied *ithout attempted interpretation! (Fiana vs. !eople"s #a$ %n&or'eent oar*, +.R. o. 10-6/, ar' 1, 1--5, 24 SCRA 165). $ccordingly the /) directed issuance of tax credit certificates to petitioner instead of the refund prayed for! arellano la* his bring us to the issue of *hether *hat is being as:ed to be refunded is the +discount, or the overpaid income tax! -hich is to be applied first in paying the income tax liability of the petitioner the tax credit or the amount of money tendered. 4t must be born in mind that there *as an overpayment of the tax because of the recomputation that *as made treating this time the discount as tax credit instead of treating of it as deduction from gross income! he amount of the tax credit ho*ever is not sufficient to offset petitioner;s income tax hence a substantial amount *as also paid for the years covered! -ere it not for *rong treatment of the discount there could have been no overpayment made! -ill the overpayment not constitute an erroneously paid tax thereby giving the taxpayer the right to file a claim for refund under /ection 20' and 226 of the 4#). $nother important point in this case is if the discount is not allo*ed to be refunded but it is allo*ed to be refunded but it is allo*ed to be granted as a tax credit certificate as in this case then there seems to be a circumvention of the rule laid do*n in )entral 9rug (2005! his is because a tax credit certificate can not be used for payment of other tax liabilities or at the option of the o*ner can sale the same! -ill his not be equivalent to the grant of cold cash to the taxpayer and therefore the effect is the same as that of a refund! -hat is not allo*ed directly should not be allo*ed indirectly!
%. COMMISSIONER OF INTERNAL REVENUE, petitioner &'. CENTRAL LU(ON DRUG CORPORATION, respondent G.R. No. 14)*12, June 2!, 2!, A#$una, J. =ust li:e the first case herein discussed this case delves on the 20% discount granted to senior citizens! he respondent filed a claim for refund on the unutilized portion for the discount *hich it claimed as a tax credit! he )$ ruled that the tax credit benefit is only to the extent of respondent;s tax liability during the year hence the claim for refund is not allo*ed! he )$ modified that decision and ruled that the unutilized portion can be carried over to the next taxable period if there is no current tax liability! his ruling by the )$ *as affirmed by the /)! 4n bringing the case to the /) the )4# maintains that the discount should only be allo*ed as a deduction from gross income and not a reduction from the tax liability! he la* (#!$! o! &'32 provides that the discount is available as a tax credit! >o*ever the implementing regulations (## o! 26' treat it as a deduction from gross income follo*ing the customary treatment of a sales discount!
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?ust compensation for private property ta:en by the /tate for public use! he privilege en?oyed by the senior citizens does not come directly from the /tate but rather from the private establishments concerned! o deprive the taxpayer of their right to apply the tax credit against future tax liability *ill be to deny them the ?ust compensation for the property ta:en!
$.
COMMISSIONER OF INTERNAL REVENUE, petitioner vs. BICOLANDIA CORPORATION, respondent . G.R. No. 14))+, Ju- +1, 2!" Vea'$o, J. J.
DRUG
he la* (#!$! o! &'32 allo*s the discounts as a tax credit but its implementing regulations (## o! 26' only allo*s the same as deductions from gross income! he /) ruled that in cases of conflict bet*een the la* and the rules and regulations implementing the la* the la* shall al*ays prevail! he distinction bet*een a tax credit and a tax deduction *as emphasized by the court thus @ + $ tax credit is an amount subtracted from an individual;s or entity;s tax liability to arrive at the total tax liability! $ tax credit reduces the taxpayer;s liability compared to a deduction *hich reduces taxable income upon *hich the liability is calculated! $ credit differs from deduction to the extent that the former is subtracted from the tax *hile the latter is subtracted from income before the tax is computed!, ('iting la'3"s #a$ Di'tionar)
4t bears emphasis that #!$! o! &'32 is no* repealed by #!$! 625& *hich *as approved into la* on Aebruary 2B 200'! Cnder this later la* discounts given to senior citizens are treated as deduction from gross income and no longer allowed as tax credit. he tax treatment thereby under the present la* *as made consistent *ith financial accounting treatment thereby ma:ing the tax system more attuned to the principle of administrative feasibility!
Can a ruling which is prejudicial to the taxpayer be given a retroactive application? This question was answered squarely in the following case.
/. COMMISSIONER OF INTERNAL REVENUE, petitioner, &'. BENGUET CORPORATION, respondent, G.R. No. 14***9, Ju- 14, 2!" Ga$0a, J. /ince the inception of the D$ in E6FF sale of gold to )entral an: has been considered by the 4# to be zerorated! (D$ #uling 3&FFF and #G) o! 56HFF!
4s there really an actual and imminent in?ury to the taxpayer if the ruling is given a retroactive application. -hile the )$ said there is none the )$ had ta:en a contrary vie* *hich *as affirmed by the /)!
