LANZ AIDAN L OLIVES TAXATION 2 TAX REMEDIES DIGEST COMPILATION 1) Commissioner Of Interna Re!en"e !s# Las$ona Lan% Co#& In$# CA'G#R# SP No# (*+1# O$to,er 2(& 2**( -a$ts. This is a petition for review that seeks to annul the CTA decision withdrawing the deficiency in income tax liability of Lascona Land Co.
Someti Sometime me in March March !!" !!"## the Commi Commiss ssion ioner er of $ntern $nternal al %eve %evenu nue e &here &herein in petitioner' issued Assessment (otice (o. )))))*+,!-,*)+ against Lascona Land Co.# $nc. &herein respondent' informing the latter of its alleged deficiency income tax for the year year !!!!- in the the amount amount of +/+/-#01 #011./ 1./1.1.- As a conse conse2u 2uenc ence# e# respondent filed a letter protest on April 0)# !!" which was denied by the 3$C# %egional 4irector# 5ureau of $nternal %evenue &5$%'# %evenue %egion (o. "# Makati City. The case was filed in the Court of Tax Appeals &CTA'. After due proceedings# the CTA rendered the assailed 4ecision dated 6anuary *# 0))) nullifying the sub7ect assessme assessment. nt. $n seeking seeking reconsid reconsidera eration tion thereof# thereof# petition petitioner er further further 7ustifie 7ustified d its action declaring the said assessment final# executory and demandable. The CTA based its decision on Section 3 (3.1.5) of Revenue Regulations No. 1299: 8$f the Commissioner or his duly authori9ed representative fails to act on the taxpayer:s protest within one hundred eighty &")' days from date of submission# by the taxpayer# of the re2uired documents in support of his protest# the taxpayer may appeal to the Court of Tax Appeals within thirty &-)' days from the lapse of the the said said "), "),da day y peri period od## othe otherw rwis ise# e# the the asse assess ssme ment nt shal shalll beco become me fina final# l# executory and demandable. ;ence this petition. Iss"e< =hether or not the contention of the C$% is correct. /e%. 0ES# $n the case at bar# it is undisputed that respondent filed its protest on April 0)# !!" and must have have submitted its supporting supporting documents documents within 1) days therefrom or until 6une !# !!". Thereafter# the petitioner has ") days or until 4ecember 1# !!" within which to act on the sub7ect protest. $n turn# respondent has another -) days reckoned from its actual receipt of the latter:s decision# if any# or the lapse of the "),day period counted from 4ecember +# !!" or until 6anuary 6anuary 1# !!!# !!!# whichev whichever er comes comes first# first# to elevate elevate its appeal appeal to the CTA. CTA. ;owever# records show that respondent appealed to the said court only on April 0# !!!# after almost three &-' months from the lapse of the "),day period. As such# its appeal was clearly filed out of time rendering the disputed assessment final and demandable.
The prescribed period has lapsed. C$% won.
2) Las$ona Lan% Co#& In$#&etitioner& !s# Commissioner of Interna Re!en"e& reson%ent# G#R# No# 112(1# Mar$3 (& 2*12 -a$ts. This is a petition for review on certiorari under %ule */ to reverse the decision of the CA in the previous case discussed.
3n March 0+# !!"# the Commissioner of $nternal %evenue &herein petitioner' issued Assessment (otice (o. )))))*+,!-,*)+ against Lascona Land Co.# $nc. &herein respondent' informing the latter of its alleged deficiency income tax for the year !!- in the amount of +/-#011./1.- As a conse2uence# respondent filed a letter protest on April 0)# !!" which was denied by the 3$C# %egional 4irector# 5ureau of $nternal %evenue &5$%'# %evenue %egion (o. "# Makati City. The CA ruled in favor of the C$%. ;ence# this petition by Lascona Land. Iss"e. =hether or not the contention of the C$% is correct. /e%< NO# The SC ruled that the revenue regulation to which the C$% anchored its contenti contention on is invalid. invalid. Section Section 00" of the (ational (ational $nterna $nternall %evenu %evenue e Code Code provides that a taxpayer has two remedies if the C$% failed to act on his protest within the "),day period# to wit> ' the taxpayer taxpayer adversely affected by the decision decision may appeal to the CTA within -) days from receipt of the decision# or 0' may appeal to the CTA within -) days from the lapse of the one hundred eighty &")',day period.
?rom the above provision# the taxpayer was given two options in case C$% failed to act on their claim. ?irst is to appeal to the CTA within -) days from the lapse of the ") day period> or second# wait for the C$% to issue the decision and then appeal# if adverse# to the CTA within -) days from the receipt of the decision by the taxpayer $n the case at bar# Lascona waited for the C$% to decide on the case and it did not appe appeal al withi within n -) days days from from the lapse lapse of the the "),d "),day ay perio period. d. Lasc Lascona ona received the adverse decision of the C$% on March 0# !!!. $t appealed on April 0# !!! which is still within the -),day period to appeal to the CTA. The revenue regulation in 2uestion is invalid because in effect# it limited the remedy provided for by the law. Section 00" of the ($%C prevails over the said revenue regulation. The said revenue regulation cannot validly take away the option of the taxpayer to continue waiting# even after the lapse of the ") day period# for the C$% to decide on the case and 7ust appeal# within -) days from
receipt# if the C$%:s ruling is adverse.$t must however be noted that these two remedies are mutually exclusive 4) O$eani$ 5ireess Net6or7& In$#& etitioner& !s# Commissioner of Interna Re! Re!en" en"e& T3e T3e Co" Co"rt of Ta8 Aea eas& an% an% T3e T3e Co"r Co"rtt of Aea eas& reson%ents# G#R# No# 194*# De$em,er :& 2**(# -a$ts< This is a etition for %eview on Certiorari seeking to reverse and set aside the 4ecision of the Court of Appeals for lack of 7urisdiction.
3n March +# !""# 3ceanic =ireless (etwork &petitioner' received from the 5ureau of $nternal %evenue &5$%' deficiency tax assessments for the taxable year !"* in the total amount of "#1**#!!".+. etitioner filed its protest against the tax assessments and re2uested a reconsideration or cancellation of the same in a letter to the 5$% Commissioner. Acting in behalf of the 5$% Commissioner# Commissioner# then Chief of the 5$% Accounts Accounts %ece %eceiv ivab able le and and 5ill 5illin ing g 4ivi 4ivisi sion on## Mr. Mr. Seve Severi rino no 5. 5uot 5uot## reit reiter erat ated ed the the tax tax assessments while denying petitioner:s re2uest for reinvestigation. Said letter like likew wise ise re2u re2ues este ted d peti petiti tion oner er to pay pay with within in ) days days from from rece receip iptt ther thereo eof# f# otherwise the case shall be referred to the Collection @nforcement 4ivision of the 5$% (ational 3ffice for the issuance of a warrant of distraint and levy without further notice. pon petitioner:s failure to pay the sub7ect tax assessments within the prescribed period# the Assistant Commissioner for Collection# acting for the Commissioner of $nternal %evenue# %evenue# issued the corresponding warrants warrants of distraint andBor levy and garnishment. etitioner filed a etition for %eview with the Court of Tax Appeals &CTA' to cont contes estt the the issu issuan ance ce of the the warra arrant nts s to enfo enforc rce e the the coll collec ecti tion on of the the tax tax assessments. The CTA dismissed the petition for lack of 7urisdiction. etition etitioner er filed filed a Motion Motion for %econs %econsider iderati ation on arguing arguing that the demand demand letter letter cannot cannot be conside considered red as the final decisio decision n of the Commissione Commissionerr of $nterna $nternall %evenue on its protest because the same was signed by a mere subordinate and not by the Commissioner himself. =ith the denial of its motion for reconsideration# petitioner conse2uently filed a etition for %eview with the Court of Appeals contending that there was no final decision to speak of because the Commissioner had yet to make a personal determination as regards the merits of petitioner:s case. The Court of Appeals denied the petition. ;ence# this petition for review. Iss"es< . =hether or not the 5$%:s right to assess has already prescribed. (3
0. =hether or not the deficiency assessments are void for failure to state the law and facts to which the assessments are made. (3 -. =hether or not petitioner is liable for deficiency income tax. @S /e%< . NO. 5$%:s right has not yet prescribed and the assessment notices are valid. At the time of the execution of the waiver# there was no preliminary assessment issued yet against petitioner where the kind and amount of tax could be referred to. Such details cannot be specified in the waiver since it was still unascertainable at the time. Since the period of respondent to assess was extended up to 6uly -# !!! in view of the waiver# the deficiency assessments issued against petitioner on 6uly -)# !!! are within the period allowed by law.
