Recent Jurisprudence in Taxation Law

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 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, 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. CO. LTD., LTD., G.R. No. 197192, 197192, June 4, 4, 2014, J. Rey Reyes es 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 city’s 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 Page | 1

PALS BAR OPS PILIPINAS 2016

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 State’s 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 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 that tax exemptions exemptions must be clear clear and unequivocal. 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)Petitioner’s 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)Petitioner’s income from gaming operations is subject to the five percent (5%) franchise tax only; and 3)Petitioner’s 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 separately executed by the parties for the conveyance conveyance of the real properties. The conveyance 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 p ay DST. DST. Notably, 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 c onsolidation, from the payment of DST. COMMISSIONER OF INTERNAL REVENUE vs. PILIPINAS SHELL PETROLEUM

CORPORATION, G.R. No. 192398, September 29, 2014, J. Villarama, Jr. Page | 3


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 petitioner’s 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. expropriated. But while DPWH rejects rejects any liability for the same, this Court must take note of petitioner’s Citizen’s 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 Citizen’s 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 Page | 4


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, ordinary, and comprehensive comprehensive sense. However, importation importation of stemmed leaf tobacco is not included in the exemption exemption under Section 137. 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 one manufacturer to another. another. Finally, excise taxes are 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 Commissioner of Internal Revenue petroleum products. Chevron Philippines, Inc. vs. Commissioner

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 o n the interest or discount from the PEACe Bonds. Further, 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 P EACe 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 o r tax credit for unutilized creditable input VAT. Section 229 pertains to the recovery of of taxes erroneously, illegally, illegally, or excessively collected. San Roque stressed that “input VAT 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 VISAYAS GEOTHERMAL POWER COMPANY vs. unutilized creditable input VAT.

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, 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 Page | 6


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 doctrine on the exhaustion of of administrative remedies. 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 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 Mindanao’s 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 seller’s best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer’s 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 Page | 7


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 when supported by substantial 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 City’s 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 NAPOCOR’s 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 specifically prohibited from doing 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 taxing power of local government units. It is consistent consistent with the guiding 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) Page | 8


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 law’s 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 Herbert Bautista, unduly oppressive upon individuals. (Jose J. Ferrer, Jr. vs. City Mayor Herbert

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 resident of a lot similar in size There 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 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 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 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 In her capacity as City Treasurer of Batangas City, 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 PEZA’s predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for its development, development, improvement, and maintenance. maintenance. Consistent with Page | 9


this non-profit character, the EPZA was explicitly declared exempt from real property taxes under its charter. Even the PEZA’s lands and buildings whose beneficial use have been granted to other persons may not be taxed with 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 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 MERALCO delivers electricity 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 liabilities of PSPC under under the original assessments were considered unpaid, hence BOC’s demand letters letters and the action for for collection in the RTC. To repeat, these assessed customs duties and taxes were previously assessed and paid by the taxpayer, only that the TCCs turned out to be spurious and hence worthless certificates that did not extinguish PSPC’s tax liabilities. (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 latter’s 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 UCA’s supervening execution. Be that as it may, and considering that: (a) the UCA appears a ppears to have been executed in accordance with the requirements of a valid compromise agreement; (b) the UCA was executed more than a Page | 11


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 taxpayer’s 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 was paid within the period 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 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 Page | 12


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. 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 petitioner’s 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 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 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 indicating in the waiver the date of acceptance by Page | 13


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. extend. Hence, no implied consent consent can be presumed, nor can it be 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 petitioner’s lapses were allowed to pass and consequently uphold uphold the Waivers Waivers in order order to support 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 respondent’s new address despite respondent’s 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 COMMISSIONER’S 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 TSC’s 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 established by a copy of a statement duly issued 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] [PHILIPPINES] OPERATIONS CORPORATION [formerly MIRANT 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 a gainst 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 petitioner’s tax liabilities in the future. Accordingly, while we find merit in petitioner’s 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 BOTTLER’S

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 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 received is being declared part of the taxpayer’s gross income; and 3) When the fact of withholding is established by a copy of the withholding tax statement, duly issued by the payor to the payee, showing the amount paid and income tax withheld from that amount.

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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 & IÑIGO 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 taxpayer’s 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 Page | 17


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, 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 Free’s 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 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 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) Page | 18


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, 7233, TPC filed its judicial judicial claim on 22 April 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 without waiting for the expiration expiration of the aforesaid aforesaid period. However, BIR Ruling No. DA-489-03 DA-489-03 allows this premature filing. filing. TPC may claim the 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, 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 petitioner’s 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 Page | 19


prescriptive period in claiming refund or credit of input VAT. Since July 23, 2008 falls within the window of effectivity of Atlas, CBK’s 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 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 application for tax credit/refund credit/refund with the BIR on March 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 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 Page | 20


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 Commissioner’s 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 BIR’s 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 Gotesco’s 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 Gotesco’s firm stance that PNB’s 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

Page | 21


MANUFACTURING, MANUFACTURING, INC.) vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 173241, 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 ca se 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 petitioner’s judicial claim was prematurely filed without waiting for the expiration of the 120-day mandatory period, the CTA may still take cognizance of the instant case as it was filed within the period exempted from the 120-30-day mandatory period. TEAM ENERGY CORPORATION (formerly MIRANT PAGBILAO CORP.) vs.

COMMISSIONER OF INTERNAL REVENUE, G.R. No. 190928 PERALTA

January

13,

2014,

J.

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 Il’s 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. Page | 22


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 TPI’s 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 TPI’s judicial claims for refund of its unutilized input VAT covering the third and fourth quarters of 2001 were prematurely filed on October 24, 2003 and January 22, 2004, respectively. However, although TPI’s 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, TPI’s 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 Court’s 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 Commissioner’s decision denying the administrative claim or from the expiration of the 120–day 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 affected by the CIR’s decision or inaction may appeal to the CTA within 30 days from the receipt of the decision or from the expiration of the 120-day period. 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 Page | 23


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 filed the Petition within within 30 days after the expiration of the 120-day period. San Roque recognized recognized BIR Ruling No. DA-489-03 which 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 Luzon’s 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 Luzon’s 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 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 Page | 24


Company vs. Commissioner 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 ADMINISTRATIV E 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 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 Collector’s 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 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 CIR’s 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 petitioner’s 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 BoC’s 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. 1 999. 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 proper category of tax that that should have been paid is not 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 Page | 26


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 inteligencia—what 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 donor’s 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, a ppeal, 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 court’s 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 interlocutory order, of the Regional Trial Court, the PEZA’s 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 Page | 27


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 petitione r’s 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 120120day 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 petitioner’s 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 Page | 28


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, Limited, G.R. Nos. 203054-55. July 29, 2015) CE Luzon claims that the CIR filed a “second” motion for reconsideration of the CTA Division’s 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 CIR’s 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 Luzon’s 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 Luzon’s 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 Page | 29


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.) (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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