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he D$ system of taxation allo*s a D$registered taxpayer to recover its input D$ either by (E passing on the E0% output D$ on the gross selling price or gross receipts as the case may be to its buyer or (2 if the input tax is attributable to the purchase of capital gods or to zerorated sales by filing a claim for refund or tax credit *ith the 4#! /imply stated a taxpayer sub?ect to E0% output D$ on its sales of goods and services may recover its input D$ costs by passing on said costs as output D$ to its buyers of goods and services but it cannot claim the same as a refund or tax credit *hile a taxpayer sub?ect to 0% on its sales of goods and services may only recover its input costs by filing a refund or tax credit *ith the 4#! he /) is correct in holding that a retroactive imposition of the D$ on the sale of gold to )entral an: *ill definitely result to substantial economic pre?udice to respondent! Airst the respondent could no longer passon to ) the E0% output D$ *hich *ould be retroactively imposed on said transactions and second it *ill also be prevented from claiming the refund because the sale is no longer zero rated! 4f this happens the entire cost of the input D$ *ill be borne b y respondent enguet *ithout any avenue for recovery!
II. INCOME TAXATION he !inimum Corporate Income ax shall be imposed beginning on the fourth year following the commencement of business operations"
e. TE MANILA BAN3ING CORPORATION, petitioner &'. COMMISSIONER OF INTERNAL REVENUE, respondent , G.R. No. 1!)11), Auu'5 2), 2!" San/o&a6Gu50ee#, J. Ganila ban: *as incorporated in E6BE and since had engaged in the commercial ban:ing business until it *as ordered closed by the /P in E6F& due to insolvency!
o*ever *ith respect to thrift ban:s the date of commencement of business operations is the date the particular thrift ban: *as registered *ith the /I) or the date *hen the )ertificate of $uthority to
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$ thrift ban: is a different taxpayer from that of the commercial ban: hence for purposes of the G)4 the thrift ban: *ill be considered as an entirely ne* entity although it continued to use the same corporate name used by it as a commercial ban:! arellano la*
7.
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. JULIANE BAIER6NIC3EL, respondent . G.R. No. 1*+89+, Auu'5 29, 2!, nae'6San50ao, J.
#espondent is a nonresident 7erman citizen and employed as the President of =ubanitex 4nc! a domestic corporation engaged in manufacturing mar:eting on *holesale only buying or other*ise acquiring holding importing and exporting selling and disposing embroidered textile products! #espondent *as li:e*ise appointed as commission agent by =ubanitex *hereby it *as agreed that she *ill receive E0% sales commission on all sales actually concluded through her efforts! Issue -hether or not the commissions earned by the nonresident alienrespondent are taxable in the Philippines! he /) ruled that a nonresident alien is taxable in the Philippines only on income earned from *ithin! )ommission are compensation for services and they are considered earned from *ithin if the services are rendered *ithin the Philippines (Se'tion 42, IRC)! he important factor therefore *hich determined the source of income of personal services is not the residence of the payor or the place *here the contract for service is entered into or the place of payment but the place where the services were actually rendered. /ince the respondent failed to prove that the mar:eting services *hich gave rise to the commissions are rendered in 7ermany she could not claim exemption from the imposition of the income tax! he /) heavily relied on the fact that respondent presented no evidence to prove that =ubanitex does not sell embroidered products in the Philippines and that her appointment as commission agent is exclusively for 7ermany and other Iuropean mar:ets! asic is the rule that he *ho claims exemption from a tax burden must assume the responsibility of proving the same! he rule availing under our ?urisdiction has al*ays been that taxation is the rule and exemption is only an exception to that rule!
. COMMISSIONER OF INTERNAL REVENUE, petitioner &'. PILIPPINE AIRLINES, INC. respondent . G.R. No. 1!*2), O$5o%e 9, 2!" Panan0%an, J. he case involves the application of the tax provision in P$";s franchise defining its liability for taxes! P!9! E560 the legislative franchise of P$" granted it an option to pay the lo*er of t*o alternatives1 (E the basic corporate income tax based on P$";s annual net taxable income computed in accordance *ith the provisions of the 4#) or (2 a franchise tax of t*o percent of gross revenues! $vailment of either of these t*o alternatives shall exempt the airline from the payment of +all other taxes,!
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gross income to include interest and other passive income! >o*ever since these passive incomes are already sub?ect to different rates and taxed finally at source they are no longer included in the computation of the gross income *hich determines taxable income! he /) concluded as follo*s1 Clearl, ten, te 9asi' 'orporate in'oe ta7 i*enti&ie* in te &ran'ise relates to te general rate o& 5: as stipulate* in Se'tion 2; o& te
:. CARMELINO F. PANSACOLA, petitioner &'. COMMISSIONER OF INTERNAL REVENUE , respondent . G.R. No. 1*9991, No&e;%e 1!, 2!"
III.
VALUEADDED TAX 0.
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. SE3ISUI JUSI PILIPPINES, INC., respondent . G.R. No. 149!81, Ju- 21, 2!" Panan0%an, J.
#espondent is a PIK$ registered enterprise availing of the incentive under I< o! 22B thus entitled to an income tax holiday! 4t registered *ith the 4# as a D$ taxpayer and exported all of its products! /ince it has unutilized input taxes it claimed for a D$ refund! Issue )an a PIK$registered enterprise be covered by the D$ system. usiness enterprise registered *ith the PIK$ may choose bet*een t*o fiscal incentive schemes1 (E t pay a five percent preferential tax rate on its gross income and thus be exempt from all other taxesL or (2 to en?oy an income tax holiday (4> in *hich case it is not exempt from other national revenue taxes including the D$! >aving availed of the second incentive scheme respondent is covered by the D$ system! /ince respondent *as able to prove that all its manufactures products are in fact exported all of its sales are zerorated! $ccordingly it is entitled to claim a s refund all unutilized input taxes!