0. NO. The purpose of Section 00" of the (ational $nternal %evenue Code of !!+ in re2uiring that Dthe taxpayer be informed of the law and facts on which assessment is madeD is to give the taxpayer the opportunity to refute the findings of the examiner and give a more accurate and detailed explanation regarding the proposed assessment. $n the case# there was substantial compliance with Sec. 00" of the ($%C because petitioner was able to protest the assessments intelligently# thereby implying that it had actual knowledge of the factual and legal bases of the assessments. The fact that petitioner was furnished the computation and brief explanation of how the assessment for deficiency 2uarterly income tax was arrived at# the re2uirement under Section 00" of the !!+ Tax Code is deemed complied with. And even if petitioner was not furnished of the detailed computation of the deficiency 2uarterly income tax# the same was discussed with petitioner during the informal conference. -. 0ES# etitioner having failed to comply with the re2uirement of the law in disputing an assessment# the same became final# executory and demandable. Sec. 00" states that< x x x $f the protest is denied in whole or in part# or is not acted upon within one hundred eighty &")' daysfrom submission of documents# the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty &-)' days from receipt of the said decision# or from the lapse of the one hundred eighty &")',day period> otherwise# the decision shall become final# executory and demandable. ndoubtedly# a taxpayer has sixty &1)' days from the filing of the protest to submit the relevant documents to support its protest# otherwise# the assessment becomes final. =ithin one hundred eighty&")' days from the submission of the relevant documents# the respondent should act on the protest. $f the respondent rendered his decision within the period or failed to act on it# the remedy of the taxpayer is to file within thirty &-)' days from the receipt of the decision or from the lapse of one hundred eighty&")' days# an appeal to this court# otherwise# the assessment will become final# executory and demandable. x x x
$n the case# petitioner failed to submit supporting documents contrary to what was 7ointly stipulated by the parties. ;ence# the reckoning of the "),day period would be the day the protest was filed which was August 1# !!!. ;owever# respondent failed to render his decision within ") days or until ?ebruary 0# 0))). The remedy of petitioner was to file within -) days there from an appeal with this court which would be until March *# 0))). 5ut since the etition for %eview was filed only on May 0# 0)))# the same was definitely filed beyond the date prescribed by law.
9) Commissioner of Interna Re!en"e !s# Rosemarie A$osta ;(2: SCRA 1) -a$ts< %osemarie Acosta is an employee of $ntel and was assigned in a foreign country. 4uring that period $ntel withheld the taxes due and remitted them to 5$%. %espondent claimed overpayment of taxes and filed petition for review with CTA. CTA dismissed the petition for failure to file a written claim for refund with the C$% a condition precedent to the filing of a petition for review with the CTA. CA reversed the decision reasoning that Acosta:s filing of an amended return indicating an overpayment was sufficient compliance with the re2uirement of a written claim. Iss"e< ' =hether or not the amended return filed by respondent indicating an overpayment constitute the written claim for refund re2uired by law# thereby vesting the CTA with 7urisdiction over this case. NO 0' =hether or not the !!+ ($%C can be applied retroactivelyE NO /e%. ' 3n the first issue# we rule against respondent:s contention. @ntrenched in our 7urisprudence is the principle that tax refunds are in the nature of tax exemptions which are construed strictissimi 7uris against the taxpayer and liberally in favor of the government. As tax refunds involve a return of revenue from the government# the claimant must show indubitably the specific provision of law from which her right arises> it cannot be allowed to exist upon a mere vague implication or inference nor can it be extended beyond the ordinary and reasonable intendment of the language actually used by the legislature in granting the refund. To repeat# strict compliance with the conditions imposed for the return of revenue collected is a doctrine consistently applied in this 7urisdiction.
nder the circumstances of this case# we cannot agree that the amended return filed by respondent constitutes the written claim for refund re2uired by the old Tax Code# the law prevailing at that time. (either can we apply the liberal interpretation of the law based on our pronouncement in the case of 5$,?amily Savings 5ank# $nc. v. Court of Appeals# as the taxpayer therein filed a written claim for refund aside from presenting other evidence to prove its claim# unlike this case before us. 0' 3n the second issue# we find that we cannot give retroactive application to Section 0)*&c' abovecited. =e have to stress that tax laws are prospective in operation# unless the language of the statute clearly provides otherwise. Moreover# it should be emphasi9ed that a party seeking an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief# but also pursue it to its appropriate conclusion before seeking 7udicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to court action.
This the respondent did not follow through. Additionally# it could not escape notice that at the time respondent filed her amended return# the !!+ ($%C was not yet in effect. ;ence# respondent had no reason at that time to think that the filing of an amended return would constitute the written claim for refund re2uired by applicable law.
() CIR !s# Primeto6n Proert< Gro"& In$# ;(41 SCRA 94+)
-a$ts< This is a petition for review on certiorari that seeks to set aside the decision of the Court of Appeals &CA'.
3n April *# !!" rimetown roperty Froup. $nc. filed its final ad7usted return. 3n March # !!! Filbert ap# vice chair of rimetown roperty Froup. $nc.# filed for the refund or tax credit of income tax paid in !!+. ;owever# it was not acted upon. Thus rimetown filed a petition for review but the Court of Tax Appeals dismissed it claiming that it was filed beyond the two,year reglementary period provided by section 00! of the (ational $nternal %evenue Code. The Court of Tax Appeals further argued that in (ational Marketing Corp. vs. Tecson the Supreme Court ruled that a year is e2ual to -1/ days regardless of whether it is a regular year or a leap year. Iss"e< =hether or not petition was filed within the two,year period
/e%< 0ES# ursuant to @3 0!0 or the Administrative Code of !"+# a year shall be understood to be 0 calendar months. The SC defined a calendar month as a month designated in the calendar without regard to the number of days it may contain. The court held that Administrative Code of !"+ impliedly repealed Art - of (CC as the provisions are irreconcilable. rimetown is entitled for the refund since it is filed within the 0,year reglementary period.
The court therefore held that respondentGs petition &filed on April *# 0)))' was filed on the last day of the 0*th calendar month from the day respondent filed its final ad7usted return. ;ence# it was filed 6it3in t3e re=ementar< erio% . 5oth Article - of the Civil Code and Section -# Chapter H$$$# 5ook $ of the Administrative Code of !"+ deal with the same sub7ect matter the computation of legal periods. nder the Civil Code# a year is e2uivalent to -1/ days whether it be a regular year or a leap year. nder the Administrative Code of !"+# however# a year is composed of 0 calendar months. (eedless to state# under the Administrative Code of !"+# the number of days is irrelevant. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of !"+. ?or this reason# we hold that Section -# Chapter H$$$# 5ook $ of the Administrative Code of !"+# being the more recent law# governs the computation of legal periods. Lex posteriori derogat priori. The months as contemplated in the Civil Code should be considered as -) days. A calendar month is a month designated in the calendar without regard to the number of days it may contain.
Accordingly# the petition is hereby 4@($@4. The case is %@MA(4@4 to the Court of Tax Appeals which is ordered to expeditiously proceed to hear C.T.A. Case (o. 1- entitled rimetown roperty Froup# $nc. v. Commissioner of $nternal %evenue and Arturo H. arcero.