=.
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. MAGSASA LINES, INC., BALI>AG NAVIGATION, INC., FIM LIMITED OF TE MARDEN GROUP ?3@ AND NATIONAL DEVELOPMENT COMPAN, respondents. G.R. No. 14!9)4, Ju- 2), 2!" T0na, J.
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9) is a D$registered enterprise! 4t sold five of its ship leased to "uzon /tevedoring )ompany to different buyers all in E6FF! Issue 4s the sale of the five vessels sub?ect to D$. he /) ruled in the negative! $ny sale barter or exchange of goods or services not in the course of trade or business is not sub?ect to D$! 4n rendering this decision the )ourt obviously did not give *eight to the ruling issued by the )ommissioner (D$ #uling o! 5BFFF on 9ecember E' E6FF holding that the sale of the vessels *as sub?ect to E0% D$! he ruling cited the fact that 9) *as a D$registered enterprise and thus its +transactions incident to its normal D$registered activity of leasing out personal property including sale of its o*n assets that are movable tangible ob?ects *hich are appropriable or transferable are sub?ect to the E0% D$! $s emphasized by the /) a sale to be taxable must be a sale in the course of trade or business *hich connotes regularity of activity (Iperial vs. Colle'tor, +. R. o. #>;-24, Septe9er 0, 1-55). he )ourt further ruminates +4n the instant case the sale *as an isolated transaction! he sale *hish *as involuntary and made pursuant to the declared policy of 7overnment for privatization could no longer be repeated or carried on *ith regularity! 4t should be emphasized that the normal D$registered activity of 9) is leasing personal property!, )$ granted the refund! )$ reversed on the ground that *hile it is an isolated transaction it qualifies as a deemed sale!
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. PILIPPINE GLOBAL COMMUNICATIONS, INC., respondent . G.R. no. 144!9!, Auu'5 1!, 2!" Ca0o, J.
his case revolves around the issue on the business tax liability of a franchise grantee during the time that the enforcement of the D$ la* is suspended! 4t must be recalled that #!$! o! &&EB (ID$ *as enacted in E663 to ta:e effect fifteen (E5 days after its complete publication in the aving been published earlier in the Galaya and the =ournal on Gay 2F E66'! his la* placed all franchise grantees (except *ater gas and electric utilities *ithin the coverage of the D$! >o*ever the /) issued a #< on =une 30 E66' en?oining the enforcement andJor implementation of the said la* due to consolidated cases filed assailing its constitutionality! (
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did not have the effect of extending the obligation to pay the 3% franchise tax since the exemption from or removal of liability for said 3% franchise tax under the ID$ la* *as not an issue in those cases! Aor failure of the 4# to act on the claim for refund it *as elevated to the )$! he )$ granted the claim and *as affirmed by the )$! Issue -hen the franchise tax is replaced by the D$ but the latter;s enforcement is temporarily en?oined *ill this exempt the franchise grantee from any business tax liability. he /) ruled that the abolition of the 3% franchise tax on telecommunication companies and its replacement by the E0% D$ *as effective and implemented only on =anuary E E66B! his means that the abolition and replacement must ta:e place at the same time! hus respondent;s claim for refund must fail! 4t *as further pointed out by the /) that +o grant a refund of the franchise it paid prior to the effectivity and implementation of the D$ *ould create a vacuum and thereby deprive the government from collecting either the D$ or the franchise tax,! Ixemption from taxes is never presumed! 4t must be based on positive grant by the legislature in language too clear to be mista:en and too categorical to be misinterpreted! o uphold the right of the government to impose the tax is based on the principle “that taxes are the lifeblood of the Government and their prompt and certain availability are an imperious need.” (Coissioner vs. !ine*a, 21 SCRA 105)
IV.
OTER BUSINESS TAXES .
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. TRUST>ORT PA>NSOP, INC. respondent . G.R. No. 149)+4, Ma- 2, 2!" San/o&a, J.
he issue raised for resolution is *hether pa*nshops are included in the term leading investors for purposes of imposing the 5% percentage tax under /ection EEB of the ational 4nternal #evenue )ode of E6&& as amended by Ixecutive
;. COMMISSIONER OF INTERNAL REVENUE, petitioner &'. BAN3 OF PILIPPINE ISLANDS, respondent . G.R. No. 148+8*, June 2!, 2!" T0na, J. $t issue is the question of *hether the 20% final tax on a ban:;s passive income *ithheld from the bac: at source still forms part of the ban:;s gross income for the purpose of computing its gross receipts tax liability! oth the )$ and the )$ ans*ered in the negative but the /) reversed in favor of the petitioner! his same issue has already been ruled upon by the /) in the cases of Cina an3ing Corp., vs. CA, 200= CIR vs. Soli*9an3, 200= an* CIR vs. an3 o& Coer'e, 2005 and the /) finds no cogent reason to disturb *hat has been previously settled! 4 all of these cases the /) applied the o*nership test in determining the composition of gross receipts! he /) ruminates in the )hina an: case as follo*s1 +4n the instant case )) o*ns the interest income *hich is the source of payment of the final *ithholding tax! he 7overnment subsequently becomes the o*ner of the money constituting the final tax *hen )) pays the final *ithholding tax to extinguish its obligation to the government! his is the consideration for the transfer of o*nership of the money from )) to the government! hus the amount constituting the final tax being originally o*ned by )) as part of its interest income should form part of its taxable receipts!,
V. DOCUMENTARY STAMP TAX n. MICEL J. LUILLER PA>NSOP, INC, petitioner &'. COMMISSIONER OF INTERNAL REVENUE, respondent , G.R. No. 1!!8)!, Ma- +, 2!" Se5e;%e 11, 2! ?Re'ou50on@" nae'6San50ao, J. his case stemmed from an assessment for deficiency documentary stamp taxes on pa*n tic:ets issued by petitioners for the year E66&! he )$ ruled for the cancellation of the assessment by holding that a pa*n tic:et is neither a security not a printed evidence of indebtedness and therefore cannot be sub?ect to 9/! #uling on the petition filed by respondent the )$ reversed the )$ decision and sustained the assessment issued by the )ommissioner! he )$ ratiocinated that a pa*n tic:et per se is not sub?ect to 9/L rather it is the transaction involved *hich in this case is pledge that is being taxed ot convinced petitioner filed *ith the /) a petition for revie* on certiorari raising this sole issue1 $re pa*n tic:et sub?ect to 9/. he /) affirmed the decision of the )$ and made the follo*ing ?ustification viz1
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+rue the la* does not consider said tic:et as an evidence of security of indebtedness! >o*ever for purposes of taxation the same pa*n tic:et is proof of an exercise of a taxable privilege of concluding a contract of pledge! $t any rate it is nor said tic:et that creates the pa*nshops obligation to pay 9/ but the exercise of the privilege to enter into a contract of pledge! here is therefore no basis for petitioner;s assertion that a 9/ is literally a tax on a document and that no tax may be imposed on a pa*n tic:et!,
he /) in no certain terms said that contracts of pledge entered into by pa*nshops a re sub?ect to 9/! he 9/ is essentially an excise taxL it is not an imposition on the document itself but on the privilege to enter into a taxable transaction of pledge! his is clear under /ection E65 of the ational 4nternal #evenue )ode! 4 a motion for reconsideration that *as filed the /) issued a #esolution on /eptember EE 200B ordering the deletion of the surcharges and interest on the assessment! 4t too: cognizance of the existence of earlier rulings issued by the )ommissioner that pa*nshop tic:ets are not sub?ect to tax on the basis of previous interpretation of government agencies tas:ed to implement the tax la* are sufficient ?ustification to delete the imposition of surcharges and interest!, ('iting Connell ros. Co. (!il.) vs. Colle'tor, 11- !il. 40, 1-6=
o. BAN3 OF PILIPPINES ISLANDS, petitioner &'. COMMISSIONER OF INTERNAL REVENUE, responden5, G.R. No. 1+82, Ju- 28, 2!" C:0$o6Na#a0o, J. his case arose from the assessment of 9/ made by the former an:s Ainancing and 4nsurance 9ivision of the 4# on the sale of foreign exchange to the /P under a /-$P arrangement! he transaction starts *ith the offer of C!/! dollars (/pot sale by P4 at a the prevailing exchange rate to the /P sub?ect to the redemption at maturity at an agreed exchange rate (for*ard! Cpon acceptance of the offer P4 *ill cable its correspondent ban: abroad to remit the amount of C!/! dollars to the Aederal #eserve an: for credit to the account of the /P! $s soon as /P receives the credit advice from the Aederal #eserve an: it credits the account of P4 corresponding to the peso equivalent of the foreign exchange sold! Issue -ill the transaction give rise to the imposition of the 9/. he /) ruled that the sale of foreign currency per se is not sub?ect to 9/! >o*ever the facility used in the transaction of the business is the one that is sub?ect to documentary stamp tax! he /) observed that /ection E65 (no* /ection EF2 of the 4#) covers foreign bills of exchange letters of credit and orders for the payment of money dra*n in the Philippines but payable in a foreign country! Arom this enumeration t*o common elements need to be present1 (E dra*ing the instrument or ordering a dra*ee *ithin the PhilippinesL and (2 ordering the dra*ee to pay another person a specified amount of money outside the Philippines! )learly *hat is being taxed is the facility that allo*s a party to dra* the draft or ma:e the order to pay *ithin the Philippines and have the payment made in another country! 4t bears emphasis to mention at this point that *hile /ection E65 (no* /ection EF2 includes *ithin its coverage +orders for payment of money by telegraph or other*ise dra*n in but payable out of the Philippines, the documentary stamp tax regulations (## o! 2B is more explicit *hen it said1 +/ection 5E1 -hat may be regarded as telegraphic transfer! 4f a local ban: cables to a certain ban: in a foreign country *ith *hich ban: said local ban: has a credit and directs that foreign ban: to pay to another ban: or person in the same locality a certain sum of money the document for and in respect such transaction *ill be regarded as a telegraphic transfer taxable under the provisions of /ection E''6(i of the $dministrative )ode!,
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his ma:es the sale of foreign exchange under a s*ap arrangement a transaction sub?ect to the 9/ because of the facility used in its consummation! here is a cable instruction from the local ban: in the Philippines *here payment of foreign currency has to ta:e place abroad! his is a taxable telegraphic transfer *ithin the contemplation of la*!