+) Commissioner of Interna Re!en"e !s# P3iiine Ameri$an Life Ins"ran$e Co#& et a# ;299 SCRA 99+) -a$ts< 3n May -)# !"-# private respondent hilamlife paid to the 5ureau of $nternal %evenue &5$%' its first 2uarterly corporate income tax for Calendar ear &C' !"- amounting to -#0*1#*.)).
3n August 0!# !"-# it paid -!1#"+*.)) for the Second Iuarter of !"-. ?or the Third Iuarter of !"-# private respondent declared a net taxable income of 0#//#1+.)) and a tax due of +)"#*1*.)). After crediting the amount of -#"!!#/0/.)) it declared a refundable amount of -#/"#)1.)). ?or its ?ourth and final 2uarter ending 4ecember -# private respondent suffered a loss and thereby had no income tax liability. $n the return for that 2uarter# it declared a refund of -#!!#"*.)) representing the first and second 2uarterly payments< 0/#+*0.)) as withholding taxes on rental income for !"- and --#)"*.)) representing !"0 income tax refund applied as !"- tax credit. $n !"*# private respondent again suffered a loss and declared no income tax liability. ;owever# it applied as tax credit for !"*# the amount of -#!!#"*.)) representing its !"0 and !"- overpaid income taxes and the amount of 0/)#"1+.)) as withholding tax on rental income for !"*. 3n September 01# !"*# private respondent filed a claim for its !"0 income tax refund of --#)"*.)). 3n (ovember 00# !"*# it filed a petition for review with the Court of Tax Appeals &C.T.A. Case (o. -"1"' with respect to its !"0 claim for refund of --#)"*.)). 3n 4ecember 1# !"/# it filed another claim for refund with petitioners appellate division in the aggregate amount of *#)!#10*.))# 3n 6anuary 0# !"1# private respondent filed a petition for review with the CTA# docketed as CTA Case (o. *)" regarding its !"- and !"* claims for refund in the above,stated amount. Iss"e< =hether or not the contention of C$% is correct /e%< NO. $t may be observed that although 2uarterly taxes due are re2uired to be paid within sixty days from the close of each 2uarter# the fact that the amount shall be deducted from the tax due for the succeeding 2uarter shows that until a final ad7ustment return shall have been filed# the taxes paid in the preceding 2uarters are merely partial taxes due from a corporation. (either amount can serve as the final figure to 2uantity what is due the government nor what should be refunded to the corporation.
Therefore# when private respondent paid -#0*1#*.)) on May -)# !"-# it would not have been able to ascertain on that date# that the said amount was refundable. The same applies with cogency to the payment of -!1#"+*.)) on August 0!# !"-. Clearly# the prescriptive period of two years should commence to run only from the time that the refund is ascertained# which can only be determined after a final ad7ustment return is accomplished. $n the present case# this date is April 1# !"*# and two years from this date would be April 1# !"1. The record shows that the claim for refund was filed on 4ecember )# !"/ and the petition for review was brought before the CTA on 6anuary 0# !"1. 5oth dates are within the two,year reglementary period.
) ACCRA In!estments Cor# !s# Co"rt of Aeas ;2*9 SCR A :() -a$ts< ACC%A $nvestment Corporation is a domestic corporation engaged in the business of real estate investment and management consultancy. 3n / April !"0# the corporation filed with the 5ureau of $nternal %evenue &5$%' its annual corporate income tax return for the calendar year ending - 4ecember !" reporting a net loss of 0#!/+#*0.)). $n the said return# the corporation declared as creditable all taxes withheld at source by various withholding agents &the Malayan $nsurance Co.# the Angara Concepcion %egala J Cru9 Law 3ffices# M6 4evelopment Corp. andhilippine Flobal Communications $nc.# totaling "0#+/.!. The withholding agents paid and remitted amounts representing taxes on rental# commission and consultancy income of the corporation to the 5$% from ?ebruary to 4ecember !". $n a letter dated 0! 4ecember !"addressed to the Commissioner of $nternal %evenue# the corporation filed a claim for refund inasmuch as it had no tax liability against which to credit the amounts withheld.
ending action of the Commissioner on its claim for refund# the corporation# on - April !"*# filed a petition for review with the Court of Tax Appeals &CTA' asking for the refund of the amounts withheld as overpaid income taxes. 3n 0+ 6anuary !""# the CTA dismissed the petition for review after a finding that the twoyear period within which the corporation:s claim for refund should have been filed had already prescribed pursuant to Section 0!0 of the (ational $nternal %evenue Code &($%C' of !++# as amended. Acting on the corporation:s motion for reconsideration# the CTA in its resolution dated 0+ September !"" denied the same for having been filed out of time. 3n * 6anuary !"!# the corporation filed with the Supreme Court its petition for review# which the Court referred to the appellate court in the Court:s resolution dated / ?ebruary !!) for proper determination and disposition. 3n 0" May !!)# the appellate court affirmed the decision of the CTA opining that the two, year prescriptive period in 2uestion commences 8from the date of payment of the taxK as provided under Section 0!0 of the Tax Code of !++ &now Sec. 0-) of the ($%C of !"1'# i.e.# 8from the end of the tax year when a taxpayer is deemed to have paid all taxes withheld at sourceK# and not 8from the date of the filing of the income tax returnK as posited by the corporation. $ts motion for reconsideration with the appellate court having been denied in a resolution dated 0) (ovember !!)# the corporation elevated this case to the Supreme Court. Iss"e< =hether or not the claim for refund was filed on time /e%< 0ES. Crucial in the resolution of the instant case is the interpretation of the phraseology Dfrom the date of payment of the taxD in the context of Section 0-) on %ecovery of tax erroneously or illegally collected.
A correct application of the Fibbs case according to the court is that 8a taxpayer whose income is withheld at source will be deemed to have paid his tax liability at the end of the tax year. $t is from when the same falls due at the his latter date then# or when the two,year prescriptive period under Section -)1 of the %evenue Code starts to run with respect to payments effected through the withholding tax system..K The afore2uoted ruling presents two alternative reckoning dates# &' the end of the tax year> and &0' when the tax liability falls due. $n the instant case# it is undisputed that the petitioner corporationGs withholding agents had paid the corresponding taxes withheld at source to the 5ureau of $nternal %evenue from ?ebruary to 4ecember !". etitioner corporation is not claiming a refund of overpaid withholding taxes# per se. $t is asking for the recovery the refundable or creditable amount determined upon the petitioner corporationGs filing of the its final ad7ustment tax return on or before / April !"0 when its tax liability for the year !" fell due. The petitioner corporationGs taxable year is on a calendar year basis# hence# with respect to the !" taxable year# ACC%A had until / April !"0 within which to file its final ad7ustment return. The petitioner corporation duly complied with this re2uirement Anent claims for refund# section " of %evenue %egulation (o. -,+" issued by the 5ureau of $nternal %evenue re2uires that< Section ". Claims for tax credit or refund Claims for tax credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement# duly issued by the payor to the payee &5$% ?orm (o. +*-,A' showing the amount paid and the amount of tax withheld therefrom. The term DreturnD in the case of domestic corporations like ACC%A refers to the final ad7ustment return. $t bears emphasis at this point that the rationale in computing the two,year prescriptive period with respect to the petitioner corporationGs claim for refund from the time it filed its final ad7ustment return is the fact that it was only then that ACC%A could ascertain whether it made profits or incurred losses in its business operations. The Ddate of paymentD# therefore# in ACC%AGs case was when its tax liability# if any# fell due upon its filing of its final ad7ustment return on April /# !"0.
) Commissioner of Interna Re!en"e !s# Vi$torias Miin= Co#& In$#& et a#& G#R# No# L'291*& >an"ar< 4& 1:+ -a$ts< 3n 0- 4ecember !/+ Hictorias Milling Co.# $nc. filed a claim for the refund of the sum of 0#*1*./- representing /) of the specific tax paid on the manufactured oils and fuels used in its agricultural operation for the period from " 6une !/0 to " 6une !/+. The Commissioner of $nternal %evenue granted refund in the sum of -#*/." representing the tax paid for the period from 6anuary !/1 to " 6une !/+ but denied the claim in the amount of 0#"+.)" which corresponds to the tax paid during the period from " 6une !/0 to - 4ecember !// for the reason that the same was filed after the 0,year period provided for in Section -)1 of the Tax Code had elapsed.