VI.
REMEDIES IN TAXATION . COMMISSIONER OF INTERNAL REVENUE,, petitioner &'. A(UCENA T. REES, respondent G.R. No. 1*9!94, Janua- 28, 2!" . A(UCENA T. REES, petitioner &'. COMMISSIONER OF INTERNAL REVENUE , respondent G.R. No. 1!+*)1, Janua- 28, 2!, Panan0%an, C.J.
his case *as borne out of these facts! Garia )! ancinco died on =uly F E663! $ deficiency estate tax assessment *as issued against her estate on $pril 22 E66F! he assessment notice follo*ed the old procedure laid do*n ## o! E2F5 because at the time that the assessment *as issued no implementing rules *ere as yet issued on the ne* procedure for issuing an assessment under /ection 22F of the 4#) as amended by #!$! o! F'2'! he procedure simply requires that the taxpayer must be notified of the findings of the )ommissioner! >o*ever the old provision of the 4#) (/ection 226 *as amended and renumbered as /ection 22F *hich in explicit language provided <e ta7paer oter$ise sall 9e in&ore* in $riting o& te la$ an* &a'ts on $i' te assessent is a*e oter$ise, te assessent sall 9e voi*.8 his change *as introduced by #!$! o! F'2' *hich too: effect on =anuary E E66F! Issues -hat is the status of an assessment issued in E66F if it failed to inform the taxpayer of the la* and the facts on *hich the assessment is made. )an this assessment be the basis of a compromise. he /) ruled that the assessment is void ab initio! Cnder the present provisions of the ax )ode and pursuant to elementary due process taxpayers must be informed in *riting of the la* and the facts upon *hich a tax assessment is basedL other*ise the assessment is void! eing invalid the assessment cannot in turn be used as a basis for the perfection of a tax compromise! he )ommissioner ta:es the position that since the assessment *as issued at a time that the #egulations in force is ## o! E2F5 the o ld rule in ma:ing an assessment should therefore be follo*ed! he provision of /ection 22F *hich too: effect on =anuary E E66F is self executing! -hile it is true that the implementing rules (## o! E266 came out only on /eptember B E666 this is merely an administrative rule interpretative of the statute! he rule prevailing under our ?urisdiction is that +an administrative rule interpretative of a statute and not declarative of certain rights and corresponding obligations is given retroactive effect as of the date of the effectivity of the statute!, (A*ason ano %*u'ation Institution, In'. vs. A*ason Bniversit Fa'ult an* %ploees Asso'iation, ove9er -, 1-/-, 1;- SCRA 2;-).
.
RI(AL COMMERCIAL BAN3ING CORPORATION, petitioner &'. COMMISSIONER OF INTERNAL REVENUE, respondent . G.R. No. 1!)49), June 1!, 2!" nae'6San50ao, J.
his case delves on the procedures of disputing an assessment provided for under /ection 22F of the ational 4nternal #evenue )ode! 4t appears that on =uly 5 200E #)) received a final assessment notice from the 4#! 4t filed a protest on =uly 20 200E and for failure of the )ommissioner to render a decision thereon #)) filed its petition for revie* *ith the )$ on $pril 30 2002! he )$ dismissed the petition for having been filed out of time!
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Issue -as the dismissal of the petition for revie* proper due to its having been filed out of time $pplying the clear provisions of /ection 22F the protest must be filed *ith thirty (30 days from receipt of the assessment *hich *as properly complied *ith by petitioner on =uly 20 200E! Arom this date the petitioner has until /eptember EF 200E the )ommissioner had until Garch E& 2002 (EF0 days to issue his decision! /ince the )ommissioner did not render a decision the taxpayer has to file a petition for revie* *ithin 30 days from Garch E& 2002 or until $pril EB 2002 *ithin *hich to elevate the case to the )$! hus *hen the petitioner filed its petition for revie* on $pril 30 2002 the same is clearly filed out of time! he /) held that the failure of the petitioner to appeal from an assessment on time rendered the assessment final executory and demandable! )onsequently petitioner is precluded from disputing the correctness of the assessment! his decision must be aligned *ith the "ascona case (a )$ case *herein it *as ruled that the treatment of the )4#;s inaction as an adverse decision is merely optional to the taxpayer! his means that if the )4# *ould later on rule on the protest despite the length of time it *as pending in the administrative level the aggrieved taxpayer can still appeal the adverse decision of the )4#! -hat is the )4# *ill not decide the protest but *ill ?ust enforce the collection of the assessed tax. $fter all the /) said that the assessment becomes final executory and demandable if no appeal is filed after the lapse of the EF0day period prescribed under /ection 22F of the ax )ode! 4 that situation the "ascona decision *ill be put into test although it is believed that it *as already rendered moot and academic in vie* of the !rovisions o& R.A. o. -2/2 *e&ining te enlarge* uris*i'tion o& te C
'. COMMISSIONER OF INTERNAL REVENUE, petitioner , &'. MIRANT PAGBILAO CORPORATION, respon*ent . G.R. No. 1*9*9+, O$5o%e 12, 2!" hico!"azario, #. he facts of this case are straight for*ard! #espondent is a registered D$ taxpayer *ith a certificate of registration issued on =anuary 2B E66B! Aor the period $pril E E66B to 9ecember 3E E66B respondent religiously filed its quarterly D$ returns reflecting thereon the amount of accumulated input taxes! hese input taxes *ere paid to D$ suppliers of capital goods and services for the construction and development of the po*er generating plant in Pagbilao Muezon! $ claim for refund for these input taxes *as filed *ith the 4#! -ithout *aiting for its resolution in the administrative level it filed a petition for revie* *ith the )$ on =uly E0 E66F in order to toll the running of the toeyear prescriptive period for claiming a refund under the la*! 4n ans*er to this petition the )ommissioner advanced as special and affirmative defenses that1 GP);s claim for refund is still pending investigation and consideration before his office accordingly the filing of the petition is prematureL *ellsettled is the doctrine that provisions for refund and credit are construed strictly against the taxpayer as they are in the nature of tax exemptionL the claimant has the burden to sho* that the taxes are erroneously paid and that the claim is filed *ithin the prescriptive period! he )$ ruled in favor of GP) and declared that GP) had over*helmingly proved through the D$ invoices and official receipts it had presented that its purchases of goods and services *ere necessary in the construction of po*er plant facilities *hich is used in its business of po*er generation and sale!
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On an aea 5o 5:e CA, 5:e Co;;0''0one a0'e/ ne au;en5' :0$: ee ne&e a0'e/ 0n 5:e CTA GP) is an electric utility sub?ect to the franchise tax and since it is exempt from D$ it is not entitled to the refund! he )$ finding no merit in the )ommissioner;s petition affirmed the )$ decision! Issue )an the )ommissioner change his theory of the case on appeal by raising for the first time on appeal questions of both fact and la* not ta:en up in the tax court. he /) ruled against the petitioner! he /) emphasized that +he settled rule is that defenses not pleaded in the ans*er may not be raised for the first time on appeal! $ party cannot change fundamentally the nature of the issue in the case! -hen a party deliberately adopts a certain theory and the case is decided upon that theory in the court belo* he *ill not be permitted to change the same on appeal because to permit him to do so *ould be unfair to the adverse party,! (Carantes v. Court o& Appeals, +.R. o. #>60, April 25, 1-;;, ;6 SCRA 514). arellano la*
5.
BENGUET CORPORATION, petitioner , &'. COMMISSIONER OF INTERNAL REVENUE, respondent . G.R. No. 141212, June 22,2!" Coona J. Petitioner appointed "!)! 9iaz and )o! an accounting firm as its confidential payroll agent and tas:ed it *ith the remittance of *ithholding taxes on compensation *ith the 4#! Aor certain months in E6FF to E66E there *ere unremitted *ithholding taxes of petitioner;s executives amounting to PBEFFB&2!50! he )ommissioner;s issued a letter demanding the payment thereof and in said letter it *as stated that all the payment orders and confirmation receipts reflected in petitioner;s annual return submitted to respondent;s $ccounting 9ivision *ere found to be fa:e that is not issued by the ureau of 4nternal #evenue! he chec:s issued by the petitioner for the payment of the *ithholding taxes on compensation *ere not issued by the petitioner for the payment of the *ithholding taxes on compensation *ere not used as such but *ere found out to have been used in the purchase of loose documentary stamps of different clients of "!)! 9iaz and )o! his fact is evident from the dorsal side of the sub?ect chec:s *hich bears the hand*ritten notes that they *ere used to pay documentary stamps *hich findings is corroborated by the report of the #evenue )ollection $gent *ho received these chec:s! his case centers on one main issue1 -hat should be considered as the best evidence of payment of *ithholding taxes the Pos and )#s *hich indicated that payment *as made as insisted by petitioner or the dorsal notes on the chec:s and reports of the 4# team that no such payments *ere made. he ruling issued by the )$ as affirmed by the )$ is that +-hen chec:s are used for payments in settling obligations the best evidence are the chec:s themselves! )onsidering that the Pos and )#s of petitioner although seemingly genuine do not appear in respondent;s records the best evidence in proving the petitioner;s alleged payments are the G) chec:s! $ careful scrutiny of these chec:s ho*ever revealed that they *ere not used to pay *ithholding taxes! he chec:s themselves confirm respondent;s /pecial Pro?ect;s eam;s findings that they *ere used to purchase documentary stamps from the 4#! Aor on the dorsal sides of the sub?ect chec:s are hand*ritten notes that they *ere used to pay documentary stamps! $s to ho* many pieces of documentary stamps *ere purchased for each denominations of P5!00 or P3!00 and even their respective serial numbers *ere also indicated at the bac: of each chec:s! he /) ruled that the issue involves a question of fact *hich cannot be ta:en cognizance by it from the high tribunal is not a truer of facts! $ccordingly the findings of fact by the )$ are generally regarded as final binding and conclusive on the /) especially if these are substantially similar to the findings of the )$ *hich is normally the final arbiter of questions of fact! $s a final note the /) ruminates Petitioner as a *ithholding agent is burdened by la* *ith public duty to collect the tax for the government! >o*ever its payroll agent "!)! 9iaz and )o! failed to remit to the 4# the *ithholding taxes on compensation! >ence no valid payment of the *ithholding taxes
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*as actually made by petitioner! )odal provisions on *ithholding tax are mandatory and must be complied *ith by the *ithholding agent! 4t follo*s that petitioner is liable to pay the unremitted *ithholding taxes!