Hictorias Milling Co.# $nc. appealed to the Court of Tax Appeals contending that Section -)1 does not apply to its claim. The Court of Tax Appeals took the taxpayer:s view and ordered the C$% to refund Hictorias Milling the amount of 0#"+.)" representing the /) of the specific tax paid on the oils used by it in agriculture during the period from " 6une !/0 to - 4ecember !//. ?rom said 7udgment# the Commissioner of $nternal %evenue has appealed. Iss"e< =hether or not Hictorias Milling:s right to claim a refund has already prescribed /e%< @S. The taxpayerGs claim for refund with the 5ureau of $nternal %evenue of 4ecember 0-# !/+ is within two years from 4ecember !// the last month of the period during which the fuels and oils were used. The appeal to the Court of Tax Appeals however# was instituted six years and two months from 4ecember -# !//. =e have repeatedly held that the claim for refund with the 5ureau of $nternal %evenue and the subse2uent appeal to the Court of Tax Appeals must be filed within the two,year period. D$f# however# the Collector takes time in deciding the claim# and the period of two years is about to end# the suit or proceeding must be started in the Court of Tax Appeals before the end of the two,year period without awaiting the decision of the Collector.D $n the light of the above 2uoted ruling# =e find that the right of Hictorias Milling Co.# $nc. to claim refund of 0#"+.)" has prescribed.
:) Coe=e of Ora ? Denta S"r=er< !s# Co"rt of Ta8 Aeas& et a# ;1*2 P3i :12) -a$ts. The College of 3ral and 4ental Surgery is an educational institution# duly organi9ed and existing under the laws of the hilippines and located at "/" 3ro2uieta# Manila.
$n a letter sent to the Collector of $nternal %evenue dated (ovember *# !/0# said institution# through counsel# protested against the collection and claimed for the refund of the sums of *#---.-! and /)) paid under official receipt (os. A, "!-*" a,nd A,-/)""+ for income tax corresponding to !/) and the amount of 0#*-*./) paid under official receipt (o. A,-**- for income tax corresponding to !/. lt was claimed that the school was exempted from the payment of said tax in virtue of section 0+# paragraph &f' of the (ational $nternal %evenue Code. This petition for refund was denied by the Collector of $nternal %evenue on 6anuary 0# !/-# pointing out the existence of %epublic Act (o. "0 amending section section 0+ &e' of the Tax Code and the interpretation thereof given by the Secretary of 6ustice in 3pinion (o. +"# series of !/)# making taxable any income derived from activities conducted for profit# irrespective of the disposition made of such income. Thereafter# the taxpayer sent another letter re2uesting for the reconsideration of said decision but the Collector deferred action on the same pending the outcome of the case of 6esus Sacred ;eart College vs. Collector of $nternal %evenue then awaiting decision of the Supreme Court# for the reason that the issue involved therein was similar to the instant case. &The decision in the case of 6esus Sacred ;eart College vs. Collector# !/ hil.# 1'. 3n April 0)# !//# the Collector of $nternal %evenue denied the re2uest for reconsideration on the ground that while it was true that the profits reali9ed by the College of 3ral and 4ental Surgery were used for the expansion and improvement of the school and that no part thereof apparently in7ured to the benefit of any individual stockholder# yet considering that the records proved that 4r. Aldecoa# as president of the institution# received a salary of l#))) a month and his wife a monthly compensation of 0)) as treasurer thereof> and that as the corporation could be dissolved any time because the period of its existence was not fixed and upon its dissolution the properties could be divided among the stockholders# the Aldecoa family in effect actually derived some benefits in the operation of the same. 3n April 0!# !//# the College of 3ral and 4ental Surgery filed a petition with the Court of Tax Appeals &CTA Case (o. 0' seeking to review the decision of the Collector and praying for the refund of the aforementioned amount alleged to have been erroneously collected. %espondent timely filed an answer denying the material averments of the petition and set up the special defense that petitioner did not come within the exemption of section 0+ &e' of the Tax Code nor was the decision of the Supreme Court in the case of 6esus Sacred ;eart College applicable to it. And on (ovember 0# !//# with leave of court# respondent filed
a motion to dismiss for the reason that the Tax Court had no 7urisdiction over the sub7ect matter of the action as said case was instituted beyond the 0,year prescriptive period provided for by Section -)1 of the Tax Code. This motion was accordingly opposed by petitioner and on 4ecember !# !//# the Court of Tax Appeals# with one 6udge concurring in a separate opinion# issued a resolution dismissing the petition on the ground that the court ac2uired no 7urisdiction to entertain the same# it appearing that the case was filed 0 years after the taxes sought to be refunded had been paid. As the motion filed by the taxpayer for the reconsideration of the same was denied for lack of merit# the matter was brought to this Court on appeal# petitioner ascribing to the lower Court the commission of several errors. 5ut reducing the interrelated issues to bare essentials# the only 2uestion presented by the instant case could be boiled down into whether or not in !//# petitioner could still invoke court action for the recovery of taxes paid in !/ and !/0 or after the lapse of 0 years from the date said payment were made> and# conse2uently# whether the Court of Tax Appeals erred in dismissing the petition filed therein for lack of 7urisdiction. Iss"e< =hether or not the claim for the refund was made within the prescribed period /e%< NO. There is no controversy that the taxes sought to be recovered where paid on May /# !/# September /# !/ and May /# !/0# and that although the claim for the refund of the same was filed wlith the Collector of $nternal %evenue on (ovember *# !/0# the re2uest for the reconsideration of the latterGs decision was denied only on April 0)# !//. Meanwhile# no proceeding in court was instituted for that purpose in the intervening period. Although the filing of the claim with the Collector of $nternal %evenue is intended as a notice to said official that unless the tax or penalty alleged to have been erroneously or illegally collected is refunded court action will follow# this does not imply that the taxpayer must wait for the action of the Collector before bringing the matter to court. $ndeed# it must be observed that under said provisions# the taxpayerGs failure to comply with the re2uirement regarding the institution of the action or proceeding in court within 0 years after the payment of the taxes bars him from the recovery of the same# irrespective of whether a claim for the refund of such taxes filed with the Collector of $nternal %evenue is still pending action of the latter.
1*) @PI Leasin= Cor# !s# Co"rt of Aeas& et a# ;91+ SCRA 9) -a$ts< This is a petition for review on certiorari assailing the decision of the Court of Appeals denying the motion for reconsideration. The assailed decision and resolution affirmed the decision of the Court of Tax Appeals &CTA' which denied petitioner 5$ Leasing Corporations &5LC' claim for tax refund in CTA Case (o. *0/0.
5$ Leasing Corporation is a corporation engaged in the business of leasing properties. ?or the calendar year !"1# 5LC paid the Commissioner of $nternal %evenue &C$%' a total of #-!#)*.*! representing * contractors percentage tax then imposed by Section 0)/ of the (ational $nternal %evenue Code &($%C'# based on its gross rentals from e2uipment leasing for the said year amounting to 0+#+"-#+0/.*0. 3n (ovember )# !"1# the C$% issued %evenue %egulation !,"1. Section 1.0 thereof provided that finance and leasing companies registered under %epublic Act /!") shall be sub7ect to gross receipt tax of /,-, on actual income earned. This means that companies registered under %epublic Act /!")# such as 5LC# are not liable for contractors percentage tax under Section 0)/ but are# instead# sub7ect to gross receipts tax under Section 01) &now Section 00' of the ($%C. Since 5LC had earlier paid the aforementioned contractors percentage tax# it re,computed its tax liabilities under the gross receipts tax and arrived at the amount of -1#!0*.**. 3n April # !""# 5LC filed a claim for a refund with the C$% for the amount of +++#+.)/# representing the difference between the #-!#)*.*! it had paid as contractors percentage tax and -1#!0*.** it should have paid for gross receipts tax. ?our days later# to stop the running of the prescriptive period for refunds# petitioner filed a petition for review with the CTA. CTA dismissed the petition and denied 5LCs claim of refund. The CTA held that %evenue %egulation !,"1# as amended# may only be applied prospectively such that it only covers all leases written on or after 6anuary # !"+. The CTA ruled that# since 5LCs rental income was all received prior to !"1# it follows that this was derived from lease transactions prior to 6anuary # !"+# and hence# not covered by the revenue regulation. Iss"e< ' =hether or not %evenue %egulation !,"1 is legislative rather than interpretative in character %L$(F< The Court finds the 2uestioned revenue regulation to be legislative in nature. LEGISLATIVE 0' =hether or not its application should be prospective or retroactive. PROSPECTIVE
/e%< ' Section of %evenue %egulation !,"1 plainly states that it was promulgated pursuant to Section 0++ of the ($%C. Section 0++ &now Section 0**' is an express grant of authority to the Secretary of ?inance to promulgate all needful rules and regulations for the effective enforcement of the provisions of the ($%C. The Court recogni9ed that the application of Section 0++ calls for none other than the exercise of 2uasi,legislative or rule,making authority. Herily# it cannot be disputed that %evenue %egulation !,"1 was issued pursuant to the rule,making power of the Secretary of ?inance# thus making it legislative# and not interpretative as alleged by 5LC.
0' The principle is well entrenched that statutes# including administrative rules and regulations# operate prospectively only# unless the legislative intent to the contrary is manifest by express terms or by necessary implication. $n the present case# there is no indication that the revenue regulation may operate retroactively. ?urthermore# there is an express provision stating that it shall take effect on 6anuary # !"+# and that it shall be applicable to all leases written on or after the said date. 5eing clear on its prospective application# it must be given its literal meaning and applied without further interpretation. Thus# 5LC is not in a position to invoke the provisions of %evenue %egulation !,"1 for lease rentals it received prior to 6anuary # !"+.
11) Coe$tor of Interna Re!en"e !# Prieto ;2 SCRA 1**) -a$ts< This is an appeal from a decision of the Court of tax Appeals giving liability to rieto
3n 4ecember *# !*/# the respondent conveyed by way of gifts to her four children all surnamed rieto# real property with a total assessed value of "!0#*!+./). After the filing of the gift tax returns on or about ?ebruary # !/*# the petitioner Commissioner of $nternal %evenue appraised the real property donated for gift tax purposes at #0-#01".))# and assessed the total sum of +#+)1./) as donorGs gift tax# interest and compromises due thereon. 3f the total sum of +#+)1./) paid by respondent on April 0!# !/*# the sum of //#!+".1/ represents the total interest on account of deli2uency. This sum of //#!+".1/ was claimed as deduction# among others# by respondent in her !/* income tax return. etitioner# however# disallowed the claim and as a conse2uence of such disallowance assessed respondent for !/* the total sum of 0#*).-" as deficiency income tax due on the aforesaid //#!+".1/# including interest up to March -# !/+# surcharge and compromise for the late payment. nder the law# for interest to be deductible# it must be shown that there be an indebtedness# that there should be interest upon it# and that what is claimed as an interest deduction should have been paid or accrued within the year. $t is here conceded that the interest paid by respondent was in conse2uence of the late payment of her donorGs tax# and the same was paid within the year it is sought to be declared. The only 2uestion to be determined# as stated by the parties# is whether or not such interest was paid upon an indebtedness within the contemplation of section -) &b' &' of the Tax Code. Iss"e< =hether or not such interest was paid upon an indebtedness within the contemplation of section -) &b' &' of the Tax Code /e%< 0ES# The term DindebtednessD as used in the Tax Code of the nited States containing similar provisions as in the above,2uoted section has been defined as an unconditional and legally enforceable obligation for the payment of money. =ithin the meaning of that definition# it is apparent that a tax may be considered an indebtedness. $t follows that the interest paid by herein respondent for the late payment of her donorGs tax is deductible from her gross income under section -)&b' of the Tax Code. Thus# under sec. 0-&b' of the $nternal %evenue Code of !-!# as amended# which contains similarly worded provisions as sec. -)&b' of our Tax Code# the uniform ruling is that interest on taxes is interest on indebtedness and is deductible. The rule applies even though the tax is nondeductible.
$n conclusion# the court held that although interest payment for delin2uent taxes is not deductible as tax under Section -)&c' of the Tax Code and section ") of the $ncome Tax %egulations# the taxpayer is not precluded thereby from claiming said interest payment as deduction under section -)&b' of the same Code.
12) CIR !s# TMX Saes ? CTA ;2*( SCRA 19) -a$ts< %espondent TMN Sales# $nc.# a domestic corporation# filed its 2uarterly income tax return for the first 2uarter of !"# declaring an income of /+#+*.-# and conse2uently paying an income tax thereon of 0*+#)).)) on May /# !". 4uring the subse2uent 2uarters# however# TMN Sales# $nc. suffered losses so that when it filed on April /# !"0 its Annual $ncome Tax %eturn for the year ended 4ecember -# !"# it declared a gross income of !)*#00.)) and total deductions of +#)1)#1*+.))# or a net loss of 1#/1#/0/.)) &CTA 4ecision# pp. ,0> %ollo# pp. */,*1'.
Thereafter# on 6uly !# !"0# TMN Sales# $nc. thru its external auditor# SFH J Co. filed with the Appellate 4ivision of the 5ureau of $nternal %evenue a claim for refund in the amount of 0*+#)).)) representing overpaid income tax. &%ollo# p. -)' T3e $aim 6as not a$te% "on ,< t3e Commissioner of Interna Re!en"e # so on March *# !"*# TMN Sales# $nc. filed a petition for review before the Court of Tax Appeals against the Commissioner of $nternal %evenue# praying that the petitioner# as private respondent therein# be ordered to refund to TMN Sales# $nc. the amount of 0*+#)).))# representing overpaid income tax for the taxable year ended 4ecember -# !".
$n his answer# the Commissioner of $nternal %evenue averred that Dgranting# without admitting# the amount in 2uestion is refundable# the petitioner &TMN Sales# $nc.' is already barred from claiming the same considering that more than two &0' years had already elapsed between the payment &May /# !"' and the filing of the claim in Court &March *# !"*'. &Sections 0!0 and 0!/ of the Tax Code of !++# as amended'.D 3n April 0!# !""# the Court of Tax Appeals rendered a decision granting the petition of TMN Sales# $nc. and ordering the Commissioner of $nternal %evenue to refund the amount claimed. Iss"e< =hether or not TMN Sales $nc. is entitled to a refund considering that two years has already elapsed since the payment of the tax R"in=< 0ES. etition of C$% is denied. Sec. 0!0# par. 0 of the (ational $nternal %evenue Code stated that 8in any case# no such suit or proceeding shall be begun after the expiration of two years from the date of the payment of the tax or penalty regardless of any supervening cause that may arise after payment.K This should be interpreted in relation to the other provisions of the Tax Code. The most reasonable and logical application of the law would be to compute the 0, year prescriptive period at the time of the filing of the ?inal Ad7ustment %eturn or the Annual $ncome Tax %eturn# where it can finally be ascertained if the tax payer has still to pay additional income tax or if he is entitled to a refund of overpaid
income tax. Since TMN filed the suit on March *# !"*# it is within the 0,year prescriptive period starting from April /# !"0 when they filed their Annual $ncome Tax %eturn. ImortantO Since the two,year prescriptive period should be counted from the filing of the Ad7ustment %eturn on April /# !"0# TMN Sales# $nc. is not yet barred by prescription.
The petition of C$% is therefore denied
14) CIR !# CA& et# a# ;4*1 SCRA 94() -a$ts< This is a petition for review on certiorari of the of the Court of Appeals affirming the decision of the Court of Tax Appeals which ordered petitioner C$% to refund 1/#0/!.)) as overpaid income tax.