u. FAR EAST BAN3 AND TRUST COMPAN AS TRUSTEE OF VARIOUS RETIREMENT FUNDS, petitioner , &'. COMMISSIONER OF INTERNAL REVENUE AND TE COURT OF APPEALS, respondents. G.R. No. 1+)919, Ma- 2, 2!" $inga, #. his case hinges on a claim for refund of erroneously paid taxes due to the *ithholding of the final tax on interest income earned in E663 by different employees trust managed by Aar Iast an:! he four claims for refund involving four quarters of E663 *ere all filed *ith the 4# *ithin t*o years from the date of remittance of the tax! he )ommissioner denied the claims due to the failure of the trusteeban: to sufficiently substantiate the same! he petitioner did not appeal the denial to the )$! >o*ever on $pril 2FE665 the petitioner filed a Gotion to $dmit /upplemental Petition in )$ case o! 'F'F (involving claim for refund for an earlier year see:ing to include in that case the tax refund claimed for the year E663! he )$ denied the admission of the supplemental petition and advised the petitioner to instead file a separate petition for revie* to *hich it complied but only
&. SAN PABLO MANUFACTURING CORPORATION, petitioner , v s. COMMISSIONER OF INTERNAL REVENUE, e'on/en5. G.R. No. 148849, June 22, 2!" Coona, J. his case pertains to the exemption from miller;s tax *hich *as granted under /ection EBF of the E6F& ax )ode! he la* specifically exempts the eo5a50on of rope coconut oil palm oil copra by products and desiccated coconuts *hether in their original state or as an ingredients or part of any manufactured article or products by the proprietor of the factory or by the miller himself! Petitioner sold crude coconut oil to Cnited )oconut )hemicals 4nc! *hich *ere utilized by the buyer as ra* materials in the production of products for export!
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Issue 4s the local sale of crude coconut o il by the miller covered by the exemption. he /) ruled in the negative! he rule is that the exemption must not be so enlarged by construction since the reasonable presumption is that the state has granted in express terms all it intended to grant and that unless the privilege is limited to the very terms of the statute the favor *ould be extended beyond *hat *as meant! -e have to adhere to the rule of e7pressio unius est e7'lusio alterius *hich is a canon of restrictive interpretation! 4ts application in this case is consistent *ith the construction of tax exemptions in stri'tissii uris against the taxpayer! o allo* /PG);s claim for tax exemption *ill violate these established principles and unduly derogate sovereign authority! 4t must be noted that *hat is exempted by la* are export sales made by the proprietor of the factory or by the miller himself! "ocal sales to another person even if the buyer *ill eventually export the same are undoubtedly beyond the scope of the exemption!
. BARCELON, ROAS SECURITIES, INC., petitioner , &'. COMMISSIONER OF INTERNAL REVENUE, respondent . G.R. No. 1*8!4, Auu'5 8, 2!" hico!"azario, #. he core issue raised for resolution in this case is *hether or not respondent;s right to assess petitioner;s alleged deficiency income tax is barred by prescription! #ecords sho* that petitioner filed its $nnual 4ncome ax #eturn for taxable year E6F& on $pril E' E6FF! he last day for filing by petitioner of its return *as on $pril E5 E6FF thus giving respondent until $pril E5 E66E *ithin *hich to send an assessment notice! -hile respondent avers that it sent the assessment notice dated Aebruary E E66E on Aebruary B E66E *ithin the three (3 year period prescribed by la* petitioner denies having received an assessment notice from respondent! Petitioner alleges that it came to :no* of the deficiency tax assessment only on Garch E& E662 *hen it *as served *ith the -arrant of 9istraint and "evy! he /) ruled for the taxpayer! he high tribunal relied heavily on the failure on the part of respondent to prove by independent evidence such as the registry receipt of the assessment notice to the taxpayer! -hat *as merely presented is the 4# record boo: *here the name of the taxpayer the :ind of tax assessed the registry receipt number and the mailing *ere noted to *hich the custodian testified that she made the entries therein! ut these are all selfserving! 4n the case of ava v. Coissioner, E2E Phil! EE& the /) stressed on the importance of proving the release mailing or sending of the notice and it said +-hile *e have held that an assessment is made *hen sent *ithin the prescribed period even if received by the taxpayer after its expiration ('iting Colle'tor vs. autista, #>12250 and #> 1225-, a 2;, 1-5-), this ruling ma:es it the more imperative that the release mailing or sending of the notice be clearly and satisfactorily proved! Gere notations made *ithout taxpayer;s intervention notice or control *ithout adequate supporting evidence cannot sufficeL other*ise the taxpayer *ould be at the mercy of the revenue officer *ithout adequate protection or defense! 4t is clear that the evidence presented by respondent is insufficient to give rise to the presumption that the assessment *as received in the regular course of mail! )onsequently the right of the government to assess and collect the alleged deficiency tax is barred by prescription! .