3n April 0# !"1# aramount Acceptance Corporation &aramount for brevity' filed its Corporate Annual $ncome Tax %eturn# for calendar year ending 4ecember -# !"/# declaring a (et $ncome of -#-0*#")0.)) &@xh. A'. The income tax due thereon is #/-#1".)). ;owever# aramount paid the 5$% its 2uarterly income tax. After deducting aramounts total 2uarterly income tax payments of #0"#!*).)) from its income tax of #/-#1".))# the return showed a refundable amount of 1/#0/!.)). The appropriate box in the return was marked with a cross &x' indicating To be refunded the amount of 1/#0/!.)). 3n April *# !""# petitioner 5$# as li2uidator of aramount# through counsel filed a letter dated April 0# !"" reiterating its claim for refund of 1/#0/!.)) as overpaid income tax for the calendar year !"/. The following day or on April /# !""# 5$ filed the instant petition with this Court in order to toll the running of the prescriptive period for filing a claim for refund of overpaid income taxes. Iss"e< =hether the two,year period of prescription for filing a claim for refund# as provided in 0-) of the (ational $nternal %evenue Code# is to be counted from April 0# !"1 when the corporate income tax return was actually filed 3% from April /# !"1 when# according to +)&b' of the ($%C# the final ad7ustment return could still be filed without incurring any penalty. /e%< IT IS TO @E CONTED -ROM APRIL 1(&1:+ . =e agree with the respondent courts ruling that the date of payment of the tax as prescribed under the Tax Code is the date when the corporate income tax return is re2uired to be filed.
The Supreme Court has laid down the rule regarding the computation of the prescriptive period that the two,year period should be computed from the time of filing of the Ad7ustment %eturns or Annual $ncome Tax %eturn and final payment of income tax> it is only when the Ad7ustment %eturn covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be claimed based on the ad7usted and audited figures. The two,year prescriptive period within which to claim a refund commences to run# at the earliest# on the date of the filing of the ad7usted final tax return. $n this case# 5$ filed its final ad7ustment return on April 0# !"1. (o taxes were paid then because the returns showed that the 2uarterly taxes already paid exceeded the income tax due by 1/#0/!.)). As correctly put by 5$# it is only on April / that the previous years income tax becomes due and payable and the
taxpayer is still free to make amendments or ad7ustments on its return# without penalty# until April /# !"1 &See Section ")# (.$.%.C.'. Thus the final payment of income tax should be deemed to be on April /# !"1# when the previous years income tax became due and payable and when the 2uarterly corporate income taxes may be considered paid. Accordingly the administrative claim and court proceeding for tax refund were timely filed.
19) /on=7on= ? S3an=3ai @an7in= Cororation !s# Commissioner ;:4 P3i 19() -a$ts< $n the years !0,!/ inclusive# u7alte J Co.# a general mercantile partnership# was engaged in the business of lumbering in Mindanao. Said company removed from the forest and milled at its say mills during this period# a total of 1#)"+./* cubic meters of timber. The forest charges amounted to "#-0".!-. pon the execution of bonds in the aggregate sum of 0#))) to secure the payment of the forest charges due the government# the Collector of $nternal %evenue permitted u7alte J Co. to remove this timber from the public forests for shipment by sea on saw mill invoices without prior payment of the forest charges. ?rom the timber so removed by u7alte J Co.# railroad ties were manufactured in its saw mills at Manila for the Manila %ailroad Co. Six thousand three hundred and five railroad ties so manufactured were re7ected by the Manila %ailroad Co.
$n ?ebruary# !/# the firm of u7alte J Co. was indebted to the ;ongkong and Shanghai 5anking Corporation in a large sum of money. 5eing unable to pay its debt in specie# the company assigned to the bank# among other things# a large 2uantity of the railroad ties manufactured at its mills. The bank sold and disposed of these ties at various times until in May# !1# there remained with it some 0#))) railroads ties of the lot ac2uired. The internal revenue charges on the forest products removed from the public forests of Mindanao by u7alte J Co. not having been paid# on May 0# !1# the Collector of $nternal %evenue caused delin2uency proceedings to be commenced and had issued a distress warrant. Later# on May /# !1# the Collector of $nternal %evenue caused an additional distress levy to be made upon the 1#-)/ ties# which it will be remembered# had been assigned by u7alte J Co. to the ;ongkong J Shanghai 5anking Corporation. roceeding in accordance with this action# the Collector of $nternal %evenue sei9ed the 0#))) ties in the possession of the bank. ntil the date last mentioned# the bank had no notice of the tax. MA$( @T$T$3(< ayment under protest# institution of complaint to recover back the sum paid# answer by the Fovernment# trial# and 7udgment followed in due course. $n this 7udgment# handed down by the ;onorable 6ames A. 3strand# it was declared that a lien for taxes existed on the 0#))) railroad ties levied upon by the Collector of $nternal %evenue and claimed as its property by the ;ongkong J Shanghai 5anking Corporation# not for the full sum of "#-0".!due as forest charges on the timber removed from the forests of Mindanao by u7alte J Co.# but only for the sum of -1.*-# which is the tax upon the timber used for the manufacture of the ties. The court ordered the Collector of $nternal %evenue to refund to the ;ongkong and Shanghai 5anking Corporation the sum of "#)0./)# with interest at 1 per cent per annum from ?ebruary # !+. (o
costs were allowed. ?ollowing timely motions for a new trial# denial# and exceptions thereto# both parties have appealed.
Iss"e< =hether or not the lien follow the property sub7ect to the tax into the hands of a third party when at the time of transfer# no demand for payment had been made and when the purchaser had no notice of the existence of the lienE /e%< NO. $n order that the lien may follow the property into the hands of a third party# it is further essential that the latter should have notice# either actual or constructive. The reason is the benevolence of our Constitution which prohibits the taking of property without due process of law. $nternal revenue laws are to be construed fairly for the government and 7ustly for the citi9en. They should receive a liberal construction to carry out the purposes of their enactment.
The plaintiff was not of course personally liable for any part of the internal revenue taxes due the Fovernment from u7alte J Co. 3n the date the railroad ties were transferred from u7alte J Co. to the ;ongkong J Shanghai 5anking Corporation no demand for payment of the tax had been made. The bonds in favor of the Fovernment were still presumably subsisting. (o demand in fact was made until over a year later when distraint proceedings were initiated. =hen the ;ongkong J Shanghai 5anking Corporation purchased and ac2uired these 0#))) ties in ?ebruary# !/# there was nothing to show that u7alte J Co. were delin2uent tax payers. (o public record could be consulted to protect the purchaser from loss by reason of the existence of a secret lien. A businessman of ordinary prudence could not be expected to foresee that the personal property which he had taken in satisfaction of a debt was burdened by a tax. 3n this date# because no demand had been made and because the plaintiff had no notice of the tax# there was no valid subsisting lien upon the ties.
1() Re",i$ of t3e P3i# !s# Ramon G# EnriB"e ;1++ SCRA +*) -a$ts. This is an appeal by way of certiorari.
Commissioner of the $nternal %evenue served a =arrant of 4istraint of ersonal roperty on the Maritime Company of the hilippines to satisfy various deficiency taxes of Maritime Company of the hilippines. The ?irst Coast Fuard 4istrict acknowledged receipt from the Commissioner of several barges# vehicles and 0 bodegas of spare parts belonging to taxpayer Maritime. %amon @nri2ue9 the 4eputy Sheriff of Manila levied on 0 barges of Maritime pursuant to a writ of execution issued in a Civil Case involving Maritime where the aforesaid company lost. @nri2ue9 then scheduled a public auction sale including the aforementioned properties. The Commissioner wrote the sheriff informing him that the barges were no longer owned by Maritime as the said barges had been distained and sei9ed by the 5$% in satisfaction of the deficiency taxes. This letter was filed on 6une !# !"1 at the office of the sheriff. 3n 6une 0-# !"1# the sheriff sold the 0 barges and issued certificates of sale to the highest bidder which was the levying creditor. 3n 6une 0*# !"1# Commissioner filed a petition for prohibition praying that the respondent be ordered to desist and refrain from further proceedings in connection with the execution and that respondent:s notice of levy be null and void. The CA dismissed the petition holding that the sheriff did not commit grave abuse of discretion. Iss"e< =hether or not the 5$% warrant of distraint and notice of sei9ure of personal property is valid and effective as against the writ of execution issued by %TC and the levy on execution and auction sale of the barges in 2uestion. /e%< 0ES# 5$% warrant of distraint is valid. $t is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a 7udgment. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. 5esides# the distraint on the sub7ect properties of Maritime Company of the hilippines as well as the notice of their sei9ure were made by petitioner# through the Commissioner of $nternal %evenue# long before the writ of execution was issued by the %TC. There is no 2uestion then that at the time the writ of execution was issued# the two &0' barges# MC, and MC,*# were no longer properties of the Maritime Company of the hilippines. The power of the court in execution of 7udgments extends only to properties un2uestionably belonging to the 7udgment debtor. @xecution sales affect the rights of the 7udgment debtor only# and the purchaser in an auction sale ac2uires only such
right as the 7udgment debtor had at the time of sale. $t is also well,settled that the sheriff is not authori9ed to attach or levy on property not belonging to the 7udgment debtor.
1+) So"t3ern Cross Cement Cor# !s# P3i# Cement Man"fa$t"rers Cor#& et a# ;949 SCRA +() -a$ts< The case centers on the interpretation of provisions of %epublic Act (o. ""))# the Safeguard Measures Act &SMA'# which was one of the laws enacted by Congress soon after the hilippines ratified the Feneral Agreement on Tariff and Trade &FATT' and the =orld Trade 3rgani9ation &=T3' Agreement. The SMA provides the structure and mechanics for the imposition of emergency measures# including tariffs# to protect domestic industries and producers from increased imports which inflict or could inflict serious in7ury on them.
hilippine Cement Manufacturer:s Assoc. filed a petition seeking the imposition of safeguard measures on grey ortland cement with the 4T$. The 4T$ Secretary then issued a provisional safeguard measure and referred the petition to the Tariff Commision. After the Tariff Commission:s investigation# it reported that there is no need for definitivesafeguard measures. The 4T$ Secretary then denied hilcemor:s petition but expressed his opinion that he disagreed with the Tariff Commission:s findings. hilcemor challenged the decision of the CA.The CA ruled that the 4T$ secretary was not bound by the Tariff Commision:s report since it was merely recommendatory. 5ased on this decision# the 4T$ Secretary then imposed a definitve safeguard measure on importation of gray ortland cement for - years. Southern cross challenges the CA decision and the safeguard by the 4T$ Secretary. Iss"e< =hether or not the CA has 7urisdiction over the case which is concerned with imposition of safeguard measures /e%< NO# $t is not the CA# but the CTA has 7urisdiction. nder Section 0! of the SMA# there are three re2uisites to enable the CTA to ac2uire 7urisdiction over the petition for review contemplated therein< &i' there must be a ruling by the 4T$ Secretary> &ii' the petition must be filed by an interested party adversely affected by the ruling> and &iii' such ruling must be in connection with the imposition of a safeguard measure. The first two re2uisites are clearly present. The third re2uisite deserves closer scrutiny.
Contrary to the stance of the public respondents and hilcemcor# in this case where the 4T$ Secretary decides not to impose a safeguard measure# it is the CTA which has 7urisdiction to review his decision. The reasons are as follows<
?irst. Split 7urisdiction is abhorred. The law expressly confers on the CTA# the tribunal with the speciali9ed competence over tax and tariff matters# the role of 7udicial review without mention of any other court that may exercise corollary or ancillary 7urisdiction in relation to the SMA. Second. The interpretation of the provisions of the SMA favors vesting untrammeled appellate 7urisdiction on the CTA. A plain reading of Section 0! of the SMA reveals that Congress did not expressly bar the CTA from reviewing a negative determination by the 4T$ Secretary nor conferred on the Court of Appeals such review authority. %espondents note# on the other hand# that neither did the law expressly grant to the CTA the power to review a negative determination. ;owever# under the clear text of the law# the CTA is vested with 7urisdiction to review the ruling of the 4T$ Secretary in connection with the imposition of a safeguard measure. ;ad the law been couched instead to incorporate the phrase the ruling imposing a safeguard measure# then respondents claim would have indisputable merit. ndoubtedly# the phrase in connection with not only 2ualifies but clarifies the succeeding phrase imposition of a safeguard measure. As expounded later# the phrase also encompasses the opposite or converse ruling which is the non,imposition of a safeguard measure. Third. $nterpretatio Talis $n Ambiguis Semper ?ienda @st# t @vitur $nconveniens @t Absurdum. @ven assuming arguendo that Section 0! has not expressly granted the CTA 7urisdiction to review a negative ruling of the 4T$ Secretary# the Court is precluded from favoring an interpretation that would cause inconvenience and absurdity. Adopting the respondents position favoring the CTAs minimal 7urisdiction would unnecessarily lead to illogical and onerous results.
1) Commissioner of Interna Re!en"e !s# Ce," Portan% Cement Co#& et a# ;1(+ SCRA (4()
-a$ts< There was a CTA decision ordering the petitioner Commissioner of $nternal %evenue to refund to the Cebu ortland Cement Company# respondent# -/!#*)".!" representing overpayments of ad valorem taxes on cement sold by it. @xecution of 7udgement was opposed by the petitioner C$% citing that private respondent had an outstanding sales tax liability to which the 7udgment debt had already been credited. $n fact# there was still a * M plus balance they owed. The Court of Tax Appeals# in holding that the alleged sales tax liability of the private respondent was still being 2uestioned and therefore could not be set,off against the refund# granted private respondentGs motion. The private respondent 2uestioned the assessed tax based on Article "1 of the Tax Code# contending that cement was ad7udged a mineral and not a manufactured product> and thusly they were not liable for their alleged tax deficiency. Thereby# petitioner filed this petition for review. Iss"e< =hether or not the enforcement of assessment of taxes is valid even if it is a sub7ect of a pending case or it is still being contested /e%< NO# The argument that the assessment cannot as yet be enforced because it is still being contested loses sight of the urgency of the need to collect taxes as Dthe lifeblood of the government.D $f the payment of taxes could be postponed by simply 2uestioning their validity# the machinery of the state would grind to a halt and all government functions would be paraly9ed. That is the reason why# save for the exception already noted# the Tax Code provides<
Sec. 0!. $n7unction not available to restrain collection of tax. (o court shall have authority to grant an in7unction to restrain the collection of any national internal revenue tax# fee or charge imposed by this Code. $t goes without saying that this in7unction is available not only when the assessment is already being 2uestioned in a court of 7ustice but more so if# as in the instant case# the challenge to the assessment is still,and only,on the administrative level. There is all the more reason to apply the rule here because it appears that even after crediting of the refund against the tax deficiency# a balance of more than * million is still due from the private respondent. The court further held that to re2uire the petitioner to actually refund to the private respondent the amount of the 7udgment debt# which he will later have the right to distrain for payment of its sales tax liability is in our view an $dle ritual. =e hold that the respondent Court of Tax Appeals erred in ordering such a charade.