COMMISSIONER OF INTERNAL REVENUE, petitioner &'. PILIPPINE GLOBAL COMMUNICATION, INC. respondent . G.R. No. 1!814!, O$5o%e +1, 2!" hico!"zario, #.
his involves a case of prescription so that the narration of specific dates on every action ta:en is indispensable for a proper understanding thereof! he relevant dates are as follo*s1 E!
$pril E5 E66E respondent filed its 4# for income earned in E660!
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2! 3! '! 5!
B!
8.
$pril 22 E66' Aormal $ssessment otice *as made assessing the taxpayer for deficiency income tax in the total amount of PEEF 2&E B&2!00! Gay B E66' filed a formal protest letter against the assessment! Gay 23 E66' other protest *as filed! he previous and present protest as:ed for the cancellation of the assessment for being invalid for lac: of factual and legal basis!
Issue -ill the filing of the timely protest by the taxpayer toll the running of the prescriptive period to collect the assessed deficiency income tax. he /) ruled in the negative! he running of the prescriptive period by express provision of /ection 22' (no* 223 can be suspended Een te ta7paer re?uests &or a reinvestigation $i' is grante* 9 te Coissioner8. ## o! E2F5 defined *hat is a request for reinvestigation on one hand and a request for reconsideration on the other! he main difference bet*een these t*o types of protests lies in the records or evidence to be examined by internal revenue officers *hether these are existing records or ne*ly discovered or additional evidence! $ reevaluation of existing records *hich results from a request for reconsideration does not toll the running of the prescription period for the collection of an assessed tax! -hile it is true that the provisions of /ection 223 of the 4#) is clear the ruling of the /) in the case of Eet Sua'o (+.R. o. ;62/1, Septe9er 0, 1--1, 202 SCRA 125) set a different tone *hen the )ourt ruled that te pres'riptive perio* provi*e* 9 la$ to a3e a 'olle'tion is interrupte* on'e a ta7paer re?uests &or reinvestigation or re'onsi*eration o& te assessent.8 4n the case of P4 vs! )4# 7!#! o! E36&3B
-. COMMISSIONER OF INTERNAL REVENUE, petitioner &'. CITTRUST BAN3ING CORPORATION, respondent, G.R. No. 1*)12, Auu'5 22, 2!" Coona, J. his case involves a claim for refund for E6F' and E6F5! )$ ordered the )ommissioner to grant the refund! he )4# filed a motion for reconsideration on the ground that the payment and remittance of the tax are not sufficiently proven and that )itytrust has an outstanding deficiency income and business tax liabilities for E6F'! he )$ denied the motion *hich *as affirmed by the )$! aving fully settled its tax liabilities for E6F' respondent prays that it be granted a refund! he )4# interposed his ob?ection ho*ever alleging that )itytrust still had unpaid deficiency income business and *ithholding taxes for the year E6F5! 9ue to these deficiency assessments the )4# insisted that )itytrust *as not entitled to any refund!
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he )$ set aside the )4#;s ob?ections and granted the refund!
he )$ has no ?urisdiction to try as assessment case *hich *as never appealed to
he /upreme )ourt *as convinced *ith the ratiocination made by the )$ and decided to affirm the grant of the refund! he /) once again said +ecause of the )$;s recognized expertise in taxation its findings are not ordinarily sub?ect to revie* specially *here there is no sho*ing of grave error or abuse on its part!, 4t is thus clear that only an assessment and a claim for refund involving the same taxable period and under common ?urisdiction are required to be settled in one proceeding consonant *ith the earlier )ity rust case! here are compelling reasons *hy the concept of @settlement under one proceeding; may not be follo*ed as *hen it is expected to create utter confusion among taxpayers! 4t is of common :no*ledge that the la*s governing claims for refund are separate and distinct from those applicable to assessment of appeals! Aor example the period of time to appeal a refund case is *ithin t*o (2 years from the date of the payment *hile the filing of an assessment appeal requires the observance of thirty (30 days from the date of receipt of the denial of protest! o illustrate let us ta:e a taxpayer *ho has an erroneously paid capital gains tax in $ugust E662! /ometime in $ugust E66' an assessment *as issued against him for deficiency income tax for the same taxable year! /upposing he immediately protested the assessment but the 4# did not immediately act on his protest *ill he still *ait for the 4#;s decision before he can go to the )$ to file his claim for refund. -hat about if the t*o year period appeal his refund is nearing expiration *ill he still *ait indefinitely for the decision on his protest so he can file both suits simultaneously *ith the )ourt. ence the assessment became final and executory and so the 4# filed a collection case in the regular trial court! 9uring the pendency of the collect ion suit taxpayer discovered that he made an erroneous payment of a different :ind of tax! o avoid multiplicity of suits *ill the 4# allo* the taxpayer to ventilate his claim for refund in the same collection case.
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consideration of tax problems and has necessarily developed an expertise on the sub?ect unless there has been an abuse or improvident exercise of authority!,
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