1) -ran$is A# C3"r$3i& et a# !s# >ames ># Raffert< ;*42 P3i (*) -a$ts< This is an appeal from the decision of the Court of ?irst $nstance
?rancis A. Churchill and Stewart Tait are involved in the advertising business# particularly in billboard advertising. Their billboards located upon private lands in the rovince of %i9al were removed upon complaints and by the orders of the defendant Collector of $nternal %evenue by virtue of the provisions of subsection &b' of section )) of Act (o. 0--!. Appellees# in their supplementary complaint challenge the power of the of the Collector of $nternal %evenue to remove any sign# signboard# or billboard upon the ground that the same is offensive to the sight or is otherwise a nuisance and maintain that the billboards in 2uestion 8in no sense constitute a nuisance and are not deleterious to the health# morals# or general welfare of the community# or of any persons.K 4efendant Collector of $nternal %evenue avers that after due investigation made upon the complaints of the 5ritish and Ferman Consuls# the defendant 8decided that the billboard complained of was and still offensive to the sight and is otherwise a nuisance.K
Iss"e< =hether or not the prohibition for the offensive billboard is validE /e%< @S. A provision in an internal revenue law prohibiting the courts from en7oining the collection for an internal revenue tax is valid as opposed to the due process and e2ual protection of the law clauses of the bill of rights of the 3rganic Act. Such legislation has been upheld by the nited States Supreme Court
(or is such a provision of law invalid as curtailing the 7urisdiction of the courts of the hilippine $slands as fixed by section ! of the 3rganic Act> a' because 7urisdiction was never conferred upon hilippine courts to en7oin the collection of taxes imposed by the hilippine Commission> and b' because# in the present case# another ade2uate remedy has been provided by payment and protest
1:) "iri$o P# n=a, !s# Vi$ente N# C"si& >r# ;: SCRA ) -a$ts.< This case is a petition for certiorari and prohibition with preliminary in7unction and restraining order to annul and set aside the informations filed in the Court of ?irst $nstance of 4avao# all entitled< Deople of the hilippines# plaintiff# versus Iuirico ngab# accused>D and to restrain the respondent 6udge from further proceeding with the hearing and trial of the said cases.
Criminal charges were filed against Iuirico ngab# a banana saplings producer# for allegedly evading payment of taxes and other violations of the ($%C. ngab# subse2uently filed a motion to 2uash on the ground that &' the information are null and void for want of authority on the part of the State rosecutor to initiate and prosecute the said cases> and &0' that the trial court has no 7urisdiction to take cogni9ance of the case in view of his pending protest against the assessment made by the 5$% examiner. The trial court denied the motion prompting the petitioner to file a petition for certiorari and prohibition with preliminary in7unction and restraining order to annul and set aside the information filed. Iss"e< =hether or not the ngab is correct in saying that he is not liable /e%< NO# The contention is without merit. =hat is involved here is not the collection of taxes where the assessment of the Commissioner of $nternal %evenue may be reviewed by the Court of Tax Appeals# but a criminal prosecution for violations of the (ational $nternal %evenue Code which is within the cogni9ance of courts of first instance. =hile there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed# there is no re2uirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code.
5esides# it has been ruled that a petition for reconsideration of an assessment may affect the suspension of the prescriptive period for the collection of taxes# but not the prescriptive period of a criminal action for violation of law. 3bviously# the protest of the petitioner against the assessment of the 4istrict %evenue 3fficer cannot stop his prosecution for violation of the (ational $nternal %evenue Code. Accordingly# the respondent 6udge did not abuse his discretion in denying the motion to 2uash filed by the petitioner. The court dismissed ngab:s petition.
2*) Commissioner of Interna Re!en"e& etitioner& !s# Pas$or Reat< an% De!eoment Cororation& Ro=eio A# Dio an% Vir=inia S# Dio& reson%ents# G#R# No# 1241(# >"ne 2:& 1::: -a$ts< This is a petition for review on certiorari annulling the decision of the CA
Commissioner of $nternal %evenue filed a criminal complaint before the 4epartment of 6ustice against the ascor %ealty and 4evelopment Corporation&%espondent'# its resident %ogelio A. 4io# and its Treasurer Hirginia S. 4io# alleging evasion of taxes in the total amount of )#/-#1+.)). rivate respondents %4C# et.al. filed an rgent %e2uest for %econsiderationB%einvestigation disputing the tax assessment and tax liability. Case was elevated to the CTA. The C$% filed a Motion to 4ismiss the petition on the ground that the CTA has no 7urisdiction over the sub7ect matter of the petition# as there was no formal assessment issued against the petitioners. The CTA denied the said motion to dismiss in a %esolution dated 6anuary 0/# !!1 and ordered the C$% to file an answer within thirty &-)' days from receipt of said resolution. The C$% received the resolution on 6anuary -# !!1 but did not file an answer nor did she move to reconsider the resolution. The CTA held that the criminal complaint for tax evasion is the assessment issued# and that the letter denial of May +# !!/ is the decision properly appealable to them. %espondent:s ground of denial# therefore# that there was no formal assessment issued# is untenable. The case was elevated to the CA and ruled that the tax court committed no grave abuse of discretion in ruling that the Criminal Complaint for tax evasion led by the Commissioner of Internal Revenue with the Department of Justice constituted an “assessment” of the tax due and that the said assessment could be the sub!ect of a protest" #y denition an assessment is simply the statement of the details and the amount of tax due from a taxpayer" #ased on this denition the details of the tax contained in the #IR examiners$ Joint %&davit which was attached to the criminal Complaint constituted an assessment" 'ince the assailed (rder of the C)% was merely interlocutory and devoid of grave abuse of discretion a petition for certiorari did not lie" 8
Iss"e< =hether or not the criminal complaint for tax evasion can be construed as an assessment. /e%< NO. (either the ($%C nor the revenue regulations governing the protest of assessments provide a specific definition or form of an assessment. ;owever# the ($%C defines the specific functions and effects of an assessment. To consider the affidavit attached to the Complaint as a proper assessment is to subvert the nature of an assessment and to set a bad precedent that will pre7udice innocent taxpayers.
The issuance of an assessment must be distinguished from the filing of a complaint. 5efore an assessment is issued# there is# by practice# a pre, assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. $f the commissioner is unsatisfied# an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. $n contrast# the criminal charge need not go through all these. The criminal charge is filed directly with the 436. Thereafter# the taxpayer is notified that a criminal case had been filed against him# not that the commissioner has issued an assessment. $t must be stressed that a criminal complaint is instituted not to demand payment# but to penali9e the taxpayer for violation of the Tax Code. The petition is granted.
21) -ran$is$o I# C3a!e !s# PCGG& et a# ;2:: SCRA 99) -a$ts. This is a taxpayer suit.
etitioner ?rancisco $. Chave9# in his capacity as taxpayer# citi9en and a former government official asked the court to prohibit and en7oin respondents PCFF and its chairmanQ from privately entering into# perfecting andBor executing any agreement with the heirs of the late resident ?erdinand @. Marcos . relating to and concerning the properties and assets of ?erdinand Marcos located in the hilippines andBor abroad including the so,called Marcos gold hoard. Chave9 assailed the validity of the Feneral and Supplemental Agreement executed by the government &through CFF' and the Marcos heirs on 4ecember 0"#!!-. $tem (o. 0 of the Feneral Agreement states that the assets of the %$HAT@ A%T &Marcos heirs' shall be net of and exempt from# any form of taxes due the %epublic of the hilippines. Iss"e< =hether or not the compromise agreement entered into by the CFF and the Marcos heirs which committing to exempt from all forms of taxes the properties to be retained by the Marcos heirs is valid. /e%< NO. The Feneral and Supplemental Agreement dated 4ecember 0"# !!-# which CFF and the Marcos heirs entered into are hereby declared (LL A(4 H3$4 for being contrary to law and the Constitution.
nder $tem (o. 0 of the Feneral Agreement# the CFF commits to exempt from all forms of taxes the properties to be retained by the Marcos heirs. This is a clear violation of the Construction. The power to tax and to grant tax exemptions is vested in the Congress and# to a certain extent# in the local legislative bodies. Section 0" &*'# Article H$ of the Constitution# specifically provides< D(o law granting any tax exemption shall be passed without the concurrence of a ma7ority of all the Member of the Congress.D The CFF has absolutely no power to grant tax exemptions# even under the cover of its authority to compromise ill,gotten wealth cases. @ven granting that Congress enacts a law exempting the Marcoses form paying taxes on their properties# such law will definitely not pass the test of the e2ual protection clause under the 5ill of %ights. Any special grant of tax exemption in favor only of the Marcos heirs will constitute class legislation. $t will also violate the constitutional rule that Dtaxation shall be uniform and e2uitable.D (either can the stipulation be construed to fall within the power of the commissioner of internal revenue to compromise taxes. Such authority may be exercised only when &' there is reasonable doubt as to the validity of the claim
